tv Bloomberg Markets Balance of Power Bloomberg July 26, 2018 12:00pm-1:00pm EDT
david: here are the top stories. daytrip to the heartland. donald trump just arrived in iowa. a threatened sanctions on nato member, turkey we spoke with ben cardin about trade, russia, and whether secretary of state pompeo passed the test in yesterday's senate hearing. rankingsecond-highest democrat is here to tell us about their new economic land and what it will take her his party to reach the house. let's get a check on the markets. earnings are driving equities. here's abigail doolittle. abigail: facebook is the big story of the day.
take a look at the action for the major averages, mixed. the dow is up for a third day in a row. the nasdaq and the nasdaq 100 down sharply off of the lows. both of those indexes are on pace for their worst day in almost a month. the difference really is facebook. , let's look report at the shares. day,ook plunging on the its worst day ever, losing more than $100 billion in market cap. otherdown 18%, taking two social media companies down, twitter and snap. sales for the second quarter and facebook missed. they are talking about the third and fourth quarter will be weak as well.
the law of large numbers. trade, weo the bank had outlet put up a big quarter. but now facebook and netflix have put up headquarters -- bad quarters. which way will amazon go? we have a little bit of volatility in oil. here is an intraday chart on oil, just around even for most of the day. it is up for a third day in a row based on a report that saudi arabia has suspended shipment after a tanker attack, giving oil a bit of a boost. let's take a look at some of the refining stocks. allthon petroleum, valero,
reporting strong second quarters. we arekative strength, looking at the chip sector. look at the philadelphia semiconductor index, aided by blowout quarters by anz and xilinx. qualcomm decided to terminate , they$44 billion bid follow from the trade war as they simply could not get the approval from china. shery: although there might be a sigh of relief when it comes to trade tensions with europe, shares of european carmakers surged after president trump backed off on his tariffs for imported cars. and john klug younger agreed -- jean-claude
yunker agreed to put off a trade were. both sides will work towards having zero trade barriers. we have senator cardin. seen president trump get some concessions from the europeans. you have been more skeptical of his negotiating tactic. would you say he has been more effective to some extent? senator cardin: it was the president that created the problem with our traditional starting first with using section 232, a national security waiver to impose tariffs against our friends coming coding canada. that caused a division among countries that should be united
on removing trade barriers globally. so it started in a bad position. it has hurt a lot of companies. we know a lot of companies in the supply chain are feeling this. we know what is happening to farmers. he announced he will give handouts to the farmers rather than markets to the farmers. there is a problem the president has created in the manner he has adjust these trade issues. welcome sign to get a trade truce in europe, but we should have better strategies in dealing with trade issues globally, using our traditional partners. shery: you told us on this show that europe needs to be more energy independent. this pledge by europeans to buy more lng from the u.s., how much will it help on this front? senator cornyn: it -- senator cardin: we know that russia uses
energy as a weapon. we need to make sure that europe is not dependent on russian oil. it is important to diversify. i think the united states can help with regards to lng. quite frankly, when you challenge our traditional trade partners in europe with tariffs, it does not necessarily get the type of response you want from their political system. i still believe the president's way of doing business has created a lot of uncertainty, which is not good. david: fair enough. isn't there at least the lowering not just tariffs, but also barriers to trade that should have been done some time ago? senator cardin: we will see. we wanted to enter into a trade agreement with europe. that was on the table before the trump administration took
office. we do need to improve, remove some of the barriers that exist between europe and the united states. that's one of the reasons why it started in the last administration. there were talks about trade agreements with europe. wery: and also today, saying are close to finishing an agreement on nafta. even if theyn -- even of an timement is made, is there to get a vote on this this year? senator cardin: i've been told that it is unlikely that nafta will come before congress before the end of the year. likely weink it is will get it before the elections. i think we all welcome an agreement that modernizes nafta. we hope we are successful in reaching that agreement. shery: on the china trade front, we heard from chinese regulators they are not approving the
qualcomm semiconductors deal. that was scrapped. are you concerned there will be more fallout on other u.s. companies trying to do business in china? knew -- whenn: we you take a look at the country with the greatest trading interest with the united states, it is china. they have the greatest obstacles to free trade. they manipulate the currency. there are all types of problems with china. the major complaint i have heard from democrats and republicans and our traditional trading partners is why didn't the present concentrate on china, get as all engaged in a unified policy in order to bring down the barriers to free trade and fair trade in china? he did not do that. instead, he acted against our traditional allies. there are major areas of concern with china. we need to be a grace of -- we need to be aggressive in dealing
with that and we need to engage our traditional partners in doing that. david: it appears the president has put another item on the agenda. he tweeted the united states will impose large sanctions on turkey. i'm sure you are fully up to speed on this. do you agree with the president that the united states should be putting pressure on turkey to release a bronson --asser pastor brunson? muchor cardin: we very want to see him return to the united states. there was good news this week when he was released from detention rather than being incarcerated. that was a positive sign. we all responded that way. he should be home here in the united states.
