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tv   Bloomberg Markets Americas  Bloomberg  November 30, 2016 12:00pm-3:31pm EST

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♪ david: from bloomberg's world headquarters in new york, we are covering washington and new york. opec quenches the deal to cut , rising over 8%. the next u.s. treasury secretary, we will did -- dig into the latest. ♪ hyman joins us now with the latest. markets are moving a little bit on the oil news. julie: definitely. especially looking at oil stocks. energy shares are helping. we'll talk more.
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it is actually touching a record high. he came down from that level. let's get total -- to oil. 4907, the barrel. if you are looking at wti, that is a .5% higher. production,t opec you look at the current is now beingre, that was theon deal that was struck. what is interesting is the dollar has also been gaining strength. you see some directions there. up another .5% today.
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you see the bonds, that means the yield is up 10 basis points at the moment. the fact that those yields are higher is putting pressure on some interest rates and utilities, for example, is one of the groups i alluded to that is holding back gains in the s&p 500. 2.5%. pressure and biotech shares are down 1.5%. we spot gold, silver, and platinum. those are the outliers within the commodities today. thank you, julie. we will check back in and a little bit.
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>> president-elect donald trump has chosen former goldman sachs banker to be secretary of the treasury. he was a well-known hollywood avatarer, hits such as and the x-men franchise. he spoke earlier in new york city. willr number one priority be the economy, get back to 3% growth. we believe it is very sustainable. selected aso billionaire investor to be secretary of commerce, and advocate for trump has his economic program when trump us is as a long shot during nancy pelosi has provided the challenge to remain the top democrat in the u.s. house for the 150th congress. has led the democrats in 2003, still the right person to energize and convey the right
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message for the party. the attack at the ohio state university, easily fit was an act of someone who was self radicalized according to the homeless security jeh johnson. directly between terrorist organizations. johnson is speaking today in washington office that there is no evidence of coordination with an overseas terrorist groups. activists say a barrage of artillery fire has killed at least 21 civilians. tens of thousands have been displaced as pro-government forces tried to claim the city. more than 50,000 of an estimated 40 -- quarter million inhabitants have an displaced over the past four days. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. vonnie: let's turn to an asset
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, futuresump transition having a big impact on markets today. fannie mae and freddie mac shares soaring after the president-elect of his nominee for treasury secretary says the morgan -- the mortgage finance giant should leave government control -- will get it done reasonably fast. joining us now is chris, head of managing partner at graham fisher and co. play. let's start with you since you are right beside me. off?le of pulling this housing is ak the complicated one. in theory, could you have private ownership, yes. they are aaa credits. the moment you convince the bond
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market that they are no longer by sovereigned entities, the u.s. treasury, i think the nature of the rations will change and the cost of a loan to a consumer will change. how you do that is complicated. it will take a while to get it done. what did he telegraph and what did you hear from him? this is not something donald trump discussed much. chris: i heard a different tone. we have had frank -- fannie and freddie since 2008, we have seen radical ideological driven proposals put forward in washington. eight years. really focusedve on protecting the taxpayer. leaving the taxpayer fully wassed, so what i heard someone who lived on the mortgage death in the past and has a greater understanding for
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deals, under a president who is a believer of making things and saying it's time to let go of ideology and move toward pragmatism. there is a deal to be done for the benefit of the taxpayer and let's get it done. obviously wedeal, do not know what it is, but i think it is either one of two things. fully private enterprises, which i do not think is realistic. there are problems for a whole row -- whole host of reasons. , so ier access to credit towarde are leaning irrational outcome is some form of utility. vonnie: this has never gained any traction and it will not be supported. your electric, your water, your gas, your support company.
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they are private companies and they are not government controlled. >> they can go into bankruptcy. can have saying you adequate capital, which is about 4.5 times what has ever been so that the face of, the markets understand there is no need for support. >> there would be no government rescues in the future. toif you're over capitalized the tune of four times worst historic rate -- >> never say never. you can place you can to protect the taxpayer, which is not what has happened, and to make sure there is a secondary mortgage market. the utility model is the model. and this is the complexity. what do you do about the market?
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thatu have enough capital you do not worry about it, that is a messaging thing. lineeed a small government paid for -- annie: let's agree this is good idea. what lawmaker has ever said they would support this idea? again, we've had ideology the extremes of these perspectives for you ideology is of window. this guy would say you're fired to both of them for failed attempts over the past six or eight years here at i think we will see a pragmatic approach. think johnson, that's a really want to pick a fight with the new incoming president when they have got higher priority issues? dodd-frank. >> but be serious.
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this is one of the most problematic discussions on capitol hill. concede already declining volumes, messing around -- it is the other way around. >> no. the recipe for having everyone >> functionally, what i'm suggesting will have an, they will operate much the same way they do today. the rest of the market has failed to operate at all. not backed up by the u.s. government, the spreads will widen. david: i wonder if you agree that we have had these on the hill. >> it has not. i agree with josh. vonnie: let me suggest we have a president for the first time that has a specialty in deal
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making in the real estate area if you want to say that. will he just avoid talking to lawmakers at all? that is a possibility? >> it is clear governor pence will be the point man on the hill. to something he was just suggesting. to what degree will we get republicans in both houses to move away from a radical proposal. fannies to do away with and freddie, have the banks and everyone else that you to support two thirds of the market. heading to about to try and dollars this year, that is a quarter of the market. >> he other piece that goes along with that is you have no duty to serve, no affordable housing mandate. trump come in -- the promises >> i think he cannot on the one hand but i do not think you could make it partially
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privatized fannie and freddie work if you have to settle them with the cost of policy. if you force them to consider -- continue the same role they have now, how do you make that work? your returns look like? >> i recommend everyone read the paper. it lays all the answers out. the issue there is if you have the utility, utilities function, they are private. you build the housing into affordable housing. to go up if you end up with them as utilities. they become dividend growth wildly over capitalized. let's talk about what the goal should be. >> the other piece is most of what we're talking about could be done without congress's involvement.
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companies start building capital. it reduces the risk. i mean look. thatve significant changes the press has missed over the where peoplers really have come around. it is absurd to recognize capital matters to force to build capital. >> josh made an important point. the whole conflict between private shareholders and the government. if private shareholders want to turn it off, they have to go out to the market and raise money, pay the treasury back dollar for dollar. owed a. taxpayer is return because they put the money in and they are the only these things are operating today. >> no one is suggesting it is the investors who will drive a deal or cut a deal. i think they get heavily
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diluted. >> it is the best for the taxpayer to build capital. >> the stock about the litigation side of things. do not think litigation is going anywhere. josh and i disagree. one of the early paints in this case basic he said was go to capitol hill, i cannot help you. i do not see a federal judge getting involved in a dispute between congress and the exact of branch. it just will not happen. josh: i could not disagree more. it is currently before the d.c. circuit ended -- we are waiting for a decision. i bet it comes down to-one in favor of putting it back, who did not review the record, all of the documents that demonstrate what the government it may end up 3-0. them.: getting rid of let's have a quick look at the bloomberg mortgage rates.
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change the outlook for housing? you had said it will be buying houses, millennials will be buying houses, that has not turned out to be true so far. up being the ends same. we expected a normalization of rates, which has taken a long time to get there. we are on the front end of seeing it. i think housing is somewhat of a four -- a false indicator at this point. i do not think it is anywhere near as strong. eva lee talk about millennials, you'll get fannie and freddie , fha isaverage fight the only place to go. the private banks are not the market of all. >> they will fall off sharply,
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especially refinancing. vonnie: thanks to chris whalen and of course josh rosner. reach apec ministers deal to cut production in vienna p or will have a live report on the details of the deal next. this is bloomberg. ♪
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david: ministers announcing that they clinched a deal to cut production in that meeting and austria. >> the agreement, $1.2 million
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bring its ceiling to , effectiven per day january 2017. ,> joining us with the latest standing by with a special guest. >> thanks. a landmark deal here in vienna. still questions about how the deal actually gets implemented and monitored. i'm joined now by jamie. thank you for joining me. many leading up to the deal are saying this could be the end of opec. is it back? >> i would say it never left. meetingsoming to the every time there was a meeting. the market reacted to it so it always matter.
