New Front In Iran War; Big Tech Earnings Falter

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 a widening war in the Middle East.
Iron backed who the militants have claimed their first attack
on commercial shipping in months, targeting two Saudi Arabian oil
tankers in the Red Sea. It comes after the US
carried out a twelfth straight night of attacks on.
Iran's military sites.
President Trump is not indicating he's ready to go back
to the negotiating table.
They're not ready to make a deal.
Because every time they make a deal they want to
change it and everything.
They're not ready. They'll be ready very soon.
President Trump spoke at a rally in Marietta, Georgia. We
get more from Bloomberg Middle East Managing editor Paul Wallace
in Dubai.
Effectively, the houthies have now opened a new front in
the US Iran war, and this comes about three days
off to the Hufi's said effectively that they were going
to attack ships calling at Saudi Arabian ports. And this
is extremely worrying for not just the Saudi Arabians, but
for the US and its allies, and the global oil market.
Bloomberg's Paul Walls reports the Red Sea had emerged as
a key workaround for oil exports, particularly for Saudi Arabia.
With the Strait of Hormuz effectively shut down.
Well Nathan, As the conflict appears to be escalating, the
Houses passed in ninety five billion dollar budget plan to
keep the war going. It's part of a two step
process that would let Republicans fast track seventy three billion
dollars for the war without Democratic votes and billions more
in aid to farmers hit by terraff retaliation and war
related price increases. How Speaker Mike Johnson was able to
unite Republicans behind the bill.
We continue to deliver for the people, and we're going
to continue that streak all the way through the end
of this year and into the next tigers.
How Speaker Mike Johnson spoke on Capitol Hill. No Democrats
voted for the measure. Party leaders say they plan to
make the vote a centerpiece of their campaign to retake
the House in November.
And the Senate.
Karen President Trump's top trade negotiator, Jamison Greer, says the
US will remain intent on tariffs as the Trump administration
prepares to replace the duties that the Supreme Court struck down.
Bloomberg Zamy Morris reports from Washington.
US Trade Representative Jamison Greer told lawmakers that tariffs are
here to stay even after the Supreme Court ruling, because
they'll find a way. Since the ruling, the President has
already signed orders to impose a fifty percent tariff on
Canadian goods, Plus the administration has proposed ten percent tariffs
on more than eighty countries. US Trade Representative Jamison Greer.
The specific authorities this administration is using have changed, but
the trade strategy has not. We are committed to continuing
to use tariffs and to negotiate deals to support the
reindustrialization of our economy, protect American workers, and increase their wages.
Lawmakers also grilled Greer on reimbursement of the terrace for
small businesses and American consumers in Washington.
Amy Morris Bloomberg Radio.
All right, Amy, thank you. He turned in the markets
now where futures are lower following a couple of high
profile tech earnings. So we begin with alphabet shares of
the Google parent. They are down three and a half
percent in early trading. The company is raising its capital
spending forecast to as much as two hundred and five
billion dollars this year and as reigniting concerns about a
lack of fiscal discipline and the race to dominate artificial intelligence.
Tom Giles is Bloomberg's executive editor for Technology.
We thought they were spending a lot before, and this
quarter they came out and said, hold my beer, we're
spending even more than we said. These are unprecedented numbers, hundreds.
Of billions of dollars.
They raised the two as much as two hundred and
five billion.
It really speaks to.
The urgency of obtaining the chips and the infrastructure, the
data centers that are needed to fulfill their AI ambitions, that.
Is the Google parent alphabet.
As far as earnings in the quarter, Bloomberg's Tom Giles
says Google's cloud revenue total to better than expected twenty
four and three quarter billion dollars. That was up eighty
two percent from a year earlier.
And Karen shares of Tesla are going in reverse as well.
This morning, they're down more than five percent. Profit tumbled
despite a strong quarter for the automotive business spending on
ambitious initiatives like robots and AI surged to five point
eight billion dollars, and that resulted in Tesla's first cash
burn in two years. The company still expects capital expenditures
in excess of twenty five billion this year. Here's CEO
Elon Musk on the company conference call.
We should be spending on capex as fast as we can,
spend as fast as we can without it without it
being too graceful. So I'm enough trying to aim for
like some extremely high efficient efficiency capital spend because that
would slow things down. So it's kind of it's a
balance between like how much cut yeah, capital efficiency.
