Why the San Francisco Fed President Supports a Rate Cut in December

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Alex Ossola (0:32)

A key Fed official says she supports a December rate cut. Plus, what's next for Trump's Ukraine peace plan?

Michael R. Gordon (0:39)

This is fundamentally about sovereignty, Ukraine's sovereignty and Ukraine's security. And yes, this plan would require Ukraine to relinquish some of the Donbass that they still hold a portion of, and they've objected to that.

Alex Ossola (0:55)

And why employees at big private equity firms are jumping ship, leaving behind paydays that could be worth millions. It's Monday, November 24th. I'm Alex Ossola for the Wall Street Journal. This is the PM edition of What's News, the top headlines and business stories that move the world today.

In an exclusive interview with The Wall Street Journal, San Francisco Fed President Mary Daly said today that she supports lowering interest rates at the Central Bank's meeting next month. Daly doesn't have a vote on monetary policy this year, but her views are notable, as she rarely has been in public opposition with Fed Chair Jerome Powell. Powell is likely to play the key role resolving officials' differences on whether to cut rates in December. Daly says she would cut rates because a worsening jobs market is more of a risk right now than a big increase in inflation. Growing hopes for a rate cut next month are helping revive stocks. Market bets on a December rate reduction rose to 80%, up from about 40% a week ago. Chipped stocks and other big technology shares jumped today, and the NASDAQ rose 2.7%, leading gains. The S&P rose 1.6% and the Dow added 0.4%. As we mentioned on this morning's show, the White House says it has made progress towards ending the war in Ukraine after this weekend's talks in Geneva. European diplomats say that negotiators found some common ground on the plan. But European officials familiar with the matter say the biggest issues will be left to President Trump and Ukrainian President Volodymyr Zelensky to work out. Here to walk us through where the negotiations stand is WSJ National Security correspondent Michael Gordon. Michael, Zelensky's main problem with the plan is the Kremlin's demand for Ukraine's territory in the east of the country, including territory it hasn't captured. He says that would leave Ukraine vulnerable to future attack by Russia. How much of a sticking point is this?

Michael R. Gordon (2:51)

The Trump administration has a tendency to cast this in terms of territory, but that's not what this is about. This is fundamentally about sovereignty, Ukraine's sovereignty and Ukraine's security. And yes, this plan would require Ukraine to relinquish some of the Donbas that they still hold a portion of, and they've objected to that. But what does Ukraine want? They want European peacekeepers on Ukrainian soil as a deterrent, in case the Russians would attack again in the future. That's one thing they want. The other thing is they don't want any constraints on the size of their military. This plan that the Trump people put together with Russian input bars European reassurance forces, it's called, from being deployed in Ukraine. And it also caps the Ukrainian military. It's 600,000.

Alex Ossola (3:44)

So let's say the US, Ukraine and Europe are able to reach an agreement. What are the prospects of Russia then agreeing?

Michael R. Gordon (3:52)

Right now, the Russians don't appear to be in much of a negotiating frame of mind. They're taking enormous casualties, but they're willing to pay that price to grind forward and claim more ground. So what are the prospects of Vladimir Putin changing his strategic objectives? I would say not great. And heretofore, there's also been a pension by the White House to put more pressure on the Ukrainian side than the Russian side.

Alex Ossola (4:21)

That was WSJ National Security Correspondent Michael Gordon. Thank you, Michael.

Michael R. Gordon (4:25)

Thank you.

Alex Ossola (4:30)

In four Trump administration related developments today, China's leader Xi Jinping initiated a phone call with President Trump to talk about Taiwan in a rare diplomatic outreach from China that follows growing tensions with Japan. Japan's new Prime Minister has said the country would likely get sucked into a war if China tried to take Taiwan by force. In a social media post today, Trump said he accepted Xi's invitation to visit Beijing in April and that Xi would visit the US later next year. He didn't mention Taiwan or the diplomatic crisis between Beijing and Tokyo, an omission that's likely to rattle US allies in the region. Trump said he and Xi discussed the war in Ukraine, among other things. A federal judge has dismissed criminal charges against both former FBI Director James Comey and New York Attorney General Letitia James in a blow to President Trump's efforts to prosecute his perceived political adversaries. The judge ruled that Lindsay Halligan, the prosecutor Trump chose to bring the cases, was unlawfully appointed. White House Press Secretary Caroline Levitt says the Justice Department plans to appeal. President Trump's advisers are discussing a proposal to head off sharp increases in health insurance costs for millions of Americans next year. People familiar with the strategy say the White House officials are weighing a two-year extension of enhanced Affordable Care Act subsidies. Lawmakers are facing a mid-December deadline for health care votes promised by the GOP to Democrats as a condition for ending the government shutdown earlier this month. The subsidies expire at the end of the year. White House officials cautioned that Trump hadn't settled on a plan. And the Pentagon says it's probing allegations of misconduct against Democratic Senator Mark Kelly of Arizona after he appeared in a video with other Democrats calling on troops to disobey unlawful orders. Kelly, a retired Navy captain, says efforts to intimidate him won't stop him from doing his job.