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we are waiting for them to do something like they did today, and do with an agreement something to try and rebalance the market. exactly how historic is this? it took months, seven months. nonstop meetings. who was able to really make the deal happen? started -- agot lot of things were taking place in order for this deal to take place. top out, needed to shale production needed to slow and show it was not going to be what we thought it was. and show a little return of the price to give everyone a little breathing room and say ok, how can we solve this on a more permanent asus? russia, today, said 300,000.
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will russia actually cut? >> you can look back at all my clips. i said russia will cut it it surprises me quite a bit they are actually willing to do this. always questionable on russia and they are only half of the 600,000 barrels per day needed for opec in order to actually implement the deal. there is a lot of uncertainty. before, there is not just one meeting anymore. we have to go to the meetings and figure alice talked about as well. >> who is going to join russia? >> a great question. i would argue the u.s. has already participated quite a bit and china has already participated quite a bit. 300,000 barrels per day, a sizable amount, not somebody who
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is already declined, i am not sure where exactly they will get that. >> where do you think the price of oil will sell down after this? >> the one thing, it is a big agreement, kind of what we expected. chances are you would need an advanced degree to understand. you can see that so far. it is up and down and up and down. overall, it is 1.2 million barrels per day. you discount that a little bit to focus on who actually will cut, you are taking a sizable amount out of the market and it is overall bullish for the market at least until we get the next big -- next bit of news. >> of members decided they were whatake of the 600,000, will happen within this deal? >> i think the negotiations start moving again. inmay be now they have moved this mode, if you cannot end up getting 600,000 barrels per day,
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it would not surprise me if they fudge the numbers somehow. i do not think unless russia and everybody backs out of it, i think you would still end up getting this, but it is a big uncertainty for the market. >> excellent. thank you so much. that was jamie from columbia university for energy policy. david: thank you very much. funny: still ahead, a planned by valeant has reportedly fallen apart. we will have the details. this is bloomberg. ♪
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david: time now for a look at the biggest business stories in the news. failure has decided to keep after talks to sell for $10 billion fell apart.
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decision does not prevent valeant from pursuing future interests in the business. they declined to comment. netflix is make an offer sure to please bid watchers everywhere. making some tv shows and movies available to watch off-line. they roll of the future on phones and tablet -- and tablets only for select shows. that is your update. oil is taking on the news that opec has reached a deal. this is bloomberg. ♪
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david: live, i'm david gura. vonnie: i am vonnie quinn. this is bloomberg markets.
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>> president-elect donald trump says he's leaving his business to fully focus on the white house. he will hold a conference with his children. people say trump should put his business in a blind trust to avoid conflict of interest. according to a person familiar with a transition. he may also be considered for chairmanship of the federal reserve. house speaker paul ryan is promising a long-delayed aid pact -- package address the water system to pass by the end of the year. he said $229 aid package will be addressed one way or the other and he said he hopes it will pass as part of a popular water projects still. castro's's ashes have
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begun a journey across the country to their final resting place in the city of san diego. the route traces in reverse. the captured took after seizing power in 1959. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. get a quickill check on u.s. stocks and where they are now. we are halfway into the session. industrial average is about one third higher. 19,186. the s&p is relatively unchanged at 22, highs of the day, dragged down among other sectors. .3 percent.s down for more detail on what exactly is moving those come let's go to abigail doolittle. abigail: stocks may be mixed today but the big story is the opec supply cut deals.
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opec agreed to its first supply cut in eight years. opec has agreed to cut daily production to 33.5 million barrels per day, down about 1.5 million barrels from production in late october. this has crude soaring up more than 8% on pace for its best day since february, faring less well, pressured by oil, is the airline sector. the s&p 500 index is down, though it is worth noting well off the lows from earlier today. the index was down 8%. and oils tend to trade in verse. george ferguson says that move tends to translate right into jet fuel. he expects this to translate to jet fuel. here are the individual airlines that are trading lower, including united airlines, american airlines, southwestern airlines, and of course jet, all trading lower. they are off of the lows. we go to the bloomberg and take
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a look at btv 5193, the chart may give us reason to believe the airline could come under continued pressure. this is a 16 year chart, and in blue, we have oil and and white, we have the airline index. we street -- we see a strong relationship, definitely chu in 2008. the airline index absolutely traded lower. in 2015 at 2016, as crude oil crashed lower, the airline index now, someher but expecting the oil could trade higher gold, trading to about 55 per barrel but this could put the airline under pressure. david: this morning, the details of the deal started to immerse. spoke totin alix steel
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the global head of the commodity research at goldman sachs and asked them to weigh in on the deal. >> our view was that we expected a deal and a key reason was weremics of the deal incredibly compelling. aside from the fact that the risks were incredibly asymmetrical to begin with for them, the key point was they had a rebalanced market in the line of sight. what they had to do was cut production and pull forward on an already balanced market. inventoryeason is normalization. why do they want inventory normalization? they want aggradation. let's actually go over why this is so important to them. when you look at the shape before the day's's rally, 45 on the front end and 5055 on the back of the forward curve. them to do?t allow
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hedge forward future production. if they can rotate the curve to where you have 5055 on the front end and 45 on the backend, it takes away that ability to hedge. >> i have a chart to illustrate this, to take a look at the bloomberg here, this is what we mean, that the prices are much more expensive today than in the future. what does this curve need to the opec to be successful? >> the thing about curve shape come it cannot price and expectations. it is an arbitrage between today and tomorrow. they have those inventories to shift urbanization. because you can buy a barrel of oil today and put it into storage and pay for the cost of storage. when you get a curve, it means it is a premium for prompt delivery. it means you no longer have excess surplus in the market.
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shape, the only possible way is to draw inventories. now let's draw the idea about compliance and implementation. tolerance in is terms of contracts they have with refineries around the world, they can just drop into the lower end of tolerance to her question is compliance. once they have started the process, take it to conclusion and bring the inventories down and shift that forward curve into backwardation. >> buyer own calculations, pventories will draw in 2017 require the urgency when we are eight months away from it happening anyway? downside wase tremendous. then spend most of the first half of the next year around 45 per barrel. by speeding up the process, they take that 43 and 45 price and turned it into a $5,055 price environment.
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that is substantially better for the revenue and it speeds up the process that then actually allow them to pursue the market share strategy because it takes away the ability for producers to hedge. about the saudi budget, they have been running a deficit and running down their reserves and there is some pressure on them. at what point is this enough to fix the problem for them? >> it is enough for a temporary relief. acta the point alice was saying, you were likely to get this anyway in the second half of next year. it takes away the pain they would have had at -- otherwise. >> to the specifics, there are a couple questions. one is will a rack and iran agree and the other comes from non-opec and russia said they would agree to some kind of cut. do you believe that? if they're cutting at today levels, that could be a net cut of 200-5000 barrels per day taking into account production.
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that seems extreme. >> historically, the own time you see compliance out of russia was in the midst of the emerging market crisis in 1998 and 1999. not a lot of history for compliance here at our base case freeze.a is a same thing with iran and iraq. we do not need heavy lifting out of those three players. additional cuts from that group would only reinforce the dynamic. core opec is the one we expected to cut production and create the inventory normalization. >> how much would it have been coming down anyway because it is harder and harder to get oil out of them. the natural decline, how much of this is just natural decline? have had low prices over the last 2.5 years, that was another reason the market would rebalanced. , groups cost players like mexico, canada, you were
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already starting to see significant declines. going back to the economics of the deal, there were three drivers of why the deal was going to happen. a stronger economic act ground -- actra, two, high cost players, but another important point is we have a delineation. we knew a line was drawn in the sand given the behavior. going back to the question, it is an important part of the rebalancing process. >> on the one hand, yesterday they were saying we will not do anything and today, they are saying iran can pump up to 3.9 million barrels of oil per day. who is doing the happier dance? herel parties involved should view this as success in terms of thinking about what it means for the revenue. in a situationre where they had to avoid the environment in which they were going to stay in that barrel
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range for the first half of 2017. i view it as a success for all of those states. david: that was goldman sachs head of commodity research. vonnie: coming up, the very latest on policies to expect. president-elect donald trump's pick for treasury secretary. it it -- this is bloomberg. ♪
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you are watching bloomberg. quite this is your global business report. big global expansion plans, including a $1 billion hotel.
