tv Bloomberg Daybreak Americas Bloomberg November 22, 2016 7:00am-10:01am EST
jonathan: good morning, from new york city. it warm welcome to "bloomberg tuesday," on this november 22. in the market, futures a positive 52 points, the dow up six points on the s&p 500. loweracross the periphery in the united states. treasury yields go lower, down by three basis points. the dollar-yen, a marginally weaker story. -- david:t you need here's what you need to know at this hour, party like it's 1999. equities rally to all-time highs for the first time in 17 years as commodities surge. death, taxes, at a rate hike. the market is certain the federal reserve will move next month as the implied probability gets 100%. and donald trump targeting trade.
donald trump: i'm going to issue our notification of intent to withdraw from the transpacific partnership. a potential disaster for our country. u.s. president elect says he will withdraw from the transpacific partnership on his first day in office. and that's what you need to know. alix: we are seeing a big move in markets over the last two weeks. seeing the great rotation out of stocks and into bonds. three charts tell the story. we are partying like it's 1999, i was a sophomore in college. it was a big party year. lineussell 2000 is the red and the s&p, the white line and the dow jones, the blue and the nasdaq in purple as the normalized basis over the last year. you see that huge jump since the election. have aflipside, you record rally, but not seeing any big volatility. if you take a look at treasury volatility versus stock volatility, we are right around a three-year high. this is the widest spread since
september 2013. bank of america says you can see treasury volatility moving a higher, it's the white line. it has more room to run, well below the historical average. what does it mean when you pair the issues in the stocks and bonds? the blue line is the bloomberg aggregate of bond index that takes into account sovereign, corporate, all across the globe in the white line is the s&p. over the last few months, they were moving in tandem and if you had a selloff in bonds, you would see a sullivan stocks, but that didn't happen. the rally in stocks continued and that is the question. can that divergence continue. jonathan: let's bring in jeff the s&p 500 bond market rolling over, does it have to close? jeff: he doesn't have to close. the gap is traditional economics
meets markets 101. what's good for stock markets is reflecting growth expectations. , itave the trump election surprises people. it's all about growth and changing the trajectory on growth. what is the reaction and financial markets? a positive reaction in equity markets to the growth died in a negative reaction in the sense of higher interest rates. that's really reflecting the expectation that we are going to that we arer odds not going to have 2% growth forever. that is with the market moves are talking about. jonathan: historically, it makes sense. it's not what we're used to recently. that's all. in the middle of the summer, you had bond yields at all-time lows and at all-time highs. can we go back? so used torg: we are this distortion and financial iskets, where bad news
treated as good news. i call of the paranormal markets. bad news is treated as good news because it means more monetary policy accommodation, which is good news for stock markets trade it raises stock valuations and bond valuations. it means a more persistent perio d of zero rate and intervention. maybe we can break out of that kind of market environment and get back to a bit of normal market environment. normal market environment, where bonds and stocks have more persistent negative correlation. what you're seeing now is the good side of that with bonds down and stocks up. you can also see the other side as well. alix: at what point do you not want to buy stocks because the yield isn't as attractive? something adjusting has happened, the generic 10 year yield has risen above the s&p dividend yield. the case roaming stocks is the so much -- the yield is so much
better, i want to own that. does it change the conversation? it's much more about rotation and different sectors that are benefiting. health care, different parts of health care as a result of what we anticipate. what it looks like for energy, what it means for consumption and consumer related stocks because of trade policies. on the bond side, it's pretty much macroeconomic growth outlooks. with the growth outlook, you see the higher registry fix it -- higher interest rate picture. david: at what point do the macro effects come back to the bond market? this is based on the anticipation of fiscal spending and tax cuts, which could lead to real deficit spending and a real growing leverage of the u.s. balance sheet. at what point does not begin to feed back into the bond market and then have negative effects? mr. rosenberg: it has, if you
look at the movements in the bond markets. the biggest movements are in the back into the yield curve. back and reflect a couple of different market expectations. one, he reflects an expectation that growth will be accompanied by inflation. it also reflects the idea that if we are moving away from that monetary policy world that we were talking about a minute ago -- monetary policy can do less and fiscal policy might do more. that might mean more debt financing. that remains to be seen. the expectation is you push up the amount of issuance relative to the amount of purchases by the fed. that is a supply demand shift that stevens the curve at the pens thetevens -- stee curve at the top. jonathan: we talk about reshape public opinion not by objective facts the by going towards people and trying to shape their personal beliefs. the way they feel emotionally. in markets, emotionally, bond strategists are always barest --
bearish and equity strategists are bullish. i just wonder how much this is really to do with hard facts. because think about it. what has changed in the last month? what's changed in terms of policy? ask anynberg: if you bond strategist or economist on your program, what is the probability of seeing a 4% growth rate over the course of the next four years, what would you have gotten his answers? you would've gotten zeros. you are seeing in the market a change in the probability of that attainment. of that goal. it's not facts, it's about what the odds are of changing the growth. ,f you add a 10% probability which had been 014% growth rate, and that fed through into nominal growth rates, the expectation is that's worth about 40 basis points of interest rates. that is how you can do the math
around the movies on the bond market. you see it in other markets as well that we will talk about later. we talk about metals and commodities. blackrockf rosenberg, fixed-income strategist is staying with us. outside of the business world, we go with emma chandra. emma: president-elect donald trump has found out his -- spelled out his policies. he will take aim at a controversial trade agreement. donald trump: i'm going to issue or notification of intent to withdraw from the transpacific partnership, a potential disaster for our country. we will negotiate fair, bilateral trade deals that bring jobs and industry back onto american shores. emma: mr. trump wants to limit regulation. he says for every new regulation, to old ones must be scrapped. in chattanooga, tennessee, police arrested the driver of a non-or school bus that crashed,
killing six people. two dozen others were injured. the driver is accused of vehicular homicide in reckless driving. japan has withstood a potentially deadly earthquake with relatively little impact. the quake measured 7.4 and struck off the coast of fukushima. that's the home of the nuclear power plant rippled by quake and tsunami in 2011. the latest quake briefly knocked out the cooling system at a separate fukushima plant, which also caused a small three-foot tsunami. global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i'm in the genre, this is bloomberg. -- i'm emmett chandra, this is bloomberg. david: the market has no doubt the federal reserve will move next month, as probability hits 100%. commodities are back in favor, set for the biggest three-day advance since may. we look at what is leading the rally and why goldman is bullish for the first time in three years. this is bloomberg. ♪
jonathan: this is "bloomberg daybreak," i'm jonathan ferro from new york. the four majoron benchmarks in the united states for the first time since 1999. will we set another record? futuresres up, s&p 500 positive six. another rally in the commodity --cess, crude, debbie g.i. wti of about 25%. yields rolling over, down three basis points. the nymex crude over $48. overall, we see in the best three-day commodity rally since may with gains across the board. the, copper, tin, all rising. the tin rally over the last few years. 44%. why is this happening?
we're joined by will kennedy and deb rosenberg -- jeff rosenberg still with us. the rally we've seen has been accredited to trump and perhaps an infrastructure plan. is that the real reason behind the commodity rally? the reason,art of but there was a good really going on before the election. , weave a lot of pessimism saw quite a slump that turned around mostly on the back of a stronger-than-expected chinese economy and also in some of the metals, actions taken by producers to manage supplies. you had demand better than expected in an interesting supply response in some commodities. alix: it's been relatively unnoticed leading up to the election. jeff, this really speaks to your world, goldman sachs saying by commodities in part of this inflation trade. the growth is going to get
better. the rally was in place ahead of time, but the big acceleration is the post trump election. in bond markets and macro markets of inflation expectations and growth expectations, you are also seeing in the commodities space, benefiting from the infrastructure expectations and overall from the growth expectation. you have the time aspect as well as but i think the big acceleration you can clearly see in the data is the postelection acceleration across commodities. chinaan: there is a aspect, but it's been marginal over the last month or so. i want to get your thoughts on that. we haven't talked about a big rally and base metals without talking about china. how much can the united states move the bar on its own without in mind? copper, you look at half of global copper demand comes from china. sachs, where they are saying people should be overweight and commodities for
the first time in years, they point to strengthening pmi globally in china, outside china, and the u.s.. no doubt that the candidate of the structure spending we're talking about would be very bullish for a range of natural resources. the output gap closing between the u.s. and china, that's bullish for commodities. so what you do on the inflation front? mr. rosenberg: we had a positive view going into the election. it a lot of with postelection pricingid for markets was to accelerate some trends that were already there. trends in terms of expectations of stabilizing inflation, trends in terms of moving away from monetary policy support towards more fiscal policy. you just got a big acceleration in that. there was a big performance in that time. they may have had a run-up from you quickly, but over the longer run, meaning three or six
months, we still think that inflation protection relative to nominal treasury exposure will be a better way of owning safe assets in your portfolio. short-term, we may have to get through some of this big increase in pricing. violations of got a little stretched in the short run. david: oil is up as well, even though we have a stronger dollar. how much of that is tied to the suppose it opec deal and where are we on that deal? the: there's no doubt people have become more optimistic that opec will put together some kind of deal to be ratified its material meeting a week tomorrow. this morning, a member of the nigeria delegation came out and said they expect a committee today to agree how the individual members within opec will divide up the burden of cuts, that's being seen as a key stumbling block to getting this deal done. if that's true, it's incredibly bullish for the market. i would caution that we need to hear from iraq and iran first. those of the two countries who have resisted any curbs on their
production. they account for $8 million -- 8 million barrels a day. once the saudi's of , we can be more optimistic about next week's opec's meeting. jonathan: -- we can be more optimistic about next week's opec meeting. jonathan: i wonder how much of an inflation had fake we will get for the mound market -- the bond market? mr. rosenberg: the bond market stories and adjusting one. oil and the dollar, it was mentioned before. we have the opec story that's dominating the short run moves. we also have another story around the election and the growth picture, which is the strengthening in terms of the dollar. that's often times been a headwind for the oil outlook. you see the typical inverse relationship between the dollar and oil. you see the far right-hand portion of that, we'll prices going up in the dollar going up.
there's been a breakdown because of the opec news. you have to keep an eye on the dollar. a year ago, it was all about currencies in china and commodities and a strong dollar titans financial conditions. oil and theack into concerns around inflation. your base effects start to not work out the way you were expecting, depending on what year-over-year levels in terms of oil, as we are down right of those low points around 45, you get to that point where you no longer get the base effect out of it. in the short run, we bounce off, you are back to the story of base effect. but you have to watch the dollar picture on will. wonder if they markets are picking and choosing the news they want to pay attention to. we want talk about fiscal stimulus, we don't want talk about deficit. we don't want to talk about trade. what does that do to commodities? we really just picking the good news? mr. rosenberg: we are selective
in the stories we are telling out of the room -- out of the news. we have a growth story that strong, it in commodity prices and interest rates in the equity markets. but then we have the anti-trade concerns in some of the emerging markets. that's one of the cautionary the consensus move towards this is growth friendly and inflationary in a good sense. we should be careful to some of the other signals in terms of the negative impacts that might occur because of the trade policies are being reflected in some of the emerging markets. alix: great stuff, will kennedy and jeffrey rosenberg, blackrock's chief income strategist. goldman sachs yesterday said they do think the dollar and oil can continue to rally. they don't because going to hurt financial conditions this time because emerging markets are going to spend what they make office rally. they are not going to save it,
david: this is bloomberg, i'm david westin. it seems three things are certain, death, taxes, and a fed rate hike. has voted, declaring there is a 100% chance the fed will raise rates next month. jeffrey rosenberg, blackrock chief fixed income strategist, still with us. 100% for december, let's get that out of the way. next year, it's not that steeper rise, it's preconscious. are we getting to a point where janet yellen is getting her wish for a high-pressure economy? mr. rosenberg: if we weren't talking about the election results, we would have been
talking a lot more about what janet yellen said back in october in a speech which he introduced some ideas around running the economy a lot hotter, running a high-pressure economy. as a much more accommodative policy with the goal of running the economy hot to repair some of the damage done to labor markets, to try to get more people back into the labor markets. the 100% probability for december, that means december should be a nonevent, except that it's about what they forecast in terms of the future pace of future increases. in december of last year, they gave us four. this year, they will give us two. you're about to bring up something. let's go on the bloomberg, the story of the last couple of years has been as follows. the market is a lot more dovish than the federal reserve. how does that change in the next
couple of months? i wonder if the market becomes more hawkish than the federal reserve, and if the market has been right? mr. rosenberg: what you see is the market in the dots of gun closer with a big increase in nowpostelection result, they are less up in those front contract to see for 2017. that's good news. for a long time we had an issue and the market was right in the fed dropped it down. now the market has come up. there's less uncertainty about that impact of the pace of at least the near-term increases from the fed. the issues are a bigger story. because trump, the election, change it to the federal reserve. many more board seats and governors they're going to be coming up for renomination or new seats to be held. that's what a change the tenor of the fed. david: how hot is too hot? or is it too soon to asked that question? too hot is not
yet the case. inflation is still running below 2%. 1.8% forwe will get to pce, their target is 2%. to want is going to be a conversation we begin to have only once you get inflation above the 2% level. then the debate about already running it too hot, is the fed behind the curve, all that will come back in. we are still try to get inflation figures back up. base effect notwithstanding, it's really about the core levels of inflation. if we get core levels of inflation up to 2%, maybe we start to have that conversation. alix: what happens in the neutral rate? unusual rate has picked up a little bit, in positive territory. if it moves that far enough, it means the fed has more room to hike through the lower it is, the less they can hike. what happens? mr. rosenberg: when we talk about this idea of the long-run equilibrium rate or the neutral rate, it's really just another code word for growth. and what is the kind of growth that we can deliver?
lowe can only deliver levels of growth, 2% type levels of growth, and what comes out of that equation is these low levels of interest rates. if we fundamentally, through structural reform and fiscal policy, productivity changes, lest i say, immigration reform or demographic things you can change, change that outlook on growth and raise it, than the neutral rate isn't as low as we once thought and it can be higher. jonathan: you are not asking for much. jeffrey rosenberg, blackrock's chief fixed income strategist. pushing policy. the u.s. president elect says he will ditch the trend pacific partnership agreement on the first day in office. richard haass, president of the council on foreign relations joins us next. from new york, this is bloomberg. ♪ ways wins.
all four major equity benchmarks rallied all-time highs for the first time in 17 years as commodities surged. death, taxes, at a rate hike. the market is certain of the federal reserve moving next month as implied probability hits 100%. donald trump targets trade. the u.s. president elect says he will withdraw from the transpacific partnership on his first day in office. and that is what you need to know. jonathan: a big session for the markets, futures are up 51 points on the dow, positive five points on the s&p 500. a big rally in the commodity complex, crude up by over five full percentage point so far this week. we tread water now, and the g 10 is a mixed space for the dollar, with the cable rate dropping, down by about one third of 1%. the trunk news out of transition team last night, when the president elect released a video statement on his priorities for the first day he takes office. at the top of the list, is withdrawing from the asian trade
deal negotiated by his predecessor. and that gives us the morning must watch. donald trump: on trade, i'm going to issue our notification of intent to withdraw from the transpacific partnership area a potential disaster for our country. instead, we will negotiate fair, bilateral trade deals that bring jobs and industry back onto american shores. joining us is dr. richard officialformer senior in georgia be bush's state department. welcome to the program. how big a deal is this? but adjusting he chose this point of trade -- it is interesting that he chose this point of trade to speak out about. it's an important source of general trade in calming down the world. the only good news from where i sit, because i believe in trade, david, is that he talked about bilateral trade agreements. it's the first time we've actually heard something.
to third-best,st get me wrong, but the fact that at least he, in get me wrot that at least he, in principle, shows some openness to trade, to me, that was slightly new. david: how realistic is that? done world war ii, we've is multilaterally. it's hard to negotiate with 200 some countries. dr. haass: it's beyond inefficient. it's not as good. there are certain issues we can deal with bilaterally. subsidies and things like that. tpp is a far preferable approach. bilateral trade agreements with south korea, so there are examples. we have trilateral with nafta, which he also says he wants to reopen and renegotiate. this is second or third best, and what else can i say? jonathan: let's talk about this region specifically to begin with. the vacuum this will leave, whether the happiest person is a certain president in china. dr. haass: i think she jinping -- she's in pain -- i think the
chinese president is feeling good. it's interesting to take a step back. the big idea of mr. obama's foreign-policy was the rebalance or pivot to asia. this is the economic component, it's like a three-legged stool without the third leg. to me, is an unfortunate way to begin. mr. trump is inheriting an unbelievably full, difficult inbox. what he is now done is taken that already piled high in box something else to it. now he's basically got to deal with the trade issue, which was essentially settled. much of a was too symbol for him and hillary clinton and bernie sanders. the only thing all three candidates agreed on was that tpp was bad, which is unfortunate, because it turns out that tpp is actually quite good for the united states. alix: can you want me forward six to nine months, he's trying
to make bilateral deals happen and he says this is really hard, i can do it. how does that play out? newhaass: you don't have trade agreements for several years. you betrayed need -- you could try to renegotiate tpp, it's just ask for an early difficult. if the thing i have been favoring, i hope it's not too late, is he gets to the point where he says this is not working. he could have a side agreement. you can keep tpp and then he could negotiate a deal with the congress, they could find all the understandings and side agreements they want to quote unquote improve tpp and deal with currency and workers who have lost jobs, train ability, safety nets, the approach that i favor. it's not inconceivable, but i think it's extraordinarily difficult, simply because tpp has taken on a symbolism for economic nationalists. my hunch is is probably done. in -- is it as important what he did not say?
he'd did not say there going to declare a current in the later in china on day one, is that somewhat encouraging? dr. haass: we are all looking for glimmers of hope. to talk about reopening nafta, canada and mexico will have their issues. in principle, it kind of depends. nafta is an old agreements, there are things that could and should be done to improve it. it doesn't look like a trade war with china. that would be a truly. phyrric war. not bet that we may going down that path again is potentially ok. jonathan: disinflation is a story that played out, the guy on the campaign trail is different to the president. i wonder whether pulling out and saying tpp is dead is just an easy compromise for this guy to appease the electorate, the
people who voted for him, but not actually do so much damage given that we don't have tpp anyways. dr. haass: what a set of optimists this morning. there's always a question between cap any other government, there's never a one-to-one linkage or correspondence. we saw that on obamacare and other things. what i don't know is what's the substitute? collateral trade deals, do they trying to a dozen or so deals, what tpp effectively try to do, or something fundamentally different on the details? if it is fundamentally different, he won't succeed. it's a good deal for the united states. already low.re everyone has access to us. this would have moved a long ways towards leveling the playing field and would've helped american exporters. the question is, can you get through that bilateral slices rather than doing something that is a loaf approach? david: it's hard to know what all caps policies will be, and that's why we are so focused on the team is assembling around him.
