tv Whatd You Miss Bloomberg November 10, 2016 3:30pm-5:01pm EST
back-and-forth over the years. a set that aside in the spirit of unity and cooperation. mr. trump: we discussed situations, some wonderful and some -- mark: mr. trump says he looks forward with meeting again and seeking mr. obama's counsel. donald trump's transition team has intensified potential cabinet members. a list obtained by buzzfeed news includes dr. critz -- dr. ben carson, chris christie, mike huckabee, and new gingrich -- newt gingrich. potential selections for secretary of state include gingrich and tennessee senator bob corker a. he is also considering defense secretary. today, we learned that a no-fly zone is being implemented over trump tower here in new york city.
that fly zone reportedly being set out because now that mr. trump's president elect, he will be making visits back-and-forth between trump tower and the white house. a federal grand jury has indicted former u.s. congressman aaron schock of illinois on 24 counts including wire fraud. 35-year-old republican was under investigation after a spending scandal. houseigned from the last year. a global news 24 hours a day powered by 2600 journalists and analysts in over 120 countries. this is bloomberg. ♪ we are 30 minutes from
the close of trading. at life from bloomberg headquarters in new york. i'm scarlet fu. it joe: i'm joe weisenthal. scarlet: climbing to a new record, bonds are tumbling. joe: but the question is, what did you miss? scarlet: president obama and donald trump had their first meeting today. president obama says that if trump succeeds, the country succeeds. we will be speaking with the conical phillips chairman and ceo to ask how trump's energy plan will affect his industry. and is the report earnings later on in the program. and we are talking about how stocks are tumbling. bonds are really getting smashed. , sodow up 240 points again
many people thought it would bring -- it shows how nobody knows anything. it was two hours or four hours as the result was coming in. we bring in those charts. i take a look at the yield curve and how much it has steep and. what a difference the trump victory makes. here that yields are rising. .e can make this bigger it shows the spread between the yield curve today and monday. 15 basis points for the 10-year. we have gotten to 32 or 34 basis points.
it has been all the inflation people were expecting under trump. go to alix steel at the new york stock exchange with conoco phillips ceo and chairman. x: i am here with ryan lance, ceo of conoco phillips. it's a pleasure to have you here. we elected a new administration here in the u.s.. laidave you had your plan out for 2017? are you changing it at all? ryan: we're sticking to the plan. we had investments rolling off of the portfolio. we talked to investors putting it to work for the unconventional place in north america. it is no change for us. if clinton had become the
president, would you have to back away? ryan: we would stay with them. we were firm about what we want to do. we see the opportunities and the discipline we can do. who would you want to see in energy secretary? ryan: i would like to see president-elect trump surround himself with qualified and broad people that understand the energy business. that is a tough challenge. it's not just about oil and gas, it's about electricity and renewables. about how the global system is intertwined. i don't have a name in mind but i would be looking for somebody that understands a globally intertwined business. there is a lot of development to the energy business. alix: [inaudible] would you want to see someone like him? ryan: harold understands the business. you're talking about
focusing on shale. that has been your priority. 100,000 assets, about to 110,000 acres. do you feel like there is a bubble? certainly the shiny object in our business right now sitting in the permian base. what the industry is finding is the opportunity for that base. it goes back to technology and innovation in our business. we have been able to discover new resources. in themian is the latest string of innovation and technology. now it is sitting in the permian. it is exciting. it is a world that we are making a difference in today. like i said, you have about 100,000 acres. on the permian right now, you guys really
haven't. why is that? ryan: we've got one of the leading positions. we have some of the best acreage in that. deliberatelower and approach because we want to acquire technology. we were learning so much the last couple of years for the learning curve. we have a tremendous -- 3500 3 billion over barrels of resources there. we are glad people are going to the permian. it is for service cost a little bit cheaper. that is dropping and we see it to be going back. it was part of the message today. don't forget about that. it is a high-value, high-margin. good point.ke a if everybody goes to the permian, cost will go up.
