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tv   Bloomberg Markets Americas  Bloomberg  November 17, 2016 12:00pm-3:31pm EST

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knowledge, its expertise, with the incoming administration. to continue the good cooperation we have built between the united states and germany and mutual interests and we will continue this. i will continue and approach of on thed i will do it basis of a deep conviction with president-elect donald trump. i can onlyn russia, repeat what the president said previously. this is all about respecting certain principles. i am saying from the european vantage point and a german vantage point. the fact for over 70 years, we have been able to enjoy peace, to live in peace depends on territorial integrity of each european country being respected. reverseean history, the
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would be the start of a very bitter road down a slippery slope and we have to nip this in the bud. we have to send resolutely against any tips. politicalning it on efforts in close relation with the united states of america. and from the european perspective, i can only say russia is our neighbor. look at poland. the european perspective it has. we have an interest in seeing the relationship being a good one. we have a lot of historical tides. this must not keep us from where ever we feel there are great differences of opinion. but again, with political means work fors trying to settlements. this is what i will continue.
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i the question on whether will put of the candidacy, i will do so at the appropriate time and not today. chancellor merkel: our country is divided. an american president who did so many things erased so much hope all over the world. do you think you have to put too much of a strain, too much demand on the americans and to what extent do you think your success may be affecting the rest of the world, the security? there are nuclear weapons in germany. willie you want to be now, madam chancellor, to see the new administration tried to make a europe and germany less dependent on the united states? are you afraid of this wave of popular -- populism hitting the
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germany? you are morema, sober when you describe your partner, how difficult is it for you to take leave of your partner? president obama: my guiding principle as president has been to try to do the right thing even when it is not politically at long-term look trends in our economy, our and the international sphere. judgment shapest policies that will serve the american people, keep them safe, keep our economy growing, get people back to work.
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short peas, cooperation and stability around the world. , cooperation and stability around the world. based on surveys of public opinion in the u.s., it turns out the majority of americans seemed i have done a pretty good job. fastwe have not gone too as you describe it. but what is certainly true is that the american people, just like the german people, just like the british and people around the world are seeing extraordinarily rapid change. the world is shrinking, economies have become much more integrated. and demographics are shifting.
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because of the internet and communications, the clash of cultures is a much more direct. people feel, i think, less certain about their identity, less certain about economic security. they are looking for some means of control. what that means is that the politics and all of our is going to require us to manage technology and global integration and all of these demographic shifts in a way that makes people feel more control, they gives them more confidence in their future. but it does not resort to divisions answers or
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or cruder try -- tribe nationalism which can be contrasted to the pride and prejudice him we all feel about wers -- pride and patriotism all feel about our respective countries. everywhere politics are going to be going through this bumpy phase. but as long as we stay true to our democratic principles, as integrityections have , as long as we respect freedom of speech, freedom of religion, as long as there are checks and balances in our governments so that the people have the ability to not just make judgments about how well government is serving
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them but changing governments if they are not serving them well, then i have confidence over the progress will continue. and, i think it is especially inortant for us who believe a world where we are interdependent that believes in mutual interests and respect between nations. it is particularly important that we reach out to everyone in our countries, those who feel affected, those who feel left behind by globalization and address their concerns in tostructive ways as opposed more destructive ways. and i think that can be done. it is hard.
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it requires creativity. it requires effective communication. part of what has changed in politics is social media and how people receive information. it is easier to make negative slogansand simplistic that it is to communicate complex policies. we will figure it out. optimistic.i remain optimistic about not just america's future but the direction the world is going again. what makes me more optimistic if you look at the attitudes of young people. across-the-board, young people are much more comfortable with respecting differences. they are much more comfortable with the diversity.
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tothey are match less likely discuss attitudes of that divide us between us and them. aey see themselves as part of global economy that they can navigate successfully. and are sure the enormous creativity and entrepreneurship and working with each other. that is where the future is. but we have to bridge that and that means making sure we are paying attention to the wages of workers in countries and making sure we are investing in their education and their skills and we are growing the economy in a smart way and rebuilding our infrastructure and investing in
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science and development. that we stay true to those values that helped to get us here. if we do that, i think we will be fine. >> on the issue of independence socialism, after the germany has been given an enormous amount of help particularly for the united states of america. the fact that we were able to enjoy european -- german unification is due first and foremost to the help of the united states of america. f since germany was able to -- ever sincety germany was able to regain its unity, it is in a stronger position to give is contribution to uphold this order for which
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democraticthe german stood out in the streets to keep this up to maintain this order, particularly in our country. trying to do more than a used in the -- then it used to be 26 years ago. a number of other areas where we have to make a stronger contribution. inwill have to do more development cooperation. it is important that the disparities in the living conditions can not to be allowed in this digital period. each and every one must be given opportunity to brexit desk to participate. germany depends on its alliance with the nato. -- given the opportunity to participate. and this world of today, when you stand on your own, achieve much.
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-- you cannot achieve much. me in myhat guides policy and my government as a whole. secondly, there's wave of populism that seems to engulf us, in your words, the united states. look at the european parliament. people who lot of are looking for simplistic , who are sort of , verying policies unfriendly policies. we have them in europe, too. we have them in germany, too. digit libation is a disruptive force -- digitalization is in a way a disruptive force. it brings about transformative ways. look at the printing press. the consequences it has had or
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into -- industry was a comedy facts it is had. it can to enormous transformational process. -- industrialization and the effects it had. until society learn to find the right policies to contain those and manage those. a period of profound transformation very similar to would lead the transition from agricultural society to industrial societies. for example, when we see shifts of huge production lines from othern areas to countries, people tend to ask, where is my place in this modern world? we have added other countries trying to keep it there society together. trying to keep the older and younger people together. trying to keep those who live in rural areas together with those who live in cities.
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see that each and every one can find his or her place. those who belong to certain groups say we are the people and not the others. that is something we cannot allow to happen. that is something that at the -- the peopleme stood in the street and said we are the people. that is something with a greater joy. is nott these people telling me it is a great joy. we have to find new ways of addressing people and getting in contact with people. i am optimistic we will be able to do so. from my partner and friend, yes, it is hard. if you were together with well, we know democracy lives off of change. in the united states of america, the constitution has clear
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stipulations. it is a tough role, eight years. out goes the president and a new one comes in. is in the german interest to have good trek electric relations -- transatlantic relations, the task is to look ahead. personally, we have freedom of movement in germany. if we want to see each other, i am game. we are not completely out of of this world, as we would say. >> thank you, mr. president. you have spoken about what you call a crude form of nationalism perhaps on the rise. i would wonder if you would advise some of the protesters at home to stop demonstrating against some of the charged rhetoric used by donald trump. i am wondering if you advised your successor to be extra mindful of what you see are very
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worrisome trends when it comes to making his own powerful staff picks. lastly, sir, and these finals weeks of your presidency, do you think you have any leverage to stop the -- vladimir putin from boy make -- for bombing aleppo? bashar has called donald trump a natural in a rate -- natural enemy. you're on minister called him a minister of hate. -- your own minister called him a minister of hate. would you say america have a perception problem? one of thebama: great things about our democracy, it expresses it self in all different types of ways. protesting.s people i have been the subject of protests during the course of my eight years and i suspect there
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is not a president in our history that at some point has not been subject to these protests. i would not advise people who feel strongly or are concerned about some of the issues that have been raised during the course of the campaign, i would not advise them to be silent. , what iould advise advised before the election and what i will continue to advise is that elections the matter, voting matters, organizing matters, being informed of the issues matters. and what i consistently say to young people, i say in the united states but i will say in germany and across europe, do not take for granted our systems of government and our way of life.
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there is a tendency because we have live in an era that has been largely stable and peaceful at least an advanced countries where living standards have generally gone up. assume, a tendency, i that is the case. and it is not. democracy is hard work. states, if 43% of eligible voters do not vote and democracy is weekend. -- weakened. if we are not serious about facts and what is true and what particularly in the social media where so many people are getting their information from soundbites and snippets of their phone, if we
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cannot discriminate between serious arguments and propaganda , then we have problems. , where they are conservative or liberal, left or right, are unwilling to compromise and engage in the democratic process and are taking absolutist views and demonizing opponents, then democracy will break down. advice my most important is to understand what are the foundations of a healthy we have tond how engage in citizenship continuously, not just when something upsets us. not just when there is an issue pops when an
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up for a few weeks. it is hard work. thinka good news is, i there are a lot of young people involved in my campaign and continued to be involved and work not just politically but through nonprofits and other organizations that can carry this hard work of democracy forward. but i do think sometimes there is complacency. here in europe, i think there are a lot of young people who forget the issues during the cold war. who forget what it meant to have a law. there are be honest, times when i listened to the andoric in europe where uneasy equivalent between the united states and russia in between how our governments
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operate versus other governments operate, where those distinctions are not made. i have said many times around the world that like any government, like any country, like any set of human institutions, we have our flaws. there are times when we have made mistakes. there are times when i've made mistakes or our administrations have not aligned ourselves with the values we need to align ourselves with. peopleay to the german that the united states has been good for germany, has looked out for germany, has provided security for germany, has helped rebuild the journalist -- germany and unify germany. principlespe, many
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that have been taken for granted here around free speech and around civil liberties and an andpendent judiciary fighting corruption. note are principles, perfectly, but generally, we have tried to applied not just to our own country but with respect to our foreign policy. and that should be remembered there isn an age where so much active misinformation and it is packaged very well and it looks the site when you see it on a facebook page or you turn on your television where zealousness on the
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term of the u.s. official is equated with constant as severe -- ifsion elsewhere everything seems to be the same and no distinctions are made, we will not know what to protect. we will not know what to fight for. we can lose so much of what we have gained in terms of the kind freedoms and market-based economies and prosperity we have come to take for granted. that was a long answer, wasn't it? i do not remember if there was a second part. i got caught up in that one. >> [inaudible] yes, i did.ama:
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she ran an extraordinary and itntional campaign was the biggest political upset and perhaps modern political history, american history. that she now has andransition to governments what i said to him and what i said to him was what may work in a generating enthusiasm mayassion during elections be different than what will work in terms of unifying the country. and gaining the trust of even of those who did not support him. and he has indicated his -- his understanding of that. you're absolutely right, it has to reflect is self not only in the things he says but how he
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feels out his administration -- fills out his administration. my hope that is something he is thinking about. because not only is the president of the united states someone that in the entire country looks to for direction, but sets the agenda internationally and a lot of ways. a lot of ways. , we arepect to syria going to continue to work as we years to the last 5, 6 push towards a political transition and settlement. it would be naive of me to suggest that with russia is toted militarily as it
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supporting what in many cases are barbaric attacks by the assad regime to crush the opposition, the springing we have been seeing -- seeing and not only aleppo, it would be naive of me to suggest there will be a sudden 100 and -- 180 degree turn and policy by either a sod or russia -- assad or russia or iran. we will continue to make the argument and try to find humanitarian steps that can reach the people there and continue to try to obtain -- hostilities that the lessons the human tragedy and the migration that is taking place. , the way this is
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going to be resolved is going to recognition by russia and a wilderness to pressure assad. that a lasting, durable peace with the function country requires the consent of people. you cannot purchase people's consent through killing them. thathave not made transition yet, but we are going to keep on trying. : i think i canel speak for the whole of the federal government when i say that we are no longer in an election mode in the united states. of the federalst
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government of germany to crop a rate well with the united states of america. this goes for each and every president shared values and i believe these are indeed shared values and should be shared values. as to my position on president actively president has tried to kill his own people. he have bonded them with a bonds -- bombed them and brought untold suffering over his people when you look at aleppo in other places. when you speak to the refugees who have fled here to germany, they will be able to tell you their own personal story. the majority of them fled from assad. and most of them not only from the is, i do not see him as an ally.