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the bank of england is out with the results of its latest stress test and it was like the world bank has a lot of work to do. the coshoser look at commercial u.s. electoral college that picks the u.s. president. down on theacked general slow down that has done little -- the chairman is launching a new $1 billion hotel and told bloomberg it is just the beginning of a global plan. >> we're looking for the next place to build something special. like many global operators, we are always interested in japan asia, wherets of you could spend this time -- this kind of money. >> opec has agreed to cut output . the oil cartel will cut output day,2 million barrels per
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slightly less than 33 million barrels. we got word earlier that russia may join in according to those familiar with the matter, russia is considering cutting back its own output i 200,000 barrels per day. hasl bank of scotland failed multiple hurdles in the bank of england's toughest stress test yet, leading to bolster its capital plan. two of the banks also showed what were called capital in adequacy's. barclays and standard chartered. neither was required to submit a new capital plan. will eliminate about 15% of its workforce and shutdown its entertainment division. they will cut more than 200 full-time provisions. they will reduce operating expenses to 660 million in 2017 and achieve the goal next year. tony bates who joined as gopro's president is stepping down by the end of the year.
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for the quick take where we provide complex backgrounds on issues of interest. constitution lays out three requirements to become eligible to be president. at least 35 years old, lived in the u.s. for at least 14 years, and be a natural born citizen. not much else about becoming president is simple. donald trump was elected november 8 after winning keys -- swing states even though democrat hillary clinton won the most votes nationwide. the president is selected via a quirky method called the electoral college. a compromise between those who andr a direct popular vote those who want lawmakers to pick the president. every state is assigned as many electoral college votes as it has members of congress.
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importance ofe small states. the u.s. has had an elected president since the soft tissue went into effect in 1789. the contest is held ethical years -- held every four years. all presidents have been members of the republican or the democratic party. the winner take all system previously called the electoral college chooses those who did , 1876, 88, and the year 2000 when george w. bush beat democrat al gore after a weeks long recount. after each election, there is a renewed push to tally the total. many states especially small are willing -- not willing to switch. broad agreement that money plays a big role in campaigns, each party spent more than $1 billion election day, most on advertising. and that is more
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your bloomberg report. ♪
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vonnie: live, i'm vonnie quinn. david: i am david gura. this is bloomberg markets peerless quebec to politics with the transition team today. donald trump, the partner spoke earlier today at trump towers in new york city. >> we need to mature our instructor is for the 21st century. that we have roads and bridges and a big focus. we're joined by bloomberg politics report kevin.
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these were pre-much anticipated. any surprises so far? kevin: i'm hearing from transition sources there will not be any more announcements. the secretary of state position still leaving a lot of people talking after the dinner trump had with mitt romney last night in manhattan. in terms of the business community, people i'm speaking with our reacting positively. executivermer goldman and hollywood producer with deep ties to the business community. had one of his predecessors some high praise for him as well. in the business community, this is being greeted with applause. his progressive critics are already quick to criticize him.
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david: you have written about his career and we know a great deal about his past. but we know from what you said today in the interviews about how he plans to run the treasury department? >> he talked honestly about infrastructure spending, a big priority of that administration. he has talked a lot about making tax reform one of his top priorities starting right away. he also talked about fannie mae and freddie mac should not the in government hands. people are excited about the idea they might return to private ownership. vonnie: the market moved on various different things he said. he seems optimistic they will just get done within the first 100 or fewer days. what will happen, kevin? is what i'm the strategy will be in the early first few days from president-elect trump than
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becoming president trump, he will execute the initial executive actions and then rely on congress, in particular his vice president mike pence, to get in the nitty-gritty of toking with speaker ryan craft some of the more nuanced policy does it -- provisions. with regard to tax reform in particular, a lot of excitement in the more conservative circles here in washington. it is still unknown whether or not they will have a joint effort or whether producing the corporate tax rate will be separate and that will come first. in terms of infrastructure spending, what is interesting is that will put trump at odds with the conservative base of his party, particularly the tea party groups who are already quietly a bit concerned about the infrastructure spending. been opposed to this for quite some time and trump obviously is not. president-elect
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in washington dc today. a great advantage that he has a background in the mortgage side of the business. to what degree will that come up in confirmation hearings for him to become treasury secretary? one of theprobably big challenges he will face. if he gets criticism, it will probably be about the seven years he spent running a mortgage letter that -- lender that has failed prior to his ownership here at he bought it essentially out of bankruptcy and made a lot of money on it. during the time he owned it, foreclosed on 36,000 people. it trudges up a lot of that memories about the mortgage crisis. want people to invest in failed businesses and tried to get them on their feet again. it is hard to say whether history chip of the company is run something he should be blamed for. vonnie: where does gary: fit
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into all of this? -- others have been talking about for ceo. >> suddenly, there are an awful lot of goldman sachs people showing up in the administration. we -- others have been talking about for ceo. noticed before a was here come i looked on the bloomberg terminal, stocks of goldman are up sharply today. you have got gary, stephen, steve bannon, the chief trump, a goldman alumni. there are a lot of goldman people. turned back tos capitol hill today and nancy pelosi won her election. about donald trump's thank you tour he is about to embark on, going to the midwest. what can we expect given the fact that he -- the company him post cap -- in vote count was times. kevin: it is a victory
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tour. trump will travel to indianapolis, where he will be joined with his vice president-elect mike pence, and they will meet with officials andtake a tour of the plant a victory for the deal in which a thousand jobs will not be going to mexico but staying here in the u.s. we still do not know about the terms of the deal but then he will be headed to cincinnati and ohio where trump will give one of his first public addresses since becoming president. he will be with his supporters as well. on saturday, he will head to wisconsin. we will see a lot more of a public trump, something we have not seen in the past couple of weeks. it was also announced earlier this morning that he will beginning a press conference with his three oldest children,
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evocative and., on december 15, the new york city, how he will divide his business in the white house. >> right. we were talking about that earlier. he will try to not divest but set rate himself from the business. thanks to our bloomberg politics reporter and here in new york, we have zach, money and politics. david: coming up, david joins us for his outlook on the rest of the year and a look ahead to 2017. this is bloomberg. ♪
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>> afternoon. i'm david gura. >> i'm vonnie quinn. welcome to "bloomberg markets." ♪
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>> we are covering stories in the next hour from toronto to boston and moscow. riyadh as well. costs of then oil saudi's soften their stance on iran. gopro costs -- cuts 50% of its workforce and is shutting down the entertainment division to reduce costs. we into the challenges for that company. the sky bridge founder tells us why --is the perfect pick for treasury secretary. we are halfway into the trading day in the u.s. julie hyman has been watching all the moves in oil every other aspect. -- and every other aspect. julie: despite the increase we have been seeing in oil prices today, the dow did touch an intraday record. they are flagging a little bit
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in the gains we have been seeing, particularly the s&p which has been held act to some extent by technology, as you can see by the nasdaq and interest-rate sensitive stocks. as for oil, today's movement on wti and brent is the biggest one-day gain since february. here is the three-year chart of crude oil prices. we are well below the levels where we were three years ago. --we have seen here, this is energy selects spider etf. handily outperformed oil. interesting here we have seen oil stocks hold up better than oil prices themselves. moving on to some of the other groups we are watching today, we are looking at home builders. we have a pending number that shows 1/10 of 1%. we are also watching valeant pharmaceuticals, which is showing some weakness today and then some. the shares are down 7% after the company said it is now going to gastrointestinal drug
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business. investors not so happy about that and they are selling off the shares. looking at automakers today as in thehis group is green, and that is after the obama administration, the epa specifically set emissions rules it introduced a few years ago will cost $875 through 2025. the original forecast with her $1100 vehicle. savings here for the automakers. the leading the gains there. handily outperformed oil. interesting here we have seen oil stocks hold up better than leading the gains there. leading the gains there. emma: president-elect altra has chosen his secretary of treasury prayed miniature and well-known hollywood financier, bankrolling hits such as "avatar" and the x-men franchise. beour first priority will
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the tax plan, and the tax plan has the corporate aspects to it, lowering corporate taxes so we make u.s. companies the most competitive in the world, making sure we repatriate trillions of dollars back to the united and where we will have the most significant middle income tax cuts since reagan. emma: trump also selected wilbur ross to be secretary of commerce or it ross is an advocate for trumps economic program when trump candidacy was considered a longshot. russia has been in contact with president-elect donald trump's team about the conflict in syria. he added that moscow was hoping for better relations with syria under the new administration. in south carolina, closing arguments underway of a police officer charged in the fatal shooting of a black motorist last year. the incident was captured a cell phone video.
