Diplomatic negotiations between the US and Iran regarding the Strait of Hormuz and nuclear program have significant implications for global energy markets and financial stability, as geopolitical developments can rapidly influence commodity prices, equity markets, and inflation expectations through supply chain disruptions and risk premiums.
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Thursday Trading - 28/05/2026 | Natural gas + Crude +Gold + Crypto + ForexHinzugefügt:
Hello everyone. Good morning, good afternoon, good evening to all of you.
Welcome once again to this live start session. Uh morning session off evening session now open.
Okay. Hulka gap up volatility right now news actually US I think 5:30 New York open volume expect 5:30 6 p.m. US GDP data unemployment claims and then 7 p.m. US market open and then 7:30 new home eventful natural gases one-sided natural gas from the bottom area expens Second half easily last which is out of the money by the way dollar index $99 around continuously trade gap down morning sorry gap upside moment Then still positive right now.
Candle sell 4380.
Similarly silver that is now $73. Let's see.
Proper move crude oil $9187 $882.5 $91 Holdex market recently MC CX launch weather future contract Indian weather trade to they can trade from there as well rainfall uh future also there rainfall future trade.
This is India's first exchange traded weather derivative right now. NCDX trade starting with the volume but you can expect what kind of weather will be in future and according to that you can hedge option buy option sell through electricity future Ready.
According to Iran IRGC affiliated Tasmin news agency, a number of vessel attempted to transit westbound through the straight of Hormos without coordination with Iran Navy formed Persian Gulf trade authority and following warning from the IRGC and they were stopped and turned back According to a statement published this morning by US Central Command, last night Iran launched a ballistic missile towards Kuwait that was successfully intercepted by Kuwaiti air defense in what they refer to as an agrious a ceasefire violation by the Iranian regime.
Additionally, Sandcom confirmed that it downed a total of five oneway attack drones launched yesterday by Iran which posed a clear threat in and near the straight of Hormos while a sixth was struck at an Iranian ground control site in Bundraas.
Crude oil will continue at this Silver expansi normally 3 months you know monthly option seller you know made good amount of money option I'll go there.
US GDP data prelim GDP last time 0.7 is but 2.0% 0% expected last time expected quarteronquarter basis unemployment claims last time expected not good data we will see that Nifty Indian market Close the water.
Recover down confirm almost Indian market maybe already gap selling zone. Get on.
Forex market.
Resistance market continuously open to low candum.
Almost 5 point this particular zone selling price sell off Cooper.
First 15 minute candle close 530 session open volume suddenly spike 6 p.m. 6:30 6 p.m. Important data schedule natural gas crude palm oil ends higher on strength in crude Candle open equal to low natural gas.
Natural gas first 15 candle looks like both buying or selling rejection.
First 15 mic candle important here Resistance support also very far right now.
Gold mini options exp.
Gold mini options expiry tomorrow.
Trading session a month for Saturday, Sunday close.
Okay. 5:30 London session about New York session open crude oil till 6 p.m. Important data GDP crude oil impact normally. Yes, but price that is not good actually.
Candle confirmed.
level remove very clearly. So it is on resistance crude oil. We need to wait for the selling confirmation. to you.
Data stuck. Important. First 150 candle low.
Natural gas first 15 candle.
be bullish completely because resistance but candle is clearly saying let's see 6:30 data maybe deciding 6 p.m. Data 7 minute left.
NYX New York exchange gap up gap down electronic trading session US trading sessionapding because of price discovery.
actual you can use those charts rather than any forex broker chart but paid version latest free version trading view trade.
Forex chart, crude oil because Forex chart or resistance 2 minute left.
Let's see.
5 days, no losses on the S&P 500.
Equities pulling back just a bit this morning, though. We'll see if this move sticks. We'll see if it holds. We're down by 210 of 1% going into PCE data in just a moment. On the Nasdaq, we're down by 0.3. In the bond market, yields are higher across the curve, particularly at the front end, by three basis points, the 4.06% 06% with crude elevating and fueling this move. We're up by 2 to 3% throughout much of this morning. With your inflation data and more, let's cross over to Mike McKe. Good morning, Mike.
Good morning, John. Where to begin?
Let's do jobless claims because it's not going to really move the markets today.
215,000, up from 210,000, but still showing a stable labor market. Now, as far as inflation, which is the Fed's main concern these days, we're looking at PCE inflation up 4/10en of a percent, a tick lower than what had been expected on a year-over-year basis. That still puts us at 3.8%, up from 3.5%. Remember, the headline PCE is the Fed's 2% target.
Core PCE up 210en of a percent, a little bit less also than expected, and that puts us at 3.3%, the expected figure, up from 3.2%. 2% in March. So, more inflation uh on a year-over-year basis.
Personal income was flat on the month.
Personal spending up by half a percent, which was as expected. That's a little bit down from the 9/10 that we saw back in March. So, uh some movement on the consumer side, a little bit less spending, but still fairly strong with inflation up. Now, the biggest question is, uh how much of that spending was because of inflation? the increased spending was because of inflation. We also have durable goods orders out up 7.9% on a headline basis after an 8/10en% gain in the month of March. Now you take out transportation and it falls to 1.1%. So there's a big Boeing effect there. And then capital goods orders non-defense xair this is what really matters down 1.1% after rising 3.9% in March. The expectation was for a 4/10en gain. So, some mixed news on consumers and business spending and some as expected news on inflation. It's rising still.
>> Mike McKe, thank you. Just on the margin, not as bad as expected. So, equity futures with the smallest of bounces off the low. Equity futures down by close to 210 of 1%. Yields at the front end of the curve were advancing by close to three basis points, now up by around 2 to 4.05%. Much of the move this morning, the epicenter for it out of the commodity market. Brennon WTI is still higher by more than 2%. Elev inflation is elevated bottom line. And ultimately for this Federal Reserve, this number is still uncomfortable. Even if you get a small downside surprise on a month-over-month read, this number year-over-year still uncomfortable, >> especially because people continue to spend. What I find notable, and you're right, that on the margins, this is a downside surprise, the right kind of downside surprise, but still we're 3.3% year-over-year. When you take a look at the personal income and the personal spending and the real personal spending, you can see the income is actually slowing down or actually not growing at all but spending is increasing either at pace or above expectations. This suggests that people are dwindling their savings in a significant way. I just wonder how sustainable this type of trend is if the averages reflect anything real on the under.
>> I think it's the right question. Lisa Mike, I hope you're standing by still because I think that's the ultimate question for economists right now. Can the spending keep up with higher prices if you're not seeing it in incomes in this country?
>> Well, that's the problem because people tend to spend out of their incomes, out of their paychecks, especially at the lower income levels. Uh the folks who get uh more money from assets aren't affected, but the personal savings rate dropped significantly to 2.6%. So, it does show people were going into their savings to keep up the level of spending. And so that uh along with the drop in the overall spending rate portends maybe a consumer slowdown ahead. People paying more for gasoline, people paying more for food, they may have less for other categories. Mike McKe, appreciate it, sir. Mike McKe down in Washington DC. Matt Lazelli of Deutsche Bank with us around the table here in New York. Matt, good morning.
Good to see you. Morning.
>> What's the first take, the early take for you?
>> Yeah, you notice the the the inflation data. I think that we contextualize it within the past several years and we think about 3.3% as being the highest since 2023. Now, now obviously that's not a good outcome, but I think if you strip out the the co- driven inflation, this is actually the highest core PC inflation rate since 1992.
Um we are moving in the wrong direction away from from 2%. Uh and our view is that this is not simply about temporary supply driven factors, tariffs and energy prices that there is an underlying demand force that is more important. trend inflation is stuck closer to 3% and that therefore it is entirely appropriate for Fed officials to be thinking about raising rates >> thinking or actually raising rates.
>> So far thinking uh our view is that the Fed is on hold that they are roughly at neutral. I think you need to have a a shift in the narrative um from the Fed that needs to take place. They need to downweight the idea uh that this is about temporary forces. They need to downweight the idea that the labor market is not a source of inflationary pressures because I I agree with that. I think as you look more broadly, the economy is a source of inflationary pressures. The the capex data that we just got was a little bit softer. U but you were looking at uh very strong uh AIdriven uh capex growth. When you look at the output gap according to the CBO, it's plus 1.1 percentage point. You would expect that inflation is well above the Fed's target given that output gap and given that demand backdrop.
>> Can the economy remain inflationary if people's incomes are not keeping pace and if they're spending out of savings pools that are dwindling? Yeah. So, I think that's that's an open question and and the the income data this morning was definitely disappointing. I think that you have a consumer backdrop that can weather higher energy prices for a period of time. We have the benefits of the one big beautiful bill from tax cuts. You have a labor market that is producing meaningful income growth. You have one 4% nominal income growth year-over-year. Wealth to income ratios are near record high levels. So, I think the aggregate picture can continue to support a consumer that that is spending. Obviously, that's not true across the income distribution. You have households at the lower end that are more negatively impacted by gas prices, more negatively impacted by by higher interest rates. And so you're still going to have this great dispersion, I think, across consumers.
>> If the Fed did hike rates, would that slow any of the inflation in the economy that seems to be independent of Fed funds?
>> Yes. So I I think that's, you know, a question that I get asked a lot. Uh in particular, is AIdriven capex going to slow simply because the Fed raises rates by 25 or 50 basis points? And the answer is probably no. Um the other you know point is that if it is demand driven you have to soften or weaken the economy in order to bring inflation back down to 2%. I think there was a period of time where we were all optimistic that the Fed and the economy was going to be saved by supply forces that the big labor supply boom that we had and productivity growth was going to save the economy and bring inflation down.
You know we are now entering a sixth year of of high inflation. Um my view is that there's not very much evidence that you can get inflation back down to target without demand weakening. Uh the question is when does the Fed conclude that they are accommodative and they're not restrictive enough in order to get inflation down to 2%.
>> Do you think it would be appropriate for them to just shift to a 3% goal or a 2% average say over a 100red years? you know this idea of you know eventually that haven't essentially I mean it's sort of like you know transitory we're all transitory in this stage of the universe but I'm just wondering from your perspective you know is 3% a more appropriate level at an industrial buildout like the one that we're seeing >> I I think it's a reasonable conversation to be having if the Fed was at 2% today uh having missed their target for so long and being worried about inflation expectations and an inflation psychology that is embedding higher inflation uh a central bank has to be worried worried that moving the goalpost when you haven't hit your target uh it actually makes it worse.
>> If they move it to three, why not four?
How do I think you people care about that that difference?
>> Let's get to the headline. How offside are they? How much do they need to hike in your mind for next year?
>> So again, our our baseline is that they're they're on hold here, but but we wrote a piece recently with with my colleague Matt Rascin. You look across a variety of policy rules which just guides you about where the Fed probably should be given the current uh economic backdrop. and they are 50 to 160 basis points above current levels for the Fed funds rate.
>> So if they start moving, it's not once, it's not 25.
>> I I think that's the other part. I think you if the Fed concludes that they are too accommodative, that inflation is embedded in a problem, uh it'd be very strange for them to conclude that they are precisely off by 25 basis points. Uh I think that they would have to view that a sequence of rate hikes is likely necessary.
>> So you actually think they do need rate hikes, but you have them on hold. Why?
Because if politics won't allow it?
>> Well, no. think we are uh optimistic still somewhat on the inflation front. I think I don't want to sound that optimistic, but I think that there's scope potentially that inflation could come down next year. Uh shelter inflation is coming off. There are still tariff driven inflation effects. Uh but in part what I have to do as well is is read the Fed's reaction function. It's not at all about politics. I mean I think if you were to hear Chair Pal and Governor Waller, which I think were uh out of politics, there's just an embedded narrative that inflation is not a problem. Uh and they're giving time for inflation to come down. And so I think that that's in part uh you know my call is both the economic forecast but then reading the Fed's reaction function. The Fed's reaction function is not there for hikes yet.
>> You mentioned the consumer being able to get by with things like the one big beautiful bill. The tax refunds now have been spent many times over according to people that come on this program. They were used Christmas holidays. They were used electricity the start of the year.
Now they're being used for higher gasoline costs. At some point are they done? Has the consumer now really just dried up in terms of the es extra fiscal power they had?
>> Yeah. So I think there's the refund part and then there's the additional tax cuts that everybody is benefiting from from this year. Um and that part I think has not been completely dried up. But but you know the longer that this war drags on, the longer that energy prices remain elevated for longer, the more worried you become about that outcome. Uh at the same time, the more we muddle through where energy prices are high enough that they are inflationary, but not high enough to actually significantly damage the consumer and growth outlook. I think that's the most hawkish outcome for the Fed. That's essentially what Governor Waller has talked about where we're kind of around $100 per barrel on oil.
There's second order effects spilling over into to the inflation data. You get worried about inflation expectations moving higher. So for me, that's actually the most hawkish outcome that we just remain uh in this muddle through scenario with energy prices near where they are. Why do financial conditions never matter when markets are going up?
I mean, I asked this because ultimately the one method of transmission that the Fed could execute would be curtailing the party in some of the frothiest of stocks, which is the one bare case that people say, "But it's not going to happen because then Fed isn't going to hike rates." At what point are financial conditions driving some of the inflation that we're seeing? Because people feel really wealthy when they take a look at their index funds. If they bought the NASDAQ, if they bought Micron two weeks ago, they feel amazing and they're going to go out and buy luxury goods. At what point is that going to become a problem for the Fed?
