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tv   Bloomberg Markets Americas  Bloomberg  March 10, 2017 2:00pm-3:31pm EST

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from bloomberg world headquarters in new york, we take you to san francisco to ann arbor to london. here are the top stories we are following three u.s. employers added an estimated 235,000 jobs in february. what comes after the interest rate increase next week. republican governor rick snyder of michigan joined us on his take on the jobs report. plus, oil is falling for a fifth straight day. barrelrading below $49 a . givesnd global commodity us their outlook. let's check on where stocks are trading with abigail doolittle. not muchreport, and
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reaction. abigail: we have had some intraday volatility. we are look at small gains were -- four averages. everything is trading slightly higher, modestly, but the s&p of --d been half -- .5% up an hour ago, and interesting on the week, there is a bit more conviction and it seems to be from the bearer side. we're seeing one more chart from the s&p 500, down right now about .6%. if it closes down on the week, it will be the first weekly decline in seven weeks. last friday, the s&p 500 closed up for a six week in a row, the sincetretch of -- november 2015. there are many analysts out there saying the markets look overbought. bloomberg, and
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it is a great chart that shows that 45% of the s&p 500 members are signaling cell. this is almost the most since this time last year, basically matching that bearish read there, and this could suggest there could be a bit of pullback. in fact, katie is watching mackey indicators as a think that there could be a near-term pullback. she has been bullish until now, but thinks we could see a pullback on the s&p 500 for a couple of weeks. and stocks may be down on the week, but commodities are getting hit. the commodity indexes down your more the week -- is down than 3% on the week. here are the big drag. oil is down in a huge way, down more than 8% on supply glut surrounding what saudi arabia's true intentions are on production. and the dollar index is a little
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bit on the week, but not in a huge way. declines are really reflecting where the fundamentals are as opposed to dollar strength. thanks, abigail. i appreciated your he don't want to mention this to you, oliver, that produced playing michigan inpurdue is playing michigan the big ten tournament right now. it is in overtime, 68 michigan, 67 purdue is the latest score i see. and -- guest isnd our latest smiling on camera, so let's look back at the jobs report. president trump's first full jobs report is showing a little over 200,000 jobs added. ,oining us now is rick snyder governor of michigan. as we see the numbers of the economy start to take in and see this sentiment across market in the numbers today, tell us how you feel and what you see on this date level in terms of
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whether or not we can attribute this to a sort of eagerness for trump's policies. governor snyder: what we're continuedmichigan is relation of strong economic growth. we have seen that over the last few years in michigan. put this in perspective. we had the highest unemployment at the last decade going back to pre-2010 times. we have seen steady growth and created over 500,000 private , number one in the great lakes states and number six in the country over the last x years. we see that continuing. the trend of strong business is doing well. i would say the pace is slowing are of it, but people waiting to see what would be the new economic policies, and i hope there is an opportunity for stronger growth if we can move in that direction, and i think we will. oliver: i want to talk about what is happening at the state level, because i think michigan is an interesting microcosm of the nation. when we think about the potential for job growth, what we are looking at here is the employment level in michigan.
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as you can see, a very strong past fivere over the years. the highest level since 2007 in terms of employment. is whetherestion is or not on the nationwide level we can continue to see job growth at the level we are right that theuse it seems strength in the economy that the president promises, because right here that it is the highest since 2007, but things have changed fundamentally in terms of jobs and industry in your state. governor snyder: i think that is a fair observation. the way i view it is what we tried to do in michigan -- and i think it is a plot warm -- we redid our economic environment. the role of government is not to create the jobs. that is up to the private sector. but we can create the environment for success. in michigan fundamentally, it was going back to tax reform, making it double, fair, and -- simple, fair, and efficient, and regulatory problem is now the
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billing the skilled trades jobs. there are a lot of great paying jobs that are not being filled. if we can fill those, those are great chances for economic growth. we have migrated for the traditional bases of tax and regulatory and are talking about the educational system, training programs, and helping people find these opportunities to break the cycle. we have seen a big migration as well in continuing to lead the nation in the creation of manufacturing jobs, and have for several years read most of our job growth is actually much broader base. only about 25-30% of all job growth is manufacturing. it is a broad-based come back. i think the platform can be there if government plays the appropriate role of creating a good tax regulatory environment and in helping support the skill set. julie: governor, what about government not creating a hostile environment in terms of certain tax policies? i am curious as to what your reaction is as to be proposed
