1 00:00:02,520 --> 00:00:10,119 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the 2 00:00:10,119 --> 00:00:14,160 Speaker 1: Bloomberg Balance of Power podcast Kettas live weekdays at noon 3 00:00:14,240 --> 00:00:17,119 Speaker 1: and five pm. E's durn on Apple Cocklay and Android 4 00:00:17,160 --> 00:00:20,520 Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever 5 00:00:20,600 --> 00:00:24,520 Speaker 1: you get your podcasts, or watch us live on YouTube. 6 00:00:25,400 --> 00:00:27,920 Speaker 2: This war between Iran and the US and Israel now 7 00:00:27,960 --> 00:00:30,720 Speaker 2: in its third day and President Trump suggesting it could 8 00:00:30,760 --> 00:00:33,960 Speaker 2: continue for days or weeks more. Speaking at the White 9 00:00:33,960 --> 00:00:36,640 Speaker 2: House earlier today, he suggested this campaign could last for 10 00:00:36,640 --> 00:00:39,320 Speaker 2: four or five weeks, as he had done previously in 11 00:00:39,360 --> 00:00:42,279 Speaker 2: other interviews, but also suggested that the US military has 12 00:00:42,320 --> 00:00:46,879 Speaker 2: the capability to go for far longer than that. Just 13 00:00:46,920 --> 00:00:49,960 Speaker 2: how long, I suppose will depend on how quickly the 14 00:00:50,080 --> 00:00:53,920 Speaker 2: US can achieve its objectives, which until earlier today were 15 00:00:54,120 --> 00:00:57,840 Speaker 2: still pretty loosely defined, but the President tried to make 16 00:00:57,880 --> 00:00:59,600 Speaker 2: them clear when he spoke earlier. 17 00:01:00,520 --> 00:01:03,920 Speaker 3: This was our last best chance to strike what we're 18 00:01:03,920 --> 00:01:07,920 Speaker 3: doing right now and eliminate the intolerable threats posed by 19 00:01:07,920 --> 00:01:13,000 Speaker 3: this sick and sinister regime, and they are indeed sick 20 00:01:13,080 --> 00:01:14,320 Speaker 3: and sinister. 21 00:01:14,959 --> 00:01:16,280 Speaker 4: Our objectives are clear. 22 00:01:16,360 --> 00:01:21,960 Speaker 5: First were destroying Orens missile capabilities, and you see that 23 00:01:22,080 --> 00:01:25,400 Speaker 5: happening on an hourly basis, and their capacity to produce 24 00:01:26,160 --> 00:01:29,560 Speaker 5: brand new ones and pretty good ones they make. Second, 25 00:01:29,640 --> 00:01:34,040 Speaker 5: we're annihilating their navy. We've knocked out already ten ships. 26 00:01:36,319 --> 00:01:39,399 Speaker 2: So those were objectives one and two. The President went 27 00:01:39,400 --> 00:01:42,120 Speaker 2: on to list a third and a fourth. The third, 28 00:01:42,200 --> 00:01:45,080 Speaker 2: he said, is ensuring that the world's number one sponsor 29 00:01:45,160 --> 00:01:48,600 Speaker 2: of terror can never obtain a nuclear weapon, and the 30 00:01:48,640 --> 00:01:53,120 Speaker 2: fourth ensuring that the Iranian regime cannot continue to armed, arm, fund, 31 00:01:53,280 --> 00:01:57,920 Speaker 2: or direct terrorists outside of its borders. So for more 32 00:01:57,960 --> 00:02:00,720 Speaker 2: return to Bloomberg's Tyler Kendall, who is live on the 33 00:02:00,720 --> 00:02:01,600 Speaker 2: north line of. 34 00:02:01,520 --> 00:02:02,120 Speaker 6: The White House. 35 00:02:02,120 --> 00:02:05,640 Speaker 2: So, Tyler, while we did hear this statement from President Trump, 36 00:02:05,920 --> 00:02:09,960 Speaker 2: once again he did not answer any questions from reporters. 37 00:02:10,480 --> 00:02:14,200 Speaker 7: Right, Kaylee, He didn't and this has been the case 38 00:02:14,240 --> 00:02:18,280 Speaker 7: since the US launched these military operations over the weekend, 39 00:02:18,360 --> 00:02:21,799 Speaker 7: though two senior administration officials did take some questions from 40 00:02:21,800 --> 00:02:24,680 Speaker 7: reporters earlier today and what was considered to be the 41 00:02:24,680 --> 00:02:29,160 Speaker 7: first Pentagon briefing in actually months, with Secretary Pete Hegseth 42 00:02:29,200 --> 00:02:30,760 Speaker 7: as well as the Chair of the Joint chiefs of 43 00:02:30,800 --> 00:02:33,600 Speaker 7: Staff Dan Kine, and they reiterated a lot of what 44 00:02:33,639 --> 00:02:37,080 Speaker 7: we heard from President Trump, including that the US is 45 00:02:37,120 --> 00:02:42,440 Speaker 7: prepared to sustain this military operation until its objectives are achieved. 46 00:02:42,440 --> 00:02:44,280 Speaker 7: As you just outlined there, we got a few of 47 00:02:44,320 --> 00:02:47,240 Speaker 7: them from President Trump. Now, Secretary Hegseth said that this 48 00:02:47,280 --> 00:02:49,840 Speaker 7: will not be an endless war, in his words, but 49 00:02:49,919 --> 00:02:53,000 Speaker 7: that Americans should be prepared that it will take time 50 00:02:53,120 --> 00:02:56,960 Speaker 7: for the US to achieve its goals. In fact, the 51 00:02:57,000 --> 00:02:59,520 Speaker 7: Chair of the Joint Chiefs of Staff, Kine, ultimately said 52 00:02:59,560 --> 00:03:02,480 Speaker 7: that the US right now is currently surging additional resources 53 00:03:02,520 --> 00:03:05,160 Speaker 7: to the region, as currently hundreds of missions have been 54 00:03:05,200 --> 00:03:08,400 Speaker 7: deployed by land and by sea, saying that this is 55 00:03:08,440 --> 00:03:11,560 Speaker 7: going to quote continue to scale this as we have 56 00:03:11,760 --> 00:03:14,600 Speaker 7: our learning here at Bloomberg News that regional allies are 57 00:03:14,720 --> 00:03:19,560 Speaker 7: urging the Trump administration privately to pursue a route of diplomacy. Now, 58 00:03:19,560 --> 00:03:22,200 Speaker 7: President Trump himself did say in an interview over the 59 00:03:22,200 --> 00:03:25,040 Speaker 7: weekend he could be open to potential negotiations with the 60 00:03:25,080 --> 00:03:28,680 Speaker 7: transitory government that is currently in place in Iran. The 61 00:03:29,000 --> 00:03:32,120 Speaker 7: reports that Iran had reached out to the US four 62 00:03:32,200 --> 00:03:35,920 Speaker 7: talks was battened down by the country's security chief overnight 63 00:03:36,000 --> 00:03:38,280 Speaker 7: President Trump has also, of course, as we've been covering, 64 00:03:38,800 --> 00:03:42,920 Speaker 7: urged the Iranian people to take over their government. But Kaylee, 65 00:03:42,920 --> 00:03:45,720 Speaker 7: it's really interesting because just within the last hour we 66 00:03:45,760 --> 00:03:49,520 Speaker 7: got this report from the AFP saying that a drone 67 00:03:49,600 --> 00:03:52,440 Speaker 7: hit a fuel take terminal in Abu Dhabi. Of course, 68 00:03:52,640 --> 00:03:55,280 Speaker 7: two of those top regional allies, according to our reporting, 69 00:03:55,320 --> 00:03:57,520 Speaker 7: that are urging the Trump administration to find an off 70 00:03:57,600 --> 00:04:00,600 Speaker 7: ramp are the UAE and Qatar. As we saw Qatar 71 00:04:00,640 --> 00:04:03,160 Speaker 7: also take off line a top l G export facility 72 00:04:03,240 --> 00:04:06,480 Speaker 7: earlier after being hit in an Iranian drone strike. 73 00:04:08,160 --> 00:04:11,640 Speaker 2: Yeah, any further damage to energy infrastructure in the Gulf 74 00:04:11,760 --> 00:04:13,680 Speaker 2: is going to be something of that the oil market 75 00:04:13,920 --> 00:04:16,480 Speaker 2: and markets more widely, very closely watched, Tyler. To your 76 00:04:16,480 --> 00:04:19,400 Speaker 2: point on what we heard publicly from the Defense Secretary 77 00:04:19,400 --> 00:04:21,560 Speaker 2: Pete Hegseth in the chair of the Joint Chiefs of 78 00:04:21,560 --> 00:04:24,440 Speaker 2: Staff General Kine earlier today, I would imagine that there 79 00:04:24,480 --> 00:04:26,599 Speaker 2: will be more detail than what was given this morning, 80 00:04:26,680 --> 00:04:30,600 Speaker 2: given when they join others in the administration and briefing 81 00:04:31,000 --> 00:04:33,279 Speaker 2: lawmakers on Capitol Hill in the coming days. 82 00:04:33,960 --> 00:04:35,880 Speaker 7: Right, And this is something that we were closely watching 83 00:04:35,920 --> 00:04:39,880 Speaker 7: as lawmakers demand more information from the Trump administration. As 84 00:04:39,880 --> 00:04:42,599 Speaker 7: you well know, we're tracking likely warpower votes later this 85 00:04:42,680 --> 00:04:45,560 Speaker 7: week that are considered to be more symbolic in nature 86 00:04:45,600 --> 00:04:48,600 Speaker 7: than actually changing the scope or the scale of the 87 00:04:48,640 --> 00:04:51,359 Speaker 7: Trump administration's plans when it comes to Iran, and that 88 00:04:51,480 --> 00:04:55,200 Speaker 7: is because Congressional lawmakers are demanding more information now. It 89 00:04:55,240 --> 00:04:58,000 Speaker 7: is our understanding that Secretary Rubio will be on Capitol 90 00:04:58,040 --> 00:05:00,919 Speaker 7: Hill later today and briefing this so called Gang of 91 00:05:00,960 --> 00:05:04,000 Speaker 7: eight lawmakers. We also have reporting that those members on 92 00:05:04,160 --> 00:05:07,839 Speaker 7: key committees, including Intelligence, Foreign Affairs, and Armed Services will 93 00:05:07,880 --> 00:05:10,640 Speaker 7: be given their separate briefings as well. It is something 94 00:05:10,640 --> 00:05:14,560 Speaker 7: to track very closely here, Keiley, as legality questions come up, 95 00:05:14,600 --> 00:05:16,520 Speaker 7: and we're hearing from both sides of the aisle that 96 00:05:16,560 --> 00:05:19,960 Speaker 7: they do want more information pertaining to what the Trump 97 00:05:20,000 --> 00:05:24,120 Speaker 7: administration says could be a military operation that extends in 98 00:05:24,160 --> 00:05:26,520 Speaker 7: some cases to four or five weeks or even further 99 00:05:26,680 --> 00:05:29,040 Speaker 7: than that, until the White House is able to achieve 100 00:05:29,080 --> 00:05:29,880 Speaker 7: its objectives. 