Transcripts For BLOOMBERG Bloomberg Markets Balance Of Power 20171228

President trump. The irs said, not so fast. Local governments may have to respond to millions of dollars. Laura davison. What did the irs say yesterday . If you want to prepay your taxes and get the deduction on a, the county has to assess them and you have to pay them before 2018. To prepay their taxes between christmas and new years. This deduction because you havent gotten the assessment. Those people. I saw that notice and talked to my accountant. In yonkers, they will not get those bills out. They are busy. They cant write all these bills and send them out. I cant pay it. It will create a ton of confusion just depending on where you live. A lot of people trying to get it done before the new year are stuck here thinking, shoot, i dont know what to do. David there was a bloomberg story out today about the International Last fact. They are getting, perhaps, a nasty surprise here about how this works. How does that work . It is a minimum tax for companies that operate overseas. The intellectual property they store overseas, the tech firms, apple, pharmaceutical companies that are notorious to take advantage of the lower tax break. Lots of those companies that operate overseas have cash going in and out of the u. S. Privatee really is that equity, some are publicly traded and some that are privately traded. The corporations are paying a 10. 5 tax rate. That is three times what the competitors are paying. David try to decide if there is a corporation or partnership. Did we contemplate people will . Hange doing business laura the partnerships, llcs, s corporations. ,ut in the Business Community folks are saying we dont want to be a c corporation. Once you put them in, partnership skip to 37 . There is still a big discrepancy there. David congress likes to pass laws and they dont look at what it takes to enforce them. This sounds pretty compensated to me. Are they going to appropriate enough money for the iris to answer questions and process this . Not just with corporations. As well as enforcing these rules and audit. Republicans are not really incentivized or desire the money. I never forgot about that. Capitol Hill Reporter for bloomberg tax. Taylor riggs is here with the latest. Green one see mostly the screen here today. Small caps benefiting from tax reform up about. 2 . There is an individual mover thats driving this. The official numbers, the guidance has them a lot lower than this estimate. There are a few things going on here, almost 3 . I stand corrected. Teaming up with india. Netflix will message users. Asking if they want to show recommendations. Some of the best stocks owned in january according to history. Perhaps some of the reason we are seeing the gains today. Lets wrap it up here, g btv. You know donald trump likes a weak dollar. A weak dollar story in 2017. We are on track with a 10 decline. A pretty weak dollar story here. We have breaking news now out of italy. They have extended time for the selection. It is expected to come and we have the Prime Minister go to the president earlier today. Next up is the time for the election. It is one group they particularly wanted to withdraw from the eu. It could be later in this hour from rome. Congress gets back to work next week and the have a lot to be excited about in the new year. We talk with maggie gage. This is bloomberg. David this is Bloomberg Markets balance of power. Im david westin. David, Prime Minister paladin to loney says the government will continue to carry out duties even after it hands temporary control to the president of italy. Political trigger instability. They trust the government and the friends and decisions of the president. There will continue to carry out the timing and procedures the next institutional steps. It appealed the Political Parties and avoid unrealistic promises. The white house says President Trump has been briefed on the Islamic State attacks on the cultural center. The president can continue to monitor the situation. Killed morehich than 40 people and wounded dozens more with the latest in a series of assaults by the local affiliate of the extremist group. Doug jones asking a judge to toss out a lastminute lawsuit from roy moore whos refusing to concede to feet. A lawyer says theres no legal ground for his attempt to overturn the results of the historic election. More is claiming Election Fraud and wants the judge to order a new election. Alabama secretary of state is set to certify joness victory today. Russian authorities will investigate if the Opposition Leader is breaking the law by calling for a boycott of next years president ial election. It has campaigned for the presidency all year. Despite being convicted for fraud. Putin as highimir as 80 is expected to win a fourth term in the march 18 election. Obamas 24 hours a day powered by more than 2700 and analyst and more than 120 countries. David Congress Gave president my trump the legislative victory he wanted but the break comes to an end next wednesday and theres a fair amount of work awaiting legislators on the return. , coming togie gage us today from washington. There is a lot to cover here. Holidays, it is right where we left off last year. Congress will come back to try to decide how to fund the government. Prettyhat, theres a good debate between democrats and republicans on spending cap for defense versus nondefense spending. We are optimistic that they do come to agreement on that deal and avoid a Government Shutdown as well as the fiscal incentive