tv Whatd You Miss Bloomberg December 1, 2016 3:30pm-5:01pm EST
the support opens the country to extremist movements. he becomes the first president run for not to reelection. setting three sources close to the discussion. democrats is that he has not been contacted from trump team and has no plans to travel to new york. he has been a strong advocate for coal. president obama is set to speak for counterterrorism on tuesday in florida. it is likely the president's since leaving office in january. he will also meet with special operations forces. opec's members have reached an historic agreement to reduce oil production. they need non-opec
producers to follow suit. in an exclusive interview with bloomberg television, the secretary-general said the deal will be brokered to satisfy everyone's concerns. >> for the first time in the wetory of our collaboration, will have a joint agreement that is jointly binding. both opec and non-opec will ensure the compliance to the agreement. >> yesterday, opec agreed to curb production, pushing prices higher on speculation it will clear more quickly. in the civil aviation authority is definitely suspending permission to operate in the air space. this is after the deadly crash of one of its charter planes in columbia. the crash took more than 70
people, including members of a football team. a carrier was founded in venezuela in 2009 but operates in bolivia. news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. scarlet: i am scarlet fu. joe weisenthal. u.s. stocks falling from your all-time highs after equity caps advanced in four months. whatet: the question is, did you miss? the 30-year-old bull market in bonds looks to be ending with a bang. the yield saw its biggest monthly drops -- jump since 2009
near record lows. president-elect donald trump takes a victory lap symbolic of his surprise victory. indianapolis where he claims success at keeping manufacturing jobs at home. he says his country needs to focus inward after trump won the u.s. election. we will have these remarks later this hour. started with a look at the major indexes. we check in with abigail doolittle for more. -- abigail: the dow is trading nicely higher on pace for yet another record close. the nasdaq and the s&p 500 are both trading lower. 500, the nasdaq in the dow, some of these technology shares, microsoft, both trading lower for a second day in a row. under the radar screen selloff,
pretty interesting. some could reflect out of technology shares with investors taking money and reallocating into energy. plus financials. big strengthen the financial sector. jpmorgan and wells fargo trading higher. forbest performing sector the dow and the s&p 500, why the dow is at a record high. the 10 year yield issued a higher earlier today, up more than 10 basis points, and extraordinary move on the day, still up six basis points. indicating a bit more of the selloff in bonds and of course november was the worst selloff in bonds on record since 1990. $1.7 trillion came out on bonds. this,t chart to explore btv 5215. this is a long-term chart of a 10 year yield trading down in
verse to the full run in bonds. the question is what is ahead? we have 10 year yields trading at the top of the 10 year range, suggesting maybe the spike in yield is nearing an end. it could go up 2.65%, maybe even 3%. message may be that we will see the 10 year yield consolidating. there are risk events ahead including the italian referendum, fomc, the market the. data has been done, another reason to think the bond selloff could end. earlier today, a bloomberg , a technical and qualitative strategist, he said the last five times the 10 year yield has gone to six years and above, it has basically signaled a move back in the other direction as bonds rally, typically five months, which he timed to the march fomc meetings.
it will be interesting to see what is ahead. it looks like we may have the spike in yields cool off a little bit. an important chart. thank you, abigail doolittle. joe: let's get more insight into the bond market route and everything else with mark, bloomberg intelligence analyst. thank you for joining us here, usually based out of singapore. selloff is really the only story right now. the 10 year yield is calling the shots for the markets all around the world. warnigngs is morning -- it is going to far. jeff is skeptical about all of the moves getting too extreme. how do you think about things? >> the trump motivation for the rally, they are all saying, will trump deliver?
that is a valid point. i do not think the rally is only about trump. the move higher in commodities moved higher before the election. it reached as high until about a week ago. 20% in the previous two weeks and hovered around the same level. there is good news already before the election. people are waiting for that. scarlet: you can trace it back to late august. of thea consolidation gains we have seen in 10, 20 years? .> a genuine change we were seeing signs of wage inflation at ok levels. nothing is running away. awaynot see it running anytime soon. we see a rise in prices. we saw chinese prices stocks falling for the first time in a long while. manufacturing data started picking up before the election. october was the best month in
two years for global manufacturing. growth was there already. another really fresh round of data out today. solid european data, solid u.s. data, it looks like for the first time in a while, all of the regions are accelerating nicely. >> absolutely. say the move has gone too far, too quickly. it is important to remember where it comes from. he or head was looking terrible, this time last year. many of the moves might seem traumatic but this is more just normalization. is just if this normalization, pmi supports or justifies the move, what about the strong dollar? wouldn't that come back eventually? >> absolutely. it will be self-correcting at some point. at what level does it become self-correcting?
