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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: This is the Blueberg Day Baker Podcast. Good morning, It's Thursday,

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Speaker 2: the fifth of March. I'm Caroline Hepkat in London.

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Speaker 1: And I'm Stephen Carolin Brussels. Coming up today, New satellite

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Speaker 1: images reveal the extent of destruction from US Israeli strikes

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Speaker 1: on Iran.

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Speaker 2: Tehran tests its adversaries pain threshold as twenty thousand dollar

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Speaker 2: drones take on four million dollar missiles and all prices

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Speaker 2: continue to climb.

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Speaker 1: Plus growing pains. China sets its lowest target for economic

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Speaker 1: expansion since nineteen ninety one, as Beijing seeks a sustainable

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Speaker 1: path forward.

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Speaker 2: Let's start with a roundup of our top stories.

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Speaker 1: Iran is continuing to target Israel and Gulf State as

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Speaker 1: US and Israeli forces bomb sites inside the Islamic Republic.

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Speaker 1: The US Sankendiranian warship in international waters yesterday. It's the

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Speaker 1: first time world War two that an American submarine has

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Speaker 1: attacked a vessel on the surface. US President Donald Trump

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Speaker 1: says he's pleased with how the military campaign is proceeding.

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Speaker 3: We're doing very well on the warfront.

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Speaker 4: To put it mildly, I would say somebody said, on

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Speaker 4: a scale of ten, where would you're ready?

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Speaker 5: I said about a fifteen.

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Speaker 4: And we're going to continue to do what We have

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Speaker 4: the greatest.

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Speaker 5: Military in the world by far, and that was a

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Speaker 5: tremendous threat test for many years, forty seven years, have

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Speaker 5: been killing.

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Speaker 1: Our people and killing people from all over the world.

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Speaker 5: And I think we have great support.

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Speaker 1: Trump's Polish assessment came as Republican controlled US Senate rejected

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Speaker 1: a Democratic attempt to halt the strikes Tran. Meanwhile, It's

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Speaker 1: dismissed a report that its Ministry of Intelligence had contacted

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Speaker 1: Washington to negotiate an end to the conflict. More than

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Speaker 1: one thy one hundred people have been killed in around

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Speaker 1: so far, with dozens more deaths reported elsewhere in the region.

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Speaker 2: Six days into the conflicate to satellite imagery and open

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Speaker 2: source data shows the extent of destruction caused by the

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Speaker 2: US Israeli strikes. While Iran's nuclear facilities have largely avoided

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Speaker 2: attacks so far, military and civilian sites, including hospitals, police stations,

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Speaker 2: and a cord have all been hit. Though the devastation

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Speaker 2: is clear. President Chrump and his team have offered differing

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Speaker 2: objectives for the campaign, Trump is called on Iranians to

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Speaker 2: rise up against the regime, while also saying that he

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Speaker 2: is open to an option similar to Venezuela. On Wednesday,

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Speaker 2: Whinehouse per Section, Caroline Levitt said that the administration has

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Speaker 2: four aims for the war.

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Speaker 6: The stated military objectives of Operation Epic Fury are as follows.

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Speaker 6: Eliminate Auran's ballistic missile threat, destroy their naval capability, disrupt

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Speaker 6: missile and john production infrastructure, sever their pathway, and end

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Speaker 6: their pathway to nuclear.

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Speaker 2: Weapons, Caroline Levitt to speaking there. When Levitt was pressed

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Speaker 2: during that news briefing to state explicitly if regime change

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Speaker 2: is one of the US aims, she declined to do so.

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Speaker 2: Israel's goal appear clearer, according to two senior European officials

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Speaker 2: who spoke on condition of anonymity, is well as seeking

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Speaker 2: the complete destruction of the Iranian regime and state.

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Speaker 1: Former US Secretary of State Anthony Blincoln says that real

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Speaker 1: change in Iran will require a sustained military focus that

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Speaker 1: could wear down US weapons stockpiles and leave it vulnerable

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Speaker 1: to attacks from other adversaries. Concerns are growing that both

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Speaker 1: sides are heading for a war of attrition, with Iran

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Speaker 1: analysts telling Bloomberg the regime thinks it can outlast America's

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Speaker 1: munitions and patients. Blincoln, who is the top diplomat in

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Speaker 1: Joe Biden's administration, is questioning whether the White House is

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Speaker 1: ready for the consequences of a drawn out war.

