tv Bloomberg Markets Americas Bloomberg August 23, 2018 1:30pm-2:00pm EDT
nuclear deal alive after president trump with the true from the accordion may. the first portion of the package totals $21 million and will be used for the private sector to help with environmental problems and to battle drug abuse. in france, islamic state is claiming responsibility for a deadly knife attack. authorities say the attacker killed two people and wounded another before he was killed by police. that attack took place in a town west of paris. one of the catholic church's leading advocates for gays told the vatican-sponsored conference today that lgbt catholics deserve to be loved, listened to, and welcomed by the church and not ostracized and condemned. the reverend james martin delivered a speech at the church's world leading of families which hope francis will be closing out when he visits ireland this weekend. >> by not welcoming, by
excluding lgbt catholics, the church is falling short of its call to be god's family. catholics, youbt are breaking up god's family. you are tearing apart the body of christ. say: ahead of the visit, a has ao the pope campaign peaceful protest planned. fema has learned the lessons of last use devastation in puerto rico and promising a better response. officials said today that leftcane rina -- maria them better prepared for hurricane lane. powerful most hurricane to hit hawaii since 19 since 1992. 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. ♪ shery: live from bloomberg headquarters in new york. from toronto, here are the stories we are following from around the world. stage.akes center nafta negotiations between the u.s. and mexico are heating up. the former u.s. commerce secretary said, without canada involved, it hardly matters. -- markets would crash president trump says that will happen if he is impeached. is tesla revealing a bumpy red for the sec?
we look at how it could be taking advantage of challenges within the regulator. start with a quick check of the major averages. we see u.s. stocks mixed at the moment, the dow falling .3%, now falling for a third consecutive session. the s&p 500 being led lower i materials. commodities under pressure in the face of a rising dollar. the nasdaq is giving up some of its earlier gains. essentially flat at the moment. after five sessions of gains. amanda: playing off the president's remarks, a look inside the terminal. a record divide in sentiment about the future based on income. that white line, american annual income. the blue line is below $50,000. -- it isou feel good
important where your income lines on how you feel about the future as americans head to the polls in a couple of months. shery: all of the focus is on trade tensions. president trump that not enough focus has been placed on china. roundtable in his latest legislation to strengthen rules on foreign investments to protect u.s. technology. to discuss the latest developer and sauntering with china and ongoing negotiations on a new nafta deal, let's welcome our guests. great to have you. trump hear that president is looking to strengthen those rules on china. how does this measure compare to tariffs on china's imports? >> it would affect fewer chinese
companies. it would be chinese companies that are investing in the u.s.. it broadens the definition of national security. there are very few cases that are taking to cfius and few being rejected. this will make it harder to get through saphenous. it -- through cfuis. shery: how much harder will it be for the two sides to find common ground at a time when they are supposed to be having trade talks? and at the same time, you have president trump wanting to cfius.hen >> we have competing objectives. on the one hand, all of the business has been on trade deficit. in reality, the business community is concerned about china 2025 transfers of data.
rules the data? that's who owns the data? -- who owns the data? is this about tariffs and deficits or a behavioral change coming in 2025, china's long-term plan? communitye business wants to see a change in the structure of how business is done in china. in the short-term term, nafta is the more important economic agreement, getting that right. longer-term, china may be more important to the u.s. is there a sense that getting nafta off the plate is part of what is happening here? part ofthink this is bringing nafta to a close so the president can focus on the real
story, which is china. up, ihe midterms coming believe having nafta out there with tariffs, it will affect the enthusiasm of president trump space. there -- president trump's base. hand, in mexico, they want to do it before december 1 because that is when the new president takes office. there is a lot of pressure to get nafta out of the way so the president can focus on china. there is a political calculation that china plays a lot better in the heartland than nafta does. amanda: could those reasons lead to a bilateral? is there a new threat they canada will be frozen out of the deal? >> it is hard to understand the logic of having two bilaterals.
we run the risk of having a mexico and u.s., even though there isn't a bilateral agreement. my sense is that this is a bit of pressure on canada. they are using a bit of leverage because mexico and the u.s. are negotiating better than the u.s. and canada. for some reason, the relationship began to deteriorate. i really doubt canada will just buckle under and say, ok, whatever you and mexico negotiate, we will come in. i think the have petitions of their own. it will be interesting to see. it will not be over if there is a handshake with mexico. that doesn't mean nafta has been saved. we still have to get canada in. and then it has to go through parliament. , the congress, and the mexican congress. that: we are now hearing
one of the sticking points at the moment is that, largely, beens on auto rules have agreed on by the u.s. is still pushing for those cars that don't meet criteria to meet a tax, up to 25% tariffs under the section 232 rule. what are your thoughts on that? >> these rules of origin, i think we are getting pretty close. the when you add something like that, the unintended consequence will be that it will be very difficult to make cars in the u.s. and you won't be able to export from the u.s. we export over a million cars a year. i don't see how we can export if we are using all of our higher costs. presidentnow see trump using section 232 and talks. there are talks in the senate
confirming what section 232 would be applied on in the defense department. what are your views on transferring that authority? >> you mean from commerce -- shery: to the department of defense? defense is a very important part of cfius. defense plays a role. when it comes down to it, on a cfius decision, defense will have a final say. but these are commercial matters. these are matters that typically pertain to the commerce skillsent and all the are not necessarily there at the defense department. i'm not sure the rationale for that. i think we are overusing national security. to say that canada is a national security threat because we get too much aluminum from them? you can take this very far. it will also encourage other countries to start doing things
that typically would not be done. we are creating this new environment that i don't believe is beneficial to the u.s. shery: thank you so much for joining us today. amanda: coming up, big numbers and big risks. the economic downside of the $16 billion tit-for-tat between the u.s. and china. that's next. this is bloomberg. ♪
washington and beijing each imposed a fresh round of tariffs on imports while talks entered today 2 in d.c. we welcome now scott miller from the center of strategic and international studies in washington. i want to start with your thoughts on how to proceed with talks when you continue to poke at each other this way, continuing tariff escalation while at the table trying to make things subside a little bit. >> thanks for having me on. this $16 billion has been tabled for a long time. it has gone through the process of public comment. it has been more expected. the initial tariffs proposed by the united states as a result of the section 301 investigation into chinese practices was $50 billion. so we had $34 billion in july. and the second tranche is $16
billion. so it is expected. anybodynot mean that who is affected by this is covered by the response. amanda: we have seen strong earnings, a halo effect from tax reform among both literal and perceived. at what point do real companies become affected by these? >> if you look at what is covered by this particular tranche of tariffs, there are consumer goods, like e-cigarettes and electric scooters. by and large, the list is composed of intermediate goods, things we import to make other things here. that is a problem for anybody who is trying to make things in the united states. it is a distributional problem. you have complexity in the supply chain. sometimes highly specialized
materials are imported for our own manufacturing processes. it causes a lot of scrambling and headaches with people managing those supply chains. whether it shows up in final pricing is an open question. it takes longer as retail prices tend to be sticky. it's mostly a disruption for the internal operations of the company itself in terms of getting product to their facilities on time and in the right quantity and that are actually qualified if they have to use an alternative. it is a headache, but there is so much fiscal stimulus at the moment. the dimensions of tax reform and the federal spending far outweigh the macro effect of tariffs. shery: if the goal right now is to change china's trade behavior, how do the tariffs compared to actually trying to strengthening cfius and regulate foreign investments coming into the united states and force some
sort of behavioral change when it comes to ip -- i.t. theft? reform,rms of the cfius that is one of the better managed pieces of policy. the president could have involved the international act and called an emergency and be solely responsible for restricting chinese investment. rather than taking that course, which would be quite competent should all worked with the congress -- by confrontational, he worked with the congress. the committee has been well-established. it has been around since the 1980's. it works effectively. it is a much more predictable and sensible way to manage investment. -- hasl is modernized modernized the action of cfius.
it looks at the exports side of technology or international property exports. that is probably the best managed and separate from the ongoing negotiations. i put out two things when it comes to the administration. the u.s. administration has not been perfectly clear about what they wanted, whether a reduction in the trade deficit or a change in chinese practices. but if they are trying to change chinese practices, if you take as their edition the conclusions of the section 301 report, it is a major confrontation with china. that report basically said china, you have cheated your way into economic success and you have to stop. that is a hard message. while the tariffs are an instrumentality to get to negotiations, it is hard for both sides to agree on what the problem is. shery: as the administration
trade negotiations with south korea. how does that compare? glad there is no longer the uncertainty hanging over the u.s.-south korea free-trade agreement. if you look at what was accomplished in that negotiation, it was finally -- fairly minor changes. it was an extension on truck tariffs in the united states, a few wiggles on the auto is this, a little help -- auto business, a little help to pharmaceuticals. --rall, this was a dial turn more of a press release than a trade agreement. i'm glad they reduced the uncertainty, but it changes very little about the terms of trade between the united states and korea. the is happening here, results of the 301 investigation
say the u.s. want china to change their method of operation. amanda: great to have you for this. shery: it is time for the bloomberg business flash. it's another sign the u.s. housing market may be cooling off. new home sales unexpectedly dipped to the lowest in five months. mortgage rates are keeping more potential buyers on the sidelines. single-family homes fell 1.7%. thatberg has learned endedheim partners have without a deal. the discussion included overseeing $30 billion in assets for the german insurer.
switching gears, in the wake of the legal drama surrounding president trump, many are raising questions about grounds for impeachment. the commander in chief commented on what that would mean for the markets earlier. >> if i ever got impeached, i think the market with crash. i think everybody would be very poor. thinking, you would see numbers in reverse. hard to deny that stocks have enjoyed and usually strong gains recently. the s&p 500 rising, crushing historical return around 9%. giving but are we president trump credit for that? shery: it might be premature to talk about impeachment. it has to go through the house, the senate, and the midterms.
drama the last couple of weeks, the sec has acknowledged -- has not invest -- has not acknowledgment up of investigation. the issue is that we are talking about a situation that is not an easy one for regulators. a charismatic, high-profile , what he hashere done in terms of disclosing in making these statements on twitter is not a clear-cut easy type of situation that the sec comes across everyday. it happens in silicon valley where there is a different culture. innovators are entrepreneurs out onre and more focused launching rockets and other types of things than filing certain forms. amanda: and you mentioned they
have deep pockets. how much of it is a matter of having resources? >> the sec has great lawyers, too. there's no reason to think this will necessarily end up the same way that that case did, if it does get there. we don't know what will happen. that all said, if you are a billionaire and you have access to the best lawyers around. : gtv is your function if you missed out on any of our charts. live from toronto and new york, this is bloomberg. ♪ xfinity mobile is a new wireless network
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scarlet: we are live from bloomberg world headquarters in new york over the next hour. here are the stories we are covering. rate it focus more on our conversation with the president of the fed in kansas, why two more rate hikes would make sense this year. and our interview with tom hayes and his plans for changing what you eat, while coping with everything from geopolitics to trade. harley's new look, an aging consumer base reshaping the eye cannot -- the iconic brand. we discussed the cover story, just ahead. in tworkets closing hours and abigail doolittle has been tracking all of the moves. we are searching for direction. abigail: you are right about that . mixe