tv Bloomberg Markets Americas Bloomberg July 6, 2017 10:00am-11:00am EDT
♪ vonnie: we are going to be covering the g-20. there is the airport hamburg. let's get some working economic data. here is abigail doolittle. abigail: we are waiting for the data for the nonmanufacturing composite index. pointrvey calls for 56 five. anything above 50 represents economic growth. the prior month was 56.9 and the data is not showing up quite yet. let's take a look at the majors. intoe looking at declines the trend. unless there is a big surprise on ims services, we do not see much of a reaction. it is looking like a bearish start for stocks. vonnie: all right. is, 57.4.
better than forecast, so that is the services ism index. let's get to germany, where president trump will meet with leaders. earlier today in poland, trump made this plea to russia -- president trump: we urge russia to cease its destabilizing activities in ukraine and elsewhere, and a support for hostile regimes, including syria and iran, and to instead join the community of responsible nations in our fight against common enemies and a defense of civilization itself. vonnie: joining us for prospective and analysis, we have reporters in two countries, bloombergs poland bureau chief and from hamburg, executive editor. i want to mention air force one is on the ground and taxing at
the airport in hamburg with president trump on his way. let's start in poland. went is the reaction to president trump's speech and long speech? -- what is the reaction to president trump's speech? positive. there were more than 10,000 people at the square where he spoken many were supporters of the government, which also likes trump. he had a nice reception, at least five times the crowd broke into a chance of donald trump, donald trump, which he enjoyed a lot. arrived in has just hamburg, it seemed the easy part of the trip is out of the way, one would sense the g-20 meeting would be more frosty for the president. that is right. these summits tend to be
scripted and sometimes they are go, but this one has -- sometimes they are dull, but this one promises to be anything but that. each of the meetings has the potential to be extremely dramatic and important, so tomorrow, we have two big meetings, one with the president putin meeting him for the first time and president xi. and of course, this afternoon, at 6:00, they will be meeting angela merkel, which will be an important meeting for the divisions that exist now between the u.s. and the eu and china, things like climate change. vonnie: john, what do the respective leaders want to gain at the g-20? xi has had a lot of different things to deal with, including testhis ballistic missile
from north korea. he has to think about having deals with something like that. what will you decide to do? xi is ansident interesting one. >> what the chinese may decide to do to essentially make the point to the u.s. president that if you want to deal with north korea, you will have to deal with it yourself. yes, we, the chinese are happy to help on the sidelines, but if you want to address this issue head-on, he will have to sit down with north korea and negotiate. for a long while, the u.s. president and administration has not wanted to do that. interesting, to remember that bloomberg interviewed with trump a couple of months ago and he said he would be prepared to sit down with kim. i weekly are along with that. what xi would try to do is press this idea on him. we, the chinese, cannot do this alone and if you want to fix the north
korea nuclear problem, you might have to do it yourself. mark: do polls still view the stillent as a -- do poles be the president as a kindred spirit? >> quite so. he said a lot of things here, which played well, including that the united states is ready to sell poland more gas. this is something which they like because their country is dependent on russian supplies, and they are concerned about russia's policy in ukraine. mentioned security and the government signed a preliminary deal to buy the patriots missile system. mark: john, on russia and the on., trump meets putin friday. it has gone from the meeting with no agenda to having syria,
it seems, on the agenda. is this meeting becoming a meeting that has beyond the two sides getting to know each other? does it have some sort of solid agenda now? and the president is getting off with the first lady as we speak, john. up to a point, yes. he will have talking points going into the meeting. i'm not certain what those talking points shall be but with donald trump, you cannot be sure. he will have a list of things going into the meeting, but the key thing in this meeting is the fact that they are meeting and what the atmosphere in the room will be like. do not forget, he said some things on russia today in warsaw, but he was tough on china before his first meeting
with xi and that turned into a friendly occasion. i think sometimes the president likes to up the ante into these negotiations, but the reality is he is instinctive. the reality when he gets into the room can be different from what you might expect. vonnie: i want to mention the president and first lady had deplaned and they are making the formal rounds, the handshakes on the red carpet at the airport in hamburg. they will depart in a few minutes, a 20 minute trip to the side of the g-20, and once again, the president and first having already, stopped in warsaw, poland, today. john, the combinations and back channel talks are fascinating at the g-20. will anything concrete emerge? whether it is between china and russia, russia and the u.s., or all three parties? they are the three parties that can decide the most when it comes to action in coming months
