tv Bloomberg Surveillance Bloomberg November 10, 2016 4:00am-7:01am EST
francine: welcome to the white house. after a surprise win, trump begins his transition with a visit of president obama. the republican party claims a mandate to rewrite financial rules and overturn obamacare. democrat leaders urge unity. global equities rally amid optimism that trump's plan will boost the global economy. this is bloomberg "surveillance ." i'm francine lacqua in new york. we are talking of course about the surprise trump win.
president-elect donald trump begins a new political era with a visit to the white house. ast comes a little later on the republican meets with president obama to discuss the transition. washington, wall street, and investors watch. republicans moved to claim a mandate for their agenda of deregulating the financial sector and replacing obamacare. as we break down the promises and policies of the trump presidency, my guests are sharon o'halloran, jim rickards, author of a forthcoming book, one of the few guests that actually called the election, and international reaction from michael fuchs a little later on for what this election means for business as we bring you more interviews. all that is coming up. first let's get straight to the
bloomberg first word news. here's nejra cehic. nejra: in the u.s., thousands of demonstrators took to the streets overnight to protest donald trump's election as president. demonstrations and vigils have taken place in urban areas as well as smaller cities. the protests come despite hillary clinton and president obama urging their backers to accept trump's victory and support his transition into power. one man who isn't protesting his carl icahn. he told bloomberg tv left the victory party tuesday morning to bet about $1 billion on u.s. shares. tried to put a lot more to work, but i couldn't put more than about $1 billion to work. then the market got away. but i'm still happy about it. nejra: the white house hasn't ruled out issuing a pardon to
protect hillary clinton from prosecution by the incoming administration over her use of a private e-mail server. donald trump threatened to assign a special prosecutor to investigate the former secretary of state. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. i'm nejra cehic. this is bloomberg. francine: this is your data check. this is the day after the day after the night before. two days since the u.s. went to the polls, this is the picture. a lot of the focus is on a possible donald trump presidency refighting the economy. we are focusing on the fed and global growth. it didn't fall out of bed as the knee-jerk reaction we saw yesterday. this is the msci world index, 0.7% higher. i want to show you mexican peso. at 13.87.dex
as donald trump's election signals a new political era for america, we spend the next 60 minutes breaking down what a transition means for america and the world. joining us in new york, professor sharon o'halloran, jim rickards. first let's kick off with some thoughts from bloomberg's political and economic editor, michael mckee. we are seeing a donald trump that is going to the white house today. when can we expect to year more details and to know who he will surround himself with? michael: normally a transition takes place during late november, early december, up to the first of the year. we don't know anything about how donald trump will manage things because we've never had a person like donald trump in this situation. policy, there's something the markets seem to be betting on.
it is hard to know whether the option is justified. he wants to raise tariffs and cut taxes. then the question is, what is the balance? he can raise tariffs unilaterally. congress has to weigh in on tax cuts. suppose that happens. you get a combination of both. then growth is probably going to be slower. i've got a chart here that shows that exports have been rising faster than imports. they have been growing while imports have been shrinking in the united states. that suggests, if we're going to cut back on exports, that is going to hurt the united states. imports, that on slows growth as well. those countries don't have as much cash. francine: i'm pulling up a website. this is the new donald trump website.
first of all, it tells you a little more about the president-elect, the vice president-elect, and if you look on the various policies, they have regulation there. do we really think he will go against dodd-frank, that there will be no real regulation? michael: donald trump said he wanted to cut regulation but offered no plant do it. he said he would gather the leaders of his cabinet and they would pick what regulations to get rid of. that is probably not going to happen. the interesting thing about dodd-frank is everybody voted to cut the regulations of the banks, but aren't we mad at the bankers? there's a little incoherence. francine: i don't know who they're mad at anymore. talk to me about the fed. when we saw donald trump possibly getting the white house, there was a feeling in the markets that the fed could not hike. now the reverse is true. 9 michael: the initial feeling was the markets might tank and
the fed would be sidelined. if that doesn't happen, and the data come in, it would be hard to change the data on a dime, so they will probably come in ok. there's now a feeling that maybe the fed does want to get a hike in because if we have to fight back a recession in the future, they need a little ammunition. in 10 seconds each, 15 seconds, sharon, what do we need to know about regulation? sharon: right now, what we know is that he's going to make a series of cuts and it's not clear that they are going to add certainty to the economy or make the economy better in the ways the markets are looking for. francine: jim? jim: people say repeal dodd-frank. what does that mean? are want to get rid of the volcker rule, bring back glass-steagall? that is a pretty serious policy move.
these are things that cause problems. you have to sort of be specific. francine: when do we find out? jim: probably more like six months. these are complicated issues. sharon: these take years to get through congress. francine: thank you so much. stay with us. let's get to the international reaction and a take on what the trump presidency means for europe. joining us by phone is michael ally of angela merkel. thank you for joining us. i always have great pleasure in understanding your insight. what does a donald trump presidency mean for germany and europe? michael: first of all it is the american voters and we have to accept it. there's no question. i'm clear that this is going to change quite a few things. has someabout it, he ideas which are pretty new, and
we are a little bit afraid as far as the regulations of free trade agreements. what he said, that he wanted to step back on free trade agreements, i don't like it at all. he doesn't want to follow ttip and not tpp so it is going to be kind of difficult for free trade. and free trade is absolutely necessary, particularly for germany. we are a country which is exporting a lot not only to the states, but all over the world. we are afraid this could be a setback for free trade. francine: do you think that ttip and free trade is dead? michael: no. i don't think so. the soup in the kitchen is much hotter than at the moment it is going to be eaten. wait and see whether things
which have been in the campaign are also what he's going to make as a president. first of all, he has a couple months to go. i'm sure his advisers are going to tell him how necessary it is to have free trade agreements all over the world. francine: michael, you follow the u.s. election, politics in general. are you concerned that this shows uneasiness among populations? we saw it with brexit, with donald trump. the whole of europe could swing much more extreme. michael: it's a dangerous thing. it's a moment of nationalism. i don't like it. i'm still a fan of globalization. say, i hope that at the end of the day, particularly the republicans which have a long-standing wto,ry for free trade, for
that they really come back to a normal way of discussion. we are looking forward to any connections with mr. trump and we are looking forward that we will discuss these matters. i cannot understand -- for instance, with china, reciprocity in all kind of measures, but at the end of the day, we need free trade. francine: do you think donald trump will be good for world growth? do you think he will reflate this economy and help exports and imports? michael: we have to see what he's going to make as far as tax cuts is concerned. tax cuts usually are good for the economy, for the companies, but we have to see also that america has a huge national debt. this, it isope with going to be an interesting thing. it is going to be interesting to
say, it is going to be like this or this, but i really wonder what he can do in order to boost the economy. not tooican economy is strong at the moment. francine: you are one of the rare european politicians that does understand the markets. we are seeing stocks rally. how do you understand that? it is not just affected by the u.s., but the overall situation. some of the words of yesterday have been positive. yesterday, first of all, the dollar dropped to 1.13. now it is again stronger. i think it is market fluctuation. we shouldn't exaggerate it. francine: i was going to ask, you've been constrained about strength in euro in the past. are you concerned euro strength in return? michael: can you repeat your question? francine: about euro strength,
this would be a big problem for a lot of german exporters. are you concerned that a trump presidency could make it come back? michael: i don't think so. between was fluctuating in the two almost 1.50 past 10 years. we can live with it. is area we are in now comfortable for exporters, but they can do their business with 1.20 as well. as long as we are in this range, i don't see any risk for euro. francine: thank you so much, michael fuchs. joining us on the phone from berlin. stay with "surveillance." what will a trump presidency mean for europe's corporate's? we have two great interviews. we speak to the cfo of continental.
joining us from germany for his first interview of the morning, we will talk about those results and the state of the world economy, the chief financial officer of continental, wolfgang schaeffer. what does a donald trump presidency mean for you? you are an exporter and you rely on currencies and free trade. think we have seen already, yesterday was the change in the exchange rate, specifically the mexican peso. the exports for the automotive industry, not only our company, obviously exchange rates have an effect. the japanese yen was effected. this might be the first impact we are seeing continuing, or further on potentially with some changes in free-trade agreements.
