tv Bloomberg Markets Balance of Power Bloomberg March 12, 2018 1:00pm-2:00pm EDT
welcome to "bloomberg markets: balance of power." shery: here are the top stories. the republican party faces a key test in pennsylvania. president do enough to keep the district in republican hands? the sec endorses president xi's plan to remain in office indefinitely. we talk with the former u.s. ambassador to china. david solomon has been named as a sole president and ceo of goldman sachs, the heir apparent to lloyd blankfein. whether wall street is happy. ♪ david: as we wait for the 10-year treasury auction, let's
check on the markets right now with abigail doolittle. abigail: interesting trading action happening today. the industrial average is down about half a percent. there is a difference of about 1%. the industrial sector is weak today, while tech is going strong. the s&p 500 index, right in the middle. investors are consolidating those gains. is at a another record high on the day. the biggest streak since october of last year. industrialhat weakness, let's take a look at the gains weighing in on the dow. some of this could have to do with the fact that investors are digesting the 10% aluminum tariff, 25% yield terra, -- y
ield tariff. names.a rally for these gains were given back to some degree. all the stocks affected by the tariffs are up slightly, except for boeing. 10-year, $21 billion bonds are brawling a little bit. -- rallying a little bit. this is slightly higher than the issue rate. investors are going to look at that very closely. been 2.883.te had not a big difference, but you now slightly higher, slightly bearish.
2.5% is higher than the last auction, another indication of this being bearish. and the participants outside of the broker dealers, right where we were last time. this option is about where traders were expecting, but maybe slightly more bearish. for more on the results of the 10-your auction, let's turn to ira jersey. he is the chief rate strategist of bloomberg intelligence and joins us from princeton. the 10 year high is 2.889 percent. ira: this is a decent auction.
there is a look -- a little bit more being issued of 10-year debt. the 2.5% ratio is about the middle of the range from the last year. say it is particularly strong or weak, quite frankly. there could be some piling up. higher yields have something to do with that. see thee continue to demand for 10-year has been falling. you were mentioning that supply -- the treasury has to finance is debt. will there be pressure on rates to go up? two-your notes and three year notes is where the treasury
department is issuing most of their new debt. those deals could be much more than 10-year debt. there are more longer-term securities at the treasury department. there is ok demand for that sector. owne are firms that need to longer-term debt for things like pension plans and the like. environment where we get much faster growth than the federal reserve is predicting, which could be behind the curve. david: as the demand for tenure do we get a sense of how much the demand is from u.s. investors for the 10-year notes, as opposed to overseas? 10-year notes and 30-year notes have been domestically driven. not a lot of foreigners by longer maturity u.s. treasury -- u.s. treasuries.
the two-yearred to and three-year notes, often in very heavy demand from foreigners, due to excess reserve purposes. david: a 30 year option is coming up tomorrow -- auction is coming up tomorrow. there is one million more now than there was in january, but they are stable. right now, we are in a study environment. two-year notes are going to be increased by another $2 billion, and another $2 billion in april. we do also have another view on the inflation front from cpi numbers. we also have the fed march meeting. be the key elements
investors will be looking at as they try to assess bond markets? is what isallenge the function of the federal reserve. will next week's statement by the federal reserve is very hawkish? you could see two-year and three-year notes go up and a flexor yield curve, but we have not seen that yet this year. with the clocks shifting this past weekend in the united states, so has part of our schedule. bloomberg real yield will be at 11:30 new york time this friday, one hour earlier than usual. trump won president his 18th congressional district
was responsible for the poisoning. theresa may is putting responsibility of that poisoning on the russian government. david: we will continue to follow this story as it develops. let's go to the first word news. kailey: president trump is to the heart of the anti-trump resistance. the president travels to california. he lost the election thereby a to-one margin. the e.u. will extend a one point $2 billion loan to struggling ukraine. -- $1.2 billion loan to struggling ukraine.
the country has been hit hard by the separate -- separatist conflict, as well as allegations of corruption. according to the bank for international settlements, household borrowing is seen as a danger in china. tiger woods and ernie els will be going head to head in gulf. -- in golf. the two have agreed to be captains act next year's cup in australia. outside players a chance to compete. global news 24 hours a day, powered by more than 2,700 journalists and analysts in over 120 countries. this is bloomberg. david: tomorrow is the day for the special congressional election outside pittsburgh, with a republican state legislator up against a democrat federal prosecutor. one -- won this
area in 2016 by 20 points. we talked to a political strategist about this. this is an important race. the president had a campaign event yesterday. that was the second time he went. vice president mike pence went once. that is a lot of time and resources. the republican candidate has had a hard time raising money. even if they were to pull this off tomorrow, they will have a real problem replicating that in november. $10 million ond dozens of seats that are up for grabs.
