Iran Ramps Up Ship Attacks in Hormuz as Oil Flows Rise, Ebola Spreads to Kenya

This is horizons, Middle East and Africa. Our top stories this morning a crude factor oil pushes higher as traders weigh increased flows through the Strait of Hormuz against a fresh wave of attacks on vessels. The RBA is set to hike for the first time in nearly four years, but hawkish fed minutes may already be looking dated and Asian stocks slip despite Wall Street's record setting rally as enthusiasm over the earnings outlook fails to carry over. It's just gone past 6:00 am in South Africa, 8 a.m. across the Emirates. I'm Jennifer Zafar in Johannesburg. Happy Wednesday to you and we are going to take a look at the market picture before we get to some of those stories. Wednesday. Starting out a bit like a risk of sentiment setting in, especially if you take a look at where we're seeing at the Asian session at this point in time. And really that's in contrast to what we did see on Tuesday on Wall Street, as we were just noting there, if you take a look at U.S. equity futures, S&P futures marginally up right now. But we should note that what we saw on Tuesday was the S&P 500 closing at its first record high since August, that even as we did get some data that showed wider than expected US trade deficit. And also there's still these concerns about inflation that is factoring into the picture, but still had a positive session on Wall Street. We'll get to an issue in just a bit, about to talk us through what we're seeing in Asia. But really it's looking like a bit of that positivity fading a bit in the Wednesday session to start us off at European futures looking a bit lower as well. This morning we have the U.S. ten year yield on the board of course, as well selling off across the curve, which of course is what we've been seeing over the past few days. But it's still we're looking at the U.S. ten year yield at about 5.31% there. Later today, though, we are awaiting an auction for ten year notes that really might prove critical to what we will see across the curve and really where we'll see yields going, especially as we continue to talk through these multi-decade highs that we've been speaking through over the past few days and weeks now. Brent crude on the board. Brent is back above $101 a barrel there up just just about 1%. Of course, we mentioned some of the a confluence of factors that are still factoring into the energy sector, especially as it pertains to what we're seeing in the Middle East. We'll talk through that in just a bit. But Brent crude back up again. And we also have Bitcoin on the board. Uh down just over 1.69% there showing a bit of weakness that as we do get some more dollar strength, the dollar strengthening against most of its G10 peers. And of course uh, we mentioned we will, uh, get an auction for some treasuries later today, but then we also get fed minutes. So potentially that changes the picture from what we are looking at right now. But that's just a quick look at where we're looking at the markets picture from where I sit. Let's check in though, on how markets in Asia are faring when issue is standing by in Hong Kong for us. When? What are you watching. Yeah good morning Jen. Well as you mentioned that divergence between the performance today here in Asia versus how we saw the strong performance in the U.S. overnight. Now actually a couple different factors weighing on Asian markets today. You have the higher oil prices to higher yields and also a slightly stronger dollar in our session, all weighing on Asian stocks. Now, when it comes to the recent underperformance of Asia versus the U.S., some actually also point to how overall, the higher yields are actually pressuring Asia in different ways, whether it's valuation, currencies or even the capital fund flows. So perhaps that is why you are seeing the picture that we are seeing today. Now, when it comes to Japanese yen, We're actually seeing weakening by a third day. And in fact, we can pass that 158 level against a dollar after the Bank of Japan board member Sato's comments fuelling bets that the Bank of Japan will likely going to be more cautious going forward with its rate hike. Now in stocks, Korea actually underperforming today. However, as you flip the board and take a look at how it has really been underperforming recently and giving up the US, its position as the world's best performing stock market this year to Taiwan, which actually see shares up about 72% so far this year as we see investors rotate away from Korea after that big sell off, the big volatility earlier this year, and with concerns rising around how there is a slowdown in the memory price, um, going forward, and you're seeing investors rotating into some of the names that can continue to benefit from the other bottlenecks that we see in the eye trade. And we have many of those in Taiwan, and hence you are seeing that switching hand in the world's top performing market. Back to you, Jen. Thanks so much. When we see you in Hong Kong, we'll check back in with you in just a bit. Now oil prices are pushing higher as a fresh wave of attacks on vessels in the Strait of Hormuz puts supply risks back in focus. Iran stepping up attacks just as energy flows through the waterway. We're seen recovering, raising questions over how sustainable that recovery will be. Let's bring in Stuart Livingston Wallace, Bloomberg's executive editor for the Middle East and North Africa. Stuart, are we seeing a meaningful escalation in the Strait of Hormuz? Give