WSJ What’s News - Trump's Plan to ‘Clean Out’ Gaza Rejected by Egypt, Jordan

Episode Date: January 27, 2025

A.M. Edition for Jan. 27. President Donald Trump proposes that Palestinians vacate the Gaza Strip in a dramatic shift in American policy. WSJ Deputy Middle East Bureau Chief Shayndi Raice explains why the idea is unlikely to go away, despite it being met with strong initial pushback. Plus, the U.S. and Colombia negotiate an end to a weekend tariff standoff. And an advanced made-in-China AI model developed by the company DeepSeek surprises Silicon Valley and spurs a global tech selloff. Luke Vargas hosts.  Sign up for the WSJ’s free What’s News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

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There is a growing sense that the Fed just needs to see more out of what's going on in policy in Washington, like tariffs. There's also just what's going on in the economy. The same things that are signs of a strong economy, like persistent inflation, are also things that worry people about the economy. And we'll get the reaction to President Trump's idea to clean out Gaza by sending Palestinians to Jordan and Egypt.

It's Monday, January 27th. 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. A short-lived but testy war of words between President Donald Trump and Colombia has ended, with the U.S. backing off on threats to impose 25 percent tariffs on the South American country. Trump had issued that threat yesterday afternoon after Colombia refused to allow a pair of military planes carrying migrants to land there. Colombian President Gustavo Petro initially threatened counter tariffs on U.S. goods before his government later agreed to take back deported Colombians, averting a trade battle between

the close economic partners. Colombia consistently allowed deportation flights from the U.S. during the Biden administration, including eight this month already, according to U.S. immigration advocacy group Witness at the Border. The standoff comes as U.S. authorities made more than 950 arrests Sunday in a slew of deportation raids in cities including Chicago, Los Angeles, Houston, and Denver. Meanwhile, in a dramatic shift in U.S. policy toward the war in Gaza, President Trump over the weekend said that he wants to clean out the Gaza Strip and send refugees from there

to Egypt and Jordan, either temporarily or for the long term. Here he was speaking to reporters on Air Force One. It's literally a demolition site right now. Almost everything's demolished and people are dying there. So I'd rather get involved with some of the Arab nations and build housing in a different location where they can maybe live in peace. And with more on how those remarks are being met, I'm joined now by Wall Street Journal Deputy Middle East Bureau Chief Shandy Race. Shandi, I see that the foreign ministers of both Jordan

and Egypt have dismissed this idea of relocating refugees from Gaza to their countries. And we should point out Hamas and the Palestinian Authority have also rejected this plan. Given that those are the major parties that would potentially be involved here, would it be safe for us then to dismiss this suggestion from Trump? Shandi Reis No, I would not dismiss any suggestion from Trump. There's a good chance that he continues to work on this issue behind the scenes. He has a lot of leverage over both those countries where the United States provides significant aid.

And so if he wants this to happen, I think he's going to make a big push for it. Whether it will happen, I don't know. Gaza absolutely has to be rebuilt. And the truth is that Trump is just highlighting one of the biggest problems, which is there's no place for people to live right now. People have been living in makeshift tents. And so there needs to be a solution. And this is one idea that has been floated for a very long time. He's just re-upping it in probably a more serious way than we've ever heard before. Speaking of displaced Gaz and Shandi, we are seeing thousands of them now beginning to return to what is left of their homes in northern Gaza.

Tell us more about this. This is somewhat of a milestone in the war, is it not? It's definitely a milestone in the war. Hamas is claiming this is a huge victory for them, that they have delivered the ability for people to return. But obviously, the big question is, what are people returning to? There isn't really infrastructure for people to actually live in a safe way, get water, food,

shelter. There's unexploded ordinances all over the place. So it's a very dire situation and it really just underscores why you're seeing some recycling of old ideas because there is this massive challenge and there's no plan in place right now to solve it. That was the Journal's Deputy Middle East Bureau Chief, Shandy Race. Activist investor, Ankora Holdings, is preparing to wage a proxy battle at U.S. Steel, urging the company to turn the page from its failed tie-up with Japan's Nippon Steel.

According to people familiar with the matter, Ancora intends to rally shareholders to oust U.S. Steel's chief executive and drop litigation aimed at salvaging a merger with Nippon, which was blocked by the Biden administration and is opposed by President Trump. The exact size of Ancora's stake in U.S. steel couldn't be determined. Reporter Ben Dummett covers dealmaking for The Journal. The bet for Ankora is by doing this, U.S. steel has a higher percentage chance of increasing its share price over time. One, it'll force the U.S. steel to focus on its operations to generate improvements.

And or two, it will increase the chances of inviting an alternative bidder to try to buy the company. Cleveland Cliffs and Newcore, two U.S. steel companies have already indicated a potential interest in buying U.S. Steel, but really that hasn't been able to come to light in any real way because of US Steel's so far fixation with trying to get this deal done with Nippon Steel." And in market news today, global tech stocks are selling off following last week's release of a made-in-China AI model from the company DeepSeek that nearly matched the performance of American rivals despite using inferior chips.