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order tax? i know michigan has an important relationship with canada trading wife, but also with mexico? trading wife, but also with mexico. our biggestder: trading partners canada, but mexico is a huge partner. what i would a is the real thing is how you do the balance in active for really. i think there are issues that should be on the table and address potentially between the countries in terms of better balance, but at the same time i would not want to see an environment where we are in a trade or. that have devastating negative consequences to michigan but also many other places. there might not be any winners and that. how do you strike the right balance to say how do you find two things that strike better outcomes that are fair, and avoid a situation where you could cause major economic dislocation, because that would have that comes with is for us all? julie: as a border state and someone who deals with these various other countries, is there anything in particular in
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a nafta renegotiation that you would like to see? i wouldn't want to hear more from my private sector companies in terms of what they are saying. we have seen a lot of success. it generally, our success has been positive in terms of rowing trade. i view that as something important in michigan, whether we are talking about exporting oo canada or two ohio. -- t ohio. the other thing we have seen is stronger relations in terms of economic opportunities. we are doing more partnerships with the aerospace industry and automotive have always been wrong -- strong. we have a great relationship canada and i want to see that continue. --ver: other intuitions questions on the border tax elementary we do not have all the details to figure out what the economic applications are going to be, but one real possibility is that it will create higher prices for consumers. you see the strength in the consumer and economy able to
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sustain higher prices and we start taxing goods coming across the border? governor snyder: that is one of the challenges. there can be expensive to that, and that is part of the balancing act that needs to take place. these are not simple questions. the good part i can tell you is over the past few years, we have seen tremendous success in terms of growth in michigan, and exports have been a strong engine for that. i see real that stupid trade relationships we have built. let's make sure we do not get into a situation where he gets adverse on both sides and go backwards. if there are improvements to made, let's have an open discussion on but not get into an environment where we have negative consequences happening. you have approved a budget that has $4 billion that is earmarked for infrastructure spending. i want to get to that because the federal government has talked about it as well and the president has indicated that yes, we do not have an infrastructure planned exactly it, but he wants state ready to start projects within 90 days of
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receiving funding. is that a realistic requirement? governor snyder: that is a realistic time. we have a list in michigan because we went about the process a couple of years ago and made a decision. we needed to invest more in our infrastructure. we started with roads and bridges in terms of additional gas tax registration fees, which are not easy questions, but we need to update our infrastructure. we also need to update our water and sewer. i had our -- we had our issue in flint and an issue with the sewer. we need to invest in infrastructure because it can have a good long-term return, and nationally we have been under investing in some time. you mentioned flint, and they want to bring that up. what are the long-term plans? the lead levels have fallen to some degree, but they are above
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the level that you have proposes the minute safety level. what is the long-term plan? snyder: actually, the new levels are below the proposed standard. there is a lot of progress on the waterfront there, and we have enhanced nutritional services, health services, and it is recovering but it is not something that will happen overnight. we are doing short-term action, intermediate-term actions, long-term actions in partnership with the city and federal government, and we are seeing progress. example,part is, for we have had 800 new jobs created in the past couple of years. 800 jobs is a lot of jobs in the community like flint, and i think we have an opportunity to see even more. let's make flint a better, brighter place than it was before the crisis even happened. oliver: i'm going to bring up a function on the terminal here were we can look at the economic specifics by state, and what i am showing right here is tax revenue over the past six years. more so than any of her state in the nation, michigan in terms of tax revenue over the past six years, is somewhat extraordinary.
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how you feel right now about president trump is talking about with taxes, and when you see that revenue stream come in, what if that starts to lessen? what we start cutting taxes on the people and groups that trump has started to talk about? governor snyder: again, in michigan, we did tax reform. tax reform can be done right. moreed a simpler, efficient tax system at the national level. i think everyone knows that. the question is to do it in a fair fashion and to do it in a way where you do not create undue problems. i'm happy for us to work hard to get the best service and the best value for a citizen, and we have been doing that. i just encourage the federal government to follow that model. think governor snyder, i you would he have know your team is victorious. 72-60 seven, michigan over purdue. coming up, the president trump administration's take on the
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jobs report. this is bloomberg.
