WSJ What’s News - North Korea Boosts Arms Supply to Russia

Episode Date: December 23, 2024

A.M. Edition for Dec. 23. Satellite imagery shows Pyongyang is ramping up production of missiles bound for use by Russia against Ukraine, in what the WSJ’s Matthew Luxmoore calls a major boost for Moscow as the war nears its third anniversary. Plus, President Biden commutes the sentences of 37 death row inmates. And the hosts of WSJ’s Take on the Week gaze into the crystal ball for some 2025 economic predictions–with the help of Goldman Sachs’ chief economist. Luke Vargas hosts. Sign up for the WSJ’s free What’s News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

Amazon Q Business is the generative AI assistant from AWS. Because business can be slow, like wading through mud. But Amazon Q helps streamline work, so tasks like summarizing monthly results can be done in no time. Learn what Amazon Q Business can do for you at aws.com slash learn more. Donald Trump threatens to take control

of the Panama Canal and Greenland. Plus, North Korea ramps up support for Russia's war in Ukraine. This is a huge help to Russia at a time when the fighting is particularly intense and its soldiers are trying to move forward on the battlefield. And the hosts of WSJ's Take on the Week help us gaze into the crystal ball for some 2025 economic predictions. It's Monday, December 23rd. I'm Luke Vargas 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.

President-elect Donald Trump speaking at a conservative conference in Arizona yesterday threatened to take control of the Panama Canal and wrest control of Greenland from Denmark on national security grounds, his latest comments openly discussing aspirations for US territorial expansion after recently trolling Canada's Prime Minister by suggesting it should become the 51st state. Trump didn't specify how he would take back control of the canal, and his transition team didn't respond to a request for additional comment. Short of an invasion, the US government has no ability to restore control of the canal, which the US built more than a century ago.

Panama's president angrily rebuked Trump's comments, calling them an affront to the country's sovereignty. Trump discussed purchasing Greenland in his first term, an idea that was at the time dismissed by officials in Greenland and Denmark, which controls the self-governing island. While elsewhere in his speech, Trump addressed Elon Musk's role in his upcoming administration after the resolution of a government funding fight that the businessman waited into last week. Musk's involvement in congressional business drew criticism from GOP Representative Tony Gonzalez of Texas yesterday, who said it felt like Musk was acting as prime minister, a suggestion that Trump brushed off. In all the different hoaxes, the new one is, President Trump has ceded the presidency to

Elon Musk. No, no, that's not happening. But Elon's done an amazing job. Isn't it nice to have smart people that we can rely on? Don't we want that? President Biden is commuting the death sentences of 37 inmates convicted of murder, saying that while he condemns their actions, he is quote, more convinced than ever that we must stop the

use of the death penalty at the federal level. The men will instead serve life imprisonment without parole. However, Biden left death sentences in place for three inmates found guilty of terrorism or hate-motivated mass killings, including one of the Boston Marathon bombers and the shooters behind the attacks on a Pittsburgh synagogue in 2018 and the Emmanuel Church in Charleston, South Carolina in 2015. North Korea is boosting its arm shipments to Russia and expanding domestic weapons production to meet its allies' demands in Ukraine. That is according to recent satellite imagery, which shows rapid progress on construction

at a North Korean missile manufacturing plant repeatedly visited by leader Kim Jong-un. Journal reporter Matthew Luxmore says that Pyongyang's assistance comes at a key time for Moscow. After almost three years of fighting now, Russia really needs all the help you can get in terms of ammunition, rockets, ballistic missiles, all of which are things that North Korea is now providing in abundance. Ukrainian officials estimate that two-thirds of the artillery and mortar shells being used by Russia along the 600-mile front line actually now come from Pyongyang.

In exchange, South Korean officials say Russia is transferring air defense systems to North Korea and sending technicians to help with the country's spy satellite efforts. Pyongyang has also received more than a million barrels of oil since March, twice the annual cap imposed under UN sanctions, according to the London-based Open Source Center. North Korea has denied supplying arms to Russia, while the Kremlin and Russia's defense ministry didn't respond to requests for comment. The US Navy shot down one of its own planes over the weekend, forcing two pilots to eject from their jet fighter over the Red Sea in what US Central Command said was an apparent case of friendly fire.

