tv Bloomberg Markets Americas Bloomberg December 29, 2016 12:00pm-3:31pm EST
oliver: we will be covering stories from los angeles to damascus and taipei this hour. u.s. stocks are fluctuating between gains and losses following their biggest slide into months yesterday. this happened as the dollar dropped and metals rally. rallied. the american congress is gearing up to appeal obamacare. but what is the plan for the 20 million people who gained insurance doing -- during the health care law. that there mays be time for a baby boom in u.s. oil. abigail: we are looking at the second two-day decline in the dow since the election.
we did have the s&p 500 making its worst drop yesterday in two months. a little bit of bearishness for the u.s. market. the nasdaq lagging once again aztec drags. but that is not the only one that is lower. -- but tech is not the only one that is lower. yields are following for another day. we look at the 10-year yields. it's a dropped quite a bit. as stocks are selling off, we have bonds rallying. a huge move up in a sure period of time, the biggest move on a quarterly asus ever, going back to 1962. what is ahead for rates? this is a long-term chart of the 10-year yield.
we see this massive decline in yield going back to 1980. this represents a huge bull market in bonds. anybody wondering whether it is over. we see on the huge move up this last quarter in yields, the channel is being touched right to the top. it is a pretty reliable channel. this suggests we could see the moving yield up consolidate back to the downside. supporting this on the bottom is the rsi, the relative strength index. times that it hit 60 since 1980, it has signaled a big reversal to the downside. so the new year could bring a reversal for the 10-year yield. maybe bring the dollar with it. vonnie: perhaps. we will have to see. that's just a few days away. courtney: a cease-fire in
serious civil war will take effect today. -- in syria' is civil war will take effect today. syrian tv says -- paved the way for talk sending the conflict. german prosecutors say they have released a tunisian man who was detained. they determined he was not in contact with the main suspect last week in the truck attack. his cell phone number was saved amri's cellct anis phone. he drove through a christmas market, killing 12 people. starting sunday, french nationals will contribute an extra $1.67 to find and save fund for extremist attacks victims.
hundreds have died in france in attacks over the last 20 months. a truck attack in nice killed 86 people. 130 people died in the pierce attacks in last november. -- in the paris attacks last november. china is warning the u.s. against letting taiwan's president pass through the united states en route to latin america next month. china has been suspicious of taiwan's president and says her attentions to stop in the u.s. are unclear. in comes in a sensitive time u.s.-china relations. oliver: thank you. some of the biggest bears in the treasury market felt a sense of
vindication after trump' a selection. ande look at rising rates investors continue to did i just it -- continue to digest it. strength in little the last week, but way off from the pre-election levels. this blip -- is this a blip as yields move higher? > i think it rates offer some good value here>. we backed up a long way. 10 year rates from 185 got up to 265. to the rest of the world, that looks like a veritable bargain. you have $10 trillion of sovereign debt trading at negative yields. the core of europe and japan namely.
secondly, the entire trump policy has not been implement of yet. umor could be a buy the r sell the news. changesdid you make any in the last few weeks of the year in your western assets fund ? obviously, they are grouped managed -- group managed. >> we extended maturities a little bit in the large backup in rates to take it vantage of that big underperformance by the bond market. allocate more of our resources into the banking sector, for example, which we think over summoned us value, trading at a discount in the industrial sector. we still like the structured product market, commercial mortgages and select student loans. the days of big capital gains are behind us. i think there are really good bargains out there. corporate america is in pretty good shape.
debt to income is good. leverage is not that high. are in the later stages of the credit cycle come i think there is more room to go. oliver: when you look at what is happening in the u.s. versus the rest of the run since the election, it is a story that only applies to us, which seems it is based on trump policy. you look adequate he markets, pretty much us and europe are the only your -- the only markets i have gone anywhere. the bond markets are putting much the same story. how is the flow of capital going to affect yields next year? you mentioned the negative rates. how high can we go if that is the case? >> i think the markets have traded pretty rationally. looking at trump policies, again, we don't know the reit -- the details and what gets through, but we estimate sent a five basis points extra to gdp widths -- we estimate 75 basis points extra to gdp.
i think the market has been pretty rational. i would say the only thing that's maybe a little bit different going into next year is the level of confidence you have in your call. it has to be lower today than it was three to six month ago. there are some big unknowns about what actually gets through congress and what gets of lamented. vonnie: what about the item -- gets through congress. what about the idea that people are heading to tips. >> 10% of our duration is in real rate form. although they have done well recently come i think there is more room to go. it is a natural hedge against a couple of bad scenarios. oliver: so when you look at -- your view -- if you want to get the return come if you want to get the capital return the people are used to after a long market, where do you go next year? are you looking across the water at other countries or to risky
stuff? case for the bond market is probably the running yield. again, not expecting too many capital gains from either massive spread tightening or much lower rates. we are looking at 3% plus or minus on the barclays aggregate index. some of the areas of a structured product market have been beat up this year, namely from commercial mortgages. in the corporate sector, we really like the banking sector. really good things to come there. vonnie: any concern for issuance next year? we saw a lot of issuance this year and there are forecasts that we may not see as many this -- next year. >> i don't think issuance scares us. sometimes it brings demand. the way western asset would look at supplies technicals can win the battle but fundamentals when the war. corporate america is still good shape.
spreads are going to hang in the regardless of supply. vonnie: are there any concerns that were voiced and how much of a base case scenario is it that we might see some kind of a spike in inflation? we are getting another jobs report next week. >> certainly, that is a risk scenario. it is not our base case or even our hype -- high percentage case. but it is in the back of our minds. again, what policies trump gets through and what are the effects of those? though your base case may have not changed dramatically, your confidence level around that is really much less. i think the tail risks on both sides are clearly higher. oliver: think you so much for the update on perhaps -- is wanted -- it's going to take some getting used to not seeing those capital markets. the jumpow could administration affect the telecom sector next year? this is bloomberg.
vonnie: this is bloomberg markets. it's time for they bloomberg business flash to look at some of the biggest news stories. the group includes bmw, audi and daimler. technology will be integrated into navigational mapping systems. saudi telecom is working with j.p. morgan chase to develop options, including increasing it stake in turkish --
they could buy stake in the 65%.ny, which holds peabody energy says its creditors agree to a 48 hour extension to rejoin the organization plan. the plan is gaining more support from creditors in recent days. vonnie: we asked john about apple's biggest challenges. apple has a lot of problems right now and it begins with john. i'm not sure it ends there. but it certainly begins there.
when you look back just a couple of years, china was 25% of iphone sales. it is now to about 18%. and the real problem is they are up against these local competitors that are doing extremely well. they are coming out with great devices at lower price points. these are companies like while, aapa, below. most of us have never heard of them. but their home tent -- they are hometown favorites in china and apple is having a hard time competing there. vonnie: back here at home, there is a new administration coming in. could we see a net neutrality thrown out. could we see other changes made? >> i think it's going to be a great year coming up for telecom is that regard because they have been under so much pressure from the regulators net neutrality is the big one where really what they are after is they move into
new services like video services. they want to offer what is a zero-rated service. you can consume video free of charge during those periods. at&t just launched directv now. under current fcc rules, they can't really do that. what they want to do and hope to do under the republicans is move beyond those regulations and have the freedom to offer services like that and not have -- subscribers saddled with very high data rates to consume video. >> you have at&t and time warner looking to get married. >> yes, an interesting deal. scarlet: leaving aside whether donald trump will support that a push against the, will we see more industry consolidation in telecom? >> yeah, you're seeing
tremendous convergence already between cable operators that will get into wireless in 2017. you're seeing at&t now moving into cable tv operator turf with directv. largest pay-tvhe provider in the u.s. most people don't realize that. but through the directv acquisition, they are the largest. so we are seeing that convergence. there really is in many ways a distribution place. so it is horizontal integration. they are now moving vertically and buying into content, which i think is a great move for the carriers. i think that is their act 2. and that's what they need to be getting into. at&t is clearly making a stronger move than verizon. manyet: isn't there so choices when it comes to these deals and what we can potentially see? >> there is still a couple of properties out there.
viacom andmily owned cbs. cbs has in play. we'll see. again, i think the pressures to over, some of of those hurdles. i'm sure viacom and cbs are feeling pressure as well. linear tv is under a lot of pressure as everyone come including me, begins at consume a lot of media on tablets and smartphones. they are moving over the top, as they say, and looking to the internet. scarlet: everyone is waiting to download and view their tv shows on their 4g lte streaming. numeral 5g is now on the horizon. >> it has been much-hyped, by the way. scarlet: are they ever, like -- i mean -- >> never. lightning fast, but the standards have to be set.
and that's probably going to happen around 2020. in telecom, as people begin to build prestandard equipment for the carriers to go out and field try on, some of the carriers get verizon will pre-standards commercial services. so they will go out and offer higher-speed service with this sort of her prior terry 5g proprietary 5g-- equipment. it will have 4g and they will get a flavor for how to draw the network and manage it and swap effort standard-based equipment down the road. i think we have an interesting 2017 coming up. that was john butler of bloomberg intelligence. let the terry down of obamacare begin. the tarrying down of
vonnie: this is bloomberg markets. oliver: the first major act of the unified republican government next year will be a vote in congress to begin tearing down obamacare. the problem is there isn't much of an agreement on how to replace coverage for 20 million people who gained insurance under that health care law. what is the whole appear? they obviously -- what is the hold up here? ben: they can basically put together a resolution that says we are repealing this.
