tv Bloomberg Markets European Close Bloomberg January 6, 2017 11:00am-12:01pm EST
mark: ok, we are going to take you from washington and cover stories out of london, hong kong, and moscow. there is what we are watching today. the u.s. labor market turned in a solid performance. 156,000 job increase followed a 200,000 rise in november and a jobless rate kicked up due to growth in the labor force. chrysler.look at seal ken sergio marchionne make the debt disappear by the time he steps down into years? intelligence officials in the u.s. will greet president-elect donald trump and brief them about the russian attempt to it -- influence the election by hacking. as we know, trump is already
skeptical and has publicly challenged their findings. mark: have a look at where european equities are trading just under 30 minutes until the end of the friday session. stocks are lower today. they are off for their second consecutive week. we entered a bull market on the stoxx 600 on tuesday. look at all the currencies that are falling against the dollar today. look at the bond yields. the 10-year, the two-year. far -- your far two columns. the most since the day after brexit, amgen winning a court blocking its partner from selling their cholesterol-lowering medicine medicine in the u.s. because -- medicine because it infringes amgen's patent treatment. analysts expect the medication
to generate $2 billion in annual sales by 2020. to appeal that ruling. confidenceic area jumping to the highest since 2011. the ecb extended its stimulus combination -- the nation shouldering -- showing further signs of strength. -- whatl lead to momentum we have seen in the economy. economic momentum rising to a 5.5 year high according to latest pmi data. german factory orders falling more than forecast. partially upsetting the investment driven 5% increase. retail sales fell more than expected. the report follows a slew of data showing the economy strengthen in europe's biggest.
output expanding by the most. unemployment continuing to drop. inflation rate posting a record increase. uncertain year due to a number of elections in the eurozone and in germany itself. 90 minutes into the trading day, let's get over to the markets desk. abigail, what are you looking at? we are looking at not a lot of action for u.s. stocks. what action we have is more bullish. we are flipping between small gains and losses. small gains for the dow and the s&p 500. the nasdaq up even more. the nasdaq is on pace to finish at yet another record close, having done so yesterday. we do have the three major averages on pace for weekly gains, as well. we take a look at an interesting chart on the bloomberg. the action we are seeing this week in contrast to last week's decline fits what we have seen
in the last five years. -- in 2011 and3 2012, we see declines in the last week of the previous year followed by gains. we see a bit of a reversal of 2015 led to, 2014, declines in the following year. we are looking at a gain. not so bad, at all. we take a look at the bloomberg dollar index. we see some strength. we have the bloomberg dollar index snapping its losing streak. we see that yields are trading higher, representative read. this tells us that bonds are selling off on all of this. to grow the best since 2009. investors are moving out of that safe haven treasuries just a little bit. the 10-year and the 30-year are on pace for weekly declines, but the two-year is on pace for a weekly increase.
a little bit of a divergence. taking a look at some unusual trading action. we take a look at hp. earlier today, there was a big drop down. whateam is digging into could have been behind that unusual trading activity. vonnie: we will bring them that as soon as we get it. that is for sure. thank you. checking in on the first word news, courtney has more. courtney: intelligence officials briefed president-elect donald trump about what they say are russian attempts to influence the election by russian hacking. trump is skeptical and has already challenged their findings. meanwhile, trump says he will demand mexico reimburse the u.s. for building a wall at the border. he blames the dishonest media for failing to report that. trump posted on twitter after aports that congress may use
2006 law to justify funding of a border wall. continued unrest in mexico over gasoline price hikes. 300 stores have been ransacked and more than 700 people have been arrested. a police officer was killed trying to stop robberies at a gas station in mexico city. a first step to reducing military forces in syria. a russian aircraft carrier is being withdrawn off the waters near syria. russia has been supporting syrian troops, which recaptured the city of aleppo. a truce brokered by russia and turkey has been in place for almost a week now. global news power 24 hours per day, this is bloomberg. thank you very much. that to the latest u.s. jobs figure. $156,000 at the end of last year. wages increasing the most since
2009. bill gross, what did he think? bill: it is a decent number and suggests that gdp is moving along at 2% or 2.5%. get a veryorder to healthy economy, trump does suggest a strong economy, you need 3% real growth and 5% nominal growth and we are a point under for both of those. >> this is absolutely crucial. if we are to see a lift in the animal spirit, certainly something the president-elect wants college do you think it will be an inflation left illusory to americans of little value or will we actually see real economic growth over the next year or two years? bill: i think some of both. it is hard to know. we don't really know what the program will be. trump is suggesting the $1
trillion program over 10 years, that is $100 billion per year, that is 0.5% in terms of fiscal spending, might boost real growth. we have seen inflation grow with these numbers and inflation grow by 3%. i think some of both. what is critical is the productivity number. not just productivity, but total factor productivity. it gets a little complicated and economist-speak, but it means that you cannot just throw resources at the economy like trump may do and the republican administration may do in terms of fiscal spending, but you need to throw productivity at the economy. growings that produce productivity, as opposed to just more resources. we are going to have to see about that. tom: the basic idea here is that there are three vectors to interest rates. there is a trump reflation, a jump condition we have had since november 8, and there is a lot of people talking about this is
great, but we are going to roll ,ver to a new lower rate regime some of that because of international affairs. what does h&s unconstrained fund betting on -- a janus unconstrained fund betting on? bill: it is hard to know what fiscal spending will do in terms of real growth and in terms of inflation. it is hard to know what other countries and central banks will do in terms of quantitative easing, but we will know it. the 10-your brakes 2.6% on a weekly or monthly basis, because it is so strong and so important in terms of the technical analysis that if and when it is broken on the upside, it is a bear market and if it is not broken on the upside, we hope to stay where we are. vonnie: that was bill gross. let's get more reaction to the jobs report.
