tv Bloomberg Markets Balance of Power Bloomberg May 25, 2018 12:00pm-1:00pm EDT
hours makes in the donald trump white house, after saying the summit with north korea was not happening, it could be back on. on the originally scheduled date. .e have on kevin rudd how damaging could the auto tariff be on the economy? we will talk with eswar prasad of cornell university. vladimir putin states do our editor in chief as he hosts his major summit in st. petersburg. what did he say about the relationship with president trump? halfway into the trading day and looking bit mixed. let's look at the markets with julie hyman. julie: thisre's --
fight north korea and other -- stocks not seeing much reaction. the nasdaq is rising as the s&p and the dow are slightly lower. look at the bloomberg for a better picture of the range we are talking about. this goes back to late february with stocks housing around. the rain -- bouncing around. the range is bouncing between the two levels. one asset that did not get the memo is oil. in the session today, intraday , $70 seeking nine cents -- $68 today, down 4% today, the worst one day tumble since september with the body -- audi energy minister saying they will likely increase production gradually in the second half of the year.
some energy analysts crediting a tweeet from president trump making opec change its tune. at itd that opec was again and oil prices were artificially high and the saudi energy minister said customers have concerns about oil prices was one of the factors in the decision i saudi arabia. looking at retailers as they report earnings with a mixed picture with big moves on either side. foot locker with a surge after their earnings and sales topped estimates. better premium goods from top vendors helping them with inventory management. boots, theirugg fiscal earning is forecast about estimates with fourth quarter earnings and sales beating estimates. omps the namesake stores c down 4%.
they blame delays in inventory deliveries. a worse than expected outlook for the second quarter although analysts saying not as bad as it appears and you should buy the shares. david: is it on or off? president trump wrote to kim jong-un yesterday and canceled be june 12 summit. north korea says they are stilling -- still willing to meet. the president this morning said maybe the summit would take place after all. theident trump: it could be 12th, we are talking to them and they want to do it and we would like to do it. david: we welcome kevin rudd, the former prime minister of australia. welcome back to bloomberg. wrong and can it be put right again? >> what went wrong, i think you have a change in u.s. strategy.
is, until the events of the last several is, until the evene last several days, you have a u.s. tragedy, -- strategy, we will meet, the president said the summit will happen. a delivered ambiguity lift around the term denuclearization. that means a lot in terms of what happens on the ground. and then, what happened last week, reflecting the input of the advisor john bolton, a determination to define precisely what that meant as a precondition of talks. everything now that meant. that is when the north koreans acted up, particularly when john bolton use the libya example. that is why we had the unseemly set of events in the last couple of days. on the second part of your question, can you put humpty dumpty back together again?
normally i would say probably not. because the north koreans have their own internal regime politics. hang tough and fire off another missile test. then you get the testament from the fisa foreign minister of north korea, sweetness and light. the response from president trump was sweet and light. is it back on? a qualified maybe, less than 50% in less whether to be on for june 12. still scrambling. david: the deputy foreign minister, he carefully said we could do this in stages. they said they are open to do it in stages and make progress. that seems to be contrary to the u.s. position, although nothing. is it realistic to do a deal like this with all of nothing?
>> not on a diplomatic negotiation. you cannot do it. a change in the u.s. position from an open approach to let see how much denuclearization we can get, to this, it is libya, get rid of the lot or we are not coming. libya phase two, all market off the got taken out -- more market like with the run, it happens -- iran, it happens in stages. the north korean response is rational. at least it would match you rationality -- the rationality from most in washington who think this would happen in stages. it is not verified, the deal is over. you hit the nail on the head. yesterday, when we heard president trump in his statement, i called my family
and said "because tensions will escalate on the korean peninsula. i was surprised to see the reaction from north korea. what struck me as interesting was when he talked about the donald trump formula. that that would work in setting things right. it seems that north korea is getting a page out of the playbook of every other world leader. you want to praise and give credit to president trump to get negotiations going and get concessions. andhe new discipline universities is called trumpology. like, how do you make sense of this? the average american ally, the president said yesterday it is off. preconditions for denuclearization has been met and 12 hours later it is halfback on. half back on.
from a management of allies perspective, particularly, the folks in the blue house in seoul, a rolling nightmare. unusual conciliatory statement from the north koreans. trump formula, pattern them on the back -- pat him on the back. the u.s. should ponder doing it over time. and an explicit but still what theyuling out denuclearize rapidly. what will be the response? i was asked this last week and i predicted that june 12 would go ahead. i am not about to do that again. shery: what about china? president trump seems to put
some of the blame on xi jinping? >> a complex strategic triangle. i think the bottom line is that you are right to say that donald trump has attributed a change to the north korean position to chinese influence. respectfully i would say to the white house of what has happened in the last week or so is a change in the american position about the matters we just discussed. whether to have an absolute precondition for total denuclearization, or to do it in stages? if it could be achieved. i would think the north koreans position has been consistent. jinping's input, i do not see evidence. the more important thing to preserve is to make chocolate global economy solve a trade dispute.
