Trump Signals Economic Pressure on Iran; Israel Rejects US Proposal

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1:39Bloomberg 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 this morning with the latest from the Middle East. President Donald Trump is signaling he is prepared to let economic pressure build on Iran rather than launching new attacks. In an interview with Axios, the president said, quote, we are low keying it and only semi negotiating with Tehran on the Strait of Hormuz. Iran's foreign minister, Abbas Araqchi, says direct talks with the U.S. aren't possible for now. At present, we are not engaged in any negotiations with the United States.

2:20As long as the American violation of the Memorandum of Understanding continues and the U.S. does not make amends for its violations, there is no possibility of resuming negotiations. Iran's Foreign Minister Abbas Aragchi spoke through an interpreter as talks continue with Oman on reopening the strait. We get the latest from Bloomberg's Zabir Abu Omar in Dubai. The two countries were discussing ways or a mechanism to restart shipping through the Strait of Hormuz temporarily to open up some kind of pathway for those vessels that are stuck for those oil barrels that are stuck to start making their way through the globe.

2:52But for now and until today, what we hear from the Iranian side is that those talks are still ongoing. They are in the final stages. And then there are some delays, of course, in getting the formalized final draft. Bloomberg Zabir Abu Omar. Meanwhile, Iran has elevated a hardline former commander as head of the country's Supreme National Security Council. Mohsen Rezaei replaces another hardliner in the post. He's been pushing for full Iranian control over the Strait of Hormuz. Well, Nathan, back in Washington, the Pentagon is putting more pressure on major defense contractors to speed up weapons deliveries.

3:26Deputy Defense Secretary Steve Feinberg sent a letter last week to Boeing, Lockheed Martin and RTX asking for accelerated efforts on several key systems. Becca Wasser is defense lead for Bloomberg Economics. Obviously, there's been so much focus on munitions consumed in the Iran war, but he really focused on some of those next generation weapons trying to speed production so that it becomes ingrained within those production cycles for those to be delivered faster. The problem is he's looking at some of the most complex weapons, including things that are needed for air defense systems that could be part of Trump's Golden Dome project, which is intended to protect all of America from all-out aerial attack, which is a pretty big ask.

4:13Becca Wasser of Bloomberg Economics appeared on Bloomberg this weekend. Catch the show every Saturday and Sunday at 7 a.m. Wall Street time on Bloomberg Radio and television and the Bloomberg Business App. Back to the Middle East now, Karen. Israel is rejecting a U.S.-backed peace proposal with Hamas. It calls for the militant group to lay its arms in tandem with a gradual withdrawal of Israeli troops from Gaza. Here's Prime Minister Benjamin Netanyahu speaking through an interpreter. Israel rejects the 15-point plan. The IDF will not carry out any withdrawal until Hamas is disarmed. And when I say disarming Hamas, it means the heavy weapons, the less heavy weapons, and the light weapons.

4:51All of the weapons. And we are talking about real disarmament, not a fictitious disarmament. Again, Israeli Prime Minister Benjamin Netanyahu. Hamas has given only hedged consent to the U.S. roadmap. It says it would hand over its heavy weapons to a proposed new Gaza administration on condition of Israeli withdrawals and the creation of a Palestinian state. Nathan, let's turn to politics in the U.S. Now, President Trump's attacks against the Supreme Court are sinking its public approval, and Bloomberg's Monica Ricks explains. The U.S. Supreme Court has a reputation problem, especially after an ideologically divisive term, with polls now showing poor approval ratings and record low support.

5:29In fact, a majority of Americans now believe the justices tend to act for political reasons, not legal ones, which experts on both sides see as unhealthy and potentially dangerous. The sentiment's driven down by years of a hyper-partisan confirmation process, polarizing decisions, and ethics controversies. That's led to more calls for Congress to impose term limits or expand the court to offset its conservative advantage. Monica Ricks, Bloomberg Radio. All right, Monica, thank you. Turning to markets now, futures are higher following another record close on Wall Street. In fact, the S &P 500 is coming off its best week since April.

6:04A sharp slowdown in U.S. jobs drove stocks higher, and there may be more gains ahead. JPMorgan Chase strategists are raising their year-end target for the S &P 500 to 8 ,000. That's a 3 % increase from its current level. Well, Nathan, earnings season may be winding down, but hyperscaler spending will again be in focus this week. We get more with Bloomberg's Charlie Pellett. With more than three quarters of S &P 500 companies having reported, 86 percent have beaten earnings expectations, and that is the highest rate since 2021. Amanda Agati is chief investment officer at PNC Bank. Clearly, corporate America is in really good shape.

6:43I think this earnings season in particular, the story extended well beyond the MAG-7. Earnings from Supermicro and applied materials will illustrate the ripple effect of hyperscalers ramping up spending on AI capabilities. In New York, Charlie Pellett, Bloomberg Radio. Charlie, thank you. Over the weekend, Berkshire Hathaway reported quarterly profit more than doubled, and it also announced it's putting more of its cash pile to work. Under CEO Greg Abel, the conglomerate spent about$4.5 billion to buy back its own shares in the second quarter. It purchased nearly$20 billion in equities that period.

7:20Nathan, SpaceX shares, they're trading right around their IPO price of$135 a share. Friday, 16 % surge brought the stock's two-day rally to about 23%, adding more than$327 billion in market value over that span. Right now, looking at SpaceX, it is up about 3 % in early trading, right around$137 a share. In Asia, Karen, Taiwan Semiconductor reported a 45 % rise in its monthly sales as demand for AI hardware remains strong. Last month, TSMC raised its spending and revenue projections for the year, reflecting confidence that torrid growth in demand for chips that power AI development will extend into 2027 and beyond.

