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tv   Bloomberg Daybreak Americas  Bloomberg  May 10, 2017 7:00am-10:01am EDT

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fbi director james comey and they say scrutiny from democrats and some republicans. u.s. equity futures little changed. on china.ocus the latest data that global reflation fueled by the world's second largest economy may be easing. good morning. you are watching "bloomberg daybreak" i am jonathan ferro. let's go through the market action this wednesday morning. features a little softer but no drama to match what is happening in the seat -- d.c. treasuries with a move. yields lower by three basis point for all eyes on the data out of china. a question mark. david: more softness to china area time for our morning brief. u.s. imports and exports.
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at 10:30, department of energy releases numbers for crude oil inventory and then more fed. later in the afternoon, minneapolis fed president will answer questions. to round up a day, the u.s. treasury will auction 10-year note and that is coming up today. jonathan: we will be keeping an eye on this as the ecb president mario draghi addressing the dutch parliament. we will bring comments. later, the headlines. david: president donald trump late yesterday shocked just about everybody went abruptly fired fbi director james comey. we want to bring in reporters -- stock marty schenker bring in reporters, marty schenker and kevin cirilli. kevin, tell us what happened and to anyone expected this? kevin: no one expected this.
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i spoke to republican political advisers to the president and senior aides and all of the pointing to the notion this decision to fire director call me will lead to some more confusion that any political capital that the administration had hoped to seize upon passing health care legislation last week through the house. it seems to be in question. this decision jolting washington to say the least and at a time that now positive question the rest of his legislative agenda items. david: why did he do it or say he did it? kevin: he is saying his attorney general, jeff sessions, recommended that director comey no longer have the confidence of thefbi and they are saying morale within the fbi had been in question. you have to remember this director call me was someone that then candidate donald trump
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praised on the campaign trail and to have this dramatic short pedalsuch a of time and not provide concrete answers as to why he was doing this is only going to escalate prosecutor's actual -- calls for a special prosecutor not only from democrats but also from republicans. and the end of the day, director comey was the person, the top person looking into the investigation into russia's meddling of the elections. david: marty, i want to bring you in. s lot of talk about comey' testimony involving hillary clinton's investigation and this russian investigation going on and that seemed to trigger talk about a special prosecutor. is it going anywhere? it is, the fbi has all
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the resources that congress lacks. was going toi that help see the russian investigation through the logical conclusion. that is completely thrown in at the air now by the surprise trump firing. it is interesting that what has happened since inauguration day and yesterday, that caused donald trump to lose confidence in comey since right after inauguration, he brought comey in and said he wanted him to say. what happened is the question washington is asking. david: the attorney general has to announce the special prosecutor. is there a possibility of congress directly doing it? marty: i do not think so. that is why you are calling for the special prosecutor i the justice department.
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jeff sessions has recused himself from the russian investigation. it will probably fall on the acting attorney general to make the call, not probably, but is. we will have to see if he calls arrivea the in the storm. david: lindsey graham came out with a statement saying "given the controversy surrounding the director, i think the first start will serve the fbi and nation well." other people not so excited including some republicans. what a republican saying? marty: a majority of republicans will stand behind the president. they had problems with james comey anyway. it is giving them some cover to support a new change of regime at the fbi. what will be really interesting
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to see who exactly donald trumps -- trump puts forward. it is hard to imagine almost anyone who isn't going to raise a ruckus on the heel in terms -- hill in terms of getting recognition. -- itld surprise somebody was a prize and put up somebody that everybody conceives is a good choice. david: yesterday, cabinet, you got to speak with elizabeth warman. warren. raid -- a he got in office and made 100 -- 180 degree turn. what donald trump is done is put together team of billionaires and bankers and handed it economy over to them and he signed off on one law after another that undercuts workers'
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safety. that steal wages from employees. david: not surprising elizabeth warren is not a big fan of the president's. will this move on comey do further damage in terms of getting democrats to come along with the policy of the president? kevin: last night, i spoke with a house democrats part of the congressional investigation into what is going on with russia. the member told me it's a view this as obstructionist policy and this firing is little more than something that administration trying to obstruct justice. whatat rhetoric catches on he american people and resonates, this administration has a big problem. this ongoing storyline is not going to disappear until the
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result of what ever investigation that director call me -- comey was leaving was public. david: how concerned is the white house concerned about the politics raising concern, john mccain and bob corker, how concerned is the administration with republican senator's parting ways? kevin: very concerned. the same administration who have chances of health care reform hanging in the balance with the senate. when you have these prominent lawmakers, people in state seats and not up for reelection within the president's own party, it diminishes the extent to which the administration had gone on capitol hill and make the case that they want to accomplish things like tax reform and health care as well as deregulatory financial policy. jonathan: one of the classic
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stories, as an investor, i would be interested in. the top two stories read on bloomberg, i wonder what it means for me. when you talk to people on wall street, what does it mean for tax reform? what does it mean for the rest of the agenda? does it become unhinged? even before the fbi shopper yesterday, the calendar incrediblygress was complicated. they have to deal with a new budget which they just passed with some difficulty in have to and up year's budget against deadlines on a whole range of things they need to do. this complicates the situation. you have to work a mitch mcconnell, senate majority leader. he will set the tone and decide what they will push forward a. there were indications last night he will move ahead with the senate's agenda likable four.
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jonathan: you look at the market reaction and not much of one. -- he will move ahead with the senate agenda's like before. usual,than: business as still going to be push forward to the end of the year? kevin: talk about recalibrating. i remember when a single donald trump tweet would send the markets fluttering. not much market reaction. this is will continue as usual and in the senate, a series of hearings and the banking committee is meeting, senator budget is meeting. you have business as usual. in terms of what will drive a narrative for at least the next with hours ahead of president trump's first foreign trip next week and the top russian official and his expected to later today and it the oval office, all of that will add to
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the entering at 1600 pennsylvania. jonathan: kevin cirilli, marty schenker, thank you. in holland, the netherlands, president draghi, the ecb chief addressing the dutch parliament the ecb stabilizing inflation and he seemed risks of increasing imbalances and the ecb measures have been very effective. coming up -- sam zell will be joining us in about 50 minutes' time. you are watching bloomberg. ♪
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jonathan: from new york city,
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you are watching bloomberg. in the netherlands, ec president mario draghi saying as follows that things are clearly improving in the eurozone and the economic recovery has evolved from fragile into a broad-based upswing. now political risks have diminished, a load of banks comic out -- coming out making more bullish calls on the euro saying it is about the sprint of the economy. the hard data with the soft eurozone surging to the highest in a decade. joining us now is deutsche bank chief international economist. great to have you with us. the focus on the data and not so much the politics. >> the data has been getting better the last six to nine months and the pressure now on the ecb talk more about that and not to be silent on the politics. it is a very delicate balance that draghi is trying to walk
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and recognizing the data is getting better and relieved the thatical stuff jonathan: the talk more about the data and less about france and they want to talk about italy as well. they cannot disregard the political nature of europe, can they? torsten slok: a number of political things on the horizon. what they would like to talk about is the data. they have been recognizing the data is getting better and that is what he is trying to say, we are looking at the data and things are getting bader full-time he is -- getting better and he is defending the policies. part is so compelling they have to change their guidance and direction of where they are in qe? summary for: in europe, most data is great except inflation. inflation has to be 2. they are hanging there hat --
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their hat on this indicator that it is not the speed we what alike. time, you see employment go up, broad improvements and basically consumption and capital expenditures, that should send signals that things are getting better and that is the indicator. that is inflation is around 1.1% and would need to get to 2%. do they have the time, could is move quickly on them and be behind the curve? torsten slok: that is the risk. the dutch pension system is enormous. so, in some sense, not surprising they are saying, we cannot generate terms, can you please help us get interest rates up? he is defending what he has been
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doing and rightly so, inflation is low but an important issue of the difference between one of andpolitical needs now economic data. jonathan: how difficult will it be for him to normalize? put it against current policies, a negative for basis points over at the ecb. as soon as they start to move, the market will price in more than 85 point hike. torsten slok: absolutely. the ecb and the u.s. fixed income, we have seen a compression of premiums and with the interest rates so low for so long. investorshat a lot of in europe will no longer take the money to the u.s. and european rates and u.s. rates go up. we have been waiting. this regime of 0% interest rate is indeed a very important
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factor for fixed income. jonathan: what does the exit strategy look like at the ecb? can they learn from the federal reserve or are they in a deeper hole? aboutn slok: it is gradual, cautious, slow, careful, any word for gradual and slow is the key for the fed and ecb and that is why they say the last thing they want to is disrupt financial markets. >> they have done it already. >> they have disrupted light no end to the world. they have pushed so hard and they are trying to take the foot off the accelerator very slowly. in the markets saying you're taking the foot off and we will see a jump in yields not only in the euro area but u.s. david: torsten slok will stay with us. sam zell will be joining us for a full hour. live from new york, this is
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bloomberg. ♪
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jonathan: and china, producer gains slower than expected. we caught upy, with alan ruskin of deutsche bank who was saying he thinks global growth has peaked. surprised me. i hope he is wrong. of the ppiith numbers and they would say the epicenter of reflation and you want to whether it down. deutsche bank chief economic is still with us. that is the story of the moment with you whether the reflation has peaked given what is happening in china. torsten slok: the u.s. is getting closer to full employment and we see this pressure on reflation around the
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world. we are seeing the upswing continue. the case global inflation is on the rise. if this the and or are we going to -- and or are we going to see a continuation? it to make sense that we are getting closer to the point where inflation is moving higher and higher and center bins are recognizing. jonathan: what are you seeing from the numbers coming out of china? they are weaker and the ppi oneer overnight was another that we had in the last couple of weeks. torsten slok: the chinese are trying to micromanage the economy and control the outflows of capital and how strong growth is. we have to make sure we are trying to curb speculation so it is not only housing that is trying to be curbed and make sure the chinese situation is not as stressed as it was earlier. they are micromanaging in a way
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that will confidence it will go well. jonathan: when you sit with the team at deutsche bank and talk about what is happening, why are we only sing the cop -- commodity market adjust? the bond market has been resilient, why just the commodity market seems to be feeding with a data? torsten slok: that is a big mystery. a year ago, so much time was spent on china. as marginal slowdown in china, people do not worry so much about it. it is not getting the attention. it is on the back that people are recognizing and appreciating the chinese have more things under control. next not the story for the few quarters and the story for maybe a few years down the road. david: you are seeing a downturn in domestic chinese stocks like down $500 billion. what is that telling us?
