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tv   Bloomberg Markets Balance of Power  Bloomberg  June 7, 2018 12:00pm-1:00pm EDT

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japanese prime minister shinzo abe due to arrive at the white house in moments. trump'sc, president summit with kim jong-un and trade. the administration strikes a deal to allow zte to get back in business. does this set a bad precedent? we will speak to senator john the senator wants more answers from facebook and their data sharing practices. u.s. stocks mixed at the moment. let's get a check on markets. abigail: we are looking at a mixed trading picture for the major averages on this thursday. thedow once again leading
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way after yesterday's rally when the dow was up more than 1%, helped by trading, fears around a potential trade war in the g7. a number of names helping out the dow including chevron and mcdonald's. the s&p 500 flat. the tech heavy nasdaq down .6%, at the lows down about .9%, on pay sports worst day since april 24, right now on its worst day -- on pay sports worst day since -- on pace foray its worst day since the middle of may. on the year, tech is up 14%. slightly on, down fears that tech could be regulated by the government. that really weighed on the tech sector at that point. facebook down 1.7%, down for a second day in a row after the company did this close that it
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shared data with certain chinese companies including huawei and lenovo. investors not liking that. will we see a return to what we saw with cambridge analytica? weighing on to other big tech names like microsoft and intel. subject ofhat facebook, we will be speaking to senator john thune in a moment. president trump will be attending the g7 summit in quebec, where he will receive a chilly reception with germany and france warning they will not sign a joint communique until trump makes major concessions. right now, he's meeting with prime minister shinzo abe of japan.
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we are waiting for them to arrive. now, we want to turn to a preview -- what is on the agenda between mr. abe and mr. trump? abehief for prime minister is the summit coming up in singapore with the north korean leader, kim jong-un. japan is very concerned here that president trump in that meeting would hint that the u.s. eventually might be willing to reduce its troop presence in south korea, which has served as a huge security guarantee and a bulwark against any possible north korean aggression. david: what about the question of the people who've been kidnapped by the north koreans from japan? how prominently does that play for mr. of it? -- mr. abe? >> that is a huge issue for japanese officials.
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they've been telling us repeatedly that they want to make sure this president raises the issues of these abductees in his meeting with the north koreans. everything we are hearing from the trump administration would suggest this is not very big priority for them. the administration wants to go in as a get to know you chat. many things will fall by the wayside, including all sorts of human rights issues with north korea. this is a totalitarian regime with gulags all over the country where it imprisons people, sometimes for very minor infractions. to president is not likely bring up these issues a great deal. it's safe to say the abductee issue is pretty far down on president trump's priority list as well. shery: president trump did mention he would raise the issue at mar-a-lago. how tricky is it for prime and esther abe right now -- prime
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minister abe right now? they don't seem to be on the same page, particularly when it comes to ballistic missiles. there are a lot of second and third quarter consequences that the diplomatic community likes to put for what an agreement would mean for there are a lot d third quarter japan. if president trump agrees to remove that nuclear security umbrella from the korean peninsula, that would leave japan to bolster its own defense forces and its own military, which could then potentially destabilize the region even further. really, his focus will be on making sure president trump makes no daylight between the two. that is a big risk for prime minister oabe. despite his efforts to charm president trump and keep him onside, he's been almost
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betrayed by the president on issues of trade and tariffs. they will be going to the rose garden for a press conference in a couple of hours. we had the steel and aluminum tariffs and the probe into foreign car imports that could hurt japan. we have seen president trump wanting a bilateral free trade agreement with japan. how likely is it that abe will agree to that? >> it's difficult to say what could come out given the trade agreement. it's a question of strategy here for prime minister oblique. abe.rime minister o personallay up his relationship with the president and use those personal ties to gain extractions from the u.s. just like with president macron, so far for shinzo abe, that has
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not worked. president trump has talked up their relationship. he brought prime minister abe to mar-a-lago. president trump visited him in tokyo. then, time and again when it comes down to brass tacks and matters of policy, president trump has done exactly what he wanted, even if that goes counter to what prime minister oblique wanted -- prime minister abe wanted. this: finally, to whom is now we see the limousine with japanese flags on it, coming to the engines of the west wing. -- and trends of the west -- entrance of the west wing. shery: there will be meeting in the cabinet room.
