Skip to main content

tv   Whatd You Miss  Bloomberg  June 7, 2018 3:30pm-5:00pm EDT

3:30 pm
the president said that normalizing relations is something i would hope to completed.ti nato defense ministers brought -- met in brussels. the ministers downplayed a series of simmering transatlantic disputes. >> we have stay united, thatially when we see russia is trying to divide us. unity within the alliance is our most important message as we prepare for the upcoming summit next month. he added, nato is not looking to isolate russia. we strive for better relations with them. the united states is placing travel bans on police and government officials accused of
3:31 pm
human rights officials in nicaragua. the state department says a visa restrictionsill be imposed on officials responsible for deadly violence against demonstrators in antigovernment protests in april. it said the violence by police shows agovernment thugs blatant disregard for human rights. president trump invite -- and vice president pence could be invited to testify against their anti-nfl of rhetoric in a private arbitration case. teammatepernick and a claim to have an blacklisted by -- have been blacklisted by the nfl after the president and vice talked about their kneeling. attorneys plan to subpoena the president and vice psint
3:32 pm
global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. i am mark crumpton, this is bloomberg. julie:e are 30 minutes from the close of trading. stocks are mixed. joe: the question is, "what'd you miss?" scarlet: the trump administration striking a deal to allow china's zte to get back into business. it could move the needle on stalled trade talks. pressure is on for brazil central bank, in freefall after support from policymakers failed currency. the
3:33 pm
theresa may narrowly avoids a rebellion for now. she was forced to held crisis talks on brexit amidst speculation that the brexit secretary was planning to resign. julia: "what'd you miss?" hikes rates, rates go down. holding that increasing number of all right targets increases inflation. but bring in stephen williamson, professor of economics at the university of western ontario. thank you for joining us. when the prime minister came out with this, there was a lot of head scratching among folks who follow central-bank policy. his ideas did not come from nowhere. can you explain the economic theories that explain this. i had heard them talk
3:34 pm
about this before so i thought it was coming out of the blue , economicntly advisers have been reading from things people writing lately so they had the basic idea that the of how wem should control inflation is wrong. fact, we don't increase inflation by reducing interest rates, we increase it by increasing interest rates. in a country like turkey, where , the policy high that would work would be to iest rates to bring inflatwn. logichere ian intuitive to the traditional framework. increasing interest rates makes
3:35 pm
short-term investments more appealing, decreases the appeal of risky lending. s credit means less activity, reducing inflation. what is the intuitive logic for how your model works? the intuitive logic is that we have these observations about the relationship between inflation and nominal interest rates. in the old days, and the 1970's, inflation was high, nominal interest rates were high. now when inflation is low, no minal rates are mainstreaeconic theory, asset pricing theory tells us
3:36 pm
with how is consistent our models work. with how asset markets work. the tendency for real rates of return to equate across assets. inot quite the one you said. it is more like a curve argument. joe: i admit that the transmission between policy and inflation, people might describe it different ways. explain this idea of consistent returns across asset classes. you say there is the observed reality in which you have high inflation and gh rateslthough it seems possible that it wou gthe otr y.
3:37 pm
what is the actual connection? in turkey, let's say you wanted to fight inflation. you cut interest rates, how is tcause how does guest: wha you do in the short run ihave lowhe ratef oshort end.vernment debt over thes of return by realm are tiedown ese oductivih. is, real rates of return cap togh equate, adjusted fd liquidity. if you lower the nominal interest rate and the real rate assets, whatsafe
3:38 pm
has to happen for real rates to adjust in the short run is inflation has to adjust down. that is consistent with theory and what webserve ong riods of time. consistent no matter what country and what central-bank we are talking about? if turkey is an exhi it possle that that theory applies in the traditional view applies in other situations? this is just basic economics. it applies everywhere. i have nn a case where it
3:39 pm
does not to apy. e arlo there are many things going on other than monetary policy in it hasning inflation but nothing in particular to do with turkey. grant you is that low interest rate policy we have seen in catalyzings is not inflation as many people would hated. that is certainly damaging t the canonical example of higher is theeducing inflation volcker. error that
3:40 pm
pen theyre that is a myth.ehavioguest: that is the way peo they tell it as if what volcker did wa raise interest rat ich brought flatio if you look at what volcker was go back and read the minutes of the fomc meeting and see how the committee thought about what they were doing. adopting a milton freeman -- milton friedman approach. reducing approach was money growth to reduce inflation. they abandoned the idea that they were going t pay attention
