Deadlock in US-Iran Peace Talks; Navy Secretary Fired

0:01Bloomberg Audio Studios Podcast Radio News. Good morning, I'm Nathan Hager. And I'm Karen Moscow. Here are the stories we're following today. Karen, the ceasefire between the U.S. and Iran has turned into a standoff over control of the crucial Strait of Hormuz. President Trump says the truce will stay in effect indefinitely until Iran comes to the table with a new peace proposal. White House Press Secretary Caroline Levitt says the president has no timetable. I know there's been some anonymous sourced reporting. that there was maybe a three to five day deadline. That is not true. The president has not set a deadline himself.

0:43Ultimately, he will dictate the timetable. Press Secretary Caroline Levitt at the White House. For its part, Iran says it has no immediate plans to take part in negotiations. Iran's president posted on social media that the U.S. blockade and threats are main obstacles to diplomacy. Bloomberg's Jumana Bersechi has more from Dubai. You've still got two blockades in place. the street is still not safe and it is a deadlock between the two sides and the question here is whose side is time on because the longer this goes on for the more you're going to see upward pressure on oil prices already we're beginning to see that public there's been public backlash in the US against the war and against President Trump himself and his handling of the war at the same time President Trump also maintains that this is costing Iran$500 million a day the blockade is And again, we haven't been able to verify those numbers, but it is a battle of the wills here.

1:38Bloomberg's Jumana Bersetje reports Iran is maintaining its own blockade, firing on ships and reportedly seizing at least two of them. The Washington Post reports the Pentagon told Congress this week that clearing mines from the Strait of Hormuz could take up to six months. Nathan, with the war still unresolved, there's been another high-profile shakeup at the Pentagon. on. Navy Secretary John Phelan has been fired. And we get more with Bloomberg Deputy Washington Bureau Chief Laura Davison. Just earlier this month, it was a dispute about promoting specific generals. That was the top uniformed officer at the Army.

2:11And just yesterday, the top civilian leader at the Navy, also after clashing with Stephen Feinberg, who's the Deputy Defense Secretary, and Pete Hegseth, the Defense Secretary, over shipbuilding priorities, also was asked to resign. Bloomberg's Laura Davison reports Phelan's ouster is not expected to affect any of the operations around the Strait of Hormuz. He's being temporarily replaced by Undersecretary Hong Kong. Meanwhile, Karen, Treasury Secretary Scott Bessent has told lawmakers many Persian Gulf allies and some Asian nations have requested foreign exchange swap lines with the U.S. We get more from Bloomberg's Amy Morris in Washington.

2:48Swap lines allow one nation to deploy the currency of another as needed to address liquidity demands. During his testimony before the Senate Appropriations Subcommittee, Treasury Secretary Besson told lawmakers that Persian Gulf allies are asking for swap lines with the U.S. Swap lines, whether it's from the Federal Reserve or the Treasury, are to maintain order in the dollar funding markets and to prevent the sale of U.S. assets in a disorderly way. Besant also pointed to the potential for swap lines to support dollar-denominated lending overseas. In Washington, Amy Morris, Bloomberg Radio. All right, Amy, thank you.

3:28On Capitol Hill, the Senate worked through the night into this morning to take a first step to reopen the Department of Homeland Security. Republicans approved a$70 billion budget plan to fund ICE and Border Patrol through a process that requires no Democratic votes. Democrats proposed a series of amendments focused on lowering health care and other costs. The bill now heads to the House, where Speaker Mike Johnson can't afford to lose just two Republicans to pass the narrow spending plan. Some Republicans are pushing him to go for an even bigger affordability package ahead of November's midterms.

4:02Let's turn to the markets now, Karen. A record-setting rally is taking a pause right now as peace talks in the Middle East remain in limbo. The S &P 500 is coming off another record close. It has now gained more than 9 percent this month, and the NASDAQ 100 also closed at an all-time high. Oil is on the rise as well. West Texas Intermediates up about 2.5 percent at$95.34 a barrel. Brent is at 104.50. That's a gain of two and a half percent. Nathan, Tesla unveiling plans for a massive ramp up in spending on AI and robotics. The electric carmaker says capital expenditure will triple to more than$25 billion.

