tv Bloomberg Markets Americas Bloomberg June 29, 2018 1:30pm-3:30pm EDT
six-month anniversary of the passing of the 1.5 chile dollars measure. -- $1.5 trillion measure. candida is announcing billions of retaliatory tariffs against the u.s. in response to the trump administration's duties on canadian steel and aluminum. beginning july 1, some items will be subject to taxes of 10% or 25%. the canadian foreign affairs minister announced the measures today in hamilton, ontario. ms. freeland: canada has no choice but to retaliate with a measure of the great reciprocal dollar for -- perfectly reciprocal dollar for dollar response. freeland said, "we will not escalate and we will not back down." president trump once replacement for anthony kennedy by october.
the white house legislative affairs director told reporters today that the president will ask potential nominees about their past and academic credentials but will not ask rulingpecific cases or such as rove versus wade, the landmark decision that legalized abortion in the united states. scientists for the environmental protection agency's day they are being left out -- say they are being left out of the rulemaking process. in a letter to scott pruitt today, the epa science advisory board said it was not involved in the decision to increase transparency and public access to the scientists who craft regular editions only moved of that learned of the move in april. -- and only learned of the move in april. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am mark crumpton. this is bloomberg.
shery: live from bloomberg world headquarters in new york, i'm shery ahn. inand live in toronto, i am for a mental line. -- amanda lang. shery: canada fight back. retaliatory tariffs taking effect sunday on $12.6 billion of u.s. goods including everything from maple syrup to growth. and we will hear from the québec premier on why he is calling the spat with america more guerrilla type warfare. pick the nextl president on sunday with issues like trade and immigration on the top of voters minds. we are seeing u.s. stocks higher
today. the last trading day of the week and the quarter. ,ow adding more than 200 points while the s&p 500 is being led higher on sectors and financials as we hear from the big banks promising to return record amounts to shareholders. today, butis falling worth noting it has been gaining in the last two weeks. stocks are being hit earlier by a report that president trump wanted to withdraw from the wto. you can see that the vix has surged in the first half of this year. you can see a big jump from last year. shery: i am -- jon: i'm keeping an eye on currencies and commodities. we are talking about trade tensions with canada and the
united states and you would think that maybe the canadian dollar would be having challenges. it has gained momentum against the u.s. dollar today more because of news about the canadian economy. gdp for the month of april, which was relatively encouraging , manufacturing and real estate activity leading the way. we got a survey of sentiment from the bank of canada suggesting that businesses even in the face of the trade uncertainty is -- are doing some spending. longer-term, the canadian dollar has struggled against the u.s. dollar. face -- based metals generally speaking, the graphs. you that there has been pressure whether it is copper or zinc or aluminum, when it comes to these trade tensions. canada is firing back against the trump administration's protectionist trade policies. from mustard and motorboats to whiskey and toilet paper christer freeland --
chrystia freeland announced the final at an event today. will go into effect on canada's national holiday. for more we're joined by bloomberg's greg quinn. a lot of people wondered if the canadian government pull the trigger on this, what would be the economic impact. on the your sense reasoning for going down this road. reg: it is pretty dramatic. the government has called it the biggest trade retaliation since world war ii. businesses don't know whether they should expand, because they were afraid that president trump might expand trade war. shery: what is interesting is that the foreign minister said today that canada won't be
escalating the trade tensions. but given the looming trade issues, including the nafta renegotiations, could canada change its tune? greg: this has been a question for justin trudeau for a year now. he play nice with president trump. it is not working out. the stakes are about to get very high. the head of canada's biggest steel mill told lawmakers this week that if the tariffs don't come down, he could shut down production lines. when he gets to that stage, the politics in canada change a lot. jon: it sounds like even though there is some assistance coming to the steel and aluminum industry in canada, a lot of the canadian businesses have substantial operations in the u.s., and even with a little aid from the federal government in canada, these businesses have hard decisions to make. absolutely. by some measures, the value of canadian exports across the
border are the same size as the sales by units of canadian companies in alabama. if i manufacture auto parts in toronto and i also have a mill in the u.s. government maybe i spend the u.s. mill instead. that could have a devastating impact on the canadian economy. that is what the president has said he wants when it comes to trade. he doesn't want big differences with countries like canada. shery: how popular or unpopular are these your territory tariffs -- these retaliatory tariffs in canada? greg: we recently had an election in the biggest province, and everyone seeking office in ontario said they stood firmly behind what justin trudeau is doing. and the heard so far saying that we don't want to escalate is one that has gotten a lot of support. aren't people worry that
prices will rise? greg: that is one thing that is a pretty clear bet. tariff rates of 10% and 25% are going to hit consumers in the pocketbook. if you are the bank of canada, you have battled for years to get inflation up to 2%, now that it is there, the possibility of extra price pressure is not the worst thing in the world. it could give a little impetus to raising interest rates faster if the rest of the economy doesn't suffer. shery: thank you so much. greg quinn from our bloomberg ottawa bureau. coming up, highlights from the exclusive interview with the québec premier. we will get his thoughts on escalating trade tensions. this is bloomberg. ♪
jon: this is "bloomberg markets." i'm jon erlichman in toronto. shery: i'm shery ahn in new york. bloomberg traveled to this corner of french-speaking canada as the region finds itself in america's crosshairs after the trump administration's move to tax metals made there. >> the town was built by americans for america. named for the president of alcoa, it was built to house workers at nearby aluminum smelter. ties between the spread of canada and the u.s. run deep.