if they are no longer as free as they have been, this might be negative for the automotive industry. i think short-term exchange rates will have an effect for us. if it is negative or positive, not yet to the scene. probably a couple of months or quarters. sorry? francine: go ahead. wolfgang: in the midterm, i think we might expect some stimulus for the u.s. economy with tax reduction speeds, with infrastructure projects, which be waso the president to talking about in his speeches, this could give tailwind to the u.s. economy. automotive is a very cyclical industry. this would help the automotive industry. people would buy more cars and this could be positive. on the short-term, i don't see bigger showoffs.
medium-term, one side free-trade agreements, other side economic stimulus in the u.s. francine: are you worried about global growth or do you think we're going to see more fiscal spending which could put global growth in a better footing? wolfgang: i think it is quite early to talk about it. there is no real economic program announced yet. stimulus to the u.s. would be stimulus to the world economy. free trade agreement changes could be dampening on the world economy. remains to be seen. , never goodecurity for the economy. stock markets in the midterm might be affected by that. i think before we have more concrete actions, it is hard to predict besides the things i was mentioning. bmw says they are
concerned about a financial crisis in china. are you concerned about it too? wolfgang: actually we are not. overlooking the development of the chinese economy in the last 4, 5, six quarters, we do see that it seems to be the soft landing scenario. is it a hard landing or a soft landing, hard landing meaning financial crisis, soft landing meaning trades continue to go down, but everything in a quiet, controlled manner. we see at the moment the latter one coming out in china. looks like we are on this soft landing. francine: thank you so much for joining us, the cfo of continental. in new york, investors and political commentators analyze what president trump means for
the world and regulation and the markets. let's get more thoughts from sharon o'halloran and jim rickards. thank you both for coming back. you were with me the day before the election, on the elections. jim, let me start with you. you thought donald trump would win, and yet we're not seeing the panic on the markets that certain commentators predicted. jim: we went down and came back up. francine: it was a knee-jerk reaction. jim: if he's going to deregulate pharmaceuticals, that is good for pharmaceuticals. caterpillar went up because of infrastructure spending. go give trump a break. he was fighting the democrats, after republican party, the media, and global elites. trump'slem is, individual policies sound attractive. but when you add them all up,
this is going to the much larger deficits. he is the helicopter money president. you have people like larry summers and paul krugman bashing drunk. are larrys policies summers' policies. francine: it is broad picture. say i want you may less red tape, but then you need quality regulation. sharon: correct. you need to figure out what is going to be pro-market, what is going to be the optimal way in which you regulate the economy that is going to lead to the types of outcomes. this has to get through congress. there's a 60-vote culture. it's not clear he's going to get any of these projects spent. he's got a long path to go. even on the trade agreements, he can't arbitrarily reduce the
tariffs like this. he can start of, but that is a legislative process as well. is higher tariffs across the board both for the united states and for our trading partners. you're not understanding what exactly that is. francine: jim, on the surface of it, you could say there are very similar policies to krugman. it depends on how you implement them. who is the person that should become treasury secretary? does donald trump need to get people that are from the establishment or well-respected by the international community? jim: yes, but not one of these cookie-cutter global elites. brilliant,rainerd, but a rubin protege. we should stop talking about free trade. free-trade does not exist. you have sanctions on russia.
maybe sanctions make sense, but there is free-trade anywhere in the world. francine: but it is not protectionist. jim: not as protectionist as it could be. free trade for germany is really a free ride. if you have cheap labor and i have cheap capital, we could trade. if my capital goes to your country, you have all the advantage. francine: if i have an economy that saves incentive spending, again, they funded a lot of the things we need in the european union. comparative advantage in that you allocate your resources in a different way. it is the difference in the knowledge economy versus the productive economy. the key in the way in which our trade has happened, we had a packed. we would benefit and retrain those workers that were dislocated as a result of those.
that was done through trade adjustment assistance, the company pensions, a lot of things where we broke in 1980. as a result, the workers now are saying we lost that and we are not benefiting from global trade and this is what the response has been. jim: the liberals spent four years trashing the u.s. education system, so why are we surprised we don't have an educated workforce? why don't we have school vouchers, private education, to get the results you're talking about? sharon: so trade adjustment is money that works with retraining workers. jim: basic education -- [all talking] francine: the problem is there's so much debt. it goes back to how you fund it. quick comment on one thing that
donald trump needs to do to reassure the markets that the fed is independent and that he will put policies in place that will be fairer, but also believed and adopted in unity. jim: there are two vacancies on the federal reserve board. stop talking about firing janet yellen which he can't do anyway. fill those vacancies. if he puts two trump appointees, you're going to see more dissent inside the board. sharon: i think he needs to have a coherent policy that actually leads to the types of planning and certainty that the market is looking for right now. and that allows for people to -- ♪ seeing is believing, and that's why
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let's get to the bloomberg first word news. here's nejra cehic. nejra: let's start in the u.s. where thousands of demonstrators took to the street to protest donald trump's election as president. demonstrations and vigils have taken place in major urban areas including new york, chicago, los angeles, as well as smaller cities. the protests, despite hillary clinton and president obama urging supporters to accept his victory. one man who isn't protesting his carl icahn. he told bloomberg tv he left the victory party tuesday morning to bet about $1 billion on u.s. shares. >> i tried to put a lot more to work, but i couldn't put more than about $1 billion to work. but i'm still happy about it. nejra: the white house hasn't ruled out issuing a pardon to protect hillary clinton from
prosecution by the incoming administration over her use of a private e-mail server. donald trump threatened to assign a special prosecutor to investigate the former secretary of state. the president-elect will meet with barack obama later today. inbal news 24 hours a day more than 120 countries. i'm nejra cehic. francine: thank you so much. between now and january 20, investors will be monitoring the president-elect, looking for clues on how he plans to run the country. donald trump made a string of promises, but was it all rhetoric designed to win votes, or is the u.s. and the world now facing major of evil? new york, sharon o'halloran, jim rickards. martin gilbert, let me kick off with you. you know donald trump. in've met donald trump
scotland. what kind of president will you be? martin: i think he will be pretty pragmatic. he's a businessman. he's got a lot of experience in property development. he's run big projects. i think he will surprise on the upside. i think he will be a good president. francine: because of regulation, because he will surround himself with a thorough team? give me a sense -- he needs to unify this country and be good for business. will he do both? martin: i think so. i think he will certainly be good for business. i think he will take advantage of these very low interest rates. if i was in his position, i would borrow money and spend it on infrastructure. i think that is probably in his dna to do that. lot of people in the business community were
anti-trump. do you think there will be retaliation? martin: i don't think so. a lot of what is said in election campaign is rhetoric. i think we've always got to remember that what politicians say and what they do our different things. i think, let's forget the rhetoric and see where he goes from here. his acceptance speech, i thought, was very balanced. francine: what does it mean for the markets? we see a rally in stocks. do you think donald trump will be great for volatility? martin: he's been good for volatility so far. i think he will be good for volatility. whether you think volatility is good or not is a different matter. i prefer calm markets. but i think he will be good for equities. bonds probably will be under slightly more pressure, but certainly for equities, i think
he will be good. as usual, it is choosing the right equities. francine: are there any parts of the market you are concerned about? if you wereppose taking him at face value, i suppose the issue might be protectionism or a return to more protectionism i should say, because i agree, there is no such thing as free markets. you have to look at which countries might be disadvantaged by that and which might benefit from it. that is how i would look at it. a country level on this occasion rather than a stock level. francine: are you worried about china, mexico, about most emerging markets? martin: i think emerging markets are doing fine. i think we've seen sentiment return to positive there.
and flows coming back into emerging markets. sadly not into our funds, which are closed, but i'm happy with emerging markets. happy with india. mexico, i think the reaction of the mexican peso has probably been overdone. saidnk again, what was during the campaign of what will happen afterwards are two different things. francine: what is one thing you worry about china? i don't know if this plays to the fact that we're concerned about debt in china, finance in china, and i'm not sure what foreign policy between donald trump as president and china will look like. do you have any clue? martin: i think china is, as i've always said, the most difficult country to make money in because of the difficulty in finding companies that we feel have good corporate governance.
