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tv   Bloomberg Markets Americas  Bloomberg  June 19, 2018 1:00pm-3:30pm EDT

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earth. can you imagine? talking about germany, they allowed millions of people -- and by the way, the crime from the time they started up more than 10%. that's one of the reasons it's at that level, they don't like record -- reporting that kind of crime. they put it down as different kind of crime. but their crime is up more than 10% since they started taking them in. i heard someone say that crooked hillary clinton was questioning that statistic. she said it's not true, it's not true. didn't she already have her chance? i will tell you what, when you , with thesereport really dishonest people -- i was never a deep state guy. let me tell you, we've got some bad doing bad things.
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when you read the ig report about what she got away with? it's a disgrace. it's a total disgrace. you ought to see the hearings right now on television. folks are going onto the main media, the fake news they want to focus on immigration because they want to keep the cameras away from the hearings. those hearings are not good for them. in fact, they are a disaster. the whole thing is a scam, a scam. what has happened is a disgrace. so, we have a house that's to finalize an immigration package and they are going to brief me on it later and i'm going to make changes to it. let's just keep it going, do it
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right. we have a chance. we want to solve this problem. we want to solve family separation. i don't want children taken away from parents. and when you prosecute the parents for coming in illegally, which should happen, you have to take the children away. we don't have to prosecute them, but then we are not prosecuting them for coming in illegally and that's not good. we want to end the border crisis by finally giving us the legal authorities and the resources to detain and remove illegal immigrant families altogether and bring them back to their country. we have to bring them back to their country. think of all of that aid that we give some of these countries. hundreds of millions of dollars that we give to some of these countries and they send them up. i'm going to go very shortly for authorization that when
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countries abuse us by sending their people up -- not their will not give any more aid to those countries. why the hell should we? why should we? so, this is the responsible that allse approach lawmakers should embrace. democrats and republicans. remember, we need the democrats. people say you have the majority. well, in the senate you have one, so we need 60. if we get 100% we will be a 51. 100% at 51. so, we need nine votes. lead 10, 12, 13 votes. we have to have democratic support. not juste need to go majority, unfortunately, which we could get, we need to go to 60, 60 out of 100. we need democratic support.
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they don't want to give it because democrats love open borders. let the whole world come in. let the whole world. ms 13, gang members from all over the place. come on in, we have open borders. they view that, possibly intelligently, except that it is destroying our country, they view that as potential voters. someday they will vote for democrats. because they cannot win on their policies that are horrible. they found that out in the last presidential election. in fact, they're only policy was that donald trump a bad guy, he's a bad person, vote against trump. they set it so much, hundreds of millions of dollars making ads, no one has ever been hit like that. i used to go home -- i started disliking myself.
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i thought man -- mi that bad? is, they never told anybody what they are doing. they didn't talk about tax cuts -- by the way, they want to take away your tax cuts and substantially increase your taxes. they didn't talk about crime. all they talked about was trump. when people got to the booth they said we will vote democrat and they get in and they say -- what do she stand for, what do they stand for? they just hate trump. note, going with trump. that's what happened. you got tremendous democratic support. it's a beautiful thing, that was a beautiful night aria do you agree? that was some night. night.s some but you have to stand for something. you have to stand for safety and security of our country. we cannot let people pour in. they have got to go through the process and, maybe it's
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politically correct and maybe it's not, but we've got to stop separation of the families. politically correct or not, we that needstry security, that needs safety, that has to be protected. so, we are here today to talk businessiness, small and the incredible progress we are making as a country. we really have made unbelievable progress that we are making with the help and support of our wonderful friends at the nfib. you have heard these numbers. if i would have said these numbers during the campaign, the fake news would have said that this is the most ridiculous -- i wouldn't have said these numbers. i would have said half? who would have known. things have kicked in better. then example -- you saw
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poll that was recently taking, -- taken, the small poll, the most optimistic in history, in the history of the poll. that's why i figured that probably this would be a friendly crowd. have believedld these numbers if i said them during the campaign. we have created more than three point 4 million new jobs since election day. 3.4 million. think about what that means. and by the way, we do need people coming through the border. we do need people. people -- youwant know, i have a lot of companies moving in, big companies, you look at foxconn in wisconsin, they are coming in, they need thousands and thousands of evil. chrysler is moving from mexico back into michigan. many car companies are coming
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back to our country. many companies are coming back. they are coming back from where they went, now they are coming back because of all of the things that we have done with regulations, with taxcutting. but we need -- people -- we need people to take care of -- we have the lowest unemployment rate, we need people. we want people to come in, but they have to be people that can help us and help these companies fulfill what they want to fulfill. unemployment claims are at a 44 year low. that's a great number. maybe the one that makes me happiest is this -- because i remember going around and saying -- what do you have to lose, but for me, the democrats of always been with you, but for me. bad education, the most unsafe arts of the country, all of
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these different -- i would say to the african-americans i would say, what you have to do, what me,ou have to do? vote for what do you have to lose? unemployment for african americans at the lowest level in history. it's like, what do you have to lose? i would go around and talk and some people would say don't say that and i'd say, look, it's true. so badly treated. and now the lowest level of unemployment in history. for african-americans. lowest hispanics, the level of unemployment in history. and for women, the lowest level .f unemployment in 21 years soon it will be history. just like i promised during the
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campaign, our economic policy can be summed up in three very beautiful words, words that you probably know better than anyone else in this country, jobs, jobs, jobs. and i shouldn't say this to the people in this room, because you will end up not having like my speech, but wages for working finally, after 22 years, rising again in our country. i'm sorry to hear that. the only thing you can hold against me, but i think you are also very happy about it, actually. i know you will. according to the latest survey, the share of small businesses is raising worker and benefit hey
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and has just set a new all-time record. it is a new all-time record. we have broken many records. i could go on and on. the optimism is the highest it has ever been in our country. more and -- meaning that more hard-working americans are able to or their family and contribute to their community, living the american dream. at the center of america's resurgence are the massive tax cuts that republicans passed and that i signed into law six months ago this week. not one democrat voted for the tax cuts and they are suffering now because they are going to lose a lot of races that they thought they were going to win. they wish they had the vote to do over again. we had numerous states for senate where i think they will be in big trouble. it's the biggest tax cut and perform in american history.
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and you know the story, not since ronald reagan have they done any major taxcutting and they wanted many times, i told this story all the time, i said i don't understand it, to cutting taxes should not be hard to sell, right? if -- is there anything easier? the leadership came to my beautiful oval office, it is a beautiful office, great office, and they talked about the tax reform. reform, what does that mean? are you going to raise tax? no, sir, it mean smart we have the tax reform act of 2017. i said no, i don't want to go reform. no one knows what reform means. i looked at all the times they try to pass tax cuts, they don't the useword tax cuts, the word tax reform. i said that no one knows what reform means. they want to know about tax cuts. they don't want to know about
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tax reform where we are going to raise your taxes, take away your businesses because tax reform. we are going to take away your farms. they don't like the word reform. they want the word tax cut. sir, can you give us a name? i will give you the name. i will give you the name. it's called your tax cut cut cut cut cut cut cut cut cut cut cut bill of 2017.
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that's a true story. right, steve? that's a true story. even i thought that that was hokey with all the cuts, so we just called it tax cut will. got rid of some of the cuts. they got the word. not one democrat voted for it. at the heart of the plan is tremendous relief for working families and small businesses. a typical family of four bank earning $75,000 per year will see an income tax cut of more than $2000 and in some cases much more than that, slashing their tax bill in half and more. we delivered a historic victory for american small businesses by 20% ofg you to deduct your business income. people were shocked.
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capital investment is soaring with small businesses and big is this is because you can now immediately deduct -- this to me is the greatest of them all, every single penny spent on new capital equipment. one year-long deduction. i think that's going to be the star. we bringing back trillions from offshore that we couldn't bring back. it was hard to do. you should have seen the forms we had to fill out. it was virtually impossible. we had $3 trillion to $5 trillion and it's seemed as if those people were hitting the higher side. they were bringing it back from
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overseas, investing it here. apple just announced recently that they were going to spend $350 billion on an incredible campus and a new facility all over the country. bringing money back like nobody ever thought. you have heard me say -- when they said 350 billion i said you mean 350 million. because $350 million is a nice plant. i know how to build under budget and ahead of schedule. [laughter] heard billion, i they said no, think of what that is. think about the total amount that they are bringing back and the rest that they are putting in, tremendous investment in our country. exxon mobil is doing the same thing. so many other countries are doing the same thing. different embers.