president trump should not have had to be in this district over the weekend. seeing thefully first signs of a decay of the parties.wo republican david: is there another aspect of this, it is not clear whether president trump is helping or not. is democratic candidate essentially running against nancy pelosi. does that indicate something about the connection to national leadership? philippe: there has been talk in the house as to whether nancy pelosi should be speaker if the democrats retake the house. i really don't know how much of
a liability she is. with everything going on, whether it is the economy or someone sensitive to i don't think someone is going to make sure nancy pelosi isn't on the ballot. no matter what happens tomorrow, this is smoke the republicans need to take seriously. there is not only one challenger for nancy pelosi. there could be a challenger in the democratic party in washington. the democrat in
pennsylvania said she is not the right person to lead. a great debate to have though, is who should be speaker. has dedicated her life to the democratic party and raised a lot of money. , bringing it up on saturday at the rally, shows you how much of a stretch that they democraticto schlack candidates, with something so inside baseball. hishe confirmed that with ly trying attention to maxine waters. but this is not rubbing off on other people, luther strange, it may not rub
off tomorrow. shery: talk about the appeal of the democratic party. they have yet to see a victory they can take to their constituents. what will they be campaigning on? president trump has basically said he has given up on raising the age limit for purchasing guns, such as what happened in parkland. it is not that the democrats don't have a forward-thinking agenda that is positive, but they are the minority. thatis going to happen is the american people, forget about the historical likelihood of the first midterm resulting in a loss of seats.
you are talking about the party control on all of it. president trump was elected because people want to blow the place up, but they don't like and a singlernage party controlling what they want. there are huge divisions between the white house and congressional leadership. speaker paul ryan and mitch mcconnell probably spend more time fretting over what donald trump is going to say and do -- given chuck schumer and nancy pelosi. he has created a system of a party within a party. he has bounced back and forth between parties seven times. it goes where it suits him. and is a danger in 2018 2020. david: there is no doubt the
democrats can make progress by targeting donald trump. but when i try to put together new jersey, virginia, alabama, and pittsburgh, i have a tough time drawing a straight line. i am not sure they get the agenda. islippe: whether it children's health or something about smart immigration or fair economic equality, not just permanent tax cuts for corporations -- these are things republicans and democrats stand for. blocked this.ve it is not simply a referendum on donald trump. if that's what it takes to win, i will take it. shery: the former advisor to hillary clinton, thank you.
reporter for more on this story. caused them to choose david solomon over harvey schwartz? before named as co- -- both were named as co coos. lloyd blankfein and the board were watching both over the subsequent year. lloyd decided that david had done enough to fulfill the position, and has a vision for how they can grow their business. they reported $32 billion in revenue last year. in thate been stuck range five or six years now. and are trying to grow believe david is the guy to help them do that. he was growing the investment bank, and now will be asked to
grow their other businesses. shery: >> it is 1:00 in washington, 6:00 in london, and two a.m. in hong kong. -- shery: if you take a look at the chart, compared to other firms, the stocks are actually lagging. coming, a long time given that there wasn't a clear direction as to a financial age nda for this bank. has been a focus on training and investment banking by david. they are trying to grow a certain consumer lender, called marcus. lloyd blankfein will step down as ceo on his timetable. theill probably be up to number two to grow the ferment
beyond what we know of it now. -- the firm beyond what we know what it now. david: how are we seeing wall street react? david has in the last 15 months been working hard to meet partners he has not met before, investors he did not know, securities division clients. folks he did not know as a banking head. investors he did not i think it is going to be pretty much like what harvey schwartz laid out in september. they have a $5 billion growth plan. $2 billion will be tied to lending. and sort of getting this online lender market up to capacity. any idea when mr.
blankfein could leave in the next five years? dakin: yes. [laughter] it is a good question. twoould be in the next years. maybe we believe the "wall street journal." that also quite possible it could be by the end of the year. shery: thank you so much for that. bell on goldman sachs. next, we will be talking u.s. strategy with north korea. this is bloomberg. ♪
materials leading the declines. there are gains and losses. energy and consumer stocks are rising. there was a pretty solid treasury auction. a 30-your debts, 13 billion dollars is being sold tomorrow. david: let's go to the bloomberg first word news. wilburident trump says ross will speak to european officials about tariffs on its goods. officials have not said if the tariffs are not fair to american farmers and manufacturers. muelleriller is at -- is at a crossroads. his investigation into whether president trump obstructed justice is a most finish, but he
may put that aside to finish other parts of the probe. reveals other parts of the case, there is worried the investigation down. the bank for international settlements, household farming is seen as a danger in china. it may be at risk for an international crisis. jong-un is hoping to sign a peace treaty when he meets with president trump. he also wants to discuss the possibility of nuclear disarmament and establish diplomatic relations. the details of this meeting have not been worked out. global news 24 hours a day, powered by more than 2,700 journalists and analysts in over 120 countries. this is bloomberg. jong-un wants to sign a peace treaty after meeting
with president trump, according to a south korean media outlet. strategy will be ewing?g -- brte our next guest says this diplomatic engagement resembles a korean "game of thrones." he is with us from washington. great to have you with us. a korean "game of thrones," who is winning? >> we're in a bit of a head -- hiatus. it was like the season with the inevitable clash of armies. starts, and the writers are debating the two kings in gauging with each other. engaging with each other.
