tv Bloomberg Surveillance Bloomberg November 8, 2016 4:00am-7:01am EST
then why settle for slow internet? comcast business. built for speed. built for business. america votes. it candidates make final pitches in michigan, new hampshire, and north carolina as the race to become america's president nears its end. predicting a second president clinton, the polls put the democrat ahead with a projected edge on the evil of the election. and the money is on a blue victory. falls,rise, volatility and markets down back hedges against a republican upset. this is "bloomberg surveillance." happy election day, everyone.
it is election day in the u.s. 226 million americans cast their ballots in one of the most among jewish u.s. presidential elections in recent history. -- one of the most tumultuous u.s. presidential elections in recent history. hillary clinton held a narrow lead in most pre-election polls. her campaign has and armed by federal probes into her handling of classified e-mails, questions about her family's foundation, and public doubts over her trustworthiness. republican real estate magnate and reality tv star donald trump, defeated 16 primary opponents and promises to "drain the swamp" of washington corruption. he has faced criticism for his treatment of women and denunciations of immigrants. we bring you the analysis you need on this historic day. i am joined by bloomberg's politics and economics editor, michael mckee. in london, we are joined by alexander friedman for the first
half of the program. alex, good to have you on the program. first, let's get to the bloomberg first world news. this is nejra cehic. nejra: production declined more than expected in september. production fell 1.8% from the previous month. the reading, which is typically volatile, compares with the median estimate for a 0.5% in a bloomberg survey of economists. that the latest sign europe's biggest economy slowed last quarter. opec has raised its forecast for global oil demand next year and through the end of the decade. according to the producer group's annual world oil outlook, demand will reach 95.3 million barrels of oil a day in 2017 as the organization anticipates cheaper crude will spur consumption even as economic growth slows. china's exports fell for a second straight month in october on tepid global demand. overseas shipments dropped to
7.3% from a year earlier in dollar terms. imports slid 1.4%, leaving a trade surplus of four to $9.1 billion. the yuan has depreciated since last august, but failed to boost exports. the u.k. chancellor, philip hammond, is facing a 25 billion pound hole in the public finances following the brexit vote. that is the warning from the institute for fiscal studies. it's a diminished growth will result in 31 billion pounds of lost tax revenue only partially offset by a 6 billion pound reduction in spending. news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am nejra cehic. this is bloomberg. francine: this is your data check. you are seeing less movement than the last 10 days. a hint of caution. gold still rising. volatility down a touch, 0.03.
here, 220 6y million americans eligible to vote today, one of the most divisive presidential elections in living memory. the leader inherits leadership of the biggest -- of the country and its global role in geopolitics. let's see how the candidates and their supporters made their final appeals to voters. hello, pittsburgh. mr. trump: florida is my second home. >> if hillary wins in north carolina, she is president. mr. trump: in one day -- to you believe this -- one day, we are going to win the great state of north carolina. president obama: michigan. >> this is the most consequential election of our lifetime. this is obama: tomorrow is the election, but that is just the beginning. we have to heal this country. mr. trump: we are a divided country.
people do not realize we are an unbelievably divided country. president obama: it comes down to you. it is out of my hands. it is in your hands. >> vote. get your friends out. every single vote counts. we have a great panel of guests today. joining us from london, alexander friedman. in new york, jim, chief global strategist at offshore group. and politics editor michael mckee. mike, let's kick it off with you. today, we find out. there are battleground states. the polls are closed. it seems like clinton could win this. the way. breaking, she will be able to win this possibly in the east coast, like her husband did in 1992, before it got to the midwest. he had almost accumulated enough votes to win. first results are in. donald trump has the early lead. there are three small towns in upstate new hampshire. you should go while you are here in the united states.
it's still not hart's location, and mills field vote at no field -- the three towns vote at midnight, according to tradition. trump disfavored, though hillary is still favored in the polls overall in new hampshire. you heard tim kaine say that you should get out and vote. you should get out and vote. it is very important. 200 35 million americans eligible to vote. only 129 million voted in the 2012 presidential election. a turnout of 54%. the brexit vote, which we covered in london -- 72.2% voted. you do not want the brits to embarrass us. get out the vote. francine: the number of people who turn out at the polls is quite low compared to most western countries. alex, you have money in the game. how do you hate yourself before we find out the news of this election? of peopleink a lot are taking risk of the table. let's unpack the four scenarios
that are relevant for investors. the most extreme is trump wins and i think you see a selloff and pretty much all risk assets. the only thing that probably goes of our government bonds, cash, gold, maybe swiss franc, yen. the second most of stream is, nobody knows who wins. you have the same result in terms of markets. more likely scenarios based on the polls are hillary wins. the question is, does the senate and the house shift? it does not look like the house is going to shift. the senate is really the question. that exposes where the market could have some slight downside against what is already baked in. even if hillary does win and the senate stays divided, and perhaps on the republican side, i think there is a limited risk rally. high itust 3% off the the s&p. maybe we see a little bit of relief, but not much. mike: historically, we have seen the markets move on the election, and often go in the other direction.
fundamentally, how are we set up to go into 2017 once this is out of the way? alex: i think fundamentally we are set up for the fed starting to tighten, inflation expectations rising against full employment. as a result, the drag a bit on the equity side, probably in the u.s. specifically, more upside in equities. in europe, based on valuation. the continued volatility risk in europe around the italian referendum, french and german elections, etc.. on the fixed income side, probably a shift more towards low duration carry instruments like catastrophe bonds, subordinated debt, those kinds of things. francine: what do you make of the markets question mark you have been in gold for quite some time. everything seems to be pointing to a clinton victory apart from gold. the markets are betting one may, but still making hedges. jim: everything seems to be putting to a clinton victory.
if you look at the pundits, the betting markets, and the financial markets, the election was over two weeks ago. it is a very close race. i think we will be up late. francine: you do not believe the polls, or the turnout will be greater? both. the polls over simple democrats. among the democrats, they do not tell you, you oversample african-americans within the democratic sample. there are a certain number of white democrats running for trump. that is the biggest factor 2012 versus 2008. the 5 million evangelicals who did not turn out in 2012. if you are going to use 2012 as her baseline, that is a skewed baseline. they did not go for romney because he was a mormon. if you go down to the ozarks and talked to in job -- evangelicals, that is what you hear. the betting odds are saying 89% probability of hillary. that.s take it is the wisdom of crowds. they do not understand behavioral psychology.
trump that's for every hillary that. the hillary bets are bigger. wall street big shots that $10,000. $50. better bets so the book is give hillary short ons. is 4-1voting booth, it because of the betting markets? francine: we are going to put this out on a chart. in the past, we had two competing charts. peak performance over the last three months. that would point to a trump -- to a trump victory. but this is employment. every time employment goes up, the house or the democrats, if they are in, stay in. it is usually good for the incumbent party if the economy is doing well, and the economy is doing relatively well. to billmes carville clinton -- it's the economy,
stupid. this year, it is not. it is unusual. we are seeing very strong consumer confidence numbers. at the same time, people are saying the country is on the wrong track. it is hard to reconcile those thoughts. what it does is, we take the economy out of this in terms of the immediate impact of the latest data. jim: this is the worst economic recovery in history. i disagree with mike. 2% growth for eight years. the trend was 3.5% coming out of the recovery. 5% as we go through 1990 -- 1983 and 1996. we are not even close to that. the labor force participation as well. you cannot use this statistical science. his recovery is unlike any other recovery. francine: another graph showing the percentage of people under the poverty rate. that does come down. we will get to those in a second. alexander friedman and michael mckee here with me. stay with us.
we have plenty more coming up. this is what we are looking at. we are looking at the economy and brexit. any lessons we can learn from that? you can follow the election results on your bloomberg. , stay withight here "surveillance," because we will be talking about election day. pharma one of the sectors most likely affected by the outcome. we will be speaking live to the ceo of glaxosmithkline. he is in india, traveling with prime minister theresa may. the final bloomberg poll gives hillary clinton a two point lead, but how accurate will those opinion polls prove? and how should investors position themselves? the fed's future on the line -- how the election will impact the world's most important central bank. ♪
francine: this is bloomberg "surveillance." i am francine lacqua in new york city! happy election day. i will talk about the policies the candidates have or have not outlined. first, let's get straight to the bloomberg business flash. investors are: pricing in a victory for hillary clinton after one of the most divisive u.s. presidential campaigns in recent memory. the poll shows clinton leading 41%. donald trump 44% to the poll was conducted before fbi chief james comey said clinton should not face charges related to a personal e-mail
server as secretary of state. acta monte dei paschi. a binding offer for its nonperforming loan platform from service credit management. the italian debt servicing company said in a statement without disclosing a price. fortress investment group also made a binding offer. representatives declined to comment. credit agricole says third-quarter profit doubled from a year earlier. france's third-largest bank saw net income climbed to 1.80 6 billion euros, in line with analyst estimates. bond trading income surged. the lender promised a stable or rising dividend for next year. deutsche post third-quarter profit has jumped more than threefold. operating profits surged, beating analyst estimates. the rise comes as the male ail operatorm
recovered from costs at its freight forwarding operator a year ago. a race fiscal forecast. operating profit will probably drop to $16.3 billion for the year in the in march, an improvement on the forecast in august. that is as the yen rally stopped short of the levels toyota had projected, with a sales slowdown threatening its position as the world's top carmaker. that is the bloomberg business flash. francine: thank you. let's turn to a sector that might be better off with donald trump, pharmaceuticals, after hillary clinton complained about drug prices. city group cut its rating on u.s. health care, saying there could be pressure to curb prices. is the ceo of glaxosmithkline. he joins us from india, where he is accompanying theresa may on her trade mission. thank you for giving some of your time to bloomberg. how has it gone so far in india?