3:41 pm
to market interest rat during that regime. if you look at the data, what happened was that over the course of booker's tenure, -- of tenure, nominal interest rates came down, which is consistent with the story. story has the causation going the other way. think higher inflation -- sorry, did you have a question? julie:e have to leave it there. stephen williamson is a professor of economics at the university of western ontario. we appreciate it. secretary of state mike pompeo is set to join a press briefing with an update on the summit with north korea following the
3:42 pm
president's comments earlier today. thismberg. ♪
3:43 pm
3:44 pm
scarlet: "what'd you miss?" at the mike pompeo is set to make an appearance at the daily press briefing. we want to check in with a washington correspondent on what to expect. given what the president has said in his conference with shinzo abe of japan, we've heard the possibility of hosting kim jong-un at the white house, signing a packed to end the toean war, we are looking get more details on the mechanics of the summit. any indication what he is likely to offer aside from the fact
3:45 pm
that it will be in singapore and to manage expectations? saying thatdent is the hard work would come after signing that document should they do that in singapore. the real groundwork of all this would begin after that. saidresident has consistently that he wants the issue up denuclearization to be on the table and he said that he has more than 300 additional sanctions he is willing to put on to north korea should they not be cooperative with the united states. the president going so far as to suggest that he would continue to put maximum pressure, a term he is no longer using at of this summit and we should note who will be accompanying president trump. secretary pompeo will be there as well as press secretary sarah sanders and other senior staffers. there was a moment before the press conference began with shinzo abe and president trump
3:46 pm
and nsa security visor walked over to secretary pompeo, they greeted, they exchanged positive words, the seemingly welcomed each other. all of this comes before the policy decisions that have emerged. secretary pompeo has taken the lead, bringing his team to begin negotiations with north korea. of moving parts outside this, this is a chess game, not a checkers game. when you look at the other folks involved in this, china most the president saying that he wants to see more strict action on the border between china and north korea. he is seemingly positive about what president xi jinping has offered. -- joe:ht we learn joe: what might we learn from
3:47 pm
the secretary pompeo? reporter: people are going to continue to try to get him to elaborate on the expectations. quite frankly, it would be remarkable to see north korea leader kim jong-un arrived at the white house. the fact that president trump is dangling that over the head of these talks is remarkable given that just two weeks ago, talks were falling apart. when it comes to john bolton, how much of a role does he really play? you mentioned the public viewing , is john bolton involved in any way following the fallout from his remarks that north korea could follow the libyan model? reporter: we have seen this before in the trump administration where you have
3:48 pm
two advisors butting heads. right now, it would appear that you have these two leaders on foreign policy advocating for different routes. secretary pompeo in lockstep with his former team from the cia, with the u.n. ambassador and with president trump. i spoke with several sources in the last week who suggested that potentially, one of the souring points between mr. bolton and president trump was the global reaction to what we saw from our counterparts around the world after the president decided to a draw from the iran nuclear disarmament deal. that was something they had specifically advocated for for a long time. i can tell you that the president was taken aback to see how intense the pushback was who did notn allies follow the united states after
3:49 pm
the u.s. decided to withdraw from the nuclear deal. within the last hour, we heard from president trump in which he said that the run from today -- the iran from today is different from before. julie: what has changed about iran's approach? reporter: when you talk to experts who talked with the administration, who are supportive of the administration, they make the case that when you look at how they have been back footed in terms of their standing globally , ucb assent of israeli power -- you see the assent of israeli , some republicans argue that with drawing from the new clear disarmament deal has created instability in the region. i hear that we are watching
3:50 pm
sarah sanders with the breathing -- the briefing. scarlet: let's pick it up now. sarah sanders at the daily press briefing getting ready to bring mike pompeo over. before she does that, i am reading through the policy intrigue in the white house. there he is. mike pompeo taking the podium. let's listen in. >> it is great to be joining you here today. early in this presidency, president trump made a commitment to address north korea which has been a threat to our nation for far too long. president trump continues to be ridding the united states of the threats posed by north korea. these programs threaten our homeland, our allies and partners and the broader nonproliferation regime.