this is a cyclically robust labor market, but a structurally challenge labor market. cyclically, we are soft landing to about 150,000 to 160,000 jobs per month. it looks good cyclically. but structurally, whether you look at the employment, the population rate, or you look at labor participation, we are still challenged. that speaks to the need not just for cyclical stimulus, but also structural measures. >> to that point, cyclically robust, structurally challenged, the takeaway, does the fed have a role to play, danny? >> obviously, the fed has a role to play. it is going to try to kind of coordinate itself with fiscal policy if there is a big fiscal birth, which sounds possible, but we don't know, then obviously this is an opportunity for the fed to raise rates,
which it should. is likely to be down the road. we are nine years into this cycle. then you would like rates to be able to be cut. mohammed is right. there are fundamental structural problems that we need to deal with. the reality is this complete decline in the employment rate has not been seen in any other country other than ones that have really high unemployment rates. the employment rate -- unemployment rate has fallen in italy, but they have an unemployment rate of 12 percent or so. we have not seen this in the u.k. or germany or other advanced countries. we need to do structural things to get people back into the labor force and back into jobs. it is going to take a while. when you talk about structural things, this is going to take a while. that is what you mean, right? x absolutely. >> since mohammed is right, let's turn back to him. >> he is always right.
[laughter] donald trump wants to take a whack at fixing structural issues. if you are devising him, do things like the infrastructure bank put you in the right direction? >> i think infrastructure, tax reform, regulation are all important, but they need to be complemented by skill acquisition, labor retooling, working on the functioning of the labor market. i think that is really important, the functioning of the labor market. that speaks to long-term elements. danny is absolutely right. that is not going to happen overnight, but the signaling we are moving that way can be important. this is an employment report that will encourage the fed to hike at least three times next year. this is a fed that is going to move beyond being short-term data dependent and it is going to become a little more
with a look at whether it is free fiat chrysler so, how is hema going to do this? investors think he will. >> yes, yes, exactly. sergio marchionne starts his last two years at the head of fiat chrysler and his mission is to reach eliminating debt targets, targets that have been fantasyland or not realistic by analysts for several months. thatood news for them is executives expressed higher confidence in reaching those targets in investor meetings the after theonths strategy in the u.s. was changed. they ditched the production of sedans, which are not very profitable for much more
profitable jeeps, suvs, and ram trucks. the end of this month, when they their 2016 results, he may show on how they plan to reach those targets. it looks like investors are starting to believe it. vonnie: well, they are. if you look at my chart on the bloomberg and you see the relevant performance of the stock compared with volkswagen and general motors, it is up way more. is this on the actual products it is selling right now or expectations for a brighter future? especially it is expectation on the fact that in the next couple of years the will be a will to produce -- fiat will be of to produce and boost margins -- will be able to boost margins in the u.s. we have seen analysts changing on fiat. he stock onraded t
conditions. the shares have been rising and today, they reached the highest since october 2015. sergio marchionne has something to may dese at the detroit auto show. mark: if he reaches his 2018 financial goals, he is in for a massive payday, isn't he, mr. marchionne? it is really is in his interest to the goal. tommaso: yes, as you know, marchionne clearly has a personal interest and all of the front-line managers, all of their links -- incentives are linked to the goals. 4rgio marchionne can get million shares if he hits the target. it is also his legacy. he feels there will be m&a in the coming years and that fiat
can play a much stronger role as an aggregator if it is free of debt. golson something corporate fixer, so he has to finish fixing fiat chrysler before leaving. mark: great story. we will have much more on the auto industry. we are going to talk to the gm chief executive mary barra on monday live 8:40 eastern, 1:40 p.m. here in london. still ahead, gold on track for a win. it is plunging in the fourth quarter. why traders are sounding more bullish on gold in the new year? this is bloomberg. ♪
