tv Bloomberg Best Bloomberg March 11, 2018 9:00am-10:00am EDT
>> stories week business around the world. white house steps up its hardline on trade. on growth.t is market was on the same page with. populist already. central banks send signals on the future of stimulus. >> but we did is to remove the explicit reference to the likelihood of an increase in the pace of purchases. michael: energy leaders come
together to discuss have shale is changing the game. >> think they see that u.s. is a producer. this is a supply source to be around a long time parent michael: in an action-packed week, the global economies command on the drama. >> it makes us nervous. >> if it continues and it's worse it will hurt. >> on attachable basis i can see the merits. michael: all straight ahead on bloomberg best. ♪ michael: hello and welcome. the michael mckee. this is bloomberg best. your weekly review of bloomberg television around the world. on sunday, italy held a general election. the results suggest that
populism in europe may still be a powerful force. ♪ >> antiestablishment five-star movement seems to be the big winner of the italian election. at current counts, it is expected to win around a third of the vote, but not enough to rule on its own. a right-wing alliance may when slightly more seats, but again it's not clear if they can form a government. the biggest loser, outgoing prime minister in the centerleft democratic party. what exactly happened here? >> the main takeaway of course are the polls before the d were not exactly right. what we understand now is that antiestablishment and anti-people having been in power are stronger than we expected. if the slightest figures are correct the five start movement
, will not be able to govern on their own but would be the party with the highest majority. the biggest losers would be the democratic party. this is the party of the prime minister for the last 18 months here at it is clear that italian, despite having a recovery in gdp growth are fed up. it might be immigration, it might be that they are fed up with old-school politics. they want to change. ♪ >> president trump tweeted this morning that he wants strong dialogue before making a final decision on terrorists. he is getting just that. speaker ryan reiterating today that he is opposed to across-the-board tariffs and reports the president is prepared for gary cohn to quit if the tariffs go through us describe. >> when donald trump came down the escalator at trump tower he talked about tariffs. he talked about free trade being an enemy of the american worker. i think he will stick to it. his getting a lot of pushback from right down the hall in the
executive office. from gary cohn. our terrific white house reporter did report today that donald trump is telling associates that he thinks gary: cohen will quit. >> gary cohn, according to two people, the former goldman sachs president quits just hours after the tariff plan. >> gary cohn has been a grown up in the white house. now he is going. i don't were they find a replacement. >> with him out, you would imagine there is less of a chance of a reasoned response out of the white house. the signals and a potential move that would require hard line. >> what we're seeing now is this battle we have been talking about between globalist and nationalist.
who would win out? i think when steve bannon let the white house, there was a feeling maybe it was the globalist. now it looks different. with gary cohn walking away. >> do you think there is a gary cohn premium in the market? >> absolutely. to the extent that he represented some form of stability and that was the markets interpretation. we have to break it down. with we have done understand the 2017. 2018 is about trade in tariffs. he might not have been the right guy for that because he disagrees with the president. >> having someone like this market friendly, for business, pro-bank, pro-localization and free trait with something the market was on the same page with. the him removed, the question is who will fill that role? not just who will take his title but who will be the centrist
voice on policy and the white house? you don't have that right now. ♪ michael: the ecb holding rates steady, changing some key language today. here is mario draghi is in his own words. >> what we did is to remove the explicit reference to the likelihood of an increase in the pace of purchases in the near future. >> it was removed but markets have responded in a dovish quit. how did he achieve that? >> you saw the euro jump when the policy statement came out, but when he used that had according you purchase there, the europe came off. you can see why. he really did play it down quite some bit. yes, the current paste approach will not go up at least in the near future, but it could well be extended after september.
that is entirely feasible. either of 30 or lower pace. there are still more purchases ahead. >> after a morning of will they won't day, we are now awaiting president trump. he is set to sign a proclamation on steel and aluminum at the white house. pres. trump: today i am defending america national security. by placing tariffs on foreign imports of steel and aluminum. >> this is a bit of a watering down of sorts from the original policy that president trump had initially wanted. >> there is actually quite a bit of wiggle room in these. the administration says any trading partner can apply for an exemption. one would expect that the eu, south korea as well as some others will immediately be applying for those. it remains to be seen whether they will be granted. there did seem to be some dialback as to just how tough the sanctions will be. ♪
>> president trump accepting invitation to meet north korean feader kim jump on -- kim jon g un. >> we are optimistic about continuing a diplomatic process to test the possibility of a peaceful resolution. >> what we have now is a situation where north korea has agreed to everything donald trump has asked for. he has backed down from his refusal down to denuclearization and terms condition that they put a freeze on missile and nuclear testing all along at the same time agreeing that the united states and south korea can go ahead with military exercises which is something he said they had to stop before. it was it does look as if trump is in the driving seat. >> president trump could end up looking like he gave something away by giving him the ability to not get anything. there is a possibility he goes and meet with him and gets nothing out of it and military tensions exculpate.
