tv Bloomberg Markets Americas Bloomberg May 22, 2018 1:00pm-3:30pm EDT
pres. trump: i will guarantee his safety, yes? . we talked about that from the beginning. he will be safe. he will be happy. his country will be rich. hard-workingill be and very prosperous. they are great, hard-working people. look at what happened with south korea. don't forget, we helped south korea. we have spent trillions of dollars, not billions, trillions over many, many years. we helped south korea. south korea is one of the most incredible countries in terms of what they do. you know that. that is where you are from. same people, same people. i think he will be extremely happy if something works out. if it doesn't not work out, he cannot be happy, but he has a chance to do something that
north korea great. [speaking in korean] >> what do you want to hear from president moon about his own summit with kim jong-un, and what can he tell you? pres. trump: that is what we are here for. he is going to tell me. he has his own meetings that he has had. he may have a meeting coming up. he may not. it may be directly with us in singapore or may be at a later date. that is one of the reason he is here -- reasons he is here. we speak a lot on the phone. this should not be that long a meeting. will you have a meeting?
in the military, they say it is a dereliction of duty what happened to our country -- that our representatives allowed other countries, and i'm not just talking about china, to take advantage of us on trade away we have been taken advantage of. china, as an example, has made a fortune. a transfer of wealth like nobody has ever seen in history. they are the big ones. they are almost all bad, but china is the big one. i am not satisfied, but we will see what happens. we have a long way to go. you are talking about numbers and billions of dollars a week, ok? when they say let's meet in a couple of weeks, that is $2 billion. i view it that way. we are talking about billions of dollars a week that we suffer and lose. we are looking to go quickly.
i am a little disappointed because when kim jong-un had the meeting with president xi jinping, the second meeting, i think there was a change in attitude from kim jong-un. i don't like that -- i don't like that from the standpoint of china. i hope that is not true. i have a great relationship with president xi jinping. he likes me and i like him. that was two of the great days of my life being in china. i don't think anyone has ever been treated better in their history. many of you or there. it was an incredible thing to witness and see. we built a very good relationship and we speak a lot. there was a difference when kim jong-un left china the second time. think they were dedicating an aircraft carrier that the united states paid for, ok? we paid for a lot.
think their present is a world-class poker player. maybe doing the same thing he would do. i will say this, there was a somewhat different attitude after the meeting, and i am surprised. there may be nothing happened. i am not blaming anybody, but maybe nothing happened or maybe it did. there was a different attitude by the north korean folks after that meeting. i don't make it was a great meeting. nobody knew about the meeting, and all of the sudden it was reported he was in china for the second time. the first time, everybody knew about. the second was a surprise. i think jean -- things changed after the meeting. i can't say i am happy about it. [speaking in korean]
pres. trump: resident moon may have a different -- president mona may have a different opinion. presidentt moon -- on may have a different opinion. i would like to know what your opinion was after that meeting. [speaking in korean] pres. trump: i do not want to get him in trouble. he lives right next to china. he is not too far away. [speaking in korean]
>> i am very much aware there are many skeptical views within the united states about whether the upcoming u.s.-north korea summit will be successful and the denuclearization will be realized. [speaking in korean] bei do not think there will a change in history if we assume that because it assumed in the past it failed and it will change -- fail again. [speaking in korean] >> there have been many agreements between the united
states and north korea previously, but this will be the first time there will be an agreement between the leaders. [speaking in korean] >> the president in charge is president trump. [speaking in korean] president trump has been able to achieve this dramatic and positive change that you see right now. [speaking in korean]
>> i have every confidence that president trump will be able to achieve a historic feat of making the upcoming summit successful and end the korean war that has been lasting for the past 65 years, and along the way achieve denuclearization of north korea, establish a agreement, and i have every confidence he will be able to make a historic turnaround in this sense. i will so i -- provide all necessary support. [speaking in korean] and i believe all of this
that ita great thing will guarantee the security of the north korean regime and promise peace and prosperity for north korea as well. [indiscernible] pres. trump: we are dealing mostly on trade. when i am dealing on trade, i have many other things in mind also. every time i talk to china about trade, i am thinking about the border. that border is a very important element in what we are doing. it has been cut off largely, but it has opened a bit lately. i don't like that -- i don't like that. we have a very powerful hand on trade. ,hen i am thinking about trade these are much bigger pictures i have in mind. trade has always been a very important element in my life in
talking about other countries america.ff the -- off i have been watching them do that for so many years, and nothing has changed other than over the last 15 to 20 years it has gotten worse, and it is not just china. when i think about trade with china, i am thinking about what they are doing to help us with peace with north korea. that is an important element. we will see how it all works out. in the end, it will work out. i cannot tell you exactly how or why, but it always does. it is going to work out. thank you all. your vision for the long game with north korea? is it to koreans peacefully coexisting, or which like to see reunification at some point? pres. trump: you will start off with two koreas, and it will be up to them whether they get
together. that border was artificially imposed many years ago, and imposed to a certain extent by us. it is an artificial border, but a border that nevertheless it took seed and that is what you have. are lookingwe certainly right now at two very successful koreas. you could have a very successful north korea and you could have a very successful -- and girardi do, southyou already korea. as north koread when they started this experiment that worked out so well for them. you look at samsung and lg and what they are doing. when i was there, i flew over plants that were incredible. , and ultimately may be someday in the future -- it wouldn't be now -- that someday they will get together and go back to one korea. that would be ok with me as long
as they both wanted that. thank you all very much. >> highview anticipate that ending up? -- ending up? zte is the fourth .argest in the world they buy from american companies. when i looked at it, it was my administration that closed them down. but when i look at it, i said bigknow, they can pay a price without necessarily damaging all these american companies, which they are because you are talking about tremendous amounts of money and jobs to american country -- companies. perhaps a new management and a very tight security roles. les.- ru
we caught them doing bad things and we made it so difficult, but it was shut down. i shutting them down, we are hurting american companies -- really good american companies. don't thinkyou -- we didn't hear from them by shutting down this massive phone company. what i envision is a very large million.ore than $1 i envision new management and a new board and a very strict ules, and they will have to buy a big percentage of parts and equipment from american countries. thank you all very much. shery: president trump talks
with president moon jae-in. he asked about zte's stunning reversal on the chinese company cut off from u.s. suppliers after allegations of violating sanctions against iran and north korea. he is now saying he wants a great deal for the u.s. and china and shutting down zte would hurt american companies. the focus was on north korea, although president trump did not say whether you go to singapore for the summit. let's talk about this with our bloomberg washington correspondent. it was interesting to hear president trump talk about kim jong-un's change in attitude. he is not saying whether or not you would go to singapore. he is dialing back expectations. >> we heard the president talk about how great the summit would be. sudden he found
himself in a position that previous presidents have been and where they think they have a deal with north korea and think things are on the right path and very rapidly and now the president is starting to cast doubt about how he can have this historic summit in singapore just a few works -- weeks before it is supposed to take place. he said it might not happen at all or it might happening -- happen later. he is blaming china with the second meeting -- for the second meeting with kim jong-un and that things have changed. north korea has a long history of dangling peace treaties out there and saying they are ready to talk about these and denuclearization, and changing course in the middle of negotiations. this is a well-worn path and it does seem president trump is following into the same pattern that his predecessors have, where they start to think they
have a do with north korea only to find it is starting to fall apart before it can come into play. he didn't want to say whether he spoke with kim jong-un, but he also said certain conditions need to be met. do you know what they are and have those changed at all? the problem we have had with the white house is they had have -- have had so many different positions. some said they should follow the libyan model. president trump said it wasn't true and that it is not the version of his white house. it has been unclear what this white house is looking for in terms of conditions for the meeting area -- meeting. he does not want to waste his time. it is clear he wants a very significant move by the north koreans. it is not clear he will get them. shery: thank you.
