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

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Speaker 2: This is the Bloomberg Daybacurate podcast. Good morning, it's finding

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Speaker 2: the twenty seventh of March. I'm Caroline Hepka in London.

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Speaker 2: Coming up today, the US reportedly weighs sending thousands more

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Speaker 2: troops to the Middle East as President Trump extends an

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Speaker 2: energy attack pause is Starmer having a love actually moment

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Speaker 2: to the UK Prime Minister says he won't be bullied

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Speaker 2: by the US president over his stance on the Iran war.

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Speaker 2: Plus homes under the hammer, London house builders struggle to

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Speaker 2: keep up with a growing population. Let's start with a

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Speaker 2: roundup of our top stories. Sources have told The Wall

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Speaker 2: Street Journal that the US is considering sending up to

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Speaker 2: ten thousand additional ground troops to the Middle East. According

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Speaker 2: to the paper, the force may be deployed to the

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Speaker 2: region to give President Trump more military options as Iran

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Speaker 2: and the US continue to wrangle over talks. Last night,

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Speaker 2: Trump again pushed back his deadline for attacks on Iranian energy,

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Speaker 2: saying negotiations were going very well.

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Speaker 3: He's what he told Fox News.

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Speaker 4: I gave them a ten day period. The s for

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Speaker 4: seven you're going to say, oh, Trump's a terrible negotiator.

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Speaker 4: They s for seven and I said, I'm going to

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Speaker 4: give you ten because they gave me ships. We talked

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Speaker 4: about the eight ships, you know, the president that I

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Speaker 4: talked about the other day. But they sked for seven

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Speaker 4: and they gave them ten. You got ten days and

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Speaker 4: they were very thankful about that.

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Speaker 2: President from referring there to his claim that Iran had

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Speaker 2: allowed some oil tankers to sail through the straight off

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Speaker 2: Homers as a good will gesture. Meanwhile, the Islamic Republic,

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Speaker 2: through its semi official Tasnim news agency, has indicated that

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Speaker 2: it is still awaiting a response after rejecting a US

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Speaker 2: fifteen point planned and the war and offering its own conditions.

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Speaker 2: According to the government and non governmental agencies, now more

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Speaker 2: than four five hundred people have been killed in the conflict,

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Speaker 2: with around three quarters of their fatalities occurring in Iran.

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Speaker 2: UK Prime Minister Kiir Starmer says that he won't be

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Speaker 2: bullied by Donald Trump. In the latest sign of how

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Speaker 2: the US president's war on Iran has frayed the so

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Speaker 2: called special relationship between the two countries, Sarma doubled down

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Speaker 2: on his stance in an interview with Sky News.

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Speaker 5: I have been clear I'm not going to join the war.

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Speaker 5: There's a clear difference therefore, of opinion between me and

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Speaker 5: President Trump. My own view is that a lot of

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Speaker 5: what is said and done has been to put pressure

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Speaker 5: on me to change my mind. But I'm not going

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Speaker 5: to do so because I'm the British Prime Minister and

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Speaker 5: i have to act in the British national interest.

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Speaker 2: The UK Prime Minister has been repeatedly insulted by the

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Speaker 2: US President, who says that Starma has made a big mistake.

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Speaker 2: The falling out between the two leaders comes as UK

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Speaker 2: lawmakers are warning Britain and its NATO allies in Europe

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Speaker 2: that they should prepare for a worst case scenario in

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Speaker 2: which they can no longer rely on US support in

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Speaker 2: a crisis. The report from the Joint Committee on the

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Speaker 2: National Security Strategy calls for a transition away from nuclear

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Speaker 2: intelligence and other defense systems that rely on America. UK consumers, meanwhile,

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Speaker 2: are already cutting back, as the OECD warns the country

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Speaker 2: is going to be the worst hit G seven economy.

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Speaker 2: GfK's closely watched consumer sentiment gage has fallen to minus

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Speaker 2: eighteen in March. Is lowest level since last year's US

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Speaker 2: trade war began. It comes as the OECD downgraded UK

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Speaker 2: growth forecast for this year by half a percentage point

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Speaker 2: to zero point seven percent. The think tank Secretary General

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Speaker 2: Mattirs Corman says that prediction is uncertain.

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Speaker 6: It reminds to be seen. As we've said at the

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Speaker 6: beginning of this conversation, we don't know what we don't know.

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Speaker 6: I mean, we don't know how much longer this conflict

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Speaker 6: we lie. We don't know how much worst it could get.

