The Democratic National Convention Kicks Off. Here’s What to Watch For.
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Learn more at C3.ai. This is Enterprise AI. Grand alliances, secret pacts, betrayal. It's all in a day's work in the booming market for low-rated corporate debt. And what does Kamala Harris need to achieve at the Democratic National Convention kicking off in Chicago?

Her goal here and the Democratic Party's goal here is to reintroduce her to the country and make an argument for what she would do if she won in a way that's attractive to voters. Plus, British tech entrepreneur Mike Lynch is missing, along with six others, in a superyacht sinking. It's Monday, August 19th. I'm Luke Vargas for The Wall Street Journal at the Democratic National Convention in Chicago. And this is the PM edition of What's News, the top headlines and business stories that move the world today.

A month ago to the day Republicans were leaving Donald Trump's convention in Milwaukee with wind at their backs. Trump was up in the polls while Democrats were in disarray and wrestling over whether President Biden should drop out of the race.

Suffice it to say, a lot has changed in the months since. And while Biden will be on stage tonight for a convention that until weeks ago was meant to be all about him, his name is pretty much absent here at the United Center and around Chicago as Kamala Harris and Tim Walz prepare to be at the center of attention. Ben Pershing is The Wall Street Journal's politics editor.

Ben, what does Kamala Harris need to achieve here, politically speaking, given that I think we can say, logistically speaking, so much really has fallen into place for her in the last month or so?

So what's unusual for her, given that she's the sitting vice president and people know her, is that in some ways people don't know her that well. A lot of Americans may not know what she stands for or what she would really do as president. So her goal here and the Democratic Party's goal here is to reintroduce her to the country and make an argument for what she would do if she won in a way that's attractive to voters. Have we seen that take shape?

It started to. We've seen her lay out some policy positions. She's talked more about the economy and how she would go after big companies, how she would combat inflation. But at the same time, there's a counter movement from the Trump campaign, from Republicans, to define her in a different way and to argue that she's way too liberal, her policies are way too liberal, and that she should be lumped in with all of the worst policies of the Biden administration. In terms of the things that have transpired in the last month, are there any lingering fissures within the Democratic Party?

party that she needs to try and mend over? So I think people are at peace with the idea that Joe Biden needed to step aside, that he endorsed Harris and that was the right move, and that she has quickly gathered support in the whole party. You're not hearing the coup word thrown around? Well, Republicans are throwing it around. Trump says it all the time, but I feel like he's speaking to Republicans when he says that. I don't think Democrats feel like there was a coup or that it was unfair that they were deprived of the chance to pick another candidate.

Democrats have almost universally coalesced behind Harris. Would that include progressives? They have with the possible exception of Gaza and Israel policy. And we're going to see a lot of that here this week. We already see protests out on the streets. That's a fissure that while Harris, you could argue, is better for progressives than Biden, she's still not where they want her to be on Israel. I've been hearing her at rallies. Sometimes you hear some discontent in the rafters.

people calling for a ceasefire now. And we did see her say, yeah, we should have a ceasefire now. But I guess the question is, is that enough to actually be a satisfactory answer? The interesting thing is her position that there should be a ceasefire now is also what Joe Biden has been saying. But Harris does have a reputation within the administration for being more sympathetic to the Palestinian side than Biden was.

So she has had these protests periodically. And you've seen her at various times kind of shut down the protests pretty firmly, but at other times saying, you know, we hear you, I respect your point of view. And I think Democrats this whole week will try to balance those two things, like respect your right to protest, but please don't disrupt our event.

I have to ask, coming out of the RNC, it was very clear that Donald Trump in many ways is the Republican Party and has molded it around him. I'm looking at the keynote speakers this week and I'm getting a pretty different vibe here. Harris surrounding herself with many past Democratic leaders, members of the Democratic establishment, if we want to call them that. What does that tell us about where Harris and this party are going? That's a good point. You know, one interesting thing about Democrats is they just have this continuity where they respect

Bill Clinton and Barack Obama and Hillary Clinton, and then they show up to endorse the next person. What you saw at the RNC was that Trump had no former nominees there. It's all about him. He does not want to be seen as a continuation of Bush or Romney or anyone like that. He's his own person. As you said, the party is him. With Harris, it's different. The party's bigger than her. I think they're trying to convey that. But the risk Democrats have is that if too much of this week is about the past,

then it might muddle Harris's message to be looking to the future. Finally, we can see Clinton's, Obama's, a Pelosi slot, you know, our headliners over the next few days, primetime speakers. And yet conventions, as we know, can often give a boost to a potential future leader. Who are you keeping your eye on elsewhere in the program over the next few days?

Right. So, I mean, even though everyone here is, of course, behind Harris, there's always this question is like, well, who's going to be our next nominee, whether it's 2028 if she loses and 2032 if she wins. And so you have some rising stars in the party who will be here this week. Gretchen Whitmer, the Michigan governor, has long been rumored as a possible future candidate. Wes Moore, the governor of Maryland, I think everyone sees as a super charismatic and smart politician who might just need another cycle or something before he's ready. So it's interesting to watch those people kind of work the rooms all this week in Chicago.

