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Markets welcome Scott Besson's nomination for Treasury Secretary. Wall Street is interpreting that as here's someone who's somewhat practical in how they approach Trump's very miterif man kind of policy.
Plus, Wicked defies gravity at the box office, and WSJs take on the week co-host, Teles Deimos, prescribes a health checkup for our investment portfolios. It's Monday, November 25th. I'm Kate Bullivant for The Wall Street Journal, filling in for Luke Vargas, and here is the AM edition of What's News, the top headlines and business stories moving your world today.
Donald Trump is eyeing two investors for the job of Deputy Secretary of Defense, the second highest ranking civilian role at the Pentagon. According to people familiar with the transition, Trey Stevens, a partner at Venture Capital Firm Founders Fund, is on the list of people Trump is considering. And as the journal has reported, Steven Feinberg, co-CEO of Cerberus Capital Management, is also in the running.
The selection of either of these candidates for the role, which would put them in charge of running the defense budget, could be welcome news for the hundreds of new defense startups that have entered the military market in recent years. Both men have invested into or founded companies in that space. A spokesman for Feinberg said he hadn't been offered any job in the administration, while Stevens and Founders Fund declined to comment. Spokespeople for Trump didn't return requests for comment.
Meanwhile, Trump has picked hedge fund manager Scott Besant to lead the Treasury Department, elevating one of his most vocal supporters in the finance world to a crucial role in his administration. Journal Europe Finance editor Alex Frangos says Besant will be tasked with turning Trump's campaign trail promises into economic policy, as well as reassuring Wall Street that the president-elect's proposals won't be damaging for the economy.
The big question is going to be tariffs. That's the thing that scares Wall Street. People think it's economically disruptive, could cause markets to be volatile and cause inflation to come back up. But Bessent historically hasn't been a pro-tariff person. He has obviously come around as a Trump supporter and seems willing to implement. But that gives a little bit of breathing room for people to think that maybe he's somewhat practical about how tariffs are going to work and that he's described them as
a tool that you use to get to the bargaining table and get to a place where you have good trade relations. So there are some analysts out there saying that Bessent is a more predictable pick, someone who may provide a somewhat calming influence on the administration. And so markets are taking that into account. The dollars fall in a little bit. Bond yields have come down a little bit. Stock futures are up.
and Trump has also announced his pick for Labour Secretary, tapping Laurie Chavez-Derema, a rare pro-union Republican. The choice comes amid a fight over Labour policy inside the Republican Party, with some members, as we discussed on our show on Friday morning, pushing for a rethink of the GOP's longstanding hostility toward organised Labour.
The US, Europe and a handful of other rich countries agreed over the weekend to triple their annual climate financing to at least $300 billion a year by 2035, wrapping up climate talks in Azerbaijan. Developing countries had been looking for a much more ambitious annual target of more than $1 trillion by 2030, and expressed outrage at a goal Indian delegate, Chardonnay Rainer, described as being too little too late.
The amount that is proposed to be mobilized is abysmally poor, it's a paltry sum, it is not something that will enable conducive climate action that is necessary for the survival of our country and for the growth of our people, their livelihoods. General reporter Matthew Dalton is just back from Azerbaijan and he says the prospect of a second Trump presidency
cars uncertainty over this climate pact. The US is supposed to be the single largest funder of these efforts. So if Trump is going to pull out of the Paris Accord, he's also going to slash funding presumably for climate finance projects. That's probably going to be supported by the Republican-controlled House and Senate, at least over the next two years.
The agreement says $300 billion a year by 2035. But there's 10 years in between that. And so there's got to be some kind of steady increase. Over the next four years, that's going to be very difficult without the US really engaged.
Wicked, the Universal Pictures' movie adaptation of the stage show Smash has collected a blockbuster $114 million in its opening weekend. The weekend's other new release, Paramount Pictures Gladiator 2, grossed around $55 million, with the two films giving theatre owners a much-needed boost.
And in news moving markets today, Italy's unit credit has launched a $10.5 billion offer to buy small-arrival Banco BPM, a takeover that will create the Eurozone's biggest bank by market value. The deal is subject to regulatory approval, but unit credit expects to complete it by June. It's the latest sign of increased deal-making activity among European lenders as a tailwind from high interest rates begins to fade.
Banco BPM shares jumped at the open in Milan. Coming up, if you're hungry for more insights and analysis to set you up for the week ahead in markets, you're in luck. The WSJ's take on the week co-host Teles Demos joins us to explain why investors, small and large, should be paying attention to commercial real estate. That's after the break.
TMB Tech Minute gives you the day's top tech headlines featuring newsmakers that shape the tech world and beyond, like OpenAI CEO Sam Altman. The two things that I think will matter most over the next decade are abundant and inexpensive, intelligence, and abundant and cheap energy. And if we can get these two things, then it's almost difficult to imagine how much else we could do. Check out TMB Tech Minute in the Tech News Briefing Feed from the Wall Street Journal.
