tv Bloomberg Go Bloomberg November 11, 2016 7:00am-10:01am EST
markets, futures negative, -11 on the s&p 500. what a week it was. the stoxx 600 heading to its biggest week of gains since july. the market is closed for veterans day. here is what you need to know at this hour. donald trump's taper tantrum. currencies taking a beating around for month lows as nearly $1 trillion have been wiped off the values of global bonds this week. u.s. banks getting their highest level since 2008 on speculation that president-elect donald trump could repeal parts of dodd-frank. to talk about his potential cabinet. the present as homeland security secretary. and i well card could be jamie dimon as treasury secretary with
lloyd blankfein saying that he could be great for that role . that is what you need to know. $1 trillion wiped out of bonds. that has only happened once in the last two decades. joining us is andrew balls. he oversees more than $46 billion in assets. he joins us from london. great to have you here. and unbelievable week and the bond market. is the search for the yields over? andrew: unbelievable in many ways. you have seen a pricing of inflation in the u.s., fiscal policy to be increased in the u.s. and the possibility of a pastor federal reserve. it all makes sense. you have to say there is a lot of uncertainty in the outlook. it is likely that under president trump we will see more
fiscal expansion in the u.s.. there is a host of other uncertainties including trade. we have been expecting a , terming of risk premiums risk premiums, we are seeing that. there is a lot of uncertainty in yellow. alix: i am hearing from you that it is a dip. is this sustainable at some point? andrew: you are seeing a steepening of the curve. that makes sense. you are seeing more compensation for inflation. tips have done well. that makes sense. you have shifted to a higher level in terms of the level of rights. we have been between 1.5% to 2% on the 10 year treasuries. you have shifted up. all this is sensible. of hows o -- in terms
hard you have to go, you will see some response in the u.s. there is a lot of uncertainty. the rest of the world as it markets, emerging markets, some of the european markets are clearly reacting more to some of the downside risks to global trade, the political uncertainty in the u.s. from our point of view, it is not all one-way traffic. we are not going to be making large adjustments in terms of how we are edition. let's talk about one of the moves in the last week. i can pull up the 2067 issue. when you look at this on my bloomberg right now, we have moved to about 3.4% from 2.8%. the price has come all the way down to 85. a lot of people have been taught a brutal lesson this week.
i want to try to understand how some of the losses at the long end of the curve are going to shake fixed income stocks in the next month. andrew: you are seeing an adjustment across curves. that is happening. we thought that the level of yields looked too low. you are seeing some sensible shift upwards. we have not had enough in terms of risk premiums and term premiums. you are seeing a shift there. and the italian case, more to focus on the referendum. france has been interesting in the last couple of days. widening spread their versus bonds. aboutd be careful extrapolating this forward. fiscalct more of a expansion in the u.s. that does not mean that you fundamentally change your outlook for the u.s. economy or the global economy. if it was as easy as electing
donald trump as president, then we would go back to much higher levels in terms of growth and inflation globally. that would be a surprise. jonathan: to be more specific, we're talking about inflation trade in the u.s.. in the eurozone, are we talking about the return of risk premiums? is that what we are seeing in france ahead of some events in the next nine months in those countries? andrew: you are seeing a higher level and steepening of the curve that by the u.s.. in france and italy, and more broadly, you are seeing pricing for political risk and for probably appreciation of political risk. that has been one of our secular themes that markets should be paying attention to political risk. this seems pretty reasonable. markets,go to emerging a more protectionist u.s., the
other side of that coin is going to be a more difficult outlook or emerging markets. it is going to be emerging markets chiefly that bear the brunt, at least in the first instance. you are seeing a repricing of emerging markets. also the position widening. outcomeat the election this week, including the republicans having both the house and the senate coming as a surprise. as you suggest, we have not seen that much happened. he has not been in office yet. he has not done anything. the bond market can affect what he can do. the price of borrowing money has just gone up. at what point does the new president have to worry about calling the bond market in order to afford what he wants to do? reactiononald trump's function in terms of thinking
about the bond market is something we will learn a lot about overtime. right now it is not that clear. equities have responded positively in the u.s. and other developed countries. to the prospect of somewhat reflects new that trade. you would thought normally that if the u.s. president is causing great market instability, you would think that would be a cause of concern. we will see under donald trump. it is important to look at that you are seeing a rise largely in terms of inflation expectations. you are seeing a rise in nominal yields. least than in the u.s. at a repricing of the real rates. that is important. u.s. there is greater real damage. in the u.s. case, more of a repricing of inflation expectations with long expecting
this. in the next few years rather than all of the rest being on the downside, it seems perfectly reasonable to expect to wait risk. foreign you are a investor, you are looking at yields in the u.s. and thinking that is juicy. this looks at the jgb's two year yield. we see that bridge below earlier in the year. be better going to u.s., better growth, better inflation expectations. i'm going over there. andrew: that is an important part. for a japanese investor, the u.s. rate market has not been that attractive compared to japan. we have seen a shift. at the same time, you have a rise in uncertainty to put it mildly in terms of the new occupant of the white house. flows which are
led by the moves we have seen in the last couple of days from japan and other global investors, but there is still a great deal of uncertainty in terms of the u.s. outlook. fingers crossed in terms of how donald trump is going to govern. it could be a shift to the center. ,hen you look at the contract renegotiating or tearing up nafta, that is one of his first things on the list. there is still a great deal of uncertainty. you have to analyze the information. you don't have a great deal at the moment. this is something that will play out over time. repricing of risk premiums from very low levels looks appropriate. repricing of inflation risk premiums and the u.s. looks appropriate. jonathan: to wrap things up, and
the united states, it is called dancing with the stars. what advice are you giving to brother ed at the moment? i have given a little bit of advice. i cannot say i have any expertise on dancing. but i have given him if you tips. good luck tomorrow. i hope you go tomorrow to see the recording. that is what i am doing tomorrow night. david: that is exciting. thank you so much andrew. gri -- chiefcheap investment officer at pimco. first word news. emma: a demonstration against donald trump's election turns violent overnight in portland, oregon. portland police called it a ralliot. in new york and chicago, thousands surrounded his
buildings. donald trump tweeted that the protesters have passion for our great country. a deadly attack on the german -- in afghanistan. they killed at least six people and wounded 120 others before being driven off a special forces. there were no german casualties. david bowie's our collection has hit the top of the chart. option brought in $70 million at sotheby's in london. items.udes 350 global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am emma chandra. this is bloomberg. alix: u.s. equity futures slightly off this morning. let's dig deeper. it did meet a miss on its earnings and revenue estimates.
he has been subscriber losses have abated to somewhat extent. they did get an upgrade over barclays. espn is figured to be key for disney. facebook, amazon, netflix, google, the momentum stocks have not performed well since the tuesday election. they are all down by almost 1% in the premarket. down about $41 billion collectively yesterday. alibaba, in a single day over in china, that is off by about 1%. some of these numbers are huge for the company. they passed their previous $13 billion record. some of their best selling items, iphones, shoes, appliances. some big numbers coming out. they always set a new
with bnp paribas. daniel: i think it could have further to run. the market is looking at the proposals of donald trump and the thing is emphasizing with infrastructure spending. significantly more fiscal stimulus in the u.s.. that means higher longer yields. that is a challenge for emerging market currencies. jonathan: as opposed to talking about trade protectionism. is this the driving seat? daniel: they don't seem to be suggesting that is a big fear right now. the trick is it the m unwind goes far enough and starts to lead to a broader risk off environment, that could slow down the fed's ability to tighten. we are not there yet. alix: the other side of the
equation is when do you look at it and say we are overdone. certain countries you will see value. that economy is still going to grow. the peso does not look that bad. mexican economy is going to be ok. where do you say that? daniel: that discussion will happen over the next few weeks as investors see value in some of these currencies and opportunity. if the route went too far, it would actually slow down the fed. there's that natural protection as you say. there is this potential growth outlook. alix: where? daniel: brazil is one where you might see earlier recovery. where more constructive on that currency. is the downward slope across the board? could this have more to do with trade? daniel: it is fairly indiscriminate. places where there is a higher yield, deficits will be more portable that have bank.