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julie: this is bloomberg markets. cohen, the formal goldman sachs president, use the february job is validation of president trump's approach to bolstering the u.s. economy. david westomberg's in earlier today about what we have seen from the administration's own far and what we can ask moving toward. -- expect moving forward. david: member, in our first 50 days, remember, this is our first halftime. was inauguration. we have had an enormous amount
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of ceo traffic into the white house. we have had many big announcements from eeo's, whether it is the automobile in your fractures or intel, you have seen many of the announcements about people building, manufacturing back in the united states, bringing manufacturing back to the united dates to remember, those jobs are not in these numbers. will, three, 6, 12 months from now. we think there is enormous demand for american workers built in the system just and what we are seeing from the ceos that are coming into the white house. that will naturally grow demand for workers, that will grow demand for other workers. it will be a enormous trickle-down and trickle up in that. we are excited for the job prospects in america. oliver: you have a good part of your team together, so based on that, and putting together a budget, which you are doing right now, what short of growth projections are you building in? david: we are very optimistic on
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growth. one thing we will do in the white house is set very realistic growth projections. we have actually looked back at all the prior administrations in their beginning and saw what they put out for gdp forecast at the beginning of their it ministration, and none of them got close to meeting their gdp projections. put ourctually going to gdp projections we think we cannot only meet, we think we are going to beat. under promiser and over deliver than underpromise. we think it is relatively easy to do in the cycle we are in, and eating at the activity that we have been seeing from all the ceos we engaged with, and the fact we are going to be rolling out regulation, we are very optimistic about the gdp growth we think is coming. but to get a little more specific, if you look at projections that are out there right now for gdp growth for this year, it is something of a's no -- slow to strange. when you expect something
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materially better than that -- slow two's range. would you expect a big materially better than that? like towe would outperform the 2.3%, two point 4% prediction -- 2.4% prediction for this year. we think we can substantially improve on that number as we get tax reform done in the second half of this year as we continue created tojob companies that committed job growth to us in the future. we think gdp growth going for belie -- going forward will in line with our projections. so yes, we will continue to see growth, but remember this year is starting to be baked in, but we will outperform where some of the projections are. gary:, -- gary cohn,
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speaking to david west this morning. so when you look at the jobs report, not just the today but the trajectory and the gdp projections, does all of it seem like they are realistic goals? more realistic goal is to .5% in the fourth quarter this year in terms of gdp, and i think that today's report has quite a few elements suggest optimism in the service where business and consumers is starting phil into the heart gator -- phil into the hard data. however, there is a bit of an exaggeration i think in terms of construction jobs, because of probably theher,
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construction season is starting a bit earlier, which could pull a bit of job growth from later on in this year. great point to bring in, some of the seasonality into it. >> in both january and february, definitelyjust driving the higher numbers for this sector in the beginning of the year. the economists that would push back against gary cohn and president trump are the be seeingay we would a solid amount of growth, and this has been going on for some time. how is it possible to do deeper and push it up more. as it out of place to think that we could get to a 2.75, 3% -- 2.75%, 3% gdp growth? >> it is several impossible, ane
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it is said it is possible, but we need to solidify a few conditions to reach such growth, and one of them is the productivity growth needs to picked off -- picked up. and we need to see more growth on infrastructure investment. and this is a longer-term forecast rather than this year. also -- julie: also the labor force per to the patient rate picked up a bit. we have any more insight as to what it is that get people back into the workforce? is it it -- is it an increase in wages or some fundamental mismatches between skill sets and what jobs are needed? >> i think the recent pickup and confidence clearly has to do with some of the pickup in the participation rate as well as a pickup in wages. people see wages growing, they get excited, they see their neighbors are getting better jobs, so they decide to try and look for a job themselves. that is clearly having some impact.
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however, the long-term trajectory of participation is to a downside, given the demographics in the united states. even a flatter trajectory, not even talking about a pickup in participation rate is probably good news for the economy anyway. julie: thanks for your time. say, be sure to watch our special report on the fed's decision. , thate an all-star lineup will analyze the decision. this is bloomberg.
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oliver: bloomberg markets, i'm oliver renick. julie: and i'm julie hyman. it is time to look at some of
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the biggest business stories in this right now. probably spoke to bloomberg tv earlier today about a trade war between two of the biggest economies. >> i think it is bad for everyone. it is so clear. i think people or politicians are just using that as a bargaining chip to try and get more. facilities that jobs, we paye, taxes, but we actually do not have a lot of revenue. team isy his research getting closer to the company's ai goal. processions -- perceptions that president trump is anti-immigrant may steer talent to china. is to be theo ipo
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fifth largest ever lifting, and will generate millions and commission. caterpillar strongly denies breaking any tax laws after its headquarters were rated. notified us last month that they were notified by the irs that they owed extra taxes. no charges have been filed in caterpillar is cooperating with investigators. oliver: still ahead, the commodities close. is $40 oil in the card? we are talking about bear market oil again. live-stream your favorite sport
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at the airport. binge dvr'd shows while painting your toes. on demand laughs during long bubble baths. tv everywhere is awesome. the all-new xfinity stream app. xfinity. the future of awesome. julie: from bloomberg world headquarters in midtown manhattan, this is bloomberg market. commodity markets are closing in
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new york. let's take a look at where the metals are trading, specifically gold. it has been bouncing around like a bit today, but has had a todayve run, going into of eight sessions. gold traders have been jumping out of the metal with that rate hike, a near certainty next week. prices on gas in your upswing next week. on the flipside, we have those oil prices. you can see we are trading below $49 a barrel. total oil ande gas rigs now at their highest, going back to 2015. oil meantime is having its first -- worst week since november, with losing more than 8%.
