June 24, 2025 • 19 mins
President Donald Trump announced Israel and Iran had agreed to what he called a “complete and total” ceasefire, easing fears that a conflict between the two adversaries might escalate. Trump, who made the surprise announcement on his Truth Social platform days after ordering airstrikes on Iran’s nuclear facilities, said the accord would begin around midnight US time and is aimed at a lasting end to the fighting. Iranian Foreign Minister Abbas Araghchi said in a tweet afterward that while there is no ceasefire agreement, his country had no intention to keep responding to Israeli attacks after 4:00 a.m. Tehran time. We break down the headlines with Joe Mathieu, co-host of Bloomberg Radio and Television’s Balance of Power.
Oil slumped and stocks rallied after Trump announced the ceasefire, spurring optimism the worst of the Middle East conflict is over. Global benchmark Brent crude tumbled almost 5% in early Asian trading after the surprise comment. S&P 500 futures rose 0.5%, while key stock indexes advanced in Japan, Hong Kong and Australia. The news damped demand for haven assets with the dollar weakening against all its Group-of-10 peers and gold dropping. Bloomberg’s Jill Disis speaks with our TV colleagues, Yvonne Man and David Ingles, in Hong Kong.
Plus - we look at how all the day’s news may play into the Federal Reserve’s inflation outlook. We get market insights from Ross Mayfield, Investment Strategist at Baird.
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 2 (00:10):
Welcome to the Bloomberg Daybreak Asia Podcast. I'm Doug Krisner,
and we begin with a stunning announcement earlier this evening
from President Trump. In a post on truth Social Trump
said there is a tentative ceasefire deal between Israel and
Iran beginning at midnight Washington time. Trump went on to
say an official end of the twelve day war will
be saluted by the world. However, a short while ago,
(00:34):
in a post on x, Iran's foreign minister Abbasarachi said
as of now, there is no agreement on any cease fire.
Arachi said that Tehran will stop its attacks if Israel
stops its air strikes by four am Tehran time. Earlier
in the day, to provide a bit of context, we
had Iran retaliating for those US air strikes over the
(00:54):
weekend by attacking a US air base in cutter Now
the Katari government in accepted this attack. There were no casualties.
That may have helped to diffuse a lot of concern
about an immediate disruption of oil from the Middle East. Now,
in New York trading, we had crude oil falling pretty dramatically,
we were down more than seven percent. Let's get to
(01:14):
Joe Matthew. He's on the line from Washington, d C.
Joe is host of the Bloomberg Balance of Power radio
and TV program. Joe, give me your perspective on what
we're learning.
Speaker 3 (01:25):
Well, it's just fast and furious today. Pretty remarkable to
think about the distance of time, just mere hours between
Israel watching Iran respond to US attacks on its nuclear sites.
As you just described, Doug to e merge with a
cease fire. We were asking just a short time ago
if it's hit for tap between the US and Iran
(01:46):
was over. I guess we can answer that now and
in fact put at least a book in on what's
been going on between Israel and Iran for the better
part of twelve days. We need to learn a lot here.
We're working on very few headlines. As you know, the
President likes to announce things on social media and there's
typically a lot of other news behind the headline. He's
on his way to the NATO summit tomorrow. As far
(02:07):
as we know, he's still on track with that plan,
and this is going to be a fascinating conversation when
he joins other world leaders overseas, and I suspect we'll
use this as a platform to send a big message
after what's happened in the last forty eight hours.
Speaker 2 (02:20):
I guess the weekend through all day today, and now
we are at this moment crude oil prices Joe, are
just collapsing even further. We saw WTI down quite a
bit today in New York. I think collectively a sigh
of relief and markets given the degree of tension that
there has been, it's been palpable.
Speaker 3 (02:38):
That's right. President Trump, by the way, just posted as
you were speaking, trust in Trump. That's all it says
with an American flag emoji. And that is the idea
here that the White House is trying to reinforce. If
you just had faith in the Boss, you wouldn't have
been nervous here in the markets to begin with. But
there has been a narrative in the markets broadly for
stocks and commodities. That's the great existential threat that's been
(02:59):
hanging over our heads for decades has suddenly been eliminated.
Now that's before we were talking about a ceasefire. There
were still missiles in the air dug and stocks were
going up today oil was going down. This is not
the scenario that we ever envisioned at a time like this,
but the idea that the nuclear threat has dissipated, save
all the rest of it, and there could be further
(03:19):
conflict in the Middle East. But that single item was
a massive risk off moment for investors in both spaces simultaneously.
And I'm still struck by that moment today, sitting here
in our bureau in Washington, knowing that missiles were on
their way from Iran to US installations suddenly intercepted and
(03:40):
markets begin to rally without the President even speaking. I'm
not sure we've seen something like that before.
Speaker 2 (03:45):
Iran's foreign minister was in Russia over the weekend. I
think there may have been some conversations happening early on Monday.