we will have to see what happens in the coming weeks. ♪ >> it's a goldilocks jobs report. payroll bringing a big surprise to the economy. unemployment holding steady at 4.1%. average earnings rising less than economists were expecting, up 2.6%. pres. trump: the focus of the trump administration in addition to lower taxes has been to increase wages for the working women and working men. we don't see that happening. soon 2.6 is not going to get it done, that is probably the case that the headline of tremendous job report will be tempered by low wages. >> this is a report that will strengthen the argument of some of the doves on the bed. -- on the fed. but this is just one report. in the context of the way the
u.s. economy is going it should not get too much weight in the bigger picture. ♪ is reportedly ready to step down by the end of the year. that is according to the end of the -- to the wall street journal. how successful has he been in giving direction after the financial crisis? >> i think there is a mixed record. going through the financial crisis, they survived. they were among the ones that did not get hurt and hit that much. but then the world changed. new regulations came and appetite for risk changed around the world. i don't think goldman adapted to those as the rivals were adapting. >> is reported that the ceo of goldman sachs might be stepping down as since the end of the year. he is responding and tweet for now. he says, it is the wall street journal's announcement, not mine.
i feel like huck finn listening to his own eulogy. ♪ michael: still ahead on bloomberg best, conversations with two architects on the trade policy. steven mnuchin and peter navarro para. jamie dimon and daniel pinto weigh in on the week's big economic themes. plus interviews with the world's most important used in oil. of next, more of the weeks top business headlines of governing coalition forming in germany. >> it is a strong win for the leader of the social democrats. michael: this is bloomberg. ♪
objectives. >> china setting a 2018 growth target of 28.6%. the key omission was last year's intention to have a faster pace if possible. your key takeaways coming out of china? >> the top lines are that growth target about 6.5%. dropping the line or higher. we got the deficit target as well, coming in at 2.6%. target cut the deficit as well coming in at 2.6%. below what bloomberg had reported. we expected 2.9% and that is what our sources would say. that is below the 3% we saw in 2017. we also heard that they are hoping to see retail sales grow at a clip of 10%. also, some moves potentially to open up some sectors including
health care, education, telecom and new energy vehicles. we have to wait to see the detail. the devil is in the detail. these are sectors that many have said need to see greater foreign participation. ♪ michael: germany's social democrats voted to join angela merkel's next government. it was the largest hurdle and restores a sense of stability. does that show a strong wind? it shows a strong win for the leader. this aspiring leader, in germany's future. really rallied around the rank-and-file. this is a highly skeptical quality going into the coalition. very against it. now, it is out to the towns and villages and got this party behind her. hats off and maybe chancellor merkel also something. >> we want to bring you now to mexico city where ministers are
holding a news conference at the economy ministry after concluding the latest round of nafta talks. >> we are dealing with a large number of difficult issues, very technical issues. i appreciate the efforts made by all negotiators. in spite of this hardware, we've not made the progress that many had hoped in this round. >> robert lighthizer has been insulting at previous press statements, saying he was disappointed at what other sites were offering. today, he seemed to recognize that there had been progress made and there had been good faith on the other side. obviously, they had to throw in the idea of a steel tariff in a dealbreaker, if they come true.
we don't know what will happen with that yet. we will have to wait and see. it was robert lighthizer is that they could do agreements with x ago or canada -- but neither mexico or canada interested. ♪ >> the prescription for growth, buying the drug edelman. the latest in a string of health care deals, we were anticipating that something might happen with express scripts? who were the potential contenders? >> it could have been a number of health insurers. what they are looking for is to mimic the model of indicted health. unitedhealth group in this game early. that diversification strategy has paid off for the company. not just as far as new revenue growth but as far as cost advantages and convenience advantages. it has bolstered its insurance division. if you remember, cigna was a target and anthem was trying to buy cigna. that deal got blocked. it did cigna extra cash. that is why they are the ones making this move.