they jam it through committee tricks,e legislative the same kind that obama used to get it through the first time, like the filibuster in the senate. and then they have a repealed yard they can put a fuse into that that you have two years, four years, five years, as long as they want into that, and that will allow them to choose a replacement. play by the of sword, die by the sword. vonnie: what if you are a member of one of the people on the exchange? ben: he's been betting, once those people get insurance, the republican congress won't want to take away from them or not be able to. those people will be able to have their insurance for at least a couple of years until the repeal takes effect. not sure exec we how many years that is going to be. not sure exactly what replacement will look like, what coverage they will have when
they will have it. oliver: the degree to which they will be grand fathered in is unclear. they're hoping that, if we can get x number of people on this plan, whether the republicans will have the goodwill not to repeal or not? : that translates to political sense. for somebody with pre-existing conditions, taking away their insurance and dooming them to all kinds of fates doesn't look a good in the midterms. it doesn't reflect well on the administration. it's a kind of thing they have to do very carefully. vonnie: the president-elect says [indiscernible] two the exception of the clauses that allow you to stay on your parents insurance until you are 26 and pre-existing conditions. what are the insurance company saying about this? ben: that has brought in a lot of business for them. there's always been sort of this where ithe situations,
brings in the business but it is a high risk your business. some have stated in the exchanges, others have pulled out. it is more company by company what the reaction will be. has the president-elect been meeting with the ceos of insurance companies? various healthth care consultants and hospital chains. so we said the unified republican front. it is basically unity in name only a number only, right? base republicans are following on both sides of the aisle. how does it break down on who wants what throughout the republican party? ben: i think it is unity on repeal. they are pretty have -- pretty happy on repeal. there are fiscal conservatives who do not want to see much more granting, block setting up more tax breaks for health savings accounts, those kinds of things.
there are more moderate republicans who would like to see something that honestly in its provisions would look something like obamacare. vonnie: if there is a quick repeal, are we looking at a situation where literally the next day someone will have to buy their diabetes drugs out of their own pocket? unlikely andms lyrically unpalatable. -- and politically unpalatable. i don't think they want to be offeived as pitching people and i don't think they necessarily want to do it. oliver: thanks so much. vonnie: up next, speaking with tom farley on 2017. this is bloomberg. ♪
in the newsroom. courtney: 2016 was a deadlier for law enforcement officers with 135 killed in the line of duty. that is the highest in five years. firearms were the number one cause of death with 64 officers shot and killed. nearly one in three officers fatally shot was killed in an ambush-style attack. in russia, there is an indication that the crash of a military transport plane was not an act of terrorism. anilitary official says analysis of the flight recorders shows there was on board. the plane crashed into the black sea surely after takeoff. and u.s. state colleges and universities are facing funding challenges and they are turning from abroad to replace their coffers.
the number of international students is at 7% from last year. 85% over the past decade. the rising demand from abroad has helped to keep u.s. colleges afloat. mrs. bloomberg. vonnie: -- this is bloomberg. vonnie: a quick check on u.s. stocks. we are not adding anything. taking away, and fact. -- taking way, in fact. if you look at what is moving the dow, it is wait upon by the financials for the most part and materials. let's go to abigail doolittle who has more. abigail: in doing without
modestly risk off tone, we are seeing that to relative to currency in bonds. the bloomberg dollar index down more than half a percent, his first down day in four days. its first drop in two weeks. we are seeing a bid for bonds. we have that two-year, 10-year, 30-year yields dropping. bonds are actually rallying. this principle should that we are seeing and stocks decline as well. it is worth noting that the 10-year yield is on pace for its second weekly drop in a row since the elections. perhaps we are seeing a bit of a turn. after sectors that are benefiting from rates dropping today, we are looking at real more. utilities and investors like this because they have high dividend yields and they start to look more
attractive with -- when yields drop. oil until today was on a big winning streak, of eight days in a row. the longest since january 2010, up over the stretch. today, we have oil down more than half a percent. it's on pace to snap the winning stak ahead of the opec and non-opec supply cut deal of 1.8 million barrels daily. that starts this sunday. and finally, running up the market picture, we take a look at the metals in the minors. we see some strength here. gold is up in a big way, up more than 1%. pace for anow is on four-day winning streak. since november. this 1% move up is the best since the end of september. as a, this is helping the minors.
barrick is up more than 100% for the year. is up more than 80%. -- newmont is up more than 80%. vonnie: thank you. playr: despite a year desperate by market volatility, the new york stock exchange still holds the crown of the global leader in raising capital. it raised $13.9 billion in ipos. now all eyes are on 2017. tom farley spoke with julie hyman on the outlook for public markets. >> 2017, i don't want to predict, but it feels really good. volatility is low and prices are at all-time highs. interest rates are low and stable and we have a lot of ideas in the backlog. there's 40 companies that have filed public we were the sec.
many more that have filed a private manner. over a point 5 billion have filed publicly. -- over 1.5 billion have filed publicly. inie: what about technology particular? capitalen some venture funding dried up in we see a big companies that are still private go back-and-forth over whether they want to come public. do think that is want to change? >> 2016 was not a total washout for technology. technologyxciting ,hat did really well, tullio for example. looking into next year, i will tell you the trend i'm saying. i spent the beginning of last week on the west coast and met with ceos and technology capris. many of them gave stock to their .mployees a decade ago now those employees have grown up and have a house on a mortgage and kids and they are looking for a little more
liquidity. i think you will see some of those larger tech companies come to market in 2017, likely a couple more in 2018. it will be exciting on the floor of the new york stock exchange for sure. julie: we have been talking about the incoming administration, the effect is potential policies can have on the equity markets. seems to be a lot of optimism around that. but do think, until things are set in stone, more so than they are now certainly, that there is still going to be that indecision? do you think there is a level of unpredictability on the part of the administration that would cause folks to delay their ipos until later in the year? >> i will tell you what i'm hearing from leaders of industry here in the united states and abroad. i'm hearing their optimistic. optimism is self-perpetuating. when ceos are optimistic, they invest more. when consumers are optimistic, they spend more. some of what we have seen, this trump bump, if you will, israel
and will manifest into a healthier economy. is real and will manifest into a healthier economy. that is harmful to business will be rolled back. we need to see that happen. take effect in pe to work.e e in vonnie: the obama administration will announce sanctions against russian officials in retaliation campaign emails. the measures are set to be announced today and will target officials in vladimir putin's
including its military agencies. ipo 2017.o it could be a good year for oil ipos. ineregulation push washington could cause 40 companies to seek at the o's. how that is these will be forced to happen? >> it's a much better atmosphere today than it was even a month ago for a lot of these companies. you are talking about a time when oil was looking like it was never going to break out of the 40's again. is given has done them an option. the ones that survived the last two years of down prices. oliver: it's pretty incurable if
you look at what happened, now just with oil, but with shale producers themselves. it really is astonishing. we all know what happened to oil. we look at how the group has , you basically got a 50% drop from the peak in 2014 until earlier this year. that.'ve gone way past his essay short-term move and oil that is making this possible or do they see structural trends going forward that will allow them to prosper? you're talking about a place that is under $35 and you can still be profitable in the permian. talking about some of the producers, both in the permian and outside of it, you have folks like wpx and ultra petroleum who see their share prices -- year. that is a hefty -- prices double
this year. that is hefty. it's in their interest to have a lot of activity in this area. they see the glass half full, right? >> yeah, we have seen a bunch of ipo proposals come through in this current quarter. it seems like there is evidence. you have to knowledge, even at 40, if the number is to hold out, would not be as many as we had in 2014. vonnie: is bigger always better when it comes to these companies? >> now. what we heard from tudor pickering yesterday is that he is looking for more action in the midsize range, to do -- $2 billion to $4 billion market cap. so not a huge offering on the scale of one of the oil majors, but also bigger than the few hundred million dollars we have seen come through throughout this year. vonnie: are smaller -- oliver: are smaller companies
that are cheaper to drill? will they be spinoffs of larger companies? what is the outlook look like? is there any somatic element to it? >> what we've seen so far this year is for -- is folks on the permian where it is profitable, doing smaller m&a activity. people are turned to cash out on that now because they see the appetite for that particular region. one of the things we were told yesterday as we shall look beyond just the primary and -- the permian. there is the hunger. investors are hungry for places to put their money again now that they feel a little bit more confident in oil prices. oliver: do they feel an administration run by donald will be favorable for them as well? they will have to worry about regulatory scrutiny? of -- andhe idea potential is you have the administration that will allow you to drill in more places and
for a to go a lot more quicker which will allow costs to go down. vonnie: what about the international look at -- outlook? one of the companies that have done really well this past year has been in contact, a canadian company. if they were to look at shopping little bit more in the united states, it is a company that looks a lot stronger than some of the smaller companies we had in the u.s.. -pgdid see the big shell purchase earlier this year. we haven't seen anything pickup from that level. but it will be interesting to watch going forward. the highercourse, dollar would not help your thanks for joining -- not help. thanks for joining. are going to the las vegas motor speedway to take some of lamborghini's most
you are watching bloomberg. here's what we are following. the italy prime minister makes comments about the future of the cut -- the country's troubled banks. then home prices in london are falling behind. we will tell you i've price gains in the capital are lagging other areas of the u.k.. take, weday's quick will take a look at the upcoming battle over integration once president-elect trump takes office. will he be able to build the
wall with congress? the prime minister talked about migrants, the banking system and a wide range of other topics. he held an end of your news conference. he's been in office a little more than two weeks. he said fixing italy's struggling banks will be long and competed. -- long and complicated. britain's companies are becoming more optimistic heading into the new year. a survey by deloitte found that in thend to be cautious wake of uncertainty caused by brexit. has picked up, but not in the same way that [indiscernible] , cfos remainerm quite concerned on the business environment. it continues to exercise a dampening effect on expenditure,
on hiring, on. vonnie: for the first time -- on capex. vonnie: home prices in london rose three .7% this year. across the country, housing prices were up 4.5%. in london in the south of england, more people have found themselves priced out of the market. macau has tried to reinvest itself as more than a mecca for gambling. a stats because of a surge of tourism from the u.s.. courtney: time for a bloomberg quick take your immigration -- quick take. , here ison in the u.s.
