tv Bloomberg Markets The Trump Economy Bloomberg August 22, 2017 1:00pm-2:00pm EDT
this hour. comment onrump's afghanistan is the latest on how hard it has been on his only i can fix it campaign theme. bloomberg breaks down numbers and looks at what companies will come out on top. the president's base speaks out on why they still believe in him despite recent turmoil. some more than ever. ♪ julia: welcome once again. president trump has announced an open-ended commitment to afghanistan that will put more american troops into the nation's longest lasting conflict. he says he will keep u.s. forces there as long as it takes to bring about political settlement
with the taliban. president trump: america will work with the afghan government as long as we see determination and progress. however, our commitment is not unlimited and their support is not a blank check. will hold aresident rally in phoenix, arizona, today. the mayor called her a delay, following the events of charlottesville. joining us to discuss is bloomberg's editor in chief and bloombergs foreign policy reporter, joining us from washington. great to have you on. flows and on point presidential trump, would you agree? >> that is what people are saying, but we will see what happens tonight in phoenix. i'm sure others resist this flip-flopping on how we describe him. he gave a deliberate speech last
night on afghanistan, but we have to set the context of the turmoil that has engulfed the white house, frankly the nation, over the last 10 days. let's not bypass that with one on prompter sticking to the message speech and also when it is the strategy we see being put forth in afghanistan, essentially the same the previous administrations have put forth and has not worked out. i resist and hesitate to call this a new day of the trump administration after one speech. julia: i feel we are in this mindset now where we have to celebrate victories when we get them. i apologize for falling into that trap. i want to talk about afghanistan. we are still counting after 16 years. what does success look like for donald trump and i separate that from what success would be for afghanistan itself? >> that is what is interesting
about the speech last night. for a president who has hailed his ability to get things done, there was no vision for what the victory would look like. president trump did not even say how many troops he plans to send to afghanistan as part of this policy. in a lot of ways, the conversations we are having with senior administration officials, what they are talking about is a difference in approach from the obama administration. chiefly, that seems to be the removal of a timeline. whereas president obama said we want to get troops home as quickly as possible, president trump says we will be there as long as it takes but he does not say to do what. presumably, that would be to make sure afghanistan does not become a safe haven for terrorists and they are able to reach a political settlement with the taliban. at this point, the devil is in the details and there were no details in his speech last night. julia: great point about what is
the endgame. what you did acknowledge was -- what he did acknowledge is things look different from the view in the oval office. breitbart said it was a flip-flop yesterday. freiburg used -- they used a headline on this. >> we should focus in the ship of direction with pakistan and how important it will be in terms of upping the pressure on activityxpel terrorist . that would be important and it changes the relationship there and has caused instability. we also have to put this in the context of the state department. we still do not have an ambassador i there and next tillerson does not seem -- rex tillerson does not seem empowered to do the work needed in the region and his standing in the trump administration
there, as nick knows. julia: we can bring in all sorts of countries, but i want to talk about arizona. this is going to be an interesting one tonight. he is back on the make america great again campaign trail. what are we expecting and what do you expect to hear about the war, which has been a difficult subject for this state? >> eight is a difficult situation tonight in a state that has been a hotbed of the immigration battle in this issue of those in a wall and the impact it will have on the state's economy is directionally led by immigration. the mayor of phoenix had asked him to stay away to wait until we have sort of more calming down from the events last week in charlottesville, which are emblazoned on people's minds. we all hope we can prevent violence tonight.
we know police forces and other security issues are working as hard as they can to make sure any protest tonight on the left and whether we see any neo-nazi, that type of activity, will come off safely. however, it is a cauldron we are seeing end everyone is hoping that what you tonight in the form of protest and free speech is carried peacefully. julia: thank you for that. andk you to megan murphy nick wadhams. let's get a check on markets. abigail doolittle has the latest. abigail: before we look at majors, let's look at shares soaring ahead on the news that the company will consider options after takeover interests. the stock has spiked into that and right now, we will be bringing you more.
