Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2: This is the Bloomberg daybreaker of podcast Good Morning. It's Tuesday,
Speaker 2: the thirty first of March. I'm Caroline Hepgar in London.
Speaker 2: Coming up today, the US President is said to be
Speaker 2: considering a rapid end to the Iran war, even as
Speaker 2: troops continue to arrive in the region. Iran strikes a
Speaker 2: vessel full of oil just outside Dubai, as the houthis
Speaker 2: consider a renewed campaign against red sea shipping. Plus a
Speaker 2: special report on the KGB's successor the FSB tightening its
Speaker 2: grip in Putin's Russia. Let's start with a roundup of
Speaker 2: our top stories. President Trump has reportedly told aids he
Speaker 2: is willing to end the US military campaign against Iran
Speaker 2: even if the Strait of Hormuz remains largely closed. According
Speaker 2: to The Wall Street Journal, the White House has concluded
Speaker 2: that reopening the waterway would likely extend the conflict beyond
Speaker 2: the President's preferred timeline of four to six weeks. Eric Nuttall,
Speaker 2: who is senior portfolio manager at Nine Point Partners, says
Speaker 2: the situation is likely to deteriorate further.
Speaker 3: If the street does not open, and we need to
Speaker 3: kill demand. Past scenarios would be when about five point
Speaker 3: five percent of the global economy global GDP is being
Speaker 3: spent on oil. That is when the onus is too
Speaker 3: great and you see real demand destruction that in today's
Speaker 3: measurement would be about one hundred and seventy seven dollars
Speaker 3: per girl. That is where we're going if the straid
Speaker 3: is not opened.
Speaker 2: That was Eric Nuttall speaking. Despite Trump repeatedly saying a
Speaker 2: deal with Iran is imminent, the US has deployed additional
Speaker 2: troops to the region as the conflict enters its fifth week.
Speaker 2: On Monday, the President said the US with target i
Speaker 2: Brainian power plants, oil facilities, and possibly desalination infrastructure if
Speaker 2: Tehran not reopen the Strait of Hormuz. While Iran has
Speaker 2: hit an oil tanker fully loaded with crude oil inside
Speaker 2: Dubai's port in an escalation of the attacks on shipping.
Speaker 2: The Kuwait flagged vessel was carrying more than two million
Speaker 2: barrels of oil when it was struck by a drone.
Speaker 2: Bloomberg's Romana Bissecci is in Dubai and.
Speaker 4: This showcase say is once again the rests that are
Speaker 4: being posed to vessels to tankers that should choose to
Speaker 4: pass the street. Iran effectively reminding everybody that they still
Speaker 4: can harass ships that want to pass through. And if
Speaker 4: you look at the flow of traffic, there have been
Speaker 4: a handful of vessels that have managed to make it through,
Speaker 4: but only ones that have had the permission or received
Speaker 4: the permission from it around before.
Speaker 2: Have Dumana Bassecchi, who added that a fire on the
Speaker 2: boat has now been extinguished and all twenty four crew
Speaker 2: members are safe. Tevan has targeted ships and energy infrastructure
Speaker 2: on several occasions, but the latest attack is the closest
Speaker 2: to the major port of Dubai and elsewhere in the Gulf.
Speaker 2: Iran is pushing Huthi militants to prepare for a new
Speaker 2: campaign against shipping in the Red Sea. European officials Tel Bloomberg,
Speaker 2: the group in Yemen is considering how aggressively it would
Speaker 2: respond to any further US escalation. CIBC Private wealths Rebecca
Speaker 2: Babin says it could be a critical shift for the market.
Speaker 5: If the HOHO theies escalade in this conflict, they have
Speaker 5: a meaningful ability to actually kind of put more pressure
Speaker 5: on the market. They will move from a chokehold and
Speaker 5: the horror most kind of a stranglehold where even the
Speaker 5: flows that were able to reroute now cannot escape.