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Speaker 6: And I mean there's significant downside risk, but there's also

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Speaker 6: upside risk or upside opportunity. I mean, things could turn

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Speaker 6: out better than what we're fearing.

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Speaker 3: Mattis Coleman.

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Speaker 2: His new forecast would make Britain the second slowest growth

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Speaker 2: of any advanced economy, with the second highest inflation. Bank

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Speaker 2: of England rate setters say that weaker growth is now

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Speaker 2: playing a bigger role in their thinking. Christie Legard says

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Speaker 2: that markets are being too optimistic about the war in

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Speaker 2: the Middle East. The European Central Bank president told the

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Speaker 2: economists that the world is facing a shock beyond what

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Speaker 2: we can imagine at the moment.

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Speaker 7: The technical experts are telling us in terms of capacity extraction,

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Speaker 7: refinery distribution, because too much has already been damaged and

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Speaker 7: there is no way that it can be restored. In

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Speaker 7: a matter of most people are actually talking about yours.

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Speaker 2: Leguard added that she sees markets hoping a positive scenario

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Speaker 2: will materialize and things will return to normal. The Central

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Speaker 2: Bank President has stressed in recent days that the ECB

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Speaker 2: will act decisively and swiftly if the current surgeon energy

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Speaker 2: costs risks a broader about of inflation. Three Federal Reserve

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Speaker 2: officials are expressing growing anxiety over the US economic outlook

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Speaker 2: due to the Middle East war. FED Governor Lisa Cook

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Speaker 2: says the spike in oil prices means inflation is now

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Speaker 2: a bigger concern than the labor markets.

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Speaker 8: I see the balance of risks as being largely on

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Speaker 8: net in balance, but I would argue that the inflation

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Speaker 8: risk is greater right now as a result of the

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Speaker 8: Iran war.

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Speaker 2: FED Governor Lisa Cook, speaking there in Connecticut as two

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Speaker 2: of her colleagues said that they preferred to keep rates

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Speaker 2: on hold while assessing the length of the conflict and

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Speaker 2: its impact on energy prices, and increasing number of traders

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Speaker 2: are hedging against the worst case scenario of emergency interest

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Speaker 2: rate hikes. Evidence is also growing that the war in

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Speaker 2: the Middle East is changing spending habits across the globe,

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Speaker 2: and as Bloomberg's team at a bioverpause, soaring fuel prices

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Speaker 2: are already leading more people to shift away from combustion engines.

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Speaker 9: Just weeks ago, the US electric car market was stalling,

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Speaker 9: then oil prices surged after the US and Israel attacked Iran.

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Speaker 9: Now buzz around the hybrid vehicles suggest the tide is turning.

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Speaker 9: One provider has seen a flurry of drivers making appointments

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Speaker 9: to view used hybrid vehicles, and signs of a shift

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Speaker 9: are playing out across the world. In Southeast Asia, buyers

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Speaker 9: are flocking to Chinese ev Giant BYD, while electric rickshaws

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Speaker 9: are selling out in Pakistan. The changes come as consumers

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Speaker 9: respond to one of the largest disruptions in global oil

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Speaker 9: market by embracing low carbon technologies such as rooftop solar

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Speaker 9: panels and heat pumps. Despite the interest, it will be

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Speaker 9: weeks before data determines whether renewed curiosity has translated into sales.

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Speaker 9: In London, do you add a BUYO Bloomberg Radio, So.

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Speaker 2: Those are our top stories for you this morning. Looking

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Speaker 2: at the markets that Asian equities will hit hard at

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Speaker 2: the open, but actually they're pairing some of those declines.

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Speaker 2: MSCI Asia Pacific in eggs is down half of one percent. Also,

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Speaker 2: European stock futures are positive this morning, up by nine

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Speaker 2: tens of one percent, along with S and P five hundred.

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Speaker 2: Even if futures are by half of one percent, but

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Speaker 2: global stocks are still heading for their biggest monthly sell

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Speaker 2: offsines twenty twenty two. You have to look at goals

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Speaker 2: something about fifteen percent. Brain Crew has jumped about forty

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Speaker 2: eight percent since the war started.

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Speaker 3: At the end of February.

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Speaker 2: Brain CREWD futures are flat, betraying above one hundred and

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Speaker 2: eight dollars at per bowl. Macquarie warning of oil hitting

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Speaker 2: two hundred dollars about if the straight of hor Moos

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Speaker 2: stays shut until Dune. The dollar this morning on the

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Speaker 2: Bloomberg Dollar Spot indexes down a tenth of one percent.

