Transcripts For BLOOMBERG Bloomberg Markets Balance Of Power 20240714

Might be around the corner. Kevin cirilli is at the white house, where we expect Prime Minister trudeau any minute. Kevin canadian Prime Minister Justin Trudeau set to meet with President Trump to discuss the usmca as the house of skeptical ases is to whether they are willing to advance this measure. Mexico has taken the next step to advance the trade agreement between the u. S. , mexico, and canada. In addition to meeting with the president , canadian Prime Minister Justin Trudeau is expected to meet with democrats on capitol hill. That that lobbying effort he is going to have to win over in order to finalize this deal. Yesterday i spoke with senior members in the Democratic Party who are on various committees that are in the middle of these negotiations. What they had to say was they are unsure that there is a path forward for usmca ahead of david the Prime Minister wants to try to expand the relations with President Trump beyond that. There are other issues on the agenda, including those two canadians being held in china, apparently in connection with huawei. Hasn the way that huawei been impacting the u. S. China trade deal President Trump has been saying he might be willing to use huawei as a negotiation table with the u. S. China trade talks. I caught up with a democrat from virginia. He said he believes huawei should not be part of the u. S. China trade talks. Senator mitt romney, a republican from utah, attaching an amendment to the Defense Authorization act that would make it more difficult for the president to do business with huawei as well. David it may be difficult to put that genie back in the bottle. Lets go to theresa rafael. There are about to be 2 where are we in this process . We are at the end of the parliamentary part of the tory Leadership Campaign carried by the end of this evening, around 6 00 p. M. London time, we will know which candidates go through to the Party Members for a vote. Theill have the results for third week of july. We know that Boris Johnson, the far end way favorite, is one of them here the other place will his ally and gove, lead campaigner and now environment secretary, or jeremy hunt, the foreign secretary. David at that point we go to a general election of all the members of conservative party across the country in late july. We have a sense of who is in the lead there . We know Boris Johnson has been leading through parliament. What about with voters . Therese the conservative Party Members are not representative of the country as a whole. There are about 160,000 of them. Not all will be eligible to vote. They are largely white, largely male, largely older. I think the average age is 57. They are overwhelmingly in favor of leaving the European Union without a deal. Goes through,e they will have two candidates who both say they are willing to leave without a deal. In that sense, they are fairly even. The main differentiating factor is that for the members i think they will see Boris Johnson as a politician who is far more able bull of winning a general election the michael gove. Johnson is mayor was mayor of london, a strongly labour city. David before they are done, they may find out whether he can win an election against jeremy corbyn. Thank you so much aaron lets go back to so much. Lets go back to bill fari es. A talked this morning with retired Brigadier General about escalation and whether that is what iran is after. With the iranians are trying to do is provoke us into an unnecessary response, and over response. I think they are taking a great risk by doing that. They are trying to keep this low level, but at the same time they are shooting down drones, attacking Oil Companies inside of iraq. Faries, what about it . . . What is the military position . What is the White House Position . Bill President Trump has a range of advisors, including National Security advisor john bolton, who has a long history of advocating conflict with iran. I think the u. S. Has to look carefully and terms of how it calibrates a response to this. You do not want to go to war over the shooting down of a drone and you have to try to look at iran as a whole. You have a civilian government that may not have total control over the military. You have the irani and special revolutionary guard, which reports to the supreme leader. You want to look at which of , whichactors within iran one of those factions is perhaps behind these strikes and what their motivations are and how do you respond to that. That is going to be a complicated equation for the white house and the pentagon to sort out. I should point out this does come at a typical time for the pentagon, which has been at a lot of leadership flux with the acting secretary due to depart sunday evening. You have a new acting secretary, mark esper, coming on board early next week. There is a lot to consider. David it is a very complicated situation within iran. It is not clear who is controlling the revolutionary guard. It is also complicated because iran has other surrogates in the area. There was a report that the Houthi Rebels were backed by missile intod a saudi arabia, perhaps hitting a power plant. Meddling toos been much in regional