that would be surely after the budget negotiations wrapup. David you have the compromise. It you increase defense and we domesticthe festive policies. Things like the dreamers act and the payasyougo act . The dreamers act, a couple of the other Health Care Provisions like Immunity Health care centers and the market stabilization act as well as disaster funding could be used for the defense cap, offering democrats some of the speakers on their side they would like to see. David and when we left the tax overhaul, senator collins had promised her vote in exchange for a couple of other bills. I think it will be sooner rather than later. I dont think it is lost on mitch mcconnell. Up. The democrats will be it would be important to him. And to secure that vote, he will have to address her concerns sooner rather than later. David he doesnt have a vote over in the house. Will the house go along with this . It will be an interesting theme the first half of the new year. We see mcconnell and ryan diverging on their plan to tackle legislative policy in the first part of the year. We hear mcconnell talking about bipartisanship and realizing what his margins are in the senate. Preferring tos tackle entitlement first and foremost, which makes sense from a fiscal point of view because it is the nondiscretionary area of the funding that will help them balance the budget. Forward. T to come david is there one thing everybody can get together on . I think there is political will on both sides of the aisle. Whether they are masking the heels of the tax bill. Any conceivable revenue raiser was contemplated and moving 1 ofllion or more infrastructure will be a really difficult problem for both sides of the aisle. David as we go into this new legislative session, we have for the five members of the house and one third of the senate. We have an election coming up. When i get in the way of getting much done it all . At all . Will be yourhis typical Election Year in which none of the debate items tend to make it over the finish line. Month toies use the message to their base and introduce a lot of bills that get their base excited. Those are kind of partisan issues and it tends not to go very far. To the other end of pennsylvania avenue. Do we have a sense of the role the Trump Administration played getting the tax legislation done . I think the white house had a role in the tax bill and have a role moving the legislative priorities over the finish line. The question year, is, what are those priorities . We will learn more about those next weekend when leaders ryan and mcconnell convene a cant david with the president to discuss exactly what that agenda will look like. The president said hes willing to do something about the dreamers that came to this country. With Chuck Schumer and nancy pelosi. The white house signaling they are on board with that is an important piece of this puzzle. The dreamers and bipartisan any sort would include of budget negotiation that we see in the upcoming weeks in january. David finally, take us through the end of the year. What will we have been surprised by . What would surprise you for this congress to get done or not done . Maggie there will be reform on the banking committees and housing committees. Find it a very large uphill battle. Either one of those made it to the finish line, we would find that surprising. David always good to have you on the program, maggie gage from Credit Suisse in washington. As you recall, softbank is making a tender offer for stock at uber with a price 30 less than the last valuation. 20 of the over shareholders have ended their shares. Willing to take a haircut of 30 . Oftbank moving forward ok, sorry. This is what they are telling me in my ear. The 20 number is the wall street journal reporting. They have not match that, its the rest of this. Trumpsp, president tough deportation talk on mexico is not translating to sending many people back home. We will go through the numbers, next. This is bloomberg. David this is Bloomberg Markets balance of power. President trump promised to send millions of undocumented aliens to mexico. At least so far, the u. S. Is repatriating fewer people under trump than it did under obama. We welcome our mexico city Deputy Bureau chief. Good to have you here. Give me the numbers. How do the numbers compare trump the first 11 months, the numbers are down more than a quarter. The repatriation numbers which went from are using last year at about 200,000 to this year of about 150,000. David why . , theyn you talk to ice say they are succeeding at deterring people from coming into the country. And that is causing deportations to come down because there are fewer people coming into the country. But it doesnt explain the full picture. Lets also happening is there are more detentions in the interior of the country. Those are taking much longer to process. The courts are backlogged. More of a focus on deporting people who are in the country, been in the u. S. For years. That combination is what experts are saying, causing the stock. We are doing our job, we said what we do. Were discouraging people from coming in. Were telling them were going to send them back. With more people in the pipeline and it just takes a while to get them back. Is that their position . Would be correct. They are saying they are succeeding. The question is, going forward, they could turn these numbers around. The backlog in the courts continue. They havent really been sped up even though more judges have been hired. If trump really wants to continue