Israel Election; Trump's Red State Midterm Blitz

0:02 Bloomberg Audio Studios.

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0:06 News.

0:10 Good morning, I'm Nathan Hager.

0:11 And I'm Karen Moscow. Here are the stories we're following today.

0:15 Karen, we begin in the Middle East this morning.

0:17 Israelis are headed to the polls today for their first election since the Hamas attacks three years ago. Prime Minister Benjamin Netanyahu is seeking re-election, saying the military campaigns he's led have improved Israel's security. Opponents, led by former Armed Forces Chief Gadi Eisenkot, say Israel's longest-serving leader is its greatest threat. We get the latest from Bloomberg's Galit Altstein in Tel Aviv.

0:40 Now, in Israel, you need 61 seats in parliament to form a government, and neither side has reached that threshold. But Eisenkot's bloc has consistently been outperforming Netanyahu's coalition. So if that is telling of the results, there are several scenarios moving forward. One is that we get a surprise and one side actually wins the necessary majority. Another is that Eisenkot forms a minority government relying on a group of Israeli Arab parties to support it from the outside.

1:13 And a third possibility, although that's less likely, is a unity government that would involve Eisenkot and Netanyahu's Likud party. Finally, if neither side can get a majority, then we could be looking at another round of election in about six months.

1:28 Bloomberg's Khalid Altstein says voter participation is forecast to be unusually high today. Tens of thousands of Israeli expatriates are flying in to cast their votes.

1:38 In Brazil, Nathan Flavio Bolsonaro is abandoning plans to challenge the results of Brazil's presidential election. His Liberal Party formally conceded defeat to re-elected President Luiz Inácio Lula da Silva. The results rattled the markets yesterday. The currency, the real, suffered its steepest drop in more than two decades, and some Brazilian stocks fell more than 50 percent. Bloomberg's Augusto Sarraiva reports from Brasilia.

2:04 Fiscal stability is not necessarily his biggest priority. Lula himself said during the campaign that he's very interested in delivering for Brazilians, especially lower-income ones. And we saw that during the campaign. He unveiled some very expensive social programs. So that's why investors are concerned, because they don't know to what extent he's going to hit the brakes on spending once his fourth mandate starts.

2:29 Bloomberg's Augusta Sariva says a benchmark of small cap stocks plunged 27 percent.

2:34 That's the most on record.

2:36 While you're in the U.S., Karen, the midterm election for control of Congress is now just seven days away. President Trump was in deep red Mississippi last night, urging Republicans to turn out and vote for incumbent Senator Cindy Hyde-Smith.

2:48 I will say nobody has ever campaigned.

2:53 Nobody's ever campaigned like I have for midterms.

2:55 I have.

2:57 President Trump told the crowd in Corinth, Mississippi, that he can't take a chance on Hyde-Smith losing her seat to Democrat Scott Colon. The incumbent is still favored to win, but the Cook Political Report recently shifted its rating on the race from solid Republican to likely Republican. And a Democratic Senate Political Action Committee recently announced it would spend $ 1. 2 million on an ad for Colon's campaign.

3:19 Well, today, Nathan, President Trump continues his red state campaign blitz in Texas. He's set to hold rallies this afternoon in Corpus Christi and tonight in Lubbock for Republican Ken Paxton, who's locked in a tight Senate race with Democrat James Tallarico. An administration official says the president will use the Lubbock rally to unveil a plan to dial back federal requirements aimed at cutting methane emissions from oil and gas operations.

3:44 The president has been trying to ease voter concerns about higher fuel costs from the wars in Ukraine and Iran. While in Texas, Secretary of State Marco Rubio is expected to join President Trump in Port Arthur to show off a newly arrived oil tanker with Venezuelan crude. This will mark the first time that Rubio has hit the road with the president on the midterm campaign trail.

4:05 And ahead of the midterms, Karen, the Cook Political Report is shifting more House seats every week toward Democratic victories, and Republicans are shifting their tactics to try to hold back the tide.

4:15 Bloomberg's Amy Morris reports from Washington.

4:18 Karen Covey with the Cook Political Report says the acceleration of voters toward Democratic candidates is less to do with a shifting landscape and more about people beginning to pay attention as Election Day draws near.

4:31 We have seen the Trump super PACs go into a number of Republican-leaning districts that now look increasingly competitive. We're also seeing Republican incumbents anticipating a blue wave cycles and.

4:43 Seats that Trump won by more than 20 points.

4:45 Erin Covey tells Balance of Power that while she does expect a blue wave, it won't hit all areas evenly. In Washington, Amy Morris, Bloomberg Radio.

