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tv   Bloomberg Markets Americas  Bloomberg  December 28, 2016 12:00pm-3:21pm EST

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from bloomberg world headquarters in new york we will be covering stories from cleveland to london, jerusalem and the arctic circle. u.s. stocks retreat from record highs as the dollar trades at its highest level in decades. at itsr confidence is highest level since 2001. what does that mean for the retail sector and the u.s. economy as a whole? we ask that question to jack kleiman. the world's most famous pop up .otel, a behind-the-scenes look halfway into the trading day, avalanche -- abigail doolittle joins us. abigail: yesterday's rally has evaporated. stocks opened slightly higher
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but quickly turned into the red, and we are looking at declines for most of the trading day. the nasdaq is down the most, dragged down by technology shares. its worst day since december 12. one marketplace that is doing better, oil is up half a percent and up eight days in a row for its longest daily winning streak since 2010. the supply cut of one point one ,arrels -- 1.1 million barrels investors are clearly liking this. natural gas is a different story. it has just crept slightly higher. yesterday, natural gas traded at three-year highs so trying to take those highs after consolidating this morning, but we have southwestern energy and chesapeake energy trading lower after natural gas was lower earlier today.
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rounding it off with the bloomberg dollar index, higher on the day, carving out levels last seen in about a decade ago. up 3/10 of 1%, does not sound like a big move but for a currency that is a big move. interesting to see oil trading higher in the face of the dollar strength. vonnie: that is abigail doolittle at the market. let's check in with the bloomberg first word news. erik: secretary of state john kerry outlined a plan for resolving the israeli-palestinian conflict. kerry: the two state solution is the only way to lasting peace and between israelis and palestinians. it is the only way to ensure israel's future as a jewish and democratic state. living in peace and security with its neighbors. eric: he delivered his speech
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with just three weeks left and president obama's term, and it comes after he angered the israeli government at the u.s. last -- u.n. last week. kerry said the vote was in accordance with u.s. values. in a pair of morning tweets, president-elect donald trump blasted u.s. foreign-policy toward israel. we cannot intended to let israel to be treated with such disdain and disrespect. they used to have a great friend .n the u.s. but not anymore the beginning of the end was the horrible deal with iran. he continues saying, stay strong, israel, january 20 is fast approaching. on the agendacare today and is meeting with chiefs of several health care
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institutions, including the head of the mayo clinic, cleveland when it, and johns hopkins. u.s. senator john mccain said the country's relationship with latvia will not change with the trump administration. mccain spoke after meeting the latvian president. mr. mccain: we will continue to have strong support for nader -- nato in the congress of the united states and the senate. that most of our colleagues in the united states senate, vladimir putin and russian behavior is unacceptable. the latest being a parent attempts on the part of the russians to affect the outcome of the recent election in the united states. eric: his next stop will be lithuania and ukraine, georgia, and montenegro. german prosecutors detained a
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tunisian man they think may have been involved in last week's attack on the christmas market in berlin. his number was saved in the cell amri.number of anis further investigations indicate he may have been involved. 12 people died in the attack. global news 24 hours a day, powered by our 2600 journalists and analysts in more than 120 countries. i am erik johnson and this is bloomberg. oliver: thank you. u.s. consumer confidence has boomed to its highest level since 2001 as american households expect the trump administration to deliver on its promises. what will that mean for u.s. retailers? joining us kleiman from cleveland. we had some good numbers yesterday in terms of consumer confidence. to much should we take these
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heart before we find out what the economic plans will be from the new administration? jack: both yesterday's release and last week, they are indicating that consumers have a very fine and very positive outlook going into 2017. i think the important thing is this is predicated on job and wage growth, and expectations that some of the programs that beyondnned for 2017 and will take place. i think the consumer today feels a lot better looking at the economy. we see that in the current conditions index, but the real strength of the indicators came with the outlook toward the future. vonnie: what is that about, because nothing has happened yet? we have absolutely no guarantees, not even a minimum guarantee that what people are expecting to happen will happen. jack: i think we will have to wait to see how the data performs as we go forward,
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especially since in november personal income was only up 3.5% which is down from a few months before. the important thing for consumption as it is income and wages and the play between job and wages going forward. i am hopeful that the momentum that people are expecting in 2017 will actually begin to take place, but it is very important to think about how the consumer has really relied on wages and wages have not grown as fast as we have seen in other recoveries . at this point in time we probably should have seen wages up around three and a half percent on a year-over-year basis but we have been seeing it around two and a half percent. oliver: let's talk numbers. earlier in october you are on you wereand said that expecting about 3.6% growth. any idea if we will get close to that? jack: i think those are going to
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be solid figures. this is a very interesting year. i was talking to a retailer and the interesting thing was that christmas and hanukkah fell on a sunday. if you think about the behavior of people getting out and buying things, it was a little different than last year and we have not seen this in several years. it gave people a little more time to spend and wait up until last minute. we think there was a solid performance that december will be showing. november was a little weak on a month-to-month, but on a year-over-year basis we had over 5% growth for retail sales as we measure it. vonnie: what about margins, jack? have they been squeezed? jack: that is a very good point. numberspeople know, the they get released by the senses are nominal so it is price times volume. what we have noticed and what
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has been very evident in retail for the last couple of years, is that prices have been falling. there has been a decline of some 2% per annum in retail, so it is difficult for retailers to hold onto those margins. they really do not have any pricing power. actually getting a great value for his dollar or her dollar when they are outspending. talk about the interplay between rates and consumer confidence. i have a chart showing us today, looking at 10 year break evens and where folks expect inflation to go, it is slipping today but if you look year to date, it has moved higher after the election year. we know this is against the backdrop of consumer confidence going higher as well. we talked yesterday about stock confidence going higher. do consumers understand where that inflation level exist where it is supposed to work adversely in their favor? jack: i do think it is a little
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soon for most households to really understand potential inflation. what we have seen if you look at the consumer price index, most of the inflation that has been occurring has been in services and cost of medical care, housing, and other types of services, and not in the good sector. as i mentioned, it has actually fallen off. the price of food has gone down so i think the consumer really thatot absorbed the fact inflation in some ways is starting to pick up a little bit . if you look at some of the expectations for prices through different surveys, it is not showing anything of substance at this time. the stock market right now is reflecting certain expectations on how the economy may perform with higher interest rates and the potential for inflation, but i do not think that really is resonating at home in the average household. oliver: the past 18 months
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largely was about commodities with a focus on energy. it's things like now a lot of wall street and main street are just missing the case. could it be blindsided if opec cuts do not work out? important to most consumers, looking at retailers, what is the cost and price of gasoline. right now the price of gasoline has been down substantially for the past few years. we have seen some elevation in the past few weeks but from that standpoint, i do not think it has a major influence on how consumers are spending. i think they have been able to absorb these changes, but i think their expectations are that the price of gasoline will stay at a reasonable rate. if you start thinking about the price of oil, it centers -- andrs into home heating oil natural gas.
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i was looking for the right word. even those prices have been moderated this year. i think the market is really looking forward. vonnie: jack, any chance of some of the employees that are going to be hired for the retail season, that they will be kept on and employment will grow? .ack: that is a great question we saw last year a little more of the part-time help stayed on in january. my expectations are that they probably will. it has been a real demand for retail in terms of employment. we have had record high openings in retail over the last several months, so my feeling is that retailers will try to retain these people. oliver: hopefully that will continue on, the national retail federation chief economist. vonnie: how the populist rise lined the pockets of the world class billionaires. billionaires.
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vonnie: 2016 was the year of populist movements from brexit to the trump election. awayonaires did not walk hurt. >> it has been kind of an ironic year. we started the index in 2012, the height of the wall street movement. there was a camp outside of protesters. this year, that populist voice
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transferred into political power with the brexit vote and trump vote, and the rich got richer as the market surged on enthusiasm that the trump cabinet and administration would deregulate economic activity. vonnie: so on paper the wealth h larger. in the lows, but obviously the wealth have been rising before that. >> it was a lot of volatility through the year. there was disappointing economic data from china that sent the market plummeting. ken fisher, a billionaire investor told us last year that the markets were wiggling sideways and this was the first year that they -- last year was the first year they actually lost wealth. it looked that way this year but it was a positive year. vonnie: michael mckee, you are
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taking the populace side of things. -- populist side of things. michael: trump is coming into office putting the richest cabinet in history. his tax cuts are focused on giving more to the wealthy than to the lower classes. if you look at something that measures income inequality, and in the united states it rose again and has been rising for years. the rich are getting richer every year, and the rest of us are not doing as well. notice i put myself in the non-rich category. give me any sign that the things that made people vote for trump are going to make people any happier. vonnie: let's look at medium incomes -- median incomes. we know this anyway, they have not moved. michael: they did go up last year, 2015, for the first time in about 20 years.