as it been as smooth expected? quick thanks for the time today. it is a good atmosphere yesterday. there was certainly a lot of engagement around how the two countries could work together to streamline trade between them, regulatory dimensions, that kind of thing. from my perspective, obviously, i was not in all of the detailed discussions. from my perspective, it was a good atmosphere around the place. francine: what would you advise her? what is the next step forwards? how could she get proper trade deals and was against countries who think there is no brexit plan at the moment? andrew: i think the u.k. are working very quickly to put together the areas they want to focus on. essentiallyities to -- an opportunity in the pharmaceutical sector, i think for the u.k. regulatory agency to cooperate and build in reciprocal operations with india
is tremendous. if you think about the role of indian pharmaceutical manufacturers in the global supply chain of medicines and some of the issues which have popped up with companies here, there is a great opportunity for the self-interested in india to connect with the global regulatory framework. i think the u.k. could be fantastic for that to happen. there are precise ways the u.k. can help countries like india, which ultimately unlock the opportunity for these conversations. it is very early days. obviously, none of these things are going to get going until after brexit happens. francine: regardless of who wins the election in the united states, you think there will be reforms on u.s. pricing? i think there will be continuing pressure on drug price. i have been saying that for a long time. this year today, we are seeing prices in the u.s. down 2%.
we are seeing negative price evolution in the u.s. we think that continued pressure is likely into the future. actually, i think a lot of people fixate on the political dimension of what might happen. it is also important to remember that the marketplace has itself put in tremendous mechanisms in place to ensure it is getting good value for money. if you look at the consolidation of the market over the last few years, whether it is hospitals, introduction of accountable care organizations -- these are mechanisms in the market which have just come in in the last two or three years. they are going to be key futures -- key features in the future. that is driving pressure on the system as well. i think regardless of the outcome tomorrow, the reality is it is going to be even more important for companies to demonstrate they have innovation and good value for money price. francine: you are expecting more regulation or a new regulator, as hillary clinton has proposed? andrew: i am sorry. could you repeat? francine: are you expecting more
regulation within the next 18 months? andrew: not especially. i mean, i cannot rule it out, of course. but i think we for sure will see more of what we have been getting, in terms of market pressure. it may well be that we see more of the demonstration-type projects, such as the part b project, which has been unrolled in the last nine months. specific areas for focus and change. we will have to see what the new administration things beyond that. i think there is an awful lot of momentum in the marketplace which is bringing more discipline to pricing, making people more accountable to demonstrating value for money. that is going to deliver a lot of what people want to see. francine: do you think -- who is better for the pharmaceutical company? is it as simple as clinton bad, trump better? andrew: no, and i think i am going to at this point -- it is so close to the decision, i am
going to plead the fifth on that one. thanks very much. francine: i understand. politically sensitive. do you think it is imperative that the medicine's regulator stay in london? not think it is imperative. i think it would be very good if it did. the reason i think that is because there would be tremendous disruption for its physical movement. clearly, the regulator could be located anywhere. but it has become very competent. the staff, many of them will want to stay in london. a top to bottom organization, for that to be moved means a lot of staff have to change position. those who don't leave have to relocate. this is a regulator who is keeping and i on the health and safety of hundreds of millions of europeans. you do not want them with their eye off the ball. so honestly, while i can understand the emotional reaction of why it should move to europe because of brexit, i think the self-interested
decision would be to leave it where it is, because you have got a tremendously competent organization doing a terrific job. we should think very carefully about disrupting it. i think realistically you cannot move it without disrupting it. francine: thank you so much. the ceo of glaxosmithkline speaking to us from mumbai. safe travels. diplomatic. he would not say if he would rather a trump or clinton presidency. the markets zigzagging in this unpredictable election. let's get back to alex and jim. i first wanted to show a graphic that shows gdp growth, year on year, depending on the last administration. let's bring that up for you. it is one of my terminal charts. you were pushing back, alex, against something jim said, which is we are seeing growth in the u.s., but it is not policy growth. alex: i guess the ascension out there is, if we could just returned to what growth should be, there would be less social strife and everyone would be in a better case. it gets too, what should growth
be? unfortunately, it gets to human lives, which are not that long. we have basically been in one growth cycle since 1980 -- reagan, greenspan, a debt-leveraged cycle. we all know that. in 2009, it did not reset. central banks put a little bit of salt on it, and it pushed income yields down and risk assets up. if you go back longer than that, you are stuck in the same dynamic. from 1860 until 1970, we were in an aberrational growth period because of electricity, the engine, the stuff robert gordon has highlighted well. it breaks the question, what is normal growth? i unfortunately think normal growth is not in the neighborhood of 4%. it is lower than that. this technology innovation we amazon,ng at uber and robotics -- unfortunately, the first wave is deflationary because it is at the expense of jobs. eventually, it may be more inflationary, but that is probably 10 plus years away. everyone says, what can be done?
you shift to the fiscal side, infrastructure spending, and it is assumed hillary will launch a big and the structure plan. problem is that if you have congress on the other side of the house, they are going to fight that to the nth degree, just like they did with obama when he wanted and info structure bank. entitlement spending is 2/3 of the budget in the u.s. already, so there is not much room for president clinton, if she is president, to launch some kind of -- francine: donald trump saying he wants to increase fiscal spending. i would assume both parties would be behind that. if you have full employment and rising bond yields, and you have a deficit scenario, there will be plenty of people in congress who are saying we cannot run the deficit up forever. there is not an unlimited deficit spending scenario here. i understand what alex is saying -- jim: i understand what alex is saying. 2% growth, whether that is the new normal, or whether we can
use fiscal policy and labor laws to get back to something like 3% -- that is a debate for the future. as of today, in terms of voters turning out, not only do we have this big growth, but there is an honest income inequality. what little growth we have had skewed heavily to the top 1%. people are very upset about this. that is where they are going to vote today. we can debate the future. by the way, i think trump's infrastructure plans have a better chance of becoming law than hillary's. francine: thank you so much. alex friedman in london. coming up, how reliable is the poll that shows clinton ahead today? does it mean she will really win the race? ♪
here in new york. we were looking at the strengths and weaknesses of the economy and interest saying because of construction just structural things and inflation there is not much we could have done. jim hurricane ivette against us. what do you think? it seems it seems as a personality rather than policy decision. alex: i guess what people are thinking about from my perspective as things do not seem that great. the american dream was it was always going to be better in the future and that is not the sentiment. when that is the case usually people want change so the question is, is the change candidate appropriate? that in a sense is the big uncertainty out there. the polls indicate that on theyce, the answer is no, would rather go with status quo because they are more concerned about the individual, trump, even if they want change. francine: if it takes a bit
longer than we are expecting for the votes to come in or for the decision to be taken or for someone to accept defeat, but we see a lot of volatility on the market? alex: it depends. if you have a split between the popular vote and electoral college you could see a fair amount of volatility. andrump refuses to concede the numbers show that he loses i do not think you will see a lot of volatility. there is a really ugly scenario which i hope we avoid is that there is protest and violence at the voting areas, in which case that could have some negative effect on the markets just because it will be a chaotic scene. francine: you see the trade of the month? jim: the trade of the year, i was in britain. short sterling, buy gold. the market was fully priced for remain.
