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

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Speaker 2: This is Bloomberg Dabacurate podcast. Good morning, It's Thursday, the

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Speaker 2: twenty sixth of March. I'm Caroline Hebga in London. Coming

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Speaker 2: up today, Trump insists peace talks with Iran are ongoing

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Speaker 2: as the Islamic Republic rejects outreach by the US. American

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Speaker 2: troop deployments to the Middle East fuel fears of a

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Speaker 2: ground invasion. Plus why Europe's carmaking powerhouse wants to become

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Speaker 2: the region's ammunitions hub. Let's start with a roundup of

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Speaker 2: our top stories. Almost a month into a war that

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Speaker 2: has engulfed the Middle East and brought havoc to global economies,

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Speaker 2: there appears to be no end to the fighting. The

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Speaker 2: US in Iran are also offering increasingly contradictory messages over

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Speaker 2: whether meaningful negotiations to end the conflict are even underway.

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Speaker 2: In an address last night, President Trump said Iran is

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Speaker 2: desperate to come to an agreement to end the hostilities.

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Speaker 3: Nobody's ever seen anything like we're doing in the Middle

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Speaker 3: East with Iran. And they are negotiating, by the way,

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Speaker 3: and they want to make it deal so badly, But

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Speaker 3: They're afraid to say it because.

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Speaker 4: They figure they'll be killed by their own people.

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Speaker 5: They're also afraid they'll be killed by US.

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Speaker 2: President Trump's claim sharply contradicts messaging from Tehran. In an

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Speaker 2: interview on Iranian state TV, foreign Minister Abbas Arakchi said

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Speaker 2: that no cease far talks with the US have taken place.

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Speaker 2: His words are spoken by a translator, hilly and USh.

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Speaker 4: No negotiations have happened until now. I say this with

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Speaker 4: certainty that we have no conversations and negotiations with our

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Speaker 4: American counterparts. But over the past few days, they have

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Speaker 4: begun sending messages through others, other countries that are our friends.

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Speaker 4: If there are messages through others to which we respond

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Speaker 4: with our own position and demands, that is not called conversation,

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Speaker 4: nor negotiation or anything. This is simply sending messages through others.

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Speaker 2: Araichi's comments came as Iran has reportedly outlined his own

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Speaker 2: conditions for an end to the fighting. According to the

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Speaker 2: state owned press TV, the regime is asking for guarantees

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Speaker 2: that the US and Israel will halt future attacks. They

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Speaker 2: want reparations for war damages and recognition of Iran's authority

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Speaker 2: over the Strait of Hormuz. The Pentagon's deployment of thousands

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Speaker 2: of troops to the Middle East is fueling fears of

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Speaker 2: a ground invasion, even as President Trump pushes for an

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Speaker 2: off ramp. Military officials have told Bloomberg that potential US

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Speaker 2: action could look to break Tehran's hold over the Strait

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Speaker 2: of Hormuz. Iran has threatened escalation if the US decides

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Speaker 2: to put boots on the ground. Mona Yakubian is director

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Speaker 2: of the Middle East Program at the Center for Strategic

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Speaker 2: and International Studies.

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Speaker 1: I'm not sure these are the forces that can reopen this.

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Speaker 1: My understanding is these forces may be used to again

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Speaker 1: either attempt to take control of that highly enriched uranium,

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Speaker 1: assuming we know where it is, possibly sees Harg Island,

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Speaker 1: which is of course offshore, or undertake some operations along

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Speaker 1: Iran's coastline.

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Speaker 2: Ukubian added that Iran is deeply distrustful of the troop

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Speaker 2: build up, which includes around five thousand US Marines and

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Speaker 2: a further thousand due to a rive from the US

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Speaker 2: Army's eighty second Airborne Division. Some Republicans have voiced caution

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Speaker 2: about the deployments and have so far declined to call

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Speaker 2: them a prelude to a ground attack. Bloomberg's Strategic Energy

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Speaker 2: Team b NEF says that the price of brain Crew

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Speaker 2: could top one hundred and fifty four dollars a bowel

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Speaker 2: if the Strait of Hormos remains closed until mid June.

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Speaker 2: The analysis comes as sources tell us that American officials

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Speaker 2: are examining what a potential spike in prices as high

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Speaker 2: as two hundred dollars a bow would mean for the economy.

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Speaker 2: Or prices have jumped since the start of the war.

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Speaker 2: Brent crude is up almost forty percent, whilst West Texas

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Speaker 2: Intermediate has risen about thirty percent. David Earnsberger is the

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Speaker 2: president of Global Energy at SMP. He says things could

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Speaker 2: get worse from here.

