tv Bloomberg Markets Americas Bloomberg January 10, 2018 12:00pm-12:30pm EST
in elections, and it calls for the republican dominated legislature to create a new landscape of congressional districts by january 24. one of hillary clinton's fiercest critics on capitol hill is calling it quits. darrell issa of california will not run for reelection. he is the former chairman of the house oversight and government reform committee. to investigate clinton's role in the deadly terrorist attacks in benghazi, libya. south korea's president said he is willing to meet him jump on under the right circumstances, but thou never accept north korea's nuclear weapons program. his comments, a day after the first high-level talks between the koreas in more than two years. president trump told president moon the u.s. is open to talks with north korea when it is appropriate. germany is maintaining a hard-line stance on brexit.
chancellor angela merkel's government will demand the u.k. pay for the privilege of its banks having access to e.u. markets after it leaves the bloc, according to officials from two key german departments. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. crumpton. this is bloomberg. vonnie: it is noon in new york, 5:00 p.m. in london, and 1:00 a.m. in hong kong. i am vonnie quinn. shery: i am shery ahn. markets." "bloomberg ♪ from bloomberg world headquarters in new york city, here are the top stories that we are following. the state of american business will speak with u.s. chamber of congress president and ceo tom donahue.
what he sees as the top challenge facing the business community. another market bombshell, or potentially from china. they may pull back holdings of u.s. debt. ofld this be the beginning the end of the bull market for bonds? ford in the hot seat. it has become the latest carmaker to be accused of diesel emissions cheating. what it means for carmakers' futures. we will have the details. julie hyman is with us. we are halfway into the trading day, and julie is keeping an eye on the market action. julie: we are seeing a breaking of the winning streak to kick 2018. the s&p 500 rose for six sessions in a row and is breaking it in this seventh session. it tied the longest stretch of records ever to start a year, as we were seeing records not just for the s&p but for all major
averages. a lot of commentary on stocks coming from the likes of jeff gundlach, that we could see a down year for the s&p 500. goldman sachs is also expression caution. we are seeing semiconductors take a hit after china international capital corp. cut its forecast for 2017 and 2018 mobile phone shipments in china. you saw the philadelphia semiconductor index lower as well as semiconductor equipment makers. that is dragging down tech stocks in particular. we are watching some of the blue-chip stocks, going in opposite directions. general election -- electric moving higher after warren buffett he would consider buying the stock at a good price. ge was the big loser on the dow last year.
it byas vonnie mentioned, concerns over cheating with its easel emissions from its diesel engines. it is being sued by truck owners having to do with alleged rigging of 500,000 diesel rigging in some of its trucks. the big story in the bond market , as we see the yield going through that key 2.5% level. bill gross, who has talked about the bull market and bonds ending before, is renewing those calls, saying the bear market could be a mild one. china is considering pulling back on its investments in u.s. debt. that has been causing some selling in the treasury market. vonnie: julie, thank you. some breaking news to bring to you. nestle is said to be near making a $2.8 billion deal to sell its u.s. chocolate unit to ferrero. that is the italian chocolate
company, the third-largest chopper -- chocolate company in the world. it now might be buying the u.s. unit of nestle. astle is said to be nearing $2.8 billion deal to sell its units, chocolate in the u.s. to ferrero. shery: u.s. chamber of congress president and ceo tom donahue delivered his american state of ,he business address highlighting emerging opportunities and top challenges facing the business community in the coming year and beyond. we will send it over to david westin in washington. david: thank you very much. i have come to washington specifically to talk to tom donahue. congratulations on your speech. we will talk about your speech on the state of the u.s. economy business. you call it a new era of growth.
what is driving that? thomas: three or four things. bill,of all, the tax which by the way has just been passed. taxesbill that lowers significantly for all kinds of corporations, a tax bill that gets american large companies a way for having to pay a double taxation offshore and onshore, and they will bring more money home. a tax bill that allows immediate deduction of capital expenditures, and a tax bill that includes the middle class, and i believe that -- and there are lots of other things in it -- but i believe that is a fundamental change after 31 years, since the last time we did this. that should drive what we are doing. second, this administration has been extraordinary from day one on reducing the explosion that
came out of eight years of the previous administration and regulation of just about everything in our lives. we are making constructive reductions there, still keeping the important regulations we need for safety and national well-being. and third, we are having a vigorous debate about trade and what role that plays in the american economic system, and we are also having a very significant debate about entitlements, which by the way, consumed most of our spending. i believe the businesses feel they have got a better tax deal, a better regulatory environment, and the government is debating and looking at the fundamental questions of what they are worried about. david: starting with taxes, there is no one that would deny this is a big deal. how do we make sure the it is
distributed the right way through the economy? you raise did this in your speech, talking about making sure the workers benefit. there is concern the corporations will take the tax cuts and give it to their shareholders. thomas: let me make three points. it is their money to start with, not the government's money. the government gives the taxes they collect and they say, that is ours. no, that is the citizens and companies who are corporate citizens, money. they are sharing it with the government for the public good. so that is the first thing. now, what they do with their money is important. what we really want them to do is grow their companies and hire more people. half a dozen or a dozen companies that have demonstrated that they are going to give bonuses and they are going to do this and that. i have not gotten any money from the tax reduction yet.
