Paxton Dominates Texas Primary; US-Iran Optimism

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1:54The Cincinnati insurance companies. Let them make your bad day better. Find an independent agent at CINFIN.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 politics and a Texas-sized result in the Republican primary runoff for Senate. With nearly all votes counted, State Attorney General Ken Paxton trounced four-term incumbent John Cornyn 63.9 % to 36.1%. Paxton picked up President Trump's endorsement just last week. In his victory speech last night, Paxton gave the president the credit.

2:42President Trump is the leader of our party, and his endorsement is the most powerful force in politics. And I'm honored to have his support. And I look forward to working with him in the Senate to deliver for Texas. Texas Attorney General Ken Paxton will now face Democrat James Tallarico in the general election. And Tallarico is already coming out swinging. Three years ago, Ken Paxton was impeached by his own party for using his public office to enrich himself and his donors at the expense of the people. That kind of corruption is the rot at the core of this broken system. Democrat James Tallarico posted that on YouTube last night after Paxton's victory.

3:26Bloomberg, Texas Bureau Chief Julie Fine says John Cornyn's loss will mean a big change in the Senate. This is somebody that rose the ranks of leadership, a trusted advisor of Mitch McConnell, you know, lost to John Thune to become the speaker right now. So it's going to be a major, major difference for the state of Texas. The fact that Ken Paxton, who at times was an embattled attorney general who had a share of legal problems, won by double digits, really shows you where this race ended up. Bloomberg's Julie Fine reports Cornyn highlighted his pro-Trump voting record during the campaign and argued that Paxton won't be able to raise enough money against Tallarico.

4:03That argument came up short last night. Well, Nathan, the Senate runoff wasn't the only race to watch in Texas last night. In the House, longtime Democratic Congressman Al Green was ousted in a generational contest against 38-year-old Democrat Christian Menefee. Green was squeezed into a new district thanks to Texas Republicans' midterm redistricting efforts. With nearly all votes counted, Menefee took 69.6 percent to Green's 30.5 percent. Former Congressman Colin Alred defeated freshman Democrat Julie Johnson 53.9 to 46.1 percent in the Dallas area district that he left to run for Senate in 2024.

4:42And in the Republican runoff to succeed Ken Paxton as attorney general, State Senator Mays Middleton beat Congressman Chip Roy 55.2 to 44.8 percent. Now, Karen, let's get caught up on the latest on the war with Iran. The U.S. is touting progress on a peace deal even after fresh skirmishes around the Strait of Hormuz. Bloomberg Middle East managing editor Paul Wallace reports a number of sticking points remain in the way of a deal. One of them relates to, and this is a big one, the Strait itself. And it is about whether the Iranians will allow free passage of ships through the waterway if and when there's an interim deal with the U.S.

5:19Now, the U.S. and Arab states and Europe and, frankly, the rest of the world, they want and demand that ships have free passage to the strait. But Iran is insisting on some kind of control. In Bloomberg's Paul Wallace reports Iran's nuclear program is another bone of contention. A top member of Iran's nuclear negotiating team says his country's highly enriched uranium stockpile is not on the agenda in U.S. talks. And until they've agreed on all issues, they consider that they've agreed on nothing. The official spoke to reporters in Moscow at Russia's International Security Forum. Well, in other news this morning, Nathan, Joe Biden suing the Justice Department.

5:52The former president is trying to block officials from sharing audio recordings and transcripts of interviews he gave for a memoir project with a conservative advocacy group and Republicans in Congress. The lawsuit, which pits a former president against his successor's administration, comes amid a long-running legal fight over a public records request for the materials by the Heritage Foundation. Biden filed his own legal challenge to stop the disclosure, which is set to happen on June 15th. Well, Karen, tariff refunds are on the way right now. More than$20 billion is headed to importers who successfully filed claims using the new web portal developed by U.S.