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while they are still at about 1980 levels there is some progress that her house barack obama can take -- perhaps barack obama can take credit for. it will be a good way to measure the progress trump makes with the non-rich, if he can bring up household median income for everybody. normally in america, people are happy to see the rich get richer because it is something they strive for, but if they are getting wealthy and the rest of us are going nowhere, that is when you get the populist movements. we have had seven years of federal reserve in action on this front. wages are rising just a little bit so will that trend continue? and appointees would likely say that donald trump's policies will affect the middle class. >> the business world is
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ecstatic now. they have one of their own appointing many of his own. betweennet's wealth is $6 billion to $10 billion of actual appointees, but if you look at all the people who have access to donald trump, that wealth gets north of $100 billion. all of those people who with one phone call can get the resident elect on the phone, that has the -- president-elect on the phone, that has the business world ecstatic. vonnie: it does not matter what the cabinet people are earning or have earned, and what does it matter if they can get policies and acted that will create jobs -- enacted that will create jobs. the other argument is if you tax the wealthy more that only adds a little bit. michael: all of this additional wealth that the billionaires made does nothing for the u.s. economy because you cannot spend
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it. we are talking about ridiculous amounts of money. the new york times did a piece about five years ago, if you have $1 billion you earn more in your investments than you spend a year even if you spend lavishly. they probably do not even care about their ranking because once you have so much money, what difference does it make? the point is, can they get something done for the rest of the country? that will be a true measure and it will be measured differently. 90% or more of their money from investments, while most people make in -- money from salary and invest -- salary and wages. that will be a true measure of the success of the administration. vonnie: what is the honeymoon period, how long will voters give donald trump to make their lives better? .ichael: i wish i knew
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the president proposes that the congress disposes, and it takes congress a long time to do anything. no matter what esther trump brings to capitol hill it will probably take most of 2017 to get it enacted in law and longer to have an effect, and years for people to change their behavior. we might not see results until 2018 or 2019. 2018 you have another election year so it will be interesting to see how much patience they give it. vonnie: i want to talk about the billionaires index again because it fluctuates all the time. if the peso weakens then one of the billionaires goes down the list, this happens a lot in matter who is in power. is a daily index and the volatility is somewhat astounding. in 2014 the story was the evaporation of russian wealth is
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of the sanctions for the invasion of crimea. in 2015 and was china with the markets went insane and the wealth evaporated when the markets crashed. now the focus is back on the u.s. as things move slightly and -- sideways and slightly up. all of the focus is on the u.s. economy saints to be the anchor for the world economy. is on thell gates billionaire index followed by warren buffett. his donald trump on it? >> he does not have that kind of wealth. .here is a huge differential he puts a huge premium on the value of his name. we have talked to many analysts about this, how do you put a value on the name of a president
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? that differential is where the $7 billion play is. vonnie: that was the editor for the bloomberg billionaires index and michael mckee. the past two years have been brutally tough on the oil industry that it may turn around in 2017. we will have analysis on the commodity. this is bloomberg. ♪
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oliver: i am oliver renick. it is time for the bloomberg business flash, a look at some of the biggest business stories. readrand has plans to franchise -- three friday -- read franchise. the company which also owns pizza hut and taco bell, has 98% of its restaurants around the world will be franchises by 2018.
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biogen says it will charge $375,000 a year for its rear muscle drug. the recently approved treatment most importants drug as they face slowing growth and greater competition. parkingying canadian payer pay by phone. of more thanfits $250 million in transactions this year. vonnie: oil is trading near a 17 month high. we will take a look at where prices are headed. ♪
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♪ >> live from bloomberg world headquarters, i am oliver renick. vonnie: and i am vonnie quinn.
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erik johnson has more from our london newsroom. erik: dylan ruth told the judge -- dylan ruth told a judge he will present no evidence to convince a jury to spare his life. roof told a judge at the hearing that he still plans to act as his own lawyer during the penalty -- when the penalty phase begins next tuesday. discovered theve flight recorder of the russian military plane that crashed into the sea. all 92 people on board were killed. the head of the labor union representing u.k. civil servants criticized prime minister theresa may for not acknowledging the complexity of the brexit according to "the guardian" newspaper. -- critiqueoncern
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is the concern the u.k. has not put in place someone who can handle the large task. global news 24 hours a day, powered by more 2600 journalists and analysts in over 120 countries. vonnie: a quick check on u.s. stocks. you can see we are not regaining any ground. .3%.ow below 19,900, down the s&p 500 is adding to its losses, down by .6% and primarily being led lower by materials and real estate. down .6% as well as let's get more details on the inner workings of the movements from abigail doolittle. abigail: not helping the major average today are the shares of nvidia trading lower.
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their worst day since the beginning of december. off of their lows, they had been down nearly 7% since may 2015, trading sharply lower, down about 5%. weakness as andrew tweetf citroen put out a saying it belongs closer to $90 in 2017. he has concerns with market share and intellectual property. on the year, it is interesting. this is a much different story. up about 240%. the top performer for the s&p 500. while andrew left has concerns, it may be possible to think he is targeting the massive run. perhaps he thinks the stock has gone too far, too fast. #btbwe take a look at g 3914, this goes back to 2000.
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we have the massive move up higher in the year. in blue, we have the five-year average pe. while the stock is up, you can see the pe is below the record high back in 1999. the five-year average pe is about 27 times below that of the vox. valuation may be -- may look reasonable. turning to another stock down on the day, we are looking at facebook. this is from june 13. the same short seller, andrew left, said he was shorting facebook all concerns of robina generation. we see a decline of about 9% after the company put out somewhat disappointing quarter relatives to standards and the fake news issue. depending on whether or not
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andrew left added the position, he is not doing so great with the short on facebook. vonnie: abigail doolittle, thank you. is fluctuating between gains and losses as it trades to the highest level in 17 months. joining us is bloomberg intelligence energy analysts andrew cosgrove. we have a lot of elements for the energy space. we have higher dollar moving up and interest-rate expectations for next year. opec cuts and this energy renaissance with our new president loading his cabinet with energy guys. how do you assess 2017? andrew: thank you for having me. in 2017 we see some strength in the end of 2016. a little bit of a low value rally. we are kind of butting up $55nst the psychological
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level. as some people may be looking to end ofght energy of the the year. going into the first half of next year, so long as opec output stays above 33 million barrels per day, that implies 70% compliant rate. you could start to see drawdowns in the second and third quarter. the narrative will be a little bit more murky because you have the risk of libya and nigeria increasing as well as opec probably having to meet again to keep output low and you also have the perspective of u.s. production also arriving -- rising. vonnie: they are preparing a meeting in the anna. -- vienna. tell us what we are anticipating in terms of the rise.
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the middle east should have a 70% compliance rate? mr. cosgrove: you can still have opec output around 33.1, which is higher than the rate they implied. they still have deficits on paper and that would imply you get drawdowns in the second and third quarter. libya, the latest reading is they were at 650,000 barrels per day and they have aspirations to get to 1.1 million by the end of 2016 -- 2017. nigeria has aspirations to get to those co-million. there you have 900,000 barrels per day and i could act as an overhang on the market as you production ramps up. it seems like both will have to keep out to keep the market -- seems like opec will have to keep out to keep the market -- how does that compliance
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rate shift if the dollar keeps moving higher and some of these suppliers say they can get a lot more from their barrels here? mr. cosgrove: i think that speaks into the hesitation for the second half of 2017 where you have opec producers saying why should i restrain my output or keep it lower than it needs to be? i can add incremental revenue. i think that is why they will have to meet again after this six-month window expires. if you think about the way the dollar index is made up, there is still room for expansion in ecb to keep the euro declining. if commodities -- this reflation trade gains steam, it could reverse the course. vonnie: the chart for the year
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is this magical chart, some of it hit rock-bottom in may and june and we are right back pretty much to where we were at the beginning of the year. u.s.osgrove: we think the rig count could be up as much as 30% next year. e&p capital spending will be the bright spot, up around 30% to 40%. that is all but a foregone conclusion. we are spending throughout the rest of the world is down. from a stock standpoint, services relative to emp underperformed last year. that is where people potentially start to look here. vonnie: that was andrew cosgrove calling into us from princeton. oliver: easy transition from oil to gas. our analysts breakdown various sectors. scarlet fu and julie hyman asked
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for the outlook on cars and trucks and of lower gas prices lead to higher sales. >> it is and it is going to continue. what is interesting now is it is not about gasoline prices anymore. what is a truck today? that would include crossovers and suvs and pickup trucks. when we look at it, they are different than what they were in 2008, which was the last time gasoline prices spiked. if you look at the chart of segment mixed crop versus car, it is very dramatic and prolonged and it will not reverse regardless of the gasoline price. isn't gas prices driving the interest in trucks or truck like vehicles what is it? is it the safety component or the idea that americans love a lot of space? mr. tynan: it is partially that and there is a lot of
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technology. people like the rider ri -- higher ride height. they are easier to load things, including people. being billed on car platforms in a lot of cases, the drive dynamics are better than they used to be. they are car like and the fuel economy is comparable, which is why we would say there is really no reason to trade back to something smaller and lower to the ground regardless of where gasoline prices were to go. julie: a follow-up question. we looked at this chart that shows a higher percentage of sales right now are like truck versus -- light truck versus car. where will we -- when will we get to the point where there are more trucks on the road than cars? are we at that point already? mr. tynan: we are past that. we are at 60% truck for two
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dozen 16 and that will be the highest ever. those two â's are recessions and those are a lot of truck demand. in the u.s., we have wanted to buy trucks all along and now we have this period of freedom since 2010 and that is what the consumer has been doing, buying trucks. scarlet: what about electric vehicles? there has been a lot of hype around that, the chevy volt, tesla. increase in a meaningful way? mr. tynan: it is very interesting because there is such a disconnect in what you are seeing automakers announce, arecoverage of that ev's getting relative to where they are in terms of share in the
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space. if you look at what we expect for december, probably about 1.6 million vehicles in the u.s. in december and roughly 50,000 of those would be hybrid, gasoline hybrids, not just plug-ins. plug-ins will be 15,000 or 20,000 units relative to everything else. you see automakers investing in that space and i think that goes back to the pre-recession period where certain domestic automakers got out of small cars because they were not profitable, which is the case with ev's right now and as things shifted they did not have anywhere to go or anything to offer. automakers do not want to be left behind on ev's when and if they catch on. julie: there is also the matter of how people are buying their cars. it looks like increasingly they are leasing? mr. tynan: leasing will be bigger.
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more trucks means higher transaction prices and that will create the affordability for the consumer. the thing to watch going forward will be the awfully's vehicles coming back -- off-lease vehicles coming back and depressing the value. oliver: we have breaking news. jumped.kate spade stock the shares were halted and resumed trading and halted again, bringing the year-to-date loss to about 3%. they had been down 18%. they had active investors among the board and now halted at 19%. we will can didn't -- follow that news as it continues with the possible sale by kate spain. vacation liken james bond and we will tell you about the swedish lapland area. this is bloomberg. ♪ ♪
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vonnie: you are watching bloomberg. this is your global business report. south korea's antitrust regulator slept a fine -- slapped a fine on qualcomm. 2016 was a good year for top billionaires, warren buffett. today's quick take, we take a look at the concept of the employment and what it means for the economy.
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fined qualcomm $853 million for antitrust violations. authorities say they cut worst customers into signing patent contracts. the company gets most of the profit from selling used technology for central and mobile phone systems. a new forecast says the british housing prices -- crisis may the next year. prices are only likely to increase 1% to 4%. they blame weaker economic growth and a pickup in inflation. halifax predicts the slowdown will be worse in london and elsewhere. the rich got richer in 2007 -- 2016 including -- according to the bloomberg billionaire index. the big winner, warren buffett. he added almost $12 million to
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his fortune and is now the second richest person in the ward. -- in the world. bill gates is number one, worth -- $19.29.2 billion billion. bloomberg talked with the codirector of global macro research for brandywine mobile and he says there is the potential that china's currency may be headed lower. >> we have the floating exchange rate system and that flexibility offset a lot of potential real damage to the economy. you have to be very careful on the market. that is why i think, if you have a trade problem between china and the united states, the trade currency will be the one to make downward adjustments. oliver: it is time for our bloomberg quick take where we provide context and background on issues of interest.
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recovery is putting back to work in the economy is on the way to restoring full employment. about formists talk employment, that does not necessarily mean everyone has a job. for employment means unemployment has fallen to the lowest possible level without provoking inflation, but not necessarily a science. estimates, a jobless rate of about 5% in the u.s., slightly higher than the november rate of 4.6%. the u.s. recovery began in 2009 and total employment was from 138 million to almost 150 million. the number of unemployment shrunk from 15 million to 18 million. getting yellen and her federal reserve are debating the timing for rate hikes next year. there is more uncertainty than usual over how many people want jobs, making it hard to pinpoint how many -- how much
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unemployment must be tolerated. the government considers unemployed people who have -- do not have a job, actively looked for one in the last four weeks, available for work. the bureau of labor statistics report about 590,000 americans are in the category of "discouraged workers." that means people who stopped looking for jobs because they thought there were no openings. here is the argument. economists are divided about how hope -- how close the economy is too full employment. some think rates should be held at near zero for longer. whatever the decision, the outcome is sure to have wide-ranging affect and financial market. you can read more about the u.s. economy and all of our quick takes on the bloomberg and that is your global business report. had to bloomberg.com for more
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stories. ♪
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♪ >> this is bloomberg markets. i am oliver renick. italian architect travel to the arctic circle to design the ice hotel 360 five in sweden where rooms can cost up to $1000 a night. -- ook roughly this is fascinating. what exactly is the ice hotel? >> that has been around for 27 years except it is only open in the winter and then it melts. it pops up in the lapland, the northern circle. it is 20 degrees in your room, but way colder outside. oliver: it is basically like the
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james bond movie "die another day." are they playing with the idea of keeping it open year-round? >> they have perfected the formula and they are figuring out how to build upon it and this is the first year it will be open year round. there will still be rooms that suitesbut a core group of will actually be powered by the sun and insulated with solar power so they can stay open ideally through the summer season. oliver: there is some irony that they are powered by solar power. who is going to the actual resort? >> this is a destination really on people's bucket list. if you want to see the northern lights, this has been proven to be the number one destination for northern lights based on the clear skies and the number of nights per year that you can see the northern lights.
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you can go on reindeer -- sledding with reindeer, hikes. you can learn how to carve ice. it is a once-in-a-lifetime trip and i think it is something people are interested in. oliver: do people actually stay in the room or do they have areas you can warm up and come back? >> usually they recommend you spend one night in the frozen sweet. sleepll not get the best of your life. i know someone and he said the only reason he slept well is because he hit the bard hard the the night- bar hard before. they have warmer rooms. they are not the most beautiful, there is not something special about them. it allows you to get that experience for maybe three nights. oliver: it looks cold, but it also looks fun. for more, check out bloomberg pursuits. ahead, vonnie quinn has
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breaking news. vonnie: just want to recap the news about kate spade. trading resumed up 17%. that is twice the circuit breaker was triggered. reported by dow jones that kate spade hired investment banks to look at a potential sale. thestors had been urging company to look for sales. they seem to be trading around the possibility today. kate spade currently trading up 17% on the news. the head of u.s. equities strategy at barclays will talk about the outlook for next year. this is bloomberg. ♪
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♪ oliver: it is 1:00 p.m. in new york, 6:00 p.m. in london. i am oliver renick. vonnie: and i am vonnie quinn. welcome to "bloomberg markets." ♪
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from bloomberg world headquarters we are covering stories from san francisco to london. stocks are pulling back from record highs in light trading as we head to the end of the year. we are -- we will hear from one of the highest s&p 500 price targets. kate stayed shares are soaring on reports the company may be up for sale. we have the latest. saudi prince alwaleed bin talal tells us what he thinks of the president-elect and where u.s.-saudi relations are headed. abigail doolittle is here with the latest. abigail: small declines from earlier. they have given way to decent declines for u.s. stocks. we have the three major averages in bearish territory. the dow s&p 500 and the nasdaq.
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nasdaq is on case for the worst day since december 1. the s&p 500 and the dow jones, little bit worse off. tech is really dragging on the nasdaq. doubtuts records and 20,000 out of mind for the day. this is a chart of the s&p 500 and the index opened slightly higher, and has been steadily declining. there does not appear to be any impetus for the declines. we will be digging into whether or not there is more behind this. on these declines, the last few days there have not been a lot of range for the s&p 500. when we take a look at g #btv this is the daily trading range back to the beginning of the year.
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a big changes in the beginning of the year where there is volatility and brexit. aboutly we are talking small trading ranges. looking at the biggest since the middle of december. a little more activity for stocks as investors get re-involved. the top two worst percentage point is on the s&p 500 are an video and facebook. on pace for the worst day since february of this year, all caps -- perhaps even further than that. andrew left said he thinks the stock should be closer to $90 in 2017. facebook is another short stock of andrew left. the stock is on pace for the worst quarter since 2012. another andrew left stock down, the specialty farming company, those shares are lower. lots of weakness around andrew
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left and some of his shortfalls. oliver: not a bad little repertoire of mr. andrew left of citroen. >> secretary of state john kerry has outlined a plan for resolving the israel e-palestinian conflict. the speech comes after the u.s. anger to the israeli government in the u.n. by refusing to veto restrictions for west bank settlements. the two statey: settlement is the only way for lasting peace. it is the only way to in short israel's future as a jewish and him a credit state. living in peace and security with its neighbors. has: benjamin netanyahu underscored his backing of the
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incoming u.s. administration. he thanked president-elect donald trump for his "warm friendship and clear-cut support for israel. donald trump is accusing president obama of troubling the transition. the president-elect wrote "doing my best to disregard the many inflammatory president o statements and. roadblock thought it was going to be a smooth transition. not." republican senator john mccain is not sold on donald trump's ,hase to be secretary of state rex tillerson. i am pleasedn: with the nominee for secretary of defense. i have questions and concerns about his nominee for secretary of state. that is my obligation under the constitution of the united
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states, which is to represent the people of arizona, who just reelected me, and to do the right thing for them and america and if i agree with the president of the united states, i will work as hard as i can. if i disagree representing my responsibilities, i will act percent -- exercise those as well. abigail: raised questions -- eric: raised questions about rex tillerson's ties to russia and vladimir putin. global news 24 hours a day, powered by more 2600 journalists and analysts in over 120 countries. am eric johnson and this is bloomberg. vonnie: thank you. u.s. stocks are fluctuating today. gains of materials and energy are offsetting losses by real estate companies. will the dow reached the 20,000 level before the end of the year? -- reductions for the end of the
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year and 2017. >> we came out with a target of 2404 2017. r 2017. fo we approached conveying that to clients through a series of productions. we made a prediction around where dividends will go. we think they keep going up. we made a prediction around buybacks, a big grabber of the market this year and we set our price target and made a prediction. when we put those pieces together, we think there are good upsides. this is one of the more bullish price targets we have set. we think 2400 is the right target. >> you -- what do you think will kickstart earnings growth? mr. glionna: we have been
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talking about the lack of earnings growth for the s&p 500. we think those days are over. we think you are going to get a rebound in sales growth, which has been a missing ingredient for those co-years now. a couple things will cause that. you have better growth domestically and abroad. we think that will allow companies to push revenue and their top line above where it has been. you get nice, top line growth. there are offsets like a strong u.s. dollar and higher weight costs, which are hurting profit margins. the baseline assumption is you get earnings per share that reacharound $127 next year. here is the thing. we think there is upside to that number. david: how many chapters are left in the story of the stronger dollar? mr. glionna: that plays into this upside i see for earnings. youhink the baseline is
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have earnings growth around 7% next year. it is the -- if the tax cut president-elect trump has been talking about comes through, the upside is higher. you could see earnings-per-share upwards of 12% if you get the tax reductions they have been talking about. when you think about upside for earnings, you cannot just take the tax cut -- the good things, without the negatives. president-elect trump has also talked about tariffs. we think some of these policies, including higher interest rates, could lead to significant dollar strengthening. you say what chapter are we in? we think there is more to go. everyone percent increase in the dollar reduces earnings per share for the s&p 500 by about 1%. in our model, you might hit 8% dollar strength next year, which
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will hurt eps growth by 8%. bigger, sox cuts are you should expect upside for earnings. david: there has been talk about repatriation. how does that work into your forecast? mr. glionna: we debated this a lot. say i look at buybacks, i we have hit the pete and they will not go up from here. we feel that way because leverage has gotten so high. --panies have been buying at back more stock than they can afford by borrowing more money. we think they have gotten to the point where they cannot continue to borrow money. you should see a plateauing of buyback activity. the potential for a repatriation holiday is a big wildcard. in 2005, last time we had a repatriation holiday, you saw an increase in buybacks. we were at a different part in the business cycle.