turning to capitol hill, house republicans looking to add their last shot to ease regulation before midterms. chief washington correspondent kevin cirilli is on capitol hill. what are we anticipating will be the outcome of today's low? -- ask thatould act to congressman mchenry who is joining us against -- ahead of the vote on dodd-frank. what is next? mchenry: this president has moved forward the andgulatory agenda regulations. what it comes to financial services, that has been the most dynamic change. think in theo you terms of the framework that there could be any more
deregulatory package that advances out of the midterms? we arehenry: working to schedule vote on that. this package is the first substantive real change in a large format that we have been able to get to the senate since dodd-frank was enacted eight years ago. this is a fantastic when eight years in the making. that will be the greatest benefit for community lending, mortgage lending, and getting capital. kevin: is likely to attract some democratic support. rep. mchenry: i want going to house leadership and the financial services committee. kevin: on house leadership, there was a closed-door meeting with paul ryan and the caucus. from reports, i am seeing that
he is a bit frustrated with the immigration issue for folks within his own party kind of holding it up as a result of their position on immigration. where are we at with that? rep. mchenry: there are two unrelated issues. in the a large group house that wants to take on the issue of immigration. unfortunately, that large group is divided in multiple camps on how you resolve the immigration issue. we are a representative democracy. our representatives and house representatives is how you solve immigration. when you add on to a challenging environment of a national election coming up, that adds a painfult layer of discussions we have to deal with in immigration. the point is -- we will have to
come to terms, probably in the month of june, with a series of votes we will have on immigration reform. can speaker paul ryan hold onto the speakership before the midterm election? rep. mchenry: yes. kevin: no reservation about that? rep. mchenry: we are pretty resolved in keeping paul into the speakership through the end of his term. in november, we will have our elections internally. kevin: we covered it all. thank you very much. let us know about your decision. kevin cirilli, thank you so much for that cupping to representative patrick mckendry -- mchenry of south carolina. so much happening today. we already have facebook ceo mark zuckerberg speaking and the south korea u.s. summit. vonnie: getting a chance to
speak to parliament in europe and they asked weston's and he is getting -- questions and he is getting to respond. let's talk more broadly. you can always tune to live go on that. doubt down a quarter of 1%. s&p 500 has crawled back to flat as has the nasdaq. shery: yields for the tenure above 3%. we will have more markets coming up. this is bloomberg. ♪ mom you called?
i know. find your phone easily with the xfinity voice remote. one more way comcast is working to fit into your life, not the other way around. >> i'm mark crumpton. president trump suggested today that a planned historic meeting with kim jong-un could be delayed, saying the summit "may not work out for june 12."
he raised the possibility the meeting could be pushed back during a white house summit with president moon. house republicans who attended the private meeting on capitol hill this morning say house .peaker paul ryan is frustrated another congressman said ryan wants republicans to band together, especially when it comes to immigration. it led to a house rejection of the gop bill. house makers plan to vote on immigration policies late next month. the european union approved trade talks with australia and new zealand. move as a boost for global trade in the face of what they view as increasing u.s. isolationism. the carry's economy minister told reporters at a news conference in brussels that a free trade deal with australia
and new zealand could benefit several sectors, including chemicals, processed foods, and services. the eu's trade commissioner said the two countries are friends and allies. >> we are part of a circle of friends who believe in good trade and it is also economically beneficial for us to have agreements with them. it puts our companies on equal footing with competitors from countries in the revised tpp agreement. mark: today's action sends a strong signal that reaffirming the eu's commitment to open trade. global news 24 hours a day, online and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm mark crumpton. this is bloomberg.
shery: live in new york, i'm shery ahn. toronto, i'min amanda lang. we are joined by both audiences and we go to facebook ceo mark zuckerberg testing before officials in brussels. mark: i don't think the question is whether or not there should be regulation, i think the question is -- what is the right regulation? some sort of regulation is important and inevitable, and the important thing is to get this right and to make sure we have regulatory framework that protect people and are flexible so they allow for innovation and don't inadvertently prevent new technologies like ai from being
able to be developed, and to make sure that new startups -- the next dude sitting in a college dorm room -- next student sitting in a dorm room does not have an undue burden to bird -- build the next great product. that is important and an ongoing conversation we look forward to participating in. there were a couple of questions around competition, and how we role and our position as a platform here. to that, i would say a few things. that we exist in a very competitive space where people use a lot of different tools for communication. the average person uses a different tools for communication, ranging from private messaging up to broadcast mediums and
communicating with groups of people and their friends all at once. from where i sit, it feels like there are new competitors coming up every day. there are competitors who reach tens of hundreds of millions of people. we have to evolve our service to stay relevant and serve people. it feels like a competitive environment. thehe business side, business model is advertising. ofebook today is about 6% the global advertising market. advertisers have a lot of choice in terms of where they choose to advertise. that is an important way to look at it, although i think you want to look at it both from consumer choice perspective and business choice. one thing i want to add that often gets overlooked when you talk about competition is around the world there are 70 million small businesses that use facebook's tools to grow and
reach customers per in europe alone, there are 18 million small businesses that use facebook tools. half of them have told us they are hiring more people because of their use of our tools to be able to grow. it is important not to lose track of when you are thinking about competition that there is the element of the internet space and the advertising space, but there is the procompetitive a fact of enabling all of these small businesses to have access to the same kinds of marketing and advertising tools and reach customers in sophisticated technological ways that previously only large businesses had the means to do. that is something we are proud of that we can provide and levels the playing field. when you think about the overall ecosystem and competition, that is a very important part to take into account. there were a number of questions about texas. .- taxes
escebook has always paid tax in the country's and by law. we invest in europe and will have 10,000 employees across europe in 12 cities. we have data centers in sweden and ireland and are building one in denmark which will be in line in 2020. we have always paid the taxes that they lie required -- that the law required. to the innovation and job growth your as well. -- growth here as well. there were questions about gdp r. the principles are around control and accountability. the idea -- a number of you
asked when we expect be fully compliance with gdp are , we have had- gdpr a large team working on this to .ake sure we are compliant one of the things that law requires in europe is that someone has to go through the extensive flows before they can use the service. one of the pieces of feedback we got was that they did not want to get roll block before being adblocked before they could see their friend's content. they just want to blow through it to get through they want to they wantugh to what
to do. we have been rolling out the gdpr settings and a large percent of european have already gone through them we put them in front of people and give them the opportunity to dismiss them starting on may 25. we will start requiring people to go through the flows for they can resume using our services. people haveent of gone through them already, and we have gotten good feedback on that and how we have implemented that so far. let me see if there is anything else important to touch on. there were a couple of questions about political bias that i want to touch on because this is an important topic. as a couple of you mentioned, we are committed to being a platform for all ideas.
that means that we want to make it so that people can come to our service and share any idea across the political spectrum. it is very important to me that we are a service that allows for a wide variety of political discourse. we view that as a big part of our responsibility. i can commit today that we have never and will not make decisions about what content is onowed or how we do ranking the basis of a political orientation area that is an important philosophical point for me that i am proud to be able to commit to. there is a specific point around distribution and reduction of seeing people's content. we made ald say is -- number of changes this year to make sure we are showing people's friends and family and community content more than public content in general.
