Skip to main content

tv   Bloomberg Markets Americas  Bloomberg  June 12, 2018 1:00pm-3:29pm EDT

1:00 pm
north korean leader. mitch mcconnell call the leading -- the meeting a major first step, but not a decisive one if pyongyang doesn't foll through. meanwhile, paul ryan says that the only acceptable final outcome is complete irreversible denuclearization. democrats were openly skeptical, arguing that leverage was given up right committing to put an end to tter exercises in south korea. nevada and north dakota are especially in play. voters in both states will accept challengers to dean heller and heidi heitk rol of the se next year could depend on how they perfor. meantime, virginia votes in contested primaries for nine of the state's 11 congressional .eats
1:01 pm
israeli police arrived at the residence of benjamin netanyahu again today. investigators are looking into allegations linking him to two confidant who are now -- two confidants who are now under arrest, moving hundreds of inlions to a telecom giant exchange for favorable coverage of the prime minister. netanyahu dismisses the allegations as a witch hunt. it's the third time he's in questioned over the affair. george h.w. bush is made history today by becoming the first former president to reach the age of 94. he celebrates his birthday with his family in kennebunkport, maine, though it's unlikely he will be able to jump out of a 80ne, as he did on his 80th, fifth, and 90th birthdays. he was hospitalized over the weekend for blood pressure and fatigue but was released last week. global news, 24 hours a day, powered by 2700 journalists and analysts in over 120 countries. crumpton, this is
1:02 pm
bloomberg. 1 p.m. in new york, 6 p.m. in london, i'm shery ahn. vonnie: and i'm vonnie quinn. welcome to "bloomberg markets." shery: from bloomberg world headquarters in new york, here are the top stories from the bloomberg and around the world that we are following. signed, sealed, delivered, the historic summit between president trump and kim jong-un results in a signed these pledge but offers few details. decision day, will at&t be able to go ahead with its deal?
1:03 pm
and in the meantime, u.s. stocks are turning back a little bit of their earlier gains. here is julie hyman with the latest. julie: this is a nge, tighter than we have seen all year, not much bouncing around, though we are slightly off the highs of this early session as we see a benign reaction or not much of one to the events unfolding in singapore. one of the areas of strength pretty consistently has been retail. taking a look at the s&p retail index this year, you can see that the year to date performance is impressive and this is the 12th record close, potentially, if it closes their in 17 sessions. really, it has been on an extraordinary run for the retailers. today let's look at the retail leaders. we've got restoration hardware, 34% in a single day with better than estimated first-quarter earnings and
1:04 pm
same-store sales as well. also, a lot of analysts pointing to the strength of the margins for the kind -- for the company. lands and would same-store sales that truckly, but performing less poor locations not located inside of sears stores and they say they are now planning to drop the 100er of in-store stores to from the end of the first quarter where investors like that strategy. rent-a-center, it's shareholder, vintage capital management, submitting an offer in cash for the company. that company owns about 5.9% stake in vintage capital. itself, former parent of lands end, rising as well as the company gets an expanded tire deal with amazon. over 90% ofhat amazon customers are new sears automotive customers if you look at stores that offer tire installation services. all of those retailers tradg higher with the jewelers trading
1:05 pm
higher today. there was an industry will or that china is lowering import dutieselry categories. saying that tiffany could benefit from that. sign as strength the consumer discretionary, stables have been bouncing from a very low basin. they are still far outpaced by , theetionary, up 24% broader retail category this year. stables down, still, by 74%, bouncing a bit off the lows of the year. thank you for that. -- vonnie: thank you for that. it's not clear what a denuclearize that north korea will look like, but our next guest said that the u.s. should take a look at its own nuclear ambitions. jeffrey sachs writes this, "the u.s. adheres to the proliferations of the non-nuclearization treaty, but they demand not true
1:06 pm
denuclearization, but it own nuclear dominance, and the level of this is stunning. byfrey sachs is with us phone from new york. professor, why would it be a good idea for thto give its ability to trump any nuclear power with nuclear abilities? basically, we are continuing as we have been for many decades the threat of total global destruction. the purpose of the n nonproliferation treaty, signed half of a century ago was not only to stop the proliferation of nuclear weapons, but to ultimately denuclearize whole world so that we can get back to a situation where we are not threatened with our own global suicide. this is obvious, but the problem
1:07 pm
is that the logic of an arms race still prevails in our therefore,and thinking of other big powers, we are in the midst of a major upscaling of nuclear capacities right now. totrary, absolutely contrary the obligations under the nonproliferation treaty. i do want to be misunderstood. i certainly hope that these -- that this meeting in singapore the path to denuclearizing korean peninsula. to say in any way trying that that is not a legitimate goal. it, also,e to take th a broader view of what we are doing.
1:08 pm
why are we spending another $1 trillion right now on a major, major cycle of escalations of talking with the other countries about fulfilling our obligations under nuclear nonproliferation. to your point, what's stopping japan and south korea from developing their own weapons is because of their reliance on the u.s. nuclear umbrella and because of this summit, if we see more warming relations between north korea and the u.s., we heard president trump saying that he plans to suspend the exercises without korea. could the allies feel the need to develop their own military, their own nuclear weapons? jeffrey: of course that's a possibility. i think that what we all recognize is that this summit is a kind of -- is welcome. but it is a bit of a shrugging our shoulders.
1:09 pm
what does it really mean? we have been here before. this was vague. trump likes to, of course, have the whole world looking at him, which he succeeded in doing yesterda but what really happened? we don't know, we won't know, and probably what really happened is long slog ahead of uncainty . nothing necessarily came out of this, though it's much better than them yelling at each other, this is a much better approach. still, whether it leads to really the end of the nuclear weapons in north korea, boy, we are a long way off from that. but there are many reasons for skepticism. u.s., rightly or wrongly, sees itself as one of the world's security guards, a counterpart to nato even as a member. doesn't the world need a power like that? jeffrey: well, i don't think the
1:10 pm
u.s. is much of a safeguard for peace myself. the u.s. has started more than t history. instarted the afghan war 1979, by sending in the cia to actually provoke a one russian invasion. now it has been 40 years of war and a understand, hooting a 2001.u.s. invasion in we invaded iraq under absolutely in 2003.tenses not just mistaken, but false. so many lies were told along the way. we basically overthrew the ,overnment of libya 2011 causing another major crisis across africa. ciaident obama sent in the to overthrow a sod in 2011,
1:11 pm
2012. creatingay are we order in the world? we're not. what we need for order is cooperating with other countries, not unilateral regime change operations. the united states took it as the core foreign policy in the last 20 years and got us into innumerable wars that have been incredibly destabilizing. no, we don't the u.s. as the sole superpower claiming to make peace but instead making a lot of mischief. professor, thank you so much for that, jeffrey sachs, from columbia, university. coming up, prime minister theresa may dodges a brexit ripple. we have the details. this is bloomberg. ♪
1:12 pm
1:13 pm
1:14 pm
is "bloomberg markets," i'm vonnie quinn. vonnie: -- shery: and i'm shery ahn. from the brexit wing of a fractured party, we have now heard that rebels are standing down on that amendment night he, the amendment, but what price will she pay? -- askask, ross thomas, ammo ross thomas. vote. she has won the the rebels stood down after some last-minute horsetrading. what has been offered is not entirely clear, but what is clear is that parliament is going to have a great say when it comes to the final bit of the brexit negotiations. it was right down to the last minute with the negotiating.
1:15 pm
talks are going to start tomorrow between the rebels and the government. there was a tiny discrepancy between what the rebels said was the agreement and what the government said was the agreement, but they will be starting talks basically on the basis of one of the amendments , very clearly saying that parliament should take control by a certain date in the fall of this year there is deal, congress should take control. what that probably means is a victory for may today. we will see if it still feels like victory tomorrow. parliament has likely come out of this slightly strengthened, nobably this means that a deal brexit is less likely with closer ties to the eu becoming likely however, depending on what she ,ffers the rebels in the talks the members of her party who want a nice, clean, quick brexit, they will be watching carefully to see what she offers and see how far she goes.
1:16 pm
ofcould be another source turbulence going ahead. turbulence today, but for how long it deals like a victory, not clear. thate: thank you for update from london. waiting for a fed decision, key decisions coming down, including whether or not we will see the highly anticipated rate hike tomorrow afternoon. of course, we almost certainly will. andeconomic reporter economy reporter is here with us now. apart from the rate hike that is baked in, more or less, what are we looking for? sort of guidance about the rest of the year including economic projections that coul go to four rate hikes for8. that'pretmove to make. the big question is whether that pulls the rate hikes forward from the following years or if we will have a higher terminal rate in the long run. markets will be really focused on that.
