Trump-Xi High Stakes Beijing Meeting; Iran War Enters 75th Day

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1:58Good morning. I'm Karen Moscow. And I'm Alexis Christophorus. Here are the stories we're following today. All right, Alexis, and President Trump is set to land in Beijing later today for a highly anticipated summit with Chinese leader Xi Jinping. Bloomberg's John Tucker joins us with the very latest. John, good morning. Good morning, Karen. President Trump says this trip primarily is about trade, but he'll also be talking about the war with Iran, with President Xi, something he acknowledged it's going to be very difficult to avoid. He's been very nice about this. You know, in all fairness, he gets like 60 % of his oil from hormones.

2:36And he's been, I think he's been very respectful. We haven't been challenged by China. They don't challenge us. Well, the president is traveling with more than a dozen CEOs. The lineup includes Elon Musk and NVIDIA CEO Jensen Wang, who was a last-minute addition. Trump wants China to ink some trade deals, to buy American planes, agriculture and energy. and artificial intelligence discussions may also be on the agenda. Beijing wants, among other things, a longer tariff truce, and Chinese President Xi may try to test the U.S. commitment to Taiwan and seize on any sign of wavering from a president who doesn't necessarily like to stick to the script.

3:14I'm John Tucker, Bloomberg Radio. Thanks, John. And as the president embarks on his China trip, the war in Iran now enters its 75th day. As Bloomberg Middle East reporter Jumaane Bersace reports, many, including the president, thought the conflict would be over by now. One of the reasons that President Trump pushed back this trip in the first place by, I think it's six weeks or so, was because of the conflict that was going on in the background. And so the hope probably from his perspective was that it would be all wrapped up and ready and behind him so that he could approach this meeting with Xi Jinping and address other thornier topics.

3:49Unfortunately, the Iran situation is still very much a live situation. I mean, And we talk about the ceasefire, even though President Trump has described it as being in a very fragile state. Ultimately, the Strait of Hormuz is still effectively closed. China so far have not played an active role in either military operations or in diplomacy. But in the past couple of weeks, they seem to be flexing a bit more muscle. And the expectation is that China will call for de-escalation. Bloomberg's Jumana Bersechi says, according to satellite images, oil shipments from Iran's main export terminal, Karg Island, appear to have come to a standstill over the past several days.

4:28Well, Alexis, Defense Secretary Pete Hegseth returned to Capitol Hill to defend the Pentagon's$1.5 trillion budget request. And Bloomberg's Amy Morris reports from Washington. Hegseth softened his tone from previous congressional hearings as he defended the historic military budget request for 2027. House Appropriations Subcommittee Ranking Member Minnesota Democrat Betty McCollum asked Seth if the Pentagon has a plan B. We have a plan to escalate if necessary. We have a plan to retrograde if necessary. We have a plan to shift assets. Certainly in this setting, we wouldn't reveal what the next step may be.

5:04The Pentagon's top budget official told Congress the cost of the war has climbed to nearly$29 billion. That's up$4 billion from just two weeks ago. In Washington, Amy Morris, Bloomberg Radio. Thanks, Amy. Turning to election politics. Now, the Democratic primary for a key House seat in Nebraska is still too early to call. With 89 % of votes counted in Nebraska's second district political activist, Denise Powell has a lead of about two percentage points over state Senator John Kavanaugh, 39 % to 37%. Now, the winner will face Republican Brinker Harding, who was endorsed by President Trump. The district draws national attention because Nebraska is one of just two states.

5:43that splits its electoral votes in presidential elections. The second district has gone to Democratic presidential candidates three out of five times since 2008, a blue dot in an otherwise sea of red. The seat has been held for much of the last decade by Representative Don Bacon, a Republican who's retiring. Well, now to politics overseas, Alexis, where British Prime Minister Keir Starmer is clinging to power as calls grow from his own party for him to quit. Bloomberg's James Wilcox joins us from London with the very latest. James, good morning. Good morning, Karen and Alexis. At a senior meeting of cabinet ministers yesterday, Starmer said he wouldn't go without a fight.

6:22But more than a fifth of his MPs and junior ministers are now publicly calling for him to stand down after a landslide loss in local elections last week. He met one of his potential challengers this morning, Health Secretary Wes Streeting. People don't expect any fireworks today, as the King is speaking in Parliament. But the crisis in Westminster is by no means over. In London, James Woolcock, Bloomberg Radio. James, thanks. A French woman infected in the deadly hantavirus outbreak on a cruise ship is critically ill and being treated with an artificial lung. The outbreak has now reached 11 total reported cases, nine of which have been confirmed.

