Trump's Iran Deadline Nears; Sharp Selloff in Markets

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1:38Radio. News. Good morning. I'm Nathan Hager. And I'm Karen Moscow. Here are the stories we're following today. Karen, we begin with the latest on the war with Iran now into its 24th day. Tehran has been carrying out fresh waves of attacks across the Persian Gulf after President Trump issued a deadline on social media over the weekend to reopen the Strait of Hormuz. We get the very latest from Bloomberg's Jumana Bersechi in Dubai. He's basically given Iran a 48-hour ultimatum to reopen the straits without threat, or else he says the U.S. will hit and obliterate various power plants, starting with the biggest one first.

2:18And Iran has around 100 power plants that they're sitting on that could potentially be targets. Now, Iran, we're quick to retaliate as ever. And they said that if that does happen and if civilian infrastructure is targeted, then they in turn will strike back on all energy, information technology and desalination infrastructure linked to the U.S. and Israel in the region. And Bloomberg's Jumana Bersetje reports this morning Iran is threatening to mine the entire Persian Gulf if the U.S. or Israel attack its islands or coastline. Nathan, Israel, meanwhile, has been carrying out new waves of airstrikes on infrastructure in Tehran.

2:56Defense Minister Israel Katz says the intensity of U.S. and Israeli attacks will increase significantly in the coming week. And we get that part of the story from Bloomberg's Dan Williams in Jerusalem. The public commentary has been ebullient, almost triumphalist, especially when it comes to the Israeli defense minister vowing stepped-up strikes on this, the fourth week of the war. Nonetheless, perhaps more quietly, officials are noting that the Iranians have managed, despite a drop-off in missile strikes overall during the third week of the war, to pick them up over the weekend, specifically with two missile attacks, two missiles that managed to reach their targets.

3:34Towns in the south of Israel where more than 100 people, civilians, were wounded over the weekend. And that's Bloomberg's Dan Williams, who reports Iran is claiming that attack in the southern cities of Iran and Damona was in retaliation for a strike on its Natanz nuclear facility. And Karen, the White House is defending the stepped-up attacks. Treasury Secretary Scott Besson says President Trump will take whatever steps are needed to deny Iran the ability to project power internationally. Every day we are taking out their missiles, their missile systems, and the factories that build those missiles.

4:07And now the General Cain, Secretary Hegseth, are leading a campaign to destroy all the fortifications along the Straits of Formos. Treasury Secretary Scott Bessett appeared on NBC's Meet the Press, heard Sundays on Bloomberg Radio. But Eurasia Group President Ian Bremmer says a prolonged war is not priced into the markets yet. This Iranian regime, if they wish, are going to be capable of continuing to pose threats to anything that goes through the strait and to ongoing production and capability of Gulf energy infrastructure. So, yeah, the Gulf is concerned about that, and they don't want the United States to stop now having started the war until that is resolved in some way.

4:57Eurasia Group President Ian Bremmer was a guest on Bloomberg This Weekend, airing every Saturday and Sunday at 7 a.m. Eastern on Bloomberg Radio and Television and the Bloomberg Business App. Well, Nathan, we are seeing major moves in the markets as President Trump's deadline approaches. Right now, S &P futures are down seven-tenths of a percent. Stocks in Japan, China and Hong Kong fell more than three percent. South Korea's KOSPI plunged more than six percent. Despite today's sell-off, Bloomberg Markets Live executive editor Mark Cudmore says investors are not fully pricing in the Middle East war.

5:31The market continues to be far too optimistic because they're focused on the fact that we always get a Trump taco. You know, geopolitical risk in the Middle East is always a fade. We've got the midterms coming up. The U.S. doesn't have any incentive to continue going. They're all based on the idea that the U.S. has near unilateral control over the conflict, which is not the case at all. In fact, as Trump's threat in the weekend implicitly accepts, it is Iran who controls the Strait of Ramirez and when it will reopen. And Bloomberg's Mark Cudmore also noted precious metals are getting hit today.