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you did get that increase. if we have a repatriation holiday again, which is part of table of the tax proposal, you would argue that companies have more financial flexibility, often they take that and they use it to repurchase shares. i would say the estimate for buybacks is they are flat next year, but potentially bias upwards if you get the repatriation holiday. david: health care is one you are optimistic about. concerns over drug prices, the affordable care act as well. what gives you optimism about the health sector? mr. glionna: it is challenging, but also the worst performing, which i think sets the table for it to be one of the better 17 --ming sectors in 2000 2017. we highlighted health care of the best -- as the best sector. it is under a lot of political
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pressure because of drug pricing, challenges around the affordable care act will also come into play, but all of that is already in the price. when we look at valuation for the health care sector, it is at a 52-week low versus the s&p 500 and also against just about every other sector, including the other defensive second or's like staples and utilities. we think it is in the price and there are actually very good fundamentals for the health care sector. one of the things we have been talking about is the cash flow profile of the sector. we are looking for sectors that can boost dividends. most sectors cannot do that because they borrow too much money. not health care, it has a really good cash flow dynamic that really do more dividends next year and more buybacks and we think that is the sector to be in. was jon glionna
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speaking with david gura oliver: . kate spade possibly exploring a sale after activist pressure. we will get the latest as the stock jumps. this is bloomberg. ♪
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♪ vonnie: "bloomberg markets." i am vonnie quinn. oliver: and i am oliver renick. time for the bloomberg business flash. it jim chin companies -- egyptian companies unable to -- decision to remove restrictions on local currency. firms face bankruptcy because
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they want them to pay for letters of credit and initiated before the pound was devalued. they ran an ad pleading for a solution. to re-franchise kifc locations.- kfc the company, which also owns pizza hut and taco bell says 98% of restaurants will be franchises by 2018. malaysia's state owned oil company wants to move ahead on a gas project in western canada according to people familiar with negotiations. a new site for shipping gas has been identified that reduces a marine area.ts it is expected early -- a decision is expected early next year. that is your bloomberg business flash update. areie: shares of kate spain
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spiking 70% on reports the company is looking to sell. give us a little bit of the background on why we might be hearing about a potential stayed -- sale now? >> they have gone down in the past you years. folks are asking what is going on with the company that at one point seemed like the darling of the handbag industry. activists have gotten into the fold and started to shake it up to see if they could sell themselves. oliver: one of those activists is a hedge fund -- they have not been transparent with how much haveown the company, they -- pushed toward measures on how -- and to reevaluate how the company manages itself. any idea what the shareholders want? >> i think they want to see some
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sort of change. the idea is there is a long history behind kate spade. it used to be part of claiborne. idea is that kate spade is the crowning jewel of this entire kind of empire and for it to be underperforming comparatively to brands like coach or michael cors, people say why is that happening? could it be better if it was bought by a bigger company? vonnie: 2016 saw a lot of acquisitions and the outlook is for more of the same for 2017, -- icularly among luxury >> they are so much sadder about these luxury businesses. everyone in this entire industry is saying, who is going to buy whom and when will they buy it
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and there is rumor after rumor across this entire industry. oliver: looking at the bloomberg terminal to get a breakdown of how the companies look in terms of price, basically you can see you have a pe level pretty low relative to its peers. 16.5% price-to-earnings. prettyurn equity is small, 50 2%. what kind of companies what they fit into? is it a -- it is a company aligned with their particular niche? two ways. it could go what they are trying to get them to do is sell into a bigger company, someone that could take increasead, ways to profit margin. suitor that i am assuming they are talking to coach,e someone like
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someone who has managed to buy lots of different brands that they could then do the same thing to them that they have done to coach. oliver: obviously shares have been going back and forth. 16%. thank you so much. themore commentary, go to bloomberg. vonnie: qualcomm slapped with a record fine. we will find out what this means. this is bloomberg. ♪
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♪ oliver: "bloomberg markets this is." i am oliver renick. vonnie: i am vonnie quinn. qualcomm says they will repeal a decision that they violated antitrust laws.
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they were fined 853 million u.s. dollars. for more, we are joined by bloomberg editor at large, corey johnson. what exactly is the antitrust agency accusing qualcomm of? accusingey are qualcomm of not offering fair processes and of charging in a way that actually charges the entire device or phone, not just the chip that is using that patent. they have been investigating this for years. what we see here is that qualcomm finally is facing these fines in a case long in the making for a sizable amount. oliver: this is not the first time they have had antitrust issues. we have a good chart showing the
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history. walk us through their previous experiences. corey: this is one of the things qualcomm runs up against. they are more based on design and then manufacturing and the regime has drawn the eye of regulators across the world. in 2009. find they could not tell into -- sell into china for some time. fine today of nearly $1 billion. companies and countries on legal regimes are looking at the way qualcomm charges and saying it is not fair for any players to emerge here. vonnie: why is qualcomm so susceptible or are all companies susceptible? corey: of course it is one of the biggest chip companies in the world. what you really look at his a company that based its business
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model not on manufacturing prowess, but on coming up with designs and hoping the industry developed standards around their designs so no one else can get in. bea result, they have to used and then they can charge whatever they want and that is of great concern to regulators from china to europe and today in korea where samsung is one of the big companies involved. oliver: these companies that are there competition, will this create cheeks in the armor c --hinks in the armor where they can better compete if qualcomm has to break up the businesses? case: i think you have a of not just being a monopoly, but monopolistic behavior. the question is what did qualcomm do once they got this power? even intel, when it comes to licensing technologies and standards built around their technologies.
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for that reason, you have not just intel and others stacked up against qualcomm, you also have apple and samsung, who contributed documents to the korean government so they can show what they were charged. they want to play less for the chips and they recommend the qualcomm licensing fees are one of the highest expenses in virtually every cell phone made. vonnie: the fine has been levied, are there other sanctions they may face to deter them from similar behavior in the future? corey: we see these big countries going after qualcomm and we see the united states missing, you wonder what is going on. i think they will fight this to's and nail. they will look at the documentation supplied and it will look at the way this case is proven and they will look at the way they describe what they are doing in terms of processing
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licensing fees and the chips and perhaps the devices and make a way to at least make it sound better. their main argument is that this is the way the industry works and that they are not breaking any rules. oliver: i might add almost $1 billion does sound like a lot, but it is 5% of a big cash pile that they have on hand. thank you so much. corey johnson, hear more from him in about an hour. vonnie: health care stocks have had a tough 2016. the sector having its worst year since the great recession. one stock has stood out. find out which, next. this is bloomberg. ♪
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private wifi for your business. strong and secure. good for a door. and a network. comcast business. built for security. built for business. hey, drop a beat.flix? ♪ show me orange is the new black ♪ ♪ wait, no, bloodline ♪ how about bojack, luke cage ♪ oh, dj tanner maybe show me lilyhammer ♪ ♪ stranger things, marseille, the fall ♪ ♪ in the same place as my basketball? ♪ ♪ narcos, fearless, cooked ♪ the crown, marco polo, lost and found ♪ ♪ grace and frankie, hemlock grove, season one of...! ♪ show me house of cards. finally, you can now find all of netflix in the same place as all your other entertainment. on xfinity x1. live from bloomberg world headquarters in new york, i am vonnie quinn. oliver: i am oliver renick. this is "bloomberg markets."
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let's start with "first word" is. eric johnson has more from london. of the release of detained a tunisian man in connection with the attack on the christmas market in berlin. his name was found on the cell phone of anis amri. further investigations indicate he may have been involved. 12 people died in the attack. search teams have now recovered the second flight recorder from the russian military plane that crashed into the black sea. investigators will use the 2 devices to find out why the jet plunged into the water moments after takeoff from sochi. all 98 people on board were killed. turkey and russia have agreed to cease fire plans for syria, according to a turkish news agency. it calls for a truce to begin tomorrow between rebels and syrian government troops. it won't cover those considered to be terrorists.
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global news 24 hours a day powered by more than 2600 journalists and analysts in over 120 countries. i am eric johnson, and this is bloomberg. vonnie: thank you. president-elect donald trump is scheduled to meet today with several heads of health care companies and hospitals. participants include heads of the cleveland clinic and johns hopkins medical center. hospital stocks have slumped in anticipation of a repeal of obamacare under trump. it is the worst year for health issues since the great recession. one stock stood out, united health. tracer,us is zachary who covers insurers and the affordable care act. first of all, visit looking likely that what we had heard what happened will happen and that obamacare will be rolled back with the exception of the
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parts people seem to like? zachary: what republicans made very clear is one of the first things they want to do next year's obamacare repeal. there are big questions on what that will look like it certainly at a high level, obamacare will look very different in a few months than it does right now. oliver: how does that breakdown for insurers? we will get to unitedhealth insurers likee or dislike the outlook for obamacare? zachary: insurers have already been getting out of obamacare. you saw at not get out, united health -- aetna get out, united health. they said we are losing money, we are pulling back. extent,signal to some -- anthem, signal to some extent, are still in there. but the big guys are getting out. vonnie: most if not all of the
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other stocks were up a little. zachary: unitedhealth group a lot of money on obamacare last year -- this year. investors have been willing to overlook that and look at the other strong pieces of their business. they had this big chunk, about 40% of their earnings right now, .ssentially technologies that unit has been doing really well and is not a traditional health insurance business investors seem to like that. the other thing they have going for them is fast growth in medicare. they have been winning some medicaid contracts as well. growing --ng growth going into next year. oliver: the story had been going on the year prior to the election. to --ch is it due perhaps a lot of its peers have been in merger talks come distracted by
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that. zachary: that's right. there is some idea that the other health insurers -- anthem and cigna combining -- some idea that those companies are getting distracted by merging and out they are both in court trying to defend mergers. the justice department saying essentially that the mergers would reduce competition. again, maybe a distraction from the core business. health come is it going to profit from it in any way? just having the bigger market cap and higher stock price? zachary: i think united health is looking towards a good year next year. they are looking at a 20% increase in profit. oliver: i was going to say, it does look like pretty much across the street, every analyst has buy on this thing.
