WEBVTT - Global Bonds Surge, Ukraine's Last US Aid Package

0:00:02.600 --> 0:00:03.160
<v Speaker 1>Good morning.

0:00:03.160 --> 0:00:05.920
<v Speaker 2>It's Thursday, the twenty eighth of January in London. This

0:00:06.040 --> 0:00:09.360
<v Speaker 2>is the Bloomberg Daybreak Europe podcast. I'm Stephen Carroll. Coming

0:00:09.440 --> 0:00:12.760
<v Speaker 2>up today. Global debt markets are close to their biggest

0:00:12.840 --> 0:00:16.920
<v Speaker 2>two month gain on record as investors gamble on central

0:00:16.960 --> 0:00:20.800
<v Speaker 2>bank interest rate cuts. The shipping firm Hapac Lloyd says

0:00:20.840 --> 0:00:23.759
<v Speaker 2>the red Sea trade route is still too risky for

0:00:23.880 --> 0:00:27.480
<v Speaker 2>its vessels, and Apple wins a reprieve to sell it

0:00:27.560 --> 0:00:31.120
<v Speaker 2>smartwatches while it fights a patent claim by a medical

0:00:31.160 --> 0:00:34.599
<v Speaker 2>device maker. Let's start with a roundup of our top stories.

0:00:35.520 --> 0:00:38.320
<v Speaker 2>Global bonds are on track to post their biggest two

0:00:38.360 --> 0:00:41.440
<v Speaker 2>month gain on record. The news comes as traders ramp

0:00:41.520 --> 0:00:44.520
<v Speaker 2>up expectations that major central banks will slash interest rates

0:00:44.520 --> 0:00:47.519
<v Speaker 2>next year. James camp, Managing director of fixed income at

0:00:47.560 --> 0:00:51.199
<v Speaker 2>Eagle Asset Management, is watching volatility in the market closely.

0:00:51.400 --> 0:00:56.320
<v Speaker 3>The Move Index the measure of treasury volatility. Unlike the Vicks,

0:00:56.360 --> 0:00:59.400
<v Speaker 3>the measure equity volatility is still extremely elevated. So the

0:00:59.480 --> 0:01:01.760
<v Speaker 3>highway of interest rate outcomes for the ten years still

0:01:01.840 --> 0:01:05.160
<v Speaker 3>very wide. So caution on duration, particularly on the taxable side,

0:01:05.200 --> 0:01:05.640
<v Speaker 3>is warranted.

0:01:05.640 --> 0:01:09.679
<v Speaker 2>Here CAP's comments of Bloomberg come as recession fears for summer,

0:01:09.720 --> 0:01:13.440
<v Speaker 2>strengthening the case to own bonds. The Bloomberg Global Aggregate

0:01:13.480 --> 0:01:17.120
<v Speaker 2>Total Return Index rose nearly ten percent over November and December.

0:01:17.360 --> 0:01:19.959
<v Speaker 2>That's its best run in data, which goes back to

0:01:20.120 --> 0:01:24.119
<v Speaker 2>nineteen ninety. The shipping joint HAPAC Lloyd says it will

0:01:24.160 --> 0:01:26.800
<v Speaker 2>keep its ships away from the Red Sea amid fears

0:01:26.800 --> 0:01:30.520
<v Speaker 2>of further attacks from militants. That's despite decisions by rivals

0:01:30.560 --> 0:01:34.120
<v Speaker 2>MERSK and CMACTM to return to the route after the

0:01:34.200 --> 0:01:36.639
<v Speaker 2>launch of a US led task force to protect ships

0:01:36.680 --> 0:01:39.840
<v Speaker 2>traveling in the area. Spot rates for container shipping have

0:01:39.920 --> 0:01:43.040
<v Speaker 2>jumped by twenty six percent over the past four weeks

0:01:43.240 --> 0:01:47.480
<v Speaker 2>as vessels take longer routes to avoid the Red Sea.

