Saudi Arabia Restores Key Oil Pipeline as Hormuz Talks Stall

ABEER: GOOD MORNING. THIS IS HORIZONS MIDDLE EAST & AFRICA. OUR TOP STORIES THIS MORNING. CRUDE CLIMES. OIL RISES FOR A SECOND DAY AS UNCERTAINTY OVER U.S. IRAN DEAL PERSISTS. SIGNS OF STRONG DEMAND OUTWEIGH THE PARTIAL RETURN OF SAUDI ARABIA'S KEY EAST-WEST PIPELINE. KEEPING AI IN CHECK. NVIDIA LAUNCHES A NEW SECURITY SYSTEM DESIGNED TO STOP AI AGENTS FROM GOING ARRIVED. THE MOVE COMES AS INDUSTRY LEADERS PUSH FOR STRONGER SAFEGUARDS AROUND SELF IMPROVING MODELS. AND BONDS STABILIZE IN ASIA AFTER A BRUISING SELLOFF SEES TREASURY YIELDS TRYING -- CLIMBED TO A FRESH HIGH. THIS IS AS PERSISTENT INFLATION KEEPS PRESSURE ON BORROWING COSTS. IT'S JUST GONE 8:00 A.M. ACROSS THE EMIRATES. I'M ABEER ABU OMAR IN DUBAI. WE WILL START WITH SOME BREAKING NEWS ABOUT U.S. IMPORT BANS ON CANADIAN ALCOHOL AND MOTORCYCLES THAT HAS COME INTO EFFECT JUST NOW. THE MOVE OF COURSE MARKS THE LATEST ESCALATION IN THE TRADE WAR THE TWO COUNTRIES. THE TRUMP ADMINISTRATION PLANS TO BLOCK IMPORTS OF MOTORCYCLES, ALCOHOLIC BEVERAGES AND DRINK PRODUCTS IN RESPONSE TO RETALIATORY TARIFFS BY MARK CARNEY'S GOVERNMENT ON U.S. GOODS. THOSE JUST CAME INTO EFFECT. MOVING ON TO WHAT MARKETS ARE DOING THIS MORNING CONTINUING WITH A RISK OFF SENTIMENT THAT WE SAW YESTERDAY. S&P FUTURES STILL LOWER THREE CHANCE OF 1% IN THE RED. MSCI ASIA-PACIFIC, THE RISK OFF SENTIMENT YESTERDAY STEMMING FROM THE ESCALATION IN GEOPOLITICAL TENSIONS THAT WE SAW INTO THE WEEKEND. OF COURSE CONFUSING MESSAGES BY THE TRUMP ADMINISTRATION AND THE IRANIAN SIDE. WE WILL DISCUSS WHAT IS HAPPENING IN JUST A FEW MOMENTS. THE PERSONAL RETURN IN THE EAST-WEST PIPELINE IS BEING OUTWEIGHED BY THE DIMMING PROSPECTS FOR A RETURN TO DIPLOMACY AND THIS IS WHY YOU ARE SEEING BRENT CRUDE PRICES TURNING HIGHER FOR A SECOND STRAIGHT SESSION. $107 ON THE BARREL, 1.7 PERCENT HIGHER THIS MORNING. WE HAVE TO WAIT AND SEE WHETHER THE TWO SIDES RETURN TO THE NEGOTIATING TABLE. OF COURSE THE STORY PLAGUING MARKETS SINCE THE START OF THIS WEEK, THE 10 YEAR NOTES, THE YIELD ON THOSE TWO BASIS POINTS HIGHER. YESTERDAY ALONE, THE BENCHMARK NOTES, THE YIELD JUMPED 11 BASIS POINTS AFTER A 16 BASIS POINT JUMP IN THE PRIOR WEEK. A STORY TO KEEP AN EYE ON ON TOP OF WHAT THE FED DECIDES TO DO. WE SPOKE ABOUT THE CREDIBILITY HIKE KEVIN WARSH HAD EARLIER THIS MONTH. WILL THAT MEAN MORE FED RATE RATES? THAT MEANS ANOTHER STORY WE WILL TALK ABOUT ON THE SHOW. FOR A LOOK AT WHAT IS HAPPENING IN ASIAN MARKETS, WE HAVE AVRIL HONG STANDING BY IN SINGAPORE. GOOD MORNING. AVRIL: GOOD MORNING. WE ARE WATCHING ASIA STOCKS SENTIMENT TAKING A HIT FOR A SECOND SESSION. LET US DESPITE WHAT WE ARE SEEING IN CHIP HEAVYWEIGHTS CLUCKING SOME GAINS, GIVEN POSITIVE HEADLINES SURROUNDING ANTHROPIC AND NVIDIA. THE FINANCIALS ARE THE DRUG IN THE REGION TODAY -- DRAG IN THE REGION TODAY. JAPAN AND SOUTH KOREA ARE LEADING DECLINES. THIS IS FOLLOWING ELEVATED ENERGY PRICES AND YIELDS, EVEN THOUGH WE ARE SEEING THAT THE YIELD LEVELS COULD BE ATTRACTIVE FOR SOME INVESTORS AND DRAW DEMAND. INDEED WE GOT THE 40 YEAR OPTION FOR JGB'S PASSING WITH THE STRONGEST DEMAND METRICS IN A LONG WHILE. THAT COULD HELP TO CALM GLOBAL BOND MARKETS A LITTLE BIT. LOOKING AT AUSTRALIA BONDS AS WELL, YOU ARE SEEING A BIT OF REPRIEVE IN THE BOND MARKET TODAY LED BY THE FRONT END. WE WILL BE WATCHING FOR WHAT THE RB A SIGNALS. WIDELY EXPECTED 25 BASIS POINT HIKE TODAY. ABEER: THAT DECISION IS EXPECTED IN ABOUT 30 MINUTES OR SO. THANK YOU AS ALWAYS FOR THE MARKET UPDATES. LET'S RETURN TO THE GEOPOLITICAL PICTURE. OIL PRICES ARE PUSHING HIGHER AS HOPES OF A BREAKTHROUGH BETWEEN THE U.S. AND IRAN FADE. BLOOMBERG UNDERSTANDS IRANIAN OFFICIALS HAVE EXPRESSED PESSIMISM ABOUT REACHING A DEAL TO END HOSTILITIES AND REOPEN THE STRAIT OF HORMUZ BEFORE THE U.S. MIDTERM ELECTIONS. FOR MORE OF THE STORY WE ARE JOINED BY BLOOMBERG'S EXECUTIVE EDITOR FOR THE MIDDLE EAST AND NORTH AFRICA, STUART LIVINGSTONE-WALLACE. OVERNIGHT, SO MANY CONFUSING SIGNALS FROM THE IRANIAN SIDE AND PRESIDENT TRUMP DENYING REPORTS ABOUT COMPROMISES THAT WERE LAID OUT. WHAT IS THE LATEST IN TERMS OF THE PROSPECTS FOR A BREAKTHROUGH IN DIPLOMACY RIGHT NOW? REPORTER: A BREAKTHROUGH IS HARD TO ANSWER. WE DO KNOW THEY ARE CARRYING ON. THE IRANIAN FOREIGN MINISTER REMAINS IN THE U.S. AS OF YESTERDAY AND WE KNOW THE MEDIATORS, I ASSUME PAKISTAN, A RUNNING BACK AND FORTH TO GET SOME SORT OF FORMULA THAT WORKS. AS YOU SAID, NO ONE IS REALLY BELIEVING THAT WE ARE HEADING FOR A BREAKTHROUGH ANY SOON. THAT DOESN'T MEAN IT'S NOT GOING TO COME BECAUSE WE CAN ALWAYS BE SURPRISED. BUT WHEN I LOOK AT $107 A BARREL, THAT SIGNALS PESSIMISM ABOUT RETURNING TO NORMALCY AND THAT IS PROBABLY THE DEFAULT SCENARIO GOING FORWARD UNTIL WE SEE SOME SORT OF MOVEMENT FROM EITHER SIDE. BASED ON WHAT EVERYONE SAID PUBLICLY, NO ONE IS WILLING TO BLINK FIRST. ABEER: WE ALSO ALLUDED TO THE FACT THAT MARKETS ARE ALLUDING TO DIPLOMACY HEADLINES AS OPPOSED TO WHAT IS PHYSICALLY HAVE BEEN KNOWN ON THE GROUND. THE EAST-WEST PIPELINE IS FUNCTIONALLY PORSCHE -- PARTIALLY FUNCTIONING. DOES THAT BODE BETTER FOR OIL PIPELINES? REPORTER: WE THINK IT'S ABOUT HALF CAPACITY. SOME OF IT WILL BE DIVERTED FOR DOMESTIC USED. NONETHELESS WE ARE TALKING ABOUT A SIZABLE PORTION OF CRUDE. NONETHELESS YOU HAVE THE SECOND PORTION WHICH IS IT'S GOING OUT INTO THE RED SEA AND WE KNOW THE HOUTHIS HAVE BEEN ACTIVE. THAT MEANS IT WILL HAVE TO GO NORTH AND GET PICKED UP IN THE SUEZ CANAL. ALL OF THAT IS ADDING LAYERS OF COMPLICATIONS FOR LOGISTICS AND IT MAKES IT DIFFICULT IN A MARKET THAT'S ALREADY TIGHT. IT'S HELPFUL, I DON'T WANT TO DOWNPLAY THAT. BUT DOES IT SOLVE THE PROBLEM IN THE SHORT TERM? ABSOLUTELY NOT AND THAT'S WHAT YOU SEE PRICED INTO THE MARKET. ABEER: PART OF THE SAME STORY, THE DIPLOMACY IN THE REGION, UAE STATE MEDIA REPORTED BENJAMIN NETANYAHU HAD A MEETING WITH THE UAE'S RULER. DO WE KNOW MORE ABOUT THAT MEETING BESIDES THE FACT THAT IT HAD HAPPENED? REPORTER: I THINK THE FACT THAT IT HAPPENED AND WAS ACKNOWLEDGED BY BOTH SIDES IS PROBABLY THE MOST SIGNIFICANT IN TERMS OF WHAT WAS ACTUALLY SAID. THE REPORTS FROM BOTH SIDES WERE QUITE GENERAL AND I'M NOT SURE YOU COULD READ TOO MUCH INTO THAT. WHAT I THINK IT SIGNALS IS THE INCREASING COOPERATION YOU HAVE SEEN PARTICULARLY ON THE SECURITY SIDE BETWEEN THE TWO SINCE THE IRAN WAR STARTED. THAT I THINK IT'S A VERY COMPELLING STORY. ONE THAT WILL DEVELOP GOING FORWARD. ABEER: SO MUCH TO LOOK FORWARD TO IN THE COMING FEW DAYS. THANK YOU FOR THOSE UPDATES. STUART LIVINGSTONE-WALLACE, BLOOMBERG'S EXECUTIVE EDITOR FOR THE MIDDLE EAST AND NORTH AFRICA. LET'S MOVE ON TO THE MARKETS SIDE OF THINGS. BONDS ARE IN FOCUS AS TREASURIES STABILIZE AFTER A BRUISING SELLOFF. THIS COMES AS OPTIMISM FOR A DIPLOMATIC BREAKTHROUGH IN THE IRAN WERE FADE SUBMIT SURGING OIL PRICES AND MOUNTING FED RATE HIKE BETS. JOINING US IS THE HEAD OF THE BANK OF SINGAPORE'S MANAGED SOLUTIONS ADVISORY. GOOD TO HAVE YOU WITH US. WE GOT EXPOSED TO THE GEOPOLITICAL SIDE OF THINGS. REALISTICALLY RIGHT NOW, OIL, BRENT AT $107. AND WHITE CRUDE ALSO RISING. CRUDE PRODUCTS DOING MORE OF THE SAME. WHAT DO YOU DO RIGHT NOW WITH WHAT WE ARE SEEING IN THE ENERGY PICTURE AND THE LACK OF STABILITY IN THE GEOPOLITICAL PICTURE? >> GOOD MORNING AND THANK YOU FOR HAVING ME ON. REALLY INTERESTING QUESTIONS. THE FIRST THING I WOULD SAY IS OF COURSE THE U.S. 10 YEAR IS AT MULTI-DECADE HIGHS IN TERMS OF YIELD. I THINK WE NEED TO TAKE A STEP BACK AND THINK ABOUT THE SORT OF PRICE ACTION WE ARE SEEING. SOME OF IT MIGHT BE TECHNICAL. IT MIGHT BE THE FACT THAT THERE WERE NO CURRENT BARRIERS, BARRIERS AT THOSE LEVELS ARE LARGE HEDGE POSITIONING AND STOP LOSSES THAT WERE TAKEN OUT. WHEN YOU TAKE THE PRICE ACTION, WITH A GRAIN OF SALT. HAVING SAID THAT, IT IS PRICING IN THE GEOPOLITICAL RISK AND CHALLENGING INFLATION ENVIRONMENT. THE WAY I SEE IT IS ACTUALLY MARKETS HAVE BEEN SURPRISINGLY RESILIENT. WE HAVE HAD A DEAL ON THE TABLE, A DEAL OFF THE TABLE SO MANY TIMES. FOR US LIVING IN THE REGION, WE KNOW HOW DISAPPOINTING IT IS. I THINK MARKETS HAVE COME TO TERMS WITH THE FACT THAT A DEAL IS NOT GOING TO HAPPEN ANYTIME SOON. YOU ARE PRAISING IT INTO THE ENERGY MARKET ON A MORE MEDIUM-TERM BASIS AND THAT IS COMING THROUGH. ABEER: SO YOU THINK MARKETS HAVE COME TO TERMS, BUT WE ARE SEEING ON THE YIELDS FRONT, QUITE ELEVATED LEVELS. ESPECIALLY YESTERDAY I WAS THINKING AT LEAST 5, 6 BASIS POINTS IN A DAILY SURGE. DO YOU THINK THE YIELDS ARE REFLECTING AN INFLATION PICTURE OR GROWTH?WE ARE ALSO TALKING ABOUT FLATTENING OF THE YIELD CURVE AND A POSSIBLE INVERSION. DOES THAT WERE YOU AT ALL? >> YOU ARE RIGHT. I THINK THERE ARE TWO SCHOOLS OF THOUGHT. THE FACT THAT YOU HAVE HIGHER GROWTH REFLECTED IN HIGHER YIELDS AND THE INFLATION ENVIRONMENT. WHAT I'M SAYING IS WE HAVE TO TAKE THE PRICE ACTION WITH A PINCH OF SALT. THERE ARE SOME TECHNICALITY AROUND THE MOVES WE ARE SEEING BUT I WOULD LIKE TO POINT OUT A FEW THINGS. LARGE BOND INVESTORS ARE SEEING VALUE IN DURATION AT THESE LEVELS. SECONDLY YOU HAVE STRATEGIC REBALANCING OCCURRING. THIS WILL BE OCCURRING FOR BALANCED FUNDS ACROSS THE U.S. AND ANYONE WITH A STRATEGIC ASSET ALLOCATION, YOU WILL BE BUYING BACK INTO BONDS AND SELLING EQUITY. ALSO THE EQUITY RISK PREMIUM AS YIELDS ARE HIGHER STARTS TO COMPRESS. I DO THINK THINGS ARE A LITTLE BIT FAR GONE AND WE COULD BE GETTING A FEW CATALYSTS TO SHIFT THE OTHER WAY. I DON'T SEE THE INFLATION ENVIRONMENT OVER THE LOCKED TERMS -- LONG TERM SO CHALLENGED TO SUSTAIN YIELDS AT THIS LEVEL,. ABEER: BRINGING IN A NICHE IN THE EQUITIES SPACE, AI, DO YOU THINK WE STILL SEE THE CONSISTENT RALLY? THERE WAS SOME WOBBLING ACTIVITY. DO YOU THINK THE OVERALL RALLY CAN WITHSTAND WHAT WE ARE SEEING ON THE YIELD FRONT? BECAUSE WE ARE SEEING TWO YEAR YIELDS, 10-YEAR GILTS, 20'S AND 30'S AS WELL. >> ABSOLUTELY. THERE'S AN IMPLICATION IN TERMS OF BORROWING COSTS FOR CORPORATE THE LONGER THE YIELDS STAY AT THESE LEVELS. HAVING SAID THAT, IT'S AN ENVIRONMENT WE HAVE SEEN SINCE THE BEGINNING OF THIS YEAR. AS LONG AS YOU HAVE THE AI CYCLE, YOU HAVE PRODUCTIVITY GAINS COMING THROUGH AND WE SEE IT IN THE EARNINGS. THE HOUSE TO VIEW IS THAT YOU SHOULD HAVE A MODERATELY OVERWEIGHT START TO EQUITIES STILL. WE DON'T SEE YIELDS DISRUPTING THAT VIEW ON THE LONG-TERM BASIS. ABEER: SO WHAT DOES THAT MEAN FOR KEVIN WARSH? THE HIKE WE SAW EARLIER THIS MONTH WAS WIDELY SEEN AS A CREDIBILITY HIKE. BUT NOW THE SITUATION LOOKS EVEN MORE ELEVATED, THE FED NEEDS TO RESPOND TO THE ENERGY SURGE WE ARE SEEING OUTSIDE THE REGION. YOU JUST ALLUDED TO THE FACT THAT THIS IS A SITUATION THAT IS ONGOING. IT DOESN'T LOOK LIKE IT WILL END ANYTIME SOON. WHAT DOES HE DO TOWARD THE END OF THE YEAR AND CERTAINLY INTO 2027? >> YOU HAVE ANYWHERE FROM 75 TO 100 BASIS POINTS PRICED IN IN THE NEXT 12 MONTHS. BUT I DO WANT TO CAUTION AT THE BEGINNING OF THIS YEAR, WE WERE PRICING IN RATE CUTS. IT'S A FLUID SITUATION. IT IS DEPENDENT ON DATA. THE FED'S DATA-DEPENDENT. WE ARE DATA-DEPENDENT MARKET SITE. I THINK CORE PCE ON WEDNESDAY AND PAYROLLS ON FRIDAY WILL PAINT A BETTER PICTURE FOR THE FED, BUT ESSENTIALLY I THINK HE WAS RIGHT TO HAVE RAISED RATES. IT'S LESS ABOUT THE INITIAL ENERGY PRICE SHOCK AND THE IMPACT ON INFLATION. IT'S MORE ABOUT THE POTENTIAL FOR SECOND-ROUND IMPACTS ON INFLATION IN THE MEDIUM TO LONGER TERM. I THINK THAT'S WHAT THE RATE HIKE CYCLE IS ABOUT. ABEER: WHAT ABOUT MONETARY POLICY OR POLICYMAKING IN TERMS OF MONETARY POLICY FOR OTHER CENTRAL BANKS? IT IS NOT JUST THE FED THAT IS DEALING WITH THIS ENERGY SURGE. WE ARE TALKING ABOUT EUROPE THAT IS HIGHLY SUSCEPTIBLE TO WHAT'S HAPPENING IN THE REGION AS WELL ESPECIALLY AHEAD OF WINTER. >> ABSOLUTELY. I THINK THAT EXTENDS ACROSS THE KEY CENTRAL BANKS AND DEVELOPED MARKETS. BROADLY WE HAVE SHIFTED FROM A RATE CUTTING CYCLE TO A MORE COORDINATED RATE HIKE CYCLE. WHEN YOU LOOK AT YOUR PORTFOLIOS, YOU NEED TO STEP BACK AND THINK HOW DO I GET ADEQUATE DIVERSIFICATION AND HEDGING INTO MY PORTFOLIO. ABEER: A LOT TO THINK ABOUT FOR THE NEXT THREE MONTHS AND THE END OF THIS YEAR. THANK YOU AS ALWAYS FOR YOUR INSIGHTS. UP NEXT, NVIDIA IS ROLLING OUT A NEW SECURITY SYSTEM DESIGNED TO KEEP AI AGENTS FROM GOING ASTRAY. MORE DETAILS NEXT. THIS IS BLOOMBERG. >> HAVE TO BE SUPER CLEAR AS AN INDUSTRY. THERE IS NO OPTIONALITY IN THIS. WE MUST HAVE GREAT TECHNOLOGY, AND IT MUST BE SAFE. THAT IS JUST UNEQUIVOCAL. WHEN I LOOK AT HISTORY OF HOW WE DEVELOP TECHNOLOGIES, IT IS ONE OF THOSE THINGS WHERE SAFETY HAS TO BECOME A FIRST-CLASS CITIZEN. WHEN YOU ARE DOING DEVELOPMENT. WE HAVE SEEN THAT IN OUR OWN WORK, WHEN WE THINK ABOUT ALL OF THE SECURITY AND CONFIDENTIALITY THINGS THAT YOU HAVE TO DO AROUND THE HIGHEST PERFORMING PROCESSORS. I THINK WE'RE GOING TO HAVE TO BRING THAT INTO THE AI ECOSYSTEM. I KNOW THAT IS FRONT AND CENTER IN THE CONVERSATION. I AM ACTUALLY AN AI OPTIMIST. I BELIEVE WE WILL PUT THE RIGHT PROCEDURES, PROCESSES, GUARDRAILS. I THINK IN AN INDUSTRYWIDE EFFORT WHERE WE SHARE BEST PRACTICES. THAT IS ONE OF THE THINGS WE DO ON THE HARDWARE SIDE TODAY, FOR EXAMPLE, AROUND SECURITY. THOSE ARE IMPORTANT ASPECTS OF IT BUT I THINK WE NEED TO BE UNEQUIVOCAL FOR THE USES OF AI. WE ABSOLUTELY ARE GOING TO DELIVER GREAT TECHNOLOGY THAT IS SAFE, THAT IS ALIGNED WITH ITS PURPOSES, AND IT REQUIRES A TREMENDOUS AMOUNT OF WORK. SO IT'S NOT GOING TO BE EASY, BUT IT IS DEFINITELY SOMETHING THAT WE ARE COMMITTED TO AS MANY INDUSTRY AND WE MUST WORK TOGETHER TO MAKE THAT HAPPEN. ABEER: THAT WAS AMD SEE -- AMD CEO SPEAKING TO ED LUDLOW. THE COMPANY ANNOUNCED IT IS PAYING MORE THAN $80 BILLION TO BUY WORLD LABS, THEN AAI STARTUP FOUNDED BY INDUSTRY PIONEER FEE FEELEY. THE ACQUISITION IS EXPECTED TO HELP PLAN ITS FUTURE HARDWARE RELEASES BY ADDING A TEAM OF LEADING RESEARCHERS AND THEIR MODELS ALONG WITH INSIGHTS INTO HOW THE ARTIFICIAL INTELLIGENCE FIELD IS EVOLVING. NVIDIA IS ROLLING OUT NEW TOOLS DESIGNED TO KEEP AI AGENTS FROM GOING ASTRAY. THE MOVE COMES AFTER SECURITY BREACHES FUELED FEARS ABOUT AI SECURITY. TO DISCUSS THIS AND ALL THE OTHER BIG DEVELOPMENTS AROUND AI IS SENIOR STRATEGIST NEIL CAMPLING. GOOD TO HAVE YOU ON WITH US. WALK US THROUGH HOW SIGNIFICANT NVIDIA'S NEW PLATFORM IS FOR ADDRESSING THE SAFETY RISKS THAT WE ARE WITNESSING WITH INCREASINGLY AUTONOMOUS AI AGENTS. NEIL: IT'S VERY WELCOME NEWS. HOW WE HAVE BEEN LOOKING FOR AN ECOSYSTEM THAT HAS ENDED IN IT THE SECURITY PROTOCOLS. IT WOULD APPEAR FOR THE FIRST TIME WE HAVE POTENTIALLY GOT THIS FROM NVIDIA, WHO ULTIMATELY ARE THE PIONEER OF THE ENTIRE ECOSYSTEM. WE GO -- THE OPEN SOURCE ON THE FRONTIER MODELS. HOWEVER, THE FACT THAT NVIDIA HAS MADE THIS A COME SOURCE MEANS IT IS AVAILABLE FOR THE WHOLE AI NETWORK TO USE THIS TECHNOLOGY. IT IS THE FIRST SIGNIFICANT STEP FORWARD BY PUTTING THE SECURITY EMBEDDED INTO THE AI LAYERS, WHICH HAS THE POTENTIAL TO CREATE INTERNAL GUARDRAILS AS THE AI TOOLSETS DEVELOP. IT IS DEFINITELY A STEP FORWARD. . I SUSPECT AS YOU MENTIONED WITH THE DEVELOPMENTS WITH AMD, THE ACQUISITION THEY MADE, BY BRINGING IN THOSE CAPABILITIES, THEY COULD POTENTIALLY PRODUCE SOMETHING IN THE FUTURE. OBVIOUSLY AI IS DEVELOPING AT SUCH A FAST SPEED. BUT BY HAVING THE SECURITIES EMBEDDED IS DEFINITELY A POSITIVE STEP, GIVEN ALL OF THE CONCERNS THAT WE HAVE HAD ABOUT THESE MODELS IN RECENT WEEKS. ABEER: OPENAI IS ALSO EXPECTED TO HOPE IT -- HOLD ITS DEVELOPER EVENT. SAM ALL MEN WILL BE DEVELOPED -- DELIVERING THE KEYNOTE SPEECH. WHAT ARE YOU WATCHING FOR THEIR? NEIL: FIRST, THE FASCINATING TIMING IS THAT THIS IS THE FIRST REAL PUBLIC OUTING, IF YOU LIKE, SINCE WE HAVE HAD THE SECURITY BREACHES BECOME KNOWN AND PUBLIC, SUCH AS THE ONE WITH THE AUSTRALIAN GOVERNMENT. IT IS A DEVELOPER'S FORUM SO WE MAY NOT GET A BIG SHOWCASING IN TERMS OF NEW BIG FRONTIER MODELS. BUT WHAT WE ARE EXPECTING TO HAVE IS A RELEASE OF THEIR OPEN AI'S AD GENTEX PERSONAL AGENT. LIKE WE HAD WITH LAST WEEK WITH THE GREAT NUMBERS IN TERMS OF DOWNLOADS OF THINGS FOR META, WE ARE EXPECTING TO HAVE OPENAI'S COMPETITOR TO META'S PRODUCTIVITY ANNOUNCED. LOOK FOR THE PERSONAL AGENT, AND ACTUALLY WHERE -- WHETHER THIS IS GOOD TO BE THE NEXT BIG PERSONAL AGENT TO BE USED BY THE END USERS. OPENAI HAS BEEN AT THE FOREFRONT OF USING THE BIG AI FIRM TIER MODEL INTO THE PUBLIC MARKET FOR CONSUMERS TO USE. THAT IS GOING TO BE THE BIGGEST FACTOR TO LOOK AT. PLUS, I'M SURE WE ARE GOING TO GET SOME TALK AROUND THE SAFETY MEASURE PROTOCOLS BEING WITHIN THE DEVELOPERS NETWORK LATER TODAY. ABEER: WE WILL BE WATCHING OUT FOR THAT. THANKS FOR THE HEADS UP. NEIL CAMPLING WITH THE LATEST ON EVERYTHING AI. DEFENSE CONTRACTOR LOCKHEED MARTIN'S CEO SEES AI AS FUNDAMENTAL TO THE COMPANY'S FUTURE AS A LEADING DEFENSE TECHNOLOGY COMPANY. HE SPOKE TO BLOOMBERG TECHNOLOGY'S ED LUDLOW ABOUT HOW AI IS BEING IMPLEMENTED INTO ITS ROADMAP, IS GROWING ROLE IN WARFARE AND THE GLOBAL AI SAFETY DEBATE. TAKE A LISTEN. >> OUR CHIEF ENGINEER, WHEN I STARTED THE COMPANY IN MANAGEMENT SIX YEARS AGO SAID AI IS READY -- REALLY CRITICAL AND ASKED FOR BUDGET TO INVEST IN OUR OWN AI CONTAINERIZED INSTANCE. WHERE WE WOULD NOT BE GOING AND USING DATA SETS OFF THE INTERNET. WE WOULD NOT BE USING MODELS AND FEEDING. OUR INFORMATION BACK INTO THE SYSTEM. WHERE WE WOULD HAVE, BASICALLY, A CONTROLLED ENVIRONMENT FOR OUR AI WORKLOADS. ONE OF OUR PARTNERS IN THE TECHNOLOGY SPACE HAS BEEN JENSEN HUANG. BACK IN 2000, 2001, WHERE HARDLY ANYONE HAD HEARD OF NVIDIA, IF YOU WEREN'T A GAMER, WE WERE TEEMING WITH NVIDIA TO GET GPU'S. THAT RELATIONSHIP CONTINUES TODAY. ABEER: TUNE IN ON FRIDAY FOR MORE OF THAT CONVERSATION DURING BLOOMBERG'S DEFENSE TECH SPECIAL LIVE FROM SKUNK WORKS. LOCKHEED MARTIN'S AIRCRAFT FACILITY IN SOUTHERN CALIFORNIA. THIS IS BLOOMBERG. ♪ ABEER: WELCOME BACK TO "HORIZONS MIDDLE EAST & AFRICA." REUTERS IS REPORTING ANTHROPIC PLANS TO SPEND MORE THAN HALF A TRILLION DOLLARS ON CLOUD AND COMPUTING IN THE COMING YEARS. IT IS CITING THE COMPANY'S IPO PERSPECTIVES FOR THAT FIGURE AS WELL AS REVEALING A $42 BILLION NET LOSS IN 2025 ON REVENUE OF $4.6 BILLION. META HAS HIRED THE CEO OF DATABASE SOFTWARE COMPANY MONGO DB TO LEAD AN AI PLATFORM. THE NEXT MAJOR GROWTH PILLAR FOR META AND IT POSITIONS THE SOCIAL MEDIA GIANT AGAINST MICROSOFT, GOOGLE, AMAZON WEB SERVICES, OPENAI, AND ANTHROPIC. MONGO DB SHARES PLUNGED 18% WHILE META STOCK FELL AROUND 4% AFTER THE ANNOUNCEMENT. IN CHINA, THEY ARE SAID TO HAVE EXPENDED OVERSEAS TRAVEL RESTRICTIONS FOR TOP AI PROFESSIONALS AND PRIVATE FIRMS TO INCLUDE THE FAMILIES OF KEEPER -- OF KEY PERSONNEL. GOVERNMENT AGENCIES HAVE BEGUN SHARING THE WIDER RESTRICTIONS AFTER AFFECTING -- WITH AFFECTED PEOPLE INCLUDING AI AND CHIP EXECUTIVES. THEIR SPOUSES AND CHILDREN NOW NEED APPROVAL FROM BEIJING BEFORE GOING ABROAD, EVEN FOR SHORT TRIPS. COMING UP, OPPORTUNITIES DESPITE THE CONFLICT. BROOKFIELD'S MILLIE'S HEAD JOINS US TO DISCUSS THE OUTLET FOR INVESTORS. THAT IS NEXT. THIS IS BLOOMBERG. ABEER: GOOD MORNING, THIS IS "HORIZONS: MIDDLE EAST & AFRICA." OUR TOP STORIES THIS MORNING, CRUDE CLIMES. UNCERTAINTY OVER A U.S.-IRAN DEAL PERSISTS. SIDES OF STRONG DEMAND OUTWEIGHED THE PIPELINE. KEEPING AN EYE IN CHECK, NVIDIA LAUNCHES A NEW SECURITY SYSTEM DESIGNED TO STOP AI AGENTS FROM GOVERNER IVEY. THE MOVE -- FROM GOING AWRY. THE MOVE COMES AS A DISTRIBUTORS PER STRONGER SAFEGUARDS AROUND SELF-IMPROVING MODELS. AND BONDS STABILIZE IN ASIA AFTER TREASURY YIELDS CLIMBED AFRESH, MULTI-DECADE HIGHS. MARKETS BRACE FOR FURTHER FED TIGHTENING IS PERSISTENT INFLATION KEEPS PRESSURE ON BORROWING COSTS. I'M ABEER IN DUBAI, AND ADJUST THAT WE COULD DO AT THE TOP OF THE SHOW, RBA DECISION JUST CAME. IT HAD RAISED THE CASH RATE TARGET BY 25 BASIS POINTS TO 4.6 %. WIDELY WITHIN EXPECTATIONS. IT DOES SAY THAT INFLATION REMAINS ELEVATED AND THAT MONETARY POLICY IS WELL-PLACED TO RESPOND TO DEVELOPMENTS THAT ARE HAPPENING IN THE WORLD. IT ALSO SAID THAT THE BOARD SAYS THAT IT WILL RELY UPON DATA ASSESSMENT OF RISK, AND HE COULD SEE HIGHER INFLATION, LOWER ACTIVITY THAN FORECAST. IT ALSO SAID THAT IT WILL RAISE CASH TRUTHS FURTHER -- CASH RATES FURTHER IF NEEDED. WE ARE SEEING A LITTLE BIT OF MOVEMENT ON THE 10 YEAR BENCHMARK NOTES IN AUSTRALIA. COURSE ALSO MENTIONING THAT GLOBAL ENERGY PRICES ARE MUCH HIGHER THAN THEY HAD ASSUMED IN AUGUST, AND SO WE ARE SEEING THIS ACTION AND POSSIBLY FURTHER ACTION INTO THE END OF THE YEAR AND NEXT. THAT IS IT FOR THE RBA. FOR WIDER MARKET MOVES, BUT IT'S A LITTLE BIT OF A GLIMPSE IN WHAT IS HAPPENING IN RISK ASSETS. REALLY CONTINUING THE PERFORMANCE OF A SAW ACROSS ALL THE MAJOR GAUGES YESTERDAY. S&P, NASDAQ, EVEN CHIPMAKERS NOT IMMUNE FROM THE WIDER NEGATIVE SENTIMENT WE'VE BEEN SEEING IN MARKET THAT IS SEEPING INTO THE ASIA SESSION, 1% LOWER NOW FOR THE ASIA PACIFIC. BRENT CRUDE IS WHERE THE STORY HAS BEEN OVER THE PAST COUPLE OF DAYS, ABOUT 2% HIGHER AS OF THIS MORNING. THE SECOND STRAIGHT SESSION OF GAINS AS THIS SENSE OF CONFUSION BETWEEN IRAN AND THE UNITED STATES CONTINUED. THE WARRING SIDES DENYING STATEMENTS THAT COME OUT OF ABOUT COMPROMISES THAT THEY WERE WILLING TO MAKE. SO WE MONITOR A RETURN TO DIPLOMACY OR THE PROSPECTS OF A RETURN TO DIPLOMACY. THIS WEEK WE KNOW THAT THE FOREIGN MINISTER HAD MET WITH MEDIATORS IN NEW YORK CITY BEFORE LEAVING BACK TO TEHRAN YESTERDAY. AND THEN THE 10 YEAR NOTES, THE YIELD ON THOSE, TWO BASIS POINTS HIGHER. HE MENTIONED THAT THEY HAVE GAINED 11 BASIS POINTS YESTERDAY ALONE ON TOP OF A 16 BASIS POINT GAIN LAST WEEK, SO A STORY TO KEEP AN ION. THE FLATTENING OF THE YIELD CURVE AND A POSSIBLE INVERSION IS SOMETHING THAT ANALYSTS ARE WARNING AGAINST IN -- AND THE CONSEQUENCES THAT WOULD HAVE ON ECONOMIC GROWTH IN THE UNITED STATES. FOR A LOOK AT WHAT IS HAPPENING IN ASIA, WE'VE GOT AVRIL STANDING IN SINGAPORE FOR US. WHAT ARE YOU LOOKING AT? >> AS YOU SAY, THOSE ELEVATED ENERGY PRICES ALONG WITH YIELDS REALLY BATTLING SENTIMENT IN THE REGION. JAPAN, SOUTH KOREA, THOSE OF THE MARKET-LEADING LOSSES TODAY. EVEN THOSE GAINS ARE BEING ERODED SOMEWHAT. AND WHEN YOU LOOK AT THESE YIELDS AT THESE LEVELS, MAYBE SOME DRAWING OF INVESTOR DEMAND. CASE IN POINT, WE DID SEE THE JGB 40 YEAR OPTION PAST WITH PRETTY GOOD DEMAND METRICS. THE STRONGEST IN A LONG WHILE WHICH SPEAKS TO THE SENSE OF MAYBE CALM FOR GLOBAL BOND MARKET. INVESTORS ARE STARTING TO DIP INCREASINGLY INTO DURATION. THOSE ARE SOME OF THE SIGNALS THEY ARE WATCHING TODAY IN TERMS OF THE BOND MARKET AS WELL. ABEER: BIG STORIES ALL OVER, THANK YOU AS ALWAYS FOR THOSE UPDATES. IN JULY, MERCK FIELD ASSET MANAGEMENT TRACED ABOUT $2 BILLION FOR A MIDDLE EAST FOCUSED VEHICLE TO PURSUE GROWTH OPPORTUNITIES BACKED BY SAUDI ARABIA'S PIF. THE COMPANY'S CEO TOLD THE QATAR ECONOMIC FORUM EARLIER THIS MONTH THAT THE REGION REMAINS A VALUABLE GROWTH DRIVER. TAKE A LISTEN. >> THE WHOLE REGION, AND SPECIFICALLY QATAR HAS DEVELOPED INTO AN UNBELIEVABLE PLACE AND IT IS NOT RECOGNIZABLE FROM 25 YEARS OF BUSINESS IN 40 OR 50 COUNTRIES OF THE WORLD WHAT IS GOING ON IN THE MIDDLE EAST AND WHAT HAS BEEN ACHIEVED IN THAT 25 YEAR PERIOD IS ALMOST A MIRACLE. ABEER: JOINING US NOW TO CARRY THE CONVERSATION, BROOKFIELD MANAGING PARTNER, REGIONAL HEAD OF THE MIDDLE EAST BASED JUST NEXT DOOR. LET'S TALK ABOUT THE $2 BILLION FUND THAT YOU GUYS HAVE STARTED IN JULY. WHAT OPPORTUNITIES ARE YOU FINDING IN THE REGION RIGHT NOW UNDER THE CIRCUMSTANCES? >> WE CLOSED THE FUND IN AUGUST SLIGHTLY ABOVE $2 BILLION. WHAT IS INTERESTING ABOUT THAT IS GLOBAL INVESTORS REMAIN BULLISH ON THE MIDDLE EAST. IN TERMS OF OPPORTUNITIES, WE ARE GOING TO CONTINUE TO FOCUS ON WHAT WE'VE BEEN DOING HISTORICALLY. FINANCIAL SERVICES, INDUSTRIALS, HEALTH CARE, AS WELL AS CONSUMER BUSINESS SERVICES. WHAT WE'VE SEEN THESE DAYS IS THERE ARE QUITE A FEW OPPORTUNITIES FOR US TO TAP. PEOPLE WANT TO KNOW THAT THERE IS A COUNTERPARTY THAT IS SERIOUS ABOUT TRANSACTING AND WE ARE IN A GOOD PLACE TO DO THAT RIGHT NOW. ABEER: WHAT ELSE DO PEOPLE WANT TO KNOW, GIVEN WHAT IS HAPPENING IN THE REGION? WHAT DO YOU THINK INVESTORS ARE ASKING FOR NOW THAT THEY WERE NOT NECESSARILY LOOKING AT THE START OF THE YEAR? JAD: I THINK THEY WANT RELIABLE PARTNERS THAT ARE ON THE GROUND AND THAT ARE GOING TO SEE THINGS THROUGH UNTIL THE END AND BE THERE WHEN THERE IS VARIABILITY THROUGHOUT THE MARKET. WE HAVE BEEN VERY FORTUNATE TO HAVE OVER 100 PEOPLE ACROSS ALL OUR OFFICES IN THE REGION THROUGHOUT THE PAST SIX MONTHS. THAT HAS GIVEN US A HEADS UP ON OPPORTUNITIES. BEING THERE IN PERSON, BEING ABLE TO INTERACT IN PERSON GIVES OUR COUNTERPARTIES A BIG DEGREE OF CONFIDENCE. I THINK THAT IS WHAT THEY ARE LOOKING FOR TODAY, THOSE FAST PARTNERS. ABEER: WHAT ABOUT REAL ESTATE, THE BREAD AND BUTTER? THERE IS ALSO A GV IF I'M NOT MISTAKEN, IN THE UAE. WHAT DO YOU THING ABOUT THE LONG-TERM PROSPECTS OF THE REAL ESTATE MARKET IN THE UAE AFTER WHAT WE ARE SEEING HAPPENING IN THE GEOPOLITICAL ENVIRONMENT? DOES THAT SWAY YOU AT ALL TO SHIFT YOUR ATTENTION, OR DO YOU LOOK A BIT FURTHER THAN WHAT IS CURRENTLY HAPPENING ON THE GROUND? JAD: WHEN YOU DROWN OUT THE NOISE, THE FUNDAMENTALS ARE STILL VERY STRONG. AND LET ME JUST SAY ONE THING. WE HAVE $20 BILLION INVESTED IN THE REGION AND THERE'S ONE OR TWO THINGS I WOULD SAY THAT WE LEARN FROM ALL THE DAY-O WE -- DATA WE ARE GETTING. WE ARE INVESTED IN ONE OF THE LARGEST PAYMENT COMPANIES. EACH TRANSACTION VOLUMES WERE HIGHER THAN 2025. WE ARE INVESTED IN A BAROMETER FOR EDUCATION HERE IN THE COUNTRY AND IN THE REGION. REGISTRATIONS ARE UP FROM JUNE. SO WE CAN SAY WITH A HIGH DEGREE OF COMPETENCE THE POPULATION HAS GROWN A LITTLE BIT. WHAT THAT MEANS IS THAT DEMAND FOR REAL ESTATE HAS NOT GONE ANYWHERE AND FUNDAMENTALS REMAIN STRONG AND WE EXPECT THAT TO CONTINUE BECAUSE THE TRENDS THAT WE ARE SEEING IN THE REGION ARE NOT SHORT-TERM, THEY ARE MEDIUM TO LONG-TERM. ABEER: LET'S BRING IN THE FOOT TAPPING THE MACRO GLOBAL PICTURE. YIELDS ARE WHERE THEY ARE RIGHT NOW. DOES THAT CHANGE THE WAY YOU LOOK AT DEPLOYING PRIVATE CAPITAL AT ALL HERE IN THE REGION, OR DOES THAT CHANGE AT ALL THE WAY YOU LOOK AT PRIVATE ASSETS HERE IN THE REGION, GIVEN THOSE YIELDS ARE ELEVATED AND THE EXPECTATION IS FOR THEM TO STAY WHERE THEY ARE FOR FOR THE BENCHMARK TO NOW BE WHERE THEY ARE FOR THE FORESEEABLE FUTURE? JAD: WHAT IS INTERESTING IF YOU LOOK AT THE YIELDS, AND IF WE LOOK AT SPREADS, CDS SPREADS HAVE NOT NECESSARILY WIDENED THAT MUCH IN THE REGION. ANSWER YES, YIELDS ARE HIGHER, BUT MANY OF OUR ASSETS ARE INFLATION-PROTECTED. WE ARE INVESTED IN REAL ASSETS AND EVEN ON THE PRIVATE EQUITY SIDE, WE ARE INVESTED IN THE TYPES OF BUSINESSES THAT CAN MOVE WITH INFLATION AND WITH THE YIELD CURVE. OVERALL, MAYBE WE NEED TO FINANCE THEM IN A WAY WHERE YOU CAN STILL GET THE RIGHT YIELDS BUT OVERALL, IT DOESN'T CHANGE OUR APPETITE NOR DOES IT CHANGE OUR ABILITY TO INVEST. ABEER: LET'S FOCUS IN ON PRIVATE EQUITY. BROOKFIELD IS ONE OF THE FIRST INSTITUTIONAL INVESTORS TO INVEST HERE IN THE REGION. YOU EXPECT MORE OF THAT ACTION TO HAPPEN ACROSS THE WORD, ESPECIALLY WHEN IT COMES TO PRIVATE EQUITY? JAD: I THINK WE ARE SEEING A LOT OF THEIR PEERS GLOBALLY COME INTO THE REGION. THAT IS A GREAT THING. NOT ONLY DOES IT MEAN THAT WHAT WE'VE BEEN DOING FOR THE PAST FEW DECADES IS NOW VALIDATED, WHAT IT ALSO MEANS IS THAT IT MAKES IT A MORE LIQUID ENVIRONMENT. AS YOU KNOW, ACQUISITIONS ARE JUST AS IMPORTANT AS DIVESTITURES, SO THE MORE COUNTERPARTIES WE HAVE THAT WE CAN DEAL WITH, THE BETTER THAT IS FOR OUR BUSINESS. ABEER: LET'S TALK ABOUT SOME OF THE BIG PLAYERS HERE IN THE REGION, OF COURSE. THE SHIFT IN THE GEOPOLITICAL ENVIRONMENT HAS CHANGED THE WAY SOME OF THESE PLAYERS LOOK AT HOW THEY DEPLOY CAPITAL, ESPECIALLY THE WE TALK ABOUT THE BIG SOVEREIGN WEALTH FUNDS. DOES IT CONCERN YOU HAD ALL BUT SOME OF THESE FUNDS ARE TURNING INTO A BIT MORE INWARD, DOMESTIC AND THE WAY THEY LOOK AT DEPLOYING CAPITAL? OR DO YOU SEE UNTAPPED OPPORTUNITIES? JAD: I DON'T SEE MUCH HAS CHANGED. THEY'VE ALWAYS BEEN INVESTING TO A LARGE DEGREE DOMESTICALLY. AS YOU KNOW IN THE UAE, AND A LOT OF THE SOVEREIGNS KICKED OFF WHAT WAS THE INVESTMENT RIGHT HERE IN THE COUNTRY. IN SAUDI, IT IS VERY HARD TO SAY THAT THEY HAVEN'T ALREADY BEEN INVESTING TO A LARGE DEGREE. I THINK WHAT IS HAPPENING IS THE PRIORITIZATION OF INVESTMENTS. THE PRIORITIZATION OF THOSE INVESTMENTS WOULD BE STRATEGIC IN NATURE. SOME OF THOSE MIGHT BE DOMESTIC AND STRATEGIC, SOME MIGHT BE GLOBAL AND STRATEGIC. SO IT HAS NOT REALLY SHIFTED, IT IS JUST HOW THEY ARE THINKING ABOUT IT HAS CHANGED. AND BECAUSE WE INVEST IN CRITICAL ASSETS, WE ARE ALWAYS PART OF THOSE DISCUSSIONS WHETHER IT IS DOMESTIC OR GLOBAL. ABEER: CINDY THINK INVESTORS ARE ASKING FOR MORE TO COME TO THE REGION, OR DO YOU THINK WHAT HAS CHANGED, YOU SAY NOTHING HAS CHANGED, BUT DO YOU THINK THERE IS ANY KIND OF SELECTIVITY IN COMING TO THE REGION? WHAT ARE SOME OF THE TRENDS YOU ARE NOTICING WITHIN THE INVESTOR COMMUNITY? JAD: AN INVESTMENT COMMITTEE NEEDS TO HAVE CONFIDENCE IN THE TEAM ON THE GROUND REGARDLESS OF INSTITUTION. USUALLY, THAT COMES WITH A TRACK RECORD. SO YES, I WOULD SAY A LOT OF PEOPLE LOOKING AT THE REGION WILL NEED TO MAYBE START A LITTLE BIT SMALLER AND GROW OVER TIME AND BUILD THAT TRACK RECORD BECAUSE WE CAN DOING IT FOR SO LONG. THAT HELPS US, BUT I WOULD SAY THAT HASN'T CHANGED THEIR APPETITE, IT JUST CHANGES THE WAY THEY ARE UNDERWRITING. AND I WOULD SEE ANYONE AT ANY GIVEN TIME NEEDS TO UNDERWRITE THEIR INVESTMENTS IN A WAY THAT GIVES THEM FLEXIBILITY AND VARIABILITY, ESPECIALLY IN THE SHORT TERM, BUT I CAN GIVE TO LONG-TERM. ABEER: SO FLEXIBILITY AND VARIABILITY, THERE YOU HAVE IT. NOW FOR A LOOK AT SOME OF THE OTHER STORIES THAT WE ARE FOLLOWING THIS MORNING, GOLDMAN SACHS HAS REPORTEDLY DISCUSSED A PLAN FOR COO JOHN WALTER TO SUCCEED DAVID SULLIVAN AS CEO AS SOON AS NEXT YEAR. THE WALL STREET JOURNAL CITES ANONYMOUS SOURCES SAYING HE COULD TAKE OVER TOWARD THE END OF 2027 OR IN 2028 WITH SOLOMON TO MOVE INTO AN EXECUTIVE CHAIRMAN ROLE. LAST YEAR, THE BOARD GAVE HIM A RESTRICTED STOCK PACKAGE NOW WORTH NEARLY $120 MILLION TO STAY ON FOR FIVE MORE YEARS. TURKISH PRESIDENT ERDOGAN WILL MEET SENIOR ECONOMIC OFFICIALS TODAY AS PART OF ONGOING EFFORTS TO STEM ANY FURTHER TURMOIL IN THE COUNTRY'S FUND MARKET. THE CRISIS HAS TRIGGERED ONE OF TURKEY'S BROADEST MARKET INVESTIGATIONS IN RECENT YEARS AND PROSECUTORS ARE EXAMINING ALLEGATIONS INCLUDING FRAUD, MONEY LAUNDERING AND VIOLATIONS OF CAPITAL MARKETS. AND PRESIDENT DONALD TRUMP HAS CRITICIZED THE U.K. DECISION TO RELEASE -- HELD OVER AN ALLEGED TERROR PLOT AGAINST THE AIR FORCE BASE. THE U.K. OFFICIAL SAID AN INVESTIGATION FOUND NO VIABLE EXPLOSIVES AT THE SCENE OF THE ARREST. AN COUNTERTERRORISM POLICE SAID THEY ARE STILL EVALUATING WHETHER THE INCIDENT INVOLVED ACTIVITY COMMITTED BY PROXIES OR INDIVIDUALS WORKING ON BEHALF OF A FOREIGN STATE. COMING UP SOUTH AFRICA, ZIMBABWE ARE DISCUSSING A PROJECT TO SUPPLY WATER TO AN INDUSTRIAL HUB NEW THEIR BORDER. THAT CONVERSATION IS COMING UP NEXT. THIS IS BLOOMBERG. ABEER: WELCOME BACK TO "HORIZONS." -- "HORIZONS: MIDDLE EAST & AFRICA." SOUTH AFRICA AND ZIMBABWE A $500 MILLION DAM PROJECT FOR AN INDUSTRIAL HUB NEAR THEIR BORDER. IT WOULD HAVE A STORMING CAPACITY OF 4,350,000,000 CUBIC METERS AND HOLD SUPPLY WATER TO THE MUSINA SPECIAL ECONOMIC ZONE. FOR MORE DETAILS WE ARE JOINED FROM JOHANNESBURG BY BLOOMBERG’S AND GOOD TO HAVE YOU WITH US AND GOOD MORNING. GIVE US A LITTLE BIT MORE DETAILS ABOUT THIS POTENTIAL PROJECT AND SOME OF THE INTRICATES THERE. >> THANK YOU. GOOD MORNING. SO AS WE KNOW, WE’RE INCREASING AND WATER SHORTAGES IN AFRICA. THIS HAS -- AN IMPORTANT PROJECT FOR BOTH OF THESE COUNTRIES. WE ARE SEEING THAT THEY ARE PLANNING TO BUILD ABOUT 450 MILLION CUBIC METERS TO START WITH. AND SOME OF THAT ABOUT 90 MILLION CUBIC METERS WILL THEN BE TRANSFERRED TO SOUTH AFRICA FOR THEIR INDUSTRIAL HUB IN THE PROVINCE. IF AGREED, IT WILL TAKE ABOUT 18 MONTHS IN PREP WORK AND ANOTHER THREE YEARS IN CONSTRUCTION. SO IT’S ABOUT FIVE YEARS OUT IF WE HAVE TO GIVE -- FOR THE PROJECT. ABEER: AND NOW VITAL OR HOW IMPORTANT IS THIS PROJECT FOR THE COUNTRIES THAT ARE INVOLVED WHETHER ECONOMICALLY OR WHETHER IT’S FOR THE LIVELIHOOD PROSPECTS? >> AS I SAY, YOU KNOW, WE ARE SEEING CHRONIC WATER SHORTAGES IN AFRICA. IT IS A WATER-SCARCE CONTINENT. WE ARE ALSO SEEING -- IT IS VERY IMPORTANT FOR SOUTH AFRICA AND ALSO TRYING TO INDUSTRIALIZE A BIT MORE. SO YOU HAVE TO SORT OF BALANCE ALL THESE SORT OF PROS AND CONS IN TERMS OF INDUSTRIALIZATION. BUT ALSO MAKING SURE THAT YOU HAVE TO WATER RESOURCES AS CLIMATE RISK INCREASES. LAST TIME SOUTH AFRICA DID THIS WAS WITH LUSITU, ALREADY DECADES AGO AND COMES TO AN END IN 2044. THAT’S A BIGGER PROJECT. YOU BET ABOUT 780 MILLION CUBIC METERS OF WATER EVERY YEAR FROM SOUTH AFRICA AND IN TURN THEY GIVE ROYALTIES ABOUT $260 MILLION A YEAR. SO THEY’RE TRYING TO SEE -- THE TALKS TO SEE IF THIS CAN ACTUALLY WORK WITH ANOTHER NEIGHBOR, ZIMBABWE. SO WE’LL SEE IF THEY CAN DO A FEW MORE OF THESE CROSS-BORDER WATER DEALS. ABEER: OK. LONI, THANK YOU FOR THE UPDATE ON THAT STORY. BLOOMBERG’S LONI PRINSLOO WITH THE LATEST DETAILS ON THAT STORY OF COURSE. NOW, A CANADIAN COURT HAS ORDERED CONSTRUCTION TO BE PAUSED ON A $16 BILLION OIL REFINERY IN THE EAST AFRICAN NATION. THE MOVE CAME AFTER A GROUP OF PETITIONERS FILED A CASE OPPOSING THE PROJECT SAYING IT WOULD