Skip to main content

tv   Bloomberg Markets Americas  Bloomberg  December 19, 2016 12:00pm-3:31pm EST

12:00 pm
scarlet: we are covering stories from new york to washington and london this hour. more than half $1 trillion in deals were recorded this year the most since 2008 we break in action.e m&a plus, barclays is preparing to tell 7000 clients to do more dealings with the firm or find another bank. it is whittling down customers that don't produce significant profits. china pushes back against donald trump's claim that his military stolen american naval drone. we look at what is to comment. .- what is to come abigail joins us now with the latest starting on the final trading week with modest gains. abigail: we are off the high, in fact we were on pace for new record closing highs.
12:01 pm
today mirrors friday with stocks sharply higher. the dow and the nasdaq both on pace for record closes. we saw those gains disappear. right now we do have gains, but are not on record watch or on close record watch. as the one big mover, if you want to know at uptrend looks like this massive spike is higher. this cannot hold, but for today probus oncology is at its highest level in over a year. a got early approval for an ovarian cancer drug, investors are clearly loving this. the index is up for its fifth day in a row but on the year it is a different story. this goes back further than a year, one year was the peak in biotech, then a big bear market,
12:02 pm
where they still remain. this year has been going up and down in this range. this is the 50 day moving average goes below the 200 a moving average it speaks the fact that sellers are stepping in. it will be interesting to see whether the recent debt cross and biotech is similar to the one last year which did bring on those sharp declines for biotech shares. most important, a haven bid with the yen trading higher. the safe haven yen is rallying today. where the 10 year yield rallying down six basis point. that is really a pretty big move. are tells us that bonds rallying in a bit of a bid for gold.
12:03 pm
areath the surface there other asset classes telling us that all is not well. maybe we see stocks do the same reversal as on friday. scarlet: thank you, let's get a check now in the first word news, emma has more. emma: russia's ambassador to turkey, andrei karlov, was shot while attending an exhibition and ankara today. a reporter said the attacker sho uted "we are dying in syria and you will die here." cnn-turk showed a man said to be karlov lying down on a stretcher. he was treated on site and was not hospitalized for that there's another report that the gunmen was killed. the un security council unanimously approved the resolution to send monitors to formal rebel held eastern aleppo.
12:04 pm
this following massive atrocities by syrian forces. meanwhile, evacuations from the beleaguered city have said to have ceased. christine lagarde international monetary fund's managing director has been convicted by a special french court for her role in a contentious arbitration to a businessman back in 2008. legarde, who was france's finance minister at the time was spared jail time and a criminal record. they will meet soon to consider the most recent developments. electors are gathering in every state to formally elect donald trump as president. but some anti-trump forces are still ready to give up. protesters plan to be at the state capitol but are unlikely to persuade electors to dump trump. they will meet also on jittery sixth two certify the results of
12:05 pm
the electoral college. this is bloomberg. breaking news, icahn enterprises will be selling american railcar leasing to sumitomo, once again that is american railcar leasing will be sold to sumitomo. 778 enterprise value is $2. billion is a fleet of railcars that is expected to occur in the second quarter of 2017. and is now deals time for the bloomberg markets in deals report every monday we zero in on the m&a business with insight and analysis from the biggest players was up today we analyze the big deals and the big deal busts of 2016 p. here with me now is jeffrey and anna.
12:06 pm
no conversation about deals can begin without go on the bloomberg. theok at ma go, and this is year to date on dealmaking bus is timeiggest we see warner and at&t pending the second one is one that is been withdrawn. with honeywell. a dollaru not just value, at&t and time warner in terms of the names. those are extraordinarily high profile names. you get cnn involved and film studios involved and everybody knows at&t. this is alex ordinarily big deal. we were lucky enough to break it here at bloomberg. what i wonder we normally have hotshot lawyers and bankers on for the segment today we have a hotshot reporter. thisis your view, how does deal impact of the m&a universe? it has impact on the media landscape but in terms of the overall dealmaking world how do
12:07 pm
you view this? >> the thing that stands out is was ambitious it without being audacious. many of the big ones we saw in early 2016 and 2015 because they were just a way to audacious. a challenge regulators and politicians. the were seen as that for consumer. this isn't like that. i hate to use the language of the m&a banker but it is horizontal integration. two companies in very different industries and time warner the content and in at&t the means to deliver that content. putting it together made a ton of sense. the price wasn't so crazy that investors on the at&t side balked at it. one of those deals assuming it does get done and brings people back to say this was a smart deal and one that actually changed the media landscape. scarlet: not a ton of overlap between the businesses but then
12:08 pm
you halve the hole political scrutiny part of it. donald trump during the campaign had indicated he would not approve this kind of deal or would push for a disapproval of this deal. ed: i think that is right for study came out and said if he wins he would block the deal at all costs. he has cut back on that rhetoric as he has on a lot of other of the rhetoric. privately he has been indicating to then that he would perhaps do that with some concessions. one of the recent the market and it is quite interesting you see this reflected in the risk spread coming from somewhere about 23 or 24% today it is run 14% right now so that is a tight spread. people assume that trump's real issue is with cnn, and if they are nicer to him then this deal gets through. you it anti competitive is not a hindrance. day aftermember the
12:09 pm
the election and i asked him about the trump commented he said this was just trump making a kick at cnn. i would be stunned, said the banker, if they blocked this one. the second-biggest of a deal they got announced was bayer-monsanto. it is a combination of other deals with the chinese getting involved. at thet is executor issue for monsanto is that monsanto spent so long dolling itself up to go after syngenta to convince that it was the right person to do a deal with that when they went off into the deal with chemchina which is the state-controlled ad chem company. monsanto was left with no dance partner until bayer came in. monsanto had no options but to say ok/ then we had some time when they
12:10 pm
were issues over price for stuffed of the agreed to something one of these deals that speaks to a wider trend of consolidation in the ad chemical space. we have seen others, not bayer-monsanto, but do regulators look at these deals in conjunction or individuals? scarlet: take a look at the annual score cutter dealmaking what is -- score of dealmaking it shows that the peak was last december on a quarterly basis. generally futures look at an annual the basis. 2016 looks underwhelming. jeff: what was lacking with the $10 billion deals. there were some we remember like bayer-monsanto and at&t time and other cyclic it announced but there was a lack of the $10 billion deals. a lot of the deals i got announced the 2016 got killed
12:11 pm
like the big fines or -- pfizer deal. the government was willing to kill deals that concerned them. scarlet: does that continue under president trump? ed: that is a good question. it is difficult to bring these deals back. blocked, if they are then the argument has to be so strong that you have the city regulators got it wrong last time. $570 billion in that fell through in 2016 the statistics to temerity trying to overcome reality. it was way too ambitious for study could see from the outset that the government led said we don't like tax evasion trip to $100 billion is a tax evasion for bayer. there was this whole run of
12:12 pm
deals, and energy transfer in williams and with the railroad sector, highly ambitious deals in the september going to challenge regulators to come out and say something and they did. i think perhaps we see people in the domestic m&a market in the u.s. more willing to try deals that perhaps would have been shaky in the past. we could seelly if repatriation next to that is really high on the priority list. you'll see deals, fewer deals going outside the united states. you will see more deals internally. stuff, good things to watch out for in 2017. our executive editor for global deals a bloomberg and ed, our deals reporter was a coming up, barclays is starting to rank its trading customers by return on capital. we tell you that won't capture more gold or platinum accounts. ♪
12:13 pm
12:14 pm
12:15 pm
scarlet: this is bloomberg markets. barclays embarks on a new separatesstem that trading partners and the gold .latinum and diamond categories this is an idea that may not work so well in the real world. according to bloomberg columnist, we are joined now by that columnist. this is some pushback against the idea that more customers is better and barclays wants to extract more value from each of the existing customers that it does spend time and money on. >> exactly, this is something that banks talk a lot about. takingve how that
12:16 pm
control of their client list and really draw the line through clients that don't make enough money overseas. costs. want to cut the reality is the clients these banks often cut are the low hanging fruit. more money out of the top clients they realize they don't have much power. as you get to the top the real pressed each clients have more negotiating power with the banks. the tables turn someone. take this with a pinch of salt in my view. scarlet: it sounds great but in practice it is difficult. it is also not a original idea. willie all be chasing after the same customers? -- will they all be chasing after the same customers? >> that is exactly it. every bank wants to get the most from the active hedge funds. the big asset managers, but
12:17 pm
these big asset managers are the ones that want the most from their bank. is if you are a bank that cutting certain asset classes and certain businesses, it is hard to get those clients on board. it becomes hard to trim around the edges when it comes to these clients. it is quite tricky. scarlet: you said they don't have as much leverage as they might they boast how much leverage does barclays specifically have because of this trim down the global ambitions and is now more of a u.k. based banking operation? ionel: absolutely, angiography is important. if you are pulling out of asia, and you can't access those global trades. some impactu do see from changing the strategy and geographies as barclays has done. on the other hand, they stuck with the investment bank and
12:18 pm
wants to be a transatlantic consumer and corporate and investment bank was that of the markets keep going positively as they have done that could be a nice cushion a nice uplift for the bank that has nothing to do with cutting client lists but everything to do with confidence in the market and from client in general. scarlet: my next question is why now? why are the going about this now eight years after the financial in in only have a sea change macro condition with inflationary change gaining momentum. the fed is seeking normalization and a return to volatility as well. lionel: it is a reflection to the way that banks have to walk the walk as well as talk the talk. there's been a lot of talk over the past five years that banks need to cut costs on their businesses. we haven't seen that much action. i think it is a good thing to hear this kind of noise even with the markets getting better. you really can't be seen to be just counting on a cyclical
12:19 pm
upturn given the pressures on cost. it is an encouraging sound and as you say it is bound to the markets in terms of what we see in revenue next year. scarlet: is this a strategy that resonates with investors? do they reward this kind of approach? inal: i think -- lionel: think so but there is a lot for investors to be disappointed about. since trump's election european banks have rallied heavily. they're willing to get the benefit of the down for now. i think that if we don't see the real delivery on revenue but also costs that could be a lot more disappointment to come. scarlet: thank you so much for joining us, bloomberg gadfly columnist and more you can check out gads go on the bloomberg list of still ahead donald trump accuses china of stealing a u.s. course for tense
12:20 pm
relationships between the two countries when he takes office next month. ♪
12:21 pm
12:22 pm
♪ scarlet: you are watching bloomberg. mark: this is your global business report. is deciding where to sell its shares. look at which country are in the running. irbnb is getting ready to take on priceline and expedia with a new service for taking on air travel. iran's president is looking for countries to invest in the oil industry. will it work? arabia couldudi sell its shares in new york and
12:23 pm
despite the lob pass by the u.s. allowing victims of the 9/11 attacks to sue the kingdom most of the plan to sell less than 5% by 2018. it can be learned of the biggest share sales in history. mark: bp chief executive told bloomberg he see signs of growth following more than two years of the oil slump. think we will remain very disciplined about the capital we spend and the projects we select. starttime for bp to growing now. we work through so many difficulties that the company is now well positioned for growth towards the end of the decade. is developing a service for air travel was a development of the feature is in the early stages. break into theto business are under consideration but the peppers the home rental startup and greater competition with the likes of priceline, and
12:24 pm
expedia. reducing headcount people familiar with the matter say layoffs recently began and could ultimately total as many as 3000 lost jobs across several units. the airline says it is restructuring to reduce costs and increase revenue. there underan gulf pressure to adapt to slowing growth after years of aggressive expansion. julie: time now for our bloomberg quick take. weary oflong been outside influence been now the president's government is offering international oil companies their biggest role since 19 79. in. it's an attractive proposition but there are plenty of risks. one is donald trump opposing the 2015 nuclear deal that allowed iran to reintegrate into the world economy. iran's oil output is almost returned to the pre-sanction levels. most of the sanctions were
12:25 pm
lifted in january after the country reigned in their nuclear program. in the november deal among opec members iran was granted in exception to not cut. require outside technology and capital and management of the government has called on foreign governments to invest $100 billion. from the first concession given to a british speculator back in 1901 until the 1979 islamic st noution iran had almo control over its most precious natural resource. when they seize power in 1979 were the first acts was to we nationalize the oil. four companies were allowed back someost left by 2010 -- companies were allowed back the most left by 2010. big oil companies will not pass up the oil field lightlys.
