tv Bloomberg Markets Americas Bloomberg December 16, 2016 10:00am-11:01am EST
vonnie: we are going to take you from washington to moscow and cover stories out of denmark, u.k., and china. u.s. stocks open higher with european shares in the green. jeremy siegel joins us as we march for that record. nejra: mario draghi speaks in brussels today warned me european leaders -- morning european leaders that explosive politics could expose the euro area's underlying weaknesses. vonnie: president obama bows the u.s. will take action to respond to russian cyber attacks attempted to interfere with the election.
donald trump dismisses claims of the interference. we talked to policy advisers we talked to policy advisers this hour. about 30 minutes into the trading day. abigail: happy friday and we do have green for this friday. happy friday to all of our viewers. -- dow, s&p 500, nasdaq modest gains. asare on record watch perhaps a dallas marching higher toward doubt 20,000. it is worth noting that it has quadrupled. it will be interesting to see what happens as the day goes on the averages can hang on to the games today -- gains today. 1% after thee than russian energy minister did say all russian oil companies will participate in a supply cut deal.
gold is getting a boost, nicely 1%,er, down on the week of may have something to do what the dollar is up sharply. now one chart that really stands out is a multi-day chart of the two-year yield. what a big move up. the last time the two-year yield moved up was back on december 7. this is represented in red because it represents bonds selling off. is a 16 point basis moment a short period of time. of course, the fed did raise rates, it will be interesting to see if this move will consolidate down. finally, taking a look at stock movers and the u.s. -- apple, j bell, and we also have sky works trading higher after jay bell it up a better-than-expected fiscal first-quarter. they beat on the top line.
they raise the fourth-quarter outlook. jabil is an apple supplier. in europe, we are second day of gains before european stocks. we are 90 as to the close of equity trading. greece,see gains in austria, norway, iceland, the netherlands. , we have seens the advance as much as 0.8%, the highest level since december 2015. a one-year high and has a raised its 2016 drop. in the fx space, we are seeing a pause. we have seen gains in sterling. in the fixed income space, yields have been tracking treasuries lower. you can see yields moving lower.
u.k. hit aand the high yesterday. aboutcrude higher by 1.5%. if we move on to see how the stoxx 600 is doing, it is heading for its highest close in almost a year up 3/10 of 1% on the day that for a weekly gain. i wanted to show you the imap so we can see how different sectors are performing. energy stocks have been leading most of the day and drop a little bit below real estate, but still up 1% on the higher crude prices. most industry groups heading higher today, so it is i take a broad-based rally. the best performer in terms of individual stocks, that has been -- we saw a drop yesterday and he jumped today after people acknowledge that it is in
advanced talks to acquire the swiss drugmaker in a deal that could be announced as soon as next week. we will have more on that throughout the show. finally, i want to show you the euro-dollar snapping three days of losses versus the dollar. it hit a 13 year low. we do have lower bottoms going into the weekend, but have been in a little bit of a recovery. deutsche bank still sticking with their bearish call on the euro. vonnie: nejra. thank you. let's check on first word news. >> president obama is promising to act on those cia conclusion that russia interfered with the u.s. presidential election. the president spoke to npr. mr. obama: there is no doubt that when any foreign government tries to impact the integrity of we need tons, that take action, and we will, at a
time and place of our own choosing. , andof it may be explicit publicized, some of it may not be. >> president obama will hold a news conference before heading to hawaii for the christmas holiday. that is at 2:15 p.m. eastern time on bloomberg and radio. donald trump's choice as u.s. ambassador to israel may signal a major shift in u.s. policy. the president-elect will nominate lawyer david friedman. friedman opposes the two state solution to the palestinians and the summer he told the newspaper that trump might support israel ports in the west bank, but later he backed up those comments. the evacuation of aleppo has been suspended. some 8000 people in the former syrian rebels stronghold left on buses and ambulances before the process broke down. media says rebels were trying to smuggle weapons out of aleppo. antigovernment activists a pro-government militias and blocked a passage out of town. and there is a red alert for air
pollution in beijing today. that is a high as warning level and it is the first time it has been issued this year under the alert. they will cut industrial production and a number of cars on the road will be limited. schools are allowed to close if they want. news 24 hours a day party by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. vonnie: thank you. nikkeie dow and japan's stock average is racing towards 20,000. it is uncharted territory for one, and the other, it is want to pass glory. both indices have been routing since donald trump november victory. joining us is jeremy siegel, professor at the wharton school of business of pennsylvania. he has been calling for the dow to reach $20,000 for some time. germany, thanks for joining us.
