Iran Attacks US Bases; Oil Jumps as Fighting Erupts

0:00Whatever your goal, trade show giveaways, client gifts, or team gear, 4imprint has the promo products to match. With thousands of options, from apparel and drinkware to tech and totes, it's easy to find the right fit for your brand and budget, with standout choices at every price point. And with their 360-degree guarantee, you can be 4imprint certain your order will show up just right, right on time. Explore more at 4imprint.com. 4imprint. 4certain. The thing about AI for business, it may not automatically fit the way your business works. At IBM, we've seen this firsthand. But by embedding AI across HR, IT, and procurement processes, we've reduced costs by millions, slash repetitive tasks, and freed thousands of hours for strategic work.

0:47Now we're helping companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business, IBM. When you're running a business, the best days are the ones where priorities stay on track. For midsize and large companies, risk can affect multiple parts of the organization at once, from property and liability to cyber and regulatory challenges. At that level, managing risk becomes an ongoing discipline. At the Hartford, the focus is on helping businesses manage risk before it turns into something more disruptive. And when losses do happen, that work is paired with insurance coverage shaped by years of underwriting, risk engineering, and claims experience.

1:28Learn more at the Hartford dot com slash risk mitigation. Policies provided by Hartford Fire Insurance Company and its property and casualty affiliates, Hartford, Connecticut. 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 escalation in the war between the U.S. and Iran. The U.S. military says it intercepted a surprise Iranian ballistic missile attack on its bases in the Middle East. The U.S. and Saudi Arabia struck back, hitting Tehran-backed militias in Iraq. That's after the U.S.

2:10says Iran directed 30 drone attacks against its forces over the past few days. Bloomberg White House correspondent Jeff Mason says all this has brought a relative calm in the region to an end. President Trump setting a much more positive tone or at least a sort of cautious wait and see tone over the last few days. And that would seem to have now changed. And if past his prologue, President Trump does not react well to attacks from Iran, particularly when he believes that there was some kind of an agreement or on a pause or on a ceasefire, which there wasn't necessarily over the last few days. but it did seem like both sides were at least tacitly agreeing to hold back.

2:51And Bloomberg's Jeff Mason adds talks between Iran and Oman to get traffic or more of it through the Strait of Hormuz seem to have faltered. An oil, Nathan, surging on the latest developments in Iran. Brent, it is up more than three and a half percent at$87.06 a barrel. This after its biggest three-day decline since April of 2020. Iran's Islamic Revolutionary Guard Corps claims to have hit and halted three tankers without saying where those strikes took place. And Karen, the escalation follows a meeting between President Trump and Israeli Prime Minister Benjamin Netanyahu at the White House. Netanyahu called it, quote, one of the best meetings that we've had.

3:28Still, the Israeli leader told Fox News he remains skeptical of any potential deal with Iran. I'm skeptical about the deal, and I say it openly. But the only way it would be achieved is if Iran understood these various factions there. I think they're not ideological factions as much as they differ on the assessment of how tough we are. And along with Israeli Prime Minister Benjamin Netanyahu, President Trump also met with Ukrainian President Volodymyr Zelensky. The White House called both discussions positive and productive. Nathan, we also heard from former Vice President Mike Pence. He spoke with Bloomberg's balance of power about the prospect for diplomacy with Iran.

4:06Whoever it is that's in charge of Iran on any given day to finally come to the table and be willing to accept our conditions, which is abandon and dismantle their nuclear weapons program, ballistic missiles, end support for terrorism, and restore freedom of navigation in the street. Former Vice President Mike Pence also praised the life and foreign policy legacy of former Senator Lindsey Graham in discussion with our Joe Matthew and Kaylee Lines on Bloomberg's balance of power. Get the full conversation on our video hub at Bloomberg.com and the Bloomberg Business App. On Capitol Hill, Karen, legislation that would allow President Trump to impose more restrictions on major buyers of Russian energy and Iran has received overwhelming bipartisan support in the Senate.