3:51 pm
north korea's past activities make clear that it is a proliferation to other actors that creates a risk. has supporting infrastructure that is also a concern. in early 2017, the trump administration decided on a policy referred to as the next impression campaign. it's enacted the strongest sanctions against north korea in history. the goal was to set the dprk tons for the denuclearize to achieve its own security. american leadership rallied the international community to send a strong message to chairman kim jong-un and the world that we would not stand for the dprk's illegal weapons programs. the president's decision to meet with chairman kim grew from this campaign. the president's policies led to
3:52 pm
the historic summit that will take place june 12 in singapore. jong-unmarch 8, kim expressed his desire to meet with president trump as fast as possible. on may 9, i met with chairman kim jong-un and explained america's expectations for denuclearization. we also secured the release of three americans. we viewed this as a sign of goodwill from kim jong-un. the united states and north korea have been holding talks in preparation for a summit and north korea has confirmed its willingness to do you guys. effort innsive support of president trump's summit is underway. white house and state department teams are finalizing logistical preparations and will remain in singapore until the summit against. to president continues
3:53 pm
follow every development closely and is getting daily briefings from his national security team. that these leaders are coming to the table shows that both sides are serious. the diplomatic model we use today is different from past efforts. our efforts give us hope that we can find a real success where past efforts have fallen short. hopeful butump is he is going into the summit with his eyes open. we have seen how many inadequate agreements have been struck in the past and you can be sure that president trump will not stand for a bad deal. the united states has been clear irreversible and denuclearization of the korean peninsula is the only outcome that we will accept. be president recognizes that north korea has great potential and he looks forward to the day when sanctions can be removed. however, that cannot happen
3:54 pm
until the dprk eliminates its weapons of mass destruction. president trump and chairman kim will discuss security issues for the dprk, establishing a piece regime and improving relations regime and improving relations between our countries. in the event diplomacy does not move in the right direction, measures will increase. the entire process, the united states has been unified with japan and south korea in response to threats from north korea. to meet withveling my japanese and south korean counterparts after the summit to continue to coordinate. beijing following the summit. i will provide them with an update and underscore the importance of implementing all sanctions imposed on north
3:55 pm
korea. recognizes north korea's desire for security and to ensure that a dprk free of nuclear weapons is also secure. jong-un denuclearize is, there is a brighter path for north korea. we envision a strong, connected and prosperous north korea that is integrated into the community of nations. we think the people of the united states and north korea can create a future defined by friendship and not fear. we believe kim jong-un shares this vision for the future and we are committed to finding a path forward and we assume and hope that that believe is sincere. we look forward to being in singapore in a feud days. >> we'll take a few questions. what progress have you
3:56 pm
made in narrowing the gap in your understanding of north korea's definition of denuclearization? process --cribe the progress? >> no. as you mentioned in your remarks, north korea has backed out of prior agreements. the first question has to do with your experience meeting with kim jong-un. do you trust him? question, the negotiations that are upcoming, who in your opinion has the upper hand and why? >> i have had the chance to meet with chairman kim twice. he is very capable of articulating the things he is
3:57 pm
prepared to do. he presents clearly the challenges we have to overcome. that is why the leaders are meeting. it is the opportunity to live is out clearly so that we can see if we can find a path forward together that achieves the outcomes that both countries want. we don't think about it in terms of who has the upper hand. intractablea long challenge that has gone on for decades. the president has said previous administrations were not prepared to do what we have done. it is not about the upper hand, it is about finding a way for the two sides to come to an understanding to get concrete steps to resolve this. saidter: the president that he does not believe he needs to prepare very much ahead of the summit. do you think that is prudent? and i want to get your reaction
3:58 pm
to rudy giuliani's comments that kim jong-un got on his hands and knees and begged for the summit. whether he should be weighing in on international affairs and whether you agree with his assessment. >> i took him as being in a small room and not being serious about the comments. i think it was a bit and just. in we are focused on the important things. rudy does not speak for the administration when it comes to this negotiation and this set of issues. with respect to a first question, we are making progress inch by inch and we are going to travel there. the approach president trump has taken is fundamentally different. in the past, there have been months of negotiations that have gotten nowhere. this is already gone to a place we have not been before. reporter: the president said
3:59 pm
today that if the singapore meeting goes well, he would like to bring kim jong-un to washington. has kim jong-un invited president trump to come to north korea? >> i don't want to talk to about the conversations that happen had between us, i will leave that for the president. this comes back to the other question you asked about the president's preparation. in my previous role, there were few days that i left the oval office after having briefed the president that we did not talk about north korea. over months and months, president trump has been receiving prefix on this issue -- receiving briefings on this issue. months, therew have been near daily briefings including today where we have in providing the president all the
4:00 pm
information that he needs. i am confident that the president will be fully prepared for the meeting. having met him twice now, what can you tell us about what opinions you have a kim jong-un as a person? >> i have not spent that much time with him. publicly that he has indicated to me personally that he is prepared to do you guys. to denuclearize. the current model is not working and we can't do it the way we have done it before. this has to be big and bold and we have to be prepared for major changes. we need to ignore knowledge that it will take some amount of time. this does not happen instantaneously. achievingfor
4:01 pm
political normalization and , for that toion take place, we have to make bold decisions and i am hopeful that kim jong-un is prepared to make those decisions. a big shift in his understanding of security. you said that you can't talk about security guarantees for north korea. we have seen in his administration that when new administrations come in, they can undo things that prior administrations have done. how can president trump guarantee long-term security for north korea? have to dooing to things that convinced chairman kim that that is the case. that we will put ourselves in a position to do something the previous administration did not do.