8:02Taiwan Semi makes AI chips for all the major players, including NVIDIA and Apple. And speaking of Apple, Nathan, the company is considering an overhaul to its smartwatch lineup in light of the industry's transition to screen-free devices. Bloomberg News has learned Apple is exploring watches without displays, as well as different screen types and sizes. The Apple Watch remains the top-selling smartwatch, even as it faces more competition from companies such as Aura Health and Whoop. 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 John Tucker.

8:37John, good morning. And good morning, Karen. Taylor Foods is pulling more than a dozen prepared food items containing jalapenos, including salsas and guacamole, from retailers because of concerns over salmonella. This comes just weeks after federal health officials tied the produce company to a separate outbreak of cyclospora. Democrats sent to raise big money from the upcoming midterms during the August recess, even while bashing big money corporate cash. That story this morning from Bloomberg's Amy Morris. This election cycle is bringing on mounting political pressure for corporations. More candidates bashing corporate PACs on the campaign trail, especially on the Democratic side where it is a signature cause in high-profile primaries.

9:20And that will likely continue into November, setting up debates over tax, health care, and money and politics debates. The political ad tracking firm Ad Impact finds mentions of corporate PACs have nearly doubled in broadcast campaign ads this cycle. In Washington, Amy Morris, Bloomberg Radio. A man was arrested and charged with reckless endangerment after a boat he had been operating overturned in New York Harbor. A 27-year-old woman and her five-month-old daughter died. The boat's captain was arrested and charged with 13 counts of reckless endangerment. Congressional Democrats say they're investigating the Trump administration's efforts to deport military service members and their families.

9:58The news follows an Associated Press investigation. that found more than 50 active-duty troops, spouses, and parents have been detained by immigration authorities. Global News 24 hours a day and whenever you want it with Bloomberg News Now. I'm John Tucker, and this is Bloomberg. Thanks, John. Time now for our Bloomberg Sports Update, and for that, we bring in John Stashauer. Thanks, Karen. Don Nelson passed away at the age of 86. He played on five championship teams in Boston, then became an NBA head coach for 31 years with Milwaukee, Golden State, Dallas. Briefly with the Knicks, the second most coaching wins in NBA history, topped only by Greg Popovich.

10:36The Dodgers slump continues, lost 4-2 in Arizona. L.A.'s lost 8-9. The Red Sox were so red hot, but they lost their first series since June 22nd at 24th. Surprisingly, the A's won 4-3. That'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.

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13:22You'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. 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 wait continues for a deal to reopen the Strait of Hormuz and as talks continue between Iran and Oman, President Trump says he's willing to let economic pressure bear down rather than ordering new strikes on Tehran. Former Defense Secretary Mark Esper says Iran may feel it has the upper hand.

14:00They haven't apparently left any room for negotiation, and we know that's important. President Trump wants to pursue that, and rightly so. Former Defense Secretary Mark Esper spoke there on ABC's This Week, heard Sundays on Bloomberg Radio. This morning, we're joined from Istanbul by Bloomberg Middle East breaking news editor Patrick Sykes. So, Patrick, we saw this interview with President Trump speaking to Axios, saying he's low-keying it with Iran. Does it seem like that is having any impact when it comes to negotiations to reopen the strait? Good morning. Good morning. No, I think we're caught in this kind of back and forth where one day the president will say that, you know, They're on the verge of resuming military strikes or they're on the verge of a deal.

14:39And now the latest is that they're taking some distance and I think trying to take some of the immediacy or expectations of immediacy out of the diplomatic dance from Iran for its part earlier today. We just heard the repetition of the message that they're not engaged in talks with the U.S., but they are indeed exchanging messages via intermediaries. We assume Pakistan and perhaps Qatar, too. So it just underlines, I think, yeah, we're stuck in this something of a loop where the two sides going back and forth through this indirect structure. As this loop continues then, Patrick, where are Gulf Arab allies right now when it comes to what we're hearing from the discussions between Iran and Oman, that they're looking for some kind of fee structure around the strait?

15:33For the Gulf, I think we've seen a transition in the stance, right? At the very start of the war, they were obviously bearing the brunt of all those attacks from Tehran, in particular the UAE. More recently, the understandably hostile response from them that we saw at the start of the war seems to have been moderated. Iran, at least for its part, has been claiming that ties with the UAE have improved. And we have, for what it's worth, not seen attacks against Dubai of the kind that we did earlier on in the war. So it does feel like there's a bit of a rapprochement going on there. The question, I think, is for those Gulf states, is that just about seeing out the diplomatic uncertainty and uncertainty about how Trump is going to end the war?

16:28Or is this some kind of recognition that, you know, Iran as their neighbor geographically is here to stay and the war hasn't displaced the regime and they're going to have to come to some kind of accommodation to make things work in the longer term? And when it comes to this idea that we heard expressed in the Axios interview that President Trump is going to wait to see how inflation, how economic pressure is bearing down on Iran, are we seeing any evidence that that is having an impact? It's unmistakably having an impact on those economic indicators in Iran. Inflation is one. The currency has hit several record lows, not just since the start of the war, but since the start of the year and the protests that we saw earlier on.

17:11Remember, of course, that the U.S. is still implementing this naval blockade against Iranian shipping. It doesn't catch as much attention now, but the U.S. does still periodically say that It's turning around, diverting ships that are trying to break that. But so far, Iran has sort of been able to resist it. It's certainly having an effect. But Iran is going to be making use of those land borders that it has with countries like Turkey, like Pakistan, with Central Asia. And it's also got air links, of course, at the same time. So it's adapting. It's suffering. but for now the public persona at least is that it is able to withstand that pressure.

17:55The question, of course, is what does the timeline on that ability to withstand pressure look like vis-a-vis the U.S., the world economy's ability to withstand pressure on the straight-of-hole moves and energy prices more broadly. 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.

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