0:01:47.600 --> 0:01:50.760
<v Speaker 2>The United States has announced its final military aid package

0:01:50.760 --> 0:01:53.240
<v Speaker 2>of the year for Ukraine, worth two hundred and fifty

0:01:53.280 --> 0:01:56.880
<v Speaker 2>million dollars. That's his political wranglings held up agreement over

0:01:56.960 --> 0:02:00.160
<v Speaker 2>further support. The US Secretary of State Anthony Blak think

0:02:00.240 --> 0:02:02.960
<v Speaker 2>and called on Congress to act as soon as possible

0:02:03.000 --> 0:02:07.120
<v Speaker 2>to approve more spending. The Biden administration says it's provided

0:02:07.160 --> 0:02:10.280
<v Speaker 2>more than forty four billion dollars in military aid two

0:02:10.440 --> 0:02:14.720
<v Speaker 2>Kiev since Russia's full scale invasion began twenty two months ago.

0:02:15.880 --> 0:02:18.600
<v Speaker 2>A new Bloomberg survey of economists shows they think Britain

0:02:18.639 --> 0:02:21.919
<v Speaker 2>will avoid a recession next year. The aggregate of their

0:02:21.960 --> 0:02:25.120
<v Speaker 2>expectations is for growth of zero point three percent in

0:02:25.200 --> 0:02:28.560
<v Speaker 2>twenty twenty four. Avoiding a recession would be a boost

0:02:28.639 --> 0:02:31.600
<v Speaker 2>for the Chancellor, Jeremy Hunt, who set March the sixth

0:02:31.960 --> 0:02:35.200
<v Speaker 2>as the date of the spring budget, but Labour's Shadow

0:02:35.240 --> 0:02:38.120
<v Speaker 2>Financial Secretary to the Treasury, James Murray, says the government

0:02:38.200 --> 0:02:40.360
<v Speaker 2>is stuck in internal squabbles.

0:02:41.080 --> 0:02:44.320
<v Speaker 4>The briefings around inheritance stacks are a sign of desperation

0:02:44.480 --> 0:02:48.120
<v Speaker 4>from Rushie Sunak because he's desperate to keep his backbenches

0:02:48.360 --> 0:02:52.480
<v Speaker 4>on side. Naturally, its conservative internal politics which is driving

0:02:52.480 --> 0:02:55.280
<v Speaker 4>these briefings rather than any consideration of what's right for

0:02:55.320 --> 0:02:56.360
<v Speaker 4>people across the country.

0:02:56.960 --> 0:02:59.480
<v Speaker 2>Just by the Labor politicians' words, the spring budget will

0:02:59.520 --> 0:03:02.520
<v Speaker 2>likely be the Chancellor's last chance to change tax and

0:03:02.600 --> 0:03:07.799
<v Speaker 2>spending policies before the general election in the UK. Apple

0:03:07.840 --> 0:03:10.239
<v Speaker 2>has won the right to continue selling specific models of

0:03:10.280 --> 0:03:13.320
<v Speaker 2>its smart watches for the time being. The company says

0:03:13.360 --> 0:03:16.480
<v Speaker 2>its Series nine and Ultra two watches are back in

0:03:16.560 --> 0:03:20.600
<v Speaker 2>retail stores and will be available online on Thursday. Bloomberg's

0:03:20.639 --> 0:03:21.600
<v Speaker 2>Charlie Palace has more.

0:03:22.000 --> 0:03:24.960
<v Speaker 1>It comes after a court ruling in a patent fight,

0:03:25.080 --> 0:03:29.519
<v Speaker 1>providing a quick reprieve for its seventeen billion dollar business.

0:03:29.919 --> 0:03:33.480
<v Speaker 1>The US International Trade Commission had beenned the important sale

0:03:33.480 --> 0:03:37.320
<v Speaker 1>of the products at Apple's official channels after it ruled

0:03:37.360 --> 0:03:40.960
<v Speaker 1>in favor of Massimo Corpum medical device maker in a

0:03:41.000 --> 0:03:45.440
<v Speaker 1>patent infringement case. Apple pulled the watches from its website

0:03:45.520 --> 0:03:49.720
<v Speaker 1>on December twenty first and in retail stores on Christmas Eve.

0:03:50.240 --> 0:03:56.960
<v Speaker 1>In New York, Charlie Pellett Bloomberg Radio.

0:03:55.040 --> 0:03:58.320
<v Speaker 2>While turning two News from Here. In Europe, the former

0:03:58.320 --> 0:04:02.520
<v Speaker 2>President of the European Commission, Dolor has died, aged ninety eight.

