Progressive El-Sayed Projected to Win Primary; Houthi Threat amid Hormuz Talks

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1:30Bloomberg 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'll have the latest on progress toward an Iran deal in a moment. But we begin this morning with politics in this country. Voters headed to the polls for primary elections in five states. The race to watch is in Michigan, where a hard-fought Senate race could signal the direction of the Democratic Party. With 94 percent of votes counted, NBC News is projecting progressive Abdul El-Sayed will defeat establishment-backed Congresswoman Haley Stevens 48.7 to 47.3 percent.

2:11Now, the Associated Press has yet to call this race, and El-Sayed told his supporters last night he knew it was going to be tight. We all knew they were going to spend their money. We didn't know they were going to spend$70 million of their money. We didn't know that they were going to outspend us$11 to$1. And yet we're still standing. Now, if Abdul El-Sayed's lead holds, it would be the biggest win in a progressive wave for Democrats that started in New York and stretched as far as Colorado. The winner in Michigan will face former Republican Congressman Mike Rogers in a state that President Trump carried in two of the last three elections.

2:52Well, Nathan, Democrats are also focusing in on Virginia and their quest to take control of the House in November. Voters there went with establishment candidates in two districts that the party hopes to flip in November. In the 1st District, Richmond-era prosecutor Shannon Taylor won the Democratic primary with 53 % of the vote. She'll face longtime Republican incumbent Rob Whitman. And in the military-heavy 2nd District, it'll be a rematch between a Democratic former congresswoman, Elaine Luria, and the Republican who ousted her in 2022, Jen Kiggins. Luria won her primary with 80 % of the vote.

3:27Republicans also held a Senate primary in Virginia. Army veteran Bert Mizusawa won that race with 51 percent of the vote. He'll face Democrat Mark Warner in November. And Karen, it was a primary election night as well in Kansas, Missouri and Washington state. Checking some of the key races in those states. Democrat Marie Glucin Camp Perez held off a progressive challenge in Washington's third district with 39 percent of the vote. She goes on to face Republican John Braun in November. In Missouri, Democratic Congressman Wesley Bell held off a challenge from the progressive he unseated two years ago, Cori Bush, by a vote of 59 to 37 percent.

4:05And Kansas voters rejected a Republican-backed constitutional amendment that would have required direct elections of state Supreme Court justices. The vote there was 61 percent against to 39 percent in favor. Now let's get to the latest developments in the Middle East, Nathan. The prospect of an interim deal focused on the Strait of Hormuz is gaining traction this morning. Cutter says a proposal had been drafted and both American and Iranian officials sounded hopeful about reopening the crucial waterway. President Trump spoke with reporters last night in Los Angeles. I think it'd be very smart to make a deal.

4:39We'll see what happens. They had a very good day. The negotiations were good. And we get more on the negotiations from Bloomberg Middle East reporter Abir Abu Omar. We could see a deal coming about in the next day or so today, even as imminent as today, suggesting some sort of opening to the Strait of Hormuz to get a trickle of movement through it. Now, Qatar, which has been mediating this between the US and Iran, said that a draft language was put in place for both parties to review. Nothing is finalized yet. President Trump saying earlier that Iranians were talking to him, that they were happy to talk, that they called him and asked to talk about the reopening of the Strait of Hormuz.

5:20We also heard from Marco Rubio, Scott Besant, about a deal that could be imminent about the reopening of the Strait of Hormuz. And that's Bloomberg Middle East reporter Abir Abu Omar, who says a 60-day agreement on shipping through the Strait is being prepared, and Axios is reporting no tolls or fees would be charged during the 60-day period. Well, Karen, we've been watching oil fall over the last few days on optimism over a deal, but crude is higher This morning, that's after a spokesperson for the Houthi militant said the group would escalate attacks on vessels from Saudi Arabia in the northern Red Sea.

5:54Checking prices now, Brent crude is up 1.2 percent, trading above$80 a barrel. West Texas Intermediates at around$76, a gain there of about a half percent. Meanwhile, American Petroleum Institute CEO and President Mike Sommer says traffic through the strait will need to increase for gas prices in this country to drop. Unfortunately, we're still not getting enough product through the Strait of Hormuz. Even at the highest ends, they're saying that we're getting only about 7 million barrels of oil through the Strait of Hormuz at this point. Because of new pipeline capacity, you only need to get that level up to about 11 million barrels a day through the Strait because of a lot of that product now flowing through pipelines.