a lot of the feedback we have are from people is that they come to facebook because the want to stay connected to people . we have done a lot of well-being research, and we are focused on making sure use of technology is good for people's well-being and is not taking away from it in some ways. all the research we have shows that when you are using the internet to stay connected to people who you care about, that is good for well-being. by increasedlated measures of health and happiness and feeling less alone. orn you are using facebook the internet overall to read news or passively consume videos, that is not correlated to the same benefits of well-being. because of the feedback we have received, we have made changes to promote connecting with friends and family and community is more than public content. that has led to a reduction in distribution for public content,
video, news, across the board and is not targeting any specific political ideology. is there anything else? to your question, for the content that websites and apps sent us, we think it is very important that people have the ability to clear this. we just announced that we are building and will soon launch a clear history feature that allows you to clear all basic browsing history data. earlier about how do we separate out the security data? it is important that we don't have people who aren't facebook users coming to our service and trying to scrape the public data
available. and evene our service if they are not signed in, we need to understand how they're using the service to prevent that unity. .- that activity we are trying to make sure we can do a better job of governing the system and keeping bad content out. one way to do that is to understand how they use the system. >> if you're not a facebook user, how do you stop that? mark: we think it is important to protect people in our community. there were a number of questions around whether cambridge analytical was the tip of the iceberg -- or whether we expect there to be more apps that have misused data. on this, the good news with cambridge analytical is that the changes we made -- analytica is
that the changes we made while it was not an app, it was a developer that used the data and sold it to cambridge analytica. it would not be possible for a developer to get access to that level of data. after hours when 14 that firm -- 24 --orm -- after our 2014 firm changes when into effect, we think it is important to go back and investigate every single app that had access to a large amount of personal data before we locked down the platform. we have investigated thousands of apps. we have taken down more than 200. there are many thousands more we need to investigate. this will take many months. i anticipate there will be other
apps that we find that we want to take down. this is why we are doing a full investigation. this is part of our shift towards not just trying to manage the system reactively. we have always had the ability for people in the community to flag bad apps. we have done audits of them in the past and had a content review and app review team. moree taken you much proactive approach. rather than waiting for people in the community to flag for us that there may be issues, we are going through and investigating ourselves up front all of the different apps that have access to large amounts of information. we are reviewing every at that has at -- app that has access to people's information. we will bring in third-party auditors to conduct an audit. if there was misuse, we will ban the apps and tell everyone who
was affected. i want to be sensitive to time because we are 15 minutes over. -- i realize there were a lot of specific questions that i did not get to specifically answer. going around and hearing the themes of what people are concerned about and had questions about, i think i was able to address a high-level areas. i will make sure that we follow up with each of you afterwards to make sure your specific questions get addressed. we will have someone come to do soon to answer more of the technical questions. thank you, again, for inviting me. raisede was one question with if there was a separation of services. this is around the market power
of facebook and the question if you cross use data between facebook's and apps, it would be good if you said. >> will you allow users to content?rgeted i have asked and have not gotten an answer. mark: i will make sure we follow up and get you answers for those. if it ised to ask you possible to have a right answer for any question from you in the next days? mar well-prepared for intervention. we have them on paper. you collect them -- we will receive
written answers on it. wayn't think that the right is to say we are going to leave it. there are a lot of questions the we want answers to brave new world that mr. zuckerberg has introduced us to. thousands of people are scrutinizing us and asking what is fake news and what is not fake news and what is hate speech and what is not hate speech. obvious.s very >> is it possible to answer question by question and have the right answer by mr. zuckerberg? european antitrust is important.
are we going to push antitrust agencies into that? there is not a good answer. >> the problem is the timing. it is impossible to say. [indiscernible] format.the do you agree for a right answer in the next days that you want to question by question? >> the questions that weren't answered. mark: yes. >> thank you very much. mark: thank you. amanda: that was mark zuckerberg's testimony in front of the eu parliament, answering question some prepared in advance based on the broad topics, including those around
the regulation versus innovation debate questions of privacy. he had previously said they could have done better, assuring lawmakers they will meet regulations, including new gdpr regulations and that they will be compliance on day one. a testy exchange with one member of the european parliament about whether or not there were answering all of the question and a promise they would be forthcoming with those answers in the next day or so. shery: it was pretty interesting to see the debate heating up as pushed toberg was continue answering their questions. lawmakers saying he was not answering them and they asked to provide the answers written to them later on. it was interesting to see that, especially when lawmakers were asking whether or not facebook should be split up into different services and questioning the monopoly of facebook and mr. zuckerberg, saying no, facebook exists in a very competitive environment.
amanda: this is "bloomberg markets." meet amanda. -- i am a mandolin. shery: -- i am amanda lang. shery: i'm shery ahn. 100 percent chance of a rate hike in june. our next guest says there is something the central banks should keep an eye on. danielle dimartino booth is a .loomberg opinion columnist she joins us. what are we missing right now? danielle: we've seen a .remendous hit up -- pick up
we read about it every day. underneath the surface, we have seen a slowdown in the sector. we have seen a tempering in the adp figures. we saw it during christmas layoff data. if toys "r" us will not be a one-off situation. sears liquidates, you will see more service sector jobs lost as the year goes on. marge was also one of the biggest months we have had for mergers and acquisitions. we know in the aftermath of mergers and acquisitions, synergy can be squeezed out which means layoffs. you note something else recently and that is inside the wage data, there is discrepancy between goods and services sectors. that is where we see wage inflation on the good side if you are looking for it and not on the server-side. how is that playing? danielle: i hope it is playing
into the thinking. we are talking about eight -- 80% of the u.s. economy. there is a risk that it looks like the tariffs and trade war rhetoric is going to cool. if that is the case, we will see a tempering even in the goods producing sector as supply change -- chains are replenished. we could see a flame out in the economy into the third and fourth quarter, even though we know the second quarter will be robust. amanda: we are seeing m&a as a thrive or. danielle: companies have been equity about private being k-swiss or jay powell -- being squeezed. jay powell will pay attention to this. he knows that deer and caterpillar and staple companies have their profit margins
squeezed and companies can only withstand that for so long before they look to marry out with other companies to cut costs. your biggest line is cutting labor costs. amanda: around fed watching is a debate going around somewhat publicly about how the fed should act and how that runs counter to economic expansion. we see anything that muddies the market more? danielle: there could be some bit of confusion tomorrow at 2:00 p.m. eastern standard time because a big word was introduced in the last fomc statement -- symmetric. it implies the fed will make monetary policy as opposed to having a hard target of 2% and that they will make policy within a range. moves 1/10the core per month, it will appear's 2% target by july. therefore policymakers have , a fulled new language
on propaganda campaign to explain to the public what it means that they are going to no longer make monetary policy based on this one unitary target has now arranged. i don't know markets necessarily understand this. this is a regime shift for the fed and i think jay powell is the one behind it. amanda: thank you to danielle dimartino booth. danielle: thank you. amanda: you can interact with all of the charts you have seen. you can save them for future reference. this is bloomberg. ♪
scarlet: we are live and bloomberg world headquarters of the next hour. mr. zuckerberg goes to europe. the facebook ceo says sorry to lawmakers in brussels. we will speak with the president of the european parliament and a few moments. a shakeup. jcpenney falls as the ceo leaves. the suite, in other glass ceiling and finance has been shattered. meet stacy cunningham, the first female resident of the new york stock exchange. u.s. markets closing in two hours. julie hyman is tracking the moves. the moves are small. julie: they are we have sideways action as we continue to monitor did the -- the development and all the trade back and forth and and
is a south korean president visits washington and president trump. we have a lot of the big movers to the upside yesterday pulling back because of the underperformance of the doubt. boeing among the declines. we are watching retail as scarlet mentioned. there is a leadership change. there are earning news to watch. kohl's falls into that category. the company raised its profit forecast for the year. companytive said the expects headwinds in the second half. that appears to be weighing on the shares. down by 7%. toenney, the ceo departing head up lows. those shares down by 5%. macy's getting caught in the department store down dross. there is one stock that is bucking that downtrend in the department stores. more on the discount department store level. tjx, raising its full-year forecast.er share for sales were up 3% versus the 2.5% analysts estimated. those shares up better than 3%. you're watching defense stocks. these have been done recently. they have been struggling.
notet suisse out with a today saying it is cutting its outlook on the sector from neutral to bullish. it's trimming its ratings on raytheon. focus one market will the normalizing outlook for the sector. and the analyst is skeptical and evaluations place multiple on pension income. those shares pulling back. of the other big stores we have been watching about is facebook. watching mark zuckerberg's testimony. just to take a larger look, this is the decline following the cambridge analytical revelations. the stock has come back. recouping its losses. it has gone solid with -- sideways since it hit its high. you can see from this chart. as we talked about, we have been watching the user growth at facebook. you can see that on the bloomberg. it has been stalling to some degree. if you look at the daily active users as a percentage of the monthly active users, that growth is slowing down and
sideline over the past couple of years. scrutinyat regulatory notwithstanding, if you look at the core business, this is one of the metrics you can watch. julia: thanks a much for that. let's get to first word news with mark crumpton. mark: thank you. homeland security secretary kierstin nielsen says she was unaware of intelligence assessments that russia favor donald trump in the 2016 election. her comments stand at odds with the u.s. intelligence community and the senate intelligence committee. secretary nielsen spoke to reporters after briefing house lawmakers on election security efforts. did do believe that russia and will continue to try to manipulate americans perspective on a whole variety of issues. secretary nielsen called russia's manipulation and integrity -- and integrity issue. the trump administration is setting iran with a new sanctions. they announced it is blacklisting five iranians for supporting shiite rebels in a.m.
