tv Whatd You Miss Bloomberg July 6, 2017 3:30pm-5:00pm EDT
the 2 discussed how divorce kim jong-un'-- how to force kim jong-un's regime to change its behavior. the point isrkel: that north korea continues the nuclear weapons program and that we talked about how to react best and uphold pressure on the north korean regime. says thesident moon crisis should be resolved in a peaceful way. president trump says he is considering what he calls " pretty severe things to do" regarding north korea, and while in warsaw, the president accused pyongyang of acting in a dangerous manner, but that he does not drop a lines, unlike president obama regarding syria. several states are joining a legal fight against a widely used pesticide. the states are suing the environmental protection keep thedecision to
pesticide on the market despite studies that show it harms children's rights. bpa says it is reviewing -- the epa says it is reviewing the lawsuit. the illinois house vote budget was delayed while police investigate a suspicious powder. the vote would end a record long impact over the budget, reducing the risk of the state on rating would be cut to junk. global news 24 hours a day powered by more than 2600 journalists and analysts in over 120 countries. i am mark crumpton. this is bloomberg. ♪ live from bloomberg world
headquarters scarlet: in new york, i am julie chatterley. --headquarters in new york, i am julia chatterley. scarlet: i'm scarlet fu. joe: i'm joe weisenthal. missedstion is, what you -- what'd you miss? scarlet: tensions escalate in hamburg, germany, as leaders assemble for the g20 summit. we will hear from ian bremmer, president of the eurasia group. ck. labor leader jeremy orbyn says there is potential to cooperate with prime minister theresa may. let's get a look at where the major averages stand as we head towards the close. abigail doolittle is standing by. abigail: we have bearish action for the major averages heading to the close. nasdaq is down 1%. we have the major averages nearing session lows.
look at this index, down nearly 2%. the worst fullback for all of these averages in about a week. surprisingly, you would think that with the nasdaq down, tech is the worst sector. not true. one of them as health care, and two of the biotech giants are down sharply. risk-off day, investors going away. names have 2 big pharma lower, merck and bristol-myers squibb. clinical trials are on hold and that could be pressuring that stock and space overall. of theyear yield -- one big stories today has been the bond selloff. continuing today, the 10-year yield up for basis points from represented in red. perhaps reaction to what is considered to be more hawkish talk from global central bankers. interestingly, before we had one
of the only positive spots for stocks today, the financial sector had been higher, but now the banks are trading lower with the overall risk tone. a big story in the bloomberg right now is the chief investment officer saying that the bond selloff a be starting. decimate just be starting. -- may just be starting. we have a chart suggesting it will not take effect right away. this is a long-term chart of the 10-year yield. this huge downturn in the 10-year yield represents a big bond bull market we have had the last more than 30 years. you see right now that the 10-year yield as well below the 3% level. above 3%, perhaps the bond bull market will come to an end. this suggests that bonds are not oversold, and they could see more buying and perhaps even the 10-year yield will go back in that range, back below 2%. andow this will be covered
i'm sure all of you will be talking about it more as well. julia: thanks, abigail. what'd you miss? president trump is in hamburg, germany, for the historic g20 meeting beginning tomorrow could for the first time, the united states is not the global leader in trade or climate change, spaces that germany and china are trying to fill. bremmer, who ian wrote the book about this, "every nation for itself." glike?u ever felt less ian: gee whiz. some timeobvious for that america was moving away from leadership but it came faster than i expected because of the election of president trump. it was coming, would have been more incremental -- china was
creating an alternative model to the u.s.-led economic system, ,he transatlantic relationships brexit happening. but then you had america first. the republican base is still very much with trump, but internationally, america first doesn't play well. the firstrump for time sitting around is the cable with 19 other leaders from the world's most important economies, and most of them don't trust and don't like the leader of the world's only superpower. that is a serious problem. it is going to be very hard for him to navigate that he does -- he doesn't care all that much from his base doesn't care at all, but these other leaders do. they will talk about one thing -- what do we make of this guy, how do we had, what do we do? julia: the first time meeting putin face-to-face, and many of the column inches dedicated --
what comes of the meeting? what kinds of exchanges do we see, if at all? do you believe it is a strategy from trump's side? general mcmaster suggests it would be an ad hoc meeting with no real plan. ian: i think there is definitely to the base -- the people who don't like him, the media. the meeting between trump and putin will probably be the best bilateral meeting at the g20. if you think of how misaligned u.s. and russia national interests are on anything, from north korea to syria to cyber to trade, you name it -- human rights, anywhere you want to go -- i never in my career as a political scientist have seen 2 major countries were the countries themselves are that much against each other. u.s.-roll up shut -- u.s.-russia
relations are the worst at any point since -- when the two leaders are trying to say we really like each other. that is going to be on display tomorrow. could care less what the international community has to say about that. i think that creates more authenticity. a no establishmentn--- non-establishment outside the box kind of guy and he will do it his way. scarlet: the 2 personalities mesh quite well, what could be accomplished by the meeting? ian: a little bit. we are seeing from rex tillerson, the secretary of state already, talk of cooperation with no-fly zones over syria. russia will determine what happens to assad. to be fair, that was true under obama, too. just that obama never admitted it. the fact that trump is talking