101 00:05:31,200 --> 00:05:33,520 Speaker 2: All right, Bloomberg Tyler Kental live at the White House 102 00:05:33,560 --> 00:05:35,560 Speaker 2: for us on Bloomberg TV and Radio. 103 00:05:35,720 --> 00:05:36,920 Speaker 6: Thank you so much. 104 00:05:36,960 --> 00:05:40,480 Speaker 2: And as we consider what this administration, this US military 105 00:05:40,560 --> 00:05:43,479 Speaker 2: is willing to do in order to reach those objectives. 106 00:05:43,520 --> 00:05:46,240 Speaker 2: Noteworthy that earlier today, in that Pentagon press briefing that 107 00:05:46,600 --> 00:05:50,080 Speaker 2: Tyler was alluding to, when asked directly about the prospect 108 00:05:50,120 --> 00:05:53,000 Speaker 2: of putting boots on the ground, this was the response 109 00:05:53,160 --> 00:05:54,560 Speaker 2: from the Secretary of Defense. 110 00:05:55,240 --> 00:05:57,480 Speaker 8: We're not going to go into the exercise of what 111 00:05:57,520 --> 00:05:59,760 Speaker 8: we will or will not do. I think it's one 112 00:05:59,800 --> 00:06:03,279 Speaker 8: of the fallacies for a long time that this Department, 113 00:06:03,360 --> 00:06:05,640 Speaker 8: or presidents or others should tell the American people and 114 00:06:05,960 --> 00:06:06,960 Speaker 8: our enemies, by the way. 115 00:06:06,800 --> 00:06:09,560 Speaker 9: Here's exactly what we'll do. Here's exactly how. 116 00:06:09,400 --> 00:06:09,920 Speaker 10: Long we'll go. 117 00:06:10,160 --> 00:06:12,960 Speaker 8: Here's exactly how far we'll go. Here's what we're willing 118 00:06:13,000 --> 00:06:16,040 Speaker 8: to do and not do. It's foolishness. And so President 119 00:06:16,080 --> 00:06:18,920 Speaker 8: Trump ensures that our enemies understand, will go as far 120 00:06:18,960 --> 00:06:22,120 Speaker 8: as we need to go to advanced American interest. 121 00:06:22,279 --> 00:06:23,360 Speaker 9: But we're not dumb about it. 122 00:06:23,600 --> 00:06:25,400 Speaker 8: You don't have to roll two hundred thousand people in 123 00:06:25,400 --> 00:06:26,640 Speaker 8: there and stay for twenty years. 124 00:06:29,040 --> 00:06:33,520 Speaker 2: So in summary, Defense Secretary Pete Hegseth is not ruling 125 00:06:33,560 --> 00:06:35,800 Speaker 2: it out. So we want to get more analysis. Now, 126 00:06:35,800 --> 00:06:38,039 Speaker 2: as we turn to Heather Conley, who is joining me 127 00:06:38,040 --> 00:06:40,240 Speaker 2: here in our Washington studio, she is a non resident 128 00:06:40,279 --> 00:06:43,120 Speaker 2: Senior Fellow at the American Enterprise Institute, also former Deputy 129 00:06:43,160 --> 00:06:46,520 Speaker 2: Assistant Secretary of State for the Bureau of European and 130 00:06:46,600 --> 00:06:48,039 Speaker 2: Eurasian Affairs. 131 00:06:48,080 --> 00:06:49,320 Speaker 6: Heather, thank you so much for. 132 00:06:49,320 --> 00:06:53,240 Speaker 2: Joining us in what is such a historic and frankly, 133 00:06:54,640 --> 00:06:58,160 Speaker 2: very dangerous moment one could argue in the Middle East 134 00:06:58,160 --> 00:07:01,760 Speaker 2: when we consider what could be necess in the coming weeks. 135 00:07:02,040 --> 00:07:06,360 Speaker 2: If the US is really intending on achieving this long 136 00:07:06,400 --> 00:07:09,320 Speaker 2: list of goals and taking out so much capability that 137 00:07:09,360 --> 00:07:12,920 Speaker 2: Iran still has, is it going to require more than 138 00:07:13,080 --> 00:07:15,400 Speaker 2: just an aerial form of combat. 139 00:07:15,600 --> 00:07:18,520 Speaker 11: Yeah, it seems to me very clearly that the four 140 00:07:18,520 --> 00:07:21,200 Speaker 11: to five week air campaign is going to do and 141 00:07:21,360 --> 00:07:24,640 Speaker 11: is doing devastating damage to the Iranian regime to their 142 00:07:24,680 --> 00:07:30,960 Speaker 11: missile capability. But transforming a government requires what we saw 143 00:07:31,160 --> 00:07:34,480 Speaker 11: in Iraq and Afghanistan, and that's clearly not what the 144 00:07:34,480 --> 00:07:37,840 Speaker 11: Trump administration is interested in. As many have said, we 145 00:07:38,000 --> 00:07:42,480 Speaker 11: don't have experience with changing regimes from the air. We 146 00:07:42,560 --> 00:07:45,000 Speaker 11: had the experience of Libya where we tried to change 147 00:07:45,000 --> 00:07:47,720 Speaker 11: it from the air and it turned out to be 148 00:07:48,280 --> 00:07:51,480 Speaker 11: quite devastating a fragmentation of the country. 149 00:07:51,600 --> 00:07:54,240 Speaker 9: So I think this is going to be a test. 150 00:07:54,000 --> 00:07:58,559 Speaker 11: Of wills between Iran and the United States how long 151 00:07:58,680 --> 00:08:03,640 Speaker 11: they can absorb the hits, the economic hits, the military hits. 152 00:08:03,840 --> 00:08:06,160 Speaker 11: And now the entire region is swept in this. So 153 00:08:06,240 --> 00:08:09,760 Speaker 11: this is no longer a US Iranian twelve day war 154 00:08:09,800 --> 00:08:12,840 Speaker 11: as we saw last year. This is now a regional 155 00:08:12,880 --> 00:08:16,320 Speaker 11: conflict and it has unintended consequences as we saw today 156 00:08:16,560 --> 00:08:22,400 Speaker 11: with Kuwait responding to a defensive need but shooting down 157 00:08:22,400 --> 00:08:25,200 Speaker 11: three American jets. So that's going to happen more and more, 158 00:08:25,280 --> 00:08:27,840 Speaker 11: unfortunately the longer this operation goes forward. 159 00:08:28,040 --> 00:08:30,400 Speaker 2: Yeah, three f fifteen's loss, though it's worth noting all 160 00:08:30,400 --> 00:08:34,000 Speaker 2: six pilots did safely, thank US eject, though four American 161 00:08:34,640 --> 00:08:37,920 Speaker 2: four lives of service members have been lost to this 162 00:08:38,040 --> 00:08:40,960 Speaker 2: point to what you were just speaking about, though, Heather, 163 00:08:41,080 --> 00:08:43,960 Speaker 2: the idea that you can't achieve regime change, at least 164 00:08:44,000 --> 00:08:46,960 Speaker 2: historically in this way, it's interesting that administration officials aren't 165 00:08:46,960 --> 00:08:49,280 Speaker 2: really using that kind of regime change language and said 166 00:08:49,280 --> 00:08:51,800 Speaker 2: what President Trump at least was describing was we want 167 00:08:51,800 --> 00:08:54,240 Speaker 2: to guarantee that Iran is no longer going to be 168 00:08:54,280 --> 00:08:58,640 Speaker 2: able to fund or direct terrorists outside of its borders. 169 00:08:58,640 --> 00:09:03,880 Speaker 2: Thinking about the proxy network here. Can you guarantee that 170 00:09:03,880 --> 00:09:07,120 Speaker 2: that will not be the case without new leadership, without 171 00:09:07,120 --> 00:09:08,160 Speaker 2: complete regime change. 172 00:09:08,200 --> 00:09:09,600 Speaker 9: You know, it's a great question. 173 00:09:09,640 --> 00:09:12,720 Speaker 11: And what we understand of the Iranian regime for the 174 00:09:12,760 --> 00:09:17,440 Speaker 11: past forty seven years, the nuclear component is essential to 175 00:09:17,559 --> 00:09:18,160 Speaker 11: that regime. 176 00:09:18,360 --> 00:09:19,920 Speaker 9: So in some ways we're saying the same thing. 177 00:09:20,960 --> 00:09:25,240 Speaker 11: Without an Iran having a nuclear capability, this regime cannot survive. 178 00:09:26,360 --> 00:09:29,280 Speaker 11: So I think really what we're saying is total emanation 179 00:09:29,360 --> 00:09:31,720 Speaker 11: of the nuclear element means that this would not be 180 00:09:31,800 --> 00:09:34,600 Speaker 11: the same government in place, So it's the same thing. 181 00:09:34,840 --> 00:09:37,160 Speaker 2: Is it realistic to think that the Iranian people, some 182 00:09:37,280 --> 00:09:40,080 Speaker 2: kind of opposition movement can can rise up to form 183 00:09:40,120 --> 00:09:42,480 Speaker 2: a government because the president is actively calling for that, 184 00:09:42,559 --> 00:09:44,320 Speaker 2: he said in a video statement yesterday. 