>> Look, I I think it is already somewhat a problem. If you look at the Fed's own uh models for FCI, financial conditions indexes, they suggest that financial conditions are adding a percentage point to growth over the next year. That they're additive of a percentage point.
That is nearly as much as they were back in 2022 before the Fed started to raise rates. So if you think about an economy where financial conditions are extraordinarily accommodative, where fiscal policy is accommodative, where you have an AIdriven structural uh boom uh happening in capex, uh I think that would make you not all that surprised that inflation uh is actually, you know, well above the Fed's target and and looks stickier than anticipated. Yes, oil prices is a drag. Um but it is offsetting uh these number of tailwinds that I think are continuing to support growth. Alisa, you basically communicated the cash carry argument, which I think is probably the right one, that if we dropped the easing bias early enough that you would have said a tightening of financial conditions that would have done some of the work for them. Of course, markets have gone in completely the other direction because the idea they still have an easing bias in the face of what we see right now in the economy where growth at the average level is pretty decent and what you see in energy and broader inflation, it's pretty amazing to see.
>> And the bond market is getting on board with the idea of inflation being a bit stickier. Stock market markets are not buying the story that bonds are telling them. They're saying, "We don't think that a worsh Fed is going to hike rates.
They might jawbone all they want, but we are not listening." But when you talk to strategists, if they were to hike rates, that would be another story.
>> Really enjoyed the note this week. By the way, the point you make is the the right point. This muddle through that we've been talking about. The idea that things aren't terrible right now with energy that we're not at 200, we're at once. You're at this muddle through where you don't see the demand destruction, but you do see the elevated prices. That's the nightmare for the Fed. The Fed knows what to do with extremes. They don't know what to do with this, and that's why they're in a bit of a bind.
>> Yeah. supply side shock that was actually a shock would actually be much more obvious. This is a supply side unfortunate reality for the United States is absolutely a shock in other places and that's why you see the Fed not seeing the destruction in terms of demand they would otherwise see.
>> What did you say? If you strip out the pandemic, this is the worst inflation number since when?
>> 1992 for core PC inflation.
>> I think that broader context is is really important here. Uh yes, we you know we think about everything within the context of CO but CO was the biggest inflation shock in 40 years. Uh today's core PC inflation would be the highest since 1992 if not for the CO driven inflation show >> and we've got an easing bus. Amazing Matt. Thank you.
>> I think that'll come out in June.
>> Thank you Matt Lazetti at Deutsche Bank.
You're not the only one who expects that change on June 17th with an update on stories elsewhere this morning with your Bloomberg brief. Vonnie Quinn has more.
Hey Vonnie.
>> Hey John. Recapping the data we just got. Then the PCE the Fed's preferred inflation gauge meeting estimates. The index up 3.8% in April marking the biggest two-month acceleration since 2021. Jobless claims coming in higher than expected at 215,000 for the week ending May 23rd.
Apple's overhaul of Siri will be a centerpiece of its next iPhone, iPad, and Mac software. Sources telling us here at Bloomberg, the update will feature a new interface and chatbot style app. Siri will have the ability to understand personal data and analyze onscreen content.
In sports, the Carolina Hurricanes are one win away from the Stanley Cup final after shutting out Montreal on home ice.
The Canes scored three goals in the first period and Frederick Anderson stopped all 18 shots he faced. The series winner will face the Vegas Golden Knights for the cup. And that is your Bloomberg brief. John >> Hey Vonnie, thank you. Thank you for the update. Up next on the program, we'll set you up for the day ahead. us. We'll catch up with Matt Stucky of Northwestern Mutual on why he's underway. US large caps with an equity market at all-time highs. A conversation up next.
Data mix data for US economy.
Now if you look at this uh 700 p.m. Market open 7:30 new home sales data natural gas 930 crude oil inventory 8700 inventory Wednesday both inventory today is Thursday.
Hey guys, as expected crude oil price uh can't move beyond the level of first 15 candle First 15 resistance indecisive candle form which is obviously not supporting this US market.
Let's see. Move.
We'll see that as well.
Natural gas contining pressure.
bottom open.
No sign of sell off neither in MCX nor in Forex chart.
Last bottom around 2980 bottom natural That's it.
$330.
Natural gas unnecessary sort natural gas.
Nothing else.
Wow.
Positive news.
move. Let's see.
Natural gas.
Forex MCX already 2.42% 40% off natural gas Forex shortcut.
The fourth time RA price this is the fourth time price hitting this level in natural gas price third time first second third fourth time as for the forex chart can go more 3% up natural guess obviously very less chances fall while last candle Okay.
Exo claim US and Iran have reached a deal pending President Trump final approval.
Wow. A news or crude oil 8,800 say 8,400 400 point fall exo report that US and Iran President Trump final approval definitely Okay.
Source.
Exo. report.
Yep.
News because that is a report details. US and Iran reach deal but need Trump's final approval. official says US and Iranian negotiation have reached an agreement on a 60-day memorandum of understanding to extend the ceasefire.
Okay, this is the news actually this is not end of the war but the ceasefire 60 days a memorandum sign US and negotiation have reached an agreement on a 60-day memorandum of understanding to extend the ceasefire and launch negotiation on Iran nuclear program but President Trump has yet to given its it is final approval to US officials and a regional source involved in The mediation mediation efforts tell exo the s uh signing of theou would be the most significant diplomatic breakthrough since the war started but a final agreement that tackles Trump nuclear demands was still required for the intensive negotiation.
US officials said the deal terms were mostly agreed as of Tuesday but both sides still needed to get approval from senior leadership. The US official claimed the Iranian later come back and said they had the necessary approval and were prepared to sign. Iran has not confirmed that. US negotiation negotiator briefed Donald Trump on the details of the final deal but he did not immediately sign off. The president relied to the mediation that he wants a couple of days to think about it. As per the US official said, Trump and his adversaries though thought they were close to a deal. Several times at earlier staged in the war, but none materialized.
So this is mainly a 60day ceasefire deal.
days and 60 days crude oil reaction equity market sudden fall over there as well Upside move.
news reaction. The MOU will include an Iranian commitment not to pursue a nuclear weapon. The officer said it was also stated that the first issue to be negotiated during the 60-day window will be how to dispose of Iran highly enriched uranium.
Normally X is reporting authenticate.
So we can expect these a real use.
First 15.
News is about 60-day ceasefire extension.
US or Iran.
Trump is green Right. Sign news already important resistance as I said% and then 6% upside move already entered M 1.23% up downside low that is approximately 4% approximately up Okay. Natural gas inventory.
Last time 96 is 192. I last time say come last time say come. It means it is bullish. Natural gas inventory is bullish for natural gas price.
Inventory bully say candle open equal to low natural gas candal candal Because of the inventory closing important 307 equal to low inventory.
Nifty recover.
to low candle inventory bullish natural gas which is bullish for natural gas price at least level 372 super close 307.2 Best case scenario open equal to low Take maybe open equal to low.
307 low MC. CX may open equal to low candle MCX open equal to low Forex maybe 3.181 closing natural gas future New York exchange forex it is on resistance man gold sorry dollar index 99 now 98.713 300 cents down currently Okay.
Natural gas candle close 7.3 approximately priceful Let's see.
Forex close 3.181K. Yeah.
chart. Same data check.
Lower high. Third time breakdown.
Next level natural gas inventory open.
Max.
Forex or MCX chart because of the candle forex. I'm not talking about individual chart from brokers but directly future New York mercies exchange Crude direct 15 $93 approximately.
Okay.
30 seconds are left.
Next resistance sell forexing 1.72.
Remove next resistance most Lovely.
Candle openal natural Yes.
ASP selling And it um 7,000 8,000 850 in the quarter. So that was encouraging and they learned that because they sort of missed sales in the fall last year.
The other thing is they've rightsided their promotional activity. They missed out on that during the crucial holiday period. So now they've really ramped that up because let's face it, in the first quarter there was a $2.6 billion gain just in off-pric sales just from the big three.
So they're continuing to lose share to the big three in off price. You know, we just had Burlington's uh numbers out today. Their comparable sales were up 6%.
>> Yeah. And then let's not even get into the TJXs of the world, which are kind of in their own category. Um, I want to get your take on a more traditional retailer, kind of a legacy retailer, and that's Gap. Um, Gap will be reporting results as well. It's got a number of different brands, Old Navy, Banana Republic, and of course the I guess they call it just the blue brand, Gap overall. Um, >> I think about Gap and how it's really picked up a lot of cache of late. There was a collaboration with, I think, Victoria Beckham, was it? Um, >> absolutely.
>> Yeah. And and things like that get people's attention. I don't know if it's translating into sales, though. Is it?
>> Oh, it absolutely is translating into sale. I mean, sales, when you look at their comparable sales gains, they've been higher than that of Old Navy. Old Navy is their largest brand. It's about 56% of revenues. Gap is the next largest brand and that's, you know, almost 30% somewhere around there. And so, no, they've been experiencing very strong comp gains there. I think um what they're looking for in the quarter is you know somewhere around that three to four percent for the gap brand. Uh so you're right you're seeing some strength and I think that these collaborations uh the campaigns all create a wonderful halo and and when you speak to millennials and Gen Z you will hear them talk about Gap. So in fact I'm wearing a a collab from last year. This is Gap X Malbon. It's it's a a favorite golf brand and I really like it and I hope they come out with another one. That one and then Doan. I also like the Doan collab as well. So So it does work.
>> I think by it does work.
>> So what what are your companies um Mary?
What are they saying just about the consumer in general uh these days?
>> Paul, what we're finding out is that the consumer even at the very low end is really proving resilient. Uh so in fact that was something that um Burlington noted that they haven't seen any signs of of weakness and of course in the off price their customer base you know most of their customers are really at the very low end. They go paycheck to paycheck and Kohl's is is sort of similarly positioned in terms of their core customer. So same same sort of thing except it's hard with Kohl's because there's other issues going on in terms of execution. But generally with all the retailers that have reported so far, we're not seeing any push back or signs of hesit hesitancy on the consumer part in spending. So I still think that there if there's some fresh newness or something that's exciting and they have to have it, maybe they might pass up on buying a favorite food brand in the grocery store or cut back there. But if there's something that really makes them happy, I think they're going to make that discretionary purchase, particularly since really with a low unemployment rate, when you have a job, you feel pretty good.
>> All right, Mary, thank you so much.
Really appreciate that. Mary Ross Gilbert, senior equity analyst uh covering all the retail stuff for Bloomberg Intelligence. She's based out there uh in Los Angeles for us. I don't see a gap collab on your on your >> No, I'm sporting my University of Richmond. So, I'm going down to Richmond today to celebrate my 40th reunion.
>> Fun >> college. What? How did that happen?
>> 40 years.
>> Yeah, we're getting there. We're getting there. Uh we're going to check in with Sam Fiselli. He is in New York. I don't That can't be good news for stunned when he walked in. Walked through the door. So, we'll talk a little healthcare. That's coming up.
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This is Bloomberg Intelligence with Scarlett Fu and Paul Sweeney on Bloomberg radio.
>> Scarlet Fu, Paul Sweeney live here in our Bloomberg interactive broker studio in New York City. We're streaming live on YouTube. We're streaming live at bloomberg.com as well. Let's talk a little healthcare. We're always stuff.
It's like technology. There's always stuff in the news. There's always deals to talk about. There's always new drugs and tests and all that kind of stuff. Uh S Pazelli joins us. He stays on top of that. Director of research for global industries and senior pharma analyst for Bloomberg Intelligence. He's based in London, lives in France, but he's in a New York studio. Go figure that out. Um I want to ask you just in this world we live in in terms of the Trump administration and how it views healthcare policy, what are the companies that you deal with, the Eli Liies of the world, the you know the Mercs of the world, how are they approaching getting stuff done? because they're still with research and development. They're still trying to get things approved. Have they changed the way they do things?
>> I mean, the basic um business of pharmaceuticals has not changed. You got to spend a lot of money and that number depends on how you calculate it, right?
To try and discover a drug and a lot of money trying to get it to patients. And of course, we all know pharmaceutical companies are pretty well um >> profitable. Yeah. Right. I mean they're not l lacking for decent fat margins. So they have a lot of room to play with which means that when you get pressures from MFN when you get issues with the inflation reduction act act sorry MFN being most favorite nation >> etc. They have ways to dealing with it and some of it involves actually doing what the president is looking for or the administration is looking for bringing manufacturing over to the US. But as you know, Paul, there's only so much of that you can do, right? Because you can't you're not going to go back to making absolute basic ingredients.
>> So, but they are doing some of that and I think they've been managing the desire by the administration to try and get some of that back into the >> Has the most favored nations impacted their financials.
>> Have you looked at the share prices?
>> No.
>> No. No. But I mean, of Sorry, that's a that's a horrible way of answering your question, but it is um >> that answers it though.
>> No. Right. There are some who are doing worse than others, but it's not to do with MFN.
>> Okay. I'm just looking at uh Eli Liy.
There you go. All right.
>> It looks almost like a Micron share price.
>> Yeah, exactly. So, what's the latest thing? You're here in the States on a Thursday, which tells me I know your schedule how you how you guys work in pharma. That means you got a big conference over the weekend.