12:26 pm
10% of the world's crude reserve s, but the risks are long. elections in 2017 could see the president replaced with a more protectionist president. and under trump the u.s. could produce new sanctions on iran. you can read more about the quick takes on our -- on the bloomberg. had to bloomberg.com for more stories. ♪
12:27 pm
12:28 pm
12:29 pm
scarlet: breaking news -- russia's ambassador to turkey has died according to russia's foreign ministry. he was shot while attending an art exhibition and ingres today.
12:30 pm
the report said the attacker had shouted, we are dying in syria and you will die here. joining us now is a reporter from his temple. give us the latest from where you sit. >> russia's foreign ministry reports that he has died. he was at an art exhibition where a man wearing a suit apparently shot hampered as he was shooting him, he was shouting about aleppo. that is the city in syria where russia is backing syrian government forces in the fight against rebels. karloff had been the ambassador to turkey since 2013. scarlet: some background layer, but going back turkey and russia have had a tumultuous relationship in recent years. what can we expect going forward? >> over the past few months, although they have had tumultuous relationships, they
12:31 pm
have enjoyed close relations, especially after the failed to hear in turkey where russia's president reached out to president erdogan. at the end of 2015, turkey shot down a russian jet on the syrian border. that led to a huge diplomatic fallout for russia introduced trade and travel embargoes. also russia and turkey have been on different sides in the fight in syria. russia obviously backing the syrian government and the syrian president while turkey wants him overthrown. scarlet: looking at the fallout and financial markets and i see the 10 year yield at session lows. they are buying steep assets like treasuries and the yen at session highs. what does this mean for the lira? lira is depreciating
12:32 pm
against the dollar ever since this news came out. it is down around 7/10 of a percent. the lira has been hitting historical lows over the past few months. that has got to do a lot with donald trump becoming president-elect. turkey's lira has been falling and emerging markets, but turkey is also in a state of emergency ever since the failed in july. turkey is not only dealing with political fallout but terrorism almost on a daily basis. scarlet: thank you so much for joining us today and thank you for the details. we will bring you more details as they cross. this is bloomberg. ♪
12:33 pm
12:34 pm
12:35 pm
scarlet: this is "bloomberg markets." i'm scarlet fu. it has been quite a year for markets as we wind down 2016. the u.s. election and deep brexit vote rattled investors. jonathan byner told bloomberg daybreak america today that president trump's growth plan will outweigh any negative trade impacte and overall has a largey optimistic outlook. >> there are potentially good things for growth and there are things that are offset for the. there's a lot of optimism and you see that in a lot of business surveys. consumers are feeling pretty good and markets are responding to that. we do think that at the end of the day that cooler heads will prevail and that is what we will see. the rhetoric on some of the things are little more inwardly focused and putting on some bestraints on trade may
12:36 pm
growth negative. we may see some of that, but less than what we will see on the positive side, like things that will make it easier to do business and reduce taxes and make people feel better about the future. david: let's talk about divergence. we're looking at possible divergence in central banks in the western world. do you see the possibility of divergence in the regulatory approach as the usd regulates? how do you see that being a factor going into 2017? jonathan: that will be a major factor in it something that we expected this year and got this year. the u.s. has been outperforming from a growth perspective. the u.s. has limited slack and we can debate how much there is as opposed to europe. there certainly big parts of europe that have a fair amount of slack. i feel there will be a big amount of divergence. kennedy that spread between u.s. interest rate levels and the rest of the world?
12:37 pm
we felt that if the economics of the fundamental demand it, we will expect that to happen . scarlet: you want to cut tax on one hand but you do not want to have any greater deficits. how do you price in a trump administration? jonathan: there's still a lot of uncertainty out there. you think about that uncertainty. it's interesting that volatility and a lot of markets has not picked up. pricedity has not been very high, so there's an opportunity there to think about it that way. you also have to think about what are the potential outcomes? there are still a lot of different outcomes. you think about the implications of the administration and a big one is around sentiment. the focus on deregulation, which i think is much more likely to have legs and to actually see some change in 2017 and beyond, that will have an impact on growth, inflation, the earnings outlook, and so on. ashave been a bit skeptical
12:38 pm
to whether you are going to get this huge fiscal stimulus. i think this goes along that line. there will be constraints there. there is a focus on the spending side rather than the deficit. i think there will be likely something on taxes, which will likely be a reduction overall ,.. it will give some positive growth in the near term. spending is going to be a much bigger challenge. david: when you look at investment decisions, how does the fed uncertainty and the possibilities expressed themselves as a practical matter? is this a u.s. dollar strength issue? is this an inflation outloo k? where do you look at the markets that might be mispriced? jonathan: what is the outlook for growth and inflation? the fed has of their estimates. we do ours. do a point we estimate, but we look at the outcomes.
12:39 pm
the outcomes are now skewed to the upside and this is a huge shift. everybody for the last several years was about, the best case we are going to get his the continuation of just ok. there's a possible the of a downside risk. now it has shifted in a fairly significant way. you want to build a portfolio that is going to benefit from growth, that is going to not get killed if we do get that pickup in inflation. i think you want to be cautious/bearish on interest rates. get as muchnot growth, but we do not think interest rates are going to start coming down and a big way from here. you want to have more of a program advised portfolio. that's want to be credit and equities. it's also going to be the dollar because the dollar is where the action is going to be. if you look at the ecb and the bank of japan, they are not anywhere near where the fed is. they are tightening. they are tightening financial conditions because they want financial conditions tighter. the ecb and the bank of japan want them easier.
12:40 pm
they will struggle to do that, but they will try. david: he touched a little bit on how to express this for realized earnings on the s&p 500. quite clearly we are expressing on the equity markets. where is the optimism not quite there? where else when you look at the pockets of value? jonathan: the emerging markets is an interesting story. there is a concern around protectionism. obviously president-elect trump has talked about tariffs on china and mexico. assetsk mexican have priced in a huge risk premium. on the one hand what we will get is less than the rhetoric. secondly, we think it is priced for the bad outcome. mexican assets, whether it's interest rates, credit spread, or currency, we think that's an attractive opportunity. where we would stay away from is
12:41 pm
china and things that are related to china. we would make that comment even before the election. now this just adds fuel to the fire. there's loads on growth. if we are in a better growth outlook, that's positive. protectionism can be offset to that comes to you have to pick your spots. david: have emerging-market assets price that in? jonathan: i think they have. e.m. has done ok, but it has lagged other markets. if you remember back to the temper tantrum when the last time interest rates went up, though emerging markets were big underperformers. you focus on the finances and on many of the countries, that was quite a bit. these deficits have been reduced significantly and in some cases turn to surpluses. we are in a much different world right now. if it has added to the better growth environment, they can
12:42 pm
actually do well. scarlet: that was goldman sachs asset management chief investment officer of fixed income jonathan beionner. since closing at a record high last tuesday, but the s&p of the dow have been unable to string together back-to-back games or losses. the dow is up 33 points and s&p 500 up a quarter of a percent. the nasdaq closer to a record high on friday is adding to that advance up 6/10 of 1%. let's go to abigail doolittle for smart context. abigail: we certainly have a rally for the chip stocks. stocks of the philadelphia semiconductor index of 1%. lam research was upgraded over goldman to a buy. the firm is really bullish on the semi equipment stocks. we see 13% upside on lam research. they also gave a buy rating
12:43 pm
there as well. they downgraded applied materials to a neutral. overall, we do have strength and we are certainly see over here with intel, qualcomm, advanced micro devices, and texas instruments all trading higher. sometimes bullish thought or commentary checks on the equipment stocks. it suggest that the chipmakers are ordering that equipment because they had demand. the bullish comments on lam research could be helping this space. the stocks have had a monster run this year, up more than 35% on the year. it is the best year since 2013. we go to the bloomberg and look at g #metv 3925 in the stocks are at the highest level since 2000. it is also approaching record valuation. the question may be whether or not a pullback of some sort is ahead for this on fire sector in 2017, scarlet. scarlet: thank you so much,
12:44 pm
abigail doolittle. president-elect donald trump accuses china of stealing a drone, setting a course for tense relations between the two countries when he takes office next month. from new york, this is bloomberg. ♪
12:45 pm
12:46 pm
scarlet: this is "bloomberg markets." bloomberg is a special series of conversations with luminaries in the technology world. as part of the series, i got to speak with neil blumenthal, cofounder and co-ceo of warby parker, the eyeglass rea retailer. he began by talking about where his investors stand when it comes to businesses financials. neil: i think investors have been really excited about fundamentals in the business, including our growth margin
12:47 pm
structure, our relationships with our customers, and that includes what it costs for us to acquire them and keep them. one of the metrics that we are probably most proud of is our net promoter score, which has been in the 80's since inception. that is really best in class that we have ever seen across any industry. last month, it was actually 84. it has gone up year-over-year for us. goingp thinking that it's to be harder and harder to keep customers happy as we scale. there's more touch points, but also when you're dealing an early stage, you're dealing with the innovators and early adopters. they tend to have a lot more patience than the late stage adopters. what is also good is that as we grow, our systems have gotten stronger and we have every year delivered a better and better customer expense. scarlet: and you're better at it honestly. neil: definitely.
12:48 pm
the expectations continue to grow and evolve, so one of the big things that we are doing this year -- i guess next year -- is launching our first optical at worthy will cut the lenses -- app where we will cut the lenses. it will enable us to reach our customers faster as we know that those expectations are changing the extent amazon, uber. there is still some patients because there is this recognition that we are making a custom product for each one of our customers, but we still want to be exceeding that expectation year after year. scarlet: as responsive as possible. being an entrepreneur means you ask investors for money a lot of the time to fund your business. afterrked in nonprofits tufts and he asked a lot of money from nonprofits. compare and contrast fundraising as a for-profit enterprise
12:49 pm
versus a nonprofit. neil: in my personal experience, it has been easier raising $100 million at warby parker than it was to raise $100,000 to distribute glasses to people living on less than two dollars a day. scarlet: even though you still do the latter as part of your for-profit business. neil: one of the reasons why we do it with warby parker is that we know how hard it is. grow insier for us to scale at warby parker and be able to support nonprofits like the nonprofit i worked at, vision spring, often than it is to fund raise for nonprofits. i think there are obviously structural issues at play. disadvantages within the nonprofit sector is that you are actually fund-raising all the time. when your top leadership is fund-raising all the time, that means they cannot be spending all that time growing and
12:50 pm
managing the organization. at warby parker, we have done a bunch of rounds of funding, but those are intense time. eriods that go from one we are putting together the deck to meeting with investors to closing the deal. not that we are not thinking about fund-raising, because we are always sort of managing relationships that we could eventually tapped to raise money, but the point is that it is not the number one priority for the vast majority of the year. we really focus on scaling and growing the business. scarlet: interesting. you tell me that you have never worked with a banker before because you raise funds yourself. at some point you will need to repay your investors and go public. that would entail going to the bankers. what will be your criteria? neil: we want to work with somebody that believes in the mission of the company, that wants to pair us with the best
12:51 pm
folks that are going to be with us for the long run. we have always built warby parker to last and not as something that we want to just scale and immediately flip. we are motivated to sell the brand that's going to be around for 100 years and hopefully have a big impact. scarlet: do you worry that going public means you're flipping the business? neil: i don't think so. i think we view an ipo as an event, which is what it is. there are some concerns that being a public company that you are under greater scrutiny. that has both pros and cons. it demands to some extent that her performance -- better performance and holds us as a leadership team accountable . on the same token, a lot of that noise can lead to short-term thinking and short-term priorities. as a private company, we are able to think five to 10 years
12:52 pm
down the road. that is something in the back of my mind because that is what i hear from other ceos. scarlet: that was neil blumenthal, warby parker's cofounder and co-ceo. let's turn now to geopolitics. china pushing back against the nex and accusation from donald trump that they stole a drone last week could an. in its week, donald from said we should let them keep it. beijing does not like the word stolen to describe its actions. joining us now with this latest kevin whords is joins us from washington. before we get to china, i want to get first your response on the news that the russian ambassador to turkey was shot dead in ingres. ankara. has there been a response from
12:53 pm
the obama administration or the trump team? kevin: we've not heard from the trump team about this breaking news from turkey, but i believe there will be more political discourse on capitol hill. there are growing bipartisan concerns about trumps relationship with russia, but from a policy and political standpoint, businesses are concerned about how he will navigate the turkish and russian relations. scarlet: we will watch that .ertainly coul getting back to china for a moment, with donald trump's tweet over the weekend, new levels of tension over this "stolen drone." what does this do to u.s.-china relations? kevin: global leaders from china to russia to taiwan are trying to figure out what exactly the new administration will mean for global diplomacy. in the case of china in particular, of course the world's second-largest economy,
12:54 pm
what you have is the chinese government taking issue with trump's characterization if you will that this drone was stolen. they say that they found it. the bottom line is the world is adapting to the way that trump communicates, which is twitter of course. they're going to be reading into his message in, but trump has no plans to stop communicating through things like twitter. quite frankly, the markets have not really been as volatile with his messages in terms of how he has been communicating with china in particular. scarlet: we did see u.s. markets sell off a little bit on the news of this drone seizure. this was also on a fairly slow friday as well. of does this method communication, this new wrinkle in the relationship, increase the likelihood of miscalculation in china-u.s. relations? kevin: i put that question to some senior trump advisors and what they tell me is that trump himself likes the element of unpredictability.
