Trump Waits For Iran Response, US-EU Trade Deal Stumbles Again

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1:52Bloomberg Audio Studios. Podcasts. Radio. News. Good morning, I'm Nathan Hager. And I'm Alexis Christophorus. Here are the stories we're following today. Alexis, the ceasefire between the U.S. and Iran has reached the one-month mark, and this morning both sides are circling around a new proposal to end their nearly 10-week war. The way President Trump puts it, he already has. The leaders are all dead, so I think we won. The president spoke from the Oval Office as Iran reviews a one-page memorandum of understanding on stopping the conflict. They want to make a deal badly, and we'll see if we get there.

2:31If we get there, they can't have nuclear weapons. You know, it's very simple. President Trump at the Oval Office, Bloomberg Middle East correspondent Jumana Brasetti reports the one-page proposal would be a first step if both sides agree. It would include an immediate end to hostilities, and then a 30-day period in which negotiations would begin surrounding the lifting of the mutual blockades around the straits, reopening of that nuclear file, discussions around the time frame of uranium enrichment, and then also handing over the fate of that highly enriched uranium stockpile. Of course, we know that they're sitting on more than 400 kilos worth of 60 percent plus highly enriched uranium.

3:09So that is a big topic that was even a topic before the war kicked off. Bloomberg's Jumana Berset, she reports Iran would be looking for significant sanctions relief in exchange for all that. There may be urgency at the White House to get a deal done. President Trump has a summit next week in Beijing with Chinese President Xi Jinping, and gasoline prices have topped$4.50 a gallon for the first time in nearly four years. Nathan, the Israeli army has carried out an attack in the southern suburbs of Beirut. The military says the precision strike killed Ahmed Ali Balut, the commander of Hezbollah's elite Radwan force.

3:42This was the first Israeli strike in the vicinity of Lebanon's capital since the U.S.-brokered ceasefire came into effect last month. Iran has previously threatened to withdraw from its ceasefire with the U.S. if Israel keeps up attacks in Lebanon. Alexis, there's more proof this morning on how the conflict in the Middle East is affecting the airlines industry. Bloomberg's Lisa Mateo has the details. New data from the U.S. Department of Transportation's Bureau of Transportation statistics shows fuel costs for U.S. airlines increased by more than 56 percent in March from the month before. Oil Fuel consumption also grew by 19.5 % from February to March, and fuel costs per gallon was up almost 31%.

4:23The costs were also significantly higher when compared to March of last year. Spiking fuel prices have pushed carriers to increase fares and baggage fees, as well as cut back on routes. It was also a major factor in the closure of Spirit Aviation. Lisa Matteo, Bloomberg Radio. Thanks, Lisa. And elsewhere this morning, Secretary of State Marco Rubio is in Italy, where he's meeting Pope Leo XIV. The gathering comes amid continued attacks by President Trump against the head of the Catholic Church. Bloomberg's Flavio Rotondi has more from Rome. Rubio said in the last few days that this trip to Rome and the Vatican has been planned months ago before the tensions between President Donald Trump and Pope Leo said that the visit was part of a regular engagement with the Holy See.

5:09But of course, the decision to come to Rome these days, as here in Italy, prompted speculation that Rubio, who is Catholic, as you know, was going on a sort of a mission to repay relations, I would say, strained by Trump's back and forth with the Pope and Italian Prime Minister Giorgio Meloni in the last few weeks. Bloomberg's Flavio Rotonde in Rome says that Rubio's focus of the trip will be shared interests with the Vatican, including humanitarian aid in Cuba and religious freedom in Africa. Alexis, trade tensions could overshadow Rubio's trip to Europe as well. The European Union has failed to finalize a long-delayed U.S.

5:49trade deal during overnight talks. That's despite warnings from President Trump that he would soon impose fresh tariffs on the bloc. We get more from Bloomberg chief Europe correspondent Oliver Crook. What you had last night was the meeting of the Trilog. This is the sort of synonym for reconciliation, the discussions that happen at the European level to try to get this now new amended trade deal across. It did not make a sort of big breakthrough, the sort of swift resolution that Trump wanted. But we did hear from the EPP party. This is the biggest party in European Parliament that basically the final rounds of negotiations with EU member states and the European Commission will be scheduled for the 19th of May with the European Parliament's final vote expected in June.

6:26Now, there are two scenarios here. One, they get this through. The U.S. is happy. The second is you start to get these U.S. auto tariffs. You go back to square one. We don't think that's likely because, of course, the Europeans didn't want to deal with the trade war to begin with, much less now when there's this issue of stragflation sort of hanging over the economy here. Bloomberg's Oliver Cook says President Trump threatened last week to increase tariffs on EU cars and trucks from 15 to 25 percent. And back here in the U.S., Commerce Secretary Howard Lutnick testified to the House Committee investigating Jeffrey Epstein's crimes and possible lapses in the law enforcement response.