We know that Russia was pretty critical of the US
move on those nuclear sites, and at the same time, Beijing
seemed to be very, very disapproving. We know the relationship
on the oil side between Tehran and Beijing. The Chinese
(04:08):
are very very dependent on crude oil coming out of Iran,
and I'm wondering how those two countries, Russia and China,
may have put a little bit of pressure on the
Iranian regime to try to come to a resolution.
Speaker 3 (04:21):
Well, that could be, and that's a great question to
ask in a narrative that we're going to be following
here or pursuing at Bloomberg. This could all take an
interesting turn as well tomorrow when the President gets to
the NATO summit, when, of course Ukraine was supposed to
be on the menu here. We didn't think we'd be
talking about a ceasefire, never mind the US striking Iran,
but knowing of course that Russia is already deeply involved
(04:45):
in its war against Ukraine. To watch this unfold in
the Middle East, it's a very dangerous moment and a
curious one as President Trump demands more spending from our
European allies in NATO, and I suspect that he's going
to speak to all of these if there's a news
conference where he's taking questions from reporters, we could advance
all of these storylines with a single visit to that summit.
Speaker 2 (05:06):
Well, you mentioned the fact that the President is on
his way to the Netherlands for the NATO sumbody. How
do you think this development is going to change the
conversation there?
Speaker 3 (05:15):
It's a great question. I suspect that he's going to
be asked a lot about this instead of Ukraine. And
if your President Zelenski, that's probably not a winning formula
for you this week. The fact of the matter is
Vladimir Putin continues to bomb civilians, striking We've seen horrifying
videos drones striking apartment buildings, and this is something that
may not get the attention that it would have otherwise.
(05:37):
The President's going to be there coming off of what
he sees as a massive victory though, and he's going
to claim victory for European nations that increase spending to
five percent of GDP. They're going to be lined up
to get a handshake and a photo opportunity with him
about that. Even though he doesn't have a lot of
nice things to say about our European allies. He made
this week. This whole summit was kind of orchestrated for
him to celebrate the push for our NATO allies to
(05:59):
spend more. He's gonna have a lot more to talk
about now when it comes to Iran, and he's going
to project himself Doug as a peacemaker when he goes
to this military alliance and in a summit of world leaders,
a peacemaker who is reportedly interested in winning the Nobel
Peace Prize, which is something that Pakistan suggested might happen today.
Speaker 2 (06:18):
Joe, thanks for helping us break this all down. He
is Joe Matthew, co host of Balance of Power on
Bloomberg Radio and TV. For more on the still evolving
details of this cease fire, we heard from our breaking
news editor in Hong Kong, Jill Disis. She spoke with
Bloomberg Yvon Men and David Inglace.
Speaker 4 (06:37):
You know, the market's been kind of a whiplash really,
but at least pricing is some sort of major de
escalation between the US and Iran, And then we have
these comments from the Foreign minister this morning.
Speaker 1 (06:46):
How do we kind of square all these together?
Speaker 4 (06:48):
Yes, certainly, Yvon, So, I think there's a couple of
really key things to sort of pay attention to you here.
First of all, when you're looking at those comments out
of Iran, I think the really key line there is
that idea that they're saying, you know, we'll hold firef
is hold fire essentially, right, So I mean again, you know,
we're still kind of leading on the presumption that you know,
it's Donald Trump that came out and he's the one
(07:08):
that talked about announcing the ceasefire. I think, as with
everything Donald Trump, you have to kind of cut through
the bluster and try to navigate exactly what that means.
To me, the really key question here is what Bibi
Dent Yahoo is actually thinking, what that official comment from
Israel is going to be. To me, that's the big
key player that we're still waiting for that official comment from.
But all that being said, we're still about three hours
(07:31):
away from when Trump has said the ceasefire is actually
supposed to take place. Obviously, we've been seeing all morning
headlines flying around about continued military action happening that you know,
you're seeing, you know, Israel continue to conduct some strikes.
I think that that just kind of shows you this
is still a bit of an uncertain situation. But to me,
I mean when you look at the retaliation that Aroan
(07:52):
ultimately took against those US strikes from over the weekend,
I mean, targeting a US command base in Qatar, heavily telegraphed,
basically telling everybody ahead of time so that they could evacuate.
That's not the kind of massive escalation, you know that
you'd expect that's really more of a symbolic move here.
So it does seem like, you know, ceasefire maybe on
the table, but we're still waiting for some clarity there.
And again I really think we need to hear from
(08:14):
Israel about what exactly is happening over the next couple
of hours.
Speaker 5 (08:17):
Right, And you know, Jill, just to ask you as well,
and you know, is it simply a matter of looking
at that you know, the clock quite literally because the
you know, the the time stamp that the US President
had attached to that announcement is still in a couple
of hours. So in the meantime to your point, right,
we've seen explosions in parts of Iran, we've seen deflecting.
