0:00

The Capital Ideas Podcast now has a

0:02

new monthly edition hosted by Capital Group

0:04

CEO Mike Gitlin. Investment professionals reveal their

0:07

best mentors, how they find their next

0:09

great idea, and a few funny stories.

0:11

Subscribe wherever you get your podcasts. American

0:14

Funds Distributors Inc. The

0:19

Supreme Court issues a major Second

0:21

Amendment decision, and NVIDIA is

0:23

pushing the stock market to new heights. But

0:25

that might not be a good thing. Typically,

0:27

you buy the index because you want to

0:29

diversify your risk. You don't want to just

0:31

bet on an individual stock. But

0:34

increasingly, you are just betting on an

0:36

individual stock. Plus, why the

0:38

famously cool San Francisco is becoming a

0:40

hot summer destination. It's Friday,

0:42

June 21st. I'm Alex Osala

0:44

for The Wall Street Journal. This is the

0:47

PM edition of What's News, the top headlines

0:49

and business stories that move the world today.

0:51

The U.S.

0:55

Supreme Court has upheld a federal law

0:58

that forbids domestic abusers from possessing guns.

1:00

The 8-1 decision is the first major

1:03

test of the conservative majority's new approach

1:05

to gun rights, which says laws must

1:07

be consistent with rules from America's founding

1:09

era. Chief Justice John Roberts'

1:11

opinion says that while gun laws must

1:13

be in line with historical examples, it

1:15

is a mistake to conclude that weapons

1:18

regulations must be, quote, trapped in amber.

1:20

He says American law has long allowed disarming

1:23

people who are public safety threats. And

1:26

overseas, more than 1,170 people in Saudi Arabia have

1:28

died amid extreme heat during this

1:32

year's Hajj, which has drawn nearly 2

1:34

million Muslim pilgrims. Fatalities are

1:36

still being counted and are likely to rise.

1:39

It's the highest death toll at the Hajj since a 2015

1:41

stampede killed more than

1:44

2,000 people. In

1:48

corporate news, The Washington Post's new top

1:51

editor is no longer joining the newsroom.

1:53

The newspaper had planned to bring on

1:56

the British journalist Telegraph Deputy Editor Robert

1:58

Wynette after the U.S. election. But

2:00

the post has changed its plans amid scrutiny

2:02

of Winnet's past tactics as a journalist, and

2:04

it'll search for a new editor. Winnet

2:07

declined to comment through a telegraph spokeswoman.

2:10

There's something unusual going on at

2:12

Starbucks. Discounts. The coffee

2:14

chain has long positioned itself as a

2:16

premium brand and doesn't typically cut prices.

2:19

But it's trying to bring customers back as

2:21

store traffic has slipped. It's using

2:24

buy-one-get-one-free offers and coffee and food

2:26

breakfast deals. And,

2:28

in a first, U.S. regulators

2:30

have approved four menthol-flavored e-cigarettes.

2:33

The Food and Drug Administration says evidence

2:35

shows the products from Altria Group's

2:38

Enjoy brand help adult smokers switch

2:40

from cigarettes, and the e-cigarettes

2:42

will have marketing restrictions to prevent youth

2:44

access. In the past,

2:46

the agency has rejected other menthol vapes,

2:48

citing risks to children and teens. This

2:54

week, NVIDIA briefly became the most

2:56

valuable public company, and its success

2:58

has pushed the S&P 500 to

3:00

new records. But this rally

3:02

is narrow. More than half of the indexes

3:04

current companies are down in the past couple

3:07

of years. Wall Street Journal's senior

3:09

markets columnist James McIntosh is here to explain

3:11

why he sees that as a problem. James,

3:14

what are the forces at play here?

3:16

What's pushing NVIDIA up and smaller companies

3:18

down? So there's two different

3:20

things going on. The first is this

3:22

wild excitement for anything to do with

3:25

artificial intelligence, where NVIDIA is

3:27

the most obvious of the winners here, because

3:29

it makes the chips that everyone wants to

3:31

train their AI models. And they need a

3:33

lot of these chips, and NVIDIA can charge

3:36

a lot for them. So its profits have

3:38

been soaring, its value has been soaring. But

3:41

for the vast bulk of the market,

3:43

AI really isn't a thing yet. It's

3:45

not having much impact. Most companies are

3:47

exposed to other things. They're being

3:50

hurt by interest rates being kept high

3:52

for a long time because the Fed's

3:54

worrying about inflation. And by

3:56

some increasing concerns about the economy, these

3:58

things are hurting. what

4:00

you might think of as the soft underbelly of the

4:02

S&P, lots of stocks in there. So

4:05

the index is making new highs, but

4:07

it's being driven by these very big

4:09

companies, not by lots of companies. And

4:12

what are the risks for investors if the

4:14

market is overly reliant on these handful of

4:16

really big companies? Typically, you buy

4:18

the index because you want to diversify your

4:20

risk. You don't want to just bet on

4:22

an individual stock. But increasingly, you

4:24

are just betting on an individual stock.

