Jessica Mendoza
Appearances
The Journal.
Why Gold Bars Are Flying Over the Atlantic
Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Wednesday, February 26th. Coming up on the show, why billions of dollars worth of gold is flying commercial over the Atlantic. The fact that so much gold is being hauled in passenger planes is a symptom that something is off in the gold market.
The Journal.
Why Gold Bars Are Flying Over the Atlantic
But to understand what's wrong, you have to understand how this market usually works. Who buys gold?
The Journal.
Why Gold Bars Are Flying Over the Atlantic
And then there are the banks, in particular J.P. Morgan and HSBC.
The Journal.
Why Gold Bars Are Flying Over the Atlantic
The gold market is anchored by two cities. One is London.
The Journal.
Why Gold Bars Are Flying Over the Atlantic
So if you want to buy like a physical gold bar, you go to London for that?
The Journal.
Why Gold Bars Are Flying Over the Atlantic
The gold traders at these banks, they're our main characters in this gold-on-a-plane story. They're sitting on billions of dollars' worth of gold bars stored in vaults in London. And Joe says owning all that gold can be kind of risky.
The Journal.
Why Gold Bars Are Flying Over the Atlantic
Here's how it works. Say I'm a gold trader at a bank sitting on a billion dollars worth of gold in London. That gold is worth, say, 2,500 bucks a troy ounce. That's the standard measured for gold, by the way, a troy ounce. But I'm worried that the price of gold is going to fall. I want to lock in that $2,500 price.
The Journal.
Why Gold Bars Are Flying Over the Atlantic
So I head over to New York and I sell gold futures, basically a promise to sell gold at a certain price at a certain time. In this case, I sell futures contracts promising to sell gold at $2,500 an ounce at some later date. I lock in that price.
The Journal.
Why Gold Bars Are Flying Over the Atlantic
So on paper, my billion dollars worth of gold is worth just half a billion.
The Journal.
Why Gold Bars Are Flying Over the Atlantic
Okay, so it's kind of like a seesaw. Like if gold prices are down in London, but I was able to sell futures in New York, that means I'm up in New York.
The Journal.
Why Gold Bars Are Flying Over the Atlantic
That's my colleague Joe Wallace. Would I ever know if gold was on my flight?
The Journal.
Why Gold Bars Are Flying Over the Atlantic
This is a very important caveat. For this seesaw trade to work, gold prices in London and New York need to be pretty much the same. They need to move together. When they don't, the seesaw snaps. And that's what happened late last year.
The Journal.
Why Gold Bars Are Flying Over the Atlantic
Gold traders began to worry, and they began pricing in that worry. On the assumption that gold in the U.S. was about to become a lot more expensive, they started charging more for it. The price of U.S. gold began to climb. How much more expensive is gold in New York versus London right now?
The Journal.
Why Gold Bars Are Flying Over the Atlantic
This was bad news for the gold traders at big banks who'd been relying on that seesaw trade. The price of gold in New York was climbing, which meant that their contracts to sell gold at the earlier, cheaper price were losing money. They were down in New York. But they weren't up enough in London to balance it all out because the price of gold wasn't rising as much in London.
The Journal.
Why Gold Bars Are Flying Over the Atlantic
Recently, planes have been crossing the Atlantic Ocean with some pretty surprising cargo. The flights take off from Europe, bound for New York. They carry the usual passengers, vacationers, business people, and the usual luggage. But along with all those identical black roller bags, they're carrying something else.
The Journal.
Why Gold Bars Are Flying Over the Atlantic
That's true. Are there load balancing issues involved?
The Journal.
Why Gold Bars Are Flying Over the Atlantic
To do nothing and just eat the loss was potentially disastrous. How much money is at stake here? Like how much money could the banks lose?
The Journal.
Why Gold Bars Are Flying Over the Atlantic
Planes. That was the solution. Remember, the traders at the big banks had gold, cheaper gold, sitting in their vaults in London. Traders could use that cheaper gold to pay off their contract holders in New York, where gold was expensive. They could still fix this. All they had to do was get their gold across the Atlantic. But that would be easier said than done. That's after the break.
The Journal.
Why Gold Bars Are Flying Over the Atlantic
The gold traders had their plan, fly gold from London to New York and avoid big losses. But there would be many hurdles along the way, starting with just getting their gold out of the vaults in the first place.
The Journal.
Why Gold Bars Are Flying Over the Atlantic
The Bank of England. It's a gigantic stone edifice at the center of London's historic financial district. Underneath it lie nine vaults containing about 400,000 gold bars.
The Journal.
Why Gold Bars Are Flying Over the Atlantic
Yeah, it's giving like Gringotts from Harry Potter.
The Journal.
Why Gold Bars Are Flying Over the Atlantic
I'm picturing underground vaults, like trains, goblins.
The Journal.
Why Gold Bars Are Flying Over the Atlantic
Bank of England employees have been stressed lately because for months, gold traders have been lining up, trying to get their gold out of their vaults to fly it to New York.
The Journal.
Why Gold Bars Are Flying Over the Atlantic
You may have heard about the gold market. Maybe you even follow it a little bit. But the details of how this market actually works, the actual mechanics of it, can get pretty complicated. It turns out the story of how gold ended up on planes involves vaults deep under the streets of London, Swiss gold refiners, New York gold traders, and one US president.
The Journal.
Why Gold Bars Are Flying Over the Atlantic
Does it have, like, your name stamped on it?
The Journal.
Why Gold Bars Are Flying Over the Atlantic
The queue to get gold out of the central bank got long. Like, Eight weeks long. Which was a problem because these traders had a deadline. Futures contracts run month to month. So traders just had a few weeks to get their gold out of London and into the hands of contract holders in New York.
The Journal.
Why Gold Bars Are Flying Over the Atlantic
According to Joe's reporting, anxious traders were calling up Bank of England officials to try to move things along. The bank told them they had to wait their turn.
The Journal.
Why Gold Bars Are Flying Over the Atlantic
Some lucky traders did manage to get their gold out, only to face a new problem. Their gold bars were the wrong size. They couldn't be traded in New York.
The Journal.
Why Gold Bars Are Flying Over the Atlantic
Those refineries, though, aren't in London. They aren't even in England. Most of them are in Switzerland, which meant some traders had to arrange side trips for their gold bars before they could finally be sent to New York. What's involved in flying it to New York?
The Journal.
Why Gold Bars Are Flying Over the Atlantic
For all the trouble involved in trying to get gold across the Atlantic, for those who could pull it off, it was worth it.
The Journal.
Why Gold Bars Are Flying Over the Atlantic
Not only that, Joe says some people are making money. Soon after almost losing their shirts, some traders have embraced a new strategy, one that takes advantage of gold's price difference in London and New York.
The Journal.
Why Gold Bars Are Flying Over the Atlantic
So it's like the old buy low, sell high. You buy gold for cheap in London, you fly it over to New York and then you sell it high.
The Journal.
Why Gold Bars Are Flying Over the Atlantic
All of which means those transatlantic gold flights probably won't be stopping anytime soon. That's all for today, Wednesday, February 26th. The Journal is a co-production of Spotify and The Wall Street Journal. If you like our show, follow us on Spotify or wherever you get your podcasts. We're out every weekday afternoon. Thanks for listening. See you tomorrow.
The Journal.
Inside the Harvard vs. Trump Battle
Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Wednesday, April 23rd. Coming up on the show, the battle over higher education has come for Harvard.
The Journal.
Inside the Harvard vs. Trump Battle
In many ways, Doug says, the fight between the Trump administration and universities traces its roots back decades, all the way to the 1970s.
The Journal.
Inside the Harvard vs. Trump Battle
Surveys from multiple universities have shown that in recent years, a greater percentage of faculty identify as liberal rather than conservative. And when it comes to public perception, polls say that Americans believe colleges generally lean left.
The Journal.
Inside the Harvard vs. Trump Battle
Fast forward to 2023. Hamas attacked Israel on October 7th. Israel struck back, and the war in Gaza began. In the U.S., protests erupted on college campuses over Israel's treatment of civilians in Gaza. These protests riled up a lot of conservatives who saw them as anti-Semitic in an attack on America's historic support of Israel and on Western values.
The Journal.
Inside the Harvard vs. Trump Battle
— The president didn't waste much time. Soon after taking office, his administration put together a group, the Task Force to Combat Antisemitism. — The White House said the task force was specifically created to root out anti-Semitic harassment in schools and college campuses.
The Journal.
Inside the Harvard vs. Trump Battle
The group's members come from a range of backgrounds, from the acting general counsel of the Health and Human Services Department, to a former Fox News commentator, to a government official who spent much of his career in finance. Last month, the task force turned its attention to Columbia University.
The Journal.
Inside the Harvard vs. Trump Battle
The Trump administration froze $400 million in federal funding at the university and demanded a series of changes, things like banning masks and empowering campus police. Columbia agreed to the demands, though negotiations are ongoing.
The Journal.
Inside the Harvard vs. Trump Battle
Harvard received that list in early April. It included the request to review programs that, quote, fuel anti-Semitic harassment. But it also took on university culture more broadly. Like, the task force wanted Harvard to end diversity, equity, and inclusion programs, or DEI, or else lose federal funding. But the task force didn't specify what Harvard needed to do to actually meet those requests.
The Journal.
Inside the Harvard vs. Trump Battle
And now, the administration has set its sights on its most high-profile target yet, Harvard.
The Journal.
Inside the Harvard vs. Trump Battle
So Harvard asked for more direction. And on April 11th, the university got a letter back.
The Journal.
Inside the Harvard vs. Trump Battle
And why were these demands such a non-starter for Harvard?
The Journal.
Inside the Harvard vs. Trump Battle
From the university perspective, that unique academic freedom is crucial to creative and innovative output.
The Journal.
Inside the Harvard vs. Trump Battle
For the past couple months, the Trump administration has been targeting higher education, homing in on some of the nation's top universities.
The Journal.
Inside the Harvard vs. Trump Battle
So Harvard and other universities are feeling like if you start to tell us what to do, that innovation is going to die because we are the ones who know what the work looks like. We're the ones who know where that money should go.
The Journal.
Inside the Harvard vs. Trump Battle
Secretary of Education Linda McMahon said that because the funds come from the federal government, quote, we want to make sure that you're abiding by federal law. She added that the administration is not trying to take away academic freedom. And then Harvard made an unexpected move.
The Journal.
Inside the Harvard vs. Trump Battle
On April 14th, the president of Harvard, Alan Garber, published the Trump administration's letter to the school's website. In a message, Garber wrote that the university would not accept the administration's demands. Trump's anti-Semitism task force was furious. Its members said that they made clear that they wanted to keep the discussions with the university private.
The Journal.
Inside the Harvard vs. Trump Battle
Harvard disputes that there was any agreement about confidentiality. The task force reacted quickly.
The Journal.
Inside the Harvard vs. Trump Battle
And that's not all. They also made the first moves to revoke Harvard's tax-exempt status.
The Journal.
Inside the Harvard vs. Trump Battle
And being tax-exempt is a big deal to these universities?
The Journal.
Inside the Harvard vs. Trump Battle
The task force also threatened to challenge whether or not Harvard could continue to enroll international students, whose tuition is a critical part of the university's income. All said, what's at stake for Harvard here is losing tons of funding.
The Journal.
Inside the Harvard vs. Trump Battle
Alan Garber, the university president, has said that the consequences would be severe, that it would impact research related to childhood cancer, infectious disease outbreaks, and easing the pain of soldiers wounded in battle. On Monday night, Harvard took the dispute to court.
The Journal.
Inside the Harvard vs. Trump Battle
That's my colleague Doug Belkin, who covers higher education.
The Journal.
Inside the Harvard vs. Trump Battle
In the suit, Harvard asks the court to halt the funding freeze. It also wants the court to declare that both the freeze and the demands asked of the university are illegal. And has the Trump administration responded to the lawsuit yet?
The Journal.
Inside the Harvard vs. Trump Battle
In response to the lawsuit, a White House spokesperson said, quote, taxpayer funds are a privilege, and Harvard fails to meet the basic conditions required to access that privilege. Can Harvard survive without this money?
The Journal.
Inside the Harvard vs. Trump Battle
Harvard has also raised money recently from its alumni, as well as by issuing bonds.
The Journal.
Inside the Harvard vs. Trump Battle
Other universities are responding positively to Harvard's position on this?
The Journal.
Inside the Harvard vs. Trump Battle
What could it mean for higher education if Harvard loses?
The Journal.
Inside the Harvard vs. Trump Battle
If Harvard did win, would things just return to a status quo? Or I guess what could the outcome be?
The Journal.
Inside the Harvard vs. Trump Battle
That's all for today, Wednesday, April 23rd. The Journal is a co-production of Spotify and The Wall Street Journal. Additional reporting in this episode from Sarah Randazzo, Brian Schwartz, and Liz Esley White. Thanks for listening. See you tomorrow.
The Journal.
State Farm Cut Policies. Then the Fires Hit.
For Sandra, rebuilding her home is out of the question. One reason for this is she isn't confident she'll get insurance again.
The Journal.
State Farm Cut Policies. Then the Fires Hit.
That's all for today, Wednesday, February 19th. The Journal is a co-production of Spotify and The Wall Street Journal. Additional reporting in this episode from Susan Pulliam. Thanks for listening. See you tomorrow.
The Journal.
State Farm Cut Policies. Then the Fires Hit.
State Farm's decision forced many homeowners to enroll in an already stretched insurance program backed by the state, and it put even more pressure on California's broken insurance market. Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Wednesday, February 19th. Coming up on the show, State Farm, the LA fires, and California's home insurance crisis.
The Journal.
State Farm Cut Policies. Then the Fires Hit.
Did you have any challenges when it came to insuring your home?
The Journal.
State Farm Cut Policies. Then the Fires Hit.
For years, Sandra was happy on State Farm. She knew her agent by name. Plus, State Farm kept Sandra's policy inexpensive for decades. Was the risk of fire something you thought about very much living in the Palisades? You know, we were on a hill.
The Journal.
State Farm Cut Policies. Then the Fires Hit.
That's Sandra Kaler. She's 74 years old, and the house she's talking about was in the Pacific Palisades neighborhood in Los Angeles. You must have so many, but do you have a favorite memory of the place?
The Journal.
State Farm Cut Policies. Then the Fires Hit.
State Farm is the biggest home and auto insurer in the country, with more than 90 million customers. Its California subsidiary has the largest market share of any insurer in the state, covering a million home policies. And part of why State Farm is so dominant is that it has expanded in the state while other companies have retreated.
The Journal.
State Farm Cut Policies. Then the Fires Hit.
In other words, inexplicably, State Farm was there.
The Journal.
State Farm Cut Policies. Then the Fires Hit.
But it turned out State Farm couldn't afford to be there. Through her reporting, Jean found that while the company was aggressively selling policies at low rates, internally, red flags were waving. The company was taking on too much risk, and they needed to dramatically raise their rates, but they couldn't.
The Journal.
State Farm Cut Policies. Then the Fires Hit.
In California, insurance companies can only increase rates with the approval of state regulators.
The Journal.
State Farm Cut Policies. Then the Fires Hit.
A 6.9% rate increase was the most that State Farm could ask for without risking a public hearing from the California insurance regulators.
The Journal.
State Farm Cut Policies. Then the Fires Hit.
State Farm says that its rate requests were made to match price to risk. It added that over the past decade in California, the company has tried to, quote, responsibly limit overexposure in high-risk areas. So why did State Farm stay so aggressive in California, knowing that it was costing their subsidiary like that?
The Journal.
State Farm Cut Policies. Then the Fires Hit.
In 2023, State Farm's era of expansion came to an end with a change in leadership. The California subsidiary got a new chief executive, Denise Hardin. She saw the risk State Farm was exposed to and decided it was time to play hardball. Hardin went to the California regulators asking for a rate increase of 28%.
The Journal.
State Farm Cut Policies. Then the Fires Hit.
And then in May 2023, State Farm pulled back on new home insurance policies. The move put more pressure on regulators. One former insurance commissioner that Jean spoke to described the move as quote, crossing the Rubicon.
The Journal.
State Farm Cut Policies. Then the Fires Hit.
Sandra, can you tell me about your house in L.A.? What words would you use to describe it?
The Journal.
State Farm Cut Policies. Then the Fires Hit.
State Farm's announcement was a blow to California's insurance market. And the regulators were faced with a decision.
The Journal.
State Farm Cut Policies. Then the Fires Hit.
That wish list included approving much bigger rate increases for the state's insurance companies. The regulators also said that State Farm could raise their rates by 20%. But it still wasn't enough for State Farm. In March 2024, they announced that they would not be renewing policies for 30,000 homeowners in California.
The Journal.
State Farm Cut Policies. Then the Fires Hit.
State Farm's decision left customers scrambling. Just months later, the fires hit, and the risk that State Farm had unloaded suddenly became California's problem. That's next. Sandra Kaler had never heard of the fair plan until last year.
The Journal.
State Farm Cut Policies. Then the Fires Hit.
In August, she and her husband were contacted by State Farm, and they were told that the company would stop insuring their home in the Pacific Palisades against fire damage. Her husband began shopping around to find a new policy.
The Journal.
State Farm Cut Policies. Then the Fires Hit.
