tv Bloomberg Markets Balance of Power Bloomberg June 8, 2018 12:00pm-1:00pm EDT
on the intersection of politics and the economy. stories, global leaders are gathering at the g7 summit in quebec. it is one of the most closely watched in years as president trump's policies put him at odds with other leaders, the president is due to arrive in minutes. north korea and the looming summit, we discussed the key issues for the summit days away. still,nts -- immigration a political war. leading to one of the figures on the issue, jeff denham. ♪ shery: president trump will leave early from the group of seven summit in quebec and had
to singapore to meet with kim jong-un in singapore. he will be the first american president to meet with a sitting north korean leader. in summit is a big moment the course of diplomacy and here to talk about what we can expect is scott snyder, a senior fellow for korean studies, at the council of foreign relations, is also an author. he joins us from los angeles. thank you for being with us. president trump saying the north korea issue is not going to be a one meeting deal. there seems to be an acceptance this will be a solution. what are mistakes to avoid in order for this summit and the ensuing process not to become another 1994 framework? scott: there are so many mistakes that need to be avoided. the danger of a slippery slope of moving to a phase process is removing closer to something like we have
experienced in the past. the best antidote to that, visit trump and kim jong-un can agree to frontload tangible evidence of seriousness of purpose to achieve denuclearization. shery: we're now seeing live pictures of president trump arriving in quebec. he is expected to meet with g7 leaders. that official welcome will get underway in a few minutes. scott, president trump dangling economic aid, investments into north korea in exchange for denuclearization. what are the chances we see the industrial complex being reopened and would businesses be happy with this given the uncertainty doing business within north korea? it is right that the administration seems to be dangling incentives. i would like to see the north koreans reciprocating but the issue of opening the industrial complex faces many obstacles from the un security council
resolutions that would require exemptions from the 18 committee. that would require political will on u.s. and south korea. it can be done. it is not impossible. right now it would only be done in the context of real evidence of seriousness of purpose by the north koreans to denuclearize. kevin: i want to pick it up there. we areu look broadly, watching president trump arriving in quebec for g7, he will be meeting with global world leaders who are at odds with him on trade. yesterday at the white house, president trump told reporters he does not believe the trade issue, particularly china and president xi jinping will directly impact the denuclearization summit in singapore with kim jong-un but what do you make of this? is the u.s. president at a disadvantage given criticism he is receiving from european allies as well as president xi jinping on trade?
scott: i don't think he is at a disadvantage in dealing with kim jong-un. the real question comes in whether or not, the u.s.-china relationship involves links between trade and performance by china on north korea? here it is a challenge. president xi jinping has been watching this unfold, he may feel left out and at the same time trade tensions are rising between the u.s. and china. the question of whether or not xi will hold fast on implementation of sanctions, becomes more at risk as a result of the convergence of issues. kevin: the brothers saying yesterday would like to see president xi jinping and act stringent border security and policies along the north korea-china border. why is that so important? scott: we need pressure to get north korea to perform. this is a classic coercive
diplomatic approach, where we're using economic sanctions, political isolation and the threat of military force in order to open away for diplomacy. the north koreans don't like the fact that we're trying to use coercion. they want to look like they are an actor, coming at this from a position of strength. maintenance of pressure will be critical to getting over the hump in terms of getting kim jong-un to commit to denuclearization. shery: how much will trade tensions with china effect? scott: china in many respects has already relaxed implementation of sanctions on north korea. we have reports of north korean laborers coming back into china. is trying tomp increase rhetorical pressure on xi as a way of getting him to hold tight but it will be very hard in the context of the signals of relaxation, the
nonuse of the phrase, maximum pressure, potentially, to maintain pressure on china to do whileons while the rest, other countries are easing tensions with north korea. shery: participating at g7 is shinzo abe of japan. his concerns along with other asian allies is during the summit, perhaps only intercontinental ballistic missiles will be addressed, and not just short-range missiles that could affect south korea and japan. how important is this, to this to be included to give reassurance to the u.s. and asian allies? from: it is critical alliance management perspective for the united states to be able to address allied concerns along with its own. america first approach to north korea is not going to work. it is not in the u.s. long-term interests. it will be interesting to see whether or not trump is able to
do a favor to shinzo abe by raising the induction issues, possibly getting a japan-north korea dialogue on track. kevin: yesterday in the rose garden president trump said directly to shinzo abe that he would do that. that is such an important issue to the prime minister. fast-forward, to when mike pompeo will be meeting with asian counterparts, as he told reporters yesterday, what is a win for the united states at the conclusion? keep it simple for us. scott: we need tangible evidence of a strategic decision by kim jong-un to move in the direction of denuclearization. the risk is if discussions about peace get ahead of commitments. shery: thank you so much for your time. scott snyder, director of the program on u.s.-korea policy, the council on foreign