the situation. the newly elected president donald trump made cracking down on illegal immigration the centerpiece of his campaign. he pledged to build a wall between the u.s. and mexico and immediately roundup and the poor criminal aliens. he also said he will terminate the executive orders of his democratic right assessor -- his democratic predecessor. ronald reagan was the last president to win passage of major immigration reform back in 1986. pushednt george w. bush for a bill in 2007 that would have tightened border security while creating a path to citizenship for undocumented immigrants who paid fines and that other conditions. but it was killed by conservatives in congress. republican candidates
focused on deporting the party'snted and the presidential candidate, mitt romney, posed a legal path to citizenship. 71% of their ballots for president obama. democrats are more or less united on immigration while congressional republicans have been split. to hard-liners, border security is the only issue that needs to be addressed. they were unmoved by an amendment to the 2013 senate bill that would have hired about 20,000 more border security guards and required an additional 350 miles of fencing on the u.s.-mexico border. and they were conservative on a pout to -- on a path to legal citizenship. you can read more about immigration in all out of our way takes on the -- of our quick
academy offered to lamborghini owners. >> anyone who gets one of these cars has to take that expands because your level of appreciation is through the roof. matt: for two days, participants get classroom instruction. but the highlight is the hours on the track, where they get one-on-one coaching from pro-level race drivers. 12 grand for the intensive a seat in the you supercar as well as countless road in this hurrican car. since most of these people already own a lamborghini, you get to ray -- you get to drive souped-up car in lambeau's racing league. getting behind this wheel is one of the major selling codes -- selling points. >> this is a culmination of two days of intensive training. how was it? >> it was amazing.
it's very different. matt: i can't wait. >> how was it? math: insane. bloomberg in he holds time trials, security consultants and brain surgeons in the group get to see who is the fastest. and those who win get an invitation to a full race weekend. it gives us a chance to be something we will never become a professional race car driver, a pathway to get as close as we can get. maybe i should start a race team. matt: that's right, by 18. the program is not just selling more cars.
lamborghini has little trouble finding buyers for its product. bo wants the super rich to put up a bigger bucks to start their own race teams. this experience has made me want to buy a [indiscernible] matt: only a handful of participants have started teams, but the number is growing. that is the kind of connection the company wants to foster with its academy. but you have to act fast. it only happens twice a year. >> lamborghini was a self-made man. when you talk to lamborghini owners, a lot of them are self-made individuals. bowlis the spirit of the -- the bull. furthermore, check out bloomberg pursuits.
vonnie: from bloomberg world headquarters in new york, we are covering stories from chicago to london to moscow this hour. here is what we are watching. u.s. stocks are continued to slide after suffering their worst loss in two months yesterday. could the bull market the coming to an end? calmly tells us why he thinks it might be time. stock at how 2016's top -- ignoring the news in the election. inres are rising by the most two months after the struggling retailer lined up to a million dollars in funding to help it stay afloat. we are halfway to the trading day now. abigail doolittle is here with all the latest moves. a day and a half left. >> it is a bit of a bearish move.
worst drope saw the of the s&p 500 in two months and the smallest clients today. very interesting the fact that right now, the dow is on pace for its worst weekly decline since the election. inflection point do not typically announce themselves. it will be interesting to see whether this signals an end to the trump trade or perhaps a little healthy congestion here. as for one market on the move, we have gold absolutely spiking higher up more than 1% on the session. on paper, it's best day in about three months. goldman sachs now up cluttered is in a row, the best winning streak since november for another point around the election. shift since the stock is around. a safe haven rallying for the first time since the election. it is important to keep an eye on these for sure.
kate spade is now up two days in a row, up 28%. today, the company is set to kick off a process, that they have drawn interest from six companies. it follows pressure from the hedge fund last month around profit margins. the profit margins for the current year are little higher than a few years ago but appellee not high enough. it had been down prior to , down 18% on the year and investors are not too happy there. a rally off a little more of a risk yield shaping the market today. fifth day in a row, the longest streak move upward for the vix since the election. precious metals trading higher
pair the end is trading higher and that might tv most important point. appears to be a little bit of macro driven. sometimes you start to see the shift in current and bond markets, yields falling in bonds are rallying. investors somewhere are seeing something they do not like that they could perhaps see a move toward risk off in the days ahead and of course the new year. >> thank you. courtney is in our newsroom. courtney? courtney: the obama administration is set to announce sanctions against russian officials in ages he's trying to interfere with the presidential election hacking into gmail's. that is according to people familiar with the process. those targeted include the russian intelligence agency, including security company -- companies hacking the democratic national committee and party officials. donald trump has repeatedly dismissed claims that russia is behind the attack.
a cease-fire will take effect at 5:00 p.m. eastern time today. tracks the syrian government and turkey affects most of the syrian forces. talks aimed ator ending the conflict. donald trump's administration can join the peace process once he takes office. in the u.k. labor party leader jeremy orbit is accusing the prime minister theresa may of being autocratic like king henry viii. in an interview, corbin said it would be extraordinary if the product -- prerogative was used. not reached as vote on the agreement. u.k. efforts to fight global mandatedith reductions
, at least $150 billion by 2030 according to the union. the union is urging the heaven -- curving reduction of three general taxation. they called on them to be transparent about the cost of fighting climate change. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. vonnie: thank you for that. britain andtions in the eu, there are many reasons for risks ahead in 2018. what is it means for the global macro outlook -- president and ceo of macro advisors, thank you for joining us. what has been the main concern of the clients you have been advising through next year? is by far the biggest
story, the new transit administration. a really good driver of the markets all year. a lot of uncertainty is around it. forsource of uncertainty the interest-rate policy next year and what the fed will do, basically we talked to clients and they asked us about trump's policies right after the election. they would look at it in three dimensions, as far as tax, fiscal policy, and trade. they like task -- tax cuts and fiscal policy but they are scared of trade. >> there is a lot of uncertainty with what trump will do. it seems like investors have become certain. i wonder how quickly the concern is going from unknown to moving to eckley based on what we do know. >> that is very good. us, the risk is not that we are overestimating the implementation of trump's plan.
a clear road with house republicans and the senate. the problem is really the trump thee, so to speak sewed seeds of its own distraction when it goes to ask. the dollar is a potential source of instability. i think that is what you are getting kumal in the markets have moved too fast and very quick, the dollar becomes a source of global uncertainty. that has to pull back. it is good at it could be self corrected if it pulls back a little bit. vonnie: at what point do we get a major change. it strikes me that next year at some point, there might be a kind of disruption. what would bring that on? ati think markets will look the beginning of the year to the source of this, which has been geopoliticala risk.
what is going on with china, the conversation taiwan and the theyring of the drone, will look at the state of the union speech going forward and how that will act -- we will have a quick inflection point in the state of the union and the march fomc meeting will be important. the markets start penciling in a meeting in march, that would he aggressive. they've talked about two or three rate hikes. if they move in marks, the market -- in march, the markets will think this is a quarterly event it will rise higher and that would be up to. >> one thing that i think is interesting that we have documented well, especially the equity market, is having with -- asset classes. things will move de son new information we get which will probably bring a degree of volatility. we talked to science and hedge fund managers of different asset
classes. are they excited? it seems like there is an opportunity to >> it happens every time there is a change in administration. the obama trade, clinton, trump trade, it will look at health care and so on. you see a big movement. i would be a -- hesitant about pushing those for -- further. some actually have a lot of structural movement. the main one being on the financials, banking shares. since 2007 and 2008, they have been battered so hard that could really be a big fundamental shift in the banking stock. oliver: do they feel it is a time to perform and beat their peers? the opportunity has not been there. >> next year will be huge for macro. we think it will be a big year for our firm and accra policy. rates on the move. thisave washington federal
.- fed risks energy stocks, potential changes in the relationship with russia. the russian market has in booming. you have issues with the chinese currency. maybe a little complacency in japan and china. vonnie: do you see more of a move toward populist leaders? more of a change in leadership in france and germany? >> if you look at france, germany is maybe a little safer than france. merkel has high personal positive ranking -- ratings. right, they the far are strong on a regional basis. strength is the big problem. up candidate who has stepped has really gone to work the
positive side. he may be able to steal that away but he might get a traditional party with more populist policies in place. vonnie: does china become a problem at some point either with trades or via its own growth? >> interesting, when we spoke with people on the chinese side, before the elections, they looked at trump and between trump and hillary, we expect trump will make economic problems but be easier on the political side. geopolitical tensions. this is a problem with outflows. china is a critical course. hitting 6.7% gdp next year. in good shape as i is they do not get something huge as the beginning of last year.
or hacking democratic party emails and for tempting to interfere with 2015 election. this is according to people familiar with the process. let's bring in allen at our washington bureau. can we safely assume this will be a freezing of bank accounts outside the u.s. or some such thing? do we have any idea how would might go in terms of form? they say to western institutions, whether banks or companies, that you cannot deal with these decisions anymore. to, theye we've spoken say this will go after state institutions and a few cyber companies. have a or not they foreign banking -- thing countess another question to her would prevent them from being able to open an account in the u.s. or elsewhere. it is more to: for them to use electronic money transfers or to
operate anywhere outside of russia. oliver: where do we go history to figure a look on a blueprint there might he? is anything we can turn to to say ok, late happened? >> euros 2014 alace back in series of individuals associated with vladimir putin's inner circle and some companies operating after the soviet union annexation from -- of crimea. while they restricted the ability to travel in the west come it has not changed russia's policies or eastern ukraine. is the 2015 cyber sanctions executive order that president obama signed. that was for critical infrastructure. this does not count for that.
having to amend the 2015 executive order to allow it to include -- we looking athat is a response not just to russia, but also to trump. trump says hey, let's move on and obama is saying, though i am on my way outcome i want to make a statement that russia cannot do this and that this is what we have to deal with with russia to the incoming president. though that is a difficult position to take. themight need to separate two. the u.s. is responding to its own intelligence agent see coordinated effort. they can amend existing executive orders and use essentially a template to do that. how that affects donald trump when he becomes president or his
policies to russia, i am not sure that anyone has an idea. will there be a russia response and is this playing into the hands of the next administration? it will look friendlier if they roll back some of the things the president is doing in the final week. >> it is true and russia promised a response and set up u.s. sanctions rush over something it clients it was not part of, they promised to retaliate. they have not given specifics and yes, they might make the trump administration appear friendlier to russia if it in obamaolled back with the administration put in place. i'm not sure i or anyone else has any idea what he trump administration will do, how fast it will do it, or what form that will take. oliver: what is interesting is when of we put sanctions on for a cyber related warfare? a new precedent?
when the u.s. invaded several chinese military officials, which it claimed had when the ul been involved in the series of cyber attack -- hacks, there is a precedent for this. the u.s. is doing this against another major country. first was china and now russia. it is not common but it will become more and more common as everydaymes a part of relations and fighting. vonnie: all right, alan. thank you for joining us once again on the news that president obama is readying sanctions on russia visuals for hacking with and at attic party emails influence the election. >> still ahead, shares of sears are rising today after the retailer managed to line of about $200 million in credit?
oliver: this is bloomberg markets. vonnie: here's shares are rising after securing $200 million in credit come investors hope the financing will help the struggling retailer stay afloat. the man to the rescue is the ceo , eddie, providing the credit to his firm, esl investments. impact thats structure? joining us now is the bloomberg intelligence analyst, director of credit research. what is the story? why is eddie continuing to do this?