1:17 pm
cut -- expecting the fed to talk about prospects in the unemployment rate. what are we expecting on that front? is 3.8%, which is what the fed was proj for the final order on average this year. we all know that they have to move that projection lower. the question is where they move in the non-accelerating inflation rate estimate that they have had in the longer run as well. it has suggested that they are not nearly as tight in the unemployment rate as they thought they were. >> does the suggestion in the rolloff come from the balance sheet? >> this is another interesting point that will have to come from the press conference in the fed funds rate has been up within the range that is trading, affective and appealing
1:18 pm
throughout the expansion. it opens up the question of we are at a point where the reserves are getting more scarce and what does it mean for your balance sheet? rolloff in the time that they to expected? think jay powell is certainly going to get asked about that in the press conference. shery: remember when he was open to the idea of holding more press conferences? do we have any more idea of forward guidance? >> we will definitely hear something about forward guidance . they have been signaling that they might drop some sentences that he guidance -- that include guidance of lower for longer rates. we are likely to hear more detail on whether he is still considering a press conference with every meeting. he clearly indicated in march that he was considering that it was a distinct possibility that he seems to have not really spoken on that point since. vonnie: all right, you are going
1:19 pm
to be following every move. please join us tomorrow at 2 m. new york time when we dissect the latest fed decision. theformer vice chairman of federal reserve will be with us. moving for the decision that everyone will be watching today, the faith of at&t, a potential deal with time warner. richard leon is scheduled to issue his ruling a little after 4 p.m. let's bring in rich greenfield. there are tuning possibilities, approval and block, and that's only the beginning. >> could there be like a third one? >> look, concessions are possible. you could put it of finding our -- put in finding
1:20 pm
some form a binding arbitration clauses. but anything tied to the decision gives the government more of an opening to appeal. with more protection you are basically saying there are fundamental is with the transaction, bolstering the government argument for an appeal. look, the reality is that if at&t wins, i believe that time warner will go forward and allow -- basic the they will allow the .rocess to play out meaning at&t will probably have to pay time warner shareholders to extend the merger yet again. but time warner shareholders will probably let that happen. they will get paid some amount of money by at&t to extend further and they will try their hand yet again on winning on appeal. if the judge rejects the deal, i think it's over. everything is -- vonnie: everything is hypothetical, here, but if it's rejected, is that the end of the possibility
1:21 pm
of the merger? richard: it's a great question. country's top antitrust taughtr right now has recently that the goal of the government is not to end all vertical mergers. that this will be a relatively narrow decision and i think -- look, we will all be reading this 200 page decision. the details are really going to matter here in terms of what else is possible. the really important thing that most media industry watchers are going to be looking for is, throughout the case, eve the pretrial brief, the government has major problem with at&t purchasing time warner, in their head they looked and said that at&t is national. you can get at&t wireless anywhere in the country. you can get directv anywhere in the country. they put a direct distinction between comcast that owns nbc, you cannot get comcast in new york city or many parts of the country.
1:22 pm
they looked at that and they said national versus regional. i was a huge part of the government's case. if the government comes out in leon basically nation versus regional was the reason? that would prevent national mergers. .nything with it -- companies like comcast or charter would be free to do vertical mergers. anything with a dish. emily's like comcast or charter would be free to do vertical mergers. vonnie: whatever happens here, how much it does this push the drive to get some sort of overhaul for the doj guidelines on vertical deals? this has been going on for like three decades. it's the same language. richard: we are in uncharted territory. step back, think about what's going on. largerflix market cap is than disney. netflix is a vertically integrated company essentially.
1:23 pm
they have reached consumers all over the world and created a billion dollars in content. i don't know if you have seen "stranger things, but they are creating a lot of their own t now. they are effectively vertically integrated. there was a huge press push yesterday, there was a bloomberg article on the new studio head who came over from nbc. amazon is vertically integrating. you can building vertical integration, but the government is saying you can't buy it. you can build it, that's fine, and that's essentially why we believe the government believes. how does at&t change its strategy in the future if it loses wes and mark >> he thinks that probably one of the most interesting things that at&t could do would be to pursue a merger with this because you already own directv. the pacing on the landscape is changing dramatically and directv has been losing subscribers faster than they thought they would. massive synergy would mean and at&t dish merger that is a great way to help the dividend extend
1:24 pm
out further in time. s administration is pro-business, right? why not let this happen? it's not how things have been done in the past but -- richard: it may be -- look, hopefully the deal gets approved. we read all 3600 pages of the trial testimony and we believe the government held to prove its case. if the government winds, it really feels almost as simple as -- fox news good, cnn bad. essentially this is very politically driven rather than fundamental driven. we have to see the decision to iferstand what it says, but you are looking at the changing landscape, all of media is under pressure. think about it, this is not just time warner trying to sell. rupert is trng to sell a good chunk of fox. rush to the door is very clear. it almost is in wide enough for all the media companies trying
1:25 pm
to get out because the netflix, the facebook, google is taking over. fighting standpoint, about whether to bring legacy mediatech companies can merge seems crazy when they are all being replaced by the future. is it the content door, the distribution door, or the verizon network door. who has got it right? richard: i think the most important thing we are seeing is that it's not the actual pipe it self, it too has that direct relationship with the customers. the platforms. someone like netflix, they actually know what we watch, what we like, they know the shows we are interested in. they know when we stop watching a show. that day to, i think -- having data on consumers and a direct relationship the covers all the vices. that's really the most important and that is why we are such a big believer in netflix stock. if at&t has to make
1:26 pm
concessions, could they wind up selling their directv units? they had the opportunity to make those concessions in they won't make those concessions. look, i think that if this deal is blocked, time warner walks is time warner is looking at it going -- the market for studios and hbo has appreciating fully. is probably worth right now only $100 for time warner in they could make more money and breakeven. investors and shareholders are eagerly awaiting that decision. rich greenfield, thank you. up, we will be talking to a former u.s. ambassador to the u.n., bill richardson. ♪
1:27 pm
1:28 pm
1:29 pm
mark: i'm mark crumpton with first word news. world leaders are weighing in on the historic summit between president trump and north korean leader kim jong-il. european union foreign policy chief federica mogherini is among those in the meeting. >> today's summit diplomacy
1:30 pm
and dialogue is the only way forward. in this case, world lasting peace on the korean peninsula and beyond. let me say in more general terms, this is a sign of the fact that the diplomatic track is off -- is often challenging, the most difficult one to be followed, but it is always the most rewarding one. for marks were's directed at the eu's ongoing attempts to keep alive the nuclear deal with iran. president trump pulled the u.s. out of the accord last month. the white house says the president's top economic adviser larry kudlow is expected to make a full recovery after he is suffering what is called as a minor heart attack. shortly before the prest summit with kim jong-un. kudlow accompanied the president this past weekend to the g7 meeting. he is being treated at a medical
1:31 pm
center. poland's president wants to add the country's voters to expand his powers. revealed today 15 questions that voters could face in a referendum in novr whether to change the constitution. thequestion is whether voters want a new constitution at all. other questions ask whether to strengthen the president's powers and protect poland's membership in the european union and nato the man at the saying -- center of the crime sandal within the academy which awards the nobel prize in literature was charged today with rate. rape. prosecutors say he assaulted the same woman twice in 2011. 18 women have come forward with accusations against him. last month, the academy announced no prize will be awarded this year as they deal with the allegations. global news, 24 hours a day, on air and at tic toc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm mark crumpton. this is bloomberg.