185 00:09:44,360 --> 00:09:45,280 Speaker 6: Now it's up to you. 186 00:09:46,080 --> 00:09:47,800 Speaker 11: So this is where what we've seen, I mean, the 187 00:09:47,920 --> 00:09:55,040 Speaker 11: horrific attacks in January, this regime will brutally suppress the 188 00:09:55,040 --> 00:09:58,520 Speaker 11: Iranian people. The Iranian people do not have arms themselves 189 00:09:58,920 --> 00:10:03,800 Speaker 11: to fight against this regime. So again, and I appreciate 190 00:10:03,840 --> 00:10:06,840 Speaker 11: that one of the targets is the internal structures of 191 00:10:06,880 --> 00:10:10,400 Speaker 11: the Iranian Revolutionary Guards to try to break some of 192 00:10:10,400 --> 00:10:13,920 Speaker 11: that structure, But at this point, it is unlikely that 193 00:10:13,960 --> 00:10:18,440 Speaker 11: these citizens would be able to overcome the regime unless 194 00:10:18,440 --> 00:10:20,120 Speaker 11: they would lay down their arms, and we have no 195 00:10:20,440 --> 00:10:22,360 Speaker 11: evidence that they are doing that right now. 196 00:10:22,520 --> 00:10:25,080 Speaker 2: So when we consider this wider cast of characters, then 197 00:10:25,080 --> 00:10:26,720 Speaker 2: it was striking to me that in an interview with 198 00:10:26,760 --> 00:10:31,120 Speaker 2: ABC yesterday, President Trump said the US had identified possible 199 00:10:31,120 --> 00:10:34,120 Speaker 2: candidates to take over a ron if the Supreme leader 200 00:10:34,200 --> 00:10:36,320 Speaker 2: was taken out, but he said, quote, the attack was 201 00:10:36,360 --> 00:10:39,600 Speaker 2: so successful it knocked out most of the candidates. It's 202 00:10:39,640 --> 00:10:42,240 Speaker 2: not going to be anybody we were thinking, because they 203 00:10:42,240 --> 00:10:45,680 Speaker 2: are all dead. Second or third place is dead. 204 00:10:46,280 --> 00:10:49,000 Speaker 11: What does that say to you, Heather, So Yes, I 205 00:10:49,000 --> 00:10:53,000 Speaker 11: mean it was a devastating decapitation of the first few hours. 206 00:10:53,000 --> 00:10:54,080 Speaker 6: Regime miscalculated. 207 00:10:54,320 --> 00:10:58,199 Speaker 11: Well, look, the Iranians have an interim council, Supreme Council 208 00:10:58,280 --> 00:11:02,240 Speaker 11: right now, and in fact, the head of their National 209 00:11:02,360 --> 00:11:07,120 Speaker 11: Security Council, Larjani, is really calling the shots right now. 210 00:11:07,160 --> 00:11:10,760 Speaker 11: So yes, there is disorganization, and we can see that 211 00:11:10,880 --> 00:11:14,960 Speaker 11: with some of the attacks that aren't clearly coordinated. But 212 00:11:15,040 --> 00:11:18,880 Speaker 11: they still have an interim internal structure and this will 213 00:11:18,920 --> 00:11:22,560 Speaker 11: not be the United States selecting the leader to control 214 00:11:22,600 --> 00:11:26,280 Speaker 11: this as we saw in Venezuela. This would have to 215 00:11:26,320 --> 00:11:29,520 Speaker 11: be a complete collapse of the current regime in my view, 216 00:11:29,840 --> 00:11:34,840 Speaker 11: complete laying down of arms to allow another potential candidate 217 00:11:35,040 --> 00:11:37,480 Speaker 11: outside the country to come in. But again, how can 218 00:11:37,520 --> 00:11:40,160 Speaker 11: you do that without a ground force. Although it's seeing 219 00:11:40,160 --> 00:11:43,600 Speaker 11: the administration was suggesting all options are on the table, 220 00:11:43,720 --> 00:11:46,760 Speaker 11: boots on the ground could be introduced, although I find 221 00:11:46,760 --> 00:11:47,800 Speaker 11: that very unlikely. 222 00:11:48,200 --> 00:11:50,600 Speaker 2: So when we consider whoever's making the decisions right now 223 00:11:50,600 --> 00:11:52,920 Speaker 2: in Iran, let's talk about the decisions they are making. 224 00:11:53,000 --> 00:11:56,520 Speaker 2: The choice to go after other Gulf states that we're 225 00:11:56,559 --> 00:12:01,920 Speaker 2: seeing bombs and sirens over places like dubai An Abu Dhabi, 226 00:12:01,920 --> 00:12:04,600 Speaker 2: that we're talking, as you alluded to you about damage 227 00:12:04,600 --> 00:12:07,800 Speaker 2: that we don't know necessarily according to the AFP, just 228 00:12:07,840 --> 00:12:10,800 Speaker 2: how widespread the damage is to that fuel tank terminal 229 00:12:10,800 --> 00:12:15,319 Speaker 2: in particular, but damage to energy infrastructure. Is Iran essentially 230 00:12:16,000 --> 00:12:18,800 Speaker 2: deciding to and I don't want to use this phrase 231 00:12:18,920 --> 00:12:21,760 Speaker 2: glibly because we are talking about war, but essentially blow 232 00:12:21,800 --> 00:12:22,360 Speaker 2: it all up? 233 00:12:22,760 --> 00:12:24,520 Speaker 11: Yeah, I mean there is some when you have a 234 00:12:24,559 --> 00:12:28,239 Speaker 11: regime that is now this is existential to their survival. 235 00:12:29,160 --> 00:12:32,760 Speaker 11: I believe their calculation is to widen this war, impose 236 00:12:32,880 --> 00:12:36,480 Speaker 11: as many costs on the global economy, therefore the American 237 00:12:36,520 --> 00:12:39,480 Speaker 11: economy as much as possible to try to bring a 238 00:12:39,640 --> 00:12:43,760 Speaker 11: change in the Trump administration's posture as well as Israel. 239 00:12:43,960 --> 00:12:46,080 Speaker 11: So this is where for as long as it takes, 240 00:12:46,120 --> 00:12:48,559 Speaker 11: I just want everyone to hold that thought, because if 241 00:12:48,559 --> 00:12:50,360 Speaker 11: this is going to go on for four to five 242 00:12:50,400 --> 00:12:54,040 Speaker 11: weeks continued operations, that means the Iranians can continue to 243 00:12:54,600 --> 00:12:58,760 Speaker 11: fly drones and missiles and create economic havoc in the 244 00:12:58,800 --> 00:13:03,000 Speaker 11: strait the global economy. This is to widen the conflict, 245 00:13:03,080 --> 00:13:05,920 Speaker 11: make those costs as significant as possible to try to 246 00:13:05,960 --> 00:13:10,280 Speaker 11: bring change. So this has got unintended consequences, a spiraling 247 00:13:10,559 --> 00:13:14,480 Speaker 11: of both the human costs potentially for our US armed forces, 248 00:13:14,679 --> 00:13:18,360 Speaker 11: but also incredibly high global economic costs that I think 249 00:13:18,400 --> 00:13:22,000 Speaker 11: we're not quite calculating in a five to six potentially 250 00:13:22,320 --> 00:13:23,400 Speaker 11: longer conflict. 251 00:13:23,480 --> 00:13:25,800 Speaker 2: So you would see a sustained closure of the straight 252 00:13:25,840 --> 00:13:26,800 Speaker 2: afore moves as likely. 253 00:13:27,480 --> 00:13:32,520 Speaker 11: I would, simply because this is the Iranian advantage to 254 00:13:32,840 --> 00:13:37,040 Speaker 11: impose as much global economic costs as they can, so 255 00:13:37,600 --> 00:13:39,679 Speaker 11: as long as they can. So the question is whether 256 00:13:39,720 --> 00:13:42,440 Speaker 11: Iran can sustain this. Do they have the missile and 257 00:13:42,520 --> 00:13:46,760 Speaker 11: drone production and capabilities to continue to attack across the 258 00:13:46,800 --> 00:13:49,560 Speaker 11: region for the next several weeks, or will the US 259 00:13:49,880 --> 00:13:54,560 Speaker 11: and Israeli campaign be able to stop their ability to 260 00:13:54,600 --> 00:13:56,960 Speaker 11: do that. That's the test that we will see. 261 00:13:57,040 --> 00:13:59,400 Speaker 2: Well, and I'm glad you've said the US and Israeli 262 00:13:59,440 --> 00:14:01,000 Speaker 2: campaign because I don't want to lose sight of the 263 00:14:01,000 --> 00:14:03,320 Speaker 2: fact that this is not the US going it alone. 264 00:14:03,480 --> 00:14:06,240 Speaker 2: Even if President Trump were to want to pursue some 265 00:14:06,400 --> 00:14:09,280 Speaker 2: kind of off ramp or American casualties get to a 266 00:14:09,320 --> 00:14:11,120 Speaker 2: level or gas prices get to a level that he 267 00:14:11,440 --> 00:14:14,200 Speaker 2: no longer is willing to tolerate. Can we necessarily say 268 00:14:14,280 --> 00:14:16,319 Speaker 2: that the same pressures will exist for Israel? 269 00:14:16,679 --> 00:14:20,880 Speaker 11: Right and certainly Israel sees a critical window of opportunity 270 00:14:20,920 --> 00:14:24,960 Speaker 11: here to really accomplish a transformation of the Middle East, 271 00:14:25,000 --> 00:14:28,040 Speaker 11: and I think, look, we cannot say that that won't happen. 272 00:14:28,040 --> 00:14:32,800 Speaker 11: There could be an opportunity for complete transformation here. It's 273 00:14:32,880 --> 00:14:36,400 Speaker 11: difficult to see that pathway forward. I think this would 274 00:14:36,400 --> 00:14:39,000 Speaker 11: be something if the US would stop begin to pull back. 275 00:14:39,040 --> 00:14:40,720 Speaker 9: It would have to be a very. 276 00:14:40,360 --> 00:14:44,680 Speaker 11: Close consultation with Israel, with the Israeli defense forces, as 277 00:14:44,720 --> 00:14:49,480 Speaker 11: there was close coordination as this attack was beginning, so 278 00:14:49,680 --> 00:14:53,120 Speaker 11: it would be something that would be challenging for israel I. 279 00:14:53,120 --> 00:14:57,160 Speaker 11: Think again, they want to seize this incredible moment. But 280 00:14:57,320 --> 00:15:00,920 Speaker 11: we'll see what the political and economic costs for President 281 00:15:00,920 --> 00:15:03,080 Speaker 11: Trump to bear here at home the longer. 