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Speaker 1: Good morning. I'm Brian Curtis and I'm Doug Krisner. Here

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Speaker 1: are the stories we're following today.

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Speaker 2: Let's get right over to Ed Baxter in San Francisco

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Speaker 2: with all the latest. Israeli Prime Minister Benjamin Netanyahu saying

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Speaker 2: that Israel's retaliation will be aimed at Hamas and it

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Speaker 2: has only just started. Ed Baxter with that story.

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Speaker 3: Yeah, that's exactly right, Brian. A television address, he began

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Speaker 3: by saying that more than nine hundred Israelis, mostly civilians,

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Speaker 3: have been killed, promises that what he does now will

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Speaker 3: echo through the generations. He's called for the opposition to

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Speaker 3: form a coalition government to unite the fight. He's also

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Speaker 3: called up three hundred thousand reservists and the largest call

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Speaker 3: up ever Bloomberg's Ethan Bronners. As a prime minister. Flatley said,

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Speaker 3: Israel will sweep across the entire Gaza strip.

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Speaker 4: This is not going to be a walk in the park.

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Speaker 4: We are going to take this force down. We are

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Speaker 4: going to do it in a way that for decades,

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Speaker 4: he said, they will never be they will remember it.

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Speaker 4: So one thing, the second thing is, you know, to

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Speaker 4: talk about the people who were taking hostage to talk

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Speaker 4: about the people who were slaughtered, to sort of focus

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Speaker 4: on the pure evil, the isis like nature of this massacre.

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Speaker 3: I meanwhile, the US has said against Israel, will have

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Speaker 3: direct support in every way possible. Bloomberg's Nick Wadams says

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Speaker 3: that will include hardware and munitions.

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Speaker 5: Well, I think what you're going to see is the

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Speaker 5: flow of some munitions to Israel. We've already had the

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Speaker 5: US announced over the weekend that it was moving carrier

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Speaker 5: straight group to the region to help in defense of Israel.

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Speaker 5: But you're going to start seeing you know, artillery shells,

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Speaker 5: precision guided bombs, things like that.

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Speaker 3: But next says already talk that munitions for Ukraine are

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Speaker 3: already low.

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Speaker 5: As there's a big bipartisan move now to give Israel

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Speaker 5: anything at once, but then to start also investigating why

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Speaker 5: this attack was such a surprise. So Ukraine was very

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Speaker 5: much in the focus as of last week, and now

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Speaker 5: obviously it is not the highest priority for the Biden administration,

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Speaker 5: and that's going to have an effect.

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Speaker 3: Yeah, and Nick mentions intelligence failures in Israel, and the

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Speaker 3: US National Security Council Coordinator John Kirby on MSNBC Today

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Speaker 3: said too worthy to dissect that, but says they have

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Speaker 3: found no direct link that Iran is behind the Helmas attacks.

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Speaker 6: No, we do not. We don't have any specific intelligence

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Speaker 6: or evidence that points to direct participation by Iran in

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Speaker 6: these particular sets of attacks over the last couple of days.

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Speaker 6: That said, of course, Iran has long supported Helmas and

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Speaker 6: other terrorist networks throughout the region with resources, capabilities, training,

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Speaker 6: and so in that regard, clearly Iran's complicit here.

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Speaker 3: And Kirby says eleven US citizens have been killed in Israel. Now,

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Speaker 3: this does put some pressure on the US as a

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Speaker 3: House did pull aid for Ukraine from the funding bill

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Speaker 3: leading up to the McCarthy ouster. Kevin McCarthy out front

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Speaker 3: and center today miss rumors that he might be interested

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Speaker 3: in seeking to be elected again.

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Speaker 7: Have ninety six percent of the conference in one place,

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Speaker 7: and you're allowing four percent with the Democrats playing politics.

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Speaker 8: But now of putting a doubt inside this body, that's wrong.

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Speaker 3: Donald Trump apparently is not now going to visit the

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Speaker 3: capital tomorrow to meet with House Republicans take part in

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Speaker 3: deliberations on the next speaker. That's a Fox Digital report,

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Speaker 3: and the Hollywood screenwriters have officially ratified their contract. Global

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Speaker 3: News powered by more than twenty seven hundred journalists and

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Speaker 3: analysts in over one hundred and twenty countries in San Francisco.

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Speaker 3: I'm Ed Baxter, and this is Bloomberg Brian.