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it's incredible what happened. it's incredible, one year of expensing, expensing will be the star of what we're doing. we exempted more small business owners from the alternative minimum, which you know very well was in a norm us waste -- was an enormous waste of your time and money. that was a disastrous tax. from now on, most small business owners will be spared from the deeply unfair estate tax that i talked about. i am so proud of that, because you are all keeping your businesses. your family, your farms, you are all keeping your businesses. as a result, american business is now on a level playing field with your competitors from other have so many other advantages, including subsidy by governments.
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you see what's happening with china. we have no choice, it should have been done many years ago. we have no choice, china has taken out $500 billion per year out of our country and rebuilt china. i always say that we have rebuilt china, they have taken so much. it's time, folks, it's time. andre going to get smart maybe something happens where they come and they say that we agree for the last 25 years. somehow it doesn't seem to work so easily. we are going to make it fair with other countries. both our friends and our enemies , going to have to say this, in many cases our friends on trade have treated this much worse than our enemies. amazing, isn't it? we know that when the rules are fair and you can compete, you will win
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against anyone anywhere in the world. there's nobody like you, you can win anywhere, but you have to bring it down to a level playing field. more than 6 million workers. they have already received a bonus. .r a pay raise or retirement account contributions. or a new job thanks to these tax cuts. a lot of new jobs. people are able to go around and look for jobs. they hate to wake up in the morning, they don't want to go to work, now they have got their choice. they have jobs that they can look and they can love. if you don't love it, you are not going to be good at it. millions of americans are now really saying to everybody that they are saving money on their monthly utility bills as a
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result of our business tax cuts. over 100 utility companies have lower their prices, saving americans an additional $3 billion per year. our historic tax cuts also ended one of the most unfair taxes. imagine a double. obamacare's individual mandate. government will the longer punish you if you cannot afford obamacare's skyhigh premiums. think of this. you pay a lot of money to the government in order not to have to buy health insurance. so, you are paying money so that you don't have -- that's a penalty. .ncredibly, it was allowed you are paying money so that you don't have to buy health care. .hat was a beauty
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it's over, it's gone, it's done. and we actually thought we had the votes and then one man very early in the morning when comes down, so that was that, but we almost got rid of obamacare without him. and that was a very sad day for the republican party. that was a very sad day for the country, when that vote was cast, that final vote was cast. thumbs down. i remember it well. obamacare has been especially brutal for small businesses, you know? you know that better than anybody. it cause premiums and adduct doubles to explode and health care options to plummet. as a result of obamacare, many small business employees and sole proprietors have no good or affordable options. but now they do. we are opening up the system. i am proud to announce another
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truly historic step in our efforts to rescue americans from obamacare and the obamacare nightmare and provide high quality affordable health care to every american. this is low-cost, great health care. before obamacare there were many people very happy to have problems. then you got thrown to the wind. baby.s alex acosta, secretary of labor. alex and the department of labor are taking a major action that has been worked on for four months now and now it is ready to make it easier for small businesses to band together to
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negotiate lower prices for health insurance and escape some of obamacare's most burdensome mandates through association health plans. you are going to save massive amounts of money i have much better health care. it's going to be fantastic and it's very comprehensive. i will tell you, a lot of people -- big percentages in this
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country, but you are in the world -- in the room together, shake hands and say good luck. he, the bigger the association, the better the deal you will make. you will save a fortune and you are going to be able to give yourselves and your employees tremendous health care. i'm really honored by that, believe me. with this action, businesses in the same state or businesses in the same industry, not just the same state, anywhere in the country, remember, i used to say during the debates across state lines so that you can negotiate? you can now cross state lines so that you can negotiate. so, if 20 or 30 of the businesses in this room get together, get together as a group, an association, you pick
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the meanest, most vicious manager owner to negotiate -- right, right? to negotiate your health care. you will end up so great. and that's ready as of when? that's not a bad answer. today, today. good job, alex. i would call our secretary of labor and i would say, sir, he's very busy. i would say he's president of
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the united states and they would say he's working on health care. i would say -- oh, department of labor, that's interesting. that is some great plan. we love it, thank you, alex. very committed to it. he's now working on an expansion of that, in looting even larger groups of people. it's really something that is also going to be very exciting. for the first time ever, so proprietors will be able to come together and buy lower-cost group insurance instead of getting ripped off by this know as that we all obamacare. these actions will result in very low prices, much more choice. much more freedom. including in many cases new opportunities to purchase health insurance. you will be able to do this across state lines. that was such a big thing. i would say -- alex, i want to cross state lines and he said -- don't worry about it.
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this is something we were able to do within the confines of the existing laws. the in -- the insurance , they made so much money, they got so rich with obamacare. take a look at what happened to the premiums. everyone hears about obamacare being a disaster, except for the insurance companies. they will have to give that money back. negotiate tough, please. every american who owns a small business plays a vital role in creating a safe, strong, and prosperous america. my administration will never forget that truth. every day you turn ideas and actions, you turn vision into turning dreams
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into reality, you don't even realize that's what you do. that's what you do. you embody the spirit of independence and invention that turned america from 13 colonies into the most incredible republic in the history of humankind. anymore, i mankind say humankind, so the women understand it. i don't know, they want me to be politically correct. a couple of women have their it's the sameht spirit that cause them to tame the wilderness and build shining cities that touched the sky. who built the highways, the railroads, dug out the panama canal.
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who were the winners of two world wars and who put a man on the face of the moon. did you see what i did yesterday with nasa? right? you have the air force and now you will soon have the space force. that's where is that. there's nothing americans can't do. we are americans who salute a great american flag. shery: i'm shery ahn alongside amanda lang in toronto. welcome to "bloomberg markets." we are joined by both our bloomberg and bloomberg audiences.
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president trump speaking now. let's listen in. pres. trump: our future has never looked brighter. that is because of the hard-working americans like you and millions of small business owners. who took the chance to do it they love. to follow their hearts into intervalir very dreams. you are the ones who are shaping our industry. you're the ones who are shaping and restoring our prosperity. we are restoring our prosperity. -- gdp, youn ddp, see what the projections are. numbers that nobody ever thought possible. seeing somerward to of those numbers. but you see what projections are. people are projecting numbers like nobody thought even possible, numbers i would likewise, like i would not have set on jobs, i would not have set on growth, i would not have said, let's see what happens.
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but we are doing well as a country. truly who arees making america great again. so happy anniversary. god bless you. and god bless the united states of america. thank you very much. [applause] [music playing] president trump speaking there at the national federation of independent businesses. he was doubling down on his rhetoric on trade, saying the u.s. was being treated horribly i canada. -- by canada. this is after he raised the stakes with his standoff with china ordering additional tariffs on 200 billion dollars on chinese imports. china's minister of commerce responded swiftly calling the move blackmail, and bowing to retaliate. stocks have slumped on the -- on this as investors piling to long-term treasuries.
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amanda, how worried are you -- should we be about the impact care of everything that is happening? amanda: it is pretty extraordinary to see the doubling down. what we're hearing from analysts is that the uncertainty factor that is the big issue. mention in that speech as a concern. you mentioned the major averages have been weak. some of these stocks inside those averages are really weak. you see the biggest industrial names in america like general motors and bowing her you see them down 3%. because access to the chinese market seems to be questioned. not tariffs, but their ability to grow their sales, according to our boat -- our bloomberg colleagues. shery: when it comes to the u.s. major averages, we are seeing the reaction. they are coming off session lows. still in the red. the dow down 1.5%. the s&p 500 down 8/10 of 1%. treasury yields also down.
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here with more insight, we are joined by lacy hunt, the executive vice president and chief economist at raising 10 investment management in austin, texas. thank you so much. also joining us today is the lead portfolio manager for the pmb equity team and wells fargo asset management here in new york. ann, let me get started with you. we were listening to the president's comments. it doesn't think he will back off when it comes to these trade negotiations. in the meantime, stock markets reacting poorly. ann: they are. i think he has been known to have a very tough stance, but bit also to show a little of a carrot once in a while as well. he has held firm in the markets are reacting to that today. we have seen the markets react in a negative way. and then the markets come back.