4:02 pm
they signed a flimsy piece of paper and we are hoping to submit a document that congress would have a say in that would give currency and strength to the process so that when ,dministrations do change chairman kim will have comfort that american policy will continue down the same path on the course we hope we are able to set in singapore. [indiscernible] are you referring to the treaty? [indiscernible] is that a condition for the ,resident in any negotiation that weapons would have to be a part of that? [indiscernible]
4:03 pm
will leave it to the white house to talk about the format of the meetings. proliferation risk is very real. there is a history of that in north korea and some of our other challenges in the world today are connected. the reason you want complete verifiable and irreversible is precisely that. to the extent that they remain stockpiles, warehouses, missile projection -- production facilities, the risk of proliferation continues. it is our hope that through these security promises, we can greatly reduce the risk of proliferation. >> [speaking simultaneously] reporter: can you explain the
4:04 pm
president's shift in talking about denuclearization of the peninsula for now talking about the need for more meetings. can you explain what happened there and describe your disagreements over north korea internally? respect to the second one, i have read about this. i love good fiction as much as is soxt person but it much so that -- i will be polite. suffice to say, those articles are unfounded and a complete joke. we are two individuals, we are two individuals, we'll each present our views. i am confident that will happen on issues from how long this press conference ought to go to issues that really matter. it is the case that bolton and i will not always agree.
4:05 pm
i will try to answer your first question. aso not see the shift disjunctive. the president understands that this is a process that will take a great deal of work to do. you can interpret how you well but i think your characterization of that is not reflective of the president's understanding. he has been consistent since i happen working with him. julie: that was secretary of state mike pompeo. aside from downplaying the intrigue that he talked about at the end. kimfact that pompeo said jong-un is willing to denuclearize, probably the most significant comment to come out of the breathing. reporter: absolutely, and that
4:06 pm
is the furthest we have seen him go. he is the most senior ranking official who has met directly with kim jong-un and he has just said that the north koreans are prepared and kim jong-un told him they are prepared to do not rise. he used the word -- prepared to denuclearize. he used the words big and bold. that was to downplay expectations, i am not sure i heard that. on the issue of intrigue and the differences between john bolton and secretary pompeo, he is saying, president trump brought us on board to hear different points of view and it will not be a distraction coming into the summit. i thoughtething else was interesting is despite the meeting we just saw between shinzo abe and president trump, at which abe was emphasizing
4:07 pm
abductees, that is not something pompeo talked about. reporter: i would also note that he said that after the summit, a tour with asia allies including japan and south korea to meet with them to discuss continuing talks regarding the plans for the peninsula. clearly, the administration is trying to forecast and taking into account china and south korea as well. you had that from president trump in his remarks in the rose theen in which he suggested significance that the chinese president will play in these talks. secretary pompeo also taking a question with regards to rudy giuliani, who within the past 24 hours grabbed headlines for saying that kim jong-un was playing on his back feet as a result of president trump pulling out. you have a topat
4:08 pm
diplomat criticize vice president mike pence and so this kind of rhetoric with such fragile negotiations scheduled does matter. julie: chief washington correspondent joining us from the white house. thank you so much. scarlet: let's get a quick market check. while pompeo was speaking, the market closed for the day. dow -- mix to read, the nasdaq was thehe big loser. it was a steady decline through the afternoon then we stabilized in the final hour of trading. a little jarring movement here in the afternoon trade. cores bring in every vice-chairman. what is interesting about what happened today, quiet trading because it is june, is the bonds snowballed, a sudden flurry of
4:09 pm
volume and the rally we saw in technology stocks petered out. is all this turmoil in emerging markets making its way over and making investors in the u.s. nervous? guest: i watch the market every 30 minutes. i think the main overriding thing is the trade deals. the emerging markets are a backdrop but the trade deals are what has the market moving up and down. i find the bond yield coming element of relaxing it. i worry about inflation picking up and bond yields shooting up and the fed starts to tighten aggressively. they are caught offguard or twot to react to root -- inflation picking up. inflationised -- to
4:10 pm
picking up. i am surprised that bond yields are where they are. joe: today we saw brazil getting slammed. other emerging markets are getting slammed. if you were to strip away all of these headlines and events and look at the underlying fundamentals of the u.s. economy, of corporate earnings, do you see anything that derails the benign picture? guest: no. i am sure something could derail now,t the economy right almost everybody thinks it is pretty strong. acceleratingit is so growth is approaching 3.5% then i start to worry about inflation. today, the have the data come out and they had consumer net worth breaking above $100 trillion, something like 7%.