12:55 pm
he has included that into his political brand and they argue that that level of unpredictability will help the u.s. to go on offense and be a bit more aggressive. if you take a step back, and particular with this drone tweet, what we are really talking about his policy and military foreign policy in the southeastern asia pacific. when you look at it from a policy standpoint, this is part of a broader conversation about use of the u.s. military in that region. is the tetrase, tech we are engaged with the chinese and u.s. officials. scarlet: we've not heard anything from taiwan on this front at all. it has been crickets on that side. kevin: absolutely crickets. [laughter] scarlet: kevin, thank you so much, joining us from washington, are bloomberg news politics reporter. a preview of tonight's bank of japan decision. we will hear from one expert who says the boj may try to loosen
12:56 pm
monetary policy. economists that we have survey do not expect the boj to do anything when it comes to interest rates. it is currently -.1%. this is bloomberg. ♪
12:57 pm
12:58 pm
12:59 pm
in new: it is 1:00 p.m. york, 6:00 p.m. in london, 2:00 a.m. in hong kong. i'm scarlet fu. welcome to "bloomberg markets." ♪
1:00 pm
scarlet: from bloomberg world headquarters in new york, we are covering stories from san francisco to dublin and tokyo this hour. delivers janet yellen a keynote address on the state of the labor market. we will bring you her comments live this hour. we look ahead to the boj decision with the stanford university professor, who says that the bank of japan might try to loosen monetary policy. apple has set up a court battle with the competition watchdogs who ordered ireland to clawback a record $14 billion in unpaid taxes from the iphone maker. we are halfway through the u.s. trading day. abigail doolittle is here with the latest. after climbing to the record highs last week, we've had a hard time trying to string together momentum. abigail: that is true today,
1:01 pm
too. s&p, and the nasdaq trading higher. the s&p was on pace for a record close, but now off of that. the nasdaq is outperforming the dow and s&p 500. the tech heavy nasdaq is on pace for record close. helping the nasdaq and the other two averages is one of the top sectors -- tech. microsoft, apple, and amazon trading higher. microsoft is on pace for record apple is nicely higher. it is trading at a seven-week high as the company has vowed to fight a $13.6 billion tax bill that scarlet was just talking about. they appealed an earlier decision that the company owes back taxes to ireland. in telestrating higher on some chip stricter -- intel is trading higher on some chip stricter w strength. we have weakness among the big
1:02 pm
banks. part of this may be guggenheim earlier telling bloomberg saying that upside for the financial sector is overdone. sector out ofp the election, up more than 15% since the election. thee a little pullback for banks, but something is weighing on the banks is a move down in yields. take a look at the five-day chart of the 10 year yield and we are seeing a bit of a haven play. we have bonds rallying. we take a look at this five-year chart. thatarea of consolidation formed after the fed did raise rates last week is starting to break to the downside, suggesting that we could see the 10 year yields retraced the entire move higher last week. it is suggesting that we will see the 10 year yield closer to 2.3% this week or later next week. that will probably drag a bit more on the banks if it happens. scarlet: we will watch out for that. thank you so much, abigail doolittle. let's get a check of blender first word news. emma chandra has more headlines from the newsroom.
1:03 pm
a russian official says the country's ambassador to turkey has died after being shot by a gunman. exhibitionn sponsored by the embassy when the man shouted out who akbar and fired a eight shots. turkey's private television says police have shot and killed the gunman in a police operation inside where the attack occurred. they also said three other people were wounded in the attack. the board of the international monetary fund will meet to discuss the ramifications of the conviction of christine lagarde . she was convicted in a case dating back to her time as french prime minister. she has don denied any wrongdoing. the judge in the case says there is no need for a prison term or
1:04 pm
a find for lagarde. she was cleared for another count to enter into the arbitration agreement. cap allen is said to be seriously tapped to head the department of veterans affairs. that is according to a report by fox news, citing a senior trump transition source. alan's meeting with president-elect donald trump today and for the. sarah palin was also floated as a possible candidate for the job. electors are gathering in every u.s. state today to formally elect donald trump as president. some anti-trump forces are not ready to give up. they are trying one last time to deny him the white house. protests are being held at some state capitals, but they are unlikely to persuade electors to drop trump. the joint session of congress is scheduled for january 6 to certify the results of the electoral college vote. dayal news 24 hours a howard by more than 2600 journalists and analysts in more than 120 countries, i'm emma chandra. this is bloomberg. scarlet: thank you so much.
1:05 pm
let's get back to the breaking is that anna was telling us about. turkeys ambassador to has died according to foreign ministry. a reporternow is from istanbul. what is the latest? simin: it is concerning that the russian ambassador to turkey has in fact died. it took place in an art exhibition in ankara where a man wearing a suit fired a few shots at him. as he was firing the shots, he shouted out about aleppo. aleppo is the city in syria where russian military forces are backing the syrian government against rebels. what we have been hearing over the past few minutes is that an kara is confirming that the gunman was a turkish police officer. this is very worrying as a development. it is worth noting that tomorrow
1:06 pm
turkey's foreign minister was supposed to travel to moscow to meet with the russian and iranians regarding the situation in syria. scarlet: certainly that meeting may be in jeopardy. when you look at turkey and russia's relationship, it has been fairly tumultuous over the last couple of years. what can we expect going forward? simin: that's right. it has been tumultuous. over the past few months, they have been appearing for re-conciliation, especially after the failed coup in turkey in july when the russian president, vladimir putin, reached out to presenident erdogan. at the end of 2015, turkey shut down a russian jet on the syrian border, which led to a huge amount of fallout. that introduced trade and travel embargoes. turkish head of
1:07 pm
parliament apologized and they were back on the road to reconciliation. russia and turkey are also backing different sides in the war in syria. russia is backing the syrian president while turkey want some overthrown. up the: i want to bring markets because we cannot talk about what is happening here without looking at the impact across markets. abigail was telling us how u.s. bonds are rallying. the yield has fallen to session lows right around the time the news of this assassination and confirmation of the assassination came out. what can you tell us about the lira? simin: the lira started falling against the dollar as soon as this news broke. it is currently depreciating around 7/10 of a percent against the dollar. the turkish lira been hitting historical lows over the past few months. that has got a lot to do with donald trump as he was elected president-elect of the united states. that is a general trend in the emerging markets. also turkey is still in a state of emergency after the failed c
1:08 pm
oup. not only is turkey dealing with political uncertainty, but they are also dealing with terrorism. the lira taking a hit again today. scarlet: thank you so much for giving us the latest details. simin joining us from istanbul on the killing of the russian ambassador to turkey. the bank of japan ca conclude is policy meeting overnight. what governor kuroda things about the recent surge in bond yields and how they plan to control the yield curve. we have the boj decision day guide coming up. bloomberg.ivere ♪
1:09 pm
1:10 pm
scarlet: this is "bloomberg
1:11 pm
markets." i am scarlet fu. time for the bloomberg business flash, a look at the biggest business stories in the news right now. carlyle group is selling estate back to the firm's top executives. it ends the private firm six-year foray into hedge funds. clarion road started with 1.25 billion dollars in assets. the decline is due to losses and and client redemption. but very in canada is opening a research center for self driving vehicles. it raises the possibility of government backing for the former smartphone makers automobile unit. that is according to blackberry skewness unit that has been building in car entertainment systems for years. billionaire investor carl icahn says that icon enterprises will sell. it is based on an enterprise
1:12 pm
value to point and billion dollars. the transaction is expected to close in the second quarter of next year. that is your bloomberg business flash update. japan going to stay with because the bank of japan on tuesday concludes its first policy meeting since donald trump election victory triggered a surge in bond yields and a slide and the japanese yen. the currency is trading around the weakest level since january. if the boj commits to keeping the yield at around 0% and yields keep rising, it would risk a further decline in the end. californianow from is the stanford university professor of finance and a visiting scholar at the san francisco fed. thank you so much for joining us. boj began its meeting and will conclude on tuesday. this is the first meeting since the election of donald trump. there's been a reset in the global market landscape to say the least. how does the bank of japan acknowledged this massive shift? >> i would expect the bank of
1:13 pm
foot at this time since president-elect trump was chosen. the situation has been good for japan. the prospect for the u.s. economy improved and the yen is cheaper. boj wille likely the wait and see how it goes. most economists expect the boj to stand pat and do nothing. what might kuroda and central-bank policy makers try to signal to the market? takeo: if they change anything, there is a small possibility that they lower the interest or they increase the size of the asset project, trying to lower the interest rates. the 10 year yield is a target now but it has to be above the target of 0%.
1:14 pm
arefederal reserve rates interest rates last week. scarlet: targeting the yield curve and controlling the will curve is something the boj has committed to now. will the bank of japan be able to manage the yield curve even as expectations for the u.s. interest rate increases continue to drive yields globally higher? is -- i think the boj has a lot of things they can do. they can increase the amount of the asset project and they can also go negative in their negative interest rate. i do not think they will move this time since the federal reserve increased interest rates. even without doing anything, the boj monetary policy is a expansionary. scarlet: do you think the bank of japan has allowed enough time
1:15 pm
for each of its different measures, whether it was negative interest rates -- and i know you mentioned they could go even more negative -- do they give it enough time for those measures to take hold in the real economy? takeo: for the negative interest rates, they have been doing this , and weonths, 11 months have started to see some impacts like lowering the mortgage rates and so on. we have not seen many impacts on the real side of the economy. i would say negative interest rate policy so far this rate, we already have seen enough. it is not working very well. yield curve rate control, which they just started in late september, we have not had enough time to see the impact. scarlet: we will need more time
1:16 pm
to see that take hold. when you talk about the benefits japan has seen since the election of donald trump, we are referring to the weakening of to japanese yen. japan's economy has been doing better. that's partly because of the weakness in the japanese currency. what is a good level for the dollar-yen for the boj? to 117 versus the dollar now, which helps exporters because it means japanese goods or more competitive and it helps inflation for the import costs. takeo: it is hard to tell. used to be around 100 or so a year ago and it is now floating around 117 or so. i would expect the boj to make moves if it goes to 120 or less than that. it it is this to love har -- is too low.
1:17 pm
it is hard to say. scarlet: we are highest for the dollar at least since february and we could be revisiting the highs of last june when it comes to the dollar as well. if we get to 130 or beyond that, what kind of negative effects would that have? elaborate please. takeo: the problem for japan would be it's higher import price. that may challenge some other companies which rely on the inputs from abroad. also, inflation may be a problem, but for now, the deflation has been a problem for japan for a long time. i do not think inflation will be a problem anytime soon. scarlet: there's always a threat of that, of course. what would that mean to the boj? does it hamstring the ability to be flexible and come up with new, inventive ways of stimulating the economy?
1:18 pm
yeno: the movement of the does not constrain the boj's move. rather increasing the interest rates in the u.s. create some room for the boj to go lower because or more expansionary is without doing anything -- because without doing anything, the monetary policy can be expansionary. scarlet: speaking of expansionary monetary policy come on what to talk about the change in balance sheet for the biggest central banks -- the ecb, the fed, and the bank of japan. the ecb is in white. the qe program has been extended through the end of 2017, which means eventually the european central banks balance sheet will exceed the feds, which is the blue line. the bank of japan's line is purple. the size of the balance sheet has become shrinking.
1:19 pm
, there is a lot of speculation about whether japan will taper its bond purchases. do you expect to see the boj tapering bond purchases in 2017 as deutsche bank posco economists have called for? takeo: the bank of japan has been buying lots of japanese government bonds. it already holds more than one third of the bank of -- of japanese government bonds outstanding. it is possible the bank of japan is starting to see the limit of the bond purchase program and it will start shrinking their balance sheet. on the other hand, they have been buying other assets. i assume you have some more room to go. scarlet: very quickly here, professor, where would they start tapering and by how much? takeo: it is hard to tell.
1:20 pm
i can't even speculate. hoshi, thank you so much for joining us today. coming up, apple appealing and eu order to pay ireland nearly $14 billion in back taxes. you will dig into what the tech giant said about this case. this is bloomberg. ♪
1:21 pm
1:22 pm
scarlet: we have some breaking news here. away an increase in public debt for bank and. italy taking drastic action or proactive action when it comes to rescuing its embattled inking sector. italy sent away for bank aid. we will give you more details on
1:23 pm
this headline as we get more news. italy is set to consider increasing debt to back bank recapitalization. it needs parliament approval to increase the public debt. more development as we get them, but italy seeking to increase public debt in order to help its banks recapitalize. we will stay with europe, but in the tech world. apple is fighting a eu court order to payback $14 billion in back taxes. they said the eu disregarded decades of irish and u.s. tax laws and global consensus on tax policy. cory johnson joins us now from san francisco with more. this was an expected move from active -- apple, but it took a wild, didn't it? cory: it's a really interesting case actually when you start to dig into this. concurrent with apple challenging this is the eu publishing a lengthy document
1:24 pm
about the history of the case and it's a fascinating read. what we see apple doing is changing the way they describe their business and having to try to take advantage of having certain operations in ireland and yet claiming a lot of operations are very much not in ireland and are controlled by tax at the u.s. level, so they should not be double taxed in ireland. is a very interesting case to see how apple has instructed itself and defined itself in ireland to minimize their taxes. scarlet: virus finance ministry has pushed back against the ruling as well. it has launched its own complaint if you will. cory: the reason for that might a low techland once company support operations in i went because they will get that beneficial tax treatment. there two things to look at -- one is apple's case, and seems to be an interesting and valid one that the laws in ireland are decided by the laws of ireland. they have been interpreted a certain way for at least the last eight years.
1:25 pm
therefore, apple should benefit probably going back nine or 10 years. apple should continue to be taxed in this consistent way it has in the past. the eu is challenging that. the other thing to look at is how apple has described itself to the irish authorities. it is insisting that certain operations and certain assets are controlled by the u.s., decisions are made in the u.s., and because the stock is traded in the u.s.. because of those things, irish tax law should not apply to those parts of the business. yet other parts of the business should be subject to irish tax law. those limited parts are why the ones that ireland depends are so much lesser than other parts of the eu and the u.s. scarlet: how big of a distraction is this going to be for tim cook? cory: i don't think it's a distraction at all. they will be focused on selling product like everyone else in business.
1:26 pm
it is interesting saber rattling by the eu when they look at ways to generate more revenue in the eu from companies that are certainly headquartered and based in the u.s.. scarlet: cory johnson, thank you so much. you can hear more from cory in about 30 minutes when he will be joined by carol massar on bloomberg radio. fed chair janet yellen is set to speak at the university of baltimore commencement ceremony. we will bring you those remarks next. she is due to speak on the labor market and what she has to say about employment here in the u.s. from new york, this is bloomberg. ♪
1:27 pm
. .
1:28 pm
1:29 pm
scarlet: live from bloomberg world headquarters in a frigid
1:30 pm
new york, i'm scarlet fu. this is "bloomberg markets." janet yellen is getting ready to speak at the university of baltimore midyear commencement on the state of the u.s. job market, and the topic of her speech today will be on the labor market. lots of intesfollowing the fed meeting. headlines indicate that when she speaks, her prepared remarks will include comments on economic gains finally raising living standards. she doesn't dollars that productivity growth has been disappointing, but wage growth -- she does acknowledge that productivity growth has been disappointing, but wage growth is growing. job creation continues at a steady pace and layoffs are fairly low, but challenges remain in the growth we are seeing in this cycle is slower than in past recoveries. yellen seesat janet is those without college degrees speaking tobehind, the widening gap of inequality here in the united states. she says the u.s. jobs market is strongest in nearly a decade,
1:31 pm
even as those without college degrees are falling behind. youngerly earnings for earners have made strong gains, partly strong overall labor picture. yellen has not yet taken the podium, and when she does, we will bring that to you live. in the meantime, let's get you some headlines on bloomberg first world news -- first word news. after being: assassinated by gunmen in -- the russian ambassador to turkey, andrei karlov was shot. the gunman was killed in a police action. the un security council unanimously approved to send
1:32 pm
monitors to former rebel held eastern aleppo. the move is critical to prevent mass atrocities by syrian forces, especially militias who have captured the rebel stronghold. meanwhile, evacuations from the beleaguered city have set to resume. a gunman injured three people as an islamic center in switzerland. the official said police were swarming to the scene in pursuit of the gunman, who remains at large. attacks by armed gunmen are rare in switzerland. president-elect donald trump is considering nominating at u.s. to runy debra wong yang the securities and exchange commission, according to a person with direct knowledge of the matter. while trump and his transition team have spoken with a handful of candidates, yang is the top contender. she would replace mary jo white, and will step down at the end of the obama administration. global news, 24 hours a day, powered by more than 2600 journalists and analysts in more
1:33 pm
than 120 countries. i am emma chandra, this is bloomberg. scarlet: thank you. we are reading -- we are waiting for fed chair janet yellen to take the stand at the commencement ceremony. she released the text of her , there's no mention on policy reaganomics outlook. this is bloomberg. ♪
1:34 pm
1:35 pm
scarlet: this is "bloomberg markets," i'm scarlet fu. we had to abigail doolittle, who has three charts of the day. abigail: we start with a long-term chart of the
1:36 pm
dollar-yen, g #btb 5395. we see the massive downtrend going back to 1970. even though a big story in recent years is the weakness in the end and the strengthen the dollar -- in the yen and the strength in the dollar on the long-term downturn remains in effect. the second chart, one is around the 10 year yield, not surprisingly, the dollar-yen is highly coordinated to the 10 year yield. and then white, you see the 10 year yield an orange, the dollar-yen. if that does remain in effect, it may suggest the massive move we've seen in yield recently, 100 basis points, the biggest move on the quarter so far could retreat to some degree. of course, that would suggest we could see volatility across the other asset classes.
1:37 pm
goes into commodities along with equities. we are talking about volatility because you had for stocks at g #btb 4350. in white, the s&p 500, and white under the vix. it suggests trumps -- investors are complacent. suggests we've seen the to reconvert. vix,e a spike up on the the quote unquote fear index and a move down and stocks. all of this may suggest a little bit of a breather is ahead for stocks and some reversals on some of these big moves out of the election. scarlet: i love any chart with the vix. let's get into the bloomberg business flash and a look at the business stories in the news. pay far less could than the $14 billion find that the department of justice wants to settle a mortgage security
1:38 pm
probe. as according to a report from reuters who cites a person familiar with the matter. is also a good chance the matter will be resolved this week, probably as early as wednesday. french drivers are asking uber for a raise, rails. and advisers of ,rance's transport ministers drivers are threatening to strike again if they don't hike prices or lower because of the company takes from each fair. buying the fertilizer unit for $2.5 billion in cash and stocks to become the biggest for laser producer in brazil. half of the price will be paid in cash and the other half in new equity, giving them an 11% stake in mosaic and two seats on the board. the transaction is expected to close late next year. that is your business flash update. regulars are sounding the alarm about tainted seafood and american supermarkets. cracking down on the problem
1:39 pm
isn't quite so easy. carol massar and oliver renick spoke to megan murphy about the story. megan: the first thing that popped out is in the context we're talking about, with china and the global economy. the story really traces how something you don't think that much about, which is when you are eating seafood or shrimp or anything, just the chain it goes through and where the prominence of that is and how things you don't know can get into the food supply. it presents a tale of an economy int is rapidly transforming, a revelatory environment that frankly leaves a lot to be desired in terms of what actually goes into our food. we have u.s. regulars putting tariffs on chinese shrimp, and they found ways to get around it. they continue to. traces through that. i don't know if you would call the loopholes, the ways they evaded regular tory scrutiny, not from a lack of intentional
1:40 pm
misfeasance, but the very fact of them wanting to get stuff to --and how they want one suppliers major they are fishing and have a robust environment and what happens there. the contrary effect of that is it seeps in and you don't know exactly what is going on and what is happening where these things are living and breathing. ad the effect of having superbug possibility coming in to this kind of stream. that's the concern. it almost reads like a movie, when you read the story. it's a tale we've seen play out on the big screen before. it reads very much like that, something that seems relatively innocuous, but through lack of regulatory oversight, desire for a higher-margin and higher profit, and friendly, carelessness in terms of a part of the world has very different standards than we would expect in the u.s. and other parts of the world. oliver: let's talk about the
1:41 pm
science of what's happening. basically, there's his ecosystem that exists that is getting polluted in some sense. not in the way we typically think about it. it's about working its way through the system and building up in the food that we eat. megan: it's a story of something that is designed to be good and improve parts of the ecosystem, can manifest itself in ways that we don't currently have a structure in place to deal with it. through in a way way the system is not designed to catch. we discovered how this is filtering in to the u.s. and into other countries in a way that people would never think could happen. particularly one of the things i really love about the story, the imagery of the story of pigs next to discarded medicines and discarded as about x.
1:42 pm
-- antibiotics. people shoveling from -- excrement from animals into the same part of that ecosystem where shrimp and other wildlife is living and breathing. oliver: i was thinking of a diagram in middle school, arrows going from here to there. it's not pleasant. megan: aquaculture for thousands of years worked well in china. when you introduce antibiotics equation. we are more sensitive about the increased use of antibiotics and how it is creating superbugs and illnesses and problems with people. toan: when we go back globalization, we've seen this play out in western world and the eastern world as well people move at different speaks. economies are moving a very
1:43 pm
different speed and they will take their advantage where they can, in terms of exploiting revelatory arbitrage. i think this story is about that, where antibiotics have been introduced as beneficial to that part of the economy. it's just that on the end product of the economy, on the more developed world side, that's where problems are emerging. that's going to be attention that plays out throughout society so much more, and it's really accelerating. i think over the next decade, it's going to be one of the biggest things of where this regulatory arbitrage is -- is there a need for oversight of the sector, where you have unpredictable effects of what is actually designed to be a good thing for an economy. scarlet: you can read the latest story in the latest bloomberg businessweek and hear more from the magazine reporters every saturday and sunday on bloomberg television. coming up, warren buffett makes his biggest for just yet. the details on almost $5 billion transaction.
1:44 pm
from new york, this is bloomberg. ♪
1:45 pm
1:46 pm
scarlet: this is "bloomberg markets," i'm scarlet fu. the canadian investor known as the warren buffett of the north on what he calls u.s. economic strains under a trump-- from --
1:47 pm
presidency. tell us more about the warren buffett of the north. >> prem watsa is the ceo of fairfax financial. he's a reclusive, quiet figure. a similar silent investment warren buffett. deal, the5 billion biggest fairfax financial has made in 31 years. is calling it a transformative deal. they are buying a swiss company with huge exposure to the united states, allied world insurance. they leave the current ceo very much in charge of that side of the business. but it is a bet he says, in his words, on the new era that is being swept fourth because of the trump election.