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we see the president welcoming the pride minister. minister -- the prime minister. david: they are about to go in, typically will have a little photo op in the oval office and many working lunch -- and then a working lunch. to which of these leaders is this meeting today more important? hasn't shifted with what's going on with the g7? does president trump need a
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friend right now? >> that's a good point. abe needs this of meeting to go well so president trump doesn't give away the store. at the same time, when president trump goes to quebec, he's looking like the odd man out. there's talk of this being the g six plus one. there's a possibility they won't get a joint statement because of the countries demanding so much from the u.s. for him to have an ally on his side like japan, prime minister abe in his corner would give him a big boost. in a bind because it forces them to be the bridge between the u.s. and its allies in a tense summit. shery: thank you so much for that. .oming up, resurrecting zte
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what deal china struck with washington to keep the mega firm in business. this is bloomberg. ♪
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shery: this is "bloomberg markets: balance of power." i'm shery ahn. david: i'm david westin. we turn out to mark crumpton. -- now to mark crumpton. has arrived ate the white house to meet with president trump. abeeportedly wants to press the president on north korea next week and on the fate of
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japanese citizens kidnapped for decades ago. he's made their return a key political issue. top judicial authority has taken over the elections commission after complaints of widespread fraud. and low turnout reflecting widespread anger at iraq's political class. nationalala, the disaster agency has suspended rescue efforts in the area devastated by an earthquake. at least 99 people were killed, 200 others are missing. bulk and makes it dangerous for rescuers. the trump administration is launching its first public service campaign with a series of new ads warning young people about the dangers of opioids. the ads will feature true stories of young people who've battled addiction.
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say they expect the donated add time to be $30 million. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm mark crumpton. this is bloomberg. shery: thank you. washington has reached a deal with china over telecom mega firm zte, according to wilbur ross. the company has agreed on a number of stipulations to stay in business, including a $1 foreign did payout, million dollars in escrow and an agreement to repay the u.s. elected compliance team. the move may indicate progress in the high-stakes talks between the u.s. and china. joining us with more, kevin cirilli at the white house. in the studio is marty schenker. congress will not be happy.
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what sort of reactions have we seen so far? kevin: they are criticizing -- yesterday, republican lawmakers went to the white house energy them to reconsider the trade deal, but also urged him to reconsider how he's lifting these trade restrictions on zte. i spoke with a source who works frequently with zte. this came as a bit of a shock to those working with zte. the crux of this negotiating the compliancef component and the restructuring is something the u.s. had asked for as far back as the obama administration. there appears to be an additional $1 billion fine in addition to the $1.19 billion settlement in spring. the restructuring is exactly what the u.s. asked for last spring. the congressional reaction,
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republicans are very uneasy about this. in 2012, they cited national security concerns. people like senator marco rubio coming to the forefront of this issue and urging the president to reconsider because of national security concerns and because they are ignoring the concerns of the u.s. joint -- te doing business with iran and north korea. what do you think the chinese response will be if the u.s. holds on to this? xi jinping asked president trump to reconsider this whole thing. david: what is the crux of this thing? the sanctions on north korea and iran, a larger trade deal or is it more strategic to national security? .ark warner really condemned it unless the trump administration plans to open a field office
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inside the company, beijing is about to get one heck of a deal. this is five g. >> this is 5g. all those things you mentioned play into this, not the least of which is this trade issue that is confronting donald trump. he wants to cut a deal with china. they are negotiating. if he were to maintain the zte decision the way it was, there was a chance china was going to totally back away from the trade discussions. out,nator warner points within the national security apparatus, there are great concerns. shery: senator chuck schumer saying it's up to congress to reverse the zte deal. is it possible? >> it is certainly possible. if they were able to pass a law, but they won't be able to. there's not enough support in congress to overturn what the
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president has decided. there is great concern over how these deals are being done by the white house. an overreach of executive authority over legislative prerogative. bute is concern about it, there's not enough will in congress to overturn it. shery: kevin? kevin: i agree with marty. the republicans are incredibly divided on this. really outhas been front with senator rubio on this. while they've said there's concern, when you get into the specifics here and go to these local districts that are republican strongholds, their supply chains inflected -- impacted by qualcomm, these are jobs. when i talk to the folks who work with zte, they say they have not been able to make the