0:04:02.760 --> 0:04:05.040
<v Speaker 2>He led the EU executive from nineteen eighty five to

0:04:05.120 --> 0:04:08.400
<v Speaker 2>nineteen ninety five, helping to build the single Market, pave

0:04:08.520 --> 0:04:12.280
<v Speaker 2>the way for the Common currency, and oversee the expansion

0:04:12.400 --> 0:04:16.280
<v Speaker 2>of the Union from ten to fifteen countries. Current Commission

0:04:16.279 --> 0:04:19.240
<v Speaker 2>President our Slavander Lyn described him as a visionary who

0:04:19.320 --> 0:04:22.440
<v Speaker 2>made our Europe stronger. Here he is in twenty twelve

0:04:22.600 --> 0:04:25.239
<v Speaker 2>speaking about the need for European cooperation in the face

0:04:25.320 --> 0:04:26.919
<v Speaker 2>of the Euro Area death crisis.

0:04:27.400 --> 0:04:28.120
<v Speaker 5>You will see them.

0:04:28.120 --> 0:04:30.960
<v Speaker 6>Among this, there was also a lack of spirit of cooperation.

0:04:31.600 --> 0:04:34.320
<v Speaker 6>Not all powers are in Brussels. We must remind systems

0:04:34.360 --> 0:04:37.280
<v Speaker 6>of this often because governments easily attack Brussels on this.

0:04:37.800 --> 0:04:40.640
<v Speaker 6>Not all powers in Brussels, they are shared. What we

0:04:40.680 --> 0:04:44.040
<v Speaker 6>need is a spirit of cooperation. This spirit of cooperation

0:04:44.240 --> 0:04:47.120
<v Speaker 6>was absent from the Economic Union and mainly from the

0:04:47.120 --> 0:04:50.040
<v Speaker 6>Council of Finance Ministers in Phenoes.

0:04:50.760 --> 0:04:53.159
<v Speaker 2>Jacques de Laurier there speaking through a translator. Back in

0:04:53.279 --> 0:04:56.960
<v Speaker 2>twenty twelve. The AFP news agency report that he died

0:04:57.000 --> 0:05:00.440
<v Speaker 2>in his sleep at home in Paris on Wednesday. Well,

0:05:00.480 --> 0:05:01.840
<v Speaker 2>in a moment, we'll be getting the latest on the

0:05:01.880 --> 0:05:04.440
<v Speaker 2>continuing disruption to shipping through the Red Sea. But one

0:05:04.480 --> 0:05:07.320
<v Speaker 2>Bloomberg piece that caught my eye this morning a column

0:05:07.320 --> 0:05:10.919
<v Speaker 2>from our Bloomberg opinion writer Lisa Jarvis about the phenomenon

0:05:10.960 --> 0:05:13.360
<v Speaker 2>of dry January. Perhaps but early to be thinking about

0:05:13.360 --> 0:05:14.880
<v Speaker 2>it for some of us, But according to data if

0:05:14.880 --> 0:05:18.880
<v Speaker 2>a Morning consult, fewer Americans gave up drinking alcohol in

0:05:19.000 --> 0:05:22.080
<v Speaker 2>January of this year. Lisa Jarvis suggesting in this piece

0:05:22.080 --> 0:05:25.600
<v Speaker 2>that perhaps instead of giving ourselves a hard and fast rules.

0:05:25.640 --> 0:05:28.640
<v Speaker 2>We should be thinking about a damp January rather than

0:05:28.640 --> 0:05:31.800
<v Speaker 2>a completely dry one. The idea being to focus on

0:05:31.839 --> 0:05:34.159
<v Speaker 2>the most important element, which is thinking about our relationship

0:05:34.600 --> 0:05:37.880
<v Speaker 2>with alcohol after perhaps an indulgent Christmas season for some

0:05:37.960 --> 0:05:40.280
<v Speaker 2>of us. She quotes George Coop, who's director of the

0:05:40.360 --> 0:05:43.719
<v Speaker 2>US National Institute on Alcoholbeast and Alcoholism, as saying, the

0:05:43.800 --> 0:05:47.680
<v Speaker 2>key guidelines are setting standards, sticking to them, and then

0:05:47.720 --> 0:05:50.560
<v Speaker 2>managoring your progress. Perhaps some food for thought as we

0:05:50.600 --> 0:05:53.760
<v Speaker 2>head into the new year from Lisa Jarvis from Bloomberg Opinion.

