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tv   Bloomberg Markets Balance of Power  Bloomberg  November 21, 2018 12:00pm-1:00pm EST

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headquarters in new york. >> welcome to "balance of power," where business meets politics. theresa may meets the eu president. next steps for italy. also the latest in the molar investigation. -- the robert lawler investigation. -- robert molar investigation. mullerr investigation. >> theresa may has just made her way in. this will be a long day for theresa may. the u.k. and european union both agree terms of the exit have been scheduled but it is about the future relationship, the future trade, the problem, we
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are now hearing some countries including germany saying if we do not get a clear text on this today the sunday summit may not go ahead. both sides are trying to get concessions from each other when it comes to the future relationships. for theresa may it is getting something she can present back on. her deal has been unpopular. for the european union, they want to make it clear that staying is always at the best decision. plotting to oppose the deal. what is the likelihood they will be able to get that true a skeptical parliament? that is the big? question mark. even if we get to seal the deal, the unknown is what happens when
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it gets to u.k. parliament? this is the strategy for theresa may. my deal may not be perfect but if we don't get it, we don't have brexit, or you get jeremy corbyn in power. if you are conservative, you don't like that. you are back in the deal even if you don't like it. shery ahn: thank you. let's go to alexander in rome. we have seen italian deputy premier stick to his guns on the government spending. is there a door open to tweaking ? >> yes. he politically does not have much of a choice. he needs to keep his promises. he is doing well as far as voters are concerned. he is ahead of his coalition partner. points.keep the main
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door and thatthe has reassured investors. he said -- perhaps we can tweak. there is not much to be feeling optimistic about. the small stuff is not going to be enough to reduce deficit or help italian debt, which is huge, which is what the eu said today said they are upset about. the reason they rejected the budget said, it was out of control. kevin: they're talking about the deficit in italy. we are not talking about that in the united states. how has president trump been playing with mr. juncker lately? reporter: about the relationship? it is not ane, easy one. every time europe goes toward him, he smiles and steps back.
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resolve what happened with emmanuel macron -- we saw what happened. it is a strong relationship but trump has something to say to accuse europe of not doing their part, paying what they need to be paying for nato. it is a complicated relationship. both countries have issues and problems. kevin: not too kevin with the latest on the mueller investigation. the president has submitted written responses to the investigation. when will we get conclusion? reporter: we know he has submitted answers to some questions. asked a set of questions about collusion and russia. there were no questions about obstruction. there is a question about whether there will be additional questions. we still have to see how that plays out and whether he is
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satisfied with what is going on so far. we are all expecting in the time, time, it is a short we will see something from mueller. kevin: how much pressure could republicans on the president to get him to meet with bob mueller privately or testify under oath? reporter: we do not know how far they want to go. most central republicans want the probe to be allowed to finish. you have also started to see them in recent weeks talk about it is time for him to wrap up. they are saying they do not want trump to interfere or end early. the town has shifted a little. has shifted a little. kevin: we have not seen much market reaction to the probe.
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we have seen movement with saudi arabia. the president releasing the statement saying, the relationship with the saudi's, financial ties will continue. at some point, that put him at odds with intelligence community. there are democrats that maybe would not agree with the rhetoric but would agree with the assertion of the importance of the relationship between the u.s. and the saudi's. reporter: the question becomes, whether the ends justify the means. the president laid out a case in his own way yesterday, basically the relationship as morten orton and anything else -- more important than anything else. it is unclear if democrats feel uncomfortable. a growing number of republicans feel uncomfortable. arms sales and oil prices and anti-iran movements outweigh anything else, this sense is a tough sell. even if you do not see it this year, next year, when democrats
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take over the house, they will be able to call in intelligence officials, whether the director of national intelligence, director of the cia and say -- tell us, what do we know? what the re-think happened? -- what do we think happened? what is he basing his decisions on? question the trump administration has avoided. shery ahn: let's get a check on markets. what a difference. a rally intact, boosting equity markets. u.s. equity markets green across the screen for major indexes. very different from yesterday. tech rally boosting nasdaq, up 1.3%. s&p 500, energy is leading gains. huge rally in crude. w[pi up 4%.