4:42CEO Elon Musk outlined the expansion plan during the earnings call. I think you've seen most, if not all, certainly the major technology companies substantially increasing their capital investments.

5:00And we're going to be doing the same. I think it's going to pay off in a very big way. That's CEO Elon Musk, who spoke as Tesla for the second quarter in a row, announced better than expected earnings. And shares of Tesla, they're down 3.2 percent in early trading. And the earnings parade continues today, Karen, with more than 30 companies reporting, including chipmaker Intel. Bloomberg's Tom Busby has a preview. Key for investors, Intel's efforts to restore its technological edge and benefit from the extraordinary demand for all things AI related. Also of note, any update on Intel's admission three months ago that it hadn't devoted enough production to server chips and at that time was not able to meet all the orders that came in.

5:42Bloomberg Consensus calls for revenue of$12.36 billion, more than half of that from client computing, on adjusted earnings per share of one cent. And Intel shares up about 80 % so far this year. Tom Busby, Bloomberg Radio. All right, Tom, thank you. Well, it's been quite a run for Intel and the rest of the chip stocks. In fact, it's been a historic one. The Philadelphia Semiconductor Index has now gained for a record 16 straight sessions. It's up 30 % in April and set for its second best month ever. that was set in 2000. And we may see more gains today, Karen. Texas Instruments gave a surprisingly strong forecast helped by booming spending on data centers and industrial equipment.

6:21Those shares are up more than 10 percent in early trading. Well, on the flip side, software-related stocks are under pressure this morning. Nathan, shares of IBM, they're down 7.5 percent. Big blue, it posted quarterly sales in its software unit that were in line with estimates, but that's failing to shake investor concerns about AI disruption to its business. Shares of service now, they're also lower, down more than 13%. The provider of software for business tasks reported results that disappointed investors and said some sales deals have been delayed by the war in the Middle East. Well, Microsoft is making a deal, Karen, announcing its biggest ever investment in Australia, pledging to spend almost$18 billion by the end of 2029 as it pushes deeper into the artificial intelligence market in the Asia-Pacific.

7:08And Robinhood markets, Nathan, expanding its global footprint. The financial technology company has received an initial regulatory stamp of approval in Singapore to offer brokerage services. Robinhood first announced it would be expanding into Asia in December 2024, eyeing Singapore for its headquarters.

7:28Time now for a look at some of the other stories making news in New York and around the world. And for that, we're joined by Bloomberg's Michael Barr. Michael, good morning. Good morning, Karen. Health Secretary Robert F. Kennedy Jr. concluded a marathon of budget hearings with federal lawmakers on Capitol Hill. Kennedy was grilled on the country's worst measles outbreak in decades. This heated exchange was between Kennedy and Democratic Senator Lisa Blunt Rochester of Delaware. Does the president know there is a historic measles surge occurring nationwide? You want me to answer a couple of answers?

8:01It's just a very simple question. You're going to get your opportunity on a grandstand. Can you answer that question? I didn't cause the measles. It started before I came in. Sir, I'm giving you the opportunity to answer the question. Does the president know there is a historic measles surge occurring nationwide? I'm sure he does. In response to bipartisan concerns about funding reductions, Kennedy said they were painful. Officials in West Virginia say two people were killed after a chemical leak at a plant just west of Charleston. More than a dozen others, including seven EMS workers responding to the leak, were sent to the hospital.

8:41Governor Patrick Morse. The families of those we lost today, our hearts are with you and our state grieves for you. We stand ready to support you in every way possible. State officials say all shelter-in-place orders have been lifted. Georgia's Democratic Congressman David Scott has died at age 80. Scott was the first black chairman of the House Agriculture Committee and was seeking his 13th term in Congress. Scott's death creates a sudden fifth vacancy in the chamber amid three resignations just this month. Until special elections are held to fill the empty seats, there will be 218 Republicans and 212 Democrats in the House.

9:20Global news, 24 hours a day, and whenever you want it with Bloomberg News Now. I'm Michael Barr, and this is Bloomberg. Karen. Thanks, Michael. Time now for our Bloomberg Sports Update, and for that, we bring in John Stashauer. Thanks, Karen. The NFL Draft begins tonight in Pittsburgh. The Las Vegas Raiders set to take Indiana quarterback Fernando Mendoza first overall. He led the Hoosiers the National Championship, and he won the Heisman Trophy. The top seeds of the NBA playoffs both won at home. That's Oklahoma City. Beat Phoenix 120-107. The Shea Gilgis-Alexander scored 37. The Thunder lead the series 2-0.