but north korea is continuing to build up its forces, but the securities of -- and the security situation has been improving. on the north koreans just trying to buy time until they can go to icbm capability? on the one hand, we have a positive development. north korea will have talks do you conversation, but there will be heavy strings attached. we have been down this road before. we have had eight international agreements with north korea, which all failed. there is skepticism, but we need to continue down this path. the north korean version
of the meeting with the south korean envoy seemed a little bit different. how are they talking about what is happening in washington? dakin: -- seen it thet information from north korea on the south korean readout. that is a little bit worrisome, and certainly something that u.s. officials wanted to confirm in their discussions with north korea. north korea is perhaps willing to talk about denuclearization, as they are required to do under you when resolutions, but they talk about wanting security assurances from the united states, which they have been given over the years. but this has been laden with a long list of demands over the diplomatic,ity, economic, and political concessions from the united states. they could be looking at an
aggregation of the tweety between the united states and south korea. treaty between the united states and south korea. it is hard to figure out what they are saying. it much more difficult is here? united states, they have not been able to build relationships with north korea. who are they talking to? north korea is one of our hard targets. the soviet union is an open book compared to north korea. there were no formal negotiations between the obama administration. negotiations, there have not
been extensive u.s.-north korean contact. u.s. diplomats have tried many times to reach out to north be rejected.o it is making the upcoming summit preparations more difficult. you were called in to help prepare the president -- if you were called in to help the -- to help prepare the president, how would you go about it? the cia is responsible for conducting leadership analyses of world leaders. we pulled together all the information we had on kim jong-un from any source, but there are very peak -- few people who had direct access until the south korean delegation. we would want to identify kim jong-un's idiosyncrasies, decision-making process, how he responds to others.
go into the history of north korea possibly negotiating record -- of north korea's talkiating record, and about the status of north korea's nuclear weapons. david: thank you so much for your time. inger fromgers -- kl the heritage foundation. next, we talked to professor gary locke, here to talk china and china relations. this is coming up next. ♪
plans for the trump administration. americans know china better than professor gary locke. u.s.e he was posted to ambassador to beijing, he served under president obama and two governors for the state of washington. he comes to us today from seattle. thank you so much for your time. let's start with the big news of the weekend. limitsre no longer turn for the chinese president -- term limits for the chinese president. how does that change or not change u.s. relationships with china going forward? professor locke: this does not policy, butchinese
if you care about trade, opening up the economy with the west, there could be greater continuity and more of the same. if you quit -- are concerned about the site china -- south rights andnd human transparency in democracy, you ought to be concerned. he has imposed a more authoritarian and militaristic regime. if you are concerned about those things, his unlimited term might be troublesome. david: u.s.-china trade. we have section 301 proceeding. there could be a hundred billion dollars reduction in the trade deficit. how could that open up the markets? professor locke: in some ways,
we need the help of all of our world toroughout the impress upon china it needs to open up its markets to foreign investment and competition. so many parts of the chinese economy are closed off to american and foreign economies. china will say, we want to buy more stuff from america, but you will limit what we can buy. should open ups the chinese market and address those issues of what they want to buy from america. shery: i had a chat with an analyst from siegel investment management. brexit, heare about only talked about president xi abolishing term limits. >> if we went back in time 10 or 15 years ago, the economic development of china would lead
to a convergence between china and the west. we are seeing a deeper trance. -- divergence. shery: should this accumulation of power around president xi be positive or negative for reform? professor locke: this could reform policies of reducing the inefficiency of government-owned companies. we will see that president xi will move in a steadfast manner in terms of reforming the chinese economy. seeyou are also going to him in power, much longer. he has huge ambitions in terms world,a's role in the developing political and strategic connections with other countries. there are multi trillion dollar
initiatives in providing assistance and loans to countries in asia and south africa and eastern europe. these will facilitate closer ties between many other hina and take,c them away from the influence of america. when you are advising u.s. and chinese companies, that is the biggest advice you would give these firms -- what is the biggest advice you would give these firms? i amssor locke: encouraging chinese companies involved in the united states to be better corporate citizens and have a stake in their employees. they are providing hundreds of thousands of jobs for americans, when they take over troubles, and revisempanies
them for increased manufacturing in america. for united states companies doing business in china, i would help them navigate the bureaucracy in some of the discrimination they will face in china. protections for intellectual property that will help them you successful in china and create jobs for the people back home in america. -- that will help them be successful in china and create jobs for people back home in america. david: south korea and the united states are going directly into north korea. what is the role of china in the discussions? china has been: a key ally with the united states in imposing sanctions on north korea. china has gone along with all the other united states resolutions, imposing sanctions and penalties on north korea. sometimes china does not comply. by and large, they have reduced
their aid to north korea. china will be a key player and in what everle negotiations produce. one of the key concerns that north korea has -- is the united states going to invade, along with south korea and north korea, if they were to give up their nuclear weapons? from chinauarantees and possibly russia in protecting and defending north korea were toh ever disarm nuclear weapons. insistedm jong-un has on the security of north korea. if there was a deal to be made on china, what would be the guarantees? professor locke: it is so important negotiations -- there are so many
issues that have to be resolved. it will require the participation of japan, south korea, russia, china, north korea, and the united states. china used to be a leader when it came to sheesh and north korea, but president is expected to meet with kim jong-un. the chinesecke: have long wanted the united states and north korea to sit down together. previous administrations had it taken the position, we're not going to sit down with north korea until they give up their nuclear weapons. north korea has continued to their nuclearst weaponry and develop greater capacity and capabilities.
