--:-- Kate Bullivant: TrueStage helps businesses answer what's next before customers even ask with innovative financial solutions designed to meet tomorrow's needs today. See how TrueStage can help you build brighter financial futures. Learn more at trustage.com slash wsj. TrueStage is the marketing name for TrueStage Financial Group, Inc. at subsidiaries and affiliates. Corporate Headquarters is located in Madison, Wisconsin.
--:-- Kate Bullivant: After two years of fighting, Israel and Hamas agreed to release all hostages in Gaza, getting President Trump closer to his goal of resolving the conflict. While this is a major breakthrough for peace in Gaza, we still have a long way to go to end this war. Plus, behind closed doors, Republicans express fears that Trump's shutdown strategy could backfire. And France's president looks for a way out of a fiscal hole that's turned into a political crisis. It's Thursday, October 9th. I'm Kate Bullivant 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.
--:-- Kate Bullivant: We begin with a breakthrough in the Middle East. Israel and Hamas have agreed to a deal that would see all of the remaining Israeli hostages held in the Gaza Strip released. There are 20 hostages believed to still be alive in Gaza. Egyptian officials who mediated the talks said Hamas would let them go as soon as Sunday morning, while President Trump told Fox News that they would probably be released on Monday.
--:-- Mike Amon: Journal Deputy World Coverage Chief Mike Amon said that while the deal marks progress toward peace, the hard part is still to come. There are a lot of moving parts of this agreement, but this is the first step. And to make it hold, President Trump is going to have to both pressure Israel to not start the war again if Hamas doesn't follow through right away. and he will have to pressure Muslim world leaders to stay on the back of Hamas to follow through its own agreements.
--:-- Mike Amon: Hamas negotiators have confirmed that they will release the hostages. They've agreed to a prisoner exchange and they have also conditioned this on the end of the war. Now, these are all very vague terms and are going to require a lot of negotiation going forward. Hamas is not going to give up the hostages without getting something in return.
--:-- Mike Amon: The deal reached yesterday, which is the first phase of Trump's plan to end the war, also includes the opening of a border crossing to allow humanitarian aid into the enclave, the release of Palestinians held in Israeli prisons, and the withdrawal of Israeli troops in Gaza to an agreed-upon area, though crucial details are still being hashed out and could still derail the agreement.
--:-- Kate Bullivant: And then there a host of other details that need to be resolved in the next phase of the peace plan. Mike, there are still major obstacles to getting a deal done. And some of those obstacles have been there for months if not years. And it's the same things that have bedeviled negotiators.
--:-- Mike Amon: Among them are, when will the IDF, the Israeli military, withdraw completely from Gaza? This plan right now leaves that completely vague, and that is a crucial point for Hamas. Another major point is will Hamas disarm? Hamas doesn't want to disarm and Israel has said that its war aim is to destroy Hamas or at least to disarm it. So that is a major point going forward. Peace cannot happen without some kind of agreement along those lines.
--:-- Kate Bullivant: To Washington now, as a government shutdown enters its second week, we're exclusively reporting that senior Republicans, including Senate Majority Leader John Thune, have cautioned the White House against moving forward with far-reaching government cuts and mass layoffs.
--:-- Kate Bullivant: According to people familiar with the matter, lawmakers have told Trump's aides that such moves could backfire with the public. The conversations reflect discomfort among some Republicans over the president's shutdown strategy, which aims to pressure Democrats into striking a deal. Democrats are so far refusing to budge, arguing that Republicans first need to agree to extend expiring healthcare subsidies.
--:-- Kate Bullivant: Meanwhile in China, Beijing is tightening its control over critical minerals used in high-tech products like EVs and jet fighters. Some products with rare-earth materials originating from China will require export licences, as will some goods produced with Chinese technology. The new rules come as President Trump and China's Xi Jinping prepare to meet at the end of the month.
--:-- Kate Bullivant: They expand on previous moves by Beijing that have choked the global supply of rare earths and put them at the centre of trade negotiations with Washington. Over in Hong Kong, shares of Hang Seng Bank surged more than 25% today after HSBC offered to take it private in a $13.6 billion deal. HSBC already owns nearly two-thirds of the lender, and the deal comes as the London-based bank sharpens its focus on Asia.