4:11 pm
corporate cash was a most $3 trillion, up 14%. it is awash with liquidity. after a decade of growth, we have a lot of things breaking for the positive like the an employment rate and the things i just mentioned. one thing that stood out was the pmi which increased to 58.6% in may and it said in the report that it probably can't go much higher. it reminded me of what caterpillar said that got so much attention on its last conference call. does it concern you that this is as good as it gets? so.t: i don't think i think that growth will slow year. -- i think that growth will slow next year. for the past decade, it has been
4:12 pm
growing and that has gone things better and better. the pmi is a range bound. 180 whereas to caterpillar hopes it just keeps going up and up and up. there is a fair chance that the pmi is peaked but at this level, it is very strong. joe: some of these surveys are quite strong. another one similar to the pmi, the nonmanufacturing report came out earlier this week and while the headline was strong, when you looked at the anecdotal stuff, companies complaining about bottlenecks and shortages, there is labor tightness. there are housing shortages. what people about would call overheating? other parts of the economy that are buckling under the pressure? that. i worry a lot about i do not quite see it as
4:13 pm
buckling under the pressure. they are having a hard time finding workers and i worry that inflation picks up in a sharp fashion but so far that has not. there are a lot of factors on the other side, technology for example. they have so far kept inflation in check even though you have tightness in labor markets. scarlet: you say you worry about inflation yet in your report you highlight average hourly earnings. if you look at the movement in earnings, it has not accelerated as it has in past cycles. what is behind that? guest: i mainly observe it and i am ready to change if it starts to change. today there were three price announcements. coca-cola so they might raise
4:14 pm
prices, starbucks and some of the airlines. it does not show up in the data month after month. oneink technology is again thing that is holding it back, intense competition where the companies have intense competition they are reluctant to give pay increases. with globalization, you can get labor from asia. i am surprised but i am patient and i will wait and see when it starts to pick up. keep in mind that people who pay increases feel good about it. itre is another aspect that will be a cost for companies and the fed will react to it but for anyone who gets a pay increase, it is a good thing. scarlet: consumption should kick in as well. guest: it will help spending and confidence. scarlet: that is a perfect segue into our next statement coming up after the break. evercore partners
4:15 pm
vice chairman. stay with us and we will pick up on that consumption idea. this is bloomberg. ♪ bloomberg. ♪
4:16 pm
4:17 pm
>> i am mark crumpton with first word news. president trump said he is prepared for next week's summit with kim jong-un but the outcome depends less on preparation and on what the president called attitude and willingness to get things done. during a joint press conference with shinzo abe, the president discussed what he is hoping for with his talks. >> you will know how well we do in the negotiation. if you hear me say we are going
4:18 pm
to use maximum pressure, you will know it will did not -- it did not do well. talk ino abe called his -- andnd candidate candid. following up on mike pompeo's comments, kim jong-un is prepared to denuclearize. in guatemala, residents are taking matters into their own hands after the official search for victims of the volcano was called off. residents are using sticks and machetes to work through debris looking for loved ones. at least 99 people were killed, nearly 200 are missing. authorities called off the search today, saying the volcanic material is too dangerous for rescuers. the superintendent of yellowstone national park says he's being forced out of his job because of a disagreement with the trump administration. he says he is retiring after
4:19 pm
more than 40 years working in the national park system because he was offered a job transfer he did not want. he says he was not given a reason and the only dispute he has had was over the number of bison in the park. global news 24 hours a day over the air and @tictoc powered by more than 2700 journalists and analysts in more than 120 countries. i am mark crumpton, this is bloomberg. breaking news crossing the bloomberg on broadcom, earnings coming out to $.20 above analyst estimates. revenues pretty much in line with estimates in the second quarter adjusted margins. 66.6% is a little ahead of estimates. the company is giving forecasts for the third quarter. it is reaffirming revenue guidance for the third quarter. 66 .6%d margin will be
4:20 pm
which looks to be above estimates. netcompany has adjusted revenue in line with estimates. shares falling by about three quarters of 1%. like many of the semi conductor makers, -- actually i should not say it fell today. it was up 4/10 of a percent. we did see falling semiconductors over the session. it held up a little better. we are back with ed hyman evercore partners vice chairman. we are going to talk about consumption. got a lotr analysts of attention last week for seeing the retail apocalypse was over. he was mainly talking about retail operations but do you think there is also a case to be made that consumer spending is going to help support retail?
4:21 pm
guest: i think it is a very good case. we got the stronger employment and got wages accelerating a little bit. is backdrop for consumers strong. we got the consumer comfort index which was down a little but still basically at a 17 year high. i travel around the u.s. constantly and every place i go is doing well. seattle, the whole west coast. philadelphia, boston is booming. the backdrop is good for consumer spending. on the other hand, even if you were optimistic about consumer spending, there has been a story until recently that the old brick and mortar companies are dead. many of them have had very good years, much the surprise of
4:22 pm
many. what did everyone miss in that story? these are some of the best games of the year. was it just that they were so low that they had to bounce a little or is there something more fundamental there? guest: i think it is a case of a riding -- a rising tide lifting all boats if it rises enough. this has been going on for a decade and eventually it got good enough that it lifted some of the brick and mortar guys. when i travel around the u.s., places all over the country are doing better you would not think of. there was a story about columbus, nebraska, that has a housing shortage. rvhart, indiana is the capital of the country. joe: i knew that. guest: you were ahead of me. places.ller
4:23 pm
there is an index called the middle america index that came nebraska,ot up for south and north dakota, etc., it shot up a lot to a 14 year high. scarlet: what you do is so valuable. you do a lot of on the ground surveys that give us a sense of what is happening in different parts of the country that a lot of national indexes don't cancel -- don't capture. a lot does not get reflected in economists'forecasts. what do you think forecasts are getting wrong? ,uest: when i have meetings when i talk about the economy getting strong, people go, yeah, i get it. there has been a feeling that it is doing better, it is not accepted as such. in the first quarter gdp was up
4:24 pm
year-to-year, in the second quarter, it is on track to be up 3.1% and i think that will change the perception of the discussion about the economy if you have four quarters that have averaged 3% that maybe it is getting better. scarlet: so, people will catch up with the numbers. guest: they are getting there. the main argument is that this is as good as it gets. growth will peak or slow. scarlet: it will kind of roll over. guest: it will roll over. i hope it slows down because if it keeps growing at 3% or 4%, we will overheat sooner. had, i 2% growth we would not mind going back to that but the stock market might have an adjustment if we were to
4:25 pm
transition into that. scarlet: it would be welcomed because the game to be more sustainable. guest: right. scarlet: thank you for joining us. let's move back to trade. according to the u.s. commerce secretary, the u.s. and china have settled on a deal to keep vte in business. the company will change a $1 million fine, change its board and retain a u.s. selected compliance team. joining us from chicago with mars bluebirds international economics and policy correspondent. secretary ross has said, we know the president is fond of using all leverage out there. is this an indication of the u.s. making progress on trade talks? guest: i would not say it is an issue of progress, it is an issue of making preconditions.