>> We do.
>> You work you go into a classroom for like all day Saturday.
>> Altruism. It's all about altruism. We're doing this because >> now which conference you going to?
>> This is the American Society for Clinical Oncology.
>> Okay. This is a cancer one.
>> Cancer one. Yeah. And they have and you know the week after is the American Diabetes Association which has a lot of obesity data in it now. Okay.
>> Where my colleague Mike Shaw will be going.
>> The interesting thing of course is that these conferences are coming up and every year we all search for is this is this going to be a big one as and of course this one is to a degree. Um although we know what's coming. We know that there's a drug for pancreatic cancer that has done really well. We're just going to get the full details there. And we know that there is a potential new therapy for lung cancer potential. Uh we're going to get the details there. And and how big a change is it? Could it be practice changing which the company who owns it thinks it is or change of standard of care? That's the sort of thing we're looking for. So hopefully I can be back here on Wednesday having all of that information in my head and we can talk about it again. So in the audience of these conferences, it's a it's some investors or some Wall Street people, but who's the real audience?
>> Vast majority of physicians of the 50 odd thousand people who go there go there to be educated, to hear about the new drugs, to learn about the new drugs, to talk amongst themselves about how they're managing their patients. This is a medical conference which we piggyback on. There's no doubt about it.
>> So, and then who presents here? What?
They're They're not just saying this isn't necessarily I guess it is a sales pitch, but it's also the the medical the science behind it. The EV I mean what are they they're presenting papers and all that kind of stuff.
>> Yeah. papers, science, medical data, new clinical trials, um you know, as I just said, a new therapy for pancreatic cancer, for lung cancer, for myoma, they come and present their data and it gives opportunity to physicians to discuss, argue, uh and parse the data aside uh to and and >> where are we broadly where are we on just the whole research and development for cancer? It feels like they're making a lot of I guess forward momentum here and I see more and more of it. We hear more and more of it. We read read about it more and more.
>> What's the next kind of milestone for that whole part?
>> Yeah. So the what's happened with cancer is that we've got a lot of tools now to to to try and become more sophisticated in the way we target things that have gone wrong in the tumor cell without killing the patient because of side effects or causing awful you know hair loss, gut falling apart, etc. That's becoming more and more doable. You can't get away. Side effects happen because biology doesn't just makes one thing for one action only. It has the has developed the ability to utilize a same protein for different functions in different cells. So that becomes tougher but the science is moving at that speed.
And I think what we'll see is a lot of this coming up with a huge growth in oncology. But Paul, what's weird and interesting is that venture capital investment in oncology has gone right the way down.
>> Why is that? hard to tell. I think a lot of them have decided it's become too hard because success makes it moves the bar higher to compete with. So, do I really want to go into that space or shall I go into an area like neuroscience where we haven't hardly got much, you know, Alzheimer's, Parkinson's, right? Right.
>> Psychiatric diseases. We have a lot of work to do there. So, maybe that's what they're thinking.
>> Interesting. All right. So, you're going to be in Chicago sitting in a conference room getting science dumped on you. When I go to a conference, it's at a golf resort. It's a Vegas casino. That's how you do.
>> Yeah. Business.
>> We eat. We eat sometimes.
>> You eat well. Okay. Maybe get a decent bottle of wine if you if you can find.
>> Oh, well, we try.
>> All right. Sam, thanks so much for joining us. Uh Sam Fazelli, he's a director of research global industries and senior pharmaceuticals analyst for Bloomberg Intelligence. Uh heading out to Chicago for a very important uh medical conference oncologist. So, we'll see how that plays out there. Um I don't see the promo. So, oh, there we go.
There it is. For our listeners in the US, a reminder you can listen to us via satellite radio on SiriusXM channel 121.
Access the world's only global audio business network coast to coast 24 hours a day. Bloomberg radio on SiriusXM channel 121 is presented by Golden Metals. More headlines coming up. This is Bloomberg. Good morning.
From ABC News, I'm Michelle Branson. New data signaling the e economic strain for Americans due to the ongoing conflict with Iran and rising oil and gas prices.
The Commerce Department figures show inflation is up 3.8% from this time last year. Costs for the basics, food, gas, utilities, and other things eating away at budgets. A separate report finding more Americans are going hungry now than at the height of the pandemic. Here's ABC's Rebecca Jarvis. This new report from the New York Fed shows what they call a remarkable rise in food insecurity, especially among those living paycheck to paycheck. And it's especially troubling because it impacts those with young children. Between late 2025 and early 2026, there was a sharp rise in households reporting that they had to skip meals, use food banks, and rely on SNAP benefits or dip into savings to cover their groceries, which are now 2.9% more expensive than a year ago. Treasury Secretary Scott Bessant says he's confident the economy can bounce back when a deal with Iran is secured. Bessent also announcing new sanctions on Iran's Persian Gulf Straight Authority that manages the passage through the Straight of Hormuz.
The US accusing Iran of ceasefire violations by targeting Kuwait. Iran also claiming the US is violating the ceasefire deal. ABC's Ian Panel has more.
>> Iran is still saying it's not willing to make any concessions on its nuclear program. It knows full well what impact it's having on the world economy, what impact it's having domestically in terms of uh opinion polls and ratings for President Trump and the impact on domestic consumers. Uh and it knows or it certainly thinks that it can wait out its own economic misery. Now, that's an open question. How long can it endure what is a disastrous economic situation inside Iran? The Supreme Court today ruling in favor of a black death row inmate from Mississippi who claims there was racial bias in the makeup of the jury that convicted him for his role in the killing of a grocery store owner.
There was only one black juror on that trial. You're listening to ABC News.
Hey, come back.
The Justice Department opening a criminal investigation into Eene Carroll. She's the writer that was awarded a settlement in a defamation case against President Trump.
>> Sources tell ABC News the investigation is allegedly centered around whether Carol committed perjury during her civil lawsuits against Trump. Carol was awarded a $5 million civil judgment in 2023 that found Trump liable for sexually abusing her in a department store dressing room in the mid 1990s and defaming her. ABC News chief White House correspondent Mary Bruce. Sources say the Coast Guard is asking permission to send divers to new areas of the Bahamas in the search for Lynette Hooker. The Michigan woman has been missing since early April. Her husband Brian told authorities she fell off their dinghy during a storm as they were returning to their sailboat. He described the moment to our Victor Okendo.
>> The wind blew us apart so fast that I think I think she tried to swim back to the sailboat to back to our sailboat.
But now, officials claim GPS data recovered from Brian's electronic devices does not match what he told investigators.
>> ABC's Hannah Bata. Former first lady Jill Biden says she was worried then that President Joe Biden might have been drugged ahead of his widely criticized 2024 debate with President Trump.
Details of her upcoming memoir shared by The Atlantic the day after CBS News released part of an interview with the former first lady saying she thought Biden was having a stroke. Michelle Franen, ABC News.
Live from Washington DC, this is Balance of Power with Joe Matthew.
So, we have a deal. Except we don't.
Welcome to the Thursday edition as Iran and the US reportedly reach an agreement to extend the truce and reopen the strait, but no one's approved it and so the wheels go round. And we're going to get the latest on this in just a moment from Bloomberg's Washington correspondent Tyler Kendall. We'll walk through the market reaction to all of this with Bloomberg's Christina Kino and on this PCE day. We'll get into the inflation numbers out this morning with Bloomberg's Michael McKe. And we'll assemble our political panel this hour as President Trump says he does not care about the midterms. Though the White House is paying tribute to Harambe on this Thursday, you can't make it up. And we start as always with a look at Wall Street. Charlie Pellet has the numbers for us live from world headquarters in New York. Charlie, how we doing >> right now? A lot of green on the screen here, Joe, Matthew, but emphasize on right now. We have got stocks erasing losses. This after Axios reported that Washington and Thrron have reached a deal to extend a truce and work toward an agreement to end their conflict, keep it locked in to balance of power for any and all developments out of the Middle East and Washington. S&P right now up by 37 points indeed a record 7557 up by about 510 of 1%. The Dow also pushing higher by 27 now up by about 1/10enth of 1%. NASDAQ composite index up 168 for NASDAQ higher by 6/10 of 1%.
The VIX now with a 15 handle the 10ear at 4.46% the 2-year 4.02% 02% and the 30-year below 5% 4.99% on the 30-year. Gold is up $28 an ounce to 44.82 up by about 610 of 1%. West Texas Intermediate crude holding below $90 a barrel up 1.3%. Barrel of Brent 94.58 up now by 3/10en of 1%. Lots for investors to digest today. A full serving of economic data, earnings news, and geopolitical developments. Sarah Malik is chief investment officer at New Asset Management.
>> The ceasefire obviously is becoming very fragile at this point and you know we'll see what happens from here. But markets really tend to follow earnings growth and earnings growth has been very strong this year driven by that AI and tech trade and as long as that continues markets will probably look past the war and even though the the war hasn't ended markets have decided that it will end at some point and that earnings will remain resilient. New Beans Sarah Malik interviewed this morning on Bloomberg Open interest. Speaking of resilient earnings, Snowflake shares are surging 37% after last night's report. Salesforce up now by 1.1% after the close of trading today. We'll be hearing from both Dell and Costco. Recapping S&P at a record up 37 up 510 of 1%. That Joe Matthew is a Bloomberg business flash.
>> All right, there's the man Charlie Pellet. Thank you, sir. He'll be back in about 15 minutes with another look at the Thursday trade. You made it to Little Friday. This week is moving along, right? You had a long weekend. I hope you did at least. It's Thursday and we've got a very similar news cycle than we had the past couple of days with a gallon of gas going for $442.
Does that feel cheap? Don't ask me about diesel because we've got our eyes on oil prices like we do every day. Today they're higher even though there was some early optimism about a deal. Axios strikes again. It does seem like a thing, a daily thing, right? Axios puts a headline up in the morning that says we're close to a deal. The markets take off.
White House says well the president hasn't approved of that. Then the whole thing falls apart by the end of the day and somehow the markets still take off.
We are right at record highs and S&P 500 still trading above 7500.
Even with crude oil tiptoeing higher, still below $100 a barrel. We're going to get into all of this with Tyler because as is frequently the case when we start this program at noon, we're not really sure exactly where we stand with talks with conflicting messages from both sides. Why don't we go back to where we started yesterday in the cabinet room? Because Tyler was in there with everybody else. They cram them all in this. It's not there's no room, you know? It's this big long table. All the reporters are are made to stand on one side against the wall. It's like a high school dance. Stand against the wall and hope that somebody asks you to ask a question. Tyler got a couple yesterday, by the way, as you heard live here on Bloomberg with the president being asked repeatedly, "What's the status of the peace talks? And will we get a deal?"
Here's what he said.
>> Iran Iran is very much uh intent. They want very much to make a deal. So far, they haven't gotten there. We're not satisfied with it, but we will be. Right now, I think uh it looks like they want to just make a deal. They want to they they have I don't think they have a choice. They're just going back to the internet because they're getting clobbered. Their economy is uh in freef fall.
>> They're going back to the internet. They I guess they've been putting some internet service back on. Uh the headline on the terminal, US Iran agree to extend truce pending Trump backing.
Axios says it's an Axio report still at this point. But could we have a deal when we're shooting at each other?
Because that was the headline we woke up to this morning. The US striking Iranian military targets for the second time this week. And you've got air raid sirens going off in Kuwait. Said it responded to missile and drone threats from Iran. Cease fire.
US forces shot down four Iranian drones fired at a commercial ship and hit a launch unit near the straight of Hormuz.
The ceasefire is intact.
Iran targeted the US base from which the strikes came. We got four of them in Kuwait. know that's why this is so delicate right now. And with the market near all-time highs, we explore the possibilities again. We asked Tyler to come over from the White House today.
Sometimes it's hard. She's there standing there on the lawn looking in the tent with the bright lights.
We can actually see each other today.
Tyler, welcome back. It's great to see you.
>> Thank you.
>> You can't see anything over there, right? It's very bright looking in the tent. It's I've done that before. It's not fun.
>> Well, that's what happens when the back is so exposed because the White House is white. for some context here on how we do it.
>> Okay, so let's add to that. What is the brightest, most painful shot in Washington? It is >> the US Supreme Court.
>> Knew you were going to say that. I've done that, too.
>> Little test there. Well, you do it more often than I do. Anyway, welcome to the comfort of uh the climate controlled studio. Uh Axios out in front again. You heard my whole setup here. This is like rinse and repeat. Is anything new?
>> Well, a lot of the Axios reporting is what we've been reporting. We know that the administration is seeking what appears to be this phased approach where we would first see an extension of the ceasefire. The straight of Hermuz would be reopened. The US would lift its naval blockade and then that could kick off a essentially delayed phase of negotiations on potential curves to Iran's nuclear program. When it comes to the Axios reporting though, we're getting a little bit more of the finer points that could be involved in a potential deal, including that it is imperative that there will be unrestricted access when it comes to the straight of Hermuz, which means no tolls, no harassment, but also importantly, Iran would only have a 30-day time period in order to remove any of the mines that they've laid. So, that's a little bit more of a firmer detail.