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Speaker 2: Those are the markets. So in a moment we'll be

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Speaker 2: going to our Middle East Breaking News editor Dana Creator

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Speaker 2: to discuss this in more detail. But before that, another

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Speaker 2: story caught my attention. Bloomberg's Josha Idleton has been writing

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Speaker 2: about Amazon. Apparently they're offering a cash prize to those

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Speaker 2: last mile delivery drivers. Why will they want them to

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Speaker 2: share stories about why they love their job?

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Speaker 3: Wonder why you love your job? Well, apparently they want.

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Speaker 2: Amazon wants, that is, full rights to use those drivers

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Speaker 2: images and their stories in marketing materials. And that's where

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Speaker 2: the difficulty lies because the drivers aren't Amazon employees. They're

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Speaker 2: employed by these delivery service partners. Amazon insists that they

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Speaker 2: aren't legally their employer. You know, there's been some wrangling

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Speaker 2: and criticism over that structure. So an Amazon company spokesperson

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Speaker 2: talking about the contest being, you know, to spotlight drivers

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Speaker 2: employed by their partners to try to celebrate their motivations

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Speaker 2: for doing their work and why they love delivering smiles

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Speaker 2: to customers, is how Amazon puts it. The delivery service

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Speaker 2: partners not are particularly happy about it, one driver telling

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Speaker 2: Bloomberg they're not even acknowledging us as actual employees, but

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Speaker 2: they're offering us a thousand dollars to talk about why

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Speaker 2: we like delivering smiles. So it's quite a wrangle. And

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Speaker 2: really it goes to this controversy around these delivery service

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Speaker 2: partners models for how the gig economy works. Anyway, I

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Speaker 2: just saw the Josh Eidelson's story about this and the

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Speaker 2: kind of ongoing reporting around this type of model that

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Speaker 2: is so common everywhere around the world.

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Speaker 3: It was really interesting.

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Speaker 2: Now President Trump is holding off on energy infrastructure strikes

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Speaker 2: for longer now, possibly though, giving time for the US

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Speaker 2: and mass troops in the Middle East after a global

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Speaker 2: stock market sell off yesterday, joining US now as Donna Krash,

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Speaker 2: our Middle East breaking news editor, thank you so much

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Speaker 2: for being with us.

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Speaker 3: Donna.

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Speaker 2: Is the US heading towards combat operations in ivon? That

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Speaker 2: surely has to be the first question.

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Speaker 10: I mean, yes, that that is the golden question here,

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Speaker 10: and they're certainly preparing for it, and we've heard this

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Speaker 10: rhetoric that signals this, and that the Iranians also have

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Speaker 10: also up their own rhetoric setting they're ready for it,

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Speaker 10: and they actually welcome the opportunity to clash with you

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Speaker 10: as soldiers.

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Speaker 11: They believe there really.

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Speaker 3: Would be really good on the ground.

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Speaker 10: There are lots of different scenarios that could unfold here,

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Speaker 10: maybe taking Khug Island or some other one. So what

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Speaker 10: experts are saying that the number of troops is not

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Speaker 10: consistent with a prolonged operation. So what we could be

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Speaker 10: looking at is, you know, a seizure of perhaps nuclear

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Speaker 10: material material as what was also pronounced before by President Trump,

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Speaker 10: or maybe taking over Hug Island, which is the oil

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Speaker 10: expert hub for Iran. Now you know, Iranians of course,

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Speaker 10: will either concentrate all their power to combat internally the

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Speaker 10: US soldiers that would probably come, or choose to up

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Speaker 10: their attacks on Golf states and that's also another risk,

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Speaker 10: and attacking maybe more energy infrastructure. They did say that

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Speaker 10: if there are troops on the ground in Iran, then

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Speaker 10: they would go after the Gulf countries even harsher and

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Speaker 10: even targeting power plants and even targeting energy infrastructure. And

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Speaker 10: the risk here is that there is a threshold in

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Speaker 10: which Golf countries would actually get involved in the war,

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Speaker 10: and from our reporting, that threshold would be power plants.

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Speaker 10: But the talks are still ongoing, so we'll see what happens.

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Speaker 2: Well, yes, I mean it seems quite unclear though who

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Speaker 2: the talks the President Trump has called, you know, said

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Speaker 2: they're going very well. Who those talks arend actually with, Yes.

