WEBVTT - President Trump Extends Iran Truce 0:00:00.080 --> 0:00:07.040 Bloomberg Audio Studios, Podcasts, radio News. 0:00:10.200 --> 0:00:13.560 Welcome to the Daybreak Asia podcast. I'm deg Krisner. Market 0:00:13.640 --> 0:00:17.239 suffered some whiplash today from the headlines regarding war in Iran. 0:00:17.520 --> 0:00:21.280 After the US close, President Trump extended the ceasefire between 0:00:21.320 --> 0:00:23.840 the US and Iran at the request of Pakistan. 0:00:24.320 --> 0:00:24.480 Now. 0:00:24.480 --> 0:00:28.040 Trump also said the US military will continue its blockade 0:00:28.040 --> 0:00:30.280 of the straight offom moves, and he said he was 0:00:30.320 --> 0:00:35.040 taking these steps until Iran's leaders could present a unified proposal. 0:00:35.600 --> 0:00:38.519 This seemed to be quite a reversal from Trump's position 0:00:38.680 --> 0:00:41.879 as of early Tuesday morning, when the President said he 0:00:41.920 --> 0:00:44.879 would resume bombing without a deal in place. Now that 0:00:45.040 --> 0:00:48.680 ceasefire with Iran was set to expire on Wednesday. For 0:00:48.760 --> 0:00:51.480 a closer look at market action, I'm joined by Bloomberg's 0:00:51.479 --> 0:00:54.520 Paul Dobson. Paul as executive editor for Asia Markets, and 0:00:54.520 --> 0:00:58.160 he joins from our studios in Singapore. It's clear that 0:00:58.280 --> 0:01:02.320 peace talks have faltered. Early in the day, Vice President JD. 0:01:02.480 --> 0:01:06.160 Vance suspended a trip to Islamabad, and I know there 0:01:06.200 --> 0:01:08.880 was a lot of confusion as to where Vance was 0:01:08.920 --> 0:01:12.240 at the time. This seemed to be in direct response 0:01:12.280 --> 0:01:16.920 to representatives from Tehran refusing to attend these meetings, And 0:01:17.000 --> 0:01:19.560 I'm curious, Paul, to get your take on what you're 0:01:19.600 --> 0:01:24.840 hearing from market participants about what appears to be the 0:01:24.880 --> 0:01:27.199 real lack of a tangible resolution here. 0:01:28.200 --> 0:01:32.240 Yeah, hi, Doug. So there's two different ways to be 0:01:32.400 --> 0:01:36.240 thinking about this as a market practitioner, I think, because one, 0:01:36.400 --> 0:01:38.840 what we're seeing in the Asian morning is actually a 0:01:38.880 --> 0:01:43.520 relatively positive macro outlook. Again, we have US stock index 0:01:43.560 --> 0:01:47.080 futures up currently, a little bit of weakness in Creede 0:01:47.080 --> 0:01:49.240 oil if anything, and weakness in the dollar as well, 0:01:49.280 --> 0:01:51.000 which are the trades that we tend to get when 0:01:51.040 --> 0:01:53.600 people are a bit more optimistic about the way the 0:01:53.640 --> 0:01:56.440 situation in the Middle East is going. And I think 0:01:56.480 --> 0:02:00.760 what people are latching onto here is that intimation from Trump, 0:02:01.680 --> 0:02:05.360 not that it's you know, another sort of change of 0:02:05.400 --> 0:02:08.760 mind by him, so much as the idea that there 0:02:08.840 --> 0:02:12.440 is really some internal turmoil in Iran at the moment, 0:02:13.000 --> 0:02:17.360 and so we're sort of waiting for that side to 0:02:17.440 --> 0:02:20.040 figure out exactly what it wants to do. And I 0:02:20.040 --> 0:02:22.560 think the market sees it as hopeful in the idea 0:02:22.680 --> 0:02:26.679 that there's a more potentially moderate voice in the room 0:02:26.800 --> 0:02:31.640 in Iran pushing in favor of those talks. At the 0:02:31.639 --> 0:02:33.640 same time, of course, you know, there are plenty of 0:02:33.680 --> 0:02:38.399 hardliners there that would prefer to prefer to maximum kind 0:02:38.440 --> 0:02:41.680 of resistance against the US. So I think that on 0:02:41.680 --> 0:02:44.360 that short term basis, that's why the market is at 0:02:44.480 --> 0:02:46.799 least taking a little bit of heart from the situation 0:02:46.840 --> 0:02:49.400 where we are right now, and the fact that there 0:02:49.440 --> 0:02:53.480 are no actual bombs falling is generally being seen by 0:02:53.520 --> 0:02:56.000 the market as a positive. The longer term view, of course, 0:02:56.080 --> 0:02:58.680 is the strait is still closed, and every day that 0:02:58.760 --> 0:03:01.560 we have that the situation still as we've been saying 0:03:02.160 --> 0:03:04.960 for weeks now, Doug, every day, you know, the tightness 0:03:04.960 --> 0:03:09.120 in those energy markets does get a little bit more constraints, 0:03:09.120 --> 0:03:11.960 and we're starting to see we're seeing airline companies, for example, 0:03:12.000 --> 0:03:15.000 they're talking about reducing the number of flights that's happening. 