Transcripts For BLOOMBERG Bloomberg Markets Americas 20240714

Struck in september 2017. Nearly 250 survivors and victims of a london tower fire are suing American Companies that make products used at the residential complex. The suit claims healthy Building Materials helped spread the flames at the granville towers, turning it into a flaming coffin for the people who died. Whirlpool, and an insulation maker. Global news 24 hours a day, onair, and tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. Im Mark Crumpton. This is bloomberg. It is 1 00 in new york, 6 00 in london, and 1 00 in Hong Kong Unit im vonnie quinn. Welcome to Bloomberg Markets. In hong kong. Im vonnie quinn. Welcome to Bloomberg Markets. From bloomberg World Headquarters in new york, here are the top stories on the bloomberg and around the world we are following. Trump threatens china again. The president saying he could impose tariffs of 25 or higher on 300 billion on chinese goods if president xi does not meet with him at the g20. Regulators alarmed by the riskier loans. The big problem, nobody knows who holds them. Teslas annual Shareholder Meeting kicks off this afternoon. Do anything to reassure investors the company is on the right track . There is some growing skepticism about the electric carmaker. First, we are in grind mode. We were grinding higher, but now we are going lower. Abigail small losses at this point, but we had been earlier. 20 , p up at the open at at that point up six days in a row. Right now, small declines, investors consolidating the rally. Some big outperformance for the Oil Services Sector index, up 1. 8 is at. This has everything to do with Goldman Sachs. Take a look at the individual names. Nice gains here. Goldman sachs cut their profit outlook by 5 to 12 or 2019, 2020, but is saying there is a bottom soon. 50 fromll index down the Fourth Quarter of last year. Perhaps a recovery. Very interesting, one of the top sectors on the day, technology actually, had been one of the top sectors of the day. We have had the rebound rally through may. What stands out over last week and yesterday, the tech sector up more than 8 . Today, down half a percent. Consolidation of those gains. May down 8 . Netnet for may and june we are about even. If you look at all of these green bars, tech is still the somesector, up 23 , but small profittaking on the day. , to yourthe s p 500 point earlier, small grind to the downside. This is the volatility since the beginning of may. Over all the s p 500 higher on the year, but starting the year rough entree concerns, concerns over the Federal Reserve been we had a bond rally, perhaps we needed rate cuts. Fed officials voicing the possibility that if the economy slows. , we are down 1. 5 over this time. Kicked iterns off at the beginning of may. That is the same as what happened in january 2018. Huge volatility for the s p 500. Stuck in a range of about 2600 and 2900. Vonnie thank you for that. You could potentially call it the xi20. President trump sense that he is says that he is planning to meet with president xi at the g20, after he promised more tariffs on chinese goods if there is no meeting. So will xi tape to trumps demands . Mcgregor. Sarah this is twice in a couple of days at the president threw down the gauntlet to china. Will china respond . Sara we are not sure because china has not even concern that confirmed yet that xi jinping will meet with President Trump at the g20. This is an important meeting the trump has cited multiple times, saying if there is no deal, then trump will go ahead and cput tariffs of 25 on 300 billion worth of goods. It is not at this meeting that they will decide on a finalized deal, but they were just decide to keep talking. Even that is a high bar at the moment goes talks have collapsed. It that he likely is played hardball with mexico and seemed to have work, that he is employing the same strategy here . Sarah in the case of mexico, that would be a what china wants. A lot of people are saying mexico agreed to things that it already promised to do in the past. A new bow,it in saying that we would do this for immigration, and you could say that you got a victory. Talks with china are past that point. Trump has promised to do a specific deal on force technology transfers, rating state subsidies in china, which will never happen or state owned enterprise. There is no wrapping up of a present with a new packaging here. Vonnie sarah mcgregor, thank you. President trump has been making some comments. Moments ago, before heading to iowa, on the way to council bluffs. He talked about china, said that he is the one holding up the china trade deal, that china wants a deal very badly. He also says he is waiting for mexico to make the announcement about the agreement between the u. S. And mexico. On china once again, he expects to meet with president xi at g20. He also spoke about north korea and said more progress was needed before another meeting. Once again, taking questions outside on his way to council bluffs, iowa. Lets turn to the bond market, which has been reacting to the vagaries of the trade war. Governorsasked bank who is the most dovish of all the governors. We will act as appropriate to sustain the expansion. Central banks across the world have moved to an accommodative stance. It is fair to say we havent easing bias. Things somehow do not go how it is predict did, we will certainly act. All of you have been talking about rate cuts so much. Rate cuts gets into your system. Raised themembers possibility of further rate cuts. Think weario draghi, i can do these things if necessary. Isthe room for adjustment tremendous. Go straight to our guest, bill odonnell. As we try to read the bond market, what is the bond market telling us . We got down to 2. 06, and now we are back to 2. 15. Meetrst of all, when i global investors, some of them are tearing their hair out, they cannot believe the market is pricing in three fed rate cuts come at the same time, the ism nonmanufacturing pmi is nearly at 57. It is that dichotomy. In our view, what has happened since the fed pivoted to a pause, the market has priced in a lower distribution for the fed outcome. Maybe in the course of the next two years you could see to rate hikes, but equally you can see the fed cut rates 250 basis points to zero. Moveose distributions lower, it is hardly a surprise to us that the market has those cuts priced in because the distribution has shifted down. Vonnie you just said it, the market is saying on the one hand the fed could cut three times this year. On the other hand, we are not sure that they will raise next. Have you ever witnessed such a time in history where we are not sure which way the central bank will go . There are a lot of things that i have never witnessed, not least of things, a fiscal stimulus occurring potentially late in the economic cycle. Meanwhile, and this gets to one of our thesis, that there is an ongoing but unspoken currency war. There is always a competitive ratesage by cutting first, debasing your currency, improving your trade terms. Ago, you saw a minute have Central Bank Governors all around the world now talking about rate cuts. Australia cutting, new zealand cutting. Finland this morning talking about their discomfort over low inflation expectations, potentially the need for more monetary accommodation. We have a liquid bond market here the flows come in, and that is what is giving us our low rates. Vonnie what happens if we dont get a deal me with china . Nothing good. Certainly, good for the treasury market. Three of events that i think will either confirm or potentially deny the very dovish pricing in our market. That is dovish leaning toward the next move by the fed being lower rates. All, on friday, we get retail sales. That will be important in gauging with the consumer is doing. Shortly after that, as mentioned earlier, june 20 8, 29, g20. Will trump and xi meet . What will come out of it . Will it be warm and fuzzy or hands off, more trade wars to come . Following that, the june employment numbers will be very interesting to see if there are dots to connect from the weak ma y data we got last week. That would certainly set alarm bells off in the fed if we get another month of weaker employment data. Vonnie definitely mixed signals. Laborer would suggest market is doing fine, but payrolls, some red flags. Of course, we dont know about Consumer Confidence is holding up and how it will translate into spending. What about a recession probability . In fact, the president is making some comets right now. Comments right now. Lets listen in. Right here is the story. I dont like it when newspapers right fake news, or reporters like you do fake news. I dont like that. So right here is the agreement, its very simple. In here is everything you want to talk about. It is done. Call them. [inaudible] biden i was not a competitor of hours. Joe biden is a dummy. Joe biden thought china was not a competitor. China made 500 billion over a short window of time against obama, biden, and for many years, in all fairness to them. China is a major competitor. Right now, china wants to make a deal very badly. It is me right now that is holding up a deal. And we are either going to do a great deal with china, or we are not doing a deal at all. Usht now, china is paying billions and billions of dollars. They never gave us . 