If you hadn't heard, WSJ's Take on the Week podcast is back. On Sunday's new host, Tell us Demos and Gun Jim Banerjee, get you ready for events likely to shape the trading week. They sit down with an outside guest to go deep on an economic trend we'd be wise to keep an eye on, which is why we ask Tell us to drop by to talk to our Luke Vargas about commercial real estate.
Tell us my initial thought was, huh, okay, pretty bold, CRE for episode two of the relaunch. And then I saw your very cheeky news bag and I was convinced.
Well, we at Take On the Week fear no topic, but actually, CRE had a very familiar news hook, as we say in the biz, which is that Rockefeller Center, an iconic holiday Americana commercial real estate property, actually was recently part of a very big deal. So Rockefeller Center refinanced itself and did a $3.5 billion financing. And it turned out to be just a perfect way to talk about
This really just sort of mega trend that has been going on for the last few years, which is looking at what is the future for downtown office retail property in the post pandemic world when more people are working from home. So this deal was a lens on that. Your guest for yesterday's episode was Rebecca Rocky, the deputy chief economist at Cushman Wakefield, the big commercial real estate services firm. And in the past, I want to play a clip from her.
The reality is commercial real estate was viewed as a niche asset class, and it is actually not so niche anymore. It is about 12% of the asset base in the country, which is about $168 trillion in total. The allocations
towards investing in commercial real estate have been growing structurally over the last 20 years. And we expect that to continue. Now, within CRE, you're going to certainly have a little less of the pot going to office. You see a lot more interest in things like data centers, industrial, multifamily, things where there are long-term drivers of fundamental demand. And over time, there's going to be a scarcity of supply.
Tell us some classes of commercial real estate. It sounds like are thriving, but the broader outlook remains pretty mixed, right? Absolutely. I think that there are still a lot of questions about properties that are okay to not great, right? Everybody can think of an office park near their house or, you know, an older office building in their city where if you were taking out a lease for the next 10 years, would you want to be in that building? Right? Probably not. And so a rundown mall. Oh, absolutely, right? Empty malls. All of those things are still out there.
And some of those properties may have been able to, what they call in the business, sort of kicking the can down the road or extend and pretend, right? They refinanced it. They put up a little more money. Maybe they did some improvements to the building that sort of keep things going for now. But the fundamental question of nobody really wants to be in this building are going to persist. And that could all get worse again, depending on what happens with interest rates, right? It's much easier to refinance
a okay property if you can do it cheaply. If you have to pay up for that financing, well, then you've got to figure out a way to make the maths math and sometimes they don't. It really was not long ago that the combination of high rates and default risks was prompting some serious fears about ripple effects across the whole economy.
Absolutely. In 2023, when there was a banking crisis, one issue was commercial real estate is a big lending space, especially for smaller banks. And so it was a worry for banking. There were people predicting that there were going to be waves of bank failures related mainly to commercial real estate. We have not seen that, thankfully thus far, but I think it's going to continue to be a topic of focus, especially if we get into trickier situations like really high interest rates, like a struggling economy.
Arthan tells, so where then does this net out for investors who might want to dip their toes into CRE? Well, one thing that we talked about on the show is that a lot of investors might have exposure to, I don't know about you, but I don't own any large commercial properties in big cities or really any cities.
No, I wish. That might be nice. But some people are individually invested in things like real estate investment trusts or REITs, which are publicly traded stocks of entities that own properties. They might more likely be exposed to those sorts of things through their 401k or pension fund or something like that. But what's interesting about that is that REITs might be focused on those kind of class A properties, not those
what they call class B or C properties, those less desirable offices, you know, the kind that don't have on-tap kombucha type of things. The other thing is that a lot of people's CRE, we've been talking about CRE, commercial real estate, is a broad category.
Office is sort of the squeaky wheel right now. And other CRE type investments might have exposure to things that are much hotter and more exciting. Data centers that power AI computing, warehouses for e-commerce, right? And then of course, some of the exposure also comes from the debt side of things, right? Commercial real estate produces a lot of bonds to finance it. So there might be funds that own those bonds and loans. And those investments, your risk there might be more related to what happens with interest rates than what it does than whether or not
people are working from home or not and occupying those offices. Obviously, it all gets related, but as an individual investor, it's a good excuse to do a kind of health checkup on your portfolio and understand a little bit of what part of commercial real estate you actually are exposed to. Ending on a note of very responsible financial advice, tell us I wouldn't expect anything less. We gave you homework. Everybody listening and watching, you got homework for this one.
Good homework. Tell us Demos is the co-host of WSJ's Take On The Week podcast, which you can catch every Sunday. Go and check out yesterday's episode now, wherever you get your podcast. Tell us. Thanks so much. Awesome. Thanks, Luke.
And that's it for What's News for Monday Morning. Today's show was produced by Daniel Bark with supervising producer Christina Rocha. And I'm Kate Bullervant for The Wall Street Journal filling in for Luke Vargas. We'll be back tonight with a new show. Until then, thanks for listening.
