Ship Attacked in Hormuz; Quake Devastates Venezuela

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1:46Bloomberg Audio Studios. Podcasts, radio, news. Good morning, I'm Nathan Hager. And I'm Karen Moskow. Here are the stories we're following today. Karen, we begin with new risk in the Middle East. A ship was attacked in the Strait of Hormuz yesterday. It is the first reported strike since the interim peace deal between the U.S. and Iran went into effect last week. We get the very latest from Bloomberg Middle East correspondent Abir Abu Omar in Dubai. What we know from American sources is that they're not pointing the finger just yet at Iran, but that could be very likely the case. And it could be because this ship, the middle-sized ship that had passed through the Strait of Vermeer, has passed through the waterway that is closer to the Gulf of Oman, or the part of the strait that hugs the coast of Oman.

2:36While Iran has been trying to maintain the movement through the coasts that are closer to its borders, to be able to sort of maintain the movement in a way that works in accordance with its own rules. Bloomberg Zabir Abu Omar reports the attack has led some ship owners to review their exit plans but traffic does continue to move in both directions through the strait. President Trump has not directly addressed the episode, but he says Iran is focused on the peace process. They want to make a deal with us very badly, and we probably will. I think we will, but the strait is open. President Trump spoke at a White House event with farmers where he announced an$11.1 billion aid request for the agriculture sector.

3:17The president says Iran will use its unfrozen assets to buy U.S. wheat and soybeans. He says that process will start pretty soon. Now, Nathan, to the latest on the other major war overseas. Ukrainian President Vladimir Zelensky has approved a 40-day influence operation to convince Russia to end the conflict. Zelensky gave no details of the plan in a post on social media made after he received a briefing from the head of his security service on strikes against Russian targets. Ukraine has recently intensified attacks on Russian energy and commodities infrastructure, prompting President Vladimir Putin to call for stronger air defenses.

3:54McCarran, a massive rescue and recovery effort continues in Venezuela, where two powerful earthquakes struck within a minute of each other Wednesday night. The death toll is up to at least 235 from the magnitude 7.2 and 7.5 quakes. Thousands more are hurt. Secretary of State Marco Rubio says American search and rescue crews are on the way from Los Angeles and the Washington, D.C. area. They have much of collapsed buildings, and so they'll need a lot of help in terms of digging through that. The airport there is badly damaged, so we'll have to rely on the Department of War to deploy assets there.

4:28Secretary of State Rubio says the U.S. will also assist with Venezuela's longer-term needs. More than a dozen other countries and the United Nations have also pledged aid. Acting Venezuelan President Delce Rodriguez says more than 250 buildings were damaged in the coastal area near the capital Caracas, where the country's main airport was heavily impacted. The Venezuelan government setting up a$200 million reconstruction fund with resources from the International Monetary Fund. Let's turn to the markets now, Nathan, where tech fears are weighing on stocks around the world. As we close out the trading week, a sell-off in Samsung Electronics and SK Hyninks triggered a second trading suspension in days in South Korea.

5:06The Kospi index dropped nearly 6%. A couple of things concerning investors include Apple's decision yesterday to raise prices on many products. That's raising fears that rising component costs could eventually curb demand and slow the tech rally. and Polka Mishra is a partner at Javelin Wealth Management. I think the one sort of reality check that market finally got yesterday was Apple increasing prices of its products. That's actually shown how there's not unlimited money in the market. If the chip makers are benefiting, then the product makers are going to suffer. So it's the first sign that it's not an endless rally.

5:49Javelin Wealth Management's Polka Mishra, Nasdaq futures, they're down 1.1 percent this morning. And shares of Micron, which soared to a record yesterday, they are currently down as well. They are lower by about 4.5 percent. Markets didn't react kindly to Apple's decision to increase prices, Karen, to deal with soaring memory chip costs. That stock plunged more than 6 percent yesterday. Mark Gurman covers Apple for Bloomberg. He says the move appears unprecedented. Apple has not, at least as long as I've been covering the company, which has been well over 15 years at this point, a broad set of price increases.

6:27Mac price increases, iPad, Apple TV, HomePod, HomePod mini, Vision Pro. We're talking about very significant changes here to the starting prices of Macs. Well, Bloomberg's Mark Gurman says prices will not be raised on iPhones. Well, also adding to investor angst this morning, Nathan, a report that OpenAI may delay its IPO. And Bloomberg's Alexis Christophorus joins us with the latest. Alexis, good morning. Good morning, Karen and Nathan. The New York Times is reporting that the chat GPT maker is leaning toward holding off on an initial public offering until next year. The paper says bankers advising the company on its IPO plans cautioned that recent volatility in tech stocks, as well as in SpaceX's shares following its record IPO could dampen enthusiasm.

