tv Bloomberg Markets Balance of Power Bloomberg July 24, 2018 12:00pm-1:00pm EDT
balance of power. showdown at the white house, jean-claude juncker and the trade minister are on the way to the white house as president trump threatens tariffs on european autos. it is not just europe, the ustr holds hearings on imposing tariffs on china, with doubts anyone can persuade the administration to change his course. president trump travels to kansas to address a veterans of foreign wars convention. -- theirms his pick senate confirms his pick to head the veterans administration amid a shakeout at the agency. tariffs are the greatest. that is according to president trump in a tweet. companies number of
do not agree. they warn about loss of revenue and employment from trade disputes. we welcome lee zeldin, a republican in new york who sits on the house financial services. welcome. it is good to have you. give us your views on tariffs. are they the greatest for your constituents in new york? the greatest is a consequence of having these threats resulting in other countries bringing down balls laws. though laws -- down there are aggressive policies of other nations, china in particular, where we are adding leverage, we are seeing markets in those countries suffering. there are different factors leading to what brings parties on both sides to the table.
tariffs, once implemented and the longer they go into effect, the more you go -- the more you get to the point where nobody wins. david: there are projections that have been done that suggest willdp in your home state go down a percent because of these. will go down 8% because of these. >> there are a lot of talks of what may happen in the months and years ahead. in my opinion, to bring to a close our discussions with these countries as quickly as possible, whether it is nafta, engaging in new deals with other nations. we are seeing the consequence of tariffs where the tariff has not been imposed yet are resulting in price increases. what i would like to see is in the weeks ahead, to be getting closure on some of these issues. once you get down the road, especially years down the road,
nobody is going to win. david: something you said, as quickly as possible. is it taking a good deal longer than the administration thought? told they would be done by the end of last year in the does not seem like they are on the brink of anything. the mexican elections provide a challenge and having closure over these last few months as it relates to renegotiating nafta. i do not know what the timeline is. i am hopeful it is after the elections are done that we can get this wrapped up sooner rather than later as opposed to something we are still talking ofut in 2021 of this desire renegotiating nafta. peopleting reports from involved at that they are making progress in reaching agreement on different facets of this. hopefully, that is true and they are close. david: you sit on the house
foreign affairs committee. the president tweeted something about russia and i will read it to you. the president says i am concerned russia will be fighting hard to have an impact on the election based on the fact that no president has been tougher on russia then me. they do not want trump. could you tell me how president trump has been tougher on the russians? >> take syria, for example. we created a vacuum, we disengaged from syria. that was filled by russia. we have been pushing back on bad he was crossing red lines with the prior administration without consequences. now, they use chemical warfare, own are seeing their chemical weapons production capabilities getting targeted.
requires with russia. regards to north korea, we were able to get russia to vote with the united states and china voted yes as well, on a package that cuts off north korean exports. utilizing diplomacy was effective in that. we are the nations that have the largest nuclear arsenals in the world. i think it is going to be important in the years ahead to be finalizing what we want to do post the expiration of the new start treaty. a negative new sanctions against russian individuals and entities. new sanctionscted against russian individuals and entities. removed -- there was a
chemical attack. suspected the russians were responsible as well as consequences of implementing's actions -- implementing sanctions. viewers,st for our that is president trump arriving in kansas city. he is going to be addressing thousands of veterans of foreign wars. we saw president trump stand up with president putin last monday and say he sided with president putin and against his own intelligence service about the extent to which there has been interfered spirit was that being tough -- which there has been interference. was that being tough? >> i think to stand with our intelligence community, to stay thousands of miles away from elections.
that moment, is what you are supposed to do with it. that is what i would do. unfortunately, it overshadowed a of topics that were discussed. the counterterrorism fight is another one. there is a lot to discuss. israel, as it relates to building a land bridge to israel. there was a lot discussed in their meeting, discussed at a press conference that was overshadowed because of what should have been an opportunity to stand with the community and send a message. david: on that point, are you concrete steps this government is taking to protect these upcoming elections? are we investing money, do we know about anything we are doing to stop it? >> there are federal grants in
the department of homeland withity and it works states and there is money available and there are resources, s practices. we can help -- best practices. we can help test infrastructure to assist with improvements. a couple ofover years, where states would have the opportunity to opt into the system where homeland security would get involved in hardening infrastructure, we are seeing all 50 states signing up with the government. we appropriate funding, part of the current fiscal year, was appropriated in this budget. it includes funding which gets used to help the department of homeland security. david: thank you so much for your time. appreciate it. lee zeldin, a republican from new york. let's get a check on the markets.