during world war ii, arvida supplied 80% of aluminum needs. it was built to protect factories and hydroelectric plants. the mayor here says there is a french expression that sums of u.s. president donald trump's use of national security to start a trade war with canada. youren you want to kick dog can you say it has rabies. it will have an effect on canada but also for the u.s. citizens. >> namely>>, higher price tags. he says he is not put the brakes on future expansion plans here, but -- >> if this were to have a negative impact on the growth of the north american market, one would have to consider that in due course. >> the decades it took to build is tightly integrated supply-chain are in evidence everywhere, and they go beyond economics. old photographs up and down the celebrate itsida
aluminum making history. the local shops of the schools, hospitals, the churches, were all the vision of an american industrialist aesthetic and the industriousis very and again -- an american industrialist and begin the fabric of this very canadian cap. jon: i spoke with the québec premier, philippe couillard, and asked him about rising trade tensions with the u.s. mr. couillard: we did the same thing we intervened in the same ago, fork or 10 days our larger smelting producer and small downstream produces that have had significant issues because of the pressure of tariffs coming on. water than this, let's revise that we are not going to achieve anything with the north american trade war. the problem on metal here in north america is probably and
certainly oversupply from china. instead of having is futile and ultimately destructive fight over tariffs. jon: you use the words "trade war." are we looking at a follow trade war between canada and the united states? mr. couillard: no, no no. it sounds that way certain mornings, but it is guerrilla type warfare. it would not be winnable despite what people say sometimes south of the border. everyone is going to suffer. the manufacturing industry on both sides is so much linked, supply jitters so well connected, you cannot -- supply chains are so well-connected that he cannot intervene blindly. before theur times prettied up product is delivered to the customer's. how can you put tariffs there in any sensible way?
washingtond in meeting this week speak with commerce secretary wilbur ross. a composition that your finance ministers said was a frank one. what can you tell us about that conversation? mr. couillard: second time we met with secretary ross. i won't go into details, because it was a private conversation, but i would say that we all is not aat canada national security threat to the usa. 90% of aluminum comes from québec. the auto industry, the manufacturing industry -- it doesn't make a lot of sense to have this type of approach. they identify what they call transshipment is the main issue of concern for them metals from asia into canada and sent to the states come and they wanted us
to address this, but i pointed out that we started addressing this even before the tariffs were first impose. there was a willingness to look at this and work together in a constructive way. if this is a fundamental problem , it is the type of issue that is solvable around the negotiating table. to: one of the goals was cement alliances. do you feel like you have achieved that? which lawmakers in the u.s. would you say are on your top allies? mr. couillard: we have allies have both sides of the aisle. republican congress representatives and senators who was quite strongly the tariff policy by the trump administration. -- who oppose quite strongly the tariff policy by the trump and administration. of course the democrats have come out strongly on this matter. people who share our point of view, but also people who don't share our point of view, and having a conversation with them. i met with secretary ross,
secretary of agriculture purdue. we had a frank and honest discussion. jon: the president once again was targeting the canadian dairy industry this week, an industry you have spoken about wanting to continue to defend. how come? mr. couillard: i want to defend our farmers and the type of agriculture we have intended that and québec particularly. it is a form of the family name on it -- a farm with the family name on it, not an industrial supply. they believe that it constitutes this model of agriculture was what appeared clear to me during my trip to washington, d.c. was the fact that supply measurement is not anymore the target of the discussion we had. milk, whichntered on is a separate issue from supply management, and a type of issue that is normally between governments of good faith should be solved around the negotiating
table. but i did not get the impression ist the u.s. administration present after supply management. jon: final question about bombardier, very well-known québec business. deal for airbus is said to finalize. how do you feel representing a government that basically say the bombardier now seeing the project controlled by a foreign entity? mr. couillard: you are right that we saved the company on a couple of occasions. we consented to the deal with airbus. from the start it was obvious maker not be put on the skill of the global market without a strategic partner of another size. we have three choices -- boeing, airbus, or the chinese. after the unfortunately very negative action from boeing, it was easier for them to present us with a satisfactory proposal which puts airbus' is future
salesforce an organization at ane in aice of the pl single part of the market, which is an excellent plane. it is a great product, a canadian had been made product, and we are proud it will be sold around the world by thousands, probably. shery: great interview, jon. i am hearing something addressing and reports from that former prime minister stephen harper of canada -- hearing something interesting, reports that former prime minister stephen harper of canada is dropping by the white house next wee. what an interesting time to stop by. jon: boy, is a strange story. we are expecting this meeting on july 2. the federal government has talked about having a united front in washington, but the trudeau government did not know that the former prime minister would be having this meeting. the foreign affairs minister embracing this idea.
shery: we have breaking news right now crossing the terminals . we are hearing from gm saying that it could reduce u.s. jobs due to the auto import tariffs. we don't have the tariffs just yet, but we know that the president has asked the treasury department to look into section 232 on foreign car imports into the united states. gm say it could reduce u.s. jobs due to the auto import tariffs. we have heard from harley davidson that they are shifting some production out of the u.s. as well. this is not great news for the president, who has been very vocal against harley davidson already. gm saying it could reduce u.s. jobs due to auto import tariffs. this is bloomberg. ♪
shery: again, breaking news on the terminal. gm releasing a statement saying it could reduce u.s. jobs due to auto import tariffs. we don't have the tariffs just yet, but the treasury department is looking into section 232 to see if they need to curtail auto imports. gm losing 1.25%. e, butbig impact ther we have seen news out of harley davidson, shifting production out of the u.s. let's turn to mexico come as we are heading to a watershed election. battling for the presidency this sunday. it comes at a time of major disillusionment. the incumbent president pena nieto is vastly unpopular. joining us is the council of americas' eric farnsworth.
we are hearing that if the candidate lopez obrador wins, what happens to mexico? something that he could adopt an hugo chavez-style of government. we willdon't think worry about that, but what he or any president of mexico would have to do is kickstart economic growth to restore the promise of economic growth that has been promised to mexicans for a long time. the next president will have to a full attack on corruption and reduce the violence afflicting much of mexico. areink many mexicans looking for change, and that is why this goes to the point you are just making about this being an election of change. hery was talking about the move on a general moly. -- general motors. a lot of people are focused on wages in mexico. what should we be ready for on that front? its: mexico made a bet that
economic future in north america -- specifically the united states and nafta. to the extent that nafta itself is ended or fundamentally changed to disadvantage mexico, that will hit them on economic growth that will hit them on jobs, and that could ironically increase immigration of mexicans to the united states. counterproductive approach on immigration. what we should be looking for in terms of the next president of counterproductive approach onmexico is defending n economic interests and looking to try to maintain the relationship of nafta, not agreeing necessarily to the most aggressive demands from the united states. if there is a deal to be made, i think it will be made. it is very uncertain at this point. that is affecting investment already. shery: the imf is expecting 2% gdp growth for mexico. it has been pretty resilient. eric: growth has been resilient,
but it has not been nearly as high as it needs to be or has been promised. ieto came to office from he promised a reform program that many like myself cheered. all of these were necessary, and they went through. but it has an unlocked the types of growth figures -- it has not a lot to the types of growth figures that many think mexico needs to get to the next level of development, but to satisfy the demands of the people politically. shery: thank you so much for that. eric farnsworth. once again, gm headline saying that it could reduce u.s. jobs due to auto import tariffs that underlie competitiveness against foreign carmakers. this is bloomberg. ♪ what's a gig of data?
