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Speaker 1: Good morning. It's Frida ad twelfth of January here in London.

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Speaker 1: This is the Bloomberg Daybreak you at podcast. I'm Caroline

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Speaker 1: Hepkat and.

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Speaker 2: I'm Stephen Carroll. Coming up today, UK fighter jets joined

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Speaker 2: the US and launching air strikes against Hoothy targets in Yemen.

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Speaker 1: Christine Legarde says that history suggests another Trump presidency would

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Speaker 1: be a threat to European interests.

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Speaker 2: Plus, we have a special report on some very large

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Speaker 2: refund requests as private equity bankers demand their money back.

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Speaker 1: Let's start with a roundup of our top stories.

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Speaker 2: The US and UK have launched air strikes on more

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Speaker 2: than sixty houthy rebel targets and Yemen in retaliation for

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Speaker 2: weeks of attacks on commercial shipping in the Red Sea.

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Speaker 2: The Prime Minister is she Soon Act described the move

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Speaker 2: as limited, necessary and proportionate. President Biden left the door

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Speaker 2: open to further action, saying in a statement that the

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Speaker 2: continued attacks in the region would not be tolerated. Defence

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Speaker 2: analyst Simon Diggins, as Western leaders had to act.

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Speaker 3: I think some kind of response was both necessary and justified.

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Speaker 3: What now happens, of course, is the interesting question. How

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Speaker 3: long will this continue for? Will there be a kind

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Speaker 3: of response, Will it be a dining down by the

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Speaker 3: Houthis in terms of their attacks, or will it escalate?

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Speaker 2: Simon Diggins's warning of further escalation comes after the Houthy leader,

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Speaker 2: Abdul Malik al Huthi, used a TV address on Thursday

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Speaker 2: to Warren of a major response to the US and

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Speaker 2: its allies if they proceeded with military action against the group.

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Speaker 2: What's then, Larder.

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Speaker 4: We will not hesitate to do everything we can, and

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Speaker 4: any American aggression will never go unanswered. The response to

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Speaker 4: any American attack will not be at the level of

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Speaker 4: the operation that was recently carried out with twenty four

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Speaker 4: drones and several missiles, but rather much greater.

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Speaker 2: The words of the Houthy leader they are spoken by

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Speaker 2: a translator. Not deterring the Huthies, who are designated by

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Speaker 2: the US and the European Union as a terrorist group,

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Speaker 2: won't be easy. Since making control of them Andy capital

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Speaker 2: Sana in twenty fourteen, They've successfully withstood a Saudi Arabian

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Speaker 2: led military campaign to oust it and remains firmly entrenched.

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Speaker 1: Oil has jumped more than two and a half percent

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Speaker 1: on the newser's spheres of escalation in the Middle East grow.

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Speaker 1: The Huthis had launched their largest assault to date on

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Speaker 1: shipping in the Red Sea earlier this week, despite the

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Speaker 1: presence of a US led naval force. David da Siha,

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Speaker 1: whose CEO of Algebra's Investment, says, for now things are

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Speaker 1: under control.

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Speaker 5: The market fundamentally cares about oil prices and the implication

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Speaker 5: to the roots trade. I would say for the time

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Speaker 5: being this is contained us A visa flares up but

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Speaker 5: not being structural attracts more media attention rather than the

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Speaker 5: facto economic impact.

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Speaker 1: Despite Sarah's view, the news of air strikes also pushed

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Speaker 1: gold and stocks of Asian shipping companies higher.

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Speaker 2: The European Central Bank President Christine Lea goaud Is warning

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Speaker 2: this a look at Donald Trump's first term as US

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Speaker 2: president raises concerns about his potential return to power in

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Speaker 2: twenty twenty five. The policymaker also shed light on when

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Speaker 2: the market can expect monetary policy easing in the Euro Area.

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Speaker 2: Bloomberg's Charlie Palett has the story.

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Speaker 6: Leguard told France to TV that quote, if we should

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Speaker 6: learn lessons from history from the way he led the

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Speaker 6: first four years of his mandate. It is clearly a threat.

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Speaker 6: She said. It's sufficient to look at the trade tariffs,

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Speaker 6: the commitment to NATO, the fight against climate change in

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Speaker 6: just these three areas. In the past, American interests were

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Speaker 6: not aligned with European interests. Leguard also said the European

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Speaker 6: Central Bank will start lowering interest rates once it is

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Speaker 6: convinced that inflation is headed back to its two percent goal.

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Speaker 6: In New York, Charlie Palett Bloomberg Radio.

