tv Bloomberg Markets Balance of Power Bloomberg April 3, 2018 12:00pm-1:00pm EDT
ahn: president trump warns it threatens to derail any chance of rewriting nafta. how serious are the president's's threats? president trump is certain to lean more on his own executive authority. and, trading at any moment now. investors keep boosting up the price. major averages in the green right now after fluctuating throughout the morning session. let's get a check of the markets. abigail doolittle. >> you are right. we have stocks trading higher well off the highs already. the dow is up .5%.
the nasdaq up to tense of 1%. more averages up 1% or after earlier in the session being down slightly. following the session we have seen all year, recently continuing on the session, and one source of volatility is the stock. the philadelphia semiconductor index has been up more than 2%. let's dig into the stock volatility by going into g #btv 7755. this is a year to date chart of the stock. we are usually looking at 1% moves and the major averages. these are 2%. a lot of moves to the downside of 2% or more. volatilityt of considered to be a leading sector going to everything we use. if we look at the movers within the chip space today, we will see a rebound from yesterday,
but one that is fading. intel had been higher earlier in the trading session now up .1%. this after yesterday, dropping about 9% at one point at the lows for the worst since 2008 on apple news that apple could be using its own in-house chips by 2020. today we have a rebound. chip space overall giving up some gains. this is an intraday chart of facebook and amazon. amazon in particular has started dropping, and they have recovered and are now about flat. stocksned to the tech and a consumer discretionary stock as for bigger moves in the market and finally, we have the march numbers for auto
companies. tesla up new a percent after the electric vehicle maker did announce for the first quarter model three 2020 cars were produced. better than feared so we have shares trading higher. elon musk talking about accelerated production for the quarter ahead and trading higher on better-than-expected .iscounting they beat in a big way march sales up 15.7% versus the estimate above 5.1%. very strong march for automakers. >> thank you. a strong day for spotify, now to open on range of 157-$150 per share. it has been climbing ahead of .he first trade
an alternative ipl. a reference rate of $132 per share, this'll put the valuation at $3.5 billion right now. the ranges between 167 and $170 per share. we'll give you the latest. inid: mixed messages washington and we were right about to have an agreement as soon as this week according to some sources in the trump administration. this morning, the president in playthat nafta is because he describes it as "a big caravan of people from honduras coming through mexico." which is it? one day it is on, one day it is off. >> it is very confusing. it may be a negotiating tactic with donald trump putting pressure on the mexican government to try to reach an
agreement. it is his version of a negotiation. it is interesting they seem to want an agreement within the next few weeks but at the same time, bashing mexico. >> perhaps his personality may come into play here. going downbig event in peru, a big summit here at i wonder whether he might just make a big announcement for the summit? bethink it is clear he would are what is he willing to give up to get it? they have been tough on nafta negotiations in some respect. something that mexico feels passionate about. we will see. what does he want, a tough negotiation or a deal to announce? spectacles ande this may be one that he has in his sights. when heis a challenge
is now tweeting about central america and refugees, and he is going on about this so this link doesn't stop. >> it does make things more -- complicated. immigration makes it that much harder. he is not necessarily serving interests and getting a deal by conflating the issues. >> the president also tweeting about amazon. done dealit was a that it is not on amazon's disadvantage to actually warp it together. >> the postal service, donald trump tweeted today that he is right that it costs the postal service money to provide services to amazon, when in fact, the facts do not necessarily conform to that view, that the postal service is
out there delivering packages, the cost of delivering for amazon is really not much at all. his relentlessness on the amazon of the prime gop tenants is not to try and let the government pick winners and losers among corporations. he has clearly decided amazon needs to be a loser. it is really against gop orthodoxy for him to take that position. >> wehe has clearly decided aman needs to be a loser. have seen amazon stock go down after a presidential tweet. there are real consequences. they have come back up and other people he has really gone after, lest am i checked, he is still running the nfl. is still running the nfl issue for donald trump where he is on it relentlessly day after day when he is powerless to do anything about it. but maybe that is all he wants to do, bring this to a public forum and somehow things change.