if leave one you were going to make a fortune. s&p, buy gold. the markets are fully priced for hillary. francine: when you look at gold, gold is rally. jim: in early october when it replaced for the expectation of the fed rate hike, and it rallied when trump was doing better and fell back when clinton got the all clear from the fbi. gold is priced for a clinton victory and it will go up if trump wins, but it will not go lower if hillary wins. everything is priced for hillary . the markets are all in, and it is exactly like brexit. is its it -- francine: not different, and we touched on it short while ago, there are a lot of people who want to draw parallels to brexit but the polls were different. we should be relying little bit
more on these polls today because we have gone through this. we have not been through trump and i keep being told that 2016 is different but there is a bit of a parallel. alex: one of the greatest human fallacies is to take your recent data point and extrapolate from it. populace and rage around it is a common theme around many parts of the world and i think it is to theidiosyncratic brexit and i would not draw too much of a parallel. is good science between the notion that the markets are priced for hillary clinton. feed and a real-time sainted up with the dow jones futures and real-time. when trump is doing better the market fell. in an even race, the polls are close and she is a little bit ahead, but the polls are close to the s&p should be around 2020
it is not. it is all in for hillary. francine: i do not know exactly what is priced in because the markets are discounting a trumpet when but if you look at a basket of 15 stocks -- discounting a trump win but if you look at a basket of 15 stocks that would benefit if clinton got in in red, blue for donald trump. they are not going with the polls 100%. jim: that is right if you are a stock picker and are looking at fundamentals but the stocks have become commoditized. some individual stocks will do better if trump wins. i am looking at more of a global acromegaly and looking at it -- if trump wins it is a shock so i would rather own the shock. francine: in terms of how you
see this, is clinton a clear continuation of what we had with president obama or will she be a little bit more left wing? alex: no, i do not think she is a clear continuation. i think the big question if hillary wins is on the geopolitics side. i do not think u.s.-russia relations have ever been in a worse position and the putin-clinton relationship appears to be terrible. i would be concerned if she wins that there would be a fair and the status quo on geopolitics and i think it would be more extreme if trump wins. you asked if it is a continuation of obama, that is too simplistic. hillary is more interventionist and we saw that in a series of different foreign interactions when she was more hawkish than obama was. there will still be some uncertainty of hillary wins and that will play out in ways we do not know. francine: if she wins is a
definitely dollar positive and we will get a fed rate hike in december? alex: yes, i think dollar positive, the fed would hike and i expect full employment that hiking would continue, the yield curve would continue to price in higher yields. if trump wins, december is probably off the table and then there is the dollar weakness story in the near term. jim: the fed is going to raise rates in december regardless of who wins. bill dudley was categorical about that. i was surprised at how different -- definite he was. they are going to raise in december regardless but the market will fall out of bed. alex: the reason i disagree with that is because this fed is so most -- is so caught. it shows they do respond to volatility extremely so they said they will raise in december. if trump wins and we see a
significant market reaction, and probably geopolitical follow-up in south korea, japan, the baltics, russia, then i would not be surprised if the fed took december off. on: so the market falls 10% a trump win but it could bounce back quickly. if you look at his policies, he has the larry summers program, infrastructure spending, tax cuts, that is the fiscal solution. francine: if donald trump gets into the presidency will he definitely replace janet yellen, 2018? alex: that is certainly what the market would expect. i do not think he is necessarily going to get through huge fiscal expenditures even though it sounds good. francine: alex friedman in london, james rickards in new york. coming up, more on the fed's future. we will look at how the election
,rancine: from washington, d.c. all eyes on washington, d.c. that is capitol hill. it is election day finally. a lot of my colleagues are tired that it has taken so long and may be over so quickly. here is mark barton with your asset check. worldlet's look at wei f equities futures. this is the column i want you to stare at, equity index futures. yesterday,wer after rising for the first day in 10 after the longest losing stretch since 1980. well the index swings an average
1.5% the day after the vote, gains or losses in the 24 hours after the election predict the markets direction 12 month later less than half the time. if we see a big move, this is great. fxs is the jpmorgan volatility index, that is the lower line. the blue line and the top half is the real clear politics for trump, clinton is the white line. volatility is muted after falling yesterday by the most since june with opinion polls showing clinton is ahead of trump. let's look at the u.s. 10 year yield, down a basis point, 1.81% today. the yields rose five basis points yesterday. a hillary clinton with all probably send the yield on the 10 year to about 2.6% high this
time next year, according to loomis vice-chairman. 2.6%, we were, last there in september 2014. that is interesting and makes it a little more hawkish than , they predict a yield of 2.5%. gold.ht move into gold did fall yesterday by 1.8%. it is up a fraction today ahead of the big u.s. election. francine: mark barton, thank you. donald trump has been outspoken of his criticism for the fed but hillary clinton could have an impact. we are here with michael mckee. i am very pleased to welcome professor sharon o'halloran. what i was surprised about of the last three weeks is that the
equities were changing, fx was changing, but our expectations of what the fed will do in december did not change. is that because we were always thinking clinton would win or did it have little impact? michael: it had little impact in the short run and will have more impact in the long run. if donald trump wins and the markets crash, that will have an impact on december but if clinton wins, status quo and they are probably going to go in december. janet yellen and stanley fischer's terms are both up in 2018, and the president normally reappoint them late in 2017. this could quickly become an issue because donald trump does not like either and would probably replace both. the clinton administration would probably look to keep both so we will have to see what happens. there are two open seats on the fed.
president obama has nominated two people who have not been able to get a hearing. we will see if president clinton or president trump would keep them or appoint somebody new. elected and takes brainard off to be her treasury secretary then there are three openings and it would be a question of the senate and who is in charge. the banking committee has not approved any nominees as they do not like democrats and they have tried to force the president to nominate a new chairman for regulation which he has not done. there will be a new chairman in either case so it will be interesting to see. francine: we are focusing so much on the presidential race, it is crucial on who gets congress. sharon: what is -- what it is looking like is that the outcome will be a close split during the democrats and republicans in the senate, and the democrats will gain seats in the house although they will not be a majority.
you have basically a divided government to matter who wins. francine: what does that mean? if donald trump gets in, how much power does he have domestically to change things? sharyn: very little. in that configuration it will be very little that the president will be able to do, especially donald trump with extreme policies pushing forward that type of an agenda since they will have to build a coalition between moderate democrats and moderate republicans to be able to get the majority necessary. it will go into what is called gridlock. that means the status quo. michael: i will tell you what is really important about the senate, the senate has to .onfirm presidential nominees the way the senate has been going, if it stays in republican hands clinton could have a lot
of trouble getting some of her nominees even confirmed to the cabinet. you go down the line and the lower-level people who really carry out policies might not get confirmed. this could be some real good luck if the democrats. does it underestimate the self power of a president? you see that donald trump is your president, do you pull back investment? that would have a huge and immediate impact. case,: usually in the what happens as it carries over the existing person in office. the republicans will have a very -- to move out of the obama appointees. hillary, who will probably take more conservative or moderate appointees will probably not be hampered in that way. definitely donald trump would not be hampered in that way.
that is the way in which you play that game so that the republicans actually are better off. just from a strategic point of view. when you are looking at an investment you see in the trump administration a volatile administration that is not going to be able to build coalitions to do anything. what you see in a clinton administration is someone who has a long history of expertise in building coalitions across the aisle. she is known for being a moderate democrat and she is known for being able to build these moderate coalitions tween republicans and democrats in a way that his been very betweenul -- republicans and democrats in a way that has been very successful. , the markets's say are clearly poised for a clinton win. what say he surprises, mayhem on the market.
what will the fallout be? if you look at brexit everything recouped losses except for sterling. michael: it is hard to say how long the turmoil would last because a lot of it would depend on who donald trump appoints to his cabinet and what the likelihood of his policies getting through our, how the markets judge that here's there would be an immediate fall probably in the market and does that hurt confidence among consumers and business, does business pullback investment and consumer stop spending? that is what the fed will be looking at. the brexit vote pushed things out disco years. -- two years. if it happens in the u.s. it would start in january. people would have to contemplate this. francine: in the past how quickly do we have a treasury secretary? michael: tim geithner was appointed in late 2008 in november. the issue is not just whether
republicans or democrats controlled the senate but what kind of role bernie sanders and elizabeth warren play in who they will let hillary clinton a point if she wins because they are going to want someone much more left wing and less tied to wall street than what we have seen in previous administrations. francine: mike, thank you so much. professor sharon o'halloran stays with us. michael mckee stays with us as well. we will be talking a little bit more about the parallels between brexit and the election. brexit,ill deliver plus, plus, plus by delivering trump presidency. this is bloomberg. ♪
that means, it sounds ugly. is he right, could it be a brexit moment for the market? this is what we are focusing on, it's get more with michael mckee and professor sharyn o'halloran. like brexit, he makes it sound like it is a cool thing. brexit could be ugly. sharyn: there are lots of consequences associated with leaving the european market for u.k.nd and the that is clear. i hope he is not saying that will be the equal consequences for the united states if he wins. francine: i do not know what he is saying. sharyn: that they explain the difference between a referendum and a poll in the united states, and what the outcome of an election would be from a popular vote in the united states. a referendum is really a popular vote that gets implemented, what the popular vote is into an outcome. in the united states we have a
democratic republic whereby our transferred tots an outcome through the electoral college. each state has a proportion of those delegates then elect the president. you do not get the actual popular vote into an outcome, so it is a break in a way, from those big swatches of preferences into these dramatic changes in outcomes that you see . those were put purposely into the constitution for exactly those types of reasons so there could be a thoughtful process in thinking about the elections, and thinking about our democracy. that is the difference. michael: i think at this point donald trump is going into the idea that you could have a surprise vote that is the opposite of the polls, and that is what he is talking about with brexit. we went into that vote with remain, in the news media being
the favorite and people were surprised by the leave vote. trump is hoping people will be surprised by a vote for him because the polls have been against him. francine: talk to me about regulation. is it clear at this moment if trump wins this is good for u.s. banks or is it too soon? sharyn: he has made the statement he would remove 80% of all regulations. that is unclear. francine: is it doable? sharyn: you would not necessarily want to remove 80% of food and drug or environmental regulations. it is not clear what he means. moreover, regulations exist when markets fail in providing their own means of regulating themselves. there is the reasons why regulations exist under certain conditions. is there a region -- reason to have more simplified regulations
, absolutely. if that is what he is referring to i think he would have a strong push from financial institutions and many other businesses. to remove 80%ent of all regulations would not necessarily help either the financial markets or other businesses. francine: thank you so much for joining me today, professor sharyn o'halloran from columbia and michael mckee. coming up, more surveillance. i will be joined by tom keene in new york and we will later be joined by stephen roach as we bring exclusive and extensive coverage of the u.s. election. ♪
the battleground state of michigan, hampshire, and north carolina. predicting a second president clinton, the poll of polls puts the democrat ahead with an edge on the eve of the election. the money is on a blue victory. the peso holds steady as market dial back against a republican upset. this is "bloomberg surveillance." i am francine lacqua with tom keene. a day, what a bitter campaign. we saw secretary clinton landing just within the hour north of new york city. what i'm focused on is yes, it is about the battleground states. voter intimidation is a real serious topic for this nation in the next 24 hours. francine: you are absolutely right. we need to go from a lot of hate we have seen in this country to