its biggest quarterly drop in two years at the end of 2016. traders turned bullish after that dismal year. it is headed for its best performance of april of that year. -- since april of that year. , analysts,ders turning the most bullish in a year on gold? eddie: i know. it is quite a turnaround. we have come up a big drop in gold prices. we have been getting survey after survey of bullish calls on gold. i think there are a lot of fromion marks left over 2016. brexit happened. we will have elections in a lot of europe this year, germany, and so on. donaldalso waiting for trump to be inaugurated. people don't know what that means. it is not necessarily that trump will be negative for the economy in some way, just people don't know, does he want a weaker dollar? with that the positive for
growth in the u.s.? his budget? advisor -- people just don't know. it is that uncertainty. gold lastlighting year. it rallied 29% by july only to get back 16% by december. once upon a time, gold was a hedge in -- against inflation. in this reflation talk, is that part of gold's possible a lower as an inflation hedge once again? eddie: gold is a great inflation hedge, but the real play is real weight. it is yields. and inflation, taken together. if the fed is willing to allow the economy to run a little bit is still good for gold prices. if we see inflation rising, but we don't see a subsequent rise in interest rates, that is great
for gold prices. that is definitely something that can support prices. vonnie: is that correlation what you have been most watching to see, where the direction of prices will go? or will you be keeping an eye on physical sales? sales are really important. we are heading to chinese new year. by the end of the month, it is a new lunar new year. china is the biggest producer of gold. we can't discount them. gold still pays attention to the physical markets. as long as china keeps buying, that would provide a floor on the prices and help to push them higher. vonnie: what is your rent is a patient for china buying? we are hearing more and more scare stories out of the nation. eddie: there are two sides to it. on the one hand, we have these questions about is china as strong as people think? will they buy as much gold as people think? at the same time, it is also a question of is the currency stable?
we have seen a flow into bitcoin in the last few weeks. that has come off in the last couple days. of that money going to come into gold as well? all of these factors provide the ammunition for the bulls and it is hard to keep the bull's down. for: the bold bull call gold, it is 10%-13% up? are sayingultrabuls 1600. among the mainstream of analysts , 13 point five zero would be a good year-end price for gold. mark: eddie, thank you. great. breaking news, vonnie. vonnie: breaking the news that senior executives at bank of america earmarked 10% more to pay the fixed income divisions staff. --is a smaller staff in 2015
2016. the bank carved out 5% less for equities traders after that business slowed last year. individual trader payouts always very from the figures depending on what products they handle. our reporters reporting that bank of america will boost bonuses for bond traders, cut them for stocks traders. bank of america up 33% since the election. up about 0.2% now. mark: have a look at european equities and how they are trading. we are heading toward the close. it is going to be touch and go. look at that, barely changed on the day. it was a week we saw the bull market for the stoxx 600. nine days of record highs for the ftse. the close is next.
this is the week we entered into a bull market on the stoxx 600. after falling massively for the first week of last year. nine days of gains come of the best run since 2013. seven of the nine have seen record highs. wanted to compare the first year week of this year compared to last year. msci.ite line come blue line come s&p 500. yellow, stoxx 600. we have seen increases on all four from 1-2%. the bottom chart is the same -- look at the declines we saw because of china jitters.
stock 600 down 6.7%. msci 6% lower. emerging markets down to .8. that's down 6.8. c beis the offshore yuan theave seen a reversal -- weekly rise for the offshore yuan was a record performance. it pretty similar move to last year when we saw the short squeeze in january of last year. that reversal of the currency began a period of a 5% rally that lasted a few months. yuanest bets against the fleshed out bearish positions when china concerns raid our screens. speaking of goldman sachs, which coined the term -- urging
investors to stay the course india appeared when it comes to china, it anticipates a grinding move lower. china, south korea, other asian protectionist measures -- what a beginning of the year we've had. if you look at the ruble , you say it's a little less at risk. it is stronger as well. oil prices have been strengthening. the mexican peso still pretty weak at 21.33. i did want to mention the 10 year yield. we saw a roundabout move with the 10 year yield.
ian saying the jobs report will be pivotal. .t was we saw the yield moved to 2.42 b. we can see a whole range of securities. the nasdaq at a record. up .5% today. s&p 500 up .25%. won ahigher because it ruling saying regeneron cannot sell their drugs in u.s. the bti earlier higher by about .4% -- wti earlier higher by about .4%. bank of america is the next tory. mark: poised to boost bonuses for many bond traders.
