WSJ What’s News - More Men Are Getting Addicted to Playing the Stock Market

Episode Date: December 20, 2024

P.M. Edition for Dec. 20. For a growing number of men, what started as an interest in meme stocks or crypto has turned into a gambling addiction. WSJ markets reporter Gunjan Banerji went to Gamblers Anonymous meetings to understand more. And U.S. lawmakers are racing to avoid a government shutdown at midnight. Katy Stech Ferek, who covers Congress for The Wall Street Journal, gives us her read from the Hill. Plus, at least two people were killed and more than 60 wounded in an attack at a Christmas market in eastern Germany. You can follow the developing story on wsj.com. Alex Ossola hosts. Sign up for the WSJ's free What's News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

This episode is brought to you by HelloFresh. Be honest, between meetings, workout classes, and the kids' clubs, who's got time to cook? That's where HelloFresh comes in. No matter how busy you get, HelloFresh makes it easy to get a home-cooked meal on the table. With flavor-packed recipes like crispy chicken parmigiana, you'll be filling your kitchen with the cozy aromas of a homemade meal in no time. Visit HelloFresh.ca and use code SPOTIFY for your exclusive offer. Lawmakers are still working on a deal that would prevent a U.S. government shutdown at midnight.

There's a real sense on the Hill that this is a taste of what could be the chaos to come under a Trump administration and Congress. And even though Republicans pledged unity and said their communication was really well calibrated, there were similar lessons this week that that might not be the case. And people who play the stock market are increasingly showing signs of gambling addiction. Plus, interest rates are going down, So why are mortgage rates going up? It's Friday, December 20th. I'm Alex Osela for The Wall Street Journal.

This is the PM edition of What's News, the top headlines and business stories that move the world today. The clock is ticking for lawmakers to come to an agreement that would avoid a government shutdown starting at midnight tonight. Congress has been working to pass a bill all week. Congressional leaders on Tuesday reached a bipartisan deal to fund the government through mid-March, but it fell apart after opposition from President-elect Donald Trump and Elon Musk.

And then a new slimmed-down spending plan from Republicans that was endorsed by Trump failed a House vote last night. House Speaker Mike Johnson huddled with rank and file GOP members today to work on a new plan while also reopening communications with Democrats who were still angry after the collapse of the bipartisan deal. The latest discussions among the Republicans focused on holding separate votes on different portions

of the package rather than one catchall bill. Wall Street Journal congressional reporter Katie Stetch-Ferrick joins us now from Washington. Katie, where are we? We are trying to control a bunch of moving pieces right now. My colleagues and I have been running the halls of Congress asking Republicans, Democrats, really anybody for a sense of where things are heading. The word that we keep hearing from lawmakers is fluid and we are doing our best to make sense of where this could go.

Right now we have a sense that there could be one vote later tonight on a bill that's very similar to the one that failed last night, but does not have the debt ceiling aspect to it. Unless you do some really technical maneuvering, Speaker Johnson can't put a bill up for vote the same day and allow it to pass with a simple majority. It will need two thirds, which means Democrats will have to be on board somehow. Sounds like there's a lot up in the air right now. So if this new agreement goes to a vote

and it doesn't pass, that's it. The government's shutting down, right? 1201 AM. I mean, I've covered Congress long enough to never say never. When lawmakers are up against a deadline, you really don't know what's going to happen. And there's been, of course, some discussion among House Republicans that there could be a small technical shutdown, one that maybe lasts over the weekend. That's on the table. They might miss their midnight deadline, but in a way that folks don't feel the impact.

What exactly does a government shutdown entail if it does happen? Depends on how long the government is shut down for, of course, and the impacts are felt more severely the longer it goes. While critical operations are protected and while social security checks still come out, anyone who's interacting with the federal government in any way right now will be in convenience. There'll be longer lines because agencies will operate

on a very limited staff and we may see really narrow limited impacts that mean a lot to a small amount of people, but it's really unclear. It'll be really individualized, what impacts are felt. That was Katie Stetsch-Ferrick, who covers Congress for The Wall Street Journal. Katie, thanks for that update.

Thanks for having me. In U.S. markets, stocks came roaring back, but the gains didn't prevent major U.S. indexes from ending the week lower. The Dow rose about 1.2%, the S&P 500 and the Nasdaq both gained about 1 percent. A car has rammed a German Christmas market in Magdeburg in eastern Germany, leaving at least two dead and more than 60 wounded, according to local officials. They said the suspect, a 50-year-old doctor from Saudi Arabia who had been in Germany

since 2006, had been detained. You can follow more about this developing story on wsj.com. Coming up, how playing the stock market has led some people to a gambling addiction. That's after the break. There's a new type of addict showing up to gamblers' anonymous meetings. Investors hooked on the stock market's riskiest trades. Some got pulled in by meme stocks during the pandemic, others by a foray into cryptocurrencies. Doctors and counselors say they're seeing more cases of compulsive gambling in financial markets and they expect the problem to worsen.

