Hamas Agrees to Release Hostages But Sets Conditions for Peace

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2:12Carol Massar:Bloomberg Audio Studios. Podcasts. Radio. News. This is Bloomberg Business Week Daily, reporting from the magazine that helps global leaders stay ahead. With insight on the people, companies, and trends shaping today's complex economy. Plus, global business, finance, and tech news as it happens. The Bloomberg Business Week Daily podcast with Carol Masser and Tim Stenevek on Bloomberg Radio. We do have our most read story in the Bloomberg now that Hamas has agreed to release all Israeli hostages captured in that October 7th attack, but said the rest of President Donald Trump's 20-point peace plan would be subject to negotiation.

2:54Carol Massar:Let's get the latest on that. For that, we do head to our Bloomberg Intelligence Senior Defense Analyst, Wayne Sanders, joining us. Wayne, this feels like a big development, but again, with caveats. Walk us through what's significant and what's still to be known? Well, I think the fact that they're doing anything at all at this point in time is good, right? It's showing that from Hamas' side is, hey, look, we need to come to the table with more than just rhetoric. We actually have to put action to this. I think the Sunday deadline that President Trump put out is something that he's holding to.

3:28And I mean, he's said what he was planning on doing, if not, right, unleashing all hell against Hamas. So they are taking it seriously. But at the same time, they do recognize they're not able to just go ahead and submit to all 2020 of those. So I think there's going to be a lot of the geopolitical play over the weekend where they're trying to figure out how to how to reach. I don't know whether they're going to go to all 20 and then it's really going to be back into President Trump's hands. What where do you. Yeah. Other parts of the president's 20 point plan require a unified national stance and must be addressed based on relevant international laws and resolutions.

4:05Where does it seem like to you? I don't want to call them sticking points because the 20 point plan is very detailed. But based on the statement that we got from Hamas, what does it seem like they are not agreeing to at this point and why? I think I think some of the points that are really sticking with is just taking some of the ownership as part of it. Right. They realize that inside that region, when you're looking at what what countries are going to go towards towards in backing the U.S. in President Trump's plan and then which ones may not. There's a lot of geopolitical pieces that play in the here.

4:39Likely with Trump is going to be UAE. It's going to be functionally on Saudi Arabia and Bahrain. There are other ones that are not pro-Hamas, but they're also not with President Trump as well. And that's like Qatar and Amman and Kuwait. They all play different plays in this, right? So I think the sticking point is making sure that if Hamas is coming to the table, how is it going to be felt within the region from the Gulf states that may, they're still trying to get onto their side.

5:04Carol Massar:I mean, yeah. And the relationships are so tricky here, right? Like trying to understand it and all the implications of such. Having said that, I mean, my understanding that I think we were talking to a member of the Bloomberg team on the ground about, I think, was it on Monday? And that there were still things going off in Gaza. Yeah, as he was talking to us, we were hearing ordinance. Right? Yeah. And so it's just, it's very tricky. It's very delicate. And I'm just curious where Israel is in all of this. And I guess we're going to be watching them very closely here. Yeah, absolutely. I mean, when you think about it, it's a military offensive that they're putting on until they feel that Hamas has actually come to the table and has met those demands, right?

5:52So they're not going to back off. I mean, at the most they would probably do is they would hold the positions that they currently have. But if there are military strikes based off of, you know, credible threat intelligence that they have of Hamas leadership as of right now, as of the time of this broadcast, right, they have not agreed to the 20 point plan. So therefore, then they consider it fair game as part of their offensive operations that they have said that they were going to do. They warned ahead of time that it was going to happen. And so if they're still going to conduct that through that, we saw that even in Israel.

6:24Iran when that was going off before Operation Midnight Hammer is even when President Trump was saying, hey, here are the timelines and here's kind of the date we're going to put this line in the sand. You still saw Israel and Iran still continuing to fire at each other right up until that last minute. So I think it's part of that.

6:40Carol Massar:All right. I'm going to be silly here, but we are living in silly and interesting and difficult times to say that. And Bloomberg has a whole story on this. So I feel it's very credible, Wayne. But we have a story out. President Trump wants the Nobel Prize and is applying pressure to win it. And I just the timing of all of this, because I think the Peace Prize is going to be is it announced next week or very soon? And so I just wonder timing in all of this. Is this silly to even bring it up? I wouldn't say it's silly to bring it up. I mean, that might be in the back of the mind. I mean, you heard during his his conference with Secretary Hegseth and all of the generals that took place on Tuesday.

7:18He brought that up because they're not going to give it to me. He almost made a flippant comment about, you know, like, oh, they're not going to give it to me. They're going to give it to somebody else. But it was something that he did still bring up. So I think that is something that is out there. Otherwise, I don't think he would have brought it up in front of all the military leadership on Tuesday.