Versus time and Tesla COEO Elon Musk also said he
could not comment on a possible merger with his other company, SpaceX.
Well, Nathan.
We also got earnings from IBM MA tech giant re
announcing an earning shortfall earlier this month, and now it
cut its full year sales out look, including for its
closely watched software unit. It's been a rough year for
Big Blue. IBM shares have declined thirty one percent this year,
including a twenty five percent drop in a single day
after the preliminary earnings were announced, and.
The big tech earnings continue this afternoon, Karen, when chipmaker
Intel reports its latest quarterly results, Let's get a preview
from Bloomberg Tom Busby.
After falling behind rivals like AMD and Nvidia, Intel has
roared back to life thanks to a turnaround effort aimed
at capitalizing on the boom in artificial intelligence spending and
rising demand for its Xeon server chips that helped make
up for a sluggish PC market hurt by a shortage
of memory chips. Bloomberg consensus calls for revenue of fourteen
point four to three billion dollars and adjusted earnings per
share of twenty one cents.
Tom Buzzby, Bloomberg Radio, All right, Tom, thank you.
US Treasury yields are trading your two month highs ahead
of next week's Fed decision, and Bloomberg's John Tucker joins
us with the latest.
John, Good morning, Good morning, Karen.
The jump in yields were flags, among other things, the
surgeon oil prices.
That's inflation.
Man.
It could force the Federal Reserve to raise interest rates.
Traders see roughly a thirty percent chance that is going
to raise rates at their policy meeting next week. You
also have to consider the strength of expected growth, the
higher cost of capital, the swelling government deficit, and the
investment boom in AI yields. On Tuesday, they were hired
by roughly two to five basis points across maturities, with
a tenure hitting the highest since late May, and so
far this year, the thirty year bond, the long bond
has traded beyond five percent for twenty eight days. That
is the longest stretch since the dawn of the financial crisis.
In New York. I'm John Tucker, Bloomberg Radio. All right, John,
thank you.
The FED decision might not be till next week, but
its decision day. In Europe, where the European Central Bank
is forecast to leave interest rates unchanged, policymakers are continuing
to assess the impact of renewed fighting in the Middle East.
Economists and traders expect the ECB to keep rates at
two and a quarter percent after raising borrowing costs at
their last meeting.
Well Nathan, the UK's new chancellor, says he will back businesses.
In his first major meeting with the City of London,
John Healey spoke to executives at Bloomberg's headquarters in London
this morning.
My message to British business is quite simple. To British businesses,
to British innovators, to British investors. I will back you
as your chancellor, and I'll back you in financial services,
in technology, in retail, in industry, in all parts of
the economy.
And John Healey succeeded Rachel Reeves as the UK's Finance
Minister after Andy Burnham took over as Prime Minister on Monday.
Man Caron Another signed this morning that artificial intelligence is
affecting the job market. Uber says it has cut ten
percent of jobs in its customer service operations. The right
hailing company says it's part of a broader effort to
simplify its ranks and quote embrace artificial intelligence.
Now.
This marks the first time Uber has tied layoffs to AI.
Businesses from financial services company Block to cloud provider Oracle
have cited the technology as a reason for job cuts
in recent months.
Time now for 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 New York Mayor's aroun
Mumdani and Council Speaker Julie Mennin are at odds over
the city's response to a legionnaire's disease outbreak. Menin is
calling it a failure and ma'm donnie is defending his
administration's actions. Mam Donnie has been criticized for spending time
on issues outside of his controls, such as calling for
the arrest of Israeli Prime Minister Benjamin at Yahoo. Meanwhile,
Menin highlighted key vaccines in the Health Department and a
lack of guidance for affected neighborhoods. Doctor Daniel Kablifski, an
infectious disease specialist with Mount Sinai, says legional bacteria can
spread when cooling towers release contaminated water particles into the
surrounding environment.
I think in terms of the number of cases that
we've seen, we are probably on the tail end of
the peak, so we're probably going to see decrease those
number of cases.
The legionnaire's outbreak on Manhattan's Upper east Side has grown
to at least five confirmed deaths and eighty two cases
confirmed ebola deaths. In Democratic Republic of Congo have prompted
a warning that the outbreak could become one of the
worst on record. Deaths have doubled in just over two weeks,
with the National Institute of Public Health reporting two five
hundred and thirty six cases and one thirty three deaths.