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Speaker 6: The markets that consume this energy, who depend on the

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Speaker 6: strait to be open, they're only feeling that the late

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Speaker 6: arrivals or the no arrivals of the energy that should

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Speaker 6: be coming their way right about now, and that's going

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Speaker 6: to build up over the next five or ten days.

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Speaker 6: In a sense, the pipeline that's on the water from

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Speaker 6: the Middle East of the world is going to start

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Speaker 6: running empty.

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Speaker 2: Arnsberger's comments. Karmas RAN's parliament is said to be drafting

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Speaker 2: a bill to charge vessels for safe passage through the Strait.

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Speaker 2: According to sources cited by the semi official Fars news agency,

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Speaker 2: the move would formalize a praxis already reported in the

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Speaker 2: shipping industry, with fees of up to two million dollars

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Speaker 2: being sought per vessel. Well now to europe, Alian government

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Speaker 2: is set to cut its economic forecast in a sign

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Speaker 2: of the coming shock from the Iran war. Blueberg has

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Speaker 2: learned that the country's officials are planning to downgrade this

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Speaker 2: year's expected growth from zero point seven percent down to

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Speaker 2: half of one percent next month. It'sly's finance ministry responded

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Speaker 2: to Blueberg's story, saying it is too soon for any forecasts,

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Speaker 2: but the report shows how Europe is bracing for an

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Speaker 2: economic hit. Here is Germany's Defense Minister Boris Pistorius to.

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Speaker 7: Make it crystal clear, this war is a catastrophe for

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Speaker 7: the world's economies. The impact is absolutely evident already now

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Speaker 7: after a little bit more than two weeks. The closure

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Speaker 7: of the homost trade has an impact for all the region.

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Speaker 7: In the Indo Pacific including Australia, but foremost especially for Japan.

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Speaker 7: That was the German Defense Minister. He called on both

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Speaker 7: the United States and Iran to end the war. UK

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Speaker 7: households and businesses are drastically reassessing their plans as they

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Speaker 7: brace for surgeon prices. The British Retail Consortium's index of

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Speaker 7: consumer confidence has fallen into minus fifty three. That's the

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Speaker 7: lowest level recorded under Keir Starmer's labor government. Blimberg's James

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Speaker 7: Walcock has.

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Speaker 8: More consumer confidence has collapsed and manufacturers are looking at

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Speaker 8: the sharpest jump in their input costs since Black Wednesday

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Speaker 8: in nineteen ninety two. Those words from both the British

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Speaker 8: Retail Consortium and SMP Globals pmis the economic alarm bells

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Speaker 8: are echoed by Bank of England rate setter Meghan Green,

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Speaker 8: who is warning the war will have a lasting effect

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Speaker 8: on inflation, even in a best case scenario. Prime Minister

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Speaker 8: Kir Starmer has said the government will set out appropriate

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Speaker 8: support later this year, but his government are conscious of

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Speaker 8: twenty twenty two, when an energy price shock made the

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Speaker 8: Conservatives intensely unpopular and with prelude to a guilt market

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Speaker 8: crisis in London, James Wilcock, Bloomberg.

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Speaker 2: Radio and finally a landmark Verdicts has found Mata and

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Speaker 2: Alphabet's Google liable for harming a user with products designed

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Speaker 2: to be addictive. Six million dollars in damages has been

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Speaker 2: awarded to the twenty year old plaintiff by jury in

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Speaker 2: Los Angeles are ruling that the company is vowed to appeal.

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Speaker 2: Bloomberg's Asia Tech correspondent Annabel Drulers says this decision could

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Speaker 2: have far reaching consequences.

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Speaker 9: So the risk here is that is big tech looking

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Speaker 9: exposed and looking at a wave of different settlement negotiations

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Speaker 9: in a similar way we saw companies in the opioid

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Speaker 9: industry tobacco industry being hit a few decades ago. So

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Speaker 9: legal experts so far say that there are signs that

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Speaker 9: jurors are willing to attach big damage awards if the

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Speaker 9: social media companies are found to be liable of creating

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Speaker 9: platforms in a way that are intentionally designed to addict

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Speaker 9: young users.

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Speaker 2: That was Bloomberg's Annabel Drulers speaking following the news. The

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Speaker 2: trial is the start of a long line of similar

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Speaker 2: lawsuits facing Meta and Google, with thousands of individual users

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Speaker 2: and school districts alleging personal injury. Those are our top

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Speaker 2: stories for you this morning. Thinking about the markets, so

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Speaker 2: still very difficult to trade given the war in Iran,

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Speaker 2: stocks and bonds both edging lower. Masci Asia Pacific Index

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Speaker 2: is down currently one point three percent. European stock futures

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Speaker 2: are in the red, down nine tenths SMB four hundred.

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Speaker 2: Emuni futures also dropping four tenths of one percent. Brend

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Speaker 2: crude climbing this morning two point two percent at one

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Speaker 2: hundred and four dollars above one hundred and four, so

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Speaker 2: rebounding from declines we saw on Wednesday ten year treasury

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Speaker 2: yields rising three basis points to four point three five percent,

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Speaker 2: up some forty basis points since the start of the war.

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Speaker 2: Those are the markets. In a moment, we're going to

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Speaker 2: bring you the latest on the conflict in Iran and

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Speaker 2: the talk about talks, plus also how Slovakia is becoming

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Speaker 2: an ammunition manufacturing hub here in Europe. Now, the United

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Speaker 2: States does continue to affirm that it is in talks

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Speaker 2: with Yvonne, while state media has previously indicated a rejection

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Speaker 2: of the talks. On the Iranian side. Tehran is also

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Speaker 2: seeking its own guarantees. Let's discuss with this with Bloomberg's

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Speaker 2: Israel Bureau chief, Ethan Bronna. The US and Israel of

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Speaker 2: course in this battle together, Ethan, good morning. These messages

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Speaker 2: to me seem like a propaganda war being fought on

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Speaker 2: top of the war itself. And this question about who

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Speaker 2: sets the terms for a peace deal if one can

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Speaker 2: be reached.

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Speaker 3: I think that's absolutely correct. I mean, of course, every

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Speaker 3: war is also a propaganda war, because in every war

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Speaker 3: you have to the enemy has to feel that he

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Speaker 3: can't move on any further, right, And that's the moment

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Speaker 3: each side is trying to persuade the other. That's the

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Speaker 3: situation he is in. And you and I are someone

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Speaker 3: in the darkest what the truth is, and in fact,

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Speaker 3: the participant themselves may be somewhat in the darkest of

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Speaker 3: what the truth is. You were saying just a few

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Speaker 3: minutes ago. It may be that Iran is in a

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Speaker 3: strong enough position that it doesn't have to even.

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Speaker 5: Acknowledge those in negotiations, and it may not be. We

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Speaker 5: don't know.

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Speaker 2: Yeah, So then let's think about control of the Strait

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Speaker 2: of Homers, Iran charging this transit fee, trying to turn

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Speaker 2: it into law. The world is seeing all of these

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Speaker 2: searching fuel and fertilizer costs. What is the thinking about

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Speaker 2: whether markets are underestimating the impact?

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Speaker 3: Yeah, look, that's difficult for me to really answer.

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Speaker 5: I don't I don't feel like there's the truth.

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Speaker 3: Beyond what markets you're looking at right now. In terms

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Speaker 3: of what's happening. I think that if I had to bet,

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Speaker 3: I would say it's going to last several more weeks.

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Speaker 5: But of course there are all these unknowns.

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Speaker 3: What if something suddenly hits a kindergarten and all kinds

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Speaker 3: of people are killed in things spin out of control

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Speaker 3: beyond where they are today, It's very, very hard to know.

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Speaker 3: What's certainly true is that Israel is trying to get

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Speaker 3: as much done from its perspective in military targets there

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Speaker 3: and at Lebanon before the thing is called off. And

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Speaker 3: I don't know what's in President Trump's mind. He both

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Speaker 3: wants to end it because of the market's problem and

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Speaker 3: the legitimate economic and human suffering problems, and he doesn't

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Speaker 3: want to be around to be able to say that

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Speaker 3: it has ended it on its terms in control of

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Speaker 3: the Strait.

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Speaker 2: Yeah, So then how should we assess the risks of

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Speaker 2: escalation now, I mean, of course it's unexpected in war.

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Speaker 2: But Israel, as you say, is continuing to strike Iran.

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Speaker 2: Then there are also the Gulf States, which I think

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Speaker 2: are still considering joining the war.

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Speaker 5: I think that's right.

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Speaker 3: I mean, it's particularly remarkable how the UAE and Saudi

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Speaker 3: Arabia have actually expressed much less impatience with the United

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Speaker 3: States and Israel than you might have expected, and much

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Speaker 3: greater impatience with Iran. There's an op ed today in

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Speaker 3: the Wall Street Journal by the Amarati ambassador to the

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Speaker 3: United States saying, enough, We're fed up with Iran and

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Speaker 3: we're not going to put up with it anymore. And

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Speaker 3: it can't go on the way it's been going on.

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Speaker 3: It can't have the power it has had, its ballistic

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Speaker 3: missile power, it's nuclear power. So these sound like American

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Speaker 3: and Israeli talking points.

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Speaker 5: I think the risk of escalation is genuine.

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Speaker 2: Okay, Ethan, thank you so much for being with us

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Speaker 2: this morning. That is Bloomberg's Israel Buia chief Ethan Bronna,

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Speaker 2: thank you stay with us. More from Bloomberg Daybagube coming

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Speaker 2: up after this. Well, two major wars are fueling European

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Speaker 2: defense spending and rearmament too. It has to be said

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Speaker 2: in Slovakia, which borders Ukraine and the Czech Republic, it

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Speaker 2: means arms manufacturing is now competing with car production as

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Speaker 2: an engine of growth for this Eastern European country that

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Speaker 2: is both a member of the EU and of NATO.

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Speaker 2: Joining me now is Bloomberg reporter Daniel Hornag in the

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Speaker 2: Slowak capital Bratislava. Daniel, thank you for being with us.

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Speaker 2: How has Slovakia, a small country, become a hub for

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Speaker 2: ammunition production.

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Speaker 10: Well, it's important to understand that's case. I'm starting from zero, right.

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Speaker 10: It has a long tradition in arms manufacturing, dating back

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Speaker 10: to when it was part of Eastern Bloc. Of course,

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Speaker 10: during the transformation in nineties, which was very difficult, this

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Speaker 10: industry was decimated. Just the most important facilities factory it's

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Speaker 10: managed to survive. But this bring us to the current situation,

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Speaker 10: because when we are seeing this surge in demand, for example,

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Speaker 10: for artillery ammunition following the Russia's invasion of Ukraine, it

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Speaker 10: just simply made far more economic sense for these companies

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Speaker 10: to scale up existing capacities here than, for example, to

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Speaker 10: build entirely new plans from scratch somewhere else. So this

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Speaker 10: is maybe the primary reason why we witnessed why we

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Speaker 10: saw this really spectacle revival of this industry here in Slovakia.

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Speaker 2: Yeah, indeed, and you've been to some of the towns

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Speaker 2: where this is happening and have got lots of photographs.

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Speaker 2: It's very interesting to see that your reporting has been

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Speaker 2: looking at the Czech arms billionaire mihol Sternad and his

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Speaker 2: s sorry and his CSG conglomerate, which is also a

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Speaker 2: public listed company. What does the company expect in terms

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Speaker 2: of demand and also of expansion.

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Speaker 10: Well, the company expects further expansion and growth. When you

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Speaker 10: look at the European defense industry to demand far far

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Speaker 10: outstrips supply. They produce shells, are more vehicles, other difference

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Speaker 10: technology that is in very high demand currently, so every

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Speaker 10: additional unit of production capacity is valuable. Of course, ESG

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Speaker 10: or the Czechoslova Group is not yet in the same

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Speaker 10: league as Ryn Metal and other European defense gens. But

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Speaker 10: as the company owner mikhasten I told us in interview

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Speaker 10: late last year, he wants to get there. He wants

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Speaker 10: to build this biggest European deference company. When we look

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Speaker 10: at data from the company, it's been one of the

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Speaker 10: fastest growing difference companies in Europe in recent years. So

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Speaker 10: you know they multiply their revenue in recent years and

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Speaker 10: have global ambitions. So I mean the trend is clear from.

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Speaker 2: This, Okay, yeah, so it could become an even bigger name.

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Speaker 2: Very interesting. Look, how does the politics mesh with this?

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Speaker 2: Standard is close to Slovakia's Defense minister, and while Slovakia

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Speaker 2: is an EU member state like Hungary, it's actually pro

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Speaker 2: Russian from your reporting.

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Speaker 10: Yes there is to regarding the deference minister and the

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Speaker 10: CSG owner Michausternerd. They have both very good relationship and

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Speaker 10: their collaboration is Abbot standard, let's say, given the number

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Speaker 10: of joint projects here in Slovakia, maybe so much that

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Speaker 10: they even face some suspicions of conflict, of which they deny.

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Speaker 10: And this might come as a surprise, this boost in

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Speaker 10: arms production here in Slovakia given what the current Prime

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Speaker 10: Minister Robert Fitzo and his government say. You know, they

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Speaker 10: are well known for their refusal of military to Ukraine,

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Speaker 10: a so called propies stands. But the truth is, when

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Speaker 10: it comes to supporting all this different industry domestically locally here,

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Speaker 10: they are trying to make the most of it because

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Speaker 10: they perceive it through you know, the creation of jobs,

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Speaker 10: additional budget revenues, expansion of economy, new investments. So from

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Speaker 10: this perspective, they don't see this contradictory, or at least

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Speaker 10: that's how they are trying to explain it to their voters.

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