>> welcome to "bloomberg markets ," investors are retreating into safer quarters of the market on indications that iran is preparing to attack israel. we will talk more about that after we get a check on the markets off of session lows. the s&p 500 looking at a decline of 1% lower you are seeing a bigger decline in risk assets. the nasdaq 100 is down 1.6% on the day. the russell 2000, around the same. philadelphia semiconductor index, ciber defines. this is the beloved semi index that has not really been bid on

all year and is not faring well in the face of geopolitical conflict. process -- cross asset movement is where you are seeing the bulk of the moves. new york crude is hitting 3.7% higher on the day, increasing two dollars and $.50, roughly. brent crude, 3.5% higher. watching the bid in gold more than 1% higher today, the vix is now at 18. we saw it reaching more than 20 in the day a little bit earlier once the news had broken, but keeping and, volatility is elevated nonetheless. breaking news we are following today as we talk about u.s. officials saying they think that iran is preparing to launch ballistic missiles against israel, the second direct attack from iran on israel in less than six months. washington is prepared to defend israel if iran strikes in has warned of severe consequences for tehran.

for more on that, we are joined by iain marlow, who covers u.s. policy. first, let's go to what's happening across the world. ian, what do we know about israel's defense as they prepare for what might be another missile attack? ian: we know that in the coming hours, potentially, even starting at around 12: 30 today, there could be iranian ballistic missile attacks heading for targets in israel, like the mossad headquarters and military bases. i think that everyone right now is on heightened alert. the u.s. has increased its defense posture in the region. the last time there was an iranian attack on israel in april, the u.s., israel, and jordan helped to shoot down almost all the projectiles. at the moment we have been told by one israeli official that they expect this response to be even more substantial than the one that came in april.

obviously, israel has just taken out the leader of hezbollah over the weekend on friday, launching all sorts of attacks around invasions in southern lebanon. at the moment, everyone is on edge, anticipating some kind of iranian response. from there it is -- where do we go from there? how does israel respond? what kind of casualties are there? the u.s. is concerned that any sort of escalation could prompt a regional war. that's what everyone is looking out for at the moment. sonali: perhaps describe that escalation we have seen over the last few days and what we might see today. how does that change the narrative around what's happening in the middle east in the u.s. response to it? ian: honestly, i think that the success of the israeli offensive against hezbollah has taken a lot of people, including the u.s. government, by surprise. in the months after october 7,

the u.s. was warning israel to stay away from hezbollah, focus on gaza, getting a cease-fire, getting the hostages out. israel has pretty much ignored that advice, started going harder at hezbollah because they have displaced civilians they want to get back into their homes and they can't do that, they say, until they take out some of the hezbollah infrastructure on the border. over the last couple of days they have sent ground troops across the border into southern lebanon, the biggest escalation since the war with lebanon and hezbollah in 2006. at the moment, the u.s. is sort of on guard to help israel defend itself against potential iranian response. u.s. officials have warned that this kind of escalation can quickly spiral out of control. we don't know exactly what the iranian response will be. depending on what the response achieves on the ground in israel, israel will then have to respond in kind or even harder.

you just get into this escalatory cycle pulling iran and the u.s., potentially, into this. at the moment that is what people are trying to avoid. in april, the attack was successfully thwarted so there is the expectation that they could try to do that again, but again no one is really sure exactly what the iranian response is like. we just know ballistic missiles aiming potentially at military targets, which is less severe in the mind of israel than going after civilians. sonali: i want to point out some remarks that this attack might be on a wide scale and there will be consequences for launches towards israel. what have we heard from the netanyahu government? ian: it's a bit of a fog of war situation with the expected responses from officials and

leeks coming out in terms of the timing and what it might look like. from israel itself, what we have heard is that the rate they are doing later on lebanon, the ground incursions they have done, they are saying that they are targeted, localized, aimed at taking out the hezbollah infrastructure on the border so they can return residents. israel says they are not seeking a broader war, but you have to expect that if there is a large iranian response that does achieve casualties in israel, israel will likely respond again. netanyahu has been quite clear in the past about viewing iran as the primary nefarious actor in the region. in the past he has not been content to only go after the proxy groups. that is what people are fearing now, and all-out conflict between israel and iran here.