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toe that they are trying suggest these supply chains that rely on zte will be significantly impacted. jinping directly asked president trump to do this. this is a sign of goodwill from their perspective in the negotiation bilaterally between u.s. and china. i cannot find one republican who can see what the ministration got back -- administration got back. the president believes the commerce department ultimately has the final say the matter what. members ofcally, congress boat with what will get them reelected. will this be an issue at all? >> i doubt it. the atmospherics around the trump administration are clearly top of mind for us journalists. when it gets down to local
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elections, it's usually economic and pocketbook issues that affect the quality of the candidates. that will carry the day in november. not the zte issue. david: thanks to kevin cirilli and marty schenker. the trump admits ration has reached an agreement with -- administration has reached an agreement with zte. they will pay a $1 billion fine. how is congress going to respond? we are now joined by senator john thune, chairman of the commerce committee. thank you for joining us. we appreciate you being here. you just heard your colleague's tweet that we've given them a heck of a deal in china. what is your reaction? sen. thune: we have concerns about that. companies school that
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like zte will get access to our ournology, stealing intellectual property and using it in their country. those are all things that this company historically has been guilty of. we have to approach it in a measured and cautiously. china has intentions on surpassing and replacing the united states as the technological leader in the world. david: wilbur ross said we have a lot of safeguards. we will have this enforcement mechanism within the company, we will have monitoring of that. does that satisfy you that we will be protected? sen. thune: i know the administration is doing everything they can to get those safeguards and firewalls in place. from themious to hear about what steps they are taking to protect our country and
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particularly when it comes to innovation in our technology. we have to be very wary when dealing with them. you have to look at people's records. this company has violated sanctions in the past. they are not a record double -- repeatable company on an economic or business level. -- reputable company on an economic or business level. we want to try to develop relationships with china and other countries that are mutually beneficial that help us expand our opportunities. in a way that takes into our consideration our national security parties. -- security priorities. deal is part of a broader negotiation tactic with china, is it worth it for china to buy more u.s. farm products? sen. thune: i don't think
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anything is worth compromising our national security. it's good news for us when china talks about expanding the purchase of agricultural products. the number oneriority when it comes to these negotiations is to protect america's national security interests. that nowber world, means all the ways in which china tries to infiltrate and get access to our technology. that is something we have to pay close attention to while at the same time negotiating deals that are good for sectors of our economy like agriculture. we will be trusting with verifying and hoping the ministration is tanker full attention. --careful attention to hoping the administration is paying careful attention. it's not just facebook --
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google has these partnerships with huawei. does congress need to do something about ensuring the privacy of americans and ensuring there are limitations to chinese firms reaching into american businesses? sen. thune: we are looking at that right now. there have been discussions among our members and we are listening to the stakeholder community to try to determine what is the best path forward, particularly with regard to big social media platforms like facebook and google who have partnerships with device manufacturers in places like china, like huawei, that could be detriment of. if there's user information being exposed. facebook didn't disclose.that letter to them right now asking them for additional
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information. how do they ensure these partners they have actually are protecting user information? to your point, i think we are getting to that time in our nation's history with the dramatic increase in user information that is available out there that we may need some protections an safeguards. david: i wonder whether the oversight function you've been pursuing will be adequate. it'su just pointed out, not like facebook is coming forward and volunteering this information to authorities. this is something the press has to find. every time we turn around, we have some new revelation. sen. thune: that's a real problem. it seems like the only way they are disclosing information is
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when there's reporting or some story breaks that forces it to be disclosed. that is wrong. we did follow-up after the hearing with the series of questions for thewhen record, written questions. they have not responded yet. we give them a may 9 deadline. i understand they have hundreds and perhaps even thousands of questions to answer. we have to do -- they have to do better than that. if they are really concerned about these issues and helping us do that, they have to do a better job. shery: thank you so much for that, senator john thune. we are getting a couple of headlines from president trump's meeting. the issue with north korea is not a one meeting deal. this is bloomberg. ♪
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david:. this is bloomberg markets: balance of power. shery: let's get a quick check of the major averages.