1:32 pm
shery: i'm shery ahn. amanda: live in toronto, i'm amanda lang. we are joined by our bloomberg and bloomberg audiences. here are the top stories we are follow around the world. sealed, and delivered. the historic summit between president trump and kim jong-un results and a signed peace pledge but with few details. we will speak with former u.s. ambassador to the u.n., bill richardson, on whether president trump's gamble on north korea's campaign off. white trade advisor peter navarro apologizes for to -- for saying "there is a special place in hell for prime minister
1:33 pm
trudeau." is it too little too late? started with at check of the averages. u.s. stocks mixed. the dow is now relatively slab --'s launched. 25,000 level. hurting through sessions of gains. the s&p 500 high. discretionary czar up while the nasdaq is gaining 6/10 of 1%. interesting story today is the wti gaining ground after iraq resisted a push to bush -- resisted a push to boost oil supplies to the ratio of crude demand against supply and also the price of rent. after the global benchmark traded at around a $10 premium to -- to wti. we are now seeing the white line is above the yellow line showing more demand than supply. this is a week ahead of what could turn out to be a contentious talk with opec
1:34 pm
members on whether or not to raise production. oil prices always key when it comes to inflationary pressures. all of this ahead of the fed decision tomorrow. amanda: absolutely. that inflation is unfocused today. we got a rate on cpi. inflation running at a six year high in the u.s. the core level, closer to 2%. way above wage inflation in either case. that hso wondering whether this poisons the fed on thinking of additional rate hikes. i want to check in on another group of stocks on the move. but his defense stocks. they jump out as among those traded to the downside today. theretically because peninsula does mean bad news for a long their -- we're way from denuclearization. as a group from another good day for those across the defense spectrum. let's get back to the top story. the historic summit between president donald trump and north korea's kim jong-un. countries agreed to seek
1:35 pm
complete denuclearization of the korean peninsula following the summit. yet, no deadline has been set. the path to disarmament remains undefined. kevin cirilli is live in singapore. great to have you with us. let's start with whether we expected more than this out of the summit. we did at least get the kind of men them -- kind of minimum. there was no shock. yes, it was the minimum. president trump trying to seek political win in the sense that he feels he has gotten north korea to commit to denuclearization. what we don't know is how the u.s. will verify that. already on capitol hill, senators, including in the republican party, questioning for specific answers. senator marco rubio saying he is hopeful to get this administration the chance to get success on this. but that he disagrees with how conciliatory president trump was with north korea chairman, kim
1:36 pm
jong-un. on the flipside side, there are other republicans who are praising president trump, meadows, aark republican from north carolina. where this goes from here, president trump has boarded airport -- air force o will then continue back to the united states. mike pompeo will then travel to south korea as well as to japan to continue to have talks with u.s. allies in the region about the new form of u.s. policy. should the president ultimately decide to lift sanctions off of north korea, he would need to get senate approval and the pushback he is already seeing from senator rubio would suggest that maintains a difficult political task ahead. all of that comes as the president double downs in that more than 75 minute marathon press conference just before he took off back to the united states in which he double down on his crib -- on his criticism against justin trudeau. shery: thank you so much.
1:37 pm
kevin cirilli from singapore. exactly did the united states walk away with from this historic summit? for more inside, let's welcome bill richardson, let's welcome bill richardson committee is a .s. ambassador to the u.n. and also former new mexico governor. he is with us from boston. thank you so much for joining us today. you have spent decades with north korea. you are one of the few americans who have maintained contact with north korea. did pyongyang agree to anything different that they have not promised in the past? bill: no. what pyongyang agreed to was a process of denuclearization which basically is not specific. it does not mean much. the temperature of the shows there is a process of normalization. tensions in the peninsula have lessened in terms of conflict with north korean, south korea,
1:38 pm
japan. that is good, that is all positive. on the specific on data larry's on denuclearization, on missile and nuclear disarmament, north korea did not to give in on anything. they never do. they always wait for you to make the first step. think, the first, i unfortunate step by saying we are suspending military exercises with south korea. i don't think we are getting much in return. nonetheless, the summit was a plus. on details, on substance, timelines, verification, not too good. amanda: exactly. -- shery: exactly. not only the suspension of military exercise, but the summit itself, the ability to hold a summit with the president of united states does legitimizes regime. what did the united states get out of it if we could not get verification or irreversible denuclearization? bill: we did get, i believe,
1:39 pm
has not had any missile tests. they have not had any nuclear test. they have disabled some of their nuclear and missile sites. they released three prisoners. specifically from the summit, kim jong-un has gotten a lot. he is gotten legitimacy and the internet -- on the international stage. a one-on-one with the president of the united states. elped hi he doesnot to worry about elections. a path to negotiation has been opened. that is the -- that is the good news. kim jong-un is not like his father or grandfather. they were rug merchants. they wanted something little in return. it seems kim jong-un may have a broader vision on economic prosperity for his country. he wants investment, energy grid improvements, infrastructure improvements, but he has to improve on his human rights situation. i think the president has to
1:40 pm
follow up, not just make this a photo op, but he has to back his negotiators. secretary pompeo, kthe other messengers out. just muddy the waters. let pompeo run these negotiations. set up a process ideals with a lot ofnswered sensitive questions at the summit. amanda: that was my question to the loop. what should happen next? deeper talks must follow. should that happen immediately and what are you looking for in terms of an outcome from those talks? bill: it should happen immediately. there is momentum. you don't want to lose momentum and politics. next week, the secretary of groupshis team, working on disarmament issues with nuclear missiles. human rights issues, which were not touched as much as they should. i like the fact that we have talked about returning the remains of our soldiers from north korea in the war. relations, butf
1:41 pm
working groups, tecical people, north korea, the united states, following up immediately , next week. they should not wait. been is momentum that has established. if you wait, and if the president is engages and says, i am moving on to my next issue, -- thatnot good here in is not good. amanda: the president has been engaged in a war of words with some countries. walking back on commentary that he made on justin trudeau. where do you think the town is right now? importantly, where do you think the state governors are and republicans in congress are in terms of pressuring the president against this kind of rhetoric? that the bad news is republicans and democrats in the congress are responding on partisan lines. , democrats say, yay say, not good enough.
1:42 pm
foreign policy should be barred -- bipartisan. i waters edge, the partisanship stops. the part of the -- the problem is what we have is a fight with our own allies. with trudeau, with france, with germany. with mexico on nafta, and canada. that is not good. you want to build international support for your goals. that the staff of the president, navarro, and others, should never insult the foreign leader. maybe a president can do that. hell orf talking about whatever they said? but thathe apologized is inexcusable. that is not diplomacy. i don't see how that works either with our european allies, our friends, or with north korea. shery: right. bill richardson, former governor of new mexico and u.n. ambassador, thank you for your time today. we have breaking news on tesla. tesla is set to cut about 9% of
1:43 pm
jobs across the company. tesla says they cuts were made almost entirely from their salary population and that no werection associates included. tesla is expected to cut about 9% of jobs across the coany. they are also saying this will not affect their ability to the model three production targets in the coming months. we were expecting tesla to produce 5000 model three units of the end that goal is still being worked. tesla saying they are going to cut about 9% of jobs across company and this will not affect their ability to reach the model three production targets. this is bloomberg. ♪
1:44 pm
1:45 pm
♪ shery: this is "bloomberg
1:46 pm
markets." i'm shery ahn in new york. amanda: i'm amanda lang in toronto. trade tensions between the u.s. and canada took a turn for the worst after president trump tweeted this on saturday. based on justin's false statements at his news conference on the fact that canada is charging massive tariffs to our u.s. farmers, workers, and companies, i have instructed our u.s. reps not to endorse the communique as we look at tariffs on automobiles flooding the u.s. market. the white house trade advisor, peter navarro, double down saying there was a special place in hell for prime minister justin trudeau. navarro apologizing for his inappropriate comments. bloomberg'sam, equity reporter, the autos have been central to the discussions because a heart important -- they are important. the nuclearit like option, saying, it would be a disaster for canada. so much so that some people are saying it will never happen.
1:47 pm
there was a first reaction when trump asked the department of congress looking at imposing 25% tariffs on auto and auto parts imports. i think a lot of people reacted to that by thinking, the industry is so integrated between canada and the u.s. and mexico that it doesn't make any sense. he will not follow through. because the justification was looking at it on national security grounds. reit'sis tweet over the -- the weekend, given the rhetoric at g7, it was looking more realistic. people started to evaluate, what does that mean for the canadian auto industry? followser is if he through, if these stay in place for a long time, and those are big if's, a nightmare scenario for the industry. is the automportant industry for canada's economy and what to do due to economic growth? kristine: the auto industry is relatively important piece of canada's economy. it generates $20 billion in our gdp.
1:48 pm
our importantly, it is second biggest exporter. 16% of canada's total exports come from the auto industry. that is about $7.6 billion a year. if you were to go to the scenario where canada is virtually exporting no cars because it does not make financial sense for these companies to build cars in canada and export them to the states and pay the 25% tariff, then you are looking at loss of tens of thousands of jobs. the spinoff effects are there too. jobs are a lot of other that are connected to those. amanda: it seems as though markets are looking through these issues because there is so much unknown, it is impossible to trade on a bunch of different variables. at what point do som folks running these companies start to make real decisions? i will not put new money to work in mexico or canada or even in the u.s. i will go elsewhere. kristine: that is a good point. if you look at the stocks of these companies, they are not moving that much.