0:03:15.040 --> 0:03:19.360 We're seeing some manufacturing production a bigger company starting to 0:03:19.720 --> 0:03:22.360 just get a little bit ratcheted down as well. So 0:03:22.400 --> 0:03:25.280 I think that those signs are emerging a little bit more, 0:03:25.320 --> 0:03:26.920 and that's something that the market is going to have 0:03:26.960 --> 0:03:29.160 to keep in its mind. At the same time as 0:03:29.200 --> 0:03:31.799 the possibility of a resolution at some point. 0:03:31.600 --> 0:03:34.440 I was struck by the fact that President Chichinpang of 0:03:34.560 --> 0:03:37.840 China was urging the restoration of transit through the Strait 0:03:37.880 --> 0:03:41.000 of Formos. Apparently there was a very rare call that 0:03:41.200 --> 0:03:45.200 happened with the crown prints of Saudi Arabia. It seems 0:03:45.240 --> 0:03:48.440 like China is beginning to exert a little bit of 0:03:48.480 --> 0:03:50.960 pressure here after what seven weeks of war. 0:03:51.920 --> 0:03:54.800 Yeah, and if China can have any influence over I run, 0:03:54.880 --> 0:03:58.160 then that would presumably be a positive thing for the 0:03:58.240 --> 0:04:00.960 global market situation at the very least, if they do 0:04:01.080 --> 0:04:04.000 manage to bring talks back to the table. It's not 0:04:04.240 --> 0:04:09.240 entirely clear what China can achieve in that respect. It's 0:04:09.280 --> 0:04:12.240 sort of been, as you intimated, a little bit stand 0:04:12.280 --> 0:04:16.080 off in the whole situation, not getting involved so far, 0:04:16.560 --> 0:04:20.240 and maybe that's because, you know, it doesn't have that 0:04:20.400 --> 0:04:25.239 much potential to influence things either. What we do see 0:04:25.440 --> 0:04:29.320 in China itself is still you know, relatively healthy looking 0:04:29.480 --> 0:04:32.400 economy relative to a lot of the rest of the world, 0:04:32.440 --> 0:04:36.240 because it came into this situation with such high energy reserves, 0:04:36.600 --> 0:04:39.920 and because it also is you know, been moving further 0:04:39.960 --> 0:04:43.000 and further away from fossil fuels, and I think that 0:04:43.480 --> 0:04:46.159 some of the energy companies have been talking about the 0:04:46.200 --> 0:04:49.680 idea that Chinese firms have been seen selling some energy 0:04:49.720 --> 0:04:53.120 products into the market, suggesting that you know, they can 0:04:53.200 --> 0:04:56.800 actually help other people out somewhat because of that healthy 0:04:56.839 --> 0:04:57.680 reserve situation. 0:04:58.240 --> 0:05:03.120 Obviously, higher crude oil prices correlates directly to inflation. And 0:05:03.200 --> 0:05:05.680 today in the States, we heard from Kevin Warsh. This 0:05:05.760 --> 0:05:08.200 is President Trump's nominee to lead the FED. He was 0:05:08.480 --> 0:05:11.960 at his confirmation hearing today before the Senate Banking Committee. 0:05:12.480 --> 0:05:15.600 He rejected concerns that he would be a sock puppet 0:05:16.400 --> 0:05:19.400 for President Trump, and he also pledged to act independently 0:05:19.560 --> 0:05:23.000 if he is confirmed as FED chair. Is there any 0:05:23.080 --> 0:05:26.960 concern here in the market that he may be inclined 0:05:27.040 --> 0:05:31.480 to maybe think differently about inflation if President Trump is 0:05:31.520 --> 0:05:35.880 even mildly suggesting that the FED needs to be lowering 0:05:35.960 --> 0:05:37.640 interest rates sooner rather than later. 