in. they freeze any assets may have an u.s. jurisdictions and prohibits americans from any transactions with them. on monday, secretary of state mike pompeo said the u.s. would step up efforts against iran support for those groups. traden's most senior leader has met theresa may since she became prime minister. the general secretary of the trades union congress called may's reluctance an example of her unwillingness to engage beyond her conservative party. the prime minister's spokesman says she meets regularly with industry figures. protesters clashed with police in paris today after french public services were increased to took -- to take to the street to cut 120,000 jobs by 2022. nine unions are seeking higher wages and are denouncing the increasing use of short-term contracts in public services.
this is the third nationwide strike of public workers since french president emmanuel macron took power last may. global news, 24 hours a day, on air and at tic toc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm mark crumpton. this is bloomberg. julia: thanks so much, mark. president trump bidding farewell to moon jae-in at the white house moments ago. the two discussed a range of issues including trade tensions with china and the president upcoming summit with north korea's leader kim jen in. kevin cirilli,y bloomberg's chief washington correspondent. great to have you with us. the president raising concerns that this anticipated meeting with the north korean may not take place. that is what we hearing. on the way into the white house. house,he way into the moon jae-in telling the
traveling press pull he was the june 12hat summit would go on between president trump as well as north korea leader kim jong-un. trump was asked about it, take a listen to what he said. meetingump: the scheduled, as you know, on june orin singapore, and whether not it happens, you will be knowing soon. we are talking right now. kevin: we should also note that the president went on to suggest that potentially in the long-term, the u.s. could advocate for having a one korea policy. he also expressed concerns about the ongoing trade talks between the u.s. and china. the chinese playing a crucial role in the put -- and the korean peninsula. this comes as earlier today on capitol hill, steven mnuchin facing questions not just from democrats but also from republicans about the president's recent decision to lift trade restriction on telecommunication firm the te --
zte. a republican control committee approving a bipartisan vote on an amendment led by a democrat from maryland. i want to pull out what exactly this amendment would do. it would prohibit changing the liftinggarding of trade restrictions against telecommunications firms like zte. it would make it very difficult -- liftpresident to do those trade restrictions against zte. otherld separately by sources that they feel the president might be able to get around this through the commerce department. scarlet: i'm going to pick it up. i'm glad you bear it -- you bring in china. there was a report on the fighting within the trump team between steve mnuchin and robert lighthizer. bloomberg has a reported peter navarro is out when it comes to discussions between china and the u.s.. is either mnuchin or navarro likely to be cast aside?
i ask because i wonder who is closer to the president's way of thinking? who is more in sync with of the president approaches trade discussions with china? secretary mnuchin at every source i have spoken with, even those inside the administration and those outside of it in the communications world, would know that secretary mnuchin is someone who has had a very long-standing relationship with president trump, dating back through the campaign cycle and someone who was at the president tsai for some time. for someent's side time. look at the messaging we have seen over the past 48 hours from secretary mnuchin. he has raised concerns on everything from silicon valley as well as he was one of the top diplomats that attended the embassy opening in israel the other week, accompanying the senior advisers to the president and the first daughter as where it -- as well as jared kushner. accounts, all secretary mnuchin has proven to be someone in step with
president trump's thinking. quickly i would note, the president does like to have diverse ideological thought and that type of nationalistic economic worldview is something in his rhetoric earlier today when he said he was frustrated with the trade talks between the u.s. and china. and also that he is pushing for the bolstering along the border of u.s. and mexico. ito navarro, stephan miller, are much more aligned with the likes of stephen bannon who as we know has spoken to bloomberg quite a bit with the last 24 hours. julia: we know that well. there was nothing wrong with having all forms of information. want to directly tie china's role to what we were talking about with north korea to complete the circle. because there have been rumors that xi and kim jong-un are having negotiations on the sidelines. that the chinese are willing to relax the trade restrictions they placed on north korea as an effective backstop here.
arming them with leverage in their negotiations with the united states. what are we hearing about that? how concerned are the u.s. administration about that potential angle? kevin: i think it is interesting what you noted. every source i have talked within the intelligence community notes the importance that the chinese are going to play in regard to the korean peninsula. north korea's exports and imports come from china. they will have to play a role here. from the u.s.'s perspective, it if they want -- they want to use investment and private investment in order to lower north korea to denuclearize. that investment has to be global. that will have to come from china. i heard from a source that the main leverage that the main leverage the chinese have is yes, they are able to tinker with the meeting with regard -- and play with that political theatrics with that june 12 meeting. the bigger concern would be china and russia working together on iran. context as always.
♪ julia: this is "bloomberg markets." i'm julia chatterley. scarlet: it's time for the bloomberg business flash, a look at the biggest business stories. the u.s. and china have reportedly agreed to resolve the seven-year ban on telecom maker zte buying american technology. steven mnuchin discussed it today. proposedaren't changes. the objective was not to put zte
out of business. the objective was to make sure they abide by our sanctions programs. kevin cirilli was telling us the president said he is reconsidering the penalties as a favor to chinese president xi jinping. dan lowe wants to raise as much as $400 million to make a run at fin tech companies. use a blank check company to make potential deals. such firms raise money and public markets and usually pledge to acquire one or more businesses within a specified period. tom farley who is stepping down as the president will lead the firm. credit suisse and take of america are leading the share sales. a 13th consecutive day. shares of the investment banker on their longest winning streak ever. tied for the longest current run among companies in the s&p 500. the board meets today and investors speculate bigger dividends are in the cards. the shares have seen more than
15% during the streak. that is your business flash update. julia: zuckerberg says i'm sorry. the facebook ceo apologized to lawmakers today for the data leak that left millions of users personal data exposed to cambridge analytical. --id kilpatrick, founder author of "the facebook effect" joins us. great to speak with you. i'm looking at the feedback on social media right now. it looks like the eu is being blasted for restricting the amount of time that mark for.rberg spoke he avoided answering the top questions to what is your thought? david: he didn't really answer any tough questions to he was asked a few tough questions. but more or less, everything he said was exactly what he had previously said to the u.s. congress. me like a pr exercise from start to finish. i suspect that the length of the hearing was negotiated and it was dictated more by zuckerberg them by the eu.
