tv Bloomberg Daybreak Americas Bloomberg July 24, 2019 7:00am-9:00am EDT
germany feels: the trade pain. manufacturing the weakest in seven years. bund yields hit a record low. one last hope, face-to-face trade talks between the u.s. and china. the have and have-nots of earnings. northrop grumman beats and raises its guidance. a busy day with earnings. ups on deck. welcome to "bloomberg daybreak." york, withne in new david westin in washington. david: i think it is sort of like jay powell. whatone wants to hear robert mueller has to say, and he does not want to make any news. alix: second-quarter revenue
coming in better than estimated at $18 billion, adjusted earnings coming in at a beat as well. to thear's adjusted high, crushing estimates. that stock is up now by 7/10 of 1%. going to be interesting to see the commentary on the call as well. guy: we were watching --david: we were watching ups particularly because they are sensitive to global growth and trade flows. the fact they did so well is really encouraging. ceo atspeak with the ups the noon hour on "balance of power." we have general dynamics out with earnings, which i have to get up. yeah, let me see. i can say that glasgow is out, and they raised estimates. david: general dynamics earning per share, $2.77. there's a nice beat there. revenue was $9.6 billion
compared to $9.3 billion estimate. this is a continuation of what we are seeing in some of the defense sector stocks. the government spending a lot of money. northrop grumman out earlier, and the stock seems to be doing well on its earnings. it is up about three quarters of 1% in premarket trading. alix: blackstone full-year adjusted earnings guidance is now down only 3% to 5%. 9%, sobeen down 5% to not as bad as they anticipated. in the markets, we have tons of earnings coming out from europe and the u.s. over the weekend. s&p futures are down by about 2/10 of 1%. at one point, euro-dollar was at a two month low. record low on the german tenure bund yield. continued buying all across the curve in the u.s. and over in europe as the german pmi was really awful, the lowest in about seven years. crude up by about 3/10 of 1%.
we have another auction in the u.s.. it will be interesting to see if this buying across the curve is going to continue for the five year later today. david: time now for the morning brief. easternthis morning time, british prime minister theresa may will head to buckingham palace to tender her resignation to the queen, followed by conservative member of parliament boris johnson meeting with the queen and the coming prime minister. at 9:45 -- and becoming prime minister. at 9:45, we get u.s. many --toring and composite pmi's u.s. manufacturing and composite pmi's. after the bell, we get facebook, tesla, and ford earnings. by brookere joined sutherland and peggy collins. i'm having a difficult time understanding, when companies raise the guidance, our earnings actually ok? brooke: i think it depends on
the sector. it seems like the consumer economy is still holding up, really doing well. we had great numbers from coke yesterday. aparteems to be doing ok, from idiosyncratic issues of losing subscribers to other services in that space. in the industrial sector, i still see a lot of signs of weakness. they are sort of lurking under these headline earning beats. sales are not doing as well as people expected. a lot of weakness across the boards. some sales guidance cut, so i think the trouble spots are there, but you have headlines out on trade that are positive, that takes away from the actual earnings numbers and people are leaning more towards the positive. i'm a little confused because all of the expectations were taken down. are they beating lower numbers, or are they actually doing better? peggy: it is interesting because in the quarter, we had a lot of turmoil around trade. caterpillar out later this morning, so we are really
looking there in terms of a bellwether potentially around trade and manufacturing. but we have seen a lot of companies held up by consumer spending. we have hasbro this week showing people are still spending money on toys, to the global luxury market coming and strong as well. we are seeing mixed results in terms of the expectations are people being hit by some of the global growth slow down and grow bull -- and global trade tension, but a little more positive than what we were you're expecting in some ways. alix: in texas last night, the semis is where you are going to get hit on trade, and the cfo -- in texas instruments last night, the semis is where you're going to get hit on trade, and the cfo was asked on the call, and they said not yet. peggy: trade is a grinding, slow problem that we are going to see take effect over time in terms of how companies change their
supply chains potentially from china, how we see the ripple effects for consumers and where. it is not a light switch effect on companies and on the consumer, but again, a very slow potential grind in the economy and on certain businesses. david: it is only wednesday morning, but we've got a lot of earnings yet to come. what are you looking at in particular? brooke: peggy flags calorie ,illar -- flagged caterpillar which will be great to see where the macro environment is heading. they have their hands in so many different industries. it's really great to see these positive numbers out from ups. fedex reporting not great numbers, and that suggests issues are more idiosyncratic at fedex, and maybe we are not releasing the trade-related slowdown that has been feared in fedex numbers. across the, we are looking for antitrust issues.
we had that report yesterday that the doj is now focusing in on whether or not there are -- there areome competition concerns, so that will be the issue for tech companies. david: one company with earnings down is deutsche bank. it is not very pretty, i think it is fair to say. this is part of the cfo had to say to matt miller yesterday. >> we are very aware that the outlook has deteriorated during june. frankly, it does represent a revenue pressure for us and all of the banks if all of the banks from here go down further. ceod: peggy, we have the christian sewing saying there is a positive outlook and core divisions going forward. how much of this is specific to deutsche bank, and how much of this is across european banks? peggy: in terms of european
banks and banks globally, the fact that european banks are lower interest rates and it looks like they are going into another easing cycle is a struggle for all of the banks, but deutsche bank has had a terrible year. they've been pummeled. as the ceo said, and the markets it was clear there was some restructuring coming. they were retreating from equity sales. this is something the bank is something -- this is something the bank is going to have to try to scramble to get out of. they are relying mainly now on revenue growth from europe, which is in somewhat of a slowdown. alix: which all hinges on the fact, will interest rate cuts from central banks spur loan capex?and that is what the european banks need to happen. peggy: but is it going to happen? i'm not so convinced, especially on the corporate side. i don't know what an interest rate cut really does for me. in europe, you look at further negative rates.
i don't think that is going to be helpful for the banks. i think that is why you see deutsche bank talking pretty vociferously about having some of those overnight loans capped at a different interest rate from what the standard is. i think you're seeing the pressure in the banks, and they are clearly looking for some relief from the ecb that many -- that may not be what they want. alix: there's an estimate that something like 11 billion euros would be lost to banks by 2020 without the tiering. our third story is the disaster is the disastrous pmi's we got across-the-board. germany was really the highlight. 43.1 is where it sits, but the overall euro area as well. this a transitory soft patch that can be resolved all of a sudden there is a trade deal, or is it more precise is -- more pervasive? peggy: i think it may be more pervasive.
