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tv   Bloomberg Markets European Open  Bloomberg  November 9, 2016 2:30am-4:01am EST

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host: welcome to the special edition of bloomberg markets third we have the first trade of the day. it is not going to feel like that today, though, is it. we are in new york city. there is only one thing to watch that donaldhat is trump stunned the world. he is poised to eat donald trump to become the 45th president of the united states. we are getting some breaking news. let's break out this headline sequence. >> i can see flashing red right
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now is that donald trump wins wisconsin, surpassing 270 electoral votes he would need to take the presidency. that is what we are seeing on this -- on the screen. it is a stunning night, a historic night. >> what is it down to? is it the same as brexit? is this domestic, or part of a global scene we have been seeing? >> this is a map that is much wider read it than we ever anticipated. he won ohio, he won pennsylvania, the great white whale of republican dreams of landing pennsylvania to jump over the line. he won wisconsin, we still have michigan and arizona in play. and set of this being donald trump been the true death knell for the republican party, what he has led tonight is a revival. >> the speech that comes up imminently, what does trump take? marketsve seen the
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reacting on uncertainty, they are reacting on some statements he has made about what he is going to do, what kind of future we will see. there is a panic in the market, no question. will he start the conciliatory tone that is needed? we have a huge divide in this country, a divide that he frankly has exacerbated at times in this campaign. it will be interesting if the tone he strikes is not about making america great again, but part of that greatness being about what brings us together. he can really govern effectively if you can do that. night many people simply will not believe. as you guys know so well, the morning-after after brexit, there was so much disbelief. frankly, some buyers remorse. we shall see how this plays out. we can already see what the markets are doing. host: to reiterate what we have learned, wisconsin has been called for donald trump. that puts an north of the 270 that is required in the electoral college that
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as thevely leaves him only candidate standing come and we now are likely to see him speak very very shortly. we'll see what yes to say. let's get to the board. it is a much much different picture compared to yesterday. you look at the markets to begin , a much muchr-yen stronger japanese. a much weaker mexican peso. that is dollar peso up by almost 10 full percentage points. field we talk about is asymmetric risk. if he had hillary clinton in the white house, that is a limited upside. it had donald trump in the white house, that is an unknown downside. >> do not know what the story's going to be in some of the politics is it the uncertainty?
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do not know his reaction is going to be to the rest of the world? the markets have a lot to figure out. >> whether it becomes a long-term issue in the policies that he wants to be implementing . for the markets, the short-term sentiment shifts. for the markets, that was the bias going into it. the risk off candidate is in the white house. difficult, or how easy, are those policies that he has got on the table to actually become reality for this market moved to actually become something more than just a short-term shift? >> we have to emphasize something -- not only is donald trump going to take the presidency, he will be doing it with a republican senate and a republican house. that is one thing that i thought all along to this campaign that had not been sufficiently priced into the market. not necessarily in terms of panic, but in terms of being able to act some pretty
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apprehensive sets of legislation. will he be able to get comprehensive tax reform through on a corporate level, and international level, are we going to see infrastructure? stimulusiscal president. he is talked about all of the stuff that is really going to be supply-side -- cutting taxes, signifying the rates. it also could be that when people began to parse what he is going to put in place in terms of economic and work, it is a page out of the republican playbook. >> what is remarkable is that the treasuries are rallying up into the 30 year point. 30 year yields are up. quite clearly at the front end, we are down to eight basis points. >> are we going back to 2000? are we going back to hanging chads? re: not going to know which way
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this election is going to know? it is to bake in terms of electoral count for her to mount a challenge. it is possible that she wins the popular vote. one thing we should mention for our european viewers turn again, we had a stunning development earlier this evening when john podesta, hillary clinton's campaign manager, took stage and said she will not speak tonight. there are still those to be counted. earlier in the week, we got the threat was that donald trump .ould be refusing to yield it is the exact opposite, with hillary clinton refusing to yield tonight. we will see what plays out. it is a very stunning, very interesting and historic night for reasons no one expected. >> let's bring in our guest in london. bob, good morning. a shock for the markets. buying opportunity, or is there selling still to come?
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>> yeah, a shock for the markets, sure. i think will be much that must realize is that whatever the polls tell you, you take away 4% and and that 4% to the nationalist candidate. in terms of markets, i don't think the downside is done. intonk as we get deeper november and understanding the story of it more, i think there will be a bounce. we could price out the fed. reality, i don't think we're going to get much. i was thinking a level of 1950 s&p's. from that level we can balance. and the longer term, we bring that up. >> the trade going into today's session is down hard. the trade after brexit saw as the index became correlated with
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the currency. do see the same thing happening in the united states? sure if it plays out entirely the same way. obviously in the context of brexit, there is the whole debate with europe and the free market and access. point, thesome bigger reality is actually the market will perhaps start to get optimistic about fiscal policy coming into u.s.. obviously, with a hillary presidency which will not happen she would unlikely have a democrat majority anyway. we would not have that much this will policy. trump, you may get some. i think the market will get hold of that. i suspect the market will be wrong on both sides eventually. i think for the rest of this year, stand aside, let this play out.