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we are seeing the dow rising for a second session. the s&p 500 holding steady. let's take a look at president trump meeting japanese prime minister shinzo have a -- shinzo abe. honor to haveeat the prime minister of japan. a great gentleman. highly respected to matter where he goes. we have really become friends over the last. of time. since becoming president, we have got to know each other very well.
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we will be discussing trade. we will be talking at great length on north korea. we will be getting some of your ideas. i will be giving you some of our ideas. things are moving along well. the summit is already to go. subject always to change. u never know in this world. the summit is already to go. north korean representatives are in singapore working very hard as our people -- as are people in the united states. i hope it continues on this track. if it does, the world would be a happy place.
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japan buys large amounts of military equipment from us including jet fighters at an particular the f-35, which is now the hottest airplane anywhere in the world. we make the best equipment in the world. japan is a big buyer. obviously we buy a lot of things from japan. in particular, automobiles.
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we buy a lot of things from japan. we are going to be talking about our trade deficit that we have with japan. we are going to have a big discussion. the relationship has never been better between the united states and japan. we are going up to the g7 very shortly in canada. we will be having further discussions in addition to other countries being there with us. we will have some pretty good discussions. we leave for singapore from their. it will be a pretty crowded number of days. very exciting. a lot of good results can come about.
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just in finishing, recently i was in japan. he said let's play a round of golf. he does it the right way. he sent us both up with the number three player in the world or thereabouts. one of the greatest golfers in
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the world. --y call him and japan they call him great. i realized he was a longer hitter than i was. he hit the ball a little bit further. it was a great honor. we had a great time. we discussed a lot of really fantastic things. i think it is going to be very productive. it is an honor to have you with us. [translating in japanese]
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he was the number two celebrity and japan. he is the number one celebrity and japan -- in japan. >> but the -- both japan and united states share a long history. we are at the best moment in terms of the strength of bond between the two nations. and also prior to the planned
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summit meeting between the u.s. and north korea, i am very pleased that we to have this opportunity to have our discussion. this is my sincere pleasure. -- youow, you have been have been demonstrating great leadership. that thesincere hope summit will serve as an opportunity through which we will have greater peace and stability and also this will be
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a transformational moment in terms of the situation in asia. through my discussion with you confirm ourready to close cooperation. to achiever us progress in our effort to address concerns including the nuclear missile issue.