is there cost insulation in the permian right now? back we are slowly going to the permian as well. we want to keep the acreage we have there. it is a little bit different kinds of pressure that you see right now. we way the organization is, are not seeing rapid hyperinflation when the price went up to $110 a barrel. anthat we have to control as industry and protect the margin but we can't let the cost get out of control like we did when we had $100 oil. alix: i mentioned permian in particular because some are going blazing as well as the smaller guys. you can make the argument there are more nimble, had a higher dividend then you. had you compete with them on those metrics when they can rotate faster? -- how do you compete with them on those metrics when they can rotate faster? ryan: when you talk about rotating faster, we talk about a
very disciplined sort of growth. we focus on returns, free cash flow. , we have age we have global diverse portfolio. one third of the production will not be defined over the next 30 years. we are reducing to $4.5 billion. other companies cannot match that. they have to spend a lot more capital to keep their production flat and grow their -- and the cash flow required to do that. we are able to break even at $50 prices. those companies are a lot higher and it takes a larger price for them to fund their capital program. capital, that is the advantage we've got. few years,n the next you're in the sweet spot.
it you rotated to shale and will have a lot of big projects coming online as well. the question becomes, if you're going production at 1.5 million barrels a day, how do you sustain that? so far, what we've talked about is the capital intensity and lowering the crime rate in the national pork olio. it doesn't take -- national portfolio. years been in business 35 and i don't worry about where production is coming from today. we can go have production for a decade and only spent $4.5 billion or $5 billion. we can now spend a little bit more money as the cash flow starts to come in. we will have a growing dividend and through flexible share repayment repurchase program. ,nd we will have a high-margin flexible, low market supply inventory.
locations,nventional but unconventional. we can grow. and we will do that with whatever returns the highest value to the shareholders. we are not trying to chase growth. it we are not going to chase the cycle up or down. alix: and the decline, the 30 years of decline is pretty incredible. to don't need to buy offset that? have captured in the company today, the cost of $45 a barrel. we can generate an after-tax rate of return of 10% and only need a $40 oil price to deliver that. and for 4.5 billion dollars, we can maintain flat production for decades. that is the uniqueness of our country and the value proposition we bring. that's how we compete against the names you mentioned. a $40 break even, the industry has produced break evens is incredible.
cost structure. do you feel like the lower-cost is cyclical? [inaudible] we look at our portfolio and we made some very significant structural changes. get thethe decision to expiration and development game. nearly $10 billion of operating costs. we have nearly $6 billion of operating costs. when we look at our plan, we will tell you that 20% to 30% of that may not fit. the 60% or 70 percent will be structural changes in the company. we will see three inflation in the business as we go forward. it is not necessarily your friend. alix: i will paint a story and you tell me what's right or wrong about it. it you're reducing risk,
highlighting reserves, improving balance sheets. are you setting yourself up to be bought? is the perfect situation -- it is the perfect situation for someone to come in and say you did all the work. ryan: i hear that. it is a reasonable question. the best defenses a good offense. defense is a good offense. meeting, we are about growing the dividend, capital discipline. it can be first share growth or organic growth. the cycle we will see in the business, it is informed by a view that we think prices will be more volatile over time. we have to bring the cost structure down. you can keep doing what we know works. if someone came to you, you would think about it? ryan: you have to consider
everything, but no. we are differentially -- differentiating herself in the empty space. we are differentiating ourself in the anti-space. empty space. would you consider taking that position in the trump presidency? , movingking that forward with progressive policies is something that you always have to consider. but i love our company, i love where we are going. we might as well get it done. alix: that was a yes. donald trump, if you call him, ryan will pick up. think you so much, ryan lance. ceo of conoco phillips. joe: alix steel with conoco phillips ceo ryan lance. scarlet: what did you miss?
-- a few backed donald trump when the establishment didn't. what is next for these men under a donald trump administration? they have been reporting on this and joins us now. steve was very active in the campaign as well. he advised donald trump. >> it is hard to remember now that trump one, but it seems to do.crazy things to d we wrote in late august. his close friends were basically like, we don't understand why stephen is doing this. they thought it was a longshot bet but he is sitting pretty now. joe: a former goldman sachs banker. goldmaniled against sachs. in the final out of his campaign, he targeted goldman sachs specifically.
