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tv   Bloomberg Markets The Trump Economy  Bloomberg  August 3, 2017 1:00pm-2:00pm EDT

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control of the white house. he tells jeff sessions his job as attorney general is sick or now. gary cohn considered the frontrunner to be the next chair of the federal reserve. some insights into how he might approach that job. and it trade relationship between the u.s. and china amid reports u.s. officials want to investigate china over intellectual property policies. john kelly reportedly told attorney general jeff sessions over the weekend that president trump does not intend to fire him. , athat a sign that kelly former marine corps general, is bringing back a semblance of order to the white house? our white house correspondent is at the white house. kevin cirilli joins us from capitol hill. use, there was as reported
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meeting between john kelly and jeff sessions. what else has john kelly now that he has achieved his first week at the white house touluse: general kelly has not wasted any time putting his stamp on the white house, overseeing the exit of several national security officials, some communication officials, including anthony scaramucci. he splashed onto the scene a couple weeks ago with statements about how he would fire everyone , profanity laced comments. he was out the door within hours of general kelly coming in. we have seen more order within the white house, we have seen the president continuing to tweet, but they had not been quite as newsmaking as they had been previously. we have seen the white house operating somewhat according to plan for the last couple of days.
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but we have also seen a number of links coming out of the white house in the last couple of days, so it will be interesting to see how general kelly manages that situation with leaks continuing to happen, some of them related to national security, some of them related to the palace intrigue here at the white house. david: you mention a lot of departures. ezra: wide net, departed yesterday, someone who had been with the administration since day one. what led to his departure from the white house? toluse: according to the white house, they believe somebody would be better suited for that particular role, defense intelligence, national security council. this is someone who had been on the ropes for several weeks as he was involved with representative devin nunes a couple months ago, who brought over -- who was brought over to the white house and made charges of unmasking but did not say who brought him that information.
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it turned out that came from the white house, orchestrated by this individual. he was someone protected by jared kushner and steve bannon, but now with general kelly in their, general mcmaster, who wanted this person out of the white house, was able to do so now. theeems the power is in hands of general kelly to get rid of individuals who do not have the best interest of the administration at heart. david: kevin, let me turn to you. shortly after president trump was inaugurated, we heard about some phone calls that were interesting. he talked to the president of mexico and the prime minister of australia. today in the washington post, transcripts of those conversations were printed. they are available online. what do we know about the way this president approaches diplomacy with foreign leaders from the transcript resulted a? match theseems to tone of his tweets, which also
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matches his rhetoric on the campaign trail. the white house has issued a statement to the washington post, essentially saying that they feel this is just part of broader negotiations. of course, it raises questions that democrats and republican critics will criticize. when we talk more broadly about what this president has said with regard to leaks, this is another example of a week. interesting to get some perspective into what these conversations are like between the leader of the free world, president trump, and other leaders. do we learn any real information that could change these relationships perhaps between the u.s. and mexico, australia? terms not really but in of the policy with regards to paying of the wall, and interesting back-and-forth between the two leaders on that front. the president saying essentially, please don't go out in public and say that you will not pay for the wall. saw,ll of that is what we
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rhetoric, back-and-forth, when they were more public. i think when you look at it, general kelly, this is his first few days as chief of staff, once again, this is a remarkable leak . if they are leaking conversations between global leaders, what other conversations are there? david: you have the set of prepared to go on recess, the house has already gone. the president will be h eaded to west virginia for a make america great again rally. what are we likely to see from the present over the next few weeks while the legislative branch is back home visiting constituents? toluse: the white house is trying to decide where to go after the health care failure. it seems a there are number of voices in the white house that want to ship to tax reform. somewhat begrudgingly, it seems the president is willing to focus more on tax reform and not
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so much on obamacare repeal, because there is not the will in congress to get that done. it seems over the next few weeks, even as congress is out, the president will try to move focus on taxic reform, reforming the tax system, trying to roll out a plan that is unified between the white house, house, and senate, so they don't run into the same trouble as they did with health care. david: yesterday, we had in its ordinary exchange between stephen miller and members of the white house press corps. i wonder when you take away from that. you are listening to conversations about tax reform and the budget, conversations about health care i'm sure continue. we don't hear a lot about immigration these days. what do you make of that announcement the other day by stephen miller? the white house has embraced a piece of legislation that is fair to say is not embraced by republican legislators. candid with you, it
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was kind of like a flashback to the campaign days, where we were at presidential rallies. that was a snapshot, a microcosm of what i observed on the campaign trail. stephan miller used to speak before donald trump -- and then candidate trump on the campaign trail. it was amazing to see that. you are right, this is something that has not been on the minds of lawmakers and legislators in washington. they have definitely kept their focus on health care. sayingay, senator rubio if there would be a vote, it would likely be in september. the majority leader there would not be a vote in august on reform. and a plea, we are already seeing jockeying among the public and on the debt ceiling, taxes. mark meadows the other day announcing his initiative and his policy line in the sand, so to speak, on raising the debt limit.