Sandra and her family lived in that house for 38 years. And the whole time, the property was covered by California's biggest insurer, State Farm. That was until last year.
The Journal.
State Farm Cut Policies. Then the Fires Hit.
The California Fair Plan was created by the state to make sure all California homeowners have access to basic fire insurance. It typically has high rates and restricted coverage.
The Journal.
State Farm Cut Policies. Then the Fires Hit.
To offset that exposure, California regulators require that other insurance companies bail out the fare plan in the event of a large-scale disaster. Sandra and her husband didn't know about these details. All they knew was that they had to use the fare plan to insure against fire. How did the coverage compare between the fare plan and what you had with State Farm previously?
The Journal.
State Farm Cut Policies. Then the Fires Hit.
But last month, the fires came. And the estimated $30 billion in damage was the most expensive in U.S. history.
The Journal.
State Farm Cut Policies. Then the Fires Hit.
Sandra managed to evacuate with her husband and their four pets to a hotel. In the days that followed, she said she spent a lot of time on the phone, chasing insurance. Sandra filed a claim with State Farm, hoping they might pay something toward the losses on her house. The claim was denied by an agent.
The Journal.
State Farm Cut Policies. Then the Fires Hit.
What went through your mind with that? I'm looking at your face, you're shaking your head.
The Journal.
State Farm Cut Policies. Then the Fires Hit.
But not to me. Sandra's home was recently appraised at $3.5 million. But she won't get that money back. Fair plan payouts are capped at $3 million. Do you think you'll ever see the money?
The Journal.
State Farm Cut Policies. Then the Fires Hit.
The L.A. fires have put a huge strain on the fair plan. The insurer recently estimated that its losses from the fires will top four billion dollars and it doesn't have enough to pay for all of that. So it's getting a bailout. Last week, state regulators agreed to let the fare plan collect a billion dollars. And that money is supposed to come from insurance companies like State Farm.
The Journal.
State Farm Cut Policies. Then the Fires Hit.
November 25th, just six weeks before fires devastated L.A. and burned down Sandra's home. Thousands of California homeowners have been dropped by State Farm in the past few months. Many of them, like Sandra, live in areas affected by the fires.
The Journal.
State Farm Cut Policies. Then the Fires Hit.
And it will, but there's a twist. Last year, regulators changed the rules to allow insurers to pass at least half of these costs on to their customers.
The Journal.
State Farm Cut Policies. Then the Fires Hit.
I mean, this sounds like pretty bad news for homeowners across the state, even those who aren't anywhere near any of these fire prone or disaster prone areas.
The Journal.
State Farm Cut Policies. Then the Fires Hit.
What about State Farm? Where do these fires, where does the situation leave the insurance company?
The Journal.
State Farm Cut Policies. Then the Fires Hit.
State Farm said it's helping people recover from the January fires and has paid more than a billion dollars to affected customers. The insurer has asked for an emergency rate increase of 22 percent. But last week, California state regulators pushed back. In a statement, the insurance commissioner said, quote, State Farm has been asked to make its case at a meeting next week.
The Journal.
State Farm Cut Policies. Then the Fires Hit.
After the fires, Sandra and her husband decided to accelerate a plan to retire in Hawaii. They'd planned to rent out their Palisades home. Now, they're wondering what to do with their burned-out lot. You know what? I hope I never go back.
The Journal.
How Elon Musk Pulled X Back From the Brink
Elon Musk is scrambling quite simply to prevent the social media platform from collapsing.
The Journal.
What's Going On With the Economy?
So until that happens, if that happens, we should all be braced for a little bit more of this uncertainty.
The Journal.
What's Going On With the Economy?
Before we go, we wanted to tell you that we're thinking about hosting a live journal event. Tell us what you wanna see by taking our survey. There's a link in our show notes. And for updates on our plans, please leave us your email address. That's all for today, Wednesday, March 12th. The Journal is a co-production of Spotify and The Wall Street Journal.
The Journal.
What's Going On With the Economy?
Additional reporting in this episode from Gavin Bade, Josh Dossey, Justin Layhart, Paul Kiernan, Conrad Puzier, and David Uberti. Thanks for listening. See you tomorrow.
The Journal.
What's Going On With the Economy?
Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Wednesday, March 12th. Coming up on the show, what's going on in Trump's economy and why?
The Journal.
What's Going On With the Economy?
When Trump returned to the White House in January, the economy was relatively steady. Here's Deputy Economics Editor Ashby Jones.
The Journal.
What's Going On With the Economy?
In the seven weeks since he took office, Trump has acted swiftly to reshape the economy in his vision,
The Journal.
What's Going On With the Economy?
Trump's firehose approach has involved massive layoffs in the federal government, an immigration crackdown, and a lot of back and forth on tariffs on longtime allies of the U.S. So far, the most significant of those policies are tariffs. At the beginning of February, Trump announced 25% tariffs on Canada and Mexico.
The Journal.
What's Going On With the Economy?
That month went by, and then the tariffs went into effect for about two days. President Donald Trump says time has run out.
The Journal.
What's Going On With the Economy?
One day later, he temporarily exempted automakers from those tariffs, and then paused all the tariffs again for another month. There are tariffs which are already in effect, like on Chinese goods. Trump first imposed 10% tariffs on them, and then a few weeks later, he doubled those to 20%. U.S.
The Journal.
What's Going On With the Economy?
The administration also placed 25% tariffs on steel and aluminum, no matter where they come from. In response, the U.S. has been hit with retaliatory tariffs.
The Journal.
What's Going On With the Economy?
His statement marked a shift in the message coming from the White House. Trump has promised a sweeping transformation of the American economy, one that makes America affordable again. But now, the messaging is that implementing that vision could cause some short-term pain. Here's Treasury Secretary Scott Besant on CNBC.
The Journal.
What's Going On With the Economy?
You've used the word uncertainty, you know, in coverage, the word whiplash comes up as well. So does it feel like at this moment that what's affecting the economy is the way the administration is rolling this out, not necessarily the tariffs themselves for now?
The Journal.
What's Going On With the Economy?
But Ashby says these tariffs themselves are making economists worry about future inflation.
The Journal.
What's Going On With the Economy?
For now, inflation has not been affected. In February, it was at 2.8%, and Ashby says it could take a while for inflation to change based on what happens with the tariffs. The biggest impact so far has been on the stock market. Both the Nasdaq and S&P 500 have dropped since Trump took office, by about 10% and 6% respectively.
The Journal.
What's Going On With the Economy?
An index that tracks fear and volatility on Wall Street is up, and the dollar's value is down. Right now, unemployment remains low. But Ashby is watching Trump's continued cuts to the federal government, which is the largest employer in the country.
The Journal.
What's Going On With the Economy?
On Sunday, President Donald Trump said something surprising on Fox News. He said he wasn't going to rule out a recession. Are you expecting a recession this year?
The Journal.
What's Going On With the Economy?
there are a few early signs that consumers are already spending less. This week, several big airlines predicted lower revenue in the coming quarter because they expect people to pull back on travel.
The Journal.
What's Going On With the Economy?
Do we have any historical context for what shrinking the government does to the economy?
The Journal.
What's Going On With the Economy?
Coming up, how the White House is managing those early cracks in the economy. Yesterday, Press Secretary Caroline Leavitt reiterated that short-term pain is expected in the economy.
The Journal.
What's Going On With the Economy?
Already, the economy is seeing some signs that that pain is here.
The Journal.
What's Going On With the Economy?
I talked to our colleague Brian Schwartz. He's a White House reporter that focuses on economic policy. What did you think when you heard those comments?
The Journal.
What's Going On With the Economy?
Does it seem like Trump believes that some bumps are worth it to make his vision happen?
The Journal.
What's Going On With the Economy?
Some business leaders are less certain about the administration's moves. On Monday, Trump met with some of them, and he did face some pushback to his stop-and-start approach to trade.
The Journal.
What's Going On With the Economy?
Brian, why is there so much unpredictability from the White House? Like, why is there so much whiplash when it comes to these policies?
The Journal.
What's Going On With the Economy?
So it sounds a bit chaotic, but it seems like no one's really saying no to the president.
The Journal.
What's Going On With the Economy?
Is there anything that could change Trump's approach here? By which I mean, is there a future that we could look at that's a little bit more predictable in the way these new policies are being rolled out?
The Journal.
‘Love Is Blind’ Is Back. Not All the Drama Is On-Screen.
One media and entertainment lawyer pointed out that reality TV relies on capturing cast members' vulnerability. It's partly what makes these shows so compelling. The lawyer said that without being able to film people 24 hours a day, among other things, the entire genre would change.
The Journal.
‘Love Is Blind’ Is Back. Not All the Drama Is On-Screen.
So think about this. In 2019, there were seven dating shows on TV, according to Nielsen, the ratings firm. Last year, there were 59. Experts told us that this kind of growth would be unrealistic if the business model changed.
The Journal.
‘Love Is Blind’ Is Back. Not All the Drama Is On-Screen.
But there's still a long road to getting reality cast members classified as employees. There's that hearing that might be postponed. And the NLRB has seen a change in leadership under the new Trump administration. And that might impact the case. So there's still a huge question mark over what happens next. Regardless, lawyers we spoke to said that this complaint will continue to haunt reality TV.
The Journal.
‘Love Is Blind’ Is Back. Not All the Drama Is On-Screen.
As for Nick Thompson... In 2023, he started a foundation with Jeremy Hartwell dedicated to supporting reality cast members, many of whom are worried about speaking up because they don't want to risk legal action by breaching their contracts.
The Journal.
‘Love Is Blind’ Is Back. Not All the Drama Is On-Screen.
That's all for today, Wednesday, February 12th. The Journal is a co-production of Spotify and The Wall Street Journal. Additional reporting in this episode by Jeevika Verma. Thanks for listening. See you tomorrow.
The Journal.
‘Love Is Blind’ Is Back. Not All the Drama Is On-Screen.
Netflix declined to comment, and the production companies behind the show, Kinetic Content and Delirium TV, did not respond to our requests for comment for this episode. But in court documents filed in December with a federal labor agency, they've denied all allegations about the way they've treated participants.
The Journal.
‘Love Is Blind’ Is Back. Not All the Drama Is On-Screen.
The fight over these contracts could now end up in court, and if it goes Nick's way, the effects would ripple across reality TV. Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Wednesday, February 12th. Coming up on the show, love is blind and the reality TV reckoning.
The Journal.
‘Love Is Blind’ Is Back. Not All the Drama Is On-Screen.
How would you describe yourself and your life before Love is Blind?
The Journal.
‘Love Is Blind’ Is Back. Not All the Drama Is On-Screen.
Nick had never really thought that he'd find his way to love through a dating show. But then in the fall of 2020, he got a DM on LinkedIn of all places. Love is Blind is a dating show where each cast member tries to find the love of their life without actually setting eyes on them first. The series hit it big in season one during lockdown.
The Journal.
‘Love Is Blind’ Is Back. Not All the Drama Is On-Screen.
And I'm not a big reality show fan, but even I binged that with my roommates back then. When Nick first heard from the show, it was recruiting for its second season.
The Journal.
‘Love Is Blind’ Is Back. Not All the Drama Is On-Screen.
It's kind of an incredible premise. Why did you agree to join in the end?
The Journal.
‘Love Is Blind’ Is Back. Not All the Drama Is On-Screen.
Nick ended up getting cast on that second season. According to his contract, he'd be paid $1,000 for every week he was on the show. The series would film for about eight weeks. So in April 2021, Nick took time off work and flew down to L.A., where they started taping.
The Journal.
‘Love Is Blind’ Is Back. Not All the Drama Is On-Screen.
Getting cut off like this is pretty standard for a reality show to keep cast members from being influenced by the outside world. They also typically sign nondisclosure agreements. Despite that, Nick was excited to be there.
The Journal.
‘Love Is Blind’ Is Back. Not All the Drama Is On-Screen.
And all of that is being filmed?
The Journal.
‘Love Is Blind’ Is Back. Not All the Drama Is On-Screen.
As those long hours turned into longer days, Nick started to feel a little uncomfortable.
The Journal.
‘Love Is Blind’ Is Back. Not All the Drama Is On-Screen.
They say that you're more fun when you are drunk. Some cast members have filed charges, and one of those cases is set to go to court later this year. That case is about one of the biggest reality shows on TV today.
The Journal.
‘Love Is Blind’ Is Back. Not All the Drama Is On-Screen.
the production companies behind the show didn't respond to our requests for comment. But in an earlier interview with The Wall Street Journal, the show's creator addressed some of the legal controversies around Love is Blind. He said it has increased its communication and adjusts to feedback from participants every season.
The Journal.
‘Love Is Blind’ Is Back. Not All the Drama Is On-Screen.
To get a better understanding of what happens behind the scenes, we spoke to someone who spent 20 years in the reality TV industry.
The Journal.
‘Love Is Blind’ Is Back. Not All the Drama Is On-Screen.
Michael worked for nine seasons on ABC's The Bachelor, one of the OG reality dating shows. He says that a lot of what Nick described on Love is Blind is baked into the DNA of reality TV. And that's in part because the producers are trying to make the best TV as quickly as possible. That's what he said happened on The Bachelor.
The Journal.
‘Love Is Blind’ Is Back. Not All the Drama Is On-Screen.
When I think about reality TV, there's one thing that comes to mind, drama. But these days, that industry is also finding drama off-screen. Cast members across several shows have been speaking out about the way that they're treated on set. Sleep deprivation was honestly terrible.
The Journal.
‘Love Is Blind’ Is Back. Not All the Drama Is On-Screen.
So the directive was like, make good TV.
The Journal.
‘Love Is Blind’ Is Back. Not All the Drama Is On-Screen.
We talked to Nick Thompson from Love is Blind, and he was saying, you know, he also felt like he wasn't getting enough sleep. They weren't, like, feeding them enough. There was alcohol on set. Does that sound familiar to you?
The Journal.
‘Love Is Blind’ Is Back. Not All the Drama Is On-Screen.
Were there ever concerns about how cast members were feeling on set or dealing with their environment?
The Journal.
‘Love Is Blind’ Is Back. Not All the Drama Is On-Screen.
Representatives for The Bachelor did not respond to our requests for comment. Back to Nick Thompson. On Love is Blind, he was finding the relationship he'd hoped for. He had connected with one of the other cast members, Danielle Ruhle.
The Journal.
‘Love Is Blind’ Is Back. Not All the Drama Is On-Screen.
And at the end of the show, Nick and Danielle decided to get married. After their wedding, filming ended and they went home. But the show wouldn't air for another eight months. And as part of the contract they'd signed, the couple had to keep their marriage quiet. NDAs like this are common because production companies want to contain leaks.
The Journal.
‘Love Is Blind’ Is Back. Not All the Drama Is On-Screen.
A former cast member from that show, which is about to drop its latest season on Friday, is one of the loudest voices calling for change in the industry.
The Journal.
‘Love Is Blind’ Is Back. Not All the Drama Is On-Screen.
During those eight months, the relationship between Nick and Danielle didn't go so well. And just a little over a year after their wedding, the two filed for divorce.
The Journal.
‘Love Is Blind’ Is Back. Not All the Drama Is On-Screen.
It was around the time of the divorce that Nick also lost his job. His employer said it was part of a planned round of layoffs. But Nick felt that love is blind had played a role. And finding a new job was a struggle.
The Journal.
‘Love Is Blind’ Is Back. Not All the Drama Is On-Screen.
What did life look like for you at that time?
The Journal.
‘Love Is Blind’ Is Back. Not All the Drama Is On-Screen.
During this dark period, Nick started reflecting on his time on Love is Blind. And he decided to take a closer look at what he'd signed.
The Journal.
‘Love Is Blind’ Is Back. Not All the Drama Is On-Screen.
Nick realized it was the contract itself that had set him up to be exploited, at least in his view. And it was this contract that he took to the National Labor Relations Board. That's next. At the end of 2022, Nick Thompson was divorced, out of work, and struggling to put his life back together. And he felt like so many of his problems went back to Love is Blind.
The Journal.
‘Love Is Blind’ Is Back. Not All the Drama Is On-Screen.
Nick's experience motivated him to speak up, and his approach has been to take on the contracts on shows like Love is Blind. When they sent you the contract, what was your impression of what you saw?
The Journal.
‘Love Is Blind’ Is Back. Not All the Drama Is On-Screen.
When he took a closer look at that agreement he'd signed, he zoomed in on how he was classified. And it very clearly stated that the production companies had not hired him as an employee. Why would being classified as an employee change the experience that you might have had?
The Journal.
‘Love Is Blind’ Is Back. Not All the Drama Is On-Screen.
We spoke to lawyers who deal with reality show contracts, and they said that most reality show cast members are not entitled to the kind of labor protections that an employee would have. They typically have no right to join a union or get minimum wage or overtime pay. Essentially, they're treated as independent contractors.
The Journal.
‘Love Is Blind’ Is Back. Not All the Drama Is On-Screen.
As Nick started digging, he found that some former Love is Blind cast members had already sued the show, including someone who was on season two with him.
The Journal.
‘Love Is Blind’ Is Back. Not All the Drama Is On-Screen.
That's Jeremy Hartwell speaking in a documentary.
The Journal.