7:01Three people on that cruise died, including a Dutch couple that health officials believe were the first exposed to the virus while visiting South America. With the evacuation of all passengers and many crew members now completed, the MV Hondias is sailing back to the Netherlands where it will be cleaned and disinfected. Well, we turn to the markets now at Alexis, where futures are mostly higher following yesterday's declines on Wall Street. At one point, the S &P 500 was down 1 % before recouping most of its losses. JPMorgan Chase CEO Jamie Dimon says investors appear to be overlooking a lot of geopolitical events.

7:35I think there's a little bit too much exuberance out there. It's not just the Middle East. It's, you know, Ukraine, Russia still there, America, China. There are a lot of these complex issues, which may or may not affect the market. But then there are issues like inflation, you know, that today's print wasn't so good. So yeah, I think the market's kind of exuberant, and it may not be completely justified. You can catch the entire conversation with JPMorgan Chase CEO Jamie Dimon on our new streaming hub on the Bloomberg Business app. And Kevin Warsh is one step closer to becoming the next chairman of the Federal Reserve.

8:06The Senate confirmed his nomination to the Fed Board of Governors, granting him a 14-year term. The Senate then cleared a procedural hurdle to pave the way for a vote on Warsh's confirmation to succeed Jay Powell as chairman, which is likely to occur later today. Bloomberg's Michael McKee has more on Warsh. He's not going to be able to come in and cut rates. Even if he could convince the other 18 members of the Open Market Committee, which I'm fairly certain he can't, the markets wouldn't let him, not with inflation like this continuing to rise. So he's got to sit back and wait until there is some end of the war and some visibility into when prices might start coming down.

8:49Bloomberg's Michael McKee says most Democrats have opposed Warsh's nomination on concerns that he will not maintain the independence of the Fed on monetary policy. In company news, Alexis job cuts are coming at Walmart. The retail giant is eliminating or relocating about 1 ,000 corporate jobs. Walmart says it's part of a plan to consolidate its technology and artificial intelligence efforts. And speaking of AI, Karen Bloomberg News has learned Anthropic is in early talks with investors to raise at least $30 billion in fresh financing. The Claude maker is in discussions to raise the new capital at a valuation of more than$900 billion.

9:25That's not including the investment. Anthropic needs to make deals to pay for enough computing infrastructure to meet growing demand for its products amid the breakout success of its AI software. Alexis, AI is also helping boost profit at SoftBank. The Japanese company reported a surging quarterly profit due to valuation gains on its OpenAI investment. SoftBank has committed to raising its total investment in OpenAI to more than$64 billion by the end of the year. And sticking with OpenAI, Sam Altman testified that he was extremely uncomfortable with Elon Musk's insistence that he have complete control over a proposed for-profit subsidiary of the startup.

10:07Altman told jurors yesterday that Musk said he only wanted control of the entity in its early days, but was unwilling to sign a contract to that effect. Musk has accused Altman and the company's president of going back on their promise to keep the artificial intelligence company a nonprofit and to follow its charitable mission.

10:27Time 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. It got heated when FBI Director Cash Patel was pressed about reports of excessive drinking during a Senate hearing Tuesday on Capitol Hill. Patel is now suing The Atlantic magazine after it reported on alleged bouts of excessive drinking. Senator Patty Murray seized on reports that Patel hands out bottles of bourbon emblazoned with his name. If you want to pass out liquor or pop bottles in a locker room, stick to podcasting.

11:03Patel was also asked about the seizures of ballots in Fulton County, Georgia, as well as the election probes in Michigan and Arizona. Critics have raised concerns about the operations during a midterm election year. Patel said the FBI has hired dozens of its own election monitors. We at the FBI and me have installed ECC's election county coordinators in every single 56 field office that I have. Patel said the Georgia ballot seizures followed standard legal process. Food and Drug Administration Commissioner Marty McCary resigned, according to President Donald Trump. and Kyle Diamantis will take over the commissioner role in an acting capacity.

11:44McCary's exit marks the end of a turbulent period for the agency, characterized by high turnover in top positions and backlash from the biotech industry. New York Mayor Zoran Mamdani ditched an earlier proposal to broadly raise property taxes by nearly 10%. In his executive budget announced Tuesday, Mamdani aims to close New York's deficit with savings and more aid from Albany, including an estimated$500 million from a new surcharge on expensive luxury second homes that was pitched by Governor Kathy Hochul. The mayor says the$124.7 billion executive budget does not raise property taxes and refuses to slash services.