0:05:39.040 --> 0:05:43.839 So the testimony seems me at least from catching up 0:05:43.839 --> 0:05:47.880 a little bit late to be relatively neutral. And you know, yes, 0:05:47.960 --> 0:05:52.120 the line of questioning from Elizabeth Warroma, she suggested that 0:05:52.160 --> 0:05:55.120 he might be a sock puppet for Donald Trump. Clearly 0:05:55.240 --> 0:05:57.760 sort of like grabbed the headlines to a certain extent, 0:05:57.880 --> 0:06:01.839 and he delivered the refuge of that that you would expect. 0:06:02.279 --> 0:06:05.000 I thought it was interesting that even myram we've seen 0:06:05.000 --> 0:06:07.760 in recent weeks has been talking about less need for 0:06:07.800 --> 0:06:10.520 the Fed to cut interest rates quite so aggressively. Given 0:06:11.120 --> 0:06:14.599 the situation that we're in. I think Warsh probably would 0:06:14.640 --> 0:06:16.800 like to get through the hearing and get in through 0:06:16.839 --> 0:06:19.839 the door before he can make that assessment for himself. 0:06:20.800 --> 0:06:23.800 The Treasury's market itself has been interesting in recent days, Doug, 0:06:23.839 --> 0:06:26.640 because actually volatility has really been falling off a cliff there. 0:06:27.120 --> 0:06:29.560 The movement that we've seen in yields has really started 0:06:29.600 --> 0:06:32.120 to ratchet back in and sort of hold in check. 0:06:32.400 --> 0:06:34.520 And it is I think that impression that maybe the 0:06:34.560 --> 0:06:37.320 Fed is just not going anywhere anytime soon, that the 0:06:37.320 --> 0:06:38.920 market is now starting to price in. 0:06:39.240 --> 0:06:39.400 Well. 0:06:39.440 --> 0:06:42.320 You referenced some dollar weakness that we are seeing now 0:06:42.440 --> 0:06:45.720 in Asian trading, but the dollar was stronger in New 0:06:45.800 --> 0:06:48.240 York trading. There's been a lot of volatility where the 0:06:48.279 --> 0:06:52.000 foreign exchange has been concerned. Is that really what we're 0:06:52.040 --> 0:06:54.960 going to be dealing with for the foreseeable future. A 0:06:55.000 --> 0:06:58.880 lot more volatility in some of these cross currency relationships. 0:07:00.360 --> 0:07:07.200 I'm not convinced because the market doesn't really seem to 0:07:07.279 --> 0:07:10.560 know what to do with all the information. So what 0:07:10.600 --> 0:07:13.480 we have seen and been reporting in recent days is 0:07:13.520 --> 0:07:16.000 the idea that hedge funds are ratcheting up their bets 0:07:16.400 --> 0:07:20.720 on continuing dollar weakness, so they're using options. First of all, 0:07:20.760 --> 0:07:22.600 we had a story that was looking at how they 0:07:22.640 --> 0:07:27.400 were trading options betting on stronger Asia currencies, are the 0:07:27.480 --> 0:07:30.600 Chinese un and the Korean want being seen as favorites there. 0:07:31.200 --> 0:07:34.280 Then they shifted a little bit into your Europe as well, 0:07:34.320 --> 0:07:37.480 looking for strength against the US dollar there. But of course, 0:07:37.480 --> 0:07:40.080 like you say, it's a little bit of a frustrating 0:07:40.120 --> 0:07:43.080 trade for them because every time the war dynamic moves 0:07:43.080 --> 0:07:45.640 in a different direction, the dollar appreciates again, and then 0:07:45.680 --> 0:07:48.520 those sort of the timing of those trades can get 0:07:49.080 --> 0:07:51.640 out of kilter as well. So I think it's not 0:07:51.920 --> 0:07:54.840 huge amounts of volatility, but it's just kind of whiplashing 0:07:54.960 --> 0:07:58.480 backwards and forwards around those sort of pivoty areas, and 0:07:58.560 --> 0:08:01.200 so much is dependent on that headline risk at the moment. 0:08:01.240 --> 0:08:04.080 What we have seen is, you know, commodity currencies in 0:08:04.160 --> 0:08:06.320 among all this have been some of the bigger winners, 0:08:06.600 --> 0:08:10.400 the Australian dollar, the Brazilian real for example, seem to 0:08:10.400 --> 0:08:12.600 be rising a little bit above the noise and showing 0:08:12.880 --> 0:08:16.080 more signs of consistent sort of appreciation process. 0:08:16.200 --> 0:08:18.600 So I'm curious as to what the conversation has been 0:08:18.800 --> 0:08:22.120 like between central bankers and the Asia Pacific and markets. 0:08:22.160 --> 0:08:25.560 Is there a message that is being communicated that has 0:08:25.600 --> 0:08:28.239 some level of clarity behind it or are they pretty 0:08:28.280 --> 0:08:30.400 much in no man's land as well? 0:08:31.880 --> 0:08:35.160 They Yes, in no man's land sounds about right. So 0:08:35.280 --> 0:08:37.440 we do hear from a couple of the Asian central 0:08:37.480 --> 0:08:42.000 banks this week. I think we have Indonesia and Philippines 0:08:42.160 --> 0:08:45.720 central bank decisions and those so those economies are in 0:08:45.760 --> 0:08:47.480 a slightly different place to a lot of the rest 0:08:47.520 --> 0:08:49.240 of the world. They're the ones that are really under 0:08:49.280 --> 0:08:53.000 the pressure because of their dependence on energy inputs to 0:08:53.480 --> 0:08:57.440 keep the economy running. And you know, Indonesia has extra 0:08:57.880 --> 0:09:01.520 issues in terms of this if it's stock market at 0:09:01.520 --> 0:09:04.080 the moment. So for those central banks, what they what 0:09:04.120 --> 0:09:06.400 they would really like to do is to be able 0:09:06.440 --> 0:09:08.840 to ease interest rates to reduce pressure on the economy. 0:09:08.840 --> 0:09:11.280 But what they're also facing is pressure on their currencies, 0:09:11.320 --> 0:09:14.480 and so having higher interest rates would protect the currencies 0:09:14.520 --> 0:09:17.040 from too much setting pressure too. So they're a little 0:09:17.040 --> 0:09:18.959 bit caught between a rock and a hard place. And 0:09:19.880 --> 0:09:22.120 you know, those are the economies that are really struggling, 0:09:22.200 --> 0:09:24.400 and as a result, they're the ones with the currencies 0:09:24.440 --> 0:09:27.560 that have been under pressure during the six or seven 0:09:27.600 --> 0:09:29.640 weeks that we've had this conflict in the Middle East. 0:09:29.760 --> 0:09:31.960 Before I let you go, I have to ask about 0:09:31.960 --> 0:09:38.880 this story and mythos this new AI model released Bianthropic selectively. 0:09:38.960 --> 0:09:42.600 There have been some government entities that have been allowed 0:09:42.640 --> 0:09:45.360 to kind of test this model. There have also been 0:09:45.800 --> 0:09:49.440 a few banks within the kind of major money center 0:09:49.480 --> 0:09:52.280 banking community that have been allowed to experiment with it 0:09:52.320 --> 0:09:56.079 as a way of testing their own vulnerability for possible 0:09:56.120 --> 0:09:59.400 cyber attacks. So today we learned that a small group 0:09:59.440 --> 0:10:03.559 of unauthor rised users was able to access this mythos 0:10:03.679 --> 0:10:06.600 AI model from Anthropic. They were able to gain access 0:10:06.640 --> 0:10:11.680 through a number of different tactics. One included basically a 0:10:11.760 --> 0:10:14.960 worker that had been assigned to a third party contractor 0:10:15.000 --> 0:10:18.400 for Anthropic was able to kind of allow access to 0:10:18.440 --> 0:10:21.840 the system. There were some other intranet sleuthing tools that 0:10:21.880 --> 0:10:25.400 have been used. Is there concern here at all within 0:10:25.960 --> 0:10:28.520 the Asia Pacific, particularly when you look at some of 0:10:28.559 --> 0:10:33.240 these financial systems, about the vulnerabilities that may exist when 0:10:33.240 --> 0:10:37.280 you get a super sophisticated AI model that represents a 0:10:37.400 --> 0:10:39.839 threat to cybersecurity. 0:10:41.040 --> 0:10:43.640 I think there must be. I think there's a sid 0:10:43.640 --> 0:10:47.079 in irony, right. The model that everyone is fearing is 0:10:47.120 --> 0:10:52.920 going to highlight all of these security loopholes in existing 0:10:52.960 --> 0:10:56.360 systems also has its own problems with back doors and 0:10:57.040 --> 0:11:03.320 access to and the potential for misuse is definitely high. 0:11:03.320 --> 0:11:05.880 And you know, we've seen plenty of cyber attacks already 0:11:05.920 --> 0:11:11.079 over the past few years that have proven pretty disruptive already. 