Gunjan Banerjee, who covers markets for The Journal, has been digging into this. So, Gunjan, how do people who are investing in financial markets know that they're addicted? What are the signs? Investors I spoke with, and I interviewed more than 30 for my recent piece for The Wall Street Journal, said that often their trading led to mood swings,

sleepless nights, and even depression. Some of them said that they had had suicidal thoughts because of their excessive trading. They were often distracted from their loved ones. One of them told me that his marriage almost ended because of his compulsive trading in the financial markets. Is anything really being done about this problem? The insidious thing about gambling in financial markets is that often people don't even know that they are gambling. Think about it, when you're on a FanDuel app, when you're on DraftKings app, it's very clear

that what you are doing is sports betting, right? When you are on a Robinhood app, when you're on a Webull app, any financial brokerage app, you could be gambling on options on cryptocurrencies, but you could confuse it with investing. And that makes this a really, really pernicious problem and one that doctors, counselors, treatment centers around the country told me is really, really tough to track. One thing they all said though, was that they expect this problem to get worse because the markets have gotten riskier and the ease of access is greater than ever before.

How did we get here? A lot of investors and traders discovered trading during the meme stock mania of 2021. They may have had one giant win that really lit up their portfolio, got them excited, gave them that dopamine rush, and they tried to chase that more and more and more. And what's happened along the way is that Wall Street has made it easier to trade. They've introduced riskier and riskier ways to play the markets through things like options, activity and options, particularly short dated options, which tend to be the most addictive. That's on track to hit a record this year.

In the latest episode of WSJ's Take on the Week, you spoke about this problem with the CEO of Robinhood, Vlad Tenev. I'm curious if he sees platforms like his as having any responsibility for this increase in gambling addictions. You know, Vlad told me when we sat down in person for Take on the Week, and you know, what they said for this article when I reached out to them for a comment, was that Robinhood has safeguards in place to help consumers make informed decisions.

They say they offer educational resources that people can make the right decisions for their investing. I think the way they view it is that they think that individuals should have the same access to trades and investments as professional investors do. That was Markets reporter Gunjan Banerjee. You can hear more from the conversation with Vlad Tenev on the most recent episode of WSJ's Take on the Week.

Thanks so much, Gunjan. Thank you for having me. This has been great. Over the past few months, the Federal Reserve has been slowly cutting interest rates. Some people hoped that this could make homes more affordable too, as mortgage rates would follow. Instead, the opposite has happened. According to Freddie Mac, the average 30-year mortgage has climbed to around 6.7% from roughly

6.1% since the Fed started lowering rates in September. And they're only poised to rise further. WSJ Markets reporter Sam Goldfarb joins me now. So Sam, it seems like when interest rates go down mortgage rates go up. Why is that? Right, I mean it doesn't have to happen that way but it's what's happened this time. Basically it's because the 30-year mortgage rate is not linked to the federal funds rate which is what the Federal Reserve controls directly. It's linked more

closely to the 10-year US Treasury yield. And the 10-year US Treasury yield is which is what the Federal Reserve controls directly, the 10-year treasury yield can still go up if investors are worried about the next 10 years. And that's what's basically happened over the last few months. So does that mean that investors are not optimistic that inflation will cool? Or are they just kind of pessimistic about what the next 10 years hold? It's a combination, I would say, of optimism and pessimism. Optimism about the strength of the economy. That's one factor that can keep interest rates from falling much further than where they are now. optimism about the strength of the economy. That's one factor that can keep interest rates from falling much further than where they are now.

Why would the Fed have to cut rates much further if the economy is doing fine? And a little bit of pessimism in terms of inflation kind of hovering higher than the Fed's 2% target. Okay, so mortgage rates are at 6.7% or so. What does that mean for the housing market in general? I mean, people just haven't really been wanting to buy homes in this environment. These mortgage rates aren't so super high if you look back before the financial crisis, before like 2008 or so, but people really got used to the super low mortgage rates that followed that period and mortgage rates look very high compared to that period. That was Wall Street Journal Markets reporter Sam Goldfarb.

Thanks, Sam. Thank you. Donald Trump has transferred all of his shares in the parent company behind Truth Social to a revocable trust in his control. A revocable trust allows the person setting it up to change the successor or move assets in and out. Security's filings yesterday show the president-elect gifting the stake, worth more than $4 billion based on yesterday's closing price. Trump then received the stake as the director and beneficial owner of the trust.

And Netflix has secured the U.S. rights to stream the next two Women's Soccer World Cups in 2027 and 2031. The value of the deal wasn't given. It's a major step forward for the streamers' bet on live sports, and marks the first time that Netflix has bought all of the rights for such a high-profile international competition. And that's What's News for this week. Tomorrow you can look out for our weekly markets wrap-up, What's News in Markets. Then on Sunday, we'll be discussing how a new presidential administration is bringing optimism for a pick-up in M&A activity. That's in What's News Sunday.

And we'll be back with our regular show on Monday morning. Today's show was produced by Pierre Bienenmay and Anthony Bansi, with supervising producer Michael Cosmides. Michael Laval wrote our theme music. Aisha Al-Muslim is our development producer, Scott Saloway and Chris Zinsley are our deputy editors, and Philana Patterson is the Wall Street Journal's head of news audio.

I'm Alex Osola, thanks for listening.