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is it the same story behind it, what has propelled it this year? zachary: they are seeing strong growth in some of their e-health care businesses. a health program for the elderly, and united has a big position in the private version of that. medicaid increasingly being turned over to private companies , united benefiting from that. you bring up these analysts. violin and that may be a time to get cautious for some folks. vonnie: zachary tracer, thank you. great story. oliver: lebron intelligence recently released the 2017 global health care outlook -- bloomberg intelligence recently released the 2017 global health garlic bread jason mcgorman joined "would you miss" with who the winners and losers would be with repeal of the formal care act. -- reportable care act. jason: most of insurers have
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been losing money, but handful of them are still in the exchanges for 2017. for them it could be welcome news because they have been losing money. in the longer trip, they lose potential revenue and earnings. but for hospitals, they lose insurance coverage and some earnings potential. for them it is a negative. now, obviously, every republican wants to repeal obamacare, but there is a lot of disagreement on how that is done it if you repeat out right away you cause for kinds of disruptions. how much of a fight is there going to be with the exact steps towards repealing obamacare? hospitals and health care companies have different versions on how to do it. jason: that is very fair. one was talking about medicaid state levels being very complex because each governor might have
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their own agenda. you could foresee this being very, because in 2018 you have elections where people have to run again. do you want to do this all in 2017 and 2018, or do you want to extend it a little bit beyond the election and take a little bit longer so investors should not be quite as concerned in the near term? one of the longer-term opportunities regardless of what happens with obamacare is costs continue to rise and until the providers of outpatient centers have a real opportunity because hospitals, the costs are very high their first earnings growth for these providers is looking more like 15% in 2017. it is underappreciated by investors. joe: what about medical device makers? how did they fare under obamacare and what are the risks as obamacare might go away?
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jason: there's a lot of noise about the device act. they fought it the hardest of anybody. that.hey don't have they will tell you they've not gotten a major boost. i think that they have. there may be a bit of a mix, but they are hoping that republicans will repeal the tax and they will have more money for innovation and jobs. on the whole, maybe a slight positive for them. longer-term, maybe fewer patients that have coverage. oliver: for reports and data from bloomberg intelligence, on thei bloomberg. arabia is next, saudi ready to corporate with united states under the donald trump presidency. and we are awaiting reaction from israeli prime minister benjamin netanyahu. you are able to watch that on
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bloomberg.com/live. this is bloomberg. ♪
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oliver: this is "bloomberg markets." i am oliver renick. vonnie: i am vonnie quinn. let's go to abigail doolittle. she has the chart of the day. abigail: we thought we would take a look at the vix. spiking higher, up about 6%, on pace for its biggest move h igher since the middle of december. does this suggest the
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complacency is starting to shake out of the market? we have a chart that suggests yes can this could be true. this is a five-year chart of the vix in the orange range. we see it is near the bottom. near its record lows. we see that when it has been at the bottom in the past, it spikes higher. is near thethe rsi bottom of that range. the head of technical and at oppenheimer says that when you , theygher lows in the rsi could suggest a move to the upside. it could suggest that the vix is setting up for move higher in the new year which means that the s&p 500 could decline. vonnie: thanks, abigail. appreciate it. oliver: saudi prince wil alwaleed bin talal is promising cooperation with the united states under the donald trump presidency.
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as a saudileed: citizen and is a member of the saudi royal family, i do not like to interfere with u.s. politics. i had very good relationship with both administrations, republican and democrat, and i'm willing work with any administration. what is important is the policies. i am getting what at. are you more or less confident any prospects for the u.s. economy, global economy, the returns you can generate for your investment? prince alwaleed: to be honest, when obama took the reins eight years ago, the u.s. economy was not in good shape at all. it was almost in bankruptcy situation. think some mistakes, but united states being in good shape right now. if we look at hillary
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clinton as the status quo, a continuation of who we had -- obama, who under mr. we should point out you have met and is in the photograph with you, and mr. trump represent something new and different, how do you invest accordingly? do you do anything differently than under the past years with obama? prince alwaleed: no doubt this election was unique, one-of-a-kind. trump is very independent, although he is a republican. but he is independent. i don't believe he has ideology, which is positive -- erik: you don't think he is an ideologue? no, he is not a mainstream republican. boehnerseen mr. conflicting with many ideas. running against mr. trump would have lost. the united states wants change. with all the things mr. trump
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did during the campaign, this was the recipe for any candidate to class and disappear. but we saw the perseverance of mr. trump. people care about nothing but one thing, change. trump represents that. we will have to wait until he takes over in january and see the policies. based on what you see and know now and the fact that you have known each other for 20 years, is that a recipe for growth? is that a recipe for continued gains in financial assets? look at what is happened to the stock market since he was elected. prince alwaleed: for sure if you look at the stock market as an indicator, euphoric about what is happening. u.s. in the market going up continuously. -- you have seen the market going up continuously. it is good for many of my stocks. but that is all short-term. , once the president-elect becomes
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president and the policies come, sometime between january and june, that is when we have to begin judging where we are heading with united states economy. erik: you mentioned citigroup. you have been a long-term holder of citigroup for more than 25 years. as a result of donald trump winning the election and the prospect of less financial regulation -- a rollback, if you will, of dodd-frank -- does that make you want to increase your holding in citigroup, or invest in other financial stocks? is that an opportunity you foresee taking advantage of? prince alwaleed: it is too early right now. soak in -- mr.to trump has to take the reins in sometime in january. it is just too early to judge. we are long-term investors. we don't go shotgun approach. we go company i come many. talk on as
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contingency basis. if you were to see donald trump, his new treasury secretary -- jeb hensarling, for example, with support from the republican senate tried to roll back dodd-frank, with that make you reevaluate your financial holdings and by other bankshares? prince alwaleed: already we are seeing indications that dodd-frank is being targeted by the trump administration. we will have to see they will repeal or cancel the whole thing or just dilute it. so fast. erik: it is not as committed as the stock market. you yourself said -- it is not us, it is the stock market. said it isf euphoric. prince alwaleed: i think we wait and see and take our time and not rush into decisions very fast. erik: as you know, your
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highness, there is a lot of concern in this country and region that the trump administration will be less supportive of the middle east, because of concerns over terrorism can immigration, and the cost of military support. do you expect a meaningful shift in u.s. policy here? is no secreted: it that the relationship between saudi arabia and the arab world and united states has not been very nice in the last eight years or so. very turbulent. i think with the trump administration, we will get a focused strategy, focus policy, ,hereby at the end of the day mr. trump will represent the united states and the whole world. thinking deeply about the whole of the arab world and saudi arabia and its support of the united states, i think administration will be a withore proof -- improved
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saudi arabia and united states. erik: regardless of what it is he tries to do, you see it getting better? prince alwaleed: between candidate trump and president-elect trump and president trump can we seen the advancement and the change between candidate trump and president-elect trump. i can assure you that the change between president-elect trump and present from will be different. -- president trump will be different. oliver: that was saudi arabia prince prince alwaleed. is really prime minister benjamin netanyahu will make a response to secretary state john kerry's speech. this is bloomberg. ♪
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wants toikipedia become the gold standard for diversity in the workplace. ubiquitous website is extending its editor ranks beyond bt-- the comic-con set. founded in 2001, is an online encyclopedia, free to use, and interestingly, free to edit. anyone in the world -- you, me, the president -- can go on and in seconding video entries, and there is this giant community who look at that .nd re-added or changed entries it is continuously self-correcting, organic thing that somehow manages to be quite good. about 10 years ago people made fun of wikipedia. it was a little embarrassing to have a wikipedia page open in a newsroom. he would never admit you looked
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at it. -- you would never admit you look at it. now it is not perfect but it is good. about as good, studies have shown, as comparable encyclopedias, textbooks. there are a few areas it is less good, in terms of prescription drugs and things like that. but in general it is good. carol: what is the infrastructure with editors look at the entries? max: this is where it gets problematic and interesting. wereedia's original users open-source software geeks -- in other words, white guys interested in tech. that has left the encyclopedia with limitations. certain areas of expertise it just doesn't have. and also -- this is what we wrote about in the story -- there isn't much diversity. you have an editor base that is 90% male, mostly white, mostly from the u.s. you see gaps in wikipedia. the foundation which manages the insect covidien --manages the
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"manages" might be a generous term -- is working on it. carol: there is no editor-in-chief. max: no one at the foundation -- there is no boss who can overrule an article or commission an article or delete something. it all has to come from the bottom up. there are different layers. there are administrators, something like 1200 of them. and those people are also just volunteers. there is no overruling wikipedia editor. oliver: that gap that goes uncovered is explained by what you detailed, the filter bubble problem. max: this is something people and talking about in other areas. we tend to think of the internet as this thing that encourages diversity of opinion. cogento on and read very arguments from people on the other side of whatever my political police are. i can pretty much and less
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amounts of content about anything. but the way we use the internet is we pretty much just fine stuff we agree with. during the conversation on misinformation, fake news, one of the things people talked about was the idea filter bubbles. there was an article on facebook that can from spices that exist within you. -- confirms biases that exist within you. if you are a hillary clinton supporter, you see something that says donald trump shot summary on fifth avenue, you are more likely to share that and that perpetuate misinformation. wikipedia has the same problem. you have a group of editors who are interested in tech, interested in running an insect of the best encyclopedia but are not -- he drifted in running an insect of the above are not interested in all areas of human knowledge. 2015, properly, one of the greatest american -- harper lee, one of the greatest american novelists, was listed on a page
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not of american novelists, but american woman novelists. there are long entries on moons in the "star wars" universe but missing key elements of world history or feminism or topics that are important and don't get the love that they should. oliver: can read his latest story in " bloomberg businessweek" and hear more from the magazines reporters every saturday with carol and i. who wouldn't want to do that? vonnie: not me. i wouldn't not want to do that. we talk with the writer of an op-ed who says venezuela should not default on obligations. this is bloomberg. ♪
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julie: 2:00 p.m. in new york, 7:00 p.m. in london. i am julie hyman. ramy: i'm ramy inocencio. welcome to "bloomberg markets."
