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--:-- Scott Simon: Stocks are down. Unemployment is up. Is the head of the Federal Reserve certain he's steering the economy in the right direction? Certainty is not a word that we have in our business.
--:-- Aisha Roscoe: Well, okay then. I'm Scott Simon. I'm Aisha Roscoe, and this is Up First from NPR News.
--:-- Scott Simon: The economy had been headed for a soft landing from the shock and many aftershocks of the pandemic. We'll go behind the numbers.
--:-- Aisha Roscoe: A blast in Tehran kills a Hamas leader and protests in Beirut. The president and vice president on the phone to Israel's prime minister. I have all the latest from the Middle East.
--:-- Scott Simon: And a plea agreement with 9-11 defendants is now off the table. Why the defense secretary says no deal. Stay with us. We have the news you need to start your weekend.
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--:-- Scott Simon: The inflation news has all been very positive, and we have a job market that is about the strongest that we've seen in 50 years. That's what Treasury Secretary Janet Yellen told us on Weekend Edition just a week ago today. So what's changed?
--:-- Aisha Roscoe: For one, an employment report that came in weaker than expected yesterday, sending the Dow down more than 600 points. Investors wonder if the economy is headed for a recession and if the Federal Reserve, which Janet Yellen chaired before she became Treasury Secretary, isn't acting quickly enough to avert it.
--:-- Scott Simon: Add to that a slip by the tech-heavy NASDAQ index into what's called correction territory, meaning it's fallen 10% from its recent high. It all means we need to talk with NPR chief economics correspondent Scott Horsley. Scott, thanks for being with us.
--:-- Scott Horsley: Good morning, Scott. What got to the market about the jobs report?
--:-- Scott Simon: You know, even before the jobs report yesterday, there were signs of some cracks in the labor market. On Thursday, we learned that new applications for unemployment benefits had jumped to the highest level in a year. That sparked its own mini-selloff in the market.
--:-- Scott Horsley: And then the route really accelerated Friday after the Labor Department said employers added just 114,000 jobs last month, far fewer than forecasters had expected. What's more, the unemployment rate jumped to 4.3% in July. That's almost a full point higher than it was a year ago.
--:-- Scott Simon: And the worry is when unemployment rises that much, it generally doesn't level off right away. It tends to keep climbing. There's kind of a negative feedback loop where people lose jobs, so they have less money to spend, and businesses don't sell as much, so they lay off even more people. That's what markets are spooked about.
--:-- Scott Horsley: And there's a concern the Federal Reserve may have missed an opportunity to interrupt that downward spiral.
--:-- Scott Simon: Well, and as you note, of course, they met just recently, and more remarkable than what they did do for some people was what they didn't do. Yeah, what they didn't do was cut interest rates. Instead they left their benchmark rate at the highest level in more than two decades where it been for the full year now.
--:-- Scott Horsley: Those high interest rates have helped in bringing down inflation but they also been a drag on some important parts of the economy especially manufacturing and the housing market.
--:-- Scott Simon: Now, Fed Chairman Jerome Powell signaled Wednesday that the Fed might be ready to cut interest rates at their next meeting in September. Bloomberg's Mike McKee asked Powell if he's worried about waiting too long. Are you certain that you won't fall behind the curve and lead to unnecessary unemployment if you wait until September?
--:-- Scott Horsley: Certainty is not a word that we have in our business.
--:-- Scott Simon: Now, investors were already expecting the Fed to cut rates by a quarter percentage point in September. After this week's jobs report on Friday, they're betting a more aggressive half-point rate cut could be in the works.
--:-- Scott Horsley: Quincy Crosby, who's chief global strategist at LPL Financial, says even that might not be enough. The market is concerned that it may be too little too late. If the job market weakens further, there's going to be a lot of second guessing about the Fed's timing.
--:-- Scott Simon: Just as the central bank was slow to raise interest rates three years ago when prices started climbing, critics will say it was too slow to cut rates when it had a chance to prevent a broader economic downturn.
--:-- Scott Horsley: And Scott, does this explain the NASDAQ? Because tech stocks took a particular beating this week, didn't they?
--:-- Scott Simon: Yeah. Intel, the big chipmaker, had a terrible week. It reported disappointing earnings and said it's laying off about 15 percent of its workforce. its stock lost more than a quarter of its value. That also dragged down some other semiconductor companies.
--:-- Scott Horsley: And there's also been some newfound skepticism about artificial intelligence. In recent months, excitement over AI has been pushing stocks to record highs. Crosby says some investors are starting to wonder if all the money that's been pumped into those stocks will, in fact, pay off.
--:-- Scott Simon: The question is now, are they just spending too much and not able to integrate the features quickly enough in order to monetize it. Even the mighty Amazon saw its stock dropped nearly 9% Friday. The e-commerce giant is spending tens of billions of dollars this year to build up its cloud computing and AI businesses.
--:-- Scott Horsley: That is expected to cut into Amazon's profits, though. And on a day when many people were in a foul mood anyway, it didn't take much for them to dump the stock.
--:-- Scott Simon: I'm Pierre Scott Worsley. Thanks so much.
