tv Bloomberg Markets Balance of Power Bloomberg March 13, 2018 1:00pm-2:00pm EDT
we are watching at this hour. change at state. rex tillerson reads on twitter that he's been fired by president trump, who wants the cia director as the new secretary of state. the first woman to head the cia -- her confirmation may not be a sure thing. pittsburgh goes to the polls. voters in pennsylvania's 18th todayct had to the polls today. to the polls shery: equity markets mixed as we await the result of the 30 year treasury auction. abigail: we are seeing wishy-washy trading here on this tuesday.
the dow trading slightly higher. down --500 and nasdaq s&p 500 down .5%. at the highs, up .7%. pretty decent intraday volatility. it's not clear entirely what the trigger is for it. that is the case often when we see these -- some could be around the uncertainty of the rex tillerson firing. sports on0 on pay -- on pace for its worst two days. s&p 500 trying to climb higher. similar to yesterday, we had stocks higher and then a mixed close. the philadelphia semiconductor index down .4%, off of its lows as well.
president trump did block that big deal with broadcom and qualcomm. we see some weakness overall. some question about whether cavium will get done. we look at the results, we will see this is pretty interesting, pretty decent demand for this auction. 3.1%. the fact that it is a bit lower does point to decent demand. higher than the last auction. the average of the last four is 2.5%. similar to the tenure auction yesterday. -- 10 year option yesterday. shery: president trump fired rex
tillerson this morning. he's replacing him with cia director mike pompeo. this ends a tumultuous tenure with america's top diplomat that was marked with a series of disagreements with the president. >> i've gotten along really well with some people over the last year. i've gone to the point where we are close to having the cabinet and other things that i want. shery: joining us with more is inin cirilli in pennsylvania the 18th district, home to today's special election. tillerson's departure has long been speculated about. there's even a nickname, calling it rexit. kevin: rex tillerson is out after months of speculation about how long he would last.
to takee pompeo set over at the state department at the u.s.'s top diplomat. is was close to pompeo tells me this is something that's been in the works for some time. they feel confident this transition will be one that will go smoothly. earlierident saying that he wants to have his team in place in order to get those deals through. ofe fallout from the firing rex tillerson -- his top aide also fired today, releasing a public statement saying that the timing of this caught rex tillerson by surprise. fueldless, this is giving to the critics of the trump administration that this is an administration in chaos. chuck schumer tweeting out as much, urging director pompeo have a new type of leadership style at the state department.
they inow confident are the 18th district? what's the chance that this seat mayn sweet swing to the democrats? kevin: the chances are very high. republican consultant tells me they are getting nervous about the polls here which have shown a tightening of conor lamb -- rick saccone against conor lamb. behind me is where the lamb campell gather as polls close. dutch camp -- where the lamb camp will gather as polls close. i was with rick saccone earlier today. he was flooded by media. he feels he has momentum on his side. he's running as a conservative. conor lamb running as a centrist
democrat. quite critical of the democratic leadership in washington, including nancy pelosi. joe biden and union leaders comping for conor lamb -- campaigning for conor lamb. a lot of republicans will be watching this and weighing their own political futures. a lot of folks think where i am today is a bellwether for the midterms. david: thank you to kevin cirilli. for more on tillerson's in elire, let's bring lake. andwrote a terrific column you go through this. tell us where it might make a difference. let's start with iran. eli: tillerson with the automatic out -- off madd man
out. he thought it was worth it to stay in the nuclear deal. the audiodd man out. many felt they were getting the best strong addendum to that that they wanted. compare that to mike pompeo who argued for not certifying iranian compliance when this has come up every three months or so republicanhe leading in the house of representatives if not all of congress who knew his briefs so well on the iran deal and would out to visit european capitals to tell them that it wasn't safe from a
sanctions when a view to invest in iran. view toions point of invest in iran. they will have to go back and look at the notes from those meetings in 2016. don't try to get the europeans to go along. willpect that mike pompeo be able to persuade the europeans to reach base sanctions against iran? >> i don't think that is in the cards. the u.s. has a fairly powerful weapon known as secondary sanctions. anybody who does business with iran's central bank or oil industry will be effectively barred from the u.s. financial markets. that is a tough policy to make. it could lead to unforeseen split with our allies on a number of issues coming with the
tariffs announcement. or the threatthat of something less than that is the strategy here that would then spur the europeans to try deal'sess the weaknesses, including its expiration date and the fact that it doesn't do much when it comes to missiles. shery: mr. tillerson called the nerve gas attack in the u.k. by russia and egregiou egregious a. do we know where mr. pompeo will stand on russia and north korea? >> pompeo is a rush a hawk. -- russia hawk. he basically said the cia would be treating wikileaks as a hostile intelligence service. wikileaks was the forum that russian hackers used to obtain stolen the males from the