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he wants to see deficit cuts. it will be one heck of a september. david: great to speak with both of you. let's get a check on the where the markets stand. julie hyman has the latest. julie: we continue to see a steady pattern here for stocks. the dow hovering around the 22,000 mark but little changed on the session. the s&p and nasdaq have been pretty consistently down. a lot of this does have to do with what is going on with earnings, but what is interesting, low volatility continues, and there's a growing disconnect between the broad market volatility and single stock volatility. has now been 70 sessions in a row that we have not seen a move of more than 1% on the s&p 500. we were talking about that streak in the beginning of the year. this is the longest consecutive streak without that 1% gain in
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the s&p 500, going back to 2006-2007. it isn price notes, unusual because you are seeing single stock volatility relatively high. though there is a bit of a disconnect there that is wider than usual. stocks, a lotngle to choose from, particularly health care. in the drug industry today we heard from teva, the big generic pharmaceutical drug maker. the company cutting its profit forecast, slashing its dividend by 75%. one of the pressures on the company is the pressure on generic drug pricing. we are seeing other drugmakers fall during the session. that is not the only health care stocks moving today. earnings from a number of companies. aetna is one of the standouts. this company was supposed to combine with humana.
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that deal ended up being scrapped. aetna looking like they are doing fine on their own. they rely mostly on business that is employee health plans. it also has largely abandoned obamacare exchanges, pulled out from most of the states that participate in that. saying that they will be pulling out a couple of those states, utah and wisconsin. they will increase rates sharply elsewhere after the company had a steep second quarter loss. those shares down second percent. the maker of various diagnostics, coming up with numbers below estimates, cut its revenue guidance for the year. treatments toor treat various things did not do as well. an air source bergen becomes the next to tradition company to come in below estimates as well. a lot going on in health care,
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specifically some of it related to what did go on in washington. david: thank you. topng up, president trump's economic adviser gary cohn is emerging as a front runner to succeed janet yellen. what we know about what he may say if he were to get a seat at that conference table in the eccles building. this is bloomberg. ♪
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david: welcome back to "bloomberg markets: the trump economy." i'm david gura. let's check in on the first word news with mark crumpton. mark: secretary of state rex russian foreign minister sergey lavrov have spoken by phone
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ahead of the scheduled meeting in manila's weekend on the sidelines of a summit of southeast foreign minister's and russia's foreign ministry says north korea was one of the topics discussed during the call. tensions have risen between pyongyang and the international community following the north's recent test firings of two intercontinental ballistic missiles. senator john mccain says u.s. commanders in chief are responsible for the military's failure in afghanistan, not the commanders in the field. senator mccain says the lack of a successful policy and strategic guidance from washington over several years is to blame. the trump administration not defined a strategy for the war. mccain plans to offer an amendment to the defense authorization bill in september. the environmental protection agency is preparing to deny a change to the u.s. biofuels program sought by valero energy and backed by billionaire refinery owner carl icahn.