-- vulnerable to that kind of thing. there are various disconnects in the fx markets right now. you have this route in e.m. backed up by risk markets. something has to give. when does the e.m. routes become a problem for the risk rally. watch the s&p. as long as that is stable or higher, that means the market is outlook in ther u.s. and tighter fed policy. if the u.s. equity market suddens a lot, all of a the fed is out of the picture in december and that is a natural slowdown for the dollar. alix: when does this filter into financial conditions? financial conditions have stayed loose since the election. daniel: we have a little further to run.
i am watching the equity market closely. we think the dollar can go higher versus the major currencies. with the euro-dollar should be at 108 relatively soon. dollar-yen at 108 as well. we think the fed is facing an fx headwind again like they were last year. it is still pretty flat. jonathan: we can look at this on the bloomberg. we can capture the performance against the d10 look at that. sterling outperforming. what is going on? daniel: yesterday when the dollar was strengthening probably, sterling squeeze tire. as you noticed, the market has been very short sterling. the position is actually to buy it back. sterling is already very cheap to our long-term and short-term models. there may be some opportunity there. they were short on some of these
traits. the early discussion between theresa may and donald trump that was discussed in the press yesterday, people may think there will be a u.s. u.k. trade access that will offset the loss of european union trade. this is uncertain. when the market is already sure, that can force people out of positions. jonathan: it is great to have you with us. b.n.p. paribas had of global epic strategies for mobile -- north america. anti-trump protests continuing across america. who the resident elect will choose for his cabinet. they stumble in the fourth quarter. we will bring you david weston's interview with marc eiger to show you why. this is bloomberg. ♪
president-elect donald trump went on to meet speaker for house paul ryan and senate majority leader mitch mcconnell on the hill. he is consulting with senior republicans as he goes about putting together his cabinet. we have bloomberg's white house correspondent. welcome back to the program. it is great to have you. give us a snapshot of this minute with -- meeting with president obama. toluse: it was supposed to be a handshake and get to know you session. it went on a lot longer. obama got a chance to tell donald trump a lot more about the office of the presidency. donald trump said he was humbled by the experience, that there was great chemistry between him and the present. they obviously have a history of tension. this was their first time to meet face-to-face. it seems like they were of cordial and spent time talking about the job donald trump will have to do as a non-politician coming into washington, the
highest office in washington and having to run this office in terms of the number of people and responsibility. david: there is uncertainty at this point as to what a donald trump administration will look like. the markets are focused on the appointments. who are the possible candidates? : we are hearing different names. both people part of the donald trump campaign and people advising him. we're hearing goldman sachs letter and stephen nugent for treasury secretary we have heard the name jamie dimon recently. there will be a lot of names that will show up. obviously, that is an important position. david: jamie dimon came up. lloyd blankfein would say that would be a good thing for him because he would get rid of some competition.
an important figure in financial regulation. e: donald trump is looking to the hill for a number of these different cabinet positions. he wants a good relationship with congress. he does not have that because he was not a senator or congressman before running for the white house. he's trying to build that relationship, so we saw him meeting with leaders on the hill yesterday. he was meeting with different chairman from different organizations. david: it is important to know the process. fashioningt role in the cabinet, dealing with the economy. is there any chance he could pull a dick cheney and nominate himself? toluse: it is possible. anything is possible. i know that donald trump has a lot of support for people who have been loyal to him. people part of his campaign to have his ear. he values loyalty among many other things. it is possible people who have
been advising him very much and up being part of his cabinet and being in the highest levels. that is possible. david: bloombergs white house correspondent at the white house. thank you very much. 2016, headwinds in disney's bob iger says he sees times ahead. my interview is up next. this is bloomberg. ♪ seeing is believing, and that's why
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as as more than $1 trillion has been wiped off the value of global bonds this week. highestks hitting their levels since 2008 on speculation could reveal parts of dodd-frank. oneok his potential cabinet including rudy giuliani as a leading contender to serve as attorney general. wildcard, jamie dimon as treasury secretary 1.5 saying that he could be great to the role. with 1.5 saying that he could be great for the role -- lloyd blankfein saying that he could be great for the role. jonathan: switch off the board. fortreasury market today veterans day. the selloff continues in the eurozone. a $1 trillion for the global bond market.
it has been a stronger dollar store it all week. one currency is stronger against the dollar, that is the pound. 126.24. we will ask that question. why is that? our morning must watch is a talk i had with bob iger, ceo of the walt disney company. one of the things we talked about was the election. when the donald trump presidency could mean for the disney company. and what they have learned from their controversial role in the election of president trump. is difficult to know what policies of a new administration could mean to this company. i have been briefed on what they might mean. too early to speculate publicly. we have been talking a lot as a company and lobbying for the need for new tax policy. the corporate tax rate in the u.s. is the highest in the world.
it is not competitive. it needs to be lower. the bulls need to be closed. david: is the media thinking about his role in future elections and what role it should be playing as the fourth estate? bob: there is a lot of handwringing about the media this week and their role in the election. handwringingthat is missing the point. the point is missing is that the media today does not look anything like the media of yesterday. we're living in a world where the definition of media, not the definition of what the industry --ates, but the commission definition that the people create is different from what it used to be. what we consider news at how information travels and how fast is vastly different. i would argue the media played a positive role in this campaign in the sense that it was ever present, which media is today.
it was all caps on, cameras on, voices about everything that went on. everything was exposed. everything was subject to scrutiny by the new media. that cannot be a bad thing. the media get it right in terms of predicting the outcome? no. that deserves some scrutiny by the media. how did they get it wrong? i don't think the manner in which the campaign was covered is necessarily something that deserves criticism. you can always be reflective, that is fine. there's nothing harmful about that. what is media today? does not look anything like it did five years ago, 10 years ago, when i started my career 42 years ago. it is just different. i think it is time that those that follow the media from a critical perspective except the fact that the media they are following today is different from the media they use to
follow or that they think they are following. david: joining us is also leaning, bloomberg intelligence director of north american research. let's start with the president-elect. the new administration, what it means for large companies. also specifically media companies. one thing i did mention was the at&t time warner merger. is that in trouble? donald trump did say that he was against that transaction taking. typically when a republican president comes into the white house, the sec which oversees the media industry and overseas -- that tends to be pro-consolidation. we're starting to see that play out. we are seeing media stocks moving positively as the cable companies are trading up with expectation that not
neutrality will be rolled back a little bit and they might get more control over their networks, which would be good for them long-term. as it relates to emanate overall, when you think about a republican administration and the regulatory bodies, they tend to be more pro-consolidation. we will have to see how the actual policies rollout. david: we think about media companies domestically. the walt disney company opened a big part in china. they have international business around the world. could the trumpet ministration pose a threat to the disney company if we end up in trade wars? spent $5.5 billion opening up a theme park in shanghai, with the growth of the chinese middle class. to the extent that there is a trade war or a worsening of relationships, that will not be good for disney. overall we have seen is that the u.s. media content tends to
travel well around the world with maybe the one exception being china. that is a difficult market to get into. there is a tremendous demand for u.s. media content around the world. when you talk to the u.s. media companies, they know international is a big area of growth with them. david: there is a lot to talk about. we have breaking news. that is also leaning. alix: we have some breaking news. jcpenney earnings are out. they are ugly. the company is cutting their full-year comp sales forecast. there are now looking at 1% to 2%. the previous estimate was 3% to 4%. they're coming in like on sales. they are well below the estimates. for as really significant company that last quarter we thought was making a turnaround. yesterday they knowledge that activist efforts to network.
it is still not yet out of that turnaround phase. jonathan: we need to draw a distinction between a consumer role in go and what is happening in this industry. this is something happening at an industry level. this is a story we have seen take place over several years. there is more pain to come. they have not bottomed out. alix: they need to look at their real estate assets now and look at investing them or monetizing them. they're trying to make that turnaround this quarter. the full-year comp sales estimate coming in at 1% to 2%. jonathan: thank you. let's take it away from department stores and talk about financials. financials in the u.s. have been rallying aggressively. they are at the highest level since 2008. the speculation that maybe financial regulations will soon be eased.
rbc capital markets head of the u.s. bank equity strategy. good to have you with us. the potential to repeal or dilute some of this stuff, where are we? >> i think it is likely that there will be some sort of change in the dodd-frank legislation. health care and banks have been the most heavily regulated industries. neither of those laws have been touched. we expect the dodd-frank law to be changed. jonathan: what do you think is going to happen with the local rule? >> proprietary trading was not the main cause of the crisis in 2007 and 2008. it was controversial when they announced they were going to implement this rule. there is a chance that that would be repealed as well. jonathan: everyone is getting excited about what this means for the big players. when you look at what his transition team is saying, the big banks got bigger. the community financial institutions have disappeared. he is talking about smaller
players. campaign, he was very rough about the big banks. let's make the distinction between are these rollbacks to help community banks or the big guys? >> i think he is going to help people industry. when you look at his transition team reporting this morning that they are looking to dismantle dodd-frank. what they really want to drive is the economic growth of this country to the levels that they are aspiring to, they're going to need to ease the rules on the big banks and the small banks. that does not mean you dismantle the entire law, there are good parts on that on capital and liquidity. there needs to be less regulatory measure. alix: did dodd-frank hurt the small community banks? .> it is more costly now you have to go through a stress test if your $10 million or less. that is costly.
