WEBVTT - The Fed's Big Cut, More Devices Explode & Global Shadow Fleet Exclusive 0:00:00.160 --> 0:00:09.959 Bloomberg Audio Studios, podcasts, radio news. This is the Blueberg 0:00:10.039 --> 0:00:13.360 Day BAC podcast, available every morning on Apple, Spotify or 0:00:13.360 --> 0:00:16.840 wherever you listen. It's Thursday, the nineteenth of September in London. 0:00:16.920 --> 0:00:18.239 I'm Caroline HEPK and. 0:00:18.200 --> 0:00:21.279 I'm Stephen Carroll. Coming up today is the first cut, 0:00:21.360 --> 0:00:24.480 the deepest. The Fed ops for fifty as it delivers 0:00:24.520 --> 0:00:27.400 its first rate reduction in more than four years. 0:00:27.840 --> 0:00:30.639 Israel diverts troops to its border with Lebanon as a 0:00:30.680 --> 0:00:33.440 second wave of communication devices explodes. 0:00:33.640 --> 0:00:36.879 Plus, we have exclusive reporting on the global shadow network 0:00:36.960 --> 0:00:39.080 transporting sanctioned Russian gas. 0:00:39.280 --> 0:00:41.279 Let's start with a roundup of our top stories. 0:00:41.520 --> 0:00:44.199 The Federal Reserve has cut its benchmark lending rate for 0:00:44.240 --> 0:00:47.640 the first time in four years. Policymakers voted to lower 0:00:47.680 --> 0:00:50.400 the rate by fifty basis points as they shift focus 0:00:50.479 --> 0:00:53.080 to concerns over the strength of the US economy and 0:00:53.200 --> 0:00:56.800 jobs market. Speaking after the announcement, Federal Reserve Charger Own 0:00:56.840 --> 0:00:59.600 Powell used his press conference to push back against the 0:00:59.640 --> 0:01:02.960 notion that the oversized cut was to make up for 0:01:03.080 --> 0:01:03.920 lost time. 0:01:04.400 --> 0:01:07.039 A broad set of indicators suggests that conditions in the 0:01:07.080 --> 0:01:09.520 labor market are now less tight than just before the 0:01:09.520 --> 0:01:13.280 pandemic in twenty nineteen. The labor market is not a 0:01:13.280 --> 0:01:17.000 source of elevated inflationary pressures. I do not think that 0:01:17.360 --> 0:01:19.200 anyone should look at this and say, oh, this is 0:01:19.240 --> 0:01:21.399 the new pace. You know, you have to have to 0:01:21.400 --> 0:01:23.400 think about it in terms of the base case. Of course, 0:01:23.720 --> 0:01:27.040 what happens will happen. If the labor market were to 0:01:27.640 --> 0:01:31.039 slow unexpectedly, then we have the ability to react to that. 0:01:31.720 --> 0:01:33.959 We have greater confidence now that inflation is moving down 0:01:34.000 --> 0:01:36.400 to two percent, But at the same time, our plan 0:01:36.520 --> 0:01:37.959 is that we will be at two percent. 0:01:38.920 --> 0:01:43.320 Despite Pile's positive spin at multiple moments during his press conference, 0:01:43.560 --> 0:01:46.959 the half point cut was not a unanimous decision. Michelle 0:01:47.000 --> 0:01:49.639 Bowman cost a vote in favor of a smaller quarter 0:01:49.680 --> 0:01:52.520 point cut, the first descent by a fat governor since 0:01:52.560 --> 0:01:53.520 two thousand and five. 0:01:54.160 --> 0:01:57.240 The decision to opt for a half point cut led 0:01:57.280 --> 0:02:00.840 traders to rampop bets on the pace of US ray reductions. 0:02:00.880 --> 0:02:03.720 The market is now pricing in around sixty five basis 0:02:03.760 --> 0:02:07.640 points of easing at the fed's two remaining meetings this year. 0:02:08.000 --> 0:02:11.880 That's despite officials forecasting just fifty points of further cuts 0:02:11.919 --> 0:02:16.040 in twenty twenty four, Bloomberg Intelligence is Chief Interest Rates 0:02:16.120 --> 0:02:19.240 trash is are a Jersey says he expects the Fed 0:02:19.320 --> 0:02:22.360 to stick to that pace, but it's what happens after 0:02:22.440 --> 0:02:24.360 that which is more significant. 