Transcripts For BLOOMBERG Bloomberg 20240703

Enters a third day. The u. S. Is moving an Aircraft Carrier strike group closer to the region. We are watching wider diplomatic fallot as one report says iran helped hamas plan its unprecedented crossborder assault. Shery watching the wildcard in the oil markets. At the potential the conflict could spread to the rest of the middle east. Gains for oil prices on that potential up 86 per barrel for wti. Rent is past 88 per barrel after oil posted the biggest weekly drop since march. Iran is a Major Oil Producer and key backer of the hamas group. Though there is no immediate threat is applied. People are watching what will happen with the shipping on the strait of hormuz where tehran has threatened to close it in the past. I did the treasury space Higher Oil Prices could mean higher global government yields freed we saw the 10 year yield and 30 year yield at the highest levels since 2007 last week. We saw a little more stabilization through the week with cash treasuries closed monday for the u. S. Holiday. We are following bond futures and seeing u. S. Futures, the first reaction to the shark attack shock attack by hamas on israel and the downside on the s p 500 futures today after it gained around and snapped its four week losing streak. We had some positive news on the auto workers strike as well on the friday session. Not to mention reacting to a very hot nonforeign payrolls report. Annabelle that is one to watch ahead of a key u. S. Inflation print do this week. There is a lot for traders to think about as we get the morning session underway. You are seeing that reflect with the vix futures contract spiking high. It is a movement back into safe haven assets like the dollar and safe havens. In the aussie dollar you have a retreat with the three year yield down seven basis points at this point on the day. For equities, a stagnant start. A couple minutes into the session you see aussie stocks pretty range bound, fractionally higher for a Third Straight session. We will watch materials and energy stocks, given the moves in energy, seeing that reflected in the aussie dollar, likewise trending lower. Something else playing out in the session today is a lack of liquidity. Thats a consistent theme. We are watching for updates on hong kong trade disruptions because we have a signal in place that is the thirdhighest storm alert at place the last few hours in hong kong and a very heavy rainfall coming down on the city. That tells us trading could be delayed. We have not had that signal lifted yet. We expect there might be no reopening session and may be no morning session depending on how it is lifted. But that signal is expected to be in place, that storm signal until at least 11 00 a. M. A number of markets are shut the entire day monday, japan, korea, and taiwan. Public holiday still in place, something that will affect liquidity in a session. We could see more muted muted moves in reaction to events in israel. Shery the latest in the development around the war between israel and hamas. The death toll has risen to more than 1000 less than 48 hours after the conflict broke out. The most severe fighting between the two sides in decades has left over 1100 dead. Israels army regained control over some areas that were breached by militants from the gaza strip on saturday. Lets Bring National security reporter Daniel Flatley. The wall street journal citing senior hamas officials saying around helped hamas plan these attacks. How could this change the response from not only israel but also the United States. States . Daniel this is something we will watch closely over the coming days. Iran has long been a financial backer of the moss. It has provided them both financial and Material Support over the years. The question raised by the store you cited is how involved were they in planning this specific attack . What was the timeline when to a . Will direct response becoming from israel . Will the u. S. Sign off on that, go along with it, try to prevent it, try to alter the course of how things go in some way . So far, when secretary of state Antony Blinken was asked about this earlier today in some sunday morning shows he said so far all the u. S. Has told israel we have your back and we will give you the support you need. We will make sure this does not happen again. We will recover some of the hostages that have been taken. So it is a situation that we will have to keep a close eye on how it unfolds over the next few days. Shery the failure of intelligence has been staggering. A lot of hard questions are facing israel, and the u. S. And the intelligence and security communities there. Do we know how this happened . Will we know why this happened . Daniel i think we will eventually get to the bottom of how this happened and what the specific intelligence failures were. A lot of people have been comparing this to 9 11 in the sense that this was such a surprise, seemingly, such a surprise. I think there are some similarities in the sense that intelligence does not seem to have been given enough of a warning. As we continue on in the coming days, when you talk to officials and people online they say we are fighting an active war here. We will not begin again to investigations yet. But, hard inquiries have started. People are starting to look at the fact. I think that as we go on we will learn more about what happens here. Shery we are trying to gauge the ramifications. Do we have any idea at this point what it means for the pending israel saudi arabia peace deal brokered by the u. S. . Daniel great question. It is somewhat an unfortunate irony of things that there were a number of peace deals pending in the middle east. There was a deal on an Iranian Nuclear program that the Biden Administration pursuing. On the agreement between saudi arabia and israel it included some security guarantees from the u. S. To saudi arabia. This would have been a huge development. Obviously, i think thats on hold for now. I believe israeli and u. S. Officials have basically said that we need to keep working on that. Even as the fighting unfolds. But it will not be our main priority as we try, at least from the u. S. Perspective, try to give u. S. Israel the support it needs and from the israeli perspective really prosecute this counterattack. Should haidi National Security reporter Daniel Flatley there with the latest. Lets get more with the director of the circle often middle east Security Initiative at the atlantic council. Jonathan, great happy with us. We appreciate your time at this time. Let me start on the security piece. What can you tell us about what could have possibly happened to have led to what many are calling a security and intelligence failure for the ages. Jonathan thank you for having me. As daniel pointed out correctly, we do not quite know yet. Clearly this was an intelligence failure and also a security failure. Having an effective investigation takes time. I am sure is greatly, u. S. Allies will go back quickly after the conflict is over to try to figure out exactly how they missed such a huge operation. It is a generational operation we have never seen before. We arent there yet. Haidi i thought it was interesting it was perhaps not only an issue of intelligence and interpreting information but an issue, with the comparison made by 9 11, of imagination. Perhaps as american ever imagined fundamentalists of al qaeda would fly planes into buildings, perhaps year, analysts did not appreciate the plans with paraglider through barricaded compounds in gaza that we saw. Do think thats a possibility in terms of how this has managed to be able to happen . Jonathan i think its true over the last few decades certainly as security areas have been built in the west bank, as gaza was disengaged and security was built. There was a view israel probably got complacent. That was comfortable. That it was hard to imagine this happening. There was a huge amount of creativity that went into this. This was not something hamas decided to do overnight. There was months of preparation and planning that went into this. I think it obviously paid off. The complexity of the attack from the hamas perspective, not only incredibly impressive but i think u. S. And is really israeli officials will have to examine their assumptions going forward. Shery if most of the attack happened towards the south of israel, whats the potential of a multifront war at this point . Jonathan great question and one folks in israel are really struggling with now. It is certainly very possible for hezbollah to decide it will get involved from not only the north, but, hezbollah has capabilities much greater than last time that can move through israel, certainly tel aviv, certainly jerusalem and major cities. But also housing militants in the west bank, whether they would get involved. I think a lot of this will be dependent on what happens next. In 2006 during that war, remember, a soldier was kidnapped by hamas. But, it was just as the ground war was getting going. The fighting was really getting spun up between israel and hamas as hezbollah also entered. If hezbollah believes hamas could really be at a risk, that is so intense it could really decapitate hamas and really setback their organization or undermine