relations. we are seeing pressure for u.s. stocks in the middle of the trading day on this last trading day of the week. there is abigail doolittle. reporter: it is the last day of the trading week. small moves. mixed trading action, the dow up fractionally. s&p 500 down fractionally. 1%, a bullishf week for stocks as the major averages higher. the dow leading the way up more than 2%. tech selling off, pullback for technology. stock down 1.3% today, two days in a row. the worst since the middle of april, contributing to weakness, let's look at chip movers. broadcom down 2.79%. skywards down 3.7%. day, on thatn the report that it told suppliers to
expect small orders. nikkei reports from the past have been unreliable. it will be interesting to see if there is shadow that supports that intel. intel down. helping to explain that weakness. let's go into the bloomberg and look at technicals on stocks. there is something to be concerned about. you can use this on gtv , one year chart, buyers and control, until the chop of this year. uptrend reversing, sellers are trying to take over. of concern, stock split in all-time high on the latest path to the top of the rink, not surpassing that, suggesting we may move down. something to watch, chip sector is considered to be early tell on what is next, components are used in everything we as. tech maybe one of the worst sectors on the day. certainly yesterday. 2 days in a row, consumer
staples, 9/10 of 1% over the last two days. the best since april, a reversal of technology. beverage companies in play, investors liking bullish comments out of monster beverage's recent annual meetings. shery: 9% would make headlines. [laughter] gop stand up. republicans struggled to find common ground over dreamers. jeff denham of california joining us next. this is bloomberg. ♪
let's get the first word news. reporter: president trump -- on claims he can lawfully pardon himself for potential crimes. it is the second time this week the president has asserted the right to do so, in the event that he is charged. >> i'm not above the law, i never want anybody to be above the law. the pardons are a positive thing for president. i think you see the way i'm using them. i have an absolute right to pardon myself but i will never have to do it because i did not do anything wrong, everyone knows it. reporter: republican congressional leaders have said the president should not take this step in any case. the department of justice website states that it would not be permissible. special prosecutor considering whether to refile an invasion of privacy charge against former missouri governor eric greitens. he resigned june 1, was indicted
by st. louis grand jury for taking an unauthorized photo of a woman during and at your marital affair in 2015 -- an extramarital affair in 2015. he was accused of using a charity donor list for a political campaign. a council has stated that it would be unrealistic for armed guards to be in every school i fall. -- by fall. there are not enough qualified applicants and schools do not have funding. 17 people were left dead in the shooting in florida. celebrity chef and travel host anthony bourdain is dead. he was found dead in a hotel room in france. french officials are calling it a suicide. he was working on an episode of
his cnn travel show. he was a chef in new5÷vju)ipì(l% he was 61 years old. global news 24 hours a day on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. crumpton, this is bloomberg. kevin, back to you kevin: it is one thing to read the tweets president trump reading about pardoning, it is entirely different to see him say that on camera. joining us in the middle of all this, trade policy on north korea is a republican lawmaker caught in the middle of an immigration debate. california republican congressman jeff denham. thank you for being her. rep. denham: thank you for having me. kevin: do you have the signatures to get to a position of compromise with your fellow republicans on the issue of
immigration? a fullnham: to force boat in front of the american public on the house floor you need 218 people to sign a discharge petition. we have 215 today. we have three more ready to sign on, the minute we don't have an agreement. right now we're still negotiating, trying to come up with a reasonable approach, not only border security but a permanent fix for dreamers. absent this, we are moving forward on tuesday. kevin: this has eluded the republican party to adjust this for some time. you're now on the cusp of getting this done i had of midterms. what is your message to ultraconservatives? with frequently but who disagree about how this moderate type of approach might benefit the conservative party, particularly when president trump has campaign as being a hardliner on the issue of immigration? rep. denham: not just to the freedom caucus or conservatives
in the house but americans, we need a secure border. this president not only campaign on it but he has been asking us to send something to his desk, infrastructure as well as the physical barrier as well as the technology barrier, we can do both. the only way we will get there is by congress working together in a bipartisan fashion to also have a permanent fix for dreamers. the president talked about the issues. proposals thatheg you want to force a vote on is a bipartisan bill. what about the compromise bill you are working on now? other democrats involved and if holdcan you only republicans passive and get it to the president? rep. denham: we need 218 votes, working with the speaker, this may be 218 republicans. ultimately we have to put something into the senate.