4:53 All right, Amy, thank you for full midterm election coverage. Stay with Bloomberg. A week from today, we bring you America Decides. And Bloomberg's David Gurra starts us off at 6 p.m. Wall Street time. He's followed up by a special edition of Bloomberg Balance of Power with Joe Matthew and Kayleigh Lyons. They take you through the numbers and give you the context that matters. Live coverage starts at 6 p.m. on Bloomberg Radio, Bloomberg Television, and the Bloomberg Business app.

5:19 Well, back in Washington, Karen, the Trump administration is putting new pressure on former FBI Director James Comey. A federal court in Washington has unsealed a new criminal filing from the Justice Department accusing Comey of directing the sharing of secret national defense information a decade ago. Comey responded in a video posted on Substack.

5:38 Well, they're back again.

5:40 It would almost be funny if it weren't such an appalling abuse of the Department of Justice, one that we cannot become numb to.

5:48 Former FBI Director James Comey's lawyer says the case involves a New York Times article from October 2016 that two different teams of prosecutors investigated during the first Trump administration without bringing charges. The Justice Department says it issued the filing to toll the statute of limitations in the case and won't comment further on the investigation.

6:07 Let's turn to the markets now, Nathan, where investors are still talking about the impending historic IPO from Anthropic. It's expected to raise more money than any firm in history and may overtake Berkshire Hathaway in market value. Shereen Gaffery covers the artificial intelligence industry for Bloomberg in San Francisco.

6:27 Entire AI industry is looking to this as a litmus test of how investors, how Wall Street is going to react to the economics, the business model of generative AI. And if this goes well, it could usher in a whole new era of AI startups that are more encouraged to go public.

6:47 If this doesn't go well, it could cause other AI.

6:49 Startups to take pause and assess if they should delay their IPOs or take a different strategy altogether.

6:55 Bloomberg's Shereen Gaffery says the company's IPO filing reveals billions of dollars in sales per year, but also extreme losses and uncertainty about unpredictable demand and massive spending required to continue building its technology.

7:09 Well, speaking of spending, Karen, MetaPlatforms is embarking on one of the largest equity offerings in history to underpin its AI spending. It is boosting a planned share sale of It's almost $ 98 billion. Meta CEO Mark Zuckerberg has committed hundreds of billions to build out the infrastructure needed to support artificial intelligence models.

7:31 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.

7:38 Good morning, Karen. We're a week away from the midterm elections. Democratic nominee for Georgia Governor Keisha Lance Bottoms says she is calling for a pause on new data center construction in the state while officials assess the industry's impact. Speaking exclusively to Joe Matthew and Kaylee Lines on Bloomberg Balance of Power, Bottoms cited questions about strain on the electric grid, costs to ratepayers, and impacts on the water supply.

8:04 That pause could be one month. It could be six months or longer. But what I've not seen come forward from the state is concrete information around what's been the strain on our electric grid, how much our consumers are actually carrying the cost for these data centers, what's the long-term health impact, the long-term impact on our water supply.

8:26 So we want to just make sure that we are moving forward responsibly.

8:31 Bottom's Republican opponent in the race, Rick Jackson, is a healthcare executive and billionaire. They're both running to replace term-limited Brian Kemp as governor. A localized temporary ceasefire between Ukraine and Russia has taken effect ahead of a humanitarian mission brokered by U.S. First Lady Melania Trump. But missile attacks resumed in Kyiv. The local pause in fighting started at 3 a.m. today in Ukraine to allow an aid mission into the Russian-occupied town of Oleshky in southern Ukraine later this week. The aid mission is planned ahead of a new round of U.S. broker talks between Russia and Ukraine expected next month. We now know who will be the halftime show performer for Super Bowl 61. It is Brooklyn-born

9:22 rapper Jay-Z. Jay-Z's entertainment company, Roc Nation, has been producing the halftime show since 2020. Global news 24 hours a day and whenever you want it with Bloomberg News Now. I'm Michael Barr and this is Bloomberg, Karen.

9:36 Thanks, Michael. Time now for our Bloomberg Sports Update. And for that, we bring in John Staschauer.

9:41 Thanks, Karen.

9:42 Game three of the World Series at Tampa Bay, a Milwaukee Brewer route. They scored eight runs in the fifth inning and won 10-1. And the Brewers, who had an NLCS sweep, are now up 3-0 in the World Series. They can win their first championship tonight. Two NFC East teams that have been struggling metastatically. Philadelphia, and the Eagles had a one-point lead, but the Cowboys scored the last 18 points and won 38-21. Golden State beat Atlanta 64-55, leads 3-2 in the WNBA Finals. That's your Bloomberg Sports Update.

10:13 Stay with us. More from Bloomberg Daybreak coming up after this.

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10:32 I'm Nathan Hager, and voters are headed to the polls today in Israel for what many see as the country's most consequential election in decades, the first since the Hamas attack that traumatized the nation three years ago. It now sees Prime Minister Benjamin Netanyahu fighting for political survival against an opposition led by his former army chief, Gadi Eisenkow.