Of course, they've said Iran has deflected the most intense
(08:38):
strike so far since June thirteen. Do markets look at
what's happening or what will potentially will happen these next
few hours and just largely try and overlook what's going
on here because there is that there is that deadline
at the end of this, at the end of these
these next.
Speaker 4 (08:55):
Few hours or so, I mean potentially David, But again
I think this really just comes down to waiting to
hear more from what Iran and Israel are actually saying.
I mean, as of right now, obviously we've got these
latest comments from Iran. Again, I do think that while
you know, there is that line about no agreement being read,
to me, the much more critical piece of that is
just saying that, you know, it sort of depends on
(09:16):
whether you know Israel you know, sort of halts its actions.
So to me, I'm looking at this and thinking, you know,
like we do have this this Trump deadline. I mean,
it sounds like Trump talked to net and Yahoo. He
certainly obviously is the US is a key player and
what's happening here, But again we're really waiting to hear
what Israel ultimately says. And so I think what this
is showing you is it kind of you know, it's
(09:37):
you know, this is there's an element of you know,
sort of fog of war here, where with a lot
of these types of action, there's a lot of different
players involved. There's a lot of different pieces on the
table that you're kind of you know, dealing with in
these really really sensitive situations, a lot of you know,
actions that have already happened, some of which have been
you know, pretty highly telegraphed. So it does kind of
tell us, I think that you need to kind of
wait to see, you know, what happens over the next
(09:58):
couple of hours, what sort of a fish statements you get.
You know, it's it's easy to kind of run into
something like this, see a Trump truth social post with
all of that bluster in those capital letters kind of
flying around sort of you know, projecting this idea of
a of a ceasefire. But again, I think we have
to wait to see what ultimately happens. And then ultimately
it kind of sounds like, you know, if there's a
ceasefire that's actually in place, maybe we sort of set
(10:20):
the clock back to where we were a couple of
weeks ago, where tensions have de escalated a little bit.
You know, we're back to looking at a situation where
maybe you know, Aroun in the US and and such,
you're at the negotiating table again, and we're sort of
you know, getting off of the military incursions that we've
seen Israel in particular ramp up over the last several days.
But again, I think just really points to a picture
where there's a lot that's in action here. I think
(10:40):
we have to kind of wait and see what some
of these official comments are ultimately going to tell us.
Speaker 2 (10:44):
That's Bloomberg's Jill lisis in Hong Kong speaking to our
TV colleagues of a Man and David Inglace here on
the Daybreak asir podcast. Back to the Daybreak Asia podcast.
I'm Doug Chrisner. We continue with our top story. Earlier,
(11:05):
in a post on truth Social President Trump announced a
tentative ceasefire between Israel and Iran. Trump said the two
countries have agreed to a complete and total ceasefire beginning
at approximately twelve midnight Wall Street time. Now. It was
earlier in the day that Iran retaliated for those US
air strikes over the weekend by attacking a US air
(11:27):
base and cutter. Oil prices plunged given what appears to
be a lower probability of disruptions of crude from the Mideast,
and crude oil is continuing to decline in the electronic session.
Joining me now for a closer look at market action
is Ross Mayfield. He is the investment strategist at Baird Ross.
Thank you for making time to chat with me about
(11:48):
this so news of the ceasefire obviously coming from the president.
Reuters is now citing an unidentified senior Iranian official on
this agreement. We've not yet heard from Jerusalem, but it
seems like we're making progress, at least it would appear
in that direction. How are you understanding all of these
(12:08):
various components right now.
Speaker 1 (12:11):
Yeah, I think it's hard to you know, feel confident
until you get confirmation from all sides. But directionally you're
headed in the right in the right direction, and that's
what really is going to matter for markets here is
that rather than things continuing to escalate as was the
you know, fear and concerns over the weekend, we've gotten
to a point where there's you know, de escalation with
(12:32):
with maybe potentially you know, minimal long term impact. We've
we've obviously seen oil prices drop pretty significantly, and for
for most US investors on the other side of the world,
that that's the primary mechanism by which these sorts of
Middle Eastern tensions can really can really make an impact quickly.
Speaker 2 (12:52):
One of the things that we've been seeing, obviously is
the charade in the crude oil price. But the other
thing that has been kind of interesting. The bond market
is been looking at higher oil and its inflationary implications
that seems to be being removed from the market as
we speak. How do you feel about the inflation story
right now?
Speaker 1 (13:11):
I feel great about it. We've got core inflation down meaningfully.
The biggest component of the CPI basket housing, you know,
both asking rents and home prices are moderating and even
falling in many parts of the country. So I think
the case for the FED to cut in July and
it is strong, and you know, we heard have heard
(13:33):
from a couple of FMC members that that's on the tables.
So you know, this the oil story. The FED tends
to look through some of those more ballatile components, but
it would have been another thorn in their side if
we gotten oil up to you know, ninety one hundred
dollars a barrow. So the fact that we're pulling back
some meaningfully here, alongside core inflation coming down, and with
(13:53):
the tariffs paused and continuing to be paused, I think
there's a real case to cut in July, and a
little more aggressive given some of the weakness in the
labor market.