10. China ate our country alive during obama and biden. And then biden has some kind of relationship financially, or his son with china . Tell me about that. The United States alive economically, and its a shame. [inaudible] pelosi attacked me. She was here, she made a irrible statement think that she wishes she didnt make while i was with the president of france. You are not supposed to do that, ok . The onetwo committed the crimes are the democrats and others. Ones who committed the crimes are the democrats and others. [inaudible] at that and weng are very much involved with the venezuela crisis being it is a horrible situation. Its been brewing for many years. It really started during the Bidenobama Administration that its been brewing for a long time. We are looking at that strongly. [indiscernible] my relationship with president xi of china is a very good one, one of the people i really like, i get along with him right. He is representing china, im representing the United States of america. We are doing very well. We are taking in billions and billions of dollars. Companies are leaving china and they are coming here because they dont want to pay the tariffs, and they are going to other countries. China would like to make it feel very badly. They are getting hurt badly by the tariffs. Companies cannot pay the tariffs so they are leaving china. The other thing you have to remember about china, china will subsidize companies so our taxpayer is not paying for much of it. A report came out they are paying for little of it. What it is doing is creating a fair Playing Field which we have never had with china since the wto, wto. [indiscernible] we expect to meet with president xi very thought shortly. We think we will meet at the g20. We had a deal with china and then they went back on the deal. They said we dont want to have five major points. So we changed it. We had a deal with china. Unless they go back on that deal i have no interest. Right now we are taking in billions and billions of dollars. I have created something when we have done in the last two and a half years we have picked up 14 trillion in net worth of the United States and china has gone done probably by 20 trillion. There is a tremendous gap. When i came in, that gap is getting close. [indiscernible] i love iowa. I won iowa by a lot. Usually a republican would not win by that much, but i did buy a lot. I have a great relationship with the farmers, i have a great relationship with everybody. Iowa is something that we will win easily. I saw a fake poll. Just like the fake media, which there are many here. Fake polls. Win texas by a lot, we are going to win iowa by a lot. I would say that we would win pennsylvania, i think we are going to do well. We have Steel Companies opening up not for 40 years they did not open up but now they are opening up. I think we are doing well. [indiscernible] i just received a beautiful letter from kim jongun. I think the relationship is very well and i appreciate the letter. I saw the information about the cia with respect to his brother, halfbrother. I would tell him that would not happen under my hospices, that is for sure. I would not let that happen under my auspices. I received a beautiful letter from kim jongun. I cannot show you the letter but it was a very personal, warm letter to i will say it again. I think north korea has tremendous potential. And he will be there. I think a north korea under his leadership. But because of what it represents, the people are great , the land is great, the location is incredible, between russia, china, and south korea. I think north korea has tremendous potential. The one that feels that more than anybody is kim jongun. He gets it. He totally gets it. I have not heard about that. [indiscernible] i would but i want to get it further advanced. In the meantime, no nuclear testing, no major missile testing, nothing like when i first got here. When i first got here, it was a bad mess. We have a very Good Relationship together. Now i can confirm it is because of the letter i got yesterday. I think something will happen that will be very positive. In the meantime, we have our hostages back, the moraines remains keep coming back. We have a relationship. Vonnie the president taking questions from reporters for 23 minutes on his way to counsel bloch, iowa, talking about a lot of subjects from china to iowa to mexico. Saying he is looking forward to meeting president xi at the g20. He says he is the one holding the deal of. Lets bring back in citi rates analyst bill odonnell. As it bond market is bid, is, and there are no worries that countries like china will stop buying, and the equity market is bid, does the president have any incentive to back down on this china play . Thaten you look at it on scale, he seems to be quick to point out his improving poll numbers, the stock market that we have. As i sat here listening to that rhetoric with you, i was thinking to myself, it does sound like a trade war, doesnt it . Just keep pushing. Nobody can know if it is a negotiating tactic or what. That is why the bond market remains bid, because there does not seem to be any thawing. The negotiations have kind of broken down as long as that is the case, the default is always the treasury market. People for cash into the front end, wait it out, and see what happens. Vonnie bill odonnell, managing director at citi rates. This is bloomberg. Vonnie Tesla Holding its annual shareholder gathering today. The event is one to watch, especially as tesla reaches for an ambitious delivery goal for the second quarter. State, whether tesla can achieve these goals without massive discounting and margin hitting incentives. Joining us now is chester dawson. Will we hear any concrete delivery figures, projections today . Chester we are not sure. Us bigly is elon musk event, he says what he wants to. Typically faces very little pushback. Certainly, shareholders are hoping so. There is a lot of interest, particularly with the shares down so much you to date, or some type of reaffirmation of those ambitious targets you mentioned. Vonnie some different key executives. Will he get any insight into how they are changing things up at tesla . Chester that is another big unknown. Not only do you have a couple of new board members, you have a new chair of the board, who really has not been heard from too much. There is a lot of speculation that tesla may choose the Shareholder Meeting to formally debut her, give her a chance to speak to investors. That, too, is unknown. We are waiting and watching. It will be a source of a lot of speculation. Vonnie the other big question is china, not just deliveries to and from china, how the tariffs will affect the operations, but also to get a factory. Chester exactly. Tesla has said that they would begin production this year. The factory is set to be nearly finished. Musk has talked about, as of the most recent earnings call, in production of 2000 vehicles a month. That would help to meet those targets for the quarterly production, but we still dont know a lot about exactly when that will come online and how towardroduction will be meeting the targets he has laid out just for china. Chester dawson, we will learn more through the afternoon and evening. Thank you. Tesla down 35 since the beginning of the year. Coming up, the ontario finance minister will weigh in on canadas budget, this as recession fears loom. This is bloomberg. The latest innovation from xfinity isnt just a store. Its a save more with a new kind of Wireless Network store. Its a look what your wifi can do now store. A get your questions answered by awesome experts store. Its a now theres one store that connects your life like never before store. The xfinity store is here. And its simple, easy, awesome. Mark im Mark Crumpton with bloomberg first word news. Received trump says he what he describes as a beautiful and warm letter from kim jongun, but that he is not yet ready to meet with the north Korean Leader for a third time. The president said talks between the u. S. And north Korean Nuclear negotiators need to advance before another meeting. Talks between the two nations ground to a halt after a february summit in vietnam concluded without a deal or any substantial progress toward kims regime of its Nuclear Weapons program. Scotlands Prime Minister says brexit and the horror show of the British Government leadership contest are signs that scotland needs to chart a different path, probably outside the united kingdom. In brussels today, Nicola Sturgeon said increasingly scotland and the u. K. Are on different political paths. She accused the u. K. Government of being immature failing to provide diplomatic support for her third of her trip to brussels to meet with the eu officials. For those that dont know, apparently, the Foreign Office decided they would not provide any support for my visit here in brussels. We have our own team here in scotland, and all the rest of it, but it does Say Something pretty depressing. I dont know the details of this, so they would have to speak or themselves. I understand there have been similar issues raise with the welsh government. Mark she added the people of scotland have to have a choice before it is too late to stop the damage of brexit in done. Amnesty International Says Sudanese Security forces are still committing more crimes and other serious Human Rights Violations in the darfur region. The warning comes as a political crisis is rocking sudan, where the military took over after removing Omar Albashir in april. The you when is scheduled to vote later this month about how many peacekeepers should remain in the region. Violence in syria has interrupted the distribution of food aid in parts of the country. The role food program says it has had to temporally stop handing out aid syrian warplane struck rebel held towns and villages. They say they have not been able to reach an estimated 7000 people who need help. Global news 24 hours a day, onair, and tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. Im Mark Crumpton. This is bloomberg. Shery live from bloomberg World Headquarters in new york, im shery ahn. Amanda live in toronto, im amanda lang. Welcome to Bloomberg Markets. We are joined by our bloomberg and Bnn Bloomberg audience is. Audiences. Another group of state suing to block tmobiles proposed takeover of sprint on antitrust grounds. That puts pressure on the doj as they near a final decision on the merger. Apples plan b. Its manufacturing partners as it has enough capacity to make all funds headed to the u. S. Outside of china. Can the company go it alone in the midst of a trade war . Our conversation with victor fedeli, discussing fears of a canadian recession, and why he calls ontario and oasis among global turmoil. Lets get a quick check on the major averages. Stocks are looking for and oasis. Markets off the highs of the session, have been positive earlier. Trade turmoil continues to be the name of the game with some ,arket for discipline saying knowing that you are one tweet away from doom is causing consternation. Industrials, utilities, real estate all weaker, but it is really tech that is weighing. That is one thing that we are watching. Apple is gaining. As folks look at their ability to whether these issues. Lots of talk about what the fed should do. Take a look at this in your terminal, how the market response to fed rate cuts. If you look on your screen, it depends on why they are cutting. If they are doing it because of the credit crisis, a recession, the market does not rise. If your stimulation, sometimes it does rise. So russian is which one would it be this time . Keep questionsly about what the fed is doing and where they are headed. President trump for the time being not liking what he is seeing, again attacking the fed, saying they dont have a