tv Bloomberg Markets Americas Bloomberg January 23, 2017 12:00pm-3:23pm EST
from bloomberg's world headquarters in your, here are the top stories. president donald trump ends a decades old tilt toward free trade by signing an executive order to withdraw from the transpacific partnership. cromwell at sullivan & joins us on what a trump administration meets for mergers and acquisitions in our weekly deals report. there is a big showdown looming in the treasury market. first, president donald trump inside an executive action to withdraw from the transpacific bishop. -- partnership. vonnie: they were running behind schedule. president trump sign that executive action. he said he will renegotiate the free trade agreement as well. as part of the campaign promise
that was about to happen. we haven't had that nafta signing yet. we have had a pulling back from tpp. this is what's to come. we will be speaking with michael mckee. rehash for us the executive order we saw sign today? >> we saw the new president signed three executive orders. repealing the tpp, getting the u.s. to withdraw from that agreement. the second one, he reinstated the mexico city policy which bans u.s. funding for abortions are it finally he implemented a freeze on hiring for all federal workers except for the military. he is trying to shrink the federal workforce. except for the military, which is exempt from that.
david: what teeth to these executive actions have? is this more symbolic than anything else? toluse: it is assigned where he wants to take trade policy. the tpp was negotiated over several years. last year, president obama he would get it through congress. donald trump is made it clear that even republican members who supported the deal that he does not want to go forward. it does not look with this new executive order that there is going to be a chance for that to go forward. vonnie: michael, let me bring you in here. we didn't get any executive orders on nafta today yet. it's possible we could still get it. does that mean the renegotiation of a renegotiation it? michael: the administration has been engaged in a debate about how many executive orders to put out in a day. they want to stretch it out.
jared kushner is going to meet with the trudeau cabinet to talk about this, which tells you it's coming. they are going to demand a renegotiation of the deal. the interesting thing is, what will they get out of it? that's not what we've heard yet. he is meeting with the mexican president next week. maybe we'll get some further clarity. maybe when he does sign an executive order. there was some confusion about what the executive orders would do. the first was somewhere to one about regulations. what do we know about the second one? michael: there are a couple of things he wants to do. the regulatory agencies have some discretion in what they can do. he wants to give them the opportunity to undermine these other laws as much as
permissible by law while they wait to see how they are going to handle the affordable care act and they can repeal the whole thing, but they don't have anything to replace it with. them the look of doing something without actually doing something. there are some things around the edges he can do. if you don't buy insurance and you are a healthy young person, you are subject to a fine. a federal agency can broaden the exemptions now. it doesn't mean a lot. you still have to file for the exemption and it takes a while. it's more symbolic than anything else. vonnie: the biggest reaction is in treasuries. that is down five basis points in the last hour or so. let me go back to you at the white house and ask you, president obama signed an executive order saying there would be no new regulations when he came into office. we shouldn't read too much into
what is coming. we can only know what we know already. toluse: i wanted to mention that president trump met with a number of business leaders and he pledged he believes regulations could be reduced i up to 75%. that's just a number that he throughout there. it gives you a number of how much he wants to reduce regulations. he will hear from them within 30 days. they were propose what they think the government can do to create more manufacturing jobs. he has made it clear he was to reduce regulations and taxes. david: thank you very much. we are halfway into the trading day. abigail doolittle joins us. abigail: we are looking at declined to the major averages here in the u.s.. the dow and s&p are on pace for the worst klein of 2017.
it will be interesting to see if this holds. there is a continuation of the volatility we've seen recently. these averages are unchanged. typically, that tends to build into the closing volatility. dow transport is down more than 1%. suggest the volatility. it had been briefly negative on friday. it could lead to the other averages. the other thing they have done is the s&p 500 may see its first 1% decline at some point. it has been 70 days, the longest since 2006 since we have seen a 1% decline for the s&p 500 and the orange line. sidewaysy flat, trading, the last time we saw this we saw a big bouts of volatility. we could see buyers and sellers taking out this range in some
decent volatility. as for some movers, we did receive breaking news around humana. a judge has blocked the deal saying it is anti-competitive. cigna. saw anthem and just minutes ago, it's not surprising that the deal is not happening, but it was much more likely than the anthem and cigna deal. we have some other movers on the downside. qualcomm is down sharply. hastily put a lawsuit up against qualcomm around licensing one of the licenses they play. -- pay. autozone is lower. say theretrump did could be up major order tax in place. that is negative for all the hardline retailers. we have the transocean lower.
not surprisingly, we do have the 10 year yield rallying, down eight basis points. i just mentioned over the last hour and a half, it tells us safe haven bonds are in a rally mode right now, halfway through the trading day. vonnie: thank you for that area let's check in with first word news. president trump is taking aim at a trade deal he says would hurt american workers. he signed an executive order pulling the u.s. out of the transpacific partnership area congress never authorized the agreement. he plans a hiring freeze on federal workers and cut off funding for international groups that perform abortion. marco rubio says he will vote for rex tillerson.
the foreign relations committee will vote on tillerson's nomination today. lindsey graham and john mccain in saying they will support tillerson despite concerns about his past dealings with the russian government and vladimir putin. banister prime minister trimmers -- theresa may's legal challenges won't and tomorrow. the issue was whether she were parliament had the authority to trigger article 50. other legal cases are pending. in the southeastern u.s., severe weather killed at least 19 people over the weekend. tornadoed when it at a had a trailer park area the storms stretched from texas to the carolinas. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries, this is bloomberg. i am taylor riggs.
lender in the u.k.. samsung said the design of batteries caused the note 7 phone to burst into flames. it was a public relations and financial disaster. airlines banned the phone from their planes. it cost $6 billion. holdouts, sales were down 3%. there was a sweet spot between the decline of conventional lighting and pushing into led. they are facing tougher competition from asia. embracing new technologically better technology. vonnie: it's time now for the deals report. analysis from do the biggest players behind the deals.
we are analyzing big pharma. humana was buy blocked by a federal judge. that would have reshaped the health-care landscape. the time itlaying can be -- that it might buy cigna for another month or let's handed over to jeffrey mccracken. .is work done deals jeff: the federal administration has a lot of influence with big m&a. we are three days into the trumpet ministration. to wonder what
the big deals are? dealmakers are optimistic about taxes and trade. what are some things he's talked about that would be good? lot yete don't know a as to what he's actually going to propose. what we do know is he has appointed a very pro-business cabinet and that pretends good things. regulatoryon hold regulations. a regulationsly are and has talked about cutting back regulations that impede business. we're going to get corporate tax reform. all of that is going to be very positive for the economy. ultimately, what drives deals is a strong economy. those are going to be things
that are very positive, more deals. we are in the midst of a positive deal cycle. i think it will continue with respect to domestic m&a. aboutif we are talking all ryan or donald trump, they want to repeat create these countries with offshore cast. frank: it's going to be a m&a,ive thing not only for but also reinvestment in the united states. there is over $2 trillion thatde the united states could be brought back. some of it will be kept overseas because companies needed for reinvestment over there. a big chunk of that will come back. it's going to pay down debt. it's going to allow companies to reinvest. a big chunk of it is going to be used for m&a.
jeff: what would it concerned professionals like you or your clients? what would concern them that he has talked about? isnk: the biggest concern around trade. many u.s. companies export an enormous amount. a lot of m&a as you know is cross-border. extent, will companies outside the united invest inreluctant to the united states? will u.s. companies be interested or concerned that if they acquire a company in europe or asia or latin america that suddenly they are going to be bashed for that? might beder m&a touchy, at least in the first few months. jeff: you think there will be a wait and see. before they move on that canada thing?
frank: i have not heard definity from clients on that. it's something you have to be concerned about. jeff: since the election results came down, the market has reacted well. it's way up. m&a when thep equity markets have pushed up stock values? going to use are stock for the acquisition, it allows you to buy another company with your currency. however, if you are buying for cash and the target company has gone up, it's more difficult. to some extent, some companies have gotten ahead of where earnings are. in stock market went up expectation that we will have a better economy. we will have to see. i think high valuations for companies, some have dampened
acquisition activity. the belief is we are going to have greatest -- greater growth. it's going to be greater than 3%. jeff: the biggest factor from what we can see here in the journalistic side is the regulatory world. just a few minutes ago, the deal that they had put together has been blocked i a judge. what do the lawyers cents? will it get easier when it comes to deals? frank: i suspect so. that's what we're going to see. 2015 was largest year on record for m&a transactions. on5 was a largest year record for busted deals.
i think we're going to see less regulatory intervention. there is a place for the antitrust laws. there is a lace for all regulators. positiveng with good consolidation, there's no place for it. i think we will see more rational behavior by the regulatory agencies going forward. jeff: thanks for your time, frank. back to you, vonnie quinn. vonnie: that was jeff mccracken there. david: there is a big showdown in the u.s. treasury markets. as is bloomberg. ♪
vonnie: this is bloomberg markets. david: there is a showdown on the horizon in the u.s. treasury markets. who is going to win out? there are the two duking it out. brian: hedge funds are short. they think interest rate to going up on the trump reflation trade we've heard so much about. we have longer-term wires and insurers, they say there is a big up buying opportunity. they see an opportunity of yields go up again they will just buy more. investing overy different time horizons? brian: the big one is the five year right now. janet yellen said there we a few interest hikes he year for --
through 2019. ,nsurers and pension funds that's the sweet spot. it's really the value of the curve that the wards being waged. end, realthe red money always wins. brian: it seems that way. even just today, yields are down eight basis points. path.ot a clear one-way a lot of biz -- has been priced inactive the election. , they havewondering not really broken out of it. no one has blinked. it doesn't seem like the shorts are prevailing. it doesn't seem like the lawns are caving in either. it just depends and how it breaks in the weeks and months. vonnie: where are people going it?
brian: they seem to be increasing their shorts, even so far this year when the range consolidated a bit. on the five year, 2%. people have been coming in all across this. others been no sense of letting up so far. up until these positions, how are they factoring them in? brian: that's the big question. is march on the table? it's unclear. some people say maybe she is in that consensus of three rate hikes in 2017. do you start in march? june is seen as the time to go for the fed by the market. it's unclear if the market will be right this time or maybe the fed is more aggressive. vonnie: short-sellers are finding a market area there is plenty of foreign demand. shown foreign buyers have
there is a sign that investors are giving up on the treasuries market. there has been some concern with china being in the cross hairs of the present. they have reduced their stake in treasuries. we need foreign spot -- sponsorship. there is not a boycott are anything like that. david: thanks very much. we appreciate it. donald trump have signed an executive order to withdraw the u.s. from the transpacific partnership trade deal. theill talk to him about presidents first 100 days agenda. this is bloomberg. ♪
tax cuts in regulation cuts in what he calls a major order tax. she spoke with business leaders that he named to an advisory panel on manufacturing. trump: we are going to be cutting taxes massively for the middle class and the companies. that is massive. we are trying to get it down to anywhere from 15% to 20%. a president said that he thinks his administration can cut regulations by 75%. former president george h.w. bush is leaving the intensive care unit from a hospital in houston is -- and is being moved to a regular floor. he has been suffering from bacterial pneumonia. his wife, barbara, was discharged from the hospital, where she was being treated for bronchitis. in france the former education minister was the front runner in the socialist party primary.