>> the supreme court is his a.b.. when he picked it up back in 2004 and 2005 and merged it with sears, this is his child without a real long-term vision of transporting the retailer to something more balanced between brick-and-mortar and an online strategy. he continues to fund the transformation which has been difficult in recent years. sears is getting product mismatches. thate: does he anticipate sears will be an actual retailer in the real? >> depends on what back on track means. serious has the opportunity to be a retailer on a more consulted the -- consolidated basis. you are probably looking at a fraction of that, maybe half or
less. he is trying to manage that transition and it is important to understand the financing they have taken on, it is an expense to a certain degree just to sort of manage the transition. there are different types of initiatives they are trying to take on whether with brands or otherwise. oliver: a company cannot get money and he worlds? he keepsockets and extending credit to them. it is not encouraging from creditor standpoint that last year we did this and people are coming to take a piece of it and nobody came. letter of on the credit standpoint. not to get too much into the minutia, it may .2 issues he might have with the credit facility in terms of availability from regular banks. viewersi want to show the distribution that sears.
this insee a lot of 2020 or before, that does not give eddie a lot of time. >> that is a fair point but a couple of things to understand playersir home, the big are in both parts of the capital structure, and the and the debt. maturity at the end of 2017, you can roll that phone if you need to. the issue is if you burn $1 billion plus of cash each year, he will have to keep coming if he wants to keep this float. that is harder and harder overtime because there are fewer assets to monetize. give us the top-down assessment for those who do not follow sears as closely as you do. the general retail landscape of , lot of other big rocks stores
brick-and-mortar stores, are struggling with? or is this something they can go fix? >> i think they're struggling with everything, which is the problem. alignment issues, consumer electronics, they have given to appliances, a costly incentives and rewards program that compressed margins for them and they have not invest in marketing for the better part of a decade. the relevancy is sort of under strain. are no quick fixes. it is not just a traffic or serious issue. it is a restructuring issue. vonnie: it is a phenomenal story. thank you. oliver: small cap funds. beating the market big-time, this is bloomberg. ♪
more from the newsroom. in russia, there is an indication that the crash of a military trance plane was not an act of terrorism. a militant -- military officials as analysis of the reporters shows there is no explosive on board. all 92 people on board were killed. north korean dictator kim jong has orderedng un the execution of -- people. 140 of those killed were senior officers in the country's government, military, and korean workforce party. ordinaryecuted citizens for watching soap operas from south korea. president-elect. trump is turning to former presidents john f. kennedy and ronald reagan or inspiration for his
amount real -- his inaugural dress. -- address. he will spend part of the day working on it. trump wants to write the speech himself. in the first major act of the unified republican government in 2017 will be a vote in congress to begin tearing down obamacare. republicans are debating how long to delay implementing the repeal. say some parts may be amended quickly and other parts may be in place for as long as four years. dayal news 24 hours a powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. formally kicking off its options process next month with six bidders in mind. your to talk about what is next is shelley.
trouble seems like a fair assessment. what are they doing to try to get out? >> to trying to the luxury status is not michael's trying to do. the retailers were everywhere. when everywhere, no longer has that luxury. >> just to going to the website, a lot of the more luxury -- did not discount. i guess all of these stories are interrelated? >> a lot of weakness on affordable luxury, which everybody aspires to get, that the middle-class aspires to get. you see a pullback of the department stores. people go to department stores and they really discount fig and huge sales.
is a reaction so revenue goes down. shareholders get worried. >> talking about the potential for deal activity, is this unique for kids. in terms of looking for a sale or is this part of m&a chatter -- you talk about >> there has been so much m&a chatter and rumors, everyone of these has been subject to a rumor. out.sure they are going if we were going to put ourselves up for sale or the other company, what would we get out of there? you look at coach, it would be a
big purchase for coach. this is a covenant that should be a merger. we're trying to get out of the fashion space. it is an excellent question, which lays at the heart of the issue. how will we set ourselves apart? of millennials. also doing well is expanding their lines. that has been pretty good for them. >> we talk about the potential and there is a chatter out there. i want to show something just found.
another interesting element here, a percentage of about 62, pre-relative to peers. how do we know whether or not the chatter becomes meaningful? -- we do noto look know how much pressure they have. we have to look at what is out there and way those options and then see, is it worthwhile to find a suitor? oliver: thank you for giving us .he update vonnie: it rose 23% yesterday with two days left in trading here in new york and all around the world in fact. time to take stock of who left
-- led the pack. the bloomberg editor in chief spoke earlier on how low -- how well the best equity investor why.nd >> j david wagner is 42 years and has spent all what one of his 17 years professionally here at baltimore. >> how well did he do? >> he almost triple the s&p 500 so far this year. he doubled the dow jones industrial average and be all of his benchmarks and beat 33%. >> we hear a lot about the valuation method. i read a good part of this. what is it really? everyone says they are a value investor. what does that mean? companiesy look for
below their net worth. that is what he has done with what we call small-cap companies. .hese are small one of his company with 146% is $305health care, million market cap. it is small, below what most acknowledged as a company. by finding these gems, which he does, he is able to show true value and hang onto them. long-term investor, not somebody who just flips things the way most people do these days. vonnie: also looking for literally the stocks no one hedgeabout question mark funds got into trouble because they know the same thing. does this protect from that mentality? >> he is the opposite of alpha
male. he is somebody with a very large team at zero price, looks at great companies, everyone of them. whatwonder if he is found is necessary to pick up what alice said. we have companies that we all know the name seven we all know the tickers of. those were really covered by analysts. the market kicked out to find out what they are. are the things that people do not know about? >> we know them on the bloomberg. and we found him, not the other way around. we can look at these companies using the bloomberg terminal. anyone who is a bloomberg user could do that. >> how much of it has to do with luck? they got a big boost during the year as well. and brings in a lot of
external events. how is that helping him? >> he would be the first to say, better luck. having said that, he is very smart and he said you get rewarded for being smart and patient in an -- unexpected times and unexpected ways. we are the last two months have been a big move in the market. people have described it as a trump rally. he would say that is a misnomer that the market improved in part, if not entirely, because the election was over and that was the driver. what was really driving the is thees he picks underlying economy, and that was pretty good and has been all year long. you can say you do not pay attention to events like the election of donald trump but a fair amount of his success has been interdependent with the affordable care act and obamacare. if that gets substantially
redone, will that affect the value of his thoughts? not really in his estimate. most of the companies he typeted our diagnostic companies or therapeutic companies. the demand for both products and services will only go up, whether or not there is obamacare, it will happen. obamacare has helped but it is not the only driver here. vonnie cohen that was matt, editor-in-chief at bloomberg. clintonr swift, hillary , what do they have in common? the home andw garden network beat cnn in 2016. this is bloomberg and that is next. ♪
vonnie: let's go to abigail doolittle with the chart of the day. abigail: a chart here deals with whether or not we are in fact on the cusp of a great rotation. is thekes it interesting fact that they had the longest bull market during the tail end of what could be the bond market. white, 3516 and in global mac it cap and stocks, -- index, we see that bonds have sold off in a big way out of the election.
time will tell whether or not this continues but we have an interesting chart. we see beautiful uptrend. 2012 typically one uptrend starts to reverse like that, it suggests we see this, this is sending mixed messages. we have on's supporting the debt . it will be interesting to see whether or not this happens that time around. seehould be interesting to whether or not the bull market in bonds ends or if it will go. people are trying to call for the end of bull market in bonds for some time. it is not your whether this is that time. vonnie: thank you.
abigail doolittle. oliver: this year passes 85.4 billion dollar deal between time warner and at&t has many wondering if things like that will be normal going into the next year. under growing pressure as they continue to lose customers to online services like that looks. as cable tv reached the tipping jerry joining us is smith. let's start with the story on a tv. my buddy just tested me saying i cannot wait to talk about the redskins. it is about all of these people -- hg tv.d tv -- hd home andnd garlic -- garden television. fixer uppers, home and modeling designs. it has had a remarkable year. cnn, and behind only fox's and espn. do not watch house hunters and things like that?
vonnie: i'm watching it right now. what about facing challenges in the current landscape? owned why -- their stock this year has been up 30%. a lot of that has to do with the ratings at hg tv. a lot of big pay-tv companies like at&t and charter, they are getting eager through mergers and they're able to squeeze smaller programmers to get lower rates for their channels. hg tv has really been the crown jewel for scripts. oliver: to be a little more serious, they found a way to stay afloat despite moving to other platforms. a great story about hallmark channel doing something similar with people come around and know what they are getting.
hg tv. happening with they know what they are getting. >> that is right. newse are watching cable and they find it to be very stressful. watching people remodel their is a relaxing and soothing escape from some of the anxiety he see on cable news, especially with the political season we have had. it is a question of potentially what sort of liars are out there as well. vonnie: you see this all of the time. you see crown jewels and you .onder what will become of them will this keep people on cable, not cutting the cord? talked toertainly, i the ceo and he says we are pretty happy with where we are now.
