WSJ What’s News - After 15 Months of War, a Window Opens for Peace in Gaza

Episode Date: January 15, 2025

P.M. Edition for Jan. 15. Israel and Hamas have reached a cease-fire agreement in Gaza. WSJ national security reporter Alex Ward explains what the deal entails and how it could lead to a permanent end to the war. Plus, the latest data from the Labor Department shows that U.S. inflation was up last month. U.S. economy reporter Paul Kiernan discusses what that could mean for the Federal Reserve’s next meeting. And big banks had a stellar fourth quarter. Reporter Alexander Saeedy explains why. Alex Ossola hosts. Sign up for the WSJ's free What's News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

Israel and Hamas have agreed to a ceasefire in Gaza. There was no other way for this war to end than with a hostage deal. And I'm deeply satisfied. This day has finally come for the sake of the people of Israel and the families waiting in agony and for the sake of the innocent people in Gaza who suffered unimaginable devastation because of the war. And U.S. inflation ticked higher in December. What does that mean for the Fed?

Plus big banks posted big fourth quarter profits. It's Wednesday, January 15th. I'm Alex Osila 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. After 15 months of war, Israel and Hamas have agreed to pause their fighting in the Gaza Strip. For months, the warring parties faced a fundamental divide. Israel wanted to get its hostages back and then continue the war, while Hamas didn't want to release captives unless it meant an end to the conflict.

But now, the two parties have been able to bridge that gap. During a news conference to announce the ceasefire, President Biden said his administration worked alongside President-elect Donald Trump's team to make the deal. I knew this deal would have to be implemented by the next team. So I told my team to coordinate closely with the incoming team to make sure we're all speaking with the same voice. Because that's what American presidents do. Here to tell us more about the ceasefire is national security reporter Alex Ward. Alex, what are some of the terms of this agreement? So it's in three phases and basically right now we are at the start of phase one and the implementation begins Sunday.

Phase one is a temporary four to-day pause to the war. Phase two, which would be negotiated throughout this whole six-week period, would be a permanent end of the war. And then phase three leads to grander questions about the return of remains and the reconstruction of Gaza. This is the end of the beginning, is where we are right now.

So we don't have a timeframe really for how long this ceasefire is intended to last, right? No, it's supposed to intend 42 days. However, during this 42 day period, all warring parties have to be negotiating a permanent end to the war. Now, if they don't have an agreement after 42 days and the talks are ongoing, then it can be extended and the ceasefire gets extended. Of course, those talks could break down, right? And there might not be a permanent end to the war, in which case fighting could resume. So it's a good day, it's a big thing, but there's like a lot more tough stuff ahead.

These negotiations have been going on for several months, at least, as far as I understand. What pushed them over the finish line? What changed? Well, nothing focuses the mind like a deadline, and the transition from Biden to Trump really seemed to sharpen all the mediators' minds that they needed a deal. In fact, I've been told that by Biden administration officials,

and the fact that Biden's Middle East envoy and Trump's Middle East envoy worked together in Qatar to get this deal really seemed to show that there was bipartisan support for this and gave a signal to all sides, Hamas, Israel, etc., that this needed to get done. Now we should note this gets done in the Biden time, right, just days before he hands the reins over, but the implementation of this is really going to start when Trump's in office. You mentioned Qatar and that's where the sort of deal was was agreed to. What does this ceasefire mean for some of the other countries that are stakeholders

in this conflict like Egypt and Turkey? Right now the main thing for them is they just want to make sure that this ceasefire holds and that it leads to a permanent ceasefire. No country in the region wants this war to continue. They all want this to be resolved. No one really wants Hamas in charge anymore. So this provides an opportunity to move forward. That was national security reporter Alex Ward.

U.S. inflation was up again last month. The consumer price index rose 0.4% in December from November and finished the year up 2.9%. Gas prices rose sharply, though price gains for other goods were more muted. Here to tell us more about these numbers is U.S. economy reporter Paul Kearned. Paul, inflation seems to be slowing down, which most consumers would say is good news. Are they going to feel that change in the stuff they're buying?

Do consumers notice a 2.9% consumer price index versus a 2.5% consumer price index? Like probably not. What happened today was the consumer price index overall rose a little bit faster than people had hoped, but this sub-index called core inflation, which excludes the volatile components of food and energy prices, that was more muted. That rose 0.2% in December from November.

