Transcripts For BLOOMBERG Whatd You Miss 20180226

There is no signs they are prepared to go against the nras opposition. Says p administration that is according to the Associated Press that says the organization did not disclose the dollar amount. Mr. Trump has pledged to donate at this will experts have raised concerns about a potential u. S. Constitution violations. Angela merkel rallied her party today with the centerleft social democrats. She received overwhelming support for delegates to coalitions see say speak directly to core themes of family security and economic growth. Only 27 voted against the agreement. Global news 24 hours global news 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. Live from bloomberg headquarters. We are 30 minutes monday close of trading here in. Levelp 500 at its highest since dozens of concerns brought on by the tax cuts and accelerating inflation. It is go big or go home for apple. Planning to release three new smartphones this year, including the largest ever. Party takesunist steps to end term limits. Place there on the world stage. Whatd you miss . Tomorrow, jay powell will be performing before lawmakers for testimony about the central bank. Made be able 11 they seek to extend the nineyear economic expansion. Running us now to talk about how investors are reacting is bloombergs matt basel. Great to have you with us. Oft describe the breakdown givetion and what could them the flexibility that we are talking about. We get the latest inflation data thursday, so that will be interesting. Staffwas a special leasing briefing. This is kind of a review on why it is so low and basically the staff did not come up with many answers and fell back on this thing we have been hearing, blaming cell phone prices. Atrought you a chart to look what exactly has been going on with inflation. The red line shows that core inflation rates they try to target, it is about 1. 5 , so below. Down a lot. E the blue line shows the process took a component that the fed can really help to boost with Monetary Policy can you can see that makes up about two thirds of the inflation rate. Shows the housing inflation, so you can see that has been trending up. Sinceas also come down last year, so that is a bit of a worry. If you go all the way down to. He purple line normalizes, it is not necessarily all clear. We seeng at the chart, some recent bumps. Even if you go back to little bit, it does not look like it is going up. Of have to take in to account that what is happening on the individual thatt level, you said, weve had a lot of optimism and Financial Markets about inflation so that is going on in the same time. When i look at the chart, none of them get close to 2 . To what extent is that 2 objective out of date . That is something the fed is starting to talk as well. A lot of discussion about and weal alternatives have not heard powell talk about that in public. He assessment going to get asked about that tomorrow. You mentioned the market towards inflation. Which shows the market is not particularly anxious. This is from the new york fed. They do ahead in every meeting and what it shows is last year when trump was elected, you can see the blue line. Reflective. D of this could be a big upside risk. You can see the line has come down in that 2. 5 to two and a half what we are seeing is really much more benign scenario. Maybe they go above, but we are inflationd about that anymore and that is kind of what is driving the inflation dynamics in the markets right now. There are Inflation Expectations as you just saw. Set tuesday and thursday. How much did he impart as a governor question mark if he gets kind of stuck in doesnt want to say too much to what areas will he stress. All these hot topics, big points of debate, he is always laid out both sides without taking a side. Now, he is going to start taking sides on some of these things so we could see that tomorrow. The other thing is, how he explained how the fed is going to react to some of the visible stimulus that we have seen recently . That is going to be a big topic of discussion and people will be really tuned in to that. Thank you so much. A reminder that you can watch our coverage before the House Financial Service committee before 10 00 a. M. Remarks come out coming up, middle and Mining Industry leaders for a conference. This is bloomberg. Are meetingleaders in hollywood, florida for market cap annual conference. I want to send it over to danielle who is on site at the event. Sitting beside me, the president of the largest gold miner and production. One of the things i would like to start with is you have said you are committed to cutting 1. 5 million off of your debt. Can you do that without selling assets . It is a pleasure being here. Needdays prices, yes, we that target without selling an asset. At this point, we will continue to focus heavily. We have generated Free Cash Flow had at the end of last year, 6. 