WEBVTT - Asia Stocks Rise Before Iran Talks

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>Welcome to the Daybreak Asia podcast. I'm Doug Chrisner. Energy

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<v Speaker 2>markets are still a critical concern. After the close in

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<v Speaker 2>New York Trading, President Trump warned Iran against charging tolls

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<v Speaker 2>on vessels moving through the Strait of Horn Moves.

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<v Speaker 3>Now.

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<v Speaker 2>Trump went on to say that Iran is doing a

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<v Speaker 2>very poor job of allowing oil to flow through. At

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<v Speaker 2>the moment, I think it's fair to say that the

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<v Speaker 2>strait remains largely blocked. Yes, there have been a handful

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<v Speaker 2>of Iran linked ships passing through, and we know of

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<v Speaker 2>three Chinese oil tankers at least with Saudi and Iraqi

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<v Speaker 2>crew that have sailed to Horn Moves. Iran, meantime, as

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<v Speaker 2>we know, has said that any vessel transitting the strait

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<v Speaker 2>will need army approval. And just to point out before

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<v Speaker 2>we get into our conversation, today, in Japan, the government

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<v Speaker 2>said it will release oil reserves equivalent to twenty days

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<v Speaker 2>of consumption from inventories in the month of May. For

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<v Speaker 2>a closer look at markets, particularly on how oil is

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<v Speaker 2>impacting the story, I'm joined by Bloomberg's Leontin Iwo. She

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<v Speaker 2>is managing editor for Asia Equities. Leonting joined from our

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<v Speaker 2>studios in Singapore. Thank you for being with us. One

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<v Speaker 2>of the things that's really surprising to me is how

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<v Speaker 2>well stock markets in the Asia Pacific are performing in

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<v Speaker 2>the face of elevated crude prices. I think the MSCI

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<v Speaker 2>Asia Pacific Index is on track for its first weekly

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<v Speaker 2>gain since the war began.

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<v Speaker 3>Yeah, it's actually on track for its best weekly gain

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<v Speaker 3>since twenty twenty four, that's when the PBOC wrote out

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<v Speaker 3>the stimulus of stimulus blitz. I don't know if you remember,

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<v Speaker 3>so yeah, I would say global stocks are actually already

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<v Speaker 3>sort of looking past the war. I know, you know,

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<v Speaker 3>there's still a lot of uncertainty. The street of homos

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<v Speaker 3>hasn't really been opened. But market by its nature is

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<v Speaker 3>very optimistic, right. Stock market people are looking at the

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<v Speaker 3>direction of travel, which has been positive. The escalation has

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<v Speaker 3>been the direction. In the last week or so, people

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<v Speaker 3>already talking about how to position for the end of

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<v Speaker 3>this war. So, you know, stuff like renewable energy is

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<v Speaker 3>really being mentioned, just because the war reminded all the

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<v Speaker 3>governments that they need to diversify their sources of energy

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<v Speaker 3>away from the likes of oil and gas. So you know,

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<v Speaker 3>people are looking at energy storage stocks, renewable like solar

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<v Speaker 3>and wind and also ev This is all being sort

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<v Speaker 3>of bought or being accumulated by fund managers right now.

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<v Speaker 2>What about the story in China as it relates to coal.

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<v Speaker 2>You're talking about how the energy crisis is impacting the

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<v Speaker 2>need for power. We know that many of the countries

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<v Speaker 2>in the Asia Pacific are heavy oil and lerg importers.

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<v Speaker 2>Is there much conversation around doing more with coal?

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<v Speaker 3>Yeah, I think coal in terms of STOCKMA performance, coal

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<v Speaker 3>stocks are also being bought just because you know, with

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<v Speaker 3>oil being sort of limited in terms of supply, investors

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<v Speaker 3>just looking at all sorts of energy sources to get

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<v Speaker 3>their hands on. But I think in the longer term,

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<v Speaker 3>China is still very much determined to phase out heavy

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<v Speaker 3>dirty coal usage and encourage power plants to use more renewable,

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<v Speaker 3>clean energy generated electricity. So in that sense, I think,

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<v Speaker 3>you know, the likes of Cattle, which has the biggest

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<v Speaker 3>business in energy storage, and even byd which has a

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<v Speaker 3>very sizable business in energy storage, and all these kind

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<v Speaker 3>of companies I would say are better positioned in terms

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<v Speaker 3>of benefiting from a future sort of government.