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this time, the markets are much more volatile. i think it is the doubling down that is scaring the markets. this is a new negotiation tactic. we are not used to having a president take such a tough stance in the market is adjusting to that. president trump saying businesses have a true friend and him at the white house. i wonder how much we can rely on these corporations to drive economic growth when we are seeing weak productivity, not to mention that gdp for every dollar of debt they take on is really not that great. it has been declining sharply. is that the big surge in federal debt, while it has been a stimulant to growth so far this year, will have only a transitory impact on the economy. and that growth is probably topping out in the second quarter. of theo through the rest
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year, i think economic growth will trail off considerably. amanda: ann, i want to talk about the small caps. we have been watching the russell 2000 the the beneficiary for some time. now, maybe also kind of flight to safety domestically fronting companies. what is your outlook on which part of the spectrum of size of business people should be looking to invest in? and i do like the small mid-cap space. primarily domestic stocks, i like domestic better than international right now. there are certainly areas of the market that i think are more attractive than others. right now, the energy space is a space that i do like, primarily the permian names within the have beence but oversold, some of the names down 20% to 30% year to date. that area of the market is attractive. there are certain select areas.
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i am bottom-up stock picker. --t is where this volatility that gives us a chance to look for those opportunities. broadly speaking though, there are areas of the market that are expensive. i think investors have to be careful out there. shery: lazy, when it comes to these trade tensions, not only with u.s. allies like canada, but also with china, the chinese economy right now is slowing down. we are seeing disappointing numbers when it comes to industrial output. could this precipitate or cause a global downturn? i think it is fair to say that with the exception of the united states, every major economic center in the world is in a material slowdown. i would call it a sacred eyes slowdown outside the united states. -- a synchronized slowdown outside the united states. pays inseen consumer
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china the weakest in 15 years. the chinese economy is not doing well, the japanese economy contracted in the first quarter, it has gotten off to a poor start in the second quarter. have beenan numbers significantly softer than anyone anticipated. to both the north and south of us here in the american hemisphere, we see weaker anditions in china and substantial deterioration and all of the major economies and latin america. i want to ask you, you have made the point recently that there is a pattern to the way hikes -- the way rates move up and down. obviously, these geopolitical events will ship what happens to the curve to a certain extent. at what point do we feel the full effect -- effective tightening in the u.s. on the fact that has -- the effect that has on the globe? lacy: i think the fact of the matter is, like it or not, the
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federal reserve is the world central bank. we have a major influence on liquidity around the globe. as a result of the tightening regime that the fed has been pursuing since december of 2015, it has resulted in a synchronized deceleration and monetary growth in europe, japan, china, and around the world. we not only have a monetary tightening in the united states, but we have a synchronized monetary tightening. this type of action will produce slower growth. is theeficial aspect rate of inflation is probably topping out right now and will also be moving lower in line with the weaker economic conditions. shery: money supply usually decelerating ahead of most recessions, but if not, we are also seeing the yield curve inverted or even flattened.
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right now, we are already seeing the yield curve, especially the 7/10 emma which is not closely watched, but at least for now we are seeing a below four basis point. what is that telling you about the potential other recession coming soon? lacy: well, i have calculated the yield curve going back to the 1920's using the short-term treasury bills in the 30 year bond. has flattenede significantly. 17 times followed by 17 recessions. you don't always have to have a reversion. in 10 of those flattening's, you had an aversion to the yield curve flattens, it basically reduces the profitability of the banks. am all of the others non-banks, that are borrowing short and lending long. typically, in a situation of a flattening yield curve. i think your mention of the seven tens is very interesting and significant. what the bank and nonbank lenders tend to do is they lower
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the risk premium. the chance that they are borrowers will default and it extension an unwise of credit. the flattening in the yield curve that has followed the train of a substantial slowdown ismoney and credit growth not only a negative for the united states, but it is a negative for global it quitting. -- global a credit he. lacey, thank you so much for that. lacy hunt, executive vice president at placing 10 investment management and austin, texas. and also ann miletti, lee portfolio manager for the equity team at wells fargo asset-management here in new york. thank you to you both. coming up, got -- got milk? trump may have a point on dairy tariffs. more on why ahead. this is bloomberg. ♪ mberg. ♪
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♪ shery: this is "bloomberg markets." i'm shery ahn in new york. amanda: in toronto, i'm amanda lang. shery: escalating trade tensions between the u.s. and china are spreading seeds of worry across u.s. agricultural markets. here with insight is bloomberg's agriculture reporter alan bjerga from washington. it is not only about china retaliating on trade with a potentially swabian productions, but it is also about nafta. the u.s. administration just fighting a -- on multiple fronts. alan: it is on multiple fronts. it is fronts that are important for agriculture. china, canada, mexico are always the top free markets by far for u.s. agricultural exports. in the case of china, there is not much they can retaliate against other than agriculture. there is a big market for front
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goods. a lot of nervous folks in farm country right now. you have been seeing it in the markets with soybeans reaching a two-year low. it will be hard selling the crop without significant discounts. it is too late to plant anything else. farmers are locked in. can you sort of amplify the fact that there really isn't a nation in the world that believes in free trade when it comes to agriculture? they are all protectionist. do you see that changing? to a it is a protectionist varying degree. you see liberalization of the less 30-40 years. countries like new zealand have very little of the farm subsidy regime. in the united states, you've seen a move away from the foreign policy that manage supply to really relying on export markets. that is where this starts to hit. a generation ago, you had more agricultural market, subsidize heavily by the government. they are not responsive to market forces. as you have created a globalized agricultural trade system, you make them more responsive to
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something like this. where a trade war ends up being agriculture possibly harder than any other sector. shery: president trump calling out canada when it comes to its dairy markets. tell us about what the issue is there? supplyetting back to management, there are commodities where systems to restrict a mystic reduction in supply to keep prices that are still in effect. canada and air he is one of the world's greatest examples of that. it is a closed market. thatave tariffs scheduled can become exorbitant in certain circumstances. president trump has really seized on canadian dairy policy is one of the reasons to justify this trade war. the issue is that it really -- canada's policy on darren -- on dairy is more the exception than the world. while you may have a case for that in nafta, it becomes part of this broader trade war that affects other commodities besides that. shery: we will be discussing that in a couple minutes. thank you so much for that. cash cows, canadian prime minister justin trudeau's
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squaring off with president trump over the area tariffs. defending the system, president trump in an and address the last hour restating his belief that the u.s. is being treated horribly by canada. trump has not and the only voice i criticizes parts of the system. with us now is chairman and ceo lino saputo. do defend a supply management, we should be clear that even though it makes your inputs more expensive, you also think there is a part of this that caused the frustration on the u.s. side that we could given. explain what part of this markets we could give in on? -- init has been in it existence of the 1970's. what is new to the industry and new to the system is class seven. ultra filtered milk, that was once coming in from the united states, now it is available in a different form in canada.