7:34Carol Massar:And we should say the winner is going to be announced on October 10th. So it is just around the corner. Yeah. The president told the U.N. General Assembly last week that everyone says they should get the Nobel Peace Prize, arguing that he and the U.S. never received any credit for striking Abraham Accords. More importantly, I think about not silly. Is this going to bring real peace to this part of the Middle East and really bring an end to a conflict that we have seen between Israel and Hamas that has gone on for so long? Yeah, that's a really, really tough one, one that is way above my pay grade.

8:12I only say that just from the standpoint is there is so much history, so much of their cultures that have been tied to this for thousands of years. This isn't, you know, this is a new thing that's that's kind of coming up. So I have a hard time believing that that they ever are going to completely just want to be at peace with one another. But I think that at least you can create some, you know, strict boundaries and guidelines that are on that may at least provide some resolving peace over at least the near term. Wayne Sanders from our Bloomberg Intelligence team joining us from just outside of Washington, D.C.

8:47Carol Massar:And balance of power. Joe Matthew will have more on all of this, the ins and outs of all of the news out of the nation's capital coming up at 5 p.m. Wall Street time. And of course, the latest on what we are hearing on this Hamas agreement, it seems like saying it agrees to release all Israeli hostages again coming out in a statement. All right, Wayne, thank you so much for that. Stay with us. More from Bloomberg Businessweek Daily coming up after this.

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11:57Carol Massar:And that includes members of the Federal Reserve, including the newest member of the Fed board, Stephen Myron, who earlier joined Bloomberg TV and radio. One of the things he stressed that he may just be data dependent after all, just like Fitcher, Jay Powell. So my view is driven by two things. Shelter. Sorry. Services are the more persistent and sticky part of inflation. Services are driven in large part by housing. And I expect housing inflation to come down through those channels. If something were to happen that were to tell me that that channel is invalidated, that there's some shock that's going to be pushing rents materially higher, the benign inflation forecast that I have would have to be adjusted as a result.

12:37That's Fed Governor Stephen Myron earlier today on Bloomberg Television, also chair of President Trump's Council on Economic Advisors. On leave, though, from that job, now Fed Governor, as we mentioned, Michael McKee, part of the team that did that interview. He's with us right now. He's Bloomberg TV and Radio International Economics and Policy Correspondent. He joins us here in the Bloomberg Business Week studio. So we're going to talk about him being data dependent in just a second. But I want to stick on this idea of shelter as it relates to the inflationary view. What is his thesis? What is his theory that that part of inflation will start to ease?

13:13Well, the theory is that because they are removing so many undocumented aliens from the United States, it will reduce demand for housing. And that will bring down the price of housing because more houses will be available to those who are still here. It's based on a study that was done in 2003 about the Mariel boat lift in Miami, which found that there was sort of a one-to-one relationship there between removal and prices going down. A lot of economists say that's a tough thing to scale up nationwide and to say is a rule that will apply in the future. But that's his story and And that's what his belief is in terms of bringing down service price inflation and therefore overall inflation.

14:00Well, shelter is such a tricky thing for the Fed to actually affect. And Fed Chair Jay Powell has talked about this for years, Mike. He said, given the tools that we have, we can only do so much when it comes to shelter prices. And in fact, he's talked about that being more of a policy issue in the past than it is about being part of the Fed's dual mandate. Well, most analysts of the housing industry say that the problem for housing is that there's not enough supply. And a lot of that has to do with zoning regulations in cities. You can always build out in the suburbs. Now you have to go to the exurbs and you start to get so far away from people's jobs that they don't want to move out there.

14:39They'd like housing in the more central areas, which means you need more density. And that's a big fight always. So that is a policy problem. The other problem is that the Fed controls short rates. And so if you are worried about mortgage rates, they're going to be much more closely tied to long treasuries like the 10-year. And that's going to be priced by the markets in what they think of inflation is going to be. So it's another reason why people are dubious about Myron's view on bringing down inflation through housing.

15:15Carol Massar:Three or four houses for sale on my block. So there's definitely some supply that I am seeing. And I remember actually a voice this week on surveillance with Tom and Paul that they talked in the morning about, no, there is plenty of supply out there. So I'm a little confused. I want to move on to another Fed voice, Fed Reserve Vice Chair Philip Jefferson, making some comments and cautioning on risks to inflation job goals. There are Fed voices that matter more than most. And we know Jay Powell is certainly one of them. What about Mr. Jefferson? Well, he matters in the sense that as vice chair, he's not going to dissent unless he has some horrible disagreement with Jay Powell.