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targeting around 1950 as a level for equities, s&p. that's in terms of bond markets, we should probably expect a high-yielding curve steepening as we factor in more fiscal policy. within that, we are sowing the seeds of its own destruction higher bond yields are not good for u.s. economy. as much as everyone has been saying in u.k. that brexit means corporate is not going to invest , i think at some point the fed will maybe have to consider the fact that uncertainty will to slower investment. hillary clinton may have conceded to donald trump over the phone. that short-circuit concerns he would've had about a prolonged. of uncertainty. >> we are seeing this market reaction, but this is also a very human story. this is a human story for hillary clinton tonight. she thought she was going to
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stand under the highest glass ceiling in america as the first woman president. her candidacy has meant so much to certain communities. it is a repudiation of her. out on thea has been stump for her relentlessly, personalizing the election, saying it is a referendum on his own legacy. they'll be stunned, saddened, and shocked. let's not forget how vicious and brutal this campaign was. she never imagined herself in this situation. >> it has been quite a night. what i thought i have seen twice this year. let's get to reporters on the ground. the clinton and trump caps, both are over there. i want to start over at trump hq. let's get the atmosphere where you are right now. we are expecting behind me that donald trump will take the stage any minute now to address
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his supporters. the campaign's inner circle has been silent in terms of what exactly we will hear from him. your point earlier about the irony of what is going on, the democratic party now has a lot of tough decisions for us to make. i remember why was coming donald trump in his first international visit to foreign soil on the day of brexit, i think that is a parallel we're seeing here today, a movement, the grassroots that he has launched on full display. we will have to wait and see whether or not when he addresses his supporters that he strikes a tone of more unifying the party, or whether or not he doubles down the criticism of what we have seen. this is a candidate who bulldozed his way to the nomination. he bulldozed his way to the political establishment. to alldozed his way political legacy, a political
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.ynasty in the bushes this could be the clintons. a historic nature for his candidacy. a total political outsider to be able to do this, really resonating on the door behind me in a sea of red hats. joining us from the clinton camp, they were told earlier on the weekend they -- that candidate was not going to speak. we are hearing from nbc that hillary clinton has conceded to donald trump, but she did so on the telephone. to confirmaiting that ourselves. everything has broken down behind us. we have been hearing much earlier tonight when prospects were good for hillary clinton, that they intended to have this setup wrapped up by 2:00. we don't know how much the exit from here had to do with literally needing to exit these premises. john podesta certainly made it seem as though the campaign would leave it inconclusive
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tonight. perhaps donald trump plans to go ahead and go public with a speech himself. they do not what a fun to the trap that kelly clinton herself said that him -- that donald trump -- that hillary clinton herself said that donald trump should not all into. they are now in terms of the map , unless someone is contesting these numbers that hillary clinton had always said it would be horrifying for the sake of the country to hold that process up. that standard turns on her tonight. we expect more details soon. the donald trump camp. we are about 17 minutes on the cash open in europe. equity look like they're going to fall. >> the uncertainty for europe is as great as in the eyed states right now. there are so many difficulties to decide upon where we take
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policy, what the security situation is. europe has a lot to think about this morning. >> we are down about 45 on the dow. quite clearly, there is plenty of uncertainty out there. you had boris johnson come out that the pound is stabilize. i wonder how they're going to handle all of this. would you come out? would you try to stabilize the markets? would you send it out for a couple days? >> amateur you have the capability of doing the former. i think that is what people are trying to understand right now. who will fill those key roles that will ultimately act as stabilizers? who will take over in the treasury question mark -- treasury? all those things need to be decided. that is the uncertainty that the markets since we cap price of the moment. there is the vice president , mikeof the united states
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pence taking to the stage at the from headquarters at the trump event. we are anticipating that we will be hearing from donald trump there a very shortly. the world will be hitting -- will be waiting to hear just what he has to say. how will he layout the policy? we are waiting as governor pence takes to the podium to hear exec at what he says. will he try and stabilize the situation? will he let it rip for a couple days and see what happens? the family as gathers around are waiting for what he has to say. gov. pence: this is a historic night. [applause] the american people have spoken, and the american people have elected their new champion. [applause] america has elected
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a new president, and it is almost hard for me to express the honor that i and my family feel that we will have the privilege to serve as your vice president of the united states of america. [applause] [chanting "usa!"] gov. pence: i come to this , gratefulply humbled to god for his amazing grace. family, my my , our son wife karen michael and his young say -- is beyonce -- his fiancee. our daughter charlotte --
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sharla. i could not be here without them. i am deeply grateful to the american people for placing their confidence in this team and giving us this opportunity to serve. i am mostly grateful to our president-elect, whose leadership and vision will make america great again. [applause] gov. pence: let me say it is my high honor, and distinct youilege, to introduce to the president-elect of the united states of america, donald trump. [applause] ♪
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[applause]