not allow geopolitics to come in over the top of this through a rolling miscalculations through language on the north korean question. david: let's talk about south korea. their president is out there farther than everybody else. he brought this to pass. did he not get the rug pulled out from underneath him, what is his role in these negotiations? >> having been the head of government, my thought about their president, he comes in and says, mr. president, we have an exciting new development -- shery: he needed a meeting at 11:30 p.m.. >> i have done things in my own country, things go wrong in other parts of the world. from a political management pass from president moon, everyone has their domestic politics. this is hard for him. the korean relationship is on the edge.
the strategic danger for the united states is that, if this is on-again and off-again, and leads to allies domestically and locally exposed, the long-term fracturing of political trust between the united states and the south koreans is a much bigger risk than the immediacy of what we are talking about, whether a meeting will happen on june 12. shery: nafta being renegotiated and auto tariffs into play. >> everything else is going fine. [laughter] kevin rudd, former prime minister of australia, thank you. coming up, we will talk about -- to francis rooney about how congress is kevin rudd reactinge cancellation of the north korea summit. this is bloomberg. ♪
shery: this is bloomberg markets: balance of power. i am shery ahn:. david: i am francis rooney >> -- i am david westin. isa middle school student into custody after they shaky shot another student and custom -- and teacher. the extent of the injuries are unclear. the shooting happened about 20 miles outside of indianapolis. is commenting on the summit with north korea, saying he could still meet kim jong-un as originally scheduled on june 12. the president says u.s. officials have resumed talks with north korea after what he called it nice statement. north korea responded to the cancellation of the summit by saying it was still open to a
meeting. iran trying to keep the crisis triggered by the u.s. nuclear deal withdrawal from getting worse. they want europe to come up with a package of economic guarantees by next month. among them are continued access to international finance and keeping oil exports at current levels. , the opposition has called for a vote of no-confidence of mariano rajoy administration. the socialist call the vote after the national court convicted a former official of running a multimillion dollar racket. the vote could lead to another election this year. global news 24 hours a day, on air and at tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am kailey leinz. this is bloomberg. tentativelyess is approving be moved by the president to cancel his planned summit with north korean dictator kim jong-il and.
questions where the president will go from here. it to shed light on the president's decision to scrap the summit is congressman francis rooney of florida, the vice chairman of the house foreign affairs committee. we welcome him from naples, florida. did the president do the right thing in canceling the summit, and what do you think now about his announcement that the summit could be back on? >> i think the president has been more effective than the three predecessors in getting theirkorea and there -- strong relationship with china in a better place. it is good cop, bad cop scene setting for a year or a year and a half seems to put us in a good spot. whether he holds the meeting or not, the key is not to wanted to bad. -- too bad. shery: president trump yesterday emphasized that the military is
ready, if necessary, regarding the north koreans. does that give you concern when it comes to the fact the president can wage war at any time? >> obviously, we are all concerned about the explosive situation with north korea and that they have ballistic missiles and hopefully we do not have to defend ourselves against them. the united states needs to maintain readiness and that is part of showing north korea we mean business. david: i want to go back to the statement that he has done better and taking a father and his three predecessors. we had a deal we thought in the 1990's under president clinton and thought we had them to denuclearize. but they were cheating from the moment we signed the deal. even if we could get to a deal, how can you possibly verify with this regime? >> that is the whole deal. a problem with the iran agreement. you do not have an arrangement
concerning nuclear weapons that cannot be verified. these are people who cannot be trusted. it happened in the bush administration also when they close in obsolete nuclear reactor that they would have to close anyway. david: then what are we pursuing? we cannot get a deal with iran or north korea that we could verify, how can you ever get a deal that you can ever verify with a regime that wants to subvert us? >> we have argued in our committee that publicly we could have gotten a deal with iran and hopefully, if we get a deal with north korea, it will not have holes like the deal and iran had like prepaying them before we make them perform. shery: what about the fact the president is linking geopolitics with trade? what risks does that strategy kerry? -- carry? >> geopolitics is always linked with trade. thatd the president
multilateral trade relationships are important aspects of security and they have a value that is distinct of economic aspects. shery: the administration pushing for sending u.s. allies may be to the arms of u.s. rivals like china. angela merkel was in beijing. is that a concern? countries like china and russia could get the upper hand? >> if it were up to me, i would focusing on the things were china was important to the united states, internet, technology issues, where they have reversed engineered some of our things and stolen our patents. i would not be worried about a hard commodity that drive industry around the world. david: that is a position we have heard from ceos and the business community says that, is that the approach the administration is taking? more a matter of terrace on goods than trying to change their procedures on ip, their