the postal service may feel pressure though they do not have a direct link to the president. they are an independent agency, to take a look at the deal amazon has. >> amazon rebounding and the session up .6% after it took pressure. ,> there is at least one member mr. pruitt. a lot of reporting about his conduct. apparently, he said hang in there. i do not know exactly what it means. in the presidency, things change. their report on the conduct of his financial route -- affairs is still pending. that he wouldrts make a recommendation. let's wait and see. >> you did help us. you had dealt's -- doubts but
david: we turn now to mark crumpton. mark: special counsel robert mueller is defending and all -- the indictment of former campaign chairman paul manafort by releasing a secret memo, from deputy attorney general rod rosenstein, which gave mueller the already to investigate crimes related to manafort's
political consulting work for the former president of ukraine. he claimed that mueller overstepped his authority. the turkish president welcomed russian president vladimir putin , who is on his first foreign visit since winning reelection last month. they're working together on plans for a nuclear plant on the mediterranean coast. tomorrow, they will join a president to discuss syria. israeli prime minister benjamin to resettlenceled thousands of african migrants. a nationally televised news conference, saying it would benefit -- benefit migrants. the prime minister said today he was suspending the agreement. soaredes in the u.s. last month. the fbi says more than 2.7 million federal background checks were run on firearms
purchases, the highest march numbers since the fbi began releasing data in 1998. while there is no exact data on fire on purchases in the u.s., the criminal background check system is used as a barometer for gun sales. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. i am mark crumpton. this is bloomberg. ahn: thank you. unlikely policy inspiration, president trump is taking a page from his predecessor's playbook or the is learning just how frustrating congressional pace can be and is instead relying on executive authority to get things done. it is a -- an approach president trump and the republican party long criticized president obama for. alec from washington.
oft are the pros and cons using the presidential pen here? when obama lost the senate following the republican takeover of the house, when asked what he would do now, he said i still have a pen and they still have a phone. to sign the partnership, created the iran nuclear deal, he created daca for immigrants, a number of things on his own executive authority. on the one hand, you are able to get around congress and get things done and go back to voters, but on the other hand, it is very easy for your predecessor to reverse actions. the ttp's history, the iran nuclear deal might be history. >> president trump has issued 57 different orders. there is one key difference.
>> this is unusual for trump to turn to the pen and the phone so early in his -- in his presence he when his party turned -- controls congress. obama lost total control of congress in his second year. notable during the campaign, he told voters he didn't do this. he did not like executive orders. he suggested it was an indication of failed leadership but here he is. >> we are now seeing the first person to be in the investigation, a dutch lawyer. agents he lied to fbi regarding conversations with rick gates, paul manafort's, and that is what got him into trouble. he had a light sentence, just 30 days. it is an indication of
as 77% of many drivers went on strike, causing major disruptions with only one in eight high-speed trains running and one in five regional trains. was likely better for international trains with recorders through london and 90% to brussels. reason is it is planning to .nd special stages currently, they have a drug for life. for theirore benefits job. the opening of the competition by 2020. on one side, unions hoping with
a rolling series, until the end of june. side, the strike would just end up turning the public against the union. despite black tuesday for minister, the trump said today that the government will hold onto the reform. part of part of the debt. significantpany took measures. unions on thursday to try and count down the situation. >> music streaming expecting to
trade from 167-100 $70 per share. you know it will be an alternative ipo for the direct listing. expecting for the trade? >> that is right, still no trading yet. 167-1 $70 per share. around $30 billion for the company. taking, myis is sources happened mid day. higher than the predicted valuation for spotify. once this starts trading, if there is a lot of volatility,
the concern before this listed is not enough shareholders would sell. up those that are unsustainable. this is a question that comes to mind. are we seeing some kind of supply here as they try to get the shares open. >> i am one of those who is not familiar with dreck twisting. -- direct listening. it feels a kid is delayed. what could be the cause? >> very few of us have seen a direct listing. they are very rare. ipo sale.s set for an this is the first time they are setting a price for the public share. instead of selling stocks for investors like they would in a typical ipo, and they are opening shares basically. morgan stanley trying to figure out the valuation here. alibaba started
trading right after 11:50 a.m. when the ipo listed in september 2014. uncertainty is expected to it is an unprecedented way to get a company of this size public for the first time. >> finally get some trading going. let's turn to italy. it has been a month since they left with a hung parliament. the time president will hold first meetings in an effort to form a coalition or government or to take us to what we expect, jeff is a senior fellow and deputy director of the europe program and he comes to us from washington. through exactly what will begin tomorrow. what do we expect? >> this is going to be the first contact the italian president with the leaders of
individual parties. he will meet with them on their own. this is the start but not the end of the process that will lead to a coalition. as a practical matter, are there really only two parties that could get together to make a government? this willot clear how shake out. the rest of europe has had a bit of a populist bug over the last year in italy. it has really gripped body politic and 50% of the votes went to populist parties of either the right or the left. how they find a way to work guess.r is anyone's natural overlaps are complicated i personality differences think it will take some time because the president has to can lead thewho
italian government and respect international obligations and the fragility of the economy. >> we have france, germany, and others, at far right and far .eft how different is italy when you look at the european spectrum and what sorts of locations does this have for the eu? >> italy's different in the sense that you have got half seats in parliament roughly now parlay --ds of the the party. one of them got about one third of the vote and has very little governing experience. it has been pretty unsuccessful. how it would act is unclear. applications for europe are enormous.
