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There and we will have continuing coverage throughout the rest of the morning on the escalating tensions in the Mid East and the impact they're having on the markets. The other major story obviously out there, is the day one of the port strike here on the East Coast. I mean, I was looking at some graphics on various TV networks and it's pretty much all down the entire East Coast, winding around our friends in Florida and all the way
to the Gulf Coast. We start thinking about you know, that's a lot of territory there that does a lot of shipping, So you really want to get some perspective on that. You go to the folks on the left side of this country, on the West coast, they had their labor issues. A couple of years ago. A Mario Kodero joins a CEO for the Port of Long Beach. Mario,
thanks so much for joining us here. What role do you believe the West Coast ports your port in Long Beach can have and maybe relieving some of the pressure on shippers who can't unload or load their goods on the East coast. How are you guys approaching that?
Well, thank you for the invitation. I mean, I think when you talk about Long Beach, we're part of the largest container gateway for the nation. So I think the road that we play is a continued rod that we move a great percentage of the nation's trade, and I think we're in a very good position to handle whatever search comes our way. And last, I'll make the point that August we had a historic number of containers moving through the Port of Long Beach. That number was nine
hundred and thirteen thousand plus content. That's a historical high number for US, a record number, and when you add the Port of la for August, we approximate about one point nine million containers in this gateway the Sampeter Bay complex. So our role here is to continue to move cargo
in an efficient manner. And again Port Labbach has a tremendous capacity right now, in that words, good capacity around seventy percent, so we are prepared to continue to move that containerized cargo that comes our way.
I'm curious what kind of lessons did you end up learning from the pandemic because we had so many supply related issues with the chains there, and how could that help you try to navigate this instance?
Great question, a lot of lessons learned. Number One, expanding operation hours. I've been a big spokesperson for twenty four to seven operations. Again, to qualify that or put that in perspective, you know, we're not going to go twenty four hours a day, seven days a week anytime soon, but there's a frame of expansion of hours. So in
Long Beach we've done that. We've done staging areas, and again this is going to be very beneficial for us if in fact we need the stage containers outside the terminals, and I think the lessons learned from COVID. Again, it's a supply chain issue, so the warehouse that is the end product here of the supply chain in this region. They also are very collaborative with us and making sure that inventory moves. So again, a lot of lessons learned
from COVID nineteen supply chain crisis. So we're applying those lessons and hopefully, again as I just noted, we're moving a record amount of cargo here at to Port Long Beach without any congestion or bottlenecks whatsoever.
Hey, Mario, if I'm a shipper, I've got a ship at sea in the Atlantic steaming towards New York or something, and that's closed. Now what are the economics for me to say, Oh, I'll go to the Panama Canal, go through there, then I'll come up to your port in Long Beach. Is that realistic? Is that a decision option?
Well, I mean that decision for shipper is based on economics, So obviously if they're going to come to the West Coast, I think that decision comes into play that for them, it's a reduced cost. With regard to the option that potentially could happen. But in that regard, yes, there's increased transportation costs for sure, but I think again, I think it's going to be a scenario which we'll be able to manage that and move forward as we have in
previous instances. We talked about COVID nineteen. But again we have a lot of lessons learned from COVID nineteen, and one of them is we are prepared no matter where the options are in terms of cargo flow, we're going to be moving to cargo here.
What other ports along the West coast do you foresee field cargo that ends up getting re routed?
I'm sorry I repeat that question.
So what other ports along the West coast do you foresee other field cargo ended up getting rerouted at this point?
Well, Number one, poor Los Angeles. Again, they're part of this gateway, the Port of Oakland in northern California, and you also have the Port of Way NIMI. So there's other ports in the West coast here and again if you go to the northwest port of Seattle and Tacoma. So I think the West Coast is in a very good position to make sure that we not only receive the car a little, but continue to move it inland to the nation's midwest.
Maria.
One of the topics that I guess the long shoremen and the shippers have is a wages of course, and presumably that will work itself out. But the other one is automation and what that means for jobs. How do you guys talk to your long shorman about the need for you guys to automate to remain competitive versus their need to preserve jobs. What's that discussion like these days?
Well, I mean you mentioned an issue here. Automation robotics has been a continued concern in all sectors of labor. So for the portal lombies, I think the way we've been able to navigate well with our labor partners is anyone who's interested in better developing the terminals of the poor long beach number one, you have to have a meeting of the mines with the IOWU, so that collaborative partnership and works well for us. So in that regard,
that's been our policy. Anybody who wants to expand or develop their terminals, they have to go through the isow first, and that mitigates any serious differences as we go down the road. So for us, it's been a successful path. But on the other hand, again keep in mind this is an issue across the board in terms of workforce in the nation, if not the global community.
Do you have a sense from retailers how they're potentially making contingency plans as of.
Now, Well, I think what I can tell you is I gave you these record numbers that we're moving here at the Poor of Long Beach for August. That's almost a thirty four percent increase year to year. So I think the retailers in the shippers have already anticipated a scenario that's occurring in the East Coast and they've already made that decision to move their cargo to the West Coast.
And again, the August numbers for both these ports Los Angeles and Long Beach here in the Sanpedo Bay complex are historical numbers, so that basically answers the question that I think they've already made those decisions, and I do expect to have additional car a little bit. Have me said all this, I want to make sure that again from the poor lobbies, we encourage that the parties in the East Coast moved to a resolution because any bottleneck and the supply chain in the nation is not good.
So for my perspective, I think again, it's not about additional cargo that we're going to get. It's about hopefully these parties coming to a mutual resolution soon so that we don't impact the nation's supply chain anywhere in the country.
Hey, Mary, thank you so much for joining us. Really appreciate getting some of your time at MARYA. Cordero, he's the CEO of the Port of Long Beach, giving us a sense of kind of they're busy and presumably they still have some capacity to take some shipments if somebody want to divert them from the East coast to the
West coast. And the other thing we learned about talking to Jean Soroka, who is his counterpart at the Port of La is that those West coast ports, particular the ones in the La area, they just got a great view of China trade. They do contannerships could just keep coming back and forth back and forth into that port so you can get a good view.
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Tensions and Conflicts in the Middle East returned to Mick mulnoy. He's a co founder of the Lobo Institute. That's just the beginning. He's a former senior fellow at the Middle East Institute, former Deputy Assistant Secretary of Defense for the Middle East at the US Department of Defense. That was enough, former Power Military Operations officer at CIA, and of course a former US Marine Infantry officer. And for his service, we say thank you very much, Mick for your service.
Make it looks like we're going to take another rung up on the escalation ladder today. What do you make of this news that the US is saying that it ran as preparing to hit Israel with ballistic missiles.
Good to be with you, guys. I think this is expected. Of course, they've been claiming they're going to retaliate ever since we saw the assassination of the Hamas leader in Tehran. Then, of course the assassination of the Hesbela leader in Beirut
and it was expected. Now the question is is it going to be like April where we have the capacity and we do have the capacity to essentially shoot down all of the incoming drones and missiles, or is it going to be more substantial or is it going to be coordinated with Hesbelah and the Huthis so that it can try to overwhelm the defenses of Israel and the United States combined. That's the question We'll see soon because it looks like it's eminent and it's going to take
some of these projectiles hours to get to Israel. So we have to stand by and see how this goes.
To what extent does the United States rely on Israeli intelligence streams and its assessment of those different regional threats.
So there's a back and forth when it comes to the Israeli US intelligence cooperation. Oftentimes Israel has better intelligence on the threats that are immediate to them. Of course, the United States also has its independent intelligence and then and when it comes to big regional intelligence, usually the US, the CIA, and other organizations inside the intelligence community are
better and past the information to Israel. For example, the IDEF spokesman said that the US had notified Israel that Iran was preparing these cruise ballistic missiles and potentially drones earlier this morning. So that shows the cooperation and the sharing that goes on near constantly, Mick.
Immediately following the October attack on Israel prime mention Netnyan, who said quite simply that the strategy, the goal of Israel is to one eliminate Hamas and to get the hostages back. That seems to have broadened out significantly. The scope to now take in on Hesbela and going into Lebanon, dealing with all in any adversaries. Is that, in fact true, has his war aims broadened significantly?
Well, I do think it's broadened, but I would have to say if somebody spends quite a bit of time in Israel. The Israelis have been messaging directly that they knew that this war in the north between Hesbelah would have to happen if they were to get their six hundred or excuse me, sixty thousand plus citizens back to
their homes in northern Israel. They were very clear about that, and I think it's important to point out Hesblah has been just hacking Israel since October eighth, there's been over nine thousand missiles, rockets, drones, an say, tank weapons fired into Israel. And this was inevitable if this was going to continue, and I think they have shown that they
have very good capabilities in Lebanon. I don't think it's in anybody's interest, including Israel, and it's certainly not Lebanon's, but this to turn into a full scale ground invasion. But from Israel's perspective, this was inevitable if Hezbolah was going to continue to attack their northern settlements and essentially put hat at least one third of their country off limits to their own citizens.
Well, the conflicts between Israel and has blowed inevitably drawn in Iran into the conflict. What does that mean for the wider region in general?
Now, So that was the biggest concern of the United States. That's why we've had so many military assets in the region to try to deter a course, and to a certain extent it has deterred Aron, I believe. And then also to defend and we've seen how capable the US was when it came to defending Israel, along with Israel and other countries in the regions such as Jordan, which
defended Israel against the April thirteenth attack by Iron. But this is what the biggest concern is for the United States, that Iran would mount something that wasn't manageable, that wasn't for show, that was or actually just got through and caused substantial damage or loss of life in Israel, because I think it's been clear that Israel will respond directly to or on and they might take direct, meaningful strikes,
not like they did last time in Iran. In fact, several of the IDF spokesperson have referenced their recent attack on the WHO thi's in WHO data Yemen is further away than from Israel than Iran's oil fields, specifically citing
Iran's oil field. So I think there's a lot of messaging coming out of Israel right now that if Iran is successful so not for show like many in it believe April was, and actually causes damage to this could escalate very quickly and have impacts that go beyond the two cunt treason, certainly beyond the region.
Mick.
We've seen the US government repeatedly call for a restraint on the part of Israel, yet Primeister Netanya, who has effectively ignored those Please here, What is the current state of the US Israeli relationship.
Well, I certainly think there is some tensions. I mean, the US overall supports Israel defeating Hamas of course they were the terrorist attack that attacked them on October seventh, and Heswela, which is a US designated terrorist organization and
has been constantly attacking Israel. When it comes to the relationship in Gaza, I think there's been differences of how that was prosecuted, and now I think the US just wants to see this get contained and have a cease fire so that they can do everything that they would like to see policy wise, which is in the conflict in both Gaza and obviously not have one if you will in Lebanon. But Israel has their own interests, they're their own sovereign country, and they make their own decisions.
If they were asking me, I would suggest to the White House that they take more of a behind the scenes role and not have public disagreements with Israel. They could certainly have private disagreements Israel when it comes to this seaspar because in Lebanon specifically, because this is very difficult for any country to tell another country that's been attacked again nine thousand missiles in less than one year not to do something that they know they would do,
So that makes this a bit different. And essentially the Sea spire needs to come from Hesbela, who could simply stop attacking Israel, agree not to continue, potentially move to the Litati River, which is required by a UN resolution. So most of the I think negotiations on this side should be focused on Hesbela vice Israel, which both countries I think, put in the same situation, would be doing something similar to Israel right now.
All right, thank you so much. As always, really appreciate getting some of your time and your perspective.
Mick mulroy.
He's a co founder of the Lobo Institute and really one of our expert voices that we rely upon whenever there's some of these geopolitical tensions, particularly in the Middle East, where he has so much experience.
You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on Focar playing and broud Otto with the Bloomberg Business app. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
Geopolitical story of the day movie markets is US is saying that is a rands preparing to hit Israel with ballistic missiles. We've been covering that story all day. We will continue to do so. Jonathan Panakoff he joins us now. He's a director of the Scowcroft Middle East Security Institute at the Atlantic Council. He is based in Washington, DC. Jonathan,
thanks so much for joining us here. What do you make of the last I guess forty eight hours in the Middle East, with Israel having some troop and versions into southern Lebanon, and now the news today that the US says that Iran may be preparing to hit Israel with the ballistic missiles. That's been quite the escalation in the last forty eight hours.
What do you make of it?
Thanks for having me. It certainly has been the escalation. I don't expect it to end anytime soon. I think the Iran strike that is probably going to be coming shortly here, it's going to look slightly different than April. I think certainly it's still going to probably target first military assets in israel intelligence headquarters.
Perhaps.
I don't think they're going to see their runnings go after civilian infrastructure. But I do think the question is going to be how does Israel respond, And I'm skeptical that you will see the same response that you had in April. And then that means that the chances for increased escalation as we go up the escalatory ladder are
only going to go up. So this is going to take a little bit of time to see where it resolves, and of course at the end of it, you still have what will be an ongoing war between Israel and Hezbolah.
Has the UN Security Council had a reaction yet to the latest news on this.
The Secretary General did come out and say every effort has to be made to try to prevent a full scale war between Israel and Hezbola that could engulf the region. But we haven't seen UN Security Council immediately this morning meet my senses, you'll see them meet as soon as Frankly Iran launchers and you start to see more kinetic action being taken. But the reality is going to be the impact of the UNSC is going to be, if anything, very minimal.
Jonathan, I guess maybe with a little bit of hindsight, we should not have been too surprised that we've had this escalation here because you think about just last week Prime mentioned that Yahoo at the United Nations here in New York. Pretty defiant speech there is he boldened down to do more than maybe what the initial aims were, which is to get the hostages back and take out Hamas. His aims much broader now.
They certainly are oka. I think Israel has been split for quite a while. They were some at the beginning of the war, including Yoev Galant, the Israeli Defense Minister, who said, no, we can actually deal with Hamas at a later time, we should go after Hezbala, and that was in late October of twenty twenty three. That's not the direction that Netanyahu chose to go. It's not the direction most security officials chose to go. But it also
didn't resolve the fundamental challenge that you had. Hisbela beginning October eighth, begin rocket attacks into northern Israel that has displaced tens of thousands of Israeli citizens who Netanyahu has now faced political pressure to return them home. It's now been a year. The original promise was to restart at the beginning of the school year, that didn't happen, and so now I think the view is and we've seen this in the last few months, Israel very methodically went
after Hezbala's command of control, its leadership. It took out more Hebela leaders in the last two months than it had in the last two decades, and so clearly there's a concern that this is going to escalate, and it probably will. But you're right, some of this has been telegraphed in the last few months about the direction we were heading.
What types of weapons could Iran use in an attack and would they use all of their military capabilities for one?
Yeah, I think so. Look, Iran has a really large inventory of ballistic missiles, of cruise missiles, of drones. You're talking about dozens of different types with significant ranges. The ballistic missiles, the time to get them from Iran to Israel is about twelve minutes, give or take, so it's really quick. The cruise missiles there is a little slower,
the drones much lower than that. But the reality is, at the end of the day, Iran's number one concern is always regime stability and regime security, and so the odds that it's going to use the entirety of it's Arsenal, I think is very very low, because if it does so, then it's got nothing left to protect itself or even to protect Kabala in another month or two, if there's a need that, if follow looks like it's really suffering, the question for Ron is going to be, how does
it respond in a meaningful way that can try to create some increased deterrence against Israel without actually leading to a full scale war that jeopardizes the stability of the Iranian regime. And that's going to be a really hard balance to me.
All Right, Jonathan, thank you so much for joining us. Really appreciate it. Jonathan Panacoff, he's a director at the Scowcroft Middle East Security Initiative at the Atlanta Council. Giving us the latest on the geopolitical tensions rising there. In the midist, you're listening.
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Bloomberg eleven thirty Economic data also coming out impacting these markets, ice and manufacturings. John Tucker just reported came into forty seven point two. They could say since it was forty seven point five, so a little bit light but kind of flat with last month. Let's break it down a little bit. We can do that, Tim Fury, he's a
chair for the Institute for Supply Management's Manufacturing Business Survey Committee. Tim, what do you make of the data we saw here from the US manufacturers today?
Good morning, So we have a stable contraction compared to the prior month at forty seven to two. Like you said, Paul, it's a good report. I think on the demand side, we're still looking for demand to surface. And of course our panelists only had a little bit of the benefit here of the federal rate reduction announced several weeks ago, but it's not reflected really in our report. Just the
sentiment would be. On the output side, output was good, our revenue and our production base was stable month a month, which is excellent. Employment stepped down again. We could talk a little bit more about that now. On the input side, we returned to a normal minimal stress and the supplier side and manufacturing inventories back and the level that you would expect them to be. So we're kind of where we thought we would be in a little bit about
forty sive. You know, we're still thinking that we're probably going to stay below fifty before we get to the beginning the next year. But yeah, so we'll talk a little bit about employment and prices. So we've kind of been preceding what's been happening on the jobs. Joelts CPI and PPI in terms of direction. Our employment came down again pretty strongly, but I think the fact that the revenue maintained this level that we had back in August indicates that we're just trying to make sure that we
have employment levels aligned properly with the latest demand for gasts. Now, on the prices side, we came down to forty eight three. We're easing a little bit. We've seen some softness on steel and aluminum, more of the foundational commodities, and I think that's probably a good omen for the CPIPPI PC that comes out later on the month.