0:05:53.800 --> 0:05:55.640
<v Speaker 2>You can find that piece on the terminal and of

0:05:55.680 --> 0:05:59.000
<v Speaker 2>course on Bloomberg dot com as well. Let's get back

0:05:59.000 --> 0:06:02.040
<v Speaker 2>to the markets and that global bond rally. One Bloomberg

0:06:02.080 --> 0:06:05.880
<v Speaker 2>index tracking returns showing it's best run on record after

0:06:06.200 --> 0:06:08.800
<v Speaker 2>gains of nearly ten percent over November and December. This

0:06:08.920 --> 0:06:12.320
<v Speaker 2>as traders continue to focus on when central banks will

0:06:12.360 --> 0:06:15.960
<v Speaker 2>cut rates next year. Our currency and rights Stratis Venram

0:06:16.040 --> 0:06:18.160
<v Speaker 2>joins us now for more Van, great to have.

0:06:18.120 --> 0:06:18.600
<v Speaker 7>You with us.

0:06:18.600 --> 0:06:20.920
<v Speaker 2>Can you put the scale of this bond rally in

0:06:21.000 --> 0:06:22.520
<v Speaker 2>contacts for us? How big is it?

0:06:23.800 --> 0:06:26.040
<v Speaker 7>Morning, Stephen? It is pretty big? I mean if you

0:06:26.040 --> 0:06:29.000
<v Speaker 7>look at the global bond market rally, we haven't rallied

0:06:29.000 --> 0:06:31.600
<v Speaker 7>this hard in the past. The rally of the past

0:06:31.640 --> 0:06:34.200
<v Speaker 7>two months is the deepest that we have seen since

0:06:35.080 --> 0:06:39.479
<v Speaker 7>to since nineteen ninety to be precise. So it's a

0:06:39.520 --> 0:06:42.520
<v Speaker 7>big scale of rally that we are talking about. Some

0:06:42.560 --> 0:06:47.720
<v Speaker 7>of the recent enthusiasm towards bonds is imminently understandable considering

0:06:47.720 --> 0:06:50.679
<v Speaker 7>that major central banks except the BOG preparing the markets

0:06:50.680 --> 0:06:53.680
<v Speaker 7>to expect rate cuts in twenty twenty four. I think

0:06:53.760 --> 0:06:56.360
<v Speaker 7>the long bond trade as a sound basis in the US,

0:06:56.400 --> 0:06:59.240
<v Speaker 7>considering that the FED is the most restrictive policy rate

0:06:59.279 --> 0:07:02.760
<v Speaker 7>among the majors central banks. The ECB has less of

0:07:02.760 --> 0:07:05.920
<v Speaker 7>a real policy rate to boast off, while the BUE

0:07:06.080 --> 0:07:09.000
<v Speaker 7>is negative real policy rate if you take into account

0:07:09.040 --> 0:07:12.360
<v Speaker 7>the UK sticky services inflation, which is still holding about

0:07:12.400 --> 0:07:15.880
<v Speaker 7>six percent, So the global bond market rally is kind

0:07:15.880 --> 0:07:18.520
<v Speaker 7>of uneven. Is more sanctified in the US and to

0:07:18.600 --> 0:07:22.360
<v Speaker 7>a lesser degree in the US Eurozone, and is definitely

0:07:22.440 --> 0:07:26.520
<v Speaker 7>questionable to some degree in the UK if you ask me, yeah.

0:07:26.480 --> 0:07:29.600
<v Speaker 2>I'm very interesting. Given the move in the moving yields

0:07:29.680 --> 0:07:35.160
<v Speaker 2>perhaps has been more exaggerated than some places than others.

0:07:35.640 --> 0:07:37.960
<v Speaker 2>I'm interested in the US Treasury auctions in this week

0:07:37.960 --> 0:07:40.080
<v Speaker 2>as well, though the two in the five year auctions

0:07:40.080 --> 0:07:43.680
<v Speaker 2>that took place, both seeing very strong demand. What should

0:07:43.720 --> 0:07:44.600
<v Speaker 2>we be reading into that?