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that is according to people familiar with the decision. have lobbiedahn the to shift responsibility for fulfilling annual biofuel quotas away from her fighters to fuel blenders and other entities. an update on a story we told you about last hour. the associated press reports barcelonatives from soccer star name are have paid over $263 million to release him from his contract. this clears the way for his siding with paris st. germain. the payment shatters the previous world record transfer for paul pogba. global news 24 hours a day powered by more than 2700 journalists and analysts in over 120 countries. i'm mark crumpton. this is bloomberg. david: may be in the wrong run of work. -- line of work.
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gary cohn is a longtime goldman president, now president trump's economic advisor and now within the arms reach of the holy grail, the chairman of the federal reserve. ,ere to talk about his chances we have two guess. we have heard from gary cohn, we have seen him as this imposing figure in the white house. you have a lot of people that talk to you about what he is like as a leader. >> what is great about being at bloomberg, you have a colleague like gina who knows all about the federal reserve and the culture. my colleague writes about goldman and i, and what we do, we understand wall street. combined, we got a picture of the federal reserve. it is this very quiet, contemplative place where it takes days to make decisions, if not months and years. know,ohn, though, as we from writing about him, i don't
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think even his very close friends and colleagues would call him calm or contemplative. he is a famous traitor, a metals trader. he has an obvious aggressiveness. talkan sachs executives about this -- tearing your face off. that is what they say. gary is an aggressive trader. there is a question now that he is a front runner for replacing yellen, and that is what trump decides to do, a question of whether he would be a fit. quiet marble halls of the eccles building in washington. do we have a sense that gary cohn wants the job, is he satisfied with the job he has, why would this be a good fit for him? the job requires a lot of engagement with literature, reading. .> it is immense prestige also, i don't think it's an exaggeration to say the white house in the last few months has
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been marked by something approaching probably chaos, just in the communication department alone. -- formerur more goldman sachs colleague, scaramucci. was alsoner involved. it may not be a terrible exit strategy if you are gary cohn and want to get out of the white house. he has said publicly, very happy in my job. on bloomberg tv. ands the head of the nec, that is a cool job to have, also held previously by two former goldman sachs guys. talking about all of these former goldman sachs alumni. no one from goldman sachs has ever run the federal reserve. it is the only thing they have not done. you would think it would have to be something of a triumph for him, but we don't know if he wants it or if you will get it. david: what have you discovered
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about what kind of departure this may be in for the fed itself? right now we have a distinguished academic labor economist running it, and we are talking about bringing someone in who does not have a phd, is not an academic economist. yellen is very distinguished, before that we had bernanke, greenspan. voelker, if i remember correctly, was the last federal reserve chairman without a phd. we don't have phd's but we can talk a little bit about it. there is no rule that says a federal reserve chairman has to have a doctorate before their name, but on the other hand, at the end of the day, gary cohn does not seem to be the kind of guy who spends his free hours applying through in econometrics research. gina taught me that word for this. he is a guy who climbed up to the trading floor. he stayed by lloyd blankfein's
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side for decades. nobody thinks of him as an economics master. although it's worth pointing out, kaplan, another goldman sachs guy at the federal reserve , if i remember correctly, he was an investment banker. it is not like he was an economist. i guess one has to be open-minded, but as journalists, we have to point out the potential clash. the phrase we use in the story is a bulldog leading a bunch of eggheads. you have to be aware of that. steve bannonicking to join goldman sachs. bloombergtory on the in the latest edition of bloomberg businessweek. gary cohn will be a guest himself tomorrow after we get the jobs numbers. trying tod, china stabilize its relationship with the u.s. as the trump administration threatens to
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investigate potential intellectual property violations. this is bloomberg. ♪
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david: welcome back to "bloomberg markets: the trump economy." i'm david gura. i want to correct a mistake we made earlier. oil trader andy hall is said to be closing his main hedge fund at capital management after big losses in the first half of the year. 17.3% through may. earlier today, a colleague of mine incorrectly stated the fund is also closing. it is not. china says it was a good relationship with the u.s. when it comes to intellectual property. anll, the prospect of investigation by the trump administration has raise the risk worth it for ted rigell you should from beijing. there with more is sarah macgregor.
