US-Iran Strikes Escalate; Lindsey Graham's Legacy

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1:14So healthcare is connected, not complicated. What's that look like? Cheaper prescriptions that are easier to get and care that looks at the whole person. How you need it. Optum is helping make healthcare work as one for everyone. Learn more at business.optum.com. Bloomberg 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 with the latest developments in the Middle East. The U.S. and Iran have exchanged fresh strikes over the weekend and into this morning. We get more from Bloomberg Middle East correspondent Abir Abu Omar.

1:57Into the weekend, we saw yet again another escalation in the rhetoric between the US and Iran, with the US targeting over 100 targets early in the weekend and then dozens of targets in Iran. This include some attacks in the eastern provinces, the southern provinces. Bushahir was attacked in Iran. And so Iran not backing down. We see similar patterns of attacks by the IRGC. It does feel like a little bit of an escalation in the narrative. We're not seeing back to kinetic warfare similar to what we've seen in March where the whole region is dragged into it, but no signs of comfort this morning. And Bloomberg Zabir Abu Omar says shipping through the Strait of Hormuz is at the heart of the latest escalation.

2:40A handful of ships have passed through the Strait in secret in recent days. Nathan, the escalation in the Middle East is on the forefront during the European foreign ministers meeting in Brussels this morning. Ben Sills is a Bloomberg managing editor for European economics and government coverage. They are obviously pretty on edge. There's not an awful lot they can do about this. If the U.S.-Iranian deal starts to unravel, as seems to be the case, they're particularly vulnerable to energy prices. Kallas has been saying that they have offered the EU's nuclear expertise to contribute to any potential negotiations, but it seems like they're a way off getting to that sort of technical detail at this point when they're still shooting at each other.

3:23Bloomberg's Ben Sills adds that EU officials say there can be no tolls or fees in the Strait of Hormuz. Karen, reaction continues to pour in following the sudden passing of Republican Senator Lindsey Graham of South Carolina. Graham died Saturday, a day after returning to Washington from his 10th trip to Kiev since Russia's full-scale invasion of Ukraine. He had been scheduled to appear on NBC's Meet the Press yesterday. Instead, President Trump phoned in to pay tribute to a man he called like a member of the family to me. He was such an advocate. He was, you know, if he wanted to get something.

3:58And, you know, he had a unique ability. He was able to deal with Democrats and Republicans. If I had a problem, a real problem, I wouldn't often ask. But if I had a problem with a Democrat, he could work it out. He was a great politician, actually. President Trump has ordered flags lowered to half staff through Saturday night in honor of Senator Graham. His office says he died of aortic dissection or a hardened artery that tore. Republican Senator Lindsey Graham was 71 years old. Nathan, Senator Graham is being remembered as a staunch interventionist on the world stage and a strong backer of Israel.

4:33We get more on that from Bloomberg News congressional reporter Eric Lawson. He was very much in favor of the bombing of Iran, of trying to replace the regime there. They're just a very assertive foreign policy voice that's going to leave that faction of the party without a very, very clear champion right now. And Bloomberg's Eric Wasson appeared on Bloomberg this weekend, heard every Saturday and Sunday morning on Bloomberg Radio and Television. Graham was also a strong advocate for Ukraine's defense, and his death could leave Kiev and other U.S. allies looking for new advocates. Several Democratic senators are calling for passing a new Russia sanctions bill as a tribute to Senator Graham.

5:12And as Washington mourns Senator Graham, Karen, another senior Republican senator is looking to clear up speculation about his health. Former Senate leader Mitch McConnell has released a statement saying he had a fall last month that landed him in the hospital. And during his recovery, he developed a mild case of pneumonia. He says he has moved from the hospital to a rehab center, but still is not healthy enough to return to the Senate. McConnell has not been seen in public since June 14th. He had faced pressure in recent weeks to provide more details on his health, including from Democratic Kentucky Governor Andy Beshear.