on any number of fronts, from energy to everything that is going on with north korea. the first point i would make is the probably the most important at this meeting is angela merkel. she is the chairwoman of the stocks. is mored of geopolitics influx now than any point in the last 10 years. this could turn out to be a g-20.uential we talked about north korea, the u.s. and russia story. interesting to point out that neither the saudi king nor the crown person saudi arabia -- crown prince of saudi arabia will be here. we do not know why. there is a lot going on there right now, but it is curious that neither of the two main players in saudi arabia are here. when it comes to the middle east and the gulf, the action over
the next few days will take place in the gulf. mark: on the matter of energy and security, why is the question so important for eastern europe? energy question so important for eastern europe? >> eastern europe deals cotton between a big supplier, -- deals caught in between a big supplier, which is russia. they are dependent on russian there isthat is why more u.s. lng coming into the region. they feel that the u.s. can be an alternative supplier of energy to the region, and they will no longer be in the position where someone can have a monopoly over their supplies. vonnie: you see there the
president and first lady taking out in a helicopter for the flight of the g-20 at the international airport. john, let me ask you one more question. typical things that have been strong points at g-20's in the past have been things like trade. toan and north korea came agreement on a massive trade deal. how much this trade feature in these talks this time around, given there is so much else going on? john: trade, if you like the glue that bind the g-20 together, it was trade and was thel linkages, that making of the g-20 at the heart of the financial crisis. trade will always be important and it is a symbolic moments. probably the most important story on the trade front was in brussels, went prime minister abe was close to signing a deal
with the eu, but on the upside, trade magnifies and crystallizes this ideological divide that runs through the g-20. for decades, american presidents would preach at the values of the importance of free trade at g-20 and that any given point in time, there would be people who would disagree. the first time in the cold war era, a u.s. president will show up and i think he will be face up against other economic powers who fundamentally disagree with the u.s. president on the importance of free trade. it will be important to see this new dynamic emerge of the g-20 with the u.s. on one side and jim and china on -- with germany and china on the other. vonnie: you are looking at marine one with the president and the first lady of the united states. they will depart outside of
hamburg. bureauto bloomberg's chief wojeciech moskwa and john fraher. marine one await for to take off, i will bring what is happening to markets. about 90 minutes to go into the end of the thursday session. thanks, autos down by 1% -- banks, autos, down by 1%. digest a busy weekend, g-20, a geopolitical heavyweight , and they are investing several -- digesting several comments. news, bankshares are pushing higher than the broader market declines from speculation of high rates. the euro stocks index getting a boost from receiving concerns
about lender stability after .antander took over of course, that you formally -- that eu formally approved, so that said the divergence between 50 intocks banks and euro the last months. we had germany orders increasing today. it is seen expanding and a robust pace. germany has given economic growth in the 19 nation euro region. the burned predicts -- they predict lively manufacturing demand and it will contribute to growth. this is the german two-year, the bubble may have first the two-year. the yield, seen as a proxy for the ecb's monetary policies, climbed nearly 40 basis points are that low in february. officials will announce the tapering of bond purchases in
selloutmn, the biggest since they pursued their easing policy in the aftermath of the regions debt crisis. to hear yield -- two-year yield has the bubble burst. vonnie: thank you. you have been watching the president arrive in hamburg for the g-20 meetings and lots of sidelines. this is bloomberg. ♪
oil is up, $46 a barrel. we get yet a data -- eia data in a minute. i ning us to discuss further the director of strategy at bell curve capital. what i would going to see today? >> i think we are going to see similar to api data. we are going to see greater pullback in inventory. i think what is exciting is the fact volume is back. we had higher highs throughout the day, recovering almost 2%. all of this on high volume. we are at about 150% regular for the average. vonnie: what are traders most watching when it comes to the oil market these days?
