US-Iran War Stalled; Diesel Hits Four-Year High

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1:44Bloomberg 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. Iran says it has targeted U.S. bases in the United Arab Emirates and Kuwait this morning. That word from state-run media comes after the U.S. carried out a second wave of attacks on Iran's southern coast Tuesday night. President Trump says the strikes targeted offensive and defensive equipment near the Strait of Hormuz. We blew up much more than their radar last night. It was a very heavy attack last night.

2:22And we're prepared to do another one anytime we want. The president spoke yesterday from the Oval Office. Now, since then, the U.S. has not announced any new attacks, but the Wall Street Journal is reporting that the Pentagon is extending Middle East deployments that could last into next year to maintain a level of 50 ,000 personnel and give the president flexibility on military options. Well, Nathan, we continue to see an impact on the war in the energy markets. U.S. retail diesel prices have hit the highest level since mid-2022, and that tops a peak seen during the early stages of the Iran war.

2:55The national average pump price of diesel is now just above$5.78 a gallon. Karen, we're learning more about the dispute between the U.S. and China at this week's G20 Finance Minister Summit that kept the group from issuing a joint communique. Sources tell Bloomberg News the disagreement came down to one word, non-market. We're told Chinese officials saw the term as a veiled attack on state-owned companies that are a pillar of their economy. Bloomberg's Jill Deesis reports Treasury Secretary Scott Besant focused on China's trade surplus in his statement after the meeting. China had a trade surplus, record trade surplus last year of$1.2 trillion.

3:30Again, record largest ever. We've seen Besant talk about this multiple times throughout the course of the summit. Bloomberg's Jill Deesis reports China proposed a tweak to the wording that would have addressed trade imbalances without putting a spotlight on its state-owned enterprises. Besant's final statement included a line calling on nations to eliminate non-market policies. Nathan, Chinese President Xi Jinping is in Egypt, and he's sharpening his rhetoric and urging Middle Eastern nations to pivot away from the U.S. During a meeting with Egyptian President Abdel Fattah el-Sisi, Xi said the people in the Middle East should be the masters of their own affairs.

4:08In an availed swipe at the U.S., he also said China would back efforts to reshape the security architecture in the region. This is the Chinese president's first trip to Egypt in a decade, and it comes before he heads to Washington for a highly anticipated summit with President Trump at the end of the month. In New York, Karen, Nicolas Maduro is making a new bid to have his criminal case thrown out. Lawyers for the deposed Venezuelan leader submitted a court filing yesterday arguing that he is immune from prosecution as the head of a sovereign state. Federal prosecutors argue Maduro and others partnered with designated foreign terrorist groups and sought to enrich himself while in office.

4:44Maduro and his wife face drug trafficking and conspiracy charges after they were captured in a U.S. military raid on Venezuela in January. They face life in prison if convicted. Trial is set for June of next year. Nathan, the Trump administration's latest attempt to limit birthright citizenship has been blocked in federal court. A judge in Maryland has temporarily blocked an executive order that President Trump issued last month. The order would deny citizenship to children whose parents took part in a commercial transaction to ensure they gave birth in the U.S. The judge said the Supreme Court already decided that children in that class are citizens at birth.

5:19The Justice Department could now ask a federal appeals court to lift the judge's order and let officials move ahead with the president's plan while the legal fights play out. In Washington, Karen, now that Congress has passed a stopgap funding bill to keep the government open until December 11th, there are more spending bills that need attention. Bloomberg's Amy Morris reports from the nation's Capitol. Texas Republican Jody Arrington chairs the House Budget Committee. He tells Balance of Power he wants to get the defense bill passed, but he says the Senate's not cooperating. Unfortunately, I don't know that the will is there.

5:54I don't think there's a more important endeavor for us as Congress to deal with than to support the common defense and back our troops. That's after the election. I just hold very little hope out prior to the election at this point that we'll get a return served from the Senate. But House Republicans are divided between defense hawks who are holding out for billions more in Pentagon funding and deficit hawks who want spending cuts. In Washington, Amy Morris, Bloomberg Radio. Amy, thank you. We turn to the markets now where futures are higher as we begin a new trading session. and shares of Snowflake, they are on the rise.

