tv Bloomberg Markets Americas Bloomberg November 21, 2016 12:00pm-3:31pm EST
i am vonnie quinn. : and i am david gura. welcome. ♪ we are covering stories from new york to paris and tokyo this hour. optimism.on opec agrees to cut output. president obama meets in new trump meresident-elect to new york as he continues to assemble his administration. julie hyman joys us with the latest. we have touched it. julie: it looks like we are trading at a new intraday record. 2194, even.
the dow earlier touched a closing record. but it is not on an intraday basis. the nasdaq is trading at an intraday record. this post election day rally is continuing. it has definitely been helped by energy. i should mention volume is down in this holiday week. we have thursday off for thanksgiving and friday is a shortened trading day. 15% belownning about the 30 day average. something to keep in mind as we watch the s&p take to a new record. energy is a big part of the story. david mentioned new optimism, that there will be an opec agreement. that comes as iran and iraq are signaling more willingness to work with opec. crude --ing imax raising.mex crude we have seen energy stocks rise as a result as well. i want to take a look at the oil
service company. they are not only rising with oil prices but oil rings. -- oil rigs. we got the rig count data on friday. since up to the highest july. more services needed for companies needed -- for companies like halliburton. we are watching their retailers as we are heading into the holiday shopping season. macy's not lower by much. interesting study coming out from capital business credit, which is a chain finance company. it surveyed. onlysponded and found that 27% of those based in the u.s. are seeing an increase in orders. about half the demand. 20% are experiencing a decrease. be a bad sign going
into the holiday shopping season. on the flipside the national retail a cessation -- retail association as optimistic. a holiday sales growth of 6.3 -- of 3.6%. that is just an estimate, we don't know if that is what the actual number will be. they also predict non-store sales will rise by 7% to 10%. seeill be interesting to how these numbers shake out and where and who are the beneficiaries when all is said and done. vonnie: always great to take notes of the forecast. thank you. word news, mark crumpton has more from our newsroom. on tapore meetings are for president elect donald trump as he selects more members for his cabinet. last week he met with mitt romney and a number of cabinets -- postpost treasury of
secretary of the treasury. trump's transition team says he will spend thanksgiving in florida. it is unclear how long he plans to stay there. vice president-elect mice president -- president-elect mike pence is spending the holiday in france. francois fillon won the first round of the republican primary by 16 percentage points over alain juppe. they will face off against each other in next sunday's runoff. former french president nicolas sarkozy has been knocked out of the race. a competency hearing is scheduled today for the man accused of killing nine black churchgoers in charleston, south carolina. the hearing is closed.
in that june 2015 attack at the emmanuel baptist episcopal church. than 2600 more journalists and analysts in over 100 20 countries, i am mark crumpton, this is bloomberg. david: crude is surging as t dollar is falling. under economic growth president trump. great have you here with us. we saw the markets breakup area what was the catalyst for this? -- breakup. what was the catalyst for this? guest: you have energy shares of the most, about 2%. a hit that weng are nearing the supply limit there. and we're seeing the laggards in the week after trump got elected doing better. these were victimized by the
rise in treasury yields. back down,elds are so the utility companies are taking a bit as well. that is positive. of course you have technology immediatelyrally after the trump win. that was the one laggard in the market. up 2.2% the next day. technology is notably absent. probablyood news for the most influential sector in terms of market cap. and you also have a great deal of short coverings. hedges that were in place before the election and in general hedge funds offloading these bets.that's -- short vonnie: technology shares are pushing higher. what certainty is there?
weakerfrom black for a dollar -- black rock a weaker dollar. guest: that includes these big task firms. that is definitely a positive and you also have to look at the cash on the sideline heading into the election. sitting on a lot of money, waiting for the uncertainty to subside. we saw a record outflows from etf. that money is flowing back in. the only thing one might see as a potential hurdle is the presumed rate increase taking place in mid december. wee people might say that are seeing good enough economic growth to do it in the first place. given the earnings growth is coming back and economic growth is appearing to be on the right track, there really is no sign
coming up that equities are going to slow. david: how much does this have to do with the fact that collections were two weeks ago, investors have chewed over what has happened and are pulling back a bit? guest: that is interesting, we saw the knee-jerk reaction from some industries. the ones that are immediately tied to this prospect of trump. as i mentioned before, technology in some of the sectors weren't viewed as benefiting quite as much, getting in on the action -- as much getting in on the action. isusting policies, saying he a be not going to do something's he said he was going to do on the campaign trail. there is more to mull over. there are more decisions to be made along those lines. , ande: liquidity is less we won't have a full story for this week because it is only four days. what about here and positioning?
yearout here and -- about end positioning? guest: they do some windowdressing going into year end. we could be seeing some outside moves because of trading volume. that is something to keep an eye on. -- down halfresent a percent tomorrow. is going to be a very interesting move to year end. strategists calling for higher moves. david: thank you very much. frome: coming up we hear eileen nugent on today's deals report. this is bloomberg. ♪
vonnie: this is bloomberg markets. bloomberge for the business flash, the biggest business stories in the news. global regulators say u.s. banks present a bigger risk to the financial business than they did last year. according to financial stability boards, citigroup, bank of america, and wells fargo all paid higher capital surcharges. puerto rico's governors already --llenging the federal board alec hundred garcia deas -- alejandro garcia ds says he believes new austerity measures will only worsen the crisis. the price of turkey is down.
output is rising 7% of a record 6 billion pounds. 11% less than they did last year. that is your business flash update. vonnie: chinese dealmakers told to hit the polls. lawyers and counselors are advising chinese clients to take a wait and see approach. this is all part of our focus in today's deals report. jeff mccracken is standing by of --ileen nugent, cohead jeff: we do have eileen here. you worked on one of the more interesting deals when a chinese insurance company made a run. they tried to buy starwood. in the end it didn't work out.
i'm curious from that and other deals you have been around, what has interested the chinese in these u.s. assets? there have been so many outbound deals. market the united states has been and remains a consistent growth model. it is a great place for any economy as large as china's to diversify their interests. i think often they view the a way of growing their bung audience. jeff: there has been some pushback and concern from lawmakers and bankers, saying we ought to slow down our activity into the u.s. with this new administration. what is your view? do you think that is the right advice for your clients? eileen: i don't think it is ever quite that easy.
dependentys -- there are always more regulatory issues paved by u.s. domesticthen deals and that has always been the case. they're obviously is more focus on it right now. if a deal is particularly important to a client, if it is not in a particularly national industry -- i don't think we have seen anything that makes it clear with the path is going to be. jeff: we don't know the people who he is going to appoint to .he doj a lot will depend on who those people are and what guidance they are getting. eileen: and taking in it a little book -- taking it a little bit further, companies
have been involved in enforcing -- there have been some recommendations made a week ago should be the brakes put on chinese own state owned businesses in terms of any acquisitions, that is a recommendation. this in the newspaper, i wasn't involved in the deal, but a chinese company was attempting to acquire a german chip manufacturer. i guess that has been blocked as of friday. and that is, in fact, a very unusual thing. jeff: how much time do you spend talking to them about the regulatory hurdles? is there is much time spent on that as there of the structure or acquisition? eileen: i have been thinking
about this a lot because of the amount of attention being paid to chinese acquisitions and regulatory issues these days. but frankly this has never changed. i was thinking about a deal i did in the late 80's. any time a group is coming -- there is a different regime, a different way of looking at things, different market practices. so it dollars takes longer. in my own case it can be difficult, because obviously at some level there will be some translation. i don't speak chinese. so it makes it more difficult. are twoly there interesting angles, one is that sometimes we take things for granted because we are used to doing things a certain way. and when you are dealing with
anyone, whether they are foreign or domestic, who hasn't done as many deals and they aren't used to it, they ask all these different kinds of questions and all of a sudden you find that your answer may not be the only way of looking at things. thing i think is in general have become much more sophisticated in doing these deals. they're doing a lot of them. many of the executives of these companies have spent time in the united states. many of them have been educated and theyited states, understand the market place and they are managing to make their way through it. mark: i have heard from people in the past that when a chinese copies doing a deal the money will be set aside, not just in a u.s. company or u.s. bank, but within the u.s. itself in a u.s. bank. it can't be sitting in china if we have concerns over regulatory issues. they have gotten better about
that. eileen: right, and i think certainly that has happened and will continue to happen until there is a certain amount of confidence in the marketplace. it has to do with the lack of and aarity on both sides concern about needing to enforce agreements in china. dissipatesconcern this will remain an issue, i believe. jeff: thanks, eileen. back to you, vonnie. vonnie: jeff mccracken, thank you. mark: john paulson went long when wall street went short. how his contrary that is beginning to pay off. this is bloomberg. ♪
david: john paulson has spent years lobbying for fannie mae and freddie mac. shares of the mortgage giants have spiked more than 80%. is joe light from washington. give us a sense of what john paulson has been up to, how he has been lobbying. companies ate two the center of the u.s. mortgage market and there taken over by the government in 2008. after the government took them they left many shares of fannie and freddie outstanding. hedge fund managers like john theson recognized, as
crisis was turning, that fannie and freddie may be seeing more profits than they had before and started snatching up shares. now managers like john paulson are basically agitating for some of fannie and freddie's profits, which are all going to the u.s. government to be sent to shareholders instead. so paulson has been hiring lobbyists to try to get into the gears of lawmakers to try to change the policy sending all the profits to the treasury. same thing with the administration. the obama administration has been very set on taken all prits for taxpayers -- taken on all profits for taxpayers. some of those profits may be going to investors instead. vonnie: how long would it take? joe: that remains to be seen. there are a lot of avenues the shareholders are presenting.