4:28

When Nvidia does badly, the chances are the

4:30

S&P is going to do badly. Now, it's

4:32

not everything. You've still got some diversified risk.

4:34

Don't get me wrong. This is not the

4:36

same as buying Nvidia stock on its own.

4:38

But when you look at how much of

4:40

the market's gains have been down to Nvidia,

4:42

it would be quite hard for the market

4:44

to go up if Nvidia went

4:46

into a long downtrend. Is

4:49

this an atypical situation where it's just

4:51

a handful of stocks that are dominating the

4:53

direction of the S&P 500? Yes

4:56

and no. I mean, these things have happened

4:59

before, but the concentration of the market is

5:01

the highest it's been for a

5:03

very long time, I think it's safe to say. What

5:06

does the split between Nvidia and other companies tell

5:08

us about where the market might be headed? There

5:11

are lots of people out there who say that

5:13

when the market goes up a

5:16

lot, at the same time as

5:18

it narrows, when it's hitting new

5:21

highs driven by just a few

5:23

stocks, that probably isn't sustainable. Now,

5:26

there isn't frankly a whole lot

5:28

of data to back that up.

5:30

This is more of a hunch that

5:32

people have. My concern here is that

5:34

most of the market is pricing

5:37

reasonably enough that the economy probably isn't

5:39

going to be in a forever boom.

5:42

And if Nvidia catches down with the rest

5:44

of the market, that could hurt. That

5:47

was our Streetwise columnist James McIntosh.

5:50

And for Nvidia today, it dropped 3.2%, bringing

5:53

the S&P 500 down

5:55

0.2%. In other US

5:57

trading, the NASDAQ also ticked lower and the

6:00

Dow ended just barely in the green, up

6:02

16 points. As

6:04

for the housing market, home prices hit a new

6:06

high in May. Nationally, the median price

6:08

for sales of existing homes was $419,300, up 5.8% from

6:10

a year earlier. The

6:15

supply of homes on the market is lower

6:18

than normal, and that low inventory has been

6:20

spurring bidding wars among some homebuyers. The

6:23

high prices and high mortgage rates have

6:25

limited sales this spring, typically the busiest

6:27

season for homebuying. Now,

6:32

in politics, what do you want to know

6:34

about how The Wall Street Journal is covering

6:36

the presidential election and other races around the

6:38

country? Wall Street Journal

6:40

editor-in-chief Emma Tucker will be answering

6:42

your questions on an upcoming episode.

6:44

Send a voice memo to wnpod

6:46

at wsj.com, or leave a voicemail

6:48

with your name and location at

6:50

212-416-4328. We

6:55

might use it on the show. Coming

6:57

up, would you take a trip somewhere this

6:59

summer just to feel cold? San

7:01

Francisco is betting on it. That's after the

7:03

break. If

7:12

your business needs a new application, then

7:14

developers will have to write code. lot of

7:16

code. A lot of code. If an

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application needs to be modernized, then

7:21

you'll need time, resources, and caffeine.

7:24

If that sounds daunting, then

7:26

you need WatsonX Code Assistant.

7:28

AI designed to multiply developer

7:30

productivity so you can generate

7:32

code quickly. Let's create a

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more modern foundation for business

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with WatsonX Code Assistant. Learn

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more at ibm.com/code assistant. IBM.

7:41

Let's create. All

7:45

over the US right now, people are

7:47

feeling the heat. Millions of Americans from

7:49

the Midwest to New England have been

7:51

contending with a scorching heat wave. One

7:54

place that's not happening is San Francisco,

7:56

where the high today is a brisk

7:58

64 degrees Fahrenheit. Jim Carlton,

8:00

a reporter covering the West at the Wall

8:02

Street Journal, tells us how the city is

8:04

trying to use its chilly weather to attract

8:06

tourists. Jim, what is San Francisco doing to

8:08

draw in tourists looking to beat the heat?

8:11

San Francisco merchants realized this is an asset

8:13

with so many hot places in the country.