4 billion. We have done well in bringing down our debt and will continue to work. Grexit you dont have to sell anything. We have been clear on that. Everything has a price. At the same time, we will continue to discipline assets. What can you tell me about that . All chinese interests of four . I cannot comment on already what you see in the market. I know the discussions are ongoing. Is derek involved in those discussions . The diligence and presentations, that is being done. The structure you have with possible leading a asset so. Why is that question mark in the evolution of those made sense sot they are continuing at those cussions, but the proposal they will apply with the proposal and come up with a recommendation. Wifes it was originally spun off from their. Does that structure still make sense question mark for the same reasons it was spun off, we will have to see how the negotiations go. Everyone is hopeful there will be a resolution in the first half of 2018. At this point, i cannot say that say more than that. Making that reduction is probably worth 1 billion or more. Why not come down on the price since they have been so clear they would like to buy it question mark i think this we would not come down on the price of any of the other assets. We know they are very viable. This point, generating great cash flow and again, we dont like moving it. There has been some confusion about 50 want to hang on or keep it question mark hang on or keep it . I think we will violate all the assets of the circumstances at the time. Still bible assets and important in the portfolio world. E have worked hard the parted started generating cash flow, so we will wait and see. Punishedtock has been in the last year largely because they production pipeline. , qualityolders some by over one which if stuck to quite consistently. How long will you take a hit . Today, i met with a large a number of large shareholders. We had an image three years ago which was to be focused on generating cash flow and strengthening the Balance Sheet. About keeping the focus and the Balance Sheet has improved remarkably from where we were. We will continue to look at it. The acidbase is among the best in the business. We will not be detracted from that. We will continue to grow our projects. Advance the be distracted or it will keep on the game plan. Thanks. Timeout for the Bloomberg Business flash. Mario draghi is not quite ready to scale back stimulus for the euro area. Caution today while addressing lawmakers in brussels. We are generally more isfident that inflation proceeding, but we also have to be persistent, because the. Nderlying inflation in. He renewed has slipped the broadcaster has settled under a debt load of 20 billion. Serious, which is mostly owned by liberty, owns americas largest satellite radio company. Sox dwarf the positions of other hedge funds. Shares gained 3. 2 billion so far this month according to data compiled by bloomberg. The consensus now is equities will rise. Disney shares are uptodate espn web launch of new services. These days, the new app that is your Bloomberg Business flash. Lets get to our stock of the hour. It is dropping after Morgan Stanley predicted the price of lithium could plunge in the next couple of years. The analysts say supply will surge. When you talking about a , thatity like lithium will present issues for the company. Both of them being downgraded and if you recall, i think we talked about s two m as a stock. Oneame to a conclusion over of its minds with the chilean government. That is going to lead to a decline in price from a little over 14,000 a ton right now. Morgan stanley says it will peak just above that and fall by 2021. It is basic economics that price goes up and supply rises. Eventually, when the new mines flood the market. Theres not as much lithium for as there is for oil, for example. Itrelatively extreme is relatively strange. It is difficult to extract. A lot of the extraction is underground faulty lakes. And, there are not Many Companies that really dominate the industry. Theres a Chinese Company that does this and has a joint venture as well and then there is a smc. That stock is also declining and count more than 80 of the worlds supply according to the intelligence. When you have a key dominating this and the price goes down because of these limited supplies, it can present a problem. At Specialty Chemicals overall to request if you take a look at the bloomberg, there are different types of businesses here, so the white line is lithium. Then, you have bromide, which is another chemical and we are finding solutions so other types of chemicals we are finding. Christ good stuff. Thank you. Coming up, are you bullish on stocks . We have the chart you cannot miss. This is bloomberg. They faceoff between morgan. Tanley and Goldman Sachs bond yields are set to go. Morgan stanley saying the off. Ure we have seen is time to look into treasury again. Three uld end around 325 by year end. This is showing you the speculation and if you had to what you can see on the side, we have record wages against the 10 year treasury. We are seeing now is some parent shortt risk, cutting it by just over 59,000. Could since november. Mixed messages over where, but parente names over positions. A the president is ready to impose the stiffest tariffs on steel imports according to bloomberg reporting. Of course, that would be a move that china. Wanted to take a step back this is chinas steel output of the total. You could see that through the mid90s. 2001 and youin could see that since then it has the kind and since then it has hovered around 48 . 