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tv   Bloomberg Markets Americas  Bloomberg  May 31, 2018 10:00am-11:00am EDT

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♪ vonnie: president donald trump will impose steel and aluminum tariffs on the european union, canada, and mexico. let's check our markets are reacting to julie: interestingly -- are reacting. interestingly, they are not reacting. it is a question of how do you trade this? been so much back-and-forth on tariffs and trade talk that it is difficult to know what the worst case scenario is if it plays out here. we're seeing the downfall because it has the heaviest weighting of those affected by
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this is a nasdaq is trading higher today. from earlier in the year when we first got headlines and you saw more dramatic reactions. we are seeing pockets of reaction center stronger. one is with alumina makers gains,ves, we're seeing pretty substantial ones with aluminum and steel. steel trading higher as well. we're watching machinery companies. goldman sachs cutting its view from neutral to attractive because of u.s. production that will pique over the year, a challenge for 25% of machinery coverage, particularly being downgraded to neutral by the folks at goldman sachs. oil prices appear to be a victim of all the trade talk as well. inventories not on wednesday of
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this week at 11:00 a.m. because of the holiday week shortened. the quick mention of pending home sales for april, which just came out following 1.3% month over month. caroline: thank you so much. trade and tensions of trade hitting sentiments with stocks trading. we are down on the stoxx 600. we have been the green and concern is building. to keep an eye on the announcement. the dow also goes -- down goes the likes of the still maker based in germany. the tariffs will be hitting these companies. to thesentiment turn
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negative. clearly there is a market reaction to this announcement. have a look at what banks are doing today as well. the worst performing industry trading.rall in i am looking at deutsche bank. it looks like the u.s. is saying this is a problem and the u.s. unit is a concern even if -- as the new executive says the u.s. is of key importance to us. moves making a surprise exit. lord to that other u.k. lender. you -- the top of the board when it comes to these particular banks. lastly, entirely. it it out of the
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territory popping above the green line. tariffs and trade negotiations. >> the metals and mining .eporter it's like they would stop them. we absolutely saw a massive reaction for u.s. filmmakers. from the largest american steelmaker which everyone knows is a u.s. century also moving. after the opening bell, a little bit of fluctuation, an interesting one because it has a -- capacity in canada. now that capacity would be coming from canada back into the
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u.s. analysts are saying maybe this isn't such a good thing. century aluminum company aluminum have the production almost entirely here in the united states here of course, all the steelmakers are looking pretty good at least for the moment. pricel see the benchmark in the united states going to $900 per ton so that is good for them. that is interesting. here, you see it has gone off the top of movers list, moving massively but aluminum is down about 30 sent right now. up just short of 1%. >> we are not just talking the united states here in the grand
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scheme of things, not such a huge producer. china remains number one. steel is far more domestic and local and most people want to buy steel close to a they need to make it. that is why all of these tariffs and discussions going on for well over a year, still guys have tended to look a little better in terms of stocks performance. everyone knows the terrorists go in on imports. they are the ones that will benefit from it. the ticker is hrc won so if you want to look at that price, you can do that as well. >> yes. it has finally happened. we started hearing the rumors when we put out headlines that this would take place, they're finally saying we will put tariffs across the board here these are all big u.s. allies and ones that many
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people on the market did not think would happen. canada is about 50% of the consumption of aluminum coming from canada. people didn't know if it would actually happen and here it is, -- it has. alcoa, these are the companies we see reaction following in the eu. as much as you expected? think you are right that the move earlier this year back at the beginning of march, and peopleuary, that is when started to put in positions. after that, maybe they thought an extension would come to the eu and imports themselves, it is not massive. but the eu does have to worry into its own
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region because the united states is putting up tariffs. everyone of her story about chinese steel and aluminum coming to the country and that might be part of the reaction here. united states essentially protecting itself from becoming a dumping ground for the entire world. chinese steel and aluminum coming to the country and that might be part i want to bring in michael mckee. wilbur.all with trade secretary. we still have 10 hours -- anything will happen in the next 10 hours? >> it doesn't look like it. secretary ross suggested this is a done deal now. progress innot made the last month, they will not in the next 10 hours. ofdid meet with the number officials from the affected countries including the eu trade