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Speaker 1: A trading probate probe at Morgan Stanley is expected to

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Speaker 1: be results without criminal charges. The firm could announce a

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Speaker 1: pact with authorities in the coming days. Bloomberg's tiwa Adebayo

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Speaker 1: has the.

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Speaker 7: Story under three hundred million dollars will likely be enough

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Speaker 7: to settle a year's long investigation into employee conduct at

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Speaker 7: the bank. According to people with knowledge of the situation,

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Speaker 7: Morgan Stanley is close to an agreement after Manhattan Federal

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Speaker 7: prosecutors and the Securities and Exchange Commissions scrutinize its employees's

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Speaker 7: handling of market moving stock sales or block trades. The

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Speaker 7: payment would amount to less than investor's worst fears. In

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Speaker 7: a case that has hung over one of the lenders

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Speaker 7: prize units and reverberated across the industry. Representatives for the

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Speaker 7: DOJ SEC and Morgan Stanley declined to comment. In London,

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Speaker 7: tiwa Adebayo Bloomberg Radio.

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Speaker 2: One billion dollar lasses, which accuses HSBC of poaching secrets

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Speaker 2: and employees when it acquired Silicon Valley Bank UK is

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Speaker 2: going ahead. At San Francisco. Judge denied the UK Bank's

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Speaker 2: re quest to dismiss the legal action, which alleges HSBC

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Speaker 2: broke contracts and misappropriated information, but she added Plaint of

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Speaker 2: First Citizens needed to amend its complaint, describing it as confusing.

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Speaker 1: China's exports posted the first full year decline since twenty sixteen,

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Speaker 1: as global demand fultered and prices fell, hurting a major

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Speaker 1: pillar of growth for the world's second biggest economy. The

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Speaker 1: country sold three point three eight trillion dollars worth of

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Speaker 1: goods to the rest of the world last year, a

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Speaker 1: four point six percent drop from the record a year earlier.

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Speaker 1: Shipments had soared during the pandemic as people stepped up

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Speaker 1: purchases as they worked from home, but demand from Europe,

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Speaker 1: the US and elsewhere faded as interest rates rose.

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Speaker 2: Bitcoin's first ever ETF went live with record amounts of

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Speaker 2: money changing hands. The Greyscale Bitcoin Truss saw the largest

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Speaker 2: ever first day turnover for an ETF, with two point

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Speaker 2: three billion dollars exchanging hands. Founder of the crypto money

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Speaker 2: transfer startup Strike, Jack Malers was bullish.

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Speaker 8: I don't own any dollars anymore. I'm sick of them,

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Speaker 8: you know. I think the real risk is owning dollars

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Speaker 8: because all they do is go down. And traditionally the

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Speaker 8: game was, well, shoot, what do I own? The government's

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Speaker 8: going to keep printing currency? There in so much debt.

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Speaker 8: Do I try and own a house? Do I try

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Speaker 8: and own an index of stocks? Do I try and

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Speaker 8: find out what Jeff Bezos is up to now that

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Speaker 8: he's not the CEO of Amazon and bitcoin is the

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Speaker 8: most accessible, most simple, best expression of this problem.

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Speaker 2: Malers called the price of bitcoin hitting between two hundred

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Speaker 2: and fifty thousand dollars to a million in twenty twenty five.

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Speaker 2: Token's currently trading at just over forty six thousand dollars,

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Speaker 2: less than a fifth of his forecast. Now at a moment,

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Speaker 2: we'll talk you through the market reaction to those US

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Speaker 2: and UK strikes in Yemen. But let's first of all

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Speaker 2: get more details on what's actually happened in the past

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Speaker 2: twelve hours. As we have heard news at the US

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Speaker 2: and the UK of launched air strikes on those militant

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Speaker 2: targets and Yemen after the weeks of attacks on red

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Speaker 2: sea shipping by the Iranian backed group are mid least

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Speaker 2: breaking these editdnacrasis with us for more. Good morning to you.

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Speaker 2: What is the size and scope than of this operation?

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Speaker 9: Good morning?

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Speaker 10: The US UK strikes were definitely considerable. The US and

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Speaker 10: allies executed what they said was deliberate strikes on more

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Speaker 10: than sixty targets at sixteen hoothy sites. What they used

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Speaker 10: some one hundred precision guidance musicians of various types were

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Speaker 10: used in the strikes. The targets included command and control centers,

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Speaker 10: munition depots, launching system production facilities and even air defense

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Speaker 10: radar systems. So the attacks were considerable and we heard

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Speaker 10: a lot of Hothy sources saying that there were explosions

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Speaker 10: in Sana and the capital and of course near the

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Speaker 10: Judaeta port.