that bill will must likely change as most do. to have a full debate in front of the american public is the most important issue at hand. shery: it seems to come down to the issue of citizenship. is there a fair compromise that can get you the votes you need? rep. denham: i believe so. ultimately, it is not going to be an easy pathway. it will be an earned pathway. it takes a long time. 10 to 12 years. i believe if you have been in this country, contra high schools, past a background check, at some point, you have been waiting long enough and worked hard enough and have a great track record that we ought to embrace you as a citizen. kevin: you cannot control when you are toddler wear your mom and dad put you in the car and driving from. you cannot control where they will take you. in addition to this issue, also the wall.
in prepping for this interview i was trying to figure out what president trump wants out of the debate. i am not sure i can figure that out with the exception of full funding for the wall. do you get a gauge -- on wha the white house is asking for? rep. denham: we have had a number of meetings with the administration. we have been down to the border. we understand what the biggest impacts are. billion, thef $25 democrat bill, every democrat supported in the house and senate two years ago had $42 billion. this is something that not only needs to get done but both parties can agree to it. we have to make sure we secure our border. we have to have judges so we can have due process, we are needing more ice and more agents. shery: thank you so much for your time, california republican congressman jeff denham. rep. denham: thank you.
♪ welcome back. like pictures of the 44th annual summit of the group of seven industrialized nations. you're taking a look at president trump meeting with the canadian prime minister, justin trudeau there with his wife sophie trudeau. president trump attending by himself. melania trump is not there on this visit. we just saw president emmanuel macron meeting with the prime minister, justin trudeau of canada. it has been a difficult situation for these allies.
president trump did not mice words yesterday -- mince words yesterday when he tweeted. president emmanuel macron tweeting today that he is opening the g7 with his european friends. let's bring in the managing editor for europe, andrew barden to talk about everything going on at g7. it is going to be a difficult situation right now for president trump. he has not even mentioned this could turn into g8. why is russia involved? how does this complicate the situation? andrew: they are laying the table for this summit. it looks like it will be a very interesting dinner to say the least. x÷we had emmanuel macron say, trump may not mind being isolated but the rest of them
don't mind signing an agreement without them. we had may saying there would be a proportionate response. then trump accuses justin trudeau of being indignant. then trump leaving early. trumphat you refer to, musing that russia should be allowed back in, move back up to a g8. it is not clear if that was a real proposal or another grenade to unsettle everybody. they clearly caught people off guard. the europeans, reminding people that russia was kicked out after the annexation of crimea and they felt that russia was still in violation of international law. it shows that whether on trade or climate or the iran deal or russia, the u.s. is taking a different tack from the rest of g7. it will be interesting if any consensus can be reached, and what final draft we will get at
the end of the day on saturday. kevin: it is fascinating to hear president trump ruminate about russia rejoining g7. i want to read a statement from a u.k. government official put out by the embassy in washington. "the prime minister is all said we should engage with russia but prime minister theresa may telling reporters that she most recently spoke to president trump on monday. she has articulated and made clear that she disagrees with his policies on steel and aluminum. what more can these leaders do other than make their case known? can they apply any more pressure on president trump to get him to change his mind? andrew: they accuse russia of being behind the poisoning of skripal. no surprises there, coming out
strong. what other steps do they take to isolate the u.s.? you remember last year we had the g7 communique, it ended up being5 a g6+1. they could go further than that. they could leave the u.s. out with a statement or saying we will have a chairs recap. they could come together, they have hit back on tariffs. shery: we have to leave it there but thank you. we will be following g7 and anything the president does. this is bloomberg. ♪ retail.
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dow gaining 2/10 of 1%. for the third consecutive session. s&p 500 higher by consumer staples and health care. energy and tech down. nasdaq being hit as well after a report that apple is preparing to buy 20% fewer components for iphones. a quick check of the bloomberg first world news. there is mark crumpton. a 145the house has passed billion dollars spending bill to fund the energy department and veterans against for the upcoming budget year. 79, itte was 235-1 includes an increase for veterans affairs, including $1.1 billion to pay for legislation, to give veterans more freedom to see doctors outside the the a -.váuqs -- va system. the measure goes to the senate. victims from the pulse nightclub
shooting are suing the city of orlando and police officers who responded. claims the suit officers acted too slowly and failed to protect patrons. the only plaintiff named in the suit was previously honored for his actions as the first person to exchange gunfire with the shooter. sent moren activists incendiary materials toward israel with the aim of setting feels on fire. have already caused blazes in agricultural areas and previous ones have carried explosive devices. the attacks are part of ongoing protests against the gaza blockade. beijing, xi jinping and vladimir putin pledged to support each other on key international issues. talks today were dominated by the iranian nuclear deal, and the u.s.-north korea summit.