that would be my guess. scarlet: based on the questions posed, do you get the sense that the eu has a better the privacy and data issues that consumers face than u.s. lawmakers did? a lot of people look at what happened in washington and say what it showed his -- if nothing else, is that senators and congressmen do not have a good understanding of the tech world and how they did -- and how the different dynamics play out. david: i don't think we saw a ton of knowledge about the tech world display. i do think today, what we saw was the eu's proper concerns for privacy manifested more vividly than what we would see in the united states. i do think that the idea of the rights of the individual and the importance of privacy as a general policy, a general principle, is something that is much more deeply felt in europe, and the questions reflected that. in general, i don't think
governments, and to lesser extent, the eu, understand the full scope of facebook's presence and threat to be honest. i think all politicians are somewhat compromised by the fact that they all use facebook to get elected, and to some substantial degree, they are afraid to offend the -- bite the hand who feeds them. onia: a tough question whether or not democracy has been compromised. clearly, mark zuckerberg didn't answer the questions that were as monopoly as far power. and the extent of global power they represent. to what extent do you think the new privacy rules but europe has put in place are any model for use in the united states? for european companies, some form of data disadvantage now? degree, think to some the so-called gdp are rules
going into effect in three days the rule -- for the world. there are parts i don't feel good about. is oneht to be forgotten that makes me come as an american who believes in freedom of speech, quite uncomfortable. notionother hand, the that the individual should have substantially more control of their social media presence, their presence on the internet generally, is one that i applaud and i think is essentially being seen around the world as a model. i think the europeans are taking the first step in a direction the whole world will in some sense follow. maybe not in every single respect. fromet: if the take away mark zuckerberg's testimony to the european parliament is that he generally told us what we already knew, is there any value for bringing him back and making him go through another public really? does it set us -- public grilling? does it set us up for others to
go through this as well? format of thele hearing was more or less the charade. where everybody asked the questions and then he gets to answers what he wants. obviously, didn't answer a lot. just as he was finishing, some of the lawmakers complained he hadn't answered their questions. that is correct. it needs -- he needs to spend more time. i'm shocked he is refusing to go to london and speak before parliament where he is being very adamantly requested that he should appear. even the threat that he might the subject to arrest if he did not appear later, a threat that has been made. no, i think the more dialogue that facebook and zuckerberg have to the governments is better. i think moore would be better than less. would be better than less. we need this dialogue to happen. i wanted to make -- one thing i theght was funny was
notorious right-winger, nigel, complained that facebook's content rules are causing him to get less distribution for his messages on facebook. which is exactly the kind of thing i mentioned before when these politicians not wanting to buy to be hand that feeds them. here is another thing we have seen in the united states. right-wing politicians who are the ones who do best with facebook because they are incendiary -- there incendiary rhetoric is designed where attention is the currency. those are the people who are putting the highest pressure on facebook. and facebook had been responding. to me, the most interesting manifestation of that is what they discovered in their investigation of what went wrong in the russian manipulation of facebook during the u.s. election, they basically concluded the reason facebook didn't come down on the russian fake news was because it was generally right-wing in town and
facebook was bending over backwards to not be seen as coming down on the right after earlier controversy. i think that dynamic continues. facebook is trying harder to not offend the right than not to offend the left which worries me. scarlet: very interesting. david kilpatrick, author of "the facebook effect" joining us by phone. neither brexit nor president trump's election would have taken place without social media. he is addressing rather directly the big elephant in the room. ahead, smashing the glass ceiling. we look at the first female president of the new york stock exchange in its 226 year history. from new york, this is bloomberg. ♪ this is bloomberg. ♪
finance has been smashed. the new york stock exchange promoted stacy cunningham to president richard becomes the first woman to be the first president. we're joined by michael moore, u.s. finance team leader. it's a remarkable story given she started off as an intern. micheal: she was a floor trader as an intern. she talked a few years ago to some interns to tell her story. she said she didn't have that career path. she studied engineering. but her for a span the floor she knew it was for her. she ended up staying as a floor trader for over a decade. scarlet: do we know whether she was groomed for this position? was she the first choice? micheal: seems like it was a quick move. she has been there for six years. she has been coo for a number of years. she has executive level experience at the firm. tom farley is teaming up with dan loeb on a new venture. they were able to move her up pretty quick.
julia: he has got into fin tech allegedly which is fascinating giving the evolving business. we were talking about this, this business is not what it once was. have twoeans we now out of three for the top women running these exchanges. which is good news. micheal: yeah. certainly a big change. it took them forever to let women in as members. now you have women running two of the three there. a lot of progress in the last few years. her experience as a floor trader, i think, could shape how she approaches the job. she talked about having meeting to marry the technology and finance side. it could certainly factor in. scarlet: things have changed so much. floor trading is no longer something you see at the new york stock exchange. it's like a -- tom king likes to compare it to a museum in some way. do exchanges matter as much as
they used to in the public equity market? micheal: they don't matter as much anymore. some for trading around the open and close. but, a lot of it has gone electronic. it is so fragmented now. one thing she talk about after getting this job is perhaps it is too fragmented now. and there needs to be changes to the market. julia: and the importance of technology she pointed out her thanks to michael moore, bloombergs u.s. finance team later coming up, sloan speaks. the company's use of digital innovation. how fitting. highlights from our exclusive interview, next. this is bloomberg. ♪ ♪
>> it will>> not be the first time north. has shown off the distraction of its nuclear facilities. in 2008, images of a water cooling tower being demolished were broadcasted around the globe. a few years later, it was restarted to make plutonium for north korea's nuclear weapons, according to the iaea. this time around, a small selected group representing international media will witness the dismantling of its nuclear test site. it is where all six of its nuclear tests have taken place. there are no technical experts in the grip and south korean media have been left out. the site consists of a system of tunnels beneath mount mentor. it has been suggested there was a partial collapse during its last nuclear test. kim jong-un's closing of it could be a's -- a first step toward full denuclearization. north korea has a number of facilities that makes up its nuclear program. it includes reactors,
centrifuges, and reprocessing plants to produce weapons and plutonium. there is the regime's muscles which could -- which kim jong-un says could reach the u.s. mainland. it is a long way yet on the road to full denuclearization. i'm in hong kong for you can follow me on twitter and get your updates at tic toc. scarlet: that is our reporting by tic toc which streams live on twitter. i'm scarlet fu. julia: i'm julia chatterley. let's get you up to speed with the first word news update with mark crumpton. mark: the newly released congress sayst to nuclear weapons are central to north korea's strategic goal of ensuring the perpetual rule of the kim family dynasty. the report says pyongyang fixed the get ability to strike the continental u.s. with a nuclear armed missile. the report was based on an assignment -- assessment of
developing's in 2017 and was provided to congress in april, one month after president trump agreed to meet kim jong-un. conservative house republicans are demanding a new special counsel to investigate charges of misconduct that the department of justice and the fbi over the russia investigation. their resolution calls for a new look at whether agency officials were biased against president trump, and whether there were any surveillance abuses committed as part of the probe. thee will be outlining abuse, how and why the hillary clinton emailed probe ended and how and why the trump-russia probe began. it calls for a second special counsel for -- to investigate the misconduct with the understanding that the justice department cannot be expected to investigate itself. mark: the move follows a white house announcement that the top fbi and justice department officials have agreed to meet with congressional leaders and review classified information
that lawmakers have been seeking on the handling and -- on the investigation. nicolas maduro says his victory was earned "person by person, vote by vote." president maduro's new term will run from 2019 to 2025. an israeli leaders say there is evidence of u.s. embassy officials interfered by politics. speaking on state television, the president said that the pro-u.s. right-wing opposition underestimated him and that american sanctions will not stop venezuela. huntan in charge of the for a missing malaysia airlines plane disagrees with a new book that claims the pilot likely flew the plane beyond the search area to deliberately sink it in the indian ocean. search director peter foley was questioned by a senate committee about the book written by canadian air crash investigator. aviation officials believe the plane ran out of fuel and crashed after flying
far off course. the plane which was carrying 239 2014e vanished in march of in route to malaysia. global news, 24 hours a day, on air and at tic toc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm mark crumpton. this is bloomberg. scarlet: thank you so much. it is time for a bloomberg exclusive. digital invictus innovation is becoming central across all industries, especially big data. bloomberg sat down with tim sloan and talked about the role of big data at the bank. use the data we have to make our customers lives easier and better, and make them more successful, that will be really successful. that will be really important. i will give you an example. real-time balance update, may of last year, we introduced real-time balance updates. it starts slow but now millions of times a month, i think it is
like 20 million times a month, we are providing an update to our customers in terms of what their balances are so they can situationir financial better, avoid overdrafts, make good decisions. that is an example of using data and applying it to our customers. >> do you think it applies -- there's a debate about wall street trading. do you think it applies to trading as it does to your other businesses? tim: i think it can. i don't think it will have as big of an impact, because we have so many more customers who are on the retail side, on the corporate or investment banking side of the business. reporter: everyone sees an opportunity for amazon or google, or facebook to get into financial services. on their own or in partnership. conversationsny like that with those companies? tim: absolutely.