♪ >> qualcomm delaying a key shareholder vote after the committee investigates the takeover. there has been a flurry of news on this huge deal of course, a $117 billion deal. is it moving ahead are unclear? >> if you were betting that it would happen, you've got some good news and some bad news. the bad news is that it looks like the u.s. government will take a look at this and they don't like the idea of broadcom taking over qualcomm. on the positive side, the return we were able to obtain indicates that broadcom will win shareholder approval for its takeover. ♪ michael: the french insurance seeks to leap ahead of rivals in
the united states. >> since the new ceo, he seems to be bringing us to a time back in the 1990's when they were doing big takeover deals. since then, they have not done much. the last big deal was in 2007. the financing of it was interesting. they are saying they will raise this money, 6 billion through an ipo that they have not done yet. they're wondering if it is really the way to go. talking about the premium, we're looking at 33%. clearly, investors are thinking they are paying a huge amount by the company. will the bet payoff? ♪ >> shares of nordstrom falling by as much as 2%. the board of directors turned down and $8.4 billion bid by the founding family. how much more money can the board get? >> absolutely. that is the key question. right now they're getting $50 per share. the stock has traded about that
for some time. the family saying that is the premium baked in. we are giving you a 24 point -- we're giving you a 24% premium. how i could go? this story broke in june of last year. >> there's a 24% premium baked in. >> what investors that i want $60. this is a difficult deal to get finance. there are not a lot of examples of retail that are highly leveraged doing great. neiman marcus would be your obvious goto example. they are struggling. ♪ >> cvs kicking off the third biggest bond sale with aetna. the move has the at appetite. off to the worst annual start in decades. plenty of demand share, but cbs -- cvs only sold 40 billion.
>> i wouldn't take it as a sign that the deal did not go well. it definitely did. we saw orders of three times what cvs was offering. the demand was there, but it was important to get the pricing solid on such a massive deal when they've been off to a horrible start this year. ♪ >> the bank of japan governor set hitting the 2% target will not trigger an immediate exit. he thought u.s. trade policy is a risk, but reiterated that economic fundamentals are good. >> he was careful about talking about exit. he was asked about the remarks he made about saying it could happen in fiscal 2019, he said the only reason he said that is because there is a high probability that inflation will hit the 2% level at that point and that is why they might do the exit. it is not that we would just automatically start talking
michael: you are watching bloomberg best. i'm michael mckee. trade talks dominated the economic discussion this week. the white house move toward tariffs by president trump. two top economic officials played out the thinking behind these policies conversations with bloomberg. start with steve mnuchin. >> the president wants to take on the trade issue. it is an important economic issue as you know.
china's market is not open to our companies and workers the way our market is open for them. the president believes in free and fair trade but he wants reciprocal trade and fair deals. that is why, when we go forward with the 232, there is a mechanism that will be able to deal with these issues. >> so folks who say this could end up raising cost are folks that say this could hurt economic growth. a site that is a concern some of , them, even republicans. what is your response to those saying it could offset the gains? >> a year ago we were sitting at 2% gdp. lots of people lined up and said we would never get to 3% gdp. we have said all along that our goal is to have 3% sustained gdp. we have had two quarters of it. the president is focused on growth. that is our number one objective. >> does this administration feel
americans will rally behind this proposal? >> absolutely. i think americans understand that the president is were free trade. but free and fair trade. he wants to get good deals. he is the salesman in cheap for american business. ♪ >> are tariffs like the ones on steel and aluminum progrowth for the economy overall? >> yes sir they are. if you look at the experience last month with the solar tariffs, they were larger than the ones where contemplating on aluminum and steel. 30% for solar and to percent for washers. what happened? this is the genius of donald trump. we had a flood of new investment in those industries for the first time in years. we will have a solar industry back. that is making america great again. it's a good thing, sir. >> how concerned are you about whether there will be trade
wars and what it would do to that progrowth agenda? >> so, the president has said this repeatedly. let me echo him. we are the freest trader in the world. hands down. low tariffs, low nontariff barriers. all we get for that is half $1 trillion year trade deficit that offshore's wealth and our jobs. my own view is that all the countries who trade with us are getting the that are part of the deal. therefore, they have no incentive at all to get into any conflict with us. i would hope that our allies would understand that if they want america to come to their defense, we won't be able to do that without an aluminum and steel industry. ♪ michael: that is the word on trade from inside the white house. how do these policies look from the outside? up next we will get a range of reaction from tariffs and much more from some of the biggest names in global business and finance. >> if it is a correction it
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tariffs just undermine protectiveness in the industry globally. it's not a specific issue but an industry issue. the world is in chaos. it is already a chaos. you just have to see how the trading relationships are moving right now at the world. >> we have all relied on globalization and i believe we shouldn't abandoned this good idea to sit together at the round table and see what the best solution is. was a sampling of the opinion on the proposed steel and aluminum tariffs from international auto executives at the geneva motor show.