for that, we turn to abigail doolittle. the dow, s&p 500 and the nasdaq, the dow, s&p 500, higher. earlier, the nasdaq had been up. well off the highs. the materials, industrials, energy sectors are leading. tech has cooled off. the nasdaq did put in an all-time high. take a look at underperformance. we will be digging into that in a moment. let's take a look at where we had outperformance for the s&p 500. these are up 4.4%, one of the 500.tocks for the s&p on pace for its best day in two months. for expectation that billions of dollars of aid will be given to farmers for relief in the trade war. .t is not just deere
let's take a look at agriculture and fertilizer stocks. revenuent, 18% of their is the agriculture sector and we have the fertilizer sector as we have a rally as investors hope that aid will flow through. since trump was elected, we are going to see this aid may make sense. timegoes back to the president trump was elected. energy is in blue, white is industrial medals. there is divergence here in the commodity complex with energy and industrial up top. the grains down 23%. , plan for possible aid billions of dollars to farmers, could help over the long-term and help these crop prices. let's take a look at a two-day chart. down 9.3% overs
the past two days. on pace for the worst day in two years. the day to they beat day. they offset rising fuel costs. investors not liking it, shares of jetblue sliding. david: that does not look very pretty. thanks very much. coming up, hearings being held today on the next $16 billion of goods from china that the trump administration wants to put tariffs on. is anyone listening? we will talk about that, next. this is bloomberg. ♪
we turn now to mark crumpton. >> paul ryan suggested today people are making too much of president trump's threat to revoke security clearances for obama era national security officials. >> he is trolling people. this is something that is in the purview of the branch. some people lost their clearances. >> on monday, the white house said the president was exploring the mechanism needed to remove clearances from former fbi director james comey, james klapper, and john brennan as well as others. than 50s have better odds of winning the house in midterms, according to a closely watched newsletter from the university of virginia center politics. the report changes ratings of 17 races in favor of democrats.
the british prime minister theresa may has made a change in brexit talks with the european union. she said she will be the negotiations. that relegates the brexit department to the sidelines. that department has taken a more hard-line approach to the split. may favors a softer split. new research unveiled today at the international aids conference is following, showing more promise for using treatment drugs as a tool. the united states top scientists call the results impressive and striking. about 36 million people worldwide have hiv. at one point, 8 million new infections occur each year. among those speaking were prince harry and elton john. global news 24 hours a day and at tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries.
i'm mark crumpton. this is bloomberg. david: thanks so much. representative's holding hearings today about proposed tariffs on additional imports from china. although many companies have objected, the administration needs these to get to that $50 billion overall it has promise. we are welcoming and adjunct professor at new york university and the author of "what the u.s. can learn from china." hearings, wethese had hearings on the initial 34 billion dollars. is there any prospect the administration will not go forward? >> it looks like the trump administration is dead set on implementing these. to correcting it perceived wrongs from china. they have said they feel the
deficit has grown too large. honestly, i think he is trying to generate jobs for americans but he is going about it the wrong way. he is stuck with this. so, i expect it will go forward. in the meantime, i do not think this is going to accomplish much for our economy. in trying tos convince companies to relocate supply chains back to the u.s., it is going to be costly to rebuild here. come backobs will not because they will be using robotics instead. even robotics may not accomplish what companies will want to do because it takes a lot of know-how to put together these manufacturing capabilities. a lot of that knowledge and
skills has left the country. they have either retired or gone overseas. there have not been new people being trained. many observers, both in the united states and europe have said they agree with president trump that there is some unfairness in the way china wrongts trade, are they in saying if we put leverage on china they will reform and become more fair? tablena has come to the to try to negotiate a deal with trump. tohink the u.s. is trying curtail china's growing economic and political influence. the dod has labeled china as a competitor. china is a threat because china is the only country that has an the u.s. as arp
superpower. or tryingof tariffs to change the way of doing technology is going to change that. this is a bigger issue. this will persist and even if they convinced china to change some of their ways, china is not going to step away from trying to be self-sufficient in technology. david: let's talk about technology -- china is overtaking the united states and economic power. there is not much they can be done to stop that. how they get there is another question. many people saying it has not been fair, they are stealing technology as well as doing other things to extract technology. prospect of getting china to reform that part of its economy? >> let's talk about industrial espionage.