well, it's a whole day's worth of love songs. 300 minutes of baby videos. or, it's a million chat messages. a gig goes a long way. that's why xfinity mobile lets you pay for data one gig at a time. and with millions of wifi hotspots included, you'll pay less for data. it's a new kind of network designed to save you money. click, call or visit a store today. julia: it's 2:00 p.m. in new york, 11:00 in san fransisco, and 7:00 p.m. in london. i'm julia chatterley. julie: and i'm julie hyman, in for scarlet fu. welcome to bloomberg markets.
we are live at bloomberg world headquarters in new york over the next hour. here are the top stories we are covering on the bloomberg and from around the world. canada quite back. carrots take effect sunday on $12 billion -- canada fights back. terrorists take effect sunday -- ffs take effect sunday on u.s.illion worth of products. and speaking of tariffs, gm says it might cut u.s. jobs due to the steel tariffs. and we break down the key traits and what is in store for the rest of the year in the markets. u.s. markets close in two hours. let's check where stocks are trading with taylor riggs. a different story with a lack of ariff reaction.
taylor: we are ending the first half of the year on a positive note in what has been a volatile news year. so we are having really a large cap story here, and i would look at the nasdaq. you are going to see the tech come back and shrug off the news like to we said. come into my terminal -- spit it out, taylor, the go function, and we are looking at a broad-based rally. materials are leading the way, so let me dig into that a little bit more. on materials, morgan emily putting out a note that they are more can active on copper and due to some supply disruptions. mining,ee both newmont one point mcnamara rising those issues. and then we have the banks, wells fargo leading the way. a clear winner after being in the penalty box from the fed, a 24 point $4
billion buyback. analysts are saying there could be a new bid for the banks now that we are starting to see this pass the fed stress tests. you are seeing that in the shares, julia. julia: thank you, taylor. let's get a first word news update from mark crumpton. the: a judge has ordered suspect in a deadly shooting in a maryland newspaper to remain detained. the judge in annapolis said there is a likelihood that a-year-old jarrod ramos is danger. he appeared in the courtroom via video feed but did not speak. countsharged with five of first-degree murder in the shooting yesterday. michigan state university has hired an attorney that defend this will against sexual assault lawsuit to head its title ix office to pertain to the school's sexual assault complaint. the detroit free press reports that the president appointed robert pittenger to temporarily
leave the department. this comes in the wake of the scandal of all thing -- evolving larry nassar. and the board said today it will eliminate a $12 million scholarship fund for the island's largest public university as well as a $50 million annual fund for municipalities. the board will also scrap an annual christmas bonus for all government employees. the moves come after legislators asused to change labor laws ordered by a federal control board overseeing the u.s. territories -- territory's finances. countriesn against eu on immigration policy is easy compared to the task of implementing it. at an eu summit today, he outlined an agreement to reduce the flow backward and migrants into europe, including building holding centers for the migrants outside the continent
and a boost for the libyan coast guard. >> we have issued a clear message to all vessels. including those of ngos operating in the mediterranean. law andt respect the must not obstruct the operation of the libyan coast guard. task also said some intake centers could be built on european soil, but any relocation and resettlement of migrants within the you you -- eu would have to be voluntary. from new york, this is bloomberg. -- global news, 24 hours a day, on air and on tic-toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm mark crumpton, this is bloomberg. julia? julia: canada fighting back. oniffs take effect sunday more than $12 billion of u.s. goods. jenny, great to have you with us. talk this into perspective in relation to the broader trade
dominating the united states and canada here, and if we compare it to the likes of the eu and how politically strategic they were, how does this compare in terms of product? retaliating, as it has announced, way before. it will retaliate on a dollar for dollar amount against the u.s. tariffs that were put in place for steel and aluminum against canada. canada is also being very strategic, targeting steel, aluminum, whiskey, maple syrup. so there will probably be not big of an economic impact, but canada has said over and over these tariffs are insulting, we are your out lie we are not a national security risk. wire with a target -- we are your ally, we are not a national security risk. why are we a target? julie: and this feeds into the nafta negotiations, one would think.