he will face the former prime minister next sunday and a runoff to determine the socialist candidate in april's presidential election. the independent candidate could be helped by a win next week. some socialist voters find him to left wing. global news, 24 hours per day, powered by 2600 journalists and in more than 120 countries. this is bloomberg. vonnie: taylor riggs, thank you. earlier,terioration but we are off the lows for the dow. being dragged lower by qualcomm and other companies with the nasdaq down one third of 1%. let's get more details now from abigail doolittle. abigail: among the declines for the major averages, the worst sector drags were energy. taking a look at the energy index we see that it is down
sharply, down more than 1%. it has been on pace for its worst decline of the year. off of the lows, slightly, dragging the energy sector -- sector lower, not surprisingly, oil. as well,e lows nonetheless a drag down this year on the news that the rate count did increase last week to its highest level since april of 2013. many of the oil related names are trading lower, on a ,owngrade over at stevens analysts saying that the story there has been outplayed or overplayed and that basically it's time to move forward and be more equal weight or neutral. course, trading lower after the company reported its fourth-quarter, missing revenue estimates, posting a profit that has been kind of shaky, so investors may think that it is amiss on the revenue side, suggesting that in the quarters to come they may not achieve profitability as the --
as desired. another sector on the downside, the aftermarket auto part countries -- companies. on pace for its worst drop since february of last year. on the news that amazon is an -- entering the aftermarket auto parts space. kevin heinen told the team that this is serious and creates a direct distribution route from consumer,the retail cutting out basically these retail stores he thinks to be a serious problem for these companies overtime. we are certainly seeing that weakness today. amazon, trading modestly higher on this news. goldman sachs saying that he as a growth at a reasonable price stock under the trump administration. the plus for that aftermarket auto parts is a $50 billion market. a good reason for amazon to enter in.
taking a look at the average age of u.s. autos, this is a 20 year chart. americans are holding on to their cars for an amazing 11.4 years. you have to imagine that over those 11 years they need lots of parts to keep the cars in good shape. which is why amazon is probably getting into that market. david: there you go. vonnie: all right, abigail doolittle. thanks. signing anrump executive order to withdraw from the transatlantic trade deal. running us now is a former chairman to the council of economic advisers. we asked him what the withdrawal signified from other countries. >> this is exactly what the chinese government has wanted all along. they are, as you know, trying to sign their own versions of the tpp that advantage china. that was one of the major reasons why the united states on
a bipartisan basis was trying to .ort out the tpp to try to put some kind of a oppositional -- some kind of opposition to the chinese grasping of the initiative in asia. are likely tou see china try to move forward tradegn their own big deals with most of the large asian countries after this. >> talk to me about the first 100 days. donald trump has a massive to do list. what is realistically achievable? if you look at his vision on the create 25e website -- million new jobs, return to 4% annual growth -- that is obviously not achievable in 100 days. what is achievable when it comes to the economy in 100 days? austan: that's a great way to ask it. i would have been more confident about what he would try to do
until i saw the first three days. we have had quite a run of just 72 hours. i think that what everyone thought he was going to do was start with cutting taxes and tax reform, getting rid of various regulations, trying to repeal obama care. i still think that he's going to do the regulation, the obamacare stuff, but it looks now like maybe the tax reform and tax cutting is going to get delayed and he's moving these protectionist trade items to the front of the agenda. so, if he does that, i fear that the first 100 days will probably not be growth enhancing. it will kind of be moving the other way. >> mark chandler this moment -- this morning saying in a note that when we talk about nafta, it's 23 years old and there
could be benefits to renegotiating a deal that is 23 years old for things like intellectual property rights and so forth. what about that argument? i agree with that. that's why i stated at the outset that if, you know, in this renegotiation -- there is an irony in this. the tpp itself was a renegotiation of nafta because mexico, the united states, and canada were going to be parties to the tpp. all of the modernization that took place was going to supersede what was in nafta. if you blow up the tpp there is an opening, there was a series of things that you see on intellectual property and others where some modernization could be good. if that's what they have in mind for renegotiation, i think that the markets would probably applaud that. i don't know if that's what they have in mind, frankly.
>> big stocks have been put on, reversing the decline in american manufacturing. is it reversible or not? to say.it's hard overall, as you know, around the world all of those countries, as productivity improves, mostly that havece sectors been the great expanders. manufacturing has been trending down and all of the advanced countries for 50 straight years. you are going against a tough trend. and i don't think that putting a huge tariff on the supply chain of u.s. manufacturing is going to prove to be good. hopefully, as i say, if they can find some -- some hidden secret regulation that increases manufacturing? that would be great. i think, given the last 72 hours of the trump administration in which they seem to be announcing things directly contradictory to what they promised in the campaign, i
would not necessarily count on the fact that donald trump promised to increase manufacturing jobs to indicate that he was actually going to do that. and that was university of chicago economics professor and former chairman of the council of economics advisor, austan goolsbee. presidency was a big topic last week in switzerland, especially on the foreign leaders there. the turkish deputy prime minister was asked what the trump administration means for the u.s. dollar and its impact on the turkish economy. >> my twitter messages are at face value and clearly, there is a case to be made for dollar strength it doesn't bode well for emerging markets, including turkey. protectionism, of course, doesn't bode well for a global economy, including emerging markets. let's hope that we have a little path,re, sort of middle
let's say. let's hoping it won't be that far, the protectionist tendencies, that they will be limited. of course, they are close to full employment. if they expand fiscal policy, clearly monetary policy needs to respond. all in know, these are the market. let's hope that it's being discounted already. >> do you think that there is a trump volatility play? >> we have had a lot of. >> that is fair. forecast,ook at the one of the ways that you calculate gdp, it means that your models need to be revised. or how do you do that? basically you are reinventing the way the you measure things. >> we are not reinventing, by the way. the european union has new standards for national accounts. the u.n. has standards for
national accounts that they regularly up eight. when they do, member states complete the revisions. we were only two years late. revision isupward .o do with measurements we weren't capturing a lot of new economy sectors. now we have done that. i think that better surveys, better models that your public-sector dictate and provides you with a better sense of what gdp wants. so, what we have done is in line with euro staff. we are in touch with them. we are in touch with imf and others. francine: how do you respond to who are concerned by saying to there is too much power at the top question mark -- top? mehmet? : there is noehmet
too much power at the top. let's face it, if any other country had been subject to the type of shocks that turkey has been subjected to, you would have a lot more akoni and stuff. i'm not justifying anything. what i'm saying is that day-to-day life is back to normal. yes, we have had more than our fair share of geopolitical .ensions the failed coup attempts, terrorists and so forth. but none of these are going to last forever. i think that if anything, the situation is going to improve. we have mended fences with russia, with israel, with iraq. i wouldn't say that the syrian issue is getting settled, but there is some momentum and there is a lot of hope. let's face it, there is improvement in geopolitics that we should try to fit into this risk perception of turkey.
--hat is the single francine: what is the single question you get the most from investors? mehmet: there is so much volatility over a short time, but beyond that, of course, there is also questions on the new constitution and what it means. that was the turkish deputy prime minister on friday. coming up, we will tell you about the new frontier of customized lavishness and the luxurious world of bespoke super yachts. coming up, next. this is bloomberg. ♪
bloomberg. i'm vonnie quinn. mark: and i'm mark barton. this is your global business report. steps to greatly expand power, we will hear from the deputy prime minister about why parliament is advancing the move. bonnie: and then foxconn maybe intling to build a factory the u.s.. is president trump influencing the decision? will today's quick pic, congressional republicans fight back against the plan to spend one dollar trillion on infrastructure? we will look into the battle over the u.s. deficit. turkey's president or to one is one step away from concentrating his power. parliament has approved the approve sweeping executive authority. the referendum last night could be held as soon as april. having familiar arid he, but
there is no more too much power at the top. issues,occasional turkey is a stable country, still a democracy. had any other country been subjected to the type of shocks that turkey had been subjected to, you would have a lot more draconian stuff. mark: oilfield services in halliburton provided fourth-quarter profits that these estimate -- beat estimates, kicking off a year-end recovery in northern -- north america. customers in the u.s. and canada increased the number of gas trading rate -- riggs 19%. mcdonald's posted fourth-quarter earnings that beat estimates. the world's largest restaurant chain was helped by technology upgrades and new foods. same-store sales were up 2.7% globally. twice as much as estimates. the biggest manufacturer of
apple devices may build a u.s. factory for upwards of $7 billion. that's a major investment for foxconn technology, which may create tens of thousands of jobs . foxconn is considering a joint investment with sharp, the japanese display supplier last year, one of the last private employers in china. vonnie: time for the bloomberg quick take. trump says he wants to rebuild america's infrastructure and expand the military while cutting personal and corporate taxes. will congressional republicans go along? here's the situation. looks againstl the stimulus. kevin mccarthy said that he would oppose any plan that adds to the deficit. the budget director nominee push for ambitious cuts in government spending while in congress.
reassuring fellow republicans the trump will take the deficit concerns seriously. here's the background. after the 2008 financial crisis, barack obama assigned $830 billion in stimulus, triggering explosive growth in the budget deficit. in 2011 the republicans told the they threatened debt default. the resulting budget control act puts limits on spending. these cats were combined with a tax increase on the wealthiest earners to help shrink the annual deficit to 430 million billion dollars in 2015. the argument is that federal gdp, thereached 75% of highest in u.s. history after world war ii. at the heart of the budget debates is the trade-off between current economic growth and the expense of interest payments over the longer term. one way to keep costs down, according to trot -- trump, is an infrastructure bank. democratic critics call it a
corporate welfare plan and say that it would subsidize projects that would have been built early with -- anyway, but less profitable projects will get no help. lowering theg corporate tax rate, reducing future revenue. it all adds up to big budget battles ahead. you can read more about the budget fights and what it takes on the bloomberg. had to bloomberg.com for more stories. ♪
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vonnie: here are some of the top stories on bloomberg and around the world. in economic news, we are heading to washington, d.c. to look at how fed policymakers are anticipating president donald trump's fiscal stimulus. news, yahoo!tech facing a probe over multiple data breaches. plus, yahoo! earnings out after the bell. in business news, puerto rico has begun negotiations to restructure their $70 billion in debt. we hear from someone who has about 4 billion and exposure. abigail? abigail: we are off the lows, but we are lower for the u.s. major averages. the dow, the nasdaq, all down after opening basically unchanged, seeing a continuation of the intraday volatility.