1:48 pm
as of the election, the republican control and senate and congress, strong potential to make the business climate for growth, making the u.s. great again. relative to the rest of the world. that is his reasoning for this deal that's been announced today in an article. the allied deal looks like it will give fairfax an investment portfolio boosted up to $39 million from about $30 billion. so they take insurance premiums and use those to invest in different industries. scarlet: when you look at prem watsa, he's a big believer in canadian technology, mainly blackberry. > blackberry, fairfax is onef the largest stakeholders in blackberry. a huge bet on a company that, as most people know, has just dropped its way further and further down. blackberry out with
1:49 pm
announcements today that it is working with canada and the government to open a research center for self driving cars. the qnx side of the business is a part of the business for blackberry. they always pointed to, it's been building software to run in car entertainment for a long time. into the new shift self driving car side of things. who knows, they do that will pay off for blackberry. you been following news that largest buyout firm has been paying up for a u.k. holiday park anthony. tell us more about this deal. >> it's interesting. these are caravan holiday parks or rv resorts in the u.k.. has announcedx they would like to acquire parking resorts for 1.59 billion dollars, expected to close some time in the first quarter of
1:50 pm
next year. the company operates 73 caravan holiday parks across the u.k., a big bet on the middle class. scarlet: we'll keep an eye on that one. pamela ritchie joining us from toronto. i want to go back to headlines we broke earlier in the hour about italy weighing an increase in public debt for banks. then curtis followed up and came up with this chart on the bloomberg. take a look, it shows basically the outstanding debt that is there for italy. in 2015, a pretty small number, but you can see that things a skyrocket in 2017. the blue side of the bar is the bond principal and the yellow portion is the interest. and then it comes back down again. italy's cabinet meeting in rome this evening to ask authorization from parliament to increase public debt. the government is preparing potential investment in the company's bank -- in the country's bank. this is as italy tries to
1:51 pm
prepare a plan to inject up to 15 billion euros into italian banks is monte paschi is fundraising does not come to pass. this plan will be implemented only if needs emerge. we now go to baltimore, where janet yellen, the fed chair, is about to begin giving her commencement speech. the topic is on the state of the labor market. the bright headlines earlier that indicated she did not give any indication of the path of policy or her economic outlook, but she did make comments on the state of the labor market, thing for the most part, the labor economy is fairly strong. i will bring you those headlines, right now. she said job creation is continuing a steady pace and layoffs are low. economic gains are finally raising close to living standards. she's getting ready to speak at the university of baltimore's midyear commencement ceremony. we'll bring you her speech when it begins. in the meantime, let's begin with headlines in the be -- in the oil market. bp makes a two point $5 billion
1:52 pm
deal. to bob dudley about the deal and asked why it has taken so long. mr. dudley: we've been working here, on important work that bp has had for a long time with a strategic relationship. to be honest, given our framework, financial it took us a while to work to the point where we could make this great investment with abu dhabi and the key element there is we used bp shares. abu dhabi will own about 2% of bp. for bp, it will mean another 160,000 barrels a day, in addition to the 95,000 barrels a day we produce and opera dobby. continuing on -- in opera dobby abu dhabi.
1:53 pm
it brings in a strategic owner for the company, and bp has worked here for a long time. we have shown we could do technically with management capability. themll move and work with and bring our own best people and resources into it to help maximize future recoveries of their resources. we have a lot of experience of working and managing big oil fields, late life oil fields, water flooding in the technical things we will bring. that's one of the things we bring great as a deep sense of responsibility about the privilege of working with the natural resources of abu dhabi. >> should we take this deal as a sign that now is the right time for oil majors to begin ramping up investment? >> one has to have some confidence in the price. we really retooled bp, getting down to an efficient level.
1:54 pm
we said we would balance our sources of funds at a $55 oil price. $60,r ago, we were saying now we can do at $55. it is clearly in sight. i think we remain very disciplined about the capital we spend in the project we select. it's time for bp to start growing. we work through so many difficulties in the u.s., the company is not well positioned towards growth in the beginning of the decade. an historic deal from opec for the production cut and historic one by non-opec producers to join in with some of those production cuts. how you feel about opec and the future of oil at the moment? dudley: it's significant what happened on november 30. you have non-opec countries series a talking about reducing their output. opecpeople have said that is not a real organization anymore. it doesn't actually bring things
1:55 pm
together, and i think opec is an important organization. this agreement is significant. you can already see it in the curtailment of us is going out for the middle east. i know, because we work in russia, there's a schedule of reducing output from russia. i think it's very serious. oil prices between $55 and $60 a barrel seems very realistic for 2017. and growth continues in china and in north america. >> donald trump has nominated rex tillerson is a potential secretary of state. do you think he's the right man for the job? clubudley: he's in a person who knows the world, he knows leadership around the world and knows how to get things done. he's a very serious person. i think he will do a great job, not just because i'm in the oil and gas industry. us is a man who really knows the world and knows how to manage global organizations. scarlet: that was bp ceo bob dudley.
1:56 pm
fed chair janet yellen has begun speaking at the university of baltimore. in, she talks about american living standards rising economic gains. yellen: there are also indications that wage growth is picking up, and weekly earnings for younger workers have made strong gains over the past couple of years. that is probably one reason why younger workers reported feeling significantly more optimistic about the job market compared with 2013, according to a survey published just today by the federal reserve. challenges do remain. scarlet: that was fed chair janet yellen. you can watch the rest of her remarks at the bloomberg live go. this is bloomberg. ♪
1:57 pm
1:58 pm
1:59 pm
scarlet: it's 2:00 p.m. in new york, and 7:00 p.m., and julie hyman. oliver: and i'm oliver renick. welcome to "bloomberg markets."
2:00 pm
julie: covering stories out of washington, is simple, and abu dhabi. tone to the markets today, exhausted by the assassination of a russian envoy in turkey's capital. gold, the yen come and treasuries catching a bid as investors look for safety. bonds look like an ultralong shot, at least that's the message from strategist about steven mnuchin's idea of a 50 year or 100 year treasury. chinese leaders are biding their tongues as trump lashes out over china about -- at beijing's response was muted. u.s. markets close in two hours. let's check on stocks with abigail doolittle. abigail: still looking at gains.
2:01 pm
everything trading higher. the nasdaq is on pace for another record lows -- record close. the dow is less than 15 points, 12 points with 13 points away from perhaps being on pace for its own record close. it little bit of strength, but to do is point, we are off the highs and we going to the bloomberg and take a look at the imap function for the s&p 500, a great function to show what the sector composition, a quick snapshot. we see lots of breaches, we also see some red helping the nasdaq outperforms the technology sector, one of the top sectors. on the bottom, we had energies, materials, and financials. you go into the materials of space, we have some interesting letters including mosaic, shears down about 6% on the news that the company will be buying a fertilizer asset for $2.5 billion in cash and stock. this will give them 11% stake in mosaic, plus two seats on the board. we also have freeport mack brown
2:02 pm
down almost 3%, this is their sixth down day in a row, the longest losing streak since january of last year. this is copper is declining, down for the third day in a row. hitting levels last seen right around the election. a bit of a reversal. as for the financials, this is another drag on the market today. bank of america, wells fargo, and citigroup all trading lower. guggenheim said they see limited upside ahead for banks, financials are among one of the best sectors coming out of the election of more than 50%. a bit of a breather here. also pressuring the banks today are safe haven assets that julie was mentioning, or the u.s. 10 year yield bonds. we take a look at these haven plays, we have the yen trading higher, represented here in red against the dollar versus the yen. the yen's trading higher come haven currency. the 10 year yield down five basis points right now. price does trade in verse two
2:03 pm
yield, so bonds getting a bit of a safe haven bid, or perhaps consolidation of last week's big move. we also have gold trading higher. lots of action to keep an eye on, julianne dollar. -- julie and all over. oliver.ll of her -- country's russian ambassador, andrei karlov was several minutes into his speech and energy sponsored event when a man wearing a suit and tie shoutedall a lot bar -- and shot him. turkey's private tv says the gunman was killed in a police operation inside the exhibition hall where the attack occurred. oled --field up -- the vincent viola has been nominated by president-elect donald trump
2:04 pm
to be the next u.s. army secretary. he is in 1977 west point graduate who trained as an airborne ranger infantry officer and served in the 101st airborne division. the founder of several businesses, including bridging financial and owns the national hockey league's florida panthers. north carolina legislators will repeal the contentious law that limits protections for lgbt people and led to an economic backlash. that's according to the incoming outgoing governor who say legislators will hold a special session tomorrow to repeal the law. the statewide measure requires people to use restrooms in many public buildings corresponding to the sex on their birth certificate. alertna, the national red brought on by choking smog. some cities are limiting the number of cars on roads and temporarily shutting down factories today to reduce pollution. --beijing, state media stay
2:05 pm
say more than 700 companies stop production and traffic police were restricting drivers by monitoring their license plate numbers. the misery is expected to continue into wednesday. global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i'm courtney collins, this is bloomberg. oliver: investors continue to assess the trump rally that lifted stocks to record levels. we hear from one of the biggest cheerleaders of the bull market, but is he still optimistic for the year ahead? here's the playbook for 2017. jonathan: i was bullish last year and we surpassed my target. we have a 2500 target to the end of 17, which is about 10% or so up from here. the way you play within the market i think is really different now than a year ago. morearket has become much
2:06 pm
procyclical, taking advantage of some of these potential trump policies. and taking event of the fact that the labor market has become much tighter and are pushing interest rates up. that was not the case this time last year. >> last year i found adjusting everyone is trying to game out the incoming administration what they are going to do. one of the things you talk about is what corporate tax cuts could add to profits in the coming year. let's say there were no corporate tax cuts. what does the backdrop look like for profits, even if you are looking at a stimulative administration' ? we are adding absolutely zero to 2017 earnings from anything that trump is going to do. because interest rates are now jumping up, it's really productive for bank earnings. banks earned out of one dollar out of every five dollars of the s&p, but the real big jump in earnings growth is the fact they
2:07 pm
are no longer have a drag from energy prices. energy is above where it was a year ago. higher energy, highridge restraints going into banks, that's probably the biggest benefit. eps, aboutut 7.5% two presented at his buybacks, which means you are 5%, 5.5% of plain-vanilla earnings. it's not a crazy number at all. the following year in 2018 is when you have a chance of really getting some of these benefits, whether from taxes, regulations, or the like. and then it really starts to matter. >> why is it that investors are quick to respond to incomplete information with this, talking about trump and his polys bashes policies -- and his policies? jonathan: i think you raise the most important part, which is the job of an investor is to say
2:08 pm
with what i know this very moment, it's always incomplete information, what do i do right now with my money or my clients money? they have to take all of the options and put a weight on each of them and jump in the water whether they like it or not. analysts are asked to be much more specific. how much do i think that ford will learn exactly based on these policies? were gm or google or whatever it is. if they don't have enough information to assess something, they are much more likely to leave numbers stale. they have a p that goes up and that needs more clarity. we made -- we may wait months or years before we know the details on things like that. what appears to be happening is that the stock market is getting more expensive. rising,rs that pe is but that's not really the issue. you have one group that is
2:09 pm
acting with partial information and the other that is waiting for complete information. we have a timing gap, not evaluation problem. golub: that was jonathan speaking earlier on "bloomberg markets." julie: janet yellen developing a , finishing up. her remarks focus on the state of the job market, saying it's the strongest in a decade and her speech is available in replay as well. coming up, the turkish lira has been sliding against the dollar following the shooting of the russian ambassador. we get the latest developments. this is bloomberg. ♪
2:10 pm
2:11 pm
2:12 pm
julie: this is "bloomberg markets," i'm julie hyman. oliver: i'm oliver renick. russian officials say the country's ambassador to turkey, andrei karlov, has died after being shot. he was shot in the back while attending an art exhibit in the turkish capital. we go now to assemble -- to stanbul. -- two i >> he was shot by a guy shouting about aleppo. that is the syrian city that russia is backing the syrian government with against the rebels. shooterfirmed that the was a turkish police officer and about 50 minutes ago, we heard that turkish foreign minister has arrived in moscow. this was a plan to visit, where
2:13 pm
he is going to be meeting with russian and iranians to discuss the situation in syria. after thismeeting assassination. that theso hearing turkish defense minister will be traveling to moscow tomorrow. julie: it doesn't look like this has, at least initially, that there is any negative implications for the list of between russia and turkey. simin: that's right. turkey is saying they are not going to let this assassination overshadow ties with russia. we've spoken to a few analysts both here in turkey and in russia, they are saying that pu tin would not allow ties to be overshadowed either. arkey has been over the past with russia, especially after the failed coup in july. back in 2015, turkey and russia fell out in a huge way, when
2:14 pm
turkey shot down a russian jet on the syrian border. that led to trade and travel embargoes. turkey is saying it's not going to let the fallout after this assassination happen once again. turkey and russia are on different sides in the war in syria. russia supporting the syrian government, while turkey wants to overthrow the syrian president. julie: that brings me to the next question, among the turkish public, what is the feeling about the conflict in syria and do we know that the syrian was in fact of syrian dissent, or is he a turk opposed to the situation there? simin: we are hearing he is actually a turk, but he has a lot of things to say about what is happening in syria. a developing story and we don't know that much information about this police officer.