11 president has until april and we will discuss this in other potential terms later. You know what is doing really good . Ech stocks the selloff we saw in early february erased. Nyse index and includes things like baidu. They all capture this global behemoth tech stock. That is at a new high. Met still has some work to do. The hottest sector in the world and there is no protection at all. The market close is next. Take a look at major indexes. We are looking at a 300 point increase for the dow. Julia stocks off of session highs with all three major averages more than 1 . The s p 500 at its highest level and a 10 year yield i am julia chatterley. Scarlet i am scarlet fu. Joe and i am Joe Weisenthal and if you are on twitter i like to welcome you. Scarlet we begin with market minutes and stocks are rising at a fourway tie. Eek high. The dow now at its best level in a month and strength in tech and financial shares and telecom the best performing group. The only losers today were utilities. And the secondworst performer still up. Joe it is an extraordinary day all around. Terms of mover, qualcomm says it is willing to engage in negotiations with broadcom indicating it is open to be bought. We will see whether this can be resolved anytime soon or if it will take another couple of weeks or months. Following ogy falling to its lowest levels. And Amc Entertainment getting a boost after like panthers Box Office Numbers helped. Julie hyman was on talking about our stock of the hour shares tumbling or than 7 after Morgan Stanley downgraded the stock. Increasing supplies the reason why. Joe trouble in a lithium, and lets look at Government Bond markets. This is a different five from beginning of the year different vibe from the beginning of the year. 23 andyield down to 10 year yield down 2. 86 . Until fresh new positions jay powell over the next two sessions is speaking, and tuesday on thursday, and the positioning factor to tie into this as well showing you the dollar cad and dollar mexico. Thea talks continuing with fact that the president was set to come and now not coming you can see pressure on currencies with canada off 3 10 of 1 . O. D mexican dollar down to draghiling get mariano is still not over the rest of it yet and have to be vigilant as far as Monetary Policy is concerned. Under the we should expect anything else despite speculation of retracing of policy. But for the u. K. Here, where the partys position is on brexit. The labour party could see a comprehensive you take a customs lets move on to talk about the dollar ruble. Jumping the most amount among emerging market peers. Scorep lifting the credit of russia to investment grade. This has given russia to rankings. Tive two more conservative investment in nds should be able to invest in the country. That is the acid market for russia today. Joe finally on commodities green across the board and nothing too special. 64, and upward among the rally, and those are todays market minutes. Scarlet for more, lets bring in equity strategist. We have seen stocks rise and bonds rally and this bounceback we are seeing from lows in my january has been incredible. You say it is pretty standard and nothing out of the ordinary, so we probably shouldnt read too much into it as of now. Yet, it is interesting. 10 decline it is one thing, but when you get a , like a minie crash we got a couple of weeks ago, i went back several decades and i cant find another time it did not bounce back immediately. Retrace 50 or 75 of its initial selloff and then you wait to see what happens next. Just because it bounces back does it mean it is going to roll over again. 2007, but there has been other times it caps on rallying so we have to wait and see what happens once we get past the end of the month and hear what jay powell has to say tomorrow. Can we read into the price action in terms of volatility, bounce back, what sector is bouncing back and what we are seeing in bonds that will protect future Market Performance . I think i know what you are going to say. Matt one of the things i look at the bond market has a pullback, yields havent pulled back much and the price hasnt bounce back much. Toould say we could go back test the old highs, but there has been a change and Interest Rates have been rising for 60 months. Mo the trendlinenth is the change and my concern right nows. And can combine with headwinds later on. The Energy Stocks, i have a chart here showing the ratio of Energy Stocks oil futures, and the gap is massive. The Energy Stocks have been underperforming oil right now. What you think of the sector here . Matt this provides an unbelievable opportunity. Case of throwing the baby out without the bathwater. Opece fundamental basis, is holding to their production cuts. Not want oil to go back down until aramco ipo takes place, and even in the they are not going to be spend, spend, spend and drill, drill, drill. On a technical side, this divergence is quite strong and i think once we feel comfortable with the bounce back in the rally and is going to hold stocks the fact oil is selling nicely should get the scoop to play catchup. The last time oil was here, it should play catchup soon. People have been talking about the divergence of Energy Stocks in the price of oil, and even though you say throwing the baby out with the bathwater in the recent selloff, we talked about in 2017. It the market isnt buying into the durability of oil prices at these levels . Matt it is a good question. Maybe it is because we are starting to move it is still february and moving into the pic season, it was 70 degrees less than a week ago. That might be playing a part of it, but the believe oil will come back down the demands still out there and i see in the correction of the stock market. Ionomic growth looks fine so dont see the supply and demand issue is going to shift in a major way. It isrket is perfect not perfect, a great opportunities. Scarlet you also look at areas of concern and consider itb, the homebuilders etf. In broaderperforming market today and worked on earlier and finished up in the green by . 