1:49 pm
it is interesting to see there has not been a market reaction. that said, experts i have talked to say there has been a chill on investment for the last couple of years because of the trade uncertainty. that includes the nafta and renegotiations. not just the threat of tariffs. investment.hill on meaning no investment decisions are being made. it is not like companies are going, i will locate my point in the u.s. and that of canada. it's, i will hold off and see what happens. there are too many question marks now. shery: there are question marks for business of in the u.s. as well. what are the chances that the tariffs will be put in place on cars when president trump's does not want to see this? kristine: not just his base, but basically every single company in the auto sector has said they do not want this either. they have been vocal against these tariffs. it takes point is that a long time to make investment decisions in the auto industry. if you are going to build a new
1:50 pm
plant, it will be at least 3-4 years from the time you make the decision. plants are these built, trump may not be president anymore. it doesn't make sense to be plant.g a new by the time the point is ready to go, these tariffs may be long gone. amanda: thanks so much. plea have more details about the breaking news on tesla. it is cutti 9% of its workforce. we are hearing tesla does not plan further cuts. let's bring in our reporter on the phone. what else do we know at this point? 40,000 plot roughly -- employees globally. elon musk sent a memo announcing they are reducing 9% of the salaried employees. this does not impact production. they are going to continue to hire. as a have grown rapidly as a company, they are looking to streamline and cut jobs where there are people in that role. this was not unexpected.
1:51 pm
one musk said they are reorganizing the company to 9% is still a big number. amanda: there was some positive news from tesla in terms of one the model three delivery estimates. does that offset this news? it looks like the stuff -- the stock is shrugging it off. to bei don't think -- frank, when a company lays off employees in an effort to be profitable, i don't necessarily at as badat is looked news. tesla absorbed an enormous number of employees after they acquired solarcity. they have grown rapidly. they're continuing to hire. they said this will not impact production. it is a reduction in a lot of duplicate of roles. shery: dana hull, thank you for that. with central banks in focus, investors are looking to position themselves ahead of rising rates. , i talked toloss her and asked her about the
1:52 pm
state of equity marks. soaneh: right now, we have many things contributing to volatility in the equity markets. obviously, rates wil a big impact and the increase in cost of borrowing, whether it is -- it is by household or businesses. it will have an impact on european markets. i think the european markets are still behind in terms of i don't see a rate increase happening there. certainly not this year. equity markets this year in europe have actually done less well as a group. although we have also seen very specific situations -- companies that have done well in europe. i think what we are moving into is moving away from that growth of markets in one direction which lends itself very well to investing in mutual funds and index funds. which are still very important. but moving more toward a market where active management and
1:53 pm
actual security selection does matter across really both u.s., europe, and asia. amanda: on that front, as we see rates continue to have higher, with the -- with the possibility of inflation appearing, how are you positioning yourself? afsaneh: what we're are doing is investing in more real assets. and looking across different ways of allocating to real assets. commodities that have been assigned to that area have not necessarily been the best. they can have more volatility. except up to this year, they have been going up. more importantly, what we have seen, which is interesting, is areas that we are talking about at the conference, we invest a that, which will be related to agriculture, food, water, and clean energy. i think those are areas that will lend themselves well to the kind of rising rate environment as well. amanda: what about the consumer?
1:54 pm
do you want to be exposed to consumers, especially in the u.s.? afsaneh: consumers in the u.s., obviouslt the height of their buying at the moment. the -- the 1.8 billion middle-class consumers coming into the market, all of that will be in emerging markets. the u.s., the largest growthe in will be in a emerging markets. that is where we are looking more to consumer related investment in emerging markets. amanda: what about the u.s. dollar? we have seen real dollar seen analysis that's adjusts with rate hikes priced into the u.s. dollar, there could be weakness ahead. do you have a view? afsaneh: i think it is very difficult to call currencies. as you know, if you look over long periods of time, you can be
1:55 pm
very right in the short-term, at very wrong if you look currency made by really anybody, including the best forecasters i think there are so many things that can impact the u.s. dollar. if there are major geopolitical issues that happen, people always still move toward the u.s. dollar and still move toward certain other currencies like the swiss franc. not movement seems to feel pretty classic. -- that movement seems to feel pretty classic. if we exclude those options, i think the dollar may weekend and that will be good for u.s. trade. depending on how it works itself through the economy, it could be good or bad for the economy. amanda: that is ceo afsaneh beschloss. in terms of what an investor has to do, those with large pools of assets like she has, there are so many crosscurrents, rising
1:56 pm
rates, real, and central bank governors. there is consumer spending in the u.s., geopolitical concerns, tariffs. i don't envy people have to figure out how to position at a late stage of a cycle with all of this uncertainty. shery: i don't envy them either. there is a lot to consider. we have the fed decision coming up tomorrow, very anticipated rate hike. at the same time, all of these trade tensions and the north korea-u.s. summit. please programming note, join us tomorrow, 2:00 p.m. new york time. our guest will include guggenheim partners global cio scott menard and former vice chairman of the federal reserve. this is bloomberg. ♪
1:57 pm
1:58 pm
1:59 pm
♪ scarlet: it is 2:00 p.m. in new york, and summon p.m. in london. i'm scarlet fu. julia: i'm julia chatterley. welcome to "bloomberg markets." ♪
2:00 pm
scarlet: we are live and bloomberg world headquarters in new york over the next hour. here other stories we are covering on the bloomberg and around the world. tesla hitting the brakes. the electric carmaker cutting 9% of jobs as elon musk makes a push for profit. judgment day. the $85 billion question gets answered today when a judge rules on whether at&t can buy time warner. warmer fcc commissioner robert mcdowell weighs in. when trump met kim. the historic singapore summit was all handshakes and smiles but came up short on details. we will look at the path ahead for the u.s. and north korea. markets close in two hours time. julie hyman, the path ahead for stocks is mixed higher. julie: it is. i want to start with one stock. we had breaking news on tesla a while ago. the stock is off its highs on the news that it is going to cut 9% of jobs across the country --
2:01 pm
company. the company says it was made from the salary population and no production associates were included. it also says it is not going to affect its ability to reach its model three prodtion targets in the coming months. the shares but have been hired today after a analyst came up and said the model three deliveries are tracking higher than he estimated. the stocks came off the high. still gaining by 4%. we will dig more into the tussle story later on. pictureeeing a mixed for the major averages. the dow, which has been bouncing around between gains and losses. all thr averages in a tight range. the nasdaq composite back at a record high. joined by the small caps. russell 2000 as well. and the s&p mid-cap index. cap's areargest trailing, re those record highs. take a look at that. take a look at the bloomberg to we have the russell 2000 versus that s&p 500. as you can see, the russell has
2:02 pm
broken out and has made new record. the last record we saw for the s&p was in late january. it has not quite re-attained those levels. in today's session, some of these stocks we are watching, speaking of momentum stocks like tesla, we have fit it on the rise today along with gopro. to beially, this appears a continuing momentum from yesterday's recommendation from citroen research. an analyst today says thetock has been on a tear lately but it could be on a short squeeze on the base of a potential acquirer. that speculation is unfounded according to google. getting an updraft as well. seemingly from the same phenomenon. to andrew ofed citroen says fitbit will become more of a medically oriented, not something that necessarily
2:03 pm
-- the stock is up. finally, we are looking at payment profit company. that is after ad yen of the netherlands raised $1.1 billion for its ipo. it is europe's big technology company. it priced at the high end of the range. looks like there is a ripple effect among the payments processors companies that trade in the u.s. julia: thank you so much to julie. let's get to first word news with mark crumpton. mark: north carolina house republican representative mark meadows says expectations from north korea have been elevated after the summit in singapore. the house freedom caucus chairman gushed over the historic in an inter today with bloomberg tv. >> not only did it go according to plan, it came off wallace because what the president and this administration wanted to do is set a new beginning, a new foundation for real one-on-one talks. if anyone were to have suggested
2:04 pm
, kevin, you and i, a year ago that this would have happened in year -- in singapore, we would have put the odds that less than 10%. mark: chairman meadow speaking there with bloomberg tv's kevin cirilli who is in singapore covering the summit. democrats were openly skeptical. they argued president trump gave leverage bynt committing to and joint military exercises with south korea. after intense lobbying that went overwhelmingleep clos europe. group formed by barack obama says it is targeting with sconce and
2:05 pm
thernor scott walker and congressional district currently represented by house speaker paul ryan. organizers for acts announced its targeted races nationwide today in addition to defeating governor walker and electing a democrat to replace bigger ryan, the group says it is also working to elect enough democrats to flip control of the state senate to democrats. moscow says president vladimir putin is scheduled to attend congress on the eve of the world cup opener. that is when congress will for thehe host or hosts 2026 world cup. have combined for one bid with morocco as the other contender. not attend the 2010 vote in zurich which gave a rush of the right to host this world cup saying he stayed away as a sign of respect for fee for. global news, 24 hours a day, on air and at tic toc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i am mark crumpton -- i am mark crumpton. this is bloomberg.
2:06 pm
julia: thank you very much, mark. fueling the fed fire to u.s. inflation warming up without too much heat. reinforcing the feds gradual approach. tomorrow, we are expecting policymakers to raise rates. gilbert says he is worried about the pace of rate hikes. martin: what worries me is the u.s. interest rates are going to go up quite rapidly. that does worry me slightly. -- if theyce will be put of interest rates too quickly, that leads to a slowdown. it is a very fine tuning of this interest rate rises and hikes. they have to get it absolutely right. julia: our next guest is also cautious against a fast fed. joining us is omair sharif, he is the senior u.s. economist. great to have you with us.