we still have to do the transition rule. the treasury department is being helpful and i think we will get those done fairly soon. it was just yesterday that all sorts of people in the congress, saying, nobodyre will do it, they will not get it done this year. i will tell you that the demand to get this tax bill was really a demand to get away from 2% growth so wegh 3% can start to employ people, drive this economy and solve the nation's problems. david: the tax overhaul was last year and this year, one issue facing us is trade. one of the things you said -- if we are not leaving on trade, we are falling behind. you said that you said this for years, and today we are seeing it happen. how big a problem is this? thomas: 95% of the people that
we want to sell something to live outside this country. i am all for the improved america, but only 5% of the consumers live here. so we need to be a trading nation. we need to be a trading country. and we need to have rules of the road. i have no problem with the administration wanting to bring nafta up-to-date. after all, when we negotiated nafta -- and i had a small role -- we did not have the internet. there are a lot of things to improve. there was a time the administration was not happy about the south korean agreement until they read it, and find out it is a strong, effective agreement, so we are having to clean it up and improve it. i think that will go well. if we quit on nafta, if we pull that out of the wall the way the administration pushed aside the
pacific trade agreement, we are in a crisis. nafta has 14 million american jobs. nafta is one point $3 trillion in annual commerce between the three countries. remember, every trade agreement of significance, not only is manufacturing goods traded, but services, and something else. it is geopolitics. on the mexican border, it is dealing with transnational crime , dealing with the drug dealers, dealing with people trying to get into this country that are not from mexico. the bottom line, what we want next to us on both sides are productive, supportive governments. if you look at mexico in this next election, if we screw this up we will have a venezuela. david: you make a compelling case that we are a trading nation. does president trump understand that? he is seriously contemplating walking away from nafta.
what is the risk? thomas: much less than it was six months ago. david: why? thomas: i think the people involved are getting more educated. for example, in the nafta agreement we export $40 billion worth of produce and similar products. that would go away like that, just like that. and everybody that plays around in government understands, do not fight with the farmers. why do you think he just went down to talk to the agriculture people yesterday with a day before? my deal is, they are getting smarter on this. they are realizing there are things they can fix. one other issue, if they were to withdraw from nafta is a six-month period of time for the congress to have its voice, and i will tell you, when you look at the states most affected by --s, there are democrats rip and republicans arm in arm. david: you make a compelling
case that people in the administration our understanding nafta better. what about china? there are pending issues on aluminum and steel. is there a similar move to be accommodative to china on trade? thomas: what the administration is doing with china could be constructive. it is important to do the studies and calculate the actual effect. we have problems with china. we have problems in what they are doing in requiring a technology transfer. --has problems in the theft we have problems in the theft of intellectual property. we have problems treating u.s. companies and other companies around the world differently than they treat chinese companies. in that context, we are also talking about one of the biggest and most significant economic players in the world. we are also talking about a very serious and very important
country in terms of geopolitics national -- geopolitics, national well-being, national defense unit we have to be tough on the economic issues so everybody plays by the rules, and fair and open and supportive on a lot of the other things we are doing with china. it is going to have to be left hand, right hand, not one without the other. david: tom donohue, president and ceo of the chamber of commerce. shery: great conversation. coming up, u.s. debt facing pressure from the east. china is set to be -- said to be wary, setting the benchmarks higher for a fifth day. how long could the route last? ♪
of pressures weighing on u.s. debt. the 10 year yield rising for a fifth day after officials were said to recommend flowing or -- slowing or stopping purchase of u.s. treasuries. this comes ahead of an issue of 10 year notes by the u.s. treasury. with us is ira jersey. he joins us from princeton. the market clearly took the words of this official to bloomberg pretty seriously. does any of this move reverse? andthat we have bill gross jeff gundlach talking about the end of the bond bull market. ira: i think the bond bull market is over all sell but that does not necessarily mean you have to have a selloff or reversal of that trend in a significant way. we could wind up in a range bound environment for a number of quarters or years. today's news will weigh on treasuries. i think the market reaction is a little bit backward, where most
