Bloomberg Audio Studios podcasts radio

news.

This is the Bloomberg day podcast. Good

morning. It's Wednesday the 11th of

March. I'm Caroline Hepka in London.

>> And I'm Steven Carol in Brussels. Coming

up today, the International Energy

Agency is set to propose the largest

ever release of oil reserves as the Iran

war halts tanker flows. President Trump

threatens to sink Iranian ships laying

mines in the straight of Hormuz as

conflicting White House statements stoke

market volatility.

>> Plus, hedged no more, top funds lose

$1.5 billion in a single week as events

in the Middle East upend portfolios.

>> Let's start with a roundup of our top

stories. The International Energy Agency

is said to be proposing the largest

release of oil reserves in its history

with the aim of bringing down crude

prices that have soared during the Iran

war. The Wall Street Journal reports

that the release would exceed the 182

million barrels used following Russia's

full-scale invasion of Ukraine in 2022.

The near total closure of the straight

of Hormuz has led to production cuts

from Gulf producers as tankers remain

unable to cross the narrow straight and

storage is filling up. Vanahari, founder

of Vanta Insights, says it will be hard

for the IEA to fill the output gap.

>> We are now past 10 days of the war. The

market has already lost about 200

million barrels give or take. If the IEA

countries released that much of oil and

a separate question over what period of

time they'll be able to release that,

that would simply make up what the

market has already lost. Then every

single day after that that the war

continues and the straight remains

closed. What do we do?

>> Vanahari was speaking as countries are

expected to decide on the proposal

today. According to the report, the 32

nations that belong to the IEA

collectively hold at least 1.2 billion

barrels of oil in emergency stocks.

>> US news outlets say that Iran has begun

laying mines in the Strait of Hormuz.

that CNN reports that Iran has laid a

few dozen mines in the strait in recent

days. Meanwhile, CBS says that

intelligence assessments indicate that

Iran is taking steps to deploy mines.

Shortly after those stories were

published, President Trump took to

social media to warn Iran against laying

mines in the waterway, threatening to

blow up any ship attempting to do so. In

2019, the US Defense Intelligence Agency

estimated that Iran had more than 5,000

naval mines that could be deployed

quickly using small high-speed boats.

The US has been targeting Iranian mine

laying ships as part of the campaign

against Iran's navy.

>> Investors are trying to gauge the US

administration's intentions towards Iran

as its public messaging shifts rapidly.

President Trump has delivered mixed

signals on the war, saying it could end

soon, while also warning that military

activity may increase. The US energy

secretary Chris Wright posted and then

deleted a social media message stating

that the US Navy had escorted an oil

tanker through the straight of Hormuz.

That prompted the White House press

secretary Caroline Lever to respond.

>> I was made aware of this post. I haven't

had a chance to talk to the energy

secretary about it directly. However, I

know the post was taken down pretty

quickly and I can confirm that the US

Navy has not escorted a tanker or a

vessel.

>> Oil prices had fallen nearly 20%

following the initial report before

reversing course after Lever's denial.

Defense Secretary Pete Heget said

military operations against Iran are

escalating and that there is little

chance of diplomatic talks.

>> As President Trump declared, "We're

crushing the enemy in an overwhelming

display of technical skill and military

force. We will not relent until the

enemy is totally and decisively

defeated.

>> However, Hexat's remarks appear to

contrast with those of special envoy

Steve Witkoff, who told CNBC that the US

is in theory open to negotiations.

>> The president has said that he's open to

communication. The question is, do they

It's the same question today that we had

when we were negotiating with them. Do

they ab do they actually want to make a

have a diplomatic solution here?

>> All of those White House officials were

speaking yesterday.

>> The European Central Bank president says

that she will ensure that the war in

Iran doesn't spark the same inflation

pain for the Euro zone as Russia's

invasion of Ukraine. Christine Lagard

says that she will do all that is

necessary to avoid a repeat of the spike

in prices in 2022. She was speaking to

France to television.

situation.

>> We are in an economic situation that's

different. We are in a better situation

and we have a greater capacity to absorb

shocks.

>> Christine Lagard speaking via a

translator. Whip soaring oil and gas

prices have triggered concerns that

inflation which had settled at the ECB's

2% target could flare up again. It comes

as the IMF's former chief economist Gita

Gobinath told Bloomberg governments

don't have the fiscal capacity to

respond to a prolonged economic

downturn. Traders have ramped up bets on

ECB interest rate hikes since the war

began 12 days ago. The cost of Britain

meeting its net zero goal is smaller

than a single fossil fuel price shock.

According to the UK's official climate

adviser, the climate change committee

forecasts that roughly4 billion pounds

in additional spending is needed every

year to meet net zero by 2050. Whereas

the 2022 oil price spike cost the UK

economy 183 billion pounds over four

years. Britain's populist right-wing

reform UK party has campaigned against

green policies with their leader Nigel

Farage saying the UK should drill for

more oil in the North Sea. We will end

this net zero obsession which the tries

started. We will end all subsidy. We

will reduce your energy bills. We will

get industry back in this country. We

will produce our own oil. We will

produce our own gas. We'll make

ourselves selfsufficient on energy not

reliant on the rest of the world.

>> Far has been criticized for his backing

of the US and Israeli war in Iran.

Yesterday, he reversed his position on

the UK's involvement, saying Britain

should not get involved in the conflict.

UK gas prices have risen by more than

50% since the conflict began, reigniting

concern over Britain's approach to

energy security, which is heavily

reliant on imported LNG. Now, in other

news, Chinese authorities have moved to

restrict the use of openclaw AI

applications on the state's office

computers. The open- source AI agent has

been particularly popular in the country

with companies from Tencent to JD.com

using it. However, the Agentic AI

platform requires unusually broad access

to private data and it can communicate

externally. Sources are now telling

Bloomberg that employees, including

those at China's state banks and some

government agencies, have been banned

from installing open claw for security

reasons. Winston Churchill will be

removed from British bank notes as part

of a revamp by the Bank of England.

Bloomberg's parts has the story. Wartime

Prime Minister Winston Churchill is out.

Badgers and hedgehogs are in. Following

a public consultation, the next

generation of Bank of England bank notes

that feature the UK's native wildlife.

Picking historical figures to feature on

the notes has not been without

controversy in the past. And perhaps

unsurprisingly, opposition parties are

making hay. With one Tory MP calling the

move wokery, but with cash now making up

only an estimated 9% of transactions in

the UK, bank notes are becoming as

endangered as some species of native

wildlife in London. I'm Yuan Pots,

Bloomberg Radio.

>> Okay, those are a few of our top stories

that ending. Yes, on uh pound notes.

Right, let's think about the market. So

oil retreating now below $90 a barrel

helping to lift the market mood. So we

saw Brent crude plunging by 11%

yesterday. We trade exactly $88 this

morning but Brent remember is 45% higher

than it was roughly uh since the start

of this year. In terms of markets Msei

Asia Pacific index is up by 1.2%. Stock

futures for the US are in the green for

US fish futures down by 4/10en of 1%. An

interesting FT report has uh some uh

eyes in the market. JP Morgan is marking

down loan portfolios for private credit

according to that FT report. Treasuries

rising. We've got US inflation report

today and the dollar is uh down this

morning 210 of 1%. Those are the

markets.

>> In a moment we'll bring you the latest

on the Iran war, plus how hedge funds

have lost hundreds of millions of

dollars over the world market moves of

the past 12 days. But another story that

we've been reading this morning on the

disruption to global travel from a

series of events this year, including

the war in the Middle East, Ben opinion

columnist Andrea Felstad has been

writing about how destinations like

Dubai, which attract generally very

high-end uh tourists are bracing for a

sharp downturn. Of course, the images of

of missiles being intercepted over the

city or stranded holiday makers telling

their stories, maybe putting a lot of

travelers off. Um, according to data

from Forward Keys, Dubai was the fifth

most visited travel destination last

year. Now, Andrea says this is part of

something that is actually a kind of a

greater upending of of classic travel

destinations. There's been uh unrest in

Mexico as well after the killing of the

cartel leader Aleno last month. Of

course, Cuba, which is a very popular

destination for Canadian tourists in

particular being crippled by the US oil

blockade as well. Now, where will people

go instead is part of the question. and

the travel industry is trying to answer.

Rhinire says it's seen a surge in

bookings to European destinations, but

it sort of depends on essentially how

much money you have to be able to spend.

>> Yeah. Well, maybe that will put paid to

the protests that we've seen in recent

summers in Europe, you know, anti-

tourism protests uh or as you say, will

people be rrooting somewhere else? So

it's hard, you know, hard to think about

holiday making in the midst of a war,

but obviously it's very important in

terms of industries for a lot of uh a

lot of countries and including for

Dubai. We'll put a link to Andrea's

piece in our podcast show notes. Let's

bring you up to date with events in the

Middle East. Oil prices have swung

wildly over the range of comments from

US officials. Now, these reports from

the International Energy Agency about a

proposal for the largest ever release of

oil reserves. We have our Middle East

managing editor, Paul Wallace, with us

now for more. Paul, what do we know

first of all about this potential plan

for oil stockpiles and would it help to

bridge the gap from supply that's been

disrupted in the Gulf? Well, this plan

is in its early stages, but the

International Energy Agency, which is

essentially a a group of the world's

biggest energy consumers, so essentially

the world's richest countries, is moving

quickly because of um because of all the

chaos in in energy markets over the last

week. They're talking uh according to a

Wall Street Journal report of releasing

something in excess of 182 million uh

barrels of of um of oil. Now that figure

was what was released in two tranches in

2022 after Russia invaded Ukraine. So by

historical standards, yes, that is a big

amount to release in terms of emergency

oil reserves. But you know, just to put

it into perspective, I said 182 million

barrels. Global consumption of oil is

more than 100 million uh barrels a day.

It's about 105 million barrels a day. So

when you put it like that, it's it's not

that much. Um so there was a report by

Goldman today saying it would make a

slight difference to oil prices, but not

a heck of a lot. I think at most it

would uh to it would help steady

markets, but it certainly wouldn't do

much to really be bring down prices to

where they were before the Iran US

tension started soaring earlier this

year.

>> Yeah. So, there are real concerns then

about the straight of Hormuz. Um the

tanker traffic has slowed to really just

a barely a trickle and there are real

fears about Iran laying mines in the

waterway, aren't there?

>> Yes. Yes, there are. Uh humus does not

look like it's opening anytime soon. Not

in the next few days anyway. That's from

all the signals we're getting from Iran

and from the US uh and from Gulf States

about the state of the war. Mines would

certainly be a big problem and their

fears about that. I think it's also

important to note though that you know

Iran doesn't necessarily have to lay

mines um or any kind of physical barrier

in the straight of form um to keep this

effective closure going. I mean what

it's done so far is threatened ships and

hit a few. Uh and there in the last hour

there's um there was a report by uh an

organization linked to the UK Navy

saying that a container ship has been

hit near Hummus. So essentially that's

all that Iran needs to do. It's a fairly

cheap strategy if it wants to keep this

closure going and to keep roing uh

energy markets. It doesn't need to lay

mines. That would be an escalation. But

even if it just keeps threatening ships

or ships think there's a threat of a of

attacks by Iran, that will probably be

enough to stop the vast majority from

from sailing through the straight.

>> Paul, that's the situation in the

straight of Hormuz. What about across

the region this morning? what are we

seeing in terms of strikes on this 12th

day of the war?

>> So, essentially there's not much let up.

Iran is still attacking uh countries

across the region. Uh in Dubai where I

am, there was an alert across the city

around about midnight and then we got an

allclear signal about an hour later. As

far as I know, that attack, whatever it

was, whe whether it was missiles or

drones or both, didn't didn't sort of

cause any damage. And most of these

attacks are being intercepted. But Iran

keeps going. There were more reports of

targeting on Kuwait in the last 12

hours. And in terms of US and Israeli

attacks on Iran, they keep going. And

important to note that the Pentagon said

that yesterday was probably going to be

the most intense bombing yet of of Iran

and that may continue as as the US and

Israel um try to further degrade um

Iran's military capabilities.

>> Okay, Paul, thank you so much for being

with us. That is our Middle East

managing editor, Paul Wallace. Stay with

us. More from Bloomberg Daybank Europe

coming up after this. Now hedge funds

suffered hundreds of millions of dollars

in losses last week after the war

against Iran triggered volatile market

moves. Our chief hedge fund

correspondent Nishantkumar joins us now

for more. Nishant, good morning. Who

lost money then and how big were the

losses?

>> The losses uh were across uh some of the

largest names in the hedge fund

industry. It's it's still too early. Uh

but the reports that we have so far

include losses at uh you know hedge fund

giant Millennium Management, Baliasni

gave up all its gains for the year,

Exodus Point Capital Management, they

gave up all gains for the year. Uh so

yeah, it's very widespread and it has

hit some of the largest names who manage

tens of billions of dollars between

them. And what is important here is that

all these hedge funds are known for

their steady returns. They should not be

losing this kind of money in such a

short period of time. Although I mean

the market moves were really wild. It

was a perfect storm for hedge funds. So

there is an explanation but the losses

were very deep.

>> Yeah. I mean which asset classes

produced then these big shocks or the

biggest of the shocks? So mostly it

seems to be around commodities trading

and uh macro bets uh as well. One of the

real pain points was u you know rates in

UK especially in uh where market rapidly

repric what the bank of England might do

and two-year guilt ills jumped about uh

35 basis points in a week. So it was uh

one bad bet. It was uh multiple market

move moving fast at the same time in the

wrong direction that led to you know

this sort of a perfect storm for hedge

fun industry last week.

>> Were there any winners among this

volatility?

>> Again it's too early. Generally hedge

funds uh post their returns and send it

to investors on third or fourth uh

business day onward. So we will know. I

mean I'm sure there are there will be

some um winners especially among the

hedge funds that trade volatility. So

they love this kind of a situation.

Among the larger multist strategy hedge

funds we have so far reported that Bobby

Ji's hedge fund which was a startup in

the space they made 10 basis point. I

mean it's tiny returns but in the

overall context of some of the biggest

hedge funds losing that much money it's

still quite respectable. Uh so yeah so

far uh very few winners emerging.

>> Is there something that these companies

can do now?

>> I mean you know these so what the beauty

of multi strategy hedge funds is they

are very well diversified. They are run

by dozens and dozens of traders doing

multiple trades across asset classes. So

yeah, they were hit and these guys are

known for their amazing risk management.

They will bounce back eventually. I

won't be surprised that all these funds

recover all the losses by the end of the

uh of the month this year.

This is Bloomberg Daybreak Europe, your

morning brief on the stories making news

from London to Wall Street and beyond.

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