a bill, can pass sending more profits to shareholders to basically recapitalize and release fannie and freddie into the private markets. some shareholders believe the treasury department could change the terms of the bailout agreement in order to eventually bury privatize them -- eventually re-privatize them. -- pursuing some soda free dress in the court system to see profits there. there are three major avenues investors are pursuing right now. legislation, that is always a wildcard. it would probably take at least several months and the re-privatization of the administration, that is something the administration can take quickly, taking the steps going into that direction may take years to privatize fannie
and freddie. fannie and freddie was not a stock line in donald trump's campaign speech. what has he said about the future of the two institutions and what has his relationship and mike -- relationship then like -- firs relationship been like? this will depend on who he was to these major economic positions. -- is also a proponent of winding down fannie and freddie, an outcome that could hurt shareholders. they have spoken about --
vonnie: roughly how many shareholders are there? the government owns about 80% and these activists are the main holders. bill ackman is a main proponent of fannie and freddie. how we don't know exactly many shareholders there are. but as you mentioned, bill ackman is a shareholder, bruce berkowitz, he is a major shareholder. the parry capital, richard stills hedge fund, they own shares and are providing funds and some of these court cases. vonnie: coming up, president elect don't trump is -- president-elect donald trump is -- this is bloomberg. ♪
headquarters in your, i am david gura. vonnie: i am vonnie quinn coul . mark crumpton is in our newsroom. k: donald trump is back at the white house with another meeting of high-profile members could ross and jonathan gray and nugent, according to a person familiar with the hiring process . tennessee senator bob corker is on list for secretary of state including mitt romney. at dog madness is looking secretary of defense. voters have a favorable or ratingt the favorable of the incoming president. his favorability rating has jumped nine point since election. theresa may is offering and all of branch to business. not force companies to
appoint workers or union representatives to corporate boards. the prime minister also urged executives not to miss the opportunity presented by brexit . >> the decision by the british people on the 23rd of june gives us a want in a generation chance to shape a new future for our nation, the chance to build a stronger, fairer country. that is the kind of change people voted for, not just to leave the european union, but to change the way our country works and the people for whom it works forever. spokeprime minister may at the confederation of british industry's annual conference. signing aated press u.s. monitoring service that withs militant postings reports that an islamic affiliate has claimed responsibility for today's suicide bombing inside a shiite mosque in afghanistan. they killed at least 32 people and dozens more were wounded. it is the second-largest
attack targeting shiites in the afghan capital in just over a month. japanese peacekeepers have arrived in south sudan with expanded powers for the first time since the end of world war ii. the soldiers will be allowed to use force to protect civilians. japan's postwar constitution for bids the use of force in settling international disputes. the government issued a new interpretation. dayal news 24 hours a powered by more than 2600 journalists and analysts in over 120 countries, i mark crumpton. this is bloomberg. a quicklet's get check on u.s. major indices. the dow is up three tens of a percent. a record earlier for the s&p 500. at 21.94.2 points the major groups are the casino and gaming groups as well as the energy, gas, and oil. nasdaq is up 7/10 of a percent.
let's get more details now from abigail doolittle. the top one of performing sector groups today are the casino stocks. we are looking at wynn resorts, mgm las vegas, and sunoco crown could wyn crown. wynn resorts is the top performer on this day that the nasdaq has carved out a new high. he sees a nice trajectory of growth for the maccallum gross gaming revenue. wn resorts2020 and is really benefiting from this the most. they have 72% of their revenue coming from macau. that 8% growth may not sound huge, but we going to the bloomberg and we take a look at g #btv 642. this is macau gaming revenue going back to 2011. 60% growth and the beginning of
2014, 40% growth. the chinese government cracked down on corruption in the gaming sector and it dropped down to 40%, more than a 40% decline back in 2014. starting in august of this year, we see a little bit of recovery. that is more of a study trajectory that could help these stocks. we have taken a look at another chart in the bloomberg and this is g #btv 5075. this is sunoco crown and this is the top tech within the gaming sector or the most undervalued shares. we take a look at this chart and it goes back to 2009. off the big decline into 2008 and 2009, the stock made a very nice recovery. could be setup developing now, suggesting that this honored value -- in hongued stock based
kong could have some pretty decent upside in the future. vonnie: abigail doolittle, thank you very much. david: president-elect donald trump resumed meetings today in new york for potential hires for his administration. he met with vice president elect mike pence and three candidates for treasury secretary, all with connections to wall street. joining us now is jason kelly. john gray was there, wilbur ross , great potential textured what do you make of the men and women whom he was meeting? jason: it is a fascinating group in part because these are not all republican name stays. john gray is definitely a rising star on wall street. be thehought by many to next president and ceo eventually of blackstone. he in the past supported financially democrats. he has advised president obama and was involved in fundraisers for hillary clinton as well.
it's interesting that he is in .he mix may be more interesting because he is one of the future leaders, not in the same category as wilbur ross or someone else. areie: some of these already advising the president on this economy plan and his campaign speeches and so forth. what to you doesn't look like that he is trying to do now? is he meeting with new people, looking for fresh ideas? >> the president-elect is meeting all the people he can right now. may bef the people he meeting with may not get administration post. people whong with did not support him all the way through. i do not know that every son -- everyone he is meeting with will amount to something. we know that trump values loyalty and we know people got behind him early and they are likely to get plum spots in the administration. at have to be looking
someone like stephen mcgeechan for the front runner as treasury secretary. we have seen senator jeff sessions for attorney general and mike pompeo for cia director, some of the people who supported trump, and they are the early ones with their foot in the door. there's a lot of speculation out there as to what is going to happen and i think we will look to see what trump says. david: wilbur ross is an interesting example of that. economicshe new york club speech that donald trump gave a few months ago, which was be rest of big wall street names. jason: wilbur ross had come out pretty early for him. mentioned not only potentially for treasury that commerce may be as well. vonnie: it would almost make more sense because a lot of what he was espousing were different trade subtleties than what we have. jason: wilbur ross is a famous
distress investor. he has invested all over the world. and ina lot and ireland the financial crisis and banks in the united states. this is a guy really robust when it comes to global economics. a commerce secretary position would certainly make sense there. david: if i were steve mi nunchin, i would be a bit flummoxed by all this happening. i thought the job was mine and now these other interviews are happening. any sense of how long this is going to take or one donald ump will make a decision on the appointments? sahil: i would never presume to know what's going on in donald trump's mind and predict positions he's going to make. he's a very unique figure in the way that he operates. he is a little mercurial in some of these things. there is no indication steve is being dropped from the list or anything like that.
trump has been meeting with lots and lots of people. it is not clear beyond the speculation who is going to be there for what. i would caution against reading too much into the fact that he is talking to a number of people. there are a lot of positions to fill. vonnie: it is not just limited to treasury secretary and commerce secretary could h. he is also meeting with executives from broadcast is positions. charlie rose and dickerson have arrived at tower as well -- trump tower as well. he says he might leave for florida for next giving tomorrow. jason: one interesting thing about john gray is that he obviously comes out of the real estate world. he is not an unknown to donald trump. they have done business together. at blackstone, john gray has built one of the most influential real estate platforms out there. they have found everything from hilton hotels to motel 6 to
equity office properties. he is one of the most important players. he is very familiar to donald trump from his business days and also as someone who has emerged as something of a young statesman in part because of his knowledge and his dealmaking around the world. from a global economic perspective, even though he comes from the other side of the aisle politically, he could be an interesting advisor going forward. david: i have to ask you about the vicegate, president goes to the play and gets lectured after. this is seen as a distraction by the trump team in light of the trump university settlement. how does this resolve itself with donald trump on twitter yet again? sahil: this is the pattern we have seen for the year and half are so that he has run for president. he has a tendency to use his twitter account to go after people and to kind of respond to people who he believes has
slighted thehim. a lot of the times that does serve as a distraction from other issues that happened to be on his place, other controversies he happened to be dealing with. it works well for him politically because this is exactly the kind of thing he wants to draw attention to that gins up his base and allows people who voted for him to look at these jeers and booze from new yorkers and the "hamilton crowd" and reaffirm the belief in their mind that people don't care about them. trump would rather be talking about this then settling the trump university case. that is a pattern we have seen throughout his campaign. it may continue that he is president-elect and it is still happening. there is sort of a logic to this even if people look at what he is doing and say what is wrong with him? why is he so thin-skinned? ahil, thank you so
>> the press upon request means that if you have to you can afford it. i would guess this is around $700,000. david: there's a recent expensive timepiece. what is the one that you are featuring in the gift guide. >> we have the turbulent 7087. it's a long name. with the time. quite hard to make a watch with a small noise that you can hear and it takes on 10 year to develop the sound in this one watch, so it's really a special peace and also really expensive. david: there's a couple meant regard that you can get for as well. ande have the whole band everything in the guide. david: the jacket from
montclair. what is different? how has the company upgraded the parka? >> it is a gift you didn't know you needed, but you will totally love it. it's a woman's jacket and it's a white ski jacket. you think of a white ski coat and you think it's big and fast. this one is actually quite slimming and it has a rabbit fur trim mode. up and not mess your pretty hair. david: fair enough. there's a new audio gadget out and that is featured as well. >> this is one of the toys for boys. they do such incredible work. fromlooks like it's sputnik and from this great big century spaceship and it creates a perfect circle of sound. it is 17 inches high and gives you 360 degree sound. . david: it also looks like
sputnik. anything at the lower end of things? anything that you or i could afford? >> we have a toolkit by georgia are money come out -- giorgio armani. it is a leather toolkit with tools and it could we have watches at all different price points. ones that are more in the several hundred dollar range and good for gifts for a kid for a first watch over someone who is in college for the first year. david: talk about how you assemble a list like this one. there is pressure to buy gifts, but what comprises the list? >> we have market editors that are looking at this stuff months in advance. the of the stuff is on runway last winter and is now in stores for the more fashioning type things. we have known about this stuff for quite a long time. david: what is the watch
featured in the magazine? what is the next trend for watches? >> we are about to see a lot of the watches that are going to come out next year later in december and january. a big thing right now is going to tradition and going through a watch companies all caps a lot old catalog and finding defunct watches and making them. brands like rolex really love doing that. david: for more, check out pursuits for the finest things in life. on thet to pursuits bloomberg, . the latest market moves ahead of the holidays next. this is bloomberg. ♪
♪ vonnie: from bloomberg world headquarters in new york, we are covering stories out of san francisco, new york, london, and mosul. rising to record highs with the s&p 500 surpassing its august closing high and oil extending its rally today. plus, we go inside renaissance technologies with medallion funds. and is president-elect donald trump too much for california? why some in sacramento and silicon valley want to go their own way. we are halfway into the trading day now and julie hyman is here with all the records. julie: there are a lot of them to go through. all three are at major records and on an intraday basis. at 2196.58.now asis up two thirds of 1%
this postelection rally has resumed after some fits and starts. definitely energy is a big part of the equation. energy stocks are leading gains in the s&p 500. the not only have oil prices higher, but the barrel is on new hopes that opec will come to a production agreement. we are seeing natural gas rise as we do get some colder weather here in the u.s. and the northeast, which is a big user of natural gas aa patc power source. all this is translating into ands for energy shares leading energy stocks to extend their leadership as the best performing group this year. take a look at the bloomberg. if you look at the s&p 500 and these group ranked returns for the year, energy shares now up 18.6% year to date. far and away the best performing group, industrials and financials follow, each with a little more than 14% return thus
far this year. health care and real estate have lagged, but energy has been in the top spot decisively. if you look at some of the other asset classes in today's session, we are watching the u.s. dollar pullback. we are seeing some of these commodities game. we have seen the dollar lag, down by a third of 1% if you look at the dollar index. we are also seeing yields fall today for the first day and four. in four. we have seen this big bond rout going on and now buyers are coming back into the market. what is remarkable even as we see that yield fault is that we continue to watch fed funds futures and what they're pricing in for the december federal reserve meeting. we are now at 100% probability being priced in to a federal reserve rate increase in december, at least as priced by the fed funds futures. this is what folks are betting on now 100%.