backed with reality on the backd in syria -- tracking to reality on the ground in syria could be called a win. they could be friendly. scarlet: should we make anything of the fact that the president in today's news briefing distance himself from the idea that there is russian interference in the election? he thought of this idea that it could have been anyone -- ian: number one, he said that before -- scarlet: in an international setting? ian: who caresian:? if you are trump come you don't care if it is an international setting. even if there were no weston at all of the trump administration and russia, no investigation, no feeling they were misbehaving with the fact is that for trump to embrace the idea of russian hacks against the election delegitimize his, in his eyes,
the validity of his win. the thing to understand about addresses cystic president -- about a narcissistic president like trump is you will not do anything to undermine his win. it is insane to me that anyone sensible would think, given what we know about trump, what about those hacks -- add to the fact that obama was president when the hacks occurred and he didn't do anything. andy wanted to go public obama told him don't do it. obama thought hillary was going to win. he's fairly risk-averse. he thought hillary would take care of it. the fact that he made that that -- a difficult bet, but ultimately, the consequence of that bet is that trump now has much more space to ignore this issue. obama, wheng of
asking about the prospect of trump tearing of his legacy, he talked of the federal government as a supertanker. does that same principle apply in the foreign-policy realm, that there is a certain inertia with the way the u.s. behave towards the world, and even if trump tries to change it, it will be slow no matter what? ian: hell, it applies to new york city and bill de blasio. if you talk about the united itses and its policies and attraction as a market to the rest of the world, the markets are telling you you are right. but if you are talking about the way the u.s. interacts with the rest of the world, ripping up tpp matters. aump absolutely facilitated saudi vs. other countries, qatar, rift. i also think the likelihood of a u.s.-china rift is greater and
likely to be more severe, with economic implications. the reason for all that is not just trump. in the case of american policy, any american president is steering into the wind. everything is pushing against getting stuff done. bestworld increasing quality moving increasingly away from u.s. leadership -- the world is actually tacking toward trump's abandonment of global leadership. he is saying we don't want to pay for all of this stuff come we don't want to be the architect of global trade. there is no democracy in that speech he gave in poland. world wasf the already moving in that direction. this speeds up the process we are already seeing. julia: accelerator. scarlet: ian bremmer will stick with us. we will talk about north korea and china. in the meantime, breaking news. theing a deal to acquire
scarlet: still with us is ian bremmer, eurasia group president and founder. i want to talk about north korea, and i saw this quotation today, new york times" from a propensity at the university of southern california. a says north korea is in class of its own but we ignore that it is a real country with a functioning government at our
peril. making steady progress in alleviating the humanitarian and economic progress while maintaining strong deterrence against the nuclear program is the only way forward." i want to get from you -- we kim a tendency to mock jong-un as a freak and by doing that, we underestimate his power, and it suggests he is a lightweight when he is proving he is not. that is a risk. ian: yeah. we increasingly can see that about the american president as well. peopleever good to mock with real power. shouldn't mock people generally. you genuinely don't want to mock people with real power. in the case of north korea, the chinese understand this well. they have been living with this threat for a long time. the chinese would really like the north korea issue to quietly go away. they don't want them doing cyberattacks.
they don't want them shooting off an icbm. they certainly don't want a crisis here. the chinese understand that even though they are paying all this money to north korea, the real options are limited or they are going to hurt themselves. understoodot yet that, and his administration hasn't, either. scarlet: why would sanctions work, then? ian: who said they would? scarlet: the u.s. is going to pursue that. ian: well, sure, but there are many reasons you want to pursue things. you want to look like a tough guy. dore is little the u.s. can in terms of additional sanctions against north korea. we have pretty much cut them all. we can put sanctions against chinese banks and companies doing business and that will irritate the chinese. we can put direct tariffs and other linkages against china as a country because they are not behaving the way we want. to be fair, we are much more powerful than china. we have a much bigger economy and they need us more than we
need them. it's possible that if we do that, the chinese will move to a greater degree to squeeze north korea. there is no reason to believe that will work, but i can imagine trump saying, see, i pushed the chinese. and steve bannon and others, many in the trump administration dealing with china, they think the u.s. should push china carter and we will get more out of them. they may well be right about that, but that doesn't help with north korea. joe: when you said earlier china cutting off payments to north korea would be hurting itself, what you mean specifically? how would that blowback? ian: a couple of ways. the answer is they don't know and they are reluctant to push them really hard to get they don't understand the impact it would have. 3 potential impacts come all the one of them good. one, oh, you are serious, we better behave better. another is how do these people?
