tv Bloomberg Markets Americas Bloomberg June 26, 2018 10:00am-11:00am EDT
vonnie: we are about 30 minutes into the trading session in the u.s. equity action is positive now as investors continue to grip with global trade fears. there is abigail doolittle. abigail: relative to the consumer confidence for the month of june, we are looking at a small miss. the survey was calling for a reading of 128, is coming out at 126. it is not having a major impact on the averages. we still have small gains following yesterday's big pullbacks of the major averages. this is the first up day for the nasdaq in four sessions.
ge dragging the direction of the major averages. pe see the big move up today, u about 7%, on pace for its best day of 2018 as the ceo makes good on its promise to streamline the blue chip. if shares can time higher for the month of june, who will be the first up month in three months. strength for homebuilders as well. let's take a look at lennar. they put out a blowout quarter, up 7%. deliveries rose 57%. these were probably driven by the cal atlantic acquisition. if we turn to the commodities space, a mixed picture. about 1%.l up gold down about 0.5%.
not a huge decline. oil is trading higher on the news that there is a libyan court dispute that is adding to supply troubles. ind down for the seventh day the last eight. maytechnicals of gold suggest more declines ahead. this is a longer than five-year chart. his is 2012, the nominal peak above $1200. we see the crash, and then we see a recovery on the recent action. gold has broken below buying support, suggesting it may had below $1200 per troy ounce. gold there is probably not letting that. caroline: we will talk much more about gold later in the show. great breakdown. close here.o nothing like making up for all
the soft yesterday. -- sell off yesterday. utilities up about 0.8%. oil pushing higher. energy majors drying is higher on the stoxx 600. this is a really risk on. this is up about 0.2%, making up for some of yesterday's losses. plenty of m&a right here in europe. there is so much going on in terms of certain stocks. it is up only 0.8%, but if you look at the renewable unit of edp, that is trading at the highest we have seen on record. we have seen potential bids coming from european players. have a danish company looking at it. a french company looking at the renewables of edp. chineseeing eyed by a
company. they are looking at taking a majority stake in edp and buying into renewables company. 5.8%.ile, ingenico up ny beingfintech compa eyed up by private equity. that is what we understand, the likes of cvc likely. ingenico in play in france. at, this is an ongoing m&a story for the european satellite company. french company might be interested has today taken itself out of the bidding. that opens the playing field for the likes of a u.s. company, echostar. that's look at what is happening to the great british pound. it is currently down 0.3%.
we saw a new member of the ecb joining in december, jonathan haskell seems to be a bit dovish. to themaking comments motary committee, which he intends to join in december. vonnie: thank you. well, with companies such as harley davidson siding trade tension -- >> thank you for sending it over here. i'm here with the ceo of the largest steel maker in the u.s. you are in high demand. people always wanting to ask you questions after the tariffs and limited by donald trump. hurt makers
because of concerns about a trade war leading to a recession, are you concerned? >> i'm not. when you look at the amount of imports you have, steel represents a very small portion of the total gdp of the united states. i don't see it on a global or domestic basis the tariffs precipitating a global recession. short-term issue. that yous something are keeping on the radar just in case, that steel is a proxy for the larger trade discussion that could cause wrote trouble throughout the system? cause realuld improvement. when you look at where we stand yearcountry today, last $550 billion trade deficit for the united states. that is needs to be addressed. my hope is that the tariffs lead to a better, long-term
discussion and resolution of the trade imbalances that exist today and come up with a more equitable trade relationship with partners like china and the eu. >> in first-quarter earnings, you talked about customer demand looking good. are you hearing some concerns that maybe eventually these tariffs start to catch up to your and users -- end users and curb growth? >> we saw the growth starting last year. we see the improvement in manufacturing demand that has been stimulated by tax reform and deregulation. certainly, tariffs i look at as of taxn a cake made out reform and deregulation. that is what created the demand in the market we see. >> i know we are jumping around, but harley davidson yesterday
announced they would be moving a bit of production offshore. are you concerned that more end users like them will start doing this because of the tariffs? >> i't want to tell people how to run their businesses. i suggest in general that people should look to the long-term when they make strategic decisions. at the end of the day, these tariffs will stimulate better discussion of true trade balance on a global basis. when that happens, tariffs, quotas will not be necessary because there'll be a balanced, fair trade relationship with our trading partners. when that happens, companies that make a rash decision today to move overseas, might regret it when you think about the advantages of working in the united states, the availability of electricity, the workforce, access to investment. the united states is a good
place to manufacture products. my only guidance would be to think what yo're doing for the long-term. uptick inseeing an consumer prices. there is a concern that we might be seeing a little inflation coming into the market. is this something you are concerned about? pricingi look at in our business, it is economics 101. it is supply and demand. we see an increase in demand a 2017,d in the middle of picked up once tax reform became certain. i think that created a lot of the price increases we are seeing today. at the end of the day, if pricing in the united states gets too high, you will see imports coming in, and the market will adjust. at the end of the day, it is a question of how demand holds up in the united states. >> tariffs, we are seeing them implemented against virtually
everyone, including key allies, -- do youck to think think they should have been solely targeted towards china? traden you look back, the imbalance with china is somewhere around $370 billion. true trading partners have a balanced relationship. i'm not saying some years country a does a little better than country b, but the last year we had a balanced trade surplus was 1975. that tells me there is something wrong in the way we negotiate trade deals. >> you mentioned a moment ago that you are positive on nafta negotiations and the trade relationship has been good for steel. how do you square that with tariffs against china? >> you mentioned the eu and
china early in the question. that was my response. when i look at nafta, i think nafta has to be modernized and updated for a different global economy. i am optimistic that something is worked out with nafta because it has been good for the steel industry and manufacturing in all three countries. i am a fan of nafta if it is adjusted to today's global economy. there are not major changes, country of origin, the way mexico and canada deal with state-owned entities, things that result in benefits for all three countries. >> where do you see strongest demand in your product right w? >> clearly right now f roll, hot roll, but also some cold roll. >> thank you very we will send it back to you in the studio. vonnie: great to get that
perspective. bloombergsto joe, metals reporter in new york city. markets stabilize the u.s. and europe. tech industrials leading the way. peter navarro made comments softening hawkish trade rhetoric. chinese stocks tumbled into a bear market in the overnight session. with us now is tracie mcmillion, wells fargo head of global asset allocation. there's no doubt that trade is front and center at now. how are you thinking about it at wells fargo and talking about asset allocation in this environment? tracie: so far, the trade tariffs have been targeted towards china. although they have been brought in with friday's announcement that there could be an additional $200 billion in tariffs, they are still pretty narrow. they are not very deep.
in terms of the amounts of tariffs that could be proposed if that were to go through, it would be about 10%. trade. not going to stop it will increase prices, and higher prices are a negative for consumers. disarray willch this through companies into? i was reading that 40% of trade issues are in companitracie: sn another factor should this all go through. our expectation is that rhetoric will continue to increase and that the tariffs will actually be very targeted and that this is part of a negotiating strategy. vonnie: you mentioned the secondary effects like confidence. we got confidence data today. it just missed. .he present situation is 161.1
expectations are lower, 103.2. what does that say about what is the calm? tracie: consumer confidence remains high at this point. business confidence remains high. if we see that the father, that means companies could start to fall back on spending and projects -- capex spending and projects postponed. caroline: when reading your reports, wells fargo warns that for the second half of the year, volatility could be a key issue to watch. this is even inverted at the moment. concerny just shows the about near-term risks. where do we go in terms of volatility and asset allocation when you're in volatility? tracie: we have seen volatility pick up this year. we anticipated that. last year, markets were focused
on tax cuts. this year, the focus has been more on tax increase in the form of tffs. don't forget, we have midterm elections at the end of this year. volatility could persist, but the good news is that the economy is still chugging along at a decent clip, about 2.9% this year. that should lead to higher markets at the end of the year. vonnie: coming up, some breaking news. the trump traveled in has been upheld -- travel ban has been upheld by the u.s. supreme court. more thaninitely bars 150 million people from entering the country. the latest version had seven countries, five of them dominantly muslim. this was one of the decisions we were waiting for at the end of the supreme court's term. now it is out. we have the justices deciding that the travel ban should be
upheld. poised to uphold it. anthony kennedy indicated he was reluctant for the court to second-guess the ministrations on questions of national security. it will be considered a major victory for president trump. it set an assertive tone for his aesidency which he announced week after taking office. we were anticipating this this week, the final week for this terms decisions. the travel ban has been upheld. that car 150 million plus people from entering the country. that is a final decision out of the supreme court. we will bring you more news when we have more news. tracie, let's get back to the markets well we digest this travel ban news.
what are you doing at wells fargo when it comes to fixed income? we have seen a lot of volatility. tracie: a lot of the fixed income indices are negative for the year. we are urging investors to maintain an allocation to shorter term investment grade fixed income in the u.s.. it does a couple of things for income, ando, adds also can stabilize the portfolio value equity markets are moving around like they are now. it is a flight to safety trade should trade tensions increase beyond what we are anticipating. vonnie: thank you. tracie mcmillion, wells fargo investment institute head of global asset allocation strategy. back to breaking news, president trump's travel ban has been upheld by the supreme court, one of the final decisions of the
term. 5-4 on ideological grounds. 5 five of the seven countries on the list are predominantly muslim. bars more thanly 150 million people from entering the country. i would like to bring in david weston, colleague of mine at bloomberg television, lot of experience in legal matters. this could be considered a win for the president. this goes back to the first seven days of his presidency. david: let's be frank, for any other president, this would not be a close call. the spring court had to decide between the president and this president. normally, the president has really brought authority. the problem was that when he campaigned and early on, he signified mentioned muslims.
that is what made this a more difficult case. vonnie: we are keeping an eye out from the white house or the president on twitter for any response. arguments in april suggested the court was poised to uphold the strategy as justice anthony kennedy was reluctant to get involved in matters of national security. david: that is the issue. the judiciary are very reluctant on things having to do with the border and national security group the supreme court had indicated this is where they were going because they refused to say it. -- stay it. they let the president go ahead to enforce the travel ban. that was an early signal. caroline: i remember when i was sat in san francisco, and all of this was coming out about the original travel ban, and the shock and horror from the technology community. what do you think the corporate effects will be? david: as you know so well,
particularly the technology sector is concerned about the h1b visas. presidente time, the would say he wants to go to a merit-based visa system. he is specifically targeting specific countries. i'm sure he will come out with a statement saying we are safer today because of what the supreme court had to say. where do we see the spending towards donald trump going forward? is this a big win? is this something he can speak out about in terms of victory? david: certainly to his base. there is no doubt in anyone's minds that the core trump supporters are concerned about security and obviously countries that have had terrorists come in from there.
i'm not sure how this will read against some of those awful images of those small children separated from their parents. i'm not sure how those read together. vonnie: this was a case led by hawaii. this was going on a long time. is this the final decision? we have seen attorney general's bring various cases? for a longactice law time. final for lawyers does not exist. this was not the first travel ban. he had a couple of shots at this. he came out with one that specifically included only muslim countries. the real claim by hawaii was once you embrace the fact that it has to do with religion, you cannot get away from it. vonnie: in some ways this could be seen as rubberstamping president trump's whole immigration policy.
we are seeing votes in congress this week. what does it mean for those votes? david: the big issue for those in congress this week is the president has pulled the rug out of their feet. congress has a real role here. statuteess passes a that says this is the way it is going to work, the president has to enforce that. i think when president trump came in, he thought i am president and get to decide what i want. i think he was shocked when courts started to stay his act ions. vonnie: let's go to kevin cirilli. he is in washington. this is a massively awaited decision. this has huge consequences for the midterms. kevin: this is a 5-4 ruling in which the president's policy was upheld. it comes at a time when there is speculation about how the president will move forward on
the issue of immigration. this case was decided on ideological grounds. several of the justices on the supreme court raising concerns about rhetoric, but ultimately decidi that the policy could be upheld and that the travel ies ultimatelyntry' can stay in line with how the president has advocated this. through the political prism of what we have been watching over the past several weeks with regards to the immigration debate, this is a significant when this white house. vonnie: briefly describe the scene from outside the supreme court. we hear some shouting. is some protesters out here with regards to other cases we will hear later today. i also have not noticed too many
lawmakers out here. typically on a case of this political significance, you would see more of an apparatus around the finality of these arguments. so much today. vonnie: we saw a lot of civil liberty action around airports around the time this law happened. it will be interesting to see what takes place with regards to civil liberty protesters now that the supreme court has made its decision. david: there was a problem when they first put it in place because they did not warn anybody. you have people showing up at jfk airport and saying you cannot come into the country. that was a mess. at this point, they have had some time to put the process into place. caroline: just set the scene for the europeans here looking at their own migration issues, particularly within the eu. how will this be digested within the u.s. ? how will this relate to people
at home? david: i don't want to speak for the entire country obviously, but i think it is fair to say that this moves the ball down the yard line. it does not decide everything, but it does reinforce the president's authority to take action for national security purposes. not for economic purposes. this is a claim that people in these countries pose a real threat to us. the president has said that if your country works with us to make sure we do not have terrorists coming in, then we can lift it. vonnie: it brings up a broader question. david weston, you were a supreme court law clerk. when the supreme court makes a decision, president trump has installed many justices around the court at this point, this is one of the ways he will impact policy nationwide for years to
come. david: it is an important point. one of the supreme court justices was appointed by him, neil gorsuch. these justices serve for life, long past the president. he is putting in people who are ideologically aligned with his point of view. this is the power of the presidency. vonnie: our thanks to bloomberg's david weston, host of balance of power, which will be covering this midday eastern, in washington.li stated. this is bloomberg. ♪ retail.
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they were expecting 10.5-10.6 million barrels per day. they're coming up with a record output -- all of this after the agreement was reached in vienna with the rest of opec to increase output. trump wanting to see an increase to oil supply -- we are seeing slight selloff in oil at the moment. brent currently trading in the red. clearly a market reaction to the fact that saudi arabia will plan record oil production, 10 when 8 million barrels per day in the month of july -- 10.8 million barrels per day in the month of july. leinz: the chairman of the white house canceled economic advisers says the u.s. is a good shot at lower tariffs in china and european union. the u.s. coming with an offer to give -- the kind of progress the
economic team is hoping for. to rival koreas agreed improve north korea's outdated railways and link them with the south. the talks were the latest to discuss options to carry out peace commitments made by kim jong-un and the south korean president. the two sides agreed to start construction . trade tensions between the u.s. and china putting several followingt risk -- trump's trip to beijing. the giant has canceled additional meanings amid growing trade issues. everything is in jeopardy for u.s. energy plans. an upgrade to the greek bond market, the latest app in the country's recovery. they were raised to just short of investment grade.
that maturity extensions should reduce the country's risk over the next two years. greece is looking to regain fiscal sovereignty for the first time in eight years. with the threat of a global trade war brewing, christine lagarde sets it is a frustrating time, especially since trade has started to fuel economic growth. >> bringing that level of uncertainty with which companies i'm not sure i want to invest in that particular country, i'm not sure i want to intellectual property in such a country because i don't know where this is heading, that is particularly frustrating for those of us who have worked hard to improve the system. >> christine lagarde was at dublint an event university. global news 24 hours a day, powered by more than 2700
journalists and analysts in more than 120 countries. i'm kailey leinz. this is bloomberg. caroline: back to that breaking news on saudi arabia. the country will be producing a record amount in the month of july, 10.8 million barrels per day. you are here with the scoop. markets are moving on it. how big of a move ishow big of ? >> it really illustrates how keen they are to clamp the market down. they were going to put a lot more oil back into the market -- there's been a lot of pressure from president trump's twitter account. opec should put more oil into the market. brent currently down .6%. citigroup analysts saying we will see up to 10.6 million barrels. this went much further than the analysts out there predicted. >> it illustrates there is that
concern about how much oil may be lost from iran in the second half of the year as sanctions kick in. production is falling faster in the saudi strike a step into the breach to keep a lid on prices and assuage american concerns. strategys this a good on the part of the saudi's? >> and has risks. saudi is a repository of most of the world's spare capacity, 2-3,000,000 barrels per day -- 2-3 million barrels per day if there's ay -- complete collapse of the venezuelan oil industry, the markets will say there's no margin for error, all that policy firepower is lost.
at is the clear risk. you may see people starting to talk and worry about that in the days ahead. caroline: thank you very much. vonnie: let's turn to company news now. the ceo racing to selling a company -- majority stake in baker hughes. breakup. expecting what else can be divested? >> this is very significant. this is as much as we are going to see for the time being. these are meaningful moves. this is a radical effort to rethink what ge is as a company, what its capital allocation strategy should be.
you are seeing in the market that investors are pleased with this. they are pleased with the progress ge has made so far. people were expecting a big announcement. they definitely got one today. vonnie: what is ge's scalability now? it divests these smaller parts of its business -- it will no longer be the -- >> the ge of old is gone. instead, we are moving on. there will be the power unit and the renewable energy business. the question is what does that look like for investors? what is the value proposition there? i would argue that ge will be very diverse in the structure. you have the crown jewel aviation business. margins are under pressure. the power struggles are well-known. the profile for that is not going to be very attractive. they are taking steps to offload debt.
you have a meaningful amount of debt on the balance sheet. health care will be in a decent position to think about acquisition. to have a much more flexible financial plan and invest in areas that maybe they couldn't before because they were part of ge. vonnie: will some of its resistant investors now exit? this.ot a bump off of it's no longer on the dow. i think ge realizes some investors don't want to own the power business, but they are interested in the faster growing health care side of things. it is shorter cycle versus t long cycle aviation, power businesses. recognizing that opportunity and counting on the fact that health care will achieve a higher valuation as a public company. vonnie: it's also planning on maintaining its dividend.
>> it's only planning on maintaining the dividend until it spins off health care. at that point, they will rethink the payoff. it's impossible to keep that payout ratio if you are getting rid of health care. it is a significant generator of cash for ge. vonnie: what is your next column going to be on? asthey appointed larry director of the board. he's known for operational excellence. at the same time, ge is talking about rolling out a different way of managing the company. you have to wonder, could we see the remaining ge become a lot more like that icon of corporate excellence that it used to be but under the dinner but under the dinner hurt -- philosophy? vonnie: brooke sutherland, thank you for joining. fantastic conversation. caroline: turning to all things
emanate. -- all things m&a. edp renovaveis climbing to an all-time high. what are we seeing from this? this is a fascinating story. it's not just european players. there's a chinese player as well . >> exactly. made ane george's attempt -- this has made all the other players in europe take notice. g, but there's m other in europe looking at this thinking if this goes through, had we map out the rest of our energy strategy? some of the business is in the
u.s. in the u.s.stment will look closely at anything involving the chinese. if they agree to the chinese, through these europeans come in and make a bid for the whole thing? it seems like a lot of pieces are moving around. vonnie: many thinking a higher bid could come in. >> edp rejected the bids as being too low. expectation is the chinese would come in with more money. probably for the renewables. caroline: you must be so busy at the moment. -- a company in france. m&a is having its day in europe. >> it's fascinating because so many of these stories have a political element. you have brexit negotiations going on.
the french company in which the french government is a stakeholder, do they want to get into a bidding war for u.k. satellite business? in have the americans coming and everything going on with the chinese. ec is booming -- there's so much appetite. the companies want to ensure they are not left out. caroline: businesses eyeing going public -- we've had the likes of -- being snapped up by paypal in the u.s. engeneco could go private again. these companies, they know this space so well.
they take them private and then five years later, they take them public again and then two years, they are private again. the carousel goes on. caroline: yes, there's politics at play. how much is there looking towards normalization in rates? is it the normalization pushing people to splash the cash? >> when they can right now because they don't know what's coming next. you have the threat of a looming trade war between u.s. and china. how does that affect m&a? valuations are so high, you often do a story and in the stock moves up and then you have the company saying hang on a minute, maybe this doesn't make sense. story, the takeover target shares moved over. down,quirer shares went so investors weren't happy.
caroline: we love it. always great to get your perspective. thank you very much. we will get back to the travel ban being upheld by the supreme court in just a moment. the president just weeding out that best weeding out -- tweeting out the courts have upheld the previous decision. we will get back to that. this is bloomberg. ♪
vonnie: i'm vonnie quinn. this is "bloomberg markets." the u.s. supreme court upholding president trump's travel plan with a 5-4 decision along ideological lines. this gives the president legal and political victory on a controversy that has defined his presidency. it began with the first week of his presidency with an executive order. aining us on the phone, professor from george washington law school. are you that the supreme court is injecting itself into partisan politics? what's your reaction to this decision? >> the decision was the only proper one. from the first decision against president trump on the travel ban order, i thought the courts were outside their navigational beacon. on thelied so heavily
and commentsweets that they ignored the separate record created by the agency. time this washe the only decision the supreme court would likely come to. it's not too surprising it was 5-4. the decision has less to do with the merits of the travel ban as it does the role of courts. what the supreme court is doing is sending a shot across the bow of judges that they need to thelate themselves from comments. the doesn't elevate them to level of a judicial record that you could base these orders on. vonnie: it sounds like the
president himself is surprised, weeding out -- tweetingut moments ago, "the court upholds travel ban. wow." >> this controversy has been created largely by the president's own hand. he became the chief witness against his own administration by continually tweeting out reckless and in some cases disturbing comments. even though many of us dislike those comments. i never viewed those as a substitute for the record. apparently, neither does the supreme court. the supreme court goes out of past presidents have elevated the discussion and clearly, that was a slap at the president.
they separated themselves from that reaction by ruling today that the record, not those comments, control. vonnie: four justices dissented, which was to be expected. the idea the justices are ruling on how courts should act -- anthony kennedy indicated he was reluctant for the court to second-guess the president on a national security question. is that the core of this argument here, professor? >> yes. this is something some of us ever it in about over the past year. strongly supported the strongly supported the precedent. the past courts have given the president great deference in these types of policies. there was a serious disconnect in the lack of deference shown past presidents
haven't made these inflammatory comments, but that doesn't answer the question. the ninth circuit and other a rathernded down unprecedented series of decisions based on those tweets and comments. it also strikes me that chaotic, this executive order was changed, agencies didn't know it was coming, there was a lot of disorder and chaos at airports when the original came out and then it was changed. the supremerevent court backing the president on anything he chose to do on national security? >> there's no question that the first order was badly drafted, badly executed and badly defended. what courts have to rely on it
order -- in order to find a policy unconstitutional, this is an order they have affirmed -- you can't just cite presidential tweets and say all that difference in those prior cases can be set aside. what it means for the future is basically what we had in the past. the court does not easily overturn policies at our borders. president have always exercised a great deal of deference and authority in determining who can enter the country. vonnie: professor turley, thank you for joining us. this is bloomberg. ♪
caroline hyde. this is "bloomberg markets." now, futures in focus. take a look at the bloomberg. saudi arabia planning to pump a record amount of crude in july. joining us from the cme, the president and founder of blue line futures. did this move take the market by surprise? >> crude oil is holding in pretty well. i think it is a surprise. you look back to last week and they talked about adding one million barrels per day, that is opec in general. a lot of countries aren't going to pick up production immediately. looking for further information on this news, is that production going to stay for the months going forward as other countries bring production back online? it doesn't elect this reaction is bringing the market down. there's a tremendous amount of value at $67. how much is left in spare
capacity? -- 1.8apacity can search million barrels per day could be a supply deficit later this year. there's some sort of disturbance, we could see oil surge higher because of that lack of supply and lack of output that can come online quickly. caroline: let's look at gold. reaching fore not this haven amid the trade tensions? gold set for three months of declines. surprised that gold has not found much traction, especially on a day like yesterday when the dollar was a bit lower, you had equity markets down 2%. i think gold will have it's time.
i'm lookingi'm lookin 1238. there's love technical indicators aligning there. we have the commitment of traders showing the lowest net long position since the end of 2015 when traders were net short gold. surgedttomed at 1250 and since then. i expect gold to be back about 1300 in the coming 30-60 days. coming above 1300 in the 30-62 days. -- 30-60 days. caroline: mark barton takes the helm for the european close. this is bloomberg. ♪
mark: here are the top stories we are covering from the bloomberg. stocks higher today after the biggest selloff since april. investors grappling with trade tensions and the implications for global growth. luring largends piles of cash, we will talk to the founder of age cropped partners -- president trump's travel been giving them a legal and political victory. giving him a legal and political victory. rising equity benchmarks of the gmm function.