Doctors without Borders Trish Newport says the response is just
not big enough.
So if we don't have proper surveillance in place, if
we're not able to monitor every single person that was
in contact with a brigecase, every single person that's at
risk of developing the disease, if we're not able to
monitor this, the outbreak will continue.
Tris Newport.
With Doctors Without Borders, a modeling scout with close ties
to late sex offender Jeffrey Epstein has been found dead
at his French home. Daniel Siad was accused of raping
a Swedish model in France in nineteen ninety and was
one of the subjects of her probe into Epstein's links
in France. Global News twenty four hours a day and
whenever you want it with Bloomberg News Now not Michael
Barr and this is Bloomberg, Karen.
Thanks Michael, Time Now for our Bloomberg Sports Update, and
for that we bring in John stash Hour.
Thanks Karin. The streak is over. The Red Sox, in
the day part of a double header in Boston, scored
four runs in the first inning and beat Baltimore six
to three. That made it fifteen wins in a row,
ty in the club record that had been held since
nineteen forty six. Tried to break the record of the
night gap, but the Oriel scored four in the first
and one five to one. In New York, the Yankees
and Pirates also with a day night doubleheader. Pittsburgh won
five to three and ten Indians, and then the Yanks
got the split with a tune up in Winnows. Max
Fried returned from injury and through five scoreless Indians. That's
the Bloomberg Sports Update.
Stay with us.
More from Bloomberg Daybreak coming up after this.
Coast to coast on Bloomberg Radio, nationwide on Sirius XM,
and around the world on Bloomberg dot Com and the
Bloomberg Business Apple.
This is Bloomberg Daybreak. Good morning, I'm Nathan Hager.
The war in the Middle East appears to be expanding,
with the rounbacked Houthi militants claiming an attack on Saudi
oil tankers in the Red Sea, as President Trump indicates
he has no plans to let up on a Ron's
threat to the Straight of hor moves we don't.
Need the Hormone Street, but we do it because we
have to do it, because we.
Cannot let Iran have a nuclear weapons.
Verse I was President trumpet a rally and Marriott at
Georgia joining us from Istanbul this morning is Bloomberg Middle
East Breaking News editor Patrick Sikes. Patrick, give us more
details if you could on this reported hooth the attack
and the significant of potentially having strikes in the Red Sea.
Good morning morning.
Yes, we know that the Huthis have hit at least
one they claim two tankers, but we know they've hit
at least one refined products tanker in the south of
the Red Sea. That's been confirmed by the British Navy
as well. It's significant because it is the first time
they've successfully acted on this blockade on Saudi ports that
they announced a few days ago. That means that in
practice there is now a whole new front in the
Iran war, and it'll just amplify in the minds of
ship owners of traders the dangers of trying to do
business in that part of the world. They're now wrestling
with not just one choke point straight Orfward Moves being
effectively closed, but a second as well. So that means
if you wanted to get from the Saudi port of
Yamboo on the Red Sea to a crude buying market
in Asia, for example, you've now got a choice between
risking the passage through that very narrow strait control by
the Huthis, or going all the way into the med
and potentially all the way back around Africa. So it's
huge disruption for shipping that will add costs and create
logistical challenges even if ships are able to avoid the
security risk.
And just looking at the price action just this morning,
Brent crude is trading back close to one hundred dollars
a barrel. Once again, what are we hearing from market
participants about what the impact on the oil market could
be and where things could go from here?
Yeah, I think it underlines that with in particular this
opening of a second front, the risk for shipping that
it creates. It brings us back into the much more
highly escalated territory that we were in at the height
of the war back in March April kind of time.
How far that goes really depends on the duration of
the disruption. Right, if the US strikes that have so
far been trying to degrade Iran's ability to threaten the
straight orform is to reach some kind of breakthrough, or
if some other kind of security assurance guarantee was to
be provided that would alleviate some of those security concerns them,
we would see more product coming through to market and
in turn the price coming down in line with that.
But for now is the opposite. We're seeing only increased risks,
and there seems to be no for the moment assurance
on the security side that would alloy those risks.
This is Bloomberg Daybreak, your morning podcast on the stories
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