turkey is a nato partner. there is no justification for him not being returned to the united states. david: i want to turn to russia. there were hearings with secretary pompeo about what happened in helsinki. i know you are concerned about what might have been said behind closed doors about the magnitsky act. asked thatdin: i specific question from secretary pompeo and did not get a direct answer. all the secretary said is there's no change in policy. what came out at this hearing is that the secretary indicates the policy is the same, although the president has said different things over time. we don't know what happened in that one-on-one meeting. senator mccain and i have filed legislation that would require the president to come to congress before taking any of
the names off to the magnitsky list so that it was clear that that was a very sensitive issue to mr. putin. and we don't want to see him get relief from the magnitsky law that sanctions the rights of magnitsky. taking that as a good sign that the president is listening to congress? senator cardin: i cannot possibly understand how he will be here in september. no one is working on a follow-up to the understandings because the president has not told us what those understandings are. we encourage the president to reach out and talk to mr. putin. when you bring him here to the united states, which should be for some justified
reason, we don't understand yet why there should be a summit held in the united states based upon not knowing what happened in helsinki. david: it is always good to talk to you, sir. shery: let's get a quick check of the major averages. u.s. stocks looking mixed. the dow is gaining for a third consecutive section. it is all about facebook. 18%.lunge continues, we will keep you updated on the market move. this is bloomberg. ♪
david: -- shery: this is bloomberg markets balance of power. david: we turn to mark crumpton. mark: president trump in the midwest where he will celebrate with hundreds of formally laid off employees who were wrought back to work at a steel mill them -- steel mill in illinois. not everyone in the state is happy. illinois-based caterpillar and boeing have already felt the tariffs.effects of the paul ryan says he does not support efforts by some of his fellow republicans to impeach deputy attorney general rod rowland -- rod rosenstein. speaker ryan said he doesn't think lawmakers should be "cavalier" with the impeachment process. he says that rosenstein's back-and-forth with republicans over document requests does not rhyme with the level of high
crimes and misdemeanors that would warrant impeachment under the constitution. 11 republicans have introduced an impeachment resolution. a firsthand look today at areas ravaged by wildfires. he had some emotionally charged conversations, promising survivors that the government will "restore everything." the death toll has risen to 82 and the search for missing people continues. at half staffing outside a few chrysler production plant in italy today -- fiat chrysler production plant in italy today. workers paused production for 10 minutes to honor the recently deceased president of the company. global news 24 hours a day, on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm mark crumpton. this is bloomberg. ♪
david: this is bloomberg markets talents of power. shery: it is time for the stock of the hour. facebook headed for its worst day on record today, plunging nearly 20% after reporting a disappointing second-quarter. i don't want to take all the credit, but i did get rid of my facebook account. it was really hard. it's like getting rid of part of your life and your friends. i feel a little more disconnected to the world. >> it's huge. there are privacy concerns, political concerns for facebook.
