Trump Heads to NATO Summit; Oil Swings as Hormuz Flows Persist

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1:35Policies provided by Hartford Fire Insurance Company and its property and casualty affiliates, Hartford, Connecticut. Bloomberg Audio Studios. Podcasts. Radio. News. Good morning. I'm Karen Moscow. And I'm John Tucker. Here are the stories we're following today. Well, John, we begin with a crucial NATO summit in Turkey. President Trump heads to Ankara tonight as tensions rise over Ukraine, Iran and military spending. We get more with Bloomberg's Dan Williams in Jerusalem. Turkey has the second biggest military in NATO after the United States. And we have a U.S. president who's quite openly looking to draw down the U.S.

2:19presence in NATO, the U.S. contribution. certainly when it comes to Europe. That's something that's really troubled European powers, not least given what is perceived as a rather warm approach that Trump has been taking to the Russian president. And Bloomberg's Dan Williams reports the U.S. has unsettled its allies in recent months with shifting announcements about reducing its military presence in Europe. Washington has said it will withdraw about 5 ,000 troops from the continent and reduce the military assets it would provide in the event of a crisis. And Karen asked for the war in Iran. Over the weekend, the country's top leadership gathered for funeral prayers honoring Ayatollah Ali Khamenei.

2:56The mourners fill the streets chanting death to America and death to Israel. This funeral comes as the U.S. continues negotiations with Tehran aimed at reopening the Strait of Hormuz and curbing Iran's nuclear program. We also heard from the Israeli Prime Minister, Benjamin Netanyahu. He spoke with Fox News yesterday discussing his excellent relationship with President Trump. Deal or no deal, as long as I'm prime minister, Iran will not have nuclear weapons. We've been very lucky that President Trump is leading the United States, leading the free world in this common effort. And believe me, if I have things that I want to point out to him and bring my own opinions, I do so in a free way.

3:37And when he has things he wants to tell me, he does that in a free way, too. That's what friends and allies do with each other. Israeli Prime Minister Netanyahu making the comments. despite President Trump recently telling Axios that Netanyahu, quote, knows who the boss is in reference to the war with Iran. Meanwhile, John, oil is fluctuating at a narrow range as flows through the Strait of Hormuz persisted and OPEC Plus signaled higher supplies. Oil and gas shipping in the Strait is showing signs of recovery after a number of recent unexplained detours over the weekend. Bloomberg's Michael Heath says the future of the vital energy corridor remains unclear.

4:14Some countries have been trying to move oil out that side as well. And then meantime, as you say, there's been some U-turns by tankers that have been taking the Omani route through Hormuz. So there is still a lot of uncertainty about how that's all going to work out. Bloomers' Michael Heath says over the weekend, several vessels performed unexplained U-turns in detours in the energy choke point. And four of them then sailed northward toward the Iranian route and exited the strait. And checking the price of oil right now, West Texas Intermediate down six-tenths of a percent at$68.25 a barrel. Brent, it's at$71.58.

4:51And Karen, elsewhere overseas Russia launched fresh waves of missiles and drones at Kyiv overnight, killing at least 11 people. These strikes come on the eve of the NATO summit, where President Trump is expected to meet with his Ukrainian counterpart, Vladimir Zelensky. And Ukraine over the weekend hit parasites across Crimea, deepening the energy crisis in the Black Sea Peninsula. Tony Halpin leads Bloomberg's team covering Russia and Ukraine. They're certainly having a big public effect in Russia because many Russians now are queuing up for petrol at stations with long lines or shortages of fuel, precisely because Ukraine has been striking ever larger and bigger numbers of refineries and fuel depots.

5:33And that's having an impact on public opinion. This war, for many Russians, has been quite distant. It hasn't really affected them personally in their daily lives. It's doing that now. Bloomberg's Tony Halpin was speaking after a weekend in which President Trump reportedly spoke to Russian President Vladimir Putin on the phone about the war and the NATO summit. And, John, as a shaky ceasefire continues to hold in the U.S.-Israeli war with Iran, fresh analysis from Bloomberg Economics shows the consequences for global monetary policy are likely to last for years. The latest forecasts show borrowing costs could increase as much as half a percentage point higher than expected before the war across economies and may stay elevated through 2028.