the s&p 500 is on pace for its worst decline of the year. the dow is negative and we see that the transports are down more than 1% on paper. their worst drop of the year as well. earlier, down even more. that index on friday was the one that turned negative a few times. these doubts of intraday volatility, we are certainly seeing some of that. one of the big pieces of news today is the fact that president trump is basically pulling out of the transpacific partnership and this is negative for some of the exporters in the u.s.. this is a great look at the exporting numbers in 2016. china tops the list. not so far behind, mexico at 271 billion. and then canada. as for the mexico number, this is clearly weighing on one stock in particular. sector stocks, kansas city southern, the railroad company is trading lower on the session.
deriving 30% of the revenue from mexico. lee class go recently told our team that for the first full day of work to be talking with this perfectionist stance they are talking about a strict major border pact and it could be a signal of more to come and it is really weighing on these jobs. taking a look at some of the other railroads, we have weakness there, including union pacific and canadian pacific. say that as more of the reality, the details of the action is policies become clear, they could perhaps continue to weigh on these companies. something to keep an eye on. as for the relationship with mexico, heading to the bloomberg, we take a look at 4926. this is a very, very long-term chart of mexican exports into the u.s.. 1995 it had a major leg up. from a technical perspective this conjecture and up here
could be bearish, could be bullish. but it does suggest that it could pull back down. it could be an early sign that perhaps this protectionism that we are seeing out of president trump could weigh on those companies as mexico's exports into the u.s.. we will be talking about that with david wessel in just a moment. taylor riggs has more. president trump, taking aim at the trade deal that he says was her -- would hurt american workers. pulling the u.s. out of the transpacific hardship trade deal. congress never formally authorized the agreement. he placed a hiring freeze to cut off funding for international groups that perform abortion. president trump told a group of pro-business leaders that he is claiming a massive tax cut in says that his administration believes they can/regulations by proposewill oppose -- what he calls a major border
tax. he meets later today with leaders and workers. the supreme court has rejected an appeal from texas in an voter to restore strict identification laws. the justices say that they won't review the ruling that the law is discriminatory. they ordered changes before the november election. news, 24 hours per day, powered by 2600 journalists and analysts in 120 countries. this is bloomberg. vonnie: back to our top story, president trump starts his first full week with an executive order to withdraw from the transpacific partnership, making good on his campaign promise to rewrite american trade policy. , a senior fellow in the economic studies department at the brookings institution is also a founding partner for fiscal and monetary policy, joining us from washington. thank you, david. the tpp had never been ratified anyway. how does this withdrawal changer
lives in anyway? david: i don't think that it changes our lives whatsoever. one thing that is clear is that donald trump meant what he said about trade treaties. he is pulling us out of trait -- tpp. it was really meant, ironically, as a way to contain china, his nemesis. he has also indicated that he wants to renegotiate the north american free trade agreement with canada and mexico. i six -- suspect that what we are seeing in the markets is that for several days, the markets were all focused on less regulation and lower taxes but now they are beginning to wake up and say -- there might be some stuff we don't like you're on the trade front. get us up to speed here, david, on the tax reform bill that we saw after the election. there was optimism after the election. now there is a dose of realism that these things take time and, as you say, perhaps involving things that will be appealing to each party.
where do things stand? david: right now they stand with a lot of good intentions. that'sorm is an idea very popular, but it turns out the specifics, particularly for the business community, are very divisive. there has been this flirtation in the house, particularly with tax, itstable tax flow would change the way that we tax businesses, -- particularly rebates for exporters. but not for importers. so, some of the big importers, walmart, the koch brothers, are quite upset about that. president trump dumped the idea at one point, then he said he was willing to consider it. then i think the people on the hill saw it as a substitute for terrorists. what i think is going on is this . republicans had talking points. they really weren't counting on having a republican president. many of them had not really thought this through. they are now in the process of
figuring out -- what is it exactly that we had in mind? can we build a piece of legislation that we can even get republicans to support in congress? i think if they pass it, the president will sign it. but getting tax reform through congress is really hard. there are so many winners and losers. it's very contentious. given what we are seeing over the border taxes and now this withdrawal from the tpp and potentially nafta as well, david, do you think that the changes in corporate america will be drastic over the next one to two years? david: i don't think over the next one to two years, but i think that american multinational corporations are waking up to the fact that this tide of populism and anti-globalization has not reached the -- now reached the point where it is a control on the government. there is some argument about whether the brexit vote was a vote for globalization in a
different form or anti-globalization or the populism that we see in france and stuff. bigink that unless the business community and the backers of free trade and governments around the world can find a way to convince people -- voters -- that this really is in their interest, it will change the face of the thing. companies are already worried about the supply chains that they have spread across the globe. it is having a short-term effect, but the long-term effect depends on how much of this is just rhetoric singling out a few factories and how much they really change things. ask you about monetary policy. you have the benefit of the great resource of ben bernanke and others coming through. you can share us and it -- sandwich with them at the fabled brookings cafeteria. in washington, d.c. saying about what the fed will look like under a donald
trump presidency? david: that's a really good question and there is a lot of speculation about that. i think that for the time being the fed will not look very different than it does now. it is on course to raise interest rates two or three times in 2017 and it looks like they might actually do it this time. if there is a big fiscal expansion they might even do a little more. deal ofthere is a great relief that the trump administration seems to be considering a guy named dave mason, a former paulson treasury guy at general electric, for vice chair for banking supervision. he was involved in the fighting during the financial crisis and is a reasonable choice for the people who have been through this for the last couple of years. he's not some weirdo. but there is another seat on the federal reserve board that is a possibility. of the people around him will have unconventional views about monetary policy. some of them are fans of the gold standard, for instance.
let's say that he had one person who was mainstream and one person out of the mainstream, that wouldn't change much for now. what happens next year is different. janet yellen, the chair, stan fischer, their terms are up. trump could replace them and lots of republicans would be willing to take that job, which could make the real change. vonnie: thank you to david wessel. thank you ray much. isid: coming up, yahoo! reportedly in the exchange commission crosshairs. taking a look at the two data breaches. this is bloomberg. ♪
you are watching live pictures of the mexican president, talking about trade and saying that he will be starting bilateral trade talks with six key nations. actionigned an executive to withdraw from tpp. mexico starting bilateral trade talks. in other headlines, he is saying that mexico is ready to start trade policy talks with the u.k. and strangle trade with argentina and brazil, strengthening to control the caribbean and latin american countries. we have seen the mexican peso stronger by but -- by one quarter of 1%. yahoo! investors have a lot to digest as the company reports earnings after the bell with outstanding questions around its plans to sell assets to verizon due to multiple data breaches and the report that they have faced a securities and
exchange commission investigation. cory johnson joins us now with more. let's start with this sec investigation. what do we know about it? johnson: you might have heard of this. a couple of years ago they said they had to notify investors of their 10k, maybe even the 8-k, that there has been a hack and they couldn't track the value. it's a good thing for the sec to do, to let them know that the thing they have an investment in the have changed in value because of the hack. kind! did not release this of information. it's an old saw that is worth repeating, what did they know and when did they know it? it could be a violation of the rule. subject to could be any kinds of fines or more. but maybe the -- maybe the bigger looming question is the ultimate value of the business after the hacks. vonnie: will there be any
leniency for the sec at all -- from the sec at all given its troubled past? cory: the greater concern might be -- what happens to the stock price? and if the value of the company as determined by the market declines after this. one could look at this and say -- no harm, no foul. but with that merger with verizon it looks like it continues with stock prices holding up. if it didn't change much after the disclosure, maybe the timing wasn't as bad under different circumstances. that you have spoken to tim armstrong about the deal. what's happening behind the scenes? what is verizon looking at here in terms of how to proceed with the deal? comes down to is what kind of deal they think they are getting. tim armstrong has been very clear. aol was acquired by verizon and he runs most of what is under there. what asset did he get from
yahoo!? to the value of the asset significantly change based on the hacking? and in fact, do they still want to go ahead with the sale? everything he has said implies that they will be doing the responsible thing, looking at the business at verizon, at yahoo!, seeing what the best deal is for verizon and its shareholders. he still things that it's a steal and that this accumulation of one billion users, there are very few things like this and that verizon is glad to be under the tent. vonnie: earnings after the bell? cory: i think they won't matter a lot. maybe we will see if there is a material change in terms of the number of users or advertisers going to the platform, but they are so under the radar, the company is not even going to have a conference call. they expect to go through and complete the deal with the
outside shareholders that don't really even matter at this point and they won't communicate more than the press release as required by the sec. david: cory, thank you very much. we will hear more from him in about half of an hour. on "bloomberg markets markets," and on bloomberg radio. latest time now for the bloomberg business flash with a look of the biggest stories in the news right now. a federal judge has officially blocked a deal to buy humana. the merger would have rish she -- we shape health-care landscape. even with the news on the affordable care act. the free competition was in the insurance area. will now always humana of breakup fee under the larger terms. hard media succeeded in its efforts to get investors to participate in bond swaps to help reduce the 21 billion dollars in debt obligations according to a person whose knowledge of the matter is with some of the largest bondholders who refused to take part,
finally caving after the big radio station won them over by extending a previously expired deadline. there is a disturbance in the force, as they say. we can describe it in one word, maybe excitement. episode eight will be titled "star wars: the last jedi." it hits theaters on december 17. that is your bloomberg business flash update. -- david:esentative representative chris collins will be talking to us about the trump agenda. this is bloomberg. ♪
create the smoking gun. so far these allegations haven't been able to stick or resonate loudly enough to convince republicans. vonnie: great interview. you. cirilli, thank david: up next, the puerto rican government said that they would be transparent about their five -- transparent about their finances as they enter talks to restructure debt and update their bond default negotiations. this is bloomberg. ♪
for a very major border tax. the president spoke with business leaders he name to an advisory panel on manufacturing. >> we are going to be cutting taxes massively for both the ,iddle class and for companies and that is massively, we are trying to get it down to anywhere from 15% to 20%. also said hesident things his administrations can cut regulations by 75%. arrange thehopes to first official phone call between vladimir putin and donald trump very soon. there are no official plans of a meeting between the two leaders but a spokesperson says he expects it to happen soon. foreign minister sergey lavrov says that russia has a lot in common with the new administration and looks forward to discussing foreign-policy objectives. protested, thousands
against the changes that could take place in efforts to fight corruption. they plan to decriminalize certain offenses, including abuses of office, and will also grant pardons to prisoners with jail sentences under five years. china is cracking down on golf. more than 100 courses have been closed and communist party officials have been told to stop playing in order to conserve water and land. the news agency says that the courses were charged for him probably using groundwater and that they were built on land for other purposes. global news 24 hours a day powered by more than 2600 journalists and analysts in over 120 countries. i am emma chandra. this is bloomberg. david: puerto rico is taking steps to restructure $70 billion in debt. andt down with the governor he said his administration is willing to pay what they can as they begin negotiations with creditors. >> right now we have a local
moratorium law, whose aim it was not to pay it we are shifting that into a willingness to pay act. mbia has $4 billion of exposure to puerto rico. joining me now is the president and ceo. joining me also is taylor riggs. i was struck by the role he intends to take in is negotiating process. a would like this to have construction of conversation. what has changed from administration to administration? >> the comments of the new governor have been encouraging. one thing you heard is that he is very focused on long-term economic growth, which we think will be terrific. there has been not enough conversation about how you grow the connelly which will help with a lot of things, in particular the residents of puerto rico. part of that is creating access to the capital markets which they have not had. there are several things that he
has said along those lines. first, financial transparency. no one really knows what the financial situation is in the commonwealth. the new governor intends to make things much more transparent, which is important. second, he has said that he wants the respect -- to respect the legal authorities in place. debts for19 different puerto rico and they are often thrown together. the team is now sorting through those things. it is also consistent with legislation passed last year to help puerto rico. third is actually trying to get consensual deals. it is one of those things that the governor has mentioned. he is working on those. one example is prepa. they have a deal that they would try to get done this year. vonnie: that is the hard part. he said we have a willingness to pay bills. of course everyone wants to pay,
but it doesn't mean that they are able to pay, unless the market give them a better deal than they have already in what is your confidence in that with $4 billion in exposure? first, he is going to try to get a handle on the financial situation. he requested from the board and extension. he put in place the fiscal plan, it was due at the end of january, he was able to get an extension. that will begin to help. nobody knows how much he can pay. in his interview with you, he mentioned the willingness, which is a different tone than what we saw from the previous governor. lines, also along those a lot of people said one of the challenges is liquidity, as opposed to we need to impair creditors. they are more inclined to see what they can pay and what can be structured in the sense that deferring repayment but paying in full on some credits later
on. to talk about some prices we have been seeing in the markets. if you look at my terminal, we have some recent prices of where go bonds are trading. initial reports came out, $.60, $.70 on the dollar. are you getting any closer in terms of where recovery value would be or you, that you would be happy with? keep inple of things to mind. there are the uninsured prices. , whiche insurance bonds we have at national, those trade essentially at par, which reflects the valley of the insurance versus the uninsured bonds. there was some back-and-forth last year with the creditors and the commonwealth in terms of the numbers you are citing. this will come back to which credit are we talking about, there are lots of different credits, and what is the financial information? there seems to be a rush to get to what is the restructuring, the impairment number, as opposed to first getting the
facts, seeing what can be done, what can be restructured without impairing anybody, and then settling on what the restructure needs to be. david: give us your assessment of the oversight board. still early days, how are they performing, to what degree are you interfacing with them? >> we have had some interaction with the intersite board. as you can imagine, they have a light to do -- a lot to do. this is a board, not full-time employees. one of their things to do is to hire an executive director, which i think would be announced soon. i know that was on their priority list. once the executive director is in place and they have advisors, things will pick up in terms of activity. i think they will work closely with the new governor in puerto rico in terms of dealing with these issues. i think now they are trying to focus more on the consensual deals, even though there is bankruptcy-like tools.
that was not the intent. them onlyat about paying $.20 on the dollar, you say transparency is great, but are you sure about that? what if you find out something that you don't want to hear? >> again, we will deal with that. at this point, the $4 billion are cut across several different large credits. one of them is prepa. there was a deal in place, about 1.4 billion. ,he other two larger exposures general obligation bonds, which are typically other top of the pecking order in terms of credit. and then there was the sales tax. in the 19 or so credits of the commonwealth has, ours tends to be the higher priority credit. to your point, we will wait to see what information is, there may be some credits where it is
less than 50% they can pay right now, and that is where the real work will come. taylor: we had a chart showing some of the prices, around six to two cents on the dollar. give us a final update on those negotiations. prepa is the electric utility down in puerto rico, there was a deal reached with two thirds of the creditors to restructure the utility. there are some things that you to take place. there is an extension through the end of march. milestones toward the end of the month. part,k for the most people optimistic because it is beneficial to all parties to move forward with that. in terms of timing, the thing is the court validation process. it is hard to predict how long it will take. all the parties are optimistic that something will be implemented. david: puerto rico and chapter nine crossed steven mnuchin's
let's last week. how do you expect things to change with a new administration? think it is a wait and see approach. i don't think the new administration has given any indication on the approach of able take. the previous administration through treasury was very involved in working with puerto rico. i think that also melded together to create this approach that you were talking about, a new, which is setting tone. i think the administration will be supportive of that, to the extent they can pay, what they campaign, and working deals out consensually they will support that idea. david: thank you, [no audio] william. renegotiating trade measures that could exclude nafta.
vonnie: this is "bloomberg markets." i'm vonnie quinn. david: i'm david gura. vonnie: abigail doolittle has our chart of the day. abigail: one of the big stories is the 10 year yield. this is an intraday chart. about seven basis points, pretty significant intraday move, especially earlier it had been trading higher. this represents volatility in green. save haven bonds are rallying. investors are seeing some uncertainty out there. perhaps around the trunk administration, withdrawing from
.pp, among other issues investors trying to figure it out. we are seeing a bit of a haven bid. this comes after last quarter's massive move. 85 basis point on a quarterly basis. ,f we look at the bloomberg this is a six-month chart of the 10-year yield. massive moves higher, but over the last several weeks moving into a consolidation phase. sellinginvestors were treasuries, others were buying them, creating that sideways range. it happens to fit into a head .nd shoulder pattern that speaks to the volatility in the marketplace. if the drops below that 50-day moving average, we could see a pretty big reversal for the 10-year yield, perhaps going back to 2.5%, 1.9%.
the volatility we are seeing in that congestion could be a bull-bear battle between the institutional money and the hedge funds. this is another chart in the bloomberg. the long we have institutional money in treasuries, in blue, the hedge funds short treasuries. we have this massive divergence. based on this, these charts may suggest the plain vanilla institutional money has it right in terms of being long treasuries at this time. vonnie: abigail doolittle, thank you. david: we are going to go to the white house. sean spicer is preparing to give his first official briefing at the white house. as i get started, i know that josh earnest was voted the most popular press secretary by the press corps, so after checking my twitter feed, i shot an email
last night letting him know that he can rest easy that his title is secure for the next you days. let me begin by saying the president has been monitoring the severe weather in the southeast, spoke by phone with governor deal of georgia and offered his condolences and support. today, president trump is focused on the filling his print to put america first. the president began his day with a breakfast with key u.s. business leaders where the focus of the discussion was on job creation and growing our manufacturing base. business leaders who attended included michael dell, the founder and ceo of dell, the ceo of whirlpool, mark fields, ceo of ford, the ceo of johnson & johnson, the ceo of lockheed of our conic,o the ceo of doubt, the ceo of u.s. steel, elon musk of spacex and tesla, kevin plank of under armour, mark sutton of international paper, the ceo of
corning, chief of staff}, steve bannon, and the senior adviser stephen miller. the breakfast was an opportunity for the president to hear directly from america's top business leaders about the challenges they are facing and take some suggestions about what policies and action can be taken to hunt them create jobs and grow our manufacturing base. the meeting included a great exchange of ideas and the president has decided to reconvene the group in a month and then have them meet on a courtly basis. the president's vision is to negotiate fair trade deals and great jobs, increase american wages, and reduce american trade deficit. has appointed a tough and smart number of trade experts who will fight on behalf of american workers and with that vision in mind, the present has already taken several steps today. first, he issued a presidential memorandum withdrawing the
united states from the transpacific partnership, tpp is a multilateral agreement that includes the united states and 11 other countries. as the president has said many times, this type of multinational agreement is not in our best interest and is moving quickly to advance trade policy that increases the competitiveness of the american worker and manufacturer. ushers intive action a new era of u.s. trade policy in which the trumpet ministration will pursue bilateral trade opportunities with allies around the globe. this is a strong signal that the trumpet ministration wants free and fair trade throughout the world. additionally, the president issued a memorandum reestablishing the mesko city policy stating the united states will and the use of taxpayer dollars to fund abortions overseas along with coercive abortion and sterilization practices and finally, the president issued a memorandum outlining executive branch hiring. this memorandum counters the dramatic expansion of the federal workforce in recent years, in particular, prevents
filling vacant positions and creating new positions, except when necessary to meet national or public security responsibilities. it does not apply to military personnel and it ensures the american taxpayer gets effective and efficient government. earlier, the president spoke with egyptian president ella cc and they discussed ways to deep in the bilateral relationship and fight terrorists and bolster egypt's economic reform program. president trump underscore the united states will remain strongly committed to the bilateral relationship which has held both countries overcome challenges in the region for decades. the president committed to working with military assistance to view jets and ensuring assistance most effectively supports the egyptian
wall and making sure we address people who are in this country, illegally. the president has been clear when need to direct agencies to focus on those who are in this country, illegally that have a criminal record, or pose a threat to the american people. we will continue to work through thatntire number of folks are here, illegally, but right now the clear focus is on that. the president campaigned on a corporate tax cut rate of 15% and later he mentioned that tax rates would drop to summer between 15% and 20% is he moving the goalposts and anyway, and on government spending, there have been reports that you might be looking at $10 trillion over the
course of 10 years. is that accurate? you saw this with the hiring freeze, there has been a lack of respect for taxpayer dollars in some time and i think the president is showing that we have to respect the american taxpayer. they're sending us a ton of money and are working really hard, some people working to were three jobs just to get by and you see money wasted in washington on a job that is duplicate of is insulting to the hard work they do. we've got to look at how we are spending the american people's tax money, so the landing -- with the landing teams have been andg is going into agencies talking about ways that we can create greater efficiencies, limited duplicity and maximize
the tax dollar. spend thet how we american tax dollars, going forward. the president is a very successful businessman and negotiator. he will sit down and work with congress to get the best deal possible they can hire more people and we can expand and grow the economy. he is going to work with congress on that rate. he understands how to negotiate a great deal. he will negotiate the best deal on behalf of the american worker and on behalf of the american businesses that are hiring them. that was a lot of the focus, today, talking to these companies. the meeting was only supposed to last an hour. he kept asking them what ideas do you have to grow this economy ? what is preventing you from hiring people? what regulations are stopping you from conducting more business?
what are the ways we can give you more matter -- market access , and i think that is what his focus is going to continue to be, how do we create a tax and regulatory economy that grows the economy and benefits the american worker. a couple questions. a maryland democratic time was woman confirmed that president trump talked to him about the high price of prescription drugs. will the president of the meeting with the full body of the congressional black caucus and the hispanic caucus on issues related to those communities? >> i am not aware of that conversation.
