tv Whatd You Miss Bloomberg December 23, 2016 3:30pm-5:01pm EST
found in their possession. it forced the plane to land with 118 people in malta. tense negotiations and soon, and within a few hours the passengers and the crew were allowed to leave the plane. all flights to malta international airport were immediately diverted an emergency teams sent to the tarmac. germany's top prosecutor says investigators are trying to determine whether the suspect in the deadly truck attack on a berlin christmas market had help from a network of supporters. ri, a 24-year-old tunisian, was shot and killed by police conducting a routine stop in milan, italy. the prosecutor says his office is working with italian authorities to reconstruct the route you took to get there from berlin. he says authorities in milan were able to identify amri with finger prints provided by german authorities. islamic state has released showinged video
soldiers burned to death, the first such footage of turkish citizens in an islamic state propaganda video officials wouldn't comment turkey blocked twitter, facebook, and youtube access. turkey is at war with militants on several fronts, fighting kurdish groups and islamic state in syria. and president obama is planning a farewell address next month in chicago. that is according to a report in to people with knowledge of the event. the remarks are slated to take place on january 10 and will thank-you toe a chicago and the state of illinois for launching his political career. global news 24 hours a day powered by more than 2600 journalists and analysts in over 120 countries. i am courtney collins. this is bloomberg.
scarlet: live from bloomberg's world headquarters in york, i'm julie hyman. scarlet: and i am scarlet fu. 30 minutes from the close of trading in the u.s. : julie: u.s. stocks little changed today. scarlet: the question is, what you miss? books on aing the major dispute, deutsche bank and credit suisse and announcing settlements with u.s. regulators. and defense stocks are trailing after president-elect donald trump's tweets yesterday. martin shkreli unleashes on the drug pricing debate. how does he think president-elect trump will take on the issue? that is ahead. let's look at where the major averages stand as we head towards the close. we have little change here. volume is down as well. abigail doolittle is standing by.
abigail: you are right about all of that, julie. not a lot of action for u.s. stocks. we look at the three major averages -- dow, s&p 500, nasdaq . each is basically unchanged. they had been flipping between very small gains and losses. on the week, it is worth noting they are up. seven the time in a row for the longest weekly winning streak since december 2014. strength for the dow. as for 2 stocks in the news, boeing and lockheed martin, after president-elect donald trump tweeted yesterday that he -- ks boeing should it caused going to pop higher and lockheed martin to drop. boeing has been trading in mixed fashion today. as analysts weighed in, including one military analyst, he says it is bizarre and late
to the game and irrelevant. it is interesting to see how this shakes out. interesting about these stocks out of the election -- we look 1318.btv lockheed martin in blue, boeing in white, since the election. people thought donald trump's defense spending would be great. boeing, steady climb higher. now we are seeing a reversal. curious to see whether or not that reverses in the year ahead. some are thinking that the trump trade could reverse. right now we have boeing up more than 10% since the election. lockheed martin still up about 4%. as for defense spending, this is another great chart in the bloomberg. #btv 1034.
since obama has taken office, 200e seeing a bit of a dip, billion lower than the high. this may suggest that it could come down. perhaps we have seen so many reversals of expectations around president-elect trump and what he could be for stocks and the markets and this could be just will notrea that become investors play out. scarlet: another unpredictable consequence of the election. donaldeard from abigail, trump it appears to be pitting 2 defense committees against each other. he took to twitter and said that because of the cost overruns of the lockheed martin f-35, iff boeing -- i have asked boeing for a comparable super hornet. the shares have been moving in different directions since the election. joining us is george ferguson, senior defense analyst for
bloomberg intelligence, and in washington, the white house editor for bloomberg news. george, as the defense expert, looking at how donald trump has positioned himself here, it is a little bit unexpected, given that people thought defense spending would increase, and yet here he is hitting companies against one another. what is the strategy here? george: i don't think it is necessarily the case that defense spending will increase during donald trump presidency. what we have seen, the surprises that he is pushing defense .ompanies to provide more value i think he realizes there's a lot you wants to get done over his presidency, a fair amount of spending, stimulus package, tax cuts. on top of that, he wants to grow defense spending but is looking for more bang for his buck. these companies -- it is great to get them to compete against each other and deliver product at a lower cost. drive, that is his real
to get as much as he can for the dollars he is spending. alex, when you look at the past administrations and their positions on defense spending, -- defense spending, have we seen this kind of scrutiny? is it seen in washington as needing attention and cutting? aex: i don't think there is member of congress who has his job after promising to increase defense spending. it is an easy position to take in washington, unfortunately. and to sell them to politicians here -- too seldom do politicians consider whether defense spending needs to go up and whether we need all of these new advanced weapons, fighter .ets, ships, nukes, bombers donald trump is well in the vein of his predecessors here in washington. julie: and indeed, on the topic of nuclear weapons, trump has