affairs. You mentioned the war in yemen. There is also conflict in syria. This is what President Trump said should have been addressed when the original Iran Nuclear Deal was signed in 2015. That is what he said he had to pull out of it last year. Thanks to bill faries reporting from washington. We are watching as President Trumps greeting Prime Ministers trudeau from canada. They will talk to camera. We will bring that to you when we have it. In the meantime, let get a check on the markets. We are wanting waiting for slacks first trade. Emma we are waiting with bated breath. Aroundndicated to open 38 or 39 a share. It was given a Reference Price of 26 a share, so that is higher than that. We will bring you the latest once we do see a trade on the New York Stock Exchange. Lets take a look at the majors. We are looking at a risk on rally fueled by the feds more dovish stance. The majors all rising around. 6 . We are off the highs of the open. S p 500 hit a record high when it did that. We retreated from then. We are not far off the lows of the session, but still gains of. 6 . President trump tweeting about that record for the s p 500, but also tweeting about iran, saying they have made a big mistake, like you reference with the shooting down of a u. S. Drone. That may be sending a fugitive through the market. Lets take a close look at the s p 500 and the dow and the nasdaqs performance. Take a look at this june chart. We should be able to tell you slack. We are going to switch gears again. Slack is open to trading on the New York Stock Exchange, trading on the New York Stock Exchange. We have been waiting for it all morning. Slack had had a Reference Price of some 26. It is not an ipo. It is a direct listing for slack, very different to the been seeingwe have for other Silicon Valley companies. 50 atover 50 , close to slack opens for the first time on the New York Stock Exchange. Its valuation has increased somewhat throughout all of that time. We are looking at a 60 million valuation. Thatve been waiting to see for some time. Looking now that it has a market cap of 19 billion. 16ad been estimated to be million for slack. Its last valuation was close to 17 7 million 7 billion. David i am glad that you brought up slack. We have some way to reinforce that with us now, Abigail Doolittle. The valuation has gone up and up and up. It looks like 19 billion. All of this relative to the direct Public Offering has to do with the Reference Price, which initially was 26. In the way the bankers got that number was looking at 2019 revenues, which are expected to million dollars, 50 greater. That gives you 20 times for 2021. It puts it in that 20 times club that you were talking about for other big numbers. David i find this fascinating. We were talking about valuations as multiples of revenue, not earnings. Abigail no earnings. David a number of these cloudbased companies have no earnings. Gail in their snc filing, sec filing, they said they do not guarantee they will ever be profitable. Times 2021 revenue. David those evaluations have to be based on growth. Are they growing as fast this year as they were last . Abigail they are not. They were growing closer to 80 a couple years ago. 2019 growth still strong and investors clearly wanting in on that kind of opportunity. David one of the interesting things to me is the shift from consumer facing tech facebook, google, alphabet over to enterprise related tax, which is what we are seeing with slack. Abigail this was initially a consumer enterprising company. It started as a gaming company. It did not work. They created this internal messaging system. You now have this messaging application the enterprise users can use to send each other documents, messages, and other things. It has taken off well. It is also similar to chinas, which has been successful. David one basic question is why not an ipo . Why a direct listing . Spotify went that way but most people when ipo. Why did they make that choice . Abigail the ceo said the number one reason they use the dpo was that there would not be dilution. It is only the existing shareholders. Their biggest private investor is excel. That way you are not going to have that dilution. There is no lock up. Those employees can sell their shares if they want to. We have had a lot of these hot ipos where they go sky high and then come back in with lots of volatility. The ceo was talking about the idea that there could be less volatility here. Sith the stock up 50 , that i good. Does that set them up for a drop . We will watch that. David we are going to bring in eric newcomer. He covers start ups. I am not sure we call this a start up. Eric all of my companies are growing up. This has been the opposite of watching the uber ipo. Today has been up, up, up for slack. David what is the attitude down there, the atmosphere in the New York Stock Exchange . Eric it took a while to get to excitement once it gets close. You have seen this range go up. A lot of the key players disappeared after the opening bell. It is not the same sort of where youu have have the uber Board Members watching this happen. Slack has been less present on the floor. It is more traders trying to figure out where price is. David the New York Stock Exchange is where the action is. ,ets go out to San Francisco silken valley, the home of all of this. Our colleague is out there. Initial reaction on how this stock is opened . I think everyone is surprised to see the Reference Price has gone up so much. Originally the Reference Price was 26. Now we see it at 38. 