there anything about his post goldman sachs experience that suggests -- >> listen, joe. after goldman sachs, he worked with george soros. he was there -- scarlet: along with janet yellen. >> the global elite. then he was producing hollywood movies. sachs, to soros, to hollywood, and now potentially, we don't know for sure, but treasury secretary under this -- >> that is the important thing to remember. it's an important part of what we will be seeing now. trump, even though he got to where he is as president-elect of the united states, bashing the global elite, these are the people around him today. there was a rumor that jamie treasuryld be secretary. it you would really have to search to find someone -- donald
trump may have knocked them and insulted them, but he was friends with a lot of these guys. scarlet: tell us about stephen h and -- steve mnuchin. do you see his fingerprints on the policies trump has proposed? very hard to find a unified policy that unites these guys. after this is that the unifying force is that they were loyalists. these are guys that support donald trump even after many hours on the phone, i did not get an ideas that he was a policy guide. scarlet: like trump. >> and trump is a billionaire like a lot of these guys. he is surrounded by wealthy people. not surrounded by random folks. joe: another guy in the financial orbit that is a fundraiser and backer that
the rule that financial advisors would have a fiduciary responsibility. is that role gone? >> you are right that scare a mucci -- you are right that he tweeted about it. even fifth-graders know that the dred scott decision said black americans aren't citizens. it gives insight to the way these guys see the world. he feels strongly about that labor department rule which is a sign that that is one of the things that we might be seeing chucked out the window. and it goes on. .oe: it was just a regulation it not a law that has to be overturned. someone in the department of labor could say that this is not a regulation. icahn talkedrl about how on day one, he wants epa,e pa -- to see the
donald trump can sign away a lot of the rules that annoy him about the epa. the environment, finance, labor department. scarlet: what are they keyed up on? what do they want to see? tax reform, getting rid of the regulations? that steven is talked about wanting to see less government. we didn't press him on details because the details were not forthcoming but if he were here, he would say that donald trump and i agree on how we see the world. we want less government, lower taxes, and it is hard to imagine anything but that. b, a signature bureau under obama came about dodd-frank. it will it still exist or have a role anymore?
it should be noted that wells fargo -- >> that is exactly what i was about to say. wells fargo's stock price today, i think it is higher than it was before the scandal hit. scarlet: when did the scandal hit? >> a very proud moment for me. it is back to levels it was since the spring. it shows how much the trump residency is worth. -- presidency is worth. scarlet: all the way back to january. joe: that kind of says it all. that areare people awfully happy that the consumer financial protection bureau might not exist because it went after wells fargo and their malfeasance really hard. joe: that's a great chart.
so great to have you on. appreciate your insight. you to thet's get bloomberg business flash and look at the biggest stories in the news right now. u.s. regulators rushing to issue limits on wall street before president-elect donald trump is sworn in. that's according to people familiar with the effort. a majore on bonuses is unfinished piece of the dodd frank act. the trump transition team says it will dismantle dodd-frank and put in policies that promote economic growth and jobs. decoder down on the axis pipeline running by spring of next year. betting the trump victory will pave way for an easement from the army corps of engineers. the battle of a pipeline construction across the nation, the $3.8 billion pipeline is a rallying cry for the anti-fossil fuel movement and faces stiff opposition from native americans. and that is your business flash update. victory was good
scarlet: i'm scarlet fu. it what did you miss? energy companies are running out of steam since donald trump toss surprise victory in the presidential election. you are looking at the daily percentage change of solar energy companies in green, wind energy companies and blue, and white. let me zero in on yesterday marked by the circle over there. in sixthe steepest drop months because of trump's position on climate change. the president-elect has called climate change a hoax. it is the biggest decline going all the way back to june. performance. it is not fund flows. it these kind of companies fare
pretty terribly under president obama that is certainly for alternative sources of energy. wase president obama inaugurated in january of 2009, you had new energy down about 3.4%. wind energy down 5.9%, and solar .nergy companies down 40% it is not like the performance has matched the mandate from the new administration. a pretty striking chart and a pretty decisive verdict as other indices have been surging. anything losing now, you know it is losing for a reason specific to this administration. i want to look at an interesting was pointedthat out. look at the price of copper futures versus the chilean peso. chile is a big copper exporter. as you see on the chart, the two lines -- the blue line's is pay so, the white line is copper -- the blue line is peso, the white
line is copper. you can see the white line going through the roof the last several days on this belief that there will be this huge trump stimulus plan. that he will build all these highways and all this stuff, whatever. it will require a lot of copper. surging, we can zoom in at the top. it is dropping a little bit post trump. chile is not gaining. the trump administration might want to spend a lot, theoretically, it is not necessarily going to be good for trade. not enjoying the ride up. scarlet: enjoying policies. joe: to win one. when the correlation breaks down, it is interesting. market closes next. take a look at the major and
the dow jones closing at a record high. [closing bell ringing] scarlet: i'm scarlet fu. joe: i'm joe weisenthal. tuning in our viewers live on twitter. you can watch our coverage every day from 4:00 until 5:00 eastern time. scarlet: we begin with our market minutes. the dow jones industrial average closing at a record high, gaining more than 200 points. financials leading. six out of 11 groups finishing higher, so a decisive gain for the s&p. what is notable is the nasdaq is slumping. huge divergence. is the story. a big surge on the dow two days in a row, but the s&p going nowhere and those stocks getting
clobbered. off as: bonds selling well. i want to start with the different sectors and take a look at how donald trump's surprise victory is driving some of these performances. these are the etf that track the sector. they have been performing well because donald trump has promised to roll back regulations on these industries. industrials are another big winner with all the industrial spending he's promised thing priced into the sector. you mentioned bank stops -- bank stocks. facebook, amazon and google or aw at-bat now off by 2% and lot of their ceos have been vocal about who they have supported during the election campaign. you wonder whether there is re-cremation or maybe that is just speculation that there might be. joe: or culturally, maybe their
movement is moving on. -- their moment is moving on. let's look at government bonds. with 2.14% on the 10 year. move and wenary will be talking about that for a long time in terms of what investors are pricing in. an increase in fed bets coming forward -- huge developments in the rates market with investors betting trump cannot break the dis-inflationary spiral. i want to take a quick look at germany. german bond yields rising. scarlet: it was negative for. joe: you can actually get paid to hold german bonds. scarlet: let's take a look at currencies -- the dollar extending its gain.