, forecastsally notched down again yesterday. germany saw manufacturing data this morning that was bleak. i think part of that is some of the manufacturing, particularly all those sales they are seeing places with a slowdown like china. david: they have a structural problem, particularly in germany, because they are based on an export economy. they've built up a lot of capacity for manufacturing. if we don't have robust global growth, what are they going to do? brooke: i think you are looking at some restructuring charges, but in europe it is very difficult to actually do restructuring, to cut those jobs and that facility footprint which keeps a cap on the market resiliency you can see in a downturn type of scenario. for the most part, it has been concentrated in the automakers.
a chemical maker sees a much broader macroenvironment than automakers, so that is seeping into other parts of the manufacturing economy, potentially the economy as a whole, which would signal a much more serious situation. alix: thanks a lot. really appreciate it. a reminder, you can find all the charts we are going to use throughout the program at gtv on your terminal. coming up, deutsche bank's slump deepens. jp morgan's asset management strategist joins us next. and we are seeing theresa may deliver her final pmq 's, after which she will go to 10 downing to deliver a final statement. this is bloomberg. ♪
♪ >> we were quite encouraged with the performance in any of our rates businesses, in any of our fixed income and currency businesses. obviously equities is down significantly. that reflect both the restructuring we executed last year, and also some of the uncertainty that played out markets,e quarter as clients and employees were expecting restructuring to come. david: that was deutsche bank's cfo speaking to matt miller earlier today. we welcome now ben mandel, jp morgan asset management global multi-asset strategist. in addition to what we heard earlier today, we also have the ceo christian sewing saying he confit -- saying he is confident in performance overall. to what extent is deutsche bank a specific problem, and what is a broader problem refunding
interest rates over there? >> deutsche bank is a unique case overall. i guess the biggest problem is the equities trading group, where clients have already started to run for the doors. , sonts are abandoning ship it is looking really bad. so deutsche bank is a specific problem. i think the sector overall this quarter will have a bit of a rough quarter, so we are forecasting revenues down about 4% or 5%. a few banks have already come out and announced a bit better than that. most of that, you have sent in their and ubs -- you have was notr and ubs, european. they're slightly more positive results are in effect of activity outside the european union. ofx: we also saw the warning
lower interest rates pressuring revenue. what happens if we don't get tiering from the ecb and we get -- somed of posit cut kind of deposit cut? see how much that can really help. that will certainly boost activity. we haven't seen any connection between the two really overall in terms of how that works. that's more a question of the steepness of the yield curve for the banks rather than the absolute rate. i will say the ecb policy so far has been a failure. it hasn't really paid the dividends expected, so i don't see how further cuts will be of much use. david: we are going to hear from the ecb tomorrow. we hope we will have a better sense of what is going on when we do. doesn't make sense for them to cut rates while moving on other -- cut rates without moving on
other fronts? ben: i think you are probably going to see a package of measures. not necessarily tomorrow, but signaling that september will include a rate cut, perhaps a restart in their qe program for bonds and corporate credit. ecb is happening a layer above what is going on in the economy, and that is a broader tendency for global central banks at the moment. in the u.s., you might argue the fed is operating orthogonally to what is happening in the u.s. economy, where cyclical easing has diminished over the last month or so. the ecb is coming, and it is sitting right now at the center of a cross current for european equities, and financials right at the center of that. alix: orthogonally? yeah.0 degrees, alix: if you come inside to bloomberg, you can see euro area pmi for germany really
disastrous, whether it be cars, but others. if you get some kind of ecb support, does that change? and say, loan me money? can the banks get more money? octavio: it is interesting because there has been an uptick in overall lending levels in europe. that go up about 3.5% compared to the second quarter last year. european households and companies are borrowing more. if you view that is positive, that is moving in the right direction for the banks. of course, that kind of downturn is going to be quite bad for credit quality overall, and that has held up very well among european banks the past few years. the overall quality of loan portfolios on the positive side, but it is much stronger than for five years ago. in been a big decrease
nonperforming loans. as the economy softens or weakens come of those loan losses start to rack up. i think we have a nonperforming rate about 7% or 8%, which is historically quite low overall. that will tick up and have an impact on earnings. the decrease in interest rates, increases had seen being loaned out. david: are we talking about the wrong subject in the sense that it will be the bundestag and the german government? at what point do they open the checkbook and start having fiscal stimulus? ben: that is a good question. the political economy of that is more and more complicated than ecb. we would expect that to continue. from the perspective of a multi-asset investor who
benefits in relative terms from the nature of that stimulus, it is things that the ecb is buying. it is global duration, peripheral bonds, generally fixed income. european equities have crosscurrents based on the fact that financials are going to benefit from the sentiment boost they willtimulus, but face headwinds in other regards. thinking about where to take risk in today's global multi-asset opportunity set, for europe it is looking much more like credit than equities. david: ok. october you -- ok. a copy of -- ok. marenzi, thank you. ben mandel will be staying with us. caterpillar and boeing out with earnings in about 10 minutes. this is bloomberg.
viviana: this is "bloomberg daybreak." at&t posting its first quarterly profit decline in four years. it also suffered another record plunge in paid tv subscribers. it also lost more wireless subscribers than expected. the stage has been set for the u.s. justice department to approve the merger of t-mobile and sprint. bloomberg learning dish network agreed to pay $5 billion for wireless assets the two companies are divesting. for more than a year, t-mobile and sprint have been fighting to get their merger approved. nissan's operating profit reportedly will plunge 90% in its fiscal first quarter, according to the nikkei newspaper. the company called the report broadly accurate. the ceo is under pressure to turn the automaker around.
profits are at a decade low. nissan is struggling in the u.s. that is your bloomberg business flash. alix: thank you so much. daimler also stepping up cost-cutting because it can't nail those returns. earnings overall in full swing, particularly in the u.s. ubs coming in with a three year expansion plan starting to pay off. they exceeded the guidance they laid out just about three months ago. caterpillar and boeing on deck. general dynamics continuing the theme of defense companies doing well. they did their highest estimate. morgan asset jp management still with us. it is going to be rough. it is all about guidance. the back half, they will have to lower estimates for the fourth quarter. what gives? ben: you are seeing that happen to some extent, so there's no question that expectations going into this earnings season fell
pretty precipitously. it was really skating on 0% on average. expectations came down. you are beating relative to those expectations. what is critical is if you look at the context for 2019 as a whole, the beats for q2 are getting taken out of estimates later in the year. changing,whole isn't even as you go through the season and you're looking at small sing will digit earnings growth. alix: how does that come in the back half? do we see easier for tougher columns, and/or the guidance issue? ben: there's that trade between what is happening today and the latter half of the year, and also 2020, which we have a high degree of skepticism that those numbers hold up. you had this trend in earnings revisions that was negative at the beginning of the year. that seems to have stabilized
briefly, but resumed its downward trajectory again. you are adding a growing dichotomy between what is happening in the s&p in terms of earnings and in terms of the broader economy. we are having increasing faith and conviction that you get a resumption of growth around tran in the latter half of the year -- around trend in the letter half of the year. alix: don't miss our interview talking about the broader economy with former fed chairman alan greenspan at 11:00 a.m. eastern in new york. ben mandel of j.p. morgan asset management will be sticking with us. coming up, robert mueller on capitol hill, set to testify. also, boeing earnings. this is bloomberg. ♪ we're the slowskys.
check it out! now you can schedule a callback or reschedule an appointment, even on nights and weekends. today's xfinity service. simple. easy. awesome. i'd rather not. alix: this is "bloomberg daybreak." in the market, you've got the macro, you've got the micro. ups super solid. general dynamics solid. by seven.s still off
terrible pmi's out of europe. news is goodbad news situation. auto stocks ironically up by 1.5% despite the fact daimler is going to have to cut more costs, and it was really ugly for nissan, according to some reports. at one time you did see the euro-dollar hit a two month low, and a new record low in german bund yields. the 10-year down by two basis points. the five-year coming on stream later today. we have a earnings coming out from boeing and caterpillar. going to start with caterpillar. earnings coming in at $2.83 a share, a slight beat on revenue for the second quarter at $14.3 billion. also, they say the full-year adjusted earnings coming in $13.06. that does beat estimates. i was really interested in caterpillar is a global economic indicator read, as well as what
it says about the u.s./china trade war. david: it tells us a lot about global construction equipment. in the meantime, boeing is coming out, and we are not quite sure. the revenue is $15.8 billion. is estimated loss per share $5.82. that can't become purple. the main thing is they said former guidance to be issued at a future date. i wonder why that is? alix: they didn't even necessarily say a future date. boeing stock pretty much flat. joining us is brooke sutherland, who covers industrials. thisre talking about before. brooke: they are looking to be at the lower end of that range. they maintained guidance, but expecting the lower end. they are reiterating at.