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for more, with -- joined for more, we are by francisco wants. let's talk more about these prices and oil as they start to move lower. look, i think this may have by hightly triggered levels being reported on wednesday. we also have probably seen the speculativeof length in the market, and i think importantly is that the saudis have guarded the market -- guided the market somewhat lower this week. so all of that has put some inssure on the market, but reality we think that balances are tightening globally, even if u.s. inventories are high, and we remain constructive heading into the summer months. nothing oil come back in a race after those posts
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opec games we haven't in -- had reactcity see any third this on the part of opec to the action we have seen jacob we see opec extending the cuts? --? do we see opec extending the cuts? >> i think it is likely. i think we will extend them to where it will be as high as the first couple of months of the year. it on the back end of the oil curve, which has fallen now for six months -- this is not just a slope price. oil curve, used for hedging purposes, has not gone down for six months straight. pointing to a slowing shale oils the by recovery in the months ahead. what needs toy happen. she'll probably has recovered a little bit after than many of us anticipated -- shale probably
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has recovered a little bit faster than many of us anticipated, and that means the price of oil 12-15 months out needs to be lowered to slow down the rate of growth. chart that is a tracking u.s. oil rigs, and i think it is interesting because while the price of oil has been volatile the past six months, ultimately it is right near where it was in june. what has changed dramatically the number of those rig counts. we keep climbing, now the highest and more than a year. -- in more than a year. is this already what we are seeing is the price is fractured? i think that is the reason prices are coming down. if you look at the expectations for increased drilling activity coupled with the actual reported activity, it has been happening where then the basin breakevens are typically lower,
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around the $40 a barrel level, we are also seeing drilling activity picking up in all parts of the u.s., were frankly the breakevens are a little higher, maybe in the 50's, and that is something the market does not need for the time being. we do not need the u.s. to produce a million at a half barrels a day of oil. we need an incremental supply from the u.s. for the next four months, and i think that is where this has come at the play. and of course, the resources still quite high. so that is a lot of factors. but the key to watch in my mind is the export picture in america. we have seen exports of oil, crude oil and petroleum products picking up in the last few weeks, and that could come to compete with other regional markets in asia and europe as they start to balance out. julie: do you think that the export growth is going to be enough to help start to work
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down the stockpiles in the u.s.? experts have been growing and the exportation -- expectation is for exports to continue to grow, it has not been enough to work down supply. >> and the reason is because refineries are running at the lowest feasible point at the end of the year. we are running at 1.5 million barrels a day from this went on. we should experience a sizable reduction in refinery runs, and don't forget we have had a warm winter. the first couple of months of the year, the global balances, which were supposed to tighten quite a bit, have not done so as much because of the lack of weather-related demand for things like heating oil. i think as we go into summer, driving seasonal peak consumption will spike, we think refinery ones will pick up and
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the global growth momentum still stays strong, so i do not see a lot of reason. there is one have it, and that is the fed potentially hiking the rates. if they deliver a hawkish hike, we could see this all go up as it delivers pressure on the commodity front, but we want to see how interest rate behavior in the state as well. obviously, commodities do not like higher rates in general, so newe is a little bit a wants in terms of our constructive view, and had a fit its hiking path into the next 12-18 months on undoing the communication next week. thank you so much, and we will talk more about the fed coming up at 3:30. thank you so much. francisco is the global head of commodity that bank of america: merrill lynch. >> president trump spoke by phone with palestinian president
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today. according to his spokesman, president trump stressed the commitment to a peace process between israelis and palestinians. president trump isd says the president committed to peace as a strategic option. top senators are signaling that in august deadline for tax reform plans may be unrealistic. senate majority leader mitch mcconnell says that repealing the affordable care law is porting some limits on what congress could do. senator mcconnell says tax or formal take longer and will not begin until the health care debate is over. the european union is reminding british prime minister theresa may just how tough the upcoming brexit negotiations will be. a series of interviews and leaked documents show eu leaders are viewing that the eu case will lose more than it gains by
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leaving. germany says the eu will not grant to many concessions. even traditional ally ireland wants the u.k. to pay an exit fee. malaysian police have formally identified kim jong un on -- kim victim of athe nerve agent attack. north korea is refusing to acknowledge this. many are speculating that the north orchestrated the attack. i'm mark crumpton, this is bloomberg. oliver? oliver: coming up, we tackle the biggest tech headlines of the week. that is up next. this is bloomberg.