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i would like to take this we tounity to make sure t utmost coordination to summitroach to the meeting you will have to the north korean leader in the near future. on top of the issue of north korea, i look forward to having a discussion with donald on issues including trade and our economic relationship. despite the fact that we now enjoy this gorgeous weather, we will not be able to play golf. but next time, let's play golf together. thank you very much,
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everybody. what are you doing to prepare for the summit with north korea? >> i think i'm very well prepared. it is about attitude. it is about willingness to get things done. at been preparing for the summit for a long time -- i've been preparing for the summit for a long time. as has the other side. it is a question of whether or not people want to happen. we will know that quickly. it is going to be much more than a photo op. i think it is not a one meeting deal. it would be wonderful if it were. they had been doing this for a long time. there is a lot of dislike and hatred between countries. this will not be just a photo op. it will be at a minimum, we will start with perhaps a good
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relationship. i would love to say it could happen in one deal. maybe it can. they will have to denuclearize. if they do not, it will not be acceptable. we cannot take sanctions off. the sanctions are extraordinarily powerful. i could add a lot more. i have chosen not to do that at this time. that may happen. iran, we are adding tremendously powerful sanctions. eyerstand that very well. iran already is not the same country. they are looking so much to the mediterranean like they were two months ago. it is a big difference. you also get the side benefit that iran is a different place. we will see what happens. ultimately, maybe something will happen with iran. for our meeting next week, i think it is going to be a very fruitful meeting. it is going to be an exciting meeting.
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we are going to get to know a lot of people that our country -- that theto know country did not get to know. it should have been handled years ago. it is being handled now. i will take care of it. thank you very much. >> make your way out. let's go. guys.ght, let's go, >> thank you very much. for the japanese invited to the meeting? will they be meeting with everybody? >> come on, let's go. >> i like him. he is a nice guy. >> come on let's go.
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thanks. shery: that was president trump --ents ago beating best to president trump moments ago meeting with the japanese prime minister. saying there will be no deal if north korea does not give up the nuclear program. it will be about whether or not both sides when it's a happen. it is also about attitude. talking earlier about the u.s. auto purchases from japan. david: there is a story across the bloomberg while they were speaking. this involves deutsche bank. there are reports that they have agreed to sell a $3 billion energy portfolio. the sale has been done. this is part of deutsche bank's overall effort to cut their costs and shore up their balance sheet. it follows a couple of weeks.
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deutsche bank is expected to sell a $3 billion portfolio of energy assets. to go back to the north korean summit, we turn to someone who knows north korea well. bruce klingner has spent years studying north korea. fellow atior research the heritage foundation. he joins us from washington. good to have you here. i hope you heard some of what we just heard from president trump. he feels he is terribly well prepared. at the end, if i understood correctly, they were referring possibly to how long the summit to go. is a longer summit better or worse news? howhe important thing is quickly are closely the two sides come to resolve the chasm and the differences over denuclearization.
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when north korea issued a series of statements in may, people tended to focus on the insulting are threatening part. was most important was the first foreign minister announced or reiterated what was the long-standing north korean interpretation, which was quite different from what the white house thought. the white house was surprised. when of the reasons i think president trump is lowering expectations is a are realizing they were not as close to achieving a big success. shery: if there is success in the summit and they agreed to a verifiable denuclearization of north korea, how difficult is this given the saying -- given the scale of john nantz -- scale of pyongyang's nuclear program? >> if north korea agrees to not only their interpretation but the u.n. requirement of cbiz, , thatould be -- cdid
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would be an agreement. to have the more robust verification regimes we had with the soviet union. you would need to have data declarations and inspections of declared facilities. very importantly, what is known as short notice inspections of non-declared facilities. if we do not have those parameters, we do not have a good agreement. shery: there are concerns in the region not only by japan but also by south korea. there is a growing fear of d covering. concernsfied are these when you look at the moves taken by the u.s. administration? >> the president and secretary of state and others have made comments where they focused only on the icbm threat to the american homeland. that makes the allies nervous that we may not discuss or include in an agreement the short range and medium-range missiles that already carry
