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tv   Bloomberg Best  Bloomberg  March 10, 2018 7:00am-8:00am EST

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♪ oprah-- michael: coming up on "bloomberg best," the stories that shaped the week in business around the world. the white house steps up its hard line on trade, and gary cohn steps down. >> the president is focused on growth. that is our number one objective. >> having someone like gary cohn was market friendly. it was something the market was on the same page with. oprah: and -- michael: and populist parties gain as italy goes to the polls. central banks send signals on the future of stimulus. >> we needed to remove the explicit reference to the likelihood of an increase in the pace of purchases. michael: energy leaders come
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together and discuss how shale is changing the game. >> i think the u.s. is a producer that is part of the new world market. the message is that this is a supply source that will be around a long time. michael: and did an action-packed week, some of the global economy's most prominent actors comment on the drama. >> it makes us very nervous. >> if it continues and gets worse, yes, it will hurt growth. >> on a tactical basis i can see the merits of argument where we continue our gradual increase of rates. michael: that's all straight ahead on "bloomberg best. " ♪ michael: hello and welcome, i michael mckee. this is "bloomberg best," your weekly review of the most important business news, analysis, and interviews around the world. on sunday, italy held a general election and the result
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suggested that populism in europe may still be a powerful force. ♪ >> the antiestablishment five-star movement seems to be the big winner of the italian election. current counts, it is expected to win around a third of the vote but not enough to rule on its own, of course. a right-wing alliance, including the anti--- and anti-immigrant leader, might win slightly more seats but again, it is not possible for them to form a solo government. the biggest loser, outgoing prime minister and the center-left democratic party. what happened here? >> our main takeaways, the polls before the blackout period were not exactly right. what we understand that is that the antiestablishment, anti-people who have been in power are much stronger than we have been expected. this is born from the north, and the five-star movement.
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if these latest figures are correct, the five-star movement would not be able to govern on their own, but they would be the party with the highest majority. the biggest losers, as you said, would be the democratic party, and the party of the prime minister for the last 18 months. it is clear that italians, despite having a recovery and 5% growth in gdp in 2017, are fed up. it might be immigration, it might be that they are fed up with old-school politics, but they want a change. tweeted president trump this morning that he wants "strong dialogue" before making a final decision on his proposed tariffs. he is getting just that, strong dialogue. speaker ryan reiterated again today that he is opposed to across-the-board tariffs. the way for top economic adviser for gary cohn tariffsif the go through as described. down the escalator in trump
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tower two years ago to run for >> when trump came tower two years ago to run for president, he talked about tariffs. he is getting a lot of pushback including some from right down the hall in the executive office from gary cohn, he is -- his chief economic advisor. jennifer jacobs did report today that donald trump is telling associates that if he does impose the tariffs, he thinks gary cohn will quit. >> gary cohn resigning as white house economic adviser as the administration prepares to impose steep duties on steel and aluminum imports. according to two people familiar, the former goldman sachs president quit after a competition with the president over the plan. >> gary cohn has been a grown-up in the white house and now he is gone. i don't know whether find a replacement. i am sure they will find one, but i do not know where. >> you would imagine that there is less of a chance of a reasoned response out of the white house. this signals a potential move or a stance that might be viewed as quite hardline.
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>> what we are seeing with the is the battleohn between the globalist and the nationalist, who would win out? i think that when steve bannon let the white house that was a feeling that maybe it was the globalists but now it was different with navarro being elevated and gary cohn walking away. >> do you think there is a gary cohn premium in the market? >> absolutely. to the extent that gary cohn represented some form of stability, and that was the market's interpretation of it, but i think we have to break this thing down. we have to understand that 2017 was about tax reform. gary cohn was absolutely the right guy, very instrumental in doing that. 2018 is about trade and tariffs. gary cohn might not have been the right guy for that because he disagrees with the president on that. having someone like gary cohn who was market family, pro-business, pro-bank, pro-globalization, free trade was something that the market was on the same page with. with him removed, the question is who is going to fill that role? who will not just take his
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title, but who will be that centrist voice on economic policy and trade policy and the white house? we do not really have that right now. >> the ecb holding rates steady changing some key language , today. here is mario draghi in his own words. >> what we need was to remove the exclusive reference to the likelihood of an increase in the pace of purchases in the near future. >> the advice was removed, but markets have responded in a sort of dovish way. how did he achieve that? >> you saw the euro jumped when the policy statement came out, with the adjuster, the euro came off. you could see why. he really did play it down quite some bit. the pace approaching 30 billion euros a month is not going to go