0:02:24.680 --> 0:02:27.400 When you think about November and December's meeting, you know, 0:02:27.440 --> 0:02:30.720 they made it pretty clear that unless something significantly changes 0:02:30.760 --> 0:02:33.959 with the trends in the economy and inflation, that you're 0:02:34.040 --> 0:02:36.480 likely to see, you know, modest cuts going forward, so 0:02:36.639 --> 0:02:39.440 you know, twenty five basis points over the next couple 0:02:39.480 --> 0:02:41.800 of meetings. But I think that's less important to me. 0:02:41.880 --> 0:02:44.480 What I was focused on was what they said they were, 0:02:44.520 --> 0:02:47.280 where they said they were going to ultimately, and where 0:02:47.320 --> 0:02:50.200 they think they're going to even with the economy not 0:02:50.280 --> 0:02:52.720 hitting into a recession, is all the way down to 0:02:52.880 --> 0:02:55.400 under three percent on the FED funds. 0:02:55.200 --> 0:03:00.000 Rate Bloomberg Intelligence Chief Interest Rates trashes are a Jersey, 0:03:00.520 --> 0:03:04.280 referring there to the fomc's median forecast for the end 0:03:04.320 --> 0:03:07.000 of twenty twenty six for rates to be just below 0:03:07.080 --> 0:03:11.520 two point nine percent. The move caps months of uncertainty 0:03:11.560 --> 0:03:14.640 over the timing and scale of the Fed's first rate cut. 0:03:14.760 --> 0:03:18.760 Now the focus shifts to the pace of reductions ahead well, 0:03:18.800 --> 0:03:19.200 the Bank. 0:03:19.080 --> 0:03:22.079 Of England doesn't focused today as it announces its decision 0:03:22.280 --> 0:03:25.440 on rate. It's thought of the patient approach to reversing 0:03:25.480 --> 0:03:29.280 the most aggressive policy tightening in decades will be maintained. 0:03:29.360 --> 0:03:31.679 Our UK correspondent Lizzie Burden has more. 0:03:31.880 --> 0:03:34.400 It's decision day on thread Needle Street, but economists and 0:03:34.480 --> 0:03:37.840 investors are expecting policymakers to stick to the status quo, 0:03:38.040 --> 0:03:41.960 holding the benchmark rate at five percent. However, wages are 0:03:42.040 --> 0:03:44.960 increasing on a faster Bank of England cutting cycle ahead 0:03:45.120 --> 0:03:48.200 after invation readings came in lower than Central Bank forecasts. 0:03:48.240 --> 0:03:51.960 In July and August, Attential will be focused on Governor 0:03:52.000 --> 0:03:54.720 Andrew Bailey for hints that borrowing costs could be lowered 0:03:54.720 --> 0:03:58.160 again in November after committee members voted narrowly to end 0:03:58.200 --> 0:04:01.680 their sixteen year high last month. Traders are also awaiting 0:04:01.720 --> 0:04:04.240 news on the speed of quantitative tightening, a decision which 0:04:04.280 --> 0:04:07.920 could prove pivotal for new Chancellor Rachel Reeves's October budget. 0:04:08.240 --> 0:04:10.400 Will have full coverage of the announcement to do at 0:04:10.400 --> 0:04:13.920 twelve pm London time on Bloomberg in London, Lizziebird and 0:04:13.920 --> 0:04:14.680 Bloomberg Radio. 0:04:15.880 --> 0:04:19.120 Now to other news Israel has declared a new phase 0:04:19.240 --> 0:04:22.920 in its regional war with Islamist groups. The country's defense minister, 0:04:22.960 --> 0:04:26.240 you Have Gallant, also said that troops would be diverted 0:04:26.279 --> 0:04:29.040 to the Lebanese board up, where Israel has been exchanging 0:04:29.120 --> 0:04:33.440 rocket far with HESB militants. His comments come after exploding 0:04:33.440 --> 0:04:38.720 telecommunications devices in Lebanon killed twenty six people over two 0:04:38.839 --> 0:04:42.400 days and wounded more than three thousand, according to Lebanon's 0:04:42.440 --> 0:04:46.239 Health ministry. Lebanon's government has blamed Israel for the attack. 