this is geopolitics? is it rig counts? chris: unfortunately, i think the market is a tease. they are looking at rig count. while rig counts are going up 23 weeks in a row, on our desk, we had seen that the new rig oil has decreased in that exploration and spending is down more than 22 percent. this lower oil is causing the suppliers to come down, the money they are spending, we see a potential plunge as far as rig count in the u.s. with $46 a starting barrel. that is chris gersch with today's futures in focus. mark: still ahead, the chief executive of toyota north america talks toyota's strong sales and plans to invest $10 billion in the u.s. over the
this is bloomberg markets. i am mark barton in london. vonnie: a new york, i am vonnie quinn. strong u.s. sales for june. toyota celebrating their new headquarters opening in plano, texas. we have more on their campus. david: thank you for having me in your home. thank you. we are joined by jim lentz, the ceo of toyota north america. from plano, texas, he has a new headquarters in tell us about it. jim: it is exciting. we have about half of our people here, 2500, to million-square-foot's, gorgeous campus north of dallas, texas. david: why did you move from los
angeles? you spent $1 billion, why and why plano? jim: if you look at how the u.s. has grown over time, we were a series of affiliated companies. we had sales and finance in california, manufacturing oversight in kentucky and corporate offices in new york. it is difficult to do that 3000 miles apart. in 2013, we started this discussion about how could we create one toyota and bring all of our affiliated companies to one location? andproject was looked up 2014 and here we are today with about -- david: one of the things i understand is you are using renewable energy. you will have solar panels, wind, and that brings me to the question of elected vehicles. there is a report out today that
says in 20 years, we will be selling more electric vehicles in this country then internal combustion engines, is that consistent with your projections of toyota? jim: we have sold about 10 million hybrids run with batteries. we sell more battery-powered vehicles than anyone in the industry, 70% of hybrid sales in the u.s. a toyota products. i think hybrids will be our mainstay power trade for many years to come. i think you will see plug-in hybrids a extended ranges and battery electrics in certain applications, but if you are looking at 20 years or 30 years down the road, we believe feel souls will be the better -- fuel cells will be divided battery. david: how much should be driven by the united states, china, or elsewhere? jim: if you look at the demand
side, the demand side for e v's is being pushed more by europe and china. making the we are push in the u.s. to jumpstart these hybrids in society and we believe long-term that will be the winner. today in the u.s., eb's correctly .5% of the marketplace. americans buy based on value. some by on sustainability -- buy based on sustainability. when gas is two dollars a gallon, to get a lot of traction, not that it will not change in the future, but when it does change, we will be ready. david: you had a good month of june in auto sales for north america. by the way, -- as, the rest of the industry, as well -- what are your
projections for the rest of the year? jim: we think the industry will come in around 17 million. we think our total volume will be about 2.4 million, unchanged from her earlier productions -- projections. our shares are about what it was last year. total share is down about .1 or so, retail share is up slightly because we are back loading are sales plan on our fleet business. our fleet is down almost 20%, so we are bullish on what the holds for toyota. --n new camry launches late the new camry launches later this month. the fact that trucks are king today, there is a large section for cars. there is a new car gaining traction in the marketplace. we think this will be a good market. no one will be unhappy about it. the fact it is down from last year, we were on the
seven-year-old. it was inevitable that would take place. david: thank you. that is jim lentz, ceo of toyota north america. vonnie: fantastic interview plano,ew headquarters in texas. thank you, david westin, for the interview. still ahead, an interview with ireland's new foreign minister of trade. what he is saying about brexit after a meeting with david davis. , weick check of the markets are down but off our lows and the dow down between .5% and .3%. this is bloomberg. ♪
first word news. president trump has acknowledged russia meddled in last year's presidential election. he spoke after meeting with:'s president -- he spoke after meeting with poland's president. president trump: i think it was russia, but i think it was probably other people and/or countries and i see nothing wrong with that statement. nobody really knows. nobody really knows pressure. says president trump president obama was told about russian interference last august but did nothing about it, ensuring hillary clinton would win. president trump says he is considering what he considers pretty severe things regarding their missile program. he does not drop redlines, unlike president obama. in may, american companies exported the most in almost two years, and that shrank the trade
deficit by almost 2%. venezuela, president majuro is promising to investigate -- maduro is promising to investigate an attack, where they stormed congress. ofezuela is in the midst three months obama's daily protests by those who accused the president of trying to establish a dictatorship. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am emma chandra. this is bloomberg. vonnie: thank you. hiring has lied in recent months. u.s. economy seems to be growing at the same pace as it has the past few years. we are able to produce as much as we did but with you are workers. on that ease of the june employment report, michael mckee joins us from cambridge, massachusetts, with more on what people are calling the skill gap.