trying to figure out how you pull this country back together no matter who wins. tom: i would suggest we will see a lot of mines and a lot of monitoring. francine: let's get straight to the bloomberg first word news. speeches are over and it is time for america to decide who will be the next president. the and trump either final pleas. most polls show clinton is in front but not by much. from today: years when your kids or grandkids ask what you did in 2016 when everything was on the line, you will be able to say you voted for a stronger, fairer, better america. mr. trump: we are going to have a great victory tomorrow, folks. they have no idea. idea.shonest media has no
actually, they do have an idea. they are saying, what is going on? taylor: the first votes were cast today just after midnight in tiny villages in new hampshire. any rock kurdish forces -- in iraq kurdish forces are battling for most soul. mosul. self -- they have discovered mass graves of 100 people they believed to be killed by the islamic state. faces a big hold because of brexit and will have to deal with $39 billion in lost tax revenue. that will be partially offset by a seven and a half billion offset -- reduction in spending. global news 24 hours a day,
powered by our 2600 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. tom: thank you so much. last night, i was sitting there and there is that one moment on election eve that gets your attention. it was the first lady in philadelphia and it was an extraordinary scene. i do not know if you have been to independence hall. it is a quiet place and across the mall, it was just extraordinary. francine: what surprised me the most is that you saw a president obama that was energized. it was also -- almost like he was running again and i wonder whether he is desperate for clinton to win because he sees it as a continuation of his legacy, or he is so opposed to what the alternative is. tom: i think you could go either way but there is a tradition that the incumbent president is
always energized and enthused or his candidate. we have seen it many times. let's go to the data. francine mentioned earlier, what a day yesterday for the markets. we pause today, no supplies on that. david gura and megan murphy will have your coverage. on to the next screen, let's see if we can get excitement. the vix coming in sharply. there is the dow, 400 points away from a record high. we have got to get brexit into the show somehow today, dollar-peso level as well. francine: we do. i think we have donald trump about six times saying this is brexit plus, plus, plus. are you exhausted? tom: you are going to be in here 1:00 a.m. tomorrow. francine: our general election campaigns are much shorter and on election day we go to
blackout in the u.k. this is like the never-ending story. stocks are advancing, currencies down a little bit. i picked out gold because you can see stocks are up and gold is as well. a hint of caution is still evident as investors think clinton will win but do not want to take too many chances. tom: the senate election, the house a given to the gop that the senate election, legal mckee has become an expert and he will join us later. we have done that execute peso chart. here is the -- mexican peso chart. here is the dow. i put it up to show the surge yesterday on the right side and the record high in the middle, the green circle. much of a chart. it is not like a chart day. .rancine: i like it i'm a two charts that are
opposing. one goes more with the polls. what it has done in the last three months and if it goes down it usually means it is the opponent, the party opponent that wins. rate andhe employment when it goes up it means it is usually the other party getting in. it is going down and it is a democratic president. because you have two charts i would not read too much into it but it is nice to look at charts. let's head to washington, d.c.. chandler. marc .et's start with you this is the final push, do we believe the polls? toluse: it will be difficult to determine because after all of
the speeches and rallies and debates that will be up to the american voters. clinton believes she has the ground game on her side and donald trump thinks he has the enthusiasm that propelled him to the republican nomination and believes that will still be here for the general election and will allow him to shock the world and win this election. it will be tough to make a prediction but clinton has many more pathways to victory. francine: what early indications do we have about voter turnout? toluse: this has been the largest election for early voting and all-time. as many as 50 million people have party voted. there are good signs for both candidates. clinton is hillary pointing to a huge surge of the hispanic vote as well as nevada, large numbers of hispanic voters. donald trump is saying obama voters are not coming out like they did in 2012 so he believes
he has more enthusiasm and places like north carolina. tom: help me with voter intimidation. mr. trump will vote in the schoolhouse in new york and mrs. clinton landing in white plains. help me with the actual voting today. do you assume long lines? toluse: i do. i believe the turnout so far has been historic and it is likely to continue. a lot of people have already voted early so that may reduce some of the lines, but i believe there will be long lines in the swing states. tom: i have to be careful, mr. trump has put together with some of his supporters and indirect supporters not so much intimidation, but this idea of how people behave within the buffer zones of various election polling stations in different states. give us an update on that, is that what we are going to be talking about the 12 noon and 3:00 p.m. and 9:00 p.m.?
both campaigns have dozens of lawyers and hundreds of volunteers on voter protection. you probably will see some donald trump supporters looking at the polls and wanting to monitor, but you will see hillary clinton's lawyers aching sure they make every legal case to make sure polls -- voters can get to the polls. this will be playing behind the scenes in the legal arena. i do not expect people to be kept away from the polls, but you may see some donald trump supporters try to make sure what is going on at the polls is on the up and up. into theot actually go polls unless they are legal ballot monitors that are sanctioned by the state and local election officials. if that does not happen they will have to be outside of that buffer and further away from the polling places. francine: thank you so much. chandler,g in marc
global head of currency at brown brothers. what happens to dollar tomorrow be -- depending on who wins? talking aboutou how close the election is but i do not see a set of polls showing trump winning. throughout this whole race it has really seemed to be it has been a one-sided race. i think we should not really focus on the popular vote as much as the electoral college. i also think this stuff about voter attrition -- repression, the biggest challenge is not people voting for to five times. the real problem is what we call gerrymandering. when the republicans control congress they can make districts more suitable for them, each is why i think the house is so difficult to capture. i see the dollar having strengthened after we had that selloff on friday. there is the market, is pricing in what i am suggesting, which is a clinton victory that has
been in the cards the whole time. i think there will be no real reaction to and as expected result. exposed onemarket way or the other if you say mrs. clinton will win, is the fx market exposed if they bet on a clinton victory? marc: i think they bet on the status quo, that is not expecting trump to win. if he wins i think the dollar will get hit. francine: how much? marc: three to four basis points. key to me was last week before the fbi came out with their new developments, last thursday and friday the mexican peso was the strongest currency in the world. the for the latest developments the market was already taking off the wiggle it had when the fbi reopened the case. the stock market was down nine days in a row before yesterday.
for four days, which i think is unprecedented, the s&p closed low. i do not see that happening in a crash or 1987. this is unprecedented. i think the market that was telling the truth is the mexican peso and the fed funds futures. bandthis is a technical showing two standard deviations, and it is an extraordinary drop. i want to show this chart one last time. i'm going to start crying. peso, a leg down as mr. chandler was opining, not us. maybe mrs. clinton will be happier tonight than mr. trump. francine: euro-peso is better. head withler, global brown brothers staying with us.
francine: tom and francine in new york. this is capitol hill in washington, d c it is election day in the u.s.. it has been 600 days since we have been talking about it and we will find out later tonight or tomorrow morning who wins and who will be in the white house come january. british department
store marks plans to shut down outlet in the u.k. and overseas over five years. marks and spencer will also close 53 stores outside the country as they try to reverse years of underperformance. rose 20% in sales november. the chinese government has said it may extend the tax break. -- onis a report that cbs the major -- possible merger with viacom. sumner redstone's national amusements controls cbs and viacom and has asked them to consider combining. francine: thank you so much. let's talk markets. more market reaction on this election day, we are back with marc chandler.
i want to talk a little bit about renminbi but we were looking at dollar-peso. there seems to be a better bet. if you look at the two extremes if trump wins, that is what you want to be in. marc: if trump does win we cannot be so sure about the federal reserve rate hike in december. there is i think almost an 80% chance of a fed hike in december and a fed -- if win, he would destabilize the markets and we have to think twice about a fed rate hike and the euro having more of a balance. tom: where else can you get euro-mexico? francine: only on surveillance. tom: it sounds election day to me. francine: it is 5:17 a.m.. the problem is -- i want to show you my chart, the s&p index in blue, the vix in white.
the yellow circle is basically fear. we are not seeing fear in the markets right now. what happens if the market get taken by surprise, is it brexit times 10 question mark marc: -- is it brexit times 10? marc: think of how sharply sterling fell. partly there is some nervousness about the election but i do not see this as a big move as far as magnitude. we tested the 200 day moving average on friday and i think this is a buying opportunity rather than a selling opportunity. tom: i would suggest we pivot to china. we sawre big changes and it with the finance minister out the door in the last 48 hours. dollar-renminbi, this is a short-term chart. 2014, isgth in early
this just a continued managed currency, up we go with continued renminbi depreciation? marc: what we are looking at is mostly dollar strength. china lost almost $50 billion in reserves. tom: it was bad. marc: for me the big story is that the chinese stock market which has been hit harder than last summer, it not causing the destruction of the global market. the markets realize china trade surplus with the u.s. is falling, the currency is weakening alongside a stronger dollar. tom: is it a one-way bet of weaker renminbi yuan or could i go the other way? marc: i think it is too early to go the other way. i think china still needs a weaker currency and it is like pushing air underneath the parachute to make sure it is a
soft landing for the currency and not disruptive. tom: marc chandler with us on election day. we are trying to keep you aware of the financial markets. tomorrow we will pick up the debris. we really wonder where the senate will be early tomorrow morning, and we do that on international relations with sir howard davies and ambassador hormats of the kissinger associates ♪.
mr. trump: this is going to be brexit plus. this is brexit times five. this will be brexit times 10. this is going to be brexit times 50. it is going to be brexit plus, plus.plus it -- francine: i do not know what that means, brexit times 50. is that armageddon? i did not know if he is talking about immigration and i certainly do not know what it means for the market. what he means is like brexit was a surprise for a lot of people and stirred things up. are finding the opposite of wrong is not necessarily right but it could be another version of wrong. jump is predicting his victory
and how it is going to upset all of the talking heads and establishment views. francine: it is a bet against what he calls the crooked media, elitism. we are seeing the parallels but it goes down to whether you believe the polls which we should not have believed when it comes to brexit. tom: what is different with this election, we are going to get the polls and i get that and we will get the results. everyone will want to know the point afterwards. there is a real question mark about that tension. how will the markets be affected if we get what some but not all the pic -- expect, that this election was "rigged?" marc: if you take a look at where obama support rating was among republicans, it was almost as low as hillary clinton. this is a cycle you go through and whoever gets elected is the
president and they will have legitimacy because the office is still the highest in the land. us. marc chandler with we will do a little more market coverage. stephen roach will join us in the next hour to give us perspective on how this holds into our economy. coming up, greg valliere will be joining us. he is from new hampshire and is just brilliant, particularly on the many senate races. greg valliere, as we look at thetol hill, the house, gop, the senate is up for grabs. this is bloomberg. ♪
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election polls will open. we will get you to our compendium of election coverage and that moves forward tonight at 5:00 p.m. with mark halperin and john heilemann, and onto david gura and megan murphy through the evening. francine lacqua will be here in the early you new york morning -- early new york morning -- francine: 1:00 a.m. announcingl be senate. let's get to our bloomberg first word news. taylor: we have heard the final speeches of a bitter presidential campaign and americans will decide. hillary clinton and donald trump made their last pitches in states that are still up for grabs. : hillary clinton is
the last stand for the wall street and special interest donors to special interest themselves. hillary is the face of failure. .he is the face of failure she is the face of failed foreign policy. : bring out your friends, roommates, strangers on the street, just stop and talk to them about what is at stake in this election because north carolina is key. taylor: polls show clinton with a narrow lead. three battleground states are expected to be the first where we will get returns, north carolina, pennsylvania, and florida. germany has arrested five men accused of recruiting for islamic state. they focused on recruiting young muslims in germany and earning money to send them to syria. havee philippines they
allowed the remains of ferdinand marcos to be moved. the current president rodrigo duterte has fashioned himself as a marcos style strongman. global news 24 hours a day, powered by our 2600 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. tom: everyone is a genius on election day. it is a lot harder to do that in the snows of new hampshire or even before the new hampshire primary. no one nailed this like greg valliere. trump,endancy of donald he was way out front and he joins us. we are thrilled to have you with us and marc chandler. we could talk for i think two hours over a beverage of our choice, there is so much to talk about. cap mr. trump win? greg: sure, he cap.