50. People are going to be asking does that set slack up for a drop in the days to come . It is a much higher climb than people expected. We talked earlier in the morning about this. You expressed concerns about this valuation. It is pretty high. It is. The president was set by zoom. It is kind of pre precedent was set by zoom. How many investors take a position in this stock . Listing,is is a direct not an ipo. We have seen this where people can get out quickly. You did not have institutional People Holding onto it. Banks came is why under pressure around hot ipos. Terms of the holders, if we were to see big profittaking in the days and weeks ahead, it would be those existing shareholders, employees and private investors. The ceo addressed this. You think they would there will not be in exodus because they are committed to the longterm investment of this company. Will they look for a trade on this . Hard to say right i would think not. I would think it would be more of an investment opposed to a trade, especially up. Traditionally, when we look like at a company like this, what prevents another company from moving into this space and competing . What is the answer for slack . Ellen i think they would talk about the stickiness of their product. Once your company starts using it, it becomes harder and harder to move away. Imagine your Company Moving more and more internal communications onto slack. Now you have communications history, file history come a lot of stuff that would make it harder to decide we are going to cut this expensive things get tough. David give me some sense of the degree of penetration of the market here. Microsoft has been a major player. Slack lists them as a primary competitor. Thatnk there is a sense slack got adoption among startups, technology companies. It has been moving up to large enterprises. It just becomes the question of how much they can get of the fortune 100 Type Companies to really deploy slack, not just on one team, but throughout the company. Stick with us. We will talk more about slack later in the program. Bloomberg bait at the venture parent arm of our company is an investor in slack. We will stay in the area of tax, talking about cryptocurrency and facebook. Sherrod brown of ohio responded to the announcement, saying there had to be oversight from somebody. We welcome senator brownback to bloomberg. Thank you for your senator brown back to bloomberg. We have now heard from the coo. We have heard from jay powell, saying they are talking. What kind of oversight do you want . Facebookith this is too big and too powerful. I do not know that people would have said that two or three or five years ago. The public increasingly believes they are too big and too powerful, particularly to engage ,n a risky cryptocurrency running a cryptocurrency system out of a swiss bank. We want to first know more. Second, we want to around this. We know what happened to our Banking System 10 years ago. There is this collective amnesia and washington about what wall street did and we also know that the trump regulators the wall street the white house looks like a retreat for wall street. We know that trump regulators are never aggressive at big companies, whether they are wall street banks or Silicon Valley. We want to shine light on this and figure out what facebook is trying to do and then begin to move with the regulators to protect the public, protect the Financial System and the with theespecially attacks on privacy facebook is well known for. David has facebook visited you yet . Sheryl sandberg says they are talking to people. Are they on capitol hill . Sen. Brown they have lots of lobbyists, lots and lots of people. They are a powerful organization by any stretch in the economic marketplace, deep little marketplace. They have too much power with the white house. They have to get in line with wall street and others at the white house. It is a concern. I think the public already has such skepticism about facebook when it comes to protecting privacy. Facebook has shown interest in one thing two things. Being a bigger player in the market and making more money. Maybe three things being powerful and the political system, too. We have to make sure the peoples privacy is protected. There is not Much Movement in congress to do that yet. David there are a lot of questions to ask. Initially, do you have any thoughts about who or what is the best regulatory scheme for this . Sometimes in washington i have seen you can have multiple agencies. Sometimes companies slip between the cracks. Is this a banking issue for the fed, a securities issue for the sec . Who should have primary lead on the regulation oversight . Sen. Brown i do not know yet because i do not know enough about what they are trying to do to run their cryptocurrency operation out of this Swiss Bank Account. Is i amhat there skeptical of the regulators because we have seen regulators k. Ready wea the trump regulators at