6:15Even as oil prices retreat, global central banks remain concerned about the war's aftershocks after post-pandemic inflation caught them off guard. And to the Fed now, Bloomberg News reporting that President Trump and his allies are renewing their push to reshape the Federal Reserve. Sources say senior administration officials and outside allies are exploring ways to remove members of the Fed's board of governors after the Supreme Court blocked an effort to fire Governor Lisa Cook. Cook reportedly remains a target, as does former Fed chair Jerome Powell. Sources say the president remains angry at Powell for staying on the Fed's board after his tenure as chair expired.

6:52Let's turn to the markets now, John. And stocks are rebounding after a global market route earlier this week. And we should say to end the week last week, the gains offer some relief after the sell-off in tech stocks renewed concerns that the blistering AI rally may be running out of steam. Monica Defend is head of the Amundi Investment Institute. Definitely industrial is going to be a key sector because of its weight on the market and because this is the sector where we have the AI enablers and this is where we think the value and the performance might come from. On Monday's Monica Defense speaking earlier to Bloomberg.

7:35In today's bounce comes as traders show renewed confidence that markets can continue pushing higher in the second half of the year. Data show that a diversified portfolio of stocks, bonds, and commodities delivered its strongest first-half return since 2021. And investors also watching SK Hynix's big ADR listing this week. But some analysts say the excitement could be overdone. The South Korean memory chip giant raising fresh capital as it ramps up spending on AI-related growth. Yet Hynix's core valuation still likely to depend on memory demand, AI spending and the Korean macro conditions. They also have earnings.

8:11U.S. listed shares of SK Hynix set to begin trading on the Nasdaq this Friday. John, President Trump spoke at the National Mall late Saturday to celebrate America's historic 250th birthday, using the milestone to promote its political priorities. The celebrations faced severe disruptions as erratic weather battered the East Coast. The president lambasted the rise of communism in the United States, calling it the country's greatest threat. And all these talks from the communists, they haven't got a chance. Not even a chance. We don't want communists in our country. Never worked and it never will work.

8:49And President Trump visited South Dakota on Friday where he used a speech at the Mount Rushmore Monument to issue a similar warning of the threat of communism. And the comments come after recent primary wins by Democratic Socialist candidates in several key primaries. And FIFA clear US star Folerin Balogun to play in the World Cup match against Belgium following a personal appeal by President Trump. Well, the suspension of an automatic punishment rare within the World Cup finals also sparked outrage among competing teams. And Bloomberg's Tiwa Adebayo has more. Balogun received a red card for a foul in his last game which would normally result in an immediate ejection and a one-match suspension.

9:30However, according to the Wall Street Journal, President Trump phoned FIFA president Gianni Infantino and urged him to review the decision. Infantino reportedly agreed to look into the matter but stopped short of committing to overturn the suspension. FIFA's disciplinary committee then removed the automatic one-game ban and instead put Balogun on probation for one year. Belgium's Football Federation said it was astonished by FIFA's decision to allow him to play. In London, Tiwa Adebayo, Bloomberg Radio. And that brings us to 509 on Wall Street. Time down for a look at some of the other stories making news in New York and around the world.

10:07And for that, we're joined by Bloomberg's Michael Barr. Good morning, Michael. Good morning, John. A stormy Sunday hit pockets of the Midwest and East Coast, bringing intense rain, high winds and dangerous conditions. A flood watch is in effect for the New York City area until 6 a.m. tomorrow. With more, here's Bloomberg meteorologist Craig Allen. Downpours will plague the Mid-Atlantic today and tomorrow, and some of these thunderstorms will produce flash flooding from D.C. up to Boston. Now, the most prominent and potentially dangerous flooding will occur between Philadelphia, New York City, and Hartford for today, and then between New York City and Boston tomorrow.

10:45And this new weather system will keep it humid, and the slow movement will ring out the heavy rain from place to place and time to time. The threat lasts into Tuesday and could present travel challenges for those getting back home or heading back to work. Warm and drier weather is expected, but not until midweek. Bloomberg meteorologist Craig Allen, the storms knocked out power in New Jersey. Governor Mikey Sherrill says NJ Transit trains have been heavily impacted. The Morrison-Essex line I'm very concerned about. We're putting resources in there. Meanwhile, more than two dozen people are believed to have died from the dangerous heat wave in New Jersey during the Fourth of July holiday weekend.