6:04Checking gold right now, COMEX gold is down 7%. Spot silver is down almost 6%. And global bond yields have risen to their highest levels in almost two years, Karen. Here in the U.S., yields are at their highest in months. On speculation, the Federal Reserve may raise borrowing costs to combat inflation. The specter of stagflation caused by the Iran war has wiped out more than$2.5 trillion from the value of global bonds this month. Oil on the move again. It's higher and at checking prices right now, NYMEX crude oil up nine tenths of a percent at$99.07 a barrel, while Brent is at$113. The International Energy Agency says more than three dozen assets in the Middle East have suffered extensive damage.

6:49Here's IEA Executive Director Fatih Birol. We are following the damage on all the energy assets there. There are at least 40, 4-0 energy assets in the region are severely or very severely damaged across nine countries. And IEA Executive Director Fante Birol says in addition to oil and gas, some of the vital arteries of the global economy, such as petrochemicals, fertilizers and sulfur, have also been impacted. And Karen, the CEO of one of the world's biggest banks says energy prices are likely to remain elevated. We spoke with UBS banking boss Sergio Armadi. Energy prices are likely to stay high for the foreseeable future, putting some inflation pressure and also some pressure on the delivery chain or on the supply chain.

7:45UBS CEO Sergio Armadi says so far his firm's customers are not making dramatic changes to asset allocation as a result of the war. Nathan, UK Prime Minister Keir Starmer will hold an emergency meeting with his top ministers on the Iran crisis. And we go to London and get the very latest with Bloomberg's James Wilcock. James, good morning. Good morning, Karen. Nathan, UK guilt deals are hitting highs not seen since 2008. Energy prices are forecast to rise as much as 20%. And over the weekend, a UK military base was targeted by Iranian missiles. Prime Minister Keir Starmer meets with the Bank of England governor and other top officials later for crisis talks on what can Britain do.

8:26He's been clear the UK does not want to get drawn into the war in the Middle East, but the economic consequences are already on Britain's shores. In London, James Wilcock, Bloomberg Radio. Okay, James, thanks. We're also following a developing story back on this side of the Atlantic. Authorities say an Air Canada flight collided with a Port Authority vehicle at New York's LaGuardia Airport. The Air Canada Express plane from Montreal had 76 people on board. The Port Authority has confirmed now the pilot and co-pilot died in this collision. The National Transportation Safety Board is launching a team to investigate today, and a notice has been issued by the Federal Aviation Administration that airport operations at LaGuardia will remain suspended until at least 2 o 'clock this afternoon.

9:10Well, Nathan, President Trump says ICE agents will be going to airports today as Congress continues debating a funding plan for homeland security. The president named White House border czar Tom Homan to lead the effort. We're simply there to help TSA do their job in areas that don't need their specialized expertise, such as screening through the X-ray machine. Not training that? We won't do that. But there are roles we can play to release TSA officers from the non-significant roles, such as guarding an exit, so they can get back to the scanning machines and move people quicker. And White House border czar Tom Holman made the comments on CNN.

9:48Hundreds of thousands of Homeland Security workers, including from the TSA, Secret Service, and Coast Guard, have worked without pay since Congress failed to renew DHS funding last month.

10:01Time 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. John, good morning. And good morning, Karen. The U.S. Supreme Court today will consider a case that could upend key election deadlines in as many as 29 states and draw justices into President Trump's campaign against mail-in ballots. Let's get more from Bloomberg's Monica Ricks. The case involves a Mississippi law that allows ballots to be counted if they arrive shortly after Election Day, which the Republican Party and the Trump administration say is incompatible with federal law.

10:33This is part of a prolonged effort by the GOP to keep control of Congress in November. But critics say it would lead to chaos, including different deadlines for congressional and presidential elections than for state and local races. It could also suppress the votes of people likely to support Democrats. Monica Ricks, Bloomberg Radio. Republican Senator Mark Wayne Mullen advanced toward confirmation as Secretary of the Department of Homeland Security. He cleared a procedural obstacle Sunday that put his nomination on track for a final Senate vote earlier this week. The 54 to 37 vote signals the 48-year-old first-term Oklahoma senator, a former mixed martial arts fighter, has sufficient support to be installed as leader of the department.