really only on one member right now, for this area, and as national security adviser, general flynn. what should he be looking for? what sort of team would help him best a cop was what's best for the united states? dr. haass: team is right, you been looking at everything in isolation. not to look at the team and what is the balance. general flynn is not your traditional choice for national security advisor. some baggage, it given some of his public positions and views on things like russia, on turkey. this, to me, would increase the desirability of having someone like mitt romney at state, a more moderate, more balanced quarter", more reassuring figure for the world. someone like general mattis. announce general flynn in isolation, rather than looking at the totality of it. you really do need a balance of strains -- expertise, government. david: does the appointment of
general flynn indicate how he will handle the national security? henry kissinger, who is a substantial policy person, other people, condi rice, who is more of a convener. dr. haass: the job is to hats. one is the person who makes process work, the other is a counselor. the danger and difficulty is make a sure the counselor hat, the advisor hat doesn't get in the way of the person who ensures due process. that's a big question about general flynn, whether you can get the balance right. it's not easy. it's awfully difficult. i think what it shows, because we don't know the answer to that question, is the white house centrality. that's been a real shift in american foreign-policy over the last couple of decades. of the nsc staff is somewhere between five and 10 times as large now under susan rice is it was very i don't think it's five or 10 times
better. me is that youo really have a white house centric operation. if you look at this white house, you have the president, you have mr. bannon, you have the chief of staff, general flynn, phelan numbers. a certain white house centrality to the entire national security process. alix: looking ahead to secretary of state, romney, rudy giuliani, senator bob corker, governor nikki haley and john bolton. if you were to outline one adjective of the foreign policy based on who might get that slot, what would it be? dr. haass: i don't see a consistency in those names. if you are donald trump, you rent a policy of quote unquote america first. let's not have any more foreign-policy than we need, which i think is mature trump's approach. that would suggest the more combative people, particularly given your he have general flynn , who is plenty combative, might not be who you need. that might argue to me senator corker or someone like governor romney. those are more traditional people.
a diplomatic approach to the world trade last i checked, that's one of the job disruptions of secretary of state. haass,r. richard resident of the council of foreign relations is sticking with us. coming up, bonding over brexit. farage asmp and nigel ambassador to the u.s.. we discussed that, next. this is bloomberg. ♪
♪ alix: u.s. futures continuing the record rally they saw yesterday. if the dow and s&p open right now, it would be at another record an intraday high. it's really all about commodity stocks. in europe, you can see it, glencore up almost 5%, bhp as well and arcelormittal up. commodities go long since the first time in four years. if it's a commodity, it is higher. that's helping these metals as well. individual names to look out for his palo alto, i cyber security firm falling over $20 a share now, down 10%. revenue missed, but it's outlook , at the high-end of 31 percent. bowing slightly higher in free market, up by .6%, getting kevin mcallister to run its commercial
aircraft division. i should point out the new ceo will replace the chief airline salesman last month. it little bit of a shakeup over at boeing. jonathan: thank you. it's probably the most talked @realaccount on twitter, donald trump. curiously, this came out. many people would like to see nigel farage represent great britain as their ambassador to the united states. he would do a quote great job. the u.k. government says there is no vacancy. they haven't completely ruled out of the prospect of this happening. we were talking about diplomacy 101 in the commercial break. this is quite strange and not in that book. >> i was probably cutting school that day. jonathan: what do you think of this kind of approach to elevate a certain nigel farage to the
position he has been put in by the president-elect? >> nigel farage will never be ambassador to the united states, and it's hard to see how this keeps the special relationship special. it anoints rather than a points nigel farage as a special envoy. he sees himself in the same modes -- mold of economic nationalism and populism. i think it's a freebie. it's one that you could give a shout out on twitter. in the meantime, britain is it thenearly well served by former national security advisor to the former prime minister. he's a real professional. over the years, i would say britain has been better served by its ambassadors and in general, by its diplomatic work than any other country. one of the reasons this relationship has been quoted" special, in this country has punched above its weight is it tracks -- it attracts extraordinarily talented people
and they tend to send us their best. david: you mentioned the inbox that mr. trump faces. what does this tell us about the inbox in respect to europe? there's a lot going on in europe, not just brexit, but the elections in france, on the merkel, the referendum and italy. is a lot going on, not to speak of latimer putin. dr. haass: -- of vladimir putin. dr. haass: there's a lot going on. december 4 and italy, is mr. ramsey loses that vote, and he may well, that could possible trigger as early as december 5 a real economic crisis in europe, real pressure on banks. more broadly, europe in a couple of years has gone from the most stable, protectable, boring part of the world to anything but. it's unfortunate. the last time europe was interesting, it was an unhappy story for the entire world. we are seeing populism and nationalism and russian aggression. ,he entire european project which was one of the great compliments of modern history to
make war unthinkable in europe is beginning to unravel. trump's, part of mr. inbox, we knew was going to be the middle east. we knew about asia and north korea and china. but suddenly in the last couple of years, europe has gone from stability and almost protectable boredom to now something that is incredibly dynamic and in currently dangerous. jonathan: america promoted that stability and a very big way, historically. we are talking about the united states leaving a vacuum in one region of the global economy, stepping away from tpp. at the same time, he is influencing what's happening in europe. he's trying to do that. that tweet is a joke, was if you're in laugh, maybe it funny. but there is some significance, richard. he's trying to shape relations with the u.k. with for roche. -- with nigel farage. dr. haass: we take for granted european stability, but it's one of the real assets and real positives in the world.
it was great that we didn't have to worry about it, it meant europe was more often than not a potential partner with united states in dealing with other troubles around the world. it's almost like oxygen. you don't notice it until you are missing it. european stability tends to be a geopolitical oxygen. we have to be very careful not to do anything that upsets it. we raised questions about our commitment to allies. i think there is some repair work that the united states needs to be doing with europe to reassure it. right now, there's more on the circuits of europe then europe can effectively handle. a positive result potentially in france the other day, that's a piece of good news. but we have to worry about italy and more broadly, this is still -- the sheer number of difficult challenges facing europe, we haven't even mentioned low economic growth. europe can get out of its own way. those issues of are internal to europe, not something the u.s. can affect.
let's help mr. trump with his inbox when it comes to europe. what could he do to help europe and not get in the way? lots of those issues, and a think we are a major player. where we can help europe is geopolitical. you continue to strengthen nato. i would have some outreach to russia, if you forgive the phrase, i would have a reset. i would try to work things with latimer putin, sent -- with vladimir putin, send him an envoy and try to stabilize that relationship. the geopolitical side of europe and buy them some time and space to deal with their issues, brexit, whatever happens in italy. jonathan: let's wrap it up with some optimism. is that one of the positives that may come out, the relationship with russia? should we show some more respect with latimer putin -- vladimir putin? dr. haass: the two media places
to look is ukraine, whether we see any change in russian policy on that in crimea. i don't expect that, but in eastern ukraine. then we don't see further russian mischiefmaking in other parts of europe, particularly nato, and in the biggest most immediate question is syria. will we see some russian restraint in terms of what they do and the kind of support they lend mr. assad. haass, theichard president of the council of foreign relations and a former senior official in president george w. bush's office. let's get your headlines outside of the world of business and more with emma chandra. buy akkr has agreed to japanese automaker for $4.5 billion. that represents a 20% premium over the last closing price. nissan owns a 42% stake in cap sonic -- it's spinning off less
important businesses so can focus on electric vehicles and self driving cars. an offensive in north america that will expand the line of suvs and sedans and start making electric cars in north america in 2021. vw was trying to rebuild its tarnished image following the diesel engine emissions scandal. novartis may sell some of its best-known drugs while it concentrates on generics and other products. according to people familiar with the matter, novartis may sell adhd treatment ritalin, a that couldic drug fetch more than $300 million. that's your bloomberg business flash. i am this is bloomberg. alix: coming up, nigeria says opec is on course to finalize the details to their production cuts. why goldman sachs is more optimistic on a deal. that is next in off the charts. this is bloomberg. ♪
alix: oil is relatively flat, but nonetheless, there's optimism in the market that it opec deal can get done. goldman sachs is saying a stronger opec cut rationale is raising the short-term price target to $55 a barrel in the first half of 2017. here the charts that explain why. his comes to us from goldman sachs. the blue line is the market in balance as of the end of september, if there is a cut from opec. the orange bar is if there is no cut from opec and there is no oil freeze. they point out that even if opec continues pumping at this level, you will still see a deficit in the third quarter of 2017. if there is a cut, you will see that deficit start to occur in the second quarter of 2017. the rationale is opec, why not? opec can opt for a short-term production cut and help balance the markets faster than if they didn't. that's a huge rationale for goldman and why they see opec
agreeing to the deal. the other part is we've seen a lot of production rollover, especially in high-cost areas like china, mexico, venezuela, u.s. conventional as well as columbia. this chart tells that story for production in that area is down under 12 million barrels of oil a day. if demand picks up and demand holds up, you really are going to feel that squeeze sooner rather than later. the real question then becomes what does a successful opec cut wind up looking like in the market? goldman said it wasn't about the absolute level of oil, it was instead about the curve. this chart is the one month to five-year forward curve of brent , prices out in five years. it currently is negative, that means the prices are much cheaper today than they will be in five years. what that does, if you are a u.s. producer, you can go in and hedge and cell production forward. prices are much juicier at the
back end of the curve. goldman says if we are able to see a deficit in an opec cut, you can actually see prices are much more extensive today than they will be in five years. that hurts the hedgers and hurts the u.s. producers. that would be the perfect cut, lowering the curve to squeeze the market. jonathan: that's a great chart, it been a big story in this market. coming up in the next hour of michael -- bob michele. equities sitting at all-time highs, we are up 53 points for dow futures, positive five on the s&p. from new york, this is bloomberg. ♪
jonathan: been and welcome to "bloomberg daybreak: americas." to talk about. potentially more. futures up 54 on the dow. in the bond market, the stabilization for treasuries with yields lower through much of the morning. 10 year treasury down to base points. -- down two basis points. is what you need to know at this hour. party like it is 1990 nine. all cointreau u.s. equity benchmarks rally to a high as commodities surge. death, taxes and a rate hike. the market is certain over the fed moving next month. donald trump targeting trade. saying he will withdraw from the transpacific partnership on his first day in office.