clue. We have seen his latest tweets talking about ridiculous quantitative tightening, rates are too high. He had been comparing it to the pboc, saying the president of the fed in china is xi jinping. Seeing, yes, they have been tweaking certain tools of monetary policy, especially when it comes to the reserve requirement ratio. That has gone down. But what has not moved is the key lending rate. That has not moved since 2015, so some food for thought when it comes to the president comparing the fed to what the pboc is doing. At least when it comes to some of his other attacks, especially on whether the euro and other currencies may be devalued, he might be right. , the euroto one model undervalued by more than 20 . Amanda interesting to see that measure showing some of these currencies undervalued. Some of the factors, u. S. China trade tensions, also looking at a new leader in the u k, all of it creating global turmoil. To give us his take on the state of investing in the context of that turmoil, we have a guest. You were talking about Interest Rates, where they should be, where they might be, in terms of where the Federal Reserve may go. In europe, is it time for central bankers to start to think about normalizing . I know that we are now in ease mode, pricing in additional cuts, but would you prefer to see rates return to more normal levels . I would prefer a stable environment. We no Interest Rates will stay where they are today, which is largely negative, for the foreseeable future. Facti do not like is the that we are in an unprecedented period of time, where 20 of the global stocks is caring negative Interest Rates. Somebody asking you to pay them to lend the money. It is unprecedented. How we are going to engineer this socalled normalization, i dont have the advice to give to mario draghi. I do not want to put myself in his shoes. I think he has the toughest job right now in the world. It is difficult to engineer that spurt of inflation that has been hope for for some time that would allow the normalization of policy. Ecb has been very successful in averting the worst. We have not had the worst in europe. But the jury is still out on whether they can engineer the best. Shery what happens once mario draghi exits the ecb . As you said, we may not be in the worst case scenario, but we might be building up to that pretty financial crisis level, when we see pockets of fragility are merging, especially in cases like italy. When you think about the strength of the european economy, it is not bad. In fact, we have solid companies that are exporting, benefiting from the growth around the world. Question,slowing, no in europe, as it is in the u. S. , and perhaps somewhat in asia. We have a lot of political noise in europe. Brexit, italy for sure, ability to reform the european union, the socalled rise of populism that you may see, and the results of the European Election are probably for some a bit of a relief compared to what was feared. If you want to mention the undervalued euro, you will see that the political noise will abate. Maybe we end up in a situation where we have an orderly brexit. What ive been hoping for for some time and even said publicly, i was believing the market was under appreciating the risk that no brexit happens. Today, the jury is on the side of brexit will happen. It is not a question only of how it will happen. If you believe all of these elements will abate, you can see the euro rebound a bit. Amanda you are optimistic. Highlights is important, this administration is open to a new link in a trade war, currencies. They areay that maybe right, the euro is undervalued, the concern is there is no end in sight to Donald Trumps willingness to play with tariffs and international trade. What do you do with that . And threat andt then back. Amanda do you ignore it . No. But you try not to react on the spot. We stand for asset management, longterm looking. You dont react to a tweeting president , you dont react to shortterm moves like we have seen recently. You try to decipher this and look to the longterm. What i see in the longterm, classic. S. , it is the debate between the established superpower and the rising superpower. We better adjust to it. Tariffs is one aspect of it, not the only one. It is make America Great again versus china 2025. It is here to stay. 100 years ago, it was resolved in a different way. Maybe i will take that risk compared to what was happening 100 years ago. This week, representatives of ontario will meet with investors in london, paris, and germany in an effort to sell ontario to the world. Earlier, we had a chance to catch up with its finance minister victor fedeli, asking about bond issuance, and how much they hope to raise globally. We are looking at our Investor Relations tour today. We have 36 billion in our bond requirement this year. Down about 10 primarily because our deficit is down. 70 to 80 inue 7adian dollars, so about billion in other currencies, u. S. Dollars, euros, and others. The world is hungry for yield. Can you change your durations to satisfy the higher yield needs out there . Victor we have a mix of yield times. We have been quite open with all of the fixed income investors about what their requirements are, whether they are looking for a shorter term or longer term. We have been very flexible. One of the things we have been talking a lot about is our green bond as well. A huge appetite or ontario green bonds four ontario green bonds. First in canadian dollars, and then as we look at other options. Marketthe green bond will develop in europe. Are you considering selling there . Sarah we are talking of victor we are talking about it. Many european fixed income investors buying our Canadian Green bond. We continue to look at the appetite as we continue to develop that. Certainly, a tremendous amount of projects in ontario. When we think about the new transit projects, the new infrastructure, we have more than plenty of project that would qualify under the green bond program. Everyone is excited about that. Shery globally, we are seeing a declining yield environment. I wonder how that is affecting your issuance policy, not to mention, whether you are prepared to deviate for fiscal track if we see a global slowdown affecting canada . Victor we have been quite happy with the yields on our side of the perspective so far. They are at their lows, certainly. We feel a tremendous amount of imprudence prudence in our budget. We know that people continue to look at ontario as a very calm oasis in a sea of other world issues. Amanda although, and away sis that could easily be buffeted external forces. What worries you . We have trade concerns, mounting concerns about the credit quality in the u. S. Market. What are you thinking about when you look at your economy . Victor we know that we will continue to do the things that we believe are necessary to make ontario open for business, jobs. We froze minimumwage of 18, saved the Business Community. We lowered the premiums by a third, saving the Business Community about 1. 45 billion. We have continued introducing things like the accelerated capital cost program. So we have seen the Business Community very satisfied with the open for business approach. They have turned around and created 192,000 jobs in the last year. We have seen the tremendous success, and we talk a lot about that here as we are meeting the investors. Shery that was our interview with victor fedeli. Regulatoryther scrutiny as a group of states sue to block tmobiles takeover of sprint. We are seeing some headlines. Announce integration between the dropbox app. Later on, we will speak to the dropbox chairman at 2 30 p. M. In new york. This is bloomberg. Shery a group of states are suing to block tmobiles proposed takeover of sprint on antitrust grounds, putting pressure on the Justice Department as it nears a final decision on the merger of the two wireless carriers. The news sending shares of both companies down. Ise to explain what is next david, whos been following the story. O sue. Step two i know we have seen the chairman of the fcc support the deal. This is almost unheard of or states to move ahead of federal regulators. The Companies Got a big victory last month when the fcc endorsed the deal, after the companies agreed to some concessions he it looks like it may be on the way to approval. Now with the state suing, that is up in the air. It will not be up to a federal judge to decide whether to block it. Meanwhile, we understand the Justice Department was already looking at concessions from the companys, was not going to follow the fcc brian blindly. Is there something that would appease them in this . At this point, no. Their view is this deal is essentially unfixable. By combining the number three and for carriers and just leaving three, that will raise prices and harm consumers, and that the market right now is essentially to consolidated as it is. Trying to bring in a new player that might bring back competition, in the state to view, is difficult to do. So who would hurt the most if this deal does not go through . Through, its not go will be seen as a challenge for sprint. Tmobile has been seen as a maverick, has been more successful. The companies together combine say that they will be able to compete better against verizon and at t. If this doesnt go through, they are back to sort of competing with each other. For the states, that is a good thing. They think that competition is good for consumers. Amanda the argument they make is that 5g is a new ballgame and that the Competitive Landscape will change. Is that being taken properly into account here . In the state view, the argument does not carry much weight at all. Deploying 5g is a priority for the Trump Administration. That is something companies were banking on here, trying to get approval. For the states, though, what they are saying is these companies are already taking steps to move into 5g. By combining, that reduces incentives to innovate more in the market. That, thece is just company arguments about deploying 5g does not hold water. Amanda thank you, david mclachlan. Shery coming up, apples backup plan. Foxconn says it can make u. S. Bound iphones outside of china. This is bloomberg. Amanda apple is making contingency plans to do with it is going trade war between the u. S. And china. Foxconn, the iphone primary manufacturing partner, says it has the capacity to make u. S. Bound iphones outside of china is necessary. Joining us is our technology editor. India is one of the places, probably others. This doesnt seem to be what donald trump had in