11:16A senior Cuban official said the country is preparing for a possible military assault as President Trump increases economic pressure on the government in Havana. The Deputy Foreign Minister Carlos Fernandez-Docasio suggested in an interview on NBC's Meet the Press Cuba could be the next U.S. target after Venezuela and Iran. And London's Metropolitan Police have launched an investigation after four ambulances belonging to the Jewish Community Ambulance Service were sent on fire in North London. Police say they're looking for three suspects, though no arrests have been made. Global News, 24 hours a day and whenever you want it with Bloomberg News Now.

11:52I'm John Tucker, and this is Bloomberg. Karen. All right, John, thank you. Time now for our Bloomberg Sports Update, and for that, we bring in John Stashauer. Thanks, Karen. The NCAA tournament down to the Sweet 16, the only one or two seed no longer in the tourney last year's national champions, the Florida Gators. They lost to Iowa 73-72. The Hawkeyes' Alvaro Fulgaris hit a three-pointer with 4.5 seconds left. A buzzer beater for St. John's, Dylan Darling. His only points of the game. And the Red Storm beat Kansas by two to advance to the Sweet 16. Syracuse on the verge of hiring a new coach, Jerry McNamara.

12:31That's your Bloomberg Sports Update. Stay with us. More from Bloomberg Daybreak coming up after this. The thing about AI for business, it may not automatically fit the way your business works. At IBM, we've seen this firsthand. But by embedding AI across HR, IT, and procurement processes, we've reduced costs by millions, slash repetitive tasks, and freed thousands of hours for strategic work. Now we're helping companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business, IBM. You need to make a huge presentation in an hour.

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14:08derivatives, which could increase risks and volatility. Monthly income is not guaranteed. Prepared by BlackRock Investments, LLC. 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 on day 24 of the U.S.-Israeli war with Iran. Attacks and rhetoric are ramping up once again ahead of President Donald Trump's 48-hour ultimatum to reopen the Strait of Hormuz or risk attacks on Iranian power plants. Treasury Secretary Scott Besant was asked how that squares with the president's talk of winding down the conflict.

14:44They're not mutually exclusive. Sometimes you have to escalate to de-escalate. And that was Treasury Secretary Scott Besant on NBC's Meet the Press, heard Sundays on Bloomberg Radio. This morning, we're joined from Dubai by Bloomberg Horizons anchor Jumana Bersechi. And with us this morning from Tel Aviv is Bloomberg News Israel Bureau Chief Ethan Bronner. Thanks to both of you for being with us. And Jumana, I'll start with you just to get us caught up with the latest on what is happening in the Middle East, as it does sound like the rhetoric certainly is ramping up along with the action. Good morning.

15:17Good morning. Yes. Well, you just played some sound there from the U.S. Treasury Secretary Scott Besson, who was saying that it may be necessary to escalate in order to de-escalate. And I should just caveat the ultimatum that President Trump gave to the Iranians with the fact that a few hours before he'd said that they were thinking of winding down some of their military operations in the region. So there's a bit of mixed messaging coming through from the White House. That being said, the ultimatum that came through at around 7.44 p.m. Eastern time on Saturday, relevant, of course, given the 48-hour deadline, is to Iran to reopen the strait without threats.

15:56And if not, the U.S. will hit and obliterate their various power plants, starting with the biggest one first. So that's what he put up in his true social post. But of course, the Iranians were quick to respond. And they said that the straits will remain completely shut. And that if the US were to go down the route of targeting their power plants, they would strike back, they would target all energy, information technology, and desalination infrastructure. They followed that up with some comments put forward by the head of the parliament, the speaker of the parliament. And he added that headquarters and assets of financial entities that buy U.S.

16:32treasury bonds are also legitimate targets. And then a couple of hours ago, we also got more rhetoric coming through from the country's National Defense Council, also putting out a statement saying that they're looking to not just mine around the Strait of Hormuz, but around the entire Persian Gulf. So you can see that there is a lot of rhetoric coming back through from the Iranians. The big question, I think, over the next 24 hours is whether the U.S. actually follows through on this threat and equally whether Iran in turn will follow through on their own threat, which is to strike at some of these key strategic sites.

17:08And I will say, you know, the water, the desalination infrastructure would take this war to get another stratosphere because so many countries in the region rely on desalinated water. Alongside the threats from the U.S. side, Ethan, of course, we're hearing reports as well that Israel is ramping up its own attacks on Tehran. What's the latest from your perspective? Yeah, look, I mean, I think Juman has accepted it very, very well. Israel is definitely flying over and attacking Iran again. And my distinct impression is whether or not there is a specific 48-hour deadline that's going to end in the next 15 hours or so.