2:15 pm
time will tell exactly what his thought was. oliver: we look at the events in the past year, a lot of these happened in turkey -- the airport bombing, and a coup attempt. now this. is that just about the intensity with which they feel about what's happening in syria? or is there some oversight in terms of security and keeping these sorts of events close to the chest? simin: turkey has been dealing with a huge security problem. of course, we have the failed coup in turkey in july, and they are still in a state of emergency. we are seeing a huge political fallout, plus we are seeing terrorism almost on a daily basis. turkey is also fighting against the pkk, the kurdish militant group, and another war against the islamic state. there's so much uncertainty in the people in turkey. again --immons him
2:16 pm
simin demokan. we speak to the eurasia group president as we assess the impact this could have on markets. has theead, wells fargo first ever exchange traded fund. can the bank catch up to its biggest rivals who are already in the game? we find out. this is bloomberg. ♪
2:17 pm
2:18 pm
julie: this is "bloomberg markets," i'm julie hyman. , thenit was jpmorgan goldman sachs, now wells fargo wants a slice of the etf pie. we hand things over the cory johnson and carol massar. welcome, everyone on bloomberg tv, this is "bloomberg markets." tell us about what wells fargo is up to?
2:19 pm
danny: this is one of the last big bank managers to add this arm, they are trying to replicate what stock pickers do with computers. one where you can do this is through an etf. everyone has done this before, jpmorgan has done it, goldman has done it, and finally, wells fargo, faced with an immense amount of outflows we've seen from active management, inc. they are facing the music here and saying we need to be found our strategies would put -- which they did by buying a firm. carol: was that a clue? danny: it is a clue. it gets people wondering what you are offering. now they announced that within the next six to three months, they are going to have etf's using this tilt. i don't know if we see this as additive to wells fargo's results, even though the new product. frommay be shifting funds the high commission [to the new low commission right pocket in etf's. danny: that is a good point.
2:20 pm
but they didn't really offer this sort of product before, so in their mind, they would say this is a great addition to have from what we already give you. whether it works that way or not, it has yet to be seen. it is important to keep in mind the type of etf they are offering, called multifactor. they're going to stuff multiple factors together. this is low volatility momentum, mostly when you see these, they are single fund. they are stuffing them altogether, saying we worked these out really well and we know the sort of exposure you need from each. by this entire product. this is something that hasn't quite caught on with the community yet, so the most successful one is from goldman sachs asset management, about $1.4 billion, which is, when you look at other etf's, it's good but not great. i think there is still a market to capture here, that flows will be coming in. carol: one of the type of returns we are seeing?
2:21 pm
under at this point, but to be honest, everyone is offering you a little bit of a different flavor. returns are kind of all over the place. carol: it's not apples to apples. danny: because it's using math behind it, investors can't say i like apple, sun going to buy this, they have to say i want to see a three year track record of this etf before i jump in and buy it. i have an of your battle to get assets for this type of etf. cory: what's the difference between this and a betterment or well-funded? -- a wealth fund? danny: it's a factor for investing. it's going to look at certain characteristics of the stock price itself. have highe, it will in value stocks, cheaper stocks.
2:22 pm
it's not really going to necessarily advise you based on what the individual's risk profile is. the idea here is this is a core holding that will replace your s&p 500 holding, for example. instead of waiting in based on market cap, we're going to weigh it on other aspects, so you get low volatility. carol: there's a lot of competition for investor money. danny: absolutely. the great investment team today reported that blackrock is actually reducing the price of their smart beta etf, so there's a little of evidence that this market is starting to look a tad there beingerms of so much offerings that they are having to reduce their prices to attract investors. cory: why did it take wells carol: whyng -- did it take wells fargo so long? danny: having a quantitative -- base, i think if the
2:23 pm
medicine flows that are coming into etf's and are likewise coming out of active management. i think they finally get a point where they say we can't miss out on this and these inflows. cory: we have bank stocks sitting at all time highs that you have a bank creating a product that is going to cut their fees so dramatically. the trend you are describing is a trend of wall street compressing margins at almost every level of investments, which is not a positive banks going forward. danny: one thing i will say in terms of this etf explosion, there are still way more mutual funds out there. part of what wells fargo is doing him a mutual fund with this quant that's going to be low volatility. it's not all flowing to etf's. there is a lot of evidence that that is indeed the way the market is going, but i think we still have some time before that occurs. carol: any other big financials that haven't joined the party?
2:24 pm
danny: wells fargo is the last shoe to drop. have we officially enter the regime of passive investing? it's a possibility. cory: it's interesting you have these guys making the moves at the same kind of time. i'm surprised they haven't looked at some of the robo advisers requisitions. that would be one way to get a couple more billion under management, but also the best and brightest in the robo advisor world. danny: wells fargo did this through an acquisition. carol: they have a pretty big customer base to start with. danny: i would be surprised if we see more people doing the sort of acquisitions like you said, just because there are so many people out there at a lot of small etf shops, we did see more acquisitions. carol: so many coming in. dani burger, stocks reporter and bloomberg news.
2:25 pm
back to julie. julie: carol massar and cory johnson, thanks. cashmore radio interviews on -- catch more radio interviews on bloomberg.com. a look at the biggest business stories. boeing is shedding more new jobs. cuts will come from a mixture of attrition, leading positions unfilled, voluntary buyouts. -- theyr -- they make may use involuntary layoffs. alex cruz says contingency plans are in place so the flights can operate as normal. urging the united unit to call off the plan to strike. members whostock joined in the last six years. negotiations continue.
2:26 pm
britain also faces a postal strike over the holidays. stepping on the battle for ,ontrol of a broadcaster divinity says it will lift its take to 30% of share capital. berlusconi is trying to keep control of the media company and today asked italian market the matter.o act in that is the bloomberg business flash. stocks climb on the lme. down 2.6%. on the screen red for copper. this bloomberg. ♪
2:27 pm
. . .
2:28 pm
attention homeowners age sixty-two and older. one reverse mortgage has a great way for you to live a better retirement... it's called a reverse mortgage. call rfree information kityour with no obligation. it answers questions like... how a reverse mortgage works,
2:29 pm
how much you qualify for, the ways to receive your money and more. plus, when you call now, you'll get this magnifier with led light absolutely free! when you call the experts at one reverse mortgage today you'll learn the benefits of a government-insured reverse mortgage. it will eliminate your monthly mortgage payments and give you tax-free cash from the equity in your home... and here's the best part... you still own yohome. call now! take control of your retirement today! ♪ ulie: from bloomberg world headquarters, this is "bloomberg markets." i am julie hyman. oliver: i am oliver running.
2:30 pm
renick.- oliver let's go to abigail doolittle. this gives you an instant snapshot of what is happening in the commodity market. it is all in red. platinum, copper, you were talking about copper being low. seenr with the level last right around the election. days in a climbed six row. it is a little bit of a reversal from what we were seeing out of the election. now we have "dr. copper" down. declining on that. another pocket of weakness, the grains, soy beans, corn, wheat all trading lower.
2:31 pm
ample, and supply is it is sending the price of soybean lower at this point. corn is also lower. we take a long-term look at corn. we have a beautiful uptrend for corn over the long-term, but we see that over the recent years, this is corn's fourth yearly decline in a row, down 60% from at most recent peak. this chart suggests we may see corn to climb even more to consolidate down on the long-term drown trend. perhaps more weakness ahead for the grain complex. these trade in a fairly correlated manner, oliver in julie. julie: thanks, abigail. bp has cemented relationships with abu dhabi with a $2.2 billion deal for a stake in one of the emirates largest oil
2:32 pm
concessions. it will pay for 10% of ad code, giving abu dhabi a 10% stake in bp. earlier this week, bloomberg spoke to bob delly about the deal. is important work that bp has had for a long time. to be honest, given or disciplined financial framework we have had an meeting obligations in the u.s., which has taken us a while to work through the point where we can make this great investment with abu dhabi, and the key element is the bp shares, abu dhabi will own about 2% of the. for -- of bp. for bp, we will produce more coming in addition to what we produce in abu dhabi, so continuing our long-term relationship. that is important for us. the economics are good for us, for our shareholders, and for
2:33 pm
bp, it brings in strategic owner of the company, which i'm pleased about. time. worked here a long i like to believe we have shown what we can do technically. we will move and work with at is going through their own transmission of the company, and we will bring in our best people and resources. we have got a lot of experience in working in a really big oil field, late life oilfield, technical things that we bring. as well as a deep sense of responsibility about the privilege of working with the natural resources of abu dhabi. should we take this as a sign that now is the time for oil majors to rally up investment? one has to have some confidence in the price we have
2:34 pm
really retooled bp, getting down to an efficient level. we said we would have a balance of funds in 2017 at $855 oil price. $55 oilgo -- at a price. a year ago, we were saying $60. we are being useful about the capital we spend, the service we select, but it is time for bp to start growing our we have worked through sewing difficulties in the u.s. that the company is now well-positioned for growth toward the end of the decade. reporter: we saw a historic deal with opec, and also an even more historic deal by non-opec providers with production cuts. how do you feel about opec in the future of oil at the moment? bob: it is significant. you have non-opec countries seriously talking about reducing their output. you have opec. some people have said opec is
2:35 pm
not a real organization anymore, it does not actually bring things together, and i think opec is an important organization. this agreement is significant to you cannot he see in the notice is going out for the middle east, i know because we work in russia, there is a schedule of reducing output from russia, so i think it is very serious. i think oil prices between $55 and $60 seems very realistic for 2017, and growth continues in china and in north america. hasrter: donald trump nominated rex tillerson as potential secretary of state. do you think he is the right man for the job? bo he knows leadershipb around: the world, he knows how to get things done. he is a very serious person. job,nk he will do a great not just because i am in the oil and gas industry -- this is a man who really knows the world and was how to manage a global organization. broad basis,a more
2:36 pm
we know donald trump is potentially more from me to the oil and gas industry than his predecessors. what does that mean for you and other oil companies? bob: well, surprises are happening all over the world. a lot of surprises have happen in the u k even the referendum in columbia, which has now gone back in another direction, is a surprise. the election in the u.s. is a surprise. i think we're in for moore surprises in 2017. we are a very long-term industry. we have to think 7, 10, 15 years out, so we will navigate and work through this. got its financial framework and discipline back, and we will work with the circumstances. julie: that was bp ceo bob dudley with our own tracy alloway. oliver: selling shares of aramco, it could be the biggest ipo in history, but where are those shares went to go?
2:37 pm
joining us is reporter alex barinka. where are they going to go? alex: john kerry spoke overnight, saying the plan is still in progress. is hongon the table, as kong. it makes sense because when you think about the scale of this be the biggest listing since alibaba, about $25 billion. this would be about four times that if you look at the current valuation estimates of a $2 trillion company. the amountink about of liquidity needed, the amount of investors needed to high-end, it seems like they will have to share of the pie a little bit to draw in enough folks to buy up all of the shares. julie: that is sort of the argument that tom farley made. i asked him how he would pitch saudi aramco to try to attract the deal.
2:38 pm
oil i am a friend of the minister, and i would explain to him what i explain to other deals, this is the most important day of your life as a public company. public and you need an exchange that can handle massive liquidity, if you are coming to raise $25 billion as alibaba did, there is really one place to do that in the world, and it is right here. with respect to the geopolitical concern, i do not want to get into it too much other than to say we need friends in the region, and to the extent we have a very large ipo of a company such as you describe, again, i would make a appeal to consider the new york stock exchange. julie: what is the risk is the ipo occurs here? it is a risk, especially few look at the fodder going on right now. an arms deal is going on with saudi arabia. these are the things that investors will have to keep in mind, and the company will have to keep in mind in terms of where it wants this to occur.
2:39 pm
if a lot of it is here at the new york stock exchange or nasdaq, which would basically be the only two listings in the u.s. that they could consider, you have to think about the optics of whether they want to align themselves -- whether saudi arabia wants to align themselves with the u.s. in an event like this. it is definitely something to keep an eye out for. when you think about financials like this, it seems like there would be demand on the table. oliver: ultimately they have to the geopolitical, but they also want to get the best deal and operate in a liquid market. is that the main priority they need to keep in mind when figuring out what to go to? alex: it is, and it is possible it will list on multiple exchanges as well. raised in its japan, its home market, and also in the u.s. also, we did see the opec deal
2:40 pm
recently. we saw a bomb in oil prices. commodity overall prices, which we have had basically none of the nupathe 18 months, so all of these things help. and the positioning from aramco and saudi arabia in this opec deal agreed to manage production also helps general sentiment, showing that they are willing to play ball. very: it will be interesting. alex barinka, our ipo reporter, thank you. oliver: let's check headlines. courtney collins has morphed newsroom. courtney: thanks so much, oliver. -- russia'stter ambassador to turkey has been assassinated. shot when av was man apparently shouted "don't forget aleppo." the gunman was shot and killed by police. scotland will hold a referendum on separation from the united
2:41 pm
kingdom and whether can stay in the eu single market. be warning seems to delivered by scott is foreign minister nicola sturgeon, a move that will turn up the heat on british prime minister theresa may, who spoke in parliament earlier today. welcome the fact that they have been looking at their priorities. we encourage all at ministrations to look at their administrations -- priorities. sturgeon said stalin voters decided to stay in the eu in the referendum -- said stayand's voters decide to in the eu in the referendum. roberts did not comment in onecting an emergency appeal senate action on garland. lower courts had previously dismissed the case.
2:42 pm
and americans who would like the popular vote instead of the electoral college. thell found 45 support popular vote. electors, 34% say should not be bound if they have concerns about the winning candidate. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am courtney collins. this is bloomberg. julie? julie: thanks, courtney we're following reports that a truck has run into a crowded christmas market in berlin. this is following a pattern of recent terrorist attacks, if in fact that is what it is, of trucks running into various crops, including of course in southern france. again, reports say in this truck has run into the crowded
2:43 pm
christmas market in berlin. oliver: according to the berliner, one person has been killed. you can see on twitter, it looks like a semi truck, so not just a small truck, but a big, like, trailer. julie: we will bring you any confirmed further headlines as we have them in more developments in this story. toing up, we will be turning china. leaders fighting their tongues as president-elect donald uses twitter to rattle relations. over theounced weekend, but the response was muted. this is bloomberg. ♪
2:44 pm
2:45 pm
mrs. "bloomberg markets ." i am oliver renick. julie: i am julie hyman.
2:46 pm
it is time for the bloomberg business flash, a look at some of the biggest stories right now. general motors will close five factories next month. the factory could close anywhere from one to three weeks, just over 10,000 workers will be idled. plants in michigan, ohio, kansas, and kentucky. italy considering a measure to boost public debt. the plan would apply to a number of bank lenders, which means to $1 billionaschi, would be extended to banks should monte dei paschi fail. lawmakers are meeting this evening. sony pictures is looking to take a bite out of apple's itunes in italy. chile.s a 5% stake in some of the biggest investors on the video-on-demand platform include paramount, viacom, and one of brothers. u.k.,has extended to the
2:47 pm
germany, poland, and australia. that is your bloomberg business flash of it. oliver: china is pushing back -- flash update. oliver: china is pushing back on the assumption that it stole a naval thrown. donald trump tweeted "we should sell china that we do not want the drone that they stole back. let them keep it." china does not like the word "stole" to describe its actions. so last friday is where we left the story as it was breaking, and we were trying to assess whether or not this was sort of a reaction or response in any way to what trump has said about taiwan, china, and his comments. any truth to that, or is this something that came up at the time? : it is hard to imagine china not taking the totality of donald trump's
2:48 pm
approach to it in consideration, whether that is his call with the leader of taiwan, which is the first time the u.s. has on that since 1979, or whether it has been his very aggressive rhetoric toward china, accusing them of waging the greatest job theft and world history on the u.s. communicated in a variety of ways. it has used official government channels and spokespeople who have been somewhat more restrained and measured in their responses, but their communications, their government-run news agencies have been a lot more stern and saying donald trump is essentially playing with fire here. julie: what kind of leverage they have, sahil, in terms of bargaining power when these in terms of
2:49 pm
bargaining power when these incidents occur, if indeed there will be a ratcheting up? sahil: they have an enormous amount of economic leverage. the u.s. and china, the two largest economies in the world, are extremely dependent on one another. any terrorist that president-elect trump tries to slap on goods coming from china will likely be met with a similar retaliatory oh response in china. there are depomed issues that ,hina can be very influential especially when it relates to other countries in asia, in china and in africa, too, where china is expanding its influence. china, as a growing military power, has that issue well for donald trump to consider. oliver: let's switch gears for a minute. the electoral college, the votes are now happening, and some of the "never trump" and "anti-trump" pollsters are trying to get the electoral members to not vote for him 30 some of your guys reporting that the only votes that have not gone the way they are supposed
2:50 pm
to is one for bernie instead of clinton. is this move dead in the water or what? sahil: it seems that way. this move never had a lot of steam behind it. it would be unprecedented in american history. never once have electors overturn the result of an election. in the entire american history, there have been 83 instances of what we call "faithless electors," never has it changed the result of an election. if it did this time, it would be a pretty explosive event that would undermine basically the entire election system that we have. that does not seem to be happening. there have been at least 12 states that have voted so far, whether it is swing states like ohio and pennsylvania, or a deep wright state like georgia and south carolina, and even blue states like connecticut all seem to be voting for the winner of their state, so i do not think we will see the mutiny. oliver: congrats to bernie
2:51 pm
sanders on his one unwarranted vote. julie: we have more headlights coming out of the developing situation in turkey. the turkish president are to gan says heo condemns the murder of the russian ambassador. russian president vladimir putin is also speaking and says he discussed the killing with erdogan by phone and said the ambassador's killing was "a provocation." we will be speaking about it with ian bremmer of eurasia group in a couple of minutes. up next on "bloomberg markets," ultralong bonds look like an ultralong shot as we talk about steven mnuchin's idea of 50-year or maybe 100-year treasury's career we will explain why. this is bloomberg. ♪
2:52 pm
2:53 pm
julie: this is "bloomberg
2:54 pm
markets." i am julie hyman. the pic for treasury secretary from donald trump, steve midocean, has floated the idea of potentially doing ultralong bonds. 50-year, 100-year treasury bonds. joining us is bloomberg news' bryan shaw potter and joe weisenthal. what is the appeal of this ultralong bond? an: with this lowest in history, the idea of issuing very long bonds, locking in for multiple decades, is a very attractive option. the issue is the way the u.s. options are set, and the -- possibility of coming every month or every quarter would be really tested by these long-duration maturities, and also, it is a brand-new offering and would take a while for investors to really catch on to a secondary market. oliver: what is it from a government perspective?
2:55 pm
why do they want to issue them? can have their budget predictable for the next 50 years or 100 years. for now, they are issuing a lot of short-term bills. the average portfolio is really growing. theer: i hear this about importance of pretty debility, stability, and wanting to have the same options, whether it is monthly or quarterly. why is it an important thing for the treasury? brian: it is the benchmark for everything, basically. issuance, andipal that is every time you come to the market with billions of dollars, that is a real important fixture. joe: let me jump on the back of it hurt why is it a trump-steven mnuchin thing? brian: it has been brought up multiple times in the past. the t backs brought it up in
2:56 pm
2011. julie: what is that? brian: the treasury advisory committee. this came up in 2009 as well. it is not a new idea, but it is always in a -- it is always on the other you want to introduce something flashy. a lot of treasury secretaries have, gone because there is a lot more easier ways to extend it. julie: brian chappatta and joe weisenthal, thank you so much. joe will be back for "what'd you miss?." stay tuned. this is bloomberg. ♪
2:57 pm
2:58 pm
2:59 pm
in new it is 3:00 p.m. york. i am oliver renick. julie: and i am julie hyman. welcome to "bloomberg markets." ♪
3:00 pm
oliver: we are live from bloomberg world headquarters in new york for the next hour, plus, we're covering stories from los angeles, washington, and is simple. -- istanbul. ian bremmer joins us later in the hour. we will get his reaction to the shooting of the russian investor in turkey. stocks advance today. fed chair janet yellen says the job market is the strongest in nearly a decade. disney's world one dominates -- "rope one" dominates -- "rogue one" dominates the box office here we are one hour away from the close of trading. let's get to the markets with abigail doolittle. abigail: we're looking at gains. allmajor averages are higher. the dow and the nasdaq earlier at various points had been on pace for record closures.
3:01 pm
both of these have come off of those highs, though. is modestlyle it higher, it is not really robustly higher. investors are a little bit on pause, taking a breather. major averages, we are looking at microsoft and disney. microsoft is one of the top major averages, hitting a record high. disney is higher, as the stock was added to bankamerica merrill lynch's number one usa sublist. -- stock list. it will hit a number of micro reasons but also macro. it also had a possibility that lower taxes could help the shares. they have seen an upside potential for the shares of disney. as for another pocket of strength in the u.s. market, we are looking at the chip stocks, a bit of a rally here. thead the stock of philadelphia semiconductor index up about 1%, being led by lam , upgraded by goldman
3:02 pm
sachs to buy. the firm is bullish on the chip equipment maker. we do have a number of the chip stocks trading higher. equipment stocks are seen as what could be ahead for the chip stocks, since they need to order the equipment to make the chips. bullish action here for the chips. this is pretty positive. many the service, we have a bit of a -- beneath the surface, we yen a bit of a bid, the trading higher. you have the growth euro versus the yen trading down. that tells you the degree to which the yen's trading higher. we have the 10-year yield trading down by about five basis points as bonds are getting a bit of a bid. finally, a bit of a move higher for gold. beneath the surface of stocks trading higher, we have some assets also, it could be a tell for what is ahead, julie. julie: you were just looking at the young versus the euro, abigail, thank you. i'm looking at the euro versus
3:03 pm
the dollar. at its low today. currently, it is trading at $104.03. lowest, going all the way back to january of 2003. a member ofier with the oppenheimer find, and he said we could see parity by the end of this year. in the next, what, week and a half. that is something we will continue to watch. let's get a check of the headlines with bloomberg's first word news with courtney collins in our newsroom. courtney: thanks, julie. german media reporting a truck has driven into a crowded christmas market in the center of berlin. and number of people have been killed, and many others injured. the incident happened outside the landmark kaiser will him memorial church. it was not immediately clear whether the incident was an accident or some kind of attack on the market. russia's ambassador to turkey has been assassinated by gunmen and ingres.