how can this effect that? if you ask both mexico and canada, they would say this is separate from the in africa -- nafta negotiations. even after the u.s. tariffs were announced, these continued, some on the minister level, some on the technical continue. that will nafta talks could probably pick back up next week because mexico has an election next weekend, so until then we will not know how fast they can mobilize their new team working with the lame-duck team to get back to the negotiating table. is not impacting nafta as far as we know. julie: jenny leonard joining us from washington. thank you. we'll be talking much more about that mexican election shortly. and talking of tariffs, general motors in the past few minutes announced it could cut u.s. jobs due to auto import tariffs. that is coming out and we want to get some more reaction and details from our bureau chief,
david welch. david, it is interesting here because as far as i can tell, gm is not talking about specific a talkingight? is about the eu, canada, or all of that? david: it is talking about this that wouldgation slap potentially big tariffs on imported vehicles. gm directionally does not like where this is going. they import a few cars from europe, a little bit from china, quite a bit from mexico. and they say if you start taxing or anybodyhere's else's, you will reduce auto sales and jobs. gm's ability to make cars -- i think they are referring specifically to mexico --it undercuts their profits. it could just basically make the company less competitive overall. his is an unusually direct statement from gm. they have always handled the trump administration with kid
gloves. the language might not be really inflammatory, but they are -- opposed toosed the policy and tariffs, and do not think the investigation should result in bigger tariffs, and they are pretty direct about it. julie: to make it clear, david, we are not talking about external tariffs on u.s. cars, we are talking about gm making beinglsewhere and then taxed as they are brought into the united states to sell in the united states? tariff that's right -- david: that's right, and they do quite a bit of it, especially from mexico. chevrolet is supposed to import more than 800,000 vehicles this year, and they make important vehicles down there like all size pickup trucks, the chevy equinox, the sport utility vehicle. these are not a bunch of small cars. so gm wants to make sure that they have the ability to bring in vehicles and for that matter, parts from other countries so it does not raise the cost of
vehicles or lower sales or their profits, and they can continue business as usual. asking you toi am speculate, but why now? why do you think gm is coming out at this moment, particularly in a week where we had harley davidson protesting over what that means for u.s. jobs and u.s. production in particular? why now for gm? tariff it is the -- ford: it is the deadline opinions and testimony on this 232 investigation. it tries to find out if imported goods are creating a national security risk. they do with aluminum and steel, and the excuses that aluminum is sod in military production, we need healthy aluminum smelters and steelmakers throughout the country, and that was an acceptable reason, the commerce department decided, so the tariffs got put in place. with the cars, they are still investigating are giving this a good look and wanted input from the carmakers and anyone else who had interest. automakers decided
to let their trade groups handle it, gm decided to come out with a two-page, fairly direct payment on this saying they do not like it and it could result in a smaller gm with fewer profits and fewer jobs. say, this is you unusual for general motors amongst its peers, but also the company itself to be taking this sort of adversarial attack with the administration. what is that telling us, and doesn't signal a bigger shift? or is it just on this particular issue? it signal a bigger shift? or is it just on this particular issue? tariff remember -- david: remember in the beginning of trump administration, people s.re quitting his committee the ceo of gm was on the board, and she left. she hung around to see what would happen and then eventually did leave, but she was not a leader in that regard. in this space, she is making a very direct statement.
it is not a shift, but i think jim will handle the policies policy by policy. needswhere gm wants and free trade, because they do a lot of business in mexico, a lot of production, and i have a massive fresh -- they have a massive presence in china. julia: we have eu's response, canada responding in their own way to the steel and aluminum, and the talk that if it came down to it, tariffs on autos could ultimately be really painful. muting theg7 prospect of zero tariffs. what with this mean for u.s. automakers? case, you might have zero tariffs, but let's take nafta, for example. probably not much impact there, because right now it is a free-trade agreement. with europe, conceivably the u.s. automakers could sell more vehicles in europe because on cars, you have a 10% tariff going into europe. conceivably,
they could, but general motors pulled out of the market and don't even really have france selling in a meaningful way. some cadillacs and corvettes, that is about it. ford might be able to send cars over there. but it is a pretty saturated market already. . -- it could help with europe and maybe with china, but trump got us down to 15% for vehicles going into china, and that seems to be where that is going to stay. no one is going to build a new plan or start exporting to china with a 15% tariff. 25% 15% is going to do nothing. 15%ink it will be -- 25% to is going to do nothing. i think it will be steady as she goes. gm i want to build one of its might want to build one of its brands, like cadillac, in europe. julie: thank you for jumping in front of the camera once we got this breaking news.
julia: this is bloomberg markets. i'm julia chatterley. julie: and i'm julie hyman. time to the halftime report -- for the halftime report. a to multidose year as we wrap up the first half of it. the s&p, nasdaq, and the dow all hitting record highs in the first half before giving back some of those gains, and joining .s now with mike regan we saw particularly strong performance in technology stocks here in the united states. not quite as good for the s&p and the dow. mike: technology, energy, like
you said, oil was a standout, and consumer discretionary basically being led by what a lot of us think of as technology specs. julie: amazon, priceline. mike: exactly. some of these were the suspect. for me, what really stands out -- there was a good order, second quarter for the u.s. market. a lousy quarter globally, and i ofnk all of the surprises the year, this dollar strength. we have a chart showing -- there it is -- basically, this is the since lastet cap year. we can see in january, that euphoric buildup we had globally . now we are down about trend trillion dollars -- $10 trillion peak,lly since that which is interesting because that is not how the stock market feels right now and the s&p is
scratching back towards its highs for the quarter. julie: part of the reason is probably that. mike: absolutely. you have to point out that emerging markets, this index is priced in dollars. if you look at the performance of other indexes around the world, the stoxx 600 in europe, , 2.5%.t 2.25% if you look at the shanghai composite in china, famously in a bear market, it was down about 10% in the quarter. when you price the whole global market in dollars, it was a nasty quarter, actually. months'aking a few performances to show you how painful the quarter has been not just on a stock basis for emerging markets, but on a currency rating basis as well. that tightens the dollar strength story you were talking about, which is a factor here as well. mike: a terrible quarter for
emerging-market currencies. you can blame the combo of rising interest rates and escalating trade tensions, but it is fascinating because we have read so much, including on our blog and elsewhere, people trying to call this bottom in em and stocks, and it is a tricky thing to do. a post a few minutes ago showed em stocks are up almost 9% in the quarter, and you think that generally leads to a strong quarter following that, but not necessarily. the past few quarters, the index has been up, but going back further in history, it has been a mixed bag. even with the valuation discount, a mixed bag and hard to pick up the bottom right now. julia: i was looking at this. em stocks are not a screaming buy yet. we were looking at the s&p 40 ratio for what we are seeing with msci in particular. msci em, taking
it back about five years. whatever basis you want to look at. a volatile it is asset class. it is not uncommon to see that itrter system, but certainly is the focus of a lot of people when now, trying to decide do you, is it prudent to rotate a little bit out of the u.s.? u.s. market cap as a percentage is almostmarket cap 40%, at a 13 year high. that is tempting to a lot of people to say wait a minute, it is time to look elsewhere. but that is a tough call. julia: tough to call the next six months as well. team readerregan, for the bloomberg markets life blog. thank you. from new york, this is bloomberg. ♪ rk, this is bloomberg. ♪
julie: this is bloomberg markets. i'm julie hyman. julia: and i'm julia chatterley. mexico will pick their next president on sunday, with issues like trade and immigration at the top of mind. the peso is one of the worst-performing major currencies this quarter, reflecting concern from investors about mexico's clinical and economic future. we are joined by our mexico city bureau chief. rita have you with us. what we are seeing from the markets is pricing for what has been perceived as the most high risk, and that is a win for the leftist candidate here. what are people saying as we go into the election about the domestic level of a win for him? >> yes, there are a lot of doubts about what is to come with his administration. the questions go around how responsible use going to be with the budget, how he is going to manage some of the goals he has established in social spending.
