Transcripts For BLOOMBERG Bloomberg 20240703

Bloomberg to break your. Lets get to the top stories that that your agenda. Israel and hamas had the dentist conflict in decades. Oil surged as much as 5 as risk sentiments sour around the world. Plus, World Leaders condemning the violence. The u. S. Is sending military support to israel. We will bring the very latest from the region. Those are your geopolitical headlines. Risk sentiment is souring around the world. We already see it in futures trading. You already always see this in geopolitical trading. You see a selloff in the markets. Especially when it comes to the United States. Even overnight they have started to pair some of the losses here. The real pain is coming in the u. S. Sector. We will dive into that throughout the show. You are seeing this dynamic where european and traders have pulled out only for American Traders to buy it as they come. Youre seeing futures there really take a hit. The nasdaq 100 taking it a bit harder. That is your u. S. Equity picture. Lets go around the world. Middle eastern markets have already processed this and priced it in. It is out looking pretty they are we look at the as well as stock index down about 6. 5 . You are also looking at the egyptian and the saudi indexes as well. The taking it on the head. This piece to the geopolitical risk you are seeing around the world taking a massive breather. This takes me to the cross asset story. Heres where the headlines matter. The bank of israel already stepping in saying they will provide necessary liquidity. Youre seeing weakness in the israeli shekel as well. Boosting the dollar as well at a time when the eurodollar is back in the conversation. Even the ossian japanese yen risk currency pair is basically leaning risk off. You are seeing a bit into the japanese yen. Very normal when geopolitical risk happens like that. Brent crude was higher as much as 5 . They now pairing those gains up. Thats get to the top story here. The client combined dental in the gaza. It has passed 1100 as fighting has passed to a third day. Both in the conflict sounding pretty defiant. Hamas started a quill and people war. We will win this war but the price is too heavy to bear. This is a very difficult day for all of us. We chose the peaceful path to achieve our rights but israel continued using blunt force against palestinian lives and palestinian rights. Israel cannot wait a fullscale war on a nation, its people, land, and expect peace in exchange. Lets bring in ethan bronner. He is on the ground in tel aviv right now. Give us the report from your perspective. What are you seeing and hearing . The situation is still quiet dyer from the israeli perspective. Hamas fighters have not only not been entirely contained in israel but they are continuing to penetrate in small numbers and to Wander Around and hold hostages in some homes. The israelis have been bombing. The israelis say they are preparing for a long and painful war which they say is aimed at removing military infrastructure for hamas. Is there any indication of timeline here . How long this conflict could last . I think it is reasonable to assume it will last some months because hamas is pretty well dug in in gaza and the israeli as well will first start and it would not surprise me at all if it moved to a ground assault at some point. A kind of house to house situation. At that were looking at a very long and ugly conflict. Israelis have very rarely felt so he million did an angry and violated as they feel now they are united in their sense that they are going to go after hamas in this way. Truly a crucial situation. Ethan, we wish you, your team and your families all the safety in the world. Take you for bringing us that update. We are seeing a massive move in oil higher by 5 when the headlines first broke out there might be a supply shock in the works. Almost three standard deviations. That is kind of the move you selloff the trump tower war. As ensley these big political moments that are having a lot of the investors panicked when it comes to the commodity market. As bringing daybreak middle east and come all aldean joining me on set. Oil was going to be 100 per barrel. We saw this big retreat. What is the oil logic here . This is all about the guidance we are going to get from geopolitical risk. This is something rbc put out, they are making it clear that basically you have the everything exports that could be in the crosshairs for u. S. Sanctions. 700,000 barrels per day. Thyssenkrupp reporting on the ground. The response was we are not going to look into the politics and they think that accounts for about two to 4 of that move is basically an opec plus unity that has serious ramifications. Westwood about the broader geopolitical take . This is the other component. We can get our head around the tragedy of the last few hours. That is saudi arabia is that in. I am looking here at a direct quote. They stood out from the rest. The can, because its repeated warnings on the danger of the explosion as a result of the continued occupation. The deprivation of the Palestinian People and the repetition of systematic provocation. Against this entities. The reasons this is important is because we have this idea that it is really Palestinian Conflict that would go away if the u. S. Saudi arabians signed a security pact. The events over the weekend jody was not true. This has been pushed far, far out. When setting that crucial piece is the normalization timeline. We thank you for that crucial context. If you look ever else, there was red on the screen. Especially when it comes to asian markets. How bad is it looking when it comes to the asian trade . We are seeing that coming through. There is very little appetite for risk. We are seeing Energy Related shares climb as oil prices surge. Despite all the regular seeing on the screen, it might even be the full picture. Hong kong was shot in the morning. Trading resumes in less than an hour for now. To golden week spending data. I can give you a sense of what we saw as china exited these terms of tourism, revenues have really undershot expectations as they only at slightly higher compared to precovered levels. We can take out the next page for you just to show you where things stand. We are seeing that really disappointing for people who were hoping for a boost from consumer sentiment. Chinese stocks are trending lower today. Lets look at how the cs either hundred fed. Still in negative territory. Dont forget that while Chinese Markets were closed, we had many Factoring Services indicators that really showed a chinese economy that is not white roaring back and then markets were contending with that higher for longer narrative. There is cash down on the Chinese Markets and risk off in the region today. A lot of doom and gloom. All others, we are seeing technical corrections around the world. We thank you for joining the program. Want to get a quick couple things on your docket. There is a lot going on in the week ahead could move markets as we monitor the job little situation starting off on wednesday, you are seeing break them. How hawkish is to hawkish . This is from a lot of fed officials who say maybe a lot of the bond volatility weve seen in the last two weeks or so has done the work of the fed, that will be crucial in terms of the thinking. Wes we get the inflation report. U. S. Cpi numbers will come out and that will be crucial in terms of the commodity increase. Is 100 oil showing up in the Economic Data . How does that factor into the crucial question for the Monetary Policy thinking around the world and friday earnings season kicks off. The major banks, j. P. Morgan coming out and giving their take on what they are there to see when it comes to lung growth and the economy. What we hear from the helm of city, jp morgan, blackrock and all of that kicking off. Determine subscribers just have to type in d. A. Why bigo on your terminal. Youre going to be hearing about that from the press about who is exley behind these attacks in israel right now. Plus, crucial guidance coming at the imf and the world bank. All of that on d. A. One bigo on your bloomberg terminal. The latest on the israel hamas war on the program. What it means for the future of the region. We get the palestinian perspective. All of this on the wider impact of the current escalation in the conflict. Stick with us for the very latest reporting. This is bloomberg. Welcome back to daybreak your. I am kriti gupta in london. We continue our coverage of the main story this morning. The combined death from the hamas attack is climbing as fighting enters the third day. Several warships from the u. S. Are much of the region. This does name include how much goes from defense. We are joined by the director of the middle east institution. We thank you for joining us this morning. Talk to us a lot thinking a little here. Whos to blame for these attacks . We can blame the very long occupation that has led to the context that we are seeing today which is large numbers of palestinians who are fed up with israels occupation and especially the last several months under the government of netanyahu where there have been many attacks on people who are palestinian and from jerusalem. Hamas wants to present itself as the palestinian entity that is carrying the voice of the palestinians. Hamas has basically presented itself as the solution to the occupation. That is why it is enjoying wide support in palestine. But there is a wider context that is to do with the shield little situation. Saudi arabia, israel and United States have been having talks to try to broker a deal to and the israel palestine conflict. Hamas wants to assert itself politically to say they should be resenting the lcd people come another post any authority. It is that normalization, the steps toward normalization that billy caught my eye here. To what extent could that have contributes to the timing of this attack, i am curious why now. Talks have been stepped up between saudi arabia and the Palestinian Authority in particular. Talks were meant to step up even more lately. This kind of attack was not done in a matter of days. This attack had been in the making for several months in coronation with iran, in coronation with other iran backed actors in the region but then again these talks i am talking about also did not start in a matter of weeks. Talk seven going on for a while. Then you have the symbolic anniversary of the youngkin for 1973 war which they almost matched to the day. We have to remember the attacks started on a saturday which is obviously a weekend in israel. You have symbolic directions so in a way this is leading to the exact timing of this attack. And all of this is for hamas to present itself as heroic. When mentioned that iran and other counterparts may have had a role in this. How can this be detected at a time where this is largely being hailed as a massive intelligence failure on both the israeli and the American Parts . How do we know that iran was behind this . The story was in the wall street journal. It is in this lucifer the wall street journal. I am preserved i or other media will cover it. I on research on hezbollah in particular which i have been doing for more than a decade shows that when it comes to decisions to engage in war, we are not here talking isolated attacks, we are talking war. In the full sense of the word. Decisions to engage in war for has below and hamas and the Islamic Jihad and these groups are supported by iran can only happen through prior agreement from iran. This is what happened here. Hamas will not single handedly and without many resources launch aware of the scale this has been in coronation with iran and it is not in irans interest for a deal to happen between the palestinians, the israelis, saudis and the United States without iran being part of the agenda. Final question to you, what comes next in terms of the american response . You highlight irans role here. This comes on the heels of a prisoner exchange. 6 billion in frozen assets. They were being talked about being released. What is the american response iran . I can say what the american response should be. I dont know if this will be the response. For years now, the United States has separated the issue of Irans Nuclear deal with iran from the issue of irans regional role. I think now we can clearly see the destabilizing role iran has on the region and how to make sure it is part of setting the agenda politically for the region. It is willing and engaging in military destabilizing events like the one we have seen. Without the occupation, and palestine we would not have had a reason for hamas to act in this way. We have that as well. I think the role of iran is very crucial. It is something we will be watching very closely. Especially given the nuclear conversations that a been happening as well between the United States and iran as whelp. They are giving us that crucial context of geo plot geopolitics in the middle east. They keep joining us. The European Central Bank President , Christine Lagarde says the imf has cut its forecast for the global economy. We will bring her comments next. Stick with us. This is bloomberg. Christie people of israel are under attack by hamas. Unite states stands with israel. We will not ever fail to have their back. U. S. President biden speaking on our top story this morning. The conflict between israel and hamas at the moment. I want to get a quick check on the data. You are seeing assets take a hit. Especially when it comes to the shekel. You are seeing real weakness there. This comes in the context of the bank of israel announcing a program to sell up to 30 billion in fx reserves. That is weakening the shekel pretty consistently. You are seeing that across the board. Youre seeing strength in terms of the crude markets. This is really creating weakness. The Australian Dollar as well. It will be crucial in a comes to what other ways you can essentially play the risk here. That is going to be crucial. Ides what to put into perspective how much the israeli stock market specifically is taking a hit. He was elected with his fully rightwing coalition government. That will be a story we continue to monitor. Lets get a quick check on a quick check on some of the other stories we are following from around the world. The afghan governments of the death toll from 6. 3 magnitude earthquake and aftershocks in the countries west have risen to more than 2000 about 10,000 people injured. According to the u. S. , the epicenter of the earthquake was followed by strong aftershocks included another one measuring 6. 3. 