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--:-- Alex Oseleff: What's in store for the Middle East after Israel and Hamas swap prisoners and hostages? Plus, three economists win the Nobel Prize for work on how innovation drives economic growth. And is all that investment in artificial intelligence paying off?
--:-- Alex Oseleff: What AI is really doing is through this massive amount of investment, that investment itself is boosting gross domestic product. But that's not the promise. Ultimately, you want to see AI boost growth by boosting productivity, by making workers get more done. It's Monday, October 13th. I'm Alex Oseleff 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.
--:-- Alex Oseleff: It was a momentous day in the Middle East as the first stage of the peace plan between Israel and Hamas went into effect. The 20 remaining living hostages from Gaza had emotional reunions with their loved ones in Israel. And Israel released the nearly 2,000 Palestinians it had agreed to free under the terms of the deal.
--:-- Alex Oseleff: Large crowds greeted them as their buses arrived in the West Bank and the Gaza Strait. In an address to Israel's legislature, President Trump vowed to extend his peacemaking to the wider Middle East. This is the historic dawn of a new Middle East. Trump then flew to Sharm el-Sheikh, Egypt, to meet with leaders from the Middle East and Europe involved in efforts to end the war and plans to rebuild the Gaza Strip.
--:-- Alex Oseleff: There, President Trump and the leaders of Egypt, Turkey, and Qatar signed a document recognizing the ceasefire and hostage release deal between Israel and Hamas. Israel and Hamas are expected to begin negotiating a peace deal that would see the U.S.-designated terrorist group disarm and give up power in Gaza.
--:-- Alex Oseleff: For more on what comes next, I'm joined now by WSJ national security reporter Robbie Grammer. Robbie, today was phase one. The hostages have been returned. The prisoners have been returned. How did all that go?
--:-- Robbie Grammer: Well, fortunately for everyone, there were no surprises. So all 20 living hostages have been released and returned to Israel. They were freed in two groups. And as part of the agreement, Hamas agreed to release the 28 bodies of hostages. So far, they've released only four. There's some open questions on whether they know where all the remains are.
--:-- Robbie Grammer: The group warned during negotiations it might be unable to find all the bodies by the 72-hour deadline that Israel set. Israel has said it's a red line. But based on the officials I talked to everyone sees this as not a major hurdle toward moving toward the next phase of the peace plan.
--:-- Alex Oseleff: Right, President Trump said in Egypt today that that second stage has already begun. Where do negotiations now stand?
--:-- Robbie Grammer: We're not quite clear on all the aspects of phase two. Trump, another world leader, signed a document that connected this initial ceasefire deal to the next phase of the peace agreement. But what's left unsaid and what's yet unclear is the future governance of Gaza.
--:-- Robbie Grammer: Hamas hasn't agreed to Israel's demand that it gives up any role in governance in the future of Gaza. What about rebuilding? Who's going to pay for the rebuilding of Gaza? How is that going to be structured? And how will the phased withdrawal of Israeli forces from Gaza be implemented in the future, especially if it looks like both sides on the peace agreement might falter or sort of renege on some aspects of this?
--:-- Alex Oseleff: It's still very fragile. You were mentioning President Trump and his visits to Egypt and Israel today. This has been quite a victory lap for him for the peace deal that he helped to broker. And he spoke today to the Israeli legislature to big applause.
--:-- Alex Oseleff: What does this show us about his reputation as a statesman? I mean, it really proves all of his naysayers wrong. Trump obviously has this very unorthodox approach to diplomacy, shall we say. You know, he's very finicky. He can be very unpredictable. But at the same time, he's really bucked the traditions of American statesmanship that past presidents have had.
--:-- Alex Oseleff: And all of his advocates, all of his supporters in Washington and elsewhere say, you know, the proof is in the pudding. He's proven here that his approach has paid off. That was WSJ reporter Robbie Grammer. Thanks, Robbie. Thanks so much for having me.
--:-- Alex Oseleff: Today, Joel Molkier, Philippe Aguillon, and Peter Howitt were awarded this year's Nobel Prize in Economics for their work explaining how innovation and what economists call creative destruction drive economic growth.
--:-- Alex Oseleff: The Nobel Organization said the three economists have deepened the understanding of what propelled economic growth over the past two centuries to levels that are high and relatively stable by historical standards. Mokyar studied the process of innovation that drove the Industrial Revolution and paved the way for the new era of steady growth.
--:-- Alex Oseleff: Aguillon and Howitt constructed mathematical models that help explain how technological change can benefit the economy, even as it harms some existing businesses. Their work is particularly relevant today when enthusiasm over artificial intelligence is running high, and economists are trying to assess how the technology might shape the economy and society in years to come.
--:-- Alex Oseleff: U.S. stocks bounced back today after Friday's sell-off. Among major indexes, the Nasdaq led the gains, adding about 2.2 percent. The S&P 500 rose about 1.6 percent, and the Dow was up roughly 1.3 percent.