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interest ratesnd going up, they are trying to veryen and it has been strong for the last several quarters and an attempt to say we do not want to strong. let's try to micromanage the economy so we get smooth sailing. ofathan: if i ask a series investors where the epicenter of inflation was, they were talking about china and figures like ppi. people would say the stimulus through toear, europe and the u.s., that is what we are seeing the data. these are slower in china for the moment. not dramatically low growth, tepid growth in europe, what kind of spill over are we going to see you from financial conditions through the u.s. to europe? torsten slok: we have not seen significant increase in inflation and u.s. or euro area.
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people are reassessing and saying we thought it would have more emphasis but it has not have -- had that. we need to recognize that inflation is going up in upside risk in the u.s. and the euro area, we are well from the 2% target rate. addressan president xi the credit issue and keep the growth going or does have to trade one for the other? torsten slok: the imf said absolutely not. as we have seen for so many years, they have been able to pull it off and micromanaging despite they are growing to significant levels. these levels of credit to gdp, credit to consumption, credit levels should of cost of financial crisis a while ago that it is the case that the chinese have been nimble and
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micromanaging and keeping the tight balance you are talking about. i used to work at the imf, as you know. [laughter] off. important to dust it the jonathan: i am joking. is sticking with us. more market reaction or lack thereof. and the equity markets. futures a little softer. highs in the equity markets. chinese ppi weaker than expected. treasury down three basis points. from new york, you are watching bloomberg. ♪
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jonathan: from new york city and viewers worldwide, you are watching "bloomberg daybreak" and there's plenty of drama in d.c. but not in the markets.
7:30 am the report if you switch out the boards, the scene in the fx market. -- down by 0.15%. upgraded forecast for euro/dollar. france.tical risk in treasury yields a little lower, down by three basis points. 3.7% is your yields on 10 year treasury. the story in the markets, up to speed on the headlines out of the business world. emma: in south korea, the new president pledging to push for peace and north korea. the president was one in after a landslide victory in a special a campaignd repeated to visit north korea under the heht conditions and said would have the u.s. and japan broker a peace deal.
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president trump decision to fire james comey is quickly threatening to backfire on the white house. even somewhat compensate the decision cannot be justified. me andident trump called informed me he was firing director comey. i told the president, mr. president, with all due respect, you are making a big mistake. the first question the administration has to answer is, why now? said comeyhite house was fired for the investigation into hillary clinton's email server. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries, i am amateur hundred -- emma chandra this is bloomberg. david: president trump is
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tweeting doubt, quite a few tweets. defense of firing of the fbi director and said the democrats and it said -- a pointed out he -- it's what got he will higher up somebody much -- higher somebody much better than james comey. shannon, welcome to the program. some arise the reaction in washington. it is fairly new news -- some arise the reaction in washington -- summarize the reaction in washington. shannon: it was shot and what it means for the russia investigation and domestic agenda and what republicans were onping to do -- hoping to do health care and with his divide among republicans, how are they going to get through some of these ambitious plans they have. david: we expect the democrats to come out for what some of the
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republicans, prominent senators are questioning the president. shannon: using words like "troubling" or with think it needs to be look into further. republicans are showing some concern and they are getting into a solid line off wall of defense behind trump on this issue. but, i have not seen anybody really come out swinging and come out hard and that is what we have seen in the past with things they feel uncomfortable. they will say it is troubling and we will investigate further. our republicans going to break with this president? and aside that their interest -- and decide their interests are better if they distance themselves from trump or fall in line? within the context of the president's remarks, many democrats are saying bad things about the fbi director.
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in the middle of november after the election, if you set president trump was going to direct -- going to fire director comey, there would be happy democrats. it comes down to timing. why now? have we had an explanation? shannon: well, to your point, that is right on and the president was tweeting today that democrats like this and last night at the white house, the press office printed out news clips of chuck schumer, a democrat, saying comey should be fired. the issue is if hillary clinton wasthe president and comey investigating her, and he was fired three months in, there would be a reaction of what is this, what are you doing? timing.out the the white house is saying the deputy attorney general came in and conducted review flt lost
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the confidence of the president and the president felt he had to take it seriously -- conducted a review and he had lost the --etous of the president conducted a review and he lost the confidence of the president and the president have to take it seriously. david: joining us is eli lake. is it a be deal or is it -- is it a big deal or is it too early? eli lake: it is a big deal. the last time a president fired a director was a serious ethics decision. not just of mishandling of hillary investigation regarding the private server which was outlined and the deputy attorney general's memo but also an argument that if it is true that the letter from trump to comey that you informed me three times i was not the subject of an investigation, why would comey
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not have shared her that in the public testimony in which he confirmed an ongoing counterintelligence probe into the trump campaign in russia? it is possible trump is lying, but it does not seem like it is because it is something we have heard from a lot of republicans and white house officials never mentioned comey's name. is somebodye here who likes to regard himself as a boy scout above the fray of politics, both the hillary probe and the russian probe has acted very politically. it has finally caught up with him. it is a crisis because he was investigating the trump campaign in russia. i think it's almost making at least a bipartisan commission everything that happened in the 2016 election. david: james comey had to tractors on both sides and he had done things that were harder
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to understand which is ironic because he thought of himself as a political. do not have a lot of reporting about the scandals that president trump is tweeting out this morning. why didn't he get us ready for this? eli lake: i would beg to differ. if you look at the president's twitter feed which may be the most reliable way this white house gets information about what the president is going to do, he is bent complain about the non-russian probe about this for some time. that somebody who covers the white house and has sources, we have known there was this kind of frustration for a while. there is an inspector general report on comey's handling of the hillary's email probe that is almost done and will be fairly critical of comey, as
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well. there were signs it was coming. what was unusual is that the reason it was laid out in the deputy attorney general's memo was all about they handling of the hillary issue but it seems a bit part is comey's handling of the russian probe as well. david: isn't a critically important to the president that and not be about the russian probe? it goes in direction he does not want to go. true he does not want to go there but he has made it front and center. i think the little strong case before he fired comey that the russia probe was much ado about nothing. i thought it would be paul manafort and it may be carter page and roger stone and not going to come to the level of president trump himself or anybody currently in his inner circle. questions, raise the
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i thought that comey had insulated himself from being fired when he announced there was an ongoing probe. the fact that drug did it is with -- the fact that trump did it is within his constraints. and he will bring further scrutiny on russia and we may find out is completely overbought is overblown and the democrats taken allegations and ran wild and not much there. now that the appearance of impropriety is so volatile that he was just fired, any chance to have her the facts come out and clear trump's name has now been exactly for the time being is no longer much of a process. thing there is not a shortage of in washington is qwerty. thank you for joining us. eli lake.