7:00Bloomberg's Amy Morris reports from Washington. Secretary Lutnick's testimony was challenged by Democrats who questioned his credibility and accused him of not being truthful about his visit to Epstein's Island. Ranking member of the House Select Committee, Ro Khanna. It was just contortions and lies and no acknowledgement that he misled the American public. House Oversight Chair James Comer says Lutnick was transparent, testifying before the committee voluntarily. The only thing that I had seen that Lutnick did wrong wasn't 100 % truthful. On the brief visit to the island with his family, he corrected that.

7:34It was a closed-door testimony. The committee plans to release a transcript in the next few days. In Washington, Amy Morris, Bloomberg Radio. Amy, thanks. And on the day of that testimony, some long-concealed evidence in the Epstein case has been released. A federal judge has unsealed a purported suicide note that Epstein's former cellmate says he found tucked in a graphic novel in the late sex offenders Manhattan jail cell. The New York Times asked for this note to be released. Federal prosecutors did not object. It reads, in part, they investigated me for a month, found nothing. It goes on to say it is a treat to be able to choose the time to say goodbye.

8:09Now, the existence of this note was little known until last year when Epstein's former cellmate mentioned it in a podcast interview. It was not mentioned in the Justice Department's millions of Epstein files. We turn now to the markets where futures are higher after another record-setting session on Wall Street. The S &P 500 rose 1.5%. Chip stocks helped the Nasdaq to a 2 % rally. Lori Calvacina is head of U.S. Equity Strategy at RBC Capital Markets. It really is the strength of the AI-related earnings story that is driving this market. That's why we do think people will continue to sort of follow the earnings and follow that big cap growth trade.

8:45But it's very hard to get bearish on the market when you do the bottom-up analysis, no matter how you feel about the geopolitics. RBC's Lori Calvacina notes the Philadelphia Semiconductor Index also ended the day at an all-time high. In Asia overnight, Japan's Nikkei surging more than 5 % to an all-time high. And checking oil this morning after yesterday's 7 % drop, Brent crude, the international benchmark, down 2 % at$99 a barrel.

9:13Time now for a look at some of the other stories making news in New York and around the world. For that, we're joined by Bloomberg's Michael Barr. Good morning, Michael. Good morning, Alexis. Health officials are trying to control a deadly outbreak of antivirus, the first ever recorded on a cruise ship. Three people have died, and the World Health Organization says there are eight cases. Dutch officials say about 40 passengers from the cruise ship have disembarked on St. Helena, but their whereabouts have not been confirmed. The ship right now is on its way to Spain's Canary Islands, but the point of infection may have been Argentina.

9:47Dr. Anne Lindstrand of the World Health Organization says the close quarters on cruise ships makes them vulnerable to outbreaks. It's an incubation time of about one to eight weeks where the symptoms are developing. It's like flu-like symptoms. You have pain, muscle pain, fever, feeding week, etc. Health authorities say nobody currently on the ship is symptomatic for now. There's mounting pressure on state lawmakers to back redistricting of congressional maps ahead of midterm elections. In South Carolina, Republican State Representative Jordan Pace talked about the renewed fight over redistricting in the Palmetto State.

10:28I don't believe and I don't think most people believe that people vote based on their skin color and never have. So I would like the map to be reflective more of political alignment rather than any racial components to it. Republican lawmakers in Tennessee are poised to vote on a plan to reshape a majority black congressional district. The move is part of a broader strategy in southern states following a U.S. Supreme Court ruling that weakened the Voting Rights Act. Democrats and civil rights activists have criticized the efforts. Rudy Giuliani was moved out of the intensive care unit and remains hospitalized as he continues his recovery.

11:05Giuliani spokesperson Ted Goodman says the former New York mayor is recovering from pneumonia after complications from a pre-existing respiratory condition. Global news 24 hours a day and whenever you want it with Bloomberg News Now. I'm Michael Barr and this is Bloomberg Alexis. Thanks Michael. Time now for our Bloomberg sports update and for that we bring in John Stashauer. Home teams won in the NBA playoffs. That includes the Knicks, who've been blowing teams out. This one was much closer in New York, but the Knicks beat Philadelphia 108-102. They lead the series 2-0. It was not close in San Antonio.

11:39The Spurs won by 38 over Minnesota. The series tied at once. Down the Cup playoffs, Buffalo won game one with Montreal 4-2. Anaheim won game two at Vegas 3-1. Golden Tempo, who had that thrilling win at the Kentucky Derby, will not be in the Preakness. They will be in the Belmont Sticks. That's your Bloomberg Sports Update. Stay with us. More from Bloomberg. Did you know that passive fixed income ETFs only capture about 50 % of the U.S. public bond market? But with J.P. Morgan Asset Management's active fixed income ETFs, we can help you capture 100 % of the U.S. public bond market and explore twice as many opportunities.

12:16Visit jpmorgan.com slash get active to learn more. J.P. Morgan Asset Management is the brand name for the asset management business of J.P. Morgan Chase & Co. and its affiliates worldwide. This communication is issued by JPMorgan Distribution Services, Inc., member of FINRA. The Bloomberg Sustainable Business Summit returns to Singapore on July 22nd. Our fifth annual Asia Pacific Summit will explore how business and finance leaders are shaping the next phase of globalization by strengthening resilience, advancing climate adaptation, and driving a multi-speed energy transition across Asia's diverse markets.