3:04 pm
-- in ankara. andrei karlov was delivering a speech when according to turkish television, a man shouted "don't forget aleppo" and fired numerous shots. the gunman was shot and killed by police. three people were injured after according today police to police who set a search for the gunman is underway. retired coast guard admiral allen is said to be a serious contender to have the department of veterans affairs according to a report by fox news. alan is meeting with trump today in florida. former alaska governor sarah palin was also floated as a possible candidate for the job. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am courtney collins, this is bloomberg. julie? julie: thank you, courtney.
3:05 pm
the russian investor to turkey has been shot to death at an art exhibition in ankara. erdogan president heard says he contends the attack, and russian president vladimir putin says it is an act of "publication. -- of "provocation." eurasia group's ian bremmer joins us. russia says this is "a provocation" and is threatening to retaliate. what can they do since we do not know much beyond this point? we don't. we know it is someone who infiltrated the turkish special fo police forces, which means turkey need to do a better job on its own security, which is not surprising given the amount of terrorism we have seen in turkey over the last few months. both russia and turkey have strong reasons to want to work
3:06 pm
more closely together, both globally as well as in their backyards right now. and they also have terrorist organizations that they want to do their best. those are not the same organizations all the time. the turkish concern overwhelmingly is the kurdish separatist groups both in syria and in turkey. in the case of russia, it is much more a number of rebels on the ground in syria, many of which are involved in al-nusra, but some of which are not. and will not stop erdogan putin from coordinating quite closely in coming weeks and months, in terms of both saying they will do everything possible islamist militancy in their own countries and of course in syria. julie: ian, recently, we have with new crackdownsn
3:07 pm
in his country following the attempted coup on the press, on the education system. can we expect further shutdowns like that, or will this type of action be different? no, you deftly can, but this is part of the problem. has been a norm is the concerned about those that would fight against him within his own military, within his own police force. he has had significant purges within the military, even before the attempted to a few months ago. he stepped that up afterwards. that is absolutely making the military less directly dangerous to him, but it also weakens turkey's own defenses to root out potential terrorists. there are millions of refugees and turkey right now, over 2 million from syria itself. the border between turkey and syria is extremely porous. it is extreme a heart for
3:08 pm
turkey, even if they had done none of that against their own defense forces, to be able to effectively defend against radical islam. look at what has happened in germany and france, in the netherlands over the past 12 months. turkey is vastly harder than that to deal with. what we are today, unfortunately, it came at the russian ambassador. in the past, it has been aimed at tourists and primarily turkish citizens and at the turkish government. same all pieces of the puzzle. oliver: ian, i am glad that you brought up the sort of lack of security in turkey. we were talking about this with in istanbul. in istanbul. there have been a lot of incidents there. what does erdogan need to do to signal to the rest of the world that turkey is a safe place, to have people visit, to have have thesend to geopolitical sort of easing of tensions?
3:09 pm
well, he cannot, and this is sort of the problem. there are more russian tourist fromcome to turkeys than any other country. germany, i believe, is number two. but the fact is that tourism into turkey has gone way down. the western investment sentiment into turkey has gone way down. in fact, i think it is going to go the other direction. there has been a deal between the turks and the europeans led for turkey to maintain border security on the turkish-greece border and also to maintain their level of refugees in return for money coming over from europe. i think there is going to be a lot of pressure now from erdogan saying, you know, and rich that deal, give us more support, or we are not necessarily going to keep all of these refugees here. in other words, this leverage from turkey in undermining the security situation for the rest of europe, and that is a real threat to greece and other countries in europe.
3:10 pm
so the turkey-eu relationship is only deteriorating at this point. julie: we have just gotten an additional headline from vladimir putin, saying the killing of the ambassador is an attempt to ruin russia-turkey pride. it seems, though, from what we haven't talking about, is not going to be a successful attempt. what this assassination of colleges, does it bring more attention to the situation in syria and in aleppo? that aleppo iss almost a past story in the sense that for the last five-and-a-half years, the world has been talking about the humanitarian crisis around an entire country that has been destroyed, and, you know, with the exception of the russians supporting syria's assad, very few have done anything about it. you be u.s. has given humanitarian aid, but nobody has tried to create or strengthen lazy democratic institutions in syria.
3:11 pm
such as they are, they are very weak. they are certainly not going to put large numbers of boots on the ground. i do not think you are going to see more attention to this issue going forward. is not what you will see only did putin say that about not ruining the relations, but you also saw the exact same turn of phrase from the mayor of ankara. similar.imself very let's face it -- if this can happen, this exact same attack had happened just six month ago, before the attempted coup in turkey, this is when turkey and russia was having a cold, this could be incredibly dangerous indeed. this could have led to a very significant escalation of russian military in the region on and maybe even into turkish airspace. but that did not happen. we now already have that, and now putin and erdogan see it in
3:12 pm
their interest to work with each other. these are two countries that are not have to worry about freedom of press, they do not have to worry significantly about opposition parties. both erdogan and putin, if they decide they want to work with each other, they can. that is exactly what will happen. oliver: we want to bring in headlines, we are getting some of the newspapers based in germany, reporting on this truck that drove through a market. it looks like right now as many as nine dead according to some reports, so it looks like the rest toll is rising here. i do not want to undermine the human cost of what is happening, but given your expertise that is politics andion of markets, in general, the sort of risk that we look at around the world, there is still a conflict in many places. how do you talk with people in with or how to deal think about the geopolitical tensions and how they impact the economies around the world? an: think about the weakness in
3:13 pm
europe, the growth of populism, the leaders in europe who have not been able to build support for europe more broadly, which they generally want, and have not been able to build an establishment party. merkel, since 2008, is the one person and europe who has been seen as absolutely being able to maintain rule of law, common values, stronger integration in she said, "let's bring in one million refugees from syria," and then it all started to go badly for her. even in berlin, which is, amsterdam,en beyond probably the most progressive urban center in all of europe, you started to see the support for the alternative parties, the populist party. i am sure you know, merkel is up for her own reelection bid right now as chancellor, and she is probably going to win big, but unfortunately, these sorts of attacks -- and we do not know exactly what happened here, but an attack on a christmas market,
3:14 pm
sort of like what we have seen in belgium recently -- just civilians getting killed around a christian holiday, you know, your guess would have to be yet another sort of extremist islamic attack -- that is going to weaken merkel, that will continue to support the populists. it is not suggest they are going to win, it is strong opposition from merkel the way there is in many of these other european nations, it makes it harder to keep euro together -- europe together. geopolitical he, it is the transatlantic relationships that are taking the biggest hit. when you tak talk about free markets and global security and is the values, it relationship between the united states and europe, and that has gotten dramatically weaker with the election of donald trump in the u.s., and it has gotten dramatically weaker with everything we've seen the headlines from brexit over the past 12 months, today's attack
3:15 pm
in berlin, yet another piece of that story. julie: ian bremmer, thank you so much for your perspective on that relationship, on the relationships around the globe, given all the headlines we are getting today. we really appreciate it. ian bremmer, president and founder of the eurasia group. i want to bring you a headline, oliver mentioned it, the berlin police have said nine people have been killed at that christmas market in that truck attack. there have been multiple injuries here. we want to get more on that developing story in berlin. our own matt miller joins us now on the phone. mats, what can you tell us about what is going on there? one of the things i can tell you about is where the attack took place. it is easily the most well-known and probably also the most highly populated shopping street in all of germany. it is a place where the very wealthy go to shop, the most
3:16 pm
high end, luxury names are there that you would recognize, from chanel,ods -- hermes, also, the big mass-market brands are there, so there is an urban outfitters on kudamm. always packed with shoppers, as long as the stores are open, and this being the week before christmas, a lot of people are trying to squeeze in some last-minute christmas shopping. it is also the home to a lot of tourists, because a big churches there that was scarred by the second world war and has been left standing. i have right now a student visiting from new york who is about to be going to
3:17 pm
college and is going to have a gap here, it is where i took him because it is one of the most famous and highly visited places in berlin. julie: matt miller, thank you so much for giving us perspective on what that street is like. we just heard ian bremmer say this is an attack on a christmas market, and it is an attack on a very capitalist area, center of commerce in berlin. once again, that headline that berlin police are saying at least nine people are dead in a truck attack at a busy holiday market in berlin, and there are multiple injuries as well. we will bring you more headlines as we get them. i should mention we have not confirmed that it was an attack, but there was a truck that ran into the christmas market. this is bloomberg. ♪
3:18 pm
3:19 pm
3:20 pm
julie: this is "bloomberg markets." i am julie hyman. oliver: i am oliver renick. time now for the bloomberg business flash, a look at some of the biggest stories right now. billionaire carl icahn says icahn industries will sell in a billion,l of $2.8 expected to close in the second quarter of this year, for american railcar leasing. $350 million in investors careem.ng the company, blackberry canada are opening a research center in cars. include anydoes not funding at the point, but it could at the future, according y's unit that has
3:21 pm
the approval to run in car entertainment systems. that is your bloomberg flash update. julie: still ahead, we are talking franklin resources, a stop that and 16% gain since the election. this is bloomberg. ♪ -- a stock that has seen a 16% gain since the election. this is bloomberg. ♪
3:22 pm
3:23 pm
oliver: this is "bloomberg markets." i am oliver renick. julie: i am julie hyman. it is time now for abigail doolittle. abigail: for today's options .nsight is jim thanks for joining us, as you do every monday. today is a bit of a rarity -- we do not have any record highs in this period of record highs. what do you make of it? jim: it is a little quiet out there.
3:24 pm
it is worth keeping in mind that seasonality. we have another santa claus rally here for the next two weeks into the ear end, so quiet, but i would not be surprised to see a nice bid on u.s. equities. abigail: that does is with what your technical analysts said. santa claus rally could kick in. as for 2017, your keeping an eye on sturgeon, and you have a great chart. what we have done here is taken 10 s&p sectors, and we are looking essentially at standard deviation. when this is high, sectors are dispersed, they are up, down, moving all over the place. it is typically a very healthy environment. what we have done with this graph as we put it up against excess returns. we zoom into the late 1990's, we deepen that expansion from where we are right now, dispersion began to lift in this four-year
3:25 pm
period where active managers outperform the s&p index. if you fast-forward the last seven years, they have underperformed. you see that on the right-hand side. sectorhe election, this reallocation that so many have focused on has been really summed up by this slight higher in dispersion. ofafter a multiyear period dispersion being low and active managers underperforming, are we beginning now via this reallocation across sectors a period of higher dispersion, and potentially a period where active managers come potentially -- can the digitally perform again. how does this relate? we look across volatility surface, trading activities, franklin resources, a name that popped up. what is the relationship here? they are an active manager.
3:26 pm
we have to jump to the trade. what we want to do is get long here, there is also the repatriation of overseas cash. a 40, 50 call spread, you pay that,two dollars for early 2017. abigail: thank you so much, jim. julie: thanks, abigail and jim. you may want to pay attention because tom lead joins "what'd you miss?" and he had been one of the biggest balls on wall street. he is calling for a correction in 2017. this is bloomberg. ♪
3:27 pm
3:28 pm
3:29 pm
i've spent my life planting a size-six, non-slip shoe into that door. on this side, i want my customers to relax and enjoy themselves. but these days it's phones before forks. they want wifi out here. but behind that door, i need a private connection for my business. wifi pro from comcast business. public wifi for your customers. private wifi for your business. strong and secure. good for a door. and a network. comcast business. built for security. built for business. berlin as aoday in truck rams into a christmas market causing at least nine deaths in multiple injuries. berlin police say that people
3:30 pm
died after the truck mounted the pavement and crashed into a crowd. while police refused to speculate on any connection with terrorism, the incident is reminiscent of an attack in nice, france in which a truck drove through crowds causing multiple deaths. the white house is strongly condemning the attack of the russian ambassador to andrei karlov. he was several minutes into his speech in the capital when a man wearing a suit and tie shouted and fired at least eight shots. that is according to a photographer who was in the audience. turkey says the gunman was police exhibition. three people were also wounded. police officials as a government has injured three people at a mosque in switzerland. -- zurick.

45 Views

info Stream Only

Uploaded by TV Archive on