WSJ What’s News - Chinese Markets Cheer ‘Economic Bazooka’

Episode Date: September 27, 2024

A.M. Edition for Sept. 27. Chinese stocks rally to close out their best week in years. The WSJ’s Jonathan Cheng says a raft of stimulus measures indicates that Beijing has gotten over its reluctance to intervene more forcefully on the economy. Plus, Hurricane Helene rips through Florida and heads north, leaving millions without power. And, the WSJ’s Peter Landers explains what Japan’s next leader, Shigeru Ishiba, could mean for markets and for the country’s relationship with Washington. Luke Vargas hosts.  Sign up for the WSJ’s free What’s News newsletter.  Learn more about your ad choices. Visit megaphone.fm/adchoices

How do stop losses work on Kraken? Let's say I have a birthday party on Wednesday night, but an important meeting Thursday morning. So sensible me pre-books a taxi for 10 p.m. with alerts. Voila! I won't be getting carried away and staying out till 2. That's Stop Loss Orders on Kraken, an easy way to plan ahead. Go to kraken.com and see what crypto can be. Non-investment advice. Crypto trading involves risk of loss. See kraken.com slash legal slash ca dash pru dash disclaimer for info on Kraken's undertaking to register in Canada.

Millions are left without power after Hurricane Helene rips through Florida. Plus, two pay TV rivals close in on an elusive deal, and Chinese stocks close out their best week in years after Beijing shifts gears to shore up the economy. The signal is being sent that the government is on the case. The very fact that you have Xi Jinping chairing a meeting that was on economics and on economic policy, that matters. It's Friday, September 27th. 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 begin along America's Gulf Coast where Hurricane Helene made landfall overnight as a category four storm that forecasters warned was packing potentially unsurvivable rain and storm surge in some areas. Helene has since weakened after passing over the Florida Panhandle, but is still delivering hurricane-force winds as it moves north across Georgia. According to the National Weather Service, flooding is expected in Georgia today, while Tampa and Tallahassee airports remain closed until damage is assessed.

According to PowerOutage.us, some 2.5 million customers were without power across Florida, Georgia, and the Carolinas as of early this morning. A diplomatic effort to establish a ceasefire between Israel and Hezbollah has come into doubt as Israel presses on with strikes against the militant group. The Israeli military said it hit some 220 targets in Lebanon since late Wednesday, while Lebanese authorities last night said at least 90 people had died in the attacks over the past 24 hours. Former Japanese Defense Minister Shigeru Ishiba has been tapped to be the country's next

prime minister, a selection that could carry diplomatic and economic significance. Our Peter Landers in Tokyo told me that despite taking hawkish stances on defense, Ishiba has chafed at the asymmetry of Japan's alliance with the U.S., including the fact that Japan shoulders most of the operating costs of American bases in the country, but has permitted little access to them. He's basically pro-U.S. He wants a stronger defense. He does see a threat from China. So in that sense, there's no fundamental dispute or disagreement that would harm relations with the U.S. But on some of these sort of points of pride, you might say,

there could be a little bit of tension or uneasiness with Washington. To make the alliance more equal, Ishiba has floated converting U.S. bases into joint bases, permanently basing some Japanese troops on U.S. soil, and backed the establishment of an Asian version of the North Atlantic Treaty Organization, or NATO, to boost deterrence against aggressors. And Peter told me that Ishiba's economic ideas are also getting the attention of markets, with the yen already strengthening against the dollar. He defeated another candidate, Sanae Kakaichi, who would have been Japan's first female Prime

Minister. And she was definitely in the reflationary faction. And that means more government spending to boost the defense industry and to boost Japan's military forces. Ichiba is, I guess, more of conservative. This year, he at one point advocated raising interest rates on the view that we've had zero interest rates long enough, we should return to what he would describe as a more normal monetary regime, the more traditional view of Japanese government debt as a problem. And that is likely to be, I would say, all things equal, bad for stocks and good for the yen.

Chinese stock markets have closed out one of their best weeks in years, following several announcements in recent days meant to inject confidence into the world's second largest economy. Those moves come after months of warnings from economists that more needed to be done, and the question now is will those steps be enough? Jonathan Cheng is The Wall Street Journal's Beijing bureau chief. John Wee featured several short headlines on the podcast throughout the week about interest rate moves by the People's Bank of China. We mentioned a special Pollock Bureau meeting yesterday focused on the economy and attended

by Xi Jinping. Separate the news from the noise for us if you could. What's been most important about what we've seen this week? Yeah, you know, in China, it's not always the specific policies that are the most important. The most important is the signal that is being sent in here. The signal is being sent that the government is on the case. The very fact that you have Xi Jinping chairing a meeting that was on economics and on economic policy, that matters because people who watch this sort of Kremlin ology around Beijing

Will note that this wasn't the time of year when the Politburo typically meets to talk about the economy so they were coming out and talking out of cycle about the economy and Again short on specifics, but the very fact that they were coming out and doing this Looks like the government is trying to say to everyone we're here. We're out in force and it's not quite We'll do what it takes, but it's something akin to that. I mean, let me probe on that. Are these steps enough?