DEPRIVE THEM OF PROPERTY RIGHTS. THE RULING MEANS THAT NO CONSTRUCTION ON THE PROJECT CAN BEGIN UNTIL THE COURT MEETS AGAIN ON OCTOBER 14. THE SOUTH AFRICAN RESERVE BANK EXPECTS FLAKES TO COOL SHARPLY AND RETURN TO ITS 3% TARGET BY THE END OF NEXT YEAR. GOVERNOR. CITY SAID TIGHTER MONETARY POLICY WOULD HELP COOL INFLATION THAT’S BEEN ABOVE THE GOAL SINCE MARCH. AND THE CENTRAL BANK RAISED RATES BY 25 BASIS POINTS TO 7.25% LAST WEEK. IN RESPONSE TO GEOPOLITICAL SHOCKS. NOW, COMING UP, SPACEX STAR SHIP ROCKET FACED A MAJOR TEST IN ITS QUEST TOWARD DEEP SPACE MISSIONS. WE WILL HAVE THE REPORT CARD NEXT. THIS IS BLOO BLOOMBERG. ABEER: WELCOME BACK TO "HORIZONS: MIDDLE EAST & AFRICA." SPACEX’S MASSIVE STARSHIP PRODUCT MASS REACHED ORBIT DEPLOYING UPGRADED SATELLITES. THE 14TH TEST FLIGHT MARKS STARSHIP’S FIRST SUCCESSFUL SATELLITE DELIVERY AND A MAJOR STEP TOWARD ROUTINE LAUNCHES TO EXPAND THE STARLINK NETWORK. BUT THE MISSION WAS NOT WITHOUT ITS PROBLEMS. AND BLOOMBERG’S DANNY LEE JOINS US FROM HONG KONG TO TELL US EXACTLY WHAT HAPPENED IN. GOOD TO HAVE YOU WITH US THIS MORNING. THIS WAS A MILESTONE FOR THE COMPANY. BUT WHAT WERE THE CHALLENGES THAT -- THAT THE COMPANY DID FACE OR THAT THE MISSION DID FACE? >> YEAH. GOOD MORNING. SO THIS WAS INDEED THE FIRST ORBITAL LAUNCH, SUCCESSFUL LAUNCH FOR THE NEW STARSHIP ROCKET. SO IT’S MUCH MORE HEAVIER. AND IT’S MUCH MORE CAPABLE OF DELIVERING HEAVIER PAYLOADS. AS YOU SAID, IT DID CARRY THE NEW VERSION-FREE STARTING SATELLITES WHICH ARE MUCH MORE CAPABLE THAN ITS PREDECESSORS LIKE IT CAN CARRY THE EQUIVALENT OF 40 VERSION ONE SATELLITES OF STARLINK. THAT PRESUMPTIVE FOLLOWED. BUT AS YOU SAID, WHAT HAPPENED WAS THAT THERE WAS AN EARLY ENGINE FAILURE, EARLY ON IN THE FLIGHT. ENGINES -- DID DETERMINE THAT THIS WILL NOT HINDER THE MIX AND IT WAS ABLE TO CARRY OUT ITS ORBIT. AND IT DID DELIVER ITS PAYLOAD WHICH IS IMPORTANT FOR ANALYSTS. THEY DID HAIL THIS AS A MILESTONE. SHARES WERE A LITTLE UNDER WATER BY THE END OF THE CLOSE ON WALL STREET. BUT INDEED, THIS WAS IMPORTANT BECAUSE STARSHIP HOLDS SO MUCH PROMISE FOR THE FUTURE OF SPACEX AND THE REVENUE GENERATION IN THE MEANTIME. ABEER: SO THEN WHAT DOES COME NEXT, DANNY, WHAT IS NEXT FOR THE STARSHIP PROGRAM? >> WELL, WE DO EXPECT TO SEE MUCH MORE REGULAR FLIGHTS TAKE PLACE, HEAVIER PAYLOADS. EVEN HEAVIER PAY ROADS BECAUSE THIS STARSHIP ROCKET CAN CARRY UP TO 60 SATELLITES AND EVEN MORE POWERFUL SATELLITES. BUT WHEN YOU LOOK AT THE BROADER MISSION, THAT ELON MUSK IS TRYING TO DRIVE, HE DID FLAG THAT THERE WILL BE A HUGE SURGE IN STARLINK REVENUE AS A RESULT OF THE MISSION, SUCCESS TIED TO THESE SUCCESSFUL STARSHIP LAUNCHES. AND EQUALLY WHEN YOU LOOK AT THE BROADER PLANS, THE FACT THAT STARLINK WANTS TO CARRY OUT AND -- SPACEX WANTS TO CARRY OUT INTERNET TO SPACE KIND OF MOBILE CONNECTIVITY, HE ALSO WANTS TO EVEN -- ELON MUSK WANTS TO CARRY OUT THIS NEW ORBITAL DATA CENTER WHICH WILL BE MILLIONS OF SATELLITES IN THE SKY. SO THESE ARE REALLY BIGGER AMBITIOUS THINGS THAT THEY WANT TO DO TO DRIVE THE COMPANY REVENUE. SO YEAH. THIS IS JUST THE START OF HOPEFULLY MANY MORE THINGS TO COME FOR THE COMPANY. ABEER: OK. DANNY, THANK YOU FOR THAT UPDATE. OF COURSE, BLOOMBERG’S DANNY LEE IN HONG KONG WITH THE LATEST ON WHAT IS HAPPENING IN STARLINK AND THE WIDER SPACE MISSION. BEFORE WE LET YOU GO FOR THE DAY, LET’S TAKE A LOOK AT -- A QUICK LOOK AT WHERE RISK ASSETS ARE SITTING. AND WE’RE SEEING A VERY SIMILAR PICTURE TO WHAT WAS HAPPENING YESTERDAY. S&P FUTURES TURNING .3% LOWER. NASDAQ 100 .4% SO A LITTLE BIT FURTHER FOR THE TECH-HEAVY GAUGE. DOW JONES ALSO TURNING LOWER. AND THE DIVERGENCE CONTINUES IN EUROPE BECAUSE EURO STOXX 60 FUTURES A POSITIVE START IN THE EUROPEAN SESSION LATER TODAY. BUT SIMILAR TO YESTERDAY, THE BIG STORY CONTINUES TO BE IN THE BOND SPACE OF COURSE. WE MENTIONED THE RBA DECISION IN AUSTRALIA. BUT THE U.S. TREASURIES CONTINUE TO BE IN SIGHT WITH THE TWO-YEAR NOTE, ABOUT TWO BASIS POINTS HIGHER. THE 10-YEAR NOTE ABOUT TWO BASIS POINTS HIGHER AS WELL. THE FIVE-YEAR YIELDS ARE FLEE BASIS POINTS HIGHER THIS MORNING. AND OF COURSE WE HAVE MENTIONED YESTERDAY THAT ANALYSTS WERE WARNING ABOUT AN INVERSION THAT COULD POTENTIALLY HAPPEN BETWEEN THE TWO-YEAR NOTES AND THE 10-YEAR NOTES IN THE UNITED STATES. AND OF COURSE THE CONSEQUENCES THAT WOULD CARRY ON THE U.S. ECONOMIC GROWTH. SO WHAT DOES THE FED DECIDE TO DO? THAT IS A QUESTION THAT WE WILL CONTINUE TO ASK. AND ANOTHER QUESTION, WE WILL CONTINUE TO ASK IS WHAT HAPPENS IN THE ENERGY SPACE? BRENT CRUDE PRICES CONTINUE TO BE ELEVATED. AND DRAWING VERY CLOSE TO $110 ON THE BARREL. THEY’RE GAINING ABOUT 2% AS OF THIS MORNING. BUT FOR "HORIZONS: MIDDLE EAST & AFRICA" THAT IS IT FOR TODAY. "DAYBREAK: EUROPE" IS UP NEXT. THIS IS BLOOMBERG.