Transcripts For BLOOMBERG Bloomberg Markets Americas 2017051

BLOOMBERG Bloomberg Markets Americas May 15, 2017

Election, it was the leading gains and tech stocks and the nasdaq lagging, so we have seen a flipping of the script so far. Like trump is open to persuasion . That is what both sides of the argument believe. Decidedly against it or for it, i think both sides see many ways he might be on their side depending on how you interpret his remarks. His part oft of principles that came out a little while ago. They are going to push it with mnuchin tomorrow. Scarlet it was not included in wire theyage, renewing the call now . Guest its because the house , chairman of the ways and means that paul ryan are very much supportive of border adjustment. Companies that are supportive of this like general ction general elective general electric, they see this as a way to get tax reform done. They will be satisfied until the president comes out and says theres no way we are doing this. Even if they get House Republicans to go against it before the next up happens. if you have some sort of border adjustable tax, you can bet that finance will be on the tax cuts the administration is promising. Guest it makes it revenue neutral which makes it easier to pass. Supporters maybe dont love border adjustment but say paul ryan and kevin brady, this is the only game in town. Thats why they are supportive of it. Scarlet we will be all over that and Matt Townsend will be as well. Thank you so much. While most retailers have been adamant about the border adjusted tax, our next guest bucked that trend and is in favor of it. The former walmart ceo, bill simon. Why are you in support of a border adjustment tax. The same as paul ryan has proposer would it be a modification of that . With the border adjusted it border adjustment is one and it is critical to the reestablishment of an Industrial Base for Manufacturing Base in the u. S. Without it, there is no way we will have the revitalization of the middle class jobs for the manufacturing that will come without it and that is why i have become a strong advocate. You are in the minority because the head of pbh was talking to us and is strongly opposed to the vat. It is a hidden tax. Theres not a lot of data out on yours a 20 increase goods coming in. The only alternative we have is the price on the consumer. With the consumer representing two thirds of the economy, we just dont think it is a good idea. It is a job killer. Joblet hes saying it is a killer and you expect them to say that because it is there fiduciary duty. This negative pr campaign diminishing the odds. Would you agree with that . Seen thewould and ive analysis and comments that would be reflective of that. What they are trying to to make it look worse than it would be is taking the proposed tax and laying it on to their Current Business practices, meaning they would not do anything. We know they will do something. It will respond to the new sets of laws and i like it to a puzzle piece. The puzzle pieces the government gives us today in terms of tax law and labor policy has resulted in the off shoring of manufacturing. That has been going on for 20 years and while that has been wonderful, it is building an emerging class in asia and other parts of the world, it has hollowed out other parts of the middle class because we dont have the job progression people changed that will not until we get new puzzle pieces. When we do, smart retailers like the gentleman we just heard and the ones who will talk to the treasury secretary will sit down and figure out how to put that in the best interest of their shareholders. It is a little bit of a selfserving, hysterical situation to say it is a jobs tiller. It will be a job changer and it will be challenging but good retailers and Good Business people will figure out there way through it. Julia do you have some sympathy . Shift toseeing this ecommerce, which many mainstream retailers will be meeting trump tomorrow. Its like the collision of two forces. Huge potential structural shift in addition to a they are facing. Guest it is going to be challenging and retail is in a transitional phase right now, so there is a lot to deal with, that people are not going to stop shopping. Economists have predicted the strengthening of the dollar will and i much of the impact dont have any reason to doubt that. But as i implemented, or it is years, itover several will protect some of the retailers who are not going to be quite as prepared as others. So you think the five year phasing window will give retailers a chance to adjust their Business Models . Three to five years seems reasonable. Needs to behain thought about how we do this so people have the opportunity to move their supply chain and look for alternative sources that would not impact their bottom line so much. Cannot exempt categories and a lot of retailers have talked about exempt this category or that category and in the government would be picking winners and losers. Scarlet do consumers need to be realistic in that bringing manufactures home means paying for the final product . Companies were able to outsource. Roduction off shore will customers realize there is a tradeoff . Guest prices will go up. I trust the capacity of our american industry and retailers will figure out how to continue to get the best value to customers all the way through the system. Created this strange irony. That is earned overseas is stranded there. Its not really stranded there. It is invested because they dont just leave it in a big bucket. Profit from american corporations are building the economy outside the u. S. Incidents inside the u. S. However, they can buy goods outside the u. S. And bring them in without paying a tax on it, so the way they get their