Ben Pershing is The Wall Street Journal's politics editor. Ben, thanks. Thanks for having me. And coming up, how U.S. companies struggling to repay their low-rated bonds and loans have increasingly squeezed concessions from lenders. And the rest of today's news with Danny Lewis after the break. This message comes from Wall Street Journal sponsor C3AI.

C3 Generative AI enables rapid access to secure, traceable, hallucination-free insights from enterprise systems, all while using any LLM, helping enterprises turn the invisible into the obvious. Learn more at C3.ai. This is Enterprise AI. U.S. companies struggling to repay their debt are taking a new tactic, squeezing concessions out of lenders by pitting them against each other.

The private equity firms and wealthy individuals who own most of the companies call the deals liability management exercises. Debt investors call them creditor-on-creditor violence. Analysts say these deals are on the rise. WSJ credit reporter Matt Wirtz is here to explain how it works. Matt, what kinds of companies are we talking about here and how extensive is this? These are companies that...

First of all, have a lot of debt. That's the one thing that across the board that unifies them because they have a lot of debt. When interest rates go up and the interest cost of their debt rises, a lot of them are struggling right now. But this crosses industries. These are retail companies. These are technology companies, media companies, health care companies. Really, every aspect of the economy is impacted by this.

The other thing that unifies them is almost all of them are owned by private equity. That's why a lot of them have debt, is that these private equity companies that buy them, they usually use debt that is borrowed by the target company itself to finance the purchase. How did these so-called liability management exercises work? It's basically like setting the investors that lent a lot of this money either by buying bonds or buying loans to

It's setting them up for a prisoner's dilemma. So the private equity firm that owns the company, it knows who owns almost all the bonds of the company and all the loans of the company. And so it might approach some of them and say, we want to restructure our debt. We basically need to cut our interest rate and we can't afford all this debt. What we'll do is we will take the debt that you own, we'll exchange it into something else.

lower interest rate, but we'll give you some bells and whistles. Like we might give you the opportunity to earn more. And as a result of that, you're going to be in a better position relative to the other lenders that don't participate in this transaction. In some cases, but in very few, the investors that the private equity fund approaches might say, you know what, we would never do that to our fellow lenders. But usually what

ends up happening is the fear of the private equity firm then going to somebody else and saying, hey, we have this special deal is enough of an incentive to the bondholder to say, you know what, this kind of stinks and I feel bad about doing this, but I have to protect my investors. And so I'm going to go ahead and do it. And that's why this is called creditor on creditor violence, because it's essentially incentivizing one group of lenders to defund

defect on the others. Matt Wirtz covers credit for The Wall Street Journal. And in the U.S. markets, stocks kept riding their hot streak today, with both the S&P 500 and the Nasdaq Composite logging their eighth straight day of gains. The S&P 500 rose 1%, the tech-heavy Nasdaq advanced 1.4%, while the Dow Jones Industrial Average climbed 0.6%, or roughly 237 points, to notch its fifth straight day of gains.

In other news, General Motors is laying off more than 1,000 employees globally in its software and services division. A person familiar with the matter says the cuts include about 600 people based around the company's Detroit-area headquarters. The move comes after a hiring binge in recent years and about two months after GM appointed a pair of former Apple executives to oversee the digital aspects of its business. A spokesperson says the company must simplify for speed and excellence.

A British tech entrepreneur is one of several people missing after a luxury superyacht sank off the coast of Sicily. Italian officials say Mike Lynch was among the 22 people aboard the vessel when it was hit by a severe thunderstorm. Lynch is a leading figure in the UK tech industry and was recently acquitted of fraud charges brought against him by the US government more than a decade ago. Officials say rescue efforts are still underway.

And expelled former U.S. Congressman George Santos has pleaded guilty to criminal charges, averting a federal trial that was supposed to start next month. The New York Republican pleaded guilty to committing wire fraud and aggravated identity theft at a hearing in Brooklyn federal court today. Santos had been facing 23 felony charges, including that he embezzled campaign contributions, fraudulently obtained unemployment benefits, and filed false federal disclosure forms.

The House voted in December to expel him. Only the sixth such expulsion from the chamber. And that's What's News for this Monday afternoon. Today's show was produced by Pierre Bien-Aimé, Anthony Bansi, and Ariana Osberu, with supervising producer Michael Kosmetes. I'm Luke Vargas for The Wall Street Journal at the Democratic Convention in Chicago, and Danny Lewis is at our New York office. We'll be back with a brand new show tomorrow morning. Until then, thanks for listening.

This message comes from Wall Street Journal sponsor C3.ai. C3 generative AI enables rapid access to secure, traceable, hallucination-free insights from enterprise systems, all while using any LLM, helping enterprises turn the invisible into the obvious. Learn more at C3.ai. This is Enterprise AI.