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"usa"]ng mr. trump: thank you. thank you very much. sorry to keep you waiting. complicated business. thank you very much. i just received a call from secretary clinton. [applause] us.trump: she congratulated it is about us, on our victory. i congratulated her and her family on a very very hard-fought campaign. she fought very hard. [applause] workedmp: hillary has
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very long and very hard over a long. of time -- it over a long period of time. we over a major debt of gratitude for her service to our country. i mean that's very sincerely. america toime for bind the wounds of division. to all republicans and democrats endents across the nation, i say it is time for us to come together as one united people. it is time. i pledge to every citizen of our land that i will be president for all americans. this is so important to me. chosen not tohave support me in the past -- of
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which there were a few people. [laughter] mr. trump: i am reaching out to you for your guidance and your help so that we can work together and unify our great country. [applause] mr. trump: as i have said from was not aing, ours campaign, but rather an incredible and great movement, made up of millions of hard-working men and women who love their country and want a better, brighter country for themselves and for their family. it is a movement comprised of americans from all races, religions, backgrounds, and beliefs, who want and expect our government to serve the people, and serve the people it will. [applause] working together, we
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will begin the urgent task of rebuilding our nation, and renewing the american dream. i have spent my entire life in business, looking at the untapped potential in projects and in people all over the world. that is now what i want to do for our country. [applause] potential.tremendous i have gotten to know our country so well, tremendous potential. it is going to be a beautiful thing. everything will american will have the opportunity to realize his or her fullest potential. the forgotten men and women of our country will be forgotten no longer. [applause] fixtrump: we are going to our inner cities, and rebuild our highways, bridges, tunnels,
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airports, schools, hospitals. we are going to be build our infrastructure. which will become, by the way, second to none. we will put millions of our people to work as we rebuild it. finally take care of our great veterans. [applause] you have been so loyal, and i have gotten to know so many over the this 18 month journey. the time i have spent with them during this campaign has been among my greatest honors. our veterans are incredible people. we will embark upon a project of national growth and renewal. i will harness the creative talents of our people, and will call upon the best and brightest to leverage their tremendous talent for the benefit of all. it is going to happen.
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we have a great economic plan. andill double our growth, have the strongest economy anywhere in the world. at the same time, we will get along with all other nations willing to get along with us. relationshipsreat . we expect to have great, great relationships. no dream is too big, no challenge to great. nothing we want for our future is beyond our reach. america will no longer settle for anything less than the best. [applause] mr. trump: we must reclaim our country's destiny, and dream big and bold and daring. we have to do that. we are going to dream of things for our country, and beautiful things, and successful things once again. i want to tell the world we willy that while
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always put america's interest first, we will deal fairly with everyone -- with everyone. all people and all other nations. we will seek common ground, not hostility. partnership, not conflict. now, i would like to take this moment to thank some of the people who really helped me with what they're calling tonight a very historic victory. first, i want to thank my parents, who i know are looking down on me right now. [applause] mr. trump: great people. i have learned so much from them . they were wonderful in every regard. i had truly great parents. i also want to thank my sisters, marianne and elizabeth, who are here with us tonight. where are they? they are here someplace.
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.hey are very shy, actually and my brother robert, my great friend. where is robert? my brother robert. they should all be on the stage, but that is ok. they look great. also, my late brother fred. .reat guy, fantastic guy fantastic family. i was very lucky. great brothers, sisters, great, unbelievable parents. to melania, and don. [applause] mr. trump: and if on to -- tiffany andric and baron. you, andu, and i thank especially for putting up with all of those errors -- hours.
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this was tough. this political stuff is nasty, and it is tough. i want to thank my family very much. really fantastic. thank you all. unbelievable job. vanessa, thank you. rate -- a lot of great people. you have given me incredible support. we have a large group of people. they say we have a small staff. look at all the people we have. look at all these people. and kelly and -- kellyanne and chris and rudy and steve and david. we have got tremendously talented people appear -- up here. it has been very special. i want to give a very special thanks to our former mayor, rudy giuliani. [applause]
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unbelievable. he traveled with us and he went through meetings. yeah, rudy never changes. where is he? .udy governor chris christie, folks, was unbelievable. [applause] mr. trump: thank you chris. , first major politician. he is highly respected in washington, because he is as smart as you get, senator jeff sessions. where is jeff? [applause] mr. trump: great man. another great man, very tough competitor, he was not easy. he was not easy.
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is that really is that -- is that rudy? another great man who has really been a friend to me but i will tell you, i got to know him as a competitor. because he was one of the folks that was negotiating to go against those democrats. dr. ben carson. where is ben? and by the way, mike huckabee is here someplace. mike and his family. sarah. thank you very much. general mike flynn. where is mike? in general kellogg. we have over 200 generals and admirals that have helped us turn the campaign.