0:04:46.520 --> 0:04:49.280 The U S Secretary of State Anthony Blincoln says that 0:04:49.320 --> 0:04:51.600 the US had nothing to do with the assault. 0:04:52.080 --> 0:04:55.560 The United States did not know about, nor was it 0:04:55.640 --> 0:04:59.920 involved in these incidents, and we're still gathering the infram 0:05:00.320 --> 0:05:05.599 and gathering the facts. Broadly speaking, we've been very clear 0:05:06.040 --> 0:05:09.640 and we remain very clear about the importance of all 0:05:09.680 --> 0:05:15.360 parties avoiding any steps that could further escalate the conflict. 0:05:15.920 --> 0:05:19.760 Anthony Blincoln, US Secty of State speaking, The shift in 0:05:19.960 --> 0:05:22.800 Israeli military operations to the north of the country has 0:05:22.800 --> 0:05:25.200 spoked fears of a wider war. As the US tries 0:05:25.279 --> 0:05:26.840 to calm the situation. 0:05:27.279 --> 0:05:30.600 European car sales dropped by sixteen and a half percent 0:05:30.760 --> 0:05:34.080 last month, with over seven hundred and fifty seven hundred 0:05:34.080 --> 0:05:37.920 and fifty five thousand sales. Total deliveries were dragged down 0:05:37.960 --> 0:05:41.760 by Germany and France as sales of electric vehicles cratered. 0:05:42.160 --> 0:05:45.000 EV sales dropped by sixty nine percent in August to 0:05:45.080 --> 0:05:47.960 just over twenty seven thousand. The UK was the only 0:05:48.040 --> 0:05:52.560 major market where EV sales rose, gaining ten point eight percent. 0:05:53.120 --> 0:05:56.880 The data comes from the European Automobile Manufacturers Association, the 0:05:56.880 --> 0:05:59.800 Industry Group, which is now calling for urgent action from 0:05:59.800 --> 0:06:03.159 the US European Commission ahead of twenty twenty five emissions 0:06:03.160 --> 0:06:06.680 targets that could potentially cast billions of euros and fines. 0:06:07.680 --> 0:06:11.600 Leading think tanks are calling for more ambitious reforms from 0:06:11.640 --> 0:06:15.080 the UK government. The Resolution Foundation says that Prime Minister 0:06:15.200 --> 0:06:18.839 Kirstarma is only halfway towards his target of making Britain 0:06:18.880 --> 0:06:21.520 the fastest growing economy in the G seven. 0:06:21.560 --> 0:06:23.400 Bloomberg's James Orcock has more. 0:06:25.240 --> 0:06:30.400 Slow growth, mysteriously poor productivity, and a contagion of worklessness. 0:06:30.600 --> 0:06:33.200 The problems of the British economy have been well charted, 0:06:33.320 --> 0:06:36.440 but now there's a flurry of policy solutions which think 0:06:36.440 --> 0:06:38.800 tanks and lobbyists are trying to get the new government 0:06:38.839 --> 0:06:41.440 to look at the Resolution Foundations say, on top of 0:06:41.560 --> 0:06:44.240 everything Labour has done so far, it needs to get 0:06:44.240 --> 0:06:47.719 its workers' reforms right, create better trade relations with the EU, 0:06:48.000 --> 0:06:50.839 and step up investment if it wants to achieve its 0:06:50.880 --> 0:06:53.880 growth pledges. On the investment side, the left leaning think 0:06:53.920 --> 0:06:56.719 tank has an unlikely ally in the City of London 0:06:56.760 --> 0:06:59.000 thinks the UK could attract as much as seven point 0:06:59.000 --> 0:07:02.400 seven billion pounds more investment by twenty thirty if it 0:07:02.480 --> 0:07:06.040 did a better job of attracting foreign sovereign wealth in London. 0:07:06.120 --> 0:07:07.920 James Wilcock Bloomberg Radier. 0:07:09.600 --> 0:07:11.520 Turning next to the United States and the chair of 0:07:11.520 --> 0:07:14.280 the Security and Exchange Commission, says the way markets are 0:07:14.360 --> 0:07:18.920 using AI risks heartbreak. Gary Gensler is warning that too 0:07:19.000 --> 0:07:22.440 many traders are relying on the same models, potentially causing 0:07:22.520 --> 0:07:27.040 a next future market meltdown. He compared it to the movie. 