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We could all use more time. Amazon Business offers smart business buying solutions so you can spend more time growing your business and less time doing the admin. Learn more at AmazonBusiness.com. President Biden defends his decision to drop his reelection bid, but signals that he's got more work left to do.
Plus, how the luxury industry is reacting to Chinese consumers tightening their purse strings. When you speak to luxury executives about, OK, so if you're not getting the growth from China, where can you get it? The line that comes back quite often is the next China is China. They're continuing to advertise in the market and obviously they can't all succeed. But what they're all trying to do is move a little bit up market. And the NBA inks a landmark TV and streaming deal.
It's Thursday, July 25th. 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.
Last night, President Biden gave his first address from the White House since he dropped out of the 2024 presidential race. Speaking softly and seeming pensive, Biden didn't directly address the debate performance nearly four weeks ago that raised serious questions about his age and his ability to serve a second term. But he did stress that it was time for a new generation of leaders and that his decision to end his reelection bid was in service of U.S. democracy. You know, there is a time and a place.
for long years of experience in public life. There's also a time and a place for new voices, fresh voices, yes, younger voices. And that time and place is now.
While some leading Republicans, including House Speaker Mike Johnson, have called for the president to step down entirely, Journal-White House reporter Annie Linsky says Biden made it clear he's not going anywhere. The president laid out a number of domestic policy priorities, including focusing more on a cancer moonshot, his work on climate change, efforts to shore up and reduce gun violence, and also an effort for ethics reform on the Supreme Court.
The president also talked a little bit about foreign policy priorities, saying that he wants to continue to rally countries that are trying to defend Ukraine and he wants to continue to work for peace in the Middle East.
The president did not talk at all about the sort of process of picking a successor. So, you know, it remains an open question about whether he has any regrets about his decision to step down now rather than earlier, which would have given the Democratic Party more time for a fuller vetting, a more traditional primary process. The once-in-a-generation job market that saw red-hot hiring and rock-bottom unemployment is coming to an end.
With unemployment ticking higher, many economists see a job market that's come back into balance. And while the market is still healthy by many measures, signs of difficulty are creeping in. Vanessa Furmans covers careers in the workplace for the journal, and she says that is particularly true for college graduates who are struggling to break into the workforce.
When graduates were graduating a couple of years ago, a lot of people in the workforce were job hopping to new jobs. Companies were desperate to fill holes in their organizations. And now that turnover has really ceased. People are no longer quitting at the rates that they used to, and they're holding on to the jobs they have, partly because the job market has cooled and partly because wage growth for people who change jobs has also cooled.
So younger people are just not finding the same number of openings that there were before. And speaking of the world of work, have you ever been a digital nomad taking your job to another state or maybe even to another country?
If so, we'd love to hear how that went, how you managed or didn't manage your taxes, and if you're still enjoying the flexibility that existed in the wake of the pandemic. And if you're a business owner, what's your mobility policy and has it changed with time? To weigh in, send a voice memo to WNPOD at WSJ.com or leave a voicemail with your name and location at 212-416-4328. And we just might use it on the show.
The NBA has signed landmark TV and streaming deals worth $77 billion with Amazon, Disney's ESPN, and Comcast's NBCUniversal after rejecting a matching 11th hour bid from current rights holder Warner Brothers Discovery. The new 11-year deals kick in after the 2024-25 season and more than double the fees that the league receives each season.
The new deal sets the stage for a potential legal challenge from Warner, whose TNT network had exercised a clause in its contract that gave it the right to match a rival bid. And we are reporting that Rupert Murdoch's plan to hand control of his media empire to his eldest son Lachlan has triggered a legal fight within the family.
Murdoch, who's 93, controls a trust that holds the family's substantial stakes in News Corp., the parent of The Wall Street Journal, and Fox News parent Fox Corp. And under its terms, voting control would pass to four of his children when Murdoch dies.
However, people familiar with the situation say recent attempts by Laughlin to amend the trust to consolidate his power have encountered stiff resistance from his three siblings who were slated to inherit some control, sparking a legal battle in a Nevada probate court, according to our reporting. A restructuring of the trust could affect any major mergers or other strategic transactions that News Corp or Fox pursue.
The New York Times earlier reported on the legal battle within the Murdoch family. Coming up, as China's economic troubles become a main theme in luxury companies' earnings, reporter Nick Kostoff shares how the likes of LVMH and Caring are responding. That's after the break.
Two of the world's leading luxury goods companies this week reported disappointing earnings as shoppers in China, the engine of the industry, continued to rein in spending.
LVMH, the owner of Louis Vuitton and Dior, said that sales in its Asia market dropped 14 percent over the three months ending June 30th. And last night, Gucci owner Kering reported a 25 percent drop in quarterly revenue in Asia-Pacific, sending its shares lower this morning.