growth at some point, i do not think we are there yet though. a theme of this entire year has been political event risk. we had the brexit vote and people thought that would be a big deal and it was for a few days and then markets forgot about it. the election again, that lasted a few hours. this sunday, two big votes in europe. the main one people are talking about is the italian referendum and people are worried this would be the start of something big there. how are you thinking about this? >> it will be less of a shock. still some headline noise and reaction, but this is a long-running story. happen in thel next 24 hours after the referendum results. ben if it fails, will there early elections?
will they get a coalition majority? certain.ngs are not they will take a long time to play out. scarlet: what does that mean in terms of how the yen traits? the euro is moving south because of all of these concerns. there is just a strong an argument zero dollars driven by the dollar strength more than dollar weakness. thehe euro will be one of hardest ones to do it technical factors. and thatll break low might dominate some of the fundamental factors. you have got ecb next week, and if you get a little bit of a selloff, what might the ecb do in terms of buying and how will that impact the europe? i would say i do not see why any investor would go so italian asked -- assets aggressively. they have known for ages this would fail. it is not a new event and this is not the time of year to
aggressively trade that. scarlet: what happens if the italian referendum succeeds? bei do not think it will properly analyzed or properly understood. saying it might even be worse or who knows. completely unstudied because people expect it to fail. assets. rally and other how do you trade them? joe: we have two events coming up in the u.s. joss reports are coming out. data is strong and people expect that continuation. fed.later this month, the everyone expects the fed to hike. >> it always seemed to be too high and now we wonder whether that keeping up here for me, it is more like the evolution that is so interesting.
how is that slowly moving over time? i also think it is completely irrelevant. scarlet: back to the point, this is available here. of's take it back to march 2015. you can see how the trajectory has changed as the market and the fed move a little closer together. gif.at is like making a moving frame to frame. the green line matches with the blue line, showing a convergence for next year. >> will the plot shift higher again? if it does not, if the market gets ahead, the fed is behind the curve. i think they do not want to widen it again. they want the markets to converge. they do not want to risk the market getting ahead of them. joe: great to have you on the
in 1991, i was optimistic it was going to happen because if you remember in 1991, they needed to period.e expansion invest in theo telecom company and it looked clear that things can change. and it did not happen. i think one of the problems was between the u.s. and cuba, president clinton and fidel this action, do you remember? it changed everything. >> now that he is dead, do things change again? for example, telefonica solves wireless phones in cuba.
as we are interested for sure. but it is not open yet. >> no. cuba, venezuela. we are erik: everywhere in latino america. would you attend castro's's funeral? >> no. last time i was there was 2001. erik: it has been quite a while. >> like two or three years ago. as you know, now and then, people mention your name as a potential candidate for the mexico.cy of if donald trump can be president of the united states, why can't carlos? >> no. i think my vocation is
entrepreneur. in politics, things happen very slowly. is an election coming in this country in 2018. what do you want to hear from the people in that office? have is important that we a low in transparency and corruption. that is a point we need to solve. look atn interesting trump talking about that in washington. it is something that happened everywhere and should be eradicated everywhere. that is the main issue. the other thing is to have a mexico -- mexico has lost many opportunities.
in the last 30 years. the $150 of oil, the investment of many things that happened. investment. i like that trunk talked about freedom for infrastructure. years, the, many economy. creating a commission, the only job is to make that get and sell these rights, to have the money to make everything. now, we move past four
investments. we need economic activity everywhere. economic activity makes great jobs. where are you most interested in investing your money today? what is most attractive? >> we are interested in improving our countries. locationrking in that -- youongly in the areas cannot solve with philanthropy in poverty. many things around. the only way is with jobs.