i'm sure you have heard the president talk about the need to bring those prices down and bring manufacturing back to the country. he understands as we reform andth care, as we repeal replace obamacare, that getting a hold of the cost of prescription drugs to get more people access to them and also allow greater access is going to be a key part of it. that is going to happen. what you are seeing with respect to the other meeting since day one, working day one, is going to start with leadership. he's going to have a great conversation, but then you will see a variety of meetings with the congressional black caucus and hispanic caucus. he is someone who enjoys that kind of conversation. you will see a lot of meetings occur, like the ones you did, today. business leaders and union workers. it is interesting, the president was asking these folks how many of you have been in the oval office, give them raise their hand.
we talked to some of these union leaders and we hear they did not get a lot of attention. here we are, day one, with the president reaching out to some of america's best business leaders and some of the union and line workers and bring the men and saying our to listen to what is going on in your life. what can we do to help you. that,ll see a lot more of a listening president who is engaged in trying to figure out what policies and actions he can take, that this government can take, to make people's lives better, to make a security better, to make their economic security better. you will see a lot of that. that is who he is and that is what he said during the transition. he appreciates the ideas and opinions that come through the from small groups where he can share their perspectives and ideas and opinions. that is what he will continue to do, this afternoon. >> i want to go back to what the
gentleman said about the mandate. -- withsomething about the numbers that were talked andt from inauguration saturday, do you believe that you have the mandate to be able to force through what you talked about, replacing obamacare, that really subsidized a whole piece of it to help low income people with health care? towhat we have is a mandate make health care more accessible and lower cost. that is what the american people were promised. it is not a question about a mandate or about forcing anything. it is about doing the right thing. it is about providing people what they were promised, which around this country and you look in market aftermarket and they are down to one plan. that is not what the american people were promised and in many cases you are seeing the rates go up 15% to 30%.
what the president is doing, and he has gotten bipartisan support, to work with congress and take executive action where necessary to implement a health care system that provides more people with health care, allows them to keep the doctor and plan they are signing up for, creates more competition. do i think he has the mandate? sure, but it is not on this issue. mandate fromave a the american people to fix the system and make it better. discrepancysome between what the russians are saying and what the pentagon is saying in terms of potential joint action. can you clarify that? is the president open to joint action in syria? >> it is still developing and i would defer you back to the department of defense. they are currently monitoring this. the president has been clear that he will work within a
country that shares our interest in defeating isis, not just on the national security front, but on the economic front. if we can create economic access and allowed u.s. small businesses and companies -- >> this is more about joint military action with russia and syria. >> i think we will join with any country that will combat isis. about the was talking u.s. not taking iraq oil during the iraq war. clear president has been about the fact that two often, the u.s. is going in with a lot of money and manpower and in many cases, losing both life and we want to make sure our interests are protected. forre going into a country a cause, he was to make sure that america is getting something out of it for the commitment and the sacrifice. >> was a foreshadowing upcoming action? >> he has been clear that he is
committed to making sure that the american people and the american taxpayer sees benefit and ensures that our interests overseas are not just sending blank checks, that we are doing something that protects america or is in our economic interest. >> later this week, executive actions, does the president planned to take actions to greenlight the keystone xl and dakota access pipeline? on tpp, john mccain says it was a serious mistake to do with the president did for america's economy and its strategic position in the asian pacific. why was tpp the right thing to with -- repeal it? when you enter into these multinational agreements, you are allowing any country in a meta-the size, any one of those 12 to basically have the same stature as the united states in the agreement.
we are basically on par with some very small companies getting access to an amazing market. in return, we are negotiating at the lowest common denominator. when you look at big multinational agreements, multilateral agreements, they are not always in the best interest of the united states agree. the beautiful thing about a lateral agreement -- about a oneteral agreement is it group feels it is being treated unfairly, they can back out. in a multinational agreement, this is not the same. i'm not going to get in front of the president's executive actions, i will tell you like areas like to code and the keystone pipeline, areas we can increase jobs and economic growth and cap into america's energy supply more, that is something he has been very clear about. not only in the campaign, but around thanksgiving, he was
talking about them being a big priority. energy sector and our natural resources are an area where the president is very keen on maximizing our use of natural resources to america's benefit. it is good for jobs and it is good for america energy. >> thank you for being here. a question about the nature of your job will -- of your job. is it your nature to always tell the truth and will you place to never say anything knowingly that is nonfactual? >> yes, i believe we have to be .onest with the american people there are some things you may not fully understand, -- we may never under -- we may not fully understand, but our intention is never to lie to you.
write a story and you publish a correction, that does not mean you were intentionally trying to deceive readers. we should be afforded the same opportunity. there are times when we believe something to be true or we get something from an agency or we act in haste because the information available was not complete, but our desire to speak with the american people -- so we do it. -- we will do our best every time we can. i will come out and tell you the facts as i know them, and we make a mistake, we will do our best to correct it. it is a two-way street. there are mistakes the media makes all the time. they misreport something, they don't report something, they get a fact wrong. say -- i don't pick it's fair to turn around and say you were intentionally lying -- i don't think it is fair to turn
around and say you were intentionally lying. >> do you have any corrections you like to make? i don't want to relitigate the whole issue, but like the issue of metro ridership. >> the information i was provided by the inaugural committee came from an outside agency that we reported on, and knowing what we know now, we can tell that obama's numbers were different, but we are trying to provide numbers we were provided. it is not like we made them up. by your statement that was the most-watched inauguration in history? >> sure. one network alone got 16.9 million people online. another couple networks got tens of millions of people. nevermind the audience that was here. it onlion people watched television, combined with tens of millions of people who watch it online, on a device. it is unquestionable. final see any numbers that you add upt, when
attendance, viewership, tablets, phones. i would love to see information that proves that otherwise. do you dispute that customer >> i don't want to get -- do you dispute that? >> i don't want to get into numbers. >> i'm just saying if you question my integrity, if you add up all the various live streaming's that we have information on, so far, i don't think there is any question that it was the largest watch inauguration, ever. >> more than ronald reagan in 1981? >> i'm pretty sure that reagan did not have youtube or facebook. 41 million people watched his. let's take the nielsen ratings, 31 million and add it to cnn. that is a little higher. numbers,sking me for
that is two entities together. >> the approach he took saturday, any second thoughts on that? i came out to read a statement and i did. we are here, today and i will stay here as long as you want. [laughter] i think you guys will want to leave before i do. i want to have a healthy relationship. i'm not trying to rehash histories. we had a tweet go out about martin luther king. think about how racially charged that is. someone rushes out and says to the entire press corps that the president of the united states has removed the bust from his office. about -- hold on.
that quote, that report, and where was the apology to the president? the apology to millions of people who read that and thought how racially insensitive that was? where was that apology? when things like that happen, when john lewis says that he never missed an inauguration and we find out he actually did, he skipped george w. bush's. there are points of which we have a right to make sure we correct the record. you are talking about integrity and telling the truth and facts. i don't know that it was not malicious, but there is a point at which we have a right to go out and correct the record, and i think that over and over, gore is this attempt to after this president and stable that can't be true and that is
not right and the numbers were not there and there is a rush to judgment, every time. we want to have a healthy and open dialogue with the press corps and the american people about what he is doing to help this country. at a time when he is trying to unite us and talking about uniting this nation and bringing people together, and then a tweet goes out to a few thousand people saying he removed the bust of martin luther king. how do you think that goes over? >> did the media invented the feud? -- invent the feud? >> he walked into the cia, people were hollow and they gave him a five-minute standing ovation. that does not look like a -- they were excited. there is a difference between having differences with intelligence leaders and leaders of that community who had strong differences, then the people and the men and women who work every single day in our intelligence community. it was reflected at the cia.
when they came there, they were so excited. 1000 people applied for 3000 plus seats. we ended up taking 4000 people. that does not sound like a feud. reports suggested there was some kind of major fencemending, but that is not what it looked like. interest inhe usg moving the u.s. embassy from tel aviv to jerusalem? i gave you the readout on the call and that covers what was discussed. >> what is the u.s. strategic interest in -- >> there is no decisions, we are at the early stages in that decision-making process. >> will there be a detailed
-- of the with potential parameters of what a trade deal might look like? is there going to be a joint news conference? >> we are here on working day one, we are excited that prime minister may is coming on friday. i'm sure there will be a discussion of trade. sure we will have an opportunity to brief you out. i don't believe we have any plans for a joint press conference. that is something our team will be marking -- will be working out with prime minister may. >> after the executive order withdrawing the u.s. for the tbp, what stands will donald trump take to expand trade opportunities abroad? >> he will have a great conversation with prime minister may about the potential for greater trade with the u.k. i mentioned when he met with manufacturers, this morning,
that was right up there at the top of that list, how can we get greater market access? what are the specific challenges that these manufacturers are facing in getting market access in countries around the globe, and that is an important issue. it is not just other countries, but with an existing trade deals, we can figure out is there a trade dispute that can be settled, is there a revision to one of the existing trade options or trade treaties that we have right now? there are things congress can make sure we are importing and exporting more, to benefit american businesses. >> has the president or will the president have a chat with the prime minister? >> there are no plans for that, now. it is possible. i think the number of calls is well over 80, people that have talked to him or congratulated
him. he has met with canada and mexico. he talked to prime minister netanyahu. there will be content -- it there will continue to be a robust number of members. there is tremendous excitement in the double medic or and at the world leader level of people who are excited that this administration was to engage. there are a lot of times when he is talking to these folks and they say they have not heard from anyone in years and there is genuine excitement to reengage the united states, especially in the area of trade another economic interest, but also in the area of national security. >> needless to say, this is the big one, and the first. why is this executive order anything more than symbolic and when will president trump start negotiating those bilateral deal as -- deals with the 11 other
countries? would argue that bilateral deals are mostly what china has been engaging in, and that is something the president is going to look to countries to engage in. most of them, we have existing trade agreements to begin with. ins was an expansion of that some areas aloud whether it was the service industry or financial services, additional market act -- access. this is not a deal in our country's best interest. a president could have come into office and we negotiated. it had not gone to congress yet because it was not finalized. this president pulling out of the agreement is not just about this one agreement, but i think it is symbolic both here and around the world of a new era in trade policy, one that will put american workers first and foremost, and one that assures the rest of the world that the
weighty we negotiate bilateral agreements will ensure that we get something out of these deals. the problem with multilateral agreements is that often, it becomes lowest common denominator and for the u.s., we arty have low tariffs and other service industry benefits for countries. we have to make sure we are going out and fighting for the american worker. >> you are not going to renegotiate? >> we pulled out of tpp. we will have further updates on trade issues later, this week. i believe there is an action that has to be taken under the provision of nafta. you send notice to the other countries. is exact nature of how that described, i don't know, but there is a trigger within nafta that allows the president to notify them that we intend to do
that. >> will there still be a north american trade bloc? >> he already spoke to both the president of mexico and the prime minister of canada about his desire to renegotiate, and i think as he meets with -- meets with these individuals, that will be a topic. if they come in and expressed willingness to do that, you could negotiate it within the parameters and update it through the existing structure. if they don't, and he decides to pull out, then we would go back to the drawing table. >> just a follow-up on the china question. china has a regional agreement called the regional comprehensive economic partnership. japan and australia are talking about joining that.