5 hours later. Over in europe, the ecb president says the imf has cut its forecast for global growth. Just not for the u. S. It is due to be published tomorrow. The current Global Forecast is for 3 growth this year. Lagarde also said the ecb will succeed in bringing inflation back down to 2 . A bipartisan delegation of u. S. Senators arrived in china on saturday with majority leader Chuck Schumer saint america seeks competition and not conflict. Besides holding talks to senior officials in the city, they will visit u. S. Companies in shanghai before heading to beijing where the delegation is expected to meet president xi jinping. We share some of those the bottom line is i think we can both achieve a level playing field. I also want to bring you some breaking news across the board terminal shortly when it comes to scheffler, tesco. This is the company that has a lot to with a letter for cajun. They really work and supply chain broadly with evs. They are offering to buy the tesco. The u. S. Already owning about half of the company. Something they want earlier in the month. Both shares higher. Coming up, the combined death toll in the gaza as real violence passes 1100 a the power goes out and we still have wifi to do our homework. And thats a good thing . Great in my book who are you . No power . No problem. Introducing stormready wifi. Now you can stay reliably connected through Power Outages with unlimited cellular data and up to 4 hours of battery backup to keep you online. Only from xfinity. Home of the xfinity 10g network. Cross good morning. Welcome back to daybreak your. Lets get back to the top stories that your agenda. Israel and hamas at war. The deadliest conflict in the region in decades. Oil surges on fears of a supply shock as rick sentiment sours around the world. Plus World Leaders condemning the violence as the u. S. As it is sending military support to israel, will bring you the very latest from the region. Quick check on the latest market seeker. It really does not emphasize that enough. Futures are not are really taking a massive hit. Especially when you look at the United States. There is some logic here. Futures down about. 4 following the trade in asia which is broadly negative. You are seeing outperformance in the ftse 100. Youre seeing it marginally one point in the green. S p futures are where it is really taking the hit. It is down about. 7 . This is really interesting because u. S. And israeli economies are actually tied in a lot of ways. Budgets matter and politics matter here. That is why you are seeing it in addition to the fact that the last few weeks you have seen european and Asian Traders pull out of the u. S. Futures overnight only for American Traders to now pair the losses. There is a technical dynamic laying in as well. That is the equity picture in the west. Lets go to in the middle east. As of the close yesterday you saw the israeli index taken almost 7 hit to a stock market. Bringing it back to lowes we saw in the march of this year. Pressure in egypt, pressure in saudi arabia. It is not just in the stock market. It is in the karmas market as well. I bring you weakness in the shekel. In times of crisis and typical conflict, you see the dollar versus the shekel higher by 1. 3 . A lot of that is coming in the context of a little bit of questioning whether or not your dollar parity is back on the horizon. The same story, weakness in the commodity exposed currency. Even though you are seeing strength in brent crude off concerns are many supply may further. Higher by about 3. 3 . A lot of moves we are seeing in the market, continued coverage of the fallout throughout Bloomberg Television and radio. Hundreds of israelis and palestinians killed since the conflict began on saturday. They join me right here on set. Walk us through the International Reaction here as more and more people chime in. This is a chessboard where we are seeing the development in real time. It is a whole new set of variables we have to work with. The rash we have seen from the middle east is one of we call on all sides to basically try and avoid violence and catch breath. They refer back to the earlier call on the palestinian repression. Remember there was a lot of enthusiasm around the potential security deal between the United States, israel and saudi arabia. Fellows like it has been pushed back to the back burner. They are taking a very cautious stance but also making it clear that they are looking back to precedent in terms of what will guide them going forward. Whether it is has blood from lebanon stepping in, iran coming into the equation as well and then of course the u. S. Response as it tries to support israel. That is what is so staggering. They have already seen a large u. S. Military presence. To what is dented they could even bigger i want to bring in one of our guests. He is with me here as well. Joining us here is the chair of the palestinian solidarity campaign. We think you so much for joining with your perspective this morning. I want to start up with the possible solutions. Usages did a great job talking about the geopolitical conflict. What about internally . How do the members of palestine find a solution . I think looking to the future , heres the argument to look at. It is is this a idea since israel was created. It should have been the case that israel withdrew from occupied palestinian territories and palestine is set up their own state but israel has chosen this government in israel has chose not to recognize the Palestinian People. On the contrary, one of the finance ministers saying palestinians have three options. Either they leave or they live here without any rights or that there would be killed. That is no further to peace. Run me through what youre hearing from your sources on the ground in terms of dialogue between Palestinian Authority and thomas. If we can get a breakthrough there, it would sure help a lot when all the stakeholders sit down together during this painful time. You and your viewers there have been a number of attempts to break through that. That has not resulted in unity. Unity is really important. It is really clear that hamas rules in gaza. And the person wouldve had no involvement in what started on the seventh of this month. But also listening to what theyll say. The ambassador is reminding everyone that the problem lies in the International Communities and israels lack of real seriousness. On the israeli side. In 2018, israel passed the law that gave even its palestinian citizens no rights i saying only jewish israel is have the rights of determination in israel. Right. Lets talk a little bit about time frame here. I think our financial audience would want to know from your expertise how long you think this lasts. I for timelines going ashore and there is a couple more days to months and even years. It is very difficult to judge. I have to say. We have escalation. A lack of even mentioning the word palestine or palestinians included here in the United Kingdom where the foreign secretary has completely gone through this. They do make up half the population. It is vastly reducing the chances for peace. I think clearly on the israeli side, they want to lash out. I dont like using this but the ratio of palestinians killed two israelis has always been around 10 te. We really and im those are your numbers and we will look into that but on the shift to the road ahead, the focus on who can just in terms of question number of cavities we are going to see and likewise that takes me to my next point. Who can bring influence to the table here . The saudis . The qataris . Every life is a life. Tends to fall on the egypt since first. Because they can speak to both sides. The saudis are in interesting position because the crown prince there said normalization with israel was not likely. They could be in a position to say unless this is brought to an end quickly than that particular deal would be for months. Theyre basically ending the power of hamas in this dancing populated region in the world. That would take people underground. Even the thought of doing that, that would result in many casualties. Palestinians can move here. What is going on in the ground . In terms of the basic supply of food, water and energy, where is that coming from if at all given all the restrictions . The reason we are here from palestinians is the fact that israel is what comes in. The supply has been shut down in israel. They have been protected to be uninhabitable. Here we are in 2023. Food supplies, etc. Are heavily controlled by israel. The situation on the ground his oh is difficult. It is only going to get worse. That is why we focus on the human beings. Adding on the other side to try to bring this to an end. We dont want to be heres when there is another assault on the people of gaza. That is certainly a tragedy that no one wants to see continue. This is the chair of the palestine solidarity campaign. We thank him for joining the program. As well as the anger of daybreak middle east. We just the palestinian perspective. We will be getting a lot more covers from the region as well and getting the israeli perspective. Well be speaking with the middle east. Coming on program, germanys really Coalition Party has suffered major electoral defeat into key states. Piling on the government of piling on the pressure on the government of olaf scholz. This is bloomberg. Welcome back, and kriti gupta in london. All schultz is wrestling with the future of his Ruling Coalition government. He joins us from berlin. This is 16 states in germany. These are home to munich and frankfurt. More than to any 5 of german gdp. Economically significant. This is merkels party that ruled the country for a great many years. They both took about 35 of the vote. They were the number one party. If you look at it as a litmus test on how the coalition is doing and a referendum on schultz, each of the numbers of the coalition lost ground in both of the regions. The greens lost the most. The fdp and liberals may not even make it into the local politics. For schultz, the interior minister is the one running in hesse. That is a major blow here. This did not go to these parties instead to the far right, the afd. They were the Number Two Party and this is a party that has made their rallying cry about immigration and something the coalition now wakes up on monday morning realizing they need to start to try to address some of these concerns with the pipe elation of germany otherwise theyre going to start losing even more ground. I know it wouldve been the headlines over the weekend. What are we hearing from olaf scholz comes to germanys response to what is going on . We spoke to benjamin netanyahu. He will deal with mediation deescalation as you can see in the pictures there, Brandenburg Gate was eliminated with the israeli flag and the colors of