WSJ What’s News - How Washington Just Turned Up the Heat on Putin

Episode Date: October 23, 2025

A.M. Edition for Oct. 23. In a first for President Trump’s second term, the U.S. is imposing direct sanctions on oil giants Rosneft and Lukoil, crippling Russia’s war chest. WSJ’s Laurence Norman says it’s a milestone moment for the U.S. and its allies, as they look to end the war in Ukraine. Plus, Tesla’s stock drops off-hours as Elon Musk derails the earnings call for a chat about his pay package. And WSJ’s Jack Pitcher explains why some popular funds are racking up huge losses. Caitlin McCabe hosts. Sign up for the WSJ’s free What’s News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

When you're with Amex Platinum, you get access to exclusive dining experiences and an annual travel credit. So the best tapas in town might be in a new town altogether. That's the powerful backing of Amex. Terms and conditions apply. Learn more at Amex.ca. The White House ramps up pressure on the Kremlin as it imposes new sanctions on Russian oil giants and lifts restrictions on Ukraine's use of some long-range missiles.

Plus, Tesla's stock drops as Elon Musk derails the earnings call for a chat about his pay package. Like my fundamental concern with regard to how much voting control I have in Tesla is, if I go ahead and build this enormous robot army, can I just be ousted at some point in the future? And President Trump tears down the entire East Wing of the White House. It's Thursday, October 23rd. I'm Caitlin McCabe for the Wall Street Journal, and here is the AM edition of What's News. The top headlines and business stories moving your world today.

Oil prices have surged after President Trump announced substantial sanctions on two Russian oil giants in what are the first direct U.S. measures on Russia during Trump's second term. At the same time, we're exclusively reporting that the Trump administration has lifted a key restriction on Ukraine's use of some long-range missiles provided by Western allies, enabling attacks. inside Russia. The moves come as the U.S. aims to pressure Russia into a ceasefire in Ukraine, following stalled negotiations and a canceled summit between President's Trump and Putin. Journal editor Lawrence Norman has been pouring over the sanctions announcement. Lawrence, give us the details. So the Trump administration, for the first time since it took office in January announced sanctions against Russia,

They've targeted the two biggest Russian oil firms, Rosneft and Luke Oil, with a pretty broad transactions ban, aiming to hit the energy sector, which produces a massive chunk of Russia's budget, which it uses to pay for the war. So this is really a milestone moment on the Trump administration's approach to the war. You said it's a milestone moment. Can you give us a bit more context of how big a deal this is. European allies have been wanting these extra sanctions for some time, right? Yeah, they wanted the U.S. to go back into pressuring Russia in order to get an end to the war. Now, how hard will the U.S. sanctions hit the Russian economy? Is unclear. A lot of that is going to be down to how determined Washington is to enforce these sanctions.

It has sweeping enforcement powers, and it's the only country in the West, really, that is able to force foreign countries like China, like India, to comply with sanctions it imposes. So it's going to be a massive enforcement question here. And how does this work in conjunction with the EU? Yeah, I think this is a really critical point. The EU approved this morning a big package, the 19th package of sanctions on Russia. It has some pretty weighty measures, including a phase out of European buying of Russian LNG product, which has been going up and up since the war began. So that's again, we're talking about a multi-billion dollar hit to the Russian economy,

and there are various other measures. The crucial point is that the Europeans and the US are now working together again on sanctions, as they did during the Biden administration. That united front on sanctions can make the measures that are taking. either by the US or by the UK or by the EU, much more effective. So it's really important that they are aligned right now on sanctions. Obviously, the big question with the Trump administration is how long will that remain so? Lawrence, at the same time, we're reporting that the US is allowing for Ukraine to use some long-range missiles for attacks inside Russia. We should note that

Trump has said, quote, the US has nothing to do with those missiles, wherever they may come from, or what Ukraine does with them. Combine with the sanctions, what does this tell us about the U.S. approach to end the war in Ukraine? The important point here is we seem to have, again, a joined-up vision of how the war should end in terms of, you know, Ukraine should not be pressured into unilaterally giving territory to Russia

in order to end the war. Now, the U.S. and the Europeans are both saying, let's end this war on the current contact line. And that could be, if it remains, that could be an important pressure point on Russia and its ability to continue the war. Lawrence Norman, thank you. Thank you very much. We're exclusively reporting that the Commerce Department is in talks with several quantum computing companies about taking equity stakes in the firms in exchange for federal funding. Companies including IONQ, Raghetti Computing, and D-Wave Quantum are discussing minimum awards of $10 million each from a pot earmarked for promising technology companies.

It's the latest signal that the Trump administration is expanding its interventions in what it sees as critical segments of the economy. Staying in Washington, where President Trump now says the entire East Wing of the White House will be demolished to build his 90,000 square foot. ballroom. The president also said the cost of the ballroom would be $300 million and increased from the previous estimate from the White House of $250 million. Back in July, Trump said work on the ballroom wouldn't touch the more than 100-year-old area of the White House, which traditionally host the offices of the First Lady. A White House official said the scope of the project was always subject to change, adding that the East Wing will be modernized and rebuilt. And in New York, the three Maine-Main candidates for mayor have squared off in their final debate before the November 4th election.

The freewheeling debate covered public safety, the rise of anti-Semitism in the city, and affordable housing. Former Governor Andrew Cuomo focused his attacks on the racist frontrunner, the Democratic Socialist Assemblyman, Zohran Mamdani. I did things. You have never had a job. You've never accomplished anything. There's no reason to believe you have any merit or qualification for eight and a half million lives. Mom Doni hit back at Cuomo for his record as governor. We just had a former governor say in his own words that the city has been getting screwed by the state. Who was leading the state?