‘Love Is Blind’ Is Back. Not All the Drama Is On-Screen.
Hartwell had sued the show, claiming it underpaid cast members and deprived them of food, water, and sleep. And he said part of the problem was that participants should have been considered employees, but they weren't. Hartwell's lawsuit, which was eventually settled, laid the groundwork for Nick and another former cast member to take this idea one step further.
The Journal.
‘Love Is Blind’ Is Back. Not All the Drama Is On-Screen.
They brought a complaint to the federal agency set up to protect workers' rights, the National Labor Relations Board.
The Journal.
‘Love Is Blind’ Is Back. Not All the Drama Is On-Screen.
The NLRB agreed, saying that reality TV cast members should be classified as employees. The production companies, on the other hand, denied the premise of the complaint. In their response, they said that reality show participants are not employees and that the NLRB is overstepping its authority.
The Journal.
‘Love Is Blind’ Is Back. Not All the Drama Is On-Screen.
The case was set to be heard in court this April, but the production companies filed a motion to postpone. And Love is Blind is not the only show mired in legal battles. Former participants on some of the most popular reality shows, like American Idol, Real Housewives, and Vanderpump Rules, have also brought lawsuits alleging they were mistreated in one way or another.
The Journal.
‘Love Is Blind’ Is Back. Not All the Drama Is On-Screen.
Some of these lawsuits have been settled, while others are still ongoing. We spoke to industry experts about the case Nick took to the NLRB. They said that if a judge rules in his favor, it could totally transform the way reality TV gets made. We asked Michael Carroll, the former Bachelor producer, about that.
The Journal.
An Eggspensive Dilemma
Right now, at the wholesale suppliers where Daquan usually gets his eggs, he's been quoted prices for the same case that range from $120 to $189.
The Journal.
An Eggspensive Dilemma
Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Tuesday, February 25th. Coming up on the show, cracking the conundrum of egg prices.
The Journal.
An Eggspensive Dilemma
I will take them scrambled, sunny side up, poached. I just love them, just like so many Americans do. Here's the journal's resident egg-spert, Patrick Thomas. How much do Americans love eggs, Patrick?
The Journal.
An Eggspensive Dilemma
The humble egg occupies a dependable rung on what Patrick calls the protein ladder.
The Journal.
An Eggspensive Dilemma
But right now, egg prices at stores across the country are sky high. According to U.S. government data, a dozen eggs cost an average of $5 these days, and in some places it's even higher. Last year, eggs averaged at about $3 a dozen. So what's the one big reason that eggs have gotten so expensive?
The Journal.
An Eggspensive Dilemma
The virus mostly spreads through contact with infected wild birds and their droppings. Farmers have installed things like lasers and sound cannons to keep the wild birds away from their chickens. And the government has provided more than a billion dollars in support. But once the virus does infect a chicken farm, there's been one main strategy for controlling the outbreak.
The Journal.
An Eggspensive Dilemma
Eggs are also in Dae Kwon's pancake batter, his banana nut muffins. They're in the egg wash, the breakfast sandwiches, the signature scramble. Can you actually list off the things that might contain eggs on your menu?
The Journal.
An Eggspensive Dilemma
— Now, there's a growing sense that in the U.S., the outbreak has gotten out of control. The virus has started jumping to other species.
The Journal.
An Eggspensive Dilemma
As of January, there have been nearly 70 confirmed human cases of bird flu in the United States. And a patient admitted to a hospital in Louisiana became the first U.S. death from the virus. But the Centers for Disease Control and Prevention says that the current public health risk is low.
The Journal.
An Eggspensive Dilemma
The patient who died was elderly and had underlying medical conditions, and most of those who were infected worked on poultry or dairy farms. The CDC says it's watching the situation carefully and working with states to monitor people with animal exposure. The persistence of this outbreak has meant that farmers have had to wipe out flock after flock of birds.
The Journal.
An Eggspensive Dilemma
Do we know how many chickens have been culled or put down in this particular outbreak?
The Journal.
An Eggspensive Dilemma
and wiping out millions of egg-laying hens means a lot fewer eggs, which is how we get those higher prices. Has that high price affected demand?
The Journal.
An Eggspensive Dilemma
I asked Daquan, the cafe owner in Richmond, about the possibility of eggless brunch. Have you thought about, I don't know, making food without eggs or finding some kind of substitute for it?
The Journal.
An Eggspensive Dilemma
And Daquan's customers still want their omelets and French toast. That's why he's had to make a tough decision, something breakfast chains like Waffle House and Denny's have also done. Tack on an egg surcharge.
The Journal.
An Eggspensive Dilemma
At the RVA Cafe in Richmond, Virginia, omelet pans are popping. In the kitchen, Daquan Woodbury is cracking, frying, and whisking eggs. Lots and lots of eggs.
The Journal.
An Eggspensive Dilemma
One fix, Patrick says, could be something that the poultry industry has refused to consider for a long time.
The Journal.
An Eggspensive Dilemma
Why not? That's after the break. One possible solution to the rapidly spreading bird flu is a vaccine for poultry. But that idea has faced a lot of opposition for years, and there's two main reasons why. First, it's a logistical nightmare, considering there are 300 million egg-laying hens in the U.S. What does a mass vaccination of chickens even look like for 300 million chickens?
The Journal.
An Eggspensive Dilemma
The bigger concern, though, is that a chicken vaccination program could jeopardize America's $5 billion market for broiler chickens or chicken meat.
The Journal.
An Eggspensive Dilemma
Why wouldn't other countries just embrace the idea of U.S. vaccinated chickens or chicken products? Like, what's the issue there?
The Journal.
An Eggspensive Dilemma
But these concerns affect one part of the poultry industry more than the other, because there are two camps in the chicken business, the egg people and the broiler chicken people. For a long time, these two camps were on the same page. In 2022, they were telling Patrick that any plan to vaccinate chickens would never fly. But today, egg producers are getting desperate.
The Journal.
An Eggspensive Dilemma
Many want to vaccinate the flocks, and it's put them at odds with the broiler industry.
The Journal.
An Eggspensive Dilemma
So there's like a split in the poultry industry over vaccinations?
The Journal.
An Eggspensive Dilemma
And this is giving rise to a new debate. When it comes to vaccines, which industry should come first? The chickens or the eggs? And then earlier this month, the Trump administration signaled it might move away from culling and towards vaccines.
The Journal.
An Eggspensive Dilemma
Shortly after, the head of President Trump's Economic Council talked about solving the egg shortage. Here's Kevin Hassett on CBS's Face the Nation.
The Journal.
An Eggspensive Dilemma
But in the last few months, Daquan's reliance on eggs has become a grade-A problem for his business. The average cost of a dozen eggs has jumped to historic levels.
The Journal.
An Eggspensive Dilemma
And to be clear, even the USDA's conditional approval for a vaccine doesn't mean there are plans to administer doses yet. The vaccine hasn't been authorized for use on farms, and poultry producers can't buy it. The Trump administration says it's committed to safeguarding poultry farms and keeping egg prices affordable. And the USDA plans to roll out a strategy in the coming days.
The Journal.
An Eggspensive Dilemma
Caveats aside, Patrick says vaccination has more momentum than he's ever seen, with many in the egg industry behind it.
The Journal.
An Eggspensive Dilemma
Still, until there's a way to curb this bird flu outbreak or get cheaper eggs from elsewhere, Americans may just have to keep shelling out for pricey eggs. Back in Richmond, Virginia, Daquan Woodbury is thinking about how he's going to deal with these higher prices as time goes on. And he's considering a whole new dining concept.
The Journal.
An Eggspensive Dilemma
The way Daquan is talking, it's like the American breakfast itself is now at a crossroads. Call it an existential crisis. I don't like this future that you're painting for us. That is a dark, I love eggs. Daquan, thank you so much for taking the time to chat with us.
The Journal.
An Eggspensive Dilemma
Before you go, we've updated the episode to clarify the price range for a case of 15 dozen eggs, which can be more expensive at wholesalers than retail. Daquan showed us quotes he received from his vendor that ranged from $120 to $189 from day to day. That's all for today, Tuesday, February 25th. The Journal is a co-production of Spotify and The Wall Street Journal.
The Journal.
An Eggspensive Dilemma
If you like our show, follow us on Spotify or wherever you get your podcasts. We're out every weekday afternoon. Thanks for listening. See you tomorrow.
The Journal.
How Frog Embryos Landed a Scientist in ICE Detention
So you said she's awaiting the results of her asylum case. What are sort of the hypotheticals there, the outcomes?
The Journal.
How Frog Embryos Landed a Scientist in ICE Detention
In other words, she could get deported while her asylum case moves through the courts. So Ksenia's fighting to be released on parole, which could protect her from deportation until her case is decided. In a post on X, an assistant secretary at DHS said that Ksenia broke the law and was lawfully detained. She added, quote, we should know who and what is in our country.
The Journal.
How Frog Embryos Landed a Scientist in ICE Detention
Ksenia's allies argue that she's not a threat. She's just a scientist. Ksenia, what are you worried will happen if you're sent back to Russia?
The Journal.
How Frog Embryos Landed a Scientist in ICE Detention
And right now, Ksenia is deeply uncertain that the U.S. is even an option for her anymore.
The Journal.
How Frog Embryos Landed a Scientist in ICE Detention
Before we go, our series Trump 2.0 is back this week. So if you have any questions about what the Trump administration is doing on immigration, the economy, or anything, email us and let us know. Please send a voice note to thejournalatwsj.com. That's thejournalatwsj.com. That's all for today, Tuesday, April 22nd. The Journal is a co-production of Spotify and The Wall Street Journal.
The Journal.
How Frog Embryos Landed a Scientist in ICE Detention
If you like our show, follow us on Spotify or wherever you get your podcasts. We're out every weekday afternoon. Thanks for listening. See you tomorrow.
The Journal.
How Frog Embryos Landed a Scientist in ICE Detention
For the last two months, Ksenia has been in the custody of Immigration and Customs Enforcement, or ICE. And what led her there was something that normally would have resulted in a fine. Instead, her work visa was taken away, she was detained, and now Ksenia's future is in the hands of an immigration court. Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza.
The Journal.
How Frog Embryos Landed a Scientist in ICE Detention
It's Tuesday, April 22nd. Coming up on the show, how a customs dispute landed a world-class scientist in ICE detention.
The Journal.
How Frog Embryos Landed a Scientist in ICE Detention
Ksenia Petrova is 30 years old. She was born in Russia, a graduate of the Moscow Institute of Physics and Technology. She's a specialist in bioinformatics, a discipline that uses both computers and math to analyze biological data. That skill set can be hard to come by in the U.S. And in 2023, Ksenia was offered a job at Harvard Medical School in a lab in the systems biology department.
The Journal.
How Frog Embryos Landed a Scientist in ICE Detention
Ksenia moved to the US on a J-1 visa, which allows foreigners to conduct research here. And Ksenia got to work studying frog cells. Xenopus is a type of frog native to sub-Saharan Africa. Their cells are very useful to scientists like Ksenia. Their similarity to human cells make them perfect specimens for studying diseases, genes, and aging.
The Journal.
How Frog Embryos Landed a Scientist in ICE Detention
That's Ksenia Petrova. She's a scientist at Harvard Medical School, studying how cells in the human body rejuvenate themselves. But right now, Ksenia is trapped. Instead of calling from her lab in Massachusetts, she's calling from an immigration detention center in Louisiana.
The Journal.
How Frog Embryos Landed a Scientist in ICE Detention
For the past two years, Ksenia has been devoted to her work at the lab in Boston. Her boss said that he'd have to beg her to go home after work. But earlier this year, in February, Ksenia decided to take a break by going to Paris to see a concert.
The Journal.
How Frog Embryos Landed a Scientist in ICE Detention
Even on vacation, Ksenia couldn't help getting some work done. Her boss at Harvard had arranged for Ksenia to visit a lab in Paris. The lab had figured out a new way to prepare Xenopus frog embryos for study. Ksenia hoped she could learn this new technique and maybe even bring back some samples to Boston.
The Journal.
How Frog Embryos Landed a Scientist in ICE Detention
Right. But it didn't happen. At the end of her trip, Ksenia packed those samples into her luggage, and she headed for Boston Logan Airport, frog embryos in tow. When she landed in the U.S., Ksenia went through passport control, showed her visa, and was admitted into the country. And then she went to pick up her bags.
The Journal.
How Frog Embryos Landed a Scientist in ICE Detention
The officer from Customs and Border Protection led Ksenia to another room to inspect her luggage.
The Journal.
How Frog Embryos Landed a Scientist in ICE Detention
As she was being questioned, Ksenia says another customs officer came in and took over her luggage inspection. That was when things took a turn.
The Journal.
How Frog Embryos Landed a Scientist in ICE Detention
Ksenia's visa was revoked, and suddenly she was stuck in immigration limbo, all because of those frog embryos.
The Journal.
How Frog Embryos Landed a Scientist in ICE Detention
That's our colleague Michelle Hackman. She covers immigration and has been following a recent rise in cases where visa holders end up in detention.
The Journal.
How Frog Embryos Landed a Scientist in ICE Detention
You said you're in your dorm? I see a lot of people behind you.
The Journal.
How Frog Embryos Landed a Scientist in ICE Detention
A spokesperson for the Department of Homeland Security said Ksenia was detained after, quote, lying to federal officers about carrying substances into the country. The spokesperson referred to messages found on Ksenia's phone as evidence that she, quote, knowingly broke the law and took deliberate steps to evade it. Ksenia and her lawyer deny those allegations.
The Journal.
How Frog Embryos Landed a Scientist in ICE Detention
After her visa was revoked, customs officers told Ksenia that she could ask for a new visa at the U.S. Embassy back in Paris. And then they asked her a question that Michelle says is not part of the normal protocol. Would you like us to let the Russian government know that you're here?
The Journal.
How Frog Embryos Landed a Scientist in ICE Detention
Ksenia had left Russia back in 2022. She was hired by Harvard a year later. So when the customs officer said they'd alert the Russian embassy, Ksenia panicked.
The Journal.
How Frog Embryos Landed a Scientist in ICE Detention
When you say triggered an asylum claim, is that a vocal thing you just say? You can't go back to where you're from and some machinery in the government is set in motion?
The Journal.
How Frog Embryos Landed a Scientist in ICE Detention
After the break, what's next for Ksenia's case?
The Journal.
How Frog Embryos Landed a Scientist in ICE Detention
While Ksenia is in detention, she's getting to know her fellow detainees. They spend their time playing chess and talking about their asylum cases.
The Journal.
How Frog Embryos Landed a Scientist in ICE Detention
Hi. Yes, hello. Ksenia, thank you so much for taking the time to chat with us again. My name is Jess. Appreciate you doing this. It sounds like it's pretty crazy over there. How are you?
The Journal.
How Frog Embryos Landed a Scientist in ICE Detention
Well, I'm glad you at least have friends while you're there. Yes.
The Journal.
How Frog Embryos Landed a Scientist in ICE Detention
Ksenia and her friends are waiting to plead their cases for asylum before an immigration judge. And Ksenia is not allowed to leave detention while waiting for a court date. The policy is part of the Trump administration's harsher stance on asylum seekers and an expanded definition of who can be detained.
The Journal.
How Frog Embryos Landed a Scientist in ICE Detention
But unlike her other friends in the Louisiana detention center, Ksenia already had a visa, and her visa was revoked over the dispute at customs. Michelle says many cases like Ksenia's are now popping up across the country.
The Journal.
How Frog Embryos Landed a Scientist in ICE Detention
But despite her surroundings, Ksenia seemed in good spirits, laughing nervously. I asked her what life was like in detention.
The Journal.
How Frog Embryos Landed a Scientist in ICE Detention
Have you talked to other folks on work visas or any other kind of sort of temporary visa?
The Journal.
How Frog Embryos Landed a Scientist in ICE Detention
Like, yeah, what are they saying? How do they feel when they hear about cases like Ksenia's?
The Journal.
How Frog Embryos Landed a Scientist in ICE Detention
But for asylum seekers, leaving can be really complicated. Because Ksenia is afraid to go back to her home country, she has to see her asylum case through, a process that's likely to take a very long time. And while she waits, she's stuck in detention. Today, after two months in ICE custody, Ksenia had her first appearance before an immigration judge.
The Journal.
Tesla Has a Problem: Elon Musk
On Saturday, scores of people converged on a Tesla showroom in Lower Manhattan. Some demonstrators went inside, while others locked arms to block the door. For a while, the showroom was shut down. Demonstrations like this broke out around the country this past week. In Colorado, one Tesla showroom was hit with Molotov cocktails. In Oregon, another location was riddled with bullets.
The Journal.
Tesla Has a Problem: Elon Musk
There's a link in our show notes. And for updates on our plans, please leave us your email address. That's all for today, Tuesday, March 11th. The Journal is a co-production of Spotify and The Wall Street Journal. Additional reporting in this episode by Sean McClain. Thanks for listening. See you tomorrow.
The Journal.
Tesla Has a Problem: Elon Musk
Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Tuesday, March 11th. Coming up on the show, are Elon Musk's politics getting in the way of Tesla's business?
The Journal.
Tesla Has a Problem: Elon Musk
When Elon Musk founded Tesla, he had a mission to help stop climate change by making electric vehicles cool. Here's Musk at one of Tesla's annual meetings.
The Journal.
Tesla Has a Problem: Elon Musk
Tesla's took off. By 2020, the company had become the world's most valuable carmaker. Soon after, Musk became the world's richest person. And he was known as someone who had big ideas and wanted to change the world.
The Journal.
Tesla Has a Problem: Elon Musk
Then in 2022, Musk made a major decision. He bought Twitter and renamed it X. And his big, bold statements started to include more than just his takes on business and tech.
The Journal.
Tesla Has a Problem: Elon Musk
By the time the 2024 presidential campaign was in full swing, Musk had become a major political presence on the right. He began donating to then-candidate Donald Trump, ultimately giving the campaign around $288 million. Musk also started appearing at Trump rallies.
The Journal.
Tesla Has a Problem: Elon Musk
At his first one, he wore a MAGA hat and bounded onto the stage.
The Journal.
Tesla Has a Problem: Elon Musk
After Trump was elected, Musk was appointed the head of the Department of Government Efficiency, or DOGE, and he's frequently been at the president's side. To some customers who'd bought into the original vision of Tesla as an eco-friendly, save-the-world kind of company, Musk's turn has been disillusioning.
The Journal.
Tesla Has a Problem: Elon Musk
Bumper stickers that say things like, I bought this before we knew Elon was crazy, and this Tesla does not endorse Elon Musk. Some people are even getting rid of their Teslas.
The Journal.
Tesla Has a Problem: Elon Musk
Last year, Tesla sales fell 7% in the U.S. and continued to fall into 2025, according to automotive industry analysts. The company has felt the pain internationally, too, as Musk has shown support for a far-eyed party in Germany. Musk has also waded into international politics. How has that sort of shown itself in terms of foreign buyers?
The Journal.
Tesla Has a Problem: Elon Musk
To be clear, Tesla's problems go beyond Musk's politics. The company is also facing growing competition from EV makers domestically and in China, where Tesla sales have taken a hit as well. But since Trump's inauguration, Tesla's stock has plummeted. The company has lost $700 billion, more than half of its value.
The Journal.
Tesla Has a Problem: Elon Musk
Yesterday, Musk acknowledged in an interview with Fox News that his work with the government is taking a toll.
The Journal.
Tesla Has a Problem: Elon Musk
Later, Trump posted on social media that he would buy a Tesla as a show of support for Musk. As Tesla struggles, Wall Street has questioned why he hasn't been around enough to fix things. So what is Musk doing with Tesla? That's after the break.
The Journal.
Tesla Has a Problem: Elon Musk
While it seems Musk hasn't been spending a lot of time getting Tesla out of its sales slump, Becky says he's focused on steering the company in a different direction. For instance, Tesla was set to release what the company called its low-cost car last year. It was supposed to sell for $25,000, giving the company a chance to dramatically increase the number of EVs and Teslas on the road.
The Journal.
Tesla Has a Problem: Elon Musk
These days, Musk sees the future of Tesla as largely in self-driving cars. To make this happen, the company is working on an AI-assisted software that it says will one day fully operate a car.
The Journal.
Tesla Has a Problem: Elon Musk
This software is called Full Self-Driving Supervised, or FSD Supervised. The software is already available, and Tesla owners can use it in a limited capacity. But Musk wants to make the cars fully autonomous.
The Journal.
Tesla Has a Problem: Elon Musk
This blowback against Tesla is coming as the company's CEO, Elon Musk, has risen in the new Trump administration. And people aren't just using signs and slogans to show their disapproval. They're protesting with their wallets.
The Journal.
Tesla Has a Problem: Elon Musk
Tesla investors are used to betting on Musk's vision well before the products exist. That's where they see a lot of value in his companies. And Musk is moving forward on these ideas. He's poured money into a new kind of self-driving car he calls the CyberCab. Tesla unveiled the model in October at a private event on a film lot in Los Angeles.
The Journal.
Tesla Has a Problem: Elon Musk
50 robo-taxis carried guests around movie sets that looked like city streets. And from a stage, Musk addressed the crowd.
The Journal.
Tesla Has a Problem: Elon Musk
Tesla says it'll start producing the CyberCab in 2026. But getting those autonomous cars on the road involves clearing regulatory hurdles.
The Journal.
Tesla Has a Problem: Elon Musk
Musk wants the system to be centralized under a single federal rule. And he wants it sooner rather than later.
The Journal.
Tesla Has a Problem: Elon Musk
He said that if the Department of Government Efficiency was created, he'd try to shift regulations away from the state level. Musk also wants to get rid of certain environmental protections he said is holding back his production facilities at Tesla and his other companies.
The Journal.
Tesla Has a Problem: Elon Musk
Now, Musk is in a much better position to actually make that happen. Musk has gotten very close to President Trump. Will that help him achieve some of these goals?
The Journal.
Tesla Has a Problem: Elon Musk
So when you look at what's happening now, what does this tell you, Becky, about Musk's strategy here?
The Journal.
Tesla Has a Problem: Elon Musk
This episode has been updated. A previous version incorrectly stated that Elon Musk was a founder of Tesla. He's recognized by the company as a co-founder and is the CEO. The episode misidentified FSD as fully self-driving. It stands for full self-driving. Before we go, we wanted to tell you that we're thinking about hosting a live journal event. Tell us what you want to see by taking our survey.
The Journal.
Taking Stock of the ‘Sell America’ Trade
So if global investors are selling America, what are they buying? In London, Mark Dowding, the investment executive, says he's now more intrigued by markets in Europe and Japan.
The Journal.
Taking Stock of the ‘Sell America’ Trade
That's all for today, Thursday, April 24th. The Journal is a co-production of Spotify and The Wall Street Journal. Additional reporting in this episode by Nick Timros, Gunjan Banerjee, Greg Ip, Alistair McDonald, and Jack Pitcher. Thanks for listening. See you tomorrow.
The Journal.
Taking Stock of the ‘Sell America’ Trade
For foreign investors, the U.S. stock market and the U.S. bond market have long been considered great places to invest. But just a few months into Trump's second term, those markets have seen dramatic swings brought on by threats of a trade war and government infighting.
The Journal.
Taking Stock of the ‘Sell America’ Trade
For Mark and many investors around the world, the uncertainty in the US financial system is starting to feel like an inflection point.
The Journal.
Taking Stock of the ‘Sell America’ Trade
Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Thursday, April 24th. Coming up on the show, why foreign investors are selling America. Before there was sell America, there was buy America. You might know it as the U.S. exceptionalism trade.
The Journal.
Taking Stock of the ‘Sell America’ Trade
Our colleague Chelsea Delaney reports on markets.
The Journal.
Taking Stock of the ‘Sell America’ Trade
So, quick econ 101. Stocks are shares of public companies. Treasury bonds are essentially a loan to the U.S. government from an investor, and that loan is in dollars. Since the end of World War II, Treasury bonds have been considered some of the safest bets in the world, because investors could count on the U.S. government to not default on its loans.
The Journal.
Taking Stock of the ‘Sell America’ Trade
This relative stability in both markets continued for decades.
The Journal.
Taking Stock of the ‘Sell America’ Trade
That growth spurred foreign investors to invest in all sorts of assets in the U.S. The stock market thrived. And it was given even more of a boost recently by the rise of artificial intelligence.
The Journal.
Taking Stock of the ‘Sell America’ Trade
How much of a stronghold has the U.S. had on the world economy recently? Is that a quantifiable number?
The Journal.
Taking Stock of the ‘Sell America’ Trade
Coming into this year, U.S. stocks had grown to make up more than 70% of the MSCI world, one of the most popular global stock market indexes. And as of February, foreign investors and governments owned almost $9 trillion in U.S. treasuries.
The Journal.
Taking Stock of the ‘Sell America’ Trade
And so just stepping back, big picture, the way that this idea of American exceptionalism and the way that it's sort of taken hold of global markets, what has that meant for the U.S.? What's sort of the upshot?
The Journal.
Taking Stock of the ‘Sell America’ Trade
For years, that was the status quo. Investors saw the American stock market as a reliable place to get rich. And after Trump's election in November, U.S. markets looked even stronger.
The Journal.
Taking Stock of the ‘Sell America’ Trade
But soon after Trump took office, he started doing something he didn't do in his first term — aggressively implementing steep tariffs. That started to worry investors.
The Journal.
Taking Stock of the ‘Sell America’ Trade
The sell America trade refers to a new market phenomenon where investors overseas are pulling back from U.S. assets.
The Journal.
Taking Stock of the ‘Sell America’ Trade
There's a new term that's been making the rounds in the business world this week.
The Journal.
Taking Stock of the ‘Sell America’ Trade
Since Trump's inauguration, the S&P 500 is down roughly 10%. That's the index's worst performance in the first 94 days of any presidential term on record. Then, just this past Monday, something surprising happened. The stock market, the bond market, and the value of the U.S. dollar were all down.
The Journal.
Taking Stock of the ‘Sell America’ Trade
Lost confidence can have real consequences. Less investment in the U.S. bond market makes it more expensive for the government to borrow. And a weak dollar means U.S. companies pay more for imports, and Americans have less buying power on trips abroad. What is the Trump administration saying about all of these market issues?
The Journal.
Taking Stock of the ‘Sell America’ Trade
Is there anything else that's been worrying investors besides the administration's trade policy?
The Journal.
Taking Stock of the ‘Sell America’ Trade
Mark Dowding has quite the title. He's the chief investment officer of Blue Bay Fixed Income at RBC Global Asset Management. Mark is based in London, and he manages over $130 billion in assets.
The Journal.
Taking Stock of the ‘Sell America’ Trade
Last week, Federal Reserve Chair Jerome Powell delivered an address on the economic outlook of the United States.
The Journal.
Taking Stock of the ‘Sell America’ Trade
The next day, Trump wrote on Truth Social about Powell, quote, There's been some name-calling.
The Journal.
Taking Stock of the ‘Sell America’ Trade
Trump appointed Powell, a Republican, to chair the Federal Reserve back in 2018. And since then, Trump has been very vocal about wanting Powell to cut interest rates. The Federal Reserve makes decisions about rate cuts based on economic realities, independent of the president.
The Journal.
Taking Stock of the ‘Sell America’ Trade
Some senior officials, according to Wall Street Journal reporting, took Trump's statements about firing Powell seriously, although it's unclear if there's a legal way to do that. White House lawyers reportedly looked into options for removing him. All of this happened very quickly. Trump threatened to fire Powell a week ago on Thursday. By Monday, stocks, bonds and the dollar had all slumped.
The Journal.
Taking Stock of the ‘Sell America’ Trade
The next day, Tuesday, a reporter asked Trump in the Oval Office if he still had intentions to fire Powell.
The Journal.
Taking Stock of the ‘Sell America’ Trade
A White House spokesperson declined to comment on Trump's private conversations. Both the Treasury and Commerce Departments did not respond to requests for comment. How are investors feeling about Trump's kind of shifting rhetoric around Powell?
The Journal.
Taking Stock of the ‘Sell America’ Trade
Trump seemed to have felt the pain of the downturn. The same day he walked back his comments on Powell, he told reporters that he was considering lowering tariffs on China.
The Journal.
Taking Stock of the ‘Sell America’ Trade
Both U.S. stock futures and the dollar rallied on Wednesday in response.
The Journal.
Taking Stock of the ‘Sell America’ Trade
a roller coaster, or in other words, volatility, something investors definitely don't like. April is shaping up to be the most volatile month for markets since the pandemic crash in 2020. And it's still unclear what the coming months will look like in terms of the administration's approach to trade and the central bank. And so for many foreign investors, none of this looks good.
The Journal.
Taking Stock of the ‘Sell America’ Trade
What's looking better is the sell America trade. Do you think that sell America is a flash in the pan or a real paradigm shift?
The Journal.
Greenland Has Tons of Minerals. So Where Are All the Miners?
That's all for today, Thursday, March 20th. The Journal is a co-production of Spotify and The Wall Street Journal. If you like our show, follow us on Spotify or wherever you get your podcasts. We're out every weekday afternoon. Thanks for listening. See you tomorrow.
The Journal.
Greenland Has Tons of Minerals. So Where Are All the Miners?
Greenland is an autonomous territory of Denmark. It's the largest island in the world, yet it's home to only 57,000 people. And the small population lives on top of a wealth of minerals, enough minerals to potentially transform the global supply chain. Some mining experts say that Greenland could supply North America and Europe with critical minerals for decades.
The Journal.
Greenland Has Tons of Minerals. So Where Are All the Miners?
That's our colleague Suna Rasmussen.
The Journal.
Greenland Has Tons of Minerals. So Where Are All the Miners?
Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Thursday, March 20th. Coming up on the show, Greenland has the makings of a mining boom. So where is everyone?
The Journal.
Greenland Has Tons of Minerals. So Where Are All the Miners?
Greenland has held the imagination of explorers for centuries. The US started looking into the island's resource potential around the time of the Civil War. And now, as the world's superpowers scramble for resources, Greenland has again become a coveted frontier.
The Journal.
Greenland Has Tons of Minerals. So Where Are All the Miners?
Greenland is an estimated 43 of the 50 critical minerals the U.S. considers vital to national security, including rare earth minerals, which are used to make everything from microchips to fighter jets. So whoever controls Greenland's supply could gain an economic and defensive edge. Right now, the country that dominates the global market for rare earths and other minerals is China.
The Journal.
Greenland Has Tons of Minerals. So Where Are All the Miners?
60% of the world's rare earth minerals are mined there. China is also responsible for 90% of the world's rare earth refining activity. That's the process that turns those minerals into a more useful form.
The Journal.
Greenland Has Tons of Minerals. So Where Are All the Miners?
How much of these minerals does Greenland have?
The Journal.
Greenland Has Tons of Minerals. So Where Are All the Miners?
To witness Greenland's mining potential for himself, Suna flew to the capital, Nuuk. From there, he took another plane, and then a helicopter, and finally a taxi.
The Journal.
Greenland Has Tons of Minerals. So Where Are All the Miners?
The town Suna traveled so far to see is called Narsak.
The Journal.
Greenland Has Tons of Minerals. So Where Are All the Miners?
Suna was sharing the town's only hotel with a group of executives from an Australian mining company called Energy Transition Minerals. The company had been exploring the area since 2007, hoping to eventually build a mine at a site called Kavanah Field. The site sits in the mountains above Narsak and contains an estimated 1 billion tons of minerals.
The Journal.
Greenland Has Tons of Minerals. So Where Are All the Miners?
During his trip, Suna and a photographer embarked on a journey from the town to Kavanah Field. Some executives from Energy Transition Minerals set out on the same trek. The two groups quickly ran into some challenges.
The Journal.
Greenland Has Tons of Minerals. So Where Are All the Miners?
Before this year, how much time did you spend thinking about Greenland?
The Journal.
Greenland Has Tons of Minerals. So Where Are All the Miners?
And access is only half the challenge. There's also a cumbersome licensing process to deal with, and the local labor pool is small. Transporting materials in and out of Greenland is another huge problem.
The Journal.
Greenland Has Tons of Minerals. So Where Are All the Miners?
Then there's the politics. In 2021, the Greenlandic government passed a law banning the mining of minerals that contained a certain amount of the radioactive material uranium.
The Journal.
Greenland Has Tons of Minerals. So Where Are All the Miners?
For energy transition minerals, that uranium law threw a massive wrench into their mining plans.
The Journal.
Greenland Has Tons of Minerals. So Where Are All the Miners?
In response, the company filed an arbitration case against the Greenlandic and Danish governments, demanding either the right to mine Kvanefeld or $11.5 billion in compensation. To put that in perspective, Greenland's entire GDP is around $3 billion. While Energy Transition Minerals wages this legal dispute, it's simultaneously fighting on another front, in Narsac, with the people who live there.
The Journal.
Greenland Has Tons of Minerals. So Where Are All the Miners?
Because of President Trump's interest in Greenland, this past February, Suna finally got to live his dream.
The Journal.
Greenland Has Tons of Minerals. So Where Are All the Miners?
How company executives are trying to win over the locals is next. Upon landing in Narsak, executives from Energy Transition Minerals were confronted by a group of local protesters. They wore brightly colored vests that said, Uranium, no thank you, in Greenlandic.
The Journal.
Greenland Has Tons of Minerals. So Where Are All the Miners?
If the Kavanaugh Field Mining Project moves forward, it would produce a lot of radioactive waste. Energy Transition Minerals has proposed storing 100 million tons of that waste in a mountain lake walled off by two dams. Experts have questioned the safety of that proposal, and some locals are very concerned.
The Journal.
Greenland Has Tons of Minerals. So Where Are All the Miners?
Energy Transition Minerals has insisted that the town will be safe.
The Journal.
Greenland Has Tons of Minerals. So Where Are All the Miners?
During Suna's visit, the company hosted a dinner for Narsac locals who were interested in their project. Executives treated them to a dinner of lamb burgers and craft drinks, distilled from herbs picked from the nearby mountains.
The Journal.
Greenland Has Tons of Minerals. So Where Are All the Miners?
In its messaging, Energy Transition Minerals has leaned into the economic benefits that mining could bring to Narsac. Ever since the town's fishing factory shuttered a decade ago, the population has struggled with higher-than-average unemployment rates. If the mine is built, Energy Transition Minerals has promised 400 jobs during the operation.