17:50From the reporting I've been able to do in Israel. The Americans are planning a fairly extensive operation to retake the Strait of Hormuz from Iran. It's going to take some weeks. That's the message they're sending the Israelis. And in that sense, the idea that this war has been kind of driven by Israel, whether or not that was true to begin with, is, I think, shifting now. And it is now the U.S. that's getting out front with the attacks. That raises the question of whether the U.S. is preparing for a ground operation to retake the Strait of Hormuz and how Iran might respond to that, Jumana. What's the perspective there?

18:32Yeah, well, our own reporting suggests that the U.S. is weighing up the possibility of taking over Karg Island. And I should just mention, for anyone not familiar with the geography, that Kirk Island is a lot more north than the Strait of Hormuz. To actually get to Kirk Island, you need to pass through the straits if you're sending amphibious vessels to that part of the region. But that aside, that would, you know, as Ethan just spoke about, imply yet another level of escalation in this conflict, because also alongside that, there are reports that the U.S. are also planning on sending around two and a half thousand, and possibly 3 ,000 Marines, i.e.

19:11ground troops, to the region as well, which would imply that what they are attempting to do here is twofold. There are two objectives, the ongoing military operations, the airstrikes that are targeting Iran's both offensive and defensive capabilities, but alongside that, looking at ways to forcefully reopen the straits. And from what we understand from our own reporting, it will take them a couple of weeks to degrade Iran's offensive capability sufficiently so that once the Marines and the extra armada that arrives to the region gets there, it won't be as exposed to as much of a risk as it would be if, say, they were to arrive today.

19:56Ethan, there's certainly a lot of attention right now on this ultimatum from the president over the weekend for Iran to reopen the strait. At this point, does it seem as though the U.S. goals in Iran are aligned with what Israel is putting forward right now? I don't see a huge gap. I mean, what's clear is that assuring freedom of navigation through Hormuz is a much bigger American goal than an Israeli goal. So the Israelis have set for themselves three goals here, the nuclear, the ballistic, and the proxies, and making sure that Iran can't be a threat again to it. I think that there is, I can't say that the Israelis are unhappy with an approach to the strait of Hormuz, although there is some chatter in Israel which says, you know, that's taking us somewhere else.

20:54Let's stay focused on the goals that we've set for ourselves here. But, you know, I think the Israelis are so grateful and so amazed to have a lockstep U.S. military operation against Iran that there's very little carping underway. And I don't, you know, I really don't see a lot of daylight there. I see an enormous amount of cooperation. We're speaking with Ethan Bronner, our Israel Bureau Chief for Bloomberg News in Tel Aviv and Bloomberg Horizons anchor Jumana Bersechi with us this morning from Dubai. Jumana, we heard over the weekend from Treasury Secretary Besant that the goal as far as U.S.

21:31strikes in the Strait of Hormuz is to degrade Iran's fortifications around the Strait, seeming to be specifically focused on that choke point. Does Iran continue to have control over the Strait at this point? Yeah, so this is the thing. So the Iranians maintain that the strait is not closed, but it is effectively closed because it's under Iranian control. And we've been reporting, our energy colleagues have been reporting over the last week that a certain number of vessels have trickled through the strait, but most of them are Iranian aligned or headed towards strategic buyers for Iran. So it's towards China or India or Pakistan, but they would have received pre-approval from the Iranians to get through the strait.

22:17So ultimately, they're still effectively controlling who passes through. And they've spoken about one of their conditions to come back to the negotiating table is to discuss the future of the straits and perhaps introducing a new policy or framework by which vessels can pass through. Obviously, you know, having Iran maintain control over it is not something that's acceptable, mostly to Gulf states as well, given the lion's share of their own oil products pass through the straits. And it's something I also think that means, you know, from the Gulf states perspective, they want to ensure looking ahead that once this war is over, we do end up in a circumstance where the strait is not effectively still controlled by Iran and that their oil can flow through it without being administered by Iranian officials.

23:10This 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. Plus, 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.

23:50Search 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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