Trump Demands Hormuz Reopening; Israel Agrees to Lebanon Talks

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1:22With Sonesta Travel Pass, every stay brings you closer to your next reward. Choose from more than 1 ,100 hotels across 13 distinctive brands and unlock the best available rates when you book direct with Sinesta Travel Pass. Here today, roam tomorrow. Join now at Sinesta.com. Terms and conditions apply. 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, the U.S. and Iran are headed for high-level talks in Pakistan tomorrow on ending their six-week war with new threats from President Trump. In a series of social media posts, the president warned Iran against charging fees on tankers to go through the Strait of Hormuz, and he said Iran was doing a dishonorable job of allowing oil through the waterway.

2:18Bloomberg's Jumana Bersechi reports both sides are still very far apart ahead of tomorrow's discussions. The U.S. once again reiterating their principles, which is, you know, zero enrichment policy for Iran, limiting their ballistic weapons, a full unconditional reopening of the Strait of Hormuz and limiting the funding for some of their military proxies in the region. Iran, on the other side, have been saying that they want a full cessation of hostilities, war reparations, assurances from the U.S. that they won't strike again, in addition to their ability to, number one, maintain these group of proxies around the region, including Hezbollah, which is a key point for them, and a new one, which is they are asserting that they have right of sovereignty over the Strait of Hormuz, and clearly that is a non-starter.

3:04but is also a condition that did not exist before the war started six weeks ago. And Bloomberg's Jumana Bersetchi reports, despite his latest threats, President Trump still says he's optimistic about reaching a deal with Iran. But Nathan, what if this weekend's talks end with no deal? Jennifer Welch is chief geo-economics analyst for Bloomberg Economics. If Iran is seen as still not making good on its promise to reopen the Strait of Hormuz, which Trump said was critical to the ceasefire, he really has two choices. He can either threaten, as he has, to use military force against them, saying that the ceasefire is now null and void.

3:43But I think the bar for that is rather high. This is an unpopular war in the United States. Gas prices are still rather high. He's clearly looking for an exit ramp. So that leads to the second option, which is diplomacy. And I think that's why we are seeing talks happening this weekend. Jennifer Welch with Bloomberg Economics as Vice President J.D. Vance will lead the U.S. delegation in Islamabad tomorrow, along with envoys Steve Witkoff and Jared Kushner. And Karen, Israeli Prime Minister Benjamin Netanyahu has agreed to hold talks with Lebanon. This comes as President Trump said the Israeli leader is, in his words, going to low-key it with strikes on the war-weary country.

4:23Still, Netanyahu is vowing to keep fighting Iran-backed Hezbollah in Lebanon. Dear residents of the north, I am proud of you. You continue to stand strong. I want to tell you there is no ceasefire in Lebanon. We will continue to strike Hezbollah with great force. We will not stop until we restore your security. Benjamin Netanyahu spoke through an interpreter there. The Lebanese health ministry says the death toll from Israel's offensive this week left more than 300 dead. And a reminder, Nathan, to stay with Bloomberg for the latest developments out of the Middle East. Bloomberg this weekend with David Gura, Christina Ruffini, and Lisa Matteo will have a live coverage and analysis of the U.S.-Iran talks.

5:07Tune in tomorrow and Sunday from 7 a.m. to 10 a.m. Eastern on Bloomberg Radio, TV, and the Bloomberg Business App. And as we close out this volatile trading week, Karen, oil is on the rise as risks to global energy supplies continue to grow. According to Saudi Arabia's state-run news agency, the kingdom has lost nearly 600 ,000 barrels a day of production capacity as a result of Iranian attacks. Will Kennedy covers energy markets for Bloomberg. It's become clear that the war has done meaningful damage to the energy industry in the region. That's an example of how long the conflict will linger and the fact that the economy and the market globally should expect oil prices to remain elevated for some time to come.