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Speaker 1: The Huthi leader on Thursday vowing a quite big response

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Speaker 1: if the US and allies took military action. What is

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Speaker 1: their position?

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Speaker 10: We had the first response from the Hothies earlier today,

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Speaker 10: saying that the act was a foolish one from the

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Speaker 10: US and it would be wrong to think that such

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Speaker 10: strikes would deter them. They also said that their aim

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Speaker 10: was and will continue to be preventing Israeli ships or

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Speaker 10: ships heading to Israel from passing until Israel stops its

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Speaker 10: aggression on Gaza. Their leader has had a televised address

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Speaker 10: yesterday before the attack, but likely of course, in anticipation

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Speaker 10: of that. He said that they would respond to any

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Speaker 10: strikes on them, and it would even surpass the level

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Speaker 10: that they carried out on a US ship earlier this

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Speaker 10: week that was their largest since they started Jana.

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Speaker 2: Saudi Arabia has called for restraint. The UN Security Councilors

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Speaker 2: going to discuss events in the Middle East today, but

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Speaker 2: it's Iran's response to the attack on its proxy that

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Speaker 2: will truly determine what happens in the next stage of

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Speaker 2: this crisis.

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Speaker 10: Indeed, what we're waiting for to see is how and

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Speaker 10: if Iran would rest not the government itself, but of

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Speaker 10: course through the proxyes, as has been the case since

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Speaker 10: October seven. Dahran has said that it doesn't want an

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Speaker 10: escalation that could lead to a wider war, But the

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Speaker 10: question is whether Iran or its proxies will feel like

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Speaker 10: they would want to save face. Israel has expanded its

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Speaker 10: attacks on Hamas and has beyond its border, and now

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Speaker 10: the US is striking the Hothies. So from Iran's perspective,

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Speaker 10: this is an escalation and it threatens its assets. That

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Speaker 10: are assets that are spread out in the region and

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Speaker 10: have somewhat been successful in cementing Iran's influence in them.

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Speaker 1: Least other events that we're waiting for today and certainly

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Speaker 1: the UN Security Council discussing the Middle East once more.

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Speaker 1: This is a conflict that has so many players now

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Speaker 1: around the world involved.

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Speaker 10: Yes, indeed, so what we're waiting for is of course

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Speaker 10: reactions from the UAE and more on how the sound

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Speaker 10: would use will witness this. Both the UE and Saudi

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Speaker 10: Arabia have kind of made it clear that they don't

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Speaker 10: want the conflict in Yemen to expand they have been

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Speaker 10: trying to put out that fire for a while and

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Speaker 10: putting so much effort into that. The Hothies have been

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Speaker 10: also a threat to both these countries. We remember a

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Speaker 10: couple of years back, the Hothy drones were being launched

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Speaker 10: toward the ue and Saudi Arabia, and in twenty nineteen,

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Speaker 10: Hathi's claimed a drone strike on an around Co oil

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Speaker 10: facilities and that briefly knocked out some fifty percent of

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Speaker 10: Saudi Arabia's oil production. So this is a real threat

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Speaker 10: in the region, the Hothies themselves and on the Gulf.

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Speaker 10: So it just remains to see how much the golf countries,

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Speaker 10: especially Uee and Saudi Arabia, the biggest influencers here, would

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Speaker 10: react to that.

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Speaker 2: Okay, Dona Quash on Middle East Breaking News editor, thank

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Speaker 2: you very much.

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Speaker 7: Well.

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Speaker 1: Following the air strikes on Hoothy targets, oil prices rose

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Speaker 1: reflecting concern about the possibility of a broader conflict in

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Speaker 1: the Middle East. Joining us now to discuss is our

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Speaker 1: Middle East Energy report to Anthony Dpauler, Good morning, Thank

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Speaker 1: you for your time an today. What has been the

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Speaker 1: reaction exactly in oil markets?

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Speaker 11: Good morning, happy to be here. Yeah, we have seen

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Speaker 11: an increase in oil prices, as you said, both on

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Speaker 11: the US benchmark WTI and the European Global benchmark Brent.

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Speaker 11: We're up about two percent now and we're close to

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Speaker 11: some of the days highs in terms of gains, but

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Speaker 11: that prices is perhaps a little bit muted if you're

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Speaker 11: considering the prospect of a region wide war. It doesn't

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Speaker 11: seem like oil markets are pricing that risk in as

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Speaker 11: much as you might think. I mean, at low eighty

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Speaker 11: dollars on Brent, we're still below some of the levels

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Speaker 11: that we saw last year, and that's because the market

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Speaker 11: is kind of looking through the current risk at the fundamentals,

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Speaker 11: and traders are feeling that the market is a little

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Speaker 11: bit long in terms of supply, that there's a little

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Speaker 11: bit too much out there, and that is keeping a

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Speaker 11: lid on prices at the moment. Even though we do

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Speaker 11: have this increase, it's not as high as you might expect.

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Speaker 2: Of course, there is the prospect of back and forth

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Speaker 2: attacks now potentially over the coming days. How much are

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Speaker 2: crude flows actually at risk here?

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Speaker 11: Yeah, that's a big question, and I would say from

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Speaker 11: the looking at the oil price, it doesn't seem that

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Speaker 11: that the market is pricing in that much risk or

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Speaker 11: what we've seen is, you know, our attacks on shipping,

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Speaker 11: mainly in the red Sea since about mid December, and

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Speaker 11: the risk there has been mainly on commercial shipping cargo vessels.

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Speaker 11: We haven't really seen oil tankers targeted as much, so

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Speaker 11: I think that's why the market is discounting that risk

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Speaker 11: of an impact on oil prices. We did see yesterday

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Speaker 11: an oil tanker that was seized on the exit of

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Speaker 11: the Persian off However, we have seen Iran take some

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Speaker 11: vessels and kind of tit for tat responses when when

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Speaker 11: some of their oil flows have been impeded, So the

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Speaker 11: market didn't really react to that yesterday either, so I

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Speaker 11: think they're seeing that as kind of an isolated impact

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Speaker 11: rather than a full on focus on taking and interrupting

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Speaker 11: oil oil flows.

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Speaker 1: Okay, very interesting, Anthony. I understand that your focus is

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Speaker 1: on the energy markets, but just can you speak a

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Speaker 1: little bit to the broader market reaction so far? Is

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Speaker 1: that also quite measured, quite sanguine given the concerns? Does

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Speaker 1: that underestimate the risks of a growing conflict? How are

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Speaker 1: the broader markets reacting?

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Speaker 11: Yeah, I mean the market is also looking a bit

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Speaker 11: more relaxed generally as well, and I think oil kind

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Speaker 11: of does also set the tone for that, and you know,

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Speaker 11: as I said, oil specifically isn't isn't being targeted. And

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Speaker 11: that's because, as Donna was saying just in the previous segment,

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Speaker 11: that the biggest producers here the UEE and Saudi Arabia,

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Speaker 11: which is which is the largest producer in Opek. They

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Speaker 11: are being very cautious around this in order not to say,

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Speaker 11: not to attract tension, but not to attract any I

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Speaker 11: or towards them. Saudi Arabia both and the UI have

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Speaker 11: been victims of attacks before and they really want to

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Speaker 11: avoid that. So they are taking care to kind of

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Speaker 11: keep themselves out of this, out of this conflict. And

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Speaker 11: there is a lot of recognition that Iran also seems

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Speaker 11: to not want to get directly involved in that they

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Speaker 11: are acting through proxies. But it seems that on all

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Speaker 11: sides there's less interest in getting kind of a direct

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Speaker 11: war between say Western countries and Iran specifically, so they

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Speaker 11: seem to be looking to do this through the proxies

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Speaker 11: at the moment, and that limits the risk of that

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Speaker 11: of wider war. That said, there's always the risk for

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Speaker 11: incidents when you've got a lot of military equipment in

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Speaker 11: the region, a lot of conflicting interests, a lot of

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Speaker 11: military equipment there, so there's always the risk for accidents

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Speaker 11: which could lead to an escalation here. So the risk

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Speaker 11: is still high, but markets are really discounting that, and

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Speaker 11: I think they're looking through at the fundamentals and kind

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Speaker 11: of the will of these countries not to allow that

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Speaker 11: war to spread more widely.

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Speaker 2: Okay, Anthony Zapalo and Middle East Energy reporter, thank you

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Speaker 2: so much for joining us this morning.

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Speaker 1: Now we'll turn our attention elsewhere this morning to some

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Speaker 1: of the most influential investors who are giving the world's

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Speaker 1: largest private equity firms a message. If you want money

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Speaker 1: for your next fund, here is our list of demands.