0:07:27.040 --> 0:07:33.040 Her Like Scarlett Johansson, was that romantic interest in her 0:07:34.120 --> 0:07:37.320 and then when she went offline, all eighty three hundred 0:07:37.320 --> 0:07:42.200 and sixteen of her romantic partners were heartbroken. I don't 0:07:42.200 --> 0:07:44.000 want that to happen in the financial sector. 0:07:45.840 --> 0:07:48.559 Gensler added that he thought automation was still a good 0:07:48.640 --> 0:07:52.840 thing overall. The SEC made a proposal last year to 0:07:52.920 --> 0:07:57.160 require brokers and investment advisors to mitigate conflicts of interest 0:07:57.200 --> 0:07:59.840 in their use of AI tools that might put their 0:07:59.880 --> 0:08:03.040 interests before clients at a moment. Will bring you more 0:08:03.080 --> 0:08:05.840 on the FED decision plus are exclusive reporting on the 0:08:05.920 --> 0:08:10.200 Shadow fleet of ships exporting Russian gas. But first, another 0:08:10.240 --> 0:08:12.800 story that caught our eye this morning, how AI is 0:08:12.840 --> 0:08:16.560 bringing back dead celebrities and they're making millions from it. 0:08:17.000 --> 0:08:19.119 This is our colleague Mea Dowkins has been writing about 0:08:19.120 --> 0:08:22.120 how the estates of the likes of James Dean, Judy Garland, 0:08:22.160 --> 0:08:24.840 and Burt Reynolds, among others, have signed up to an 0:08:25.000 --> 0:08:29.560 AI voice cloning startup called eleven Labs, which can use 0:08:29.600 --> 0:08:33.400 their iconic tones to narrate books or other materials. 0:08:33.679 --> 0:08:35.839 Yeah, I think this is I mean, we've seen some 0:08:35.880 --> 0:08:37.600 of this, haven't we, especially in London. 0:08:37.679 --> 0:08:38.599 Abb of Voyage. 0:08:38.679 --> 0:08:41.719 I went to see that, of course, which is kind 0:08:41.720 --> 0:08:43.680 of a hologram image. 0:08:43.440 --> 0:08:46.080 As an eldest version to cod Yes. 0:08:45.760 --> 0:08:47.160 Exactly, that's coming soon. 0:08:47.480 --> 0:08:49.760 So me did a really nice piece of kind of 0:08:49.760 --> 0:08:54.920 deep dive into this about the financial implications, it's quite complicated, actually. 0:08:54.720 --> 0:08:56.920 It's kind of and look, there are some in the 0:08:56.960 --> 0:08:59.079 industry who say it's a great thing and points to 0:08:59.080 --> 0:09:02.280 the que amounds money can Others aren't so convinced, and 0:09:02.320 --> 0:09:04.160 she's spoken to both sides on this as well. She 0:09:04.160 --> 0:09:07.160 spoke to one industry player who talked about this being 0:09:07.160 --> 0:09:09.520 a trend a kin to the nft fad as well 0:09:09.520 --> 0:09:10.880 as somebody to think about that. Of course, there are 0:09:10.960 --> 0:09:14.000 ethical concerns involved her as well, and you mentioned Abba Voyage. 0:09:14.000 --> 0:09:15.679 She spoke to the co producer of that show as well, 0:09:15.679 --> 0:09:19.120 saying that AI can't replace the emotional connection that people 0:09:19.240 --> 0:09:21.840 have to arts. There are limits to this as well, 0:09:21.920 --> 0:09:24.240 but it's a fascinating read on Bloomberg dot com and 0:09:24.400 --> 0:09:25.079 on the terminal. 0:09:25.440 --> 0:09:26.640 Okay, good stuff. 0:09:26.760 --> 0:09:30.440 Let's think about then, the Fed's decision, now, shall we 0:09:30.520 --> 0:09:33.320 to cut interest rates by fifty basis points? Will change 0:09:33.320 --> 0:09:36.480 your own Pal says that future moves will be based 0:09:36.480 --> 0:09:39.319 on how the US economy performs in the months ahead. 