democrats -- stolen emails from the democrats. combine that with the idea that the pentagon is now giving the ukrainians antitank missiles, pompeo has a lot that's a long history here and he will be tough on russia. tillerson came into the job having won that friendship medal from vladimir putin. after trying to reset the relationship to come back on the same square that hillary clinton landed on and before her we saw with condoleezza rice -- the russians burn us. we are seeing a much tougher russia.n it comes to
tillerson wanted to preserve the option of talks. pompeo over the weekend said it is a great accomplishment. it is a question of tone and style. when tillerson was asked about this on history to africa, he said we are not there yet and it will take a long time. -- on his trip to africa, he said we are not there yet and it will take a long time. shery: coming up, larry sabato jr. will an upset win in pennsylvania indicate a blue wave coming in november? this is bloomberg. ♪
shery: this is "bloomberg markets: balance of power." david: we turn now to mark crumpton. minorityate majorit leader chuck schumer says he hopes mike pompeo will turn over a new leaf as secretary of state and tough policies toward russia and its president, what are potent. -- vladimir putin. schumer says with the firing of tillerson today, "instability of this administration in just about every area weakens america t."
terror suspects were subjected to controversial interrogation techniques known as waterboarding -- the current deputy director carried out in order that the agency destroyed waterboarding videos that led to an investigation without charges. scott pruitt says there could be a showdown with california where lawmakers have led the nation in reducing emissions and air uitt says -- pr the state should not have the final say on setting emission standards for the rest of the country. >> they are talking with us. we will see where it leads. the waiver, i understand california's role in this process, california is not the arbiter of these issues. the epa makes those decisions. california contributes as well.
and can't dictate to the rest of the country -- mark: the epa faces an april 1 deadline to decide whether obama era standards should be revised. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm mark crumpton. this is bloomberg. shery: thank you. let's get more perspective on our top news story. rex tillerson's ouster as secretary of state after a little more than a year. theave larry sabato jr., director for the center of politics at the university of virginia. great to have you with us again. we will get to the pennsylvania special election in a few minutes. how much will these resignations and firings not only distract but also affect sentiments
toward the president and the gop? prof. sabato: i couldn't have imagined when i woke up this morning that the special election in pennsylvania would be the second most important story of the day. you never know in the trump administration. i don't think average people care all that much or even know the players. i do think that those who work with politics and government at home and abroad are concerned that the turnover rate now is somewhere around 40-45% and it's only been a little more than a year. that is not healthy for an administration. you need institutional memory and experience. as far as tillerson is concerned, on the one hand, everyone is shocked that it happened the way it did. another reason to check the morning put her feet -- twitter feed.
everyone knew it was coming eventually. president trump and secretary tillerson have never been on the same wavelength. shery: do voters in these local elections like pennsylvania care about these national headlines? or is it more to do with what's happening within their district? prof. sabato: it is a combination. they are mixed together. president trump that infamous visit saturday evening to pennsylvania 18 to rally for his public and candidate. and up talking far more about himself and making all kinds of inaccurate and controversial statements and using vulgar terms. i don't think he helped the republican candidate, rick saccone. i don't know if he helped the democrat, either. he can't stay on message. when he gets off message, he
damages himself. question goes to the heart of the issue all of us do theseo what extent elections presage what will happen in november or are they all one offs? prof. sabato: do we over interpret every one of these elections? of course we do? it's our business, and profession. the big elections, the alabama senate seat, the virginia governorship, each one is a milestone on this interstate highway to the midterm elections in november. they do tell us things. they give us directions. we can tell which way we are going and how fast. it can change. we will have other special
elections between now and november. it's basically good news for democrats, even if the republican wins tonight in pennsylvania 18. president trump won by 20 points just two years ago. even if the republican pulls this out, it won't be more than five points. that's a decline of 15% in an area that is deeply republican red. david: november will be good news for democrats. that is true of most every time you have an off election. how good is the news going to be? better than one would normally expect at this point? prof. sabato: i don't know. isbody who claims they do blowing smoke. it is too early. there are eight months to go. are this indications
will be a significant gain for democrats in the house. the senate is another ballgame. much tougher for democrats. the critical question is do democrats gain control of the house? if they have one house of congress, given all the controversies we see, think of how the subpoena power, the investigatory committees will be used. with the house intelligence , imittee released last night bet that report is redone. david: seems like a safe bet. , director ofjr. the center of politics at the university virginia. still had, not for sale. president trump shuts the door on broadcom's bid for qualcomm.