Speaker 2: CIBC Private Wealth's senior energy trader Rebecca Babin there with
Speaker 2: Hormuz blog. Saudi Arabia has ramped up crude exports from
Speaker 2: the Red Sea port of Yanbou. The Huthis themselves are
Speaker 2: so far split though, on the merits of any campaign,
Speaker 2: where roughly half of Yemeny's are suffering from acute hunger
Speaker 2: according to the UN. US Secretary of State Marco Rubio
Speaker 2: has suggested that the United States may need to reassess
Speaker 2: its relationship with NATO after the Iran War. Speaking to
Speaker 2: Al Jazeera, Rubio criticized what he sees as a lack
Speaker 2: of support for US operations in the Middle East from
Speaker 2: member countries. America's top diplomat also took issue with the
Speaker 2: Alliance for denying access to some European air space and
Speaker 2: military bases.
Speaker 1: And so you ask yourself, well, what is in it
Speaker 1: for the United States. And I've been a big supporter
Speaker 1: of NATO. And one of the reasons why I've been
Speaker 1: a supporter of NATO is because I believe that these
Speaker 1: basing rights give us leverage and give us flexibility and
Speaker 1: operational capability all over the world. But if NATO was
Speaker 1: just about US defending Europe of their attack, but them
Speaker 1: denying us basing rights when we need them, that's not
Speaker 1: a very good arrangement. That's a hard one to stay
Speaker 1: engaged in it and say this is good for the
Speaker 1: United States. So all of them are going to have
Speaker 1: to be rea examined.
Speaker 2: Rubio's remarks come as NATO members have largely rebuffed US
Speaker 2: requests to help reopen the vital Strait of Hormuz, and
Speaker 2: in other news, China's factories are unexpectedly boosting their output
Speaker 2: even with the war in the Middle East. PMIS in
Speaker 2: March hit fifty point four, beating estimates in a sign
Speaker 2: of growth from the first official data from the period
Speaker 2: since the war began. That's despite many Chinese factories struggling
Speaker 2: with higher cost due to the conflict. The data also
Speaker 2: shows the fastest surgeon war materials costs and output prices
Speaker 2: in roughly four years. Beijing lowered its annual economic growth
Speaker 2: target to a minimum of four and a half percent,
Speaker 2: the least ambitious goal since nineteen ninety one, and here
Speaker 2: in the UK, shopers are being worn to brace for
Speaker 2: a wave of price increases. Bloomberg's un Pots has more
Speaker 2: details on the survey from the British Retail Consortium.
Speaker 6: The prices of goods sold UK stores rose one point
Speaker 6: two percent in the year to March, just ticking up
Speaker 6: slightly from one point one percent in February. Food inflation
Speaker 6: actually slowed during the month, coming in at three point
Speaker 6: four percent year on year. The Retail Industury survey was
Speaker 6: taken immediately after the outbreak of the Iran War, with
Speaker 6: the BRC warning it will take at least three months
Speaker 6: before the effects of high costs passed through to consumer prices.
Speaker 6: With petulan diesel costs already soaring, that will come as
Speaker 6: welcome relief for consumers for now, at least in Hong Kong.
Speaker 6: I'm you and Pots Bloomberg Radio.
Speaker 2: And those are our top stories. Looking at the market,
Speaker 2: it's that the Iran driven stock route continues, buyers looking
Speaker 2: pretty elusive. The MSCI Asia Pacific Index this morning is
Speaker 2: down by one point two percent. Remember that Dubai's main
Speaker 2: stock index, the DFM, is now down sixteen percent in March,
Speaker 2: so the world's worst performer so far. The costb in
Speaker 2: South Korea also seeing a significant decline today of three
Speaker 2: point six percent, but futures actually for Europe and the
Speaker 2: US are in the green bond markets, Treasury yields easing
Speaker 2: two basis points to four point three two percent. Oil
Speaker 2: prices have stalled, with that report on a potential US
Speaker 2: early exit as one option that President Trump has floated.
