Pentagon Asks Carmakers to Boost Weapons Production

0:00Enterprises are operationalizing AI at scale, moving from experimentation to accountability. How can leaders embed AI into core operations, address unfinished digital foundations, and measure success by outcomes instead of pilots? Learn more on a new episode of Tech Fluential, a podcast from Deloitte and custom content from WSJ.

0:21Washington dusts off its World War II playbook, asking manufacturers like GM and Ford to ramp up weapons production. Plus, why pricier fuel is putting Spirit Airlines' future in doubt. And Europe drafts a plan to protect the Strait of Hormuz after fighting stops, ignoring President Trump's appeal for immediate help. The chance is that he sees this plan, that Europe has cooked up as something of a nothing burger, and that it actually ends up just irating him further and further alienating the U.S. from Europe. It's Thursday, April 16th. I'm Luke Vargas for The Wall Street Journal, and here is the AM edition of What's News, the top headlines and business stories moving your world today.

1:07The Trump administration is pressing U.S. manufacturers to massively boost weapons production, framing the push as a matter of national security. We're exclusively reporting that senior defense officials have held wide-ranging talks with executives at Ford, GM, GE Aerospace, and Oshkosh as part of the latest effort to put military manufacturing on what Defense Secretary Pete Hegseth has called a wartime footing. Lawmakers and the Pentagon have been concerned about manufacturing capacity since the U.S. and NATO began transferring large quantities of weapons to Ukraine after Russia's full-scale invasion in 2022.

1:42The Pentagon's recent request for a $1.5 trillion budget, which would be the department's largest in modern history, calls for major investments in munitions and drone manufacturing. Firefighters in Australia have extinguished a major blaze at an oil refinery after it burned for over 12 hours. Our David Winning told me the fire is insult to injury for a country already dealing with stretched energy supplies because of the Iran war. Australia used to have a thriving refining industry. But what we've seen over the last 15 years is that a lot of the facilities that they had closed and in many cases were replaced by fuel import terminals.

2:19The fire which happened very late on Wednesday is at a refinery that produces 120 ,000 barrels per day. That meets 10 % of Australia's fuel needs and 50 % the needs in the state of Victoria, which is home to Melbourne. So it is a setback. To shore up supplies, Australia's prime minister has been visiting regional oil suppliers and announced deals today to import diesel from South Korea and Brunei. Though David said Australia's not out of the woods just yet. The question for me is not so much how it feels in cities, it will be how it feels in remote areas where you use diesel for farming, we're coming up to a planting season, and there's only one gas station within a reasonable distance and all of the communities around it are using that fuel supply.

3:05That is where the pinch point is. If this evolves into fuel rationing, we're currently on level two of a four-level strategy, of which rationing is level four, then that would have political implications. The government has tried to hold costs down. They've halved the fuel excise duty. So that is offering relief to people and sort of easing anxiety. But then again, on the flip side, it also stokes demand because consumers aren't getting the right price signals. The question is how successful the government is going to be in terms of competing on the international stage for cargoes and being able to maintain fuel supply into Australia.

3:41According to the International Energy Agency, Australia had just 49 days worth of oil held in reserve at the end of last year, the lowest levels of any IEA member and below the IEA's minimum 90-day requirement.

3:58Spirit Airlines is facing a potential liquidation as its plans to escape bankruptcy collide with surging fuel prices. The discount carrier and some of its creditors had reached a deal just before the Iran war that would have seen it emerge from Chapter 11 as a leaner airline by early summer. However, the lenders behind Spirit's revolving credit line have since objected to that reorg, saying that it didn't account for much higher fuel expenditures. While the likes of Delta and United hope to recoup fuel costs through ticket prices, Spirit is more vulnerable, with JPMorgan analysts saying that its higher fuel costs could surpass its cash on hand.

4:34The world's largest contract chipmaker, TSMC, has once again beat analysts' estimates, posting a nearly 60 percent jump in quarterly net profit. While the company's production lines face longer-term risks if the Iran war keeps energy prices higher or continues to crimp helium exports, AI chip demand has thus far been unfazed by the conflict. And CEO CeCe Wei also downplayed the risk that rivals like Intel, which the U.S. government took a stake in last year, posed an imminent threat. And we view Intel as a formidable competitor and do not underestimate them. But having said that, there are no shortcuts.

5:15The fundamental rule of the country game never change. They need technology leadership, manufacturing excellence, and customer trust, and most of all, the service. And Wei added that breaking into fabrication, which Intel plans to do with Elon Musk's SpaceX, Tesla, and XAI, won't happen overnight. It takes two to three years to build a new fire. No shortcuts. And it takes another one to two years to ramp it up. And a raft of other earnings updates are due today with Pepsi, U.S. Bancorp, and Abbott Laboratories all out this morning, while Netflix will report after the closing bell. And while this year's crop of newly listed companies have seen mixed results since their IPOs, biotechs appealing to broad health needs are soaring, led by Connecticut-based Veridermix, whose shares are up 370 percent since its February debut.