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<v Speaker 2>Incentives speaking of the government in China. I was reading

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<v Speaker 2>a piece on the Bloomberg Terminal indicating that the government

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<v Speaker 2>is considering financial relief for some of the Chinese state

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<v Speaker 2>run airlines. Obviously, the war has created much higher jet

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<v Speaker 2>fuel prices. Give me a sense of what's happening with

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<v Speaker 2>the airline industry in China right now as it relates

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<v Speaker 2>to higher jet fuel.

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<v Speaker 3>Yeah, it's I would say they're in quite a dire

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<v Speaker 3>situation just because state owned airlines in China typically don't hedge,

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<v Speaker 3>so they are directly hit by any increase in jet

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<v Speaker 3>fuel prices. And also domestically, consumption still hasn't been very strong,

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<v Speaker 3>so they cannot easily pass on the increase in jet

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<v Speaker 3>fuel to consumers. Therefore, they're really taking a hit on

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<v Speaker 3>their margins. So this time the government is just you know,

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<v Speaker 3>spending billions of yuan to support this industry, very much

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<v Speaker 3>similar to the support that we saw during COVID. So

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<v Speaker 3>I would say, yes, the margins are really coming under pressure,

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<v Speaker 3>and these stocks I would say, sold off the most

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<v Speaker 3>among global airlines during this war.

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<v Speaker 2>So we have the official data on inflation for China,

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<v Speaker 2>both CPI and PPI. When you look at the wholesale

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<v Speaker 2>inflation number PPI was up behalf of one percent. That

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<v Speaker 2>was slightly above the forecast consumer prices, however a bit

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<v Speaker 2>below the one point one percent that the market has

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<v Speaker 2>been expecting. Is this mostly a reflection of higher energy

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<v Speaker 2>cost yeah, I.

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<v Speaker 3>Would say so. I would say it's a relief, right.

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<v Speaker 3>We haven't seen the kind of one percent jump in

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<v Speaker 3>CPI for quite a while. And of course, lots of

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<v Speaker 3>people are talking about referation trade and there is a

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<v Speaker 3>lot of argument about how this cost to driven inflation

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<v Speaker 3>is not necessarily healthy. But we've also seen economists coming

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<v Speaker 3>out to say, you know, inflation in China still a

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<v Speaker 3>good even though it may be ugly inflation or not

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<v Speaker 3>the most healthy form of inflation. And anecdotally we're seeing

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<v Speaker 3>some companies who are able to lift prices. Was a

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<v Speaker 3>quato amount High, which is China's premium liquor maker. They

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<v Speaker 3>were able to just really pass on some of the

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<v Speaker 3>prices to consumers. So I would say generally it's taken

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<v Speaker 3>as a positive. And whether this is going to spread

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<v Speaker 3>to bigger cohort of companies in a sense that they're

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<v Speaker 3>able to lift prices is yet to be seen. But

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<v Speaker 3>at least we're seeing some examples so far.

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<v Speaker 2>We know that the inflation story in South Korea has

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<v Speaker 2>been critical. The government was considering maybe a supplementary budget

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<v Speaker 2>to deal with the result of rising inflation, and now

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<v Speaker 2>we've got the Bank of Korea keeping its policy rate

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<v Speaker 2>unchanged today. Give me a sense of what's happening in

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<v Speaker 2>the bokse thinking as it relates to inflation right now.

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<v Speaker 3>Yeah, it's a tough decision, right, They need to balance

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<v Speaker 3>the kind of immediate energy cost surging higher, but also

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<v Speaker 3>the potential slowdown in its growth. I would say this.