The problem is, for one thing, it's just one month. Since September, inflation's been a little bit stickier than people had expected. So one month, that's not enough data to really change anyone's long-term perspective on the economy or, in the Federal Reserve's case, its plans about monetary policy. So thinking about the Fed and with the meeting later this month, what do these numbers change

about the likelihood of an interest rate cut? What's going on with the Fed is that on the one hand, the labor market is looking really good. On the other hand, inflation report for December, inflation overall a little bit too high. And last but certainly not least, there's a major source of uncertainty in the next few months, particularly for inflation, but also for the broader economy, which is President-elect Donald Trump's policies. And so the Fed's looking at today's numbers, at the numbers for the past year and saying, okay, we're kind of moving in the right direction here. But they really don't know what's going to happen in the next few months.

And they also really don't need to cut interest rates with the way the labor market's performing. That was Wall Street Journal reporter Paul Kiernan. Thanks Paul. Thanks Alex. US stocks were up today as investors were hopeful that the new inflation data could revive the possibility of rate cuts. The Dow was up about 1.7 percent. The S&P 500 rose approximately 1.8 percent.

And the Nasdaq ended the day about 2.5 percent higher. Coming up, what a stellar fourth quarter means for the future of big banks. That's after the break. Big bank profits surged in the fourth quarter. Net income rose 50% at JP Morgan Chase and more than doubled at Goldman Sachs. Citigroup and Wells Fargo also posted better than expected profits. Alexander Saidi covers banking and finance for The Wall Street Journal and joins me now. Alex, what drove these profits?

A lot of the fourth quarter's strong performance really came out of the corporate and commercial arms of these big banks. So the parts of the banks that serve big companies, big financial institutions, and everyday people's savings, even to some extent, insofar as it's invested in the markets. So what you really saw was a surge in companies looking to borrow money. They also looked for advice on transactions, both before and after the election. And after the election, with Trump's victory, many companies felt much more confident about the future and tapped the capital markets

and started to trade stocks and bonds a lot more given the sort of positive momentum they were feeling because of the election's outcome. What are the parts of the banking sector that seem to be really working? The debt capital markets business, What are the parts of the banking sector that seem to be really working? The debt capital markets business, which refers to any way in which a bank will help big companies borrow money from investors, saw some of the biggest growth among the big banks over the

last quarter. A lot of that has to do with interest rates. Also, the outcome of the election just made people feel like it's going to be a boom time in the economy. So companies are going to be able to repay their debts so they don't have to pay as much in interest when they borrow. So you saw a lot of good stuff on the debt side, but you also saw a lot of encouraging signs in equity capital markets too. Companies looking to raise stock or investments in themselves instead of borrowing money. So both of those areas were active and the trading arms of these banks also made a lot of money

because there was a lot of volatility in the fourth quarter. There was uncertainty around the election and then after the outcome was known there was a lot of enthusiasm and optimism. All of that means more trading. So trading arms brought in a lot of cash in the fourth quarter. It seems like a pretty good moment to be one of these banks or be an investor in them. What does the outlook look like for the future? For the time being, it seems like most things are pointing in a positive direction from what we can observe.

But many of the executives, including Jamie Dimon and JP Morgan Chase, he acknowledged there's a lot of unknown unknowns. We don't really know yet what's the impact to the labor force going to be if we see a large number of people kicked out of the country. We don't know how tariffs might impact inflation, but there is cautious optimism. That was Wall Street Journal reporter Alexander Saidi. Thanks Alex. Thank you.

The U.S. Food and Drug Administration is banning the use of red No. 3, an artificial dye used in food and ingested drugs. Consumer advocates pushed the agency to revoke authorization for the additive after two studies linked it to cancer in male laboratory rats. The move will impact thousands of food products on the market in the U.S., including some that aren't red. Food manufacturers will have until early 2027 to reformulate products that use the dye. And Pam Bondi, Trump's pick for attorney general, had her confirmation hearing today. During the hearing in front of the Senate Judiciary Committee, the former Florida attorney general seemed calm and confident in the face of intense questioning by Democratic senators.

Bondi worked to cast herself as a free-thinking, tough-on-crime prosecutor, while also affirming her loyalty to Trump and support for many of his most controversial views. She encountered skepticism from Democrats, worried she will help Trump wield the Justice Department as a weapon to go after his perceived enemies, as he has threatened to do. And that's what's news for this Wednesday afternoon. Today's show was produced by Anthony Bansi and Pierre Bienamé with supervising producer Michael Kosmitis. I'm Alex Osala for The Wall Street Journal.

We'll be back with a new show tomorrow morning. Thanks for listening.