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one of the questions raised over is firing of director comey what it means for trump's legislative agenda. what been proposed is to bring was glass-steagall, once banks taking the deposits from investment banks. kevin cirilli talked with u.s. senator elizabeth warren about glass-steagall and she said she is to get going. senator warren: a.l. ready. -- i am ready. i have got the bill. remember, i have a bipartisan bill. my cosponsor is john mccain and cantwell from washington and angus king, an independent, from mena. let me put it in context in the book. book, talk about in the 1935 until today and in the time people, gdp keeps going up but 1935e first time period,
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to 1980, and expansion of america's middle class, working family, the working poor, upper-middle-class. investment. also, careful regulation to make sure the playing field and kevin: if there regulation goes way? senator warren: glass-steagall is part of that. checkingour grandma's account and bank account, that kind of banking should never be put at risk by high-stakes gambling the goals on a wall street. you write that then candidate donald trump that i covered extensively, added this to -- senator warren: absolutely. kevin: has there been any private conversations between your office and the white house? senator warren: we are reaching
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out to the administration. >> have they been receptive? >> we have had good conversations. i am ready. this is one of those basic on wall street may resist, most of the american people get it. there is one kind of banking, check it -- checking and savings accounts and it ought to be separated from high risk gambling the banking. smaller banks, more easily compete against the big banks. smaller investment companies would be able to compete against the investment companies. this is one of the walls that would let you actually have simpler regulations overall. if the banks are only doing banking, regulators can see that. if the investment companies are doing investment banking, the kind of risk-taking, let's evaluate that separately. david: that was senator elizabeth warren speaking to
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kevin cirilli and it goes to the a debate raging between regulation and deregulation and economic growth. president trump and many ceos said deregulation is where you need to go for growth. matt, you wrote a piece today on this question of does regulation detract from growth or promote growth? promotes growth and you can see that in of thenia which is 1/7 gdp of the united states. is 39 million people and its economy is rivaling the u.k., number five in the world. the most you has regulation of any state, may be of any country in the world with respect to climate, with respect to protecting people from the hazards of working conditions. yet, it is a mecca for investment. the markets have rewarded
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california companies, big and small companies alike have outperformed companies across the board consistently for the last five years. gdp hasia's outperformed the u.s. gdp and every developed economy save china. is no question they have a lot of regulation, there could be a question of if the two are connected and they are succeeded despite the regulation. matt winkler: the people of california voted for this. it is not like it is something that has been imposed upon, a convergence of people's preferences and policy coming together. jerry brown, in his fourth term as governor, he was the early day president. people prefer him as moonbeam, it is rather complement. he anticipated as a policy maker
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that challenges that would become very important to the 21st century and he saw them back in the 1980's when he was governor. this is not anything new, california has been about this. what a good example is clean energy. a 21st century industry and growing rapidly. california dominates this, there is no place in the world were clean energy is more dynamic than california. david: what i find puzzling, i have not found a ceo that said more regulation is good for their business or growth. i find a lot of ceos that say the reverse, it is holding back growth. those who disagree about tax reform in health care policy, uniform there regulation is holding back policy. why are they all wrong? some manyer: why are in california and staying in california? three of the largest companies in,he top 10 are domiciled
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for you. if everything so bad, why is congress in california continuing? it has nothing to do with regulation. things like stanford and google and apple and facebook a lot of sunshine, the movie industry. matt winkler: i think there is the notion that regulation is a bad thing when regulation is something people want. it is democracy. it is one of the most dynamic democracies in the country where democracy actually works for a change. and people want clean air. people want clean water. there is a goal in california to the more than one million electric vehicles on the road pretty soon and they are on the way to doing that. and the policy is following the people's preferences. with us. torsten slok
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we had larry summers on a number of months ago and he talked about the old administration getting through the regulation and he said that was a bad and the symbolism was wrong. do you agree? torsten slok: it is important if regulation serves a purpose, various industries have various regulations, sometimes about the environment or energy, you say you care more or less and not is case that all regulation a bad. matt is saying a number of regulations, despite high taxes and a lot of issues and that is not to say, less regulation is a better. when it gets to the nuances, it is unfortunately more complicated. jonathan: torsten slok, thank you. and matt winkler, his latest column on the bloomberg. sam zell will be joining us.
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the world according to sam in about 20 minutes. you are watching bloomberg. ♪
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emma: i am emma chandra. coming up -- federal reserve vice chair at 11:30 a.m. eastern time. ♪ emma: your business flash. the royal of qatar wants to boost stake in deutsche bank to more than 10%, according to people familiar with the matter, a signal they are seeking greater control. requestde at the several months ago. earnings at disney hurt by the boost profits,to
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espn reported the sports network key to losing subscribers and paying more to televise games. the ceo said he is not worried. >> we are feeling very optimistic about it. the reaction suggests otherwise but that is not the case for us and will take the steps to contend with it, it is not something we are just getting too. something we have worked on for a number of years. people should look at espn in a positive way and not a negative way and think about how mobile devices are being used. emma: overall earnings better than expected thanks to fame parks and movies. that is your business flash. jonathan: the unemployment rate for two euros to the client hitting 4.4% in april -- unemployment rate declined to 4.4% in april. joining us now is bloomberg fed
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reporter is -- and torsten slok. the date has not accelerating anymore and in some areas, a little softer and what you make of that dynamic? matt: the really important thing they look at, namely the jobs report number has been pretty steady and that the take a lot of comfort. inflation, are we seeing inflation roll over? on the other hand, reasons to believe it is going higher so we have a blip in the data that needs to be interpreted but i think the fed is not seeing anything to alarmed at this point that would knock them off the track they have been on. jonathan: the market that follows or rather the fed that follows the market and now it seems the market is beginning to gravitate toward the federal reserve, why do think it is? torsten slok: it is regime
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change. the market has been saying you have been crying wolf. we are right to say it will be below the deutsche and right to say rates are not going to go higher. in the last few months, two weeks before the march meeting, they changed expectations. the market is scared about a repeat. inflation has actually been slowing. jonathan: a toxic rate, isn't it? the data is softer, looking at china, the federal reserve seems to be on autopilot. torsten slok: the narrative is saying to look through the -- look through the soft data. whether it is right or wrong, should the market be listening? we want to get going and do an acceleration of rate hikes. the question is, the market continues to believe that orders mario going to say it should be
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a disappointment? david: how are we going to know how with the fed know if you are ready to be weaned off the accommodative policy? how much strength is because of the low rates? matt boesler: just looking at real interest rates, they have been on the rise the last couple of days and broken into positive territory for the first time in a while. usually when it happens, we got a market selloff but it is not happened yet. the markets assure they can handle the higher rate hikes, it will be a good assigned for the fed and encouraging and we'll have to see how it goes pretty markets go up and down so who knows how long it will last. d.c.han: and talking about , worries about the federal reserve, how many policymakers came out after the election, why are you pricing in fiscal
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stimulus and why not more reaction from d.c.? some of them did. the majority did not. matt boesler: i'm glad you mentioned the politics because it seems something from unspoken to actually spoken of these days. here are more fed officials talking about the balance sheet and wind it down and more for political reasons the necessary economic. they have become explicit. when you think about the rate hikes this year and the flows up and down in the data, they really want to get it started. janet yellen is potentially vacating the fed chair seat in february and they would like to get it going and they need to raise rates. reserve: is the federal responded to political pressure in some way? torsten slok: if you ask them, they say, no.
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let's face it, they cannot sit around the table and not think about what are the consequences of this action or that action. they may say we assign a low probability or we assign a high probability to the outcome. to say we completely ignore and only look at inflation and unemployment is misleading. jonathan: torsten slok, very diplomatic. and matt boesler. sam zell. he will be joining us through the hour. from new york city, you are watching bloomberg. ♪
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jonathan: president trump fires fbi director james comey. a white house faces intense scrutiny from democrats and even republicans. the european stocks cling to a 21 month high. the investor focus appears to be in china. global inflation field by the road''s second-largest economy may be easing a little bit. good morning and welcome to bloomberg daybreak. alix steel is on assignment today. soft now but there is no drama here. move on treasuries moved by two basis points. 2:37 is your yield on the 10 year. we will get u.s. import and export prices at 8:30 a.m. eastern time. at 10:30, u.s. crude oil inventories.
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fed president eric rosengren speaks in vermont on the economy. afternoon come the minneapolis fed president will answer questions in minnesota. at 1:00 p.m. eastern time, the u.s. treasury will auction one dollars.billion right now, a special segment with sam zell. we will talk about what happened last night with president trump and james comey. he shocked the country when he fired james comey. kevin cirilli is our chief washington correspondent. what is the talk today in the aftermath? confusion and criticism. i spoke with several republicans, all of whom are very confused at the timing of president trump passes decision to fire james comey. some feel this is the fresh
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start needed for the fbi but again, republicans are joining for democrats criticizing this administration,, -- the biggest political threat not just to president trump us his politics, but also his policy. later today, senate majority leader mitch mcconnell about 9:30 in the morning, will speak on the senate floor delivering marks set to be about this firing. you have a situation in which the political capital the white house has will diminish. jonathan: democrats have said some of the worst things about james comey, including the fact that he should be fired, talk about the essence of the democratic complaints here. if this were november or december, i imagine some of them would be happy. kevin: absolutely. james comey was investigating
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the russian involvement in the 2016 election. the president has the onus to support the notion that he did not fire him as a result of the investigation. put forth yesterday by the trumpstration, president was informed by jeff sessions, who by the way recused himself from the russian investigation, mr. comey was no longer the fort person to be in place the job. regardless, republicans who are standing by him including his top political advisers, suggests this is what they need in order to train the swamp, so to speak. this is only going to continue the call into trying to get to the bottom of what happened in russia and the 2016 election. david: it must be the priority of the white house for now to get this off the front page and
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get it out of the newscasts. how are they going to do that? kevin: they have to move on. today, he is meeting with the foreign minister russia in a private meeting. after that, he is scheduled to take his first international trip abroad and so, you know, look, there are hearings today that will continue on a host of issues. the senate bank is meeting today. there is no question he needs the senate to pass health care. when you have prominent republicans raising questions about his maneuvering with the fbi, that is not something good for his policy agenda. joining us now is sam zell. a legendary investor. the author of "am i being too
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subtle, straight talk, and he pulls no punches. particularly just the story of his father and his mother fleeing from poland and getting to chicago by way of some -- siberia and japan, an amazing story. good to have you here. about president trump and the things he wants to do for the country. jim comey, does this get him off the rails? can he get back to a core agenda? i think if you stepped out of the 24 hour news cycle world, i am not sure he has been put off the rails. i am not sure this gets him off of his agenda. comey got himself involved
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in a whole bunch of stuff. he was a wounded animal to begin with. the ohmic question i would ask is what took trump so long? i do not necessarily have an opinion as to the decisions that mr. comey made. i just think the timing and the appropriateness affected his credibility. i think this will pass quickly. i do not think this is a major event, interesting at all. every other one i have seen, i read the new york times and everybody else, nobody mentions that james comey was a republican nominee. david: he served us justice department under george w. bush. beenur book, you have not
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shy to make tough decisions, even controversial decisions. it to explainis why? some of the things people are reacting to his explanations which go back to august and what happened in the democratic seems aration, that little less implausible. first of all, are we 12 hours into this? i think making a demand for an elaborate explanation 12 hours into it is an interesting objective but hardly critical. i think everybody will get their hands relaxed and try to adjust to what is going on and that turned into world war iii. david: let's go back to the agenda and assume it is not off the rails. what is the most important thing the president should be adjusting right now? i assume it is not james comey. sam: for sure.