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they are special people and it's really an honor. we have 22 congressional medal of honor recipients. we have tremendous people. a very special person. i never had a bad second with him. he is an unbelievable star. it's right. had you possibly guess? reince.tell you about reince -- and i know it. is a superstar. i said, they can't call you a superstar unless we win. you can't be called a superstar like secretariat. secretariat came in second. secretariat would not have that big beautiful bronze bust at the track at belmont. reince is really a star and he's the hardest working guy. and in a certain way -- where is
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reince? boy, oh boy. it's about time you did this, reince. my god. come here. say something. reince: ladies and gentlemen, the next president of the united states. donald trump. it's been an honor. mr. trump: amazing guy. our partnership with the rnc was so important to the success of what we have done. have gotten to know some incredible people. the secret service people. smart.e tough, they are they are sharp. i don't want to mess around with
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them. i can tell you. they written me down. they are fantastic people. i want to thank the secret service. [applause] trump: and law enforcement in new york city. they are here tonight. these are spectacular people. sometimes, underappreciated. we appreciate it. it has been what they call an historic event. but to be really historic, we have to do a great job. and i promise you that i will not let you down. we will do a great job. all of the very much forward to being your president. at the end of two years or three
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years or four years, or maybe say eight years -- you will , so many of you work so hard for us. but you will say that -- you will say that that was something that you really were really very proud to do. and i can thank you very much. and i can only say that while the campaign is over, our work on this movement is now really just beginning. we are going to get to work immediately for the american people. and we are going to be doing a you will beefully so proud of your president. he will be so proud. again, it's my honor. it's an amazing evening and it has been an amazing two-year pe riod. and i love this country. thank you. thank you very much.
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thank you to mike pence. thank you, everybody. >> you are looking at live as donald trump, the president-elect of the united states lays out some of his ideas for the what the next four years what will be looking like. the markets responded reasonably positively over the last few minutes. he talked about infrastructure spending. it will be interesting to see how this gets priced in. the early indications are that the markets have priced some of the negativity early on. european markets have opened as he has been speaking. the dax opened. london coming a little further down. it is 2.31%. as you can see, london caring reasonably well.
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let's get some details on what exactly we have been seeing in the markets as we have been listening to donald trump, the president-elect of the united states. that this been saying is as big as brexit, but the markets do not think this is as big. this shows you the regional bite down as we look at the benchmark in europe. down by 2%. castor mind back to june 24 would we saw the euro stock fall 54%. today, we are down categorically across every single region, but not as much as in the onifications of post-event brexit. intoe a flight to safety ..k. debt, yields coming down we are about five bits lower. money moving into the so-called
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havens. and we see money move to the euro. seen a significant run. off of thoseoming immediate concerns. visions,liatory digging back into stocks. banks as well feeling the pain. we know they have been going negative on this particular sector. health-care stocks the only industry group gaining on the stoxx 600. nordic up 5.8% now, now 5.9%. a lot of stocks saying this industry group might rally, of course, on the back of a trump
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victory. that is what we are seeing. is moving inversely with clinton's prospects for victory. being moreut trump against renewables and wanting to bring back coal. down 10.5%. it gets significant amount of the revenue from the u.s.. turbine makernd very much feeling the pain. it is actually the worst performer, at least one of the worst performers at the stoxx 600 at the moment. i put in wpp here because this is one of the stocks from barclays that said the underperform -- they get a lot of their revenue from the u.s. and off by 1.8% at the moment. stock would have been rand gold.
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performance of gold we are, jumping the most this brexit. on that bid for the sake haven. moment.e, down 2.7% a calls, they say that higher bond yields on a trump victory might be positive. a win for trump might increase global bond yields. there are still, however, a significant risk o. with us to discuss what the implications of a donald trump presidency actually mean for the financial markets. the markets heard something in that speech that it liked. what was it? think it was conciliatory, infrastructure spending is a good thing from an economy
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perspective. they are beginning to realize that. the republican clean sweep. i think mr. trump will have to become a lot clearer. it is that issuance, and it is talk about the fact that great isolationism should mean higher prices. more inflation. the other interesting part of this is europe. about the short-term reaction that i think is very clear. a longer run for next year is five critical referendum directions -- elections in
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europe. the extremist nationalist candidate. the u.k. referendum. about what could happen in ,taly, austria, france, germany and the one that scares me is the one that will happened in holland. in that context, the whole debate will be interesting. i mentioned this before, but nato becomes a key issue. with the u.s. less willing to write a blank check for nato, nato's other resources are going to be exposed. for nato, u.k., and france, there is not a lot of military credibility there. this will be part of the brexit debate as well. it is a global story.
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the european market has been relatively muted. i think this tells you much more about the asia-pacific relationships going forward and how that will play out. very key here for china. independent climate adviser, thank you for being on the program. interesting moves in the bond market. speech, putting infrastructure at the epicenter of it. we saw the treasury markets start to adjust. on the front end of the curve is a repricing of the prospect of the fed hike. with 38aggressive yields up about nine basis points. do we get the infrastructure spending that he put on the campaign trail? will that become reality? >> i'm not sure about the terminal but we will bring it up
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if we can to talk about what, exactly, it is in terms of the pricing. few hours, we priced out significant indications from the fed as we look at 51 percent probability of the fed hike now. so many things we need to be thinking about. >> the question i want to ask is, how on earth does the fed communicate not hiking interest rates when the data is unlikely to change? >> the data won't change. and when events change, you need to start changing your view of the world as well. let's head over to barclays headquarters in london were william holt's head of investment strategy for europe at barclays is standing by. william, we will put that question to you. quite simply, politics don't matter? in december, how do they not
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hike interest rates? william: that is a great question. that is what we have to consider at the moment. rates might be pushed back into next year. it will be quite a long time before they set the administration not. you have the higher 4000 people and run some of those through senate approval and run all of those through security approval. most administrations haven't really got going until the second quarter. will the fed be in limbo until then? inflation continues to normalize. it has been happening. it has been kind of a funny decision. to some, they look at buying the curve anyway. >> the market heard something in a speech that donald trump delivered a few minutes ago. and the infrastructure story is going to be a big part of what this administration is? be aong before this will negative shock for it to be a positive one.
