US Readies Isolation Plan for Iran; Trump Tariffs on Drones

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1:20You'll have everything you need to scale your go-to market efforts. Elevate your wins with Adio. Start your free trial at adio.com slash iHeart. 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 on the war with Iran. The U.S. is preparing for unprecedented economic isolation measures against Tehran. Treasury Secretary Scott Bessent says it's part of the Trump administration's effort to squeeze the regime's finances. The kinetic war ended after several weeks and we went from epic fury to economic fury and at the president's orders we have raised the level even again and watch this space for more announcements coming next week because we are going to apply measures like have never been seen in the history of economic isolation on a country.

2:27And Treasury Secretary Scott Besson told Newsmax the economic pressure will be part of a one-two punch that includes the continued blockade of Iran's ports. The Iranian economy has taken a major hit, industrial capacity is damaged, and crude oil exports have been severely curtailed by the blockade. Well, oil rose, Nathan, after the U.S. threatened to impose the economic measures against Iran, and checking prices now. NYMEX crude oil is up 1.5 % at$82.49 a barrel. Brent is up 1 % at$87.92. Francisco Blanche, head of commodity research at Bank of America, says dwindling inventories are a concern.

3:05Last six months, right, we've had this massive negative supply shock in oil. And many people are surprised that it hasn't created a collapse in economic activity. But part of the reason is we have very high inventories. we've lost about 12 to 1 ,300 million barrels of oil as a result of the Iran war. About two-thirds of that gap has been met by inventories, which means GDP growth has only come down maybe 30, 40 basis points globally, as opposed to 1, 2, 3 percent. So we can play that game for a little longer, but we're getting close to the end of the rope. And Bank of America's Francisco Blanche's comments come as Bloomberg reports, super tankers are going dark for longer to get oil through the Strait of Hormuz and the Bab el-Mondeb Strait, doubling down on tactics honed in the early days of the Iran war.

3:50And staying with geopolitics, Karen, the Trump administration is now imposing tariffs of up to 100 percent on imported drones and drone components as it seeks to reduce reliance on foreign suppliers. Smaller drones will face a 25 percent duty, while even lower rates will apply to some trading partners, including the European Union, Japan and the UK. The move risks accelerating a decoupling with China. It is the world's biggest drone maker and U.S. drone exports from China have been cut in half in the first half of this year. Well, let's turn to bonds now, Nathan. There was a decent demand from buyers as the U.S.

4:22sold 30-year government debt yesterday, but the Treasury had to offer a yield above 5.2 percent to sell$25 billion of bonds. That's the highest rate since 2001. Bloomberg Intelligence's chief U.S. interest rate strategist, Ira Jersey, says years of elevated inflation and deficit-fueled spending add to the strain on government finances. The U.S. Treasury now is competing with other countries worldwide, whereas for the better part of two decades, we were the highest-yielding developed market, liquid bond market in the world. That's just not the case anymore. There is competition. And Ira Jersey with Bloomberg Intelligence says concerns over paying down government debt will grow as debt to GDP rises.

5:01The U.S. spent close to$1.2 trillion on debt interest so far this fiscal year of 15 percent from a year ago. And Karen, global stocks are headed for a third straight weekly gain amid optimism over the A.I. trade and cooling inflation, bolstering bets the Fed won't have to raise interest rates. But some officials are raising the alarm about sticky inflation. Cleveland Fed President Beth Hammock, one of the three dissenters at last month's meeting, doesn't have confidence that recent signs of an inflation slowdown will continue. We've gotten two recent reports on the inflation side that are definitely better than the earlier five months that we've had this year.

5:40And so it's welcome. I love to see that those numbers are coming in lower. That's a good thing. But I don't have confidence that we're going to continue to see that or that we're going to see them low enough that it's going to bring us back down to that two percent number. At an event at the Dayton Area Chamber of Commerce, Cleveland Fed Chief Beth Hammock reiterated her call to raise rates now. Nathan, there's still disagreement among Fed officials. Richmond Fed President Tom Barkin argued to hold interest rates steady due to signs that inflation is declining. Speaking in South Carolina yesterday, Barkin said elevated inflation is coming from tariff and war shocks, which should pass.

6:14He acknowledged the risk that some price pressures could become embedded, forcing officials to tighten policy. In tech news this morning, Karen, sources tell Bloomberg that OpenAI is on track to generate more than$40 billion in annualized revenue. That would roughly double its run rate from the end of last year. Bloomberg Markets editor Sam Unstead says the momentum strengthens OpenAI's case for a future Wall Street debut as competition with Anthropic intensifies. The thing to keep in mind with these two, with OpenAI, Anthropic as well, a pair of them are kind of trading off at the moment, and bolstering their own strengths and bolstering up their plans for an IPO later in the year for each company.