6:32American Petroleum Institute CEO Mike Summers spoke there on Bloomberg's balance of power. You can get the full conversation on the Bloomberg Video Hub at Bloomberg.com and the Bloomberg Business app. Well, Nathan, there's new developments this morning in the war with Ukraine. At least 17 people were killed in Russian air attacks amid fresh signs that Kiev's ability to defend against missile strikes is becoming exhausted. Ukraine is seeking more interceptors from allies' existing stocks for the U.S.-made Patriot system that's most capable of taking out Russian ballistic missiles. Let's turn back to the markets now, Karen.

7:05Futures are mixed. Following a record close on Wall Street, the S &P 500 rose 1.8 percent. yesterday. The Philadelphia Semiconductor Index climbed 6.6 % for its fourth straight day of gains. Well, this morning, we're watching shares of SpaceX. Nathan, they are down 10 % in its first earnings report as a publicly traded company. SpaceX detailed higher AI spending that overshadowed better than expected quarterly results. Revenue beat estimates while the company posted a smaller than expected loss. However, capital spending soared as Elon Musk pushes ahead with his AI and space ambitions. Bloomberg Tech's Ed Ludlow has the details.

7:46SpaceX spent a staggering$18.4 billion in the quarter, and the vast majority of that, 86%, was on AI infrastructure. But renting out compute capacity or computing power to companies like Google and Anthropic is becoming a major business, and they gave lots of evidence of that. Second, where is the growth? SpaceX said they will hit$100 billion in annual revenue run rate by the end of this year. And Musk even went a step further saying they have line of sight, like complete confidence that SpaceX will hit$1 trillion of real revenue in 2030. Bloomberg tech's Ed Ludlow says SpaceX's results cap a rollercoaster ride since the company's record stock market debut in June post-IPO.

8:29Volatility has wiped more than$1 trillion from SpaceX's market value. And on the conference call last night, Karen, Elon Musk reiterated his commitment to NVIDIA. He said SpaceX will build exclusively on NVIDIA chips. And NVIDIA shares in the pre-market are up nearly 2%. Nathan, shares of advanced micro devices are sliding. They're down 8 % this morning. Musk comments on his commitment to NVIDIA and the chipmaker's underwhelming sales outlook weighing on shares this morning. AMD says it expects third quarter revenue of about$13 billion. dollars. Well, that topped the average analyst estimate. It missed some lofty projections.

9:07And we get more with Bloomberg Markets reporter Anthony Stevens. Some of the stock price reaction has to be put into context with the year to date performance of that stock. That stock is up triple digits. So it's up around 140 percent year to date. So an 8 percent retracement when the earnings fail to clear the best estimates is kind of understandable. Bloomberg's Anthony Stevens on AMD's results. They come just weeks after CEO Lisa Su unveiled a new AI chip that the company believes will outperform NVIDIA's. In some other AI news, Karen, OpenAI says some of its models, along with ones from another AI lab, were involved in three previously unreported cybersecurity incidents.

9:44OpenAI says these new incidents are separate from a previously disclosed case involving hugging face. Nathan, a California federal judge scheduled a 12-day trial early next year in a pair of lawsuits seeking to block Paramount Skydance's$110 billion proposed acquisition of Warner Brothers Discovery. The judge says she will hear cases brought separately by a group of states and the Writers Guild of America in a single trial. Both lawsuits allege that allowing the media companies to combine operations would hurt competition in film and television production and distribution. That news comes after Paramount Skydance reported earnings yesterday, posting a surprise surge in second quarter profits with costs cutting from its merger last year continuing to pay off.

10:27The company said it has delivered over$2.7 billion in annual cost savings associated with that combination and expects to reach its target of$3 billion. And we have this programming note, Karen. Bloomberg Radio is introducing a new feature exclusively for Bloomberg.com subscribers and terminal clients. You can help shape our conversations by submitting questions for our analysts and experts to answer live on air. Subscribers can just go to Bloomberg.com slash ask radio to send in your questions and you may just hear them asked on the air. That's Bloomberg.com slash ask radio.

11:04Time 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. embattled Ohio Representative Max Miller said he's seeking an ethics investigation on himself to clear his name. The House Ethics Committee is reviewing allegations that Miller may have engaged in domestic violence and abuse or illegal drug use. Ohio Senator Bernie Moreno, his former father-in-law and other fellow Republicans, have called for Miller to resign his House seat. And Politico reports the White House is pressuring Miller to drop his re-election bid.