it is pretty extraordinary to see that kind of likelihood being priced into any kind of market. david: julie hyman, with the market update. now let's get a check of bloomberg first word news. mark crumpton has more from our newsroom. hek: president obama says intends to give donald trump space to lead the u.s. and set his own agenda, but the president says he reserves the right to reinsert himself into the public debate if he thinks core american values are extinct -- at stake. in lima, perue after a meeting of asia-pacific leaders. hillary clinton lost the race for the white house, but a new poll shows that voters preferred her campaign to that of president-elect trump. just 30% of those gave trump and a or b grade for his campaign. 35% gave him an f. 43% gave secretary clinton and a or b. that is the first time in the history of the pew postelection survey that the losing candidate
earned a better grades than the winter. in france, police believe they prevented a potential terrorist attack. authorities did not identify the target. the arrests come five days before the opening of strasburg's famed christmas market. hundreds of workers at o'hare international airport have delayed their strike until after the thanks giving holiday. the workers say they want the public support and would not want to mess up anyone's holiday plans. the group, which includes baggage handlers, cabin cleaners, and janitors, plans to hit the picket lines on november 29. they are seeking union rights and a $15 hourly wage. global news 24 hours a day powered by more than 2600 journalists and analysts in over 120 countries, i am mark crumpton. this is bloomberg. vonnie: thank you very much. today surging with energy companies.
a new milestone with the s&p 500 . field trump's election optimistic plans with energy geared toward growth. willext guest says energy continue to rise, but it will not be a straight line. atning us now is jack caffe jpmorgan. now the straight line -- will it be volatility with major ups and downs or rising higher? jack: i think it is more grinding higher. underneath the surface, you will see the sector rotation that has really dominated this year. you talked about energy. withgin with the year energy down. now as we get more help around and opec production cuts, we have hardly seen people coming back to energy. i think that will be the dominant factor for markets the next several months. david: julie hyman mentioned health care is one of the laggards and how they have
performed this far. is it difficult to group all health care together? it's t-rex me that after donald trump's victory, a lot of the conversation on what this might me for drug companies and hospitals, is this harder to tied together in the past? jack: certainly. the bio techs were hoping for price relief or a lack of price pressures. you have the insurance companies and what happens with the affordable care act and doesn't get repealed. it is not necessarily as uniform a sector as you want to think. it is certainly one that led markets for a long time and now i think digested some of those gains. vonnie: i'm curious as to what the main concern is with your clients. without knowing what the policies are, the market is at least anticipating policies that will be good for the markets. jack: i think right now people basically -- you can look at the transition and you can see whatever you want. .ffectively you do not know
we have seen some apartments on the national defense side, but you have not seen what is coming out of the treasury, department of labor, or what might come in terms of the transportation department. as a result, equity markets want to look at that and they see a blank canvas. they want to see what they want to see. as we start to see where appointments go, we get a better sense of if it is taxes and spend, is it financial responsibility, is it we have approved the fast act so the infrastructure plan is set? until we have those people and the policies that will come from those people, we are left with i can see whatever i want. have politics and policy at the moment supplanted concern about the federal reserve? julie hyman showed that chart of a 100% rate hike in december. have you heard enough from the fed at this point? is the focus now squarely on donald trump and what he has planned? jack: i think it is a two-parter to that answer.
every central-bank has asked. relax ourike to reliance on monetary policy and use more fiscal policy. you saw some of that in terms of financials doing better. there's a hope for more and for structure spending and more fiscal stimulus. i think the fed and what comes into the in ministration might actually be able to work together rather than across purposes. the tricky one has actually been the dollar. i was expecting a weaker dollar and anticipating more spending coming out of washington. i've been wrong for at least a week and a half. [laughter] julie: not a bad record to have if that's all. vonnie: what about moving out of the country and taking advantage of places that are suffering right now? jack: almost all of my portfolios are very domestically oriented in terms of the stocks in. investing u.s. multinationals have been under considerable pressure over the past week and a half on this dollar reflation trade.
are beingme names left behind in the could be some interesting opportunities. europe starts getting interesting to the extent that europe is a very expert led economy. a stronger u.s. dollar winds up giving some stimulus back to the ecb and they have less conversation around the need for tapering. a week ago they announced that they would stop buying bonds over the december holiday. you look at a multinational and europe matters. 40% of sales are generated overseas. david: we've talked about health care and energy. what are some that are appealing to you right now? jack: industrials get really interesting as you understand ratherh you self help than a hope story in terms of what i may get. technology also continues to be very interesting. and some financials, i think that there are certainly some value in the yield curve. to bring it back, the financials will need to be able to drive
the banks higher. you've got the rate side of things and we have some enthusiasm to turn into the financials. there's always a push and pull in the markets. to me what is interesting is watching mortgage applications. it is generally the largest expense that an individual makes in their life when buying a home. 60 plus percent of mortgage applications are refinancing and that is away in short order if rates continue on the path they are been. vonnie: we have to leave it there unfortunately. david: facebook ceo mark zuckerberg changes his mind on battling fake news. what he has on designing your newsfeed coming up next. this is bloomberg. ♪
david: this is "bloomberg markets." i'm david gura. vonnie: i vonnie quinn. time for a look at the bloomberg business flash. my land is rejecting a request to testify on a congressional hearing for its price of epipen. charles grassley of iowa has scheduled a november 30 session to figure out how the drugmaker id lower than legally required discounts on epipen. goldman sachs has left the block group and other banks may soon follow it out of the door. that is according to someone familiar with the departure . it's tied to its ability to work together with enough of the lock containing technology itself. the exit marks a blow to our
three with more than 70 institutions. tesla motors says it has completed its acquisition of solar city. elon musk will fulfill his vision for a viable one-stop shop for energy consumers. the deal is valued at $2 billion and integrates the maker of model s vance with the installation of solar rooftop panels. that is your latest bloomberg business flash. david: facebook ceo mark zuckerberg says the social network will crack down on fake facebook news. that is after criticism that it may have influenced the present election. cory johnson joins us with more. ry: i thought you were going to go with speaking with crazy. it is certainly a change of mind here. i think it is a decision that mark zuckerberg has been forced into. he did not really seem to believe that.
he says it was crazy to think that would have an influence on the election. the studies that look at how people consume news show this very big change in this behavior . a study found that 62% of people gather news from social media. 18% gather much of their news often from social media. the role of social media and distributing news is an important one. i think in mark zuckerberg's mind this is something that people can figure out for themselves what is real. facebook is very active in deciding what you can and cannot see. they are very active in keeping the way hackers, bots, and pornography. they have done this through algorithms and artificial intelligence to go through things to figure out what is real, threatening, and what's not. the notion that it is too hard to do is something that facebook is forced to back away from. vonnie: normally we would not share specifics about our work
in progress, but i want to outline some of the projects we have underway. facebook owns a lot of our personal information. does it not have a duty to disclose what products -- projects are underway? cory: it is not of that to shareholders, but there is real legitimate concern about how fast this business has grown. when you look at the user numbers, it is a massive collection of people they have accumulated in terms of monthly active users. interestingly as they have changed the way people interact with things, they have seen their user growth accelerate. user growth has been much higher and has been meaningfully higher, closer to 4% than it was only a few quarters ago. as they start to add users coming can see that they will lose them just as quickly. that might be a concern for them if they people -- people find the value around facebook is something injurious to its users. you can also imagine within
facebook that a lot of employees are concerned about the role that facebook might have had on the last election. studies have also come out and found out that there was more fake news on the right than there was fake news on the left. that is a concern to everyone within and without facebook. david: this is a company that has used the word news liberally, calling the feet newsfeed. mark zuckerberg plans to meet with journalists to ask them how about they do their job. the say that part of broader conversation is facebook as a media organization. cory: i cannot imagine what he might learn. we pick up the phone and check facts. i do not know how that would resonate at facebook. they can have ways that they can verify where news comes from and where these posts come from and what the aggregate of these posts are and how reliable they can be checked. we have heard the story of the teenagers in macedonia that figured out by putting up fake news post that theyget
lots of clicks in ad revenue and get paid. that is something that a machine could track down quite easily if facebook bothers to do so in the same way that they are chased after phishing scams and the like. vonnie: what more do you know about the u.k. business that is expanding? cory: the u.k. business for facebook? biggest growth areas for facebook are outside the developed world and their hope is to get into places outside of europe and the u.s. they're running out of new places to explore. they would love to break into china and have failed to do that thus far. that is where the growth opportunities are for facebook. david: cory johnson come on bloomberg's editor in large, you can hear more from him when he is joined in half an hour by carole mars massar on bloomberg radio. vonnie: medallion funds is known for its intense see pretty and availability to a few. it is the world's greatest moneymaking machine run by scientists. how does it do it? we will have some answers.
