US Seizes Sanctioned Oil Tanker Off Venezuelan Coast; Traders Flock to Safety on Oracle Woes

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1:09Bloomberg 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 new geopolitical tensions on the high seas. the U.S. has seized a sanctioned oil tanker off the coast of Venezuela. It is an escalation of tensions that have focused on deadly military strikes on suspected drug smuggling boats coming out of the oil-rich country. President Trump confirmed the move in comments from the White House. We've just seized a tanker on the coast of Venezuela, a large tanker, very large. largest one ever seized action and other things are happening.

1:57And following President Trump's remarks, Attorney General Pam Bondi posted a video on X of heavily armed forces dropping onto the ship's deck from a Black Hawk helicopter. Bloomberg's Stephen Stapchinsky reports the U.S. concluded this vessel was headed for Cuba. This is a very large crude carrier. Trump was correct. It is big, two million barrels of oil. And it's abnormal to send carriers this large to Cuba. So where was its actual destination? It's still unclear. Was it actually going to China? But either way, the Trump administration did decide to do this, saying that because the ship was already sanctioned, we have the authority to board it and take it.

2:33Bloomberg's Stephen Stepchinsky reports the Venezuelan government says the seizure shows U.S. aggression against the country has always been about its natural resources. President Trump is suggesting the U.S. should keep the oil. Now, Nathan, let's get the latest on efforts to end the war in Ukraine. A coalition of more than 30 countries will hold a virtual meeting on the latest peace proposal. Ukraine sent its revised plan to the U.S. overnight after President Trump held a call with the leaders of France, Germany and the U.K. We discussed Ukraine in pretty strong words. And we'll see what happens.

3:08I mean, we're waiting to hear our answers. President Trump says it's time for the war to get settled. Bloomberg's Oliver Crook reports three documents are under discussion. The first is a 20-point framework for peace with Russia. European leaders are trying to urge Donald Trump to come to Europe, potentially this weekend, to have discussions. Trump said that that's potentially on the table, but really he wants to have more security, that there's actual progress being made in the negotiations before agreeing to do that. Yesterday also, we had President Zelensky and a number of top Ukrainian officials meeting with Larry Fink, the CEO of BlackRock, meeting with Scott Bessett, the U.S.

3:41Treasury Secretary Jared Kushner, who seems to be involved in just about everything these days, to talk about the reconstruction of Ukraine. And that is the second document is about reconstruction. And the third document is the third and probably the most contentious. This is all about detailing what are the security guarantees going forward for Ukraine. And Bloomberg's Oliver Cook reports it remains unclear whether Russian President Vladimir Putin will agree to a deal. After talks last week in Moscow, the Kremlin said some proposals on the table were acceptable, but it rejected others. Well, let's turn to the markets now, Karen.

4:13Futures are lower following yesterday's Fed-fueled rally on Wall Street. The main culprit, disappointing earnings from Oracle. Those shares are down more than 11 percent. Revenue and operating income fell short of analyst estimates. The company's fate is deeply tied to the artificial intelligence boom, and it raised its AI spending forecast, rekindling concerns over tech shares' expensive valuations. Annabelle Droolers covers Oracle for Bloomberg. Investors were already quite cautious and you can see that drop there in the stock over the last few months, but we have seen about a drop of a third since the stock hit its all-time high back in September and certainly seems like those fears haven't been late at all because you're seeing Oracle there very much under pressure on those questions really about the exposure that Oracle has to OpenAI's business in particular.

5:00Bloomberg's Annabelle Droolers says Oracle now expects capital expenditures to reach about$50 billion. That's about$15 billion more than its September forecast. Well, Nathan, the oracle disappointment is taking the shine off the market's best day on a Fed decision since March. The S &P 500 rose seven-tenths of a percent. The Fed delivered a widely anticipated quarter point interest rate cut, but policymakers are increasingly split on the path ahead. And that vote for the cut was 9 to 3. Fed Chair Jay Powell says the central bank has a tough mandate. It's a close call. We have to make decisions.