2:07 pm
do you share martin gilbert's concerns about the risk of tightening too fast? omair: i think that is correct. the concern the fed has is that if you tighten to do the quickly come up what you may do is dampen inflation expectations moving forward. if that is the case, what you need is to be boosting inflation expectations to get thelized higher. there is concern that if you tighten too much, you may slowdown the consumer, the economy, and put down -- downward pressure on inflation. scarlet: it becomes a self-perpetuating cycle. we have seen this in the past. talk about the may inflation print. on a month over month basis, use a look soft. year-over-year is where you see things heat up. why i would argue against a fourth rate hike. there is no sign that underlying inflation is picking up. let me give you three points. first, if you loe re cpi excluding shelter, which has been holding everything up, we are running basically this year around a 1.7% annualized rate.
2:08 pm
if you take out the strong january, it is about a 1% annualizednt for the core excluding shelter. secondly, shorter term trends are slowing down. the three-month annualized rate was running 3%. people were saying, the fed has to slam on the brakes. it has now been at 1.8% the last two months. the low 2.2%.the reason we are s because we knew the space effects were coming. we knew march, april, may, would help lift us up. looking forward, let's see if we can sustain 2% or 2.2%, led a but -- let alone push abe it. it is the fed to stay gradual moving forward and see how inflation plays out. julia: where do you expect core inflation to settle as we push through the next few months? to what extent is that a problem to the fed, particularly when you're talking about inflation expectations? omair: i think we will probably 2.2% on cpi. as we head into the tail end of
2:09 pm
the year, i expect us to slow down below 2%, around 1.9%. the fed refers record to flight or. if you talk about the spread between the tubing, we will be down 170 core pc. concern is youl expected inflation to keep rising as an employment rate kept going. it is down to 3.8%. it will probably not get lower. if core inflation looks like it has peeked midyear and is slowing down in the back half of the year, thatother year to posit around your and and taken the landscape going forward. scarlet: we have seen oil prices come up a lot at the end of may. up until the middle 20th of may or so, they were zooming higher. i know we look at core pri that.ou look at there is a spillover. a followthrough into the rest of the consumer prices. how much of that is reflected in what we saw today? omair: i don't think very much at all. where we were expecting to see the sort of spillover is at
2:10 pm
airfares. you've heard airlines talk about the fact that steel prices are up. they have to pass this on. they have not done it for the last few months. we have had airfares declined sharply the last few months. we will see if it comes through later on in transportationsts and airfares. we haven't seen much of a spillover. julia: we know as far as the fed is concerned, there is a ragingy become neutral as far as rate is concerned. to actually tightening. to what extent do we get a sense of what they are thinking? do we get that from the press conference tomorrow or from the minutes? will this play out as we get more data? it is tough to calibrate, given what we are not seeing in wages. omair: debate is raging about. not only where is neutral, but should we push past neutral? you can probably count about five or six fed officials who are saying, whenever we get to neherever that m let's pause. there is a whole other contingent that is saying, in may move higher.
2:11 pm
we may have to push throh. i think we will get a strong nse of that tomorrow when we get the statement. we will see what and modifications i have made, if don't expect much out of the press conference in terms of where we are relative to nurture. i think we will have to wait for the minutes to see where the debate is. scarlet: where's the capacity for surprise and tomorrow's conference? omair: i would go with the statement itself. i don't think ths done a being very given kill. i am not expecting him to drop any bombshells. i think if we get anything that is a surprise, it will be either in the projections, potentially the longer rate unemployment fordfalling, or if the guidce is really modified quite strongly, relative to expectations, that is where i would look for a surprise. scarlet: great stuff. omair sharif, thank you so much. be sure to watch our special report tomorrow. the fed decides. our guest lineup includes scott
2:12 pm
minard, bill gross, investors, and economists. at 2:00 p.m. tomorrow. coming up next in our deals report, a judge set to rule on the at&t-time warner merger. we will speak with former fcc commissioner robert mcdowell. he says trust regulators do not have a strong case. from new york, this is bloomberg. ♪ bloomberg. ♪
2:13 pm
2:14 pm
♪ julia: this is "bloomberg markets." julia chatterley. under two hours from now, a judge is scheduled to rule on at&t's $85 billion deal to acquire time warner. let's check in with at hammond who is standing by with a former fcc commissioner. that's right, i'm am joined
2:15 pm
by robert mcdowell. he is back to talk about this. they can for joining us. robert: thank you for having me back. ed: you were with us in march. aid there was no scenario where justice could win this case. it was going to go at&t's way. have they done anything to dissuade you from the notion? robert: that is difficult. i'm not sure i said an absolute no. but it is difficult. it is a steep hill from the government to climb. the government has the burden of proof. i have tried hard to think like the government. and like the judge perceiving the jet -- the government's case. i haven't quite seen the vision yet. we can all be surprised. we have all been surprised by bigger things as well. the past couple years in particular. i don't see the path to victory. right,ernment loses all the government wins partially by some sort of court mandated divestiture, or the government
2:16 pm
wins outright. i think the government winning outright is the least likely. e leon hasipped his hand in other cases such as comcast, nbc, universal. i have was at the s -- was at throughand it had to go him. in the outlook we he had with attorneys at the time, he talked about structural remedies versus behavioral. there is a possibility. i am trying to be fair as i analyze it. i still -- i will be surprised at 4:30 p.m. whenever we find out, if the government has won. ed: judge leon, i suppose he is heard both cases, both arguments. it is seen -- it seems like at&t has made a strong case. we are -- is that all the judges going to consider? or are there other factors he will be looking at? robert: excellent question. judge leon has a terrific reputation as being very much law and order, just the facts and law.
2:17 pm
nothing extraneous. he doesn't care about political motivation. he doesn't care about any advertisements. somebody might be running in the new york times or whatever the case. he admonished the parties not to do such things. some ofefully restores your viewers of faith in the sy that he will look at the facts and law and be judicious. in hishink be thorough explanation and rational as well. to your point, one of the things at&t did, which was very compelling, is the proposal for baseball style arbitration. that really was a cure for any possible harm alleged by the government. baseball style as a refresher means there are two proposals and the arbitrator has to pickoo the middle. each party wanting their proposal picked and they wanted to looking was reasonable. that, and then also at&t's attorneys did a terrific job of poking holes in the lead government witnesses testimony.
2:18 pm
part of the point there is there's an 85 billion dollar deal. you will not destroy that market value by having fewer people watch your content. bloomberg makes more money if more people look at your content. you have an economic incentive to have more eyeballs look at your content, not fewer. the motivations and incentives regarding exclusive dealing in this converging marketplace don't make any sense. i'm shocked and surprised if the court gohat way, i will be fascinated to look at the reasoning. ed: you sound pretty convinced at&t is in the right. let's play of the scenario where it is a resounding victory for damning loss for the boj. does that defang the justice department ability to go off the other mergers similar to this? and potentially even more traditional horizontal mergers? robert: i think this case is unique. it is a cliche to say, but it is true that every deal is unique
2:19 pm
on its own facts. this is the first vertical d that the government is opposed in 47 years. there's a reason why it has taken long. they are hard -- it is hard to win in court on these are doors on the spirit pours onto deals are horizontal deals. there will be a lot of those. there's a lot of convergents going on in the doj. oddly the doj will look at the convergent between content, delivery, value added, all caps, intelligence embedded in networks and all the rest that is happening to give consumers what they are demanding. the marketplace is really being mixed up in a number of different ways. ed: let me come in on that. they were criticized for looking at historic marketplace mechanics, rather than anything present. is there something we can expect them to do againr will they take the traditional line of looking at the fourth dynamic of the market when deciding whether to the merger? robert: we don't know.
