Will Market Turbulence Spread Beyond Metals?

0:00Chelsey Dulaney:This is a new era of American innovation. Using Google AI, Etsy is making it easier for shoppers to discover unique creations and helping sellers connect with the people who love their work. Learn more at g.co slash American Innovation.

0:17Luke Vargas:Volatility grips global markets as jittery investors sell off everything from gold to Bitcoin. Plus, the latest from Washington as Congress's bid to end a partial government shutdown gets tougher. and Israel reconnects Gaza to Egypt in a major test of President Trump's peace plan.

0:35Chelsey Dulaney:This is a long-awaited moment for Gazans. So Gazans have not been able to have a crossing that allows them to leave and enter since the start of the war.

0:44Luke Vargas:It's Monday, February 2nd. I'm Luke Vargas 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.

0:59Luke Vargas:A market sell-off that began on Friday is continuing this morning, with U.S. stock futures tracking a drop in global stocks. Cryptocurrencies are also selling off, with Bitcoin trading below$77 ,000. But in a sign of potential stabilization, gold and silver prices have halted a slide that had gained steam over the weekend. Here with more is Wall Street Journal markets reporter Chelsea Delaney. Chelsea, bring us up to speed here. A week ago, this metals rally had seemed practically unstoppable, but we've seen a big unwinding, to put it mildly. What's going on?

1:32Chelsey Dulaney:Yeah, this is really all about metals. So over the past year, we've seen this incredible run-up in metals prices, gold, silver, just soaring. And last week, it hit the wall. So we saw a huge drop-off in silver prices. We saw gold tumbling. And it looked like it was going to continue this morning. But it does seem to be stabilizing a bit. But I think for investors, this has been a kind of mind-boggling rally. And there's a lot of reasons that people give you for why gold was up over 60 % in the past year, why silver has doubled in price. And a lot of that has to do with concerns around the U.S.

2:07Chelsey Dulaney:So debasement, whether the unpredictability of U.S. policy was going to erode the value of the dollar. And one of the reasons why this might be turning around now is because last week, Trump nominated Kevin Warshad as chair of the Federal Reserve. he's seen by investors as kind of a safe hand. He was a Fed governor. He has helped sort of ease some of those concerns about the independence of the Fed and whether the Fed is going to pursue lower interest rates because Trump wants them to.

2:34Luke Vargas:As you mentioned at the top, this is really about metals. Friday, truly a bloodbath for silver and gold, posting their worst one-day sell-off since the 1980s. Though this seems to be affecting a lot of assets beyond silver and gold. I mean, is there anything that's not selling off right now and why?

2:50Chelsey Dulaney:You have to look pretty far to find something that isn't selling off right now. It is such a widespread route across global markets. But, you know, we are seeing treasury bonds rise today. So yields are going down as well. The dollar, which had been getting hit really hard over the past year and in particular over the past couple of weeks, has sort of stabilized and risen a little bit. So that actually should ease some concerns about the sell America trade. Treasuries are acting as they should. They're acting as a safe haven right now.

3:16Luke Vargas:Is that kind of the reassurance probably many retail investors are looking for if they're worried, listening to all this, that a major correction is beginning to take shape?

3:25Chelsey Dulaney:How far this goes is up in the air. We've just seen such an incredible rush into metals over the past year. And it shifted from being something that was thought to be central bank driven. And now it's retail investors and these things. Gold, this sort of safe haven, is now trading like a meme stock. So this might just be a positioning washout. This bet got so crowded. We've had a trigger. And so now it comes back a bit.

3:48Luke Vargas:That was Journal Markets reporter Chelsea Delaney. Chelsea, thank you so much.

3:51Chelsey Dulaney:Thanks for having me.

3:55Luke Vargas:The U.S. government is beginning the week partially shut down. The Senate passed a funding package to keep the lights on late Friday, but the House still needs to approve it. And its success there is far from given. House Minority Leader Democrat Hakeem Jeffries called the Senate deal, which extends Department of Homeland Security funding for two weeks in order to allow for talks on reining in enforcement operations a step in the right direction. However, he said that many House Democrats believe that even two weeks of DHS funding is too much and are demanding a series of changes to DHS operations, as he explained on ABC's This Week with George Stephanopoulos.

4:35Chelsey Dulaney:Body cameras should be mandatory. Masks should come off. Judicial warrants should absolutely be required, consistent with the Constitution, in our view, before DHS agents or ICE agents are breaking into the homes of the American people.

4:49Luke Vargas:Speaking on NBC News' Meet the Press, Republican House Majority Leader Mike Johnson called some of those requests reasonable, but pushed back on the requirement for judicial warrants, as well as calls for no masks. When you're talking about masking, the reason that ICE agents wear masks is to protect their own identities and protect their own families. And in some circumstances, they've had a price put on their heads. Johnson will need to keep almost all Republicans on board to end the shutdown in the coming days. No easy task, given that some in his party are floating their own demands and are frustrated over being painted into a corner by Democrats.

5:25Luke Vargas:Further complicating matters, Johnson will be swearing in a new House Democrat as early as today, shrinking Republicans majority to 218 to 214 after Christian Menifee won a special election in Texas. And the Justice Department's latest release of files related to Jeffrey Epstein exposed the names of 43 of his victims, including many who haven't shared their identities publicly or who were minors when they were abused by the notorious sex offender. That's according to a journal analysis which found that several women's full names appeared more than 100 times, alongside personally identifying details, including home addresses.

6:03Luke Vargas:The DOJ was required to redact all victims' names prior to releasing the files, raising questions about the government's compliance with the Epstein Files Transparency Act. Yesterday, Deputy Attorney General Todd Blanche said the DOJ would remove victims' names if notified, a process some victims told the journal was re-traumatizing. Since Friday's document release, media outlets and influencers have started publishing the women's names, leading some to say they've already begun facing online harassment. For more on the latest trove of documents, including a look at the famous names included in the release, from Elon Musk to Google co-founder Sergey Brin, check out the link we've left in our show notes.

6:45Luke Vargas:Coming up, Israel reopens a key border crossing into Gaza for the first time in two years, and we'll look at the influx of AI in music. Those stories and more after the break.

7:00Chelsey Dulaney:This is a new era of American innovation. Using Google AI, Etsy is making it easier for shoppers to discover unique creations and helping sellers connect with the people who love their work. Learn more at g.co slash American Innovation.

7:18Luke Vargas:The Rafa border crossing between Gaza and Egypt is reopening today, allowing Palestinians to enter and exit the enclave for the first time since the war between Hamas and Israel began. The journal's Anat Pelled is in Tel Aviv.

7:32Chelsey Dulaney:As we're talking now, it's Monday morning, local time in Israel. We are hearing that Gazans are lining up at the border and the crossing process is beginning. Those entering Gaza through the crossing have to be residents who left after the outbreak of the war in October 2023, not before the war. That's a restriction that Israel wanted. They're going to undergo security checks, both leaving and coming in. and what's only going to be people. So we're not going to see at this point any cargo or aid coming in through the crossing.

8:00Luke Vargas:Rafa's reopening marks the final major requirement of the first phase of President Trump's Gaza peace plan. Renat said that what happens next is far from certain.

8:10Chelsey Dulaney:The reopening of the crossing is expected to facilitate the entry of a Palestinian technocratic body that is supposed to oversee day-to-day governance of Gaza as part of the second stage of the truce. And it's going to be an early test to see how Hamas will respond to what it sees as a rival entity seeking to govern the enclave.

8:27Luke Vargas:Thus far, Hamas has also resisted disarming, a key demand of the peace plan's second phase, alongside the withdrawal of Israeli troops from most of Gaza. Just days before President Trump's inauguration last year, we report that the crypto venture tied to the president's family accepted a half a billion dollar investment backed by a member of the United Arab Emirates' royal family. Sheikh Tanun bin Zayed Al-Nayan is the UAE's national security advisor, sometimes called the spy Sheikh, and is a brother of the country's president. Prior to Trump moving back to the White House, the Sheikh's lieutenants signed a deal with the Trump family to buy a 49 % stake in World Liberty Financial, which steered around$187 million to Trump family entities.

9:13Luke Vargas:The deal came just months before the UAE won access to American AI chips, something the royal had been pushing the U.S. for.

9:25Luke Vargas:And in a contest of Super Bowl halftime stars, Kendrick Lamar took home last night's Grammy Award for Record of the Year, while this year's performer Bad Bunny won Album of the Year. The awards come at a pivotal moment for the music industry, as a surge in AI artists sparks fierce debate among fans and creators alike, as well as a rush to clarify whether an artificial artist could one day walk away with a Grammy. The Recording Academy's CEO, Harvey Mason Jr., said last week on the Rapid Response podcast that using AI is allowed, but that eligible music must be based on human artistry. AI does not disqualify you from being able to submit for a Grammy.

10:06Luke Vargas:There are certain things that you have to abide by, and there are certain rules that you have to follow, but it does not disqualify you from entering. However, with an estimated 50 ,000 AI-generated tracks being uploaded to Spotify daily, record labels and artists are being forced to confront AI, as entertainment reporter Catherine Sayer explains.

10:26Chelsey Dulaney:How musicians and how labels can monetize this is still a big and pretty complicated question. You have record labels that are now partnering with AI companies in search of the best way to do that. The big three labels, Warner, Universal, and Sony, they had sued the biggest music AI company, Suno, alleging it essentially stole copyrighted music to train its model. And now, Universal has partnered with another AI music company, Udio. And they're working on one of those social-type platforms where fans can create this music. 2026, it's going to be a huge year for AI in the music industry.

11:06Luke Vargas:And that's it for What's News for this Monday morning. Today's show was produced by a slate of real humans, Hattie Moyer and Daniel Bach, supervising producer Sondra Kilhoff, and me, Luke Vargas, for The Wall Street Journal. We will be back tonight with a new show. And until then, thanks for listening.

11:34Chelsey Dulaney:The spirit of innovation is deeply ingrained in America, and Google is helping Americans innovate in ways both big and small. Using Google AI, Etsy is making it easier for shoppers to discover unique creations and helping sellers connect with the people who love them most. This is a new era of American innovation. Learn more at g.co slash American innovation.