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under international prices. processors like ourselves have access to these solids. are acquiringe these solids from canada and we are no longer importing them from the u.s. this only happened two years ago in 2016. i think this is really the issue that the u.s. dairy farmers have with the canadian systems. amanda: back at the nafta negotiating table, that is something wicked toss in the ring. what we have seen with the tpp is we have to give in on this stuff. it becomes a big part of what other countries want from us. you see as able to withstand the pressure against apply management? lino: there have been a lot of different trade negotiations that have gone on over the course of the last 40 years. canada have been a bill -- have been able to maintain the system. the tpp deal, canada granted access to solids coming into canada for canadian consumers. i don't think that is a viable option under nafta. i think the most logical viable option is the elimination of class seven. aery: we are seeing not only
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glut, but also prices continue to fall, especially when it comes to milk. we are seeing this downturn. do you believe the trajectory of prices is in a cyclical downturn or has something fundamentally changed that you need to protect these markets? in a no, i think we are downturn. the markets are cyclical. it is based on supply and demand. and there are too many solids in the market and not enough consumers to consume the solids, prices will drop. this is what we are seeing in our industry. there has been a little bit of pain over the course of the last year. all the way back to the farm gate prices for dairy farmers, outside of canada. i think that will continue for another couple of quarters moving forward. i think ultimately, the cycle of supply and demand will rebalance itself. amanda: you will not be affected by tariffs because you buy the products in the country in which you process it into something else. is that true for most big dairy producers? true for, that is
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those outside of canada. that is true for all processors that by their milk domestically for domestic consumers. the advantage we have is we have tubing other platforms where we are buying milk at international prices. not only do we have an ability to serve the domestic market, but through those salads and pricing's, we are able to sell into the emerging markets where growth is much more developed than it is in those domestic markets. shery: you have plans in the u.s. i think you have a plan in china. when you hear all of these trade tensions between china and the u.s., does that affect you? how does that affect your business? lino: not at all. we are exporting less than 5% of our manufacturing from the u.s. p early are domestic -- purely are domestic business is one that serves domestic consumers. the servicing of the pacific rim would come out of our argentinian and other platforms. any spat between these countries has little effect on saputo. amanda: we appreciate your time
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today. lino saputo, chair and ceo of saputo. shery: lloyd blankfein opens up about the migrant crisis around the world. this is bloomberg. ♪ this is bloomberg. ♪
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♪ shery: this is "bloomberg markets." i'm shery ahn in new york. amanda: i'm amanda lang in toronto. growthlankfein says the and populism around the world can be traced back to tensions and immigration. the goldman sachs ceo and chair spoke with bloomberg's editor in chief john mickelthwait earlier today at the economic club of new york. we are seeing this in the united states on our southern horribleere obviously, tragic situations, but it is an immigration issue that splits the immigration debate has split the country. more realistically, in europe, and more dramatically and consequentially in the near term, immigration issue in the
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where magnanimously, germany admitted a couple of million people, but hard cases make bad law. of course, with open borders in europe. theit is a direct link to consequences to the immigration crisis. you are talking about a soft brexit. if you get into a soft brexit the people are speaking of, the only thing britain will have accomplished in brexit's immigration -- is immigration. you see what is going on in italy and certainly the relatively right-wing movements in central europe, those are reactions to immigration questions. john: there are interesting balances. lloyd: hard cases make bad law. i would not want to be in the position we find our government and now with respect to the tragedy that is going on at the border. john: you would not know which to choose?
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lloyd: i could not do what obviously is being done. i agree with those things. when you watch tv and listen to the pendants, i don't believe -- i don't appear anyone talking about the consequences. if we permitted for people to pass through, the same thing you happened -- you saw the tragedy and the consequences of what was happening along the mediterranean. in one of learn this the cliches of law school. hard cases make bad law. when you want something, when it appeals to you and your heart, and make something work out, as a matter of your sense of justice, 28 rational projection, you can end up with a hard case but bad law. sachs ceo and chairman lloyd blankfein. it is time for the bloomberg business flash. a look at the biggest business stories in the news right now. a win today for carl icahn.
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bloomberg has learned they gained at least four of the seven board seats of energy. thathas been pushing for since november. the stock has dropped more than 40% since the 2016 bankruptcy filing. buyer drew massive orders for europe's second-biggest year.ate on steel of the the german pharmaceutical giant is on track to complete a two day $21 billion fundraising drive to help pay for the acquisition of monsanto. a $15 billion offering in the u.s. on monday selling eight notes to support the $63 billion takeover which is the second-largest u.s. corporate bond offering this year. the rich are getting richer faster in asia. more than anywhere else in the world. a new report finds wealth assets held by high net worth
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individuals in the asia-pacific 22ion jumped 15% to nearly trillion dollars last year. japan and china contributed the bulk of asia's wealth that india came out at the top on growth rate. that is your business flash update. reminder, opec ministers square off starting tomorrow on whether to raise oil production could bloomberg will be in vienna covering that story for the rest of the week. shery: if you missed out on any of our charts, gtv go is your function. save them coming use them for future reference. this is bloomberg. ♪ retail.
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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 rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store
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near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. lemon a quite a a.m. in sam at cisco, 7:00 p.m. in london. i'm scarlet fu. julie: i'm julie hyman in for julia chatterley. welcome to "bloomberg markets."
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♪ scarlet: we are live and bloomberg world headquarters in new york over the next hour. here are the stories we are covering on the bloomberg and around the world. reducing risk. investors mapping out tactics for how to play the trade dispute. the head ofna, equity strategy at rbc. blankfein on bloomberg. the goldman sachs ceo sounds off on a range of challenges from trade to immigration, to rising interest rates. a massive global shift that is happening faster than you think. half of the world's energy will be powered by wind and solar by the year 2050. we have a special report from bloomberg's new energy finance. have u.s. markets closing in two hours time. let's get a check on where stocks are trading. the day started off with red in asia. abigail: that led into the u.s. markets. here to look at it intraday
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chart, the s&p 500 over that time. -- over that time. doubt a tense up 1% to we have seen steep declines in the u.s.. all three major averages down 1%. for the three-day chart for the s&p 500, last week he s&p 500 finished higher for a fourth week in a row. now we have a decline. the question is whether or not this will continue? right now down 8/10 of 1% over this time period. the source of pain for investors fear over a trade war between the u.s. and china. here are two stocks being hit in particular on these fears. theseuld not think of immediately carry general motors on tesla, both of these automakers are hoping to take share in china. and if a trade war really arrest between the u.s. and china, it certainly could damper those hopes and take a look at tesla, down 4.5%. weakness for the chinese
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internet names. these companies received most or all of their revenue from china. you would think this has more to do with perception. another source of pain could be this is wells fargo as the company's growth margaret -- margins could come under pressure. we will be taking a look at those shares closely. two in for that. hop into thes bloomberg to watch him is no longer considered to be a emerging market, we have weakness for the emerging-market equities. going back to 2010. but we are looking at, blue, the price of the emerging market etf, near 50 back in 2011. in white, we looking at andcally the flows, shares, we see this year, not only has priced declined in a big way and part as interest rates rise in the u.s., and on these trade war fears, but we also have the outflows really declining.
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investors really shunning this emerging market etf. take a look at that topping pattern. it suggests the pain could continue. julie: we will see if all of the news flow continues to exacerbate the painted thank you, abigail. let's go to first word news with mark crumpton. mark: bloomberg has learned the trump administration plans to announce its withdrawal from the united nations human rights council. secretary of state mike pompeo and u.s. ambassador to the u.n. nikki haley plan to announce the action this act -- -- this afternoon. the administration has accused the council of hypocrisy and criticized it as being biased against israel. the u.n. commissioner for your human rights slammed president trump's immigration policy yesterday, calling separate -- separation from children "unconscionable." the topic has traded by's or peter navarro says beijing "may have underestimated the resolve of president trump by refusing to meet to u.s. demands on trade
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and by threatening to retaliate against american tariffs." navarro told reporters that the u.s. is open to talks to resolve the dispute before it imposes tariffs on up to 400 $50 billion in chinese products. he also dismissed the notion that the trade standoff would damage america's relationship with china saying president trump has a great relationship with chinese president xi jinping. angela merkellor took him a present trump's decision to withdraw from the move "very regrettable." speaking at an international meeting in berlin, the chancellor said "we know climate change is not a matter of faith, it is a fact." she said germany remains committed to the agreement but acknowledged the country still needs to do more to curb emissions. the united nations special coordinator for the middle east said that illegal israeli settlements in the palestinian territories are spreading and further eroding practical
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prospects for peace. said thelackner security council today that israel is failing to abide by security council resolution 2334, which the u.n. passed in 2016 which says all israeli settlements in the west bank are illegal. >> please note that all developments are taking place in the broader context of the palestinian territories and uncertainty about the piece prospect and the two-state solutions as well as instability and continued turmoil in the region. israeli-palestinian conflict has escalated in recent months. near weekly mass protests began along the israel-gaza border in march. scores of palestinians have been killed and thousands more winded by israeli army fire. 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. julie: thanks, mark.
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take cover when it comes to the markets, risk off sentiment as trade tensions escalate between the world's two biggest economies is affecting markets today. china vowing to retaliate after president trump threatened to impose tariffs on another $200 billion worth of chinese goods. joining us with more is lori calvasina, head of u.s. equity strategy are -- at our nbc. cheers constructive on u.s. equities. you have been watching the trade rhetoric back and forth. yesterday didn't seem to have much of an impact. as we get the ratcheting up today, somewhat more than impact. this is not a world ending scenario, at least if -- if you look at it through the presence of the market. what is your take? lori: i have been watching what sectors are getting hit. it is interesting to me that technology has been so resilient through some tough news flow.