they are all good customers of ours. we value those relationships. the feedback we get from those technology firms is that they do not want to get in financial services. they want to be able to deliver good experience to their customers. and sometimes i can be a financial service product. amazon asfinancing to they grow their customer base. or having a chat and having our x in thesiness chat bo apple technology. that is helpful for them. reporter: is that because banking still has a big mode -- moat around it? or is it because silicon valley doesn't want to disrupted the business? i can't see why they would want to. tim: it can be very profitable. there is no question about that. i think the industry is doing a pretty good job of disrupting
itself. there are a lot of other financial technology firms that are doing a great job of trying to disrupt us too. i believe their strategies to themselves. apple is a great example. they came out with the ability for apple pay. did they want to get into the credit card business? no, they wanted to provide a convenience to their customers with a great phone to be able to transact on their phone. reporter: i know you are proud of what is going on in wells fargo's start up accelerator. what technologies are you most excited about, that you can see wells fargo adapting to the services and products it provides people everyday? is thee big issue there ones i can understand. we have really smart people in this company. that run our innovation group, run our technology business, that understand these things much better than i do.
what i am really excited about is the transformation that has occurred in the company in the last year. the new products and services we have rolled out. whether it is real-time balance update, the overdraft rewind, our intuitive investor. the mortgage application. controlow piloting power. we will be piloting green house. that is what is exciting. it is taking these ideas. these are just ideas a few years ago. and putting them into place and seeing the customer reaction. that is what is exciting. julia: that was our exclusive interview with wells fargo ceo tim sloan. coming up, jc penny pinching. weighing on company shares. all the details next. this is bloomberg. ♪ t. this is bloomberg. ♪
♪ scarlet: this is "bloomberg markets." i'm scarlet fu. julia: it's time for our sector spider report and our stock of the hour with abigail doolittle. abigail: we are taking at the xl wire, the sector spider. you can see it is down. a small decline. down 2/10 of 1%. one of the downside is weighing on the s&p 500. as it flips between small gains and losses. as for the xl why, this is a fourth out of the last six days lower. a little weakness. modest. despite the fact that we have the small declines for the xly, a lot of movement beneath the surface. what's look at one of the big winners on the day. this is tj maxx. over the last two days, popping higher. this after the company did put up a strong quarter. right now, shares are hitting trading at a new all-time high.
not only did they put up a strong quarter, they boosted the full-year outlook. it looks like they have a disproportionate amount of millennial shoppers helping the result. it seems like those millennials like that treasure hunt aspect of shopping at t.j. maxx. thever, as for some of laggards for the discriminator discretionary space, look at holes. down 6.7%. this is at the company -- as the company beat estimates. on the conference call, management indicated there could be second half headwinds. investors not liking that, dragging on macy's too. lastly, macy's put up a great quarter. shares have been in rally mode. i now, on for the worst day since february. our stock of the hour, a piece of the department store picture. take a look at jcpenney. this is over the last five days. last week taking a big hit. today, lower once again. these are the worst five days for jcpenney of the year.
today, lower on the abrupt departure from ceo marvin allison. he did resign. he will be the ceo at lowe's after he stepped down from his post on june 1. it is so abrupt that they don't even have a replacement. they have four jcpenney executives who will come in, share those day-to-day activities. the big story for jcpenney with the stock trading above two dollars, the turnaround story. marvin allison have been trying by cutting cost and selling big-ticket items. not a lot of success. the stock is down about 70%. more than 65% since he took over back in august of 2015. scarlet: if you look at how lowe's shares react, investors marvine appointment of ellison. it's a acknowledgment that it doesn't matter who is at the helm of jcpenney. the company is not in a good place. abigail: they have a lot of
points to improve. marvin allison spent 12 years at the home depot. his specialty may be for those big-box home realtors. needs to turn apparels. let's take a look at the story. and had comeas ceo in 2011 and was expected to do big things. revenues above 17 billion at that time. taking a dive. this is when marvin allison took over. where took it -- closer to 12 billion. this is what they need to turn around. they need to bring people into the stair -- stores. that is cutting into margins. julia: lots of the things he was trying to do a jcpenney in terms of efficiency gains -- that is exactly what the activist investor in lowe's has been working for. abigail: it could be a good fit. as for jcpenney come it will be interesting who they find. julia: now what? scarlet: have you been to a jcpenney, julia? julia: no.
abigail: baby when i was 18. scarlet: i last went when i was buying toddler clothes for my 14 ural 10. it's been a while -- 14 year old son. it's been a while. abigail: they need to reestablish their women's apparel. scarlet: give them a reason to go. youail doolittle, thank very much. coming up, bannon on bloomberg highlights -- on bloomberg highlights from that. from new york, this is bloomberg. ♪
they asked if president trump would sit down for an interview with bob mueller. from the once again, beginning, don't think that is necessary. i want to go back to the question. we know, probably, where that investigation -- broadly, where the investigation is going. jay sekulow is our lanny davis. i think it was him who took the notes and it got out somehow. ofut the 44 verticals inquiry. i think it is also a forward stuff. i don't think the president needs to sit for an interview. when i saw those questions, i thought those questions could be answered in writing. if there is to be an answer at all. that is for the president's lawyers and counsel to work with him on. i didn't see anything in those lines of questioning that were going to be that problematic. some may be more than others. at that it was straightforward. i think those things can be answered in writing. i would advocate that unless it
is absolutely necessary, the president should not sit down. if i can get my two cents in. i completely agree with steve bannon. rudy giuliani is the best decision that could possibly have been made. he has given away the president's defenses. he waived attorney-client privilege. he lies all the time. he seems slightly manic. he is the best thing we democrats -- thank you, donald trump, for putting rudy giuliani on. secondly, facts are stubborn things. steve is right. there are 44 a lot -- lines of questions. i wonder how that got non-leaked out why my various friends got that story from only a couple of people in the room? you but can't believe -- you bring up weeks when the 2 -- when the new york times -- anything that goes on and special prosecutor's office is immediately, to add their typedage, -- i should say
up in the new york times. the paper of record the following day. you can't talk about -- this is part of the agreeable. lanny: we had a hard time with lakes at the clinton white house too. i'm sympathetic. truth and facts are stubborn. nomad or what donald trump or steve does -- no matter what theld trump or steve does, truth will prevail. sooner or later he will -- a year.t has been i'm saying, go back to the 44 questions. that is where we know in some official capacity that this is going. i think these are thin reeds. if that is your case, that's a thin reed to hold onto. i think the american people will ingh in and measure all this november 6 of this year. i think they will speak very loudly about what they think about this. reporter: are you in touch with giuliani? steve: i don't want to talk
about that. i'm a very big fan of rudy. he knows the president. he's a great lawyer. user terrific -- he is a terrific guy. some media hits are bigger than others. fan of giuliani speaking on television speaking for donald trump. please, keep going. on television speaking for donald trump. please, keep going. reporter: are you advocating rod rosenstein be fired? steve: i thought they crossed a line with all the michael cohen situation when he signed off on that. in coming forward with the situation about the formant -- informant or what fbieillance was done by the and other intelligence agencies or law enforcement agencies. the president gave him a direct order. he should be fired. i was part of the team with senator sessions that reviewed rod rosenstein. of his an advocate
becoming deputy attorney general. i think the track record is clear. i was a strong advocate that he should be let go. i was a strong advocate that rod should be let go also. if president trump should dare to fire rosenstein, mueller, or his own attorney general who he has demeaned many times publicly, he should go back in history and take a look at what happens when richard nixon engaged in the saturday night massacre. steve bannon is the one person that warned donald trump not to fire james comey. i think james comey should have been fired. but by barack obama, because he violated every justice department rule there is when it came to handling the clinton email-- hillary clinton investigation. steve: this gets back to the facts. facts't think there were in it. i thought this would peter out in 90 days.
get to lanny davis revved up and you couldn't get him rubbed up on it. would take its course and we would deal with this thing last year. i think it has been a week -- elongated and now they are talking about wrapping it up by the summer. also spoke with steve bannon about china. he condemned the trade truce between beijing and washington. what started as a defined process because we were taking a hard-line as soon as we started to get soft, it is very vague and general. remember, what the chinese want to do is play for time. what they want to play for time is they want to see the political capital that donald trump has. they want to see what happens in november. they want to see what happens in 2020. they have never had to face someone in a leadership position in the united states of america that fundamentally understands what is at stake here in the industrial relationship we have.