-- he can. tom: you have been out front on the senate. how late are we going to be up on the senate and which races are you focused on? greg: one is nevada where the democrats have to the harry reid seat, and i think they will. i am going to be a chicken this morning and say it is a tie in the senate. the democrats get a net before and that means tim kaine will break ties. tom: we are going to dive into this with michael mckee in our next section as well. the battleground states, the one that intrigues me the most is michigan. 1988, it has been a long time. this is not george romney's michigan. greg: this is the one upset in the primary season. hillary clinton lost michigan to bernie sanders and the polls did not catch that.
i keep being told that if donald trump becomes president the senate will be there to put him in check and balance so he cannot do that much damage. is that true? analogouss somewhat to if she wins because the house will be a check on her and whoever wins will have one of the houses working against them. thatine: what american america represents depending on who is president is huge. it makes a difference if you add regulation, on whether foreign policy is your priority. friend whoe an old has told me 40 years that gridlock is good because they do less harm, and i think that will be one of the takeaways of tonight election. francine: is it a done deal that we get fiscal spending? marc: the key is how will that be financed -- greg: the key is how will that be financed.
with the fed balance sheet so high -- morbid appetite for higher taxes. tom: the thing that disturbs me the most, the washington post has done a great job on voter intimidation. are we harkening back to the 19th century with the intimidation we may see today? greg: there could be some of that but in a country this big there will probably be dead people voting in philadelphia and scattered areas of irregularities. i doubt that anyone can claim tomorrow morning that this was rigged. tom: what is a buffer zone in the polling place? how does it work? greg: you would have representatives from both campaigns monitoring but you have a zone of protection that you cannot penetrate. it is different in every jurisdiction, but you cannot
advocate for one candidate or another inside that zone. francine: will this campaign change anything no matter who wins? i have a morning must-read that looks at the role-play that russia had and the fact that it has put a spotlight on the system which needs to be fixed. greg: there could be some changes. you will see more regulations from her and i think she will be tested geopolitically right away. i think this election is going to wind up being the big story tomorrow morning, will be the changes demographically in this country. hispanics, african-americans, women, that is the change that may not be fully appreciated. francine: this is my morning must-read from bloomberg view. it is so completely different. he talks about the upside of russian interference and says "putin is providing a service to the united states by holding his malicious mirror to the
political establishment. it is a trolls hair but does not reflect a nasty reality -- it does reflect a nasty reality." whoever becomes president tomorrow will have to unify. it is a little like brexit. it is no good if you have a candid -- campaign that means you have two halves. tom: there was an election in 1960 was decided in a bar in chicago, i think was the full glory. we are supposed to have close elections and they always are. to take a more recent example, al gore won the popular vote in 2000 and did not win the electoral college. you could have something like this tonight and i think it could be really close. tom: florida is a tossup, no one is surprised. what geography will you look at in florida? greg: i think the hispanic vote
will be overwhelming. i think if florida goes the way i think it will go, we might be able to go to sleep around 10:00 tonight. "surveillance" breakthrough. francine: thank you for giving me a little bit of help that i get more than a half hour of sleep. do you expect the polls to be so clear winning? marc: i do, but i am still concerned about putin's role. it is not just in the election but he is funding the populace right party throughout europe as well. this is not something that is unique to the u.s. and we will look back and see this as a turning point. how did we stop foreign interests from giving us a one-sided story in the u.s. election? tom: give us an update on the italian election. francine: it is a referendum and
that it is difficult to understand whether the prime minister will be replaced. tom keene with some pretty incisive questions on election day. greg valliere, thank you very much. marc chandler, the global head of currency at brown's brothers. june into our coverage tonight at 5:00 with a two-hour edition of with all due respect. coverage eastern continues with david gura and megan murphy. this is bloomberg. ♪
beautiful new york city. this is where hillary clinton has returned to cast her vote. donald trump also. tom: mr. trump was in that camera shot. francine: we will be looking at washington, d c but we will be here in new york. i would suggest they are very politically chosen and it is very choreographed. atncine: look at new york the next 72 hours. the senate is also up for grabs. let's bring in michael mckee and still with us greg valliere and marc chandler. this is crucial because it goes back to the powers that the president has. michael: you were talking last segment about how we may have divided government, and it is going to be important particularly for hillary clinton
if she has to face this divided government, that she get some support on capitol hill and that would be in the senate. democrats need to take a net of four seats away from republicans if she wins because tim kaine could break ties as vice president. the incumbent is way behind and is likely to lose to tammy duckworth. it also looks like they will take wisconsin. russ feingold in a rematch against ron johnson, the republican incumbent, is ahead. the most likely spot is probably pennsylvania where katie mcginty is ahead of pat toomey. here's a question for greg valliere, where is that fourth seat? a lot of people are looking at new hampshire, kelly ayotte and maggie hassan, or north carolina where richard burr is locked in a tight race with deborah ross. greg: i think new hampshire is
where they get their fourth but they cannot lose one seat and nevada may be in play. michael: according to the people who live out there and study the early vote, something like 80% of nevadans have voted. they do not count the votes but we know most of those votes have gone to the democrats at this point. that has given people in nevada a lot of confidence that they are going to hold that harry reid seat. tom: if we get a democratic senate, does that change the paul ryan calculus house democrats? what will be the new paul ryan if there is a democratic senate? marc: the new paul ryan is on thin ice. i think he has it potential insurrection on his hands with his own troops. when we have the debt ceiling fight at the end of the winter he may have to align with some of nancy pelosi's votes. he could go the way of weiner
and cantor and be out by spring oehner and cantor and be out by spring. michael: the freedom caucus has decided to hold off on challenging ryan but they have given notice. audience,our global is that the tea party? michael: it is a little bit different. the tea party are like, do not spend any money. these are not just fiscal conservatives but cultural conservatives who do not want any compromises at all with democrats. it is the hardest thing that paul ryan has to depend on because he can count on nothing from that group. there is only 12 or 13 but with a narrow majority will make it hard. for our global and european audience, a lot of the appointments of the fed our
political and the chair is a political appointee. is it a done deal that if donald trump wins she is out by 2018? marc: i think it is a mistake to think that donald trump or any president can fire a federal reserve chairperson. if i was janet yellen i would say i need to protect my institution's instant -- independence. two toellen for the last three years has been facing criticism from the right when she raised rates on december 14. she will receive criticism from warren,, elizabeth bernie sanders will say she acted to precipitously. her term is up in 2018 as a stand fisher so whoever is elected by the end of 2017 have to make edges -- a decision. francine: my concern is that
every central banker can do nothing right or wrong because they are always in the line of fire. who is the person that donald trump could appoint that would gain the trust of the markets like janet yellen has? >> i have no idea. arc?cine: m bec: i think the issue will not so much who it will be but how it impacts policy over the next 12 to 18 months before janet yellen is out. , ifael: this is a key thing the senate stays republican but hillary clinton is elected president, she is going to have a very tough time getting many of her cabinet choices through because the republicans are not going to want to cooperate with her in any fashion. if there is anyone controversial they may just do what they have done with merrick garland and put it on hold. this is important stuff.
tom: mike, you have some perspective on this. what are your thoughts? michael: you look at the polls and the way the state breakdown, and we vote on an electoral vote races state-by-state. it looks like hillary clinton is poised to win but the question is does she have enough support in congress to do anything or is intoing to just devolve investigation after investigation in the house, and a senate so narrowly divided that it is going to be tough for her to get her appointees through? tom: that is not what i asked. i just want to know when i can go to bed tonight. michael: i think it could be fairly early if things break the way. , floridawatch florida goes for her you can get in your jammies and go to bed early. tom: my red sox jammies, you got
tom: it is part of the national fabric, the voting of the president and vice presidential candidates. this is the first shot of the kasine in the background greeting people in richmond. he was mayor of richmond to begin his political career. what is wonderful about this and so american, mr. kane is literally from the 19th century,
a son of a blacksmith. his father was a welder. we now go to another candidate for secretary clinton, ron kirk, a democrat, and one of the lead voices on trade within the democratic party. is so manyhere things to speak to you of but i think what i would speak to the first is a collapse of tpp. , canur candidate wins trade be reinvigorated in the debris of this election? ron: i certainly hope so and i would take a little issue, i do not know that tpp has collapsed as certainly the public support and discourse around it has collapsed. trade is going to have to stay relevant because so much of our economy in the future is going to be tied to our ability to provide the goods, the services that countries around the world need as they modernize their
economies. we do have some work to convince the american public that trade is not only not a bad word, but it can be a critical part of building the jobs, building the economy in the future. convince how do you the american people? i am from london and we have the same problem with brexit. people do not believe globalization serves them. how do you convince them otherwise? ron: the shortest answer is jobs . those of us that believe in trade i think get a little bit too esoteric. talk about globalization and rationalization of the supply chain and in an environment like this, when the most pressing, iserlying question is where the next generation of jobs going to come from, we need to show people that buy our opening new markets around the world we can sell more of our stuff and it is that simple.