on the macro level, yes, i think china would be one that i would trumpried about as donald pushes more and more manufacturing back into the u.s. china, but they've got plenty of levers to pull in china and they've been pretty successful. move probablywill slightly more toward that type of model of borrowing more and investing in infrastructure. francine: if i pull up the bloomberg terminal, we have a great chart. this is net exports from china or to china, a great chart that we will get plenty more on. jim, what happens to gold? you've been very bullish on gold for many years. volatility or uncertainty
go back to gold or are we in a better place? jim: gold is a key asset to have right now. trump wants to make america great again. that is more spending, larger deficits, so the bond market is going to want to sell off a bit. but the fed has to keep a lid on nominal interest rates so you can have negative real rates. the fed has been trying to get negative real rates for seven years. negative real rates are extremely bullish for gold. the fed has to keep a lid on nominal rates. what is the point of inflation at 3% if the 10-year note goes to 5%? francine: martin, do you see inflation going up around the world? martin: i think as you just said, inflation is great for central bankers if they can get it slightly above the interest rate. it is great for them and i do
see is creeping up gently. i see them trying to keep interest rates as low as they can. i think probably the chances of an interest rate rise in december are diminishing rather than getting more likely. francine: you worry about liquidity? we saw it with the flash crash in pound. we saw it in various other asset classes. it was very small markets, but what does liquidity look like from here to the next 12 months? martin: the world is awash with liquidity. the only time there isn't any is when we see systemic events. then it manifests itself in the smaller markets. there is no signs of that happening at the moment. regulators were concerned yesterday about emerging market debt. again, nothing really. there wasn't any liquidity issue in those markets.
francine: sharon, we have a chart up for you. we're talking about inflation. the 30-year breakeven inflation rate in turquoise, and in purple, the 10-year. what does it mean for fed rate hikes? we had martin gilbert saying the probability of a fan hike is diminishing a little bit. sharon: interest rates are going up already. ben i think they're going to -- as long as that happening, they are reaching their target already, they are fine. we have to watch what is going to be happening with the economy overall. we have to watch where all of that is going. spendinge policy is , ifuse it is cheap to spend the interest rates go up, that falls apart. francine: just want to bring you
over to the bloomberg terminal. this is world interest rate probability, around 85%. amazing, those expectations. the fed is definitely going to raise rates in december. this is operation twist. keep the lid on 10-year nominal rates, but take the short-term rate. they have to get rates up before the next recession. we are eight years into expansion. normally you have to cut interest rates to get the u.s. out of recession. how do you that when you are at 25 basis point? you can't. francine: independent of what i've just said, i want to ask you a final question on european banks. aberdeen is a huge holder. are you worried that persistently low profitability of european banks coupled with possible deregulation in the u.s. of banks means that they are going to go through a tougher time?
martin: i think banks are going through a tough time at the moment. these persistently low interest rates make it more difficult for them to make money. it is going to be tough for them over the next 12 months. i don't see it getting any easier. francine: do you think regulators in europe should worry about this a little more and maybe help out the banks. martin: they don't worry about it at all. i'm pretty certain they won't help the banks out. i think they are very happy with the position that banks are in at the moment. francine: thank you so much for joining us. always a great pleasure to have martin gilbert on air. we will be back also with sharon o'halloran and jim rickards. they are staying with us. i'm looking forward to a conversation on even more regulation or less regulation. what does a trump presidency mean for european corporate's?
francine: i'm francine lacqua and you are watching "surveillance" as we break down what the trunk transition means for the world. let's talk about trump and europe's corporate's. ppuma raised its earnings outlook. joining us now for his first interview of the day, the ceo. thank you so much for joining us right here. congratulations on your profits. your comment on a donald trump presidency, will it hurt trade and willie hurt your figures?
>> hello. focusing on we are influence, trying to do better products and better marketing. america's had an election. you've chosen a new president. we will see what that means. in the short-term it doesn't mean anything. francine: are you changing the way that you sell? if we don't have free trade anymore, and there are issues with how you define free-trade, but does it make a difference to you? >> i can't speculate what will come. we are making products, marketing and selling the products. in ave a good momentum business that we are in the process of turning around. i think short-term it will not have an impact. then let's see what happens. i think it is too early to do any decisions based on what happened to days ago. francine: footwear sales growing
17% during the third quarter. how much of this was helped by promotions by artists such as rihanna and celebrities? >> i think that rihanna, kuroda levine, kylie jenner, and the fantastic performance of usain bolt in the olympics helped us. we have managed to do better products. when the retailers sell more of our products, they are more happy, and that will make them order more in the future. we look optimistic into the future. francine: rihanna, big celebrity partner. you have something coming up with kendall jenner. when you took over, you spoke about losing a lot of heritage. are you not afraid that coming toward celebrities means you will lose this heritage further? >> you need to do both.
you need to do what your consumer is interested in. the kylieen's side, jenner's and rihanna's our personalities with young target groups. at the same time, we need to make sure we are in the performance area. that is why we're investing in track and field, soccer, football, and others. i don't think you can do only one in today's world because fashion and sports is merging into a big business that is influenced from both sides. it is not either or. you have to do both. francine: analysts looking for the operating margin at 3.4%. adidas'ill half of and a quarter of nike's. >> we are in the turnaround
phase and operating margin is not high enough. we're taking step-by-step. you start to see operational leverage. our earnings were up 40% in this quarter. we will continue to improve as we go. we have to make sure the value is there in the product. we will continue to improve our performance from an operating margin, but we will not explode it and try to do things too quick, but take step-by-step so we have long-term growth and a solid brand for the future. francine: thank you so much. speaking to us first after they released results. mark barton is standing by. four days of, gains, best run since october 4. metals, miners, construction, materials all gaining today on hopes donald trump will
implement big infrastructure spending which will boost these types of interest raise. -- these types of industries. this shows the 10-year yield yesterday. this is from essentially -14 basis point to gloss 20 basis points. start to essentially price in the prospects of faster growth, faster inflation, and the yield on the 10-year crossed 2%, leading some to say maybe this is time to buy. pimco and global asset management see the surge in the 10-year yield as a sign inflation will quicken and that means the fed may have to act more swiftly to raise borrowing cost. breakeven 10-year, 30-year, which rose to the highest level since july 2015.
expectations for a fed hike in december fell to 50%. they gone up to 80% again. finishing off with the dollar spot index, the percentage gain yesterday, not as much as we saw in brexit. we are up to the highs we saw earlier this year. the feeling is that donald trump will pursue reflationary policies. the dollar rebounded from a loss versus the yen. the yen may strengthen to 90 against the dollar within six months. so says a former top currency official in japan. he says that is because of trump's america first stance. the dollar spot index is trading high today. not as high as yesterday. francine: thank you so much. let's get some final thoughts from my guest, professor sharon o'halloran and jim records.
we're also just getting some news. this is something that has been said in the past and it comes from interfax, citing the russian deputy foreign minister saying russia was in touch with trump's team during the campaign. i don't know how to read this. do we need to not focus on foreign policy or trump's relationship with russia and focus on how he brings this country together and what kind of president he will be for america west and mark -- america? jim: it is going to be a big part. hasn't been strums specialty. ease up on the sanctions on russia. europe would go along with that. some trade can get going. this inflation indicates a higher oil price.
there's a good story for russia and the ruble. sharon: i just think that is probably true but i think trump is going to have to focus on the fiscal policy and domestic policy to keep the united states going and we are to have to see how that interacts with the monetary policy. that is the big ripple throughout the world global economy and that is going to have big implications for trade and for the different types of foreign policy and how the fed acts in response to prospects of growing inflation pressures and so forth, whether it moves in december, is obviously a higher probability. francine: what do you think his mandate is? i imagine he will be quite emboldened with how many electoral votes he has. he sees himself as the guardian of the people that had no voice. i don't know how he sees himself. sharon: one, he didn't get the popular vote. clinton did.
hard for them to argue he has a mandate. the vote he did get are those people are quite disenfranchised from the recession. mind, that was the core base that he was able to speak to. very different from any other republican. when he talks to infrastructure economy,lating the that is who he is trying to help. however increasing inflation goes against their interest. those are people with mortgages, who have loans and so forth. he has to do a balance. jim: his mandate is drain the swamp. stop empowering washington think tanks, the imf, bring in pragmatic people. said he's auest pragmatist. i think that is right. wake up every day and see what
works. francine: so that means that he surrounds himself with whom? the economy has to be his priority and the economy was not the priority of this campaign. jim: steve moore, larry kudlow, these guys have been around. i'm not saying that is the inner cabinet. a former goldman sachs senior partner, these are very seasoned people. they tend not to be ideological. they tend to be practical. sharon: a lot of people would say -- you are bringing back in many of the people who were disproven by the academic community a long time ago. they would have a very strong ,oncern about that being where who is going to be guiding the economy. jim: academic economists have been wrong about everything for eight years. sure who has not
gotten it right the last eight years. give me one person who has got it absolutely right who is in charge of making policies. jim: no one in charge of making policies. we are still in the currency wars. my -- francine: but you are not in charge of policy. jim: exactly right. but there are voices out there. i'm not the only one criticizing this. it is a club. m.i.t., harvard, fine universities, but that is the thinking that has been wrong. it is empirical. [indiscernible] francine: is this a time to bash m.i.t. or is this because donald trump was so different, 2016 was so different, he was on tv for 15 years and that is why he got elected? jim: he is part and parcel of the same thing.