One pilot sustained minor injuries, and an investigation is underway. The incident came as the U.S. military said it conducted airstrikes against Iranian-backed Houthi rebels whose attacks on passing cargo ships conducted in solidarity with Palestinians in Gaza have snarled international trade. And in market news today, car makers Honda and Nissan have confirmed plans to merge in 2026, a move they say is backed by their respective boards and the Japanese government. Shares of both companies closed higher today. We are exclusively reporting that Xerox is nearing a deal to buy printer maker Lexmark

in a $1.5 billion transaction that's expected to be announced this morning. The takeover would bring Lexmark back under US ownership after it agreed to be sold to a group of Chinese buyers in 2016, one of which has been placed under a US import ban over alleged links to forced labor. And on deck, the Conference Board's consumer confidence reading is due at 10 a.m. Eastern, with durable goods and new home sales data expected tomorrow morning before the stock market's early 1 p.m. close for Christmas Eve. Coming up, WSJ's Take on the Week hosts Telus Deimos and Gunjan Banerjee share why Goldman

Sachs chief economist is optimistic about the economy in 2015, and they explain the X-factors that could make things more unpredictable. That's after the break. The Paramount Plus exclusive series, The Agency. The CIA sends us out to behave in a dangerous way. Starring Michael Fassbender and Richard Gere. Whatever it takes, make it invisible. The Agency, new series now streaming exclusively on Paramount+.

Well last week was a bit of a rough one for markets, but don't let that bum you out about what next year could hold. That's the message that journal columnist Telus Demos and reporter Gunjan Banerjee got when they spoke to Goldman Sachs chief economist Jan Hatsias for the latest episode of WSJ's Take on the Week, which dropped yesterday. And Telus and Gunjan are here to relay that bold case and put it into context for us. Hey guys, happy almost-Polidase. Hi, Luke. Thanks for having us. Hey, thanks for having us on. Before we skim Jan Hatzius optimistic 2025 forecast for next year, we can trust this guy, right?

He's one of the most widely watched economists on Wall Street. And that's because at a time when almost everyone was calling for a recession the past few years, Jan was the one who was saying, hey, I think the economy could actually hold up and I think we'll see a soft landing. So far, that seems to be the case. All right, then. So what is his core argument for why things are looking up next year? His core argument among his core arguments is that inflation is relatively in check. It obviously hasn't come all the way back, but has slowed down and he expects it to continue

slowing into 2025. And that will allow other strengths of the economy to continue to play out and should allow for kind of normal economic growth in the foreseeable future. It's interesting, although Jan is really optimistic about the economy next year, one of the biggest risks that he does cite to the economy is tariffs. However, Yan seemed to think that though it could pressure prices a little bit, it's not really altering his overall sunny outlook on where the economy is headed next year. Right.

And let's actually listen to what he told you on that. We're expecting roughly a 20 percentage point increase in the average tariff rate on imports from China. And then we have some more targeted auto tariffs on Europe and electric vehicle tariffs on Mexico in our baseline. So that gives you an overall increase, again, if you translate it into the overall tariff rate of about three and a half percentage points. gives you an overall increase, again, if you translate it into the overall tariff rate of about three and a half percentage points.

And in my view, that's probably manageable. And we still expect the economy to grow to an half percent in that kind of environment. We still expect gradual disinflation in that environment. The risk case is one in which, in addition to these tariffs, we also get a bigger across-the-board tariff, say 10 percentage points. That would probably deliver a bigger hit to growth and also a re-acceleration in inflation, at least for a period of time. So I would be more concerned about that.

All right. So Hatzius' base case is the tariffs won't be such a major headwind and that's not the only area where incoming President Trump is proposing to do things that could have a negative impact on the economy and yet Hatzias foresees those effects as not being quite as severe. Yeah. So, there have been a lot of concerns about deportations, how that's going to impact the labor market, how that's going to impact inflation. His expectation is that net immigration into the U.S. in 2025 will still be around 750,000 people.

So that's well below the numbers we saw a few years ago, but not that much lower than the historical average of around 1 million. All right. Then aside from something like immigration, there are just some net potential positives on the policy front that could come in the form of additional tax cuts, perhaps a more business-friendly approach on regulation. And then finally, what other factors should we be keeping an eye on going into 2025, according to Hatsias?

I think that when we talk about these policies, there's expectations for what the policies are. And so those things might not play out as expected, right? And then there's also the balance. There are things that will probably hurt growth, and there are things that will help it, right? But fundamentally, the American economy has come into this next administration in a pretty good place and will continue as long as what happens isn't overly disruptive to the economy.

So there is a lot of uncertainty baked into some of these things just because we don't know exactly what the policy picture will be. And so that maybe is one thing that I take away is economic cycles are not allowed to just sort of naturally come and go. There are many things that happen. There can be political changes, pandemics, wars, all sorts of things. So economic forecasting always comes with a pretty sizable asterisk. Tell us Demos and Gunjan Banerjee are the hosts of WSJ's Take on the Week. Go and subscribe now wherever you get your podcasts. Tell us, Gunjan, thanks so much. Thanks for having us. Thank you.

And that's it for What's News for Monday morning. Today's show was produced by Daniel Bach. Our supervising producer is Christina Rocca, and I'm Luke Vargas for The Wall Street Journal. We will be back tonight with a new show. Until then, thanks for listening.