6:12Journal reporter Brian Gormley says the company's success is being driven by the mass market potential of its hair loss pill. The barodermics story appeals to biotech specialist investors and also more generalist or consumer-oriented investors. Hair loss is a highly relatable condition, and I think barodermics benefits from growing interest in products that serve the full spectrum of chronic health needs that people face. Brian added that investors are shifting away from biotechs specialized in severe disease treatment, instead betting on broad health issues such as weight loss. Coming up, what Europe's post-war plan looks like to free up the Strait of Hormuz without the U.S., and we'll look at a rather quirky tax loophole New York's real estate developers are capitalizing on after the break.

7:05This episode is brought to you by Charles Schwab. Decisions made in Washington can affect your portfolio every day. But what policy changes should investors be watching? Washington Wise is an original podcast from Charles Schwab that unpacks the stories making news in Washington right now and how they may affect your finances and portfolio. Listen at schwab.com slash Washington Wise.

7:34European countries are putting together a plan for a broad coalition to help free up shipping through the Strait of Hormuz. That would include sending mine clearing and other military vessels, though that would only come after the war ends and could cut out the U.S. Max Colchester is the Journal's U.K. correspondent. Max, French President Emmanuel Macron said earlier this week the plan is for an international defensive mission that doesn't include the belligerent parties, meaning the U.S., Israel and Iran. So what's the plan? The idea is how best Europe and its allies can reassure shipping companies that it's safe to continue traveling through the strait after the war between Iran and America has come to an end.

8:15It looks unlikely that China will be on the table on Friday. And a key point to this is that the US isn't invited to this meeting because European officials think that they don't want to be under the aegis of Trump during this project. And secondly, they also fear that if the US is involved, Iran is less likely to sign off on the project. which again shows how Europe is trying to take matters into its own hands and really try to be a major player at a table dominated by large regional economic powers. And yet doesn't that just invite a clash with the US which has been specifically calling on European allies to back the war?

8:52There's a reality here which is one, politically in Europe this war is very unpopular so European leaders are very reticent to be doing anything alongside the US in the Strait of Hormuz. Trump has been very vocal saying that Europe should come to America's aid and should be part of a plan to forcibly open the strait or at least blockade the strait to try and force Iran to effectively play ball with America and unilaterally decide to not attack shipping going through the strait. The chance is that he sees this plan that Europe has cooked up as something of a nothing burger, and that it actually ends up just irating him further and further alienating the US from Europe.

9:38And secondly, there's also a military reality, which is that Europe and its allies don't have the military heft to go in and clear out the strait. And so for them, the only realistic option is to try and offer what would effectively be a reassurance force to offer comfort to shipping companies once the fighting has ended. That all sounds, Max, a bit like political theater, though. There's a degree of political theatre, but there's also a degree of business reality, which is that after the fighting stops, it is likely that insurers will request and shipping companies will require that there is a degree of military presence in the strait to ensure that, well, to minimise risk, really, to ensure that if something does go wrong, there is military presence in the region to take down drones and potential missiles and to offer insurance companies and those operating the ships a degree of safety.

10:32We saw this really in the Red Sea back between 2023 and 2025, where the European countries clubbed together to try and essentially ferry cargoes through the Red Sea to avoid them being attacked by Houthis. The US had its own mission alongside the UK and various other allies, which was much bigger. So I think it's not impossible that we see a similar thing play out in the Strait of Hormuz with two military missions operating in parallel. What we're seeing now is Europe is really looking at its plan B for how does it ensure its own security in an era where the U.S. does not want to get involved in Europe's defense.

11:11And in a way, this plan for freeing up the Strait of Hormuz post-conflict is part of that thinking, which is what can Europe do on its own to protect its own interests. That was Journal Correspondent Max Colchester. And finally, New York Mayor Zoran Mamdani is extending an olive branch to wary landlords with a new insurance program designed to slash premiums, a surprising move for an administration that's also calling for rent freezes and higher property taxes. Facing the prospect of increased expenses, real estate reporter Rebecca Pechotto says that some developers have been on the hunt for loopholes in a tax law meant to encourage more affordable housing.

11:53Developers are now slicing their large projects into 99-unit pieces. Basically, this allows them to get the 485x tax break. Because they're staying under 100 units, they avoid triggering extra affordability and wage requirements. And developers know that this approach, building in 99-unit segments, is more inefficient. But they say that it's worth it. Like, they can't make these 485X projects work financially with the stricter requirements for 100-plus unit buildings. And, of course, this loophole has sparked outrage among construction labor unions who say that developers are getting away with building large projects without paying workers more and without adding more affordable units as 485X originally intended.

12:40Despite those concerns, New York officials are not currently looking to close the 99-unit loophole. And that's it for What's News for this Thursday morning. Today's show was produced by Hattie Moyer and Daniel Bach. Our supervising producer is Sandra Killhoff. And I'm Luke Vargas for The Wall Street Journal. We will be back tonight with a new show. And until then, thanks for listening.

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