Haidi welcome today break australia. I am having these stroudwatts in sydney. Annabelle im Annabelle Droulers in hong kong. Shery i am shery ahn. More than 1100 people were killed as fighting between israel and hamas enters a third day. The u. S. Is moving an Aircraft Carrier strike closer to the region. The middle east goes to war with the yen and go higher. Soil traders watching calls for governments to support the palestinian people. Iran is a key or producer and backer of the hamas group. This is how wti and brent are coming on in the Asian Session after a shark attack by hamas on israel. Iran is now seen as a wildcard when it comes to conflict potentially spreading to the rest of the middle east. This is the pricing after oil posted its biggest weekly drop since march. There is no immediate threat to supply at this point. However, we are watching very closely the vital shipping route that tehran previously threatened to close and of course Higher Oil Prices could mean global Government Bond yields rallying further. Look out bond futures. Cash treasuries are closed monday for the u. S. Holiday but bond futures are trading is normal. Flip the board and you can see where we are at after the 10 year yield and 30 year yield come down a little after touching the 2007 highs. We had data showing hot nonforeign payrolls or ports on the friday session in new york. The s p 500 gained ground snapping its four week losing streak. We got a lastminute deal with the automakers union helping boost demand. The dollar is continuing to study at the 12 70 level after the boost we saw initially following the deadly attacks on israel. Lets get more details on data. At least 700 people have been killed there since hamas launched its unprecedented incursion saturday with at least 307 palestinians dead. Washington affirmed ironclad support for israel as it sends an Aircraft Carrier strike group in the Eastern Mediterranean. Lets get the latest from bloombergs ian fisher. We continue to watch violence and fighting. Where are we at . How deadly has it been . Ian it is the worst attack in israel since the formation of the nation in 1948. Theres really no comparison. Even the yom kippur war that essentially happened on this 50th anniversary of it. That was a completely different thing. It had far fewer casualties inside of israel. Right now we are looking at 700 dead, as you said inside israel. Some of them are american. We dont know how many. 370 palestinians have been killed mostly in fighting and some in retaliatory attacks. Following the conflict over the years, you notice that when israel and gaza get into one of these conflicts, generally, a lot of Palestinian Civilians die. Israel has not quite launched this level of attacks it often does in situations like this. I think they are quite shocked about planning their next steps. I would expect a number of palestinian deaths to grow quickly and by a lot. Haidi this has been an intelligence failure for the ages. How did israel and u. S. Security and intelligence officials missed this . Ian good question. Nobody has been able to answer that. I think the answer is not going to be good. For israels current political leadership. It is hard to find the words for the level of failure of this. Think about it. There was probably 1000 or at least the high 100s, what davids verily what the Israeli Military said last night of palestinian attackers. Can five people keep a secret . Not usually. Can 1000 people keep a secret . Never. How they missed this is mystifying. Haidi the latest on the ongoing fighting. With us is david miller senior fellow at the Carnegie Endowment for International Peace previously a state department negotiator on middle east issues. Great to have you with us. Ian was just telling us how incredible it is this sort of attack was missed by the intelligence community. What do you make of it . David i was in jerusalem when egypt and syria attacked israel in october 1973. I had an eerie reminiscent sensation about the rapacity of intelligence organizations to have a lot of information but failure to imagine the capacities and motives and acceptances of their adversaries. We will not know the full tiktok on the intel of the story here for months of that. But, its clear the israelis underestimated their adversary. Its they simply did not come for him the notion, even though the idea of hamas operatives tunneling, hezbollah operatives in the north tunneling, have been a major concern of israel before, they simply could not imagine hamas could conduct such an operation or under current circumstances would. What we do not know is whether or not analysts indicated the threat and nobody took it seriously. It was an intelligence failure and an operational failure. The fact that three days into this conflict, the Israeli Defense forces are still not successful in securing the areas proximate to the fence line, that is long, and breached on many different levels. In many different places. I am not questioning the heroism and commitment of the israeli forces. But, intelligence failure and operational failure. Why werent there sufficient forces on permanent bases along the fence line . Or, in gaza, the where they could be deployed immediately. Shery should we start imagining the possibility this could spiral into a wider regional conflict . David people talk about that. I have done a fair number of interviews since yesterday. When you talk about regional conflict lets be specific. You arent talking about an intrastate conflict between israel and any of the countries. With the exception of lebanon and its not the lebanese estate it is hezbollah. When we talk regional conflict we really mean iran. I still think the prospects for an actual confrontation, and i mean israeli and iranian strikes against one another, not proxy, but for directly on one anothers territory. I believe the prospects of that are probably not great. This conflict, however, is not over. It could easily spread to the west bank coming to jerusalem. If the it israelis do mount, as i suspect they will and major ground incursion, land, sea, and air in an effort to eradicate hamas leadership, destroy its military infrastructure and fundamentally change the balance of power, preventing hamas from covering 2 Million People in gaza, that will involve enormous numbers of casualties. That could prompt, then, and trigger, a wider escalation. But even under those circumstances i do not think its real wants this. The iranians clearly do not want a direct confrontation with israel or the u. S. Annabelle if the political calculus has fundamentally changed, where does that leave the two state solution . Aaron where does that leave what . Haidi the two state solution. Aaron pop aaron the two state solution even before this was largely a thought experiment. In order to have a serious negotiation and pursue something you and i would describe as an equitable and durable solution we need four things. You need it leaders that are masters of their political houses not prisoners of their ideologies. You need a sense of ownership. Israelis and palestinians care more about solving this problem than any external actor. You need an effective mediator prepared to go the distance and finally an agreed and that both sides can agree to. Im sorry to say, we worked on this problem the better part of 25 years. Since leaving government in 2003 i preached the same annoyingly negative message. Without at least the first two, leadership and ownership, the chances of the resolution of the conflict are slim to none. And not to trivialize it. Slim has already left home. Haidi we touched on what is called an enormous failure of intelligence and there are questions faced by the u. S. And israeli officials on how this was allowed to happen. I wonder how the fractious nature of domestic policy in israel may have led to this point as well, certainly, not help the situation. Aaron you will hear a lot from mr. Netanyahu i am sure in the coming days. It was the divisions within is really society. The decision on the part of thousands of israeli with service wrigley important for intelligence operations under force operations. It was their unwillingness or commitment not to do reserve duty that sent signals to israels adversaries and led to this. I do not think that is credible, frankly. I think by and large even without a judicial overhaul, and domestic divisions, you still would have to problem this problem. It flowed from in part complacency. In part more of a focus on the west bank. And the northern border of lebanon. And an ability to imagine that hamas inability to imagine that hamas would breach the fence line. And, coordinated undercover off rocket strikes, high trajectory weapons launched, almost 3000 in three days. It was a failure to imagine and the terrible consequence. The brutality, the savagery. The stories we will hear, once the israelis secure the south, they will be ghastly. I need cruelty, and in their barbarity with respect to what hamas has done. Their intention was to kill indiscriminately, to terrorize. And, to demonstrate to the world that they, not the Palestinian Authority, could defend the rights of the palestinian people. This was a mass care were attacked. Despite the fact you could attach labels, military coordination, it was a massive terror attack. I am aimed at sowing terror. It will not break the spirit of the government or the people. But, its a painful, tragic reminder of the cruelty this region can offer. Shery does this mean the Israeli Campaign could go on a long time, especially when you alluded to that major incursion that could happen . Not to mention as heidi alluded to the fractious divide in politics, a common foe could work well for domestic politicians as well. Aaron i think in a way it though the longterm consequence for the Prime Minister is unclear. Her premiership, leaving it. The israeli options are not great. They could negotiate with hamas for the return of we dont even know how many israeli casualties. Well over 100. If they do that hamas will have a highpriced, in terms of the release of palestinian prisoners. Thats one option. They could try military rescue. Thats very dangerous. Then you continue with airstrikes. That will destroy infrastructure badly needed for 2 million and habitants of the gaza strip. They could blockade the strip. A total embargo. Nothing goes in and nothing goes out. That would cause severe humanitarian consequences. Or as you pointed out, they could launch qualitatively and quantitatively a campaign that we have not yet seen. It could last days. I doubt they would reoccupy the gaza strip. But you have to ask yourself and i am sure the planners are asking themselves this now. What about the day after . What happens even if they are successful in decapitating a masa leadership . Destroying its military infrastructure. Without a statement of force to improve the lives of those on the gaza strip and to control a monopoly on the forces of violence of these disparate group, you are talking about a wash, rinse, and repeat circle that will recur. Its a tough situation they face. And it is an even tougher one given what we see in terms of those killed and injured in recent days. Haidi we talk about israel being galvanized into response with this new shock of vulnerability. Does this push closer to that potential lies for ron here . Aaron i think its too early. A lot of analysts are speculating you could hang a closed for the season sign on the prospects of israeli semi normalization. I think that objective has taken a big hit. Because, success dependent is dependent on the Biden Administration pushing the government for meaningful, consequential concession from the israelis on the palestinian issue. Right now, if the Biden Administration had any leverage they were prepared to use with israel the leverage is