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Speaker 10: It is unclear, and that could be with the parliament's speaker,

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Speaker 10: collibuff Or could be with the Foreign Minister Auto g

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Speaker 10: Or could be with both, and there were reports saying

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Speaker 10: that so many is being briefed by these two about

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Speaker 10: what's going on now. Publicly, Iranians say we don't want

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Speaker 10: to cease fire because they feel that they are winning

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Speaker 10: right the closure of Hormas. That's their biggest leverage and

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Speaker 10: they have done it so that feeling gives them and

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Speaker 10: they want to frame it as the US begging them

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Speaker 10: for a ceasefire. But there is no doubt, of course

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Speaker 10: that the possibility of forming a coalition to reopen Hormas

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Speaker 10: or on the ground operation, it's not going to be

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Speaker 10: a walk in the park for their Iranians and they

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Speaker 10: are definitely or they definitely fear that this operation might

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Speaker 10: might come to fruition the ground, the troops on the ground,

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Speaker 10: or actually just an international coalition to reopen homemans. And

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Speaker 10: there is a limit to this military capability. So while

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Speaker 10: they publicly say we don't want to cease fire, what

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Speaker 10: we've been hearing, we know behind the scenes that they

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Speaker 10: are talking to the Americans, of course indirectly via the

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Speaker 10: pakistanis now.

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Speaker 2: Okay, despite the lack of support though really in many

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Speaker 2: parts of the world for the US war. The economic

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Speaker 2: hit from the conflict is starting to emerge for the US,

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Speaker 2: but also for Europe and globally exactly.

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Speaker 10: And we just saw on the terminal now that Brent

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Speaker 10: oil futures erase their drop to trade above one hundred

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Speaker 10: and eight dollars on the risk of Iran and of

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Speaker 10: course what we saw in the past week and the

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Speaker 10: swing from this risk premium has been going up and

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Speaker 10: easing after Trump's remark on the five day ultimatum of

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Speaker 10: hitting energy sites in Iran to extending it yesterday. It's

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Speaker 10: quite a chaotic market to be and some are saying

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Speaker 10: that investors are not even pricing in the right risk premium.

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Speaker 11: Maybe they're being too complacent.

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Speaker 10: And of course the big hit will be on oil

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Speaker 10: consuming countries. They will be hit the most, like in

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Speaker 10: Europe that's also bracing for this energy driven up swing

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Speaker 10: in and slashing growth output. We saw Germany and Italy

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Speaker 10: are among the countries weighing cuts to their official growth

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Speaker 10: projections following a more maybe somewhere outlook last week from

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Speaker 10: the European Verypean trans Central Bank, and Trump is of course,

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Speaker 10: under pressure from stockstropping and high oil prices, and many

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Speaker 10: see his deadline extension as giving or maybe allowing a

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Speaker 10: reprieve to markets in the US and globally too.

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Speaker 3: Yeah.

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Speaker 2: Absolutely, And that's interesting though, isn't it, Because of course

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Speaker 2: the Strait of Homers is crucial to that, the US

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Speaker 2: not sort of addressing that right now. There's also been

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Speaker 2: this US warning about the risks of an attack in

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Speaker 2: the Babel mandeb straight also from the Huthi, So there's

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Speaker 2: another angle to the issues in shipping global shipping. Donna,

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Speaker 2: thank you so much for being with Usana crash is

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Speaker 2: our Middle East breaking news edit, so thank you so

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Speaker 2: much for your time stay with us. More from Bloomberg

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Speaker 2: Day Bakeuobe coming up after this. But now I want

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Speaker 2: to turn our attention to London, which, as anybody here knows,

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Speaker 2: urgently needs more housing. The city's population increased by over

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Speaker 2: half a million people in a decade, but construction has

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Speaker 2: fallen dramatically, with thousands of projects being canceled or pause.

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Speaker 2: This is something that Damien Sheppard, Blomberg's real estate reporter,

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Speaker 2: has been looking at in depth. I just really I

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Speaker 2: love this story, Damien, because it gets into the nitty

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Speaker 2: gritty of this issue that is massively important to voters,

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Speaker 2: to politicians, but has been so hard to solve. Successive

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Speaker 2: governments have promised more homes and yet the situation with

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Speaker 2: building seems to be worse now than before.

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Speaker 12: That's right, Caroline, I mean the data is really damning

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Speaker 12: and it just seems to be getting worse and worse.

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Speaker 11: And like you said, it's.