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as important as health care and pass reform are, at the moment i think what is going on in the we have gotten eight years of no foreign policy, and i need to get one quick, think what is going on in venezuela and the ukraine and what is going on the middle east, they are the most important issues that affect this. presidentus for the to go forward on his domestic agenda and get things done and i think he will but if you ask me to prioritize, i think the issues and the risks in the world are greater than anywhere else. david: is that the same for sam zell the investor as it is for n?m zell the businessma
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the i answered as sam zell citizen. i rarely make the decision and rarely have i seen any scenario citizen's use the go against what would be beneficial for sam zell the investor. david: how does foreign policy really affect investments? how does ite, affect you if you think about investment? as an example, we have significant investments in mexico. is a veryhat important issue for this country. that's -- the sooner the discussion on that begin, the sooner we lower the rhetoric.
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it is a very significant portion of our trade and something to be worried about. i'm a big investor in brazil. a blows up, i promise you, brazil will not miss the opportunity to get hurt . you can ascribe what might or might not have happened with north korea, a significant investment and impact on the way you think. the wall across the southern border is a big issue. investment or citizen, are you an agreement with the president on that were in disagreement? to be perfectly honest, i don't know what the president's view is. david: that is a problem. know. don't i understand your question.
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you saw i dedicated my book to , i came heres after my parents, 90 days after my parents came here. immigration think built this country and immigrants are the self-selected was. that is not a unique story. jonathan: two think this at ministration is waiting on immigration approach? sam: i don't think so. because i really think this is china to use the immigrant issue to get everybody's's attention, to
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think about it. there are elements described in both cases. i am very pro-immigration but the same time, if you asked me to distinguish further, i a lot who interested in somebody has a phd that other grandmother coming over to join the illegal immigrants. david: do you think the president understands the economic and business consequences. rather than understand there is a positive economic benefit. sam: donald trump's's father came from germany. he do google. our country has enormously benefited from the challenges
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and intellectual contributions of immigrants since the beginning of time. nothing is changed. i don't think anybody in the administration doesn't understand that. we see politics result in the strangulation of clarity. this is certainly one subject were that is the case. jonathan: sam zell will be sticking with us. coming up, we will be joined to talk about bank of england policy decisions. plus, goldman sachs aspect -- asset management. a full lineup coming up tomorrow. you are watching bloomberg. ♪
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jonathan: mario draghi spoke in front of the dutch parliament earlier. he noted while the economy is struggling, there is still room for improvement. >> nevertheless, it is too early to declare success. show an upward trend. the domestic drivers of inflation and wages are not yet responding to the recovery and the narrowing of the gap. now from joining us his office in london, the sitting european economist. .till with us is sam zell mario draghi on message. nothing really changes from just a month ago.
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collects two steps. we think it will move the and that will, that buys to ease come it was warranted at a time when we had deflation and -- pressures. very busy for the ecb. they will certainly leave alone for now. >> small and implement a changes in europe. if you are looking at five or 10 years, d.c. big problems in europe? >> i cannot know if i see big problems. i see a lack of solutions.
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when you talk about europe today, used -- you talk about asking the question. where does demand come from? europe is doing better today than a year ago. both an issue, so it is a question of how far along. i think europe has to do with where that demand will come from. they have created a society where work is not at the top of the list. excel ifnow how you you don't have a motivated workforce and a motivated population. where we going to see fundamental demand pickup from? be in the periphery or does it still have to come from germany? >> i disagree with what was said
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before. have been getting through for the last couple of years. a demand in the euro area currency which has yet to be realized. the highest rate of job creation since 2011. with a very easy policy stance in the years ahead, i think europe is about three years behind in that you will see gradual improvement in the years to come. there is clearly upside but in the longer term, you have a real demographic challenge. how much of a concern is that for the economy? is a challenge because you need the reform to be necessary to ease potential growth.
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let alone, you counsel -- it is the mindset. in terms of imbalance, i think obviously the population will turn better. migration is something to keep in mind. i do not think there is a fundamental problem here with the trajectory. do youn: do work -- worry about the church action of the population? demand comes the from? it comes from growth. it comes from 28 countries in the euro. them have lessof people in them in december than in previous january. a real problem. last time i checked, the man said he needed a 2.1 fertility
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to maintain the population. is there any country in europe meets thateven minimum standard? i don't think so. jonathan: just to pick up on is aroundell said, quite a bit within europe. talk to us about it. >> i think the comments are wrong to begin with. more than one country has 2.1 children per household today in europe. the second point is it can increase notably. i think europe is at the right time to enjoy acceleration. >> you could get effectively more people working by loosening up the labor test by working harder.
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you think they could loosen up labor restrictions so you could have longer hours and work harder. at least for the next several years? a step of the right direction but there is no example of it happening. david: how likely is it? there has been talk for some is there tow likely be real labor reform in europe? sam: -- >> it typically increases market cost 30 loosen the rules around market access. to get for retirement and this is what they have been doing. the evidence, what your guest is saying, is plenty in this direction. jonathan: sam zell, as an makingr, it is different
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equities and trying to grow a business over there. is there anything you look at right now that makes you optimistic about making an investment at some point for european business? sam: i like the cheese in the castles in the tourism. europe allts me to the time. am i being too subtle? are never too subtle. talk to me about what it would take to build a business there? sam: think about what it would be like when you hire someone and you cannot fire them. start right there. forget about the work rules, and reallyt unions anti-capitalism. that makes it tough to overcome. david: you say there is labor
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reform going on and we are just not picking up on it. you talk in the wake of brexit. we are reluctant to move into paris. it is impossible to give his people and impossible to fire them, is that a misperception? >> completely, yes. it is easier to do in some countries rather than others depending on regulation you have . europe is 28 member states. d -- why do they think it would be good for them? i don't know. >> there is no question, but at the same time, do you just reject the possibility that some large banks are going to france? let's talk about one, france.
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experience about long-term employees in france. it costs a large amount of money. classic was the same in spain before him labor market reform, same in u.k. before this that test decided to go and get aggressive -- i think it is the right model. the same amount of social protection for workers. .ut it is about creating jobs you don't want to protect workers at all costs. you want to have a system that trains them. it is not about labor market rules for the day. there is mobility in the markets and that is what europe is doing. jonathan: thank you very much for joining us from london. will be sticking with us. and the markets then, some change -- 60 minutes and some change away. negative 1/10 of 1%.
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the drama is not in the market this morning. by abouts negative 1/10 of 1%. lowereasury market yields in the u.s. ten-year pier 1 1387 is how we trade on dollar-yen. the number is traveling higher. the weaker yen story, stronger yen by 1/10 of 1%. europe on firmer footing as well as we pull back from 2017 highs over previous days. $1.09. coverage continues. you are watching bloomberg. ♪
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jonathan: you're watching bloomberg. -33, down 10 or 1%.