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<v Speaker 3>Of course, the move is widely expected, and this is

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<v Speaker 3>also the last policy meeting for the outgoing governor, and

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<v Speaker 3>obviously he doesn't really want to jot the situation for

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<v Speaker 3>the incoming governor. So this is sort of all well

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<v Speaker 3>expected by market participants. And the inflationary situation in Korea,

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<v Speaker 3>it does not look good. Korea, I would say, is

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<v Speaker 3>probably the most vulnerable among Asia economies to any energy

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<v Speaker 3>shocks because it does import so much energy from the

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<v Speaker 3>Middle East, which has to go through the strait of

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<v Speaker 3>horror moves. So Carea's economy is in a bit of

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<v Speaker 3>a dire situation. Right now, but it is also compensated

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<v Speaker 3>by the continued high export from the chip sector. I

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<v Speaker 3>think the latest export number we saw again showed that

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<v Speaker 3>chip exports were really robust and really dominating these numbers.

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<v Speaker 3>So you know, it's just a investors need to go

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<v Speaker 3>to look through the economic damage from the higher energy cost,

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<v Speaker 3>but also the still robust memory hip demand.

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<v Speaker 2>Speaking of central banks in Asia and how they're responding

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<v Speaker 2>to this higher inflation story, some of the PPI data

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<v Speaker 2>for Japan I think was above forecast. Is there the

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<v Speaker 2>sense that the boj is behind the curve now and

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<v Speaker 2>trying to get inflation under control?

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<v Speaker 3>Yeah, I think there is a sense of that. As

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<v Speaker 3>you mentioned, japan story is also quite similar to Korea.

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<v Speaker 3>Right what matters to investors is still very much focused

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<v Speaker 3>on these industries in Japan that have a competitive edge

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<v Speaker 3>and right now and today's market reaction again reminds us

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<v Speaker 3>that Japan is really strong in again chip related export,

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<v Speaker 3>but also some consumer names fast retailing. Today, I think

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<v Speaker 3>shares searched quite a bit more than six percent is

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<v Speaker 3>last night I saw because of the stronger guidance. So

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<v Speaker 3>Japan does have a few national champions that are continuing

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<v Speaker 3>to be popular with foreign investors.

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<v Speaker 2>So how was the market feeling about the AI trade

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<v Speaker 2>these days? I think I saw a note from our

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<v Speaker 2>colleague David and Glay saying that the market in Taiwan

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<v Speaker 2>could be the first major equity market in the APEC

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<v Speaker 2>region to recover all losses since the war broke out

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<v Speaker 2>at the end of February.

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<v Speaker 3>Yeah, the AI trade. Just because there is the escalation

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<v Speaker 3>in around tension, people are able to refocus some of

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<v Speaker 3>their attention to the themes that markets were focused on

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<v Speaker 3>before the war. So AI again is being talked about

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<v Speaker 3>as a hot topic in terms of AI some arguments right.

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<v Speaker 3>We see, on the one hand, people are talking about

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<v Speaker 3>software disruption and how Asia hardware names are still very

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<v Speaker 3>much positioned favorably, that the AI spend is still very strong,

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<v Speaker 3>so you know, TSMC and the two chip names in

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<v Speaker 3>Korea again are now being talked about as you know,

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<v Speaker 3>stocks to own by some of the buyers. But at

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<v Speaker 3>the same time, we saw Jefferies that came out this

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<v Speaker 3>morning talking about how they're expecting an AI capax peak

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<v Speaker 3>this year. Part of the reason is because energy costs

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<v Speaker 3>will stay high even if the war ends. It's not

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<v Speaker 3>gonna the whole oil shipping. Oil flow is not going

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<v Speaker 3>to be resolved anytime soon, so we may see a

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<v Speaker 3>structural change in energy costs and that does not bode

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<v Speaker 3>well for AI data center running and all the related costs.

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<v Speaker 3>So that is a negative argument, which means, uh, the

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<v Speaker 3>kind of price search that we have you know, priced

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<v Speaker 3>into these chip names maybe you know won't last very long.

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<v Speaker 2>Beyon Tan, thank you so very much for sharing your

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<v Speaker 2>perspectives and insights. I hope you have a great weekend.

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<v Speaker 2>Bloomberg's Leontink two, Managing editor for Asia Equities, joining from

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<v Speaker 2>Singapore here on the Daybreak Asia podcast. Welcome back to

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<v Speaker 2>the Daybreak Asia Podcast. I'm Doug Krisner. The US and

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<v Speaker 2>Iran are preparing for peace talks this weekend in Islamabad, Pakistan.