it would need to put small banks through these stress tests. hisu.s. banking industry in stage of consolidation for 30 years. 1980's,4000 and that there are less than 6500 now. this trend has been going on for a long time. jonathan: you have been wargaming this for a while. who is going to win out of all this? who is ready to take advantage of this? >> the single biggest winners will be the banks that are less than $250 billion in assets and greater than $50 billion. currently there is legislation in the senate under senator shelby that will raise the asset size of the sea car banks. he wants to raise it to $500 billion in assets. we don't think it will go that
high. the reason it has not been passed is because that they know president obama what have the code it. expect that to happen first thing next year. alix: what is their fallout from that? are there more loans that get on their books, more m&a, what is the biggest take away? >> you touched on it. mergers and acquisitions. you will see a big surge. banks can now grow over 50 billion in assets. they won't have to go through this costly stress test. jonathan: a rally in europe for financials. ubs has big exposure to the united states. we wonder what this means for their european peers. >> everyone expects a much stronger economy on her daughter trump, which leads to stronger national markets. so having big operation in the capital market industry is probably feeding into why their stocks are doing better. alix: that is fascinating stuff.
it has been a huge week for asset classes all across the globe. we want to focus on what happened with u.s. equities. the dow has seen its biggest weekly gain since 2011. the big story is bank stocks. look at this rush into the banks after the election. daily 1% mo in the s&p index. they are up by 5% just in the last two days. above this red line means oversold territory. we are above that right now. anything over 70 is oversold. we have had a rally, but it may come as some kind of cost down the road. the other story has been technology. they have not performed well in this rally. this is highlighting the same stock versus the s&p.
facebook, amazon, netflix, and google. they have had a nice run up so far into the election. since then, they have underperformed the s&p, getting no love from the equity rally we saw. is it perhaps a trade war from donald trump could hurt business overseas? we don't have a good idea why yes. what this does mean his we have seen a killer outperformance from the russell 2000. this is the russell 2000, small-cap index is that white line. the s&p is the blue line. financials make up 27% of the russell, 14% for the s&p. financial is pushing them higher. technology makes up 20% of the s&p. that expense why small-cap is killing it right now. weighing on the s&p. three fascinating developments in the past 72 hours.
david: those are three fascinating charts. we are going to talk more about the rally in equities. we are joined by mike reagan. we have seen these three takes on this rally. what strikes me as nothing fundamentally has changed. earnings have not changed. gdp has not changed. the only thing that has changed is we know who the next president will be in january. how much of this is real? mike: what the market is trying to do is if you look at donald trump's wish list, what is he most likely to get? the main question goldman sachs is getting from their clients is the corporate tax cuts. he wants to drastically lower taxes. donald trump controls congress. you can see republicans getting on board with max it tax cuts -- massive tax cuts before
endorsing infrastructure spending. if you look at a lot of the moves in the market, the giant move up in the yield curve in the 10 year treasury yield, obviously that is higher deficits, more bond supply to pay for it. that is part of the tax cut story. one of the big things in addition to the regulation issue that is helping the banks is this shift in the yield curve. it will be more profitable to be a bank because of that. you come back to work after a month of vacation. i will tell you that 10 year treasury yields are going up 30 basis points in one week. where will you tell me the s&p 500 is? mike: i would ask for one more month of vacation. it is a lot to handle. i would never guess the s&p would react the way it did. going into the election, the setup was everyone counting on hillary clinton winning except for some contrary in spirit
everyone thought if donald trump wins, we will have a risk off sentiment immediately because of the uncertainty. no one was certain what is policy, what is first initiative out of the gate would be. would it be to tara trade agreements -- tear up trade agreements? his speech on election night or the next day eased so many concerns because it really focused on equity friendly, bond market on friendly initiatives like infrastructure. there is rhetoric out there saying it is all short covering. we are underweight s&p and u.s. stocks, that is all it is. mike: there is probably some of that. people were sort of sitting on their hands and waiting to do something. people wanted to be invested. people that missed out on the mild gains we had before the
election were looking to do something, and now that there is clarity on who the president is, they are piling into the bets on where they think it will be favorable. alix: six weeks until the end of the year. you have to make your numbers. thank you. bloomberg gadfly columnist joining us. other stories making headlines at this hour. emma: imposing limits on wall street pay before donald trump becomes president. the rule on finance industry bonuses is the last major unfinished piece on the dodd-frank act. donald trump has vowed to tear up the law. boosted oiley output last month. that could cause problems as they are finalizing how much to cut production this month. saudi arabia's oil output stayed near record levels. they have stopped making their
own sparkles. they are bringing out one last device for diehard blackberry fans. blackberry ceo john chen says bloomberg tv that he has promised people a keyboard phone. it is coming. they have shifted away from making smartphones to software. that is your business flash. this is bloomberg. alix: thank you so much. their $14 billion single day sales record with room to spare. how a president like donald trump will impact their growth in the u.s. this is bloomberg. ♪
$13 billion. mackenziened by tom in china. does this tell us anything about the chinese economy? tom: they have racked up sales of more than $15.5 billion u.s. they broke their record from 2015. we still have three hours to go on this. this underlines why we are seeing international companies getting on board with the shopping extravaganza that puts black friday and cyber monday in the shade. adidas denver and well today. this is also a litmus test on the health of the chinese consumer, the we have seen remain bullish. retail sales were up 10.7%. chinese consumers remain confident despite the overall
slowdown in the chinese economy. david: one of the things that happened this week besides singles they is the united states election. donald trump is have a lot to say about china. not all the favorable. is there apprehension in china about what donald trump will mean for them? tom: there is. there are a lot of question marks. alibaba, they said last night that if the new president jeopardizes u.s. china trade, then he will end up in trouble. i quote. there is concern from, they are saying that all the big chinese alibaba is the most exposed. we heard from chinese state media today, and editorial saying that if that were to happen, china would no doubt respond and china should prepare
for a trade war. that will flip the years of apple and cal comp. for now, policymakers are in the wait and see mode. they are ready to work with donald trump if he seems reasonable. david: jen and later with the alibaba president. jonathan: coming up in the next hour, chief investment officer of wells investment management gives us his forecast under president elect donald trump. the s&p 500 heading for its biggest gain in over two years.
i am jonathan ferro alongside david westin and alix steel. we close out the trade and futures are down 29 on the dow, but the latest week of gains in almost five years. closed fory market veterans day with the selloff in the bond market that continues. yield higher in germany, up by two basis points on the 10 year. it is not over. david: it certainly is not and here's what you need to know. trumps paper tantrum. emerging markets, equities and bonds take a beating around four-month lows as more than $1 trillion has been wiped off the value of gold and -- global bond. u.s. banks hitting their highest level since 2008 at speculations that president-elect could repeal parts of dodd-frank. you are hired, trump lining up his potential cabinet, including rudy giuliani to serve as attorney general.
one potential wildcard could be jamie dimon us treasury secretary with lloyd blankfein saying he could be "great for the role. let's take deeper into the bond market. here is the chart with global bond market. you can see the damage has been done in the past week alone. trillionring about $48 , and yields backing up anywhere you look. selloff continues. i want to trigger that and what it did to u.s. curve. this is inferential between five and 30 year and you can see this steepening in the last week. the move was in the long end of the market. the 30 year yield jumped about 40 basis points and the 10 year yield was up 37 basis points. and unbelievable move. next story has to do with inflation expectations and how they related on a trump victory and more stimulus in the economy
potentially. this on the blue line is the 30 year break. the purple line is the 10 year, both jumping. the 30 year hitting 2%. 10 year under 2% at 1.9%. even inflation's are moving faster than real rates. something to watch going forward. can they catch up? you have potential stimulus and faster rate hike from the fed and may be bank regulations are lifted, somewhat capital flowing in the markets. all of that with the dramatic impact on global bonds. jonathan: thank you. markets, jimhe colson, wells capital chief investment strategist from minneapolis, great to have you. we have the epicenter of the market that breaks up and aggressive rotation on the equity markets in the bond into financials and they are doing well. my question, how much longer can you have a market where e.m. faces a routes and bonds they
surround and equities outperform? is that it aimed to continue? jim: in some sense, many parts of this theme were going on prior to the trump election. we had some of the bond surrogates getting hit and some under defensive stock performing before the election occurred. we had a pick up in more super bowl areas of the stock market, higher areas, before the trump election and we had a backup in bond yields. some of this got accelerated, no doubt. cannot continue at the pace it is on, but i think the basic trends, a lot of them come might continue. that the undertow at this rally ultimately has more to do with the fact that the u.s. is that full employment, wages and core
inflation were rising over the last year, and the fact that we growth,ck up in u.s. pickup in earnings momentum, pickup in global growth, and that combination is going to be more inflationary, more upward trend on yields, and i think for a while, more bullish for stocks. jonathan: had this conversation earlier on bloomberg radio, are we letting the market shifted narrative around donald trump? you have a rally in risk assets, rates backing up, is that shaping the narrative around trump instead of the narrative around trump driving the market? think there is some truth in that. i really believe that the pace of change that will come from a trump presidency is being grossly overestimated and i think the amount of change and how fast it will occur right now in the markets, and looks like it will happen in the first 100 days. we will have a massive
infrastructure spending program, get rid of dodd-frank, build a wall, do it all. i think the reality will set and that this will set and that this would be a much smaller pace of change. technically, we have tried power with the republican power -- or the republican party, but in reality, we have an independent in the white house and republican congress, so when they sit down, there will be gridlock that slows the process to change it down. things that have happened, big changes of relative values and financial stocks, health care stocks, i think some of that will slow down and maybe reverse a little as people sort of calm down in the next several weeks. david: if we go back one week ago and we had a discussion with the stock market, it would be a different discussion. would we be out of this jam and productivity is not going up at