mind, manufacturers losing over from one lowcost manufacturer to another. Taiwan is another location that they could move to as well. This is the reality of the Global Supply chain or smartphone components. Situation where these Multinational Companies can adjust to what is happening on the ground. I think in particular for foxconn and u. S. Bound iphones, it would be quite a heavy lift to get it done but it would be possible. We are hearing foxconn has been testing some iphone xrs in india. How big will that be for the company . That is another issue that apple has faced. India has said, you can have access to the massive indian market, but you have to actually produce your product in india itself. So apple has been adjusting to that, i would say for over year already. Subtexts toof the all of this, the trade war, that the Global Supply chain may shift, in ways that are hard to shift back. These companies dont make these decisions like the. Is this something we are seeing across the tech space, like semiconductors, having a rethink of where the supply chain will be . Alistair companies are thinking about this, getting ready to move. We have another story coming out later which i will not tell you about now but a very large u. S. Tech company is moving manufacturing out of china pretty soon. Shery all of these measures by the Trump Administration is a strategy to bring manufacturing jobs back to the u. S. Foxconn was thought to be doing that in wisconsin. How is that going . Alistair the executives we spoke to actually sounded pretty bullish about the wisconsin plant. But the report we have been doing the past year has been showing that that has been a disaster, and at worse, an empty pr stunned. Saw the stock reaction. Is that logical to see the apple stock move on this news . Alistair i think this is a huge concern for them. Any assurance that foxconn has their largest partner in a large way even if they could do this, a heavy lift, would be an assurance to apple investors. Barr, thank you for joining us from San Francisco. You can catch all of our past interviews on the tv function. You can also watch live and dive into any of the securities that you want, charts as well. Live from toronto and new york, this is bloomberg. News. This is first word President Trump says he will not finalize a trade deal with china unless beijing returns to terms negotiated earlier in the year. It is reported he left the white house for iowa a day after he threatened to raise tariffs on china if president xi jingping does not meet with him at the group of 20 summit in japan. President trump china is a major competitor, and they want to make a deal very badly. He is holding up the deal. Ofk the u. S. Accused china reneging on provisions of a tentative trade deal, bringing talks to a halt. House democrats are debating a resolution today that would make it easier to sue President Trumps administration and potential witnesses, and it would authorize lawsuits against attorney general william barr and former white House Counsel don began fortifying subpoenas pertaining to Robert Muellers report. It would empower Committee Chairman to take legal action to enforce subpoenas without a vote of the full house as long as they have approval from a Bipartisan Group of leaders. Maurice johnson is Building Momentum in the race to become britains next Prime Minister, getting backing from leading pro brexit lawmakers. But he is facing calls from rivals to abandon his low prideful Campaign Strategy and start answering questions. 10 candidates are running to succeed theresa may, who stepped down last week on concerns. The u. S. Government has omitted an extradition request to the u. K. For wikileaks founder julian assange. He is accused of soliciting and publishing classified information and conspiring with Chelsea Manning to crack a Defense Department computer password. He was arrested by British Police and is serving a 50week inntence for jumping bail 2012. Global news 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. I am Mark Crumpton. This is bloomberg. 7 00 p. M. In london, i am Caroline Hyde. And this is Bloomberg Markets the close. Caroline the rally takes a breather. This is after the longest winning streak in two months. Threat, thest president says hes holding up a trade deal with china ahead of the g20. Will beijing returned to terms negotiated earlier in the year . And takeover troubles, another hoping to block the tmobile proposed merger with sprint. That and much more coming up. Antitrust, we are awaiting a News Conference with the new York State Attorney general, leticia james, a major announcement regarding antitrust matter with telecoms expected. Were all looking at what has of localening in terms state filing an antitrust suit against the tmobile proposed takeover of sprint. We will await that News Conference and bring you the latest. Popup romaine romaine lets check the markets. Six Straight Days of gains for the is a be 500, 2890 right now. 29 hundred is the resistance. Composite up about 2. 6 , largely on the backs of the news that there would be a little bit more support with regards of infrastructure. A little bit of a boost to the euro dollar earlier in the day. Race jan declining, down about 4 raytheon declining. Investors not quite on board with the merger proposed yesterday. Lets dive deeper into the action. Lets start with abigail. Abigail a little bit of volatility on the day, and june. Lity in may into 500. Gains for the s p may 1, the worst on month of the year, the rebound rally, the question is whether or not it can continue. An issue stink pattern that appears to be transforming for a higher high. The volatility reading suggesting it is positive. Very busy but all three lines are important. Blue is the s p 500. Yellow, the vix, fear index. White, the true fear index, put calls, betting on a shock event. With last year with volatility at the beginning of the year, those indexes went sky high. Heather Fourth Quarter volatility, there was bets on a big event. That now, look at the fact both the vix and the skew index are lower. Ends p 500 trying to put an other bottom, suggesting at least in the near term we may have continued gains for stocks. But at some point, we will probably see a painful read convergence between volatility and stocks. The bulls may have more room to run in the future. Luke about the strength and resilience of the equity markets, even as we are in a one front trade war now, that is belied by what we see in the fx market, which is worried about trade and just got that warning from Mick Mulvaney that a deal with mexico means it could be tougher on china. Premium at vol event around the g20 meeting that may or may not happen between president s trump and xi. The measure is at the highest point of any meeting, any runup to any meeting between the two president s, so it is the most important meeting and hedge people event between trump and xi of his presidency. At the bottom is three we can play volatility versus one month, still higher, showing a kink in the ball curve still there. It suggests the difference between the former and after vol pricing is it is expected to be a momentous event, and it is expected that rocky times will continue, even after the g20 summit. Caroline looking at tmobile and sprint, both declining today on that news that 10 states, along with the d. C. , are suing to block the tmobile takeover of sprint. They say it would harm competition and lead tire prices. Look at at t and verizon, both rising today and by more than 1 . We have seen a rally across a major indexes in the u. S. Fizzle out. Both sprint and tmobile had rallies last month. This is when the fcc chairman said he would move to approve the deal after winning some key concessions. Seems that todays news has investors down. This is the spread between the tmobile offer price and the sprint current share price, at its widest since runway 17. We will hear from the doj. They will say whether or not they will approve or disapprove of the deal. We know the head of the antitrust division there said the secs concessions did not go far enough. Caroline our markets team, thank you. We are still waiting News Conference with the new York State Attorney general. That is leticia james. Toare joined by a guest the news. Not only the antitrust but also what is happening with tmobile and sprint today, states soon to block the potential m a. From your perspective, is there a lot of pushback from lawmakers against such a deal in the telecoms area . It is an interesting conversation that has evolved over the last five years, pretty significant since after the recession, and worry about access to reserves. It has been a focus for democrats and republicans, and the Trump Administration has seized on that, as well. People are looking at what this ns for rural out excess rural access. I think this president has done a good job telegraphing what he wants to see for this specific merger. You hear about it on capitol hill, both directions. Interesting to see the states come out today and going this direction. Romaine this is also big news with regard to antitrust. And there are the investigations congress has taken up, as well as the Justice Department and ftc. Do you think there is enough impetus with regards to the administration but congress and the agencies to follow through on this . A senior republican staffer about this, and he said we will continue to guide this home as long as the narrative works. They can talk about facebook, but there is a long connection to go to make it to russia and the election. I think as long as there is a good narrative to pull from it, they will continue to hold these hearings. They hearings are on rudimentary components, whereas the fbi and the doj are conducting pretty ingressive investigations, and antitrust lawyers will have a field day. Caroline technology has been under pressure as a sector. Trade wars are ongoing. Plenty of headline risk today from trump saying he is the one holding up a deal between china and the United States. He wants them to walk back some of their own changes. In terms of the mood music on capitol hill as to when and if we will get a trade deal, are you holding out for the g20 . I am not. I am sure we will get an announcement of some kind, but the president is not in a decision to make in a position to make decisions on the tariffs until after the g20 anyway. I expected will go on for at least two weeks after june 17, and then we have seven days to review rebuttal, terry, two more weeks two more weeks to internalize that. So the last week of july. So