i do not think those of us who believe in trade and done a good enough job between connecting the dots between what we make and produce here in the united states and europe, and how we sell that abroad. tom: you grew up in austin, texas, and an austin of a different time. tell me about voter intimidation. what do you expect to see in your taxes today of freedom within the ballot? see somepe we do not of the things that my parents endured and even some of the things that i endured when i was growing up. i would not say all republicans would go out of their way to make it difficult for people of we areo vote, but what seeing in texas is an excitement that the rhetoric of donald trump has done more to and sent getg hispanic voters to
organized and come to the polls, and i think we will be pleasantly surprised. i am not as optimistic as to believe we will turn blue today. for a state we historically lose by double digits, i think it will be a single-digit race and we will see an explosive hispanic turnout all over the state. tom: ron kirk, thank you so much from washington. we see the vice presidential candidate voting in richmond, virginia. aine, the former mayor. marc chandler, thank you for being with us. ♪
get out the buffer zones amid vote in confrontation and intimidation. there is a deplorable lack of sleep. secretary clinton lands in white plains north of new york in the 3:00 hour. mr. trump will vote in a manhattan schoolhouse. and forget clinton-trump. the senate could go either way. in this hour, we have greg and steven roach. this is "surveillance." live from our world headquarters in new york. in london, francine, this is a big day. francine: i want to know about voter turnouts. bits been a lot less than we get in the u.k. alecs. tom, the story of the day we're looking at the markets because we're bloomberg and dollar volatility is dropping because the markets are priced for a clinton win. tom: out first among our candidates, clinton-kaine, the senator from richmond,
virginia, voting here, of course. always a made for television photo-op. and voting in many different ways. i don't know if they use a chad which goes back to bush v. gore years ago but it's amazing, francine, and for our global audience to explain the process. this is a state and local process. voting is not run so much by the federal government. froip frank: francine: in most european elections you have a blackout not to influence voters. tom: it's a good point. the distinction is we don't have a blackout but exit polls, there's a process. we don't do that. it goes back a good number of years. and the other is the idea of a buffer around each polling booth and that goes to the reports of the intimidation that we could possibly see today. with much more on this, an update on where we stand at the
6:00 a.m. morning with our first word news, here's taylor rigs. taylor: the speeches are over and it's time for america to decide who will be the next president. hillary clinton and donald trump made their final flees -- pleas to voters in battleground states. most polls show mrs. clinton is in front but not by much. hillary: today when your kids, grandkids ask what you did in 2016 when everything was on the line, you'll be able to say you voted for a stronger, fairer, better america. [cheers and applause] donald: we'll have a great victory tomorrow, folks. [cheers and applause] donald: they have no idea. the dishonest media has no idea. actually, they do have an idea. they say what is going on? taylor: the first votes were cast after midnight in
tinyvilleages in new hampshire. trump shows a narrow lead, 32-25. in iraq, kurdish forpses are battling islamic state fighters for a town east of mosul and part of an offensive aimed at recapturing iraq's second largest city. troops south of mosul have discovered a mass grave filled with bodies of about a hundred people believed to have been killed by islamic state. a new study warns the u.k. chancellor faces a big budget hole because of brexit. according to the institute for fiscal studies, hammond will have to deal with $39 billion in lost tax revenue caused by diminished growth and will be partially offset by $7.5 billion reduction in spending if the u.k. no longer contributes to the e.u. budget. global news 24 hours a day powered by more than 2,600 journalists and analysts in more than 120 countries. i'm taylor rigs, this is bloomberg. francine and tom? tom: breaking news from a financial space. valiant a always troubled and
adjusting and they caught their forecast. it's a nice reduction off revenue ford but i really note a $1 billion goodwill impairment we see this morning from valeant as that saga continues. the value check of a the situation yesterday. we showed the chart earlier, a good 300 points on the dow. we turn this morning the futures are a little heavy but what you'd expect on an election day with eight states opening here at 6:00 a.m. east coast. on the next screen, francine is looking at pace, 18.62. the peso turned this morning. francine: i'm looking at gold a little bit higher. i know it's a touch. gained 0.2%. but investors believe clinton will win and yet gold is still going a little higher. a little caution from some investors. those are the things i'm watching out for in the markets. let's get more on the u.s. election with bloomberg
politics reporter. he's outside the white house. tell us how close this election will be? if you believe the polls and market, clinton will have a pretty clear victory. reporter: if you believe the polls, the race is much closer than it was just a few weeks ago. anything can happen. it's all going to be down to turnout and the ground game of each campaign, how much they're able to get their voters out to the polls. donald trump is within striking distance. anything could happen. tom: toluse, i was taken aback by the pageantry in philadelphia to see the thousands of people assembled with the first lady fired up obviously in support of secretary clinton. tell us at the white house this morning the enthusiasm of the president as he assisted his secretary of state. toluse: the first time we've seen a sitting president in such a long time campaign so heavily for their successor. barack obama is incredibly excited about trying to get hillary clinton into the white
house. but he's also incredibly afraid that donald trump could win and erase everything he's done over the last eight years. he's been very heavily involved in this election and been on the campaign trail almost every day. he was in philadelphia with his wife yesterday and a lot of different, important political figures showing how much of a support that hillary clinton has among former presidents, sitting presidents, as well as celebrities like bruce springsteen who was there last night in philadelphia. tom: maybe different celebrity with mr. trump. i look at mr. trump's last number of days and suggest he's been quieter, clearly off twitter as has been widely reported. the thoughts of the white house as they look at the final days of the campaign of donald trump. toluse: you heard president obama say he's used to the fact that donald trump's twitter has been taken away from him by his aides saying someone you can't trust with a twitter account is
someone you can't trust with the nuclear codes is a line he's been using on the campaign trail. he's afraid donald trump could pull off a victory but does believe the internal polling shows hillary clinton is ahead and has several paths to victory like florida, north carolina and ohio where president obama has been going the last week and she's in good shape to be the next president and occupy the oval office here in washington, d.c. in about a couple months. francine: if donald trump gets elected, i want to talk policy, what is the one thing that will change significantly policywise that will change three months from inauguration. toluse: there are tons of things. he has a completely different vision for america than the current. and hillary clinton. you look at trade and that's an important area where the president is trying to get a t.p.c. trade deal through and donald trump said he'll not only not sign the t.p.p. deal but maybe negotiate nafta and pull out of nafta, one of the trade deals u.s. is involved
with with our trading partners. that's one area donald trump would completely change u.s. policy as well as foreign policy in terms of working with our allies. tom: toluse olorunnipa, thank influence the white house. joining us in the studios from yale university and decades with morgan stanley, steven roach. professor roach, i guess i can call you that at yale university. been there a number of years. you wrote a magnificent book eight years ago, nine years ago, the next asia. for steven roach, what's the next america? steven: well, the good news, tom, this is the last day we're going to have to listen to donald trump as a credible candidate. and we can now go on to focusing on make it's going to look like for president clinton which i think is the most likely outcome as she faces a very challenging economy, a very stahleninging world. tough issues in china centric
asia with china much more muscular on foreign policy and how she addresses that without t.p.p. which is something she believeed the secretary of state was the centerpiece of a china containment strategy. it will be a big challenge for her and she's going to trying to figure out how to get back into that approach. tom: that is foreign affairs. senator contain speaking -- senator kaine in richmond talking secretary clinton and mr. trump, mr. kaine in richmond, virginia. let me bring up a cart because i'm doing it for stephen roach, he's been a great supporter of bloomberg surveillance and the economy for years. it's my chart of the year, the four-year moving average of real g.d.p. from morning america in the late 1990's and down we go to what we did in 2006, not bad, above 3%. and we're not getting it done. stephen roach, you predicted this and were very strong on a soft consumer.
we're down to a 2% run rate on g.d.p. and 40% decline in economic growth in a matter of 20 years, maybe 15 years. what is the roach prescription to give us a little more economic growth? stephen: you've got to get behind the number, tom, and the major reason for the shortfall of g.d.p. which you're entirely right in pointing out is unprecedented weakness in consumer demand. american consumer growth rate for eight years has been about 1.5%. and that's two points below the ecrisis average for the 12 preceding years. we went through a balance sheet recession like japan did with consumers overly levered on a property bubble. they're still paying down debt, trying to rebuild savings and given the shortfall of labor income because of stagnant real wages, maybe changing a tiny bit right now. they're not getting back to where they need to be. we have to address the consumer.
francine: is this the new normal? will we ever go back to what we were? stephen: i hate the word "new normal" francine. tom: there goes your consulting gig with pimlico. stephen: i never had one. it's a challenging head wind and there's so much focus on providing relief for poor beleaguered corporate america. the real issue here is making american consumers whole again, assisting them with their excess debt and their total lack of savings in addressing an insecure and frightening future for many american families. francine: this is my u.s. unemployment rate. the blue is under democratic president. if we bring it up, we brought it back to the 1950's because tom keene likes a little bit of history. it's gone down. i know we look at the participation rate but is the u.s. economy all that bad? i know there's an inequality problem but if you look at the
percentage of the poverty rate, it's also gone down. stephen: look, the economy is, i think tom pointed out, the growth rate in this recovery has been about half the historic norm. the unemployment rate has come down significantly because the participation rate has basically collapsed. there's a big debate whether or not this is structural or cyclical or a combination of the two. but i think the pieces of the economy that tell me the most are the profound shortfall of domestic demand driven by the american consumer. francine: this is worldwide, right? stephen: i wouldn't call it a global phenomenon. we need to look the a the united states economy. typically recovery is 4%. this one's been 2% and the major reason for the shortfall is the overly leveraged savings
short american consumer. and president clinton is going to have to address that very quickly if she wants to transform the attitudes and the middle class towards the next america. tom: we should say polls are open in eight states. francine: there you go. stephen roach, yale university. thank you for now. tune in tonight. our special election coverage starting at 5:00 p.m. eastern with a new edition of "all due respect" and then at 7:00 p.m. eastern our coverage continues on the bloomberg channel. we're looking at the markets. pretty subdued today. this is bloomberg.