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she joins me from washington, d.c. let me start by asking you how china has responded to these reports that came up yesterday that this investigation is being considered or is in the works. sarah: what we're hearing from we have doney is, a lot to boost our intellectual property protections, we are interested in cooperating with the u.s. but what our colleagues in china have reported, china is knowng for this, they are for having tit-for-tat responses for any sort of trade disputes. the area they are targeting right now are so you beans. china buys half of u.s. exports of soybeans. you can imagine any action on soybeans would make some farmers and big agricultural groups quite unhappy. david: let me ask you about the wto. i asked someone about the role of into the to. going to start
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moving away from that and say we will start to take unilateral action with rock murder to the wto or will ignore the results, it will lead to other countries to retaliate against us or even worse imitate us and take action on their own without regard to international obligations. reports of this investigation, in concert with the investigation of steel production, in concert with any number of things the wood house is looking to with trade with china say about the trade policy as we know it now? do we have a sense of the direction of the trade policy? the investigation we are hearing now, also into steel, these are investigations that give the president broad powers to place actions, take actions against imports, especially from china. if you look at the debbie to system, it takes a more global rules trade approach. it leads one to believe that the u.s. is taking things into its
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own court, trying to make enforcement solutions that work for it. the number one goal that trump always says is, his foremost priority, to reduce the trade deficit. you can see a lot of these actions moving in that direction. david: great to speak with you, sarah. up next, the battle over tax reform continues. can u.s. senate republicans move forward after failing to reach a deal on health care? we will speak to michael needham about that. this is bloomberg. ♪
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david: this is "bloomberg markets: the trump economy." looking at the u.s. capitol in washington, d c let's start with the headlines
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and the bloomberg news. mark: the bill allows any special counsel for the department of justice to challenge their removal in court with a review by a three-judge panel within 14 days. it would apply retroactively to may 17, the day robert mueller was appointed. the u.s. department of veterans affairs is taking new steps to use technology to improve access to health care for veterans across the nation. president trump announce the initiatives today at the white house today include using video technology and diagnostic tools to conduct medical exams and give veterans the ability to use mobile devices to schedule, reschedule, or cancel .ppointments with ava dr. japanese prime minister shinzo abe reshuffled his cabinet today
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seeking to repair his approval ratings by installing well-known moderates in key roles. at a press conference, he apologized to the japanese people, adding "we will put the economy first. he has faced criticism for prioritizing conservative issues such as amending the constitution. approval ratings for him and his liberal democratic party have fallen after a series of scandals over alleged cronyism and other abuses. turkey's top diplomat is promising to root out militants plotting against china. a visit to beijing, the turkish foreign minister spoke alongside his chinese counterpart and said his country would treat threats to china's security as threats to itself. relationships between the two countries have been strained in recent years by turkish support for groups fighting syrian president bashar al-assad. global news 24 hours a day powered by more than 2700 journalists and analysts in over 120 countries. i'm mark crumpton. this is bloomberg. i want to get an update
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now on tax reform. senators prepare to head home for the august recess. joining us from capitol hill is my colleague, stephen tennyson. when you look at the things that senate republicans hope to accomplish, you have this agreement. does this constitute enough progress for other members of the republican conference on capitol hill? >> i don't think so. they are very far apart. if you were to talk to all 100 republican senators, all 100 senators today, 52 republican senators, you would have 47 different tax plans. they have not narrowed things down beyond a general wish of getting things -- corporate rates down, individual rates down. the real trick is where does the painful? are you just going to add to the
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deficit, close loopholes, which are you going to close? that is the tough part of tax reform. they are not close at all on that. the one big difference between health care and taxes is mitch mcconnell, the senate majority leader, promises this one will go through committees, there will be amendments. there is at least a chance for some bipartisan pickup. you have a number of democrats in red states where tax reform is not as radioactive to their days as health care was. that is something to watch in the coming weeks. right now, it still looks very unlikely they will come up with a plan that will have 50 republican senators anytime soon. david: things get quieter in the august recess. easier to get a table at restaurants, but what will be happening policy wise? you have senators going home to their states talking to constituents. are the wheels of policy moving
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on capitol hill while they are gone? >> i think you will see maybe some telephone tag, staffers working on two fronts. there is still an effort to revive some part of health care bill, some sort of stabilization package that could potentially move on the giant package including the debt limit, keeping the government open until the end of september, as well as trying to have a better framework for tax reform when they come back. they want to have more things they could hit the ground running. still have those russian investigations overhanging everything. by thecans flummoxed tweet of the president blaming congress for the state of russia relations. in the meantime, those investigations are ongoing, they will talk to witnesses, and then we will have public hearings in september. september will be a jampacked month. david: rest up, steven dennis.
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tax reformhing force is heritage action for america, a conservative group based in washington. michael needham is its ceo. let me ask you about the timetable. you heard the outline of what republican leadership would like to see happen, of course, reality intercedes. what is your sense of a timetable for tax reform? michael: i think it will be by the end of the year. they will come back from august recess, september or october will be focused on the budget and the fiscal side, before you can move to tax reform. spin ofress has to reconciliation instructions from that budget, which will allow the 50-vote threshold to be used in the senate, rather than the 60-vote threshold. that will happen in september, october. hopefully before december, that is the timeline where you will see the real tax reform package come together and be signed by the president. david: to what extent are you
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and your colleagues involved in this process? at vfl you have had a seat at the table as this is hammered out? i mentioned that statement on tax reform that we mentioned last week. do you feel you had a say as that was being written? michael: i think it is a better process than what we had with health care. when a house first rolled out their health care bill, everyone is taken by surprise, a lot of criticism that came out. on this one, the white house has had key stakeholders over, the senate, house, they have been brought in. i was with the speaker last friday, had been over at the white house. there is a better collaborative process of getting people on the same page. that will hopefully lead to a better result david: than the health care fiasco. ver norquestgro who was also at the meeting. you conservative advocates, are you speaking with a unified voice? michael: i don't know every
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position grover holds, but certainly we are all in the same business, looking to cut taxes. as you look at this, there are minor disagreements in washington on issues, temporary, permanent, full expensing, do you do something short of that, permanent bonus depreciation. there are issues that need to be worked out. unlike health care, where there were some republicans who just want to keep the republic -- regulatory architecture of obamacare, others that wanted to keep president obama's medicaid expansion in place, on tax reform, we all want the same thing. how much from column a, column b be put into the final package. i think it will be a much easier deal to strike than health care. david: what is your message to your donors about how you will approach this going forward, how you will deploy resources? we spoke to tim phillips who outlined the push that his organization will be doing to explain tax report to people. the border adjusted tax,
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expensing. these can make people's eyes glaze over here. how can you make this understandable to people who don't follow tax policy on a day-to-day basis? michael: we will put all of our resources into it, we have a nationwide grassroots network, using all of our messaging tools. this is all about growth. the american people understand that when president trump talks about getting to 4% growth, that is what is needed to get jobs moving in this economy, to get our debt under control. america spending problems cannot be solved if you're looking at one point of percent growth in the is what barack obama assumed in his last budget. if you want to turbocharge the ,conomy, get a slide 4% growth so that people can have great jobs, we can start solving our spending problems in a more responsive way, we need to unleash that growth. that is what president trump's regulatory rollback has been about. that is protector form is about,
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creating jobs, creating opportunity for everybody across the country. david: how important to you is urgency? with the health care fight, there was a push to get something through. a lot of people may say may be the senate was moving too fast on that issue, despite the fact that they have talked about it for seven years. how important is urgency or this timetable to you? by prolonging this, less likely that you get tax reform, or more likely, as stakeholders have more opportunity to talk about what they want. michael: i think you need time to expect when you are doing but also nothing happens in washington without urgency. washington will always try to kick the can down the road. the forces of status quo are powerful in this town. many of us underestimated just how many republican supported keeping obamacare in place. that has caused the first seven months to go in a disastrous fashion. on tax or form, the urgency is there politically. the republican party knows it needs a win.
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trump has been very clear from the start of his campaign that growth is what his administration is about. omb director mick mulvaney had a great op-ed in the wall street journal talking about all the policies of the administration that will unleash growth. from a policy standpoint, tax reform is something congress wants to deliver on. there is much more of a unified effort here and urgency will be necessary to get congress to move. that is always a last option, governing. with to speak michael needham, ceo of heritage action for america. coming up, venezuelan president nicolas maduro denies allegations of vote tampering. the latest on what is happening there, next. this is bloomberg. ♪
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david: this is "bloomberg markets: the trump economy." i'm david gura. sellers have shown the next talk of the hour is not bulletproof. oliver renick is here to talk about her murder. that was a bad pun. tell me about what is happening with stormtrooper. this is a bit of a reversal. this is a bit of a reversal. i guess it depends on the time range. the top panel looking at the price, the bottom panel showing us the rsi. this is a pretty steep move as you get very steep selling, now in the oversold territory. this, i problem with will look at the actual moving
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averages. 200-daveee over here, moving averages, it has blown through all of them. the stock price is not great and this is coming after earnings. david: i used to cover the firearms industry. firearms is one of the most durable goods, you have manufacturers getting people to buy more than one gun. when you look at what is happening here you would think this is where the politicking comes in. when you have a president or somebody campaigning for ,resident who is more pro-gun which donald trump was during his campaign, you would think this of being a good thing when he wins. however, what spurs the short-term demand is when buyers of guns feel like the president or the white house will take those guns away. the expectation was that hillary clinton would win the election.
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when she did not, these stocks tanked right after. not just her mover. the idea was there was a potential buildup for expectations of what would happen for sales. people essentially hoarding them, and a sense, if you think somebody will change the rules of purchasing. that didn't happen. that he had to think about the picture for supply. ruger,ecific to sturm there was a recall for some of their pastors as well. some of them discharging, not a great situation to happen with a gun. david: i want to switch gears now and talk about venezuela. nicolas maduro is denying allegations that voter turnout figures were manipulated by his government. he says the assembly would go ahead and meet tomorrow. joining us now is our correspondent for latin america. get us up to speed on the latest. dramatic footage of two opposition leaders being taken from their home.
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scheduled to take place tomorrow. what is the dynamic right now between venezuela between the opposition and government? >> there is no dialogue. elections, wese will never know how many people participated. as far as we know, he is convening a new assembly tomorrow, bypassing the democratically elected congress. you can imagine, things are not well. david: let me ask you about the power balance between these two assemblies. you have the constituent constitution assembly that maduro created, and the national assembly. paper, the new one is more powerful than the other, how will they interact? >> the national assembly is basically the congress in venezuela. he basically just voted for a new one and said that these people will have to review a portion of the constitution of venezuela. what exactly are the changes going to be, who is running this, who is part of this new assembly? we still don't know.
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any semblance of a very functioning democracy in venezuela. by the day, we are losing that. david: help me understand the calculus of what the treasury department is going through these days when it goes to sanctions and venezuela. the u.s. government targeting individuals, members of the maduro cabinet, and then maduro himself. the looming specter is whether or not the u.s. government will somehow sanction imports of oil. what is the treasury department thinking about whether it ways to do that? >> it would be a very dramatic move to simply prevent imports from venezuela reaching the united states. you would strangle the country over there, they have no money. also you have an impact in the united states immediately. what they had decided to do is sanction individuals. we see impacts. one of the individual sectionals was the cfo of the state oil company. this means u.s. banks, bondholders and i cannot directly work with him.