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president, describe your hopes and a greater historical terms. let me break it down two months and years. the fact that steve bannon was made chief strategist and the fact that prominent republican representatives did not decide to join this transition team. what makes you confident that president trump can be a reliable partner to the world and europe and germany? madame chesler, if you hear the , what hethe president said, can this not be sort of demanding too much from you and germany? too much is demanded an expected from you and to great are the expectations and you cannot meet them? obama: i am always
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optimistic. there are times when i was in and people would come to meet with all kind of political problems and policy problems and international problems and my team would be getting discouraged and depressed. them, i haveay to to be optimistic because the of somebody odds named barack obama being president was very low. the fact that in my lifetime i have seen such a positive change in the united states and around that althoughs me
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history does not travel in a straight line, it moves in the direction of justice and freedom. and a better life for people. but we have to fight for it. we have to work for it. cautiouslyme about my successor and of the shift from campaign mode to governments -- there ise is that something about the solemn ,esponsibilities of that office the extraordinary demands that states,ed on the united
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not just by is on people but for people around the world. people but for people around the world. it forces you, it demands seriousness. and if you are not serious about then you probably will not be there very long because it will expose problems even when you are doing a good job, son when you are, there are many things that come across your desk that people are going to question you a you will have and yous and critics figure that out pretty fast when
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you are sitting there. and the president-elect is going that inairly quickly the demand and responsibilities onesu.s. president are not you can treat casually. , complex,n a big diverse country, the only way you can be successful is by listening in reaching out and working with a wide variety of people. hope that is my what will happen. i will do everything i can over the next two months to help ensure that happens. that absolutely true chancellor merkel is going to have significant responsibilities, has had extraordinary burdens that she is had to carry.
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if she chooses to continue, you are right, she will have a big burden. i wish i could be there to lighten her load some way, but she is tough. -- i know what it means to carry burdens. , iffact of the matter is there are problems around the world, the first question people ask is why isn't washington doing something about it? importanty it is so not to discount or take for granted the importance of the transatlantic alliance. this is probably the best place for me to end. international, inc. g 20's, , then the united nations united states and europe are not
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always perfectly aligned. but, the voice that speaks out dissident whoome is jailed halfwit around the world, the voice who is expressing concern -- halfway around the world, though voice was expressing concern about an african child without drinking water, though voice and that that in sit -- the voice that insist on norms governing international affairs, the voice to steer the world away from work wherever possible -- for war whenever possible, that is our voice more often do not. we are not always successful. or if that voice is absent if that voice is divided, we will be living in a meaner,
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harsher, more troubled world. and we have to remember that. whoever is the u.s. president chancellor and at the leader of other european nations and other democracies around the world, they need to recognize chancellor and at the that. there are going to be forces that argue for cynicism, for looking the other way with somebody else's problems that are now going to champion people more vulnerable because sometimes that's politically convenient. , muchdo not have a strong resentment standing up for those alliance transatlantic standing up for those things, we will begin to our children a worse world. is,ver the u.s. president
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the chancellor of germany, we need to remember that in our citizenry who decides who that is. chancellor merkel: first, it is after all a very good thing is after eight years of cooperation the president of the united states says it is based on friendship and we cooperated well. this a very good, a very positive message and an encouragement for me. knowdly, fortunately, i many people and many more i do not know and many politicians who stand up for the same values of democracy that open up societies for the dignity. in a feel that we are
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community of people who stand up for these values. we try to maintain them. where ever they do not get respected, we stand up for people's rights to enjoy them as well. there are many, many people who feel committed to this goal. thank you very much. >> angela merkel and president barack obama. we saw a lot of the same played out in this news conference, talking about the relation between the united states and germany and his personal relationship with angela merkel and how important it has been. he noted the last election was in greatest political upset american political history. and urge those watching him not to take democracy for granted. he said if we cannot discriminate between propaganda and serious issues, we have
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problems. he expressed optimism and talked about the role that young people will play. address nato saying he was encouraged by donald trump's comments about his commitments to nato and donald trump saying his commitment is unchanged. e: that is not all that is happening. tower, nikkimp haley, rudy giuliani and michael as thell in trump tower president-elect meet with potential members of his cabinet. outside and she joins us on the phone. any comment of anybody entering or exiting? heard a: we've not whole lot from the people coming and going. we did hear briefly from mayor giuliani.
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he was going down to d.c. and rumored to be and the running for secretary of state. his response was he was going to get some rest. it has been kind of a slow day so far. lieutenant general michael flynn said tipping it he down on the reports there are disarray in the campaign transition structure. just saying that president-elect trump at handling everything very well. exercise pretty waiting for people to enter the building. trying to get them to talk. not the most glamorous part of the reporters job. david: you are in a gilded enclave. the role that jared kushner, donald trump's son-in-law is going to play.
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is seeking tot he get clearance for him and his children. jennifer: there's been denials about those reports. it is difficult to know. governmentbeen some ethics lawyers that have said bringing in a son-in-law would violate nepotism laws just like bringing in done junior. -- don jr. it is a legal and personnel issue on how the president-elect wants to use him whether in a legal capacity or an advisor. after this point in time, it is not clear. bonnie: we did get more information from a couple of spokespeople, his economic lending team will be announced on monday. do we assume that in be had of these landing teams, whatever secretary it might be -- do
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assume that the head of these landing teams, whatever secretary it might be? the staffit is at level. there has been indications from kellyanne conway, who was the , said theanager cabinet announcements might be coming before thanksgiving. right after thanksgiving which is traditionally one is a rollout. that was true of president obama 80 years ago and previous administrations. one or two names like secretary of state before thanksgiving and the bulk after thanksgiving. bonnie: jennifer epstein, thank you. david: janet yellen testifies before the house. we look at the market reaction, next. ♪
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bonnie: this is bloomberg markets. david: treasuries fell and oils advance. janet yellen said a rate hike could come son -- soon. she reiterated that it will be gradual. joining us more is a market strategist and bloomberg intelligence economist. thank you for your patience as we waited for the news conference in berlin to wrap up. thisw the statement early morning, not a whole lot of news. the open question is, what issue going to say about stimulus under a donald trump presidency? what did we hear today? >> she did not mention much about that in her prepared
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testimony. more interesting part of the whole episode was the q and a. needed saying that we stimulus earlier on and the economic cycle when the and 9%.ment was 8% now, it is much less critical. fiscalned that adding stimulus to an economy that is close to full employment could generate an undesired pickup. bonnie: hold up. , having they been begging policymakers? carl: that is irony. her point was we needed more a year or, 2, five years ago. now, it is icing on the cake for the economy. bemoaning low productivity growth and fiscal
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stimulus and infrastructure spending could help to move the needle. david: we saw the markets react to the prospect of stimulus earlier in the week. what did you hear today, what is the timetable for stimulus like that? >> there is a much greater likelihood of stimulus. there is a lot of details not there yet. that is why you did not hear much from david yellen. we are waiting to see who are going to be the players and the agenda. there was another aspect of this, not just fiscal but the trade deficit that something will have to be. you cannot answer one question without the other. the fiscal is expanded while the trade deficit is coming in. slipsns the traded gender and -- if the trade agenda slips, the expectation would be you have a pickup in growth. bonnie: cavan, what do you do?
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your long risk -- you were long risk. kevin: what we're thinking about is there was an initial reaction, a big drop -- a big jump in bondi is. reconciliation where we will have to see where it is priced in and how much will get backed out. came into thee middle part of the year, we saw a big pickup and the 10 year treasury, low, depressed because of brexit. that led us to the overweight equity, underway treasuries, overweight high yields portfolios. now, we're at a point where some of that may be looking to reverse. we have not seen a downtick of fundamentals. david: what do we learn about janet yellen about her position in the new administration?
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is she acknowledging that will change, her role is going to change? talk about rules-based? election was focus in ads. she signaled she fully intends to serve out her term which will last until 2018 and continuity from the central bank is critical at a time of transition in terms of fiscal authorities and whatnot. there was not much guidance on whether she would consider an additional term beyond that. the fact she is serving to her term is important and we have talked about central bank independence. steppingthe fed chairs down because they do not like the political situation in washington, it raises question about their independence. is the most important question you are focused on right now? what does the equity go?
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kevin: the lift with gotten in data which was seen in earnings for the quarter, whether or not that list continues. when we came through 2015, we were getting slower and slower with a lot of negative for earnings growth that looks like the potential for recession. we are happy to see it turn around. if it continues and it carries to the new year, that will be a major catalyst. david: thank you. kevin caron and carl riccadonna joining us on set. againstkickback charges a valeant executive. details are next. this is bloomberg. ♪
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david: this is bloomberg markets. bonnie: valeant and philidor
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executives arrested and they were allegedly involved in a kickback scheme. is ang us with the latest bloomberg report was been following valeant stock, it is down right now. investors knew it might be coming. >> first of all, we got a little bit more detail on the charges filed against one former valeant executive and one former theutive of philidor, pharmacy that valid used to sell drugs and push sales. one of the other notable things what this investigation was ongoing and if they could have brought more charges, they would have. that does not miss only mean it is over. we have worked the prosecutors have looked at some senior valeant executives, mr. schiller and mr. pearson.