0:09:39.559 --> 0:09:42.040 And let's bring in bloom Big Opinion columist Daniel Moss, 0:09:42.040 --> 0:09:44.000 who joins us now for more on this Good morning. 0:09:44.080 --> 0:09:45.319 Daniel in the end. 0:09:45.400 --> 0:09:48.360 What message you think Powell actually sent with this cut 0:09:48.400 --> 0:09:51.920 and then the press conference afterwards, this jumbo cut in 0:09:51.960 --> 0:09:52.480 the end. 0:09:53.240 --> 0:09:55.840 Well, I'm not so sure we should call it jumbo. 0:09:56.440 --> 0:09:59.480 Don't forget when the head was was hiking, it did 0:09:59.520 --> 0:10:02.400 a couple of seventy five basis point moves in the 0:10:02.440 --> 0:10:06.199 other direction. That was jumbo. I think the message that 0:10:06.360 --> 0:10:10.360 were sent today was if we were perceived to be 0:10:10.600 --> 0:10:14.200 late as inflation was climbing, we're not going to be 0:10:15.080 --> 0:10:21.520 lacking for forcefulness as unemployment begins to rise. Now, you know, 0:10:21.559 --> 0:10:24.000 it's all very well for j. Powell to say it 0:10:24.040 --> 0:10:27.400 is press conference, Oh, don't take this as a future sign. 0:10:27.559 --> 0:10:31.599 Don't take this as like meaning that we're going to 0:10:31.679 --> 0:10:34.920 do fifty to fifty to fifty to fifty. That's fine, 0:10:35.800 --> 0:10:40.080 But he would know that by starting with fifty, which 0:10:40.120 --> 0:10:42.760 the Fed rarely does absent a crisis, and this is 0:10:42.800 --> 0:10:47.160 not a crisis, he is laying down a marker for expectations. 0:10:47.760 --> 0:10:49.199 Does really a sense he's trying to have. 0:10:49.160 --> 0:10:49.880 It both ways? 0:10:51.040 --> 0:10:52.840 Well, I mean, what do you make of how the 0:10:52.840 --> 0:10:56.600 markets are interpreting that? Than the pricing in about sixty 0:10:56.640 --> 0:10:59.800 five basis points are further easing this year. What does 0:10:59.880 --> 0:11:01.520 it tad That's about why the fad goes for the 0:11:01.559 --> 0:11:02.160 rest of the air. 0:11:02.840 --> 0:11:05.120 It tells you that there's a couple more cuts coming. 0:11:05.160 --> 0:11:09.280 But you know, look, this can oscillate based on data 0:11:09.600 --> 0:11:13.600 and based on commentary. Don't forget It's like, only five 0:11:13.760 --> 0:11:17.440 business days ago the consensus was that fifty would be 0:11:17.480 --> 0:11:22.480 a stretch. Yet by the time that press release came 0:11:22.520 --> 0:11:27.400 at two o'clock yesterday afternoon, people had coalesced around fifty, 0:11:27.720 --> 0:11:32.160 So things can changed, and emphasized his data dependent on 0:11:32.240 --> 0:11:34.880 all the rest of it. But look, there's a marker 0:11:35.120 --> 0:11:39.360 being laid down here. We're going to respond forcefully to 0:11:39.480 --> 0:11:43.080 signs of emerging softness in the labor market. And by 0:11:43.120 --> 0:11:48.280 the way, inflation heading toward two percent gives us the 0:11:48.280 --> 0:11:51.840 flexibility to do so. It was interesting, he added, just 0:11:51.960 --> 0:11:54.960 by way almost of clearing his throat at the end 0:11:54.960 --> 0:11:56.959 of his sense. Of course, you know we still think 0:11:57.000 --> 0:11:57.959 we'll get to two. 0:11:58.600 --> 0:12:01.440 Yes, which is interesting of itself, where the new normal 0:12:01.520 --> 0:12:05.200 post pandemic actually is. What did you make of a 0:12:05.320 --> 0:12:07.360 descending vote from Michelle Bowman? 0:12:07.480 --> 0:12:08.880 Is that significant? 