i think that is a disappointing that -- reiterating that. i think there is disappointment about that. it is not the robust confidence in the second half of the year some people were expecting. that's really been the sticking point for a lot of these industrial results. so many companies are banking on a second-half rebound. the question is whether that is actually going to materialize. i'm less confident in that then some investors just because i don't really see where that impetus is going to come from. even if you get a trade resolution in the coming months, what is that going to look like? how quickly can you see demand rebound? are we even at a point where a deal would change the trajectory of where this is going, or an interest rate cut? this is definitely just another signal of a pain point, in my opinion. alix: you also it, in terms of individual businesses, they had an increase in volume of business pretty much everywhere, whether it is north america, asia pacific, europe, africa,
middle east. they did have higher output in volume in terms of mining, but i have to wonder how much farther that persists because it is backward looking. can they continue if copper and going over? brooke: you previously had seen some momentum in the more construction related businesses, really taking a hit with the downturn in china. if mining starts to crack and you don't see the corresponding rebound in construction, i think you start to see a more material slowdown. alix: wrapping this all into boeing, take a look at revenue coming in just under $16 billion. in terms of the earnings-per-share, their core loss is now $5.82. that is extraordinarily dramatic. is this a baby and the bathwater thing, or a canary in the coal mine. -- or a canary in the coal mine? brooke: cash burn was about $1
billion, which is not as bad as analysts were expecting. we will look to see what exactly is causing that, but they did take that $4.9 billion after charge already. the max is now entering its fifth month of grounding. it does not include legal settlements or any kind of what they might have to pay for what happened here. it is my personal belief that is just the tip of the iceberg, and i think you are seeing this in the loss they are reporting this quarter brooke sutherland, thank you for helping us break down both caterpillar and boeing -- reporting this quarter. alix: brooks -- reporting this quarter. alix: brooke sutherland, thank you for helping us break down both caterpillar and boeing. david: we welcome now someone who spent 20 years serving in congress, arising to chair the house democratic caucus.
thanks for being with us. we have the bob mueller hearing, but before we get to that, let's get to what can affect a lot of business across the country. we have a debt ceiling and spending cap agreement, although there still has to be appropriations. is there still a risk of the government shutting down before october 1? rep. kelly: i think it has -- crowley: i think it is diminished. there have been these artificial clips on government which do nothing but unsettle the markets and the american people. there's so much conflict in the world. governments shouldn't be adding to that plate with make-believe crises. i know she has a real aversion to that.
but overall, this is a good deal. it brings up domestic spending and brings more calls to equal with the military spending, which all sides seem to agree with. the debt itself continues to rise, which will continue to be an issue for many people, but i think overall, politically this is probably a very smart and sound move. david: we take that off the table for the time being. what is very much on the table is the usmca, the successor to nafta, which is terribly important to a lot of american people. whether it is a farming business or export business, where does that stand. joe: full disclosure, i am one of the chairs of a past usmca coalition of a pass u.s. -- of a pass usmca coalition. multilateral agreements are
always a little more difficult. these are our two largest trading partners. it is important for us to get this right. nafta itself was outdated. this is a better deal. i believ thate it really does --erve passage that i i believe that it really does deserve passage. i think the president has turned trade upside down. during the election, he came out against the bp, and against nafta. he said it was the worst deal in the history of mankind, and now we have a better deal. i wouldn't say it is the greatest deal, but it is better. i think this is good for america. i think it is good for the markets. i think it is good for investment. we have basically balanced trade in north america between all three countries.
mexico has an advantage on the u.s., but we have one over canada i'm an optimist. i think it is probably 60-40 that it gets passed. david: we have these two hearings with former special counsel bob mueller coming up today. are you expecting anything? joe: i think one thing i would suggest is that this is probably the only time mueller is going to come before congress. democrats have to keep the high road. you have to maintain, despite the what -- despite what the tactics will be of the republicans, democrats have to maintain the high road. it is going to come down to the questions that are asked by both, but particularly, may not have an answer properly but need to be asked. david: is there a danger of being hijacked by impeachment? if that becomes the issue in 2020, i'm not sure the democrats
want to fight the election on that. joe: i think this is such a critical issue that we can't look at this as personal politics. it is so important for our country that we do this right. what we've been saying all along lead work.truth david: in the meantime, the president tweeting this morning, objecting to the fact that the special counsel will have his deputy beside him during questioning. is that ordinary, for somebody to have counsel? joe: oh yes. i think for proximity purposes, having a counsel right there may be important for mr. mueller, particularly because he said he's not going to veer off of what he said before. truthful,'s got to be
and he asked to be candid. david: thank you so much. that is former democratic representative joe crowley of the state of new york. alix: still with us on set in new york is ben mandel of jp morgan asset management talking about trade, specifically highlighted cereals costs .ecause of tariffs wider if trade goes away, what happens? ben: that's a big if. i think we have the debt ceiling deal that did create some space and some bandwidth to focus on trade issues. usmca most likely gets through. our base case, that you do get a reduction of tensions for the presidential election in 2020. the unfortunate thing is there is still some uncertainty about how you get that easing intention. one is a bilateral agreement, which is our base case.
you can also get a reduction of tensions because we are applying tariffs on all chinese exports to the u.s., and there's nothing more to do. you stop escalation by virtually taking it to its limit. i think the jury is still out on which way this thing goes, which is a bit of a threat to that manufacturing complex that you already mentioned has been weakened. alix: do you want to take on more risk, or more defense? ben: i think you need to take on risk selectively. perhaps narrowly, in this environment. we don't think the u.s. economy is on firm footing. think recession risk is relatively low. an environment like that plus the fed being very accommodative , risk assets will tend to trend upwards. i think you have to pick your spots, though. we let credit as a source of kerry. -- source of carry.
there's a preference for the u.s. in that global conflict for equities. is it is notnote all bleak out the side -- bleak outside the u.s. global weakness in manufacturing has taken a step down. you are not seeing signs it is increasingly deteriorating. shift. a level i think what happens here will depend on the future of negotiations. alix: thank you so much, ben -- ben mandel of people morgan asset global management. now we want to get more on the first word news. here's viviana hurtado. viviana: boris johnson is set to become the next prime minister of the u.k. he has said they will leave the european union on october 31 with or without a deal. theresa may says she is proud to position asver her
prime minister during her final prime ministers questions. she will meet with queen knows this -- with queen elizabeth seeing it. ricoovernor in puerto vowing to stay in office. his departure would mean more uncertainty for the bankrupt island. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. on or to auto -- i'm viviana hurtado. this is bloomberg. alix: coming up, more on deutsche bank in today's wall street beat after their rough quarter. this is bloomberg. ♪
viviana: this is "bloomberg daybreak." coming up in the next hour, ilman, callister's c io. ."is is "bloomberg daybreak two private equity firms are aong those bidding to buy unit of general electric, pk air finance. the business could bring about $4 billion. since the financial crisis, ge has been moving away from lending. we work is looking to september for what would be the second largest ipo of the year. bloomberg has learned the office space company is targeting a share sale of about $3.5 billion.