gone. With 700 dead and still counting, and at real possibility of a massive military operation against gaza, the odds the administration could force, would force the Israeli Government at this time, or that the Israeli Government would even entertain the concession relating even to the Palestinian Authority or any palestinians. It strains credibility, friendly, to the breaking point. I worry greatly about the price of the u. S. Will have to pay for israeli saudi normalization. Its way too high given return on investment. Thats what i worry about more than anything else. Right now i think the issue is the israeli palestinian. That is the focus. The Biden Administration would like to do things that would preempt this strain. I think their mindset is to your. They are prepared to give the israelis, understandably, the time and space and even support as secretary of defense lloyd austin said, to basically do what they will do in response to this massive act of terror. I think our leverage year here is minimal. One thing. If the israelis do launch a campaign in gaza, if they are successful, if to any degree they choose to extricate rather than to reoccupy that it is conceivable, and, i am thinking about in a galaxy far, far away, but it is conceivable if the International Community led by the United States, eu, and bangor could come up with a plan , a real plan, to deal with the economic and social rule cruel realities of what life is like in gaza, you might consider they could, to a large degree, reduce the influence of the radical palestinian groups. But that would take coordination and resources and real will. In order to do it. Probably there would need to be a transition. May become organized by the United Nations to somehow create a pathway from a hamas leadership to something else. It is sketchy, i concede. But we need to think positively in some regard of what to do. Haidi aaron david miller, we appreciate your time. He is a senior fellow at the Carnegie Endowment for International Peace. Lets get you to annabelle. Annabelle a look at some initial reaction through some of these weekend events here. Big moves in oil already. The story in currencies, still firmness in the japanese yen. Thats a safe haven play. Also Dollar Strength is coming through. You can see the euro, pound, weakening. The aussie dollar down. 5 . In equities we saw a selloff coming through middle eastern markets, as can be expected. Israeli stocks really bearing the brunt of the losses. The biggest loss for the israeli benchmark here, a big drop of more than 30 years, already a stock market under pressure given the stability and Security Issues ongoing in israel. In terms of Market Reaction in asia lets change now because we have a number of clodr markets given the wild weather we are facing in this the. It is something that could take a lot of liquidity out of the market closures. Kiwi stocks already online to the downside. Other factors are at play including a blowout jobs number from friday. Shery more to come on daybreak australia. We continue to follow the latest of elements on the israel hamas war. This is bloomberg. Shery oil gaining ground in the Asian Session after a shock attack by hamas on israel injecting uncertainty into geopolitics under the middle east. Su keenan is following the energy Market Reaction it is not like there is really other meaningful threat to supply. The concern seems to be about the conflict widening. Su all eyes are on iran, a huge producer of oil and a supporter of hamas. Anytime there is a conflict in this area of the world there is concern about the strait of hormuz, a key shipping area that has brought up situations as recently as july where iran threatened shippers in the area or threatened to close the area. There is a possibility of the u. S. Cracking down again on a renewed flow of iranian oil exports. That is the situation where you could really see oil process prices higher. The concern would be with opecplus recently constraining supply just which just 10 days ago had a brand within striking distance of 100, before last week when we saw the biggest weekly decline since march. There is concern about other issues, macro issues that have caused oil to really retreat. Its the constriction of supply that would really send oil flying again. Right now there are no indications of that. We saw in asian trading a 3 gain from west texas intermediate. Its been on a tear before the recent pullback. Same with brent crude. It had been on a terrific rally before pulling back on these other macro issues. We heard from our earlier guest, just 50 years ago it was eerily similar in terms of the timing. There was an Arab Oil Embargo when saudi arabia and other producers choked off flow of oil. This is very different. At that time oil prices tripled. There is no repeat expected. Conflicts are very different as we just heard a lucid day did. The timing is a bit eerie. The saudis are not expected to turn off oil taps in solidarity with palestinians. Energy ministers from opecplus said we do not engage in politics. Haidi what are we hearing from analysts . Su you heard whether this be an escalation by sea, land1, air, that will be wait and see. Volatility will clearly be added back to the mix but we dont expect a huge jump in oil prices as we saw a little bit of jump, a little bid from gold. Thats also not expected to have a huge runoff. A bit of the jump you are seeing in asian trading might be traders that had short positions betting oil go slower from here and they had to buy back into the market to get out of those positions with the volatility this kind of crisis brings. Its not smart to take such a position at this point many traders will tell you. We heard from the Saudi Arabian energy ministers, the kuwaitis, and the uae. They stressed support for u. S. Opec policy and say they will cooperate. There is no reason to pull oil from the market to create a greater squeeze.