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tv   Bloomberg Markets Americas  Bloomberg  December 22, 2016 12:00pm-3:31pm EST

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david: from world headquarters in bloomberg, from flint, to berlin, to moscow. the bank failed in his last ditch effort to bring in private capital. you will get why this could spell trouble for bondholders. mayident-elect donald trump have a $300 million conflict of interest with deutsche bank. this could be a very delicate situation given ongoing negotiations between the bank and the department of justice. bank of america ceo weighs in on how potential changes to banking regulations could lead to large returns for his firm and the rest of wall street. highlights with our interview with him next. we are halfway into the trading day. here is a look at the markets. abigail: stocks were basically unchanged earlier that we are looking at the kleins now. declineseins now. -- now. it does feel a little bit like more than unchanged.
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in fact let's take a look at the intraday chart of the s&p 500. we see the higher trading action earlier still in the red. now we are right at those lows. prior to being at the loews a few minutes ago we were looking at the smallest trading range on the year. btb2839. look at these go back to may. the s&p 500 right around those lows. the lowest daily trading range as we are again finding directional cues for the downside. what does stand out in terms of the lack of a trading range today, yesterday and the last couple of days is the volatility on the year. we have a great chart. this is the annual range. this is the biggest range this year in 2016 since 2008. it reminds us of the volatility we have seen. there was a big correction.
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there was a technical correction,, almost a bear market for the nasdaq earlier this year. that is helping to explain why we are seeing this really big trading range on the year. as for one winner, we are looking at weight watchers. they shares are surging. you can see they are up sharply. this on the news that oprah winfrey lost 30 pounds using the program. she has a stake in the weight watchers company. it is interesting to see she is promoting this and the stock is nicely higher on her success with the weight loss. david: thank you abigail doolittle. let's check in with the first word news. emma chandra has more. campaignald trump's manager kellyanne conway is heading to the white house. she will service counselor to the president. she said previously she place in her family to washington to serve from either inside or outside the administration.
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she will be the highest-ranking woman in the administration. angela merkel she is proud of the german people's levelheaded response to the berlin truck attack. she got an update on the investigation. the search for the suspect continues. a vote in united nations security council resolution criticizing israeli settlements in the west bank has been delayed. that is according to officials with knowledge of the deliberations. donald trump called the resolution unfair to israelis, saying it was a miniport negotiating position. the u.s. has historically veto resolutions seen as hostile towards israel. the obama administration did not say how he would vote in this case. michigan governor rick snyder says he has no reason to be concerned about being charged in an investigation. as the bill came
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for his legal fees reached $4.9 million, all patriot act -- biotech -- all paid by taxpayers. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. i'm emma chandra. this is bloomberg. david: thank you so much. u.s. banks of done a good job recapitalizing since the 2008 financial crisis. brian moynihan says his bank has all the capital it needs until 2019. but he adds the current regulatory requirements means his bank cannot take risks with 30% of its capital.
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that cap of the effect were shareholders. david: capital requirements are one thing, a lot of behavioral regulations or something else. i want to talk about dodd frank and amending dodd-frank, reforming dodd-frank. are there particular assets you think of gone too far? it,n: our approach to largely our industries the same place. it is not a lot of the parts we talked about a dodd-frank. it is just getting the calibration right.
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for smaller companies to get caught in the complexity we have to deal with -- we are a bigger company and they should be some relief from it, but we are talking about the application of rules. not necessarily you have to change rules. it's not an effort we have to get rid of dodd-frank. it is more we take something and apply it to far. that is heading in a debate going about where we should fine-tune this. that is an honest debate everyone believes we should have, whether you were inside the regulatory framework or not. that is a responsibility of the industry and regulators to think about the academia to get this right. david: that may welcome back to the identity of the regulators. there are two seats on the fed, one in charge of regulation. does that put a premium from your point of view on exactly who donald trump appoints to the key regulatory positions? brian: we are highly regulated industry.
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the consumer bureau, the controller, the fed position, the fdic, the sec, you can keep going. we have a lot of people. we have a high interest in making sure we have highly qualified people working. david: what of the volcker rule? brian: let's talk about how we run our company. if you took it out tomorrow morning, we would not change what we do. we believe our role in the capital markets and our team is on a great job. the flow is between our issuing clients and our investing client in back-and-forth, and helping investing clients get access to product and also access to markets and our research in talent. -- we take risk in the middle because the trading day has moves. with volcker, with the problems caused by it, it is building up on a balance sheet and some guys store. the private equity of that
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store. we have $60 billion in private equity hurricane related when i became ceo and we are down to $2 billion. they can go invest in private equity firms. the question is, how much work is a take to comply with a rule like that as opposed to changing behavior? i think is a question of our we overengineering a solution to a simple question which is we should not have a lot of capital invested, we should have invested in turning risk over to facilitate markets. that is how we are going to run the business. david: what about stress tests? these are devices the fed has used to regulate. good idea, bad idea, overdone, mishandled? brian: two very good ideas. i won't bore you with all the details, but let's think about with the stress test says. he confirms for society that you
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take all these banks and you run them into the mountain without any warning at 100 miles per hour and what did they look like with little ability to adjust their business model? the inability to adjust. and the losses for the company come down every year. that is a good thing for the business model. it says you have to assume you will get things wrong and hold the capital. if you did it the wrong, he took too much credit risk, did you have the capital's or survive -- capital to survive. very dire circumstances. it is a good rule because he gives comfort. the living will. is integral to figuring out the question of do you take these large enterprises, you have to understand them well. if they do hit the shoals in the night, you can take them apart.
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things going back to when i , it istarted in banking important to know where everything is. it sharpened our pencils. the recent determinations were very critical. in the self-interest of bank of america, if you think about who pays for the fdic fund, it is government, not a question, but a candidate it is filled in by size and relativity. we had a higher interest in anyone in the country. our economics are on the line to fill the fund backup. it is my great interest to make sure we can take people apart if they had the wrong position. i think those are two good aspects of the regulation. david: just one small part of our exquisite interview with brian moynihan. check out the rest that monte dei paschi seems destined
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for italy's biggest bank nationalization in decades. efforts to prevent that are now underway. this is bloomberg. ♪
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♪ this is bloomberg markets. time for the bloomberg business flash with some of the biggest is the stories in the news. shares of cdr refining surged after the enough at that carl icahn is donald trump's special advisor to roll back regulations. they had the biggest intraday gains since september 8. the rate of ipo's should double
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or triple in 2017 for venture capital backed technology companies. possible andys are it may snowball should wall street or washington failed to cooperate. the largest u.s. radio company, i heart media, is working on a reboot. it is buried under $21 billion in debt. it is fighting to stay about bank receipt. that would turn into new which initiatives like live events and award shows and introduce a new on-demand streaming app with spotify-like features. that is your business flash update. now the latest news on the world's oldest bank. monte dei paschi has failed to convince anchor investors to commit to it share sales. the italian bank is inching closer to nationalization. lionel says this could play out like an opera and the fat lady
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has begun to drop her first breath. you write the bank is under the brink of a nationalization. what could forestall that from happening? lionel: this is a very political story. there is always time for a fudge when it comes to europe. i think a lot of this is out of italy's hands. all it would really take to take us off the ticker in terms of typing -- timing would be a they extended the deadline to raise capital which it has not done. a lot of this is coming for the european regulator. we have seen no signs of that. . a lot of the debate over the small print is how to do with in accordance with or in some kind of compromise with eu rules. a lot of this is out of the hands of italy, even if a fudge
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is still possible. david: your column has an operatic conceit. let's talk about with the timetable. he said his good rival a opera in length. should it turn to nationalization? lionel: nothing official has been called for yet. we are were going to wait until tomorrow anyway to see any kind of official movement. to hammer out any kind of deal with brussels, with frankfurt, this could drag on into 2017. the italian banking system and his problems are much bigger than just monte paschi. italy has talked about a 20 billion euro package to support its banks. nobody thinks that on its own would really be enough to draw a conclusive line under the problem. i think whatever happens at monte paschi will send italian banks willing to next year. david: what indications do we
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ine with italian taxpayers light of the rise of the five-star movement in italy, how would this go down? lionel: that's a good question. italy will have to sell this deal carefully at home because taxpayers and households own bonds on italian banks. they might have to take losses according to the rules of a rescue. the five-star movement is making political hay out of this, saying that the bank should be nationalized and calling for a parliamentary inquiry into the bank. i guess now it's a question of what -- how to present this. this as asent bailout, bankers get away with it. or is it a protection. that is the key message. david: bondholder protection. what would that look like? there are a couple of
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ways. you can strike a deal with europe to exempt bondholder pain. even ifis a bondholders they were to seek compensation afterwards. that is possible. for italy could simply buy the bonds straightaway and immediately compensate bondholders and take the pain. there are a few mechanisms. we don't know yet what form this will take are clearly italy is worried about the impact on bondholders and market holders at home and abroad. david: in the u.s. we talk about about important financial institutions in our financial sector in the u.s. give us a sense of the systemic important of monte paschi in italy. what would happen if this bank were to file for bankruptcy? lionel: great question. officially there is one big thing in italy which is unicredit.
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they will seek to raise a lot of capital next year. monte paschi is small. it is really valued by the market as a microcap. it is a sideshow to the bigger questions facing italy's banks. unicredit's market cap has had a big hammering this year. there is an effect in italy from monte paschi. monte paschi in itself is not the whole problem, but if this love issue drags on, it takes time. if it doesn't pick up, it will affect bigger institutions including unicredit. david: thank you very much, lionel. for more fast, terry, gadf on the bloomberg. donald trump addresses nuclear policy in a tweak. we will -- tweet. we will have the latest on that next. this is bloomberg. ♪
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-- interesting some questions. is this a strategic message to russia. whatid that mesh with was up until now was an open a personal letter couldn't. david: the president is in hawaii, not in washington, d.c. i went with people in is a demonstration are doing at this point. the president-elect making statement about nuclear policy last week with a temporary disappearance of this underwater unmanned vehicle.