wework's biggest investor. ad salesk., i fell less than expected thanks to the show "love island," which sees young people pair up under the sun. shares in itv are up the most in four years. i'm viviana hurtado. that is your "bloomberg daybreak ." alix: apparently it is this superhot show that everyone is watching. it is either going to go to mallorca for this season, and hilarity is going to ensue. david: i confess i actually watched the beginning of one of these on cbs because i read so much about it. but it is not just a pair up. they pair up and then other people try to come in and break them up. it is quite something. 10 or 15 years ago this would have been rated r in a movie
theater. alix: 100%. and that is super stable ground for a relationship. up other couples is the way to start a meaningful, long-lasting relationship. [laughter] david: i don't know behind the scenes, but some other reality shows have known about, a lot of alcohol is involved. alix: i'm sure. it's time now for wall street beat. first, we are talking about deutsche bank. fixed income traders are safer now. the bank is going to cut 18,000 jobs. it doesn't include fixed income jobs yet. u.s. --'s ddb sees suspicious transactions made by jeff epstein moving money out of the u.s. to federal agencies. joining us on set is lisa abramowicz and sarah ponczek. take up the fixed income
traders. they are safe for now. there was a question initially of why they did not go after the fixed income unit more. they said they would be paring back there equities unit substantially, but the fixed income unit has been underperforming dramatically. on the flipside, it has the most potential to be lucrative given the fact you have higher spreads . ideally, you could have revenues pick up, but you haven't seen it actually happen. the question is, how long can they hold on the force they are for -- hold on before they are forced to pare back? sarah: if you look at where they are going to focus their attention going forward, it is really on working with businesses, working with corporations, issuing loans, and looking at high network clients and asset management. these are steadier streams of revenue. when you think about how you are actually going to turn the company around, you might have
to go with fixed traders as well. alix: let's go to asset management as well. cfo spoke earlier today. here's what she had to say. >> our clients are looking for diversity in managing their portfolios. there's a strong trend of passive assets, and we have a very diversified portfolios of etf's across the globe that accommodate the requirements of our clients. alix: yet another victory lap for the passive guys. suite of has their about 38, but if you look at the assets under management and add them all up, it is about $14 billion. a decent amount, but when you think about the fact that the largest amount in the s&p billion, $14 billion
compared to $275 billion, you have a ways to go. sarah: there's also the question of how profitable can this be for deutsche bank. if they are counting on their asset management unit to be there profitability, is it that lucrative given the fact that the big allure has been low fees? this raises the question that maybe they are attracting more assets, but it doesn't translate necessarily to bigger bucks. alix: let's get to our third story with deutsche bank. this is a "new york times" piece that came out. apparently jeffrey epstein went to deutsche bank, and deutsche bank flagged potentially suspicious transactions a few year after that. walk us through what we know. lisa: he has been a customer of deutsche bank private banking since 2014. they didn't cut ties with him until late last year after that
very investigative "miami herald" report. supposedly it has taken a while to offload these accounts because they keep finding there are more and more, and it has been difficult to close them out. but when it comes to the suspicious report that they filed with the treasury department, they are saying that better safe than sorry, there might not be something here, but better safe than sorry. sarah: it is about timing to me because it was earlier this year they were parsing this stuff. earlier?t it flagged it really gets to the timing because they've had a relationship for a long time. alix: how many potential investigations are they under for violating other stuff? at least they found it. [laughter] there's that, and they are out front. that is kind of the tenor of the story. alix: thanks a lot. really appreciate it. coming up, the justice department targets big tech. shares down on a potential antitrust probe. if you are getting in your car,
♪ david: this is what i'm watching today, they depart in of justice antitrust division taking a hard look at tech. we knew the doj and ftc had split up the tech companies between the two of them to think about looking at them. now the doj says they are looking at all four of the big guys and whether the overall approach to the market place is deterring competition. that doesn't mean necessarily they will go forward, but it is not good news for tech. alix: also, aren't we waiting for facebook and ftc may be ing $5 billion? david: there was a consent decree earlier about protecting the privacy of data. they violated that. the question is how much further
they go than that, having a board committee police this thing actively. of theady had the head antitrust division give a speech last june saying, you know what? we've gone against bell and at&t back in the late 1970's, early 1980's, and went against microsoft, to good effect. he really is going after tech and taking a hard look at it. alix: it's weird that they would announce it, right? it is unusual. david: yeah, although this is such a potential market mover that you have to come out and say it i think. calsters cioup, will join us. ♪
manufacturing hitting a , bund yieldsw hitting a record low. a mixed picture for u.s. earnings. caterpillar seeing lower demand, energy hit the hardest, while bowing finds support in the -- g finds support in the dreamliner. welcome to "bloomberg daybreak" on this wednesday, july 24. i'm alix steel. david westin is in washington. for roberting ready mueller on capitol hill. david: for the noon ones, iny've had people standing to go through it all. alix: as a theater director, i love this.
it is like a tech rehearsal. david: today is opening day, i think it is fair to say. --eport mcnamara freeport-mcmoran is out now. revenue was 3.5 five as opposed to 3.53. as i understand, a lot of it is copper. alix: freeport is pretty much all copper, and there's been a weird divergence in all commodities, the macro versus the micro. you have trade concerns that way on the price, but on a specific basis, you are seeing some tightness in the market that is not being reflected in the price. that is an interesting dynamic there. i'm also watching norfolk southern coming in with second-quarter earnings, missing estimates at $2.70 a share. their operating ratio is also a little bit lower, so that is also not right great. intermodal revenue is down by about 1.8%. we will see when it opens up in premarket trading. david: if efficiency --
efficiency is so important because precision scheduling railroading has done so well on that. they had some problems with flooding on lines, so maybe wrapped up in there. alix: in the markets, the s&p around the lows of the session, down by about six point. the dow down also by almost almostd it it's -- by triple digits. manufacturing data out of germany is leading a charge in the bond market. -38 is where the german ten-year yield sets. the bad news, i guess good news if you are a bond bull because he might see more easing from the ecb, that playing out in europe. eastern,t 9:30 bridge prime minister theresa may goes to buckingham palace --
british prime minister theresa may goes to buckingham palace to tender her resignation to the queen, and boris johnson will officially become prime minister and give a speech outside number 10 downing street at about 11 a clock eastern time. at 9:45, we get u.s. manufacturing and composite pmi's. at noon, the u.s. treasury sells five-year notes. after the bell, we get facebook, ford, and tesla earnings. alix: officials are figuring out their current strategies on whether or not they should change inflation targets at the ecb and what it means for their deposit rate. we spoke to narayana kocherlakota on the risk associated with the fed embarking on a new downward trajectory for interest rates. for them ine bar terms of what kind of inflation patterns they have to see to start to raise rates is pretty high. they are going to have to be something above 2%, sustainably above 2% for them to switch into
tightening mode. alix: joining us now is chris ailman, california state teachers retirement system cio, with assets totaling nearly $207 billion. good to see you. christopher: good to be here again. alix: you came out yesterday with your return at 6.8% on investment. you need 7%. christopher: super close. alix: but we could be on the verge of an easing cycle. have lowerwe could rates for longer. what do you do? christopher: to adjust away from fixed income, to look for other areas to balance the portfolio. right now our asset allocation is aggressively neutral. i know that sounds funny, but i'm serious. we are right on the targets because don't want to be long and we don't want to be short any of our asset classes.