pollsters tell us donald trump got an electoral booster unemployed blue-collar workers. he promised to bring back the jobs they lost a foreign competition. data tells us to have a legitimate complaint. take a look at this chart g #btv 849, those with less than a college degree suffered more during the recession and have recovered last. will they get what trump promised? no.experts say it isn't foreign competition killing factory jobs, it is the machine. we are at m.i.t., where in economics professor recently completed a study on the effects of automation. ,e found that for every robot up to six humans lose their jobs and wages fall by up 2.75 of 1% -- up to .75 of 1%. he said we do have a skill gap.
>> yes, we do. technology is changing rapidly and many of our skill sets, especially workers who do not have a postgraduate degree, are now being done by automated technologies, robots and for artificial intelligence. there are also many jobs and many skill sets employers need, but we have not made the transition to endowing a workers with those skills. michael: is that a time problem, something that will disappear or is it a more secular change? i go back to the turn of the 1900s, when henry ford put buggy makers out of work but he hired hundreds of people to build cars. ron: this is not a unique period. we have experienced many waves of automation. every new technology destroys
some jobs, as well as creating others, but we are going through a turbulent time. i think what makes this period particularly challenging is that we do not have much of a mouth about what the future of work will look like. of that withmap the future of work will look like. in other words, what are the skills we will need in the future? that is an open question and what makes it more difficult is we had not been investing resources to understand what the future will look like, how we can improve our education system, so i think one of the problems we are facing is complacency. michael: in other words, the jobs displaced by technology are not coming back, and it will take years of effort to close the skills gap. taker next report, we will a look at what companies are doing in the meantime. vonnie: this that mean what donald trump is -- president
donald trump is saying about bringing back jobs, it is a flight of fancy? michael: it is, that is what the experts tell us. there is no reason humans will come back to do jobs that have been replaced by other mission. the coal industry is a good example. what miners used to do underground in mile mean has been taken over by machines. even if cole whitt to make a with to c -- coal make a comeback, it would not mean jobs. vonnie: what it and apprenticeship can help with the skills gap, maybe there should be apprenticeships in other kinds of fields for people who have lost their jobs and are affected now? michael: part of the problem with the technology revolution is in the day they seek understanding of certain concepts, essentially a college degree, before you can move into the training to get you into the tech jobs. i talked to one ceo here who said, yes, we have apprenticeships, they're called
interns very become some places like m.i.t. and then we teach them the skills they need to know. it may help with some middle skill level jobs but not the answer for the tech jobs of the future. mckee, you'lll have to find someone more positive for us next time. he will solve the questions, mark. mark: he better do that. 12:00 p.m. newn york time, 5:00 p.m. london time tomorrow. do not miss it. big day tomorrow. always a big day here. this is bloomberg. ♪
vonnie quinn. mark: in london, i am mark barton. this is limberbutt markets. time for the bloomberg business flash. -- this is bloomberg markets. costco shares higher today after reporting june sales outpacing expectations. model, whichership make up 75% of annual profits, showed the resale or can coexist with competitors like walmart. it seems tesla will have a lead in the electric car race. according to bloomberg energy finance, it stands out. they are expected to sell more than 700,000 vehicles to 2021. tesla releases it's more affordable model three sedan at the end of the month. andin-robbins is delivering
hopefully fast, some 600 stores in the u.s. are now drinking cakes to homes through door --. dash.r they plan on delivering to locations as door dash close. -- grows. they will now compete with mcdonald's, who announced deliveries earlier this year. that is the latest bloomberg business flash. vonnie: time for our bloomberg quick take. today, we are looking at japan, tradesigned a preliminary agreement to the european union. japan's prime minister has a bold strategy, shock therapy for an economy that has been stagnant for 20 years. that it isoters japan's last chance to remain a world power. after early promise, progress on so-called abenomics, it has stalled. the theory was unprecedented