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nuclear warheads. the reason for the prime minister's recent trips is to get the president to publicly affirm that those kind of missiles will be discussed in any agreement or discussion between the u.s. and north korea. of course, we have a very strong alliance with both countries. we have a firm commitment to defend both of them against any kind of north korean provocation. david: help meet with what seems to be a core conflict. kim jong-un wants to make sure he stays in power. that is his number one goal. that means the united states cannot take him out of north korea. our allies, and the united states was to make sure we maintain our commitments to south korea and japan. had you reassure kim jong-un and maintain your military forces? conditions north
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korea has long held is that we have to provide a security assurance. that is not a guarantee that the regime stays in power. it is a nonaggression pledge. the u.s. has provided that many times particularly in the september 2005 and 2006 party talk were replaced not to -- not to attack them with conventional or nuclear arms. the north korean still walked out of the agreement. the americans can pledge not to attack north korea unless they talk -- must be attack our allies -- and less they attack our allies. it is not a guarantee that kim gets to stay in power. it is simply a place that the u.s. will not unilaterally attack the north and less they attacked first. you attributed that
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pledge to what happened in libya and with what happened to iran. had is that undermine the pledge -- how does that undermine the pledge? >> a number of folks have said that if we did and as we did, a lot of the agreement, north korea would feel that they cannot trust the u.s.. they are still willing to have the summit and negotiations. i think that was a risk they already factored ibecause they are still coming to the table. the libya issue, there are two different issues. 2003 divestiture of the nuclear weapons. eight years later, that overthrow of mole market off the -- of ghaddifi. north korea sees the issue. is linked -- as linked.
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with: kim jong-un has met policymakers and high-level officials, basically all of the five or four members of the six party talks. how is important -- how important is it to include japan? >> is very important. that is why president bush insisted on a six party's approach. time, the south koreans complained we were negotiating their security above their heads. even though u.s. diplomats fully briefed them, they felt they needed to be in the room, which is legitimate. when president bush insisted on six party talks, it was to have our ally japan there because they have issues of concern that may be separate from hours. it is best have all the
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countries affected at the table to each carry their own water. david: i want to draw upon your expertise as someone who has studied north and south korea. you know as much as what most people know. what has caused kim jong-un to change his path? it is so different to what he had before. has he just decided to be a visionary? is there something going on inside north korea that is worrying him? >> i think there is a perfect storm of factors. the hawks, the doves, the python's are all claiming credit. forcedntive attack that him back to the table. the threat may have had a bigger impact on the south korean president. the doves are saying you are now was thing to us after 10 years of ignoring their advocacy. the python to say we need to
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squeeze north korea through pressure will say it has only been the last two years we have had sufficient pressure. that does not take into account that kim is a bit different from his father. if nothing else, he is doing his father's playbook. the south korean president is certainly very eager to diffuse tensions. combinedose factors and brought about this change that we saw compared to the beginning of the year when it seemed like we were on a path to war. shery: thank you very much. coming up, president trump and the japanese prime minister holding a working lunch at this moment. they will hold a joint news conference at 2:00 p.m. eastern. this is bloomberg. ♪
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>> this is bloomberg markets: balance of power. shery: it is time now for our stock of the hour. shares of mcdonald's are gaining up more than 3% to their highest level since february after a report that the company is slimming down its corporate structure. they are slimming down the corporate structure. the wall street journal cited and email from the company saying they are reducing the level in corporate governance between their regional field consultants and the ceo. they are reducing the levels to six. are saying it is keeping with their plan to reduce administrative costs. they are expecting to do that by 20 -- 2019.
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franchisors are making up a growing share of mcdonald's revenue. surpassing that of company-owned stores. lending support is a mood favored by investors. david: they are actually doing pretty well. shery: you can see in my terminal the same store comparable sales are turning. looking good for mcdonald's. david: thanks so much. shery: coming up, live coverage as president trump and the japanese prime minister hold a news conference. that is scheduled for 2:00 p.m. eastern. bloomberg users can interact with the charts shown using gtv go on the bloomberg. any charts that you miss. this is bloomberg.
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>> trade partners take different tactics with the u.s. i $25offers to buy and billion of u.s. goods. trump to opec, more. president trump quietly asks to ramp up by one billion barrels a day. john down with a -- ceo chrisman. i'm alix steel.


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