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we obviously do not see charges for them today. there were no charges against the company. those things are probably good news for valiant although not out of the woods yet. david: they have not been charged yet and the company probably touting that in a statement. what do we learn about what is alleged? drew: the charges deal with defrauding valeant. two people. andy davison who ran the pharmacy and gary tanner who was an employee of valeant. and what the government is alleging that tanner instead of doing his duty to valeant was secretly concealing from valeant he was working with philidor and andy davison to steer this business from valeant and create this relation were valeant would pay $100 million and getting a kickback after the deal was done to the tune of $10 million paid by andy davenport. shell companies and things like that. a lot of characters you
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brought up in language use and they saw themselves like cassidy and the sundance kid. not $40 million bond wouldt's because nobody -- then investors. drew: the money is going to these two people. at the same time, this scandal is a part of what brought down valiant. investorso imagine, did not see, i am not sure. investors are upset about how it happened. actors.o bad if you read the details, you have unnamed a valeant executives saying we are suspicious of what is going on here. we have been to visit the philidor offices and we notice that you ostensibly, a valeant employee has an office at philidor.
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suspicions raised by the company and asking him what is your relationship, do you have any equity interest. according to the criminal complaint, he lied about those things to valeant. yes, it does seem like valeant got ripped off by one of their own people according to allegations. bonnie: this not the end. we should mention that greg tanner's lawyer did not respond for request to comments. bloomberg drew armstrong, thank you. david: we will talk about janet yellen's testimony. this is bloomberg. ♪
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david: it is 1 p.m. in new york and 2 a.m. in hong kong. funny: welcome to bloomberg markets. bonnie -- vonnie: welcome to
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bloomberg markets. from bloomberg world headquarters in new york, we are covering stories out of san francisco, washington and tokyo. is what we are watching -- says air janet yellen rate increase could come relatively soon. a critical day for elon musk -- shareholders at tesla will vote on a merger of his to clean energy companies. walmart shares tumbling -- the retailer reporting profits that top estimates the revenue fell short. we are halfway through the trading day. julie hyman has been watching. julie: all three major averages are rising. close to a record closing level,
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just above 2190. that would be the number two watch. we continue to see tech shares come back in the way of janet yellen's testimony which did not theyuse that fact that would not raise rates in the future, the fed funds futures are pricing it that way. that, highs oft the session this moment and .4%ng, we are seeing that gain in the s&p 500. looking at the other assets in the wake of her testimony, the two year yield has been moving higher. tot is in response not only her testimony but good economic data, better than estimated.
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housing starts are standing out today. all that contribute in to the selloff in bonds and a rise in yields. it has affected the u.s. dollar with the u.s. dollar index rising today, up .4%. here come a we see that underscoring her testimony. movers on the up and down side with best buy shares arriving, sales better than estimated selling products like home theaters. an investigation was completed and no wrongdoing was found. systemslipside, cisco seems to indicate corporate spending on tech hardware is slowing, those shares off 5.5%. the owner of energizer, sales missing estimates there. andreway, we talked to
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citroen and he is selling short today. an executive said the generics is this is not going to turn around any time soon and those shares are off by 7%. david: now it's get a check on the bloomberg first word news with our colleague, mark crumpton. mark: a surprise announcement from the u.s. director of national intelligence is morning. >> i submitted my letter of resignation last night which felt pretty good. and i have days left a hard time with my wife anything past that. mark: the director made the announcement while testifying at a rare open hearing of the house intelligence committee. he will stay on the job until the end of president obama's turn. president-elect trump is meeting with south carolina governor, nikki haley. she is reportedly on the shortlist for secretary of state. mr. trump has other high profile meetings today including with
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palmer secretary of state henry kissinger. those chosen for the trump administration will be required to sign a five-year dan on lobbying when they leave government. michigan may require all michigan and toddlers to be tested for lead poisoning. that's the recommendation of a task force created after the flint water crisis. the report also recommends requiring a lead inspection and risk assessment be performed when any house built before 1978 is sold or transferred. kosovo police say they prevented simultaneous attacks by islamic state. one attack was land against the israeli national soccer team that laid a world cup qualifier in albania. explosive devices and electronic equipment were found during this search of the suspects homes. global news 24 hours a day powered by our 2600 journalists and analysts in more than 120 countries. crumpton.
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this is bloomberg. vonnie: fed chair janet yellen iss the u.s. central bank close to lifting interest rate. >> we are -- were we to delay for too long, it would tighten policy abruptly and keep the economy from significantly overshooting both of the committee's longer run policy goals. moreover, holding the federal funds rate for too long could encourage excessive risk taking and ultimately undermine financial stability. joining us now is the asseteconomist at .72 management. i imagine there could be a december increase now because the fed would throw the market in turmoil if they decided not
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to move in december. is never absolute certainty a few weeks ahead of time, but we can be quite certain the fed will be raising rates. she gave a clear signal that the data since the meeting were in line with fed tightening. how do they start plotting for next year? the data is probably going to shift drastically in the first six months of the administration. chair one message from yellen is that she is not convinced growth is suddenly going to surge at the start of the year. she is going to wait and see how the economy responds and what policies are put in place. fed feels they have time to react to data as they come and rather than trying to front run the data. doing amidstre you
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the world of speculation about what a package might look like and tax cuts might be. what are you pricing out? my view is economic growth is picking up next year anyway. we are starting to see that in the third quarter of this year. we had a very soft patch for several quarters a row prior to that. what we are seeing is exports are starting to pick up and expenses will pick up and we are seeing better momentum in the economy already. if we do get some fiscal stimulus in the addition, that should only pile on and lead to a better growth outcome. does it depend on how the fiscal stimulus is prepared? quite a few different opinions on how much of a private ownership, how much public funds will be used. will that change the outlook
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dramatically? guest: we will have to see. we don't have enough details to make a firm determination. there's also questions of when this might take effect. we don't have enough information at this point to really make a decision. there are ways to look at it. a 1% decrease in a tax rate would be equivalent to a 32 basis point hike in some ways every $250 billion in infrastructure spending would add to the equivalent of a fed increase. have you been doing any type of that work? guest: we are looking at calculations like that. yellen said, we are getting close to full , theyment, so if there is
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would have to respond to that with greater increases. like itot get a burst might imply. the testimony and economic data we got this morning, looking at cpi and housing start, how does the housing market look to you and how important is the housing starts measure we got today? guest: the housing market is in a gradual up word move. at might undercut things for a little bit as people adjust to those higher rates, but the housing market looks really solid fundamentally, but the starts number certainly reinforce the september softness we saw was a blip and we saw good strength in october. vonnie: do use the -- do you see stability or volatility in the
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coming months? guest: in terms of the trajectory of the economy, i think we do have stability. we are lined up to have better business investment numbers better gdp numbers than we have been seeing. positive are looking for next year as we move into it . after that, we will have to see how policy changes and what kind of shocks hit the economy but i think things look fairly positive. david: how do you prepare for a post janet yellen said under the trump administration? there are five openings in the next 18 months. this is a fed that could be acting dramatically different in a short time. guest: we certainly have to see who is put in place. depending on who is in place, as weing to think about look to 2018 is we are going to
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have a notably lower unemployment rate and core inflation is like -- likely to be at the fed target. i think she would be raising rates more rapidly. that would only be the case if we got a more hawkish fed chairman in that time. vonnie: we will see. thank you. david: shareholders of tesla motors and solar city are set to sign off on a combination of the two companies. will this marriage of companies be a happy one? this is bloomberg. ♪
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david: this is bloomberg markets. i'm david gura. vonnie: and i'm a vonnie quinn. time for a look at the news right now. the move reflects broad obamation to the administration of the iran nuclear deal which allows the transactions involving 109 aircraft worth as much as $25 billion. boeing won approval to sell its first jetliners to iran in nearly 40 years. managed's master fund
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$12.7 billion at the end of last month. they are suffering withdrawals after its major hedge fund lost money last two years. jobs. cutting about 500 tim armstrong told employees the added 1500 over the past year and needs to consolidate to improve operations. he's of aol would add jobs in areas that are driving growth. verizon bought aol last year for $4.4 billion. tesla and solar city shareholders are voting on the much debated merger today. elon musk says it will create a one-stop shop for electric cars and solar panels. our next guest thinks if the deal goes through, it would hurt tesla shareholders must. joining us is the director of equity strategist from
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washington dc. give us your critique and why you think it is wrongheaded. guest: i want to clarify we are not taking a position on whether it will create or destroy value for tesla shareholders. but if it does, shareholders have the most to lose. citydeal with solar surfaces long-standing issues tesla has been suffering for a while. shareholders came to a swift and it wasconsensus after announced the deal destroys about a billion dollars. lost over 10% of trading. there's a clear signal that they are wary of this deal. this is not the result of an arms length negotiation.
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withs heavily freighted conflicts of interest. all of this points with the fact that tesla passport is in need of immediate changes. vonnie: does it destroy shareholder values in both companies or could they be better valued or are there other reasons? there are as many opinions on what the correct valuations are as there are annually, but we say you want to focus on the governance landscape. beginning with the fact that mr. musk's cousins run solar city to the fact that they chair spokes have the seasthey that control the board of directors. all of these point to the fact that tesla's board of directors
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are in need of independent oversight. , teslault is that today shareholders are having to make a huge decision based on information provided by an easily conflicted board. these corporate governance issues have existed at tesla all along. people are essentially investing in elon musk no matter what he is saying, so why take a stand now and what do you anticipate getting out of it? we have been engaging with tesla since 2014 and as they make a transition from an industry upstart to a profitable company, we need to see a set of changes. early investors have invested in the story of tesla and as the story of tesla matures and mr.
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musk rolls out additional visionary projects, he needs the assistance of independent oversight and good governance to bring those things to fruition. i think is a critical juncture for the company. challenges are on the horizon for tesla whether or not this deal goes through. you have a set of risks coming up and increasing competition in the space. you have political risks that arise from an incoming administration that has expressed hostility toward clean energy companies and execution risks as tesla rolls out new products. long-term investors want tesla to take on all of these things had on. david: thank you. vonnie: donald trump's energy -- part of our
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exclusive interview with harold hamm, next. this is bloomberg. ♪
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david: this is bloomberg markets. i'm david gura. vonnie: i'm vonnie quinn. the speculation that donald trump may nominate a figure for oil and gas sector to be his energy secretary, harold hamm has told numbers he would be proud to be considered, but at this point, the subject has not been broached. : i have not talked with him about that. , but he andcome up about occasionally important things. asking your opinion about other cabinets question mark secretary of the interior can be extra nearly relevant for your business.