282 00:15:02,800 --> 00:15:05,120 Speaker 2: This goes well, and so when we think about that 283 00:15:05,160 --> 00:15:08,040 Speaker 2: political cost in our final moments here heather more. Widely, 284 00:15:08,080 --> 00:15:10,680 Speaker 2: this was a president who said he did not want 285 00:15:10,720 --> 00:15:12,720 Speaker 2: any more wars, that he wanted to be a bringer 286 00:15:12,800 --> 00:15:15,240 Speaker 2: of peace. He campaigned as someone who was going to 287 00:15:15,240 --> 00:15:18,640 Speaker 2: be much more an isolationist than an interventionists. Whether you're 288 00:15:18,680 --> 00:15:21,680 Speaker 2: looking at what's happening with Iran now or Venezuela, or 289 00:15:21,720 --> 00:15:25,400 Speaker 2: potentially what we could see with Cuba for example, are 290 00:15:25,400 --> 00:15:27,840 Speaker 2: we learning that actually this president may be one of 291 00:15:27,840 --> 00:15:29,720 Speaker 2: the most interventionists in modern history. 292 00:15:29,920 --> 00:15:35,200 Speaker 11: He is very interventionalist. I would say he's also an internationalist. Really, 293 00:15:36,120 --> 00:15:39,680 Speaker 11: he seeks the international stage and whether it's negotiating peace 294 00:15:39,760 --> 00:15:44,360 Speaker 11: deals or inflicting military action to try to transform the situation. 295 00:15:44,560 --> 00:15:47,600 Speaker 11: This is perhaps the most international president we have seen. 296 00:15:47,720 --> 00:15:50,320 Speaker 11: But this is a far cry from focusing on the 297 00:15:50,400 --> 00:15:54,520 Speaker 11: domestic agenda. Affordability and cost of living, and those are 298 00:15:54,560 --> 00:15:56,840 Speaker 11: the two forces he is going to have to reconcile 299 00:15:56,960 --> 00:15:58,360 Speaker 11: with in the coming months. 300 00:15:58,280 --> 00:16:00,280 Speaker 2: Well, especially as we get closer to the mid terms 301 00:16:00,320 --> 00:16:03,000 Speaker 2: in November. It's not just about him who cannot run 302 00:16:03,040 --> 00:16:06,200 Speaker 2: for reelection obviously, but the Republican Party more widely. Heather, 303 00:16:06,360 --> 00:16:08,600 Speaker 2: so appreciate you joining us with your inside Heather Conley 304 00:16:08,640 --> 00:16:11,680 Speaker 2: as nonresident Senior Fellow at the American Enterprise Institute, also 305 00:16:11,800 --> 00:16:14,560 Speaker 2: former Deputy Assistant Secretary of State for the Bureau of 306 00:16:14,560 --> 00:16:18,040 Speaker 2: European and Eurasian Affairs, and what Heather was just touching 307 00:16:18,040 --> 00:16:20,720 Speaker 2: on the notion of the political consequences of this conflict, 308 00:16:20,800 --> 00:16:24,240 Speaker 2: how it will play for both Republicans and Democrats, what 309 00:16:24,400 --> 00:16:28,480 Speaker 2: role Congress will play if we are to see further 310 00:16:28,560 --> 00:16:30,880 Speaker 2: operations in the Middle East, when it comes to war powers. 311 00:16:30,880 --> 00:16:32,720 Speaker 2: We'll get into all of that with our political panel 312 00:16:32,720 --> 00:16:33,800 Speaker 2: next on Ballance of Power. 313 00:16:33,840 --> 00:16:36,000 Speaker 12: Stay with us on Balance of Power. We'll have much 314 00:16:36,040 --> 00:16:37,200 Speaker 12: more coming up after this. 315 00:16:41,480 --> 00:16:45,160 Speaker 1: You're listening to the Bloomberg Balance of Power podcast ketchas 316 00:16:45,200 --> 00:16:48,480 Speaker 1: live weekdays at noon and five pm Eastern on Apple 317 00:16:48,560 --> 00:16:51,560 Speaker 1: Cocklay and Android Auto with the Bloomberg Business App. You 318 00:16:51,600 --> 00:16:55,040 Speaker 1: can also listen live on Amazon Alexa from our flagship 319 00:16:55,160 --> 00:16:59,000 Speaker 1: New York station, just say Alexa play Bloomberg eleven. 320 00:16:58,760 --> 00:17:02,440 Speaker 2: Thirty, Welcome back to Balance of Power on Bloomberg TV 321 00:17:02,560 --> 00:17:04,960 Speaker 2: and radio. And of course Washington will get a lot 322 00:17:04,960 --> 00:17:07,840 Speaker 2: busier over the next few days as Congress makes their 323 00:17:07,880 --> 00:17:11,440 Speaker 2: return to town. We are expecting that members of Congress 324 00:17:11,480 --> 00:17:14,320 Speaker 2: will be briefed by senior Administration officials over the coming 325 00:17:14,400 --> 00:17:17,680 Speaker 2: days about the operations ongoing in Iran, which again are 326 00:17:17,680 --> 00:17:19,879 Speaker 2: in their third day, and President Trump suggests that it 327 00:17:19,880 --> 00:17:23,240 Speaker 2: could continue for weeks to come and is not ruling 328 00:17:23,280 --> 00:17:26,240 Speaker 2: out putting boots on the ground. He says, and to 329 00:17:26,280 --> 00:17:28,520 Speaker 2: quote him directly via the New York Post, he has 330 00:17:28,560 --> 00:17:32,520 Speaker 2: no yips about that? But would Congress have yips about that? 331 00:17:32,560 --> 00:17:38,560 Speaker 2: Should Congress play a role constitutionally in declaring formally war here? 332 00:17:38,720 --> 00:17:41,359 Speaker 2: Of course, if you listen to most Democrats, their answer 333 00:17:41,480 --> 00:17:43,600 Speaker 2: would be yes. It certainly was the case when we 334 00:17:43,600 --> 00:17:47,760 Speaker 2: spoke to Democratic Congresswoman Madeleine Dean of Pennsylvania last night. 335 00:17:48,600 --> 00:17:52,520 Speaker 13: Only Congress has the power to declare war again, because 336 00:17:52,560 --> 00:17:55,439 Speaker 13: we are closest to the people, and no power to 337 00:17:55,440 --> 00:17:58,639 Speaker 13: declare war should be in a single hand. Again, what 338 00:17:58,720 --> 00:18:02,840 Speaker 13: I worry about is an escalation of this fighting and 339 00:18:02,920 --> 00:18:07,760 Speaker 13: an incendiary message around the region and to our allies 340 00:18:07,800 --> 00:18:08,640 Speaker 13: and friends. 341 00:18:08,320 --> 00:18:10,960 Speaker 4: In the region, not to mention the economic impact. 342 00:18:11,119 --> 00:18:14,560 Speaker 13: This president was elected to reduce prices for everybody. 343 00:18:14,720 --> 00:18:17,399 Speaker 4: To get things under control, to bring peace. What are 344 00:18:17,440 --> 00:18:18,440 Speaker 4: we watching now? 345 00:18:21,440 --> 00:18:24,520 Speaker 2: And of course, while Democrats are beating the drum toward 346 00:18:24,560 --> 00:18:27,160 Speaker 2: a war powers vote, it's not to say that Republicans, 347 00:18:27,160 --> 00:18:30,960 Speaker 2: at least some of them aren't either. One Republican Congressman 348 00:18:31,000 --> 00:18:34,560 Speaker 2: Tom Massey, who of course often finds themselves at odds 349 00:18:34,600 --> 00:18:37,119 Speaker 2: with the administration, is going to be one of the 350 00:18:37,119 --> 00:18:39,240 Speaker 2: co sponsors of a war powers resolution vote in the 351 00:18:39,320 --> 00:18:41,880 Speaker 2: House this week. But there's another Republican to watch as well, 352 00:18:41,920 --> 00:18:45,919 Speaker 2: Congressman Warren Davidson of Ohio, who posted this on X 353 00:18:46,320 --> 00:18:50,600 Speaker 2: earlier today, quote Congress declares war America is at war. 354 00:18:51,080 --> 00:18:54,600 Speaker 2: Congress did not declare war, he says. This week, we'll 355 00:18:54,640 --> 00:18:57,399 Speaker 2: either see real intel here, a persuasive explanation with a 356 00:18:57,480 --> 00:19:00,879 Speaker 2: defined mission and declare war the rise of mission, or 357 00:19:00,920 --> 00:19:04,760 Speaker 2: Congress must pass this war powers resolution and cease work 358 00:19:05,160 --> 00:19:07,760 Speaker 2: in Iran. For more, we turn now to our political 359 00:19:07,800 --> 00:19:10,840 Speaker 2: panel here on Bloomberg TV and Radio. Bloomberg Politics contributors 360 00:19:10,920 --> 00:19:13,879 Speaker 2: Rick Davis and Jeanie Shanzano are with me. Rick Stonecourt, 361 00:19:13,920 --> 00:19:17,200 Speaker 2: capital partner and Republican strategists Geni or Democratic analyst and 362 00:19:17,200 --> 00:19:22,200 Speaker 2: Democracy visiting fellow at Harvard Kennedy School's Ash Center, Genie. 363 00:19:22,200 --> 00:19:23,920 Speaker 2: When we think about the idea that it does seem 364 00:19:23,960 --> 00:19:26,240 Speaker 2: there are at least some Republicans that are wary of 365 00:19:26,640 --> 00:19:31,000 Speaker 2: this effort going on without congressional approval. Will a war 366 00:19:31,040 --> 00:19:34,919 Speaker 2: Powers resolution be anything more than a signal than symbolic 367 00:19:35,040 --> 00:19:37,040 Speaker 2: because President Trump can just veto it. 368 00:19:38,760 --> 00:19:42,040 Speaker 14: Yeah, Kaylee, I think it will definitely be symbolic. It 369 00:19:42,119 --> 00:19:46,440 Speaker 14: also is political to the extent that it's forcing all 370 00:19:46,520 --> 00:19:49,440 Speaker 14: members to go on the record, and as we all 371 00:19:49,520 --> 00:19:52,159 Speaker 14: live through when that happened with the war in Iraq, 372 00:19:52,280 --> 00:19:56,360 Speaker 14: that can come back to have devastating consequences for political 373 00:19:56,400 --> 00:19:59,040 Speaker 14: futures going forward if people are on the wrong side 374 00:19:59,040 --> 00:20:02,960 Speaker 14: of history. So for those reasons, it's important. But it 375 00:20:03,000 --> 00:20:06,280 Speaker 14: doesn't seem like even if it passed the House and 376 00:20:06,359 --> 00:20:09,800 Speaker 14: Senate that they would be able to break a Senate filibuster. 