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Starbucks is serving up a change in leadership, tapping the head boss at Chipotle Mexican Grill as its next chief executive.
And who's better for business, Trump or Harris? As the 2024 presidential election draws closer, some financial leaders are still on the fence. The Democratic Party is unlikely to, you know, become as pro-business as the old Republican Party was. So they're kind of stuck in the middle in a few different ways. Plus, the U.S. is lifting its ban on weapons sales to Saudi Arabia.
It's Tuesday, August 13th. I'm Francesca Fontana for The Wall Street Journal. This is the PM edition of What's News, the top headlines and business stories that move the world today. Starbucks Today said that current Chipotle Mexican grill chief Brian Nicol will take over as CEO and executive chairman.
It's an abrupt management change, as Starbucks tries to turn around its business and contend with activist investors. Starbucks has spent weeks negotiating with activist investor Elliott Investment Management on ways it can address slowing sales and operating problems. Last week, the Wall Street Journal reported that another activist, Starbird Value, had taken a stake in the coffee chain.
Founder Howard Schultz, who's publicly criticized Starbucks' current CEO, Lakshman Narasimhan, voiced his approval of Nickel, saying he has his full support. Meanwhile, activist Elliott said that while Nickel's appointment was a transformational step forward, it would continue discussions with Starbucks. Starboard CEO Jeff Smith said Nickel is uniquely qualified to run Starbucks.
The iconic Paramount Television Studios is shutting down this week, as its parent company, Paramount Global, works to cut costs. The studio's closing is part of a shakeup that will eliminate about 15 percent of Paramount's U.S. workforce, or about 2,000 jobs. The company said current TV shows and development projects will transition to Paramount's sister production unit, CBS Studios.
In markets news, stocks rallied in today's session after fresh economic data boosted investors' hopes that the Federal Reserve could cut interest rates by half a point next month.
U.S. producer prices rose by 0.1% in July, coming in below expectations, the latest sign of slowing inflation. And, all in all, the tech-heavy Nasdaq composite jumped 2.4%, the Dow Jones Industrial Average rose by 1%, or about 408 points, and the S&P 500 gained 1.7%.
Among individual movers, Starbucks shares rallied roughly 25 percent after the company announced a new CEO, the stock's biggest one-day percentage gain ever. Meanwhile, Chipotle tumbled 7.5 percent. We're exclusively reporting that the U.S. is lifting its ban on weapons sales to Saudi Arabia, reflecting the oil-rich kingdom's central role for the Biden administration's Middle East policy.
The U.S. will send Saudi Arabia shipments of bombs worth more than $750 million in the coming months, according to officials from both countries. Deliveries have been on hold since 2021, when President Biden halted the shipments over Saudi Arabia's punishing war in Yemen. WSJ National Security Correspondent Nancy Youssef has more.
Saudi Arabia has become a key partner for the United States on a number of issues. And having this sort of restriction really had become an irritant in terms of relations between Washington and Riyadh. And the hope was that by lifting this restriction, she would...
establish better security ties and a better diplomatic relationship such that they could potentially work together on things like ending the war in Gaza, like addressing threats from this group of rebels based in Yemen who are called the Houthis conducting
drone and missile attacks against commercial ships traveling through the Red Sea, which is one of the busiest commercial shipping waters in the world. It really speaks to how much the Biden administration's relationship with Saudi Arabia has changed from treating them as a quote unquote prior to really trying to woo Saudi Arabia. This comes in conjunction with the administration drafting a defense treaty with Saudi Arabia, as well as discussing plans to provide assistance to
So the kingdom can acquire civil nuclear power. Coming up, how many business people and Wall Street executives seem to have been left with no natural political home as the election gets closer. That's after the break. 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.
The Republican Party used to be synonymous with a pro-business mindset. All of that has changed since the rise of Donald Trump. He's been inclined to criticize companies in late-night tweets, and he says he plans to impose more tariffs that could raise prices and slow economic growth. Some business and financial leaders are increasingly apprehensive about Trump, but they're not convinced Kamala Harris is a better alternative. This leaves them in a tough spot, without an obvious candidate to align with.
My colleague, Pierre Bien-Aimé, spoke to Wall Street Journal financial reporter Miriam Gottfried and asked her how the Republican Party came to lose some of its appeal to Wall Street executives. Well, it's happened during the course of Donald Trump's presidency and then over the two times that he has run for president. Before his presidency in 2016, he cedered.