the shares of this utility company up more than 25% this year, so let's now take a look at the majors. we are looking at a rally, risk on for stocks in the u.s. we had the dow, nasdaq and s&p 500 sharply higher for the best day in more than a year. look at nasdaq, up or than 1%. being held by technology shares from the likes of apple, microsoft, also that and more. -- aand more. there are reasons to think it may not last if we look at this volume term on the bloomberg. this is showing that the average volume represented in the it's about today -- in the blue line is about today's volume. in fact, below the average by 23%, so something to keep in mind. buyers are out there but on
lighter volume. in addition, this is typically a seasonally deep time for the s&p 500. g #btv 2004. and we had the average movement -- 20 44. averagead the movement and we are seeing outperforming on the stock rally. we also see that through the end of july to september, we typically have declines. saying, and this is typically when declines happen. we are seeing the s&p 500 pull down. is there more ahead? there are some market watchers who say that the market internals are deteriorating and that could be a reason to be cautious in the markets. finally, let's look at the movers. some stocks that are moving on today's session and standing out in helping the markets are the
materials company, mainly involved in aerospace industry, up about 4%. and then we have strengths here with macy's and dsw. i hear there is breaking news. back to you. julia: breaking news on chevron. the ceo is planning to step down, according to reports in the wall street journal. the energy giant in a tough environments. it is expected to be announced next month, though a successor has not been finalized why the board and could change. that report coming from wall street journal and we will continue to keep you up-to-date for the stock, higher by 0.6%. coming up, we will talk to mark kimmitt on whether he thinks donald trump's you afghanistan tragedy will help the u.s. claim a win in the 16 year war.
♪ julia: this is bloomberg markets. i am julia chatterley. this afternoon, first word news with mark crumpton. mark: cattle on police -- catelon police released the deals of the suspects, where the suspects are believed to have four-- have lived after suspects appeared in court. minister hasrior reports that they had been photographed in paris for speeding. the u.k. wants to keep london the center of european
commercial legal disputes. the government promised a paper that gave few details on how this might be accomplished. british law governs around 40% of commercial arbitration cases, but eu countries could decide they want a larger share after brexit. the u.s. treasury department has sanctioned russian and chinese companies and individuals for regime.ng north korea's according to the new york times, it affects six individuals and 10 organizations with ties to their weapons program. they say they have enabled north korea's weapons of mass distraction. internationalon issues, including the fight against terror, the view of foreign minister after talks in moscow with the vatican secretary of state. the cardinal added that he was
pleased with the progress of the bilateral relations between russia and the vatican. on wednesday, he is scheduled to meet with president vladimir putin. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am mark crumpton. this is bloomberg. julia: thank you. many congressional republicans are plotting president trump for the strategy outlined for aniston and south asia yesterday evening. democrats are criticizing the lack of details in his speech. saysresident successfully he successfully made afghanistan his war. underimmitt, who served george w. bush, and as assistant secretary secretary of defense of the middle east, he joins us from washington. president trump may have made it his war, but is the strategy outlined superior to that of president bush and president
obama before him? mark: you can only rate it superior after you look at results. there are key issues that differentiate himself from previous strategies. his attitude towards pakistan. the fighting on the ground. and a relationship with india, all different from his assessors. it is yet to be seen whether it will work. julia: what do you think? gen. mark: the military component is important. they are adopting the iraq style of fighting, where this is not worth thousand american troops going to fight taliban, this is 4000 american troops owing to advise, assist, train and equip the afghani soldiers. u.s.have lost 6000, the has lost approximately 14. if we look at the results in notl, and iraq, it is
about idea to be using inside of afghanistan. julia: what is the endgame? what do you think the endgame is president trump is trying to achieve? gen. mark: a number of rings. inst, what was first wanted 2001, that afghanistan is not remain a safe haven organizations of terrorism. before we leave, we want to leave the hind a stable, afghani governments, and the military that can defend its own territory and not depend on outside assistance to do that area it -- to do that. julia: an investor warned that " conflicts have now intensified to where fighting to the death is probably more likely than reconciliation." i assume he was talking about north korea. do you share his views on this -- sears on this issue? gen. mark: first, you never want
to that against ray dalio -- 12 againstn -- want to bet ray dalio. they are fighters. they are not going to give up when the government tells them the wars over. they will fight to the death, and not oblique in iraq and afghanistan, it is around the world. i think we will see more of this and we have to be ready to handle it. julia: is this president handling those situations appropriately in your mind? does he have the subtlety required without going to it ray dalio was suggesting, which is conflict? look at what you he has done, regardless of your view on his style, he has sent a strong message to north korea that he will not allow them to bully the united states and they seem to have backed off. he sent that same message to iran in january when they tested
the u.s. with speedboats. chemicaltinues to use weapons, and the united states used cruise missiles against them and they backed off and you are seeing a president that uses conventional deterrence methods to make sure americans are secured. terrorism, we will see if he has a different style in fighting terrorism than his predecessors. some parts look similar. julia: you mentioned were thousand additional troops in afghanistan but president trump was criticized for the lack of clarity surrounding the actual plan and details of how they will operate as far as afghanistan is concerned. do you think the american public is owed greater details? gen. mark: i think this president understands you do not want to telegraph military operations. he understands that transparency is not always good.