The Journal.
Greenland Has Tons of Minerals. So Where Are All the Miners?
Locals who support the mining project see it as an opportunity to get their economy back on track. Another argument in favor of the mining site taps into the widely popular Greenlandic push for independence from Denmark. To become self-sufficient, Greenland would need to harness its mineral wealth. Supporters of the Kavanagh Field Project see it as a step towards advancing that cause.
The Journal.
Greenland Has Tons of Minerals. So Where Are All the Miners?
And what was your impression when you finally went?
The Journal.
Greenland Has Tons of Minerals. So Where Are All the Miners?
How serious is the divide between those who are pro-mining and those who are anti?
The Journal.
Greenland Has Tons of Minerals. So Where Are All the Miners?
While the Kavanaugh Field mining project is a big deal for locals, it also has global implications.
The Journal.
Greenland Has Tons of Minerals. So Where Are All the Miners?
But although Greenland's minerals would diversify the world's reserve, the western portion of the supply chain still stops short of a finished product. Remember, China is behind over 90% of the world's rare earth refining activity.
The Journal.
Why Influencers Say Honey Is Stealing Their Money
In other words, Julie is saying that browser extensions and other affiliate marketers can identify when someone else should get credit for a potential sale. So if a customer clicks on one browser extension, the rest can opt to stand down. The same policy could apply when influencers or anyone else leads customers to a purchase.
The Journal.
Why Influencers Say Honey Is Stealing Their Money
So one of the main allegations facing PayPal Honey is that by taking commissions, when consumers click on their pop-ups, they're taking money that should have gone to creators. That is the allegation. What do you make of that?
The Journal.
Why Influencers Say Honey Is Stealing Their Money
For stand-down policies to really be effective, the affiliate industry needs to play ball, from publishers to networks to advertisers. But standing down is not a law. And that's the challenge for creators who are suing Honey and these other shopping extensions.
The Journal.
Why Influencers Say Honey Is Stealing Their Money
As one advertising lawyer told the Journal, those lawsuits have to prove that those platforms were actually doing something unlawful and that creators were entitled to that money. He says that could be a difficult premise to prove. Still, Devin, or Legal Eagle, says he's in it for the long haul. How long could all this take?
The Journal.
Why Influencers Say Honey Is Stealing Their Money
Honey is owned by PayPal, the online payments company. And Honey's main thing is discount codes and coupons. You download the browser extension, and while you're shopping, you click on Honey's pop-up, and it looks for coupons for you from across the internet. For years, Honey was a darling among YouTubers.
The Journal.
Why Influencers Say Honey Is Stealing Their Money
Why do you think it's worth that effort?
The Journal.
Why Influencers Say Honey Is Stealing Their Money
So you've got your sleeves rolled up for this one.
The Journal.
Why Influencers Say Honey Is Stealing Their Money
That's all for today, Thursday, February 20th. The Journal is a co-production of Spotify and The Wall Street Journal. This episode was reported by me and Alan Rodriguez-Espinosa, with help from Angel Au Young, Megan Graham, and Peter Rudiger. Thanks for listening. See you tomorrow.
The Journal.
Why Influencers Say Honey Is Stealing Their Money
But late last year, a YouTuber posted a video with some big accusations against Honey. He said the browser extension was misleading its customers and stealing from the very same creators it had sponsored. In an email, PayPal disagreed with the allegations.
The Journal.
Why Influencers Say Honey Is Stealing Their Money
And some in the e-commerce business say that Honey is just playing by the industry's rules and that it's long been a standard that the last link clicked gets the credit and the cash. But the video ended up getting millions of views in just a few days, and outraged YouTube creators started sharing their reactions.
The Journal.
Why Influencers Say Honey Is Stealing Their Money
Now, Honey and other services like it are facing several lawsuits. And this dispute is drawing scrutiny toward a multibillion-dollar industry that helps drive how money gets made online. Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Thursday, February 20th. Coming up on the show, whose money is it, honey?
The Journal.
Why Influencers Say Honey Is Stealing Their Money
Honey was launched in 2012 in Los Angeles. And basically, it automates the process of searching for coupons online. Users who download Honey get a pop-up, either offering them a bunch of coupon codes or telling them that Honey didn't find any better deals. And Honey offers that service for free. The platform makes money through commissions from some online purchases.
The Journal.
Why Influencers Say Honey Is Stealing Their Money
There's a bunch of other companies that do this too. Capital One, for example, has something called Capital One Shopping. You may have also heard of Karma or Microsoft Shopping or Rakuten Rewards. For a while, though, it seemed like everyone was talking about Honey. Yub, the gaming YouTuber, says he first heard of Honey in 2016 or so when he started seeing other creators get sponsored.
The Journal.
Why Influencers Say Honey Is Stealing Their Money
And you probably get asked this a ton. Why Yubb?
The Journal.
Why Influencers Say Honey Is Stealing Their Money
The rest of the internet seemed to love Honey too. By 2019, it had 17 million monthly active users. And later that year, PayPal acquired Honey for about $4 billion. By then, Honey was working regularly with influencers, including some of the biggest names on YouTube, like MrBeast and PewDiePie. Yub says Honey paid him $800 to promote the brand in 2019. He made a second deal with them in 2021.
The Journal.
Why Influencers Say Honey Is Stealing Their Money
Then fast forward a few years. This past December, just before Christmas.
The Journal.
Why Influencers Say Honey Is Stealing Their Money
Megalag accused Honey of taking money that should have gone to his fellow YouTubers. He alleged that Honey takes advantage of something called affiliate links. Affiliate links are a common way of making money on the internet. Think about the links you see on a YouTube channel or a review site. If that link leads you to a product, that's probably an affiliate link.
The Journal.
Why Influencers Say Honey Is Stealing Their Money
And if you buy that product, the influencer or website gets a cut for helping to make the sale. The affiliate marketing industry is growing quickly. It's expected to hit $12 billion in the U.S. this year and generate more than a billion dollars in revenue for social media creators. On YouTube, these links are especially popular among creators who review products.
The Journal.
Why Influencers Say Honey Is Stealing Their Money
And it's not your real name, obviously.
The Journal.
Why Influencers Say Honey Is Stealing Their Money
In his video, Megalag showed Honey overriding the influencer's referral and replacing it with its own, in effect taking credit for the sale. He alleged that this happens even when Honey doesn't offer the customer any discounts. PayPal said it does offer value to its customers because it gives them a sense of confidence that they're already paying the best price.
The Journal.
Why Influencers Say Honey Is Stealing Their Money
We tried to replicate what Megalag did. Our producer Alan Rodriguez-Espinosa and I downloaded Honey and then clicked on an affiliate link on a YouTuber's channel. So I'm going to hit that product link, that affiliate link, and it goes to a VPN website.
The Journal.
Why Influencers Say Honey Is Stealing Their Money
I'm not someone who spends a lot of time on YouTube. But recently, a spicy controversy that has to do with how influencers make money had me on a call with a YouTuber.
The Journal.
Why Influencers Say Honey Is Stealing Their Money
Dylan Russell, aka Yub, has about 1.6 million subscribers on his channel, and he's been making a living entirely off YouTube for years. Most of his income comes from ad breaks in his videos.
The Journal.
Why Influencers Say Honey Is Stealing Their Money
After the YouTuber's link took us to a new website, we pulled up the HTML code for that page and looked up the YouTuber's affiliate cookie. That's a piece of code that identifies the YouTuber as the person who sent us to that product page.
The Journal.
Why Influencers Say Honey Is Stealing Their Money
We're in the system. And just like in Megalag's video, when we got to checkout and we clicked on the honey extension... Oh! Where'd he go? The cookie associated with the YouTuber disappeared and was replaced with a cookie associated with Honey. We tried this a few times, and it happened even when there wasn't cashback or a better coupon available. That's the part that got YouTubers heated.
The Journal.
Why Influencers Say Honey Is Stealing Their Money
Yub, who had promoted Honey in the past, says the whole thing felt icky.
The Journal.
Why Influencers Say Honey Is Stealing Their Money
PayPal said that Honey returns to shoppers a large chunk of the commissions it makes as cashback rewards. The company also said Honey cuts back on cart abandonment, which is when a shopper fills up their cart but never actually completes the sale. As Megalag's video made the rounds, it came across the screen of another YouTube creator.
The Journal.
Why Influencers Say Honey Is Stealing Their Money
And he decided that he wouldn't just make a video reacting to the accusations like so many other YouTubers did. He was gonna go a step further. So on behalf of creators everywhere, I have filed a class action lawsuit to stop it. After the break, Honey gets taken to court. So you are a real lawyer. You're not just one who plays a lawyer on YouTube.
The Journal.
Why Influencers Say Honey Is Stealing Their Money
That's Devin Stone, known on YouTube as Legal Eagle. Devin has more than 3.5 million subscribers to his channel. His whole thing is breaking down law in news, in current events, and in pop culture. Do you have a favorite video you've ever made?
The Journal.
Why Influencers Say Honey Is Stealing Their Money
As a lawyer and a creator, Devin was very interested in the Honey accusations, even though he says he'd never worked with Honey himself. What was your first thought when you saw what Honey was being accused of doing?
The Journal.
Why Influencers Say Honey Is Stealing Their Money
Devin, along with a team of other lawyers, kicked off the new year by filing a class action suit in a district court in California, where PayPal is based. The lawsuit names five different YouTube creators, but Devin says he's had over a thousand other people reach out to join the class action. What's the legal basis for this case? What are you saying Honey should not be doing under the law?
The Journal.
Why Influencers Say Honey Is Stealing Their Money
Another common way that Yub and other YouTube creators get paid is through sponsorships, basically promoting products in their videos. One company that sponsored Yub was a service called Honey. In fact, Honey paid a lot of YouTubers to promote it.
The Journal.
Why Influencers Say Honey Is Stealing Their Money
PayPal said, quote, We disagree with the claims in these lawsuits and look forward to defending ourselves. After Devin filed his lawsuit against Honey, others quickly followed. A few of those cases, including Devin's, have since been consolidated into one big class action suit. And litigation has spread beyond Honey to other shopping extensions.
The Journal.
Why Influencers Say Honey Is Stealing Their Money
Capital One Shopping and Microsoft Shopping have also been sued for similar allegations. Capital One said via email, quote, We disagree with the premise of the complaints and look forward to defending ourselves in court.
The Journal.
Why Influencers Say Honey Is Stealing Their Money
Microsoft said that they're reviewing the complaint, but believe that the claims are without merit, and that their service provides shoppers with benefits and follows common industry standards. Those industry standards are at the root of the conflict here. I spoke to several industry insiders in the affiliate marketing world.
The Journal.
Why Influencers Say Honey Is Stealing Their Money
And to varying degrees, they question the ethics of these browser extensions swapping out referrals. But is it unlawful or just not cool? Because in the affiliate marketing business, giving credit to the last referral that a user clicks is just common practice.
The Journal.
Why Influencers Say Honey Is Stealing Their Money
That's Julie Van Allen, the chief revenue officer of Rakuten Rewards, another shopping extension.
The Journal.
Why Influencers Say Honey Is Stealing Their Money
The industry considers last-click attribution as the most straightforward way to track who led a customer to a sale and pay them for it. But it's not a flawless system. Sometimes there are several different actors pushing customers toward a sale, and it can be unclear who really deserves the commission.
The Journal.
Why Influencers Say Honey Is Stealing Their Money
And that's why Julie says the industry has another common practice to prevent people from taking advantage of last-click attribution.
The Journal.
Does Meta Have a Social Media Monopoly?
But the FTC disagrees. The case may come down to how meta is defined, as an entertainment app or a social networking app. How strong would you say the FTC's case is?
The Journal.
Does Meta Have a Social Media Monopoly?
So let's talk kind of timeline here. When will we get a verdict?
The Journal.
Does Meta Have a Social Media Monopoly?
The trial is set to run for about eight weeks. If Meta loses the case, there's a chance that the company will have to break up and possibly have to sell off Instagram and WhatsApp.
The Journal.
Does Meta Have a Social Media Monopoly?
And with that, Jan's lunch break was over. Right on schedule. Thank you so much for your time. Get you back to the courthouse. Yeah, sure. That's all for today, Thursday, April 17th. The Journal is a co-production of Spotify and The Wall Street Journal. Additional reporting in this episode by Rebecca Ballhaus, Megan Bobrowski, Josh Dossey, and Dave Michaels. Thanks for listening. See you tomorrow.
The Journal.
Does Meta Have a Social Media Monopoly?
Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Thursday, April 17th. Coming up on the show, the FTC's case against Meta finally goes to court.
The Journal.
Does Meta Have a Social Media Monopoly?
I think I joined Facebook in like, I don't know, 2009 or 10. I think I started in 2006. And you know how Facebook now does these like memories of old posts? I have sometimes seen just like one-line status updates from like 2012 that make me cringe very much.
The Journal.
Does Meta Have a Social Media Monopoly?
Exactly. The Facebook of the 2010s was very different from the meta we know today. This was a time before vertical video dominated our screens. Back then, Facebook was all about status updates and comments, writing on someone's wall, and poking your friends. And then a new photo-sharing app that let people post filtered, artsy images hit the social media scene.
The Journal.
Does Meta Have a Social Media Monopoly?
In 2012, Facebook bought Instagram for a billion dollars. Two years later, Facebook made another acquisition. This time, it was a quickly growing messaging platform called WhatsApp, which had a big international user base. These acquisitions were part of Zuckerberg's business strategy, one that involved scooping up successful smaller companies.
The Journal.
Does Meta Have a Social Media Monopoly?
In a trial that could break up his social media empire. The FTC is saying that Meta, formerly Facebook, is a monopoly. The case was first filed back in 2020, and it's finally gone to trial. At its heart are two acquisitions that the company made over a decade ago of Instagram and WhatsApp.
The Journal.
Does Meta Have a Social Media Monopoly?
The FTC approved the acquisitions of Instagram and WhatsApp at the time of their sales. And under Facebook's ownership, both platforms grew. But that smooth sailing came to a halt about five years ago when the FTC filed the anti-monopoly case.
The Journal.
Does Meta Have a Social Media Monopoly?
Facebook tweeted a statement at the time, saying, quote, Is it unusual for the FTC to change its position on an eight-year-old acquisition? Yeah, it's pretty unusual. The FTC's case came at the end of President Donald Trump's first term. It was a moment when Zuckerberg's relationship with Trump was particularly rocky.
The Journal.
Does Meta Have a Social Media Monopoly?
It didn't help that Trump was suspended from Facebook after the January 6th riots.
The Journal.
Does Meta Have a Social Media Monopoly?
Of course, Trump couldn't do that. And anyway, his first term was up. But the monopoly lawsuit continued under then-President Joe Biden and his FTC chair, Lena Kahn. Preparing for these trials can take years. In this case, it took the entirety of Biden's presidency. Soon it was 2024, and Trump was back on the campaign trail. Then in July, he survived a shooting at a rally in Pennsylvania.
The Journal.
Does Meta Have a Social Media Monopoly?
Zuckerberg saw an opportunity to turn Trump from foe to friend.
The Journal.
Does Meta Have a Social Media Monopoly?
This week, the billionaire CEO of Meta, Mark Zuckerberg, was on the stand in federal court. He was there to testify in a Federal Trade Commission lawsuit against his company.
The Journal.
Does Meta Have a Social Media Monopoly?
While Zuckerberg tried to win over the administration, Meta also looked at other ways to make this FTC lawsuit go away.
The Journal.
Does Meta Have a Social Media Monopoly?
And was he right to be confident? Did his efforts work?
The Journal.
Does Meta Have a Social Media Monopoly?
And so, despite the fact that Trump and Zuckerberg met a lot of times since he was reelected, and even before, it seems like His advisors were telling him not to step in and stop the trial. That's correct.
The Journal.
Does Meta Have a Social Media Monopoly?
Now the trial is finally here. Each side's argument after the break.
The Journal.
Does Meta Have a Social Media Monopoly?
That's our colleague Dana Mattioli, who covers tech investigations.
The Journal.
Does Meta Have a Social Media Monopoly?
You're kind of on a time limit here with us. Can you explain to the audience why that is?
The Journal.
Does Meta Have a Social Media Monopoly?
Our colleague Jan Wolf has been covering the trial since it started on Monday. He says the courtroom was packed and representatives from some of the biggest tech companies like Google, TikTok and Snapchat were there to watch, particularly to see the testimony of Mark Zuckerberg. What does he look like up there? Like, what is he wearing? You know, what's his sort of demeanor?
The Journal.
Does Meta Have a Social Media Monopoly?
Zuckerberg sat on the witness stand for more than 10 hours over the course of three days, defending his company against the FTC. And big picture here, what is the FTC trying to prove in this case against Meta?
The Journal.
Does Meta Have a Social Media Monopoly?
To help prove this idea, the prosecution dug into emails that Zuckerberg had sent to his staff. They leaned on one message in particular, from before the acquisition in 2012.
The Journal.
Does Meta Have a Social Media Monopoly?
Zuckerberg's defense was that the company bought Instagram and WhatsApp not to neutralize them, but to improve them.
The Journal.
Does Meta Have a Social Media Monopoly?
