tv Bloomberg Markets Americas Bloomberg July 19, 2018 1:30pm-2:00pm EDT
discussed the helsinki meeting. discussed a variety of issues including terrorism, security for israel, ukraine and north korea. the president said they can all be solved. homeland security secretary christian nielsen said there is no question in the u.s. intelligence community that the russians will attempt -- attempted to interfere in our electoral system. the comment came today during an appearance at the aspen security board. what we are doing is to work with states to propose that election and -- i don't think there's any doubt that they did it. they think we should all be prepared given a capability that they will do it again. >> secretary added that it would be in her words for which to think the russians are not still targeting the u.s.. willontinued we have the
we have to be prepared. >> suspects have been identified in the poisoning attack against russian spies. according to the news agency, officers think several russians were involved. they were identified through security camera video. earlier this month the woman died after coming into contact with the same nerve agent used in the attack. the general overseeing u.s. operations in afghanistan says he is taking a new look at the war strategy. president trump announced nearly a year ago. he says he wants to consider changes that could include prospects of afghan government peace negotiations with the telegram. global news 24 hours a day on air and at tictoc on twitter. 2700ed by more than journalists and analysts and over 120 countries.
i'm mark crumpton this is bloomberg. live from bloomberg headquarters . welcome to bloomberg markets. we are joined by bloomberg and bn and audiences. right now, president trump criticizing the fed taking aim at the central bank interest rate increases. raking with more than two right now, presidentdecades of e tradition. car tariffs caught and political traffic jam. globalociation with automakers on the commerce department hearing. flag towaves the white
take over fox's entertainment assets. now what? >> let's get a quick check of the major averages because we are seeing the impact of president trump's comments just now. the dow is falling at about half a percent. we have seen stocks falling given disappointing earnings after but we saw a seesaw president trump's remarks and the s&p 500 down pretense of 1%. of the bignergy some losers. the treasury yields continue to fall back after the president's remarks. take a look at what the dollar has done because the bloomberg dollar index has been von for the past two sessions. all of that is gone after the president's remarks. president trump saying strong dollar is a disadvantage. is saying he is not happy about interest rates going up. pretty remarkable and a very rare comment coming from a sitting u.s. president about the
central bank roll here in the u.s.. >> absolutely. beyond tracking the dollar itself, looking at the currency trades that have been so important recently with the yen and the u.s. dollar. yen trade getting to a fresh low on those comments. the increase in japanese appetite for overseas assets namely the u.s. dollar. all of these market moves bringinghim bloomberg, and kathleen gaffney. thank you for being on the show. becausetart with you we're seeing these market reactions. time. we had the same thing happen
yesterday with the mexican peso. i would caution about the president's remarks on the dollar, we saw a depreciation of the yuan overnight. i would not be surprised if he clarifies the strong dollar comment and directs it more towards china. we have seen him complain about dollar strength in the past. it plays into his tariff argument that the excessive dollar strength weakens u.s. exports. this may eventually be directed specifically to china and not the dollar in general. shery: how should investors look at the president's comments now? >> it's a quiet time in the market. a tweet or two is going to get the markets moving. this is a very quick reaction. thatither market thinking the fed is actually going to respond to the president's comments about where interest rates are headed or its risk off
thinking that we are looking at more of a weaker economy. i think we have to look at what the trends are overall for the long-term which i do think is good growth here in the u.s., china doing what they need to keep their economy growing and that might mean a weaker currency. if interest rates in the u.s. are the only country to be going up. that is the consensus view for now which has until a few moments ago been driving the dollar higher. let's talk about what kathleen is alluding to hear. both the idea that in china there is this growing acceptance of weakening of the chinese currency against the u.s. dollar, but additionally what their appetite is for u.s. treasuries going forward. >> china has essentially stated they are not going to come out and sell u.s. treasuries, but
they may buy less. overnight we saw a rather intense qe from the chinese central bank. the director -- they directed larger banks to extend lending. if they were to lend or buy corporate bonds below aa plus they will get two-for-one. there's a real push by china. they are suffering a bit of a credit crisis to shore up a trend of corporate defaults. the backlash of that is the weaker currency. they were trying to support their economy. safe -- same thing with every country. when the central bank adds excessive liquidity, that is what happened overnight. the dollar strengthening across the board. is really exclusive to china. it bleeds into the emerging markets. not necessarily broad dollar gain or loss sort of thing. how does the balancing
act for the federal reserve play out? if we have to look at what happens with emerging markets. the u.s. fed has to keep an eye on what's happening at home. you have to balance it out with these comments on the dollar. how does that balancing act play out? >> it is a very tricky balancing act between the two great economies, the u.s. and china. powell the u.s. led by is going to focus more on what is the right thing to do for the u.s. we've had qe from us to decade and it's time to move rates back to normal. and i think they will continue on that path. they're obviously aware of the other responses in the global economy, but i think their first objective is to get back to normal. and then china has a bit of a problem although they have an
easier stance in that it's a command and control economy. so they can ease at the short end and they can target areas where they want speculation and leveraging to come down. particularly in shadow finance and the property markets. they are doing a good job there. really right now it is just interest rate differentials. china is easing and the united states looks to be continuing on that path. slow and gradual, but higher. u.s., as opposed to the other emerging markets, a lot of them are using at the moment. does that provide an opportunity for investments or do the trade tension headlines offset that? because a tricky time in emerging markets we have definitely seen the strength of the dollar pressure the asset class.
