tv Bloomberg Markets Balance of Power Bloomberg April 2, 2018 12:00pm-1:00pm EDT
here are the top stories we are watching at this hour. to the second quarter for u.s. stocks as major averages are falling around 2% as of now with the nasdaq the biggest decline or. -- as itse standoff gets ready for more to come with broader tariffs to punish intellectual property of users. democrats think they have a good chance to take over the house in november and al hunt has what it will take. ♪ david: breaking news as markets tumble on the first day of the second quarter and here is abigail doolittle to take us through it. abigail: stocks are tumbling and a selloff note best the dow, s&p
500, and nasdaq down and up just andtly for mixed action, now we see these huge declines. this is a familiar theme for the year or we had intraday volatility that has led to downside. is amazon as today shares are down 5%, the worst day on the year on concerns company could be regulated. of ais a continuation thing around facebook, and that is one of the big pieces of uncertainty investors arguing. it is having an effect on a sector composition standpoint. let's hop on to the bloomberg for grr on the s&p 500 for the year. not long ago, 10 of the 11 s&p sectors are lower and earlier today discretionary had been up of 3/10 of 1% and it is now lower. take a look at tech -- the
fade and starting to it is very bearish they have all the sectors lower and may suggest the selling action could continue as there is really no sector to rotate into that is outperforming on a positive basis considering we had so much weakness. this is taking a technical pole. last year when tech and consumer discretionary's mercy for strong and we had a beautiful uptrend and the s&p 500 was being helped by the buyers about the moving average, january is very strong. along andebruary came lots of volatility withhip sawing through major averages. pouncing on buyer session with the s&p 500 well below its 200
day moving average in a definitive way. tolooks like it is likely close below to 200 day moving average for the first time in 2016 and 2015, pointing that more selling action could be a head. selloff mode in place. and also tesla along with some of the other car companies, tesla is a big drag on the nasdaq, down about 5% with concerns around the company's cash burn and model three problems. we have other companies down and there's concern of companies reporting monthly sales, plus there is an interesting point " subprime that the buyers are slipping away." we have retail under pressure as down,- under armour is
and on a data breach, hudson bank says 5 million users are affected at saks fifth avenue stores and lord and taylor, and for under armour, it is my fitness pal, 150 million accounts breached but not financial information taken. there.ot of confidence david: thank you so much, abigail. we will continue to monitor that and information as it develops. one thing affecting markets is china and china made its next move over the weekend, increasing tariffs on 128 u.s. products in response to washington's action on aluminum and steel. for a sense of where this may aldon, who is ed also the author of the book,." failure to adjust."
with us, for being let's start with the basic question, china has imposed tariffs on 128 products, is a total of $3 billion of products. is not actually that much money. is it enough to balance the trade deficit? clearlyi think this is an opening salvo from the chinese to send a message to the trump administration that if you hit us with tariffs we are going to hit back in kind. so far the trump administration hasn't done much with respect to china -- just fairly small tariffs on steel and aluminum and this is a proportional response from the chinese. whereestion is if this is it stops or this is the beginning of a series of sanctions. david: we heard there will be sections coming in and there is a deadline for this friday for robert lighthizer, the trade representative to come up with a list of products.