all, even if we have an infrastructure spending bill, so changed?undamentals james: i personally think the fundamentals were getting better again leading up to the election. below 2% in the united states and we just had a 3% third-quarter and looking like we will grow to 3% in the fourth quarter. we were having negative year on dear earnings growth. in the third quarter, now positive year bond a year. -- year on year. they'll continue as you go forward into the third quarter. he basically had no growth overseas and now we see china showing good signs of picking up. we see better results in manufacturing across the globe with pursing manager surveys picking up. pessimism sort of spike up a little bit with a lot of people calling for the end of the cycle and the vix spiked
ahead of the election, and now we have negative sentiment, refresher and values, pick up in u.s. and global growth, earnings momentum, so there is fundamentals for positive stock market outcomes. down becausetech the high beta momentum stocks and googles and apples of the world, if you are called as it is better growth, leading up disapproving? james: i still like tech and i kind of agreed that that is a big puzzle. i have the same puzzle in mind, but i think if you get a radical move upward in the overall , yes, yousk on move may rotate assets away from those that have really performed well and maybe are overvalued into more deep slicker equals -- deep cyclicals. that may slow down and dissipate in the months ahead. i think people will rotate back
to technology, but i think another great buy right now, i think tech is a good area to look at right now, emerging markets a good area. jonathan: just to wrap things up, i do not know what the market competition on be without the fed, on the dashboard, not to do fewer inflation but the markets, s&p 500, the dollar and treasuries. what is more important, the equity market looks resilient or you saying the dollar is stronger and financial conditions may be tightening? james: i think the fed will be impressed with the steepening of the curve and that is a strong message of the bond vigilante that it is time for the fed to get in the game. they will be impressed that there is more evidence of global growth and they will also be drawn to have fast the embedded inflation expectation of the 10 returnedace has a list to 2%. the fed i think will raise in
december and raise throughout 2017. david: that is jim paulsen, wells capital chief investment strategist. let's get a look on what is making headlines with amash chandra. em -- amash chandra. emma: and that's a trump demonstration turned into a riot with damaged cars and smashed windows on the second night of protestations. in other protests cities, including new york and chicago. trump tweeted that the protesters have "great passion for our country." advances in the assault on the city of the islamic state stronghold. they say that there close to surrounding an area north of the city and kurdish forces are assisted by us-led airstrikes. soccer fans can rest easy. they have not decided whether to ban [indiscernible] from the 2022 world cup. ahead of the organizing committee said they do not want
beer to be said that the game but it is up for negotiation. areair, wine and liquor served in hotels and burners with the permit -- foreigners with the permit. this is bloomberg. you. thank u.s. equity futures soft the jcpenney hammered on the downside in premarket, off 99% almost. comcast down to 1.2% and previously saw 3% to 4%. appliances it should help margins and the company grow, direhe transition still in straits. it is a different story when you look at nordstrom. they had tighter inventory and that helped boost the forecast for the year. different take the jcpenney's. companyg it out with a that rates dividends by about 22% and it is popping over 13% in premarket. presidentmay not be
jonathan: this is "bloomberg ."ybreak let's check the markets as a wrap up an incredible trade. futures down 21 on the dow, negative seven on s&p 500 index, potentially the biggest week of gains and more on the dow. theurope, potentially biggest week of gains since july, a strong session. ,reasuries hammered all week
the market closed today for veterans day. of global bonds. in the commodity market, crude rolling over and copper. what a week for copper. alix: the best week for copper. ever. a tremendous move of over 5%. oil sliding. what does it mean for big energy ceos? i sat down with ryan lance, chairman and ceo of conoco phillips after the announced they would resume share buybacks for the first time in 4.5 years. we touched on what his plans are with the donald trump presidency. ryan: we are sticking to the plan we talked about. have longerny, we cycle investments rolling off the portfolio. we talked a lot to our investors about putting more of that money to work in the unconventional place in north america. that was our plan for adding rigs and we following through, so no change for us as a result within the 48 hours.
alix: if clinton had become the new president, would you have backed away? ryan: in no. we were firm in what we were trying to do an independent of the administration. we see the opportunities that the returns of higher-margin and bucks ability and discipline of what we can do for more of the investments we have. alix: who would you want to see in the energy secretary? ryan: i would like to see president-elect trump surround himself with deep, qualified broad people who understand the energy business. that is a tough challenge. it is not about oil and gas but about renewal, nuclear and how the global system is intertwined . i do not have a name in mind. when i would be looking for is someone to understand the globally intertwined business and understands the developments to the energy business. alix: [indiscernible] ryan: harold understands our
business and he knows what goes on. he would be a fine candidate. alix: you are on the sweet spot. you rotate into sales, you have big projects online next year grade you have international prices and sales. if you are growing production at 1.5 million barrels a day or year situation, how do you sustain that? for 10 or 15 years? the capital intensity being down in the low decline rate in our natural portfolio, it does not take a lot of incremental to grow the company. business forn the 35 years, always worried about where production came from. i do not worry about that today. go productiony to for one decades and only spend $4.5 billion to $5 billion. that is not our aspiration because we can spend more as cash flow comes until he return it to the shareholders through growing dividends and flexible share repurchase programs, but there he can put money into a
low-cost, high margin lexical, the cost of supply, inventory of amazing locations. not only conventional but unconventional. we can grow but we will do whatever returns of the highest value back to the shareholders. we are not trying to change the cycle up heard we were not change the cycle down. the harold would be a good secretary, but would you be the job -- but would you take the job? what would you say? that is quite an honor if you got considered for something like that. to be able to help the country, world and move forward with progressive policies, always something to consider. i'm happy doing what i am doing great having fun, i love the business and our company and where we are going. we know what we need to get done and we will get it done. alix: thousand interview with ryan lance, chairman and ceo of conoco phillips.
interesting time for the industry with the potential of a lot more drilling and how they will manage that. jonathan: interesting time for the banking industry, as well. european banks hit hard over the last six months and the new presidency may not be great for the future. what a week it has been with the stoxx 600 thank index up by 7.82% the president-elect's policies could have a negative effect on european banks and the ability to compete with u.s. counterparts. cheaper could get settlements as democrats leave perhaps the trump presidency is not all bad. for more, we bring in bloomberg economist from london. great to have you. so many moving parts, the rally perhaps the trump presidency is not all bad. for more, we bringwe have seen e last week or so, but berkeley coming out and saying, this could be good news for the likes of deutsche bank, etc. walk me through that. >> again, there is a lot we do not know. i think the market reaction has panic buying because european
moneyare under arms with on the sidelines and looking for a reason to get in. there are lots of reasons why they could be [indiscernible] the most positive with the yields going up, yield curve steepening, inflation and they beat regulatory rollbacks in the u.s. that encourage europe to sort of close the gap. there are potential positives but there is so much we do not know. as protectionist meaning, it helps u.s. banks or rather foreign banks and that may not be good for europe. jonathan: what would it mean for regulators? quite clearly, we saw quite it sleeps in the u.s. with big exposure to the story and the the unitedes -- to states, but how will regulators in europe followed them a question mark line oh: --? : there is stuff we have to nail in the next months before donald trump gets his feet behind the desk. if the u.s. decides to maybe
take a more benign tone, i could change a lot and allow the eu to get its way on the additional requirements. the eu has called for some kind of truce or a benign outlook for future roles. on the other hand, if the u.s. takes the current tone, that would not change much. tearnald trump decides to up the whole rulebook, dodd-frank included, who knows? that is a global regulation over the past decade that would have to be unwound, a huge uncertainty. jonathan: great to have you. quite a week for european financials and u.s. financials. the story at least, you have to look at the curve over germany, so maybe they will stop complaining for a little bit over at the ecb. i wonder whether this continues and i cannot believe how quickly the narrative shifted from the start with a clear suppose it risk off candidate to all of a sudden risk assets rallying behind the prospect of a donald
trump presidency. david: president-elect trump slow walking so reserve requirements were not going to affect as quickly. alix: that is that short covering rally. jonathan: running away with its up a little bit. alix: talking about, penny dreadful jcpenney plunging after cutting the sales forecasts. why the turnaround effort to not go as planned. later, joining us to reveal if disney earnings were good enough to upgrade. this is bloomberg. ♪
they're coming off a lower base, so it is easier to do well but apparel underperformed, which is bad because it was back to school and that is a big push. have and appliances, they been betting big on support and appliances, have they seen the benefit yet or is it the next year story? lindsay: october was good for jcpenney. they said they expect the rest of the sale to be like october with a pick up in the later half of october, so they think appliances will be great but appliances, are they really a giftgiving item? has performed really well, so they're rolling out more shops, so a good story for them but it is one brand. alix: is it wrong that i want the dustbuster for christmas? [laughter] taking a hit.also appliances can help them with that, so they might not generate the same kind of revenues that a
paralytic but it could help their margin. lindsay: apparel is what people go into stores at the holiday four, a big lift giving item. you do big ballgame in that, maybe not as big and appliances. the whole giftgiving aspect in the fourth quarter, who gives a washer and dryer and how many times? alix: why are people shopping at macy's, nordstrom's and not jcpenney? people: i spoke with this morning and they say they do not think every department store can perform well at the same time. a.b. had $100 to spend, and he spent 20 at macy's and $20 at kohl's, but i don't know it is true. call. and nordstrom apparel last strong for them and not by jcpenney, so a big difference. jonathan: they are down in the premarket, ahead of the open one , thankay, lindsay rupp you.