-- how dare these people? cybere nukes and capability and we better stop that appeared third is that the north korean regime starts to crumble, and then we have refugee issues, massive concerns about what happens with the reunification, geostrategic uncertainty. and we also have things like loose nukes. what does that mean in a country that has the military capabilities it does? it is not at all clear. a lot of neocons in the united states pushing iran because they want regime change. regime change would have been dangerous for the united states. the in between path is really rocky. the same would be true in a bigger way with a hermit kingdom. we should remember the power him john kuhn has, but we should also remember that this place is excreted there -- extra the nearly dangerous because --
extraordinarily dangerous because it is a totalitarian state. there is the possibility this regime implodes and that is a danger when they don't talk eye to eye. the day after the crisis hits, there is a much greater chance of severe miscalculation and over escalation precisely because we don't have plans. julia: and there can be a misunderstanding of how this works -- using the iranian example, pressure to bringing them to the table, and a perfect example, -- imperfect example, comparison of how pressure works. pressure on china may work. what does not working look like? at what point does china get frustrated, the south china sea, the bombs that trump is throwing in their court? ian: i think they are frustrated
already. theyutin meeting is what pay attention to. the meeting with xi jinping -- china's economy is going to be the largest in the world soon. if the chinese get seriously antagonized and decide that they are going to escalate, we move towards a trade war. that is an economy we do rely on that affects corporations and consumers. hasry interesting poll obviously taken by someone on twitter. what percentage of american gdp would you be prepared to sacrifice to force the chinese to get the north koreans to the table?that is really the question. there are economic consequences of pushing the chinese heart, and it is like saying how much you care about human rights in syria, how much do you care about refugees? most americans don't care that much. that is why this is all america first.
ultimately, an icbm that they can punch at canada -- lunch at canada and alaska and hawaii does not make him want to sacrifice much. that is just the reality. scarlet: we see u.k. prime minister theresa may arriving in hamburg for the g20 summit tomorrow. china has been warming ties with europe. there is a lot more emphasis, it seems, on that, as the u.s. stands off to the side. what is the risk to the united states in doing so, as china and germany and the u.k. are forging closer ties and perhaps leaving the u.s. out, or is that the wrong way to look at it? no, it is a way to look at it. when trump made his first international trip to the middle east and europe, the most important thing was china inviting 29 heads of state to come to beijing and to have their first ever one-road summit.
the reason that was the most important meeting and not trump was announcing deals with the saudis already done while china was putting out real money for infrastructure and of element. countries respond when you write checks. the united states is still by far the most attractive economy for people to come to. the chinese themselves want to send their kids to be educated in new york and to buy apartments in new york and san francisco and all those things. mostmericans are not the attractive partner to be with from a foreign policy perspective. economically, especially in asia, the economic future of the world, the chinese are becoming the dominant economic player, not the united states. scarlet: ian bremmer, great to have you on. eurasia group president and founder. perfect timing as we get ready to kick off g20. julia: you are looking at live pictures of protests outside the g20 summit in hamburg.
cannot read the protest signs. it is actually quite normal to see protests outside a g20 meeting. -two, that is's pretty sizable, but when you talk to people, what they are protesting, they tell you also's of things -- globalization, not necessarily the actual politics of the situation. violence earlier, for now seems pretty peaceful as we head towards evening and we count down to the beginning of the g20 summit. expect fireworks. from new york, this is bloomberg. ♪
>> would you miss? global bonds under pressure. the dollar at its weakest mark since may. i'm julia chatterley. i am scarlet fu. joe: it i am joe weisenthal. we want to welcome you on twitter. scarlet: we begin with our market minute. major indexes for equities. red arrows all around, and we are looking at losses of more than 1% -- at least to just at 1% for the nasdaq. we came off the close. the lowest level for the s&p since mid-may. the dow losing 155 points. i look at sector groups, even utilities, a safe haven,
the best performing group is still down .1%. insurance companies off, materials, and again, these are the best performers. the big losers are the telecom stocks. safe havens, cyclicals, it doesn't matter which way you slice or dice it, they are down. joe: everything is getting slammed, and that is the theme of our market minute. scarlet: microsoft a loser. amga.s part of the f .7 5%. announcing job cuts, mostly in sales outside the u.s., but it did notify workers today. on pharmaceuticals is under investigation by the department of health and human services. we don't know why.