the president with the tweet he will make a decision after the g20 is sort of captain obvious. Romaine there is also a political timeline. A big election coming up. How does that factor into the potential decisionmaking with regards to not only creating a deal, but even if you get the all ofhere you lay off these countries . Exactly the question. The alternative is President Trump has to present you with this perfect trade deal. This president runs on being against things, against the slope recovery, against nafta, against the wto. Difficult for a perfect u. S. China trade deal. Speaking with democrats on house ways and means, they wish he announced a plan in may so they could spend the next 18 months poking holes in it. That is what joe biden and Kamala Harris would like to see. Instead, the uncertainty works for the president s favor. He can do two things without legislative action, trade and immigration. Caroline and he can poke holes on what is happening with the fed. Are we expected more to come from trump on that . At every opportunity, absolutely. Investors are focused on a july decision from the federal 28. Rve and the g20 on june i think the Federal Reserve will be severely pressured. Either way, President Trump will impose the tariffs. I realize we are at a consensus, and i feel fine with that. Romaine great to have you here, vedaetta treyz of partners. Coming up, vertical farming, we will speak to the ceo of a berlinbased startup leading the charge. Inthe video gaming world is los angeles for the electronic entertainment expo, e3, and we will speak with a gamer cofounder. Musk will brief investors at the companys annual Shareholder Meeting. A preview of the issues likely to take stage later today. This is bloomberg. Caroline Business Case for investing in tech figures, i sat down with an investor in the founders of two of his portfolio companies. Earlier i got to ask him how some startups started focusing on environmentally friendly foods. Have been thinking about how to do this with success, and maybe they can get some grants from the government. It is not really scalable. It will have to use innovation and technology and produce these products and services in a commercially sustainable way. So that means they need to be produce these products at a good margin. If they can do that, they will be sustainable. You want to talk about the consumer demand, which is there and is getting bigger and bigger. And the Public Awareness around these issues is increasing. And it will be i am pretty orn five or i five 10 years, if there will be Bigger Consumer awareness about these issues. There will be a bigger call from consumers. So the consumer will be there. The other thing is what we have seen around Tech Companies as the ones who can attract the best people are usually the ones who have an upper hand. Want to workials in companies with a real purpose and be able to impact society. So these companies that have a real purpose are able to attract much, much better people. They are better to build a strong culture of values and get people to really pull in and make things happen. O those are also the reasons the other thing is capital. Us as aome of like venture firm, our job is to be ahead of the curve. ,hen we see from our investors they say, what are you doing around sustainability and development calls . What can you show us as to what thisre doing to improve and address the issues . Our investors want to do this because the pensioners want to make sure their money is increased. Kind of a full circle. Caroline part of my conversation from the sooner than you think conference in london. An alternative to traditional agriculture. Vertical farming, there is a berlinbased startup raising 100 million to expand their farming systems. The indoor environments grow herbs, vegetables, and fruits while reducing the use of water and pesticides. We are joined by the ceo. Wonderful to have you with us. Congratulations on the funding round. Half 1 million. What are you going to do with it. First of all, we are going to expand into europe, where we have existing clients. Caroline 25, at least, right . Wewe have more than 25, and have a few more big announcements in the next couple months. Course, in the u. K. , right here. Is tort of this round start and think about how we can Global Economy and expand to the u. S. And asia, building relationships. Infarme tell us, how is different from normal agriculture . Probably the only company in the world integrating farm directly into the supermarkets, farming directly to the food and vegetable oils, providing premium, Fresh Produce at affordable prices. It is not just for the 1 . We want to bring quality, healthy produce that we can cultivate to everyone. Each and every firm is plug and play. You can plug it to the cloud directly, and we can control it from our command room in our headquarters. We just started to execute q4 last year, and now we are pushing more than 50 farms every quarter. We will be up to 300 quarter. We are very stacked into the market. And were building a consumerfacing brand, and it is whyrtant us to show them they value such technologies. Technology andhe the farms and facilities, how do you scale that up in a linear fashion without costs getting out of control and getting out of whack with what you can sell the end product for . Very good question. We have thought thoroughly about how we can make a very big Company Without spending a lot of money. Havee way to do this is we units that we can deploy instantly everywhere. We know our costs. With companies, whether it is for vending machines or juicing companies, we can reduce costs by half. The costs of the farms themselves. When you use software, it is important for us, and we can look at each and every plan and look at the resources and energy, nutrients, and we know exactly how to optimize the cost per plant and reduce costs per plant. We look at biodiversity and increasing outputs. Yeah. Caroline i wish we had more time. Thanks so much. Ceo. Was the infarm new York State Attorney general Letitia James is holding in his conference to discuss antitrust issues, including the lawsuit her office is leading in blocking the tmobile proposed merger with sprint. We will continue to monitor her comments and bring you developments as they happen. You can also watch the entire event using the terminal function live go. This is bloomberg. Carolyn caroline time to look at some of the key movers. Cut to neutral from overweight with a 121 price target. An evaluation call on a stock that is now too expensive. Shares down. Mcquarrie morning fseries headwinds facing capital and demand. [indiscernible] price likely hitting margins in the back half, keeping the underperform rate. 1. 6 . Rally finally, an upgrade for facebook. Strong fundamentals and growth particularly in commerce and messaging, offsetting risks from regulatory scrutiny. Those are some of your top calls. Romaine a quick check on the markets. We had earlymorning gains. A little bit more cautious sentiment coming into the market. S p 500 little changed. We did see gains in asia overnight. A little bit of volatility in currency, of course with the tweet i president with regards of the euro and the devalued nature. Raytheon down today. The latest gaming titles live from the e3 gaming conference. This is bloomberg. Mark i am Mark Crumpton with first word news. National security advisor john bolton says another summit with north korea is entirely possible. Bolton spoke in washington and said the u. S. Is ready when the north is, but he warned that the campaign of maximum pressure will stay in place until kim jongun agrees to give up Nuclear Weapons. Swedens foreign minister has criticized the United States for jeopardizing a decade of diplomatic efforts to secure they ran nuclear deal the iran nuclear deal. Speaking in stockholm on nuclear disarmament, the minister said the Trump Administrations action does not increase the credibility of the u. S. As a partner to any new deals including with north korea. I think it is very counterproductive, what the americans have done, because they took 10 years to negotiate , andran deal and the jcpoa i think it is still very viable tool to control the iran does not acquire Nuclear Weapons. And ited its purpose, can be verified that they live up to what they committed. Mark germanys foreign minister added that if i read were to withdraw from the agreement, it would go into international isolation, putting the country where it was before the agreement, including all the sanctions. Mexican officials are beginning neweploy the countrys National Guard for Immigration Enforcement as part of a plan to avoid u. S. Terrorists. Officials say the main objectives will be to register migrants to upgrade the immigration status and return those who dont want to register. , mexicoof the deal agreed to an expansion of the program known as migrant protection protocol. Nearly 250 survivors and victims of a 2017 london tower fire are suing American Companies that make products used at the residential complex. The suit claims fall the Building Materials helped to spread the flames at brent felt tower grenfell tower, turning the building into a flaming coffin. Ae companies include pittsburghbased company and an insulation maker. Global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. I am Mark Crumpton. This is bloomberg. Romaine from bloomberg World Headquarters in new york, this is Bloomberg Markets the close. I am romaine bostick. Caroline i am Caroline Hyde in london. Lets talk big tex. Companies are under scrutiny at a House Judiciary Panel hearing. Companies like google and his facebook are under the spell it. Apple probably has a backup plan if the u. S. China trade war gets out of hand. Lets go to San Francisco. Lets start with tech, first and foremost. Facebook rallying because it raisingme analysts are right targets in the face of such scrutiny. How much are those on the ground where you are worried about the limelight these companies are taking on capitol hill . The bet right now is that Congress Holds the hearings and makes a lot of noise that does not come out with any laws. That is a typical wall street that about these things. From the companys point of view, they are relatively concerned with these hearings because the House Judiciary Panels that are doing the hearings can subpoena documents, in else, contract emails, contracts, things like that. Probably more of a concern for the companies then investors. Romaine there is a speech outside the head of the justice , and i trust chief traveling in israel, one