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it was the safe haven, people were coming back to the u.s. now it is getting hit today. i think there is plain old-fashioned profit-taking. it is crowded, expensive, it is a good time to take risk off the table. youlet: to what extent think asian market reactions, particularly in china, is driving a lot of the trade in the u.s. today? lori: i think it set the tone for the day. we all woke up and we were spooked. it makes sense to me that you are seeing it fell off. scarlet: you said you are looking at sectors today. technology being one of them. industrials is the worst performing group. this is reflected in the dow's underperformance versus the other indices. i believe you said in your latest know that you're looking at industrials for potential downgrades. downgradeave an on watch we don't make sector changes all that often. this is one we like to start the year. a lot of pieces were falling into place to we said the valuations were expensive and we have been watching the sector closely to see if you can get relief. when of the things that
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concerned me is you are not getting much in the way of valuation relief. i am not sure why. we haven't seen it improve. the other thing that is concerning as you have started to see outflows. this was a great sector interns -- in terms of etf's. growth startsome to steepen, both globally and a mystical industrials have taken the hit. julie: i don't think i heard you say the word trade. could the irony be the trade concerns bring down those valuations on industrials and keep -- or do think it is a real risk? all the different sectors on policy risk. it is more art than science. trade has been the big issue that has been overhanging the industrials. and theseen them us -- machinery valuations are you haven't seen the broader sector come in. scarlet: what sectors are more resistant, less vulnerable to the trade noise? the ones where you can count on them to continue trading the way they should be, trading on fundamentals, and be price to valuations rather than be
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subject to all the noise? lori: i don't think there is any sector in the market. is one we have identified maybe utilities doesn't have a negative headwind coming. we have set energy and financials have positive tail coming out of d.c. from regulation right -- regular geopolitical risk. one we have been getting more intrigued with his health care. it has got its own d.c. issues from drug pricing that has faded into the background to we are neutral. we have good on upgrade watch because of valuations are getting to be so unbelievably cheap. investors are actually starting to notice and care about it which is really interesting. scarlet: now that the courts have allowed the time warner at&t deal to go forward, we are looking at the transformational m&a deals in that space as well. what does that mean for the smaller players, the less big players that hog-tie headlines? lori: the telecom sector? scarlet: in health care. we have talked a little
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bit about health care having a potential m&a conacher, but it has been in that the small cap space. i would not chase small cap health care care at this point. it has been crowded. i feel very differently about the small-cap health care space. julie: i know you watch flows very carefully. one of the entries and our markets live blog caught my eye. where they are looking at the national association of active investment managers exposure index. it climbed to almost 104% as of june 13, which is the highest level of the year. it implies there is leverage going on. is that something you watch as well? is that a warning sign of any kind or does it need to get higher? lori: i am not familiar with that indicator. i don't want to jump in there. leverage is coming up a lot in conversations whether you are talking about individuals, corporations, there was an interesting story i think you guys had on private equity this morning that i read about. i think leverage in general, it
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is one of these buzzwords that is starting to come out. nobody quite knows how to measure it or figure out where the tipping point is. it is something that is starting to weigh on people. scarlet: acrylic the mood has turned where everyone is on watch for possible risks. everyone is looking at the potential catalyst to the downside. what are some of the potential triggers that are not being discussed enough? lori: in terms of further downside potential? when we have talked about is margins. been unusual, normally strategists raise their targets as the year progresses. we actually trend are earnings estimate and price target. one of the big things we talked about when we turned the earnings estimate number is margins. marginmarried -- modest expansion. we felt that was not a reasonable assumption to have heading into the back half of the year. i think investors are starting to come around to that way of thinking. when we have gone through and looked at self consensus estimates from the back half of the year, we keep coming to the conclusion that there is a lot
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of margin expansion. concerned about that becoming a risk factor as we move into the summer months in particular. i think the dollar. a lot of people worry about rising interest rates. i'm worried about the dollar and its potential to clip earnings if you see a rise. scarlet: it certainly has been helping earnings until this point. it could get a completely different story. lori: going back to the conversation onits potential tos if you see a rise. scarlet: industrials, i think those were two sectors last year that benefited tremendously from the weaker dollar from an earnings perspective. that is a headwind for both sectors that i think is coming into the mirror. scarlet: watch margins on the dollar. soi calvasina, thank you much. lloyd blankfein thinks playing hardball with china may be the right negotiating strategy. we have highlights from our interview with him. from new york, this is bloomberg. ♪ bloomberg. ♪
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♪ this is bloomberg markets. i'm julie hyman. scarlet: tensions over trade between u.s. and china gate -- keep getting worse. it seems like the more they negotiate, the farther apart they get goldman sachs ceo and chairman lloyd blankfein item with bloomberg's john nichols week and discussed this rocky relationship. the whole thing with china, there is a lot of frustration with china from here. i know china is very frustrated with sudden aggressiveness of u.s. policy. who is transacted with china appreciates the had good of china, has expenses with china, and frustrating experience is in china. and at various times, one or the other comes to the floor. selves, 15 years ago
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almost, set up our joint venture in china that was going to lead to us to being able to own our own investment bank in china, which seems imminent at the time. there have been a lot of suggestions that that was going to happen quickly. in fact, statements that said it is already available, and then oftentimes, that gets announced at the seniormost level and it gets into the ministries that have to affect these things. we found out recently that now these many years later, in order to own our own entity, it has to be capitalized at a level that would make it totally not sensible for us to do it. we go back to square one. that level -- again, we are in finance, but we are advisors to people in other industries p other industries have similar experiences. this would not be the course i would have done. not necessarily recommend. i can see what happens. a lot of the people who are o publicly, this is
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a very difficult thing, for americans, this is a bad thing. which we know from taking economic courses that it is. at the end of the day, and publicly making the statements, you have to pay homage to your clients in china and your customers in china, and at the same time, when they are not in public, could very well be going to the u.s. government and saying what you are doing may not be such a bad thing. i can understand how we get to the place that we get to. argument may be acceptable with $50 billion worth of tariffs, now you have $200 billion and you have the prospect of a full-blown -- it has gone beyond -- the game of chicken has gone beyond. lloyd: it is not my style. but what you want to show -- if you want to give someone an incentive to see the world from your point of view, it does not of yourremind them
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negotiating position is a better one. the fact is if we go tit for tat, i the time you get to 100, they run out of things to apply a tariff to and we don't. if you want to make that point, you make that point. that is what you would do if you were crazy and really wanted to end free trade. and that is what you would do if it was a negotiating position and you wanted to remind your negotiating counterparty of just how much firepower you have to bring to the negotiation. which one is it? john: do you think donald trump is a protectionist? does he just looked -- he dislikes nafta, he has his record. omi to save -- who am i to say what he thinks? --on't know what he would do what i would do in his place. i am not sure what he would do in his place.
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give aask me, can i narrative about how this is a useful thing to do? of people doa lot with respect to almost everything he does, this makes no sense at all. it does not make no sense to me at all. goldman sachs ceo lloyd blankfein speaking to bloomberg up the economic club of new york. up next, a bloomberg exclusive we will hear from former u.s. treasury secretary larry summers at the annual form and portugal. what he sees as the biggest risk for the economy. some new york, this is bloomberg. ♪
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♪ scarlet: this is "bloomberg markets." i'm scarlet fu. julie: i'm julie hyman. larry summers is sounding off on the state of the global economy and monetary policy.