--:-- Alex Oseleff: Gold futures notched a new high today, passing $4,100 per troy ounce. Silver prices also hit an all high today eclipsing a 45 record from 1980 Comments from President Trump and senior administration officials eased investors fears of a revived trade war with China.
--:-- Alex Oseleff: As we mentioned in this morning show President Trump posted on social media yesterday quote don't worry about China, it will all be fine. And then in an interview this morning on Fox Business, Treasury Secretary Scott Besant said that new tariffs on China don't have to happen. We have substantially de-escalated.
--:-- Alex Oseleff: President Trump said that the tariffs would not go into effect until November 1st. He will be meeting with party chair Xi in Korea. I believe that meeting will still be on. WSJ Markets reporter Hannah Aaron-Lang says this situation may have reminded investors of another from earlier this year.
--:-- Alex Oseleff: Basically, this was a very similar scenario that we saw in April, where the president originally was quite bombastic in his tariff threats. investors got quite frightened that there might be another trade war on with really significant ramifications for both economies and companies across the globe.
--:-- Alex Oseleff: And then the administration subsequently walked that back and basically assured investors that they were talking a big game, but that this might not necessarily happen. And it seems like investors are ready to believe that this is not going to be another big trade war between the world's two largest economies.
--:-- Alex Oseleff: Coming up, is AI actually making workers more productive? More on that after the break.
--:-- Alex Oseleff: In corporate news, JPMorgan Chase said today that it would invest $10 billion in companies it deems critical to U.S. national security, part of a push to protect the U.S. economy amid trade tensions with China and other countries.
--:-- Alex Oseleff: The bank said it would invest in mostly U.S.-based companies, and options include producers of rare earths, the minerals needed to make computer chips, electric vehicles, and other technologies. J.P. Morgan has already been involved in the Trump administration's recent investments in companies considered important to U.S. national security.
--:-- Alex Oseleff: In July, the bank and Goldman Sachs agreed to lend $1 billion to MP Materials, the biggest rare earth producer in the U.S. Open AI's deals with chip and cloud companies in recent months have helped propel stocks.
--:-- Alex Oseleff: Today, the company announced its latest agreement with AI chip designer Broadcom to deploy 10 gigawatts of custom AI chips and computing systems over the next four years. The companies didn't disclose financial terms, but people familiar with the matter say that the new agreement will be worth multiple billions of dollars.
--:-- Alex Oseleff: With this deal the company behind ChatGPT has recently made agreements to buy computing capacity totaling 26 gigawatts enough to meet the summer electricity needs of New York City more than two times over OpenAI is just one of the companies investing heavily in artificial intelligence and it helping the U economy grow.
--:-- Alex Oseleff: But is AI also helping workers be more productive? For more, I'm joined now by WSJ economics reporter Justin Layhart. Justin, how would AI boost worker productivity?
--:-- Justin Layhart: It can do it in two main ways. The first way would be to just automate jobs away. So AI takes over the work that somebody was doing. Then the other way to think about it is it can maybe give workers superpowers in a way. Just like computers have made us more productive, AI could simply make it easier for a worker to get more done.
--:-- Justin Layhart: And do we have a sense yet of whether AI is actually doing that? It is, but at this point, it's just on the margins. What AI is really doing is through this massive amount of investment, that investment itself is boosting gross domestic product.
--:-- Justin Layhart: But that's not the promise. Ultimately, you want to see AI boost growth by boosting productivity, by making workers get more done. If workers are more productive, then the economy can grow more quickly and there's more pie to go around for everybody to share.
--:-- Justin Layhart: Now, we don't know what AI is going to do, what kind of technology it's going to be, if it is going to wholesale replace a lot of workers, or if it's going to be more what economists would consider augmentative. It's going to help people do more and get more done and just create a better standard of living.
--:-- Alex Oseleff: So stepping back then for a second, I mean, we talked about all of this investment in AI and how it's really sort of boosting the U.S. economy right now. What does this mean about whether all this investment is really going to pay off?
--:-- Justin Layhart: The question is pay off how? Who is it going to pay off for? Are the companies that are doing all the investing, are they the ones that are going to benefit ultimately? in the 1990s during the dot-com and telecom days. There was tons and tons of fiber optic cable being laid out, and a lot of those telecom companies and dot-com companies or their investors didn't really benefit from all of that investment.
--:-- Justin Layhart: But the economy ultimately did. We as Americans ultimately benefited from it. That was WSJ reporter Justin Layhart. Thank you, Justin. Thank you.
--:-- Alex Oseleff: And that's What's News for this Monday afternoon. Today's show is produced by Pierre Bien-Aimé and Zoe Colkin. with supervising producers Jana Heron and Holly Arbell.
--:-- Alex Oseleff: I'm Alex Oseleff for The Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening. This message comes from Viking, committed to exploring the world in comfort. Journey through the heart of Europe on an elegant Viking longship with thoughtful service, destination-focused dining, and cultural enrichment on board and on shore.
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