the question is if the dow's overvalued as opposed to $20,000? germany: there is no question that stocks are not cheap. the s&p, which is a broader about 20 selling for times operating earnings. although i do not think that is out of line given the interest rates, interest rates are rising, but i think it will get to 20 and close over 20 before year-end. but i think the passer $21,000 is going to be a little tougher. show me the earnings, and show me some of the good things you are promising before we would really have another strong rally. the one upon the dow 10% in just a matter of six weeks. i don't think we are going to repeat that shortly. are youwhat measures
placing most confidence in? taking a look in my bloomberg, it shows it is the-20 years. the ratio, it is extremely high. what you looking at to measure? jeremy: i am looking at --i have written on the shorter measure why that might be overly bearish. i published work on that. i look at next year's earnings which i believe are too optimistic. down, but ithem think what has driven this rally is the expectation of significant corporate tax reform that could come in and of itself, boost s&p earnings by 10%, something higher. that explains the movement of the dow. regulation,ss stronger infrastructure, that is almost like frosting on the cake
that would send it higher. but i think the real move is taxation with the hope of less regulation, and that taxation legislation is moving rapidly through congress at this particular point. vonnie: jeremy, i understand that the bull market in stocks have been driven further since donald trump was elected. what we have seen is that rotation out of the bond market. jeffrey said earlier, if 18 year treasury hits 3% next year, the losses might spread not bonds and into stocks and real estate. what i am wondering if interest rates rise throughout the economy, could we see be tell investors start to pull out of the stock market, and what with that due to the bull market? jeremy: rising yields is definitely a headwind. certainly, the interest rate, sensitive sectors and we are talking about some of the
utilities are silly going to be challenged and a rising interest rate scenario. but let's look at the big picture. i guess i am old enough to remember when i thought 3% was unbelievably low for the treasury yield. and the big picture, i don't see 3% challenging stocks. the dividend paying stocks is almost paying 3% with growth, growth andg, -- with headwind. 3% looks high, but from an absolute standard, it is still, in my opinion, not a challenge for stocks. is going to be more challenged, in particular the financials, raising interest rate is a very big positive. the financials are almost half the rally we have had since trump has been elected.
nejra: you're absolutely right. are stillields at 3% historically low. i wanted to ask you about the comparison between the dow and the nikkei. i have a chart on my bloomberg, which is showing both the doubt and the nikkei approaching $20,000. the differences this has been a slow march higher for the dow, whether that's where the nikkei has crossed that $20,000 threshold. does that tell you anything about u.s. stocks versus global peers? jeremy: japan is a very interesting story. reached -- thet -- $39,000 in $39 1989. we are talking about almost 30
years ago. -- it has been way above the $20,000 and into the $30,000 level. at that particular level, it was selling for 90 times earnings. unobtainable for any major market in the world, and that is why returns have been poor from that astronomical level that we saw there. both the nikkei and the dow and the s&p are on much firmer ground right now with respect to earnings. basically atings, a very low interest rate environment, coming out of an earnings recession, which now looks like it will be better next year, i think is a sustainable level, but once you start from bubble levels, as we were 25 years ago in japan, you are going to suffer in your