monetary easing in government spending would tackle deflation and buy time to implement structural reform. the goal of inflation has not been met. they have introduced negative interest rates in january 2016 and stocks slumped and the yen surged. clear signs that the quit in two abe's critics, that his plan was failing. the transpacific partnership trade agreement is trying to forge ahead, and even president donald trump with some of the deals. japan's real estate bubble burst in the early 1990's. wages stagnated. that led to two lost decades of no growth in the economy. the devastating earthquake and tsunami 2011 did not help. the challenge is japan's economy with an aging population and a series of prime minister's. the argument is they see the bank of japan's massive
government debt as a way to shakeup inflation. japan's yield remains among the lowest in a developed nation. they're looking for signs that shinzo abe is willing to take more old assets, including attracting more women into the workforce. areas where he must take on tough vested interest. you can read more about japan on ni quick at the bloomberg. mark: gearing up to hash out g-20rences on trade at the as it kicks off tomorrow. director of the world trade organization spoke to bloomberg about what you would like to see in hamburg during the summit. >> the first thing to bear in mind is this will probably be the first opportunity these leaders have to have a conversation about the concerns, problems face-to-face and in more than one on one kind of environments.
i think that is a good opportunity because right now what we need is to talk and listen to each other. there are concerns we cannot just ignore and say that the other concerns are in reasonable. we all have to -- are unreasonable. we have to interrupt solutions. that is the value of this meeting. david: your responsibility is to monitor and promote global trade. give us your report card now on where we stand globally. we heard some stuff out of the term administration, not the only place where there has been talk of reducing some of the trade. think the trade conversation involves global problems. for example, the overcapacity of steel production. for example, concerns about distortion, subsidies introduced into the economies. all of these are global. the only way to fix the global
problem is to talk with the major players around the table. a face-to-face conversation bilaterally and regionally is important. i think we have to explore all avenues because most concerns we have are not easy to fix. i think that is something we have to bear in mind. jonathan: there are concerns about your organization. the president has referred to it as a disaster. what do you say to people who agree with that phrase about the organization you represent? roberto: i had already a few meetings with the u.s. bureau. we had excellent conversations. they do have concerns about the organization. the are concerned about certain limits imposed by the rules negotiated before. that affects everybody, but we have to understand more what they expect from the organization. how can the organization address those? many of the things i hear the u.s. administration saying,
used are tools that can be to solve those problems in a constructive way. i think we need to explore that somewhat. mark: that was sto direct -- wto director roberto azevedo. vonnie: a new case divorce from britain'san union -- divorce from the european union is well known, we will hear advice straight ahead. this is bloomberg. ♪
consequences on trade ties. simon coveney met with brexit secretary david davis earlier and he joins us now run exclusive interview of the irish embassy in london. thanks for joining. your first impressions of your meeting with david davis today? : i think we had a good meeting. i think it was frank and length, which it needs to be because the ireland and england are friends great ireland is on the negotiations,xit but we have a close relationship from a trade and political perspective with britain that we need to be cognizant of that. we are in many ways in a vulnerable position in the context of brexit, should it not turn out to be a positive outcome from a future trade
perspective. i think the points reinforced today are true and they have been to from start. a country that leaves the european union cannot expect to retain the benefits of free trade in a large, common market. uniony leave the european and leave behind the financial and political responsibilities that come with membership, so we were discussing in some detail what that means for the irish-british relationship. we have a 1.3 billion euro a week trade relationship with britain and it is an interwoven one, so from a large perspective, we respect and understand, even though we are disappointed by britain's decision to leave, but we accept it is happening. but we do need to insist on outcomes that protect our interests year. mark: you mentioned the brexit
negotiator, the eu's brexit not peddlingho is a stock division today, have you sensed a change in the vision from the conservative led government since the election? it seems as if they are pushing for a softer tone of brexit. did you get that from your meeting today with brexit minister davis? simon: i think the official position is britain is leaving european union. door andclosing the went to reopen the door to negotiate -- want to reopen the door to negotiate while maintaining the ability to put free trade agreements in place with other parts of the world, as well. that is what we would say in ireland as having your cake and eating it. i do not think the european union is going to accept a situation where britain can gain competitive advantage by