>> Does that also confirm that there are mines? There's been questions about that, right? Well, I mean, considering that the US had a military strike just the other day going after these boats that were laying mines, according to SenCom, it would appear that they're still trying to exert this influence in what is a very dangerous way, just underscoring how fragile the situation still remains in the straight. It is also interesting because it comes on the heels of a lot of other efforts that Iran has been doing recently in order to tighten its grip. We saw this new authority established. We're seeing uh them moving forward with what is being called navigational services fees, what feels like a rebranded toll system.
Yeah. And we had Iranian state media earlier today confirming that the IRGC has let through 26 commercial vessels in the last 24 hours and vowed severe retaliation if the US uh messes or or disrupts I think was the word that they used their efforts to exert control over the street. So publicly the sides feel very far apart. Though we have heard from the administration that they are moving towards a diplomatic effort. So perhaps the Axios report helps to advance that narrative. There were a few other things inside the memorandum of understanding will include an Iranian commitment not to pursue a nuclear weapon. Yep.
>> Doesn't really feel new considering that Iran's public negotiating stance has been that they're not pursuing a a nuclear weapon despite Western intelligence assessments >> to the contrary. But importantly, Joe, I will pull out this point. In the 60-day negotiating window, what is going to be prioritized is what happens to that stockpile of highlyenriched uranium. So, it feels like perhaps this is giving us a little bit clearer of a road map and how things could develop if and when we see it.
>> Did you bring the memo? You have the memo of understanding right here. Wow. I don't >> if only.
>> This is why we have her come over from the White House. Uh we got to clear up a couple of things here. You were in the room with him yesterday.
um he didn't seem agitated as sometimes he might be in the back and forth with reporters seemed for sort of blasze and it got to the point where because you know he said we're well maybe we'll just have to resume hitting them hard or maybe we won't was kind of his attitude >> uh when it came to a couple of other things though including questions about the midterm elections >> that's the new t-shirt that Democrats are making up today I don't care about the midterms he said I think it was Rachel Scott who asked him you guys were standing right next to each Bringing us back to that whole I don't care about Americans finances. It's kind of a similar vibe. Republicans heads explode when they hear that stuff. Does he not care about the midterms or is he trying to make another point involving Iran?
>> It feels like the latter. It feels like he is trying to convince Americans. I don't even think I can say it feels like that. We've heard from US officials.
He's trying to convince Americans that this what the White House has called a short-term disruption will be worth it for the long-term gain of preventing Iran to have a nuclear weapon. The issue that's coming up even within members of the Republican party like those more hawkish voices on Capitol Hill like Senators Lindsey Graham, Ted Cruz, Roger Wicker, is that the contours of this deal appear to be postponing that dialogue about what potential curves to a nuclear program will look like. And that has swed some doubt in this. Also, the idea of short-term, I mean, how many weeks are we into this? You mentioned higher gas prices.
What sort of pressure does the administration face on the political front? Now, if we do continue down the lane of politics, so far, President Trump has a pretty good track record when it comes to the primary season. All of the candidates he's been backing have been doing well in the Republican primaries. The question is, how does that translate when they're head-to-head with Democrats as we get closer to November. I will quickly add while the polling is not in President Trump's favor when it comes to discontent with the economy, it's not necessarily great either with how Americans feel that Democrats would handle the economy. So, they also have some room to make up on their side as well.
>> Wow. Really interesting. Um, fascinating. Actually, I to clean up one last thing. You asked the president about a gas tax holiday. We're at still about $45 as as I mentioned, just shy of. And there's been a a thought, he said it himself, to suspend the federal gas tax is something that he would pursue. And he's got Republicans and Democrats ready with legislation. You asked him about a gas tax holiday and he looked puzzled. Yeah.
>> And he said a gas tax holiday. He repeated it back to you as if the terminology was foreign to him. Is this a matter of semantics?
>> I perhaps I did clarify that I meant a suspension of the federal gas tax on a temporary basis, which is what the holiday would be. I think he was thought you were proposing a new federal holiday.
>> It could be it could be a good idea, but um we'll have to see because this idea while does have bipartisan support, some economists have cast out on how uh much this could really impact retail gasoline. We know that it takes time for prices to trickle down. Um so it's definitely something to watch. He said that they may be talking about it, but that ultimately he wants to give negotiations one to two more weeks in his words before they make any such decision.
>> Boy, really interesting. Um we don't have time for Harambe. Did you see the Harambe tribute on the the White House Twitter page? What? That's an official one, right?
>> I I don't know. I haven't seen it.
>> All right. No, we're gonna make time for No, look, there it is. If you're with us on YouTube, this is real. The official White House ex account posting a tribute to Harambe, the 17-year-old gorilla who 10 years ago today was shot dead by the Cincinnati Zoo's emergency response team. The White House calling him a true patriot with apologies to Harambe and Tyler for that matter. I'm Joe Matthew in Washington. You picked the right day to join us. Yep, there she is. Tyler Kendall. She's going to head back to the White House presumably.
>> Yep. That's where I'm headed next >> in our next hour. It's amazing how this stuff works. Michael McKe, Christina Kino are coming in next as we watch the markets here on Bloomberg.
Hey.
Hey. Hey.
Look at that.
Hey, feel.
Heat. Heat.
Hey.
Hey. Hey.
Come on.
Hey.
Yeah.
Yeah.
It's 12:21 on Wall Street. We do check markets all day long here at Bloomberg.
Looking at records right now on the Dow, the S&P, NASDAQ, they're all pushing higher. This as a rally in oil eases amid speculation that the US and Iran are close to a diplomatic breakthrough.
Keep it locked in to Bloomberg for the very latest on any and of all developments out of both the Middle East and Washington. S&P right now up 41 at 7561 to underscore record there up 510.
We've got the Dow up 23 up under one/10enth of 1% while NASDAQ is up 194 for the NASDAQ composite index a gain there of 7/10 of 1%. The VIX trading right now below 16. We have got the 10-year at 4.45% with the 2-year 4.02% and the 30-year 4.98%.
Gold is up $41 the ounce up by about 910 of 1%. Spot gold at 44.95 the ounce.
West Texas Intermediate crude is gaining 510 of 1% 8912 on WTI barrel of Brent 9393 down by 4/10en of 1%. CVS Health has reversed the decision to restrict access to Eli Lilly's obesity shot Zepbound for certain drug plans after Lily agreed to cut the price it charges many health plans. Lily shares right now they are surging by 4%. CVS shares up now by just about 1.1%.
So again recapping we do have the Dow the S&P NASDAQ all advancing. S&P up 40 right now to 7560. That is a gain of 510 of 1%. And that Joe Matthew is a Bloomberg business flash.
>> All right Charlie thank you so much.
Charlie Pellet will have much more on the markets coming up in just about 20 minutes time here on Balance of Power.
Welcome to the Thursday edition. It's great to have you with us here. Thanks again to Tyler Kendall who's reading up on Harambe right now on this 10th anniversary tribute day. The White House, if you haven't seen this, calling out the great patriot in an expost today. Indeed, it was 10 years ago.
Harambe was shot by the emergency response team at the Cincinnati Zoo and became a meme for the ages.
In a tribute, White House calling him a symbol of loyalty, strength, chaos, unity, and the strange beauty of the internet, bringing millions of people together for one cause, never forgetting Harambe.
I'm Joe Matthew in Washington. This is part of the conversation here today on balance of power as the market is as well. We want to stick with this because we're getting into an interesting world here where the rinse and repeat of headlines coming from organizations including today it's Axios frequently is the case. Sometimes it's Bloomberg, Wall Street Journal, Washington Post, whatever. It somebody gets a phone call into the president, somebody gets a document in their hands and it moves the market because it might mean a peace deal or it might mean that the two sides are walking away. We've had both take place today. We woke up this morning to reports that the US was resuming strikes against Iranian targets and that Iran was lobbing drones and missiles or whatever else they have at US interests, in this case bases in Kuwait.
Markets didn't like that. Axio's headline hits, we've got another peace deal and the verge of a breakthrough and markets take off. You just wonder when this whiplash starts to have a backlash on Wall Street. And that's why we wanted to talk to Christina Aino for a moment. Other than the fact as well that it's been a long time. Bloomberg's managing editor for markets is with us right now live from New York. Christine, it's great to see you. Um, we could play the tape back from the last time you and I spoke and we were probably in a pretty similar position. I'm just wondering if traders are enjoying trading on volatility right now or or if there's going to be some corrosive impact of all this whiplash here in the market.
>> Yeah. Well, Joe, you know that volatility is of course excellent for banks trading books. I'm sure that they don't necessarily mind having to contend with all of these swings, but yeah, you're absolutely right. In general, there does seem to be a sense of fatigue uh amongst market participants when it comes to trying to parse the latest headlines uh when it comes to the US Iran relationship. And you know, I think what's different the last time we spoke is that now we have Micron joining the trillion dollar market cap club. We have a we've had a strong set uh of earnings from the biggest hyperscalers, the biggest tech companies and that has provided a lot of insulation for the market to the extent that perhaps there is a sense that maybe markets are just kind of shrugging off some of the geopolitical risk because there is this massive AIdriven trade that's propelling it.
>> Well, you mentioned Micron, so let's go there. Um, that was an insane uh move that we've seen just in the last couple of days. By the way, it's still got a bid today. Micron shares, which were lower earlier, are now up $10 or 1%.
$938. This thing's up like over 800% in the last year. It's up over 100% this year. We got a price target this week uh of 1625 from UBS.
So, Christine, do we look back on this as the Henry Blahit call on Amazon uh from 2000 that that this was actually the turning point? This was the top.
>> Yeah. I mean there's certainly a lot of anxiety over that prospect Joe but you know at the same time anyone who kind of makes that call at least when it comes to uh the top of the AI trade has so far been uh proven disappointed uh and and you know there's there's a lot of caution actually over calling the top and calling the end uh of this particular trade just because you know uh there is seemingly insatable demand for anything related to AI. Now of course beneath the surface the story is morphing a little bit right a lot of focus at the moment uh when it comes to memory makers and so that's why we have seen um uh shares related to that space uh gaining traction in recently um and that shows you you know that whereas the AI trade in general does seem to be chugging along beneath the surface there are kind of nuances are changing a little bit here and so it really is now a question of we're of course seeing a memory shortage at the moment. Um, is that something that gives certain companies pricing power and is that something that's going to be a headache for other companies who don't have the same kind of pricing power?
>> Well, give us your broad view then uh before you leave us coming off of what's appeared to be a pretty successful earnings reporting season and knowing that we're still dealing with some inflationary issues that we're going to talk to Michael McKe about in just a moment. The fact is Goldman Sachs this week joined several other big uh firms in hiking its year-end targets for the S&P 500 up to 8,000 now uh from 7600. I think Morgan Stanley was already there.
The analyst you're talking to and hearing from as bullish as they were at the start of the year or did this earnings reporting season make them even more so?
>> I mean it certainly did uh juice up the optimism that was already in the markets prior to the earning season. But you know, one thing that my team and I are watching out for, of course, is positioning and whether that's becoming overcrowded. I think that's definitely something to watch out for because it is when you get that overcrowded positioning that any sort of minor, seemingly minor news development, whether it's geopolitical or data, uh, since we're going to get non-farm perils next week, that is what tends to cause an outsized reaction. If if markets are going very much in one direction, it doesn't take much to pull them back the other way.
>> Well, with our eyes on Wall Street and the great help of Christina Kino, uh we'll keep you posted on everything that's going on. The S&P is up 41 points right now, 7561. Christine, it's great to see you. She's on TV and radio more than I am because she's brilliant. Kind of like the next person we're talking to here. Professor McKe is with us live in Washington as we keep our eyes on PCE data this morning. This is the Kevin Walsh world we're living in now. And of course, Michael McKe is Bloomberg's international economics and policy correspondent. It's great to see you.
Uh, how do we set the table for Kevin Worsh with today's data?
>> Well, it's not what he wants to see.
Certainly, the inflation rate on a year-over-year basis, headline basis, is up to 3.8%.
Going in the wrong direction, almost double what the Fed's target is. They don't target core, they target the headline, but the core is up as well. So the question is, do you think that Kevin Walsh is really going to want to cut interest rates or is that projecting from Donald Trump? Because we wouldn't say it about any other Fed chair. We would say the Fed chair is going to do what the data tell them to do. If inflation's rising and they need to raise rates, they would raise rates.
>> So it we may be able to give him the benefit of the doubt for a bit. I we have no idea whether Trump will.
>> Well, fair enough. And I think you and I discussed that it might be smart for him to take Truth Social off his phone uh now that he's got the gavvel in his hand. But I I did think this morning at 8:30 when the numbers came out, does this not give him cover? I mean, President Trump's talking to Scott Bessett and others to say, "Look, Mr. President, he can't you got to give him a you got to give him some time."
>> Yeah. You couldn't make a case for cutting rates now because inflation is going up. it's continuing to go up and the Fed can't say they would cut rates that would the markets would go crazy.
The question becomes uh where are we going from here? And Worsh's argument had been that AI would give us productivity gains and that would enable you to cut rates which might have been an argument if inflation was stable but right now it's not. So, you can't make that claim and and think it's going to get you anywhere with the other members of the open market committee because it's just too early to see the benefits from AI.
>> Interesting. Today, we're going to be uh hearing the stylings of Scott Bessant in the briefing room. Um that's, by the way, about 90 minutes from now. He's scheduled for a 2 p.m. briefing. This is normally the press secretary, but of course, uh she's out on maternity leave.
And we've seen kind of a a new season of The Apprentice. Marco Rubio got one. JD Vance got one. Scott Bessant gets one today. Is it because of the PCE data?
And and I mean this is going to be a political conversation, not an economic one. Correct.
>> Uh I'm not sure. I suspect that a lot of this will have to do with the war. Okay.
>> And uh sanctions and inflation in a in a broader sense rather than an analysis of what this particular month means. And people will ask him, you know, what's the president going to do with Kevin Worsh? Is he gonna give him a hard time or not? But I think this is they're they're moving into sales mode with these briefings with cabinet officials uh because the midterms are coming up.
>> Well, so can I ask you and I I don't want to get you in trouble. you're kind enough to come in here, but is this is is Scott Bessent becoming more of a Kevin Hasset inside this administration in terms of being a political animal when we hear him in interviews getting real confrontational sometimes with the interviewer speaking about under Donald Trump's leadership. Not not as necessarily an economist would be talking at this time.
>> Well, I think you'd have to have a scale of, you know, zero to Kevin Hasset, but >> fair enough.
>> All you saw the cabinet meeting yesterday. All the members of the cabinet are obsequious and and say really nice things about Donald Trump.
And I think Scott Besson has been doing that throughout his time at Treasury. He hasn't uh gotten worse. Um it's just that if you work for Donald Trump, >> you're a political animal.
>> The moon and the sun revolve around Donald Trump.
>> So what will that mean for Kevin Worsh in his first news conference? You're going to be sitting in there presuming that he has one.
>> Well, that's going to be uh the question is the Fed's not going to do anything.
They're not going to raise rates. Yeah, >> they might take out the bias statement.
A lot of members have said that they would like to see that go, >> but then the rest of it is all going to be like a theater review, a movie review of Kevin uh Kevin Worsh, like how did he do how did he sound? Did he sound in control? Did he, you know, is he is there a lot of opposition that he faced or something? So, uh that's going to be kind of the market focus this first uh goround.
>> What's Stephen Meyer doing?
>> Uh right now he's not employed. Yeah.
Uh, he's on the beach.
>> He's on the beach. But I'm sure that he he he was a chief economist at a hedge fund before he went to the White House and he could do that again or the president could find him something else to do.
>> I wonder if that was part of the conversation.
>> Uh, is Myron says no, but we know that the president has turned around and hired people from one job to another.
And >> that's for sure. Absolutely. How was Bruce?
>> Bruce was great.
>> Was it great?
>> Yes.
>> I'm amazed you have a voice. I thought you'd be you'd be hor too.
>> Yeah. Are your ears ringing?
>> Bruce rocked the nation's capital last night. This guy was there. We're lucky enough to have him on Balance of Power.
Michael McKe. A pleasure as always.
>> With us live in Washington. I'm Joe Matthew. This is Balance of Power, the Thursday edition. And we're glad you're with us. We'll assemble our panel next with much more to follow on the fastest show in politics only on Bloomberg.
Hey, hey, hey.
Heat.
Heat.
What do you think?
Yeah.
Hey, hey, hey.
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It's 12:40 on Wall Street. We do check markets all day long here at Bloomberg.
We're looking at records. We're off session highs, but nonetheless, the S&P right now 7559 where we stand, up 39.
That is a gain of 510 of 1%. Dow industrials up 21, up under one of 1%.
NASDAQ also at a record up 181 points now up by about 7/10en of 1%. The 10-year 4.45% all of this with a VIX now below 16. The 2-year 4.01% and the 30-year currently yielding 4.98%.
Gold up $46. The ounce 4500 even. That is a gain of 1%. West Texas intermediate crude 8905 a barrel up 4/10en of 1%.
Brent the global benchmark sliding by 510 of 1% 9381 a barrel. Daryl Kron is chief investment officer for wealth and investment at Wells Fargo Bank and he told us this morning there is a lot of support for markets coming from Washington. What people are missing is all the effects of the one big beautiful bill where now all that capex spend we talk about every single day can be depreciated in this year or next and not over a period of 5 to 10 years which means all that capex spend goes straight to the margin straight to the bottom line earnings growth and that's not going to change like we're not getting a one big beautiful bill 2.0 you know regardless of what happens in the midterms. Daryl Kron of Wells Fargo Bank interviewed this morning on surveillance. US auto safety regulators have opened an investigation into Riven Automotive over the potential failure of a part that could lead drivers to lose control of their EVs. Today we're seeing Revian shares advance. They are up right now by about 3.2%.
Again, recapping the Dow, the S&P, NASDAQ, all advancing. We are looking at records. And for on demand news 24 hours a day, subscribe to Bloomberg News now wherever you get your podcast. I'm Charlie Palato Matthew. This is a Bloomberg Business Flash. Okay, Charlie.
Thank you as ever. I'm looking forward to the big debate a little bit later on.
Can we watch this at work, James? It starts at 2:30 in the afternoon.
Democratic primary Michigan. This ought to be a doozy, right? McMurro, Stevens, Elsad, among others. Uh that's a crowded stage. That's going to be a fascinating race to watch as we talk more about the midterms getting into the throws of the primary cycle. Just don't ask President Trump. As he says out loud, he doesn't care. Um it was quite a moment yesterday and we recall his statement in the driveway a couple of weeks ago. You know how we do this, everyone's going to connect the dots when he said that he didn't wasn't concerned about Americans finances.
The answers came from the same question.
Reporters keep hitting him on this, right? Are gas prices or Americans finances are the midterms going to be enough reason for you to cut a deal with Iran? Is that informing your view here? Maybe hasten the announcement of something? The answer is consistently no. Here's what he said yesterday in the cabinet meeting.
>> They're going to outweight me. You know, we'll outweight him. He's got the midterms. I don't care about the midterms. Look what happened last night.
That was the prelude to the midterms.
People understand it. They know that very simple. Iran cannot have a nuclear weapon. I'm doing that for the world.
I'm not doing it just for us.
The prelude to the midterms, referring, of course, to the defeat of 24year veteran Republican Senator John Cornin in Texas, having endorsed Ken Paxton.
The question is, will Ken Paxton beat a Democrat?
And more broadly, will other MAGA candidates actually be able to close the deal in a general election cycle, especially if the president doesn't care about the midterms? We get into this with our panel. We've got a great one for you today. Republican strategist Mora Gillespie is with me here in Washington, founder and uh CEO of Blue Stack Strategies, and Laura Frink, Democratic strategist, founder CEO of Rebel Communications. It's great to have both of you with us here. And Mora, I'll start with you as our Republican. this is making GOP heads explode in Washington. When you hear the the leader of the party say he doesn't care about the midterms, how do you strategize around that?
>> It's tough. I'll be honest. I think that when you're looking at midterms that have already primaries have already shown that Donald Trump has a big voice there, right? He has a big impact. But I think it's short term. It's short-sighted by looking at the midterms and looking at primaries as they're going to reflect in a general election.
We saw it with Kim Paxton, his endorsement in the last minute. A lot of money was spent.
>> Yeah.
>> A lot of money was already spent in the primary, but a lot's going to be spent.
>> That's right.
>> Uh, you know, against Telerico. And he felt so confident yesterday saying that, you know, look what I did in in Texas.
>> Okay. But what happens when it comes to November and people are still feeling the pains of the grocery cost, of gas prices, of not being able to buy a home.
And so the reality check there is that people didn't show up in Texas. I mean, the runoff was what, 5% of the voting population showed up for that runoff, down 60% from who showed up in March for the primary itself. That's a small fraction of the population in John Corn and said so in his concession speech. A small percentage dictated the outcome.
>> But that's what happens when people show up to vote. And those who voted for Donald Trump are frustrated with him.
They don't feel at home in the Democratic party or Democratic candidates. So, they may just very well stay home. And so, if you don't care about the midterms, you certainly should. So, what's your thought on this, Laura? Other than, you know, are you making bumper stickers and t-shirts with that line on it already?
>> Well, I don't think that might be spiking the football a little bit too early. We know that there are a lot of environmental factors that go into this, but I really appreciate Mora uh being straight with both the president and her Republican colleagues because the president has been clear that he does not care about affordability. He denied his his its existence and now he's saying he doesn't care about uh the pocketbooks of American people. He's building a ballroom costing billions of dollars. He started a war that has costed somewhere between 30 and hundred billion dollars and and and close to a trillion if you count the economic impact. This is someone who like his legislative agenda is putting a slush fund in place to take taxpayer dollars and pay it to people who he determines worthy. uh a lot of them criminals and convicted criminals. So, I just you take all of that together and if you're at home trying to pay your bills, you wonder where where is the president when it comes to what I'm going through. And I think that's those are the questions that Republicans are going to have to answer on the trail. And I think it's going to be really tall order because they've been standing with this president the entire time and not saying a peep about any of it.
Well, so the conversation goes on here with a war that's underway and doesn't appear to be ending anytime soon. If you listen to what the oil executives say, >> Mora, whether it's Exxon or Chevron, if we reopen the straight today, Bob McN at Rapidan will say the same thing. It's going to take a couple of months for energy flows to rationalize to where they were before this all began. So, let's say it ended today.
>> It's going to take us till what, Labor Day, to get that back together. And you know where I'm going. What happens after Labor Day? I mean, you're doing you've got early voting underway. You're doing your door knockers are out. A lot of decisions, in fact, have already been made. If we're still paying four and a half, $5 a gallon, what does that mean come November?
>> There's only so much ground that people can make up in the month of October leading into election, right? So, Capitol Hill largely goes quiet here in October because people are going back to their districts to run for office and to campaign. A lot of decisions are already made. people have already baked it in that they spent their whole summer paying $5 for gas because it hasn't gone down and their summer travels were upended or at least you know incurring more costs than they were planning for.
But when you look at it and what Laura just said too, it's it's not just about the war in Iran, the costs that are happening. It's the separation of things that Donald Trump is doing versus what the Republicans in Congress are doing.
Are they representing their constituents? Are they serving the needs of the people that they swore an oath to defend and to serve? And if they can't answer that question when they're home in October or home in August or this summer, >> that's going to be their problem. It's not necessarily just pledging loyalty to Donald Trump. Yes, that may get you through a primary. That's not going to get you through a general, especially at a time we're facing right now.
>> And so, a decision needs to be made. Are you going to blindly say like Ken Paxton that your biggest attribute is that you say yes to whatever Donald Trump tells you? Is that your platform or is it I'm going to serve the constituents here at home in Illinois's exist or whatever it may be and actually address those needs.
That's a choice that every congress person needs to make, but also I'd say for Republicans, now is that choice. Now is that moment to decide.
>> So then there becomes a question as to whether more Republicans will draw that line as we get out of primary season and get into the general election uh cycle here. Is your is your thought, Laura, that that will happen or this is Trump's Republican party straight through November?
>> Well, I think the challenge that Republican uh elected officials have is that they've got to stand against Donald Trump. They've got to say, you know, in debates and on air and in interviews and with journalists like yourself, you've got to say, "Hey, no, I I think Trump was wrong about that. I would have done things differently." And you risk, you know, drawing the eye of Trump or the lack of funding, etc. Um, I think that they have a line to tow. I think what they're counting on and what I think Democrats are rightly uh intimidated by and afraid of is the Supreme Court decision that just got handed down and the fact that redistricting and the gerrymandered districts, Republicans have a sincere advantage there. So even in the face of the environmentals, the the districts are drawn so tightly in Republicans favor. Uh the question is, can Democrats overcome that gerrymandering in those districts?
because Republicans uh have been doing this for a long time, but I think uh have have won that redistricting war. Um if if that's you know, so the starting line is a little muddy. Uh the question is if Donald Trump's numbers continue to tank, if the economy continues to be problematic, which by all accounts, unfortunately, you know, for for working people, it remains. The stock market's flying, working people are struggling.
And so if this continues to go on, the wind's going to be in the face of Republicans. So, even with those redrawn districts, uh the question will not be do they lose the house, but by how many votes? And the and the question again, >> you don't think we're already there?
>> Continue.
>> Oh, sorry.
>> You don't think we're already there, Laura? Like, you redraw the maps all you want. I'm not sure what the advantage is at this point. I I can't keep score anymore. I don't Republicans are up four 10. I don't know what it is, but if Democrats think they can turn 30 seats, if this is a wave election, then redistricting doesn't matter.
>> Well, I mean, it used to not matter. But the problem is there the the numbers are because of the aggression with which Republicans have redistricted, the numbers are different than in past cycles and they have a more sincere advantage. Um, but you're right, wave elections uh can surmount that. But the question is, do you come in with such a razor thin majority majority that you can't act and and do you take the Senate or do you not? And those are the decisions um that that will be made. But but I don't think redistricting is a wash because the environmentals are so tough. I think it is a real challenge for Democrats and they've got to be sober about that as they look forward.
>> Well, oh, that's interesting, Laura, because that actually uh goes against what a lot of Democrats have said on the program and even some Republicans who are who are trying to keep score here and look at the historical implications of this midterm cycle. How about you, Mora, at at this point? I mean, if this is a wave election, will redistricting be a footnote?
>> It will be in this the long-term picture, I think, because it's creating less competitive districts. And what that means for everyday voters is that you have less choices.
>> We're already seeing, as I mentioned before, this small percentage who actually participates in the primary, >> what point would you feel as though is necessary to even participate if it's already been decided for you?