us a sense of what we're looking at as we start the day. Good morning Jennifer. Yeah. So I mean, it certainly appears to be that way in terms of the number of reported attacks. They've just been increasing in frequency really for the last several weeks. Now, remember, we're in a situation where not necessarily all the reports, uh, sorry, all the attacks get reported and they will be varying in terms of the actual impact on shipping itself. So this comes at a time, as you said, when the volume through Hormuz really is picking up. We're not quite sure just how many barrels are getting through, but all the indicators are that it's getting pretty close now to pre-war level. So in terms of immediate supply to the market, that's a big positive. I think the continuing issue here and why we remain above $100 a barrel, is that ongoing risk. You know, so long as missiles and drones are flying over that waterway, I think the market's going to be very reluctant to believe that everything is back to normal. It clearly isn't right. And even if we do, as you were just pointing out there, see flows recovering slightly. How vulnerable are is the disruption. I mean, I think the answer to that is very not by and large, we haven't had too many ships sunk. So there is when damage when it does happen, uh, you know, is obviously of concern, but it's not necessarily stopping the ships in their tracks, However, the fact that that's going over there is doing two things. One is obviously going to make a lot of carriers reluctant to go through that, too. It's raising the cost of basically hiring one of these vessels to do that. And then you've got the insurance costs, which are either non-existent. I no one's prepared to insure them or they're incredibly expensive. So a lot of companies and nations are having to do it for themselves, which they're prepared to do, and that's fine. But again, this is not a typical situation. And when so much of the world's energy supplies coming through the strait, you know, that is a concern for the entire global economy and all the knock on effects that has in terms of the inflationary pressure. And then from that, from that fiscal policies across every country on the planet. And Bloomberg is also reporting, Stuart, that the Trump administration is resisting a deeper role in Saudi's fight against the Houthis. Why do we know or what do we know about why Washington is holding back? I mean, I think on two counts, really. One, As you recall, you know, they spent a long time bombing the houses with, frankly, very little effects. And number two, they don't want to be overstretched. I mean, they are already overstretched to some extent because of the concentration they have on Iran and around the Strait of Hormuz. As you know, they're moving a third strike carrier group here, which we're not sure if that's in addition to the two that are already here or that's going to replace one of them. But nonetheless, it speaks to a US military that is highly concentrated, its forces in one very specific area. Does it necessarily want to open a second front in Yemen, in perhaps a type of conflict that in the past has not proved to be wholly successful at a time when certain types of munitions certainly are being run down? I mean, there's some debate about whether the, you know, how critical that is. So I think the calculation is that perhaps other countries need to step up here and get involved. We know that that is happening to some degree. Washington doesn't necessarily feel that it's in its fight right now, and that that situation can to some extent be contained in separated from their realm. Whether that's right or not, of course, is a matter of opinion, she wrote. Livingston Wallace, Bloomberg's executive editor for the Middle East and North Africa. Stewart, thank you so much for joining us. Let's stick in the Middle East. The Iran war is leaving the Middle East with a massive energy infrastructure bill, and the region's biggest producers say they shouldn't have to shoulder it alone. For more, we're now joined by Anthony De Paola, Bloomberg's energy markets reporter. Anthony, what exactly are we hearing from energy giants in the region and what what they're asking for? Good morning Jennifer. Uh you're right. They're saying that they shouldn't have to deal with it alone because they are, uh, in their view, pushing out a lot of their barrels on, uh, their own ships, uh, running through the Strait of Hormuz. Uh, often they are running at night. They're turning off their satellite transponders so they can, uh, put those ships through undetected. Uh, and but that's not without risk, because vessels have been attacked as. Stuart was saying earlier. We do have, uh, an uptick, a seeming uptick in the number of vessels that have been attacked, uh, really since since last weekend and going through this week. Um, a lot of focus had shifted from, uh, looking at the Strait of Hormuz to looking at the Red sea with all the attacks, uh, by the Houthis and some of those, um, Iraqi militias, uh, on, uh, Saudi facilities. They've been mainly hitting a lot of Saudi facilities, uh, along the and cities along the Red sea, Aramco refineries, um, uh, pipelines. Uh, so that has been a focus as Aramco has, uh, repaired that pipeline, uh, started flows again, resumed some activity in the north of the Red sea. Uh, we're looking back again now at Hormuz, and we have seen those, uh, exits take up. They're running about 12 million barrels a day. Uh, at the moment, it seems, according to some, uh, some