they are having a really bad day, the a guest, worst market cap loss ever for an american company on record. $120 billion in market cap loss. second-quarter results actually did beat, but it's these other 42% thisrevenue quarter year-over-year. seems like a good number, but lower than analyst estimates. it's the first time the company has lost -- has missed analyst estimate since 2015. the important number is the active daily user number. that posted its slowest growth on record this quarter. it came in at 11%, lower than analysts were anticipating. more importantly, that is a revenue driver. the company is saying that is not going away anytime soon. revenuees expressed growth continuing to decline.
margins will be compressed. that is dragging down some of these other tech names as well, twitter, netflix, google. is still to come. >> twitter is on deck. obviously, it is being dragged to down with facebook to. but we are not sure. you can see the chart on the terminal. it has been pretty flat. week got itsast first down gradient six months because of user growth. analysts lagging this, saying you may not see the numbers. we saw the same thing with netflix. . the reason netflix had a bad week last week was because growth did not rise to the expectations. with twitter, you have a double whammy because now it is getting attacked i one of its most prominent users, president trump saying they are shadow-danny
shadow-banning republicans. as we have seen, the president trump effect, amazon, others that he has gone after, shares do not respond well to that. this is balance of power, this program. let's talk about facebook with respect to washington and brussels as well. have much of this problem can you -- some of the revenue guidance reduction we saw out of the company last night reflects what they's the in europe -- what they are seeing in europe. the new law will have an effect going forward. that is something the u.s. technologies have had to deal with, the regulatory oversight.
that is not the big issue. the big issue is, if there will toryy u.s. or you oversight coming from congress or any regulatory authority, -- any other regulatory oversight coming from congress, that would make a big difference. facebook has the double whammy of slowing revenue growth and the higher expenses, in particular plywood some of the regulatory oversight they are seeing. the net result was a big hit to the office outlook. shery: even the unique problems that facebook faces, how much guidance to they provide for future tech earnings? we see earnings coming into play this afternoon. on tech of an overhang names, probably reflecting the valuation that a lot of these names have been trading. very high valuation. it should you had tenuous those valuations can be.
an facebook issue is advertising issue, a cost issue associated with their business. good about their long-term digital advertising outlook. amazon is a different animal. it is on autopilot in the sense that all investors want this company to do is continue to invest in their business, grow their e-commerce and grow their cloud business. that has been the story, the long-term. story for macro commerce. . david: -- the long-term story for macro commerce. have theazon may inside track with this big contract with the government. >> amazon already has all of these advantages. paul can can see this is an astronomically-sized contract. shery: valued at as much as $10 billion.
>> this is a big reward for amazon. david: there has been some over how much employees want to do for the pentagon. >> given the president's attacks totwitter on jeff bezos, potentially award such a big piece of business is not consistent with that. and the cloud business, there's a handful of really big layers -- players. amazon is the big player. alphabet is there as well. amazon is clearly a big player. biggest typically the player in this quickly growing business. alluding toll was the valuation so high, no matter what happens, if you miss a little bit, the reaction is huge. >> there is so much expectation built in the stocks.
netflix was the best performer in the s&p 500 and it missed. it was not an astronomical miss. tagything was already price expeditions are so high, you cannot afford to miss the bar. shery: thank you for joining us on this roundtable. aming up next, trying out fresh pitch to midterm voters. why a democratic majority would be a better steward -- would be better stewards. this is bloomberg. ♪ this isn't just any moving day.
this is moving day with the best in-home wifi experience and millions of wifi hotspots to help you stay connected. and this is moving day with reliable service appointments in a two-hour window so you're up and running in no time. show me decorating shows. this is staying connected with xfinity to make moving... simple. easy. awesome. stay connected while you move with the best wifi experience and two-hour appointment windows. click, call or visit a store today. david: this is bloomberg markets balance of power. shery: let's get a quick check of the major averages. the dow falling -- or rising
half a percent. for three sessions now. most sectors are in a green. information technology dragging the index. the nasdaq is down almost a percent. boostrials are getting a on lower trade tensions following president trump's meeting with the european commission president yesterday. david: we turn to mark crumpton. mark: steven mnuchin spoke to reporters at the white house today. he says the united states is leaving the door open for talks with china. >> if they are willing to make serious changes, just as the eu agreed to yesterday, we will negotiate with china anytime. but they need to make a serious change. mark: addressing steel and andinum tariffs counterterrorist will be covered in the first phase of talks between the u.s. and the eu.