this trunk not see a national trumpty component -- does not see a national security component? >> he has been very clear about china's place in the geopolitical landscape, both economically and national security winds. he understands the need, that is part of the reason that trade is important. it provides a check on a lot of this, but he is always going to be fighting for the interests of the country. with whom is and going to be decided on whether or not we can get a deal that benefits our country, economically and in terms of national security. there are things we can do economically to end up also benefiting us from a national security standpoint, because of the economic relation ship. >> what is the average national
unemployment rate? what is the overall unemployment rate? >> the bureau of labor statistics -- it is not a question of what i accept. there are ways you can put out full employment. there is a reason we put out several versions of that. one is the illustrative nature of how you count the unemployed, whether or not they are long-term or whether or not they are still seeking a job. there is a reason you put out several statistics so that economists can view them and decide -- look at different landscapes on how to make economic policy. >> during the campaign, he said the unemployment rate was 42%. team is going to look at animal to judo statistics. his goal is to get as many americans working. when he sees people that are hurting that i'm not have wages lifted up, that are unemployed, the cannot save, that are having
trouble with health care costs, that is what he cares about. it is not just a number. is someone getting by? our wages going up -- are wages going up? can someone say for higher education? -- save for higher education? those are the kinds of things the president -- he is not focused on statistics as much as he is on whether or not the american people are doing better. i know we talked about carrier, will that is 1000 jobs. it took about those jobs and their families, i would beg to differ that those people were unbelievably ecstatic, that the president and vice president intervened. everyone of these meetings that you saw a trump tower and now, it is all about whether it is 2000 jobs or 20,000 jobs. that is the focus, making sure that small businesses have
greater opportunities to be successful, that american workers can have their wages lifted up, the benefits they receive in terms of health care and education will provide them with the support they need. too often, we get our heads wrapped around a number and a facestic and we get the in the families and the businesses behind those numbers. that is where his head is that, trying to look at those people that come to his rallies that he has met with in person, that are struggling and say i am working as hard as i can. i am working two jobs, doing everything by the rules and i keep getting screwed. that is who he is fighting for. he mentioned that when he was in his inaugural speech, shifting power back to the american people. for too long, it has been about what number of we looking at. i was curious about the
message from the administration from the white house to young people who may qualify and not yet have -- should they enroll, going over, those who are in the program now? >> what those people should know is that the president has laid out a list of priorities and the priorities are focused on making sure the people who can do harm or who have done harm and have a criminal record are the focus. as he said throughout the campaign, we have a series of individuals that we have to figure out, people who overstay their visas and have committed a crime, and we will go through that in a systematic way. the focus is on people who have done harm. >> 2016 was the hottest year on ,ecord in the last years scientists are saying we are getting dangerously close to the point where human civilization is being threatened. how does president trump plan to address this? >> i think he will meet with his
team and you're out what policies are best for the environment. one of the things he talked about during the campaign is there is a balance. is trying to make sure we use our resources appropriately, that we maximize things to make sure we don't do so at the detriment of economic growth, and job creation. there is a balance. we can ensure we are doing things that are smart for the environment and smart for our longevity as well as making sure we are doing things that create economic growth and job creation. -- who were protesting on saturday and a follow-up after that? >> there a polite of you. -- very polite of you. he has a healthy respect for the first amendment. this is what makes our country beautiful is that one day you can inaugurated president and the next day, people can occupy the same's race to protest. he is also cognizant to the fact
that a lot of these people were there to protest an issue of concern to them and not against anything. -- was ons morning television talking about -- i don't want to inaccurately quoted her -- quote her. she said different women were there for different reasons, but they were all there to make sure their core american values will be protected and many people like me were there for positive reasons. i think the president shares her views that people came to the ball as they do all the time, sometimes in smaller numbers. i think he reaches out to them in the way that he started on the night that he won the election, the way he did on inauguration day, sending a message that talks about fighting for them. i think he will show through action and success that he is fighting for them and fighting for every american. one of the things that we have seen so often in this town is a lot of rhetoric about how much people care.
i think the president is going to show in action and success that he wants to fight for people's health care. he wants to have a better education system. he wants a stronger america. he wants to go in and fix the inner cities. i think more than anything, showing people through action and success is where he is going to prove to the american people how much he cares to unite us and how much he cares to make this america better and safer. side, -- other >> you have been listening to the press briefing in the white house briefing room. that was press secretary sean spicer talking on a wide range of issues, including trade, jobs, the relationship between media and the front administration. you can -- the trunk administration -- the trump administration. after friday's briefing, which
was abrupt and did not involve any questions and answers, this was a little more convention. >> this was more of a traditional briefing that the press corps was used to. we heard from the trump administration they were going to shake things up, but it seems that they are going to go the traditional style and take questions from traditional media outlets and also try to have a more cordial relationship with the press. the statement that happened saturday was very angry from spicer and was very antagonistic towards the press, and it seems like today he tried to mend those fences. >> he said his intention was to always speak honestly, his intention is not to live, although the sides may disagree on the facts. mentioned the president meeting with business and union leaders.what did we learn from that ?
>> we learned of the president is highly focused on manufacturing. he met with a number of leaders from the business community and told them to come back in 30 days and tell him what he needs to do to bring manufacturing jobs back. they talked about tax reform, regulations, how he said he was going to reduce regulations as much as 75%, but clearly, the president wants to reduce the burden on the business community and try to bring manufacturing jobs back. he's going to meet with a number of leading auto executives. >> they are eager to show that they are ready to get to work. there's a meeting scheduled between mexico's top trade officials, along with u.s. top trade officials. any update on the plan to renegotiate nafta ? >> in the number of executive orders president trump signed today, we did not see an executive order or memorandum about nafta, but the white house is telling us they are very much focused on nafta, and there will be meetings not only at the
lower level but between president trump and the leaders of mexico and canada in the coming days. one of the top focuses of that meeting will be to renegotiate nafta. it something that is high on the agenda for the presidents list of things to do in his first 100 days. thank you so much. once again, if you want to continue watching sean spicer's press briefing, do it on the bloomberg at live go. earlier this month when he was president-elect, donald trump sent pharmaceutical stocks plummeting after toughening his stance on drug prices. >> they are getting away with murder, pharma. pharma has a lot of lobbyists, a lot of power, and there is very little bidding on drugs. we are the largest buyer of drugs in the world, and yet we do not bid properly, and we are going to start bidding and save billions of dollars. industry isa
fighting back with a multi-your ad campaign promoting a national dialogue on bold advancements in science. huguenin,ned by bob celgene's executive chairman. >> thanks for having me. >> you heard what the president said before his inauguration. how would president trump make the industry bid for the business? is there any model for this? >> i think a lot of changes need to be made to the system so we have the most efficient health care delivery system. we are optimistic that discussion is going to happen, and we want to be a constructive part of that solution. value, andsed on that is what i think we should be focused on, value. >> what changes need to be made? itwe think about the system, has become awful complex. i saw a report that said manufacturing and research companies that discover these drugs retain about 63% of the price of those drugs.
lots of other components have worked into the system. how do we make the system most effective? how do we ensure we get people to pay for performance and pay for value? there are lots of regulatory changes we feel can make the system more efficient and effective and ensure value is what we are focused on. >> would some of those reforms commissioner?fda i wonder what the focus should be for the new fda commissioner. >> i think throughout the system we want to have reform, innovative people with creative solutions. think about the systems we can do to ensure that we have a value-based pricing. what do you think is most feasible? >> i think there are a number of them. when you think about the best price practice, which prohibits
companies from negotiating performance contracts with payers to ensure patients get access, but there are only a number of good payers. we have to make sure we recognize drugs are about 14% of overall health care costs. we need to think about the entire system. drugs are part of the solution. we need to invest in innovation so we can deal with the problems .ike cancer, alzheimer's we are part of the solution, and we want to be engaged in a constructive dialogue. >> with respect to drug pricing, which the president mentioned, celgene raise the price of your blockbuster cancer drug by 8%. this follows years of price increases. in the current environment we are in where the president calls drugmakers as getting away with murder, can drugmakers bring growth by ramping up prices you echo >> our drugs offer great value to patients.
we think we should always be value-based. we always want more value for patients. we are glad to look at the value of our products for patients and the entire system, reducing hospitalization, adding long life to patients. offeel good about the value our drugs. it should be fair and based on the value of the payer and patient. we are confident our drugs offer that. >> will you ever call a halt to the drug price increases for that medication? >> we base it on value. if the drug does not provide value, we shouldn't have price increases, or the price should change. there's more competition coming in all the time. we are on the dawn of a new revolution with products coming on all the time. we've got a lot of challenges. >> celgene has given aggressive guidance for 2020, and i know you are in your quiet period,
but i wonder if you can talk about dealmaking and how that will fit in with profitability targets? >> i think the future of celgene is incredibly bright. we've got a great team of people leaving the company. it's a great team. we've invested for more than a decade in a focused, intensive way to invest in a pipeline. we think we have one of the brightest highest potential pipelines in the industry. frome great growth coming the organic pipeline. it something for great opportunity. we only do it if we see scientific, disruptive technology. we are in a great position. we've invested at the highest end of the entire industry, putting a percentage of our revenues into r&d.