tweeted about that in recent days. these are also weapons that these 2 companies we are talking about are poised to submit bids on. talk to me a little bit about how this may be brakes with what we have seen on recent policy. usually thewell, united states makes its nuclear weapons policy in fairly dense documents issued by the pentagon . here we have the president-elect appearing to restate u.s. nuclear posture on twitter. it is, i think, reasonably alarming some of our allies and adversaries and proponents of denuclearization. of, for sure, and likely disturbing to some people. scarlet: george from you mentioned that the president-elect wants to get more bang for his spark and that
is his motivation for pitting these companies against one another. nuclear armament may be an issue he will be grappling it. give a sense as you rejected the defense budgets will likely grow where the spending -- project the defense budgets will likely grow where the spending will go to. george: there is a number of areas that have been underinvested in the last decade. we just came out of wars in iraq and afghanistan spent money on the army and marine corps and the land forces. a lot of the products we built, navy air force products, take a longer time to bring to the force and have not been reviewed in some time. -- renewed in some time the ohio class submarines, made by general dynamics. the current ballistic missile submarines we used our 30-plus years old and need to be rejuvenated. some of the delivery mechanisms,
both conventional and nuclear armed, our bombers. a lot of the bombers in the fleet are approaching 50 years old, more than the b-52s made in vietnam and post vietnam. i think the trump administration will look to rejuvenate that. it started under barack obama, as we awarded new bomber contracts. a lot of platforms like that need to be rejuvenated. force, navy platforms need to be rejuvenated. george, the type of weaponry you are talking about is more traditional -- as you say, it needs to be rejuvenated. -- conflictthe u.s. the u.s. is facing now are different from traditional conflict. are the companies you cover in those warfare areas where we could potentially see spending benefit as well? george: when you say "newer
areas," you mean? julie: i mean talking about -- scarlet: technology, even. intelligence,ogy, not traditional wars where the armies are clashing on various fronts. interesting thing about this is all the copies we cover --boeing, lockheed, raytheon -- they are on the technology and of the businesses and work on the intel side of the businesses. remember, you get a lot more employment on the bigger programs. that is one of the other things we need to remember. i think donald trump wants to look strong on defense to would like an employment driver. those would do a lot for his presidency. he is going to like some of the big programs, rejuvenate them, and they employ a lot of people. unfortunately, you don't spend a lot of money on the other stuff like intel programs and drones and stuff like that. they are not big-ticket items. and if you remember -- if he is leader,esque type of
reagan built these big platforms but never engaged the enemy with those platforms. you have the employment benefit and you are not necessarily looking to engage. scarlet: to follow-up on what george was saying, donald trump wants to look strong on defense. we talked about the bigger and more elaborate defense weapons systems. all of that. but in terms of personnel, are we looking at a larger navy, larger army, more people in the marine corps? alex: george makes a good point that a lot of the big-ticket weapons are sons and ships and planes are old -- subs and ships and planes are all good there is no country on earth that can challenge the u.s. in conventional or nuclear warfare. where we have problems is what julie was talking about, asymmetric warfare, guerrilla war, russia sending little green men into neighboring countries
who don't wear uniforms with insignia and all of a sudden crimea is taken over by russia, just overnight, practically. these are the places we are lagging behind and i don't see investments trump is calling for that would solve the problem. scarlet: george ferguson of the intelligence and alex wayne, white house editor for bloomberg news. thank you so much, gentlemen. julie: coming up, martin shkreli speaks out on the drug pricing debate, saying that despite the backlash he would do it again. this is bloomberg. ♪
lawmakers were in the cells. david shkreli joined westin and jonathan ferro this morning and talked about how the conjurer still price hikes played a role in the presidential election. caught inen you are the perfect storm of political season it is easy to become a target for unwarranted aggression. if you look back, one of the things i noticed is that president obama and his and administration said actually nothing about drug prices through the entire peirod, and i asked one of the people in his cap, why is he and joe biden staying silent? he said very curtly, they are not running. it is a populist issue and blown out of proportion. seeings of regret, not that as acutely would have been a minor regret, but because the price increase has stuck, that is the main mission, to raise the price and have it generate increased revenue. that has happened. david: apart from the politics, and perhaps in business you can
never be entirely apart, as you learn, but did it benefit the investors in your company, the way you handle this? would you have made more money for investors if you are not raised at this fast and in this public? in that sense it was difficult to do anything in terms of the investors from the cash flow perspective. it makes no difference. you are better off raising it faster. from the perspective of things like multiples and exit opportunities and brand names, there is a damage done. again, i think it was someone unexpected when i raised the price of a drug 20 fold and there were not any stories. jonathan: how do you pitch what seems to be an ideological pursuit, poster boy of capitalism, versus running a company and going to d.c., where you have to negotiate and dance around to have a successful company? can you do both? martin: it is hard, isn't it?
in your prior segment you were talking about his criminal charges against banks. we have been in administration that is very thuggish and bullyish when it comes to companies. they look at them as targets to shake down, in essence, and actually enforcing justice is not their goal. their goal is to make a name for themselves and extract these billion-dollar settlements. one has to tread very carefully. that is why some of the greatest been quite.ple have david: people feel strongly about their prescription drugs and that means politicians and government get involved. did you put turing to some extent at risk of government coming in? they will come down on you hard. martin: absolutely, and learning at a young age that government in many ways is an apparatus of vengeance is, to be a little cynical about it, is frustrating. at the same time, nobody talks about the drug on the shelf at
bristol-myers squibb, just hit the primary point, trial i planned with nyu -- nobody talks about that. nobody talks about what i put into the clinic. we talk about one insignificant drug. jonathan: let's talk about something a lot of people are talking about, a trump presidency. you brought up the issue of populism. do you think donald trump makes it a populist issue? martin: i think the media made it a populist issue. if you look at california, they ran an ad with my face on it during the world series. my family was shocked to see. the proposition failed. this is one of the most progressive states in the country. the proposition failed. jonathan: you say the media made it an issue and i love when people come on the show and say that. hillary clinton was running -- martin: she is an apparatus of the media.
jonathan: using the media to get the message across -- martin: it is no secret that the media favored -- jonathan: i would not go that far. martin: ok, whatever. david: not to the people who needed to take it -- terribly important. if you have people who don't have a lot of money and they need to take this drug, there is going to be consequences. martin: there isn't consequences. they have insurance. i don't know if you are familiar with health care insurance. americans have it, the president forced us to get it. i paid a fine for not having health care insurance. david: your insurance is really great. a lot of people's insurance does not cover 100% of the cost. martin: as far as i know it is covered by every major insurer. i ultimately think trump is going to be a fantastic president. he will bring more competition for drug prices and solve it in
a capitalist way. getting a generic approved takes five years. jonathan: the ultimate problem is for the health-care industry come almost monopolistic because it is so hard to get drugs through the fda. martin: drugs are a small -- jonathan: beyond that, the pricing issue, it will be harder if they would dress that. martin: drug pricing is a small part of health care expenditures. physicians prices are rising faster as our hospitals. the drugs of the best cost-effective solution for health care. they are algorithmic, re-modular. whereas surgery, much harder to control. david: there is no question that the price of drugs is going up faster than the cost of living, and as a percentage of gdp in this country, health-care costs are 18% or something like that. martin: absolutely. david: much higher than any
developed country. when you have the health insurers pay high prices from that gets expressed through premiums sooner or later. martin: and so the question is, grow, and wep's are at the top of that act, we learn as a society that what we prize in life is our health and we will spend more and more on our health than ever before and that is a good thing. it is the mark of a civilized country. david: so you would do it again? martin: of course. shareholders -- you have seen castigated for their increases. they raised prices after the senate committee. i look at bloomberg for inflation and i don't see they need to give up 13% inflation. surprisingike i'm that i would do it again. everybody is doing a good and capitalism you charge the highest price you can for the profit.
scarlet: i am scarlet fu. what'd you miss? a mortgage rates spike. home loans are getting more expensive and the 30-year x rate mortgage has gone up 75 basis points to the last time we saw a move like that that steep in that amount of time was june 2013. back then we saw home buyers jump in and push home sales up by about 19%. what happened afterwards? you saw a big dive. home sales plunged afterwards. if you look at what happened today, we got new home sales they jumped 5.2%. this is perhaps the peak before the decline. it is something we will be watching for in the coming months. julie: people act quicker than they might have. today we got the mexican trade balance numbers and mexico reported an unexpected surplus, trade surplus of $200.4 million. that is the white line, pretty
close to the top. going about that shows surplus. $900 million deficit was the forecast from economists. none of them predicted a surplus. a change? -- what changed? the pace. pesos the u.s. dollar -- versus the u.s. dollar could that caused an export gain. even as we see the rhetoric about tariffs, potentially talk about trade wars with various companies, the drop in the peso has created at least one benefit for mexico thus far. helped, of is course comply oil prices stabilizing. the market close is next. take a look at the major indexes with less than four minutes to go before the close. little change here, slightly to the upside. dow up by almost 12 points.
stocks with narrow trading ranges, falling out ahead of the holidays. scarlet: on scarlet fu. julie: and i'm julie hyman. scarlet: welcome to viewers who are on twitter. you can watch closing bell covered every weekday. we begin with the market minute, sleepy in terms of equities and how they are performing today. we wanted to a couple of sectors that i will begin with european banks. they are in the news, one making headlines. they are paying a combined $12.5 billion to uncle sam. and we see italian banks gaining after the italian government agreed to put 20 billion euros into their veins. bloombergeck on the to give you a sense of how quiet it was today. this is the dow jones industrial average and what we saw today, 30 point move.
that is timing. it is the lowest ranges since december 2013. if you want to see or get a sense of houston -- of how thin trading was, so far we have this blue horizontal line, a swing if you can call it that. 30 points. julie: can we acknowledge that amazing fun -- pun. scarlet: in terms of weekly performance when you are looking at gains all around. this is the seventh straight weekly gain. the longest stretch since 2014. julie: and a look at the bond market, today little change. we have selling on the shorter end, a little bit of fine on the longer and -- end. it is the weekly move that is interesting, a drop in yield and increase in price. take a look at the bloomberg, we have the weekly change in the
10-year note. you see the election with the yield, sellingn and price. this is the first week we have had a drop. difficult to see if it is a bigger reversal, because volume is so low this week. scarlet: commodity currencies dropping after the chinese president says he is open to the idea of gdp falling below 6.5%. creates if doing so risk, we do not need to do that. you saw the kiwi selloff. it is at its weakest since june. the canadian dollar trading above 1.35, way down as well as the gdp out of canada unexpectedly declined. julie: we are also taking a look at commodities right now. oil prices as we continue to get libya back online with some of their production. crude oil prices up by .1%.
i want to share the chart that has been one of my favorites this year, crude supplies in the u.s., seasonally adjusted. line. can see the top the following line, 2015. and then a few years preceding that. the crude supplies are well above the seasonally adjusted average. here in the u.s., some got a lot of crude out there to work down. also taking a look at gold prices, we continue to see the losing streak. there is the one week chart, down .4%. scarlet: those are today's market minutes. taking a dive into the bloomberg . you can use the function at the bottom of the screen. we know that the election accelerated things, but how much money is left in countries like india and the philippines? you can find it on the
bloomberg, we are tracking the former -- foreign portfolios. we will start with equity. start by quarter to date. you see india at the top. we will click on that and you can see some changes. 11.8 point 2016, they have the biggest with $3 billion put out from the equity market. if you go to the bond tax, same thing. and they have moved a lot of money coming out there. 11-8-2016.s this is out of the bond market since the u.s. election. i'm not trying to pick on india. let's show you another country. we have seen thailand and malaysia and indonesia without close so far this quarter -- with outflows so far this quarter. south korea has had net inflows. we will click on this.
11-8-2016.rt at these are the days after the election. was. was when the bottom then money coming into south korean stocks. it is a great function to check the countries and quantify the money moving in and out. julie: really interesting, because we have seen debate about emerging markets, whether they would be a good buyer not. -- buy or not. china to put them all in one basket. in which would perform better. i will get back to one of those top stories, the settlement between deutsche bank and the u.s. government over and the s abuses. -- over abuses. in this is the equity ratio. thanks to bloomberg intelligence for taking a look at these numbers. the concern with deutsche bank is if they got too high of a
settlement, they would be forced to raise capital, because the tier one ratio capital is lower than many competitors. that today is not over, but it seems to be something of a relief today that they had the settlement. scarlet: the fundamentals do not change either though. julie: exactly. that is now what we will be talking about. closing a chapter in the dispute , deutsche bank agreed to pay $12.5 billion with another bank to end u.s. investigations. what has credit suisse and due to bank that's going to make settle, barclays is filing suit. forthis has been going on some time and it has been an overhang for these companies. how much of a relief is it now they have settled? >> the biggest fear was deutsche bank, because he showed the chart, the capital ratios are
not great. and a lot of people pay attention to european leaders -- lenders need to calculate that. it is the lowest among european banks. thatey were really scared if the fine came around $10 million because negotiations started with high numbers. $15 billion. they thought it was going to go down some of the how much? the headline, it is now much smaller. it is only $3 billion. they had provisioned about $2 billion already. julie: is smaller -- the fine is smaller? >> there is a cash fine, then consumer relief for all of those homeowners. julie: do they pay directly to
the consumer? >> it is not paying money, is restructuring the mortgage, giving you some relief on the mortgage. that was negotiations already happening. thatk. been doing they want to do something with your mortgage, they want to give you a break so you can continue paying, instead of default in. promise,, this is a and also certainly principal. because thanks do not want to reduce the principle, they will give you a longer payment time, but they do not want to take down on the principle. it was bigger part credit suisse and deutsche bank that they book of this really over the next 5-10 years. that is not as painful. andillion for deutsche bank
$2.6 billion for credit suisse, that will cause them to take the losses in the current quarter. those are much smaller numbers than anyone. so they are not going to have to raise capital. scarlet: are they in the clear? or are there still things hanging over deutsche bank? >> so many things. nobody can keep track of them. so many spreadsheets. it is not only department of justice, there is u.k. regulators, there is fx probes and so many things. and it is not only deutsche bank, others have more coming. but they still need to deal with it. and as he mentioned, the fundamental story of profitability in europe, especially with deutsche bank, has not gone away. they struggle to make money,
even if they were not paying fines, they are not making great profit. how do you fix that? you get rid of more people, do you shed businesses? they have researching plans all over europe -- restructuring plan all over europe. but these are slow. julie: barclays did not come to an agreement. what happened? >> there is a lot of speculation. and things leaking from the bank and they are distinguishing themselves on how they are different. as bad. smaller, not it is hard to know if any of those are the reason. it is perhaps partly because they thought they were different. i have a hard time believing that. theyally, you can see that , with time, they could drag it out longer, not settling now, a
new administration comes in and maybe they will not be as aggressive. even if they are, you settle it two years from now and you have time to make money coming to you can actually pay the fine. julie: taking a gamble. thank you. coming up, challenges facing the german chancellor. we talk about her reelection on in the aftermath -- odds in the aftermath of the berlin attack. this is bloomberg. ♪
condemning the settlement in continued construction and palestinian territory as a violation of international law. they are casting a veto to support israel as it almost always does in the conflict. the u.s. abstained and that david agreement for the council to approve the resolution by a 14-0 vote, a move greeted with loud applause in the council chamber. and when airline says that those that hijacked their planes wanted to go to rome, but ended up in malta. to flight was diverted tripoli. it ended peacefully seven hours later when the two suspects surrendered to authorities. nobody was hurt. and germany's top prosecutor is investigating whether the suspect in the deadly truck attack on a christmas market had help from a network of supporters.
anis amri, a tunisian, was killed by police during a routine stop in italy after he opened fire on them. the prosecutor says his office is working with italian authorities to reconstruct the route he took to get there from berlin. he says authorities were able to identify him with the help of fingerprints provided by german authorities. hours a day,24 powered by 2600 journalists in 120 countries. mrs. bloomberg. scarlet: for more on what is happening in berlin and have the latest terror attack could derail angela merkel's inalection campaign is n shifts. following the attack and the noise on her policy toward immigration and how it contributed, it seems like she is more vulnerable than she has
been. the far right party gets the headlines, but there are tax coming from the left -- there are attacks coming from the left . you think she will have to shift and she defends herself? vulnerableuch more than she has been and it as -- has been going on since last summer. i think it is likely she will win the election, because the left, even though they are attacking her right now, when she announced the migration policy, they wanted to go further. and on the right, the anti-immigration populist right-wing party, while they were waiting in the buddhist outcome of their party toxic to be a mainstream party. no other parties will work with them. it is interesting to see the criticism within her own party, her barbarian sister party as well, that seems evident that they are vocal. and since last summer, she has been pushing to domestically get
reforms of that will crackdown things. and it is interesting to see the suspect in this case was going to be deported, but because of logistical reasons, that did not happen. certainly, she will be coming under a lot of pressure. i think this means her focus is going to be domestic and on security. angela merkel what kind of promises -- julie: what kind of promises are we getting from her. it was a breakdown in italy as well, where the suspect was before. he was said to be deported from italy as well. he has a criminal history. so are we hearing not just a response from her, but a coordinated response from europe? >> is a clear indicator that the security systems with the zone in europe are strange and it is something that has been apparent since last year. we have not seen a coordinated
response as of yet, but this is something that eu will be looking into. this is not an isolated incident, this has been happening in paris, brussels and now germany, so the eu must step up their game. the people who are prosecuting this right now, the far right movement across europe, saying this is another indicator that the border free zone within the european union does not work and that the eu border security is not safe. and there is some truth to that when you consider what happened. scarlet: i want to pick up on that, because there is truth to the idea that he cannot support -- secure the border completely. do you see the far right, far more toxic, do you see them toning down the rhetoric to appeal to more people? >> i doubt that they will turn down the rhetoric, because it was initially a party that was opposed to the eurozone policy.
then it was hijacked by a more extremist right-wing and that has been their cause. it was a party that looked like it was decimated, until a migration crisis started and that when it -- that is when it started to rise in the pulpit they are around 10% nationally -- to rise. they are around 10% nationally. the key thing to remember is none of the other parties will work with the afd, so they will be an isolated voice in the government. but the fact they can even enter the government will be seen as a revolution really. angela merkel in -- julie: in france, we have seen more strength in the right wing party. marine le pen is struggling to raise the money she needs to find a campaign. do those incidents like in germany change that all? >> absolutely.