4:52The bill would extend penalties on Iran and empower the president to target the top five buyers of Russian crude and natural gas with tariffs. Connecticut Democratic Senator Richard Blumenthal spoke in support of the bill. This bill says to Vladimir Putin, your days of war are numbered. You are on the losing side. Better to come to the table now. While Connecticut Democrat Richard Blumenthal was supportive, some other Democratic lawmakers are warning that the legislation could be used by the president as a legal justification for broad new tariffs. Also happening in the Senate, Nathan, Jay Clayton was confirmed as director of national intelligence by a vote of 51 to 47, replacing interim director Bill Pulte.

5:35The former top federal prosecutor in Manhattan will lead DNI, which has seen staff reductions under Pulte. At his confirmation hearing, Clayton repeatedly declined to say if Joe Biden won the 2020 election, raising concerns over whether he would contradict the president in his new position. And today on Capitol Hill, Karen, Dr. Anthony Fauci returns. He's set to appear before the Senate Homeland Security Committee after Senator Rand Paul released Fauci's pandemic diary. We get more from Bloomberg's Amy Morris in Washington. Homeland Security Chairman Rand Paul has publicly clashed with Fauci over whether Fauci's agency could have funded research that could produce a pandemic pathogen.

6:15This past weekend, the New York Times reports Senator Paul released Fauci's diary entries in which Fauci mused about the virus's origins. Paul claims Fauci lied to Congress about whether the virus leaked from a laboratory. Fauci has said he is open to the idea of a lab leak, but he believes the virus was natural in origin. In Washington, Amy Morris, Bloomberg Radio. All right, Amy, thank you. We turn to the economy now, and traders are watching whether the Federal Reserve will change interest rates in response to recent inflation data and geopolitical activity. And Bloomberg's Michael McKee has a preview.

6:48For the first time this year, a Fed meeting is live, which means there is a chance they might change the nation's benchmark lending rate. Investors see about a 40 percent chance of a rate increase. The argument is inflation has been above the Fed's 2 percent target for five years, and the resumption of fighting in Iran is pushing up energy prices again. Proponents say a hike would build credibility for new chairman Kevin Warsh and, at the same time, lower long-term rates. Economists, however, are almost unanimous in saying it won't happen. They point to the benign CPI and PPI readings for June and the move lower in oil prices the past few days.

7:25No matter which way they vote, Warsh's news conference today will be very closely watched. Michael McKee, Bloomberg Radio. All right, Michael, thank you. And stay with Bloomberg for full coverage of the decision and Chair Warsh's news conference on a special edition of Bloomberg Surveillance, The Fed Decides. That's at 1.30 p.m. Wall Street time on Bloomberg Radio, Bloomberg Television and the Bloomberg Business App. And along with all that, Karen, we get earnings later today from some of the world's biggest spenders on artificial intelligence. But now we get a preview from Bloomberg's John Tucker.

7:57Good morning, John. Good morning, Nathan. Well, after the close of regular trading, we're going to hear from Meta Platforms and Microsoft. They open their books just as a sell-off in chipmakers has left the Nasdaq 100 on the brink of a correction. Investors are going to be looking to see how much they're spending on AI and whether there's any return on that investment. At the Stern School of Business, Ashweth Demaduran doesn't sound too hopeful. Maybe, maybe these companies have collectively overinvested. It doesn't mean all of them are going to walk away as losers, but collectively, I think that they've overinvested in tens of billions of dollars.

8:31In April, Microsoft projected $190 billion worth of CapEx and finance leases for the year. Microsoft's free cash flow may actually go negative later this year. Meta, which doesn't have an established cloud business, they're expected to record CapEx this year of close to$139 billion. Apple and Amazon, They report tomorrow. In New York, I'm John Tucker, Bloomberg Radio. All right, John, thank you. And for those earnings this afternoon, Bloomberg Radio is introducing a new feature exclusively for Bloomberg.com subscribers and terminal clients. Participate in our wall-to-wall coverage of earnings today at 4 p.m.

9:10Eastern by submitting questions for our analysts and experts to answer live on air. Subscribers can go to Bloomberg.com slash ask radio to send in questions. Then listen on Bloomberg Radio and watch on Bloomberg Originals and YouTube at 4 p.m. Eastern. We're already seeing action in the tech space this morning. Karen, shares in South Korean chip giant SK Hynix have plunged, despite the company reporting profits that rose more than 550 percent compared to last year. Record margins and plans for$31 billion of capital spending weren't enough to meet sky-high expectations for one of the AI industry's linchpins.