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julie: we are live in bloomberg world headquarters in new york. covering stories out of beijing, dallas, and caracas. spiking bond yields and quickening yuan outflows may still trouble for china in the new year. what is behind liquidity fears. at&t went from a home earnings report to the top of the m&a chart with the time warner deal. did with a man behind that randall stephenson. and why venezuela should default how caracas can get breathing room for economic reform. u.s. markets close in 2 hours. let's get more on where stocks are trading good we have some red today. -- thesehe's declines and declines for the dow, s&p,
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and mastec. we see that the nasdaq is lagging the most, on pace for its worst day since december 1. a light-volume day so investors can push the market around a little more. a disappointing pending homes sales report did not help. and we have citroen research shorting nvidia, a top stock on the s&p 500. and maybe is not helping investor sentiment today. bearish trend, spiking higher, on pace for the best day since november 2014 as dow jones reports that the company is exploring a sale. it comes under pressure from shareholders to increase profit margins. ahead of this move up, the stock was down 18% on the year. you can understand that shoulders one happy. vincetrength is helping
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holdings, higher today. up nicely. vince holdings of nearly 4%. similar to kate spain, most of the stocks are down on the year. spade, mosto kate of the stocks are down on the year. the five-year yield is declining. we see it represented in green. it tells us that fonts are rounding. this after a $34 billion option. there was more interest in this option than had been thought. in fact, one is saying it was the biggest auction since february. julie: very interesting, given the recent bonds as well. ramy: let's look at "first word" news. taylor raikes has more from the newsroom. happening right now, israeli prime minister benjamin netanyahu is responding to secretary of state john kerry's
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speech on middle east peace, slapping the speech, saying it was skewed against israel could you can watch the remarks on bloomberg live
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the beginning of the and is the horrible iran deal and now this." u.s. senator john mccain says the country's relationship with lafayette will not change with the new trump administration in january. he spoke after meeting with the latvian president. senator mccain: he will continue have strong support in nato, the united states, united states senate. the three of us and most of our colleagues in the united states and leave the vladimir putin and russia's behavior is unacceptable, the latest the apparent attempts on the part of affect thes to outcome of the recent election in the united states. taylor: the visit comes as a neighbors of russia's
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come amid worries that the u.s. may not be fully committed to the defense of nato allies following the statements of u.s. president-elect donald trump it the next stop will be ukraine, georgia, and montenegro. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. ramy: taylor, thanks very much. the new year is looking rough for china. negatives going to 2017 including spiking von yeldon currency having the worst year since 1994. earlier on "bloomberg daybreak: we asked what is causing the majority of china's challenges. >> if you look at the private sector, the private sector, capital investment remains very weak. the economy has stabilized, no question about it, but it has been caused mostly by public-sector investment.
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once the fiscal stimulus has petered out over the course of next year, i'm concerned that growth will soften quite steadily. i think the structural problems have not been resolved in china and i don't think the chinese government has really done a very serious job in reforming the economy. that is the fundamental problem going forward. >> how good you really have substantial private investment when you are up against these big state owned enterprises that have monopolies? to compete with these behemoths seems like a fool's errand. chen: that is absolutely right. chinese economic reform is reaching a critical stage. you have to do tough work. if you look at the state monopolies, they argued. they are enormously inefficient -- they are huge. they are enormously inefficient. they are not very profitable. they act more like government thaties than companies
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these companies have a monopolistic position in the that actually suffocates small businesses. the problem is to break them up will require a lot of political capability and also, you need a leader that has a really long-term vision for the economy. right now i don't think the chinese government, especially at the very top level, has the consensus or vision to pursue the job. that is one you can see that the whole thing is a stalemate. is it also because china is distracted by managing currency depreciation? that is what we keep reading that as the dollar rises. chen: i think 2017, next year will be a very tough year. the chinese central bank will have to deal with the fed, because the fed will definitely raise rates a couple of times. under those circumstances, the chinese currency will be under downward pressure. how will the deal was that --
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how will they deal with that? they are trying to maintain control of interest rates and exchange rates at the same time, trying to have some kind of mobility. they have to somehow reform the system either floating the foreign exchange rates or letting go of the interest rate. you cannot do both. if you do both you are taking out monetary policy already. if you think about the chinese economic system or policy, the only thing that is left is fiscal policy. they are boxed in on the monetary side. that is why they are really focusing on the fiscal side. that is one thing that is very risky, and of course you have to trump's very hawkish trade policy towards china. we talked yesterday on what would happen if we saw a border tax for the dollar and the yuan. dollar5% extra on the
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suddenly numeral a doesn't seem so ridiculous. they have to move there just to keep the competitiveness of the current levels, forgetting about dollar appreciation have seen the last few years. alix: is that what we are in for four dollar -- for dollar-yuan? chen: it is interesting to figure out a potential trade war. the last time was in the 1930's, the so-called smoot-hawley law. that was the last time we had a full-blown trade war. at the time, we have a gold standard, so every time the u.s. put up tariffs, in necessarily raise prices of every country, imports. that is why we had trade contraction from one country to another. today we have a different and interesting situation. 45% tariff up against chinese imports, what
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they could do is manage a massive currency devaluation -- , 40%atan 40 -- let's say for arguments sake. that would offset the impact for the tariffs. alan saying is that we have a floating exchange rate system around the world that would offset a lot of potential real damage to the country's. but you have to be careful on the markets. if you have a trade problem between china and the united chinese currency is going to make a lot of downward adjustments. is a: you are saying this political matter more than an economic matter. when the president came and he was a true reformer. he just needed to consolidate his power. he has consolidated his power. will the extent political capital -- with the extent political capital to have to report? chen: you mean president xi jinping, right? david: yes, i do. chen: the problem today is president xi, and not very clear
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about his economic ideas. he talks about supply-side restructuring. if you read what he really meant, individually given thing from the supply-side reform -- it needs a totally different thing from the supply-side reform we understand it we talked about making sure the regulated system that the regulating the system, cutting we need to make sure we do you the system and cutting taxes. that is what we mean by supply-sider form. what president xi is talking about is a strange thing. he is talking about strengthening the state monopoly and cutting oversupply -- which is ok. that is a technical part of supply-side reform. but you are talking about strengthening state monopoly? that is not supply-side reform. that is totally some thing else. i personally don't think he has an idea of where he wants to take the economy to. that was the brandywine
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global codirector of global macro research earlier today on "bloomberg daybreak: americas." julie: coming up, bloomberg gadfly calls in the most interesting dealmaker of 2016. randall stephenson -- his background, and what his bid for time warner means to investors. this is bloomberg. ♪
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julie: this is "bloomberg markets." i am julie hyman. ramy: five ramy inocencio. time for the biggest business stories and a new strain of it yum! brands plans to re-franchise has lots in
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turkey's and add more locations in the next five years. it is part of a global shift away from owning his own outlets it it says 90% of the restaurants around the world will be franchised by 2018. malaysia's state-owned oil company wants to move ahead on a $27 billion natural gas project in western canada. that is according to people familiar with the negotiations. they say the new site will be identified and reduce costs and avoid a sensitive marine area. a decision on the project is expected next year. biogen says it will charge 300 summary $5,000 a year for a rare muscle disease drug. still command high prices for products patients have few if any other options. slowing growth and increased competition. flashat is your business update.
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julie: when it came to m&a in 2016, the most important dealmaker of the year was an oklahoma native with a background in the telephone business. back in july, randall stephenson's at&t reported unremarkable quarterly figures, which is why the mega deal with time warner topped the m&a charts in 2016. with more on what the deal means investors, bloomberg gadfly columnist carol lachapelle. you think of at&t. what could be more boring? sorry. but the telecoms are these behemoths, slow-moving, study returning businesses. here comes this big deal. how does somebody who is an oklahoma guy, etc. -- how does he make it happen? >> that is why it is so interesting. listen to randall stephenson, he does not strike you as somebody running one of
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the biggest businesses in hollywood. that is why the deal is interesting. back in the second half of this year before the deal was announced, investors were getting concerned about at&t. they have been losing customers to t-mobile that accelerated. t-mobile sort of came out of nowhere. they are now a formidable competitor. at&t disclosed their directv acquisition last year. they have been losing much more subscribers than direct tv has been adding. there was concern and investors were thinking, what is randall stephenson going to do? this deal was not what anyone was expecting but it definitely doesn't show he has the for the future. differentiation here -- in terms of sentiment now as people look at these companies merging, what is the prevailing mood?
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some of the shareholders i've talked to are happy to see them do something. there is obviously a lot of cultural difference. there are people who are not happy they are doing this. they are spending a lot of money. the pointk of it from of view is if this is the trend that we will see these mergers more and more -- is verizon or comcast going to do something -- it pays to be the first mover, or at least an early mover in this. it is interesting, but it will come down to execution. julie: as you say, it is an early mover, but not the first . are there parallels for lessons that at&t can take away from the deal and how it was integrated? tara: specifically went comcast was buying nbc universal, the scrutiny they got was very intense. the concessions they have to make were not as bad as everyone
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was expecting. they were obvious and they line up with comcast's own business, what they wanted to do with it. basically, they did not want to keep it just on comcast. everyone would have the content. that is important in what regulators are looking at with what at&t does at time warner. they cannot keep it just for their own company. i think the regulatory part we can learn from the comcast deal, and even the doldrums is saying , -- evenry to block it of donald trump is saying he will try to block it, i don't see what the reasoning would be. of $109 billion, $110 million, does that justify what is going on? tara: that is going to be hard. a lot of the mergers we have seen since 2014 when we had the big merger boom, a lot of the prices are hard to justify and they are dependent on synergy.
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i think this deal, that is going to be a problem. they have to prove this is worth the price. time warner is a great asset but $108 billion for a company that has no experience in entertainment. ramy: you talk about scrutiny. jobs. trump campaigned on but when companies come together, there are redundancies and job losses -- julie: what are there as many redundancies? ramy: exactly. what do you see here? tara: hard to make that case for this deal. there will not be many redundancies. they need to deal to be successful. just let them do what they've been doing and if anything, make sure they are getting enough resources to keep making these shows. it is different from at&t's business, but some thing like hbo, warner bros. studios, even tnt, they have to pile money to making the content good. julie: thank you so much.