11:26Officials say many of those who died did not have air conditioning in their homes. In New York City, eight people, including four children, were shot in Coney Island by a masked gunman, leaving a 21-year-old woman in critical condition. According to police, the victims were outside celebrating the 4th of July with a family barbecue when the gunman appeared at the fence of their courtyard and began firing at the crowd. New York City Mayor Zoran Bamdani. There is no place for this kind of violence in our city. We will not tolerate it and we will fight it with every single tool at our disposal. The suspect fled on foot.

12:01A scary moment for people aboard a Long Island seaplane. It made a hard landing in New York City's East River Sunday. The landing caused one of the struts to break. Eight people were rescued. Two suffered minor injuries. The FAA is now investigating. Global News 24 hours a day and whenever you want it with Bloomberg News Now. I'm Michael Barr and this is Bloomberg John. Thanks Michael. Time now for our Bloomberg Sports Update and for that we bring in John Stashauer. Thanks Aaron. Wild World Cup game last night. Mexico hadn't allowed a goal through the first four games. Then England scored twice on them in two minutes.

12:36Mexico scored four minutes later. England had to play the last 36 minutes with 10 men after a red card still held on to win 3-2. Norway upset Brazil 2-1. It's the U.S. and Belgium tonight, and the U.S. will have top scorer Florian Balligan, despite the red card in the previous game. Upset at Wimbledon is Naomi Osaka topped Irina Sabalenka. That's your Bloomberg Sports Update. Stay with us. More from Bloomberg Daybreak coming up after this. Support for the show comes from Public.com. If 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.

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13:57That's public.com slash market. Paid for by Public Investing. Rokered 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. At 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.

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15:52Coast 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. And President Trump is headed to Turkey for this week's NATO summit. Talks are expected to focus on the war in Ukraine, but European defense spending the Iran war and the president's views on Greenland could also come up. And we want to get more now with Gautam Mukunda, Bloomberg opinion columnist and lecturer at Yale School of Management. Gautam, thanks so much for being here this morning. Let's jump right in. So as we said, Trump is heading to Turkey.

16:28What are his goals at this NATO summit? So there's most likely his goals are domestic politics, that he's going to try and impress his base with his ability to stand up to NATO allies and sort of bully them and gesture dramatically. He may also have some larger intentions about trying to increase NATO spending, although that battle's largely over at this point. may be trying to get NATO to decrease it to sort of back off on its support for Ukraine in the hopes of forcing a settlement there pretty quickly. But this seems largely ceremonial at this point. The relations with NATO allies are so catastrophically poor, thanks to the series of choices he's made, I'm not sure what he can get out of it.

17:09So you're really not seeing any big developments then, it sounds like. No, there's always the possibility of big developments. What I'm not seeing is the possibility of big positive developments. There's always the chance that Trump will do something that will, you know, further weaken the NATO alliance or get, you know, get the allies to find the United States even more sort of even less dependable. But at this point, when NATO allies are running war games about how to defend a NATO country from an attack by the United States, which what has actually happened in Greenland, that is not hypothetical.

17:39They actually made those plans. We've reached a nadir in the transatlantic relationship that it's kind of hard to imagine even a few years ago. All right. Well, this is interesting, too, because this is all being hosted by Turkey and President Trump is meeting with Turkey's president before this all begins. What is Turkey's position in all this? So Turkey has always been a NATO ally for a long time, but it has always a little bit of a difficult situation for sort of a combination of reasons, both cultural and political. And President Trump's sort of attitude towards global Islam and particularly Turkey, which is led by an Islamist government at the moment, is going to make that particularly fraught.

18:18On the other hand, you know, there's always a lot of incentive to paper these things over in the course of a summit. I would be curious about Turkey. I'd be particularly curious actually about the relationship between Trump and Italy right now, where even though the Italian government is also right-wing and aligned with Trump on basically all policy goals for reasons that kind of passeth understanding, he's been making it a point to continually insult the prime minister of Italy, who for obvious reasons is not taking it well. This is Bloomberg Daybreak, your morning podcast on the stories making news from Wall Street to Washington and beyond.

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19:35I'm Karen Moscow. I'm John Tucker. Join us again tomorrow morning for all the news you need to start your day right here on Bloomberg Daybreak. 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.

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