0:11:11.600 --> 0:11:14.199 I think I had a really interesting conversation with one 0:11:14.200 --> 0:11:16.320 of my colleagues where they were talking about this idea 0:11:16.440 --> 0:11:19.640 that the greater the sophistication that we get with the 0:11:19.679 --> 0:11:22.520 AI models, the bigger the risk there is of one 0:11:22.600 --> 0:11:26.760 day something just absolutely unthinkable happens. You know, for example, 0:11:26.840 --> 0:11:29.800 every sense everybody's bank account in the entire world is 0:11:29.800 --> 0:11:33.400 emptied simultaneously, which would be a very very extreme example. 0:11:33.800 --> 0:11:37.720 But those kinds of really nasty things are a little 0:11:37.720 --> 0:11:41.840 bit less of a kind of non negligible risk of course, 0:11:41.840 --> 0:11:44.280 if you're a market practitioner, something like that is impossible 0:11:44.320 --> 0:11:46.200 almost to price in because it would be such a 0:11:46.280 --> 0:11:52.480 humongous shock globally. So it's sort of something that people 0:11:52.520 --> 0:11:54.600 have to keep in mind. I think the flip side 0:11:54.600 --> 0:11:59.120 of him propic and myth us is the tech industry, 0:11:59.120 --> 0:12:02.520 the AI industry, the chip industry is just you know, 0:12:02.840 --> 0:12:05.200 having another phenomenal run at the moment. We see the 0:12:05.200 --> 0:12:09.080 costby setting record highs, the Taiwan benchmark setting record highs. 0:12:09.080 --> 0:12:13.240 We've seen the Philadelphia Socks Index on a fifteen day 0:12:13.320 --> 0:12:18.000 winning streak now, and so you know, there are risks 0:12:18.040 --> 0:12:20.440 and vulnerabilities out there, but there's also you know, a 0:12:20.559 --> 0:12:26.400 renewed massive enthusiasm for the potential for AI and technology 0:12:26.400 --> 0:12:26.960 going forwards. 0:12:27.280 --> 0:12:29.040 And there really seems to be the need for kind 0:12:29.040 --> 0:12:31.800 of global regulators to get involved so that everyone is 0:12:31.800 --> 0:12:35.120 on the same page, right because I mean, the pervasiveness 0:12:35.200 --> 0:12:37.960 I mean of these systems globally. It's not just that 0:12:38.000 --> 0:12:41.000 we're talking about the US financial system, were we're talking 0:12:41.000 --> 0:12:42.760 about financial systems worldwide. 0:12:43.679 --> 0:12:47.719 Yeah, I agree that it's running so fast that it's 0:12:47.720 --> 0:12:52.240 ahead of the regulators, and you know, the sensible thing 0:12:52.320 --> 0:12:57.000 would be for wise or cool heads to step in 0:12:57.160 --> 0:13:00.400 ensure that there's some sort of slow down mechanism in 0:13:00.440 --> 0:13:02.679 place so that things can be studanized. It's a bit 0:13:02.720 --> 0:13:06.680 like the nuclear energy industry, you know, where the regulators 0:13:06.720 --> 0:13:10.680 there are extremely careful and prudent before approving any new 0:13:10.960 --> 0:13:14.120 plant because of the dangers. It's kind of a similar 0:13:14.160 --> 0:13:17.120 sort of risky sort of a thing, and you would 0:13:17.160 --> 0:13:19.840 hope that they could put in place structures that would 0:13:20.160 --> 0:13:22.840 be able to control it and self censor as well 0:13:22.880 --> 0:13:25.600 in terms of the developments that are being rolled out. 0:13:25.920 --> 0:13:29.240 Good analogy, Paul, Thank you so very much. Bloomberg's Paul Dobson, 0:13:29.360 --> 0:13:33.319 Executive editor for Asia Markets, joining from Singapore here on 0:13:33.360 --> 0:13:44.720 the Daybreak Asia podcast. Welcome back to the Daybreak Asia Podcast. 0:13:44.720 --> 0:13:49.120 I'm Derek Prisner. So President Trump indefinitely extended the ceasefire 0:13:49.160 --> 0:13:52.280 between the US and Iran at the request of Pakistan. 0:13:52.720 --> 0:13:55.800 For a little more analysis, we heard from Jessica Genauer. 