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what is the market going to do to that? does it need to wait for details or is the broadbrush enough? get to try to get a sense -- if you try to get a from thehis presidency conflicting campaign trail promises, it's difficult to get a sense. , certainlyress academically and the official sectors, there is big agreement that u.s. infrastructure needs updating. so maybe this is one of the things that does get done. but generally, what we are looking at is domestically, we will argue that the congressional checks and balances will reign in some of the extreme campaign trail promises. the president those have more , evento act unilaterally though congress has the power to
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monitor the u.s. relations internationally in terms of commerce. the president does have power to act unilaterally and that is what people are watching for. recently suggesting that if he does get to carry out all of his threats to the degree that he can, you're looking at a in 2018 orn the u.s. 2019, probably global as well. >> maybe we can show it on the screen for viewers. health care and the pricing issue that surrounded this campaign will somehow go away. is that the correct assumption? >> campaign promises -- if you
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look at what politicians in the u.s. have been talking about. it probably translates to a lot of spectacle. you have to worry about precisely what they are saying. it gets through congress. it is still an economy you have to watch. calling china a currency manipulator, all of that looks quite extreme to us. and when you have mike pence as your running mate, it is unlikely you will go totally down that route. in terms of how you dictate your sector strategy. it still suggests the cyclical quarter -- culture.
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us headam hobbs joining of equity strategy. do we talk about inflation here? he will invest in infrastructure and will actually build some of the stuff he's talked about? some of these key commodities -- >> we have drawn a distinction between a sentiment shift and fundamentals. we saw on aggressive sentiment shift overnight as it looks like it was heading towards donald trump. him in ther from acceptance speech? we see a steeper yield curve. the fed is the issue for me that strikes at the heart of this market. we have a president-elect that is quite clearly come out and said he's not a big fan of the fed chair.
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fed chair janet yellen's term ends in 2018. i assume she say's -- stays for the rest of her term and at worse, she goes early. it will be the next fed chair? the complexion of the federal it can really change what the fed looks like. he is joining team trump in new york. like what itd heard from that speech. we see european equity markets still down, and a much more positive picture being painted. when do we hear more? wind we start to get more about the details about what happens next? we will be hearing more information about the transition team. new jersey governor chris christie was on stage tonight
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and donald trump thanked him. he is spearheading donald trump's transition team. in the message of unity that donald trump tried to this cost during his remarks, we also saw and familiar republicans cast of characters -- as well as chris christie, jeff sessions. folks looking on that stage tonight did see some familiar faces. i couple donald trump for a year and a half. tonight was really the first time that the crux of his entire speech was calling for not only the party to unify, but a divided country to unify as well. what do we hear from the acceptance speech and what didn't we hear? we didn't hear anything about china.
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>> we did hear something about china. >> in the margin, he said we will work together. >> we want to work with countries that work fairly with us. it was a message to china and other countries around the world. chinak that message was directed in terms of the way he sees -- >> not as aggressive as we have heard. bit of aed a little turnaround in the margin in the market. but what we have seen is a big market and treasury that spread has widened. and what that makes for the yield curve, the treasury stakes -- we can take mine if you can. 142 basis points. that isn't a big gap but wider than it was earlier this year when we were trading around 100 basis points in august. i wonder if the yield curve story continues. >> we will watch that one very carefully as we price and the prospect of inflation and bring
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some of the growth to the u.s. market. let's bring in the global cio at ubs global management. he joins us from zurich. good morning. what are you telling clients today? >> i think there is the more specific things around the open and then there is the broader picture. let me start with how we see things in the morning. donald trump in his campaign has had a message about more protectionism. in the european open, i think we will be watching very closely about how these european reacter stocks start to when they face greater protectionism. in the united states, we will be watching managed-care companies if donald trump and his administration rollback what is commonly known as obamacare, it would impact those stocks as well.
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and defense spending is something that donald trump has trumpeted on the campaign trail. but if we pivot to what we heard this morning, and a clear market reaction to that, we heard jobs. we heard infrastructure build. heard, you know, a positive message that a lot of people were saying, is this the same guy is on the campaign trail? adding fiscal stimulus to what we believe to be a supportive monetary policy can make the view over the six month term where equities take this uncertainty and weaken and higher in six months. >> health-care stocks gaining and the premium that was applied to those stocks was obviously on the back of this drug pricing issue.