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<v Speaker 2>Heading into the weekend, there are a lot of questions

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<v Speaker 2>as to whether the ceasefire will hold. Israeli strikes on

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<v Speaker 2>Lebanon are certainly going to be a major issue in

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<v Speaker 2>these talks, so too will be Iran's grip on the

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<v Speaker 2>Strait of Horne Moves now. President Trump has already warned

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<v Speaker 2>Iran against charging tolls on vessels moving through the Strait,

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<v Speaker 2>and that's where we begin our conversation with Jonathan Pannicoff.

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<v Speaker 2>Jonathan is the director of the Scrokoff Middle East Security

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<v Speaker 2>Initiative at the Atlantic Council's Middle East Program. Jonathan spoke

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<v Speaker 2>with Bloomberg TV host Sherry On and Heidi Stroud Watts.

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<v Speaker 4>They seems to be fundamental misunderstand gaps in what the

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<v Speaker 4>ceasefire or what these talks would even cover going into

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<v Speaker 4>the talks in Islambad this weekend with jd Vance. When

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<v Speaker 4>it comes to the issue of ranium proxies, was that

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<v Speaker 4>pretty clear from the outset that there was going to

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<v Speaker 4>be disagreement?

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<v Speaker 5>There look to be worth he as always, I don't

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<v Speaker 5>think that it was clear at least it wasn't clear

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<v Speaker 5>to all sides. This agreement as a whole has become

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<v Speaker 5>a little bit of a Rorshach test. In other words,

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<v Speaker 5>everybody's interpreting it as they want and seeing what they

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<v Speaker 5>wanted to be.

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<v Speaker 6>I think, look.

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<v Speaker 7>If you ask the Iranians, if you ask even the

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<v Speaker 7>Pakistanis also no, it was very clear that all proxies

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<v Speaker 7>including Hesbala Lebanon.

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<v Speaker 6>They were not They were also off limits.

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<v Speaker 7>Phrase really strikes this wasn't just about US, was really

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<v Speaker 7>strikes on Iran. I think you've seen some reporting that

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<v Speaker 7>the US is trying to get Disula to make me

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<v Speaker 7>pull back to ensure that the talks this week.

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<v Speaker 6>And still go ahead.

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<v Speaker 7>President Trump also talked about frustration this evening on True

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<v Speaker 7>Social about how frustrated it is that the street doesn't open.

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<v Speaker 6>But right now there's.

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<v Speaker 7>Clearity that everybody does seem to want an offering, and

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<v Speaker 7>so that points to the fact that talks probably will

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<v Speaker 7>happen this weekend, But the context of them and whether

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<v Speaker 7>or not they're going to really be able to dress

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<v Speaker 7>all these issues is still very much up in the air.

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<v Speaker 4>Jonathan, to your point of seeing what you want to

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<v Speaker 4>see in the issues that are going to be discussed

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<v Speaker 4>over the weekend. The various versions floating around of the

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<v Speaker 4>ten point plan, if you were to believe some of them,

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<v Speaker 4>they really do include points that I would assume are

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<v Speaker 4>absolutely off limits for the US right, things like removing

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<v Speaker 4>military bases from the region, things like paying war reparations,

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<v Speaker 4>and the exclusion of around's proxies. How do you think

0:13:51.160 --> 0:13:53.320
<v Speaker 4>there gets to be a point of compromise on this.

0:13:54.600 --> 0:13:55.520
<v Speaker 6>I think that's right.

0:13:55.559 --> 0:13:58.719
<v Speaker 7>Look the irrity though are all hands at this, This

0:13:58.760 --> 0:14:01.880
<v Speaker 7>isn't you know? Theres go around here in these types

0:14:01.920 --> 0:14:05.800
<v Speaker 7>of negotiations, and so as is typical in these types

0:14:05.840 --> 0:14:09.760
<v Speaker 7>of international negotiations, it wouldn't be a surprise that there

0:14:09.760 --> 0:14:11.800
<v Speaker 7>were things on the list that the Wereonians know they

0:14:11.800 --> 0:14:14.480
<v Speaker 7>probably are not going to get, but it allows them

0:14:14.480 --> 0:14:17.640
<v Speaker 7>to then sacrifice those as chits to say that they

0:14:17.679 --> 0:14:20.800
<v Speaker 7>know have moved meaningfully away.

0:14:21.160 --> 0:14:23.960
<v Speaker 6>And what you're left with ultimately is their core demands.

0:14:23.960 --> 0:14:26.400
<v Speaker 7>And what I expect really to their core demands to

0:14:26.440 --> 0:14:29.840
<v Speaker 7>be is a that they're not going to agree to

0:14:29.880 --> 0:14:32.800
<v Speaker 7>stop production on ballistic missiles, that they see that as

0:14:32.840 --> 0:14:37.840
<v Speaker 7>their fundamental long streak, long term strategic deterrence, that they're

0:14:37.840 --> 0:14:40.040
<v Speaker 7>not going to give back the strait of hormots. And

0:14:40.080 --> 0:14:42.960
<v Speaker 7>then the really hard one, I think is that Israel

0:14:43.200 --> 0:14:46.440
<v Speaker 7>has to be guaranteed not to come and strike around

0:14:46.480 --> 0:14:50.480
<v Speaker 7>again three six, twelve months from that. That's a hard

0:14:50.520 --> 0:14:53.640
<v Speaker 7>one for the US to guarantee fundamentally. So the question

0:14:53.760 --> 0:14:57.600
<v Speaker 7>is do you even have confirmation from all of the parties,

0:14:57.960 --> 0:15:02.640
<v Speaker 7>because this goes beyond Israel, Lisabella and Iran, it includes

0:15:02.720 --> 0:15:05.360
<v Speaker 7>the golf. There's a lot of actors here just besides

0:15:05.440 --> 0:15:07.760
<v Speaker 7>the US and Iran. Are all of them going to

0:15:07.760 --> 0:15:10.400
<v Speaker 7>agree to the terms if they're not represented at the table.

0:15:11.800 --> 0:15:15.040
<v Speaker 1>Exactly? So, Jonathan, what are the low hanging fruits that

0:15:15.120 --> 0:15:18.600
<v Speaker 1>can be achieved in this negotiation? And are we looking

0:15:19.040 --> 0:15:22.160
<v Speaker 1>at a big deal that encompasses all of those actors

0:15:22.200 --> 0:15:24.120
<v Speaker 1>that you talk about, or are we going to see

0:15:24.160 --> 0:15:27.080
<v Speaker 1>a long drawn out war where we're seeing small, small

0:15:27.120 --> 0:15:31.000
<v Speaker 1>details and small changes, and perhaps even the US, especially

0:15:31.040 --> 0:15:35.760
<v Speaker 1>President Trump's losing interest in actually finding a sweeping resolution.

0:15:37.600 --> 0:15:39.960
<v Speaker 7>My guess is what you're probably going to end up

0:15:39.960 --> 0:15:44.400
<v Speaker 7>with is an overarching framework agreement without the details filled in.

0:15:44.400 --> 0:15:46.160
<v Speaker 6>And now we've seen this happen before.

0:15:46.560 --> 0:15:48.600
<v Speaker 7>It allows President Trump to be able to say we

0:15:48.720 --> 0:15:52.280
<v Speaker 7>have a deal even though we really don't have brinkly

0:15:52.320 --> 0:15:55.680
<v Speaker 7>the meaningful context all the details including it. But then

0:15:55.720 --> 0:15:58.360
<v Speaker 7>the hope would be that I think the details follow

0:15:58.520 --> 0:16:01.320
<v Speaker 7>on from that order to get there, It gets to

0:16:01.720 --> 0:16:04.200
<v Speaker 7>your first point of what is the low heating fruit

0:16:04.240 --> 0:16:07.080
<v Speaker 7>To even get there, I would expect that there will

0:16:07.120 --> 0:16:10.720
<v Speaker 7>be some discussion, frankly, about the uron's nuclear program and

0:16:10.800 --> 0:16:13.480
<v Speaker 7>about the four hundred and forty kilograms of highly enriched

0:16:13.560 --> 0:16:18.040
<v Speaker 7>uranium still buried in Iran under four doh or at

0:16:18.120 --> 0:16:19.360
<v Speaker 7>least some of it under four dough.

0:16:19.360 --> 0:16:21.720
<v Speaker 6>There's rumors that some of it has been moved.