5:36And we always hope that the data will give us a clear read. But in this situation, you have competing. If you look through the SEP, you'll see that a very large number of participants agree that risks are to the upside for unemployment and to the upside for inflation. So what do you do? You've got one tool. You can't do two things at once. The results from Jay Powell and the Fed marked the first time since 2019 that three officials voted against a policy decision with dissents on both ends of the policy spectrum. And reaction continues to pour into the decision, Karen. Jim Bianco, president and founder of Bianco Research, says he would have liked to see more dissents.

6:19I was hoping for a 7-5 vote. I was hoping for a Fed that was more divided, that was more independent, that was going to send a message to the administration. You could put a guy in that wants to go to 1%, but he's not going to bully us to cut rates next year just because he's the Fed chairman. They kind of left the door open. I think that the Fed can be bullied by the next Fed chairman to do the bidding of President Trump. That's Jim Bianco, Bianco Research. Just two policymakers, Kansas City Fed President Jeff Schmid and Chicago's Austin Goolsbee, dissented in favor of leaving rates unchanged.

6:54The other dissent was from Governor Stephen Myron, who continued to call for a larger rate reduction. Well, in company news this morning, Nathan, the battle for Warner Brothers discovery is carving up the country along political lines. And we get the details with Bloomberg's John Tucker. John, good morning. And Karen, few mergers in recent memory have been as polarizing as the battle for Warner Brothers. In Republican circles, it's become fashionable to root against Netflix and for Paramount's bid. Paramount is run by David Ellison, was close ties to the White House. And his bid for Warner Brothers is backed by Jared Kushner, son-in-law of President Trump.

7:30And the president himself had a drama yesterday. That's when he said any deal for Warner Brothers should include the sale of CNN. I don't think the people that are running that company right now and running CNN, which is a very dishonest group of people, I don't think that should be allowed to continue. Some prominent Democrats, on the other hand, are voicing objections to the Paramount effort, crying foul over the$24 billion that's coming from Middle East sources. Like many in Hollywood, Democratic Senator Elizabeth Warren of Massachusetts would prefer no sale at all. She called Paramount's offer a five-alarm antitrust fire.

8:08In New York, I'm John Tucker, Bloomberg Radio. John, thanks. There's a change in the C-suite at Coca-Cola this morning. CEO James Quincy is stepping down. He'll be replaced at the end of March by Enrique Braun, Coke's chief operating officer. Quincy assumed the CEO role in May of 2017. Under his management, Coke shares rose more than 60%, while the S &P 500 gained nearly 190 % over the same period. And finally, Nathan, it took a while, 25 years. In fact, Cisco, a bellwether stock of the dot-com era, has returned to a record after a quarter century, thanks in part to the artificial intelligence spending boom.

8:45Shares closed above$80 yesterday, taking out a peak that stood for more than 25 years. And the stock's March 2000 high is viewed by many as the height of the dot-com bubble and marked the high-water mark for the tech-heavy NASDAQ 100 index until late 2015.

9:05Time 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. The House has passed the annual defense policy bill authorizing$900 billion in Pentagon spending. But a little notice provision has drawn the ire of safety regulators. Inside the 3 ,000-page bill is a provision allowing for waivers to let military helicopter training missions without collision avoidance systems resume near Reagan National Airport. Jennifer Homendy, chair of the NTSB, says the safety board was not consulted on the bill's provision.

9:43This section to the lay reader is drafted to seemingly enhance safety. I want to be very clear that it does not in any way enhance safety. NTSB Chair Jennifer Humady says 67 people were killed last January when an Army Blackhawk helicopter collided with a regional jet in the crowded D.C. airspace. We're learning more about the suspected gunman in Tuesday's deadly shooting at Kentucky State University. Officials identified as 48-year-old Jacob Lee Bard, Assistant Police Chief Scott Tracy. Mr. Bard is a resident of Evansville, Indiana. Our investigation has determined that Mr. Bard is a parent of a Kentucky State University student.