2:20 pm
a lesson.e they learn maybe we don't go there again. we don't try to do that. let's be more forward-looking if that is the case. we don't know. it could be that they were more backward looking, and i agree with you and your analysis because of the unique aspects of this case. we just don't know all the motivation there. all we can do is read the pleadings. that does not tell us about the motivations. ed: i was just looking at read right before we came on air. still make about seven dollars in this trade if you are buying time warner shares. what does that tell us? is that the markets way of saying they think there is another twist here? another way of looking at it is what to can either party do if the decision goes against them? robert: your viewers should understand that this judge does not leak. anyone who is trying to claim they may know what is going to happen is full of it we will not know until the judge actually rules and reads the order. number one. number two bank, time warner is
2:21 pm
a jewel. i think it is a gem of a company. folks realizing there is a bump regardless if at&t wins. there is a lot of value to be created from the combined company. if at&t were to lose in the government wins, it is possible time warner could be out there again as by lavar ball. and therefore, it is still valuable. is veryay, time warner valuable and that is probably reflected in the numbers you are seeing. ed: robert mcdowell, thank you so much. back to you. senior -- wemond, talked about this many times. it is an acceptable. still holding the line. the question is, will he address the things he is faced in light
2:22 pm
of the g7 meeting? and president trump donald trade -- trade advisor peter navarro has offered an apology saying there is a special place in hell for prime minister justin trudeau. he says he wants to send a strong message and he did that. we will watch that and you can continue to watch that using the function life go. plenty more to come. from n york, this is bloomberg. ♪
2:23 pm
2:24 pm
♪ julia: this is "bloomberg markets." julia chatterley. scarlet: it is time for the bloomberg business flash. a snapshot of the biggest business stories in the news. tesla saying it will percent of jobs across the company with no further plan. these cuts will be on salaried employees and will not include production associates. tesla says these productions will not affect their ability to reach model three production targets in the next few months.
2:25 pm
we'll have more on tesla shortly with an analyst. mcdonald's is making changes with organizational structure in the u.s.. according to a website document, the company will it eliminate that in favor of field it will improve efficiency and offer faster career progress for employees. mcdonald's will record a second short -- second quarter. solar installations beat gas and wind in the u.s. for a second straight quarter. according to a report, solar climbed 13% from a year earlier and new installations are expected to rise more than 20% by 2023. despite tariffs on imported panels, one industry associated executive says solar is becoming a common sense option for much of the country. that is your business flash update. julia: just to reiterate, we have been showing you live pictures from canada's house of commons. justin trudeau is addressing lawmakers. you can watch the entire event if you should choose to on the terminal function live go. to bring you up to speed, the
2:26 pm
comments he has made, he said, we are continuing to discuss nafta. despite theons, that weraised ag the discussions are continuing and the sunset clauses acceptable and we keep coming back to that issue and we know we have in the past. it remains a red line as far as canadians are concerned. scarlet: it is also a redline for the trump administration. -- hasmike pence is made made that clear to justin trudeau in a phone call and looking up for any comments in light of the tensions raised. youill continue to keep updated. from new york, this is bloomberg. ♪ his is bloomberg. ♪
2:27 pm
2:28 pm
2:29 pm
♪ julia: welcome back to "bloomberg markets." i'm julia chatterley. scarlet: i'm scarlet fu. julia: let's get first word news update from mark crumpton.
2:30 pm
rk: chuck schumer tonight warned that the historic meeting in singapore between president trump and kim jong-un could become what he called a reality show summit. he said president trump didn't waste any time giving up u.s. leverage over north korea. the president faces questions over his decis to stop joint military exercises on the penith south korea. schumer says if north korea fails to name 2 -- to denuclearize, the meeting will be a victory for north korea and defeat for the u.s.. france's foreign minister is calling on italy to reconsider its stance taking in more than 600 migrants on a private rescue ship searching for a place to dock. france says italy authorized the rescue but then refused to take in the passengers. the ship is stranded off the coast of italy and malta it is also refusing to provide safe passage. >> we cannot continue the political ping-pong on who is
2:31 pm
y responsible for sheltering the responsibility of migration. ones.tecting external because we all are. the european union as a whole is responsible with all member states. mark: doctors without borders, which operates the ship, is asking italy and mgrant them a landfall so the migrants can be moved to spain, which has agreed to take them in. mitt romney's returned to politics took another step forward today. early voting for utah's primary election has officially begun. ae biggest race features former republican presidential nominee e lawmaker mike kennedy to become the republican nominee for senate. least 11n today and at early voting will run until the primary election on june 26. plans to close 260 five public schools across puerto rico have been halted temporarily after a
2:32 pm
judge ruled that education officials did not approve the closed -- do not prove the closures were necessary. the department of education says it will appeal the decision. and roman and puerto rico schools have been shrinking steadily as families keep moving to the u.s. mainland due to an 11 year recession and the devastation caused by hurricane maria. global news, 24 hours a day, on air and at tic toc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm mark crumpton. this is bloomberg. julia: thank you, mark. tesla tightens the electric carmaker plans to slash 9% of its workforce. e -- ceo tweeted his emailed's to the companies saying the move is part of a "difficult but necessary reorganization." we are joined by david walsh. great to have you with us. not in be clear, this is colluding -- not including
2:33 pm
production associates. is that right? david: that's right. when he exps, he was very clear that it is not production workers. the model three will not be disrupted by this. they will not be pulling people off the assembly line or anyone who is involved in production of the car. maybe some of the support staff around them would be touched given the share percentage of it. it will not be production workers. answering theby questions that all investors and analysts have, which is will this affect model three productions? here's the other part of this memo, he also included a lineabt renew the sales agreement with home depot. to sell solar panels. instead, they will do so on its own. there's not a lot of detail here to how do you read this? david: there is no detail at all. non sequitur with him a letter. it sort of gems in there. what i am wondering is, maybe that relationship required support staff, salespeople, that
2:34 pm
sort of thing and maybe they went in the restructuring, or maybe they were not getting enough sales from home depot to justify continuing the agreement and they want to go it alone. how the do we know solar panel businesses doing within tesla? is this something pe press him on in conference calls? i know the questions are on model three production. what does he get pressed on that? what: solarcity, which is the company was called, was woven in. he does not talk about it a lot. they were first restructuring it, and they were paying off some of the debt, making it -- absorbing the debt to make this thing. to make it a more viable enterprise. it really was not serious trouble. i think the focus for elon has been on getting the model three out and on the car business. they are stiorking with solarcity business. it is not a big of a priority for the company when it was when elon are running it -- was
2:35 pm
running at a separate enterprise. julia: you were just comparing tesla employees to the lights of facebook -- likes of facebook. is this about being -- scarlet: tesla has 37 thousand employees. apple has 100,000 per facebook is 26,000 employees. this is on the page of the bloomberg. julia: an interesting compariso in terms of the idea of tryintoe efficient. i thought it was interesting that elon said, we never made an annual profit in 15 years. profit is not what motivates us. we do have to demonstrate that we can be sustainably profitable. that is a valid criticism of the company right now. this is a good thing, surely. david: it is. in contrast to that with the comments he made at the earnings call where he was saying, he did not care if they traders invested in his stock. he had this cavalier attitude toward that community. now what he is saying is, we do need to make a profit -- profit. we do need to be self-funded.
2:36 pm
it is also another thing that shares are up, he has to be an operator. he has always been the genius, the visionary, who is going to put a solar panel on your roof, charge it to a battery on your garage wall, and it would keep your electric cars charged and you were going to get free energy. it was a great vision. moneyt happened toose for 15 years. now he is saying, maybe now we need to graduate on to the next level. and become a viable business. julia: fascinating. this has been the criticism. in light of the earnings call and the comments he made. he needs to be more rounded as a ceo and talking about a future where the company profitability is important. but the one-year chart. we have shown you the performance of the session. if we can show you a chart of what tesla has done since the lows we head toward the back end of may hear it i have the chart here as well if you want to take my terminal and show you. you can see the rebounds we are seeing. -- oh, gosh.
2:37 pm
my map. 25%. from the lows we have seen in the back end of may. scarlet: do you think it is because there was pressure on him at the last board meeting where they were looking to maybe change of the board of directors, that he is changing his town? -- tone? david: i think it was. you look at the pressure he has been under on the earnings call. but that's pretty ugly with some of the analysts. he did not react to it well. he never will probably react to criticism well on the spot. that maybe after he has had time to reflect, and thinks, i have to become an operator. really quickly, i want to liken him to steve jobs who made visionary cool computers come he gets fired come he comes back when the company is in trouble, and he stood -- any still came up with good products. only made cool products, he made cool products are made a lot of return and return a lot of cash to his shareholders.