It was you. Governor Hockle. You were leading the state for 10 years screwing the city. You cut homelessness funding. You cut funding for the MTA. You did all of these things, my friend. Curtis Sliwa, the Republican nominee who trails the two, compared his opponent's feuding to, quote,

two kids in a schoolyard. Coming up, Tesla reports strong car sales, but you wouldn't know it, judging by the stock's reaction. Plus, a look at the exchange-traded funds that analysts are calling wealth destroyers. Those stories after the break. It's the matcha or the three ensemble

Cephora of the fates that I've been to denichy who energize all the time? Mm, it's the ensemble. The form of standard and mini, regrouped,

what's the abend? And the embellage, too beau, who is practically to give to them. And I know I'd like the Summer Fridays

and Rare Beauty by Selena Gomez. I'm, I'm sure. The most ensemble the Cado of the Fettos

Cepora. Summer Fridays, Rare Beauty, way, Cipora Collection, and other part of Fast, procure you these formats, standard and mini, regrouped for a better quality of price.

On link on Cephora.C.A or in magazine. Tesla shares are falling in pre-market trading this morning after the EV maker reported a 37% plunge in net income in the third quarter, despite record sales. But little was actually said on the company's earnings call about its electric vehicles, with CEO Elon Musk instead using the time to discuss his new pay-pack. package, which could be worth as much as one trillion dollars. Musk has said the package is important in securing his control of Tesla as it expands into

AI and robotics projects. Journal Auto's reporter Stephen Wilmot tuned into the call and joins me now. Stephen, tell us more about what Elon Musk had to say. Well, yes, the pay package subject was what one analyst described as a heavy-handed pitch at the very end of the call. they have a general meeting coming up to ratify this, and the company is obviously a little nervous that it won't get the votes. It could be worth up to a trillion dollars extraordinarily if the company hits some extremely aggressive growth milestones. So it's very much a performance

related package, which is in its defence. But Elon Musk called Glass Lewis and ISS, the corporate governance ratings companies, corporate terrorists a couple of times on the call. because they don't like the package. And he's concerned that passive funds, essentially, which automatically voted according to the recommendations of the corporate governance experts, will scapper the vote. So that was one aspect of the call. The other aspect really was the focus on AI, above all else,

even though AI contributes extremely little, if anything, to Tesla's current results. There was some good news in the earnings, right? Revenue rose 12% to $28 billion for the quarter, driven by strong sales of electric vehicles. Do analysts expect that trend to last? Yeah, the short answer is no. It was a good quarter for revenues in particular and cash flow also. Cash flow is at a record. And that's because the company delivered a record number of vehicles, almost 500,000 in the quarter. And it produced about 50,000. less than that, just under 450,000. So if you deliver a lot more vehicles than you produce, then you get a huge cash benefit. So they had record cash flows, which is, you know, plus, but obviously it was a one-off because you were running down your inventories. And the other factor is that there was this federal tax credit, $7,500 tax credits, on EV purchases, which expired on September 30th. So there was a rush to take advantage of this in the third quarter.

But of course, the flip side of that pull forward effect is that it will go into reverse, in the fourth quarter, as everyone who had been intended to buy an EV, would have already bought one. So Elon Musk said three months ago in the second quarter called that the Q4, Q1 might be tough. It's widely acknowledged, including by the company itself, that winter's going to be very tough. That's Journal Auto's reporter, Stephen Wilmot. Thanks for joining us. Thank you. And Tesla shares being down this morning is particularly bad news for investors in Popper,

popular leveraged funds that are tracking the stock. Because while these risky exchange traded funds offer to double or even triple the value of the underlying asset, they've also exposed more investors to steep losses. Journal finance reporter Jack Pitcher explains how these single stock funds work. If you bought the two times long Tesla ETF and Tesla rose 5% tomorrow, your ETF would be up 10%. That also applies to the downside. If Tesla falls, falls 10%, your ETF is going to be down 20% on a daily basis. One issue with these funds, and the fund managers readily tell people this, is that they're only made to track the performance of their underlying asset over a single day.

What that means is if you hold onto them for a longer period of time, the volatility of the underlying asset going up and down can make the return of the ETF differ quite a bit from the underlying asset. Over the long term, the leveraged fund tends to lose money in many cases no matter what, even if the underlying asset goes up. The associated risk means some large managers, such as BlackRock and JP Morgan asset management have avoided these ETFs, with Jack adding that some analysts even call the funds wealth destroyers. One reason we've seen these still be popular is they had a really good period late last year. It was going around social media a lot, that people were making really big gains betting on Tesla levered funds

or Micro Strategy levered funds, which is a Bitcoin-linked stock. So a lot of money went into these funds late last year, and they have not performed as well since then. Both of those funds I mentioned, Tesla and Micro Strategy, are trailing their underlying stock over the last 12 months, even though the underlying stock is up. Of the just over 700 leveraged equity ETFs available, Bank of America analysts say roughly 200 have been launched in 2025 alone. And that's it for what's news for this Thursday morning. Today's show is produced by Daniel Bach. Our supervising producer is Sandra Kilhoff. And I'm Caitlin McCabe for The Wall Street Journal. We'll be back tonight with the new show. Until then, thanks for listening.