7:15The Times says CEO Sam Altman is pushing advisors, including bankers and lawyers, to target a valuation of a trillion dollars. OpenAI has filed confidentially for an IPO with the SEC, saying it has not decided on timing just yet. In New York, Alexis Christophoris, Bloomberg Radio. All right, Alexis, thank you. SoftBank investors aren't taking well to the news of a possible delayed OpenAI IPO. That stock fell more than 12 percent in Asia. SoftBank's investment in the chat GPT maker is slated to stand at roughly 65 billion dollars by October. Expectations of a big financial windfall from OpenAI's public debut had buoyed SoftBank to record highs.

7:54Citigroup strategist Nathan say it's too early to call an end to the AI trade. The team led by Dirk Willers says equities are likely to keep churning higher as corporate earnings remain strong, while, quote, liquidity has not tightened enough to burst the bubble. In some other news this morning, Karen, California will vote in November on a controversial proposal to impose a one-time tax on billionaires to help fund federal cuts to health care for low income people. A major labor unions announced it is moving forward with the proposal, despite staunch pushback from a wide swath of critics, including Democratic Governor Gavin Newsom.

8:29Opponents say the tax will push billionaires out of California. In Washington, Nathan Homeland Security Secretary Mark Wayne Mullen sidestepped questions from the top Democrat on the House Appropriations Committee about his support for privatizing security services at airports nationwide. And Bloomberg's Amy Morris reports from Washington. Ranking committee member Rosa DeLauro of Connecticut asked Secretary Mullen how the department can justify the move after all the sacrifices made by TSA workers during what she called the Republican shutdown. Mullen took issue with that. Well, actually, it was the Democrats that voted every time to shut them down.

9:08We didn't shut them down. You shut them down. Answer my question. I did. Why are you moving? And I answered your question. You were the one that shut them down. Was the Democrats shut down? You know, these people come to us to get funding for their for the work that they do. And you voted to shut them down. President Trump is pushing the move in the budget process alongside efforts to strip federal workers of collective bargaining rights. TSA workers would be affected in Washington. Amy Morris, Bloomberg Radio. OK, Amy, thank you. And White House officials say President Trump will take his first trip on the new presidential plane next week when he travels to an event in North Dakota.

9:44The plane was gifted by Qatar's government. It's intended to serve as a temporary plane until a new fleet of Boeing jets arrives. President Trump had defended accepting the gift from Qatar, saying it would be foolish to turn it down. And he sprays the plane, saying, quote, this is the sleekest line. And, quote, again, it was my taste.

10:06Time 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. A campaign promise from New York City Mayor Zoran Mamdani has been fulfilled. The Rent Guidelines Board voted last night 7-1 to freeze rents for nearly 1 million rent-stabilized apartments. The freeze applies to both one - and two-year leases. In a statement, Mamdani said this is a historic victory for New York City tenants. This tenant was at the meeting. For years, landlords have run the city, and this is like a new era of tenant power.

10:41We have a rent freeze mayor. Dozens of her, hundreds of people came out and testified, thousands online. Like, landlord's days are over, tenants are in power now, and it feels amazing. The real estate industry is against the rent freeze, claiming it would hurt landlords' ability to maintain their buildings. The whole process is such a force. Audio courtesy of ABC7. Discussions are said to have stopped for now about a possible plea deal for Luigi Mangione, who is accused of killing a UnitedHealthcare CEO on a Manhattan street. Mangione, who has pleaded not guilty, heads back to court on Monday.

11:18The Manhattan District Attorney's Office has decided to drop a rape case against Harvey Weinstein after two consecutive juries failed to reach a verdict on the charge. The DA's office is said to have consulted with the alleged rape victim, Jessica Mann, who wants to move on with her life. Weinstein still faces prison time for a California conviction. A top official at the National Park Service says a liner along the bottom of the Lincoln Memorial reflecting pool was cut with a sharp knife or razor causing damage to the foam sealant installed as part of a$16 million rehabilitation project. Frank Lange, Deputy Director of Operations for the Park Service, said about 70 fence post tops were also thrown into the pool.

12:02lands made statements in a court document as part of a lawsuit filed by a non-profit organization to halt the administration's work on the project. Meanwhile, work to drain the pool also faces algae issues, and it won't happen until the 4th of July. 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. Thanks, Karen. The World Cup game played in Los Angeles was essentially meaningless for both teams. The U.S. already having won its group.

