Gaza Strikes Dent Mideast Peace Prospects; Trump Reduces US-South Korea Drills

0:00Bloomberg Daybreak U.S. edition is brought to you by OTC Markets Group.

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1:03That's the kind of stuff Optum is changing. They're using data and technology to integrate patient care, pharmacy, and everything else. So healthcare is connected, not complicated. What's that look like? Cheaper prescriptions that are easier to get and care that looks at the whole person. How you need it. Optum is helping make healthcare work as one for everyone. Learn more at business.optum.com. Bloomberg Audio Studios, podcasts, radio, news. Good morning, I'm Nathan Hager. And I'm Karen Moscow. Here are the stories we're following today. Karen, we begin with the latest from the Middle East. Israel has carried out new attacks on Lebanon as the U.S.

1:48prepares fresh economic sanctions on Iran. The Israeli military says it killed senior Hezbollah commander Abu Hassan Allah in retaliation for a strike that injured three Israeli soldiers on Saturday. We get more from Bloomberg Middle East correspondent Abir Abu Omar in Dubai. These are the deadliest strikes against the southern part of Lebanon since the MOU was reached in June, which the expiry date for that, if you were to hold it into account given the latest escalations we've seen in the region, mean anything that deadline is due later today. We don't know what exactly is going to happen once it expires.

2:25Bloomberg's Zabir Abu Omar reports Treasury Secretary Scott Besant is promising to roll out an economic isolation plan against Iran this week. Robert Harward is a former deputy commander for U.S. Central Command. The pressure will be increased on Iran. The negotiations, the MOUs, the ceasefires have gone nowhere as anything has with Iran the last 47 years. So in this case, they really go ratchet up the economic sanctions, which is a very sound strategy. Former CENTCOM Deputy Commander Robert Harward was a guest on Bloomberg this weekend, heard each Saturday and Sunday on Bloomberg Radio and Television.

3:01Meanwhile, the Wall Street Journal is reporting that Iran has used the recent lull in fighting to prepare for an even broader confrontation. The report says it has given the Islamic Revolutionary Guard Corps greater influence over the military, accelerated missile and drone production, and strengthened coordination with proxy militias. And Nathan, as the confrontation continues with Iran, the U.S. may be looking to scale back in the Asia-Pacific. President Trump said he's told the Pentagon to substantially reduce joint military exercises with South Korea. This is a 10-day drill with some 18 ,000 South Korean troops is set to kick off today.

3:40We get more from Bloomberg Chief Asia Correspondent Rosalind Madison. It's a bit of a mystery as to why perhaps someone just mentioned this in passing to him that these drills were kicking off and they are quite large in scale and that got his attention and therefore his ire over the level of the U.S. military commitment to these drills which is not small in scale. Bloomberg's Roz Madison reports the president posted the announcement on social media saying the drills are too costly and sent an inappropriate signal to North Korea He cited his, quote, very good relationship with leader Kim Jong-un.

4:17South Korea has declined to get involved in the U.S. war with Iran, but it says this week's joint drills will go on as planned. Let's turn to markets now, Karen. Futures are mixed with tech stocks leading the way as we kick off a new trading week. Documents seen by Bloomberg News show that Anthropic is telling its prospective investors Second quarter revenue jumped at least 14-fold compared to the same period a year ago. Nathan, the dollar is dropping for a third day as traders reduce bets on Federal Reserve interest rate hikes following weaker-than-expected U.S. economic data last week. There's a less than 30 percent chance that the Fed will raise its policy rate in September.

4:59That's down from about 70 percent odds at the end of last month. Meanwhile, Goldman Sachs says market bets on rate hikes are still too aggressive given that inflation in the world's biggest economy is cooling. And this week, Karen, earnings are going to be in focus. We hear from several big retailers this week, including Walmart, Home Depot and Target. Let's get a preview from Bloomberg's Charlie Pellett. Consumers are still spending, albeit more prudently, in the face of higher energy costs, cooling wage growth and a softer jobs market. Tuesday, we hear from Home Depot. Bloomberg Intelligence says same-store sales should rise for a fifth straight quarter, defying a housing slowdown and anemic DIY demand.