coming up, we go to the fx market, the surprise winner from the u.s. election, the british pound the greatest performer against the dollar. we dig into donald trump's impact on the fx market, next. the broader markets, what a week for equities. high andt an all-time futures softer as we round out, down negative nine on the s&p 500. the treasury market closes veterans day and the selloff in bond continues in europe. $1 trillion, how much has been wiped off the global bond market this week. from new york, this is bloomberg. ♪
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and extra benefits all in one complete plan for a low monthly premium, or in some areas no plan premium at all. other benefits can include: $0 co-pays for an annual physical and most immunizations, routine vision and hearing coverage, and you'll pay the plan's lowest prescription price, whether it's your co-pay or the pharmacy price. or pay zero dollars for a 90-day supply of tier 1 and tier 2 drugs, with home delivery. don't wait, call unitedhealthcare or go online to enroll in aarp medicarecomplete. alix: this is "bloomberg daybreak." street andon wall 1:30 in london. emerging market equities, bonds take a beating around four-month lows as more than $1 trillion
has been wiped off the value of gold -- global bonds this week. levels since 2008 on speculation donald trump could repeal parts of dodd-frank. you are hired, donald trump lines up his cabinet, including rudy giuliani as the leading contender to serve as attorney potentiald one wildcard could be jamie dimon as treasury secretary with lloyd blankfein saying he could be "great for the role." jonathan: now to today's morning news where we hear from what key banks are looking at. the intriguing move in the fx this week, surprise winner in the u.s. election aftermath, the pound climbing against all major peers since friday. it marks a reversal from last month, when it was the worst performer, sterling. global head of fx strategy, and intriguing one in the g 10 space, the only gain
against the dollar is sterling and why? think you can have several explanations. one is when you look at the political and dimensional curves , it has.s. election understanding of the brexit decision. secondly, when you look at the data coming out of the u.k., they have been relatively strong and the yield within upper value. into theave to look slight change in the government andtion with the u.k. respect up or talking to the financial sector and to include the financial sector's 10 points into the own position. has sterling turnaround
already happened the week before. you are seeing it at a slow steps, not as drastic as this week, but it was there the week before. it has a lot to do with the process of the british government. lastly, we recommended to our client base to buy sterling and i reiterate to recommendation, even at current levels, and there is more to come on sterling, but there is a significant evaluation potential in the japanese yen. jonathan: let's talk about upside potential. feels like a stretch to say that president-elect trump can be that supportive of sterling. if you think it is, it is one of three factors you painted for us, what is the upside potential? this when you talk about against the u.s. dollar, we could actually get back to as thewe did see before
birmingham speech, so it implies you may go up to 1.30, but there is one thing to consider and that is that we are potentially in an environment where the u.s. dollar in the long-term, if i say it long-term, over when your time, is going to gain significant or upside momentum. my is this? -- why is this? in has to do with a steeper curve, higher u.s. bond yields, finance shows and cyclicals in the u.s. equity market moving higher, and that implies that we have moved away from the yield hunting and we have moved into a type of gross story. developedlar procyclical trading behavior, so it is more [indiscernible] the u.s.nds me of
dollar in 1999, going up in line with shares and good information . this has a lot to do with that in the united states, there is a process of closing the outward gap while outside the united states come out with gaps, especially in asia, are significant. that does require a much higher u.s. dollar. alix: to back up your points, and sent to ago, chile, they say a faster u.s. growth would mean quicker rate hikes and they do see considerable global policy divergence. but markets can handle a potential of hikes and policy divergence in which cannot? the: the good news is that impact that comes on the back of higher u.s. dollar is the negative impact on the u.s. economy and it may be smaller when compared to the year 2014. in late 2014, we were preparing
for a fed rate hike at that time did little, but inflation expectations in the united states this fall. -- did fall. at the same time, asap yields going up cash you sock yield going up -- you saw yields going up. yields are normally higher because they are supported by inflation expectations. i think that [indiscernible] meaning for the fed that there is a negative impact that may be less on the u.s. economy. aboutan: if i could talk how we have captured the aggressive unwind of the carry screennd you see that with the top line, the white carry trade,rg fx which has rolled over and the blue line, picks up at the
bottom, the emerging market yield premium, so if treasury yield the kleins, risky debt has been diminished to some extent. i wanted to ask about how the carry trade evolves from here. hans: i think that has a lot to do with positioning. i think it is not comparable to the situation into a 14. at that time, a high-yield and emerging-market side was offering a bigger phone ability. this is about a positioning on watch. for emerging markets high-yield environment, to deteriorate significantly from the relative valuation perspective, for that, you need to get a go yields in the united states higher. yesterday, there was an increase of yield and subsequently, an impact on the emerging market
and deep position on emerging market yields. what do you expect on a real yield level in the united states? i think it will stay stable for 1.2.5 -- 1.5 quarters worried -- quarters. that is where the real truth comes through the respective high-yield emerging markets. jonathan: always a privilege. thank you. morgan stanley head of fx strategy in london. toid: we turn off from fx media. yesterday, the walt disney company announced earnings, the scene estimates on earnings per share and revenue but said the record for earnings and revenue and earningsup 6% per-share up 17%. rich greenfield joins us, a media analyst who has followed disney classic, when it to analyst with a recommendation on
cell on the stock, $90 a share. yesterday and up in the pretrade. you are a skeptic about the wall street disney company and stocks. did you hear or see anything yesterday that makes you rethink that? richard: when you listen to the igerny last night, no, bob was clear that he feels comfortable and more comfortable than investors with the future of espn. you look back when you're ago on their year-end fiscal year-end call, which they have in november, he said he saw signs espn subscribers improved, meaning grow, and they reported last night at 2% decline year over year. i think a little bit is trying to remove some of investor fears , which has not worked well over the past year. david: i will play a little bit of this because his pew is basically, although they are losing subscribers in cable, they are enticing those with
digital alternatives. bob: one of the reasons we made the investment into bands like israelite the play of it into tech isse -- into ban that we like the way it plays into the sense of customer data and how to grow the business. we will continue to look with an open mind expensively at those opportunities. do we have to own distribution? not as a company. we do quite well without it. we like to have the kind of distribution that solves the problem or provides us with an opportunity, then yes, we would. they getthe amount paid from cable operators, that number was growing 3.5 percent in disney's fiscal third quarter. this is the fourth quarter and it went from 2.5% to 2.5%. to two point 5%.
the amount of money they are getting from those subscribers, because it is not just about slopes but how much you get paid, and they are not getting the same amount from over-the-top services that they were getting from the big bundle . not all of the channels are getting in this. david: for people who do not follow this as closely, bantech is a digital provider that they byested $1 billion in two one third of, but to disagree with bonds -- bob's hypothesis that going forward, those methods are the way to go? richard: i figure it be great if they figured it out but how do you do it? espn, more than any other company, has over earned by why degree, meaning everyone in america is paying for espn who takes multi-general cable service, but i asked tom rutledge yesterday, how many people would actually choose to pay for espn if given the choice? he said at best, one quarter.
when you think that 100% of people or 90 plus percent of people are paying for espn, that is the challenge. investing is a great big step, but how did they separate themselves from the bundle? they never communicated away that espn can go to the direct consumer the way hbo can because hbo is all a cart. ch is with hbo. richard: for now. david: bob said 2017 will be an anomaly. they will grow, but not as much and in 2018, they come back strong because of the proximities. do you believe that? richard: i don't think 2018 will be better than 2017. i think we are harping on 2017 having trouble hitting consensus expectations. on bloomberg, it was 6.0 4, 6
point 03, and we think that is aggressive. plus six dollars is possible, so i would push back on whether they can achieve 17 numbers, especially when they have missed two of the last four quarters. when you look at espn, organic growth and programming cost is growing three plus percent, even leaving off then be a deal they signed. david: there have been open about that. in 2018, they say they will be favorable comparables. richard: correct, but revenue growth, what they get paid from comcast and are to be, that number is growing at 2.5 percent, so cost of growing faster than revenue and that is a problem when ratings go down. david: what their theory is, they're serious they will make up for that by adding new subscribers through direct to consumer and other digital packages. richard: they will try but if you look at the industry level, the industry metrics, there are
more subscribers that were lost in this quarter in terms of total industry, total cable subscribers, or lost than one year ago. in the first nine months, so through september 30, the industry lost over 900,000 subscribers compared to 500,000 the first nine months of last year. there is a trend of things are getting worse. a bit to get better and it reverses protecting the reality and you look at viewership levels, more people are choosing not to pay for cable, watch cable, but time will tell. orid: you can argue about it look it up, so next year this time, better sense. thank you. coming up, donald's impact on the health care sector. will it -- will the repeal of the affordable care act signal of boom for hospital stock? that is next. this is bloomberg. ♪
emma: grooming the hewlett-packard enterprise greenroom. coming up, ubs is julian emanuel. alix: health care companies have emerged as the main gainers from donald trump's presidential when. he bows to repeal obama care, so their biggest weekly gain has boosted it since 2009 but not all created equal. a selloff in hospital stocks. they are worried that the hospital debt will rise. us, thes -- here with initial market reaction the terms presidency, is it the right one? >> it is hard to tell.