2:38 pm
maybe wishful thinking, that elon is getting there. it is at least a first step that he has to operate the company. and ke money. scarlet: rationalization. operator and manager as well. david welch, visiting us in new york. thank you. deal hungry companies anxiously awaiting the at&t-time warner ruling which will be due at around 4 p.m. new york time. we will look at stocks moving ahead of that decision. comcast off by 1%. this is bloomberg. ♪
2:39 pm
2:40 pm
♪ scarlet: this is "bloomberg markets." i'm scarlet fu. sectorit is time for our eport and stock of the output -- hour with abigail doolittle. abigail: today is about the xl
2:41 pm
why, the consumer discretionary sector spdr etf. why is up modestly, up 3/10 of 1%. one of the sectors helping the s&p 500 on the day. what stood out is a fact that this is its eighth update in a row. the longest such winning streak of the year. the top point of the xl way may come as a surprise. that is amazon. check out amazon, not a big gain, up 3/10 of 1%. the reason it could be a surprise, so many of us think of amazon is a tech company. it is considered to be a discretionary name as his netflix. -- as is netflix. amazon is up 44% this year per amazing.p it is really pretty speaking of amazon, let's take a look at sears holdings we have the shares of sears holding popping on the day, up 4.2% on the announcement but it's
2:42 pm
agreement with amazon around its tire agreement has been expanded. those shares are being rewarded by investors and lands and also to not so much amazon, but sears up 25%. they actually missed comp, especially relative to those sears stores. the narrower loss, then loss was narrower than expected. they beat sales by 5%. restoration hardware up 32%. it is really pretty extraordinary. they put up a depth -- a better quarter than expected. both of those stocks, and sears holdings, i do not check it out before coming on, but lands and has a 24% beer shortage risk. restriction hardware has 36%. much of this is a short squeeze. turning to our stock of the hour, that is the first century fox. take a look at the shares. off of the guys. nonetheless, up 1%. this has everything to do with that court ruling that we are
2:43 pm
waiting for later today on a the at&t proposed merger between at&t and time warner. it isthought that if allowed to go through, that there could be another bid to come through for fox. billion bidt $52.4 from disney for certain fox assets. comcast might come through with a bid. it is expected it would be much bigger. closer to $60 billion. perhaps -- the interesting thing is, some are saying cash might not be attractive to the murdoch because there could be tax applications. it could be cash and stock. there could be an ollanta bidding war ahead between comcast and as for those stocks assets. scarlet: it depends on how the ruling shakes out. if there is as i bidding war, is there any to sense of -- any sense of hoop fox prefers? abigail: it would probably want to stick with the disney. they like the disney assets. bob iger thought they like them.
2:44 pm
the clear winner, if we take a look at a chart of these three companies is fox. if we happen to the bloomberg them in beer is can take a look at this chart usi the gtv function, take a look at fox on the year of 26 -- up 26%. this is since december of last year. possibility that they would buy this company at all. the roberts family which does control comcast, they want to be a global media powerhouse. both of these companies, disney and comcast, are in this race for content, distribution, international exposure, to take on the tech names such as alphabet, amazon, apple, 30 interesting. -- pretty interesting. julia: we will be delivering the verdict. scarlet: you have to move quickly. julia: thank you to abigail doolittle. time for the bloomberg business flash. a snapshot of the biggest business stories in the news today. stanley says quarterly bond revenues should top one billion dollars through the year. chief executive officer james
2:45 pm
gorman says the poll is expanding "as higher volatility and interest rates fuel a rebound." the firm's fixed income revenues, $1.9 billion, beating estimas. and rising from thus years of $1.7 billion. credit suisse is cutting senior investment banking jobs. bloomberg has learned they dismissed 26 directors and managing directors. the cuts have been focused on london. involved were responsible for m&a and industry coverage. u.s. consumers are getting deeper in debt. federal reserve data finds the percentage of financial obligations compared to personal income has climbed -- declined in recent months. a bank of america executive says despite the rising in borrow debt, credit profiles remain healthy but need vigilance as people continue to layer on debt. they see little risk of crude fighters dipping below $70 a
2:46 pm
barrel in the near future. this outlook for oil earlier in a bloomberg exclusive. iswhat we are seeing relatively stable, oil price. in may.ssed the bar supported by a strong demand. that thelso seen storage level has been brought down to a higher average. and the economy is quite strong. we are seeing quite some good support for the higher oil 70's. stable in the having said that, we also see geopolitical uncertaintyorting . i'm going forward, -- and going forward, we could expect volatility. they were talking about brent crude. it is trading at $76 a barrel.
2:47 pm
that is your business flash update. up, signed,ing sealed, delivered. president trump and kim jong-un make a pledge for peace but they are light on details. we will dig into everything. is bloomberg. ♪
2:48 pm
2:49 pm
♪ scarlet: this is "bloomberg markets." i'm scarlet fu. julia: i'm julia chatterley. it is the handshake that made history. president trump and kim jong-un promise piece on the korean peninsula when they met in singapore. mark meadows spoke to bloomberg's kevin cirilli about the landmark summit. did notggest that this go according to plan would be inaccurate. not only did it go according to plan, it came off flawless because what the president and his administration wanted to do is set a new beginning, a new foundation for one-on-one talks.
2:50 pm
if anyone were to have suggested , a year ago, that this would have happened in singapore, we would have the odds at less than 10%. and yet, here it happened. we are going to see not only this as a new foundation, but certainly the expectations have now been elevated. the fact that we have a buzz here on -- in washington, d.c., the excitement you can feel it, as potentially two countries come together who have been at odds for decades. kevin: what have you made then of how the u.s. ought to verify this? what would you like to see in the next steps in terms of making sure that kim jong-un ?ctually does denuclearize when needs to come next? abigail: obviously we will have -- rep. meadows: obviously we will have the international community. as long as secretary perry in those negotiations. it does have to be verifiable. i think the key is that as long
2:51 pm
as that is put in place, that verifiable aspect of making sure that we have a nonnuclear north korea, i think good things are in store for us. here's the interesting thing. some on the other side of the aisle have been very critical, not only of the meeting, but they were afraid the president would give away way too much, when indeed he did not. foundation for further negotiations. i think he will see in the coming months that progressing nicely. this was all about establishing a foundation for mutual respect and negotiating terms going julia: that was the house peter -- speaker mark speaking earlier on bloomberg. our reporter joins us from washington. a lot of the criticism in light of the meeting as historic as it was has been ultimately, whatever agreement was signed, it lacked substance and the
2:52 pm
president has given away too much. what is the take care on ultimately what was given away and at what expense? bill: president trump called this agreement he signed with kim jong-un a comprehensive agreement. really, it is 400 words that do not really spell out any kind of deadline or timetables for how denuclearization takes place with the next steps are. i think the president did say afterwards, this is not part of the agreement, but he said afterward the u.s. would suspend what he called wargames with south korea. that is something that has long been a linchpin of u.s.-south korea relations. when you talk about criticism of what happened in singapore, that is the kind of thing that i think people are a little bit concerned about. how long can u.s. forces go without these kind of joint drills, and what is the timetable for north korea actually doing something on its nuclear program? that. i'm confused about how can those exercises just happen and don't they happen
2:53 pm
every once -- once every year? we have 11 months now before those things have to not take place again or indeed take place again to that gives us 11 months to seeroof in the pudding. i don't feel like president trump gave away too much. bill: there are different kinds of exercises that take place. there were some this year there were delayed because of the winter oly exercisethe full eagle per that involved more than 300,000 u.s. and south korean troops. there was a subsequent exercise after that. there are exercises scheduled for this fall. it is much more of a type of computer simulation type of exercise, it still involves 20,000 troops on both sides. there are a series of regular exercises that always take place. one of the interesting things is that a lot of the u.s. troops who go through south korea only do so on one year rotations. you have to keep training just
2:54 pm
because you have got a whole new troops essentially green coming in who need to get up to speed on what happens if there is a conflict with north korea. with all of those concerns that the u.s. gave up too much, i thought it was interesting that the president showed a rare side of canned or -- candor. saying he may be run to let's listen to what he said. pres. trump: i think he is going to do these things. i may stand before you in six months and say, hey, i was wrong. i don't know i will ever admit that, but i will find some kind of an excuse. scarlet: he was kind of joking. but maybe not. waause you usually don't see the president you try that self-doubt. bill: he also said at another point that he had been awake for more than 24 hours. that may have quelled some of his inhibitions there. i think the president has said that this is something that could go wrong. but he really sees himself as bringing a brand-new approach to
2:55 pm
this problem that has bedeviled presidents going back to the 1990's with bill clinton. his statement has been that things wworking. we needed to try something radically different. d his decision to just meet with kim jong-un, i think three months ago, when he agreed to the meeting, to meet with him without a real clear set agenda was a way of shaking up that history and seeing if maybe were progress could be made. it came with a lot of pageantry. now comes the hard work to we have administration officials moving on to do the next thing, including mike pompeo. talk us through where he is headed next and what he hopes to publish? -- hopes to accomplish? bill: wednesday morning, mike pompeo will be flying to seoul. he will be briefing officials from south korea and japan about the meeting. and i think about the details then travel on thursdayblic. to beijing to brief chinese leaders about the talks before
2:56 pm
flying back to the u.s. the unusual thing about this process has been the normally after this agreement, we would have someone from the adstration standing upbefore rea solid readout of what some of these details are. we haven't had that so far. the president is still en route from asia and mik pompeo is traveling the region. in mbe while longer before we get that. scarlet: so far, things have been anything but usual. ill ferry, thank you for that. joining us from washington to coming up, it is m&a judgment day. shares are mixed ahead of the long-awaited at&t-time warner ruling. if you look at at&t and time warner are faring, we go live to the courthouse next. this is bloomberg. ♪ retail.
