US-Iran Nuclear Talks; Trump's List to Succeed Fed Chair Powell
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Good morning, I'm Nathan Hager. And I'm Karen Moscow. Here are the stories we're following today. Karen, we begin with the latest from the NATO Leaders Summit in The Hague. President Trump is calling it a major success after finalizing a significant defense spending boost from member states. In a very historic milestone this week, the NATO allies committed to dramatically increase their defense spending to that 5% of GDP, something that no one really thought possible.

And they said, you did it, sir. You did it. Well, I don't know if I did it, but I think I did. President spoke at a news conference following the NATO summit heard live on Bloomberg radio. The agreement gives member nations until 2035 to reach the 5% spending threshold. Nathan also at the NATO summit, president Trump opened the door to diplomacy with Iran after last weekend's airstrikes on its main underground nuclear sites. We're going to talk to them next week with Iran. Uh,

We may sign an agreement. I don't know. To me, I don't think it's that necessary. The president repeated his argument that the strikes obliterated Iran's nuclear facilities. An initial Pentagon assessment says it may have set the program back just a few months. Bloomberg's Jumana Bersetchi has more on where the talks could go from here. In the run-up to this war, five rounds of discussions had taken place at

mediated by Oman, by Qatar, in order to progress with the nuclear deal. The sixth round was supposed to take place a couple of days after the war began, but of course the 12-day war then ensued, putting back all of those discussions. Now the U.S. are expressing optimism that the two sides can find some form of an agreement. Yesterday, the special envoy, Steve Witkoff, in an interview said, we are hopeful for a comprehensive peace agreement. The signs are there.

Bloomberg's Germana Bersetchi reporting from Dubai. President Trump says the war between Iran and Israel is effectively over after the U.S. bombing campaign, though he says it could start again. And Karen, President Trump is once again taking aim at Jay Powell. The Wall Street Journal is reporting the president could actually announce a replacement for the Fed chair.

As soon as September, he says he has a list of people to succeed Powell when his term expires next year. Yeah, I know within three or four people who are going to pick. I mean, he goes out pretty soon, fortunately, because I think he's terrible.

We have no inflation. We have a tremendous economy. President Trump has called on the Fed to lower rates by two and a half points. Last week, the central bank decided to leave rates unchanged in the range of four and a quarter to four and a half percent. Markets are pricing 62 basis points of easing by the end of this year. The chance of a cut next month remains at about

Meanwhile, Nathan Powell wrapped up two days of congressional testimony on Capitol Hill. The head of the Fed repeated his message that it's tough to figure out how tariffs will affect inflation. The question is, who's going to pay for the tariffs? Originally, it's the importer, but it gets passed along through the distribution change to some extent to the consumer. The ultimate question of it is how much of it does show up in inflation.

And honestly, it's very hard to predict that in advance. Powell told the House Financial Services Committee that recent economic data is backward-looking and many economists expect a meaningful increase in inflation over the course of this year due to tariffs. Karen, investors get a slew of reports to digest this morning on the economy. And we get a preview from Bloomberg's Michael McKee. Bit by bit, analysts are hoping to build a picture of the post-tariff announcement economy.

Initial jobless claims will be front and center today. Claims have ratcheted a little higher in recent weeks. Any rise in unemployment may suggest earlier Fed rate cuts.

We'll also get new orders for durable goods. A jump in orders for expensive Boeing jets should boost the headline number. But capital goods, a proxy for overall business spending, are forecast to rise only modestly. That may be another signal the economy is slowing. Also on tap today, the first look at trade in May. Imports are expected to drop for a second month after a lot of tariff front-running purchases the first part of the year.

That should narrow the overall trade deficit. Michael McKee, Bloomberg Radio. All right, Michael, thank you. As for the equity markets, futures are higher ahead of the Thursday session. Shares of Micron Technology are up 2.5% in early trading. The chipmaker is forecasting stronger than expected revenue this quarter, citing booming demand for AI-related chips.