every nation has encased in engaged inding -- that, including the europeans, including the americans. thed: are you suggesting united states engages as much as china does? >> it would be difficult to measure that because it is done covertly. i would say that estimates are all over the place. deals, whatunfair is a lot ofined companies they want to do business in china have no way of making a success because you have to have marketing knowledge, distribution, the relationships. there are a lot of things they come together to make a business succeed. both parties bring something to the table. china requires technology
be moved onshore as a condition of doing business. not,nited states does germany does not, the united kingdom does not. isn't that different? >> china is a sovereign country. if you invite someone to your home, you're going to have them abide by your rules. more open-minded about how your guests behave but maybe i am more strict. each country has their own rules. no one has forced the u.s. companies to do business in china or to set up operations. they did it because of their instincts. to do that deal, those executives made a we areted step that going to win in the end if we
provide this technology at the cost of doing business in china. nobody has put a gun to their head. this is something they did on their own. maybe in hindsight, they would say this was a bad deal and we need to renegotiate. bile means, go to the chinese and say we need to renegotiate -- by all means, go to the chinese and say we need to renegotiate. to start a trade war does not come across as a winner. david: a different perspective, that is and leave. .till at -- ann lee speaking of tariffs, whirlpool is drowning. that is up next. this is bloomberg.
i'm david westin. of the hour,stock whirlpool is on pace for its worst day in seven years. tariffs are partly to blame. kailey leinz has the story. by far the biggest underperformer in the s&p 500, on one point its worst day in 30 years. trading around the lowest the stock has been since 2016. ,econd-quarter results missed they cut their growth forecast for all of the regional markets. they once sawca, growth of 12%, now they are seeing -- they revised it down. those areas, the issue is rising material costs. asia, themerica, in costs resulted in the negative results this quarter.
the only place it was latin america but they had their own issue with the strike. is 75% of the market being affected by its cost. 9%s represents a percent to of the cost. steelent trump put a 25% tariff. that is weighing on the company. david: the first tariffs were to protect washing machines and things like that. thanks so much, kailey leinz. next, the administration has a plan for struggling farmers. weighs in on issues facing farmers in her state. that is coming up next and this is bloomberg. ♪ retail.
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
s&p up about 18 points. nasdaq over 22 points almost. they will have the best year since they had last january if they keep this up. now we turn to mark crumpton. >> president trump says tariffs are the greatest. on twitter today he wrote that either a country which has treated the u.s. unfairly negotiates a trade deal or gets hit with tariffs. are theident added, we piggy bank that is being robbed. jean-claude juncker won't be coming to the white house tomorrow with a great deal on trade. the eu official says european leaders don't see a trade crisis with the united states. may see things differently. he has been sharply critical of the eu and claims it runs a $150 billion surplus with the u.s. doner coal executive
blankenship intends to file paperwork to run in west asginia's u.s. senate race the constitution party's nominee. it's unclear if the bid violates west virginia's of so-called sore loser law which prohibits candidates affiliated with the major party who lose in primary from changing their registration to a minor party. blankenship finished a distant third in the republican primary in may. officials in pennsylvania are asking a judge to classify bill cosby as a sexually violent predator. the 81-year-old was convicted in april on sexual assault charges. sex offender classification would require increased treatment in prison and increased notification of his neighbors when he is released. cosby is scheduled to be sentenced in september. global news 24 hours a day on air and at tictoc on twitter powered by more than 2700 journalists and analysts in over 120 countries.