9:50SK led another day of sell-offs in chip stocks in Asia. The KOSPI index in South Korea has now seen one of its most volatile quarters ever for a major market. In other AI news, Nathan, a rogue OpenAI agent has breached a second testing environment, raising fresh questions about the safety of advanced AI systems. The AI broke into a customer's isolated testing environment hosted by cloud computing firm Modul, which says its own platform was not compromised. Last week, OpenAI revealed the same experimental AI agent had also hacked developer platform HuggingFace after escaping a test area. And finally, in Europe, Karen, firefighters in Spain and France are racing to contain wildfires threatening Madrid and Bordeaux before a fourth heat wave over the last few weeks.

10:35Officials say the spread of these major fires has slowed, but crews are racing to cool burned areas before conditions deteriorate again. These wildfires are destroying crops and disrupting transport.

10:50It's time 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. The Northeast is still dealing with heavy rain and flooding. Bloomberg meteorologist Craig Allen has the latest. Good morning. Traveling and commuting will be hectic and challenging again today, especially from New York City and suburbs up into New England. Boston and suburbs will see downpours. But on the other hand, some good news down towards Washington as thunderstorm chances diminish. So for today, I'm focusing in on the area between Trenton, New York City to Hartford for the greatest threat of flash flooding and possible stream and river overflows as well.

11:31Bloomberg meteorologist Craig Allen. Rescuers in Japan continued the hunt for survivors in the ruins of a shopping mall on the southwestern island of Kaiushu after a major earthquake in which 13 people have been confirmed dead so far. An explosion rocked a mall shortly after the magnitude 7.1 quake hit. Today, Senator Lindsey Graham will be buried. Senator Graham's body was transferred back to Columbia, South Carolina. Yesterday, Graham was eulogized during a memorial service in Washington. President Donald Trump, during his remarks, said Graham would be remembered as a titan of the Senate. He was a man who gave America the full measure of his good and mighty heart until that heart itself just gave out.

12:18Graham died suddenly July 11th at the age of 71 of a likely aortic tear. New York State is taking aim at tech companies who use algorithms targeting children on social media platforms. It's part of the Stop Addictive Feeds Exploitation for Kids Act. Governor Kathy Hochul says the kids did not ask for the algorithms. That are just constantly drawing their attention away from being a student or someone who can communicate in person with others. The human connectivity has been lost in schools. Governor Hochul, along with State Attorney General Letitia James, say companies that don't comply face possible lawsuits from the state and fines.

12:58Companies have until January to comply. Global 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. More details on the car accident that involved 49ers coach Kyle Shanahan. And original reporting was that it was the fault of the other woman that was involved in the accident. Shanahan spoke to reporters yesterday and said it was his fault that he took his eye off the road when his phone fell between his seats and he crossed into oncoming traffic.

13:33Draymond Green has played 14 seasons, all with the Golden State Warriors. He had opted out so that the Warriors could try and sign LeBron James. That didn't happen. He signed a new deal with Golden State. That's your Bloomberg Sports Update. Stay with us. More from Bloomberg Daybreak coming up after this.

14:14You can customize it all, your logo, your message, your look, and many items come with no setup charge to help you save. And if you're really watching the bottom line, you'll find standout choices at every price point so you can make a real impact while staying on budget. Plus, you'll get expert help, fast turnaround times, and their 360-degree guarantee, so you can be 4imprint certain your order will arrive on time and look exactly right. Whatever your goal, 4imprint makes it easy to find your perfect promo match. Explore the possibilities today at 4imprint.com. 4imprint. 4certain. Support for the show comes from public.com.

14:51If you're actively involved in your portfolio, you probably catch yourself repeating the same actions. Buying the dip. Manually sweeping idle cash. Putting on a hedge. On public, you can now create AI agents that handle all these tasks on your behalf. Just describe what you want to do in plain English. Like, if the VIX hits 25, buy a put option on the S &P 500. or if my cash balance goes above$20 ,000, move the excess into my direct index. You approve of the workflow and your agent handles the rest. Monitoring the market, watching for your conditions and executing your strategies exactly as defined.