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and lease federal land offer drilling rights. have you been offered other names were positions? harold: i have and this is somebody at a very unique time in his career. from the positions he has had in the company and let his succession team run it. that is larry nichols in oklahoma city with devon energy. unique heart. -- unique part. it's not everybody in a position in their lives that they would go to washington and do that, but he feels like it is so important to america that he would do that. and i'mted his name very glad to be a part of that.
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it would be tremendous. >> if he was the interior secretary and you are not energy secretary, who would you want to see as energy secretary? harold: there are a couple of people i feel would be fantastic. somebody that has been a regulator because a lot of the is not what you think . they are not out there regulating our industry like you think so much. nuclear, do is with spent cells and spent fuel rods, where are you going to put that? they deal with those types of things in a big way there. than regulating our industry. >> so there are some people that
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you would like? harold: one of those is someone who has worked closely with the trump organization, and that is kevin graham berg from north coast. worked on public until it sees. he was a regulator there for a long time. he's very well-qualified. he's somebody that could do that job tremendously well. said does same thing about you. he says you have the right of first refusal. do you want that? think i could be president. the and i think iers have been. i think i could be. there's a lot of material we
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could provide. you have to step back and look, we have a great opportunity here we turn thisow can into a huge driver for this economy? that was the first thing he caught onto. it sounds like you want to be part of that but you don't have to be energy secretary to do that. other avenuesare to do the work that needs done. vonnie: that was an exclusive interview with harold hamm and our own alix steel. coming up, we break down walmart's earnings. this is bloomberg. ♪ wow, x1 has netflix?
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hey, drop a beat. ♪ show me orange is the new black ♪ ♪ wait, no, bloodline ♪ how about bojack, luke cage ♪ oh, dj tanner maybe show me lilyhammer ♪ ♪ stranger things, marseille, the fall ♪ ♪ in the same place as my basketball? ♪ ♪ narcos, fearless, cooked ♪ the crown, marco polo, lost and found ♪ ♪ grace and frankie, hemlock grove, season one of...! ♪ show me house of cards. finally, you can now find all of netflix in the same place as all your other entertainment. on xfinity x1. vonnie: live from bloomberg world headquarters in new york, i'm vonnie quinn. david: i'm david gura. let's start with the headlines
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in the first word news with mark crumpton. donald trump's favorability ratings are up since winning the election. view mr.s. adults trump positively. before the election, that number was 34%. houston craddick leader, nancy pelosi is weighing in on the james comey controversy just days before the presidential election, he sent a letter to congressional leadership announcing the bureau was investigating additional e-mails in regards to the use of hillary while secretary of state. nancy pelosi called a foul deed that cost him a credit the election. arehan 500 french taxpayers looking into leak documents from the so-called panama papers. taking areportedly closer look at specific cases. the taxpayers were not identified. the u.s. surgeon general report calls for a major shift to the
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way americans do -- view drug and alcohol addiction. -- how brain science offers hope for recovery. is anport says addiction illness, not a character flaw or moral failure. global news 24 hours a day powered by our 2600 journalists and analysts in more than 120 countries. i'm mark crumpton. this is bloomberg. david: walmart is the biggest drag in the dow today, the stock having its he is they -- it's worst day since 2015, falling almost 4%. same-store sales growth rose, just shy of the 1.3% predicted by analysts and marked a slowdown, total revenue also missed estimates. walmart did see a 21% gain in online sales. the company has been pouring
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money into its website to meet its goal of growing online sales this year. its acquisition of jet.com should help in this effort. online strategies highlighted its recent move for jv.com. walmart is the largest u.s. grocer and that makes up 56% of its u.s. revenue. grocery prices have dropped on a year-over-year basis for 10 straight months. a streak of deflation not seen since 1960. it has brought headaches to walmart. walmart is pulling back on new openings, saying its spending more to spruce up existing stores. the real celebration doesn't yearplace until fiscal 2015. the walmart ceo says he's not satisfied and walmart needs to change to reach its long-term goals.
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let's get more on walmart's earnings now. the stock is down 3%. we were watching that together. online was a huge element in the disappointment. massivelyalling short. did they do something wrong? online was one of the bright spots, but they have had to buy their way to growth. they taught a chinese company and jet.com. .hose sales were included , so sales online are growing. but everyone is asking when is that going to be profitable. they don't break that out, but jet is not profitable and they don't know when it will be. sales stores, same-store
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comparing the same number of stores you had compared to the ones you had now, it was a little shy of what analysts were hoping for. you could blame a lot of things on that, but it wasn't what investors were looking for to move the needle. the future of a big box store? mentioned grocery. the grocery business is really struggling right now because of food inflation. walmart needs to get more competitive on grocery. there are a lot of chains out there and lower cost chains out there coming onto the scene. grocery drives regular traffic. get people in the store to buy groceries and they by other things. you cannot lose business to a
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grocery chain or amazon fresh or google grocery service. they have to fortify the walls around grocery and make sure it is stable. vonnie: how do they do that? does it have to do with minimum wage increases? guest: they have been getting more competitive on price and talk about trying to increase their competition, but one thing they are trying to roll out is where you can order your groceries online and have them delivered to your car at the store. send them a beacon that indicate you are there in the working lot and someone rolls the groceries out to your car. that is something they are really optimistic about. they have been testing grocery but when it comes to online groceries, grocery is the traffic driver into the store.
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pick up other items or see something there that they want or why do you have a 150,000 square foot store if people are just getting dropped off in the car. david: we had a report today about the new administration and how that's going to affect the administration. any comment on that? guest: they basically said it was too early to tell. it is something i'm sure they are watching. they get a tremendous amount of their products from china. ortever happens with terrace price negotiations with china and mexico, their mexico business has done well in one respect because the peso is fallen. money backre sending home where the peso has spending if there are
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renegotiations for nafta, how does that impact their business? i think that's a question that's not going away anytime soon. the deals are negotiated, it is that walmart dealswe will see negotiated in the consumer will feel the impact. what is the outlook of the consumer without any of that coming down the pike? guest: each quarter, i ask them about where the consumer is at. they see a solid him a stable consumer and they felt like consumers were pulling back and distracted, they weren't spending like normal and walmart did not feel like they saw that. they are the world's biggest retailer and they do half $1 trillion in sales. they see a consumer that is
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doing ok. not a great consumer, but a stressed-out and depressed consumer. vonnie: a great reflection there on walmart. let's head over to julie hyman who has our chart of the day. is at the russell 2000 its fourth straight record a row. this, as we have seen small cast outperform in the wake of the election, perhaps in part as investors think the mystically oriented companies will do better than some of the other companies internationally. this is the chart of the day. a couple ofng at exponential moving average is that give more weight to some of the more recent moves. it has moved above those
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averages in what has been a dramatic outperformance. .ake a look at the chart since the election, the russell around 13% and the s&p 500, more like 5%. what is interesting is what has driven that outperformance. , materials and health care. if you look at the same chart, you get financials and industrials on that list as well. not only have you seen the outperformance, you have seen different industries that have been driving it. keep watching these small caps in the wake of the election and as we learn more about the policies of the incoming administration. up, how venezuela will affect the u.s. and the rest of the world. ♪
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vonnie: this is bloomberg markets. i'm david: vonnie quinn. i'm david gura. this is your global business report. saudi arabia's oil minister is
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optimistic opec will reach a deal to cut production. they will pay $264 million. david: a look into the deepening crisis unfolding in and is wail and how it's impacting the rest of the world. energy saudi arabia has minister is optimistic they will reach an agreement to cut oil production. they say deal will be in the interest of consumers and producers. they want to impose a ceiling on each of its members to reduce prices. jpmorgan will pay $254 million to settle allegations that it hired children of chinese decision-makers to its business. it settles the investigation into whether they violated privacy laws. no employees are being prosecuted. david: wells fargo says retail
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accounts dropped 44% in october. they have announced a settlement regulars because retail bank employees opened as many as 2 million unauthorized credit card and deposit accounts for customers. a surprising jump in retail sales last month. it was far more than economists expected in october. amazon has found a cheaper way to expand inventory available for quick delivery. they are turning to merchant to sell on its marketplace for extra warehouse space. it's the latest sign amazon cannot build facilities quickly enough to meet demand. they say they have 6 million more items available to deliver within two days. uber is close to settling a lawsuit with potentially billions of dollars at stake.
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the allegations are the right hailing service failed to pay minimum wage and overtime to hundreds of house and some drivers. time for our bloomberg quick take. venezuela has more oil than saudi arabia and more poverty than brazil. the country was once one of but ismerica's richest near the bottom today on top of triple digit inflation. here's a look at the crisis unfolding in venezuela. >> venezuela does not have enough food to feed it 30 million residents and cannot guarantee electricity. staring downry social upheaval cop local unrest and economic unrest. double states of emergency have been declared. how did this happen to the country with the largest oil reserves in the world?
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broadars, the oil brought support at home, but collapsing revenue combined with a series of government missteps have fingers pointing at the unpopular president. there have been a number of calls for a referendum on him. polls suggest if there was such a vote, he would lose by a wide margin. venezuela's current crisis started long before his his presidency with hugo chavez. politics withzed his fiery anti-u.s. rhetoric, saying of george w. bush -- >> yesterday, the devil came here and it smells of sulfur still today. >> chavez nationalized thousands of companies he said were not functioning in the public interest and focused all resources on one thing -- producing oil. this meant almost everything venezuela consumed needed to be
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imported and he borrowed a lot of foreign money to fund at all. in 2013, the first domino fell and shop has died. fell14, the second domino and the price of oil started to crumble. for 95%of oil accounts of venezuela's export earnings. then venezuela found itself suddenly short on cash. the government responded by falling down to avoid into debt. inflation has surged into the triple digits without an end in site. takenonomic downfall has its toll. the boy for hours to get simple household goods and their misery index is the second highest in the world. it's so bad that food shortages have prompted major riots and the president is bearing them rent of the line.