9:55Detroit, after losing game one to Orlando, was tied at halftime. Pulled away in the third quarter. The Pistons beat the Magic 98-83. That's the Bloomberg Sports Update. Stay with us. More from Bloomberg Daybreak coming up after this. As markets move and headlines break, what matters most is context. A Bloomberg subscription gives you unmatched reporting, sharp analysis, and powerful tools that help you connect the dots. Visit Bloomberg.com slash podcast offer to learn more.

10:29Coast to coast on Bloomberg Radio, nationwide on Sirius XM, and around the world on Bloomberg.com and the Bloomberg Business app. This is Bloomberg Daybreak. Good morning. I'm Nathan Hager. the ceasefire between the U.S. and Iran has turned into a standoff over control of the Strait of Hormuz. President Trump has said the truce could go on indefinitely while hinting talks could happen this week. White House spokeswoman Caroline Levitt says the timing is up to the president. He is satisfied with the naval blockade and he understands that Iran is in a very weak position and the cards are in President Trump's hands right now.

11:04Press Secretary Caroline Levitt at the White House. For more, we're joined by Bloomberg opinion columnist Mark Champion. Mark, it's good to have you with us. Where do things stand on this morning of what appears to be an indefinite truce between the U.S. and Iran? Good morning. Yes. So, you know, we are in a place where we, you know, just don't know whether the war will resume. It seems clear that neither side really wants that. And therefore, you have this kind of standoff over Hormuz. And the great difficulty in going back to talks because their positions are so distant from each other. And that runs from, you know, Hormuz itself and the control of Hormuz that the Iranians want after the war.

12:03The Americans obviously do not want that, nor do their allies in the Gulf. And then you have the nuclear file, you have ballistic missiles, you have the whole range of things that were under discussion before the war, or at least the U.S. wanted to be under discussion, and are still unresolved, essentially. You know, the Iranians are still able to fire missiles, ballistic missiles. They still have a nuclear program badly damaged, but it exists and they have not given up the principle that they'll keep it. So, you know, we're really in this place where everything remains unresolved. The war has not achieved US goals.

12:46It's done enormous damage to the Iranian state and to its economy. And we're now in a standoff. And the question is, who can last longer? Well, as the standoff continues, Mark, what's the potential economic impact? We've heard reports that just clearing the mines that Iran has laid through and around the Strait of Hormuz could take up to six months. Yes. So, you know, for now, the oil price is up again, just above$100. That's a, you know, a significant increase from before the war, but it is quite manageable for, you know, parts of the global economy, certainly for the US. It's a political issue, but it's a manageable issue for the US economy.

13:35Much harder in Asia, which relies very heavily on the Gulf for its oil. And there the issue is just the, you know, physical supply that about 10 % of the world's supply has been taken off the market. And that is a very significant problem in Asia, which is the biggest consumer of Gulf oil, not so much for the US, which consumes rather little, it's just affected by, you know, global price trends. So it's, you know, it's, it is uncertain, the Iranians will also be hard hit. But they are still getting some tankers through the US blockade, whether that is the U.S. turning a blind eye because they don't want this to become an existential issue that prompts the Iranians to carry through on their threats to attack energy infrastructure in the Gulf, or whether they simply aren't able to control these ships once they turn off their black boxes.

14:39it's not quite clear yet, but it will take a toll on both sides.

15:09in Washington, Bloomberg 92.9 in Boston, and nationwide on Sirius XM Channel 121. Plus, listen coast-to-coast on the Bloomberg Business app, now with Apple CarPlay and Android Auto interfaces. And don't forget to subscribe to Bloomberg News Now. It's the latest news whenever you want it, in five minutes or less. Search Bloomberg News Now on your favorite podcast platform to stay informed all day long. I'm Karen Moscow. And I'm Nathan Hager. Join us again tomorrow morning for all the news you need to start your day right here on Bloomberg Daybreak.