2:57 pm
2:58 pm
2:59 pm
under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers ly ocomcast business to delivstent network speed across multiple locations. every corporate office, warehouse and store near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. edit on the end in london. >> welcome to bloomberg market -- markets.
3:00 pm
>> here of a top stories we are -- you are the top stories we are covering around the world -- here are the top stories we're covering around the world. jay powell keeping a close eye on inflation. the $85ment day, billion question get center when the judge rules on whether at&t can buy time warner . let's check up on markets with julie hyman. >> still, relatively mild here in the wake of the events in singapore.
3:01 pm
the dow just taking lower. the nasdaq is at a record again. it is not alone. take a look as the other groups the mid-caps earlier touched the record before coming back down. the s&p.s been ofis coming even in the face geopolitical risks. we have this indicator that measures volatility. obviously, it is much higher. up since eyeses level since march the we are still seeing relative strength. a lot of the strength is coming in technology. large cap has reasserted itself.
3:02 pm
facebook, and, paypal participating. strong,p that is not there is some concern that if a deal is finalized, you could see it cut down on the pentagon budget and some of these companies could be a casualty. >> let's get you to first word news. >> republicans and democrats are holding back on openly celebrating the meeting between the sitting president and north korea. mitch mcconnell called it a major first step, but not a decisive one if pyongyang does not follow through.
3:03 pm
paul ryan said the only acceptable outcome is complete, irreversible denuclearization. democrats say -- iran says his country won't be able to remain in the nuclear report unless the benefits from it president or ronnie said the europeans must find a way to compensate iran if they want to preserve the landmark accord. last month, president trump pulled the u.s. from the deal and restored sanctions. >> our determination to preserve the deal is also in the interest of the united states. it is essential to our common , theities for europe
3:04 pm
united states and the entire middle east that might otherwise fall into nuclear proliferation. >> israeli police began evacuating jewish settlers from homes built illegally on palestinian land. thens of settlers protest against the evacuation. some threw stones and bottles at police. israeli forces are expected to demolish forces. e government said it will compensate and rebuild their homes on nearby lands that are not privately owned. former president jh -- george h.w. bush made history by residentthe first u.s. to reach the age of 94.
3:05 pm
he was hospitalized over the memorial day weekend for low blood pressure. global news 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. >> what a legend. i did not know that. it has been a long time coming and finally a decision on at&t's deal with time warner. now, the decision coming in about an hour or so. the burden of proof the deceptively on the government
3:06 pm
here. give us the potential outcomes. >> the burden of proof is on the government and they have to show the deal may have a substahood g competition in the markets and it is very hard to do where you have two companies that don't actually compete in the market and you create competition in the market. where you have a vertical integration resulting from a deal, it is not as clear. seen whether be .hey have or not >> the judge could block the deal or allow it to go forward by having the make changes or
3:07 pm
alterations. >> comment on that point in particular. scarlet alluded that we have this deal. that is critical. i think that is an outcome that is quite possible. sorry about the background noise with the sirens. hold on just a second. thedepartment could decided department of justice carries the burden of proof, but the judge could decide you could remedy some of the issues. case,k if that was the they would go ahead and close the deal because i believe the company is expected to enter conditions way back when they
3:08 pm
signed on the steel. i don't believe the department of justice will like that outcome. just talk about what it's like being in this courtroom. you have computers in there. there's a real crackdown given th with -- market implications. >> it really is different, where you don't always expect this excitement. the judge has been strict. devices onheck all the way into the courtroom to make sure they are turned off. they will have the windows everybody who attends has to stay in the room
3:09 pm
until he is finished which i would expect to be sometime between 4:30 and 5:00. we are here and there are a lot of cameras set up. excitement.ot of it is really different and unique puree >> i'm sure there's a lot of anxiety as well. >> very briefly, talk about deal process. are the companies definitely looking to appeal? think we will see appeals on either side. the thing is, both of them come with a huge -- a few issues. if at&t chose to appeal, time warner -- asappeal could be as quick two or three months. time warner would have to stay in.
3:10 pm
on the department of justice aside, they won't be able to keep these companies from closing the deal unless they win an emergency injunction that -- the department of justice could still continue to pursue an appeal and i think that is what will happen. >> thank you for that. a reminder, we will bring that decision at about 4:00 p.m. new york time. inthere's a lot going on washington today. the capitals celebrating their stanley cup win. coming up, we will continue the conversation on at&t time warner. this is bloomberg.
3:11 pm
3:12 pm
3:13 pm
>> this is bloomberg markets. hour until the ruling of the at&t time warner merger. >> this is an important case and it has a lot of implications. it is something we aused on. we are he had a good start to the year in the perspectie doesn't seem to be any change. people are still looking. portfolioooking at my
3:14 pm
aremaking the changes really the driver. perception where did was thrown up in the air. >> are very talking about not knowing where this is #i think people are watching this and we know investors don't like uncertainty. this is a new issue of regulatory uncertainty so as this becomes clear, people will hopefully have confidence on how to
3:15 pm
departured be a major from the last 30 years or so. compare and contrast with your. your has an assertive competition authority. when youe difficult are dealing with the eu? veha their challenges. i don't think it is dramatically comes up or thumbs down. i were not -- we are busy in both venues adding people to our business model and we are very strong in germany and we are getting is done. i believe there is more discussion with regulators in advance as opposed to taking the regulatory risk yourself.
3:16 pm
>> you have lots of choices today. we talk about the that stock prices are high. people have lots of flexibility. >> we have the navigation, a lot of issues like that. ceosat affecting the way look at mergers and acquisitions? that yet, butseen there is no question that trade wars are in uncertainty. difference.e is a i think we are talking about >> if you could
3:17 pm
draw a generalization, in general, are people more receptive to what president trump is doing? i think people are holding their opinions in the twoiews -- is one that health care and also media telecom. europe will be among those?
3:18 pm
>> yes. >> we talk about the banking sector. >> and no financial union so it makes it harder. >> if you look at financial services in europe, there are a lot of moving pieces and there was discussion on whether we are on the edge of a new time of .ctual consolidation >> the company is quietly developing -- 20th now is our text -- tech reporter sarah. tell us what you learned. >> this has been in place for about a week and it cracks down on a very common practice for
3:19 pm
developers. they asked for your contact information and once they get it , they can do whatever they want with it. the company has been realizing the threatnd anyonets caught doing it can be banned from the app sto. why didn't they mentioned that this week at the developers conference? all the data collected so far still out there. doesn't make its business on people's data and making profiles, but they haven't powering developers to do so. i talked to one privacy expert who said they are complacent in the ecosystem.
3:20 pm
they are still making this work and one other thing people pointed out is that people that use these don't necessarily understand what happened. it goes with young what op might understand or respect -- >> thank you. >> from new york, this is bloomberg.
3:21 pm
3:22 pm
>> this is bloomberg markets. >> it is now time for options
3:23 pm
insight with julie hyman. kevin, i have been talking a lot about records weave been seeing. out isng you pointed there is an expand index that has options in users. yesterday came out where you can trade european-style index options. the american-style is where they could be called early. as the market has rebounded and we are covering how nasdaq is doing some of this is a tool you can use in your portfolio.
3:24 pm
he can get short or put additional capital. these are the types of tools you want when you're trying to manage your portfolio. >> i think it is one exception. let's talk about your pretty today. you are looking at netflix right now. the ones.out one of netflix has done exceptionally well because they have been
3:25 pm
reinvesting in their business. that is why they have been insulated from the hoce-earnings that everyone hums about. it is a mixture of market dynamics. amazon people care about the price to earnings ratio and tesla has cash burn, but tends a free pass. you want to go out and buy this option --then selling sell an option. 6% would you get to keep no matter what. you are basically funding your acquisition of netflix stock. >> yes. exposure netflix you are going to actually lose
3:26 pm
money, but you want to own the stock anyway. this is a way to get it cheaper. >> julia, back to you. the $85 billion question getting answers one of judge rules on their merger. we will bring you all the details. from new york, this is bloomberg.
3:27 pm
3:28 pm
3:29 pm
>> canadian prime minister justin trudeau addressed parliament days after hosting a g7 summ. that the northrs
3:30 pm
american free trade agreement timbered brought up to date. we continue to discuss modernizing nafta. we cannot sign a trade deal that automatically expires every five years, bmove forward. >> the sunset clause were and nafta unless the u.s. andico x tens it every five years. macedonia will also amended thousands is


info Stream Only

Uploaded by TV Archive on