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commissioner and canada's foreign minister over the last line for hours and they got nowhere. this will change the dynamic for the g7 finance ministers, talk of a g six against one which has generally been the case for steven mnuchin, even though he is not response for trade issues , he will bear the brunt of the criticism. issues is where does the excess steel capacity in the world, canada late last night saying it would tighten its against incoming steel so it does not get dumped on but that was not enough to keep them off the list. it will be interesting to get the canadian reaction. everyone wants to know what retaliatory tariffs from other countries may be. >> yes. i'm seeing angela merkel speaking, the leader of germany, responding in a joint fashion. are we going to hear them go to the wto and will we see
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reactionary tariffs? you are looking to hear from the finance ministers coming from europe. collects yes. expect retaliatory tariffs. the finance ministers meeting, not the trade ministers meeting, but they will be talking about it, you will be sure, throughout the weekend. the eu has suggested it has a list of put a targeted tariffs to put some paint on american politicians who would support the president, particularly republicans. a lot has been made in paul ryan's district and mitch mcconnell's content it. when they talk about italian eating united, one merkel talks about it, she is talking about the eu as a whole. does the eu team up with canada and mexico and japan and other by thees targeted
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administration and come up with a joint retaliatory plan to put extra pressure on them? that is something to watch. >> something we have heard being touted why china can accord native fashion. give us a sense of what it is like with the central bankers and the finance chief. is there a feeling that the u.s. is to watch. >> something we have heard being touted why china can accord native fashion. really ostracizing itself here? been thed that has feeling for the past year. i have attended a number of these conferences and the general feeling is that the u.s. stands alone on this. and know steven mnuchin now whether they like him or not, they can get along and talk with him. he is not representing any kind of consensus and there is not a feeling of that as they go forward with local problems the u.s. is a trusted partner. when i mention global problems, i am talking about italy. it is the other issue here for finance ministers.
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they are perhaps going to want to come up with a coordinated plan to react should italy go south on the distractions we saw the markets this week getting worse. will the united states participate and to what extent can i count on them? those are questions these tariffs raise. >> swiss market reaction, now up 3% having given up some gains. and ouro michael mckee expert ad mining little earlier -- earlier. let's check in now on the first word news and get to kaylee. >> presence as the expert a little meeting on u.s. and north korean officials has gone well. kim jong own's closest adviser is going to deliver him a letter from kim jong-un tomorrow.
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it prime minister may be on the verge of being out of office. the socialist opposition is a no-confidence vote tomorrow. people close to negotiations are signaling that pedro sanchez is likely to get the report he needs. more signs of economic growth in supporting the federal reserve's plan for gradual rate hikes. it was up .6%, beating estimates. the fed's preferred inflation gauge held from its target, up from a year ago. in two second time years, president trump's net worth has fallen. valued ate is now $2.8 billion, down $100 million over the past year. for his golf courses and fifth avenue tower in new york fell. global news 24 hours a day on air and on tick tock on twitter, powered by more than 2700 journalists and analysts in more than 120 countries.
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this is bloomberg. vonnie: let's check in with currencies after the announcement tariffs will go into effect. at midnight, we have a dollar that a stronger and it has been for most of the day. been having problems anyway with italy and now the idea that we might get a voted out,ce vote, we will see how that progresses. the mexican peso inching ever closer toward 20. it is weaker off the back of those announcements. canada, a move of one full big figure in the last hour. this is bloomberg. ♪
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vonnie: breaking news. response to president trump announcing that by will propose u.s. steel and tariffs in canada and mexico and the european union, as it has been forewarned and friend. we're joined now by the bloomberg news opinions columnist. it was a surprise. >> it really is. first off, the retaliation, it is easy to win a trade war said nobody who understands tariffs and trade was, but secondly, go back to the campaign of 2016. every rally and every stump speech in every interview, candidate trump said i will every way ifs in can, u.s. manufacturing.