it is the third-largest economy in the eurozone, it has a public debt version about 130 percent of gdp, more than twice the for europeanevel union countries. also on foreign-policy issues the leading calling for ae presentation of russia sanctions. it could put italy at odds with european partners and washington. >> thank you. calling for a presentation of russia sanctions. jeff is a senior fellow and deputy director of the euro program. .e are still awaiting spotify the indicated -- it is indicated to open at 167-100 $70. climbing ahead of the first trade. this is bloomberg. ♪
great respect for baltic states. a wall in the southern border with mexico and talking about the immigrant caravan breaking up because of mexican laws. he has been tweeting about refugees, president trump saying the u.s. will find out quickly if putin is a friend or foe. of theand the new ceo new york fed is going to be john williams, we have michael mckee, senior economics correspondent here. >> it is not a surprise because the name had leaked but it is a different name. john williams is a widely respected economist and has been president of the san francisco fed since 2011. he has a doctorate in economics from stanford. janet yellen's research
director when she was the president of the san francisco fed and worked with her on the board. he is an expert in monetary policy. but the new york fed announced it will have a wide and broad and diverse search for a different kind of leader and they ended up with another white male, and that will raise questions. david: those names included women and people of color. >> there is no way to block the appointment, he has been approved by the board of governors in washington and will take office in june 18. thatearch committee felt it would be important to have someone with a lot of monetary policy experience to help jay and is the new chair, not an economist, and it doesn't look like will get a vice-chairman for a long time. and they will have to be confirmed. the committee also says when you put up a list of the things that you need in a president, john
williams stood out far and above other candidates, including in making diversity work the search committee chairs that i spoke with bash you look at his track record in san francisco. 12%ook the back from diverse staff to 46% and made a major effort for committee --reach and he take those ticked those boxes. they feel comfortable with having williams and safety is the most qualified and best candidate. a couple of other things people will criticize is he has no market experience. the new york fed is important because they carry out monetary policy for the fed in the markets. the answer there is williams has board and hasfed studied this for a long time and worked with the fed chairs and understands it. also, different new york chairs
has come with different levels of experience. it is not completely necessary. the final thing is the regulatory background. elizabeth warren and others criticize them because they look at what happened at wells fargo. did a lot of things wrong the last 10 years and he was heading the san francisco fed and that time. therefore he must have been responsible. the problem is that the fed, especially the san francisco fed, doesn't oversee wells fargo. the only thing that oversees the international divisions of wells fargo. the fed is one of five regulators in the u.s. toice of control anchored really regulated wells fargo and it is the board of governors and not the san francisco fed. the argument he didn't sufficiently regulate under his control doesn't hold water. david: thank you mike, please stay with us. we bring in thomas simons.
about monetary policy, because part of his new might itnning -- how changed the direction of the fed, if at all? i woulder in his care have said he is a dove but over the last couple of years his views in monetary policy has been much more consistent with the consensus. this move from three rate hikes expected this year and edging towards four, he was one of the proponents earlier on in that move. i don't know if it necessarily presents a big change in overall monetary policy. i think it is good to have some consistency. views areint when changing on monetary policy and have a complete unknown with little policy experience coming into the new york fed best that might create more uncertainty and instability. i think it is a good thing from that perspective. shery: he talks about the
neutral rate in the u.s. being the low. how hawkish is he when it comes to these elements? i don't view him as particularly hawkish but he reacts weekly to incoming data. incoming data has been solid lately, so i think it is consistent with that. michael: i'm not a chart that looks at his neutral rate research for the board of governors and came up with a way to calculate what the neutral rate is. do because itt to is a moving target but you can see. the white line has moved up over the years. what i did is at inflation back into it because their natural rate is inflation-adjusted. fed'sou look at the target rate, you can see monetary policy is getting tighter and tighter, but it wasn't for a long time. that argued for the fed remaining loose and now you are 50 basis points away and the