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the market quite clear with a little bit of a knee-jerk bump. a say it will be less aggressive on the health care providers. will that help with drug pricing? >> certainly, that was a big issue. it was a little bit overdone. we don't have a view that it is going to rebound tremendously. clearly, there was a lot of pressure there. a lot of sectors will bounce around and i don't think anybody -- we ran hundreds of scenarios and we didn't see it playing out exactly like this. one of the things i want to stress is this is not just about donald trump being elected that this republican sweep. equity markets like the s&p 500 do well under a republican sweep situation. as some of the dust settles, somee will be looking for
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of those analogies again as well as fills out his administration to get a sense of how we move forward. >> the focus will turn back to europe. in the last few minutes in the european parliament talking about this being a wake-up call for eu leaders. brexit was not a one-off. what does it mean for europe? >> in europe, hopefully, it will give them a sense of urgency that they are going to have to continue on a path of reform. and stimulus. to keep that economy moving forward and revive even further. interestingof the things we're looking forward to, in addition to the italian referendum, is the next communication from the ecb about tapering. and if they take a small uptick to,nflation, for example,
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say, we are going to start tapering the ecb bond purchases, perhaps sooner than markets expect. >> what have we learned? dollar-yen. ahead of this vote. ahead of this decision. it was exactly where it was ahead of the brexit decision. it'll series of risk events coming up in the next 12 months and markets quite clearly are struggling to price risk effectively. what have we learned so far this year? what can be applied to events on the horizon? >> i think there's a couple of key things. capture thesks headlines and they certainly over thehe markets shorter term. the economic fundamentals underneath, central-bank policy in a specific country is
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providing stimulus. and more importantly, how earnings are revolving. people talk about an earnings recession and they are on track. it will end up on the year and end up significantly in the following year. you have the on those fundamentals. the largest message here is that in bothe a divergence politics, fiscal policy, and monetary policy in these different regimes around the world as they come to grips with them a graphic changes and the fact that debt to gdp ratios are too high. the only thing a rational , you simply do can't make some of this stuff up.
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>> the series of events coming up, how do you diversify that? talk me through about giving that kind of diversification given the volatility we are looking at here. >> let's keep it to the very basic fundamentals. we have clients around the world , very sophisticated clients. people tend to stay in their home currency as kind of a default decision. you might want to make tactical bets on other countries. a lot of the work is simply focused on getting people to tolerance,heir risk
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the right mix between bonds, stocks, and alternatives assets. and to have -- and to get rid of that home bias. let's say their bond portfolio and their equity portfolio. >> struggling to price risk, ok. again and again and again, cash holdings. the series of political risk events on the horizon. sitting cash. i think many people in the world agree with you. they have seen that they held high levels of cash throughout this year.
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say, aftert i would the selection, the positive stories that is significant portion of the risk is out there. and should we get through some of these events in europe? give negative rates in europe and give rising inflation. it might make sense to put more of that cash to work. >> the world we lived in the last few years, we will see low growth and low rates, negative rates in certain parts. do you get a sense that what we saw signaled tonight was an ending of that period? he will try to reinflate the u.s. economy. is that the end? >> i don't think it's the end of lower for longer.
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say, six or 12 months. where we have entered a new period, many central-bank policy that negatived rates tend to be deflationary and are not the best policy solution. they are working very hard to push more stimulus towards fiscal measures. the message from donald trump is very positive. we don't think there will be enough fiscal stimulus over the next six to 12 months that monetary policy is going to go away. to have you with us on the program. we appreciate your insight. the story for me, and we just .alked about it it the serious risk events. you try to diversify and hedge and you take a slap in the face. up quite clearly with tactical opportunities, you wonder if people will wake up and say i don't believe the
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polls anymore. , i'mot going to de-risk going to de-risk into cash. they will be a whole lot more risk-averse than they were. >> i think the risk went up. understand what that risk is. i understand what you're saying. >> which currency are you going to be sitting in? should they sit in dollars? do they take gold? >> not as aggressively as they otherwise were. it is down by .8%. health care a big gaining industry group along the stoxx 600. >> that is amazing. the dax is down by 1.9%.
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and that is the worst performer. >> which, at the border, it catches very quickly. , theove to the fx markets dollar and peso up by nine percentage points and the top of the screen is a stronger japanese yen. and he says these are big moves. they are not overly aggressive moves. i got that money that implied it volatility. certain key pairs, you will continue to see a great deal more volatility coming into the story. that is something we need to carry on talking about. >> it will take a couple of days to shake out. i will bring you another key pair you are bringing.