Journal reporter Nick Kostoff covers luxury goods for us out of Paris. And Nick, you have characterized this trend at play as China malaise, and evidently it's hitting smaller fashion brands even harder than it is for LVMH and Kering. Yeah, exactly. The industry for the last couple of decades has been heavily reliant on growth from Asia and the rise of the Chinese middle class in particular. And what we've seen since COVID is not only was there not a COVID bounce really, but that middle class has really reigned in spending.
And there's not much growth elsewhere for these luxury companies at the moment. And so that's really hit them. And it's hit the more kind of fashion companies, the ones that really cater to the middle classes, to what they call the aspirational consumers, even more.
This China malaise has now been a trend for several consecutive quarters, as I can see very clearly going back through your reporting archive. What is the sense within the industry about when Chinese consumers are going to return to prior spending levels? And is there a fear they actually just might not ever? There is a fear that they might not ever. The optimists will look at the savings rate because right now the Chinese middle class is intending to save and the
Obviously, the Chinese Communist Party is trying to sort out this economy. And if they manage what luxury executives are saying is that the saving rate is so high, that we could get a very quick, very robust recovery. There's also the kind of more pessimistic outlook, which is that the growth that has powered the industry for the past 20 years is a thing of the past, that it's still going to be a very good market and that GDP growth is still expected to be
5% this year, but it's not going to be what we saw kind of from the mid 2000s until pre-COVID times. And just to be clear, I mean, we've seen a trend play out, let's say, in smartphones, in electric vehicles, where foreign brands, often ones that commanded higher prices, are seeing a drop in sales at the expense of national upstart brands. Do you think that's going to be a trend?
That's not a trend here, right? It's just that the consumers are pulling back, but they're not buying Chinese handbags, Chinese jewelry instead of the ones from European luxury houses, just to be clear.
Yeah, certainly not to the same extent. Right now, there are no big Chinese competitors to these European luxury brands. But what we are starting to see is that as these middle classes are hit hard economically or are less confident to spend, they are starting to trade down from luxury to more affordable brands. And there, there are some Chinese competitors.
Tell us more about that and any other bright spots the industry is turning to, strategies they might be employing to try and strengthen themselves for the future so they're not just, I guess, waiting for the Chinese consumer to come back. What are we seeing? None of them really believe that they can replace the growth from China with somewhere else. And so they're doubling down on China as much as possible. They're continuing to advertise in the market. And obviously they can't all succeed. But what they're all trying to do is move a little bit up market.
So for instance, I recently did a story about Gucci and because they're a fashion brand, they go in and out of fashion. So yeah, the billionaire owner of the company, what he's trying to do is be less reliant on the kind of trendsetters who tend to be very influential when they're on your side, but they're also quite fickle and move a little bit up market to get some of these kind of wealthier consumers who spend
whether the economy is going well or not. The other thing to say about China is that the numbers you cited at the beginning, obviously they're down, but it's also because the Chinese are starting to travel again. For the longest time during COVID, all of Chinese spending happened in
in China. Now, because of the very, very weak Japanese yen, the Chinese are spending in Japan a lot. And at the moment, prices are at roughly 20% discount in Japan rather than China. So if you're buying a $5,000 handbag, you're saving $1,000 by getting it in Japan. And so Japan has grown hugely. I think it was up almost 70% to LVMH.
And a lot of that is Chinese consumers going to Japan because they can get the same handbag for cheaper. That was Wall Street Journal reporter Nick Kostov, who covers luxury goods for us in Paris. Nick, thanks as always. Thank you very much. Thank you.
And in other markets news, we're watching a comparably weak yen, maybe disappointing luxury brands used to transacting in euros. But the currency has now hit a nearly three-month high against the dollar. That is on expectations that the Bank of Japan is increasingly likely to raise interest rates at its next policy-setting meeting next week.
Refrigerated storage company Lineage is set to raise $4.4 billion today in the largest IPO of the year so far. The listing comes as the cold storage market has heated up, as consumers have purchased more fresh and frozen food in response to the pandemic and high inflation.
The day may be young still, but we've already seen a flurry of earnings reports, including from Nestle, which has trimmed its sales guidance as cost-conscious shoppers look for cheaper alternatives to branded products. The company's Swiss-listed shares are trading lower. And Chrysler parent Stellantis said it's considering production and price cuts after reporting a nearly 50 percent drop in profits on the year.
The maker of Jeep, Dodge, and a dozen other brands is seeing more cars sitting at U.S. dealerships and is hoping marketing can help clear excess inventory. Its shares slumped in morning trading.
And a reading of U.S. GDP for the second quarter is due at 8.30 a.m. Eastern. Economists polled by the Journal are expecting growth of 2.1 percent. That follows a surprisingly weak 1.4 percent rate in the first quarter, but would be far below the 3.4 percent rate seen in the final three months of last year.
And that's it for What's News for Thursday morning. Today's show was produced by Kate Boulivant and 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. And until then, thanks for listening. ♪
We could all use more time. Amazon Business offers smart business buying solutions so you can spend more time growing your business and less time doing the admin. I can see why they call it smart. Learn more at amazonbusiness.com.