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donald trump weighing in on that as well. the white house is been rather quiet. >> that is right. the national security council has always continue to operate even if the president is on vacation. the president continues to get free things. whether they find out on twitter, like the rest of the united states, this is something the white house is monitoring closely. president obama seems determined not to get engaged in a tit-for-tat with a man that is not president yet whose administration's eye has been of these international issues, having conversations with their counterpart in those other countries because he is still the president. that is the channel of communication. it is something they are moderating -- monitoring and concerned about. david: there been more formal channels from the transition teams. kellyanne conway will be counselor to the president. carl icahn appointed to oversee
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regulatory reform within the white house. peter navarro we'll head of trade policy. let me talk to carl icahn. he was on bloomberg tv a few weeks ago talking about regulation. let's see what he has to say. carl icahn: i'm a very microcosm of this. i don't control 15 businesses. i would tell you we would invest in many of these businesses if we do not have these insane regulations. david: the transition team noting carl icahn will not have to be appointed, he will not be a special federal employee. what sense do we have of his role? is a like the role they had in the obama administration or something different? he is the 20th richest man in america. he has a tremendous amount of influence and also investment and every thing from biotech energy to telecom. a stake in many of these issues were regulations are front and center. it is ah is whether
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paid position or an outside advisory position, weatherpersons role is has everything to do with what the incoming president once that role to be. it is a role to compete with the nec or the treasury secretary or become elementary to them. concerns from those that have thatd criticism is precisely human not be an official or a paid staff role. he can exert influence on industry without that scrutiny. david: our white house correspondent from washington. this is bloomberg. ♪
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david: live from world bloomberg headquarters in new york, i am david gura. more from our newsroom.
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>> russian president vladimir putin today. an annual meeting with the defense ministry said the country passes military is stronger than that of any potential foe. increasing the annual televised -- it lasted for three hours in 2015. attending the funeral of the russian ambassador to turkey who was murdered earlier this week. the obama administration is officially handing a post-9/11 era registration system for mostly muslim countries. this decision comes at a time where president elect donald trump suggested he could ban all -- all muslimthe immigrants from the u.s. of security is investigated as a possible factor in an explosion. some of the stores may have been too crowded.
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dozens are wounded and the death toll could still walk -- could still rise. president-elect donald trump's boyhood home in new york city is going back on the auction block. is beingtyle house offered on january 17. the house built by trump's father has been with -- listed for $1.3 million. 24 hours a day powered by more than 2600 journalists and analysts in more than 126 countries. david: a quick check at u.s. majors today. it does not look like we're on track to reach that today. in the nasdaqwn down by about half of a point.
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,et's go to abigail doolittle for more on the markets. 500 up: we have the s&p about 4%. at 5461, we see this performance is included -- is completely in line. the second longest bull market on record. all the fourth quarters with the exception of one in 2012 have been higher. is the second smallest return and the games are slowing. wondering if this will come to an end soon, a reversal as retail investors are getting in late. this suggests the first -- fourth quarter is likely to be
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higher. right now it suggests there may be more likes to the bull market. performers top include nvidia. blowout quarter. there up more than 200% on the year. yields have gone skyhigh. points on6 basis growth expectations with the fed. sectorske a look at top first. not surprisingly, we are looking on the performance of yields rising. energy is higher as yields have gained and we also have industrials higher.
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trade,reflects the trump sectors that did best out of the election. think thatason to perhaps there is an end in sight, 50 to 85, this is the s&p 500 valuation. it is going out of a range it has traded in for most of the last 26 years with the exception of the tech bubble. this may suggest that at some point in 2017, the rally market could get back in. >> the u.s. economic calendar data slew of releases of which pointed to slower consumer spending, and a strong economic outlook by consumers. joining us now is bloomberg's executive editor for markets and senior markets editor.
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dan. to gdp for the third quarter. how important is that provision of .23 .5% in the fourth quarter, or should we look ahead for the fourth quarter and beyond? >> we should be looking ahead. almost at the end of the quarter following today. the consumer took a break today. the star today was really durable goods. a subcomponent that refers to quarters for capital equipment. not very sexy. it is a good profit for business investment, a good number that has people optimistic. about thegail talking trump rally here. so much expectation when donald trump comes into power. what relevance do these have today in light of the potential policies for the year? >> you still care about the year. the future aspect is what
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everyone is concerned about. a confidence that the number being high shows what the market is feeling. a symptom but -- sense of optimism. volumes are really light. i think we have a chart of what the s&p did compared to the bloomberg s&p index. it is almost a mirror image of themselves. stocks are up very strongly. the treasury market was down strongly. funds by the end of this quarter have a significant amount of rebalancing to do to get the ratios back. certain amount of selling of stocks and the buying of treasuries to get the ratios back your credit -- credit suisse estimated about $30 million in the selling of u.s. stocks. a 20 china our stockmarket is
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not huge but it might have a little bit of an exaggerated effect. might be part of the reason we see a little weakness now the rally and it is flattening out. >> all about expectation. we have talked about two or 3%. the gdp rate will be close to 2% for the fourth quarter and the 2% first quarter and we are still in that world. a lot of things mike has been talking about have been all about expectations. and yes, we will get more consumer confidence readings, but the consumer does prefer a break. they have been lifting this expansion since 2009. >> when you talk to economist and you talk to economist and you're looking at numbers, what could contribute most to an uptick in growth -- in growth? do we have a sense of which of
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the policies at this point in time could make a difference? >> several things you mentioned, structural things, they take a while to go through. if there is any one thing, there is nothing like a nice tax cut to get the consumer juices flowing. beyond that, a stable economic environment. the chinese economy and the u.s. economies are intimately linked. about tradetalks services included in that have been flowing in the opposite direction. a global environment in this world we live in, the global supply chain is so integrated, there is a limit to what anyone nation can do.
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looking atot a chart the 2% target their. you see all of this leading to does thatmuch cheer bring policymakers? >> look at where we were several months ago. ,efore that it was like central-bank cammie 30 target, negative bond yields and disinflation going on, that seems to be abated. it is one of the themes of the past six months. can that continue? >> we discussed the psychological import of that. not hit thatill today. your -- what is your sense of how long this can continue? how long to be give them to do based on different
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what we have heard? moree consensus is optimism about it. list will turnty think is important. it might be a short-term boost but as far as dividends and how they handle that if they do pass the law, when they did it in 2004, the bill said you're not allowed to use the money for buybacks and dividends. but there are studies showing that most of the repatriated money is used for buybacks and dividends. they have been the back one of the market. they are showing signs of weakness and higher interest rates make it harder to borrow but if you have got repatriated earnings, at least in the
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short-term, it would be positive. david: thank you. mike is bloomberg news senior markets editor. coming up, parts of our exclusive interview, thoughts on tax reform and his legacy. this is bloomberg. ♪
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julie: i am julie hyman. mark: this is your global business report. follow from the brexit report may be overblown as the private sector growth -- if u.k. climbs
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to its highest level in a year. julie: finland's nokia suing the maker for infringing on several patents. look at how president trump could undo years of financial regulation. chile: a measure of private sector growth has climbed to its highest level in a year, flying in the face of concerns about brexit. the index was helped by a strong performance in manufacturing, the best i more than two years. retail activity slowed slightly. from five in july just after the eu referendum. promisedald trump has to dismantle the dodd-frank law in an exclusive here in bloomberg. said we should not get rid of it but amended. it is a real question of, are
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we over engineering a solution to his double question him a witches not have our capital invest in prince will risk. markets.tate it ended negotiations with a $22 billion drugmaker. nokia is suing apple, saying the iphone may infringe set -- infringe several mobile passion -- patents. filed complaints and three quarts, federal court in texas. apple says nokia is refusing to license on a fair basis and is using the tactics of a troll to attempt to restore from apple.
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julie: quick take, we provide context and background. assets,l in dollars in almost twice as much as the next 30 combined. a lot of money in not many hands. it might mean those banks are still too big to let it fail. global regulators have been working ever since the financial foris to make it possible financial institutions to close their doors without a meltdown. it years to avoid the bailouts were thrown into doubt by donald trump, an outspoken critic of dodd-frank. trump has been vague about what might replace the law but repelled -- congressional republicans have proposed to free banks if they voluntarily raised billions of dollars. told by the fed they need to raise about $70 billion in long-term debt.
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wells fargo rejected by regulators for a second time. the failures of the great depression led to the creation of regulators like the fs -- fdic. in place to keep insured apologists separate from activity seen as riskier. in 2007 and 2008, a series of deeply embedded -- indebted banks, creditors and shareholders started to doubt solvency. when the lehman brothers was going under, regulators decided they were so connected that only dozens of ls -- democrats vowed to defend dodd-frank saying it is slowly but surely -- the former fed chair says it would be better to check the ever thicker ruble can make banks rely on hefty capital reserve spirit you can read more about bank regulation at all of our quick takes on the bloomberg.
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that is your global business report. head to for the full story. ♪
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david: keri geiger helps to break the story for us. what do we know about the loans that donald trump has in terms of those loans. >> they are pretty typical loans. they have recourse loans.
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says i am personal responsible -- personally responsible for it. couple ofught up a really fascinating questions. it is completely uncharted territory. wall street bank that the president of the united states will only money to. typically there is no reason to restructure the loans or negotiate the term. beholdendent will be to the bank and the bank will be beholden to the bank. david: a sense within the bank of how this needs to happen. >> it is an issue of optics. the bank has done nothing wrong. it is not their fault one of their clients was elected president of the united states.
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bank, this would be an issue. for deutsche bank in particular, one of the broadest things analysts have been looking at, onesche bank has more than ongoing investigation with the justice department here donald trump will soon be overseeing the justice department with the political appointee of his choice. mean nothing in terms of how these investigations go, but it does not look good. a lot of this comes down to optics and could be a conflict of into it -- of interest depending on who you ask. david: having these conversations months ago, when could thef sessions, mandate of the department change and could there be discontinuation? will be a big settlement that deutsche bank is trying to reach.
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it will be a multibillion-dollar civil settlement for the way they sold mortgage-backed securities. crossed that gets done because both parties want this to be over with. been ongoing for years. we do not know how it happens with how the justice department looks of things like white-collar crime, wall street, if jeff sessions is confirmed, we do not really know what he thinks. we are all waiting to see. david: one of the most fascinating things about your article, this has been a long relationship donald trump has had with the bank. he invokes the name on the campaign trail. what has the relationship in like -- been like? >> it is interesting. the loans have been done with
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wealth management and that does lend commercially with clients. he does work with a specific banker at deutsche bank who is .argely unknown he was basically asked about his relationships on wall street and said her names in public and now everybody wants to know who she is. david: how leveraged is he and could these convert take -- >> he hasons be taken very little that in comparison with deutsche bank. $300 million. the size of his assets and it is not much. there are not a lot of tanks he has publicly disclosed doing business the with pair deutschek is the most prominent actual wall street bank. with not have disclosures any of the other wall street lenders. the circle of lenders is small and the comparison of debt is pretty small.