Meta says that the FTC's case ignores how people use technology today and that the company had legitimate business reasons for buying the platforms. This case is coming at a moment when a lot of large tech companies, like Apple and Amazon, are facing antitrust lawsuits. Just today, a federal judge ruled against Google, saying that the company acted illegally to maintain its dominance.
The Journal.
Does Meta Have a Social Media Monopoly?
Like most antitrust hearings, the FTC meta-trial is what's called a non-jury or bench trial, which means the two sides are making their cases in front of a judge rather than a jury. In this case, that judge is James Boasberg. If his name sounds familiar, it's because Boasberg has recently been in the news after he ruled against some of Trump's deportation efforts.
The Journal.
Does Meta Have a Social Media Monopoly?
Ultimately, Judge Boasberg will have to make a decision on whether or not Meta is a monopoly in the social media sphere and who Meta's competitors are.
The Journal.
The Botched Software Update That Cost $600 Million
And is that passion enough to turn things around? Like what does Tom Conrad need to do to get confidence back in the brand?
The Journal.
The Botched Software Update That Cost $600 Million
Before we go, we've got exciting news. We're planning a live event for the show and we want to know what you want to see. Take our survey by following the link in our show notes and leave your email address to be the first to know when it's happening. That's all for today, Thursday, March 6th. The Journal is a co-production of Spotify and The Wall Street Journal.
The Journal.
The Botched Software Update That Cost $600 Million
Additional reporting in this episode by Dan Gallagher. Thanks for listening. See you tomorrow.
The Journal.
The Botched Software Update That Cost $600 Million
Sonos has apologized and spent months trying to fix the problem. But customers are still upset. And the issue has hit the company's reputation, led to layoffs and a leadership overhaul, and cost it hundreds of millions of dollars. Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Thursday, March 6th.
The Journal.
The Botched Software Update That Cost $600 Million
Coming up on the show, Sonos and the terrible, horrible, no good, very bad update.
The Journal.
The Botched Software Update That Cost $600 Million
Do you listen to music at home? And what do you listen to?
The Journal.
The Botched Software Update That Cost $600 Million
Oh, my God. When Ben and his daughter listen to those bangers from the Cars soundtrack, their device of choice is not a Sonos.
The Journal.
The Botched Software Update That Cost $600 Million
Tell me about Sonos. What is the company known for?
The Journal.
The Botched Software Update That Cost $600 Million
The idea is you put your Sonos devices on the same Wi-Fi network and they can talk to each other. And you can control all your devices with a single app on your phone.
The Journal.
The Botched Software Update That Cost $600 Million
Or you might want to listen to Taylor Swift in all the rooms, and then you can also do that.
The Journal.
The Botched Software Update That Cost $600 Million
Sonos has been around since 2002, and it won over hardcore audio lovers with its emphasis on quality sound. On its YouTube channel, there are videos about how Sonos users can really perfect their TV sounds. And what the best Sonos speakers for gaming are. Sonos products range from a couple hundred bucks to thousands of dollars for some of their sets.
The Journal.
The Botched Software Update That Cost $600 Million
And although the company is a lot smaller than other tech companies that also sell speakers, like Amazon, Sonos was able to carve out a place for itself in the luxury audio space. By the end of March last year, the company was worth over $2 billion. Then, in April, the company announced that it was upgrading its software.
The Journal.
The Botched Software Update That Cost $600 Million
Or in 2016, when an update to the Nest thermostat left people angry and cold. Their internet-connected thermostats have been malfunctioning ever since they got a software upgrade last month. Or last year, when a CrowdStrike software update caused major travel delays.
The Journal.
The Botched Software Update That Cost $600 Million
The old app was sometimes hard to manage, and the company wanted an update to make it easier for them to release new products. In a statement, then-CEO Patrick Spence said, quote, The new app was released globally on May 7, 2024, as a software update. But lots of customers had problems with it almost immediately. So what was it exactly that happened?
The Journal.
The Botched Software Update That Cost $600 Million
Updating your software. It's one of our modern common chores. Mostly it's annoying, inconvenient, but we do it because it's supposed to make sure our stuff works better. So when a software update somehow makes things worse, people get mad. Like back in 2014, when an iPhone update caused a bunch of people's phones to crash.
The Journal.
The Botched Software Update That Cost $600 Million
The tech problem was complicated. Part of it was that over the years, Sonos had continued to rely on a lot of obsolete code. They'd done a lot of updates, though never a complete overhaul. And they ran into issues when they tried to bring their software up to date to match their hardware ambitions.
The Journal.
The Botched Software Update That Cost $600 Million
Sonos says they looked closely at whether or not to revert back to the old app, deciding eventually it wasn't viable. But they also struggled to fix the new one. And then there was the PR problem. At first, the company defended the update, according to a statement published by a tech news outlet.
The Journal.
The Botched Software Update That Cost $600 Million
Soon after the messy rollout, Sonos started releasing additional software updates to try and fix the bugs. And in July, Spence, the CEO, published a letter of apology. But customers were still mad. A lot of them still couldn't use their devices the way they wanted. In October, more than four months after the app rolled out, Spence released another statement, this time a video.
The Journal.
The Botched Software Update That Cost $600 Million
The video is more than three minutes long, and it's titled, Recommitting to Quality and Customer Experience.
The Journal.
The Botched Software Update That Cost $600 Million
Ben says that for a lot of customers, the response was too little, too late. How has all of this impacted Sonos, the company?
The Journal.
The Botched Software Update That Cost $600 Million
And the company's market cap has plummeted by around $600 million since the app came out.
The Journal.
The Botched Software Update That Cost $600 Million
In the best-case scenarios, companies act fast and fix the problems, and we can all move on. But our colleague Ben Cohen recently wrote about a software update that has plagued a company for months now.
The Journal.
The Botched Software Update That Cost $600 Million
After the break, we asked Sonos directly about the saga. Do you remember what you were doing the day of the app rollout?
The Journal.
The Botched Software Update That Cost $600 Million
No, May 7th, 2024, not... I remember the weeks afterwards with my phone blowing up. That's Eddie Lazarus. He's the chief legal and strategy officer at Sonos. Were you hearing from a lot of different people? people you knew?
The Journal.
The Botched Software Update That Cost $600 Million
Eddie has been with Sonos for about six years, and he was in charge of investigating what happened in the aftermath of the app rollout. You were the one, Eddie, who did the internal audit. Why did it go so badly?
The Journal.
The Botched Software Update That Cost $600 Million
But I guess that's sort of the question that I think has been on a lot of people's minds and was, especially immediately after, was why? Why do so much all at once? This was something that came up a lot on Reddit and on community forums. You know, why did the company decide to roll out such big changes all at one time rather than do it slowly for small groups of users at a time?
The Journal.
The Botched Software Update That Cost $600 Million
Was there a sense that the team or the company underestimated the complexity of what this would take? 100%. Eddie says one reason that Sonos went big with their new app was that they were about to launch new products that would benefit from updated software. A big one was Sonos' first pair of headphones. How was that product launch tied to the timing of the release of the redesigned app?
The Journal.
The Botched Software Update That Cost $600 Million
The new product wasn't enough to boost Sonos. And the company's total units sold, so across all its products, were down by 14% in the back half of last year compared to the year before. Talk to me about what Sonos did to fix the problems with the new app over the course of the weeks and months that followed.
The Journal.
The Botched Software Update That Cost $600 Million
So just to be clear, is the new app fixed?
The Journal.
The Botched Software Update That Cost $600 Million
Sonos has tried to be transparent with its efforts to fix the app, holding Q&As on Reddit and the company's community forum, and sharing a Trello or project management board with the public. But the damage to the company's reputation has been hard to shake.
The Journal.
The Botched Software Update That Cost $600 Million
The company with the software update from hell is Sonos. It makes high-tech speakers that are controlled through its app. And when Sonos updated that app last spring, a lot of users suddenly ran into all kinds of issues. Many couldn't do basic things like connect to their devices.
The Journal.
The Botched Software Update That Cost $600 Million
Internally, the company has also struggled. They've had two sets of layoffs since the app update, losing around 300 employees. Then, at the beginning of this year, the CEO, Patrick Spence, stepped down. Here's our colleague Ben Cohen again.
The Journal.
Pope Francis Has Died. What’s Next for the Catholic Church?
Yesterday, on Easter Sunday, Pope Francis graced the public with his presence outside the Vatican, for the last time.
The Journal.
Pope Francis Has Died. What’s Next for the Catholic Church?
And so with the death of Pope Francis, what's the burning question that you as a reporter and Catholics around the world will have?
The Journal.
Pope Francis Has Died. What’s Next for the Catholic Church?
Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Monday, April 21st. Coming up on the show, Pope Francis has died. What's next for the Catholic Church?
The Journal.
Pope Francis Has Died. What’s Next for the Catholic Church?
Francis was born Jorge Mario Bergoglio and was ordained as a Jesuit when he was in his early 30s. In 2001, he became a cardinal. He built a reputation for living modestly, cooking his own meals and taking public transit. And he was known for ministering to people in the shanty towns of Buenos Aires.
The Journal.
Pope Francis Has Died. What’s Next for the Catholic Church?
In 2013, he became a surprising pick to lead a worldwide population of Catholics that now exceeds an estimated 1.4 billion people. Francisco.
The Journal.
Pope Francis Has Died. What’s Next for the Catholic Church?
A Jesuit pope from Argentina, the first pope in 2,000 years from the New World.
The Journal.
Pope Francis Has Died. What’s Next for the Catholic Church?
Francis was a pope of firsts, the first to come from the Americas.
The Journal.
Pope Francis Has Died. What’s Next for the Catholic Church?
Francis brought his personal ethos to the church itself. He criticized corruption in the Vatican Bank, which had been beset with scandal. His efforts there included improving financial transparency and preventing money laundering. And his progressive ideas were reflected in the way he approached issues that the church has historically opposed.
The Journal.
Pope Francis Has Died. What’s Next for the Catholic Church?
And when asked about gay priests, he famously said, you know... If a person is gay and seeks God and has goodwill, who am I to judge him? Who am I to judge?
The Journal.
Pope Francis Has Died. What’s Next for the Catholic Church?
And as pope, Francis used his voice to influence global issues.
The Journal.
Pope Francis Has Died. What’s Next for the Catholic Church?
It seems clear to me also that climate change is a problem.
The Journal.
Pope Francis Has Died. What’s Next for the Catholic Church?
The Pope's willingness to speak on sensitive issues and his insistence on living a modest life made him popular around the world. But he also faced a lot of criticism during his papacy, especially from those who felt he didn't do enough to crack down on sexual abuse within the church. For example, in 2018, the Pope had defended a bishop from Chile who was accused of covering up abuses.
The Journal.
Pope Francis Has Died. What’s Next for the Catholic Church?
Francis later said he'd been misinformed.
The Journal.
Pope Francis Has Died. What’s Next for the Catholic Church?
So broadly speaking, how did the church feel about Francis's approach? Was it generally approved of or did it cause tensions?
The Journal.
Pope Francis Has Died. What’s Next for the Catholic Church?
Over the course of his papacy, Francis also wanted to broaden the church's global reach. He made it a point to elevate more leaders from beyond Europe and the church's major population centers. Is there the expectation that his approach will continue with the next pope?
The Journal.
Pope Francis Has Died. What’s Next for the Catholic Church?
Francis died Monday morning at the age of 88. The cause of death was a stroke, according to a medical bulletin released by the Vatican. What's ahead for the Catholic Church is after the break.
The Journal.
Pope Francis Has Died. What’s Next for the Catholic Church?
The death of Pope Francis has left the administration of the Catholic Church to the Vatican's Camerlengo, or Chamberlain. He's an Irish-American cardinal named Kevin Farrell, and he'll run the Vatican's day-to-day affairs until the next pope is elected.
The Journal.
Pope Francis Has Died. What’s Next for the Catholic Church?
A conclave is a highly secretive gathering of cardinals, an election for the most powerful voice in the Catholic Church. 135 cardinals from all over the world will be eligible to vote for the next pope. The cardinals will be shut out from the outside world until the decision is made.
The Journal.
Pope Francis Has Died. What’s Next for the Catholic Church?
Are there any clues as to who might be next in line for the papacy?
The Journal.
Pope Francis Has Died. What’s Next for the Catholic Church?
Among the eligible candidates is the Vatican's Secretary of State, who likely has the clout to assemble enough support. There's also a cardinal from Hungary, who's seen as a serious conservative contender. Other candidates include a Congolese archbishop, who has stood against blessings for same-sex couples, and a former archbishop from the Philippines, who's been called the Asian Francis.
The Journal.
Pope Francis Has Died. What’s Next for the Catholic Church?
What kind of church will this next pope inherit?
The Journal.
Pope Francis Has Died. What’s Next for the Catholic Church?
That's all for today, Monday, April 21st. The Journal is a co-production of Spotify and The Wall Street Journal. Additional reporting in this episode by Francis X. Rocca and Marcus Walker. Thanks for listening. See you tomorrow.
The Journal.
The New Hit Depression Treatment? A Ketamine-Derived Nasal Spray
A quick heads up before we get started. This episode mentions suicide and discusses depression. Please listen with care. So just to start us off, could you introduce yourself, your name, your age, what you do?
The Journal.
The New Hit Depression Treatment? A Ketamine-Derived Nasal Spray
Spravato's success shows the challenges and opportunities for big pharma when it comes to mental health treatments. And it's also giving hope to companies working in the field of psychedelic research. There are now dozens of startups studying the effects of drugs like LSD and psilocybin on mental health. And last year, the industry seemed poised for another breakthrough.
The Journal.
The New Hit Depression Treatment? A Ketamine-Derived Nasal Spray
The FDA considered approving MDMA for treating PTSD, a condition that affects 13 million Americans. But the agency decided that drug needed more testing. Hosseini, who has now left J&J, told me he thinks that the success of Spravato could mean we see other nontraditional drugs being used as treatments.
The Journal.
The New Hit Depression Treatment? A Ketamine-Derived Nasal Spray
But there are still unanswered questions about the future for patients taking Spravato. A J&J spokesperson told us that over six years of testing, the treatment remained effective and, quote, no new or unexpected safety issues were seen during long-term use. I spoke to one psychiatrist who runs a Spravato clinic, and he raised some concerns about patients taking the drug beyond six years.
The Journal.
The New Hit Depression Treatment? A Ketamine-Derived Nasal Spray
I asked Husseini about this. Would you say Spravato is a long-term or a short-term treatment?
The Journal.
The New Hit Depression Treatment? A Ketamine-Derived Nasal Spray
In January, the FDA went one step further in its approval of Spravato by removing a condition of use. Now, patients are not required to take it with an antidepressant and can use it as a standalone treatment. Today, in Fort Worth, Texas, Sean Fury will do what he does every Friday. He and his wife will get into the car and drive 10 minutes to the clinic where he takes Bravado.
The Journal.
The New Hit Depression Treatment? A Ketamine-Derived Nasal Spray
He'll inhale the medication through his nose and then relax in a reclining chair for two hours. Sean told me that now he's hopeful for the future. He's finished filming his vampire movie and is editing it. He sent us a clip from the final scene. The dialogue is almost verbatim a conversation he had with his wife at the depths of his depression.
The Journal.
The New Hit Depression Treatment? A Ketamine-Derived Nasal Spray
Sean has what's called treatment-resistant depression. And a few years ago, he found out about a new kind of treatment that might help him. It's called Spravato, and it's made by Johnson & Johnson. And Spravato is unique because it's a derivative of ketamine, best known as an illicit club drug. What impact has Spravato had on your life? How would you describe that?
The Journal.
The New Hit Depression Treatment? A Ketamine-Derived Nasal Spray
Well, Sean, thank you so much for your time.
The Journal.
The New Hit Depression Treatment? A Ketamine-Derived Nasal Spray
Before we go, if you're considering self-harm, help is available. Call the Suicide and Crisis Lifeline by texting or dialing 988. That's 988. That's all for today, Friday, March 21st. The Journal is a co-production of Spotify and The Wall Street Journal. The show is made by Katherine Brewer, Pia Gadkari, Rachel Humphries, Sophie Codner, Ryan Knutson, Matt Kwong, Kate Leinbaugh,
The Journal.
The New Hit Depression Treatment? A Ketamine-Derived Nasal Spray
With help from Trina Menino. Our engineers are Griffin Tanner, Nathan Singapak, and Peter Leonard. Our theme music is by So Wiley. Additional music this week from Katherine Anderson, Peter Leonard, Bobby Lord, Nathan Singapak, Griffin Tanner, and Blue Dot Sessions. Fact-checking this week by Najwa Jamal and Mary Mathis. Thanks for listening. See you on Monday.
The Journal.
The New Hit Depression Treatment? A Ketamine-Derived Nasal Spray
Patients with results like Sean's have propelled sales of Spravato. Last year, it exceeded a billion dollars in sales worldwide, becoming a blockbuster drug for J&J. For the pharmaceutical industry, it's amplifying the potential of psychedelics as a treatment for mental health. Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Friday, March 21st.
The Journal.
The New Hit Depression Treatment? A Ketamine-Derived Nasal Spray
Coming up on the show, how a ketamine-derived treatment for depression became a hit for Johnson & Johnson.
The Journal.
