WSJ What’s News - Why Elon Musk’s Rivals Worry About His Power in the Trump Administration

Episode Date: December 2, 2024

P.M. Edition for Dec. 2. WSJ reporter Keach Hagey discusses how Elon Musk's ascent to power alongside President-elect Donald Trump could threaten his business rivals. And manufacturing reporter Bob Tita explains why U.S. steelmakers want Trump to levy more tariffs on international competitors. Plus, Intel’s CEO resigns after struggling to turn the chip maker around. Tracie Hunte hosts. Sign up for the WSJ's free What's News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

Three, two, one. What will the world look like 10 or 20 years from now? The Wall Street Journal's Future of Everything podcast is here to give you a peek. And we can't wait to show you what's coming. Subscribe now. How Texas could offer a blueprint to the incoming Trump administration's plans for a mass deportation of migrants. And why rivals of Elon Musk worry about the power he'll have in the new administration. He loves to talk about enemies. He's very energized by having enemies. That's what

people close to him say. Plus, Intel's CEO is stepping down after four years. It's Monday, December 2nd. 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. Investors have flocked to a pair of turbocharged exchange traded funds that seek to amplify the daily return of micro strategy, even as the risks aren't widely understood. You might remember us telling you about MicroStrategy last week, the software company that has turned itself into a Bitcoin buying machine.

Well, today, it announced that it snatched up another $1.5 billion of Bitcoin last week. It now holds more than 402,000 bitcoins worth more than $38 billion. Bullish investors have swelled the company's market value to almost $90 billion, or more than twice the value of the bitcoin it holds. But these ETFs haven't been working as intended in recent days. Jack Pitcher covers markets for the Wall Street Journal. These are new products that first got approved by regulators about two years ago, and they use derivative bets or borrowed money to try to achieve a target leverage on the underlying stock. What's different here with these micro strategy funds, which are new, they just launched a couple of months ago, is that the dealers that these fund managers use aren't offering them enough swap exposure for them to get the return that they're targeting. There's risks involved with the

fund managers and some of the big banks that often provide this kind of exposure aren't willing to do so. So I've seen several people call these funds the most volatile ETFs in the entire market. Just at their base level, even if they are working as intended, we're looking at a product that is trying to double the daily return of an extremely volatile stock that itself trades related to how Bitcoin is trading. Bitcoin is a very volatile asset that's not backed by any hard assets. And all of this is leading to a very volatile asset that could get completely wiped out if Bitcoin started

to fall a little bit. US markets were mixed today. The S&P 500 closed about 0.2% higher and the Nasdaq was up about 1%, kicking off the first trading session of December on a high note after November's hot streak. The Dow ended the day down about 0.3%. US manufacturing activity contracted for an eighth straight month in November, albeit at a less sharp pace, reflecting the challenge for the incoming Trump administration to revive this struggling industrial sector. The Institute for Supply Management today said its Purchasing Manager's Index of Manufacturing

Activity remained in contraction territory. It was 48.4 in November, up from 46.5 in October, which marked a low for twenty twenty four. A value under 50 indicates a contraction. Some U.S. steel manufacturers are not only backing President-elect Donald Trump's plans for tariffs on Mexico and China, they want him to go even further. The Steel Manufacturers Association today called for tariffs to be reimposed on steel from the UK, the European Union, and Japan. Bob Tieta covers manufacturing and the metals industries for the Wall Street

Journal. Bob, why are so many steel makers in the US so enthusiastic about getting more tariffs on more countries. Back in 2018, then President Donald Trump imposed tariffs on imported steel and aluminum. The steel industry credits those tariffs with helping them boost profits, boost steel prices, expand payrolls, and ultimately expand production in the United States. So what do steel makers want the new administration to do? What they would like is tariff extended to some of the countries that had their tariffs scaled back under the Biden administration. They would like those countries to be sort of reinvestigated or renegotiated those quota

amounts. And is the industry hopeful their calls will be answered? The steel industry and the aluminum industry to a lesser extent have both been kind of favored industries of the previous Trump administration and there's some expectation that they will be again. Steel in particular has become a sort of a preoccupation for both the Trump and Biden administration, something that the steel executives are basically tuning into. That was our reporter Bob Tita. Coming up, why rivals of Elon Musk fear he will target them with his new power in the

incoming Trump administration. That and more after the break. What then will the future reveal? There's one thing we know about the future. It's being built now. We all have a stake in the future. The future. The future. The future. The future.