So Tim, we know that previously declining orders had been that issue in a persistent retreat in the backlogs that had remained kind of key headwinds here for production where are new orders increasing versus decreasing, So.
Demand overall I think is still negative. This month, we have very weak new export orders. The new order level contracted again, but not quite as bad as it did in the prior month. We contracted minimally, but we're still contracting. Our backlog gained a little bit in terms of slowing down its contraction, but it's still contracting fairly heavily, so you know overall, and customer inventories came in about right, which really isn't all that good for next month's activity,
So overall demand is still weak. Wouldn't expect with the Fed announcing and interest rate reduction just a couple of weeks ago that we would see an impact on the demand side. I'm hoping to see additional investments start to occur in the November timeframe. Maybe that will help as we build up maybe manufacturing inventory to do better on customer demand. But overall, I really don't see demand coming back until we close the year and the election gets behind us.
All right, Tim, thanks so much for joining us. Really appreciate you breaking down this news here. Tim Fury, chairman of the Manufacturing Business Survey. The firm is the Institute for Supply Management breaking down some of those numbers came in a little lighter than expected, but a little stable relative to last period, still in a contraction mode.
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All right, Boeing some news here, Maybe weighing to raise at least ten billion dollars in stock because why, they got a cash flow problem here and they're not delivering as many planes as they need to. It's definitely a challenge for them. So they did go to the bond market. They're concerning going to the equity market. Lets see if
that's enough. George Ferguson, Senior Airspace Defense analys for Bloomberg Intelligence Joints us George, again, this is something you've talked to us about in the past, that the company may need to go to the equity market and raise some equity. It stocks down forty percent year to date, ideally not a good time to raise money. At this valuation. But what do you make of this?
Yeah, I mean, you know, I think the strike is sort of dragged on enough and they have to be concerned about having enough cash to continue to run the business that they're ready to do whatever it takes right to show up their position. I guess it kind of gives me a sense that maybe they think the strike's going to last longer than maybe even we anticipated originally, and so you got to do it, you gotta do, I guess.
And we do know that Boeing is on the cusp of seeing its credit rating cut to junk. Here, what's the likelihood that we could see this happening soon?
I mean, I think that again, if this strike drags on, you know, you're starting to get to the point where I think once you get past a month, where you're probably doing more damage to the supply chain, and so losing a month due to the strike, you know that doesn't just going to take you a month to sort of recapture where you were previously. I think losing a month means you put the suppliers a much more strain.
Maybe it means it's six weeks, seven weeks worth of recovery, So the further drags on, I think the more the rating agencies have to think about when are they going to really bance back to profitability and you know, and generate some decent cash and they've got to keep sort of pushing it out at a multiple the time the
strike has gone on. And so you know, that's what I think the real challenge here, I think the I think I'm not the credit analyst, but I think that the credit agencies, if we drag on again past a month, I think they have to really start to think about whether they can hold Boeing in a band that frankly, I think they weren't really in any ways. But the credit agencies are trying to look through the cycle a bit here.
The stock's actually up three and a half percent on the news today, so maybe the investment great credit rating is more important. That made me some delution here, George, where are we in terms of these negotiations here in week three? Any any movement there?
You know, not what we're hearing. You know, I think you've heard the same as we did. That another offer came out. It looked like I think it was about thirty percent increase. Looks like the union wasn't very interested.
I think if you're Boeing right now, you know what I understand is a lot of these union members got one of their last paychecks either at the very end of September bidding of October here, and so I think, now what you're really trying to do is figure out what the reserve, you know what, the you know what the union really, how far they're willing to go right, whether they they're as as girded as they say they are to keep going into a world where they're just
not getting paychecks, right. And so maybe here we're in a bit of a who knows it, you know, sort of the chicken phase where Boeing says, look, we can push this further, and let's see how long you can't take a paycheck and see how how much the union
is saved up. And I think the challenge here really is Boeing has to live with whether whatever cost structure they ultimately agree to, right, and so as much as they just want to get back and start building airplanes, they also have to be very careful about what the long term effects are on their financials. It's really challenging right now for going in their financial position to have to do this, but they've got to think about the long term here, all.
Right, George, thanks very much. We appreciate it. George Ferguson's senior Airspace, Defense and Airlines analys for Bloomberg Intelligence.
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