377 00:20:09,960 --> 00:20:13,200 Speaker 14: So from that extent, it's symbolic, And of course it's 378 00:20:13,200 --> 00:20:17,640 Speaker 14: a one in many reminders as to why elections are 379 00:20:17,720 --> 00:20:21,480 Speaker 14: so important because that's really going to be the opportunity 380 00:20:21,560 --> 00:20:24,960 Speaker 14: for the public, and of course voting begins tomorrow for 381 00:20:25,000 --> 00:20:28,480 Speaker 14: the primaries in Texas and North Carolina to be able 382 00:20:28,520 --> 00:20:32,399 Speaker 14: to voice their view as to how they feel about 383 00:20:32,440 --> 00:20:35,120 Speaker 14: this and so many other things going on in Washington, 384 00:20:35,240 --> 00:20:35,440 Speaker 14: d C. 385 00:20:35,640 --> 00:20:36,800 Speaker 4: Today. 386 00:20:37,760 --> 00:20:39,840 Speaker 2: Well, so Rick Way in here as to whether or 387 00:20:39,880 --> 00:20:43,200 Speaker 2: not congressional authorization should be necessary. 388 00:20:43,240 --> 00:20:46,200 Speaker 6: Are we not at war at present? 389 00:20:48,080 --> 00:20:49,000 Speaker 4: Well, there is. 390 00:20:48,960 --> 00:20:52,480 Speaker 15: Something called the authorization of military force. It was passed 391 00:20:52,560 --> 00:20:55,960 Speaker 15: right after nine to eleven that gives the president of 392 00:20:55,960 --> 00:20:59,080 Speaker 15: the United States the ability to deploy forces in a 393 00:20:59,119 --> 00:21:02,760 Speaker 15: defensive way. This is the rationale I think that the 394 00:21:02,760 --> 00:21:07,200 Speaker 15: Trump administration has chosen to take, saying things like we 395 00:21:07,200 --> 00:21:14,159 Speaker 15: were under an imminent threat that Iran regime poses such so, 396 00:21:15,000 --> 00:21:19,120 Speaker 15: there are legal frameworks that have been used by previous presidents, 397 00:21:19,160 --> 00:21:25,040 Speaker 15: both Republicans and Democrats since nine to eleven to allow 398 00:21:25,119 --> 00:21:29,920 Speaker 15: them to deploy forces in efforts such as this. Look, 399 00:21:29,960 --> 00:21:32,399 Speaker 15: there's no question that there should be a debate in 400 00:21:32,480 --> 00:21:35,840 Speaker 15: Congress around the use of military force in this instance 401 00:21:35,880 --> 00:21:38,280 Speaker 15: and other instances. There was a discussion around the Twelve 402 00:21:38,320 --> 00:21:43,640 Speaker 15: Day War that really didn't ultimately go anywhere, but it's 403 00:21:43,680 --> 00:21:47,680 Speaker 15: a healthy debate to have amongst the public. In Congress's 404 00:21:47,800 --> 00:21:50,680 Speaker 15: role is to do that. Whether or not they could 405 00:21:50,760 --> 00:21:54,199 Speaker 15: sustain a presidential veto on a war powers resolution is 406 00:21:54,240 --> 00:21:59,000 Speaker 15: highly skeptical, but it's worth a discussion. And ultimately, if 407 00:21:59,000 --> 00:22:01,600 Speaker 15: Congress really wants to do something about their war powers, 408 00:22:02,520 --> 00:22:05,520 Speaker 15: they ought to pass a law that takes away the 409 00:22:05,640 --> 00:22:09,000 Speaker 15: ability for a president to use an authorization of military force. 410 00:22:09,560 --> 00:22:11,960 Speaker 15: They put that into effect, they can take it away. 411 00:22:12,080 --> 00:22:14,720 Speaker 15: So there are many things for this Congress and future 412 00:22:14,720 --> 00:22:17,800 Speaker 15: Congresses to consider when they think about the balance of 413 00:22:17,840 --> 00:22:19,840 Speaker 15: power with the military. 414 00:22:21,400 --> 00:22:24,520 Speaker 2: Well, when we think about the composition of future Congress 415 00:22:24,560 --> 00:22:25,320 Speaker 2: is rick that's. 416 00:22:25,200 --> 00:22:27,240 Speaker 6: Going to be decided in November. 417 00:22:27,320 --> 00:22:29,479 Speaker 2: And too Genie's point about even if a war powers 418 00:22:29,520 --> 00:22:33,119 Speaker 2: resolution can't do anything, if the president can veto it, 419 00:22:33,119 --> 00:22:35,080 Speaker 2: it does put members on the record. If you are 420 00:22:35,119 --> 00:22:39,320 Speaker 2: a vulnerable Republican in the swing district knowing that at 421 00:22:39,440 --> 00:22:43,160 Speaker 2: least the Trump economy is not overwhelmingly popular, and looking 422 00:22:43,200 --> 00:22:45,840 Speaker 2: what's happening with oil and by extension, what is likely 423 00:22:45,880 --> 00:22:48,320 Speaker 2: to happen with gas prices, what kind of position does 424 00:22:48,320 --> 00:22:49,040 Speaker 2: that put you in? 425 00:22:50,600 --> 00:22:53,240 Speaker 15: Yeah, I mean, when you changed from a discussion about 426 00:22:53,560 --> 00:22:56,320 Speaker 15: the proper role of Congress in the Constitution, and you 427 00:22:56,359 --> 00:22:58,720 Speaker 15: want to talk about politics, that's a totally different kettle 428 00:22:58,720 --> 00:23:01,560 Speaker 15: of fish. And in this case, nobody wants to be 429 00:23:01,600 --> 00:23:04,160 Speaker 15: the party in power going into a midterm elections talking 430 00:23:04,160 --> 00:23:06,440 Speaker 15: about a Warren Iran. They want to be talking about 431 00:23:06,440 --> 00:23:09,719 Speaker 15: affordability because that's ultimately what the voters care most about. 432 00:23:10,560 --> 00:23:13,920 Speaker 15: And by and large, voters will give a little leeway 433 00:23:13,960 --> 00:23:17,200 Speaker 15: to the present but probably not their congressman. And so 434 00:23:17,560 --> 00:23:19,199 Speaker 15: it's going to be a tough slog. It was going 435 00:23:19,240 --> 00:23:21,280 Speaker 15: to be a tough slog anyway for Republicans in this 436 00:23:21,400 --> 00:23:24,879 Speaker 15: midterm because of the situation that the public feels like 437 00:23:25,040 --> 00:23:28,960 Speaker 15: they're in economically. But this is kind of piling on 438 00:23:29,080 --> 00:23:34,600 Speaker 15: at this stage, use of resources, you know, putting our 439 00:23:34,760 --> 00:23:38,360 Speaker 15: bravest men and women at risk. You know, these are 440 00:23:38,400 --> 00:23:41,760 Speaker 15: all things that weigh heavily on voters, and I suspect 441 00:23:42,520 --> 00:23:45,560 Speaker 15: this will be resolved before the midterms. But the question 442 00:23:45,720 --> 00:23:50,520 Speaker 15: is how much before the midterms can Republicans potentially get 443 00:23:50,560 --> 00:23:54,240 Speaker 15: past this in order to really address the issues that 444 00:23:54,359 --> 00:23:58,919 Speaker 15: are the burning kitchen table, issues like inflation and affordability 445 00:23:59,000 --> 00:24:01,040 Speaker 15: and cost of goods. 446 00:24:02,280 --> 00:24:05,840 Speaker 2: Well and so on that affordability question, Genie, as we 447 00:24:05,920 --> 00:24:08,679 Speaker 2: consider gas prices, but also what this could do simply 448 00:24:08,720 --> 00:24:12,720 Speaker 2: to consumer confidence if gas prices are indeed higher, if 449 00:24:12,760 --> 00:24:16,080 Speaker 2: there is concern about how this conflict could spread elsewhere, 450 00:24:16,080 --> 00:24:18,480 Speaker 2: maybe even in the homeland. If we consider the threat 451 00:24:18,960 --> 00:24:23,119 Speaker 2: of potential terrorism here at home, which is always a 452 00:24:23,119 --> 00:24:27,240 Speaker 2: concern when it comes to Ron, how would you how 453 00:24:27,320 --> 00:24:29,840 Speaker 2: quickly would you expect that materialize, and how lasting? 454 00:24:29,880 --> 00:24:31,280 Speaker 6: To Rick's point, will that be? 455 00:24:31,440 --> 00:24:35,120 Speaker 2: Is that necessarily something that will be sustained through November? 456 00:24:37,000 --> 00:24:41,280 Speaker 14: It absolutely on the issue of affordability, inflation, cost of living, oil, 457 00:24:41,440 --> 00:24:45,080 Speaker 14: all those things you mentioned and more, Kaylee, those will sustain. 458 00:24:45,560 --> 00:24:47,840 Speaker 14: And I think it is the height of a profound 459 00:24:48,040 --> 00:24:51,840 Speaker 14: misunderstanding of what has happened and the extent of it 460 00:24:51,960 --> 00:24:56,080 Speaker 14: this weekend to suggest this is going to be like Venezuela, 461 00:24:56,119 --> 00:24:58,000 Speaker 14: a one and done. We're going to get in and out. 462 00:24:58,080 --> 00:25:01,360 Speaker 14: You know, the president is talking about wheat That really 463 00:25:01,520 --> 00:25:04,640 Speaker 14: depends on what his objective is, which, by the way, 464 00:25:04,680 --> 00:25:08,119 Speaker 14: he has not been clear about at all. And anybody 465 00:25:08,160 --> 00:25:12,000 Speaker 14: who knows Iran knows that this is not going to 466 00:25:12,040 --> 00:25:15,320 Speaker 14: be resolved. We are not talking about Venezuela. We are 467 00:25:15,320 --> 00:25:18,879 Speaker 14: talking about a theocracy with a deep state, with ninety 468 00:25:18,920 --> 00:25:23,200 Speaker 14: three million people, a long history, and so these kinds 469 00:25:23,240 --> 00:25:26,800 Speaker 14: of things are not resolved easily or quickly. And even 470 00:25:26,840 --> 00:25:30,479 Speaker 14: if you suggest that the president has these subjectives of 471 00:25:30,600 --> 00:25:34,720 Speaker 14: regime change, well, let's just stop and think about that. 472 00:25:35,200 --> 00:25:37,040 Speaker 6: We are in a war of choice. 