10. There has been a market underperformance relative to the broader market. Why is this the canary in the coal mine, perhaps . Matt when rate started to excellent rate in september and into january, the housing stocks kept flying. They outperformed the s p quite a bit, and this changed. It coincided when longterm multitickethe trendline and that is concerning to me. Affecteds erratically by Interest Rates, and we saw home Sales Numbers were weaker than expected so it looks at the higher rates are having an impact. Given how important housing is to the economy, is this a short term trend, the underperformance is a month old, but if this continues on a technical basis lower makes a key level that is going to be a red flag for the group. It could mean headwinds for the overall economy. One other thing for jay powell to keep his eye on as we had forward. What we expect jay powell to say at what we should be focusing on, particularly his Comfort Level with allowing an inflation overshoot feeding into the market narrative right now. Matt that seems to be what everyone will be focused on. There will be questions on whether there will be three or four rate hikes, but right now s main issue is inflation. To me i think that is ok because with all the debt we still have wille world, i think that keep inflation and control if it starts to pick up a bit. He is easy with this, it is going to show maybe they are going to pull back on their bounce more quickly and raise rates quickly. Some people are looking for or three in 2019, and that is going to scare people. Says things that will shake up the market, so i think it will be calm, but if he says something that is more hawkish than people are expecting, especially after a 10 rally, that could have an impact on the market. Julia thank you for that. Scarlet we have earnings from fitbit. A lossice maker reported that is wider than what analysts were anticipating and that ment as is a disappoint well and going to miss estimates by as much as 28 . This is revenue for the current quarter, and for the Fourth Quarter it missed analysts estimates. Is off bye the stock 12 in afterhours trades. Julia the cost of profitability. Coming up next, activists are taking their fight for gun control to corporate america. How the firearm industry is faring. This is bloomberg. Coming up next, activists are taking their fight mark i am margaret the first world news. Nationst trump told that teachers and students learn that billy mass shooting at a Florida High School found fault with the officers who did not stop the gunmen who carried out the massacres, saying they werent exactly medal of honor winners. Question governor was one of two democrats to address the president publicly, expressing his concerns over Arming Teachers as a way to respond to School Shootings, telling the president , we need less tweeting and more listening. Handed the court has Trump Administration a defeat on dreamers for now. And the deportation protections for young undocumented immigrants buys them while Congress Tries to work out a political solution, but the case could end up back before the Supreme Court after an Appeals Court rules on it. Postbrexitur Party Division could face a showdown with Prime Minister theresa may. Opposition leader delivered a keynote speech today in england. Labor would seek to negotiate a new, comprehensive Customs Union to an sure there are no tariffs on europe and help avoid any need whatsoever for a hard border. Mark Prime Minister may has with the euunion which puts her at odds with most of the business committee. Her conservative party is seeking a hard brexit and those who want closer ties with the eu after britain exits the block. China is taking steps that could xi to stay innt power indefinitely and extend serve more than twos consecutive terms and will do away from the orderly session that china adopted after chaotic rule. Global news, 24 hours a day, powered by more than 2,700 journalists and analysts in more than 120 countries. Crumpton. This is bloomberg. Lawmakers returned to capitol hill today and were forced to join the National Conversation that has been sparked since the School Shooting that 17 people dead. The activism of teenage survivors about the issue of gun control front and center and there is a growing list of Companies Cutting ties of the nra with calls of boycotts. Great to have you here, polly, you have been doing great work on this. Putting pressure on the National Rifle association, cutting ties, taking back incentives. Talk about where we are. We saw towards the end of last week and the weekend, companies have been called to no longer work with the nra for their member benefits. Discounts andn 50 off, and there was an nra branded credit card, and companies are saying we no longer are going to offer