10:33Assistant Chief Tracy also says they have identified the victim who died as 19-year-old DeJon Fox, a student at the university. Another victim remains hospitalized in intensive care. The Trump administration has approved sales valued at$686 million of technology and equipment for Pakistan's F-16 fighter jets to modernize its fleet. The sale would boost interoperability with U.S. forces and help extend the jet's service life through 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.

11:14And for that, we bring in John Stashauer. Thanks, Aaron. The University of Michigan fired football coach Sharon Moore for having an inappropriate relationship with a staff member. And then Moore's day got even worse. He ended up in a county jail suspect in an alleged assault. NBA Cup quarterfinals, Oklahoma City by 49 over Phoenix. And the Spurs won easily over the Lakers. Those winning teams advanced to the semifinals in Las Vegas. Been a rough week for the Mets. Edwin Diaz left to sign with the Dodgers. Pete Alonso left to go to Baltimore. That's your Bloomberg Sports Update. Stay with us. More from Bloomberg Daybreak coming up after this.

11:55Hello, I'm Stephen Carroll. I'm in Brussels where many of Europe's biggest decisions get made. And I'm Caroline Hepker in London. We're 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.

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12:57Coast 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, and as expected, the Federal Reserve delivered its third quarter point interest rate cut in a row to end the year. But dissents behind that decision are pointing to an uncertain path ahead. Fed Chair Jay Powell says the committee's trying to get the balance right. This further normalization of our policy stance should help stabilize the labor market while allowing inflation to resume its downward trend toward 2 % once the effects of tariffs have passed through.

13:33Fed Chair Jay Powell at the Post Decision News Conference heard live on Bloomberg Radio. We're joined now by Jennifer Lee, Senior Economist at BMO Capital Markets. And Jenna, I'd love to get your reaction to this decision and the messaging we heard from Chairman Powell on the upside risks to both employment and inflation. Good morning. Good morning, Nathan. Thank you very much for having me on. When I first saw the press statement, it was like reading a book or watching a movie. It was like this plot twist all of a sudden, except it's not a movie. It's not a book. This is like real life. And I think the message that he was trying to send during the press conference was how much uncertainty there is.

14:12And again, emphasizing that, yes, he did say it was a close call, but it doesn't sound like that to me. I think he was sort of downplaying how much dissension there was potentially in the committee. Yeah, we did get three dissents for the first time since 2019 on both sides. And some policymakers who weren't voting saying they would have called for keeping rates on hold as well. What does that signal about what we could get next year? So we are, you know, we so much could happen. And in terms of, I mean, right now, it was interesting how, you know, we started off the year talking about how dovish all the central banks are.

14:47And now we're ending the year talking about rate hikes. So I think it's obviously still early to see what's going to happen in the next 12 months. But, you know, I still think we're going to see rate cuts. Obviously, it's not going to be in quick succession. It's not going to be in 50 basis point moves as Governor Myron had preferred. But, you know, we're still sticking with our call of, you know, probably about another two or three cuts, but spaced out. Waiting to see how the data pan out. Waiting to see how what happens with the job market. Are we actually seeing job cuts? You know, what are the stats saying?

15:18What's going to happen on the inflation front? I still think inflation is going to remain quite sticky. And that's going to prevent a larger number of rate cuts. So I think two or three rate cuts is still quite reasonable right now. Well, what's your view on the reliability of the data since we have kind of holes in it due to the government shutdown? I don't know. So that's a big question. I mean, obviously, when we had the shutdown and then everyone was hustled back to work and said to get those surveys out, the first thing I was wondering was how reliable will this data be? So I'm going to be interested to see how the revisions are going to fare.

15:57We always see revisions anyway, regardless, but how big they will be will be interesting. So I think because of that, we have to wait at least a few more months to see how the data fare, what the stats are saying. how the revisions are going to show, what the revisions are going to show. And then that's how they're going to be making the decision, because right now they can't make the decision on data that they're questioning, you know, that how reliable they actually are. 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.

16:35Eastern 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. Search Bloomberg News Now on your favorite podcast platform to stay informed all day long. I'm Karen Moskow.

17:12And 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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