neutral rate keeps moving up, they will have more room. but you close that gap at the end of the year and will be interesting to see where he will go with that. shery: he also spoke about price level targeting is that of inflation targeting. the chart showing you that it is better to keep an eye on the level of prices in a steady growth path. a long run average inflation rate at 2%. could we see this shift and the crops -- in their thoughts? michael: it isn't going to happen right away, but the 2% target that remained for a number of years still makes sense. williams argues that maybe what you should do is go to price level targeting. when you look at this chart we see the pce index, which is their target, and how inflation dipped. his suggestion is elected inflation run for a wild about
what the level of may have been and you end up with an average inflation rate and establishes inflation more at that level. that is his suggestion for what could be done. since he has been pushing this forward, it is likely it helps move the debate board during the next year and it will talk about if they want to change the policy. i am curious about the team moving forward, he is part of a larger team. the third most important member of the team, we don't have to a vice chair. it strikes me we have jay powell, a non-economist, randy quarles, a non-economist, and this man is an economist was incredible. does it mean he has an outsized influence within the fed? experiencehink this less to having a good voice on the committee. he is well respected internally and externally. his body of research is very
strong. the san francisco has put out good pieces on the neutral rate and other sorts of topical comments. i think the new york fed president has a big influence on that fomc. hemp being an economist is good for balance of opinions. why they become more important, and it does it change the characters around the table but bill dudley will not be there anymore because williams has been a member, but now he will be at every meeting. selectiont does the tell us about what the board is prioritizing at the moment? at a critical point in monetary policy because we are far into the normalization process and there is a lot of uncertainty of how much further that has to go. having a strong academic economist at a high rank in the committee is important for
consistency. it also puts us in a position where the new york fed has to look internally for more resources towards managing market operations. williams istioned, not much of a market guide relative to his predecessors. the fact they have a strong voice and exit of vice president, who is running the desk for a long time, gives us confidence that will continue to execute out sheet policy properly and maintain the rates at the target ranges. simonsthank you thomas and michael mckee. coming up, spotify is hitting the public market and we have a direct listing. we still awake straight as it is indicated at $170 per share. this is bloomberg. ♪
shery: breaking news president trump speaking to baltic leaders. president trump saint amazon has money to pay a fair right to the post office and the u.s. is giving subsidies to amazon and post offices have seen losses. we talking about a range of topics, including russia and how the u.s. will get along with russia and the u.s. will find out if we if putin is a friend or foe. presidents ofwith estonia and lithuania and also talking domestic policy and immigrants and a caravan breaking up because of mexican laws. we saw him tweet about the caravan the last couple of days. david: and a use conference to come with baltic leaders. mark crumpton is here now with first world news. mark: crime is is considering
letting the president -- facing criticism for having approved a $1.3 trillion measure. an eight to kevin mccarthy says he is discussing the plan with the president over the past couple of days. congress is on a recess until next week. despite reports that scott pruitt job may be in jeopardy, the president and his chief of staff have given him a vote of confidence. the administration has been told to fighting and the administration has his back. pruitt is under scrutiny for racking up high travel security expenses and for running a condo from an energy lobbyist. dozens gathered at the syrian highway ready to take on a group of rebel fighters away from their stronghold near damascus. the army of islam is the last remaining and largest insurgent group in eastern ghouta.
they are heading north as part of an agreement with the syrian government and the russian actors. german prosecutors said today they are seeking the extradition of a former catalan separatist leader to spain ready to face trial for his role in organizing and independence referendum. he was detained in germany last month. spain also accuses the 55-year-old of misusing public funds. global news, 24 hours a day, powered by more than 2,700 journalists and analysts in more than 120 countries. i am mark crumpton. this is bloomberg. breaking are getting news, spotify has started to trade and will send the taylor riggs for the latest. 167potify is now at dollars. some indications were 168, i am seeing 166 right now.
one thing we are talking about right now, we knew this was a direct listing and not an ipo. let's look at how the volatility stands out on this intraday chart. we can see the volatility. we knew this might be more volatile than traditional ipos. let's take a look at some of the fundamentals if want to go there and talk about what is behind the business. spotify is compared to netflix because they can stream music versus tv. netflixinteresting is to help boost margins created its own tv shows. spotify does not want to great its own music, so that puts pressure on gross margins. we have a chart, i don't know if we want to pull that up -- but has gone up 25% and it was as low as 5%.