there is chaos in the first couple of days after the president-elect is announced. the impact on health care we think will be varied depending on the sector you are within health care. one thing everyone should remember is that health care is a clear weather report for investors whenever there is a macro economic concern and we think that will continue to be the case, but we should talk subsector bite subsector. my wife and father at both positions, so i've be remiss if i don't start -- i would be remiss -- are both physicians, so i would be remiss if i don't start with that. they will not see that much of a direct impact but if something happened with aca in terms of appeal, there are 13 million people purchasing on the exchange and that is what we should talk about with impact in the subsectors. bloomberg intelligence said obamacare accounts for 10% or tenant health care and community health last year, and this year could be higher.
can you quantify the loss of their earnings if obamacare goes away? nirad: the biggest impact to occur will be what we now have as commercially insurance lives, especially those from exchanges, if something were to happen where the folks would not be able to get insurance to the exchange or get replacement policies, those folks would be debt, so patients who could not pay and falling back on emergency care. that is what the impact will be. i think what you saw on wednesday in the market with the hospital sector. have: when things we talked about is what can the president do by himself and when he needs congress for? they could modify it and the incentives for people to join. if they do reduce incentives, what? effect would they have nirad: i do not profess to be -- what
effect would they have? if the president-elect comes in on january 20, there are policy specifics that have to be set between him and the congress that will come in at that time. i think there will be a few things that will be able to be done by the administration and executive branch. a lot will require operation and we do not know the specifics. there are specifics and it is easy to say you will repeal the aca, but coming up with specifics of the replacement will take time. alix: let's go to private equity, doesn't have to step back from the hospital sector because they don't want to get involved or is it an opportunity? nirad: if you look at where private equity has been over the last years within health care, it tends to be derivative of businesses to health care, so it is not primarily exposed to reimbursement, not to say that there are not investors investing directly in hospitals
or other sectors, but there is a lot of service provider investments being made. the impact on those will be more muted. we'll have to see how things whatd before we determine will happen there. health care is a fair weather report during macro economic times of uncertainty, you will see investor interest in the health care sector. david: with this much anxiety, does it create opportunities because valuation goes down? .irad: i'm glad you ask what it finds in research is that bold acquirers during periods of uncertainty are the ones that have been able to unmask some of the largest market share gains and other market benefits, so we believe that this is a time for investors to think shrewdly about how you continue connecting within health care. alix: two rocket all, -- to wrap it all, what sectors of the least vulnerable or immune from changes? nirad: first, derivative service
providers to help care. their impact will be needed -- more nenmuted. people believe the pharmaceutical factor is now blocked for more risk, so those are a couple of places i would spend time these days. alix: thank you. nirad, great to see you. coming up, donald trump's plan economy,ate the u.s. the biggest weekly advance in copper. we show you why, next. this is bloomberg. ♪
u.s. this is charting not resolve over the last couple of days, actually crazy. this is the copper price. surpassing 6000, heading to the biggest weekly rally but we charted it versus the chilean peso. we spoke to kneel yesterday on "surveillance," and he said this is another side of trump with america. ande builds airports bridges, then there will be a demand for copper, sure, that is why it rallies, but however, if people really believe that this is the beliefs, then you should expect the chilean peso, which reimburse to see on the chart on the left, you should see that rally but that is not the case. i wonder what a lot of people have doubts on how much she can actually spend on infrastructure if it will be passed by the house and how much copper do we really need in the country?
david: this is fascinating. i would have thought the chilean currency would have gone up. francine: it means people are taking different bets. alix: i have the same chart with the different currency. this is a bundle of the charts first, but it is a hot story and tells a different picture. this is the dollar-yen versus the copper price. itn you see a stronger yuan, is better for copper and the u.n. rallies and copper rallies, as well. the dollar is stronger and the u.n. weaker and that is when it falls off a little. not what we have seen in the last few weeks. the stronger dollar and the weaker yuan, but the monster rally in copper. i have yet to see in analyst report that says copper was not re-rate. a stronger yuan is what you need for the dollar rally, a major
copper wipeout is what you would need. david: you are seeing the carry trade and instead of underlined the fundamentals of copper. this is the total type of chart, but i will give it to francine because she is a guest and going back to london. [laughter] alix: this will be huge to watch next week, huge impact of the markets. david: thank you, francine. back to you. jonathan: coming up, active management looks to the big move across asset classes. what a week it has been. we count you down to the final week of trading. about 34 minutes away. teachers down, -10 points on s and p. this is bloomberg. ♪
i am jonathan ferro alongside david westin and alix steel. the cash open 13 minutes away. touch negative, -20 on the dow. what a week in the bond markets. treasuries closed for veterans day but climbing in europe with 10 year yields up three basis points on the german yields. david: trump's paper tantrum, a emerging markets, equities and bonds around a four-month low as more than $1 trillion has been wiped off the value of global bonds. chilling financials, u.s. banks onting the highest level speculation that president-elect trump could repeal parts of dodd-frank. you are hired, mr. trump lines up his potential cabinet, including rudy giuliani's contender to serve as attorney general. one potential wildcard could be
jamie dimon as treasury secretary lloyd blankfein saying he could be "great for the role." alix: weaker u.s. equity futures. we want to show you big movers, disney up like 2.5%. the company missed on revenue and earnings, but the headline from the quarter was that bob iger said subscriber losses abated to some extent. jcpenney off by 9% in premarket. they missed in their sales forecast for the rest of the year. they now see 1% to 2% growth, less than half of earlier. nordstrom different than jcpenney, up by almost 4% and helped by tire inventory control -- by inventory control and raised it 7% on the high-end and 10% on the low end. the story and the markets over the last 72 hours is what has been done to u.s. banks. panel is the 1% daily
move for the s&p financial index. up almost 5% over the last 20 -- i cannot count, 48 hours. bottom panel, take a look at whether they are oversold, the rsi index, anything over 70 is oversold territory. bank rsi at 83 and raises the question of how much more juice is in the rally? some oversoldng levels and can we continue that monster rally? david: thanks. ,or more on the markets, bob senior portfolio manager and cheap equity strategist from princeton, new jersey, the thing -- chieflked about equity strategist from princeton, new jersey, that they would have talked about, is it real? is this an overreaction of markets? bob: it depends which donald trump is been elected, if it is progrowth, cut taxes, regulatory rollback, and that is what the
market assumes, then the market deserves to have gone up. if we get the darker side of all the trade deals that are not good, i will put up terrorists, attacks increase, then we have terrorists -- tariffs, have increases, then we have a problem. david: the country cannot pick and choose. donald trump was pretty clear that he believed in things like tariffs and trade restriction. but happens if he goes forward, which you can do more quickly, because he does not need congress? bob: we know from history that president-elect's's a lot to get elected or eight there was a study recently that they attempt only 25% of what they say and the only get done less than half of that comes of who knows what he will do.
a list ofset priorities and tackle first things first. i agree with you that he has got to do something. the people of michigan that voted for him are expecting them to bash china. jonathan: two days ago, s&p futures were down. i cannot think of an example over the last few years where the market move is the narrative for everyone in the market and we have had an unwind. equity markets have rallied aggressively, but are we to believe in four hours, collectively, a whole market and group of investors decided that things are going to be ok and good? what happened this week? bob: i think the selloff was expected by most of us is donald trump was going to be elected. on the thesis that with clinton, you knew what you would get. with donald trump, the range was lighter. markets do not like uncertainty and that is why the selloff. many of us also pre-teased it would not last long and balance
but not the quickly. the cash market did not open up. i think a lot of the downward movers retraced if you are called during the president-elect's victory speech , about half of the losses were retracted when he acted kind, rather than antagonistic to hillary and maybe a global equity market players said, maybe he will become presidential and have a progrowth plan that is good. i think that is what has happened. yes, the bond market and stock market, but i think the real story is what happens inside the stock market. the last two days, financials are up 8% and utilities down 6%. 1400 basis points of differential within two sectors, amazing. is and also, tech has not participated in this risk on valley.