0:13:56.160 --> 0:13:59.960 Jessica is the academic director of the Public Policy Institute 0:14:00.080 --> 0:14:02.440 the University of New South Wales, and she spoke with 0:14:02.440 --> 0:14:05.800 Bloomberg TV host Heidi Stroud Watts and Cherry on. 0:14:06.160 --> 0:14:08.560 We've seen from the start the fifteen point Plan, the 0:14:08.600 --> 0:14:10.880 ten point Plan, the last round of negotiations that a 0:14:10.960 --> 0:14:13.720 lot of the really substantive issues have the part is 0:14:13.880 --> 0:14:17.959 very much far apart, almost exidentally apart. Right, what does 0:14:18.000 --> 0:14:21.040 that mean going forward? Now that this truth has been extended, 0:14:21.400 --> 0:14:25.040 We're now talking about the possibility of some type of 0:14:25.080 --> 0:14:28.200 a cold war, a frozen war, in your wording, a 0:14:28.280 --> 0:14:31.280 sort of forever war, if you will. 0:14:31.400 --> 0:14:33.520 Yeah, that's right. So there are sort of a couple 0:14:33.600 --> 0:14:37.040 of tracks on which things are happening. So there's the 0:14:37.120 --> 0:14:43.640 track of more substantive political agreement around those really tricky issues, 0:14:43.800 --> 0:14:47.160 for example, what happens with the strait of Humor's what 0:14:47.240 --> 0:14:51.960 happens with Iran's capacity to enrich uranium and the whole 0:14:52.040 --> 0:14:55.480 nuclear issue, what happens in terms of sanctions on Iran, 0:14:55.840 --> 0:14:59.640 And we're really not seeing any movement on those deeper 0:14:59.720 --> 0:15:03.520 issues use that are driving this conflict. And then on 0:15:03.560 --> 0:15:07.680 a sort of a parallel track, we have these shaky 0:15:07.760 --> 0:15:11.840 agreements around a ceasefire, which at the moment really depends 0:15:11.880 --> 0:15:14.520 a lot on the fact that I think Trump wants 0:15:14.600 --> 0:15:18.240 a cessation of hostilities, wants to kind of withdraw the 0:15:18.360 --> 0:15:23.080 US from that full scale military campaign that we saw 0:15:23.320 --> 0:15:27.640 in those weeks of full scale war, and so what 0:15:27.800 --> 0:15:31.840 I see happening is that most likely the ceasefires will 0:15:31.880 --> 0:15:35.480 hold because ultimately that's in the Iranian regime's interest at 0:15:35.480 --> 0:15:36.560 the moment as well. 0:15:37.000 --> 0:15:39.160 Whilst they have withstood. 0:15:38.560 --> 0:15:42.560 The US bombing campaign so far and Israeli military strikes, 0:15:42.600 --> 0:15:45.360 they really wouldn't be able to withstand that forever. I mean, 0:15:45.360 --> 0:15:48.320 they might survive as a regime, but there'll be massive 0:15:48.440 --> 0:15:50.560 costs for them of that. So I think that the 0:15:50.600 --> 0:15:54.240 ceasefire will hold, mainly because it looks like that's the 0:15:54.280 --> 0:15:57.080 direction that Trump wants to pursue. But at the same time, 0:15:57.120 --> 0:16:00.560 on that other track of those really substantial issues, I 0:16:00.600 --> 0:16:03.920 don't think we're going to get any agreement anytime soon 0:16:04.040 --> 0:16:08.200 if ever between this current Iranian regime, and that. 0:16:08.080 --> 0:16:10.280 Means that there'll be a lot of volatility. 0:16:10.640 --> 0:16:14.120 There'll be ongoing costs for the Iranian people, for the 0:16:14.680 --> 0:16:17.800 region and also around the world. And so whilst it 0:16:17.880 --> 0:16:20.920 might be a sort of a frozen conflict, it doesn't 0:16:20.960 --> 0:16:24.120 mean that there wouldn't be flare ups of violence, but 0:16:24.240 --> 0:16:27.360 also ways in which the conflict is actually going to 0:16:27.640 --> 0:16:31.520 have a heavy price for you. Know countries not only 0:16:31.560 --> 0:16:32.760 in the region but globally. 0:16:34.160 --> 0:16:37.360 You've talked about how the asymmetry of this conflict in 0:16:37.440 --> 0:16:41.320 terms of military might actually create some more protracted situation. Right. 0:16:41.640 --> 0:16:44.320 Do you think for the leadership in Iran, having undergone this, 0:16:44.560 --> 0:16:48.440 having obviously lost their leader and a number of key personnel, 0:16:48.600 --> 0:16:52.000 that they're now going to just double down and this 0:16:52.080 --> 0:16:54.000 is going to be something that turns into a war 0:16:54.040 --> 0:16:56.440 of attrition, That's right. 0:16:56.480 --> 0:16:58.360 So I think that's partly what we're seeing now with 0:16:58.560 --> 0:17:02.520 Actually it was the the Iranian negotiators who said that 0:17:02.560 --> 0:17:04.919 they were not going to show up in Islamabad in 0:17:04.960 --> 0:17:08.639 Pakistan this time, and Trump was actually quite willing to 0:17:08.720 --> 0:17:11.439 send jd Vance who was sort of primed and ready 0:17:11.520 --> 0:17:15.200 to go to meet the Ranian negotiators in Islamabad. 