11:40Yesterday, Miller spoke to CNN about allegations from Moreno that he withheld a baby toy from his two-year-old daughter, a blue bunny. This is nothing more than an individual who's being politically vindictive and talking about a blue bunny. When I have text messages, I can show you from our parent coordinator, who is a mandatory court reporter, who said that Mr. Moreno would be coming over my home. And then another individual came who I don't know. Miller faces Democrat Brian Poindexter in November's election. The family of a second man to die at a New Jersey immigrant detention center in eight months is talking.

12:17Federal authorities say 39-year-old Edwin Lopez Corneo died Saturday at the Delaney Hall facility in Newark after what they called a medical emergency. However, his family alleges medical negligence led to his death. A New Jersey lawsuit claiming poor conditions and inadequate access is making its way through federal court. This woman spoke at Tuesday's news conference. When we heard from the family of Edwin, you know, they had not even realized that he was dead. Audio courtesy of CBS2, the Salvadoran was arrested in June, accused of entering the country illegally. It's a growing problem in New York City, riders on illegal e-bikes.

12:59Yesterday, City Council Speaker Julie Menon announced new bills focused on e-bike and e-scooter safety. Mayor Zoran Mamdani. Because it is hard for New Yorkers to keep up with what is legal or illegal if they're able to buy it online. And our work is how to ensure that each of those New Yorkers knows this is something that's permitted, this is something that's not. And the reason it's not is because it's not safe. In total, 17 bills will be introduced in the City Council next month. Global news, 24 hours a day and whenever you want it with Bloomberg News Now. I'm Michael Barr, and this is Bloomberg.

13:31Karen. Thanks, Michael. Time now for our Bloomberg Sports Update. And for that, we bring in John Stashauer. That's going to be John Robinson, considered the best running back in the NFL, and he has cast in, was looking for a new contract, got it with Atlanta. He could make$75 million through 2030. The other top running back, Jameer Gibbs, also 24 years old, looking for a new deal in Detroit. Chicago made tackle Darnell Wright the highest paid ever Wright tackle, and Baltimore gave wideout Zay Flowers a big four-year,$140 million deal. Carlos Alcaraz is withdrawn from the upcoming tournament in Cincinnati with that wrist injury.

14:08That'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. dollars from 8 p.m. to 4 a.m. Eastern, Sunday through Thursday. Extend your trading day and trade global securities in U.S. dollars through a FINRA-licensed broker-dealer.

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15:29Let's create smarter business, IBM. Everyone's talking about how AI is transforming work, especially in sales, While the landscape shifts, one thing remains the same, the thrill of closing a deal. Whether it's a gong or a confetti machine, every team has its celebration rituals. Adio is designed for that moment. It's the agentic CRM that turns customer signals into actionable insights, helping you close deals faster. With revenue agents and automations working around the clock, you'll have everything you need to scale your go-to market efforts. Elevate your wins with Adio. Start your free trial at adio.com slash iHeart.

16:06Coast 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. They are still counting the votes in Michigan, but in a closely watched Democratic Senate primary progressive, Abdul El-Sayed is holding a slim lead over establishment favorite Congresswoman Haley Stevens. We should know who the victor will be tomorrow, and the work starts anew. That was Abdul El-Sayed stopping short of declaring victory last night. This morning, we are joined by Jennifer Lawless, professor of politics at the University of Michigan.

16:42It is great to speak with you this morning, Professor. And as I look at the results as they stand at this moment, El-Sayed holds a 1.2 percent lead over Stevens, according to the Associated Press. If that holds, does this seal a leftward shift for the Democratic Party more broadly across the country? Good morning. Good morning. Well, it definitely seals a shift toward insurgent candidates. I think there's been a lot of attention focused not only on this race, but on races across the country that are pitting these insurgents against establishment candidates as though it's really about progressives versus moderates.

17:20And most of these moderates are pretty far to the left anyway. It's really a lot different in terms of rhetoric and the ability to fight the Trump administration. How could a progressive do in a state like Michigan, a swing state in the past, one that President Trump has carried in two of the last three elections? Well, I think it's possible for him to win. You know, this is a big test because the insurgent candidates, especially those who have who have identified as Democratic socialists, although he does not have won in mostly blue states. But there's time to pivot in the general election. And I don't mean switch policy views, but make a case to the broader Michigan electorate, that you're somebody who can represent their interests.