some analysts are not sure if long-term that gross margins are high enough. that would be the problem long-term is how this company can make money. we have analysts come out and talk about that as well. long-term what could be their business model in terms of getting subscriber growth up. 165, howvering around does this compare with the private transactions? before it wants to the marketplace there were private transactions. those shares were lower, and went up to 135, so these are over the private valuations, and they were less than this. i think long-term for the company in terms of going forward, how do they make money? they said by selling data, they could look at ad revenue. a chart looking at at supported revenue that is lower, brings about 130 million, versus
regular revenue which is 30 billion. it is 18% on the margins whereas overall is 25%, so maybe they sell data or make target listeners and concertgoers and promoters, so that is a way. i am curious to see the volatility. i close out this chart and pull-up -- the intraday chart. that 166.ring around not a ton of volatility yet. that seems to be good news for shareholders and investors. shery: spotify is also making share, andt 165 per that would mean investors value the company at about $30 billion. let's begin our ipo reporter
alex barinka. is this within market expectations? actually higher than what my sources expected yesterday. the stock opened at a valuation of about $29.5 billion. this raises questions for me, what is the supply? on the top live blog on the terminal right now, who said a lot of early shareholders didn't want to sell and they didn't want to let go of stocks. that could create liquidity squeeze running the share price up. the big thing for spotify that i was told is that from this open 165.90, to what ever it closes at -- they don't want to see a lot of fluctuation. they want a modest level of swings and they know it will swing a little but they don't
want a lot of volatility. they don't want that stock top you typically see in ipos in this direct is the trading. to taylor's point, will be watching volatility today and the rest of the investor community as well. existing shareholders as well as folks who might want to get into these shares. david: you talk about supply, what about the volume of trading? that might be one indication of how much supply there is an also could drive volatility one way or the other. alex: that is the key point when you look at a typical ipo. float trades on day one and spotify is different, as much as 90% of its existing shares could potentially trade because there is no lock up. sources tell me they still want 100% of volumeto changing hands before this listing. wondered 78 million outstanding shares, so will be up to 100% of those
outstanding shares to potentially trade hands in terms of a tradable float. if you get more than that it could be an indication there is a lot of money coming in and out of the shares and lot of retail investors. if you think about the end goal, to get a stock that trait efficiently has been traded for a wild and yet a lot of money moving quickly in and out actively to volatility that the company does not want to see in its early days as a public company. shery: we keep talking about not wanting volatility but this is an awful time not to want back. we saw the tech route. alex: and the caveat i have heard from folks is a lot of textbooks to have followed not have specific reasons. we have trump tweeting about amazon and the tesla issues -- these are tech specific. even with the broader selloff, the first three days for spotify will be driven by the trading dynamics and the demand for the shares, and supply.
because it is a unique event i'll be checking a week and a month from now if that continues. if this starts moving in line --h the broader tech indices volatility as we know is the bane of the existence of newly traded shares. the first day on day one of trading, i don't think the macro volatility will be as much on the might of folks trying to get into the stock. alex, thank you so much for reporting today from san francisco. up next will hear more for the presidents eating with baltic leaders. live from new york, this is bloomberg. ♪
president trump: these are courageous people and have done a fantastic job or their countries. i have great respect for you and your nations. thank you all. take a look at the post office. the post office is losing billions of dollars, and the taxpayers are paying for that money because it delivers packages for amazon at a very low cost. that is not fair for the u.s. and not fair to taxpayers. amazon has the money to pay the fare right to the post office, which would be much more than they pay right now. the other thing is a lot of retail businesses are going out of business and that is a different problem. it is a big problem. retailers all over are going out of business. you look at small towns without a beautiful main street with stores, and they're all gone.
that is a different problem we have to talk about, but if you look at the cost we are subsidizing, we get a subsidy to amazon. we are talking about billions of dollars a year. areport came out at said dollar 47 or about that for every time they deliver a package, the u.s. government, many the post office, loses 1.47. amazon has the pay much more to the post offices. there is no doubt about that. thank you. david: that was president trump a short time ago speaking to leaders of latvia, the wayne
lithuania, and estonia. president trump will be holding a news conference with the leaders of the baltic nations will bring you coverage live. shery: a reminder you can catch our interviews on the bloomberg the function is tv . you can also find breaking news and charts and related optionality discussed on the program. but there is our interview with thomas simons, senior economist about the new york fed president being named. live from new york, 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
in place during the obama restriction was not appropriate and set standards too high. >> this will begin a process that will determine what the standards should be and is not conclusion very in that regard. is that weclusive look at issues that should set standards, they need to be updated and evaluated and standards need to be revised accordingly. mark: the epa in partnership with the highway traffic safety demonstration work to come up with new standards. washington today, 33-year-old became the first person to be sentenced in special counsel robert mueller's investigation. ordered toawyer was serve 30 days in prison and fined $20,000 for lying about his context with former trump , rick gates,cials and those connected the russian military intelligence. french rail