of the most pointed remarks i have heard from the Justice Department, and he ended the speech by saying that if we would not submit to a number, we would not submit to an article on trade. What is the selling you about the direction the Justice Department is about to go . That speech is the clearest indication of where the boj is looking right now. Out the three main areas four main areas, actually, internet search, the ebook market, or amazon is and one, social media, other area. That is by far the clearest indication of what the doj is looking at. One important point he made was that a common argument of u. S. Antitrust experts is that googles products are free for consumers so how can they do harm. He put that argument he really said that was a blinkered way of looking at it and he argued that u. S. Antitrust law is useful for coming down on Tech Companies for doing other things like harming competition in other ways. Another tech time that has to a certain extent been under the glare of the department of justice of late has been apple. There is a story out by bloomberg today saying that one isthe key chinese suppliers saying, look, dont worry about us being based in china, we have other ways to get the supply chain around the u. S. Chinese trade wall. Talk about it. , from investors when of you, the trade war is more of a concern that antitrust in the u. S. Right now. Foxconn is apples major partner, and this executive saying that we could the u. S. Bound iphones, we could move assembly of the devices outside of china taiwan, for instance, or even india, or that is happening a little bit. We spoke to one analyst who said they might need one or two. Actories to move wholesale this person did not want to go on the record with this particular piece of intel, but he was saying that the risk of job losses there could be well over 100,000 jobs lost in apples foxconn moved iphone production for the u. S. Outside of china. Caroline Alistair Barr putting perspective on that in terms of the sheer scale of apples production in china. Thank you for joining us. Another story we are watching in the investable, tesla. More than 35 own on the year over a concern of the pace of vehicle deliveries, but romaine concern about much more than that. There is a great story in bloomberg about five key things. One is the delivery of cars by tesla, but also the new board in terms of the lack of seats on it it is nine feet rather than 11. There is new chair of the board, female. What will she be like as chair of the business . Im interested in the conversation about teslas exposure to china. Romaine that is going to be interesting. The new chairman, it will be interesting to hear from her because she is the one who is going to be the main person overseeing the flow of information that sort of tripped up elon musk in the past. It will be interesting to see how much autonomy she has and how much control over the situation. C Ellison Larry Ellison on the board, too. Interesting to see what he brings to the table. Coming up, we are going to speak to the dropbox ceo on his new desktop to unravel and how the company is working to improve cloud security. This is bloomberg. Caroline it has started. This is the House Judiciary Committee hearing on Online Platforms and market power, featuring the news corp. General counsel. We for be keeping you abreast of the situation with our coverage from and if you want to watch it directly, type ,ve romaine our stock of the hour having a rare positive amazon affect, Food Delivery Service grubhub. Amazon decided to exit its own experimental foray into food delivery. Dave olson is looking at the unusual consequences. This stock was hurting less than a year ago at 146. Dave this stock has taken a hit , and you can understand because grubhub is facing a lot of competition. Uber has uber eats, you have doordash. Trying to do well in the business with that kind of competition, you can understand why the shares have come off lately. And then you have amazon in the next until now. Caroline it is a busy all the world out there. I will be speaking with the ceo of another Food Delivery Company here in the u k and it is big in europe. Amazon took a big state. Are we expecting any consolidation . We have seen that in europe. Dave we have that potential, no question. Into that company. They are the leaders of a 575 million round of financing. It is not like by shutting down the road service their own service, which operated in london and 20 u. S. Cities, they are gone from restaurant delivery. They are just trying to find another way in. The amazon affect you talked about when amazon make that investment in the company last month, we saw some European Companies take hits, delivery ay. Com. Akeaw the amazon affect has worked in both directions. Caroline dave wilson, we thank you. Lets stay on the theme of technology because dropbox has unveiled an overhaul of its Software Including updates to its website and mobile app. It announced new partnerships. Joining us from San Francisco to discuss all of the changes come none other than dropbox ceo drew houston. Great to have you with us again. This updated user interface is a big overhaul. Drew thank you, thank you for having me. We are excited about it. It has been a big morning. We launched the biggest change we ever made it to our products, an allnew desktop app. It changes the experience to a living work you can have any kind of clout content. Really anything that you are using. Integrations with tools like slack. You can send people messages and start meetings and send things out for signatures. It is a much more integrated workspace because we saw so many of our customers and ourselves with all of these new apps, and they are great but how do we put them all together . We are excited about it and cannot wait to get it out there. Romaine do you see this type of integration as something we will see more of not just in europe, but other types of software and Software Services . Drew yeah, absolutely. Certainly most if not all companies are going to have integrations, but the opportunity we saw was to organize it. To bring it into a welldesigned coherent experience, different from the messaging tools, what dropbox allows you to do is you can uptive app all your content across these different ecosystems. Instead of interface being messages, you can see here is what we are working on and the most important pieces of content and we think from a design standpoint it is a different approach. Caroline the perspective is that the aim is to keep everyone coming back to dropbox, but as much as were working with the other apps, you are competitive for peoples eyeballs and time. Do you think the plethora of apps can survive by themselves . Do you think the ecosystem can support all of these different players . Drew we certainly do, and what were seeing is that users want choice. They are using all kinds of different apps for coordination and content. What is missing is a way to stitch it altogether. That is of all we think we can play. Were thinking about how we organize and simplify your working life and stitched together the Different Things. A lot of what we are doing is complementary. You will not stop using slack or the other tools. We are making it easier for you to get the. We find that a lot of our customers love using the different tools that they need more integrated experience, not having that means you are searching back and forth and theres a lot of friction. Caroline it is interesting that within the Enterprise Software space where talking about numerous players, but when the argument from capitol hill is that there are too few players when it comes to the Technology Space. They are monolithic and they need to be broken up. How do you as a ceo in the Technology Space take this viewpoint from capitol hill, and do you think it has grounds in any way . Drew i think it is an important conversation to be having. From our perspective we think that competition is a good thing and we need a level Playing Field. It is an important conversation. Romaine what are the important conversations is the idea of responsibility that companies have. I wonder how you view not only what happened, but what type of responsibility you think the companies themselves should be shoulder to make sure their services are used in a proper way. Safety is thed first thing on all of our minds. In all aspects of that security of service, content people are putting on services and keeping them safe from think we are seeing a broader conversation of a lot of Technology Companies how do we protect free speech, but what do you do when people put up content that is objectionable or unsafe or things that are not true . People dont usually use dropbox is a publishing platform, but we care about the safety and wellbeing of our users and to the extent that anyone does but objectionable or unsafe content on dropbox, we take it out. Romaine we appreciate you joining us today. Dropbox ceo drew houston. Still ahead, the video world is dissenting on los angeles for the electronic entertainment expo, e3 as it is commonly known. This is bloomberg. Caroline the esports market is booming, where highly skilled players and revenue projected to reach 1. 8 billion by 2022. Shelley hagan has a breakdown by the numbers. It is a farley from the penny arcades. Center stages the of the gaming world with highly technical players, arena sized audiences, and big sales. The global esports market rate in 865 million in revenue over 2018, with nearly 26 Million Viewers in the u. S. s largest in a second with 50 of the worlds viewers. That is compared to 12 in north america. With the e3 conference underway this week in california, all eyes are on the booming business. Gamingliforniabased e committees have a combined market cap of more than 60 billion. Private investment in esports is going as well. Total u. S. Venture Capital Investment reached 1. 8 billion in 2018, up from 32 million in 2008. That is a more than 5000 increase in a 10year period. Raised 53eesports million last year. Teams compete in popular games from fortnite, world of warcraft, and league of legends, with the largest number of players. More than apick up high school. The largest prize pool was close to 26 million in the 2018 championship in vancouver, canada. With the Global Market projected 2022,ch 1. 