francine: live pictures of the white house. tom informs me this is the northern facade overlooking lafayette scare. i saw a fired up president obama yesterday. i looked at a lot of coverage for the final push for hillary clinton and his final push for his own legacy. let's get straight to corporate news now and back to the u.s. election and markets. let's get to the bloomberg business flash with taylor. taylor: francine and tom, valean cut its forecast after posting earnings that missed estimates. the company took a billion dollar goodwill impairment to write some of the u.s. businesses. it became the focus of outrage of high drug costs last year and sent the stock price down more than 90% of its high in 2015. that's your bloomberg business flash. francine and tom? tom: thanks so much. here's a wonderful morning must read and can only come from
albert hunt with his decades of coverage of "the wall street journal" and bloomberg. mr. hunt, on a personal note i'm envious of the late david broder, the esteemed "washington post" political writer, the first presidential race he covered was kennedy-nixon. the last was the president in 2008. if this is my finale, mr. hunt goes out with style. the book ends with nixon's re-election in 1972 and one donald trump. thank god for the four great ones in between. greg revisits us from horizon. mr. trump is getting torn to shredsly the -- by the lines of al hunt, isn't he? mr. hunt: he has. he's been on message and i think he's actually become a redible candidate. tom: nixon's coming was
contentious but was a nation ripped by war versus what we have now. what are we ripped at now like vietnam. greg: i think this country has changed dramatically demographically if you look at the influence of people of color in this country. i think there are other people who don't quite accept it and that's led to a lot of tearing at the social fabric. francine: greg, you talk about donald trump being a credible candidate the last 10 days. what's his main policy. i want to talk policy, i'm european and actually i'm amazed at how this election is so much on personality and on where you want for know what they do on trade or fiscal spending or taxes. depreg: look at michigan which hillary clinton lost. it was a referendum on globalization. i like free trade but an awful lot of people in michigan don't and trump has captured that mood. and i think michigan tonight will be closer than expected.
tom: steve roach -- stephen: why do you like free trade? i do, too. greg: they're winners. everyone talks about the loser, they're winners and we as consumers get to -- stephen: going to wal-mart and buying cheap things made in china. greg: part of it but i think trade encourages economic growth and protectionism retards economic growth. tom: along this line, allen kruger and the president of the council of economic advisors with an op-ed on something you teach at yale, monopsony. greg's point on michigan, we have the basic idea of a labor group in america that can't get fair shake because of fancy esoteric things and rising wages. how do we get wage increases now? stephen: i think there's a great book published a while edited ed and you
implying to one answer, an absolute lask and -- classic and never quite won the prize we were hoping it was. there was labor arbitrage. tom: a phrase you invented. stephen: that i wrote and that's what we've got to grapple with in this era of trade and globalization. the idea of low cost labor coming in and squeezing high cost labor in the developed world, especially in the united states, especially in michigan is not going away. it's intensified and accelerating. how do we address that? tom: stephen roach and greg valliere, we'll see you the next coming days. the white house on this election day, the jefferson memorial and washington monument in the back ground. good morning.
tom: and america votes. brooklyn, new york, east of new york city. there's not a polyester fiber in sight as they vote at the brooklyn museum. enal l be using artis ballots. at the acclaimed brooklyn museum, brooklyn, new york. with us is francine laqua. what's your observation so far coming in? francine: i've written bizarre things about puppies at the polls to get a younger
generation to vote, tom. i'm hooked and confused. tom: you'll vote in the confines of connecticut today? stephen: i will. tom: long lines expected, right? stephen: never can tell. tom: within the contentions of this election it evolves down to six or seven states. which states will be look at closely tonight? stephen: the usual, florida, michigan, i don't think they'll be close, i really don't. i think we'll be able to go to bed early tonight. i think the momentum is not there. the media is trying to make this look close but i just sense that the air, the hot air is out of the trump balloon. tom: will secretary clinton keep janet yellen as chair of the federal reserve. stephen: sure. no need to change it at this point, no compelling reason. tom: we'll talk about that with
dr. roach through the morning. he's with yale university. again, the brooklyn museum, voting in eight states occurring right now including new york. francine? francine: tom, this is what we're hoog at in terms of the market. there's a little bit of caution. i know the polls are suggesting and i really think they are pricing in a clinton win but this is for the world index, they're flatter than they weres, the futures on the s&p also slipping and european shares in advance and gold eking out some of the gains a the this point to a little investor caution before the presidential election with opinion polls showing hillary clinton narrowly ahead of donald trump. this is bloomberg on election day . . wow, x1 has netflix?
hey, drop a beat. ♪ show me orange is the new black ♪ ♪ wait, no, bloodline ♪ how about bojack, luke cage ♪ oh, dj tanner maybe show me lilyhammer ♪ ♪ stranger things, marseille, the fall ♪ ♪ in the same place as my basketball? ♪ ♪ narcos, fearless, cooked ♪ the crown, marco polo, lost and found ♪ ♪ grace and frankie, hemlock grove, season one of...! ♪ show me house of cards. finally, you can now find all of netflix in the same place as all your other entertainment. on xfinity x1. francine: this is a picture of the white house, all eyes and
the markets and anyone in foreign policy looking at your election. you are like the leader of the free world. tom: the white house is pretty original and you literally can see the paint pieling on the side of the house. it's like a regular house. tom: harry truman built it but very much like the original. francine: whoever wins tonight will enter the white house january it 22 after the inauguration. let's get to the election and bloomberg news with taylor rigs. taylor: we've heard the final speeches of a bitter campaign and now americans will decide who will lead them the next four years. hillary clinton and donald trump made their last pitches in states that are still up for grabs. donald: hillary clinton is for wall street and special donors
and special interests themselves. hillary is the face of failure. she's the face of failure. she's the face of failed oreign policy. hillary: bring out your friends and roommates and strangers on the street. just stop and talk to them about what's at stake in this election. because north carolina is key. francine: polls show clinton with a narrow lead. north carolina, pennsylvania and florida. germany has arrested five machine accused of recruiting for islamic state. the authorities say the suspects focused on recruiting young muslims in germany and raising money to send them to syria to join up with islamic militants. in the philippines, the streak has cleared the way for the remains of ferdinand marcos to be moved to the national heroes cemetery. marcos ruled for three
centuries before being ousted in a coup and was accused of human rights violations. the current president has fashioned himself as a marcos style strongman. global news 24 hours a day. i'm taylor rigs. this is bloomberg. francine and tom? tom: tom keene and francine laqua from london and guy johnson is here and francine will be later on tonight to open for europe. this was the pageantry in philadelphia and remarkable with two very different campaign. this is the clinton campaign with the obamas and saw the first lady speaking in the middle of the evening last night but really quite a turnout in philadelphia. and of course the philadelphia suburbs are huge focal point for how the state of pennsylvania will go this evening. stephen roach of yale university. we introduce brian belski of bemo capital markets to talk
the capital markets and i want to bring up a chart from dr. roach's colleague at yale university. this is the acclaimed ibbits chart from the standard & poor's and what it says is go to cash and go to cash often to play on election day. it's really not a good policy. brian: it really isn't. this, too, shall pass. let's just kind of get through this noise and the rhetoric and the conundrum which is the election. let's focus on what's happening in terms of fundamentals in the economy which are improving. and if we cannot be emotional and not be reactive, i think we'll be fine. tom: there's an underestimation of the multinational of our multinational large cap and the visible exchange for example and our mid caps and even small caps, are they immune from washington and the political process? brian: i would say this. small cap stocks from a
structural basis have changed the last five or 10 years in respect to how much cash they're holding and we talk a lot with respect to dividends and mid cap stocks are starting to show and grow heavier dividend. are they immune with respect to platforms, no. but at the end of the day, the economy drives stocks. the fundamentals drive stocks, not necessarily platforms. if we do enter more of a protectionism type scenario than small caps can do quite well over the near term but longer termites all about profit growth and how companies are going to be able to grow within either environment going forward. francine: i'm going to be in the tom keene time-out chair but i don't care. i made a candle chart, bar chart for people in the u.s. tom: i like bar charts. francine: this is the three month return. every time that bar chart means the s&p went down the last three months, it's the opponent, the opponent party gets in. why is 2016 different?