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for more fast commentary, go to gadfly on the bloomberg. ramy: still ahead, going condo. why the luxury sector may be in trouble. this is bloomberg. ♪
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ramy: this is "bloomberg markets ." i am ramy inocencio. julie: i'm julie hyman. ramy: condo construction is proliferating in manhattan and that is creating stiffer competition for buyers. it is all about fewer restrictions and more amenities. with more, talk us through the sales numbers first. the rise of the condo and the fall of the co-op. >> everything is falling on the luxury side. but when you drill down to the
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numbers, co-ops have been falling more. costs.% from luxury let's specify about $4 million. people with $4 million for more to spend our gravitating to condos. happening? s that oshrat: choice. so many larger condos happening and not enough buyers. condos are essentially offering the luxury product that is newer with more amenities and fewer restrictions. you don't have to go and submit your entire financial history in .ront of a board may reject you they said other terms, like how much your dog can, how much cash you need to have in the bank. you can do it without the intrusiveness. ramy: how much of it is a question about liquidity? when you want to leave a co-op. oshrat: that is a good question,
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and it is a very new york kind of ownership. when you live in a co-op, you don't own your apartment. you own shares in a corporation that owns your building. ets certain rules and they can reject buyers. there is a little bit of a aul to pull out your investment. julie: likewise, don't co-ops have restrictions? if you are buying this as an investment property, to more people gravitate towards condos? oshrat: you are pretty much -- you pretty much always go condo. a lot of co-ops will require you to live in your residence and that is nice. you want to know that your neighbor is not going to change every few years. that is a big upside. if you are an investor, you are probably buying a condo. very very quickly come out quickly, how about outside of
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manhattan? and -- manhattan has been the core of it but there is expensive condo building in brooklyn. i imagine that would have a ripple effect of you are a co-op there as well. julie: thank you so much. covers real estate for us and bloomberg. ramy: still ahead, the commodities close. since still the highest july 2015. we will take a closer look. this is bloomberg. ♪
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from bloomberg world headquarters in midtown manhattan, this is "bloomberg markets." i am julie hyman. commodity markets are closing in new york and let's look at today's big movers. oil has been on the rise
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to some it has pared degree it's advanced get it did turn negative had one point in trading. this is the longest we have seen since january, and above the four dollars a barrel. we have been looking at the performance of crude relative to the rest of commodities. -- crudehe chart relative to the commodities index. this is the relative performance of oil to the index. we're looking at in 2016 the biggest outperformance going back to 2009. oil is obviously an important component and it helps it go higher for you look at things like gold medals, agriculture, etc., oil has been outperforming. ramy: thanks very much. from oil to the challenges facing venezuela, heavily dependent on oil production, the
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company has gone to great lengths to put off default so far. joining us is the cohead of latin america strategies who recently wrote an op-ed for "the new york times" entitled "why venezuela should default."" whatever the consequences, they can only be postponed, not avoided. the economy faces recession as well as hyperinflation." joe, you said it should default. why? joe: most countries would have defaulted long ago. the way it is supposed to work as a country far money and promises to repay you normally they do if there is a major shock to the country, they are supposed to be allowed to restructure. as long as the restructuring is fair, that is part of the contract. in this case, venezuela has delayed construction -- restructuring far longer than anyone would have imagined. it has become a real problem for them, in part to the country,
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because money that is being used for debt service could be used for economic growth, investment and even food and medicine, where we see a lot of shortages. it is also a problem for bondholders, because as a bondholder, if i hold a bond temperatures in 20 years, when i care about is not just getting paid back next year. i want to get paid back for the rest of the lifespan of the bond. by depleting the assets they have now, it is making it less likely they will get paid later. toy: why are they continue the fire to pay off their debt? joe: what the government has said repeatedly is it is worried about losses that may come if they stop paying. that is a real risk. unlike most sovereigns, which don't have assets abroad, venezuela does have very , not the assets abroad
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refineries that people focus on, but actual oil. their concern is if they stop paying and kinds of investors who own the bonds will go after them. if not the oil itself come they will go after the receivables for the oil, the payments by all the purchasers of the oil. that would be a big problem. julie: and so if you say they should default why isn't that enough risk to outweigh defaulting? joe: the risk, in my opinion, is quite exaggerated. we don't really know if the receivables can bce seized. we don't have recent examples of sovereigns that are commodity exporters defaulting. in the few examples of sovereigns defaulting -- congo, argentina -- the lawsuits taken extremely long period of time.
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congo took 20 years to resolve the issues. julie: is there evidence that creditors are threatening this kind of action and that is why venezuela has come to this conclusion? joe: so there have been some litigants already written on bondholders -- some litigant's already. not bondholders. it includes large multinational oil companies like seneca. -- sunoco. they are ensuing venezuela, and those lawsuits have been progressing to the point where in some cases they are ready to start looking for assets in the u.s. and starts using those assets potentially. ramy: what would the fall look like -- what would it default look like? i like this line in your article -- "venezuela does not need to take its assets to the punch up. -- pond shop -- pawn shop."
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joe: they mortgaged cisco -- ramy: which is amazing because you say that is not the way they need to do that. joe: not how i would have handled it. exchange for and some kind of economic reform. things like exchange rate unification, which would solve a lot of the distortions in the economy. ofthey embark on a path economic reform and make some kind of credible commitment to that, than bondholders would be happy to give them breathing room the briefing room would come in the form of a maturity extension commit deferral of coupons, and they could offer bondholders oil warrants in return. they would not pay when the oil prices are low. the default comes in part because you may need to threaten default to get some people to
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agree to the restructuring. you may need to threaten default in order to prevent any kind of holdouts that want a better deal or continue to get paid. of this hanging over venezuela, as an investor, are there any opportunities there? or do you have to wait until all of this is resolved one way or the other? i think venezuela in the long term has a bright future because of the oil reserves it has, which are the largest in the world. extraction costs in venezuela are fairly low. thecompanies joked that risk in venezuela is above the ground, not below the ground. in the long-term, bondholders could do well. if you can get it at a low enough bond price today, you should do well after the
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restructuring. speaking of above the ground risk, you are not just talking about extraction. you are talking about political risks as well. joe: it is obviously large and obviously what is most on people's minds. resolve some of the economic issues, i think it would make oil companies much more comfortable investing, and then investors would have more of a guaranteed return. thank you so much for your perspective here on venezuela. the cohead of latin america strategy at scotia bank of let's check on headlines. taylor riggs has more. taylor: house speaker paul ryan's crackdown on live streaming from the house floor is raising questions on constitutionality, according to politico the house.
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-- the houseboats next month on a bill to find lawmakers from taking video from the house floated democrats used cell phone video to livestream a protest after paul ryan's refusal to all our can control vote. -- to hold the gun control vote. roof told a judge at a hearing that he still plans to act as his own lawyer when the penalty phase of his trial begins next tuesday. and german prosecutors say they have detained a tunisian and they think may have been involved in last week's attack on christmas market in berlin. they see the man's number was saved in the cell phone of anis amri, believed to have driven the truck into the market, and that further investigation indicates he may have been involved. 12 people died in the attack.
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global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. julie: coming up, the latest on the souring relations between the outgoing obama administration and israel, and what it means for the incoming president-elect. this is bloomberg. ♪
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ramy: this is "bloomberg markets ." i am ramy inocencio. julie: i am julie hyman. in. equities are on a tear 2016, particularly since the election. the indices up 20% since the lows. for more on the large market trends, we spoke with a macro strategist and asked if investors are euphoric. george: i don't think we are at euphoria territory yet, joe, but there has been a large change in sentiment over the last few months. i definitely -- that definitely place into an economic cycle coupled with where you see the previous transmit the example of consumer confidence index, the spread between the percentage of the list equities
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versus parish is at the highest 2007.since february joe: what happens then? george: yeah, exactly. we are not headed for anything like what we saw in 2008, 2009. i would never put ahead for 40% of like that. that said, sentiment is getting properly bullish after the bull market that has climbed the wall over half a decade now. speaking of that, stocks have done just fine, thank you, even the sentiment has been low for quite a long time. we are sort of not used to it anymore because it has been so long. what does it mean? what can we take away from that more positive sentiment? toward -- way i think about it is a loss from a purely contrary
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in perspective. it is hard for assets to lose value when everyone thinks they are going to lose value. the opposite is also true. stocks,ryone is long there is no one else to come in and buy stocks. soundingy without outlandish or aggressively bearish that sentiment has started to turn around in white that it had not previously. during the last seven years or so, there has always been people who think that the market cannot go any higher. those people are starting to capitulate finally. that is how it looks in a number of surveys. we are not there yet terms of extreme bullishness like we have seen in equity market bubbles in the past. the direction and the level of camp where in the the market is quite bullish relative to where it was a year ago or five years ago. now is myning us "what'd you miss" cohost for
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today, joe weisenthal, who also spoke to george. and we will be covering the outlook for oil, the dollar, and with robert cinch, who we joining us later today. bob will take a beach were of everything. what are you looking forward to talk to him about? joe: i'm curious if east coast-t t-trump moves we have been talking about a lot are showing some exhaustion. look at the 10-year today. one of the strongest -- second strongest day on the long end. it is a quiet week. there's a lot of stuff out there on low volume, like random donald trump tweets that people are talking about. it is interesting to see if this
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is just sort of a breather or assignment some of these trades have gone too far. fitting with the conversation we had with george with the sentiment having swung so sharply -- not just these survey data, but the positioning data, the way people feel about specific asset classes, whether we are just do for a little bit of a break. ramy: also looking at well right now we are heading back -- oil right now, heading back to the flat line. whether the deal will happen. joe: totally. extraordinary year for oil going back to january and february. one of the huge questions for next year. julie: thanks, joe witt as sinche at 4:00 p.m. eastern. ramy: geopolitics had a huge impact on 2016. this is bloomberg. ♪
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ramy: i am ramy inocencio. i am julie hyman. welcome to "bloomberg markets." ♪ we're live from bloomberg world headquarters in new york. covering stories in washington, london, berlin, as well as turkey -- tokyo. geopolitical events will drive the markets in 2017? to france to brexit to trump, the optimistic and pessimistic positions. kate stated his report of itself and that has shares surging. the future of the luxury handbag maker. target boosted his s&p to next year and he will tell us why. we are one hour from the close of trade let's get to the markets.