4:26 pm
the chinese government had a real problem on its hands and needed the u.s. to respond. they could have retaliated by holding up one of the mergers the u.s. companies want to do in china and it could have derailed the talks. there is no question it was tied up with the talks. now we move on to whether sanctions get put in place. that is the next trigger point. joe: what about the mystic u.s. politics? -- domestic u.s. politics? it is a political firestorm of a sort on capitol hill. the problem is there is not much they can do about it. there is legislation that has been sponsored by a lot of republicans and some democrats. moveay it is going to attached to a defense authorization bill is going to
4:27 pm
put it past the deadline that that this zte deal is going through. there is nothing congress is going to do about it except make noise. julie: how does this play into the upcoming north korea summit in terms of china's role in that and the ongoing trade negotiations? have the the chinese most leverage over the north koreans of any country. they are the biggest trading partners. they want the u.s. to continue to pressure north korea to make a deal. the president has backed off on what they can accomplish in singapore which probably means he needs the chinese around for longer. so do you go ahead with sanctions and risk chinese you postponer do them somehow? it is hard to imagine donald trump climbing down.
4:28 pm
today the u.s. trade representative met with members of the ways and means committee who said they believe the president intends to go ahead with sanctions. it should be interesting next week. scarlet: the u.s. has also announced that it plans to put ofiffs on $50 billion chinese goods. you mentioned the zte deal as a precondition for the chinese to go ahead with trade talks. either any others we should be aware of? does the u.s. need to hold off on sanctions? reporter: they do, according to the chinese. they say they will not negotiate if the u.s. puts sanctions on. the chinese say if they do not put sanctions on, they are willing to meet the u.s. halfway. we do not know what that means and we don't know what the administration is looking for other than this $200 billion reduction in the trade deficit. it is hard to say exactly what happens but we would probably be
4:29 pm
in for some months of standoff if he sanctions go ahead. joe: what is the next day after that you are watching for? subjects all of the are tied together with the north korean summit. that may affect things, then you have june 15 where they publish the final list of open be sanctioned. shortly after that, they will impose it. that could stretch out for some time. as soon as that happens, you look for the chinese to 30, thee than on june administration is supposed to give final recommendations for what kind of authority the president would assume to stop mergers by chinese firms with u.s. firms on national security grounds, broadening the definition of national security. the treasury secretary does not want him to do that. there is legislation moving through congress that would do it separately.