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earlier today jurors visited the scene of the shooting. the death toll from severe storms that moved across the southern u.s. now stands at 5. the death toll from severe storms that moved across the southern u.s. now stands at 5. tennessee emergency management says a married couple died and 2 polks were injured in county. line, threetate people were killed in northeastern alabama when a assessed
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whatever policies come out and their viability? >> that process is ongoing right now. there has been a bit of a honeymoon now with e-commerce and treasury secretary having been announced. i think the markets arethere haa taking that as an optimistic sign for tax cuts and may be some well thought out trade adjustments going forward. obviously we do have these issues to get through in the short-term, the italian referendum coming up on sunday. those will be important near-term hurdles for the market rate i do think of the backdrop overall is becoming a little bit more optimistic in terms of growth expectations for next year. david: when you look at that italian referendum, do you see the continuum between the brexit
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referendum, the presidential election in the u.s.? a couple things. first of all, we will find out if it is a continuation, that populist sentiment. right now the polls are suggesting the no vote is ahead by single points. but there's a very large undecided segment yet. so we will see. the bigger issue here is that italy is a member of the eurozone, whereas great britain was not. undecided segment yet. so we willif there is a no votet does energize the aspirations of the five-star movement, then it does call into question the political future of the european union and the eurozone traded that will be an important event. a special year this year or can we look forward to a typical, quote unquote rally? >> tough question. i had thought maybe going on in looking at week or so back that we had already gotten the santa claus rally.
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i said earlier, there seems to be a growing sense that the economic actor is improving. -- backdrop is improving. i don't think it's going to be robust. as you said in your previous sectors only certain are participating. successl be the key to in this market through the year end and into next year. the more cyclical parts of the market will benefit, but the more defensive bond proxies will probably lag behind. the effect might be a muted rally going into the end of the year. acrosswhen you look assets, is politics the principal driver right now in each of them? success in this market through the year >> i would say yes, in terms of expectations about policy initiatives. a unifiedn the u.s., government by party, at least in terms of congress and the executive branch, it looks as though a very good chance it
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will get tax reform, and will get some deregulation. to that extent, it looks as though the political overhang is brightening up. on the other hand internationally, particularly in europe, i think it is still an open question. time will tell. just to caps off the domestic conversation, are we pulling forward gains from the future? will we pay for these asset price gains down the road, maybe 12, 18, 2 years away? >> that's a great question. to some extent steer we are expecting earnings growth to be more robust than it was this year. i think there are probably some gains yet to be had. we do have to keep an eye on a couple things. interest rates are higher, market rates are higher, and we expect the fed to be raising rates maybe another 2 times next year.
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that will hurt certain parts of the economy. today, mortgage applications down. the other variable is the dollar. the dollar strengthened quite a bit and that will be a headwind for export related industry. it's not all sunny skies out there. overall earnings should be better. that means may be somewhat higher prices. we are looking for a 6% to 7% or so extent. where do you see opportunity right now overseas? >> this is an area where we got it wrong to some extent in 2016. we were right the u.s. would outperform the developed market but we thought we would see better returns coming out of europe. towe get a favorable outcome the italian referendum and the ecb follows on with an extension m, their qe progra
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eurozone in particular could surprise us on the upside. growth is pretty good, valuations are a little more attractive than they are here. that is one that i'm optimistic about, hopeful for. another area that we underestimated strength was latin america. and, that may have gotten ahead of itself a little bit worried i would say maybe in the emerging markets, probably in the asia-pacific region little more attractive. vonnie: we will be back soon and figure out where markets are headed again. thank you very much. coming up, gopro is cutting 15% of its workforce and closing its entertainment division. why the action camera maker seems to be struggling. this is bloomberg. ♪
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david: this is "bloomberg markets." i'm david gura. vonnie: i'm vonnie quinn. it is time for the bloomberg business flash. a key regulator of u.s. bank says warnings against efforts to roll back wall street regulations. in a speech to new york, he says he is quote, disappointed how quickly some forget the lessons of even more recent events. president-elect donald trump and republican lawmakers vowed to erase or undercut rules stemming from the 2010.-frank act. are beginningepublican lawmakes flights this week to havana but the long-awaited -- to cuba is already in doubt. american airlines citing weak demand. and, president-elect donald trump is a threatening to
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rescind new relaxed policies. are beginning flights this week to havana but the bank of england's new plastic five pound notes is stronger, cleaner, and safer. but apparently not suitable for vegetarians. vegans and vegetarians are calling for the new banknotes to be replaced. they are made of a substance derived from animal fat. contains notes contain, quote, a trace of a substance k nown as --, rendered animal fat. you could not make it up. that is our latest bloomberg business flash. david: gopro slashing 15% of its workforce as the company struggles to get traction with its cameras and new drone. cory johnson joins us now from boston with more. what is happened to gopro -- has happened with gopro here, with regard to entertainment? the: this was a big part of
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pitch of the ipo. this isn't just a camera on a stick. this is a media company. that's how this copy went public, that was a story they told. we saw incredible videos of the surfers and skateboarders and rock climbers and kite boarders and the whole deal. that gave us this notion there was a whole new kind of video about to happen, gopro with its own little cable station and the station showing the virgin america flight was going to launch a major media business that would go well beyond the cameras on a stick. not anymore. vonnie: that's the thing, we want to watch the homemade videos of their friends and maybe some fan base watching. anyway, the point is, gopro is cutting 200 jobs. they had some vast aspirations. be morerations may
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important to those on wall street who wanted to support this stock. i stumbled upon a quote from an analyst, back when the stock was trading $92 a share, saying the two dollars offset was a vast overreaction to this incredible buying opportunity. when you look at the revenue growth of the company, we put together a chart that shows the revenue growth. you can see the struggles these guys have, selling just the camera on a stick. they needed more product, they needed a media business. they have been unable to acquire anything substantial. >> what does it signal that tony bates came to the company about 2 1/2 years ago and now is leaving? it seems that leaves a big leadership void here. cory: this has been a company that has founded by him. he charismatic lay led in it. -- charismatically led in it. before the lockup period was
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over, there was a break from the sale that would have prevented insiders from selling shares. he was able to give away shares to a donor directed fund worth about $500 million. aboutshares are now worth $5 million -- about $50 million. while he got this great long-term tax benefit, the way this company has been run has really been under his arms and h is his baby. vonnie: i like her you keep repeating camera on a stick. it's true, when you look at it that way -- in fairness, gopro was one of the first ones to do it really well. you do adventure things with your camera attached to you in some manner. is it that they got to the end of that, that other companies could join in at that point, and then turning to entertainment was the wrong move? cory: i don't mean to say camera on a stick derisively.