Speaker 2 (14:02):
Yeah. FED Governor Michelle Bowman seemed to signal today's support
for a potential rate cut in July. That seems to
echo what we heard from Fed Governor Chris Waller. We
also heard today from Austin Goolsby. He is the head
of the Chicago Fed, and he was kind of putting
a caveat on that, saying that if the inflation hit
from tariffs remain subdued, then he maybe could get on
(14:25):
board with the Fed resuming rate cuts. How do you
view the tariff story as a part of the inflation story.
Speaker 1 (14:31):
Well, it's obviously a big part of what they're watching.
And ultimately, it's not how I think about it, it's
how the FED thinks about it. They're clearly very concerned
about the potential for inflation from the tariffs. Obviously, the
market is more on the side that July is not
a live meeting. Something like eighty percent odds in the
fitful futures market that we just continue at current levels
(14:52):
until September.
Speaker 4 (14:54):
But I.
Speaker 1 (14:55):
Struggle with it. I do think it's a mistake to
wait for the confidence that the tariff policy hasn't resulted
in some sort of issue, because you know that the
labor market is weakening currently and if you wait too long,
and this is a part of the FED story for
the last fifty years, is if you wait until you
kind of see the whites of the eyes, it's often
too late to avoid, you know, some sort of economic downturns.
(15:19):
So it'll be important in a couple of weeks to
see that either those reciprocal tariff pauses get extended or
that we announce you know, more deals than I think
the market expects to see right now. But the main
thing will be can we get those pauses extended, you
know for most countries, and that the administration acknowledges you know,
most of our trading partners are negotiating in good faith.
Speaker 2 (15:40):
So we've talked about a few of the risk How
are you left feeling about risk assets right now, particularly equities?
Speaker 1 (15:47):
Yeah, I feel pretty bullish, to be honest with you,
you know, the fact that we're dealing with all of
these kind of headwinds and noisy macro things, geopolitics, a
big tax bill, and yet the market is still within
a couple percentage points of all time high. I mean,
the resilience today was pretty astounding given what happened over
the weekend. You've had this this really aggressive kind of
(16:09):
momentum thrust off the April lows, you know, participation not
just in the US, but a broad cyclical leadership. You know,
tech kind of coming back into the fold. So a
lot of things that really our market messages that portend
strong returns if you look out six or twelve months historically.
Now you know, the environment is rife with headwinds too,
(16:29):
and it's it's not a perfect backdrop, but I think
the message from the market is a lot more optimistic
than the message from you know, the news as it's
covering the geo political situation, and that's the message that
I think we have to pay more attention to.
Speaker 2 (16:46):
So how are you feeling about valuations? With an S
and P trading it around twenty four times earnings, they're rich.
Speaker 1 (16:53):
I mean, it's one of those things where you know,
as a timing tool it's basically useless. But you would
say that if you're looking out from this starting point,
and again with the market functionally back at all time
highs and many global markets now well on the you know,
through all time highs and at new records as we speak,
(17:13):
you would say that if you're looking at the next
five years or the rest of the decade, you would
expect more muted returns from here. You know, whether that
looks like a couple more years of outsized gains and
then you know, sort of an AI bubble having to
deflate down the road, or whether it just looks like,
you know, a couple of years of single digit, more
muted returns. It's not something that's going to keep us
(17:34):
out of the market, but it kind of frames up,
you know, the expectations that we would have for returns,
and especially in what we feel is going to be
a higher for longer rate environment, even if the FED
starts to cut again later this year.
Speaker 2 (17:45):
Yeah, thirty one times earnings. If you look at the
Nasdaq one hundred. You talked about the possibility of maybe
AI bubble. Is that something that you're concerned about actively?
Are you taking defensive measures in that regard?
Speaker 1 (17:59):
No, it's something that we think about. I don't think
we're quite there yet. I mean the obvious corollary would
be the late nineties into the early two thousands dot
com bubble, and as much as you know some of
the valuations today, uh, look look frothy. I don't think
they really hold a candle to what we saw in
you know, ninety nine in two thousand, So I think
(18:21):
we could get there. The enthusiasm around AI is clearly
coming back into the market. But for one, a lot
of the big companies today are just much better capitalized,
you know, more cash, less debt, bigger motes, and then
past that AI, you know, the adoption rate of AI
seems to be really aggressive. You know that most of
(18:42):
the survey data we're seeing from you know, some of
the big consultant firms suggests that companies are really experimenting
with these tools and trying to get more efficient at
at a high clip. So I think we could get there, certainly,
but I don't think the sentiment environment is there yet.
People are still very kind of restrained and risks as
opposed to youph it, and I don't think that the
(19:03):
valuations are quite there yet. So to me, it would
be more of like a you know, maybe a twenty
twenty seven kind of story.