trump: i will issue a notification of intent to withdraw from the transpacific partnership, a potential disaster for our country. david: that is what you need to know. digging deeper into what you are talking about. this is what we have seen in the last two weeks. -- ever sinceis the election, you can see all of these rallying to record highs. record highs since 1999. that comes at the expense of bonds. bloomberg the aggregate barclays index which takes into account sovereigns and corporate's. that is the blue line. the white line is the smp. what we have seen in the past few months is that bonds and stocks have rallied together. that has been a big worry.
forced to then sell stocks? the answer so far is no. does this inverse correlation that we have been used to over the last few years continue? what we know is that we have seen more volatility within bonds than we have in stocks. the white line is volatility for treasuries and the blue line is volatility for stocks. the move is well below the average for volatility which means volatility could continue in treasuries while stocks continue lower. jonathan: let's talk about this. particularly that chart that shows the divergence. . want to bring in bob michele head of global fixed income for fx and commodities. historically, a story that makes sense. equities underperform
while the other outperforms. and recently,es no. cannot divergence continue? maybe it is time for somebody else to do the work? i think the divergence continues. i think what we have to get our mind around is that we lived in an era of distortion, driven by monetary policy since 2009. and it is clear that is going to begin to fade, certainly in the u.s., you are left to market dynamics and in a re-fleeting economy, lawns look too expensive and equities look like good value. we lived the idea that in a distorted market -- we are likely to live in a distorted market for a long time to come. every talking about a marginal shift as opposed to free markets
, making a come back without a central bank involved? to: i think the fed is about lead a seismic shift and i don't know if they are even aware. when you listen to the rhetoric coming out, it is too sanguine. they talk about it as if it is close to zero on a real basis. .25-.5, hugely negative. it was going to be a difficult couple of months anyway because u.s. corporate profits have picked up so the earnings recession was over. you are looking at commodity prices picking up against the year over year headline inflation data was going to be much higher because energy has stabilized around $45 a barrel. and you had talk of the ecb tapering. yet -- behind that behind that enormous, yet
and it istimulus coming in tax cuts and it may are in the regulation which enormously powerful tailwinds. alix: what is the pace of reallocation for that? during the taper tantrum, we saw the flow out of bonds and into stocks. what kind of pace can we see this time? bob: a lot of that comes from what central banks actually do and what the normalization process looks like. if i were on the fed i would advocate raising rates in december and going every other meeting in 2017, and i know that seems aggressive from where we were three weeks ago, at this time last year, that is what we talked about four 2016. think that is the case, i you could take the 30 year down channel in bonds and create the mirror image of that and that is what bond yields will look like for the next 4-8 years. monster: that is a
call. a savings glut, an aging forcesphic -- structural that should keep a lid on potential bear markets in bonds. what do you say to that? bob: the secular stagnation argument is real, a cousin or has been a preference for savings over investment over the last 8 years. but how much of that has been driven by regulatory reform? how much has been driven by our tax structure and recovering from the financial crisis? are we getting to a point in time where, if you put in place something like trump did not mix trump-economics, that actually begins to create the incentive to spend, consume and invest, rather than safe.
and i think that is an enormously powerful tailwinds. i step back and say three weeks ago there was a 5% probability that donald trump would win the presidency and that the senate would go republican. the house, everyone had as going republican. that 5% probability is now everyone's central case. you are telling me in two weeks time, the markets have completely shifted from three years, theom eight central scenario? i don't buy it. david: you must have some 74 janet yellen. she wants to run the economy under a higher pressure. but month after month, predicting that will be here and it hasn't happened. so it makes sense that they would because his right now, right? because we don't know what will get done with fiscal stimulus and reform and corporate tax reform and things like that.
we also have betrayed issue overhanging us. isn't it sensible for the fed to because this? bob: i think so. this is why i don't think the yields go in a straight line higher and why this week i think wey look a bit oversold but are shifting into a time where instead of buying backups, you should buy rallies because there is a form of policy stimulus coming. and we don't know what it looks like but i think it would be naive to assume that it is not ining and the only game left town is monetary policy. that story is done. quickly, to wrap this segment up, a change in expectations isn't enough. an important book in economics was written and it talked about animal spirits. how importantut that is? have we stirred that kind of thing up and can it be fundamental, can it be real?
bob: a lot of this will be led by companies. and their willingness to get out and invest, because either they are in scented for a number of reasons or, they are starting to see consumption pickup. that pre-election, we were already starting to see sales pickup and revenue pickup and the topline pickup. and we had seen a lot of stabilization come out of china, in particular. so there was some spending growth that was occurring anyway. i think you will see a lot more coming in behind that. i think it is more than animal spirits. unknown.-- it is an but we can talk as though the .25-.5 and itd furat at doesn't make sense in an environment where you are going to get forms of policy stimulus. bob michele, staying with
us. i do want to update on what is making headlines outside the business world. emma chandra is here. trumpa report that the administration will not pursue investigations against hillary msnbc. coming from the report has not been confirmed. during the campaign, donald trump without he would launch an investigation into hillary clinton's use of a private e-mail server while secretary of state. in san antonio, a suspect has been arrested in the killing of a police officer. the 20th police officer to die in a targeted killing this year, the most since 1995. spend hammond pledges to 1.2 billion dollars to improve the broadband infrastructure. the proposal will be included in statement.autumn global news, 24 hours a day.
powered by our more than 2600 journalists and analysts, in more than 120 countries. iam emma chandra. this is bloomberg. alix: u.s. equity futures extending the rally from yesterday although they are off the highs of the session. moverse some individual to focus on. this is the world's largest medical technology company. revenue fell in the second quarter and they cut the full year earnings. also take a look at segment jewelers. that stock is much by 8%, roosting be full gear after earnings topped estimates. we expect sales to fall by 1.5%-2%. and cyber security -- both of these stocks are higher. -- both of these stocks are higher. palo alto eight estimates but the revenue missed. the high-end to seize 31% growth. fire i getting hit and getting a
conducts -- the commodity complex. atn on the wti, we roll over $47.87. alix: a little bit of lightness when it comes to crude but commodities have had a monster rally in the past few weeks and are set for the biggest three-day advance since may. copper is up 21% in the past month. nickel up 14%. , ill with us is bob michele keep asking this same question -- we say it is all about donald trump and his infrastructure plan but the rally started before the election. what is happening? bob: we can't give him credit for everything, he hasn't taken office yet. have to look at the commodity complex, having seen a lot of reduction cuts. we know about that in oil. we know a lot of shale production was shattered.
a lot of mines have been shuttered as well. what we started to see in the middle of this year is that china has stabilized again and they started another infrastructure spend. net consuming and consuming a lot of commodities. consuming copper before it took off in the past couple of weeks. trump has added fuel to the fire, it is now everyone is looking at a bigger unknown infrastructure spend coming in the u.s., on top of already limited production and it has pushed prices up a lot. real: how much of this is and animal spirits? specifically with china? is transforming from a manufacturing economy and a construction-based economy into services, goods and consumer. copper are they consuming? how much are they using of zinc?
in the united states, how much copper will they put in the wall? think china is using a lot of copper. and for us, the issue is looking at continued consumption and continued imports into china. and that keeps growing and accelerating. so there is a lot going on on the consumption side. i think there are other parts of the global economy that are also looking at spending. also talking about increased spending. so it isn't just the u.s. or china. there are other parts of the economy that are spending. goldman sachs went long on commodities yesterday. if you have more demand than there is supplied, that is all that matters. put the commodity markets together for me. i find this amazing that the pendulum has swung from deflation and going long on
lawns to going short on bonds in six months. i asked to this grade -- i asked this question to blackrock earlier and i will ask it now -- the we see -- given favorable conditions in the coming months? bob: i think we would have seen we would have seen the year-over-year headline data flattered because of the bounce in oil from somewhere of a low $45-$50. $30 up to and for those reasons, ourselves cells have been buying tips. looking for them to move to a 1.5% break even to over 2% break even. i think you have to revisit the expectations and say, that will take us through the first quarter. after that, you will get policy initiatives and you will see what the infrastructure spend looks like.
so from my perspective, i want to own 10 year tips here. i think they're going back to a place where they traded for a 2.75% on a- 2.5%, breakeven. michele, you eu. head of global fixed income and commodities. coming up, as the president-elect transitions to the white house, many worry how he will impact small businesses. this is bloomberg. ♪
$16 billion worth of merchandise. joining us now to talk about the important role small business plays is sweet sweet, head of the small business administration. tell us about the small business -- i actually heard about it from my kids. maybe they just want to buy things? maria: the important thing to note is that small businesses are creating two out of three net new jobs. 72 months ofienced consecutive job growth. small businesses are driving our economic recovery and yet, i don't think they are given their due recognition. so it is important to a knowledge this day, right before cyber monday. go out,s important to shop and reestablish the main street. throughout this time of job growth, does the number remain a constant? maria: we track it carefully.