diplomacy is always the best avenue. two have -- to have the two leaders meet directly could get respective subordinates, diplomats, to start negotiations. it will not be solved in a one-time meeting, but it is a start. shery: you mentioned japan. they have never been too happy with cozier relations between the united states and north korea. could there be resistance coming from the japanese? the japaneseke: have much to fear and be concerned about if north korea were to develop nuclear of -- the, the ability to launch a particular warhead. they have been working with the united states, along with south
korea, and trying to put pressure on north korea to stop its nuclear capabilities. china wants stability on the korean peninsula, which is why they don't fear north korea ever launching an attack against china. china does not want the collapse of the north korean regime, where you have the democratic forces aligned with the united states on the very border of china. they see a communist north korea as being a buffer between south korea, japan, the united states, and china. , thank you sodor much for joining us. coming up, special counsel robert mueller's investigation into interference in the 2016
markets: balance of power." said theeresa may ex-spy poisoned in england was exposed to a military-grade nerve agent. >> russia conducted a state-sponsored us nation -- assassination. the government has concluded it is likely that russia was responsible for the act. shery: the announcement comes less than one week the four ressians vote in -- befo russians vote in an election that will almost grant vladimir
putin a fourth term as president. david: special counsel robert mueller is reportedly at a crossroads. his investigation into whether or not president trump obstructed justice is almost finished. put this aside while he looks at other parts of this probe. let's go to our reporter. not act on his conclusions right now? lookingnvestigation is at obstruction, the russian interference into 2016 election, other elements going on like the rt,estigation of paul manafo michael flynn, investigation into dnc hacking. on whether or not president trump obstructed justice by trying to interfere in the investigation of the justice
possiblyt into russia, by firing former fbi director james comey, could be nearing an end. mueller hassel requested thousands of documents relating to the events and is negotiating with president trump's lawyer the terms of an interview. you would want to have all your pieces in place when interviewing such a high-level figure. might not get any sort of conclusion anytime soon until what his findings are. david: it is dangerous to try and infer what bob mueller is trying to do. if they are ready to do an interview with the president, does that mean the president is
only subject to questions of obstruction of justice? not collusion or hacking? shannon: we cannot read into that. dnly the president's lawyers an topics's team knows the that will be discussed. but if this interview could be -- this interview could be very wide-ranging. even if they come to a conclusion when it comes to the obstruction part of the probe, is it likely he will announce that first and wait for the other parts of the puzzle to come together? shannon: that is why you get into a bit of a game of chesse. chess. game of
witnesses may have made false statements. there are pieces that could interfere with other parts of this investigation into conclusion -- into collusion or hacking. if you charge someone with causection, it could witnesses to be less cooperative. david: thank you so much, shannon. cause witnesses to be lesssign-up forf power" newsletter to get the latest on politics in your inbox. the chiefing up next, investment strategist at brown brothers, and tv is your function. this is bloomberg. ♪ retail.
under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store
.elcome ♪ >> we are live in bloomberg world headquarters in new york over the next hour. here are the top stories we are covering on the bloomberg and around the world. plenty to ponder, u.s. stocks mixed. line, meet the man known for his taste for fine food, wine and music. and dropbox downgrades expectations b of the silicon valley company reins in its goals i had of the market. we have stocks closing in two hours time. n interesting divergence. the nasdaq today putting in yet another all-time high.