that being a bit subtle, that, we know our plans, they do not know how many troops we will put in, that gives us flexibility. -- it makes sure we are not getting the weight plans. there is a downside to two months transparency in warfare and that is what he has embraced by giving now details. -- not giving those details. julia: how quickly do think it will be resolved? gen. mark: i do not leave it will be resolved in the next five years or 10 years. i believe it will be for years to come, but not at the 150,000 person level we have seen in the past. iraqe at about 10,000 in and making progress there. this is a determined enemy. it is a long war we have been predicting his 2001 and that has come to pass. julia: general, thank you for
♪ the trump economy, this is bloomberg markets. after the election, there was a sense encircles that it would not take long for voters to regret their decision areas bloomberg news has found few signs of remorse among the president's face. joining us is the managing editor at bloomberg news, tracking eight trump supporters since the election. any sign of remorse? >> very little. for the most part, they all say
he is our guy. some may have issues with one thing or another, but by and large, i would say they remain firmly behind him. if anything, i would say a lot of folks say they like and more now than they did when they voted for him. julia: why? >> i think that they like -- even though others may say, well, this ministrations has not achieved anything, it is in chaos, they think he is out there vocalizing their feelings and frustrations, and he is trying to do right. they feel like congress -- and they blame the democrats in congress broadly for dragging -- and they blame us, the media, for creating problems. a field fee is trying to do the right thing and fight the fight for them and he is held back. julia: the media bias is one thing that stood out to me, but one of those guys, 41 years old,
he works as a wholesale mortgage lender in wisconsin, and we should make a point you are specific about the states you went to. >> we went to the four key states in the heartland, the firewall that the democrats supposedly had, and said, if those states flip and surprised the world, maybe we better keep an eye on how that base is doing. we wanted to see how it evolves. so far, it is clear. we are firmly behind him. and then we -- at times, we have heard, boy, your characters look white. that was by design. this is the demographic that voted for donald trump, middle america, middle-aged, middle-class workers and small entrepreneurs. julia: what are they saying about his twitter habit? this is unique to him. we have a quote from one person who lives in michigan, and she
says, my biggest news is i get trump tweets all day long. which is good because and getting it from the source. i like how she calls it twitters. someone else -- it really drives me out of my mind. it is a waste of time. all it does is infuriate people. it seems to take people's focus off of what is important. >> kim, the last one there, she is an outlier. we just updated the tracker this morning, and a lot of them weighed in on the twitter habit. most of them sounded like ann out of michigan. she loves it. i can get it right from the horse's mouth. kim is like, i had enough of this. it is driving me crazy. julia: i want to get back to the
that cnn is so obsessed with him and has such a bias against them that they have to find fault in everything he does. i do not think it is stocks from his agenda. flip?akes these people >> we are going to find out>>. perhaps nothing. when perhaps say having covered the rise of another politician in venezuela, hugo chavez, and the bond he had with his voters was incredible. you sense a similar bond. julia: emotional bond. read this, guys. it is fantastic. this is bloomberg. ♪
let's start with the headlines on first word news. mark: thank you, president trump is an route to arizona for a campaign style rally in phoenix. it's the stronghold of trump supporters but there are some republican critics there such as senators john mccain and jeff flake. large protests are expected near the rally. defense secretary jim mattis says islamic state militants are trapped in a military advice that will squeeze them on both sides of the syria/iraq border. baghdad, secretary mathis said islamic state in iraq is on the run. >> they have been shown to be unable to stand up to our team in combat and they have not retaken one inch of ground that they have lost. we are dedicated from the american side to the strategic framework agreement which means we will continue standing by the