tesla trading at the lowest level since may 23. now down for a third day. there were some disappointing second-quarter delivery numbers. that raises some questions over how the company is going to do with the model three as well. off by 14%,brands the worst day since february. sales missing analyst estimates, plunging 17% at the victoria's last month. retail having a tough go. is really a global bonds selloff. was 2.37 wheneld we brought up the screen. now 2.36. 2.12 in the middle of last month. quite a move. let's take a look at the german 10 year rates. to 0.5 six.
remember, this is negative last year. negative territory. quite a move, really showing the degree to which europe is at the center of the action. we will talk a little more about that momentarily. julia: there he much building into what we are seeing in the fx markets as well -- vv much building into what we are seeing in the fx markets as well. .6%.ts up is 1445.to date high certainly a level to watch on this. of all the selling we have seen , managing tossion hold in the green, and that is the commodities curve on a relative basis. talks going on at the g-20 in light of north korea and
we are keeping a check on that. that could affect the bond market. on commodities, oil bouncing back a little bit today, not a tone of action -- not atown of action ton of action mayor. is genericbig loser first, down over 6%. we will be talking about grains later in the show. scarlet: we're seeing a bond wipeout. one person says it's only the start. people are turning to trade strategies. of this isdigest all peter, head of macro strategies. what do you make of the idea that the bond wipeout is just starting? >> i think there is more room
for bonds selloff. a lot of people post-brexit were buying treasuries. that worked very well. a tough election. owning sovereign debt worked very well. a lot of people are buying stocks, buying bonds. and ultimately, they are dropping together. and of course, a risk parity trade strategy exists in many forms. joe: right, that's what i wanted to get at. people look at the risk parity universe and say there is not that much money in the grand scheme of things. but you say a lot of people are doing risk parity light. portfolios that are quads i risk parity are premised on some of the same assumptions? >> i think that's really the driver. it doesn't matter if i talk to high net worth or sophisticated pension fund managers, people are allocating some amount of
money to this strategy. you want to hedge. treasury groups have proved an effective hedge lately. that, peoples like turn to etf's and the commitment of traders. joe: you brought up the risk parity index and ctas, both going in the same direction. how far could this unwind go? >> i think it could go pretty far. both of these funds typically use some amount of leverage. when things turn, they could go down. cta funds are not a risk of parity per se, but they were heavily long on treasuries. they appear to be long on the equity side. they are having to battle on days like today when everything gets pushed down together. i think that becomes self-fulfilling. it could be a more dramatic selloff. what about by year end?
>> i am not so sure about year end. use the termto flash crash, but i don't like putting equities in the market. i don't like the positioning. when any real flow comes through, we disappear quickly. liquidity disappears. i think we could get a selloff quickly and that could be us a price to most people. julia: what you like if into were three days time we are talking about everything reversing? will investors power back in? >> i think we're on the cusp of that. i think we are going to see the next stages. if not, we could rally. i am not overly concerned with levels. joe: does there come a point where a selloff in risk assets a bid fortes
treasuries? you get the fear trade and instinctively people reach for long treasuries? could you see that kick in? >> i think we could see that kick in. other stocks are getting dragged. i think us stocks are not leading the way, that should create a nice bid -- if stocks are not leading the way, that should create a nice bid for treasuries. what about the broader global -- >> what supported it on monday and a little bit yesterday is financials receiving inflows a little bit going into the russell 2000. that sort of reverse things. i think the next wave down means people give up the rotation. usually simms doing the selloff in that drags all markets down. this is the first time in a few days they've done that. that speaks to more selling. scarlet: that's a good point.