we do not want to be a part of a bigger media -- conglomerate. they have three main cable channels and in a world where maybe there are only 20 or 30 channels get in a package, there is an advantage to having fewer cable networks. oliver: i think this is interesting, breaking down the average household income by channel. how big of a portion of the story is this question mark they have people willing to come back at it? -- is this? they have people willing to come back and look at it? older audiences as well? >> one advantage they have going for them as they have more affluent audiences on cable television and strangely enough, a big live audience, which is a
little surprising because it is not like news or sports where you need to watch it live. people are tuning in life. people like having it on the and find it soothing and relaxing. some viewers have told me that. they have the audience and live viewership. vonnie: we will see the fruition of the time warner deal. why should that make other companies nervous? >> time warner was one of the media companies and still is. hbo, channels are included in the new online services. it had news in sports, probably the two most important kinds of programming. in time warner, he decided he that a standalone company. if you are the ceo of another company, you're probably looking at this and thinking, if just does not see a bright future,
♪ the trees ofmong peak foliage in this massachusetts town is an unfamiliar object, high-powered commercial drone. >> you are seeing the park system and what it is is an -- aerial communications plath or. not movinges are much and if you look closely, they are tethered to the ground. they are designed for surveillance and medication. us to keep the bird in the air indefinitely. it is powering the system and allowing us to move data up and down. >> lance is the ceo of size i works, which makes the drones which fly at 400 feet for up to 220 hours. partnering with state police, the u.s. army, and the events such as concerts and marathons. >> the screen you are seeing here is coming off of that
camera. we can lock in a car. , it givesr payload you 30 times obstacles. >> the massachusetts sci-fi is the latest startup by helen. >> from a technology point of view, we are flying right along. >> and m.i.t. graduate and cofounder of the company betide -- behind the roomba. date from million to investors and strategic partners like motorola and ups. successfully flew its first delivery this year, medicine to a hard-to-reach island. >> going to inaccessible areas and emergency relief areas is the right base to start but i envision drones getting your starbucks coffee in the morning or bring you your pizza at night
. maybe even bringing you milk you forgot at the store. >> the faa clear small commercial drones for take off less over with the promise of a delivery joan limited to a short data related. these drones present a new set of challenges. >> they are making our drones much more rugged and the reliable. you get more testing in which to better and safer and more reliable delivery drones. >> big players like amazon alibaba and other startups are competing for commercial applications of drone technology valued at $127 billion. >> we work with a number of government agencies, public safety, we are working with customers in the oil and gas space, telecoms and utilities.
peopleently employs 50 and plans to double the size of the company in 2017. >> is an exciting time for drones and the sky is the limit. ♪ oliver: that was at the sci-fi drone test facility in massachusetts. vonnie: some details on the sanctions we knew were coming out of the u.s., has announced sanctions against russia for the cyber attacks. they are economic sanctions against particular actors and thanks to the hack ring of emails which may or may not have had an loans on the u.s. election. up, more outlook for 2017. this is bloomberg. ♪
julie: we are live in bloomberg world headquarters in new york. here is what we're watching. we get a tactical approach to investing, coming up right a new round of sanctions. president obama retaliates for russia hacking the democratic already emails ahead of the .residential election trailing activity in the u.s., the highest in nearly a year thanks to a rebounded oil prices. why some producers say they are inclined to sit on her hands rather than spend in an effort to avoid a price adjustment. u.s. markets close in 2 hours. is here tolittle guide us through it. abigail: we are looking at declines for the second day in a row.
dow when s&p trading lower trade this is the second two-day decline. needless to say, this seems to put down 20,000 out of mind. pace for its first weekly decline since the election. we see the nasdaq lagging the most. these declines are very modest, not really along the lines of yesterdays pullback. as for what is dragging from a sector perspective, we hopped to the bloomberg and look at the imap. a great way to get a quick shot of what is happening sector wise straight even between green and red helping to explain small, on the s&p 500. in terms of those sectors trading higher, the only significant gains are in the weight sensitive sectors. c-stocks tend to do well when rates fall. take a look at the 10 year yield along with other asset classes, we see the 10 year yield is down 4 basis
points, down for its second day in a row. represented in green, this tells us that bonds are rallying. selloff we are seeing in stocks. this is not helping the dollar. snapping a three-day winning streak. 1% on the more than day, on pace for its best day since the end of september. this asset class picture does suggest we are seeing a risk-off. it out with commodities, we have coffee, sugar, and orange juice all rallying for geographic reasons. it looks like the brazil coffee is suffering on commodities, we have coffee, sugar, and orange juice all whether, while in india sugar crop came in less than expected, and we also have oj, brazilian frost has hurt some of the orange juice crops in argentina. that is helping oj. supply-demand stuff here helping
some of the soft commodities. ramy: thanks very much on the market. as we just mentioned, the u.s. just unveiled sanctions against this comes as retaliation against an attempt to interfere with the 2016 u.s. presidential election. our reporter joins us right here. what is known about the retaliatory effort right now? coming across even as we are talking about it great we know this is aimed at basically isolating people connected to russian intelligence, the gru, isolating them on the international stage and making it harder for them to do international monetary transfers, harder to get bank accounts on the international stage, and harder to work, especially in europe and the united states. in russia, it's a different story. julie: how effective have you found these kind of sanctions to be? have been looking at is the sanctions that went in
place after the annexation of crimea. it did not necessarily pull vladimir putin back. he wasn't necessarily stopping his territorial ambitions. in light of those, it was the falling price of oil that was the only check on him during that period. it's not clear that these are going to be very effective. ramy: there were reports about the expansion of economic penalties as well as some expansion of this from a 2015 -- what more on this? there are going to be putting out a sort of presidential order. basically he ordered the treasury department to do this, and it is an expanded base to do this based on cyber attacks. we will be seeing a lot more of these in the future, battle over our digital infrastructure the comes the crucial battlefield. julie: donald trump speaking last night about hacking, and i believe we have a sound from that comment. we don't have it.
computers, he said, who understands them, they are so complex, what can you do. what ability will he have to just reverse the sanctions once he gets into office? >> it's basically his treasury department and his executive order. they have said their approach to sanctions is that they want sanctions that work and they haven't said whether or not they think russian sanctions work. it's his treasury department, his executive orders. when he comes into office, theoretically after january 20, he has broad authority to roll back some of these. ramy: what is interesting and concerning by many is he's already setting up tension with intelligence agencies talking about the alleged russian attack. right now crossing the fbi and homeland security said if you will offer declassified evidence -- do you know if he will
actually listen? >> we don't know, and he's been very dismissive of those in the past, even when they did come from what we call the intelligence community. that sort of broad umbrella several groups. he might all listen to it. he's not necessarily obliged to listen to it. i think we will see some impact here, there are several hawkish republicans, especially on russia, in the senate, and they will be overseeing confirmation hearings of wrecks tillerson. they are going to be holding hearings and they are not necessarily going to be pleased to hear that tillerson or trump are not necessarily going to help them push back on russia in this situation. julie: the story ramy was referring to about the fbi releasing more information, our story saying it tended to serve two purposes, to help prove the russian government was behind this, and frustrate officials in moscow by exposing some of their most sensitive hacking
infrastructure, the technical aspects of this operation. we have been talking about what the u.s. can do to prevent this through political and sanctioned means. ?hat about the u.s. firewall what measures has the u.s. been toing, and what can we do prevent this sort of thing from happening? >> i think we are on the precipice of an escalating cyberwar with russia. on the one hand, we're presumably doing a lot that we can, not all these details are necessarily public or accessible. on the other hand, this is just the beginning of this. this is going to be ongoing and will continue to escalate. it's important to say, president obama, this name and shame tactic you mentioned before, not necessarily being able to come out and say, this is the latest
firewall, the one that will keep out the russians or chinese or whoever else. they said, we are going to expose you. that has been a policy and a weapon that the obama administration has been using here. ramy: thank you, we will have to leave it there. you are talking about the gru's, the sanctions do include the deputy chief and first deputy chief of the gru. also "the new york times" reporting the u.s. is ejecting 35 russian intel operatives from the country. we will be watching what's been happening. still ahead, how will stocks end the year? pins and needles. ♪
the term really may be sick for a correction is down over the president-elect's ability to execute his campaign promises growth. according to new data compiled by university professor scott baker, nick bloom and stephen davis, uncertainty surrounding u.s. economic policies has spiked. 2017 will bet says a year that will require a more tactical approach to portfolio management. a management strategist joins us from his office in florham park, new jersey. 2016, it still was a very good year even though we are not hitting 20,000, at least not yet. >> yeah, but we've come a long way from where we were at the beginning of the year, if you remember how soft the data was, it looked like the global economy was slowing, commodity prices plunged, and it looked like a touch and go situation
this time a year ago. roundabout midyear, things started to pick up and we are happy to report as we are closing out the year, not only are we seeing better growth, but prospects for earnings have picked up, and even the yields have reset somewhat. backing up of yields in the treasury market, steeping of the yield curve and following on of the fed to get back on track with rate increases allstate to growth, at least in the near future. where coming into 2017 with more optimism than we did a year ago. julie: when i look at the average of the wall street forecasters who we surveyed, the israges 2356 -- the average 2356. d of bullishloo sentiment we have seen come back into the market, do you think the number is too low? are people not as optimistic as they should be for next year? estimates.a range of we are a little bit more
optimistic now. what we're seeing in terms of the growth pattern and data, we are seeing better things. returns mostat the people are talking about are lower returns and there is good basis for that. if we look at where we are, we have a $25 trillion stock market sitting on a roughly $18 trillion economy. your market per prices for equities are at a premium. growth, while positive, are slow. those have even slowed down a little bit too. it's right to be more modest in terms of your expectation. i do think we are in store for a positive year. abouti want to talk valuations for our indices and those around the world. hop into the bloomberg with me. this is the mrv function, market relative valuation. the s&p 500 in red, indicating it is the most overvalued relative to the hang seng.
a lot of people are saying we will head higher, but what about over valuations? at the united states, there's a couple things. currency becomes a big deal. if you look at what has been going on with currencies, the u.s. has been an attractive place not only because growth is somewhat better, we are seeing a better currency. our dollar has been relatively strong, which attacks capital and maybe feats growth in some ways. -- feeds growth in some ways. think about the returns to cash investments. the three-year treasury -- three months else here are now something like 90 basis points better than our european and other g7 counterparts on average. we've had a big improvement in terms of our relative attractiveness in recent years, that helped to drive some of
the relative overvaluation you are seeing. i wouldn't deny that emerging markets are cheap. i wouldn't deny that developed markets are cheap. we have a little bit better growth going on in the united states. ramy: -- kevin, we haven't really talked about fiscal policy and we don't have a lot of time left, but how much do you think be trump administration will able to carry through on not only their promises, but the promises the market has baked in for them? >> markets baked in some, but not all. if you think about the raft of proposals, they are all generally pro-growth. directionally, we think those are things the market would like. reduced tax on corporations a good thing for shareholders. we will have to see how it plays out in the next several months. there will be a lot of changes between now and whenever gets enacted. that's why we have to be tactical. we will have to leave it
coming into the coming year, there's been a lot of activity in the past year. of this cakeews spade deal and it suggests the consumer facing product area there will be a lot of m&a. will this make for more acquisitions? >> it will. it's more the smaller m&a that will occur. in 2016, there's $240 billion of m&a globally. m&a withf of that was less than $200 million of enterprise value. what we are seeing across all sectors, including apparel and handbags, is a large companies are terrified. they are scared they are losing market share. they are scared they have no pipelines for new products. they need to buy new products. they need to buy rmb, and that's what we are seeing. cory: the notion that the kate spade band -- brand appeals to millennials, maybe that helps
solidify product categories. >> it may. kate spade is in a tweener spot. i'm not sure if the purchase there was truly about growth or about cost-cutting. we are seeing acquisitions happen for both reasons. fundamentally large companies need to deliver shareholder value by cutting cost or growing the company's. we are seeing acquisitions from both purposes. in the case of kate spade, they may have either in mind. has kind of lauder figured out how to be a huge company that gobbles up a lot of smaller companies in the cosmetic and perfume industries, and done it well, and tried to keep the smaller companies with their own identities yet it's under a big corporate umbrella. kind of stay young that way. is that the model you think for other consumer companies -- you're seeing for oth consumer companieser -- other consumer companies? consumer, the average
public consumer company spends 1.5% of sales in r&d. it's about 13% of sales in r&d. for decades, large companies have essentially had no pipelines for new products, to my earlier point. that's only beginning to catch up with him today, as millennials are demanding a more personalized product line, products and meat their unique needs. they are not willing to buy the same product their parents bought. we are seeing that personal care, to your point, with estee lauder. carol: which big consumer product companies are out there that you think will be doing some acquiring come 2017, and what kind of companies might they be looking at? i think the question is what is the purpose of their r&d. at crafton heinz earlier this year, they are doing it for cost-cutting reasons.
they are trying to deliver ups by slashing costs. to me that's a difficult long-term strategy. imagine where google would be if 10 or 15 years ago they focused on cutting costs as opposed to investing in growth. the flip side of that are the estee lauder's of the world looking to buy companies for a billion two, simply to grow. i don't think there are any large consumer companies that are immune to that. we also see that on the retail side as well. grocery chains, department stores, etc. wonder, not only do we pay too much attention to big deals, but how does one monitor those? do we look for trends, individual names that are growing so fast? your first point, we don't get a lot of -- those types of deals don't get a lot of attention.
san francisco, you tend to hear a lot about the multibillion-dollar -- cory: unicorns. >> exactly. it might've been good for early investors, but in consumer, you see the deal gets sold for 150, 200 million dollars. in terms of how the companies are being identified, that's why a lot of these large consumer companies are starting new m&a groups, specifically internal vc arms that are out there looking to make initial investments. they are the precursor for buying those companies. we're seeing these initial vc investments are like a farm team for the m&a department. carol: i'm curious, ryan, in terms of the companies that can list on your website and be a part of your community, if you will, what do you look for specifically? i'm assuming it's not just
anybody and everybody. >> is not. we accept lesson 5% of the companies that apply to us. we build a series of machine learning algorithms. the consumer space, one of the things i love is how much data there is for this company. this isn't like tech. in tech, you're trying to evaluate a 23-year-old engineer. it's a hard task to guess what that person will build in a year and a half that has never been seen before in the world. in the case of consumer, when a company has $200 millionin revenue, because of the companies we love. -- those are the companies we love. typically, consumer retail companies -- this is important for listeners. that's the size range that has been eating share rapidly over the past five years from our companies. in every single category in consumer retail, large brands
are losing market share to small brands. when i say small grants, i mean the ones in circle of size range. carol: we have to run. back to you guys in television. carol massar and cory johnson, thanks so much. catch more radio interviews on sirius xm, bloomberg.com, and bloomberg.he apologies, i was looking at the bloomberg rather than at the camera because i was looking for market reaction to this breaking news we have been getting. i'm not seeing any as of yet. we are getting a statement from president obama about the u.s. actions against russia over its hacking activities straight the president says he has issued an executive order, and sanctions 9 entities and individuals. this includes the russian intelligence services, four individual officers of the gru. the state department also shutting down 2 russian compounds in maryland and new
york that were used by russian personnel for intelligence related purposes. there are some of the details of sanctions related to russia's hackings. that, we aren to getting comments from a couple senators, including chuck schumer, saying that the incoming donald trump administration shouldn't we can any sanctions that are now being -- weaken any sanctions being put into place. senator mark warner is also saying something similar. we will have to see how this develops. ahead, the commodities close, oil prices, and shale production are in focus. this is bloomberg. ♪
backing off its highs for i-17 today. it's been on a tear for most of the year after hitting lows not was backe 2002, that in february. prices today lower after oil inventory figures came in at the highest recorded levels for this time of year. in fact, there's an interesting way to look at that. 4081, also at g #btv saeg will get you there. oil has been one of my favorite charts consistently throughout the year. is the turquoise line. the top line is 2016. we definitely have ample supplies here in the united states. things is one of the that has kept somewhat of a cap on oil prices. this morning, bloomberg daybreak: americas spoke to dan dicker to get his thoughts on
whether the bull market has tired out. >> 2017 looks to be one of the best oil years in history that i can remember. everything is lining up as a perfect storm. nobody would want to be short here right now. it's not just about the fundamentals. the iea that says oil will rebalance in 2017 -- it's also administration. trumpne coming into this administration has some connection to oil. the obvious ones like rex tillerson, secretary of state. commerce, wilbur ross, is a major shareholder. trump administration has some connection to oil. you have harold hamm, who was supposed to be the energy secretary, ceo of continental. they swapped him out for rick perry, the epa guy is from oklahoma and he's a climate change -- i won't say denier, but skeptic. zinc he, who was going to be interior. he's an anti-regulatory guy. you could go down -- even the
guy becoming secretary of army stood next to me for 5 years in the nymex, before going to make an algorithmic happening trading oil futures. everybody coming in as some sort of connection to oil. >> you come on here the day before the new year and you are that bullish, and you say everyone is that bullish. take a look at the bloomberg. when you have long positions in wti, the white line there, record highs, short positions are still relatively -- how much more upside? >> we may be ahead of the cycle here. i think there's an outside shot for triple digits by the end of next year, but $55 getting thisr to $60 at the end of year, that may be ahead of the cycle. the trouble is who would want to be short in such a situation right now where we are coming from very low prices, we see it rebalance is on the way. there is no kind of peak demand
problem that people talk about, just like there wasn't a real peak supply problem we talked about a few years ago. this trap administration with all these oil guys inside the white house, no one will want to be short. will libya move down quick, fast-paced on guys who get long too early? yes. over the course of the year, i see a steady climb upwards. trader danwas nymex dicker. the oil boom has brought some relief to shale oil companies which need higher energy prices to support the more expensive drilling operations. those companies are focusing on not overreacting and spending to quickly which could cause another price adjustment. for more on the balancing act, we are joined by tina davis. how could we be sure that companies don't overproduce? there would be a weight on oil prices. we have spoken to a bunch of shale ceo's, and they are being
very cautious as they look to 2017, they don't want to be caught out again. they are first and foremost waiting to see what opec does, starting sunday, if we see that production come through. ramy: if the opec oil deal does stick around, how much can oil's price rise? >> it depends. opec is playing a delicate balancing game where they don't want to wak the dragon -- wake dragon that is shale oil. they want to sustain their own budgets without encouraging too much production from the u.s.. you will see0 oil, another 1.5 million barrels come on. with the drop in oil we have seen the shale
industry got a lot more lean and efficient. how is that now going to play out, now that we've seen prices go back up? does that mean as prices go back up, there is an exponential increase as some of these drillers because of increased efficiency? seen, looking at all the activities, if you look at the rigs gelling for oil today in the u.s., a substantial majority of them -- that's where it is cheapest and easiest to get the oil out. we have also been talking to servicers who have been hard hit by the past two years' events. they are talking about not letting these costs rise too much, but not going any lower in terms of what they are charging industry. julie: what does hedging have in terms of what these shale dealers are hedging for next year's oil prices? >> hedging is a great way for these companies to get cash flow right now. even if the opec cut is wiped
out and it falls again to twice six dollars, they will have more financial certainty. they won't necessarily have to go to the banks and beg for more revolving credit or ask for extensions in terms of the money they have from that sort of financing. this is another way for them to keep the cash flow looking good. ramy: you were talking about u.s. shale producers. with that, at least the ones that have stuck around, we are seeing some really terrific shareprice rallies, for example continental and year to date is up 123%. are they going and because they are good and stable, or they are the only ones to go into? >> there's a lot of demand now. he was talking about what should be a booming ipo market in the coming year. there is investor demand to invest in the sector, and fewer high risk, high reward folks out there. a lot of them took a little bit too much risk and faced the downside for that. you may see some new entrants, smaller players, midsize of $2
billion to $4 billion market cap. julie: we have seen some folks delay ipo's. are there any we have been waiting for that have been delayed that could come in 2017, or is it just those that have been not doing as well because of the oil price being down? >> we saw a huge drop-off. the number of ipo's in the energy sector in north america dropped by 70%. nobody has even really been talking that much about ipo's. the small ones we have seen have largely been private equity funds or management owned companies seeking to raise funds or cash out and try to get by by doing the ipo route. which u.s. shale companies might be in the best position to move first if the opec oil deal holds, to capitalize on that? ofwe talked to the coo pioneer not long ago and he was talking about 3 to 4 months for
them to wrap up output again when they see the right price signal and they feel it is a steady price and not just a blip. a lot of people say this is a hot play, low-cost play. folks that have a lot of acreage there will be ones to watch. julie: thank you for giving us perspective on what is going on in the shale industry right now. we have been talking about this story about the obama administration posing new sanctions. we have been getting comments from different members of congress. now it's paul ryan coming out, he called today's action on russia qutoe, unquote, -- quote, unquote, overdue. chuck schumer also strongly supportive of u.s. sanctions on russia over the hack. courtney collins has more on the sanctions in our first word report. courtney? courtney: 30 five russian operatives will be expelled from the united states as part of the response.