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i'm surprised people are surprised he is doing this to this was one of his cornerstone promises. i think it is a terrible policy but he is following through on his promises. >> that said, a lot of people were saying that if he does the eu and other places the eu is considering that now does this change the president's mind by midnight? >> it is a terrible that to thes will impose tariffs on places for a midterm election, they're very important. it looks like make , what will change president trump's mind over any time. look in terms of tariffs on soy. states.t right to close i think united states has been playing a game of checkers and more sophisticated layers like a bit ofe been playing 3-d chess. we will see which strategy wins. i am not a fan of trade wars and most people who think out the endgame are not fans either.
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>> interestingly, the news coming from wilbur ross saying he is skilled -- still scheduled to go to china. what will the eu and mexico as well, what will reaction be? will they come together? he is skilled -- still scheduled to go to china. will be usb pushed out by other countries question mark -- countries? >> the moral leadership the united states has enjoyed since world war ii is completely missing. interest outside of the united states is to say if you impose tariffs on us, we will impose tariffs on you. there is a reason known has done trade wars in the past. they are fences and dangerous. they tend to spiral out of control.
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it is not just that we will protect our goods and everyone else will sit there and not respond here of course they will. him is the challenge facing -- facing u.s. companies. how do you deal with a policy that is not especially well thought out? >> what about investors? you are a man who led an investment research company. what to investors do in this scenario? what are challenges that they face when we look down the barrel of the trade war gone? >> the big issue is how much of this is already priced in? judging by the reaction in the or two is not a big deal. a lot of this is priced in. and again, i keep reminding people who seem to be surprised, i'm aghast that there is gambling going on here but this is exactly what the president throughout his
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campaign and he continually reiterated it during his first year and made it pretty clear by who is in his cabinet, when people who were against trade wars and tariffs stood up to him, the takeaway was, maybe you should not be in my cabinet. notn, this surprised should be a surprise. i do not know what investors could do to adjust portfolios. it is kind of late in the season to say what will we do in case there is a trade war? >> you already have a bunch of things you are trying to think about, where to spend the extra cash from, how do give noweholders more guided, you have this to deal with. ,re you pivoting the focus should i move factories to various countries in the world and should i be edging for currency risk now? >> here is a problem with the whole, thought process.
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we have no idea how this plays out. we do not know at what point that it gets so bad that everyone backs down. if i am the ceo of thought proc. the big company, a jamie dimon or the head of fort or apple, i am already on the phone with the white house saying what are you doing to us? our jobs much more difficult. we want to hire people and invest. we cannot do that while there is this much uncertainty as to how this plays out. the handful of companies that benefit from tariffs on steel and aluminum are vastly outweighed by the companies that will suffer. remember that every time a consumer goes to buy something that is the result of either a higher tariff on import or a tariffs that fights back from elsewhere, the consumer pays more and that is a problem with trade wars. >> thank you always. your column is an bloomberg opinion as well as the podcast in business.
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a -- checket's get on the reaction on this deal. by 1.1.ks, this is important to her they were trading in the green. the key turnaround. the u.k. government is responding with breaking news. that the uk's deeply disappointed in the u.s. tariffs and that is coming from a government spokesperson. this is bloomberg. ♪
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by 8% perhe bank up we are seeing the worst day for shares since mark are trading at a record low. it is fascinating that the u.s. has been put on a federal reserve list of problem banks.
