Israel approves ceasefire plan

0:02Good morning from the Financial Times. Today is Friday, October 10th. This is your FT News briefing. Israel approved an initial ceasefire deal in Gaza, and Orsted is going through massive cuts. Plus, are the good vibes in the markets really just investors running on fumes? The message from professional investors here is, look, we're prepared to dance along to this. We're making good money out of it, but we've got a lot of hedges in place, and we're quite cautious in case this starts to go wrong. I'm Mark Filippino, and here's the news you need to start your day.

0:44The Israeli cabinet has voted to approve the first phase of a ceasefire deal with Hamas. Under that agreement, the remaining Israeli hostages would be freed, and Israel would gradually pull back from Gaza while also increasing aid. But it's not clear if the ceasefire is going to progress beyond that point. Here to speak with me about it is the FT's Neri Zilber in Tel Aviv. Hi, Neri. Hi, good to be back with you. So what do we know about the details of this deal and how it came together? So the details came together really over the past couple of days in Egypt. And what was agreed was the first stage of what is hopefully a comprehensive deal to end the Gaza war.

1:23It entails a first stage where all the Israeli hostages, 48 in number, 20 of whom are still believed to be alive, will be coming out of Gaza back home to Israel in the coming days. There will be a ceasefire in the Gaza Strip starting today, as well as a partial Israeli military redeployment out of the main population centers of the Gaza Strip. And then finally, the release of nearly 2 ,000 Palestinian prisoners from Israeli jails. So all told, that's the first stage of this ceasefire deal. And there is a more complicated second stage that is yet to be negotiated, which we imagine will be a much heavier diplomatic lift.

2:02What are some of the sticking points here? I mean, what still needs to be shaken out, if anything? So we're fairly confident that the first stage will proceed with minimal bumps, just because all the various international mediators, first and foremost, U.S. President Donald Trump, but also Egypt and Qatar, have essentially guaranteed both Israel and Hamas that they will get what they want, at least initially. And that, we imagine, will go forward as planned, not least because Donald Trump is expected to be in the region this weekend. But the real difficulties, we imagine, will happen on the other side of this initial first stage of the deal.

2:40A lot of things still need to be negotiated, like how exactly Hamas will disarm, how exactly an international and Palestinian committee of technocrats and others will take over governance of the Gaza Strip, how exactly a proposed international security force that is part of this deal will actually come together and deploy into Gaza to get the Israeli military to fully withdraw. And really, to my mind, the biggest sticking point that we will likely come up against is Israel's demand that Hamas fully disarm before it commits to fully ending the war. Nuri, I want to switch over to something that you cover very closely, which is Israeli politics.

3:25I know that one of the things that was holding up a potential ceasefire was the far-right coalition. How did Prime Minister Benjamin Netanyahu get these far-right politicians to agree to this deal? Well, the truth of the matter is that Netanyahu didn't. The far-right parties voted against this deal, but they have as yet not threatened to actually leave his ruling coalition or topple the government, at least for now. Really, it all boils down to the fact that Netanyahu and this Israeli government only agreed to their minds on the initial first stage of the deal, and not for the broader and more comprehensive second stage, which would actually require Israel to fully commit to ending the war.

4:08So the far-right politicians in Netanyahu's coalition are probably still holding out hope. and also likely don't want to face the Israeli voter anytime soon. And that's why they haven't left just yet. But really, if this ceasefire deal proceeds, then to my mind, early elections and the collapse of Netanyahu's government is not a question of if, it's a question of when. Neri, what does this deal mean for the region as a whole, especially because this war spilled beyond Gaza, right? So what does this do to the region? So this is definitely good news for the overall region and probably a central reason why you saw all these various Arab and Muslim countries come together and push for precisely this deal that would end the Gaza war.

4:50What started on October 7, 2023 in the Gaza Strip and in southern Israel with Hamas's devastating attack on Israeli communities and bases there spread all across the region to Lebanon, to Syria, to the West Bank, to Iran, to Yemen. So for many people here in the Middle East, it would be fitting that something that started in Gaza would actually come to an end in Gaza with a durable ceasefire, a durable peace deal. And hopefully it sets the region and especially Gaza on course for a much better and more positive future. What's the FT's Neri Zilber in Tel Aviv? Thanks so much, Neri. My pleasure.

5:32The U.S. is officially intervening in Argentina's currency. Treasury Secretary Scott Besant said yesterday that the Treasury directly purchased Argentine pesos to boost the currency. Besant also said the department finalized a$20 billion currency swap framework with Argentina's central bank. The Trump administration is trying to support its most important ally in Latin America, and it comes just before Argentina's president enters crucial midterm elections just a few weeks away.