these things and have these discounts and that is what has been going on the last few days. Joe why . We have had Mass Shootings in the past and it often faded after a few days, so why is there a need to change their stance . Polly the big thing here is we ors a local and that is different. The tragedy and sandy hook were different, but it was children, not saying it is as critical, but it is notable here. Fedex is saying they wont drop the nra from its discount program, so the point is there is both sides of the debate here. Scarlet when you look at shares of gunmakers, stocks have underperformed badly since the election. This is less politically motivated and the fact that they have more inventory from misplaced expectations. Polly a lot of people thought Hillary Clinton was going to win and a lot of the firearms community. She was going to wind election and polls were predicting. When she didnt when, firearms had a lot of inventory and were prepared for a democratic president , and that inventory is hard to move. Aree is not that same factored in control is going to go through when you dont have Democrats Holding congress or the presidency. Scarlet polly, thank you so much for that muchneeded primer of what is going on with guncontrol debate. Want to get to breaking news with nutrisystem, missing lowest analyst estimates and the stock is tumbling right now, off by a quarter of its value. From new york, this is bloomberg. Julia miners say they have to dig deeper to find gold, and the ceo of gold producer listen and. In. Is renewed interest but it is difficult for the junior states to get capital, the interest we are seeing is more on the mature businesses, business that could still grow. Business that is still funding and content, and if you are in the junior looking for capital, it is a challenge to get those funds. Guys are different in that you are doing a massive expansion in canadas north, and notd large, everybody is seeing massive amounts of Capital Investment in the gold is up, what is it going to take to unlock that . Part of that is the discipline in the industry now versus five or 10 years ago. The industry is doing a better job of allocating capital, i would say a lot of it is that there is not a large highquality products out there. Theres too many players in the business for the number of highquality opportunities that are out there, so you are not finding the big Capital Projects that are going to drive Gold Production growth for the industry and will likely see flat production going forward. You have been clear in the past you are only interested in gold but you have cobalt assets and your history is in cobalt, nickel, and silver. Given the runup of cobalt sizes . Ande are dusting them off, more from the perspective off, do they fit with one of the players whose business is just that . That is not our business, we on them, but we havent announced so versus 1988 as the primary metal, but we started in that cap of how much valued there is on the surface, we are doing analysis now but we are open to work with those players that have that as a specialty and maybe there is value. For people who may not be familiar, these are assets and cobalt, ontario, and you are thinking about possibly selling them. Had been approached by certain buyers yet . Been approached for people wanting to talk about what our intentions are. We have had that land for decades. Is it worth a lot more to somebody else than it is to us is not a focus. We have not spent capital on it but we are having it reevaluated and are open to talk about possibilities around that land package. Can you give us a ballpark of what it may be worth . It is hard to say, really. To our say relative market cap it is worth a significant amount, is not material. We would entertain a proposition where he get some cash, retain a royalty, and have a legitimate business come in and look after the environmental obligations that exist there. So a stream on your own asset . Royaltynt to maintain lets see what value they can surface there. It is interesting, you have talked to me in the past about the need for consolidation in the industry. Newmont is still the connection terms of being the largest gold miner in the world, but if you and goldcorp were to join forces, you guys could give them a run for their money. Is that something that has been considered in the last year . For 32, ive been here years and i have heard lots of different ideas of what we should do and how we should do it, and the best energy for us is to stick with what we are good at, which is to identify things at an early stage and build them. Had theof that we have best performance in the state, and the consecutive year, nicobusiness review made a top 100, and that is based on 20 years of shareholder return and that is from systematically Building Business from the bottom up. By the ability to grow, so we are not looking at big m a at all. Strokes, compared to this runup we have seen in gold prices, what do you think the market or investors are waiting for . Gold was up 9 last year and a lot of that has not been reflected in the equities and investors are trying to understand Janet Yellens replacement and his view on Interest Rates. How his inflation is settling into the system if it is there. If we get to inflation levels at 3 , does that those great gold is great. We have seen