efficient markets don't work. free trade doesn't work. on these models are wrong. francine: let's see what comes next. thank you so much. jim rickards and sharon o'halloran. bloomberg "surveillance" continues in the next hour. tom keene joins me. we will be joined with michael, chief global strategist at regan & co. these are your markets. let me give you a quick market check. banks driving stocks in europe higher. we are focusing on a reflationary economy. this is bloomberg. ♪
policy and protest. the republican party claims a mandate to overturn obamacare. democratic leaders urge unity. plans,imism that trumps more fiscal spending will boost the global economy. this is "bloomberg surveillance." stocks are rallying. tom: rally last night was the protest against donald trump. the protest and the tone. there is a real anger to the protest. what i personally witnessed looking down on the protest with the police -- everyone was well ordered, no riot. francine: how many people voted? this has strong parallels to
exit. were thousands of protesters who didn't vote for trump. i know it is something we need to look at and see if we can unify that it is expected. we show the symbolism today of the president and the president-elect of meaning -- a huge deal. francine: let's get to the first word news with taylor riggs. donald trump will go to the white house to discuss his transition with president obama. abouto said harsh things each other during the campaign. hopeobama says we should for trump success in leading the country. there may be more leverage in theresa may's brexit talk. trump has cast doubt on the u.s. commitment to nato. india's prime minister has launched the most extensive
anticorruption operation in decades. he is withdrawing high denominations. those who extend their interest in india's cash policy may start struggling with simple transactions. and south korea has expanded its --ruption examination for they have examined some of the country's largest companies. a close friend of the president alertingd of companies. global news, 24 hours a day. powered by our more than 2600 journalists and analysts, in more than 120 countries. i am taylor riggs. tom: it is almost as if we have forgotten the markets. futures launch again this morning. futures up 15. yields are a huge story and we'll get to that through all of surveillance. i will call that the quiet
backstory. move.x, what a michael purvis will be with us in a minute. we do have a breakout steepening. ,nd for you, i put the euro swiss, the new hero bellwether. that says something but i'm not sure what it says. francine: i do think we need to look at havens. people may not want to move to new york. i'm kidding but something to look at. go, zero dollar. i thought this was significant. ceos are talking about trade. the mexican peso, it is what it is. tom: i want to get through this
quickly with our wonderful set of guests today. is the bloomberg consumer comfort index. the long-term decline back to 1999. and the extended ears below the 50% blue line. it is extraordinary what this says about the pulse of the nation. there is a snapshot on the why of this election. francine: i may take the gallery by surprise but i switched it to treasuries. after speaking to a lot of economists this morning, treasuries are what they are looking at. basically, the test for donald trump at the moment, there is consensus he will spend his way through this. we are not sure how he will find the funds for it. so a shift in the yield curve.
bruce kasman here. and we are thrilled to bring you michael purvis. he has been brilliant on dollar dynamics and the pivot to asia. but he has worked 24/7 to lose the hysteria of the moment. great --ckee has been michael, what a pageant at the white house. michael mckee: a funny story. i covered the white house when george h w bush was elected. theyhey did this where came out to the rose gardens and those were the days when you yelled questions. i said, mr. president and ronald reagan turned around and said, which one? that today.
with your experience with george h.w. bush. what is the thing you will look for in the body language between a president elect and a washington that has no clue in who this guy is. he has no relevant experience to be commander-in-chief. he will need a lot of help. how much helpful he get from the existing washington establishment? he gets a little bit from governor pence. and theestablishment agencies, the idea of being an executive running something that big, it will be interesting to see how much help he gets in the transition. maybe we will get a signal from president obama's body language. thecine: this is president-elect website.
to apply for a job, i think you can. to work, regulatory firm, trade reform, education. we don't know the details yet. you go to "legislation" it "less." -- mr. mckee: the cabinet will decide what their agencies will put that together. that is an interesting question. and it is interesting the way the markets are reacting. he has a lot of power because he said he can order a lot of things done. they're planning, they are planning on reversing the executive orders that president obama put into place for immigration and things like that. you can expect that to come. of thiseconomic effects and how it will impact companies doing business, it is hard to
say. francine: let's bring in michael .urvis great to have you on the program. regulation and the fed? what questions do you want answered? trump is not a detail guy eddie he doesn't have the experience. governor pence will have an important role here which will be significant. and there will be a big power whitele within every house administration. and when you don't have a guy who is deep into the details running it, that will create an interesting dynamic. thatn't going to be just this guys doing this right now. francine: how important is it that he even gets democrats in the cabinet? is this ignored? for arves:
president-elect to have switched party affiliations five times in his life, you would think he would be used to going across the aisle. he made his career in new york and is a pragmatist -- presumably. so one might think that he would take hillary clinton up on his offer to do that. but he has also set hard things on the campaign trail. tom: here is a great headline. i will say it. softens tone on trump." michael mckee, i suggested a little bit of that going on this morning. softening the tone. what wee: sure, that is do. we all hope the new administration succeeds. new presidential campaign starts next week. so a lot of this soft tone does not last that long. market voted yesterday. i thought this was absolutely
extraordinary. the gloom of the futures. there is theow and bloom of 10:00 p.m., 11:00 p.m. election night. , there is the vote fed trans-pounded people. that confounded people. you would think that hillary clinton one. won. there was the harsh edge to the campaigning. the party didn't last for that long. theink the second thing and deeper thing is what you got a taste of yesterday. been jerking with monetary policy with low growth,
and a steady rise. the market was getting frustrated with that. conflict of the pivot from monetary policy to fiscal policy seems to be , that to meesterday was something that the markets had penned up, a pent up lust for. francine: is that because they wanted to be better? mr. mckee: if you spend more money, it will go into corporate bottom lines. and a lot of people leave out the tariff part. imposes tariffs, does that has a greater effect they're
cutting taxes and do we see more inflation? you see the bond market price those things in. in: we have catherine mann the next hour to talk to us about those things. rounding michael mckee up what we are expecting from the president-elect and the president today. and we have michael purves. coming up, we speak to catherine mann. this is bloomberg. ♪
with us now is taylor riggs. taylor: a consumer lawsuit in the u.s. said that any emissions scandal also included audis. audi is accused of installing technology to beat a missions. a judge has signed off on a billion-dollar settlement. fourth-quarter policy earnings that were better than expected. the company said that revenue growth occurred at most of the industry divisions. they now plan to spin off the health your division. and astrazeneca third-quarter earnings rose to a one-time tax benefit. without that, they did miss estimates. astrazeneca cholesterol pills became the second blockbuster drugs to face generic
competition in the u.s. in two years. that is your bloomberg business flash. francine: we are with michael purves. michael, let's talk about the market -- about the winners and losers. i want to come back to the fed. that will underlie anything that the equity markets do. the markets are now wondering how they will raise rates in 2017. the quickness of the turn surprises me. i think pimco said they were expecting three or four next year. which is very interesting, a very interesting argument to make and they could be right. as it relates to trump, i know he said a lot of harsh things about the fed and anti-janet yellen rhetoric but i believe one of his staffers was saying
that actually may keep janet yellen. it is an interesting debate. because we know him as a guy who understands leverage in his business and the value of low interest rates. typically if you are financing infrastructure. ont will be putting pressure the super end of the curve. wonder, how does trump fight at fx war with a hawk running the fed? and that is one of the things he has talked about. we want to go to some of the market movers and this is something we picked out because it shows the matter of pimco. he basically says, we see a higher and more balanced inflation forecast and a more rapid normalization of policy. the fed will means
move faster on rate increases in the market. isonder whether the market pricing things too quickly. coal makers did benefit. the mexican peso, that was pretty much expected. defense contractors went up yesterday. is this too much of a knee-jerk reaction? michael: you can't read too much into yesterday. there was a bit of a relief rally. there were three nice speeches because ofs up 30% more infrastructure. but that isn't enough to keep the s&p 500 going up. the bigger issue is the 10 year yield. and that could go up to 2.5% by the end of the year. destabilize the broader context? tom: bring up the chart.