Speaker 2 (19:09):
Okay, Ross, we'll leave it there. Thank you so much.
Ross Mayfield, he is investment strategist at Baird joining us
here on the Daybreak Asia podcast. Thanks for listening to
today's episode of the Bloomberg Daybreak Asia Edition podcast. Each weekday,
we look at the story shaping markets, finance, and geopolitics
(19:29):
in the Asia Pacific. You can find us on Apple, Spotify,
the Bloomberg Podcast YouTube channel, or anywhere else you listen.
Join us again tomorrow for insight on the market moves
from Hong Kong to Singapore and Australia. I'm Doug Prisoner
and this is Bloomberg
Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 2 (00:10):
Welcome to the Bloomberg Daybreak Asia Podcast. I'm Doug Krisner,
and we begin with a stunning announcement earlier this evening
from President Trump. In a post on truth Social Trump
said there is a tentative ceasefire deal between Israel and
Iran beginning at midnight Washington time. Trump went on to
say an official end of the twelve day war will
be saluted by the world. However, a short while ago,
(00:34):
in a post on x, Iran's foreign minister Abbasarachi said
as of now, there is no agreement on any cease fire.
Arachi said that Tehran will stop its attacks if Israel
stops its air strikes by four am Tehran time. Earlier
in the day, to provide a bit of context, we
had Iran retaliating for those US air strikes over the
(00:54):
weekend by attacking a US air base in cutter Now
the Katari government in accepted this attack. There were no casualties.
That may have helped to diffuse a lot of concern
about an immediate disruption of oil from the Middle East. Now,
in New York trading, we had crude oil falling pretty dramatically,
we were down more than seven percent. Let's get to
(01:14):
Joe Matthew. He's on the line from Washington, d C.
Joe is host of the Bloomberg Balance of Power radio
and TV program. Joe, give me your perspective on what
we're learning.
Speaker 3 (01:25):
Well, it's just fast and furious today. Pretty remarkable to
think about the distance of time, just mere hours between
Israel watching Iran respond to US attacks on its nuclear sites.
As you just described, Doug to e merge with a
cease fire. We were asking just a short time ago
if it's hit for tap between the US and Iran
(01:46):
was over. I guess we can answer that now and
in fact put at least a book in on what's
been going on between Israel and Iran for the better
part of twelve days. We need to learn a lot here.
We're working on very few headlines. As you know, the
President likes to announce things on social media and there's
typically a lot of other news behind the headline. He's
on his way to the NATO summit tomorrow. As far
(02:07):
as we know, he's still on track with that plan,
and this is going to be a fascinating conversation when
he joins other world leaders overseas, and I suspect we'll
use this as a platform to send a big message
after what's happened in the last forty eight hours.
Speaker 2 (02:20):
I guess the weekend through all day today, and now
we are at this moment crude oil prices Joe, are
just collapsing even further. We saw WTI down quite a
bit today in New York. I think collectively a sigh
of relief and markets given the degree of tension that
there has been, it's been palpable.
Speaker 3 (02:38):
That's right. President Trump, by the way, just posted as
you were speaking, trust in Trump. That's all it says
with an American flag emoji. And that is the idea
here that the White House is trying to reinforce. If
you just had faith in the Boss, you wouldn't have
been nervous here in the markets to begin with. But
there has been a narrative in the markets broadly for
stocks and commodities. That's the great existential threat that's been
(02:59):
hanging over our heads for decades has suddenly been eliminated.
Now that's before we were talking about a ceasefire. There
were still missiles in the air dug and stocks were
going up today oil was going down. This is not
the scenario that we ever envisioned at a time like this,
but the idea that the nuclear threat has dissipated, save
all the rest of it, and there could be further
(03:19):
conflict in the Middle East. But that single item was
a massive risk off moment for investors in both spaces simultaneously.
And I'm still struck by that moment today, sitting here
in our bureau in Washington, knowing that missiles were on
their way from Iran to US installations suddenly intercepted and
(03:40):
markets begin to rally without the President even speaking. I'm
not sure we've seen something like that before.
Speaker 2 (03:45):
Iran's foreign minister was in Russia over the weekend. I
think there may have been some conversations happening early on Monday.
We know that Russia was pretty critical of the US
move on those nuclear sites, and at the same time, Beijing
seemed to be very, very disapproving. We know the relationship
on the oil side between Tehran and Beijing. The Chinese
(04:08):
are very very dependent on crude oil coming out of Iran,
and I'm wondering how those two countries, Russia and China,
may have put a little bit of pressure on the
Iranian regime to try to come to a resolution.