lending, investments and contracting. the important thing we are working on now is that small businesses don't see themselves as local even though they are locally owned. they want to engage in a global marketplace. that is why the president has been pushing for a trade agreement. if we don't engage and we wait for the perfect then china will set the rules so we need to raise labor and environmental standards to make sure small businesses have a level playing field. tppd: it sounds like the trade deal will not go anywhere with the new administration. what has been the track record of the obama administration and what have they done that has resulted in the growth of small businesses? and creation of new small businesses? first, you remember we passed the jobs recovery act which allowed banks to raise the lending limit for small businesses. we used to have a lending cap of
$2 million and we have raised it to $5 million. we have set stronger standards to make sure small businesses get their fair share of the federal supply chain. what small businesses really want is less regulation. we have taken out scores of and we have in mayors to get into the game and allow small businesses to start up through online solutions, their business in the day. david: i'm glad you brought up regulations. there have been studies done hugeindicate it is a burden that is disproportionately felt by small businesses because of regulation. is it fair to accuse the obama administration of not dealing
with regulation? that is the perception. that regulation has grown. maria: quite the contrary. we have taken out so many underwriting rules were banks that were not sufficient. i am a banker who has started three different businesses. i knew what the pain was. and we have taken out scores of regulations and with the technology coalition we have started, small businesses can start in small operator. overwhelmingly, the biggest issue for everyone was the work force and how to get the right workforce. what would be your number one advice to the new administration? the obama thing that administration has an working on in collaboration with the department of labor is how to up ill our employees. what we have done is the small business technology coalition. can find theirs employees in a much more efficient manner. if you look for new employees, .ou can use zip recruiter you could use salesforce technologies.
we urge small businesses to take advantage of technology and employ every tool available to them to optimize business. suite, great to have you with us. we look forward to saturday. that is something we underreport , the importance of small economy.on our alix: the panel i worked at is the importance when it comes to growth and promoting your workforce. coming up, donald's cabinet search continues. tope is no rush to fill the positions. we look into the transition process next. this is bloomberg. ♪
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all-time high for the first time in 17 years as commodities surge . the market is certain of the federal reserve moving next month as the implied probability hits 100%. donald trump targeting trade -- saying he will withdraw from the transpacific partnership on his first day in office. donald trump: i will issue a notification of intent to withdraw from the transpacific partnership, a potential disaster for our country. alix: that is what you need to know. to then: let's get market action. futures positive across the board and we could set another record. up by 4-5 points on the s&p 500. curvearkets, marginal flattening. yields dropping on the 10 year treasuries. a with the session for crude. it was higher but now we are down.
$47.98. thed: the world focuses on trump transition. who will be on his team and when will he know about them? it could come this week or today but we are not in a rush to publish names just because everyone is looking for the next story. we have to get it right. we know we are ahead of schedule when you compare to previous administrations and previous presidents. we are now joined by somebody who has been at the center of more than one presidential transition. gray.ador boyden i should say, a former colleague of mine many years ago. welcome to the program, good to have you here. from your point of view, having seen this, are they on track? are they on a path and tempo to get them into a place to take over on january 20? boyden: it appears so.
i think they certainly are at the level of prior administrations and ahead of some. what we don't know is whether they are building up a backlog subcabinet, who are critical to implementing the president's program. are those cabinet officers being properly vetted? are their names going through the fbi? so that when the clearances are bee, they will be ready to nominated shortly after the inauguration? the top level people have already had some form of writing through security clearances or otherwise. you run into less of that the lower down you go and the more time it takes for the fbi to do clearances so it is imperative to start now with the fbi. focus on the do
cabinet secretaries and ignore the assistant secretaries and the level below the top level, and that is where a lot of the work that's done. talk to us about that process. actually does that that thing? do they have their team put together to facilitate that now? boyden: it can be divided between the mystic physicians and national security positions, but for most physicians, the vetting is done by the fbi. form thatends on a has to be filled out which is quite lengthy and tedious to fill out. it takes time. easier itou move, the is. the older you are, the harder it is. that is where it starts. if you have assets, even modest assets, you have to go through a financial clearance. and that can take a lot of time and cause discomfort.
so it is a process that should begin soon. i don't think they have named the white house counsel. person is named, it will go faster. have not heard about the white house counsel. we have the national security adviser, chief of staff -- you george the council to h.w. bush and the white house counsel at the white house. how central is that and can it be a roadblock to moving forward with the appointments? h can be a roadblock if they don't get the person nominated. that the current person of transition, he may be moving names through the fbi but i have not heard that. the protocol is normally a call from the white house counsel to do that. week at a conference last , and hesenator grassley
was lobbying me, of all people? as if i could do something about it? to get him on the council because he said we had seven ready to go but we can't do it without a white house counsel. so that job is important. david: you point to an interesting phenomenon. a republican house, senate and white house. does that increase the time pressure on them because they don't have an excuse to move forward? supreme court justice, and legislation, and talking about tax reform or redoing obamacare -- how much pressure is on them to get their act together so they can move right away? boyden: there is pressure to do that he does the rule of thumb in washington is that you only have a six month window to launch policy, because then the
bureaucracy closes around you and washington closes around you. getting is a premium on a fast start, because you only have so much time to initiate the initiatives you want to do. and it will take quite some time to get them started. it requires a minimum of key people in the subcabinet positions. david: i want to turn to europe does you are the ambassador to the european union. the president-elect is preempting me by tweeting overnight, suggesting who the next ambassador should be from the u.k. to the u.s., saying it should be nigel farage. we have it appear. "he would do a great job." do you have a reaction to that? asking theresa may to send him over? this is donald trump tweaking saying to send nigel farage
over. boyden: that is a little unusual so i don't know how that works out. at the end of the day, i don't mean to diminish anyone who , buts to or from london the relationship is so close that often the issues are discussed straight by the staff with the british staff, it is only a five hour flight over there. so london with the embassy and the ambassador, it probably is less important from a strictly technical point of view there rush it would be or china or a far-off country where you don't have the same kind of affinity -- that wee ways have with britain. david: what would you be advising donald trump about what he needs to do with respect to the inbox he has on europe? political developments all over
the place from brexit to the french vote to the italian referendum. vladimir putin making various sounds. what would you advise he needs to do? i think there have been some questions about him in europe, so i think he needs to go over there. and i think you would solve all the problems and questions about went overon if you there and talked to the leaders. he needs to meet them face to face. telephone is nice but face to face is better. a trip to europe would, i think, be one of the first priorities. our largest trading partner, one of our strongest allies, and we have a trade relationship that means our economies are intertwined. and if we want to grow at the rate he wants to grow, we have themt up to the rate for
to where we are growing and that is a very important piece of the puzzle. david: that is ambassador boyden gray, former ambassador to the eu. up, hedge funds looking for an edge in some are betting on a small startups. revealing what is behind the investment strategy and listing the companies he is keeping an eye on. next. this is bloomberg. ♪
jonathan: from new york city, this is bloomberg. all time highs across the board. futures are pushing higher. 48 points on the dow. europe outperformance on the stoxx 600 driven by what is happening with basic resources stocks. there was a decent rally in crude and there was a bid under there on wti. byasuries, yields, lower basis points. and dollar strength emerging in the last couple of hours. make money if you are a hedge fund? they have been underperforming since 2014. average return was 2% so every hedge fund is looking for an average. and steve cohen's turning to technology. they recently dropped big money a cloud services
company and a financial services company and an algal writing company. -- point72's istures matthew granade not here. what made you want to take on syntax? want to knowou what is going on with technology, it is important to know about technology -- about startups. we are trying to get into the space of asset management, a diversified asset management firm. so we are excited to work with those companies to be a client and investor to them. drop the money and say goodbye? or is it a venture partnership, at the end of the day? matthew: one of the important
criteria is, can we help them? there is a lot of places to get money. so all the investments, we are helping them day to day, whether it be introductions to large banks or customers or how to trade. it is critical to our investment the says. on one hand, it is how you know you are making a smart investment, you can be a customer. and you are able to help them. alix: are you independent? and say hey,teve i have something for you to look at. matthew: steve is very involved. ends up with me, pete and steve having a talk about it. getting his view and having his opinion on the process. it is great to do that with him because he is a liquid markets investor or 30 years and one of is theeresting things
blends he brings on things. he want to talk about multiples and how much we pay for this and those traditionally are not things you hear in the process. it is very exciting for me. alix: let's talk about valuations. how do you value these companies and are they overvalued? how do you deal with that? matthew: you mainly value them on revenue, if they have revenue. and there are multiples in the market. and if you have been doing d.c. for a while, you begin to understand what the multiples are. over the last year, they have come down in most spaces. the exception being artificial intelligence where they are high. deals, whenly-stage there is not revenue, there are just accepted norms. an acttup investing is of faith. hugh are betting on something
big happening down the road. active guy?ve and matthew: if we are really betting on the team, he wants to understand what they've got. and it is energizing for him. and it helps with his public market investing. because these companies are the ones that are investing -- that are disrupting. if you trade automotive stocks, you have to know what is happening with artificial intelligence and self driving cars. so for us as a firm, it has a lot of different advantages. alix: your exit strategy, ipo? matthew: there is a lot less ipo these days. boughtf times it gets along the way. nowadays, you have to count on that less and less. alix: matthew, great to talk to you. matthew granade. time for other stories making
headlines at this hour. strike islot threatening to ground flights during the holiday shopping season. 250 pilots work for a subsidiary of the air transport services group which opposites -- which operates 80 flights a day for amazon. they say they are overworked. no comment from the airline. offense ining on north america. it will expand its line of sedans and will start making electric cars here in 2020 one. they are trying to rebuild their tarnished image. and a swiss drugmaker may sell some of the best-known drugs while it concentrates on generics. that is according to people according -- people familiar matter, they consider the sale of ritalin and an alzheimer's drug. that is your bloomberg business
flash. this is bloomberg. jonathan: a look at the top stories. go.can find these on read if you are in the market for a new job, there are bond managers out there licking their lips. take a deep breath and get set for what the pay looks like. if i were to say to you, what do you get paid more for, running the fed, ecb or the belgian central bank? i imagine you wouldn't say the third one. the bloomberg benchmark has put together economic analysis and has breaking down what you can earn by running the individual central banks. the belgian central bank governor taking on -- taking 400-9000 -- mario draghi, 386,000 euros. this makes no sense to many people. at 409e mario draghi
thousand dollars and janet yellen south of $200,000. topping the lot over in zero. in zero. and, he gets an annual train pass. alix: those are really expensive. that is like a bonus. k.athan: yellen under 200 david: i won't even compete with that. brexit may save european growth after all. there is a new book out which actually says that in history, europe has benefited enormously because it was divided and not united. amongld cause competition the various countries for the best talent. and if they were unified there would be one rule and that is why china got left behind. this book appears
jonathan: from new york city, this is bloomberg. let's get you up to speed on the markets. the equity market is front and center. setting records for the first time in 17 years. rallying toeously an all-time high. will be extended gains? 45 points on the dow. in europe, breaking down the equity market into the individual groups, you see basic resources outperforming off a big rally in base metals. crude was higher in the commodity index. down by .6%.