5:44Let's turn to the markets now, Nathan, where the latest escalation in the Middle East is weighing on equities and the oil markets. Checking crude right now. West Texas Intermediate up 2 percent, up$1.49 at$72.90 a barrel. Brent up more than 2 percent at$77.70. And tech leading the way lower this morning. Right now, Nasdaq futures, they're down 1 % or 305 points. In Asia, Karen, South Korea's AI-fueled stock rally has come under pressure once again. SK Hynix tumbled by a record 15%, underscoring growing investor concerns that the boom in AI had become overstretched. The sell-off sent the benchmark KOSPI index down 9%.

6:25SK Hynix's newly listed American Depository receipts may be under pressure today. after they surged 13 % in their debut on Friday. Well, Nathan, earnings will also be in focus on Wall Street this week. Five of the six largest banks are set to announce quarterly results tomorrow, and we get a preview with Bloomberg's Charlie Pellett. We'll be hearing from JPMorgan Chase, Citigroup, Wells Fargo, Bank of America, and Goldman Sachs. Ethan Devitt is chief global market strategist at Mineta Group. Trading volumes, I expect them to continue to be high, but I would like to hear the outlook given this reversal of interest rate expectations.

7:01If interest rates stay stable or rise, what does that mean for the banks? For analysts covering banks, it will be an interesting Tuesday morning. While many of the conference calls are staggered, the ones being held by J.P. Morgan and Bank of America are scheduled to overlap. In New York, Charlie Pellett, Bloomberg Radio. All right, Charlie, thank you. It's also a busy week on the economic front. Kevin Warsh makes his first congressional appearance as chair of the Federal Reserve, And that comes as Wall Street gets a fresh read on inflation. We get more from Bloomberg's Tom Busby. On Tuesday, Warsh will testify about monetary policy and interest rates before the House Financial Services Committee and on Wednesday before a Senate committee.

7:40Just ahead of that Tuesday hearing, the Bureau of Labor Statistics releases its June Consumer Price Index. Ahead of Wednesday's hearing, the June Producer Price Index. Now, both reads are expected to show declines thanks to recent drops in gas prices. but CPI is still forecast to come in at 3.8%, well above the Fed's long-term target of 2%. The goal for Walsh to convince Congress he's able to reach a consensus with other central bankers on rates ahead of the Fed's next policy meeting two weeks from now. Tom Busby, Bloomberg Radio.

8:13Time 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 Michael Barr. Michael, good morning. Good morning, Karen. a Legionnaires outbreak on the Upper East Side of New York City's Manhattan has dozens of confirmed cases. As of last night, city health officials announced that the number of cases is now at 59, with 15 patients still hospitalized. Health Commissioner Dr. Alistair Martin. And when you catch a case early of Legionnaires disease, you can actually treat this fairly straightforwardly. And we're seeing that folks, when caught early, are making it through.

8:48Dr. Martin noted the people at most risk for contracting the potentially deadly illness are the elderly, immune-compromised, and smokers. Approximately 180 building cooling towers, where the Legionnaire bacteria usually clusters, are being tested. Tonight, officials in New York City plan to hold a virtual town hall on the latest outbreak. Venezuela's official death toll from last month's twin earthquakes rose to 4 ,490 on Sunday. National Assembly President Jorge Rodriguez says that is up from more than 4 ,300 a day earlier. New legislation in New York State could temporarily put the brakes on new data center construction.

9:31A new omnibus package of legislation is awaiting New York Governor Kathy Hochul's signature, which would temporarily limit the construction of large data centers known as hyperscalers. State Senator Kirsten Gonzalez co-authored the bills. It acknowledges that we are not in a place where we can build a number of hyperscale data centers across the state and not see negative impacts on our environmental resources, on our energy bills, on our water bills and more. And so the bill, first and foremost, implements a one year moratorium on any state permits being issued for the biggest of the biggest data centers.

10:08Senator Gonzalez says the bills would also force data center firms to convert 90 % of their power intake to renewable sources by 2040. Global News, 24 hours a day and whenever you want it with Bloomberg News Now. I'm Michael Barr and this is Bloomberg, Karen. Thanks, Michael. Time now for our Bloomberg Sports Update. And for that, we bring in John Stashauer. Thanks, Karen. The Wimbledon men's final had only two service breaks over four sets, both by Yannick Center. He lost the first set to Alex Zavera, but he won the next three. It's Sinner's fifth Grand Slam title, his second straight at Wimbledon.