is this rotation over done on a technical level or do you feel there is more upside? given the fundamental political uncertainty that comes with donald trump, i think we perhaps have done it too much and we need to calm down a little. i think there will be a lot of trolling in the equity market before we really know what is the order of priority, who are his people in which positions, and then we get clarity. the uncertainty every day will lessen in markets like that. sometimes bad news that is known is better than i do not know. markets a uncertainty. jonathan: breaking news that crossed the bloomberg, three arrested in insider trading, so three bank employees said to have been arrested in a u.k. insider trading case, three unidentified workers of major banks, the focus of the u.k. probe.
that broke across the last couple of minutes. any updates, we will bring them to you. bob, one of the stories now, and they'll keep everyone up to speed. you going forward from here, i want to understand when we get past the perception of the greatness of what is around the corner and things settle down and flatten out, we focus on other things. bob: let's come back to what drives equity markets. it is the valuation, the p/e ratio and earnings. pe kobe limited if interest rates move higher -- will be limited if interest rates move higher. rates will continue to move higher, i think it is almost unquestionable. on the earnings side, here is what the market is saying. under hillary clinton, we would have four more years probably up 1% to 2.5% growth. under donald trump, we have a
chance for one point better than that and may be more inflation, so all of a sudden, phenomenal growth, which was running in the trees, could approach -- in the threes, could approach five. jonathan: great to have you with us. you very much. counting you down to the open. an update on business news toma --em, let's go outside, let's go to emma chandra. emma: protest overnight, crashing windows and starting a fire. portland police stopped the riot, the second night of and a trump protest across the country. also in new york and chicago. trump tweeted that they have "passion for our great country." .utlining the case on brexit it will make next month to the supreme court. judges were wrong to roll that the government must get
parliamentary approval before starting the process of leaving the eu. a ruling from the british supreme court is doing the new year. leonard cohen has died in los angeles. his career spanned five decades. he was best known for the majestic valid "hallelujah." sung orsts have recorded it. more than 2000 recordings of his songs have been made. leonard cohen was 82 years old. day,l news 24 hours a powered by more than 2600 journalists and analysts in more than 120 countries. david? david: coming up, soaring copper prices. details on the biggest weekly rally ever. another area routing, bank stocks. regulations meant to curb the risk-taking that led to the two dozen a crash may be rolled back under the trump administration. we will have more, ahead. this is bloomberg. ♪
alix: today, copper in the future in focus. copper prices had the best week in 30 years. take a look at prices, up about 18%. this bottom panel is the rsi, the 14 day rsi, how oversold we are. anything above 70 shows we are oversold. rsi for copper at two, unbelievable news. for more, we are joined by joe q buying into are you the rally or shortening it? .oe: i am not shorting it buying, not at these levels, too difficult. technically, it is oversold but things are overbought and things can stick overbought for quite a
bit. is interesting is who continue to seek copper moving even before trump, even before the potential policies that will be put in place and they look like they will be a reality, moving for the last 15 sessions, 10 specifically. look at what has been moving, 50's the straight draws, this is the supply component, 4100 tons overnight. the copper stocks in china are down overnight over 14,000 tons, so right now, it looks like we are looking not supply components getting in front of all of the policies. alix: i have a hard time buying that because you have a stronger dollar, oil moving higher if we get better u.s. growth, and you make the case that it is a supply issue but copper has a lot of supply next year, so help me understand. joe: we are also not anticipating inflation. copper started to move when we heard global inflation was a concern.
we saw it when they talked about it in europe and we see inflation data overnight come out of china, a lot better than expected, so copper is showing there will be the potential for more growth in front of what we know what will happen with the infrastructure play in the united states and the term policies coming through. -- trump policies coming through, it's a global supplies under question. unless there is a global supply she we don't know about, which -- i do not know anything right now, so not inferring that -- but unless there is, copper will have upside. so 90not time to sell it, two on the rsi for copper, unbelievable move. up, dissecting the huge rally in u.s. financials, up about 10%, leading the s&p higher for the past five years. paul miller on his outlook under the trump administration, next. this is bloomberg. ♪
bloombergthis is counting down to the market open. futures softer but in focus throughout the week. u.s. financials rally about 10%, leaving the s&p over the past few days, head of financial institution markets research joins us from the junior. paul, where do we start with a rally -- joins us from virginia. paul, where do we start with a rally? we assume president-elect trump will take a softer tone but the other side is what is happening .ith the yield curve which is the dominant factor for you? -- : jonathan: i think we have technical problems with paul miller, but several moving parts
to the rally. as i have said, one is the yield curve and the other regulation and aggressive rotation in the cyclicals and you wonder if it continues. we are at -- alix: we are at 80 oversold territory. so are we in an environment where it is short covering and or is it a technical fundamental shift and canned higher yield curve sustained? will you do read it, the voice of donald trump is if big banks got bigger, institutions disappear at the rate of 1% a day. maybe the focus is on the smaller ones. let's try to drink back, ller -- let's try to bring back paul miller. great to have you on the program. can i begin with the rally and ask you what is the dominant driver for you? is if the steeper yield curve or outlook for regulation?
paul: outlook for regulation to we woke up wednesday morning where a lot of this race to regulation was going on in washington, d.c., and now it has pushed to the back learner. -- back burner. they want to redo dodd-frank, i don't know that is possible, but of the coin and a lot of the financial sides will be pushed to the side read the department of justice has been out there and it will be pushed it aside. i look at the regulation side that it will get better for banks. this deep yield curve will also help. fbr, wewe have stash at are looking past the rates and we have to see how high, but we think regulations right now are the big driver. alix: rocco's through the distinction between community and big banks. paul: big banks, like bank of america, jp morgan, regulation
will remain intact. you have the mindset that the banks are too big. theave to wait and see how government deals, blowing you talk below the community banks, that is where a lot of regulation will be lifted. they are held to the same standard as bigger banks and the talk is killing their bottom line. we think a lot will go away. jonathan: for european players and outstanding cases with the doj, there was a bias that said the banks should hurry up and get the things settled before the end of the year. berkeley saying that may be a trump administration might take a softer line. what are your thoughts over capital markets at the moment? paul: on the international side, not a lot of coverage, but i think thanks are going to try to stretch this into the new administration and they should. they are going to take a softer line. there will be more of a pro-business aspect to the new and current -- new
administration compared to the current one today. if we do see the ability for smaller banks to get bigger, can you walk us through consolidation and who will be the buyers? paul: right now, there have been andrs, but tanks have sold not really bought. -- banks have sold the not really bought. you have higher currencies at some of the banks, so you will up.m&a gear it will give up to the smaller side, not the bigger side. i don't think you will see big regionals merge it you will see that $10 billion below, m and a lead up a lot. jonathan: great to have you with us on the program. the prospect that we might get softer regulation, david? important day, veterans day, a time when veterans and their families are recognized for their service for the country.
president-elect donald trump made that part of his campaign saying "we will treat our veterans as victors, not victims, and insured they receive the rewards they will deserve." justin wolff joins us now, the u.s. air force major, who serves pilot ande helicopter has been deployed three times under operation enduring freedom. welcome back, good to have you truly do have lived this life. you are with bloomberg before you signed up and then you served in war. but his experience about what veterans look for as they come back into the working community? justin: as they transition back, i think the biggest thing they look for is a semblance of normalcy. they have been through different scenarios, combat environments, or being away from their families. ultimately, they are looking for a better transition into day-to-day. generally speaking, sometimes they come back rest traded, but
rested,od -- come back but it is good to have a mentor. wall street has made an effort to provide careers for returning veterans. can you describe what the efforts are and the success they have had and what needs to be done still? to reada great effort over the last several years, the country was at war for a long time and it was about finding jobs for veterans, veterans on wall street, great organization. as they transition into that, it is careers and what to do to provide them, and that could be training and mentor ship. wall street has done a good job understanding and helping these individuals, not just get a job, but helping them create a career. many of them have created communities, like the one at bloomberg, the bloomberg veterans community, which has been a big help to not only retention but recruiting. david: we have a lot of people
thatave served in wars will be with us for a long time to come. if you were advising president-elect trump today the one thing to do in his new administration to help those veterans, what would it be? justin: as you have seen some of his policies and conversations, he is generally focused on the department of veterans affairs am a but one thing i think is important is the families. sometimes a focus on the soldier,l, whether the airmen, but we don't want to support -- neglect their support structure. they are only as strong as family and friends, so it is something not to neglect, think about spouses and children and not just the individual. that is something president-elect trump could expand his focus. david: important day for the entire country. it is when we entered world war i, so to ui for being here and
observing ave been moment of silence with the new york stock exchange, a similar moment at the nasdaq. this is to honor veterans and a families on this veterans day in the united states. alix: it has been a big week in the market. i wanted to highlight all for asset classes to demonstrate the veracity -- the lost city of the move we have seen. i want to start with u.s. equity, taking a look at the dow jones industrial average versus the nasdaq 100 to show the underperformance we have seen of tech. orange is the dow around a record high that we hit yesterday and the white line is the nasdaq 100, tech. the difference between the
indices is the biggest difference since the internet bubble. tech has underperformed pretty much all week and has a heavy waiting for the s&p, 21%, which is why the s&p was not able to hit a record this week, as well. other asset class is bonds, enormous excel off. bonds have lost $1 trillion worth of value in the last week. this chart shows the story. at the beginning of the week, $49 trillion and now it $48 trillion. yields backing up by about 40 basis points. that leaves us to the route in emerging markets, the paper tantrum unfolding, the stronger dollar, backup and yields in the u.s. and that shows this story. white line with carry trade, and almost dropped that we saw, the worst read a sellout emerging 2011. currencies since carry trade at 4%. the blue line is emerging market
premium over treasuries in the u.s.. that also felt quite a bit, around 4.4%. earlier in the year, around 5%, still higher but that yield premium is eroding. last asset class does with industrial metals, we talked about copper, the biggest weekly rally in three decades. this is the commodity index, the best week in 25 years. not just copper but nickel, zinc , aluminum, huge move. those four charts highlight them you -- the move notation across asset classes. jonathan: thank you. what a week. for me, i am trying to understand whether the trunk narrative is shaping the market or the market moves is shaping the trump narrative. it is a great example of when the market moves, it does not have a clue what is coming. that is where we are at. i cannot think of an example like this over the last years.