with thoselso spoke and it intense week of debate. jpmorgan chaseh ceo jamie dimon. she asked if prospects of a trade war could hold back growth. >> it could. it could offset some of the few positives we have had from competitive tax reform. >> was gary cohn [indiscernible] >> i think it's terrible. he was a proponent of economic road. it's good to have the white house. we had an economy run. he is not there. it is unfortunate. i wish him the best. he will be fine. we will see who they put matchup next. >> does gary do next?
>> i don't know. >> who would you put in charge? or who should the president put in charge? >> i don't know. i haven't thought about it very much. i hope it is someone knowledgeable. hopefully they will understand markets, global or allies around the world. it is important that we maintain good relations. ♪ >> we are at an interesting time. to the end ofrs the cycle. markets will be nervous to anything relating to inflation or growth. has beeneyond what announced. >> is their correction at the
end of the cycle or real markets adapt and adjust? >> normally there is a correction. it anti-markets are. trigger.never just one it could be -- i mentioned--for the next year or two. when there is a correction, it correctionbig between 20 and 40%. it just is to be prepared. eedthose times, declines n you. liquidity dries up they need to reshuffle. we know there will be a correction at some point. ♪ ar ee of the things if you
history, it was the advent of protectionism set contributed to the depression. if you look at australians history, the removal of protection really led to australians growth the much more dynamic. when you see this being reversed, the idea of more protectionism makes us nervous. outher you can carve elements, and there are certainly unfair trade practices, but the big concern is a snowball in terms of protectionism. ready expressed some conservative views to where the stock market goes. does this make you more cautious?
>> we gave up on those decades ago. sense.ard to make any we look longer-term. that is based on high valuation. when you have a richly valued disruptsnything that people's anticipation will cause volitility. ♪ this,h a jobs report like does charlie evans say i am more on board with a rate hike in march than i was in december. doingnk the economy is very well. it is likely that inflation will pick up. that is a good thing. my tactical basis, i can see the merits of arguments where we con increase inadual
rates. at a more strategic level, the long. tivenflation below our objec has been difficult. at thee that we spent zero the full bound, it was there for so many years. future, years from now, the economy will have a difficult spell. it is important that we have as much monetary capacity to respond to the difficult times as possible. it is important to ratify 2% as a objective. markets have inflation
objectives. i'm nervous there too low. i believe that by being a little more cautious and waiting to see if the march inflation data comes out in a better waym relative ♪ to a year ago, that could be helpful. thursday was international women's day. several of the most influentialal -- women spoke with us. about trade. you talk to ceos and other businesses. how concerned are they? >> very concerned. concerned that the trade war that could be set off. it follows on the heel of the u.s. tax reform. what is not seen is the u.s. tax reform, to try to get investment in the u.s. kicks off a tax work. how do they adjust to keep their country competitive? when you combine the tax were
with a trade war, it is a combustible combination. i think business fears that could be a race. >> the tax cuts were justified by the team as being progrowth, in large part by growing investment. how with the trade tariffs cut against that? >> it was the filling a campaign promise. those tariffs would hurt u.s. workers. the steel and aluminum users of steel -- there would be a net job loss. it is not the filling a campaign promise. ♪ is there any study out there at all that supports the president's approach? there's the issue that he has identified which is fair. there have been unfair trading practices. the approach. the chaotic approach, the approach of going it on own rather than forming coalitions, that just doesn't seem --there
are a lot of risks to that approach. issue is fair, and a real one, and certainly he has tapped in to voter angst. but achieving the objective, it is a dangerous approach. >> could it works though? it's dangerous, but could it make some of the trading allies rethink about the policies? >> yes. it can work. playing hardball and using the carrot and stick approach, it could achieve certain objectives. it could have unintended consequences along the way. ♪ how does the fed respond to a possible trade war? we're talking this could lead to higher inflation but drag global growth? >> if we got into a trade war,
it would surely be bad for the economy. forfor all parts of it, but most of the economy it would likely slow growth and give a lot of uncertainty to the market. the fed would have to deal with it. aboutave been worrying possible overheating. a slowdown in growth would throw them in the other direction. >> are you inclining towards 2, 3, or three rate hikes this year? >> clearly we don't know the fed will not tell us. they've been dealing with a good economy. tighteningoyment, labor markets, very little inflation and a positive outlook. this uncertainty will give them pause. the fed is always cautious. i read jay powell is a cautious
choice for growth, development, and prosperity. ♪ secretaryhat was opec speaking exclusively with bloomberg. dinner.g a my colleague alix steel covered the event. ♪ challenge for said the u.s. would surpass saudi production. it is real. some of the feelings now is the correspondence going and maybe doesn't have the durability. the message is that this is a supply source that will be around a long time.