sent: president trump shockwaves through the tech industry yesterday after issuing a kick blocking broadcom from acquiring qualcomm. the move likely means the end of the deal that qualcomm has been pursuing since november. --ckling what happens i to explain what happens and why everyone is talking about china. the processwas in of moving from singapore back to the united states. nt's concerns wasus
that broadcom would underinvested in qualcomm's r &d. the government was concerned if they didn't continue to invest in r&d, that would create an intong for china to move this space and gain market share. aery: how common is that sitting u.s. president blocks a deal on national security grounds? >> it is very rare for a deal to go all the way to a president. it has only happened five times since 1990. president obama blocked those go deals -- two deals that involved chinese buyers. trump in the last six months has
giving up earlier gains, a similar pattern to what we saw yesterday after the opening rally that was not sustained. half of the sectors on the dow are falling. health care still up. financials losing ground. yields a bit lower after that cpi data we got this morning. david: markup in here with the first word headlines. mark: president trump says he made the decision to fire rex tillerson by himself. the president said the two disagreed on iran and other issues and will be much happier now. he will be dominating mike pompeo to replace tillerson. succeed pompeo. she will be the first woman to lead the agency. public and lawmakers and say they've received complaints of corruption and mismanagement in
restoring power to puerto rico. say theyican lawmakers received complaints of corruption. summit may have paradise their own homes over hospitals -- myanmar's government is rejecting to reports -- two reports that found they committed human rights violations. the reports were based on hundreds of accounts by witnesses of reported violations and satellite imagery, photographs and video footage. myanmar officials say the information is not credible. hillary clinton told an audience in india that the u.s. did not deserve donald trump's presidency and that he was the country's first reality tv candidate.
if you watch reality tv, you know it means that the person who is the most outrageous, the person who set the politically incorrect things, the person who is attacking drives big ratings. "has quitedent trump an affinity for dictators," she says. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm mark crumpton. this is bloomberg. shery: u.s. secretary of state rex tillerson ousted by president trump today, ending a rocky tenure for the former exxon mobil ceo. the move comes as the administration hones in on trade. congressman tom
rice jr. thank you for joining us on the show. we are seeing a very high turnover at the white house. the you expect -- do you expect a shakeup in the team holding the trade talks? rep. rice: i think he has some competent people involved in the trade talks. experienced,s an proven executive with experience in trade. mr. light heiser has an extensive background. i hope we can keep this team together and bring these nafta talks to fruition. shery: you've joined over 100 house republicans in a letter to president trump to stop these tariffs on unfair trading partners but also expect
concerned about him american minute fracturing. -- american manufacturing. what would your recommendation be here? rep. rice: we have tremendous momentum with tax reform. business confidence at all-time highs, stock market at all-time highs. we done a lot of good work in regulatory reform. i want to build on that momentum with trade. we need to bring these nafta negotiations to a prompt end so that people will have confidence and stability in trade. the tariffs are clearly for bad actors. those bad actors have cost american jobs, they've cost our american middle class. that that make sure is responded to forcefully.
the president has proposed more targeted -- we don't need to penalize our friends and allies who are acting responsibly. david: what are you hearing from your constituents about penalizing exporting states? what is the risk for your constituents that getting into a trade war and having these broad tariffs can drawback the admin just they might get from tax back the advantages they might get from tax cuts? rep. rice: my district was hurt very badly when nafta came into being. it was a tobacco growing area. it is just now recovering. i think that people are very wary of trade agreements in my district.
they also recognize that these jobs aren't coming back. we have a lot of good things going in the district. trade is a very important part of it. if we can get something resolved on nafta, you will see our economy continue to grow in that growth will accelerate. david: you've been involved in these rounds of nafta talks. what kind of progress are we making? what are the odds that we can reach a successful renegotiation of nafta and by when? rep. rice: i think the odds are very good. i have dealt with legislators and bureaucrats and business people and chambers of commerce. with all three countries. butdy has told me anything
we need nafta to continue and be modernized. everyone is on the same page. we are down to three or five big sticking points at every meeting. those are theon, last sticking point to get to. date.t give you a precise the folks in mexico would like to resolve it sooner than later with their elections coming up in. thing and dothis it responsibly and hopefully get it through pretty quickly. shery: does president trump run the risk of facing challenges from republicans like yourself and having people like you distance themselves from the president if his trade war hurts your constituents? rep. rice: i think the president
is doing the right thing on trade. there's no question that 40 years ago, we may have accepted some trade deals that weren't in our favor. anymore.afford it when you ask our trade ambassador what his objectives are -- what would be a win for nafta? he says to reduce trade deficits, to eliminate incentives to offshore, to grow wages and jobs for the american middle class. those are all very good objectives and i support the administration. shery: thank you for your time. congressman tom rice jr. rex tillerson will speak to the press at 2:00 p.m. eastern. we will bring you his remarks when they happen. we will talk up,
david: we've just learned that rex tillerson is about to take the podium at the state department. that will happen at 2:00. it's not everyday that you see a candidate officer fired over twitter -- he will give his remarks. we will be bringing you that live on bloomberg. angela merkel is said to be sworn in tomorrow once again as chancellor of germany. now john emerson from los angeles.
good to have you. let's talk about rex tillerson. give us a sense of western europe and how they are likely to react to this series of events. he was abruptly fired and now, we have mike pompeo coming in. amb. emerson: i was just at the munich security conference a few weeks ago and had an opportunity to talk to senior germans and people from other countries in western europe. in terms of the abruptness, they are getting used to it. that's how this president conducts himself in a new world, the world of twitter. there's been enough press about the trump-tillerson relationship being somewhat rocky, i don't think this will come as a massive shock. when things like this happen, it is somewhat unsettling. people have begun to build a relationship with rex tillerson.
i heard from some folks in munich that there's been so much press about how this secretary of state and the president were not of one mind on so many issues that they were beginning to wonder is it even worth h having a relationship there. having a secretary of state that is of one mind with him on a number of issues might be a positive thing in so far as know can' ability to we take to the bank something this new secretary of state says. david: there were a lot of reports of the morale being quite low at the state department. will there be hope with mike pompeo? amb. emerson: there might be.
this,e dead right about senior people in the state pride themselves on being able to carry out the policies of the new administration. many of them have been through six or seven different administrations, different , are depressed about the lack of respect shown to them. treat theompeo did senior intelligence officers with respect. you can see that in the way he handled comments on the russia investigation where he basically opinionp the unanimous of the intelligence services that russia was involved in our elections and that is the direction they were pushing things. i haven't talked to anybody at the state or any of the former
but there mays, be a sense that as a former member of congress and given the ,ay he's been handling himself there may be a bit of hope there. shery: when it comes to germany, we expect angela merkel to begin her new term there. how big of a challenge will russia be and also just president trump's renewed focus on germany and unfair trade? prof. sabato: the chancellor was quoted -- amb. emerson: the chancellor was quoted on this just yesterday. calm the waters somewhat and just say let's wait and see exactly what these policies are when they roll out. tit-for-tat response is
not necessarily in the best interest of europe or the united states. fundamentally, what makes the most sense is for europe and the united states to reengage on discussions about free trade agreement, which is something that i was deeply involved in, working with her and her team for the last four years. my understanding is that in her first meeting with president trump in the white house, the u-u.s.f resurrecting an e trade discussion was discussed. it is a bilateral trade u.s. and between the eu. that may be a positive direction we could move in. shery: with the european
response increasingly linking those trade deals with the native budget? -- nato budget? amb. emerson: i don't think that is going to work too well. we spent a lot of time talking with the chancellor and with the defense minister and the finance minister about the need to defensethe funding for and honor the commitment that was made in the nato summit in 2014 to get to that 2% level. of negotiations quietly is sometimes more effective than doing it publicly. when you do it publicly, it makes it harder for a foreign leader to go along with it. obviously, this is nothing new. it will continue. when the chancellor went to
washington, she brought with her the heads of a number of german companies that have invested billions of dollars in the united states and are responsible for creating tens of thousands of jobs in the united states. what you are more likely to see is a linkage of german investment in the united states with this whole question of tariffs. shery: thank you for your time. john emerson, former u.s. ambassador to germany. hurt her chances of leading the spy agency? this is bloomberg. ♪
mike pompeo will take his place. michael hanlon is a senior fellow at the brookings institution. we welcome mr. o'hanlon to bloomberg. spend a minute on rex tillerson. he was only there for a year or so. what did he accomplish? michael: he was a steady hand. that's the most positive thing i can say. is in stinks turned out to be pretty good. this was quite a to mulch was year -- his instincts turned out to be pretty good. this was quite a tumultuous year. president trump feels tillerson was off message -- that was usually the president's doing because he would change his own
message. we have to give tillerson credit for being a pretty calm hand for avoiding an exacerbation of any ongoing problems. things could have been a lot worse given the way the president wanted to turn the u.s. trade policy claimants trade policy- commitments upside down. i get tillerson credit for stabilizing policy in that area. that: does that mean that influence may be gone with mike pompeo? critics can expect a more radical approach to foreign affairs? michael: tillerson is closer to the centrist view them pompeo --
than pompeo. tillerson had a shaky relationship with the president. bestimes, tillerson's leverage was in his partnership with secretary mattis. mattis has often wanted to make it clear that he is supporting tillerson. in that regard, you've had some leverage indirectly. pompeo will have more of the president's here. ear.esident's shery: will we see u.s. policy towards russia move forward after being stuck since the 2016 election? michael: it is possible. that will be a tall order. thepresident feels legitimacy of his own election is being questioned anytime we are talking about potent's hand
-- putin's hand in the 2016 race. the president may worry about a potential impeachment scenario. becausethese reasons, all those issues have to do with russia, anytime you talk about russia, you raise these domestic and legal issues. that means you have to have a person who can be tough on russia and realistic about what they've been doing to us and our democracy and maybe pursue new ways to get along. tillerson did that quietly. he had some useful interactions with russian officials. he wasn't able to get this thing to find out ifl there's a possible way to stabilize u.s.-russia relations. i hope pompeo may be capable of that. shery: when can we expect from gina haspel, the new nominee?
michael: she is a career cia officer. she had some involvement in the war on terror -- personally, i think if she's confirmed, she will get beyond that. the cia will understand that she wasn't doing any of that -- her role wasn't something she chose. something she was asked by a previous administration. this is president trump's choice. she willconfirmed, receive a good reception at her home agency. ultimately, her odds are pretty good. david: we've already heard from senator john mccain saying he wants a bow from her that she will not participate in this enhanced interrogation. you have to look for
all sorts of ways to ask the question. senator, i have no intention of doing that. we don't think they work those methods. if there ever were a circumstance that was so extreme , i would want to consult with you. to be that kind of language can allow her some flex ability to knowledge senator mccain's concerns. david: that is michael o'hanlon. shery: rex tillerson will speak to the press at 2:00 p.m. eastern, just moments from now. this is bloomberg. ♪
scarlet: we are live at bloomberg world headquarters in new york. here are the top stories we are covering on the bloomberg. white house shakeup. rex tillerson is out, and mike pompeo is in. we will be hearing from the former oil ceo in just a moment. u.s. stocks, fluctuating, the dollar declining as investors weigh the latest out of washington. we will speak with one of the biggest bears on the street. mike wilson, chief equity strategist at morgan stanley, will join us. let's get to u.s. markets. abigail, the cpi report was a big show, but it ended up being a smaller headline. abigail: we are looking at more intraday volatility. we have the