0:07:45.840 --> 0:07:49.000
<v Speaker 7>Absolutely with reads, with rates having reached the peaks for

0:07:49.040 --> 0:07:52.400
<v Speaker 7>the cycle, the hunger for shorter data notes is kind

0:07:52.400 --> 0:07:55.400
<v Speaker 7>of well founded in the US. After all, you're still

0:07:55.440 --> 0:07:58.000
<v Speaker 7>getting a four percent plus rate, which you can't find

0:07:58.040 --> 0:08:01.400
<v Speaker 7>anywhere else in the developed world. And it's not just

0:08:01.440 --> 0:08:04.440
<v Speaker 7>about the yield you get. You're also buying into this

0:08:04.520 --> 0:08:08.720
<v Speaker 7>notion of capital gains. Should the Fed cut traits as

0:08:08.760 --> 0:08:11.520
<v Speaker 7>deeply as the markets expect, which is some one fifty

0:08:11.520 --> 0:08:15.000
<v Speaker 7>basis points by the end of twenty twenty four, So

0:08:15.080 --> 0:08:18.160
<v Speaker 7>you've got a yield to speak of and potential capital gains.

0:08:18.160 --> 0:08:20.720
<v Speaker 7>So that's a combustible combination for the markets.

0:08:22.000 --> 0:08:24.800
<v Speaker 2>What does this mean for central banks?

0:08:24.840 --> 0:08:25.040
<v Speaker 7>Then?

0:08:25.280 --> 0:08:27.840
<v Speaker 2>Are some the markets doing some of their work for

0:08:27.880 --> 0:08:31.520
<v Speaker 2>them essentially by doing the easing and does that mean

0:08:31.520 --> 0:08:33.400
<v Speaker 2>that center banks will be able to keep rights higher

0:08:33.400 --> 0:08:36.200
<v Speaker 2>for longer? Is there sort of a strange cycle going

0:08:36.200 --> 0:08:36.679
<v Speaker 2>on here?

0:08:37.559 --> 0:08:40.000
<v Speaker 7>Yeah, it is kind of bizarre. You know, the rally

0:08:40.000 --> 0:08:42.040
<v Speaker 7>in the bond markets in a sense, makes life more

0:08:42.120 --> 0:08:45.280
<v Speaker 7>difficult for them some central banks because of the loser

0:08:45.360 --> 0:08:48.440
<v Speaker 7>financial conditions that it spawns. It is less of a

0:08:48.520 --> 0:08:51.360
<v Speaker 7>problem for the FED because it can affort some loosening

0:08:51.400 --> 0:08:55.080
<v Speaker 7>of financial conditions, considering that it's real policy rate is

0:08:55.120 --> 0:08:58.280
<v Speaker 7>the most restrictive, so it'll be happy for the markets

0:08:58.280 --> 0:09:01.439
<v Speaker 7>to do some of its work. But that's not the case.

0:09:02.280 --> 0:09:04.640
<v Speaker 7>For instance, if you look at the POE for example,

0:09:05.080 --> 0:09:09.280
<v Speaker 7>this breakneck rally has the potential to keep inflation simmering

0:09:09.280 --> 0:09:12.640
<v Speaker 7>away in the background, frustrating its efforts to get inflation

0:09:12.760 --> 0:09:16.000
<v Speaker 7>back down to two percent. So it's it's an odd

0:09:16.040 --> 0:09:18.280
<v Speaker 7>kettle of fish.

0:09:17.640 --> 0:09:19.800
<v Speaker 2>Yeah, and making it harder for some an instant point

0:09:20.520 --> 0:09:22.839
<v Speaker 2>on that front for the BOE. What does all of

0:09:22.880 --> 0:09:25.439
<v Speaker 2>this mean for other assets? Though you've been writing racing

0:09:25.440 --> 0:09:28.120
<v Speaker 2>by the prospects of the NASDAC in this environment.