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Speaker 5: What I'm worried about. One of the things I'm worried

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Speaker 5: about this gets to the second and third orer consequences,

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Speaker 5: is we so deplete our arsenal and it takes a

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Speaker 5: long time to rebuild it. That that puts US in

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Speaker 5: a disadvantageous position when it comes to say a China

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Speaker 5: or a Russia. All of those things need to be

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Speaker 5: factored in. And again it's one of the reasons why

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Speaker 5: if you're going to undertake something like this, you've got

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Speaker 5: to make sure that you've factored all of that.

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Speaker 1: In speaking to Bloomberg's Big Take podcast, blink And added

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Speaker 1: that the US will be constrained by markets and munitions.

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Speaker 1: Defense firms Luckied, Martin and RTX have been called to

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Speaker 1: a meeting at the White House tomorrow. As the Pentagon

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Speaker 1: pushes companies to speed up weapons production.

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Speaker 2: Brent crude climb towards eighty four dollars a bow as

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Speaker 2: traders continue to price in a longer conflict in the

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Speaker 2: Middle East. Global energy markets have been rocked by the wall,

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Speaker 2: which is entering at six day with no immediate prospect

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Speaker 2: of a resolution in sight. Trump ally and FED governor

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Speaker 2: Stephen Maron argues this will not feed into inflation.

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Speaker 7: Even if oil stays at these types of levels. To me,

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Speaker 7: it's difficult to get a lot of read through as

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Speaker 7: a result of that. Sure, oil will feed into headline inflation,

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Speaker 7: but the evidence that it feeds into core inflation in

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Speaker 7: any sort of material way, unless there's a huge move

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Speaker 7: in oil prices, I think it is quite limited. So

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Speaker 7: it's difficult for me to get very excited about a

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Speaker 7: policy implication of what's happened thus far.

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Speaker 2: Marin's comments come after crude prices climb nearly sixteen percent

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Speaker 2: so far this week. In the latest sign of the

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Speaker 2: global disruption to supply, China's government has told the country's

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Speaker 2: largest oil refiners to suspend exports of diesel and gasoline.

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Speaker 2: China receives close to half its all supply from the

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Speaker 2: Gulf and has some of the world's largest oil refinery companies.

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Speaker 2: Although the vast majority of it aill goes to domestic uses.

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Speaker 1: The number of canceled flights to Middle East HOBS has

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Speaker 1: surpassed twenty three thousand. Since the start of the war,

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Speaker 1: thousands of passengers have been stranded in the Gulf region,

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Speaker 1: with over half of all scheduled flights to or from

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Speaker 1: the Middle East canceled. The UEE says it is now

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Speaker 1: working to establish safe air corridors to allow for as

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Speaker 1: many as forty eight flights an hour. Here's our Aviation

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Speaker 1: and Transport reporter Danny Lee.

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Speaker 3: Priority has really been given to people to get out

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Speaker 3: of the region, and we have seen recent days the

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Speaker 3: likes of Emerson and Etty had Eland starting resuming some

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Speaker 3: flights to get people out, but clearly for now as

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Speaker 3: a pretty broad.

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Speaker 1: Disruption overall, it brings Danny Lee there as some airlines

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Speaker 1: in the Gulf continue to operate limited repatriation flights. The

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Speaker 1: U State Department said that seventeen thy five hundred Americans

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Speaker 1: have safely fled the region and urged others to register

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Speaker 1: via its website. Skinese reported that a planned repatriation flight

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Speaker 1: for UK citizens from Moscat and Oman has been delayed.

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Speaker 2: China has set its lowest growth target since nineteen ninety one,

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Speaker 2: as policymakers appear to acknowledge the difficulties facing the economy,

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Speaker 2: including deflation, tariff risks, and the property sector. The target

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Speaker 2: of four and a half to five percent set at

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Speaker 2: the National People's Congress is the first formal downgrade since

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Speaker 2: twenty twenty three. Former People's Bank of China advisor David

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Speaker 2: Do Kwai Lee says the decision is logical.