we were looking at the index earlier and everything was red. ,hen it comes to equities between cyclicals and safe havens, what are parity risk strategies really loading up on? --ia: i would say >> i would say my general opinion is they are more index based. the s&p 500 base, maybe the nasdaq base. i think that's where the real risk is. the nice part is you have seen nasdaq volatility jump. if you want to hedge, you still have an opportunity. i haven't recommended this for a long time, but i recommend buying ftse. unlike the last year and a half where that has been a disaster of a strategy. you talk to clients and you talk about a world where everything moves in the same direction, risk assets and so-called risk-free assets, what in cash?, hide out
>> for people who are long equity or long fixed income, i would recommend reducing risk. i don't think you have to be completely out of risk, but you want to have more cash than you would normally have. i think if we get a dip, it will be fast, furious, but fairly short-lived. you will want the cash because you will not have much time to take advantage of it. do think that was do you think that was coordinated? >> this feels like 2001, 2007. a little bit of a shakeup is not the end of the world. for most investors if they dropped 5%-10 percent, what do they care? they are still up from where they got in. mom-and-pop don't care about these moves. i think it would be a healthy
shakeup and central bankers are keen on letting it happen. scarlet: thank you so much for joining us today. speaking of this topic, bloomberg will be focusing on this recent drought in global bonds. at 12:00 p.m. tomorrow, we have jpmorganom robert tip, , and oppenheimer funds. thea: i wish you could see smile on joe's face. he loves this story. we will be talking about grains. from new york, this is bloomberg. ♪
on the eve of the g 20 summit in germany, protesters have been battling police in the streets of hamburg. biggests second city has reinforcements. an estimated 100,000 protesters were expected. some of that number includes people consider to be part of europe's violent left-wing faction. belgium has already said they are looking for more than -- for at least one other suspect after rating more than half a dozen sites. however, they insist they have no information and attack is imminent and that the investigation was not linked to past attacks in paris and brussels. the prosecutor's office said in a statement that two belgians were charged with "taking part in activities of a terrorist group." the attacker who bombed the ariana grande a concert in the u.k. this past spring was not
part of a large network, but other people involved in the crime may still be at large, according to authorities. more arrests may be made. he detonated a homemade bomb as crowds were leaving manchester arena may 22, killing 22 people and himself. more than 200 other people were wounded. walter shaw, director of the ethics agency, announced today that he would resign. he challenged president trump over his plans for dealing with potential business conflicts of interest shortly before trump took office. plans forled trump's dealing with the conflicts "meaningless." global news 24 hours a day powered by more than 2700 journalists and analysts in more than 170 countries. imr crumpton. this is bloomberg.
mark crumpton. this is bloomberg. said therext guest could be a perfect storm in u.s. agriculture. he is a strategist with bloomberg intelligence and he joins us now. mike, everyone has been wheat, but it's not just tweet. there is a bigger story with agriculture in general. what's going on? >> wheat could just be the spark to the game. the game starts now. july 4 is halftime in the grain market. july and august is when you either make corn and beans -- and that's what matters. wheat is significant, but to the most significant grains are corn and soybeans. demand and supply is really taking off because prices have been down for four or five years. joe: we have a chart about that
going back to 2000. it's a little bit noisy, but i think the thing you want to focus on is the white line. tell you about prices going forward? >> we took the most defensible data we could find going back 10 or 20 years and did a full demand versus supply ratio. in this case for agriculture. you can see what it is doing. it is well above the 1:1 threshold and it has dipped to the lowest level in 20 years. indicator.t is an it is beginning to show up in the rest of the markets. it's just a matter of time. the thing we need is to end the bumper crop trend. im not predicting the weather, but at some point that will happen. it's not a matter of if but when. scarlet: record exports are in
yellow on this chart. those have been flying of late. look at this move up over the last couple of years. what does that indicate about the price action? >> that's what we call an unsustainable trend. something has to give. either prices have to go up or there has to be a reduction in exports. this is the low hanging fruit. experts have taken over, and his taken-- exports have over, and historically, prices have had to increase to adjust to that. do we get a bumper crop this year to add to supply and suppress and meet those exports, or do we get what has been happening so far in wheat, a little bit of normalization. julia: the problem is if investors are surprised and
prices rally, if you look at the net positioning and soybeans, a lot of people are going to be caught on the wrong side of this trade. explain what's going on. i think the white line says it all. >> that chart is wheat three months ago. record shorts. a little bit of supply. and then a drought. this is in terms of production, not trading. we have to watch for the potential storm developing and that's going to be this month and next. a little bit of short covering could really boost so i a lot. last friday we got the usda report and the spread in acreage between soy and corn was the narrowest since the early 1980's. some people thought there would be more soy than corn, but it
didn't quite happen. what is driving that trend? >> money. simple. its profits. wethe beginning of the year, were making money. look what happened to wheat. that just happened to soybeans. it looks like -- farmers fast can recompose an acre from corn to soy to respond to price signals? >> within a year. that's why agriculture is such a good indication of overall commodities. they? how close are across the board, i am thinking if you got caught short like this, could you hedge in something else to create a spillover effect?