this is the gloom of for session. further recession. 2000-2001. andave this movement down the gloom cruise says, here is the pressure. this is the condition of what we have seen with donald trump's victory. this deepening of the yield curve. the 10 year yield is higher than the 10 year yields. do we have a tipping point on a basis point with the yield curve? michael: not really. this has been heavily distorted by foreign qe. tom: but you adapt to distortion. you have the steepening in the yield curve. where is it? -- i don'tu know know. is thursday at 5:20. this is great. when i look at the
yield curve, i don't know if it is as relevant of a predictor. tom: are you a red sox fan? [laughter] tom: bring me here with the chart. this is the big question. bring the chart up. there it is. i am kidding. michael purves is phenomenal at synthesizing the bond market. with michaelmore purves and maybe he will be able to talk in the next segment. [laughter] tom: plus we know who will talk. lawrence summers. in -- the pride former president of harvard. this is bloomberg. ♪
or is to make sure inflation expectations continue to increase faster. lower and keep the dollar in check. andi think to solve for weaponize fx and weaken the needr structuring, he will -- first of all, you don't want a hawk running the fed. francine: and how do you spend? had krugman who was similar to what trump once to do but we are against it. michael: right. build that heture had talked about should be significantly inflationary. it is also going to be tough for people who have been long treasury.
tom: do we get elevated equities because we assume elevated nominated gdp from an all republican washington. michael: yes. the short answer. i think the market is craving higher nominal gdp and fiscal stimulus. but it will be a much choppy or road. tom: michael purves, thank you so much. coming up, the classic book on global and american capitalism. we will talk about the shocks of a transition of power. this is bloomberg. ♪
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we talked about asset classes d similaritieshe with brexit. some people say that donald trump's election victory may have given to theresa may, some unexpected leverage. foreign policy, looking at finance and economics. let's get to the first word news with taylor riggs. selectionnald trump has led to protests across the u.s.. thousands march in new york, los angeles, seattle and other cities. thatsaid they are afraid donald trump will carry out his deportation of undocumented immigrants. house, they won't rule out issuing a pardon to protect hillary clinton from prosecution. a white house spokesperson is but hopes itdon, won't be necessary. during the campaign, donald
trump threatened to assign a special investigator to her lincolnton. the republicans say donald trump has given a mandate to replace obamacare. paul ryan skiffs in the credit for helping the control. and he says it will let republicans be bold in enacting an agenda that could touch every part of the american life. and donald trump's victory has populist setting sights on a coming votes in europe. italy, austria, the netherlands, france and germany. there is widespread exasperation and is miss in germany europe. populists are likely going to try to exploit that. pledges 50 --ader pleaded guilty to wire fraud. moneyo agreed to forfeit
and profit. he placed orders he never intended to fulfill. and he still faces a prison sentence. global news, 24 hours a day. powered by our more than 2600 journalists and analysts, in more than 120 countries. tom: thank you. rachel on the evening of the election and i said if there is one person who i wanted to speak to, it was daniel yergin. the iconic book on the 20th century of capitalism and on regime change within government. whatever the moment may be. expert ongin is our the shock of politics. he joins us this morning from abu dhabi. talking about unexpected places. america is in an unexpected place. the do you foresee for
first 100 days of a trump administration? has a: well, we see he long list of things he wants to do and accomplish. some of its will be able to be done in 100 days but a lot of things take a lot more time to get done. but one thing he wants to move on, and it goes back to what we were talking about with other transitions, that we have seen in the 20th century, he wants to reverse the regulatory current that has been so strong over the last eight years. cnn i saw david gergen on last night talking about the massive distinction between ronald reagan as an outsider who went with an eclectic group of true experts within his party. do you suggest that mr. trump can replicate his transition? or will this be original, narrow and inside? this is a saying where
it seems that almost no one knows. we have seen a cast of characters who are mentioned that there is a big difference. ronald reagan was governor and the head of the screen actors guild. he was part of a political process. donald trump has been around for decades but he has been a one-man show and reagan was not. francine: what is the one thing that we discount in foreign policy? we had a story yesterday saying that this may be too good to be true if you are vladimir putin. what will the relationship with china look like? i think this is an area, we saw financial markets go down and they rebounded because we focused on infrastructure spending and tax cuts. but the larger issue out there is the uncertainty of, what does this mean with trade and geopolitical relationships?
before i camesia to the middle east and there was much discussion about china's expanding influences. it was a free trade agreement in asia. and other countries are viewing this as a way for china to become much more dominant in will be that the u.s. pulling back from that and pulling back from engagement. the mostk it is important geopolitical relationship that the u.s. has, with china. this is an important geopolitical engagement. it is certainly at the top of the list. let me just add. say, the tpp, we see the controversy in the united states about it that a lot of governments in asia invest a lot of political capital in getting that to come about.
and the pulling back from it is again like a red line in syria. it is a credibility about the seriousness of the united states as seen through the eyes of other countries in the world. francine: what worries you the most? that he is against free trade agreements or is it about security? the fact that we don't know what the u.s.'s commitment to nato is at the moment? the security relationships are very important. generalt the secretary of nato coming out and saying he regards the u.s. commitment to nato as rocksolid. of the trade, over 20% u.s. workforce benefits from global trade. inyou add in workers who are u.s. foreign companies invest in, over 25% of our workforce. so international trade has been worrying anyway. the numbers are way down and are
back to where they were in 2009. the positives will come from withing but what happens global trade is important to our economy and a global economy. and that is the area that i think gives a lot of concern. , "theithin your book prize" and the follow-on, the quest. donald trump is a candidate and president-elect of servitude. are you optimistic that trump can find the path in governing from servitude to the humility of balances when he speaks to the middle east? well, i think that we have seen a tilt. and i noticed in this region, the iranians have already criticized and others in this region have a more mixed field because they are looking for the u.s. to be more muscular in the
region. but i think, his experience is very different from the experience of ronald reagan. and even a president with all the power he has does not control his inbox. he doesn't control the crisis that happens in the first 100 days of the administration. and i think the question that are thes is, who advisors and how does he listen and interact? is donald trump on the campaign the same donald trump as a president? it is too soon to know that. what can trump and his family learned from the struggles of winston churchill after the struggles of world war ii. you talked about the saga that winston churchill and his family went through. from sirthey learn winston churchill? daniel: i think it is that things can turn around quickly.
it is an extraordinary, schmidt going down the escalator in trump tower and ending up as president of the united states. but churchill was a great war leader. he led britain in an alliance and voters turned him out. and his wife said to him, maybe it is a blessing in disguise and is disguised, it is well disguised. and i think it is the fact that things can come at you that you are not expecting. you may want to go in this direction but you will be surprised from other directions. and it is a volatile world. look around geopolitically. any number of different points. in the middle east, four different wars are going on. yergin, we appreciate your attendance and his more classic recent book is the quest." this is a shock for all of the
underestimating her chance of winning? we talked to jonathan fenby. you.s great to have especially on a day like this where we are really trying to see with our eyes open what the donald trump presidency means for the anti-establishment movement europe in -- movement in europe. this hikes her chances of scoring well in the first round of election. whether she could actually go through and win the runoff against the combined forces of the left-wing voters in order to stop her, that is an open question. but you could see her on the television last night. trump like. she doesn't speak out and she is very measured and is very was really the mistress of evening last night.
the referendumve in italy and the political elections. months, could 12 there be a complete change in the fabric of the political movement in europe? jonathan: i think it is our happening. ofxit is it big example this. and her party got a quarter of the vote in elections last year in france. and that is changing the whole landscape of europe in politics. the establishment parties are deeply worried. some of them are on the run. this is an important election also in the netherlands with a very strong anti-europe party. and there is a mixture of anti- eu feeling and anti-immigration feeling and general concern by the people who donald trump called yesterday forgotten men and women and it is coming together in a potent group.
looking at some of the papers. i try to read as much as i could to understand who elected donald trump. and if you look at the breakthrough of the numbers, it isn't the forgotten. it is people who make more than $60,000 a year's. so we are just confusing populism? does that just mean that it is more extreme politicians that get in? europe, i think it is more the forgotten people. the richer people are still with the establishment, by and large in france and other countries. what is also important is that you then have national elections in germany in september. will bethe germans go interesting. because you have the anti-party on one hand but on the other hand, you have a gathering of the orthodox right. and that will play out so that
will be interesting. the will have an effect on ecb policy and qe in europe. tom: help me with the structure of european governments. one thing i have learned is that a lot of europeans don't understand how sad it is. i don't get france, germany or london. help me with populism within a parliamentarian system? you have the british approach, it is very difficult for a smaller party or a populist party to break through. in germany, you have a more important federal system where people can get into the government of states. in france, a two track system. because you have the legislative elections which the mainstream parties will continue to
dominate but then you have the presidential election. and in the first round you get a lot of protest votes. and that could push her up. -- she couldhe way go to 40%. tom: michael perrone, a great american analyst, wrote in the washington examiner and was politics and the the representation of that. help me with the royalty of french politics? is there a royalty to french politics? will they be defeated? even more of an elite royalty than there was in the united states. the same people go round and round. candidate for the mainstream right was prime minister in the mid-1990's but got chased out. nicolas sarkozy has been around
forever. the french president only has a 4% support for reelection in some polls was there in the 1980's. so this is the old class. beenll these people have running france for their own interests and the interests of their own parties and she poses as the only candidate who will stand for "the general national good." this is the french equivalent of "make america great again." thank you so much. francine: that was jonathan fenby. be talking about policies and trade and regulation. will dodd-frank survive? this is bloomberg. ♪
at the white house today. we say good morning to you, worldwide. joining us now is someone who nailed it. with earlyughey support of donald trump. she has picked out curtains in executive mentions a number of times. mr. trump will look at the curtains today. what do you expect from the historic meeting? betsey: i would expect more graciousness. the world seems to be very reassured. the language of the campaign dramatically shifted to the language of governing. both in donald trump's acceptance speech and hillary clinton's resignation speech the next day. seen, fori have quarter after quarter after quarter, is people who know mr. trump, say that trump you see with the fire and controversy is not the real donald trump.
which one will show up at the white house? betsey: a man who is capable of governing. thatas a team around him includes many washington experts. i have heard this rumbling about how can he go to washington because he doesn't know anything about washington but he has nook regression. has experts in state government which will be critical this time around. it will be a combination of seasoned washington insiders. as well as people from business. francine: is it important to have democrats in there? betsey: we will see. tom: help me. just one vignette of mr. giuliani, always controversial. some of the door him and some do not. him as attorney general? this is the kind of controversy
that is getting attention in washington. with that be good for your candidate or should he take a different path? betsey: i have been a huge admirer of rudy giuliani. as a new york city resident, he has brought debility, law enforcement and fiscal responsibility to new york city at a time when it was urgently needed. was ins a city that chaos and bankruptcy and he turned it around. so i can only say that whatever rudy giuliani wants to do in washington, it will be a blessing for the united states. francine: when will he have more details on the policies? i'm obsessed with policy. i want to talk policy because i am a foreigner. and it is clear that this election was won on personality. i know you will fight back. but give me regulations? explain in one sentence why there is such a connection between how this
election was one and what comes next. this was a reviewed nation of the divisive class warfare rhetoric of hillary clinton's campaign and before that, bernie sanders. the fact is, americans don't hate the rich. they want to be rich. when hillary clinton emphasized inequality -- and americans are not angry when their neighbor has more. looking atnd we are a reflationary america. people are saying donald trump will spend and it will ring back inflation but how does he finance it? betsey: as you have heard from many times from me. he is looking back at the example of ronald reagan. who cut taxes. and tax cuts will be high on the agenda. he cut taxes and spurred economic growth. and we saw the deficit come down as a result. more revenue. west of albany, new york is
rome, new york which has been back on its back four years. how does donald trump make rural new york better? betsey: investment. as you know, investment was steadily declining. tax cuts, regulatory relief, it will spur investment. very high on the agenda. ,om: betsey mccaughey congratulations to you and your candidate. up next, we have catherine mann. this is bloomberg. ♪
the president-elect, there is protest among the cities. markets celebrate. the dollar ascended. on the dysfunction and many call dependencies of america, catherine mann. good morning. this is "bloomberg surveillance ," i am francine lacqua and she is tom keene. that is exhaustion. francine: being tom keene, i like it. i get a early bond option. me. help you decided to stay over in new york. francine: this is where the story is that people want to know what a donald trump presidency means for unity or disunity. this is critical. does it give theresa may what she needs to get a better deal?
tom: what have you seen from the british newspapers? francine: adapting and adjusting. what i am watching golf for optionme being from, and -- tom, an auction. that 30 year will be the first time in investors make a bet on president trump. tom: bruce passman will join us from jpmorgan. to bring you up today, here's taylor riggs. taylor: in a number of cities, and thousands of demonstrators protested donald trump's election. there were largely peaceful. police arrested 15 in new york. protesters marched in philadelphia, boston and los angeles among other places. the president-elect meets with the president. trump goals to the white house -- goals to white house.
things butd harsh obama said america should learn. russian government said it did not contact donald trump's campaign before the election. spokeswoman said it was the -- said embassy staff met with the campaign. the trump's election may have given theresa may more leverage in break that. trump has cast doubt on the u.s.'s involvement to nato. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries, i am taylor riggs. this is bloomberg. tom: a quick data check on the markets still extended. futures up 16. dow futures up 140.
the dollar ascended. dollar pushing up against resistance. you wonder where the dollar will be come inauguration day. -- 13.7.rom it is morning in america. blowing through 100 basis points, a steeper yield curve area -- yield curve. francine: similar to your board, i will tell you thanks are up in europe. that is surprising. -- i will tell you that banks are up in europe. they are focusing on deregulation and inflation. that is the mexican peso. tom: we are so guilty on being focused on new york. michael wrote about a trump victory. you go out i-80, you get to
start college pennsylvania. he is a penn state graduate. you moved to pennsylvania that helped mr. trump. joining us is an optimist on the oferiment, kevin katzman jpmorgan. what i like about your background, you know i-80. it is long. altoona mr. trump do in or the one community that led to victory? into athis was tapping of thef people who felt economic recovery did not impacted them. toald trump was a -- able transcend ideology. a lot of these people actually voted for barack obama in 2008 and 2012 and shifted back. big point about
that, did not show up for secretary clinton. helping me with your thoughts as we saw florida fall, north carolina. the day-to-day experience of the trumps, didn't they see this coming? kevin cirilli: yes and everybody thought they were crazy. said you have to go to wisconsin because you shot. everybody thought that they were looking for a win and a hail mary, they were right. it was the white working-class voter that pushed him over the edge. >> doesn't gdp, economic growth matter in your political discussion? yes, i have been all over the country for a year and a half and despite statistic saying there is an economic recovery, many people did not feel it. many fell to the culture of institutions of not help to
them. tom: wonderful to have you. on economicc view growth. could we get to 4% trump american growth? >> our review is the economy basiconstraints that are right now. we do think policies will ship in a row -- will ship in a reflationary tone and boost inflation but a real limits on how far the u.s. economy can go given where labor markets are and our demographics. francine: my first immediate thoughts, kevin, and you have been traveling with the donald trump, what will he be like as president? will he be able to unite this country? when you look at economics, everybody have to work together. kevin: it is the tale of two tr a.m. what you saw at 3:00 the other morning was one that
wanted to unify. i think that could be one key area particularly early on where you can see bipartisan. the short term, tpp is almost the dead. francine: what replaces some of the growth from tpp, bruce? he needsn the cabinet to make sure he gets the economy in a better place? is promotinge certain things that will help the economy with infrastructure spending. if he does tax reform, that would be positive. he is talking about things on the international front which will be negative area -- which will be negative. francine: i am trying to look at the details. and krugman saying he is for infrastructure. dr. kasman: everybody is for infrastructure like everybody loves apple pie. i do not think it will be better
than anything else, we have not been investing in infrastructure. with had the sequester, limitations. the important thing of this in terms of macro is we are ngshackled link -- unshackli policies different than what we see elsewhere in the world. that the difference will be start on the monetary and fiscal side. tom: have you ever been to waffle house? francine: i love waffles. tom: it is a restaurant across donald trump's america. 3:00 a.m.ly good at with a six pack. when you have a waffle house president and the assumption he will govern for all of america, do you buy it? kevin: i do and he is a new york billionaire. i would argue that someone who at the end of the day in
deregulatory is a republican president with a republican-controlled congress. and there is going to be a lot of deregulation. shift, see the fiscal cbo matters and people worried about deficit expansion. do the debt vigilantes, do they tell president trump what to do? dr. kasman: no, we will see a steeping and the curve. behind the election took place. tom: were they behind at 10:00 when north carolina felt? -- fell? dr. kasman: they were behind yesterday and perhaps they will be more behind. francine: donald trump is now for low interest rates but it is noteople feel -- it great for the common american man. dr. kasman: this becomes an
issue. if we get more of the demand-side stimulus and olivia get a world doing ok, it will be positive. hot --it will be demand-side stimulus and the world is doing ok, it will be positive. much a deeper, longer-lasting policies. how long we can use it does a poor, we will get in touch wrote just trouble at some point. tom: -- we will get into trouble at some point. essay: i go back to when on the royalty of america's, the royalty,lty, the obama the clinton royalty and a trump royalty. people including president trump reach out and grab the american psyche? four bite trump
already has. when he took the stage with more than a dozen of his family members, quite interesting. bit already has. it is already reverberating. tom: what will the curtains look like? >> gold. >> gold. tom: prada? francine: melania will do it. that is how you will reinflate it economy. tom: what will they do with the green room? i say that with great affection for the green room and the jackson memorial. thank you.- the important idea of finance in this nation. the former treasury secretary, secretary of the treasury lawrence summers. good morning.
francine: as we look at the truck transition, what a beautiful day in washington, trump transition, what a beautiful day in washington, d.c. thatow later president-elect trump will meet with current president obama. what will they talk about? tom: i think most of it will be tradition. i think it will be delicate. especially about secretary clinton. francine: business flash back. strengthened,rket the royal institution of purveyors said home sales gauge
arose. higher prices but home values in london felt for the eighth straight month. the chief operating officer of twitter is leaving as the company tries to do something about slowing revenue growth. twitterbe replaced by cfo anthony. --september, twitter hired for sales. investor carl icahn led donald trump -- left donald trump's the victory party early two advance. t. to inves icahn said he would've liked to bet more. tom: thank you. at jpmorgan has been . fabulous house the idea of the volatility of our economic growth.
know, did, you jpmorgan economics change election night? we didn't change our views because we want to see a bit more from this administration. we have biases in which direction our views will go. the idea will will have more nominal growth. it is promoted by the notion -- from the negative supply the trade side. as we were talking about, the biases that it will deliver more stimulus and monetary tightening from the fed. tom: bring all the chart, if you will. the 10 year yield and strapped across a is hsbc's outlier call of a lower yield. the basic idea is america is 5% yield, down we go.
you're not suggesting we get back to morning yields in america? dr. kasman: no, we are not. we're looking at an equilibrium rate from the fed acted 3%. at 3%. not a particularly high level by historic standards. francine: when you look at -- i have a chart which supplements tom's because it is what we saw yesterday. this was for 10 year. today, we have the 30 year. basically, it shows you this cover ratio was the highest since june. the markets are clearly believing that donald trump can pull it off. what if there's a for policy mishap? dr. kasman: everything we talked today is the huge amount of uncertainty we have. neverpresident who has been in government and said many things, many times inconsistent.
does not have an established working relationship with the president. the republican party controls congress and the president. a government that is committed to more fiscal stimulus. we can see that's a positive for the demand side of the economy. what he does ultra to foreign policy conceivably could be a negative supply shop. we are downplaying the extreme but you cannot completely ignore. francine: is it the market saying give the president elect some time to figure it out? a market that things the way that power is structured in the u.s. there is little damage he can do? dr. kasman: i do not think it is true at all. one of the issues is we want to celebrate -- separate. as economists we tend to overestimate the minute and under -- immediate and under estimate the shorter term.
policieseflection of in place for 15 or 20 years. to answer your question, we are not ignoring the risks. the tales are wider. look at pastble to presidential campaigns as you have a rhetoric on trade and for policy has translated. it has been more sober this into the administration starts for tom: i am sure you have had meetings with norman, what is your strategy? the dollar is likely to be weaker against reserve and the g4 broccoli but in the world in which we have trade problems, it is likely to be stronger against -- tom: what is the weaker against the turkey liver and -- lira and mexico? dr. kasman: if we think about a world where the u.s. is
tightening on trade, the relative performance is hurt and that sense. we have to get balance right. it is not as positive for e.m. as other g4, gtn economies. man, boy, would he look good on the board of finance. he will continue. rochester, he of has been outspoken on television a new monetary america. this is bloomberg. ♪
tom: stay with bloomberg through the day on politics. the granularity of elections, writing in the washington examiner the -- i find it that is stunning. -- i find that stunning. francine, that is a great compendium of early analysis. with us.man some of this about the spirit of american consumption. way out front about a dampened american consumer. with a better look on inflation, can there be better american
consumption? dr. kasman: it can, there are headwinds. if we can get growth growing and labor in, moving up, an opportunity for some of the post traumatic stress disorder that has been with us as the financial crisis has an opportunity to fade. there are gains from house prices going up and from equity values going higher. francine: i look at charts and they are not looking that badly. i understand some people have been left behind are compared to the rest of the world, the u.s. is stronger. no doubt.: if you look at where we are compared to what will generate in actual income and wealth and consumer confidence and house debt household expectations and behavior, it does not been a dramatic pedal of weakness but the shortfall. our models would have expected more consumption especially
after the oil price decline came in. thank you forn, joining us. he is with the jpmorgan. of next guest on the concept economic dysfunction. want to talk about regulation. it is part of that and goes back to european banks who have had tough time. any european bank. tom: catherine mann will join us on america and our new president. it is a new york city this morning. donald trump's new york city. this is bloomberg. ♪
president-elect donald trump will go to washington to begin -- trump transition. -- president-elect donald trump will go to washington to begin the transition. let's get straight to bloomberg first word news with taylor riggs. taylor: president trump's acrossn led to protests the united states. many carried signs saying "not my president." some said they were afraid that he would carry his threat to deport immigrants. there were a number of arrests. the white house will not rule out issuing a pardon to protect hillary clinton from prosecution from the trump administration. is hoping aama pardon will not be necessary. during the campaign, trump threatened to investigate hillary clinton while secretary
of state. house speaker paul ryan gave helpingedit for republicans keep control of both houses of congress. victory and the brexit vote has populous setting their eyes on five populations in europe. italy, austria, the netlist, france, and germany. -- the netherlands, france and germany. populouss -- populists are likely going to exploit that. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries, i am taylor riggs. this is bloomberg. tom: at little history. when you go to 1800, 1960, how about 1876, the election of 1876?
there was a one point electoral vote difference. rutherford b. hayes. in and around washington, it is now possible to conclude definitively what is the result would've been if a fair election had been held without the violence and intimidation of 1876. usually speaks about international economics but today catherine mann on america. she is the definitive expert on dysfunction and codependency within an economic system. is truly aper classic. dr. mann how dysfunctional is america this morning. -- this morning? dr. mann: we had an election and a new president, what we need to
do is have the policies might affect the americans who elected mr. trump. and all americans. when we look at this and as you know, our economic outlook is scheduled for monday, november 28, so this is very germane to our strategy. how do we programmer ties the thecy -- perimeterize policies he puts in place? that what we're the process of doing. tom: your research was the codependency in china, helping me with the codependency of the elites in washington. as the president meets with the president, how cold depend are republicans and democrats in leads within the beltway? washington it does exist within the beltway, but it is clear what people are looking at is what kind of policies are going to be put in place?