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it's maybe the best camera on a stick. we go down to willoughby's on 5th avenue and 31st street, it was one of the best-selling things they have a right next to it they have competitors that sells very similar products, often a lower price with lower margins for the parent company. i love the gopro. i have left them at the bottom of the ocean, on the mountains, all over the place. it's an amazing things in terms of the device itself but it is just that, and faces great competition. i don't know where they go from here. their attempt to get into the drone business, particularly by wall street, but the media is also complicit in this, suggesting this drone will be the thing to take gopro to the next level and be a fantastic savior for the company. the promises they made to wall street and the journalists failed. whate: i can only imagine is on those cameras at the bottom of the ocean and on top of the mountains. david: don't leave one in
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boston. hear more from cory in about half an hour's time when he is joined by carol massar. vonnie: still ahead, we will talk to a trump advisor. he has been talking to david gura. we hear what trade deals could look like under president-elect donald trump. this is bloomberg. ♪
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david: this is a key cabinet pick as he assembles a tim tebow also campaign promises to boost the economy. the sky bridge capital founder joined me and tom keene earlier on bloomberg surveillance. >> stephen miniature and is a
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perfect pick for many reasons. 20 plus year relationship with donald trump and wilbur ross. in a a phenomenal guy number of different businesses. he's worked in hollywood, on builttreet, and he also from scratch a finance operation which powered us through to the presidency, and he was critical in the policy piece of the website and building the tax plan and all the white papers around the economic and trade policy for the truck campaign. i know this is something he will carry through with him into the administration. i've had the opportunity to know steve for 1/4 century. david: a lot of people saying we know the background, we know about goldman sachs, we know about hollywood. they want clarity about how will steve mnuchin will run the treasury department. guy, a very organized
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super meticulous. my guess is he will start with the first order of shop is the tax policy and implementation of the tax policy. the already going through u.s. trade representative list with our transition team this morning. order of action is going to be on taxes, getting the truck tax plan to the .ongress immediately the second big piece of this is working towards nation with the president, secretary of commerce, and the u.s. trade representative's to focus on their deals. as you know, our economic history in the united states is 1945, that we have on even these trade deals to benefit the emerging economies as we believe that economic interdependence would lead to less violence around the world. that has been very successful, but the side product of that is
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it hurt the middle class families and the working-class states. in the united these guys, they understand the truck trade philosophy better than anybody and they will go back through these deals. you saw what happened with carrier states last night. go back to these deals and refashion them for the american worker and middle class. every economist i talked to says when he or she is forecasting for the next year, the biggest x factor is what is going to happen with trade. they are worried about what that could mean for the economy. to find for us what the trade policy is under donald trump. >> i feel that people who are worried are really not understanding the trade policy. david: we talked about it on the campaign trail. onwhat he said about tariffs the campaign trail is that he would use them as a bargaining chip, if people did not want to go through the formal review
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process, and even up these trade deals.we have had back channel discussions with many nations at this point. my guess is we are the united states, the largest economy, 23.6% of the global gdp. our trading partners are going to want to deal with us. theink mr. trump is sending message the same way he did to carrier over the weekend that we want things to be fair, we want things to be fair for the american worker. the tariffs are a last resort proposition if people are making a decision that they don't want to treat us fairly. that is really all there is to it. this is a free, fair trade proposition by the trap administration. better think of any two people in the united states to this.ute david: donald trump tweeting this morning that he will give a press conference on december th. david: 15 talking about leaving his business. what is the cap look like come
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december 15 at is this in response to criticism of those back channel deals you are talking about with foreign governments? >> we are working super hard on this. done again, the white house counsel, you're going to see mr. chop completely removed from the trump organization. he's leaving that to his children, they will stay in the organization, and there will be a thick wall between the two. they are not even going to be talking to each other. it is a phenomenal trophy business and my guess is that children are going to do a really good job on that business without the dad. david: anthony scaramucci of sky bridge capital. this is bloomberg. ♪
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live from bloomberg world headquarters in new york, and vonnie quinn. and david gura.
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a bit of breaking news. abc reporting that sarah palin under consideration for secretary of veterans affairs. sarah and david gura. a bit of breaking news. under considerationarah palin for secretary of veterans affairs. let's start with the headlines on the bloomberg first word news. emma chandra hasaffairs. let's start with the headlines on the bloomberg first word news. emma chandra has more from our newsroom. emma: president-elect donald four four peopleing for secretary of state. mitt romney and rudy giuliani are on the short list. list. a separate transition official says trump is also considering the former cia director general petraeus at bob corker for
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the job. house speaker paul ryan has made his priorities for the new congress clear. he and the republican majority will seek to repeal and replace the affordable care act. >> we need to get obamacare relief to families as fast as possible. this law is hurting families in america. this law is canceling insurance plans that people wanted. this law is giving people repeated double-digit premium increases. this law is raising the deductible so high it doesn't even feel like you have insurance. we have to bring obamacare as fast as we possibly 2017, and that is our plan. emma: the federal government says aca 2017, and that is our plan. assignments -- the saudi prince issued a public call for women to be allowed to drive in the conservative kingdom. on prince made the call twitter, tweeting in arabic and english, stop the debate, time for women to drive. saudi arabia is the only country that does not allow women to drive. on capitol hill, house and senate negotiations have agreed that thousands of california national guard troops won't have to repay enlistment bonuses. those bonuses of up to $15,000 were sometimes improperly offered to guards members to
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service in iraq and afghanistan. the pentagon had been trying to get recipients to pay the money back. 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. vonnie? vonnie: as president-elect donald trump announces his cabinet picks, the outlines plans for extricating himself from his business interests, or at least talk about the december will outlineen he his plans. i spoke to one democratic lawmaker who has been raising concerns about trump's conflict of interest. >> i think wilbur ross has a record of favoring investment tax credits for infrastructure construction. ofelieve that those kinds giveaways for special tax breaks
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offer less than a full solution to the challenges we face in building more roads and bridges and ports and airports. there ought to be public funding , a public-private partnership worried we may have a disagreement. vonnie: calls have been growing for the president-elect to exit some of those business interests. he does now say he's going to have a total exit. those are his words. he is scheduling a news conference to discuss december 15. your specific complaints to the attorney general had been with his dealings with deutsche bank. is that all we have a problem with? he owns or is a borrower from deutsche bank for properly that he -- prpoerty that he owns now. i've suggested that the investigation of deutsche bank should be done by an independent prosecutor. it could be a criminal
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investigation. it should be independent of the department of justice, that likely will be headed by a a personalrrogate, supporter, and that creates an inherent conflict of interest unless he severed himself and administration severs itself from the investigation, which potentially is criminal. it should produce not just a civil penalty, but a criminal penalty, if there is a finding of criminal culpability on the part of the bank. your specific problem here seems to be with deutsche bank and not exactly the president-elect's business. do you have any other problems with conflict of interest that might arise? >> yes, the deutsche bank issue is really emblematic of the far-flung interests owned by donald trump that create conflicts right now. will leavethat he
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totally is really a very vague and inadequate description. vonnie:totally what would you r? would you need to divest his businesses, exit ownership? he needs to sell or divest. and he needs to do it to an independent, disinterested party, not to his children. he needs to sell or divest. so long as he has an interest -- and we all know his parents, if our children have access, we have an interest -- there is a conflict of interest in what he does vis-a-vis foreign countries or infrastructure investments or the choice of contractors to do investment.ructureso long as hn he really should do what past presidents have done, which is to sell all his interests to an independent and disinterested party. vonnie: that was democratic
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senator richard blumenthal of connecticut. politics,italian three days before a referendum that could do decide prime minister matteo renzi's future. earlier today, bloomberg surveillance's anchors got the latest assessment on italy's economy. when unemployment is really high, labor markets stop working. think about when the unemployment rate is 20% and it moves to 18, it doesn't change things very much. this is a labor market that hasn't been working, isn't working, and that has implications. the big thing you see actually, in britain there's an awful lot of italian academics. they come out of the italian labor market, moved to the u.k. the same, but do this is clearly a labor market in crisis. >> it's a labor market in crisis. incentives to the people that the italian
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government must initiate? not macroeconomic mumbo-jumbo, but how do you incentivize these people under 25 to go get a job? >> obviously there's two parts to it or you want to make sure that theyply side have the skills, but the reality is on the demand side. you actually have to offer adequate numbers of jobs. we talked about wages and growth and austerity. blech flower would come back and with a blanchflower fiscal ties have been throughout the european union and we have little incentive on the part of italian employers to hire young italians. that's the problem, not moving to italy. you look at youth unemployment in italy, it's huge. when you look at spain, 42%. 42% of people between 25 and 35 are unemployed in spain. is, how do to you
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you do reforms that actually make employers want to hire but also fire? at the obvious thing -- raise the level of aggregate demand, give firm incentives to hire young people. you can do it through the tax code. you say, if you hire a young person, we will give you this tax credit. we are not seeing any credible government in italy focused on those types of. the one thing you will say is a surprise is these young people have been pretty compliant. you would have think they would been on the street. high levels of youth unemployment like that generally generates social disorder. they haven't. that's a big puzzle. you need to break this youth unemployment problem. what we know, the famous line been on the street. high levels of youth is, youth unemployment actually
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generates a permanent scar rather than a temporary blemish on people. it's not just an individual problem, it's down the road that society will be heard. >> i want to jump in. this is so critical. vonnie: to your point, let's stop talking mumbo-jumbo. what needs to happen? matteo renzi was in power. he's 41 years old, and the focus was meant to point, let's stop talking mumbo-jumbo. what needs to happen? get people back into jobs and he has been unable to do that. >> i don't know about mumbo-jumbo. the reality is that this labor market has been in trouble for 2 or 3 decades. to government doesn't seem have any ability to do that. the fiscal framework is too tight. you need to give firm incentives you need to get the labor market working, the capital market working, the housing market working. you need to loosen the levels of
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aggregate. and give incentives for employers it -- employers to hire the young, and that is not what has been happening. nowd: some breaking news about the u.s. attorney for the southern district of new york, a powerful position within the justice department he was meeting with president-elect donald trump earlier today. and donald trump have agreed that he will stay on in that capacity. up, we willng discuss. this is bloomberg. ♪
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david: it is time for the bloomberg business flash, a look at some of the biggest business stories in the news right now. sales of previously owned homes in the u.s. barely rose in october. pending sales were up 1/10 of 1%. the national association of realtors says demand has made strong despite higher prices and limited listings. higher mortgage rates could slow sales in the coming months. netflix is making an offer. it is making some tv shows and movies available for download to watch off-line. the world's largest online tv network will allow the feature on phones and tablets for all its but only for select shows like "the crown" and "orange is the new black." netflix is making anthe man wh's big mac nearly 50 years ago has died.