6:52And both IPOs expected to be enormous deals. So as they come up to that, I think you're likely to hear much more of this, of how strong those businesses are, how good the revenue run rates are, and then how good the outlooks are as well. Bloomberg Sam Unstead says OpenAI's growth is being driven by AI coding tools, subscriptions, and a small but growing ad business. Nathan, Elon Musk's stake in SpaceX is valued at nearly $907 billion. Based on the company's latest share price, Musk held a 48.4 % stake in SpaceX as of June 30th, according to a regulatory filing, but says some shares only vest on crazy good outcomes.

7:28Despite owning less than half of SpaceX's economic equity, Musk retains more than 82 % of the company's voting power. And Karen Reddits set to join the S &P 500 before the start of trading on Tuesday. It's part of an off-cycle change. The social media site will replace Avalon Bay Communities on the index. Right now, Reddit shares are up 12.5 % pre-market. In legal news, Luigi Mangione is expected to plead guilty, Nathan, to resolve federal charges relating to the fatal shooting of United Healthcare CEO Brian Thompson. And we get more with Bloomberg law host, June Grosso. Sources tell Bloomberg that prosecutors will recommend that Mangione serve life in prison.

8:09The plea would come at a hearing set after federal prosecutors and defense lawyers jointly requested one. Court records did not identify the purpose of the hearing. The 28-year-old Mangione is facing both federal and New York state charges over the shooting of Thompson in December of 2024 outside a Midtown Manhattan hotel. June Grosso, Bloomberg Radio. June, thanks. Los Angeles Dodgers owner Mark Walters offered to pledge his stake in Guggenheim Partners as collateral to secure loans for his TWG Global Holding Company. The firm's been exploring deals with investors to clean up loans on the insurer's balance sheet that have drawn scrutiny from federal prosecutors.

8:48Sources tell Bloomberg proceeds from Walters' recent sale of the Los Angeles Lakers will help accelerate TWG's efforts to clean up that balance sheet. And finally, Nathan, 2026 is projected to become the world's hottest year ever. That's according to the nonprofit Berkeley Earth. An unusually powerful El Nino weather phase is raising the odds that this year will surpass 2024 before 2027 sets a new high. Time 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.

9:24New York City's Pied-a-Terre Tax is back on for now. The story this morning from Bloomberg's Charlie Pellett. The rollout of New York's Pied-a-Terre Tax can proceed after an appeals court in Brooklyn temporarily put a hold on a Staten Island judge's order blocking the plan. The court stayed the restraining order that was issued earlier in the week in a lawsuit filed by a group of homeowners. The tax was signed into law in May by Governor Hochul, and it targets single-family homes worth$5 million or more, and apartments worth$1 million or more. In New York, Charlie Pellant, Bloomberg Radio. Defense Secretary Pete Hegseth is pushing back in reports for the Military Times that outlines deteriorating conditions aboard the USS Abraham Lincoln.

10:09Completely misrepresented. Listen, we make sure that every ship, every crew, every captain has everything we can provide them at every single moment. The Lincoln is deployed as part of combat operations in the Mideast. The ship has spent 250 days at sea. The report alleges at least one sailor attempted to go overboard. Senate Democrats say they've heard of safety concerns, water contamination, and shortage of basic supplies. More storms heading the Midwest overnight in areas that have already been hammered over the last couple of days. Thunderstorms into this morning may create rainfall rates of up to two inches per hour.

10:45Harvard University has won dismissal of a federal lawsuit claiming it had turned a blind eye to anti-Semitism and discrimination against Jews and Israelis. U.S. District Judge Richard Stearns ruled the Justice Department didn't sustain its claims that Harvard violated a civil rights law. And President Trump plans to highlight his record on crime and safety during a visit to New York today where he's going to release new FBI crime statistics. Trump is visiting Nassau County's Police Academy. The visit aimed at boosting Republican candidate, Republican Bruce Blakeman. Global News, 24 hours a day and whenever you want it with Bloomberg News Now.

11:22I'm John Tucker. This is Bloomberg. Karen. Thanks, John. Time now for our Bloomberg Sports Update. And for that, we bring in John Stashauer. Thanks, Karen. Baseball for the third time held a Field of Dreams game in Dyersville, Iowa. a tribute to the 1989 movie, and 26 Hall of Famers emerged from the cornfield before the game. The Phillies then beat the Twins 7-1. Kyle Schwarber hit two home runs. NL division leaders met in L.A. and Milwaukee with three runs in the ninth inning, beat the Dodgers 5-4. Five-way tie for the lead after the first round of the St. Jude Golf in Memphis includes Jordan Spieth.