future stock returns. vonnie: so, professor, i will pull up another chart on my bloomberg relating to the financials you were talking about. -- what is going on since the fed moved. what is the net effect on the economy? is it going to hurt the consumer to offset that? jeremy: you mean the higher interest rate? part of the higher --there are two parts to the financial rally. one part is higher interest rates, and one of the reasons is banks cannot charge less than zero on bank accounts. when interest rates are zero, there is no margin there. ,nce we get the rates rising they are not going to raise the bank account anywhere near as fast. that is a major factor. the second factor is an easing of dodd-frank rules, the super
tight regulation. the justice department has basically, certainly for the financials, extracted billions of dollars in penalties. we can talk about if it was justified or not since the financial crisis. the hope that all of that is easing, and maybe we can get a return to profitability in financials. almost turned them into public utilities that are totally regulated. but as the second factor. higher interest rates clearly are going to add to some of the interest --going to have to some of the expenses. perspective,cture these are still very, very low from a historical standpoint. you have been a wharton school a professor. thank you for joining us from philadelphia. china'soming up,
promising an active fiscal policy. scott has more from hong kong. >> monetary policy will be printed and its fiscal policy will be -- cadres thrashed out their plan for 2017. it comes pretty much as a policy makers who have done a fairly good job compared to where some of the bears views of china were at the start of the year for people thought the economy was going to follow the rails. 6.7% for the full year from what are economists surveyed think. let's give room to move slightly tighten for property, debt, and will forward all structural reform. those of the other key messages the got today from this look ahead to the 2017 policy. more of the same, a little bit of tightening around the edges.
thank you for joining us, eric. you have a great title, dividing the year into two titles. >> before trump and after trump. i have never seen anything like this. the first half of the year, golden fixed income or doing well and stocks were flat, and then brexit happened and there was a boost, and then trump happened. if you look at the last six have taken and $90 billion, doubling the amount etf's to be the asset class with the most funds. what is interesting about trump, he talks america first, how dramatic u.s. stock flows compared to the other months. he talks america first and that is how the flows are playing out. if you look at the close this year, 91% of the flows have gone into u.s.-focused stocks and bonds etf's. my percent into international --
9% international. emerging markets took a $25 billion, but europe, japan, they have seen $70 billion in outflows. very boring products. if you rank the top five by -- i, the top three, i will track the same index. the three that are on the top, are all the same index, that tells you the whole boost into a u.s. stock etf. a lot of this, these are born, but cheap. cheap.e are boring, but have knowledge of the cheaper of the cheap. it is triple the average of the theater the etf's.
help the return of the end of the day. what about other countries in etf's? categorymple country the second-most money was canada. canada is a number one country taking in the most money with one point three billion dollars speak to how brutal it was for international investing. japan lost $10 billion. european countries like germany got bled. it is really abnormal for them to be the leader and speaks to the notion of international back into the u.s. you're talking about the big three coming the big two. >> blackrock and vanguard are taking in the money. it has become a two horse race.
abigail: good stuff, eric. vonnie, back to you. vonnie: abigail doolittle, thank you for that. still ahead, a former adviser to president elect donald trump tells is why the u.s. should repair ties with russia. right now, the dow is up 54 points. up a 10th of a percent. 103.ollar index above this is bloomberg. ♪ . .
