WSJ What’s News - Stablecoin Project Is Trump’s Latest Overture to Crypto

Episode Date: September 12, 2024

A.M. Edition for Sept. 12. The WSJ’s Vicky Ge Huang explains what we know about former President Donald Trump’s backing of World Liberty Financial, and how the crypto industry has shaped this election cycle. Plus, as the European Central Bank prepares to cut interest rates, the WSJ’s Tom Fairless says the focus is shifting from inflation to concerns about whether Europe’s economy can keep apace with the U.S. and China. And, JPMorgan and Bank of America impose limits on young bankers’ hours after an outcry about Wall St reet’s dangerous culture of overwork. Luke Vargas hosts. Sign up for the WSJ’s free What’s News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

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at cibc.com slash aventura business. Terms and conditions apply. Wall Street banks call for young employees to log off following an overwork outcry. Plus asset managers want to help wealthy clients dip their toes into private markets. And we'll take a look at Donald Trump's latest attempt to court crypto money and votes. This year's election has almost become a crypto election. The crypto industry has raised a lot of money for a few super PACs. It's Thursday, September 12th. 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. We are exclusively reporting that JPMorgan Chase and Bank of America are planning to limit the hours that junior bankers are allowed to work, as they seek to address an outcry over Wall Street's dangerous culture of overwork. J.P. Morgan will now cap junior investment bankers' hours at 80 per week in most cases, while Bank of America will roll out a timekeeping tool that will require them to share more details about how their time is spent. The changes come after a journal investigation found that junior bankers at Bank of America were routinely told to lie about their hours in order to avoid going over existing limits. And they also follow the death earlier this year of a 35-year-old Bank of America associate

who had been working multiple 100-hour weeks. Individual investors could soon have an easier way to invest in private markets. We are exclusively reporting that in pursuit of a new revenue stream, BlackRock plans to offer wealthy investors a way to access alternative investments that don't trade on public exchanges – things like private equity, private credit, and infrastructure funds. To do that, it's teaming up with private equity firm Partners Group to create a so-called model portfolio that wealth advisors can offer to qualified clients, meaning they have at least $2.2 million in net worth, excluding their primary residents. Journal markets reporter Jack Pitcher has more.

A lot of the challenges currently out there with getting retail investors and private assets is just the complexity of all of it. There's all kinds of different products. There's a lot of documentation. These products have different levels of liquidity. Some of them can be redeemed at any time. Others have certain holding periods. The point of this BlackRock and Partners Group offering is to handle all of that for the

end client in one fell swoop. You are essentially paying them a fee to be your chief investment officer, manage your entire private portfolio, rebalance it all through one single account with one single set of documentation. While institutional investors have long dabbled in private markets as a way to diversify and chase potentially higher returns. Multiple asset managers are now moving to beef up their private market offerings to individuals, with State Street and Apollo on Tuesday announcing a partnership to launch

an ETF and other products focused on private credit. Railroad company Norfolk Southern has fired CEO Alan Shaw, saying that he violated company policy by engaging in a consensual relationship with its chief legal officer. Shaw, who oversaw the response to a train derailment that caused a toxic chemical spill in East Palestine, Ohio last year, will be succeeded by CFO Mark George. Influential, Jeep and Ram dealers are calling on parent company Stellantis to do more to reverse steep market share losses in the U.S. In a letter to CEO Carlos Tavares seen by the journal, a dealer advisory group blamed

a sales pullback on Tavares' quote, disastrous choices end quote and called on him to spend more on consumer promotions to clear out bloated inventories. Stellantis responded that an action plan it had drawn up with dealers was already bearing fruit citing a 21% sales increase in August compared with the previous month. Well, it's interest rate decision day for the European Central Bank, with the ECB expected to trim borrowing costs by a quarter point at 8.15 a.m. Eastern. Journal reporter Tom Fairless told me that would mirror the step it took in early June,

but that certain larger trends have come into the bank's focus since then. I suppose the panic around inflation has gone and interest rates are at a relatively high level in Europe and in America. So central banks can switch their focus to growth. In the US, the economic picture is still unclear. The economy still seems to have some momentum and although unemployment is rising, the growth picture looks relatively strong on different metrics. In Europe, that's not the case. There's been two, three years of stagnation.