foreign reserve managers and the assets they own tend to be in shorter-term securities, two-year and three-year notes and the like, so demand could diminish. this should be a curve flattening or rather than a steeper, so you should see the two-year notes doing worse and they have not moved far. shery: any reduction in chinese purposes comes at a time when the u.s. is planning to boost its supply of debt. fed is unwinding its balance sheet here at how does this complicate matters? ira: it makes the demand picture more murky. the treasury department in november said they were going to primarily issue front end debt, and that is often used by people who want safety, people who think the economy might be slowing, and also foreign reserve managers, people who buy bonds because of their current account surplus but want to keep things liquid and short-term,
and do not want to lose a lot of money if the bond market goes down. so this creates another problem for the treasury department. january 31, they will mention how they are going to do that going forward. that report coming out will be very important to the bond market. that,: even if we allow it is possibly all about the pboc this year, what will they actually do? they are going to keep expanding their balance sheet and might get rid of a few u.s. treasury's, but will it disrupt or slow anything in the world? and we have to get the pboc state agencies of foreign exchange a little separate. i think one of the things that might be going on here, and hopefully we will find out more from chinese officials, they might be thinking about rebalancing their portfolio a bit to reflect a little more of what their actual trade flows are. if they do that, that means they
will probably reduce u.s. debt holdings and increase holdings of other assets like european debt or japanese debt. if you do not like u.s. yields where they are, it is hard to like the yields of germany and japan given how low they are. vonnie: ira jersey, fantastic context. that is ira jersey. coming up, ford is in hot water. the motor company is being sued by truck owners claiming at least 500,000 diesel engines were rigged. we will bring you that next. this is bloomberg. ♪
cheater. tell us the details of this lawsuit. >> this is at least the fifth carmaker in north america to be accused of diesel cheating. what does that mean? the carmaker ford worked with robert bosch of germany to create an algorithm in the computer so that when the car was tested for its emissions, it would tell the computer that it is indeed compliant with epa standards and california standards. in reality, when the cars on the road, it is emitting these pollutants at levels almost 50 times higher than legal limits. these are the allegations in court. the claim is that there are at least 500 thousand cars on the road that are in violation of these standards, and consumers paid almost $8,400 more for
these cars and gasoline alternatives. shery: -- vonnie: thank you. shery: moments ago, president trump spoke at a cabinet meeting. he was meeting with his cabinet and said that he has been listing his 2017 achievements. he said 4 trillion dollars will pour in from overseas holdings. >> a record in our country's history, as reported by many newspapers. before christmas, we passed the largest tax cut and reform in american history, including anwar and the fact that the individual mandate was terminated, which is a tremendously important thing and a very popular thing. people are supposed to pay for the privilege of not having health care. that was not good. unfortunately, the courts did not cut it at we did.
in addition to the largest tax cut and reform in history, we have one of the great oil sites that has now been approved. they have been trying to approve anwar for over 40 years. ronald reagan tried to get it approved for exploration and drilling, and for 40 years they have been trying to get it approved. that was in the bill. individual mandate, in the bill. since that tax cut was enacted, more than one million workers have received a tax cut bonus. something that frankly nobody even thought about. we did not think about it we just knew hold bunch of good things would happen, and i must say, at&t was at the first one and they did $1000 per employee. they have hundreds of thousands of employees. many companies followed immediately thereafter. the employees are saying, what about us?
millions of employees in this country are getting thousand dollars and more in some cases, tax bonuses because of the tax cuts. hard working american families will receive tremendous tax relief. vonnie: you have been watching the president of the united states at a cabinet meeting, listing what he sees as the achievements of the last year. we will be continuing to monitor those headlines, and bring you anything that is dramatically landscape altering. , theg up, bloomberg etf iq first show solely focused on etf's and features bloomberg industry data and analysis. this is bloomberg. ♪
scarlet: i am scarlet fu. this is "bloomberg etf iq." where we focus on the access, risk, and rewards offered by exchange traded funds. ♪ scarlet: do you need star power like a linked index to get assets to $16 trillion by 2024? we discussed what role endorsements can play in the industry's growth. why dan draper is on trial for computer programmers rather than mbas. and with the holidays