projections -- protections? >> it is the funneling that they took -- be funneling that they took these measures that could affect supply chains. helping theet from telephone company the military intel people say they will not that our people use those phones? david: what do they say when you talk to them?> you are with the same party, what does the administration say? >> they are focused on the trade deficits in countries like china and mexico. we are trying to figure out how we can have a dialogue about reducing the trade deficit in some areas without undermining the basic economics of nafta, the basic economics of our importation from china. david: we appreciate your time and hope you do not get caught in the storm over the weekend. congressman francis rooney,
house foreign affairs committee, good to have you with us. shery: wti crude plunging today after saudi arabia made a major policy shift, now supporting a gradual increase in oil output over the summer. losing more than 4% for a fourth consecutive session, at the lowest level since may 1. below the $70 per barrel level. this after saudi arabia sets of why would be boosted in the second half. this is bloomberg. ♪
fox reports that president trump has a tentative deal with china on gte. -- zte. there is hope that perhaps the deal between qualcomm and nxp; as will happen because with president trump reaching this tentative deal with zte, it suggests the trade stance, the conversation with u.s. and china may be such that the nxp deal will be approved by chinese regulators. it was talked about in october 2016 and it has been at a standstill. we have been waiting for months for rate with tory approval from china which has not come through. -- regulatory approval from china which is not come through. the u.s. stands for is the chinese phone company as softened. perhaps good news for nxpi going through with qualcomm.
is dutch but 30% of their business comes from china. shery: nxpi is up more than qualcomm. >> you would expect qualcomm to rally and not clear why the reaction. perhaps some thinking that qualcomm has more skin in the game. they need the deal to come through and need the diversification. i, 40% of their revenue plus qualcommm auto and wants to get into that business and perhaps qualcomm investors not as excited about nxpi. optics around the stock for nxpi where structural for qualcomm. david: qualcomm turned on broadcom and the board is dealing pressure. point, focused on the stock buyback, $25 billion stock buyback.
the time is ticking. shery: thank you abigail doolittle. up next, as vladimir putin navigates controversy after controversy, european leaders are trying to get close to him. why? we talk with a former u.s. ambassador to russia. and president trump pending out diplomas -- handing out diplomas in annapolis, maryland. you are seeing live pictures. live from new york, this is bloomberg. ♪ >>
nasdaq is up a quarter percent. the 10 year for a third consecutive session. the dollar reversing this week's losses and rally and that largely due to euro weakening. wti, it is following and the lowest level since may 1. saudi arabia saying that supply would likely be boosted in the second half. >> big move in oil. for first word news -- defense secretary says that there is "a possibly some good news about a u.s.-north korea summit." mattis said diplomats are working to get a summit on track. he is called the recent back-and-forth between president trump and north korea the,
--ual give-and-take paren give-and-take." president trump told the graduates in annapolis that, "the best way to prevent war is to be fully prepared for war." the president praised the military saying you do not give up, you do not give in. has askedme minister for looking into irregularities in the election. there have been complaints earlier this month in which electronic voting systems were used for the first time. this great movie mobile harvey weinstein has surrendered -- movie mogul has rendered to new york city police. against him after
months of allegations of sexual assault. global news, 24 hours a day powered by more than 2,700 analysts and journalists in more than 120 countries. this is bloomberg. david: thanks so much. at the st. petersburg economics forum earlier today, vladimir putin took president trump to task for canceling the iran nuclear deal. lost thatt think he she is just doing good on his electoral promises. demolished deal be for good, then many will stand to lose and we have to do everything to avoid it. david: someone who has dealt
personally with vladimir putin, michael mcfaul. freeman'sds the boldly institute at stanford university. he is the author of "from cold ar to hot piece." trying to explain what has gone wrong between the united states and russia and why he was personally targeted by president putin, welcome mr. ambassador. >> thank you for having me. putin,we saw vladimir offer openness and light breez a -- and light. and taking president trump the task. who is the vladimir putin that you know? michael m.: yes and no. the situation today in the speech he gave was created by president trump. unitether act would
russia, china, and our nato allies been pulling out of the iran nuclear deal. was a good deal for america under the deal for the world, so now, we are the ones isolated. earlier couple of years because of his actions in ukraine and propping up a dictator in syria and an intervening in our elections, putin used to be the one that was isolated to. as you describe those events, you can add a couple others. help them to shoot down a civilian airliner. poison to individuals and sells very. sibury.al how can the world quickly forget all of that? >> we should not.