the fed and the sec have already moved toward weakening rules to keep banks honest, particularly the big wall street banks. We have got to tread a careful path. We want to first of all i think the role of the media is important. Light on whatne a facebook is up to. Most of the American Public does not know what running a cryptocurrency operation out of a Swiss Bank Account means to americans or means to a Financial System or means to your use of credit card or cash in an american store. Know. D to so much more the role of the media is one of the reason these hearings are great. Toare calling on facebook appear so the public does learn what this is all about and what threat this company that never seems to be big enough, never seems to be powerful enough, never seems to be rich enough, is up to. David i want to change subjects. Something that is important he was the usmca. There is a headline coming up right now of President Trumps meetings with Prime Minister Justin Trudeau. Dois asking nancy pelosi to the right thing on usmca. We are hearing inflicting things about the democrats position. We heardrepublicans yesterday that rob portman expects it to be ratified by the august recess. Where do you think that stands . Sen. Brown rob and i are friends. We represent the same state. I do not agree with them. I do not think it will be ratified by august. Changes sot dramatic far. The most important thing is it stops the moving of jobs that shut down production in dayton and moves overseas, moves to mexico. The most important thing is to stop that. This renegotiated nafta 1. 6 does not do that. What would do that is the brownwyden proposal, which will lift labor standards so mexicans can buy the products they make and we make and it will be legitimate, fair trade between and among the countries. Mexico and canada should be supportive of these labor enforcement language. I wanted to get a yes to this agreement but i cannot for vote for anything that continues to hurt American Workers and companies. I saw a General Motors just did in my state, increasing production in mexico. That kind of thing nafta needs to stop. This renegotiated nafta does not do this. David i understand this does not do and everything you would like it to do. There are provisions in this agreement that would increase the wages that have to be paid to people in the Auto Industry in mexico. That would help presumably on jobs going down in mexico if they had to pay higher wages. Is that better than it has been . Sen. Brown it is better than it has been but we have an opportunity to have a trade agreement that will really stop the bleeding of jobs from the u. S. To mexico. This clearly does not do this. This makes life a little bit better for some mexican workers. It does little for American Workers. Enforcing these labor standards the way they should be enforced, takesfactory floor forever to enforce and nothing happens way including wages. It is a nonstarter. We can make this work. The president has to stand up and negotiate a good deal. He is going to say it is a good deal because it always dies but this does not work for ohio because he always does but this does not work for ohio. It is not just 5000 workers in youngstown. There are hundreds of workers in Small Businesses and that supply chain. They do not go to mexico. They are stuck. They lay off workers. They go out of business. There is no concern for this in this renegotiated nafta. If you believe in the dignity of work, you fight for those workers. If you love your country, you fight for the people who make it work and this trade agreement falls far short. David i do not let you go without asking about something very pressing and that is iran. President trump is making headlines right now, saying that they made a bad mistake and that it was probably a mistake of an individual person. What do you make of what the u. S. Is doing in the persian gulf . Are we asking for trouble . Can we back down . Sen. Brown i take a backseat to nobody and holding iran responsible. I was the author of the iran sanctions bill with a couple others. Our pulling out of that agreement with all the Major Players of the world were with us on stopping around Getting Nuclear Weapons we pulled out of that agreement unilaterally. It means that iran is now likely moving toward Nuclear Weapons and other countries in the world when we do not Work Together iran, thisin kind of thing happens. It is provocative what were doing. It is stupid what our country is doing. Iran is a bad player but we have done a reasonably good job of constraining them. Now we are not and i am concerned about this march toward war. If one uranian sailor, somebody fires something at somebody, iranian sailor, somebody fires something at somebody, who knows what could happen. It is really serious. David many thanks, senator. I appreciate your time, senator Sherrod Brown of ohio, ranking democrat on the banking committee. Back now to slack, which opened higher on the New York Stock Exchange. It opened higher than the Reference Price. The last private funding ran 7. 1 billion. Now it is trading at 20. 