Speaker 3 (04:21):
Well, that could be, and that's a great question to
ask in a narrative that we're going to be following
here or pursuing at Bloomberg. This could all take an
interesting turn as well tomorrow when the President gets to
the NATO summit, when, of course Ukraine was supposed to
be on the menu here. We didn't think we'd be
talking about a ceasefire, never mind the US striking Iran,
but knowing of course that Russia is already deeply involved
(04:45):
in its war against Ukraine. To watch this unfold in
the Middle East, it's a very dangerous moment and a
curious one as President Trump demands more spending from our
European allies in NATO, and I suspect that he's going
to speak to all of these if there's a news
conference where he's taking questions from reporters, we could advance
all of these storylines with a single visit to that summit.
Speaker 2 (05:06):
Well, you mentioned the fact that the President is on
his way to the Netherlands for the NATO sumbody. How
do you think this development is going to change the
conversation there?
Speaker 3 (05:15):
It's a great question. I suspect that he's going to
be asked a lot about this instead of Ukraine. And
if your President Zelenski, that's probably not a winning formula
for you this week. The fact of the matter is
Vladimir Putin continues to bomb civilians, striking We've seen horrifying
videos drones striking apartment buildings, and this is something that
may not get the attention that it would have otherwise.
(05:37):
The President's going to be there coming off of what
he sees as a massive victory though, and he's going
to claim victory for European nations that increase spending to
five percent of GDP. They're going to be lined up
to get a handshake and a photo opportunity with him
about that. Even though he doesn't have a lot of
nice things to say about our European allies. He made
this week. This whole summit was kind of orchestrated for
him to celebrate the push for our NATO allies to
(05:59):
spend more. He's gonna have a lot more to talk
about now when it comes to Iran, and he's going
to project himself Doug as a peacemaker when he goes
to this military alliance and in a summit of world leaders,
a peacemaker who is reportedly interested in winning the Nobel
Peace Prize, which is something that Pakistan suggested might happen today.
Speaker 2 (06:18):
Joe, thanks for helping us break this all down. He
is Joe Matthew, co host of Balance of Power on
Bloomberg Radio and TV. For more on the still evolving
details of this cease fire, we heard from our breaking
news editor in Hong Kong, Jill Disis. She spoke with
Bloomberg Yvon Men and David Inglace.
Speaker 4 (06:37):
You know, the market's been kind of a whiplash really,
but at least pricing is some sort of major de
escalation between the US and Iran, And then we have
these comments from the Foreign minister this morning.
Speaker 1 (06:46):
How do we kind of square all these together?
Speaker 4 (06:48):
Yes, certainly, Yvon, So, I think there's a couple of
really key things to sort of pay attention to you here.
First of all, when you're looking at those comments out
of Iran, I think the really key line there is
that idea that they're saying, you know, we'll hold firef
is hold fire essentially, right, So I mean again, you know,
we're still kind of leading on the presumption that you know,
it's Donald Trump that came out and he's the one
(07:08):
that talked about announcing the ceasefire. I think, as with
everything Donald Trump, you have to kind of cut through
the bluster and try to navigate exactly what that means.
To me, the really key question here is what Bibi
Dent Yahoo is actually thinking, what that official comment from
Israel is going to be. To me, that's the big
key player that we're still waiting for that official comment from.
But all that being said, we're still about three hours
(07:31):
away from when Trump has said the ceasefire is actually
supposed to take place. Obviously, we've been seeing all morning
headlines flying around about continued military action happening that you know,
you're seeing, you know, Israel continue to conduct some strikes.
I think that that just kind of shows you this
is still a bit of an uncertain situation. But to me,
I mean when you look at the retaliation that Aroan
(07:52):
ultimately took against those US strikes from over the weekend,
I mean, targeting a US command base in Qatar, heavily telegraphed,
basically telling everybody ahead of time so that they could evacuate.
That's not the kind of massive escalation, you know that
you'd expect that's really more of a symbolic move here.
So it does seem like, you know, ceasefire maybe on
the table, but we're still waiting for some clarity there.
And again I really think we need to hear from
(08:14):
Israel about what exactly is happening over the next couple
of hours.
Speaker 5 (08:17):
Right, And you know, Jill, just to ask you as well,
and you know, is it simply a matter of looking
at that you know, the clock quite literally because the
you know, the the time stamp that the US President
had attached to that announcement is still in a couple
of hours. So in the meantime to your point, right,
we've seen explosions in parts of Iran, we've seen deflecting.
Of course, they've said Iran has deflected the most intense
(08:38):
strike so far since June thirteen. Do markets look at
what's happening or what will potentially will happen these next
few hours and just largely try and overlook what's going
on here because there is that there is that deadline
at the end of this, at the end of these
these next.
Speaker 4 (08:55):
Few hours or so, I mean potentially David, But again
I think this really just comes down to waiting to
hear more from what Iran and Israel are actually saying.
I mean, as of right now, obviously we've got these
latest comments from Iran. Again, I do think that while
you know, there is that line about no agreement being read,
to me, the much more critical piece of that is
just saying that, you know, it sort of depends on
(09:16):
whether you know Israel you know, sort of halts its actions.