18:04And the reality is Donald Trump's approval in Michigan is very, very low. The affordability crisis is something that's very important to Michigan voters. And in terms of foreign policy, they're also concerned. So there's a path for him to win, but he's going to have to make a really compelling argument. Now, in your home state of Virginia, in a couple of key House races, Democrats went with more moderate candidates in a couple of seats that the party's really hoping to flip in their quest for the majority in November. Is Virginia a moderate outlier amid the progressive Democratic wave? I don't think so.

18:44It really requires a progressive candidate to emerge with a lot of power, a lot of backing, and we just didn't see that in the Virginia House races. The primaries were not particularly competitive. I also think that as far as Virginia is concerned, it is a pretty blue state. We've elected Republican governors over time, but this is just not a state where the progressive wing of the party or the insurgent wing of the party has decided to play actively. Got about a minute left here. The market is focused on prospects for another interim deal between the U.S. and Iran. In terms of domestic political pressure on President Trump to get something done, how do you see this playing out?

19:30Well, I think the uncertainty and the unpredictability regarding the war and all of the statements that President Trump makes on a regular basis about how close we are to a deal not only doesn't do any favors to the markets, it also doesn't do any favors for Republican candidates who would like this war to be over by the midterms in November. It's unlikely that that's going to be the case. And as long as they're talking about a war that the overwhelming majority of Americans, including Republicans, do not support, they're going to be fighting uphill terrain. Thank you for this. Really appreciate your insights this morning.

20:05That's Jennifer Lawless, professor of politics at the University of Virginia. Karen. Nathan, SpaceX shares they're down about 11 % right now. That's right around a session low after it disclosed higher than expected spending on its artificial intelligence business, overshadowing an inaugural quarterly report that broadly surpassed Wall Street forecast. We want to get reaction with Bloomberg News senior strategist Neil Campling. Neil, good morning. Let's start with this investor reaction. So was the bar just set too high? What did investors need to hear that they didn't? Good morning. I think they would be happy with the three divisions second quarterly sales data.

20:46But of course, as you mentioned, it's all about the cash burn levels. So CapEx, very elevated at$18.3 billion. But I think the problem here is to a degree about investing for the future. And basically, SpaceX needs to invest significantly on the CapEx line going forward, suggesting that that capex will remain at the same elevated levels for the rest of this year so if you look at the numbers they are low in absolute terms relative to the hyperscalers so the four big hyperscalers combined will spend roughly a trillion dollars on capex next year so investors are left wanting to know where spacex can afford to compete in that and whether they will need to come back to market at some point in the future to raise more capital.

21:37All right, we did hear from Elon Musk. He talked for, what, about an hour, and he made some bold predictions, including reaching$1 trillion in revenue by 2030. Was there anything that Musk had to say in that call that caught your attention? That$1 trillion certainly caught my attention, particularly because most of that is expected to be driven really by the AI revenue. Now, Now, an AI currently is a small piece of the business. So whilst you have the other elements that are generating the cash flow, it's really a question of how you get to those numbers. And that is because they will require significant investment.

22:16So I think that's where we get used to the bold statements from Elon Musk and his very ambitious targets. But it's a question of how you pay to get to those kind of numbers that remains. the questions for investors, which in some respects, the ambitions are of a startup type culture. But the company now being public means it gets marked to market, if you like, every quarter. But does some of this, will it be helped by this selling of computing power? And sorry, this is also a future play because it did talk about these deals it has with businesses like Google and Anthropics. So should investors also be taking more of a look at some of these deals that went into effect just recently.

23:02So this we might hear more about in future earnings reports. It's very true. We've heard a similar type of comment out of Meta recently in terms of the potential of leasing out this compute power. I think one thing we need to remember is that in the cloud infrastructure deals that XAR have struck with Anthropic and Google, Google themselves have referred to these kind of partnerships as bridging solutions, which means that they can potentially have easy exit clauses. So whilst SpaceX is building out these compute capabilities, there is chances that the deals could be changed in terms of terms or that they won't be able to scale significantly to sell that compute power quick enough.

23:47So there's many questions that it raises here. All right. And just briefly, we have these lockups expiring. Should we expect some volatility in the shares this week as a result? even more volatility, I should say. Yes, it has been volatile. Some of the hedge funds have been borrowing stock to look to shorting the stock. Now, as more stock becomes available, that actually might help reduce the volatility around the stock price. So whilst it may pressure the stock into those kind of stock sales, it could actually help longer term just by the way where those set of metrics around the hedge funds.

24:28This 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. And don't forget to subscribe to Bloomberg News Now. It's the latest news whenever you want it in five minutes or less.

25:08Search 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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