negotiating its own free trade agreement on a bilateral basis with other countries around the world and expect they can have free, uninhibited access into the european market of half a billion people. you cannot have both, so if britain is determined to leave the single market and ing theally leav european union, i think there are consequences for that. from an irish perspective, the problem is our economy is so close to the british economy that we will insist on an outcome here that respects both. mark: can we talk about progress made so far? theresa may has put forward the idea of bright for eu nationals -- of right for you nationals in the u.k. they have to allow talks to
progress to ultimately a trade negotiation. how much progress is being made so far in early negotiations between the two parties? early i think it is very days so far. they are braving up to negotiating segments into a four-week segments. we are coming to the end of the first one. as you say, there are three issues to be discussed in the first phase of negotiations before we can move on to the bigger trade and transition issues, which i know they are anxious to talk about. in order to get onto those discussions, we do need to see some progress on the issue eu citizen rights in britain and the rest of the european union. i think there are some progress on that. written hazard -- britain has produced a paper they are examining in detail and i think that is a good start.
on the financial settlement issue, britain has made financial commitments to the european union, which need to be paid. just because they are leaving does not mean this financial commitments were not made. calculating what that figure is and how it may be repaid is something we need to make progress on. thirdly, the issue i am most involved in, the irish issue, in particular, the border between northern ireland and the republic of ireland, which is 500 kilometers long, 400 row crossing and central to the peace process over the last 20 years or 30 years in terms of creating a normal relationship north and south in ireland, and we need to make sure the negotiations to allow the european union and northern ireland to leave the european union, that we do not see the reemergence of a border on our island. vonnie: it has always been pushed on both sides that there
will not be a hard border. i imagine that is still the position for most people involved. i have to ask about the influence propping up the british government, what with the influence beyond brexit and the voters of northern ireland? i think that is interesting because a lot of people have commented on the inference of the do you be -- dup in the context of brexit negatively. they say this is like getting a blank check to the british government around brexit. i do not see it that way because the dup has committed to supporting legislation around brexit. that means they will need to defend what they are voting for in northern ireland when they go home, so the dup will need to try and influence the brexit legislation that comes forward in a way that is good for northern ireland.
undoubtedly, that means ensuring that there is no visible border between north and south on the island of ireland at the normality of trading movement and community activity around the border region in ireland remains positive, as opposed to going back to the years of the past, when we had a visible border. veny, --nister co sorry, a final question. do you think the relationship, the deal between the dup by conservative party will last? which obviously leads to the question, are we heading for stop elections? we spoke to jeremy corbyn today, who is acting like he is prime minister and waiting. do you expect this deal between these two parties the last? simon: i think it is dangerous
territory for me as a foreign minister to talk about internal politics and the united kingdom. all i can say is we are successfully running a minority government that relies on a conference of supply agreement of the main opposition party in ireland. that has lasted now for more than one year and it looks like it will last for another year. it is possible to make arrangements work. even when you have a minority government, as we have, so i do not see any reason why it is not possible for the government to last, but i think brexit -- mark: we have to leave it there. this is bloomberg. ♪
bloomberg markets. ♪ vonnie: we are in a holiday week, which means inventories move a day. we went to break u.s. oil inventories now with abigail doolittle. abigail: we are looking a bullish activity for this department of inventory energy information. drop thanbigger expected. six .3 million barrels on oil. 1.7 was the drop expected, set a much bigger draw down on crude inventories and a bigger draw down on gasoline. we have seen the effect on crude that it is in fact popping higher. let's take a look at what that pop looks like. we see this hike up on a much better than expe