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the switch of the board quickly. treasury yields largely lower. if you do's and scrap to the inflation trade and believe china is at the epicenter of that, you might want to took -- -- coming in lower than expected in. night, marginally stronger japanese yen. let's get you an update on what is making headlines. here is am a. president pushing a piece with north korea and get tough on the company policies biggest corporations. in a specialictory election. he repeated a campaign promise to visit north korea under the right conditions and that he would fight to the u.s., china, and japan. in the u.s., democrats and congress are blasting present from's's decision to fire james
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comey. the white house says james comey was dismissed because of his handling of the investigation of hillary clinton while she was secretary of state. chuck schumer was skeptical. crisis the administration had objections to the way director comey handled the clinton had thoseion, they objections the minute the president got into office. but they did not fire him then. why did it happen today? >> democrats call his firing a cut -- an attempt to cut short the investigation into the russia interference into the election. president trump said he will be replaced by someone who will do a far better job. meanwhile, the president meets with russia's's foreign minister today at the white house. a reprieve to the president's to face meeting with vladimir putin
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since he became president. global news 24 hours a day power been 120 600 journalists and analysts in more than 120 countries. this is bloomberg. jonathan: the unemployment rate in the united states continues to decline. joblessness is expected to be 4.5% through 2019. the fed hike interest-rate projections at the end of the meeting. joining us now, matt is still with us to assess the u.s. economy. head of equity group investments. this adjustment in terms of whether the market is gravitating toward federal reserve, is the federal reserve going to push things against? >> probably not. probably a three rate hike this year. i do not know there is a cabinet -- appetite to speed up the process given it sounds like officials want to get it going
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and not be raising rates exactly . it looks like three is a reasonable asked -- estimate is year. jonathan: you say 24 hour news cycle maybe makes too much out of it. what may or may not do over the next several years? what everything is all about if you are running an investment business and making those kinds of decisions. i have not been a big fan of quantitative easing. i think the fed has been too easy for the last few years and it has can should be to two hour slower than expected growth. rates create a sense of urgency. lack of rates don't. there has been no penalty for delay. was supposed to make the
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investment on monday and then i say let's not make a total six months from monday, with zero interest rates, it ain't very high. i think getting our rates closer to normal, in the world we live in today, no one really remembers that up until the great recession, the average cost of capital for the government was 5.6% for 20 years. zero, that creates and i thinkof stir it is not healthy for the country. i hear this again and again from the businessmen and investors out there. the f1 seat.from the accusation is that it is an echo chamber and these are the policies we need in that is it. to these policies resonate with the fed in any way shape or form
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to higher growth? >> i think we have started see the idea creep into this -- this discussion a little bit. 1 thing we happen watching is lifting raising rates. especially how the mortgage market would handle the higher interest rates. there was a theory that maybe there were buyers on the that need to be notched off the sidelines. we have not seen even with the big rise in interest rates much in mortgage finance. that is encouraging for the fed. jonathan: a misallocation and capital as we see pockets of public activity? some people outside of the real estate market would say it is an real estate right now. what would you say back? question.asked me the i think bubble would not be an appropriate description for
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commercial or residential. think the u.s. commercial market is a little frothy. we are about to have significant and supply isply the elixir that takes care of bubbles. we are building more family housing units this year than any time in the last 25 years. i think the supply demand thing will balance it out. how about subprime auto loans, student debt? the multipleat is that amazon sells at? in order to justify that multiple, more than a quarter of the u.s. economy in five years. jonathan: they generate a lot of cash. sam: not enough to make up for
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the multiple. david: we will interrupt you for a moment. rex tillerson on the right meeting with the foreign minister of russia at the state department. this, up there on the left will be meeting with donald trump in a private meeting later this morning. you about commercial real estate market. digital has distracted a lot of the economy. what is digital and amazon going to do with malls and all of the buildings across the country? sam: certainly something to worry about. , i think weetail don't know the answer yet, but i would support
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the very top malls and the bottom strips and almost everything in between is basically obsolete. does that create the opportunity if prices get low enough -- they are known to do that on occasion. had a great experience doing that, i bought a shopping center from a bankrupt company. we had a big and they get -- and vacant space. we learned a great lesson, free rent is too much if there is no traffic. so it did not work out well. you are not optimistic about buying a lot of vacant malls. sam: tell me where the traffic will come from? how do we get people in the stores? if we get the men, we will seldom stuff. but how do you get the traffic?
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online has done is it has taken a significant amount of the traffic. about these great one dollar, that they are giving and replaced by for small they were driving traffic, they were spending money in advertising. now they are not and guess what, a reduction in traffic. therefore, a reduction in commercial activity. david: it does not look good for malls, i will say. next, churches, ok. >> empty, big-box containers. coming up later, merrill lynch senior equity strategist
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and a global investment strategist. live from new york city, this is bloomberg. ♪
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>> this is the hewlett-packard enterprise greenroom. coming up, federal reserve vice chair. now to your bloomberg is this flash. today of t-mobile arising quinn to the financial times, the softbank ceo plans to seek talks to merge with sprint. he says the trump illustration would be more amenable to confirmation.
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the second-largest insurer in europe is planning an ipo of its operations. and lift businesses, including its u.s. licensing savings and it. access holding. the company made -- return money to investors. shareholder -- were apologized to. he said in a general meeting he made an end -- a mistake in becoming personally involved in a compliance issue. that is your bloomberg business flash. david: a walt disney company amount -- announced second-quarter earnings and though it heat on profits, it fell short on revenues, largely attributed to his flagship espn channel. himn interview, i asked about the challenges of espn and his plan to a dress the challenges.
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feeling very optimistic about it. the reaction suggests otherwise but that is not the case with us. we have taken a number of steps to see that it is not just something we are getting to. it is high time people started looking to espn in a positive way and not a negative way. think about how mobile devices are being used and what for. david: joining us now is paul sweeney and still with us is sam zell. this was the job yesterday, to say it will be ok, we're losing subscribers and we will make it up in digital. did he succeed? >> i am not sure. it was a mixed bag of results last night. i think the company disclosed a little bit that subscribers , maybe at espn continued a little accelerated from last quarter. that is the number one issue.
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they did not come out with a definitive strategy to bring espn directly to consumers via direct over the top option. it is coming later in the year. that was a little disappointing for shareholders. >> a five-run the leak for soccer in the u.k., and in london, they should be worried that sporting content, it is right up here, -- >> yes, i think everybody in the whole food chain need to be concerned, including players, who get paid because tv networks are willing to spend billions of dollars and increase those 10 or 20 or 30%. what we are seeing here is the peak of revenue supporting these rights, which leads espn and everyone else, are they going to
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bid as aggressively as they have in the past? jonathan: unfortunately for these guys, these deals are very long. david: and very rich. and the other thing with sports going way back, there is always someone else trying to break in her the drunken sailor. you have the amazons of the world saying wait, we want to get into the business. there is some new guy coming in and that is what really saves them. >> if you are espn, it is a really tough business model. fixed and it looks like revenue under pressure for subscriber fee and advertising. >> you say in your book you never wanted to be a media mogul but you were for a time. radeon television as well.
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what was your lesson when it comes to costs and revenues? was the logic of reducing costs and generating revenue was lost on the media industry. am i being too subtle? do you think about where the media industry is going? is obvious it is getting more rational. the whole espn story is a story of unbundling. in other words, as long as i had , espn- to buy 27 channels was included and can generate the highest price. all of a sudden, they are unbundling it in finding out a whole bunch people want to us the history channel but couldn't care less about espn let alone pay premium to have it. there at the same time, is deep engagement with some of these brands.
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whether it is see as pn, there is deep engagement. there must the some way. sam: you started this conversation by talking about the cost of content. you keep raising the cost of content, it is no different than if i keep raising the rent on my billing. the rent, mysing people are going to go across the street at some point. i happen to own a very small piece of roast board teams. it means my grandchildren get goodies and i get tickets. that is fine. the numbers are crazy. professional sports people are being paid off the charts. this chairman used to say when it comes to sports, the money goes to talent. it is not going to the network at the end.
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up next, final thoughts from sam zell and his take on health care. all week, bloomberg technology is live from boston. regional innovators, startups, venture capitalists that come up every day at 5:00 p.m. eastern time and live from new york, this is bloomberg. ♪
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david: this is bloomberg. the gop came up with a plan to replace obamacare that got to the house. it has to go to the senate now. is zell is with us and he working with yet another group of investors to buy more. health carebout policy. a gop bill is rumored to really hurt hospitals. is that your assessment of what is going on? billthe first health care
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is almost meaningless in terms of, what if anything will come out of all of us? it was very important republicans could pass a starting point. and that is what it is and not much more than that. david: how dependent is the success of these businesses you are invested in terms of regulation? sam: washington as a regulator can be very devastating. hospitals fit that description. is we will see compromise and a change in the health care policy going forward. as they not as radical current conversation suggests. david: why du invest in it? sam: we talked about europe before and what is the key to good -- key ingredient, demand.
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the aging of our population is creating unlimited demand for business. we basically focused on buying hospitals that have been -- from nonprofit to for-profit. it creates the opportunity to generate a reasonable return. what you saidn above the demographic in europe, why have you got the appetite to do the same thing over there? sam: do i want to voluntarily get involved in a regulated is this in europe? i don't excel. not voluntarily. the very things we were talking they a little while ago, appliance based in the health care arena compared to everything else. and the same time, 17% of gdp involved in health care.
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said isren buffett, he up from 5% in 1950 27% now. for the good of economy, don't we have to get the number down and might that not hurt your hospital business? sam: the answer is we have got to get the number down and yes, it could hurt the business. it also might make it a lot easier to be more efficient. challenge in the business is the potential for efficiency, and there is enormous opportunity. david: most people say single-payer is the way to go if you want real efficiency. sam: i think that is too big a to reach that conclusion. it may ultimately be that were notations on it, but i do think anybody, least of all me, has an opinion at this point. >> why did you write your book and what effect does it have? sam: it is the hardest thing i have ever done.
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something here and tomorrow, i could say you misinterpreted meet. if i put it in the book, it is there for posterity. secondly, i have led a very different life that would probably qualify as unusual. i do to wi-fi-40 speeches a year on college campuses. this book was really written to be inspirational to the people in my audience. you getting much reaction so far? sam: to be honest, it is off the charts. i am shocked. bestseller,g into a which is certainly accidental. , isn't going to change my lifestyle. this book worked, but it makes to be able to
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write something everyone wants to read. david: good for you, sam zell. thank you for being with us for an hour. the author of, "am i being too subtle?" the answer is not -- the answer is no, you are not. jonathan: coming up on the program in the next hour -- why he saysd with low volatility does not mean high risk. it is just round the corner. county you down to the opening bell, you are watching bloomberg. ♪
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jonathan: president trump fires
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fbi director james comey in the white house faces intense scrutiny from democrats and even some republicans. european stocks cling to a 21 month high. disney loses a little bit of magic. espn continues to lose subscribers. from new york city, a warm welcome to bloomberg daybreak. i'm jonathan ferro. .lix steel is on assignment just under 30 minutes away, let's keep you up to speed on the action. down by about 1/10 of 1% on the s&p 500. switch up the board quickly. treasury yields grind lower by two basis points. tot ppi, reflation trade some extent. a stronger japanese yen story, that is the story across assets. let's get you up to speed on movers.