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the menstruation to have been held across the country calling for his ouster. here is the argument -- his critics say he has botched his presidency so bad that he should resign immediately. then some say the alternative is not utter. the oppositional alliance is pushing for new elections but it's made up of it doesn't parties with no unified plan to fix the economy and no single leader to do it. neither he nor the opposition have a roadmap to fix the crisis. vonnie: you can read more about venezuela and all of our quick takes on the bloomberg. had to bloomberg.com for more stories. trump maying up, how be more like john maynard keynes than republicans like to admit. this is bloomberg. ♪
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david: this is bloomberg markets. president-elect trump says he wants to repair bridges, roads and networks. is he advocating for stimulus? i mccain'sng with biographer and said no one would adopt the mantle of being a keynesian. are we seeing a 10 z stimulus
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shaping up? guest: i think we will get one and i don't think we will call it that. every tax bill or revenue bill has to get what is called a score. the budget office looks at it and says this is how much it is going to cost. so it is odd if they come back and scored your appropriations bill and says you have not offset it. of the things we have been seeing with the republicans they have been pushing for something they called dynamic scoring. instead of using the static gdp forecast, they take the model, get a one-year result, feed the new gdp back into the model and get next year's result. is itt eventually does makes tax cuts look cheaper. if you believe tax cuts create growth and the model shows that, your tax cuts are cheaper
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because you increase revenue over the long term and it makes the accounting different. what we are going to see is a huge tax cut that looks less expensive through dynamic scoring. that is how you get money through math. it's kind of amazing. but trump, as he has done with everything, has taken a different approach to this and his way of dynamic scoring makes a $4.4 trillion tax cut. wilbur ross did an analysis. how are they looking at these plans? guest: there are a number of things that can go into these. what they have done with these they are modeling everything and bringing in regulatory changes and that is going to create gdp growth. they are talking about changes
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to trade. i talked to a couple of economists and the easiest thing to say is that it is brand-new. economists who have worked on these macro models, they -- once you start doing things that have not been part of these models, regulatory changes and trade changes, that makes this challenge massive. it's not something the cbo is prepared for. modeling is not a back of the envelope kind of thing. this model says we can make a tax cut magically happen. if the models are correct, then the tax cuts pay for themselves. if they are not, we have a huge, kenzie in stimulus. is a fiercely nonpartisan institution, the cbo. where do they fall on this issue? guest: he is cautiously supportive. what he would like to see as you
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get dynamically scored appropriation bills. and means a stimulus infrastructure package gets scored as well. we should be honest about what we don't know. alan greenspan 20 years ago told congress i would love for this to work, but even i don't believe the macro models are there yet. i e-mailed his office and said has he changed his mind and i got hands down that was the best quote of my career. though he wishes he it -- he wishes it was not so, he hasn't changed his view. he doesn't believe it is good enough to say we can believe this and the tax cuts will offset itself. battlei have seen this play out and it is extremely partisan. the question is how much -- guest: the question is how much we touch the cbo.
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is, it will produce a fair score, which score will matter more for politics? will it be the donald trump office of management and budget score or the cbo score? that's the fight. david: you can check out the bloomberg businessweek story this week on newsstands. breaking news thanks to cnn, citing an unidentified republican source, mitt romney and donald trump will meet this coming, a turnaround given that mitt romney expressly did not support donald trump. you are watching bloomberg markets. jim chain is is coming up. nose is coming up. jim chanos.
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these medicare advantage plans can combine your hospital and doctor coverage with prescription drug coverage, 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. >> it is 2:00 p.m. in new york and 7:00 p.m. in london. oliver: welcome to "bloomberg markets."
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oliver: we're live at the bloomberg headquarters and here is what we are watching. release of mexico will their decision -- we are expecting a hike of 50 basis points. scarlet: prime minister abe will visit trump today. the first foreign leader to do so. oliver: and an exclusive interview. becoming the nation's next energy secretary. mexico, and the bank of they have released their interest rate decision. increasing interest rates by 5.25%. they mexicant how peso is trading, the dollar is taking a like higher. now at 20.39.
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point 35n, and 20 before the decision. so again, the bank of mexico raising the key interest rate to 5.25%. joining us now is philippe a felipe hernandez . >> this is in line with what the market was expecting. what most surveys were showing. and in line with what we read from the last poll is a -- the last policy meeting. scarlet: we see it at 20.44. it only sent the peso weaker? felipe: as you mentioned, the problem in mexico and the reason
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behind the decision to hike interest rates is not inflation. inflation is actually well behaved. inflation expectations are in line with the central-bank target. but there are some risks. is the peso risk depreciation. and they're concerned that could feed inflation. and reaction he have seen evidence of that. we have seen inflation rise since the beginning of the year. the main reason behind that is actually the price of tradable goods. they are highly impacted. and they are starting to move higher. oliver: this is what is so interesting. as you point out, they're not hiking rates because of low inflation. it isn't the internal reason. but they are subject to the whims of the u.s. and other non-mexico's pacific forces, right?
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this with the fed, it seems, the market is pricing in a steeper move for rates then we may have expected a few months ago. so how does the central-bank navigate the head winds that are not specific to their own economy? felipe: they have their own commitment and they had raced this in a clear way. they said the best way to navigate this with external shocks is by having a credible and resilient macro fundamental. and the best way to achieve that having a solid economic policy. central-banken the hiking interest rates on a preemptive way. getting ahead of the curve. and also efforts from the side of the government in terms of spending cuts in order to guarantee fiscal accounts
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remaining in line. mexico: they say the economy faces elevated uncertainty and it will be monitoring the monetary stance relative to the fed. all of her code that is the other point. of, how tight is the bank mexico to the central-bank here? if the fed has to start hiking to keep up with our own growth here and inflation expectations, mexico -- at what point do they have to recognize they are going their own way? ilipe: when you look at -- haven't seen this statement from these meetings, but statements from previous meetings, they have said there are two things they are monitoring closely. one is what happens with the exchange rate and the mexican peso. what happens with expectations with the interest rate hike in the u.s., and, as you mentioned, the likelihood for the fed to rates,iking interest they will be locked one and one
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with the interest rate in the u.s. scarlet: the mexico peso weakens against the dollar, it has pulled back a little bit, and they say that there is no litigant aggregate demand pressure on prices. and the balance of risk for mexico's growth has deteriorated. mexico, the country and government, i just economic tilt, now that we have president trump coming into office? the election of president trump raises some headwinds for the mexican economy. by now, a lot of people are aware that mexico's be -- mexico's big trading partner is that.s. and a big share of is manufactured goods. and so manufacturing accounts gdp.6% of the mexican implements the restrictions he mentioned during
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the campaign, those risks do trickle down to investment. the investment outlook. employment. roughly 16% of total employment in mexico is in the manufacturing sector. and also, through potential tracing -- potential changes in the immigration process. undocumented immigrants and the u.s.. if we see followthrough on trumps rhetoric during his deportingbout immigrants, it could show risk for the mexican economy. hernandez, thank you so much. and we have breaking news. mike pence, the vice president-elect, and nancy pelosi holding a news conference
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now. we will bring you headlines as we get them. mike pence and nancy pelosi in washington. oliver: we talked about the mexican peso. julie hyman talks is now with the latest. have a rally in the u.s. resuming for all three major averages although barely for the dow. the s&p trading is about five points short of a record high on a closing day. and the nasdaq strengthening the most. yellen,ard from janet the fed is closer to raising rates and it is being priced into the market but it is giving a lift to banks. we have been watching volume, as well. this is trading volume for all the stocks in the united states. that is how you would see it on the bloomberg. and we have seen a spike in volume following the election. heavy trading volume in the u.s.
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and it is starting to subside, as of yesterday. line is the 20 day moving average. we saw it fall below the average. we saw a spike like this following the vote for britain to leave the eu so we will be watching bees numbers as we get more information on the trump administration plans. we are watching the 10 year yield because it has risen. up five basis points. that is also helping some of the financials during the session. janet yellen's comments helped, as did a lot of economic data that beat estimates. jobless claims at a more than four decades low. and the biggest monthly spike going back to the 1980's. so all of that pushed up the yields as well. technologies are strong today. we have been watching microsoft. goldman sachs heather bellini upgraded the stock. she is doing a new assessment of
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public cloud revenue and says it is expected to quadruple to $140 billion in 2020. microsoft is a company that could benefit. shares up by 2%. some of the other winners that we see in technology, we have a and z 12% today. wells fargo said that the market discrete graphics and game consoles is stronger than expected. that company's forecast is above estimates and a new by over -- and no bureau. get your check on the first word news. mark crumpton has more. mark: president obama and angela merkel held their final joint news conference today. the president told reporters that he and the chancellor discussed a wide range of issues
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including the uk's impending departure from the european union. barack obama: i reiterated our hope that the exit from the eu will be conducted in a smooth and orderly and transparent fashion and will preserve as closely as possible the economic and political and secure relationships between the u.k. and eu. mark: obama also appealed to donald trump to "stand up to russian president vladimir putin when the behavior deviates from global norms. " will seeksays he reelection in 2018 but is rolling out a presidential election. his decision is final. he wants to serve in the upper chamber for as long as he is healthy and the voters of virginia and his wife allow him. syrian activist and rescue say that a water pumping
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station was hit. it is a third day of a renewed air campaign. -- killed at least 30 members of al qaeda linked groups. johnny manziel has reached a deal with prosecutors for the conditional dismissal of it domestic assault case. he is accused of hitting and threatening a former girlfriend in january. the charge carries a penalty of up to a year in jail and a $4000 fine. the judge scheduled another hearing for december. global news, 24 hours a day. powered by our more than 2600 journalists and analysts, in more than 120 countries. i am mark crumpton. this is bloomberg. thank you. coming up, the minneapolis fed president will be joining us to discuss the dodd-frank under a trump administration. we also get headlines from carl icahn who says he has no
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interest in being be treasury secretary and he believes steve minutia and will get the job instead. jeff sessions was one of the first endorsement in congress. this is bloomberg. ♪
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scarlet: this is a "bloomberg markets." oliver: time for the bloomberg business flash. a look at the busiest -- a look at the biggest stories. mcdonald's is planning table service. the company is also bringing as well as more
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digital kiosks. they already have table service at some locations in new york, florida and california. the former deutsche bank chief executive officer, joseph ackerman says he see's no legal basis for returning bonuses that have already been paid out. that after a newspaper reported the bank was considering that move. shareholders of tesla motors are said to sign off on a combination of two clean energy companies with a track record frequent fund-raising needs. the only holdup is a tally of shareholder estimates set to happen later today. that is your bloomberg business flash. neel kashkari spoke yesterday and he laid out a plan he promised to address the issue of banks that are too big to
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fail. earlier today, he explained his stance. is a nonpartisan issue. there are people on both sides of the aisle who say we need to address this. the biggest banks are bigger than they were before the crisis. there is still a chance of another crisis in the next that tree which is a lot of risk. that i think with the new administration and congress, there is a chance to take a fresh look. capital higheror requirements. so i like or he is going but i think we need to go further. here, is part of the deal let's tone back on the behavioral regulation? on the details regulation in exchange for more onerous capital budgets? chairman greenspan was on the program and he proposed that. think that is correct. a lot more capital in the bank so then we can probably relax
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some of the more micromanagement of what they are experiencing today. jonathan: let's address the word big. jpmorgan is big. what is big to you? $250 billion and above. all the capital requirements good go up to 23.5% with real equity. we don't count debt because i saw firsthand in 2008 that this notion you bail out these creditors and convert the debt to equity, it sounds great but it is a farce. it doesn't happen in real life. what we need to stick with is common equity. we know that it absorbs losses. for the biggest institutions, the treasury secretary has to certify that they are no longer too big to fail. and if they refuse than they will see higher capital requirements. jonathan: the offset is tied to banks potentially -- that is the operative word there.