4:30 pm
that would be the next marker in the standoff. >> thank you. joining us from chicago. let's get to first word news with mark crumpton. mark: president trump met with japan's prime minister shinzo abe at the white house. the premise has been helpful with preparations for next week 's summit with kim jong-un. partnership has been invaluable reaching this moment and we will continue to be in close communication in the weeks ahead. including the issue of japanese abductees, which i know is of great personal importance to prime minister abe. ofk: he will raise the topic abducted japanese citizens at the summit. jokeir putin says it is a
4:31 pm
to suggest the kremlin may have interfered in the 2016 u.s. presidential election to help donald trump. his comments came during his annual call-in show on state television. he called the allegation nonsense. nato defense ministers met in brussels today in a show of resolve against russia. the ministers downplayed a series of transatlantic disputes. >> we have to stay united when and tries toussia divide us. alliance, unity in the is our most important message as we prepare. nato is not aiming to isolate russia. we strive for better relations
4:32 pm
with russia. global news 24 hours a day and on tictoc on twitter powered by 2700 journalists and analysts in 120 countries. this is bloomberg. markup of today's action, the nasdaq off, tech stocks the big losers. energy the big gainer here gaining 1.6%. the dow up 95 points. u.k. prime minister theresa may facing another rebellion from her over brexit over her plan to maintain eu customs rules after the u.k. leaves next month. top ministers led by david davies is said to be furious raising speculation of how long he will last. london, there was
4:33 pm
some resolution of sorts. you like to call these a fudge week as they are kicking the can down the road. andd davis did not resign they held crisis talks that seem to have resolved the issue for now. >> it is a typical week of brexit. a lot of a do about nothing. obviously --as they didn't come to a resolution on the idea for a backstop. northern ireland has been a problem. what the u.k. agreed to was that failing a resolution for , theyng a hard order would accept a backstop which would give northern ireland special status. northern ireland would remain in the customs union or the eu single market. the eu has decided that is not what they want to do and the
4:34 pm
was the factift david davis wanted to have an end date to this backstop so this could become the new status glow. he has not got that. i would argue theresa may has come out on top. even though there is commitment to exit this option if it has to be put in place by 2021, anyone who was following the negotiations knows the final deal between the u.k. and eu will not be done by 2021. not wond davis has anything on this. joe: i am sure you sought in the last couple of hours. gaveech that boris johnson , conservatives complaining about the brexit process. anxiety that may be going off
4:35 pm
the rails if they are not going to get a real brexit. a hard-core brexiteers have reason to be nervous? >> the agenda that has been hijacked by the soft brexiteers, theresa may, ali robinson, they are accused of trying to seven sabotage brexit. theresa may has relatively tempered her position as the reality of what a hard brexit means. moreteers who wish for a singular break from the eu argue this is because they haven't been able to do the brexit in the way they wanted. the narrative has already begun. the things boris johnson was saying. but he couldn't believe it was beyond believe the issue ireland and northern ireland had become
4:36 pm
such an obstacle is insincere. i reckon this will be a narrative we would hear from many years to come. the idea it is not a success because they were unable to get their version of brexit. joe: one of the other big developments this week has been the labor party putting forth the support for some sort of stopped -- stopped brexit. union is not expected to succeed. mean?at does this the more moderate conservatives and the labour party may be waiting to join pushing to a softer brexit? >> the holes in reo so remainated, labor is oh -- pro remain.
4:37 pm
they wanted to vote on the amendment but by the house of lords. which is basically the norway model. they have promise they want to have full access to the internal market. they know that is not possible. is of the fundamental items accepting free movement of people. the labour party doesn't want to have that. it is an unrealistic proposition. , the finalase outcome will be that the u.k. remains closely tied to the eu. , they willbenefits not be materializing in the years to come. where we seesue this grand narrative of the
4:38 pm
trail. betrayal.trail -- of they do not really dare to challenge the situation, which i find intriguing. doesn't theresa may have most of the leverage it this point? who wants to replace her? >> theresa may has a lot of leverage. if the hardliners tried to topple her and get, push for the hardest brexit they want it would be impossible to get parliamentary support for that. , and the of the names ,e see thrown into the fray brexit is happening in 10 months time.
4:39 pm
the hypothetical situation to leave, we have not even gotten onto conversations about the future relationship. that gives you an idea of how ridiculous the timeline is and the fact that we won't be seeing any kind of resolution for many more years to come. i do not think the u.k. has any leverage at all. the idea that it can threaten to walk away is simply untrue. scarlet: things are still gummed up. we are talking about a hypothetical situation. thank you for staying late. brazil's riau is level in to its lowest two years. what could stem the freefall? this is bloomberg. ♪ ♪
4:40 pm
4:41 pm
4:42 pm
julie: the brazilian realities one of the worst performers, tumbling 2% in its third day. additional $2an billion was sold. what tool does the central bank have left? the bureau options under consideration?
4:43 pm
we have not heard much from the central bank itself. >> the central bank has not said anything on tuesday when the intervened. he said we are at liberty to do this and nothing else. we heard from the finance minister that said the government is watching and acting as a group to make sure, .hey are looking at volatility the central bank hasn't said anything. even though they are pushing lower today, it was 3% at some point. the central bank did not ask anything more. it had said nothing about the interest rate. joe: let's back up and look big picture for a second. we have seen a number of trouble spots emerging. turkey, argentina, most notably.
4:44 pm
what does brazil have in common. what makes it interesting? >> it hasn't intervened selling reserves in a long time. that is what analysts say is one of the biggest lessons against the depreciation that they could use. the situation isn't as dire as we have seen for the central bank was intervening more heavily. here the central bank is taking a small step. while it is not containing the drop, it is not a dysfunctional market. peso is the worst performer. theit is off by 9.3% versus dollar. to what extent is their suspicion or willingness to confirm or address the idea
4:45 pm
there is a speculative attack taking place? >> the finance minister was asked about that. he said the dollar is rising, which is true. the situation in brazil deteriorated a bit with the truckers strike paralyzing the economy, the government having to offer subsidies. we could get there but i do not think that we are there yet. the truckers strike is now terminated. going on? we have not talked about the crux of the issue. >> we kind of haven't talked about the crux of the issue about why it is going down so much. there is rumors of a new truckers strike. walkovernment is having to
4:46 pm
back on the things it promised. the government is weak at this point. they have used up their political capital fighting corruption allegations and the crises we have seen. it is a fragile situation. a locket go wrong quickly. scarlet: there is also presidential elections. to what extent is that driving uncertainty? is that showing up? >> it is already. analysts expected it to only come up in the second half but that is not the case. candidates seen as pro-market and prone to continue with reforms are not going anywhere. no one is breaking 10%. we're seeing to more extreme candidates on the left and right ahead in polls. markets are getting concerned over what they have been saying,
4:47 pm
what this means for the election. julie: thank you so much. coming up, exclusive interview with ken jacobs. why the whole fields deal is causing a recall -- ripple effect across the economy. this is bloomberg.
4:48 pm
4:49 pm
scarlet: almost exactly when year ago amazon acquired whole foods in a bombshell deal that sent shockwaves through the online and brick-and-mortar industries. can joke spoke to shelley to discuss the effects of tech disruption.
4:50 pm
hadt is a deal which has ripple effects across the economy. it led to a revaluation of retail stocks. in the fall of 2017 you saw a revaluation of packaged good companies. esau a reevaluation of the drug retailers, which led to the cvs at in a transaction. transaction.igna an attempt around otc do investors, which did not succeed because of the personal care environment in the knotted states. you see pressure on advertising in part because of this transaction and what is going on in regard to television and cable. , others are under pressure.
4:51 pm
,ou'd think about this one deal and the activity of people having to rethink business models, i think it is just the start. we see the same thing in content. netflix spending $6 billion on content. advertise a tv show globally. amazon gets to use it because it drives crime membership. .t changes the game then you have the benefit of what over-the-top guys in terms of the pressure it puts on cable companies. they all compete against cable. these are technological -- reshapethat rishi the industries. >> what are the most honorable to change? >> everyone is at a level. it is a question of the pacing of which it happens. there is a lot has happened in other parts of the world.
4:52 pm
you go to china. payments are well advanced over what they are in the united states and europe. we will see changes in payments in the u.s. and the way they work. there is an impact on the industry. or do theumbents when insurgents win? how successful are people in terms of maintaining their business models? to be competitive in the future? we are going to see that a lot. .e saw the impact that has shifted dramatically in terms of people perceived to be the winners. >> we have technology driving deals. how much does washington impact dealmaking? i think it is having an impact. there is no question the shift
4:53 pm
is going to impact acquisitions on the part of the chinese companies in the united states. at least during this time. there may be changes closer to a resolution of the trade issues but it is difficult for a chinese company to do anything. the chinese acquirers are going to look outside of the united states for the same opportunities. latin america, australia, and technology, they will develop their own or look elsewhere. antitrust, i think it is going to be interesting to see what happens with the at&t time warner deal. approach inmal terms of challenging a vertical merger that comes with consequences. if they succeed it is going to chill other vertical mergers.
4:54 pm
if they fail it takes away tools or threats that they get from the ability to go to court around vertical mergers. i think there is risk around the. i was surprised that deal was challenged. on a regular way, i do not think we have seen a change from the obama administration. i don't think you have seen a change from the bush administration. the deals were more challenging. they were more down the center of the fairway. there was more overlap. would -- it did not surprise me they were more challenged. >> that was our exclusive interview with ken jacobs. time for the bloomberg business flash. looking beyond our a hole and turning attention to health-conscious consumers.
4:55 pm
the president and ceo spoke to bloomberg. >> products in health and well-being will be well-received in southeast asia's. there are diseases unique to tropical areas. we do have concrete timing yet but we are proactively considering opportunities there. regulators moving to reduce currency outflows could pull investors away from placing bets. warned money illegal. are regulators want banks to monitor credit card machines. analysts are warning of the risks of a broader clampdown. religious believes could get in the way of profits for amazon on prime day. they will overlap with from it
4:56 pm
on -- ramadan. -- oyees amazon is moving to address the culture clash. there are more than 100 million prime subscribers. that is the business update. julie: coming up, what you need to know for marlis trading day. this is bloomberg.
4:57 pm
4:58 pm
scarlet: the nasdaq did not climb to a record high. it fell 7/10 of 1%. a mixed day overall. g7 leader summit takes place tomorrow in québec. recount baker hughes comes out. it will be interesting to see what the latest is there. julie: we will speak to the kk oh founder. ulie: bloomberg technology is up next. joe: have a great evening. this is bloomberg. ♪
4:59 pm
5:00 pm
i'm emily chang in san francisco this is bloomberg technology. the u.s. has reached a deal that will allow zte after paying a record fine to management changes. trade talks between the u.s. and china. plus amazon is attempting another home device breakthrough. board.t alexa is on


info Stream Only

Uploaded by TV Archive on