Stunned GOP Looks to Replace Graham After His Sudden Death

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0:33Republicans begin the scramble to replace Senator Lindsey Graham following his sudden death. Plus, company expectations are sky high for this earnings season. But can it last? We're past the AI hype. Now we want some sort of proof that there are returns on these investments. And shares in SK Hynix suffer their steepest drop ever. It's Monday, July 13th. I'm Daniel Bach 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. Republicans are expected to move quickly to fill the seat of late Senator Lindsey Graham, the longtime South Carolina lawmaker who died late on Saturday at the age of 71.

1:15Preliminary findings by the District of Columbia Medical Examiner show that Senator Graham died of an aortic tear caused by cardiovascular disease. He had been in Kiev on Friday to meet with Ukrainian President Volodymyr Zelenskyy before returning home to Washington. I've never been more optimistic than I am today that we have the formula to end this war. Help Ukraine be more lethal. Let those supporting Russia to know it's going to be a price to be paid if you keep doing it. He said I'm tired because it's a long trip. But other than that, he was he was fine. President Trump told CNN's State of the Union that he spoke to Graham shortly before he died.

1:55He was a great politician. He was a natural. There are very few of them. He was a natural politician, got along with everybody. When he didn't, he was very tough. You know, he's a tough cookie, too, but he got along with everybody. Journal-White House reporter Alex Leary says Graham was known as a foreign policy hawk who was widely respected in Washington and after being a fierce critic of Trump, became one of the president's closest allies on Capitol Hill. The loss of Senator Lindsey Graham is just a shock that settled over Washington. He was not just a beloved figure among fellow lawmakers, including Democrats, who saw him as a folksy, smart, collegial person, even if they disagreed strenuously with some of his views on foreign policy.

2:38And his relation with President Trump will go down as one of the most interesting relationships of the Trump era, someone who really vehemently opposed Trump and became one of his closest friends and allies. When Trump was running for president in 2016, Graham was a fierce critic of him, saying that the Republican Party would be forever changed. And he continued to criticize him at times during Trump's first term, most notably during the aftermath of the January 6th riot at the Capitol by Trump supporters to overturn the election results. But they patched things up. Graham represented the foreign policy hawkish views that traditional conservatives had.

3:19He was very consistent on that front for a long time. He was instrumental in advocating for the war with Iran, for example, a fierce defender of Israel. So a lot of ins and outs, contradictions, and sort of a fascinating political storyline between those two. His death narrowed Republican Senate majority, adding to the challenges the GOP faces in moving President Trump's agenda forward ahead of November's midterms. Alex says South Carolina Governor Henry McMaster can immediately appoint someone to serve out the rest of Graham's term. Politically, in South Carolina, this is going to set off a certain free-for-all to replace Graham.

3:55The governor there can appoint someone temporarily, but there's a lot of ambitious, younger Republicans in a very conservative state that are going to vie for this seat. So we now have another blockbuster election on our hands. Names floated for the short-term appointment are those who have expressed a personal interest in running in the primary include Representatives Russell Fry, Nancy Mace, Ralph Norman, and Lieutenant Governor Pamela Evitt. Their representatives didn't immediately respond to requests for comment or couldn't immediately be reached. Because of the slim lead over Democrats, GOP House leaders have signaled they are wary of any House member leaving for a new post before the end of this Congress.

4:34Once someone fills Graham's position, Republicans will be back to a 53-47 majority, though Senator Mitch McConnell remains unavailable to vote because of his own health problems. Over the weekend, McConnell broke a week's-long silence about his hospitalization, saying he's been recovering from a fall and a subsequent bout of pneumonia.

4:56Markets have dipped this morning, striking a pessimistic tone after shares in SK Hynek slumped 15 percent in South Korea after the company's historic listing on the Nasdaq on Friday. U.S. stock futures are also pointing to a lower open, with futures for the tech-heavy Nasdaq down more than 1%, with U.S. shares of SK Hynix sinking 10 % ahead of the open. It comes as results from major U.S. banks this week kick off a busy earnings season. Market expectations for this upcoming season are sky-high, with the consensus estimates suggesting average earnings per share for S &P 500 companies will grow an impressive 23%.