they bowed to keep the nuclear deal alive. global news -- global news 24 hours a day on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm mark crumpton, this is bloomberg. shery: thank you. republicans and democrats skirted disaster in the primaries in california. democrats managed not to be shut out of key district overcrowded with candidates while republicans got the pic for governor on the ballot. reveal anything about republicans hopes of staying in the majority? we welcome frank luntz. great to have you back. we have been seeing this happening while there is so much noise over trade, terrace, the theident at g7 -- tariffs, president at g7. do voters care? frank: they care because it is jobs, employment.
right now unemployment levels are at a low, people have come back to the workforce, inflation seems in check. the public is saying, the economy is better than it has been and they are optimistic about the future. here is the warning. if they start to see food prices go up, if farmers continue to suffer in the midwestern states, it could be a regional problem. there could be an impact. if china decides it wants to punish american agriculture, it becomes a political issue. shery: we are already seeing eu mulling $3.3 billion of tariffs on key states such as those that producevbourbon, that are crucial for congressman. frank: i don't know -- if that is the key consumption. shery: it depends on leadership. frank: i love that. don't think about trade, think about reading. shery: [laughter] --nk: the challenges china
is china. intellectual property not behaving as it should, chinese corporations doing things with american technology it should not be doing. one of the reasons trump won, he said i will not let china abuse you anymore and it had a significant impact among working-class americans. you are correct. the tariff issue is important in terms of cost. more importantly and why trump is still doing well, the american people want him to hold china accountable. kevin: you don't just that he the bottom line. you talk to voters, in your famous focus groups. when you look at states that could be hurt most by the tariff proposals, the electoral map, north dakota, south dakota, kansas. when you look at the states, what message should republicans
who are at odds with this administration's trade proposals -- what should they be telling voters or how does the administration, how do they need to sell this to the administration to change their mind? businesses have been unsuccessful in advocating for a globalist it economic worldview to the base of the conservative movement, no? frank: we are all in this together. if certain states suffer because of china's economic behavior and security behavior, all states are in this. sothe end, that is why it is important for congress to pass a farm bill, particularly for missouri and north dakota where democrats are vulnerable and there are strong republican candidates. trade could determine who controls the united states senate. the public is more concerned about a national approach. how do you stop china from taking intellectual property? from using technology to undermine american corporate
efforts? have you open up the incredible chinese market to american products, services and employees? that is the bigger issue. kevin: that is really important. when you look at a bloomberg chart, under my terminal, you look at wall street versus main street, how the s&p 500 has trended against president trump's approval rating, they are seemingly more in line. when you look at president trump arriving in quebec at g7, from a republican voter standpoint, when you dissect the numbers, does this hurt or help the president to be directly at odds with so many european leaders, as well as xi jinping? i think the base of the republican party loves this. frank: they wanted to fight for america. this idea of make america great again, put america first. there are some voters who find that jingoistic. the reason why donald trump won
in 2016, 40 5% approval rating right now, same as barack obama in 2010 -- which people forget about -- they find them fighting, they want someone who will fight for the american worker, for the american small business. that is exactly what he is doing. kevin: what about north korea? is there any way this could hurt hisntly hurt him, chances or republicans chances in midterms? frank: it is interesting you use the perspective of hurt. most people are thinking -- how might this help the president if he is successful? kevin: fair point. frank: make no mistake, the likelihood of success is not high. we know who this leader is. let's face it. this president was able to bring a very difficult dictator to the table. let's see if they get there.
they have done more in the last 2 months to challenge north korea than any president, republican or democrat in the last 25 years. let's give him credit for making the effort. it seems like there could be a result. shery: what about immigration? there is a showdown in congress. how difficult is this for the gop, when what could help in the primaries is not what could help you in november? frank: that is exactly it. they want to build a wall, the electorate. they don't care about the people. they want the wall. the general electorate cares about the treatment act, wants to address the children, they want an overall solution that includes border security and justice for dreamers. if republicans are smart, they will find a compromise. that is available to them now. shery: great talking to you again. thank you. kevin: fascinating perspective.
congressman, president trump is at g7, clearly at odds with european counterparts as well as with xi jinping. he is also at odds with members of his own party, including yourself. what would you like to see -- how can he change course on trade? rep. roskam: by focusing on china. that is where the real problem lies. i represent a constituency in suburban chicago poised to lose tariffs go in place these are the our allies. importing specialized steel from sweden, prices will go up, it will hurt consumers in my district. pivot to china. that is where the lions share of the egregious conduct has been coming from. kevin: last segment, we talked to frank luntz, he suggested the same. no one slices the republican
electorate better than him. how does the president pivot to china at a time when he needs them to help with north korea? rep. roskam: the president is really believing if you raise -- on imports, it will raise economic activity in this country. to your point, there is a bit of multidimensional element in his relationship with xi jinping. on the one hand we want to enhance openness with our trade relationship and the u.s. needs a better footing and access to the chinese market, they need to stop the ip theft, there is no quarrel about or dispute about, they are absolutely doing it and they have to lower the barriers of u.s. interests. let us have access and lower ownership areas. that said, the only reason kim jong-un is at the table in my view is because the chinese are really putting harsh sanctions
on kim jong-un right now. the president can multitask. he is able to interact on this basis. my view is, this is not time well spent vis-a-vis our allies, he should be focusing on china. shery: should congress try to curtail the authority the president has, whether on china imposingte deal, or tariffs on allies? rep. roskam: the irony is that it would require a presidential signature. kevin: [laughter] rep. roskam: he will not sign anything and we don't have the votes to override. we are very much in persuasion mode. i was in meetings with ambassador lighthizer and secretary ross. i was giving voice to concerns i'm hearing from the manufacturers and employees and consumers in my constituency, trying to persuade them say --
going different direction. -- go in a different direction. in one sense they are listening. whether they are hearing us and make decisions, the jury is still out. i don't think it will be possible to impose new trade standards over the administration, because they have authority under the law. shery: another issue important for your constituents, the tax package. you supported that legislation. democrats now seizing on capping the local deduction. your democratic opponent is talking this up. the deduction be your achilles heel in november? rep. roskam: no. you look at my constituency, they are the beneficiaries of tax relief under this plan. husband-and-wife, median income, two children in my district, $4600 in tax relief. according to our estimate, property values up 5% in my
constituency and that is all based on the tax cuts and jobs act. you have commonwealth edison, provider of electricity, now for the first time saying, we are coming back and offering rate release as a result of tax cuts and job act. i will be running on this. kevin: you represent suburban chicago. these are independent voters, i grew up in suburban philadelphia. these voters decide elections. the president has suggested that naftab
capital approved a plan that would allow the state to bail it out. assuming the debt burden is another layer on connecticut's mounting fiscal woes, not out of the question. according to a bloomberg opinion columnists, could connecticut become the next problem child along with illinois and new jersey? reporter: as far as states go it is already in that unfortunate pantheon of problem children. it is been downgraded three times in the past three years has the largest tax debt per person of any state in the country. it is already there. the idea behind the column i wrote was earlier comments from their fiscal sheets saying it is inconceivable that connecticut could ever default on bonds. that struck me as, maybe that is not the tone you want to be taking, maybe want to be
thinking about how you fix these problems that got you downgraded in the first place. kevin: talk about tone deaf. i love this column. i don't get it. it is 2018 and we're talking about whether or not connecticut is too big to fail. so goes connecticut, so goes the rest of the american economy. definitely an open question about what is going to happen. you look what happened with ge and the move to boston. i was struck by, i have not looked into connecticut in a while, but i looked into the comments they made about moving from fairfield. says it was- ex cfo a more there and he hated it. what is going on? that is not exactly a recipe for success for a state. at the federal level and throughout the state
governments, they are buying for large -- they are vying for large companies and maybe connecticut does not have going for it like they used to. kevin: a nice morgue. shery: you don't want to be compared to a morgue. when you look at states and cities in the past, they don't just go away. detroit survived. reporter: it will be a slow process. a slow burn. ben barnes, who made the comment, said it is 1000 years, there will be issues. that is not exactly right. it is not that long-term. the pension issue has been building for a long time. financial markets, stocks, even bonds have had a solid run over the past decade. that has helped tensions. -- tensions. it -- pensions. shery: raise taxes.
reporter: connecticut cannot really do that anymore. it is running out of room. that is the struggle they face. shery: no one wants to hear, more taxes. reporter: [laughter] shery: thank you. time for the "balance of power," newsletter, bloomberg.com/ politics, get the latest global politics in your inbox everyday. coming up on bloomberg markets, complete coverage of the g7 summit, we will show all the events as the leaders hold a lunch and take a family picture. that will be interesting. if you missed out on our charts, gtv is your function. this is bloomberg. ♪
will jonathan: from new york city for our viewers worldwide, will city for our viewers worldwide, i'm jonathan ferro with 30 minutes dedicated to fixed income. this is "bloomberg real yield." breakdown on international diplomacy. central bank governor in a world of pain asking the fed to help. ecb refusing planning to discuss the end of qe. we begin with a big issue, emerging markets asking the fed for help. >> the fed is always clear they are making policy for america