trump has done more in a year and a half then administrations over 30 years have done. he has put to lie the fact that we did not have tools. the chinese are playing for time. i have always been a strong advocate as has peter navarro and bob lighthizer and other people in the administration that the best thing to do with china is a confrontation. not a confrontation where you try to go to war. but a confrontation to tell them that we are firm in these beliefs, we will not let you steal our innovation, we will raidet you sit there and silicon valley. it will not happen. julia: that was steve bannon speaking earlier on bloomberg. it is time for the bloomberg business flash. a snapshot of the biggest business stories in the news. activist investors elliott management is building a safety in german engineering giant. elliott would like to replace ceo since he took over in 2011. of theirve lost 30%
value. more followed in the scandal executive was found guilty of taking a $10 million bribe for manipulating the company takeover of startup pharmacy. the former head of the startup was also convicted. 1.7 billion dollar acquisition of magenta may have repercussions for shares. it fell today after the deal was announced last night. magenta oh is the biggest magenta oh is the biggest customer. the opposition rules out for adobe. that is your business flash update. we have coming up, market analysis. if you look at the s&p 500, it is holding merits highest level since march. a mixed day overall within equities. not a lot of movement. the russell to have -- the russell 2000 has made record highs the past four days, has
retreated a little. off by one third of 1%. the dollar is lower. treasuries are lower. crude was higher. it has come back a little bit. we will talk about what that means with lawrence taylor. reminder, you want to check out all of our market charts on gtv go. julie hyman always has a couple. abigail has them. us talk about facebook with mark zuckerberg's testimonies before the european parliament. there is the stall for daily active users as a percent of monthly active users for facebook. the also look at rising costs for airlines. this is bloomberg. ♪
i'm julia chatterley. scarlet: and i am scarlet fu. welcome to bloomberg markets. julia: 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. driving down tensions -- u.s. stocks fluctuating often is china plans to cut card tariffs by 15%. going after a german giants -- elliott management is said to be building a stake in -- aiming to oust the ceo. countdown to left off. we have live coverage of the spacex falcon nine launch coming up this hour. one hour from the close of trading, let's get a check on the market and beyond. julie: a failure to launch, as it were. we have socks and a narrow range as we consider the ramifications of trade negotiations as well as the president's meeting with the
president of south korea and the prospect for a meeting with north korea. the dow pulling back. weakness in energy, industrials, and materials in the s&p. we are questioning whether what we see in the market is concern about a trade war. he looked at an index. the purple line is the total return index. exporters have actually outperformed year to date, and you have seen even at times when the have been concerns about trade, they have not underperformed by much necessarily. interesting there as we look at the various proxies for trade. in terms of how it is playing out, i wanted to look at the automakers. there is been a lot of discussion that the reduction in tariffs will benefit european automakers as well as toyota more than the u.s.-based automakers. they are arriving nonetheless. sharp weakness however in the
auto parts retailers. nothing to do with china, but rather autozone making comments they are facing pressure due to higher wages. that seems to be a theme due to concerns in the second half of the year and concerns of inflation and the rising costs in various ways. numbers have reported an unexpected drop for first-quarter comparable sales. autozone overall was a net beat before making the comment about costs in the second half of the year, they rose. theyn is on the rise after announced a buyback. analysts are very positive on the stock. margo -- marvell and nxp also on the rise. helpingmestic is not you either. toll brothers out with numbers that missed estimates.
they are talking about a rise in cost for labor, material, land, and those shares are trading lower along with the rest of the homebuilders today. a lot of pain in various sectors today. scarlet: good roundup. thank you so much. let's get you to first word news with mark crumpton. president trump suggested today a planned historic meeting with north korean leader kim jong-il could be delayed cash kim jong-un could be delayed. -- kim jong-un could be delayed. mr. president raise the thought that it could be pushed back. hisgyang pulled out of talks with the southwest week. china is defending its relationship with north korea. china says its exchanges with the country do not contradict international obligations. by a foreign ministry spokesman came in response to pressure by president trump for china to seal the border with north korea so pyongyang cannot avoid international sanctions. deputy minister for
diplomacy is criticizing the palestinians decision to open a complaint against israel before the international criminal court. ands called "outrageous," adds israel has no reason to be concerned. itself, as anyds other countries do, against a terrorist organization driving innocent civilians in an attempt to break through our fence, kill civilians and destroy our state. there is no need for any investigation. if any investigation needs to be done, israel can do it itself. cabinetrmer palestinian leader says the leadership had no choice but to seek remedy from the icc. >> i believe this is extremely significant because it came very long has attendance on behalf of the palestinian leadership and after lots of pressure from the countries that
are supporting israel, like the united states, in order to try to do tour the palestinian leadership from taking this step. mark: meantime, the prosecutor of international criminal court as signal she will not be rushed into making a decision on whether to launch an investigation into alleged crimes by israel in the palestinian territories. global news 24 hours a day on air and at tictoc on twitter powered by over 2700 journalists and analysts in more than 120 countries. i am mark crumpton. this is bloomberg. scarlet: we have more on the markets. when will the bulls make a comeback? joining us now is lawrence taylor at t. rowe price. -- lawrence taylor. you focus on-
growth equities and it would appear it is changing, whether looking at europe, or even the u.s. where the threat of inflation could mean growth slows down a little bit down the road. yes, and iylor: think one of the big differences between last year and this year growth is now known, it is out -- scarlet: it is factored in. laurence: to a degree, yes. the market likes positive surprise. now you are facing a more complex regime where inflation will be higher. julia: is growth in the price? doing no ultimately the impact of fiscal spending, higher deficit spending from the united states in particular? we still have stimulus for potential trade benefits from the united states. a lot of reason to still be
optimistic about the upside for greece here? there are somenk big unknowns. we are looking at those, it will be important to follow particularly some of the political risks that are unfolding hour-by-hour at the moment. if you look at a growing, stable, u.s. economy with stable, growing inflation, this valuation, this price for u.s. equities is actually below its average long-term. julia: so you see opportunity? laurence: absolutely. that is part of the benefit of volatility. the biggest risk at the end of january is that we would burn out, valuations would expand, we would face a traditional bubble, a real zoo brent access. we don't -- exuberant excess. we don't have that. people have come out strongly. people like to paint a black-and-white picture. the picture is inflation will go up.
it will accelerate inflation data points to the point where the equity market will stall. seehe end of the day, you opportunity. scarlet: i want to pick up on inflation because a lot of people say we are on the cusp of a broad breakout in inflation. you push back against -- against that. what do those people get wrong? what you see in economic textbooks -- demographics, technologies, take album, aback to black" $15 album, index it today, it should be $45. scarlet: it is not. laurence: it is deflation rate. amazon is deflationary. it is impacting both price inflation and wage inflation. what about what julia was just saying -- the fiscal stimulus, the deficit the u.s.?
is adding to constantly? surely those are inflated -- is adding to constantly? surely those are inflationary. laurence: bear in mind a year ago inflation was very subdued. today, earnings growth, economic growth, cash flow growth, that is being returned in part to the shareholders, in part to the employees. that is creating inflation. that is fine, we think, because of the structural, disinflationary impacts. still, perhaps, you believe in more political action, which becomes inflationary. trade wars, sanctions on iran are adding to the complex. julia: you are arguing the broader themes, the deflationary themes overwhelm, effectively, the underlying, ultimately inflationary themes. laurence: the magnitude of the inflation cycle will be much more modest than history would suggest.