He seemed to embrace a lot of pro-business ideas and talked a lot about his priority of cutting taxes, which was consistent with what a lot of business people wanted. But over the years, that changed as he embraced more of the populist element of the Republican Party, bringing a lot of white working class voters into the Republican Party.
And those people tended to not really love the embrace of business in Wall Street. And so the rhetoric changed. And I think that change has been cemented by Trump's selection of J.D. Vance as his running mate, who is an outspokenly anti-Wall Street candidate. And are Democrats filling this political void in Wall Street that Republicans have opened?
Well, they are to some degree, but of course, Democrats are never going to be a party that outspokenly embraces the priorities of Wall Street and business. Lower taxes, for example, are not going to be on the agenda for Democrats. Lighter regulation will also not be on the agenda. Antitrust scrutiny, which some—
business leaders feel has been too heavy handed under the Biden administration is likely to continue under a Harris administration. So many of these things practically will not change. And the Democratic Party is unlikely to, you know, become as pro-business as the old Republican Party was. So they're kind of stuck in the middle in a few different ways. Well, how is Wall Street looking at this choice that they'll be making as a
Some people are saying, you know, are there still some technocrats left in the Democratic Party? Are there still some people who are thinking about these policy issues like, you know, shoring up Social Security, fixing the budget deficit? Are there people who are still going to be focused on these types of issues instead of just kind of scoring political points with the left wing or the right wing? Some people are saying, you know, are there still some technocrats left in the Democratic Party?
CEOs and business leaders really want stability. You know, in general, they want to sort of have stability.
more checks on the isolationist and populist undercurrents than what they're seeing out of the Republican Party. And then some people are saying, you know what, social issues matter more to me. So I'm given that neither party is really going my way on the business front. I'm going to vote for Harris because more of these voters tend to be a little bit more left leaning on the social issues.
And business leaders, financial leaders, they're obviously a little more influential than just in the votes they cast. That's true. They have strong lobbying groups that represent their industries that can provide financial backing to one side or the other. And then, of course, those individuals themselves are often wealthy and can throw their weight around by making donations to one candidate or another. Also, because the race is so close, they're
it will really take winning over moderates for either side to win. So both parties have to be trying to convince these in-the-middle people that they're the better party. That was Wall Street Journal financial reporter Miriam Gottfried speaking to my colleague Pierre Bien-Aimé. The United Auto Workers filed federal labor charges today against former President Donald Trump and Tesla CEO Elon Musk,
alleging that they attempted to intimidate workers during their live conversation last night on Musk's social media platform X. Specifically, the union alleges that both men threatened workers who participate in protected labor activity, such as strikes. The UAW, one of the country's largest unions, endorsed Vice President Kamala Harris' campaign last month. Its president, Sean Fain, said Trump stands against everything the union stands for.
Representatives for Musk and the Trump campaign didn't respond to requests for comment. Today, Google debuted its new generative artificial intelligence bot, Gemini Live. The voice assistant will come built into the company's four new Pixel phones, but it's also available to anyone with an Android phone, the Gemini app, and a $20 a month subscription to Gemini Advanced.
WSJ senior personal technology columnist Joanna Stern spoke with Google's Rick Osterloh, who oversees Android, Chrome and Google's hardware businesses. He explained why the company persists with its Pixel smartphones despite their small market share. If you look at the macro picture, there's all sorts of different kinds of smartphones. Android fortunately supports all of them. You know, there's
Phones that cost almost $2,000. There's phones that are very affordable. We try to support all of them with Android. That's a big philosophy is to give users choice. And Pixel's really focused in a small part of the market, which is premium smartphones trying to be on the leading edge of innovation. And if you zoom into that space, it's actually much larger than it seems.
So in the premium smartphone space above $400, Pixel's actually the second largest Android player. And so I think that's a little surprising to people, but it just goes to show how many phones there are in the world. And fortunately with our platforms, we can serve everyone. And you can watch Joanna's exclusive interview and how she put Google's Gemini Live to the test on WSJ.com.
And that's What's News for this Monday afternoon. Today's show was produced by Pierre Bien-Aimé and Anthony Bansi with supervising producer Michael Kosmides. I'm Francesca Fontana for The Wall Street Journal. We'll be back with a new show tomorrow morning. 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.