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Speaker 8: Pp decision makers realize that we are in a very

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Speaker 8: turbulent at times, and it is most important for the

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Speaker 8: Chinese economy to stay put, to stay stable, okay, rather

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Speaker 8: than to pursue a rapid rapid rebalads.

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Speaker 2: Former PBOC advisor David Do Kwai Lee, speaking to Bloomberg

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Speaker 2: There earlier this morning. While Chinese officials have met their

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Speaker 2: growth goals for the past three years, it's going to

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Speaker 2: be a lot more difficult this time. China has also

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Speaker 2: set a fiscal deficit goal of around four percent that's

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Speaker 2: the highest in more than three decades.

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Speaker 1: Anthropic is reopening talks with the Pentagon about the use

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Speaker 1: of its technology by the US military. The move comes

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Speaker 1: after a feud between the two about AI safety and

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Speaker 1: reports that US Central Command used Anthropics Claude AI for

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Speaker 1: intelligence assessments and other purposes during recent strikes on Iran.

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Speaker 1: Bloombergs two out of Bio has more.

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Speaker 9: Just days ago, Anthropics said it couldn't in good conscience

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Speaker 9: agree to the Department of War's request remove safeguards from

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Speaker 9: its AI model, but now it seems that two sides

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Speaker 9: may have found a way forward. Bloomberg understands that discussions

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Speaker 9: between CEO Dario ama Day and the Pentagon have resumed

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Speaker 9: with the hopes of nailing down a contract outlining the

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Speaker 9: government's access to Anthropics technology. A resolution would help clear

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Speaker 9: the air around one of the artificial intelligence industries fast

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Speaker 9: as growing and most promising firms. Anthropic declined to comment

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Speaker 9: on the reports, whilst a Pentagon spokesperson didn't immediately respond

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Speaker 9: to requests. In London, Tea were at a Bio Bloomberg Radio.

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Speaker 2: And those are our top stories today. Asian equities this morning, though,

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Speaker 2: are rebounding despite the deep anxiety around the war in

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Speaker 2: the Middle East South Korea, leading gains. The COSTPI is

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Speaker 2: rebound after that record slump yesterday, were actually up by

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Speaker 2: nine point three percent. It also did come after strong

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Speaker 2: US economic data that helped with Wall Street yesterday. European

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Speaker 2: stocks that the close yesterday were up by one point

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Speaker 2: four percent. As for stock futures this morning, though in

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Speaker 2: the red both for the US and europe rencrude futures

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Speaker 2: trading at eighty three dollars eighty six up three percent

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Speaker 2: this as the dollar is stronger three times of one percent.

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Speaker 2: Those are the markets in the moment.

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Speaker 1: The latest on events in the Middle East plus why

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Speaker 1: depleted weapons stockpiles could play a key role in how

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Speaker 1: long the war goes on for But another story that

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Speaker 1: we've been reading this morning. Another part of the market

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Speaker 1: reaction to events in the Middle East has been to

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Speaker 1: push gold prices higher course traditional haven asset, and now we're

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Speaker 1: still a few hundred dollars off the record highs reached

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Speaker 1: in January. But our colleague Alexander Sasanov has been speaking

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Speaker 1: to the Indian billionaire who built one of the world's

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Speaker 1: biggest family owned jewelers about what he's seeing in terms

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Speaker 1: of demand for the precious metal and how it's evolved

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Speaker 1: from consumers as well. Joe Lucas says that he expects

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Speaker 1: prices to remain high and climb even further. He said

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Speaker 1: that even if there are dips, if there are a

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Speaker 1: reduction in geopolitical tension, the overall direction still looks upward.

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Speaker 1: He's well prepared though for this. They've got nearly sixteen

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Speaker 1: thousand kilos of gold and stock in bars and jewelry.

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Speaker 1: And I thought it was really interesting that actually he

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Speaker 1: was saying a lot of people are now want to

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Speaker 1: buy bars of gold and silver to keep as an

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Speaker 1: investment rather than necessarily coming in going shopping jewelry.