6 billion. Investors clearly want in on this Enterprise Application Software company. Mandeep i think there is a lot of enthusiasm around cloud subscription models but it will be interesting to see how the fragmentation plays out. Our view is there will be consolidation. For single product companies, the growth will taper at some point. They are spending too much on acquiring customers and you will see growth slow. Mandeep says there should be consolidation. It gets expensive. Ellen that is true. Looking forward to what happens to slack in the next month and years i come back to this thing that the ceo said in one of their earlier earnings calls about how one of their Biggest Challenges is going to be explain what slack is to people who have never used it before. It is something that is pretty easy to get a conception of once you have tried it, but for a lot of people it just feels like this thing the other people use. Is it chat, email . We do not know. I will be interested to watch how slack will tackle that challenge in the months ahead. David many thanks to Abigail Doolittle them a man d Abigail Doolittle, mandeep singh. Bloomberg beta is an investor in slack. Now for bloomberg first word news we go to mark crumpton. As we have been reporting, iran has and President Trump tweeted that the irani and iranians made a big mistake or that incident took place near the entrance to the persian gulf. Iranian media says the Unmanned Aircraft was an iranian airspace when it was hit. The u. S. Says the drone was an International Airspace and the attack was unprovoked. The attack has escalated tensions in a region where they have been high for several weeks. Turkey is warning the United States not to impose sanctions for its purchase of a Russian Missile defense system. Saysurkish president turkey will retaliate. He calls his elation ship with President Trump good but says that relations with the people under him are far more different. Brecher says European Union countries are losing patience with britain and are strongly opposed to extending the brexit deadline beyond october 31. Speaking in brussels today, after talks with eu berries it negotiator michel barnier, he says there is enormous hostility to an extension, but an extension might be granted for a several record random on leaving the eu. Hope hicks believed President Trump was serious when he said he would accept information about a political rival irma foreign source. Thats according to House Judiciary Committee chairman jerry nadler referring to her closeddoor testimony yesterday. Also said suchks foreign assistance should be rejected and reported to the fbi. Global news, 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. Crumpton. This is bloomberg. David . David as mark just told us, President Trump says iran made a very bad mistake in shooting down a u. S. Drone. The spread the president is speaking with Justin Trudeau moments ago and said the drone was in international waters. The Vice President for Global Analysis coming to us from austin. Thank you so much for joining us. Im not sure if i feel better or worse when the president says an individual perhaps made this mistake. Are we asking for a mistake when we ramp up the forces over in that area . This is an example of denial. We saw that with north korea, pushing its Ballistic Missile testing, and trump would say it is minor. He said the tanker attacks were minor. Now, hes attributing this drone to down to an individual, someone stupid enough, he said. You can see this is the president saying, wait a second, this is not ending in the way it is supposed to. It was supposed to have all of this maximum pressure dried toward a negotiation. Iran is actually risking a limited military confrontation, but there is potential for that to spiral beyond. David what is driving this point . Is it fundamentally that iran is feeling pressure from sanctions as europe is about to kick in . Yes. The sanctions pressure is intense. You are not seeing countrywide unrest, not seeing triple digit inflation. Iran is not at that rockbottom point where it is acting out of complete desperation. That is where you have to revisit iranian assumptions. We see a concerted effort by iran to push back with a nuclear restarts, a huge uptick in attacks in iraq, the tanker attacks one month apart from each other, and now this drone shootdown. That is where they might already be calculating a risk of a limited strike and want to go ahead and get that over with while it is still operating from a position of relative strength at home. That is a big gamble still. David are we giving iran a way out . Reva it will be hard to. Especially at the scale of escalation. This is definitely driving a u. S. Response. It can be a proportional response when the u. S. Target the missile batteries that shutdown down the drone, it could trike strike the irgc from where it was deployed to. There is also going to be an argument to attack other strategic targets like airbases and so on. David reta, thank you so much. We are going to the president of the United States. The president is in the oval office. Pres. Trump youll find out. Youll find out, youll find out. Not going to are be talking too much about it. They made a very big mistake. What are your concerns about china . Pres. Trump no concerns. We will be discussing that. Thats will be one of the issues we discussed with justin. [indiscernible] pres. Trump the indicator will be that they are large, but what are you going to do . You cant win them all. We should have done it sooner. Cant win them all. Eventually, he will do what is right, perhaps. Lets see what he does. [indiscernible] are verymp we concerned about the dachshund line we are very we are very concerned about the escalation from iran earlier. We look forward to discussing with our closest ally on this and how we can move forward adds an International Community. [indiscernible] pres. Trump i dont know that hes trying to. We have a meeting set up with president xi and it is on the big transaction we are talking about and negotiating. We will see what happens with that. Anything i can do to help canada, i will be doing. [indiscernible] do you think you will bring it up with president xi when you meet with them . Pres. Trump i will absolutely bring it up. [indiscernible] pres. Trump dont say when because i have to get the democrats to approve it. I like your positive thinking, but if, and the if is subject to the democrats, so we will see what happens, but i believe nancy pelosi and the house will approve it and the senate will approve its rapidly. It will be very bipartisan. It is great for the farmers, manufacturers, great for everybody. And it is great for unions. We have tremendous Union Support too. Is a partnership between free countries. Three countries. Three countries in a trade sense that we are competing with the European Union, china, it gives us a bigger dialogue on a much bigger platform. It is good for all three. It is something very popular. I hope, politically, they can do what they have to do. If they had the election, it would win with tremendous support, but i believe nancy pelosi will do the right thing. [indiscernible] pres. Trump we will see. They have to do what they have to do. We understand that. We cant have tremendous shipments of certain products and we understand that well. We were pleased with the tariffs on steel and aluminum. Pres. Trump they have been lifted and there will hopefully not be trans shipping. If there is trans shipping, i will call justin and he will take care of it. I will probably call him a second time, and if he doesnt, [indiscernible] but i think that situation is very well care of in and very important for all three countries, the farmers, very important. But so for us and canada, the farmers are really happy with it. Manufacturers are very happy. Mexico is thrilled. Lopsided and a positive vote. A great boat. I think it will be something special. It is the largest trade deal, by far, ever entered into. We are close to having it finalized. It means a lot of wealth for all three countries, and we are competing against the world. We are not competing with each other. It brings us into a position where we are not competing with each other. We are competing against the world. And that is what we are doing. We are competing against big sections of the world, including asia, and including other areas. I think it will be very special and be an important deal, but the biggest ever made. Will you invite the Toronto Raptors to the white house . Pres. Trump that is an interesting question. They played phenomenal basketball. I watched a little bit of it. They were really terrific. Congratulations, by the way. Thats was a great job by a great team. Wouldy like to do it like to do it, we will think about that. The president ial medal, we are going to be presenting the president ial medal of freedom to roger pinsky. Who hasgreat gentleman won 18 indianapolis 500s. Won one1 daytona has daytona, indianapolis, more than anybody in the history of racing. Be getting thell medal of freedom and is very thrilled to be getting it. That will be announced over the next little while. I guess some announcing it pretty much now. [laughter] pres. Trump they will be putting something out. Hes a great gentleman and very deserving. I have known emma known him a long time. When you think of all of the countries that want to win indianapolis and daytona and they fight and spend, even canada, they spend a lot of money. When a man wins indianapolis, wins it 18 times, and he just won the daytona. He won many things over the course of years and has become a very successful man. We talked about electric cars today. Nobody knows or about that subject in terms of common sense than robin roger penske. He will be receiving the president ial medal of freedom. [indiscernible] do you still hold that opinion . Pres. Trump absolutely. Ton i came here, iran had 14 18 sites of confliction. They were extremely hostile when they signed the deal. We were screaming death to america. I think, probably, iran made a mistake. I would imagine it was a general or somebody that made a mistake in the shooting that drone down. Unfortunately, that drone was unarmed. And fortunately, that drone was unarmed. There was no man in it. It was clearly over international waters, but we did not have a man or woman in the drone. Have made a big difference. It may beeeling, and wrong and i may be right and im right a lot. I have a feeling it was a mistake made by somebody that should not have been doing what they did. I think they made a mistake, and im not just talking the country made a mistake. Im saying somebody under the command of the country made a big mistake. [indiscernible] pres. Trump lets see what happens. It will all work out. You thinking it wasnt intentional, shooting down the drone . Pres. Trump i dont i have a hard time believing it was intentional. It could be somebody that was loose and stupid that did it. We will be able to report back and you will understand what happens, but it was a very foolish move. That i can tell you. Do you feel your Administration Pushes you into conflict . Pres. Trump not at all. I want to get out of these endless wars. I want to get out and we have been in afghanistan for 19 years. We beat the caliphate and took back 100 of the caliphate. When we are 99 i said we would get out and everybody was crazy because it was 99 and we will finish it up so we get 100 . We are pulling a lot of people back, but this is a new wrinkle, a new fly in the ointment, what happened, shooting down the drone. Will not stand for it. Thank you very much. Clambering] thank you. Thank you. Thank you. Thanks, guys. [crowd clambering] lets go. Lets go, thank you. Lets go. Thank you. Pres. Trump thank you very much. David we have been listening to President Trump with a little Justin Trudeau in the oval office, covering a number of different topics. They are talking talks with president xi coming up and he may advanced interests of canada in those talks. Much of the discussion was devoted to iran. Making at was somebody big mistake, an individual, that was not part of the regime. He says it is important there was no american on that aircraft. He reiterated, once again, that he was committed to get america out of a lot of wars. And hee ramping up, doesnt want america in those endless wars. E are back with reva as you listen to what the president said, a couple of things struck. He said if an american gets hurt, that is a different sort of thing. At the same time, is there suggestion iran might have given him a license to take out some of the antimissile capabilities in iran . It reva is a contradictory statement, right reva it is a contradictory statement, right . On one stained he says this is a rogue action which could give an out to say this may not require response. It didnt have a man or woman that was targeted, therefore, it may not require a military response. Repeat he repeated his Campaign Promise to get out of wars in this part of the world. That reluctance is on display, which could embolden iran to push harder. At the same time, he is saying we are going to get and present it to the International Community that this took place in international waters. That is a valid claim because the u. S. Would be sending this drone into hostile airspace in the first place. It doesnt make sense for it to be sending into iranian airspace. That is something that builds legitimacy for a response if the u. S. Needs it. But, he is in this quandary. You can hear it through his statements. He does not want to militarily respond and that is only going to encourage more iranian action. David i wonder whether having committed the forces of the United States, the fifth fleet and other forces, does he almost have to have some response . Can you put the military in that position and have an attack on the drone and nothing . Reva ultimately, he is the commanderinchief, so he will be giving the final call, but something has got to give. There is a concerted effort by iran when you look at the tanker attacks, uptick in attacks in iraq, drone shootdown, and tomorrow, we could see something else. Then, what do you qualify as targeting a u. S. Asset whether it is manned or unmanned . Iran is already pushing that line. I agree and think we are driving toward a limited mayor military scenario, but we need to be mindful that, given the forcefulness in which iran has been retaliating, there is still potential for that beyond what other side once. David for years, strategists have said if you go after iran, there are a lot of ways they can get out you whether it is the rebels in yemen, has bull has hezbollah . Have notacks in iraq been attributed specifically to iran but strongly suspected. You are seeing targets against energy sites where American Companies are operating, and of course, iran has many more proxies it can employ. The key thing to watch, moving forward, is how the regional allies are responding, showing up there defenses before blowback. You have emergency meetings taking place now, the gulf states will be preparing their defenses, and that will be the most likely indicator the u. S. Is preparing any kind of response. David so good to have you on. Thank you for your patience waiting through your remarks. Coming up, we get the meeting on trudeau and trump from bruce hammond. Thats next. This is bloomberg. David this is balance of power on bloomberg television. President trump and Justin Trudeau are meeting at the white house right now. U. S. Canada relations have been up and down since President Trump came to office. With the conclusion of the usmca to replace nafta, it looks like the worst may be behind us. We welcome bruce heyman, former u. S. Ambassador to canada. Thank you, mr. Ambassador, for being back with us again. I want to take