Kim Forrest is founder at Boca Capital Partners. I think they really eclipsed what I had thought they could do in this quarter. Remember, the chips that are driving their earnings higher sold out for the end of this year, which is next quarter. So they're already booking next year's 2026, you know, high bandwidth memory orders.

And Kim Forrest of Boca Capital Partners. Micron has been one of the chip industry's hottest stocks this year. Shares have gained more than 50% so far this year. And Karen Fellow, chipmaker NVIDIA is trading at a record high this morning. It's up another 1% in the pre-market. The AI Darling's market cap has risen 63% off an April low, a rally that has added nearly $1.5 trillion.

to its valuation. NVIDIA has now overtaken Microsoft as the world's largest stock with a market cap of nearly $3.8 trillion. In Europe, Nathan Schell says it has no intention of making an offer for rival oil giant BP. And we get the very latest from Bloomberg's Ewan Potts. Ewan.

Karen and Nathan, Shell's announcement today quelled speculation that the UK's two oil majors could combine to take on the likes of Exxon and Chevron. BP's ADRs briefly surged in New York yesterday after The Wall Street Journal reported the company was in early stage takeover talks. But today, Shell has clarified it has no intention of making an offer for BP and says no talks have taken place. In London, I'm Ewan Potts, Bloomberg Radio.

Time now for a look at some of the other stories making news in New York and around the world. And for that, we're joined by Bloomberg's Michael Barr. Michael, good morning. Good morning, Karen. Closing arguments are scheduled to begin today in the Sean Diddycombe sex trafficking trial. Yesterday, federal prosecutors asked a judge to strike language regarding attempted kidnapping and arson from jury instructions.

While the rap mogul also faces racketeering conspiracy counts, prosecutors said in a filing to the judge that they understand the court's desire for streamlined instructions to jurors. People are still talking about this week's political shocker in the New York Democratic primary for mayor. A 33-year-old self-described Democratic socialist, State Assemblyman Zoran Mamdani, defeated nearly a dozen candidates, including former Governor Andrew Cuomo. Mamdani

Mamdani, speaking to WABC, was asked about democratic socialism. I think of the words of Dr. King, who decades ago said, call it democracy or call it democratic socialism, there must be a better distribution of wealth for all of God's children in this country. And it gets to the heart of the matter, which is inequality, and my belief that

Every New Yorker should have what they need to live a dignified life. Mamdani campaigned on freezing rent, making buses free, and opening city-run supermarkets. Barring any surprises, Mamdani will face the city's current mayor, Eric Adams, who is running as an independent in November. He's a snake oil salesman. He will say and do anything to get elected.

Former Governor Cuomo has conceded the primary, but he's not out of the race just yet. He is now weighing his options, including whether to run as an independent in the general election. Today marks 10 years since the Supreme Court's landmark ruling, which granted same-sex couples the right to marry in the U.S. It comes as LGBTQ advocates have warned that under the court's new conservative majority, which eliminated the right to abortion, marriage equality could also be at risk. The

The human rights campaign's Jonathan Lovitz. - The legal setbacks for LGBTQ people, particularly trans people, are deeply troubling. But on the other side, the groundswell of support for our community to protect our rights

is louder and growing louder by the day. The human rights campaign's Jonathan Lovitz. Global News, 24 hours a day and whenever you want it with Bloomberg News Now. I'm Michael Barr and this is Bloomberg, Karen. All right, Michael Barr, thank you. For enterprise organizations, managing all your food needs is a tall order.

But with Easy Cater, you get a single workplace food vendor with the tools and resources to make it easy, giving teams across your organization an easy way to order from a huge variety of restaurants, all on one platform. All while consolidating your corporate food spend so you can control costs, streamlining billing and payment and simplifying reporting.