him in conferences and engaged in meetings, they are not friday the tickets but we expect to see them taking a bigger interest in the gold equities. Julia shaun boyd. This is bloomberg. Mark i am Mark Crumpton with first wrote news. Changes to obamacare will boost premiums to double digits according to the urban institute. Obamacare insurance plans will go up and average 18 in 43 states. Those are states with no limits unless Company Heads of coverage the administration is calling for. Today marks 25 years since the first terror attack on the world trade center, to 1993 attack killed six people. Six suspects were convicted and are in prison, including the accused ringleader, a selfproclaimed 9 11 mastermind. A seventh suspect in the bombing remains at large. Oppression is fashionable again and fundamental freedoms are in retreat, those words from the u. N. High commissioner for human rights. Who spoke at the Human Rights Council in geneva today and asked why more is a in done to stop human rights abuses around the world. When an elected leader blames the jews for having perpetrated the holocaust as recently done in poland and we did this is graceful so little attention, the question must be asked, have we all gone completely mad . Mark the jordanian pence is not seeking a new fiveyear term when his current one ends in august. The European Commission president says serbia must solve its conflict with kosovo and implement reforms before it can join the european union. Lowing talks in belgrade he said the balkan country is on the right path, but that you cannot accept any new members with unresolved territorial issues. Global news, 24 hours a day, powered by more than 2,700 journalists and analysts in more than 120 countries. I am Mark Crumpton. This is bloomberg. Lets get a recap of todays market action, it was up, up, and up. N in the 400 point gai dow industrial. Joe it is hard to remember the selloff earlier in the month. School, a Bloomberg Apple prepared to release a trio of smartphones later this year. Runningne maker is production tests with suppliers and the brick technologies mark gurman joins us from San Francisco with the scope. I guess this is a concession at admission that the iphone x did not deliver to wait apple anticipated . To look atis a way it if you consider the perspective the iphone x did not deliver a way expected, so now there are coming up with two models, h for model of the iphone x and the more expensive, higher and model with a much larger screen that is going to appeal to customers in asia as well as Business Users around the world. Joe is talk about that larger screen size, is this an inevitable expansion and will the top out where our phones going to get bigger and bigger . Mark joe, i know you will want that. Big deal going to be a for apple and it is going to be a revamp of their mobile computing strategy. Imagine everyone on the subway pulling out these giant screens out and it may replace computers for some people. I am personally excited for it, i know you are, and it is a big deal for investors because it is the next big thing to steal from samsung. Niipad. It is a mi mark i think the ipad has many uses, and this highend phone, if you look at points, 1000ice for the iphone x, and then you are going to get this big one with a ton more technology, what are they going to prices at . 1200 . 1300 . Asps andy care about it will bring up asps over the next lifecycle. Galaxy, andentioned they came out with a response with the s nine, and we make of it and talk this through the new features in particular that challenge the iphone . Was live on this i gadgets with gurman, check that out on twitter. It is an impressive phone for some some fans, but in terms of technological improvements it doesnt move the needle forward. The focus is on Camera Technology and augmented reality. It is not a big competitor in x, but ithe iphone think samsung is holding their fire until they come up with what people coin the galaxy 10, or galaxy x. The iphoneback to and nextgeneration, in terms of display do we know anything about new technology or features that we can expect to see soon . Might be a gold one users,ill appeal to some loser particularly in asia. They are also working on new technology for dual sim card functionality which means you can have one form, can stick to some cards in it. Sim cards. If you look at europe and asia, they have a condensed array and summoning countries together with people traveling for business or vacation, and between those two countries often. You see people wearing the sim and as they chips, go from country to country they are popping the cards in and out. It is a problem that has been solved, so having a dual card system allows you to have to carrier plans at once so if you go between germany and want to go to the u. K. And you are on vodafone, you can have both of those in there and moved between the two. Julia brilliant, seamless transition. Mark gurman, thank you for joining us. Gadgets with gurman, if we can pull that up briefly, the Perfect Place to go for all the latest information. Look at this. Joe i want to check it out. Julia coming up, representatives from the united canon, mexico, and meeting in mexico city for around seven of negotiations for nafta. Whether any progress is actually being made. From new york, this is bloomberg. The seventh round