iraqi people and their military. troops reaching the first urban areas of the islamic state held northern town secretary mattis refuse to predict victory. he said generals and senior officials should just go silent when troops enter battle. south korea has rejected the u.s. proposal to revise their trade deal. the trump administration has called the five-year agreement a job killer and has asked to implement changes to address the trade imbalance. the south korea trade minister says a joint study is needed to further research and analyze the imbalance. premised or malcolm turnbull's government could be running on borrowed time. that's if a court rules that three of his lawmakers with dual citizenship are ineligible to hold office. 100 17-year-old law bars dual nationals from parliamentary positions even if the court rules in favor, some believe the
prime investors handling of the crisis may have open and up to charges of double standards. the hearings begin tomorrow. global news, 24 hours a day, powered by more than 2700 journalists and analysts in over 100 20 countries. i am mark crumpton. this is bloomberg. julia: let's get to the latest on tax reform. donald trump's top aides and congressional lawmakers have found common ground on some of the best ways to make tax cuts. steve mnuchin said yesterday that corporate tax cuts -- corporate taxes are a major concern. >> we have one of the highest yet it encourages companies to leave their money offshore and pay less taxes. we have to fix this and fixing it is going from what we refer to as a worldwide system to a territorial system where we will
tax companies on the u.s. income and we won't tax companies on the worldwide income. julia: joining us now from washington brio's brian gardner. trump'spresident comments regarding charlottesville have hurt the chances of tax reform. are you surprised by the report that suggest there is some kind of acceleration in tax reform? , we expect of it once congress left town that negotiations would continue among what people refer to as the big six, treasury, the national economic council, and the congressional leadership. those talks have kind of coalesced around an outline of what a plan might look like. that is kind of the easy part. the tough part will occur when congress returns next month and has to actually go through the legislative process which we can
about.re that's when things get tough so i don't think an agreement among the principals about what a plan looks like is surprising. the heavy lifting is yet to come. julia: what do you mean when you suggested that donald trump's comments and light of charlottesville actually complicate this? do you suggest it's tougher to pull people together even within the gop? willis it you think activate the challenge. ? >> there had been some talk over the last few weeks about outreach from the white house to democrats to bring democrats on board to help the administration and help republicans passed tax reform. i think the dustup after charlottesville and the way that situation was handled makes it nearly impossible for any democrat to support the white house and republicans on legislative priorities like this. onre are efforts going
within the democratic party among liberal activists threatening any democrat who collaborates with the white house. i think that door is closed. that means it will be a republican only affair. republicans are not necessarily unified either. there are divisions within the party about policy alternatives and policy directions. for members who are worried about taking tough political votes, maybe somebody is worried about capping the mortgage interest of, maybe someone is worried about offending a particular industry in their state about eliminating a certain tax treatment in the tax code. by affiliating themselves with the white house, they are not getting political cover because i think the white house is get them-- it does not any political advantage for working with the white house. it does complicate things. maybe it was already complicated beforehand but it has gotten heavier because of charlottesville.
you mentioned the capping mortgage interest adoption or state and local text adoptions, those are two items contained within this but what about pragmatism question mark what about the need for this administration to sign off on something and achieve something in terms of reform? does that not pull people together question mark >> that's why i don't dismiss the idea of passing tax reform. the republicans are in a very tough spot right now. they do have to have some kind of legislative compliment. that is going to be a unifying principle to keep them together to pass something. however, we have just been through the health care debate. i think that is a good proxy for how the debate on tax reform will go. it's not, as some people think, easier than health care. in some ways, it's more complex. there will be other state and play thatnterests at
will pull lawmakers in certain directions, maybe against the interest of the white house. unifying theme of getting something done. could -- local, factions and -- are affecting this. if i wanted to raise the chances, it's a coin flip at this point of what will pass. or whether it will pass. julia: what about the business community in the united states? a lot of time is been spent role andg the morrow capacity of some of the ceos and the push back we saw it last week, the disillusionment of some of the policy forums. what about them going forward question mark will there be greater cautiousness interacting
with president trump, even if it could be something good for the country? and talk about something like negotiations with china over business opportunities as well. will there be an inherent reluctance now question mark >? >> during the clinton administration and during their scandals, we used to talk about being able to carve -- compartmentalize. i think the business leaders will be able to carpark -- compartmentalize and put us that debt and put aside the president's statements about charlottesville and putting their corporate interests and the interests of the country first. julia: they might be able to compartmentalize but their the press andnd others that bombard them with accusations of not having moral capacity if they stand up or don't stand up to this president, are they going to be able to compartmentalize if they
see that ceos are engaging with the president again question ? >> there will be different constituencies within different corporations and their shareholder base which will complicate things depending on the industry, depending on the company. i would be very cautious about painting with too broad a brush. i think you'll have to look at each industry individually. benefitustries would from a different approach to china. soy would benefit or suffer that will impact of their relationship with the white house and their willingness to collaborate. the same thing on tax reform. there will be winners and losers. if you are a shareholder and you don't want the company you own, your investments, to get too close to the white house but you see it as in your interest to our a tax package to change
trade relationship with china or any other number of nations, then i think shareholders are smart enough certainly at the institutional level where you are a steward for your investors money whether you are a pension fund, insurance company, a mutual fund. i think you have your eye on the and are able to compartmentalize a little more. julia: a lot of ceos hoping you are right. brian gardner. coming up, contracting dollars rise and fall with troop levels. we will break down the numbers and look at which companies will come out on top in light of president trump's speech last night. from new york, this is bloomberg. ♪
julia: this is bloomberg markets, the trump economy. it's time for our stock of the hour. we will look at two of them, boeing and northrop grumman which are defense stocks and it's about the air force plans to replace its icbm system. emma chandra has more. the u.s. air heard force has narrowed the field to boeing and northrup as the two companies that get to replace the intercontinental ballistic missile system, something we have heard recently with all the saber rattling over north korea. it's a huge opportunity for whichever company gets picked. $60 could net between billion and $80 billion over the three decades. global threats are writing and upgrading the system is a top whichty not the least of
is north korea and the existing system which was originally built by boeing back in the 1970's and it's getting old. julia: who are expected to be the winners question markemma: the two of them were expected to be in the running and they still have not picked one. byy will pick a final one 2020. in terms of stock reaction from the sector, we heard the president talk about afghanistan. it has been fairly muted. a chart but i you cannot bring it up. boeing and northrup are doing well on the news but the rest are not doing much. i have a chart i want to show you. this is the defense space index. since trump got elected in november, that and the corresponding etf are massively outperforming the s&p 500 week
as we have heard a number of hawkish statements from the president since he took office. we saw a big spike in defense stocks. earlier this month, they hit whend highs when we heard, the president threatened fire and. from the threats from north korea. julia: and increased military spending is well. -- as well. thank is so much. president trump no afghanistan strategy gives the pentagon authority to ramp up troop levels in the country by several thousand. the u.s. currently has around 8400 troops in the region. some say the increase could help the current stalemate against the taliban but at what cost? defense analyst robert levinson has been crunching the numbers. great to have you on. per is the additional cost troop member in afghanistan? steadyas remained pretty
over time so for every soldier, sailor, airman or marine deployed to afghanistan, there is about 170 -- $179,000 per year in contracting to support them. the numbers are tightly correlated. when two numbers go up, then of course, the contract dollars go up with them. you can see the chart there which shows how tight the relationship is between these two figures. terms of the spending we saw in 2016, to give us a sense of how much money was already being spent in afghanistan, what are we talking about? >> in contracting dollars, it's in the neighborhood of close to tens of billions of dollars, i think. again, it will rise and fall with the troop levels. made severals have billion dollars supporting the u.s. president there. julia: who are the largest
contractors that are working in afghanistan? many names were mentioned. we've got a chart here to show it. ora and dyncorp support the day-to-day logistics. we used to have soldiers peeling potatoes and providing food but that does not happen anymore. that.ontractors or do the soldiers do the fighting but there are a lot of contractors providing the food and shelter and the showers in the laundry services come all the mundane things that goes to support the forces. julia: what about intelligence work? i was reading about this and they seem to contract pieces of that out as well. international's making nearly $400 million performing intelligence work in afghanistan. i can understand some of the there areture,
critical elements of the intricate work like intelligence that are also being contracted out. is that right? >> that's absolutely true. if you look at the entire intelligence budget of the united states civilian and military, it's somewhere in the neighborhood of $70 billion per year and about 70% of that is spent on contracting. some of that is still the monday and stuff but we is a lot of contractors for analysis work. there is a lot of information technology and infrastructure that has to be supported. the intelligence community is highly dependent on contractors. julia: it's quite fascinating, actually. what about for outside afghanistan. you've got the direct contract between troops having been pulled out in more troops being added in afghanistan. i looked at the data and there are contractors out there still being paid money for work in iraq. directd there is a
correlation between having troops there and the amount of spending going on. there is also other work being done in other countries were he would not necessarily be aware of it. >> right, everywhere the u.s. military is around the world and we are frankly in a lot of countries. afghanistan syria, and have a smaller presence in africa. wherever you find the was military, you're going to find contractors. the u.s. military cannot function today without a lot of support from contractors. even in they are, combat zones, you'll find contractors alongside them. julia: the government was criticized for not being clear about the strategy over afghanistan. do you think they are open enough about the breakdown of spending and where the money is being pushed? he has also talked about putting more pressure on pakistan. they paid billions of dollars in aid to pakistan so they want to see some further support from that country in not harboring
criminals. is the government open enough? >> the politicians do not like to talk about a lot. in that sense, there's not a great deal of openness but all the data is there. that's what we look at at bloomberg government and the government publishes all of this eight on contracting figures and things like that. there are some hidden classified programs but that's a relatively small percentage. if you want to look for the data, you can ask bloomberg government or some other places or look publicly. there's plenty of information to be had out there. julia: great to chat with you. coming up, we will get a preview of what president donald trump hopes to a compass with his rally in arizona tonight. from new york, this is bloomberg. ♪
julia: this is bloomberg markets, the trump economy. president donald trump is on his way to phoenix, arizona for a big rally tonight. joining us from washington, d.c. is kevincirrilli. what do we expect from donald trump and protests? >> there could be a lot of protests. this is a hot button state for immigration reform as well as several democrats and, quite frankly, some republicans in that state including senator john mccain and jeff flake who have emerged as critics of president trump. he will try to rally his supporters behind his commander-in-chief message from last night's national address in which he announced of there would be no pulling out of afghanistan. he did not specifically say how many more troops would be on the ground but we can tell you there will be 4000 additional troops
on the ground in afghanistan in addition to the 8600 already there. the big takeaway is whether or -- he throws any red meat to the base of the republican party. we could have an announcement on the controversial sheriff joe arpaio. julia: there is a lot of speculation on that one. found guilty with his policies on immigration and he could potentially receive some type of pardon. that would appease some of the post -- some of those in the conservative unit. i interviewed joe arpaio and he donald trump's earliest endorsers. you can also look at jan brewer who was a conservative in arizona and i will be interesting to see just how the president unifies that state in particular. for all of the talk that happened on the campaign trail about immigration reform, we
have not had much talk in congress about it. they are grappling with other financial issues like tax reform. the sheriff joe conviction, he was accused of racial profiling. from what we have seen the last 10 days, that's a hot button issue. what about an endorsement of kelly ward? callingioned jeff flake donald trump toxic. do we expect an endorsement of kelly ward tonight questio? >> we have seen the president trump about him. i spoke with someone make the president would embark on local battles instead his political agenda. senator flake and senator mccain were quite critical of the president for his response to charlottesville.
they have also been somewhat more praiseworthy of the president's decision to add more troops to afghanistan and not pull out. julia: is this the beginning of campaign 2020 from president donald trump? i think it could be the start of the midterm elections in 2018. that is definitely the president and his base and quite candidly, the political operatives who work with this president are definitely taking a look at some of these midterm races including arizona. julia: is that a reason to back donald trump? >> we will say. julia: thank you so much. from new york, this is bloomberg. ♪ . .
julie: we are live at bloomberg headquarters. here's the top stories we're covering on the bloomberg and around the world. with elio is waving the red flag again, saying he is tactically reducing risk. the world top minor is changing course -- php billiton is in talks for a buyer for its shale assets. and apple is celebrating the 10th anniversary of the iphone with a makeover. we will go under the hood to look at the features of the iphone eight. u.s. markets are closing in two hours. are check on where stocks trading with taylor riggs. taylor: kind of a risk on field today after a recent pullback. the s&p 500 down