10:52 Joining us from Tel Aviv this morning is Bloomberg News Israel bureau chief, Ethan Bronner. Ethan, it is good to speak with you this morning. How much is October 7th looming over this election on this October 27th?

11:04 Good morning.

11:06 Good morning, Nathan. It is overwhelmingly dominating everything. I mean, not just this election. It has dominated every moment of consciousness in this country for these three plus years.

11:17 So it is everything.

11:18 And of course, like a lot of things, people give it interpretation based on their prior assumptions before. But it is extremely powerful and, as you said, has traumatized this country. So it's absolutely about security. And of course, security can be defined in different ways.

11:37 Yeah.

11:37 Let's talk about that, because it seems as though Gadi Isinkot has defined it in a much different way than Prime Minister Netanyahu has. He's been arguing that the military campaigns he's been carrying forward have kept the country safe, while Isinkot, it seems, is making a different argument.

11:55 How are voters taking that?

11:58 So let me just first say that the distinction is subtle rather than enormous. I mean, Eisenkot and most of Israelis have backed the wars that Netanyahu has waged over these three years. What's happening now is Netanyahu wants to be even more, and there was a sense that he wanted to go back to war with Iran even before the election, and wants to after, and that he wants regime change in Iran, and Eisenkot is saying, wait a second, we do want to stop nuclear weapons program, but we don't need to go for regime change. We need to be more diplomatic in our future. So I think that's the difference between the two at the moment.

12:39 It's actually fairly subtle.

12:41 The voters are about evenly divided, frankly. I think people are afraid, and many people in this country think that Netanyahu is the only guy with the experience and the skills to protect it, and others think that he has become the greatest source of peril to this country. So it's very hard to know what's going to happen. Early election voting participation is at its highest in 45 years.

13:06 So it's going to be a very, it's a very active day of voting. People are out on the streets. The polling stations have fairly long lines. I was visiting a few. So it's a lot of drama.

13:18 A lot of turnout, obviously, as you say, and we've heard as well that tens of thousands of Israeli citizens are coming in from overseas to cast their ballots as well.

13:30 How could that sway things?

13:33 Well, you'd have to know how they're all voting. The assumption is that most people overseas who are willing to pay for a flight to get back here are the kind of secular professionals who are opposed to Netanyahu. I think that's probably right. We're only aware of about.

13:48 50, 60, 70,000 people.

13:50 Now, that could add up to a mandate, as they say, a seat in the Knesset or a little more, depending, again, on the turnout, because then it's divided proportionally. So, You know, if it's a very close election, one or two seats can make a difference. Again, I assume that most of those coming in are voting for the Eisencourt block. But we don't really have very, very strong data, just a broad set of guidelines on that. It is added to a sense, as you say, of, you know, seeing people you haven't seen in a long time coming here just to vote.

14:24 As you said, it seems as though Israelis are divided as far as how to interpret the post-October 7th security situation. Does that point to a divide that could make it difficult for either Netanyahu, if he comes out the winner, or for Eisenkot to form a coalition government?

14:45 Is that going to be a difficulty?

14:47 Yes.

14:47 It is going to be difficult.

14:48 Neither block, at least based on polling over the last year or two, has enough to get over the 60-61 threshold that's required. So, yeah, there's going to be a lot of very complicated horse trading that goes on after midnight tonight. And, you know, one of the strange questions here is that there's a growing number of Israeli Arab citizens who are expected to vote. This is not a group that the Prime Minister wants to join in the government with, but Eisenkot has also said he doesn't want them in the government, but might be willing to have them be outside if he formed a minority government as supporters.

15:29 Some of his fellow bloc members are unhappy about that. Some are pushing it. So that's going to be a very important wild card here. A, how many votes go to the Arab bloc? and B, whether they can be incorporated into the opposition group. That's going to be a very significant issue.

15:46 I have about 30 seconds left here. Just because we're here in the U.S., the question often gets asked about a Trump factor in just about any election. We know that President Trump is pretty popular in Israel. Is there a Trump factor heading into the vote today?

16:03 Much less than you might have thought.

16:05 His popularity plummeted after the MOU with Iran in the spring. He was everybody's favorite guy here until it seemed that he wanted to cut a deal with Iran. He has endorsed now Prime Minister Netanyahu. There's no evidence from the polling afterwards that it had much of an effect. So, on the other hand, there is a sense that you have to have a superpower on your side Netanyahu is the guy, for some people, that has certainly been the conclusion.

16:35 This is Bloomberg Daybreak, your morning podcast on the stories making news from Wall Street to Washington and beyond.

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17:22 And I'm Nathan Hager.

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