this is a going away in five or 10 years. it will be here for a long time. >> for this year you looking at her exit rate to exceed 300,000 barrels of oil a day. aren't you part of the problem? >> certainly you would argue that all the companies are part of the problem today. that is our point. it is a well supplied world. the resource and technology has brought on a lot of mark resource. that's what he had to be prepared for volatility. ♪ nobody has the crystal ball to be able to see what the future holds. it is very interesting. scared?pec seems >> now, i think they see the u.s. as a producer.
did you get the impression chapter extend cuts? >> now. impressive on how they and russia have continued to conform to their cutbacks. they seem very committed to seeing it through. what i like is that they are talking about a soft landing. that gets people concerned. continue a vision to to support price. ♪ >> there has been a huge production increase in non -opec.
in norway, brazil, and canada. why did production their cover so quickly? >> have had impressive cost reductions during the latest year. operational cost up by 30%. last year, we received your plans for development and production. tments made inves deficient for 16 billion u.s. dollars. that is the highest level of investment commitment of all offshore gas regions. quite impressive. >> aren't you undermining opec? >> no way.
where the seventh-largest exporter of gas in the 14th largest exporter of oil. it is still just 2% of the global market. it is not that much. and, we are going forward. we will be an oil and gas exporter for decades to come. unity for oil and gas companies and supply industry in our way is promising. ♪ >> we have such a low breakeven cost at about $19. it will just increase our margin. our objective is to keep the process of our organization moving forward at constant or increasing rpm. >> does it go up if we get a 10% steel tariff? >> i'm concerned about that. the president and administration have done so many good things to this focus on energy dominance.
for our business, that has been in the form of improving pipelines andopening new areas for drilling. itt said, this is not what appears. the oil and gas industry was the goose that laid the golden egg. the pipeline is taking the product away. -- they'rethere all conducted out of steel. ♪ pettyannot be in favor of wars. i'm directly concerned because we are shareholders of a solar company in u.s. someieve the u.s. has put power from the software because one was owned by chinese
shareholders. on u.s.just put a mess companies by some foreign companies that are complaining. the solar market will group. take on the steel and aluminum, the surprise change to organize for mexico, canada, uso. , the othertariffs customer have to pay. >> and the customer might be you if you talking about the pipeline? >> yes. consumers,n is, the the voters, the people we elect. i'm not sure you create or jobs. you don't create jobs by manufacturing in the u.s.. you create just because you have plenty of distributors, people who sell solar panels.
these have a negative impact on the global market and at the end, the question is will it create jobs or destroy them? convinced that you just not good for the u.s. economy, damaging. ♪ michael: another important figure in the world of while spoke with bloomberg on thursday. elaborating on the progress of sodium aramco's ipo. >> the only certain thing about saudi aramco's ipo is that it will happen. b, it will happen at the anchor market will be that the dow exchange and saudi arabia, which is being prepared to not only take aramco shares being lifted, but bring in a lot more foreign
investment. then the importance and central role that london plays and will continue to play, we xit, thepost-bre relationship between these two centers of capital is very important. as far as the second venue of the listing for saudi aramco, if any will be announced in due course. the decision has not been made. >> is the international listing 100% confirmed for this year? >> the international listing will be ready to be made this year. we've said that repeatedly. the company has prepared and the government has prepared for we've created a framework, fiscal and otherwise, regulatory for saudi aramco to be. will beal timing announced when we feel the