8:16

And so beginning about two years ago,

8:18

hotels started doing promotions. One hotel called

8:21

the Hotel Zios, they launched a Beat

8:23

the Heat in San Francisco campaign, and

8:25

they would offer, you know, 25% discounts. There

8:28

are other hotels that are doing this. And so

8:30

San Francisco has always been a lure in summer,

8:32

but now they're using temperature. So

8:35

they're adopting this strategy of courting people who

8:37

are just too hot in their hometowns. Is

8:39

it actually working? It seems to

8:41

be working very well. I was out in the

8:43

streets of San Francisco the last few days. I

8:46

went to the Golden Gate Bridge, went to Pier

8:48

39. And I talked to another woman from Buffalo.

8:50

She said, look, we can't really go outside in

8:52

the winter, it's too cold. We can't go outside

8:54

in the summer, it's too hot. But

8:56

here we feel free. And so the word is spreading,

8:58

and yeah, it seems to be working. Why

9:00

is this a big deal for San Francisco, given just

9:02

everything that's gone on there in the past couple of

9:04

years? There's all the

9:07

crime, the homeless, the feces on

9:09

the streets, that's all pretty legendary. The city is

9:11

trying to claw its way back. There's

9:13

a sense of revival, but tourism really is

9:15

one of the stronger parts of the economy

9:17

now. So even though San

9:19

Francisco is trying to appeal to tourists with its

9:21

cooler weather, people are still surprised by how chilly

9:24

it can be when they show up. Is that

9:26

right? No, 100%. There will

9:28

be tour buses going up. And you see all these poor

9:30

tourists get out and their t-shirts and shorts,

9:32

and they're freezing. In fact, I was at

9:34

Pier 39, and I saw this cool

9:37

looking dude named Chris Vardian, who is smiling

9:39

and selling boat rides on the bay. And

9:41

I asked him, do you see a lot

9:43

of tourists dressed inappropriately? Everybody, they think it's

9:45

going to be warm, so they come not

9:47

dressed for the weather. They're coming shorts and

9:49

t-shirts. And you'll notice the big sales

9:51

that all the tourist places make here are sweatshirts. He's

9:55

buying sweatshirts and hats and things because

9:57

they're all come un-equipped. As

10:00

summers just keep getting hotter, can we expect

10:02

to see other cities leaning into their cooler

10:04

temperatures? Yeah, in fact, after I did this

10:06

story, I got calls and emails

10:08

from other places, Eureka, California, the coast

10:11

of Oregon, the Upper Michigan

10:13

Peninsula, the Colorado Rockies. There are many

10:15

other places that have cool weathers that

10:17

people retreat to. It's definitely going

10:19

to be an asset to be cool in summer.

10:22

That was Wall Street Journal reporter Jim Carlton.

10:28

And finally, call it the Pop Girl Spring. Or

10:30

at least, that's what it was supposed to be.

10:33

Artists including Ariana Grande, Billie Eilish, Dua

10:36

Lipa, Jennifer Lopez, Taylor Swift, and Beyonce

10:38

all came out with new albums in

10:40

the first half of 2024. But

10:43

instead of giving us a fantastic moment

10:46

of pop music, these new releases have

10:48

fallen flat. Some had

10:50

lackluster sales, others had negative reviews,

10:52

and fans were left disappointed. Here's

10:55

Wall Street Journal music reporter Neil Shaw on

10:57

the sorry state of pop. If they missed

10:59

the mark, they did it in different ways. To

11:02

take the biggest example on the

11:04

planet, Taylor Swift and her album,

11:06

The Tortured Poets Department, we

11:09

had some songs that caught people's

11:11

attention, but they often didn't

11:13

stay very high on the singles charts

11:15

compared to past albums. Another

11:18

major factor that affects everybody is

11:20

just how crowded things were this

11:23

spring. Everyone is listening kind

11:25

of in their own niches in

11:28

the streaming age. There aren't gatekeepers at

11:30

radio saying, hey, these are the 10

11:32

songs of the week. With so much

11:34

possibility around, it gets harder when

11:36

you're a Dua Lipa putting out an

11:38

album to really come

11:41

out, be fresh, and just keep our attention.

11:43

Hopefully the next time the field is

11:45

so crowded, competition could push those artists

11:47

to new creative heights. Gotta stay hungry.

11:50

And that's what's news for this

11:52

week. Today's show was produced by

11:54

Pierre Bienemay, Zoe Kolkan, and Tadeo

11:56

Ruiz Sandoval. I'm Alex Osella,

11:59

our AM host. Next is Luke

12:01

Vargas. Additional support this week from

12:03

Anthony Bansi, Francesca Fontana, and Jennifer

12:05

Maloney. Michael LaValle wrote our theme

12:07

music. Our supervising producers were

12:10

Tali Arbel and Christina Rocha. Aisha

12:12

El-Muslim is our development producer. Scott

12:14

Salloway and Chris Zinsley are our

12:16

deputy editors. And Philana Patterson is

12:18

The Wall Street Journal's head of

12:20

news audio. Tomorrow, you can look

12:22

out for our weekly markets wrap-up,

12:24

What's News in Markets. And

12:26

on What's News Sunday, we'll be answering your

12:28

questions about urban real estate and what's

12:30

happening with America's downtowns. We'll

12:33

be back with our regular show on Monday morning.

12:35

Thanks for listening. AI

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