6:07Offshore wind developer Orsted is planning on cutting a quarter of its workforce. There's a lot going wrong for the Danish company right now. The Trump administration has put pressure on the offshore wind sector, and that's spooked investors. Earlier this year, the government issued a stop work order for one of its wind farms. Orsted has since been allowed to resume work on it while a lawsuit plays out. But the company has paused a major offshore wind project in the UK and walked away from two others in the US. Orsted is also struggling with higher interest rates and an overstretched supply chain that's made equipment more expensive.

6:50This week, the price of gold passed$4 ,000 a troy ounce for the first time ever. Gold has been on an unusual tear this year. It's unusual not only because the price is so high, but investors are piling in while stocks keep ticking up. So what should we make of all this? Here to tell us what she thinks is the FT's market columnist and co-host of the FT's Unhedged podcast, Katie Morton. Hi, Katie. Hey, Mark. How's it going? Not too bad, but I'm a little confused about this whole gold thing. So I touched on it a little. I touched on it a little already. But why is it so weird that gold is so high right now?

7:26Well, look, if you're confused, it's you and me both, right? There has been just the most extraordinary rally in gold this year. We're up by about 50 % in price so far this year. It's the biggest jump since the 1970s. So normally, one of the main reasons why gold goes up is because other markets are going down. So people are making big losses on stuff like stocks or bonds, and they want to make sure they have something else in their portfolio that does well, so they buy gold. But those sorts of conditions that normally make gold go up, you know, war, pestilence, economic shocks, collapse in financial markets, none of those things is the case right now.

8:10So it's really strange to see gold doing this. So we've got gold going up. As I mentioned, stocks are also going up. What can we attribute to the stock market exuberance? Well, the stock market exuberance is a whole other thing. So I think to me, the main thing that's going on with stocks at the moment is that the bad news just is not sticking. So I spend a good portion of my life talking to fund managers, right? And they, you know, just chew my ear off about a bunch of things that they hate and that make them really nervous. But earnings are doing fine as a rule in US corporations. And so they just can't really see a reason to fight the momentum that we've had ever since the pullback from the Liberation Day tariffs from Donald Trump in April.

9:04So the momentum is there. And I think that's a really important thing to bear in mind for the gold trade as well. The thing that really is helping the gold price at the moment is it's got momentum. There is a line and it is going up and people want a bit of it. So the word bubble gets thrown around a lot. But, you know, it certainly does look frothy out there. Is it appropriate to call it a bubble, Katie? So even a few weeks ago, using the B word was a bit kind of, you know, a bit naughty. And now everyone's saying it. People like the Bank of England and the IMF saying there's a huge amount riding on this one trade on AI.

9:50And there's a lot of very rich valuations out there. There's a lot of very expensive stocks. There is not a lot of room for error here. It's based on a lot of promise of things that may or may not happen in the future. I don't think anyone's arguing that these companies are worth nothing. But people are starting to wonder whether they are worth the trillions that is ascribed to them by public markets. Katie, in your latest column, you called this market rally running on fumes. Jeff Bezos called the AI surge a good bubble. What does it matter if the market is supposed to be terrible as long as everybody keeps making money?

10:27I mean, look, that's the thing. Investors are paid to invest, and they are paid to make the most out of big market moves, and that's what we've got going on here. The problem is that these things generally don't end well. And, you know, those of us who were there to witness the crash in 08 and those of us who managed to survive the Eurozone debt crisis know that, you know, big pullbacks in public markets can be very, very ugly. So I guess the message from professional investors here is, look, we're prepared to dance along to this. We're making good money out of it. But we've got a lot of hedges in place and we're quite cautious in case this starts to go wrong.

11:01because when you do get a correction, it can take you down by, you know, 10 % or more in just a few short days. And that's just something that people need to be aware of. Katie Martin is the FT's market columnist. Thanks so much, Katie. Pleasure. You can read more on all these stories for free when you click the links in our show notes. This has been your daily FT News Briefing. Check back next week for the latest business news. The FT News Briefing was produced this week by Sonia Hudson, Josh Gabbard-Doyan, Lucy Baldwin Fiona Simon Ethan Plotkin and me Mark Filipino Our show is mixed by Alex Higgins Kent Millitzer and Kelly Gary We had help this week from Peter Barber and Michael Lello Our acting co-head of audio is Topher Forges and our theme song is by Metaphor Music