The New Hit Depression Treatment? A Ketamine-Derived Nasal Spray
And I'm seeing some, like a very interesting background there for you. You've got a poster. You've got, is that Creature from the Black Lagoon?
The Journal.
The New Hit Depression Treatment? A Ketamine-Derived Nasal Spray
Nearly 30% of adults in the U.S. say they've been diagnosed with depression at some point in their lives, according to a Gallup survey. But even though depression is so prevalent, and in recent years more widely discussed, the way we treat it hasn't evolved for years.
The Journal.
The New Hit Depression Treatment? A Ketamine-Derived Nasal Spray
Dr. Hosseini Manji is a neuroscientist and professor of psychiatry at Oxford University. And for years, he worked at J&J coming up with treatments for depression.
The Journal.
The New Hit Depression Treatment? A Ketamine-Derived Nasal Spray
In the late 80s and early 90s, the pharmaceutical industry made some breakthroughs in the field of mental health treatment with the success of Prozac.
The Journal.
The New Hit Depression Treatment? A Ketamine-Derived Nasal Spray
These drugs are called SSRIs, and they boost serotonin levels in the brain. They're some of the most common treatments for depression, and they're effective, but results vary.
The Journal.
The New Hit Depression Treatment? A Ketamine-Derived Nasal Spray
Sean loves movies, but he doesn't just love to watch them. He makes them too.
The Journal.
The New Hit Depression Treatment? A Ketamine-Derived Nasal Spray
Hosseini wanted a medicine that worked quickly and could help people with treatment-resistant depression. Instead of boosting serotonin levels, he thought a better strategy for dealing with depression was to help the brain cells create new connections. So Hosseini went looking for a substance that could do that. And he found a good option. Ketamine. Ketamine is best known as a psychedelic.
The Journal.
The New Hit Depression Treatment? A Ketamine-Derived Nasal Spray
It's often used illegally at clubs and is popular for its hallucinogenic effects. It can make people feel detached from reality and kind of spacey.
The Journal.
The New Hit Depression Treatment? A Ketamine-Derived Nasal Spray
It is usually snorted or swallowed. The desired effect is euphoria, a dreamlike state. Ketamine is a controlled substance, which comes with a risk of addiction and abuse. but it has also been used legally for decades as an anesthetic.
The Journal.
The New Hit Depression Treatment? A Ketamine-Derived Nasal Spray
In 2008, Hosseini was hired to become the new global head of neuroscience at J&J. He started working to create an effective medication for treatment-resistant depression. Hosseini believed ketamine could provide a breakthrough. But first, he needed to convince J&J.
The Journal.
The New Hit Depression Treatment? A Ketamine-Derived Nasal Spray
Why did you want to make this film?
The Journal.
The New Hit Depression Treatment? A Ketamine-Derived Nasal Spray
How long before you were able to change their minds? Did it take a lot of arguing on your part?
The Journal.
The New Hit Depression Treatment? A Ketamine-Derived Nasal Spray
Knowing these risks, Hosseini and his team worked on minimizing them as much as possible. He came up with the idea of putting a very small amount of a derivative of ketamine into a nasal spray device.
The Journal.
The New Hit Depression Treatment? A Ketamine-Derived Nasal Spray
This device also had the added benefits of getting the dose to the brain faster than taking a pill would and was more convenient than using an IV. What were the challenges of testing this drug on patients? What were the risks involved?
The Journal.
The New Hit Depression Treatment? A Ketamine-Derived Nasal Spray
Because of these side effects, the drug would have to be administered under medical supervision in a clinic. In testing, Hosseini and his team saw real results. He noted how the dissociative feelings wore off after about an hour, but the sensation induced a longer-lasting chemical change in the brain that reduced depressive symptoms.
The Journal.
The New Hit Depression Treatment? A Ketamine-Derived Nasal Spray
The nasal spray had to go through many rounds of clinical testing, with some shown to improve depression, while others showed no improvement over a placebo. In 2019, the FDA approved Spravato for patients with treatment-resistant depression to take along with another antidepressant.
The Journal.
The New Hit Depression Treatment? A Ketamine-Derived Nasal Spray
For Hosseini and his team, the FDA approval was a huge breakthrough.
The Journal.
The New Hit Depression Treatment? A Ketamine-Derived Nasal Spray
Were you popping champagne?
The Journal.
The New Hit Depression Treatment? A Ketamine-Derived Nasal Spray
But Spravato got off to a shaky start. Because it had to be taken in a clinic under supervision, doctors and patients had more of a learning curve than typical medication. And then the pandemic made that sort of in-person treatment even harder. How Spravato turned into a blockbuster is next. When you first heard about a ketamine treatment for depression, what did you think?
The Journal.
The New Hit Depression Treatment? A Ketamine-Derived Nasal Spray
Sean says depression has been part of his life for as long as he can remember. At times, he says, it's been debilitating.
The Journal.
The New Hit Depression Treatment? A Ketamine-Derived Nasal Spray
Sean Fury, who we heard from earlier, was encouraged to try Spravato by his psychiatrist because he was continuing to struggle with his depression. What changed your mind?
The Journal.
The New Hit Depression Treatment? A Ketamine-Derived Nasal Spray
Sean attended his first appointment in 2023. The treatment was covered by his insurance. How did that first session leave you feeling afterwards?
The Journal.
The New Hit Depression Treatment? A Ketamine-Derived Nasal Spray
But Sean went back the next week, and the next, and the next. And how did your body feel after taking it?
The Journal.
The New Hit Depression Treatment? A Ketamine-Derived Nasal Spray
In the two years he's been taking it, Sean says he's only experienced hallucinations twice. He told me about the first time it happened.
The Journal.
The New Hit Depression Treatment? A Ketamine-Derived Nasal Spray
But overall, Sean says Spravato has worked for him.
The Journal.
The New Hit Depression Treatment? A Ketamine-Derived Nasal Spray
Since its slow start, Spravato has steadily grown its sales. J&J offered assistance to doctors who were interested in setting up clinics like the one Sean goes to. And like so many pharma companies, J&J also invested in an ad campaign.
The Journal.
The New Hit Depression Treatment? A Ketamine-Derived Nasal Spray
Since the beginning of 2023, prescriptions for Spravato have nearly doubled in the U.S. to more than 46,000. But with an estimated 3 to 5 million people suffering from treatment-resistant depression, according to J&J, the company has high hopes for the drug's potential. J&J predicts that it could make them $5 billion annually. Here's a company executive from an earnings call in January.
The Journal.
Germany's Economy Is Broken. There's No Plan B.
That's all for today, Friday, February 21st. Alessandra Rizzo, Alan Rodriguez-Espinosa, Heather Rogers, Piers Singhi, Jivika Verma, Lisa Wang, Katherine Whalen, Tatiana Zamise, and me, Jessica Mendoza, with help from Trina Menino. Our engineers are Griffin Tanner, Nathan Singapak, and Peter Leonard. Our theme music is by So Wiley.
The Journal.
Germany's Economy Is Broken. There's No Plan B.
Additional music this week by Katherine Anderson, Peter Leonard, Bobby Lord, Nathan Singapak, and Blue Dot Sessions. Fact-checking this week by Mary Mathis and Kate Gallagher. Thanks for listening. See you on Monday.
The Journal.
Germany's Economy Is Broken. There's No Plan B.
Like many other cities in Germany, Ingolstadt relies on just one company. In this case, it's the luxury car manufacturer Audi. Audi.
The Journal.
Germany's Economy Is Broken. There's No Plan B.
Ingolstadt's fortunes have been tied to Audi for 75 years. In the 60s, the company was acquired by Volkswagen. And since then, most of Audi's cars have been exported. Nearly 90% of Audis are sold outside of Germany. And its biggest foreign market for many years has been China. How reliant was Audi, how reliant were they on exports to China?
The Journal.
Germany's Economy Is Broken. There's No Plan B.
These luxury cars are at the heart of Germany's economy, which is the third largest in the world. Over decades, Germany developed an economic model based on manufacturing and exporting products like these, and it turned the country into a global powerhouse. But that model, which has been so effective for years, is on the verge of falling apart. Our colleague Tom Fairless covers the German economy.
The Journal.
Germany's Economy Is Broken. There's No Plan B.
But over time, China has stopped turning to Germany for as many products.
The Journal.
Germany's Economy Is Broken. There's No Plan B.
Not only is China producing its own cars, it's exporting them, making it a direct competitor to Germany. In 2022, China's auto exports soared past Germany's. Now, with its dominance in electric vehicles, China seems positioned to stay ahead.
The Journal.
Germany's Economy Is Broken. There's No Plan B.
Germany's also facing other issues that are squeezing the auto industry. In particular, high energy costs.
The Journal.
Germany's Economy Is Broken. There's No Plan B.
Right. So energy costs are high, which is being passed on to the manufacturers?
The Journal.
Germany's Economy Is Broken. There's No Plan B.
Audi has been a casualty of these shifts. The company reported a 91% decline in operating profits for its third quarter of 2024. It's been cutting thousands of jobs across Germany. This downturn at Audi has had a ripple effect on Ingolstadt. Audi, through its parent company, has historically been an important source of tax revenue and business for the town. Now, that's changed.
The Journal.
Germany's Economy Is Broken. There's No Plan B.
What does that mean for the town itself?
The Journal.
Germany's Economy Is Broken. There's No Plan B.
Audi declined to comment. There are more challenges for Germany's manufacturers on the horizon. At a press conference this week, President Trump talked about potential tariffs on auto imports into the U.S.
The Journal.
Germany's Economy Is Broken. There's No Plan B.
25 percent would be a massive increase from the status quo. At the moment, the tariff rate on cars is 2.5 percent.
The Journal.
Germany's Economy Is Broken. There's No Plan B.
And further exacerbate what's already going on.
The Journal.
Germany's Economy Is Broken. There's No Plan B.
For decades, Germany has been known as the king of luxury cars.
The Journal.
Germany's Economy Is Broken. There's No Plan B.
That fear may come into play this weekend when the country heads towards a big national election.
The Journal.
Germany's Economy Is Broken. There's No Plan B.
Could a new leader keep Germany's problems from getting worse? That's next.
The Journal.
Germany's Economy Is Broken. There's No Plan B.
Germans head to the polls this weekend to cast their votes for parliament. Our Germany bureau chief Bertrand Benoit says that the top concern among voters is the economy.
The Journal.
Germany's Economy Is Broken. There's No Plan B.
Voters are unhappy with the current government under Chancellor Olaf Scholz. His efforts to turn around the economy haven't worked. Scholz has been making only incremental tweaks, when many economists say what the country needs are big changes.
The Journal.
Germany's Economy Is Broken. There's No Plan B.
With less demand for German exports, one solution, some economists say, is more government investment. What does Germany need to be investing in?
The Journal.
Germany's Economy Is Broken. There's No Plan B.
But these kinds of investments are not what the candidates are talking about. Instead, when it comes to Germany's economic model, even the upstart anti-establishment parties are sticking to traditional economic policies. One of the contenders is Alice Weidel. She represents AFD, a populist right-wing party that's been associated with neo-Nazis.
The Journal.
Germany's Economy Is Broken. There's No Plan B.
And her proposals about how to fix the economy are focused on smaller modifications meant to revitalize Germany's export model.
The Journal.
Germany's Economy Is Broken. There's No Plan B.
Unless there's a turnaround, the fallout will reach far beyond the country's borders.
The Journal.
Germany's Economy Is Broken. There's No Plan B.
According to polls, the AFD is expected to gain a bunch of parliament seats in this weekend's election, though not enough for Vidal to end up running the government. That person is likely to be Friedrich Merz, the head of the CDU, a conservative center-right party. It was the party of Angela Merkel. Bertrand recently interviewed Merz.
The Journal.
Germany's Economy Is Broken. There's No Plan B.
Based on your conversation, what was your impression of his views on the economy?
The Journal.
Germany's Economy Is Broken. There's No Plan B.
How hard would it be to make a big change? Like, if the economy is so dependent on manufacturing and exports and that's starting to not really make sense anymore, why wouldn't the candidates want to do something else completely?
The Journal.
Germany's Economy Is Broken. There's No Plan B.
So what does that mean for Germany? Sounds like the economy is already struggling. You know, the voters are starting to see signs of that in their day-to-day lives. What happens?
The Journal.
Germany's Economy Is Broken. There's No Plan B.
And if that is what happens, what could that mean for Europe, for the EU, and for the rest of the world?
The Journal.
Germany's Economy Is Broken. There's No Plan B.
Welcome to The Journal, our show about money, business and power. I'm Jessica Mendoza. It's Friday, February 21st. Coming up on the show, Germany's economic model is cracking and there's no plan B. Last December, Tom took a reporting trip to a city in the south of Germany called Ingolstadt.
The Journal.
How the 'Napa Valley of Cannabis' Dried Up
Pueblo was one of the first communities to go all in when Colorado led the legalization of recreational marijuana. Now, 24 states around the country have done the same. What's your takeaway from your reporting on Pueblo?
The Journal.
How the 'Napa Valley of Cannabis' Dried Up
So it isn't that Pueblo is an example of why this is not going to work. It's more of a, it's not going to work this way.
The Journal.
How the 'Napa Valley of Cannabis' Dried Up
That's all for today, Friday, April 18th. The Journal is a co-production of Spotify and The Wall Street Journal. The show is made by Kathryn Brewer, Pia Gadkari, Carlos Garcia, Rachel Humphries, Sophie Codner, Ryan Knutson, Matt Kwong,
The Journal.
How the 'Napa Valley of Cannabis' Dried Up
Kate Linebaugh, Colin McNulty, Annie Minoff, Laura Morris, Enrique Perez de la Rosa, Sarah Platt, Alan Rodriguez-Espinoza, Heather Rogers, Piers Singhi, Jeevika Verma, Lisa Wang, Katherine Whalen, Tatiana Zamise, and me, Jessica Mendoza, with help from Trina Menino. Our engineers are Griffin Tanner, Nathan Singapak, and Peter Leonard. Our theme music is by So Wiley.
The Journal.
How the 'Napa Valley of Cannabis' Dried Up
Additional music this week from Katherine Anderson, Emma Munger, Bobby Lord, Nathan Singapak, Peter Leonard, So Wiley, and Blue Dot Sessions. Fact checking by Mary Mathis and Kate Gallagher. Thanks for listening. See you on Monday.
The Journal.
How the 'Napa Valley of Cannabis' Dried Up
Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Friday, April 18th. Coming up on the show, how one Colorado town's cannabis dreams went up in smoke. Pueblo is a city two hours south of Denver, with a population of just over 100,000 people.
The Journal.
How the 'Napa Valley of Cannabis' Dried Up
Karen Randall lives in Pueblo, Colorado, one of the first cities in the country to develop a legal marijuana industry.
The Journal.
How the 'Napa Valley of Cannabis' Dried Up
When recreational weed became legal in Colorado in 2014, Pueblo saw an opportunity to establish itself at the center of the cannabis boom.
The Journal.
How the 'Napa Valley of Cannabis' Dried Up
The county commissioner at the time called it the Napa Valley of Cannabis. Advocates like him imagined Pueblo would draw marijuana lovers from around the country. Why was this so important to Pueblo?
The Journal.
How the 'Napa Valley of Cannabis' Dried Up
The idea was that embracing the legal cannabis industry could bring new jobs, tourism, and tax revenue to Pueblo. And at first, it seemed like that's exactly what was going to happen.
The Journal.
How the 'Napa Valley of Cannabis' Dried Up
Karen took our colleague Julie Wernow on a tour of Pueblo late last year. As they drove around, they spotted signs of the cannabis industry everywhere.
The Journal.
How the 'Napa Valley of Cannabis' Dried Up
One local newspaper reported that the day after legalization, 50 people were camped out in front of one of the first weed shops in Pueblo, waiting for the doors to open. And in the first month of legalization, the two licensed shops in Pueblo County rang up a combined $1 million in sales. That amounted to $56,000 in taxes for the county. Pueblo couldn't get more shops licensed fast enough.
The Journal.
How the 'Napa Valley of Cannabis' Dried Up
One local joint that sprung up during that exciting moment was called Sticky Icky's. In 2016, the owners set up shop on a popular route from the city to a local lake, which brought a lot of business in the summertime.
The Journal.
How the 'Napa Valley of Cannabis' Dried Up
By 2017, Sticky Icky's was riding Pueblo's cannabis high. At one point, its daily sales rang up to about $20,000. But that boom didn't last long. And soon, things started looking sticky for businesses like Sticky Icky's.
The Journal.
How the 'Napa Valley of Cannabis' Dried Up
The 200 shops faced a lot of competition from each other. And it didn't help that the taxes on marijuana products were so high.
The Journal.
How the 'Napa Valley of Cannabis' Dried Up
I mean, I can see why businesses didn't love that.
The Journal.
How the 'Napa Valley of Cannabis' Dried Up
And some sellers were skipping the license process and going through the black market instead.
The Journal.
How the 'Napa Valley of Cannabis' Dried Up
That signature smell was hard to miss. And yet, many of the marijuana greenhouses and dispensaries that Julie saw seemed to be shuttered.
The Journal.
How the 'Napa Valley of Cannabis' Dried Up
At the same time, this was around 2020, other states started legalizing marijuana, creating even more competition. What did that mean for businesses like Sticky Icky's?