he reiterated that no new tariffs will be imposed during the negotiations. and if the u.s. concluded an agreement, "there will be no car tariffs on the eu." frauddge overseeing the trial of paul manafort wants to keep politics out of the courtroom. he is laying down ground rules for the bank trail that is scheduled to begin july 31. the judges handing any mention motives orueller's manafort's role in the trump campaign. the vice president says the u.s. turkey ife tariffs on they do not release an american pastor accused of espionage. he was moved from jail to house arrest yesterday because of onset -- unspecified health problems.
hasn collins party announced victory. bets ofi stocks rose on a stable government based on khan. global news 24 hours a day, on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm mark crumpton. this is bloomberg. ♪ much. thanks so president trump is predicting a red wave this november. that experts say democrats have an edge in the possibility of flipping the house and reaching a majority. welcome one of the lawmakers whose job it is to make that happen. steny hoyer has served for 37 years in congress and rose to the position of majority whip. mr. congressman, thank you for spending time with us today.
let's start with something you have been campaigning on, your new economic approach. you have gone across the country and talked with a lot of people. new?uch is really it sounded vaguely familiar to a lot of things we have heard from democrats in the past. hoyer: it is talking about jobs and helping americans make it in america. that was the message in the last election, the election before that. it is the message that resonates with americans because they know, it will be successful and their families will be successful, they need to have good jobs and good pay. we talk about a better deal, an agenda that is for the people. the people are focused on their economic well-being. that is what they really care about. they care about their health care as well. they care about investing in their kids' education.
the agenda is not brand-new. it was fashioned eight years ago in 2010. it resonates with americans because americans came from so many lands. why they come here to make it in america to succeed. we focus on education and job training for 21st century jobs. we have 6 million jobs available in america that are being advertised and cannot be filled because we don't have a match for the skills that americans have. so we need to invest in their education and skills training. we need to make sure that america has the capacity to start new businesses, to grow jobs in small businesses. that is really where you jobs come from for the most part. what we want to do is make sure they have portable benefits so they can leave the job they have and start a new business and be sure they have health care benefits and long-term pension benefits. we also need to make sure they can get capital.
that is part of the make it in america agenda. lastly, we will be talking about infrastructure. the president talks about infrastructure. immigrants and republicans talk infrastructure. we know we need to do our best in building the infrastructure of our country, not just the roads and bridges, but the grid, the internet availability for our communities. you may say, well, we have heard this before. we have cared but we need to do it. we need to do it. -- we need to do it. david: this is close to what democrats said before. fewer people are out of work. since the tax cuts, more people have money have -- more people have money in their pocketbook. hoyer: theive
american people, the majority of the american people think the tax cuts were for the rich and they are right. when you save more money in their pockets, they don't notice it. you see poll after poll say that tax cut was for the wealthiest in america. again, 83% went to the wealthiest 1% in america. we think that is a winning issue for us. they are worried about losing their health care. that is now a winning issue for us. conor lamb, in a district that , he wonn by 20 points on tax cuts and health care. this president said he was going to make america great again, invest in education and in building jobs. he said he would invest in infrastructure. he has not done that. yes, the economy is doing reasonably well and that is good. frankly, we think it is the obama economy. we have had a straight line up
over the last 10 years approximately. that was the obama investment in building the economy. we will see what happens over the long-term. and the tax cut we saw not only has not driven jobs to be created at a greater rate created under obama, but it has increased by 100% the deficit that we had in 2015, the operating deficit. .e think we have good arguments we think the american people will respond. that's why the polls show that the majority of people will vote for democrats to be the majority in the congress next year. shery: you are talking about the issues. how do you think voters will respond to party identity? conor lamb is a centrist. cortez inhave ocasio- new york is a progressive. is this a party identity crisis?
representative hoyer: i don't think we have a party identity crisis. they ran on needing to protect the affordable care act and accessible, affordable quality health care. they both had that premise. our party is united. you see that in the votes cast by the democrats in the house and in the united states senate. ery: conor lamb was also the first person who passed the and have below see -- the anti-policy message. io-cortez also not admitting she will support below see. loci.pport pe
to comee democrats have out against nancy pelosi to flip a red districts? no --entative correa: representative hoyer: no. i think that is what people will vote on. difficult't there a message? president trump is effective at appealing to his base and saying your life is not better and it's because of things like the chinese, things like trade. i will fight for you. withill the democrats deal things that are hurting americans, in places like michigan, ohio?
hoyer: the make that.rica deal speaks to we have historically been for making sure people can make it in america. we will press that argument. very frankly, the soybean farmers in america don't think that mr. trump was thinking of them when he started a trade war. they are really hurting. other farmers are hurting. did we need to deal with china? we did. but did we have to deal with china in such a ham-handed fashion that affected our closest allies as well? the answer to that is no. is it hurting her people? the answer is yes. harley davidson did not think it was positive. an iconic manufacturer of american motorcycles, as you saw, just move jobs overseas. we think we will be able to make this message to the american
people. and as a result, we will take back the house in november. david: we know you are a busy man here and it is good of you to take time and spend with it -- spend it with us today. shery: let's continue discussing trade. testify before the senate appropriations committee, a nafta agreement is on the horizon. this coming as president younger ncker has agreed to work with united states, by more american soybeans and liquefied natural gas. in return, president trump back down on applying more tariffs on european cars. nowesentative ron kirk is senior advisor. thank you for your time today.
u.s. tariffs on steel and aluminum are still in place. how satisfied are you with the specifics we got yesterday? do you have confidence, optimism that this could lead to something? >> i think the short answer to that would be no and no. we did not get an agreement yesterday. detente ina welcome a trade war that should never have been started with one of our strongest strategic and economic allies, like the european union, in the first place. what we had is this president try to quickly put out a fire that he started by committing to reengage on negotiations to reduce tariffs between the u.s. and the european union that frankly started under president obama when we launched to propose the transatlantic trade and
advancement partnership initiative. but it is a welcome bit of relief, particularly for the auto manufacturing industry. at the top, because of the steel place,minum tariffs in you still have the retaliatory tariffs in place that have been so damaging to america's farmers, as you just heard congressman hoyer mention. the europeans did promise to buy more lng, more soybeans from the united states. how concerned are you that this might embolden the white house to use tariffs with other trading partners as a bargaining tool going forward, keep using those, and will that be a good strategy? >> if it is going to cause the kind of pain we have seen happen to the farming economy, and you have a republican president against the very loud objections from his own party now having to
promise the liens of dollars in aid to america's farmers to promised billions of dollars in aid to america's farmers to address the pain he imposed on them. congressman or reference, america should hold china's fee to the fire. engage all over our trading partners. but there is a more thoughtful approach to doing that. more than the tragedies of this administration walking away from the proposed tariff agreement with the european union and withdrawing from the transpacific partnership is we have lost all of that leverage. have aan opportunity to completely tariff-free agreement
with the european union. now we will have to go back to the table and renegotiate that. we are doingnk sona now from a position of weakness rather than strength. now from a position of weakness rather than strength. this could embolden him to act this way with our allies. back to thet to go attempt to reach an agreement under the obama administration with europe. it was not going that well or smoothly are quickly. we may not have gone forward in a straight line end it may not have been elegant, but if we are circling background and negotiating a burden of that
deal now with europeans, certainly, the president has gotten their attention. there is no question about that. why do you think we are so much weaker today than then? that withjuxtapose each a specific partnership. you now have the largest free trade agreement and the largest economic zone in the world put in place with principles and trade mechanisms largely initiated and negotiated by the united states. ,nd those 12 other countries those 11 other countries have already put them in force. that gives them an extraordinary competitive advantage. david: i'm talking europe. one ofhe case of europe, the reasons the negotiations stalled is this president in particular made it plain that he favored bilateral negotiations with presumptively one country that he could bully versus
larger multilateral agreements. fallof the blame has to squarely at the feet of the current administration because they made it clear they were not interested in negotiating. so there hasn't been much activity since this administration came into office two years ago. and one of the sticking points that we knew would be between -- would be in an agreement between the european union and the united states would be over farm subsidies. they will still have to work those out. award we have a parade or a nobel prize for economics, let's see what happens. because this feels a lot like the victory we declared after nato in which the president came out and committed to europe to doing much more than we heard any of their leaders commit to. shery: let's talk a bit about nafta. representative saying we are in the finishing stages
of achieving an agreement in principle that will benefit american workers, farmers, ranchers, and businesses. an agreement in principle, is that enough? is that better than not having a deal until next year? or will this just prolong uncertainty? principle, i have been on a diet and exercise regime for the last 24 months and i am healthier. not to make light of it, in principle is just that. the reality is we can completely update nafta as part of the transpacific partnership. we brought everything from intellectual property rights standards up to norms that americans have wanted for years. we already have complete elimination of tariffs in north america. and i can assure you know state appreciates that more than my home state of texas, which is
spectacularly the largest beneficiary of our trade between the u.s. and mexico. so i will be anxious to see what more this administration can get. because we are in the challenge position now that, with the transpacific partnership going into effect without the united states being a part of it, canada and mexico have an extraordinary leg up on us in terms of export into that market. but i'm hopeful the ambassador might be able to get an agreement beyond what we had proposed in the transpacific partnership. but as you know, mexico just elected a new leader principally based on his opposition to the president's very damning relationship. shery: thank you so much. more talents of power next. this is bloomberg.
i'm david: breaking news. illio marchionne had been for the year and in the hospital. that had not been disclosed to shareholders. sergio marchionne turns out has been seriously ill for a year before. just over 10 weeks to go before the november 6 election. democrats are focused on the house of representatives. e o brian murray and janie zano. let's hear from you.
tell me about the chances for republicans to hold onto the house. >> i think the chances are terrific. that: a lot of experts say it will likely go democratic >> if you look at history, yes. there is always a challenge in the midterms. you have a different electorate. when you look at the racist side-by-side, politics are local. when you look at these races one by one, yes, you can lose seats at the table, but not the house. shery: president trump right now speaking in iowa on a factory tour right now. you would say the democrats have a bigger chance right now. >> you look at most of the predictions, they need 23 seats. looks like they will pick up 25 to 35. historically, they will pick up the number in the house. the senate is a much tougher
battle for the democrats. but certainly, the house. the question now with the house is how big will the wave be. will they make up -- will you pick up 2425 or the closer to 35? they need to be over 7% in the generic ballot. some of the latest have them in the low double digits. years,you go back eight around this time, those leads and those polls were double digits. if you look at the real clear politics average, it is about six or seven. the cash on hand is a major issue and redistricting since that time. david: everybody has a poll. they specifically said, in minute sconce and -- in
wisconsin and minnesota, the president is down double-digit's. that could affect the selection. day, whenend of the you go back to local, one of the questions right now are tax cuts. how does that impact everybody locally? the trade war with terrorists come -- with tariffs, what does in michigan? i believe those numbers will turn as well. -- president is at 44% of the highest. that is about where barack obama was in 2010 with the first -- the big republican wave. another indication for republicans is they are trying to avoid discussion of president trump for the most part. they are focusing not on national issues. if you look at these races, on local issues. they don't want this to be a referendum on president trump. for house races, when you look
at vulnerable republican seats, they are suburban, well-educated areas and they are likely to go democrat. i agree with you, the money edge goes to democrats now. in the last fundraising cycle, democrats out fundraising republicans. david: ok. thank you both. you are watching president trump's speech live at the panel. shery: coming up, commodities edge will look at the trade truce struck by president trump and juncker. this is bloomberg. ♪