So to me, I'm looking at this and thinking, you know,
like we do have this this Trump deadline. I mean,
it sounds like Trump talked to net and Yahoo. He
certainly obviously is the US is a key player and
what's happening here, But again we're really waiting to hear
what Israel ultimately says. And so I think what this
is showing you is it kind of you know, it's
(09:37):
you know, this is there's an element of you know,
sort of fog of war here, where with a lot
of these types of action, there's a lot of different
players involved. There's a lot of different pieces on the
table that you're kind of you know, dealing with in
these really really sensitive situations, a lot of you know,
actions that have already happened, some of which have been
you know, pretty highly telegraphed. So it does kind of
tell us, I think that you need to kind of
wait to see, you know, what happens over the next
(09:58):
couple of hours, what sort of a fish statements you get.
You know, it's it's easy to kind of run into
something like this, see a Trump truth social post with
all of that bluster in those capital letters kind of
flying around sort of you know, projecting this idea of
a of a ceasefire. But again, I think we have
to wait to see what ultimately happens. And then ultimately
it kind of sounds like, you know, if there's a
ceasefire that's actually in place, maybe we sort of set
(10:20):
the clock back to where we were a couple of
weeks ago, where tensions have de escalated a little bit.
You know, we're back to looking at a situation where
maybe you know, Aroun in the US and and such,
you're at the negotiating table again, and we're sort of
you know, getting off of the military incursions that we've
seen Israel in particular ramp up over the last several days.
But again, I think just really points to a picture
where there's a lot that's in action here. I think
(10:40):
we have to kind of wait and see what some
of these official comments are ultimately going to tell us.
Speaker 2 (10:44):
That's Bloomberg's Jill lisis in Hong Kong speaking to our
TV colleagues of a Man and David Inglace here on
the Daybreak asir podcast. Back to the Daybreak Asia podcast.
I'm Doug Chrisner. We continue with our top story. Earlier,
(11:05):
in a post on truth Social President Trump announced a
tentative ceasefire between Israel and Iran. Trump said the two
countries have agreed to a complete and total ceasefire beginning
at approximately twelve midnight Wall Street time. Now. It was
earlier in the day that Iran retaliated for those US
air strikes over the weekend by attacking a US air
(11:27):
base and cutter. Oil prices plunged given what appears to
be a lower probability of disruptions of crude from the Mideast,
and crude oil is continuing to decline in the electronic session.
Joining me now for a closer look at market action
is Ross Mayfield. He is the investment strategist at Baird Ross.
Thank you for making time to chat with me about
(11:48):
this so news of the ceasefire obviously coming from the president.
Reuters is now citing an unidentified senior Iranian official on
this agreement. We've not yet heard from Jerusalem, but it
seems like we're making progress, at least it would appear
in that direction. How are you understanding all of these
(12:08):
various components right now.
Speaker 1 (12:11):
Yeah, I think it's hard to you know, feel confident
until you get confirmation from all sides. But directionally you're
headed in the right in the right direction, and that's
what really is going to matter for markets here is
that rather than things continuing to escalate as was the
you know, fear and concerns over the weekend, we've gotten
to a point where there's you know, de escalation with
(12:32):
with maybe potentially you know, minimal long term impact. We've
we've obviously seen oil prices drop pretty significantly, and for
for most US investors on the other side of the world,
that that's the primary mechanism by which these sorts of
Middle Eastern tensions can really can really make an impact quickly.
Speaker 2 (12:52):
One of the things that we've been seeing, obviously is
the charade in the crude oil price. But the other
thing that has been kind of interesting. The bond market
is been looking at higher oil and its inflationary implications
that seems to be being removed from the market as
we speak. How do you feel about the inflation story
right now?
Speaker 1 (13:11):
I feel great about it. We've got core inflation down meaningfully.
The biggest component of the CPI basket housing, you know,
both asking rents and home prices are moderating and even
falling in many parts of the country. So I think
the case for the FED to cut in July and
it is strong, and you know, we heard have heard
(13:33):
from a couple of FMC members that that's on the tables.
So you know, this the oil story. The FED tends
to look through some of those more ballatile components, but
it would have been another thorn in their side if
we gotten oil up to you know, ninety one hundred
dollars a barrow. So the fact that we're pulling back
some meaningfully here, alongside core inflation coming down, and with
(13:53):
the tariffs paused and continuing to be paused, I think
there's a real case to cut in July, and a
little more aggressive given some of the weakness in the
labor market.
Speaker 2 (14:02):
Yeah. FED Governor Michelle Bowman seemed to signal today's support
for a potential rate cut in July. That seems to
echo what we heard from Fed Governor Chris Waller. We
also heard today from Austin Goolsby. He is the head
of the Chicago Fed, and he was kind of putting
a caveat on that, saying that if the inflation hit
from tariffs remain subdued, then he maybe could get on
(14:25):
board with the Fed resuming rate cuts. How do you
view the tariff story as a part of the inflation story.