david: this is "bloomberg markets." i'm david gura. vonnie: i am vonnie quinn. the medallion fund is the blackest box and all finance. it is known for its intense produced $55d has billion in profits over the last 28 years. what's more is that the fun never loses money. little is known about the investors who runs the fund. joining us now is jill weber, the editor at bloomberg markets magazine. you got access that people have been running through deserts and mountains trying to get. not cooperate did with the story, but what we were able to discover is more than anybody else has known about
with the culture of the place and the fabled son medallion. vonnie: what did you learn that was new? >> first of all, this is quantitative that jim simons founded it. it fund began in 1988 and has not been open outside of investors since 2005. we know very, very little about it. but we have been able to gather is that it is a fountain of money unlike any other. they cap the fund at $92 billion a year and all those profits go back to the scientists. that is the most interesting thing about it. these are not wall street people. if you have wall street on your resume, you will not get hired. these are scientists and they approach investing through that lens. david: andrew lo of m.i.t. calls at the manhattan project of finance. who do they hire? who makes the cut. ? you mention profits go back to the employees and its allocated
in a byzantine way as well. joel: astrophysicists is a huge set. basically the elements that they look for our people who look at data. they really want clean data. they has spent decades now creating clean data sets. look at where their performance comes from, it's really the fact that there have been able to harness that data and counterintuitive ways than the rest of the people who look at it. it is pretty amazing. 300 employees, 90 of them have phd's. this just gives them a sense of the brainpower sitting there all day trying to eke out wins. moment ago on a the screens the actual returns and they really are phenomenal. joel: it's mind-boggling. vonnie: did we find out afterwards what they made their money on? joel: we know it is sort of intensively equities at this point. it started as commodities and shifted to equities overtime. there have been government
filings that we up and able to learn from, but we think it is definitely heavy on equities at this point. david: why hasn't this replicatoable? your editor what to wear this fund is based. why isn't there a fund who says, this is what they are doing, and we will replicate the secret sauce? joel: i think they have tried and it speaks to them being scientists first and foremost. quantitative strategies have been very invoked of late. these guys have been doing it longer than everybody. that gives them a certain advantage. they are not alone and that is one of the questions we raise in the piece. how much longer can they keep doing this? at some point, every strategy runs out. part of the impressive thing is that this has been going on for 28 years. you see this number by number thing and that is the first time anybody has ever had it year-by-year. it's impressive. vonnie: you can say that again.
i love the idea that employees have a piece. joel: exactly. those fees up long ago, maybe to get outside investors to go away. 2005 was the last time any outside money was in this particular fund. renaissance has other funds open to outsiders. this one is sort of like the prize and you have to be an employee to have money into it. if you do, part of your salary actually gets allocated to it. you are better off than me. vonnie: any indication as to what he is like? joel: simons? he retired in 2009. the firm since then has been headed by two co-ceos, peter brown and robert mercer. simons since 2009 has been focused exclusively on philanthropic causes. we just know that he is very involved in this effort. david: joel, thank you very much.
"bloomberg markets." mark crumpton has more from the newsroom. mark: the uk's drawing up plans to invite donald trump for an official state visit to britain next year. as prime-- this, minister theresa may looks to strengthen relations with the united states. stay inrump likely buckingham palace. newt gingrich is printing newly installed right house -- white house strategist stephen bannon changes including ending ironic my raises, using firing restrictions, changing union rules, and shrugging raises. shooting was in san antonio, texas. authorities there are still searching for the suspect, a fourth officer shot near kansas
city. the circumstances surrounding that incident are unclear. iraqi soldiers are fortifying positions in basel -- in most mosul.in iraq wants the assault to retake in more than aul month. global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am mark crumpton, this is bloomberg. vonnie: u.k. new labour party leader jeremy corbyn today says theresa may has ruled out to havecompanies workers to board. talking about whether state intervention is good for business. state intervention alongside private capital can be very good, when you look at the
history of the industrial developments in italy and in germany, where there's been a very substantial state role-played, i think there's a very important role for that. byermine the state industry nonintervention is a bad thing and supporting the steel industry wide degree of state supported intervention is a good thing, it provides a platform for manufacturing industries to develop. mayrime minister theresa wants to avoid a brexit cliff edge scenario. what would you say in her shoes? >> first of all, make it very clear that we intend to make sure there's market access for british companies to have trade with europe, and that the rights that have been gained through european membership will be defended and continued. and we intend to work with europe in the future. idea of what i suppose would , whenold -- a hard brexit much more of than half of our
traders with europe would be damaging. -- is britain headed for a hard brexit? are plenty of concerns expressed. every business i've met, every trade union i met, every group of residents and workers i've met are concerned about it. are we heading for not? the problem is, the government will not set out what it's negotiating policy is, will not set out a proper timetable for it, all they have come up with so far is the hardly original words that brings it means means -- that brexit brexit. i don't know what brexit means in that context. >> would you support the u.k. leaving the customs union? >> we have to negotiate on that. the issue is also about questions of the power of national governments to invest in their own industries and also , the power of a national government to take industries such as rail companies into
public ownership. we don't wish to join an organization that restricts us from doing that. we need to trade with the rest of the world and have a human rights environment and sustained in agenda on trade policies as well and not convinced that would be possible. >> and wondering how concerned the first round of the republican primaries in france. do you think it's a failure of the left that voters seem to be voting in more right-wing candidates, both in europe and the u.s.? >> there's been a fundamental change in politics. the politics of the left and centerleft have changed a lot over the past 10 years. the parties of the left that supported austerity in 2008 and 2009, and that in the case of, for example, greece implement in very severe forms of austerity ended up losing out quite badly. as in the united states. what's interesting is the anger of working-class communities at
the lack of investment, the lack of jobs, the lack of opportunities, and the underinvestment in housing and health services plays that two ways. they can either blame minorities as with trump and marine le pen, and the right across europe, with a can look to the communities that the left are offering, such as the huge support with bernie sanders in the united states. in the enormous increase in labour party membership in this country. -- on u.k. is considering the subject of recent elections, is considering inviting president-elect donald trump to british -- visit britain on official state visit. have you asked to meet the president-elect? >> i will need the president-elect and i will make it very clear that i absolutely and totally deplore the comments he made during his presidential campaign in respect to women, it in respect to minorities and the way in which he sought to blame
very hard-working mexicans throughout the whole country, very hard-working muslims throughout the whole country, for an economic ills anybody suffers. and the idea that you can run an economy on the basis of a race to the bottom in taxation and the grotesque levels of inequality that would bring about is simply not a way forward. i want to live in a world where we don't all go to war, or live in a world where we are dedicated to sustaining our environment, and above all, sustaining our economy so we don't have these appalling left behind communities that you find over the great lakes region of the united states, as you find in many parts of europe, and indeed, as you find in parts of your own country. >> a lot of these ills which some say have been caused by free market capitalism, voters are thinking that the solution is still right-wing politicians. why do you think that is? what messages the left not getting across?
and thirdt involved wave economics, saying you could abandon your basic principles of full employment and properly funded public services and of a generational growth in wealth, rather than impoverishment of the next generation, and became a very unclear message. our own problem was the labour party in mid-2010 elections. we have some fantastic stuff in our manifesto. the problem was, we were also still offering to make cuts in public services. we have to do better than that. that is what our labour party now represents -- something very different, which is about investment in house, which creates good housing, saves a lot of public money because you create good jobs and people pay taxes, and end up with young people contributing to society in a good way, because there's a good education and do well, rather than being underemployed or unemployed. so my messages, later party offers a different economic
approach. the contract and chase down employers a grotesquely exploit people by paying the minimum wage and trying to dodge around it to pay even less than that. we want to see the prosperity that is shared by all in all regions of the country. that was jeremy corbyn along with nejra cehic from london. david: canada posts do away with all coal-fired electricity by 2030. details on how the 12th largest coal producer plans to do that, next. this is bloomberg. ♪
vonnie: i'm vonnie quinn. julie hyman has her charts. julie: the chart of the day bloombergus from the newsroom. looking at the recent moves in stocks and bonds and volatility in stocks and bonds, we start with a look at stocks and bonds going back several years. chart, moreree-year or less, of the s&p 500 compared with the bloomberg barclays treasury index. we've seen positive returns for both until the election. ,e've seen a steep bond rout even as stocks continue to rise. in yields asrise bond prices and treasury prices of gone down. highsseen stocks set new that we've been talking about today. we've also seen a diversions and volatility. -- a diversion and volatility. this is the volatility of stocks which has been trending downward postelection. the moves index looks at volatility in treasuries and it
has been trending higher. that has led strategists to raise concerns about this. how can volatility trade height on what we are seeing stock volatility go down? would you see stock volatility catch up? if recent history is any indication, that won't necessarily happen. the chart of the day is looking at instances since 1990, when we saw this big diversions. what happened afterwards? case, thist recent month, the vix is fallen 26% as that move index has risen 25%. the instances when you saw this before, when you saw the vix trend lower while the move index trended higher, stock volatility down, bond volatility up area if you look at the three months afterwards, the vix was down even more. in fact, an average of 12%. in other words, historically, we have seen in recent history at least is not that stock volatility catches up with bond
volatility, but just the opposite. we see even more of a drop in stock volatility. this could potentially bode well for stocks, continue to bode well for stocks in the month of the reasons only see this increase in bond yield is in some cases, it can help profits. vonnie: julie hyman with the chart of the day, thank you. taking action against coal. in a statement today, catherine mckenna said the goal is to make 90% of canadian electricity not admitting by 2030. canada's plan to phase out coal-fired power contrasts trump'sith donald pledge to revive the industry. joining us is amanda lang. it's great to have you in new york, thank you. with today's announcement a surprise? it's an acceleration of the government already signaled.