0:17:15.320 --> 0:17:16.720 So I think what we're. 0:17:16.600 --> 0:17:20.720 Seeing is the Iranian regime has seen a sort of success. 0:17:20.760 --> 0:17:24.040 So whilst they definitely need a cessation of hostilities, they've 0:17:24.040 --> 0:17:27.680 seen a kind of success to their tactics so far, 0:17:27.960 --> 0:17:32.880 which have been using these asymmetric strategies, so using sort 0:17:32.920 --> 0:17:37.840 of small light attacks, closing the Strait of Hormuz, using 0:17:38.080 --> 0:17:42.600 missile attacks against the Gulf, so imposing these economic and 0:17:42.920 --> 0:17:47.680 political pressures on the US and on the Trump administration, 0:17:48.000 --> 0:17:51.639 And what we're seeing is that they are doubling down 0:17:51.840 --> 0:17:56.440 on that approach so by actually really playing this game 0:17:56.560 --> 0:17:59.439 of brinkmanship with the US. So they didn't quite know 0:17:59.480 --> 0:18:02.040 whether the Trump would extend the ceasefire when they said 0:18:02.040 --> 0:18:04.720 they weren't going to go to Islamabad. But I think 0:18:04.760 --> 0:18:08.119 that what elements of the Iranian regime are feeling is 0:18:08.480 --> 0:18:12.800 that they need to double down on an internal narrative 0:18:13.080 --> 0:18:17.720 of staying strong and powerful themselves and continuing to resist 0:18:17.840 --> 0:18:20.879 the US. And we haven't really seen any softening of 0:18:20.880 --> 0:18:24.000 that so far from any of the remaining elements of 0:18:24.080 --> 0:18:25.720 the leadership of the Iranian regime. 0:18:25.840 --> 0:18:30.159 What what do the internal dynamics look like in Iran? 0:18:30.280 --> 0:18:34.440 Because even President Trump are extending the seasfire, actually called 0:18:34.960 --> 0:18:38.600 a seriously fractured leadership structure in Iran and blame that 0:18:38.760 --> 0:18:42.080 for the collapse of the negotiations in Islamabad. 0:18:43.280 --> 0:18:45.560 Yeah, I think this is a really interesting point, and 0:18:45.600 --> 0:18:49.639 I think I wouldn't necessarily say fractured at this point 0:18:49.640 --> 0:18:52.840 in time, but there definitely has been a very strong 0:18:53.000 --> 0:18:57.879 effect from the fact that we've seen high level political 0:18:57.960 --> 0:19:00.560 leadership killed since the beginning of this war, and very 0:19:00.600 --> 0:19:04.840 importantly the Supreme Leader so Ayatola Harmione, who was then 0:19:04.920 --> 0:19:09.040 replaced by his son Mushtaba Hamioni. But what the issue 0:19:09.040 --> 0:19:12.680 here for the Iranian regime is that there's no one 0:19:13.119 --> 0:19:17.720 centralizing figure anymore with clear authority over all of the 0:19:17.760 --> 0:19:20.480 different parts of the Ranian regime, which the previous Supreme 0:19:20.560 --> 0:19:24.080 Leader did have. And so what that means the Iranian 0:19:24.119 --> 0:19:26.880 regime is certainly going to survive at this stage, and 0:19:27.359 --> 0:19:29.359 all of the elements of the regime are very much 0:19:29.520 --> 0:19:32.080 focused on its survival. So it's not that it's going 0:19:32.080 --> 0:19:35.359 to collapse. But what we're seeing is a little bit 0:19:35.400 --> 0:19:39.199 of power struggle starting to happen between different sort of 0:19:39.280 --> 0:19:41.960 elements inside the regime who might want to take a 0:19:42.040 --> 0:19:44.640 slightly different approach to the way they're dealing with the US. 0:19:44.760 --> 0:19:48.960 So everybody in control now we could broadly call hardline 0:19:49.080 --> 0:19:52.520 from a sort of US perspective or a Western perspective, 0:19:52.640 --> 0:19:56.720 in that they're very much engaged with ensuring the regime 0:19:56.800 --> 0:20:00.320 survival and ensuring resistance to the US and resis distance 0:20:00.320 --> 0:20:03.359 to Israel. But even within those groups, there are those 0:20:03.359 --> 0:20:06.359 who are a