--:-- Scott Horsley: You're welcome.
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--:-- Scott Simon: Next up today, the Middle East. The U.S. is sending more warships to respond to an expected attack on Israel by Iran and its allies. That's following Israel's killing of several top militant Palestinian and Lebanese leaders.
--:-- Aisha Roscoe: NPR's Jane Araf joins us now from Beirut. Jane, thanks for being with us.
--:-- Jane Araf: Thank you, Scott.
--:-- Scott Simon: What is the latest?
--:-- Jane Araf: Well, Israel is continuing those attacks on militant commanders. The Palestinian news agency says an Israeli airstrike this morning actually killed a Hamas commander in the Israeli-occupied West Bank.
--:-- Scott Simon: And as you know, Scott, in the past week, Israel has killed several top commanders of Hamas, Lebanese, Hezbollah, and Islamic Shehad, including in an airstrike here in the Lebanese capital.
--:-- Jane Araf: Israel hasn't taken responsibility, but it's believed to be behind the killing of a top Hamas political official while he was visiting Iran.
--:-- Scott Simon: Iran and its allies are expected to retaliate, and it has dramatically increased fears of a wider conflict breaking out.
--:-- Jane Araf: As evidence of that, the U.S. Defense Department is sending more warships and warplanes to the region, and Israel and Lebanon are bracing for the expected retaliation.
--:-- Scott Simon: Here's U.S. Defense Secretary Lloyd Austin regarding the U.S. military response. If Israel is attacked, we certainly will help defend Israel. You saw us do that in April. You can expect to see us do that again.
--:-- Jane Araf: But we don't want to see any of that happen.
--:-- Scott Simon: The reference to April is when Iran fired hundreds of missiles and attack drones at Israel in retaliation for an airstrike that killed a top Iranian commander in Syria.
--:-- Jane Araf: The Hamas leader killed in Iran was buried in Qatar yesterday and gathered mourning in several cities.
--:-- Scott Simon: Could you tell us about that please?
--:-- Jane Araf: It was an elaborate funeral for Ismail Haniyeh whose body was brought back from Iran. He'd been a guest of Iran. He was there for the inauguration of the new president, so the killing was particularly provocative.
--:-- Scott Simon: Israel hasn't claimed responsibility, but it's widely believed to have been behind the attack.
--:-- Jane Araf: And Scott, it's had a particular impact because Hania wasn't a military commander. He was head of the Hamas Political Bureau in Qatar and involved in U.S.-brokered ceasefire negotiations with Israel over the war in Gaza.
--:-- Scott Simon: Jordan's foreign minister, Ayman El-Safadi, said this week that after Hania's killing, Israel had now become a, quote, rogue state.
--:-- Jane Araf: He was the one who was negotiating the exchange deal. So how on earth is a country that wants to conclude a deal kills the main interlocutor in those negotiations?
--:-- Scott Simon: Let's keep in mind that Jordan is one of only two Arab countries with a peace agreement with Israel.
--:-- Jane Araf: Safadi said the killing was an attempt by Israeli Prime Minister Benjamin Netanyahu to torpedo the ceasefire talks.
--:-- Scott Simon: There are lots of diplomatic efforts still going on. The U.S. doesn't speak to Iran directly, but Safadi, for instance, this week spoke with both the U.S. Secretary of State and the Iranian foreign minister to try to de-escalate tensions.
--:-- Jane Araf: What's the scene been like in Iran?
--:-- Scott Simon: Well, Iran held a huge memorial for him before transferring his body to Qatar.
--:-- Jane Araf: And here in Beirut, Palestinian factions held a symbolic funeral. fighters carried two coffins representing Hani and his bodyguard draped in palestinian flags a speaker said Hani could rest now and others would carry on his work almost every palestinian faction was represented including a lot of young people most of them grandchildren of people expelled from their homes decades ago and what was striking scott was their absolute faith that Someday they will go home again.
--:-- Scott Simon: And I gather Israel detained the preacher of an important mosque in Jerusalem for incitement.
--:-- Jane Araf: What do we know about that?
--:-- Scott Simon: Yeah, it was Al-Aqsa Mosque, one of the holiest places in Islam. Israeli security forces took Sheikh Ikram Sabri away for questioning after he delivered a eulogy for Henea.
--:-- Jane Araf: He was detained for several hours and then temporarily banned from the mosque.
--:-- Scott Simon: And where are we at the moment?
--:-- Jane Araf: Well, under high alert, certainly regarding Israel, most airlines have stopped flights in and out. And Lebanon, a bit of a bubble here in Beirut, but the country is clearly bracing for attacks and U.S. and other embassies are worried.
--:-- Scott Simon: And here's Jaina Raff in Beirut. Thanks so much.
--:-- Jane Araf: Thank you, Scott.
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--:-- Scott Simon: And we'll end today on the head spinning week at the U.S. military court in Guantanamo Bay, Cuba. Three days ago, the Pentagon announced it had reached a plea agreement with three 9-11 defendants, including the alleged mastermind of the attacks, Khalid Sheikh Mohammed. It would have mostly resolved the prosecution after two decades of legal quagmire.