dollar got yen, the within spitting distance of 107 which is at a four-month high. we see a selloff in latin american currencies. the fed would turn more hawkish because the policies would be inflationary and that would make these higher-yielding currencies less attractive. you are looking at the gain in the dollar versus the mexican peso versus the brazilian currency. here today, it is the best performing currency. all those bridges are not going to build themselves. not much more to say except hard commodities are doing very well. are today'sse market minutes. let's take a deep dive in to the bloomberg.
let's go back to equities. you notice that the dow is doing well and the s&p is going anywhere. it seems stores of trump -- that the old fashion economy would do well while other indices would language, it just seems right. i made a chart of the dow s&p ratio going back to 1960 and i noticed something interesting. the red shaded areas are every time there's a republican administration the blue shaded areas are when there is a democratic administration. the dow s&p ratio seems to go during a democratic administration. it went down during obama and down during kennedy and johnson injuring republican administration, the dow rises against the s&p and during the reagan years and bush years -- i america takes a
turn for more conservatism that people favor the old-style american companies and when a turn toward liberalism, we favor the diverse range of companies that mix it up more. we will see what happens. we have seen the dow significantly outperform the other indices and we will see if that continues. scarlet: this is a great chart. joe: i cheated a little bit. in the final two months of the clinton administration, it did turn around. so it's not perfect. scarlet: but it goes all the way back to the 60's. one day, we are going to have to look at the dow versus the nasdaq. insight onget more the markets after the second day of trading following donald trump's presidential win.
the chief investment strategist at charles schwab joins us. our bloomberg stock reporter also joins us. oliver: the dow is very industrials heavy. a little bit more tact and financials which tend to be driven by different elements of the economy. i would have to look at those dates closely. i also have a sector breakdown here. you have egg industrials and tech has a smaller waiting. tech is a lot closer to 20 or 21, so if you believe there's going to be a big reworking in terms of the trade agreement, then some of those multinational big task companies could move around.
joe: the steeper yield curves -- this is true globally. we've seen it in the number of places, that's helping financials not just in the u.s. and is true or industrials everywhere, even in asia, picking up on this that trump could have global implications for bonds. scarlet: when you look at how some of the companies are performing on equities, which was fairly bullish overall, small cap cubbies are doing better. to thisu can speak chart with the russell 2000 outperforming. oliver: going into this event, the market had a risk off mentality about a potential trump victory. butaw markets doing poorly, not only is it not risk off, it is extremely risk on.