markets, thery marginal curve is flattening. 10 year yields coming down by one basis point. 2.31. marginal dollar strength in there. one .2417 is how we trade on the cable rate. these are the dates, times and things to put in your diary. eastern, u.s. will see $34 billion in five-year notes coming to markets. camerday, two-year notes to market, issuing the highest yield on that security since 2009. incidentally, the implied probability of a rate hike in december is 100%. is told nothing in life certain but apparently, in december we should go home because the fed is raising interest rates. david: there you have it.
time for battle of the charts. lisa abramowicz is taking on alix steel. lisa, your chart is related to u.s. existing home sales coming out today? beautifully done. [laughter] a look atnted to take how big of an effect the rise in benchmark borrowing costs could have on the u.s. economy, more specifically, through what we have seen in new home sales and existing home sales. , we have seenek the biggest one-week rise in mortgage rates for 30 year 2013, amid the taper tantrum. is this the beginning of a rapid rise in mortgage costs? you can see that the low cost of borrowing mortgages has andrpinned this real rise recovery in new home sales and existing home sales? it seems that new home sales have risen to the highest level
since 2007. will this stop that? will this take it back? one of the biggest questions people have today. alix: i like this. if you look at 2013 when you saw the big rise in mortgages, you did see a fall in new home sales. and application's have been falling a bit. so i agree with you. david: but it lacks a little bit. lisa: that's right. we won't necessarily see it in today's home sales. cap: i am looking at small risk premiums. we have seen the monster rise so does it continue? the yellow line is the average for the risk premium. as you wind up having a stronger rise in risk premium, it winds up meaning that perhaps they are undervalued. so if you go to the long-term value, how much of a rally will we have to see? winduld hit 1400 and you up having not a lot of exposure international sales, so that is a bonus, and deregulation.
19%, also anke up added bonus we don't talk about as much. i love your chart, this would have won yesterday. but today, i am going with lisa. you win. jonathan: great work. coming up in the next hour, an important conversation with mark kiesel. stuck sitting at a major highs. across the u.s. this is bloomberg. ♪ .
i am jonathan ferro. 30 minutes until of the open and we are counting down from new york city, the heart of a record-breaking equity. futures are up. five points on the s&p. outperforming in europe, driven by a big rally. crude trading water. not much higher than it rolled over. marginally stronger dollar. david: what you need to know at this hour. all 4 major u.s. equity marks at record highs since 17 years ago. a rate hike --d the market is certain the federal reserve will move next a month. donald trump targets trade. the u.s. president-elect said he will withdraw them from the trends atlantic -- transatlantic group. tosident-elect trump:
withdraw from the transpacific partnership, potential disaster for our country. david: that is what you need to know. alix: talking about how we are seeing equities after the monster rally yesterday. we are off the highs of the higher.and trades are yesterday, the only second to make all time highs in the s&p was industrials sector. one, the rally is not brought a base or there's a lot more sectors and that need to start making record highs. more momentum for the index paris at five of 11 are under highs by double digits. something to look at through the session. .8 hours away from turkey earnings triple output for mail up by 5%. earnings for a while put for hormel, up by 5%.
on the downside, jack in the box, that company cutting full-year outlook. about a: i want to talk big aggressive reaction into equities with equity markets at all time highs. mark kiesel from california per you know what of the charter like. equities are surging. not a chart and we saw earlier in the year, it was 2 asset classes in tandem. isn't that a view at pimco? it can continue for little while longer. the reason is investors basically were owning a lot of bonds and hedging for deflation. we had already seen prior to trump, inflation risk was picking up with wages and a tighter labor market.
under trump, the potential for tax cuts and a potential for big infrastructure program. were so premiums which compressed are starting to reprice with higher inflation risk causing rates to go up and the yield curve to steepen. what is happening if you think about the markets, a big rotation into the reflationary hedges. not is that investors are going into equities, but you are seeing a big outperforms and the bond market for tips. that is actually a sector we have been overweight and we think tips will continue to perform in the bond market. jonathan: you have been on on the tips call. it is a consistent view at the moment. were you what consists is inflation how inflation will be in the coming years. you are saying we will get this big boon. vocus through that. mark: yes, i seem to the pickup in inflation will be relatively
moderate. that will allow the fed it to raise rates but in a gradual fashion. inthink the fed will go and december. inflation should pick up because the labor market is tightening and we are going to see modest growth pickup. we do have headwinds. the headwinds are simply china is slowing and that will impact the global economy. the dollar has been strengthening significantly. it is mainly due to rising interest rate differentials. that is going to create a headwind. while we see inflation picking up, it should be rather gradual. david: a number of people are fullg, we are close to employment. if you inject fiscal stimulus on is at least ahich real possibility with president-elect trump, you could have substantial inflation. where do think it goes wrong?
mark: the thesis is possible and that is why we oqn tips -- own tips. were inflation does pick up. these taxy is that packages and infrastructure spending are going to take time. and likely once they get implemented, it could take the nine months, 12 months for the actual. and having offset to that is the negatives which are the trade, the dollar headwinds and immigration. the markets are romance and big positive surprise under trump and we are arguing there is a lot of uncertainty regarding the protectionism, and at work -- immigration and trade and that should dampen some of the high animal spirits your say. you maye tips call a have been first in front and center and not everybody is jumping on the tips bandwagon. a monster rally.
at one point, does it become too expensive? mark: sure. we think tips have further to run and the reason is if you look at the break even inflation on ten-year tips, you are under 10%. if you look at a 10-20 year history, those breaking even, spare value should be closer to 2.3%, 2.4%. probably another 30 or 40 base points on tips. most importantly, what we are seeing at the marketplace and visit churros equities is reflationary assets under old by the marketplace. trump was a big surprise. nobody was thinking about a inflation. -- tail that is why tips can run much further. jonathan: you were out front add a we talked about it many times. , intoection, the result your centro theme.
what -- central theme. what have you been selling off the back of the presidential result in the last couple of weeks? what if you been rotating out of? mark: in general, we were running durations underweight for the front end of the curve because we felt the risk was a high rate. that was the tightness of the labor market and not so much trump. with credit under trump, we want to own more cash. trump creates right and left risk.- tail you will have more volatility uncertainty and credit a you want to upgrade quality. we have been de-risking and holding more cash and reduce some of the high yields, especially energy sector which has rallied in the triple c sector. we are more concerned about hospitals and where the opportunity lies in the credit
market is to take advantage of the volatility and scale into positions that are fundamentally strong and may have been under sold under trump. i would highlight emerging markets, namely brazil. you make the case, a stronger dollar, emerging market fx selling off and do risking? how do you make the case for brazil? idiosyncratic story. if you look at mexico, 33% of exports go to the unitas eight. .ith brazil, 3.7 -- of exports go to the united states. it was linked to commodities. brazil has turned more domestic, less trade oriented. that economy went through the worst recession in 50 years. i was there on the ground meeting with the central-bank and all of the biggest companies. over half of the biggest
companies have new ceos and cfos under the new president. the key with brazil is inflation is coming down unlike the united states were the inflationary potential to go higher. brazil, a huge recession and inflation's calming down. that will allow central banks and we think they will allow them to go down more than priced in. country where the economic fundamentals are turned in a major way. lower inflation and positive potential for surprises on earnings. that is one that has an upside. david: thank you. that is mark kiesel. of an update on news outside the business world, emma chandra with first word. emma: donald trump said no more business as usual in washington. in a video outlining his agenda, he announced numerals with a lobbyist for the donald trump: on ethics reform to drain the
swamp, we will propose a five-year ban on executive officials but common lobbyists after they leave the administration and a lifetime ban on officials lobbying on behalf of a foreign government. at thee is taking aim transpacific partnership and said on his first day in office, he will begin the process of taking the u.s. out. of'trumps advisor said he will not follow through on his plan to investigate hillary clinton over emails for kellyanne conway do not dispute a report that trump would probe into clinton's email. conway said perhaps a good thing if trump am could help. japan has reach a potential deadly earthquake with little impact. the a measure to 7.8 off coast of fukushima come the home of the nuclear power plant crypt -- crippled in 2011. it and knocked out of a cooling
center at a separate plant. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries, i am emma chandra. this is bloomberg. david: coming up -- goldman change in its two. commodities are rallying. -- goldman is changing its tune. later, the reality show that is trump's transition. how he is using the media to his advantage. this is bloomberg. ♪
president-elect trump was elected to office two weeks ago. leading the charge, oil. goldman sachs upping commodities, an overweight position in four years. joining us from more is christian. questionen asking this every hour, we get almost around since trump was elected. what part of this is real growth , really fundamentals, real inflation? guest: two things are helping. one is the growth prospects in china are quite good. they have enough momentum for the first time of 2017 for growth rate to be pretty good and the fact that trump comes in and talks about the u.s., that is another thing supporting the market. , an agreement, that would be better.