we see it glide up and then level off, unless you believe there is an incentive to fully embark on a trade war, and then perhaps you get inflation breakout and that would be negative. julia: you have said the volatility we are seeing is allowing you to upgrade your portfolios. i have a chart here. we have seen higher volatility -- we seem to be talking a lot about that for february, march, but i am watching equity volatility could particularly -- volatility particularly, line,ng back, the white and is this level of volatility -- it is higher than what have seen in terms of averages -- but it is not that much higher. it has come back again. manynce: the vix is, in measures, a complacency measure. when it is low you would like to see complacency burned away. we saw that in february with the wage inflation data print. it was able to reposition and effectively say that was the
easy money. let's move on. in that period, you got to buy around noise -- let's call it the fangs in those fast growers. the results have been good since then. julia: you have a couple of charts i want to show. you show some analogies we see in terms of low-price earning stocks and the relative riskiness. we have a disparity between low and high pe. talk us through the chart. laurence: if you look at the way the economy has evolved over time, you go back in time -- i think it was established wisdom that value would be where you hold and own stocks, and then perhaps you would trade growth when you saw the economy accelerate. in many respects, you have seen almost the opposite ocher and the latest cycle. people have owned growth stocks because the perceived wisdom is in a low-growth world.
we agree with that. therefore earnings growth is more price. people pay for it. to find a catalyst for value -- one of the catalysts is an inflation cycle and acceleration of the global economy. that is what investors are looking for to own the value segment. the challenge is perhaps it is more risky and volatile. julia: yes. scarlet: as you mentioned tolier, you were looking upgrade your portfolio -- give us specifics -- what sectors, what kind of companies. laurence: what we have been doing recently is adding to technology, and people often perceive that as being a correlated tactic. we have been adding within technology semi-conductors, which, again, if you look at the history that was a volatile, expansion-contraction industry. you have a chance based on some relatively weak apple earnings, the disappointment of the iphone x, disappointing results from the underlying ecosystem of
suppliers, to add to some individual companies that are on the right side of where devices are moving -- effectively 3-d facial recognition and ultimately gaming communication using that 3-d technology. there you have a chance to add the cyclical, lower-multiple stocks and get, perhaps, value and growth together, and quite frankly cheap growth outperforms value over time. scarlet: select semiconductors. thank you so much, laurence taylor. coming up, why elliott management is targeting to thyssenkrupp. from new york, this is bloomberg. ♪
this is bloomberg markets. julia: i am julia chatterley. scarlet: i am scarlet phil. a time for the bloomberg business flash. subsidiary plans to launch super channels with a focus on sports, finance, and entertainment. ceo tim armstrong discussed the plants on bloomberg television. tim armstrong: we have gone up mobile we are doing. we just announced two weeks ago a giant deal with samsung to put our brand on samsung desktops, and future products. we are in the space of committing digital mobile. scarlet: the alternative asset
manager, which was bought last plans tooftbank group, raise $2 billion for a first fund dedicated to direct lending to the new york-based firm is targeting $5 billion for a fifth flagship credit opportunity fund. and that is your business flash update. julia: it has been a busy year for paul singer's elliott management. bloomberg reporting the activists is building a sticking german engineering thyssenkrupp and seeking the ouster of its ceo. we are joined by ed hammond. a lot of value in europe. they are not the first to notice issues at thyssenkrupp. ed hammond: they are not. they come in behind simeon capital, who have a huge position, the second-largest holder, and they have lobby and a lot of things we expect elliott to lobby for. they are not public, so they are under the 3% threshold. we suspect they will go above that and become public and make
specific demands in terms of management changes, reorganizing the businesses and crucially what can they do with the steal asset they have long talked about merging into a jv. julia: this has been two years of negotiations. that is what complicated part, but the traditional conglomerate, it is all over the place. ? submarines? ed: -- submarines? ed: submarines to elevators. have seen it in the u.s.. united technologies. ge. we talked about it just yesterday on the show. i suspect it will be a big element. the question then is can the current management push that through or is that something elliott will seek to push over? we should note they have a seat on the advisory board. companies activism -- are less receptive to activism in europe. julia: yes, they are. scarlet: why are there so many
more opportunities it seems up late in europe, or at least outside of the u.s.? we keep hearing about elliott management, the moves they are making, hyundai motors. the british bookstore -- what is the theme unifying all of these? ed: i think there are two themes . first, if you look at the u.s., low-hanging fruit has simply been picked. there are tons of targets. we see the majority of activity globally happening in the u.s., but a lot of the big, easy stuff has been done. the other thing that is interesting and more unique to elliott, they are lawyers. they seem like lawyers. paul singer was a lawyer. they are good at going anywhere in the world's and understanding the jurisprudential structure of a particular environment, market, or corporate structure, and they get in there. they also, unlike other activists, they will dig in for the long haul. you have seen them do that time and again. they will stay there for years. julia: speaking of the long haul, what about nxp -- get into
the physical element that was the nonevent in the broadcom telecom, but talk us through this one. ed: let's go through the terminal. share price graph tells a story of its own. they were in a more arbitrage way. they became activists and said to qualcomm you can get eight more than you are offered. at that point, qualcomm was over a barrel because they had qualcomm trying to come in hostile. elliott was holding up this deal they are -- were trying to get done. they agreed to bump, but you had a situation where nxp is sitting in front of the ministry of commerce in china, and they are taking a long time to review it. they are taking longer than expected. the review period was renewed. we are 30 days into a new 90-day window. if we get to the end of that and
they have not agreed to a deal, and qualcomm will walk away. you have seen enormous volatility and that reflects risk arbitrage guys do not know how to play this. as a: and does something result of the trade negotiations between the u.s. and china. at hammond. deals reporter. from new york. this is bloomberg. ♪
this is bloomberg markets. i'm julie hyman. time for options insight. i'm joined by kevin kelly of benchmark investments. kevin, i'm going to skip today because there is not much price action, and go straight to retail. there, we are seeing plenty of price action today. we watched cole fall. we are watching tjx go up. stock fall after the company said it ceo was leaving. what kind of options activity are we seeing around all of this? interested, what is
if you go into the xrt, the s&p index, and it includes everything including the deep end of the pool with smaller retailers. you see the implied volatility of the sector. all the retail the comprises the market is about 20% and you can get a barometer of what is happening with other players. as we saw today with kohl's, they were up initially, and it had to do with them beating on sales, but then they started guidance and said we probably pull some of those sales forward. when you look at tjx, they say foot traffic has been doing well. foot traffic is so important to retailers. when you look at implied volatility for kohl's, it is at 30 6%. it is well above the xrt. if you look at t.j. maxx, it is only at 18%. it is a little bit below that. it is the tale of two retailers. julie: it is. at the same time, kohl's is talking about headwinds in the second half of the year.
we have heard a lot of companies and defense sectors increase me talk about rising costs. is that going to be a problem? tjx is reporting -- season, it beat and raised today. it already came out. would that be a problem if you're talking about one retailer or another -- will it be a problem sector-wide? kevin: it shouldn't be a problem sector wide and one of the reasons why is you need to look at the management teams and those that increased operating costs and margins. that is what happened with t.j. maxx. desmond has been exquisite quarter after quarter, and operating margins went up this quarter, ahead of their guidance. they have been on the bottom line six out of eight times, beaten on the top. they are not afraid of rising input costs. kohl's on the other hand, what they are trying to do is right size department stores. ldi coming in,
pair up with amazon -- it seems they cannot window matter what they do. julie: what you want to do with tjx? kevin: increase your exposure. a defensive name where they have the77% dividend yield, sell call all the way out to october. you were getting two dollars before. the stock pulled back, but this is a great way to get a free dividend and ride this great management team. julie: thanks kevin kelly. julia, back to you. julia: we have breaking news -- rio tinto is ready to accept a $3.5 billion deal with indonesia minecept a copper and gold . they have had 40% interest since 1995. would be a big move. more to come. ♪
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more than 15,000 weapons, countries are threatening the said -- president erdogan countries with more than 15,000 weapons are threatening the world. move as a sees a boost for global trade in the s as of what the bloc view increased isolation. the bulgarian economic minister told a news conference in brussels that a free-trade deal with australia and new zealand would benefit its sectors, including motor equipment, chemicals, processed foods, and services. trade commissioner says the two countries our friends and allies. part of this circle of friends who believes in good trade and multilateralism, and it is also economically beneficial for us to have agreements with them. it would put our companies on an equal footing with competitors from countries