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so therefore, your compliance department will say, we are bypassing u.s. laws if we do business with them. it is a bit of indirect, but there is impact. switch, buthey can so far that is the root of what we see in the u.s. they are discussing more and more dramatic sanctions but so far no new news. david: you have the sanctions, a change in rhetoric than i have noticed, the u.s. government referring to the dictatorship in venezuela, other leaders internationally condemning what happened over the weekend. what could happen next, aside from the sanctions program in the u.s.? what other ways could other governments exert influence over the power structure and how things are being run in venezuela right now? >> they are still a sovereign nation, so it is a delicate situation. are they just going to invade the country and impose order? let's oppose the european union also decided to impose severe
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sanctions on venezuela. obviously, it gets more difficult for maduro. the idea is to force venezuela to uphold democracy, first and foremost. basically maduro grabbing power, bypassing his own constitution. what is the endgame? basically, he just rewrite the constitution and stays in power forever? that is anow, but very delicate and sad state of affairs for venezuela. david: venezuela has not defaulted on its debt yet. are investors speculating that may happen in light of the unrest we have seen in recent days? culturally, venezuela has been defaulting, isto it different this time around? >> to wait to see the question. very risky bet here. we have seen especially after the sanctions, bonds have really taken a hit early this week. the combination is getting more
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difficult. if they lose access to money, how can you make your debt obligations? today, they told bondholders that they want to waver and present financial reports later, they won't be able to do it in time. distressed, a risky investor, some people say it is a bargain opportunity. there is no doubt, the bonds have really taken a hit, especially in the last couple of days. david: thanks to speak with you. tremendous coverage of what is happening in venezuela. of jobsp, a preview numbers, which will be released tomorrow morning at 8:30 new york time. also speaking with gary cohn, the national council -- economic council's director. this is bloomberg. ♪
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david: this is "bloomberg markets: the trump economy." i'm david gura. tomorrow is jobs day in the u.s. 8:30 new york time. so far this year has been marked growth andage falling unemployment. the latest numbers will be out at 8:30. joining us now for a. is carl riccadonna. great to have you with us. give us a sense of what you're looking for, looking at the preview that i know you are getting ready to send out. what are you watching for? carl: a perspective has changed a little bit on the numbers. usually the market is so focused on the monthly payroll change. given we now know the economy has re-accelerated from that soft patch in the first quarter, seems to be on decent voting as we hit the midyear mark, the pace of job gains is less relevant than some of the other details of the report. david: let me pull up a chart. the conversation for these last
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many months has been about wages in the u.s. a chart of wage pressures. talk about about what you're looking for. carl: average hourly earnings is the key metric of wage pressures we will see tomorrow. as we see on the chart, on the screen, things have been gradually accelerating. there is a positive slope to the line but it is pretty soft. if we zoom into the right-hand side of the screen, not much upward progress. this goes to this ongoing debate among economists, where the neutral level of unemployment is, why we are not see more wage pressure. this will be critical to the fence reaction function. the fed has been marking down its estimate of full employment as of late because we are simply not getting the wage pressures as we go to lower and lower levels of the unemployment. tomorrow we could even see a.2 decline. last month was a statistical glitch. david: what is your sense of the neutral rate right now?
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carl: i agree with the prevailing sentiment, it is lower than where we thought it was going into the cycle. it changes in every cycle. you really don't know until you see evidence, wage pressures in the rearview mirror. you never know in real time. you know want to have gone past it. we thought maybe 5.5%. we plunge through that level, no wage pressure. now we are below 4.5%, still not seeing the wage pressure. i'd expect somewhere in the low 4% territory. david: looking at the moving averages here, what do we see in this chart? the far right-hand side, there seems to be a deceleration in the pace of hiring over the last couple of years. 12-months rate of change in payrolls. recently there has been a bit of an uptick. whether this is related to optimism thatthe
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has emerged since the election, or other factors, improving global growth prospects, we seem to be seeing some acceleration here. i think this will be supported by stronger economic growth in the first half of the year. growth was below 2%. my team is forecasting closer to 2.5% in the second half. holding all things equal, productivity gains, wage pressures, faster growth should translate into faster hiring in the second half. much, carlk you very riccadonna, chief u.s. economist for bloomberg. he will be on the air tomorrow morning as the jobs numbers come across. this is bloomberg. ♪ who knew that phones would start doing everything?
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scarlet: we are alive and bloomberg world headquarters in new york over the next hour. here at the top stories we're covering. in markets, u.s. equities had reached new heights. a global hedgeng fund manager seeing opportunities in stretched evaluations. politics, china trying to con trade tensions with the u.s.. a diplomatic measures are not stopping the nation gearing up to fight back. closing down his main hedge fund after suffering from big losses in the first half of the year. u.s. get straight to markets that close in two hours. julie hyman building on the record high? julie: only for the dow. we see this divergence between the dow and the other major es


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