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david: you spoke with the council, what did he have to say about being in debt in general. >> that it was not that big compared to his empire, and that basically the loans and negotiations will take due course. is not anything unusual about what is going on. david: the conversations between deutsche bank in the justice department, you look of -- you look at what has happened, are there any indications that slow down the conversations as we wait the transition to the new administration? >> usually a new administration coming in, either people want to slow down so they can see what the new administration will be, or they want to hurry up by the end of the year because they do not want hanging out. our sense is they are trying to get this done as quickly as possible. obviously, there are a lot of
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moving parts. justnk generally people want to get their things done with by the end of the year. david: coming up at the top of of our exclusive interview with jamie dimon. his thoughts on self driving cars, plus, a test lasts that was group you at a thrilling six miles an hour. a sound system and even a horn. this is bloomberg. ♪
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david: good afternoon. welcome to bloomberg markets. ♪
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david: from bloomberg's world headquarters in new york, we are covering stories from los angeles to berlin to moscow. showingf economic data a pickup and business activity. president-elect's donald trump fiscal clans. the country's largest radio operator is trying something new to clean up its balance sheet. could a subscription model keep the company from going bank of -- bankrupt? jamie dimon talks about detroit's survival. we will bring you that coming up next. first, julie hyman is here with the latest. looking at the latest margins first. julie: this is the first back-to-back decline for the dow since the election. strength,en that much
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we have seen 20,000 get close to but not quite there. people are already away for the holidays. a little bit of a holiday low. that is doing experienced among various retailers. let's look at the cars. ford, the latest forecast for 2016 the equal retail sales, saying they will fall to 14.1 million. maybe one thing way on all out -- on automakers today. also traditional department store retailers pulled back in today's session. kohl's lower, macy and bed bath & beyond. general weakness in retail. all 33 of the components of the
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s&p retails index are trading lower in today's session. it is one of the drags overall, consumer discretionary more broadly. we have got the numbers on traffic in retail that are worth looking at here. this is showing holiday retail traffic is down. count online sales. specifically in luxury and apparel full -- we see declines in the traffic here. that has been accelerating as we have headed further in december. it is not a phenomenon you would expect. root --ore from the from the newsroom, m a? >> the resolution criticizing the assessment in the bank has insulated according to u.n. liaison office.
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president-elect donald trump call that resolution unfair to israeli saying it was them in a poor negotiating decision -- position. the obama administration did not say how would vote in this case. killing in turkey -- it is denying acumen -- accusations that he was behind the attack. turkey's president indicated in the killing. president-elect donald trump's campaign manager kellyanne conway is headed to the white house. she will serve as counsel for the president. she has said previously she plans to move her family to washington to serve trump inside or outside the administration. david coke in florida this week according to the
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washington post. they reportedly discussed trump's preparations for his administration. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. dimon jpmorgan ceo jamie does not sound at all surprised about donald trump's election victory. >> a lot of you saw in america i want a change. i want a wrecking all brought to these governments. they want change. they want something very different from what they have seen. we want to season of a different, we want to see it that her. ultimately, it takes analysis and real detail to make that happen. a fivejpmorgan made
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million dollars investment. we are joined now on set. let's start with this hundred million dollar investment. why did jpmorgan decide to do this? why detroit? >> it is an investment and not a loan. not a bailout of detroit. they are the largest ranking institution in detroit. they have been there for a long community where small businesses get back on their feet and entrepreneurs feel they can thrive in the city, it is good for them. they are candid about that. neighborhoods and getting that leg up, is that is important. david: you asked him if he was in the running, if that is something he would have wanted. how does he see the relationship between wall street and washington going forward? relationshipee the in the new term?
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as recently as september in the interview, jamie said he did not think anyone would actually get confirmed. he says obviously, i was dead wrong on that. as rebuildings it his reputation with the american public. whether it is corporate tax reform, dodd-frank, all items of the trump administration will look closely at it. there is risk involved. if american people feel they were bamboozled, taking a chief executive officer approach to governing, it could backfire. risk at stake.of david: let's take a listen.
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>> we are driving capital and oversees every single day. that government made a mistake acting like an version was the problem. the rest of the world is coming down to our state level. theiries are leaving money overseas. some of that is not coming back. every study shows a reduce corporate tax rate helps lower wages.ople and to me, we should solve the problem and i hope the administration will do that. say about how it would affect banking, you have been in washington and you know these conversations have gone on for years. there is talk about it. what are the processes for that to happen? clinton won this election, he would be slim indeed. a republican house, republican senate, republican president. this is what we talked about in
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washington for decades now. one thing people definitely think will get done is tax reform. i think we will get repatriation, chileans of earnings are offshore now. that is likely to happen. it is hard to bring down the resistance if they like that up with infrastructure, that will hit old-school because infrastructure means increasing spending on the republican side and the deficit. as a comprehensive grand bargain, there is a lot of talk that -- on the international side, it is one thing people definitely think will get done. >> infrastructure spending was talked about and how it was important to spend some money, improving schools or fixing roads, harder to attract that kind of investment. and that -- jamie
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dimon had to about getting the private sector involved in things that is as moneymaking as others? he has been cap -- become more passionate about, the number of schools that close every year, it is astronomical and shocking to hear about. you are right that getting private sector money is less sexy and getting to grips with the problems we face as well. they hope that in the example like detroit, others really focus on the kind of skilled jobs, technical skill jobs, locational skill jobs, that will benefit businesses for a long time. it is about making a connection longer-term to invest. david: you talk about innovation. let's hear what he had to say about that lexmark >> what we need to do, it does not hold
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back technology. people are richer -- worried about retirement. year ineople die per cars. 40,000. probably 5000 people. it would be a good thing. not a bad thing. david: we have a sense of him as a bank executive. what sense did you get about him as a visionary, thinking about technology and where it is headed? question amy don was talked treasurynly as secretary. he says he wears the jpmorgan sweater. there is no question he positioned himself potentially a more public role. everything that has gone on since the financial crisis with how that industry was hit, positioning his record is incredibly important to him and
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jpmorgan. whether or not you can make the leap, he still carries a scarlet letter from the crisis. fascinated to see how they take forward this under the trump administration. some as democrats they never thought would happen. whether or not all of these will be able to cast themselves as civic leaders. david: considering what his legacy will be here at j.p. morgan chase. came to see me and said, you have got to do one big thing. i was like what are you talking about. he was like the old international or whatever. so the stock. we have got to do it all right. technology right, i have got to do it right in every country. i have got to get it right or i
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fail. hopefully, the world is better off and he made this a better place, and that is it. david: it is a line. >> this is the thing. going forward, what is, and as i said, are you ruling out, i think it will be interesting to see what he decides to do. whenever it is said and done, you look at the trajectory of jpmorgan, a force to be reckoned with. we probably may not have said or three years ago -- david: thank you. you can watch the full interview in a conversation tonight at 9:00 p.m. eastern time only on bloomberg television. hear more from the reporters and editors every saturday and sunday on bloomberg
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television. coming up, uber is pulling driverless cars off the roads in san francisco. why california's revoked registration for the vehicle is next. this is bloomberg. ♪
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david: it is time for the bloomberg business flash, a look at some of the biggest business stories in the news right now. weight watchers gain. its most famous customer today climbing as high as 40% after she announced she has lost 40 pounds in the program.
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weight watchers unveiling new tv advertisements faith -- showing winfrey battling weight loss. the they reached a patent license agreement with apple in 2011. the tech giant decline offers. technologies like software and video coding. the rate of by p oh's should double and triple for capital technologies companies according to the ceo of spv financial who says delays are possible and may snowball. the santa clara county -- come for you half of all tc companies. that is your update. when a high-stakes game of self uber is pulling
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16 self driving cars from san francisco streets. edgecame after a revoked -- registration from the vehicle. it is not a huge fleet of cars, cory. hoover is doing this in pittsburgh. why did the dmv decide to do this? cory: uber refused to get permits for the vehicles. it would have cost them a grand total of $150,000 a car here for 10 vehicles. that is about 1500. amazingly, they decided they would not do that. a picture from my instagram theunt parked in front of bureau there. uber insisted these are not in fact self driver car -- subject cars but the driver said, yes, that is what you're looking at right now. these are the cars that uber profited that are self driving cars. has many companies
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they would like to get involved in this. california, if one could emoji the thing, there are 20 companies in california to test these cars. 130 test vehicles approved. it is not a matter of the state aboutts head in the sand the future. it is uber giving a middle finger and saying we can do what we want. david: something i asked max about was the sentiment of those not in the cars themselves here at how do people in pittsburgh feel that there are so many. california feel about the future here? this is thef phraseology. the argument until yesterday was that these are not actually self driving cars. there are drivers in the cars.
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we consider the same thing even if it is not self driving because the tesla and is not self driving. theink what you see here is attitude of uber when it comes to regulation for most of its has been to look for forgiveness rather than permission and then push the willingness to the limit. california's attorney general as she becomes senator for california, the attorney general sending them a letter saying get these things off the street. uber finally blinking here after meeting with officials. do you think we will see these cars back on the road? cory: i know they can afford it. it is interesting to have a company that has cars on the street as a user very involved
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in testing and mapping. i have seen these things all over in the last couple of weeks. they are doing their own thing with these efforts. uber has been adding as many as 30,000 drivers per month. we do not know what the nutrition rate is and we do not know how it contributes to statistics. but it is an important number. the same time, saying let us take us -- take you away from the monotony of your life. will matter a lot when we start to think about the in feet -- the future of employment and the future of automation inflation, not just when it comes to uber drivers. david: who is really pushing things forward?
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it is not the automakers themselves. it is the other companies. what we may very well see is the innovation will not necessarily be from new startups. they are from companies that , companies like ford, organizations that are working hard developing the latest and greatest to keep sales open. in the big car companies have got a lot already ahead. pushing rapidly they have hired hundreds of people here in silicon valley trying to get the best programs in the world. are companies like tesla that may overhyped what they are doing but they are surely doing innovative things as well. these encounters, it
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draws attention so no one will sleep at the wheel. david: thank you, cory. you can hear more from cory. check that out. still ahead, the newest tesla 026 seconds into .5 seconds. we will tell you about the many tesla for kids. ♪
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david: it is time for a look at some of the biggest business stories in the news right now. barclays stopped selling things i looked attracted with -- to u.s. savers that resulted in customers earning zero interest.