473 00:25:37,080 --> 00:25:40,639 Speaker 14: We have taken preemptive action to kill a leader of 474 00:25:40,680 --> 00:25:45,199 Speaker 14: another country, and we are talking about regime change in 475 00:25:45,240 --> 00:25:48,880 Speaker 14: a regime like Iran that is going to take months 476 00:25:49,000 --> 00:25:53,840 Speaker 14: and resources, all of that impacting what happens here domestically. 477 00:25:53,880 --> 00:25:57,440 Speaker 14: And I think this is really really must be very 478 00:25:57,440 --> 00:26:00,760 Speaker 14: frustrating for Republicans in Congress going to go on the 479 00:26:00,800 --> 00:26:03,720 Speaker 14: record and be forced, to Rick's point, to defend this 480 00:26:04,320 --> 00:26:08,000 Speaker 14: when they themselves followed this president down this garden path 481 00:26:08,040 --> 00:26:12,120 Speaker 14: of repeatedly saying we are not going to get entangled 482 00:26:12,119 --> 00:26:16,000 Speaker 14: in foreign wars, of saying about Kamala Harris, she was 483 00:26:16,040 --> 00:26:18,800 Speaker 14: going to get us involved in this endless war in Iran, 484 00:26:18,880 --> 00:26:21,080 Speaker 14: and we would never do such a thing. And yet 485 00:26:21,119 --> 00:26:24,520 Speaker 14: here they find themselves, and stunning enough, we've only had 486 00:26:24,560 --> 00:26:27,840 Speaker 14: a few drop offs like Massey and others so far, 487 00:26:28,280 --> 00:26:31,080 Speaker 14: and they will pay the price of that electorally so 488 00:26:31,240 --> 00:26:36,080 Speaker 14: this thing has legs, and the President seemingly just doesn't care. 489 00:26:36,400 --> 00:26:39,520 Speaker 14: He wants to make his name historically, and the impact 490 00:26:39,600 --> 00:26:42,240 Speaker 14: on all the other Republicans seems to be. 491 00:26:42,520 --> 00:26:46,320 Speaker 9: His view is, let it be damned well. 492 00:26:46,320 --> 00:26:49,040 Speaker 2: And while all of this is going on, it's happening 493 00:26:49,080 --> 00:26:52,440 Speaker 2: as the Department of Homeland Security is currently shut down, 494 00:26:52,640 --> 00:26:55,200 Speaker 2: it is not funded. Genie, does this actually put more 495 00:26:55,200 --> 00:26:58,439 Speaker 2: pressure on the Democrats to go ahead and break the 496 00:26:58,480 --> 00:27:01,320 Speaker 2: stalemate and to fund it, to guarantee the safety of 497 00:27:01,359 --> 00:27:04,400 Speaker 2: the homeland or to do I think that they can. 498 00:27:05,600 --> 00:27:07,080 Speaker 4: Yeah, I think there's going to be pressure. 499 00:27:07,119 --> 00:27:10,280 Speaker 14: And to your point, earlier we heard that that horrible 500 00:27:10,440 --> 00:27:14,040 Speaker 14: shooting in Austin. People were speculating in the security arena, 501 00:27:14,359 --> 00:27:16,560 Speaker 14: there may be ties to what's going on in Iran. 502 00:27:16,880 --> 00:27:19,800 Speaker 14: We are vulnerable, they are vulnerable in Europe. For certain, 503 00:27:20,240 --> 00:27:22,800 Speaker 14: there will be pressure, but at this point I don't 504 00:27:22,840 --> 00:27:26,720 Speaker 14: see Democrats buckling on their very common sense requests to 505 00:27:26,800 --> 00:27:31,000 Speaker 14: the administration and to the Republicans in Congress, the d masking, 506 00:27:31,119 --> 00:27:33,880 Speaker 14: the better training and all of those things. So there 507 00:27:33,920 --> 00:27:36,280 Speaker 14: will be pressure, but I don't think it's enough yet 508 00:27:36,600 --> 00:27:38,760 Speaker 14: that they are going to sort of pull back on 509 00:27:38,880 --> 00:27:40,920 Speaker 14: any of those demands of ice agents. 510 00:27:42,119 --> 00:27:44,119 Speaker 6: Rick, we just have a minute left, But same question 511 00:27:44,240 --> 00:27:45,639 Speaker 6: to you. Does this unlock something? 512 00:27:47,080 --> 00:27:49,080 Speaker 4: Yeah, I think it could certainly. 513 00:27:49,720 --> 00:27:49,879 Speaker 13: You know. 514 00:27:49,920 --> 00:27:52,919 Speaker 15: The Republican pushback now is that we're going to have 515 00:27:52,960 --> 00:27:56,000 Speaker 15: a lot more risk in the homeland and need to 516 00:27:56,000 --> 00:28:00,840 Speaker 15: be ready for business. And really it's not something I 517 00:28:00,880 --> 00:28:02,639 Speaker 15: would think the Democrats want to spend a lot of 518 00:28:02,640 --> 00:28:04,439 Speaker 15: time on. I mean, they have the advantage of the 519 00:28:04,480 --> 00:28:07,639 Speaker 15: economic argument. They want to talk about that homeland security 520 00:28:07,680 --> 00:28:09,960 Speaker 15: is getting in the way of a broader, you know, 521 00:28:10,119 --> 00:28:13,399 Speaker 15: much more politically salient conversation. They got to open up 522 00:28:13,440 --> 00:28:14,880 Speaker 15: that agency as soon as they can. 523 00:28:16,840 --> 00:28:20,280 Speaker 2: All right, Rick Davis and Jeanie Shanzano, Bloomberg Politics contributors 524 00:28:20,280 --> 00:28:21,800 Speaker 2: that both of them, thank you so much. 525 00:28:21,920 --> 00:28:24,080 Speaker 12: Stay with us on Balance of Power. We'll have much 526 00:28:24,119 --> 00:28:25,280 Speaker 12: more coming up after this. 527 00:28:30,720 --> 00:28:34,200 Speaker 1: You're listening to the Bloomberg Balance of Power podcast. Catch 528 00:28:34,280 --> 00:28:37,280 Speaker 1: us live weekdays at noon and five pm Eastern on 529 00:28:37,440 --> 00:28:40,680 Speaker 1: Apple Coarcklay, and Android Auto with the Bloomberg Business app. 530 00:28:40,840 --> 00:28:44,120 Speaker 1: Listen on demand wherever you get your podcasts, or watch 531 00:28:44,160 --> 00:28:46,960 Speaker 1: us live on YouTube. 532 00:28:47,000 --> 00:28:49,640 Speaker 2: More analysis on what's happening with oil and the energy 533 00:28:49,640 --> 00:28:53,640 Speaker 2: sector amid this conflict between the US, Israel, and Iran, 534 00:28:53,680 --> 00:28:56,400 Speaker 2: that of course is also engulfed other Golf states as well. 535 00:28:56,400 --> 00:28:58,880 Speaker 2: When we think about Iran's retaliation and just how far 536 00:28:59,000 --> 00:29:01,720 Speaker 2: it could go, whether this will ultimately result in a 537 00:29:01,760 --> 00:29:04,040 Speaker 2: full closure of the Straight Offour Mews, of course, a 538 00:29:04,080 --> 00:29:07,240 Speaker 2: waterway in which about a fifth of the world's oil 539 00:29:07,280 --> 00:29:10,520 Speaker 2: and natural gas flows through, and of course there's energy 540 00:29:10,560 --> 00:29:13,520 Speaker 2: infrastructure in the region in question as well, whether or 541 00:29:13,560 --> 00:29:15,400 Speaker 2: not that could be targeted. All of that is what 542 00:29:15,480 --> 00:29:17,320 Speaker 2: is contributing to the gains we are seeing in oil 543 00:29:17,360 --> 00:29:20,120 Speaker 2: prices today, though a Charlie noted, we are well off 544 00:29:20,120 --> 00:29:22,240 Speaker 2: the highs of the session. We had a taste of 545 00:29:22,280 --> 00:29:25,239 Speaker 2: what Brent above eighty dollars a barrel would be like 546 00:29:25,240 --> 00:29:27,880 Speaker 2: once again, but right now we're back down at seventy six. 547 00:29:27,920 --> 00:29:29,880 Speaker 2: But as far as where as prices go next, this 548 00:29:30,000 --> 00:29:32,240 Speaker 2: is something that we've been speaking about here at Bloomberg 549 00:29:32,280 --> 00:29:34,600 Speaker 2: with experts all across the board, including Jeff Curry, the 550 00:29:34,680 --> 00:29:38,200 Speaker 2: chief Strategy Officer of Energy Pathways at Carlisle, who had 551 00:29:38,240 --> 00:29:39,720 Speaker 2: this to say earlier today. 552 00:29:40,480 --> 00:29:43,640 Speaker 16: This market going into this was priced for a glut 553 00:29:43,680 --> 00:29:46,200 Speaker 16: a high level of complacency. We've been talking about a 554 00:29:46,280 --> 00:29:49,240 Speaker 16: security premium in energy prices. Now for over a year. 555 00:29:49,920 --> 00:29:51,560 Speaker 16: I think this is it. This is going to be 556 00:29:51,640 --> 00:29:55,320 Speaker 16: a structural repricing. Then I would not fade this current spike. 