sonali: ian, thank you for your time. bringing more breaking news to our audience. following those comments from the idf's forks -- spokesperson, the spokesperson saying that rockets have been fired at israel and they are noticing sirens as well. we will bring you more as it comes. we of course have limited information. the idf spokesperson said that the attack might be on a wide scale. the idf has instructed residents of central israel to stay near shelters. we are now going to bring in paul salem for more on the middle east, vice president of the middle east institute in washington. we are of course getting information throughout the day as it comes, but since this morning, since the white house communicated this attack and since we have seen the israeli response so far and wait to see with the fallout looks like over the next 24 hours, what are you

looking for? paul: good to be with you. i am actually in lebanon, not in washington currently. i'm close at hand and watching the operations of israel and lebanon, the effects on hezbollah and the lebanese population. now looking at the launch of missiles from iran to israel. obviously, the region is poised at the moment such that the u.s. administration has been fearing, the potential of a major outbreak of a major regional war affecting israel, iran, the gulf and the gulf countries, potentially, if it got out of hand. so, we don't know the exact scenario and what it could be. i will say that iran is in a vulnerable position at this point, effectively having lost a major detergent power of hezbollah, which was its major deterrent against israel. israeli leaders said that they would not retaliate on behalf of

hezbollah. hezbollah said they would do that and iran would retaliate for things relating to the assassination in iran, so that might limit the scope. secondly, iran has consistently said they don't want to get dragged into a war of netanyahu's choosing. correctly -- they believe they correctly read his intention now that he has weakened hezbollah to direct his targeting towards iran. iran is aware that the u.s. has a lot of assets in the region. this is not a moment for iran to take such a big risk. we don't know what that decision is. it might be something on a larger scale than happened in april, but something more demonstrative rather than having heavy impact being dragged around israel. i think that the iranian leadership is well aware that they are very vulnerable.

it is something that they have wanted to avoid. in war, miscalculations happen, that is almost the rule of war. sonali: recapping the headlines as they are coming from the idf at the moment, the head of the israeli idf said that rockets from iran have been fired at israel and that they are fired towards israel and that the missile attack has begun. sirens sounding across israel, the idf spokesperson saying the attack might be on a wide scale and they are instructing residents in central israel to stay near shelters. just to recap what has been going on in the escalation of this conflict, how does this start to change the dynamic between what is happening between israel, between its neighbors, and the u.s.'s own involvement. paul: i think we will know in a

few hours. this is either largely demonstrative with iran being a clear distance away, missiles tracked from launch to the new trajectory. the u.s. has a lot of assets. u.s. partners in the region, as previously mentioned, like jordan and other countries, having shared information. israel has a largely very effective iron dome, with many other systems. either this will be a large-scale attack, like the one in april, effectively largely defended against without major impact, in which case it will have been largely demonstrative and not something that changes the dramatic -- changes the dynamic dramatically and in that case the focus will still be on the war between israel and lebanon and degrading the capacity of hezbollah. i think that israel wouldn't

turn into a major focus on iran except for maybe a few months after the u.s. election, after they know who will be in the white house. confronting iran, beginning systematic attacks, if that is something they want to do, that's going to require a real buy-in from the u.s. sonali: we should also say, to keep the audience updated on the latest, and not only says that according to the idf, they not only say that rockets from iran have been fired, they say all of israeli civilians are in bomb shelters. paul, when we talk about the conflict and its escalation, you yourself said you are in lebanon . what is it like on the ground at this moment, especially as the reaction we are seeing today might inspire another reaction? paul: well, it has been a very

dramatic two weeks in lebanon since the attack by israel on the pagers of 4000 hezbollah fighters, going all the way to the assassination of the leader of hezbollah last friday. this amid hundreds of airstrikes throughout the middle and south of the country, as well as the southern suburbs of beirut, where hezbollah has a lot of physicians. it has been a very destructive campaign. we have decapitated -- they have decapitated hezbollah at the moment, but they have also killed hundreds of civilians, injured hundreds more, and displaced over a million people who have moved north or to other parts of the country to get out of harm's way.

in many cases it has not happened and has led to a tremendous loss of life. but there is a lot of panic and distress in the country. really has a lot going on in the country. sonali: earlier today when the news was first respond -- reported regarding the missile attack prospect, there was a sense of comparison to around what we saw months ago in april. but the conflict has escalated quite significantly since then. do you see this being very different? do you see this as being non-comparable until now? paul: i will say that in the last two weeks as things have escalated tremendously from israel to has fuller and

lebanon, iran has not escalated their rhetoric in the sense that they have remained, they have tried to be conciliatory, de-escalating. as i said in the beginning, hezbollah is their main asset. without hezbollah, they are going to be much weaker. they want to preserve whatever is left of hezbollah, providing time in years to slowly rebuild it to the force it once was. as i said, iran is not ready for a major confrontation with israel in the u.s. at this point. at the same time, they are the leader of the active resistance and are in a tight spot, they have got to do something. if it is similar to the april attack, may be a bit bigger, that would be more likely, but if it is a much different attack with real damage, then we are in a state of direct war between israel and iran and i think that israel will not hesitate to hit a number of targets immediately inside of iran, which could then

get into a back-and-forth that drags in the u.s. military. i would fear that if the war were -- i would fear the war, the damage of it spreading to the gulf countries, the persian gulf, affecting energy prices immediately. that's the global economy, trade routes and someone. that's the nightmare scenario everyone is hoping doesn't develop. sonali: stick with us for a moment, i want to shift gears. the market is having a significant reaction to the escalating conflict. looking at declines in the broader market of the s&p 500, at or near session lows of 1.2% lower on the day. you are also watching that go for the nasdaq 100, 2% lower. you are seeing the haven bid in the bond market, investor flight to safety. you are watching yields rise in the two-year to the tune of six

basis points. you have this now elevated number again, closer to the 20 handle. yes, passing the 20 handle. you can see the most drastic movements unsurprisingly when it comes to energy markets. you are seeing it whipsaw more drastically than it was moments before. when we began this hour there were only increases of 3%, 4%. you are looking at new york include rushing higher to the tune of 5%. nearly 5% higher. that's $3.26 higher, new york crude at a handle of 71. you are also watching significant movements and bitcoin and gold, lumber as a risk asset. gold, higher as a haven bid like we have been talking about. paul, coming back to you here for a moment as well, you talk about the uncertainty of the next couple of hours, the next 24 hours, but also the potential for even further escalation of conflict.

as we saw over the last couple of days and more so now, as we see the idf saying that iran has begun the missile attack, talk us through what you are watching for over the next couple of days, given the concerns, about first -- further escalation from here. paul: it's really the next couple of hours. we need to see how the attack shapes up, the number of missiles, and how many make it through the lines of defense in the region. to see if it over the next few hours it causes major damage, maybe loss of life in israel, or if it doesn't. if it doesn't or if it is very minor, i think it won't lead to major escalation. israel might do like it did in april, have one or two demonstrative strikes in iran. both sides agreeing that this is not going to be a major escalation.

that is one scenario. i would say may at this point possibly the more likely one. it could be a major attack with a lot of missiles making it through this line of defense, causing serious damage in israel, in which case israel will stage a large number of attacks on iranian targets and then it is up to iran to respond as well. we are really in one of those pivotal historic moments where military decision-makers are holding the region sort of in their sway. also leaders, world leaders, whether it is the biden administration or others, have a role to play to make sure it doesn't go in the direction that one fears it might. sonali: more breaking news, as i said we will bring you every headline as we get it. news from the army radio that iran has launched over 100 missiles. i will say anybody watching on bloomberg television and radio, with the bloomberg terminal,

should follow top live on the terminal, we have up-to-date moment by moment updates here on what is happening. remember, this is the seventh directed to it -- second direct attack on israel this year by iran. 100 missiles have been fired according to the israeli army radio. local footage showing israel over key cities. what does this sound like to you as we get more information? i recognize this is early in the attack, but we are getting more information and want to understand how you, how you are gauging the response. paul: in april there were over 300 missiles and drones launched from iran to israel, so if it's just 100 for now, that's one third of what was launched in april. of course, as you say, we are just reading headlines as they come out. many more could be launched.

one big question is if iran will launched by itself. are these only missiles coming from iran? they take a fair amount of time to make it across that airspace and it takes a fair amount of equipment to try to shoot them down. will iran activate their allies throughout the region? will hezbollah join at the last moment? that's a short distance between launchpad's in iraq and syria. those are unknowns. but as i said, 100 right now is less than what was fired in april. we will have to see if it develops further. sonali: one more time, recapping the headlines, they have been coming quite fast and hot this hour. from the idf we have that iran has begun their missile attack.

air raid sirens are sounding in central israel. the attack came hours after the white house warned that the missile attack was imminent. the white house has been prepared. the israeli government said that this is what they expected. from the israeli army radio we have 100 missiles that have been launched. we are waiting to hear more about what the fallout might be. paul, before we let you go here, can you tell us a little bit more about the kind of concerned that you raised earlier about whether iran is acting alone or with other proxies, or other allies? at this point, where are the frictions and paul: iran certainly commands a large group of proxies from yemen to other militias in iraq and syria. they could put pressure on them to launch simultaneously later

after they launch. i will say that in the last few days and couple of weeks, iran has not said that they would all respond together, has said that hezbollah would respond to attacks on hezbollah, that they would respond on attacks on tehran. so, they have been saying that they would separate these things. of course, we are in a war, disinformation is maybe the first rule of war. so, we really will have to see whether this is sort of just a pro forma demonstration of revenge to satisfy domestic response -- supporters in the region to show they did something, something short of triggering a major war, or did they make the decision to cross the rubicon and go into a serious war with israel in the u.s. -- and to the u.s.

israel is feeling triumphant and powerful, how they react is something that the iranians might miscalculate as well. i want to -- sonali: i want to acknowledge that this attack is coming on the people of a vice presidential debate, perhaps the only one of this election cycle. if you take a look at how the world is watching, the election cycle in the united states, the reaction to the conflict in the middle east, what are you thinking? what are governments around the world thinking in terms of the u.s. role in this escalating conflict? paul: i think the world's ceric -- seeing that the u.s. and u.s. administration has been powerless to influence their main ally, israel, for the last year. the u.s. certainly supported the right to defend themselves after the horrific attacks of october 7, but within a few weeks the

biden administration and netanyahu administration began to diverge quite seriously on the war in gaza, on the endgame of a two state solution, and certainly have been in bitter disagreement about any expansion of the war into lebanon as well. i think the world is seeing that the u.s. definitely provides the support, the military in that, and we solve prime minister diab netanyahu really dominate congress with 50 standing ovation's. the administration really seems feckless. israel feels, it seems, that between now and depending on who wins the election, for a few months they have a free hand to do what they want. i would think they would be more concerned if president trump were the winner. yes, he would be supportive but they would feel he's maybe more of a tough customer. they feel they've been able to

push president biden around and i don't know if they feel the same about vice president harris. sonali: paul, we have to let you go here. we are of course looking at a live shot of jerusalem as well, as we understand, from the idf here, that the missile attack from iran on israel has begun. we understand there have been roughly 100 or over 100 ballistic missiles fired. we also want to take a look here at the market response, it is certainly having an impact. particularly on oil prices. you are seeing a significant move higher on the heels of this attack. crude oil roughly 4.6% higher. that is much higher than we saw earlier today. we will keep an eye on everything as it comes and bring you live updates here on bloomberg. don't forget to follow top live

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>> from the world of politics to the world of business, this is "balance of power." live from washington, d.c. joe: the missiles are in the

air, launched by iran toward israel. welcome to the faster show in politics, as iran makes good on reports of an imminent attack. it's been confirmed by both sides. that happens as the vice presidential candidates gather today in new york where we are broadcasting live for what will be their only debate of the cycle. i am joe mathieu alongside kailey leinz in new york. this debate tonight just got more complicated. kailey: absolutely the middle east will be the topic on everyone's mind. iranian state tv says this was just the first wave of an attack against israel. israel's military said the first we've included 100 missiles being fired at the country. this is the second time this year we have seen iran try to hit israel directly. if we think back to the hundreds of missiles and drones sent in april, largely intercepted, the question is what kind of defense israel and its allies including the united states can put up against this attack. joe: