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tv   Bloomberg Markets Americas  Bloomberg  December 16, 2016 12:00pm-3:31pm EST

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visit] david: we're covering stories from houston to washington and geneva this hour. here's what we're watching. donald trump rally is making history with the dow recording the biggest five-week jump any new president has seen since 1900. we have a chart you cannot miss. the u.s. will take action in response to russian cyberattacks intended to interfere with the election. the president-elect continues to dismiss the claims of foreign interference. and super bowl 51 will be here before you know it. we'll have a guide how to get to houston if you are willing to fork over the cash. we look at the markets. >> after early gains and with the major averages flirting with record highs, we're now looking at mixed and choppy trading right here. ever the dow s&p 500 lighter. some could reflect quadruple
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witching which causes in the absence of markets volatility. these markets also have been so tightly wound out of the election and also with the fed that sometimes you don't need a reason to have this sort of volatility. however there is something interesting that did come out today. we'll look at an chart at the s&p 500, the highs around the open. then we see around 11:30 the s&p 500 trading at the lows. there was a report that surfaced from reuters saying china's navy seized an underwater u.s. drone. to have perhaps sparked an initial risk off tone. we see the s&p 500 slightly higher. we go into bloomberg and take look at g #btv. we see it with the dollar and gold also. we see the u.s. dollar dropping lower. gold the safe haven. this might confirm that there was some sort of an initial reaction to that report. sticking with china, this is a very interesting chart as well in the bloomberg.
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t is g #btv 537 o. -- 5370. this is a 10-year chart in blue. japan holdings of u.s. treasuries n white china's. for the first time since 2008 we have japan overtaking china's holdings of treasuries, both roughly around $1.1 trillion. huge holdings. it is interesting to note that it's also worth noting that was as of october 31 before president-elect donald trump was elected. tense relations there may suggest this could even magnify or diverge more in the months to come. finally, the u.s. stock market has outperformed china over the last month or so. e do have the s&p 500 up about 4%. the china shanghai composite down more than 2 1/2% in the month. this week, vonnie and david, china, the shanghai composite has worst week since april.
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selling off more than 3%. perhaps in reflection of those tense relations with president-elect donald trump and china. vonnie: a lot going on today for friday in december. thank you. let's check in on the bloomberg "first word" news. courtney is in our newsroom. courtney: an international incident as abigail just mentioned involving china and the u.s. reportedly has erupted in the south china sea. according to righter china seized an underwater unmanned dronethroid by an american ocean ship. it took place off the philippines. the u.s. has formally demanded that china return the vessel. in the last couple years china has boosted its presence in the south china sea. president obama's promising to act on that c.i.a. conclusion that russia interfered in the u.s. elections. but president told n.p.r. the president will respond at a time of its choosing. some of the response will be explicit and publicized and some may not be. president obama will hold a news
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conference today before heading to hawaii for the christmas holiday. that's going to be 2:15 p.m. eastern time right here on bloomberg television and radio. david mccormack has the insidetrack to be president-elect's donald trump's deputy defense secretary. that's according to people familiar with the matter. he's president of the world's biggest hedge fund, bridgewater associates. he was considered as a possibility for treasury secretary. switzerland may have solved its immigration dispute with the european union. swiss lawmakers passed a bill that would curb immigration by giving locals a head start on job openings. t side steps quotas. the news 24 hours a day powered by more than 2,600 journalists in more than 120 countries. david? david: thanks. president-elect donald trump's plan to cut taxes and spend big on infrastructure has made the inflation trade great again. how long will it last as we head
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into 2017? joining us with his outlook is niladri mukherjee, chief investment office of global wealth. great to have you here with us today. banked into all of this the infrastructure, tax reform is uncertainty. how do you begin to play that at this point? mr. mukherjee: we think that even before the elections took place we were moving into a different regime for the financial markets. we were moving into a regime of higher growth, higher inflation in interest rates as well as higher uncertainty. some of the things that have worked for investors before in portfolios such as low strategies hors d'oeuvre strategies, high dividend yielding strategies, are slowly giving their leadership away and will continue to give their leadership away to much more cyclical strategy. think about consumer discretion or financial sector. as well as things like small caps. the uncertainty factor will be high elevated. much more episodic volatility. i think the starting point for any investor should be a diversify portfolio.
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one that is in sync with the growth, with disciplined risk management and rebalancing plan in place. vonnie: that sounds great. give us more of an idea where you put your money and what you put it on. mr. mukherjee: our strategy going into 2017, we expect higher growth as well as inflation. we're favoring equities over bonds and cash for 2017. vonnie: no bonds are returning more than dividend paying equities? . mr. mukherjee: we do think with the equities, the cyclical parts of the markets will work better. we like u.s. stocks. we think earning will be in the range of 9% to 10% next year. we have raised our allocation to small cap stocks recently because we do think that some of the domestic cyclical and fiscal stimulus policies of donald trump will work in the small cap favor. small caps benefit from lower corporate taxes because they have higher medium tax rates. small caps we're favorable.
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we're retailing our overweight positions and emerging markets. we like the attractive valuations. we like the fact that commodity prices are heading higher. and it should translate into better earnings. we have reduced our conviction recently just because of the uncertainty factor that you talked about because we just don't know how much of the anti-trade policies will be put in place. that's what it looks like. david: break down the emerging markets for us. where are you looking at this point? what excites you the most with emerging market equities? . mr. mukherjee: you have to look over the long term consumer spending. i think that's one of the markets, sectors that we're excited about. but over the next 12 to 18 months we really like china. we like the recovery that's going on in in india. india has had a hiccup in this quarter with respect to some of the policies. india is one of those stories that could bounce back as well. we see some of the recessionary economies, for example brazil, as well as russia doing much
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better in 2017. that's an area to look at. those markets, especially brazil, has run up a lot. i would be selective in the emerging market space. vonnie: basically get everything there. you like them but be selective. they are all attractive except for some. where do you go? . mr. mukherjee: the other markets, the u.s. markets as we said, we like the u.s. markets, we were underweight on international developed markets for some time. we have raised that allocation to more of neutral. with international developed markets we favor japan over europe. we think japanese economy in 2017 could be the real surprise factor. they have pretty tight job market. in nation rates could head higher over there as well. the positioning is still very light in japan. that's one of the markets we like. vonnie: what would an investor buy? . mr. mukherjee: you buy the exporters in japan. that's the way to go.
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the other thing about japan is we're bearish on the currency. we do think then has more -- the yen has more downside. david: glad you brought up currency. your outlook for 2017, what's your sense of the strength of the dollar in 2017 and how long that continues? . mr. mukherjee: right now i'm not that worried about the strength of the dollar because if you look at the trade, that was up that 11%, 12% back in 2015 hit home hard because it slowed down corporate profits. the manufacturing sector. the u.s. dollar is only up about 3 hers or 4 hers so far this year. don't think that's going to be a headwind right now. again i think that's one of the major risk factors for the economy and the markets because it can really take a bite out of corporate profits in 2017. i think we're good for now. vonnie: speaking earlier, who has been looking for a long time. it was acknonled we probably will hit 20,000, the stocks are
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very richly valued at this point. even the cyclicles you talk about, is it worth getting in? . mr. mukherjee: i think so. the markets have gone really far in a short period of time. the thing about valuations for equities is they do look exsended but they can still produce positive results. in other words, they are not extremely extended. so we do like equities. in fact, if you look at the valuation level for equities for u.s. stocks, you can get about 6% to 7% return on annualized basis if you look long-term. that's fine. our expectation is over the next 12 months you get about 9% corporate earnings growth for the s&p 500 and that should be our expectations. we don't expect val identification expand. vonnie: give me a brief explanation where that 9% comes from. inflation interest rates rising? eople are going to be --
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. mr. mukherjee: we had a profit recession for the last four or five quarters. some of the recovery we'll see in 2015 the contribution will come from energy as well as financial. rising rates, improving commodity prices. manufacturing looking up will contribute to earnings looking better. also you have health care as well as the technology sector which on a secular basis should continue to produce that 6% to 7% growth. david: thanks for joining us. niladri mukherjee, chief investment office joining us here in new york. vonnie: coming up, president obama vows to take action against russia hacking into the u.s. presidential leaks. this is bloomberg. ♪
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vonnie: this is bloomberg markets. i'm vonnie quoin. david: i'm david gura. looking at some of the biggest business stories in the newsrooms. a top executive at wells fargo says the number one goal is to rebuild trust following that fake account scandal. the bank has plenty of work ahead of it. retail customers opened 41% fewer checking accounts in november compared to a year ago. in september the bank admitted mployees opened at many as two million deposit and credit card accounts. redstone's chairman emeritus will retain his sittle and continue to participate in meetings. the change will take effect after the annual meeting in february. according to a company. facebook said it undercounted traffic from advisors who posted contend tenth. the error was traced to a recent software update. the disclosure is the latest in
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a string of metrics problems for facebook. the company says it will be more transparent about its mistakes in the future. that is your business flash update. vonnie: president-elect donald trump casts doubts on allegations the russia interfered with the u.s. election. president obama discussed the importance of the issue in an n.p.r. interview. president obama: there is no doubt that when any foreign government tries to impact the integrity of our elections, that we need to take action and we will at a time and place of our own choosing. explicit and be publicized. some may not be. vonnie: joining us on the phone to discuss the opposing views and russia's involvement is kevin cirilli.
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do we have any foundation for any belief on anything apart from the c.i.a. investigation? what exactly does it tell us when president obama says we may or may not act whenever and wherever, you may not know about it? kevin: my secret democrats and i speak with there are two opposing views. that's why it's interesting development here are the bipartisan calls on capitol hill to create some type of commission or some type of report that would lead to final conclusions and results what exactly happened. i was -- i'm on my way back from washington now from her she, pennsylvania, where i was -- hershey, pennsylvania, where i was covering donald trump last night. the president-elect did not make any mention of this despite the growing calls in washington, including from members of his own party, to really debt to the bottom of this. because the bottom line, and i think you heard this from
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president obama in that clip you just played, is that there are a lot of unanswered questions. i, quite frankly, i'm not sure it's going to be good enough for lawmakers on capitol hill if obama takes action but doesn't say what exactly those actionable steps are. david: kevin, "the new york times" just posted a bit of audio reported as hillary clinton talking about this. she's talking to her donors she says she thinks she was targeted who are because of her past relationship with putin. he was taking steps here against her. you mentioned the bipartisan momentum in washington, d.c. how much more of that does there need to be before there is a commission or further investigation? kevin: i think there need to be more. i think this was a big week for that. what's interesting about former secretary clinton is that she did try to have that failed russia reset. what's fascinating right now is the parties seem to be switching their alignment with russia with
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republicans seemingly more open to working with russia and the last presidential cycle it was democrats who seemed to be more open to doing that. either way, i can tell you that i was speaking with voters donald trump rally yesterday, at least to his supporters they are not concerned about this. they feel that a lot of foreign governments are hacking on each other and spying on each other. and i think, quite frankly, there needs to be a conversation about cybersecurity. let's be frank here. this is not the first hack that we have seen in the obama administration. whether it's target or whether it's sony or whether it's even yahoo! which just came out. this is a policy area that is just so behind the times. vonnie: yes. kevin: hopefully this will be an impetus to grabbing people's attention and leading to some policy steps. vonnie: kevin, has there been
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anything on the part of the russians here? any attempt to reach out or anything like that on the part of the russians? kevin: they denied it. i think that's what -- there doesn't seem to be right now, again a key word right now, any smoking gun directly tying these hacks to the russians. there needs to be some type of commission or report in order for there to be actionable steps taken. that's where i think congress in this lame duck period is really going to have a lot of pressure on it because if roles could be reversed, we know this, four years from now or this could easily happen to republicans or the nexwave of democrats. david: people talk about how fully in box it's going to be for the president-elect. there's tension with china and news today out of the south china sea reports that china has taken a u.s. vessel, a drone reportedly, and the pentagon has
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asked for its return. what's the latest you have heard? you are on the road reporting. what have you heard from the u.s. government about what's going on in the south china sea? kevin: i think the question on everybody's mind is whether or not this is a direct result of the tweet that president-elect donald trump sent out regarding taiwan. right now the developments are still in motion. i can tell you that the concern among some within the intelligence circles is that this is a result of that tweet. i can also tell you that the folks that i'm speaking with in political circles with donald trump indicates that this was a well thought out tweet. he knew what he was doing on this. clearly it's a bit too early right now to directly link that to the tweet. but a lot of speculation right now that this is a response to that tweet about taiwan from last week. vonnie: kevin cirilli coming back from that thank you event
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in pennsylvania. thank you for that. a reminder that president obama will hold a news conference today at 2:15 new york time. david: still ahead, controversial i.r.s. commissioner says he would be willing to remain in the agency's top job if president-elect donald trump asked him to do that. we'll head to washington being, d.c. for more. next. this is bloomberg. ♪
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vonnie: this is bloomberg markets. i'm vonnie quinn. david: i'm david g. ra. the founder of sky bridge capital. a member of the donald trump's transition team spoke with some of our colleagues earlier today and discussed strategy as we near inauguration day. >> i would say tax reform will be a very big component of this. regulatory reform. in the early part of january we have to get the 12 major cabinet positions confirmed. so that's a process that we're working on here at the
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transition team. david: sticking with taxes, one person willing to keep his position under a trump administration is i.r.s. commissioner john koskinen. he spoke with a capitol hill tax reporter and we're joined from washington, d.c., with them. what is his interest with sticking around? this is a job the person in that position is supposed to be apolitical. is he excited about dealing with tax reform or public service oriented decision? laura: i think he's excited about some of the changes that would be coming down the pike. tax reform is something that hasn't happened for 30 years. and koskinen wants the agency to have a technical role. they don't have a policy role in determining what the tax laws would look like. he thinks that the agency has a lot to offer. working with members of congress, folks at the white house, treasury, what do you want to do? here's the right way to frame this law. vonnie: is there any indication that the trump team would be
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very willing to have this happen? laura: it's unclear. koskinen's term does go for another year. he could stay in unless trump asked him to step down and koskinen said he would step down if trump asked him to leave. he said he would be happy to stay. one thing that's interesting to note about these two men is that they know each other from way back. one of trump's first real estate deals, he was buying a manhattan hotel, koskinen was actually the party negotiating on the seller side. these guys have a history that goes back to the 1970's. david: as he looks ahead perhaps to continuing, he must be looking back as well. this has within a -- been a difficult few years in the position for him. laura: one of the big things that highlighted his term is that members of the house freedom caucus, conservative group, have been trying to impeach him. they so far have failed. they tried a couple different times. this is tied back to even something that happened before koskinen was at the agency back in 2012 there were allegations
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that the i.r.s. was targeting conservative groups trying to become tax exempt and holding up those applications. koskinen is known as a fix-it guy was brought in to shore up the agentcy. members of the freedom caucus weren't happy with his responses in some congressional investigations into the agency. they said he was withholding evidence from lawmakers. so they have been pushing for his removal. david: thank you very much. capitol hill tax reporter from bloomberg d.n.a. vonnie: as the now dears 20,000, we'll hear from jeremy siegel. this is bloomberg. ♪
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♪ -- david: live
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from bloomberg headquarters in new york. vonnie: let's start with the first word news. man tapped to be the security adviser director has deep conflicts. michael flynn's consulting firm has competed for federal contracts greeted -- contracts. is according to public records and public contracts. the u.s. navy says it needs 350 five ships. that echoes a goal that president elect donald trump called for. that could mean increased sales for a general dynamic. european bailout auditors completes a bell out -- a bailout for talks in greece. critics say prime minister
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alexis tsipras is pushing through programs that is preventing the bailout that kept greece and most of the area. much of the area is in a deep freeze. parts of the region made for some crippling conditions. forecasters say it storm will fall the frigid weather, dumping more snow, sleet, and freezing rain across parts of the nation. global news 24 hours per day. >> we were talking about that vessel in the south china sea. u.s. demanding that china return and unmanned undersea water. >> earlier their calling their
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way back. down about as point and a half. let's head over to our report with abigail doolittle. : the nasdaq has the biggest overweighting to technology. facebook, intel, alpha that. the code-1 spark for some volatility here. on facebook it is being reported there's something with the companies -- is being reported there's something wrong with the companies metrics. 7% on the week, on
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pace for its worst week since january, on the news that some are saying verizon could walk bid for yahoo!, or alter the terms. this after a second big hack was reported. paul sweeney told our team yesterday this is a big negative for yahoo!. when we going to the bloomberg and look at a six-month chart, we are seeing a nice uptrend through much of the corridor on the acquisition. we are starting to see a series of lower highs. that is when the first big hacking issue is reported. a 15 day moving average. the buyers are stepping away.
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this report may come as a surprise to some. suggesting that we could see a measure out of the range. abigail doolittle, our markets desk. >> it was a real possibility the dow could hit 20,000 in the year 2016. as the year comes to a close we are nearly there. whether he thinks the dow is overvalued as he approaches that threshold. >> there is no question stocks are not cheap. the dow is reaching that milestone. a it is settling for 20, 21 times this year's operating's.
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i don't think that is out of line. i think we are going to get to 20. i think it is going to be a little tougher. show me the earnings. up on the dow. i don't think we are going to repeat that. >> what measures are you placing more confidence in? the relative strength index says it is the highest of 20 years. at the ratio, it is also extremely high. what are you looking at?
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>> i have written why that may be overly bearish. i have published some work on that. i look at next year's earnings. what has driven this rally is the expectation of significant corporate tax reform that could boost s&p earnings. that explains the movement of the dow. i think the real move this taxation with the hope of less regulation. moving rapidly through congress. >> i understand the bull market
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and stock has been driven further since donald trump was elected. if a 10 year treasury yield hits next year, the losses may spread the on bonds and real estate. ratesent -- if interest rise, could we see retail investors pull out of the stock market? yield -- rising yield is a headwind. some of the utilities are certainly going to be challenged in a rising interest rate scenario. i guess i'm old enough to remember when i thought we percent was unbelievably low for the treasury yield. in the big picture i don't see
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3% challenging stocks. from what we are used to, 3% looks high. is not a challenge for stocks. the raising interest rates is a big positive. the financials are have to rally. you are absolutely right, even at 3%. i wanted to ask about this comparison. i have a chart of approaching
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the 20,000. this has been a slow march higher. then there, done that. does this tell you anything about u.s. stocks or is it just an interesting pattern? >> japan in and of itself is an interesting story. the nikkei reached 39,000 in 1989. we are talking almost 30 years ago. it has been way above the 20,000 and 30,000 level. it was selling for 90 times earnings. unsustainabley
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for any major markets in the world. both the dow and the s&p are on dow and s&p are on much firmer ground. rate,a very low interest coming out of an earnings recession, which looks like it will be better this year. as we were 25 years ago, you are going to solve for the future. >> some advice on how to book your trip to the big game next. >> president obama is holding a news conference before he heads to the prison that heads to
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holiday. -- before he heads to holiday.
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nejra: --
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honeywell is suffering from a continued slow growth environment. generic drug industry under fire. denmark as onet of those that will fight against protectionism. >> you can steam the wave of populism, you can free the open market and the champion of free trade. this is -- denmark is one of those countries that have benefited from open markets. nejra: honeywell, the maker of worker safety equipment, forecast earnings for next year missed estimates. honeywell says sales are expected to fall and a continued slow growth environment. despite that the cfo says
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margins can still improve. boeing may be sending a message about protectionism. boeing vice-chairman says the company's airfare sales to china support 150,000 american jobs. president elect donald trump has threatened him punitive tariffs on china that could lead to a trade war. pulling outend up of that deal to buy yahoo!, but the telecom giant is going ahead with a strategy that focuses on mobile advertising. verizon is considering whether to drop the $4.8 billion takeover of yahoo! in the wake of the company's data reach. takenow for our quick where we have backgrounds on interest -- on issues of interest.
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this according to a lawsuit filed by 20 u.s. state. the justice department charged two executives of heritage pharmaceuticals with conspiring to fixed prices. harsh criticism comes from the u.s. lawmakers about pricing practices. the situation, on average about $1100 per person per year is spent on prescription drugs. cancer drugs routinely cost $10,000 per month. 2015, his coveney bought the rights to an older drug and raise the price 50 fold. unlike other nations, the u.s. -- to limitctly their state fund and health system. the national health service has refused to pay for some counter drugs.
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one in five adults in the u.s. said they failed to complete the course of mex -- the course of medicine because of cost. from a suitable companies argue they need robust profits. meanwhile critics point to the industry's fast profit margins and save the companies exaggerate the drug costs. greater price regulation means -- they say drugmakers can andce spending on marketing emotional bunches exceed those as you can read more on our quick takes on bloomberg. here's our business report. ♪
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account down to super bowl 51 is on and if you are thinking about going to the big game come book
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your trip as soon as possible. walk us through the timetable for doing this. >> their team has a shot of making it all the way. but a lot of people think this is kind of like new year's eve in new york city and times square. you can still get a pretty decent deal. prices won't truly start to spike for another two or three weeks. nice test >> how is a city like houston preparing for it yet though what what i see their?
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>> houston is undergoing an interesting revolution. -- interesting evolution. thathave built something is similar to the new york high line. they have friend a bit quarter world. this would be a perfect opportunity to promote all they have done. i think they are expecting a massive impact. >> they have been here before. challenge,ok at that a ticket to the game itself, how difficult would that be? story a couple of days ago. i would refresh my hotel searches and seizures was going on and you can find a room at the four seasons.
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you had a couple of good luxury options. think airbnb is a good option. i still saw several hundred private apartment listings. >> this is a huge hotel they are building to coincide with the super bowl. >> it is a 1000 room hotel. they get that access to the star. there packages?
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i would imagine there are packages that get to go. >> i always think with big events, you always want to go through official channels. you want to buy a package online. there is a company that works with the nfl. they are called ole. you can buy a package through them. when the game ends, you can be out on the field with them. >> what got you interested in looking at the end -- looking at the economics of the super bowl.
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>> something like cinco de mayo and mexico. you always think about it a little too late and then you don't know. i partnered with a company called harper. they have been healthy dig up the real stats and numbers. we will be seeing some of these. >> i am a miami dolphins fan. i love the sport and i love watching. >> for more check out for suits on bloomberg. the finest things on life including travel lodges, dining, and property. a programming note, president obama will hold a news conference at 215 eastern time.
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live coverage right here on bloomberg television and on bloomberg radio. ask heidi richeson about her latest strategy, her outlook for 2017. this is bloomberg.
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vonnie: welcome to bloomberg markets.
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from bloomberg world headquarters, we are covering stories from san francisco to toronto new york, tel aviv and beijing this hour. chairman and ceo jamie dimon weighs in on why he is not suited to be treasury secretary. and an underwater -- underwater vehicle of the south china sea, we could consider the political ramifications. we will take a look at stocks in a moment. >> president obama is planning on acting on that cia conclusion
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that rush interviewed in the u.s. election. he says some of the response will be definitely explicit. hold a newsama will conference for heading to the christmas holiday. that is at 215 p.m. eastern. a warning from ecb president mario draghi. a combination of interest rate and explosive politics pose a risk. draghi did say conditions have improved everywhere in the region compared to the start of the year. and france's ambassador to the u.s. -- the evacuation of thousands of civilians was suspended amid reports 50,000 people were removed before the cease-fire could that cease-fire broke down.
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news 24 hours per day power by 2600 journalists and in more than 120 countries. >> tensions are mounting in the south china sea. the u.s. defend -- u.s. defense department demanded china returns the vehicle. john, why is this so serious? >> this is not the sort of thing that happens every day. this is an escalation of diplomatic tensions we have seen that follows on from tweets.
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50 miles from the coast of the philippines. the information we have at the moment was relatively sketchy. we will see how this plays out. understand the contested miss of this particular part of the world. we watched as a tribunal issued a ruling a few months back about the contested nature of this area and china and the philippines, fighting over islands here. is the sense of peace in this area. that one is suggesting there is going to be military conflict. nevertheless, having said that, diplomatic tensions between the u.s. and china have risen up more than a notch in the last few weeks.
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the question of taiwan is ask dreamily important. think probably this is going to be the precursor of any itious military exchange, could certainly be the beginning of both sides, especially the chinese, being prepared to show their naval muscle in that part of the world. do we know about maritime rules of engagement? there are u.s. vessels. encroachment on something they shouldn't have? >> these are contested warfare's. this is our territory so to speak.
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this is an unlawful seizing of their drum. china will say no. we have full rights to do this. will be the big bone of contention. it is one of those diplomatic questions of, will both sides on whaty disagree happens in those sovereignty waters. that sort of contention can keep it for days. >> you recognize this as the drone. an ocean glider. what we know about that particular piece of technology? guest: it is a very conventional piece of equipment, it is the sort of thing that is used to measure salt, salinity levels.
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argue what we have in front of us. this could be used for any military purposes. it is the symbolism of it. china is refusing. it is the nature of the standoff so to speak. a relatively trivial matter that happened. >> what happens next on the u.s. side? the chinese are not about to give in. what kind of response could the u.s. come up with? >> they are going to have to that is going to be the
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interesting's -- interesting thing. this is the sort of thing that he might react to. clearly you have to see this in the broader context of what has been happening over the last two weeks. donald trump has been questioning the one china policy. you are questioning the whole idea of their ties to the mainland, whether it is parts of china or not. they are making a not too subtle point about their determination to continue making the point about where the territory lies and the validity. >> thank you for this and for that context. >> halfway to the trading day, abigail doolittle is here with the latest on the markets. >> after mope and lay -- after
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we now modestly higher, have the three major averages trading down modestly. the s&p 500 and the nasdaq are on pace for a weekly decline. some of this could be tension around the news that china did sees that u.s. thrown. another point is the fact that it is quadruple day. on top of all this we have a lot of stocks in the big rally mode. we take a look at 3505. this is a very long-term chart. we see volatility for the years. this is a momentum indicator, many use it as a cell and a buy .ignal when it is above 70 it that is
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an overbought signal. 74 sinceas been above the election. -- if we takereat a closer look at this chart, a six-month view. it is a strong rally. what will concern him is if you start to feel the lower high. that is the signal, a bit of a fade. what happens if the markets are overbought? as for a few movers, we have movers across the sector board.
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the company says it has named for new board members under a shakeup. it is now the solo ceo. and trading higher up. online travel agent did go public. higher and expedia is trading around unchanged. this will remain in control of the publicly listed company. >> abigail doolittle with a market update. look at what she
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is looking for in 2017. this is bloomberg.
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david thing this is bloomberg markets. vonnie: -- david bank this is bloomberg markets. : this is bloomberg markets. vonnie: overall the markets have shown resilience and is expected to stay volatile with trump with lingering concerns over china. here's a first look at the playbook for next year. heidi richardson is the head of black rocks strategy for i.s.
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shares. did you have to rip up the playbook and start again? it has been interesting to see this trump rally. i think the markets are trading on this reflation policy. with repatriation of foreign assets, i think the markets are trading on those. there are still a lot of ifs on whether or not that is going to happen. >> we have the promise from donald trump and many republicans. you have to imagine this might not happen. >> we usually give expectations to our clients that this is the base case. there are variables around this. they have been trying to give guidance to the asset classes if there is tax-free -- tax reform. there are certain asset classes that are going to benefit.
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vonnie: a chart showing that the company with higher tax bills typically boasted the boot -- typically posted the blue line. would you go? look on of high share portfolio would you be looking at? some ofu are looking at the regulatory reforms, i think some of the beneficiaries are financial service is. if we look at repatriation of access, i think the beneficiaries there as well as health care and areas of technology. >> how hard is it to navigate health care? you have donald trump changing his tune about prescription drug price. to -- he made some remarks to time magazine.
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heidi: it is hard to navigate that. about the proxy for the biotech market, that has sold off ever since a year ago. hillary clinton has tweeted they want drug pricing reform and control. donald trump was focused on the affordable care act and getting rid of obamacare and making significant changes. until last week when donald trump tweeted again. will be some valuation differentials with health care. some sectors will benefit and will be a lot more volatile. exposureaving that based on valuations, the diversified exposure as a way to go. vonnie: if you're trying to ,ecalibrate your interest risk what do you do?
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heidi: a base case for the fed, giving their guidance, we are going to see another three hikes this year. i think most investors having exposure should think about shortening up the duration of the exposure. i think it makes sense. i think the best way to do that would be exposure to the tips market. i think you are better off based on the volatility of the market. >> let's talk about emerging markets. where do you see opportunity in that space? basis, thegraphic best exposure is emerging-market .sia and individual countries most investors having exposure to emerging markets, they are not that precise in terms of the
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exposure. getting their feet wet, they are better off having broad exposure. the new story, earlier on china, i think there is idiosyncratic risk. having the broader exposure may make sense. those who may for be more sophisticated or can take more risk or want to do something uncharacteristic, are there other products that you would maybe recommend? if you look at the shift for monetary to fiscal policy, some of the reforms we are seeing, we could see some benefits to infrastructure spending. is the commodity exposure and areas like transportation.
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a lot of those fiscal policies and particularly and infrastructure. -- some of the small cap. specifically i think the case of financials and health care. hedge that currency risk with something like 80 wj. david: how cute are the inflation pressures right now? we talk about infrastructure spending. howl worried are we about inflationary pressures? >> i think we will break through that 2% target. i don't think we are going to see inflation at 5%. there is good and bad inflation. at the same time economic growth then it isg past 2%,
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a reflationary environment. have the growth, you do have the increases in wages and salaries. i think there is a lot of positive. there fromus seattle, thank you. for wayscompanies look to ease the transition from the firm and employees. our walk the talk segment next on bloomberg. ♪
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david: welcome back to bloomberg markets. vonnie: it is time for walk the talk, where we look at the pressure points of social change and where it is outpacing corporate america's ability to adapt. today's focus his retirement, turning000 baby boomers
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65 each day, businesses are scrabbling to find ways to slow and exit is of the most experienced employees -- slow exodus ofxit us -- the most extremist employees be at what our companies doing about this? guest: a lot of companies are where you don't leave suddenly, where you don't go off the cliff and suddenly you are gone within a week. they give you a flexible schedule. that is a way to get you to stay longer. david: how did this come about? you haven't had this has the corporate setting to this degree before. was because of demand from the companies themselves.
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collect certain companies you take the steelcase, which makes office furniture, a lot of company and older workers. are suddenly realized we going to have a third of our work force out all at once. happen in some industries more than others? happening with skilled people, i.t. and those companies, older companies. a lot of health care companies. you are not going to see this as much as silicon valley. as much on wall street. vonnie: is it kind of strange because it is a another way of changing the retirement age. working tore people come have you found? guest: it varies. between 65waiting
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and 70. they need more money. david: something you detail that is so fascinating, it is not always the same list, there are challenges staying on past 62 or 65. guest: you need just -- there are always adjustments. an employee doing this you are usually the experienced person used to giving the orders. one guy i spoke to, he had to learn i'm not the go-to guy all the time. i may set the whole thing up and they have to do it their way. vonnie: is any data yet to drive a conclusions about the economic impact? guest: nearly there will be economic impacts. a point in your piece about the transition.
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what are they doing in particular? are doing two things. they are saving their knowledge. outdon't want them walking with all of the procedures. they understand how things get done. you want them to teach that. you want these people the pass them on. david: coming up, an exclusive jpmorgan ceoh jamie dimon. that is next. this is bloomberg. ♪ ways wins.
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especially in my business. with slow internet from the phone company, you can't keep up. you're stuck, watching spinning wheels and progress bars until someone else scoops your story. switch to comcast business. with high-speed internet up to 10 gigabits per second.
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you wouldn't pick a slow race car. then why settle for slow internet? comcast business. built for speed. built for business. avid: vonnie: a --vonnie: lovely day in midtown manhattan. it is not that warm.
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i am vonnie quinn. david: i am david gura. let's start with first word news. taylor riggs has more. taylor: the u.s. and china are at odds according -- after an incident in the china sea. a drone was deployed by an american oceanographic ship and was testing water conditions. the u.s. has formally asked for the drone back. in recent years, china has boosted naval patrols in the south china sea. photos released this week indicated the chinese have deployed weapons on reclaimed lease in the region. the u.s. navy says it needs as many as 355 ships, and that echoes a go president-elect donald trump said in his campaign. i plan calls for extending the current fleet of 272 over the next 30 years. that could mean increased sales for general dynamics. they are the primary makers of combat vessels. donald trump's choice as u.s.
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ambassador to israel made issue a major sitting u.s. policy. the president-elect will nominate lawyer david freeman. theman -- friedman opposes two-state solution. he told a newspaper that trump might support israel seizing parts of the west bank, though he later backed off of the comments. hillary clinton told a group of donors that vladimir putin's grudge against her led to his involvement in hacking democratic groups. contributes -- attribute the loss to head the fbi james comey discussing new questions about her in us. globalist 14 hours a day. i am taylor riggs. -- global news 24 hours a day. i am taylor riggs. jamie dimon in detroit
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yesterday about the role of wall street and washington in the donald trump administration. in exclusive interview, megan asked him about having been a potential pick for u.s. treasury secretary. jamie: i have always been quite public about how i do not think i am suited to be secretary of treasury. i love what i do. i'm not ready to do something else. i can add a lot of value just doing what i am doing. megan: that is the answer. when i look now -- is really as september, when i look back at what you were talking about the next administration -- and this was before we need the outcome of the election. you said you thought it would be difficult for wall street guys to get confirmed, and get in. now we look at the landscape. we have several wall street figures. some you know very well, -- gary cohen from goldman sachs, rex tillerson. when you are looking at that cast of people, what do you think they are going to bring to the administration that is different? what is new? this is a good thing?
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jamie: obviously i was dead wrong that you will not see a wall street person in washington anytime soon. you had a complete of people. republicans are in charge, and the republicans have not been antibusiness the way you have seen democrats largely be antibusiness for years. if you are going to be president, you should have the best people sitting around the table. i think it is a mistake to constantly be told that if you work for an oil company, a bank, this, that automatically makes you bad. you want the best team. i think a lot of these people are very qualified people who are patriots who will want to help the country. they will not try to help their former company. these are people with deep knowledge that hopefully will do a great job. megan: do you think that now, when you look at that, sort of, shift, in terms of wall street, that this is a reset moment for the industry more broadly in terms of what the american people are expecting or what they are likely to see? jamie: i think it is a reset
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moment for how businesses will be treated. 145 million people work in america. 125 million work for private enterprise. 20 million work for government -- we hold them in high regard -- sanitation, teachers -- but if you did not have the 125, you could not pay for the other 20. business is a huge, positive element for society. for years, they have been being down as terrible people. i think it is a good reset. detroit is a perfect example where you see civic society, not for profits here, government, business, working together to improve the lives of american citizens. so, yeah, i think the reset has the chance to do the same thing. if you can duplicate what you are doing in detroit around the country, you are going to have a huge renaissance. david: that was megan with jamie
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dimon. the full interview will appear in "bloomberg newsweek" good business issue. vonnie: before he was tapped to state, rexy of tillerson had his own organization. he would never walk into a foreign negotiation unprepared. joint is just join us for more the story is david marino, bloomberg news oil editor. sense -- you do not want your top negotiator on the intelligence unit, as great as it may be, right? m. that is: exactly right. they are taking big risks in all parts of the world. when they go in, they need to know what is going on on the ground. so, they are taking economic discussions,tic and also, reports from people on the ground, their people on the ground, and news reports from
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bloomberg and other people, perhaps, and bringing all that together when they go into help make themselves make the decision. david g.: what do we know about this group -- how big it is, who comprises its ranks, and how it is used in the company? david m.: the group takes intelligence from different parts of the company, where it is gathered, and they are mostly people that have come up through the ranks of exxon. they have not really pulled in a lot of people from the intelligence committee. vonnie: i mean, is it very public? are you invited in to take a tour of this part of the building, or is it a little bit secretive, and do they use other intelligence agencies? are not very -- they do not publicize this. every big oil company has some form of intelligence they are using. they have to. exxon is not the only company going into sensitive places, difficult places. it is not something they publicize. it is something they naturally
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want to keep to themselves. it is their intelligence. it is an advantage to them to have the best as possible. david g.: you have the donald trump transition team making the case that rex tillerson presided over a huge enterprise with a big global footprint. maybe you can help us understand that. we know the name exxon mobil. how broadly does this company operate, and give us a sense of the interface he had with his unit, and the outposts around the world. david m.: he has negotiated with vladimir putin. he has had discussions with him. he is in every big project around the world -- whether it is in southeast asia, africa. he has been right at the forefront of negotiating these deals. so, he has had to have this intelligence before he goes down -- goes and since down with governments and national oil companies to get the best deal possible for exxon. vonnie: david, do we have any idea where the resources are most utilized? you have more information about russia, for example, then they do guitar?
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-- qatar? david m.: there is more permission to be getting about russia. it is a more complicated situation. a bigger country. they are putting more money into an area -- there will be more demand for the intelligence. it definitely depends on where you are going, and what your investment is. david g.: you have been following the oil industry for some time -- i wonder if you can give us the contrast -- exxon versus other big oil copies. -- companies. does it say anything about how the company operates, how it is different from chevron or another big oil company? david m.: exxon is the biggest. it is the biggest public retreated oil company in the world. all the other bets oil companies are made are magnified when it magnified- making are when it comes to exxon. they have more need for the best intelligence before they go in. it does not mean there will
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never make a mistake or bad investment, but the stakes are higher. vonnie: it would be fascinating if they pass it off to an institution where academic university. david m.: yes. vonnie: david marino, thank you. david g.: coming up, do beers is flooding a subarctic mind. ♪
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vonnie: this is bloomberg markets. i am vonnie quinn. david: i am david gura. time for the bloomberg business flash. we start with chipotle mexican
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grill having named four new directors to its board in a long anticipated shakeup supported by activist investor bill ackman. the new members include -- robin hickenlooper, the wife of colorado governor john hickenlooper -- and megan paul. the move brings the current number of members on the board to 12. chipotle is trying to recover from criticism it was slow to respond to any: outbreak last year. wells fargo says retail customers say they open 41% fewer checking accounts from a year earlier. that comes after a settlement with regulars over fraudulent sales. in september it was revealed wells fargo employees opened as many as 2 million deposit and credit card accounts over a five-year span without customer's permission. shares of norstrom downgraded by j.p. morgan chase, which means the upstate -- upscale retailer sees no silver bullet to revise -- revive stagnant sales.
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a target share price was trimmed from $48 to $45. shares are falling in new york after climbing 11% this year through thursday. that is the bloomberg business flash. over tolet's head abigail doolittle. she has some charts of the day. abigail: indeed we do. our charts deal with gold. we look at e.g. #btv 5218. this is a five-year chart of gold. the golden nominal peak back here in 2011. we see the strong trend after the federal reserve disappointed by instead of doing qe, they did the operation twist, which set off the bear market in gold. at this point we have gold i are on the year slightly, but weasley gold has come down. at one point, it was up 20 percent at up now about 8%. the relative strength index is suggesting that gold may be oversold.
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it is well below 30%. it has been there for -- 30. it has been there for a while. perhaps it was a bounce in gold. on the day, gold is getting a hit of a bid. late in the morning, there was a report that china did these a u.s., unmanned drone. by 1% earlier. coming off of the lows a little bit, but still higher on the day. let's look at gold in relation to the 10-year yield. #btv 3283. in blue, we have gold. in white, we have the 10-year yield. see the diverging trading action. it is very interesting. usually rising and classy -- inflation of the kitchen's wood's -- would help -- expectations would help gold. this perhaps marks the end of the fed's extraordinary policy. it is pressuring gold.
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it is interesting to see if they could find a group and climb higher. maybe there will be a near-term pop for gold. vonnie: thank you for that. fascinating. theeers will shut down on canadian diamond mine after failing to turn a profit. wherehead to toronto bochove why not- maintain it, let it be for a while? daniel: it was usually expensive to operate, which is part of the problem, and it is difficult to put on care and maintenance as well. just to backtrack a little bit, to explain where it is, it is underneath a lake in canada's subarctic. it is a very rich diamond deposit, and apparent of de -- anglo, anglo, has
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has expense with under grind -- mining.und they had problems with water leaking impaired you need a certain diamond price and quality of diamonds for this to be viable. the bar is higher than it is for other projects. they try to sell it. they could not find a buyer. they put it under care and maintenance. they are finding the cost of maintaining something like this in the subarctic is not cheap. david: bachus through what happens when they flood the -- walk us through what happens when they flood the mine. how difficult an undertaking with that be? it is hard to say. they are saying this is still care and maintenance -- a different way of maintaining it. mines do get flooded this way. i spoke with an analyst and he said the difficulty is to maintain the option alley, which
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is why they say they are doing this, you would have to first drain the water out. you would have to make sure the structural integrity of the mine was still ok, and presuming how many years down the road that is, there could be questioned marks there. you would have to look at environmental factors, and then fix the original engineering problems to make it a viable asset. so, i think there is no doubt that doing this is going to create a bigger problem for anyone else who would buy the mine further down the road. they will have more to deal with. i think the bigger question is how likely it is that anyone is ever going to make this mine viable, and certainly at current prices, it is not looking super great. vonnie: danielle:, do we know , do we knowdanielle anything about what is left in the mine? danielle: well, the reserve itself, in 2015, they got 1.2
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million carats out of the mine and a reserve under the lake is still large. the asset itself is still there. in terms of the physical equipment and thinks they will leave in the mine after they flooded, they are going to build an ice road this winter to try to halt some of that away and there will be environmental criteria to meet to do that in terms of what they can leave there. the other option for de beers would be to permanently close the mine. when you do that, you have rehabilitation costs. to play mine site back to the way -- to put a mine site back to the way it was is expensive. essentially what they are doing is lowering the cost of the care and maintenance and avoiding rehabilitation costs while saying they are going to maintain the option alley of the mine. we come back to the big question which is whether anyone, including de beers will ever
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reopen it, drain it, and make it viable. david: you have described the remoteness mine of this. we saw the trip. give us a footprint -- the amount of enbridge it -- engineering infrastructure that goes into operating a mine like this one. danielle: susan a similar area may --ne i visited in this is in a similar area to a mine i visited in may. they engineered it differently. they have a dike system that manages to keep the deposit area dry. it is a phenomenal place to visit. it is very barren. the closest town is actually the territory's capital, yellowknife, which is 140 miles away. there is nothing else except for a few aboriginal communities. there are not even roads. there are ice roads they build every winter. they last for a few months. de beers will have to build an
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ice roads to get the equipment out before the flood the mind -- the mine. vonnie: they have to do a reality show on that. i imagine it happens quite regularly. danielle: there is went. there is an ice truckers reality show. vonnie: that we have seen. don't worry. that was danielle bochove. thank you. david: president obama will host a press commerce before headed -- heading to hawaii for his annual christmas vacation. we will have live coverage. this is bloomberg. ♪
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vonnie: this is bloomberg markets. i am vonnie quinn. david: i am david gura. it is time for options insight with abigail doolittle. danielle: joining me is mark --abigail: joining me is mark sebastian from the cboe in chicago. thank you for taking the time to join us. we have stocks at record highs, but you are saying you think the easy money has been made. mark: yeah, i mean, i think markets are going to meander higher, but the catapult out of the election and out of the belief that regulation is coming off and that will be economic stimulus, a lot of that has been priced in. now it is just more, kind of, the path of least resistance. the fact that there are not a
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lot of factors to push us lower, it will allow for the market to slowly meander higher, especially for the end of the year. volumes will be light. a lot of guys are checked out. i was coming into my office back from breakfast this morning, and guys were leaving for the day already. abigail: wow. mark: volume will be weak for the day. generally, though volume at the end of the year tends to lead to markets rally in. i think we will see that. that said, little bit of news can push things around. take the china-u.s. drone story. 9, 10hed markets down points, and it is a new story that really amounts to very little. abigail: a tightly wound market. mark: a little can push the market around. abigail: we are seeing that a little bit. mark: one player pushes the button, it will move the market
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in the direction he or she wanted to go. abigail: overall, it seems as though you think this rotation into stocks out of bonds is likely to continue into the new year. mark: yeah, and the winners likely are going to continue to be winners, but i think are smarter ways to play that. for instance, if you look at banking, there has been probably as much money that is going to be made made in the large cap banks -- the megabanks, goldman, bank of america, jp morgan. those banks have had such a massive move. some are approaching all-time highs. some are at all-time highs. at least in the last 20 years. abigail: you have a trade on a midsized bank. can you take us to that quickly? is morethink there money to be made on the mid-cap's, the domestic banks that are larger. they are the ones that really benefit from regulation. regulation really limits their ability to grow. removing that regulation is
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beneficial. the biggest of those is fifth or bank. a bank that was over $50 10 years ago. we have never seen a growing interest rate environment with it existsd bank as now today. that is one that could be two years from now $60 pet i like owning the february calls for $.90. i think they will double in price. abigail: we have to leave it there. vonnie, back to you. vonnie: abigail, thanks for that intent. coming up, president obama will hold a news conference at 2:15 p.m. eastern before he has to hawaii with his family for the christmas holiday. ♪
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scarlett: it is 2:00 p.m. in new york, seneca p.m. in london. i am scarlet fu. oliver: i am oliver renick. welcome to bloomberg markets.
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scarlet fu: we're live from bloomberg world headquarters in new york over the next hour, and ofre covering stories out washington abe -- and beijing. financial markets jolted as geopolitical tensions reared their heads following reports china's navy has seized the u.s. drone. of washingtonrisk assets are headir while havens like gold and yen catching a bit. president obama to host a news conference this hour. we will bring you that life and in full. against this backdrop, we will jed toith j.p. morgan -- get his outlook. let's check on where stocks are headed with abigail doolittle. it is a bit of a decline from what we saw earlier on. abigail: it certainly is. we are looking at a bearish trade for the major averages. this is after the major averages
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had all opened higher. the dow and the nasdaq had flirted with all-time record highs. now we do have stocks trading lower. in fact, the s&p 500 and the nasdaq are now flirting with weekly declines. a bit of a reversal there out of the big rally. one source of tension could be what scarlet fu just mentioned, the report china sees the u.s. drone underwater, unmanned. it seems to have sparked a risk off response. it is important to remember these markets are tightly wound. any piece of news could set them off and it is why drupal witching day. these -- quadruple witching day. as for the commodity topics, both gold and oil trading higher. oil trading higher on the report to the russian energy minister said all russian oil companies will dissipate in a supply cut deal, and gold seems to be bid on some of the haven the report that china did sees
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the u.s. drone. trading, we're looking at fedex, ups, and amazon all trading lower. planeory is amazon's pilots are suggesting that amazon may not be able to deliver holiday packages on time. they are cited many concerns, including pay and work conditions, and we have a fabulous function within the bloomberg to highlight the importance of planes for amazon. it is bloomberg mavs, a new function, newly revealed, a way to visualize data. this is a map of the world. the big orange dots symbolize amazon's distribution centers. the smaller dots represent airports. in the u.s. we see a massive pocket in the midwest, the central midwest, going to the pacific, where there are not many dish of use and centers. if you live in that part of the u.s., it will be a plane and issue the planes are not moving much. it essentially to know that
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amazon does not have distribution centers in the walmart territory. this is a great function within the bloomberg. bloomberg maps showing us the importance of planes for amazon. oliver: take you. an awesome visual. let's go to first word news. taylor riggs is in the newsroom. taylor: the u.s. is demanding the return of the unmanned, underwater drone seized by the chinese in south china sea waters. it was deployed by an american oceanographic vessel with a mostly civilian crew. in recent years, china has boosted naval controls in the south china sea. photos released this week indicated china has deployed weapons on reclaimed reit's in the region. russian cyber hacking has continued since the election in november according to -- according to cnn. targets include american political organizations and think tanks. u.s. intelligence and law enforcement officials reportedly
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believe russian intelligence agencies will keep carrying out the incursion. david mccormick has the inside track to be president-elect donald trump's deputy defense secretary according to three people familiar with the matter. mccormick is a of the world's biggest hedge fund, and he was formerly considered to be a candidate for treasury secretary. in ohio, mourners are saying goodbye to famed astronaut and former u.s. senator john glenn. he was hailed as a hero after becoming the first american to orbit earth in 1962. he grew up in ohio and represented the state in the u.s. senate for 24 years. he became the oldest man in space at the age of 77 in 1998. he died last week at the age of 95. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries.
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i am taylor riggs. this is bloomberg. oliver? oliver: thank you, taylor. haven assets are getting a bit -- risk assets are getting joining us with his reaction and is 2017 outlook is the j.p. morgan asset management solution cohead jed laskowitz. let's talk about what is happening to there is a market reaction. it was a quiet day and a quiet week, but there is a move here. why do think investors are responding to this news today? jed: it is a great question, and whether this year has taught us is to expect the unexpected. you saw that with brexit, with the u.s. election. time and time again, events like this show they end up being short, abrupt market reactions that work themselves through rather quickly, and we expect something like this will happen. brexit was five days before u.k. equity markets return to where they had been, and the election
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was mere hours after a selloff. these things are serious. we have to take them seriously when they happen, but the investment applications time and time again throughout history show they tend to be opportunities to build positions rather than to sell. scarlet: i like the way abigail described the markets in current conditions -- tightly wound. our people looking for an excuse -- our people can back -- looking for excuse to give back some of the gains we have seen? jed: i am not sure. sine raising -- regime shift -- we had seen a regime shift post-election. rates are starting to respite other stimulus. still room for equities to perform well going into 2017. we are overweight risk assets. we are thinking about areas where we want to continue to stay overweight -- areas that might be less sensitive to dollar strength like small cap's over large cap's, and looking at areas like japan that are going to benefit from a stronger dollar and a weaker yen.
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there are opportunities for risk assets, and those are the areas we are focused on this year. scarlet: nevertheless, i wonder if we are going to get more instances like this in the coming year, four years, really. you are ceo of j.p. morgan asset management asia pacific until last year you are familiar with how the markets react to political headlines. is that what it will be like in the u.s. -- we react to political headlines and traders jump on it immediately? jed: it is the behavior of finance -- just because of thing happens recently you think it will happen in the future. investors tend to overreact at the wrong time. one of the reasons -- it is one of the reasons we think it could be a good time for active management. sector dispersion is that a two -year high. stock correlations are improving. the spread between the best performing and worst-performing stocks are the highest they have been in two or three years. these are times where you have
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to look at fundamentals, and that is where you can find opportunities. these movements, although they are abrupt and they are emotional, they tend to present more opportunities rather than long-term setbacks. oliver: now you are speaking my language because i love the dispersion, the correlation. i think that has been a big market story. this is implied correlation. you can see it dipping down over here. this is what you are talking about -- implied correlation in stocks in the s&p 500. that does speak to that. why exactly does that happen? i find it fascinating, the past three weeks, or take it back further -- since the election, take a week, and most likely different sector will be leading. at first it seemed clearly financial industrials, but they started to underperform. utilities and bound proxies are today the ones doing well. how does that work -- what is the driving force behind a market they can move from sector to sector every day? jed: i think what has happened over the last few years with all the stimulus put into markets,
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that has clearly distorted asset prices, and one of the bigger distortions we witnessed was the run-up in bond proxies. investors paying any evaluation for anything that payday yield. what you have seen is that rotate back to more fundamental. i think you will see that continue, and it will be about earnings, quality, growth, and hopefully that is a market we enter into. that is a market that should be very good for active management. scarlet: just to back up your point, if you come inside the bloomberg, this is the relative rotation graphic. this is a clear indication of how financials not only are leading, outperforming by a longshot, while tec has moved into a weakening phase, and other cyclicals are in that phase. in the bottom left hand court and, you have the lagging indicators -- telecoms, utilities, real estate trusts.
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and it is interesting -- as you point out, there has been a shift. we basically see a bear market of the last year, or maybe the s&p did not fall 20%, but you and they of sectors were set up for a turn. could they pick sectors that were undervalued? jed: you said it. it is an area where you should be able to find a spread between winners and losers and blindly buying sectors or indices is not a way to achieve return objectives regardless of the investor type you are in an environment where you believe there will be lower returns in the future. it is hard to sink in the recent rally we have seen, but if you think about the longer-term picture, it is lower returns for traditional indices -- the 60/40 portfolio. we think that will look more like 5% or 6%, were in the last 10 years, that is look like
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eight. you will need better allocation, active management, using the tools traders have. scarlet: within fixed income, what would you want to be? have you shifted your position when it comes to duration? jed: we have. we are underweight duration right now and still positive on credit. we are of the view there is still a low likelihood of a recession in the u.s. in the next 12 to 18 months, and although credit spreads, high-yield spreads have come in, we still think the yield cushion is an attractive place to be, even in a period where you see rates rise in the five's and the 10's. oliver: great stuff. before joining us, jed laskowitz , helping to break down what is going on in markets. scarlet: coming up, from the white house, we are awaiting president obama, what is it that the to be his final news conference as president. then he and his family will be headed to hawaii.
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we will bring the news conference as soon as it begins. this is bloomberg. ♪
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scarlet: this is "bloomberg markets." i am scarlet fu. oliver: i am a oliver renick. time for a look at the bloomberg business flash. goldman sachs has raised $4.5 billion for its first private equity fund in a most a decade according to a person with knowledge of the matter. the bank has sent its first capital call to participating investors. the fund is the bank's first since the creation of the volcker will which limits how much money their own bank can invest in private funds and equity funds. the cheaper, generic version of available the pen is next week. it will cost half the price of
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the branded version. move willceo says the not solve the industrywide issue of higher prices. blames an outdated system that determines what somebody pays for medicine in the country. union president -- pilots that five. as for amazon are taking their concerns about pay and amazon to online shoppers. they are saying the internet retailer might struggle to deliver holiday gifts on time. strikingcomes after pilots were ordered back to work. amazon prime air, a fleet of about 40 planes. that is your bloomberg business flash update. scarlet: donald trump continues to fill his cabinet and this morning he nominated david friedman as ambassador to israel. anthonystin spoke with and asked which roles will be filled next and how the process is moving overall.
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anthony: we have one of the best project managers in the world here at the top you're on the 26th four. i have said to people here on 14, it is a lot like a business -- building project it we are laying out the foundation, we will eventually put the sheet rock, and in the other orientation of the building. i think it is regular -- an intensive process. you can see from the secretary of state selection process, david, that the president-elect really wanted a wide range of people to look at. he is doing that for each of the jobs you mentioned. i do not know if that is next week's business or the week after, but i want to ensure your viewers and the american people that it is coming timely, and what they are to get used to is we will be on time and under budget in a place like this. you guys have to be impressed with the selections we have made and the speed with which we have made the selections. we have a world-class cabinet we
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are putting together here to serve the president and the american people. david: just -- speaking for myself, i do not hear anyone saying you are dragging your feet. dateo have a hard out -- a to take office. the question is what you need in the economic sphere to have ready to go -- you have public and senate and house. is taxed first up, and is that what you need in place? one of the conversations we had yesterday was around the tax proposals and the implementation of that plan. we will need somebody at omb. you guys know from your life verysed at the omb job is technical, very detailed in its orientation. we have had a situation here with the obama administration where we have not really had a budget. maybe we had one last you, but the 5, 6 years prior to that, we did not have one. the president-elect is very keen
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to make sure we are putting a budget of to the hill to get past on and ratify. yes, we need those ingredients. i would say tax reform will be a big component of this. right auditory form -- in the early part of january -- regulatory reform -- in the early part of january we have to get the cabinet positions in front. that is a process we are working on here with the transition team. in general, the spirits are high. it is christmas time, monica season, and we are happy about feel it ind you can the stock market and in the american people. when i am out traveling, there are a lot of gratified and appreciative people. david: so, anthony, you are not somebody that will go out on a tour when you are done with the transition team. you said you have a full-time job, you are fully engaged. would you be open to war in -- --n to oriented in interested in an opportunity on the team? anthony: i serve europe the
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discretion of the president-elect. my job every day -- i have said this -- i want to help the most amount of people with the least amount of drama. i do not want to make this about me. if it turns out there is a spot in the administration where vice president-elect pence or president elect trump one we to do, i am an american patriot, and i would be sick -- willing to serve the country, but i know there are things i can do outside of the administration that can also be effective. my goal is one -- as one of the executive transition team numbers is to help the president-elect find the best people who can put their egos in a jar, on a shelf, in the 14th for pantry, not focus on themselves, and focus on driving this agenda that will be powerful for working-class families and for the middle class. scarlet: that was sky bridge capital founder anthony scaramucci. oliver: still ahead, we are
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awaiting president obama who is scheduled to give a news conference before his trip away for the holidays. we will be watching for comments on china and russia. you can see right there, not quite arrived yet. this is bloomberg. ♪
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oliver: this is bloomberg markets. i am oliver renick. scarlet: and i am scarlet fu. we are awaiting president obama. he is set to deliver his final news conference as president before he leaves for holiday in hawaii. we will bring you his news conference when it begins. meantime, tensions are mounting the south china sea. chinese warships have seized an american underwater drone. joining us from washington with some perspective, bloomberg's nick wadhams, our policy reporter and bloomberg politics
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-- nick, i want to start with you. iswe presume the seizure part of the incoming president's decision to antagonize beijing with his phone call with taiwan's president? nick: there is still a lot we do not know about what happened in the south china sea with this incident. i would be wary to -- wary of going too hard with that angle. tensions have been mounting in the south china sea for a long time. there have been repeated incidents, most recently in 2013, when a chinese navy vessel cut in front of a u.s. missile cruiser. you have seen confrontations like this for some time, and there is no question china has become much more aggressive asserting claims in the -- south china sea, whether there is a degree of coronation that government officials in beijing would then say we are looking for an opportunity to make a statement to the u.s., it is a
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possibility, but i would be very wary of drawing the conclusion just yet. oliver: on the details -- where this was, the south china sea -- is it international waters -- are there any reasons they would have to justify doing this? it seems like an oculus vessel -- a drone picking up research, or did they think housewives -- otherwise? it is a naval vessel doing what the u.s. pentagon has described as routine work. it does seem it was up to routine weather-monitoring work, however the thing that is so provocative about this is that it was in international waters. yes, that is part of the south china sea, this was in waters that were not disputed by anyone. these are international waters they united states has every right to operate. -- if they take this thing in international waters, waters,
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that is provocative. the pentagon issued a formal protest to beijing. remind us of what the department of defense has said in the past on its activities in the south china sea. a this seems to be part of series of an escalating war of words between president-elect trump and china -- the leadership in china. throughout the campaign, let's remember trump had been attacking china for devaluing currency, accused him of creating -- carrying out the greatest job theft -- his words, in world history against the united states. what we see right now, they said that in his call to the leader of taiwan, which china does not recognize as a sovereign country -- recognizes it as part of its own territory -- a sensitive issue in beijing. we see a war of words escalating on china's end, and the
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possibility that is leading to the provocative moves china is making in the south china sea. a lot remains to be seen about what happens here. i guess we will be watching to see if current president obama will mention it in his press conference that is coming up. it was not on the agenda, but he will be reacting to it now. sahil kapur, nick wadhams, to a. we are -- thank you. we are awaiting the press conference with president obama to see what he talks about before he goes away for the holiday. we will for comments on china and russia with all the hacking information. we will bring that to you as soon as it begins. this is bloomberg. ♪
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scarlett: mrs. bloomberg markets. i am scarlet fu. oliver: comedy markets are closing in new york. abigailt to it
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doolittle. on the week it is a different story. gold is down 2%, a big decline on that federal reserve rate hike. the dollar climbed pressuring gold. this is gold six decline in a row. gold has been down every week since the election. bloomberg and in yellow we have gold and in white we have the 10 year yield. ,e see as yields have climbed the stands out from the standpoint that gold is seen as a hedge for inflation but with suggests the it federal reserve's extraordinary monetary policy could be coming to an end. something that has supported gold for some time. it will be interesting to see
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yields or not rising continue to pressure gold or perhaps we are up for some sort of reversal. there are many technicals suggesting the 10 year yield may retrace some of that huge gain we have seen so far this quarter. up about 1%. as for some of the stock commodities on the week, we look at orange juice and sugar. big declines here. orange juice is down 11 straight days. the longest losing streak since october 2015. the investors not liking that. sugar is having its worst week since 2014. rubber is more than 15% having a great week at a three-year high as a rubber cartel did cut output. oliver: thank you. australia'saustralia's largest c
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energy writer is undergoing a transformation to become a retailer with a big focus on renault but energy. the ceo sat down with us to talk about how the company plans to achieve that. energyre the largest retailer. we are also the largest. in terms of co2. we have a real risk owing forward and it is not a risk we want our customers or shareholders to bear. we have been aggressive in pursuing alternative solutions. with a currently operate loss of renewables but it is not enough. we have a situation where we have to invest in large-scale renewables to replace the coal generation. we have announced the closure nexther plants with the 2022.g in >> you are the leading edge of this in terms of renewables. readinga itself, i was
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there was a spat between the premise to her and the other states about climate change. how do you do with that with perhaps on getting the political from the elite. >> we engage. there are questions of not only no investment but costs and jobs politicalre some issues. we should be concerned if we are not having that debate. for us it is engagement. it is making sure that we keep customers foremost in our mind as we talk about policy engagement to get those outcomes. we are involved all along the line from state government and federal government. it is a debate we expect and one governments should have. the president-elect deny climate change. impact what you are doing in australia?
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>> for people like agl and others who invest in assets where we sink through many election cycles. we have to see what happens. for us, we plan on a carbon constrained future. if the world changes, legitimately changes we will be prepared to visit -- pivot. we have to make investments along those lines. one major difference in australia is you have a combination at the federal level of environment and energy. the minister is for environment and energy. here you have two separate functions. you have the epa and you have a department of energy. would come in nation is important. there are going to be trade-offs between environment and energy and the right outcomes will be gotten by looking at both. >> i wanted to get to something you have recently announced, importing lng.
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this is as a striker is about to become the biggest exporter of the fuel. >> is not crazy? i have a million gas customers and they need price secured gas. we have not seen the replacement of those molecules in the market. i am seeing some high pricing of gas in the market. and see alle oceans this lng and there is a price to virgins. for my customers and shareholders i am duty-bound to look and see liking get more competition into the gas markets. by exploring importation. we are seeing a glut of lng globally. -- how long do you think that will last and have you started looking at supplies, are you planning to bring in gas from other parts of australia or are you looking at asian supplies? >> we are trying to get the best pricing. there may be opportunities
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between the northern and southern hemisphere. to the question how long we think this will last, probably till the middle of the next decade. >> you are planning to spend $300 million on a terminal. tell us about how you are planning to get that gas into the southern states. >> it is early on in the process. the investment feasibility study and it will take two years to do. the fundamental thing we're looking at is building floating storage and placing that terminal not only were we have the right harbor about where we have access to the platform. i also some storage we have onshore as well. we are thinking about this in a way that provides options. if during our look at the markets the markets in australia rationalize and they stop, if we bring in floating storage and the markets rationalize we send the boat on its way. everything about us is investing or creating option naughty.
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we need to see more competitive markets for gas and more molecules. if we can that by bringing in another source and another competitive player, that is what we are going to do. scarlet: we are waiting for president obama to begin his news conference, the final press conference of his presidency. he will be speaking to the news before he goes on to the way for his vacation for the christmas holiday. we will be waiting to hear if he has anything to say on russia, china, and 20 of questions on the incoming administration. let's get you to bloomberg first word news. taylor riggs is in the newsroom. taylor: president obama is promising to act on the conclusion that rush interfered on the election. the u.s. will respond at a time of its own choosing.
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he said some of the response will be explicit and publicize and some of it may not be. the u.s. and china are at odds over an incident in the south china sea. according to the pentagon a chinese naval ship seized a u.s. underwater drone. it was deployed by an american oceanographic ship and was testing water conditions. china has boosted its naval patrols in the south china sea deployedhinese have weapons on reclaimed reefs in the region. concluding a year-long investigation into flint, michigan's water crisis. state officials in the epa saying they did not protect -- detect the problem soon enough or take proper action when problems were identified. the committee's top democrat elected cummings want to subpoena governor rick snyder for flynn-related documents. france's ambassador to the country said his country and
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germany have called an emergency meeting of the security council on war-ravaged aleppo. the evacuation of thousands of civilians was suspended amid reports of renewed violence. thousands were removed before the cease-fire broke down. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. oliver: thank you. still ahead we are awaiting president obama who is giving a news conference ahead of his trip boy for the holiday. and trumpts on china and the trump picks. this is bloomberg. ♪
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scarlet: the president has begun his news conference. president obama: typically i use
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this conference to review how far we have come over the course of the year. today, understandably, i am going to talk a little bit about how far we have come over the last eight years. as i was preparing to take office, the unpleasant rate was on its way to 10%. today it is at 4.6%, the lowest in nearly a decade. we have seen the longest streak of job growth on record and wages have grown faster over the pastor year than at any time in the past 40. when i came into office, 44 million people were uninsured area today we have covered more than 20 million of them. for the first time in our oftory, more than 90% americans are insured. yesterday was the biggest day -- healthcalth care more are setting up a day. we have doubled production of renewable energy and enacted the
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post sweeping reform since fdr to protect consumers and prevent a crisis on wall street from punishing main street ever again. none of these actions stifled growth as critics predicted. instead, the stock market has nearly tripled. since i signed obamacare into added 15 million new jobs. the economy is undoubtedly more durable than in the days when we relied on oil from unstable nations and banks took risky bets with your money. last year the poverty rate fell at the fastest rate in almost 50 years while the median household income grew at a record. we have done all this while cutting our deficits by nearly protecting vital
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investments that grow the middle class. in foreign policy, when i came into office, we were in the midst of two wars, now nearly 180,000 troops are down to 15,000. than beingn rather at large has been taken off the battlefield along with thousands of other terrorists. over the past eight years, no foreign terrorist organization has successfully executed an attack on our homeland that was directed from overseas. we haveto him say ensured that iran cannot obtain a nuclear weapon without going to war with iran. -- erect. we opened up a chapter with the people of cuba and we brought nearly 200 nations together around climate agreement that could save this planet for our kids. and almost every country on earth sees america as stronger
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and more respected today than they did eight years ago. in other words, by so many measures, our country is stronger and more proper -- prospers when it -- than it was then we started. the situation i am proud to leave more -- for my successor. and based to the american people for the sacrifice use you made and your communities and the businesses that you started or invested in. the way you looked out for one another. i could not be prouder to be your president. to tout this progress does not mean we are not mindful of how much more there is to do. this season in particular, we are reminded that there are still hungry, people who are still homeless. people who still have trouble paying the bills or finding work after being laid off. the communities that are still mourning those who have been stolen from us through senseless
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gun violence and parents who are wondering how to protect their kids. i leave office, i intend to continue to work with organizations and citizens doing good across the country on these and other pressing issues to build on the progress we have made. around the world as well, there haveotspots where disputes been intractable. conference have flared up, and people, innocent people are suffering as a result. nowhere is this more terribly true then in the city of aleppo. for years, we have worked to stop the civil war in syria and alleviate human suffering. it has been one of the hardest issues that i faced as president. the world as we speak is united in horror at the savage assaults by the syrian regime and its russian and iranian allies of the city of aleppo. we've seen a deliberate strategy of surrounding and besieging and starving innocent civilians.
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we have seen relentless targeting of humanitarian workers and medical personnel, entire neighborhoods reduced to rubble and dust. there are continuing reports of civilians me next routed. these are horrific violations of international law. thisnsibility for brutality lies in one place long. with the assad regime and its allies, russia and iran. and this blood and atrocities are on their hands. we'll know what needs to happen. there needs to be an impartial international observer force in aleppo that can help coordinate an orderly graduation through safe corridors. and that there be full access for humanitarian aid even as the u.s. continues to be the world's largest donor of humanitarian aid to the syrian people and it needs to be a broader say that's the cease-fire that can seize -- serve as a solution.
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that is what the u.s. will push for with our partners and through multilateral institutions like the u.n. russia has repeatedly blocked the security council from taking action on these issues so we will depressing the security council to help improve the delivery of humanitarian aid to those who are in such desperate need to ensure accountability continuing to monitor any potential use of chemical weapons in syria. we are going to work in the u.n. general assembly as well on accountability and to advance a political settlement. it should be clear that although you may achieve tactical victories, over the long-term, the assad regime cannot slaughter its way to legitimacy. that is why i will contain to more for a transition to a representative government. that is why we must not avert
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our eyes to the terrible events that are unfolding. regime and its russian and iranian allies are trying to confiscate the truth -- office -- obfuscate the truth. the world will not forget. even the season where the incredible blessings we know as americans are all around us. even as we enjoy family and and are reminded of how lucky we are great we should also be reminded that to be an american can involve wearing burdens and meeting obligations to others. american values and american ideals are what will lead the way. to a safer and more prosperous 2017. both here and abroad. and by the way, if you embody those values and ideals like -- our brave men and women in your
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firm and their families. and want to close by wishing all of them a very merry christmas and a happy new year. with that, i will take some questions and i'm going to start with josh letterman of ap. >> thank you. there is a perception that you are letting president couldn't get away with interfering in the u.s. election and that a response that nobody knows about -- do you agree that packing was responsibility for -- responsible for hillary clinton's loss? president obama: with respect to i think theyn, would be the first to acknowledge that we have and everything we can to make sure that they are successful as a
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promised and that will continue. it has just been a few days since i last talked to the president elect about a whole range of transition issues. that corporation will continue. it has not been a lot of squabbling. what we said is the fact. on uniformhat based intelligence assessments, the russians were responsible for and that as ac consequence, it is important for us to review all elements of that and make sure that we preventing that kind of interference through cyber attacks in the future. bipartisan be a issue. that should not be a partisan issue. themy hope is that president-elect is going to
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similarly be concerned with making sure that we do not have potential foreign influence in our election process. i do not think any american wants that. it should not be a source of an argument. i think that part of the challenge is that it gets caught from the carryover election season. and i think it is very important for us to distinguish between the politics of the election and the need for us as a country both from a national security perspective but also in terms of the integrity of our election system and our democracy to make sure that we do not create a lyrical football here. how this respect to thing unfolded last year, let's just go through the facts pretty
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quickly. summer,eginning of the we were alerted to the possibility that the dnc has been hacked. and i immediately ordered law enforcement as well as our to find out teams everything about it, investigated thoroughly, to brief the potential victims of this hacking, to brief bipartisan -- on a bipartisan basis the leaders of both the house and the senate and the relevant intelligence committees , and once we had clarity and certainty around what in fact had happened, we publicly in fact, russia had hacked into the dnc. and at that time, we did not anyibute motives or
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interpretations of why they had done so. we did not discuss what the effects of it might be. we simply let people know the people know, congress know that this had happened. all of you wrote a lot of stories about both what had happened and you enter but it why that -- interpreted by that happened and what effect it would have on election outcomes. we did not. and the reason we did not was because in this hyper partisan myosphere at a time when primary concern was making sure that the integrity of the election process was not in any whenamaged, at a time anything that was said by me or by anybody in the white house would immediately be seen through a partisan lens.
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i wanted to make sure that everybody understood we were playing this thing straight. that we were not trying to advantage one side or another but what we were trying to do is let people know this is taking place. if you started seeing effects on the election, if you were trying to measure why this was happening and how you should consume the information that was being leaked, that you might want to take this into account. that is exactly how we should have handled it. imagine if we had done the opposite. it would become the -- just one more political scrum. part of the goal here was to make sure that we did not do the work of the leakers for them by raising more and more questions about the integrity of the election right before the election was taking place, at a president-elect himself was raising questions
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about the integrity of the election. and finally, i think it is worth waiting out that -- pointing out that the information was out. it was in the hands of wikileaks so that was going to come out in a matter what. -- no matter what. i was concerned that that was not compounded by a potential hacking that could hamper vote counting, affect the actual election process itself. and so in early september when i , i president putin in china felt that the most effective way to ensure that that did not happen was to talk to him directly and tell him to cut it out and they were going to be serious consequences if he did not. seein fact we did not further tampering of the election process, but the leaks through wikileaks had already occurred.
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so, when i look back in terms of how we handled it, i think we handled it the way it should have been handled. we allowed law enforcement and intelligence community to do its job without political influence, we briefed all relevant parties involved in terms of what was taking place, when we had a consensus around what had happened to my we announced it, not through the white house, not through me, but rather through the intelligence communities that had carried out these investigations. and then we allowed you and the american public to make the assessment as to how to way that going into the election. the truth is there was nobody did not have some sense of what kind of effect it might have. i am finding it a little curious that someone does your buddy is acting surprised that this looked like the -- this was just
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a managing hillary clinton because you guys wrote about it every day, every single leak about every little juicy tidbit of political gossip. john podesta. this was an obsession that dominated the news coverage. so, i do think it is worthless that theg how it is presidential election of such importance, of such moment with so many big issues at stake, and such a contrast between the candidates came to be dominated bunch of these leaks. what is it about our political --tem that made us foldable vulnerable to these kinds of potential mate -- manipulations. ,his is not some elaborate
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complicated espionage scheme. into some democratic party emails that contained pretty routine stuff. some of it embarrassing or uncomfortable because i suspect that if any of us got our emails hacked into the might be some things we would not want suddenly appearing on the front page of the newspaper or a telecast even if there was not anything particular -- particularly illegal or controversial doubt it and then it just took off. me and itoncerns should concern all of us. but the truth of the matter is everybody had the information. and we handlede,
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it the way we should have. now, moving forward, i think there are a couple of issues that this raises. number one is a constant challenge we will have with sever security. throughout our economy and throughout our society, we are a digitalized culture. there is hacking going on every single day. not ais not a company, major organization, there is not a financial institution, there is not a branch of our government where somebody is not going to be fishing for something are trying to penetrate or put in a virus or , for thend this is why last eight years, i have been obsessed with how do we continually upgrade our cyber security systems. and this particular concern around russian hacking is part of a broader set of concerns about how do we deal with sever being used in ways that
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can affect our infrastructure, affect the stability of our financial systems, and affect the integrity of our institutions like our election process. i just received a couple weeks back, he was not widely reported non-, a report from our cyber security commission that outlines a whole range of strategies to do a better job on this. it is difficult because it is of cyber- the target attacks is not one entity but it is widely dispersed and a lot of it is private. dnc.the it is not a branch of government. we cannot tell people what to do but we can inform them to get best practices. what we can also do is to on a bilateral basis warn other countries against these kinds of
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attacks, and we have done that in the past, so just as i told , and indicatedit there will be consequences when they do it, the chinese have in the past engaged in cyber ourcks directed at companies to steal trade secrets and proprietary technology. i had to have the same the presidentith and what we have seen is some evidence that they have reduced but not completely eliminated these activities probably because they can use handouts, one of the problems with the internet and cyber issues is that there is not always a return address and by the time , they are a to it true reading what happened to a
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particular -- are tripping what happened with a particular government is not always probable. intelligence committees can make an assessment. what we have also tried to do is start creating some international norms about this to prevent some side of -- sort of cyber arms race. we have offensive capabilities is well as defensive capabilities. my approach is not a situation where everyone is worse off because folks are constantly attacking each other back-and-forth. but putting some guardrails , nationehavior including our adversary so they understand that whatever they do to us, we can potentially due to them. some special challenges because oftentimes, our economy is more digitalized, probablye vulnerable because we are a wealthier nation and we are more wired
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than some of these other countries and we have a more open society. and engage in less control and censorship over what happens over the internet which is also part of what makes us special. last point and the reason i am going on here is because i know that you guys have a lot of questions about this and i am addressing all of utrecht the about it. with respect to response, my principal goal leading up to the election was making sure that the election itself to an off without a hitch, that it was not tarnished, and it did not feed any sense in the public that somehow, tempering had taken place with the actual process involved. and we compass that. -- accomplished that. that does not mean that we are not going to respond.