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♪ julie: this is bloomberg: it. i'm julie hyman. -- markets. i'm julie hyman. the most inerves three months, following a report try and fund management is unhappy with the company's recent performance. is on the hotr seat with the activist firm. shares rose nearly 2% today after jumping as much as 2.2% for the biggest gain since december 1. and both are completed -- volkswagen completed guilty -- pleaded guilty for us -- hiding a levels and obstructing
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investigations when authorities grew suspicious. under the agreement with the u.s. government, the company would pay $2.8 billion fine and $2.5 -- $2.5 billion in civil penalties. top supplier of cutlery is not as worried as a -- about a 3.5% border tax as it is about china. he warned about potential conferences on the world economic stages if world -- china and russia were to align. that is your business flash update. julie: wikileaks published nearly 9000 files on the cia's spying capabilities. they highlight vulnerabilities smartphones, televisions, and
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other technologies built by apple, samsung, and others. teamam joined by a dream from bloomberg technology, and we are going to kick it off with the data dump. mark, more than 8000 reports and -- he assange saying out will help the tech giants. wikileaks was part of the source of the confusion, because he made people think you could apps, which was not the case. but it does show is that the cia has the ability to hack into virtually any consumer electronic twice out there, which is like a phone or computer, or a samsung smart tv. >> and they have already started to seek out the likes of apple,
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alphabet, google, and saying they have closed it out, but do you think -- how has silicon valley responded to this? >> to me, it is not that shocking that if they can get on your phone they can understand what is happening. i think there was a lot of your initially when it like eagle and telegraph and some of these sncrypted messaging out -- app were compromised. and the cia, they get on your phone you are in big trouble. there is a lot of paranoia in silicon valley so i think that was some of it. -- some of itd was they managed to decrypt in christian, and that is not the case. >> they can see whatever you can see. it is not the government's ideal way of hacking into these messaging apps.
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they would ideally like to be wholeo tap into the network and see everything, but it does not look like they are able to do that yet, which should give us some solace that these apps are secure. attention will appear as this goes on as this relationship has always been a bit stressed. this will talk about stress in washington and uber not deciding to be on donald trump panel of advisors. and then, this week it was the you broughte video travisg answered and saying he needs leadership help and is going to get the 00's. coo is. now -- >> it now looks like they are going to get an executive recruiting firm, and certainly
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with all the problems they have had, there is a strong desire to have a strong female leader of the company, and just something -- someone travis c is a key are, and be the messenger for the company that he is not successful in delivering. >> are we hearing names? think your dream candidates, like disney's old cfo, but i do not think there is they haveic report of talked to this person and this is who they are considering. i think it is still premature for that. >> were to restart with uber, because it is not just taking on tension, there have also been interesting reports they have is basicallyt trying to get away from the authorities. they are able to put up in a most fake version of the app that helps cars dodge certain individuals. and now that has been taken off-line. neverht, there has been a
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ending parade of bad news. they came out and said they will no longer target regulators and law-enforcement officials with this program, which they say that they still plan to keep because they use it for other suspectuch as if they somebody is going to do harm to a driver or otherwise violate the terms of service agreement within uber, they will use the system to deceive them and think they are on the system when they are not. >> as a reporter on hoover, how is everyone reacting? perfect storm or a nightmare scenario for them? you can have pr disasters, but to have them all seemingly in one short amount of time, it is pretty painful. >> i think the morale hit is the most damaging effect. the #, it had some
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impact on their business. i think the other controversies have not had the name impact on usage, but i think it is constant. every tuesday it is these meetings, and the ceo have to cry every week to apologize in a different way. it is just constant. and these employees can work anywhere in the world. the uber has to provide a company that where they go home for their family they are not asked why they are working for the bad guys. and that is a core problem they are facing right now. >> they said they are actually starting to think about advising employees do not have uber on their cv because it looks so bad. but one more company that continues to be in the limelight is airbnb. it is the second most valuable startup after uber, and they just raised some cash. >> they have disclosed their billion-dollar around, they have
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been working on it for almost a year, and it affords them tuesday private for a while longer, which is something that we have heard that they plan to do. they have no immediate plans to follow stretch at -- snapchat straight to the public market. >> and despair from public investors wanting to get in on .irbnb, uber is the same everyone is hoping that these businesses will get out on the market. >> i mean, the perverse thing is that some of these late stage investors what have invested in them in the public markets, right? there are some super sophisticated public market people who literally changed chase airbnbes to and uber on the private markets when there is a deal flow aspect and they can get an average, but consumerhe more investor is definitely frustrated, and they will remain frustrated. these companies have so much money. cooper has a lot to sort out, airbnb has fresh cash.
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uber has a lot to sort out, airbnb has fresh cash. they will take a while. >> it has been great as ever, thanks guys. we are lapping up a preview the week -- wrapping up a pretty busy week. oliver: thanks, caroline. you can get the rest of the top tech headlines on bloomberg technology. and remember, all the episodes of bloomberg tech are now live streaming on twitter. coming up, does today's better than estimated jobs report mean the fed is undoubtedly going to raise next week? and what is the statement say about the future of monetary policy? this is number. -- bloomberg.