get those he is projected to get by cleaning up the corruption under the government? so this is a bit of a wait and see moment and trying to get better clues after the election signs ofsee actual what he is going to follow. the moderate path, or the one he is more about, his socialist ideology. there it does seem like are some optimists out there who think he will be, they are seeing signs he might be more moderate than some of his most extreme rhetoric. what are the signs and how is the sentiment swinging on that? you take a look at the people he has names to be part , there arential people who are moderates in regards to fiscal stability, hopefully they will be able to
cut the spending and until they and thethe social budget savings they expect, until then is when they promised to do the social spending that they have promised during the campaign. so this will give a little bit of peace of mind to some investors, but of course, once the transition begins in mexico, we will see if those same people if he is power and listening to those people, the ones who are a little more radical on his potential cabinet. julie: and let's talk about the peso as well. carlos, we have seen the peso reacting more over the past several months to master news than two election news -- nafta o election news. does that change after sunday? carlos: it may not. we are getting ready for a bumpy ride because we are going to have a variety of mixed signals
from the electorate and also from nafta. at the end of the day, what investors and traders are more worried about is nafta. mixedsaw, we saw some signals from the white house, mixed signals from the different teams negotiating, and that will be the stronger influence on the if we keep into consideration the transition, the political transition in mexico is very long. webber wins on sunday will not take office until december 1. -- whoever wins on sunday will not take office until december 1. julie: thank you. should havenk you dealings with the prior it ministrations deal with nafta, but it will hit that plate as well. julie: time for a snapshot of the biggest business stories in the news today. upman investors are lining an investigation into transactions allegedly handled
by barclays, goldman sachs, and bnp kari but. bloomberg says learned investigators are also looking into potential roles played by brokerages and accounting and law firms in the deal. the report is looking beyond regular traders and going after higher-ups. and the uk's losing its most senior female in the finance sector. she will step down after five years in the drivers seat of the world's biggest and oldest insurance market. that is your business flash update. coming up, gm hits a road bump essentially. the company says it could cut u.s. jobs. we will look at the invocations for gm and for the industry. this is bloomberg. ♪
developing story. gm motors said it could cut u.s. jobs due to u.s. auto import duties. been tracking companies and their relationship with the administration. as david welch told us earlier, this is unusual for gm to come out with a direct statement. as part of this commerce department investigation, they submitted this testimony, and at this point, the pr, this is messaging, is this really going to happen as far as gm is talking about may be reducing jobs? we wrote earlier next week -- last week that the retail lobbyists are gaining momentum now around fighting tariffs, saying it will increase the cost for american families. gm says it will kill american jobs. the wayks like corporate america is going to go as far as attacking the tariffs, it is just how aggressive it will be is the question? julia: i love the word you used,
and that is lobbying. i can only imagine the millions of dollars that have been spent 80's companies combined lobbying this government. is this starting to get more desperate and looking around the world and rather than threats and threats of retaliation, we are seeing action and people reimpose in tariffs from other countries on the united states, and now we need to really take term tradet: the war, that looks like it is what is brewing here. next week, the chinese tariffs go into effect. there is still this $200 billion worth of goods that might also get tariffs from china. isi think corporate america waking up to the fact that this is real, this will affect more companies and more supply chains , and where does it end? toia: and if you want to get the attention of this president, you talk about u.s. jobs. matt: u.s. jobs, in the middle of the country -- julia: ahead of a midterm. julie: but will the
response be don't get cute, like was said to harley davidson? we will hear more about this going into earnings season. julia: let's get the first word news with mark crumpton. mark: the man charged with killing five people in yesterday's shooting at annapolis, maryland newspaper office acted alone, and has a history of harassing staff members on the internet. this did not become clear until last night. of 2013, we did have a situation where online, threatening comments were made. we had a detective assigned to investigate it, the detective spoke with legal counsel for the capital gazette on that conference call. it was discussed that the capital gazette did not wish to pursue criminal charges. a fear that doing so
would exacerbate an already flammable situation. mark: authorities said they use facial recognition to identify jarrod ramoss once in custody. foreign minister sergey lavrov is warning that russia could walk away from the global chemical weapons watchdog after member nations of voted to allow the group to assign blame for chemical attacks. in an interview with the british media outlet, lavrov denounced the vote in powering the organization for the prohibition of chemical weapons to assign responsibility for chemical weapons use. russia and 23 other countries voted against the move. presided over mass this morning with 14 new cardinals from around the world. the newly appointed cardinals were elevated in a formal ceremony held in peter's basilica on thursday night. during his on the late --
membersthe pope urged to reach out to those who are suffering. if you are traveling this today isthe tsa says expected to be its busiest day ever with agents screening more than 2.7 million people. more than 28 million people are expected to fly between now and july 9. global news, 24 hours a day, on air and on tic-toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm mark crumpton, this is julia. , i will beks mark driving. deals worth $5 billion on pace to double last year's total, and the buck does not stop there. corporations are eager to capitalize on their growing cash cushions, but will the m&a momentum last? joining us with more is our peter beuth cos
pwc u.s. deal leader. we just talked about gm and the uncertainty surrounding trade. given that, do you think that will put the brakes or at least put a caution on some of the dealmaking? known for abeen while that there are trade tensions going on. i would say the cycle we are in with m&a right now has been anything but typical. it has not made an impact yet. we were previous guest had made the comment that now people are feeling that it is real. it is certainly one of the headwinds that is pushing against us. what i would say, not what i would just or predict, but if you go back to the 1970's, there was a trade war with japan. the electronics to tariffs when up, and then japan became the biggest foreign direct investor in the u.s.. so trade can become m&a, especially when you have an administration right now that is looking to make it here. so we could see some positive