0:16:21.960 --> 0:16:25.760
<v Speaker 7>I expect that you'll also have some discussion frankly, about

0:16:26.160 --> 0:16:29.680
<v Speaker 7>what reprocessing looks like. You'll have some discussion as well,

0:16:30.120 --> 0:16:34.840
<v Speaker 7>I would expect about the straits. But I think really

0:16:34.880 --> 0:16:37.360
<v Speaker 7>it's going to be challenging to expect that the US

0:16:37.440 --> 0:16:39.600
<v Speaker 7>is going to end up in a better position than

0:16:39.640 --> 0:16:42.000
<v Speaker 7>when the war began, and that I think is what's

0:16:42.000 --> 0:16:44.920
<v Speaker 7>frustrating a lot of people and what's scaring a lot

0:16:44.960 --> 0:16:48.320
<v Speaker 7>of partners in the Gulf frankly that are watching as

0:16:48.320 --> 0:16:51.560
<v Speaker 7>they started the war with the street completely free from navigation,

0:16:52.080 --> 0:16:54.640
<v Speaker 7>and they may end with having to pay a toll.

0:16:56.640 --> 0:16:59.720
<v Speaker 1>Yeah, that's the thing, right, I mean, freedom of navigation

0:17:00.120 --> 0:17:02.600
<v Speaker 1>has been given for hundreds of years, and you're telling

0:17:02.600 --> 0:17:05.040
<v Speaker 1>me that they're trying to put the systemic tolls in

0:17:05.080 --> 0:17:07.320
<v Speaker 1>the straight of horror moves as a dangerous precedent to

0:17:07.440 --> 0:17:09.879
<v Speaker 1>set What does this mean for the rest of the

0:17:09.920 --> 0:17:13.080
<v Speaker 1>world and can other mediators like we're hearing that China

0:17:13.119 --> 0:17:16.480
<v Speaker 1>perhaps played a big role. They've been credited by Iranian

0:17:16.560 --> 0:17:20.440
<v Speaker 1>officials as trying to really achieve that ceasefire. What does

0:17:20.440 --> 0:17:23.880
<v Speaker 1>it mean for third parties that also have a little

0:17:23.880 --> 0:17:25.200
<v Speaker 1>bit more influence with a run.

0:17:26.520 --> 0:17:28.800
<v Speaker 7>So if we go back a little bit right in

0:17:28.880 --> 0:17:31.800
<v Speaker 7>terms of precedent, it's really important to look at that,

0:17:32.520 --> 0:17:36.280
<v Speaker 7>especially effects obviously East Asia and South Asia. The UN

0:17:36.359 --> 0:17:38.800
<v Speaker 7>resolution that was put out by the Baharin needs to

0:17:38.800 --> 0:17:42.640
<v Speaker 7>try to ensure freedom of navigation and to try to ensure.

0:17:42.840 --> 0:17:44.159
<v Speaker 6>The choke points in the streets.

0:17:44.359 --> 0:17:46.720
<v Speaker 7>The reason that the Russians and Chinese at least in

0:17:46.840 --> 0:17:51.359
<v Speaker 7>part vetoed it earlier this week was fundamentally because they're

0:17:51.440 --> 0:17:53.840
<v Speaker 7>very very terrified about how that will be then used

0:17:53.880 --> 0:17:58.000
<v Speaker 7>against them as precedent setting Visa VI Taiwan, visa VI

0:17:58.119 --> 0:18:02.400
<v Speaker 7>other places in East Asia for the Russians the same thing.

0:18:03.320 --> 0:18:05.320
<v Speaker 6>That is a part of the challenge here.

0:18:05.440 --> 0:18:07.720
<v Speaker 7>I do think that the Chinese have played a meaningful

0:18:07.800 --> 0:18:11.159
<v Speaker 7>role in that they're the only ones with enough influence

0:18:11.400 --> 0:18:14.240
<v Speaker 7>over the Iranians to really serve as.

0:18:14.080 --> 0:18:17.200
<v Speaker 6>A guaranteur for them. The Iranians need the Chinese.