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oliver: this is bloomberg markets. i'm oliver renick. julie: the u.s. added 235,000 last major
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piece of economic data. the rate hike is all but certain, but what happens beyond that? is interesting to see how quickly the discussion in the past two weeks have switched from is there going to be a rate hike to how many rate hikes will there be this year? going into that, there were still some possibilities that we have a real clunker that could i do not think anyone today thought that was a plausible scenario. i do not think this affects but what march at all, is it say about the long-term trajectory of the labor market, what is it safe for the median term for the? -- the fed? one interesting fact, labor force for dissipation rate ticking higher, prime age labor force and -- in participation rate. that is ticking higher. arrive,tion that does
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whether there is more implied slack out there in the labor if they could, the potential for gdp is higher and perhaps the fed will ignore inflation pressure sometime soon. oliver: this is a big element of the conversation, is if we want to move further into 4% how muchd territory, further can this 9.2% though? and i guess this again brings down the conversation and puts it forward that the number can go down? and another down, thing to look at is the spread between them. we talk about the unemployment rate at 4.7%, for a long time a gap between unemployment and underemployment. this is something that janet yellen herself have looked at at that has look at incited -- and decided that the
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unemployment rate was overstated -- overstating the strength of the labor market. but maybe more people will come into the labor market if we are adding 200 k jobs month, 230 -- 200,000 jobs a month, 230,000 or something like that. julie: we got this wage inflation, but it all seems like these baby steps that seem to never explode upward lightweight economist keep predicting. -- like wage economists keep reacting. -- last month's number that revised 2.8%, so it is a stalled by that, but this is still the highest level since the crisis. nevertheless, other levels are shown to go a lot higher and it is nowhere near precrisis levels of deceleration. -- acceleration. oliver: the yellen thing, to go
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into next week, we are ready to go as where the -- as long as everything holds up. is goes we are going to get. julie: last year in december we were at the same certainty levels in the markets. 50%e had just come off the likelihood that they could go one way in september, so we are still seeing that out there. oliver: for the very first hike, people thought they might go in september. julie: i believe that there, and that is bloomberg's joe weisenthal. note,: on a programming next week, the fed decides. this is bloomberg.
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>> is 3 p.m. in new york, 12 p.m. in san francisco, and 8 p.m. in london. i'm oliver renick. >> and i'm julie hyman. welcome to bloomberg markets.
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oliver: from bloomberg world headquarters in new york on this friday, we will take you from oregon to washington, jerusalem, and soul in the next hour. let's see what going on right now. stocks are rising after the jobs are for your the way for the fed to raise rates next week, probably. but the s&p has been fluctuating all day and the market is still on track. and in politics, support for rex tillerson is waning on both sides of the aisle. many of his supporters surprised why the old man's management style. plus, we continue our focus on infrastructure and talk to one portfolio manager that says math will kill president trump's plan. one hour from the close of trading, let's get a check on the markets with abigail doolittle.
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abigail: not much happened with the major averages, so we thought we would take a look at the week. the first time down in seven weeks. at the russell 2000 down more than 2% on the week for it worst week since december 2. is, is this a pause or are we actually going to see a pullback? take a look at the s&p 500. -- six weeks higher and we have the one week lower. this is the first time we have had a break of this sort all the way going back to november of 2015. it will be interesting to see if this will be a bullish pause before stocks trade higher or a reversal. katie stockinette bt ig. as for what is behind the actions this week, some of the
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worst drags. ahnson & johnson trading at record high today. chevrongan and chevron, makes sense down 2%, 2.8%. having one of its worst weeks since before the election. jpmorgan, look at this. it is important to notice those things and see what comes of it next week. if there is more bearish followthrough. not a lot of true information to come from this. we do have the 10 year yield up 10 basis points. gold down on the week. the worst week since the election. we have accrued a risk assets and the beginning of november. not really confirming that picture but look at this.