0:09:28.840 --> 0:09:31.880
<v Speaker 7>Well, the NASTAC one hundred index is kind of highly

0:09:31.920 --> 0:09:35.959
<v Speaker 7>overvalued at current levels. If you imagine technology stocks as

0:09:36.160 --> 0:09:39.480
<v Speaker 7>very long duration bonds, estimate their cash flows in the future,

0:09:39.520 --> 0:09:42.120
<v Speaker 7>and then bring them back to present value, what you

0:09:42.200 --> 0:09:45.360
<v Speaker 7>find is that the intrinsic value is about twelve eight

0:09:45.440 --> 0:09:50.480
<v Speaker 7>seventy seven, So at current levels. The Nasdaq is overvalued

0:09:50.520 --> 0:09:53.959
<v Speaker 7>by staggering thirty percent, but you know we are in

0:09:54.120 --> 0:09:56.199
<v Speaker 7>so we are in a kind of a bubble territory

0:09:56.280 --> 0:09:58.360
<v Speaker 7>like we were in the Doorden during the days of

0:09:58.360 --> 0:10:01.480
<v Speaker 7>the dot com, except that dot Com is replaced by AI.

0:10:02.080 --> 0:10:05.319
<v Speaker 7>But as he knows, Stephen, the markets can remain irrational

0:10:05.400 --> 0:10:08.840
<v Speaker 7>for longer than one can remain solvent. Even so, it's

0:10:08.880 --> 0:10:11.000
<v Speaker 7>hard to see them, as sec Hunter doing as well

0:10:11.040 --> 0:10:13.920
<v Speaker 7>as in as well next year as it did this year.

0:10:15.080 --> 0:10:17.400
<v Speaker 2>Yeah, very interesting to think about that in that context

0:10:17.400 --> 0:10:18.800
<v Speaker 2>as well, and I do like your comparison to the

0:10:18.840 --> 0:10:22.400
<v Speaker 2>dot com bubble as well. Venram Our Currency Right Strategers,

0:10:22.400 --> 0:10:24.520
<v Speaker 2>thanks so much for joining us with the latest on

0:10:24.600 --> 0:10:27.480
<v Speaker 2>the markets. As we're watching that rally in bonds. Taking

0:10:27.480 --> 0:10:29.559
<v Speaker 2>a bit of a pause on treasuries this morning as

0:10:29.559 --> 0:10:31.760
<v Speaker 2>we look at the ten year yield holding at that

0:10:31.840 --> 0:10:34.440
<v Speaker 2>three point eight percent level, so up a basis point,

0:10:34.679 --> 0:10:37.400
<v Speaker 2>but just pausing it seems as we look at the

0:10:37.480 --> 0:10:42.000
<v Speaker 2>returns tracked by that Bloomberg aggregate index over November and

0:10:42.080 --> 0:10:47.200
<v Speaker 2>December reaching gains of nearly ten percent. Let's turn to

0:10:47.440 --> 0:10:50.280
<v Speaker 2>the Middle East next. The shipping company HAPAG Lloyd says

0:10:50.280 --> 0:10:53.120
<v Speaker 2>it'll keep its vessels away from the Red Sea trade

0:10:53.160 --> 0:10:55.840
<v Speaker 2>route after the recent spate of attacks on ships by

0:10:55.880 --> 0:10:58.720
<v Speaker 2>Huthy militants from Yemen. Are Managing editor for Economic and

0:10:58.720 --> 0:11:00.840
<v Speaker 2>Government News in the Middle East, Silvia Style joins US

0:11:00.840 --> 0:11:03.240
<v Speaker 2>now from more Sylvia. Great to have you with us.

0:11:03.240 --> 0:11:05.720
<v Speaker 2>So shipping companies are divided on whether or not to

0:11:05.880 --> 0:11:08.360
<v Speaker 2>use the Red CEA route. Now, does this mean that

0:11:08.400 --> 0:11:11.400
<v Speaker 2>the US led efforts to protect chips in this area

0:11:11.679 --> 0:11:12.360
<v Speaker 2>aren't working?