>> And that's the problem, not only here and now, uh, but long-term having less choices. You're feeling less infranchised to be part of this. Uh, and that's not good for our democracy.
That's not good for our republic. And and I think that I I I have a lot of concerns for Republicans moving forward, at least of this cycle, this midterm. I don't know about the Senate. I'm not there yet. I'll have to you have to stay tuned with how I feel about the Senate.
It's going to change hands.
>> But the House, I think because Mike Johnson hasn't made a a foothold in having any stances that he can take personally other than yes, I support Donald Trump and that's my policy plans for the year.
>> Yeah.
>> I think people are just looking for someone to be an adult in the room and right now neither side seems to be that person. Interesting. You watching that Michigan debate today? Speaking of which, >> very curious. See how Stevens does.
>> For sure.
>> There's a lot of pressure on her. I think >> a lot of pressure from establishment Democrats. Uh, and I guess there was too much pressure. I don't know. When it comes to Governor Whitmer, this is a really interesting headline today. Uh, with only a few months left of her term, the governor says she is not going to stage a run for president in 2028. This is somebody who is considered to be on the short list and would be a formidable Democratic candidate. Laura Fink, how does that hit you?
>> Uh, well, this is the the first I've heard of it. I didn't catch that particular headline, but I think you're going to see more of that as people assess the field and their viability.
And Gretchen Whitmer is a young candidate, so perhaps she thinks she's going to do better in a in a future election. But it it is surprising actually because she was considered one of the front runners and she has been positioning herself for a long time to sort of take on that challenge. And so uh but I think you're going to see a lot more of that and you don't always get the reasons why people choose not to keep their hat in the ring. Uh they you know you hear people back out for family reasons etc. Uh but a lot of times it takes years before you figure out what the what the real story was.
>> I want to have impact she said in a statement. I want to do good work, but I'm also looking forward to taking a little bit of a break and thinking about it, not jumping right into something.
So, you're running against Gavin Newsome.
>> I can't help but when I think of Governor Whitmore, I think of what that photo she did with that influencer with the Dorito where she's feeding influencer a Dorito as if it's the body of Christ. I'll never get that image out of my head.
>> I thought you were going to say the binders hiding behind the binders in the office.
>> Wasn't a great one either. So I think between those two photos if I were a you know >> maybe take a couple years to >> I would campaign heavily against that with those photos just blast them everywhere because that's pretty yeah pretty damn >> well if JD Vance and Marco Rubio are the short list on the Republican side you have Gavin Newsome right you have Governor Shapiro is it all governors on the Democratic side >> sounds like you also have like Governor Wesmore people talking about him >> right >> so >> a lot of it does seem governors I mean which is a little bit surprising but we'll see >> we'll see a lot more to talk about on that one but pretty interesting development here today to see Governor Whitmer say no to 2028. We've got a great panel for you here today. Mora Gillespie and Laura Frink will be back in our second hour, in fact, moments from now as we zero in on geopolitics and the back and forth here when it comes to the US and Iran striking a peace deal. The markets are listening closely and we'll have a lot more ahead as we welcome our global television audience. It's all next right here on Bloomberg.
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Live from Washington DC, this is Balance of Power with Joe Matthew and Kaylee Lines.
>> It's deal or no deal again at the White House. Welcome to the Thursday edition as Iran and the US reportedly reach an agreement to extend the truce and reopen the straight of Hormuz, but no one has approved this and the market is still asking questions. I'm Joe Matthew alongside Kaylee Lines in Washington on this Thursday. We have to remember Kaylee, we started the day with news that the US was striking targets in Iran. So, the wheels go around again.
>> Yeah. Once again, US forces saying they were acting defensively in shooting down Iranian drones that apparently were targeting commercial strips uh ships rather near the straight of Hormuse. So the ceasefire while they say it remains intact clearly is still seeing firing exchange and uh whether or not uh it remains intact and for what period of time is the question we are dealing with today. is we understand and Bloomberg has confirmed what Axios first uh reported that they're talking about extending this truce for 60 days using that window of time to try to start talks over the nuclear program specifically >> and presumably reopen the straight while talks were taking place over the nuclear program. That part is unclear though and at the moment we are looking at oil prices uh well I guess they're just heading lower now Kaylee they've given up gains from earlier and stocks are starting to pick up uh some momentum here as well. So maybe we're getting back on the positive side of things.
We've seen a real whiplash kind of market today.
>> Yeah, and we'll get a check on those markets with Charlie Pellet in just a moment. And as we consider what's happening in the energy market specifically and how it's feeding through into inflation, we obviously got PCE data uh today and we'll be hearing a little bit more about the inflation story uh in an important conversation that will be taking place shortly with the St. Louis Fed President Alberto Musulum and Bloomberg's very own Stephanie Flanders. But before we get to that conversation, as promised, let's check in with Charlie who's checking the markets up in New Life. Hey, Charlie.
>> Thank you very much. Joe and Kaylee, let me attempt to connect the dots between the falling oil prices and rising stocks. There was a headline moments ago on the Bloomberg Professional Service uh from Iran's president saying, quote, "We're not seeking nuclear weapons."
Now, all of that is according to the semiofficial Iranian students news agency. But again, the quote there, we're not seeking nuclear weapons. That quote attributed to Iran's president.
the headline uh right now on the Bloomberg Professional Service. So, the Dow, the S&P, NASDAQ, they're all pushing higher. Uh we are seeing the S&P 500 index, best level of the session right now, up 44 at 7565. That is a gain of 6/10 of 1%. The Dow Jones Industrial Average also at a record right now up 65 that is a gain of just about onetenth of 1% while NASDAQ up 217 for the NASDAQ composite index higher by 8/10en of 1%.
All of this with a VIX below 16, a 10-year at 4.44%, the 2-year 4.01% and the 30-year 4.97%.
Gold up $59 the ounce up 1.3%. I mentioned a move lower for crude. WTI now down 2/10 of 1% 88.47 a barrel while Brent crrew the global benchmark 9336 a drop there of 1%. After earnings, keeping an eye on Snowflake shares. They are ripping higher now by 37.5%.
Also after earnings, Salesforce up now by 1%. For on demand news 24 hours a day, subscribe to Bloomberg News now, wherever you get your podcast, Joe and Kaylee. That is a Bloomberg business flash.
>> All right, Charlie Pellet, thank you so much. The question for financial markets, the question for those of us here in Washington is the same one. Do we have a deal or not? As Bloomberg and other outlets are reporting today that the US and Iran have reached a tentative deal to extend the ceasefire for 60 days, using that time to negotiate over the nuclear program while the straight of four news reopens in the meantime.
But of course, President Trump has not yet signed off. We actually haven't heard from him about this today, though we did hear plenty from him yesterday in the cabinet meeting about the prospects of a deal with Iran.
>> Iran Iran is very much intent. They want very much to make a deal. So far, they haven't gotten there. We're not satisfied with it, but that we will be.
Right now, I think uh it looks like they want to just make a deal. They want to they they have I don't think they have a choice. They're just going back to the internet because they're getting clobbered. Their economy is uh in freef fall.
>> Referring to the regime restoring uh some internet access in the country.
indeed the accord for a 60-day extension of the truce and for negotiations uh to restart on Iran's nuclear program. There are big questions about whether this is sustainable. However, Kaylee, of course, we've seen this on again, off again uh now for weeks. We want to start with our political panel. We're going to talk more about this later in the hour with Congressman Mark Pokehan of Wisconsin.
But with us to start things off, Republican strategist Mora Gillespie, Blue Stack Strategies, and Democratic strategist Laura Frink, founder CEO of Rebel Communications. It's great to have both of you with us. And Mora, I'm wondering your thoughts on the communications effort here. You're a you're a communications expert and strategist. And when the White House is saying one thing, Iran is saying something else, and the stories continue to change day in and day out, keeping the markets certainly on pins and needles. How about voters? What is the impact when people hear so much conflicting information every day?
>> Well, I think it's also a concern about what are you getting their hopes up for?
Are you telling them that the gas prices are going down? Are you telling them that they shouldn't be worried about what's going on here at home and what should be happening overseas? Uh I think that there's a real concern as well as is this just to play with the markets?
>> Is this something that the White House is trying to push the president to do?
Is that why they got ahead of it?
Because the fact that all the outlets are saying the president has not agreed to sign it yet.
>> To me, that's very telling that the White House is already struggling with keeping the president on message, uh there's been plenty of people talking from within the White House who have been frustrated by the president's inability to focus on affordability, uh but his obsession not only with what's going on here in DC, the architectural projects and things of that nature, >> his lack of focus on what's happening in Iran and you know, kind of brushing it off and acting as though it's not a big deal. Yesterday during his press conference, he made a comment about blowing up Oman, an ally of ours. That is a comment that is not just flippant and it's deeply damaging. And I think that there is a real concern when this kind of a story breaks where it says the White House has agreed to it. Iran's telling a different story, but the president has a weighed in.
Unfortunately, in this in this world that we live in right now, nothing is going to happen until the president weighs in. Mhm.
>> Well, so you weigh in uh Laura on this knowing President Trump has repeatedly said he's not going to sign on to any deal unless it is a great one if he doesn't agree to sign on to this. Is that implicitly saying that this isn't a great deal for the United States?
>> Well, I I I I trust what Donald Trump does and not necessarily what he says.
And and here we don't know what a great one is. By his terms, any deal that he signs will be a great one. whether or not we are actually in a slightly worse position than before the war. The goals of the war were regime change for Iran to obliterate its nuclear program and for the the world to be in a better place. But we don't see any of that particularly happening. The JCPOA which uh the Obama administration negotiated was put in place and put constraints on nuclear development in Iran. We have the same regime. We have the nuclear uh like stores still in place and we have spent billions of dollars. American lives and the world economy is teetering on the brink. Uh we've also emboldened Iran to tax the the straight of Hormuz and to understand just how much leverage they have in the world economy and I think that leaves us in a worse position. Not to mention our relationships with other countries and the reliability of America as an ally is really being put into question. So there in arguably we're in a worse place, but is this deal there or are we Lucy and the football again? I mean, Donald Trump is so erratic. It's really hard to tell. And I think voters have kind of tuned out outside of everything but their pocketbooks right now because that's something a truth that they can really count on.
>> Mora, before Congress left town, the speaker of the house decided to pull war powers resolution off the floor when it appeared it might pass. And I realize there were some Republican absentees, but we've heard from a number of members, DZn say if that thing gets back to the floor, it's going to pass next time. As we question whether the president has found the line on this issue in Congress, do you believe that's the case? You used to work for a former for a Republican speaker and John Boehner. Will that pass with this conference?
>> I think Republicans in Congress are realizing they need to reclaim their their control. They need to reclaim the authority that Congress has and that the House has, the Senate has, but especially when it comes to this, this is impacting their constituents. And as Laura and I've discussed both in our comments about the gas prices, that's affecting their constituents. That's who they serve. They don't serve Donald Trump. They serve their constituents.
And this is an issue where they have to reclaim their power and the separation of powers. We're celebrating 250 years of this country. That's an important marker when you go home and you talk about what your role is, what you're doing for them, how are you providing and and working for them. And this is a way of doing that. We already saw the Senate start to break off and show that they're going to be willing to do that.
I think there are House members who are realizing they're up for re-election and Donald Trump's not and their jobs are on the line. Uh, and this is an impact. I think one of the thing I wanted to mention was, you know, when this all started, it wasn't about the straight up moves that was open.
>> Right.
>> When this all started, we joined with Israel. Where are they in this conversation? They've been largely cut out. And let's not forget that that's what brought us into this in the first place. And I do think that that's also impacting some members of Congress back at home. M >> well when we consider uh what members of Congress might be willing to do even if a war powers resolution were to pass, Laura, does it really matter? Isn't it just a symbolic vote?
>> Well, we know Donald Trump's going to do what he wants to do. I it it shouldn't be a symbolic vote. It should it should be constitutionally the power that Congress has to restrain the president from starting wars wherever they want.
And so I I I think the the challenge here and and I want to credit Mora again for sort of telling the truth straight.
I think the problem that Republicans have politically is that there's no critical mass that Tom they see Thomas Massie stick his neck out on the Epstein files and get it chopped off in the in the primary. The same with Dr. Kennedy standing up uh to to Health and Human Services Secretary Kennedy. You see this over and over again. John Cornin just days ago uh even though he stood with Trump 99% of the time. So there is no critical mass who are willing to stand up to this president and I will be pleasantly surprised if that changes before election day.
>> All right, Laura Frink and Mora Gillespie, our political panel trying to tell the truth. Thank you so much uh both of you for joining us as we consider the path forward for this conflict and of course ultimately what it means for the global economy. That is a challenge that uh policymakers have to deal with not just on Capitol Hill but inside the Federal Reserve building and the various uh buildings across the country that the Fed inhabits as they consider the economic picture and the inflation picture uh that this has created. And it's on that note we turn now to the Recuik Economic Conference where the San uh St. Louis Fed President Alberto Musulum is sitting down with Bloomberg's very own Stephanie Flanders.
Let's go live now to Iceland.
>> Well, thank you so much. I am indeed here in Recuik with Alberto uh Mousalam.
Thank you very much uh for joining us.