15:53And so if that's where he is, that's where Powell is. And you get the same thing when you're talking about what John Williams thinks is the vice chair of the Open Market Committee. So it tells us that basically the Fed is on board with another rate cut because that's what Powell suggested at the last meeting. The question is, is it October or December? Most people in the markets think it'll be October. And without data, the general feeling seems to be, well, that doesn't give them a reason to change their mind. Now, it could give them a reason to wait and see what happens. But I think what we have to do is wait until we get closer to the end of the month, the meetings on the 29th of October, and then start judging what Fed people are saying.

16:37Carol Massar:Speaking of changing one's mind, and I do want to go back to Steve Myron for a moment. From the conversation that you had this morning with the team on Bloomberg TV and radio, is it fair to say he is kind of data dependent? Did he kind of come across that way? Well, he's data dependent to the extent that the data back up what he thinks is going to happen. He's saying that he is looking forward, which is basically being based more on forecasts than on past data. So it's going to be hard to say he's wrong in the short term because whatever he's predicting hasn't happened yet. But his view is that the economy is going to slow, that the labor market is going to slow, and that inflation is also going to come down.

17:23And therefore, you could cut rates and you should cut rates more quickly because you don't want the economy to weaken too much. But again, that's all based on forecasts as opposed to prior data. We know that he's on leave from the job of chair of President Trump's Council of Economic Advisors. You and the team asked about input from the president. What did he tell you when it comes to not just whether or not he's had an interview to be the Fed chair, but if he's ever been asked by the president to actually take a specific policy action? Well, he gave us the same answer that he has given other people that he has not heard from the president since the day he was confirmed when Trump gave him a call to congratulate him, but did not ask him to do anything particular.

18:06And he says since then, he hasn't heard from Mr. Trump and that the president has never asked him to take a particular position. On the other hand, you know, if mom told you a couple of weeks ago to clean up your room and she's standing there staring at you, you kind of get the message without her having to say it. I think Carol would agree. Totally. Yes, yes.

18:30Carol Massar:We did get some data. Well, you know, first I'm going to say, in terms of jobs data that we've gotten so far, you know, I've heard people say we're kind of flying blind without the monthly jobs data or the government shutdown and not getting government data on the U.S. economy. Are we completely flying blind? Or do those private reports and the different reports, including ISM that we got today, still help form a fair picture of the U.S. economy? They give you a sort of pointillist picture of the economy. You know, it's not sharply defined, but there's a lot of private data out there now, more and more all the time.

19:06Reveglio Labs is a new one out there. They were out today saying 60 ,000 jobs in the month of September. The economist survey by Bloomberg was 53 ,000, so they're in that ballpark. ADP was negative 32 ,000, so they're in a different ballpark. They're playing an away game, different ballpark altogether. other. But in general, you get the idea that this is what's happening in the economy. And remember that whatever the first jobs report number is, it's going to be revised. And the Fed knows that as well. So they have a lot of their own data sources that they use to try to figure out what's going on.

19:45Well, you guys asked Governor Myron about this, whether or not the lack of data would affect the Fed's job. And he gave an interesting answer. I thought he said the Fed uses that data, but they're not making decisions each and every day. What did you make of that? Well, the market is always moving rates around because of the latest data or the latest thing that happens to a particular company. And the Fed just every six weeks meets. And so they look at what all the data up to that point is. Plus, as I said, they have their own data. They get the ADP data, the raw ADP data. And they manipulate it their own way statistically.

20:23Statistically, they don't do what ADP does with the Stanford lab to come up with the numbers that we get from them. So they have their own views on what we're seeing. And as I've noted before, right now, given all the problems we've had with data coming out of the pandemic, the Fed officials are leaning much more on their conversations with CEOs and businesses about what's happening to get an idea.

20:51Carol Massar:Hey, 20 seconds. One other important indicator, I can't believe we didn't get to it, the Swift measure, as in Taylor Swift, new album. What do we need to know real quickly? I found it had a good beat and I could dance to it, which is a joke I used before. And Carol got it. She's been around like me for a while. It looks like about 50-50 on the Internet. Some people like it. Some people don't like it. But it's the most streamed album ever. So it tells you that that's going to make some money, which is good for the economy. So we thank Taylor Swift. And great for the Taylor economy as well. Michael McKee, thank you so much.

21:28Carol Massar:You're listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app or watch us live on YouTube. We want to stay on the jobs report, the U.S. economy. We want to see what she and her team at LinkedIn are seeing. Let's bring in Karen Kimbrough. She's chief economist at LinkedIn out there in Sunnyvale, California. Karen, you guys have such a great vantage point. You get lots of data on LinkedIn. Tell us what you are seeing on the platform when it comes to the U.S. labor market.