5:41Wednesday, its target, Citigroup says the retailer, could raise 2026 guidance on a potential second-quarter beat. And then Thursday, we hear from Walmart. Citi says Walmart will likely score an earnings beat for the quarter and keep its full-year profit outlook unchanged. In New York, Charlie Pellett, Bloomberg Radio. All right, Charlie, thank you. In Asia, China's economy got off to a sluggish start in the second half. Industrial output rose 4.5 % from a year earlier, missing forecasts, while retail sales growth slowed to 6 tenths of a percent. The figure raises the pressure on Beijing to revive domestic spending and keep its annual growth goal within reach.

6:21In Europe, Karen, JPMorgan Chase CEO Jamie Dimon is warning the new chancellor of the exchequer in the U.K., John Healy, not to raise bank taxes. In an introductory call last week about his firm's U.K. operations, Dimon emphasized the need for governments to better support economies, including through tax policy. The Financial Times first reported details of this call. It says Dimon also pointed to a decline in finance jobs in New York, which he blamed in part on that city's tax burden. Laura Noonan is a senior finance reporter for Bloomberg News. I think we would very much expect that as soon as Jamie Dimon had an audience with the Chancellor, he would in fact make those points.

6:59He has been very public on it, so it's entirely consistent that he would share his public views privately with the Chancellor. As to whether it will actually change anything, I mean, we all have long known that, you know, Jamie Dimon and other bank CEOs are not fans of bank tax. And that's essentially what Jamie told the new Chancellor during their call last week. So in that sense, we would not expect bankers to be fond of bank tax, and we would expect them to warn that if the UK implements bank taxes, there will be a negative impact not just on banking, but on the economy as a whole. And Bloomberg senior finance reporter Laura Noonan says that call comes as bumper bank profits fuel speculation that Prime Minister Andy Burnham's government could increase taxes.

7:41Meanwhile, Nathan, Bloomberg News has learned German officials are open to discussing a potential sale of Germany's stake in Commerce Bank to Unicredit. We get the very latest at Bloomberg's Ewan Paz. Good morning, Ewan. Karen and Nathan, Germany's government owns just over an eighth of Commerce Bank and until recently was opposed to a takeover by Italy's Unicredit. Bloomberg now understands the government is open to selling its stake if Unicredit can secure backing for its plans from Commerce Bank's current management. A spokesman for the German government says its stance remains unchanged. In London, I'm Ewan Potts, Bloomberg Radio.

8:18Ewan, thanks. Alphabet is looking to raise about$3.6 billion in its debut bond offering in Australia. The Google parent may sell securities across four maturities, including one as long as 20 years. U.S. tech giants, including Alphabet, have raised hundreds of billions in dollars and other currencies this year to fund their artificial intelligence ambitions. Nathan, Meta Platforms is facing a landmark trial this week. 29 states allege Facebook and Instagram were deliberately designed to addict young users. They also accused the company of improperly collecting children's data. Bloomberg News tech reporter Alexandra Levine is following the case.

8:58At question here is really the product design. So it's notifications that are pinging young people in the middle of the night while they're supposed to be sleeping. It is the algorithm that keeps them doing an infinite scroll. It is all design decisions that really, not just in the state AG's case, but in all of the litigation that we've seen playing out this year, that has been the primary focus. Whereas in the past, the focus has more been on the content posted on the platforms. Today, the focus is primarily on the design of the platforms and how that could potentially harm. And Bloomberg News tech reporter Alexandra Levine says opening statements in the Meta trial are set to begin tomorrow in California.

9:37Got some news in the world of sports this morning. Karen could be potentially big news for soccer fans. Cristiano Ronaldo is suggesting he will probably retire at the end of this season. The 41 year old soccer superstar told Vogue magazine he has his future all mapped out and wants to have more fun and leave a spectacular legacy. Ronaldo will attempt to reach 1 ,000 career goals this season with Al Nassar when his contract runs out next summer. And we have some sad news here, Nathan, out of Hollywood. Actress Hayden Panettiere has died. Her father, Skip, announced her death in a statement to ABC News.

10:15Panettiere began her career as a child actress, including in the movie Remember the Titans. But her breakout role was as a cheerleader with superpowers in the TV series Heroes. No cause of death was given, but Penetier was open about her struggles with alcohol addiction and depression. Hayden Penetier was 36 years old. Time now for the Bloomberg Sports Update, and we bring in John Stashauer. John. Thanks, Gary. Tommy John passed away at the age of 83. He pitched 26 seasons, won 288 games. In 1974, when he was 31, his career was saved by a new elbow surgery that forever then became known as Tommy John surgery.