-- income america is the next story. joining us now with the latest .s laura keller the rebound in sentiment around fixed income that we experienced in the second half of last year. expectas you can see, we 10% for traders of fixed income products. that is much better than we would have expected the first half of the year when it was really terrible across every credit or currency. mark: not such good times for equity. laura: the disc record -- that is correct. 5% fewer if you are trading equities products. the stock world is not doing as well as fixed income for the end of the year. reward or this a incentive?
not much of an incentive for equity traders. laura: this is a bank that is having trouble returning on equity like they wanted. they are trying to cut costs. it is a bit hard to justify these bonuses for these equity traders when in fact they've not been doing as well. vonnie: will the markets now into space this or see this major print this as equities are not going to do so well next year either? laura: certainly, compensation decisions are made based on history and past factors. i don't know that equity traders ot gett that as i may ni paid extra. if you are looking for another job, it could sway you if you did not get paid as much as you expected.
it speaks to why these banks overall don't have to pay as much for the overall pool. they are cutting people because there's nowhere else for any of these traitors to go. -- traders to go. mark: great to see you. thank you for bringing us up to date. more reaction on today's u.s. jobs report. richard jones. earlier this week, people were saying come is this the end of the dollar rally? the dollar picking up speed today. richard: the key focus for investors today and what has led the dollar higher and u.s. yields higher is the jump in hourly earnings. that was the standout from today's report. ors lights a lot we've seen
pulled back we've seen in the dollar and the chart we are looking at is dollar-yen has had a slight bounce back today. where up 1%. still lingering your the intraday highs. -- near the intraday highs. mark: the close link between the dollar and yields. -- billff the highs gross saying 2.6. that is such an important level. that signifies a bear market. richard: we are 10 basis points higher than we were. we are not anywhere near the level's bill gross is talking about. those earnings numbers today did give reason for some optimism. that is why bonds sold off. there is a lot of volatility. what is the bank of japan thinking when you have three or four big figure moves in a couple of days?
can the minute a currency helping around like that that's whipping around like that? richard: there has been a lot of volatility for a long time. since president-elect trump was elected in november, that's been a 15% move. that is a big move in a short space of time. when you get a big move like that, you will get these really sharp pullbacks. that is what we are seeing now. it's something policymakers have to get used to. vonnie: what about bonds? do they become any more attractive in japan? we are inching our way towards the 2% target. richard: if bonds do get attractive, it is that level where bill gross has highlighted, 2.6, a level where
those who aren't convinced this trade is the way forward will be looking to actually buy bonds at those levels. given the yield differentials, you probably still favor the u.s. in terms of the attractiveness of the fixed income markets. mark: this was a battle of the chart winning entry earlier. the day the ecb reinstated inflation -- all indicators, the breakeven, the five-year forward that the cpi went to 1.1%. it is the core that matters come is a net -- that matters, isn't it? richard: if you look at the chart come ever since qe was started in the beginning of 2015, we have tracked sideways in a tight range.
it is not going anywhere. there is no upward traction being seen. you see it in the breakeven's. that -- really core trading sideways will keep the ecb on hold. david: happy new year. news --some breaking president obama making headlines in an interview with vox right now, talking about the future of obamacare. he said he would publicly support the repeal of the affordable care act and replacement if republicans come up with a better plan. "if there is a better plan, i want to see it first." coming up, mitch daniels will
vonnie: once again, president obama is making headlines in an interview with vox right now commit talking about the future of obamacare. he says he would publicly support the repeal of the affordable care act and the placement if republicans come up with a better plan. joining us with his take is mitch daniels, former indiana governor and president of purdue university. thank you for joining us.