5:52Bloomberg's Will Kennedy says markets face a daily shortfall of more than 10 million barrels. That's roughly one-tenth of global demand due to the effective closure of the Strait of Hormuz. Nathan, let's turn to the equity markets now, where futures are lower to close out the week. Stocks are coming off seven straight days of gains. That's the longest winning streak since October. Robert Rowe is head of global strategy at Citigroup Research. I think the news over the last two days has been encouraging. But I don't think we're out of the woods yet. And I think the markets price themselves that way.

6:21We haven't had a full recovery or full reversal of the risk aversion that took place in the market. And I think it's a wait and see for the market right now. Citigroup Research's Robert Rowe, the S &P 500, is down nearly 1 % since the war began. On the other hand, oil is up 46%. While the other major story out of Washington, D.C., is coming from Melania Trump. The first lady took to a White House podium yesterday to deny any ties to the late sex offender Jeffrey Epstein. The lies linking me with the disgraceful Jeffrey Epstein need to end today. The individuals lying about me are devoid of ethical standards, humility and respect.

7:09In a rare on-camera statement, Melania Trump said she never had a relationship with Epstein and only had casual correspondence with his accomplice Ghislaine Maxwell. She did not give specifics on what she called numerous fake images and statements about her and Epstein, but she said she wants to uncover the truth. I call on Congress to provide the women who have been victimized by Epstein with a public hearing specifically centered around the survivors. Following First Lady Melania Trump's statement, the top Democrat on the House Oversight Committee, Robert Garcia, said he agrees that a hearing should be held immediately.

7:49Earlier this week, Karen, Wall Street's top leaders were called to an urgent meeting at the Treasury Department. Bloomberg News has learned Treasury Secretary Scott Besson and Fed Chair Jay Powell called this meeting over concerns that Anthropics' latest artificial intelligence model could usher in an era of greater cyber risk. Sources say the meeting was intended to make sure banks were aware of possible future risks and taking precautions to defend their systems. Anthropic's mythos is a more powerful system that the AI firm has said is capable of identifying and then exploiting vulnerabilities in every major operating system and web browser when directed by a user to do so.

8:27The Pentagon recently labeled Anthropic a supply chain risk. 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 Artemis II astronauts are tidying up their lunar cruiser for this evening's return to Earth. The three Americans and one Canadian are reflecting on their historic journey around the moon. Lunar explorers set a new distance record during Monday's lunar flyby. Artemis II is aiming for a splashdown in the Pacific off the San Diego coast. Jeff Radigan is the lead flight director for the Artemis II mission.

9:06It's in my head about an hour and a half of things that have to go right. They're coming home pretty fast. As Orion enters Earth's atmosphere, it will travel nearly 24 ,000 miles per hour. Then parachutes will deploy, slowing down the spacecraft as it splashes down. A former New York police sergeant was sentenced from three to nine years in prison after he threw a cooler at a fleeing drug suspect who died when he lost control of his scooter. Defense attorneys for Eric Duran say they are appealing the sentence. Attorney Arthur Idella. It wasn't like, oh my God, this is the first time someone's getting away.

9:42Let me stop them. It was, holy cow, here's a motorcycle. It's about to hit these guys. What do I do? Boom, boom, over. More than 11 ,000 officers signed a petition pushing for Duran not to go to prison. However, community members and activists disagreed. Hank Newsome is with Black Lives Matter Greater New York. It is a very seldom occurrence that justice prevails when a cop kills a black and brown person. But today, in the Bronx, we got it right. Audio courtesy of ABC7, Dupre, who was 30, was killed in 2023. The husband of a Michigan woman who went missing in the Bahamas has now been arrested.

10:23Brian Hooker is into custody after he says his wife fell from a small boat that they were taking to get to their yacht. But Hooker, who denies any wrongdoing, says she fell into the water and was swept away. 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. Only three golfers have won back-to-back Masters. They're three of the all-time greats. Jack Nicklaus, Nick Faldo, and Tiger Woods. Rory McIlroy trying to join the club.