10:56Scotty Shuffler won the St. Jude golf in Memphis. He had shot a 61 on Friday. He finished at 17 under par and won by eight shots. It's his first win since January. Since then, he had finished second five times. That's your Bloomberg Sports Update. Stay with us. More from Bloomberg Daybreak coming up after this. Bloomberg Daybreak U.S. Edition is brought to you by OTC Markets Group. Thinking about joining the exploding overnight market space, but unsure where to start? Designed to meet the needs of a growing international investor base, OTC Markets Overnight Platform for Exchange-Listed Securities, Moon ATS, provides access to global securities in U.S.

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12:25Bloomberg's Natalie Lung reports the company says it has been conducting pilot programs with various restaurants, some of which have seen their order volume grow during the test period. The effort marks an expansion of DoorDash's in-house robotics efforts to reduce reliance on human couriers for some orders, as their wages constitute a key expense to the business. Drones are also a way for DoorDash to cut delivery times on orders from more remote locations that some dashers may not want. That's the Bloomberg Tech Minute brought to you by ChatGPT. Put ChatGPT to work on your most ambitious ideas and projects.

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13:37Start your free trial at adio.com slash iHeart. Coast 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. As the standoff between the U.S. and Iran continues, President Trump may be looking at dialing back in the Asia-Pacific. The President says he has told the Pentagon to substantially reduce joint military drills with South Korea, just as a major new exercise is set to get underway. For more, we're joined by Bloomberg News Chief Asia Correspondent Rosalind Matheson.

14:12Ros, good morning. Why this announcement now? Well, it's possible that these exercises, these are 10-day joint exercises that do happen quite regularly, and they are quite large in size. Perhaps just got on Donald Trump's radar, Someone mentioned to him these were happening and he seems to have immediately drawn the conclusion that why would they be doing these exercises, expending this much military firepower when South Korea was one of the countries that declined to help out the US militarily when it comes to Iran. So that seems to have been one factor at play. He did mention in his social media posts what he called his very good relationship with the North Korean leader, Kim Jong-un, and said that these drools were costly and would send what he called an inappropriate signal to North Korea.

15:03So it's curious what he means there, because there's really not been much notable interaction between the US and North Korea under this Trump administration. No sense of great talks going on or developments compared to the first administration when they met in person several times and then things kind of collapsed between them. But perhaps Trump is thinking he might want to try and restart that conversation with the North Korean leader and restart dialogue between them. And that's something that would be welcomed by South Korea, but probably not at the expense of their military drills. The only real major interaction we've seen with North Korean leader Kim Jong-un is with Russia, with North Korea sending more troops in to help support Russia's war against Ukraine.

15:52I mean, how could that complicate things? Well, that's right. And there's no great sense from the North Koreans that Kim is in any great rush to engage with the US, although I'm sure if Trump reached out, he would respond. But as you say, the world of North Korea is a bit different than it was some years ago. the North Korean regime has supported Russia militarily in its war against Ukraine in that their own military prowess has probably grown. They've had a chance to see things, how they work on the battlefield, perhaps learning some tricks around drone technology and so on. And their own missile technology has improved.

16:33So he might see himself as being in a stronger position previously when it comes to the U.S. and not exactly rushing to engage as a result. But again, if Donald Trump does pick up the phone, I'm sure Kim would answer and would resume some kind of contact. But there's just no sense that that's been happening so far. Just 30 seconds left here, Roz, but South Korea has been in talks with the U.S. about major investment in strategic investment. Could that be affected now? Well, it's probably, it might be something that is also on Donald Trump's mind because he likes to blur everything together. So politics, geopolitics, economics, business, trade, you name it.

17:17And so he conflates these things. So as you say, there are these conversations going on between the South Korea and the US for strategic investments in the US. There are reports that the US is feeling those conversations are moving too slowly and wants to push the South Koreans along to talk about specific projects. So perhaps by making these comments about the military drills, Donald Trump is sending a message about the rest of the relationship, including those trade and business ties. This is Bloomberg Daybreak, your morning podcast on the stories making news from Wall Street to Washington and beyond.

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18:29I'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.

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