0:11:14.240 --> 0:11:17.480
<v Speaker 5>Yes, thank you. Yes, I think there's quite a bit

0:11:17.480 --> 0:11:22.600
<v Speaker 5>of confusion about what this ued US led plan will

0:11:22.600 --> 0:11:27.600
<v Speaker 5>actually do. It's this idea of having a protection for

0:11:27.679 --> 0:11:31.560
<v Speaker 5>shipping in this region. It actually already exists as actually

0:11:31.600 --> 0:11:35.200
<v Speaker 5>already forces based there. So I think some of the

0:11:35.240 --> 0:11:38.079
<v Speaker 5>companies are a bit confused as to what it will

0:11:38.120 --> 0:11:42.800
<v Speaker 5>really entail. And the U s Secretary of Defenses in

0:11:42.840 --> 0:11:45.600
<v Speaker 5>the region and is meant to outline some of those

0:11:45.640 --> 0:11:49.240
<v Speaker 5>plans over the coming days. So I think, you know,

0:11:49.320 --> 0:11:52.960
<v Speaker 5>based on this idea before of having this sort of

0:11:53.280 --> 0:11:55.960
<v Speaker 5>force and what's already there, I think it's more about

0:11:55.960 --> 0:11:59.559
<v Speaker 5>the uncertainty of what it will actually entail and if actually,

0:11:59.679 --> 0:12:03.960
<v Speaker 5>you know, additional ships or additional forces in that area

0:12:04.000 --> 0:12:07.280
<v Speaker 5>will actually in fact cause more risk because in a

0:12:07.360 --> 0:12:10.480
<v Speaker 5>various sort of tightly patched shipping area, the more you

0:12:10.480 --> 0:12:12.600
<v Speaker 5>know military ships that you have there, the easier it

0:12:12.640 --> 0:12:15.920
<v Speaker 5>is for things to kind of slip into something that escalates.

0:12:16.080 --> 0:12:18.720
<v Speaker 5>So I think that's probably where things are now. And

0:12:18.760 --> 0:12:22.880
<v Speaker 5>it's still quite unclear to companies about how this will

0:12:22.920 --> 0:12:25.120
<v Speaker 5>work and if it will work at all. So I

0:12:25.160 --> 0:12:28.920
<v Speaker 5>think that's kind of where we are now, and like

0:12:29.200 --> 0:12:31.880
<v Speaker 5>the companies we're you know, people covering the region are

0:12:31.880 --> 0:12:34.120
<v Speaker 5>still trying to understand what this will actually entail.

0:12:34.520 --> 0:12:37.520
<v Speaker 2>Yes, the situation unclear for shipping companies as well. Though

0:12:37.520 --> 0:12:40.240
<v Speaker 2>if we think about this more broadly, though, is the

0:12:40.280 --> 0:12:43.920
<v Speaker 2>Red Sea the biggest risk for wider escalation of the

0:12:43.960 --> 0:12:46.160
<v Speaker 2>Israel Hamas war something that we've been watching very closely

0:12:46.200 --> 0:12:47.400
<v Speaker 2>since the start of the conflict.

0:12:48.600 --> 0:12:53.560
<v Speaker 5>I think it's the biggest risk for things that wild

0:12:53.559 --> 0:12:57.600
<v Speaker 5>affect global markets, this shipment of goods and oil, for example.

0:12:58.000 --> 0:13:00.280
<v Speaker 5>In terms of where things could escalate on the ground,

0:13:00.720 --> 0:13:04.280
<v Speaker 5>you have Iraq right now, and in Syria where you've

0:13:04.280 --> 0:13:08.640
<v Speaker 5>got you know, in various areas groups and militia and

0:13:08.679 --> 0:13:13.200
<v Speaker 5>fighters backed by Iran, and you know, various sort of

0:13:13.200 --> 0:13:18.080
<v Speaker 5>proxy escalations happening there as well. You've had the US

0:13:18.280 --> 0:13:22.199
<v Speaker 5>strikes on groups in Iraq, which the US has said

0:13:22.520 --> 0:13:27.360
<v Speaker 5>we're targeting US troops. These are Iranian backgroups around denied involvement.