10:56just had his best Masters opening round since 2011, a five under par 67. McIlroy tied for the lead with Sam Burns. College hockey in Las Vegas, the Frozen Four semifinals and wins for Wisconsin. And Denver, who beat Michigan in double overtime, the Wolverines were trying to win the hockey championship the same week they won it in basketball. That's your Bloomberg Sports Update. Stay with us. More from Bloomberg Daybreak coming up after this. Everyone has been there. Your team's feedback is scattered across emails, chats, and sticky notes. It's a mess. But PDF Spaces and Adobe Acrobat gives you one collaborative workspace to streamline every file and comment.

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13:25Go to MyPolicyAdvocate.com. Coast to coast on Bloomberg Radio. Nationwide on SiriusXM. And around the world on Bloomberg.com and the Bloomberg Business App. This is Bloomberg Daybreak. Good morning. I'm Nathan Hager, ahead of high-stakes talks between the U.S. and Iran. Tomorrow, President Trump is ramping up threats over the Strait of Hormuz, and Israeli Prime Minister Benjamin Netanyahu is promising to keep up the fight on a parallel front in Lebanon. We continue to strike Hezbollah with force, and we will not stop until we restore your security. Our great achievements, both in Iran and against the axis of evil, have brought a historic change in Israel's status in the region.

14:06Prime Minister Netanyahu spoke through an interpreter in an address to the nation. Joining us this morning from Jerusalem is Bloomberg News reporter Dan Williams. Dan, how tenuous is the ceasefire this morning ahead of tomorrow's talks? Good morning. Good morning, Nathan. Well, the ceasefire appears to be largely holding, at least sufficiently, to allow for that first round of talks to kick off tomorrow in Pakistan, hosted by Pakistan. It is worth noting, however, that yes, strikes have continued to a small degree in the Gulf. And as you noted, there has been some consternation and recrimination over Israel's continued offensive against Hezbollah in Lebanon, especially a series of bolt out of the blue strikes on Wednesday that caused a large casualty toll, including civilians.

14:52Israel says it targeted hidden Hezbollah fighters. Now, according to both Israel and the United States, Lebanon is not part of that ceasefire. Trump said so explicitly at the outset, as did Netanyahu. It appears, however, that there has been a rethink, given the extent of those casualties on Wednesday, and that the Israelis are scaling down the offensive to a degree. Hezbollah, meanwhile, showing it's still in the fight, with launches overnight, including deep into the Israeli interior, some 200 kilometers in. That's the upper end of the Hezbollah arsenal, what remains of it. It's rocket arsenal.

15:27That hasn't caused significant damage or casualties, but nonetheless, it's a reminder to Israelis that they want to conclude this war, at least with a change of the security situation on their northern front with Lebanon. The question is whether that balance will be sustained sufficiently to let the ceasefire talks continue. Keep in mind that Iran does want the ceasefire to apply to Lebanon. It wants to safeguard Hezbollah, its ally, its most powerful guerrilla ally in the region. And Pakistan, the intermediary, has spoken similarly. So at the outset, there is a disagreement between the parties as to the basic terms of the ceasefire.

16:03Nonetheless, it would appear that the US and Iran are sufficiently interested in the ceasefire to keep those negotiations going. So we have this disagreement over Lebanon and over the Strait of Hormuz with these threats posted on social media from President Trump over allowing oil through. In our last minute, Dan, what's the risk that these new threats derail the talks? Again, as far as Trump is concerned, much of the word Hormuz is key. It's key that this is what brought Trump to this position. The Americans say that that's where this entire ceasefire begins. It's clear the Iranians want to make sure they don't give up anything too soon.

16:40So I think that will become far clearer tomorrow when the talks begin or when the delegates emerge from the talks to see if something can be achieved in Hormuz initially that would lead to the rest of the ceasefire unfurling as planned, at least in the coming two weeks. 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.

17:23Plus, 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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