with this and increase be otherrs, there will changes that have to be made to speed up the process. Are based in mexico city and you report from there. How is this perceived south of the border in . They see the crackdown continuing. That the numbers are a little lower this year, they wont be higher next year. A lot of possibilities that the numbers could rise again, removal, the temporarily, of protections. Undocumented migrants that came to the u. S. As children. The u. S. Administration is cracking down on sanctuary cities. There is a prosecutorial discretion that is being removed in a lot of cases that wouldve allowed people with no criminal record to stay in the country. I think that for mexicans here,. He news is grim it is more expensive to cross the border because it is very unsafe in the northern part of the country. Together,s coming things dont look great even though the number looks ok. Mexican authorities do anything on their side of the border . To reduce the tension . They are also doing this for the Central Americans with the southern border of mexico. Toy are working very hard stop Central Americans from coming into mexico. Thed which was one of problems, people coming from Central America up through mexico to the United States. Will be talking to a bank of america Ceo Brian Moynihan about the state of the u. S. Economy at the end of 2017 and how they are rewriting tax laws to affected. To affect it. Cannot live without it. So if you cant live without it. Why arent you using this guy . It makes your wifi awesomely fast. No. Still nope. Now were talking it gets you wifi here, here, and here. It even lets you take a time out. No no yes yes, indeed. Amazing speed, coverage and control. All with an xfi gateway. Find your awesome, and change the way you wifi. David this is Bloomberg Markets balance of power. Shery ahn is on assignment. Lets get to the headlines with the bloomberg first word news from the vila. Davila 8. 7 Million People have signed up for obamacare, 95 of last years total. Cut thenistration advertising budget by 90 and the individual mandate was terminated as part of trumps tax bill. The u. S. Embassy has announced an end to the visa crisis with turkey. Stopped pieces for turkish citizens after the u. S. Consulate was arrested in october. Services are now resumed after. Hat turkish government a supermarket bomb injured 13 they liquidate on the spot. Terrorismded that would be far worse if not for his countrys military operations in syria. To saudi princes detained in the nations corruption crackdown have been released. The princes both sons of the late King Abdullah have reportedly left the Ritzcarlton Hotel where they were held hostage for nearly two months. Its not and if they agree to financial settlement or released because of a lack of evidence. A could be a very happy new year for some left the lottery players. There have been no winners in the Mega Millions pour powerball drawing. The combined jackpots have climbed to 690 million. The next Mega Millions drawing is tomorrow night. Powerball is saturday. Powered by more than 2700 journalists and in more than 120 countries. David, good luck in the lottery. David im not a gambler, but thank you, the vila nabila. Uber shareholders have agreed to sell a stake in uber to an Investment Group led by softbank. Joining us from San Francisco to explain is bloombergs head of Global Technology coverage brad stone. We had a general sense that this outfit was trying to buy. Why is the news important . This is a process that really started way earlier this fall. Softbank founder taking advantage of the year of turmoil and herb oil at over. At uber. Offering to buy shares at a significant discount, but it came with reform in the governance of uber. Much needed. A 1 billion investment. The secondary offer was a steep discount of 30 . What were learning is that enough of the early investors , howleyart capital Travis Kalanick who still owns 10 of the company, theyve offered to sell their shares to softbank, making soft rank softbank one of the biggest investors. They get enough shares to match . You say they did. They wanted about 1 5 of uber, about an 8 billion investment. Itd reached the threshold which means the deal can go forward. David and they can get cash, even if they leave money on the table. Liquidity has been a long, hard journey for the country company. The ceo of uber says 2019 at the earliest for an uber ipo. This is the best chance for liquidity, to sell some of those shares. Those that of been on the ride for more than five years and hell over the last year with the resignation of Travis Kalanick and the controversy and turmoil. David are these shares worth more to the softbank people than isthe uber shareholders . There something they can do with this interest . Thats a good point. Softbank is optimistic about the ride hailing sector. Theyve invested in india and china. Competition has been destructive. Uber has lost 4 billion this year on discounting a lot of these competitive markets. What softbank can do is what they did in china where they merged operations and uber left china. They can create these very competitive markets. Some of the discounting goes away. Is there some possible grand alliance . Is that possible . What do they do to lift aspirations overseas . Is this a bad day for lyft . Beneficiary. N the lift might have been the recipient of softbanks interest had this deal farm through. I think with the last year has shown us is there is plenty of interest and plenty of opportunity. The