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overall, it looks to be a bit more of a risk off week. oil lower and it's interesting to see what happens next week if the fed, what happens then. abigail doolittle, thanks so much. julie: let's get more insight on the markets now. following the jobs report and investors looking for the rate hike to come from the fed on wednesday. joining us is treasury and kevin kelly, and equity fundamental analyst for bloomberg as well. the commentary around the fed decision will also be quite important. let's start with you. got this big jobs report, stocks have been kind of muddling along. >> it is pretty important when you see the jobs report cannot today and you don't see a big move in the market. it kind of a rule of thumb if
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you are not seeing a move higher based on a report like today, it could be a sign that we might be hitting a bit of a top here. if i could jump to my terminal here, i'm looking at something that i think is also kind of an important thing. volatility. oliver: i recognize this chart. >> this was the losing chart the other day. but the big takeaway here as we have the vix on the bottom, the expectations of future volatility. tracking the s&p in white. the 180 day realized volatility. we have hit levels here that we haven't seen their he often. with some pretty big move to the upside. the caveat there is the valuations is the hot story. were 17ting valuations and 13 in the most recent one. definitely a bit of a cap there
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for the s&p moving forward. >> surprising how will be vix has been able to remain. today, not quite the case. what is the explanation for why bonds strengthen a solid jobs report? what gives? were nine straight days with the 10 year yield increase. the longest since march of 2012. a little bit of a give back. if you look at the terminal, you can see it has been quite a week for the 10 year yield. it broke through the purple line, but it failed to get to highlue line which is the yield was reached after the fed's last decision in december. it hasn't quite gotten to that level yet and it will be interesting to see if it does breakthrough that level if the
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fed raises rates. julie: if the 10 year yield stays there in a sustained way, maybe, finally, the end of the bull market. 2.6% and we'rew not at that level yet. >> let's connect the dots here. yields moving higher. bill gross says, if this holds, yields will go up even more. investors have been going to equities either for yield and specific bond replacement type stocks or in general for the earning yield. at what point is that start to eat away from the value add of being in equity markets? the things we talked about that brian made a really good point, the yield can be if
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you had closer to the 3% levels. the u.s. equity specifically, we are at an inflection point where you saw what we deemed as the trump trade. but a lot of sustainability is because of that. it started well before president trump was elected. moving forward, i have another quick chart here. a shout out for putting this together. we look at the percentage of by recommendations. that is the top panel here. tighten to spread the narrowest point. it speaks moving forward. it might be a regional shift from the u.s. a little bit overvalued.
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there could be potential international opportunities like emerging markets. there could be opportunities elsewhere that investors are starting to see. looking out past the fed here, what else are people -- because it is a certainty, essentially, from the fed at this point, what are people looking for? and, if you get steve mnuchin's idea for an ultralong 50 year or 100 year bond. that is coming back and it might be one thing that steve is the yield curve. that is the potential for $1 trillion of venture structure -- infrastructure. this is all sort of longer-term stuff. outer: we have to figure what the fiscal side is.
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give us a little taste. oliver: the fed, it's basically a certainty. what is keeping them up at night? >> they want to figure out if the inflation trade is sustainable. this growth story and inflation story can keep up. just as equities are really struggling to grind higher, they saying that this is an attractive yield an almost double where it was eight months ago. it seems like a buying opportunity. julie: -- oliver: greater into the equity market.
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julie: thanks to kevin. the skin a check of the headlines. mark crumpton has more. mark: as a trump was not aware his national security adviser was probably going to have to register as a foreign agent. sean spicer dismissed questions about whether michael flynn's work as a foreign agent should've given president trump pause in naming him national security adviser saying that flynn had "impeccable they told the transition team that he might with theegister justice department is a foreign agent because of work on behalf of turkey. the president is congratulating house republicans for what he calls their diligent work to repeal obamacare. following a white house meeting, he said the repeal and replacement of the affordable
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care act is now in sight. results.e some great we have tremendous spirit and we think it is something that will happen very shortly. mark: both the house ways and means committee in the energy and commerce committee clear the legislation this week. some u.s. hotel operators and tourism promoters are launching campaigns to convince a global travelers that america is still a welcoming destination. the wallccording to street journal which blames the sudden charm offensive on president trump's travel restrictions. the journal citing tourism economics. of u.s. could see a decline nearly 2 million international visitors this year. is york and los angeles expected to be hit the hardest. ties for discussions
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about syria. relations were strained after turkey shot down a russian military jet in 2015. they have since cobe broke the cease-fire that would reduce the scale of fighting in syria and cosponsored two rounds of talks this year between syrian president bashir al-assad's government and the opposition. a third round a set for next week. global news powered by more than 2600 journalists and analysts in over 120 countries. i'm mark crumpton. atver: why there is growing ease at the state department over secretary rex tillerson's position on budget cuts. that story next. this is bloomberg. ♪
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julie: this is bloomberg markets. oliver: time now for the bloomberg business flash. some of the biggest stories in the news right now. he will focus on external operations after his company merges with standard life. companies thees chance to grow. size matters because sovereign wealth was to give the money to the global giants. >> standard life agreed to acquire aberdeen. it is the largest active money manager. preparing for another bid for maker, axelst mobile according to a dutch newspaper. the 22 billion
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dollar offer as too low and not in the interest of shareholders, customers, or employees. has racked upand close to $250 million in production costs and marketing expenses. production cost requires at least $500 million in global sales to break even. it hits theaters this weekend and a strong international showing is crucial. domestically, it faces stiff competition from logan and beauty and the beast opening march 17. i think you know where i will be, julie. that is your business flash update. julie: beauty and the beast, of course. rex tillerson met with president trump at the white house. bloomberg news is reporting growing unease over his stance on budget cuts and foreign policy. he joins us now from our washington bureau. there seems to be this sort of
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disconnect between anticipation of tillerson before he arrives and the impression that staffers at the state department have of him. can you talk to us about that? >> when rex tillerson was nominated for secretary of eight, there was sort of a sigh of relief in the state department among the 70,000 employees there that sort of relieved that it wasn't john bolton, two people who had seen as being in the running and standing in direct opposition to the bureaucracy of the state department. people were very relieved that they had a great deal of foreign-policy experience. it has come to pass that rex tillerson really does seem to see himself a sort of an implementer of donald trump's america first vision.
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and most crucially, he does seem to be largely in favor of president trump's bid to cut the state department's budget by a drastic amount. the number floating around is 37%. he is looking at where inefficiencies can be made, meaner and leaner. >> if department of state staffers had viewed tillerson is a relief it is a wouldn't be quite as on board with some of trumps style or ideas, it's a matter of whether or not they essentially agree with the president. or, as you pointed out, related to the idea that they will slim down. you are bringing the department down 37%. >> i think what you are seeing is sort of a radical realignment.
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the budget had increased pretty drastically from 2008 to 2009 when he came to office and there was the creation of a great many so-called special envoy post point -- would appointed senior outside of the tackle a particular problem. rex tillerson a stripping away a lot of those things. the conservative liberal debate where the department would be reverting back to how conservatives have often seen the state department. it the idea that it is bloated, slow to respond, it needs to be trimmed down. however, there is really a retrenchment this time against some of the soft power initiatives like democracy promotion, gender issues. it has taken a lot of people by surprise.
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oliver: fantastic story. everybody can view it on terminal one. we look at how to trade sp y, the spider s&p 500 etf up 6%, pretty much in mind with the s&p. -- in line with the s&p. this is bloomberg. ♪
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oliver: this is bloomberg markets. julie: it is time for options insight with abigail doolittle. abigail: joining me in chicago for today's options in tight is investment advisor at equity armor investment. happy friday to you. thanks for taking the time. we are at small gains today. on the first weekly decline for the s&p 500 in seven weeks, what do you make of this? >> we had a jobs report this morning. -- even better report that
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honey, i love you, and you hardly look pregnant at all. the market closing at an all-time high. potential risk to downside is delhi. and i'm starting to follow a little bit more the correlation index. as the stock is closing at an all-time high, we have more more stocks making 50 highs at the same time. they also get even lower at the same time. the correlation is a leading indicator of volatility. something am watching carefully. of when we canms see volatility, your work is pointing to some sort of an april event. you associate that with the wrench election -- french election? >> next week, we have the ides of march. you probably want to stay.
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if you are a dutch citizen, go to the polls. the french election will be in april. we see these in europe and the united's ace. we see volatility rise after an increase in the far right party. you will see volatility after that. skew, a lot of protection for doubt in april options. >> is the fed completely priced in? there is a probability the fed will raise rates next week. what do you think next week potential rate hike could bring? >> the rate hike is definitely priced in. the market has been looking towards the language. how many more will we see in 2017?
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the market is pricing in a little bit of a rate hike. turning to the trade, they talk about selling some put . can you tell us why? >> i prefer the strategy as an investment and i prefer the overlay strategy when it comes to options trading. it is simple as a, b, c. always be collecting. long.g the market you collect to 25 for that. passes without the market going significantly lower. i won't necessarily lose any money until 231. i have little more cushion to the downside if we see a correction. abigail: risk management at
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work. congratulations to you and your wife. julie: thanks so much, abigail. still ahead, more in right and this with bank of america merrill lynch ahead of the u.s. economics. what is it mean for president trump's agenda? how many more interest rate increases will we get this year? a lot to not shawn -- nosh on. oliver: nosh on equity market stuff because first down week in seven. julie: we will be talking all about it. from new york, this is bloomberg. ♪
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mark: time for first word news this afternoon. attorney general jeff sessions asked 46 u.s. attorneys to resign. they were the last remaining attorneys appointed by president
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obama. in an emailed statement by the justice department, attorney general sessions said he was eking a "uniform transition inside the doj." mexico is performing a faster track for revising nafta than the u.s. has suggested. he hopes formal talks will begin midyear and wrap up by this ember. sanse u.s. insists imposing -- insists on imposing tariffs. the dakota access pipeline protesters are demonstrating in washington. a federal judge refused to halt construction. oil may start flowing through it next week. ae pipeline would pass under reservoir that provides water to native american reservations. of the, the impeachment


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