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added to a group of trouble lenders insurance regulator. they are basically saying that the bank has such bad weaknesses in the u.s. that they are serious enough to endanger the financial viability of the country. no wonder the stock continues to tank. >> yes. the bank relocating away from wall street to a smaller midtown location that recently, the new reiterating the importance him -- the u.s. portion of the bank. about 14%.ow this is bloomberg. ♪
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vonnie: live from bloomberg world headquarters in new york, i am vonnie quinn. >> live from bloomberg's world
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-- european headquarters, i am caroline hyde. let's get you a check in with the first word news. here's more from new york, kaylee? >> the u.s. is going ahead with aluminum. there will be a 25% tariffs and a 10% tariff on aluminum port. preserve help america's manufacturing base. president trump has denied filing -- in a tweet, the president said in a quote that the corrupt mainstream media loves to push the narrative but they know it is not true. that contradicts what president trump told nbc news in an interview last year. first time filing for unemployment benefits fell last
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week by more than estimated. they dropped to 221,000week by . they dropped to 221,000. the government comes out with the monthly jobs report tomorrow. the russianweek by more than es. billionaire put his ambitious plans on hold. this choppy football club favored an investment environment. of visa problems, he cannot travel to the u.k. now. powered by more than twice -- global news 24 hours a day on air and on tick tock on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. >> thank you. trump administration is imposing aluminum tariffs on the intensifying trade conflicts to plunge the wto into a state of crisis. caught up right before the announcement was made. as -- >> there for sure.
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i think trade permeates everything -- everyday lives of people. they do not really realize it. we go in on where terms of trade relations, the economic recovery of the world are another downturn in the economic recovery could come about. this is important and a priority for everyone. >> in a crisis, in a way, is ?t a wake-up call >> it depends on how you look at it. it could be both. the u.s. has been pointing to some systemic shortcomings according to their views. i think some members may also agree there are shortcomings to upgrade. i don't know. it is up to them.
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but a big part of the conversation is how to go about it. what to do with all of those shortcomings and the improvements. there are different perspectives on how to do it and i think that is part of the conversation that we need to have. >> donald trump to be a savior of it long-term? hei wouldn't go that far but is steadily suggesting the system needs to be rethought. with what other members feel as well. wake-up call? >> definitely, not only for them but for multilateralism in general. how to make the world and multilateralism function better in light of him -- of concerns expressed. >> china to retaliate to the u.s. tariffs already announced.
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if thisld it mean becomes reality? >> i think it introduces elements of death that complicate trade relations because once you begin to take it cancal measures, prove -- provoke a domino effect. you cannot blame only the response. there is also the original measures. you have to look at two sides of the coin. what are the measures being introduced, and what is the response be taken? one may understand why response is being suggested. we need to be very careful on both sides. >> that was the director general of the wto with our very own carillion live in paris. what is the reaction on the
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ground to the fact that the tariffs have indeed than brought in? obviously, it is not very good here. the premise to will react in the next few minutes. him -- what we can say, it was just said in a statement, today's a bad day for world trade. that is what she said in a joint segment. the eu is threatening to few hours.n the next you know the eu had already threatened to -- to retaliate at 2.8 billion euros of american motorcycles.luding we will see this italian nation that retaliation and what it means. as you see, the mood is not very good here. after this announcement.
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europe, a how quickly for example, and that is just one part of this, could actually game --hat when the retaliating can go into effect? him -- >> we put a date on the mergers. june 20. we will see whether the retaliation measures are taking effect earlier. it could be in the next few hours. we will have to wait to see where these mergers rp are obviously, from the eu trade sheets, the eu has been lobbying the past few days and the past couple of months trying to convince our u.s. counterparts
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to change donald trump's mind. obviously, the final decision relies on donald trump and the you -- the u.s. president. we will have to wait and see right now what the response is from the eu. but the director did one me that the domino effect this could cause on the trade system. now, a breaking news response from mexico which will also now take reciprocal action versus the united states common --to the economy military. it will impose tariffs on pork, sausages, apples, grapes, some cheeses, and possibly other products. once again, mesko is taking retaliatory steps on things like steel and on agricultural rocks as well.