this world is so uncertain and challenging. i am thrilled with the one year, but one year for us is like the pace of a mile marathon. we are a long-term investor, 30 year horizon. i care about our 10 year, which was 30%, and our 30 year, 8.1%. the thirty-year average risk medical he is ahead -- the thirty-year average arithmetically was ahead. alix: do you pile in where everyone else is piling and? christopher: it is a real challenge within the portfolio. we have created a new asset class called risk mitigating strategies. it is a bucket of different strategies that we think are going to at least diversify in an equity decline. long bonds, which do well, we have looked at momentum strategies. we have looked at global macro. we looked at all kinds of different strategies we think would be slightly negatively
correlated, or at least not correlated with global equities. that is really a big driver of the portfolio. global stocks in private equity. david: where are you on private equity specifically? you've done some of it, not as much as others. we got some noises coming out of washington about maybe trying to rein it in. christopher: you're looking from the standpoint of allocation. we are $230 billion, so actually about the second largest private equity portfolio in the usa. almost $20 billion in private equity overall. we would like to be higher allocation within the plan, something closer to 13% instead of at 9%. we are going to be a steady-state investor in private equity. it has gone through political challenges time and time again because of the nature of that industry, being private, and some of those companies are now public. it is a real challenge. david: the yields are something people want to pursue. at the same time, there's a lot
of dry powder. are you worried valuations get too high and it will get harder to get the returns you want? christopher: i'm always worried, but i'm glad they are being patient. we've allocated pretty steady allocations into private equity 2015, and now even in 2018 and 2019. we've extended the investment period. limited partners in the industry have allowed us to extend the investment period because they are being patient, looking at price. i think that is a good thing, but you're right. you have to put that into consideration. over half of the public companies that, when i started into business, there were 7000. half of them now are private. now you're seeing a larger pool of capital available for private investments in private money, so that large dry powder is staying
available to feed into that when those complete want to expand or merge, and i think if we saw a slowdown in the economy, you would see the private equity money come back and a lot more merger monday, as you guys used to call it. alix: for 2020, can we expect a repeat of 6.8% return? what are you forecasting? christopher: let me put on my forecast hat. when we look at it this year, the bull market is very stale and very old. it doesn't mean it is going to die, so i think we see another choppy, volatile year. if you took a slice of last year and really looked at the grand canyon, we went down to a valley in december and climbed back up. we hit higher highs, and the market was at a an all-time high recently. i think we see a choppiness as we go through the china trade problems. we do expect this earnings season to see some value in some
growth, but it is going to be choppy along the way. everybody is looking at very low returns for this next year. i think it's going to be hard to generate 7%, but again, i'm looking at the pace per mile over 30 years. i think we still see booms in the future with innovation to make that 7%. david: even with those thirty-year glasses on, you really succeed i seeing things other people don't see. as you look at the marketplace overall right now, what are you seeing that other people are missing? what are the biggest opportunities people aren't getting? christopher: for us it is really about asset allocation, not picking individual names, but looking at sectors within the world that looks relatively attractive. we've been saying for two years that emerging markets look attractive, but we haven't been putting a lot of money in that. people havet of been looking at emerging markets and saying at some point, they are undervalued and are going to
be a real opportunity. we think europe is going to turn around eventually, but you still have a really tough time with bad numbers out of germany, still some slowdown and the whole brexit question, but we got to get through that and then there will be opportunities. ,eal estate is fairly valued private equity fairly valued. it will be hard to figure out where to invest in this kind of market, which is why we are not tilting the portfolio risk on or risk off. we are absently neutral. david: don't miss our interview with former fed chair alan greenspan at 11:00 this morning eastern. let's get an update on the headlines outside the business world. viviana hurtado is in new york with first word news. viviana: today boris johnson becomes prime minister of the u.k. one of his first jobs will be to announce cabinet ministers. willon has said the u.k.
leave the eu as scheduled on october 31 with or without a deal. for the first time, the former special counsel indie russia/trump investigation will face questions from congress. robert mueller will testify before a house committee. democrats hope you will offer more details about president donald trump and possible obstruction of justice. mueller has stated he won't go what is beyond what is in his report. fbi director christopher wray says china is the biggest counterintelligence threat to the u.s.. he testified before the senate judiciary committee. wray: we have, as we speak, probably about 1000 plus investigations all across the country involving temp to deft of u.s. intellectual property -- involving attempted theft of u.s. until actual property, almost all leading back to china. on to saye went
russia is probably the second biggest threat. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm viviana hurtado. this is bloomberg. david: as you know, i got to sit down with mark mobius, who has spent a lifetime in asia and a lot of it in china. we talked in part about how the changes coming about between the united states and china, and how they see the world a different way. mark: we have to realize china will become a dominant, if not the dominant, player globally in the foreseeable future. the balance between the u.s. and china will become more and more equal, or maybe even moving towards the chinese side. we've got to look very carefully at what structure the chinese see themselves going forward, what part of the structure they will play. the rules that they impose will
be somewhat different from the u.s. let's remember that the chinese world order will be much more different and more important going forward, and we got to adjust to that reality. that: you can tune into interview tonight at 9:30 p.m. eastern time. coming up, more on the uk's change of leadership. this is bloomberg. ♪ pres. trump: a really good man is going to be the prime minister of the u.k. now, boris johnson. [cheers and applause] pres. trump: good man. he's tough, but he's smart. ♪
theresa may has just left parliament after her last session of prime minister questions, and soon she will head to buckingham palace for her last visit with the queen as prime minister. boris johnson will follow shortly thereafter to emerge as her successor. we welcome now from london sir , former u.k.ott ambassador to the u.s. n is still with us. give us a sense of the man. is he as protectable in managing as he seems to be in some of what he says? sir peter: good morning. good to be with you again. i think one of the criticisms of boris and anxieties about people watching him step through that big black door at number 10 is that although he's been mayor of london for eight years, he's never really had a job of major responsibility where he's been in charge of how to deliver really difficult things. he was surrounded by pretty
competent people ended ok as mayor of london. the rest of the time, there's been a lot of the showmen, a lot of the bluster, presenting himself as the clown to entertain people. when he becomes from minister. there are a lot of serious things he gets there. using ision people are can boris make that adjustment. can he know deliver on the really big issues which face the united kingdom at the moment? david: when we heard his remarks yesterday after being named head of the conservative party, he said his number one priority was to deliver brexit. what does he bring to the table that theresa may didn't? what can he contribute to get this very difficult thing done where others have failed? sir peter: the main thing he brings is a fresh face and a new name, and some of the hardline
brexiteers who think he's one of them. boris johnson, at a pretty late stage in the dame, came down in favor of brexit, so the referendum went in that direction. he's got that wind in his sales. but on substance, it is going to be really difficult because he's been talking about leaving the european union on october 31, come what may, do or die, with or without a deal. most people know if there is to be a deal negotiated, it will not be done by october 31. there just isn't the time to do the legislative and other negotiating changes. there's also an anxiety, and i think maybe the market's underpricing this possibility, that boris will not succeed in getting a deal, or may not even want to get a deal, and because street towards no deal brexit. even that will be pretty difficult to do by october 31, but with a bit of pushing and shoving it might be doable.
but parliament doesn't want to do that. the opposition is likely to vote to block that. so where do we go from here? how does boris deliver brexit, and what sort of brexit? all of that is still very much in the air. carol: ambassador, -- christopher: ambassador, thank you for being on. willre hoping that bojo change his tone, but really, "dude?" forgive me if i'm being a bit blunt, but you are not going to make it in 100 days, so what is the next deadline for brexit? is it going to be easter of 2020? sir peter: well, it's a really good question to which i do not know the answer. as you probably got from what i a saying just now, i don't think october 31 is likely to happen. he will have to get a deal because the damage of no deal is very considerable, as a whole
lot of business and economic forecasters are warning. times worse for britain than it is for the rest of the european union. there will be a lot of people trying to stop no deal. that will mean more time. but of course, how do we get there? it is possible boris will decide that whether he gets a deal or doesn't, he needs a new parliament tree majority. it is not impossible -- needs a new parliamentary majority. it is not impossible that he calls for a general election. it is not impossible either that if all of that fails or he can't get majority in an election, the question could be put to the buddhist people in a further referendum ash to the british people in a further referendum -- to the british people in a further referendum. in answer to your question, i can't tell you, but nor can anybody else at this stage. he says october 31, do or die, come what may.
most people don't really believe that. david: do we know whether he's up to the job? he's been a very colorful figure. he's been a journalists bad boy. is he up to the job? sir peter: he was not a very successful foreign secretary, to be honest. he wasn't known for reading his brief or managing relationships with other people. andended to do some bluster not so good jokes that didn't translate. he made some relationships which were ok, but managed to insult a number of people around the world, and he's been pretty politically incorrect with a number of his remarks, but there's no question that the intellectual capacity is there. it is a matter of application and whether he is going to move from the persona of clown and blusterer which he's thrived on and become a more serious politician. that would be a big change. he may well have to do it. in my judgment, he does have to do it, but it may not be the
same boris we are dealing with. is he up to the job? clearly he is. very highly educated, very intelligent, articulate, and cultured man. but political intelligence and getting a job done is not necessarily the same as shining in public on the stage, showing a mastery of latin and greek rotations. -- and greek quotations. david: it will be interesting. westmacott,ir peter former ambassador to the unit estates. chris -- to the united states. chris ailman will be staying with us. as the grounding of the 737 max hit second-quarter performance. more on that next. this is blumberg. ♪ -- this is bloomberg. ♪
worth watching this morning. there's a report that dish has agreed to buy assets that were perhaps allow the sprint t-mobile merger to go through. it would be a from edible company in the telecom space. also -- a formidable company in the telecom space. alix: taking a look at caterpillar, they did not do well. asia sales are slowing, and energy sales in north america are weak. they see a rebound at the end of the year, but will that actually happen? david: the third company is boeing, out with earnings. for more, we are joined by aoglu, jeffries aerospace and defense equity research analyst, out with a buy rating on boeing. what do you make of the earnings? are they in line with what you expect it? i would say here are two
bright spots. both commercial and defense profitability were better than expectations, so although commercial included the loss of the max, the underlying wide-body performance was better. second, free cash flow came in wea use of $1 billion, but were expecting about $3.8 billion primarily due to indo and tory usage a lot lower than we expected -- due to inventory usage a lot lower than we expected. david: do you expect that the last reserve they are going to have to take for the 737 max, or do they have more to come? sheila: the press release last week was quite clever. i think investors were pleased
in that it encapsulates the losses associated with the max and gives that a number on the concession, but does somewhat contain it to that time period in which they are assuming the grounding lasts. one thing the press release noted from boeing this morning citing the77 x, engine delays pushing the slate out to 2020. this was previously expected in the second half of 2019. there's no doubt that there's going to be more of a regulatory process around that aircraft, so that might push deliveries into late 2020 or 2021. is still withlman us on set. do you like boeing? christopher: we are actually underweight on boeing. our active managers have
under weighted the stock as we started to see the 737 issues come up. alix: is that a short turn weight until you get the 737 max 8 back into the air, or do you feel like you are going to continue to reduce shareholdings? christopher: generally we are going to tend to be long boeing. there are only two plane manufacturers in the world. one is a british and french company with brexit. they had too much cost cutting, too few engineers, too much of a push to get that plane out and not require the pilots to be in a simulator. that was obviously a tragic mistake. now they are gearing back up. costs are going to be higher because they need more people working on their facilities, but hopefully they will get back to where they were. they are an awesome company that makes a great product. david: to that very point, this is basically a global duopoly with airbus. do they lose clout to airbus,
and does it matter if they become number two? sheila: we were recently at the paris air show that happens every two years. what was reassuring was airbus didn't really have available slots until the end of 2024 duopolythis is a global in the backlog stretches out. leadthat said, airbus does on the narrow bodies in terms of share. they have a good product with the a320. but boeing has been doing well with the wide bodies. they have a leading share with 777, and they are not cutting share because commercial underlying profitability was better spike the narrowbody product, the highest gross margin, being out of the next. , thankheila kahyaoglu you very much. chris ailman will be sticking
with us. caterpillar weighing on all equities. security summer earnings are good, some are bad. texas instruments on the upside. in europe, holding flat, but autos doing pretty well, even though you have a company like nissan. you also have daimler needing to cut even more cost. in other asset classes, you are having a mostly stronger dollar story. money keeps pouring in to all bond markets. here in the u.s., you have yields down three basis points. -39 basis points is where the german ten-year bund year yield since. they are basically trading in tandem. good news for the bond bulls because you get more easing. that is the rhetoric playing out. that is happening, in
london we have a transition of power. the current prime minister is heading back to number 10 downing street. back into herget limousine to go to buckingham palace to meet with the queen to hand over the sales. alix: facebook will pay a record $5 billion to settle the ftc privacy claim pro. pay $5reported they will billion. there was a lot of scuttlebutt around that people were not happy that it was not more and there was not more responsibility on facebook's part. chris aleman is still with us. how do you look at the d.c. landscape inditex right now? now? big tech right chris: even though i'm not a fan of regulation, big tech needs some form of regulation. it is a form of communication.
radio waves regulated, the mail is regulated, television is regulated. social media need some form of regulation. this company has demonstrated that they are playing lip service to the customer. they are really focused on the revenue. , what down in washington we are watching is robert mueller in the house judiciary committee hearing. just convening right now for the first of does joe hearings. robert mueller -- the first of does joe hearings -- the first of two hearings. robert mueller about pure before two two panels. we have kevin cirilli on capitol hill just outside the house hearing room. set the stage for us if you would. kevin: robert mueller arriving earlier, now taking his place inside the house judiciary committee hearing room.
i can tell you that from the republican standpoint, they are hoping this is much ado about nothing and president trump tweeting out earlier this didn't saying that wide special counsel robert mueller investigate hillary clinton? democrats hoping this will indicate an administration of chaos as she put it in a memo she distributed within her democratic caucus. this is the first time many americans will be hearing from special counsel mueller following his 22 month investigation. now is up to everything he has to say or does not say. david: we are seeing robert mueller sitting down. first we will hear from the chair of the house judiciary committee, jerry nadler new york , then we will hear from mr. collins from new data from georgia, and then we will have robert mueller's opening remarks.