0:18:17.200 --> 0:18:20.760
<v Speaker 7>The Chinese are the only ones with sufficient capacity large

0:18:20.840 --> 0:18:23.080
<v Speaker 7>enough to buy the oil to for Urn to start

0:18:23.119 --> 0:18:27.560
<v Speaker 7>to generate some meaningful revenue again. But again there are

0:18:27.760 --> 0:18:31.679
<v Speaker 7>huge challenges here and right now from a US perspective,

0:18:32.240 --> 0:18:34.240
<v Speaker 7>it's a struggle to see out how the US comes

0:18:34.240 --> 0:18:37.840
<v Speaker 7>out further ahead, whereas they're frankly winners of this may

0:18:37.920 --> 0:18:39.560
<v Speaker 7>end up being Russia and China.

0:18:41.000 --> 0:18:44.960
<v Speaker 4>Jonathan, I think we're having similar conversations in the last

0:18:45.040 --> 0:18:49.199
<v Speaker 4>military operations halfway through last year, right, And I do

0:18:49.359 --> 0:18:54.120
<v Speaker 4>wonder have the objectives the US and Israeli objectives been

0:18:54.160 --> 0:18:58.479
<v Speaker 4>achieved in these operations and what are the risks that

0:18:58.480 --> 0:19:02.040
<v Speaker 4>we're going to see just for the volatility flare up

0:19:02.040 --> 0:19:03.280
<v Speaker 4>in the region as a result.

0:19:05.119 --> 0:19:08.119
<v Speaker 7>I think, Look, I think some of the tactical and

0:19:08.160 --> 0:19:10.160
<v Speaker 7>operational objectives have certainly been achieved.

0:19:10.240 --> 0:19:11.320
<v Speaker 6>Right. It is true.

0:19:11.320 --> 0:19:16.160
<v Speaker 7>Iran's military is significantly diminished, especially its naval assets.

0:19:16.680 --> 0:19:18.280
<v Speaker 6>It is true that Aroun's.

0:19:18.000 --> 0:19:23.520
<v Speaker 7>Ballistic missile capabilities are very much degraded from where we were.

0:19:23.320 --> 0:19:27.679
<v Speaker 7>The problem is from a strategic perspective, even if Iran

0:19:27.720 --> 0:19:32.159
<v Speaker 7>has tactically lost strategically, if it ends up if not

0:19:32.280 --> 0:19:37.280
<v Speaker 7>controlling the Straits, fundamentally demonstrating ultimate leverage over the Straits

0:19:37.320 --> 0:19:39.640
<v Speaker 7>and putting a toll in or having to ask even

0:19:39.720 --> 0:19:43.199
<v Speaker 7>permission from the Iranians, every time a ship goes through.

0:19:43.920 --> 0:19:47.960
<v Speaker 7>Then really it's created a situation where strategically Iran comes

0:19:48.000 --> 0:19:49.960
<v Speaker 7>out ahead, and I think there's no way about that.

0:19:50.040 --> 0:19:53.160
<v Speaker 7>And what that's going to mean long term is that

0:19:53.200 --> 0:19:57.240
<v Speaker 7>the Iranians are going to have frankly greater leverage in

0:19:57.280 --> 0:19:59.800
<v Speaker 7>the region and for their asks, and that is going

0:19:59.880 --> 0:20:03.280
<v Speaker 7>to really be a challenge for Special League golf allies.

0:20:03.480 --> 0:20:06.640
<v Speaker 6>We're going to walk away from this incredibly.

0:20:06.040 --> 0:20:10.199
<v Speaker 1>Concerned, Jonathan. And before we let you go, where are

0:20:10.240 --> 0:20:12.960
<v Speaker 1>the Uranium people in all of this? I mean, President

0:20:13.040 --> 0:20:16.080
<v Speaker 1>Trump keeps oscillating from whether or not there has been

0:20:16.080 --> 0:20:19.720
<v Speaker 1>a regime change in Iran, And at the beginning of

0:20:19.720 --> 0:20:22.240
<v Speaker 1>this conflict, there was a lot of talk to potentially

0:20:22.280 --> 0:20:26.159
<v Speaker 1>we could see a popular uprising as well, Why hasn't

0:20:26.200 --> 0:20:28.600
<v Speaker 1>this happened, and could we expect it?

0:20:30.560 --> 0:20:33.040
<v Speaker 7>I think it'd be very, very unlikely to expect it.