>> that's what you are seeing in spring wheat. people can't get what they want so they go to what we call chicago wheat, the deepest market in the world. they are highly correlated. and there is feed wheat. feeding wheat to animals, it's the sign of a bit of a bottom. joe: great stuff. if you want volatility, just look at the ad market. bloomberg intelligence commodity strategist, thank you very much. scarlet: coming up, why the commodity index is up -- is due for an upturn. you can catch all segments on bloomberg from tv . you can get breaking news, charts, related functionality discussed on the program. breaking news headlines. it goes on and on.
at the: i am looking economic surprise index and the seasonality behind it. let's take a deep dive into the bloomberg. this is the citigroup economic surprise index. i have seen it crop up in a couple of people's notes, most notably andy cinko in ny go. this index put in a bottom right around the month of june for the last six years. 2011, first circle. 2012, second circle. it3, not exactly june but
started to make a real upturn after june. so, the data has artie started to improve, which means that going forward, you should expect the data to improve. we have the payroll nonfarm's jobs report tomorrow and ppi on friday. julia: i am looking at global trade. we have been talking about g-20. we spent a lot of time talking about personality politics and not some of the critical issues like trade. come out of this meeting, if, indeed, we do, given donald trump's stance. has an indexy looking at the performance of 2017. on the right of the chart, taking a bit of a turn for the worse in 2017. the question is, will that continue? look at the relationship
over the last eight or nine years, they have tracked each other pretty closely. is, can they continue to do so? i should point out, there have been some positive signs. japan and the eu negotiating a trade deal. there are good things about global trade out there. and then the united states and china start to throw things into the works. a reminder to look at the real economy. i am looking at perhaps an unusual pair. im looking at a chart of tesla, which i have inverted. that's the blue line. and you asked year treasury yields. 30 or treasury yields. i think it's interesting that the peak in shares coincided with the bottoming in rates. .here could be a couple factors
the poll risk parity, the general unwind between red hot tech stocks and safety stocks. there is an additional factor with tesla, remember. a lot of people arguing that the company most likely or possibly will have to tap capital markets again at some point in the future. tighteningcern is financial conditions, if you think rates are coming down, that implies narrower access to capital. it would make sense that tesla gets hit along with this. it's an interesting relationship you maybe want to keep your eye on. high growthimate compared to safe haven trade. we shall see. coming up, government regulating broadband. some places are making up their own rules. we will discuss. from new york, this is bloomberg. ♪
mark: defense secretary jim mattis says u.s. investigators are still scrutinizing details of north korea's intercontinental ballistic missile launch. he says every missile test conducted north of the korean peninsula put a rights -- provides additional information. the u.s. was aware as soon as it was launched. department is questioning whether some so-called sanctuary cities are responding honestly when whether they follow the law on sharing
the immigration status of residence. attorney general jeff sessions says the government is reviewing responses from 10 jurisdictions that are facing losses of federal grant money if they can't prove they cooperate with federal immigration authorities. the democratic attorneys general in 18 states and in washington, d.c. have mobilized against education secretary betsy devos's decision to suspend student loan borrowers rules. -- they filed a lawsuit to have the rules for sport -- rules restored. they were designed to hold responsible for financially responsible student loans. authorities investigated a report of hazardous material in the capital. a vote would move the legislator -- legislature closer to a
record long impasse over the budget. it has been the nation's longest fiscal stalemate since the great depression. global news 24 hours a day powered by more than 27 hundred journalists and analysts in over 120 countries. im mark crumpton. mark crumpton crumpton. this is bloomberg. scarlet: qualcomm has filed a patent infringement complaint against apple on iphones. used in says technology the iphone's specifically. this comes down to the broader legal issue around patents that let qualcomm take a cut of every iphone even ifn it doesn't have one of qualcomm's chips. this is the latest battle in a longer war between qualcomm and apple over patent infringement
and whether apple should pay for qualcomm technology used in the iphone. this is after-hours trade. qualcomm getting a little boost in extended trading. julia: almost two dozen state are trying to increase consumer privacy protections after congress rolled back regulations. the move would prevent companies like verizon, at&t, and comcast from using subscriber data. this is just one example, it seems, of states deciding to go their own way when the government has repealed or rolled back earlier regulations. explain to us what is going on and how likely it is that the states decide to act unilaterally. quick states are moving ahead on several fronts. isadband privacy regulation one. we saw states reacting to the withdrawal from the paris a with pledges to
go ahead with greenhouse gas reductions. we saw a california scoff at efforts to eliminate mileage improvements for cars. something is going on. in this particular incident, it was the elimination of the rule from the federal communications commission. states: why now are moving to act so quickly? >> this got a reaction from the .ublic people get in their guts that they are being watched on the web. the elimination of the rule that would reduce that hit people in the solar plexus. this plays into partisan politics as well. congress nullified the rule on pew early republican votes. i think the democrats see a possible -- purely republican votes. i think the democrats see a possible legislative advantage here. look at the underlying