it is coming together. , bank ofwe do not america sees sup 40. how much of the reflation and break even is due to oil, what is the downside is we are seeing if we do not get a deal? krishna: reflation is with or without commodities. it is really not depend on commodities. it is dependent on deficit spending in the u.s. at a massive level. alone, they will be sustained longer. they do not have to be the primary driver. less monetary stimulus and that makes a stronger dollar eventually and that is the offset to the whole story. how does a stronger dollar factor into the commodity story? krishna: a strong dollar without growth in the u.s. and without growth of debt in the u.s. is unsustainable. if we have long -- large deficits, that exports from
emerging markets, commodities coming in to the u.s., the flipside can be absorbed in the u.s. that is sustainable. deficit financing u.s. government and strong dollar are very consistently david: we are having a good party right now. sounds like china to me, which is borrowing for growth. big deficit spending today growth of the united states, sooner or later, it catches up. krishna: the problem with china is over investing that is already over investing. that is not the case in the u.s.. the u.s. can deal with the ,eficit financing infrastructure, rebuilding, something to stimulate growth and credit growth. that is not the case in china. china is far down that path. jonathan: i will go to japan. thiso we have to have
world since a view of infrastructure spending? why don't we end up with japan? are quitehe risks substantial that the secular stagnation, something japan has been dealing with for quite some time is a real risk for the u.s. 10 or 20 years down the road. the u.s. economy relative to japan from a structural standpoint is a much better level. our does levels are lower. , demographics are better. we can use the investment in infrastructure another things to jumpstart productivity. we are not to japan. can we become japan? maybe. alix: the question is, where is the need for emerging markets? get this mining in emerging markets and exported commodities, do they save it or spend it? krishna: the u.s. growth
environment has been quite good. the challenge with emerging markets is really on the asset price aside with a dollar investor. thatill believe in environment, emerging market growth can it be ok. you are better buying u.s. equities. perhaps small u.s. equities. alix: good stuff. you will stick with us. krishna memani is staying with us. coming up -- forget the turkey. this weekend is all about the sales. the holiday shopping season kicking off. the annual sales and will retailers are doing to grab the market share. this is bloomberg. ♪
dave: this is bloomberg. thursday is thanksgiving and the u.s. and that means one thing, everybody will be resting up to be resting up to get ready for black friday. we rush out to start the holiday shopping. the big question is what it will hold for retailers. to have a sort it out is a retail analyst at morgan stanley and talks about hard lines and discounts with stores for walmart and target. welcome. answer my question -- what we looking forward to? >> it could be an ok season. ok. if the consumer's spending is healthy, a little bit of fluidity in the world, we have elections and in -- consumers have been spending and a little bit of a cooldown until black friday, mixed signals. a lot of weather. cold weather helps the malls and help raises. we think it is ok.
maybe a little woe than last year. david: last year, the weather was a little mild. does it help? imeon: the weather effect itself, the mall retailers, sporting goods and some of the outdoor space stores and auto parts retailers, not a conventional holiday top of name. debbie: i am buying my wife some auto parts. alix: she will love it. -- david: i am buying my wife some auto parts. -- alix: what will you do about markets? was stores can handle the margin pressure who cannot? simeon: margins, that is a tricky story. the shift to online is one of the most prevent -- pervasive things. of thumb for every point of online share increase, your margins will get hurt by 50 basis points.
in terms of who can handle it, best buy. best buy has done a great job of transforming their business and moving to online and competing. jonathan: we have been discussing with krishna memani about what it means for wall street and the political fallout. for main street, what does it mean for consumers. are they going to go out and spend a be enthusiastic about the next four years as walmart is? simeon: hard to say. a very fluid. spending haskets come back but the mix. -- lastarnings from week from a good breath of companies. unfortunately, the weather, we are going to see how it is. alix: tomorrow, you get lots of good data. one is inflation expectations. inflationld expectations have been picking up, what do you do as a consumer? you could cut back on
certain things. it depends on what categories. your food spending could be curtailed, one area that has been deflating. if you see high price increases in big-ticket items, you can cartel. ando not expect a whole lot the sentiment is a big idea in particular the lower end verse higher end through the holiday season. jonathan: looking to break even? they are not. i have a question, what is the risk because discounting is peopleall of a sudden get very enthused and retailers had not really planned for this enthusiasm and margins are significantly better than what we are expecting. great upside risk. inventories in a great shape. we have had to prepare. the operating leverage in these businesses are enormous. if we have a low discounting
season, you could see big profit surprises. wall street is mixed and some people may take that bet but a little early. david: who is best position to cash in on that? have a in my world, you lot of operating leverage in a best buy, for example. last quarter was a great example. 2%.e sales were up that is because of the multiple years of cost cuts and the growth margin improvements as they have seen. before the krishna: election, we were not expecting trump to win. we are not expecting margins to expand. maybe there is a player there. low expectations is the right way to going to the holiday. jump to: great to have you with us. simeon gutman and krishna memani . more with krishna. we counting down to the opening
bell. record-setting equities in the u.s. and potentially more to come. in the fx market, a marginal stronger dollar story emerging. dollar/yen and the cable rate dropping. yields are lower by a basis point at two point 30% brent crude not much higher. a wimpy session. base metals are rallying. -- party like it is 1999. all four equity benchmarks at the highest since 17 years ago. the opening bill is next. ♪ seeing is believing, and that's why
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there's more in store than you imagine. visit an xfinity store today and see for yourself. xfinity, the future of awesome. speed always wins. especially in my business. with slow internet from the phone company, you can't keep up. you're stuck, watching spinning wheels and progress bars until someone else scoops your story. switch to comcast business. with high-speed internet up to 10 gigabits per second. you wouldn't pick a slow race car. then why settle for slow internet? comcast business. built for speed. built for business. jonathan: from new york, a record second -- setting equity. equities, futures up across the board.
60 nine on the doubt. seven of for the nasdaq. -- 69 on the dow. as user the opening bell in new york, the other asset classes. crude, much higher. wti unchanged. into the equity open, up 48. bonds, treasuries, yields are down. dollar strength in the g 10 a mix. your cable rate, down 0.6%. tuesday, let's go to the market open and cross over to alix steel. .lix: record intraday you are seeing the dow up 37 point sprint nasdaq up 15. all making new intraday record highs right now at the opening bell. interesting to pay attention that as and p was the only sector that made all new heights. how does that play out? is it a short rally?
.atch oil rolling over as it to did as the s&p came all the highs of the session. watch oil when it comes to trading. individual names we want to focus on is retail. sector two hours away from black friday. burlington up 13%. it's raise its full-year outlook by 7%. goodman jewelers is up. they raced there are outlook after third quarter topped estimates. dollar tree up on better sales and raised fourth-quarter earnings guidance. when it comes to retail, often by 0.8%. a downgrade saying they are world about outlet sells and tourism. a little bit are too high. the story in the broader market has been the rotation out of bonds into stocks and that hell -- tells an interesting story.
this white line is the link yields and the blue line is the 10 year yield. the story for the last year had been, you are going to make more on the yield basis if you invest . that story hasn't shifted. the 10 year yield is yielding more than the as and p and over -- s&p over 2%. will we see a rotation into the bond market because get better yield or more jews left in the rotation into stocks? -- juice left in rotation into stocks? jonathan: an all-time high and down a touch the dow topping 19,000 for the first time ever. think about a bond market. over the last year, you can pull off my bloomberg. equities and bonds of moving almost in a tandem through much of 2016. bonds outperformed equities then. the last couple of weeks happened. the yield spiked higher.