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the former u.s. treasury secretary joined us from the ecb form in portugal. he spoke exclusively with bloomberg stephanie flanders. the issue that has preoccupied monetary policy for the generation before the financial crisis, the avoidance of inflation, is no longer the top issue. the top issue and i believe, is a maintenance of sound growth and getting to full employment. that is going to be a much more difficult challenge over the next generation than many suppose because of the very sharp declines we have seen around the world in the neutral real interest rate. declines that in many cases have been masked by the very substantial fiscal expansions we have seen. >> you are known for having stagnation. some people thought you had walked away from that a little bit over the last few years. i felt you are doubling down on it last night. larry: i think that is exactly
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right. some people think that well, the economies are growing, that shows that the stagnation very was wrong. i have exactly the opposite view. it required enormous fiscal stimulus to get the economies to grow even reasonably adequately, and that demonstrates the validity of the secular stagnation pieces. relative to what happened in 2013 when i first talked about taking thegnation united states commit you had far more fiscal expansion than we have done. you have four lower long-term interest rates than we had been. we have asset prices that have increased in an unsustainable way. it is not that the economy has somehow healed itself. it is that the setup developments predicted by secular stagnation theory have happened, and yet many make the mistake of condemning those developments as somehow because they, represent abnormal monetary
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policies or excessively expansionary fiscal policies. reporter: many in the u.s. would it has taken a long time, but we are starting to see some signs of acceleration in wages, we are still very loose monetary policy. you are overstating the problem. larry: those who put it the way we just did neglect that have seen an enormous fiscal expansion. and an enormous fiscal expansion. they neglect that asset prices have risen, creating a wealth effect at a pace that asset prices will surely not continue to rise. we will not see 15 percent 20% every year -- 50%, 20% every year. policiesay be that if stay on guard with relatively expansionary monetary policies, with fiscal policies that are traditionally regarded as improvement -- and prudent, then we may keep this going for a wild. -- while.
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odds ofs happen, the the economy moving into a downturn about -- are about 20% each year. when they happen, and the normal playbook is to cut interest rates by 500 basis points. there is not going to be that kind of road going forward. scarlet: that was an exclusive interview with former u.s. treasury secretary larry summers. coming up tomorrow at the ecb form, mario draghi speaks alongside his counterparts from the fed. you will want to catch it on bloomberg tv, radio, and life go. it is time for the bloomberg business flash. a snapshot of the biggest business stories in the news today. plan5 biggest u.s. lenders to announce dividends and buyouts adding up to more than $30 billion more on last year's total. that is in spite of annual stress tests for banks which starts this year. jpmorgan, bank of america, and citigroup will distribute more than 100% of their profits over the next four quarters.
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foreign banks are also getting tested for the first time as well. some of the biggest u.s. companies are among the most vulnerable to china's rise over the terrorist threats. apple, gm, tesla, and starbucks are among companies rapidly expanding in china. they could face penalties from beijing including custom delays, tax audits and increased regulatory scrutiny. that is your business flash update. the massiveg up, global shift that is happening faster than we think. we have a special group port -- special report next. from new york, this is bloomberg. ♪ retail.
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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 rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store near or far covered. leaving every competitor, threat and challenge outmaneuvered.
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comcast business outmaneuver. >> this is tictoc, i'm jeff green.
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bloomberg's management reporter in detroit. rain now, only 11% of the directors for procter and gamble's commercials are women. within five years, the consumer giants must be 15%. that is according to market producers pick he talked about this ambitious goal this week. group torking with a pool her to increase the of producers considered for commercials. they are working with queen latifah and katie couric to get more women from the content produced. his study by see her, the initiative of the association of national advertisers, says about one third of women in media are inaccurate, demeaning, or biased. they also say positive for trails of women can boost sales by 20%. that is like an of impact that png is interested in. p&g says brands such as always, as k2, and panting will support 212 minute films as part of the initiatives -- two 12 minute
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films as part of the initiative. p&g spent $7 million last year in advertising. that is a lot of reason to expect able to listen. this is jeff green, you can follow me on twitter at jeff a greinke do can get all of your updates at tic toc. that is some of our reporting from tic toc by bloomberg. it is streaming live on bloomberg -- on twitter. this is "bloomberg markets." i'm julie hyman. scarlet: i'm scarlet fu. let's get you to first word news with mark crumpton. mark: thank you to calls are mounting are -- on capitol hill for the trump administration to end of the southern border. that is ahead of a visit from the president to discuss the legislation today. in a speech to the national federation of independent business, the president said the house is getting ready to finalize an immigration package that they are going to bring on later that i'm going to make changes to. pres. trump: what i am asking congress to do is to give us a third option, which we have been
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requesting since last year. the legal authority to detain and probably remove families together as a unit. we have to be able to do this. this is the only solution to the border crisis. mark: senate majority leader mitch mcconnell says he is reaching out to democrats on a possible border measure. meantime, florida democratic senator bill nelson is accusing the trump administration of a "cover-up" after officials denied him entry today to a detention center for migrant children in south florida. nelson and florida democratic congresswoman debbie wasserman schultz went to a temporary shelter in homestead hoping to sort -- to survey the living conditions. >> we are here because of the result of a ridiculous policy that has offended the morality of the american people. senator nelson says he was told it would take two weeks for him to get access to the
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facility. thousands of children split from their families at the southern border are being held in government run facilities. grim statistics today from the united nations secretary-general antonio guterres says the number of countries involved in violent conflicts is the highest and 30 years while the number of people killed in conflicts has risen tenfold since 2005. speaking to reporters at a peacekeeping meeting in oslo, gutierrez added that on top of regional conflicts, global terrorism is a new type of struggle that "can strike anywhere, at anytime." a choiceans will face this november of whether to divide the state into three. backers of the cal three measure are saying that california has ofome ungovernable because its geographic diversity as well as its population of nearly 40 million people. the initiative is driven by venture capitalists tim draper who has tried in the past to
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place an effort to break up california on the ballot. 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. julie: thank you, mark. bloomberg new energy finance has released a new report predicting a massive change in the way the world is powered. we have one word for you, batteries. they will track for -- investment by 2050 as homes and businesses push to use more clean energy. joining us to discuss is logan goldie scott, he's the head of bloomberg energy finance and is joining us from san francisco. why us through this, batteries are important. the outlook talks about different sources of power. how it is going to be stored is very important as well. logan: thank you for having me.
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it becomes a crucial source of flex ability between now and 2050. it helps enable additionally wind and solar to divert projects to be connected without battery storage, we would not see wind and solar end up increasing the generation from 7% today to nearly 50% by 2050. that happens because of energy storage. julie: this is something that was a challenge for the renewable energy industry for many years. that you have wind, you have solar, but it is not constant. what has changed technologically over the past several years that has allowed you to make this kind of prediction that a investment is going to be such a big piece of all of this? logan: indeed. the biggest thing is batteries have gotten cheaper. we have seen a 79% decrease in between 2010costs and 2017. we expect that decrease of a
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further six and 7% between now and 2030. this is being driven by investment and scale from the --ctric -- electric fake electrification transport. it is helping drive down prices that is enabling more wind and solar. that theteresting driving force behind that is not in the industry industry itself but rather as you say, in the auto industry. talking about the utility and the power industry, natural gas has also been a big part of the story. what is the role of natural gas now in this next as you see the battery costs come down? importantstill see an role for financial gas over this. -- over this period. it provides power around the clock for when wind and solar are not generating and when there is insufficient battery storage to end up meeting demand. we are seeing more gas capacity
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which becomes crucial to operate the system efficiently. wondering where the nonrenewable sources of energy fit into this, notably coal, which has gotten some support from the administration. but certainly has not gotten a lot of support from the marketplace. what is the outlook for that? logan: indeed. our outlook is not based on additional policies support. it is based on what is the most cost-effective way of meeting demand. we see cole really being a loser in this scenario. pushed out by wind and solar as the lowest cost form of electricity generation. loses out to gas and batteries in terms of providing flexibility. it is the biggest loser in this outlook. you mentioned electric cars per we talked about that. one of the headlines that struck me in the takeaways from your report is electric cars are going to suck up 9% of the
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world's power demand. which is an enormous increase from where we are now. is the electrification of the auto industry going to look like over the next several years? logan: that is a great question. it could be incredibly disruptive. if you have flexible electric vehicle charging, you could see demand being 9% of very flexible demand. it could follow where supply is being generated cheapest. supply traditionally having to meet demand. we believe electric vehicles and additional's with a vehicle charging will end up -- could end up boosting economics for both wind and solar as well. julie: i'm curious also if batteries are the big impetus behind this and where investment is going. is there a next step or next technology or next piece that is going to be coming in the next