that was carlos speaking to our own erik schatzker at the year ahead summit in mexico city. scarlet: let's get you to a look at the biggest business tourism in his right now. a contract approved that includes a 30% raise over four years. labor spending improved by $509 over the first year. it could also leave higher pilot wages at other airlines. buying cardinal commerce in a move to improve security for transactions. helping insurers authenticate purchases online. the acquisition will help the payments network improve security for connect devices like phones and wearable devices. the hit website for young startups looking to raise capital. a one-stop shop for entrepreneurs looking to keep up
the latest are getting together. a merger between two of the more popular sites in the silicon valley seen looks to make initial list the best to find products. that is your business flash update. up next, was opec puffy surprise agreement to cut output actually the real deal? why history officer -- offers reason for caution. ♪
excluding iraq, a white line, it has moved well above that. you can see how production has taken off even if the quota has remained the same, including the time when saudi arabia started to go with a market strategy first rather than i price strategy. evidence of compliance could at six dollars per barrel to the oil price forecast. jeffries says what you want to watch for his compliance by non-opec members, particularly russia which agreed to cut 300 barrels per day, which had excuses in case you can't get there, like technical issues. that is something you want to keep a close eye on. the question is whether you can stick at the details. we have been talking a lot about the bond treasury yields rising. on my screenp up but it does not matter. this is the bloomberg barclays aggregate index which goes back
to 1990. bond index,timate an incredible gold market. if we focus down on the corner right down here, the worst month in the entire history of the index was this november. 30 years of the index, which captured all of the bonds all around the world, it is the aggregate index. .his was the worst the huge question, was this just a tantrum like in 2014 or was -- it isstart of arguably the only question that matters right now in market. you have to get this right. an extraordinary month. look at 2013. it looks modest in comparison. the 2010, and 2008 as well. joe: exactly. it may just be a one-off.
from the closing bell, the dow jones closing at a record high, financial markets started the month with continued confidence in economic growth with treasuries -- the dollar near a decade high. ♪ i am scarlet fu. joe: i am joe weisenthal. you can watch our closing bell coverage on twitter every weekday from 4:00 to 5:00 p.m. eastern. scarlet: let's begin with the market minutes, the dow jones closing at yet another record high. the nasdaq decline which is interesting because the us you how industrials have them the star performers since the election of donald trump. big tex has flailed. gap has flailed. joe: it shows the gap between industrials and the financials in energy, the big caps and the tech. scarlet: the data today had been encouraging for the broader u.s. economy.
if you look at the breakdown of sectors, the nasdaq is the big loser. tech was a drag on it. the sector etf that tracks technology off by better than to present an apple declining on a report they reduce orders from iphone 7 suppliers in ibm and microsoft each down by 1.5%. among thepside, gainers, carmakers advanced after their november sales beat analyst estimates, gm with a 10% sales gain for november thanks to incentives. ford jumping the most in four years. giving back a little bit of their gains after yesterday's opec production cut deal. joe: let's look at government bonds. further selloffs and higher rates. 2.44% onthe two-year, the 10 year, both were higher earlier in the day. seeing an intense selloff, starting to freak people out as
economic data and expectations of inflation and stimulus pick up. a longer-term chart of the 10 year yield going back five years. we are right there at levels where they peaked in the middle of 2015, if we can look higher, at levels we have not seen since 2014. if we get 3% yield, then we will be animal play your high. -- multiyear high. scarlet: an incredible move. the dollar taking a breather today. we start with the british pound, speculation may be hoped that the u.k. could keep it single market asset. this comes after the nations brexit secretary said that the u.k. would consider making contributions to keep that access. they did not specifically mention making payments but hard to see what other contributions there would be to keep that access. losses lira, it
deepened, fell to a record low versus the dollar and the euro which is adding to pressure to the central bank to step in and intervene and curvy losses by raising interest rate on expect -- unexpectedly. it would oppose president on one by doing so this -- it would oppose president ertl one by doing so. joe: tired or has been on a terror lately -- iron or has been on a tear lately. , a huge two days in west texas intermediate after the opec decision yesterday to of output of -- up 3% in -- 3%. gold below $1200 as people rotate out of these proper -- safety assets. we have some breaking news, starbucks making the announcement that howard schultz is stepping down as ceo. he will be named executive chairman and kevin johnson will be the ceo to succeed howard
schultz as the ceo. starbucks shares in the after-hours plummeted on the announcement, falling 11% and then quickly paired those losses to being down 5.5%. joe: i have the chart on my terminal, you see how quickly -- we want to bring that up -- how quickly they dropped. one second. you can see how sharp that drop was automatically but then we came back and are down a few percentile, this is a big surprise, i have not heard anything about howard schultz moving on to this role. the market taking a hit but not as much as initially. scarlet: kevin johnson is a tried-and-true executive at starbucks, the current president and the coo and he is expanding his role to the ceo according to the company's news release. howard schultz will stay on with the copy as executive chairman. towas shifted focus
innovation, design, and development of starbucks reserve groceries around the world. companies social impact initiative. he will stay as chairman of the board of starbucks. do you try these reserve beans? joe: i have never had a reserve team -- bean. will they encourage howard schultz to run for office because his name is every once in a while thrown out there. scarlet: that is a good question. down on theares announcement that howard schultz is stepping down as ceo. joe: i want to bring in a chart on inflation. one second. scarlet: this is already died and you can find the charts on the bottom of your screen. go, it looks at various market based measure of inflation, breakeven rates for
30 year, 10 year, and five year. we see that markets are starting to price in inflation that is getting close to the fed goal. the lowest actual measures of inflation are still shy but going in the right direction. markets are starting to see them getting their which makes some of this pricing in of a likely rate hike in december and so forth make sense and this is the story of markets. scarlet: they all crossed the wildcats the white line across the 2% in spark after the election. joe: it has been shooting higher since then. scarlet: data that is consistently topping economists estimate. you are looking at eco-surprise index which does not show growth in the economy, it shows the extent to which data points are surpassing consensus estimates which has been the case over the past couple of weeks and months. let's bring in ian. the data today paints a rosy picture of the u.s. economy.
things seem to be working right now and donald trump's election where we will move presumably to an expansionary fiscal policy shifts is into overdrive. ian: that is not where we want to be with unemployment at 12.0%. survey, it is not in boom territory. six or nine months ago people were talking about a manufacturing recession what did not happen. it it are coming out of appears and the massive downdraft in the mining sector when oil was down superlow, that is finished. it is starting to come back here effect it is gone is allowing the broad favorable trend in manufacturing to lift everything. seen jobless claims printing further down and the hiring indicators rebounding. going into next year, stimulus with an economy that to my mind does not need it. joe: janet yellen said a few
weeks ago in a speech that there may be an argument for running a high pressure. running an economy in overdrive. to see where the tensions are and perhaps boost productivity. after years of underinvestment. do you buy that? ian: i have somebody with akamai like the idea of low inflation below the target, running a couple of years of inflation above the target would not be a tragedy. it will be an average market. it is a much more difficult sell politically. i think congress will regard that as -- dependsr problem is it on what your inflation chart looks like at the time you get the target. if you just gently creep up through it and you can plausibly argue it will not go very hot. -- very high. what if you shoot through it and do not have a plausible plan to bring it back down, the markets will be on your back and you have seen the rise in nominal treasury yields which has been
startling at best and this happened before any of the stimulus stuff kicks in. what happens if we do it and of ation goes much more and unemployment drops to 4.5%, there is nobody left to hire and the productivity boom that we hope does not happen. then you have inflation. scarlet: aren't we better than bringing down inflation that creating inflation? ian: you can always bring it down but it hurts. if you embed an overshoot rather than just have a little bit, it fades away because you have done a couple of hikes but what if it is not enough then you have to move into a traditional timing, the sort of time everybody in the markets think is never going to happen again. that triggers a recession which you could have avoided if you do not bring in the stimulus and the first place but if it is not doing the stimulus, it is caucus and administration working in a way nothing that i suspect is the like. joe: everyone thinks the fed will hike, there does not seem to be debate whatsoever.
for 2017? 42017 -- do you think we could get multiple hikes in 2017? + i am to miss we will get them, it depends on the size and structure of the stimulus and the timing of the stimulus, we do not know anything now. we have no legislation but once we get some come if the administration does what donald trump said and we are looking at a much hotter economy on top of a tight level market to begin with. an environment where the fed will move 3, 4, 5 times this betting on the speed and size of the stemless with the market is not ready for, it is thinking about it but not ready for it. the risk of a shock, an accident, he star market flying, evaluations look stretch to me. the danger is that we have to have a reckoning at some point. you will stick with us as we talk job data and other stuff. scarlet: we want to give you a recap of the breaking news,
starbucks saying that it ceo howard schultz is stepping down, he will remain as chairman of the board and the executive chairman and kevin johnson, the chief operating officer and president will succeed him and assumed the role effective april 3, 2017, starbucks shares falling in after-hours trading. this is bloomberg. ♪
howard schultz will remain chairman of the board and executive chairman overseeing things like innovation for the company. it was a surprise to investors and the knee-jerk reaction was to push the stock lower. it was down by double-digit percentages earlier but has rebounded some of the losses and is now off by 4%. tomorrow morning, getting the final set of jobs data before the fed meat for the final time this year. economists expect 180,000 jobs added in the month of november. if you come inside the bloomberg , we have the whisper function for people to enter in estimates. , according tois people who participating, the whisper number is four 189,000 jobs, higher the consensus estimate which is 180,000. the prior number of courts is 106 1004 october. -- the prior number of courts is 164,000.
joe: we are with ian shepherdson . what will you be watching for tomorrow in the jobs report? ian: it almost does not matter because they will hike no matter what, it would have to be some big mind boggling and if it is it would probably because of an sort of cork in the data. in the data. i think it will be 200,000. quite friendly in the fourth quarter but the trend is about 175,000 which is good enough but not great. 220,000 --ining at trending at 220,000. joe: something that could make a difference from the fetid there was more headwind on the labor participation rate and there really were some sort of shadow slack in the economy and room to grow. do you think there is possibly room to reverse in a meaningful well -- meaningful way? ian: a different between possible and probable, it is possible because it stopped
falling and probably picked up, the monthly data is very suspicious, you look at a run rather than a month but it is possible. given the way that companies are screaming about how hard it is to hire people, why wouldn't they have already pulled in these 2.5 million people who left the labor force, why are employers not on the phone with them saying i have a job? they are saying is that we cannot fight the people we want and wages are bid up, and for small businesses, the safest thing to do is to pick someone working out a competitor. pay more but you know what you're getting. other than going for someone who has not had a job in several years. it is an unknown question, an article of faith among the people coming in the new administration that participation will rise strong and they will not get credit wage inflation and i hope they are right. thatost likely scenario everything will be great and reverse this drop in participation, it is a maybe rather than improbable. scarlet: harvey at full
employment -- are we at full employment? + we are close -- ian: we are close, you never know until you get it. has picked up, running at 2.8 percent, the latest number four wages after five years of two. it has moved up but not crazy. joe: we are looking at official is themeasures, 4.9% expectation for the unemployment rate, staying steady. the year over year earnings which is key. we have another chart which we swiped from one of your notes a couple of weeks back which makes an interesting argument that wages are going to pick up. let's bring up that chart. number it looks on the of companies saying that they have one or more job openings and white lines, atlanta fed measure in orange line, tell us about this chart. ian: it is telling you that this
is real wage growth, adjusted for inflation. if you look at the nominal numbers, that looks low. in real terms, wage growth is dead in line with survey measures of companies, how hard it is to fill positions which is what it should be. why are the nominal numbers so low? because inflation has been so low. it is not going up. how do we keep the real wages rising? either inflation can go back down, that will not happen, or the nominal numbers which the fed cares about have to accelerate. this is a real-time experiment. playing outs because of nominal wage numbers have picked up, five straight years of 2% wage growth, everyone got bored. now we are at 2.8% and by easter we will be at 2.4%. joe: what what a big infrastructure stimulus program due to wages? + driving -- ian: drive them away, we do not have the number
of people for construction and everything else you would need for the sort of scale of infrastructure program the administration is talking about. i have no doubt it would drive up materials prices and wages and we would have shortages in the construction sector in particular where companies are already whining they cannot find people. the tragedy is the republican congress will pass this infrastructure plan, a lot of these are the people who use do not put a penny in infrastructure because it was promoted by the wrong guy. scarlet: a goes back to the idea you were saying, joe, we needed infrastructures in the plan five years ago when -- ian: the time for infrastructure is when you have the resources to do it which is why you do it at the bottom of the cycle which helps turn the economy around and you have the resources to do any non-and missionary weight but what congress did was cut spending after the initial stimulus in 2009 we have a secret station where we cut defense and nondefense at the wrong time. they are saying that -- let's reverse some of that but it is
the wrong time. joe: what will be the best fiscal policy at this point in the cycle? anything that congress and the president -- there has been a lot of talk of monetary policy, anything that makes sense? ian: i would want to see a ton of federal money going into retraining and reeducating people who have been the victims of losing their jobs to china or wherever, the people who lost out, the people who voted angry in the election, money can help those people. we are not very good at helping people victims of things. joe: ian shepherdson at pantheon macroeconomics, great to have you. scarlet: starbucks has named kevin johnson as ceo. he will be succeeding howard schultz as ceo of the company, this was a surprise to investors who said the shares down in after-hours trading although they have appeared some of their losses.
but where will his focus the -- be? + -- >> politics he is active in democratic circles. he talks like a politician, somebody, the race matters conversation he did and i think yes bigger -- i think he has bigger aspirations. joe: kevin johnson, the new ceo, we see the market reacting slightly negative to this news, probably on the uncertainty of the transition but what is the key thing to know about the new ceo? you thinke think when about kevin johnson is that he has the operational focus needed to sustain starbucks growth trajectory in -- he is in operations focused guy and has been involved in the operation for several years and then on the board for several years so he should could then you -- so he should continue to
maintain operationalize let's. .- excellent scarlet: good howard schultz moved to do something in retail -- could howard schultz do something in retail? >> he has a grand vision for revolutionary retail. whether he decides to use his energy and a political sphere or in this greater sphere of how do we move forward and change the scope of retail is yet to be seen here he has distinct -- is yet to be seen. he is talking about opening roasteries and the opening of the reserve stores which are more upscale's and consumer centric. short-term, i think he will be occupied with making sure those plans move forward. joe: as jennifer pointed out, he
has a tech background, used to be at microsoft, where is starbucks tech wise? their mobile app is big. what opportunities do they have? techey are a leader, the app is huge, they're mobile ordering. they have been a leader and that is a big reason why kevin johnson is now getting the job, he is a tech guy, they realize how important the daily coffee purchases on your phone and grocery stores are trying to catch up. joe: does starbucks have technology they could a license out? >> i would be shocked if they did that because they see that that is their advantage, why they have all that customer data of daily purchases and the ability to push digital coupons which is important to the
business going forward and everybody else wants to be where they are. scarlet: and the past, when howard schultz has stepped down, the company has wobbled. pk back to service ceo again to save the company. is there a concern that with kevin -- even with kevin johnson's credential, he cannot keep betrayed moving in the right direction because only howard schultz can do that -- keep moving the train in the right direction because only howard schultz can do that? >> their retirement manus -- the entire management team is more solid, other people in key positions to support the overall direction of starbucks. the cohesion is more stable. thank you both for joining us quickly on this breaking news. scarlet: coming up, today's departure brought more volatility to the peso and raising questions about the future of mexico's economy. this is bloomberg.
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then why settle for slow internet? comcast business. built for speed. built for business. >> let's get the bloomberg first word news. donald trump is planning to nominate retired general james mattox as the nation's 26th defense secretary. that is according to the washington post citing people familiar with the decision. he is a career u.s. marine and a hawk on a ram. -- iran. he retired in 2013. indianarump was in today to tout the preservation of jobs at a carrier factory in indianapolis. atappeared with mike pence issued a warning to u.s. companies thinking about sending jobs outside the country. ump: companies are not
going to leave the united states anymore without consequence, it will not happen. of the unitedunit technologies agreed to keep 1100 jobs in indianapolis. it is still living 13 positions to mexico in exchange the company will receive $7 million in tax and other incentives from the state of indiana. west virginia senator joe manchin baby cap for secretary of energy according to politico citing three sources close to the discussions. the conservative democrat says he has not been contacted by donald trump's team and has no plans to travel to new york, he has been a strong advocate for coal. the french president says he will not run for reelection. the move clears the way for his more popular prime minister to enter the 2017 presidential race. hollande made the announcement in a televised address, saying his lack of support open the
door to risk of extremist movement, becoming the first president since 1958 to not seek election. a united nations report says the world's population grew to 7.4 billion. the report focuses on the unique challenges faced by girls as the youth automation source with 89 percent of the world's 10-year-old live in developing countries where they have obstacles to education, health care, safety. global news 24 hours a day powered by more than 2600 journalists and analysts and more than 120 countries. i am mccourty collins, this is bloomberg -- i am corny collins, this is bloomberg. to run the bank for international settlements. that moved move the mexican peso at is raising questions about the future of the mexican
economy. mike mckee spoke with the mexican deputy governor. honoris an important for a policymaker. he is the best candidate for the post. it is a big game for the world economy -- gain for the world economy. -- thetral bank decisions are made by a board which is part of the institutional framework of our central bank. this institution should continue operating efficiently as it has lastdoing during the
years. said that he has been the major figure heading the bank since 2010, how much did carsons drive policy, did he do it the same way as alan greenspan for the united states federal reserve? >> he was an important participant, the president of the board. it is very significant, his role and his capability. brings credibility to the central bank. should continue -- the
institution is designed in a way that the operation and the direction of monetary policy and the different activities and responsibilities of central performed with all the efficiencies that we have been exceeding. by the globalined head of market strategy and foreign exchange, mark chandler. so much going on in the world. let's start with mexico. taking it on the chin and post donald trump world. how do you assess things now particularly in light of the news today? >> with the mexican peso, two big things, the election of
donald trump and the hike in u.s. interest rates, the market is pricing in the hike in december but the fed futures to hike next year. the central bank of mexico has been raising interest rates to head off inflationary pressures caused by the week they so -- weak peso. thanis a story broader that, emerging markets and general have been hearted and mexico is the proxy for a lot of emerging-market currencies. joe: you think of treasuries and u.s. treasuries as the ultimate safety asset ethic of emerging markets as one of the ultimate risk assets and they are trading simultaneously because long-term rates in the u.s. are so pivotal to this trade now. will this be the story for a will be that u.s. rates the main driver of all these international assets and currencies? >> one thing i find useful on the bloomberg terminal, analytics and correlations,
iwatch how markets are moving together. i recognize what you are saying. for me, that moved again in the middle of september and continuing. i suspect by the middle of december after the fed raises rates, there will be profit-taking, the fed will not raise rates of genworth or february. -- and in january or february. u.s. interest rates are going higher because higher inflation from the high oil prices, or whether because of a large stimulus package, when the u.s. like a-- it looks possibility that a 30 year, 35 euros bull market bought is over. basis --en trend -- foura problem from emerging markets who borrowed dollars. joe: this is a huge question now
because obviously we had the 2013 paper tantrum that paper tantrum. yields cap going down and strategists and interest rate forecasters are famously wrong about that direction every year. they think rates will be higher than what they ultimately are. you think this could be a key turning point in this usable market that we have had for over 3 -- this bull market that we have had for over three decades? europe is not having deflation and it depends on how you look at japanese numbers but it looks like deflation has subsided. in the u.s., close to the fed target, 1.7 on the core pc deflator. the deflationary problem we had has been used and the other forces are kicking in. joe: we have had cyclical upswing's across this huge market, this would not be the first time we have had growth. to break a 30, 35-year-old trend
, you would have to have something like regime change, do we have that, something that meaningfully changes it other than nice moments in the cycle? >> it could possibly be a cyclical upturn but it could be something bigger. what donald trump is talking about, the first time in american history a -- not in a recession and we get fiscal stimulus, roughly the same package, size packets that we did in february of 2009 when the u.s. economy was cratering and 10% unemployment. i are adding a schedule and do believe in infrastructure spending, i think that he -- more people can be working, a larger part of the workforce could be employed. but the kind of program they are talking about now seems -- the market is concerned that it could insight inflation. has been fiscal stimulus in this country pretty minimal and only doing it during
downturns, 2009 or a few times during bush, since everyone a check to get a weak economy going. what makes this different is that we are at 4.9% unemployment, not countercyclical. >> the other pieces of puzzle that fitted is globally, europe or even though the europeans are still having qe and maybe spending it next week, they too are moving towards fiscal policy. the entire world -- a lot of high income countries including japan, are leaving -- leaning more towards fiscal stimulus at the same time. more towards fiscal stimulus at the same time. the idea of a 3% yield on a tenure bonds seems far but i do not know why we do not go to 2.5% by the end of the first half of next year. we were at 130 basis points on a 10 year bond in the middle of september. joe: a lot coming up in europe, i tie in referendum this sunday
and -- i tie in referendum this sunday and the president of france is not running. what do you think about this development ahead in europe? >> the market sees two points on what they think of the a wave. the brexit and the donald trump election. the market looking for the third point, where will it be as we think is europe but we are not sure. a lot of people are focusing on italy because the prime minister could resign if he does not get what he wants. the problem i have is that this will not change much in italy, if he resigns there will be another technocrat government, not a populist more nationalist movement questioning whether they should be part of the eurozone at all. the real challenge i think for people will be on monday is not the italian referendum, the austrian election, it is likely and the poll suggests that the
far right candidate, the first from a far right candidate has a european country as president of a european country said the finish of world war ii. the third populist point. sleeper, most of the talk is on italy but you think the real story is austria. >> nothing changes in italy. vote. expect a no have ralliedanks and the stock market has outperformed the other markets and italian bonds have bounced back. relative to germany. the market to me is focusing on italy when he think that will hurt us will be in austria. joe: thank you so much. i feel we did a great tour around the entire world on the economy and markets.
>> everybody is excited about economic growth next year and we are expecting some fiscal stimulus to help with the overall economy. that is why the company will be on footing. the impact on housing could be more muted this time around. let's look back and compare it to what we saw after the paper tantrum a few you do -- taper cap from a few years ago. we saw a decline in home sales, which resulted -- joe: there we have the joy that there we had the chart. 2013, we said that was the taper tantrum, this could be the same size theoretically. what was the impact? >> the increase in mortgage
rates is happy price of what it -- half the price of what it was in 2013. if we move to the next chart, maybe we can see that back then tantrum,e had taper home sales declined, new home sales and existing home sales, that resulted in a decline in broker commissions components of gdp. almostmponent subtracted one percentage point from gdp growth in 2014. joe: what about prices -- what does it do to prices? >> theoretically it should dampen prices. we might see some flattening in prices. joe: i have a chart i have been
tracking on the bloomberg if we can bring it up, a 30 year yield is the green light and the blue light is the year-over-year change in the mortgage refi index. sense, no one will refi when rates are going up here in a room those people who would. how significant is refi activity in terms of consumer spending? >> at this point in the business cycle and after the great recession, it is not as significant as it used to be .ere -- as it used to be joe: overall, when people talk about housing, one of the major bull arguments for housing is that after years -- we were under-housed him at that there was such a collapse in housing activity in the financial crisis and demand from millennials,
that we have to build a lot more and now we have this slight headwind which could turn into a bigger headwind with rates. looking to 2017, what wins out? >> i am optimistic on housing, it did not contribute much to this year's growth, we could probably see a little bit of a support next year. economicuse, overall conditions are improving and people will be earning more money and when you are near -- and nearing full employment. the overall growth in economy should help housing and should offset the headwinds coming from higher mortgage rates. joe: thank you very much, a great topic. looking forward to following your stuck in the new year. donald trump celebrating his deal with carrier to save jobs. speaking outside the plant in indiana here we will tell you about it next.
joe: i am joe weisenthal, what you missed come a major trigger at starbucks, howard schultz is stepping down as ceo next year, the high-profile executive the build the coffee of fire over three decades and served two stints as chief executive officer and being replaced by coo kevin johnson. howard schultz will stay on as executive chairman, the move is likely to renew speculation that howard schultz will seek to look office. starbucks shares down in after-hours trading. doldrums spoke outside the carrier plant in indiana, celebrating his recent deal with the company to save over 1000 u.s. jobs. joining us now on the transition is alex wayne in washington.
this is like great politics for donald trump. rather this is scalable on a national scale, this is great. for him. >> he will garner political capital. not many presidents have claimed that they saved 1000 jobs even before they entered the office. joe: what is next? he said during his speech that the light doing this, enjoyed getting on calls with ceos, did not mind if people called it on presidential. -- un-presidential. is this a model on how he will operate? >> if you take him at his word he dismissed ending not presidential to call company executives and then there elbow to get them to stay in the country. he said that any company
considering a move outside the u.s. will get a call from his administration and if they move there will be consequences. joe: there are critics, of the sandersnator bernie published an opinion piece today saying that donald trump has signaled to every corporation in america that they can threaten to offshore jobs in exchange for business friendly tax benefit and incentives. that seems right. that there is a moral hazard where you say we will go to mexico unless you give a statement. >> it is a sweet deal for carriers parent company united technologies, they are moving 1300 jobs out of indiana to mexico. they are keeping 1100 there and get $7 million from state taxpayers and united technologies get some credit with the white house. they are a big federal contractor and health engines for jet fighters and other stuff. they have a friend in the oval office.
joe: any conservative critics of this move? they talk about not picking winners and losers and the free market, is that we know of the party going to go slink off? troubleem to have getting republican economist to call us back on this story. maybe they were just busy but maybe they are trying to avoid public criticism of the guy entering the white house. republicaninst orthodoxy for the last couple of decades. today interesting on the cabinet selection process? >> they reported that general mattox has been named defense secretary or will be named defense secretary donald trump's communications director shot that down on twitter which they do not usually do.
>> do not miss the big jobs report tomorrow morning and right after the jobs report, we will get fed governors mayor p.m..rd at 8:45 on 1:00 tomorrow, and interview you do not want to miss, liver editor and chief will sit down with imf managing director risking lagarde and a wide-ranging energy about the global economy at 1:00 p.m. eastern and 6:00 p.m. london time friday on
john: i'm john heilemann. with all due respect to all those people floating the idea of chris christie being the new rnc chairman, we have five works for you. >> sit down and shut up. ♪ john: on the show tonight, trump's transition team, and one lean, mean howard dean. but first, it's been 23 days since donald trump became the first -- making the president-elect --