money back is importing goods. Im not saying that bad. It really and given the puzzle pieces they have had to put together today. We need to change the puzzle pieces. If we dont, we should not expect any change. Taxlet if the corporate rate were cut to how would that help the walmarts and targets of the world . What would they do with that extra retailers, if you do the research, pay among the highest Corporate Tax rates in the world they do not because have the exports to go with it to offset like ge. Every company does Different Things with their free cash. Most Companies Look for a way to grow. Dividends, they may give you a shortterm boost. They wont give you the growth you need. Most wellrun companies will look for opportunities to grow and invest. Just been over 3 billion to buy jet. Com so they could become more effective in the ecommerce space. Many retailers might move money in that direction. Bill, joining us from tulsa, thank you so much. That is a great point he made that retailers pay some of the highest Corporate Tax rates. They benefit more, if you can bring tax rates down. We have more on the tax debate tomorrow. Senate Majority Leader Mitch Mcconnell will be joining bloomberg daybreak america. The news with on Mark Crumpton. The Trump Administration today accuses the Syrian Government of carrying out mass killings of housings of visitors and burning bodies outside the military prison outside damascus. We believe the regime has installed a crematorium which could dispose of detainees remains. Itthe state Department Said believes that 50 detainees a day are being hanged at that military prison. Arguments have concluded in seattle over whether to reagans a President Trumps whether to reinstate President Trumps travel ban. The ninth Circuit Court of eals the president neil, the judge from oi, had repeat easily the president s executive order was the result of those statements. The judges gave no indication of when they might move. Russian president Vladimir Putin said the main source of the worldwide cyberattacks is the u. S. Intelligence community. Speaking to reporters in beijing, putin said microsoft it straightas put in stating that u. S. Intelligence services created the means for the attack and that russia was not involved. His comments came after the president of microsoft, brad smith, blamed u. S. Intelligence agencies for stockpiling Software Codes that can be used by hackers. Eu governments are tightening their brexit negotiation positions as they prepare to talk with the u. K. That is according to the latest draft negotiation direct is obtained by bloomberg news. The eu toughened its language on a transitional arrangement. It would help companies adapt to the new status. Help with Citizens Rights and clarify issues of the courts. Global news, powered by more than 2600 journalists in over 120 countries. Im Mark Crumpton, this is bloomberg. Ahead on cyber safety. Security stocks are gaining today as governments and companies grapple with an unprecedented attack over the weekend. The latest on the global response. This is bloomberg. This is bloomberg markets. Im scarlet fu. Now to the Cyber Attacks that have swept across the globe over the weekend, others Cyber Security stocks are jumping as governments and Companies Work to contain the damage to their systems. In at least a hundred 50 countries it has been affected. Tom, do weancisco, presume that the worst is passed . There was a whole new way this morning. That,t is happening is just as the cyber attackers develop a new approach to this malware, a kill switch gets instituted. Someone finds out how to shut it down. The good news for Many Companies and institutions is that when microsoft sent the original updated patch a few months ago, they did what they were supposed to do. Microsoft sends me a message about now where and you need to malware and you need to upgrade your software. But there are always people that jack their feet. They are particularly vulnerable. People like the National Health service in the u. K. , it is tough to turn off computers. Is this a wakeup call to those companies that dont update systems when they get a critical update message. When you get that message, you update. Whether an individual or company or government, that is absolutely vital. Find a way to take your systems offline. You dont want to do things that will hurt people to hurt people receiving Critical Health care. You dont want to do something thats going to affect your operations globally, but there are still these holdouts. They have to find a way to coordinate and work those upgrades in such a way they can keep the software up to date and not affect missioncritical operations. What is interesting is the blame game you have been talking about. We have the nsa stockpiles being passed. They are keeping track of what kind of malware is out there. How can the uses for the sake of national security. Microsoft came out and said the nsa is partly to blame. The fact that they have stockpiled these it is not quite that straightforward. There are those in the Cyber Community who say Microsoft Might need to do a better job of issuing Safe Software from the getgo. Obviously, the administration signed this executive order looking into cybersecurity. The Homeland Security advisor actually talking about this issue once again. Does government enforcement need to come into play . Who is ultimately responsible if it is corporations that need to invest more . Where do you draw the line . Guest Mark Crumpton was telling us about how he recently cited with microsoft and said this is the nsas fault. The nsa is responsible for cybersecurity, taking tariffs taking care of cybersecurity for the u. S. They do have a role to play in tabs on these hacks. The idea is a need to do a better job of making sure those do not get stolen and then disseminated and published. Lots of roles to play. Thank you very much. We did not get time to talk about bitcoin. I wonder how many people bitcoin . That 300 and scarlet still ahead, the nathan join us. Had will he will offer a reality check as the world secondbiggest economy shows signs of slowing down. Julia time for the Bloomberg Fischer hassh agreed to buy pantheon for 5. 