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it simply meant that we had a set of priorities leading up to the election that were of the utmost importance. our goal continues to be to send a clear message to russia or others not to do this to us because we can do stuff to you. it is also important for us to do that in a thoughtful, methodical way. some of it we do publicly. some of it we will do in a way that they now but not everybody will. and i know that there have been folks out there who suggest if i went out there and made the announcement and stopped our chests about a month stuff that somehow that would potentially spoke the russians that keep in mind that we are -- already have enormous numbers of sanctions against the russians. the relationship between us and , sadly,as deteriorated
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significantly over the years so how can we approach an appropriate response that increases cost for them for behavior like this in the future but does not create problems for us is something that is worth taking the time to think through and figure out. that is exactly what we have done. so at a point in time where we have taken certain actions that we can vote publicly, we will do so. there are times where the message will go, will be directly perceived by the russians and not publicized area i should point out, by the way, part of why the russians have in effective on this is they do not go around announcing what they are doing. it is not like putin is going around the world publicly saying, look what we did, was
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not clever? he denies it. somehow public effective going to be i think does not read, the thought process in russia very well. did clinton lose because of the hacking? president obama: i will let all the political pundits in this town have a long discussion in thehat happened election. it was a fascinating election, so i am sure there are going to be a lot of books written about it. i have said what i think is important for the democratic party going forward rather than try to parse every aspect of the election. i have said before i could not be prouder of secretary clinton, her outstanding service, she has worked tirelessly on behalf of the american people and i do not
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think she was treated fairly during the election. her andthe coverage of the issues was troubling. but, having said that, what i ,ave been most focused on appropriate for the fact that i am not going to be a politician daysout, what is it, 32 question mark 31? 34? when i have said is i can maybe give some counsel and advice to the democratic party. the thing we have to spend the most time on because it is the thing we have the most control , how do we make sure that we are showing up in places where i think democratic policies are needed, where they are helping, where they are making a difference, but where
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people feel as if they are not being heard. and where democrats are characterized as coastal, liberal, latte-sipping, politically correct, out of , we have to be in those communities, and i have seen that when we are in those communities, it makes a difference. that is how i became president. i became a u.s. senator not just because i had a strong base in chicago, but because i was driving around downstate going to fish fries and sitting in vs -- vfw halls in talking to farmers and i did not win every one of their votes but they got a sense of what i was talking about, what i cared about, that i was for working people, that i was for the middle class, that the reason i was interested in strengthening
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unions and raising the minimum wage and rebuilding our infrastructure and making sure that parents had decent childcare and family leave was because my own family's history was not that different from theirs even if i looked the little different. same thing in iowa. the question is, how do we rebuild that party as a whole so county in is not a any state, i do not care how red, where we do not have a presence and we are not making the argument is a think we have a better argument. that requires a lot of work. it has been something i have been able to do successfully in s, it is notign something i have been able to transfer to candidates in build a sustaining
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organization around, that is something that i would have liked to have done more of, but it is kind of hard to do when you are doing with a bunch of .ssues here in the white house that does not mean it cannot be done and i think there are going to be a lot of talented folks out there, a lot of progressives who share my values for going to be leading the charge in the years to come. michelle: we heard hillary fbiton talk about how the director's announcement made the difference in the election and we heard her campaign chairman talk about something being deeply broken within the fbi, talking about how the investigation was lackadaisical in his words. what do you think about those comments? do you think there is any truth to them, do you think there is a danger there that they are
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calling into question the integrity of institutions in a similar way that donald trump's team has done, and second part to this is that donald trump , giving theedly indication that the investigation of the russian hack might not be such a priority once he is in office. what do you think the risk is there and are you going to talk to him about -- directly about some of those comments he made? latternt obama: on the point, as i said before, the seasonion from election two governance season is not only's -- not always smooth. it is bumpy. there are still feelings that are brought out there, there are people who are still thinking about how things unfolded and i get all that.
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but when donald trump takes the is sworn ince and as the 45th president of the united states, he has a different set of responsibilities and considerations, and i have said this before, i think there is a sobering process when you walk into the oval office. i have not shared previously have hadonversations i with the president-elect, i will say they have been cordial and in some cases it has involved me making some specific suggestions about how to ensure that, --ardless of our obviously obvious deep disagreements about maybe i can transmit some thoughts about maintaining the effectiveness, integrity,
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cohesion of the office and various democratic institutions, listened. i cannot say he will end up implementing, but the conversations themselves have been cordial as opposed to defensive in any way. and i will always make myself available to him just as previous presidents have made themselves available to me as issues,. with respect to the fbi, i will tell you, i have had a chance to know a lot of fbi agents, i know director comey, they take their job seriously. they work really hard. they help keep us safe, and save a lot of lives. and it is always a challenge for
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law enforcement when there is an intersection between the work that they are doing and the political system. is one of the difficulties of democracy generally. wantve a system where we our law enforcement investigators and our prosecutors to be free from politics, to be independent, to but sometimesht, that involves investigations that touch on politics and particularly in this hyper-partisan environment we have been, everything is suspect. everything you do one way or another. done is tohat i have notretty scrupulous about wading into --
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prosecution decisions or not to prosecute. i have tried to use -- to be strict in my own behavior about preserving the independence of law enforcement, free from my own judgments and political assessments in some cases. and i do not know why i would stop now. mike: thank you, mr. president. on aleppo, your views of what happens there am a responsibility, the russian government, the iranian do you as, and -- but president of the united states, leader of the free world, feel any personal moral responsibility now at the end of your presidency for the carnage
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we are all watching in aleppo which i am sure disturbs you. secondly, also on aleppo. you have again made clear you have practical disagreements [indiscernible] and president-elect trump has said last night he wants to create [indiscernible] do feel like in this transition -- do you feel like in this transition you [indiscernible] i always feela: responsible. responsible when kids were being shot by snipers. whent responsible
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people are displaced. i felt responsible [inaudible] because there is not so much social media being generated. there are places around the ared where horrible things happening, because of my office, i feel responsible. is thereelf every day something i could do that would save lives and make a difference and spare some child who did not deserve to suffer? that is a starting point. there is not a moment during the course of this presidency were a have not felt some responsibility. that is true, by the way, for own country. -- our own country. when i came into office and people were losing their jobs and using their homes and losing their pensions, i felt
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responsible. i would go home at night and i would ask myself, was there's something better i could do or smarter that i could be that would make a difference in their lives, that would relieve their , and really their hardship. -- relieve their hardship. with respect to syria what i have consistently done is taken to best course that i can while end the civil war having also to take into account the long-term national security interests of the united states, and throughout this process, , ifd on hours of meetings you tallied it up, days or weeks of meetings where we went in painfulry option
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detail, with maps, and we had eightlitary, and we had agencies, and we had our diplomatic teams, and sometimes we would bring in outsiders who were critics of those. whenever we went through it, the challenge was that, short of putting large numbers of u.s. , uninvited,e ground without any international law mandate, without sufficient at a timeom congress, when we still had troops in afghanistan and we still had troops in iraq and we had just gone through over a decade of war and spent trillions of dollars and when the opposition on the ground was not cohesive
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enough to necessarily govern a country, and you had a military superpower in russia prepared to do whatever it took to keep its involved in you had a regional military power in iran who saw their own bridal strategic interests at stake and were willing to send in as many of their people or proxies to support the regime. circumstance, unless we were all in, and willing to take over syria, we were going to have problems. and that everything else was tempting because we wanted to do something and it sounded like the right thing to do, but it was going to be impossible to do this on the cheap. in that circumstance, i have
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to make a decision as president of the united states as to what what is going on? summit he is not feeling good? is not feeling good? we have got -- we can get our doctors back there to help out. so many want to go to my but -- to my doctor's office and have them -- all right. where was i? we could not do it on the cheap. -- cane -- it may be someone help out, please, and get the doctor in here?
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somebody grabbing our doctor? in the meantime, just give her a little room. the doctor will be here in a second. you guys know where the doctor's office is?
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through there. go through the palm doors. it is right next to the map room. there he is. ok. the doctor is in the house. -- ind i do not mean that mean that with all sincerity. i understand the impulse to want to do something, but ultimately, what i have had to do is think about what can we sustained, what is realistic, and my first priority has to be what is the right thing to do for america. and it has been our view that the best thing to do has been to
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provide some support to the moderate opposition so they could sustain themselves and we would not see anti-masonic anti-assad regime forces. we have engaged our international partners to put pressure on all the parties involved in try to resolve this through diplomatic and political means. i cannot claim that we have been successful. that ishat is something true with a lot of issues and problems around the world. i have two go to bed with every night -- i have to go to bed with every night.
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i have to believe it was the right approach given what realistically we could get done. absent a decision as i said to go into much more significant way. that i think would not have been sustainable or good for the american people because we have a whole host of public -- other obligations we have two meet, wars we had already started and that were not yet finessed. the issue ofto ises owns -- safe zones, it a continued problem, a continued challenge with safe zones, if you are setting up those safe zones on syrian territory, then that isuires some force willing to maintain that territory in the absence of
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consent from the syrian government and now, the russians, or the iranians. aleppo's be that with tragic situation unfolding, that, in the short term, if we can get more of the tens of thousands who are still trapped that so long as the world's eyes are on them, and they are feeling pressure, the regime in russia concludes that they are willing to find some arrangement perhaps in coordination with turkey, whereby those people can be safe. even that will probably be temporary, but at least it solves the short-term issue that is going to arise. unfortunately, we are not even there yet, because right now, we
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claimingians and assad that basically all the innocent civilians who were trapped in aleppo are out when international organizations, humanitarian organizations who know better and who are on the ground has said unequivocally that there are still tens of thousands who are trapped in preparing to leave under pre-much any conditions and so right now, our biggest priority is to continue to put pressure wherever we can to try to get them out, ok? >> [inaudible] helpdent obama: i will president-elect trump with any advice, counsel, information that we can provide so that he, once he is sworn in, can make a decision. between now and then, these are
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decisions i have to make based on the consultations ahead with our military and the people who have been working this every single day. peter alexander. peter: thank you. can you given all the intelligence we have heard assure the public this was once and for all of free and fair election and specifically on russia, do you feel any obligation now as they have been ,ssisting -- to show the proof to put your money where your mouth is and declassify some of these [inaudible] and is it relates to donald you concerned about his relationship with vladimir putin, especially given some of andrecent cabinet picks, rex tillerson who hosted putin with champagne over oil deals? inc. you. -- thank you. i may be obama: getting older. these multipart questions, i
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start losing track. i can assure the public that the kind oft tampering with the voting , andss that was of concern will continue to be of concern going forward, that the votes that were cast were counted, they were counted appropriately, we have not seen evidence of machines being tampered with, so that assurance i can provide. that we find mean potential probe of every single voting machine all across the country. but we pay a lot of attention to it, we worked with state officials, etc., and we feel confident that that did not
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occur in that the votes were cast and they were counted. so that is on that point. what was the second one? reclassification. president obama: we will provide evidence that we can safely provide. that does not compromise sources and methods. will be honest with you, when you're talking about cyber security, however that is classified and we're not going to provide because the way we knowingople is by certain things about them that they may not want us to know and if we are going to monitor the stuff going forward, don't want them to know that we know.


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