us back to the g7 meeting when President Trump went up to canada and met with Justin Trudeau and the other leaders. As soon as he got on air force one, he tweeted and was not complimentary about Justin Trudeau. Among other things, he said they are dishonest and weak. I understand the relationship has gotten better since then. Is that your understanding of it . Bruce a little bit. Two weeks before the meeting the president put on steel and aluminum tariffs on the basis of National Security on canada, which is appalling. Folks from the white house, peter navarro, talked about a special place in hell for the Prime Minister. Its nice to see the Prime Minister there and the president using more collaborative language then he has used with canada today. Hopefully, we are on a better path. They have a number of challenges, but hopefully this meeting will allow them to artful way find an to have a diplomatic outcome here. David certainly, the body language we saw between the two were much more positive. He said he will raise concerns with president xi if he wants me to do that. How much of the relationship is defined by usmca . Amb. Heyman i dont think it is as defined as people think. We have nafta, it is in place, it is an upgrade to it and we would love to see the upgrade move ahead. They will have to work out the details with the democrats in congress. Importantly, the relationship is based on so many levels, and i think there are border issues between our countries and this issue with china which is causing tremendous stress, not only because two canadians are being held in canada, probably inappropriately, but more importantly that china is doing retaliatory actions against canadian agriculture and so forth. They are in a box. The u. S. Put them there. They need to start working those kinds of problems out. David explain the situation as it looks from Prime Minister trudeau. He has a tough election coming up in october. You would know far better than i that President Trump is not the most popular u. S. President in canada. How close can he afford to be to President Trump . Amb. Heyman i think President Trump is maybe the least popular president in canada in its history. Recent polls shows somewhere between 10 and 20 approval of the president. He i think that showing that is strong with the president is going to be important. His father had talked about living next to the u. S. Is like living next to an elephant and every twitch and turn of the small country canada could be exposed. I think the Prime Minister needs to have a good working relationship. We are nextdoor neighbors, allies, so much of the economy is intertwined that it is good that they are together and that they can talk about the issues and challenges they face. David there is the issue of the two canadians who are being detained in china, in connection with the huawei situation. The cfo, the daughter, the founder was detained in vancouver. How big an issue is that for the canadian people . Amb. Heyman the president comes located this issue. While i was ambassador, we had an extradition request to the canadians for a Chinese National stealing military secrets. The chinese did not want that extradition to go through, and today, the person is in jail in the United States. It was in vancouver, but china would never go after canada under the circumstances because the u. S. Had canadas back. The president overcomplicated this by saying he might trade ren away. That sent a signal to the chinese that this was not legal. That then exposed canada to retaliation from china. It overcomplicated a historical legal extradition treaty that we have had for many years that operates smoothly. The president complicated this in a very negative way. David what would a win be for Prime Minister trudeau to come away with . If everything went perfectly from his point of view, what sweetie go back to canada with . Amb. Heyman there are a series of asks he is coming with. The first is that he wants assurances the president is not going to put on additional tariffs, even though they have this deal. The president has shown, with his threats to mexico, he is willing to do tariffs for other things even though there was the usmca. Theone area that tariffs come into play are the uraniums. The canadians are the second largest producers of the uranium. Has lumber tariffs put on the country right now by the United States as a rotella torrey for pricing. I think, if he could find a path to getting that resolved, that would be a good thing. The third is this china situation and getting the president to actively ate and getting out of the mess he put the canadians in. That would be a positive. Having an understanding from nancy pelosi later that day as to what the path looks like in the house of representatives on u. S usmca, those are allimportant. Having a meeting is a good thing for the u. S. And canada to do on a regular basis. David so great to hear from you. Thats the former u. S. Heyman. Or crude oil gained 5 today. Sign up for the balance of power newsletter at uber politics. Com or uber. Com po bloomberg. Com politics. And you can go to gtb go on your terminal. Live from new york, this this is bloomberg. 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