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because that would hurt growth. in europe the experience that right now. one of the big things that this country did with the bailout of the banks and the banks moved on to finance the economy. this is late stage stuff. do you think the offset could be damaging? neel: here's the thing. we have seen a financial crisis -- estimatedg that it is 150% of gdp. so a $28 trillion hit to the u.s. economy. if we avoid one of those, our plan will have paid for itself many times. or we could take another approach and say you know, that's ok. everyl have a crisis 50-80 years and let's get on with it. i don't accept that. i think we can do better. have you had reaction from the big banks? these banks operate internationally. they have different schemes for regulating. and this is a different approach from what the banks would be
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subject to in europe. doesn't that pose difficulties for them in trying to go in two different directions? neel: the banks hate it. they want to pretend that this problem doesn't exist. it is in their interest. let the taxpayers pick up the tab when there is a mess. i don't care about that. the fact is, we can't force the rest of the world to follow our regulations. we had to do what is right for our economy. if you can show the world that you can have an economy that is vibrant without having banks that are too big to fail than other countries will follow. we can't wait for europe to catch up. jonathan: one of the big things we have seen is the erosion of counsel. that doesn't necessarily mean safer markets. you understand the markets. do you look at that? that situation with regulations on the banks and the erosion of capital and the potential for
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markets to get a lot messier? neel: i don't find those arguments persuasive at all. the idea that wall street dealers will be stepping in when there are big price moves and somehow they would change the settling of a price, i don't buy that at all. the s&p is.e stocks are high. it isn't as though there is a lack of appetite. it isn't as though there is an capital to go into the markets because the banks are regulated. scarlet: that was neel kashkari speaking on "bloomberg daybreak." oliver: facing fraud charges. stock downnock the further? already down 82% this year. we will discuss. this is bloomberg. ♪
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oliver: this is "bloomberg markets."
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scarlet: the latest on the valeant case. or is brought fraud and money laundering charges against the former head of the mail-order pharmacy affiliate. as well as gary tanner. this morning.sted the u.s. attorney for the seven district of new york collaborated. >> days after the first alleged kickback payments, tanner wired $6.5 million to pay for personal expenses in and investments. and put $2 million into his retirement account. have import used the payout to for his brokerage account. purchased another home and cellar.d a $50,000 wine scarlet: joining us now is caroline chen. allegations of kickbacks. wired money. it sounds pretty damning but what is surprising here is that the company itself was the victim rather than the perpetrator. valiant has been under
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scrutiny for more than a year now on its model. and the relationship with the mail-order pharmacy. that valiant was the victim. they were the ones being defrauded by former managers and andrew davenport, the ceo. so i think that was unexpected. oliver: we will get into the but first, let's continue to jump into this. because the stock has gotten crushed. we know people lost money. there has been massive restructuring to the company and they are rethinking what it does added as alue is corporation. so does this reverse all that? it was the thing that started it. where does this part valiant in terms of how we should think about it? issue with them in the first place was that they didn't disclose to its
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shareholders how important it was and how close the relationship was and how much they were relying on that pharmacy to drive sales. a even though there is strange kickback scheme going on between these two people. it doesn't really change the fact that valiant replied -- valiant relied and then had to restate some of their revenue. that goes to the core of how they were running the business. and i think those questions do not go away. scarlet: they don't go away and they haven't been completely answered. by to what extent are michael pearson and the former cfo involved in what has been disclosed today? caroline: a question that has yesterday answered. how much did they know about this? and i think it was clear today as was said in the press conference that the investigation is ongoing. and no charges have been brought against the company.
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but there are ongoing investigation so we will have to wait and see. oliver: there he interesting stuff. certainly a twist in the case. maybe thist that wasn't as we expected. that was caroline chen on the west coast. up next, will -- become the energy secretary? less, we watch more as we head to the commodities growth. this is bloomberg. ♪
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oliver: this is "bloomberg markets." closing look at markets
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in new york. we talk about gold. the central bank is close to lifting rates. the market is putting it at close to 100% and trying to recalibrate how they will make the next year with donald trump as president. down right now. this is not a great time for gold right now. oil trading at $45 a barrel right now. and they sayeting they are optimistic they will reach an agreement to stabilize world markets. copper is rebounding. ending a slide and showing a resilient demand. i have something a lot more fun. let's check out this chart. bloomberg.the this is about thanksgiving because it is coming up. the good news here is that it might be a cheaper thanksgiving but why is not the best news. people.0 for 10
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this is down a little bit from last year. prices were up because of the bird flu which pushed the price of a little bit. and then you look at this. if you take this seriously, maybe we read this through for inflation but anyway, we are down this year. and i will throw back to you. thelet: harold hamm says energy world is in good shape today thanks to the election of donald trump and republicans retaining control. alix steel travel to oklahoma to speak with him. she started by asking if he had spoken with president trump about serving as energy secretary. x i have not talked with him about that. still haven't. and it hasn't come up. but you know, he and i chat occasionally. -- is heu helping him asking your opinion about other
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cabinets? i ask him because he secretary of interior could be relevant for your business. they're the ones that give the drilling rights and such. >> i have offered a name there. somebody that is at a unique time in his career. he is stepping down from the position he has had in the has ledand basically the succession team to take and run it. and that is with devon energy. he interested? >> yes. so that is the unique part. because not everybody is in that position in their lives where they would go to washington and do that. but he feels like it is so important to america that he would do that. and so, i have submitted his name. to be a partglad
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of that. i think it would be tremendous. lex so if he was the interior secretary and you were not energy secretary, who would you want to see as energy secretary? sex there are couple of people who i think would be fantastic. you need somebody who is regulated. someone who has been a regulator. is not a lot of the job what you think. you are not out there regulating an industry like you think. what they do a lot of has to do with nuclear. stem cells. where do you put that? they could deal with those kinds of things in a big way. more so than regulating our industry.
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alix: so there are people you would like? harold: one of those is somebody with theworked closely trump organization who is kevin cramer. he is the -- he worked on the public utilities. he was a regulator there. and he was well-qualified. so that is somebody who could do the job tremendously well. he said the same thing about you. he said you have the right of first refusal. do you want that right? said, iwell as i have think i could be valuable, to the president, on energy matters. i think i have been. i think i could be.
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material that of we can provide. you have to step back and look. we have a great opportunity here. and that is to -- how could we turn this into a huge driver for the economy? and that was the first thing he caught on to alix: it sounds like you want to be a part of that but you don't necessarily have to be energy secretary? other avenuesare to do the work that needs to be done. scarlet: that was harold hamm speaking with alix steel in an exclusive interview. oliver: let's check on the headlines with mark crumpton. he is here to give us more. mark: michael flynn is the leading contender to be donald trump's national security advisor according to two people
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familiar with the matter. he is a retired army general who was the top advisor to the trump campaign. mike pence had a series of meetings on capitol hill today. he told house republicans that the new administration wants members to "buckle up and get ready for a speedy start on policy." he also met with nancy pelosi. republicans agree that cutting the affordable care law is a top priority but lawmakers are warning that it will be a lengthy process. republicans can keep what they favor. and they can get rid of what they oppose. 2016 is the deadliest year on record for asylum-seekers risking the journey to europe. refugees have died or disappeared crossing the mediterranean.
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that is according to the international organization for migration. at least 340 refugees have died or were reported missing this week. global news, 24 hours a day. powered by our more than 2600 journalists and analysts, in more than 120 countries. crumpton. this is bloomberg. scarlet: thank you. coming up. the parade of visitors into trump tower continues. this week is henry kissinger and nikki haley. on the transition efforts. this is bloomberg.
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oliver: this is "bloomberg markets." scarlet: it is time for the
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bloomberg business flash. the u.s. house of representatives has voted to effectively lock boeing from selling or leasing jetliners to iran. broad opposition to the nuclear deal which allow the transaction involving 109 aircraft. approval. the -- estimated $1.1 billion in net outflows. that is according to documents reviewed by bloomberg news. the master fund managed less money from september. breath and is suffering withdrawals at the main hedge fund lost money for two consecutively -- four to lost money for two consecutive years.