Speaker 2: Brenkrewed futures currently trading just above one hundred and seven
Speaker 2: dollars per barrel, Aluminium heading for its biggest monthly gain
Speaker 2: in two years. Gold and silver seaing gains, gold extending
Speaker 2: two days of increases. Those are the markets now. President
Speaker 2: Trump continues to vacillate between saying that the end of
Speaker 2: the war in Iran is near and also threatening a
Speaker 2: further escalation US military action. Joining US now to discuss
Speaker 2: as Bloomberg horizons Middle East and Africa. Anchor Jumana Bussecci,
Speaker 2: Good morning, Jumana. President Trump is considering leaving without reopening HOMEMUS.
Speaker 2: What happens in that case? Do other countries attempt this
Speaker 2: daunting time? Do they agree to paying up to paying
Speaker 2: Iran which is their demand? Yeah?
Speaker 7: I mean I think it's important just to take a
Speaker 7: step back here and to reiterate that this is sourcing
Speaker 7: from the Wall Street Journal. This isn't coming directly from
Speaker 7: the White House themselves, but clearly the White House are
Speaker 7: considering a range of options here. And what they have
Speaker 7: framed the last couple of days, and this has come
Speaker 7: through via many calls that President Trump has had with journalists,
Speaker 7: is that they deem themselves to be militarily very successful
Speaker 7: and that the operations having gone very well over the
Speaker 7: course of the first month. Of course, the lingering issue
Speaker 7: remains and will continue to be so for the foresellable future,
Speaker 7: the effective closure of the Strait of Hormas, and so
Speaker 7: it looks as though they're trying to sort of draw
Speaker 7: a line between what they're trying to achieve militarily with
Speaker 7: the war versus the reopening of the Strait of Hormas,
Speaker 7: and this Wall Street Journal article suggests that he may
Speaker 7: look to separate the two issues.
Speaker 3: Not.
Speaker 7: The problem, as you say, is that it is unlikely
Speaker 7: at this point for there to be a huge uptake
Speaker 7: of other nations who would be willing to join in
Speaker 7: on these efforts. And the Wall Street Journal articles suggests
Speaker 7: that the first, the first point of call would be
Speaker 7: for them to try to get to a diplomatic solution
Speaker 7: with Iran on the street, and if that fails, then
Speaker 7: perhaps look together, look to put together this so called
Speaker 7: coalition of the Willing that might be comprising some of
Speaker 7: the golf Arab states as well, but for golf Arab states,
Speaker 7: and I just want to remind viewers as well, they
Speaker 7: have been very vocal over the last couple of days
Speaker 7: about how Iran is effectively terrorizing the world via their
Speaker 7: hold and their grip on the Straits of Hormos. An
Speaker 7: outcome in which they still have that control is not
Speaker 7: something that would be palatable or acceptable for golf nations.
Speaker 2: Yes, so I think that's very important to understand the
Speaker 2: view of those golf countries. Is this turning into a
Speaker 2: loss for the US then a strategic disaster? I mean,
Speaker 2: what would be the consequences of that.
Speaker 4: Well, I think you have.
Speaker 7: To also distinguish between military success and strategic success. Militarily,
Speaker 7: there's no doubt that the US has superiority over the skies.
Speaker 7: They've managed it, and this is joint US Israeli operations.
Speaker 7: I should say, they've managed to really incur a lot
Speaker 7: of damage on Iran's missile capabilities, on their launchers, on
Speaker 7: their air defense systems, on their navy. So there are
Speaker 7: a series of military successes to speak of. Politically questionable
Speaker 7: at this point whether this has actually resulted in a
Speaker 7: change of leadership or even not necessarily regime change here,
Speaker 7: but a regime that is more compliant, at least to
Speaker 7: the west.
Speaker 4: Unclear that that has come through.