how much is nancy pelosi trying to avoid the i-word. kevin: the impeachment word is something she can now not avoid. the fact that 90 members of the democratic caucus have called for impeachment, some with mueller, some with president trump's fiery rhetoric in the past week. the question for speaker closing is it any of the development for special counsel bob mueller would yield any information that would embolden those calls for impeachment. special counsel bob mueller is a seasoned washingtonian professional. he has led the fbi for a decade, he is ivy league educated, and he knows a thing or two about how congress works and how the committee's works, including the house of representatives, which has a rugged tatian -- which has --eputation for being more
than the senate. ultimately faced pressure from democrats and republicans to testify. many do not anticipate him to break it all from the mueller report itself. they are expecting the democrats will ask pointed, simple questions to try to get him on the record as it pertains to obstruction of justice and from the president standpoint, as well as foreign interference. the latter point, particularly russian interference, is a rallying cry notches for the democratic caucus, but also for republicans. david: stay with us. i believe we have chairman nadler of new york giving opening remarks. >> to lie and deny that it had happened. he ordered his former campaign manager to convince the recused andrney general to step in
he attempted to prevent witnesses from cooperating with your investigation. although department policy argues against indicting the president for this conduct, you made clear he was not exonerated. any other person who acted in this way would be charged with crimes. in this nation not even the president is above the law, which brings me to this committee's work. responsibility, integrity, and accountability. these are the marks by which we who serve on this committee will be measured as well. director mueller, we have a responsibility to address the evidence you have uncovered. you recognized as much when you the constitution requires a process other than the criminal justice system to formally accuse a sitting president of wrongdoing." that process begins with the work of this committee. we will follow your example, we
will act with integrity. we will follow the facts where they lead. we will consider all appropriate remedies. we will make a recommendation to the house when our work concludes. we will do this work because there must be accountability for the conduct described in your report, especially as it relates to the president. thank you again. we look forward to your testimony. it is now my pleasure to recognize the ranking member of the judiciary committee, the gentleman from georgia, mr. collins, for his opening statement. rep. collins: thank you mr. chairman and mr. mueller for being here. in the years leading up to the report and in the years since, americans were first told what to expect and what to believe. collusion, we were told, was in plain sight even if the special counsel do not find it.
we read no american conspired with russia to interfere in our elections but learned the depths of russia's malice toward america. we are here to ask serious questions about mr. mueller's work and we will do that. after an extended unhampered investigation, today marks and ian d to the investigation -- and end to an investigation that closed in april. the burden of proof is extremely high in light of the special counsel thoroughness. we are told the investigation began as an inquiry into whether russia metal in our election. you concluded they did. -- the investigation also reviewed whether donald trump sought russian assistance as a candidate to win the presidency. mr. mueller concluded he did not. his family or advisors did not. the report concludes no one in the president's campaign colluded or conspired with the russians.
the president watched the public narrative surrounding this .nvestigation others assumed his guilt while he do the extent of his innocence. the robert mueller reported the president's reaction to a frustrating investigation where his innocence was established early on. the president's reaction was understandably negative, yet the president did not lose -- do not use his authority to close the investigation. he did not shut down the investigation. the president knew he was innocent. those are the facts of the robert mueller report. russia meddled in the 2016 election. the president did not conspire against the russians come and nothing we hear today will change those facts. one element remains. the beginning of the fbi investigation into the president. i look forward to mr. mueller's testimony about what he found in the origins of the expectations.
released andill be to ensure learn -- law enforcement powers are never citizened on a private or a political candidate as a result of the political leanings of a handful of fbi agents. the origins and conclusions of the mueller investigations are the same thing -- what it means to be an american. every american has a voice and we must protect their voice by combating election interference. every american enjoys the presumption of innocence and the guarantee of due process. if we carry nothing away, and must mean we increase our vigilance against election interference to ensure our government officials do not weaponize their power to the constitutional rights guaranteed to every u.s. citizen. we must agree the opportunity cost is too high. the months we've been investing failed to end the border crisis or the job market. as a side note, every week i
leave my family and kids, the most important things to me to come to this place because i believe this place is a place where we can do things and how people. came here to work on behalf of the ninth district. we accomplished a lot on a bipartisan basis, with many of my friends across the aisle sitting on the side with me. this year, because a majority dislike this president and the endless hearing into a closed investigation have cost us to accomplish nothing about the problems of our country while our border is on fire and everything else is stop. this hearing is long overdue. we have had truth for months that no americans conspired to overthrow our elections. what we need today is for that truth to ring with confidence and i hope, closure. >> i will now introduce today's witness. robert mueller served as
director of the fbi from 2001 to 2013 and most recently served as special counsel for the department of justice, overseeing the investigation into russian interference in the 2016 special election. he received his ba from princeton, his ma from new york university, and his jd from the university of virginia. robert mueller is accompanied by counsel aaron simply, who served as deputy special counsel on the investigation. we welcome our witness and we thank you for four is bedding. -- for participating. if you would rise, i will swear you in. raise your right hand. do you swear or affirm under penalty of perjury the testimony are about to give is true and correct to the best of your knowledge, so help you got. let the record show the witness answer the affirmative. thank you and please be seated. please note your written statement will be entered into
the record in its entirety. i ask you summarize your testimony in five minutes. you may begin. mr. mueller: good morning, chairman nadler. and ranking member collins and the members of the committee. 2017, thew, in may of acting attorney general asked me to serve as special counsel. i undertook that role because i believed it was of paramount interest to the nation to determine whether a foreign necessary at interfere in the presidential election. as the acting attorney general said at the time, the appointment was necessary in order for the american people to have full confidence in the outcome. my staff and i carried out this assignment with that critical objective in mind. we worked quietly, thoroughly,
and with integrity so the public would have full confidence in the outcome. the order appointing me as special counsel directed our office to investigate russian interference in the 2016 presidential election. this included investigating any links or coordination between the russian government and individuals associated with the trump campaign. it also included investigating efforts to interfere with or obstruct our investigation. investigation, i stressed things to the team that we had assembled. first, we needed to do our work as thoroughly as possible, and as expeditiously as possible. it was in the public interest for our investigation to be complete and not to last a day longer than what is necessary. second, the investigation needed to be conducted fairly and with
absolute integrity. leak or taked not other actions that could compromise the integrity of our work. all decisions were made based on the facts and the law. during the course of our investigation, we charged more than 30 defendants with committing federal crimes, including 12 officers of the russian military. the defendants have been convicted or pled guilty. certain of the charges we brought remain pending today. for those matters, i stress that the indictments contain allegations and every defendant is presumed innocent unless proven guilty. in addition to the criminal charges we brought, as required by justice department regulations, we submitted a confidential report to the attorney general at the conclusion of our investigation. the report set forth the results of our work and the reasons for
our charging and definition of decisions. the attorney general may the report largely public -- the attorney general made the report largely public. remarks few limited about our report when we close the special counsel's office in may of this year. there are certain points that bear emphasis. first, our investigation found the russian government interfere in our election in sweeping and systemax fashion. systematic -- systematic fashion. second, the investigation did -- that members of the trump campaign conspired. we did not address conclusion, which is not a legal term, but whether the evidence was sufficient to accuse a member of
the campaign from taking part of criminal conspiracy. it was not. our investigation of efforts to obstruct the investigation and lied to investigators was of critical importance. obstruction of justice strikes at the core of the government's effort to find the truth and hold wrongdoers accountable. finally, as described in volume two of our report, we investigated a series of actions by the president toward the investigation. based on justice department policy and principles of fairness, we decided we would not make a determination as to whether the president committed a crime. it is our position that and it remains our decision today. andt was our decision then it remains our decision today. let me say a further word about my appearance today. a prosecutor for to testify about a criminal investigation. given my role as a prosecutor, there are reasons my testimony
will be limited. first, public testimony could affect several ongoing matters. and some of these matters, work rules or judicial orders limit the disclosure of information to protect the fairness of the proceedings. consistent with long-standing justice department policy, it would be inappropriate for me to comment in any way that could affect an ongoing matter. second, the justice department has asserted privileges concerning the investigative information and decisions. ongoing matters within the justice department and the liberations within our office. these are justice department privileges i will respect. the department has released the letter discussing the restrictions on my testimony. i therefore will not be able to answer questions about certain areas that i know are of public
interest. for example, i am unable to address questions about the initial opening of the fbi's russian investigation, which occurred months before my appointment. or matters related to the so-called steele dossier. these matters are the subject of ongoing review by the department. any questions on these topics should therefore be directed to the fbi as part of the justice department. closedplained when we the special counsel's office in may, our report contains our findings and analysis and the reasons for the decisions we made. we conducted an extensive years.gation over two in writing the report, we stated the results of our investigation with precision. we scrutinized every word. summarize ord to
describe our work in a different way in the course of my testimony today. as we said on may 29, the report is my testimony and i will stay within that text. i will not in may, comment on the actions of the attorney general or of congress. i was appointed as a prosecutor and i intend to hear to that role and the department standards that govern it. we're joined today by deputy zebly whounsel aaron has extensive experience as a federal prosecutor and at the fbi where he served as my chief of staff. he was responsible for the day-to-day oversight of the investigations conducted by our office. i also want to say thank you to the attorneys, the fbi agents, the analysts, the professional
staff who helped us conduct this information in a fair and independent manner. these individuals spent nearly two years working on this matter of the highest integrity. let me say one more thing. over the course of my career i have seen a number of challenges to our democracy. the russian government's efforts to interfere in our election is among the most serious. 29, this on may deserves the attention of every american. thank you, mr. chairman. rep. nadler: thank you. we'll proceed under the five-minute rule with questions. i will begin by recognizing myself for five minutes. director mueller, the president has repeatedly claimed that your report found there was no obstruction and that it completely and totally exonerated him. that is not what your report set, is it?