0:12:09.360 --> 0:12:12.040 Well, you know, when I first saw it, Central banking 0:12:12.120 --> 0:12:15.520 geeks like me. You know, I got pretty surprised about 0:12:15.559 --> 0:12:18.840 that because I'm always asking people when was the last 0:12:18.920 --> 0:12:23.839 time a FED governor dissented, and prior to yesterday, the answer, 0:12:23.880 --> 0:12:26.880 of course was two thousand and five John Olsen in 0:12:26.920 --> 0:12:31.440 the aftermath of Hurricane Katrina. So this was interesting from 0:12:31.440 --> 0:12:35.480 a geeky perspective. Then again, when you look at it closely, 0:12:36.360 --> 0:12:40.120 it's not like Michelle Bowman favored no cut at all. 0:12:40.640 --> 0:12:44.600 She was dessenting on the size of the cut, not 0:12:44.760 --> 0:12:47.480 the cut per se. The other thing I would say 0:12:47.520 --> 0:12:51.080 is when it comes to monetary policy, she's not particularly influential. 0:12:51.080 --> 0:12:54.120 I believe her background is as a community banker. Community 0:12:54.160 --> 0:12:57.000 bankers have a lot of clout in DC. Congress always 0:12:57.120 --> 0:13:00.520 likes to see a community banker on the foe. See. 0:13:00.840 --> 0:13:03.880 I think the vote that Paw really wanted for fifty 0:13:04.280 --> 0:13:06.080 and that he got was Chris Wall. 0:13:06.280 --> 0:13:08.599 What about looking ahead? We've got a decision from the 0:13:08.600 --> 0:13:11.040 Bank of England today, We've got the Bank of Japan tomorrow. 0:13:11.040 --> 0:13:13.960 How much will policymakers in London and in Tokyo be 0:13:14.040 --> 0:13:15.280 eyeing the fad decision? 0:13:15.960 --> 0:13:19.160 Well, again, we're at that point. Everyone will say, well, 0:13:19.200 --> 0:13:21.120 you know, we don't just follow the FED. You know, 0:13:21.200 --> 0:13:23.720 we act in our own domestic situation. Da da da 0:13:23.800 --> 0:13:26.200 da da da da. But they're all responding to the 0:13:26.240 --> 0:13:28.360 same trends. And I would put the Bank of England 0:13:28.360 --> 0:13:31.720 in that category. I mean, the Bank of Japan is 0:13:31.760 --> 0:13:35.720 the outlier in this whole conversation. What's going to be 0:13:35.840 --> 0:13:40.360 very interesting is whether the Governor Kazuo Waider can back 0:13:40.520 --> 0:13:45.359 the hawkishness that he exhibited back in August with language 0:13:45.400 --> 0:13:49.480 like this on Friday, or does he you know, is 0:13:49.520 --> 0:13:53.200 he perceived to be walking away? You know, my colleague 0:13:53.240 --> 0:13:55.800 garaud Ready and I have written that one of his 0:13:55.960 --> 0:14:01.400 weaknesses is as a longtime academic figure, we'll answer questions 0:14:01.679 --> 0:14:04.880 on their merits, and sometimes it seems like he's given 0:14:05.040 --> 0:14:09.839 giving secondary thought to the message he seeks to convey. Well, 0:14:09.840 --> 0:14:12.160 that's a very interesting point. No, no, no, it's not 0:14:12.200 --> 0:14:15.360 necessarily a signal. But this is the danger for Wader. 0:14:15.600 --> 0:14:20.240 He was forceful with hawkishness in August. You know which 0:14:20.400 --> 0:14:22.200 Wader shows up Friday. 0:14:23.680 --> 0:14:27.080 Okay, we shall wait that interesting question. Daniel, thank you 0:14:27.160 --> 0:14:29.080 so much for your time this morning. A big opinion 0:14:29.080 --> 0:14:31.880 that columnist Daniel Moss. Then, as we think about that 0:14:31.920 --> 0:14:34.520 fifty basis point rate card. So we had the vote. 0:14:34.560 --> 0:14:37.080 It was eleven to one, of course, to reduce the 0:14:37.160 --> 0:14:39.960 rates to arrange now of four point seventy five to 0:14:40.040 --> 0:14:42.200 five percent after the FED of course held for. 0:14:42.200 --> 0:14:43.800 More than a year. 0:14:44.720 --> 0:14:47.080 And in terms of the projections, you've got ten out 0:14:47.120 --> 0:14:50.840 of nineteen officials favoring lowering rates by at least an 0:14:50.840 --> 0:14:53.760 additional half point over the next two meetings. 0:14:53.760 --> 0:14:54.480 So that's ahead. 