the canadian government has a firm target on greenhouse gas emissions, but the timeline has changed. there are a couple of things inside this announcement are surprise. taking 1.3 million cars off the road, the equivalent. there's a bit of a break for coal-fired plants. if the plants use either a scrubber or carbon capture storage, they are exempt from this plan. it gives us some of the provinces in canada time to get their act together. everything the government is doing is offering a little bit of time in order to allow these plants to shift electricity producers from coal to natural gas, which is the most easy, obvious route. straight over to renewables or alternative energy. it little bit of buying time to try and persuade and two entirely new industries. david: u.s. political campaign is still fresh in our time -- in our mind. in canada, is there political risk? there will be pushed
back from a couple of provinces. there already are in terms of the amount of coordination. the federal government is working to put carbon tax in place and some of the provinces are very disturbed by that, because of the economic applications. but the biggest province and biggest economic region in canada, ontario, has already phased out coal-fired electricity. it did at some cost, electricity prices in that province are much higher than the used to be. however, it has shown the can make the shift to renewables. canada has the benefit of having a lot of hydroelectric power. half of our total electric grid is fueled by that renewable resource. the shift into solar and wind and other forms of green energies is one that the government is really pushing. and backing with new info structure spending as well. up,ie: if nafta gets blown does it matter? it will take a while before you ve a new agreement in terms of trade. amanda: there so many unknowns about what happens with our
trade relationship. there are things that can happen right away and already are happening even under nafta, we saw that things like country of origin labeling of meat or lumber agreements could be affected. in this case, we actually do in some parts of the country import energy from the u.s., particularly in the east and we export as well to the u.s. trade it's unlikely that those are factors that be affected by any changes in nafta. as we all know, if nafta itself is ripped up, we revert to the free trade agreement which predated it, which for canada, would be ok. there's a lot another protects us in any event. it's the uncertainty. we've seen that in coal producing stocks as well. they've been on a bit of a wild ride because donald trump is pro-coal. in our country, coal producers have been seen as expert to china as being their best bet. as is giving a bit of a shot in the arm some of those companies. west moreland is one, tech is another. they been fairly good performers. we get a little bit of certainty
here around what the future looks like. west moreland has a big jump. when lessdavid: parallel to the u.s.. conversation is about the fact that people are out of work because: is gone away. is the government doing any work to teach new schools -- new skills for those you would have worked in the coal industry? amanda: there are very specific regions that produce coal, and when they see one industry shut down, it's very difficult, which is why became so political for donald trump. in canada, the provinces are more diverse. he doesn't have the same direct effect. there's a big push to move people into renewables. it's one of our state goals, to make canada a renewable fuel power and exporter of technologies. this is one step in that direction. vonnie: amanda lang from bloomberg tv canada, thank you. david: coming up, his trump too much for california? why someone to go their own way. this is bloomberg.
david: this is "bloomberg markets," i'm david gura. after the election, some prominent lawmakers and business leaders in california think the golden state may be better off on its own. carol massar and oliver renick spoke with elsa hoffman. >> california is the largest state in the nation, it's a complete with democratic run state. it's also 2700 miles away from washington and the democrats in sacramento, since the election, have been trying to figure out how to basically -- they joked about building a wall around california. over: it's very apropos -- oliver: they are talking about a legislative wall about what they
already built. tell us how they defended their existing legislation. >> they really want to make sure they can keep the policies and programs they want for themselves. they are really very interested in trying to figure out how to defend emissions legislation that's targeted at climate change. california, because it's such a giant market, connections that standards that are in action edges for california, but for the whole country. automakers will follow california emission standards. california lawmakers are trying to figure out how to do is follow the models they set with emission standards that were higher restrictor than the rest of the country. ago andn a decade carmakers have followed that, even though congress really didn't keep up. a real to do that and they feel like they can use that same model to defend other bits of legislation. carol: it's interesting that you guys talk about california being
--reeding glavine test lab breeding ground and test lab for leading the charge on carbon emissions and other issues. can we expect california to continue to do that no matter what comes out of washington? >> i think we can. voters there, the same itron was , they legalized recreational use of marijuana, not the first state to do so, but by far, the largest. they also passed a crackdown on , sosale of gun ammunitions that's a backdoor gun-control measure. the increased taxes on the wealthy. united states is going one direction in california went the other way. vote fora 61.5% hillary clinton, the second highest in the entire country. after hawaii. differencehe entire in the popular vote for clinton nationally is chalked up to her big win in california.
they see no reason why they should go along with whatever the republicans propose in washington. it's been only five years the california has been top to bottom run by democrats. have a situation where the governor's jerry brown, who overlaps with gerald ford during his first term as governor in 1970's. and jerry brown came in and followed on from arnold schwarzenegger and went mpletely real direction. he now has partners in the state senate and assembly, both democrats and latinos from southern california. the day after the election, they put out a strong statement, the two heads of the legislative branch put out a joint statement in english and in spanish and word,isten, word for california was not part of the united states when the united states was founded, but it is now and we consider ourselves the defender of progressive values in this country's future. oliver: break down the
legislative relationship between california and washington, and what they're going to be able to do. for the more concerned about the law they already stalled -- installed being overridden, or they were the stuff they want to do is not going to be able to get done? >> laws that are state laws, washington can touch. california has a higher minimum wage than the federal wage, that the california. california certainly has no interest in rolling back access to abortion, so if, for example, a trump supreme court were to undo roe v wade and ticket back to the states, california would be a state that would protect abortion rights in a matter what. there are things the state can do on its own. where things start to get tricky is where the state depends on federal funding. one of the things that state lawmakers are most concerned about our immigration, with the threat of deportations and health care. on health care, they face a little bit of a jam. have a big enough market that
there would certainly be interest from insurers in doing calcare, if you want to do a statewide version of obamacare. the problem is funding. california depends on the federal government, they depend on the federal government for billions of dollars in funding to subsidize the insurance policies under obamacare and the medicaid expansion. if th were to get ridf the program in washington, california would have to find a way to pay for that and the other way to do that would be to dramatically raise taxes. it's possible to voters in california would be fine with that. the truth is, they would be taxes cut once that program goes away federally. there could be a way to preserve a california version of public health care like we see under obamacare. the other big dimension of programs they are concerned about is the treatment of undocumented immigrants. california has been way out nott, the lapd chief has
gone along even under the obama administration, with efforts to deport criminal immigrants and he stood up on monday the 14th and said i don't care with the trumpet missed ration does, it is not up to my guys in the lapd to be involved with federal deportation policies. we will not help the federal government to poor people. you can checkd: out her story in the latest lumber business week -- in bloomberg businessweek. cecchini coming up next, discussing all three major averages topping previous intraday highs. this is bloomberg. ♪
scarlet: all three major u.s. indexes hitting all-time highs. when optimism for donald trump's economic scams are fueling these schemes. and hopes for an opec agreement. another busy day at trump towers. newt gingrich, rick perry from texas and well as businessmen in the marble lobby. i we getting closer to cabin appointments -- cabinet appointments? tumbling corn prices and supply rising. what will president-elect trump's policies mean for agriculture? markets closing two hours, a record-breaking day. throughman will take us
. juliewe've already seen this happen of the last week or so. record breakers across the board, even as we see lower volume today. compared with that we have seen for the 30 day average, about 15% below that average for the s&p 500. alldow, the s&p, the nasdaq at record on intraday and closing basis today as we continue to see stocks power higher in the wake of the election on speculation about what the new administration's policies are going to mean for corporate america. one of the groups that has been lagging since the election have been technology. today, as a group, it has now erased its losses since the election. if you look at the individual components, you have facebook and apple and paypal, just a few of the large cap text companies -- tech companies that are rising. but small all caps have really been where a lot of action has been over the past couple of weeks. russell 2000e
versus the s&p 500. the russell is at a record today, at its outperformance versus the s&p since the election is remarkable. it's up about 10%, 10.4% versus in less than 3% gain for the s&p 500. the gap has been notable here in terms of that outperformance as people have been pouring money into small caps as they are seen as benefiting the most from the new at administration's policies, particularly those that are domestically oriented. we also have some small cap deal today in particular to talk about that are helping these stocks. being acquired by burrell of australia for $1.8 billion in cash. symantec buying lifelock for -- $2.3.3 million billion and applied micro service -- microcircuits selling to make on.
these are some of the performers within small caps. everything isnot a winner. we're looking at the imagery industry, with energy transfer partners selling itself to sunoco logistics partners for $21.3 billion. kelsey worn controls both of these companies under the umbrella of energy transfer equity's. essentially, it's to companies that are under the same umbrella now combining. in this situation, both of these stocks are trading lower. amanda: thanks, julie. time to check in on bloomberg first word news, mark crumpton has more from the newsroom. scott brown says leading veteran affairs is the toughest job in the cabinet. brown indicated he is under consideration to leave the embattled agency after meeting with president-elect trump. mr. trump also met with oklahoma governor mary fallin, she says she has not been offered a post in the administration. the president-elect transitions
thanksys he will spend giving tomorrow lago in florida. he could depart as early as tuesday. it's unclear how long mr. trump plans to stay in florida. vice president elect mike pence is spending the holiday in mississippi, where his son lives. one of the closest aides to brazilian president has come under pressure to resign over allegations of influence peddling. it could potentially disrupt the approval of crucial austerity measures in the brazilian congress. opposition leaders are demanding the immediate dismissal, just as the president needs all the political support he can achieve to approve a controversial bill to cap government spending. the united nations to manage arian chief says conditions in held aleppo have gone from quote terrible to terrifying, and now barely survivable. stephen o'brien told the un security council that food is scarce with prices getting higher and higher.
fuel and gas for cooking are reportedly unavailable in most neighborhoods. global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am mark crumpton, this is bloomberg. amanda: of course, as we've been talking about, u.s. stocks hitting record highs as donald trump's election is fueling optimism and his plans could benefit industries that are geared towards economic growth. the russell 2000 rose for a 12 day, the longest rally since 2003. our next guest says all caps will benefit from president-elect trump's policies more than large cap's, but even so, the recent earth shattering outperformance of the russell 2000 is not justified. is at cantori fitzgerald. great to have you here. you think the cyclical's make sense but this is overdone. why do you think this is is overdone?