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abigail: disney shares are down more than 2% on a mixed bag quarter. they did beat earnings. the revenue miss of nearly 1% driven by the cable division where we saw 3.3% sales driven andspn disappointments subscriber losses. shares are down right now. there are at least two defending disney. abercrombie & fitch, scherzer , hiring to assess a sale. 2017stock is down 85% at a below. be cheeringem to the possibility of a sale. nvidia surging up more than 12% with yet another monster quarter, it has now been eight of its last quarter's. huge growth on its top line year-over-year growth.
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on the bottom line, 103% growth in adjusted earnings. not small numbers either. it looks like the move toward automotive segment as long -- along with the pc, and to gaming, is really helping him. david: thank you. president donald trump late yesterday shocked just about everybody when he abruptly fired fbi chief james comey. joining us is bloomberg businessweek editor-in-chief murphy. not in washington at all. and bloomberg's executive editor for legal financial regulation. welcome to both of you. i do not know where to start. >> i do not either with this one. there are so many days when you cover the administration when you put your hands up and say what is going on. there are several questions it raises to her the first is about
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timing, the second is about rationale, and the third is about who knows what when. surprise in some senses that he was fired if you extracted it. he was not popular with both democrats and republicans and supporters left given what happened with the clinton investigation, the -- the email server. the question is timing. he was also the head into probes of possible ties with russia. a huge investigation for months and continues to do so. the timing, the comparisons people are making with the watergate area, -- i will interrupt this. kevin is down on capitol hill with an there -- very important guest. >> we're here with senator lindsey graham, republican from south carolina. thank you for the time. a lot of comparisons to
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watergate and a lot of comparisons and questions about the timing of president trump's decision to fire fbi comey. >> i do not remember the democratic leader during the watergate era calling for the dismissal -- jamesschumer, called for comey's decision -- dismissal. of the timing, the deputy attorney general seems to be well respected by everybody and wrote a letter to the president saying director comey needs to be replaced and we will get new leadership. >> you have a lawmaker who has not always agreed or cited with president trump, particularly on discussionscy and with russia. do you have any concerns that the firing of director comey will somehow muddied the waters
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of an investigation to get to the bottom of what happened in the 2016 election? i don't havem: no a lot of faith in the professionals at the fbi. a counterintelligence investigation going on as to whether or not there is a collaboration between a trump campaign and russian officials and on the taligent -- the intelligence side. then we will talk about a special prosecutor. the intelligence committee is working well together. working with white house. it is not about a single person. it is about the system. i believe at different times for different reasons, people have asked for a new fbi director and now they will get them -- they will get one. >> when you look at how the ministry she has handled foreign policy, president trump going on his first international trip next week, are you satisfied with a change or have you noticed a change with russia?
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lindsey graham: he has got the best national security team since i have been a. when it comes to russia. russia interfered and i do not think they changed the outcome but they need to be punished here and i do not know if there is collusion tween the trump campaign and russia but i want to look under every rock for political purposes, i want to look at all things rush appeared when it comes to his foreign policy, i think firing the assad fornd -- at using weapons was the rating to do. be helpful in syria but i will not accept a deal that leaves aside in power. i would advise the president to be aware that they are not teddy bears. inmatter what russia does syria, i'm hell-bent on punishing the russian government for trying to undermine our 2016 election, even though they did not change the outcome. they try to interfere and putin
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and his cronies need to be punished. i hope the president agrees with that. if he does not, we will have a conflict on our hands. >> should there be a special you sayor and what do to americans who share your concerns and want to overturn every rock to see what went on but look at this firing as perhaps an example of the trying to get rid of the person investigating him? lindsey graham: the firing was based on a letter from somebody we all respect. i believe the investigation will go forth. both cardiff have called for dismissal of mr. comey. this is not watergate. in terms of what the congress will do, i want to know all things russia and it is important we understand what happened. i don't have a desire to punish president trump nor do i have
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the desire to not hold him accountable. a lot of people believe he is not legitimately elected. i did not vote for the guy but he won. the system is bigger than mr. comey. the very democrats who are calling this watergate at a different time for a different reason called for his dismissal. the president has got to pick some buddy who will reunite the country. i think he can and i hope you will. >> thank you for coming on. we appreciate your time. david: thank you. it was really important to hear from lindsey graham. graham addressed something you were talking about, the timing issue. he said the timing is simple. the executive attorney general is the only one because -- recused himself. he was confirmed not that long ago so he got into office and
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took a look at this thing event a letter to the president saying that took a hard look at the fbi director and he has got to go. isn't that plausible on timing? >> when you look at the letter and what he is referring to, it relates back to last summer and also to the late october surprise when comey reopened the investigation of the mouth with -- which some republicans think had an impact on the election. the rationale i think does not make a whole lot of sense going back to how he handled the clinton investigation, particularly as we discussed this morning, trump himself supported the way that comey acted. now to say that was a mishandling, it does not make a lot of sense to the time he does not make a lot of sense. was supposed to be the week of a little momentum for the trump administration. they got health care through the house. they did not really have talking points or surrogates lined up.
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comey himself was looking at screens behind him when he was fired. there does seem to be many questions about timing and the actual rationale. .ho knew what and when david: i will interrupt you again we will get to you. another senator with reaction, we go down to kevin. kevin: senator rand paul, we what dop this fast but you make of president trump's decision to fire james comey? rand paul: i think it could not have come soon enough. every democrat thought he did too much to insinuate that clinton was guilty, and every republican thought he did not do enough to actually indict her. with hiss been happy performance. the clinton investigation by any measure was very much politicized. time to take a new direction with the fbi. the president has made a wise
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decision here. >> do you have any concerns about the timing and what do you say to folks who are calling for a special prosecutor. he lostl: he said confidence in him. the president could have done it without process but he waited until the team was approved. chuck schumer and the democrats delayed his team being approved for weeks. we finally have an attorney general and assistant attorney general. my understanding is the fbi director reports to the assistant attorney general and that they reviewed the process, went through investigating it. one of the most telling points was from eric holder, who said that james comey had really defied long-standing traditions of the department of justice, usurping power that should have been in the department of justice. you really heard from both sides , republican and democrat, long-time people on the department of justice that comey had really overstep his bounds and that it is time to go.
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the rest is politics. the democrats are mad right now because they are still met they lost the election. you say to americans, republicans, who are looking at that thehave concerns president of the united states, fired an individual leading the investigation into russia's meddling into the 2016 presidential election? rand paul: there is no evidence investigations will not continue. nothing changes as far as that goes and the investigation will go what it is good -- where it is going to almost every american out there will tell you that comey botched the mail think a democrats have been calling for him to go for six weeks. republicans are not happy with mp or you cannot lead the agency whatever one thinks you made the investigation political. the fbi needs to be above politics. comey drug it down into politics and that is why it is time for him to go. york.k to you in new
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david: you have been very patient. i want to ask you one specific question. senator paul said the problem was the clinton investigation had been politicized. another investigation that people are concerned is politicized and that is russia. i think that is where the call for a special prosecutor comes from. how likely is that? >> i have to take exception from something both the senator said. i am proving i'm an independent. andas truly independent that is where his credibility came from. by removing him, you are inserting a political element that you cannot reverse. that is how we get the discussion of a special prosecutor. that expired sometime ago. you cannot have a special counsel. it will now go to the attorney general's office.
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he has recused himself because of possible implications, to decide whether a special counsel is called for. if a criminal investigation is caught -- one of the interesting , will there be a select or bipartisan committee? my guess is the administration would prefer this to stay in congress. that could be a mistake in my estimation. they do not have the same limitations as a prosecutor. dirty laundry would be aired. jonathan: thank you very much. joining us ahead of the market open, senior equity strategist, dennis on the phone in the city of london this morning. the market does not bat an eyelid to any of this. the s&p 500 by two or three points. does the d.c. trump agenda matter as much as it did a month
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ago to investors? >> it does but i do not think this news plays into what the market is concerned about. from day one, the biggest concern has been tax reform. i do not think this plays into it. optimism was going to build it we would get a big pr push from the administration on tax reform. that would get the market excited but the reality would usher in the end -- newest -- who will pay for test pharma, essentially, and as we and you talk about that get participants really fighting who will pay for it, that will get the market to question what will get done. jonathan: how do you use the events of the last 24 hours. certainly not financial participants. >> it is not as much of a market concern. there are philosophical concerns
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really when it comes to the market. it is really about profit and growth. questionwould never the market but if the market thinks that congress can handle a possible select committee to investigate the president, it may not -- it may have to rethink its thinking in washington. >> i think that is right. probably have to rethink whether tax form would be done anyway. anybody who thinks tax form would be easy is out to lunch. people who think that are less and less into the market. another thing on top of many things that will get in the way of comprehensive tax reform. >> an easy question for me to ask and tough to answer, what is in the price at the moment? you speak to investors at the moment, where are they? what is the base case? >> i think there is a better than 50% chance that tax reform gets done early next year.