little softer in their approach to being willing 0:20:06.400 --> 0:20:08.280 to negotiate with the US, and there are those who 0:20:08.320 --> 0:20:10.680 are saying, we shouldn't negotiate with the US at all, 0:20:10.720 --> 0:20:13.479 we should just double down and we should even you know, 0:20:13.560 --> 0:20:16.760 potentially escalate in the war. Now, I think those slightly 0:20:16.800 --> 0:20:19.639 more pragmatic elements will probably win out, just because the 0:20:19.640 --> 0:20:23.320 Iranian regime does need a cessation of hostilities in order 0:20:23.359 --> 0:20:27.120 to sort of regroup itself. But that's basically what we're 0:20:27.119 --> 0:20:28.400 seeing inside the regime. 0:20:28.760 --> 0:20:33.160 So Jessica, if survival is the ultimate goal and they're 0:20:33.200 --> 0:20:36.560 managing to do that and drag out the war, what 0:20:36.600 --> 0:20:38.960 could the run look like in the next few months 0:20:39.040 --> 0:20:42.160 or even years. Are we talking about a frozen conflict 0:20:42.240 --> 0:20:44.880 that could lead to what happened in Afghanistan or even 0:20:44.920 --> 0:20:48.960 closer to home here in Asia, to say North Korea. 0:20:49.119 --> 0:20:51.360 So what I expect is going to happen, and again 0:20:51.400 --> 0:20:53.959 there's always uncertainty around these things, but what I expect 0:20:53.960 --> 0:20:58.200 at the moment is that the cessation of hostilities will hold. 0:20:58.440 --> 0:21:00.640 There will be no substantial politic agreement. 0:21:01.040 --> 0:21:03.640 So what that will mean is that the Raning regime 0:21:03.840 --> 0:21:08.320 will very much still continue to be a disruptive actor 0:21:08.840 --> 0:21:11.479 regarding the Strait of Humors, And of course there's that 0:21:11.800 --> 0:21:14.040 US blockade at the moment with the Strait of Humors 0:21:14.080 --> 0:21:16.200 as well, so there'll still be a lot of tensions there. 0:21:16.359 --> 0:21:18.600 It will still be really hard to get shipping out 0:21:18.600 --> 0:21:21.120 of the Strait of Humors. In terms of the region, 0:21:21.520 --> 0:21:24.040 it will be quite a long path for Gulf countries 0:21:24.080 --> 0:21:28.720 to rebuild that sort of impression of stability and safety 0:21:28.720 --> 0:21:32.000 and security that they had before this war, and for 0:21:32.040 --> 0:21:35.560 the Iranian people that the Ranian regime is going to 0:21:35.600 --> 0:21:39.640 be even more controlling and hardline in terms of its 0:21:39.640 --> 0:21:46.240 own domestic security. So I think going forward that we 0:21:46.320 --> 0:21:49.280 will see probably in the medium term, that the Ranian 0:21:49.359 --> 0:21:52.560 regime will stay in control of the country, but will 0:21:52.560 --> 0:21:55.960 be a disruptive actor. I do expect, however, that within 0:21:56.240 --> 0:22:00.040 the longer term, so sort of three to seven years out, 0:22:00.359 --> 0:22:03.040 we might start to see those power struggles within the 0:22:03.080 --> 0:22:07.359 Iranian regime start to have a more sort of costly 0:22:07.480 --> 0:22:11.880 effect domestically. So that depending on what happens with mush 0:22:11.920 --> 0:22:14.119 de Bahamioni and whether he can really sort of bring 0:22:14.440 --> 0:22:17.400 those different parts of the regime together under his leadership, 0:22:17.400 --> 0:22:20.359 which is not yet clear. We could actually see some 0:22:20.480 --> 0:22:23.240 kind of more internal fracturing, which would be more of 0:22:23.240 --> 0:22:27.399 a sort of civil war type situation within Iran, but 0:22:27.480 --> 0:22:29.080 I don't think we would see that for quite a 0:22:29.119 --> 0:22:31.760 few years. That's not something that would happen within months 0:22:31.800 --> 0:22:33.479 or even the next sort of three years. 0:22:35.600 --> 0:22:37.240 Jessica, just a couple of final thoughts. 0:22:37.440 --> 0:22:39.960 Has the war in a long term sense achieved anything 0:22:40.000 --> 0:22:43.240 other than showing the world how much leverage the leadership 0:22:43.240 --> 0:22:45.760 in Tehran has over the global economy through the straight 0:22:45.800 --> 0:22:47.879