reputation has benefited so much that it may not be the. Reatest day david we wont feel too badly for them. Brad stone is bloombergs head of Global Technology coverage. Lynch ismerica merrill the secondlargest u. S. Bank in one of the largest dollar deposit holders in the world. And in 40 other countries around the world. There is a view of the economy not many others have. When i sat down with brian iynihan before the holidays, started asking what they could see from the vantage point. On the consumer side, its what people are doing. We have roll up what they spend money on. Whether it is cash out of the atms, those checks written. The debit or credit cards used, it is a 6 over the last year. In what is driving that is people are spending more money. Check writing has gone up. Is the fastest big number growing. Consumers are spending well. It kind of drives the economy. Stuff and they invest in our house. It is very good news for the u. S. Are they borrowing more or worried about credit . Not worried im about credit. Even if you look overall, there is concern about lending in that kind of got back. It hasnt been anything because were still working through the memories of what happened before with the service structure. And what goes on in lending. A little bit to some of the unsecured lending. Aboutnot really worried consumer credits, but that consumer groups spending drives our economy. In the u. S. , well finish this 2. 2 gdp rate growth with serving a zero in the first quarter. In next year, we have two and a half. That Movement Across the size economy is very big. The rest of the world is also growing. The first time you see japan China Growing at 6 , india growing at 7 . It is tremendously different chinae were 3, 4, 5 years had come from a faster growth rate. Ow they are sort of stable india when downandout. Those things are very interesting. Thats been that for the world. The United States can supply that growth. 2. 5 youre looking like growth in 2018. Tax legislation passed so it is not including any benefit. Experts say they would add to that. David taking into account the tax overall, you look at about 2. 8 or 2. 9 . Mr. Moynihan i think its more like 6 or 7 . It takes a while to kick in. For businesses in america is a strong statement and they will be looking to do things. And around the world you have brexit and other things that create interesting questions. Do you have a sense of talking on the institutional side, what they are likely to do with the money . The changes benefit. The you have a sense that they return that to shareholders . Lets going to happen . The goal for all of this is to get an effective tax rate which is competitive with the world. Shifted toas being where final demand is. And building manufacturers. They were shifting the investment dollar over. Expect that to reverse a bit. That was a core principle. My guess is you will see a little bit of everything. Some people buy back more stock and have more aftertax off it. Some will build things faster than they would have otherwise. We rethink the balance inside the United States and outside. None of this can be bad because the money will go back into circulation if it is share repurchasing dividends. That was bank of americas Ceo Brian Moynihan. Italy prepares for new elections. The controversial fivestar movement is ahead in the polls. This is bloomberg. David this is Bloomberg Markets balance of power. Im david westin. The Canadian Producer of medical marijuana rising more than 8 and up nearly 40 of the last week. To explain was driving the rally is emma chandra. The outlook for 2018 is good for legal pot. California is legalizing Recreational Marijuana use january 1. There are a few states that allow sales, but theres no move towards legalization on the federal level. Canada will be a smaller market and recreational pot is going to be legalized across canada later this year and medical marijuana use is already allowed. Which isred for canopy the Worlds Largest public the traded marijuana company. A market cap of 5 billion. Our colleagues in canada have spoke with the ceo and being very bullish about the year, saying this move toward globalization of medical marijuana is going to be a big theme for the company. And they will really push that and the stock is up 220 this year. That is the largest. Are there others . Is is the whole sector . They all look towards january 1 and take a look at the bloomberg here. Its is the Bloomberg Intelligence index. And hopefully, we can pull that out. It does exist. And if you take a look, you got all of them here and you can see on a oneday basis, there are 44 companies that are part of this and 39 of them are up today. And if you make this year to doing prettye all well. David those are all Marijuana Companies . Yes. I know. Five of these countries have market caps of over 1 billion and looking forward to 2018 being a year when they are going to grow even more as we all relax, i think is the word. David thank you so much, m a. Great to have you here. Italys president has formally , setting parliament the stage for a National Election scheduled to take place on march 4. Opinion polls show the Movement Ahead of the Ruling Democratic Party as well as the possible coalition and none of these pretty look likely to win an outright majority. We now know it is marked for. What are we going to look forward to between now and the election . Quite an angry campaign because it is the populist fivestar movement against the establishment. Everybody fighting over the economy. Over