There was a sort of widely heralded recovery earlier this year that seems to already be stalling. And Germany is flirting with recession. And there's only so much the ECB can do about this. Its central job is to tackle inflation. Yeah, limited tools there, Tom, at a time when some prominent voices have been saying that more economic supports are needed. Yeah, that's right. Recently, there are deeper concerns among policymakers in Europe about the stagnation and whether Europe has just become far too uncompetitive

in the face of this strong competitive threat from China and very robust growth in the US. This past week, we've seen Mario Draghi, the former ECB president, publish this much anticipated report into what Europe can do and he provided some quite radical suggestions. One of them was he said Europe needs to probably find an extra trillion dollars or so per year public and private investment to close this technology gap with the U.S.

And in other markets events today, the U.S. producer price index for August is due out at 8.30 a.m. Eastern, with economists forecasting 0.2 percent monthly gain compared with 0.1 percent in July. And earnings from grocery giant Kroger are due out before the market open, with software maker Adobe following after the closing bell. And the Israeli military struck a Gaza school-turned-shelter yesterday, killing 18 people, according to Palestinian officials. The United Nations Relief and Works Agency, which runs the school, says that six of its staff members were killed and that the school has now been hit five times in the war.

The Israeli military says its operation was aimed at Hamas militants. Coming up, crypto reporter Vicky Guihuang will join us to explain how a new digital currency project promoted by Donald Trump is further solidifying the 2024 race for the White House into a crypto election. That's after the break. Your teen requested a ride, but this time, not from you. It's through their Uber Teen account. It's an Uber account that allows your team to request a ride under your supervision with

live trip tracking and highly rated drivers. Add your team to your Uber account today. For too long, the average American has been squeezed by the big banks and financial elites. It's time we take a stand together. That was Donald Trump posting on Truth Social recently in a message that ended with a link to the Telegram page for World Liberty Financial, a digital currency project that is aiming to spread US-pegged stablecoins around the world. And if you're having trouble following all of that, don't worry, because it's precisely why I've got journal crypto reporter Vicky Gahwang here to help explain this project

and Trump's reasons for backing it. Vicky, good luck answering this one. Based upon the word salad that we all heard earlier, what is World Liberty Financial and its goal? So World Liberty Financial is a decentralized financial project, which basically means that it provides some sort of financial services that's automated by software rather than the financial services we know such as borrowing and lending that's facilitated by a bank or a human intermediary. And this project hasn't even really launched yet, but it's attracted a lot of attention.

We don't have too many details about the project right now. So far, we just know that it's a decentralized project that will involve stablecoins. So stablecoins, so just for anyone who's not familiar, a cryptocurrency aimed at maintaining a set exchange rate with a government-issued currency, is that right? Yes. Stablecoins are a type of very popular cryptocurrencies that's usually packed to government issued currencies like the US dollar and US dollar packed stable coins such as tether or USD coin are the most popular type of stable coins. So that just goes to show you that a lot of people outside of the US want to access the US

dollar and it's widely used by traders. However, they've also got a very controversial reputation because sometimes they're used for terrorism financing and drug trafficking and other illicit activities. Vicki, we should note that this week we reported that the team behind this project clarified that one of the things that it aims to do is to ensure the dominance of the U.S. dollar, though exactly how that will work remains an unanswered question, as does the actual nature of Trump's backing, right? I mean, besides Trump and two of his sons lending their support to the project on social media, we don't know, for instance, if they have a financial stake in it, right?

Yes, nothing has been disclosed. The Trump campaign didn't get back to us after repeated inquiries, but the World Liberty Financial spokesperson said they just can't say anything for now. That said, as you've reported, just the potential involvement of Trump and his children in a digital currency could create potential conflicts of interest if elected. And running a digital currency pegged to the dollar would open up even more questions because despite the fact that the president doesn't control the value of the dollar, they can take actions like running up deficits that can affect its value.

So a lot to be determined here. But just zooming back from all of this, Vicky, we are seeing the worlds of politics and cryptocurrency colliding in some novel ways here, aren't we? Yeah. So in a way, this year's election has almost become a crypto election to some people who are watching this space. The crypto industry has raised a lot of money for a few super packs that's trying to sort of elect crypto- friendly politicians and lawmakers to help the industry establish a regulatory framework and Trump in particular has started courting the crypto industry this year and he has made a series of

promises including the establishment of a national Bitcoin Reserve and the establishment of a presidential crypto council. He has also hosted fundraisers and invited a lot of the wealthy donors from the crypto industry. That definitely marks a dramatic shift from his prior position just a few years ago when he was saying that Bitcoin is a scam against the dollar. So many people see this digital currency project as sort of the latest iteration of that. That was Journal reporter Vicky Gehuang, who covers the cryptocurrency industry for us.

Vicky, thank you so much for the time. Thank you for having me. And that's it for What's News for Thursday morning. Today's show was produced by Daniel Bach with supervising producer 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. ["The Wall Street Journal"]