0:14:54.680 --> 0:14:56.800 Yeah, of course, plenty to read more from Daniel and 0:14:56.840 --> 0:14:59.320 as colleagues are Bloomberg dot Com, Forward, Slash Opinion. I 0:14:59.320 --> 0:15:02.000 would also point and John Othis's referenced and his piece 0:15:02.080 --> 0:15:03.840 just out this morning as well as Bimberg Opinion has 0:15:03.880 --> 0:15:07.000 a FED day soundtrack and there's a Spotify playlist that 0:15:07.000 --> 0:15:08.960 you can click through on his piece. The first song 0:15:09.000 --> 0:15:12.560 on the list, the first cut, is the deepest. Let's 0:15:12.560 --> 0:15:15.560 go to a different story now. This morning some exclusive 0:15:15.600 --> 0:15:18.720 Bloomberg reporting on how Russia's weaving a global web of 0:15:18.800 --> 0:15:22.440 shell companies to create a shadow fleet to export liquefied 0:15:22.520 --> 0:15:25.960 natural gas. This is an effort to circumvent US energy 0:15:26.000 --> 0:15:28.840 sanctions over the Russian invasion of Ukraine. We've got Bloomberg 0:15:28.840 --> 0:15:30.840 Stephens Staptinski with us for more. It leads our team 0:15:30.880 --> 0:15:33.600 of energy reporters in Agist even great to have you on. 0:15:33.960 --> 0:15:36.960 We've reported previously on the shadow fleet of ships carrying 0:15:37.040 --> 0:15:40.760 Russian oil. This investigation looked at the way Russia's exporting 0:15:40.920 --> 0:15:44.520 LNG from its Arctic terminal that only opened last December. 0:15:45.080 --> 0:15:46.080 How are they doing it? 0:15:47.240 --> 0:15:50.960 Yeah, I mean the LNG dark fleet is much smaller 0:15:51.640 --> 0:15:57.400 than Russian the Russian one which is so far when 0:15:57.440 --> 0:16:00.920 you some calculations show that they've a met hundreds of 0:16:00.960 --> 0:16:05.360 billions of dollars with that trade for liquefied natural gas, 0:16:05.400 --> 0:16:08.520 it's a little bit more challenging. Unlike the oil industry, 0:16:08.560 --> 0:16:12.520 where there are thousands over seven thousand vessels available, so 0:16:12.560 --> 0:16:15.320 it's easier to hide your movement and buy old and 0:16:15.360 --> 0:16:20.120 smaller ships. The LNG industry liquified natural gas is much smaller. 0:16:20.240 --> 0:16:22.520 It has only seven over a little bit over seven 0:16:22.600 --> 0:16:25.440 hundred ships, and it's a very specialized trade, so you 0:16:25.480 --> 0:16:27.680 can't just bring it to any old port. You have 0:16:27.720 --> 0:16:30.760 to bring it to a specialized LNG export terminal or 0:16:30.760 --> 0:16:35.920 import terminal. So through our reporting we discovered that a 0:16:36.000 --> 0:16:40.320 company in Dubai we're not exactly shared the relation with Russia. 0:16:41.320 --> 0:16:46.000 But this company started amassing vessels in March twenty twenty 0:16:46.040 --> 0:16:50.760 four to help Russia essentially export the fuel. The fuel 0:16:50.880 --> 0:16:55.040 was finally exported with one of these ships in August. 0:16:55.720 --> 0:16:58.760 A picture satellite pictures confirmed it was the first of August. 0:16:58.840 --> 0:17:03.800 The vessel called Pie was faking its AIS location, so 0:17:03.840 --> 0:17:06.240 that ship tracking data showed that it was in the barns. 0:17:06.400 --> 0:17:06.760 See. 0:17:07.720 --> 0:17:12.200 Okay, so who's buying this leng what are the known 0:17:12.359 --> 0:17:13.320 risks about this? 0:17:14.280 --> 0:17:19.320 So through our investigation we found that the Russian government 0:17:19.320 --> 0:17:22.399 has been putting pressure on Arctic Energy two to get 0:17:22.640 --> 0:17:25.800 exports out of the facility. Because of the sanctions from 0:17:25.800 --> 0:17:28.320 the United States last year, they weren't able to get 0:17:28.359 --> 0:17:31.120 their icebreaker ships and they were also