i think things such as this, if you look at people who have been vocal on things like this, marine le pen, it certainly adds to the feeling of insecurity and terror we have been seeing across the european continent since last summer. aat happened in berlin is part of something that is greater across the continent and that is how to deal with the migration crisis. it has not stopped and with the recent atrocities, this is something that will continue and has been continuing and also the threat of extremism. not only extremism among migrants or refugees, but also homegrown terrorism. this is something that the eu as a whole has no sufficient answer to you. scarlet: give us an update on the migration issue. are there any new ideas being proposed? did the far left coming up with
a better idea, leaders coming up with a new prescription, or is it the same debate turning over and over again? >> the interesting thing is, after angela merkel defended the rules lasser, saying if you make it a germany we will give you safe refuge, she has estimated the strategy dealing with it, the deal that they struck with turkey so that any migrant that comes to europe will be taken back to turkey and then from turkey, the eu will take refugees that are vetted into the country. the second part of the idea that she pushed was that asylum-seekers would be evenly distributed among the eu. this is something that the eastern countries refused to take part in. so really, we are looking at a continuation, even though it is not in the headlines, a dire situation where the migrants are
stuck in italy and greece. this is not something the eu has been able to resolve and neither does it look like they will be able to resolve it. scarlet: ok. it is an issue we will be watching. nina, thank you so much. ♪ taking a lookup, at the deep. pay -- deep dive. if you are shopping for the holidays, you may be dishing out more cash this year. this is bloomberg. ♪
you can use the function at the bottom of the screen. we want to go with a holiday theme. it has to do with christmas trees and canada is a top exporter and in 2015, the white jumpedows that shipments 12%. that ended a three-year decline. this year is not on the chart. you can see the yellow line showing dollar canada and when it goes up, the u.s. dollar is depreciating. about 40 million christmas trees are cut every year in north america, 3-6,000,000 are from canada. there is room to grow that. the export half of their total trees and mostly to the u.s., but also to mexico. julie: i have been wondering as i walk around and see all the kiosks selling the trees, i wonder how many go unsold? as i walk by, there are still
trees and we are a couple of days away. i wonder if there is a sale. scarlet: always people who buy them at the last minute. let's talk about what people are buying. julie: if you look at the 12 days of christmas, there is an index of these, but together by the pittsburgh national corporation in 1984. and courtney collins highlighted this earlier. what is interesting is that are $13,000ming for seven swans. that is the green part. and even though it is expensive and has remained steady, there was a debt -- dip in the 90's. as i said, it was the swan glut, but it has come back up. what you see overall is that birds between the swan and geese, 7% more expensive today. 116% means of milking,
more expensive. and the ladies dancing and lords leaping and drummers drumming, skilled labor, 290% more expensive. aidslet: domains -- the m would argue that that is a skilled labor. not anybody can do it. julie: but i have milking machines. scarlet: i have automation. julie: we need to do more research. to be continued. it has been a banner year for bitcoin mother is it sustainable? scarlet: looking at the crypto currency, next. this is bloomberg. ♪ ways wins.
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♪ courtney: let's get to first word news. gelaloomberg -- an merk spoke with the president after the death of the chief suspect in the berlin expected he was a tunisian denied asylum, but germany was unable to deport him. the lens said the humanitarian evacuation of eastern aleppo has concluded with more than 35,000 people transported out of the city. it back to me cap arrived i u.n. reception centers. u.s. officials know that many
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this is bloomberg. thank you. we will get a recap of the market action. we limped into the closed, the down moving 30 points and closing up 15 points. we still cannot get to 20,000. we got within 15 points this week. and this is the seventh week of gains. but we cannot get to 20,000. julie: not quite. scarlet: we will continue to keep a watch on that. "what'd you miss?" this was the year of geopolitical risk and uncertainty and we are reaping some benefits as we look at alternative assets. we are extending a rally that goes above currencies. we take a look at bitcoin and what lies ahead. gil, thatamazing
bitcoin has outperformed other assets, other major currencies and commodities in 2016. when people have bitcoin, they hold it or they try to get in and out of it? do they use it as a way to get into another hard currency? >> it is both. any restriction on the movement of money creates incentive to use bitcoin. it is a peer-to-peer network for digital cash that is efficient to use and it can go across borders and do so with little or you intermediaries. any type of restriction, capital flow from china, cash in india, the threat on monday between the u.s. and mexico, that is incentive to use bitcoin. and when the market starts discounting that back mother is more of a sense of the
importance of bitcoin can have in a world where there are more borders and conflicts between countries and limitations on how to move money. julie: it has also seen, much like gold, a haven if you will in times of geopolitical risk. we have a chart of gold and bitcoin carpet eagerly since the election, people have been selling gold, but not bitcoin. in fact, the gold premium to bitcoin is at a three-year low. how much of the buying, you say there are various reasons people buy it, what sort of -- how big a factor is the desire for this haven? >> what i would say, it is a desire for assets not correlated with other assets. sometimes you have fixed income and real estate moving in unison and it is hard to put assets in something that is not correlated and can preserve value, or move
in an independent way. bitcoin is uncorrelated with other assets and that is the advantage. that is an advantage that gold used to have. bitcoin is more fluid and you feel closer ownership of it. and calling it a safe haven is maybe taking it a step too far, because it is a commodity and a trained just like -- trades just like oil. around had gone up to 1100, now back to 900, it is not a safe haven, but there is a huge advantage to owning a asset that is not correlated to others in the portfolio. from 150 they can go two 30, and it is so volatile. >> it is like a commodity, like gold and copper, it trades like
that. it is not a safe investment, but the upside is tremendous. if bitcoin takes out and is used for bank accounts for emerging markets and online shopping, it could rise in price to a multiple of where it is out today. there is upside, but it does trade like a commodity and there is a volatility that comes with it. scarlet: you talk about how there is not a correlation with other assets, but there is a correlation with china. you can see the white line from bitcoin and the line is higher after the election and the blue line is the chinese yen. when it goes down, it is losing value. china is a popular destination for a bitcoin and a popular host of bitcoins medicus people are trying to get around -- a bitcoin, because people are trying to get around controls.