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michael dell gotti invented the signature. he says mcdonald's originally resisted his idea but it went over so well it went national in 1968. he was 98 years old. that is the bloomberg business flash. i could not have done i could not have done that. let's head over to bloomberg's abigail doolittle for a take on the markets. abigail: the big story is the opec supply cut deal, the first in 8 years. we have all things energy. this does include oil up more than 9%. on paper, its best day since february. outperforming in a huge way are producerse u.s. shale , including continental resources, newfield expiration, waste as petroleum. continental resources up about 24% at this point is on pace for its best day since 2008. huge strengths here, and the
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logic behind it is if he climbs higher, these shield producers will put supply on very quickly and it will move right to the bottom-line. one point to make around this, we going to the bloomberg and g #btv.ook at in red we have a oil. we see a decline over the last four years. white, purple, and blue, in production. that two of the other big bases have actually declined. oil has also declined. if oil does climb higher, you could see these production. producers bring that supply higher. our team did reach out to mike kelly at seaport global holdings who was nice enough to speak to us. he said what's going on here is if oil does get to $50 a barrel, it is basically 100% project return for the shale producers, not so bad. big reason to think they will bring on that supply.
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as for some of mike kelly's favorite names going forward, a very good call here. on a year-to-date basis, absolute huge game for continental resources, newfield along with oasis. continental he likes a lot. gains in oil could flow right to the bottom. newfield he sees more than 25% , managementre oasis meetings he had recently suggest that they could talk about well-being about 20% better than currently expected to write all of this is predicated on oil rising. one reason to think this could happen, we go to the bloomberg and look at a great long-term chart. 5184, going back all the way to 1999. this is the energy etf in orange. in blue, these are passed opec supply cuts of more than one million barrels. performed well, perhaps
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chart. work four proposals. two were approved. two were not. what was the prime minister's rationale for approving, albeit with conditions the first two? basically canada's pipelines are at capacity and it is believed that in the next year or so, crude growth in the country will be about 5%. that would put canada at over capacity and that could mean
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stranded barrels of oil. this bottleneck needs to be reduced, and we also, at least producers, would like to see canadian oil not trade at a discount to west texas intermediate, which it has for years. candor morgan transmountain proposed pipeline that would run from alberta to the ocean in d.c., would triple capacity of the existing pipeline by 2019. it would cost about $7 billion. it would be their largest project ever. it is essential that there is an upgrade and you are looking at 7.5 billion expected to be spent there. it would double capacity by 2019. one key thing here, canada wants new markets outside of the united states, where you guys are. that's where the majority of our oil goes. there hasn't been much
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movement today, but i do wonder if people are watching closely in canada and the opec agreement. >>movement today, absolutely. that came down this morning and it may be a bit of a surprise for some people, in that the waning days leading up to today it seemed as if opec was struggling to get an agreement seeing a big run-up in the price of crude oil today. you are mentioning -- the previous reporter was mentioning the gains in some of the u.s. energy producer who is seeing the same thing here. and our canadian dollar is moving higher on that news. david: i'm curious to what degree is this a done deal. where do things stand now? justin trudeau has given his approval to two of them. are they done deals? >> prime minister trudeau talk yesterday about the complications that were done, very extensive with various groups.
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he feels these are the best decisions approving these two pipelines, and he also knew that no matter what there would be some people who are upset. we have seen protests in vancouver. we have environmentalists upset about this first nations groups, politicians as well, such as the mayors in vancouver and burnaby. this pipeline transmountain will wind up on their doorstep and the mayor of vancouver saying disappointed.y he thinks seven times the oil tankers in vancouver waters will occur than are now. there could be some legal challenges. it was approved a couple of years ago but the previous government and then a court said the government did not consult properly with first nations group. that put up a huge obstacle for that one. you can expect more protests and
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perhaps some legal challenges. this is far from done. vonnie: thanks. david: up next, why elon musk has been target -- the target of fake news reports online. this is bloomberg. ♪
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tesla's ceo elon musk finds himself a consistent target of internet trolls. police one of those trolls turns out to be fictional. carol massar and oliver renick talk to bloomberg businessweek's reporter about the reporter targeting elon musk. >> he's a fake op-ed writer. appears on websites, particularly politically conservative websites, and whoever is behind the shepard stewart identity is very much intent upon criticizing elon musk, the very well-known tech entrepreneur and mogul who is
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affiliated with companies like and he haspacex, some enemies out there in the world who want to attack him but don't do it in a straightforward way. >> specifically you delve into one corner of the internet which is largely -- opposition he faces from an industry specific whoseoint, many people best interests may not be allied with elon musk's. tell us about where these people are from. that strong suspicion is his commercial competitors perhaps at a couple of levels have hired firms who may be have hired firms who are going out, putting websites up, hiring fake op-ed writers, and so forth. i was not able to connect all the dots. the coal industry is behind this particular thing. in some instances, you can identify what group is behind
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the website. there's a website called stop whichrom failing again, is a relentlessly negative website that portrays him as someone who just sucks up federal subsidies and does nothing in return for it. that website is affiliated with a conservative group, and that group, so 501(c) four it doesn't have to disclose its donors. you don't know who is providing the money for stop elon from failing again. >> are they making up stuff? >> for the most part they are aggregating stories with bad news about musk's company. the companies have had a rocky up-and-down history. and, in addition to that, you get the sort of mock editorials. are they making stuff up? it's very negative opinions about everything he does. have received
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certain types of incentives from government at different levels. that's a fact. is that a terrible thing, or is that smart policy to encourage solar energy through his company , solar city? he's not the only person in the solar industry receiving those incentives. that's a matter of opinion, -- the opinionhe's is always negative. david: check out paul's story in the latest issue of "bloomberg businessweek." vonnie: coming up, at 2:00 p.m. we will be breaking the fed's beige book with carl tenenbaum. that is less than 4 minutes away . this is bloomberg. ♪
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>> this is bloomberg markets. we start with breaking news. we're just moments away from the release of the beige book. 'm scarlet fu.