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abigail doolittle. abigail: we are looking at the clients for the major averages. the dow, s&p 500, nasdaq, all lower and having their second birthday, a big pause in the trump trade rally. we see the dow transport more than 1% outpacing other major averages. theh noting the nasdaq is -- .ou pull down when we take a look at some stocks dragging the most on the dow trance boards and the reason that is impacting more, we are looking at american airlines and delta airlines. this could reflect the fact that oil is now up for this eighth day in a row. our team was told in the past that rises in oral -- and oil translate -- plus there is the
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news that delta had -- mishandled a boeing dreamliner -- having 95 points. it opened slightly higher and steady declines all day. there is a reason behind all of this. investors take advantage and tightly wound markets do not need a lot of reasons to move. we see a distinct move down for the dow. but low volume. this is the function on the s&p 500, average climate times, on the bottom, the 25 average, and were react today, p are we see this. we were well below the 20 to average but as declines have been accelerating, we are closer and closer to the 20 day average
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, down about 38%. declines are on later volume than usual. ramy: thanks. julie: let's get a check of the headlines. >> secretary of state john kerry foroutlined a plan resolving the palestinian conflict. this comes after the u.s. angered the israeli government at the u.s. last week by refusing a resolution censoring israel for the bank settlement. kerry: the us two state solution is the only way to have a lasting peace. it is the only way to ensure israel's future as a choice and democratic state. living in peace and security with its neighbors. >> the israeli prime minister denounced the policy speech saying it obsessively focused on
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-- earlier, the incoming u.s. administration, in a tweet he thinks president-elect donald trump his warm friendship for israel. president-elect donald trump blasted u.s. policy toward israel, tweeting we cannot continue to let israel be treated with total disdain and -- disdain and great respect -- disrespect. -- to last week'sg u.n. vote. january 20 is fast approaching. mccaincan senator john on donald trump passes choice of secretary of state, rex tillerson. john mccain spoke today in lafayette. john mccain: i am pleased with his nominee for secretary of defense and i have questions and concerns about his nominee for
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secretary of state. it is my allegation under the constitution of the united states, to represent the people and doona who elected me the right thing for them in america. if i agree with the president of the united states, i will work as hard as i can. additionally representing my responsibilities, then i will exercise those as well. >> both republicans and democrats on capitol hill have raised questions about ties to -- presidentesent vladimir putin. global news 24 hours a day powered by more than 2600 journalists and analysts in more the 120 countries. this is number. julie: thanks. the victory of donald trump shocked many. forecasts that both could happen here they are turning their attention to 2017.
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the barton i spoke about risk and implications ahead. next year, the focus on the netherlands, france, and germany. in all three elections, countries are seeing the potential for the same sort of disruption that we saw in the u.k. and to the u.s. france is a big one that people are looking at. are notw, the chances huge. that is what people said about trump a year ago. the big one is germany in september. politically and economically the powerhouse of europe. >> you raised the question of whether theresa may could hold and how it is going. andolitics is so fluid
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there is so much anger that you cannot rule it out. nots increasingly split only in london but other eu capitals. her position was -- she has not won an election. one half says she is not going tough enough. a big problem for her. mark: a big problem potentially for the euro. of all those eventualities take place, we could see a 2009 or 2012, the sovereign debt crisis. >> but on a much rigor scale. worry is what if they get into power and manage to get a referendum onto the agenda?
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-- of holding this, in of itself, could be enough. mark: there are so many fascinating things to talk about. talk about 2.0. this essentially is about russia. what is the outcome? >> many issues may well end up on angela merkel'shoulders. let's say donald trump is serious about putting more pressure's bending money on military protections. let's say he threatens to suspend nato. that puts a tricky position. increasedrn europe
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defense spending to stand up against a russian military threat, or do they learn to deal of vladimir putin. that she respect the fact that the russian sphere of influence does not go right up to those borders? this is a huge implication for the ukraine for example. western europe on the other hand. preparedxtent is she to help ukraine, or relive -- will there be a tacit expression of the fact that russian influence extends much further into eastern europe. >> that was bloomberg's guide of editor with a 2017, a very good read online as well. >> let's look at what could go right in 2017. a growing number of investors and economist see better times ahead.
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bloomberg's executive editor of global -- global economic. >> it is the promise of a more robust fiscal policy. the idea that witches would start to pick up. there seems to be a sense that the worst trend has not gone away. it has abated. you can see that in the major central bank. they are ready to take a step --k, projecting a forecast projecting, they do not like to call it a forecast. 60 and boe isng ready to go either way. there has been a shift both in terms of what people expect economically, and terms of how the major central banks are prepared to respond. >> on the eve of the new year,
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nothing has actually happened yet. we do not have fiscal policy the united states. donald trump is not even there yet. the markets are taking all of the good and disregarding all of the bad. is this possible that people are overreacting? >> there is something to that. exhaustion from the campaign trail me to become policy and policy will pass. there seems to be a directional and vibrational seachange and it is not just about the u.s. , there is a sense that japan could be ready for better times as well. it is not based entirely on the u.s.
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>> how many times have you heard the term animal spirit in the last month and can it a self-fulfilling in any way? >> it can be self-fulfilling. as the irrational despondency was. we sat here on the program many times and bemoaned negative on yields and how inflation was below target. we talked about stagnation. fewer people are talking about it now. theoes not seem to be message that many people are to hang into 2017. it is a sea change in the way people are thinking. it can be subtle or a caveat. but the move changes there. >> you said it is not just the united states, but that the attitude permeates the world. pull upunited states
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europe and asia and japan with it? are getting into the discussion about whether it still lives economically and what is interesting is for all of the talk about u.s. declined is him, arguably what is going on the u.s., that is making people optimistic about japan, the strength of the dollar certainly since the election with the prospect of more rate increases next year, has weakened and pushed yields of globally which makes the boj's task in combat easier. >> that was dan maes on reasons to be optimistic in 2017. you can learn more on bloomberg or on the web. >> coming up, shares are soaring looking for a buyer. we will have the latest next. ♪
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>> dow jones reported a company is working after coming under pressure with it activist investor. to start witht wide. sales have been rising the past couple of years. >> they are doing better but over the past two years or three -- they italy all these things. they really lost those gains there.
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>> the investor is clearly seeing opportunity here. walk us through any details, i know it is early hours yet. >> stocks went up a lot but it is expected in a sense. it is a litany of merger talk. -- the money to do something like this, or something we have not
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talked about yet. without being so reliant on stores and promotions. >> after the headline broke, i called you and i said, wait a was in it something else and it had been bought and this and this? privateed to be a company run by the woman who started it and her husband. after it rebranded, they sold out all the other brands that they owned. sweatpants everybody -- focus because they thought this is where our customers really want. it is better than other brands and they are still doing really well with millennial's.
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the other brands went way too far into department stores. way to stop -- to foreign tablet stores. the only way to do that is from pulling back a little bit. overall in the long-term, the hope is it will boost its brand. classes is not specific to kate spade, is it? >> i think it is across the board. it is not as important to have that. ubiquity, you of can buy it at tj. why spend the money to have the label?
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julie: are we going to see more consolidation? >> the consolidation is going to happen. will it be lesser performing brands? that is what i expect to see. >> coming up, we will talk with the market strategist about her outlook for 2017. this is bloomberg. ♪
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ramy: this is bloomberg markets. julie: i am julie hyman.
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here is abigail doolittle. >> thank you. thank you for joining us and taking the time. dell 20,000, so close and yet so far. >> iare your thoughts? thought we would make it easily but we still might. in my have some of that pressure into what is going on in israel here. that is when the selling started this morning. it does not look good at the moment. whether going to ask this could be the beginning of a turn. whether the rally would come to an end and it could be tough to you think there is a rough patch in 2017? >> i think we will print 20,000. treasurers will push through one or the other. i see a rough patch coming.
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we have had a dramatic rally, the trump rally, call it whatever you want. they will not happen tomorrow and we have all of this old debt . money out there. it will initially heard and help later. in the near term, we will see it coming in. >> what is your tell on the turn? what is the number one thing that suggests we will see bump in on the outside? selloff which would indicate some sewing. buyersoking for how the react to the selloff. >> i know you're bullish on gold
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. can you talk about your trade? of the huge way already this year. >> nugget has been kind of wild. a highflyer. i believe we're coming close to the near end. to playo figure a way the gold market now. two, to sell by the call in the money right now because it has moved quite a bit since the trade and. i will buy $28 calls purity gives me a $200 risk that the potential upside is unlimited. i start making dollar per dollar and gold should have a big mover. there is more downside. up atight be on the way that point. >> it sounds like you like precious metals. any trade?
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>> it is so nonvolatile. if you want to look to be an owner for silver for sure, i believe it will uncle once again. >> good stuff and happy new year. back to you. >> thank you. bob at 4:00 p.m. eastern about his outlook for 2017. we will hear from prudential in just a few moments. await the closing bell in a half hour, the nasdaq up most 5.8%. >> prima dread across the board, all of 11 sectors down. ♪
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>> let's get to the first word
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news this afternoon. have ruth says he plans to no evidence to try to convince a jury to spare his life for murdering church worshipers. says he still plans to act as his own lawyer. the trial begins next tuesday. house speaker paul ryan's crackdown is raising questions on both sides about its constitutionality according to politico. approving a package by gop leaders to combine lawmakers for taking photos on the chamber floor. that move is said to be a response to last june when democrats use cell phones to livestream a toy for our post death protest after a refusal to allow a gun vote. northernmost states in new england continue to see staggering or declining populations. experts predict that will limit economic growth in the region which sayso --
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challenges are slightly different among the states with from losing -- new hampshire
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