12:27It has not been easy, but we have balanced the budget, and we have done so without placing the burden on the backs of working New Yorkers. Mayor Mamdani has said the second home tax was an important step and has pledged to raise taxes on the wealthy. Global News 24 hours a day and whenever you want it. With Bloomberg News Now, I'm Michael Barr and this is Bloomberg. Thanks, Michael. Time now for our Bloomberg Sports Update. And for that, we bring in John Stashauer. Thanks to everybody. Lasting Victor Wembenyama, he had thrown that elbow and got thrown out of Game 4 of the playoff series with Minnesota.

13:00Game 5, Wembeny was back. He led the Spurs to an easy victory over Minnesota. and a 3-2 series lead. Stanley Cup playoffs, Vegas beat Anaheim 3-2 in overtime. That's the Golden Knights series lead. Buffalo won 3-2 at Montreal. That series tied at two. NFL schedule comes out tomorrow, but the league announced that the first Monday night game of the season will be Denver at Kansas City. The Dallas-Balduar game in Brazil will be hit play on week three. That's your Bloomberg Sports Update. Stay with us. More from Bloomberg Daybreak coming up after this. Did you know that passive fixed income ETFs only capture about 50 % of the U.S.

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15:03IBM. 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. And President Trump is on his way to China for a highly anticipated summit with Chinese leader Xi Jinping. The 36-hour meeting will mark his first overseas trip since waging the war in the Middle East. I think you're going to see that good things are going to happen. This is going to be a very exciting trip. A lot of good things are going to happen. And there was a president speaking yesterday before boarding Air Force One with a group of business leaders.

15:41That included NVIDIA co-founder Jensen Wong. For more on this story, we're joined by Bloomberg Asia government editor John Herskovitz. And John, good morning. So we heard the president there saying a lot of good things are going to happen. What are good things, according to the president? What are you expecting to see? Yeah, I mean, from the U.S. perspective, they're looking at a few things. They're trying to get more trade in things like soybeans, beef, setting up a board of trade and investment for non-controversial, non-secure items in trade with China, looking for some deliverables like Boeing airplanes.

16:16But Trump is heading into the summit facing a more confident Xi Jinping at a moment that the Iran war has weakened U.S. leverage. On top of this, the U.S. is battling inflation that's accelerating at rates not seen in about three years. We have gas prices, which are quite high. And this is all set against the backdrop of the November midterm elections, which is putting pressure on Trump and the Republican Party. So Trump is going into this optimistic, but in terms of ability or just Xi Jinping really has a lot of cards to play when he has his meeting with Trump. So obviously Trump is going to be looking for some help or some cooperation from China when it comes to the war in Iran and opening the Strait of Hormuz.

17:07Does he have the ability to get that from Xi Jinping, or are we expecting to get anything in terms of the war? China has exposure in terms of the strait. It gets about 30 percent of its oil imports through that body of water. So it's a key energy source for China. But China also has a lot of diversity in terms of its imports of energy. It has Central Asia, Latin America. It can turn to other places to get the oil that it needs. And trying to help the U.S. at a time when the U.S. is having a lot of problems with the war, with its allies, it just doesn't work into Beijing's favor. So Trump will probably ask for help.

17:54I don't know what help that China can give. And China is also a very key player for Iran. Iran is one of its more important partners in the Middle East, and making concessions from China's perspective that weaken Iran is not something in Beijing's interest. So Trump will apply pressure for the strait, but what China will do is we really shouldn't expect all that much coming from Xi Jinping. Well, we also got a bit of a surprise when we heard NVIDIA's Jensen Wang was among those joining the president on board Air Force One. That was a last-minute change, it seems. That really pushed AI into the spotlight.

18:33So will we be getting anything in that area? Yeah, no, it's a really interesting thing. Since Jensen Wang wasn't on the original list, last-minute addition, as you said. And, you know, for NVIDIA, it sees China as like a$50 billion market opportunity for its advanced H200 chips. The U.S. has approved the sale, but for Beijing, they're rather cautious about this. They're holding back approval to support domestic champions like Huawei. The U.S. tried a little bit something different, improving the less advanced H20 chip, but this was something that was not of interest to China. So we'll see how this plays out.

19:16Under the Biden administration, these types of chips were not allowed for export, trying to keep U.S. strength in these areas. But now under Trump, they want to get China addicted to these chips and keep NVIDIA as a customer. 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.

20:02Plus, 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 Alexis Christophorus. Join us again tomorrow morning for all the news you need to start your day, right here on Bloomberg Daybreak.

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