that could come out of that as well. , becausefine atypical you said this has not been atypical emanates -- m&a cycle. forcaps on balance sheets these companies as well as walking. talk us through the anomalies you are seeing and the difference that makes this time around? >> there are a host of anomalies. i will name a couple of them. if you go back to any of the previous m&a cycles we have had, we cdo deal volume tick up every year. we have not had to deal volume taking of every year, it has been very lumpy over a period of time. we have more available cash, whether that is corporate liquidity, private equity had.al then we have ever so there's $2.5 trillion of corporate liquidity, one $.5 trillion of on invested private equity -- 1.5 trillion dollars of on invested private equity , sovereign wealth funds, so a tremendous, tremendous amount of capital that we have
not seen in previous periods. the last comment i will make on that is across industry sector transactions. for the first half of the year, one third of the deals have crossed industry lines. it is no longer that if you are in the automotive industry you are doing deals in the automotive industry. the automotive industry, you are likely doing deals in the technology industry. julia: so disruption. julie: but what we are seeing is other industries getting into tech in some way. is there a defensive aspect here when we are looking at those types of acquisitions in particular? i think of amazon acquiring pill pack and everyone else trying to figure out what to do. >> there is definitely an amazon effect. i would not say it is defensive as much as it is seeking to disrupt yourself from the inside , seeking to avoid being disrupted. so the amazon pill pack is a
great example. , goingught task grab into the technology space. it is more about changing operating models, every customer, no matter what industry you are in, wants higher quality, they wanted faster and at less cost. that requires companies to reinvent their operating models, which in many case means buying technology. anomalynd the other this year that we have not addressed is the regulatory aspect and the question mark we have over vertical mergers in particular? we have at&t and time warner settles, and questions over disney, comcast, and fox. what do you think will be the driver now if we push forward, if you can pinpoint sectors where you think perhaps even these kinds of deals will precipitate more action going forward? vertical deals are the opinion me of when we talk about disrupting yourself on the inside. they are all about enhancing the
value chain, so it is going back to higher-quality faster and at less money. so we will see more media transactions firstly, we have already seen them since the time warner-at&t, which is definitely a bellwether for these types of transactions. we will see more in the pharmaceutical space. we will see a lot more of these larger transactions that are cutting across their supply or value chains. julie: and on the antitrust point. is there anything to be taken away from that? or is that just an individual case? is this an antitrust friendly judiciary right now? bob: you know, it is hard to tell. the reality is they were not buying a competitor. that was not buying a competitor, taking a competitor out of the market. that was a transaction that argued beyond the service did
not have a lot of certainty that it would go under the scrutiny of antitrust. i think it will depend on the type of transaction it is. clearly, in bounce transactions of that size, in light of the committee on foreign investment and some of the things around protecting technologies in those transactions, they will be under significantly greater scrutiny as we go forward. determined on some of the more traditional antitrust transactions, but i think we will see more vertical deals. we will see more cutting across industry deals then we will necessarily see large consolidation deals of competitors. julia: a chilling effect already happened with sisyphus and higher powers in the controls that they have now. are you expecting it or are you seeing it as we go forward? bob: that is a great point. we saw it in the broadcom-qualcomm deal for sure, but right now the committee is
under view of how to expand the mandate. so we saw a little bit of it and we are probably going to expect to see a lot more of it as time goes on, especially as they brought in the definition of what a critical technology is versus purely on national defense. i think we will see a lot more and hear a lot more from them as well. julia: thank you. pwc u.s.b saada, deals leaders. up next, canada strikes backs with -- back with tariffs on u.s. goods. what will this mean for us? from new york, this is bloomberg. ♪
markets. i'm julia chatterley. i'm julie hyman. from maple's europe to motorboats, canada is firing back against u.s. tariffs on canadian steel and aluminum. the measures were announced this afternoon. >> canada has no choice but to retaliate with a measure perfectly reciprocal, dollar for dollar response. that is what we are doing. joining us now from aspen, colorado -- oh, joining us now is the u.s. ambassador to canada. julia: great to have you with us, thank you for joining us. is this the right response from canada now to hit back on the united states and their actions? well, it is a predictable response, but the fact of the matter what the u.s. did initially on steel and aluminum tariffs is just unexplainable. you sit down and you think about
it rationally, the u.s.-canada trade relationship, we have a surplus in goods and services with canada of almost $680 billion. we have a surplus of steel in canada. you sit down from an economic perspective and say it does not make sense, and then you look at the relationship. we have no better friend in the entire world than we do with canada. they have been there for us at every turn when we have been in need of support and help, diplomatically, disasters in the united states, militarily around the world, and here we find ourselves in this position. so canada's response is printable. it is unfortunate and proportionate, and they are trying not to escalate it, but they are getting whacked pretty hard with a steel and aluminum tariffs, which for national defense reasons makes no sense. julie: what about some of the seemingly mysterious tariffs that the president has pointed out?
i think his favorite is the dairy tariff of 160% on a particular type of dairy? there are some tariffs that seem illogical, right? solet's walk through this everyone understands the context of it. prior to june 1, when the u.s. put those steel and aluminum tariffs, 99% of all goods that we traded with canada back and forth were tariff free. so when he is talking about dairy, between the u.s. and canada, there are a number of agricultural items that both of us have some tariffs on, whether it is peanuts or sugar on the u.s. side, dairy on the candidate he and -- canadian sign. the u.s. is not even paying those tariffs because we have tariff relief set aside, and we would have even higher tariffs if we had accepted tpp. so yes, there is a tariff there, but it is so miniscule as part of the relationship and is a
distraction from this friendship and relationship. julie: and this whole situation has really seemed to take the canadians to bat. we have seen strong reaction from justin trudeau and a strong reaction from christopher edland as- krista fre well. what is the sentiment like in canada at this point, because there has been a special relationship between the two countries? this is a serious moment and americans need to fully appreciate what is happening. i think the canadians were actually stunned. we had given the canadians an exemption when we first initiated these tariffs in march, and that went through june 1. june 1, when we sat down and started initiating these tariffs on canada, the canadian people d, takenst stunne aback, but have now gathered together where people in the country are saying why should we do travel to the u.s.?