557 00:29:55,440 --> 00:29:58,800 Speaker 16: The probability that this thing gets protracted in other regions 558 00:29:58,800 --> 00:30:00,800 Speaker 16: I think is quite high. If all of it is 559 00:30:00,840 --> 00:30:04,360 Speaker 16: going to be be high, the situation's fluid, I wouldn't 560 00:30:04,360 --> 00:30:04,760 Speaker 16: fade it. 561 00:30:07,320 --> 00:30:10,040 Speaker 2: So let's add another voice to this conversation. Bob McNally, 562 00:30:10,040 --> 00:30:12,120 Speaker 2: the founder and president of Rapid End Energy Group, is 563 00:30:12,160 --> 00:30:14,520 Speaker 2: here with us on balance of power. He's former Special 564 00:30:14,520 --> 00:30:17,840 Speaker 2: Assistant and Senior Director for International Energy on the National 565 00:30:17,880 --> 00:30:20,400 Speaker 2: Security Council under President George W. 566 00:30:20,480 --> 00:30:22,200 Speaker 6: Bush. Bob McNally, welcome back. 567 00:30:22,240 --> 00:30:24,760 Speaker 2: We of course spoke to you just last week when 568 00:30:25,240 --> 00:30:28,200 Speaker 2: the strikes against Iran were still just a question of 569 00:30:28,240 --> 00:30:30,000 Speaker 2: whether or not they would happen at all. Now we 570 00:30:30,000 --> 00:30:33,400 Speaker 2: find ourselves in day three of these combat operations. You 571 00:30:33,440 --> 00:30:35,920 Speaker 2: suggested at the time when we spoke last week, that 572 00:30:35,960 --> 00:30:38,560 Speaker 2: we could potentially see oil going up to one hundred 573 00:30:38,600 --> 00:30:41,240 Speaker 2: dollars a barrel depending on how this conflict plays out. 574 00:30:41,280 --> 00:30:46,080 Speaker 17: What is your assessment now, hi, Kaylee. Yes, so we 575 00:30:46,120 --> 00:30:50,840 Speaker 17: did expect the conflict to happen. I'm a little surprised 576 00:30:50,840 --> 00:30:54,440 Speaker 17: at how quickly it has devolved into some of the 577 00:30:54,480 --> 00:30:58,840 Speaker 17: more worst case scenarios, meaning a full on attack. It 578 00:30:58,880 --> 00:31:02,320 Speaker 17: wasn't a selective attack, it wasn't a blockade, so we're 579 00:31:02,320 --> 00:31:07,200 Speaker 17: into the big attack version of this. Of course, we 580 00:31:07,320 --> 00:31:12,000 Speaker 17: saw Ross lafon the world's biggest LNG plant, twenty percent 581 00:31:12,000 --> 00:31:15,920 Speaker 17: of supplies get shut in today and damage done to 582 00:31:16,280 --> 00:31:18,680 Speaker 17: ros Tanura, the Saudi refinery. 583 00:31:18,720 --> 00:31:20,440 Speaker 4: It's also a loading terminal, but it looks like a 584 00:31:20,640 --> 00:31:21,520 Speaker 4: refiner was injured. 585 00:31:21,560 --> 00:31:23,720 Speaker 17: So and as far as we can tell, Horne Mooz 586 00:31:23,840 --> 00:31:28,120 Speaker 17: is pretty much shut and many of the insurance companies 587 00:31:28,160 --> 00:31:33,880 Speaker 17: are just canceling war insurance. So we're into the, if 588 00:31:33,960 --> 00:31:36,880 Speaker 17: not the worst case, one of the more dire cases. 589 00:31:37,320 --> 00:31:38,720 Speaker 4: You know, Kayla, we've talked about it. 590 00:31:39,200 --> 00:31:44,440 Speaker 17: I think there's complacency about how quickly the US military 591 00:31:44,520 --> 00:31:48,680 Speaker 17: will be able to guarantee safe commercial passage of Hormuz. 592 00:31:48,720 --> 00:31:50,600 Speaker 4: I think we talked about that in the past, and 593 00:31:50,640 --> 00:31:51,000 Speaker 4: I think. 594 00:31:50,840 --> 00:31:53,200 Speaker 17: That's one of the reasons we're only up four dollars 595 00:31:53,240 --> 00:31:57,360 Speaker 17: now and not fourteen, for example, And so I think 596 00:31:57,400 --> 00:31:59,640 Speaker 17: there's a real risk and our base case would be 597 00:32:00,240 --> 00:32:04,560 Speaker 17: that this will last more like weeks. We're thinking fifteen 598 00:32:04,680 --> 00:32:07,600 Speaker 17: days as sort of our new base case with more 599 00:32:07,760 --> 00:32:10,640 Speaker 17: or less horror moves pretty much closed. 600 00:32:11,080 --> 00:32:13,840 Speaker 4: And if that turns out to be correct. 601 00:32:13,920 --> 00:32:17,160 Speaker 17: Then we have a lot higher to go in both oil, 602 00:32:17,840 --> 00:32:20,640 Speaker 17: refined product and even natural gas prices. 603 00:32:22,720 --> 00:32:25,440 Speaker 2: Well, so when we can we think about duration here, 604 00:32:25,480 --> 00:32:28,080 Speaker 2: and as you're speaking to the US's capability to ensure 605 00:32:28,120 --> 00:32:30,120 Speaker 2: the safe passage of these vessels that would need to 606 00:32:30,120 --> 00:32:34,360 Speaker 2: be navigating the straight we've kind of seen something at 607 00:32:34,440 --> 00:32:37,040 Speaker 2: least that has parallels to this just in recent years, 608 00:32:37,040 --> 00:32:39,080 Speaker 2: when we think about what the Hoothies were doing in 609 00:32:39,120 --> 00:32:41,560 Speaker 2: the Red Sea, forcing commercial shipping vessels to be going 610 00:32:41,600 --> 00:32:43,920 Speaker 2: around the Horn of Africa because the waterways were not 611 00:32:43,960 --> 00:32:46,280 Speaker 2: safe in the US firepower that was president at that 612 00:32:46,320 --> 00:32:49,720 Speaker 2: time could not guarantee that they would be. Is that 613 00:32:49,840 --> 00:32:52,640 Speaker 2: essentially the parallel we should be drawing here, knowing that 614 00:32:52,680 --> 00:32:55,600 Speaker 2: the Hoothies were just a proxy for Iran, not necessarily 615 00:32:55,640 --> 00:32:58,200 Speaker 2: you know, the state itself, with all of its armaments 616 00:32:58,200 --> 00:32:58,680 Speaker 2: that it has. 617 00:33:00,120 --> 00:33:03,280 Speaker 17: Yes, it's that type of asymmetric conflict that we should 618 00:33:03,280 --> 00:33:06,440 Speaker 17: be thinking about, not the First Gulf War or the 619 00:33:06,480 --> 00:33:09,760 Speaker 17: Second Gulf War, which were resolved in a matter of 620 00:33:09,840 --> 00:33:12,760 Speaker 17: days in terms of the military conflict. But that was 621 00:33:12,880 --> 00:33:16,160 Speaker 17: large formations of US ground troops against enemy formations of 622 00:33:16,240 --> 00:33:16,880 Speaker 17: ground troops. 623 00:33:17,040 --> 00:33:20,000 Speaker 4: That's very different than what we're talking about here. 624 00:33:20,320 --> 00:33:27,200 Speaker 17: Iran has the ability, through its many drones, missiles, small boats, 625 00:33:27,920 --> 00:33:32,560 Speaker 17: mines to again, you don't have to stop every single ship. 626 00:33:32,920 --> 00:33:35,880 Speaker 17: You just have to hit a few and convince the 627 00:33:35,920 --> 00:33:39,440 Speaker 17: rest not to go through and to make Hormuz unsafe. 628 00:33:39,440 --> 00:33:41,760 Speaker 4: And as you noted, the Jutis, who. 629 00:33:41,640 --> 00:33:46,440 Speaker 17: Have much more inferior weaponry and even coastline to operate from, 630 00:33:46,920 --> 00:33:49,680 Speaker 17: held off the US military for fifty two days and 631 00:33:49,720 --> 00:33:52,040 Speaker 17: we lost. We didn't even succeed in opening up the 632 00:33:52,040 --> 00:33:55,040 Speaker 17: Babaman Dab back then, back in April. Now we are 633 00:33:55,120 --> 00:33:58,040 Speaker 17: throwing a lot more at the Iranians than we did 634 00:33:58,080 --> 00:34:01,680 Speaker 17: at the Jutis, to be fair. But still I think 635 00:34:01,920 --> 00:34:07,239 Speaker 17: the likelihood is if Iran chooses to contest Tormouz and 636 00:34:07,440 --> 00:34:10,640 Speaker 17: use its capabilities, this will go on longer than a 637 00:34:10,680 --> 00:34:11,240 Speaker 17: few days. 638 00:34:12,760 --> 00:34:15,080 Speaker 2: Well, so let's talk about the calculations then bob that 639 00:34:15,160 --> 00:34:17,800 Speaker 2: factor into that choice. If you're Iran and you have 640 00:34:17,920 --> 00:34:21,759 Speaker 2: just had most of your leadership decapitated, taken out. It's 641 00:34:21,840 --> 00:34:25,960 Speaker 2: clearly a volatile kind of power vacuum period, and the 642 00:34:26,000 --> 00:34:29,400 Speaker 2: remaining remnants of what was the regime are probably about 643 00:34:29,400 --> 00:34:32,480 Speaker 2: survival here. Right from an economic standpoint, if you are 644 00:34:32,480 --> 00:34:35,279 Speaker 2: trying to ensure the economic survival of Iran, are you 645 00:34:35,400 --> 00:34:38,640 Speaker 2: willing to take these risks with energy knowing you yourself 646 00:34:38,800 --> 00:34:41,960 Speaker 2: want to be able to sell your oil to China? 647 00:34:42,080 --> 00:34:45,080 Speaker 4: Yeah, I think you do because you're desperate. 648 00:34:45,600 --> 00:34:50,239 Speaker 17: And the thing that the Iranian survive successionist governments such 649 00:34:50,280 --> 00:34:54,799 Speaker 17: as it is requires is leverage over Donald Trump. They 650 00:34:54,800 --> 00:34:59,440 Speaker 17: have no leverage since June. Their military capabilities have been degraded. 651 00:35:00,080 --> 00:35:03,800 Speaker 17: Air superiority now we can go anywhere almost at any time. 652 00:35:04,760 --> 00:35:09,040 Speaker 17: Iran needs leverage, and the only leverage it can get 653 00:35:09,080 --> 00:35:11,680 Speaker 17: over President Trump, in my view, is. 654 00:35:11,719 --> 00:35:12,800 Speaker 4: Through the oil price. 655 00:35:13,080 --> 00:35:18,600 Speaker 17: By inflicting a catastrophic oil price on the US, on 656 00:35:18,719 --> 00:35:22,160 Speaker 17: its allies and so forth, along with attacking GCC and 657 00:35:22,200 --> 00:35:22,720 Speaker 17: other countries. 658 00:35:22,760 --> 00:35:24,560 Speaker 4: We're already starting to see them call for an end 659 00:35:24,560 --> 00:35:24,759 Speaker 4: to this. 660 00:35:25,239 --> 00:35:27,480 Speaker 17: You know, Iran has to make the problem bigger, and 661 00:35:27,520 --> 00:35:29,560 Speaker 17: it has to make a problem for Donald Trump, and 662 00:35:29,600 --> 00:35:31,839 Speaker 17: that's through the oil price. And if it can do that, 663 00:35:31,960 --> 00:35:34,480 Speaker 17: I think Iran will bet maybe they can get President 664 00:35:34,520 --> 00:35:35,759 Speaker 17: Trump to back off. 665 00:35:35,800 --> 00:35:37,320 Speaker 4: Other than that, it has to capitulate. 666 00:35:39,120 --> 00:35:41,640 Speaker 2: So if it is really about manipulating the oil price 667 00:35:41,680 --> 00:35:43,480 Speaker 2: for leverage, I know you just suggested that if we 668 00:35:43,520 --> 00:35:45,440 Speaker 2: see the straight of horor moves closed off for more 669 00:35:45,480 --> 00:35:47,839 Speaker 2: than just a period of days, that could do it. 670 00:35:47,880 --> 00:35:50,879 Speaker 2: But for that to be a kind of sustained price move, 671 00:35:50,960 --> 00:35:53,400 Speaker 2: one that will test the willpower of the President to 672 00:35:53,400 --> 00:35:58,040 Speaker 2: withstand it is what it needs to require more robust 673 00:35:58,080 --> 00:36:01,719 Speaker 2: attacks on the infrastructure and the energy production capacity of 674 00:36:01,760 --> 00:36:02,680 Speaker 2: other golf nations. 675 00:36:03,800 --> 00:36:05,799 Speaker 17: Yeah, I don't think so. All they have to do 676 00:36:06,320 --> 00:36:11,520 Speaker 17: is conduct enough attacks on tankers to convince those tanker 677 00:36:11,600 --> 00:36:16,000 Speaker 17: owners and operators and insurance companies to not transit cormus. 678 00:36:16,520 --> 00:36:19,920 Speaker 17: The situation we have today pretty much make it too risky, 679 00:36:20,480 --> 00:36:23,160 Speaker 17: too dangerous. That's all they have to do. They don't 680 00:36:23,160 --> 00:36:26,799 Speaker 17: even have to destroy or hit onshore infrastructure. They just 681 00:36:26,840 --> 00:36:30,480 Speaker 17: have to make hormos unsafe for commercial passage for a 682 00:36:30,520 --> 00:36:34,480 Speaker 17: matter of several weeks. If they can do that, unfortunately, 683 00:36:34,520 --> 00:36:37,600 Speaker 17: I think that will send oil prices much higher, equity 684 00:36:37,640 --> 00:36:41,960 Speaker 17: markets much lower, start to raise concerns about the macro economy. 685 00:36:43,840 --> 00:36:45,000 Speaker 6: All right, Bob, McNally. 686 00:36:45,040 --> 00:36:48,120 Speaker 2: We so appreciate your insight of rapidant energy advisors joining 687 00:36:48,160 --> 00:36:50,640 Speaker 2: us on day three of this war with Iran. 688 00:36:50,760 --> 00:36:51,680 Speaker 6: Thank you so much. 689 00:36:51,680 --> 00:36:53,520 Speaker 2: And as Bob was just speaking to the notion of 690 00:36:54,040 --> 00:36:56,320 Speaker 2: what tanker rates could do, we have seen oil super 691 00:36:56,320 --> 00:37:00,000 Speaker 2: tanker rates today surging to a record on this conflict. 692 00:37:00,000 --> 00:37:01,799 Speaker 2: It's something we will continue to track as we also 693 00:37:01,800 --> 00:37:03,880 Speaker 2: continue to track the headlines that are crossing the Bloomberg 694 00:37:03,960 --> 00:37:07,920 Speaker 2: terminal pertaining to these combat operations. US Central Command now 695 00:37:07,960 --> 00:37:11,480 Speaker 2: saying that last night USB one bombers struck deep inside 696 00:37:11,520 --> 00:37:15,200 Speaker 2: Iran in order to degrade Aroan's ballistic missile capabilities. Again, 697 00:37:15,239 --> 00:37:17,400 Speaker 2: that was one of the objectives that President Trump outlined 698 00:37:17,440 --> 00:37:20,759 Speaker 2: at the White House earlier this hour. So as we 699 00:37:21,560 --> 00:37:24,239 Speaker 2: keep track of the military operations, we also want to 700 00:37:24,239 --> 00:37:27,040 Speaker 2: track the impact it is having on financial markets with 701 00:37:27,080 --> 00:37:30,080 Speaker 2: asset classes across the board. We obviously just focused on commodities, 702 00:37:30,080 --> 00:37:31,919 Speaker 2: on energy and natural gas, but we want to turn 703 00:37:32,560 --> 00:37:34,839 Speaker 2: to the other aspects. As Christina Kino joins us, she's 704 00:37:34,840 --> 00:37:37,040 Speaker 2: managing director or managing editor rather for. 705 00:37:36,960 --> 00:37:38,960 Speaker 6: Bloomberg Markets Live Blog. 706 00:37:39,120 --> 00:37:42,600 Speaker 2: Christine, it's incredible to see, obviously the fluctuations we're getting 707 00:37:42,840 --> 00:37:46,279 Speaker 2: in oil, a big move unyields in the treasury market, 708 00:37:46,280 --> 00:37:48,479 Speaker 2: we're up thirteen basis points on the tenure right now, 709 00:37:48,800 --> 00:37:50,120 Speaker 2: and stocks in the green. 710 00:37:50,960 --> 00:37:52,960 Speaker 6: Where is this risk appetite coming from? 711 00:37:53,480 --> 00:37:57,400 Speaker 10: Yeah, very interesting. Indeed, Kaylee and I would characterize it 712 00:37:57,560 --> 00:38:00,959 Speaker 10: less as a return of risk app tight and more 713 00:38:01,280 --> 00:38:04,600 Speaker 10: kind of a receding of that risk aversion that we 714 00:38:04,680 --> 00:38:08,000 Speaker 10: did see overnight both in the Asia and European sessions 715 00:38:08,120 --> 00:38:11,200 Speaker 10: and indeed earlier at the opening of the US session, 716 00:38:11,320 --> 00:38:14,759 Speaker 10: right And I think it really is just attests to 717 00:38:15,400 --> 00:38:20,279 Speaker 10: markets tendency to kind of sell first and ask questions later. 718 00:38:20,400 --> 00:38:23,560 Speaker 10: This is a phenomenon that we've observed time and time 719 00:38:23,600 --> 00:38:27,520 Speaker 10: again when we did have geopolitical risk breaking out over 720 00:38:27,520 --> 00:38:30,160 Speaker 10: the weekend, and then you know, by the time we 721 00:38:30,239 --> 00:38:33,640 Speaker 10: finished the day in the US session, traders have kind 722 00:38:33,640 --> 00:38:37,440 Speaker 10: of realized, Okay, there's really not enough to sustain the 723 00:38:37,520 --> 00:38:40,520 Speaker 10: selling here until we get more details. And that's exactly 724 00:38:40,600 --> 00:38:43,680 Speaker 10: I think what's happening now that we're hitting that midpoint 725 00:38:43,680 --> 00:38:44,920 Speaker 10: of the US equity session. 726 00:38:46,239 --> 00:38:47,880 Speaker 2: Well, and that's of course, when we're looking at kind 727 00:38:47,880 --> 00:38:50,360 Speaker 2: of the surface level, headline level of the equity market. 728 00:38:50,360 --> 00:38:53,439 Speaker 2: What about beneath it, Christine. Obviously the place we look 729 00:38:53,480 --> 00:38:56,040 Speaker 2: first is energy given the move we're seeing in oil, 730 00:38:56,080 --> 00:38:57,799 Speaker 2: But what other sectors are you keeping an eye on? 731 00:38:58,200 --> 00:39:00,439 Speaker 10: Yeah, I mean when it comes to kind of pass 732 00:39:00,480 --> 00:39:03,799 Speaker 10: through from that oil move. Very interesting. What's happening both 733 00:39:03,840 --> 00:39:06,680 Speaker 10: into bond markets, as you mentioned, yield higher across the curve, 734 00:39:06,880 --> 00:39:11,000 Speaker 10: but also what's happening in the rate markets, especially as 735 00:39:11,000 --> 00:39:14,680 Speaker 10: it pertains to expectations for interest rates, right, I mean, 736 00:39:14,840 --> 00:39:18,279 Speaker 10: that is something of course that drives a large swath of. 737 00:39:18,200 --> 00:39:20,279 Speaker 9: The market what the Federal Reserve is going to do. 738 00:39:20,400 --> 00:39:22,359 Speaker 10: And just before I came over the year, actually I 739 00:39:22,400 --> 00:39:24,640 Speaker 10: was just writing about how markets are not kind of 740 00:39:24,680 --> 00:39:27,120 Speaker 10: towing the line when it comes to expecting two rate 741 00:39:27,160 --> 00:39:30,520 Speaker 10: cuts from the Federal Reserve this year. They've peered that 742 00:39:30,680 --> 00:39:34,520 Speaker 10: back a little bit just before I head it over here, 743 00:39:34,560 --> 00:39:37,320 Speaker 10: and that really speaks to you again, this balance between 744 00:39:38,520 --> 00:39:41,319 Speaker 10: the fact that there has been an expectation for two 745 00:39:41,360 --> 00:39:44,719 Speaker 10: rate cuts up until this point and now higher oil 746 00:39:44,760 --> 00:39:47,600 Speaker 10: prices getting traders to rethink, well, what is that going 747 00:39:47,640 --> 00:39:49,759 Speaker 10: to do with longer term inflation expectations? 748 00:39:51,160 --> 00:39:51,440 Speaker 17: All right? 749 00:39:51,560 --> 00:39:54,759 Speaker 2: Christina Quino of the Market's Live Blog, thank you so much. 750 00:39:54,880 --> 00:39:57,800 Speaker 2: Just type M live m liv go on your terminal 751 00:39:57,840 --> 00:40:00,120 Speaker 2: to get her analysis, along with the analysis of or 752 00:40:00,160 --> 00:40:03,279 Speaker 2: other colleagues, as we continue to work our way through 753 00:40:03,280 --> 00:40:06,360 Speaker 2: the implications of this ongoing conflict in Iran. 754 00:40:09,400 --> 00:40:12,600 Speaker 12: Thanks for listening to the Balance of Power podcast. Make 755 00:40:12,640 --> 00:40:15,600 Speaker 12: sure to subscribe if you haven't already, at Apple, Spotify, 756 00:40:15,680 --> 00:40:18,279 Speaker 12: or wherever you get your podcasts, and you can find 757 00:40:18,320 --> 00:40:21,560 Speaker 12: us live every weekday from Washington, DC at noontime Eastern 758 00:40:21,880 --> 00:40:23,320 Speaker 12: at Bloomberg dot com.