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up, at least in the near future, but it could well be extended after september. that is entirely feasible, either at 30 or at a lower pace. there are still more purchases ahead. >> will they, once they on tariffs? we are waiting for president sign the preparing to tariffs at the white house. president trump: i am defending america's national security by placing tariffs on foreign imports of steel and aluminum. >> this is a bit of a watering down of sorts from the original policy that president trump had initially wanted. >> there is actually quite a bit of wiggle room in these, the administration says that any trading partner of the u.s. can apply for an exemption. one would expect that the eu, probably south korea and some others will immediately be applying for those. it remains to be seen whether they will be granted. but there did seem to be some
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dialback of just how top these desktop the sanctions will be. thehe president accepting invitation to meet with kim jong-un, and that means it will be happening by may. >> we are optimistic about continuing a diplomatic process for the possibility of peaceful resolution. >> what we have now is a situation where north korea has agreed to everything donald trump has asked for. he has backed down from his refusal to tie talks to north korea's denuclearization. he agreed to trump's condition that he put a freeze on missiles and nuclear testing while also agreeing with united states that south korea can go ahead with their military exercises. so it really does look like trump is in the driving seat. >> president trump could look like he gave something away by m this him -- giving ki
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credibility of sitting with a u.s. president and not getting anything. there is the risk that the president goes to the border region and meets with kim and gets nothing out of it and military tensions escalate. so we will have to see what happens in the coming weeks. >> since the goldilocks jobs report, payrolls delivering addingpside, the economy a better than forecast 313,000 jobs in february. unemployment holding steady at 4.1%. average hourly earnings were rising less than economists expected, up just 2.6%. >> the focus of the trump administration, in addition to lower taxes, has been to increase wages for the working woman and the working man. we do not see that happening. not goingat 2.6% is to get it done, and it is probably the case that the headlines of tremendous job reports is going to be tempered by low wages. >> this is a report that is going to strengthen the arguments on some of the doves
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in the fed, but this is just one report and i think in the context of the way it is going, it shouldn't get to much weight -- too much weight in the bigger picture of things when it comes to the next meeting in march. >> lloyd blankfein is reportedly ready to step down by the end of the year. that is according to the wall street journal. how successful has he been on giving goldman sachs a direction after the financial crisis? >> i think there is a mixed record. going through the financial crisis, they survived, they were among the ones that actually did not get hurt and hit that much. but then the world changed. new regulations came. appetite for risk change around and ie around the world, do not think goldman really adapted to those as their rivals were adopting. wall reported in the street journal, ceo of goldman sachs lloyd blankfein might be stepping down as soon as the end of the year. he is responding in tweet form right now. i'm just looking at my phone. he says "it is the wall street
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journal's announcement, not mine. inneel like hawk -- huck f listening to his own eulogy." >> up next conversations with two , architects of the trump trade policy. steve mnuchin and david navarro. also jamie dimon and daniel , pinto weigh in on the economic themes. plus interviews with some of the world's most important figures in oil. and up next, more of the top business headlines. a governing coalition forms in germany. >> this is a strong win for the leader of the social democrats. michael: this is "bloomberg." ♪
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♪ michael: this is "bloomberg best." i'm michael mckee. let's continue our global tour of the weeks top -- weekly top business stories.
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in china, the national people's congress opened with a statement of the government economic objectives. >> china setting a 2018 growth target of about 6.5%. and the keys up, omission was last year's pace. this was announced coming out of china. >> the top lines are really that growth target about 6.5%, dropping the line or higher. that is what they included in 2017. we also got the deficit target as well coming in at 2.6%. what bloomberg have reported -- we expected 2.9%. that's what our sources are saying. that would be below the 3% we we -- we saw in we also are 2017. hoping to see retail sales growth at a clip about 10% in 2018. it is those moves that will potentially open up some sectors , including health care, educations, telecoms, and new energy vehicles. we'll have to wait to see about the details.
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the devil is always in the details with these kind of announcements, but it is interesting to see these are sectors that many have said they need to see great foreign participation. >> germany's social democrats voted to join angela merkel's next government. it was the largest hurdle to her fourth term and restores a real sense of political stability in europe's biggest economy. 66% agreed to join a coalition , and that shows a very strong win for merkel here. >> it shows a strong win for the designated leader of the social democrats as well. this inspiring potential leader this --allied around this is a very skeptical party in the coalition and very against it. now let's get out to the villages and the cities and rally the party behind her. hats off to chancellor merkel as well.
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>> we want to bring you to mexico city, where ministers from the u.s., canada, and mexico are holding a news conference at the economy ministry after concluding the latest round, the seventh round of nafta talks. largeare dealing with a number of difficult issues, very technical issues. i appreciate the patience from all the negotiators. in spite of this hard work, we have not made the progress that many had hoped this round. >> robert lighthizer has been very insulting and previous press statements, talking about how he was disappointed in what the other sides were offering and they were not taking this seriously. today, he seems to recognize that there had been progress made and that there had been good faith on the other side. obviously, he had to throw in the idea of the still tariffs -- steel tariffs being a dealbreaker if they come through, but we will have to wait and see.