11:56Scotty Scheffler trails by three. That's your Bloomberg Sports update. Stay with us. More from Bloomberg Daybreak coming up after this.

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13:35The effort marks an expansion of DoorDash's in-house robotics efforts to reduce reliance on human couriers for some orders, as their wages constitute a key expense to the business. Drones are also a way for DoorDash to cut delivery times on orders from more remote locations that some dashers may not want. That's the Bloomberg Tech Minute brought to you by ChatGPT. Put ChatGPT to work on your most ambitious ideas and projects. Get started at ChatGPT.com today by selecting Work Mode. Available on Plus and Pro Plans. Everyone's talking about how AI is transforming work, especially in sales. While the landscape shifts, one thing remains the same, the thrill of closing a deal.

14:18Whether it's a gong or a confetti machine, every team has its celebration rituals. Adio is designed for that moment. It's the agentic CRM that turns customer signals into actionable insights, helping you close deals faster with revenue agents and automations working around the clock. You'll have everything you need to scale your go-to market efforts. Elevate your wins with Adio. Start your free trial at adio.com slash iHeart. Bloomberg.com and the Bloomberg Business App. This is Bloomberg Daybreak. Good morning, I'm Nathan Hager. As the impasse continues with Iran over the Strait of Hormuz, the Trump administration's leaning even further into economic pressure to try to get Tehran to bend.

14:56Treasury Secretary Scott Besson says, quote, watch this space for even more announcements next week. It will be a combination of economic isolation like the world has never seen before and the continued blockade in the Strait of Hormuz. That was Treasury Secretary Scott Bessent in an interview on Newsmax. And joining us this morning from Dubai is the head of Middle East coverage for Bloomberg News, Stuart Livingston Wallace. Stuart, it's good to speak with you again this morning. I know Secretary Bessent didn't reveal his cards much in terms of what that economic isolation could look like. boat.

15:29Do we have a sense of what the Trump administration could be considering on top of what it's already imposed on Iran? Good morning. Yeah, good morning, Nathan. I mean, that last bit is a very good point. This is a country that's been under sanctions for 40 plus years. It is arguably, well, certainly one of the most sanctioned countries in the world. It was probably overtaken by Russia a couple of years ago, but it's kind of up there. So the remaining options, we think, are probably something along the lines of shadow banking, cryptocurrencies, is maybe even secondary sanctions. That is, the third parties that trade with Iran.

16:01But the reality is that there's a dwindling number of countries that are prepared to do that trade precisely because of the threat that they themselves would be damaged economically and sanctioned. So it's clear that the intention here is to squeeze Iran even further. But again, even on that point, it has to be acknowledged that Iran's economy is in pretty dire straits as it is. You've basically got hyperinflation. You've got rolling blackouts across the country because they can't maintain the grid. Again, very difficult to get trade in or out. But we also know that Iran has had a lot of practice and is quite skilled at evading sanctions.

16:34But it'll be interesting to see what comes next week for sure. And to that point, the fact that Iran has managed to weather so much of this pressure all this time, we've heard from Iran's military that it's reorganizing its leadership to be more agile and aggressive, for potentially preparing for protracted conflict in the Middle East. What does that say about what Iran's thinking might be right now? I mean, it does seem to be the same playbook. I have to say that it's something surprising to sort of hear that they're, you know, changing their stance to a more aggressive posture when, you know, particularly for those of us living in the Gulf.

17:08I mean, I think the last several months of, you know, could only be characterized as quite aggressive in terms of the thousands of missiles and drones that were fired, you know, across the Gulf. Having said that, I mean, it's clear that their view is that they have gained unexpected leverage in a way that I don't think even they were expecting. And I'm talking specifically here about poor news and from that, obviously, a stranglehold over energy flows and other commodities to the global economy. And they're not willing to give that up. So I think what we're seeing for the US administration is, yes, you're going to have the pressure of the blockade.

17:41And that is for sure curbing Iran's ability to get its own oil out. but at the same time continuing to squeeze it economically. And between those two things, hopefully pushing Iran into some sort of concession, particularly when it comes to Hormuz, but on that much wider raft of issues, including nuclear proxies, missiles, and so on. It's a very, very long list. 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.

18:19Wall 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. 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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