mr. mueller: it is not what the report said. rep. nadler: reading from page if we hadwrote, " confidence after a thorough investigation of the facts that the president clearly did not commit obstruction of justice, we would so state. based on the fact and the applicable legal standards, we are unable to reach that judgment." does that say there was no instruction? mr. mueller: no. rep. nadler: in fact, you are unable to conclude the president did not commit obstruction. is that correct? mr. mueller: at the outset we when it came to we president's culpability, needed to go forward only after taking into account the llc opinion that indicated a indicted.cannot be
rep. nadler: so the report did not conclude he did not commit obstruction of justice? mr. mueller: that is correct. rep. nadler: what about total exoneration. did you totally exonerate the president? mr. mueller: no. rep. nadler: your report expressly states that does not exonerate the president. mr. mueller: it does. mr. mueller: it does. rep. nadler: your investigation found "multiple acts by the president capable of exerting undue influence over law enforcement investigations, including russian interference and instruction investigations." is that correct? mr. mueller: correct. rep. nadler: can you explain in clear terms what that finding means so the american people can understand it? mr. mueller: the finding wascates that the president acts helpated for the
allegedly committed. fact, you aren talking about incidents "in which the president sought to use his power outside of legal channels to assert undue influence over your investigation. " is that correct? mr. mueller: yes. you wrote "the president became aware his own conduct was being investigated. at that point the president engaged in a second phase of conduct involving public attacks on the investigation, nonpublic efforts to control it, and efforts in both public and private to encourage witnesses not to cooperate with the investigation." president trump's efforts to exert undue influence over your investigation intensified after the president became aware he personally was being investigated? mr. mueller: i stick with the language you have in front of you.
page seven, volume two. rep. nadler: is it correct that if you concluded the president committed the crime of obstruction, you cannot publicly state that in your report or here today? mr. mueller: could you repeat the question? rep. nadler: is it correct that if you've included the president committed the crime of instruction, you cannot state that in your report or here today? wouldeller: the statement be that you would not indict, and you would not indict because , a sittinglc opinion president cannot be indicted. rep. nadler: you cannot state that because of the opinion that have been your conclusion. mr. mueller: yes. rep. nadler: under department of justice policy, the president could be prosecuted for instruction of office after he leaves office. correct? mr. mueller: did any senior white house -- correct.
rep. nadler: did any senior white house official refused to be interviewed by you or your team? mr. mueller: i do not think so. i would have to look at it, i'm not certain that was the case. rep. nadler: to the president refused to be interviewed by you or your team? mr. mueller: yes. rep. nadler: is it true you try for more than a year to secure an interview with the president? mr. mueller: yes. rep. nadler: is it true that you and your team advised the president that in interview with the president is vital to the investigation? mr. mueller: yes. rep. nadler: is it true that you stated it was in the interest of the presidency and the public for interview take place? mr. mueller: yes. rep. nadler: but the president still refuses it for interview? mr. mueller: true. rep. nadler: did you also asked him to provide written answers to questions on the 10 possible episodes of obstruction of justice crimes involving him? mr. mueller: yes. rep. nadler: did he provide any answers? mr. mueller: i would have to
check on that. rep. nadler: we are grateful you are here to explain your investigation and findings. having reviewed your work, i believe anyone else engaged in the conduct described would of been criminally prosecuted. your work is vitally important to this committee and the american people because no one is above the law. the gentlemane from georgia, mr. collins. rearing --s: we are we are reiterating the five-minute rule. i have several questions. i want to lay some foundations and we will go through these quickly. i will talk slowly. i am set i talk fast. and your press conference use it any testimony would not go beyond your report. you would not provide information beyond that which was already public. you stand by that statement? mr. mueller: yes. >> since closing the special
counsel's office, have you conducted additional interviews or obtain any new information? have you conducted any new interviews with any new witnesses? mr. mueller: no. >> you can confirm your no longer special counsel. mr. mueller: i'm no longer special counsel. >> at any time during your investigation, who was your investigation curtailed or hinder? mr. mueller: no. >> were you or your team provided any of the questions today? mr. mueller: no. >> the reports that your team included 19 lawyers, 40 fbi analysts,ntelligence and forensic accountants. are those numbers accurate? mr. mueller: generally, yes. >> is it true you issued over 2800 subpoenas, obtained more than 230 orders for communication records?
mr. mueller: that went a little fast for me. >> in your report, you did a lot of work. mr. mueller: that i agreed to. >> a lot of subpoenas. mr. mueller: a lot of search warrants. >> you are very thorough. you listed is out in your report. mr. mueller: yes. >> is it true that the evidence gathered during your investigation, given the question you answer. is it true that the evidence gathered did not establish the president was involved in the underlying crime related to russian interference? mr. mueller: we found insufficient evidence of the president's culpability. >> that would be a yes? mr. mueller: yes. it true the evidence did not establish the president or those close to him were
involved in the charge of russian computer hacking or that the president had unlawful relationships with any russian official? -- i willr: i believe leave the answer to the report. >> is it true your investigation did not establish members of the trump campaign conspire to coordinate with the russian government. jonathan: you'll been listening to former special counsel robert mueller appearing before the house judiciary committee. several headline so far. the former special counsel reiterating that the special counsel report is his testimony. he explains the limitations of what he could and cannot discuss and reiterated the risk russia poses to the election process. we will continue to follow the process. from new york, the countdown to the open starts right now. ♪ jonathan: