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tv   Bloomberg Markets European Close  Bloomberg  November 28, 2016 11:00am-12:01pm EST

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>> we will take you from washington to london and cover stories out of paris, wall street, in vienna in the next hour. here's what we're watching. the impact of brexit would be less hard than anticipated. while mario draghi adds the euro area will vote with resilience. more on brexit this hour from the eu trade minister. crude oil trading above $47 a barrel. iraq must decide to cooperate with opec this week. they had to -- we had to vienna for an update -- head to vienna with an update. six incomer from strategist on if there's any end
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in sight. wherehave a look at european equities are trading right now. just under 30 minutes to the close. what was the longest-running weekly gain since july, three weeks for the stoxx 600 has come to an end. we are seeing losses pretty much across the board. greece down more than 3%. down one point 8%. we are seeing the euro stoxx 50 down, germany's dax down as well. sterling has dipped below 124 today. down 5/10 of a percent on the pound. in fixed income markets it was a good 10 year yields the german 10 year yield down five basis points. we see yields move down in the core in france and germany if we look at the bond market. a lot of movement in commodities as well. i will get to oil in just a moment. we are seeing that rally in
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metals, too. look at italian banks. this one of the recent we are seeing the stoxx 600 fall over all because of the weight of what is happening with italian banks. the index is heading for its lowest level in more than three months. to abouting its drop 15%. as many as eight italian banks risk failing if they lose the referendum. we're gearing up for that spread between italian and german government bond yields as well whitening set for the highest may of 2014. the stoxx 600 overall is down about .9%. financials ofthat the worst performers. energy stocks are down 1.3% despite the rally we're seeing right now in oil prices and also
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seeing material stocks not performing too well either despite the rally in metals. speaking of oil, here is wti and brent, just below $47 a barrel at the moment. we have seen oil reversed earlier losses as iraq pledged to cooperate with opec. an agreement that is except will to all, we have been seeing oil rebound on that. re followingcks a the declines you just mentioned. we have the dow, s&p 500, and nasdaq all lower. for the first time in five days. we saw lots of new record highs, &p, anday the dow, s nasdaq often is at record highs. the small-cap index up sharply on this month.
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today, it is actually lower for since november 3. that is perhaps endangering a 15 day winning streak, the longest since february of 1996. shares of at time, the iconic magazine publisher are higher on a report that the board did reject an $18 per share from edgar brongmfman. another stock trading higher is going on aechnology, path to get the stock to 80 or $90 per share. elliott management is one of the top shareholders in cognizant. we also have southwestern energy trading higher. gas upsidea cheap potential. we're seeing a modest safety
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modest the selloff in stocks. higher,gold trading about half a percent higher. in the u.s. dollar versus the yen trading down on some modest a strength in the yen, one of the true safe havens out there. >> thank you for that, let's check in on the bloomberg first world -- word news. active shooter situation at the ohio state campus in columbus. the far department says seven people have been taken to the hospital. two are described in stable condition. ohio state has almost 60,000 students on its main campus. donald trump is now considering retired army general david petraeus to be secretary of state. according to a senior transition official, trump will meet with
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petraeus today. he was the director of the cia but resigned after revealing he shared classified documents will having an extramarital affair. an accused of killing nine black permission is at a south carolina church will act as his own attorney. dylann roof's decision came against his lawyers advice. the judge said he would reluctantly accept the decision. world gdpzation said will expand, that is the fastest pace in five years. chiefke to the oecd's economist. increased our global growth path for 16 and 17 based on fiscal stimulus not only in
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the united states, or expected therefore 2017 and 2018, but also ongoing fiscal stimulus in china. it is not just donald trump, but more broadly speaking the larger economies. >> for the lsast five years, she says the global economy has been in a low growth trap. global news 24 hours a day powered by more than 2600 journalists in more than 120 countries. this is bloomberg. nejra: thank you so much was an oil futures are on the move higher today as opec ministers begin to gather in vienna. they're say they will cooperate ish a productive -- iraq saying they will cooperate with a production cut. we have seen oil reversed earlier losses on those comments from iraq's minister. is a deal anymore likely at all? >> well, too soon to tell for certain. we saw oil trading lower this morning we heard from the saudi that they were
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really dialing down the position. once the iraqis spoke we did see that reaction. quite choppy trading in crude. we spoke when he arrived, take a listen. >> we will deal with opec. opec.l cooperate with >> that is the iraqi oil whicher, quite a scrum, is typical for an opec meeting. we did ask him well iraq cut, and he did not answer. that is where things become complicated. algiers is about finding consensus, this meeting in vienna is about deciding who will bear the brunt of these costs. saudi arabia is making it clear they will not do it alone. upn and iraq need to step
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and cut as well. so far, we don't have any of those details. the devil is certainly in the detail on those. what about a side meeting than the supposed to be taking place in moscow? it is the northern nations that are important to this as well. >> that is right. this is a diplomatic venture by two oil ministers, the venezuelan and the algerian oil minister heading to moscow to meet with the russian oil minister. they will map out the opec plan with him. the algerian -- venezuelan oil minister said that opec and a together.ust work again, opec has said to nonmembers they would like to do cut 600,000 barrels a day. but russia has time and time again said they are not willing to do a cut, only a freeze.
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it is interesting to see how russia is going to respond. will they say we will only do a freeze, or will they buckle down and do a cut as well? it will be interesting see what comes out of that moscow meeting. also, arriving tomorrow is the saudi oil minister. oilukrainian -- iranian minister, two very important delegate in terms of getting a deal on wednesday. nejra: i like him will check back with you for updates throughout the day. for more now on the impact of this week's opec meeting let's bring in the global oil economist for credit suisse. you have been following opec and non-opec ministers for the longest time. what is your instinct? does the outcome give us an agreement this week? >> there really should be a deal. it is in everyone's interest. opec would be of
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better off if they can ratchet up the oil price one way or another. the interests are aligned. that is normally a bit of a struggle. - we saw them agree on something back in september. it is really just between saudi arabia and iran, they have to agree on the way forward. i think that comes down to the to what being agreed the saudi's to do. vonnie: ultimately, is it in both of their interests to agree to the deal? doesn't this give the light of the u.s. more leverage over what the u.s. does ultimately hurting the likes of iran and saudi arabia? jan: the bigger existential question, that was answered to
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an a half years ago. this is going to be a deal not forever. this will not be the saudis going back to a swing producer role. shorteningy about the rebalance that is already going on. oilhe words of the saudi's, inventories have begun to decline. we can now hasten that decline. that is all that it is. that is really all there is to this deal. this is not about balancing markets in 2022. run. the shorter >> when we talk about the devil in the details i suppose what we mean is there some specificity on how much each membership cut. i have a chart here, oil etf idexx simply what it shows is that we have that record output
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was the initial lack of detail tha t really increased volatility. do you think the output and agreement that doesn't actually focus on the detail might increase volatility? purchasing opec members will want to avoid that? dealat was that algiers except for a headline without any kind of specific detail and volatility? so now, you need to get down to details. how much are the gcc members of opec going to cut? if they are going to cut something meaningful, between the four of them, then that will have an impact most of everything else is frankly peripheral.
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marketst quarter oil takes 2000 barrels a day off the market. >> how peripheral is the impact of non-opec nations. non-opec production actually outpacing opec production. we might get an agreement in vienna but how much does it matter if russia doesn't agree to cut rather than freeze? , thathe non-opec part would be icing on the cake. we are at today's meetings between opec delegations were canceled last thursday is because they want able to fix the cake just yet. so bake that cake. the rigly, you can see count is at the highest in
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several months, and continuing to rise. do we see many more bankruptcies or is the bottom in? jan: the short answer to the output is higher. we have routinely and consistently underestimated what the industry is capable of. that is up where it matters. up in the horizontal oil. that beforeof know too long sequentially already oil production in western texas is rising. other declines the to be overcome but the early part of next here in march and april u.s. oil production will already be on the move.
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shareill the longer run production growth with texas. from the perspective you're already questioning if it is the longer run. is it in all an opec's interest to be doing anything to interfere with this market? be that yes, would the short run it is probably not a bad idea. 20t that means for 18, 19, and their point of you are from the perspective that is probably different. .> thank you nejra: coming up, my interview with u.k. trade minister, what are the top trade priorities when it comes to brexit negotiations? ♪
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>> live from london, and new york. nejra: you are watching the european close. now, the is a government will make access to the single market a top priority in the upcoming brexit negotiations. earlier i spoke to the u.k. minister for trade. i spoke to him about brexit positioning for those formal talks begin. >> i think there is a lot of people coming in and out of london each day and other european capitals. admin up in negotiations but we are actually friendly partners. we still in the european union. it is important to be as little disruption as possible in this whole process. i think i am all in favor of talking. >> we could have a cliff edges scenario where after article 50
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is triggered and we haven't made the trade pact we need. are you concerned about this? right the to get future of the relationship between the european union and the united kingdom. both parties are dependent on this. u.k., 44% of our exports go to the eu. the european union runs a substantial trade surplus, 60 billion pounds a year with the u.k. i think it is strongly in the interest of both countries for there to be no new trade barriers in place where there currently aren't any. are havingow you formal talks with india. what sort of talks are you having with china? we're at the moment building capacity in the department for the uk's future outside the european union. we are talking with a large number of countries outside the european union, the possibility
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for trade and reducing and removing barriers. wey rightly point out that started discussions with india and australia and new zealand and others. i, personally will be going to china early in the new year. to talk to china about how we can do more to reduce barriers between the u.k. and china. we don't have to wait for free trade agreements. we can do a lot right now to engage on trade and making sure the barriers are reduced. nejra: what about how the issue of the union fit into this? the government is quite divided on the question of remaining in the customs union. where do you stand on this? don't think the government is divided on them. they are try to work out what is the best negotiating position going forward. and having a discussion about that that is not the same thing. we're quite rightly taking time out to make sure that we have the right approach.
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think that the u.k. will need a single market? greg: what we have said is we want u.k. companies to maximum access to the single market would expect to offer the same in return for european companies. that is very important. we don't want to have a new trade barriers between the u.k. and the european union where there are none today. that is very, very important going forward. so much arbitrate going both ways is dependent on it. nejra: can you give any kind of guarantee to businesses and investors on with the u.k. will stand in terms of trade deals? certainly if you look at financial market in sterling for example it seems investors are really not convinced about the government's position and are concerned about the risks of a hard brexit. with them.'t agree
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theresa may has been absolutely clear that she wants the u.k. to remain the most passionate and convincing and compelling country arguing for free trade around the world. that is where i see the uk's future. is something passionate about free trade and having a fantastic trade future for this country. nejra: how do you think a doll trump presidency will change the u.k. trading relationship with the u.s.? greg: i think we have to wait and see. it is still in the early days. we will be watching closely to see what the signaling is on different trade agreements and him free trade in general. of course the occasion the u.s. of always enjoyed it very long-standing solid free trading relationship going back many decades. that u.k. and u.s. trade will remain strong. nejra: that was my interview with u.k. trade minister greg hands. we are counting down to the european close. ♪
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♪ >> from new york i am vonnie quinn. nejra: cap to get down to the european close we're five minutes away from the close of equity trading. but stick a look where european markets are right now. weeks of gains ending today. the stoxx 600 down 9/10 of a percent, we're seeing losses across the board. the is largely wearing on index over concerns of italian banks in particular. this is bloomberg. ♪
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at the gmn function on the bloomberg. down 9.4%.e one of the worst performers today. down 1.2% pay the stoxx 600 overall coming off three weeks of gains, the longest run of weekly gains since july. looking at the fx space, the euro unchanged at 1.0593. 1.2424. tenths of 1% at in fixed income, tracking what is happening with treasury. germany's 10 year yield down five basis points. after a victory in the republican primary in france.
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we are seeing the rally in metals continue. up 6.5%. multi-year highs in some of those. turning to italian banks, this is the ftse italian all share banks index, down more than 4%. heading for its lowest level in more than three months. taking its drop this year to a drop of about 50%. we have been seeing italian banks putting pressure on the stoxx 600 and the bitsy after it was reported as many as eight italian banks risk -- in the ftse after it was reported as many as eight italian banks risk closing if matteo renzi loses the election. moving onto the sector breakdown on the stoxx 600, you can see it 8/10 of 1%. some
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financial leading the losses, down 1.6 percent. perhaps more surprising is we see material and energy down, despite rally in metals and oil. to finish up on oil, you can see wti and brands -- brent reversing losses. this ad iraq has pledged to cooperate with opec -- this as iraq has pledged to cooperate with opec. vonnie: looking at cmm as it relates to the head states. it is taking another breather, with indices pretty much lower across the board. mainly what is dragging down things like the dow our health care stocks. of the idea that
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-- the canadian and australian and new zealand dollar are all stronger versus the u.s. dollar. modest currency commodity moves. speaking of which, all of the opec talks ongoing has the vti $47 perading over barrel. we'll will look -- we will look at treasuries in the second. let's look at some currencies. the bloomberg dollar index is down three times of 1%. that rally was overdone, the dollar overbought against many currencies. that is why you see the bloomberg dollar index down. one of those is the yen. it is stronger by about 9/10 of 1%. above 113 friday, and now it is back to 112. the central bank did not make a move, and it is below 14 again.
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the vix is below 14. is around0 year yield 2.4 at the moment. 1.11 on the two-year. that is your market check on the moment. the first wordon news. courtney donohoe has more. courtney: there has been a shooting at the university of ohio -- at ohio university. at least seven were taken to the hospital. one suspect is dead and authorities are searching for other possible suspects. in the french presidential election, former prime minister won the republican
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primacy. meanwhile, president francois hollande may face a challenge in his socialist party if he tries to run for reelection. the prime minister says he is ready to run. a group of writers lawmakers demands an agreement with great talks start.rexit a letter to the you president donald tusk, lawmakers say citizens should not be used as bargaining chips. the lead negotiator for the you says talks cannot -- for that you says talks cap -- for the e.u. says talks cannot start yet. a 73 story building will be located at one under shaft, a plot of land between the gerkin and the cheese grater in london.
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global news 24 hours a day, powered by our 2600 journalists and analysts in more than 120 countries. i am courtney donohoe. this is bloomberg. thanks. bond investors are signaling they are not quite convinced the worst is over. the 13.8 trillion dollar market suffered its biggest slump after donald trump's presidential win. for more, i want to bring in guy strategistf income at janney montgomery scott. great to have you. ,hat is interesting about this because we are focusing on the trump of that, but this actually started in august. -- because we are focusing on the trump affect, but this actually started in august. guy: well if you take a look at where we are trading the day of when markets closed election day, we were at 185 10 year
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yields. then it moved to a high of 2.4%. while the timing coincides with the election, i think it is optimistic to collect -- call it "caused" by the election. instead, we have a powerful market narrative that coincided with the election. nejra: you talk about this being about the re-flation story. what i want to talk about is how the dollar feeds into this. i have a chart showing the bloomberg dollar index and relative stress index showing it is not only in overboard territory, it has actually dropped below 70, showing a sell signal. how does the dollar strength play into your view of where
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inflation and the bond market go from here? guy: there is a puzzling contrast between a stronger dollar and higher inflation expectations. if you look at the economic numbers, a rise in the dollar takes the cpi down to tenths of 1%. they simultaneously have rising inflation expectations and a rapidly strengthening dollar -- it seems to be in conflict. at some time, that trend has two peter out -- has to peter out. when that dollar strength begins to peter out, i expect we see a little bit of a return to earth in terms of inflation expectations. if you look into my bloomberg, you can see we're only at 1.94%, which is a huge
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increase -- 30 plus basis points from where it was. but we are nowhere near where the 10 year yield is saying. what are you looking for in terms of inflation? guy: frankly, we do not have a good handle in a post financial theis world of all of factors that go into creating inflation. for whereuess inflation will be 12 months from now is right where it is today. within spitting distance of the 2% goal from the federal reserve. there is no fundamental indicators, despite the run-up in inflation expectations we have had in the last month. do we get a day -- do we get a very different kind of inflation depending on what kind of measures donald trump puts in place, assuming he can? for example, if we get tax cuts, does it look different to fiscal
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spending? guy: probably not. handle onhave a great the post financial crisis world as to what causes inflation globally. one of the things that could cause it is a gradual and persistent increase. they have not been persistent. another factor would be a permanent increase in the size of the monetary base in the federal reserve. with that tightening, that seems unlikely now. other factors may be fiscal stimulus. it does not seem that powerful a driver of inflation risk. nejra: i wonder what your view on europe is. in europe, low inflation is more of a problem than in the u.s. yet postelection, we have seen european bonds move pretty much
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in tandem with treasuries. do you think the selloff in europe will continue? i have spoken to a number of people who do not think it will. u.s.-based are a investor, so your liabilities are denominated in dollars, it does not make a lot of sense to go to europe unless as a currency play. and with not a lot of support, i do not think it is a great entry point. as a us-based investor. in terms of the absolute level of interest play, i expect the move has been a little too violent and fast, and we'll have snap-back which i expect will include burnout on the part of the ecb. labarre -- guy lebas, chief
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fix income strategist at janney montgomery scott. coming up, aberdeen asset ceo martin gilbert. this is bloomberg. ♪
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nejra: live from london and new york, i am nejra cehic with vonnie quinn. time now for the bloomberg business flash. a look at the biggest business stories in the news. job cuts on the way at standard charters investment banks. the bank will cut about 10% of its staff. it is part of a plan standard
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chartered announced last year. samsung is talking to investors about a proposal from paul singer to overhaul of the company. shareholders are unhappy with the status quo. singer's elliott management has proposed adding independent investors. moneyans to spend more investing in tech startups. bmw will invest as much as $530 million over the next 10 years. that is the latest business flash. sharesn asset management are trading higher after the fund manager reported earnings. outflows of $9