david: it raises the question, i feel like i woke up in the rules are changed. we have more uncertainty, so everyone goes to risk assets. the dollar is up, so commodity goes up and expectation inflation goes up. i don't understand it. jonathan: a big week of gains. the dollar is stronger with the exception of currency. the yield's keep climbing up three basis points. week. having a big crude is rolling over. alix: indices all over. nasdaq the biggest loser up 3/10 of 1%. we are off that level but not a lot of movement.
looking at hisn best week since december 2011 despite any downdraft. one downside me come from oil continuing to roll over by 2%, dragging the majors down with them. earlier and pumped the most oil they have since the sanctions. that poses a very big hurdle heading into the pivotal november 30 meeting. to remember the stronger dollar is going to be difficult for some commodities to overcome. oil.is case watch oil and see if the s&p will be dragged lower. jonathan: thank you very much. the director of u.s. equity and strategy joins us now.
we have been talking about what has been driving this. guest: we really don't know a lot of things. the uncertainty level is higher. what we do know is there is in incoming president that is likely to be decreasing regulations versus the near-term past. rates have risen sharply, which probably changes the psychology. withows we have seen yields in july are very .mportant lows what we are getting for the first time in a number of years, this whole idea that monetary accommodation as the sole driver of asset prices is about to end.
and the invigorating level of client engagement is very high. for us feedback to financials. -- s an opportunity -- somew them only money move out of the financial rallies. because of extremely low interest rates, internationally, as well as the u.s.. and because of the valuations you have the scope for a further upside. >> your note said volatility will pick up. that did not pan out in the next 72 hours.
>> what you have seen as a move out of the range. excitement is money -- money out, which is moving out of utilities. we do expect volatility to continue. discountedrket has is the promise of greater economic growth. jonathan: we got to 2029. what are you clients saying about that? >> they would agree.
we have to assess what is possible and what we actually do know. just a tremendous rotation within the sectors. not just within the sectors by within stocks. >> how do you avoid getting crushed in the rush to the entrance? sort of over buying and going along with the market heard and discerning the ones that are good alpha? that is where you do your fundamental homework but a really key. frankly it was part of forgot donald trump to where he is now, there is an emotional aspect all of this. made oneow money is investors can suppress their wetions, which is why
concentrate -- >> jim was saying something earlier on in the show. take a look at the bloomberg. you can see here that huge decline. i don't get it. guest: you had a tremendous run in technology post the u.k. referendum. the environment in general is not an up and the way environment because interest rates are rising. >> how contact the be responding to an overbought environment? seet: what we're going to is a stabilization. what we haven't technology is a sector that people who start
focusing on the center for , tech has the cash that can come back from overseas. >> those three things to me, they don't spark a risk rally, they stay completely the opposite. that have to does go before it becomes a headwind. ? guest: that is what it leads a test that is what leads us to a price target of 175. a lot of it is going to depend on how the rhetoric to -- frederick develops. -- the rhetoric develops. >> coming up retailers wrapping
jonathan: this is bloomberg. to minutes into the session we look like this. let that shape your week, what a week it has been. let's dig a little bit deeper into the nasdaq and get to abigail doolittle. abigail. abigail: the big internet companies have been hammered. yesterday collectively these stocks lost 41 lien dollars in market caps, relative to the broader markets gaining. a huge divergence there. but on the trumped win that
these companies have a lot of international exposure, they may not in effect under a protectionist policy. we have the shares of the graphic chipmaker absolutely soaring on their best day since october 2008. they also raised the current quarter sales guidance to $2.1 billion. a huge quarter here. surprising -- surprisingly is not on the hide. valuation is at historical highs. we see this, we see both the stock and the five-year average price to earnings multiples are very high.
sustained?n this be >> we are at the tail end with 90% out with their quarterly numbers. a few hours ago we got jcpenney cutting its sales forecast for the year. we are going to go to joe, you for beingk with us. was looking pretty good and then jcpenney came in this >>ning and what happened? the other department stores actually did excellent job of presenting their expectations. the investment community is just thrilled with that. >> is there a deeper story on how they are doing in the
revenue has been soft. they have taken many steps to protect the bottom line. inventories are down, expenses are down. you really see the difference. one of the analysts came out with a study that suggests there were too many department stores to get to the united states. stores are closing, productivity will be closing. >> is it all overwhelmed by amazon? amazon was up 27% in the last
quarter. a staggering difference. mall traffic has continue in leap been dropping. betweeneeing declines seven percent, 8%. >> if we do get higher tariffs overseas, what is that going to do when i go to distort store and want to buy a t-shirt? >> if you think about the apparel business, it exited in terms of manufacturing decades ago. the likelihood of it coming back is very slim. workers do not want to work in factories. it creates a problem and no one wants to pay more money for anything at this point in time. president trump is a pragmatic businessman.
he appreciates value. i would suspect along the way there would be compromises. >> on one hand your cost of goods may go up. are you hopeful there may be more consumer dollars to spend? guest: i would hesitate to see prices rise because i don't think the american public will feel good about that. i think that would be a fundamental problem. >> some breaking news in the market. a really interesting development. copper at one point was up my about 7%. the blue line is oil. almost 4 million barrels of oil per day. usch leads me to the leave
to believe -- jonathan: is that the story now? little overbought here. >> to be clear i am joking. coming up at the top of the next hour is bloomberg markets with mark barton. mark: still focusing on jcpenney. shares down 5%. he is the md there, he will tell us about his views on jcpenney. president on a record singles day. mike evans is the alibaba president. management senior, $1 trillion tops global bonds.
president elect donald trump sent the markets scrambling. we have spoken to some of the biggest names in investing markets about what they are predicting him of trump in the white house. >> i think what you're going to see is a very serious thoughtful man who is saying i'm going to leave a legacy of showing the world that an independent person with norom modest means political background can be the best president of the united states. >> he wants to see companies grow and do well. and bring consumer prices down for the american people. at the kindutting that is the campaign plan.
it would be inconsistent with our economic interest. >> the policies of tax reduction and reform, replacing it with something else, the idea of getting fiscal discipline. those are things that are positive. >> slapping tariffs on mexico and china. he needs to refrain from doing that. that we have al president and we don't understand what his economic agenda is going to be. infrastructure is where i would start. why obama never did it i don't know. >> we want to bring in michael mckee.
there was a range of viewpoints. markets seem to be liking it so far. u.s. equities are betting on the idea that maybe we are going to spend more money so it will be good for raw materials and producers and people who are going to do the construction work. other markets around the world, they are getting hammered. the united states may be entering an inflationary period. if you look at the one on my it, were, or if alex has are looking at the inflation numbers in the market here. you can see how they have soared after donald trump was elected inflation is now becoming a
+++ calculation to fed rates. all of a sudden the path may have gotten a lot steeper. >> what artists are you seeing? >> we are seeing the economic uncertainty index spiked this last week. it is still going to be elevated. that is going to go up and down as we get more information from donald trump. at this point it has been generalities. >> what are the markets going to be focusing on? >> it is possibly going to be inflation for some time. a question of cutting taxes and spending more money on infrastructure. both of those being inflationary. see betsobviously placed on the companies that will do well. it is all gone about what the myths ration -- what the administration is going to do.
>> it is also the congress and the republican congress. >> at this point that is going to be the real question, how far do they let him go? prices going to go way up or way down. >> fascinating 72 hours. >> 26 minutes to wrap out the session so far. stocks down by 1/10 of 1%. still on track for the biggest week of gains since october 2014. up next it is bloomberg markets from new york.
julie: we are going to take you to new york and shanghai, covering stories of new mexico and -- i've mexico and washington. michiganrsity of consumer confidence reading is coming in better than estimates. and the expectations part of at 82 point five. it should be noted, i was talking with a bloomberg intelligence reporter, and he said the results were tabulated on wednesday. this doesn't necessarily capture the sentiment following the election.