of the big traders, this was the CEO of saying that yesterday at a conference, uh, running through Hormuz. Uh, that's that's crude oil only. Uh, but this is, uh, a risky venture. It's not, uh, the situation as usual, because they do have to take those risks. The, uh, Gulf producers are looking at setting up alternatives, meaning, uh, other pipelines, international storage that would pre-positioned some of their oil outside of the region. So they're looking for contingencies. Of course, those things are not free. Uh, storage is a cost because you need to pay for the tanks. You need to build them. Uh, and you need to pay for for holding that, uh, supply idle for a long period of time. Uh, pipelines as well. Not necessarily. Always used that, uh, East-West pipeline that the Saudis had, uh, was largely unused. It took about 2 million barrels a day of oil across the country to refineries on the Red sea coast. The capacity is 7 million barrels a day. That, uh, flex of those extra 5 million barrels per day came in handy when global markets needed it. The, uh, companies are saying that they want to be a little bit compensated for some of those investments. Uh, that that may sit idle for a while until they're needed. So that's that's really what they're asking not to have to show the loan. Jennifer. Uh, Anthony to Paola, our at Bloomberg energy reporter joining us today, Anthony, thank you so much. Bloomberg's energy markets reporter joining us there. Now coming up we speak with AG Capital's Casey Brake who says the Fed September hike marked a policy turn. That's next. This is Bloomberg. You. Can't borrow endlessly and spend endlessly. And it's been going on for a long time. But if you look at the build up in debt around the world, actually you're going left. I mean, you kind of tapped out at one point, but America has gone from your 50% of GDP to 100%. Your countries around the world are borrowing money, and I think we can't be complacent. And the lesson is, there will be a point where the market will ask for more and more and more. That was JP Morgan CEO Jamie Dimon speaking exclusively with Bloomberg now. Treasury Secretary Scott Percent says the U.S. can very quickly begin bending its debt curve through stronger economic growth and spending restraint, even as Treasury yields remain near their highest levels since 2002. Casey Sprague, market strategist at A.g Capital, says the Fed's September hike marked a turn in policy and the Bank of England maybe close to the same point. She joins us now from Cape Town. Casey, thanks so much for being with us. So maybe just walk us through that point that you're making, because right now we're seeing fed pricing right now, signaling a bit of a divergence about what the market is expecting over the next few meetings. Where where do you get that conviction from? Yeah. Good morning Jennifer. And I would say in simple terms, I mean, government debt has had a rough few months. Uh, investors are rightly so worried about inflation and fiscal deficits, have kids, you know, selling in a in a volatile month long news. And we getting to the point now where we are starting to to pick winners and losers. I mean, if you just put a little bit of context, I think what the US ten year, that's when it hits a high of three, 5.34%. That's been a high since 2002. France is ten year yields also sitting at around the highest since 2002. Uh believe the UK to two years above 6%, which is the first time since 1998. And even in Japan, the ten years at the two is high. Um, so, you know, the point to really make here is that some of these spikes have reversed within hours. Of course, US and German yields have fall as investors move towards what I would say is perceived safer issue. Well, French, Italian, Greek yields have also stayed here. But what we are seeing at the moment is that sovereign curves have generally flattened and a flatter curve points to markets, pricing, sort of near-term policy tightening, more than a long run fiscal crisis. And I think that's important to to highlight. So I would say the depression is greatest where deficits are large and spending is high, of course. Um, France really being the obvious example here. Um, but again, if you look at the US, you know, debt has passed around $40 trillion. Investors have been more than willing to buy short dated treasuries since the soft inflation prints. But through all of this really just sort of largely expecting the volatility to persist. And bond markets are essentially sort of reacting now to central banks reaching though they'll pain points on inflation. Casey, how does that factor into the headwinds and the potential optimism and the tailwinds then facing risk assets. How do we how do we factor that into the current outlook. Yeah, I mean we it's quite simply a fed hiking cycle. These elevated yields that I've mentioned and soaring energy prices are really remaining sort of the chief headwinds for risk assets as you mentioned. Uh I mean it's quite simple. They're they're on conflict is now in its eighth month. Uh, we still seeing a area where, uh, petrol or energy prices at the moment all remaining elevated. And it's these expensive energy feeds, um, straight into inflation. And it's really forcing sort of central banks to, to respond. But it's really, uh, interesting the economy at the moment, because at the same time, we see last week's data coming out of the US from a consumer point of view, that's still giving us a little bit of comfort, even with that sort of weekly payrolls print. Uh, the US economy is still all intents and purposes holding strong. So how that filters through to the rest of the world, particularly in emerging markets, is what we think is really key to to watch right now. Well, in case we're still seeing tech outperforming despite what we're seeing with the bonds. Yeah. So that's that's the interesting underpin. You know there's so much debate at the moment. Are we going to reach that sort of tech bubble. Where is that eye spending sort of going. And I think that your ability of what we're seeing around this, this I investment cycle is being quite remarkable. And if you look at sort of the Q2 results, it's really suggesting that you or I or uh, is really starting to stack it up. Uh, I mean, that's really what's powered, uh, the sort of strong large cap tech performance, um, towards around Q3 as well. Um, but I think it's an interesting point that tech particularly is usually packaged as a long duration asset. It's really been the only game in town during what's been a quarter of heavy bond selling as well. But I would say the market's return really depends on a very narrow sort of group of companies. And it's that sort of concentration is actually creating quite unusual problem for anyone trying to diversify more broadly across the equity market. It's a fascinating time. Certainly, Casey Sprague, market strategist at AG Capital KC, thanks so much for your insights and for joining us as always. All right. Coming up, a Falcon I has launched a new model that's more attuned to the Emirati dialect. We'll hear from Feisal Al Bonny, UAE presidential adviser, about the strategy behind the launch. That's next. This is Bloomberg. Faisal Al Banai, adviser to the president of the United Arab Emirates, says the UAE has launched a new Falcon Eye model that's more attuned to the Emirati dialect. Al Banai discuss the strategy behind the model with Bloomberg's Alex Duller at the I everything conference in Abu Dhabi. As we all know, when Falcon started releasing the models and their videos, we were one of the early frontiers of releasing open source models. At that time, the focus was was on the larger models and we multiple times released the best performing larger models, maybe a year and a half down the line. We felt that the future need. There's not really about the large, much larger models. And the thing about creating more specialized models that can actually do practical use cases and solve things for enterprise, for governments and for clients. So we shifted our focus to focusing on very specific domain focused models. And I think that's what we're getting a lot of traction with clients. So we used our experience there to really deliver very focused, impactful models. And can we expect to see any new models being announced or released anytime soon? So we are announcing today the releasing of the Falcon Amarante model, which has much more, and in Marathi dialect, the falcon okay out of it to recognize Arabic text and the text to speech in the speech to text the palm. That's what we released now. But we've been releasing multiple modulated television related to engineering needed to the number of areas that we feel are very tailored focus to what our clients need. But today, we've definitely launched the Arabic Falcon Emirati model. And will that be released today or when it's released today? Oh wow. And people can come today. They should be able to download. Okay. And there are some new exciting startups emerging from technology developed at the Technology Innovation Institute. How ambitious are you about commercializing that research? And should we expect to see more eight CRC backed companies to own more of the strategic technologies that Abu Dhabi sees as critical for its future? I think what you will see in Q4 of this year, which is kind of now you will see multiple unicorn companies launched where HR, CTO technology is going into them, where there is a very clear partnership between private sector investment and investment entities and technologies from Tei that are really launching multiple unicorn companies. So I say stay tuned between now and end of the year, and you'll hear about two pretty significant companies launching using a good part of the ROI technology in them. I know that any startups that you're most excited about currently in Abu Dhabi? I think, uh, there is a lot of work going on around robotics area. I think there's a lot of work going on on autonomous, um, driving technologies. There is a lot of technologies going into security products in that regard that can help the defense sector. And these are the ones that you will be seeing a number of announcements on during this year. Okay. And we're here today at AI everything. How does the UAE stay at the forefront of eye. Is it an issue of regulation or more funding? How do you see the UAE? It is really the main advantage for having a practical regulator, a client that is bold enough to push and try new frontier areas and at the same time, an agile ecosystem that is bringing talent from around the world, looking to experiment, looking to invest in new technologies and our ability to really sink all of these things together and hence the goals and more. There is speed and agility of iteration, I think is what gives the UAE an advantage. But across the board, which is a regulator between client and between actual companies and technology and talent. And that was Feisal Albani, adviser to the president of the United Arab Emirates, speaking to Bloomberg's Alex Diller. Let's just take a look at where your markets are positioned right now. If we take a look at U.S. equity futures up just about flat right now, but that's in comparison to what we are seeing, uh, across the Pacific. Uh, but the which is, of course, a Euro stock, 50 futures now, uh, just about down 6/10 of a percent there. Uh, so quite a bit of a contrast now coming up as Iran ramps up attacks on tankers in the Strait of Hormuz. We'll discuss the impact of the conflict on GCC countries with Romana Mubarak, the Mena country risk head for Brunei. This is Bloomberg with. This is horizons Middle East and Africa. Our top stories this morning. Crude factor oil pushes higher as traders weigh increased flows through the Strait of Hormuz against a fresh wave of attacks on vessels. The RPI is set to hike for the first time in nearly four years, but hawkish fed minutes may already be looking dated and Asian stocks slip. Despite Wall Street's record setting rally, as enthusiasm over the earnings outlook fails to carry over. It's just gone past 6:30 a.m. in Johannesburg, 8:30 a.m. across the Emirates. I'm Jennifer Obasanjo in South Africa. Let's just take a look at the markets picture as the Wednesday session gets underway. As we were just mentioning, there a bit of a risk of sentiment at least setting in, uh, in Asia. That's in comparison to what we did see on Tuesday with that record setting rally that we saw with the S&P actually notching its first record high since August and not even coming at despite seeing a wider than expected U.S. trade deficit data coming out. And still, there's some concerns about inflation that continue to persist. But again, as we're mentioning, risk sentiment apparently setting in Asia. And if we look across the Atlantic as well, it's broadly lower for European futures. But S&P futures are modestly higher right now Looking a bit flat at the moment. Uh, MSCI Asia Pacific Index, as we were just saying, they're down just about 6/10 of a percent again. Uh, just a bit of broad risk off sentiment. Brent crude though, uh, notable moves. What we're seeing in the energy sector. Uh, traders, uh, really weighing a bit of confluence of factors and headlines that we're getting. Of course, we are, uh, noting increased flows through the Strait of Hormuz, while at the same time there's a pickup, uh, in attacks from Iran against vessels. So perhaps that's factoring into some of the price action we're seeing. Brent crude, uh, up just over 9/10 of a percent, almost 1% there to trade at about $101 a barrel. And just finally, we have the U.S. ten year yield. Uh, right now we're seeing yields, uh, really selling off across the curve. Uh, the U.S. ten year yield up, uh, just about two basis points to trade at, uh, 5.31%. Later today, we are awaiting a $39 billion, ten year auction. Uh, perhaps, that proves to be critical to what we have been seeing multi-decade highs with treasuries and with yields more broadly. So that is something to watch out for. Later today in the session. Let's check in on how markets in Asia are faring. Actually, before we get to markets in Asia, we do want to bring you some breaking news that we just got, which is the RBI decision day. We were mentioning that we were going to get this news and we did just get this news. India central bank raising the repo rate by 25 basis points. The notable factor of this really is that this is the first rate hike in nearly four years. Not just that, it's also the first rate hike under the governor right now who took office back in December of 2024, but notable because we have been watching and waiting to see what the Indian, uh, the RBI would do, just given what we have been seeing a bit of weakness for the rupee, but then also a bit of concern around inflation as well, and inflation climbing higher than what the central bank as tolerance band is, which is about 2 to 6%. So that news just coming in India central bank raising the key rate by 25 basis points to 5.5%. There was a bit of of a split about what exactly the central bank would do. But that is just the latest news. We are getting into our newsroom right now. But let's get back to how markets in Asia are faring when he she is still standing by in Hong Kong for us with more Winnie. Yeah good morning Jen. Well, as you mentioned we are seeing Asian stocks still continue to be under pressure because of how we see oil as higher yields are higher. Plus, um, this or risk off sentiment that we are seeing in the region as well, with a slightly stronger dollar being all of these headwinds for Asian stocks. Now, we continue to see South Korea's Kaspi index here, leading declines. And it is continuing to underperform the likes of Taiwanese stocks. And in fact Taiwan is really now the top performing stock gauge globally so far this year, with the gauge up about 72%. Now you are also seeing this gap between Korea and Taiwan in terms of performance on a quarterly basis, the biggest gap since the beginning of the century. So you can really see how investors are rotating beyond that memory trade when it comes to the Japanese yen weakening by a third day, as investors continue to bet that the Bank of Japan will likely going to be more cautious with the rate hike going forward. But before we take a closer look at some of the names when it comes to the tech sector. First off, we have Samsung Electronics here, uh, hovering or fluctuating before uh, its preliminary earnings tomorrow. For now, we are actually expecting a record quarterly profit. But still investors want to see the durability of earnings. And also if there is more buyback plans going forward. SK Hynix is also under some pressure today, given that this is before its lockup expiry of the orders due tomorrow. When it comes to a slightly brighter spot in the region. We're actually seeing optical stocks here in Asia tracking those gains in U.S. peers overnight following their strong sales outlook from Marvell Technologies. Back to you. Thanks so much. When you shoot in Hong Kong, for us now, the U.S. Iran conflict continues to weigh heavily on economies around the world and in particular, those in the Gulf. Here to discuss the impact the conflict is having and when it might end is Ramona Mubarak, the Mena country risk head for BMI. Ramona, thank you so much for your time. I'd like to start with Saudi Arabia because really, what we are seeing the kingdom facing conflicts on, on multiple fronts. Uh, how is that factoring into the risk perception and really what the economy is facing in Saudi Arabia as you see it? Morning. Um, before we going into risk. Uh, it's, uh, it's a good time to see or to assess where the Saudi economy stands now in terms of, uh, it's been 7 to 8 months. Uh, we've seen relative resilience compared to, uh, several of its peers. But the war itself, the conflict, the disruption and more recently, the, uh, situation in Yemen still impose significant cost. Now, um, for us, uh, the Q2 GDP data showed non oil growth slowing to about 0.9%. Uh, manufacturing trade hospitality sector affected the most. These are the sectors that are exposed to the conflict. But against this uh, we're seeing, uh, domestic demand, uh, remaining strong and inflation remaining contained. Now uh, under uh, our base case, uh, for the US, uh, Iran conflict and the resolution we're expecting, and we're basing it for a deal, uh, between the US and Iran towards the end of Q1. Uh, we're expecting a contraction this year, mostly led by oil and then a rebound, uh, next year. Um, of course, assuming the deal, uh, halts now, um, in terms of the situation in the, in the, in Yemen, it adds certainly another complexity. So the immediate risk is a sustained campaign, uh, of uh, 40 strikes on oil facilities, ports and other critical infrastructure. But think of it this way in terms of every time there was a hit on, um, energy infrastructure, the repetition was quick. So now we operate under this assumption in the event of future attacks, which means that the tail risk is more serious because both the Red sea and the Strait of Hormuz are exposed to, uh, geopolitical tensions. So there are risk to, uh, oil, uh, flow coming out and also risks to the oil economy, uh, through different channels, disruption to airspace, higher shipping cost and inflation, increased defense spending, etc.. Ramona, you said your expectation is a deal, uh, at the end of Q1. What is the catalyst for that deal? Do we see compromises from both sides as a diplomatic resolution? How do we end up getting there? Well, as for now, uh, everyone lost the midterm anchor. So we were expecting a deal earlier. Uh, it almost happened in June. We thought it will. Um. Uh, um, the momentum. We will gain a little bit of pace afterwards. Uh, but for now, uh, we lost the midterm anchor and term for, uh, in the in the U.S., so we had to anchor it on something else, which is economic pain on both sides. So basically bite you on our logic is, uh, economic, uh, pain in the US, uh, based on our trajectory for oil prices will be, um, acute enough to in terms of, of course, gasoline prices, inflation, the fed rate, the Treasury yields, um, and even the resilience that we're seeing now in the US losing momentum that will fade. And also the US is now focusing on the economic pressure on Iran through the maritime blockade, the emerging air blockade, and more recently, more sanctions on the financial network and also the land droughts, uh, coming out of, uh, Iran. So for this, it needs time, uh, to yield the desired results. And the US will either conclude either of two things. One, it's working and, uh, the Iranian regime will provide some concessions or it's not working. And then, um, the, uh, US will have to adjust, uh, strategy in terms of, uh, lowering the demand or even escalating. Ramona, really quick, what does this mean for growth prospects in the region? Um, so Under on our base case, we expect the next year a significant recovery. You have base effect. You have, uh, the oil flow coming in after normalization of activity overhauls. Um, uh, but what's interesting is that not all GCC countries will be, uh, recuperating the loss this next year. So we see, uh, the like, of Qatar, Kuwait, uh, but in uh, still by the end of 27, remaining below or smaller in terms of size than they were in 25, uh, the UAE stands out. The Saudi Arabia stands out and our man stands out on that front. Now, of course, this is the base case. We have alternative scenarios in terms of a more pre-launch disruption, which means the rate of growth will be depressed. And the risk and the most damaging, uh, in our view, is that it doesn't hold. And we go into a stop start cycle, which means it's a prolonged, uh, disruption, higher security risk. And, um, this becomes this shock stops becoming transitory. Like, we're currently factoring in and business are factoring in and becomes more structured in terms of higher for longer geopolitical risk. Uh, we really appreciate your analysis. We have to leave it there. Ramona Mubarak of BMI, a Fitch Solutions company. Ramona, thank you so much for joining us this morning. All right. Coming up, SpaceX is in talks to borrow $40 billion to buy Nvidia chips. The details on that next. This is Bloomberg. Welcome back to horizons Middle East and Africa. JPMorgan Chase CEO Jamie Dimon says cybersecurity remains his biggest concern as artificial intelligence creates new risks and vulnerabilities. Speaking exclusively with Bloomberg, diamond also weighed in on the growing tension surrounding data center expansion. Take a listen. Data centers. You build them where they're wanted, you know, and go half of them, half the new ones in America, Texas and and Virginia. And, you know, people don't want them there. You're not going to win. You get lawsuits. But there are a lot of states, we take it, that have access to power. And of course, you know, any big company has to be a good community citizen. So I think a lot of these people are doing it. They're going into town, you know, and they're being part of the community to help the community get the rights. They, you know, make commitments that won't raise consumer electricity costs. It's just things like that. And that'll be worked through. And I have these huge positive effects. I mean, I do think it'll cure diseases and it'll save accidents on the roads and the composite materials. It'll make life unbelievable for people there. The downside is obviously what you read about with, uh, you know, the, the agents and my thoughts and all these things you can quote. And that's a legitimate concern. It's a real thing I'm not going to get hysterical over. Is it existential or not? What we're doing is raising our, uh, you know, rolling up our sleeves and going to work to fix it. So the banks have always had a system in place. We help each other. We also started this thing called the Alliance for Critical Infrastructure. It started with 50 companies, is starting in the US. It's across six industries. You know, tech, financial services, water, transport. These industries, uh, that the government point out is lifeline. But eventually it should probably extend to health care, former agricultural. I mean, every industry is kind of critical and it should also we need to help the smaller companies too, because they have different vendors and different needs. And so it's a lot of work. We simply have to do it. I created vulnerabilities that we didn't didn't know about. And and we always worried about cyber before these things. And you've thought about cyber risks for a long time. Yeah I know that. It's our biggest risk is your biggest risk? Does I make cyber systemic risks more likely? Oh, yeah. So I guess I'm saying that meet those whatever you thought it was before. I mean, I posed my chairman as I said. So I said cyber is our biggest risk. They didn't publish me those yet. And I would say that went up tenfold after mythos. That was JPMorgan Chase chairman and CEO Jamie Diamond speaking with Bloomberg's at Tom Mackenzie. They're all right. Bloomberg has learned that Chinese eye startup Deep Seek is close to raising over $12 billion in the Tencent and Catl backed funding round, ahead of a potential IPO in early 2027. Let's get the details with our markets. Reporter That's Anthony Stevens, who is standing by in Hong Kong for us. So, Anthony, what more have we learned about Deep Sik wanting to raise these funds? What can you tell us? Yeah, the Deep Seek fundraise is part of a pre fundraising kind of a round in Hong Kong China. From all of this I llms right. So we have deep seated raising around 12 billion. Looking to come in the first quarter of 2027. We have moonshot that just completed a similar kind of financing again in 2027. And we have a smaller. I kind of video related name calling also looking for 2027. So this shows the level of demand for the Chinese eye space, which is growing despite being material laggard in terms of frontier technology. So Deep Sea in particular has found its way on that frontier in terms of price and performance now. But what's really interesting to observe in markets at the moment is that it is pressuring the Hong Kong China market for existing listed labs. So we see a pretty, pretty sharp retracement in shares of Z, I and minimax, which are already listed alongside other players in the air space like Xiaomi or quite short. So this dynamic between the listed players and the unlisted players, which are still raising money, is going to be interesting to watch in Hong Kong in the back half of this year. It's also fascinating news that we're getting Anthony about space, which is in talks to borrow $40 billion to buy Nvidia chips. What have you learned about this and how this, again, plays into the global picture around some of the AI development. Curve to coming from such a huge IPO, the fact that they can go back to the private credit markets in such a material size does highlight the depth of demand in the US for hyperscale or debt for hyperscale kind of exposure. Credit investors want more AI, and it will be interesting to see at what prices these loans and this this kind of credit goes off. So it's a mix of leverage financing. It'll be interesting to see how much the partners also take down. We see, you know, plenty of private equity involvement from Apollo and from Pimco on this deal. So that's another kind of capital structure trade that has been opened up by space X, which has been very innovative in financing these deals. Now, what's interesting about SpaceX is what are they going to use this money for? Right. They have multiple expansion plans obviously, for talking about they always talk about the kind of space centers in the eye, data centers in space. But here on Earth, they're also expanding very fast. They have their Colossus computer called, uh, super, uh, culture. Uh, they also have the kind of grok bot that they're trying to, uh, to grow. So where this money gets kind of, uh, deployed is going to be the key determinant of how the market takes this, uh, kind of financing for both the stock and the credit space. CDs has been blowing out recently. So it'll be interesting to see how the US session takes this news today. Anthony Stevens, our markets reporter in Hong Kong. Thanks so much, Anthony, for bringing us those reports. Now we turn to the region next. Coming up, Ebola spreads to Kenya. We'll have more on the latest outbreak and the response next. This is Bloomberg. Welcome back to Horizons Middle East and Africa. President Trump says he will speak soon with Russian President Vladimir Putin to discuss a suspected case of plague. International concerns are growing over the death last week of a worker at an infectious diseases research institute in Russia's Siberia region. The 28 year old died after developing severe pneumonia, with almost 200 contacts reportedly placed under observation. Now let's turn to the region here. Health authorities in Kenya have confirmed an Ebola infection in a traveler who recently arrived from the Democratic Republic of Congo. It marks the country's first imported case linked to the outbreak in central Africa. I'm joined now by Janice Kube, Bloomberg's Africa health reporter. Janice, you've been following the story closely. What more do we know about this? To the first death in Kenya from Ebola. So Kenya has never had an Ebola case before. Um, and this was something that five months ago, when the outbreak happened in Congo, uh, was a concern because Nairobi is such a major travel hub, not only for East Africa, but for the region and internationally. Uh, we know that he fell ill in the in the Congo, in Congo, in the DRC. Um, he traveled through Uganda and then quarter flat through to Nairobi on the 3rd of October. Um, he died within 48 hours. And so he must have been pretty ill by the time he landed. This does raise a lot of questions as to how this happened. Uh, I spoke with the head of the Africa CDC yesterday evening, and they are saying they've sent a team last night already to try and unravel all of that. But he was saying that it really highlights how there have been failures all along the way. Um, that really, um, he. Congo is a really big country, and the fact that he traveled from the north west of the country, right across the country, um, while he was already ill, and that it wasn't sort of stopped or picked up along the way. Say something. And, I mean, you were just referencing how expansive Congo is. We've been reporting on the outbreak now for several months. Why do you think it's been so difficult for authorities to really get a handle on this in the DRC? Well, one of the things is that, um, although there was, uh, initial response to this, um, you've got to respond incredibly quickly because of the nature of the disease. And so you started with three health zones that spread to 64 health zones, um, across seven provinces in Congo. And already Congo was dealing with displacements, um, cuts in international aid, um, and other difficulties in the country. And so responders have really been able to deal with hotspots. But um, as one responders said to, to one of our colleagues, You know, you can deal with these small fires, but if you can't deal with them fast enough, you're actually facing a much bigger fire. And so you can deal with the hotspots. But if you cannot get ahead of the disease, which they have not been able to, then you are dealing with a really big problem. And that is what they're facing. On top of aid cuts, which we have seen having a compounding effect. But we have seen international funding commitments, uh, coming in. Uh, how has that played a role in potentially getting this under control? How do you see this? It has definitely helped, but it has not. Um, it's not enough yet. We cannot say that that we are out of the woods by any stretch of the imagination. Um, that being said, there are seven health zones that have not had a case in, um in 20, 42 days, which is significant because the maximum period of incubation for Ebola is 21 days. So there are signs of improvements, but there is still a long way to go. And Janice, Q joining us here, our health reporter, following this very closely, Janice, thank you so much for joining us. Now, let's take a quick look at markets before we wrap the show. And as we've been mentioning, uh, Tuesday was a positive session on Wall Street, not necessarily translating into the session for Asian as your stock 50 futures. Look right now down just over 6/10 of a percent though US equity futures largely flat. The question will be what we still see. Uh, the AI tech fueled rally that helped propel, uh, equities uh, U.S. equities on Tuesday continuing into the Wednesday session. Let's just take a look at oil really quickly before we let you go. Of course, there's a number of factors that investors are paying attention to. There are increased flows. But then there are still an uptick. There is still an uptick in attacks that are happening. Brent crude, uh, up just about 8/10 of a percent as it stands right now. That is it for Horizon's Middle East and Africa. Stay with us for Daybreak Europe. This is Bloomberg.