5:32This week's guest on WSJ's take on the week was Christine Short, head of research at Wall Street Horizon, which is part of the financial services company TMX Group. She said there is one reason for companies' huge expectations. Well, I think a lot of it has to do with the efficiencies around AI. I think a lot of this is operational resilience as opposed to revenue growth is still very robust at 12 percent. But they're finding ways to manage the supply chain perfectly, manage inventory, cut unneeded costs, more or less cut the fat, right? There has been a lot of overhiring during COVID that a lot of these companies have taken care of.

6:10And so it's an efficiency game. And I think what these companies are seeing is AI is just going to continue to drive that for this year. We see analysts expecting calendar year 2026 earnings growth at 24%. And so for a yearly growth number, that's quite exquisite. For more on this earnings season and whether those expectations are actually sustainable, check out the link we left in our show notes. On the economic front, the outlook is also positive, with economists in the latest journal survey expecting U.S. GDP to grow 2.1 percent this year, an uptick from their view in April. They said the war with Iran hasn't impacted growth as negatively as first thought, but at the same time are increasingly worried about sticky inflation.

6:50They now predict consumer prices will stay well above 3 percent for the rest of the year, leaving the Fed no room to cut rates. And Chinese fast fashion giant Xi 'an has won approval from Beijing for a Hong Kong IPO that could value the company at over$40 billion, with a listing expected as early as the third quarter. The company has become one of the most popular ultra-fast fashion brands while finding itself in the crossfire of geopolitical tensions between China and the West, which has complicated its path towards an IPO. Supply chain scrutiny and U.S. tariffs derailed the brand's initial attempt to go public in the U.S.

7:37While Xi 'an has no customers in China, its reliance on thousands of local factories meant it needed Beijing's blessing ahead of the public offering. Coming up, Washington puts the squeeze on Cuba's program to send doctors and nurses overseas, one of the island's last financial lifelines. That story after the break.

7:57AI isn't just changing how we do business. It involves a new kind of leadership. On the season one finale of Tech Pluential, we trace the through lines across episodes, revisiting powerful insights from executives who are helping redefine technology leadership for the age of AI. Learn why tech is now a shared enterprise agenda and how you can drive real, durable value for your organization. Where technology and influence converge, new opportunities can emerge. That's Tech Fluential, a podcast from Deloitte and custom content from WSJ.

8:31The U.S. campaign to force economic and political change in Cuba has included blocking fuel shipments to the island, slowing tourism to a trickle, and curbing money being sent back to the country from abroad. But now the Trump administration is turning the screw on Cuba's most valuable export and one of its few dependable sources of hard currency, the doctors and nurses it sends to other countries. Journal National Security reporter Vera Bergengruen is here with more. Vera, can you give us a sense of the size of Cuba's program and its importance to the country? These overseas medical missions are pretty enormous.

9:06There are about 24 ,000 doctors across 50 countries. They've been doing this for decades. And it's a pretty well-known program in the region and across Latin America, some parts of Europe. And they often tend to also appear during natural disasters, during the COVID pandemic, when especially small countries or rural areas have very stretched healthcare systems. Cuba, which invests a ton in training these doctors, tends to send them abroad almost as a, you know, soft power diplomatic mission, as well as a way to get currency back into the country. So in 2024, economists tell us this program brought in about $5.3 billion.

9:42We have to remember, you know, this is an incredibly cash-strapped economy, and it's a really, really important source of income and hard currency. And how has the Trump administration been upending this practice and squeezing other countries as you write about? The Trump administration is trying to make it very costly for these governments to keep employing them. So their main tool has been diplomatic pressure. They've been threatening visa restrictions or other kinds of penalties for foreign officials involved in the program. I saw this myself when I traveled with Secretary Rubio to Jamaica and to other parts of the Caribbean, where some of these communities really rely on these doctors and nurses.

