WSJ What’s News - Kamala Harris Outlines an Economic Vision for Her Presidency

Episode Date: August 16, 2024

P.M. Edition for Aug. 16. The Democratic nominee pushed for more construction and tax incentives—and criticized Trump’s tariff proposals in a speech in North Carolina. White House reporter Tarini Parti discusses Harris’s policy plans. And Heard on the Street columnist Telis Demos explains why a new KeyCorp deal could be a model for U.S. regional banks. Plus, Cybertruck buyers get an unwelcome surprise with their new car. Tracie Hunte hosts. Sign up for the WSJ's free What's News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

Kamala Harris outlines her economic policy agenda. As president, I will bring together labor with small businesses and major companies to invest in America, to create good jobs, achieve broad-based growth growth and ensure that America continues to define the future and lead the world. In hopes for a U.S. rate cut and geopolitical concerns, push the price of gold to a new record high. Plus, KeyCorp gets a big investment from Scotiabank. Could that move be a template for other regional banks? It's Friday, August 16th.

I'm Tracy Hunt for The Wall Street Journal. This is a PM edition of What's News, the top headlines and business stories that move the world today. Let's start with gold prices. As they hit a new record high today, rapidly reclaiming lost ground after a market crash and sell-off in early August. Gold futures rose 1.6% on the New York Mercantile Exchange to more than $2,530 per troy ounce. The precious metal has been breaking records since March on rising hopes for a U.S. interest rate cut and geopolitical tensions. US markets edge higher today, capping off their best week of the year in a head-spinning

turnaround that defied recent concerns about rising recession risks. Bullied by a surprising streak of encouraging economic reports, the S&P 500 gained 3.9% this week, the Dow Jones Industrial Average climbed 2.9 percent, and the NASDAQ Composite advanced 5.3 percent. It was the biggest weekly gain for each major index since last November. One sour note, data out today showed that Housing Starts, a measure of U.S. home construction, slid in July to their lowest since 2020. KeyCorp, one of the country's largest regional banks, announced earlier this week that Canada's

Bank of Nova Scotia is investing $2.8 billion into the company. The deal could help KeyCorp build up capital and reposition its bond portfolio. Here now to tell us what this all means and how it could affect other regional banks. It's heard on the street columnist, Tellus Demos. So just to start, can you explain this deal a little bit more and tell us how KeyCore will benefit from all of this? So just backing up for a second, we remember last year there was the kind of regional banking crisis that happened and it engulfed a couple of banks. One of the things at the heart of that was this issue of banks had bought a lot of bonds

and other securities a few years ago that were paying yields that were super low. What has happened since, of course, is that the Federal Reserve has started to raise interest rates. That left banks with a problem. These bonds weren't suddenly unsafe, but they lost value. That, in turn, means that they have a little bit less capital for the bank. So, to address this issue of sitting on what are sort of paper losses in the value of some of these securities, if you raise capital, that means that you can sell those at a loss, but then you can reinvest

that money in new securities that are either shorter duration, paying more yield, things that will actually increase your income in the present. And so basically what it means is that the bank just sort of resets itself a little bit. But you know, the question is whether or not banks should continue to be aggressive in kind of making these moves in order to again sort of reset themselves for kind of the new interest rate environment and be able to tell a cleaner story to investors about what their economics look like going forward. Yeah, picking up on that, can this be a model for other regional banks?

I think so. I think that bringing in some outside investment, especially from in this case, bringing in Scotiabank, which is a giant, obviously Canadian bank, you know, brings a lot of other benefits too. There's a strategic alliance there. So not only does it have that benefit, but raising that capital allows KeyCore to reposition its kind of securities portfolio, increase its net interest income, and then just basically be able to sort of present to investors and regulators just sort of a different picture of its business.

And it does cost something, right? Raising equity means that all the shares are essentially worth a little bit less or they have lower earnings per share. But what investors are saying is, you know what, even at that cost, we like this. That's what the positive market reaction told us. That was heard on the street columnist, Telus Demos. Former President Donald Trump says he's picked his transition team. They will prepare for the handover of power if he wins another term in November.

The GOP candidate is tapping his sons, Eric Trump and Donald Trump Jr., along with Howard Lutnick, the chairman and chief executive of financial services firm, Cantor Fitzgerald, and former Small Business Administration chief Linda McMahon. Senator JD Vance, his vice presidential nominee, will also join the team.

The transition team will flesh out Trump's policy proposals and vet and help select key personnel from cabinet secretaries to White House staff. Coming up, Vice President Kamala Harris unveiled her economic policy agenda. That's after the break. Vice President Kamala Harris said today she'll expand the child tax credit, set a goal of building 3 million new housing units, and will penalize companies that engage in price gouging. She also warned that former President Donald Trump's trade policies would raise prices on everyday goods.

Harris made the comments in Raleigh, North Carolina during her first big policy speech since moving to the top of the ticket. Harris has been criticized for not outlining a detailed economic vision in her early campaign events. Wall Street Journal White House reporter Tarini Parti joins me now. Hi Tarini. Hi. What did Harris have to say today?

So Harris laid out her economic agenda that she hopes to put in place in the first 100 days. She said these policy proposals are focused on lowering costs for Americans. We're seeing in poll after poll that inflation, rising costs are a huge concern for voters. And so we're seeing both Harris and Trump in recent days try to talk about the economy, but specifically on how they would lower costs for Americans. How close are her policies to President Biden's? Her policies are essentially an expansion of President Biden's policies. She said today that her plan would build on what she called

the progress of their administration. It was the Biden-Harris administration. So it would be hard for Harris to completely abandon or distance herself from the work that she did alongside President Biden. So these policies essentially build on them. And how does her plan differ from Trump's? So we've heard a few things from former President Donald Trump on his economic agenda. He's talked about making the tax cuts that were passed under his administration permanent.

He's also talked about reducing energy costs. Um, but most importantly, he's talked about across the board, tariffs of at least 10% on imports. And this is something that Harris pointed to today in her speech in North Carolina. She said that these tariffs would essentially raise costs. So we already saw her sort of drawing a contrast between her economic agenda and Trump's. That was WSJ White House reporter Tarini Party. Millennials, this next bit of news might come as a shock to you. According to an analysis

by the Federal Reserve Bank of St. Louis, in early 2024, millennials and older members of Gen Z had about 25% more wealth than Gen Xers and Baby Boomers did at a similar age. The median household net worth of millennials born in 1980 rose to $130,000 in 2022 from $60,000 in 2019. And median wealth has quadrupled to $41,000 for Americans born in the 90s. Wall Street Journal finance reporter Joe Prinsker told the Your Money Briefing podcast what factors drove that turnaround. Housing really is the biggest one and that has been driving this effect. If you look

over the past four years, millennials housing wealth grew by $2.5 trillion even after accounting for the additional mortgage debt that they took on during that time. Another big factor is just retirement accounts. This is a generation that has sort of been auto enrolled into retirement contributions through their employer in a way that previous generations weren't. And so just that steady investment over time means that the run-up in stock prices in the past few years has also really benefited a lot of millennials.

An extremely important point that came up in interviews I did with economists is that inequality within generations is sort of a more urgent and important distinction than inequality between generations. So if you look at the millennials, inequality has widened over the past several decades, and that's been true within the generation as well.

So there's really a wide range of experiences and it's important not to talk about generations monolithically because there's such a diversity of experiences within them. And you can hear more about this story in today's Your Money Briefing podcast. A brand new car without that new car smell? As Tesla rushes to fill orders for its long-delayed Cybertruck, some customers are taking delivery of their expensive new trucks only to find surfaces covered in dust, dirt, or other grime. More than two dozen Cybertruck buyers have posted on social media that their $100,000 trucks were delivered covered in mud and fingerprints or with muddy and dirty floors on the interior.

Tesla hasn't responded to requests for comment. Cybertruck, which went on sale last year, has had a bumpy launch due to manufacturing challenges, recalls, and other delays. Before we go, heads up, we made a correction to today's morning show. We said that the airport servicing Dallas was the country's biggest, when it was the second largest in the U.S. in terms of passenger traffic in 2022. That's according to the Bureau of Transportation Statistics. And that's What's News for this week. Tomorrow you can look out for a weekly markets wrap up,

What's News in Markets. Then on Sunday, we'll be answering your questions about how economic data and Americans' everyday experience don't seem to match and what can be done about it. That's in What's News Sunday. Today's show was produced by Pierre Bienanamay. I'm Tracy Hunt. Our AM host is Luke Vargas. Today's show was produced by Pierre Bienimé. I'm Tracy Hunt.

Our AM host is Luke Vargas. Additional support this week from Francesca Fontana and Chip Cutter. Michael Lavelle wrote our theme music. Our supervising producers are Tali Arbel, Michael Cosmitis, and Christina Raqqa. Aisha Al-Muslim is our development producer. Scott Salloway and Chris Dinsley are our deputy editors, and Falana Patterson is the Wall Street Journal's head of news audio. We'll be back with our regular show on Monday morning.

Thanks for listening.