i'm mark crumpton. this is bloomberg. keep america growing. the trump administration is set to announce a billion-dollar plan to aid farmers that of an hurt by tariffs, making good on sonny perdue's month-long promise of an aid package. aat do we know about this package yet to -- aid package? we are talking billions of dollars. markets are reacting positively to this. we have seen soybeans going up. the price of deere stock has been going up today. this has been long anticipated. sonny perdue had long been talking about an announcement by the labor day holiday. president trump is going to be speaking in iowa this week. he might have wanted to have something to tell farmers. this ise are told
because of damage caused by tariffs. weren't a lot of these farmers hurting before leeco -- before? commodity outstripping demand. you have seen the lowest farm income projected in 20 years on top of a farm economy that was having problems economically. david: how does it affect their planning decisions yet to -- decisions? >> soybeans which have been hardest hit by the trade war got the most acreage put in the ground. more than any other crop. it doesn't affect that. as far as when a former may show up we are winning for details. it's going to be a matter of how this program is administered.
david: our chief washington correspondent kevin cirilli set down with joni ernst whose home state of iowa is no stranger to blows to farmers from tariffs. she's also a member of the senate agriculture committee and here is what she had to say about issues facing farmers in her home state. >> all across america some of our distressed communities were identified as low income since this track and they were nominated by their mayors and their governors as areas of opportunity for investment. so through this brainchild of tim scott what we decided was to take those capital gains from private investors and give them the opportunity to invest those capital gains in those opportunity zones thus deferring the capital gains taxes for a longer period of time. , private investment capital investment, private dollars and boosting those
distressed areas. >> it impacts not only urban communities but also rural communities that quite frankly have a harder time attracting some of that outside investment. >> you bet. what we were able to experience in iowa, 62 opportunity zones identified. many in the rural areas. some of those in our metro areas. it is an opportunity to take those capital gains and invest them in distressed areas. it can be rehabbing old buildings and it can be putting in high-speed internet services which are really important to rural areas. what we it might be want to see is a renaissance occurring in some of these distressed areas. >> what's the timeline in terms of getting the money?
>> it is entirely dependent on the investors and where they want to invest. the rules are being made up right now by the u.s. treasury department. opportunity zones have already been decided across the united states. legislation is in place. what we need are private investors to step up and say i'm going to have these capital , i would like to reinvest that in a distressed area and help the community out reach it's a great tax incentive for those investors and again just really raising up those areas that really need a little extra help. benefit of the tax reform. >> it absolutely is. was signed into law by the president. we love it. it provides opportunity. >> critics are saying you are shifting from one area of investment to another. if you are investing in one area it's not going to have a positive impact on the other.
>> i say this is a great opportunity to see those private dollars invested where it will do the most good in those challenged areas. helping entrepreneurs. helping create employment opportunities that didn't exist previously. it's going to be great for our economy. about rural ask communities having some of the same economic hardships as what urban communities face as well. >> you bet. i am excited because i come from a very rural area. and there was an opportunity zone approved the community just south of where i live. there are some wonderful old buildings in this community that now possibly could be rehabbed and made into new and exciting businesses. >> where are we on trade?
what do you hope president trump does? >> i hope we can work with the european union especially pushing agriculture commodities into the eu. we would love to see them purchasing more of our soybeans. because those are the commodities that have been really challenged by the retribution and retaliation from the tariffs we have put on the chinese and others. so we want to open up new avenues for trade. aid.farmers say trade, not >> i have been interviewing folks from agricultural dominant states and what they hear from their constituents as they trust president trump. what are you hearing in terms of trade negotiations? trade doneo see sooner rather than later. i think the president has excited -- an exciting to do better for the
united states as a whole. in the meantime farmers are caught in the crosshairs. we don't want that. want to see young farmers go out of business. we don't want to see beginning farmers not able to make it through the fall we have to provide opportunity. trade,by opening up new new markets, new areas of opportunity. ethanol. what is the latest in terms of ?hat's going on at the epa you are one of the leading .awmakers >> we would like to see changes to the waivers. the epa has not been able to clearly express why some of these hardship waivers were granted. >> why aren't they? >> it should be very simple to lay that out for us. what we would also like to see a 15 year round.
consumers would love to see that but because of the vapor pressure issue right now it cannot be sold in the summer months. we need to see it sold year round. is the epa going in terms of all of the fallout with former director prewitt? >> i still have some concerns. whathas yet to be seen direction they go. i want to see a commitment to upholding the law. the rfs is the law. thear from what i have seen epa has been a great job at really undermining the rfs. implementedo see it and we want to see it fully supported the way congress intended. >> are you satisfied with the level and the pace of the reform of the veterans affairs office?