0:20:33.119 --> 0:20:36.760
<v Speaker 7>Now that there's two problems. One, I think there's been

0:20:36.760 --> 0:20:41.120
<v Speaker 7>a failure by the US administration to sufficiently distinguish between

0:20:41.200 --> 0:20:44.560
<v Speaker 7>how the Iranian people view what is Iranian and what

0:20:44.680 --> 0:20:48.359
<v Speaker 7>is the regime. When you start talking about knocking as

0:20:48.480 --> 0:20:52.320
<v Speaker 7>civilization back to the stoneager to completely destroying it, whatever

0:20:52.720 --> 0:20:56.720
<v Speaker 7>the exact wording of that true social posts was before

0:20:56.760 --> 0:20:59.840
<v Speaker 7>the ceasefire, that really hit. I think a lot of

0:21:00.000 --> 0:21:03.200
<v Speaker 7>Iranian people you heard this, that they took that personal

0:21:03.240 --> 0:21:07.240
<v Speaker 7>lit They may load the regime, but bridges and infrastructure

0:21:07.280 --> 0:21:10.560
<v Speaker 7>and power plans and desalinization plans, I think a lot of.

0:21:10.480 --> 0:21:12.840
<v Speaker 6>Iranian's view as Iranian not regime.

0:21:13.240 --> 0:21:15.080
<v Speaker 7>Any regime change is going to have to come from

0:21:15.160 --> 0:21:18.600
<v Speaker 7>with in Iran, and it's still going to fundamentally require

0:21:18.640 --> 0:21:21.439
<v Speaker 7>that at the end of the day, will somebody with

0:21:21.600 --> 0:21:24.480
<v Speaker 7>guns switch asides or stands aside.

0:21:24.560 --> 0:21:27.399
<v Speaker 6>That's what happened in the nineteen seventy nine revolution. We

0:21:27.640 --> 0:21:31.200
<v Speaker 6>haven't seen that yet. There's sufficient regime cohesion, at least

0:21:31.240 --> 0:21:31.680
<v Speaker 6>so far.

0:21:32.119 --> 0:21:32.280
<v Speaker 3>Now.

0:21:32.320 --> 0:21:34.000
<v Speaker 6>The economics of Iran are.

0:21:33.960 --> 0:21:37.040
<v Speaker 7>Quite terrible, and governing is going to be a very

0:21:37.119 --> 0:21:39.160
<v Speaker 7>very hard challenge for what is going to be a

0:21:39.200 --> 0:21:45.399
<v Speaker 7>harder line, more conservative, frankly new regime leadership. So maybe

0:21:45.440 --> 0:21:48.120
<v Speaker 7>you could get there eventually, but I think we've still

0:21:48.160 --> 0:21:51.560
<v Speaker 7>got a ways to go before you see significant challenges

0:21:51.640 --> 0:21:52.200
<v Speaker 7>in Iran.

0:21:52.680 --> 0:21:55.919
<v Speaker 2>That was Jonathan Panakoff of the Atlantic Council speaking with

0:21:55.920 --> 0:21:59.479
<v Speaker 2>Bloomberg TV host Heidi Stroud Watts and Cherry on bringing

0:21:59.480 --> 0:22:05.600
<v Speaker 2>you their conversation here on the Daybreak Asia Podcast. Thanks

0:22:05.640 --> 0:22:09.280
<v Speaker 2>for listening to today's episode of the Bloomberg Daybreak Asia

0:22:09.440 --> 0:22:13.879
<v Speaker 2>Edition podcast. Each weekday, we look at the story shaping markets, finance,

0:22:14.240 --> 0:22:17.320
<v Speaker 2>and geopolitics in the Asia Pacific. You can find us

0:22:17.359 --> 0:22:21.520
<v Speaker 2>on Apple, Spotify, the Bloomberg Podcast YouTube channel, or anywhere

0:22:21.560 --> 0:22:24.679
<v Speaker 2>else you listen. Join us again tomorrow for insight on

0:22:24.720 --> 0:22:28.840
<v Speaker 2>the market moves from Hong Kong to Singapore and Australia.

0:22:29.280 --> 0:22:31.760
<v Speaker 2>I'm Doug Prisner, and this is Bloomberg