15:27An investing platform driven by your intent, not just your clicks. You can also get full read and write access to your account via the public API. Go to public.com slash market and fund your account in five minutes or less. That's public.com slash market. Paid for by Public Investing. Brokered services by Open to the Public Investing, Inc., member FINRA and SIPC. Advisory services by Public Advisors, LLC, SEC Registered Advisor. Complete disclosures available at public.com slash disclosures. So there's a lot of noise about AI, but time's too tight for more promises. So let's talk about results.

16:04At IBM, we work with our employees to integrate technology right into the systems they need. Now, a global workforce of 300 ,000 can use AI to fill their HR questions, resolving 94 % of common questions. Not noise. Proof of how we can help companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business. IBM. 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. After several days of relative calm in the Middle East, the U.S.

16:41now says it has intercepted a surprise Iranian attack on its forces in the region. And the U.S. and Saudi Arabia have responded with strikes on Iran-backed militias in Iraq. For the very latest, joining us from Dubai is Bloomberg News Middle East managing editor, Oner Ant. So, Oner, we'd seen both sides try to give diplomacy more space over the last few days. But after these latest attacks, are we back to square one? Good morning. Good morning. Possibly, and on the other hand, it is still possible that diplomacy is taking place in some shape or form. But yes, the overnight strikes carried out by Saudi Arabia targeting Iran-backed militants in Iraq really is a scary development.

17:27This is very rare since Iraq and Saudi Arabia were involved in a war about three and a half decades ago at the time of Saddam Hussein. And it also is a sign that this conflict, unless it comes to an end, has a risk of spreading to a wider area. Iraq was not an exempt. There were clashes there before. But this is the first time that the U.S. and the Kingdom of Saudi Arabia jointly carried out attacks inside Iraq. And it comes right after Iran-backed militants carried out drone strikes targeting Saudi Arabia's oil field, Nathan. So does this point to, as you say, a potential new phase here? I mean, we've seen Iran go after U.S.

18:16interests in Kuwait and Bahrain, Qatar and the UAE as well. But with Saudi Arabia involved now, does that take things to a potential new level? It does. Saudi Arabia's involvement deepened about two and a half weeks ago when it first attacked the airport in Sana 'a to prevent what it said was an arms shipment from Iran to Houthis there. And that spurred tit-for-tat attacks between the kingdom and Houthis. And eventually we saw the Houthis declaring a ban or blockade on Saudi Arabian vessels trying to exit the Red Sea. Now, what happened overnight is that the Iranian-backed militants in Iraq, which have been somewhat absent from the conflict so far for much of it, are now in the game as well.

19:04They were accused of targeting Saudi oil facilities, pipelines and fields over the last couple of days. And this is now possibly a new front in the making. This is Bloomberg Daybreak, your morning podcast on the stories making news from Wall Street to Washington. and beyond. Look for us on your podcast feed by 6 a.m. Eastern each morning on Apple, Spotify, or anywhere else you listen. You can also listen live each morning starting at 5 a.m. Wall Street time on Bloomberg 1130 in New York, Bloomberg 99.1 in 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.

19:51And 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.

20:20Whatever your goal, trade show giveaways, client gifts, or team gear, 4imprint has the promo products to match. With thousands of options, from apparel and drinkware to tech and totes, it's easy to find the right fit for your brand and budget, with standout choices at every price point. And with their 360-degree guarantee, you can be 4imprint certain your order will show up just right, right on time. Explore more at 4imprint.com. 4imprint. 4certain. Healthcare doesn't always work great. If you've ever waited on a refill or couldn't schedule an appointment, you get it. That's the kind of stuff Optum is changing.

20:56They'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. Shape the conversation on Bloomberg Radio. Today, listen for wall-to-wall coverage of big tech earnings as Microsoft, Qualcomm, and Meta report. This is a blowout quarter. And now, Bloomberg subscribers can submit questions for our experts. Visit Bloomberg.com slash Ask Radio to send questions to our hosts.

21:34Earnings kicking into high gear. Your questions on big tech earnings live on Bloomberg Radio. A subscriber exclusive. Visit Bloomberg.com slash Ask Radio to join the conversation. Then listen at 4 p.m. Eastern on Bloomberg Radio. Thank you.