>> of course we would like to see it done yesterday. i am excited about the confirmation vote in the senate with avenue v.a. director robert will keep. he really gets the issues. he understands the importance of making sure our veterans are cared for and we will continue to see an uptick in the pace of reformation within the v.a. david: that was joni ernst speaking with our very own kevin cirilli. coming up, the man president trump called a brutal killer is heading to washington. will a white house meeting with the eu president jean-claude juncker help fit europe into the america first vision? this is bloomberg. ♪
this is bloomberg markets: balance of power. i'm david westin. president trump tweeted once again this morning about how unfairly the united states has been treated in trade and the tariffs could be in his words, the greatest. he's threatening to impose some of those tariffs on imports of automobiles as he gets ready to meet tomorrow with the eu leadership at the white house. ward.e now, bradford earlier he was an assistant to the u.s. trade representative responsible for trade enforcement. he comes to us from washington today. thank you for being with us. >> thank you. david: the president has said maybe they will get a deal with the eu. what can mr. juncker offer the president that might satisfy him? >> i think the president is focused on terrorists. not only from the standpoint of
leveraging other countries and negotiations but also the fact that tariffs are higher for u.s. exports to europe than they are for exports from europe to the united states. so if you can see some equivalent there he might find that enticing. david: if the president is right, he has said again and again that they are not equal. we have had negotiations for all of these years. is the president right? we were just bad negotiators? >> the agreements overall sought to balance a great number of different elements and at the time they were deemed to be appropriate and acceptable. there's always an opportunity after the fact to look at them to again and see if they can be rebalanced. that's generally what the ideas. whether that's practical or in what time that might be possible is a separate question. david: when it comes to automobiles which clearly are very important would it be
politically possible to say let's make tariffs going both ways exactly the same. could he do that? >> that's really an internal eu issue. it has gone beyond that in that there are a number of german transplants in the united states who use the southern united states as an export platform to the rest of the world including to europe. any discussion of what those tariffs might be have gotten a little more complicated with the transplants in the united states. david: there was a time when we did this on a multilateral basis. is it possible to turn this on the bilateral? eu make au.s. and the deal without involving other trade partners? >> they could. the issue would the weather there were legal vulnerabilities
to the extent that it was simply between the united states and the eu. the general principle is that if you reduce barriers you are supposed to provide that members of thel wto. it really depends on what might be discussed and what might be ultimately granted. david: if you are germany how can you possibly make concessions to the united states without having to make them to other trading partners? it would cost you a lot of money. >> conceivably. this is a very dynamic trade environment. many things are changing rapidly. lots of people have to re-examine fundamental precepts they have had about investments, sales, exports, imports. david: is this something the president should be doing? typically we rely on the trade .epresentative to do that
setting the't be details. he is setting the stage. he is sitting the context and basic parameters so if it's possible from his perspective or acceptable than the lieutenants can go out and negotiate the precise details. david: it will be fascinating to see what comes out of that meeting at the white house. office of the u.s. trade representative. now he's a partner darren washington. going to beump is speaking at the vfw convention in kansas city. we will bring you any headlines that come out. this is bloomberg. ♪
>> we announced we were going to have a strategic review with management and the board of this is this unit. it is grown to be pretty substantial in scope and scale and we wanted to reflect on whether this was the right position. we concluded that review. we looked at holding it on an ongoing basis. we looked at selling it. pathe chose the ipo because it maximizes value for our shareholders after-tax it too will give a clear focus be able to focus resources on working with veterinarians to improve animal health and allow the parent company to focus on its critical mission which is to keep reducing life-changing medicines for patients. david: what's an ipo going to do for your margins. it has not done as well in terms
of margins as your business eli lilly. it is a bit ofrm a headwind on margin expansion from the sand on revenue growth. we don't expect that over the long term. but in the short term that is the case. of course we are in the quiet period here. there's not a lot i can say about the forward rejections. good corridortty in q2. those that aren't expiring had a percent growth in q2. 30 strong. alix: how much would you be expecting to get an idea? -- in an ipo? this is the best one for our shareholders and hopefully that will bear out as we go through the process. portion ofe the 20%
our ownership ipo this fall and then probably next year to separate the rest of the company. david: let's talk about the president of the united states a little bit. you had a statement in your earnings release talking about drug pricing. to what extent are you responding to pressures from the president of the united states thing drug prices are simply too high? policymakers and patients want us to do something about patient cost out-of-pocket costs for medicine and we agree. something should be done. of course the administration has rolled out a sweeping potential set of reforms. some we like, some we don't. while that was national conversation is going on we think it's important to be prudent about how we think about u.s. price. we haven't raised price as the blueprint was announced on any lily medicine. include any doesn't
u.s. price increases for the balance of this year while that conversation occurs. when those changes are implemented we will take a look at things. that's how we think about this problem. david: it'salso trade that has been in the national agenda. just a short time ago president tariffs are the greatest. either a country which has tweeted the united states -- treated the united states unfairly gets a fair deal or gets hit with tariffs. remember we are the piggy bank that is being robbed. all will be great. what effect could trade disruption have on eli lilly? david: the president of the united states right now is speaking at a vfw convention in kansas city, missouri. >> this incredible organization. that's what it is. it's incredible. i'm honored to be here today in kansas city, missouri area -- missouri.
to pay tribute to the men and women who make freedom possible to francis -- kansas city and what a special place. what a special group of people. the veterans of foreign wars. very proudshould be of yourselves. i want to personally thank each and every one of you who have served our country in uniform, defended our nation in battle and protected our great american flag. i also want to recognize a great kansas city legend who i met today at the plane. somebody i have been a fan of for a long time. a member of the baseball hall of fame. george brett of the kansas city royals. he's aroundrge? here somewhere. how many years data 20.
-- how many years? 20. what was your batting average? 305. special god. -- special guy. i want to thank bob wallace along with your outstanding national auxiliary president d gilroy. thank you. congratulations to vfw's , b jing leadership lawrence and sandy kriegel. where are they? great. congratulations. brand-new joined i am pa secretary, robert will keep. he's going to be fantastic. he was just confirmed by the senate last night with an overwhelming vote in the only ones actually been voted against him were all the people that are
running against me into a half years. every one of them. if you want to know who's running just take a look at wilke's score. because every single one of them there will probably be quite a few more. in the senate that was it. what a great vote and he's going to do a fantastic job. there has been nothing more important to me. thank you. thank you. our acting to thank deputy secretary for doing such a fantastic job in the meantime. holding down the fort until wilke got approved and peter is going to be joining the whole team and they are doing numbers and they are doing the job with choice and with all of the other things we've gotten approved.
for our doing some job vets. it is a very important commitment we made during the .ampaign several terrific members of congress are here today as well. great friends of mine. they have helped me so much. we are joined by kevin yoder from kansas. what an incredible guy. and members of missouri's congressional delegation. vicky hartzler, billy long, jason smith. along with your state's attorney .eneral hopefully. we need him so badly. hopefully your new senator to be come josh holly. we need josh badly. thank you. give me a favor. come appear just for a second. just shake my hand.
this guy is a special man. come here, josh. >> against -- it's an incredible honor to be here today. how about the leadership of president donald trump? what do you think? when i think about president trump there is one word that comes to mind. that word is courage. do you agree? how many people over the years have said they will do this or that but there's one guy who had the guts to actually fulfill his promises. the guts to move our embassy to jerusalem. guts to actually stand up against our enemies overseas. the guts to put conservatives on the supreme court of the united states and that's donald trump.
the president always says we are at a turning point moment as a country. our a critical time for country and he's providing the leadership that this country need as we lead the world into this new century. now i tell you what. i think he needs reinforcements in washington, d.c.. let's agree you have to show our appreciation again for donald trump and leadership he is giving to this country and let's redouble our efforts and recommit ourselves to standing together, working hard and making america great again. >> goodbye folks. that was great. what a great young man.