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showing you what is happening to the euro dollar. this is the most traded in the world and it's not as bad. to the u.s. political establishment but not as big a shock to the markets that came june 24. we have seen volatility pick up dollare overnight euro -- but not as much as had been the case back in june when we would see the volatility really spike for brexit. keep a clean i on the volatility as badand that it's not as it was back in june. we are seeing it in german debt. we are seeing yields coming back down. move to then backside. and we are not
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back in negative territory that we saw back in the era of brexit. and what are we seeing shaken up? but not as and all, shocking or awe-inspiring is back in june. this is today's selloff. not nearly as significant. we see movement out of certain particular risk assets but it doesn't seem to be as painful. at bloomberglook and i want to show you what you have been mentioning. it is health care. energy gives off two percentage points. momentking sector at the seems to feel the most pain. let's get to individual movers. might be downocks overall, but it is the gold producers outperforming some of
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the best producers on the stoxx 600. this is on the jump we have seen on some of that moved to the safe haven on the donald trump victory. not gaining quite as much as they were earlier. we are seeing double-digit games earlier this morning. and you mentioned the pharmaceuticals outperforming as well. and jpmorgan did highlight the most exposed sales withude 68% of more than 50% of sales from the u.s. market. to get through today in terms of the worst performing industry groups. we are looking at carmakers and banks. is largely on the high
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exposure to emerging markets. we also did see credit suisse on thecause it relies american for more than a third of its revenue. it is particularly the yen exposure and some of the worst performers on the stoxx 600 right now. dax, downsses on the 4.4%. they were seeing double-digit losses earlier. down six .3% right now. this is on trump policies. coal as theyes for had often moved to the prospects. no surprise we see this danish winter decline.
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>> some of the comments you have been seeing over the last few minutes, this coming from the kremlin. thes hoping that russia and u.s. can seek a response to global security and he hopes we can go back to a pre-crisis relationship. we talked about the u.s. and russia. a return to the cold war. it will be interesting to see how they end up running policy, how it devolves to areas the administration has not traditionally devolved to. this is one of the areas we have been watching. see how it reacts to a potential trump win. one is what is happening with oil. set, the market reacted quite positively.
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if you delivers on what he promised with infrastructure spending, it may be something that is market positive. we have seen that priced in quite quickly. >> we came in and started figuring out the markets were discounting a hillary clinton presidency and they tanked aggressively. fact that maybe they're trying to figure out some of the policies. been here for days and we try to talk about policies and every time i get pushback from americans saying that we don't really know about the key issues for donald trump. fact that he has a personality that appeals to certain voters. a short speech because there was a lot of thinking. but he says hey wants an america that comes together and that may have
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freaked out the markets a little bit. >> there was a shift in tone there. talking about how they deal with china. for me, there was a slight disconnect at the moment. president talking about infrastructure spending and a federal reserve where the price is 50% from december. if you believe infrastructure spending happens and you get a re-price of inflation, should the fed be hiking? >> i think what the market is looking at is that it might be a little bit early. that is what they are looking at nab they need to spend a little bit of time thinking about that. >> even if he does do infrastructure spending or build walls or whatever he wants to do at the moment, it might take 3, 4, 5 years. what you spend on, projects that
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take a long time and you don't get the benefit in a click of the fingers. >> how many people thought it would take nine months to trigger the process? actuallyany people realize how long this might take to get policies implemented so that it becomes reality? >> come january, he's in office. it's not shovel ready, but some of it is. copper spiking on the fact that we have had a speech from donald trump indicating that he feels he wants to spend on infrastructure. talk about another sector that will be changing and having a different outlook on the world. stocks rising on the back of donald trump's victory. many are breathing
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a sigh of relief. but how much visibility do they have on the main market right now? >> the first thing this does is take away the obvious risk that we were facing if hillary clinton was voted in. with regards to very vocal views and ideas and about how they want to control drug prices. i think that is the first reaction you see. you'll see him repealing as much of the affordable care act that president obama put in. and the areas where there are likely to achieve much of that is repealing the taxes. talking not about drug price control.
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i just say? the one thing we should not forget is drug prices has not really been politicized. from payers in the united states. that is what is causing major for the diabetes business. it hasn't gone away. this is just relief that we are not facing any immediate big push on the drug price discussions. >> we can capture the story from bloomberg right now. he see the basic resources of one of the industry groups going up. a streaming ahead. that this was a cross party issue. it was something that democrats and republicans could agree on. why do we see the shift now? the point is that some of the
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proposals made by democrats were much more draconian if you want to use the phrase been what the republicans would be pushing for. and i don't think even if the democrats had one that the two houses would have allowed any was thing and the thing giving the ability to negotiate prices. and that is just not something that would have been positive for the industry. that conversation has not been part of it. >> thank you very much. as a result of donald trump's victory. citigroup,now from the global head of the fx strategy. scratchingobviously our heads to understand exactly what this means. but has the moment to buy volatility already passed?
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>> i would not think so. there is considerable emphasizingabout the infrastructure spending that you mentioned in the speech. cuts, earnings repatriation that we think would be positive. he didn't mention immigration or his trade platform. and i think that the market is going to be very cautious about buying risk and assuming low volatility. until it is clear what he chooses to emphasize. >> let's deal with the federal reserve. i just want to try to understand how honor the fed communicates not hiking in december. the s&p 500 futures are down. barring a big washout ahead of that decision, how do they not hike in december?