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Speaker 2: Yeah, we're given that girls is not twenty percent this year. Yes,

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Speaker 2: it's you're certainly buying in an expensive time. But then,

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Speaker 2: as you say, is it going to continue to go up?

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Speaker 2: People are worried around war and the escalation of conflict,

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Speaker 2: so looking for those safe havens. But yeah, I can't

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Speaker 2: actually imagine what sixteen thousand kiloads of gold looks like.

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Speaker 2: I don't know.

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Speaker 1: Don't vault someone in your house, Caroline. To be honest,

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Speaker 1: I think I think you need to get that extension

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Speaker 1: dot if you want to try and start stuff piling

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Speaker 1: your gold now. But it's a it's a great read

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Speaker 1: on the turnel this morning and telling us I suppose

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Speaker 1: another part of this story as well, about how people

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Speaker 1: and consumers are reacting to the events that are happening

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Speaker 1: in the Middle East. Well, let's bring you up to

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Speaker 1: date now on the sixth day of the war. We're

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Speaker 1: joined Byron Midleast Breaking news editor Patrick Sykes for more, Patrick,

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Speaker 1: what is the situation in Iran this morning and with

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Speaker 1: the regime in Tehran morning?

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Speaker 10: YEA, Tehran is still under extreme aerial bombardment. We've seen

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Speaker 10: We've done an analysis of some sort of light imagery

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Speaker 10: that showed that, you know, besides the obvious military targets

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Speaker 10: in and around the city, we've also seen places like

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Speaker 10: police stations, judiciary buildings, hospitals being targeted as well. The

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Speaker 10: regime is trying to project a sense of continuity. We

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Speaker 10: have that three person leadership Council temporarily in place until

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Speaker 10: there's a new Supreme leader. One of the key clerics

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Speaker 10: who will be choosing that new Supreme leader yesterday said

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Speaker 10: that they have a sort of shortlist in mind and

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Speaker 10: that they're close to finalizing it. So I think the

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Speaker 10: next key step is are they able to meet. If so,

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Speaker 10: is that in person? Does it happen somehow remotely and

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Speaker 10: obviously who emerges at the end of that process to

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Speaker 10: lead the country.

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Speaker 1: Yeah.

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Speaker 2: In the latest lines from Iran's Foreign minister Abbasaragti writing

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Speaker 2: on social media that the United States will come to

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Speaker 2: regret the attack on the warship, on the Iranian warship

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Speaker 2: that was sunk off Sri Lanka. In terms of US officials,

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Speaker 2: they said yesterday that they're shifting to closer in attacks.

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Speaker 2: President Trump talked about a big wave still ahead. But

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Speaker 2: there's also confusion about actually what the US objectives and

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Speaker 2: timelines are here exactly.

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Speaker 10: And I'd just add on rugtually in that naval incident,

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Speaker 10: and I think that's important because Iran is likely to

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Speaker 10: want to target the US naval assets in the region

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Speaker 10: as a response. Right for the US, Yeah, the timeline

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Speaker 10: continues to move. The latest we heard overnight was that

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Speaker 10: it could be six, eight or three weeks. I think

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Speaker 10: the common denominator is that the US wants Iran to

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Speaker 10: think that it's in this for the long bawl, that

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Speaker 10: it's not committing to a specific timeline, because from Iran's perspective,

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Speaker 10: it has more of an incentive to see this through

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Speaker 10: to the end, and the US is key to counter

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Speaker 10: that and to say that we're not after We'll take

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Speaker 10: the short win if there is one, but we'll see

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Speaker 10: it through if we need to. So I think there's

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Speaker 10: a bit of a rhetorical battle about endurance there.

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Speaker 1: Patrick. What about the energy market moves on this? We're

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Speaker 1: seeing oil pushing higher again this morning, Brancrud's up over

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Speaker 1: eighty four dollars a barrel. Again, what are the key

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Speaker 1: factors and focus then for those markets?

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Speaker 10: Yeah, it's all about the straight the form moves and

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Speaker 10: specifically how long that disruption lasts. Right, We've had that

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Speaker 10: promise from the US that they would help on both

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Speaker 10: insurance and military naval escortes, but on those escorts were

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Speaker 10: yet to see any so it's unclear how that would happen,

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Speaker 10: what kind of volume at which it would happen. But

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Speaker 10: I think ultimately we can expect that if and when

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Speaker 10: it does happen, it's going to be at a much

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Speaker 10: lower volume of transits through the Strait than what we

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Speaker 10: had in normal times, and there will still be many

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Speaker 10: many companies, shipping owners and individual captains on the water

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Speaker 10: who'll just decide that it's too risky. At this point,

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Speaker 10: while hostilities are still so active and.

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Speaker 2: So Patrick, thank you so much for bringing us the

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Speaker 2: latest details. That is our Middle East breaking news editor,

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Speaker 2: Patrick Sykes, stay with us. More from Bloomberg DAYBAKEUOBE coming

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Speaker 2: up after this.

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Speaker 1: On the battlefields, the opening phase of this conflict has

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Speaker 1: been swift, the United States destroying two thousand targets and

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Speaker 1: decimating Iran's navy. Let's bring in Jerry Doyle, Bloomberg's Global

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Speaker 1: Defense editor, for more on this. Jerry, good morning. What

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Speaker 1: is Iran's strategy on the battlefield with drones and missiles?

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Speaker 4: I mean, to some extent, their strategy is to hit

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Speaker 4: what they can, to be opportunistic. As you've mentioned, the

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Speaker 4: US and Israel had destroyed thousands of targets in Iran already,

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Speaker 4: and so that sort of limits what Iran can do.

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Speaker 4: Their leadership in terms of military commander, is somewhat decentralized

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Speaker 4: at this point, and so they're hitting what they can. Now.

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Speaker 4: One of the things they're dealing with is as these

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Speaker 4: editor weapons destroyed by US and Israeli airstrikes, their options

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Speaker 4: become more limited, what we call their magazine, their supply

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Speaker 4: of ammunition becomes more constrained. They seem to have many

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Speaker 4: more drones these one way attack munition called shah had

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Speaker 4: one thirty sixes than they do missiles, and that's been

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Speaker 4: reflected in the strikes that we've seen so far, as

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Speaker 4: they've reached out to try to hit targets around the goal,

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Speaker 4: mainly US facilities in golf countries, but also they've hit

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Speaker 4: population centers, they've hit embassies and things like that. So

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Speaker 4: they're attacking targets not necessarily that will affect the trajectory

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Speaker 4: of the war, but that will inflict pain on the

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Speaker 4: US and its allies.

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Speaker 2: Okay, so that's their goal is sort of maximum pain.

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Speaker 2: How much have the US and Israel, though destroyed in

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Speaker 2: terms of Iran's weapons and capabilities.

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Speaker 4: Now, Well, certainly they've been very optimistic and very aggressive

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Speaker 4: in terms of what they feel like they've been able

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Speaker 4: to do. So they've hit lots of missile launch roots,

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Speaker 4: which creates sort of a bottleneck for Iran. They might

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Speaker 4: have lots of missiles stockpile away in places that can't

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Speaker 4: be hit, under mountains and so on, but if there's

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Speaker 4: no launchers available to shoot them, then they're essentially unusable.

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Speaker 4: So we have seen the volume of ballistic missile fire

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Speaker 4: start to slowly decrease, and that is one of the

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Speaker 4: goals of these air strikes to prevent those missile attacks. Also,

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Speaker 4: we've seen attacks on weapon production facilities, missiles and drones

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Speaker 4: to prevent Iran from being able to regenerate their supply

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Speaker 4: of ammunition. During the war, we've seen air strike destroy

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Speaker 4: Iranian air defensers. Going to that point earlier about using

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Speaker 4: closer immunitions, By destroying Iraans air defenses, that makes it

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Speaker 4: safer or easier for aircraft to operate over Iran as

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Speaker 4: far as opposed to fire ammunition from far away, and

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Speaker 4: that allows the US in Israel to keep their stockpiles

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Speaker 4: of expensive precision, long range strike missiles in reserve for

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Speaker 4: other conflicts and use many more numerous sort of dumb bombs.

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Speaker 4: One thing that we haven't necessarily seen so far from

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Speaker 4: Iran or in terms of things that have been hit,

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Speaker 4: is Iranian naval assets. We've seen ships sunk, obviously, but

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Speaker 4: around is known to have large numbers of anti ship missiles,

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Speaker 4: large numbers of mines, and some submarines, and those have

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Speaker 4: not been seen on the battlefield or in any sort

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Speaker 4: of footage of things that have been destroyed, and as

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Speaker 4: the US. If the US go forward with these plans

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Speaker 4: to escort ships through the Strait of Hormus, which is

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Speaker 4: extremely narrow and offers Iran sort of a bottleneck to

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Speaker 4: be able to fire into, we could see those weapons deployed.

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Speaker 1: What about these concerns about the US to pleasing expinitions

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Speaker 1: we heard from former US Secretary Site Anthony Blank in

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Speaker 1: the moments ago. We have this meeting of top defense

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Speaker 1: contractors at the White House tomorrow as well. How much

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Speaker 1: of an issue is this or could it be well?

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Speaker 4: Again, it sort of depends on how the war is

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Speaker 4: prosecuted and how it's going. The more missiles and drones

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Speaker 4: around fires and it targets around the region, the more

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Speaker 4: pressure it puts on air defenses around the region, and

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Speaker 4: that sort of deplete these stockpiles in many cases of expensive,

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Speaker 4: hard to replace air defense missiles such as Patriot Pac three,

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Speaker 4: such as bad such as the SM three SM six series,

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Speaker 4: and so what we're seeing here and this is an

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Speaker 4: acknowledged problem. The US also made deals in January with Lockey,

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Speaker 4: Martin and Artik to increase production of various munitions. I

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Speaker 4: think what we're going to see on Friday is additional

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Speaker 4: movement in that direction. And it's interesting though, because you know,

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Speaker 4: the President Trump of course said that, you know, we're

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Speaker 4: not where we want to be with stockpiles of these

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Speaker 4: sorts of weapons. But Pete Hexth, the Secretary of Defense

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Speaker 4: yesterday was sort of very aggressive and saying, we can

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Speaker 4: fight this war as long as we want. We have

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Speaker 4: everything we need. So there's a bit of a disconnect there.

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Speaker 4: But it does seem fairly clear that these high and

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Speaker 4: the air defense munitions are in high demand obviously in

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Speaker 4: the theater, but also sort of needed globally. So in

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Speaker 4: order to make sure their stockpiles are adequate in every theater,

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Speaker 4: not just the Middle East, the US is going to

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Speaker 4: have to build more and it's going to have to

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Speaker 4: do it fast.

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Speaker 1: What about the question of nuclear sites and Iran, We've

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Speaker 1: been looking at the satellite imagery of tracking some of

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Speaker 1: what has been happening in terms of strikes. What do

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Speaker 1: we know about the nuclear sites and how they've been affected. Well,

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Speaker 1: some of those nuclear strikes were hit last year. Of course,

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Speaker 1: the US was sort of very adamant last year that

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Speaker 1: they had destroyed around nuclear capability, and of course this

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Speaker 1: time around the teams that might not have been the case.

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Speaker 1: I think the problem that the US and Israel face

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Speaker 1: at this point is that the remaining nuclear facilities, the

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Speaker 1: ones that can actually produce the style material for bombs

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Speaker 1: could maybe even be used for researching nuclear weapons warhead design, are.

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Speaker 4: All extremely hard to hit. The very very deep, to

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Speaker 4: the point where even the US is massive ordinance or

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Speaker 4: a penetrator. The giant bombs that are designed to penetrate

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Speaker 4: one hundred meters into the ground and detonate and destroy

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Speaker 4: underground targets, those aren't going to be able to have

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Speaker 4: any effects. So you can expend a lot of munition,

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Speaker 4: you can put pilot's lives with in order to try

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Speaker 4: to hit these sites, but you're not going to be

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Speaker 4: able to do anything from the area. If they're serious

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Speaker 4: about taking those sites off the board, they're probably going

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Speaker 4: to have to put people on the ground, and I

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Speaker 4: don't think anybody is willing to do that.

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