even though that happens, still ofh us is krishna memani oppenheimer funds. typically, this makes sense. given the distortion of central-bank stimulus we have seen, it has not been the story. everything kind of story. the disconnect, how does it reconcile? krishna: this is hope. hope of driving the equity markets and hopefully we get the reflationary story we have been waiting for a long time. the point you are making is at the risks, have risen materially as well. climb, onentinue to of the biggest drivers of equity trade wasn't the fact their earnings was quite substantially higher than rates -- was at the fact that earnings were quite substantially higher than rates. i think that right now, we are expecting growth to pick up and
we continue to rally. if and when the legislators come in and not the levels we would like them to be an dollar remained strong and raise our 50 basis points higher, there is a chance for a day of reckoning. aboutan: we are talking rates. records across the board. talk to me about the levels in treasury in the dollar. the line in the sand. if we got to their in a significant short period of time. to, 3% in awe get hurry before trump takes over, we have significant risk. that would be almost 150 basis points from the lows for the markets to digest with the no significant improvement and growth all on the vapor. and there is substantial risk. price: their earnings-
ratio. earnings, betting and expanding it to come or may not. we have a wider range of possibilities of trump, the good and bad. when you increase the risk, the price-to-earnings ratio gets driven down. not a natural effect on the equity markets to drive prices down because of the risk. krishna: absolutely. if we do not get the denominator , the earnings moving and moving relatively quickly, we will have a problem. anddifference between bonds their earnings yield, the reverse of price-to-earnings ratio has definitely shrugged. if it continues to shrink, one of the biggest anchors for equities to do well falls apart. to compensate, earnings have to improve and improve relatively quickly. we shall see. alix: back to the 2013 taper tantrum, how fast he did it
happen and how fast will it be this time? krishna: the difference between taper tantrum in 2013 and trump fact that 2016 is the the reflationary story really was not in place. to be mediocre. no significant change of the trendline and the fed tightening. this time around is different. seeill see and be able to if it comes out that way. inflation every outlook becomes or has become significantly better and rates can rise in that environment. that is the situation we are dealing with. jonathan: you have financials outperforming on the back of the hope you have softer regulations story. you have a steeping yield curve. and the prospect you will get a president clinton and that comes out of the market. for industrials, it came out this morning, the only industry
group coming into today's open come industrials. i was scratching my head, why are we here? what is the fundamental driving force taking industrials to an all-time high? really about safe trades in the markets and real growth of trade in the market fading. we do not want to buy utilities anymore. interest rates are rising. at the same time, the premium we were willing to pay for technology, for example, kind of diminishes because other sectors can grow as fast. really a rotation out of growth and to value. of focusing on companies that have prospect significantly changing the trendline for their earnings. dan: thank you so much for being here. krishna memani, he is oppenheimer's fund -- what are you? krishna: chief investment officer. thank you.
of movers and cyber security space not helping the record highs. paulo plunging on a mixed fiscal first quarter. they missed on revenues and worrying was the fact that buildings the celebrated and second quarter besides what the street was looking for part of we have analysts defending the shares including ubs and oppenheimer and piper jaffray perhaps looking ahead of what the management talked about, acceleration in growth. they are taking a toll on the cyber security forms -- firms. alehave a downgrade with s with gabrielle said the fundamentals to remain under pressure. to get a good idea other pressure, we look at the tv. this is a year today chart. without the nasdaq and blue and palo alto and fire i.
the nasdaq is outperforming of about 8% year to date where the other two stocks are sharply lower below, basically a reset of multiples. alix: thank you, abigail doolittle. donald trump and his businesses. "the wall street journal" called for a to liquidate his earnings in order to avoid any conflict of interest with his policy creation. trump responded tweeting the -- -- tweeting this -- trump'sg spoke to transition head kellyanne conway. ande has a adult children they will be managing the family business. obviously, these are not entry-level positions. they are already respected executives and mentees in charge
of building things, acquiring things, taking the meetings. you have seen their handiwork. the old post office building ndc is a great example of under budget, on time these adult children do. they will do it clear. he has a team of advisers that make sure he comply with the laws. --president obama in short said it is not good enough. will he worry about appearance in -- appearances as well? conway:d -- kellyanne that is typical of a politician who is not been a successful businessman. he has to comply with the law -- should be their parents. people will know he has a full-time job as president and commander in chief. he already said he will not take a salary.
i guess he will donate that to charity. is no reason for anybody to believe he is lying or do what he is supposed to do upon taking office. >> i want to stay on that. "the wall street journal" wrote a strong editorial and strongly worded about this. they are not professional politicians and as you know, conservatives and capitalism, the argument they made in their editorial was that the political damage to the administration is mr. trump does not liquidate his business holdings could be extensive. scrutinizeause lee for having motives for any action he takes on a wide variety of different policies, policies that affect a wide variety of the country issue. is "the wall street journal" arguing from wanting him to succeed and not being critical, is there any merit that it would be the safest to liquidate the assets and move forward with a
clean slate? we alreadyonway: know what his policy positions are. he has a 100 day plan. about he wantsng to great 25 million jobs over two years and unleash coal and shell or has been infrastructure projects that democrats are excited about, a possible motive to that with his business holdings, we know what he stands for. it is not like he is going to invent policy that would credit a business he is not involved in. more importantly, as president of the united states, he will have no authority whatsoever over what is happening in his business with the acquisitions. david: that was kellyanne conway. she is the transition senior adviser as speaking on "with all due respect." he is going to liquidate his assets, this is real estate, not
like selling a security. jonathan: a big talk with mr. dimon, would he have step in he can sell it if you wanted to. donald trump sitting in a meeting with shinzo abe, a lot of conflict here that maybe the law and the legal issues do not deal with the directly and that was john and mark's point. more than to go by the law if there is moral input to think about. was to go with the lawyers. they will be fully occupied for some time. speaking a jamie dimon is banking. many bankers were treading the possibility of a trump presidency but surprisingly how quickly many of them turned when he focused on what he had in mind for the financial industry. max has written a piece with his colleague.
taking us through the conversion of the bankers. tell us about this pre-a pretty quick turnaround. >> conversion makes it seems like it was a process. what we found when we spoke to wall street bankers, one guy said he spent 20 minutes very, very upset create clinton fan and then i moved on. het did this guy says if thinks a trump presidency will be good and is talking about his own, he will have tax cuts and wall street will deregulate and he is not alone. so much excitement among bankers who are a few months ago were vilified by dump truck. alix: there was a sign of vilifying blank is fine -- blank and stein. -- blankenstein. policies are more geared toward community banks. max: you're right to bring that up.
he put his face up and his voiceover, a global trying to steal your money. from transition team included three goldman sachs veterans, hin, who we run a and i think the way these people are looking data is they have got to their friends in high places now. i think they think that will be good and not just for small banks but the big banks. jonathan: the conversation with markets haver the shapes in the expectations and if they saw the market kick and they thought it was good. hasuestion is, how fragile it been that your experience in those conversations? they were depressed and then happy, what will it take to be depressed? max: is it was only because a stocks, jpmorgan
was about 10% and wells fargo was maybe more. stock pricesy popping, these guys would be in trouble because stocks go up and down. there's a lot more going on. my colleague, jesse hamilton, has a good piece. jesse hamilton is a story worth reading in one of the most read stories on the terminal. what he talks about is if you could take your eyes off from just obsessing over treasury secretary, other jobs wall street have their eyes on. if you have somebody like jan probably been a annoying big banks. the fed decides the policy and is also regulator. joan to reload has this unofficial role at the said of watching over the big banks and regulating them with the kind of sentiments that bankers dislike. what to jesse wrote about if trump puts in a guy who comes
straight from wall street or sympathetic to the big banks into that role in the fed, bankers will be rejoicing. dodd-frank created that to dil -- fill junta:int. max abelson, great to have you with us. ,- jonathan: max abelson great-nephew with us. stocks in all time highs. mark barton will flip through it. our guest does not think reflation is coming. he admits the bond market is indeed in trouble. looking to speak. conrad, he said banks are entering a new world order. time to shift exposure as the outlook looks much different impost trump world and finishing off with ben kumar. he answers why are equities moving higher in a rising rate
in uncertain environment? we are after the top of the hour. toathan: looking forward that. coming up -- the equity markets. all time highs on the major benchmark in the united states. the dow up by 40 points. we kissed 19k. we will break down the markets for you next. from new york, this is bloomberg. "bloomberg daybreak." ♪
people out there that will look at and say these are round the numbers, they do not matter. we have had a big rally. arey: a lot of people looking forward to next year, which is a scary prospect. people are saying policy is going to be an stocks favor. consumer discretionary that the pace actively high tax rates. they think it will come down and a lot is fueling the rally. we had bank of america release its 2017 year and forecast and they see the 2300 and say policymakers will help sustain the growth. people are trying to get ahead and positioned themselves for what they see as a favorable environment. alix: industrials and consumer discretionary at a record highs out of the 11. is it a small base rally or more intensive? dani: that as a good point. we said a lot of dispersion in stocks we have not seen before. stockpicking is in the favor right now. to your point, we had nasdaq do
fairly well. definitely lacking. some has been the dollar, it failed today. with its rising postelection, people were looking at domestic companies. it is not exactly everything coming up. there is lagging in use sectors. talking aboutre if it is capitulation or conviction. what are people saying? or are they far having the conviction of saying it will go the distance. dani: people are as divided as they were for the election. some people, some investors who said i do not trust of this. i think it is a majority shortselling and i will save the rally. other people positive and have a great outlook. for example, financials have done pretty well. a sector that had been shown to for the most part. a lot of it seems like conviction. -- a sector that has been
shunned for the most part. thankan: dani burger, you. let me get you up to speed. all time highs. we kissed 19 k on the dow. rally continue in europe. get to the other board very quickly. other asset classes for you brent crude holding steady. treasuries with a big yields. and marginal dollar strengthened as well. $ yen at 1.11. your markets wrap from new york. a worker second equity. -- a record-setting equity. this is bloomberg. ♪
vonnie: we will take you from chicago to divide and cover stories in the u.k., walls and washington. -- wall street and washington. we go straight to julie hyman, looking at economic data. existing home sales coming out an annual pace of 5.8 million homes. 5.4 4 million was the estimate from economists. this means a gain over 2%. that is better than the drop that was estimated. richmond fedhe manufacturing index coming in with the reading of cointreau, a rebound from negative for -- with a reading of