that thehat we know is u.s. trade representative's office is going to publish a list of products, and the markets aren't to look carefully what products are on that list. we have a two-month window before that u.s. pulls to trigger on any of those tariffs. timeoffers this period of to see if any resolution can be reached. it is going to be difficult but we saw last week the u.s. and korea reached a deal to modify their free trade arrangement. korea made small concessions, so there is a pattern here that the trump administration threatens action and tries to see if it can negotiate an adequate deal. think a serious effort will be made with china on the front. david: we have any information on what efforts are going out? robert lighthizer had written a
letter that will like to get the trade deficit down best we have a sense of if the chinese responded? edward: i think there are clearly negotiations going on within a couple of days of the original tariff announcement from the president. we heard from the chinese that there were talks of the u.s. and secretary mnuchin and ambassador nikki haley kaiser has been involved -- and ambassador like hauser. we recognized some of the u.s. concerns, and on the other hand they say if you hit us, we are going to hit back in kind. to take it tong the u.s. course the way this was has done, we are going to hit act in kind so the chinese are sending a double message and we still know how that is going to play out over the next couple of months. david: has president trump succeeded in what he wanted to accomplish in making this bilateral instead of multilateral -- we know that wto is there to resolve this trade
dispute. are we really breaking down the multilateral approach to trade that has taken place since world war ii? therd: we are taking down approach since the creation of beingo in 1995 -- this is taken outside of the rules of the wto and is not too dissimilar of what happened with the reagan administration with japan in the 1980's. this is trump's playbook and he wants to use it as a lever to force a deal he believes the u.s. cannot get otherwise. over u.s.hammer trading partners and see what he can get. there is no question this is a trump trade policy. it is how we talked about trade for several decades now and this is how he wants it to play out. david: go back to the reagan eric and what happened with the japanese. my recollection is that it had to do with steel. is he trying to protect these
industries? although, --, auto, semi conductor tools. in terms of overall capacity it has been where it is for 20 years, so the trade actions against japan did not revive the steel industry anymore than these trump trade actions will revive the industry. it may prevent some further decline, but you cap look back at the 80's and say there was a magic bullet. the closest is the semi conductor case for you a japanese market that was genuinely closed to very competitive u.s. products in terms of semi conductors. the reagan administration forced that market open and has stayed open ever since. there are a handful of successes from that era to look at. david: what would you look at next? this will goll if into a full-blown trade war or if this is a tit-for-tat in
negotiations? edward: if you look globally, the trump administration has exempted some countries from the steel and aluminum tariffs. our nafta partners in canada and mexico and the european union is now facing a may 1 like that it administration says it wants to see concessions or tears would put in place. i will watch that, and if there is hundreds in nafta by may 1, i think that if not, it looks back with progress. but china is clearly the toughest nut to crack. and also, not an ally in the same way these other countries are. i still think the china piece is going to be by far the toughest here. thank you soden, much. the president new favorite punching bank, amazon,
david: this is "bloomberg markets: balance of power". -- first world news we turn >> the white house concerns a summit meeting between president trump and vladimir putin is in the works in the not-too-distant future. president set the almost the white house for a summit. adviseruse economic gary cohn says businesses last week on the job, he told bloomberg news will join a meeting with kudlow and
president trump and could go says he doesn't expect major changes. china says previously announced tariffs on u.s.. imports that affect today. beijing targeted $3 billion worth of american products, including pork, wine, and certain fruits. the white house has opened its gates for the biggest social event for the year, the annual easter egg hunt. of 30,000 adults and children attend, and it dates back to 1878. global news, 24 hours a day, powered by more than 2,700 journalists and analysts in more than 120 countries. this is bloomberg. the markets are moving in the first day of the second quarter and with a check of where they are we have julie hyman. at one point the nasdaq
was down 3% but all three major averages are hovering around their lows. divergencesaw a between the doubt and the nasdaq that we saw last week, in other words the dow wasn't down as and not seek a magnitude of declines as the nasdaq, but all three major averages are down i at least 2%. -- all three major averages are down by at least 2%. magnitude -- of consumer discretionary which areudes amazon and netflix falling today, as well as tyson over, which is down concern of tariffs being imposed by china, and the selling of oil prices exhilarating today. rebound, a lot of
selling going on. even groups that are little more defensive are lower. utilities and real estate and consumer staples. i want to point out what is going on with the 200 day moving average. this is a crucial level that investors are watching, it is the pink line that we broached back in earlier february and then bounced back up. stocks, a support for and some of the selling today is going below it. a note on this, pointing out that even if you are not a technician there are technical sell one that 200 day moving average is broken. we could see a acceleration based upon those programs. later be back little bit as we update you as we continue to see the selloff on the first day of the second quarter. david: we will keep watching
that very carefully, it is a bit bouncing off and today it is not. up hisnt trump has attacks on amazon can a fresh round of tweets this morning, saying only fools or worse are saying our money-losing post office makes money with amazon. and ourl be changed, taxpaying retailers are closing stores all over the country, not a level playing field. the tweets storm at the top of the trading day sent shares down -- and senator marco rubio has supported the president saying a potential new economy monopolies will require closer monitoring. it has met lower prices, long-term it could mean less competition. is there a legal case to be made against the e-commerce giant? bloombergnior antitrust analyst.