When we heard, in spite of the many economic challenges that China's faced this year, that officials this week still think a 5% growth target is in reach, it raises the question, I think, are these reforms really meant to meaningfully overhaul the economy or just hit some short-term targets? The 5% growth target is one thing, but it's not the be-all end-all because we all know the calendar flips and you get into 2025 and they still need to do something with the economy. I think the question is more, are they acting now in such force and with such urgency because they now see the bottom falling

out of the economy that things really have gotten so dire that they do need to act that even though they have these other priorities and they'd like to not bail out the economy as it were there's a real moralistic tendency here and they've had to overcome that with what they've rolled out in the last few days but ultimately it's a question of confidence. The question is, do people believe it? Do people believe that now is a good time to go and buy a property, for example, addressing one of the big issues that China has in its economy. We certainly have seen stock market investors get excited.

And part of the measures that the government did roll out this week were aimed specifically at shareholders and at people who buy and sell stocks. So that was a target and mission accomplished so far. Of course, the markets are off for seven days starting next week for a long holiday here. So people will have some time to cool their heels, reflect on what the government has done so far and decide whether or not they really believe that this is the bottom, that a corner has now been turned by the Chinese government. And things like housing sales will have to wait a few months. That's right.

That will take longer. And of course, buying stocks is relatively easy and you can buy fewer or more, but buying properties, well, that takes a little bit more confidence. So we'll see whether or not they're able to move the needle on that front. John Chang is The Wall Street Journal's Beijing bureau chief. John, thanks as always. Thanks for having me. Coming up, DirecTV and Dish are close to a deal

that has eluded them for years. And U.S. safety officials flag a potential hazard in Boeing's 737 planes. Those stories and more after the break. Looking for a path to accelerate your career? after the break. You will find it at York University School of Continuing Studies, where we offer career programs purpose-built for you. Visit continue.yorku.ca We are learning that Direct TV is in advance talks to acquire its satellite TV rival Dish in a deal that could create one of the country's largest pay TV distributors.

The two companies have flirted with a merger before, but decades of attempts to combine have thus far been unsuccessful. Journal reporter Ben Dummett says this time around though, it's looking more likely the two companies will strike a deal. This deal comes together when both are negotiating from a point of weakness. Both have been losing customers to streaming services. By combining, they're going to be able to cut costs by eliminating duplicate services, and that will help them actually conserve cash to pay off these looming debt payments

that they face. All that said, there's no guarantee this deal will actually complete. That's because it's going to face regulatory scrutiny. Question will be whether regulators see the pay TV market as competitive enough after this deal is completed, and similarly whether they see the satellite TVs future bleak enough for the deal to proceed. Bloomberg reported earlier that the two companies were close to an agreement. The deal could be finalized as soon as Monday, assuming talks don't fall apart. The National Transportation Safety Board has urged the Federal Aviation Administration and Boeing to address a potential hazard on around 350 of Boeing's 737 models that are currently in service.

That's after an incident on a United Airlines flight back in February where according to the NTSB, a flaw led to cockpit pedals that controlled the plane's rudder getting stuck. Rudders are movable parts on the vertical fins at the back of planes, and pilots often use them to steer during takeoff and landing. The NTSB's recommendations, which were issued yesterday, don't necessarily mean the 737s in question will be taken out of service. The FAA said it would consider corrective actions, and Boeing said it was reviewing the recommendations and would develop additional guidance. And in news moving markets today, shares of pharmaceutical company Bristol-Meyer Squib jumped in off-hours trading after the U.S. Food and Drug Administration approved a new treatment for schizophrenia yesterday.

The drug, which is the first new kind of treatment in decades, could help to stabilize symptoms without the uncomfortable side effects that come with existing drugs currently used by many patients. And on deck today, economic data is set to be in the spotlight yet again, with investors awaiting the release of the Fed's preferred inflation gauge at 8.30 a.m. Eastern. The Personal Consumption Expenditure's price index is expected to show that price pressures continued to ease in August. And that's it for What's News for Friday morning. Today's show was produced by Kate Bullivant with supervising producer Christina Rocca

and I'm Luke Vargas for the Wall Street Journal. We will be back tonight with a new show. Otherwise, have a great weekend and thanks for listening.