of nafta talks the United States, mexico, and canada kicks off mexico city and officials are trying to narrow disagreements on how to overhaul that the trade deal despite renewed signs of tension between mexico and the United States President Donald Trump over his plant border wall in particular i would to bring in monica was the senior fellow of International Economics and she joins us now from washington great to have you with us. We saw the wrap up in the sixth possibility was a to renegotiate and steamroll with the mexicans because they have less leverage, that what in particular are we fighting over . What are the key sticking points . There is three, essentially. The first is the u. S. Demand for having a socalled clause on nafta. Every five idea that years the three countries will get together and reevaluate if nafta make sense and if one of them thinks nafta doesnt make sense then this would in principle allow that particular country to withdraw. Obviously mexico and canada do not like the proposal because of all thinks it introduces a lot of uncertainty into nafta going forward. That is the first sticking point. The second is the u. S. Has requested that the agreement now requirementlocal for a goods producer and a north american region, this essentially means that some share of goods produced within north america would have to be sourced in the u. S. This is not part of the current nafta agreement and is obviously something that also mexico and canada dont like. Issue is the current agreement in which the u. S. Wants to do away with and mexico and canada want to keep some form of, the u. S. Doesnt want it at all. I can seefar as nothing has changed from the previous rounds of negotiations and around before that. Who specifically can break this deadlock . Yes, these three issues have to be doubt with at the ministry of health level ministrilial level. We have seen progress in the terms of the technical aspects of anticorruption issues and have seen progress on state owned enterprise related issues and other areas like that, but these are all negotiations that are done at the technical level and these big issues have to be doubt with by the ministers. There is no way the rest of the staff can deal with that. Julia they are running around in circles. Joe the New York Times reported the white house it appears his stock is gaining and what does that signal big picture to you about his rise . Monica it is interesting because at the same time we are seeing these socalled dependency of Peter Navarro, who standss antideficit that trade deficits are bad and yet the go after countries with whom the u. S. Has large trade. Deficits. Ina trade china, and partners with nafta, and we also see the economic report that the president prepared by the National Economic council. What is interesting is the chapter on trade contained in that report says and speaks of trade in a way that is completely different from the way that Peter Navarro and others within the Administration Speak of trade. Again astension here to how exactly trade is viewed within the administration. We have an idea of how the president views and have some idea of how of his advisers view it. Peter navarroof is definitely something to watch, but on the other hand this report is saying to be entirely different and contradictory. Scarlet i want to get your thoughts as well on the potential for the president to slap tariffs on imports on steel and aluminum. Is there any link between that and what is going on in nafta discussions given canada would be affected by some of these import taxes . Monica most definitely. Canada is a big exporter of steel and aluminum products to the u. S. The talk of having global tariffs on steel imports by the imports, thatum is something that affects the canadian stance and certainly something that is likely to contaminate the nafta discussions, no doubt. Scarlet our thanks to monica. We will see how this plays out. It willg is for sure, continue. Up, china faces rule of decades and look at what that means for chinas economy and markets. This is bloomberg. Scarlet chinese president she in power for years to come announcing yesterday their moving to end the term limit on the presidency which would allow xi told office indefinitely. Michael, great to speak with you, ask for joining us. Is a part of this move is unexpected when it comes to his ambition and urgency come but talk about why this is a big risk when markets have reacted positively to consolidation of power. Michael there are risks here but there are reasons why the market might be cheered in the short term. Isa continuity, president xi powerful and this means he is more powerful and will stay on the stage them much longer. Theres some areas of chinas reform agenda where she having xi haswer demonstrated his determination over the last year. Giving him more power and time to be able to accomplish that is a positive. The risks will play out. Joe what are the reform areas that open up possibility wise with him not having to worry about leaving after five years . Michael i think what this means is chinese officials cannot ignore him. They cannot wait around the clock and some of the reforms he is looking at particularly are those that relate to financial risk is deep, thorny issues like pension reform, which is a looming issue in china. It isnt in the headlines by the is a complicated issue that deals with politics at the local level some pension reform, health care reform, repairing a social safety net, environmental quality. A lot of these are the emphasis on better quality growth and try to reduce chinas previous fixation with hitting rigid gdp targets. Reform that promote consumption and you risk the economy are areas we are going to see the most movement. Julia what about trade and the relationship with donald trump in particular . Powers consolidation of allow him to ease up on some of the trade restrictions . We talked about it before in the financial sector, does it give them leeway . Michael i think it does, it gives him a freedom of movement and he might use that to strike a trade deal with President Trump. That might be playing out this week, and he is sending his chief Economic Advisor to washington this week. Themthe fact he is sending to d. C. Is a big move because this is a busy time right now and the political calendar for china. On the verge of the National Peoples congress, and he is about to take over the china andportfolio in it is not an easy time to take off and make a trip to washington. I think that says he is coming to deliver a message and that messages want to work. Julia the top priority. There is the market upsize and this opens the opportunity for gains on the reform side. But what about on the downside . It is not typically seen as a positive when the country changes its rules. Michael there are risks but they play out in the immediate term, and one of the risks is to xi personally. He is calling the shots, that means if there are missteps by him, there is little insulation for absorbing the blame. Julia there is no one left to blame. Michael so that is a risk to him, and i think for the Global Market the risk you have to think about his policy failure. Policy is being set at an increasingly small circle around xi. The art being vetted in china system and he may not be getting the right information. Of realntering a period possibility of policy coming out that are not vetted that might shock the economy and Global Markets and american may not be well communicated either. The third risk is we are moving away from some of the key institutions that have guided chinas political process over the last few decades in the reform era. We had a significant amount of uncertainty about who is going to be leading china after xi steps down. Which norms is he going to preserve, and are we moving towards a strong rule in china . Those are risks that i think will play out in the immediate term. Scarlet do we have an idea of who the next successor right the might be . Xihael it is likely that if stays on stage past 2022, we have to assume the next leader is born after 1965, and there is one member of the Central Committee who is eligible. What that means is it is likely the next leader is not yet on our radar screen. Committee whothat is the uncerts new. Julia he is 64yearold. We will worry about that later. Michael, thank you for that. Scarlet it is time for the business flash and the biggest stories right now. Qualcomm is potentially open for a takeover from bought and has invited a nondisclosure agreement. Qualcomm has rejected eight 170 billion offer. Traders at Goldman Sachs had a few days to celebrate according to a filing to have wrapped up millions of dollars of revenue in four days, the lowest number is 2004. Involved the mark 131 times. Spectrum brands is taking over its own majority stockholder at a deal valued at 10 billion. Bill become owners of a merged entity and spectrum will become an independent Public Company with no controlling shareholders. They make audits suggest armor all. And that is your business flash update. Julia that is a fascinating statistic. Joe not bad. What you need to know about tomorrows trading day. This is bloomberg. Scarlet stocks up, bonds up, yields down. At 400 point increase. Dont miss this, jay powell makes his first public remarks since taking over the central bank and will make for spark of his annual testimony to a house panel starting at 10 00 a. M. See must is going to see tv, and i will look at Economic Data at 8 30 a. M. Your time and will get the latest reading of consumer confidence. Julia and macys reports fourthquarter results we start traffic and store closures. Scarlet it is still burning season. That does it. Joe have a great evening. This is bloomberg. Lisa here is a check of your first word news. President trump met with the nations governors today, telling them the title discussing what to do about School Shootings is over. President trump we dont have any actions. It happens, a we goes by, keep talking, another week goes by, keep talking. Sudden, everybody is off to the next subject and when it happens again, everybody is angry. We have to stop it. We are writing that out. Im writing that out myself. I dont care if congress does it or not. Lisa Supreme Court justices turned away an appeal ending protections for undocumented immigrants. It is a temporary reprieve for socalled dreamers while Congress Tries to work out a political solution. Israeli Prime Minister benjamin then yahoo plans to visit the Benjamin Netanyahu plans to visit. He wants to thank President Trump for his her puzzle to move the u. S. And the sea to jerusalem. Hundreds of people came to pay respects to billy graham in his