marco rubio is calling it a new monopoly under antitrust laws, to the justice department go after amazon? lost itnk with existing will be very difficult, the body of law hasn't grown enough as cases have gone through the court. high bar ints a difficult standards to meet approved a company is a monopolist under antitrust laws, that is a part of the reason you see some calls by democrats for a change in the laws are a reassessment of the antitrust laws to better apply the way they would say it to these kinds of companies. david: changing the laws is one thing, that is difficult. the force point -- if you look at amazon shares in terms of e-commerce retailing, it is a very big share and has gained faster than anybody else. it looks like a monopolist. does it look like a monopoly power? jennifer: just being a
monopolist or having market power alone does it violate our laws. a company can get there by using skill and business acumen and better efficiency than others. it can become dominant or even hurt its rivals. as long as it hasn't done that using very specific predatory or exclusionary tactics. what it depends on is how the dems on get to where it is? exclusionary practices to hurt rivals and keep rivals out. or did it get there because it is efficient? david: come back to what the president is saying about the u.s. post office. amash on ships stuff to us. it can't be making money on that, is net below cost pricing on the shipping and isn't that a purgatory act? -- predatory act? jennifer: you can violate antitrust laws, but to be
honest, of all kinds of conduct that they may cross the line on, that is most difficult to prove because it has been proven they are selling the low-cost and you have to look at what that packages and are they truly selling below cost? that is hard to show, but he also have to show the intent is to ultimately drive out all of your rivals and get a monopoly position and recoup what you lost by raising prices. these are very difficult things to show and these are rarely if ever successful. david: it's takes us back to capitol hill to change antitrust laws. jennifer rie will be staying with us. here is a look at the stocks right now, all major averages down over 2%. the dow is down five and 30 points and s&p 500 down 63. will continue watching this the first day of the second quarter, which is not starting off strong for equities. this is bloomberg. ♪
david:david: markets all falling, and we will follow that closely, but first we'll talk about walmart and it has a deal with humana on medical plants, and this could be expended even to an outright merger cost over $50 billion, and this comes in the backup of sickness seeking to combine with express scripts. taking us through all this, we welcome zach covers health care for bloomberg. zach, welcome. tell us what could be going on with humana and walmart. >> what we know is walmart and humana are talking about doing something closer together. it could be a joint venture, and there have been reports they could merge and walmart with acquired humana come we don't know what form it will take. the idea is to take more of omar's customers -- more of humana's customers and take them
to walmart. maybe put doctors and walmart stores and get care for humana customers in walmart stores. david: why do they need few manna? humana?o they need >> they want to provide care to customers in stores, and why do they need to manna, that is what investors are asking today. what is the point of merging if you have a tighter partnership? that is unresolved and that is why from what we are hearing it will be a joint venture and closer partnership rather than an outright deal. about thenifer, what antitrust aspects? is there some point where antitrust says we are getting too much consolidation? jennifer: it is something they will absolutely keep in mind and think about as they possess a deal. have to remember that each deal
is different and assessed on its own merits. when you look at this one in particular, you don't know what they're going to do here, but when you think about what zach was talking about, it looks like it is open expanding and it will bring more care and better benefits to consumers. that from a antitrust perspective, it is a plus. david: if this went through, would i pay less for prescriptions? >> that is what they are saying. walmart and humana already have adeal, you can pick up generic prescription at they walmart pharmacy for either four dollars or one dollar. it brings people to stores, and the idea is -- bring people to stores. this raises a lot of interesting possibilities. could you have doctors and nurses and stores to provide care for more umana members? these are customers who are older, so bringing nurses or
doctors and to stores could be a ase look at getting care they go shopping. it makes sense. david: thank you so much. up --n the selloff coming over 500ones is down points, and other major averages are down over 2% across the board in the first day of the second quarter. live from new york, this is bloomberg. ♪
and down more than 2% across the board. we are seeing lower than average volume today and this being the day after easter and spring break for many school districts in new york and across the u.s. while you may is lower but trending up brought the day as we have seen the selling x laurent here. we are seeing selling accelerate. focus is tesla, tesla shares are tumbling and bouncing off of lows, still off by 2.5%, but down by more than 6% during the day. the auto website reporting in the past few moments that tesla production of model three is now at 2000 vehicles per week, which would represent an uptick but below elon musk's target of 2500 a week. itsa is set to report
production numbers between now and the next couple of days and is one reason the stock is falling around pessimism on that. and the fatal accident involving a tesla vehicle last week, apparently the autopilot feature was engaged, and elon musk came under criticism for tweeting some april. jokes yesterday, including joking that tesla has gone bankrupt. a asset check your, crude oil prices falling as we see the risk off sentiment. gold is catching up and up 1%, selloff as heeing go up one basis point. is at 23 asthe vix we see elevated levels of all of healthy. david: katie lyons is with us with first world news. >> president trump says mexico
has power to stop refugees from entering the country, the president said mexico must stop and there are reports refugees are making their way through mexico hoping to seek asylum in the u.s.. president trump threatens to pull out of nafta over the flow of people and drugs. --mer catalan the greater leader says he is not a criminal and independents is based on democracy and nonviolence. he made the comments in an interview from a german jail where he was detained on a european arrest warned and is accused of rebellion and authorizing and unauthorized referendum. american factories expanded at a slower pace in march and --klogs were at the 14 euro your high. droveile, tariffs measures of material prices to
the highest in seven years. in south africa the former wife of and that apartheid crusader nelson mandela, has died. while her husband spent years in prison, her legacy was later tainted by kidnapping and front allegations. she was 81. global news, 24 hours a day, powered by more than 2,700 journalists and analysts in more than 120 countries. i am kailey leinz. this is bloomberg. president trump environment putin discussed holding a summit at the white house according to press secretary sarah huckabee sanders who confirmed kremlin reports. joining us now is kevin cirilli. time forn interesting a summit given the fact we kicked out a lot of their diplomats, and they kicked out a lot of our diplomats. what will they talk about? kevin: they could be talking about the arms race.
public statements from president trump himself following the telephone call between vladimir putin and president trump on march 20. out a ziput congratulatory call from president trump on behalf of community 10 winning reelection. was said at the time that the arms race might be something that they talk about in the future, but he didn't specify where that would be. there has been some developments in u.s.-russia relationships since that call, the treasury department joining nato allies overseas and sectioning russia for that chemical attack against a former agent. the administration sectioning more than 60 russian u.s. based the romance, believed to be russian spies and closing the russian consulate in seattle.
flashforward and this morning you have moscow saying that could take place your at the white house. that besters saying reiterating what trump said weeks ago. should they ultimately meet and have that summit here in washington, it would be remarkable given the tents relationship between russia and the u.s. david: is there any indication when this may happen? --in: according to sources whether or not this happens before midterms, but also before another meeting that president trump has said would like to have, and that is with north korean dictator, kim jong-un. sources in the intelligence community have said that any type of peace talks or denuclearization talks with north korea has to include not only china, but also bringing north korea -- i am sorry, russia to the table to broker a deal with north korea as well.
david: kevin, thank you so much. and we will check back in the markets, we are coming up a bit off of the lowest of lows. the dow jones is 2% down. the nasdaq is leading the way by and large, and we continue to watch this market selloff to see how it develops. live from new york, this is bloomberg. ♪
are down in the first day of the second quarter. democrats have high hopes to take over the house this november, but do they have a victory plan and do they need a victory plan? here to explain is the man knows washington like few others, al hunt. it is great to have you on the program. you have a terrific column out now chastising leaders of the democratic leader of how they are acting. time,er a short period of there is some mindset problems that really are looming, and that is what i tried to write about. when is the speech hillary clinton gave in which she said the people who voted in may are optimistic and in the productive parts of america, and the people who voted for donald trump are the people who don't like like
people getting ahead and don't like women getting jobs. that is a prescription for a democratic defeat for as far as the eye can see. you can't win an election comfortably without getting some of those white working-class voters. barack obama got 36%, she only got 28%, and that is why she lost. when you tell people you don't like them or don't respect them, they tend not to vote for you. david: [laughter] that is profound and makes a lot of sense. you saw the contest in pennsylvania where nancy pelosi became an issue. is it time for senior leadership to say it is time for some younger people to come along with different views? have a problem as far as leadership in the house is concerned when it comes to age. pelosi has been an effective leader, but when you have a change coming back that is a
problem. hillary clinton would be better -- a thinkomeplace tank, and thinking right thoughts and commenting. i think the india speech suggested -- it is a danger for her and the democratic party. the other problem is joe biden, if you hurt donald trump talk about what he did about women in high school, he would take him out in the backyard and beat him. you can't get into the swap with the swap monster. you can criticize his integrity policy and lots of things, but when you get into the swamp with dirty with him. david: looking at the race so far, it looks like it was issues
in the particular districts that was involved. al: it is a question if there is a hide or waive -- tide or wave. not be enough for likeol, if there is a wave 1994 or 2006 or 2010, then they will pick up more. i think most house races will be decided by those individual contest, but those 20 or 25 that will make the difference will be -- there will be some incumbents would ordinarily when i can't survive a wave. david: let's talk about the issue of dreamers, the president was tweeting this weekend he is walking away from back to and could a deal -- daca, that have a affect on key races? al: look at florida were there is a big senate race and a growing latino publishing that
does not vote in numbers that is representative. you have new residents arriving from puerto rico. if he inflames tensions there, it is conceivable that could mean two or three points in a general election in that state. on the other had obama is looking at energizing his base, and both immigration and trade and a couple of other hot button issues, and yes taking a gamble you can keep true believers to turn out and a lot of republicans are worried if that is the case. david: bloomberg covers markets all the time, apply technical's to the election. as an off year election, the majority party loses a number of seats, enough seats in the norm to actually switch the house. are democrats going to win on the technicals? al: the technicals are there in the losses tend to be more in
the six year cycle of a eight-year presidency, but the loss in the first term too. the fundamentals are with the democrats this year in two or three ways. trump remains remarkably unpopular, he has his base with him not much of the rest. the technicals and fundamentals that you talk about -- the democrats have accrued a lot of good candidates. disproportionate number of women, veterans, and women veterans. a marine pilot woman, they have interesting candidates, by and large that is good. if they have primaries and the least attractive candidate wins, that is a problem, i would rather have too much and too little. david: al, thank you for your time, it is always a treat to have you on. to leadarks a campaign the mexico's july collection for
the next president and polls show the popular candidate is the front runner, followed by owner finance minister of the current ruling party, a national action party. join us now from mexico city is our next and government reporter for bloomberg news. take us through this. right now we know who the leader is, how will this playoff between now and july 1? the latest poll today cut him more than 20 points ahead of the second and third place, which is a huge margin. the campaign has just kicked off, so anything can happen. back in 2006 when he ran, he was also ahead in march, and in april it's one the other way and he ended up losing.
it is not too late and it is still anyone's race, but he is the man to beat. david: we hear a lot of concern in the business and financial committee about him, is he moving at all on his policies? bite was climbing down a for a few months, and then once he saw himself in a comfortable phase and ahead of everyone else, yes opened up more of what he wants to do. he is causing concern for investors on two topics, one is energy reform which he says he drillto hold auctions to for private companies. he also wants to cancel a $13 million airport project and move it to a small naval base instead. those are two areas investors are concerned. david: we hear a lot from our
president up here in the u.s. about what is going on with mexico. over the weekend and this morning he was tweeting and condemning mexico for not closing down the border for a caravan of people calming and. -- will the trump tweet situation had any affect in mexico at all? >> it did a year ago when there was a nationalist surge we saw in mexico is a backlash. to trump. now the local issues are taking over and there is a lot of corruption scandals and poverty is stagnant, wages is stagnant, violence is very high. those are issues taking over now. david: thank you so much for reporting from from mexico. next, two fighter jets that outpaced the rest, and there is a problem the weapons system and that glaring flaw in and we takes,
david: this is "bloomberg markets: balance of power". continued breaking news of u.s. stocks falling around 2% to start the second quarter, although they are off of session lows. here with details is julie hyman. julie: we are off session lows that it remains relatively steep in selling here of what is a new volatile environment for the u.s. stock market. it is a broad based risk off sentiment we are seeing today both in stocks and other assets, particularly oil, which is
seeing a sharp selloff. i am watching volume closely, and that is below the 20 day average for the s&p 500. we are seeing raleigh negative as stocks bounce around near the bottom. here is a look at the intraday move in the s&p 500 going back to the beginning of thousand 15 -- 2015. the red line is the barrier and we had a period of calm, and now they have come roaring back. not that it happened to the up and down side, and we have a 2% decline. ies of more currenc swings, so it is difficult to suss out in the individual date when you have increase in volatility. in terms of other things we are
watching today, some subgroups are seeing steeper declines than larger averages. we have bio techs which see risk aversion on days like this as they tend to be momentum stocks. downervices stocks are sharply along with oil prices. in semi conductors as well, which had been outperforming and leading some of the gains so alsoly and technology, underperforming the broader market today. biggestmerica's two fighter jets, the f-22 and the f-35 are miles beyond the rest with superior capabilities in speed and range. what sets them apart are there advanced sensors to share information, except not with each other. let's bring senior analyst from washington with more. how did we get this far with expensive planes that can talk to one another? >> one of the problems is the
time of development. the f-22 came in operation in 2005 and the f-35 came online in operational for the air force in in 2016. part of it is a lag in development times so the f-35 is a newer jack and sometimes that makes it hard to talk to older stuff. david: can be fixed this problem? these planes are terribly expensive. robert: the f-22 was at that price, butthese planes are terry the f-35 is half of that and the are trying to bring the price down. these things can be fixed, but your definition of reasonable is an open question. but with enough money and time they can fix these things. there may be fixes that are already lamented on the classified side or workarounds
that make it around the problems. you have to spend money and time to fix it. david: this raises questions of the way we design these planes and if they were appropriate for them. work reforms required in the pentagon? craft: the f-35 is an and first conceived in 1993, and it is going to be flight until 2070, and people are questioning if we should take that long in committing to one aircraft for that long of a period of time. david: how big of a problem with this be -- was it the that they would operate together in combat? but reallyolutely, in the cases of a high-end threat, what the pentagon is worried about with a conflict with china or russia. we will not need to deal with this capability and the middle east or afghanistan, but with a
high-end threat there is a requirement for the two just to work closely together. david: as accountability for a practical matter, in a private company a ceo would say how do we get to this, someone should have anticipated it? they are both made by lockheed martin, and there is a issue of cost and you want to modify it. some problems can be anticipated, but sometimes things just to change. the technology is advancing at a rapid rate so it is tough to project what you might need five or 10 years into the future. to anticipatedrd but not hard to anticipate that they have to talk to each other. isn't that a specification problem? robert: it could be that when they look back at the requirements why didn't they talk to each other? that is perhaps something that could have been foreseen. rob,: thank you so much,
for joining us from washington. senate to the balance of power newsletter and you can get the latest on global politics in your inbox every single day. as we go out another check of the markets on the first day of the second quarter is back down, all over 2% down. the dow jones down -- the s&p down almost 60 points at two and a quarter percent, and the nasdaq down 170 points. continue with bloomberg tv as we followed this market story closely as the markets selloff. live from new york, this is bloomberg. ♪
lady hosting the easter egg, roll . daca provide temporary protection to immigrants brought to the u.s. as children. mr. trump into the program last year, but gave congress six months to pass new legislation. in egypt, officials say that the president has won a second four-year term with more than 97% of the vote. turnout was 41.5%. there was a string of strong candidates who with a jew under pressure or were arrested. his sole opponent was a little-known politician who may know effort to challenge him. the nobel peace prize winner manella is in pakistan today, ending a surprise visit to the country. her first trip back home since her attempted murder, being shot by taliban militants by promoting education for girls. she returns to permanently return to pakistan after comple