israel, what is happening in response here on the ground and apart from that, you can see an increase of security around some of the jewish sites here. In germany, that offset some rallies without people showing their support. Also, some rallies in the southeast where the police came which were sort of propalestine rallies that the police had were spontaneous meetings reported by colleagues and do to did antiisraeli rhetoric, they were broken up shortly after. They will need together to take us they will have the top ministers convened there. This will be an issue they will perhaps see much more on ion. Oliver is monitoring the situation at a berlin. They can be joining the program. In the u. K. , the labor leader kicking off his Party Congress by condemning the attacks on israel. Listen. This is an appalling attack on israel, a terrorist attack for which there is no justification. And israel has every right to defend yourself. The perpetrators of this have deliberately pushed back the prospect of peace agreements. Lizzie, talk to us a little bit about the response to the situation in israel. This is not the party that prepare for this. He has had to pivot to Foreign Policy but his aides say he is sanguine about that because it also underscores just how far he has shifted his party away from his predecessor, Jeremy Corbyn. You will remember Jeremy Corbyn had supporters of both hummus and has below before he became party leader. Jeremy corbyn posted on at, passing up the opportunity to condemn the attack and emphasizing the importance of the impact of israels occupation. It is against that history in contrast to that they have returned to a more traditional foreignpolicy stance. The fact that israel is going to dominate the airwaves gives them the opportunity to not be drawn into the detail as much on his vision. The election could be 15 months or so away. Apart from this in liverpool on israel, it is business day. We are expected to hear from chancellor rachel leaves at 12 00. She will try to set up set a how she would grow the economy to cover public spending to enable her to be fiscally responsible. That will be her message and indeed it has to be said that the business presence at this conference is strong. For the first time you have Goldman Sachs paying to sponsor an event. You can inspect more endorsements like that publicly throughout the conference and i am is to business representatives and asking them is that they are more aligned to your interests than the conservative party . What they say as it is not white that yet but it is that they think it is somewhat inevitable that labor is going to be the next government. That is what the polls suggest and they want to get a seat at the table so they can help influence that formulation of policy. Spent some that we will be watching very closely. Lizzy burden all over that. She will begin this those reports already all week long. Thank you for joining the program. The conflict between israel and hamas and what it means for the future of the wider middle east region. This is bloomberg. Breaking headlines. They are ready president can gradually hamas on both the israeli side and the u. S. Side as well. Lets go tomorrow champion for more on this topic. I want to start off simply with this iran headline we are getting. There are a lot of questions about how this was even planned. We had a guest, the director there saying our van was 100 behind us. We had reports of a similar story. Do you agree . What are your thoughts . As you go into this, even when there was no evidence of iranian involvement, it is intimately a large question in the background. You know twice had the iranian say they were pleased about it and the wall street journal has done a story this morning in which there was a this book to officials in hamas and is hezbollah that confirmed their was planning done with their vein is to conduct this. It doesnt make things any easier for netanyahu unfortunately. He set out a plan to deal with the hamas attack but he is now really walking to the agenda that was set. So they will have predicted that he will have to go into gaza so it is a very difficult thing for him. As we speak to you, youre looking at live pictures of gaza city. Talk to us about netanyahus strategy here. See did write desk white well initially. Securing the border and then we need to inflict this. And then we needed to secure our other borders. He was aware. Finally, creating unity within israel and keeping a level head, whether he can do that is a good question. Our Bloomberg Opinion columnist with crucial insight, thank you, mark. Stay with us for a lot more coverage from the region. We will be speaking with the middle Eastern Institute london time. As well as philipp hildebrands later. Stick with us. Thibloomberg. Youre probably not easily persuaded to switch mobile providers for your business. But what if we told you its possible that comcast business mobile can save you up to 75 a year on your wireless bill versus the big three carriers . Have we piqued your interest . 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