we should be able to walk and chew gum and both are administrations should be able to do that, but it is striking that people have forgotten about those events. they are moving on. the st. petersburg international forum is going on as if nothing happened. back in 2014, 2015, there was a boycott of that event. people are trying to isolate president putin. we are moving on and that is a strategic mistake. shery: putin also saying the lack of continuity in u.s. policy creates uncertainty. is he hitting the nail right on the head? nash this goodng beginning in upper hand to arrivals whether it is in geopolitics or trade. michael m.: there is some irony in that statement. they have continuity and russia because they do not have free and fair elections and mr. putin makes the foreign-policy decisions.
i would prefer our system or we have elections which of consequences, but he is right -- we're in a period of withdrawal as united states. we are withdrawing from many different international agreements. does not serve stability in the international system and is not serve as stability in the international markets. i would like to see america that leads instead of withdrawal. shery: let's talk about russia's hypocrisy. secretary pompeo advocating a tougher stance against russia, is there a right way to deal with russia under this administration of president putin? michael m.: i think there is. i want to and emphasize tragically -- you have to go back to the way we dealt with the soviets and the cold war. secretarycourage pompeo to read secretary george schultz's memoirs of how he dealt with the soviets.
that was a big dose of containment, pushing back when russia was doing bad things in the international system. america's it is in national interest to engage in the kremlin on issues that we might benefit on engagement, so back then, it was arms control. that would be a good place to start for the trump administration. push back. punish russia for what they did in ukraine. punish them for what they did in our elections. engage to control the spread, new nuclearively of weapons that vladimir putin and just announced. these are dangerous and i need to be brought in. david: in your book, you recount a very chilling events where you actually met with vladimir putin with tom donald at the time and mr. putin targeted you, really look at you with anger and accuse you of things -- trying to undermine his regime.
just today, headline says that mr. putin does not intended to be president beyond the storm. the believe him -- beyond this term. do you believe him? michael m.: i hope that is true. it is hard to imagine who would be a successor. there are a lot of people who have become very rich with vladimir putin as president who do not want to see him step down because their property rights are not guaranteed by the court system, they are guaranteed by their personal relationship to putin. there is going to be a lot of pressure on him to stay on because there is not an obvious successor. he has not created a political party that would help to bring along new leaders at the gubernatorial level, and therefore, he is going to be there for a long time. shery: let me go back to the
you run nuclear deal. you have experienced -- the iaran -- the iran nuclear deal. do you expect another deal with iran and what form could take? michael m.: i do not. sit down the iranians to a deal with us right now when the entire world, even our allies are supporting the mullahs in tehran. i do not think they have any incentive right now and less our economic sanctions begin to have an effect on european companies, maybe then they will sit down. right now, they are in the driver's seat and the united states is isolated. david: thank you michael mcfaul. really good to have you on. book,eally great new "from cold war to hot piece." coming up, trump's trade
david: this is bloomberg markets, balance of power. shery: president trump has sent mixed messages on trade this week. his announcements on a range of issues has caused a turmoil with allies around the world. today is the st. petersburg managingonal forum, director had this to say about the importance of global trade. >> trade is a driver for growth around the world and has been. after 10 years of depressed and depressed trade,
trade is finally picking up and finally growing faster than global growth. just really imperative not for china but for all countries that rely on trade for their growth. we are joined now by eswar prasad, senior fellow and senior professor of trade policy at cornell university. great to have you with us again. let me start with the auto tarriffs that could be coming from the trump administration on top of the steel and aluminum tariffs, solar panels and washing machine tariffs -- you can waive tariffs around and get the upper hand. tareffective are iffs as a bargaining tool? letterfirst of all, member that is his trade week so we have gotten is more hostility towards traditional trading partner allies of the u.s. and certainly the view of the trump
administration administration sing tradee that u tariffs can generate a blunt across a broad range of products which are really not -- it raises all sorts of questions and i do not think will be ultimately effective. taken a morehas conciliatory stance. they have stopped their antidumping investigation into say --o when you wouldn't you say that they are working? what is actually been accomplished, china reducing a uto tariffs does not help the u.s. that much.