newsroom in new york. orsa: european bailout out say they have significant concerns about greece. critics say the prime minister is pushing through expected social programs, that's threatening the bailout that cap -- that cap greece in the european area. merkel says greece has had her support, although she says decisions will be made by others. >> i want to say this isn't the place where decisions will be made. this is in the good hands of the three institutions of the eurogroup. certainly, it will play a role in our talks and how the greek prime minister sees the situation. elisa: those institutions are the ecb, the imf, and the european commission. draghi, herom mario told european leaders that the combination of rising interest rates and explosive politics pose a risk. that's according to an eu official familiar with the meeting. mario draghi did say conditions
have improved everywhere in the region compared to the start of the year. the u.s. navy says it needs as many as 355 ships, that echoes a goal that president elect donald trump says in his campaign. a report out today calls for expanding the navy's current fleet of 272 over the next 30 years. i could mean increased sales for general dynamics and huntington ingalls industries. they are the makers primary they are the makers primary makers of comment vessels. and hillary clinton told a group of donors that vladimir putin's grudge against her likely led to his involvement in hacks undemocratic groups. that's according to a report by cnn. clinton was a frequent critic of the russian president during her tenure as secretary of state. at one point, she even suggested the russian elections were unfair. global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i'm elisa parenti, this is bloomberg. vonnie: thanks. president obama's vowing to
retaliate against russia for attempts to influence the u.s. presidential election. speaking to npr yesterday, the president said russia must pay the price. president obama: i think there is no doubt that when any foreign government tries to impact the integrity of our we need to take action. and we will come at a time and place of our own choosing. explicit andy be publicized. some of it may not be. vonnie: joining me to discuss u.s. russian relations as someone who just got back from tosia, a onetime adviser president elect trump and founder of glover -- global capital. there's a lot of chatter about russia and the involvement in the u.s. elections. you said there are some question marks about who your ties are and why the trumpet demonstration to not have you as
an advisor anymore. we will get into that if we have time. from your experience in russia and your conversations with people there, what was the involvement? >> people really across the board laugh at it. it's very consistent with a long-standing trend going back most of 70 years. denigrating russia. every once a while, they were and flows,s -- ebbs they warm up some in washington, but in general, people laugh it off. vonnie: denigration is one thing, but there is evidence clearly that there was some kind of interference or tampering. why would that be? why would russia even want to intervene? did russia want to donald trump as president elect? mr. page: it doesn't make much
sense at all. there's no direct evidence or reason behind it. i think you take a step back, absolutely. iss is something where there huge enthusiasm. when i was there over the summer, i haven't seen so much enthusiasm they are for u.s. russian relations in the future potential since my first trip at the end of the soviet union, 1991. vonnie: what does russia want exactly? the president's donald trump, which is going to be the case now, that life will get easier for russia and there will be a rapprochement? mr. page: they want normal relations. as president gruden and president elect from talked about in their phone conversation recently, it's mutual respect. that's a key focus area. it is something they have talked about, and something i referred to previously in my research and
my infamous speech back in july. vonnie: there are reasons why the possibly shouldn't be as much of a rapprochement as you heard president obama saying russia would be severely punished if there were to be any untoward activity. what convinces you that there should be so much of a detente? mr. page: what's often forgotten in the west, in particular, in washington is what has been done incorrectly on both sides. everyone is very quick to point the finger at vladimir putin without kind of looking back at the long history of mistakes which policymakers and leaders in the united states have made as well. i think having a more balanced perspective. prudent -- thing is, putin has been belligerent, with ukraine, were not sure what's going on with prudent and syria.
-- putin and syria. now this involvement with people associated with trump's campaign, including yourself. don't you at least allow that there is reason for the u.s. have looked to be skeptical? -- u.s. public to be skeptical? if you look back a statement on both sides, hillary clinton her campaign versus vladimir putin and his administration, i think there is much more normal dialogue from the moscow side compared to the very harsh intense rhetoric. very often unfounded, which you heard coming out of there last year. vonnie: rhetoric is one thing and actions are another. moving into ukraine, for example. nothing fully clear about what's going on in terms of the syrian involvement. that's reality, as with the u.s. is trying to deal with diplomatically. mr. page: there are two separate issues and ukraine. i think where russia is often
criticized, often harshly and unfairly, is with regard to crimea. they talk about moving into ukraine, in the might on the u.s. had a very significant involvement, which even the president petro poroshenko is referred to as well. vonnie: let's look at potential energy policy under trump. we have a screen of some of the things that trump has promised, he gave a speech just a few months ago back in may in which he promised several things. we will try to get that up on the screen. some of them are contradictory. he wants to revive the coal industry and bring back jobs. he also wants to stop all payment to the u.n. when it comes to global warming. but then rex tillerson, who believes there is human ,nvolvement in global warming
for example, it is a supporter of the paris climate agreements. how will energy policy shakeout? to, i'm: as you alluded not representing the incoming and administration. but my perspectives and what i've seen is a very open-minded individual and an open-minded team. the fact that he has reached out individuals that have a more diversified view i think reflects a big step forward, if you compare it to previous, the last eight years. vonnie: you say there isn't a fully formed energy policy, but he promised a $30 billion left annually, that's pretty specifically comes to energy. and he promised to $700 billion increase in annual economic output over the next 30 years. you must have some plan in mind. look at theu leadership he has. you look at rex tillerson, for example. onremendous impact he has exxon mobil building the company around the world. the same type of leadership
wills and leadership ideas be a key driver going forward. and also bringing in what an amazing array of talent that was brought on the scene. positivehat's all very in everything, but do you believe the u.s. will still be a signatory of the paris climate agreement? difficult to say. i have not seen any definitive statement one way or another. but certainly, there's an open-mindedness. in my work at the center for national policy, was a fellow there. for about six years. openness inlot less the outgoing white house to new ideas and new approaches. i'm highly optimistic. vonnie: carter page, thank you for joining us today. , bloomberg
vonnie: you're watching bloomberg, i'm vonnie quinn. nejra: i'm nejra cehic, this is a global business report. denmark's finance ministers tells us why his country is willing to fight against protectionism. then, honeywell is suffering from what he called the continued slow growth environment. today's bloomberg quick take, generic drug industry under fire for its pricing practices. you can count denmark among the countries that will fight against protectionism. the danish finance minister spoke about the popular
sentiment events -- against free trade in an interview. >> denmark is one of the denmark's brewing, that you can defend the free open market and champion free trade. denmark is one of those countries that benefited tremendously from open markets. honeywell, the maker of jet engines and safety agreement forecast earnings for next year that missed estimates. honeywell says sales are excited to fall in what it calls a continued slow growth environment. despite that, the cfo says margins can still improve. messagemay be sending a about protectionism. saysoeing vice-chairman the company's airplane sales to china support about 150,000 american jobs. one fourthbuy about of the planes boeing built in the u.s. this year. president alexa donald trump has threatened to impose punitive tariffs on china that could lead
to a trade war. verizon may end up pulling out of that deal to buy yahoo!, but the telecom giant is going ahead with a strategy that's focusing on mobile advertising. it still has an appetite for more deals, according to a person familiar with the matter. verizon is considering whether to drop the $4.8 billion takeover of yahoo! in the wake of the company's latest data breach. vonnie: time now for the bloomberg quick take, where we get back on issues of interest. mylan andn tina -- teva conspired to raise prices for two drugs, according to a lawsuit filed by 20 u.s. states. the justice department charged two former executives of heritage pharmaceutical with conspiring to fix prices. these cases stem from investigations of generic drug industry, and harsh bruises and comes from u.s. lawmakers about pricing practices. here's the situation.
in the u.s. on average, $1100 per person per year is spent on prescription drugs. cancer drugs in the u.s. routinely cost $10,000 a month. bought, martin cirelli the rights to an older drug and raised the price more than 50 fold to $750 a pill. unlike other nations, the u.s. doesn't directly predicate -- regulate medicine prices. other countries limit what the country pays. the national health service has refused to pay for some cancer drugs widely used in the u.s. on the ground they don't constitute value for money. in a 2013 survey, one in five adults said they failed to complete a prescribed course of medicine because of cost. that figure is that one in 10 in germany and australia. from cynical companies -- pharmaceutical companies say they need the prices to bankroll future medical advances. they point to the profit margins
theyay companies say exaggerate costs. medicines are rapidly becoming affordable. --ater price resolution regulation advocate for reducing spending on marketing and promotional budgets exceed those for research and development at most big companies. you can read more at and i click on the bloomberg. quick on the bloomberg. hence you bloomberg.com for more stories. they spoke with jamie dimon in detroit about the role of wall street and washington in the trump administration. in an excuse interview, megan murphy asked him about having been a potential pick for treasury secretary. >> i have always been quite public about i don't think i'm suited to be secretary of treasury. i love what i do and i'm not ready to do something else.
i can add a lot of value to america doing what i'm doing. megan: that's the answer. as recently as september, when i look back when you were talking about what you thought the next in administration would be, you said you thought it would be very difficult for wall street guys to get confirmed. and now we look at the landscape law --, we have several wall street figures, rex tillerson, exxon mobil, when you look at that cast of people, what do you think they're going to bring to the administration is different? is this a good thing? >> obviously, i was dead wrong about you are not going to see a wall street person in washington anytime soon. you have a complete of people. republicans are in charge and republicans have not been antibusiness the way you've seen other democrats largely be antibusiness for years. i think if you were going to be goodsident, i think it's
-- a mistake for the american public to be told if you work for oil companies were bank or this comes on as the make she bad. you want the best team. i think it's a good thing, a lot of these people are very qualified were patriots who want to help their country. then i can try and help their former company. these of people with deep knowledge that hopefully will do a great job. that: when you look at shift in terms of wall street, that this is a bit of a reset moment for the industry more broadly in terms of what the market people are expecting or what they are likely to see? >> it's a reset moment for how businesses can be treated. under 45 million people work in america. -- 125 millionon worker private enterprise and 20 million worker governments. we hold in high regard. the 125ou didn't have million, you could pay for the
other 20 million. and it is a huge positive element in society and for years, it's been beaten down as if they are terrible people. i think it's a good reset. detroit is a perfect example. you see where civics exciting -- cynic society, not, government, business working together to improve the lives of american citizens. yeah, i think the reset has a chance to do the same thing. if you can duplicate what you are doing in detroit all over the country, you will have a huge renaissance. that was bloomberg businessweek editor megan murphy with j.p. morgan chase chairman and ceo jamie dimon. the full interview will be aired on bloomberg tv and featured in thursday's bloomberg businessweek good business issue. still ahead, just days after johnson & johnson walks away, shares of act telly on climbing on reports -- actually in -- actelion to be bought by another
vonnie: this is "bloomberg markets," on vonnie quinn. nejra: from london, i'm nejra cehic. sanofi is in advanced talks to buy actelion. a deal could be announced as early as next week. joining us is manual the gory. obviously we're hearing this news after j&j walked away from actelion. is how a number of
drugmakers have died actelion for years -- have eyed actelion for years. this is an appealing target. does it look like this potential deal has the material to perhaps be successful, finally? >> the biggest question mark. over the years, we have seen a lot of interest from different drugmakers and activist shareholders, in particular, one of the most successful drugmakers in europe. the big question now is whether or not they will reach an agreement with santa fe. -- with sanofi. they are super excited to get this deal done. whether or not the region agreement, anything is possible. s managementlion'
almost reach an agreement with j&j that fell apart at the last hour. nejra: talk to me about the contingent value right and how important that is in this deal. >> it's a key question that remains to be told her it they are working really hard on trying to accomplish or set up a structure that's compelling for both companies. value asthe contingent you mention it, it is something that sanofi has done in the past. ago,did it a few years they tried to do it over the summer. the biotech they kept is quite busy that pfizer ended up buying. sophie toe a way for structure the deal in cash that will be milestone payments depending on the preferment of certain drugs over a certain. of time. it seems that this
latest bid is the one that's most likely to be successful, given the performance of actelion's stock price. you see the various different bids we've had over the last number of years. the stock went nowhere during the first couple of bids and then began to rise. suddenly we see this big surge after j&j made the approach. good point. actelion stock has been very volatile, we've seen the ups and downs as we've been reporting on the saga with j&j and now with sanofi. it sounds like a very demanding conception to be accomplished, but i think sanofi is very committed to get it done. i'm sure shareholders who have been longing for the stock for a long time will be happy to get a deal done. it's one to watch over the next few days. nejra: thank you so much.
quinn. this is the european close on "bloomberg markets." nejra: we are going to take you from washington to moscow and cover stories of denmark, and china in the next hour. here's what we're watching. ecb president mario draghi speaks in brussels today, warning european leaders that combination of rising global interest rates and explosive politics could expose the euro area to underlying weaknesses. vonnie: u.s. stocks trading alsor with european shares in the grain. we wrap up the week of global stocks as we continue the march towards down 20,000. warns ofcentral bank limited potential for monetary loosening. we go live to moscow