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it was robert lighthizer who said they could do a bilateral agreement with mexico and canada at this point, but mexico and canada do want to finish this multilateral doodad. >> this company has agreed to scripts this is $437 billion. the latest in a string of health-care deals. we were expecting something might happen with express scripts. who were the other potential contenders? i think it could have been other health insurers. what insurers are looking for is to mimic the model of the united health, which got in this game earlier, they got a pharmacy back in 2015. that diversification strategy has really paid off of the company not just as far as the revenue growth but as far as cost advantages, information advantages, convenience advantages that have bolstered the insurance business. it could've been a number of insurers, but if you remember cigna was the target. cigna had a limited extra cash
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-- little bit of x or cash to play with, which is why they are making this move. >> qualcomm delaying a key shareholder vote after the committee on foreign investment in the u.s. began investigating broadcom's proposed takeover. broadcom says it is on course to win all six seats it is seeking a broadcom's board. there has been a flurry of news on this huge deal, of course, a 100 $17 billion deal. is it moving a head -- a $117 billion deal. is it moving ahead or is it at a standstill? >> if you are betting it would happen, you have some really good news and some really bad news. the bad news was that it looks like the u.s. government is going to take a look at this, that they don't like the idea of broadcom taking over qualcomm. on the positive side, the initial returns that we were able to retain indicates that broadcom were going to win shareholder approval for the takeover of qualcomm's board. this french insurer seeks to
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leap ahead of rivals in the united states. >> it has been two years since thomas took over as ceo and he seems to be bringing us back to a time back in the 1990's when they were doing these really big takeover deals. since then, they've not really done much. the last, biggest deal was in 2007. the financing of it is very interesting. they are saying they're going to raise this money, $6 billion of it through an ipo that not done that is not done yet. investors are wondering if this is really the way to go, they're talking about the premium. we are looking at 33%, clearly investors are thinking well, they are paying a huge amount to buy this company. is that bet going to pay off? >> shares of north from falling back as much as 2%. its board of directors turned down an $8.4 billion deal by the founding family. how much more money could the board get? >> that is the key question.
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right now they're getting about $50 a share. the stock has traded above that for quite some time. the family is saying that is the premium that is being baked in. we are giving you a 24% premium over the share price before we announced we were looking into it. how high could it go? >> this story broke in june of last year, there is a 24% premium baked into it. how much do they still want? was $60.aid one >> but this is a very difficult deal to get financed. there aren't a lot of example of retail that are not highly leveraged neiman marcus would be that are doing great. neiman marcus would be your obvious go to. of the department store chains that are highly leveraged, they are still struggling. >> cbs kicking off the third biggest corporate bond sale on record to fund its acquisition of aetna. it will test the appetite of the corporate bond market, off to its worst and you will start in decades. there is plenty of demand, but the interesting thing is that looked intoad
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selling off $45 billion of debt, but instead they went with $40 billion. >> we saw orders of three times offering, so certainly the demand was therefore a deal like this, but it was important to get the pricing solid on such a massive deal, especially when, like you said, investment grade markets have been off to a horrible start this year. >> the bank of japan and governor kuroda said that he inflationting me target will not trigger an exit from policy stimulus. he also says he saw u.s. trade policy is a risk, but he reiterated that the fundamentals are good. >> he was very good at talking about the exit. saying that about it could happen in fiscal 2019. he said the reason he said that was because he thinks there is a high probability that inflation will hit the 2% level at that point and that is why they might
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do the exit then. he said is not that we would not just automatically start talking about an exit when we hit fiscal 2019. it is incumbent, based on price moves and this is all based on his expectations of meeting his goals. ♪
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♪ michael: you're watching "bloomberg best." i'm michael mckee. trade talk dominated economic conversations this week as the white house moved toward the imposition of tariffs proposed by president trump. two of the administration's top economic officials laid out the thinking behind these policies in conversations with bloomberg television. let's start with treasury secretary steven mnuchin, who spoke wednesday with our chief washington correspondent, kevin cirilli. ♪ >> the president wants to take
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on the trade issue. it is a very important economic issue. as you know, china's market is not open to our companies and our workers the way our markets are open for them. the president believes in free and fair trade but he wants reciprocal trade deals. that is why we go forward with the 232, there is a mechanism that will be able to deal with these issues. kevin the folks who said this or this raising costs might hurt economic growth, they cite that is a concern. what is your response to that, those who feel that these tariffs could ultimately offset some of the economic gains that have been made as a result of tax policy? >> as of a year ago, we were sitting at 2% gdp. so many people lined up and said we would never get to 3% gdp. we said all along our goal is to have 3% sustained gdp. we've had two quarters of it. we are not there on a constant basis yet, but the president is