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Speaker 2: All right, thanks very much, Ed, I'm Brian Curtis, along

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Speaker 2: with Rishad Salama and Doug Krisner. Well, the attack on

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Speaker 2: Israel by Hamas has the potential to disrupt the flow

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Speaker 2: of oil in the Middle East. Israel's role in global

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Speaker 2: oil supply is actually limited, but Iran has become a

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Speaker 2: major source of extra crude, and there's a question looming

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Speaker 2: on whether or not Tehran's proxies across the Middle East

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Speaker 2: could be drawn into an escalating conflict, and whether there

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Speaker 2: would be additional American sanctions on Tehran. Here's i'm rita

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Speaker 2: send at energy aspect.

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Speaker 9: It is only China that's buying it, and it's very

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Speaker 9: hard for the US to reinforce any kind of sanctions.

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Speaker 9: Given the route that Iran is right now taking to China.

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Speaker 9: You might get a bit more of vocal US administration,

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Speaker 9: and they had turned a blind eye, you could definitely

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Speaker 9: expect some more just a more scrutiny around those volumes.

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Speaker 2: Amrita Sin. Iran has denied that it was involved in

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Speaker 2: the Hamas attacks on Israel, and US National Security Council

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Speaker 2: spokesman John Kirby, as you mentioned earlier, said there is

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Speaker 2: no direct evidence linking Iran to the attacks.

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Speaker 1: Well, the three biggest US airlines have now halted flights

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Speaker 1: to and from Israel. We have the story from Bloomberg's,

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Speaker 1: tom Busby.

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Speaker 10: Delta, United and American Airlines have all canceled all their

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Speaker 10: flights to and from Tel Aviv. In response, the US

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Speaker 10: Federal Aviation Administration said in a statement quote, operators are

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Speaker 10: advised to exercise caution and review the security situation before

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Speaker 10: resuming operations into and out of Israel. Now, those US

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Speaker 10: airlines are not alone. Germany's Looftanza Air, France KLM, and

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Speaker 10: the low cost Hungarian carrier whiz Air also canceled flights

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Speaker 10: to Israel. In total, airlines worldwide canceled forty four percent

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Speaker 10: of scheduled flights out of Tel Aviv on Sunday alone.

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Speaker 10: Tom Busby, Bloomberg, Radio, Wall Street's biggest banks have told

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Speaker 10: staff in Israel to work from home after the attacks.

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Speaker 2: We get more on that from Bloomberg's Charlie Pellett.

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Speaker 11: Sources familiar with the plans tell Bloomberg JP. Morgan Chase,

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Speaker 11: which has about two hundred employees in Israel, and Morgan

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Speaker 11: Stanley have asked their workers not to come into the office.

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Speaker 11: Goldman Sachs and Bank of America also asked staff to

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Speaker 11: stay home, and Bank of America closed its office in

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Speaker 11: Tel Aviv as it continues to monitor the situation. A

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Speaker 11: City Group staff in Israel can work from home or

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Speaker 11: in the office in New York. Charlie Pellett, Bloomberg Radio,

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Speaker 11: and we go to the latest FED speak. Next, we

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Speaker 11: heard today from Vice Chair Philip Jefferson. He is watching

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Speaker 11: the increase in US treasury yields as a potential further

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Speaker 11: restraint on the American economy.

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Speaker 7: My view is that the FOMC is in a position

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Speaker 7: to proceed carefully in assessing the extent of any additional

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Speaker 7: policy firming that may be necessary. We are in a

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Speaker 7: sensitive period of risk management where we have to balance

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Speaker 7: the risk of not having tightened enough against the risk

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Speaker 7: of policy being too restrictive.

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Speaker 1: That is, FED Vice Chair Philip Jefferson. Now, since the

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Speaker 1: FED September meeting, the yield on the US ten uere

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Speaker 1: is up about forty basis points. And recently we have

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Speaker 1: had FED officials that would include San Francisco President Mary

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Speaker 1: Daily and the head of the Dallas Fed, Laurie Logan,

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Speaker 1: both noting that the recent tightening on financial conditions may

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Speaker 1: be a substitute for additional rate hikes.

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Speaker 2: Right, and you wonder how complicated it might get with

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Speaker 2: yields potentially dropping. Now Here, we had treasure futures up

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Speaker 2: and yields indicated about ten basis points lower on a

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Speaker 2: tenure than what we saw. But anyway, that's four of

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Speaker 2: the days to come. Well. Senate Majority Leader Chuck Schumer

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Speaker 2: led a delegation of US senators in a meeting with

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Speaker 2: Chinese President Shi Jinping. The meeting in Beijing marked the

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Speaker 2: first time that she met with senators since twenty fifteen.

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Speaker 2: At that time, he spoke with congressional leaders while on

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Speaker 2: a visit to Washington. Senator Schumer briefed reporters after the.

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Speaker 12: Meeting, the United States and China are at a historic

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Speaker 12: decision point in the relationship between our countries. Our bipartisan

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Speaker 12: Senate delegation spoke candidly with President she about a range

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Speaker 12: of issues and our respective priorities. We may clear to

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Speaker 12: the President Shei that America wants fairness and stability at

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Speaker 12: the foundation of the relationship. Must be a level playing

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Speaker 12: field for American businesses and workers, as well as responsible competition.

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Speaker 12: We may clear we don't think that level playing field

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Speaker 12: exists right now.

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Speaker 2: Schumer also said that Beijing revised its statement on the

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Speaker 2: Middle East to condemn the loss of civilian life after

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Speaker 2: he had requested a more forceful response. I'm Brian Curtis,

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Speaker 2: along with Rishad Salamat, and our guest is Kirsten Fontenrose,

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Speaker 2: president of Red six Solutions and non resident Senior Fellow

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Speaker 2: at the Atlantic Council. Kirsten the Israeli Cabinet Minister Ron

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Speaker 2: Dermer was on Bloomberg surveillance earlier in the day and

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Speaker 2: he left no doubt that the Israeli response was going

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Speaker 2: to be harsh.

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Speaker 8: It was going to be.

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Speaker 2: Aggressive and devastating. We haven't seen that yet, but should

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Speaker 2: we expect it.

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Speaker 13: We should expect it. We should take them at their word.

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Speaker 13: There have been nine hundred Israelis killed. There have been

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Speaker 13: about six hundred reported Palestinians killed. Are the numbers probably higher,

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Speaker 13: and there have been eleven Americans killed. Other nations have

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Speaker 13: also confirmed that they have lost citizens. So Israel is

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Speaker 13: taking this extremely seriously, not only for their own security,

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Speaker 13: but for what they feel they owe other nations who

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Speaker 13: have lost people. Remember, this is the fifth attack on

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Speaker 13: Israel by Hamas in just the two thousands in Israel

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Speaker 13: states that it intends to end this cycle this time,

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Speaker 13: So the counter offensive we are seeing now is just

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Speaker 13: the beginning. And in addition to attacks by Hamas, both

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Speaker 13: Islamic Jihad and Hazballah we're both also armed by Iran,

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Speaker 13: have claimed attacks on their border with Lebanon. It says

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Speaker 13: so far that it's hit more than twelve hundred military

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Speaker 13: targets in Gaza and that many more are planned and

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Speaker 13: may not be limited to Gaza. Now, continuing this does

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Speaker 13: not necessarily mean it will all be strikes. They could

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Speaker 13: use covert, they could use cyber. There are lots of

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Speaker 13: tools at Israel's disposal, but they've made it very clear.

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Speaker 13: I think they're trying to prepare the world. This is

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Speaker 13: not going to be over quickly.

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Speaker 14: Well, it certainly would be, but let's look at apart

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Speaker 14: from the horrible human cost of all this, what about

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Speaker 14: actually where it leaves the geopolitical kind of framework of

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Speaker 14: the Middle East, with Saudi Arabia on the verge of

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Speaker 14: perhaps doing a deal with Israel at some sort of

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Speaker 14: peace deal that's pretty just on the back.

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Speaker 13: Ben and now well, I think the deal is definitely

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Speaker 13: on the back burner.

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Speaker 8: I won't say it's dead.

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Speaker 13: Many people are saying this is a win for Iran

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Speaker 13: because that deal will be dead.

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Speaker 8: I think it's a win for Iran in other ways.

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Speaker 13: But like Israel, Saudi Arabia perceives Hamas and these other

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Speaker 13: groups that are also backed by Iran as a threat,

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Speaker 13: and Saudi is not going to allow Hamas to dictate

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Speaker 13: the speed of its long term strategic goals, for which

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Speaker 13: a relationship with Israel is fairly necessary. It's just the

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Speaker 13: time frame for normalization will definitely be impacted by the

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Speaker 13: scope of Israel's response to this attack. They say retaliation

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Speaker 13: against Hamas's just beginning, as we talked about it, and

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Speaker 13: is going to continue, and their intent is to establish

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Speaker 13: deterrence against other anti Israel groups from joining Hamas's operation.

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Speaker 13: They also intend to minimize mass civilian casualties because those

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Speaker 13: would make it politically impossible for Saudi Arabia and any

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Speaker 13: other Arab or Muslim country to be in public talks

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Speaker 13: with Israel about normalization. The difficulty for Israel here is

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Speaker 13: that the residents of Gaza are in an extremely densely

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Speaker 13: populated area, and Hamas has been using them as a

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Speaker 13: human shield for their operational planning centers and for their arsenals,

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Speaker 13: so that collateral damage is almost inevitable.

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Speaker 2: We just played those comments from Senator Schumer. He says

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Speaker 2: that he chastised China for not expressing more sympathy to

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Speaker 2: Israel after the attacks, and I wanted to add that

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Speaker 2: Bloomberg contributor Larry Summers scolded Harvard for staying silent on this,

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Speaker 2: and that was after student groups said that it was

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Speaker 2: Israel that was responsible for the Hamas attacks. So my

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Speaker 2: question to you, Kirsten is whether or not there will

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Speaker 2: be plenty out there that will sympathize with Hamas after

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Speaker 2: these attacks.

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Speaker 13: There absolutely will be, not only because of groups that

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Speaker 13: are making it clear that Hamas is a result of

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Speaker 13: Palestinian sentiment about what is perceived as an Israeli occupation

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Speaker 13: of Gaza.

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Speaker 8: It's more blockade. They're not actually occupying Gaza.

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Speaker 13: But what we're also seeing is media is interpreting what

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Speaker 13: is happening on the ground in different ways. So we're

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Speaker 13: seeing lots of media outlets, many of whom have the

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Speaker 13: intent of simply maligning the US even more than Israel.

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Speaker 13: But because Israel is such a close partner with the US,

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Speaker 13: this is an opportunity to kind of take them down

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Speaker 13: with us. So you're seeing a lot of Chinese sponsored,

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Speaker 13: Russian sponsored media outlets speaking negatively about US stewardship in

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Speaker 13: the region that has led to this situation on the

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Speaker 13: ground in Israel and the suffering of all of these Palestinians.

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Speaker 13: There's going to be a lot of misinformation around this

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Speaker 13: situation as this conflict moves on, and we're definitely going

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Speaker 13: to see a galvanization of opinion on it.

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Speaker 8: You know who's responsible.

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Speaker 14: So I mean, let's look down the road a little bit.

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Speaker 14: I mean, what's going on to the moment, is the

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Speaker 14: folk of war, etc.

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Speaker 6: Etc.

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Speaker 14: Does this move the dial and perhaps lift up what

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Speaker 14: has already fallen behind on the agenda, and that's the

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Speaker 14: peace process?

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Speaker 8: Great question.

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Speaker 13: I think most of the US government right now would

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Speaker 13: definitely like to see this catalyze the peace process because

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Speaker 13: it's been quite frozen and this administration really has not

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Speaker 13: made a play at a peace process answer of their own.

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Speaker 13: The Saudis have refloated some ideas from the past. They're

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Speaker 13: Jordanian ideas. It may be that this is the unfortunate

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Speaker 13: coit situation that will bring some of those to the forefront.

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Speaker 8: To be more seriously discussed.

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Speaker 13: The first issue, though, is really internal political discussions that

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Speaker 13: have to take place about how much they are willing

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Speaker 13: to bring to that table at all.

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Speaker 7: Yeah.

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Speaker 2: Well, Kiris and I started off by talking about Ronderman

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Speaker 2: and his comments about a harsh response. Would an immediate

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Speaker 2: harsh response by Israel against Thamas in Gaza, would that

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Speaker 2: really bring Iran to the backing of Hamas or might

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Speaker 2: they back off a little bit and say, at the moment,

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Speaker 2: this is your fight.

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Speaker 13: The irony is that the regime in Tehran will gladly

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Speaker 13: fight Israel to the last unwitting, innocent civilian Palestinian. So

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Speaker 13: as long as the fight is taking place in Israel's

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Speaker 13: backyard using non Iranian fighters, there's no reason for Iran

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Speaker 13: to back off. This is an inexpensive way for them

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Speaker 13: to reduce Israel's military readiness to create problems for their

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Speaker 13: strategic adversaries like the United States. Tehran is literally gleeful

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Speaker 13: right now about what is going down, so I don't

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Speaker 13: expect any back off. Half of the reason the US

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Speaker 13: is sending additional fighter jets and a carrier group out

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Speaker 13: to the region is to deter Iran from encouraging any

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Speaker 13: of its other proxies from joining the fray.

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Speaker 8: We're hearing that Hasbeala is hedging a bit right now.

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Speaker 8: Go ahead.

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Speaker 2: It sounds like what you're saying is a broader war

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Speaker 2: is to be expected here.

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Speaker 8: I think a broader war is what we are trying

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Speaker 8: to prevent.

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Speaker 13: So there's no reason right now we would expect Iran

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Speaker 13: to pull back on continuing to arm or backing or

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Speaker 13: encouraging the many groups they have around the region. I

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Speaker 13: think we'll potentially see more activity out of Yemen or

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Speaker 13: parts of Iraq while Iran believes the US and the

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Speaker 13: West is distracted.

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