>> what you are saying is you wouldn't need to make any kinds of defensive purchases? >> all the business development we are looking at are things we think would be disruptive technology that could transform the way medicine is practiced in a certain area. we will continue to do those, but not out of the need to fill a gap. we feel powerfully positive about the pipeline and the prospects for growth. >> let's talk a little bit about obamacare. republicans are determined to repeal and replace the affordable care act. the time when his -- timeline is not set. what is the best scenario and most realistic scenario? >> i hate to nitpick of this. i hope we stop calling it a obamacare, and i hope we never itlect fromcare -- call trumpcare. this is so important. when we politicize it, it makes
it harder to do the revolutionary changes we need. it trumpcare. our health-care system is going to change over the next way five population, continued demand for health care. we need to refine it. hopefully by june, we will have fairly significant changes made to the delivery of health care in the system, but that does not end it. things are going to change. we need to make continued refinements. we have a great system in america, but we shouldn't say, we are only going to look at it every five years. if we see an opportunity to change something, we should change it. >> why do you think june? >> i don't live in washington, but my sense is by the second reconciliation, we are going to see that there's an energy between the house and senate and administration to say, we are going to get something done. the timeline they have set is to get something done by the second reconciliation. >> what parts or part of the affordable care act do you think are worth preserving that the
new administration should hold onto? >> i think there are a number of positive things that came out of the four double care act in terms of how we think about paying for things, how we focus on prevention and wellness. we've got to make sure we do those things, but we have failed the patient in our health care delivery. it is hard for working-class people to afford the deductibles and coinsurance that everything so high that even the prices are 50% or 70 for side -- 75% lower on drugs or doctors prices, they can't afford the coinsurance. >> bob you can, thank you for joining us. >> thanks for having me. >> still had, we will take a look at president trump's impact on energy prices. our guest tom petri of petri partners. white house press secretary sean spicer is still holding his first press briefing. this is now running an hour long. watch it on the bloomberg at live go. this is bloomberg.
this is bloomberg markets. i'm scarlet fu. debbie t i screwed starting the week lower, even after crude startedwti the week lower, even after supporter comments from opec. tom petri joins me. great to speak with you. u.s.d data that showed drillers added the most rigs in nearly three years. my question is, how difficult is it going to be for opec to drain global oversupply when u.s. companies are so involved and so invested?
will beon't think it too difficult over the next 12-18 months. and the is in recovery, rigs are good, but we had a real overshoot on the downside. the need to have rig editions there will beand a lead time involved. there is this perception that they will come on very quickly, but there are infrastructure issues and leadtimes involved, even with the drilled, undeveloped wells. i don't spend a lot of time worrying about it. issues and leadtimesopec has ben uncharacteristically compliant with this agreement. i think that, along with real signs we've got better global growth than we have seen in some time -- not huge growth but .rowth that is more discernible
it probably means they can exhort -- absorb the recovery of some of the u.s. production while opec stays compliant. scarlet: i like the way you put that, uncharacteristically compliant. let's take a listen. permutation as far as iraq is concerned will be in 100% compliance with the opec agreement, and by the end of this month, before the end of this month really, we are going 210,000ete our share of barrels per day. that is a reduction in our production as a whole. scarlet: of course, the production cuts are with opec and non-opec members. opec held its first monitoring committee meeting this weekend. how effective do you think this committee will be in ensuring the cuts?
i think it is going to surprise us. -- tom: i think it is going to surprise us. in the long history of opec, it's condition us -- conditioned us to have low expectations, but the degree of cooperation and the benefits to be had by the it'spec members, compelling for them to work together. over time, you get to a point where the benefits are reaped, and then you get a different condition, but i think that is more than a year away, really probably a couple of these interim meetings and this cooperation with this council. i think the spirit of we all win by cooperating here is very real. if the u.s. gets all the way back to the old highs it had a, that is when you start to get pressure, but i don't see that happening until very late this year, more than likely a year
and a half from now. scarlet: that leaves us through the rest of 2017. donald trump said he is committed to achieving energy independence from opec, according to a white house plan. he wants to exploit vast and untapped domestic energy reserves. i have a chart that shows me the u.s. last imported 3 million barrels a day from opec, saudi arabia and venezuela counting for the majority of that. another country seems worried the u.s. will be less reliant on them for oil. should they be? tom: i think their point of view is as follows -- one, there are embedded declines they have to make up for elsewhere. two, there is growth elsewhere in the world, and three, let's make sure we recognize that the u.s. is going to be both an importer and exporter. the president is right to say that this is a goal, that what we are going to be doing is we are going to be exporting some high-value light oil and
importing lower value medium and heavier oils, which are most suitable for our refining system. we will be moving very much in the direction of reduce dependence, and i think it is achievable to get there and the time frames people think realistically, which is the middle of the next decade. don't just look at what our imports are. we've got to balance it against what we can export. we are going to pick up a .ositive spread our oil we are exporting has a higher per-barrel value than many barrels we're importing. . our oil we are exporting has a higherscarlet: you are soundinga we want to open up our exports beyond canada to open up our independence. basically, going to the first part of your question, i am looking for that to happen,
because the ban was lifted two years ago. we are now at a point where the flexibility of delivering balkan oil, which is very high-value, to both coasts, the west coast and the east coast, and indirectly getting it down to the gulf coast, it's very good. that oil is very suitable for other markets, as well. remind me of the second half. scarlet: your outlook for oil prices in the long-term versus the next 2-3 years? tom: i think we are going to make progress in the course of this year, first of all in eliminating the last of the excess inventories out there, and it will take probably three of the next quarters to get that done. we are going to have a net drain that takes the inventories down to a level that is much more manageable, and as a result of that, i think we can close this year having seen oil trade in the second half with a six handle, $60-plus oil price.
then, we are going to see a backing and filling, a functionality of the seasonality of oil demand, and it may be partly actions by opec to make sure we are reminded that none of us, opec and non-opec, want to see oil back to the levels we were at. now, we wereght headed for $26 oil. it's only a year. every now and then, as we get to $63 oil, to pick an example, we will see it drop quickly to maybe 59. the overall progress is going to be up. arabiaer thing -- saudi , andrious about its ipo, it's going to be a whole lot more executable with a $60 handle than a $40 handle. scarlet: thank you so much for
scarlet: more news on u.s. manufacturing, but this time from foxconn, the manufacturer of apple devices, is considering building a u.s. factory. if it happens, it has the potential to create tens of thousands of jobs in the u.s. i want to bring in tim kopin, normally based in taipei, but in town. it's not just news. it's the suggestion of a potential factory. tim: it's just an idea. terry gore ham himself said it's a wish, not a promise. that's an important caveat from him. whenever he says something around the world, people take it to heart and think it's going to happen. he's been very clear at this stage it's just a wish.
scarlet: i'm glad you bring up his factories in other parts of the world. he has talked about that. they haven't quite achieved what he intended, or they haven't achieved with the government's intended. tim: it's not necessarily what he intended but what the governments were hoping for. indonesia is a fantastic example. he was talking about maybe opening factories in indonesia, and he was pushing hard for good deals there. he wanted land. he wanted a cheap supply of water and electricity. the local governments wouldn't come through with it, and he basically walked away from the deal. wherever foxconn sets up, and it's mostly in china, he plays governments off each other. he goes to one province and says, what deal are you going to give me? these governments are very keen to have him there. he has stated very clearly, in fact over the weekend, he will do that in the u.s. he'll will go to states and say, you need to give me some kind of benefit. scarlet: he's a dealmaker in his own right, just as donald trump
says he's a dealmaker. one thing about this proposed or wish list of ideas, it would make displays that cost more than $7 billion. you took at what kind of product it would make and whether there's a feasible market for it. tim: it's massive pieces of glass. these massive pieces of glass up, and theided amount of volume we are looking to get out would be over 800 million iphone 7's per year. they aren't selling that many, and apple wouldn't want to source from just one place. if you break it down into tvs, then the metrics go down, but the point is it's an incredible amount of volume to bring onto the market, and then you need to do something with them, either assemble them in the u.s., which is not going to happen, or ship them overseas. these massive pieces of glass don't ship well. you can make them here, and make the economics work. the actual supply chain doesn't exist that would work, and
probably never will. scarlet: you have been covering him for years. what you think is likely to happen? tim: i think he may invest in the u.s. i don't think it's going to be on the grand scale he's talking about. the areas that will work for him will be robotics. isther thing he will do automated. the type of work that would make sense in the u.s. would be higher-level work where better skilled workers in the u.s. could make that work for them. scarlet: tim colton, thank you so much for joining us. much more coming up on bloomberg markets, including the cio of goldman sachs' private wealth management. ♪
we are live from bloomberg world headquarters in new york. we are covering stories out of washington and china. there are following on bloomberg and from around the world. u.s. stocks coming off their lows. at one point, they were flirting with their worst year -- worst day of the year. president trump takes executive action on trade, pulling the u.s. out of tpp. is there a chance he cuts a deal and softens his stance on the agreement? the senate is set to take a vote or two on president trump's key nominees. rex tillerson for secretary of ciae and mike pompeo for director. we are one hour from the close of trading in the u.s. let's get a check on the equity dip with abigail. abigail: you really nailed it. we are looking at the averages trading lower, but well off the lows. the s&p 500 and the dow had been on pace for their worst declines of the year, but now well off
those lows. we are seeing more intraday volatility that we've seen over the last week, week and a half. earlier, the dow had been down more than 1%, on pace for its worst days since september. this chart, an intraday chart of the nasdaq, really illustrates it. higher, then well lower, trying to tick higher. lots of uncertainty. the bulls and the bears are really battling it out, trying to figure out what's going on. we do have the transports down today. the s&p 500, it's been quite some time since we've seen that. it's been 30 days since the s&p 500 has seen a move up of 1%.
it's been a 70-day drought of 1% declines. this is the longest streak of a lack of 1% to kleins since 2007. we see the s&p 500 is trading in this range, within the 1% parameter to the upside and downside. the last few times this has happened, it has ended in some closing volatility to the upside and downside. we are probably going to see that sooner than later, although it hard to know when that intraday volatility will close. 11%, on, down about pace for its worst a since november of 2015 after apple has put a lawsuit against qualcomm around licensing fees, wanting it to come lower. general electric is down sharply, down nearly 3% in continuation of last week's weakness. ge did miss expectations by about 2%.
all of this, this weakness, this volatility -- as we go across asset classes, we see a bit of a bid for the haven assets. about 5%,e vix up telling us some of the complacency is leading the markets. the 10-year, down about seven basis points, it tells us safe haven bonds are rallying. the dollar index, down a bit. again, some uncertainty about what is happening in the u.s. on that dollar weakness, we do have some yen strength. the dollar is declining the balanced -- against the yen. it's an important one to keep an eye on. scarlet: thank you so much, abigail doolittle. let's get a check on the headlines. emma chandra has more. the trump administration
has unveiled part of its plan to mitigate illegal immigration. speaking to reporters at his first official briefing, white house press secretary sean spicer laid out some of the immediate priorities of the new administration's immigration agenda. >> the president has been very clear that we need to direct agencies to focus on those inside this country illegally and have a record, a criminal record, or pose a threat to the american people.that is where the priority is going to be , and we will continue to work through the entire number of folks here illegally. emma: it's the first time spicer .as addressed the press he criticized some news agencies for "deliberate false reporting" about pictures of crowds gathered for the inauguration. president trump is taking aim at a trade. he criticized some news agencies for "deliberate false deal he st workers. he signed an executive order pulling the u.s. out of the transpacific partnership trade deal. congress never formally authorize the agreement.