0:13:27.800 --> 0:13:31.280
<v Speaker 5>So I think in terms of actual escalation, the flashpoints

0:13:31.760 --> 0:13:34.679
<v Speaker 5>are on the ground in terms of how things could

0:13:34.720 --> 0:13:37.880
<v Speaker 5>sort of be more explosive, but in terms of how

0:13:38.160 --> 0:13:40.599
<v Speaker 5>things could affect global markets and shipments of goods and

0:13:40.640 --> 0:13:42.720
<v Speaker 5>the things that financial markets look at, it really is

0:13:42.760 --> 0:13:44.920
<v Speaker 5>the Red Sea that's in focus right now.

0:13:45.679 --> 0:13:50.040
<v Speaker 2>Meanwhile, diplomatic efforts to see progress in the Israel Hamas

0:13:50.120 --> 0:13:54.200
<v Speaker 2>war continuing. President Biden speaking to Katari ruler this week.

0:13:54.280 --> 0:13:58.360
<v Speaker 2>Is there any sign of another ceasefire being agreed or

0:13:58.440 --> 0:13:59.360
<v Speaker 2>being negotiated.

0:14:00.480 --> 0:14:04.160
<v Speaker 5>Well, it's very clear that countries that are watching what's

0:14:04.200 --> 0:14:08.679
<v Speaker 5>happening in terms of Israel's invasion of Gaza are putting

0:14:08.720 --> 0:14:14.560
<v Speaker 5>pressure on Israel to agree to another ceasefire, and it's

0:14:14.640 --> 0:14:17.520
<v Speaker 5>clear that there is a real desire and the international

0:14:17.559 --> 0:14:21.000
<v Speaker 5>community for things to de escalate and for that to

0:14:21.000 --> 0:14:23.560
<v Speaker 5>come to an end. Obviously, Israel says it won't end

0:14:23.720 --> 0:14:28.440
<v Speaker 5>its military operations in Gaza until Hamas has been destroyed,

0:14:28.480 --> 0:14:31.480
<v Speaker 5>which is kind of a kind of quite unclear how

0:14:31.520 --> 0:14:34.000
<v Speaker 5>long that will take and what they would consider to

0:14:34.040 --> 0:14:37.040
<v Speaker 5>be a success. So I think for now, at least

0:14:37.040 --> 0:14:39.680
<v Speaker 5>when you look at what Israeli officials are saying in

0:14:39.760 --> 0:14:42.480
<v Speaker 5>local media, there isn't any sign that those efforts are

0:14:42.520 --> 0:14:45.280
<v Speaker 5>moving forward anytime soon for there to be another pause.

0:14:45.960 --> 0:14:47.720
<v Speaker 5>But then, you know, the longer this goes on, you

0:14:47.760 --> 0:14:51.600
<v Speaker 5>know the pressure still will increase more. And it's been

0:14:51.600 --> 0:14:54.160
<v Speaker 5>reported that a US Secretary of State, Anthony Blinkn, is

0:14:54.200 --> 0:14:56.800
<v Speaker 5>on another trip to the region in the next few

0:14:56.880 --> 0:14:58.520
<v Speaker 5>days as well, where this is bound to be a

0:14:58.560 --> 0:14:59.640
<v Speaker 5>topic that comes up again.

0:15:01.600 --> 0:15:04.280
<v Speaker 2>This is Bloomberg Daybreak Europe, your morning brief on the

0:15:04.320 --> 0:15:07.400
<v Speaker 2>stories making news from London to Wall Street and beyond.

0:15:07.480 --> 0:15:10.320
<v Speaker 2>Look for us on your podcast feed every morning, on Apple,

0:15:10.440 --> 0:15:13.240
<v Speaker 2>Spotify and anywhere you get your podcasts. You can also

0:15:13.320 --> 0:15:17.360
<v Speaker 2>listen live each morning on London Dab Radio, Bloomberg Business App,

0:15:17.480 --> 0:15:20.560
<v Speaker 2>and Bloomberg dot Com. Our flagship New York station is

0:15:20.560 --> 0:15:24.240
<v Speaker 2>also available on your Amazon Alexa device. Just say Alexa

0:15:24.400 --> 0:15:28.000
<v Speaker 2>play Bloomberg eleven thirty. I'm Stephen Carroll. Join us again

0:15:28.040 --> 0:15:30.560
<v Speaker 2>tomorrow for all the news you need to start your

0:15:30.640 --> 0:15:39.240
<v Speaker 2>day right here on Bloomberg Daybreak Europe