10:44They'll play the baseball All-Star game tomorrow night in Philadelphia. In the Phillies, Christopher Sanchez will be the starting pitcher for the National League. Toronto's Dylan Cease for the American League. The home run derby is tonight. The hottest team going to the All-Star break, the Red Sox. They beat the Mets. They finished their first 9-0 road trip since 1977. It's a Bloomberg Sports Update. Stay with us. More from Bloomberg Daybreak coming up after this.

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13:52Coast 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. Good morning. I'm Nathan Hager. Crude oil is back on the rise this morning as the U.S. and Iran continue to trade attacks along with conflicting accounts about the status of the Strait of Hormuz. U.S. Ambassador to the United Nations Mike Waltz says Iran has repeatedly broken the interim peace deal. This was a performance-based MOU. Iran is not living up to it, and all options are on the table. We saw that from our great U.S. military overnight.

14:26It was U.N. Ambassador Mike Waltz on ABC's This Week, heard every Sunday on Bloomberg Radio. And joining us this morning is Terry Haynes, the founder of Pangea Policy. Terry, we've seen U.S. Central Command go after a number of targets aimed at degrading Iran's ability to threaten the Strait of Hormuz and Iran responding with attacks on U.S. assets around the Gulf. What's your read on what's happening in the Middle East since the weekend? Good morning. Good morning, Nathan. I would say that the markets are following the through line a lot more than they are the competing explosions. And the through line here is that there's probably positive direction of travel on opening the Strait of Hormuz.

15:09You see the United States kind of saying enough already on Iran's gaming. And you see Iran being backed into a corner, which is increasing IRGC desperation. There's been all the, you know, there's the tensions between a conventional civil government and the IRGC have been much in the headlines over the past week. And I think what you see is ultimately kind of the concert of the United States, the Gulf nations, Israel, even China to some extent, all working together to bring a run back to the table. So there are jitters this morning, justifiably so. Overall, though, I think we're trending in the proper direction.

15:58You may have to wonder how Senator Graham might have reacted to what's been happening. Of course, he was a strong advocate for going after Iran's nuclear program, carrying out the attacks that were launched on February 28th. Give us your thoughts, Terry, on the whole left by Senator Graham and Washington. Two things, really. One is, you know, and I agree with you that I think Senator Graham would have would have applauded and did applaud the most recent actions in the straits. You know, the thing is, Washington always has workhorses and showhorses, and the relation of showhorses, I think, to workhorses is higher than ever.

16:44And you see that every day, and it's in both parties. But Lindsey Graham was a workhorse who understood, was a serious guy, understood a lot of things, including how to project power out of the Senate. And, you know, the pure respect is the respect that matters in Washington. And Graham had that in spades, whether Republican, Democrat, or anybody else. So, you know, this is a serious man who achieved a lot and is deservedly mourned. The other thing I would say, though, is that people who think that that hole is not going to be filled are, I think, are incorrect. Republicans do have a deep and strong foreign policy bench, from Senator Hagerty of Tennessee to Dave McCormick, who's kind of the rising star there, Tom Cotton of Arkansas, the stalwart, and a number of veterans, including Roger Wicker and Jim Risch.

17:40So there's, you know, Graham did not do this all by himself, and I think you will see a remarkable consistency in how the post-Graham Republican Party continues to deal with foreign policy matters. Do you think, Terry, that any of those potential advocates will have the ear of President Trump in the same way that Senator Graham did? We only have about 30 seconds left. Not exactly in the same way, but they do. Bill Haggerty, certainly, former diplomat, among many other things. And Dave McCormick, who has a unique background from West Point to military service to Treasury senior to major financial services posts.

18:23And Tom Cotton always has. So, you know, I think you'll see a variety of people not really vying, but providing complimentary advice to the president and building trust there. 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.

19:03Plus, 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 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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