the fbi and homeland security department arson to release a report with technical evidence intended to prove wretches services-- russia's were behind the hacking. donald trump has repeatedly dismissed claims that russia was behind the attack. meanwhile, in russia, there is an indication that the crash of a military transport plane was not an act of terrorism. military officials said an analysis of the plane's flight recorders said there was no explosion on board. the plane crashed into the black sea shortly after takeoff. all 92 people on board were killed. gentina has reopened its investigation into an accusation against former president cristina fernandez. she's accused of covering up a legend iranian involvement in the 1994 bombing of the jewish community center. 85 people died and hundreds of others were wounded. the accuser was also found dead. earlier this week a judge
approved fraud charges against fernandez and two aides, and ordered her assets frozen. the u.s. state colleges and universities are facing funding challenges of the are turning to full tuition paying students from abroad to replenish their coffers. the institute of international education finds the number of international's units is up 7% the last year, and 85% over past decade. the rising demand from abroad has helped keep u.s. public colleges afloat. and, the obama administration is proposing plans to block hard rock mining on as much as 10 million acres in the western united states. health is seen as an indicator for other animals depending on similar habitats. decision rests as decision rests as president-elect donald trump --
how trump will weigh business interests and the environment. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i'm courtney collins. this is bloomberg. julie? coming up, we will continue to follow the headlines coming out on the new u.s. sanctions of russia over russia's backing of the democratic party's emails. we will also be checking in on the market, specifically what's going on with gold. this is bloomberg. ♪
dollars -- dollars in penalties for helping americans evading taxes. the doj includes 4 institutions and a cooperative for wrongdoing. the base and cooperative paid no penalty after being cleared from any tax offense. prosecutors are pursuing criminal cases against them. brokerage said it cut hundreds of jobs overseas since april and is now embarking on a companywide review of spending. plan, dubbed the waterline project, the cost effectiveness will be evaluated of daily activities and the bank's operations to determine how much money can be saved by 2020. emirates seeking to streamline operations so it can push ahead ash expansion plans, even terrorism and slowing economy stops demand for international trouble. the world's biggest long-haul is revising job
descriptions, evaluating processes, and slowing the pace of hiring. that is your business flash update. 2016 may go down as one of the toughest years for hedge funds, the 3 trillion dollars industry faced widespread backlash from clients who were asking for their money back because of years of poor returns and high fees. earlier today on bloomberg what is inmericas, store for industry and the week ahead. >> when we look at a lot of what has been going on, the actual correlations we have been seeing between the top performing hedge funds, the so-called activist managers that are some of the highest performing, what we have seen when we look at the data is, you see a correlation that is running in the 80% range, and when you take the 2 and 20, not
much in it for investors. people are starting to look at these mutual funds as stock- picking alternative. >> what strategies in the hedge fund world are working really well? >> i think the biggest challenge when people look at what has been going on has been the disappointment for some of the strategies that really should have been going very well. when we look at macro funds, they're up to percent, 3%. high fives all around. if we look over the first half of the year, we saw -- what do these guys do? bonds, and in commodities. commodities are up 14%, bonds up 10%. and that's -- a pretty that timeary run for period. you look at this and you are a
macro investor, had you bought almost anything, you would have been there. in the second half of the year, if we pull that up, what you end returns,s similar another 22% was available by being short the bonds, and yet you return this year making zero. you ask yourself, one of the things met touched upon, the structure of these funds. do you have a huge number of people just lying and selling stuff with each other, but looking forwards, macro has to make a lot of sense. let's get a check on markets now. specifically, what is going on with etf's today. abigail: we are taking a look at the gld today, gold-backed etf. we see a big pop up in gld today, up more than 1%. on pace for its best day since the end of september, tracking
gains in gold as well. you would think this strength in gld would be good for holding not sogold etf's, but much. we hopped to the bloomberg and take a look at g #btv, 5233. this is a six-month chart of orange, gold, and in white gold, the holdings. while gold is starting to rise, the holdings are down an amazing 33 days in a row. it will be interesting to see whether that small divergence can turn around, tight correlation over the last 6 months. for gold itself, we have reason to think gold may continue these gains. gold also having its best day since the end of september. this is g #btv 5218. on top we have gold, the big bear market over the last several years. we see on the recent decline out of the peak in july, gold trying to catch the support of the
middle of the channel. fell below the bottom indicator of the relative strength index the many investors use as buy and sell signals. below 30 suggests the asset in question, oversold gold was below 30, no climbing higher in the past, the suggested gold itself will climb higher. 2017 may be kind to gold, noting that gold this year is up about 8%, its best year since 2011, something that might not stand out considering gold has been down since the middle of july. on the week, gold is having a strong week, first weekly gain since the election. we have new mining up more than 10%, this could reflect a number of factors, including the fact that gld is about $110 per share. new mining, closer to 35. plus, profitability. interesting to see those huge gains for the miners. julie: coming up, --
julie: i'm julie hyman. it's been a year of diverging central-bank policies, bank of japan focuses on its yield curve, the european central bank maintains an expansionary policy and the federal reserve just announced a more hawkish plan for this coming year. a global strategist sat down with "what'd you miss?" yesterday to elaborate on how this will play out in 2017. we asked him why he sees japan as a relative -- relatively positive picture. >> i think what is behind this is a big global inventory liquidation. we saw it in the u.s., it was
global. when inventories are coming down you will see weakness in production. you saw a lot of weakness in industrial production during the first half of the year. you saw it in china, in japan. we've now seen over the last 4, 5 months that particularly purchasing managers index is for the manufacturing sectors have all picked back up into the 52, 53, 55 range, which suggests there's a rebound taking place. we've seen that in the pmi readings in the manufacturing sector out of japan and we have seen it confirmed and some of the actual data. -- in some of the actual data. we have had a bit of an inventory swing, things are picking back up a bit. looks like growth is firming into the latter part of the year. that was a significant part of the bond selloff, the realization that the global economy was may be gaining a little momentum. >> you took my next question right out of my mouth. so much of the bond selloff we andtalking about, trump
reflation and fiscal stimulus, and it seems like there could have been some of that. there was a sharp move after november 8. i'm curious if people -- how much really was the result of people being more aware of what is going on? >> one of the relationships i do look at in terms of yield levels is the global economic surprise index. average of the global economic surprise index is for developed and emerging markets, and that over time tends to correlate reasonably well with 10 year treasury yields. there was a big rise in economic surprise index is to the top side during the latter part of the third and of the fourth quarter, and the rally in bond yields is pretty consistent with that. at a lot of been th the selloff in bonds and rise and bond yields was a function of economic data, the continued increase in oil prices and its potential spillover effect on inflation, and had very little
to do with expectations about what will happen to policy as we go through next year. >> i want to address some of the topics we need to discuss. the dollar strengthened a little bit past what you thought that we are still looking at this range here. i'm looking at the euro-dollar and dollar-yen. the yen on the flipside, we're at 117. just about the dollar's strength, just powering through every currency, or is there an ability from some of these economies to push back due to their own economic growth? >> i did think dollar-yen, 110, 115. a lot of these were broken on the fed announcement. the fed was a bit more aggressive than we expected. that has pushed u.s. interest rates a bit higher than expected
before year-end and that has taken the dollar with it. julie: for more, i'm joined by joe weisenthal from "what'd you miss?" who i will be anchoring with today. joe: on the show this week we have been talking about sentiment, but also we can talk about the raw math. lots of people arguing that multiples are really getting d, and you can justify that perhaps more easily in a declining rate environment. not always in practice, then multiple contracting. that will be a discussion. julie: we will have that discussion in this show today. this is bloomberg. ♪ contracting. that will be a discussion. julie:
and we are live from bloomberg world headquarters in new york for the next hour, and covering stories out of washington, paris, and moscow. president obama retaliates against russia for cyber attacks he says were it interfered with the 2016 presidential election. we will discuss the sanctions, the impact on u.s.-russia relations, and what they mean for incoming president trump. kate spade -- we will talk to a former board member about the luxury retailer's strategy. will political upheaval spell trouble for cross-border offer forlike bayer monsanto. let's check the markets with abigail doolittle. abigail: we are little changed.