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>> obviously from the eu as well. >> apologies. give us a sense, we are seeing reaction. difficult at the same name. but what are you thinking about the reaction now? you said there would be a domino effect. how do they brace themselves for also have wilbur ross saying they need to change. this is a difficult time to try and reinvent itself. >> it is a very difficult time. other people have called for reform saying it is outdated. the first rules on the global in 1940re establishing seven even though the wto is only created in 1995. these were clearly outdated. macron has been coming here for urgent reforms. in fact, he did say these
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tariffs from donald trump could beat the wake-up call and actually point at the itrtcomings of the wto ruled we will see whether this has in the long-term a policy effect on that could happen as soon as the next few months. there is a g20 in argentina in december. in the director told me this would be the top of the agenda. >> all right. fromlion is reporting paris. caroline is in london. my fault.artly i want to point out the mexican peso is at 19.94, weekend -- weaker all morning long and again, that news checks out in the last few moments. mexico coming out with retaliatory tariffs following .he news aluminum and steel will go into
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effect at midnight. here is what is coming up in the next hour. we have more on world trade and governor john kasich will weigh in. reaction already coming in from other republican senators. in pennsylvania, saying the move is that news. this is bloomberg. ♪
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vonnie: live from bloomberg world headquarters in new york, i am vonnie quinn. : this is lumbered markets. breaking news on the back of those tariff announcements. now.ny reacting
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as joe commenting saying u.s. tariffs are extremely dangerous. he is an ally of angela merkel, in the eu party. risk atariffs protectionist spiral. breaking news coming from germany and the u.k. authority reacted. a ceo spoke in an exclusive with erik schatzker in tucson, arizona and they spoke about the next distress cycle. take a listen. >> given the impressive -- unprecedented amount of corporate issuance both on the bond side and on the loan side, by definition, will the next cycle be bigger than the last? or the mother of them all? >> it could be. it depends on how disruptive the capital flows are and where the global economies are. it is hard to say. that is just one piece.
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but why the financial crisis was so great was you just had an enormous constraint on globally -- liquidity. hopefully, we will not encounter that again and we will have a more normal environment so, i think, it is not simply a function of the size of the leveraged loan market. you need to look at what kinds of triggers there are with respect to the capital. you know, what kinds of financial covenants and the like. >> in recent years, it has been relatively isolated. health care and some technology. what other industries do you figure are vulnerable? >> there are some media companies like clear channel. been a very large source of activity for us .lobally
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>> does it look like anything is poised to be next? >> we look at transactions in the leverage associated with at that lens,ing health care certainly, there has been a lot of activity and health care. we are seeing companies that are having a more difficult time responding to technological changes within their industries. i would say 30 or 20 years ago, good businesses were probably more protected than they are now from new entrants. the disruptors are so substantial. so that is why we would like to stay on top of various disruptions happening in across the industries. it shows us not
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only can we givethe disruptors o our existing clients on the corporate finance side better advice, but it allows us to position where we want to allocate resources in the future. >> infrastructure again? >> yes. we are always with restructuring. for us, it is part of our dna. our restructuring group has north of 200 financial instructional's. we have the largest group in the world in terms of number of financial professionals and revenue being public. we now see to a certain extent what our peers report on the structuring side you're not all of them break it out. some did, some don't. we have always believed that there are restructuring opportunities across industries and geographies out there to keep our people busy.
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>> an exclusive conversation with erik schatzker in tucson, arizona. vonnie: let's take a look at some currency action now following the news that the tariff exemptions will not continue. at midnight tonight, they will go into effect. steel from eu, canada, 10% on aluminum. have a look at the currency's weakening. it is a tiny bit stronger but we know the euro has been weakening all week. the mexican peso is just short of that mark. one .2% weaker. the canadian dollar is continuing its weakening streak and more of a full day figure. in the meantime, exemption companies are holding their won.h over the korean it is stronger as is the brazilian ray out. and the australian dollar also enjoying an exemption. aat peso is not really
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reflection of personal power in is country but right now it free much unchanged versus the u.s. dollar. this is bloomberg. ♪ ar. this is bloomberg. ♪ free
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caroline: live from london, i am caroline hyde. vonnie: this is bloomberg markets. the trump administration announced it is re-imposing tariffs on steel and aluminum from the european union. move that mexico, a might trigger retaliation by america passes closest allies. we have promises of that already from the likes of mixed co. joining us for the latest is sarah. what you make of the retaliation threats from mexico's economy ministry and the european union, they affect a lot of products. >> yes. the reaction was immediate to the announcement today of the tariffs.
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i think many countries were expecting it. we heard a got a pre-reading and the decision was to be made. they had the approvals for press releases and reactions already this morning. what is clear is the targets for retaliation, at the eu and mexico, have identified, are politically sensitive goods, from states were a lot of trump supporters live. they are targeted. we definitely sit here and escalation and this is amongst i guess america's biggest allies. will that in some way backfire and just make more people support trump, if they are going to try to have some sort of retaliation? one of the key lawmakers say this will end up in a trade spiral. where are you expecting this to supportnly for trump
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but also for trade retaliation worldwide including china? >> economic impact was one of the biggest fears for the economic tariff. we heard a lot of public outcry from retailers and people who use these metals in the products. this will raise the cost of good spirit also the fears of retaliation that it will make if thes more expensive eu and canada and mexico will have products that consumers will buy up here. viewrump administration's is that this will have such a small impact and will be one the u.s. economy even with retaliation. according to the trump administration, they say the estimates are overblown on the economic impact that this could have and they are not worried about it at this point. they say this will protect the manufacturing base of the u.s. and they say this will outweigh the consequences of the retaliation. canie: what kind of impact
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it have here? surely the news will complain to the wto, an official complaint. it have here? surely the news will complain to the wto, an official complaint. does the wto have any teeth? >> as we all know, it is a slow-moving machine. it is going through the process, if there are complaints that the wto will take time. i think that was actually the very nexus of the u.s. argument for why it did not want to go through the wto to begin with because when it did in the past, it would be bogged down and take time. that is one avenue to pursue but , withre immediate action other tariffs by other countries, that could be a more immediate possibility. >> all right. thank you for that context. for our stock of the hour and a story we have not hit today, top performers in the s&p 500 on the news. a bank making a two and a quarter billion dollars
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investment in gm crude. has thedoolittle details. abigail: it is an exciting story. the best day ever going back to when the company emerged from bankruptcy in 2010. relative to this investment, it is the largest our nation between a tech firm and automaker and they will receive $900 million right about now and $1.4 billion next year once the autonomous vehicles are ready for commercial deployment. theirs of course autonomous car subsidy. so it is not actually part of the revenue line, but accounted for as an asset. through, itl goes will be a 20% stake for softbank which will be valued definitely at about $11.5 billion. gm themselves are investing $1.7 billion. there really is validation for this company. dan, the president of the company earlier told david westin they were not looking for
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this capital. the fact that the world's's making this fund is investment shortly after investing in uber is really a feather in the cap. >> they want to be involved in this i'm sure. the stock is up 10% in the downmarket. tesla's down two and a quarter percent by the way. >> that is the goal. their goal is to put out the first autonomous -- it puts them not just head-to-head with tesla . it is really putting them the forefront of the market. world's's largest automaker but now they have this whole other side and if we take , we will see here just how well the stock is doing on above average. valuation is trading at a huge discount, 7% from its purest are that is being valued for the old-line. once investors take a look at the technology, giving them a knowslogy evaluation, who
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your the stock could just continue to climb. very exciting for sure. >> the news yesterday. all right. thank you. is our stock of the hour. >> fascinating stuff on autonomous driving. ae of our key stories is market reaction to the fact that tariffs will not get a retrieve -- a reprieve and look at the market reaction on the euro, we are seeing ever turn into negative. trading for the last two days, just turning up about .1%. coming off of its highs previously in the day. concerns about the ramifications of the trade war, nearly every single group in the red, banks, utilities, and auto parts. we will be joined by mark barton next. ♪
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>> it's 11:00 in new york. 30 minutes left in the trading day in europe. from bloomberg's european headquarters i am mark barton. vonnie: this is the european
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close on bloomberg markets. ♪ a lot is weighing on investors as president trump's decides to post tariffs on steel and aluminum that is coming from the eu, canada, and mexico. those exempt will expire at midnight tonight. we are getting retaliatory action. we have breaking news on u.s. crude oil inventories. of 3.6 million barrels, the market is looking for a gain. gasoline inventories also surprising. we're looking for a drawdown of 950,000 and we got a bill of half a million barrels for gasoline inventories.


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