EasyCater, your business tool for food. To learn more, visit easycater.com slash podcast. Thrivent can help you plan your finances for the people, causes, and community you love. What makes Thrivent different? Financial services and generosity programs are combined to help you build a financial roadmap for the future.

while also creating opportunities to give back along the way. Visit Thrivent.com to learn more. Thrivent, where money means more. How can you free your team from time-consuming office tasks? Amazon Business empowers leaders to not only streamline purchasing, but better support their teams.

Smart business buying tools enable buyers to find and purchase items fast so they can focus on strategy and growth. It's time to free up your teams and focus on your future. Learn more about the technology, insights, and support available at AmazonBusiness.com.

Time now for the Bloomberg Sports Update. Here's John Stashower. John, good morning. Good morning, Karen. It's been a rough couple of weeks for both the Mets and Yankees, especially the Mets. Ten losses in 11 games. They went from a five-game division lead down to second place. But for one night at Citi Field, it came together against the Braves, who they were 0-5 against. It started in the fourth inning. Here's Juan Soto. 1-1 game as we go to the bottom of the fourth. And he drives one to deep right center field. Back goes Harris to the wall. It's out of hand.

back in front on Juan Soto's 18th home run of the year. SNY, the Soto blast started a five-run inning and three innings later, Soto homered again, his fourth multi-home run game this season. Mets beat Atlanta 7-3. The series ends tonight. The Yanks salvaged one in Cincinnati, 7-1.

Out hit the Reds 13-4. Both Trent Grisham and Jason Dominguez had four hits to back Max Freed, who leads baseball with 10 wins. Yanks now have their first day off in a while. They'll host the A's tomorrow. Red Sox limp home with a five-game losing streak, beaten again by the Angels 5-2. The Sox struck out 14 times. Nationals held the three hits, lost 1-0 to San Diego.

Duke's 18-year-old Cooper Flagg, second youngest, first overall NBA draft pick. Only LeBron James was younger, and that was by eight days. What's so different about Flagg? He'll be the first NBA player born and raised in the state of Maine.

It means a lot to me, you know, to have the support of the whole state. And, you know, I know how many people showed up today in support of me at some of the draft parties back home. So, and it feels amazing knowing I can inspire younger kids. I mean, I was in their shoes really not that long ago. So just to know I can give those kids those feelings.

and have the whole state behind me, it means a lot. And into the Dallas Mavericks. San Antonio with a second pick to Dylan Harper from Rutgers. Another Duke freshman, Conn Kniepel, went fourth to Charlotte. And the other Rutgers freshman, Ace Bailey, went fifth to Utah. Nets had five first-round picks. The Knicks will get to make a pick tonight in the second round. John Staschauer, Bloomberg Sports, Karen Nathan.

Coast to coast on Bloomberg Radio. Nationwide on Sirius XM. And around the world on Bloomberg.com and the Bloomberg Business App. This is Bloomberg Daybreak. Good morning, I'm Nathan Hager. President Donald Trump has left the NATO Leaders Summit in The Hague after sealing a commitment for member states to raise defense spending to levels many thought was impossible just months ago. Five percent of GDP.

I think we had a great victory here, but this is an ongoing project. This is the safety of Europe, the safety of the world. President Trump spoke there at a post-summit news conference heard live on Bloomberg Radio this morning. We're joined by Bloomberg News senior writer Stephanie Baker. Stephanie, good morning. Of course, a 5% target would be a massive change to Europe's security architecture. Can member states get there given the challenges they're

that so many of them had just getting to the current 2% goal. Good morning. Good morning. You're right. 5% would effectively mean hundreds of billions of euros of additional defense spending. But I think it's clashing with fiscal realities.

many European countries just don't have the scope or the fiscal room to spend anywhere near that kind of money. And remember, the 5% target is actually 3.5% on actual defense spending, with 1.5% allocated to defense-related infrastructure. So, it's all a bit fuzzy. And France and Italy have opted not to use

the EU rules that would allow them to take on additional debt to finance that spending. I think the real leader here will be Germany, which has promised really ambitious additional new spending on defense and infrastructure, and will probably pull ahead and be a real leader on that.