can you tell us about the point in china? are people able to use it more as they store more of their savings and the coin? -- bitcoi n? >> the top two drivers of the sense of bitcoin prices is chinese capital control and speculation. it is not necessarily used for transactions inside of china, it is for allowing people to move wealth from inside of china to outside of china, in ways the government may not allow otherwise. and the other is speculation, a market that trades 24 hours a day and is incredibly fluid, you can go in and out at small transaction costs. a lot is happening in china and so that is activity, a lot of what is driving the price up is going forward, that could happen in other places that have trade restrictions, but for now china is the big driver of bitcoin.
scarlet: d.c. more research being done on -- do you see more research being done on bitcoin in china? >> i do not know if i see that. a lot of it is speculation and the utility of getting money out of china and speculation, like on any other assets in china, which is prevalent. this is an asset that is moving a lot and it is very liquid and easy to get in and out of. it encourages people to bid up more and more. i do not know if there is a lot of analysis done on where it will go. julie: when we talk about it being used for payments of any kind, how accessible is it? if you are somebody working abroad for example, for you and moreegular people, is it like a technorati you are using it? >> for now, mostly technology
oriented early adopters are driving the adoption of bitcoin. 20 years ago, aol was the main access to the internet and then there were people who are very proficient with the tools of the internet and able to do more with it. that is heavily where we are. only early adopters know how to use it. but already, those include tools. you can move with a less than 1%. western union may charge 5%. the real hockey stick will happen when we have a netscape and amazon moment, not imagine the facebook moment, where the adoption will be rapid because the tools will make it easy to move money it will be so inexpensive, that people will gravitate to that over the current financial system or institution that they are partnering with right now.
scarlet: ok, thank you so much. the director of research joining us from los angeles. julie: i always miss matt miller when we are talking about bitcoin. scarlet: i know. he tried to live life using bitcoin. he got quite a bit done. julie: he did. he used it for some things. scarlet: a couple of transactions. and coming up, something else he would be into. julie: we have your 2017 auto outlook. that is next. this is bloomberg.. ♪
are looking at what you cannot miss in different sectors. today we are looking at autos. kevin, let's start with trucks. suv's a few years ago, were persona non grata because of what we saw with gas prices. gas prices came down and the sales went back up. will the trend continue? >> it is going to continue, but what is interesting is it is not about gasoline prices anymore. what is a truck today, that would include crossovers and suvs and pickup trucks. they are very different from what they were in 2008, which is the last time gasoline prices spiked. if you look at the chart of the next, truck versus car, it is romantic and prolonged and it will not reverse regardless of the gasoline prices.
scarlet: if it is not gas prices driving the interest in trucks or truck like vehicles, what is it? safety components, or the idea that we likeas americans? as americans? >> it is that and technology. and with the smallest of crossovers you have all-wheel-drive, and it is easier to load things in and out of. so being built on par platforms, the drive dynamics are better than they used to be and they are car like and the fuel economy is comparable as well, that is why we say there is no reason to trade to something smaller and lower to the ground, regardless of where gas prices go. julie: quickly, a follow-up on that, we looked at a chart that shows a higher percentage of sales right now are the light trucks versus cars.
when do we get to the point where there are more trucks the in cars? >> we are way past that. we are 60% trucks for 2016, which is about where the year will end. it will be the highest ever. if you look at the chart, the two vertical red bars are recession, and even the time between was a lot of truck demand. basically, barring government intervention, which the one prior to this bike was gasoline prices, we have wanted to buy trucks all along and now we have a time of freedom since 2010 and that is what the consumer has been doing, buying trucks. scarlet: what about electric vehicles? there has been hype around that and i'm thinking about a chevrolet bolt, tesla and various cars, will it increase
in a meaningful way? will be one day see as many electric vehicles as trucks on the road? >> it is interesting mother is a disconnect between what automakers and out into the coverage that these are getting, including tesla, and where they are in the space. if you look at what we expect for december, probably around 1.6 mailing that's million vehicles and roughly 50,000 of them would be hybrids, including gasoline hybrids, not just plug-ins. plug-ins would be around 15,000 units. but you are looking at all of the automakers investing in that space and i think it goes back to the pre-recession when we had automakers, domestic automakers, getting out of small cars because they were not profitable. that is the case with the electric cars right now. and as things that shifted, they did not have anywhere to go.
so, automakers do not want to be left behind. julie: quickly, there is a matter of how people are buying cars. it looks like increasingly they are leasing? >> yes, leasing will be bigger because it tracks mean higher prices and it will create affordability for the consumer. the thing to watch will be all of those vehicles coming back and depressing the prices of new cars. julie: very interesting. thank you for giving us the auto outlook for 2017. next, we hear from the former imf deputy director and now a distinguished scholar at the institute. this is bloomberg. ♪
♪ scarlet: "what'd you miss?" more than eight years after the financial crisis, european banks are still struggling. strengthening the regions banks is not a challenge for the fainthearted. earlier today, john lipsky discusses what it will take a spur economic growth. john lipsky: this is been one of the key reasons why growth in the european economy has been sluggish. the balance sheets of the banks, the bank account for 80% of the current flow in the eurozone, when they are clogged with bad
assets and you have overhang of the large fines for things like the one we were just talking about, that is not leave them in a position to be aggressive about lending and helping to spur growth. >> sometimes they are out of your control and jurisdiction. for the european monetary policy makers, the regulators, is this what they can pull? john lipsky: the ecb has been pulling every lever they ca think of. but not total success. what is necessary is with what they are doing with the italian banks, including cleaning bad assets off of the balance sheets and it happened more quickly in the u.s., that is why they grow more rapidly. >> it is one thing to put the lawsuits behind you and it is another thing to restructure the balance sheets, that appears to be happening in italy. arewith deutsche bank, they
taking care of legal liabilities, but then how do they move forward, how will it be successful in the future for european growth? john lipsky: that will be important for deutsche bank and other banks, as well as the product of the eu to create a more vibrant securities market and have them be a smaller part of credit in the future. >> to make that change, it is not an overnight story. companiest mean the can change the cultural habit of going to the banks for loans must the how long will it take? john lipsky: it will take some time, because it needs to be put in and grown. ay back, the european firms -- british firms were at the forefront. >> you are a chief economist at chase and a senior official at imf, they have been taking down the estimates pretty
consistently for some months. are we going to see a change in that not given the election of donald trump? john lipsky: let's hope so. the imf forecast for europe is better next year on the basis of things like banks getting worked out and other aspects, but in general they see the advanced economies moving along at more or less a steady pace. what is notable, since the great the growth2008-2009, in advanced economies has been below the 30 year average from before that time. so the real problem here is how to spur growth in the advanced economies. >> there has been a flashing light in the background, from the past decade, the global trade growth stalling and now more protectionist rhetoric coming out of class the planet and western world. does it concern you?
john lipsky: of course it does. since world war ii, growth and international trade has outstripped gdp. it has been a leader. but since the great recession, even for the emerging economies, trade has turned into a drag. it needs addressing and it needs addressing on a positive and constructive basis, but the credible reason for the sluggish growth in my view has been weak business investment. all is a uniform across advanced economies, including the united states. >> is it possible we had too much of not sustainable growth in trade. go back to the election in the u.s., people felt that they were not benefiting from the global trade. it was fine for policymakers to talk about it, but do we need to take a fresh look at fair trade, growth in trade in terms where
the populace feels that they are benefiting? john lipsky: that is for sure. but the biggest growth occurred in the 1990's, it was not that people did not notice in the u.s. we had a record trade deficit, but it was accompanied by strong growth. back to my point, we need to it was notuality -- that nobody noticed, as well as the economy overall was growing, these problems where a secondary thing. >> she wanted this, where the socialist wanted this? [laughter] john lipsky: i do not know about that, we can see what overall growth is slow, these problems seem big. scarlet: and that was john lipsky, a distinguished scholar at henry a. kissinger center for global affairs. scarlet: coming up, what you
got closer to 20,000, but not really. in terms of what is happening next week apart from the holiday, the premise of japan and the president will be visiting pearl harbor. julie: and also, in terms of japanese news, on monday the bank of japan releasing the policy decision meeting minutes to thepeech from kuroda business lobby in japan. scarlet: and economic data is coming up including jobless claims on thursday. that will be watched as key measures of the u.s. economy. thank you for watching. julie:
counsel to condemn settlements in palestinian territory as a flagrant violation of national law. , giving thetained green light for the council to approve the rebels -- resolution unanimously. there were loud applause in the chamber. president-elect donald trump is reacting to the vote. he sent out a tweet not long ago after the session concluded saying "things will be different after january 20." with the inauguration less than a month away, jimmy carter is the only former president to rsvp. bushclinton and george w. are putting their decisions off until next year. in president obama is planning a