about fivei: standard deviations on the russell versus the s&p. just based on the extent. i also think generally speaking, a correlation between small caps on large cap's tends to be greater than people think. or see these dislocations divergences that last for a time, but at the end of the day, if the dollar remained strong, which was our call for this year -- of the dollar remains strong and s&p earnings suffer, the russell will correlate to the s&p, both because of the impact of the value change and also because when risk is off, risk is off. scarlet: to what extent the narrative of donald trump presidency bringing more domestic projectionist policies and w thatould benefit smaller cap companies. i wonder if that narrative has its own appeal, or if it's cropping up because of rice action -- price action? mr. cecchini: there's always that feedback loop. this equation of whether the
tail wags the dog or not. with emerging markets, is the same dynamic, developer rates have risen. all of a sudden, the emperor has no clothes. that's the fundamentals, they haven't improved much this year. in our case, for example, we got a call for him wrong this year until recently. we got the fundamental part of a right, but we got the asset price part of the wrong because of an under appreciation of how much negative rates would affect capital flows into emerging markets. are making ayou call on emerging markets that says yes, we got it wrong. you are saying that rally is also done. you might change your outlook on that. mr. cecchini: we are struggling with this. we were ahead of the e.m. selloff. it actually held up for about a week, even as rates started to creep up. we don't think rates in the long into the u.s. curve specifically have crept up solely because of this trump growth and inflation narrative. there are other reasons that we don't have time to talk about.
but it held up for a little while it has sold off. they are probably caught up for the cola relation to the two-year yield, which is what we look at. now we are waiting to see what happens. we'll yields continue to rise or will they not? if they do not, ian might be ok? . scarlet: there's a sense that the fed will have to move come december. this is the world was a straight probability. if you look at ois, we're basing off here. rate0 6% odds of a increase. if you look at fed funds futures, this is remarkable. 100%. that gets your attention. we are looking for a rate hike in december. what about 2017? people are talking about three rate increases in 2017. that'schini: i think highly unlikely. this is a question of whether the narrative is feeding the markets or the markets are feeding the narrative. in 1980, president reagan, what was his slogan?
let's make america great again. yet what happens to the market on the president's election? .hey rally to new highs the next month, they were off 15% to 20%. but a transition in this case, here's were the analogy dies. transition for monetary to fiscal policy is much harder than people think it is. and the impact of fiscal policy tend to be less efficient as a dollar spent usually doesn't resort to the dollar earned. scarlet: there's all kinds of extra maladies that come into play. globally as well as domestically. going back to markets and focusing on debt. one look at the outflows in debt , think we can go inside the terminal and take a look at that. this is pretty significant bearish view. also feel back citations about trump and where rates go. is their opportunity here? it continues to depend on what we think is going to happen to rates in the u.s.. if i'm correct and they don't --
let's talk in terms of the 10 year. don't gonure rates above 2.5%, the two-year doesn't 1.5%, it might be ok. except that the fundamentals haven't been there. they've been overvalued for a long time, relative to the fundamentals, simple because of capital flows. this for a with little tactical trade, but i'm still very cautious from a fundamental perspective. go.da: i get the risk of in terms of all the reasons to be skeptical, they are all driven by the united states. what about what happens fundamentally within those countries? the central banks of india and malaysia coming in and supporting the currency because of the extraordinary weakness compared to the dollar. does that have an effect on what happens with their assets? mr. cecchini: certainly. scarlet: what does it just love the dissent -- or does it just
slow the dissent? mr. cecchini: it just slows the descent. india's economy is small on a relative basis. it's affected the most by the capital outflows the most quickly. that's also a function of the fact that they don't have that many capital controls in place relative to other developing economies. i think it's very hard for them to fix the problem when there is this massive tidal wave of higher developed market rates very unless there's some sort of innovation or idiosyncratic event happening that spurs growth and productivity in those companies. scarlet: it isn't just the russell 2000 that scene this run. lots of optimism fueled by the says that fiscal support is coming. is it over done? mr. cecchini: i think so with the s&p about 20 times. the russell, you practically can't measure with earnings are on the russell. you get almost infinite
multiple. so yes, i think it's a bit overdone here. i don't mind being long u.s. equities at least through -- into the fed hike. i do think the fed hike is e thing to watch. i happened to be heren the day that the e-mail scandal was marie unearthed -- was re-unearthed. and i said the election matters, but when the election happens, vol is going to come out of the market and we look at what happens with the fed in december. that is real. scarlet: everything else is perception of people speculating. mr. cecchini: perception matters, but the fed increase is real. scarlet: peter cucina, joining us from cato fitzgerald. amanda: we take a look at some of the technical trends driving stocks to all-time highs. is a five-year chart of the s&p. this is bloomberg.
scarlet: this is "bloomberg markets." i'm scarlet fu. amanda: i'm amanda lang. here's abigail doolittle. do have the dow and this of the hundred and nasdaq all at record highs as the intraday and closing basis. very important according to the head of technical analysis at oppenheimer is the fact that his record highs are coming on a concurrent fashion. suggests that more strength is ahead. as for what got us here, they recall going into the election,
there was a bit of a pullback for the u.s. major averages trade from a sector standpoint, looking at the financials, industrials, and materials as top sectors. today on the strength we've had technology trade higher for the first time since the election. ahead, according to katie stockton ibt ig, she does believe that if we can 2194 concurrently, the eye is on the target set back in july of 2400. amanda: thanks, abigail. more "bloomberg markets," after this.
man deep singh is with bloomberg intelligence, and follows symantec in those companies in the space. this deal, buys lifelock, $2.3 billion. lifelock was a bunch of companies that were pursuing lifelock. why is it such an interesting company and why do so many companies want to buy it? mandeep: security right now is a very fragmented space. there are a lot of point solution guides to give you one product, one service, and you use them and basically you have to deal with hundreds of vendors. over time, your environment is very fragmented. as the biggest security company out there, symantec to be the consolidator. that's what they are doing. they bought bluecoat to prop up the enterprise segment and now they bought lifelock to prop up their consumer segment. they got out of storage. cory: it's interesting to see
them go back towards they can -- the consumer segment. one that she was one they seemed to be getting out of. i'm trying to make sense of what the corporate direction is, when it looked like they were going all in on enterprise. mandeep: there are two reasons they did this, one is for subtraction revenue that lifelock cap. symantec is trying to move from a licensed to us of scripture model and with lifelock, they get that steady recurring subscription stream that is so essential for every software company right now. the other is a strategic. their flagship product is bleeding. they say, they are trying to revive it, but it's been suffering from declining sales. this is a good way to make up the numbers. the consumer segment is forecast to grow from low to mid single digits going forward with this acquisition. carol: does it have to continue doing other requisitions to continue to build out the portfolio and get even bigger?
it such as -- it is such a fragmented space. do they have to be all in? mandeep: they are all in. they don't see any future acquisitions, it could be small acquisitions. but given their debt situation and the s&p just put out a note that their debt to be downgraded to junk. i think they're right on the precipice. debt,an't issue anymore that would restrict them from pursuing any large deals at this point. cory: to your point, they can be the aggregator because they are out of steam. they exhausted any sort of sources of cash for them to does anyone else want to be the aggregator? mandeep: there are a couple of high-growth names insecurity. palo alto networks, fortinet, checkpoint is not high-growth anymore. but these guys have the balance sheet and they can go out and
pursue big deals. there are plenty of names insecurity that are right for getting acquired because their sales growth is just tapering and they are not profitable. carol: is it going to be industry where there are a few very big players? littleton in the end of that way or will it continue to be some extent a fragmented market? like any others cycle. and technology uc time and again whenever there is disruption, there are a lot of small players that grow very fast. ultimately, there's consolidation. as is going to play out exactly the same way. we've gone through an entire paradigm shift when it comes to the new type of security attacks and so all these new companies which came up and did very well initially and now they're going to get acquired. palo alto networks is the real winner here in terms of rising from a smaller company to become a $1 billion plus company. they could be the next consolidator. cory: talk about the valuation for lifelock.
how does it compare to other companies? mandeep: lifelock was acquired at about four times to sales. given how much symantec paid for bluecoat, which was seven times, as was a much better multiple. isn'ter security segment going to grow as fast as enterprise security. we bluecoat, the expectation is they are going to grow much faster rate that segment is going to grow much faster. this was in line with the median multiple for security deals that we have seen so far. carol: what is the risk to this? mandeep: there is integration risk. right now they are thinking they're going to operate these companies independently, both bluecoat and lifelock. carol: that doesn't always work. energy is in cost in terms of cutting costs and building operating leverage over time. they didn't talk about product synergies, so that worries me a little bit. cory: it also makes you look at
the mcafee spent out from intel in a different light, knowing that symantec is out of cash to be acquiring. bedeep: that could very will the case. but at least they are all in insecurities. by devasting veritas, they have shown they are committed to just being a pure play security company. carol: if you look at symantec, that stock is been boosted of about 5% or so. investors think it's a smart move. they're fixing the flagging consumer security segment. that was a drag. after the bluecoat deal, it was fairly obvious they needed something to stop the bleeding on the consumer side. i think this does, at least in terms of the numbers and sales growth. singh -- mandeep singh, back to you. scarlet: you can catch more of carol and corey's radio
interviews online. now time for the bloomberg business flash. we look at some of the biggest business stories in the news right now. the nation top derivatives regular try to push ahead with controversial rules the clampdown on traders before donald trump takes office. that's according to people familiar with the matter. timothy messe recently gave his latest plan the caps on number of contracts a trader can have to the commodities trading commission's other two members. it appears the is trying to schedule a vote before president obama leaves office. anthem, cigna, and the u.s. government offered a federal judge widely different views of the impact of their proposed $40 billion merger would have on health insurance markets. the combination is the biggest and most complex in the industry's history. government attorneys say would harm consumers in at least 60 markets. the companies argue they will be able to negotiate lower rates that will then be passed on to consumers. businessit, the
process outsourcing company is being spun off from xerox is cutting the size of its bond offering and boosting rates after failing to attract enough buyers. that's according to people familiar with the matter. conduit/the plan failed to $500 million to $750 million. and that is your business flash update. amanda: kellyanne conway of the trump campaign is speaking. let's have a listen. ms.,: very successful. -- ms. conway: very successful. you asked people how long you are going to play golf into the transition? a suggesting he is doing something illegal? i already said he is not, but the resumption is that he is. is.he presumption that he if you operate from a presumption of illegality, it's going to be tough to answer the question. it sounds like you are operating under the presumption that he is doing something wrong. >> [inaudible]
ms. conway: i don't believe they have spoken today. >> [inaudible] ms. conway: that was not addressed. they both recognize they had a rough-and-tumble campaign. a week before that, president-elect trump had great practice in meeting with president obama. they had exchanged barbs on the campaign trail days earlier. agrees that everybody that they love this country and they want to help the people transition into the next and administration. >> [inaudible] ms. conway: and backgrounds and experience. talking about diversity, he has met with women and people of color this past weekend. he met with them here and in bedminster. i have been present at both of those. he is very heartened untouched by the number of people and
diversity including people from across the aisle. people who are traditionally more democratic and progressive, coming together and wanted to offer him advice, and perhaps vie for a spot in the cabinet. it willing to give him counsel and willing to share experiences and have candid conversations about their views and their backgrounds. >> [inaudible] conway: his nominees so far have been qualified to do the job they are asked to do. it's said routinely, being typed right now. in addition to that or apart from that, the first criteria is that everyone be called by the people to do the job that they are asked to do. and secondly, that they support his agenda is. he's been very straightforward about the first 100 days. and thirdly, that they represent america. he is interviewing many different people, but you can't sacrifice the first criteria for the other ones. i was there when we are talking
about tim blackwell and bob johnson and the speaker of the house in oklahoma, the highest raking woman in the house of representatives for many years now, mother of three, good trivia. the first woman to give birth in congress three times. we talked to governor mary fallin today, the former labor secretary free years under george w. bush, korean-american who didn't speaking was when she got to this country. those are just at the top of my head with no notes. it's been dozens and dozens of people who represent all walks of life, both political parties, both genders, different sexual orientations, religion, it's been quite exciting. >> are you going to florida tomorrow or wednesday? when is he returning to new york and can we expect -- [inaudible] ms. conway: he is going tomorrow to have thanksgiving with his family. when shet to determine
is going to return. a lot going on. his appointment will come out when he is ready and not a moment sooner. these are big decisions and they should not be read. we are weeks and weeks and weeks ahead of president carter, president reagan, even president obama hadn't appointments by ths point, nor should he be subject to -- i don't think so. no. to be determined. none are scheduled now. >> [inaudible] can you talk about his relationship to his fellow billionaires? [inaudible] >> it is not a hindrance at all. he is the guy that gave way to forgotten manthe or forgotten woman. a lot of those who missed the electorate missed real america. he animated them and attracted them.