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will continue -- as part of the exit, todd nose toon selling retail investors and has left the bank. the offerings side is $100 million as they plan to go public next year. green bay wisconsin-based company plans to use those proceeds for capital expenditures and paying down debt and general purposes. flight attendants say the outfits are making them sick, complaining about headaches. they will conduct a fourth test jointly with the union. that is your business flash update. up next, morgan stanley's chief u.s. economist in the tax system
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and unintended consequences. she joins this morning. this is bloomberg. ♪
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david: live from bloomberg world headquarters in new york, this is bloomberg markets. a stock is flooding today as rated posted disappointing
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numbers. right it is in the number of -- the process of being acquired by walgreens and agreed to self 860 54 906 five dollars. let's dig into rated today's the numbers don't lie. there is concern that the reason for data and write it could hurt what it is buying. you can see more than 3% on the back of a high percentage decline on performance sales. that is the orange line. physical stores are at the center of antitrust concerns. you can see the overlap between the states including california, new york, michigan, and ohio. the plan is designed to help ease concerns. a chain in the southeast part of u.s. has agreed to buy additional stores in regulators want more investment.
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you can see how rating has steadily decreased since back in 2008. rated tied up both sides and agreed to as many as 1000 investors. 325 million dollars termination fee if the deal is not approved. 600 50 million dollars if wall street answers into a pat summitt a transaction, which is not defined. investors cheered the announcement. rated and walgreens have a few months left to close that deal within the stated timeline. when completed, the deal would be the largest. now for first word news and m a is standing by in the newsroom with more. a statement says two u.s. citizens are among 48 people injured in the attack on christmas markets in berlin. reopened with extra
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security. a german minister is confirming the fingerprint of a suspect was found in the truck. more than $100,000 are offered in a reward for information leading to the arrest. seeking permission to build a wall and a detecting his golf resort in the tiny village. plans have been submitted back in may. the decision is due by february 24. the former nsa contractor edward snowden remained in contract since he arrived in russia three years ago according to classified congressional investigation. the report did not provide proof of its accusation. to hackathon ats seized by u.s. companies to companies overseas paired edward snowden fled the company to avoid prosecution. and 19 generic drugs sold in
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the u.s. during the past three years have undergone major price hikes that may be collusion according to a wide-ranging raisedhere prices were almost simultaneously by tedious manufacturers even though there was no obvious reason for the increased. the news comes at the justice department investigates price-fixing. news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. bloomberg. david: president-elect donald trump made trade one of his rallying cries among supporters during the campaign. bloomberg surveillance tackle this with chief economist today. she was asked about the potential economic impact of protectionism for the next administration, including the idea of a zero sums society for >> part him trade aaron of the zero-sum argument is also a very important piece of the
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republican blueprint that we saw thatout over the summer includes border adjustability for tax reform. it creates a natural tit-for-tat if you will. if you are an exporter, you get the equivalent of a subsidy. into the u.s., it is the equivalent of a tariff war and exercise -- excise tax. it is a tariff in a different form. whether it is trump's camp leading that in terms of making china playfair, and trying to imports and boost exports out of the u.s., whether it is specifically his argument or the republican plan, it is a shade of the same border adjustability. catherine, this with dysfunction within international economic. this is the rate of world trade years and years, a 10 year
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moving average take-two the reagan era. all you need to know is the rollover in world trade. we are back to a rate of trade we have not seen since the late 1980's. is this the right time about talking about more defensive -- areith most economists, we worried at the trend. globalization seems to be a reverse and course at least over the next four years or so, it does not seem like global leaders will advance the cause of global trade. , puttingdel impacts tariffs on china and china retaliating, that takes time. u.s. bordersg off actually has a bizarre immediate impact of lifting growth here you are eliminating imports so much. over the long haul, it damages
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long-term output and long-term growth. policy makers move inward and reverse globalization and the next few years for short-term game at long-term pain. well after they are out of office. from which parts of society would benefit or lose the most if we saw a rise in protectionism? >> it takes time. let's say we were to place tariffs on china. prices would immediately rise in the u.s. because consumer durables in the u.s., 40% of that is imported from china. that would damage u.s. households immediately. income would not be going up but prices would be. there is a temp oral affect their where we can say, sure, we would step in and be able to goods,- produce our own manufacturing, but that takes time and we have no labor to meet the demand immediately.
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the labor market has been going along for so long in the recovery, we have lost so many manufacturing workers that you cannot just turn it on tomorrow and expect to have the labor meted -- needed. >> the u.s. remains one of the more closed economies, the ability to generate more than other economic blocks. in terms of the relative trade, wouldn't the u.s. come out on top? >> exactly. when we first talked about what a trump presidency might mean for the economy and trade policies, it sounded like you could tell a story where it was positive at least in the near-term term for the u.s. and negative for everyone else. exports making up 12% of the u.s. economy, it does not seem like a large amount when you compare it to other economies that are much more reliant on exports. we have been dealing with a
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painful adjustment in the dollar and very rapid over a short time. while it might cripple other economies, it has been painful and border adjustability and trade protectionism, you are talking about in much stronger dollar. >> is he looking for a stronger dollar? from the a 10% rise time trump took office. we have had a 4% increase. we are due for more. >> that is very important. i want to go back to the fed call. bring up the chart. i am squeezing the chart to get out in front of trump reflation. .he lollipop chart fed meetings, a rate rise here and here. the genius of alan right here. no, they will not raise. you nailed the call. the money call now is do we revert that to the world or do
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we go up to the enthusiasm of trump boom? >> there is a counterbalance. if you run a high pressure economy because your continuing late in the business cycle when the unemployment rate is 1.456%, that is an uptick on price is. a tempering effect of the dollar on there. the dollares appreciate? there is a dollar effect on the other side of the equation and they are playing tug-of-war. >> that was today on bloomberg surveillance. coming up, gold prices overall might have had a volatile year. we will hear from some of the biggest mining ceos. i heart media buried under $21 billion worth of debt. the company is betting on a spotify like app to spur growth. could that work? this is bloomberg. ♪
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david: prices -- the uncertainty of the brexit vote in the u.s. election. they hope to turn things around in 2017. we're joined from toronto. the price of gold right now is about 1129. it seems like we have been stuck fewhe range for at least a days. what do ceo's's tell you about expectations for price going forward? >> i start with the caveat that ceo's is 10 to be universally bearish on gold prices. that said, medium to longer term, the outlook is universally
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quite positive. in 2017, there is more uncertainty for a couple of reasons. a lot of people were surprised by the way the market sold off several weeks after the trump election. there is a lot of uncertainty about what he will mean for gold dresses going toward. headwinds from the fed in terms of tightening, not good for gold thatnce you get the aunt further out, there is political uncertainty globally, very loose policy elsewhere in the world. a lot of people mention the fact there is a case for pent-up inflation. on top of that, you have got supply issues. gold is being discovered. my colleague kevin put out a series of charts on the terminal showing on the supply side, fundamentals for gold are supportive. not sure for the near term but longer-term and medium-term,
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everyone is bullish on gold. david: what is the -- what are the comments, what did they say was in common? probablyggest theme is rebuilding after the collapse of the commodities super cycle in 2011. you think about what happens, a cross based metal, gold as well. everything started down on the lows. what you heard was a very similar song. focused on shoring up their balance sheets, cutting costs, shedding assets. what is happening is on the base metal side because of the outlook for construction, you have had a late in the year rally. things have been more positive for gold as well. the gold range is $100,000 in it was the focus for 2017 is probably going to be reinvestment.
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exploration.ost they said they are focused more on internal projects but both leaders, said they see the potential for acquisitions in 2017 especially if gold prices fall a bit. is also not something that is discretionary anymore. it cut to the bone so much with the downturn, they put off things like buying trucks, so he expects to see a lot of that in 2017. david: we talked about gold here. what about base metals in the new year? a mixed bag. in broad strokes, it is fair to say people see the late rally started to falter. the ceo of tech resources said copper is frothy at current prices and could slip back before picking up. he is bullish on think and metal
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and coal in the first half of the year. he sees a dropping as supply rebalancing occurs. similar views for zinc. he sees nicole week for the next year and a half. what could be interesting for base metals is if you start to see some fallout, both gary goldberg and paul said a lot of their mindspushed through the limits in the down cycle in terms of going after prime areas of deposits. their cherry picking minds. it may set the stage for lower grades as they have to now go after the fruit that is not quite as appealing. david: thank you. let's head over to julie hyman for her charts of the day. julie: a very different kind of a commodity. marijuana is what we are talking
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about here. cannabis market where it has been legalized. a new projection for how large the market for cannabis grow in colorado. according to a researcher, new frontier research, colorado could see the legal marijuana industry surpassed 2 million in sales by 2020. obviously, seeing steady growth since legalization. not necessarily cannabis, but hemp. talking about kentucky here. the farm ohio state attacker paltrow two departments to create industrial research programs. .nly 33 acres the spike to 922 in 2015 and 2350 by this year. it is a growing industry. still to work by the tobacco industry though that has
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been fallen. -- 270 3000 planted last year to thatcky as opposed small planting. it still has been shrinking as we have seen shrinking demand through cigarettes. you know it the largest is? david: i would have said tobacco. >>hay. 2.3 7 million acres. david: this is bloomberg. ♪
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david: this is bloomberg markets. tesla seems to be the car on many people's holiday wish list. if you are a kid watching, you are in luck. took to the streets of brooklyn, new york, to test the
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collaborative new toy, tesla for kids. >> founded in 1970, a chicago-based manufacturer of little red wagons. tesla motors, incorporated in 2003, is a silicon valley leader of electric cars. put them together and you get the model s for kids, battery-powered toy for kids between three and eight. it brings us to our test driver. >> i am five years old and i live in new york. >> i let the lab over to brooklyn bridge, a mile down the road and it seems like a great spot to put the car through its paces. and the was quick operation so intuitive that i could condemn the >> down. two modes, drive and reverse.
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andlithium-ion battery, headlights like it's counterparts. also has speakers. it goes from zero-60 miles per hour. in the same time, this went zero to six top speed. a speed of three miles per hour, like the child resistant switch in the rear. be enjoyinge to themselves. that is what i expected. thrilled to sit in the front seat of a parked metal car. the car also proved to be educational. over steering has led to so many crashes. the bottom line, the price is $500. that may sound like a lot of money until you consider that in this neighborhood, it buys you about 20 hours of a dissenting. it was fun. went out with colored
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pencils and drew me a picture. the self-portrait as a motorist told me the tesla ride left a lasting impression. patterson. was choi for more, check out pursuits, just head to and i pursuits go on the bloomberg. i heart media is trying to dig out $.1 million in debt to generate revenue. they are offering a live event conference and awards shows. it is betting on a spotify like app. for more on this, lucas joins us now from los angeles. listeners -- listeners per month. how have they not been able to modernize that? >> it is more they cannot grow that. radio revenue across the industry has been the same in the past four years. revenue has grown or fluctuated 100 reset every year but has more or less they the same.