10:18These are the only medical staff that they sometimes have. And even when they train local doctors, they tend to move away for more money. So Rubio has really been putting a lot of pressure privately and sometimes publicly on these governments that hire these doctors, telling them that it's an abusive program, that they are funding the Cuban regime, and that there are other alternatives available. And on those alternatives, you report that the U.S. in some cases has offered to provide alternative medical care and resources to the countries that they're asking to remove Cuban doctors. What does that look like?

10:52That's right. The U.S. is now really just encouraging these countries to do different workarounds. In some cases, they're asking them to hire doctors, nurses from other parts. They're asking them to pay the doctors directly instead of through the Cuban government, which, you know, a lot of these countries say they're already doing that. But U.S. officials don't believe them. And in other cases, you know, for example, in the Caribbean and some of these islands that really have almost no other medical staff, some U.S. hospital ships sporadically show up and provide surgeries or medical care or eye care, things like that.

11:22But ultimately, that's just not enough. When I was in St. Kitts, which is a very small island in the Caribbean with Secretary Rubio, I went to a local hospital. In some of these rural clinics or these small islands, Cuban nurses and doctors are the only highly trained medical stuff that they have, especially when it comes to eye surgeries, things like that. But speaking to Latin American and Caribbean officials, they tell us that it's really unrealistic for some of these short term solutions like a U.S. hospital ship that might come once a year to bridge the gap of, again, just, you know, emergency rooms, Cuban nurses, people who can do dialysis, people who can do surgeries.

11:59That's something that they really rely on these Cuban doctors for. And there isn't any other alternative. And has the Trump administration said anything about how they might move this forward? Cuba and Latin America more broadly, evidently, is more of a priority for Trump in his second term. There's been quite a lot of movement. At first, some of these countries were quite defiant. A lot of them said, you know, I would rather lose my job than have people die or suffer. We have seen quite a shift, especially since the U.S. began flexing more muscle in the region. We've seen these strikes on drug boats in the region.

12:32We've seen the U.S. military assert itself a lot. We've seen this operation to remove Venezuelan autocrat Nicolás Maduro. And I've seen a lot of these officials get quieter and they don't really want to publicly defy the Trump administration. Guatemala has phased out its program. Honduras has sent back hundreds of medical workers. And we've seen some of these countries start to comply or at least really want to show the Trump administration that they're working to comply. Because I think they've realized that Secretary Rubio and Trump himself are quite serious about this. Journal National Security Reporter Vera Bergengruen.

13:04Vera, thank you for this. Thanks so much. And finally, move over Chippendale and Eames chairs. Gen Z and millennial collectors are driving a new furniture craze by turning vintage IKEA pieces into rare collector's items. The Swedish retailer built its brand over the past 84 years on low-cost mass-market design, but some of its early pieces are now so sought after that they're out of reach for many buyers. Journal contributor Leonora Epstein says the trend is driven by a combination of nostalgia, appreciation for good design, and recognition of future value. IKEA didn't launch in the U.S. until 1985, so there's a real appetite for American collectors for pieces produced prior to 1985, as they tend to be more rare in the States and the stock is concentrated in Europe.

13:51Ikea pieces made during the 50s and 60s are exceedingly rare and can cost tens of thousands of dollars. But the 90s, 2000s and early 2000s are also trending now. This movement is driven by serious and novice collectors alike. But the biggest demographic seems to be millennials and Gen Zers who are experiencing nostalgia for pieces they may have had during childhood or a general nostalgia for the aesthetics of the 2000s. What many of these pieces have in common is they were originally released as part of special collections and were eventually discontinued. On one online marketplace, the average vintage IKEA item sells for nearly$1 ,000.

14:32And on another, a rare 1970s reclining chair, originally priced around$350, is listed for over$12 ,000. So if you've got an old, or should we say vintage IKEA chair, you might already be sitting on a great investment. And that's it for What's News for this Monday morning. Today's show was produced by Hattie Moyer. Our supervising producer is Sondra Kilhoff. And I'm Daniel Bach for The Wall Street Journal. We'll be back tonight with a new show. Until then, thanks for listening.

15:10This 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.