6:28Customs and Border Protection. The agency is in the process of issuing refunds to importers who paid as much as$166 billion across more than 53 million import entries. The refund process gained significance after the Supreme Court struck down portions of President Trump's tariffs. Let's turn to the markets now, Nathan, where futures are higher following another chip-fueled rally for tech stocks. And Bloomberg's John Tucker joins us with the latest. John, good morning. Good morning, Karen. Call it a chip frenzy. Investors are betting the AI boom is going to lead to a sustained revaluation of the industry.

7:02Micron Technology was the best-performing stock in the S &P 500 in yesterday's session, finishing up more than 19%. It's up 213 % so far this year, and has now crossed above a market valuation of$1 trillion. It was joined by SK Hynix in that exclusive club. Samsung Electronics hit that milestone earlier this month. These are the three leading makers of high bandwidth memory, and with forecasts of memory shortages to last through 2027, analysts say these companies will now have remarkable pricing power over the world's largest tech companies. In New York, I'm John Tucker, Bloomberg Radio. All right, John, thanks.

7:41Carlisle Group co-founder David Rubenstein's weighing in on the market rally. He spoke with Bloomberg at the UBS Asian Investment Conference in Hong Kong. Their animal spirits have come out in the equity markets and fueled by two things. One, the anticipated IPO prices of OpenAI, of SpaceX, and of Anthropic. I think people are anticipating this will have very high valuations and that will fuel the market and have an impact on other stocks. Secondly, I think people are thinking the war will eventually be over. And while we don't know when it's be over, they think it's in sight. And therefore, I think that will fuel the equity markets and it's fueling it right now.

8:17David Rubenstein is the host of the David Rubenstein Show, Peer to Peer Conversations on Bloomberg Television. Nathan, China's ByteDance is planning to sharply increase its capital spending this year and next. The developer of TikTok, and a leading force in artificial intelligence, is trying to lead the Chinese AI market and challenge the top U.S. players abroad. Sources say the Beijing-based social media leader is discussing expenditures of as much as$70 billion this year as it builds out data centers and other AI infrastructure. And Karen, Donald Newhouse has died. He's the American billionaire who oversaw the newspapers at the heart of his family's closely held media empire.

8:54Newhouse's son says he passed away at his estate in Lambertville, New Jersey after battling lymphoma. Newhouse newspapers included the Newark Star-Ledger, the plane dealer in Cleveland, the Oregonian, the Birmingham News, and the Times-Picayune in New Orleans. Donald Newhouse, dead at the age of 96.

9:14Time 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 Trump administration plans to send U.S. citizens exposed to the Ebola virus to Kenya rather than bring them home for observation and treatment. That's according to the New York Times. Dr. Darian Sutton. The current strain that's leading this current outbreak is called the Bundy-Bujo strain. And it's important to understand that that strain has no vaccine or targeted treatment. And so all of these variables are what is likely leading to an equation.

9:46Unfortunately, that means more cases and likely record-breaking numbers that we will we have only yet to see. Dr. Darian Sutton spoke to ABC. There are a reported 930 suspected cases and more than 220 deaths and is spreading in a remote part of eastern Congo. At least one person has died and nine others remain unaccounted for after a chemical tank imploded at a pulp and paper mill in Washington state. Emergency responders in Longview planned to resume recovery efforts this morning at the Nippon DynaWave Packaging Company, Washington Governor Bob Ferguson. On behalf of the people of the state of Washington, I want all those individuals to know that we stand with you.

10:29We'll be here to do everything we can to help with the situation, and we'll be here as long as it takes. Governor Ferguson and other authorities say they are being hampered by 90 ,000 gallons of the dangerous liquid that remain in the unstable tank. New York mayor Zoran Mamdani announced a massive public housing plan pledging to build 200 ,000 affordable homes. Mamdani proposed spending$22 billion on housing over the next five years, including$5.6 billion to improve public housing. We can keep people in their homes and we can build the homes that they need to live in. We have spoken about this crisis long enough.