8 billion by it is far from game over. Shelley hagan, bloomberg news, new york. Romaine for more on e3, lets bring in Chris Palmeri who is in los angeles right now with the latest. We were just hearing about esports. Everyone is playing on these consoles, but it simply a lot of the narrative out of the e3 conference this year is that consoles will be a thing of the past. Chris yes and no. Nintendo, no news there. Sonys gift to for the first time in 24 years. Skipped thesony show for the first time in 24 years. But xbox announced a new console. You are seeing many different Business Models. The show behind me, epic games has the super successful fortnite, a free to play game. You are seeing subscription models. You saw last night that for 15 a month you will be able to access 100 pc games. Microsoft talks about xcloud, the cloudbased platform. You can buy a consolebased game but play it on a tablet or phone. You are seeing a lot of different ways people interact with games. Caroline talk to us about the ways in which we are now seeing streaming becoming the de facto means of playing your gaming. Is it going to be a help or hindrance to the usual game makers . How is it upending the industry . Chris both. It is sort of like what is happening in tv. You are seeing an explosion of streaming services and the old Business Model of paying the monthly cable bill is maybe fading away, but now you have netflix and amazon and a whole host of others. Same thing happening in gaming. We are seeing a bunch of different Subscription Services coming out and it is not clear who is going to win. It is early stages of this. Some of the services to have players in the millions. We are just beginning to see the Product Offerings there. You will see a lot of options for people, whether they want to buy games, string them, figure out some other way to play. Romaine talk to me about some of the titles. 2077, and what else are we hearing about . Chris i just got pulled out of a demo for lego star wars. I was looking forward to seeing more of that. Cyberpunk stole a lot of attention. Tn ariz came out on sunday s came out on sunday at the xbox show, he is part of the game. Although in theory we are moving to this freetoplay world, there is a lot of what the industry calls strip away titles from the classic really evolved games coming up. It is going to be an explosion of choices for players. Caroline and still money to be spent. Chris palmeri, enjoyed. We will let you get back to the lego demo. Quick check of the latest business flash headlines. Morgan stanley Ceo James Gorman will be surprised that the trading revenue beat the First Quarter figure. He told a conference in new york that the past two weeks have been hard for the trading business and that macro trend was especially challenged and merger activity has been lumpy. In germany, 80 former and current employees of Deutsche Bank are suspects in a tax fraud investigation. Bloomberg has learned that the former Investment Bank had is a suspect, and so is Josef Ackermann and the former coceo. Deutsche bank isnt commenting for the apple has a backup plan if the u. S. China trade war gets out of hand. The companys manufacturing partner says it will make all iphones outside of china if necessary. Foxconn makes most of apples smartphones at its chinese factory. That is her business flash update. Of get a quick check of the markets, because the Dow Jones Industrial average was in the red at the beginning of the trading day. It can is like ours managed to pick ourselves up. Romaine you look at the dollar and the performance and you get some sense. This is bloomberg. Mark im Mark Crumpton with bloombergs first word news. An air safety investigator says an earlier passenger in a helicopter that crashed into a manhattan skyscraper yesterday killing the pilot said nothing seemed out of the ordinary. National Transportation Safety board investigators set the short fight had taken the passenger from Westchester County to a manhattan heliport. On ailot left by himself planned flight to new jersey after waiting in reviewing the weather. Shortly after taking off, he crashed. Reporters were told that investigators are turned to confirm whether the pilot tried to make radio calls. President trump says he received what he calls a beautiful and warm letter from kim jongun but he is not yet ready to meet with the north Korean Leader for a third time. The president said talks between the u. S. And north Korean Nuclear negotiators need to advance before another meeting. Talks between the two nations ground to a halt after a february summit in vietnam concluded without a deal for any substantial progress to stripping kims we jima the nuclear program. They spent months jabbing at each other from a distance. Now President Trump and joe biden are both spending the day in iowa, a state critical to their political futures. Joe biden needs a win in the state caucuses next year to get a jump on his rivals. The president wants to shore up support in iowa as part of his strategy to win the midwest again. Lawmakers in puerto rico want to move up the islands democratic president ial primary to march. The governor said today by making the bankrupt island in early voting state, it will guarantee to thwart tension. In primaries but not in the general election. Puerto rico fell into bankruptcy two years ago after a decade of economic decline. The island is still recovering from hurricane maria, which struck in september of 2017. Global news 24 hours a day on air and at tictoc on twitter powered by more than 2700 journalists and analysts in over 120 countries. Im Mark Crumpton. This is bloomberg. Caroline it is 8 00 p. M. In london. Live from bloomberg World Headquarters, im Caroline Hyde. It is in 00 p. M. In london. 8 00 p. M. In london. Im Caroline Hyde. Scarlet im scarlet fu. This is Bloomberg Markets the close. Caroline will beijing return to terms negotiated earlier in the year . Toumber of states give up file an antitrust suit hoping to block the tmobile merger with sprint. All that and more coming up. Scarlet first, lets get a check of the markets. A day of modest gains has turned into a day of modest losses for the major indexes. If we were to close trading right now, we end the street at five days. Close in5 to a record the s p 500 but right now we have seen that disappear. Buying coming into longer term treasuries. Caroline yes. The dollar in a bit of a pause get overall, seeing concerns about what comes in terms of trade with china. Trump saying look at me holding up a deal, expecting to meet with president xi jinping at the g20 but that that overhangs the market if there is not a meeting at the g20. New tariffs are coming in. Scarlet it is weighing on oil prices. 53 a barrel. It found support after a sharp selloff at the end of may, early june. Who is the most dovish of them all . That is a question central bankers around the world are asking. We will act as appropriate to sustain the suspension. Banks across the world have moved. It is fair enough to say. If things somehow do not go how it is predicted, we will certainly act. Now talking about rate cuts. Rate cuts gets into your system. Several members raised the possibility of further rate cuts. Like mario draghi, i think we can do these things as necessary. The room for adjustment is tremendous. Caroline what a lineup we have had. Joining us with a look at the riggss and more is taylor retailer like you said taylor riggs. Taylor like you said, looking at a rate cut in the next 18 months. New zealand and australia and purple and green. All the other major Central Banks like the ecb, ble, and boj looking at one to two rate cuts in the next 18 months. What is interesting about this environment is this is global yields down to their 2017 lowest. 1. 26 1. 6 . It has been that way for the entire month of june. What happens doing a rate cut does not sincerely mean the s p 500 or the equity markets rally. Interestingly enough, doing rate cuts, the s p actually falls. It was between 2009 and over the next eight to 10 years when the fed was on hold or hiking that the s p 500 rallied from 700 to 2200, so that is a look at perhaps what happens if the fed turns a little bit more dovish. Scarlet thank you so much. Peter coy joins us to discuss all the different Central Bank Action and what people are pricing in here. We had this global sovereign bond rally. This idea that the world Central Banks had turned dovish, is that backed up by what we actually hear from them . Peter you hear Different Things from different people. I thought that was a great segment at the beginning, all these different people saying dovish things. You can probably put together a similar segment of people saying the other thing because Central Banks tend to talk out of both sides of their mouth. They never want to go all in on inflation or growth. Unemployment being the central concern. I wrote a piece for bloomberg nows out now quittin coding quoting Deutsche Bank. , that is notations the same as reality. It could turn out different and it could be that the economy is a little stronger, if inflation is a little higher, some of these predicted interestrate cuts will not materialize. Caroline what will dictate it to a certain extent is inflation. We got a sense of Producer Prices today. How is the fed in particular eyeing up inflation and some of the data we are seeing . Came an important number out today. Inflation expectation. That showed inflation being quite low. The fed takes that quite seriously because they like all Central Banks do not want inflation to become unanchored. In other words, they want people to expect to percent inflation. If they start 2 inflation. If they start to worry, they will lose control of the narrative. On the other hand, Goldman Sachs pointed this out. There is another inflation which wasm april tying a sevenyear high. We are not getting all week inflation numbers. Some signs of firmness as well. A typical mixed bag for central bankers. Scarlet central bankers more hawkish. Inflation is doing fine if not reaching its target. The president renewing his call on the Federal Reserve to cut rates. His comments make him sound envious of china and the central bank there which is decidedly not independent. What is the likelihood his pushing and prodding will backfire . Peter the theory would be that jay powell and the other numbers of the federal open market committee, who are meeting next week by the way, the 18th and 19th, will need to assert their independence of the president. In doing so, the president is telling us to cut. If we cut, it looks like we are caving to him. Ideally they would be able to put that out of their minds and do what is right, but it could backfire against the president by causing them not to do a rate cut. Have to think that has to be something on a lot of peoples