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there isot say overwhelming consensus at this point. you willnths go on, get more more people questioning what will be done this year. then, there will be a lot of ups and downs. >> was think about what is on the table currently in that document released a number of weeks ago. the rate, will that happen or how close will we get? >> i don't think so. 20% was the baseline. trump is playing the negotiation. choosing 15%, he come pushes two things. a lower rate to negotiate higher, and second, he is able to follow through on campaign reform. andampaigned on that rate not backing down yet, it accomplishes both things. it is very unlikely given there
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is a very political will to pull out the budget deficit, that we get anything even close to 20%. >> let's talk about how you express this in the market. at a mexican story in the united states to small caps. is that story over? >> we think it is. if you think about our view on the market, we think it has gotten poorer. still go higher but our view is the key supports over the last five or six months has been improving growth and confidence. already they started to roll any pmie look at globally outside of europe and japan. you have seen those indicators at healthy levels starting to roll over. at the same time, is going away. david barton -- the us the only
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asset >> really adjusting -- asset class really adjusting? in there.anging near an all-time high. treasury yields still a little bit higher. >> i think the commodity markets are very specific to those markets in china. i think that is reflecting that particular aspect. global equity markets are taking into account a lot more optimism around european and japanese growth and the fact that this is .he best any season in years there is an interplay there. i ultimately think the commodities sir -- story in terms of a lack of inventories going down on oil prices, i think the risk reward, clients have it right in the sense that risk reward -- you mentioned small caps. the thing is trading at the 99th percentile of that rate, going back to the 70's, it is not a
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good recipe. this is the telling has tech like expectations. one last question on small caps. it is generally thought deregulation benefits smaller companies is -- disproportionately. the administration seems to be repeatedly emphasizing because they do not need to go to come -- through congress. is the market underestimating the benefits for small caps? get a lot more regulation, you are probably right that it helps small caps more. aret of other dynamics going on. even within tax reform, a lot of stuff that hurts as well. anerage for small caps is at all-time high. they are a lot more credit sensitive. debt for ahe cost of lot of these companies. is why we recently went more bearish on small caps.
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jonathan: up next, market cap, $800 billion. the first $1 trillion company around the corner. aliceon, economist rivlin. ♪
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david: the combined market capitalization of the nasdaq's five most viable corporations is rising $3 trillion after 24% this year. apple contributes $800 billion to the number. -- ing us is sam stovall steve -- welcome. good to have you back on the program. why is apple up so high?
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steve: it has been an amazing performer. at the earnings estimate, it has not changed much over the last six to 12 months. i think it is largely a narrative change. the story is gradually shifting from a business where they have got to have a new part every year or two, to a more annuity driven business where the focus year whichng 20% per allows them to sell more phones. i think that expansion is largely what explains it. finally, people are underweight. it is hard to be overweight apple. david: one person, warren buffett. he really reinforced why he thinks apple is such a good. his partner out there said it is
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a good idea that warren has finally seen the light. helpingt be apple'stock. >> a couple of his portfolio managers got into it earlier. he seems to have piled in early this year. he has pulled back on his ibm -- ipm investment. apple seems to be -- he talks about it more of a consumer company rather than a tech company. i think technology analysts are used to a consumer electronic company like apple eventually getting commoditized. in this case, you have got an ecosystem you did not have deviously with blackberries, and you potentially have got a lock on customers which makes it look more like campbell soup. david cohen in word, order the biggest risks? >> perhaps china. the next cycles we expect to be pretty strong double-digit, but
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with china one point, it was two thirds growth. more recently, it is actually declining. back to got to get double-digit iphone growth in china. we think they're waiting for a new product that looks different but that is a risk. jonathan: thank you very much. ahead of the opening bell, minutes away. and about 45 seconds. futures negative. we're down by about two points on the s&p 500. a seriessofter after of all-time highs. you are watching bloomberg. ♪
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jonathan: from new york city for our viewers worldwide, you are watching "bloomberg daybreak." we are seconds away with 22 to be precise, from the open. down -1/10 of a percent.
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not even that on the s&p 500. 30 record closing highs in just 88 trading days this year. that is the nasdaq. the s&p, less than 20 basis points in nine of the last 10 days. yields down to basis points on the 10 year at 637. the dollar a little bit softer. 9952 on the dxy. we are looking at another relatively quiet open for u.s. stocks. the dow and s&p 500 opening a little lower. the s&p 500 down less than 1/10 of 1% with it closing less than 1/10 of a percent nine out of
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the last 10 recessions. h-- processions. let's turn to some of the online travel agents. advisor missed estimates in a gateway way, but shares are higher by 7%. by could be the back of the company is pulling back from the instant book feature which basically directs consumers directly to its website. investors seem to be chewing the fact they are pulling away from the strategy. back to you. jonathan: thank you very much. from his office samnew york is sta since stovall. >> i think when you look at the small caps and the mid-caps, they are trading at a premium relative to their p/e ratios to the 500 over the past 20 some
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odd years. the whole market seems to be expected based on a trailing basis. you have to look to the future and also have expectations that we will see an improvement in quarterly results similar to what we saw recently. jonathan: you can look to the future and get increasingly optimistic. i keep hearing it by europe. shorter u.s. equities. is that a story for you? sam: partially it is. overseas has been oversold. on a rolling 10 year compound rated run basis, it is rivaling its all-time low of february 2009. on a rolling five-year well enough strength basis, the emerging markets are at one standard deviation below the mean for the s&p 500. finally looking at bloomberg data, look to earnings growth valuations and dividend yields. they look much more attractive
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overseas. but i would not be shorting the u.s. markets. one reason is this complacency that everybody seems to be worried about as actually proven to be historically favorable for stocks in the remaining seven months of the year as well as the full calendar year. jonathan: we have heard it all in the last 24 hours, 48 hours. the vix is at a 1993 low. should you be worried? >> you should be worried. we talk about a support of the rally have gone away and have started to fade. over the next three to six months, you will probably see an elevated chance you get a pretty significant correction. we think the market will end the year higher. between now and then, a bumpy road. we think it is likely it gets to the 2200 level, which would indicate a 6% or 7% recession. [laughter] jonathan: looking at the vix, should it be an indicator of worrying about what is around the corner?
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the sample size is small and does not tell you much? sam: i think what it does say is it gives you a pulse eyes to what is going on in the marketplace. i look back to the 1950's. we have only had three days this year in which the market was up or down by 1% in a single day. normally, you would have had about 20 times so far this year. this very low level of volatility actually implies that you do not want to be getting overly bearish. i agree with dan. i think we could be experiencing a 5% to 10% decline at any time, but based on the fact that we do not see a recession around the corner, we don't think a bear market is in the calling, and we don't think a 10 plus percent decline is around the corner either. i would basically say if we end up with some sort of digestion of recent gains, i would use that as a buying opportunity. david: ultimately as you just
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suggested a few minutes ago, it is about the earnings in the project earnings for these companies. that is what really drives the stock prices. we have seen some remarkable increases in earnings in the u.s. and even more remarkable in europe. what are the factors, and what do they tell us about whether that can resist the, that growth rate? sam: just to put all that into perspective, we started the corner expecting to see a 9.9% gain in operating results. we are now expected to see a 14.9% with 90% of the countries reporting by the end of this week. that five percentage point increase is better than the average 3.5 percentage point increase we normally see over each of the last 20 orders. let's face it, companies have had a very good track record of managing expectations. are sayingl street
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this is likely to happen for the rest of this year. we are looking at earnings are g this is likely to happen for the rest of this. it would have been zero or negative at this time, so what we are seeing is that is an improvement in revenues and organic growth, and we are not seeing the share of vivax artificially boosting earnings expectations. jonathan: those calling for a correction, it was a policy failure pullback that people were putting on the radar saying that will lead to a correction. it did not. then it was earnings that would not deliver, but it did. how do you see a correction when the bias for stop is i want to buy. everybody is waiting for the same thing. who will sell? dan: sentiment can change very drastically. everybody wants to buy the dip when they think things are good, but if the perception of the health of the economy changes, that is possible.
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just look at all the pmi's and economic surprises. people will start to question how healthy the economy is at that rules over and whether they want to invest in the market. all of these things are screaming late cycle signs. do they want to believe we are in for one more ride up? we think ultimately people will pant to buy the deii and come in. some of the key takeaways for me is that despite strong expectations for growth, a couple of the keys are expected to be down, industrials and discretionary. they have surprised significantly to the outside, especially industrial. industrial could see a gain. discretionary is already seeing a gain. you are seeing the writing trends telling wall street that their numbers are too low it
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over to a half years. david: for we have been seeing is synchronized global growth. if there were a change in the armor -- chink in the armor, which would you be most concerned about in terms of downward growth? sam: i think because there has not been much growth in europe, you can take that off the table. in terms of the u.s., the growth has been below 3%. it has been quite muted. with expectations now likely to be at 2.7% year on year gdp growth by the end of this year, i would say the biggest concern would have to come from china, primarily because of the smoke and mirrors that tends to surround the economic forecast from china. we are very willing to go along with that when the trend is higher, but likely saw in february of 2016 if that kind of growth comes into question, i think strategists fall over
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themselves trying to anticipate how would lower the growth estimates are likely to become. jonathan: sam and dan, thank you -- dan, thank you very much. disney results from those in the and theme parks were positive. growing.espn is not they are losing subscribers. >> this is problem number one for disney. almost every question on the call last night was about disney this by the very strong performance from the parks, the one-year anniversary of shanghai, all the great movies they have released, the focus on the espn issue. they continue to lose subscribers at espn, maybe even at a slightly faster rate. the court that issues we are seeing across the cable network business industry are continuing
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to affect espn, and that affect the subscription revenue in the futures and advertising. that is tough. david: we are told that senator mitch mcconnell right now is addressing the issue of james comey's firing. >> he prayed mr. rosenstein for his independence and said he had developed a reputation for integrity. our democratic colleagues are complaining about the removal of an fbi director who they themselves repeatedly and sharply criticized. that removal being done by a man, rosenstein, who they repeatedly had praised. mr. rosenstein recommended mr. coley's removal for the same reasons that they consistently complained about.