We heard the criticism from President Trump with Spain, you know, openly talking about the challenges it says that it could face reaching that 5% target, talking about maybe making them spend twice as much on a trade deal. Of course, Spain's part of the EU, but...

Could this affect this fuzziness? Could this affect what's going on in trade talks between the U.S. and the EU? It could. And for countries like Spain, they'll have to choose whether or not they want to spend potentially tens of billions more on defense or lose maybe single-digit

billions on a bad trade deal with the U.S., and I think that's the kind of calculation many will be making. The NATO summit was really designed to deliver Trump a victory by agreeing to that headline 5% figure, while getting Trump to reaffirm the U.S. commitment to NATO's Article 5, that the U.S. would come to the defense of any NATO country that was attacked.

And it achieved that goal. But I think they fudged the numbers and that will come back to haunt them down the road if they are unable to really deliver that kind of spending. What does that mean going forward when it comes to putting continued pressure on Russia to ease back on the fighting between Ukraine and come back to a negotiating table? It's incredibly important. And I think that's one of the things that was sort of sidelined at the NATO summit, particularly

Ukraine needs a new package from the United States for military aid. What the Biden administration had approved before he left office is now coming to an end. And Ukraine needs, in particular, Patriot missile defense systems to ward off further Russian air attacks.

Trump said at the summit that he would look at it, but we are very far from any kind of deal that would provide additional serious military aid to Ukraine. And in fact, a lot of these European countries are counting their military aid to Ukraine as part of that NATO pledge, which is, again, another kind of fudging of these sort of fuzzy numbers. And they're using the proceeds from Russian frozen assets

assets to finance it. So there's a real lack of money here. And I think that is the central problem. Ukraine needs a really serious additional military aid to ward off Russian attacks because Putin does not seem to have any appetite to come to the table for a ceasefire. Just 30 seconds left. Does all this make it more difficult for Europe to put further sanctions pressure on Russia?

Well, EU leaders are meeting today to approve their 18th package of sanctions. And it's expected to widen restrictions on Russian banks and Russia's shadow fleet of oil tankers. A proposal to lower the price cap on Russian oil, which is set at $60 a barrel,

to $45 a barrel, that seems dead in the water now because Trump opposed that, even though most EU leaders were supportive of it. There does need to be a more robust package of sanctions to really drive down Russia's oil revenues to really impact

Putin's ability to finance the war. This is Bloomberg Daybreak, your morning podcast on the stories making news from Wall Street to Washington and beyond. Look for us on your podcast feed by 6 a.m. Eastern each morning on Apple, Spotify, or anywhere else you listen. You can also listen live each morning starting at 5 a.m. Wall Street time on Bloomberg 1130 in New York, Bloomberg

99.1 in Washington, Bloomberg 92.9 in Boston, and nationwide on Sirius XM Channel 121. Plus, listen coast to coast on the Bloomberg Business app now with Apple CarPlay and Android Auto interfaces. And don't forget to subscribe to Bloomberg News Now. It's the latest news whenever you want it, in five minutes or less. Search Bloomberg News Now on your favorite podcast platform to stay informed all day long.

I'm Karen Moscow. And I'm Nathan Hager. Join us again tomorrow morning for all the news you need to start your day right here on Bloomberg Daybreak.

For enterprise organizations, managing all your food needs is a tall order. But with EasyCater, you get a single workplace food vendor with the tools and resources to make it easy, giving teams across your organization an easy way to order from a huge variety of restaurants, all on one platform. All while consolidating your corporate food spend so you can control costs, streamlining billing and payment and simplifying reporting.

EasyCater, your business tool for food. To learn more, visit easycater.com slash podcast. Thrivent can help you plan your finances for the people, causes, and community you love. What makes Thrivent different? Financial services and generosity programs are combined to help you build a financial roadmap for the future while also creating opportunities to give back along the way. Visit Thrivent.com to learn more. Thrivent, where money means more.

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