In your speech here at this conference, you pointed out that the US has inflation running meaningfully above target, long run inflation expectations creeping higher and yet a real policy rate that was below the level that the federal uh open market committee think is is neutral. So, not actually applying any restraining force on the economy.
That th all those things together sound like someone who wants to raise interest rates.
>> Great to be with you. Um, that's right.
Their real policy rate right now is running at around a half a percent, which is lower than the 1% that the committee believes is the neutral rate.
I think you have to look at the full picture and uh it looks to me like policy is at or slightly below the committee's long run neutral level. But if you combine that with the other things you talk about, you had emphasized the risks of the inflationary pressures on the demand side and the supply side of the economy. It just it it sounds like you think they should be leaning towards tightening. It sounds like you pro you might have been one of the policy makers in the April meeting who actually thought they should have removed the the the the statement against uh tightening in the in the statement. So yes, I I supported the interest rate decision, but I thought the easing bias was no longer uh consistent with the outlook and the balance of risks, which in my mind uh the balance of risk has shifted a little bit towards the inflation side and less towards the employment side. Um so uh whether the economy will require a hike or a cut or a hold will depend on on the scenario. There is a scenario where inflation uh remains high. there's no disinflation in the next quarter or two and in that scenario the economy will probably require uh a hike. There's also a scenario where the economy weakens materially in the second half of the year because real incomes are challenged and corporate margins are challenged. In that scenario, inflation could come down. In that scenario, we would be thinking of no hikes, maybe even uh a cut. So, so there there are two scenarios to play with here. But looking down the track, at least the markets are now fully pricing a rate hike by March 2027. Given where we are now, how we think things are going to proceed with oil prices and some of the risks on the supply side that you talk about, do you think that's a sensible thing for them to price?
>> Again, I think I think there there are two scenarios here. And uh uh I'm I don't comment northern market pricing.
I'm more focused on what's best for the economy and for Main Street.
uh markets have repriced materially in the US and in other countries and the front end of the curve. Um I think that's markets trying to understand what our reaction function uh is.
>> So I'm going to quote here because in your speech you talk very directly about the impact of of AI on productivity and the long run impact that could have on monetary policy and on interest rates.
But you warned that policymakers cannot depend on a potential productivity boom from artificial intelligence to ease elevated inflation right now in the short term. And in fact, you seem to suggest that the buildout of all the data centers uh associated with AI was actually putting upward pressure on inflation. Do you think the incoming Fed chairman Kevin Walsh is one of those policy makers that's inclined to be hoping for that?
>> So I'll speak about my views. Uh I am an AI enthusiast and and and productivity optimist. Uh but at at present it's unclear that productivity first of all is higher than the long-term average.
It's actually at or below the long-term average. And so to rely on uh productivity to do the inflation job seems a risky proposition uh because what if the productivity doesn't materialize in the future? Uh we could end up with higher inflation today and in the future. And um what AI is doing right now, it's not really expanding the supply side of the economy yet. What it's doing is it's putting upward uh demand pressures uh you know through through chip prices through the buildout. In my district, I hear of construction companies shipping workers all over the country. Uh this is specialized you know trades persons uh to to build out the the data center. So uh at present it's more of a demand story from AI than a supply story. And you see that in the aggra demand numbers and the percentage of capex uh that is coming from the AI uh buildout is is material.
>> But of course a lot of this does come down to how you think in the scenario the next sort of year and a half that that's what you're focused on when you think about where the policy is right now and in the next few quarters.
There's obviously different pressures, right? There's some have emphasized even John Williams has talked about the disinflationary forces that come from AI. If you start to see people lose their jobs, if you see jobs eliminated as AI is rolled out, you've highlighted more of the supply side, the sort of upside pressures that come from data centers and other things, those kind of pressures on resources. You seem pretty clear that those upside pressures are going to be the larger factor at least coming from the AI revolution in the next year.
>> I think there are two things in in the short run. I think the demand pressures are more prominent than the supply uh relief.
uh I'm prepared to change my view if and when I see AI actually contributing to aggra productivity uh growth which we don't see just yet in the data and when that becomes evident that that's actually uh putting downward pressure on inflation at present that's not where we are uh now in terms of the long run uh productivity and AI uh if and when we get uh productivity to grow above uh it long run average where currently right now is not uh the impact on real interest rates will depend on how permanent that increase in productivity growth is expected to be.
If it's expected to be very permanent that that will put upward pressure on real interest rates. If it's expected to be transitory then the supply side will win and that will put downward pressure on interest rates. One other thing that's happened since the beginning of the Iran crisis is a real change in in bond yields and actually uh we certainly think on Bloomberg economics we think that's been largely due to an increase in the term premium slightly uh an increase in what we're expecting on inflation but mainly on the on the term premium. So in that sense has has that the bond market already done some of the Fed's work for it? I mean is that producing a meaningful tightening even though you have a very low short-term rate? So my interpretation of what's happened to bond markets is that uh they're seeing an economy that's resilient on the real side. They see a labor market that's been resilient on the real side. They see higher realized inflation. They see higher expected inflation. When I look at the decomposition, I arrive at a different uh uh conclusion than your team, which is a fantastic team. uh my understanding it's about threequarters of it was an increase in the expected neutral rate uh policy rate that is and about one quarter higher term premia uh now if you look at forward markets >> so just on that you don't think it is hasn't meaningfully tightened financial conditions if you're looking on that kind of medium-term >> so I was about to say if you look at the forward uh real interest rates uh markets have raised the real implied forward so the real interest rate a year from now the interest rate two years from now have come up meaningfully in the last uh you know month or two.
>> But just going back to think you you don't think that it's made that the incoming uh Kevin Walsh is not uh has his job hasn't been made any easier by the tightening in the bond market. You still you would still have to be focused on that short-term rate.
>> Um I think when he comes in, he's going to take a look at the Oh, he has come in. He's been sworn in. you know, he's going to he's going to have his first meeting next uh next two weeks and he's going to have to look at the economy and we're all going to have to look at the economy and, you know, exchange views on the economy and exchange views on what the best policy for the American people is at that point in time.
>> Well, the other thing that the incoming Fed chair has talked a lot about is changing the Fed's communication tools.
He said he doesn't want to see so much or indeed any forward guidance. He wants to have fewer public speeches. He wants to get rid of the dot plot. Um, lots of people come in saying they want to have less less forward guidance and then they find they want to say things to the markets. Do you think that he's going to have a similar kind of learning curve?
>> Well, he's he's been in the Fed before.
So, he his learning curve will probably be uh much lower than than somebody who had not been there before. Uh, you know, he's expressed some views uh during the last year or so. uh once he's in the seat, once he consults with the full committee, and I expect him to consult with the full committee on all all these matters, you know, he will he will try and steer the committee in in in a direction or another. And uh I think it's always healthy to look at uh your communications policy, your monetary policy framework, and see how to adjust uh each or both uh to make sure we're fulfilling the dual mandate as best we can. But you're kind of on the opposite side of this because you wanted to actually connect the dots to whole forecasts, not not reveal who whose dots they were, but make a bit more sense of what the dots represented. Um the bigger picture, whereas he instead of elaborating on the dots, he wants to get rid of them all together. I mean, that's just a straightforward disagreement, right? Well, I I would say what I think uh I would uh like the most favor the most is that we have a communications policy that is very effective at transmitting what our reaction function is at any point in time. Right now we have the dots. We can make the dots more effective by connecting the dots uh in terms of transmitting our our reaction function. Now you could also think of not having the dots but replacing them with something else that is effective in transmitting to the markets and households and businesses what our reaction function is.
>> The other big thing that certainly people in the financial markets have been very focused on in uh Kevin Walsh's comments is about wanting to shrink the Fed's balance sheet. And actually, Governor Michael Bar said uh just the other day that he thought that was just the wrong goal, that it would actually raise risk for financial stability and that it wouldn't necessarily reduce the Fed's footprint in financial markets.
What do you make of that? I I think that's something that needs to be studied and we need to uh all uh you know review what the options are for doing that if if we so desired and I think it's very different to reduce the balance sheet from the supply side which could be very disruptive or reduce the balance sheet from the demand side for reserves demand for reserves as opposed to supply for deser reserves if uh we went in the direction of uh taking measures that would reduce the banking systems demand for reserves then that would be I think a smoother path path towards a uh lower balance sheet and percent of GDP or a lower growth of the balance sheet uh in nominal terms than simply reducing supply which could be disruptive.
>> But other things equal do you do you kind of share the desire on balance to have a smaller balance sheet?
>> I I think uh I think there u I'm going to do a two-handed economist now. There are some benefits to having a large balance sheet in terms of financial stability. uh but it's also u I think uh healthy for the central bank to have the minimal or minimum balance sheet that it needs to have to operate its monetary framework and to promote financial stability now. So I think we need to understand where that uh where that is.
>> Just a last question when you talk about communications and we've certainly had a lot of communications about the Fed from the White House but also we have ordinary people who are coping with the impact of of higher gasoline prices. Um, we're definitely having a conversation about higher interest rates now that we wouldn't have expected to have six months ago. And I think a lot of people, whether in the White House or in the broader economy, would say, hang on, what is what is the Fed doing thinking about raising interest rates in an environment where it can't affect the global energy price, that's thing pushing up inflation, and it definitely can't affect the roll out of AI because that seems to be just an unstoppable force. So why why raise interest rates?
So our mandate is price stability and maximum employment. Uh and right now we're we're above target on inflation.
And so uh the possibility or probability that we might consider an interest rate increase in the future I think has to be greater than zero. Um you know the economy has been robust. GDP growth has been at or around potential. The labor market is uh right around uh in terms of unemployment right around its natural rate around 4.3 4.4. Um and so we're missing on one side of the mandate. Uh inflation expectations are drifting uh higher to some degree and we're not missing uh on the other side of the mandate. So you have to take uh all all all the factors and you know we have a statutory uh responsibility to uh to hit both sides of the mandate.
>> And finally, you did mention uh Kevin Walsh was sort of is is in the building and has been sworn in. uh he talked in the past about wanting to shake, you know, break break some heads and have a sort of revolution, be a be an agent of change in the Fed. Is that the way that he's presented himself internally?
>> I think I think uh the new chair uh or chair wars I should say will uh be asking some very profound and deep questions about uh many ways in which we operate, you know, monetary policy, communications, operations. Uh and so I think that's uh refreshing. You know, a new a new leader should always come in with with a vision and uh asking very deep questions about how things uh were done in the past. I expect that to be the case.
>> Alberto Malam, thank you very much for joining us and I think we'll even forgive you for disagreeing with our US economics team. Thanks very much.
>> Stephanie Flanders, we thank you as well for bringing us an important conversation here on Balance of Power.
I'm Joe Matthew alongside Kaylee Lines in Washington. And ahead of our conversation with Congressman Mark Pokean is going to be joining us live in just a moment. The Democrat from Wisconsin with the latest on so many issues including the war with Iran. We want to update Wall Street very quickly.
Charlie Pellet has the latest on the markets from his perch in New York.
Charlie, how things going >> right now? Do want to begin with the 10-year yield there 4.45%, the 2-year 4.01% and the 30-year below 5% 4.98%.
We did have the Dow wavering but right now higher up 11 trading at a record 50,655 on the Dow little changed up under 1/10enth of 1%. S&P up 42 that is a gain of 610 of 1%. NASDAQ higher now by 217 that's a gain of 8/10en of 1%. Spot gold is advancing by $50. Yamsta 454 up 1.1%.
West Texas Intermediate crude it is a mixed picture for oil right now. WTI at 88.96 a barrel. It is higher by 3/10en of 1%. We're seeing brank crude retreat to 938 a barrel. Down now by just about 510 of 1%. Briefly keeping an eye on some of the retailers after the bell.
We'll hear from Costco right now. Dollar Tree after earnings up 18.8%.
Best Buy after earnings up 17.8%.
Kohl's rounding out a stellar day for retailers up 18.2%.
Kaylee and Joe, that is a Bloomberg business flash. All right, Charlie, we thank you. It's a market that's gone through a couple of different phases today based on headlines coming out of Washington as we woke up to news today that the United States had resumed strikes against Iran. Several targets, not unlike this time yesterday. But then, of course, Kaylee, the news cycle started to change a lot. And now Bloomberg is talking to sources who say we may well be on the verge of a deal to extend the ceasefire by 60 days, reopen the Straight of Hormuz, and continue a side negotiation about the future of Iran's nuclear program. The problem is we've heard reports like this before, and it's unclear what we should be taking seriously.
>> Well, and whether or not we take it seriously might depend on what we hear from President Trump about it. He's not commenting directly on this today. and our understanding via sources familiar is that he still needs to approve >> these terms. So, as we consider what these terms may be and the prospect uh of their approval or denial, we turn now to uh Democratic Congressman Mark Pokean uh of Wisconsin's second congressional district who is joining us now on Bloomberg TV and radio. Congressman, welcome back to Balance of Power. As we consider the terms, as we at least understand them, to be a 60 within 30 days, Iran would be removing mines from the straight of Hormuz. uh commercial shipping would flow unrestricted once again. Are these terms you believe the United States should agree to?