Speaker 7: There are no signs on the ground of regime collapse,
Speaker 7: and ultimately, you know, going back to Gulf arb States,
Speaker 7: the worst case scenario is one in which you end
Speaker 7: up with an Iran that is angry, that is defiant,
Speaker 7: and is still maintaining ownership of the street.
Speaker 4: So if the.
Speaker 7: US were to walk away today, it could actually be perceived,
Speaker 7: as you know, militarily successful, but strategically not successful, only
Speaker 7: because you've created an even more ferocious enemy on your doorstep.
Speaker 2: Indeed, Jumana, thank you so much for your time this morning.
Speaker 2: That is Bloomberg Horizons Midle East and Africa anchor Jumana
Speaker 2: Bassecci on the latest when it comes to Iran. Stay
Speaker 2: with us. More from Bloomberg daybakeuope coming up after this
Speaker 2: now to put in Russia, where the successor to the KGB,
Speaker 2: the Federal Security Service, is tightening its grip on many
Speaker 2: aspects of Russia's economy and social life. Joining me now
Speaker 2: is Tony Halpin, who leads our coverage of Russia's economy
Speaker 2: and government. Tony, this is a very interesting story that's
Speaker 2: been written. What are the changes at the FSB that
Speaker 2: have increased its power so much good?
Speaker 8: I mean, actively, from tomorrow, the FSB will have the
Speaker 8: authority to obtain copies of any organization's databases that it
Speaker 8: wants to examine without a court aura, and businesses will
Speaker 8: simply have to ensure that their IT systems allow them
Speaker 8: to hand over that data on demand from the FSB.
Speaker 8: And there's very little monitoring of what the FSB will
Speaker 8: would do with that information. And although they're under some
Speaker 8: obligation to destroy it after they've made use of it
Speaker 8: for their given purpose, there's no real guarantee that will happen.
Speaker 8: And clearly that has big implications, implications for things like
Speaker 8: commercial secrecy company's ability to do business without wiring that
Speaker 8: they may be, for example, submitted to some kind of
Speaker 8: pressure or black mail by unscrupulous agents. So it's a
Speaker 8: matter of concern for a lot of companies and a
Speaker 8: lot of organizations. Generally, it's not restricted simply to businesses
Speaker 8: and banks, but any organization at all. And that comes
Speaker 8: on top of things like the FSB's ability already to
Speaker 8: order major banks to install surveillance systems so they can
Speaker 8: monitor messages and other content in banking applications. So it's
Speaker 8: a very extensive surveilment power.
Speaker 2: Yeah, that is very widespread, that is it.
Speaker 1: I mean the.
Speaker 2: Fsp's also got of course, you can't forget the ability
Speaker 2: to shut off the Internet and phone lines. It's trying
Speaker 2: to move away from telegram and get people to use
Speaker 2: state sponsored messenger platform called Max. What do you think
Speaker 2: it shows in a nutshell about Putin's control over the country.
Speaker 2: Why is he doing this now?
Speaker 8: Well, I mean it's all part of a continuum in
Speaker 8: many ways when Putins since about twenty twelve has been
Speaker 8: slowly tightening the screws ensuring that there's no challenge to
Speaker 8: his rule. But undoubtedly the war in Ukraine has intensified
Speaker 8: that and accelerated that trend. The authorities and the criminal
Speaker 8: are more and more concerned about public disappointment with the
Speaker 8: outcome of the war so far, and they're worried about protests,
Speaker 8: and they're intensifying their scrutiny because they want to be
Speaker 8: sure that they can snaff out any kind of descent
Speaker 8: while putting continues as a flaw.
Speaker 9: This is Bloomberg Daybreak Europe, your morning brief on the
Speaker 9: stories making news from London to Wall Street and beyond.
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Speaker 2: I'm Caroline Hepka.
Speaker 9: And I'm Stephen Carol. Join us again tomorrow morning for
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