minds. Caroline meanwhile, we have criticism coming from trump about rates not being low enough amid very low inflation. Actually, the problem is slow growth. More severe abroad, right . Peter iesco get the u. S. Is doing pretty decently. The european, the bank of japan have bigger problems on their hands. I just saw that the german 10 year Government Bond yield is down to an alltime low i believe of. 23 . We are talking about plays he low about crazy low numbers there. When you get the bank a thin the bank of finland governor and ther people talking about risk of inflation becoming unanchored, the possibility of needing to get back in there and resume bond purchases, resume rate cuts, it is because they are in a tougher position than the u. S. Is in right now. Scarlet we talk to people constantly who observe the bond market is try to force the fed hand, trying to get the Federal Reserve to cut rates by pushing farm prices. Bond Prices Higher and yields lower. Has that worked . You think ofsly, games the we hear, one central player that acts as a central unit and then all the different traders how they are not aligned with each other. In game theory, they would want to betray each other to gain a temporary advantage forget if they saw the fed was moving in a way that would hurt them, they would turn tail and run quickly. The fed may be small in comparison to the entire bond actst but because it monolithically with one voice and one way and sticks to what it is doing, it can have a lot of power over the larger bond market. Caroline as always, Bloomberg Businessweek telling us it straight. Thank you. Coming up, delaying the deal. A group suing to block tmobiles proposed takeover of sprint. What this means for a potential merger. Plus, taking on the world. What you need to know for the 2019 womens world cup as the u. S. Plays its first match. An extreme xbox. Why the nextgeneration xbox council will be the fastest ever. Will be the fastest ever. This is bloomberg. Scarlet it is time now for social climbers, the stocks making waves in social media today. You can find this on the bloomberg. First up, Tesla Holding it any will meeting later today. Among the things to watch for, indications of whether tesla can reach its target of delivering 90 to 100,000 cars 90,000 90,000 to 100,000 cars. Citigroup not participating in the japanese jgb options after manipulated futures prices. This move is another strike against the business in asia. The company was previously find ¥133 million. Finally, alibaba moves to a planned hong kong shares sale. Seeking Chinese International capital to lead the sale. Alibaba expected to follow a listing application within weeks. Those are your social climbers. Caroline thank you. Now it is time for todays deals report. Tmobile and sprint shares both declining after several states prepared to block tmobiles proposed takeover of sprint on antitrust grounds. What does this mean for the merger . For more, we welcome ed hammond. The market is clearly somewhat surprised because the shows are falling, but should they be . We have known the attorney general attorney generals concerns about this deal. Ed it is reasonable they are falling, particularly sprint, which would come up worse if the merger were to break up. We know there has been some concern about this. They think the fact that have come out ahead of the doj and fcc with this announcement that they will sue, it is telling. It suggests they want to apply some pressure. Trying to get him to follow suit. If he does and the doj and s p come out against, it become significantly harder for the companies to close any deal. Scarlet this has been a longrunning soccer for so long. What impact will this have on future consolidation in telecom or media . Ed we have to wait to see what happens next. If the doj get on board with this and sue and block the deal, it has a really Chilling Effect on big m a in space where there is a lot of consolidation. If you look at the telephone companies, it is tough to see other histories going down that route. At ttime we saw the warner stuff come to a similar thing with the doj suited to block it, saying you are too big and it will create a leviathan. They said that is wrong. We will go to court. They went to court and won. It will have a Chilling Effect in terms of people will be less inclined to go out and execute very large deals whether or not it means people will get things done remains to be seen. Caroline Morgan Stanley already calling it a lumpy quarter for dealmaking so we will see how that continues. Interesting conversations regarding eqt. We understand an investors looking to settle. Ed it is interesting. Thoughtnot like to be of as an activist. He is an energy guy. Wellsckground is in gas and oil wells. Fight to take control of the company to kick out the board and put in their own management. Interesting because he alluded in competition to us that he would like to settle. It does not need to go all the way to a fullblown proxy fight. Chimeoes not necessarily with what we heard last month with the ceo of eqt. If we go now, we can hear from that interview. That sort of change, that massive amount of change for any company, that is extremely disruptive. Not the least of which for a company that is successfully going through a real transformation that has good positive momentum, so i think theyre asked is so big their ask is so big that there is not room for a settlement. Ed not room for a settlement. Very different from what we were hearing today from toby rife. I asked, would you go from the seven directors you currently have 25 . Instead of putting have to five . Instead of putting 15, 547. It was very vague five or seven. It was very vague. Scarlet this is a story that bears a lot of watching. A reminder that you can catch all our interviews on the bloomberg with the function tv. You can find breaking news, life events, become part of the conversation. Here is the conversation we had with the dropbox ceo earlier this afternoon. From new york, this is bloomberg. Scarlet lets get a quick check of the latest business flash headlines. We begin with Morgan Stanley. The ceo will be surprised if that First Quarter figure is beat. He said macro trading was especially challenged and merger activity has been slumping. The american skincare brand drunk elephant is open to a buyer founder Tiffany Masterson says the startup with a cult following has hired bankers but a deal is not on the horizon yet. Masterson downplayed a report from last month that unilever was considering a billiondollar offer. Shares of beyond meet falling after rising 600 in the first five weeks as a public company. Jp morgan cutting government addition on the stock from overru recommend to neutral. In pro basketball, and injury to golden state star kevin durant has shaken up more than the warriors. Last night in game five of the nba finals, he hurt his achilles tendon that can lead to a lengthy recovery. He was expected to be the most highly sought after free agent in the offseason, but now nba teams will have to take a closer look and consider if they want to spend 150 million or more on him. That is the business flash update. Poor timing unfortunately. The womenstiming, world cup is underway in paris right now and the u. S. Team is currently playing thailand in their first match this hour. We hear they are up 10. The u. S. Will play chile on june 15 and sweden on june 19. England is expected to be one of the final four so you are in a good position. Caroline they already played their first match versus scotland and won. Now friday a match against argentina. Im quite amazed. The latest score is it is 20 to america. The odds are phenomenal. U. S. Womens world cup odds, United States, to the one chances of winning two to one chances of winning. France 11 to two. England, im afraid we have odds of 71. Scarlet root for the underdog, right . Caroline we are always the underdog. One day. One day. Now time for our options insight. We have abigail doolittle. Abigail thank you so much for joining me today on the phone is dan. Great to have you with us. Interesting time. The last time we spoke in the month of may, the first down month of 2019. Today, small moves up and down. What do you think is next for volatility . What are investors waiting for brick aside returned . The market is very focused, abigail, on basically the narratives in the market that it has been contending with, the trade situation with china. That will still be the focus and why you continue to see the volatility persist in the market because the headline risk is still very persistent. That is one of the major focus is. Also, the fed. The fed is continuing and Central Banks continue to soften their stance. Seeing developed nations start to cut rates. Started in new zealand a couple weeks ago and then australia and india a week and a half ago. Expectations are that will continue to roll out. Expectations for a rate cut in the u. S. Sooner rather than later. Abigail interesting that you bring up trade and the fed, clearly the two big issues. Volatility coming out of the 2016 and 2017 valley came out in january after President Trump put out tariffs against washing machines and solar panels coming out of china. Which do you think is the more important fact that investors are paying attention to, the fed or trade . I would say the fed in the sense that from a volatility standpoint even though we are seeing the vix elevating and holding up here, it has not gone to a point where you see it get too worried about a risk of a significant down move. You say the fed is still there but from a headline risk, that is when you are seeing the vix holding up because we are seeing the market move on an intraday basis better than 1 . Abigail speaking of the fed, skipping quickly to her trade. A blessed position a bullish position. Playing to the upside. A trade example in july for a one by 2 27. For profit potential. Abigail dan, thank you so much for joining us for options insight. From new york, this is bloomberg. Mark im Mark Crumpton with bloombergs first word news. A federal investigator says the helicopter that slammed into the roof of a manhattan highrise building monday was apparently captured on video minutes earlier flying erratically after it took off. A video reported by a bystander and posted on social media shows the helicopter shortly after taking off from the east 34th street heliport making abrupt maneuvers, including a dive andre flying into the mist disappearing. The ntsb reporter said we believe that to be the helicopter. It is something i still have to confirm