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few years that will start to ramp up also? logan: at the moment, we think it can happen with batteries. there are issues around cost reduction that we have already discussed. density and battery electric vehicles increase over 5% annually since 2011. we are also seeing a huge shift in the evolution of this type of chemistry in the performance of batteries today. we expect that to continue over the next few years. i would imagine that the next few years is a story dominated by batteries. potentially, beyond 2030, of course, there is room for other technologies. julie: logan, thank you so much. he is the head of energy storage analysis at bloomberg new energy finance. thank you so much. really interesting finds. scarlet: don't forget to check a gtv go on the bloomberg. you can find all of the charts we feature on bloomberg television including several we showed earlier today. this is a great one on the
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global slowdown that takes a look at the developed and emerging economies. the white bars show emerging economies, the red bars show the developed economies. you can see 2009, 2008, a bad period for the develop economy -- developed economy could nowhere near as fast as what we saw precrisis. that is one of the many charts available at gtv go. this is one julie and i talk about frequently. we will bring it up later on "what'd you miss?" russell continues to trade near record highs. julie: especially amidst this trade talks on perception. scarlet: and they benefit from the tax cuts more. and perhaps when we do see more of the deregulation financial sector, they are in a better position to benefit. julie: we will see. from new york this is bloomberg. ♪
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♪ -- julie: thiss is "bloomberg markets." scarlet: it's time for the stock of the hour with abigail doolittle. abigail: today we're taking a look at the xl k, the tech sector is one of the sectors being hit by these spheres around a trade war. the xl k is down sharply. on please right now for -- on pace for its worst day since april 24. the xl k had been on pace for its worst day since april 6. not intuitive. -- nonintuitive that tech would be had, but here are the culprits. take a look at the philadelphia so my conductor index. the stock down 1.3%. down for a third day in a row. there is a bit of a double whammy for some of these chips companies. nvidia and intel, and others,
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which is the fact that on the one hand, there is a possibility that these companies could in receivetariffs -- tariffs on components that they have assembled overseas bringing them back into the united states. then of course, trade war is probably not good for global demand. that growth picture. that would of course hit products of all sorts. does explain some of the weakness we are seeing for the chip space. very interesting. apple is another big laggard on the day. down 1.9%. this is a longer-term chart of apple. a one-year chart of apple. apple has recently been putting an all-time highs. we see this beautiful uptrend in yellow. we're looking at the 200 day moving average. in blue, 50 day moving average. weeks ago, an all-time high very today, capping lower thomas on the 50 day moving average. telling us the sellers are trying to take control. what does this have to do with china? apple receives 20% of their
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revenue from china. if those relationships is strange, it could hurt the company. this channel really's adjusts we could see apple drop back down toward the bottom of the channel. the 200 day moving average in yellow towards 171. if that happened, this is the biggest waiting for the major averages, it could suggest more weakness. time will tell. of the hour, we do of course have weakness here for the chinese internet company sharply lower am a down 4.9%. its worst day of the year. think one hand, you might this has to do with trade war fears. is a chinese e-commerce its, and it receives revenue from china. really not a lot of exposure in terms of the possibility of u.s. tariffs. what we do have, google has made off of it a $550 billion investment in to help
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expand its retail presence in southeast asia. some are saying this may not be a positive. that it could weigh on gross margins or gross margins will continue to side. that has been a piece of the problem at the story. if we happen to the bloomberg, we can put this into perspective. for an internet company, you would not think rose margins would be small. what we're looking at in blue rgb. congress margins and we have to bank different axises here. now, closer to 12%. for alphabet, we have the gross margins at 73%. a huge differential. julie: it is not an internet company. it is a retailer. it's margins would be more amazonian perhaps. alpha betty and? they do have the logistics network. that is something that differentiates them from alibaba. one of the pieces of this growth margin story is the competition. they are fighting off amazon,
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fighting off alibaba. but alibaba is a little bit different and the fact that they don't have their and distribution. this is a piece. scarlet: when it comes down to it, you have a risk off feel across market states. etf,ooking at the k web this is a member rank return. there are 44 members in this etf. almost every single one of them is down you have to bank gainers. want is awould not better performer, but one of the lease worst performance. it is down 4.8%. you can see for instance, alibaba is down as well. it is a case of people are selling first and 22 take money off the table. abigail: that is a great point. it has a lot to do with perception. we see that relative to other companies. something i always ask myself around macro headlines is, will it affect the bottom line? it seems unlikely this would affect the bottom line of these companies. most of their revenue is coming
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directly from china. when you have this macro risk off, these headlines around china in the u.s. and trade war, there could be some selling the babies with the bathwater. you could have concerns about business relationships between companies and the two countries, warranted or not. you have maybe some of those concerns. .hank you, abigail abigail doolittle talking about coming up, small to big. how one entrepreneur turned tiny cupcakes into a big business. yum. this is bloomberg. ♪
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♪ julie: this is "bloomberg markets." i'm julie hyman. sometimes the most successful businesses are born from adversity. tell -- take the well-known bakery chain, baked by melissa. the founder was unemployed when she decided to follow her passion and become a cupcake on.
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-- under the newer. melissa tells the story in this addition of small to big. >> we started baked by melissa in 2008 when i was fired from my job in advertising. i actually picked up the phone in my cubicle, called my big brother, i went straight to his office from being fired. go to cheer me up, he said home and bake your cupcakes, we will start a cupcake to we always wanted to start a business together. the night i was fired, i baked 250 cupcakes. four batches. i sent them to work with my best friends's little sister. she's was interning at a pr firm. the owner of the pr firm loved the cupcakes and put me in touch with her caterer. the rest is history. we never really had a business plan. we had opportunity. after doing events with the caterer, i would go on tastings and people would place large orders.
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we knew we had a product that everybody wanted. and loved. we decided to open in the union square holiday market. we had a booth that was baked by melissa, and people lined up to sold out every single day. that is when we saw the opportunity to open up our very first retail location. cafe berry, which is where i was doing my baking, has this pickup window that they did not always he is. that is what we turned into the very first baked by melissa store locations. i was fired from a job in july of 2008. we opened our first storefront in march of 2009. we also heard from people all over the country that they too wanted to get baked by melissa. in april of 2010, shortly after we opened our second store location, we developed packaging and started chipping out our product nationwide.
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we did market research, we ordered other baked goods to receive and to see how that came. , we researched, and then we developed. and we tested. it definitely did not happen overnight. you have to start somewhere. today we have 14 retail locations. we ship our product nationwide. three of those 14 show -- stores are not just here. there is one in long island, new jersey, one in jfk airport. today we know that every time we open a new store, it it contributes to our e-commerce. there are plans to open locations in the new market. as soon as we started it, we have sold over 100 million cupcakes per been no we celebrate over 50,000 birthdays a year. i love working hard. i love cupcakes. cupcakes are my favorite thing in the world. coul never live a life of
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da, woulda, shoulda. i had to do everything i could to make baked by melissa a reality. i firmly believe this is a gen x thing. we all grew up on cupcakes. to the would bring them in for their birthday parties at school. when they came back, it was like, this is a piece of my childhood. julie: baby. she doesn't seem like a gen x or, does she? my day, momsck in would make the cupcakes at home. scarlet: but now it is easier. there are two big cupcake shops within walking distance. julie: it is not hard to make cupcakes. scarlet: but they look really nice. you don't want to get the gigantic ones. we have cupcake parties a lot here. it is now time for the bloomberg business flash, his snapshot of the biggest business stories in the news today. 77% ina shares soaring their trading debut. the online marketplace for used goods raised $1.2 million in the
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ipo. the ceo discusses the road ahead. overseas market has always been the important part of our business. we realized the growth speed is slower in the u.s. than in that of in japan. has joined ar ceo year ago, growth momentum has been picking appeared i am looking forward to fast growth of our business overseas in the coming two years. scarlet: bank of america merrill lynch -- the unit of bank of america has agreed to pay 42 million dollars to settle accusations of misleading customers. u.s. regulators say it routed customer orders to outside brokers while telling them that they executed the orders in house. merrill lynch has admitted wrongdoing. some of big tex early as
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investors are betting on a corporate credit card buybacks. targeted specifically at venture backed companies. the silicon valley startup announced it raised $57 million in a funding round that included paypal cofounders peter keele and jim. rather than focus on credit history, brexit looks at funding raised in order to issue cards to companies and employees to cover startup expenses. talkshow and media mogul oprah winfrey went through another milestone. she is one of the world richest people. he is theing chip -- first black female entrepreneur. she has over 494 on the list. julie: i would have thought she was there already. scarlet: she got bumped up thanks to weight watchers. this is bloomberg. ♪ his is bloomberg. ♪
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scarlet. >> welcome to bloomberg markets.
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.e're live in new york over the next hour, here are the top stories we're covering. we're seeing stocks fall and investors head for haven as trade heats up. the goldman sachs ceo speaks on trade to rising rates and we are one hour to the close. all averages down more than 1%. nasdaq down 1.7% in the
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its worst day since early april. offulie mentioned, we are of these lows. we have seen some of the selling pressure come off, but nonetheless it is a risk. not a huge rally. lows, that tells us it is a higher herb on, but again that has moved away. this is the longest losing streak for the dow since march of 2017. we may be off the lows, but this does follow down more than 1% since the end of march, all of concernsourse on trade
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. how farestors surprised it is going. i have heard from a number of experts. what's take a look at some of down.vers that are some of these companies to the hit by retaliatory tariffs from china. we also have going, caterpillar in particular being hit, so a little bit of a double whammy. of course, this is the least abroad, but this damage that has technically been done, and uptrend telling us the movers are very much in control. abovely, we have the dow
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all three of its moving averages. the 50 day moving average above the levels now. oil, copper, soybeans all sharply lower. china is the biggest consumer of the wrong natural resources. now to firstu word news. >> ted cruz said he is introducing emergency legislation intended to keep immigrant families together.
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>> it is one of the real tragedies of the illegal immigration that kids are often the victim. the legislation introduced this week would mandate that kids stay with their parents. fierce fighting raged today, hitting thousands of againstrnment fighters the shiite rebels. now they have fled their homes to escape the violence. international aid groups here a
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shutdown could lead the country into famine. japan's government has ordered a suspension of cinderblock walls nationwide a day after an birthday -- a great killed five people. injured more quake than 370 people. grieving family members joined in london today for a moment of silence to mark a year since an attack on a london mosque. he is serving a life sentence. global news 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries.
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>> is the u.s. in the midst of a tit-for-tat trade spat with china? indicates $250 million worth of goods. you can see u.s. imports far exceed that. is squeeze do companies and other ways. >> great story by your team. you look at u.s. exports sales of companies inside china, there is a surplus according to deutsche bank that china can play around with and one point you make is that xi jinping can pressure through bureaucracy.
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>> that is right. the united states has more than $600 billion of assets in china and china has been known in the barriersse nontariff of countries it is having a problem with. they can do that through tax, custom inspections, it can u.s.y stymie business for investors. >> what about on the currency side? workxactly would that without harm to china itself and what would be the mechanism in doing so? u.s.ina could buy treasuries and devalue its currencies. that would help value its own trade balance.
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there had been some concerns in the past that china would stop buying u.s. treasuries and destabilize the u.s. government's ability to take on debt. of largest foreign holder u.s. treasuries, so why destabilize? it does not make sense. if the for the record, u.s. loses its expenses, -- they will have to take measures to retaliate forcefully and there are examples of what china has done in the past. abouty talked quantitative. qualitative are these barriers that can put up against doing audits on u.s.
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companies. they did it with a south korean then lostt chain and millions and millions of dollars. organizingioned these boycotts. that was something that toyota and honda really felt. talk little bit about how much of an investment, gm, ford has made in china and what that means if china really wanted to put the screws in these companies. -- the bigmarket factor is that china is the largest user of electronic cars in the world. as you mentioned, tesla, they are trying to negotiate in shanghai to build there.
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if china wants to crack down on u.s. companies, they could encourage people to boycott and that would really hurt those companies were a major percentage of the profits are made. you.ank over u.s. debate immigration policy. we will talk with sheila jackson lee of texas. she is a member of the homeland security committee. from new york, this is bloomberg.
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>> this is bloomberg markets.
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the debate over u.s. immigration policy is intensifying. white house officials say children are being held in 17 states separately from the parents. prison says he wants the law family canhanged so stay together. this is the only solution to the border crisis. >> the president is scheduled to meet later today and joining us from texas.ckson as we and other outlets have talked about, it is the administration's policy that causes separation. it sore not reversing
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looks like there will have to be a legislative remedy. what are the chances in a republican-controlled congress? my colleagues who are republican would take the word partisan out of their vocabulary and use the term nonpartisan. if they would listen to the cries of the children on the audio we have been listening to, they would take up the bill that i support to ensure we get the problem fixed immediately. i think i can almost equate -- pt they would answer that call
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and the desperate conditions that these mothers, children's and fathers are now subjected to, we could go on and have further discussion. -- agreeare those of us who with something called fair trade and that requires negotiation, but the negotiations of this white house and administration are provocative insults and lives are in the way in those our children. >> what about ted cruz that says legislation toce
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prevent family separation at the border as well. would you can support his efforts? >> it is in the house in the bill., so you pass the billok at senator cruz is and if those two can come together immediately, we will have a solution. the point is, this game playing some a i'm supporting more justice at the border. the trump administration has viewed long-standing policy to allow those thing violence to at least have an opportunity for hearing. there are two different standards. the one thing i'm to say, i assume some americans will be reviewing this and saying call the police.
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are comingiduals from countries where they do not have the infrastructure or law enforcement. >> i hear what you're saying. it is clear from the presence record that he won't stop the makey unless democrats concessions. you talked about negotiation. what concessions are you and democrats willing to make to ensure families will no longer be separated? >> we've made many points of opportunity for engagement.
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we had order security resources, the same kind of resources and language that have been passed in the past by a homeland security in a bipartisan matter. i have seen them. i have been on this committee and traveled all the way from san diego texas. there are people who don't want a wall, so we must engage not only with our constituents, but willinge the president border at this and patrol will say this works. down toared to sit craft the kind of barrier meet with the
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neighbors and those on the borders that engage back-and-forth. if the president is willing to do that and your stones at the fear of their in life. said -- ing, he to tour's, oneid on yesterday, one on sunday. the same group that runs those facilities has also signed a release for warehouse in houston and i believe that is in your district. you or othersay private stop them from doing that or is it too late to do that? i the values of my community, am a representative and i have to represent my constituents.
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no notice was given to me as a member of congress or officials. i understand they just had a press conference. i would hope that the good intentions of the owner who i understand did not notify the city hadll and the intended to try to help all the adults who we have to get them is and we understand this potential of children being snatched from their families. these are not our values. , i would be very much opposed to the process going forward without the affirmation of my community and all i have heard is outrage. i can tell you the outrage is
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well-placed because your heart breaks if you were down in the valley and saw what is happening to the children and mothers and fathers. >> we wish you a lot of luck on this issue. thank you for your time. from new york, this is bloomberg.
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insight.ow for options kevin, you have noticed something i have noticed. we've got sector correlation breaking down. i have been watching the dow versus the nasdaq. what has taught your eye about what creates the opportunity? correlationsen the
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actually widen since the end of may. what you have seen is negative correlation which is pretty telling me. with consumer staples it has a 5% correlation. with utilities, it is sad a negative correlation which is pretty telling. >> we are definitely seeing that. it andu are looking at you see these kind of differences, do they tend to last? >> know, what we are actually seeing is there is no rhyme or reason. the market is still trying to get its footing.
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materials at over 83%. i thought that was pretty fascinating. you have seen materials have an 83% correlation to technology, so you are seeing a lot of rotation as the feds start to raise rates. industrials are kind of flat on. >> you have found specific stock rather than trying to get mired in all of that. not a great day to be looking into chinese tech stocks. nothing has really fundamentally changed on this story from alibaba. you saw out of the conference a from morganration
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stanley and then wells fargo today. there saying this is a great opportunity to get exposure to alibaba. takeyou want to do is $6.70 in and use part of the spread. to buy a call make $30. come, you will hear on the big challenges facing bankers. this is new york.
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>> mitch mcconnell says all senate republicans support the familieseep immigrant together to avoid separating
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children at the border. >> we need to ask. to this is the week when i think hopefully all of us can come together and fix the problem. >> mcconnell said he is reaching democrats for approval in the senate. the united nations says it illegal israeli settlements are spreading and further eroding prospects for peace. he told the security council -- they are failing to


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