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yesterday it hit a one year low. the oil market is shrugging off a number of pieces of news that we thought would send it the other way. oil industry growing in the u.s.. the president tweeted, backing the saudi's for pushing oil prices lower. asking for lower still. rally for crude. tech. let's switch. amazon over 2%, facebook and google too. these names are down double digits this quarter. one day of green, may not a good quarter make. amazon getting more of a break this weekend as holiday shopping starts with black friday into cyber monday. they would normally get a boost anyway. cold weather forecast in the northeast, people may stay-at-home and shop online rather than go to stores. that could benefit amazon.
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another group rallying -- homebuilders. significantlysing in session. after positive news, earlier this session with existing home sales data stronger than anticipated. see,u take a look, you can this rise at the end, is the first rise in seven months for existing home sales, suggesting demand may be stabilizing at lower level. down 5.1% from one year ago. shery ahn: thank you. we will be discussing housing numbers, with our next guest. also, the trump economy. we will speak about the recent volatility and the president's agenda. this is bloomberg. ♪
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♪ kevin: this is "balance of an here is the first word news. kailey: president trump thinking saudi arabia for keeping oil prices lower. he wants them even lower. bigreated that it is like a tax cut for america and the world. saying he would not let the murder of jamal khashoggi jeopardize relations. theeuropean union has taken
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first steps to putting fines on italy over the budget. the deputy prime minister of italy says he is open to tweaks, but he says he will not compromise on the main principle. theresa may is meeting with european commission president in a bid to finalize brexit. on a documented but are still working to nail down agreements on future relations. eu leaders will meet in brussels on sunday to understand the deal. the leading international a 85,000 yemeni children have died from malnutrition and disease since the start of the war in 2015. officials say more than 8 million people in yemen are at
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risk of starvation. global news 24 hours a day on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm kailey leinz. this is bloomberg. shery ahn: thank you. farm and construction equipment maker deere is our stock of the hour. emma chandra is here to break it down. the concern was that the trade war would take a bite of farmers purchases. emma: it is a complex story. top line numbers, earnings shares missed. sales missed by $300 million. earnings forecast broadly in line with estimates. trade was the concern. they said they were being hurt by the trade war in a couple ways. higher steel cost dragging profits and tractor sales growth slowing.
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they did not offer guidance for first quarter. for 2019 it would be just 7%. havefs on soybeans, you tractors,y sales for that they might export to china. that was concern about from them. nevertheless, we heard from the executive who said the warning for the year ahead were conservative. kevin: that is where i want to pick up. later on, art is a trump economic advisor, and he is a descendent of the trade policies but we are seeing in real-time how the trade policies are impacting companies and farmers in particular. what are concerns and how are they building it into growth forecast for the next calendar year as the president escalates tensions with china? emma: we heard from the chief
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executive officer. it is still very much alive despite trade tensions. it is not just the ceo. farmers want growth. while trade concerns are affecting sentiment among farmers overall, u.s. farmers and dealers are remaining cautiously optimistic. that is why you saw the conservative guidance into 2019. they may be hoping they can do better than guiding through next year. shery ahn: thank you. stock of the hour. we will be discussing trade and more. the u.s. economy, next. this is bloomberg. ♪
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♪ kevin: this is "balance of power," i'm kevin cirilli. shery ahn: i'm a shery ahn in new york. sharp losses across asset classes, trimming yesterday. what does volatility mean for the economy? laffer, joining us now from nashville. great to have you with us. thank you for your time. we have recently seen jerome powell downplay volatility in equity markets at q&a at the dallas fed. how are valuations across the u.s. and could volatility be the cause of another dot com or 2008 bus? >> i don't think so. market that has been flat the whole year.
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since trump took office, it is up 33%, depending on whether you look at high tech or the s&p or dow. it is solid growth in market. i'm looking forward to continued prosperity. shery ahn: crucial part of the economy, housing sector. mixed reports. home sales numbers today seemed better than expected. we saw a sentiment plunge the most in four years. how big a threat is the sector for the broader economy? art: huge. you cannot have a boom in the u.s. economy without housing and construction. you cannot. new housing starts for 10,000 population, is the key central figure you need to look at. if you look at the last eight years or prior to this past year, new housing starts for 10,000 population being extremely low by any historical standards, so we really need to
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get housing market going and growing to get this prosperity. i anticipate it will happen. to interest forward rates back to where they should be at normal market rates so this sector of the economy does not get starved. kevin: wait a minute. i think i heard him say he is looking forward to fed chair powell raising interest rates. that is not what president trump says. as the president wrong? -- is the president wrong? art: if you want to talk to him, please do. i am an economist. i support president trump. i understand his background. they loves low interest rates because he is a businessman. -- he loves low interest rates. you need to match demand and supply. when they are too high they kill demand. when they are too low, they kill the supply of capital flowing in the market. you need interest rates that come back to market levels and have the fed get out of the business of trying to control rates.
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book, you lay this out easy to understand. trying to understand what the president is looking to do with economic policies? read this book. let me ask you with the trade policies with china -- you said you think a trade war with china is not a good thing. art: horrible. kevin: as a supporter of the economic policies, what should the president's end goal be? in terms of where this is headed? they will meet and when is buenos -- windows aris -- s aires. art: when he left g7 in ottawa, he said to the other members, i am willing to do this right now. he is going. how do you get countries like china which are not free trade, how do you get them to negotiate and bring down intellectual
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property rights of americans, bring down the tariffs, open their markets as well is ours? he has a strategy that i am not an expert on. i do not know how to negotiate. i am no good. i cry whenever i think of negotiation. i climb under my bed in the fetal position. tell me when it is over. trump is a negotiator. he really believes it and i think he will be successful, he will get a free trade deal with china because of the strategy he is using. i couldn't want a free-trade deal more than i do now with an especially. they should be our best friends. without look at china, walmart, there is no middle-class class or lower class prosperity in america without china, there is no walmart. they're the best partners america could possibly have. it has to be free trade. shery ahn: how bad will the fallout be until president trump is successful?
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we are seeing farmers getting hit. president trump has promised them a $12 billion package. only $800 million of that has been paid out. how much tougher will it get? art: i don't know how tough it will get for farmers or groups. if you look at u.s. gdp growth, employment growth, there is little aggregate impact so far. when you look at. like the great depression -- clearly caused by protectionist early 1970'she -- nixon, 10% import surcharge, evaluating u.s. dollar, job development credits -- he caused marketving of the stock and the horrible economy of the 1970's. i do not think anything like that will happen but a trade war would be very bad. china should sit down with president now and negotiate we trade for the world and we will double the stock market in two
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years. shery ahn: it looks like it is headed toward 25% tariffs starting anywhere, -- january. when that happens, what will the impact on consumers? will they be jolly? trump is doing this with regard to negotiation to get them to come to the table and negotiate a real free-trade agreement and take tariffs away. i truly believe that. i know that is his mindset. anyone who has run an international business has to be free trade. he had the big business. he knows what it means. i have joked with him about freeg -- he has to be a trader. kevin: if they get to infrastructure, can the u.s. handle that economic stimulus? art: yes at the infrastructure is needed, i do not think it has
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anything to do a stimulus. it has to do with infrastructure, a highly productive source of capital. but no other government spending. entitlement programs pay people to get unemployed. we have to reduce those. kevin: don't crawl under the bed this thanksgiving. art: thank you. kevin: thank you. art laffer. up, a tech warng or trade war? the latest accusations. this is bloomberg. ♪ [ phone rings ] what?!
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see the grinch in theaters by saying "get grinch tickets" into your xfinity x1 voice remote. a guy just dropped this off. he-he-he-he. ♪ kevin: this is "balance of power," on bloomberg television. shery ahn: i am in new york. let's get started. u.s. stocks gaining ground with tech rallying and pushing stock
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markets higher. nasdaq up 1.4%. the dow also reversing session losses, gaining 6/10 of 1%. the s&p 500 higher by communication and consumer discretionary stocks. gaining the most in one week. session.ding let's turn to the first world news. a dozen gop senators are urging president trump to send u.s.ess a copy of the -canada-mexico trade agreement as soon as possible before democrats take control of the house. that the bill would be more difficult to pass. the trade war with china appears to be cooling in american factories. factory orders were business equipment were week in october
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for the third straight month. nominal capital goods were little changed. special counsel urging a judge to reject george papadopoulos' request until a u.s. appeals court decides on a challenge. he is new to report to prison next monday. he says he is not accepted responsibility for his crimes, citing his public comments regretting his guilty plea. rain in southern california. that could be more trouble for the region. the national weather service says mudslides and rock slides are possible in areas burned by the fires west of los angeles. there is the risk of flash flooding which could complicate efforts to find victims. 81 people are confirmed dead. more than 870 are missing. global news 24 hours a day on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm kailey leinz.
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this is bloomberg. thank you. look out. president trump and president xi jinping are sent to me december 1 at the g20. g20.t to meet at the we break it down. be in this the goal framework of the framework meeting? >> peace and prosperity. what that means is challenging. there are different factions. it depends. kevin: it depends who the president is listening to. >> varies from day-to-day. peter navarro will not make the trip. that is positive. larry kudlow has a different idea. january,is comes in when they face another deadline. what tariffs will be implemented. what would a win be from the
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g20? >> whatever he thinks it is. he will say it is a win. this is more than economics. this is geopolitical issues, policy, the role of commerce between the nations. it has become a bigger issue than trade friction. kevin: inside the beltway, we miss this. the president going after china helps him politically, especially in battleground states like michigan. >> i grew up in the midwest. i have uncles in the union. they are baffled. they fully support what trump is doing. michigan,ennsylvania, wisconsin, there is huge support for president trump. there are plenty of people, even people that work with china, ,hat
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that want to see more aggressive posture from the u.s.. shery ahn: when we talk about domestic audiences, president xi jinping is president for life. who will face bigger domestic pressures first? >> the xi thing is interesting. he will be there for longer. there are factions in the communist party, just like in the u.s.. there are people that want to see a more reformed government and china. if you saw what hank paulson said last week, he is listening to different folks. there are folks in china that want to see reform. shery ahn: president xi jinping got the limelight in asia. was this a strategic mistake that president trump missed? >> it would have been important for him to make the trip. more of long-term american interest will be in asia, the south china sea, india, it is
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important for our government to spend more time in that part of the world. china mark warner slams on intellectual property. >> that is a huge challenge. china has made advances. we are not near where we need to be. our system is predicated on intellectual property rights. the chinese do not have that. they will get there when they have brands that are worth protecting. kevin: there was a shift when folks were saying, the u.s. would have the upper hand, now it seems the u.s. in terms of the pr war between the countries is on the back foot heading into g20. how does the u.s. get the upper hand? >> we are still, we still have the upper hand. who is up and down and the horse race is not the best thing. it makes for interesting twitter. big term, these are macro issues. , from china's
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perspective, would be a win out of g20? i think we are putting too much emphasis on this. january will still be the actual development of when we see how long of a dispute this will be. >> three big players. brussels. europe. kevin: china is shifting. they should not be annoyed. g20 is interesting. -- should not be ignored. tariffs are in place. they have not hurt the consumer. kevin: there is a farm bill that should be renegotiated hopefully during lame-duck. coming up, president is facing blowback from members of his party over his decision to stand with the saudis. we talk with a member of the foreign affairs committee, next. this is bloomberg. ♪
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♪ kevin: this is "balance of power," i'm a kevin cirilli. shery ahn: i'm shery ahn. president trump is standing by the saudis. he said he would not jeopardize relations with the u.s. ally, citing the potential impact on oil prices and iran. he went on to discount conclusions from his own intelligence agencies about evidence linking the crown prince to the killing of jamal khashoggi. "it could be the crown prince
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had knowledge of this event. maybe he did. maybe he did not. we may never know the facts.", adam always great to have you with us. does saudi arabia have much leverage over the united states as the president makes it out to be? >> i don't think so. i do not think it is leverage. i chalk this up to what i have had to say, right policy, wrong words. this is a tragic event. it is egregious. that statement from the president should have used 1.5 pages for the point. we believe the act, we believe it was probably directed by the highest levels however, when you look at a terrible area and see
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what is going on in the area, saudi arabiave to theyran, and russia, could have killed journalists in moscow, political opposition poisoned in the u.k.? you cannot fundamentally shift relationships. it missed a massive opportunity. we cannot intervene everywhere. we can use the force of our words and we missed that. shery ahn: when it comes to president trump trying to defend saudi arabia, is it the right policy because saudi arabia is the backbone of american lessee in the middle east -- american policy in the middle east, so this is understandable? >> it is not a bastion of our policy. when you look at middle east politics, you have to pick between saudi arabia and iran. while saudi arabia is not the best place to be by far -- they have massive human rights violations -- iran has the same
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thing. they project power outwards, including to 50,000 children in syria. he missed the opportunity to say we do not stand for this. given the fact that the middle east is a rough place, we will not fundamentally shift our alliance with saudi arabia, but we will put them on notice. you have people disagree with the outcome. i do not think there would be bipartisan outrage at the words. seeing, saying the president was tone deaf. lindsey graham, republican, calling into question his confidence in the saudi crown prince. how do you recover?
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>> the only way is to do better. there are good things happening in saudi arabia. finally giving women the right to drive, for goodness sakes. that should have been done when the car was invented. trying to bring about social change and spreading the economy beyond oil. there has to be a change. bring change to your country, as he professes, you have to respect human rights. be where the united states are in terms of that view. dismembering a person of the press and your embassy is over the line. we cannot intervene everywhere. we have to have bad allies sometimes. the force of our words make a difference. we missed that. . kevin: the president cited businesses like lockheed martin,
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would u.s. ties strengthen jobs domestically. mistakepresident make a by not embracing the intelligence community that implicates him? >> i think he made a mistake. we can still have the policy he laid out and acknowledge the problem. i do not like using economics as the reasoning for in action or action on issue. it is real politics. you have to take the economy into account. that stuff matters. that matters how we talk about it. it is not diplomatic speak. it is not just trying to sound good. it is saying that we hold values to be dear to us. we hold them close to us. if we lose that moral authority, then when russia does what they see humanably, or you
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rights violations in africa or other parts of the world, it takes away our ability to have impact with words because they say -- what about saudi arabia? i think the policy is correct. there are no good answers. words matter. i wish he would have had someone else write that statement. shery ahn: one more question on this. brendan boyle joined us yesterday and he was talking about a democratic house, restoring focus on human rights next year. is this congress undermining human rights? you have to choose between the lesser of evils, i ran or saudi arabia? >> i do not think this will be a death blow to our stand for human rights. i would welcome the house to have a focus on human rights. but do not use this as a wedge for political purposes. my party did this sometimes under president obama. issueld take a side of an simply because he was on the other side. i am old school.
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even though i am young. i think politics should end at the water's edge. it is great to focus on human rights but i hope they do not use it to wedge. we can disagree but we should stand united. shery ahn: what will it be like for the gop as i minority already in the house next year -- as a minority party in the house next year? >> it will depend on what the democrats do. do they want to work on issues? there is common ground, whether it is infrastructure, realigning ability for job training, to put them in line with economic need. there is a lot of areas. the first half of the years, then it turns into politics. it will be my first time in minority. it is about messaging. it is talking about values. as a party, we have to do a better job of that. all i can do is be one member of the republican party and do my
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best. kevin: switching gears with regards to venezuela. there are reports that the administration might argue venezuela is a sponsor of terrorism. do you agree? the strategyhink should be for the administration standpoint? >> there needs to be a thereting of pressures, is a lot of things that come after them including arms control. i am all for it. there is an oppressed group, oppressed country in venezuela, very good people, not just an issue of being sad about what is happening when starvation and the out-of-control inflation. it is also a reality that we have ignored our hemisphere for a long time. these things in venezuela, nicaragua, other areas challenged, we are affected. we see the rest of the border, the weakening of our allies,
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columbia. i can see the administration doing anything and everything to increase pressure. there is short-term pain and we have to be compassionate. this dictator will stay in place without that pressure. that is the worst thing that could happen. kevin: does that include additional sanctions? >> i think additional sanctions, obviously any tool we have economically, diplomatically, informationally, and i'm not calling for intervention but i think the ability to have intelligence surveillance and reconnaissance that feed information, extremely important. shery ahn: always great talking to you. adam kinzinger, republican of illinois. coming up, cindy hyde smith on the defensive over comments just days before a runoff election. how her missteps put a republican seat back and play. this is bloomberg. ♪
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♪ kevin: this is "balance of power," i'm kevin cirilli. shery ahn: election day was over two weeks ago. midterms are not over. mississippi going to the polls for a senate runoff, and what should have been a layup for republicans. it is now a real race. cindy hide smith under pressure, under fire, many companies asking for a refund on donations. kevin: remarkable. complicating race this for senator cindy hide smith against mike espy.
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this has been fascinating. this should have been a total slamdunk for republicans in the deep south. it is headed to runoff. it is further complicated, in terms of the final number, in terms of taking control of the senate, but this is going down to the wire. seat thatkly, not a republicans wanted to lose. this should have been easy. shery ahn: walmart withdrawing resort. the company's withdrawing support, trying to get refunds for donations, let list continues to grow -- that list continues to grow. a key point this political cycle -- when you see red states, easy wins for republicans becoming competitive. kevin: if you look at the broader spectrum of how the house turned blue, it was
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because of the suburbs. taskdent trump, taking to some republicans who made political calculations they would not embrace his message because they were trying to tow the line and trying to attract independent voters. we all remember what he said at the white house a couple weeks ago, when he attacked mia love. >> when the other hand you had some that decided, let's stay away. they did poorly. i'm not sure i should be happy or sad. i feel just fine about it. carlos. mike. too bad. mia love. she called me all the time to help her with a hostage situation. venezuela.hostage in
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mie love gave me no love and she lost. sorry about that. laugh buton't mean to that is still a moment i am not used for seeing. shery ahn: you have to ask yourself, was it because they didn't embrace president trump? or is it that because voters were not comfortable with the brash style. kevin: such a good point. guess he was coming to town? senator mitt romney from utah. that will be fascinating to watch the dynamics of new republicans. jeff flake is gone. mitt romney has a storied history with president trump, for lack of a better term. that will be interesting to see whether the pressure comes up. i was struck i what the congressman told us in the last segment. essentially, they still are
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uncomfortable with the president's tone on geopolitical issues. shery ahn: true. the house firmly in democratic hands. the next step would be for democrats to get a house speaker. it looks like, the opposition we have seen for nancy pelosi, there is no declared rival. whon: i think marsha fudge, had emerged as the hope of some progressives, who wanted to see she was announcing she would not do that challenge. a win for nancy pelosi. when i was in new york, i was talking to aids, they had even said this would be a difficult challenge. look to see how nancy pelosi turns to the left, how she works with new congresswomen, including alexandra cortez, the
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progressive democrat from new york city, to see how she meshes, and what exactly the power of the gavel means for this speaker. shery ahn: one week away from that members only meeting in the house. democrats. then the full boat on the speakership. -- vote on the speakership. get the latest on global politics in your inbox every day. coming up, etf iq. join scarlet, 1:00 p.m., wall street. live from new york and washington dc, this is bloomberg. ♪
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is "bloomberghis etf iq." nowhere to hide with stocks in selloff mode and treasuries and gold standing still, reggie go for shelter? weaker?make a week and roderigo explains how to use the funds to actively allocate your assets while gutting out the current volatility.


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