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i think you stated it and indicated the market share. we're going to stay at this of effects prices and so on. the data came in ok. i think what the market is looking at is saying that the last two hours or so, re-buying of risk after having sold it, it may not last. and that if the fed sees the emerging markets under pressure, they are not going to force a hike if it is coming at an opportune time when financial markets might be fragile. and that is a sensible view. -- is thecurrent plan current plan fit for purpose, do
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you think? wax they are in the same situation as the fed. they would like to do some sort of tapering. probably not a lot. if we are in an environment where equity prices are going up , i thinkby 3% or 4% they are right to be prudent and indicate any tapering they are going to do on the view that they can extend for three months or six and put off the decision. last thing they want to do is do a major tapering. be a very strong tightening of policy. >> let's talk about how it evolves. for you andthat up we can have a quick look of trading against the base currency.
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stronger yen, stronger euro, and you expect that story to evolve in the trading conditions over the last day or so. for me, the question is where do we go from here? this is a knee-jerk safe haven reaction. how does this evolve? i market is too optimistic about the way the policies will go. if he will back away from the controversial aspects of his program. people in the market would hope that he would and view it as the rational approach to take but the question is, will he see it that these strong commitments he has to follow-up on? i think it will be reasonable uncertainty that the very low period will be behind us
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for quite some time. >> copper coming up a little bit. seeingre going to be infrastructure spending and a refocus, it is confusing a little bit. but what is the outlook? and canadait varies will be under pressure. the domestic economy is weak enough and they are not getting the benefit of trade. the aussie has done very well in the non-commodity sector. u.s. commodity demand is beginning to pick up, they might find some support. you in new have york.
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>> let's talk about what we have learned over the next few hours. donald trump will be the next president of the united states. this is what he had to say as he celebrated his victory. mr. trump: it is time to bind the wounds of division. we have to get together. to all republicans, democrats, and independence, i say it is time for us to come together as one united people. as i have said from the beginning. but was not a campaign, rather, an incredible and great movement made up of millions of hard-working men and women who love their country and want a better and brighter future for themselves. while the campaign is over.
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our work on this movement is now really just beginning. it's been an amazing two years. and i love this country. >> it strikes me where we were yesterday versus where we are now. the market pricing in the unknown. early on, an aggressive repricing. now, not so much. >> it doesn't feel like it. you will see what is happening here. it might be throwing the baby out with the bathwater but we start to understand it some more detail. look at what is happening. the story incredibly positive. you are looking at copper. interesting trends of what the story will look like going forward. our understanding of
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what the china relationship is going to be looking like. at hsbc.rategist one of the things we have been noticing is the chinese currency early on, it cracked a little bit higher. how much will we see the next few hours, days, and weeks? and what does that mean for strategy going forward on the policy front? >> i think it will be a massive focus. china is still the currency that matters. and at the moment, the near term, the policymaking history suggests that it will remain relatively stable for the time argumentre is even an that it should be a little bit stronger when you come into tomorrow.
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is what policy has been focused on. the bigger question lies on if donald trump follows through with his election pledges. will he lump import tariffs on chinese goods? those are questions we can't answer and if the market starts to price that in, there is downside risk. hsbc came on bloomberg television and it was pretty clear that we've moved the u.k.. it was to sell aggressively. what is the narrative surrounding the dollar more broadly with president-elect donald trump? >> we are all moving to a political dollar. if you think about the rest of g an italian there's
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referendum coming in a few months. i don't think anybody really sees it a particular strong point. there is a question of how long that rally can continue on politics. we've got just as much political uncertainty as well. there is a challenge figuring out how to play that but the euro can still do quite well. the least political of all the currencies is gold. there isn't any politics or intervention. >> does this make brexit look like a less frightening prospect? >> maybe not less frightening in mays of what the future hold and the difficulties the extent,es, but to some we got through brexit in a way
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that we are used to these surprising events. the reaction you're seeing in markets regarding the selloff and we're coming back little bit whether it is stocks or other risky currencies. we have that initial bounce. the question is if we are in the denial stage. not going to be that bad. we overreacted. we thought that was happening and we went to the bargaining stage and we had the depression stage where we fell very quickly. there is a case we can see the same markets as well. maybe we get a bit of bargaining. fears about trump following through on his election policies. >> thank you for giving us your time and the view from hsbc. and i've got to say,
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drama inrnight, but the moment, not so much. steep.curve is the takeaway is what we're likely to see is a more reflationary u.s. policy. that is what trump was signaling very clearly earlier on in new york. higher seen copper going and we have seen this staffing in the u.s. yield curve. signaling a number of things. and it will be interesting to see how that parlays with what is going on with the fed. >> we will go to the studio for the radio booth. wrapping up hours of trading.
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not as dramatic as many people thought. thisen i got an early morning, it looks like a dramatic market reaction and we aside from newt york. over to francine lacqua.
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francine: president trump, the republican candidate, is elected 45th resident of the united states. repressing the republican market risk, turmoil eases as investors weigh the fallout from the victory. all caps off. on the fad asf global markets are plunged into uncertainty. i'm francine lacqua in new york on this historic day. has beenump

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