--:-- Aisha Roscoe: But last night, Defense Secretary Lloyd Austin took the deal off the table. NPR, Sasha Pfeiffer, has been covering Guantanamo and joins us now. Sasha, thanks so much for being with us.
--:-- Sasha Pfeiffer: You're welcome. Good morning, Scott.
--:-- Scott Simon: A little more detail, please, on events of the week.
--:-- Sasha Pfeiffer: Yes, and first I want to note, many people are always shocked to hear that Guantanamo is still open. It was set up after the so-called War on Terror, after the September 11th attacks. There are still prisoners there, still active cases. One of them is the September 11th, 9-11 case. 20 years later, still ongoing.
--:-- Scott Simon: This week was an earthquake at Guantanamo for those who cover it, because on Wednesday, it was announced that three of the 9-11 defendants, including the big guy, Khalid Sheikh Mohammed, were going to plead guilty in exchange for in KSM case a life sentence It presumed the other two would also get a life sentence In return the death penalty would come off the table and they would no longer go to trial which, by the way, it's looked increasingly unlikely that there will ever be a trial.
--:-- Sasha Pfeiffer: And this was great news to people who felt that it had been really bogged down for years and was finally ending. There were some strong feelings about it, though, weren't there?
--:-- Scott Simon: Very much. Now, again, some people who realize how intractable the case has become felt like finally it's resolved. But people were very upset. Some 9-11 family members felt like they wanted to see these men put to death. They feel like a trial might bring out some secrets about 9-11 we don't already know. Some congressional members pushed back.
--:-- Sasha Pfeiffer: And then all of a sudden, last night, shocking thing happened. Secretary of Defense Lloyd Austin puts out a short memo saying, I am withdrawing from the plea agreements. I'm also removing the person in charge of the military court who oversees 9-11 in the case, just in the 9-11 case, and basically undid the deal.
--:-- Scott Simon: Isn't the military court part of the Defense Department that Lloyd Austin heads?
--:-- Sasha Pfeiffer: Yes, and this is what's so puzzling. The court is this complicated thing that's overseen by someone called the convening authority, who in theory, statutorily has independence, does not need the Secretary of Defense's approval to make plea deals, yet Austin reversed it.
--:-- Scott Simon: He basically said, it's so significant a decision that I alone should make it. So I'm going to step in and reverse it. We also were told that the Biden White House had not known about this till Wednesday. So this huge, huge pushback coming from all quarters seems to have pressured Austin into reversing the deal.
--:-- Sasha Pfeiffer: And what kind of reaction is there been?
--:-- Scott Simon: Huge. I want to play for you Brett Eagleson, who was 15 years old when his father died in the World Trade Center collapse. Brett opposes the deals, and here's what he said about the plea agreements.
--:-- Brett Eagleson: We all deserve our day in court, and to do a plea deal feels like we've been betrayed. We want a trial. We want to put these individuals on a stand. We want the public to see it, and we want the media to see everything that these individuals have to say.
--:-- Scott Simon: And Scott, at the other end of the spectrum is Elizabeth Miller. She was six when her Staten Island firefighter dad died in the 9-11 attack. She's been a supporter of the agreements, And here's what she said to me last night.
--:-- Elizabeth Miller: I'm really just feeling numb. I'm disappointed in the U.S. government. We're no closer to a death penalty conviction now than we were 13 years ago. Most families just want this to end. And this was the best way. And in my opinion, the only way that it was going to end. But Scott, this reversal of the plea deal makes the end look even farther away.
--:-- Scott Simon: Basically, what happens now is the 9-11 case goes back to this legal slog of endless so-called pre-trial hearings and it's unclear how they might get to trial, if ever.
--:-- Sasha Pfeiffer: And Pierre Sasha Pfeiffer, thank you so much.
--:-- Sasha Pfeiffer: You're welcome.
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--:-- Scott Simon: And that's up first for Saturday, August 3rd. I'm Aisha Roscoe. And I'm Scott Simon, Michael Radcliffe, Gabe O'Connor, and Gabriel Donatoff.
--:-- Aisha Roscoe: Produced today's podcast, Andrew Craig directed. Our editors were Ed McNulty, Raphael Nam, James Heider and Nick Spicer.
--:-- Scott Simon: Anna Glovna is our technical director with engineering support from Nisha Hines, Arthur Laurent and Andy Huther.
--:-- Aisha Roscoe: Evie Stone is our senior supervising editor, Sarah Oliver is our executive producer and Jim Kane is our deputy managing editor.
--:-- Scott Simon: Tomorrow on the podcast Aisha flexes the reporting muscles she built up on the energy beat. That's right. We'll take you to Louisiana's Gulf Coast for a look at liquefied natural gas.
--:-- Aisha Roscoe: The U.S. is the world's largest exporter, and a lot of it gets piped down there before it gets shipped out. So there's a lot to learn about American energy policy, the local economy and ecology, and global climate change.
--:-- Scott Simon: I'm breathless just hearing about it. And for more insights like that into your community, your country, and the world, you can listen to your local NPR station. Find it, please, by going to stations.npr.org.
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