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Speaker 12: A very politically sensitive topic and one that the Labor

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Speaker 12: government will definitely have at the front of their minds,

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Speaker 12: given that they came into Parliament on this promise to

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Speaker 12: build one point five million homes and a large portion

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Speaker 12: of those being affordable homes. Now it feels like a

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Speaker 12: lot of this has intensified since twenty twenty two.

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Speaker 11: We've seen a sustained.

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Speaker 12: Rise in interest rates, the help to Buy program, which

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Speaker 12: was stoking demand and helping house builders get spades in

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Speaker 12: the ground, ended inflation sort of coming from supply chain

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Speaker 12: shocks from COVID and war have intensified. We've seen the

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Speaker 12: cost of materials just rise and rise. There's a lack

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Speaker 12: of builders to actually do the work on site, and

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Speaker 12: that is a result of Brexit. All at the same time,

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Speaker 12: on the regulatory side, we've seen the planning system bloated,

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Speaker 12: lots of other regulatory issues around fire safety.

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Speaker 11: Two.

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Speaker 12: So unfortunately for Londoners who are looking to get into

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Speaker 12: a home of their own, one that's affordable, the situation

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Speaker 12: seems to be getting worse and worse.

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Speaker 2: Yeah, my gosh, I mean that is a long list

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Speaker 2: of things that are going wrong in terms of the

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Speaker 2: house building sector. I like that you have focused on

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Speaker 2: affordability of homes.

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Speaker 3: I mean that's the issue.

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Speaker 2: It's the quality, the size, the location, the affordability of

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Speaker 2: homes that is so important, and that is sometimes lost,

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Speaker 2: I feel in the data of simply saying you know,

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Speaker 2: so many units have been built, it doesn't tell you

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Speaker 2: how many rooms or the size of the winners and

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Speaker 2: so on, and that's a massive issue.

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Speaker 11: That's totally right, Caroline.

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Speaker 12: And look that I mean, what's not mentioned enough is

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Speaker 12: that these days it's the private sector that the responsibility

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Speaker 12: is on to build these affordable homes.

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Speaker 11: You know, many years ago at the.

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Speaker 12: Public sector was you know, constructing lots of social housing,

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Speaker 12: affordable housing, but now we're looking to you know, private

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Speaker 12: house builders who ultimately have their profit margins at the

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Speaker 12: front of their mind to construct these units. I was

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Speaker 12: at the mipp In real Estate conference in can earlier

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Speaker 12: this month, and you know, if we take all of

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Speaker 12: this to the present day, the conversation out there was

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Speaker 12: around the situation in the Middle East, what that might

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Speaker 12: mean for interest rates, what it will mean for inflation

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Speaker 12: potentially intensifying again. So we've got all of these sort

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Speaker 12: of geopolitical headaches that are causing a strain on the

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Speaker 12: private sector. And then when you look down the chain,

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Speaker 12: you know, the people that really are suffering in London

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Speaker 12: are those that are struggling to get into a home

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Speaker 12: of their own. So, I mean, you know, the way

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Speaker 12: that we rely on the private sector for this type

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Speaker 12: of housebuilding is definitely something that didn't used to be

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Speaker 12: the case.

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Speaker 11: And all of these.

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Speaker 12: Issues that I mentioned earlier around inflation, around higher.

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Speaker 11: Rates have contributed to this lack of housebuilding.

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Speaker 3: Well, how does that change? What are the solutions?

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Speaker 2: So it doesn't sound like Labour's planning reform is enough.

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Speaker 12: Yeah, I mean it's been a good starting point, but

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Speaker 12: we're now seeing the Mayor of London himself step in

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Speaker 12: and say, you know, and a letter this week actually

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Speaker 12: to housebuilders that he's bringing in new calling powers that

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Speaker 12: can allow him to override planning applications that are taking

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Speaker 12: too long to get through the system or are getting

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Speaker 12: local opposition. He's looking to lower taxes for developers and

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Speaker 12: help to fast track applications through the planning system too.

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Speaker 11: So we're now starting to.

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Speaker 12: See leaders come in and try to take steps to

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Speaker 12: get things moving, because, like we said at the start

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Speaker 12: of things are just seems to be getting worse and worse.

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Speaker 12: Data wise, construction starts in London and now down more

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Speaker 12: than seventy five percent in a decade, and when you

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Speaker 12: look at those numbers, that's no way to get people

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Speaker 12: into affordable homes.

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Speaker 3: This is Bloomberg Daybreak Europe.

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Speaker 1: You're a morning brief on the stories making news from

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Speaker 11: Europe