2 worthn, including debt 7. 2 billion. Its one of the largest makers of diagnostic and testing equipment. Saudi aramco has promoted eight executives ahead of what could be the worlds biggest ipo. According to an internal memo, the Company Appointed its senior vice to Senior Vice President , and to associate general counsels. For a look at what is behind the rally in crude ive spent my life planting a sizesix, nonslip shoe into that door. On this side, i want my customers to relax and enjoy themselves. But these days its phones before forks. They want wifi out here. But behind that door, i need a private connection for my business. Wifi pro from comcast business. Public wifi for your customers. Private wifi for your business. Strong and secure. Good for a door. And a network. Comcast business. Built for security. Built for business. Julia from bloomberg World Headquarters in midtown manhattan, this is bloomberg markets. Im julia chatterley. Cody markets are closing in new york. Gold higher for a third day following tepid Economic Data and north koreas Missile Launch on sunday. Higher by. 2 . Copper prices also in focus in five of the past six weeks and nearly wiping out the year to date gains. Higher by some. 6 . , hitting its highest level in two weeks after russia and saudi arabia said they favor production cuts until 2018. Toy meet on may the 25th discuss the proposal, but as you can see some optimism in the market today. 4890 the level there. Scarlet also helping oil is word that china will import more crude and natural gas from the u. S. The u. S. Has very rich oil and Gas Resources while china needs to diversify its imported crude supplies. American crude will be one of our options as the u. S. Government is listening restrictions on oil experts. Oil exports. It is important for china to expand its natural gas ratio from the current 6 to 10 or 15 in the next five to 10 years. Stayet oil prices will near current levels for the foreseeable future. Estimate the price per barrel will be around 50 u. S. Dollars. 60h possible short term, u. S. Dollars is not sustainable. The oil price will see a slow recovery in 2018. However, prices will not get , 100 u. S. Dollars. Ofia china soliciting tens ilion to dollars in Global Infrastructure deals to bolster its economy. How will the doubleedged sword fuel spending and affect the World Economy . At the peterson institute, a former u. S. Treasury Department Undersecretary for international affairs. Hes just back from china. Thank you for joining us today. Tell us what your view is as youve returned from china. I heard a number of people say everything is on hold as a return from congress. What you see while you were there . Hand, i would say the chinese authorities were quite comfortable about the nearterm outlook for growth. They are expecting the pace of growth to continue somewhere at percent. 5 they are also increasingly concerned about potential risks andinancial Security Financial regulators have taken important steps to increasingly discipline the provision of credit and Wealth Management products that have been quite significant of late. Scarlet we might have seen some of that in the latest data with investment coming in later than expected. China is capable of warding off systemic Financial Risks and maintaining growth. Will there be a tradeoff there . If so, what would it be . Is over ainstinct several year horizon, there will indeed most likely be something of a tradeoff. I think china can achieve 6. 5 or 7 growth but it will require increasing leverage in the economy. As we have seen recently. To the extent that happens and there are imbalances and challenges in the economy that continue to expand, i think there will be a day where the chinese authorities have to make a tough choice. I think i was hearing over the last week that they are prepared to accept lower than 6. 5 growth. But thats what they are saying in the abstract. It could be difficult. Saying chinaare can get 6. 5 growth. Are they trying to have a soft landing . Get the think they can 6. 5 or 7 growth, but it is going to require increasing in balances that will make the soft landing all the more difficult. My feeling is they should be flexible on the growth target and allow growth to steadily moderate. 5 n if china were growing at rate, that would be rapid, including emergingmarket economies. Julia china represents 50 of net new growth in the world. When we look at the credit import, the net new credit has gone from super expansionary to negative. When you combine those things, i see a reason to be concerned, particularly when very few people trust the gdp data that comes out of china. Had they got the calibration of policy under control right in your mind . The objective, the soft landing scenario is one where growth slows but is more dependent on demand and as they are more dependent on domestic demand, the economy is more open and that would create ongoing significant opportunities for other countries to export into that market and create chinese demand for the rest of the world. Getting all of this balancing right is difficult. Chinese authorities have a challenge ahead of us and it that thoses the case of us in the rest of the world, it in other emergingmarket economies could feel some aftershocks.

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