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billion in the fiscal fourth quarter. ceo martin gilbert spoke to tom keene and francine lacqua. martin: i think it is looking a lot better in the fourth quarter with more inflows into the emerging market products. while the president-elect may be good news for the u.s. market, it certainly has not been good news for emerging markets. people think he may be a protectionist president. it could be a buying opportunity. francine: is it a buying opportunity for you? martin: i hope so. he lowersthink, if taxes, people we'll feel good, spend more, and inevitably, that will benefit emerging markets. e: over time or will you see huge outflows in emerging markets if the hike feds in december? re-flating ofthis
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america? what happens to emerging markets in the next three to six months? martin: what we would expect to as is a slowing of inflows people wait and see. certainly, a lot of our clients who were positive on emerging markets have gone back to neutral. a lot of the private banks. is where i think we see the change. francine: how important is it to stick to your dividend in these times? martin: we are obviously very unchanged pay an dividend. but i think of the asset management industry has a lot of headwinds. more regulatory capital. fee-income pressure. the rise of passives. of these point towards more
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difficult times ahead for the industry. so i will not give any next year, but we will have a look and see how things go. you never know. emerging markets may recover hugely. francine: recover on the back of what? martin: well, i think they have had five horrible years. i think there is a lot of catching up to do. they are growing well. india is still doing well. china is growing reasonably. asean countries, latin american countries, they are doing pretty well. francine: on the call with investors and reporters, you said you would like a similar deal to janice henderson. are you looking to merge? martin: if we could find
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something like that. i said it was a very collaborative deal, because we all once more access to the u.s. market and -- because we all want more access to the u.s. market. i think it is a trend we will we've nothing really planned in the near future. francine: are you looking, and what is your ideal deal? would you acquire someone or is it a merger of equals? martin: well, acquisitions are always easier to integrate then mergers. but at this stage, as i say, we have to look at what is good for the business. and there are great opportunities. america has more than half the world's wealth. be more area we want to
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involved in. francine: so you look for an opportunity that gives you exposure to the united states, is that right? i think so. especially distribution in the u.s., we have always been keen for more of our product, more of our capabilities, to be bought by u.s. investors. so something that gives us that is where we -- but also the rest of the asset hedge fund industry is looking as well. we are not unique year. >> aberdeen asset management ceo martin gilbert. a little correction from us. we said shares were higher. they were initially at the start of trading, but we had a turnaround, and by the european closed 20 minutes ago, we were down almost 4% in aberdeen asset management. coming up, as opec ministers try
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to salvage a deal on production cuts, i have a chart on how oil companies are holding up. this is bloomberg. ♪
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>> time now for our global battle of charts. you can always see those charts chart libraryrg by referencing the number at the bottom of your screen. kicking things off is danny burger. think -- what i did is sort of the s&p 500 raised on the companies' effective tax rate. the returns were perfect based payinghighest tax rate companies, the blue line, versus
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the lowest one. and everyone in between. what is happening here is traders are betting these in the effectivehe highest tax rate as republicans common to congress, they will lower in the blue pay the highest effective tax rate. as republicans come into congress and the white house, they will lower the tax rate. and to emphasize how much of a change this is and how much this is driving it, year-to-date, all of these groups are anywhere .rom 10% to 11% not much dispersion. so really the trump election having an impact when you sort by tax. you can check out this chart at g #btv 5162. vonnie: it really gets to the
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question on people's mind -- equity. what do you have? nejra: looking at a particular class of equity investors, we have been talking a lot about the opec meeting coming up. i just want to show how much oil companies have writing on that opec decision. are theompanies second-best performer in the world this year. as we see the crude price recover from a 12 year low, oil and gas producers together have added $490 billion to their market value. the biggest gain in six years. it follows the rise we have seen in brent and wti. $850 billionws a loss last year. shell and bpows shares in particular.
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they are heading for their biggest annual increase since 1999. so oil bosses could be forgiven for hoping open members resolve their differences. thecan see my chart on bloomberg g #btv 5140. tough: this is a really one, particularly on a monday. typically, you would win it hands down, but today, i will becauseto dani berger, i think a lot of investors are wondering what the difference in corporate tax rates will mean for the s&p 500. ♪
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,l noon in new york, 5:00 p.m. in london. i am vonnie quinn. david: i am david gura. welcome to "bloomberg markets." ♪
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david: from bloomberg's world headquarters, here is what we are watching. mr.'s fly to moscow, and officials in vienna start more talks to try to salvage a deal on production cuts. and the president-elect alleges millions voted illegally. it is cyber monday, the biggest online shopping bonanza. we speak with the ceo of wayfair to see if trading will increase. for now, abigail doolittle joins us now. abigail: first down day in u.s. stocks in five days. this after the three major averages closed at record highs to the dow and the s&p 500 had been on a four-day streak of putting in record highs, the first


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