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oliver: there's equities right there, a little bit of gains in the equity market. the s&p unchanged right now, from about 14. the dow jones doing a little bit better. nasdaq down quite a bit after leading yesterday. if you look at bonds, that's what's interesting. it's red across the screen. scarlett: what do you see in erms of headlines? matt: the latest reporting period, covers right before the election and after the election. remember that beige book is a collection of business anecdotes from business leaders around the country, the fed's contacts. it looks like a majority of districts reported higher retail sales than the previous report. labor markets tightened in seven of the 12 districts. we got momentum there. that's certainly confirmed in the official statistics. scarlet: another headline is the fed says this is cited as a head wind in a few districts,
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so this dollar strength that put pressure on treasuries or happening co-ince dently is certainly going to be something to watch out for. >> it's certainly something businesses have been talking about as a lack of pricing power, especially manufacturers who are dealing with a strong dollar there, you know, not able to pass along price increases to customers. and it looks like the outlook for growth going forward is mostly positive, mainly positive. the beige book says six of the 12 districts expect moderate growth going forward, so you get that kind of classic, modest to moderate steady as she goes outlook. oliver: looking through the report, and it looks like election uncertainty was mentiond. is it common for the fed to talk about those kind of things and find something here? >> certainly the fed is reticent to talk about election, but the business contacts have been a key thing. in the previous beige book, it was the commercial real estate industry was talking about
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uncertainty from the election, so this is probably too soon after the election, gin it's only been a few, but certainly markets are taking a positive view of things, so we'll see if that soldiers through in business confidence as well. scarlet: matt, you're sticking with us. we're going to continue to look through headlines and come back to you in a moment with more analysis. but in the meantime, we want to get a choke how markets if reacting to the release of the beige book. julie hyman has more? julie: we don't tend to see a big reaction to the beige book unless there's something in there that is new or surprising. in this case, there hasn't seemed to be that much that is new or surprising, so stocks are holding steady. the dow and s&p are gaining today. both of them touching intraday records, although they have moderated their earlier gains. the nasdaq is the big drag here, down about 2/3 of 1%. if there was a reaction to this report, it probably would be market.the bond
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earlier, market. earlier, we saw a rise of as much as 10 basis points in the 10-year yield. right now, that has paired to about eight basis points, as we continue to see this selloff in treasuries extend into the last day of the month. and speaking of the monthly performance, as we know, and as we've been talking about all month, it's been a big route month for u.s. treasuries. we've illustrated that on the bloomberg. so this shows the monthly change in the bloomberg barclays u.s. treasury index, the monthly percentage change. so this drop that we have seen this month, it's the steepest we have seen going all the way back to december of 2009. so it's quite uncommon obviously to see a big selloff like this. so that's one of the big stories we've been following, not just today, but this month. we've seen the selloff continue, and personal incomes, as well as the employment report, the other big story of the day, of course, is oil. oil prices continue to climb after opec did come to an agreement, unexpectedly in vienna on production cut of 1.2 million barrels a day.
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you can see the increase in oil prices. oil rising to the highs of the session. i'm going to dig much more into oil at the commodity close in just about 30 minutes. i also wanted to look at the two stories, push and pull are affecting the equity market today. on the plus side, we've got energy shares, as a group, up 5% here, and at the highest since july of 2015. so financials are also gaining with that increase in rates. that's a consistent pattern we've seen since the sensitive groups that are providing a big drag. utilities, telecoms, and real estate stocks are all lower today, along with technology, as we see from the underperformance of the nasdaq. and finally, quick check on fannie and freddie. of course, a big mortgage financier is controlled by the u.s. government, backed by the u.s. government, and the person who looks to become treasury secretary has said they should be removed from government control, so we're seeing a big surge in both of those stocks
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today, scarlet. scarlet: we'll continue to monitor that one. julie hyman, thank you so much. oliver: this comes amid a big week for economic data. for more on that and insight and analysis about the economy, we're joined by carl tan he balm, chief economist for northern trust. carl has also worked at the federal reserve and the chicago fed, and also still with us is matt of bloomberg news. carl, welcome. let's start with you. we're looking here, trying to figure out what some of the fed's contacts around the country are thinking about the economic outlook. what's most important to you right now after we've seen this move in rates, we've seen this reaction from the election? carl: i think as the fed gets ready for its gathering later this month, they're going to realize that six months ago they couldn't find inflation anywhere, and now it seems like we're fighting inflation everywhere. we have energy prices that are pushing up. they're very closely correlated to inflation expectations. we have the prospect of a restriction on trade, which would raise prices. we have a prospect of rising wages as the economy runs hotter under a more
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expansionary fiscal policy. we have the prospect of rising wages, if there's action taken to deport undocumented workers. so as all that comes through, the fed's evaluation of where inflation might go is going to be very important. we'll see their updated projections after this meeting, and what's been interesting to watch, as the markets begin to form their expectations, not so much about december, which is baked into the cake, but about next year. you're seeing a much bigger deprergs of where the year end 2017 funds rate might be, and that's where the dot chart that we'll get again in a week and a half will be very interesting to look at. scarlet: when you talk about inflation, there were signs that there was inflation percolating, even before the election. we saw rates already start to come up. we saw inflation expectations start to pick up a little bit, and the wage gains, elusive wage gains were moving in the right direction. >> yeah, that's right. we're not really seeing, you know, strong signs of that yet. the beige book noted that there was slight upward pressure, which is kind of what's been going on. but we're starting to see it in
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the macro cat prices moving up, and certainly as you mentioned in financial markets. i just want to highlight one story that says there were 11 references to uncertainty surrounding the election in this beige book. so in cleveland, staffing confirms attributed a modest decline in the number of job openings, and in richmond, auto sales declined, which a couple of dealers attributed to uncertainty. then in chicago, there were numerous reports of businesses seeking to refinance loans in anticipation of future interest rate increases. so we've certainly gotten those interest rate increases already. it will be interesting to see how that continues to play out going forward. oliver: i believe in the last beige book, there were eight references to the election, so surprise, surprise, afterwards people talking about it more. but along those lines, when you think about the move in interest rates after the election, we're seeing yields jump across the board. when you're the fed and you presumably didn't see this election coming any more, you know, than anybody else, how do
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you have to rethink your tools and the taxes that you use to go about accomplishing the goals? is the change based on the short-term move, or do they say this election doesn't change and we're going to key the way we're planning to? carl: i suspect they'll look ago the rise in interest rates as a bit of the tightening, which may factor into their decision, but they're going to be forced to confront the trajectory of the economy next year, even though there's a lot of uncertainty about what policies will be driving it. i think that the other big dwhea we're going to be watching very closely is the new administration take shape. are they going to value fed independence, both in what they say and the appointment that is they might make to the federal reserve board? as an investor, i take great comfort in knowing that there's somebody who's leaning against inflationary pressures. we won that battle, a hard-won battle 30 years ago, and hate to give ground on that. you may have a group come in that is going to be running big deficits that would like to see the economy running hot and
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would be a little bit more comfortable with inflation than an independent fed might be. oliver: how important are the two open seats that president-elect trump will presumably be able to place people in terms of the outlook for the fed? carl: a couple of thoughts. remember, in order to close debate on nominations, i think those appointments require 60 votes. so some compromise with the democrats will be likely. expect potentially a package deal of one from each side. but the more important one that's still open that can be filled by one of the two nominees is the vice chair for supervision. inasmuch as financial conditions both of interest rates and the way that banks are regulated, if the administration follows through along with the congress on its hope that deregulation will be advanced, that appointment would be a critical one for promoting that agenda. scarlet: what happened to the debate, the conversation over the neutral rate of interest, the one that the san francisco fed brought up, saying maybe it's a lot lower than we thought? that's gone out the window with the results of the election.