why should we buy u.s. goods? this is ridiculous. this is our next door neighbor. so you have this nascent movement afoot of the canadian people coalescing around the prime minister and feeling like they were unfairly attacked. todayame out in an op-ed in the usa today and basically said we have a short, small window to try and do in offramp --this trade were highway trade war highway. i think if the u.s. could give that exemption back to can, we could get down to the table, negotiate nafta, modernize it and improve it, but we are talking about american jobs that will be affected and lost. two thirds of the u.s. states, their number one export market is canada. if you look at canada, our number one export market in the world, you could take china, japan, the u.k., add them altogether and we export more to canada. we are losing perspective. on -- we are losing
perspective here on a relationship that does not involve canada, but is impacting it. do you think canada got into the crossfire with the president that is trying to address some of the broader asymmetries he sees in trade relationships, whether that is the u.s. and china or beyond, and canada is just falling in many ways victim to that? i think you are right, but it shouldn't be. why would you want your best friend to fall victim to it? --have this 500,025 500,000 mile border, thousands of people cross every day, we have been there for each other, thick and thin, and to say they got caught in the crossfire, someone needs to hit that pause button and say this is a mistake. we need to do a course correction on canada because this is a reality check. we are going to war with canada. i never thought i would use that term with canada, but something
is amiss if you are talking about war with canada and using those terms together. it is wrong. canada is 151 years old on july 151nd i would say for years, things have been going pretty well between the u.s. and canada. we have had some disagreements over time, but nothing like what is taking place right now. i would like to see us get back on the right track. julie: we have been hearing from other ceos and investors from over there in the past couple of days. what have you been hearing? gm's here and there, we have not heard a big outcry get from corporate america. are they saying it privately, even if it is not public? bruce: that is the problem. here is where fear takes hold in america and causes significant problems. so you have the business me aside andling canadians and others aside saying we are with you, we care
about this relationship, but we do not want to put our head out because we are fearful of what will happen if the president takes aim at us like harley davidson. we have republicans and mainly republican governors and members of congress highly supportive of the u.s.-canada relationship and the trading relationship, but they do not want to end up like in southord did carolina. we have a lack of support as a result of fear that is out there. look, the u.s. chamber has had a strong voice here and it is good to see the automobile industry starting to say this is going but fear is taking hold in america and keeping voices violent and letting relationships like the u.s. and isada go on this -- go amiss a huge mistake. julia: so you command g.m. for standing up and taking a stand against the and ministrations, and you hope that other companies do the same? bruce: they should speak the
truth, and they should speak the importance of the u.s.-canada relationship and not only of the economic sides, but the larger relationship that we have. us who haver all of ever traveled there, spent time there, visited with canadians or done business with canadians, everybody knows this is our best friend, our best trading partner, our number one hour like in the world, and we share so much together that i think we all as americans need to have a voice in support of this relationship, and it is nonpartisan. this is not democrats versus republicans, this is everybody. this is america. this is our best friend and next-door neighbor. julie: bruce heyman's former u.s. ambassador to canada, joining us from aspen. from new york, this is bloomberg. ♪ ♪
markets. i'm julia chatterley. and i'm julie hyman. one of america's biggest banks is our stock of the hour. wells fargo shares rising the most since november 2016. that is following the fed stress est, and we got a fine per reliefly perhaps -- fine , perhaps, from wells fargo and other banks. >> the nation's four largest with theirame out payback plans after passing the stress test, combined, they will doubt $110 billion in dividends inpayout 110 billion dollars dividends and buybacks. this is particularly good for wells fargo and good news because they have been in the fed's penalty box, so to speak. back in february, the fed band the bank from growing and we remember the various scandals they had with sales practices and fake accounts, which cost
wells fargo's ceo his job. this did prevent some banks from includingyouts, -- and deutsche bank failed the test. we have a chart of the s&p financial sector breaking down that 13 game losing streak and it is back, but we should also remember that year-to-date, financials are still doing -- they are still down. julie: thank you so much, emma chandra. we appreciate it. still ahead, back to gm's warning. the company said it could cut u.s. jobs because of import tariffs. this is bloomberg. ♪
julie: live in new york over the next hour who are the top .tories we are covering a close watch on trade tensions. canada fighting back with tariffs on u.s. goods. we speak to a key analyst. and why the u.s. will soon producer ofargest natural gas. not slowing because of it. >> they are shrugging it off. i am taking a look at the nasdaq, the tech heavy indices .allying after a volatile week
that makes you want to jump in .ere performers, the why -- the right bar, they have been positive for the last straight corners. citigroup came up with the stress test. other three the jpmorgan, they had to pare back some of those distribution plans. $170 billion being returned to investors. i want to let you know what is going on tonight.
it may be affecting u.s. jobs dragging down forward as well with it. julie: a stock reaction there. the first word news with mark crumpton. president trump marked the anniversary of the republican tax-cut law. it provides generous tax cut for corporations and the wealthiest americans and more modest reductions for middle and low income individuals and families. >> we unleash an economic miracle signing the biggest tax-cut's and reforms. word reform. the that is what is really doing it. the biggest tax-cut's in american history. : it is behind president reagan's in the 1980's and
post-world war ii tax-cut's. candidate is announcing billions in retaliatory tariffs against the united states in response to steel and on canadian aluminum. some items will be subject to taxes of 10 or 25%. today wereeasures announced in hamilton, ontario. has no choice but a dollar for dollar response. mark: we will not escalate and we will not back down set of the escalation. in a letter to what many people said, the advisory board said it was not involved in the decision to increase transparency and usedc access to the signs
to craft regulations and only learned of the move through a press event in april. emmanuel macron said it is important to maintain european cohesion. remarks came a on the second day of an eu summit where leaders set an agreement on how to deal with the pressures of migration to strengthen the external borders. it six to ease pressure on point of entry countries like greece and italy. day powers 24 hours a and analystsalists in 120 countries. general motors has issued a stern warning. it could shrink operations and cut jobs if tariffs are applied
to auto parts. , consumer edge research. thank you for joining us on this developing story. gm talking about the cars it imports to sell in the u.s.. much does this represent. >> good afternoon. the ironic thing is it is small. else isthan anything speaking out from a public relations perspective in solidarity. to the degree that china, the isld's largest auto market going to be important to gm's future, it believes them to get everybody on the same page.
ford and othernd domestic manufacturers have the fears.tration we thought they were working along the lines of mcnish or the administration knows the severity of the impact these tariffs could have. this would seem in contrast to anticipatedtion we they would have. >> they are clearly lobbying behind the scenes. in light of the fact it surprises you, does this suggest an increasing element of alarm in light of what we are seeing from the likes of canada. we are seeing it from china. it does feel like it is escalating.
>> at a high level i would agree with that. this is complicated. we are talking about tariffs in and out of china. there is a separate discussion about the reorganization of nafta. we have asked for their wish to leave nafta alone or find a way of reorganizing it. they said the latter. there's a lot of different moving pieces here. and thinly odd time bailed -- thinly veiled relief. depth tonot a lot of it. we are curious as to why now. they have talked down the negative impacts to their own business. this does seem like trying to show solidarity.
>> it is interesting they would put themselves in the line of fire so to speak on this issue. in the case of harley davidson, some have suggested the underlying business is not going great. some of their decisions to shift production is reflective of that. can we make any serious conclusion about what it tells us about the health of their business now? gm mightally a smaller be more profitable. when you look at the core business, i do believe as the cycle continues we are going to see more focus on utility vehicles. separately, they will start carving out investments. the technology here as well. i do think smaller gm may be
better. -- i don't cover harley davidson there might be a similarity there. julie: two things. demand,he longer-term that is the calculation they are making in the hopes for that in the future. a $45 target. at what point do you have to rethink your current stance in light of the concerns? >> it is a great question. frustration, the management would share is that they are getting these late cycle multiples when u.s. sales
are holding up well. they have reorganized and pulled out of europe. they are doing the right things. downside't a ton of from a valuation perspective. momentum on the connectivity side of the business. in our minds we are less concerned even withstanding these tariff debates. we would hope we would end up in a world that is free. fair. there is also a positive opportunity. we are more cautiously optimistic than pessimistic. julia: do you think they have gates to othersdgs to voice their concerns?
>> that is possible. this feels like a debate going on in the public relations department. i don't think this is a financial announcement. posturing.s is more public facing opinion or to show solidarity, they made. i don't think this changes anything. .t is so thinly worded there is not a lot we can take from it financially. jamie, thank you. commodity call, why the u.s. has become the biggest natural gas producer. ♪
>> he have issued a couple of reports. is the outlook, is the production greater than many others are suggesting? going in the per mia five years. they need to some pipelines. supply has been held back by the need for new structures, which we think we'll take a year and a half to get in place. paperies into our other because a vast amount of new natural gas has been produced and that has to get to market. the world gas conference, 12,000 people, one of the big questions was how big and how fast will the role of the united states grow.
mark: what are you saying? what sort of growth are we looking at? first, supply base grew 40%. we think it is going to grow another 60%. the u.s. is going to be one of the biggest producers if not the biggest producer of natural gas. this has profound impact. it was really interesting. to see the change in the role of the u.s. is such a big issue, big theme throughout the global industry. mark: how is the rest of the world taking it?
>> consumers like it. , saw asian buyers this morning they are thrilled. it is useful in relations with china going back to trade disputes. it is one big export we can add to the max. others are saying it is going to be competitive. we are going to need supply and the u.s. will be welcome. it is more like the oil market that in the past. thef you're competing with likes of asia for this type of production who has the most technological know-how? given the spat with china about sharing technology, how does it play out? >> the chinese want to import u.s. lng.
.hey had a shortage the u.s. is part of the mixed. i think it is going the competitive. price will be important. more of our market for the u.s. will be asia, not europe because russian gas is going to be competitive. people are responding to it. russia, we heard has said they have changed their policy and strategy they want to be a player. mark: have you been surprised about the relationship, clearly relationship toelationship
become further entrenched. >> i think that is a good point. people were skeptic all at the beginning. it seems to have grown into oilthing that goes beyond prices and other links that are notable. the crown prince went to the soccer game with president putin. for rush this is an important relationship. , think the saudi's look at it russia can talk to iran. it has become a larger thanlitical relationship just about trying to stabilize the oil price. time for the bloomberg business flash. the king ofica is the municipal bond underwriting business. handled nearly a fifth of all
state and local government bond deals. bank of america managed long-term you minute -- municipal debt sales. gps maker tom-tom dropped after a techcrunch reported apple plans to rebuild using its own data. the company have partnered on mapping technology since 2012. apple has been building an infrastructure from a network of iphones and information from high-tech sectors. that is your update. check out g tv on the bloomberg or you will find all of the charts, exciting charts that you see here. you can see the charts for future reference. this is bloomberg. ♪
julie: you're watching bloomberg markets. joining me, alex conner. it is good to see you. your trade has to do with something we have been talking a lot about. we talked to mike earlier who aid it is unclear if there is signal at this point yet. what do you think? a emerging markets were such positive coming into the year, we have seen capitulation, net .utflows a goodg markets may be place to allocate capital. julie: why is that? at why would it
be overdone? what are the reasons to buy? of hong konge up stocks. like in the earnings set up in those stocks. movement, a lot of the has been overdone. the dollar strength has pushed a basket of currencies down 10% for the year. they are range bound. >> what about the trade concerns. that has been something that his hit china. do you think that is priced in? >> we do think it is mostly priced in. the bluster is a little bit louder than the actual policy put into effect.
we have seen that for the last year and a half. >> you can protect yourself to the downside. that is what you are attempting to do with this trade. walk me through this. buying,e selling and our max risk is one dollar for every option we put on. we are using that to buy the $46 calls so we have leverage if we start to see capitulation, and people going out back into em equities. julie: it would be outsized and your losses on the downsize would be limited. ok. thank you. good to talk to you. there are so many opinions. back to you. the house of
representatives failed to pass immigration overhaul endorsed by president trump just this week. what comes next? we will talk to a congressman at the forefront. you can catch our interviews. find breaking and become part of the conversation and are acting with us directly. david, we will continue the conversation.
from past administrations usual practice of avoiding monetary policy out of respect. a fed spokesman declined to comment. officialopean union says president trump is trying to divide over trade. juncker urged them remain and looked to ease tensions instead of escalating them. >> we should not dramatize this. i'm not sure that we will find an agreement. mark: juncker