he's a successful businessman and billionaire in his own right so he understands what the success stories look like. he is happy to take their counsel as well. from allpeople economic factors. they will continue to advocate. and in a more official capacity. we know how it creates jobs. they understand the value of pursuing the american dream. they are talented and i'm sure got lucky at some point. it's a combination of the two. the are folks that understand tax policy by and large. immigration. all of the issues he brought up
before. issues that and 3% he brought to the four. you are relating to the donald trump message. thanks for sharing with us today. tomorrow, he will be with the new york times. and as invitations come through, we will be going through them and scheduling them. i'm all for it. blasio said that the city will be standing up for all new yorkers. >> fearful of what? anti-semitic
discussions, muslim registry. >> are you aware of what he has said about the muslim registry? look it up. you have to be fair and complete in the coverage. on his website, he has a policy to ban all muslims. >> anything else? conway sharing policies with the trump team, defending the credibility and diversity of the candidates. commodity markets are closing right now. >> 4748, the barrels up about 4% here.
there is optimism about an opec reduction plan. goldman sachs saying that is the based case scenario. so that has been pushing oil price higher. look at the timeline for what we have seen even as there has been a lot of talk. production has continued to go up. there was a decision not to act. oil production is still continuing to go up. the opec cut plan has now been talked about.
almost one million contracts. those have headed into november. more and more optimism appears to be creeping into the market here. onrlett: we will stay commodities here because to hope secure his victory, president-elect donald trump drew support from rural states and make -- major agricultural producers including iowa. top chicken producer and texas, the biggest cattle state. the bloomberg agriculture policy reporter has answers and joins us with charts to explain the tough times farmers may be
>> it is a heavily subsidized industry. >> they try to make their bottom lines workout. since the advent of genetically modified seeds, the cost has more than doubled. it doesn't make as much sense as it used to. fewer suppliers could push the prices up further. complain and the next farm bill is expected to begin with the next congress. >> we dramatically increase the
debate for ethanol use. talk to us a little bit here about what kind of policy we might anticipate. >> ethanol is the reason for the previous boom. that rise in the renewable fuel mandate. that flatline about three or , it drives all other commodity prices and agriculture, flatlining. we have more and more crop that doesn't know where to go. how do you deal with that? that is where ethanol came in. the political will for ethanol is no longer there. standard isn't going up and might be going down. had you get prices back up? scarlet: another farm bill
coming. you talk to the agricultural secretary. iowa,o-term governor in he had a lot to discuss. rural voters were very important. if you try to get rid of the renewable fuel standard, you will have a lot of opposition. and it is through whoever is controlling the white house or congress. >> thank you so much for
>> he is obviously going to take underlication consideration and i'm glad that he called. >> let's get the shortlist we are looking at right now. >> trump is talking to dozens of people for many spots on the administration. a lot of this stuff is unclear. we very much reflect the tone and tenor. he's going to govern the way he campaign. goes, it'shat post not clear who he's talking to.
again, theand over american veterans in his words, are being treated terribly. beyond that, there's a lot of speculation out there and it is far from clear who he's -- what he is ultimately going to do. will it bring a slightly different approach? >> we're definitely seeing a trend where the prominent figures that got behind trump early are getting hosted. the decisi he kes in terms
of what to do with his cabinet. he's talking to people like mitt romney who are staunchly opposed to that as well. my personal hunch is he's going to pick the people he's comfortable with. that is generally who he's been in the campaign. people who go with we trust. he has been talked about for possibly secretary of state. trumprly message is that is going to try to govern the way he campaigned. he has concerns about globalization. would share his view in favor of waterboarding. that is the trend we are seeing.
>> that is the approach is taken so far. mitt romney, john bolton, rudy giuliani, nikki haley. they don't seem to have a consistent approach to foreign policy? it is a pretty diverse group of people. mitt romney would be the third failed presidential candidate after hillary clinton and john kerry. it would be an interesting continuation of that trend. your point, there's not a whole lot of consistency in foreign-policy views of those figures. , knowing whateer we know, toward a more hawkish standpoint on things like iran and issues like the cuba
embargo. a much more -- i don't want to say isolationist, but less embracing of diplomatic engagement. unclear who trump is going to pick. it will have a big impact on how we conduct foreign policy. scarlet: still ahead, we will look to prevent a trump's potential finance picks. would longtime finance executives mean for wall street. this is bloomberg. ♪
have connections to wall street. .t is a new executive editor it congrats on the assignment. and joe weisenthal. here,e are talking about formerly at blackstone, a billionaire investor. we have -- what do we know about jonathan gray? arguably one of the most influential investors around the world and has built lack stone into the biggest of those types of players and private equity. also big in the real estate business and the likely person
to run blackstone someday. >> there is a certain logic to it. is there a sense that this is a kind of relief? that some of the overregulation they would say they've endured. >> there has been a lot of mixed it is the kind of wholesomeness of the policy but i suspect that there would be a lot of relief just having no name that has been particularly ideological. >> unlike over ross, i feel like we don't have a lot to really hang our hat on when it comes to the new chin -- mnuchin.
>> he did start his own investment firm and he is best known for his takeover of indymac bank. that is one thing that may have in common yet. in the long run, a very savvy investment in rescuing the financial sector. he has a very interesting background. with a big job on the campaign. outliersthere are coming out in full support of hillary clinton. joe: there were not a lot of finance people into trump.
so much of the wall street establishment essentially backed hillary clinton. she got more donations from the industry, but since he won, they are thrilled by him and they like the rising stock rises and all that. >> that is true. john gray's boss, tony james at blackstone has been a great counselor to president obama. it longtime republican advised residents -- president obama. >> the treasury will be .esponsible scarlet: one of the commonalities is that these are not just knowledgeable, they are active investors.
kellyanne conway, what about the yognificance of the billionaire? think the populous vote that -- him where he is >> it's a great question. muchll see how president-elect trump ultimately cares. a lot of the names we have seen parade through trump tower and -- >> being a billionaire did not hurt trump. scarlet: if he is a billionaire. we don't really know, do we? joe: calling himself a billionaire didn't hurt. scarlet: one thing missing is john paulson who has been an early trump supporter and has money at stake. he's been trying to get the rolesment to change its
and returning to shareholders. the guy whown as made his fortune on the misery and collapse of so many people might be a little on the nose for that one. >> he was strangely public. he was one of the guys that did a fireside chat with the new york economic club with donald trump. paulson is very much a behind-the-scenes sort of guy so even him sticking his head out this much is rare. it's hard to see him taking a public job. amanda: is this a good mix of people we are seeing? are these good relationships? >> covering wall street as we have, it is amazing how these guys find a way to work together
in some of thetrger circumstances. think about private equity and it can be on different sides of a transaction. the next day, collaborating on another one. it can be across the table tomorrow. scarlet: they all speak the same like which are ultimately pragmatic. see you in about half an hour. coming up next hour, oppenheimer funds will be joining us. is there no chance of hiking rates come december? this is bloomberg. ♪
markets. scarlet: we are live in bloomberg world headquarters for the next half hour, covering stories in washington and south africa. it is a record day for u.s. stock split the dow, nasdaq, and s&p breaking through to record highs. for cabinettings positions continue at trump tower. today's list includes scott brown, newt gingrich, and a host of news anchors. shopping begins in earnest. will people go to the model instead of shopping online? the ceo of the national council of shopping centers is here to answer that. we are one hour away to the close of trading on a record-breaking day. lots going on, lots driving this energy front and center. i should mention it is
not only the large caps making records, it is the russell 2000. up for eight straight sessions. we have not seen a streak like that for many years. all major averages are higher. we are not seeing huge gains, the nasdaq is the largest of the gains. we are seeing up three quarters of a percent rise in trading. that is also playing into what is going on. so is energy. not just energy but commodities. energy has standout -- energy stood out today. up on iran and iraq signaling and opec plan. optimism about infrastructure spending and the demand for copper, then it had a bit of a dip.