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Speaker 1: Sovereign wealth funds and state pension providers are among investors

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Speaker 1: who are telling money managers that they will only commit

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Speaker 1: in their upcoming fund raises if they're capital tied up

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Speaker 1: in old funds is released. This according to people with

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Speaker 1: knowledge of the matter, it's a very interesting story. And

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Speaker 1: our reporter Laura Benitas, who's been looking into this, joins

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Speaker 1: us now. Laura, good morning. What sorts of requests are

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Speaker 1: p firms facing now from some of their largest investors.

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Speaker 9: Well, they are saying, you know, if you want our

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Speaker 9: commitments to your upcoming funds, then you have to release

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Speaker 9: previous distributions from previous vintages of private equity funds. They're

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Speaker 9: also asking for more disclosures into underlying investments, and they're

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Speaker 9: asking for things like, you know, more power at the table,

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Speaker 9: big a seat at the table co investments, things like that.

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Speaker 2: What how are private equity funds keeping their investors sweet? Then?

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Speaker 2: Considering the distributions and fund exits which have.

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Speaker 9: Been challenged, Well, they're doing things like raising navlans as

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Speaker 9: a way to release funds and give them some distributions back.

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Speaker 9: So that's a short term solution if you like. But

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Speaker 9: there's all sorts of creative thinking going on behind the scenes,

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Speaker 9: things like secondary funds where you can sell your stick

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Speaker 9: on of your fund into a secondary market, but you

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Speaker 9: might be taking a ten to fifteen percent discount if

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Speaker 9: you do that.

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Speaker 1: Yeah, I mean, the private equity firms have had had

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Speaker 1: such a strong run, how is it that the powers

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Speaker 1: sort of shifted now to the investors?

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Speaker 9: Well, things like fun distributions last year we're at all

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Speaker 9: time lows. You know, exits were at all time lows,

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Speaker 9: and I think you know investors now are more concentrated.

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Speaker 9: So you've got these big, powerful investors and they're becoming

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Speaker 9: you know, sort of a smaller handful of players, if

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Speaker 9: you like. So I think they've now got this real

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Speaker 9: clout and heft and they're able to actually, you know,

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Speaker 9: kind of pull the strings a little bit more than

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Speaker 9: they have done before.

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Speaker 2: Who are we talking about here, Who are some of

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Speaker 2: those big backers of private equity? And how I suppose

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Speaker 2: has that cast evolved over the years.

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Speaker 9: That's a really interesting one because you know, five years

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Speaker 9: ago we saw we didn't really see many Middle East

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Speaker 9: funds in the top ten or even certainly not the

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Speaker 9: top five. Now you know that there are like there's

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Speaker 9: five Middle Eastern funds that are in the top ten

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Speaker 9: plays and investors in private market. So you're talking about

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Speaker 9: piff adiir Ma badla Adq you So you can really

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Speaker 9: see that concentration building up in the Middle East, which

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Speaker 9: is a really interesting you know, sort of evolvement.

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Speaker 11: Yeah.

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Speaker 1: Absolutely So, Then in terms of fund raising for private

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Speaker 1: equity this year, what are the prospects.

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Speaker 9: So private equity its look, it's not looking great so far.

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Speaker 9: I mean, you know, forecasts from did to provide a

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Speaker 9: slight pitch Book, for example, saying that it's looking like

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Speaker 9: it'd be thirty percent below it has been all the

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Speaker 9: median levels for this year. A private credit you know,

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Speaker 9: that's looking a little bit brighter. But again you've got

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Speaker 9: a handful of players there that are raising you know,

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Speaker 9: huge amounts of money, so it's quite concentrated, so it

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Speaker 9: could be quite patchy, but it'll be interesting you to follow,

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Speaker 9: I think in terms of fundraising.

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Speaker 2: Yeah, that's interesting. I mean, how different is the situation

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Speaker 2: for private credit. I mean, you say a little bit brighter,

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Speaker 2: but is it a case that you know, investors are

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Speaker 2: shifting from one to the other?

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Speaker 9: I think so. I think private credit is obviously, you know,

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Speaker 9: it's become a very trendy catch or concept in the

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Speaker 9: last year or so, and there's been a lot of

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Speaker 9: reallocations to private credit because you know, there's there's more

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Speaker 9: attention around the market and the fees sometimes more lucrative

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Speaker 9: for investors. But as I said, yeah, there really are

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Speaker 9: just a handful of firms, private credit lenders that are

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Speaker 9: ticking the line shaff fundraising at the minute.

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Speaker 2: This is Bloomberg Daybreak Europe, your morning brief on the

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