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top thee pretty much audience that they have in the u.s. is not growing, they just have to look summer else for growth and for business. it is you mentioned similar to what spotify is doing. how has it set itself apart in the app space? already has an apple or you can stream a lot of local stations over the internet. you will be able to combine the radio streaming with on demand features people are used to getting on spotify. the main selling point is let's say you are used to listening to the radio and you like this song. traditionally, you either do not know what to do to hear the song again or you use shazam to save it and look it up later. with this app, you will be able to save it immediately. ace emails -- seamless integration of the on demand appleence in a way that cannot really offer.
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>> i measure the size, 21 billion. investors are waiting in the wings to see how this pans out with the app. how much time does it have? >> that is a good question to which i do not really know the answer. they have intentionally chosen recently.e this they have been under a debt crisis for a while and managed to move around the money such that they have been able to keep operating as a business. there are obviously some creditors who would like them to go bankrupt right away and clearly management and other owners who do not. how long the game will go on is anyone's guest -- guess. from: some breaking news president-elect donald trump's transition team. he has began to assemble his senior committee case and steam. special assistant to the president press secretary,
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familiar to many following the campaign assistant to president and director of strategic medications. assistant to the director for medications in the donald trump white house and dan will be the assistant to the director of social media. donald trump saying they have been key members of his team during the campaign and transition. i'm excited they will make america great again. i will speak with longtime donald trump supporter tom in the next hour here on bloomberg television. be sure to catch that. this is bloomberg. ♪
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♪ scarlett: we are covering stories out of san francisco, berlin and jerusalem. deutsche bank may have an expensive conflict of interest with donald trump. the german bank is try to restructure a three digit million dollar loan to avoid further scrutiny by the department of justice. an exclusive interview with brian moynihan. he will tell us what midsize companies are happy after trump's victory. tom barrick joins us with the latest on the president-elect's cabinet picks. let's check on first word news this afternoon. courtney collins has more for the newsroom. courtney: aleppo has returned to government control. that ends a four-year hold of her parts of the city.
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the army has reestablished security after the last rebels evacuated from their final toehold on the user arts of this eddie. the recapture represents a momentous victory for president assad and a crushing defeat for syria's opposition. the ancient city has been divided since 2012. president-elect donald trump is greatlyng the u.s. must strengthen and expand its nuclear capability. he tweeted the u.s. must bolster a kind thatuntil the world comes to its senses regarding nukes. during the campaign he suggested the u.s. expand its arsenal and set the world would be better off if other companies -- countries had nuclear capabilities. meanwhile, two men were removed from a jet lieu flight after 1 -- jetblue flight expressed displeasure after flying with ivanka trump.
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the jetblue staff kicked them off after overhearing the remarks. possibility ofhe risk of escalation during the flight and explaining the decision to remove them in. a spokeswoman for the family declined to comment but did not dispute the account. michigan's governor says he has no reason to be concerned about being charged. in the flint water investigation snyder's comments came as the bill for his legal fees reached almost $5 million, all paid by taxpayers. the city was using the flint river for drinking water but it was not treated for corrosion, causing lead to leak from pipes and fixtures. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. on courtney collins, this is bloomberg. scarlett: think you so much. we have more now on our exclusive interview with bank of america's chairman and ceo brian
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moynihan. from the company's boston office, david west and spoke with him and asked about the u.s. economy. specifically if he has seen a fundamental difference in the economy rather than just the recent market rally based on hope. brian: bank of america having a fairly decent sized customer base and seeing the $50 billion of credit card spending growth year-to-year, those are all good things. that means the economy is in good shape and making progress. the difference after the election has been in the business side, the enthusiasm that the world is our worchester or whatever phrase -- oyster, whatever phrase you want to use. there is more they will get done, they feel better about the prospects of the regulatory environment, they feel better about the possibility of final
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demand. that is going to take time to come true, but instantaneously the consumer confidence shot up in the business confidence shot up. 20 think about midsize companies, you and i own a company. we can decide to do something or not do something. build a factory. if we feel better, we will do it. if we do it, that means things happen. people are hesitating and i feel the animal spirits, and people say let's go try it and see what happens. david: are you seeing that specifically in mid-level spending? brian: we see it grow faster a lot of parts this year. they are putting their money to work. it will fall through because it is six weeks since the election. the people look at how much attitude is important for that group of companies. for big companies, we always have this one forward. every day we have to figure out a way, no matter what the
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environment. we had to make more money, be more efficient, generate more revenue, apply more technology. that has to go on forever. midsize company's commitment decisions because they are privately held. when they are excited, that is good for america. david: part of your job as being a macroeconomists, understanding was going on. macro risk manager. when you look at macro risk, what you anticipating in terms of the economy under donald trump? what do we know, don't we know, the questions your mind? n: we're the number one research team in the world for six years in a row. they just got it for six years. they have the u.s. growing around 2% next year, an increase of what this year will be which is 1.5% to 1.7%. that is an increase. and the world of the lower threes. their fundamental belief of that
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has not changed a lot since the election. we believe the economy in the u.s. will grow, the economy of the world will grow and is more on the upswing. it ticked up and fell off this year. part of that uncertainty has been hampered by the markets in by people predicting outcomes, which is pretty interesting. brexit, italian referendum, french elections, the u.s. election, all that stuff people five if this happens, there will be huge disruption. the market disrupted for a few hours and came back and said life goes on. i think there was a tremendous momentum and capability that is behind this. the question is, was trump selected -- businesses are more friskier. you are seeing that going on. the oil and gas business. the rig count is starting to go up. that should help for next year.
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the belief of our clients about regulatory burden is it will come down and i will help them do things more quickly. although that they believe is good. there are other serious concerns. labor is trickier than people think. getting the right labor in the right place at the right time on the right train is kind of tricky right now. jobs init is the right the macro sense, a lot of weight pressure. -- wage pressure. the sole difference that happened last six weeks is enthusiasm. if that follows through, it will be interesting. hasd: the research team not taken the gdp growth numbers up in response to donald trump. have the markets been overreactive eco-certainly the markets are reacting as if gdp will grow faster? this: is one of those questions you have ask.
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they thought the uncertainty around this tax reform, this repatriation will have people slow down and wait to see what happens. it's an interesting viewpoint. i am not sure. we will have to see what they think about that moving forward. ther initial reaction was news is so positive it freezes people. people will like to see with the tax reform might say because it might be losing an advantage by doing something now. there is always some uncertainty. fundamentally it's a solid u.s. economy, a solid world economy. the risk factors have gone up because the market reaction. the market's reaction to brexit has been behind us. there is still always another election, always another possible outcome. i think they are very constructive. at the end of the day it is based more on real items of real trajectory and confidence arising in demand.
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you'll see them keep it in the 2% bubble. david: some peoples of the markets are taking all the good possibilities had a fully heard out of donald trump and are not really pricing in some of the unintended consequences of the deck consequences. where are you on that? what are some unintended consequences we might not be thinking through? sayn: i'm not sure you can any presidential candidate or elected president to the doesn't have the same problem. there is a series of things in an and prioritized, whether it is tax reform, repatriation, immigration reform, affordable care act and things like that that people are focused on. the question is how do you get them done? there is great view of alignment between the senate, house and presidency will help that through, but that is the real trick. these things get harder when you get down to brass tax. they are never easy. the markets enthusiasm will at
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least make a try. scarlett: that was a portion of david westin's is lucid interview with bank of america's brian moynihan. u.s. markets close in just under two hours. let's look at where equities are. julie: we have got stocks falling, although falling by a little lesson they were earlier. the dow has slowed his declined 8/81 hundredths of 1% -- 100ths of 1%. this is not the first time it is falling in back-to-back sessions and election. notable for that reason. we continue to watch not just the largest companies but some of the smaller ones as well. the focus continues to be on these domestically oriented smaller companies that perform better since the election. the s&p mid-cap index is down more than the 500 today. small cap and 2000 measure also
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following more than their larger peers. that is a switch and what we have seen since the election. one of the charts i'm tracking regularly is 4698. the 2000 ratio of relatives of the s&p 500. it goes back to the election and the big performance came at the beginning. in november, in the week or two weeks following the election, that is what we saw the big lift in small caps relative to large caps. sense than they have maintained that would not build significantly upon it. a lot of folks are still saying they like small caps going in the next year. a couple of underperformers we are watching today individually include red hat. the lenox software maker. that company coming up with a estimate weaker -- report weaker than estimates. those shares down 9%. o bouncing on a report
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is now erasing those declines today. preview as wee are going to talk about more about red hot later in the show. scarlett: deutsche bank is trying to distance itself from donald trump ahead of his inauguration. this is bloomberg. ♪
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♪ scarlett: deutsche bank find itself in the crosshairs again, this time involving u.s. president-elect donald trump. kjeeri geithner joins us with a look at what the bank is doing ahead of the inauguration next month.
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this is not so much an abusive the industry as much as an interesting conflict that is becoming more interesting because of the presidency. keri: nobody has done anything wrong. it is not their fault on other clients was elected president. it brings up, a question something we have never had to discuss before. this is how does a bank manager relationship when the relationship is the president of the united states and he owes that bank money. these loans are personally guaranteed loans. there is some personal guarantors backing the loans. then a compound the issue specifically for deutsche bank is this broad ethical question of, deutsche bank is facing more than one investigation at the department of justice. one is for mortgage tax securities which everyone and wall street has had to deal with, the others have dealt with certain trading operations in russia. scarlett: those are still pending? keri: we are awaiting the outcomes of those.
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come january 20, a political appointee of donald trump's to think will be overseeing the justice department. it is raising questions on exactly how do you manage something like that and what are the optics. oliver: what is the origination and background on the loans? how much is it in total? do we know what they are used for? how long of a been there? what is the term of the loans as they stand right now? keri: donald trump's relationship with deutsche bank goes back to decades, a long time client despite some nasty legal problems within the two of them. it's about $300 million in debt for active, successful products. golf courses in florida, is hotel in washington, d.c. which just opened. these are basically vehicles to help fund some projects. most of the mature in 8-10 years. they have quite a bit of time before the loans are actually going to be paid off.
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oliver: what is interesting is what could potentially go wrong to sort of think about why this to be clarified. are the terms basically out on paper. maybe they are not, i don't know. what could be the situation that could arise in which it makes it uncomfortable? he is the president, got someone in charge, but how do they rework it is favor? keri: you are right. there is nothing illegal happening, nobody has done anything wrong. but say one of these projects fails. probably never going to happen, but if you think like that, what happens if you call a loan on some of that is the president of the united states? that would be awkward for any bank to deal with. now the trump organization is trying to -- the trumpet administration is trying to deal with -- trump administration is trying to deal of a conflict of interest. he has a huge global empire. this is just one part of that. the bank has to think about what
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they need to do to make sure they can stay and continue doing business the way they are doing business and continue to make a client happy without basically, you know, doing things people might raise an eyebrow at. scarlett: you talked to different people. whether they suggest was the best way to handle this? is a not possible given the president-elect owes money to a big bank? keri: one of the ways you can do it is removed the personal guarantee. you may have to restructure some other parts of the loan but that would basically take out what a bit of one of the big ethical issues people are talking about. it would just then go back to the trump organization. he has worked with other lenders. these of the ones that were disclosed when he disclosed all -- all his banking and financial stuff when he was running for president. there are certain ways you can do it. if he had not been elected
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president, this would not be a big deal. you would not need to have these discussions. unfortunately for both sides there has never been a precedent for this. i think everyone is trying to figure out what could go wrong, what the right thing to do is, an obviously try to make everyone happy. oliver: they also have loans outstanding with the son-in-law as well. keri: yet with his companies. scarlett: keri geiger, thanks so much. you can see her article on oliver: red hat shares fall on weak earnings. we will have more on the software company's latest result. down almost 13%. this is bloomberg. ♪
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♪ oliver: this is bloomberg markets. scarlett: among the stocks moving on earnings news, we have red hat. its shares are plunging after
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they forecasted disappointing sales outlook. they also announced the cfo is stepping down to take a tough job somewhere else. let's join our colleagues in that cory johnson. >> you have amazon and microsoft which are dominating that space. it makes it a little bit hard, for red hat does have a niche. i think you have a little bit of a base to tap into. it is just a matter of execution. of the cfo steps down, to just compounds your problem altogether. >> we want to welcome everyone from bloomberg tv joining our conversation. we are talking with an industry analyst at bloomberg intelligence in our studio. and talking about red hat. the cfoen you see leave, get is a bad sign. -- telle concerns about me about the revenue recognition and where they might be concerns
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about their accounting or things that the cfo might have his hand ridley involved in. >> i don't see the red flags with regard to accounting yet. it is more of how they build their customers with this new model. in the cloud world to get a multiyear contract, you are going to recognize the revenue over the duration of the contract. there has been an on premise role. you will recognize everything up front. that is really the difference. cory: except for services. they are not a big part of the contract and i can be stressed out over time. little bit of a guessing game when you try to figure out exactly how to count for every single contract. mandeep: correct but services is just 12% of the revenue. mostly they do play their linux product and a new emerging products like open stack. these have a very small services component. a lot of it is companies really trying to use their products on demand.
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when you are using on-demand, you can realize tomorrow i need to deploy more instances of your product that would result in a big spike this year. then the next quarter it could be different. a lot of these views they are assigning our long-term deals, 3-4 years. and the revenue will be realized overtime but in the short term it will soften their growth and that is really are feeling the pressure. >> so, you follow this company in this space. what are you going to be watching out for over the next six months from red hat? ep: a lot of the financial and health care stocks have done very well. that theserbingers companies are likely to spend more on i.t. red hat has high exposure to both. i would be looking for solid growth. >> think it's a much. taking a look at red
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hat shares that are the most in about a decade. scarlett: thank you carol and cory. you can catch their radio interviews on sirius xm,, and bbr go on bloomberg. equity markets are kind of us weekly date. volume has been fairly low. it is not just equities. we are searing -- seeing that and affect as well. oliver: it is pretty slow today. a slow session in europe as well with indexes a little bit next. also basically when you look outside of stocks, there is an ottawa -- not a lot to be too excited about. if you look at any other measure, bonds, emerging markets, stocks, it is not that great. scarlett: you are lucky -- looking at the dollar move slightly higher. we had gdp data. third revision that was better than it dissipated.
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we did get a boost on that for than your personal income and spending numbers they came in and missed analyst estimates. all in all, not a huge change for the dollar. oliver: a little bit of weakness in bonds. some of the trends we have seen in the stock market, a lot of people just want us to stop talking about it. it might have been, and when it does people get excited about it. scarlett: you will break out the hat, right? oliver: coming up, a special conversation with the -- will join us with a list of the president-elect's cabinet pick. this is bloomberg. ♪ generosity is its own form of power.
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you can handle being a mom for half an hour. i'm in all the way. is that understood? i don't know what she's up to, but it's not good. can't the world be my noodles and butter? get your mind out of the gutter. mornings are for coffee and contemplation. that was a really profound observation. you got a mean case of the detox blues.
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david: will get into the details, something in a you care greatly about. let's start with foreign policy. we will begin with a tweet. he said he had it safe is greatly strengthen and expand its nuclear capability until such time as the world comes to its senses regarding nukes. people read that and wonder if twitter is the best forum for dealing with an issue is greatest nuclear war. say it's an interesting question on the world is changing every day. we are learning so much about a new method of communication. this election has been a great example of moving away from the legacy modes of communication, something new, and what the power of that is. i think the fear is when you
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talked about tweeting and spontaneous acts i and men who is president-elect and you nuclear,at to everybody freaks out. i would look at it another way. , the message is, the world is a confusing tapestry at the time. i think you will see this president-elect start to bring normalcy and quietness back into that fabric. starts from strength. one of the perceptions is that over the last few years, even though everyone valiantly tried because obama did the best job is, thebut the truth prestige of american-born foregi n policy has dwindled because of lack of reliability, uncertainty when we draw the line, and those lines seem to move and bend.
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the nuclear situation is quite complicated. you look at iran. country,a shia-based really persia. iran says, ok, so we have nuclear capability in pakistan, north korea, in israel. -- israel. i should have nuclear capability. theome point in time, balance relates to predictable, reliable, consistent strength, and the breadth of that strength . we think all the president-elect is doing is saying that the of americarestige needs to be built around a strong, predictable military and there'spolicy alliance, nothing predatory about it, nothing to worry about, and the means of communication at twitter just happens to be more impactful and powerful than
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cable news broadcasting, which is mind-boggling. we are getting used to it right >> you have introduced a lot of nuance the you and i know is not something we associate with twitter. you and othersf who are close to the president-elect are worried about the fact that when he tweets spontaneously, there is danger of the message being misunderstood, too much is left that.
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true, those things are that the existing policy of the united states as it sits and what it is and the anticipation of what the future policy might be. that's probably all he's doing, giving a little preview and protection of what that stands -- stance or policy may be. whether it's appropriate or not appropriate is way over my pay grade, but i think it's very effective. >> my sense is this is a tweet that was in reaction to comments of vladimir putin made, that he was talking about russia's nuclear triad. we have a tweet that was a reaction. i want to assure that americans -- that there is going to be
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some introspection, thinking through these things before there is a reaction. reactionimmediate elsewhere. gillingham's nuclear war, dealing with relationship with dealing with nuclear war, dealing with relationship with china -- maybe cause would be a good thing. one thing.sure you this president-elect does nothing based on instantaneous temperament. before he tweets, before he reacts, he has a constituency and a group of people who have the expertise around him to advise him on the efficacy of that statement. whether he should weet ot -- tweet or not is a different debate. he's one of the most open to countering points of view. if you look at his choices in the cabinet, the choices of his staff around him, he encourages debate. i think you have a very safe and confidence set of hands. we are just learning a different
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communication style. thank you communication style is transitioning from campaign to presidency. we were also shocked in that that communication style in a campaign. and i think the training of that shouldn't be interpreted as spontaneous or not well thought or considered. he's a very thoughtful man. he has a great group of people around him and will not do anything abrupt. >> talk about some of the men and women he has picked for jobs in the white house. we will start with rex for secretaryked of state. what can we read into that pick? a lot has been made of rex tillerson's relationship with russia and the russian president. should this indicate to us that when we look at the foreign policy prefer the next president, russia will be highest on the agenda? rex tillerson i think it's one of the best tricks possible for that position. let me give you the preface. if i were going on a safari in africa and i have lots of choices of who to lead me
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through the jungle, i pick somebody who has been through that jungle 1000 times. that would be the number one qualification. ranksf the criticism of is that he knows most of the world leaders, he knows putin. he has dealt with arabs and energy and oil and he has relationships. when you move aside any potential conflict of interest which will be handled by a very buoyant senate confirmation process, you have somebody who knows the hardware, who has the cultural adaptability, who understands the history of these regions and has been there, running a big organization. what he has run is much bigger than the state department. himself is warrior perfectly sculpted for the job. now the question is, the relationship with putin, is that a good or bad thing?
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in my opinion, it has to be a good thing. soft or hard with the man. having somebody that has experience with him that has dealt with him on a business basis, that understand this -- understands the ideological components of russia, can only in the middle east, for instance, we have to come to some alliance with them in order to find peace in syria, for instance. that dialogue isn't based on his point of view. that point of view is going to be that justify congress, primarily. the president will present a vision and congress will agree or not agree. but out in the field in that jungle could not have a better ,thlete than rex tillerson leading a foreign service operation, and a bureaucracy he knows and understands. >> we have talked about the novelty of his communication strategy, meaning the newness of it. let's talk about donald trump's diplomacy. can rex tillerson expect that
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there will also be messaging from the president? he will be somebody who in concert with rick perry, should he be approved to be secretary of energy? how unified is a message going to be? tom: i think what you will find is it will be terribly unified. one of the first tasks of this president is to unite the constituencies that were never trump. trump constituencies a knows and has at hand. the objective now is, as president of all the people, you need to incorporate all those points of view. that includes bringing all the points of view of now the advisers that he has the resources to bring in who are better than him in those individual disciplines. aat has been his task, as builder, as a developer, he's gone out and hired the best
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architect, the best contractor, the best sculptors, the best of everything. and orchestrated them together. it hasn't been his division alone, it's been this beautiful the launch -- melange. him buildu will see symphonies, not dictate his own personal points of view. about tradek you policy. i know you care a great deal about that. be the u.s. trade representative. there's a lot of talk about who will be driving trade policy in this administrative -- administration. to sayf people i talked they are unclear what donald trump's trade policy is going to be. can you give us any more clarity on what that will look like? >> yeah. it's a great question because it is the most confused quagmire in the government. let me give you a snapshot. if you think about trade policy, first of all we have farmed out
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our trade policy to these third-party entities. nafta, wto, tpp are independent bureaucratic agencies, and in multilateral forum in which we america have given our power and authority to some other entity on a contract. 535 individuals are all trade experts because in every state, something is made that is being shipped or something is being received, being exported from someplace. every business has skin in the game going to their congressman or senator's looking for some advantage. that process used to first lie in the executive branch. this was four years ago. then it transferred to the legislative branch. it's one of the toughest jobs in the world. it's like me trying to negotiate with somebody to buy a company. . i walk in and spend 72 hours with them hounding them, getting
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them to agree to something. i say thank you, now i have to go ask my mother or father if it's ok. you have none negotiating ability. ability.gotiating we came up with a process called fasttrack as it relates to certain cubbyholes of things that need to be adjudicated quickly, saying within this sphere, congress will give the executive branch -- there are 3 or 4 very good candidates in addition to the one you named. allowed us trade representative to negotiate a bilateral trade agreement. the trade agreements we have in place have nothing to do with jobs. they were born out of foreign policy. the marshall plan, which came after the war, was the beginning of foreign policy. it was about revitalizing europe and then revitalizing japan. now we are at a very different point. we're trying to understand -- it's not really the problem.
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when we talk about currency manipulation, it ebbs and flows. there used to be currency manipulation and china. >> should the policy be that there is no currency manipulation and china? ballots, say is the when china -- of course there is currency manipulation. at the moment, the currency manipulation goes the other way. when china stops buying u.s. assets, right, that balance on its currency forces capital to .tay at home they are manipulating the currency for sure. sometimes it is to a benefit and sometimes it is to a negative. but they have a power -- the power in a central banking environment to do it. 10 years ago, i guarantee you, you could not remember who the head of the fed was her who the central banker in europe was. all right?
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today, the world is run by central bankers, by central bank intervention. we talk about trade and then currency, you can wipe out all the advantages of trade in an instant with the currency fluctuation. it is a hand in glove process that lies across a legislative branch, the judiciary branch. i think we've had two enforcement cases on trade violations in the last five years and any of our multilateral cases, it takes seven years to bring a case. in the no efficacy problem. it needs to have a clear, definitive mandate. i think it should be moved back to the executive branch to negotiate bilateral agreements. the 89,000 pages of trade regulations, when you look at duties and trade regulations, almost every cabinet secretary is involved in trade. it's impossible. it's got to winnow back to
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accountability in the problem. it needs to have a clear, definitive mandate. i think it should be moved back and responsibility and an understanding that we are global , for sure we are a global environment. but the health of the u.s. -- if you are flying at 50,000 feet and you lose oxygen, the oxygen comes down and you first put the mask on yourself. when you then come back to consciousness, you put it on your neighbor. tot is what trade policy has be. the world will grow, but we have in ake sure we are growing fair, equal playing field. what we do for others, they should do for us. it's that simple. >> we heard that carl icahn has been picked to be special advisor to the president. it seems like a -- position in the trump white house. could you foresee yourself having a role like that in the white house? what do you intend your advisory role to be here going forward? >> my advisory role right now is napkins and plates and gallons.
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i am the senior party planner. he took all the brilliant people and put them in great positions and i am the concierge and event planner. i'm happy to be doing that. look, i'm elated and so privileged coming from an immigrant background to be able to serve in any way, and i'm very happy to be able to put on this inauguration, which will be the greatest democratic display to america of a partisan transfer of power. when you think about it, president obama sitting in five seconds having the weight of the world transferred to the shoulders of president trump is something that doesn't happen anywhere in the world the way this happens. i am content to help in any way that i can, and delighted to be part of planner in chief at the moment. >> can you tell us who will be planning the soundtrack to that momentous moment? >> and responsibility and an understanding that we yeah.
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while we did is something different, and it came from a different theme. this president is a celebrity. campaign along the way took advantage of his celebrityship and focused on him as an individual, and the 13 years on the apprentice that he and mark burnett created gave him the celebrityship. when we came to him saying, what is the inauguration about, the president was very firm that this inauguration is about the people. it's not about him, it's not about adulation to a celebrity. as a consequence, it needs to be more of a people's gala of the framework of americana rather than surrounding himself with other celebrities to support what we already experienced for the last year in the campaign. cadence ofts and the
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this is much more oriented to the memorials, the americana. we have one of the best event liners in the world -- planners and they will be in that genre. there will be seems that aboutnd america's themes americans, about the workplace, about liberty, about freedom, and not about individuals. barrack, the chair of donald trump's in on drill for your time today. >> thank you -- inaugural co mmittee today. >> the u.s. government is suing barclays over a residential -- over residential mortgage-backed securities. this was a surprise, because last we heard, the two sides were in negotiations. >> it is a surprise.
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this is a type of case that several banks on wall street have had to deal with. during the crisis, banks pulled a town of mortgage backed securities. the department of justice to severalas gone banks, jp morgan, citigroup, bank of america, goldman, morgan stanley. all these things settled for multiple billions of dollars. these are civil cases, which is why you see the government suing barclays as opposed to charging or indicting them. >> this is going to be a lot more billions potentially than what barclays won. we don't know the numbers right now. in the news they cited $31 billion of loans, saying roughly half of the mbs failed. barclays had wanted to try to limit these fines to $2 billion? >> $2 billion. we have two sides of the table that are very far apart. it looks like maybe this is an opportunity for barclays to push
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back a bit, which you don't see happen with these cases very much, particularly between banks and the department of justice because it is treacherous to try to oppose the department of justice. >> almost 2%, paired off somewhat. >> primary shares from london have closed for trading. did the department of justice overreach in its settlements, or attended settlements, with deutsche bank, with barclays here? they have not been able to get anything going. you figure a lawsuit is probably not the way they wanted to go down. >> not necessarily. there is a big question as to whether or not these numbers the department of justice asked for i got from other banks, $15 billion per bank is too much. debated been hotly whether the department of justice was too aggressive about these mortgage cases. a lawsuit -- not for this particular type of class, when you have a lawsuit like this you
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see this in antitrust cases and so forth. and is a way to negotiate possibly settle, or you have a judge rule on it. it is a path to settling. when you look at what the path could be here, some of barclays sued in boston, federal home loan bank was offered $6 billion, at mbs, both parties -- mbs, both parties walked away from there. what is the case that barclays makes to keep the fine or settlement in the range they want to be in? >> barclays would have to make a case. it's hard to argue in favor of a bank, when it's based on all these issues around the financial crisis. it's a very hot issue, and not something particularly. i don't know if this would be a jury trial, if they had a trial in this. juries don't typically like these mortgage cases and they are typically kind to the banks. that will not be the case here. -- here, necessarily.
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barclays would have to argue that they are not responsible for this amount of damage and that the fines are onerous for what happened, what the result of that was. scarlet: what natural deadline is built in here? we will have a change of government in the united states come january 20. there is also the statute of limitations to be aware of when it comes to these issues. >> usually when you file something in court, that can mitigate the statute of limitations issues. you also have a tooling agreement, and those are put in place for a purpose so that does not run out. and out moved to court of negotiation, the change in administration probably matters less, because it's now directly in the court system and you are not going to be having basically difference of opinion within the justice department on what and how much these fines are going to be. scarlet: thank you so much. news have more breaking
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developing with banks at this hour. bank monte dei paschi had been looking to -- it does not look like they will be able to get coo had been traveling, trying to rows of some interest to get some money for the bank. it looks like they could potentially be the first heading towards naturalization. we will have more on that on the hour. this is bloomberg. ♪
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>> i'm oliver renick. scarlet: i'm scarlet fu. welcome to "bloomberg markets."
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get back to that breaking news out of italy, monte dei paschi says it is built to raise sufficient funds from its anchor investors opening the door to nationalization. writerring in a senior for bloomberg news who has been following the story is the bank has been struggling. coming?something we saw >> this was expected. we weren't sure if the bank was going to throw in the towel first or the government was going to come out and say we are nationalizing the bank. it looks like the bank made the announcement first. it's any moment we would probably hear from the government of italy, the new government saying we are buying x percentage of steak. in the bank,e because they cannot get the money from the market. they need the support, they need to clear up these fed loans.
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the government is coming in. scarlet: the government has been preparing for this in many ways because it has proposed raising about 20 billion euros. end, what does that mean in terms of the italian taxpayer? how much are they going to be kicking in here? >> the problem with italy is that -- it is>> 130% of gross around domestic product. that is a very high ratio worldwide. one, but it on this follows pretty close. adding to this, and italy, partly because of this debt burden, has been struggling economically for a long time. a barricade of almost no growth, very slow. it's not great that the government shoulders this. as we have seen over and over all around the world,
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governments -- banks don't die, governments and up rescuing them, and we are seeing another example. scarlet: what's different about italian banks is bondholders tend to be mom-and-pop investors as well. are they going to be expected to pay up here or suffer the losses? >> the way they are technically minimize do this is to the losses to bondholders. the junior bondholders. according to all the rules around the world now, you have to have billions while you are bailing out. at least the junior debt creditors will lose some money. the way they are going to do it is a precautionary capitalization which after a bank that is almost failing -- whatever. still, they are going to do it that way. and that way they don't have to stick to certain limits, so they don't have to have the 8% losses by creditor and shareholders before the government money
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kicks in. they have to burn junior creditors somewhat. the way other countries in europe have done this, ireland did this somewhat too, retail holders, retail investors can't get refunds if they prove they did not really know what they were buying, not bonds, that may be else. that's how they might do it. scarlet: senior writer for bloomberg news, thank you very much. raisedei paschi failed to sufficient funds. oliver: let's get a check on the markets with julie. julie: we have stocks selling off today, not a huge selloff. it is on low volume. nonetheless, all three major averages are down. that usually coincides with a bit of an uptick in the vix. i want to focus on volatility for a moment. depressed.very seasonally, it tends to be low at this time of year. it is unusually low versus what
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we have seen over the past couple of years. that could be changing in a significant way heading into january. this is a chart of the three months volatility, forward-looking indicator of where traders think solitary -- halle tillage he will be versus the present value of the vix. as you can see from the dotted 2012, after that spike in is pre-stage decline in the s&p 500. just one thing to keep an eye on, we could see that uptick in seasonal volatility return. perhaps it will be even more than usual. getting back to the day's session, some of the movers we are watching, here is the top and bottom of the s&p 500. on one hand, that was a sales forecast. surging 30%. the company falling by the save -- same amount after his forecast was short of estimates. we're watching weakness in retail today.
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the traffic trends have continued to be weak. people have not come back into the stores for this holiday season, despite getting over the hump of the election and some of the other issues here. bed bath & beyond falling after third quarter comparable sales unexpectedly fell. we are seeing really brought retail weakness. oliver: thank you so much, much appreciated. scarlet: courtney collins has more from our newsroom. courtney: a statement by the syrian armed forces says the northern city of aleppo has returned to government control that ends a four-year rebel hold over parts of the city. the army said it has reestablished security after the last rebels evacuated from a stronghold in eastern parts of the city. the recapture of aleppo represents a momentous victory for president bush are all assad and a crushing defeat for syria's opposition. the ancient city has been
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divided into rebel and government parts since 2012. chancellor angela merkel says she is proud of the german people's levelheaded response to the berlin truck attack. she arrived at the federal criminal police office in berlin today for an update on the investigation. meanwhile, the search for the man believed to be driving the truck continues. the attack killed 12 people and injured dozens of others. 26 people still remain hospitalized. president-elect donald trump's enterprises is seeking permission to build a seawall protecting his golf resort in a tiny village. earlier this month traps company shelved plans the worst of it back in may. enterprises is seeking permission to build a -- trump's company shelved plans back in may. 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. scarlet? scarlet: we want to turn to the
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insurance sector to get a sense of how higher interest rates and regulations will impact the industry. joining us now, the president and ceo of one of the nation's biggest insurance and life insurance, retirement planning companies. great to see you, dennis. >> thanks for having me. scarlet: we need to start with rising interest rates, because that is a move that has taken so many people by surprise. a huge tailwind for insurers. to more normalized levels for the 10 year yield in the next i've years. can you quantify what that would mean for your earnings? >> we have had about a 3% drag on earnings per share, both because of interest rates, 10-year at 1.5%. drag, earningss growth drag would go away completely. insuranceortantly,
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businesses, it takes some premiums up front, it invests those premiums and pays plans sometimes as long as 30 years ago. if we are getting better investment turns, we can lower the cost of our products and sell more products. consumers do better, or shareholders do better. america does better because of the products we sell. oliver: let's talk about what happened since the election. you move in your stock as well as other financial companies stock is pretty astounding. in particular, almost up double. it tells us about what is specific to your company that has allowed you to move up 34% on the year. >> we have to step back to november when we reported record earnings per share, and we sigh pretty significant lift there. that falls on the heels of six years, 12% compounded growth in earnings per share. the fundamentals of the company
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have been good for quite a while. i think the valuation had not caught up with them. we also increased our return of investment by 300 basis points. that's what happened in the third quarter. since the election, you have the prospects of less regulation, and you have the prospects of higher interest rates. that has helped us quite a bit. scarlet: over the past couple of years you have been a pretty consistent buyer of your own stock. now that your stock prices higher, oliver cited that gigantic move after the election. what kind of impact does that have on your capital plans for the upcoming year? does it tilt the balance more towards increasing your dividend, or have you been making acquisitions? >> could. excess capital, we have to put it to work. even with the interest rates rising a couple basis points, we are still investing at 2% or 3% after-tax on our capital.
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we are building excess capital, a really good place to go is to buy our shares back. i still think our shares have upside. i say that because a record high was 10% higher than we are today, and our earnings are 20% higher than they were at the time of that record high. i would be inclined to continue to buy our shares. oliver: part of the theme from the post-trump rally has been that his post infrastructure and fiscal spending will boost gdp growth. in that kind of environment, is it still most advantageous to either invest in infrastructure -- >> we bought $700 million worth of shares last year, plus or minus. the biggest use of our capital is investing in growth every year. $1.5t $1 billion to billion into growing the business first and then we still have money left over to buy shares back. over the last three or four years, our employment has gone
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by 1000. so, we have been growing organically very well, and still generating enough capital to buy our shares back. scarlet: we need to switch to regulation. with the incoming administration is a lot of questions over what that will look like. we have the do-over fiduciary role in april. what is your sense of whether the administration will carry through with that or delay it or scale it back? >> speculation as to what we will do with regulations and we met with some of the transition team. there seems to be a sense that . could be improved, may be the best idea at the moment would be for it to be delayed, and we would be supportive of that. scarlet: is that your preference? >> i think the context, or the idea that we do what is in the best interest of the customer is a great idea. our insurance company is 107 years old. we got to be 107 years old by
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doing what is in the best interest of the company and shareholders that our customers. and there are some things that are pretty positive about the dol. for example, transparency of cost so people know how much they are paying for a product choice, and how you compensate your financial advisor. finally, the idea that you don't pay any more for a product that requires the same amount of time and effort to be educated, to educate the consumer and provide the same benefits. our really powerful, consumer oriented, early trends in the marketplace going on. those things are fine. what is not good in my opinion is the concept of right of action. if you go to the fcc, they have an enforcement arm. the department of labor does not. this right of action makes the plaintiff's bar the enforcement arm. this is not good for customers
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or for america, in my opinion. i would like to see that changed. scarlet: think you so much, dennis glass, president and ceo of lincoln financial. >> coming up, our exclusive interview with jamie dimon. what he has to say about how technology is changing the way we live and work. this is bloomberg. ♪
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scarlet: the new edition of bloomberg businessweek comes out today and a good business edition features megan murphy with exclusive interviews with jamie dimon in detroit last week. in that interview, they can ask about how advances in technology and automation are changing the way we live and work. greatestlogy is the
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thing that ever happened to mankind. we had agriculture, we would still be hunting buffalo and living in tents. agricultural specialization created a knowledge. knowledge build on top of each other and created institutions. we went from fire to wheels to steam engines to these wonderful phones we have in our pocket which can do things we could not even imagine were doable. this is the reason mankind is living the way it is today. we wouldn't be living the way we are today. my grandfather was born. there were no cars in 1897, no planes, no health care. you got sick, you died, ok? so now it's 120 years later and it's pretty good over that time. mankind has gotten better and better. there's a book that analyzes things like people who were murdered at the hands of other people, ok? and that number has been coming
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down every single century, including last century. i believe the century so far is better than last century. howind is slowly learning to get better. technology drives it. changesis scary and it things and it is disruptive. we've done a bad job helping the disrupted. not holdo say, let's back technology. let's use it to improve mankind. people are worried about autonomous driving. 43,000 -- 40,000 people die a year driiving in cars. a good thing, not a bad thing. warren buffett about 11 million 50 or working on farms 60 years ago, now it's 1 million. do you want people going back to picking corn? will it make society better? not really. mankind has gone from working
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seven days a week to six days a week to five days a week, and i suspect we are down to four. we will adjust if we need to adjust. you and i in running the government, all of a sudden, you will have 10,000 jobs, you and i would do something to slow down, retrain. one of the problems of this retraining -- it is not about youth. how do you deal with that? hea trucker loses his job, does not want to go back to earning seven dollars an hour. he has a family and wants to live with the 90. we can redevelop, retrain, i do a bunch of things to ease that issue. i would not stop it. maybe would slow it down and modify how it will function if it is causing too much disruption in society. >> i'm glad you brought up trade. that globaleel trade has hollowed out their community, their manufacturing, their industry in the part of the world where they grew up,
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it's difficult to explain to people, globalization of industry generally lifts the vote higher, but it may not have lifted your vote because those jobs have gone to more efficient -- factories in mexico, factories where they can get the product done just as well. that is a message that we see can fly back in the election cycle, everywhere across the world. people are sort of saying, resisting globalization, that is a trend that if it deepens, we will be back for business. >> there are issues where globalization is unfair. you could say that steel or something like that. there are issues were disruption is not done properly. hugely beneficial to the united states. if it helps 98 people, two people are really hurt. most manufacturing jobs have gone from 20 million to 11 milion or 12 million.
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automation generally has been a good thing. some of these are very tough jobs. scarlet: that was bloomberg businessweek's megan murphy speaking with jame and -- jamie dimon last week. watch the full interview on bloomberg businessweek debrief. that airs tonight at 9:00 p.m. eastern only on bloomberg television. ♪
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oliver: this is "bloomberg markets." scarlet: it is time for the options insight with julie hyman. me today as mark sebastian, a managing partner at options take. he joins me from the cboe and chicago. great to see you. we have a little bit of a pullback today, it is a holiday week. one of my colleagues noticed it is the first back-to-back declines for the dow since the election. should we take anything away from this?
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it's the holiday. yes, the holidays. we've had a huge run-up. people are going away for the week. if i was a traitor that had a huge -- trader that had a huge position, give me a great reason to pull along for the next week rather than just enjoy my vacation. bank stocksng the getting sold off. noticeably, retail is getting smoked today. nordstrom's, macy's, a lot of the mall retailers are getting hit pretty hard. but that's another drag on the market. that being said, i would not be surprised if tomorrow we see a bunch of programs. everybody on the floor is waiting for that 20,000 dow number to get out of the way, and would not be surprised if that happens tomorrow. julie: we have seen the vix very depressed here. i sewed a chart that had three month volatility -- showed a chart that had three month volatility.
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of course volatility tends to come back somewhat in january. how strongly do you think it will come back? i think it will be interesting as tax policy starts to form. it really kind of depends on whether the fed can stay out of their own way and stay the course of what they put out there, or if the economy does something funky. is a year where we see the vix have a lower average volatility than we did in 2016 and 2015. the market as a whole is potentially going to have an overall lower realized volatility for the year. that's kind of the way things are lining up right now, because of all the relaxing of regulation, normalization of rates, fixing of tax policy. julie: i want to turn to your trade to tesla here. tesla has been in the press a lot lately, it's almost always in the press a decent amount.
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you think may be that it has seen a decent run here, and now it's going to stall out? what do you think? >> got a little bit of a pop when elon musk joined trump's economic team. it's right up above the 200 day moving average. that merger is a nightmare. i would be looking for a two potentially fade back a little bit, maybe move back below 200 or maybe 190. maybe not all the way lower. when i look at the chart and i look at the underlying fundamentals, i think it will get below 200 between now and early january. i like owning the january 205 puts for 6.50. scarlet: we will see. -- julie: we will see. mark sebastian, think of her joining a straight happy holidays. up, a chiefing
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market strategist joins us with his outlook for 2017. he says there are a couple of references here that are parallels between the market today and the market when reagan was elected that investors should be aware of. oliver: he has a lot of great stuff on market dislocations. scarlet: peter cecchini coming up on "whta'd you -- "what'd you miss?" from new york. this is bloomberg. ♪
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♪ >> on courtney collins, let's get to the first word news. donald trump has named a veteran washington operative as the white house press secretary. he also served as the chief spokesman for the republican national committee. he will be director of
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communities and and adjacent miller will serve as director of communications. and president trump says he is sticking with his campaign mantra after a supporter suggested otherwise. he tweeted, somebody incorrectly stated he was no longer using the phrase. that is newt gingrich. advisor that told npr that trump disclaims the popular campaign slogan. and the majority of voters want a new democratic presidential candidate in 2020, that is according to a usa today survey. 66% of voters most excited about a new candidate, about 44 of democrats and independents were excited about bernie sanders. that compares to 43% for joe biden. meanwhile, 62% said hillary clinton should not run again in 2020. and a lack of security


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