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two investigations are currently ongoing. the senate intelligence committee's review of russian active measures and intelligence activities and the investigation disclosed by director comey. today, we will know that here calls for a new investigation, with could only serve to impede the current work -- which could only serve to impede the current work to not only discover what the russians may have done, also to let this body and the national security community to develop countermeasures to see it does not occur again. partisan calls should not cause the work. too much is at stake. general rosenstein was just confirmed on a bipartisan vote 94-6.
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94-6. sort of consideration should continue when the senate receives an fbi director nominee. once the yesterday, senate receives a nomination to fill this position, we will avoid zweifel, fair, and finally confirmation process. -- we look forward to a full, fair, and timely confirmation process. >> mr. president. >> the democrat leader. >> yesterday the president fired the director of the fbi, jim comey, who is leading an active investigation into the top trumign's possible -- campaigns possible collusion with russiap. for thes no reasoning
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firing other than he had the recommendation of his attorney general, who has already had to recuse himself from the russian investigation for being too close to the president and his deputy attorney general, rock rosenstein. mr. president, there is little reason to think mr. rosenstein's letter is the true reason that president trump fire director comey. why? administration truly had objections to the way director comey handled the clinton administration, they would have had them the minute president got into office, but he did not fire director comey then. the question is, why did it happen last night? we know director comey was leading an investigation into whether the trump campaign colluded with the russians, a serious offense. were those investigations getting too close to home for the president? the dismissal of director comey
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establishes a very troubling pattern. this administration has now removed several law enforcement officials in a position to conduct independent investigations of the president and his administration from acting attorney general cellulites to now jim comey -- general sally yates to now jim comey. what should happen now is mr. rosenstein appoint a special prosecutor to oversee this investigation. deputy attorney general rosenstein sat in the judiciary committee and promised to appoint a special prosecutor at the appropriate time. he said "i am willing to appoint the special counsel whenever i determined that it is appropriate." wouldcolleague asked him, you agree that it is vital to the assurance of confidence in our democracy?
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democracy and enforcement system that any investigation be fair, free, thoroughly and politically independent? mr. rosenstein answered, yes, i do. if there was ever a time when circumstances warranted a special prosecutor, it is right now. mr. rosenstein already expressed concern that director kobe damaged the integrity of the fbi. the attorney general has already had to recuse himself from the investigation for being too close to the president. if mr. rosenstein is true to his word that he believes this investigation must be "fair, free, thorough, and politically independent," if he believes as i do that the american people must be able to have faith in the impartiality of this investigation, he must appoint a special prosecutor and get his investigation out of the hands of the fbi and far away from the
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heavy hand of this administration. has the authority to appoint a special prosecutor right now. he needs no congressional authorization. this would simply be a step that he could take as outlined in the department of justice guidelines and in a law passed after watergate to get an independently minded prosecutor who would be insulated from various pressures. a special prosecutor is not subject to day-to-day supervision by the attorney general or anyone else at the justice department. that means the special prosecutor would have much greater latitude in who he can subpoena, which questions they ask, how to conduct an investigation. the special prosecutor can only be removed for good cause, such as misconduct, not to quash the investigation. third, there is built in congressional oversight. congress is notified
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whenever special counsel is appointed, removed, or finished with the investigation. the appointment of the special prosecutor would be a welcome step in the right direction, but it is not the only action that should be taken. there are a great many outstanding questions about the circumstances of director comey's dismissal, the status of the executive branch investigation into the trunk campaign ties to russia -- trump , campaign ties to russia and what the future holds for these investigations, so i will be requesting that the majority classify ae and session. all senators briefing. i will be requesting that the majority leader call a close and if necessary classified all senators briefing with the attorney general and the deputy attorney general separately at which they can be asked questions.
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some of the questions. why was attorney general sessions, who had recused himself from the russian investigations, able to influence the firing of the man conducting the russian investigation? did deputy attorney general rosenstein act on his own or at the direction of his superiors or the white house? that the president has been searching for a rationale to fire the fbi director for weeks true? was director comey's investigation making significant progress in a direction that would cause political damage to the white house? why didn't the president wait for the inspector general's investigation into director comey's handling of the clinton email investigation to conclude before making his decision to
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fire him? was this really about something else? no doubt, we will have an opportunity to question mr. comey, now a private citizen, about what happened, but we need to hear from this administration about what happened and why and what is going to happen next. that is why, again, i am requesting that the majority leader call a closed and if necessary classified all senators briefing with the attorney general, deputy attorney general separately at which they can be asked these questions. i hope the majority leader agrees with me that we need to get to the bottom of this and get a handle on all the facts so that we can grapple with them. i remind him and my republican is ats that nothing less stake in the american
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people's three medical justice system in the integrity of the branch of our government. i yield the floor. david: we have just heard from the senate majority leader and the senate minority leader. that is mitch mcconnell and chuck schumer of new york talking on the floor of the senate about the situation surrounding the filing of fbi director jim comey. you can see mitch mcconnell, from whom i think we have not heard before, came out resoundingly backing the president's decision, 40 out that the democrats themselves called for jim coley to be replaced. on the other hand, they had just ratified and supported mr. rosenstein, number two in the justice department, and he is the acting attorney general because the attorney general recused himself. we want to bring in kevin cirilli on capitol hill, who has been getting reaction all day long. you heard the remarks. what did you take away from
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them? kevin: the battle lines have been drawn. republicans increasingly arguing their critics on the democratic side of the aisle as well as a handful who are democrats and calling for a special prosecutor are hypocrites. on the flipside, democrats now suggesting something needs to be done with the special prosecutor to get to the bottom of russia's interference in the 2016 presidential election. there is no question that president trump's very own decision yesterday to fire the fbi director james comey -- director james comey has resulted in something that has caught him and his advisers completely off foot. they have no idea how to deal with this and are struggling to put the pieces to best respond. david: is the ball really in mr. rosenstein's work? is it up to him to decide? kevin: ultimately it will be up
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to president trump. based on the advice from attorney general jeff sessions and mr. rosenstein, that will influence his decision. desperate itted was ultimately their influence with the president in order to allow him to reach that conclusion to fire director comey. i think i would point out when i spoke earlier today with senator john hogan, the republican from north dakota. this is a staunch conservative. when i asked him about whether or not this would impact president trump's ability to work with the congress on various facets, he told me that president trump's decision to fire mr. comey "raises questions that can only be raised b answey the committee." investigators are still ongoing and very much will continue. the political nature of this on
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the senate intelligence committee will definitely still continue with the exception of senator hogan. i spoke with senator lindsey graham and senator rand paul. these two republicans have not seen eye to eye, but both of them were defending president trump. david: i want to play a little bit of what senator lindsey graham from south carolina said to you earlier on the program. >> i believe the investigation will go forward. both parties at different times have called for the dismissal of mr. comey. this is not watergate. in terms of what the congress is going to do, i want to know all things russian. david: kevin, in your interview with senator lindsey graham, you pointed out that lindsey graham has not always supported the president, so this is not someone going blindly along with the president, but on this issue, he seems rocksolid with president trump. kevin: yes. spokepublicans i spea with suggests democrats a few
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short months ago, including hillary clinton, have had concerns about director comey. i would note that i spoke with democrats such as senator richard blumenthal, who has received the wrath of president trump's twitter this morning, he directly through the comparison to watergate. he told me that history does not always repeat itself, but it rhymes. that is what we will be hearing more as we just heard from the senate minority leader on the floor, chuck schumer. david: at the same time to go into politics a little here, it seems critically important that the republicans stay with president trump in order to make this thing go away. we have to remember that at one point, candidate trump did not think it would be an investigation at all. your pumpkins have to be concerned that if they do not go for some sort of special prosecutor that they will appear to be soft on russia? here is the interesting
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political tightrope that republicans are having to increasingly have to walk, and it is a very tightrope. it is stand with the president, but also at the same time raise questions about russia's interference in the election. paul ryan last week traveled overseas and spoke in the u.k. and criticized vladimir putin directly for meddling in the 2016 election via cyberattacks. he himself raising concerns. president trump has criticized q, but there is no question -- has criticized putin, but there is no question that firing the person leading the investigation sends a signal that is not something that republicans want to be grappling with, particularly when they are having to grapple with so many other hosts on policy issues such as health care. they cannot reveal anything of obamacare unless they can appeal with the moderate senators.
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that will be the test. jonathan: thank you very much. david: fbi director. jonathan: nice descriptions on the senate floor of espn. kevin, great work. thank you. from the whole of the "bloomberg daybreak" team, that wraps up our three hours. down 2/10 of 1%. rather muted action that does not match the heightened rhetoric in d.c. from new york city, you are watching bloomberg. ♪
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