how is that going to affect different individuals and businesses? and aggregate all of that to the macroeconomic levels? just what isnot happening in the united states, but the being and the global economy and there will be spillover effects. tom: how can president trump jumpstart global trade if it's campaign was a campaign of zero-sum economics? it's --: we think trade plays a very important role in prosperity but we've knows domestic policy needs to be put into place to ensure its games are widely shared. what we have clearly seen is domestic policies have not been put into place. not a just true of the united states but more broadly across the world that transfer plans have not been capable of adjusting market in, to a more
equal household disposable income. when you look at the kind of policies necessary, we focused not just on the trade side, but to the complementary set a domestic policies that make the difference. not to just about trade but technological change since that is as big an issue when it comes to achieving widely shared side ofthan trade things. francine: will the trump administration understand this and put to those domestic policies in place? well, not a detailed plan yet out to their two exam -- out there to examine what the policies may be busted there are two things at issue. of the look at some aspects of the plans, we look at investment and the prospect of improving and that is something the oecd things is important. we look at hard and soft investment, the roads and
bridges pre-soft investment is education, training, skills, are indeed. -- bridges. -- soft investment is education, training, skills and are indeed. on the tax side, reduction in the corporate tax rate is not exactly consistent with the kind of domestic policy direction which would widely share the benefits. francine: is the regulation and you are good at best, i know you look at it for more than a decade, is deregulation automatically a good thing for u.s. companies? four isn't the details of how you deregulate industry first? dr. mann: it is always about the details. have foundthings we is regulation in general has had a negative effect on investment. that is a broad aggregate observation. it it does mean there are things
to look at in order to determine which regulations of benefit to most the population with the least cause to industry. one of the things we ought to remember is in the united states , the states play a very big role. statewide regulation has increased. we needed to look at that and determine if all of the regulations make sense. the other thing that is happened at the state level which is day, 4nt is on election more states voted for an increase in the minimum wage and .hat adds to 11 states act at the state level, individuals when it is a hit of the ballot box are thinking about their neighbors and theirg forward for neighbors something that will raise the prices of things they buy. they are willing to do that. j-roll and on that -- drawing on that is something we need to doing the federal level. we will come back
to you, doesn't this election means the federal reserve must adapt and adjust? does it have an effect on janet yellen? operates inll, she a combination of fiscal and monetary environment, what the fiscal policies are due effect the nature of the federal reserve's decisions. tois a partnership that has be working forward for the dual mandate of the federal reserve which is inflation and unemployment and growth. yeah, she has to be dealing with whatever policies is put in place. tom: we will continue with this in a moment. extraordinary. francine: 1876, the first in february, the first sardines were canned ever in maine. it is significant. a very important time in
american history. for a global audience, the civil war in 1865. just like in england, it went on. from76, a tipping point war to a modern reconstructive america especially in the south. it really showed the parallels to some of these elections with what we have in the last few days. we will come back with catherine mann. formere summers, the secretary of treasury, larry summers on stagnation and president trump. this is bloomberg. ♪
francine: pictures of the white house in washington, d.c. united states the elected a new president, it is donald trump. the president-elect will go to the white house to meet with president obama. we will have a couple of news briefings throughout the day. we will have more on the election and what it means for geopolitics and your market for first, some corporate news. tyler? taylor: deutsche telekom posted third-quarter earnings. growth slowed in germany. that was all set in gains by t-mobile. sales in the u.s. increased by 18%. popstar katy perry has pulled out of an extravaganza put on the by china's alibaba. she do not give an explanation. as no longer after she posted an tightrope of messages per she was to perform at the alibaba
event for single's day. -- after she posted anti--trump messages. we are back with catherine mann, dr. mann, a featured economist talking to us. we were talking about trade and what president trump will have to do to get to this economy growing and growing a little bit more. what is the one thing he needs to show the american people in the next two months as he takes reins in a divided nation? main -- dr. mann: he has to have policies and how he will ensure that those sources of growth are widely shared. that is a key element of this is programs, about investment, domestic policy. the trade part is a very focal point but we know trade is associated with a gains, they
are not widely shared. that is about the domestic policies and we need to hear more. francine: how will a trump presidency reshape the beltway culture or the manufacturing industry, but it will change? is mann: the beltway culture a fairly rigid culture. so, there is the fact he has the house and senate and presidency all on the republican side. it is still the case we have to be thinking about the widely shared feature of gains. what got him to the white house was the fact that gains are not shared. he have to put in place policies that will do that. he has to work with congress. tom: francine has been a focus on where is the policy, maybe we do it different in the united days where it is about policy.
president -- an effective president joins us -- and the executive president joins us, help us. the affordable care act but much more is a dodd-frank. if the generalization, does dodd-frank gold stage left with a trump presidency? guest: in the dreams of a lot of bankers, it will, but it will not happen. dodd-frank is that the law of the land. it is embedded in regulations that has not been promulgated. note are agencies so he can go in and with a draw them. what he can do if he can make new regulations when the terms are up and the regulators he appoints might have a different view. it is a slow process. ,om: help me with a certitude
for disclosure, i am guilty of this. the framework of president clinton working with senator warren of the security exchange commission. do we know how mr. trump will interact with senator sessions? dino kos: i certainly do not know. again, the question is, a lot of criticism of chairwoman white acted the sec. again, these are fixed terms, independent agencies. maybe criticism of that but he also has to -- he cannot use capital at this point early on on issues on the sec. he will have bigger fish to fry. get a supreme court appointment. tom: there are positions more prestigious? yes.kos: tom: a bloomberg surveillance
exclusive. francine: when you look at donald trump and president elected talked much about regulation except for saying, we heard him maybe three times saying he will get rid of the 2010 act. dr. mann: we just heard is a very challenging thing to do and regulations are not the just act the presidential discretion. also the case within the financial community, they have taken on a lot of these regulations, not all of them. the other aspect is the interest rate environment and the challenge that has presented to the financial firms. and let's layer the international domain regulation of the basel committee. not just a presidential decision. mann, josephe publishing arguably our most important in the international relations. ei talking about
trump and new foreign policy. an extraordinary essay. here is -- here it is -- catherine mann, i am sure those awards you agree with. how does president trump deal with a changing dysfunction in china? china is going through a transition. this rebalancing and you brought up earlier an article i wrote in the 2000's about codependency. after that time, an issue where china was dependent on the
united states as a source for their market, goods and the u.s. was dependent on china as a place to buy cheap things from. that has changed on the u.s. side because we're not important nearly as much as consumers now than we did back then. and not because we are poor that because we changed the type of things we buy. on the chinese side, the process of rebalancing, although challenging, has changed, has made progress. and now they are focused on much more on the european market as a destination for the products, not just the united states. francine: thank you. fascinating. talking to us from paris. we are back with dino kos of cls. a picture of stocks. they are searching. metals are up. investors betting the trumpet administration -- trump administration will invigorate.
president and president-elect. for an exchange. barometer.he francine? francine: bloomberg daybreak alix, i cannot wait to hear what larry summers has to say. alix: i am sure he will say a lot. who will make a good u.s. treasury and push him on his thesis. if we get a lot of stimulus, isn't it a good thing? we will discuss that what larry summers. what is the continuing fallout from markets. our guest will join us on emerging markets out of a trump election. senator will be joining us. donald trump was to create 20 million new jobs. how many will come from small
businesses. tom: alix steel, thank you. my chart of the year. i think it was the day of the election. let's go over it. it is mr. trump and secretary clinton. real gdp, four year moving fromge and we are down 54% the morning in america, the late 1990's. just before the crisis, the middle graining -- green circle. as the agony we have seen. dino kos is with us. this is the backdrop to a policy prescription. what can chairman yellen do to help president trump? dino kos: i am not sure how much she can do. she will have to wait to see what he can do. is a monetary policy going to take the baton? with had a long period where it is called the only game in town. that has played itself out.
will be policy responding to the signals coming from the administration and for fiscal policy. tom: every president, i suggest every prime minister is molded by events. mr. trump events will be a republican senate. do you expect it will be monetary and fiscal debate wrapped around filibuster? dino kos: boy, i hope not. i really hope not. he is coming in and his message is infrastructure. his message seems to be i will rebuild infrastructure. agreement -- if he cannot get agreement with his own party all of that, it is not clear where he goes. it is important there be an alignment of interests. francine: how he funded or what he builds? dino kos: both. what he builds is probably the most important part. what infrastructure are we talking about? airports, air traffic control.
high-speed rail, bridges. the details really matter. tom: dino kos, thank you. we love to see you more as we go through the transition and the inauguration in january. mr. kos with cls. what will you look for from this visit today? what would you like to observe? francine: body language between the president-elect and the president. and the markets. the market surprised by soldiering on and giving a thumbs-up. let's see what they do tomorrow. tom: acting presidential, i am not sure where it goes. stay with us through the morning. the white house. this is bloomberg. ♪
10. the tone of the markets, the dow finished near record highs. dow futures up one third. s&p 500 futures positive 14th. treasuries, a aggressive selloff yesterday. crude lower but a big rally in base metals. alix: trump transition, president obama and president-elect trump or meet in the oval office at 11:00 a.m. -- his today well unlikely rise to power is providing a shot in the arm for global equities. muchbillion, that is how global bond investors lost in a single day as the trump victory sparked concerns that his plans to boost economic growth will lead to a surge in inflation. the 10 year yield jumped its