The Journal.
How the 'Napa Valley of Cannabis' Dried Up
As the marijuana industry in Pueblo has struggled, the county's tax revenue has plunged. Dispensaries have closed down, going from more than 200 businesses in 2017 to just 45.
The Journal.
How the 'Napa Valley of Cannabis' Dried Up
And as Julie spent more time in Pueblo, she heard from residents who felt strongly that the failure of the marijuana industry was hurting their town. That's next.
The Journal.
How the 'Napa Valley of Cannabis' Dried Up
Pueblo's marijuana business boomed and quickly went bust. Now, local law enforcement, along with some city officials and residents, say the experiment wasn't worth it. One of the lingering problems has to do with the people who came to Pueblo from out of town, drawn by the industry's promise. While some did start their own shops, that wasn't the case for everyone.
The Journal.
How the 'Napa Valley of Cannabis' Dried Up
But even as the cannabis industry took a nosedive in Pueblo, a lot of the newcomers stuck around. Crime and homelessness started to rise, and some residents that Julie talked to blamed marijuana. Local police told Julie that before legalization, there were only about 15 unhoused people in Pueblo, and they knew all their names. Now, that population has grown to more than 500.
The Journal.
How the 'Napa Valley of Cannabis' Dried Up
Julie went on a ride-along with Ryan Masterson, who's with the local police department. He said that unhoused people he's spoken to have told him that they came to Pueblo for the marijuana.
The Journal.
How the 'Napa Valley of Cannabis' Dried Up
Whether there's a distinct connection between homelessness and cannabis legalization is still being debated. Regardless, city officials say the tax revenue they're bringing in for marijuana isn't enough to meet the costs of some of the new problems they blame on the industry. And social organizations trying to address these issues are feeling the strain.
The Journal.
How the 'Napa Valley of Cannabis' Dried Up
Pueblo was a city that dreamed of being a marijuana hotspot. And it went all in on Colorado's growing legalized pot industry. Julie went there to see how it was faring a decade later.
The Journal.
How the 'Napa Valley of Cannabis' Dried Up
There are still some weed shops in Pueblo, though many of them are working with fewer employees and slower business. You know, Sticky Icky's is still there.
The Journal.
How the 'Napa Valley of Cannabis' Dried Up
What would it take at this point for Pueblo to have a strong economy or even a stable economy?
The Journal.
The Fight to Kick Soda Out of Food Stamps
Over the past 20 years, states have tried to get sugary drinks out of the SNAP program. But those efforts have always fizzled. This time, though, Arkansas has a chance. Industry insiders told Laura that if this idea spreads across the country, it could be a real hit to company sales, and soda makers are gearing up for a fight.
The Journal.
The Fight to Kick Soda Out of Food Stamps
Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Friday, March 7th. Coming up on the show, the fight bubbling to get soda out of Snap.
The Journal.
The Fight to Kick Soda Out of Food Stamps
That's former President Lyndon B. Johnson. Back in the 1960s, the U.S. government created a permanent food assistance program for low-income Americans. Today, those eligible for the program get a kind of preloaded debit card from their state through the U.S. Department of Agriculture. They can use that to pay for food at grocery stores, convenience stores, and farmers markets.
The Journal.
The Fight to Kick Soda Out of Food Stamps
When it comes to soda, Laura has recently been looking into a fight that's been brewing in one particular state, Arkansas. There's an effort there now to restrict what people can buy with food stamps, also known as SNAP, the Supplemental Nutrition Assistance Program.
The Journal.
The Fight to Kick Soda Out of Food Stamps
Almost 13 percent of Americans rely on SNAP. And every year, the federal government spends over $100 billion on the program. But soda and other sugary drinks have been a point of tension in the program for decades. Public health experts and lawmakers have raised concerns over the nutritional impact of those kinds of beverages.
The Journal.
The Fight to Kick Soda Out of Food Stamps
In the past, when states like New York and Minnesota have tried to get soda removed from SNAP for their residents, they've gone to the USDA. But the agency rejected their requests, saying the restrictions were too complicated to implement.
The Journal.
The Fight to Kick Soda Out of Food Stamps
There are a lot of different kinds of soft drinks with different levels of sugar content, and it would be tricky to sort out what could and couldn't be bought with food stamps. The agency also said it'd be hard to gauge what kind of impact that effort would have on public health. But under the new Trump administration, the push to ban soda from SNAP has been reignited.
The Journal.
The Fight to Kick Soda Out of Food Stamps
Robert F. Kennedy Jr., the new Secretary of Health and Human Services, has spoken out against sugary foods for a long time. As part of RFK's campaign to improve public health, what he calls MAHA, or Make America Healthy Again, he's specifically gone against soda for its high sugar content.
The Journal.
The Fight to Kick Soda Out of Food Stamps
In an op-ed for The Wall Street Journal last September, RFK said as much, adding it contributes to poor health in America. He also wrote that it's, quote, nonsensical for U.S. taxpayers to spend tens of billions of dollars subsidizing junk. And Brooke Rollins, the head of the USDA, has indicated that she'd support taking soda out of SNAP.
The Journal.
The Fight to Kick Soda Out of Food Stamps
Even with growing momentum to take soda out of SNAP, there are still some hurdles, including from within the Republican Party.
The Journal.
The Fight to Kick Soda Out of Food Stamps
The president of the American Beverage Association, which represents soda companies, told us that Americans should be able to decide what's best for their families. He also said that these proposed changes would not, quote, improve health or save taxpayer dollars. How the soda companies are fighting back? That's after the break.
The Journal.
The Fight to Kick Soda Out of Food Stamps
In Arkansas, Governor Sarah Huckabee Sanders is poised to send a request to the USDA to restrict sugary items from SNAP, potentially including candy, desserts, and soda. Companies like Coca-Cola and PepsiCo are now on high alert. And it's in part because the battle over soda in the SNAP program comes as these companies have been trying to keep up with changing consumer habits.
The Journal.
The Fight to Kick Soda Out of Food Stamps
Coca-Cola, for instance, fully acquired the milk brand Fairlife in 2020. In the past few years, PepsiCo also bought SodaStream and invested in Celsius energy drinks. As the companies move away from traditional sodas, they're also pushing back against the efforts in Arkansas. To do that, they're trying to appeal to one of America's most famous soda drinkers, President Donald Trump.
The Journal.
The Fight to Kick Soda Out of Food Stamps
— Laura says that the president has been skeptical of banning things his supporters like, telling his advisers that bans are unpopular. Beyond that polling, the American Beverage Association also launched an ad campaign. It highlighted that more than half the products Americans buy from soda companies are low or zero sugar drinks.
The Journal.
The Fight to Kick Soda Out of Food Stamps
So if Arkansas does manage to remove soda from SNAP, what will it mean for the people who use that program?
The Journal.
The Fight to Kick Soda Out of Food Stamps
Laura says it could also cause some of the complications that the USDA has referenced in the past, because it's unclear what does and doesn't count as an unhealthy soda.
The Journal.
The Fight to Kick Soda Out of Food Stamps
If Arkansas succeeds, Laura says that it could open the door for other states to do something similar.
The Journal.
The Fight to Kick Soda Out of Food Stamps
Who doesn't drink soda, right? That's our colleague Laura Cooper, who covers the beverage industry.
The Journal.
The Fight to Kick Soda Out of Food Stamps
How worried would you say soda companies are about what's going on?
The Journal.
The Fight to Kick Soda Out of Food Stamps
Before we go, we wanted to tell you that we're exploring a live event. Tell us what you want to see by taking our survey. There's a link in our show notes. And for updates on our plans, please leave us your email address. That's all for today, Friday, March 7th. The Journal is a co-production of Spotify and The Wall Street Journal.
The Journal.
The Fight to Kick Soda Out of Food Stamps
The show is made by Catherine Brewer, Pia Ghedkari, Rachel Humphries, Sophie Kotner, Ryan Knutson, Matt Kwong, Kate Leinbaugh, Colin McNulty, Annie Minoff, Laura Morris, Enrique Perez de la Rosa, Sarah Platt, Alessandra Rizzo, Alan Rodriguez-Espinosa, Heather Rogers, Pierre Singhi, Jivika Verma, Lisa Wang, Katherine Whalen, Tatiana Zamise, and me, Jessica Mendoza, with help from Trina Menino.
The Journal.
The Fight to Kick Soda Out of Food Stamps
Our engineers are Griffin Tanner, Nathan Singapak, and Peter Leonard. Our theme music is by So Wiley. Additional music this week from Catherine Anderson, Marcus Begala, Billy Libby, Bobby Lord, Nathan Singapak, Griffin Tanner, and Blue Dot Sessions. Fact-checking by Mary Mathis. Thanks for listening. See you on Monday.
The Journal.
A Tariff Loophole Just Closed. What That Means for Online Shopping.
Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Friday, May 2nd. Coming up on the show, what a world without De Minimis means for e-commerce. Did you realize that you were going to have to be an expert on De Minimis?
The Journal.
A Tariff Loophole Just Closed. What That Means for Online Shopping.
That's our colleague Shen Liu. Lately, she's been covering the administration's efforts to roll back the de minimis exemption. De minimis, by the way, is a Latin phrase, and it refers to things that are small or trifles. What is the purpose of the exemption originally? Like, who was supposed to benefit from it?
The Journal.
A Tariff Loophole Just Closed. What That Means for Online Shopping.
De Minimis was designed to make things simpler so that customs wouldn't have to inspect and tax every small item that American travelers brought back. For a long time, de minimis applied to goods under $200. Then, in 2016, Congress raised the limit to $800. And that new limit caught the attention of businesses because it gave them a way to avoid paying taxes on low-cost imports.
The Journal.
A Tariff Loophole Just Closed. What That Means for Online Shopping.
The exemption's popularity attracted government scrutiny. Since 2022, Congress has tried to get rid of the de minimis exemption. But those efforts didn't get far. When Trump announced new tariffs on goods from Mexico, Canada, and China back in February, he also said he would take away the de minimis exemption for all three countries.
The Journal.
A Tariff Loophole Just Closed. What That Means for Online Shopping.
He called de minimis a loophole that gave other countries an advantage over the U.S. and allowed illegal drugs to be smuggled in.
The Journal.
A Tariff Loophole Just Closed. What That Means for Online Shopping.
They're sending massive amounts of fentanyl, killing hundreds of thousands of people a year with the fentanyl.
The Journal.
A Tariff Loophole Just Closed. What That Means for Online Shopping.
China denies that it's at fault for the widespread use of fentanyl. It says that the failure is with the U.S., which China says hasn't been able to curb domestic addiction. Trump's order to suspend de minimis in February led to a lot of confusion. In the days that followed, something like a million packages piled up at JFK Airport in New York.
The Journal.
A Tariff Loophole Just Closed. What That Means for Online Shopping.
A week later, Trump delayed the suspension to May 2nd, but limited it to goods from Hong Kong and China only. Already, companies are feeling the pain, especially those that have built business models around the de minimis exemption.
The Journal.
A Tariff Loophole Just Closed. What That Means for Online Shopping.
Shein is a fast fashion retailer that sells extremely cheap clothing. Taimu is more like Amazon, where third-party businesses sell all kinds of stuff. So how does De Minimis help these two companies?
The Journal.
A Tariff Loophole Just Closed. What That Means for Online Shopping.
These added charges are largely a reaction to the Trump administration's high tariffs on goods from China. Right now, those tariffs are hitting an average of 165 percent. But there's a second reason the price tags on these products are going up, and it has to do with something called de minimis. De minimis. De minimis. De minimis.
The Journal.
A Tariff Loophole Just Closed. What That Means for Online Shopping.
Compare this to retailers like H&M or Zara. Those companies order big bulk shipments that are worth a lot more than $800.
The Journal.
A Tariff Loophole Just Closed. What That Means for Online Shopping.
Avoiding these taxes has helped Shein and Taimou keep prices ultra low, which is one of the reasons the companies are so popular in the U.S. Shein and Taimou are the biggest beneficiaries of the tax provision, accounting for 30 percent of de minimis packages from China. But now, with De Minimis going away, it's going to hit their business model.
The Journal.
A Tariff Loophole Just Closed. What That Means for Online Shopping.
One analyst told Shen Liu that he expects Xi and Entemu sales to slide into negative territory this week.
The Journal.
A Tariff Loophole Just Closed. What That Means for Online Shopping.
In anticipation of De Minimis going away, Shein and Taimou started making changes. They've pulled back on ad dollars spent in the U.S., redirecting instead to other markets. Shein has raised its prices. And Taimou for a while added an import charge to its products. Now the company is focused on sourcing from U.S. sellers instead of from China.
The Journal.
A Tariff Loophole Just Closed. What That Means for Online Shopping.
And both companies have ramped up efforts to move manufacturing out of China.
The Journal.
A Tariff Loophole Just Closed. What That Means for Online Shopping.
President Trump's trade war with China has made its way into your online shopping cart. Some of the most popular websites where you might find yourself paying more are Shein and Taimou.
The Journal.
A Tariff Loophole Just Closed. What That Means for Online Shopping.
But while Shein and Temu are some of the most well-known users of De Minimis, small online retailers are also bracing themselves. Many of those companies won't be able to adapt in the same way as the e-commerce giants. After the break, one U.S. business says this could be an existential crisis.
The Journal.
A Tariff Loophole Just Closed. What That Means for Online Shopping.
One company that's bracing for the impact of losing De Minimis is called Kuru Footwear. It's based in Salt Lake City, Utah, and it sells comfortable orthopedic shoes.
The Journal.
A Tariff Loophole Just Closed. What That Means for Online Shopping.
The Trump administration is ending today something called the de minimis exemption. It kind of sounds like a Harry Potter spell, but it's actually a trade provision. Basically, it means companies don't have to pay taxes on goods they're bringing into the U.S. as long as those goods are worth $800 or less.
The Journal.
A Tariff Loophole Just Closed. What That Means for Online Shopping.
That's Matt Barnes, Kuru's chief financial officer.
The Journal.
A Tariff Loophole Just Closed. What That Means for Online Shopping.
Which shoes do you have on right now?
The Journal.
A Tariff Loophole Just Closed. What That Means for Online Shopping.
Over 60% of Kuru's shoes are made in China, and the company sells them entirely online. Like Shein and Taimu, it uses a direct-to-consumer business model. How does the de minimis exemption fit into your business model?
The Journal.
A Tariff Loophole Just Closed. What That Means for Online Shopping.
And how much money has de minimis saved you in that time?
The Journal.
A Tariff Loophole Just Closed. What That Means for Online Shopping.
Wow. With De Minimis now gone, Kuru is on the hook for those tariffs. Can you give an example of how much you have to pay in tariffs on a pair of shoes retail?
The Journal.
A Tariff Loophole Just Closed. What That Means for Online Shopping.
Can you put that in sort of dollar terms?
The Journal.
A Tariff Loophole Just Closed. What That Means for Online Shopping.
Again, that's more than $300 in tariffs for a shoe that sells for $175. Kuru has done a number of things to try and mitigate all the costly effects. Last week, the company ran a sale to get rid of inventory, and it started to change its pricing.
The Journal.
A Tariff Loophole Just Closed. What That Means for Online Shopping.
Kuru already manufactures some of its products outside of China. But I asked Matt if they were considering moving even more of their operations to other countries, including to the U.S. He said that's not a realistic option for the company. It would just be too expensive and take too much time to build the factories they'd need.
The Journal.
A Tariff Loophole Just Closed. What That Means for Online Shopping.
At what point do you think these problems will become existential for Kuru?
The Journal.
A Tariff Loophole Just Closed. What That Means for Online Shopping.
While the de minimis suspension only applies to China and Hong Kong right now, there is a chance the administration could expand it.
The Journal.
A Tariff Loophole Just Closed. What That Means for Online Shopping.
But as of today, the Trump administration has taken away this tax exemption for goods from China and Hong Kong.
The Journal.
A Tariff Loophole Just Closed. What That Means for Online Shopping.
That's all for today, Friday, May 2nd. The Journal is a co-production of Spotify and The Wall Street Journal. Additional reporting in this episode by Esther Fung, Raphael Huang, and Liz Young.
The Journal.
A Tariff Loophole Just Closed. What That Means for Online Shopping.
The show is made by Catherine Brewer, Pia Gadkari, Carlos Garcia, Rachel Humphries, Sophie Kotner, Ryan Knutson, Matt Kwong, Kate Leinbaugh, Colin McNulty, Annie Minoff, Laura Morris, Enrique Perez de la Rosa, Sarah Platt, Alan Rodriguez-Espinosa, Heather Rogers, Pierre Singhi, Jivika Verma, Lisa Wang, Katherine Whalen, Tatiana Zamise, and me, Jessica Mendoza, with help from Trina Menino.
The Journal.
A Tariff Loophole Just Closed. What That Means for Online Shopping.
Our engineers are Griffin Tanner, Nathan Singapak, and Peter Leonard. Our theme music is by So Wiley. Additional music this week from Katherine Anderson, Peter Leonard, Emma Munger, Nathan Singapak, and Blue Dot Sessions. Fact-checking by Kate Gallagher and Mary Mathis. Thanks for listening. See you on Monday.