The future. And the Wall Street Journal's Future of Everything podcast is here to give you a glimpse of what's on the way. I'm Danny Lewis. Join us as we dig into how science and technology are shaping the future. For that is where you and I are going to spend the rest of our lives. Subscribe wherever you get your podcasts. After plowing $200 million into President-elect Donald Trump's campaign and being appointed to the newly created advisory panel, the Department of Government Efficiency, Elon Musk is poised

to have significant influence not only over how his six companies interact with the federal government, but also over how the new administration treats his business rivals. These rivals are now concerned that as Musk has reached an unprecedented level of power for a private citizen, he continues to nurse his own private business grievances. WSJ reporter Keach Hagee covers media and marketing. Keach, who's on the Musk enemies list? Well the list is long but these days near the top of it is OpenAI CEO Sam Altman who Musk co-founded OpenAI with and who has been suing him over this year after things went sour. Also on the list are folks like Bill Gates and Mark Zuckerberg and Jeff Bezos,

all billionaires that he has tussled with over the years, as well as rival car companies and space companies who are really stressed out about this new position he holds. He posted on X that he's President-elect Trump's first buddy. From his position as first buddy, how can Musk potentially hurt some of these companies and these individuals? Musk has been at President-elect Trump's side almost nonstop since the election. So he is sleeping at Mar-a-Lago. He is in the inner circle. And so at this moment during this transition, he's a very

influential voice that other folks are having to go through in some cases to get to President-elect Trump. So just being influential about what kind of cabinet picks or other kind of administrative appointments are happening is a big part of it. He's publicly pushed for folks like Brendan Carr to lead the FCC, which does have jurisdiction over some of his companies. And longer term, there are concerns across rival tech companies that he is going to invite antitrust scrutiny against folks like Google and Facebook rivals to X and use the levers of power across many federal agencies to perhaps, at least he has the ability to enrich himself and hurt his rivals.

So a Trump campaign spokesperson said the president will serve all Americans and Musk himself did not respond to requests for comment, but he has said on X that he hasn't asked Trump for any favors, nor has he been offered any. But I'm sure his rivals are still concerned. So what are they doing about it? Well, number one, they are trying to back channel and form relationships with the Trump inner circle that do not necessarily involve him. We've reported that since the election, Sam Altman, through a friend, has had a meeting

with Howard Letnick, who is the head of Trump's transition team and who has been tapped by him to lead the Commerce Department. And then of course, hiring lobbyists to try to build power and influence in Trump's circle. That was our reporter, Keach Hagee. Thank you so much, Keach. Thank you. As president-elect, Donald Trump is preparing for border restrictions and deportations, which were the bedrock of his election victory, Texas, the state that has pioneered extreme

immigration crackdowns, is reaching out to lend a hand. In recent weeks, Texas leaders offered some 1,400 acres of land on the border to the federal government for construction of deportation facilities and said the state was looking to offer more. Elizabeth Vindel, a WSJ reporter based in Texas, says the state could provide a model for the Trump administration. In 2021, Texas Governor Greg Abbott started this very sweeping project to address illegal immigration at the southern border and also to challenge the federal government's authority over border and immigration issues.

The state has done that on a number of fronts. They have surged thousands of National Guard and state troopers to the border for long deployments. They have started this system of arresting migrants on misdemeanor state trespassing charges. They have started programs to build state barriers from border wall to these buoy barriers in the river itself. And all told, the state has spent more than $11 billion on this over the last three and a half years.

You know, it has created some things that the Trump administration could use and the state has shown that they are eager to work with them. In business news, Intel CEO Pat Gilsinger has departed abruptly after four years at the helm. Intel was once a dominant name in the semiconductor space, but it largely missed out on the AI boom, while rivals like NVIDIA and advanced microdev devices have zoomed ahead. The company named CFO David Zinsner and Michelle Johnston-Holthouse, General Manager of Intel's Client Computing Group, as interim co-CEOs.

And server maker SuperMicroComputer said a final review showed no evidence of fraud or misconduct by its management or board relating to accounting issues that have dragged on the stock in recent weeks. In October, Ernst & Young resigned as the auditor for Supermicro, saying it could no longer rely on management's representations. In response, the company created a special committee which completed the review. On the committee's recommendation, Supermicro will also appoint a new CFO to strengthen corporate governance and support the company's growth.

And that's what's news for this Monday afternoon. Today's show was produced by Pierre Bienneme and Anthony Bansi with supervising producer Michael Kosmitis. I'm Tracy Hunt for The Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening.