US Ratchets Up Iran Pressure; OpenAI Funding to Top $100 Billion

0:00Hello, I'm Stephen Carroll. I'm in Brussels where many of Europe's biggest decisions get made. And I'm Caroline Hepker in London with the hosts of the Bloomberg Daybreak Europe podcast. We're up early every weekday keeping an eye on what's happening across Europe and around the world. We do it early so the news is fresh, not recycled and so you know what actually matters as the day gets going. From Brussels, I'm following the politics, policy and the people shaping the European Union right now. And from London, I'm looking at what all that means for markets, money and the wider economy. We've got reporters across Europe and around the globe feeding in as stories break So whether it's geopolitics, energy, tech or markets, you're hearing it while it happens It's smart, calm and to the point And it fits into your morning You can find new episodes of the Bloomberg Daybreak Europe podcast by 7am in Dublin or 8am in Brussels, Berlin and Paris On Apple, Spotify, YouTube or wherever you get your podcasts

1:02Bloomberg Audio Studios. Podcasts. Radio. News. Good morning. I'm Nathan Hager. And I'm Karen Moscow. Here are the stories we're following today. And Karen, oil is on the rise again after gaining the most since October yesterday. This morning, West Texas Intermediate is up 1%. That's as Axios has reported the Trump administration is closer to a major war in the Middle East than most expect. Axios says a U.S. operation would likely be a weeks-long campaign. We get more from Bloomberg Managing Editor Paul Wallace in Dubai. It sounds as if Iran has roughly two weeks to get back to the Americans, and then if they're broadly satisfied, the Americans will say, OK, let's go to round three, and we don't know where that will be.

1:50But of course, there are plenty of people, including in the oil market, who think America might be essentially trying to lull Iran into a false sense of security and maybe willing to strike the country before Iran returns with those proposals. Because that's, you know, in some senses that echoes what happened in June last year with the 12-day war between Iran and Israel and then America at the end. And, you know, that that will happen when or at least it started when the U.S. and Iran were in the middle of nuclear talks. Bloomberg's Paul Wallace says the U.S. has announced visa restrictions on Iranian officials and executives for repressing recent anti-regime protests and cutting off Internet access.

2:35Now, Nathan, to the latest fallout from the Jeffrey Epstein files, billionaire retail mogul Les Wexner testified behind closed doors about his relationship with the late sex offender to Democrats on the House Oversight Committee. The former CEO of Elbran said he visited Epstein's private island once with his wife and children, but was unaware of any sex trafficking operation. And he repeatedly said he could not recall key details of his relationship with the late sex offender, including giving him considerable financial support. Arizona Democrat Yasemin Ansari says it's all on the record. He allowed Jeffrey Epstein to live in his homes, to have hundreds of millions of his dollars, to use his yachts and his planes.

3:18This was obviously a very, very close relationship, and so far what we have seen is a denial of that relationship. Congresswoman Yasemin Ansari spoke to reporters from Ohio where Wexner agreed to testify under an agreement with the committee. The Justice Department named Wexner as one of the 10 co-conspirators in its 2019 investigation into Epstein. Wexner was not charged in the case and says he was duped by Epstein. Meanwhile, Karen, Bill Gates has backed out of a speech at a high-profile AI summit in India just hours before he was due to speak. In a post on X, the Gates Foundation said the Microsoft co-founder made the decision to make sure the focus remains on the event's key priorities.

4:00Gates has come under criticism for his ties to Epstein. The Gates Foundation did not mention the financier in its statement, but Gates has called his relationship with the late sex defender a huge mistake. Nathan, let's get to the latest in the search for Nancy Guthrie. It's been 19 days since the mother of today's show host, Savannah Guthrie, was last seen at her home near Tucson. Police are still looking for new leads as they sort through upwards of 50 ,000 tips. Pima County Sheriff Chris Nannos spoke with BBC News. I think she's somewhere here in our community. Locally? Yeah. What makes you think that?

4:35I just do. I don't know why. I don't have any evidence to prove that. But I just believe that she's somewhere here locally. Pima County Sheriff Chris Nanos speaking to the BBC. The sheriff has come under some criticism for his handling of the investigation. He declared the scene at Nancy Guthrie's home done three days after her disappearance, only to return later. And he has not held a news conference in almost two weeks. In an interview with the Wall Street Journal, Nanos said some of the criticism is politically motivated. And in his words, haters are going to hate. Karen Mehta CEO Mark Zuckerberg has testified in a social media and safety trial in Los Angeles.

5:12He says it's very difficult to enforce Instagram's age limits. But Zuckerberg says Mehta has introduced some proactive tools to try to identify and remove accounts that violate the rules. But he calls it a challenging problem. Bloomberg's Kurt Wagner says this is a signature moment for social media. To kind of be challenged with these allegations and in Mark Zuckerberg's case to defend himself and his company against these accusations. And so it's been highly watched, highly anticipated. And this is just really the first of more than a thousand potential trials that we could see. Bloomberg's Kurt Wagner says this trial centers on a 20 year old woman who blames Meta's Instagram and Google's YouTube for her years of mental health struggles.

5:56Well, Nathan, Bloomberg News has learned OpenAI is close to finalizing the first phase of a new funding round that's expected to bring in more than$100 billion. Sources say the overall valuation of the company, including the eventual funding, could exceed$850 billion. Brad Smith is vice chair and president of Microsoft, a key OpenAI partner, and he says the chat GPT maker is branching out. It's not as exclusive as it was, say, a few years ago. OpenAI uses our compute. They train models in our data centers, but they work with other companies as well. We critically rely on OpenAI's frontier models.

6:36They are among the best. In many days, they are the best in the world. But we have a relationship with Anthropic. Microsoft's Brad Smith made the comments earlier in an interview with Bloomberg. And you can check out that interview as well as live streaming news, all our Bloomberg TV shows, documentaries, and more. It's all in one place at Bloomberg.com forward slash videos. Let's turn to the markets now, Karen. Futures have turned lower after yesterday's gains on Wall Street. The Nasdaq dumped eight-tenths of one percent. Barbara Reinhardt is chief investment officer of multi-asset strategies at Voya Investment Management.

7:10Short-term, we're very oversold at this point. Look, you've had a 33 percent correction in U.S. software stocks from their peak in October of last year. It seems to be a bit overdone and somewhat indiscriminate selling at this point. So I don't think there's reason for us to go to cash at this point. Earnings for the fourth quarter were very strong. Earnings revisions are still holding in there relatively well. And the labor market, which is a big part of consumer spending, seems to be getting a second breather at this point. Voya Investment Management's Barbara Reinhardt, the Nasdaq is still down more than 5 % from its all-time high from late October.

7:47And we have this red headline crossing the Bloomberg terminal. Karen, the BBC is reporting that the UK's former Prince Andrew has been arrested on suspicion of misconduct in public office. The report shows cars arriving at the former Prince's Sandringham estate. It comes after local police said they were assessing a complaint that the former Prince may have shared confidential material with the late sex offender Jeffrey Epstein. Andrew has denied any wrongdoing. doing. Again, the BBC is reporting former Prince Andrew of the UK has been arrested on suspicion of misconduct in public office.

8:26Time 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. In New Jersey, flights in and out of Newark Airport were temporarily suspended last evening after a reported engine failure forced a JetBlue flight to return to the airport and evacuate passengers shortly after takeoff. The flight heading to West Palm Beach immediately returned to the airport after takeoff. This passenger says while everyone remained calm in the air, once they were safely evacuated on the slide, it became emotional.

9:02Everybody was panicked. The moment we got off the plane, there was a lot of release of emotions, a lot of tears and shaking and shouting. Airport operations resumed after flight 543 was removed from the taxiway. Authorities say the bodies of eight backcountry skiers have been found and one remains missing after Tuesday's avalanche near Lake Tahoe in California. Six others were found alive. Heavy snow and the threat of additional avalanches slowed the rescue effort in the mountains near Castle Peak. Nevada County Sheriff Shannon Moon. It's a very remote, rugged area on the north side of the highway there.

9:44It is not a groomed area or a ski resort area. This is a backcountry area, rugged terrain. Sheriff Moon says this is the deadliest skiing avalanche in modern U.S. history. The New York area could get another winter storm system this weekend. Bloomberg meteorologist Rob Carolyn has the latest. Michael, the weather pattern is getting rather active. We've got another weather system which is going to bring rain to the tri-state area late tonight and tomorrow, then a stronger storm system, which could potentially affect the area Sunday and on into Monday. The problem right now is the computer models aren't in agreement.

10:17Some of them take it out to sea to the south of the tri-state area, don't bring us any precipitation at all, and some of them bring it close enough to us that we'll be dealing with some snow during the day on Sunday. That would end Monday morning. We'll be keeping a watch on this over the next several days. I'm Rob Carroll and Bloomberg Radio. Global News 24 hours a day and whenever you want 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. It was quite a day at the Olympics with Michaela Schifrin winning the gold medal in the slalom and three quarterfinal hockey games went to overtime, including Team USA's dramatic two to one victory over Sweden.

10:59Women's hockey today, the U.S. versus Canada for the gold medal and Jordan Stolls goes for a third gold medal in speed skating. Just a couple days after Tony Clark resigned as the head of the Baseball Players Association, they promoted his assistant, Bruce Meyer. That's your Bloomberg Sports Update. Stay with us. More from Bloomberg Daybreak coming up after this. I'm Barry Ritholtz, inviting you to join me for the Masters in Business podcast. Every week, we bring you fascinating conversations with the people who shape markets, investing, and business. CEOs, fund managers, billionaires, Nobel laureates, traders, analysts, economists, everybody that affects what's going on in the market, whether you own stocks, bonds, real estate, commodities, crypto, you really need to hear these conversations.

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12:30and around the world on Bloomberg.com and the Bloomberg Business app. This is Bloomberg Daybreak. Good morning, I'm Nathan Hager. After the latest round of Iran nuclear talks, both the U.S. and Iran said they had made progress on a deal, but oil is on the rise this morning on reports the U.S. may be edging closer to war than many Americans might think. Here's White House Press Secretary Caroline Leavitt. The president has always been very clear, though, with respect to Iran or any country around the world. Diplomacy is always his first option, And Iran would be very wise to make a deal with President Trump and with this administration.

13:03White House Press Secretary Caroline Levitt. This morning, we're joined from Dubai by Bloomberg News Managing Editor Paul Wallace. Paul, that sounds like a veiled threat. Is that how Iran is taking it this morning? Good morning. Hi, good morning. Yes, it is a threat of Iran for sure. The thing is that the Americans in the White House, they've been pretty consistent in the last few weeks. They have said publicly that they want to try to make the negotiations with Iran work, to try to resolve this diplomatically. They've said they know it will be very difficult. Dealing with the Islamic Republic is anything but easy.

13:42But at the same time, if they don't reach a deal, if Iran doesn't agree to a deal, then it should be prepared for military action, action, which I think is something Caroline Levitt was reiterating yesterday. I think what you've got also to note is you've got a massive buildup of US forces in the region, naval ships and jets as well. A second aircraft carrier is on the way and should be in the Middle East pretty soon. So this is a huge armada, looking bigger than what the US had off the coast of Venezuela in December and at the beginning of January before it captured Nicolas Maduro. So there's a lot of military hardware there.

14:31It seems as if the US is pretty much ready to go, the military is ready to go at a moment's notice if Trump decides to go that route. And there are some people who think that even though the US is saying it will let diplomacy run its course, that it may not actually do that. It may decide to strike whilst the talks are ongoing before there's been any collapse in them. So that's something that's sort of hanging over the oil market right now. And I think that's a big reason why oil is rising. Paul, what are we hearing about whether the administration is close to making that decision? What's the latest that we're hearing?

15:07We've only got about 30 seconds left. Yeah, to be honest, I don't think it's a cliche in this situation to say only Donald Trump knows. I mean, some of the things we're hearing from the White House suggests that even pretty senior White House people don't know that Donald Trump is going to make that decision himself, and he hasn't fully let on what he'll do yet.

15:49in 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. 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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