6:26They are surging almost 24%. The company is raising its outlook for annual sales, tiding rapid adoption of its AI-assisted coding tool, a maker of software that helps organize and analyze corporate data in the cloud. Snowflake is weaving artificial intelligence through its platform. We're also watching shares of Broadcom in the pre-market, Karen. They're down 2.4%. The chipmaker's results and forecasts were seen as underwhelming. But on the company conference call, Broadcom predicted a boom in AI chip sales over the next two years, and that's helping renew optimism. It can challenge NVIDIA's dominance in the lucrative market.

7:00Kunjan Sabarni covers Broadcom for Bloomberg Intelligence. Near term, there doesn't seem to be a lot of big upside. Apparently, from the company's perspective, we still think they are being conservative and they could get higher than that 115. But nevertheless, what was the key positive was that really high guide of$230 billion for the fiscal 28 from AI revenues. Just to perspective, the street is close to somewhere around$180 billion there. So that was a real positive. Bloomberg Intelligence Senior Semiconductor Analyst Kunjan Sabarni notes Broadcom's custom AI semiconductor business is thriving as companies like Google, OpenAI, and Meta Platforms look for ways to supplement their NVIDIA-made chips with additional supply and variation.

7:43Well, staying on the AI theme, Nathan, Secretary Howard Lutnick hosted a series of fireside chats yesterday with big tech industry leaders, including NVIDIA CEO Jensen Wong. Lutnick later spoke with Bloomberg's Joe Matthew and said if chip companies build their factories in the U.S., they won't pay tariffs. There'll be shovels in the crown building it to get us to 40 or 50 percent production semiconductors. And the idea is very simple, and it's been very successful with pharmaceuticals. Build it here, and you won't pay a tariff while you're building. But if you're not willing to put shovels in the ground here, then you should pay to have access to the greatest market in the world.

8:25And Commerce Secretary Howard Ludnick made the comments on Bloomberg's balance of power. Catch the full conversation on the Bloomberg Video Hub, available on Bloomberg.com and the Bloomberg Business App. And Karen, a month of gradual decline in the Japanese yen has reversed sharply over the past 24 hours. The currency is now up about one and a quarter percent against the dollar. Investors are speculating Japan could intervene in the currency market again.

8:52Time 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 shooting at a downtown Minneapolis apartment building has left three people dead, including the suspect and five others wounded. Authorities say those shot include two Minneapolis police officers who are in stable condition. A third officer suffered injuries. Interim Police Chief Bill Peterson. I'm truly sickened by this level of violence. That feeling is tempered only by the courageous actions of the Minneapolis police officers who responded without hesitation.

9:26Chief Peterson says the suspect was known to authorities before the shooting. A deadlocked jury in the trial of Lindsay Clancy will resume deliberations today for a sixth day as the court teeters on the brink of a mistrial. For the second time, the jury yesterday told the judge they are deadlocked. The jurors are split over whether the Minneapolis woman was sane when she strangled her or the Massachusetts woman was sane when she strangled her three young children with the defense team claiming she was suffering from postpartum psychosis. Prosecutors allege the murders were calculated. If the jury deadlocks permanently, the judge will declare a mistrial, leaving prosecutors to decide whether to retry Clancy, offer a plea deal, or drop the charges.

10:13New York City's public schools will temporarily ban elementary and middle school students from using artificial intelligence tools during the upcoming school year. Mayor Zoran Mamdani also said high schoolers will get a course in AI literacy. Our job is to give every student the knowledge, the independence and the confidence they need to build a future of their own choosing. That means safeguarding the teacher-student relationship, refusing to surrender our classrooms to profit motives. And above all, it means protecting childhood. Ma 'am Dunney says all grades will be banned from using AI companion chatbots.

10:50Global 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 NBA came down hard on the Los Angeles Clippers. They ruled that their star player, Kawhi Leonard, was given outside income. That circumvented the salary cap. And they took five first-round draft picks away from the Clippers. They fined the owner, Steve Ballmer,$30 million. Tiger Woods had that DUI in Florida back in March. He struck a plea deal. And Tiger will have his license suspended.