the president has signed executive orders implementing a hiring freeze across the u.s. government except for the military. he's renewed a federal policy that forbids international nonprofits from receiving federal money and using it for abortion policies. it was rescinded by former president of clinton, restored under president bush, and rescinded again by former president barack obama. in the southeastern u.s., severe weather killed at least 19 people over the weekend. seven died when an apparent tornado struck a trailer park in georgia. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries, i'm emma chandra. this is bloomberg. thank you so much. scarlet: let's get back to markets and what to expect under the policies of president trump. joining me is cio of present wealth management -- of wealth
management at goldman sachs. are we back in a regime where we are risk on, risk off? for a while, it looked like people would go back to picking individual names, and there was less correlation between asset classes. we've seen the return of everything moving in lockstep again. >> we have a view that is very similar for 2017 12 we had for 2016. in many ways, whether we are talking about the economic perspective, whether we are looking at equity markets, our view is we are going to continue having an economic recovery. we are continuing to have a bull market. last year, our theme was the last inning that had not ended. thetheme this year is, glass is half-full, and when we look at our long-term investment team of u.s. preeminence, a review is that is intact. when we are looking at the long-term perspective for our clients, our recommendation is
to stay invested and look at the markets and recognize valuations are high but still remain invested for the long run. scarlet: you want to remain invested in a could these. equities.tay in we have a chart that shows that the virgins between equity volatility and political risk. the blue line is the u.s. economic policy uncertainty index. it has been trending higher. the white line is the vix, which is near a 2.5-year low. in the past, the two have tracked closely. right now, the vix is coming down. uncertainty continues to move higher. why is this, and how long does it last? doesn't something have to give at some point? uncertainty continues to move >> there's a team at stanford who have done some good work, and they show when there is a lot of uncertainty, it is a drag on investment. however, it has to stay high for a long period. some of this uncertainty is about headlines, because we are right at the point of the obamation between the
administration and trump administration, and there is a lot of uncertainty in terms of the size of fiscal policy. what could be the infrastructure program? what are the trade relations going to be like with china? there is a lot of uncertainty. for that to increase is not surprising. what are the trade relations going to be like withit doesn'tn there should be a lot of volatility and downside to the equity market. the underpinnings of this bull market are very strong. scarlet: i'm glad you bring up trade. chuck schumer has said on issues of trade or prescription drugs, trump, if he is true to what he says, could be closer to democrats than republicans. if you look at his cabinet otherwise. suggests as an investor, what do you pay attention to, what the president says or who he appoints? when we >> look at the risks associated with any outlook we have, we have categorized them into high probability, and-impact, low probability
uncertainty, and low probability and low-impact. when we think about the greatest risk with the highest impact, we think about china, both from in a cannot perspective as well as trade and geopolitical of perspective. what are the things we're following carefully? we are watching carefully what happens in china from a debt perspective, policy perspective. what will be the trade relations be? will they be called a currency manipulator? we are not surprised that the u.s. has said we need to reset the relationship. if you think back to may 2015, the council of foreign relations produced an incredible study and said, whether it's from an perspective, military perspective, cyber security perspective, we need to have a reassessment of the relationship with china. trump and the team he has selected a buy into that. so many people have talked about the need for a reset. scarlet: at that point, it can go any which way, once they
begin those negotiations. i want to get your take on the bond market. do you agree we are on the cusp of a bond bear market, whether it is 2.6% as bill gross or 3% in terms of where you draw the line in the sand? are we on the cusp of that? >> when we look at the bond market and look at interest rates, what are the key or 3% if where you draw the line in the drivers? there are some real returns, some real risk premium in bonds. there has to be an inflation factor. we have not seen inflation is a made for -- major factor that will drive interest rates. scarlet: you don't by the reflation story? >> when you look at the components of inflation, or will inflation come from? we have excess capacity. we have a dearth of demand. china is not consuming enough. germany is not consuming enough. we have tremendous excess capacity, whether it is in so many services in an industry, and it's hard to imagine that we
are going to get any major push in labor prices. when we look at it in aggregate, it's hard to imagine other than the base effects we are now seeing from the dollar and energy prices, we are going to have significant inflation. we think rates will be a little bit higher, but not so much it will create an unraveling of the equity bull market. productivity is kind of the big conundrum of our time. how do you determine the slowdown in productivity growth? is it simply a function of missed measurement, or is there something more systemic? >> we think there are two components. ofhen you look at historic u.s., itctive, in the is cyclical. you can have 10, 20-year windows of high productivity followed by years of low productivity. if you look at the productivity levels we have now, we have seen these before. if you look at the post-arab oil
numbers,roductivity you are looking at levels of productivity growth of around 1.3%, 1.4%. after 1995, productivity growth rates doubled to over 3%. in the early 1990's, all the naysayers who now say productivity growth will never recover in the u.s. are the exact same people who said that in the early 1990's, and yet we ended up having incredible productivity growth rates. it is cyclical. it ebbs and flows. we are at a low point now. nothing about the future tells us we have to stay at these levels. hard to look at the various deflator's for technology, for telecommunications, and not conclude that there must be some missed measurement. -- mis-measurement. the missed measurement could be somewhere between 0.5% and 1% of gdp.
scarlet: this is "bloomberg markets." 's nominee for cia director mike pompeo is expected to be confirmed tonight with the senate taking a vote that has been pushed to 9:00 p.m. joining us now is kevin cirilli. was there is much controversy surrounding the nomination of mike pompeo as there was around some of the other nominees for
cabinets? kevin: he did face tough questions about russia's meddling into the u.s. election, but by all accounts, mike pompeo is said to be confirmed later tonight by the senate. here he one of the first of a few appointees who are scheduled to be appointed. the other is rex tillerson, the former exxon ceo, picking up key support from republican senators who democrats hoped to flip. most notably, senator marco rubio and senator lindsey graham, a florida and south carolina respectively. scarlet: does this mean that marco rubio will be backing trumps other picks, or was this specific to rex tillerson? do we have any sense of that? tell you there are a lot of republicans within the trump administration who are breathing a collective sigh of relief.
they viewed tillerson's nomination as one of the most contentious, if you will, particularly because of his business ties with russia, and as a result, people like rubio and lindsey graham are folks that democrats targeted. they signaled they, despite having reservations, will still support him. it sends a clear signal that democrats are quite frankly out of luck and up against a rock and a hard place if they hope to stop any of trump's nominations. it is looking increasingly unlikely. scarlet: that brings us to steven mnuchin. democrats pressed him pretty intensely during his nomination hearing. what is the latest on his prospect of being confirmed?are we looking at potentially this week ? >> we are looking at this week. i can tell you i've spoken to sources close to mnuchin and sources who have worked on his nomination process, and they are feeling quite confident for the performance he delivered last
week, one night before president obama was inaugurated. utilizee not able to criticism against mnuchin because the new cycle became dominated by the inauguration. scarlet: senate democrats have requested another hearing for devos.evos -- betsy are they coming at this and a more strategic way as opposed to their opposition to the nominees for treasury secretary and defense secretary? >> i think the concerns they are raising our part of a broader effort for democrats to define president trump's nominees, trying to lay the groundwork for opposition as they look to oppose several of the policies they look to put in place. i would raise the example of tom
price, another one of trumps nominees that is facing tough criticism for his investments in a particular health stock. particularly getting what democrats are alleging falsified information from one of his colleagues, representative chris collins, a liaison to trump's transition office, but collins told me he refutes all of those allegations. he told me it was little more than a "political witchhunt," and that i think is part of the larger take away that republicans are looking to frame this as, democrats playing politics. the math simply is very, very difficult to block any of trump's nominations. scarlet: i meant to say of course the health and human services secretary, not defense. thank you for joining us. it is time now for the bloomberg business flash. you will get some of the biggest business stories in the biz -- in the news. a federal judge has blocked at deal to buy's
humana. the judge ruled that the mega deal would have heard competition in the insurance space. aetna humana. humana a breakup fee. u.s. regulators have opened an investigation into whether the firm misled investors and its fight against a short seller. a team of the attackers will take over the duties temporarily. since he helped recapitalize the bank in 2010, the lender's assets have soared more than tenfold. that is your business flash update. still ahead, we've got today's options. we are trading mattel as the toy giant has a new ceo and is due to report earnings. this is bloomberg. ♪
scarlet: this is "bloomberg markets." i'm scarlet fu. it's time for options insight with abigail doolittle. abigail: joining me is jim schoen are of mk am holdings. think you for taking the time for joining us. before this segment, we were talking about the intraday volatility we have started to see in recent days. what are you seeing, and what are your clients asking? i understand some of them have been asking about a chart we have been showing. is one question -- where is the volatility? the graph you made reference to points out there hasn't been a 1% decline on the s&p 500 for a long time, and then references the similar pweios back in 2006 d- pweios back in 2000 -- perio back in 2006. many people expected a lipton volatility, we haven't seen it
at. the s&p 500 20-day realized volatility is just over 5%. besides august 2016 and the summer of 2014, go back as far as you can in time, and you are sitting on the lows. one of the metrics we look at is the periodicity of the volatility. since august of 2015, we have had some sort of volatility event every 4-5 months. if you project that off november, the last time we had a little bit of spike in volatility, you are not talking about the next one until probably march. our preference is to take advantage of skew and get into collars at the single stock level or the sector level, rather than indices were volatility links to products. your trade, mattel, i know you
have a great trade on volatility. can you take us through that you go jim: concerns about the holiday season. he debugs some of that with the checks he did at the time. they weren't doing any huge discounting. concerns about revenue growth in the fourth quarter, expected to come if yout 1.2% take out disney princess, up about 3.5%. we are pretty constructive here, and what this graph shows us is that implied volatility in the near term, just into earnings, it's particularly elevated out.ive to six years what we can do is take advantage of that. what we want to do is sell february, much higher implied volatility, turn around by march. out. what we can do is take advantage ofthree expiration, 32 calls. do that for about $.15 or so. you have directional exposure to the upside, and you are taking
advantage of the term structure. abigail: great stuff, as always, jim. scarlet: thank you so much. we just want to bring you a taped playback of donald trump meeting with union leaders earlier today. let's listen in. >> we just finished up right down the street. you guys did a great job. a great job. we are going to work. we are going to use common sense, and we are going to do it the way it is supposed to be done. we are going to stop the ridiculous trade deals that are taking everybody out of our country, taking companies out of our country. ♪
we're going to do with the way it is supposed to be done. we're going to stop the areculous trade deals that taking people out of the country and taking companies out of our country. i think a lot of companies are going to come back to our country. these that left are going to come back to our country and they're going to hire a a lot of people. it is inconceivable to me that this was allowed to happen in the first place. and i am not blaming president obama for this, i am blaming many years long beyond obama. this is been going on for decades. it is a trend that we are going to stop cold. we started today, which is my first official day. although actually started from the hour i got here. this is the day we wanted to sign some of the