>> I have no idea where this president is with this war. Um you know, this has been a war of choice from the very beginning. There was no imminent threat to the United States. We've seen this same act before. Um whether or not it's real this time, I don't know. They were just exchanging fire within the last 24 hours. All I do know is that this president has fumbled this entire uh war in in the most magnificent way. Uh the fact that we're paying almost $2 more per gallon for gas, the fact that we've doubled diesel costs for my farmers in Wisconsin, doubled the cost of airline fuel, uh spent over $90 billion on this war, and we may not even get to where we were with the deal we had under President Obama. I wish I could tell you there was any clarity with this, but with Donald Trump, there's rarely clarity.
>> Well, Congressman, with that said, and I know you've been clear calling this the president's unnecessary war with Iran, if we were in a world in which you were advising the White House, would you withdraw forces now or do you need to continue that pressure to find a diplomatic solution?
>> Yeah, I you know, the problem is they went into this without a plan. I we had constituents that were caught over there. Clearly, there was no plan. We dealt very directly with some people on that. There's no plan on how to get out of this. They didn't really anticipate what was going to happen at the Straits of Hormuz. And we're not just affecting American consumers, but some of our best trading partners around the country, South Korea, Japan, they don't have natural energy sources. 70% of their energy comes through the Straits of Hormuz. We're hurting those people that are buying things directly from the United States, which hurts American companies. I I just think Donald Trump has to I know it's hard, but put the ego aside, you know, he is the narcissist and chief and try to uh understand that this has been a complete debacle and that we've got to reverse course as quickly as possible.
>> Well, it is a question of how quickly uh is possible given our position here uh and the fate of of a lot of commercial and and energy flows particularly for the global economy in the balance.
Congressman, we still have American troops in theater, at least for the time being, and the Pentagon has not yet sent uh you and your colleagues a supplemental funding request. Do you have any idea as to when exactly that could come and what that number would look like and whether or not you would approve it? I know you've advocated for less defense spending, not more. Yeah, look, six years ago, we started Barbara Lee from California and I started a Pentagon spending reduction caucus when we were spending roughly 650 uh plus or minus 20 billion dollars on defense to try to keep it in check. They failed the last eight audits. They can only account for 55% of their equipment and yet we keep giving them money. And that was to hold it in then. We're at a trillion dollars now, six years later and the president wants a trillion half dollars for uh essentially defense contractors.
This isn't really money that's going to the military. A small part of it is, but most of this is going to defense contractors. So, we'll see what they give us, but many of us are really concerned because every dollar that's going towards the Pentagon is not going to healthcare or housing or veterans because veterans dollars are separate than defense dollars. So, you know, a lot of us, especially me on appropriations, are very concerned about uh that we think this is pretty irresponsible spending. and now uh he's cost us at least $90 billion more that we didn't need to have had to spend.
>> Well, Congressman, you agree with uh Steve Ellis at the group Taxpayers for Common Sense out without a with a statement following uh the House committee revealing details of this uh proposal. The nation cannot afford this bloat, he writes, we're up to our neck in debt with interest payments now surpassing a trillion dollars a year in interest rates rising. Meanwhile, the Pentagon, which still can't pass an audit, wants to spend taxpayer dollars on a gilded battleship that cuts against its own vision for a more agile and distributed naval force. What did Democrats do if that's the case? Then, can you get to this in committee or will Republicans in the majority make this a law? Well, this is one where the public, I think, needs to get a little bit involved because a trillion and a half dollars for the Pentagon is as much as the next 35 nations combined. Uh that's a lot to be spending, a lot more than we need to be spending. And that is uh in lie of other things including middle class tax breaks in lie of uh healthcare, in lie of education, in lie of housing, in lie of veterans and so many other programs. So I think people really do need to have a bigger concern.
And just to give you an idea of some of the spending that happens and why it is a boondoggle in many ways, the most recent class of aircraft carrier, the Ford class, when the toilets get clogged, they literally have to flush $400,000 worth of acids down the toilet to unclog them, which is the the definition of flushing money down the toilet. Um, we need to get a better grasp on how much we're spending on defense, period. But right now, I don't have a lot of confidence in Pete Hegathth, a former Fox News host, uh, who now is running the Department of Defense. I don't think they have a game plan of what they're doing. And I think everyone is actually seeing that happen in real time.
>> Well, as we consider whether everyone is seeing the things you are seeing, uh, Congressman, it does seem that more Republicans are starting to become wary, uh, of being mired in this conflict in the Middle East. We saw the speaker polling a vote on the war powers resolution before the Memorial Day recess, but that is going to have to come to the floor when you return. Do you expect that it will pass?
>> Yeah, I I think we're very close to it passing. It already was was very very close. The Senate, it did just pass. Uh right. Uh so I I think we're on the cusp of it, which is why it got pulled last week. They played a game with saying the number of days that they needed to have us vote on it. But uh you know I think there are enough Republicans to join and I believe this time it will be every single Democrat uh to make sure that we're doing what the Constitution says which is Congress uh initiates any war and therefore the war powers resolution is so needed. I'm sure that's why Donald Trump's trying to quickly get something put together to avoid that. But at the same time we want to make sure this is done right and it's past time Congress get involved.
>> What happens if the administration just blows right through it? How do you hold the White House accountable?
>> Well, and that's where we're going to be able to to see what power Congress actually has. Constitution makes us a co-equal branch of government. Speaker Mike Johnson might want us to be a subservient branch, but I think there's enough Republicans and Democrats who don't believe uh that that is is the case that we should be following the Constitution. And that means um you know, it is Congress's ability to deal with this. So I think that vote very likely could be next week and uh you know hopefully we can bring some sanity to what's happening because right now um the president has fumbled this miserably and you know I don't want it to cost more American or Iranian lives >> with the view from Madison Congressman Mark Pokean Democrat from Wisconsin second district. It's good to have you back congressman on Bloomberg. It's been some time. I'm Joe Matthew alongside Kaylee Lines in Washington as we wait for word from the White House. There's really been no uh action on Truth Social today. Uh never mind conversations or public comment from him on any of this.
They're presumably reviewing these options right now.
>> Yeah, I guess we'll see if we hear from the Treasury Secretary about it. Scott Besson is going to be briefing the press in the White House briefing room at 2 p.m. Eastern time. And we'll have uh some of that for you here on Bloomberg TV and radio. I wonder what kind of questions he could get uh around the straight of four news and inflation in particular. So stay with us for more here on Bloomberg.
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Yeah, Heat. Heat.
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Heat.
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Hey, hey, hey.
It's 140 on Wall Street. We do check markets all day long here at Bloomberg.
We've got the Dow just moving lower right now. Little change. The key takeaway retreating from a record down just about seven points under 1/10enth of 1%. S&P though pushing higher up 41 right now higher by 510 of 1%. NASDAQ also at a record up 217 for the NASDAQ composite index. That is a gain right now of about 8/10 of 1%. Source telling Bloomberg that Iran and the US have reached a tentative deal to extend a ceasefire and work toward an agreement to end the war. The tenure currently at 4.45 45% the 2-year 4.01% and the 30-year 4.98% all of this with the VIX below 15 uh below 16 I should say. We have got spot gold at 454 the ounce up 1.1% West Texas intermediate crude up 210 of 1% 88.90 for a barrel of WTI Brent 9379 barrel of Brent down by 510 of 1%. CVS Health has reversed the decision to restrict access to Eli Liy's obesity shots zapbound for certain drug plans after Lily agreed to cut the price it charges many health plans. CBS shares are up by 1.1% Lily up by 3.6%.
For on demand news 24 hours a day, subscribe to Bloomberg News now wherever you catch your podcast. Joe and Kaye is a Bloomberg Business Flash.
>> All right, Charlie Pellet. Thank you, sir. He'll be back at the top of the hour with more on the markets. 2 p.m.
Eastern time to kick things off on Bloomberg Business Week Daily. Balance of Power, the Thursday edition, live from Washington right now. As we consider what we might hear from the White House, there are a lot of questions about what the president is up to. Now that we do understand, according to reporting from Bloomberg and other agencies, that there is a deal on the table for an extension of the ceasefire between the US and Iran by 60 days. That would also include reopening unfettered access, reopening the Straight of Hormuz and continuing negotiations over that 60-day period uh with regard to the country's nuclear program. The most recent we have heard, and the president needs still to approve this if it's going to be enacted. The most recent we've heard uh was yesterday in the cabinet room as the president met with his cabinet, brought reporters in for a conversation, and made clear that he was not being motivated by politics here in the United States.
Listen, >> they're going to outweight me. You know, we'll outweight him. He's got the midterms. I don't care about the midterms. Look what happened last night.
That was the prelude to the midterms.
People understand it. They know that very simple. Iran cannot have a nuclear weapon. I'm doing that for the world.
I'm not doing it just for us.
>> Of course, Bloomberg's Washington correspondent, Tyler Kendall, was in the cabinet room with the president for those comments, and she's joining us now live from the north lawn of the White House. So, Tyler, I don't believe you or any other members of of the White House press pool have had the chance to see the president today. We also haven't heard from him on True Social. Do we have any sense as to whether or hear from him on approval or not of this tenative agreement? Well, Kaylee, that is the big question that we are all waiting for. Though, we are expecting to hear from the US Treasury Secretary Scott Bessant at the top of the next hour and perhaps that will give us some insight into where the US stands when it comes to these diplomatic negotiations and whether or not we are getting closer to a deal. Because, as you both mentioned, sources confirmed to Bloomberg that a potential 60-day memorandum of understanding is currently on the table, but it's awaiting President Trump's signoff. And so far, the sides have appeared publicly to still be pretty far apart on some of the main issues. We did get a statement out of Iranian state media citing one Iranian official that says, "Progress has been made, but a lot of sticking points still remain here. But it does appear clear that we are moving towards a phased agreement, if we get an agreement at all, that would prioritize reopening the straight overuse."
President Trump said as much just yesterday. That would include the US probably having to lift its naval blockade, of course, a big point of leverage for this White House. And only then, once those components are in place, could we move into this secondary phase of negotiations for potential curbs on Iran's nuclear program. Uh, at this point, uh, this reporting would indicate that there has been progress from the two sides. Yesterday, President Trump said that he wasn't satisfied quite yet. So we have to see if there were agreements made here on some of those key points, mainly the Straight of Hermuz because Joe and Kaye, we heard earlier today from Iranian state media threatening retaliation if the US disrupts uh their control over the straight as we see the country impose these navigational services fees, set up this new authority, and confirm that so far they've let through 26 commercial vessels in the last 24 hours, seeming to suggest that they're not quite ready to let up their grip on the straight just yet.
>> Yeah. Realizing we have not resumed uh military action outside of the few strikes that we've heard of in the last couple of days here. Tyler, there's a new report out from the Center for Strategic and International Studies that questions what we have in our supply of munitions that the US used so many interceptors from missile defense systems like the Patriot, like the THAAD that we talk about so often uh that stockpiles will not be replenished until 2029. We've still not heard any acknowledgement to that from the administration. Right. The only thing that the the president Pete Hexath have suggested that we have unlimited munitions. Is that the case?
>> We are expecting the Treasury Secretary to likely address this during the briefing. Joe, we know that revitalizing the defense industrial bases. We talk a lot about here on Balance of Power has been a bipartisan priority that at this point has spanned multiple administrations, but it has raised alarm bells. And it's also raising some questions on Capitol Hill about why we haven't seen that supplemental uh funding request yet when it comes uh to being related to the conflict in Iran as the administration will likely have to ramp up the production of these uh critical munitions and stockpiles as the war drags on. That of course contributes to the timeline that lawmakers are looking for and the timeline that Americans are looking for. you mentioned and played that sought from President or soundbite from President Trump earlier talking about you the midterms and and that uh this will be worth it to ensure that there are curbs when it comes to Iran's nuclear program. But Joe and Kaye, it's probably worth pointing out that we have heard some concerns from some hawkish Republican members on Capitol Hill that they don't want the administration to give up leverage without concrete details on what those curves could be. The reporting does indicate that in this 60-day potential memorandum of understanding, we would see talks about uh enrichment levels as well as what happens to that stockpile of highlyenriched uranium prioritized in this 60-day period.
>> Tyler, thank you so much. Live from the White House on a sunny day here in Washington, Bloomberg's Tyler Kendall.
Oil prices have largely flattened out.
Crude oil in New York, WTI, is up about a quarter right now, just shy of $89 a barrel. Brent is in fact lower. It's down about a half dollar uh to just under $94 a barrel. And we mentioned that with the idea of the straight potentially reopening imminently. The president was asked about it yesterday in that cabinet meeting and who would control the straight knowing that Iran has attempted to create a system, a tolling system uh that some have already paid to get through the waterway. Listen to Donald Trump.
>> The straight's going to be open to everybody. It's uh >> and who would control that?
>> It's international waters. Nobody's going to control it. We're going to watch over it. We'll watch over it, but nobody's going to control it. That's part of the negotiation that we have.
They would like to control it. Nobody's going to control it. It's international waters and Oman will behave just like everybody else. So, we'll have to blow them up. They understand that. They'll be fine.
>> A comment that raised a lot of eyebrows as Oman of course is an ally uh and questions as to whether he meant to invoke that name or Iran. Let's add the voice of Clayton Seagull, a senior fellow uh at the James Leer Chair in Energy, Geopolitics, Energy Security, and Climate Change Program at the aforementioned Center for Strategic and International Studies, CSIS. Clayton, it's great to have you back as part of our conversation.
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