11:09It is now time to do something about it. Our housing plan meets this crisis with the scale and urgency it demands. Mayor Mamdani says his plan calls for zoning changes in some neighborhoods that are not building enough housing. 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 Stash Hour. Thanks, Karen. Last two years, the Oklahoma City Thunder have only lost nine times in the playoffs. and each time they followed the loss with a win.

11:43They got blown out in game four at San Antonio. They came home, beat the Spurs 127-114. Shea Gilgis-Alexander scored 32, and the Thunder now lead the series three games to two. A sweep of the Stanley Cup playoffs. Vegas beat Colorado 2-1, swept the West Final from the Avalanche, who had the best record in the regular season. A couple of upsets at the French Open. Jess Pagula and Daniil Medvedev both lost. That's your Bloomberg Sports Update. Stay with us. More from Bloomberg Daybreak coming up after this.

12:38and its affiliates worldwide. This communication is issued by JPMorgan Distribution Services Incorporated, member of FINRA. 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. Now 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. Support for the show comes from Public.

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14:06SEC Registered Advisor. Crypto services by zero hash. All investing involves risk of loss. See complete disclosures at public.com slash disclosures. 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. The Texas Senate runoff has led to a runaway victory for Ken Ken Paxton, after winning President Trump's endorsement last week, the state attorney general defeated longtime incumbent John Cornyn. And as he puts it, sent a Texas sized message to Washington. I said it in March and I'll say it again now.

14:46Today, change was on the ballot and change won. Ken Paxton in his victory speech last night. Joining us this morning after is Terry Haynes, the founder of Pangea Policy. Great to speak with you again, Terry. And I think after last week's election results, you put 60 percent odds of Republicans taking full control of Congress in November. I don't suppose there's much reason to change that prediction after last night. Good morning. Good morning, Nathan. Yes, I will stick to the 60 percent likely. The reason I think what markets learned from last night's Texas results particularly is that the old mainstream Democrat-friendly narrative for the midterms is getting upended by a combination of Republican redistricting gains, increased Republican voter enthusiasm, and a Trump-Republican money advantage going into the fall that hasn't yet been fully seen.

15:42So that's going to even out the playing field a lot. And what that net nets it today, five months out, is a Republican advantage in holding the holding the Congress. Of course, during the campaign, Senator Cornyn argued that Paxton is going to be an albatross around other Republican candidates next. We've already heard from his November opponent, James Tallarico, in a YouTube video last night already highlighting a lot of Ken Paxton's scandals in the past. Is there a risk that this nomination backfires on Republicans? Oh, sure. Absolutely. You know, the media and political professionals alike, I think, will be fascinated by the Texas Senate race because it matches two wildly imperfect candidates.

16:30Paxton is, of course, the Trump-based candidate, as you see with that sort of thumping primary victory. But he gets dogged by longstanding ethical challenges, a polarizing style. The question really will be, is he a kind of a high floor, low ceiling person, politically speaking? The Democrat Tallarico, though, has his own problems. He's never run statewide, has no demonstrated appeal to a wide variety of swing voters in Texas, which is a very diverse state. He's very easy to Austin code, you know, kind of claiming he's kind of a typical Austin-style liberal. And he's been competitive so far, but he hasn't been strong.

17:10He's never gotten over 50 percent in polls. And Texas is a right-leaning state. So the question really is, does Texas revert to type or does it not? He's got a pretty big money advantage as well. He's raised a lot of money since the primary election on his side. Does that make a difference in this race? His Tallaricos? Yes. That'll help him, certainly. But the question is, where does money come from? And it's a two-edged sword because, on the one hand, if it's smaller dollar donations that accumulate, if it's local people, local Texans, others, that's one sort of look. If it's the National Democratic Party piling money in, that's a different look.

17:56And it says a couple of different things. One is, you know, National Democrats will see Tallarico as some sort of savior of the kind that you've seen a lot in Texas over the past several decades. the so-called centrist Democrat who never ends up winning. And the influx of national Democratic money also carries a lot of baggage with it in Texas, where people will think the national party's trying to steal an election. 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.

18:37You 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. 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.

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