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-- needs to consolidate to improve operations. thatill add jobs in areas are driving growth. verizon bought aol last year. that is the bloomberg business flash. let's head to julie hyman for the sector report. looking at the housing sector today. this is the best performing of those that we monitor. up 1.8% today as we got stunning data on the housing market. specifically on housing starts. rising up to 1.3 2 million. the highest going all the way back to august 2007. that is what the top of this chart shows. it shows the long climb that we have seen back from the housing crisis. the bottom part of the chart shows single-family versus multifamily but both taking up. and the increase month over 25 .5%.th
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we haven't seen a one-month jump like that since july, 1982. so you can see why we see homebuilders outperform today. look at individual movers. , and d.r. horton and toll brothers on the rise with the wake of that data. what hasnteresting is been going on lately has big implications for the housing market. here is the 30 year fixed mortgage rate which we have seen jump as we see the 30 year yield climb. that is what it is pegged to. there are some investors and we have seen some investors selling where there are concerns with the increase in rates. but on the flip side, there could potentially be a surge in home buying ahead of an anticipated increase in rates. all of her co-in politics today,
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it is all about who is coming and going from trump tower in manhattan. general michael flynn who is said to be the leading candidate for the national security advisor position. linglso have jeb hester who is being floated for treasury secretary. to say earlier today. >> i have a great position in public policy today. if he wants to talk to me about serving somewhere else then i will look at serving somewhere else. that regardless. dom excited for what he can for america and it was an honor to be here. oliver: let's check in with who has spent the past 18 months following the president-elect around the country. you are in good shape after all the running around. who has spent the past 18 monthsthe guy you have g is indeed now going to be the president. what do we know about who he is
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surrounding himself with? kevin: a lot of folks meeting in , these are folks who have been on the campaign trail for the duration of the campaign. they were the most prominent surrogates. and i think you saw this earlier this week with the naming of reince priebus as the chief of staff and steve bannon being a senior strategist advisor. the bottom line is this. people like general flynn are people whose have been there since the beginning. and if there is one thing that anyone who is in the trump world values donald trump loyalty and consistent loyalty. and a lot of the folks who are coming in the revolving doors outside trump tower in midtown are going to be the same folks who will be coming in and out of the white house in just over a month and a half. scarlet: you mentioned reince
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priebus and steve bannon. and he did name them to key positions. since then, lots of speculation about other cabinet posts in we haven't heard anything. there is a lot of reporting out there that ends up being debunked. why is it taking so long to come up with firm names? kevin: a week before election day i talked with some sources who were familiar with the trump transition team that was led by chris christie. and the bottom line was that there wasn't much of a transition apparatus. it wasn't something that those on the transition team felt was really going to happen. i think they were expect him -- i don't think they were expecting him to win. when he did, chris christie was demoted due to the bridge gate controversy. and as a result, i think there was an even bigger vacuum of power that was created. and so you have folks like the
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vice president-elect's taking on a key role, as well as his son in law. who has been, incredibly influential in shaping the political apparatus surrounding the donald trump administration. whohere are a lot of people are still sorting through this. but the bottom line is that with the appointment of reince priebus, he inherits the republican establishment apparatus and has succeeded in unifying the republican party. vicein point, president-elect pence on capitol hill earlier today meeting with everyone as well as nancy pelosi. oliver: m.i.t. reaming or did i see something about mitt romney? that he was being considered for a spot in trump's cabinet? is this an example of everyone who was standing in his way saying actually, let's rethink this?
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kevin: it is washington. anytime there is a vacuum of power, there is always someone who is willing to fill it. a lot of these folks were critical and in some cases, rightfully so of donald trump and actually mitt romney's niece is on the shortlist for replacing reince priebus to have the rnc, as well as other folks, including the individual who let the pennsylvania campaign operations for donald trump. be interesting. as well as his political director. so again, this is washington. everyone needs a job. kevin, trump gave his first detailed briefing yesterday. we have a sense of how friendly they will be to the outlets? because there was the instance earlier when trump went out to dinner and it came after his
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representation said no, he is done for the night. kevin: i can tell you from personal experience that there were definitely tense moments, to say the least, inside the press pen on the campaign trail. that i also think that we as journalists need to be pushing for more access and we saw president obama, in many cases, limit press and there will be conversations that are important ones that need to be had. and we will have to wait and see. you are correct in discerning that trump has bucked traditional tradition in several key ways and we will have to see if he catches up to speed in that regard or if it is something more deliberate but we will say it is too early to tell. scarlet: and a victory tour to states that he won? kevin: i heard that last week but there have been no key states that have been announced. i think the fact that he credits the big rallies for being part
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of the reason he was elected president, i think he wants to keep open that line of communication with the voters. we will have to wait and see. cirillii.at was kevin at 3:30 today, maxine waters in california, the ranking democrat on the house financial services committee will be here. scarlet: coming up, are the days over? gains jim chanos gives us his opinion. this is bloomberg. ♪
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oliver: this is "bloomberg markets." recovering aks are bit after getting hit post u.s. election. this is something we spoke with jim chanos about yesterday. there is some basic
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narrative about technology and silicone valley being out of favor. we have said, who knows? it is too early to tell. >> higher to the election, did what we see in these big tech stocks look bubbly? like what investors cast aside as rationalism? jim: we are stock guys. there are certain things we think are overvalued. and the business models are more questionable but others are borderline cheap. i'm not going to disclose where we are specifically but the point being is that i think everything is moving together, right now, thematically. and over time it will dissipate. and companies will be judged on their own merits. but taking a look at something
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as simple as that neutrality. which the obama administration embraced and hamstrung the television companies to the internet companies, in the past, he has talked about that not being fair to the telecom companies. so companies that have benefited from net neutrality have gotten hit pretty hard. but will he in act anything? we don't know. ask what do you think about what president donald trump will mean for big deals that are pending such as at&t and the effort to buy time warner. jim: again, i think if we are right about our populace that we have been discussing, i think there will be fewer business combinations because they tend not to happen. and he has indicated some skepticism on a deals. but you know. scarlet: dallas jim chanos. joe weisenthal is here. and i thought that was an
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interesting conversation about populism and how it could actually turn out in a way that is unexpected for investors. people are thinking that donald trump one on population but he could enact population that when benefit the 1%. joe: there is a nation for the way people just look at trying to grab the good news and ignoring be stuff they don't want to see. there was a great headline on politico this morning. and it was like "bankers are thrilled at the dawn of a new trump presidency. and they say oh, this is so exciting. but he hasn't named a treasury secretary yet. and as jim chanos talked about, there are a lot of reasons to think he won't be as friendly towards big finance as people think. so it is an open question. oliver: going into the big bank endorsements, they went to clinton. so they had a relationship where
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she spoke there but at the same time, among her liberal following, she was vocal and aligned with elizabeth warren, someone stricter on getting on the banks. so maybe the idea that trump also has two sides? not many bankers donated to donald trump's campaign and he hasn't said anything since the election that i recall that's a jesse is gone back on anything. scarlet: at dinner he did say he would lower people's taxes. at 21e folks who need club are not his population. joe: he ends that anything since the election that is difficult on subjects related from economics, banking, financial reforms than what he said before. so why bankers were so into clinton before as evidenced by their donations and suddenly they think trump will be awesome to square. hard oliver: let's talk about markets and jim chanos.
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when was the most interesting thing? joe: i thought it was interesting when he still talked about there being a big fraud trade in the u.s.. the nextill we find enron? and he still thinks there are all kinds of opportunities. you get the impression he sees stuff like that elsewhere. scarlet: alibaba -- joe: he's as china hasn't gotten any better. scarlet: that was joe weisenthal. and he will be back when we speak with maxine waters who is the ranking democrat on the house financial services committee and is concerned that the appointment of steve bannon as the strategic advisor is a bad sign for the u.s. and the financial industry. this is bloomberg. ♪
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oliver: it's 3:00 p.m. in new york, it :00 p.m. in london. i am oliver renick. scarlet: i am scarlet fu. welcome to "bloomberg markets."
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fromet: we are live bloomberg world headquarters in new york over the next hour and covering stories from washington, chicago, and berlin. fed chair janet yellen faces congress, says we are near a rate increase and opens up about her future in a trump administration. yellen: confirmed by the senate to a four-year term, which ends at the end of january 2018, and it is fully my intention to serve out that term. scarlet: janet yellen may have some company in washington from hedge funds and private equity. why donald trump is leaving on wall street names. -- leaning on wall street names. and what is driving this rally and will it continue? let's get straight to julie
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hyman with one hour to go until the close of trading, let's start with the russell 2000, at a record high. julie: fourth straight session it is trading at a record level. we had out performance among small-caps in part because they are more domestically oriented and seen as benefiting from trump administration policies. technology shares bounced back. the dow underperforming because of a couple of its members are underperforming today. we get to those right now, in fact. if you look at individual stocks moving within that index -- we not looking at the terminal, we're looking at some individual movers. best buy, for example, staples, walmart there we go. best buy and staples are up, cisco and walmart, members of the dow, trading lower today. walmart out with sales that missed estimates. flipside, best buy and
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staples outperforming within retail. their sales looking a little bit better. cisco and walmart dragging on the dow. we have also been watching the treasury market and the full cargo treasuries after we heard from janet yellen, who is indicating that it looks like a fed rate hike is closer rather than further, confirming what the market has already been talking about and pricing in. we have the two-year, 10-year, and 30-year, all seen yields climbed. now let's go back to the screen -- the likelihood of a fed interest rate increase by the funny -- by the end of the year. 98% is that number today. it was 94% yesterday. it keeps climbing. the market is treating this as a virtual certainty. we see all this action in a bondmarket, we see this in fed funds futures. the volatility in stocks is relatively subdued. here is a number of different
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measures of volatility in bonds and currencies, in the white and purple lines. we have to see -- we've not seen that relatively elevated following the election, whereas as measured by the vix we are seeing stock volatility fall. interesting divergence between asset classes and the volatility we are seeing. oliver: thanks so much. let's get a check on the headlines with "first word was good news. mark crumpton with more. mark: surprise announcement from the u.s. director of national intelligence. >> i submitted my letter of resignation last night. it felt pretty good. i've 64 days left, and i have a hard time with my wife anything past that. mark: director klapper made the announcement while testifying before a rare open hearing of the house intelligence committee. he will stay on the job until the end of president obama's term. mitt romney and president-elect
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donald trump will meet this weekend according to a cnn report citing an unidentified republican source. the 2 men will reportedly discuss a possible role for romney in mr. trump's cabinet. romney was a critic of trump during the campaign and refused to endorse him. houston want president obama to pardon 750,000 undocumented immigrants. they are temporarily shielded from deportation under an executive order. the request reflects growing concern over a shift in immigration policy once president-elect trump takes office in january. iran is being warned to adhere to the historic nuclear deal after it was found to be in violation for a second time. both the united states and the united nations agencies have cautioned iran about reaching the limits of the water stockpile -- breaching the limits of the heavy water stockpile allowed in the agreement. global news 24 hours a day powered by more than 2600 journalists and analysts in over 120 countries.