12:39Turkey already knowing it's going home after the game. Turkey scored late, won the game 3-2, and now the U.S. gets ready for a knockout round game next Wednesday. Another big trade in the NBA. Minnesota made the Julius Randle to Brooklyn trade, and now the Timberwolves have acquired star point guard Lamello Ball from Charlotte in exchange for Naz Reed and four draft picks. That's your Bloomberg Sports Update. Stay with us. More from Bloomberg Daybreak coming up after this. So there's a lot of noise about AI, but time's too tight for more promises. So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need.

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15:56Coast 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. An attack on a ship in the Strait of Hormuz is pointing to the risk to Middle East shipping, even with an interim peace deal in effect between the U.S. and Iran. President Trump says the deal is still intact. We knocked the hell out of them, and now we're negotiating from a position of pure strength. Pure strength, they know that. And the straits are already open, and we're setting records of the strait. That was President Trump at a White House event with farmers last night.

16:34Joining us from Dubai this morning is Bloomberg's head of Middle East coverage, Stuart Livingston Wallace. Stuart, what more do we know about this attack? What could it mean for the negotiating position between the U.S. and Iran? Good morning. Good morning, Nathan. I mean, at the moment, the details are not entirely clear. I mean, specifically, who exactly carried out the attack? And as of now, no one has really claimed responsibility for it. However, we can read into it certain important points, which is this ship was traveling in this so-called southern corridor, hugging the coast of Oman, which is obviously the alternative route to the northern passageway, which hugs the coast of Iran.

17:15and therefore one might presume that it was perhaps a warning of sorts not to use that southern route and to stick to the one close to the Iranian coast and from that you can extrapolate that there is pressure from Iran that it wants to maintain the control over Hormuz and ultimately would like to extract a revenue stream from all the ships that go through there every day which you know we don't know quite what that toll would look like or whether indeed it would be called a toll or a fee, but we're talking about billions and billions of dollars every year, you would presume. In terms of what that means for the negotiations, it's going to be very difficult because so far the red line for the US and for many of its allies, and indeed most of the region, has been that the strait must remain an area of free passage for international commerce.

18:05And to that point, we heard from Secretary of State Marco Rubio talking about the difficulties that he sees around charging any kind of fees for whether it's tolling or insurance or whatever you want to call it through the Strait of Hormuz with just 60 days to negotiate a broader peace deal. Could this situation, the status of the Strait of Hormuz, bog things down toward a more permanent deal? Yeah, I mean, absolutely. It's going to be a problem going forward. I would say it's one of a number of problems. I mean, it's probably the most pressing because that's the one that's had the immediate impact on the global economy far and wide, and will continue to do so despite the recent drop in oil prices.

18:46You know, we're a long way from going back to normal in terms of global energy supply. But in terms of that 60-day timeframe, I'm not sure how many people actually believe that we'll get anything done in 60 days. The last major nuclear agreement we had with Iran, the JCPOA, took the better part of two years. It wasn't quite two years, but pretty much there. so I suppose in theory they could use that as the basis of the current negotiations but that seems quite unlikely so I think the expectation is that will probably be extended but then you add to that all the the huge problems on top of there not just the nuclear file not just Hormuz but also the issue of ballistic missiles of sanctions of frozen assets support for proxies it's a very very long list and they're all very very thorny issues and when it comes to this uh this attack uh yesterday Stuart, how is it affecting traffic through the Strait of Hormuz now?

19:40We had heard from the president that something like 19 million barrels of oil had gone through the Strait in just one day. Is it starting to have an impact on the level of flows through the Strait now? It's very difficult to say because it's always been a little bit patchy, and a lot of the ships going through continue to turn off their signals, which means that often we don't discover that they've gone through until several days later when they emerge somewhere in the Indian Ocean or off the coast of somewhere quite far away. So I can't really give you a definitive answer. What I can say, which I think is difficult to argue against, is that as far as the international shipping industry is concerned, the fact that you can still get attack going through there is going to make them very cautious about moving ships either in or out.

20:25And with just one example, the International Maritime Organization was working on an evacuation plan for the hundreds of ships still stuck inside the Persian Gulf. As of now, that's suspended because, again, they can't guarantee safety coming through Hormuz. So I think it's going to be something that develops over the next several weeks. We'll see if there are further attacks, what the negotiations look like. What's telling is that the Sultan of Oman is going to be in France next week, I believe. And you presume that Hormuz will be very high on the agenda. I think the Omani position is going to be critical here because they're obviously one of the two countries that actually sits on that straight and to some extent can determine the outcome.

21:09This 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.

21:49Search 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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