the energy index is the best performing group in the s&p 500. it is at its highest in 16 months, being powered by what is going on with oil prices. also we are seeing technology strong. the s&p 500 technology index has been one of the laggards in the election and as of today it has erased its postelection losses. -- andk and alpha bit alphabet are trading higher. the company has been exploring the idea of a live sports package to prime subscribers. people familiar with the situation are talking about discussions with the nfl, major league soccer, the nba. shares were already higher, they are hanging onto gains. the stock of fact we are seen from the story is on disney, which has been having some issues with espn in particular and demand for it from advertisers.
the stock is still down by three quarters of 1%, despite recovering some of those initial losses. scarlet: rate observations. he will keep an eye on those moves -- great observations, we will keep an eye on those moves. officials -- this -- this asnister prime minister theresa may looks to strengthen relations with the incoming u.s. president. mr. trump would be the guest of queen elizabeth and would stay at buckingham palace or one of her other locations, such as windsor castle. steve bannon will lead an effort to overhaul federal employment policies. the washington post says those changes include hiring freezes, ending automatic raises, changing union rules, d shrinking pensions. more than 300,000 people have cautious sixyria
year civil war. that is according to the world health organization, which says one point 5 million syrians have been injured with another 600 million -- which has said over -- president -- is under pressure to resign. the scandal could disrupt the approval of austerity measures in brazil's congress p the dismissal -- congress. global news 24 hours per day powered by 2600 journalists and analysts in over 120 countries. i am mark crumpton, this is bloomberg. comes to the it
developing world ahead of emerging markets fixed income at blackrock says you should pay attention to the three tees, transition, trump premium, and transaction cost. mark barton and vonnie quinn asked whether he would call for investors to take part in the great migration to emerging-market debt. guest: to take into your landscape is the context of the u.s., the fixed income and the dollar. both of them are very important variables for fixed market income. the dollar, under a trump premium, we don't know whether a dollar is going to fly to quality will continue to rally. .his is the main variable , idiosyncratic risk in politics. -- variable, idiosyncratic risk in politics.
basically ruling with congress, everything is going according to plan, this is what the market is buying today. so it will take three years before we see the implications and the results. a 3 a.m. tweet that might happen out of the blue that might derail the market. he may grow frustrated with things developing to slowly. -- developing too slowly. and finally we have noticed with emerging markets optimism that leaders tend to rebuild relationships with their own people. so they bypass congress. normally this happens through social media, where basically they have a base relationship and communication.
vonnie: with the countries you have to deal with, which one is extraordinarily related to the united states and which one can you -- a lot of them have seen difficulties in the last few months. i'm thinking brazil, for example. guest: this is very important when you look at the context for emerging markets. a -- emerging markets have a lot of the leaders have had to do their homework and make sure there is more managing restraint, especially with commodity exporters. is see fiscal policy important for commodity exporters because copper isn't going to grow, or you are not going to find copper in the u.s. like this. if you want to go ahead with the fiscal plans, you need to make sure you import commodities.
it may be difficult for manufacturers. if you compare the mexican story versus the brazil story, this is where you see a totally different picture. and the last time i sigh you i told you it was time to be selective. we were the bad guys of the bear market, commodity and oil forrters, and a good guy other markets. these are the guys that got a lot of crossover money but eventually the situation is -- going forward. vonnie: last weekend, plenty more central banks meeting -- plenty more central banks meeting this week. guest: i think central banks are in a situation where they are all about cutting rates to stimulate their own economy. driving are not in the
seat, they need to step back to understand where the dollar with respect to the currency, how much inflation do they import, what are the balances, is there coming back to the usc? -- to the u.s.? to dome going to have more if the situation deteriorates? some might step aside and give you the time. scarlet: that was the head of blackrock's fixed income markets. still ahead brick-and-mortar retailers as well as online retailers prepare for the battle on black friday. we speak with the international council of shopping centers ceo. this is bloomberg. ♪
♪ amanda: this is bloomberg markets. scarlet: it is time for the bloomberg business flash pit printer he goes governor is challenging the control board to pull its territory ouof the economic crisis. he will not submit an amended fiscal plan. austerity measures will only worsen the crisis. -- for final round of negotiations. according to people familiar, the two bidders gained an edge because they have technical expertise in the system. and ups is developing apps that help customers with simple requests and may someday enable
them to track packages using voice command. ups offered a chat box interactive feature on the facebook messenger app, skype, and alexa system earlier this month. artificiales intelligence to interact with its customers. amanda: the holiday shopping season kicks into high gear and the competition between online retailers and brick and mortar stores is fierce. our next guest sees value in both strategies. he is the ceo of the international council of shopping centers, and he's out with a survey. is this going to be a strong black friday and thanksgiving day sales weekend? guest: it is. broader, awill be a very strong holiday shopping season. our forecast is 3.3% growth. real trendioned, the in shopping, although 90% of all
retail transactions happen in a theical store, i think integration of technology and the physical shopping experience will continue and accelerate through the omni channel retailer. i'm wondering why more shopping centers are stayin closed on things giving holiday versus last year. is that because people have the option to shop online on their tablets and phones? and the demand wasn't there to go to the stores? tom: the preponderance are still open on thanksgiving. it's more reaction to the community itself. i don't think it is a reaction to traffic at all. i think it is an accommodation to employees and local communities they are offering. demise of did see the the shopping mall for a long time.
but the trend is clearly to that online experience. are your business associations using technology to bridge over that loss of potential traffic? tom: i think winning retailers in the new world, omni channel will offer a seamless experience online as well as the physical location. they can also offer great customer service. the way they treat you when they are there, whether that is the integration of technology in the shopping experience, whether that is using a robust application that allows you to do the right around of -- right amount of research. i do want to set the stage because we talk about e-commerce to the retailer. while it has experienced robust growth, if you just look at amazon, which is obviously the largest e-commerce retailer, it
is $100 billion. is stillentage it quite small. we sat down with the u.s. census bureau and disaggregated retail sales. look at true online only retailers, they are only 3.5% of retail sales. there are a lot of things mixed into that number. more importantly, to the extent there is on live sales -- online sales, if you look at most of the data, if a physical retailer closes a store generally that is negative to their online sales as well. the synergy that exists between online and physical is important. i wonder though, this year, what is the new new? we have heard similar discussions on how omni channel needs to be more integrated.
amanda and i were talking about maybe there should be loyalty points and your car will be parked for you. that kind of service begins the moment you end up at a shopping mall as opposed to when you end up in that store. tom: i think there are a lot of malls and retailers offering loyalty programs. i think valet service, not so but valet parking but at the curb -- 40% of the folks who buy things online over the holiday season will actually go to a store to pick it up. that aboutindicated 70% of those folks who walk into a store to pick up something they bought online will buy something else. and aaks to integration pull through opportunity. commercial real estate has been at the top of the list for a lot of pension funds. re: some of your members -- are
some of your member seeing the benefit of that? tom: i think the industry is quite strong. if you look at occupancy rates, they are in the mid-90%. i do think you see a healthy industry that has rising rates that make it attractive to investors. scarlet: what does it mean for the big marquee locations? whether it is bloomingdale on lexington? tom: it is a fiercely competitive industry and business. i think you will always see winners and losers, whether it is from a location or individual retailer standpoint. people have been talking about the demise of physical retail for generations and it is still alive and kicking. i hope you would invite me back in.
drop is going to be sustained. market moving events that are coming up that i know you are watching. we have been talking about opec, the meeting coming up on november 30. how are you gaming out something like that and its ability to increase volatility? guest: right now the market is , that isbout a 6% move etf that tracks on the bti crude features. crude oil and equities have decoupled a little bit. late 2015 every bit was focused on this relationship. that has he coupled a little bit. bit.s decoupled a little that is one of the events on the calendar we are looking for. italian referendum is potentially going to be a big event. just given the wave of populist
type movement that we have seen in the u.k. and the u.s., it could be some thing to watch out for. julie: the past populist victories, the trumped victory as well as the brexit vote, they have cost some unexpected market reactions. when you are trying to game out the italian referendum, how do you anticipate what the movements could be? guest: unfortunately i can't anticipate -- julie: do you prepare for a bunch of different eventualities? guest: we look where themarkets in pricing in currently. a couple of months before the election people were assuming hillary has got this in the bag. it wasn't until a couple of days before the election the market was getting worried about it. you could see the same thing in the italian referendum.
we could very well see that risk premium going dead as we get closer to the event. julie: at the last big event is a december meeting. you have universal pricing in of te increases. what strategy do you take in order to try to anticipate them? guest: we try to look for hedges that are not going to cost us too much and are going to capture these three events. right now we can take advantage of the shape of the fixed term structure. futures arem vix trading -- saying we are coming off of thanksgiving, we have winter holidays coming up. but we have the first few months of the trump administration and uncertainty going forward. the trade i'm looking at is the x december options.
julie: how is it structured here? it is potentially a bullish call. guest: i like to think of this as a hedge. when you do hedges you don't expect to make money, you are trying not to lose too much money. what we are doing is we are selling a put on the vix. the 19 .7 call spread. -- the 19-27 call spread. the idea is it doesn't .ost you anything is likely do you think it that we will see a spike in volatility from either one of these events or something else? guest: it's pretty unlikely. but the thing is people do have to be hedged and we will see a huge flow.
we like being prepared. even though the elections, we ended up rallying on the unexpected outcome of the elections, you generally want to be prepared so you are not like in the commercial, sitting there at dinnertime selling s&p features. prepared so you are not doing it during dinner. julie: thank you so much. scarlet thing still ahead, global strategists will join us at 4 p.m. eastern time to discuss the fed, the strong dollar, and what is going on in europe. we are keeping a close eye on the markets. ager indexes at record highs. -- major indexes at record highs. ♪ wow, x1 has netflix?
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-- mr. trump also met with obama governor mary fallin. she says she has not been offered a post in the incoming administration but she has been mentioned as a possible secretary of the department of the interior. in chicago, hundreds of workers at o'hare international airport arguing their strike until after the thanksgiving holiday. they say they want the public support and do not want to mess up anyone's holiday plans. the group, including baggage handler, cabin cleaners and janitors, plans to the picket lines november 29. the want union rights and a 59 -- $15 hourly wage. they're leaving the country but they are not heading for the united states, they're going to chile.