Speaker 1 (14:31):
Well, it's obviously a big part of what they're watching.
And ultimately, it's not how I think about it, it's
how the FED thinks about it. They're clearly very concerned
about the potential for inflation from the tariffs. Obviously, the
market is more on the side that July is not
a live meeting. Something like eighty percent odds in the
fitful futures market that we just continue at current levels
(14:52):
until September.
Speaker 4 (14:54):
But I.
Speaker 1 (14:55):
Struggle with it. I do think it's a mistake to
wait for the confidence that the tariff policy hasn't resulted
in some sort of issue, because you know that the
labor market is weakening currently and if you wait too long,
and this is a part of the FED story for
the last fifty years, is if you wait until you
kind of see the whites of the eyes, it's often
too late to avoid, you know, some sort of economic downturns.
(15:19):
So it'll be important in a couple of weeks to
see that either those reciprocal tariff pauses get extended or
that we announce you know, more deals than I think
the market expects to see right now. But the main
thing will be can we get those pauses extended, you
know for most countries, and that the administration acknowledges you know,
most of our trading partners are negotiating in good faith.
Speaker 2 (15:40):
So we've talked about a few of the risk How
are you left feeling about risk assets right now, particularly equities?
Speaker 1 (15:47):
Yeah, I feel pretty bullish, to be honest with you,
you know, the fact that we're dealing with all of
these kind of headwinds and noisy macro things, geopolitics, a
big tax bill, and yet the market is still within
a couple percentage points of all time high. I mean,
the resilience today was pretty astounding given what happened over
the weekend. You've had this this really aggressive kind of
(16:09):
momentum thrust off the April lows, you know, participation not
just in the US, but a broad cyclical leadership. You know,
tech kind of coming back into the fold. So a
lot of things that really our market messages that portend
strong returns if you look out six or twelve months historically.
Now you know, the environment is rife with headwinds too,
(16:29):
and it's it's not a perfect backdrop, but I think
the message from the market is a lot more optimistic
than the message from you know, the news as it's
covering the geo political situation, and that's the message that
I think we have to pay more attention to.
Speaker 2 (16:46):
So how are you feeling about valuations? With an S
and P trading it around twenty four times earnings, they're rich.
Speaker 1 (16:53):
I mean, it's one of those things where you know,
as a timing tool it's basically useless. But you would
say that if you're looking out from this starting point,
and again with the market functionally back at all time
highs and many global markets now well on the you know,
through all time highs and at new records as we speak,
(17:13):
you would say that if you're looking at the next
five years or the rest of the decade, you would
expect more muted returns from here. You know, whether that
looks like a couple more years of outsized gains and
then you know, sort of an AI bubble having to
deflate down the road, or whether it just looks like,
you know, a couple of years of single digit, more
muted returns. It's not something that's going to keep us
(17:34):
out of the market, but it kind of frames up,
you know, the expectations that we would have for returns,
and especially in what we feel is going to be
a higher for longer rate environment, even if the FED
starts to cut again later this year.
Speaker 2 (17:45):
Yeah, thirty one times earnings. If you look at the
Nasdaq one hundred. You talked about the possibility of maybe
AI bubble. Is that something that you're concerned about actively?
Are you taking defensive measures in that regard?
Speaker 1 (17:59):
No, it's something that we think about. I don't think
we're quite there yet. I mean the obvious corollary would
be the late nineties into the early two thousands dot
com bubble, and as much as you know some of
the valuations today, uh, look look frothy. I don't think
they really hold a candle to what we saw in
you know, ninety nine in two thousand, So I think
(18:21):
we could get there. The enthusiasm around AI is clearly
coming back into the market. But for one, a lot
of the big companies today are just much better capitalized,
you know, more cash, less debt, bigger motes, and then
past that AI, you know, the adoption rate of AI
seems to be really aggressive. You know that most of
(18:42):
the survey data we're seeing from you know, some of
the big consultant firms suggests that companies are really experimenting
with these tools and trying to get more efficient at
at a high clip. So I think we could get there, certainly,
but I don't think the sentiment environment is there yet.
People are still very kind of restrained and risks as
opposed to youph it, and I don't think that the
(19:03):
valuations are quite there yet. So to me, it would
be more of like a you know, maybe a twenty
twenty seven kind of story.
Speaker 2 (19:09):
Okay, Ross, we'll leave it there. Thank you so much.
Ross Mayfield, he is investment strategist at Baird joining us
here on the Daybreak Asia podcast. Thanks for listening to
today's episode of the Bloomberg Daybreak Asia Edition podcast. Each weekday,
we look at the story shaping markets, finance, and geopolitics
(19:29):
in the Asia Pacific. You can find us on Apple, Spotify,
the Bloomberg Podcast YouTube channel, or anywhere else you listen.
Join us again tomorrow for insight on the market moves
from Hong Kong to Singapore and Australia. I'm Doug Prisoner
and this is Bloomberg
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