ironically, many of the main beneficiaries of china's reduction in tariffs is going to be european countries and korea. by the trumpfs administration are going to hurt that the allies of the u.s.. what china has given up is minimal impaired to what the the -- compared to what u.s. really needs which is to protect intellectual property rights and so on. in this isl steps not going to help very much in terms of fixing the trade deficit or in terms of the longer-term issues of the u.s. that they have long been trying to get the chinese to succeed on. david: if this does develop into a trade war, is it the last war that we are fighting? steel,like we are doing war, automobiles -- we went
through this in the 1980's with japan. forld may actually be going things like intellectual property on services, on investments -- why are they focusing on what really feels like some thing from 30 years ago? there is not much economic basis of working on the -- focusing on the multilateral or lateral bases and driven more by macroeconomic policies. of guidanceelement in the short run and in terms of overall economic welfare, they are not the greatest tool. concerns thate the u.s. has long had about and ie trading practices think there was a real opportunity here for the u.s. to create the common front that many of its allies share the same concerns about china, but instead, the trump administration is gone after
those allies before going after china and a lot of the tools and has used including steel and aluminum tariffs that are really not hurting china but hurting the u.s.'s traditional allies. taken a winning hand and turned it into a not effective one. to raise something as a concern which is technology. zte company which is violated the sanctions and then lied about it. we have a deal, what kind of mixed messages are we sending were on the one hand you are saying that automobiles are tied into national security but on e getther hand, will let zt off the hook because it will serve some larger purpose of the president's? eswar: it does adjust that the administration is willing to
trade off legitimate to long-term national security conservations and terms for some shorter economic wins. china is really winning the long-term economic war. as i have long held, one of the principal strengths the u.s. has is the strength of its institutional and legal framework. that thiscomes clear company has violated regulations in the u.s. repeatedly, if they can get a pass for the u.s. to get some short-term economic gains, that really undercuts the u.s. institutional framework and that will reverberate for a long time to come to china's advantage. shery: a great opinion piece professor that you talked about the institutions being undermined and dollar supremacy. professor, thank you for your time. coming up, from the piece
♪ david: this is bloomberg markets, balance of power. i am david westin. shery: i am shery yeun. the first to vote since the president struck a peace deal. joining us now is cynthia arnson, director of the woodrow wilson international center for scholars. she joins us from washington. thank you for your time. protege of thea former president who led the no vote against the peace treaty. what does yvonne duke's
presidency mean for the peace? cynthia: it is clear that yvonne ke wouldonne du change the provisions of justice which he sees as giving too much leniency to the far -- including those who would take up seats and the congress. he is a critic of the way that coca eradication has been ,arried out and is looking so i think there are lots of elements of the peace deal that will be actively changed or thought to be changed and others that will simply be abandoned because of lack of resources, lack of financial resources as well as political capital. i think it is fair to say that the peace process would not prosper under a duke presidency.
will it impact columbia's relationship with the rest of the world? cynthia: you have pointed out an anomaly here. rd was submitted and lost by a very narrow margin, less than half a percentage point, showing the depolarization -- the deep polarization in the region. aspects dealing with transitional justice and also political participation. division in the country and at the same time, by theas been an embrace international community reflected in the nobel peace prize that was given to president santos a few years ago. this'll be a real challenge it should ivan duke the elected. all the polls indicated that that is the case.
polls have been wrong in a, but should he be elected, he will face pressure in united states to maintain aspect of the peace accord and to address the issue of the murder of social activists, human rights defenders in rural areas. a very difficult issue. david: is it too simplistic to so just are seeing increased ombia --tion in col use it just that duke is likely to move further right. are we ending up with a tale of two countries and what is the risk of pedro coming in? cynthia: the chances of pedro ning are slim. a lot of people are opposed and
will vote for pedro simply because they do not want ivan duke in power. the polarization around the reflected,ment was but you see the polarization over to radically different divisions of the country. -- in law ander order, security-based approach to things versus pedro who wants a social justice and investing in the countryside. thefact that those are two visions and those in the traditional parties at the lowest levels they have ever been, it is notable. shery: hundred of thousands of venezuelans pouring into the country, will duke's approach to them change? presidency would
feel that there is a strong need more international assistance, but much greater efforts to control the border and to limit the flow. the relationship between colombia and venezuela would get more difficult. david: thank you for your time. , the director of the latin american program at woodrow wilson. fairfax financial holdings we will have a representative, and if you missed any thing throughout the show, gt go is your function. this is bloomberg. ♪ retail.
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david: -- >> this is bloomberg real yield. >> coming up, a shakeup in the european bond market. political risks spreading from italy to spain. trading were 10 year yields were a week ago. desperately trying to regain some credibility. we begin with a big issue, political risk in europe making a comeback. >> italy is the toughest call tactically here. in