struggling to find 0:17:31.119 --> 0:17:33.480 buyers and to this day they still do struggle to 0:17:33.480 --> 0:17:39.280 find buyers. So because of that, they were looking at 0:17:39.480 --> 0:17:42.960 waves to get the fuel out. That's why the dark 0:17:43.000 --> 0:17:48.479 Fleet was developed. And I think it's important for Putin 0:17:48.560 --> 0:17:50.840 as well. He's looked at this project, which has been 0:17:50.880 --> 0:17:53.520 hit by sanctions, as a sort of prestige project. If 0:17:53.840 --> 0:17:57.320 they're able to get these exports out of the facility, 0:17:57.720 --> 0:18:02.159 then it shows that Western sanction aren't effective against Moscow's 0:18:02.200 --> 0:18:06.960 trade of fossil fuels. So this has gotten Putin's personal 0:18:06.960 --> 0:18:10.000 stamp of approval to get it through and through our 0:18:10.119 --> 0:18:12.800 According to people with knowledge of the strategy, there is 0:18:12.840 --> 0:18:18.480 pressure from Russian officials to get the shipments out. 0:18:19.200 --> 0:18:21.879 What about the counter efforts to is this? Surely the 0:18:22.040 --> 0:18:25.800 US must be looking at the circumvention and thinking about 0:18:25.840 --> 0:18:27.320 how to combats. 0:18:27.440 --> 0:18:31.440 Precisely so, the shadow fleet of vessels were accumulated over 0:18:31.440 --> 0:18:33.919 the last few months, and the first shipment was in 0:18:33.960 --> 0:18:37.680 early August. In quick succession, there were three more shipments. 0:18:37.720 --> 0:18:40.480 All three of the vessels were faking their location when 0:18:40.520 --> 0:18:43.320 they picked up the energy from the Arctic Energy to facility, 0:18:44.200 --> 0:18:47.400 but later in August the US slap sanctions on all 0:18:47.440 --> 0:18:51.200 three of the ships. There was another instance where one 0:18:51.200 --> 0:18:53.720 of the sanctioned vessel transferred the energy through a ship 0:18:53.720 --> 0:18:58.919 to ship transfer onto a vessel that hadn't been sanctioned yet. Basically, 0:18:58.960 --> 0:19:00.840 less than two weeks later, do you sanction that ship 0:19:00.880 --> 0:19:05.840 as well? So US is taking unprecedently fast steps to 0:19:05.920 --> 0:19:09.280 make sure that any way they can put pressure on 0:19:09.320 --> 0:19:12.359 the development or further development of the Dark fleet, and 0:19:12.400 --> 0:19:15.679 so they're throwing sanctions on very quickly. By doing so, 0:19:15.800 --> 0:19:18.880 you're also deterring potential buyers, because if you're a company 0:19:19.119 --> 0:19:23.240 somewhere looking to potentially purchase the fuel, would you risk 0:19:23.880 --> 0:19:26.159 counter sanctions from the United States if they see that 0:19:26.160 --> 0:19:27.680 you're involved in this trade. 0:19:27.760 --> 0:19:29.320 This is Bloomberg Daybreak Europe. 0:19:29.359 --> 0:19:32.159 You're morning brief on the stories making news from London 0:19:32.200 --> 0:19:33.600 to Wall Streets and beyond. 0:19:33.880 --> 0:19:37.840 Look for us on your podcast feed every morning on Apples, Spotify, 0:19:37.960 --> 0:19:39.920 and anywhere else you get your podcasts. 0:19:39.960 --> 0:19:42.960 You can also listen live each morning on London DAB Radio, 0:19:43.000 --> 0:19:46.760 the Bloomberg Business app, and Bloomberg dot Com. 0:19:46.800 --> 0:19:49.560 Our flagship New York station is also available on your 0:19:49.600 --> 0:19:54.320 Amazon Alexa devices. Just say Alexa play Bloomberg eleven thirty. 0:19:54.560 --> 0:19:57.200 I'm Caroline Hipka and I'm Stephen Carroll. Join us again 0:19:57.240 --> 0:19:59.760 tomorrow morning for all the news you need to start 0:19:59.800 --> 0:20:05.080 your day right here on Bloomberg Daybreak Europe. 0:20:03.320 --> 0:20:09.440 Mm hmm