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i am mark crumpton. this is bloomberg. oliver: mark, thank you. as julie hyman was saying, federal reserve chair janet yellen was on capitol hill today, saying an interest rate hike could come soon. yellen: at our meeting earlier this month, the committee judged that the case for an increase in the target range had continued to such anen, and that increase could well become appropriate relatively soon if incoming data provides some further evidence of continued progress toward the committee's objectives. oliver: joining us for more insight on the testimonies alan levenson -- on the testimony is alan levenson. we are assuming 100% chance -- julie putting out that the fed funds future says we are sure. is it a done deal in your mind? alan: condition on things
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rolling around the way that i have and it is always that way with the the fed. i'm a little surprised that we elected the candidate we did, given where the polls were beforehand. and as the news was shown earlier, markets have behaved the way they are, but at this point, we get past the november employment data, and yes come of it will take that step. for some'm curious excellent nation as to why we have had this stunning shift in understanding of what would happen after the election. even the night of, trump gets elected, said funds future go down, and suddenly the next morning, risk is back on and hikes back on more than they ever have been. where is the breakdown in understanding? expectations were following the risk markets. you have the selloff, and the fed followed that. i'm not sure myself. i think in retrospect, maybe it
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is the fact that the republican party also held on to the senate, so they have united government, both the president and house leadership want to cut taxes. there is no focus on these very -- there is now focus on the series of the system is where congress and the president should be able to work together. scarlet: you are 100% for a december rate increase. where does this put us for 2017? is the tightening going to be much steeper and faster than what has been priced in so far? everyone is focusing on the benefits of that for the financials but at what point do we consider the costs? alan: it is not obvious to me to be will get more tightening or the fed will indicate a steeper theythat i have - than have, because we don't know what policies will be implemented in the trump administration and the sequencing of the policies. if it is tightening first and tax reform later, that is not as
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stimulative as the other way around. rate hikes will be an indication of a stronger economy to the extent that they come, not a threat to the economy, because interest rates, as chair yellen said in particular, are at accommodate of levels. e levels.odativ oliver: this is expectations of a federate hike. -- fed rate hike. you can see the same thing happening for expectations in the fixed income market. this shows economic surprise. basically at zero. the economic data has an improved since mid-august. -- has not improved since mid-august. is the market and risk of getting ahead of itself in terms of acting on speculation in terms of policy? alan: in a word, yes. if the data had turned more
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constructive in the manufacturing sector, surveys out of the federal reserve, strong retail sales yesterday and housing starts today. with what we know about where the economy is, it is 2% growth in the fourth quarter, nothing to write home about if we haven't been writing home about it for the last seven years. you could say that the market reaction to trump's victory, in my view, is accentuating the parts of his campaign program that would be positive for the economy and downplaying the downside risks that would come on the trade and immigration side. scarlet: we have certainly come from glass half empty to glass half-full without much of a change in the fundamental economic data. having said that, looking past the idea that we don't know what a trump administration would mean for fed policy, what do you see for 2017 and what other weaknesses heading into 2017? alan: the strikes are internal
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balance. we have come through an inventory correction, capacity correction in the energy sector, still growing. the labor market is still healing. housing has a lot of upside, in my view, because the level of housing starts is barely keeping up with the level of household formation. household formation is starting to pick up. corporate profitability away from the energy sector is growing so much anymore but it is quite high. industries continue to expand. i would say all of these things are supportive of growth going forward. oliver: do you remember before the election we were talking about whether or not the fed needed to move at a pace and think about this philosophic conversation about whether to target one level of inflation, and there was this whole philosophical debate that emerged. i have not heard much about it now. has that got to the wayside? they goy reevaluate how about raising rates and the pace at which they do it? how: it is not so much the
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of raising rates in the situation they are in. throw up yourd of hands in terms of getting inflation where you want it. central banks by themselves can't create inflation when it is too low. they are good at stopping inflation when it is too high. i think the conversation about how do we avoid being in this predicament again is going to continue. include overshooting at 2% inflation target, it may include raising the inflation target. if we ever get inflation up to 3 and change the target. it here, higher nominal interest rates, that is a good thing. the fed has no control over the underlying potential of the real growth rate of the economy, the other component of the nominal rate. control it also has no over overseas development and that is stopped it in the past from raising rates when it wanted to. we just broke the news last hour that the bank of mexico
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is raising interest rate 50 basis points. to what extent will they take into account the divergence of monetary policy from it and everyone else as it considers the path in 2017? alan: it will continue to be an issue given that the expectation and to purchase pushes the -- divergence pushes the dollar. somewhat of a headwind for trade and corporate earnings. it is harder to pull away from the pack if it is staying at zero and you are trying to get to 2. slowing the fed down, but i think the more inflation starts to rise in the u.s., the more evidence it is that wages are exhilarating. they are going to -- accelerating. they will have to take steps much more gradually than in the past. oliver: great conversation. obviously, a lot of speculation and rearranging the needs to happen. alan levenson, chief economist at t. rowe price.
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3:30 p.m., congresswoman maxine water joins us. she discusses what is next for democrats. scarlet: coming up next, will washington. to wall street south? hedge fund futures may be moving to the seat with president-elect donald trump. one of them right there. breaking news -- mitt romney being considered for secretary of state, according to nbc. mitt romney and donald trump quarterly schedule to meet on sunday. this is bloomberg. ♪
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oliver: this is "bloomberg markets." i am oliver renick. scarlet: i am scarlet fu. oliver: time for the biggest
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business stories in the news right now. jpmorgan will settle allegations that it hired children of chinese decision-makers to win business. u.s. regular does announce the settlement today that regulators announced the settlement today --u.s. regular does announce the settlement today. wells fargo announced new retail dropped in october. it comes after wells fargo announced $185 million settlement with regulators because retail bank employees opened as many as 2 million unauthorized credit cards and deposit accounts. year hasank sold last been accused of redlining and breaking federal laws. housing advocacy groups alleged it made few mortgages to black and latino borrowers. the complaint doesn't mention mnuchin by name. he's being floated for treasury
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secretary. which owns the bank, says it is committed to fair lending. that is your business flash update. scarlet: we will stick with president-elect trump. hedge funds may be finally getting their day in washington because it has been a remarkable turnaround for the industry. amid pretty inflammatory comments about the industry, but maybe that is all changing. for more on the optimism we are now seeing, let's ring in simone foxman. donald trump at one point when he was candidate said hedge fund guys are getting way with murder, for the way they are surrounding him and celebrating is victory seem to suggest they don't think it will translate into anything actionable. there are a lot of guys tight to hedge funds around him, more so -- this is different from your typical banking crowd. paulson, rebecca
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mercer, who is the daughter of robert mercer, anthony scaramucci, who has supported trump even when others were questioning that. there is a lot of folks like that. oliver: speaking of which, we will run sound of anthony scaramucci just talked about what trump is going to be doing in terms of appointing people. >> his number one goal is to get us people in the administration on behalf of the american people. oliver: sounds pretty good in theory, but the question is whether or not trump will stick to the populist rhetoric that might be more anti-wall street, anti-hedge fund come all that type of stuff. do we know what the game plan is where you can point to and look, here is what he is actually doing, following through with his? simone: one of the things the hedge fund community that is antse close with him w
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he as you do talked about or not talked about darkly. certain things like the department of labor fiduciary rule, which requires investment of eyes to act as fiduciaries when they are giving retirement advice. anthony scaramucci has talked about that but that is not a key trump thing. nnie-freddie,-- fa where john also has an interest in the past, those things are more esoteric things. the thing that gets people going , the normal man on the street, is dodd-frank. but dodd-frank is a big law, too, and the pieces that donald trump has talked about, the community banks, not the big bank pieces. there is a lot more that wouldn't really resonate with normal voters but may resonate when he makes a decision on it later. scarlet: as hedge fund guys get excited at the possibility that donald trump will be much friendlier to them that he said
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on the campaign trail, i wonder if there's any sense of trepidation or concern. have you heard any rumblings of that? think there is serious concern that things will go too far, too fast. wall street generally, hedge funds in specific, given that there were a handful of hedge funds making money while americans were getting kicked out of their homes, that image has not played well over the last eight years. there is certainly concerned that if you roll back a lot of you make a lotif of changes, some of the good that has been done in the last 8 years will get thrown out with the rest of the bathwater, and you will end up in a situation where, got for bid, wall street id, wall street causes another crisis and you have the average joe yelling at the street again. simone'syou can read story on bloomberg.com. oliver: do small cap stocks
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still have room to run? beating the s&p for days now. we will discuss that next. this is bloomberg. ♪
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oliver: this is "bloomberg markets." i am oliver renick. scarlet: i am scarlet fu. time for "options inside" with julie hyman. julie: joining me is mark sebastian in chicago. great to see you. you are talking about something we have been talking about a lot today, the strength in small caps. fascinating market rotation, expressed in a lot of ways, but one of them is the strength in the russell 2000. what do you make of it? >> a few things. the russell 2000, more so than any other indexes, is domestic
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earnings-centric. also all the income comes from the united states -- almost all the income comes from the united states. ponomics, probably has benefits there. let's think about some of the names in there, some of the smaller banks, and all the way up to some of these mid-tier banks. none of these existed in their current form in the rising interest-rate environment. we have this combination of domestic policy and interest-rate rallying that is sending the russell 2000 way higher relative to the other major indexes. i think that is something that could continue all the way through inauguration day in january. julie: i guess my question, though, sending it way higher -- is it too much higher? small caps are relatively highly valued versus larger caps.
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where does it become too expensive? where does the run to come too much? -- become too much? mark: let's think about potentially how much earnings growth there could be. it will really help financials, and with the domestic-based company, companies in the russell 2000 will do a lot better. do i think that the rocketship part of the russell 2000 rally is over? yes. is it going to outperform the other indexes? yes. i would suggest selling puts in the nasdaq and s&p. which is why i like owning january call spreads in the russell 2000. julie: talk to me specifically about what kind of call spread you are looking at here. mark: i am going out a little bit further because, obviously, we have had this huge move higher and we could see a little bit of a pullback. 2000t to own the russell
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1350 call and sell the 1400 call. hang about $13 or -- paying about $13 or $14. relatively low risk for an index that tends to move. julie: mark sebastian, thank you so much. really topical. we have been talking about the russell 2000 today. appreciate it. scarlet: julie hyman, thank you so much. councilman maxine waters -- congresswoman maxine waters will be joining us. we will discuss the outlook for dodd-frank and her perspective on things like freddie and fannie as well. this is bloomberg. ♪
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mark: i am mark crumpton. it is time for "first word" news. mitt romney and donald will meet this weekend, according to her
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-- donald trump will meet this weekend, according to a report by cnn citing an unidentified source. msnbc is reporting that romney is eating considered for secretary of state. he was a vocal critic of trump during the campaign and refused to endorse him. the transition team says that the president-elect has been "unbelievably impressed" with alabama senator jeff sessions but is still talking with others as he punches evident. so since -- as he forms his cabinet. sessions is on the shortlist for attorney general. and jerod pressure will not be seeking security clearances, -- jared kushner will not be seeking security clearances record to "the near times -- "new york times." no comment onve what job he should or should not take but he was integral to the campaign and

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