12:50Join us for solutions-driven and discussions, interactive workshops, and networking opportunities. Learn more at bloomberglive.com slash SBS dash Singapore. Daybreak coming up after this. 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. Optimism is building in the market that the U.S. and Iran might be able to find a way out of nearly 10 weeks of war. This morning, Iran is said to be reviewing a one-page memo of understanding from the U.S. President Trump says he has a clear bottom line.

13:32Iran cannot have a nuclear weapon because as tough as they are, we want to keep them alive. We want to keep all of you alive. Iran cannot have a nuclear weapon. And that was President Trump speaking from the Oval Office. Joining us this morning from Dubai is Jumana Bersechi, the Bloomberg Middle East correspondent and anchor of Bloomberg Horizons. Jumana, from what we understand about this memo, the nuclear weapon issue waits till later, right? Good morning. Yeah, good morning. So from what we do understand, it is a memo. It's just one page and it would entail an immediate end to the war and then a 30-day period in which negotiations would start around, as you mentioned, the nuclear file in exchange for the U.S.

14:18lifting sanctions and unfreezing some Iranian assets. Now, again, that is a toll order to solve all of those issues, including the mutual lifting of blockades around the straits over a period of 30 days. Just to give you some context, you know, JCPOA, it took 18 months. Prior discussions with Iran around anything to do with nuclear has taken anything from months to years. So a little bit, I would say, ambitious in terms of timing. And then also, we're sort of back to where we were before the war even started in terms of what the US are pushing for in these discussions versus what Iran are willing to concede to.

14:54And here, the same points to do with uranium enrichment, what level, zero level enrichment, low level enrichment, the timeframe of suspension, and then the fate of that highly enriched uranium stockpile. It's still unclear at this point whether Iran is willing to forsake that or give that up and on what terms they're willing to do so. However, what I will say is the reason the market is reacting so positively beyond the expectation that we may get some form of a resolution to this war is that at the beginning of the week, we looked like we were on the brink of another round of hostilities. We've walked away from that now, and it seems like diplomacy is back on the table.

15:32So while we wait for Iran's response, Jumana, what could that potential response be now that we have this situation in the Strait of Hormuz where things are at a near standstill? And you could argue that Iran does have some leverage there in terms of trying to enact a tolling system to get shipping through. That's exactly it. So, you know, we've spoken to many people over the course of this morning, especially people who are involved in oil markets. And there is, despite the knee-jerk reaction, there's some skepticism about how quickly we will likely see the lifting of the blockade. And if it is true that this is going to be a 30-day period of negotiations, let's not forget that the straits, if we're still closed over that 30-day period, you're talking about another 450 million barrels a day of oil that will still be taken off the market.

16:24That's per RBC calculation. So it's probably a little too soon to talk about a full free flowing of vessels through the straits. And it is a key point of leverage that Iran continue to hold on to and they know that they're holding on to this. At the same time, they're trying to establish a new protocol overnight. They've put together what they're calling the Persian Gulf Straits Authority, which is a new authority that they set up, and requiring vessels to submit a request in which they then would be required to fill in a form, including all sorts of data, what cargo they have on board, the nationalities of the crew members and so forth, after which they then would get a yes or no in terms of their ability to transit the vessel.

17:08So this is a protocol that Iran are trying to set up. From our own reporting, we understand that ship owners are very unlikely to subscribe to it, in which case you're still left in an impasse. Very few vessels are passing through. And of course, this memo of understanding is coming ahead of a key summit for President Trump in Beijing with Chinese President Xi Jinping. There's been a lot of pressure as well on the U.S. side to get China to exert its leverage over Iran. Is that having any impact from where you sit in Dubai? I think it certainly is. And you also need to bear in mind that the Iranian foreign Prime Minister Abbas Arakshi was in Beijing yesterday.

17:47He met with his counterpart there. China once again pushing for a diplomatic resolution to this. And obviously they have a vested interest in it too economically. They import the lion's share of Iranian oil. It's talking about 90 % of Iranian oil ending up in Chinese hands. So from their perspective, clearly they want to see things return back to normal, but also perhaps sense a geopolitical opportunity here to gain a one-up versus, the US, which is in a situation where it's very tricky for President Trump back home. He's on a shorter timeframe, shorter timeline. And the Iranians' calculation is the longer this drags on for, the more the economic costs are going to build up, not just for the US, but for the rest of the world.

18:33And so here it really is to do with managing a timeline that actually works out for all parties involved. And what we are sensing from the region, at least from countries like Saudi Arabia, is they too are pushing for a diplomatic resolution to this. Nobody wants to see the full return to hostilities. But the question is how you, in effect, paper over those huge differences in the respective stances of what the U.S. want to see out of Iran on the nuclear file versus what Iran are willing to offer. This is Bloomberg Daybreak, your morning podcast on the stories making news from Wall Street to Washington and beyond.

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19:50I'm Alexis Christophorus. 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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