11:27for five years. That's your Bloomberg Sports Update. Stay with us. More from Bloomberg Daybreak coming up after this. This is the Bloomberg Tech Minute brought to you by ChatGPT. Now with ChatGPT work. I'm Carol Masser. Social media posts on sleep outnumber those on exercise by three to one and those on diet by five to one, according to consumer researcher Rila Global Consulting. And so it may come as no surprise that there are seemingly no limits to what we will do to get a good night's sleep. People are spending on everything from pricey sleep trackers, AI-powered scent therapy machines, to$3 ,000 body temperature-regulating Manosphere-endorsed mattress covers, and couples outfitting totally separate bedrooms.

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13:23At LPL Financial, we believe the only question should be, what if you could? Pitt advertisement, Anna Kendrick is not a client of LPL Financial LLC and receives compensation to promote LPL. Investing involves risk, including potential loss of principal LPL Financial LLC member FINRA, SIPC. As markets move and headlines break, what matters most is context. A Bloomberg subscription gives you unmatched reporting, sharp analysis, and powerful tools that help you connect the dots. Visit Bloomberg.com slash podcast offer to learn more. 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 with tensions in the middle east still a focus for investors after this week's return to strikes on iran for the u.s but president trump is predicting the u.s won't need to keep attacking Tehran for long.

14:14We now control the Harmo Strait and we have many boats going through that every day, every night. Many, many boats loaded up with oil. It was President Trump from the White House Rose Garden last night. Joining us this morning from Istanbul is Bloomberg Middle East breaking news editor Patrick Sykes. So, Patrick, President Trump is saying this current bombing campaign will be short. Is it looking that way in the region? Good morning. Morning, yes. So far from On the U.S. side, at least, that is the case. We didn't have any resumption of strikes from the U.S. military in Iran overnight. What we did have, however, this morning was confirmed Iranian drone and missile attacks against Kuwait.

14:58Iran has also claimed to have attacked the UAE, but currently there's no confirmation of that. But I think it just goes to show, you know, Iran's initial response to the U.S. attacks was described as a retaliation, but it was described as an open ended one and that they would continue until they felt that the aggressor had been sufficiently punished. So even if the U.S. backs off, that doesn't mean that Iran will will necessarily follow suit. And we also heard the president say that the U.S. could attack again any time it wants. What does that suggest about what the strategy could be going forward?

15:36I think that goes to show we're in this phase of the conflict where day to day there's a relatively low intensity baseline. But we're expecting to see, you know, bouts like we did this week where, you know, be it in attacks on shipping in the Strait of Hormuz or be it on airstrikes on the Iranian mainland. And one side or the other lashes out, tries to reclaim some kind of leverage or at least just to challenge the narrative of its opponent in order to try and shore up its position. But currently, we're not seeing any ramp off for either side. They're both sticking firm to those positions. So for the moment, it's this low intensity with bounce of renewed violence.

16:27Well, what do we know at this point about the status of the Strait of Hormuz at a time where the tracking data seems to show that some oil is still getting through? Well, at the same time, we're seeing diesel prices near record levels that we haven't seen since the early days of the Ukraine war. Yes, and it's important to differentiate between crude oil and oil products like diesel gasoline made from that crude, right? As for crude, it does seem that the U.S. has been in recent weeks getting more and more successful at this, these nighttime operations to move crude tankers through the Strait of Formus, through the southern route, away from Iran's coast, closer to Amman, in order to keep some level of supply reaching the market.

17:17That hasn't been yet the case on the product side. And at the same time, on the product side, you've got a security situation in the Black Sea where due to attacks on ships there, as part of a completely different conflict, you've also got limitations on, for example, Russia's ability to refine crude into products. So two related but distinct markets. And in our last minute here, Patrick, what about the economic pressure campaign? Even if we do see an ebb and flow in military activity, does it look as though the economic pressure campaign is having an impact at this point? It's hard to pin one to the other, but it's certainly the case that Iran's economy is suffering.

18:03Inflation is over 80 percent, I think approaching 90. And we know that imports through key hubs like Dubai, on which Iran has relied for so long, have been severely restricted. At the same time, my understanding on the Turkish border where I'm based is that products do continue to move. So it's not a total airtight seal. I think what we should expect is for the U.S. to continue piece by piece to be trying to limit any oil flows to Iran and that to result in this gradual incremental increase in the pressure and deterioration in the economy. This is Bloomberg Daybreak, your morning podcast on the stories making news from Wall Street to Washington and beyond.

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19:28I'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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