of the you make headlines that president obama would publicly support it better that's a better plan if the gop comes up with one -- publicly support a better plan if the gop comes up with one? >> i only heard what you just reported. from the sound of it, it is a comment by the president. for him to take an open stance on this bill in which he has invested so much is really very amendable. -- commendable. advocatess staunchest have faced up to the fact that it has not performed. it has failed on every parameter that it originally made promises about. we ought to be able to do better. that is true as a matter of health care policy and certainly true as a matter of fiscal and economic policy that will be
more promising for the american future. vonnie: your state has one of advanced ideologically ways of delivering health care. would you have the indiana system adopted throughout the united states as part of this replacement or what would you have done? >> i would certainly recommend the basic elements of it be included in a new, more consumerist health care system for the country. i would take exception to the term ideological. i see it as entirely practical. was in the health care business for a long time before my public service. one thing that has always been very apparent is we will not have cost control and health care until we are all cost controllers. we are trying to do it from the top down, this massive bureaucratic system trying to
you arecost -- squeezing the balloon, the cost pops out somewhere else. placediana system put in for state employees and the trusting is based on people's decisions about first dollar health care, the basic commandment three aspects of health care while protecting fully against really expensive events of the kind that can wreck a family's finances. everywhere that has been tried it has been proven to get at the core problem. overutilization of health care. the plan does penalize people that use services too often. one of the criticisms levied against it. consultant to indiana at the
did develop that and craft some of those ideas for indiana. what do you say to critics who medicaid not fair that enrollees can't get access to the full amount of services unless they pay a premium? anybody who doesn't know that emergency room services have been badly abused hasn't been paying attention to the evidence. it is not a penalty to say to people at some point you will have to pay a little bit. as it operated in asked very little of the participants. it does give them the ability to make their own decisions. that let anyone tell you
just because someone is low income they cannot make smart consumerist decisions. should i get a generic drug instead of the most expensive prescription ready? should i get a second opinion before undertaking that procedure? should i go to the emergency room if it is not really an emergency? until we get all of us making those decisions which we are entitled to as a matter of human dignity, you will not see control of costs in health care. vonnie: if it is such a party, why hasn't the gop gotten a replacement for the affordable care act? >> i will not speak that i'm not in the partisan world anymore. i will not speak for people who are. there are a variety of similar plans that would be much simpler, much more consumerist in their nature, would give
people coverage who don't have it now but would give them the opportunity to make those first dollar decisions and if their experience is positive to build up some savings against those emergencies that might come in the future. vonnie: the incoming president is proposing a trillion dollar spending plan for infrastructure. hawk.e a strong deficit how do you reconcile fiscal spending and keeping the deficit and check? >> i hope they will be very careful about this. during the last campaign come in either side had much of anything to say. did they haveered anything to say about this minor matter of nearly $20 trillion in debt. campusking to you from a
where 30,000 young people are kind to prepare for better futures. each one of them has already been settled with a massive debt run-up by their elders. not for investments in their future but for current consumption. to do andwrong thing an economically very dangerous thing for society to do. disagree with corporate tax cuts and personal tax cuts as well? >> the first step toward a better fiscal future and toward some control over our debt is better economic growth. i have no problem with them starting there. we will never get anywhere 1.xing along at on percent growth like we have been for the last several years. they will also turn their attention to the real cause of our debt problem, which is out of control spending in the
so-called entitlement programs, getting a start on reform of those programs. we just talked about medicare and health care being one of the .iggest mitch daniels, think you for joining us today. margaret willy, join bloomberg for an exclusive interview with our very own david gura. we are within reach of the 20,000 mark in the dow jones. this is bloomberg. ♪
bonds andis one has equities and it's looking ahead. this white line is the relative performance of the ftse 100. how it is doing relative to the rest of the region. it did quite well last year. we all know the brexit story, the low pound. it has gone down versus the stoxx 600, it is not doing as well. this blue line explains it all. it is the selloff. we saw the reflation trade come every bond selling up around the world. future the u.k. guild that brought the stock market lower. the ftse 100 is a pretty defensive market. one third of it is health care and consumer staples. it doesn't do really well when the economy is doing well. suisse saying this is
going to continue. we will have a market in 2017 where the ftse underperforms. mark: you can find this chart at -- 4714.btv vonnie: that is a great second timeout. oliver, you have a lot more experience. oliver: that was pretty good. i'm looking at u.s. stocks. not a lot of bonds mixed in here. i'm looking at what's been happening in terms of what people are buying since the election. the purple line here is the s&p 500. the teal line looking at a low volatility and the white line looking at the high state of stocks. this is normalized at the
election. look at the rally. they are up 16% since the election. thele have been going into companies that have the most volatility. a stark difference from what we saw at the beginning of the year. we have a lot of dichotomy there. #btv 5533. i never forget the number. my vote goes to sophia. david: my vote goes to sophia as well. i get so excited by things like that. that was the european close. this is bloomberg. ♪
we are covering stories from chicago to new york and moscow this hour. will up, robert kaplan join us with his reaction to today's jobs report. donaldresident-elect trump is expected to receive an intelligence briefing this hour. a $2.5 million bugatti for half the price. where you can get this bargain. abigail: the rally ball is flip-flopping action earlier, small gains and losses for the major averages. the dow and s&p 500 are all nicely higher. the dow is within 50 points