brian: as you remember in 2012, too, the polls coming in before the election had romney ahead and then the market was down the day after the election because the stock market thought romney was going to win. at the end of the day, we just him pause people to take a much more longer term perspective. and not be so reactive. we in our society want to know everything right away. and i think it's dangerous heading into this election, especially given the fact how much stocks were up yesterday. francine: i spoke earlier on to the glaxo smith c.e.o. and if clinton wins will the pharmaceuticals be worse off? he hesitated and talked about regulation. brian: you have to talk about regulation but talk about how many roadblocks come up with respect to the senate and the house in terms of how much the democrats could push through if she wins. ultimately means more angst and emotion and we'll see
ultimately how these things pan out. tom: we need help from stephen roach within the equity markets, stephen roach, strategist at yale university. alan greenspan was on yesterday. stephen: who? tom: on daybreak and surveillance as well and chairman greenspan didn't forecast a single point estimate but alluded to higher yields to come including the quotable phrase, 5% yields. i would suggest dr. roach would push against that. stephen: well, it's amazing to me you have the maestro on predicting interest rates. to get interest rates anything close to that level you have to think of a very different world in terms of inflation, in terms of global growth and we're as far away from that now as we've been at any point in our career. the lessons of japan which i think are the template for what we're going through now in the
broad developed world is long term interest rates can stay a lot lower post bubble even than alan greenspan had envisioned. tom: i set you up because of the chairman's love for the federal reserve system. how do you invest the investors of b.m.o. federal market to be in the market when there's so much doubt out there because of the higher rates. a n: throwing out a 5%, of black swan or trump win is a headline grabber. structural equities over the next several years are going to be very attractive assets especially those from an asset allocation basis able to provide equity income. we think equity income is a new sleeve on the assetal education given that the fact of fixed income is a fallacy. if we see bonds, clients will
look for stability and we believe from a longer term perspective, equities will provide stability. francine: what happens to volatilities in equities if trump wins? i showed you this chart backwardization, there's no you in the markets because see what happened? brian: you look at a fixed chart you look at it in a longer term. we're in a low volatility environment and we'll be that way for a while especially given where assets are in terms of bonds and stocks. however, on a long term basis, the answer you're looking for is are we seeing a spike involved with respect to seeing a trump victory? the answer has to be yes. the markets telling you yesterday the stocks want status quo and if we get the opposite we'll see a spike in volatility. throwing out numbers like a 5% yield will take a long time to get there.
trump is clearly more inflationary and we won't get there in six months. francine: tune in for our special election coverage at 5:00 p.m. eastern with a two hour edition of "with all due respect" and then at 7:00 p.m. eastern our coverage continues with bloomberg news washington bureau chief megan murphy. we're looking at the markets. this is bloomberg.
the outskirts of columbus. may be less battlegroundy than have been in previous elections. nevertheless a key state. all the people we're seeing in the shot saturated by the advertising. it's amazing the polarization n america who gets the tv ads. francine: i highly suggest to andletgo. go find the latest polls and look at that. this is a wlerg prediction of who will win and -- bloomberg prediction of who will win. it's an awesome map. coming up shortly bloomberg's is eak election day exciting and america numb for the moment. >> feels like a payroll day.
it's payroll friday with the volume cranked right up. we'll be talking to peter navorro, professor of economic and public policy, trump supporter and always fiery and expect that coming up in a little bit. the status quo is what many people expect and that generally means a divided government but i'm not sure how much what happened the last couple years you can put back in the bottle and how much of it is very versal. we'll talk about a fallout and political policyics next. tom: i'm writing a banner. roach on navorro economics. peter navorro will join "daybreak." you were visibly moved when we announced we'd have a economist from the trump camp. why do you disagree so vociferously with what we see from the professor from ucal-irvine. stephen: peter navorro should
be defrocked and lose his ability to practice economics. he's not written one credible thing about -- tom: what's the feature of his macroeconomics of this nation you take issue with? stephen: hate. e hates china. his wannabe treatise, the book i think was called "death by china." peter believes china is spob for all that ails -- responsible for all that ails the middle class and the economy. his so-called analysis of the trump economic plan co-authored by the great wilbur ross is not worth the paper it's printed on. they take the concept of dynamic scoring into a realm that was never envisioned to do. where they presume that all of the protectionism and the so-called reregulatory remake of the american economy will be positive for the united
states. francine: we had him on the show friday, actually. positive stephen: too bad. francine: he took offense i was asking questions because i was in london and shouldn't be interfering in the u.s. election at all when it was about trade and the second thing, he also pushed back against germany and saying any country with a surplus should be punished because they're cheating america. stephen: right. what peter quite doesn't get and is sort of understandable because i think he has an economics degree from harvard is that trade deficits do not occur in a vacuum. the united states doesn't save. and when we want to grow without saving we run trade deficits. tom: this is critical question, is this our new mercantilism, is navorro ross economics taking jason viner's classic essay of the 1940's and bringing it over to a new neo-mercantilism? stephen: there are reasons to raise serious questions about the impact that trade has on
american workers. but to blame others for our own shortfalls, there's nothing neomercantilism about that. tom: with your experience on equity investment how do the multinationals adapt and develop into the new political system about trade? brian: at the end of the day, the trend in manufacturing, tom, has been make as much cheap stuff you can possibly overseas, ship it back here. i think going forward we're going to see manufacturing, some capacity coming back, but at the end of the day we'll make less and sell it more efficiently here. so i think, you know, any time we start talking about binary outcomes it varies on either side, i think it's dangerous. and we wound up this international trade situation over the last 20 years, the percentage of non-u.s. revenues with respect to u.s. overall sales has grown substantially
the last 20 years. you can't unwind that, right? and so at the end of the day, you want to be with companies that have diversified platforms around the world that are not binary and if we start to think of the binary outcomes 100% international or 100% u.s. is not the way to run a company. francine: why is globalization or trade deals around the world getting such a bad rap? i'm thinking of brexit and what we've heard from both candidates here. is it because we actually are worse off than 30 years ago in terms of income or simply because no one stood up in the last 15 years and said look, this trade may not be perfect, this deal, especially it's much better than if we had no deal? stephen: francine, trade is short of -- sort of an amorphous contract. in the years we've seen low cost workers enter the economy largely as producers and the
chinas and indias and eastern european and latin american countries contribute as producers but not as consumers. and so we as consumers benefit from their low-cost production but we need to sell them things. and until they can stimulate their own internal consumption, we have a real east symmetry in globalization that's painful. tom: a final thought from you from the economic markets. if we assume tepid g.d.p., how do we get six months earnings in one year? brian: the majority of the move in the markets are going to be all about multiple expansion. we need to start to see a combination of both fiscal and monetary policy together working together. we've not seen that during this recovery since 2009. so if we start to see some of that we'll see revenue growth and earnings growth. the other thing, too, in corporate america, consumer america we're sitting on our hands. we want to get past this and get through the fed at the end of the year and start growing
again and we think that actually growth would be a little understated and earnings growth could be understated and we're in a nice tailwind with respect to growth the next six months. tom: thanks for the briefing. mr. belisky is with bmo capital markets. tomorrow we have a wonderful lineup for you post election on our very international relations. it's election day. we're pleased to tell you tomorrow with us sir howard davies, r.b.s. chairman, consult. haas to the that will be tomorrow on bloomberg surveillance. the white house on election day. this is bloomberg.
them to give their acceptance speech. tom: there trump in midtown manhattan and will vote at a schoolhouse and secretary clinton at their home north of new york. the foreign exchange, a quiet market. the peso has been front and center. i'm calling it a churn today in sterling 124.08 as well. let's go to our single best chart and on election day, i've been saving it. it is my chart of the year and really speaks to the story of debates where mr. trump was quite emotional about 1%. and down we go. we go back to morning in america which was 4% real g.d.p. down we go to 3% and the new level of g.d.p. stephen roach is with us from yale. stephen roach, you've predicted this chart and you absolutely nailed the nonrecovery in real g.d.p. what's the single presidential policy prescription that we can have to get economic growth going for all americans? is it a tax cut?
stephen: again, tom, i go back to the point i made earlier this morning. the force that's holding back that gpped -- g.d.p. is the american consumer, 70% of the economy. why is the consumer weak? that's the question that president-elect clinton is going to have to address. tom: is the overlay the paradox of saving, a renewed paradox and we're saving more because of the distortion the fed has given us in the rate market? stephen: the fed has given markets, assets and incentives to save an unprecedented distortion with zero interest rates and quantitative easing. you're right about that. we need to get monetary policy back on a more table platform. we need to look at longer term saving incentives and look at incentives for overly indebted americans to still dig out of a very, very deep hole. francine: you talk about president-elect clinton. what happens if donald trump wins and what happens to the such consumer? stephen: i get a new passport.
francine: what happens to the rest? not everyone can leave this country. tom: where would you move to, new hampshire? stephen: i'm really not seriously considering the options now because i don't think it will happen. but i do have a backup plan i'm prepared to take out of the vault if that happens later tonight. francine: there's nothing anything good can come out out of a donald trump presidency, fiscal spending, tax cuts, deregulation? stephen: nothing good would come from a donald trump presidency and i'm confident in the character of the american people to have figured that out a long time ago. tom: stephen roach, thanks for being with us today. dr. roach will continue with us on radio through the morning. so much to talk about, francine. i want to go to when you reappear for asia and europe in the august 1:00 a.m. and 2:00 a.m. hour. we may not know even then the president but particularly the senate races. francine: it's 10 hours from now. and actually what i would look at is the markets. we started the program about
two or three hours ago. europe was on a high. gold was a touch higher but it seemed that the markets was largely pricing in a clinton presidency. now futures and the s&p 500 sleeping a touch and european shares are off. i think traders are a little nervous. tom: to your point, i want to go here. francine: want to hedge. tom: want to hedge away but i would suggest by 2:00 or 3:00 p.m. this afternoon with the turnout we may have a better market response. francine: yep. tom: we'll continue. we have further coverage through the morning. with all due respect tonight, 5:00 p.m., look for that and our special coverage at 7:00 p.m. with david and megan.
election day, and i'm jonathan ferro with david westin and alix steel. the biggest pop on the s&p 500 since march of this year, futures going nowhere, down about four points on the s&p 500. -22 on the dow. yieldsn off yesterday, down about a basis point to 182 on treasuries and the dollar yen down, a weaker japanese yen. head to the polls to decide who will be the next president. results are expected at 7:00 p.m. eastern time. aocks are slightly lower with billion -- opinion polls showing hillary clinton slightly ahead. kenneth make their final pitch to voters. candidates take their final pitch to voters. hillary clinton: it's job