Shares in Nvidia and Broadcom were down more than 8 and 9 percent respectively in off-hours trading. ASML shares are down around 10 percent in European trading, and futures tied to the tech-focused NASDAQ 100 are off 3 percent ahead of the US Open. And on deck today, AT&T is due to report earnings this morning ahead of new home sales data for December due out at 10 a.m. Eastern. Coming up ahead of the Fed's next policy meeting this week, Telus Demos from WSJ's Take on the Week podcast joins me to explain the uncertainty around future rate cuts as

the market distills President Trump's economics. That's after the break. savings adventure, maybe reach out to TD Direct Investing. Where to from here? That's the big question surrounding the Federal Reserve as it prepares to make its next interest rate decision this week. Inflation is way down from where it was in recent quarters, and there are reasons to think that the central bank has succeeded in charting a so-called soft landing that didn't dent the job market or economic growth.

But with President Trump's trade and immigration policies raising some renewed consumer price and labor concerns, can the Fed afford to sit still? In the latest episode of WSJ's Take on the Week, hosts Telus Deimos and Gunjan Banerjee took on that question of what the new normal for interest rates looks like, if we can even call it that, and what it means for investors and the broader economy. And Telus joins me now with more. Telus, because you're the only one in the hot seat this week, you are my appointed Fed whisperer, so give it to us, what is the Fed expected to do this week?

The Fed signaled before and the market now expects that it's going to take a break from interest rate cuts. It is not expected to cut at its upcoming meeting. The market still thinks that there might be some more cuts later this year, but I would say there is not a lot of conviction there. There is a growing sense that the Fed just needs to see more out of what's going on in policy in Washington, and that's things that the president controls, like tariffs. That's also things that the president will be doing in conjunction with the Republican Congress and Senate, which is fiscal, like the budget. There's also just what's going on in the economy.

The same things that are signs of a strong economy, like we're seeing persistent inflation, are also things that worry people about the economy. That inflation and the relatively high level of interest rates, at least relative to the last couple of years, make life difficult for some consumers, for small businesses. I've been covering bank earnings. Banks have not been saying especially buoyant things about a lot of their customers. Obviously Wall Street bankers, people who make fees for getting CEOs to buy other companies and stuff like that, they're pretty excited. But those actual banker bankers, the ones who lend money to businesses, are not seeing

buoyant activity. So maybe the economy isn't that strong. That would point towards maybe the Fed getting back to cutting There's just this stew of uncertainty Around the Fed right now that I think is distinct from what we've been seeing recently Another element of this is this question of whether the Fed has just sort of reached a neutral rate This is something that came up in the interview in your most recent episode with sonal desai from Franklin Templeton fixed income She's the the CIO over there and weighed in on this quite a bit.

Yeah, I asked her what I thought was an interesting question. Is this the new normal, right? Is this where the Fed is now in that kind of low 4% base rates area? And she had an even more interesting answer, which was, no, it's not the new normal. That's the old normal, meaning that what we've been experiencing for the last call it 15 years, right, since basically the 2008 great financial crisis in which the Fed slashed rates, bought bonds, did everything it could to sort of grease the wheels of the economy and then double down on that strategy through the pandemic, that that era in which we got used to interest rates being rock bottom, right, you could go out and shop for a mortgage that started with a two, that that is not the normal at all.

That what we're getting back to is where rates have historically kind of settled and that base interest rates in the fours, mortgage rates in the sixes, sevens, even eights are not unusual. And that the economy will do fine in this area, right? That we don't really have to worry that much about interest rates at this level. And so that conversation about neutral, which basically means interest rates are neither

stimulating the economy nor holding it back. That's what was so interesting about Sonal's comment that, no, no, this isn't the new normal. This is just normal normal. There is though the Trump factor here. As she pointed out, after all, a reason Trump got elected was anger about soaring prices so maybe he's not content to keep things as they are. We've reported that there are folks in his camp, groups of his allies, that argue he should be consulted on rate decisions and he has said he loves low interest rates. So I don't know, is he going to listen to Sonal and follow that advice? Donald Trump is not an economist.

He's a politician. And so the mix of things that he likes are things that are good for a politician. He wants growth. He wants job creation. He wants Wall Street to be buoyant. He wants interest rates to be low. He wants the dollar to get cheaper

and therefore boost the competitiveness of American exports. Those things are not necessarily consistent with each other economically. And so what the market is trying to figure out is which of those things can we get? How many of them can they actually achieve? And you're going to see situations where, okay, the stock market's excited. Stocks are being bid up.

People think that companies are going to do well. People think that the consumer is pretty healthy. But look at what's happening in the bond market. Treasuries are selling off and therefore yields are rising. The market is saying, well, we don't think that you can do all that and get continuing to fall interest rates. So you can listen to what Donald Trump and his allies want and what they think ought to happen.

But then there's just the economic realities of these things. Tell us, Demos, along with Gungeon Banerjee, hosts the WSJ's Take on the Week podcast, available every Sunday wherever you get your podcasts. Check it out. Tell us thank you so much as always. Thank you. And that's it for What's News for this Monday morning. Today's show was produced by Kate Bulevent. Our supervising producer was Daniel Bach.

And I'm Luke Vargas for The Wall Street Journal. We will be back tonight with a brand new show. Until then, thanks for listening.