the dow in the s&p 500 down just fractions. the nasdaq down .2%. all of this presents a two-day decline. certainly not the vigor of yesterday's decline for u.s. stocks. as for what this looks like on the day, this is an intraday chart of the s&p 500. the index had been higher, then drifted lower. where we arentasy 1 -- interesting to see where we are when we close. as for movement from it down-side perspective, the biggest drivers down our amazon, bank of america, and jpmorgan. this could represent a little bit of consolidation from a two -day move higher for amazon after the company said it had its best holiday ever. the banks down a second day in a row as yields are also dropping for a second day in a row. in fact, the 10-year yield is
down -- on pace for its biggest -- year decline since average volume -- on the bottom you, in the green bar, the 20-day average. a really nice way to see it up here, in red -- this shows we are well below average volume over the last 20 days by about 40%. we are looking at basically unchanged markets on very little trading action. ramy: continuing the trend over the past couple of days. abigail doolittle, thanks very much. julie: back to the breaking news -- the obama administration has pulsations on russia for hacking activities. nine individuals have been sanctioned, and he is the f-35 diplomats have been done at the u.s., given our family we are joined by a former is a foreign policy reporter bloomberg -- a
foreign policy report of bloomberg news. the obama administration response to the hacking, and the aftermath of the hacking is repeated warnings. are we seeing a reaction from russia at this point? give they are scheduled to a statement shortly, but so far they have denied u.s. allegations of hacking. this fits into a much broader increasing tensions between the two sides. the u.s. says this is not only in response to the hacking, but in response to months of what it says has been harassment of u.s. diplomats overseas. you have the sanctions directly going after entities believed to be involved in the hacking, including the entire federal security service, the inheritor agency to the kgb, and also military intelligence. then there is a saw wing of expelling the diplomats, then denying russia access to these two recreational facilities that
were used as intelligence safe houses, which is really a response to an increased pattern of harassment overseas to u.s. diplomats. ramy: so, nick, with these expulsions and sanctions, what real significant heard or impact could there really be on russia? that is a very good question. the u.s. has already sanctioned so many russian individuals over actions in the ukraine, and elsewhere, that it is unlikely these individual sanctions what effect.eal, direct a lot of these people don't have assets in the united states anyhow. it is more, a, sort of, showing of resolve and response to the elections hacking. the other thing that is really important to note is the u.s. -- as president obama said in his statement -- this is not the. of our response to russia. you could expect -- the full sum
of our response to russia. you could expect other covert actions. obviously, they are not say what those are, but there is another hidden element that could potentially go after the hackers directly. they have also released a report that really details a lot of the u.s. evidence without exposing u.s. intelligence methods and things like that. the u.s. is laying out, saying here is the evidence we have. so, that serves a very important purpose. it shows how they made the decisions they did, and then it also boxes in president-elect trouble little bit because he said we do not know if it is russia -- this could be some guy in his bed in new jersey. this is the obama administration making his case about the allegations of russian hacking. julie: now, we have not heard from the president-elect or his team as of yet. no tweets have come up it we have been monitoring that. he did speak last night in advance of all of this about the
hacking, and i want to play what he said at that point. mr. trump: i think we have to get on with our lives. i think computers have complicated lives very greatly. the whole age of computer has made it where nobody knows exactly what is going on. we have speed, a lot of other things, but i am not sure you have the kind of security you need. julie: trump there, appearing, of course -- of course, with don king. given his downplaying of this, how much does this action today really bo himx in? can he come into office and say nevermind? nick: he kanaan do a lot of the sanctions. though sanctions are done at executive order, by the stroke of a pen president obama. can take his image off the sanctions -- the financial sanction or, the other side of it -- production of taken place, expulsion of the russian format woman -- -- russian
russian diplomats, the big thing is here is the evidence that makes the case for russia's involvement. the other element is this is also directed at congress, which has indicated it conducts several investigations of their own -- lawmakers have said so -- two russian hacking, and already we have seen a response from hall and others saying these allegations laid out by the administration are indeed troubling. to it would likely add pressure for congress to push ahead with their own investigation. ramy: definitely. house speaker paul ryan saying they are overdue, taking a swipe at the obama administration here, but mr. trump has also said he does not necessarily believe the cia and the fbi are actually able to be believed. 21 days, 22 days going into this -- maybe we do not even know what is going to be happening, right? nick: that is really one of the
most interesting storylines as president-elect trump comes into office. obviously, there is some antagonize him with president obama, -- antagonism with president obama, which would be expected -- democrats versus republicans. i have the same time, we have seen some antagonism between donald trump and republicans in congress, and that is a situation we are all very eagerly awaiting to see how it will play out. congress has been talking for quite some time about imposing further sanctions on russia over ukraine, but also over his involvement with iran. that is something presumably donald trump would oppose. he has come out and said he wants to revisit sanctions. congress does have power to impose its own sanctions on russia. it would be a big question of whether they will pursue that under julie: pressure from president-elect trump. a lot to keep you busy. thank you very much. really appreciate it. let's check the other day headlines in the first word
news. courtney collins has more from the. courtney: a cease-fire in serious civil war will take -- syria's civil war will take place at 5:00 p.m. today. syrian tv says the agreement paves the way for talks aimed at ending the conflict. russia says president-elect donald trump's administration can join the peace process once he takes office. german prosecutors say they have released a tunisian man who was detained. they determined he was not in contact with the main suspect in last week's berlin truck attack. prosecutors said at the time his sense that telephone number was -- that his telephone number was saved in a may summary telephone. he is believed to have driven the truck that drove into a christmas market, killing 12 people. found ine prints were
the truck. starting next week, french nationals will contribute an asra $1.67 to finance a fun a terror attacks. hundreds have died over the past 20 months hit a truck attack in nice killed 86 people, and 130 people died in paris the tax november of last year. they are floating the 1.5 and other fun. the case, there is that the crash of a military transport plane was not an act of terrorism. a military official said analysis of the white recorders show there were no white recorders show there were no -- shows there were no explosions on board. the four hours a day, powered by analysts -- 2400 analyst.
i'm the t i believe you are still a catesby shareholder as well. that's kate made shareholder. for katehe right move spade taking? againstnk they're up some headwinds, as everybody is today in the consumer marketplace. if you have activist after your board,as a company, as a you are obligated to take a look at what the possibilities are in the marketplace. it does not mean you will sell. definitely,eans, though, that you have an obligation to shareholders take a look at what is available in the market, and that is what they are doing. julie: when you look at the potential outcomes here and having it on the board, does it accents for kate to the inside another company, for example? one of the other, perhaps, luxury companies, handbag companies -- does it accents to go private -- does it accents to
go private? kay: they have a strong man -- ran -- ran presence. i think it would have to say -- stay true to its brand and not the homogenized to the greater parent company. that is the thing that larger companies can do to bring that will dissipate the brand, so you have to be careful about who that is. think that is a careful consideration about might be. he needs to be-- a private equity firm that has other fashion brand. has an expertise that will be sold to the company, if that were going to be sold to a private equity firm. ramy: if it were bought by another company -- a couple have been floated -- coach, michael kors, which one do you think would be the best it? -- best fit?
have buses and the pluses and minuses. athletic i think. that is really not kate. it is a whimsical brand, a brand for millennial women that are career women -- women that are single, can spend money on themselves, have disposable incomes, and women alike to have fun, go out and have a good time, "look at it, i can show off a little bit." that if the customer -- a desirable customer that had. -- that has disposable in him. trends we havehe seen is a watering down, and you -- devalueme extent to some extent. many have pulled back from that, trying to keep the prices up, etc.. do you think that is the right
way to go, and you think it is too late to do that kind of pulling back? kay: i have felt for many years the consumer market has been trained to buy only on, only on sale, because people know things will go on sale. i think that is the wrong thing for a brand do. right leverage, the ceo of kate, has tried, the last couple of years, to pull back from discounting, and to look at the full price sales in the stores, and hasn't participated is aggressively in some of the sale pricing. look, the marketplace has his pressures on that, and after all you have to sell the inventory. so, they had discounted going because theyiday do have to move the inventory, like everybody else. ramy: old records and i want to bring in our gadfly columnist to talk further about m&a and the geopolitical events that could influence dealmaking. what is most on your mind that
will impact what will happen? >> obviously, the u.s. election. dealmakers are trying to figure out will donald trump stoke more deal activity, or stifle it. it could go to waste. therump is going to change tax code, is that going to bring fewer cross-border deals because if you look at activity globally, u.s. companies drive that, especially cross-order deals. they do not have the need to do that if they are able to take their cash back to the u.s. without those penalties. will they look more to the u.s. for deals, and on the other hand, are we going to have this protection is aspect play into it, which we are seeing in other companies as well, china, parts of europe -- could we seem more of that. i do not think we will have less of it, but we will have less cross-border deals. julie: and are you some caution
in express because of elements tara is talking about -- people waiting until later in the year to see how these political event play out? kay: nobody knows. we are really in a period of time where everything is unexpected. however, there is a great deal of capital spending on the sidelines still, and m&a activity has been high. i think for good acquisition there's going to be a lot of money around and not just in the fashion market, but i know in the media business, where i come from originally, there is a lot of others were media activity is high is well. i think the consumer is starting to come back. see that in the emerging market. if the kicker, i think europe is still at risk for the tumor because of the uncertainties in the upcoming election in the immigration issues have been tough in many european
countries, i think. ahead, what is your biggest worry -- or what do you want to have outlined politically from the incoming trust administration and set aside some of the concerns in the retail industry? kay: bringing that the enormous amount of capital in overseas in corporate coffers -- 80 enormous -- dollars -- it is really important. it is something that is. it was something on the docket regardless of what elected because we realize u.s. companies are much cap will that needs to be going. it is an issue with other companies that i am on the board of the companies i am associated with. people are looking at that as an opportunity to do some real. don't forget, companies, corporations, have stockpiling andtal, pain that dividend, it is what you like to have, but it is not investing in the future. we have to jerk.
that is probably the most -- we had invest in the future. that is probably the most important ink. it will come with closing loopholes. depending where you are, it will be individually assessed, but i think bringing back the capital overseas. julie: any sector where we see a lot of that -- activity? tara: media. julie: thank you. terribly tell, tyra lachapelle and kay koplovitz. coming up, the talking to bloomberg view columnist conor sen and get his take on why immigration might be the only hope for states that helped elect president donald trump. that is at 4:00 p.m. eastern time. . ♪
abigail: thanks so much for geting us here at i have to to the question i have been asking guests week. doubt 20,000 -- it basically means tomorrow. could it happen? : it could happen. it has been a reversal of macro trends -- treasuries being on, dollar -- the bought, equities getting weaker. point tomorrow to reach the 20,000 level would be a surprise. abigail: early 2017? jim: we will get there. abigail: q -- can you talk about skew is?- what jim: you sell and s&p 500
three-month out-of-the-way call and what that affords you, you buy the foot. this is how far out of the money the put is. it is near five-year lows. you have to go too far out of the money to buy that. what this represents is the dominant -- phenomenon, post the presidential election in early november. investors caught offside at chase to call him find volatility. -- implied volatility. skew.lattened out it is true across u.s. equity markets. 300 names in the s&p 500 have three-month skews below the 20th percentile. abigail: how do investors play this? jim: one way to think about it is from the hedging side -- the
technical perspective. we do not see the next true volatility event risk until further out, february, march. something you can do to exploit that is sell upside to buy downside. nvidia has been in the news. go out to february. $120 call.ing like a you do that for nothing and have nice, white protection. abigail: great stuff -- wide protection. abigail: great stuff you -- stuff. miss --oming up on you ♪
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russian intelligence officials and agencies. 35 russian operatives will be expelled from the u.s.. as part of the response, the fbi and homeland security department have released a report with technical evidence intended to prove russia's military and civilian services were behind the hacking. president-elect donald trump has repeatedly dismissed claims russia was behind the attack. two videos released by syrian group show thed aftermath of a attack on a school in syria. effect atre goes into midnight. russia and turkey have both backed the deal. argentina has reopened its investigation into an activation against former president christina hernandez. she is accused of covering up the alleged iranian involvement of a 1994 bombing of a jewish community center. the