their organization in such a fundamental way that they could not be a valuable partner, then i think you might see has but i. Then you have a multifront war like israel has never seen before. Shery according to senior members of hezbollah and hamas speaking to the wall street journal Ukrainian Security officials supposedly helped this hamas attack. If this turns out to be true what are the implications of an actual direct iran israel war . Jonathan i think that is certainly an important question. This report just broke. I have not seen coverage of it from any other news feed that does not mean it is not coming. In some ways it really should not matter if iraq played a direct role in the attack. The reality is the majority of hamas, money, weapons come from iran. More importantly iran would have had to have given some sort of acquiescence for this to happen. If they turn out to have a direct role on it i think israel will take that into consideration. There has been a shadow war going on for years now in the cyber realm, certainly. You have seen investigations ascribed to israel. This may be bringing it into an overt, public matter. But it does not fundamentally change how we should view what is the iran israel conflict. Shery does this fundamentally change israels military strategy from your . Romney it could. But alluding to the multifront war earlier, there is the question of how many fronts can israel fight alone . I think it will change israels strategy most dependent on whether it feels secure and can quickly accomplish the objectives it has set visavis hamas and hezbollah if hezbollah gets involved. Iranian militants, if syrian militants and west Bank Militants get involved. Its hard to imagine a direct strike on iran right now by his real. I cannot say that is not possible. But there are some any fronts israel has to fight on. I think the bigger question will be, what response does the u. S. Take and how does that change is u. S. Calculus visavis iran in its support of israel . Shery Jonathan Panikoff of the atlantic council. Fujitsu shares. Their thoughts on the yen and why they think another round of intervention could be necessary. This is bloomberg. Is it possible to fall in love with your home. Before you even step inside . Discover the Magnolia Home james hardie collection. Available now in siding colors, styles and textures. Curated by joanna gaines. Haidi we are seeing another typhoon affected day when it comes to hong kong read the Hong Kong Exchange saying the morning trading session will be delayed due to that typhoon and black rainstorm. The Securities Markets delay will be markets will be delayed due to the issuance of typhoon signal number eight and a black rainstorm. We have seen a number of these disruptions over the past few weeks and months, these more frequent whether discussions disruptions in hong kong. We have seen discussions of lowering the thirdhighest or morning before midday. Stock market trading is expected to begin at 2 00 p. M. Lets get to our stop top story. Global Financial Markets facing Geopolitical Uncertainty after hamas surprise attack on israel. Lets bring contributor Garfield Reynolds. Garfield, there was a bit of haven demand. Of course we are watching for the longerterm implications when it comes to iran and oil markets. What is on your watch this morning . Our prop garfield one of those things which makes it difficult to read exactly what is going on with the bond market is we do have cash treasuries closed all day because of the columbus day holiday. Putting that is assigned, we have had a very strong rally. A bit stronger than expected given there are reasons for oil prices to move higher and over the longer term that is part of what investors and traders are trying to work out where we go from here. If oil will stay sustainably higher, that will drive inflation higher. Then, that is a reason to expect the fed to stay hawkish. That is a reason to move back out of bonds as soon as you can after moving into them in the most obvious haven trade. Shery the reason we are following oil is the invitation for inflation and the impatient for the fed. At a time when the u. S. Jobs picture also looks pretty resilient. Tell me a little bit about how resilient the labor market here in the u. S. Looks. The headline number seems very hot. Was it that the same case under the hood . Garfield know, under the hood there were a few signs that, you know, some of the expected slowdown in, you know, wages pressure is beginning to come through. Some people are saying that they were already doubting that the u. S. 10year gilts, for example, could top 5 . Though some people hinted that was a very strong call. The way yields did not move up all that much after payrolls, they moved up into payrolls on a net basis, a few basis points further after payrolls. But it was not a blowup for yields. It was not a real shock. Then you also had inflation coming up. And of the u. S. Jobs report. So there were plenty of reasons for u. S. Yields to be on the upper end but there was not what looked like fresh capitulation area capitulation. That is one of the things you bought been one to do with a strong rally in treasury yields and Australian Government bonds, exhaustion on the selloff run and a sudden reminder that there are plenty of reasons out there to doubt the equities marching higher. One thing that the middle east conflict has done is remind people of the dangers for this. Haidi bloombergs chief rates correspondent for asia and live contributor Garfield Reynolds there. Fred newman is a chief asia corresponded at hsbc. This is another geopolitical overlay as we watch for what the longer term implications are. Does this introduce the possibility of more uncertainty . Fred absolutely. We are still, i think, trying to really get to grips with the implications of the tragedy we are seeing in the middle east. The first reaction is possibly risk aversion. Its a reminder geopolitical risk is alive and they suspended trading in the u. S. Monday. In the asian open you see a bit of a sign sign of a slight pullback in markets, pricing in risk aversion. The risk for asian markets is it puts additional strength into the u. S. Dollar over the next you weeks. Thats been a headwind for asia, particularly for Central Banks that would like to ease monetary policy. Their hands are tied. You see u. S. Yields higher and the dollar very strong and this complicates the picture for the outlook for asia. Oil, we have to see what will happen to oil with the middle east. Shery that depends on possible retaliation against iran and lots of complex factors. Even before this we saw the energy reflation story creating challenges for Central Banks. Does this make policymaking in the final leg of the cycle more challenging still . Fred it does. Absolutely. We are still not sure where we land in terms of u. S. Rates. Policy rates, of course. The nonforeign payroll numbers were relatively strong friday. Maybe under the hood there were some signs of numbers not being quite as strong. But it does suggest, as we look at market pricing, that the fed may need to push higher. That is what the market currently believes. For the asian Central Banks, this means that Higher Oil Prices, the fed moving further, that could perhaps mean a few more rate hikes are needed. Central banks, for example, the are b. I. In india or the bsp in the philippines but even the bank of korea, that is reluctant to hike rates at this point. Given these global to filament, they be maybe they might be dragged into a rate hike. Thats not necessarily the baseline scenario, the moment. Shery will we get back into the target range for indias inflation . We have data this week. Fred it looks as if we have seen a bit of deflation, or at least, adjustment in food prices coming through. There is a chance here we see a temporary dip in headline inflation because of weaker food prices. With oil is at the same time moving higher as well. We saw last week a bit of a pullback in oil. If that rebounds, that might just be read below the upper end of the target. So, its very sticky. That makes the rbi in play. They may not need to hike until year end,. Shery a different picture for chinas central bank. When will we see some signs of reflation in the chinese economy . It gives the pboc some leeway for more easing, but at the same time, shows the demand picture is pretty bleak. Fred it is. There were some encouraging numbers out of the mid autumn festival for example on the consumer side. Certainly, compared to 2019, the last comparable year, we have seen relatively strong spending. The question is, can this last . Will this be enough to really pull the economy out of its sort of disinflationary funk, if you will . The verdict is still out. We think there is a good case that by early next year the pboc made it to may need to upgrade further. Shery Frederic Neumann is hsbc, thank you. We have more to come. This is bloomberg. The biggest ideas inspire new ones. 30 years ago, state street created an etf that inspired the world to invest differently. It still does. What can you do with spy . What do you see on the horizon . Uncertainty . Or opportunity. Whatever you see, at pgim we can help you rise to the challenges of today, when active investing and disciplined Risk Management are needed most. Drawing on deep expertise across the worlds public and private markets in pursuit of longterm returns. Pgim. Our investments shape tomorrow today. Shery you are taking look at live pictures of the skyline and gaza tens of thousands of people have already been displaced Israeli Defense forces continue to target hamas positions. This weekend militants fired an estimated two 1002 hundred missiles from gaza and sent fighters into southern israel. Israel now officially declaring war against hamas. The u. S. Says it is moving an Aircraft Carrier strike route to the Eastern Mediterranean and is augmenting its Fighter Aircraft squadrons as fighting between israel and hamas continues for a third day. Vonnie quinn joins us now with the latest in the death toll continues to climb. Vonnie and will continue to, this is not stopping and has been nonstop since those surprise attacks on saturday. The u. S. Is responding swiftly sending a group of warships to the Eastern European secretary austen saying after discussing the matter with President Biden he directed the uss gerald ford Carrier Strike group to the region. That includes an Aircraft Carrier a guided missile cruiser and guided missile destroyers. He also said the pentagon will be sending additional aircrafts two fighter squadrons already in the region to enhance deterrent efforts. The u. S. Will be rapidly providing the Israeli Military with additional equipment and supplies including munitions which will begin moving today and arriving in coming days. A Swift Response from the pentagon and from the administration. Also in congress the u. S. House a bipartisan resolution that will say it stands with israel and will condemn hamas brutal war. We have had swift reaction from Many International bodies and countries, ukrainian president zelenskyy one of the first condemn what he called a terror attack. He said israels right to defend itself cannot be doubted. There are some supports from iran, the wall street journal reporting that around iran helped plan this and has been since august with hamas around Supreme Leader praising the attacks in a post on x formerly known as twitter. Their country is walking a fine line calling for deescalation or the preservation of a two state solution. One example being turkey, president erdogan reiterated his call for the establishment of an independent palestinian state with 1967 borders and jerusalem as its capital. These statements are being parsed to the very word and they are being very careful with what they say given some of the communities within them and some of the diplomatic ties that they have. I want to point out that in some cities including istanbul but also london and new york there have been gatherings and our gatherings ongoing that some describe as celebrations or propalestinian gatherings in support of palestine at this time. The metropolitan police in london are being called upon to actively monitor some of those gatherings. I do want to point out that across from the United Nations there was also a clash between propalestine and proisrael supporters this evening. United Nations Security Council has already met in a closeddoor session, you and secretary general condemned the attacks and called for all diplomatic efforts to avoid wider conflict. The u. S. Ambassador to the council mentioned not all members condemned hamass attacks and that we could probably deduce which those were. Shery what did we hear from beijing . Vonnie to the investors point, beijing being a little equivocating here trying to up its presence and clout in the region. In the last few months it has even met with the plo president , and president xi jinping proposed an International Peace conference on the conflict. Beijing statement as you can see is that it is deeply concerned about the intensification of violence. It reiterated support for an independent palestinian state and said hamass attack showed a longterm stagnation of the Peace Process is unsustainable. I mention a longterm stagnation as china did with the priest Peace Process stalled intra 2014 and has gone nowhere since. Shery lets get you to annabelle for a look at how we are shaping up with markets in asia. Annabelle we just want to kick off with Market Reaction we are seeing so far feeding through from the middle east because this was the close for some of the regional benchmarks. The one that is on the biggest drop was the israeli benchmark, that went down more than 6 into the close. That was the worst day for israeli stocks in more than three years and have been facing a lot of uncertainty in that market given the ongoing political drama. That is what we saw in middle east markets on sunday. Lets change on and see how we are setting up counting down to some key market opens. China the watch for us this morning. We have aussie stocks online and they are pretty range bound in the session, it is the move as we see a spike in volatility in the vix future contract. We are seeing that move more into safe haven assets, things like bonds. We are seeing that drop come through for yields at the front end of the curve, the japanese yen a little firmer in the greenback has been stronger against a lot of its peers. The biggest move is an oil in brent crude up nearly 4 at this part of the day. As i said the focus for us on the session is Chinese Markets coming back online. We have a number of other bench markets shut today including japan and korea. No trading at the top of the next hour these events in israel are going to be something traders are watching closely, whether it has ramifications. China stocks, close to a racing reopening gains but over the week they have been shut and it has been a volatile period because the u. S. Jobs report, seeing that higher for a longer narrative playing through in terms of rates. And some mixed data coming through from the golden week holiday break in china so that is going to be another big watch point for us. Haidi so much for markets to contend with, lets get to indonesia and the central bank there says it plans to keep rates on hold as it determines the impact of a stronger dollar. Thank indonesia governor spoke to us exclusively, about their policy outlook. We have to hold our policy areas for a while, not because interest is very low, but because of the global spillover. Because the fed funds rate increase and its very strong. We need to wait that. Governor, what is a while . The first or second half of next year . How difficult is it at this point to try and calibrate when the move down could come . In this very difficult uncertain world, i have an idea. But of course that depends on the global its very important. How the fed whether this november will be the last one, whether this year will be descending and how the dollar will be declining from 106 to 100 and so on. All of it depends on that. You said in the past you dont need to match the rate hikes and what you are explaining is extremely important. You have an idea but you have all these things that could come and hurt that. What is your biggest concern that would make you come off of the plan in your head now . Every country must protect their domestic against the impact of dollar strength, year increase as well as the uncertainty unfolding in the u. S. The best way to do that, while addressing spillover addressing the year of the government bond, especially this is what we are doing not only intervening in the fx market but also selling our haidi bank of indonesia governor speaking exclusively to Francine Lacqua in london, still ahead fujitsu chief economist tells us how the yen could weaken further on rate differentials and slowing exports. That conversation is next, this is bloomberg. Shery take a look at how currencies are trading after we saw strength on the u. S. Dollar following deadly attacks on israel. We are seeing it hold steady at that 1272 level, a little upside but it is what is on the other side of the break we are following closely with the japanese yen also seeing a little bit of strength given that safe haven demand at this point. Really not that much and really in the low 149 levels at this point after four weeks of losses against the greenback already. Of course last week we saw more data signaling the potential the boj would do more including japans wage growth data disappointing. We are also following the euro and the british pound, under pressure at the moment as well as the aussie. Some more risk off sentiment spreading across markets but the japanese stock market on holiday today. We are following the yen as we bring in our next guest that says the currency could weaken further on rate differentials and slowing exports. With us is martin chief economist fujitsu. Great to have you with us, we are not necessarily seeing that much of a safe haven reaction on the japanese yen today. A little upside today but not that much, are we headed towards another run towards that 150 level and will authorities intervene . Martin completely right, right now this is how much sentiment is actually negative where it is usually a safe haven. We are really way outside of the conflict right now, the yen should be stronger, the yen has been struggling around 150 because this might be the line in the sand at the government is drawing for another round of interventions. People are really nervous here, the bank of japan supporting the economy is still buying record amounts of yen. Domestic government bonds so liquidities there, the yen might weaken when the situation normally normalizes a bit more. Haidi you mentioned wage growth data last week disappointing and not showing the boost that the boj wants to see, how much longer do they need to keep this ultraloose policy and how much longer will the japanese public and politicians tolerate this . Martin this goes in all sorts of directions in japan. This is where the bank of japan is challenged because the economy has been extremely strong this year. It is weakening now, it is slowing down significantly but sentiment is surprisingly positive in particular on the corporate side. Companies are able to pass on prices, they are selling. They are seeing that market supply chains of stabilized. So far a very strong corporate sentiment, weakening markets and that means that the bank of japan really wants to remain expansionary and what is mostly in their way is not so much public sentiment in japan but the weakening yen. More liquidity is getting out there in terms of yen the more it is flowing overseas and that is weakening the yen so i think this is where we have our eyes on the yen dollar rate right now. Haidi what is really in their way is the fed. What is really in their ways jay powell and i suppose the question is how much are they willing to sacrifice in order to potentially stabilize the yen if they need to. Is that why we have seen more measured approach to intervention . Martin well governor a way to stretches his stresses his eyes are on the economy. He wants to get a positive Wage Inflation cycle growing well into next year, overseas markets next year look challenging so having a strong domestic economy is indeed extremely important but as shery pointed out sentiment on the public side and the government is very concerned about the yen dollar rate. It is increasing import prices and this is are we still on . Haidi yes you are please continue. Martin i am sorry i was gone for a second the government is also pumping an enormous amount of money and keeping Energy Prices low. This is heavily subsidized in japan, on percent of gdp here, 1 there. So the government is basically doing the bank of japans policy on keeping prices low and it still runs at 3 but in the supermarkets at around 10 inflation. So people are concerned about the yen getting weaker and the overall economy being so badly devalued, overseas and westerners are coming in because japan is so cheap. So the yen dollar rate is really important and beyond 150 is probably not acceptable for many people. Martin we are also haidi we are also starting to see the cost of borrowing start to rise as a result of higher rates elsewhere. It seems like japanese corporates are not necessarily immune. When you take a look at the big picture for japan are you convinced that this time it is different as the markets have been buying into or do you think some of these headwinds will start to come into the fray . Martin we came out of the pandemic and the difficulties overseas with Global Policy adjustments with a very strong domestic economy. So that is clearly different from normal. Exporters have not been doing as well on the very weak yen but they are ok. Supply chains are fixed in asia, that is extremely helpful. The overall picture from a japan perspective is actually not as negative, what we are feeling and which is also not as usual is that the yen is so very weak. This is just a followup of a decade of monetary expansion so there might need to be some change. Companies are adjusting and they are pushing productivity, labor markets are extremely tight so they are focusing on digitalization and productivity. That is a challenge but that is also what drives stock prices in the long run so i am quite positive in terms of what companies are doing and how their domestic economy is performing. Shery how closely are you watching the market dysfunction we have been talking about given the bojs large presence there. You said more than a decade of expansionary policy and those side effects, how concerning are they . Martin this is quite concerning because Global Policy change driving the bank of japan through the Exchange Rate right now, we have a change in japan looming and that means that Smaller Companies will be quite challenged. They cannot easily use digitization and productivity, we have an intense environment for Smaller Companies next year but this means that the overall market for Bigger Companies, also overseas investors, is actually quite positive because productivity really has to go and it is increasing. This means there will be a lot of m a next year, japan is very attractive as a market in terms of valuation. People will probably go after the value that is here and this is the story for next year i think. There is a lot of value around if you are selective and look at what services are doing around japan. Very low valued, a good situation for investors i think. Haidi alwaysc with you the chief economist f fujitsu. Still ahead a big week of politics in this part of the world. In new zealand electing its next government and australia is set to decide on an indigenous voice to parliament. We get the latest on both of those, this is bloomberg. Haidi australian Prime Minister says he is optimistic that the nation will vote yes on saturday in the referendum on an indigenous voice to parliament. Australian government reported joining us, is there any source of the optimism. Has there been a turnaround in poll numbers at all . Ben there has been a slight uptick in the vote for yes in the past hours but it is very minor and it is only the second time in the past week or the entire campaign we have seen an uptick in a yes vote. At this point we are looking at a vote of 55 for the no side of the campaign. Five days out we can expect a rejection of the voice to Parliament Proposal this saturday. Haidi so how is the Prime Minister dealing with the prospect of a referendum defeat . Ben he is sad but he is going to respect the results of the referendum no matter which way it goes, this is not a proposal that came from him but he really has picked it up and ran with it since he won power in may of 2022. He said that he wont try and legislate a voice if this proposal is rejected so that means if there is a no vote on saturday he says he will respect that and there wont be any other way. But the voice proposal is effectively off the table until a future government decides to pick it up. Haidi are there any other future pathways to more representation . What are we hearing from the opposition . Ben the opposition has said they will hold a second referendum if he takes power, in the next election or the election after that. But that will be particularly a symbolic representation in the constitution for indigenous australians. He also hinted he might legislate a voice of some variety but the exact form of that is unclear and complicated at this stage. If this proposal is rejected he has said this is it as far as he concerned. We think we would not be expecting anything in the next two or three years. Shery and we are expecting another big vote on saturday over in new zealand. What are we expecting in terms of what shape the government will take . Ben if the polls are going to be believed we are expecting a change of government, will probably lose power in the next new zealand Prime Minister will be the former ceo his National Party might have to form a government with a couple other parties if the polls are right. That is the prolibertarian act party and then the new Zealand First party under the former deputy Prime Minister winston peters. If the polls are right christopher will be the new Prime Minister after saturday but in coalition with two other parties and that would be a stunning turnaround from that record victory by the Prime Minister in 2020 which saw her take more than 50 of the seats forming a majority in the new zealand parliament. Shery been there with two big votes in new zealand and australia this week. We will actually provide you with on the ground coverage of new zealands election, voters heading to the polls in less than a week. We are also watching oil prices at the moment, we saw a jump at one point past 4 . In the early asian session, this of course after that surprise attack by hamas on israel and the potential that the conflict could spread to the rest of the middle east. At this point the expectation is that there is no immediate threat to supply but all eyes are on what happens to iran a Major Oil Producer and key backer of the hamas group. We have heard from media reports that iran help plot the attack on israel. All of this coming at a time where we have seen big losses for oil already, we are just coming off the weekly biggest weekly drop since march. Haidi yes that big jump as a result of that surprise attack, we continue to watch what if any retaliation against iran it looks like and how that impacts energy markets. You are seeing that classic haven demand risk off effect, we are seeing the vix jump, coal jumping the yen being bid up as well. We are releasing treasury futures along with regional bonds seeing upside there as well. The australian and kiwi and aussie 10 year yields on your screen, the s p 500 futures up by three quarters of a percent at this point. Really as we see that safe haven demand after that shock attack by hamas and israel. This is bloomberg. 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 . You can get two unlimited lines for just 30 each a month. There are no Term Contracts or line activation fees. And you can bring your own device. Oh, and all on the most reliable 5g mobile network nationwide. Wireless that works for you. Its not just possible. Haidi it is approaching 11 a. M. In hong kong you are watching daybreak asia anabel we are counting down to japanese markets japan and korea are closed. Shery oil surging as traders react to the hamas and israel he wore an u. S. Treasury futures pushing higher more than 1100 People Killed as the fighting enters a third day. The u. S. Now moving a Carrier Strike group closer to the region and we are watching the wider diplomatic fallout as a report says iran helped hamas planets unprecedented crossborder assaults. We are watching the reaction from the u. S. As well, now sending an Aircraft Carrier strike group into the Eastern Mediterranean and bolstering its Fighter Aircraft squadrons in the region. Vonnie quinn joining us now for more on whats happening and of course the death toll also continuing to climb. Vonnie the fighting has not stopped for three days straight night and day. More than 1100 and that number is expected to rise. The u. S. Is sending a Swift Response, the gerald r. Ford defense carrier after a conversation with biden, that Group Includes an Aircraft Carrier a guided missile cruiser and guided missile destroyers. The defense secretary also said the pentagon will be sending additional aircraft to fighter squadrons in the region to enhance deterrent efforts in the u. S. Will also be providing the Israeli Military with additional equipment and supplies including munitions which will begin moving today and arriving in coming days. The u. S. House is preparing a bipartisan resolution that it stands with israel and condemns hamass brutal war and we are also seeing reaction globally. These blocks of allies really putting out some strong statements, we will begin with Volodymyr Zelenskyy the ukrainian president who is at war himself. He condemned what he called a terror attack and israels right to defend itself cannot be doubted. Then there is europe, france, germany, italy all condemned the attacks and the eus Foreign Policy chief said he is on his way to oman to meet with arab counterparts. There is some support from some quarters including iran. You mention it is being reported by the wall street journal that iran helped plan these attacks and has been helping since august. Which is quite a shocking revelation from the wall street journal sources to the journal. I ran coming out on twitter really giving support to the palestinian Freedom Fighters as he called them and then there have been citizens coming out in groups and gatherings and cities around the country and the world in the United States, new york and london and turkey and istanbul. Giving support to what they call the palestinian Freedom Fighters. The metropolitan police in london was called out to keep an eye on some of these celebrations by people calling into the police. Overall the United Nations Security Council has met already, it was a closeddoor session and it was a was not a unanimous decision whether to condemn this. The u. N. Secretarygeneral condemned the attack the u. S. Ambassador to the council said not all members of the Security Council condemned hamass attacks. Haidi and we have been watchful of chinas reaction. Vonnie exactly we have to keep an account ultimate diplomatic complexities. Relations with russia, saudi arabia, the normalization of relations with israel. With some of those african countries as well as countries in the middle east. All of these counter currents and crosscurrents are playing underneath it all. China is walking a fine line and doing what some other countries have done as well concentrating on the two state solution and this revival of peace talks. China in a statement saying it is deeply concerned about the intensification of violence and reiterated support for an independent palestinian state and said hamas is attack showed a longterm stagnation of the Peace Process as unsustainable. We know the priest process has been installed for 10 years at this point, installed in 2014. We also know china would like to have more of a presence in the middle east and more of a voice in the middle east. We will have to watch how it all plays out in coming weeks and months. Haidi vonnie there with the latest, lets get back to our stop top story. At least 1100 people have been killed as fighting between israel and hamas militants enters a third day. Israel Prime Minister netanyahu has vowed to win the war. Netanyahu we are at war not in operation this morning hamas opened a murderer a surprise attack against the state of israel and its citizens. We are in it since early morning. I convened heads of security, i instructed first to clear the villages from terrorists that infiltrated. This is taking place now. In addition i ordered a wide call for reservists to fight back with might and scope that the enemy did not know. The enemy will pay a price he did not know, until now. In the meantime i a citizen citizens of israel and the instructions of the homeland we are in a war and we will win it. Haidi lets get more from bruce einhorn. What do we know about the intelligence failures that led to this attack both in the u. S. And israel. How did security and intelligence communities fail to see this coming . What can we find out at this point . Bruce it is quite early to be drawing any conclusions about the intelligence failures. There was a major failure to anticipate this would happen and be prepared for it. At the moment the focus is going to have to be on the current situation, israel is saying at least 700 killed and israel. The u. S. Has said at least four americans have been killed. Islamic jihad has said it is holding 30 hostages from israel. The Israeli Government has said it has declared war and it will not stop until hamass military infrastructure is dismantled. That is something that could likely lead to a Ground Invasion and could possibly take months to accomplish. Shery and the concern right now is the conflict spreading to the rest of the middle east especially as we are getting media reports that iran was backing this attack by hamas. What do we know at this point . Bruce we know that iran supports not only hamas but also hezbollah in lebanon. There have been reports of attacks from the north, the Israeli Government is evacuating some areas in the north. There is the potential for this to widen and as you said there is the potential for it to go even further because of irans involvement. We do know that israel has been at odds with iran for many years. Going after one another, often times through proxies such as a or hezbollah. That is likely to get worse in the days and weeks ahead. Haidi we know the divisiveness and fractious nature of domestic politics within israel has been ongoing recently. To what extent would this have made the Tactical Response side more difficult . Bruce obviously Israeli Society has been very focused over the last few months on internal issues on Prime Minister netanyahus coalitions plan to overhaul the judiciary which has led to massive protests. Again, this is the sort of thing that down the road no doubt there will be investigations. There will be inquiries to determine not just what sort of intelligence but what role the political situation up until now played in this. The other thing to keep in mind of course is at the same time with political divisions in israel there have also been signs of progress on the diplomatic front with the United States trying to broker an agreement with the saudis. There have been reports of movement there and it is possible it is one of the things that hamas and possibly iran prompted them to do this now to stop that from progressing. Shery bruce there with the latest on the israel hamas conflict. We continue to watch the price of oil hike higher given the hostilities in the middle east in the potential for that conflict to escalate. Su keenan is following the energy Market Reaction, there is not necessarily an immediate threat to supply but it is the concern of what might happen next setting prices higher. Su it is concerned about escalation. There is a concern this could be a devastating proxy war involving both iran and the u. S. And a concern with their be disruption in supply . Right now there is not any but even with that you are seeing cold up, it has been up just over 8 and then crude up about 3 . And at the start of trading with brent crude we saw just in the past hour prices well above 4 . That is a significant jump on this news. You are looking at the strait of hormuz, that is a critical shipping lane for oil. Iran has exerted control over it many times over past decades, most recently there was a conflict in july. There is also a possibility the u. S. Could enforce any kind of sanctions against iran or limit its repowering of exports to put more oil on the market. All of that makes the oil story very volatile. What you are looking at is the impact of opecplus voluntary cuts which have been extended to the end of the year. They have really put a squeeze on supply over the last two weeks and that drove prices, particularly brent within striking distance of 100 dollars. Just 10 days ago and then the concern about macro events and other issues including the Rising Inflationary issues, Interest Rates etc. That caused oil to pull back, it now looks like oil is retracing that area and moving higher once again. How high do we go from here . There is a view, right now until there is more information on how expansive this might be this might be the limit of the jump we see. But volatility certainly has been layered in in a whole new way as of this war news hits the market. Haidi what are we hearing from analysts . Su they are saying it really depends on the details we get on whether the strike is far more violent. Whether it is by land or sea or air. All of that. Israel for instance might have a retaliatory strike against iran as more details are coming out about the depth of the rounds irans involvement. They have always been a supporter of hamas. There also a major producer of oil. The extent to which iran is drawn into this, possibly the u. S. , could ultimately determine how high oil goes. There is also the fact that these hostilities are coming almost 50 years to the day of the incident in the 1970s where we saw an oil embargo that drove prices three times higher. There is no sign this would repeat, this is a different type of conflict but all of these add to the unease and anyone who had been short betting oil prices would go lower from here clearly is repositioning at this hour. Shery sue there with the latest on both brent and wti topping 80 a barrel. A little difficult to gauge Market Reaction today when so many markets are on holidays but annabelle what are you watching . Annabelle with a number of closures today, what we can see is a little play into safe havens in the fx market. If you look at the japanese yen has been holding on to a little firmness through our morning session and when you take a look at the dollar moves you can see it against other g10 peers, the euro, the pound, the aussie. In that strength coming through as well. Fixed income markets also that safe haven play, you do have moves lower coming through across the curve. We had seen it being led more at the front end but that is starting to dissipate as we head through the morning. Futures pointing toward similar moves cash markets currently shot because they trade out of japan. Japan is one of the closed markets in the session today alongside korea and taiwan. Hong kongs morning session will be scrapped. We do have a typhoon, the third highest signal in place right now and it is likely to be enforced until 11 40 local time. One of the few markets onto online at this time is australia. It is still traders reacting to the israel hamas war and also at plays china markets coming back online later this morning. And add to that u. S. Inflation print that is still on the rise later this week. So that is a lot for traders to be digesting. Haidi we have more on the main one which is the israel hamas war. For more lets have morningstar the impact we see across the markets may be more limited in a best case scenario. It will take a look at the broader risks, next. This is bloomberg. Is it possible to fall in love with your home. Before you even step inside . Discover the Magnolia Home james hardie collection. Available now in siding colors, styles and textures. Curated by joanna gaines. Haidi we have a few markets on holiday including japan and south korea but this is a picture across australia and new zealand. We are seeing the asx 200 being led higher by a Third Session by energy and materials as we have also kiwi stocks under a little pressure at the moment. But this as we see u. S. Futures also losing ground, we have seen that reaction to the shock attacked by hamas on israel where you can see the dollar also gaining strength. Another haven demand and Oil Prices Pushing Higher with brent above 87 a barrel. Lets bring in director of Asia Equity Research at morningstar. It is still early days in this hamas israel war but if this conflict gets prolonged where are we going to see the first implications in terms of market assets, where we are going to see fallout . Lorraine good morning. I think the issue the main risk is if it is prolonged, if it is not contained to just in israel hamas conflict, that is where youre going to see a lot more risk to the market. Already youre seeing Oil Prices Jump in that is going to be damaging particularly at a time with oil growth slowing. And concerns of still high inflation in the u. S. And prolonged higher Interest Rates is going to present a risk of a deeper recession or rather a recession to some countries. Shery especially when we do have the economic challenge that china is also facing. Do you see any turnaround at some point and do you see any opportunities because of the slump . Lorraine for china what we are looking at is some signs that the economy is beginning to stabilize and pick up. Overall we are still looking at forecasted for china growth is four to 5 for this and next year. It is still growing just not at the 6 pace most investors would like to see. What we still see selective opportunities. What we are hoping to see with the policies that have been coming out is some positive impact for that. We still probably cant expect more can expect more. I think the government does have the ability to do more fiscal spending if they want to, when we look at china and purely domestic grades which are less sensitive to what is going on outside of china, that includes good companies. Quality Companies Like which we rate as wide note which and also byd which we expect to increase benefit from increased sales. Shery it is interesting with byd. Are you concerned about this renewed focus when it comes to the European Market on chinese cvs . Lorraine one thing, the car sales that the Chinese Ev Companies sell in europe or even outside of china is relatively small. We are not concerned about those. The main thing is to make sure that the products coming out, the volume sales in china, that is going to be much more sensitive. Haidi how do you feel about the Chinese Consumer postgolden week because there is a school of thought i guess you are either in one or two camps. Either Household Wealth effect will be impacted by ongoing issues with the Property Market and on the other hand households are seeing segments of consumers because they are not so tied to wanting to buy property maybe they are spending money on other things. Lorraine that is possible but i think overall the initial issue is that Consumer Confidence is weak because the net wealth effect is perceived to be coming down so you have the property crisis valuations and for example even in a tier one market like that we have seen prices come down from by about 30 at the peak. That is going to weigh on most consumers and it is not a case in china of not the issue is not people are just saving more. At some time they are going to want to spend. There will be pent up spending when things are perceived to be better but at this time we are still seeing very challenging working capital cash flow situations. Companies still showing high receivables. There is a risk there will still be job cuts out there. So we will probably watch out for those figures but we do think the policies are beginning to help in some cleat cases. In particularly we are watching the property space for that. With encouragement for new homebuyers. We do expect that to pick up in the second half and particularly the Infrastructure Spending is still pretty solid. Shery how much does a weaker chinese yuan help stockmarkets because years ago we would have thought it would benefit exporters but since we are seeing the rebalancing and shifting in the chinese economy, how beneficial is it to have a weak currency anymore . Lorraine thats the thing. Even before, at this point in time you can talk about china exporters in terms of translation profits. It is probably going to look decent because most sales are done in use dollars but u. S. Dollars but imports are going to rise and that will put pressure raw material inputs will rise and that will put a little pressure domestically. I think with the government obviously prefers is a much more not a volatile Exchange Rate but one that sort of gradually comes down. I dont think they will stop but they just want a more gradual situation with less volatility. Haidi always great to talk with you director of Asia Equity Research at morningstar you can get around of the stories you need to know, subscribers can get them on dayb on their terminals and it is also available on the mobile. In the bloomberg anywhere app you can customize settings so you just get the settings and news on the industry and assets you want. This is bloomberg. I wish i were here to announce a tentative agreement with these companies, but i do want to be really clear. We are making significant progress, in just three weeks we have moved these companies further than anyone thought was possible. Haidi shery United Auto Workers president there as strikes enter a fourth week in the uaw winning a landmark agreement with General Motors to allow battery plant workers to join the union. A key move that will pressure forward and stellantis to follow, just before they agreed to spare the automakers from further walkouts. This is key as evs become a bigger part of the industrys production and sales. Gm also facing a shutdown in canada as a strike deadline closes and with no agreement insight. Unit four which represents Canadian Auto workers has set a deadline of just before midnight on monday toronto time. They are trying to get gm to match a new three year deal it signed with ford that includes pay bumps of at least 19 for workers. Kaiser permanente and workers will resume contract talks thursday following the Largest Health care strike in u. S. History. Acting labor secretary will be present at the bargaining session, last week over 75,000 kaiser employees walked off the nice footwork. Man, youre lucky, watching live sports never used to be this easy. Now you can stream all your games like its nothing. Yes [ cheers ] yeah woho running up and down that field looks tough. Its a pitch. Get way more into what youre into when you stream on the xfinity 10g network. Biden today israel is under attack orchestrated by a terrorist organization, hamas. And this in this moment of tragedy i want to say to them that the United States stands with israel. We will not ever fail to have their back. Annabelle that was President Biden expressing support for israel aftershock attacks by hamas over the weekend. We are continuing to monitor reaction to that including for markets. We are seeing reaction in the early parts of asian trading most notable what we are seeing for oil given we have brent and wti trading higher at this point. Whether we will see further gains because in the context we have seen oil coming off its biggest weekly drop since march, where we do see sustained gains could depend on if we see the conflict spreading. We are also seeing that move into more safe haven assets so cash treasury shot shut but we have seen moves in treasuries and like gold in the dollar. The yen is also a little bit. That move and energy whether it is sustainable. Energy oil prices in particular will depend on where the conflict goes from here. We are seeing energy and oil stocks moving higher in australia off that, many markets are shut today including japan and korea. If we change on energy or gold rather we are seeing that haven bid and seen that play out. Gold producers are spiking, 90 minutes into the session for australia today. Shery chinese president xi jinpings push for prosperity has spooked the nations rich. The mainland to seize a trend of wealthy families moving money outside china through underground networks. For more lets bring in lulu who leads coverage for bloomberg news, we know for a long time china has severely limited the money that the wealthy can actually move outside. So what do we see in terms of trends of how this has changed over the years . Lulu ever since the borders reopened advisors have seen a spike in demand of overseas backup options. Like you said, the push for common prosperity and geopolitical uncertainties have spooked the rich and even middleclass. In addition a struggling economy and also soaring youth unemployment following the housing crisis, it is making more wealthy chinese families feel it is essential to have assets overseas. Whether for diversification reasons or just paving the way for future immigration. And we are saying that money show up in various cities from london to new york, from canada to singapore. Haidi with a closed capital account it has never been simple to move money out of china. Whether you are an individual or company. What are we seeing as the options available . Lulu authorities have long crack down on options such as moving trunks of cash or suitcases of cash across the border. It is also getting harder to use cryptocurrency. But there are some popular ways including some thing and leveraging the whole lawless system, faking imports. There are some cases out there that i want to. 2 to show you the scale of operation. In one case police uncovered one operation that had more than 75. 6 billion you want assets. This network use more than 8000 bank accounts, in over 20 provinces to operate this network. Shery all of those options look incredibly risky. When it comes to those under cloud thanks what are the specific risks . Lulu it is not a decision to be taken lightly because of the individuals caught using these underground networks can be fined 30 of the amount that they attend intend to transfer of the individuals hoping to move money abroad, if the money is significant they can face significant jail time senses. That said the trend of moving money abroad is not stopping. They expect by 2025 more than 700,000 Chinese People are expected to immigrate and people are seeking backup options and they are on the move. Haidi lets stick with china and markets, the mainland is set to reopen after the golden week holiday and an uncertain global backdrop. During the holidays travel and spending surge compared to last year but only slightly above precovid levels. Lets bring in a partner and chief economist at grow investment group. When you take a look at the numbers from last week we were expecting a stronger recovery certainly compared to the prior year but it is is it going to give us an indication of a strong consumer and willingness to spend in the months to come giving concerns in the Property Market in that link to Household Wealth . Hao i think the golden week data has been very encouraging. It is actually at the precovid level and in china you can experience the crowds of people going around traveling and spending. Also in the first half of this year the chinese household has been saving really hard, the savings deposits in the Banking System announced over 20 in the first eight months of the year. Once youve gone through excess saving, and house prices not going up there for people are postponing their urge to buy a property, therefore there is money left over to spend. I say consumption will continue to trend upward. Haidi how do you feel about broader sentiment. Can the Chinese Consumer, can chinese businesses and i suppose by extension earnings get used to the structurally slower for longer narrative that a lot of economists see for the country . Hao i think right now the confidence is still very fragile. The pboc survey household confidence is still at an alltime low even though it is improving from the lowest level. And regarding businesses, if you are a smaller business in china you are still probably struggling because nowadays even though risk aversion makes it harder to lend. So i think the Bigger Companies are doing well, and also many other in the Technology Sector and in the chinese household sector is booming. So china is now the biggest exporter car exporter of the world. And also some other countries as well. I would say there is a dichotomy here. If you look at one part of the economy they are doing quite well, but then if you look at the smes it is still struggling. Haidi how are you expecting mainland markets to come online after golden week . Hao i think it is key to call this at this point, the external environment has turned a very complicated. Because of the war in the middle east. I think domestically the Economic Data has been better than expected. There are pluses and minuses here. For a trader they may find it difficult to trade but i think within the index we can see that energy and also commodities because of the Geopolitical Uncertainty. I would say if people really want to trade they can focus on these two sectors. Shery and we are still following the congressional visit from the u. S. To china for the First Time Since 2019 at a time when we are potentially setting up a president xi and biden summit as well. How are you factoring in the potential political positive coming out of this relationship into your market views . Hao i think between the u. S. And china obviously we are seeing some defrosting of the relationship in recent days. We have a series of senior u. S. Government officials visiting china and also the two sides having dialogues on many of the key things. It will be a prelude to an eventual meeting between the two leaders at a summit later this year. Overall the risk tone is starting to turn positive and many of us in the market would like to see global positive developments. Shery the chinese currency at around 730, is this the bottom or do we have further down to go given what is happening in the u. S. With really high inflation and potentially the fed staying higher for longer . Hao i think the Interest Rate is working against the chinese yen and also they have a tendency to ease because the chinese economy obviously needs help and also on the fiscal side they could do more. But i think probably a couple months ago, we are seeing tremendous down pressure on the yen. But i think it will stay a level between 7. 3 and 7. 4 and this should be one of the lower points of the cycle. One reason is the chinese Economic Data is starting to improve and also the pboc is ready to defend the yen. I would say even though the sentiment is extremely negative towards the chinese yen, 7. 3 and 7. 4 i consider to be the lowest lower point of this economic cycle. Haidi a lot of the serious challenges are domestically focused but there is a lot of overlay as well particularly when you look at domestic china. The risks are still there, are you watching beyond 2024 if there is a change in administration or consistency when it comes to china policy . Hao i think the rivalry between the two countries has been ongoing since 2018 or even earlier. So i think the trajectory is quite clear. And then at the same time we should see china starting to develop its own competence and expertise in key industries. For example with Wireless Technology and what they are able to achieve, it was quite stunning to be honest. I think it was a big surprise to any everyone. Yesterday, over the weekend they launched their own car as well and many of their own technology that proved to be one of the more technologically advanced of the market. So i would say there is an ongoing rivalry between the two countries but at the same time you can see china being one of the Key Manufacturers of the world in the u. S. Market being the king consumption market of the world, the two countries need each other. Besides competition there will be cooperation between these two comfort countries and we want to see what positive developments will come of this summit. Shery we are also sing investigations in europe when it comes to electric vehicle subsidies, are we going to see more of these risks for Chinese Companies in the future and what does derisking mean in terms of the bottom line for some of these firms . Hao i think the investigation was because the chinese chip and it is taking over much of the European Markets. For example if you look at european carmakers market share in china, evs etc. , is essentially going down. Right now china is supplying close to half of the worlds new energy vehicles. Which is quite stunning. And because china was able to do so so cheap and fast, therefore there is bound to be market tension and unfair competition. So it is hard to avoid this but at the same time the chinese cars are cheaper in quality is improving. I would say even though there could be this kind of risk ongoing, it is very difficult to take away the edge of the ev car industry. Shery always great to have your views partner and chief economist agro investment group. Coming up next analysis on israels war with hamas with a middle east negotiator, we will hear from howard david miller next. This is bloomberg. Explore endless design possibilities. Find your personal style. Endless hardie® siding colors. Textures and styles. Its possible. With james hardie™. Haidi we are looking at live pictures of gaza as we continue to monitor the latest when it comes to the hamas surprise shocking attack within israel over the weekend. The combined death toll from that hamas attack has climbed to more than 1100, the fighting entering a third day. Oil has been surging and we have seen some safe haven man play out across the markets. The fighting is threatening to inflame tensions across the middle east which is home to almost a third of global crude supply. We continue to watch with more than 700 israelis, mostly civilians killed. Which erupted outside the gaza strip, 400 palestinians have died as well in retaliatory attacks. The Israeli Military gaining regaining control over most of those areas reached by militants. The operation by hamas which also included taking scores of israeli hostages was an unprecedented incursion that shaken stability and markets with israels official declaration of war. Lets get more analysis, david miller is a senior fellow for International Peace. We spoke to him earlier and he told us the conflict reflects both intelligence and operational failure for israel. We wont know the full story on the intel here for months. If that. But it is quite clear that the israelis underestimated their adversary. Simply could not comprehend, even though the idea of hamas operatives tunneling hezbollah operatives tunneling in the north has been a major concern of israel before. They simply could not imagine that hamas could conduct such an operation or under current circumstances would. What we dont know is whether analysts indicated the threat and nobody took it seriously. So it was in intelligence failure and and operational failure. Shery so if we take it seriously and start imagining the possibility it could spiral into a wider regional conflict. People talk about that and i have done a fair number of interviews suggesting, when you talk about a regional conflict. Lets be specific, what you are really talking about is not a conflict between interstates between israel and any of the countries on its borders. With the exception of lebanon. It is not the lebanese state it is hezbollah. We really mean iran. I still believe the prospects for an actual confrontation, what i mean by that is israeli and iranian strikes against one another, not a proxy but directly on one anothers territory, i still believe the prospects of that are probably not great. This conflict however is not over. It could easily spread to the west bank, to jerusalem. And if in fact the israelis do start a major ground incursion by land sea and air to eradicate the hamas leadership, destroy their infrastructure and fundamentally changed their balance of power which would prevent hamas from governing people in gaza, that is going to involve enormous numbers of casualties. That could prompt them and trigger a wider escalation. Shery david miller senior fellow at the Carnegie Endowment for International Peace. Sure to plume tune into Bloomberg Radio and get indepth analysis from the debris team. Broadcasting live from our studio in hong kong, centre the app or online. Plenty more ahead, stay with us. Shery mainland Chinese Markets had to reopen in a little over 30 minutes after golden week. Lets bring in chief markets editor david ingles. I was going to ask catch up, catch down, i am thinking probably very difficult to tell given the geopolitical developments over the weekend. David that is correct and i suspect at this point time traders would be making eight maybe taking a step back while the situation is obviously very fluid. That being said even if you strip out what has been happening on the weekend, you look at some of the proxies for example. We were going to see an element of catch down when you look at some of the proxies that have been trading in some of the price action there, it indicates the csi 300. There is one specific etf that trades in the u. S. , the harvest one, this is down about a third of 1 since china last traded. That being said, we need to split the difference between what we are seeing their and some of the futures contracts and risk aversion we are seeing elsewhere. On top of that just keep in mind since we are talking we have a very definitive geopolitical overly across these markets today so we are back to business in china which means the ministry of foreign affairs, that is a daily briefing, that resumes today. We did hear from the chinese yesterday as far as where they stood and their initial reaction, expect officials to take more questions. May to flesh out what china might be prepared to do here if in case that is the direction to take and a perhaps more active role. A couple other things we are tracking, commodity markets. At is really an oil story and oil has traded. A big drop last week, we have split the difference with some gains right now, that starts trading in a couple minutes onshore. We are in the window, not that it is a day where this matters but credit numbers could come out for october as early as today. It is really all about risk aversion today and to what extent premiums will be baked into this market in about 25 minutes. Haidi another day another typhoon and storm warning in hong kong. What is going on with markets given this other situation . David two things, we have a typhoon signal warning that is a t8 and also a rain storm warning. A black rain storm warning over the city right now. We understand from whether officials that hong kong will be taking down the t8 and lowering it to at3 t 3 by noon and if that happens we will have a short session. If it happens. What we know so far is no morning session here in hong kong, i will leave it there for now. Haidi our chief markets editor there, and some markets we are watching ahead of rocket reopening in china after golden week. Retail consumption and property shares in focus, tourism revenue dodging passed prepandemic levels and we will take that as a win. We will be watching energy shares, oil is gaining following that surprise attack by hamas militants on israel. Shery and given the developments over the weekend we are seeing oil prices continuing to gained ground. Wti above 86 a barrel and gaining more than 4 . Haidi still to come we get a view from beijing on the israel hamas war with plus Chinese Markets are facing a pretty choppy environment for that return from the golden week holiday. He capital ceo joins us to share his outlook, that is it for daybreak asia our market coverage continues with the reopening of trade it mainland china. This is bloomberg