back to the sector breakdown. before, it'sown the mystic facing. if you are doing the america first attitude and we're going to put all of our money here. "what'd you miss?" small cap finance loves deregulation. oliver: they might like higher regulation. you talk to the steepening yield curve having ramifications across all asset classes. modeler controversial fed tries to come up with a relationship between bond valuations and stocks. what do you think of stock valuations in light of a rising rate environment? oliver: there's always a connection rate between rates and prices. stocks are tied to earnings
rises after two years of an earnings recession. valuations may be under pressure given the uncertainty of what a trump presidency means, but earnings likely are at a turning point. at profithen you look margins for global companies, you see that they are in the middle but not the top of a long-term range. oliver: this is so important. profit margins were at all time highs and they are now just below the long-term average. we don't have the drag of slowing down revenue per unit and that is great news. oliver: when you look at stocks and bonds, ultimately if you are long stocks, it's not going to change. it's not going to immediately
derail the economic improvement, but why i am curious about is when you look at the valuation case for stocks, the only one that has been there is that fed model -- we're not going to get much in the bond markets, so i would be curious if you have clients talk about valuations and stocks, is it moving to the back of the pack when you look at higher yields and see them going up on the 10 year and you are losing one of the potential justifications for buying equities. that, it's correlated with higher stock prices. one of the oldest cliches is that markets hate uncertainties and with trump other is so much uncertainty and that's not necessarily a judgment, that's just a fact that we don't know his policies
and the fact that geopolitically, there are all weds of ramifications that don't know how they are going to play out. on do not see more anxiety the part of the market on these big unknowns? guest: uncertainty doesn't usually mean bad things. we've talked about infrastructure, a steeper yield curve. when trump made his acceptance speech, he talked infrastructure not politicizing the fed. those days are coming and that's why this isn't a trend to the upside but a trend of volatility . there will certainly be some negative days. scarlet: when you go back come you look at equities and pointed out that earnings are much more balanced and we are not relying on one or two industries the way we were decades ago. in 2007, the prophets came from materials and it's
perfectly evenly divided across the sectors. joe: thank you very much, the chief global investment strategist and oliver run it, thank you for helping to break down another extra gary day in the saw -- and the stock market. disney earnings are expected to break a minute. we will give you all the details. this is bloomberg. ♪
sunshine. i'm glad we get to see it on video. scarlet: we are a leading disney earnings and what's interesting is the lower political advertising is expected to hurt the revenue for the company. that something every analyst has pointed out. analysts were looking for one dollar 16. it's a decline because last year , disney reported $1.20 per share. revenue is $13.1 billion. this is a drop from the same time last year because the consensus estimate was for no change, sorry miss in the bottom line and top line. median networks revenue beat expectations and i wonder if that explains why the loss we are seeing after-hours is not quite as bad, only 2%.
you would imagine it would be disastrous, but it's only a modest selloff at disney. --rlet: revenue $5.7 billion that is better than expected and in terms of parks and resorts, the consensus estimate was -- joe: consumer interactive revenue, 1.2 9 billion, so pretty substantial revenue miss on that. scarlet: one thing people point out is there was one less week in the quarter this year, so you have to factor that in when you get the numbers on the advertising revenue and how that might play out. it seems to have had a big to thebut we go back idea that u.s. advertising revenue has been declining because of less political advertising and the olympics as well.
i want to bring in our guest from bloomberg intelligence who has been tracking disney in particular. disney onor fourth-quarter earnings per share as well as revenue. i know people were looking at softness because of this calendar glitch, but is this a surprise to you? guest: i don't think so. i think a lot of people were expecting the tougher call from last year we had the extra week. 350gement pointed out million dollars in head winds, so this was expected a little bit. are under pressure, so there's a lot of squeeze when it comes to advertising revenue. the same thing happen on the parks segment as well. scarlet: operating income at the cable network dropped and they
say that's due to decreases at espn and the disney channel. has one of the big stories in the collapse of nfl viewership. people are hopeful that may be when the election is over people will want to watch football live sportshat if is just not the draw that it used to be? how big of a deal is that if there starts to be a live sports bear market? >> this has been a huge source with the nfl ratings. a big drope seen is in ratings because of the election coverage and a lot of other noise factors as well. area for all of these companies, especially for disney because a gets almost half of its operating profits from its cable division.
then we go back and see the world series and we had absolutely fantastic ratings. i think it still in a pretty good spot but if these rating declines continue, that's going to be a big source for concern. scarlet: more headlines on espn. advertising had fewer impressions and lower rates and higher programming and production cost. i like what you said about the bear market and live sports. it's very much the exact opposite of what you want to be talking about. scarlet: when you look at live sports and how much it has been a driver for these companies, we can extend that to cbs. rethink do they need to their business model? that they needng
to pull back from. but they have already invested a lot. it's going to be a big source of concern. that's the big factor because they have $53 billion and sports programming. the question is what do they do next? they have a dwindling subscriber base and all these costs they have to meet. how do they get there programming out there? investment last quarter which would allow them to take some of their espn content over the top. they are obviously going to be thinking along those lines. bob iger is 65 years old and was supposed to retire this year or next year and that got delayed.
his successor, the plans they have laid out, what's next in terms of management succession? they have been very quiet on this front. .here's some time for bob eiger we have not heard anything in the last five months except there is this internal process going on. is a little disconcerting for investors because they had a textbook succession plan in place and all of that went down the drain when tom sachs quit. nobody doubts the capability of bob iger, so the board could easily ask him to stay on. would bethat interesting. we will find out more. disney ceo bob iger will be speaking to bloomberg today on "
joe: donald trump has spent a lot of time talking about two -- talking about trade. he's about to destroy the transpacific partnership and our next guest says those policies could spark trade wars and more. joining us is a visiting senior fellow at the london school of economic and clinical science. thank you for joining us. concernedrkets not
about the trade side of trump's economic policies. taxes.thinking about the it you think it could have severe consequences. lay out the ramifications of the trump trade policies on the world. guest: you are absolutely right. after the initial shock, markets are trying to look to the upside some ofou pointed out, the this -- some of the fiscal policy could be positive. the potential for protectionist trade wars which could cause the collapse of multilateral trading systems could cause a global recession which would morph anything from would be doing domestically. he's not going forward with the tpp. talks that have stalled with the eu's is dead canada and mexico are both trading
partners. if he does slap tariffs on chinese trade, the chinese will clearly retaliate and that leads both to inflation in the united states and slower growth and disruption of supply chains. lower exports and a global system and chaos. it could go and pull out of the wto which is the rule setting body and forum for global trade. i think the consequences would be very severe indeed. scarlet: the hypothetical effect is extended. four months after the brexit vote, what can we learn about how the u.k. is proceeding with that process? might we learn were how
might it inform us about how the u.s. would proceed? guest: there are some people in britain who are very happy with the trump victory and they think while trump hates free trade in general that he will put britain at the front of the queue for some kind of special treatment. we will see if that turns out to headedcase but if we are to a world of rival trading blocs, then the u.k. might find it very lonely out there if the u.s. goes protectionist and europe tears itself apart and and coalesces around china brexit is what we are promising. joe: the visiting senior fellow from the london school of economics. thank you for spelling out some of the ramifications for what could happen. scarlet: will the fed change your outlook for the economy
mark: i'm mark crumpton. time for bloomberg's first word news. president obama described his oval office meeting with president-elect donald trump as excellent. he noted the two men had never he -- had never met and looks forward to meeting again in the future and seeking mr. obama posco. the white house press sector was asked what, if anything was achieved. confident in telling you they did not resolve and i their differences feel confident telling you they did not try to resolve all their differences. they tried to lay the foundation for an effective transition from the obama presidency to the trump presidency.
they meeting originally scheduled for 10 minutes lasted nearly an hour and half. a federal judge has tentatively denied a request to and statements made by and about trump's the trial of university. said he wasjudge unprepared to issue a link it and the wood consider more specific request at the trial that begins november 28. mr. trump has selected gop maverick can block well to lead his domestic transition team. his role appeared on an organizational chart obtained by the associated press. the ohio republican is on the boards of the national rifle association and club for growth. he's a senior fellow at the family research council. a u.n. officials as the last rations inside eastern
aleppo will run out by next week. the last time to under 50,000 people trapped inside the city received any humanitarian aid was at the beginning of july. global news 24 hours a day powered i more than 2600 journalists and analysts in over 120 countries. i'm mark crumpton. this is bloomberg. joe: let's get a recap of today's market reaction. day two of the dow jones surging, the polish election and extreme regains over 200 points. the gains were not as wide red across other industries. the fang stocks getting hit notly hard and the s&p 500 going anywhere. , industrial metals and financials continue to be the big winners of the post election trade. scarlet: there may be a drag to our because disney reported
earnings and profits and sales missed analysts estimates and they declined from the same time a year ago and mentioned advertising situation for espn was soft. impressions were lower and the rates were lower as programming production costs increase. disney down 2% in after-hours trading. joe: "what'd you miss?" will the election of donald trump delay an interest rate hike next month? st. louis fed president james bullard said no. he said we are on track the same way we were before the election. i'm not seeing enough volatility to change my production -- change my projection. the fund bring in manager for m and g limited. it's great to have you in the studio. you followed greg's it closely
and then came here to follow the u.s. election. everyone is trying to make election toom one the other. what are your observations coming from an outside perspective? there are parallels and there are big differences. the parallels are undoubtedly populism as an election strategy in there, there are a lot of similarities. popular -- populism was used during the brexit debate to create allies that were unnatural. what we see with trump when you look at the distribution of his supporters and what i would say is it's not a coherent set of policies. it's an electoral strategy but not a coherent set of policies. the mood in terms of the actual very different from the post-brexit world. the immediate aftermath is
this expectation -- if you look at shares of caterpillar, they are surging. do you think that is a sustainable gamble? guest: i have to say if i listen to trump's macro economics, it could be larry summers. his opening speeches about infrastructure spending, in one way, this is conventional keynesian economics. brexitin contrast to the narrative. it's all about controlling the leavingement of people the single market. if i listen to trump, he lists macro economically, it sounds keynesian. it looks like house republicans,
it's about deregulation. so far, everyone has gone silent on all the other policies that might be negative for growth. scarlet: they are just not sure what's to come next. my chart looks at the 30 year yield. it has spiked up recently because people are thinking trump's policy proposals sound inflationary or boost inflation. then, we have the jobless claims which have been steadily declining. over the long-term, it's at near record lows. guest: what is important is to understand how prices work. the first thing you can observe facts in theic united states have been stable, but look at the volatility. look at the volatility you have seen in the 30 year interest rates. you start the year close to 3%.