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very focused on growth. that is our number one objective. >> does this administration feel that americans, his supporters will actually rally behind this proposal? >> absolutely. i think the americans understand that the president is for free .rade, but free and fair trade he wants to get good deals. he is the salesman in chief for american business. e tariffs, like the ones on steel and aluminum, are they pro-growth for the economy overall? sir, they are. if you look last month that the solar tariffs, they are larger than the ones we are contemplating on aluminum and 30% for solar, 50% for washers. this is the genius of donald trump. we had a flood of new investment in those industries for the first 10 years -- first time in like we, and it looks
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will have the solar industry back again. that is good for america. that is making america great again. it is a good thing. >> how concerned are you about whether they will be trade wars and what it would do to those progrowth agendas? >> the president has said this repeatedly. let me echo what he said. we are the freest trader in the world. hands down. low tariffs, low non-tariff barriers, and all we get for that is $1 trillion year trade half a deficit that offshore's our jobs. all other countries we trade with are getting the better part of the deal and they have no incentive at all to get into any conflict with us. i would hope that everyone, and our allies in particular would understand that if they want america to come to their defense, we won't be able to do that without aluminum and steel industries. word on so that is the trade from inside the white house. how do these policies look from the outside? up next, we will get a range of reactions to tariffs and much
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more from some of the biggest names in global business and finance. >> it could be a correction, it could be --. michael: this is bloomberg. ♪ mom you called?
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♪ is -- it is already a chaos. it is already chaos. it is already chaos. we just have to see how inflation is moving right now. >> i believe we cannot abandon this good idea. we need to sit at the table. michael: that was a sampling of the opinion on the u.s. steel and aluminum tariffs at the geneva convention. we spoke with global leaders in
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banking and policy during an intense debate with speculation on wide range of economic issues. with jpmorgan ceo jamie dimon. tax reform.offset gary cohn is a -- is valuable. he knows how the economy runs. it is unfortunate. i wish him the best.
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[indiscernible] >> i'm sure he will have plenty of opportunities. i don't know. [indiscernible] >> we are in an interesting time. we are at the end of the cycle. >> what happens at the end of
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the cycle? will markets adapt and adjust? [indiscernible]
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[indiscernible] [indiscernible]
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>> i am getting more on board the market rate hike from a december hike.
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what tips it for me as i am thinking about this, i think that the long period of inflation has been very difficult and has been associated with difficult times, and the time we spent was painful. it is important to ratify 2%. have expectations, i
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am nervous they are too low. cautious ande more hoping the market inflation data comes out better relative to a year ago could be helpful for us. michael: thursday was international women's day. women shared insights and analysis on bloomberg television. let's see the highlights. trade's talk about because you talk to other ceos. how concerned are they? >> they are concerned about the trade war. and it really follows on the , and it u.s. tax reform kicks off a tax war and then every country looks at how to keep their country competitive? when we combine the tax war with
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what could be a trade war, that is a combustible combination. cuts were justified as being pro-growth because it is driving investment. how would the tray tariffs cut into that? >> it is the feeling a campaign promise. but actually those tariffs would hurt u.s. workers. the steel and aluminum users, there would be a anti-job loss -- there would be a net job loss. >> is there any study out there at all that supports the president's approach? issuehink there is the that he has identified about unfair trading practices. it is the approach. the approach of going it on our own rather than forming coalitions with our allies that
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doesn't seem -- the issue he has identified is fair and a real one, and certainly, he has tapped into over trade, but in terms of achieving the objectives of leveling the playing field on trade, it is a very dangerous approach he is taking right now. >> it is dangerous, but couldn't make some -- >> yes, it can work. playing hardball and using the caret in the stick approach, it could level the playing field, but it could have intense consequences along the way. >> how does the fed respond to a possible trade war? on the one hand, it can lead to higher inflation, but also drag global growth. how does the fed square that?
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got into a trade war, it would surely be bad for the economy -- if we got into a trade war, it which really be bad for the economy. it would likely slow growth and give a lot of uncertainty to the markets. and the fed would have to deal with that. they had been worrying about possibly overheating, so a slowdown in growth would slow them in the other direction. for 2, 3, inclining or four rate hike this year? >> we don't know and the fed isn't going to tell us. we have been dealing with a very ,conomy and a low unemployment tightening labor market. very little inflation, and a generally positive outlook. the fed is always cautious.
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