--:-- Kate Bullivant: And we're exclusively reporting that the Trump administration isn't planning to impose tariffs on generic drugs from foreign countries. Generic drugs make up about 90% of medicines dispensed to Americans every day, from antibiotics to heart medications and are largely sourced from abroad.
--:-- Kate Bullivant: The move which isn final and could change in the coming weeks significantly narrows the scope of Trump 100 levies targeting drugs made by companies that don manufacture in the US. Coming up, the prospect of French snap elections is averted for now, as President Macron prepares to name his fifth prime minister in a year. We'll check in with our Paris bureau chief on why France is becoming ungovernable.
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--:-- Stacey Meichtry: French President Emmanuel Macron plans to appoint a new Prime Minister in the next two days, buying himself time to pull the country out of fiscal disarray. He needs his government to pass a budget that narrows the country's deficit, something four Prime Ministers have tried and failed to do.
--:-- Kate Bullivant: Here to explain why that's proving so tricky and where that leaves Macron himself is our Paris bureau chief, Stacey Meichtry.
--:-- Stacey Meichtry: Stacey, you report that Macron has been wielding the threat of holding parliamentary elections after the abrupt resignation of his prime minister on Monday. It sounds like he's playing a bit of a game of political chess here. Can you unpack just some of the dynamics for us?
--:-- Kate Bullivant: I mean, one of the most powerful tools available to a French president is the ability to threaten to dissolve parliament and call snap elections. The reason why this is usually so effective is that political parties, especially the establishment parties, the socialists, the establishment conservatives do not want to face voters right now. So they're dreading the idea of having to go back to the polls.
--:-- Stacey Meichtry: And his gambit seems to have worked. You reported yesterday that Macron's departing prime minister said he sees a path to cobble together a government and get a budget passed. Does that mean we're out of the woods, though?
--:-- Kate Bullivant: No, I don't think so. He has to pick a prime minister that can create consensus. And creating consensus with the current composition of the National Assembly is next to impossible, because you have three different blocks within the assembly, all of which have very different agendas.
--:-- Stacey Meichtry: You have this sort of array of leftist parties that don't want to see any cuts to public spending whatsoever even though France faces this yawning deficit. You have a group of conservatives that don't want any tax increases. And then you have National Rally and Marine Le Pen. Their position is sort of nebulous, but what they've made clear is that they're going to vote no confidence, no matter what shape the government takes.
--:-- Kate Bullivant: The dynamics are really, really difficult. So, you know, to be perfectly frank, I don't quite know how they're going to square the circle.
--:-- Stacey Meichtry: There's some talk right now about suspending the signature pension reform that Macron did a few years ago, which basically raised the age of retirement to 64. Now, this was one of the biggest cost-saving measures of Macron's administration.
--:-- Kate Bullivant: So the idea that they're going to suspend or roll back this particular overhaul, first of all, it's a sort of devastating blow to Macron's agenda. But second of all, it really puts France in a difficult position fiscally.
--:-- Stacey Meichtry: And on that, Stacey, what does this mean for markets if the French government can't get this budget under control?
--:-- Kate Bullivant: Well, for the time being, investors have been deeply concerned that France, first and foremost, looks ungovernable. And if you can't govern the country, it means you can't reform it. And obviously, you can't do anything significant to slash its deficit.
--:-- Stacey Meichtry: And France's deficit is significant. You know, it's around 5.7% of GDP, and it's been expanding from year to year. So what France needs to do, what Macron needs to do is start to change the trajectory, start to narrow it. And that's really been the point of these budget negotiations.
--:-- Kate Bullivant: Now, he had one prime minister who was ousted in a confidence vote because he tried to trim 44 billion euros from France's public spending. That got him thrown out of office. The next prime minister is going to face some real difficulty here. It's going to be a real balancing act.
--:-- Stacey Meichtry: Stacey, we'll be keeping an eye on these complicated dynamics. Thanks so much for your time.
--:-- Kate Bullivant: Thank you.
--:-- Kate Bullivant: And that's it for What's News for this Thursday morning. Today's show was produced by Daniel Bark. Our supervising producer was Christina Rourke. And I'm Kate Boulivant for The Wall Street Journal. We'll be back tonight with a new show. Until then, thanks for listening. This 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 for investors from Charles Schwab that unpacks the stories making news in Washington and how they may affect your finances and portfolio. Listen at schwab.com slash Washington Wise.