shock and in the japanese moves to a negative interest rate and in the middle of the year coming get a brexit you have had it from them, and 80 basis so off. that's against a backdrop of relatively stable economics and that tells an awful lot of things. price itselfu that can construct a narrative. joe: i love that point that price can construct a narrative because it seems we tell the story after the fact. stocks continued to crash like tuesday night, people would be recess me stories about it is him. speaking of reflation, people are betting the fed can get off zero even faster than they were. if you look at the fed futures
implied yield, the white line is the day after. guest: the other thing i would mention is what happens to the bond shortage? that doesn't seem to be a thing today. i think it's way too early to make that call. is isg question for me this a republican alliance that doesn't believe in deficits anymore? that raises the interest rate question. joe: we don't know how much the rest of the party would go along. give up does paul ryan on all pretenses to fiscal austerity? guest: that feels implausible or it certainly going to be a battle. pure reaganite procyclical
stimulus? joe: we can bring the chart backup. guest: bonds and rate expectations have shifted so dramatically. the u.s. labor market has been strengthening consistently for ofee years and yet a lot people are abandoning their medium-term beliefs about interest rates. that's very often a strong contrarian signal. when you have fed governor saying we are in a new regime of lower than ever interest rates, it should not surprise you that you get something approximating a bond panic. scarlet: this is the markets impression, but what about the fed? how does the fed interpret the election results? yelleni remember janet saying that we could do with some this. it was. so i think the economic discourses very ironic relative
scarlet: i'm scarlet fu. time for the bloomberg business flash. to. regulators are rushing issue sweeping limits on wall street change before president-elect all trumpets warn and according to people familiar with the effort. bill rule on finance ministry bonus is the last unfinished piece of the dodd frank act.
at the trump transition teams as they will dismantle the act. linkedin may be blocked in russia. a company broke a law requiring personal data of russia. it could be died as early as next week. russia's main antitrust regular has opened the case against michael's -- against microsoft which is concluding acquisition of linkedin. manhattan landlords are giving renters more financial incentive than ever. says sweeteners like free rent or broker fees were offered on 24% of new renter agreement in october, a six year high and up from 10% one year earlier. that's the bloomberg business flash. joe: "what'd you miss?" inflation expectations surging --the highest july of 2013
let's look at the one scarlet has. republican controlled congress boosting fiscal stimulus. still with us is the fund manager for mn g limited. the 10 year break even surging. is this a logical response to what we have seen? what you find is that it is positively correlated with what the nominal rate does. there's one key factor to bear in mind, the risk property. this whole issue of volatility of volatility aversion, we live in a world where investors are myopic and perceive government bonds to be safe assets. their waking up to the fact that is actually very risky. joe: so you can actually lose money on government bonds.
iting the financial crisis, was so scarring that the main thing people wanted to find in their investments were assets perceived to be risk-free and what you are saying is the and risks -- as risk-free investment has changed radically. guest: there was the whole narrative of stories about shortages of bonds and collateral. i have not been a big buyer of easyand i think it's very to rationalize what is going on based on our ability to see policies that are going to emerge. one of the main things that has been around for a long time is that there's no inflation anywhere. i have a chart if you look at services inflation, core inflation excluding housing has an up since the beginning of the year. is it possible for people that so locked into this idea that we are never going to have inflation again they are not
paying attention to actual real world economic data? interestingnk the story on inflation has been how extraordinarily stable it has been. if you look at core inflation in the u.s., it's been very close to 2% despite extraordinary economic shocks. i want to get your impression of this view that inflation is the domain of the said. hit they set the dial and their 2% target and if they hit 4%, it could go up to 4% and fiscal policy is a marginal actor. not the like that's case. that: i'm a big skeptic of framework and model. nor do i think inflation
ofectations, the role inflation expectation is exaggerated -- is exaggerated. you can see inflation expectations have been climbing. responsesaying the from the bond market is not a considered response. do you think this is a considered response? guest: i think it is more likely indicative of the simple risk properties of index links versus nominal bonds, so i would not read much into it. this kind of rice action is absolutely brutal. there are people who own them for their safety properties and if you think of what 30 year treasuries have done since the post brexit low, you have had a double-digit selloff and double-digit capital loss. even if you look at the last two
days, government bonds in germany losing 5% or 6%. but we are seeing is not just in the united states but other parts of the world as well. even if it is a knee-jerk reaction, because you are seeing it in germany and japan, everyone gets the sense that it is more real. absolutely. as an investor, this is where you get the opportunity to be contrarian of these dramatic moves. the u.k. doing qe and that has been totally inconsistent with what global economic facts have been doing and now -- the two people overstate significance of these monetary policy innovations, the negative seorest rate or the boe or
be doing a big change -- do you not by the significance of these moves? guest: they can matter and have been important, but i would observe globally that there's been a huge swing in the pendulum against those policies and last six or nine months. that changes the risk-reward policy of the bond. think to yourself what is the risk reward of these global interest rates? are they going to go more negative? there's no upside for further qe but we are realizing there are scenarios where you lose a lot of money. joe: thank you so much. rate to get your perspective and perfect timing with what we are seeing here. coming up, donald trump goes to washington. the president-elect six down -- sits down with a sitting
scarlet: i'm scarlet fu. "what'd you miss?" president obama coming face-to-face with president-elect donald trump. here's both men in a meeting. president obama: i want to emphasize to you, mr. now aret-elect, that we going to want to do everything we can to help you succeed because of we -- if you succeed, the country succeeds. our bloomberg politics
for joins us now with more on this. the words were very gracious. the body language was a little stiff. what can you tell us about trump's transition team? my wrong in thinking chris christie was heading up? guest: chris christie was tasked with heading it up. there has not been an official change with that vote there have in some indications that his role has been diminished in the wake of the bridge gate verdict that ended up in snaring two of his aides. more information about the transition team and he unveiled a website where he has a series of policy proposals, whether it's immigration, building a wall, doing things like e-verify and canceling president obama's executive actions. he's talking about repealing the
affordable care act, also known as obamacare, and offering rod indications as to how he would replace it. he says he would look at the pre-existing conditions guarantee. we are starting to get a picture of what a trump administration is going to look like based on that. and i were talking about how some of the characters and trump's orbit in this transition really hit the revivingn terms of their fortunes. chris christie being one, rudy giuliani being another. newt gingrich, also. i have heard he's in the mix for a possible post in the cabinet. people whose political life looked like had been diminished may get prominent positions. guest: that is true. and sessions from alabama
chris christie you made a big bet on trump early are going to have that that payoff enormously. a number of these people had been more or less airbrushed out of polite company, especially in the case of newt gingrich and even someone like jeff sessions, not always in the good graces of republican leaders and not someone you would expect a republican presidential elect would tap as an advisory role, but you are absolutely right. may have hadcans no influence in a republican administration of someone else had one but now they will be key players. rudy giuliani would be another of them. and the game of thrones continues. thank you very much. up, what you need to know for tomorrow's trading day. this is bloomberg. ♪
scarlet: "what'd you miss?" the dow jones industrial average on a four-day winning streak, posting at a record high. in terms of what is taking place, lots of e-commerce purchases in china because it is single day, november 11. tomorrow, we will get numbers on a single day joe: -- single day. and the university of michigan sentiment tomorrow. i'm interested in all the consumer surveys coming out. they did not get affected much in the runoff, let's see if they get hit in the aftermath. scarlet: it is veterans day
tok: with all due respect the media, the next four years will be a marathon, not a sprint. >> awkward. >> we are watching donald trump's plane. >> we are watching the motorcade pull into the white house. >>'s meetings were going on for a lengthy amount of time. >> this meeting was close to an hour and a half. >> to be a fly on the wall. >> fly on the wall. >> even if we could interview