migration. Parties from the left and the right calling for tax cuts, calling for investment to boost growth. It is this recovery is happening, it is right slow compared to other eurozone countries. Basically some skepticism is not hostility toward the European Union. Have italians by and large the European Union . Sure, if you go out ahead into the smaller towns of the countryside, you find plenty of italians that still hunger for the lira. They say with the prices shot up , the fivestar itself has been a bit ambiguous in the euro skepticism. They abandon the euro or not. It will be the last resort. The fivestar government will try to renegotiate eu treaties which is a very tall order. Might thisprotected process be . In germany, we see a much more but and than italy. If you look at the number of government changes, they have had a lot of tough times getting their act together. The next government will be the number 65 since world war ii. Talking to a politics professor. They are taking ages to sort things out. In italy, we may have twice as many parties in parliament. Be for the president and the head of state to possibly a point the premier until maybe we head into new elections. Terrific to have you on the ground over there, reporter for italian politics and european affairs. A judge has rejected judge roy moores effort to try to delay certification of the election of the democratic candidate in the alabama election. Ae democrat won, which was surprise to many people in a very republican state and judge roy moore said he will challenge this thing. A judge thus far has rejected the more challenge. Coming up, the latest chapter in the latest tsonga of the saudi luxuriousld in the ritzcarlton. Awaiting freedom, but at what price . This is bloomberg. Marketshis is blumberg balance of power. Im david westin. To saudi princes in the nations crackdown have appeared to be released. Have left the restaurant and hotel with a were held for nearly two months. Riyadh how mody a who is joining us by telephone in dubai. These two know about princes and the other one still in detention . There was never an official list of the princes or officials that were arrested. And there are no official announcements, so we are hearing this through social media, who is coming and who is going out of the ritzcarlton. These two princes are sons of the former king. It released about a month ago. I dont know if it was a settlement of the payment done, and there is kind of that going assumption. The authorities said that they will recoup as much as 100 billion from the settlement. This in the to United States, we try to puzzle out, is this an attempt to get the money that was needed for the budget over there . Or is this a legitimate corruption investigation . We hear we want to try to get 100 billion and it doesnt sound like corruption. It is a lot of money. So there is no doubt that there was corruption. Have that in the world family. In the royal family. And it could be a legitimate attempt to change the way of doing business. Them welcoming and it might make them easier. Much thatsion is very this is a power grab. And they are trying to get this money. I think that impression matters. And there is a lot of people that have expressed concern about the lack of transparency. Do we have any sense at all about the timetable . When this corruption investigation will be over and is there pressure to get this thing wrapped up . They said they wanted it riad riad they said they wanted it over by the end of this year. Were talking about weeks instead of months. And they report about 20 have been released. It does seem to indicate that there is an end game. This at a conference wants to encourage investments, encourage the private sector. They need a certain level of certainty before they come thiso encourage to invest in the country. This lack of clarity and transparency. In terms of those investments. The crown prince has been very energetic this far. He has a war going on in yemen. Withid the incident lebanon and qatar is there a bandwidth problem . Hes taking up a lot of issues. If you look at this economic plan to diversify the economy away from dependence on a lot of people are saying it is coming a little bit too late. And a brutal shift in the way saudi arabia functions. It is a big job and its all right. Much more foreign policy. There is a question over if hes bitten off too much. David thank you so much, joining us from dubai. Coming up on Bloomberg Markets, the yield curve. This is bloomberg. Cannot live without it. So if you cant live without it. Why arent you using this guy . It makes your wifi awesomely fast. No. Still nope. Now were talking it gets you wifi here, here, and here. It even lets you take a time out. No no yes yes, indeed. Amazing speed, coverage and control. All with an xfi gateway. Find your awesome, and change the way you wifi. 2 00 p. M. In new york, 11 00 in San Francisco, and 00 7 00 in San Francisco. Im julie hyman. Welcome to Bloomberg Markets. Julie we are live at bloomberg World Headquarters over the next in new york over the next hour. Softbank ceo Masayoshi Son is about to add to his tech portfolio. R investors having agreed have agreed to sell a 20 stake in the company to softbank. And with a bubble burst a negative rate bonds in 2018 . To our guests, who says those bonds are headed to a disaster. Prepayad frenzy to property taxes before the new tax laws kick in. What is it what is it worth that happening . Lets get a check on what is going on with stocks today with emma chandra. Emma