a number ofre are countries who are actually doing well. their external debt is a lot lower than it was during the taper tantrum. there are countries, turkey is a good example where they are running a current account deficit. they don't have an independent central bank. and they do not want to raise interest rates. so you are getting some stress in specific countries. you really have to look carefully. i would say with my long-term that the dollar as the u.s. focuses more on domestic policy is going to weaken with rising inflation not only here but around the globe three of shery: what do you think? >> we are seeing inflation go higher but we are seeing the fed walk with that higher inflation where we are not able to see that with other countries. so the interest rate differentials will continue to favor the u.s. what we saw last night from
china is also a response to what is being interpreted as a weaker economy. this is what is spilling into emerging markets. a weaker china and weaker exports for the emerging markets race is essentially not good for their currencies or their equity markets. at the weighing on him moment. not so much weight differentials. , wen the u.s. dollar story have started to hear from companies that are being asked by analysts for the rest of the year how their businesses are going to be impacted by the stronger u.s. dollar. is that going to continue to be a trend? >> i think it will. a lot of trump's trade rhetoric plays into his base. until we get to the midterm elections this is one thing he has been hanging his hat on. this may linger all through november where he continues to talk tough on trade complete to buck up his pace until elections. -- base until elections.
they will probably keep the fed going one or two interest rate hikes for 2018 and most definitely we will still see the dollar trend at least flat to slightly higher. >> thank you, vince cinderella and kathleen gaffney. coming up, could your bmw the national security threat? president trump's trade war spilling over to important cars at the commerce department begins open hearings today. how the industry is responding. we will talk with president and ceo of the association of global automakers. next. this is bloomberg.
>> this is bloomberg markets. shery: i'm shery ahn. the commerce department began open hearings to consider whether auto imports are a threat to national security. says it'swilbur ross too early to tell whether the investigation will lead to tariffs on the cars. findnvestigation will little if any support for the idea. we welcome now one of the industry leaders who testified today. president and ceo of the global automakers association, john bozzella. he testified this morning. just tell us the gist of it. what was the message you wanted to send policymakers? one, there is no case for high tariffs on auto imports and auto parts. they are not a national security threat.
just the contrary. those imports support competitive dynamic industry that leads to investment and innovation. the second argument we made is that there is no company anywhere in the automotive industry or the automotive supply chain that is requesting protection. third, these will hurt american consumers and workers. tradeetter way to resolve disputes and improve opportunities to export around the world. shery: what's the latest you have heard on lawmakers efforts to curb and limit the president's authority when it comes to imposing tariffs on national security grounds? we haven't heard any updates. do you think that will happen? i spent the morning on capitol hill with over 100 auto workers who make cars and trucks here in america employed by international car company's and they drove the cars they made to capitol hill to talk to lawmakers. what i hear is increasing
concern from lawmakers. there a letter in the house of representatives signed by 149 bothrs of the house democrats and republicans expressing concern to the president. there is bipartisan legislation in the senate to get a timeout section 232 auto tariff investigations before a further look can be taken at these things. i'm starting to seem increasing concern in the halls of congress as well. jon: how do you think this will all play out outside of whether we see tariffs or not? there will be a period of time when the commerce department takes what it has heard from you and others to reach its conclusion. it could be sometime potentially. a longer time before the president assad's to address the issue again. how are you navigating that? certainly the department of commerce has a fair lifetime to investigate this. i'm hearing the department would
like to move this investigation forward fairly quickly. concerning because we are hoping they are going to follow the facts. i heard secretary ross say his mind is made up. that andnly appreciate we hope you does look at the facts. one of the problems is there's a tremendous amount of uncertainty right now and businesses need certainty and stability. a greathat supports investment climate. i'm concerned that prolonged uncertainty even before tariffs will also serve to hurt our opportunities to continue to invest in exports. by the way, we have existing tariffs on steel and aluminum and in the back-and-forth between the u.s. and china which is already hurting the u.s. auto industry. shery: president trump said he would try our ties a bilateral deal with mexico over canada. are your members already looking at scenarios where you could see a collapse of nafta?
and how could they reposition themselves a bilateral trade -- if bilateral trade deals take effect? nafta has been absolutely critical for the u.s. auto industry. we have had an opportunity to talk about this in the past. it has really benefited the american auto industry. more cars now in the red states than we did before nafta. we export twice as many cars than we did before nafta. we export four times as much value. nafta is a winner. i'm concerned that nafta might unwind. i also want to continue to encourage our trading partners to talk together. i think if the u.s. is having good conversations with mexico and that allows both the u.s. and mexico to include canada and continue to work toward a trilateral deal than we would want to continue to encourage that.
separate bilateral agreements is not nafta. thanks for your insight today, john bozzella. joining us today from washington. coming up in the program, in just a few moments kevin cirilli will interview democratic senator elizabeth warren. focusinge going to be on the fox hunt continuing. does the prevailing as comcast drops bid for 21st century fox. the media next for megamerger. we will talk about it. this is bloomberg. ♪
iger's $85.1 billion at edition. so what comes next? to have you with us. the first question would be what would happen to sky? >> it seems like the fox situation has been cleared up. disney is probably going to close that deal. they have regulatory approval. off sky may be disney backs of that. maybe they decide we will just let comcast have it given where the prices have gotten to for this deal. it possible that disney continues pursuing it. they have said that it is the crown jewel. i think we are getting to the point where there's a lot of egg numbers involved here and disney had to end up offering cash. when they are looking at their balance sheet and thinking about the debt that they didn't want to take on to do this may be selling fox's stake in sky would be a way to raise cash and get things back to where they
wanted. shery: what does it mean for comcast? will they tried to take over other targets? >> i think so. everyone is on the hunt for more content. everyone wants to own entertainment content because of the popularity of streaming services. that's the direction this is heading. you could see them being viable targets. there's companies like amc network which is very tightly -- sought -- tiny but popular. we have talked about the billions of dollars that netflix itself is spending on content. one big question is would that company be willing to go out and buy one of these legacy media players just to shake things up even more? is there any talks that netflix could be in these m&a talks?
to guess what the tech companies are thinking. my colleague on the bloomberg opinion team has written about this. they could do it. it would make sense. we have to see what happened. the legacy companies are the ones that are scrambling. how do we get enough content that is popular enough to learn viewers away from netflix and amazon services and other things coming down the pipe. i think that's where the focus is right now. jon: one of the things you have written about is that netflix is a simple option in increasingly complicated media landscape. >> that's right. when you are a consumer looking at this array of products that we have now almost every network out there has their own streaming service which when you are looking for what to subscribe to his little bit overwhelming. a lot of people these days don't really have the brand loyalty.
they don't realize something is viacom show. a they just know they like this series. i think what's happening is companies are becoming more try ballistic about their content and consumers are becoming more detached because of things like netflix. thank you. joining us with the latest on the m&a landscape in media. coming up, bloombergs kevin cirilli will interview democratic senator elizabeth warren. this is bloomberg. ♪ retail.
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scarlet: we are live from bloomberg world headquarters in new york over the next hour. hero the top stories we are covering. market tension, from the commodity correction to the following yuan to trump's criticism of the fed, top strategists weigh in. commodities under pressure again in the face of lingering global of theisputes with some pain reflected in earnings from america's top aluminum maker, alcoa. tesla tumbles. it gets hit with a downgrade on model three concerns. we will speak with the analyst behind that call. u.s. markets closing in two time.time -- two hours' >> stocks looking at pretty much the same thing before those remarks, modest declines at this point.