issues. telco is regulated by the fcc. and google are. it seems like the playing field is in uniform. the main argument wielded against the rules. google and facebook can enrich collected using data from customers. at&t, verizon, internet service providers cannot. the and even playing field has been one of the odd features here in washington -- uneven playing field has been one of the odd features here in washington. there have been attempts to unify the regulatory field. whether they will go far in coming months, i would be skeptical because of the rivalry or disagreements between republicans and democrats on the issue. you made the point that the rule change would put isps in the same playing field as facebook and google, which, of
course, make quite a bit of money with access to customer data. think this is something people appreciate, or they just hear internet, privacy, rule, rollback, bad? >> the latter. fine points about washington head if i go over my am not paying attention. i don't think people get it whatsoever except, as you said, inner's -- internet privacy rollback, they don't like it. julia: great insight. thank you for joining us. up, how robots and automation are changing the face of the american workforce and why it matters much more than you think. from new york, this is bloomberg. ♪
scarlet: what did you miss? the economyag, but still seems to be growing at the same pace as the last few years. it seems like we are able to do as much but with fewer workers. our economics and policy reporter michael mckee joins us from cambridge, massachusetts, with more on what people are calling the skills gap. it sounds like we are talking about productivity. i go: it's a little bit about that. a boost fromgot unemployed blue-collar workers. he campaigned on the idea of bringing back the jobs they lost to foreign competition. certainly, they do have a complaint. if you look at this chart, you can see that those who had less then a college degree suffered more during the recession and have recovered more slowly. but will they get what trump has
promised? the experts say no. it is not foreign competition the cost the factory job. it's the machine. an economics professor recently came out with a big story about automation and its effects on the labor market. he found that for every robot installed per 1000 workers, six humans lost their jobs and wages were depressed by three quarters of a percent. he told me there is indeed a skills gap. >> yes, we do. i think technology is changing the rapidly, and many of skills that our workers especially that don't have college degrees or postgraduate byrees are now being done automated technologies, robots, and increasingly by artificial intelligence. many, manyre also jobs and skills that employers need, but we have not made the transition to producing those
skills or endowing our workers with those skills. >> is this a problem that will disappear over time or a more secular change? i go back to the turn of the 1900s when henry ford started putting all the buggy whip makers out of work but hired hundreds of thousands of people to build cars. facebook has 17,000 employees. >> absolutely, this is not unique. we have experienced many waves and every new technology destroys some jobs as well as creating many others. but we are going through turbulent times, and i think what makes this one particularly challenging is that we don't have to much of a map about what the future world is going to look like. in other words, what are the skills that we need in the future? that's an open question. what makes it even more difficult is that we haven't resourcesn investing
to understand what the future is going to look like, how we can improve our education system. in other words, i think one of the problems we are facing is complacency. words, the jobs displaced by automation are not coming back. scarlet a half joked about it in her initial question about productivity, but it really is a mystery, all of this stuff about robots, and yet productivity readings are mediocre by historical standards. explain the contradiction. >> well, there are a lot of explanations but no good overall theory. one is we have put a lot of effort into machines and electronics. there is a big amount of
spending the could be unleashed of congressity would pass a business tax bill. a lot of this technology takes time to work its way into the productivity numbers, and that will happen eventually, as companies continue to adopt labor saving techniques. we can't let you go without asking a question about the jobs report tomorrow, joe's favorite day of the year. when it comes to the payroll -- nonfarm payroll number, is that what you want to pay attention to, or will it be wage growth? >> the weight growth in one sense, because the fed is concentrating cash wage growth in one sense because the fed is concentrate -- the wage growth in one sense because that is what the fed is concentrating on for inflation. but because the fed is going to wait until september to raise rates again, that's less important than some trends.
our factory jobs coming back? we have seen a slowdown, but we are not slowing down tremendously. watch retail jobs. we should be seeing more retail spending if wages are growing up -- going up, but we have seen that slowing steadily. scarlet: thank you so much. michael mckee reporting from cambridge. earliere were saying whether jeffs comments were trading his position. this could be another instance of trading his position. find out why something german corbyn's days as prime minister are number -- find out why theresaorbyn thinks may's days as prime minister are numbered. be meetingrump will with leaders to talk about north korea. outside, protesters. we will bring you the latest. from new york, this is
julia: what did you miss? look at this. they thought they were home. jeremy corbyn will meet the chief eu brags that negotiator next week. he stands ready for a snap election that could make him prime minister. bloomberg spoke to him earlier today and asked if he thinks he will be prime minister. listen in. >> we did very well in the election. we did not win the majority of seats, but we put forward a large number of votes and a credible economic alternative to this government. this government does not have a majority. it's done a very strange deal and it doesn't look to me to be very stable.
i think things could change quite quickly. at some point we could have another election. we are ready for it. i am very ready for it. >> there are still many unknowns in british politics at the moment. one of the great unknowns is where jeremy corbyn stands on .he details of brexit i am curious why you are being vague on the subject when you could provide little transparency in your thinking. >> fundamentally, we want to make sure there is fair, free trade access to the european market. that's crucial. half of our trade is with europe. secondly, that we do not become an offshore tax haven on the shores of europe. i just gave questions about levels of taxation to the chamber of commerce. european nationals
are guaranteed unilaterally ashts to remain in britain citizens and writes a family reunion. and that we maintain university connections across europe and a broadly similar level of of consumer products, environmental, and workers rights. inwe will be a partnership the future, but not members of the european union. >> is membership in the single market compatible with brexit? requires market membership of the european union. ist we are looking for access to european markets. a shadow team has become -- has had many discussions with european officials and parliaments, and we have a good
relationship with socialist parties across europe who want to work with us in the future. >> would you be prepared to pay for access? >> i can't give you a commitment. >> when would you? >> we will have the discussions and set out our agenda objective. the general objective has to be access to the entire european market. that's key. when you think of the industries, nissan, airbus, bmw, companies allhose have supply chains on both sides of the channel. and a lot of manufacturing actually relies on a supply chain from europe. you can't break all that up massive dislocation and
job loss, not just in the companies themselves. for example, if bmw decided not what speedurther, effect of the local economy? it's massive. , in north wales, a massive employer, a very important player. they don't make a plane. they make important parts of it like wings and take them over for assembly. quick so you wouldn't rule out -- >> so you wouldn't rule out paying for it. accesspriority is to get to that market. >> right, but you haven't decided how you are going to achieve that. >> it's a job's first brexit that we are concerned about. protecting employment and job opportunities. >> do think financial services will suffer in the process? >> financial services are a
large part of the economy, particularly in london and edinburgh. there has to be access to european financial markets and financial services. >> is that a priority or just alongside -- >> as i say, jobs first. our priority is protecting employment. >> do you think incorporation as possible? >> i think it's difficult while the government's continuing with the idea that somehow or other they can simply walk away. lb very bad. -- i think that would be very bad. suppose we left the eu and had to trade -- change wto rules. that would be catastrophic to britain.
that -- it is in the interest of both parties to reach an agreement, which is why we are putting such a huge amount of effort into building up the respectful good context and relationships all across europe. we accept the result of the referendum. we are leaving the eu, but let's have a serious partnership with them in the future. people saidyoung they would have voted to remain if they had voted. how do you square leaving with that demographic? >> we say we have to respect the results of the referendum. does that mean we break off relations? of course it doesn't. the closest possible cooperation and coordination in the future. other countries not in the european union, for example, norway, enjoy very good
relations with the eu and have travel arrangements that fit in with all of that. a number of students study part of their courses in the european union. i think that's an excellent idea , and i would like to see it continue. >> if it is you at the g 20 and messageesa may, what would you take? >> that we have an important role in this world. we have to look at the levels of economic inequality that exist across the planet. if we don't do something about that, the situation will get worse across the world. there is a growing feeling of anger amongst young people in all industrial countries that somehow or other they are being coolerhind, going to be than their parents generation, and their children will be poor poorer than their parents
generation, and that their thanren will be poorer they are. hence the anger. i was jeremy corbyn, u.k. labor party leader's in london earlier today. scarlet: it's time for the bloomberg business flash, a look at some of the biggest business stories in the news right now. it seems tesla will have a clear lead in the electric car race. it will surpass general motors and emerge as the standout. will be releasing its newer, more affordable model sedan at the end of the month. cutting 3000 jobs, mostly in sales outside the u.s. the organization once to better focus on selling clout software. a spokesperson said workers were being notified today. hedge point capital -- hedge fund glenn point capital has gained 17% this year.
scarlet: down, down, down for u.s. stocks, treasuries, and government bonds, the biggest decline since may. julia: german chancellor angela merkel plays host to european leaders. be: and of course, i will watching jobs data tomorrow at 8:30 a.m. 178,000 is the expectation. electronics giant samsung will be releasing preliminary quarterly earnings tomorrow. that's all for what it you miss. joe: have a great evening.
lady have arrived in germany. chancellor angela merkel who is playing host in her hometown of hamburg also met with trump. the priorities of the g-20 include climate change, immigration and trade. trump seems that odds with the majority of european leaders. police and protesters have been battling in the streets of hamburg. german police fought back protesters with water cannons. germany's second-biggest city brought in reinforcements to assist local police. organizers say the -- othe planned protests are over. president trump and russia's vladimir putin will meet tomorrow with analysts watching for clues about the future of relations between moscow and washington. a solution for north korea is expected on their agenda. meantime, defense secretary general jim mattis says u.s. investors are still scrutinizing details of the intercontinental ballistic missile launch. secretary mattis