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matt: there's so much uncertainty. is it really a reflection of people marking up their views with the neutral rate of interest, or is it more we're seeing higher risk premiums to account for that uncertainty? i think there's a really relevant question at the moment, because certainly what you're seeing is, for example, in housing, mortgage applications have been declining, and certainly in the last few weeks since the election, we've seen big drops there. so it seems that, you know, the u.s. housing market is still very sensitive to interest rates, so i'd be interested to hear if you have any thoughts on that, carl, how big a risk that is, to the recovery at large. carl: often when rates have been low and start coming up, you get an immediate burst of positive activity, because fence sitters realize that the opportunity may be fleeting and they want to get in and lock in their rates right away. but after that, clearly the impact is negative on housing. it's also negative on consumer cash flow, because free
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financing opportunities, those that still exist, start dwindling. oliver: carl and matt, great conversation. gentlemen, thanks so much for joining us. scarlet: let's check news this afternoon. alisa parente has more. alisa: former vice-presidential candidate sarah palin is under consideration for the position of secretary of veterans affairs. that's according to a report from abc news, citing a close palin aide and a top trump transition official. palin has reportedly been in talks with trump's team. u.s. attorney has agreed to remain a federal prosecutor as president-elect trump's request. he talked with reporters at trump tower in new york. >> we had a good meeting. i said i would absolutely consider staying on. i agreed to stay on. i have already spoken to senator sessions. as you know, he was the nominee to be the attorney general. he also asked that i stay on, so i expect that i'll be continuing to work. alisa: president of will he donald trump has chosen steve
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manunchin to be secretary of the treasury. was a well known hollywood financier, bank rolling hits including "avatar" and "x-men andts." he also selected wilbur ross to be secretary of commerce. there are indications that this week's attack at ohio state university was an act of someone who was self-radicalized. that's according to homeland security secretary jea johnson, who says right now authorities see no direct links between abdul razak and terrorist organizations. johnson, speaking today in washington, also said there's no evidence of direct communications with an overseas terrorist group. the u.n. security council has voted to tighten sanctions on north korea. this is in response to a swift and largest nuclear test back in september. the council unanimously approved the sanctions resolution today with diplomats calling it a significant step forward. the new sanctions target north
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korea's hard currency revenues by placing a cap on coal exports, cutting them by at least 62%. scarlet: global news 24 hours a day, powered by more than 2,600 journalists and analyst, and more than 120 countries, i'm alisa parenti, this is bloomberg. scarlet: thank you so much. coming up -- we're going to head to vienna, hear from one of the ministers who took part in the historic opec meeting. we hear why the cartel agreed to a production cut. this is bloomberg. ♪
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scarlet: now to oil, which is surging today, as opec surprising the market with its first production cut in eight
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years. the group has agreed to reduce collective output to 32.5 million barrels a day. following the announcement, we caught up with ecuador's foreign affairs minister. we asked if this deal will be enough to ease a record global lut and stabilize markets. >> well, this is what we've been working on for a while. it's been visible. you guys have been reporting on it. we really wanted it to be kind of something that we do all together. there's been a lot of consultation. i think the world was expected the opec to take a decisive first step and to send a strong signal, but we kind of -- that signal was contingent on other countries, and i think we're going to see announcements in the next few minutes maybe of important opec members, you know, saying something -- >> russia. are you alluding to russia? what are they going to cut? what do you think? >> we'll have to see, but the
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general emotion that we have is there will be an additional 600,000 barrels less, an additional 600,000 barrels less in global production by non-opec members, so that's -- if you add that to opec, 1.2, that's 1.8 million barrels less in the market. i think that will have a big impact on stocks, and i think it will have a significant impact on stabilizing the markets. >> now, do you expect the deal for another six months when opec meets again next year? >> oh, this is something which we'll have to review. i mean, we did discuss whether it should be a deal for a year. there was no significant opposition, but we thought that it was technically more wise to have a look at the deal six months down the road, to analyze how things are going, and to convene again, and if we have to extend it, then sure, we'll extend it. >> besides russia, who else besides non-opec members? >> i think there are a number of non-opec countries that are
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very interested in the deal that we're making and we've been talking to, so there's a number of countries that some opec members already have a special relationship with, so they've been talking to them. in our region in latin america, of course, we've got non-opec country, oil-producing countries that are important, mexico, colombia, brazil is another one, so in latin america, we'll be talking to the latin americans. that will be the role we'll be playing. but yeah, i think today's announcement, what we're seeing from russia, and the sounds we're sfreeg other corners of the world send a very, very strong signal. this is the most significant intervention in production i would say, certainly in more than eight years, and probably in decades. >> now, there's so much hype about this meeting, and you luckily were able to be there. just finally, what were the
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toughest parts? >> these meetings are always long, tough, sometimes, you know, there comes a time where you have to make a decision, where there's an ultimatum, are we going to do this, not do this? opec meetings are like that. but i think what we demonstrate today is there's enough cohesion, there's a lot of doubt about that. and we demonstrated the cohesion. beyond what journalists thought, analysts, people around the world thought, and we also demonstrated that opec is relevant in the 21st century. this organization is alive and well. it's taking decisions, it's taking matters into its hands, rather than an organization for this new century. scarlet: that was ecuador foreign's affairs minister in vienna. oliver: still ahead -- president-elect trump is headed to indiana to announce big news about air conditioning company carrier keeping jobs in
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indiana. how did he pull it off? we'll find out. this is bloomberg. ♪
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scarlet: this is bloomberg markets. i'm scarlet fu. oliver: and i'm oliver renick. donald trump's nominee for treasury secretary, earlier today, he briefly outlined an economic agenda. >> our number one priority is going to be the economy, get back to 3% to 4% growth. we believe that's very sustainable, and focus on things for the american worker. hat's absolutely our priority. oliver: meanwhile, donald trump reached an agreement with carrier. let's bring in our white house editor. let's start off with some of the appointees here, the people that trump has tapped. he's keeping the sort of billionaires and bankers up
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front in his cabinet. tell us about the choices that we now are for certain. alec: mnuchin for treasury, tom rick frets chicago is going to be deputy commerce secretary. trump is staffing his administration, these top financial jobs at least, largely with people who look like him. and i don't know if his supporters are getting the government they quite expected. he was driven to office by a real populist movement, people who were discontented with the way washington and the way wall street have treated them. some of these guys are from that world. so the change that he promised to supporters is not yet evident in a lot of his appointments. scarlet: the c.o.o., president of goldman sachs, do we have any idea where he might fit into trump's economic team? alex: apparently he's being looked at for a couple of top jobs really in the white house, maybe o.m.b. director, or
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chairman of the national economic council. these are actually very powerful jobs. he would be closer to trump than the treasury secretary would be, in fact, and would probably have more now economic policy. oliver: as we talked about tapping some of the people that perhaps his voting base wouldn't be too happy about, i mean, these are basically wall street guys for the most part. none of them really have a lot of washington experience, not necessarily washington insiders. i guess is he justifying that way and bringing in, at the end of the day, fresh faces to washington at least? alex: yeah, if he wants to tell his supporters he's bringing outsiders to washington, that's true, except that these are -- these are all guys who are not unfamiliar with navigating power. i'm sure all of these guys have employed lobbyists in washington, have been to washington to lobby themselves, have been involved in policymaking. they're not outsiders in that
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sense. they're only outsiders in the fact they don't live here. scarlet: donald trump announced today he will leave his global business empire, but he was vague about how he would do that, so that he can focus on the presidency. we spoke with senator richard blumeen that will of connecticut, a democrat, whose raised a lot of concerns about what the president-elect will do with his businesses. here's what he said. take a listen. >> he needs to sell or divest, and he needs to do it to an independent, dissbpped party, not to his children. because so long as he has an interest, and we all know his parents, if our children have assets, we have an interest. scarlet: his children, that's the key part. donald trump has said he'll make an announcement on december 15 with his children. >> right. he's never going to have an arm's length relationship with his company as long as his children are running it. i don't think he particularly cares. i don't think he considers himself to be susceptible to conflicts of interest.
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as president, he is exempt from the main federal law regulating conflicts of interest for the federal officials, so he doesn't have to worry about any actual legal liability, i don't think, but does he have to worry about public perception and public trust n his administration. i think luke en that will is right that liquidating the company, selling it to a third party, would be the way to go if he really wants to distance himself. scarlet: white house editor for bloomberg news, thank you. talk about the importance of optics there. we'll be bringing you live coverage of president-elect donald trump's job announcement regarding carrier, the air conditioning manufacturer, tomorrow at 11:00 a.m. eastern time. this is bloomberg. ♪
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oliver: from bloomberg world headquarters, this is bloomberg markets. scarlet: commodity markets are closing in new york, and it's been quite the day for oil.
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julie: it has been quite the day, the biggest one-day gain since february. this, of course, sparked by the surprise agreement on the part of opec in terms of a production cut deal, and so we're seeing oil here surge about 9% at the close of trading in new york, 49.38 is the barrel right now. that's the highest in about a month. to put this in perspective here, as we talked about the huge gains for oil today, here's the three-year chart of oil. so obviously, even though we are seeing gains, it's from a very low base here. as we have been seeing oil trade, of course, up to $100 a barrel, it wasn't that long ago, just a couple of years ago, and now we are trading at about half that, and there's a lot of excitement about it. so interesting perspective if you take the longer view. in terms of the effect it's having in today's session, we are, of course, seeing a surge in oil stocks as well. so some of the largest oil companies, these are big gains. and then there are also the
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shale producers in the united states. and that's in part because these guys are seeing, as really poised to take big advantage of an increase in the oil price. they've been adjusting their businesses so that they can better be profitable at, say, $50 a barrel oil. so the fact that we are now rising and get around to that level is being seen as very good news for the likes of continental resources, and oasis petroleum. but finally, i want to end on a caveat, and that has to do with the fact that this is a production target, of course, and opec is notoriously bad at keeping the targets. here's the production quota in blue, and then the actual production in white. so obviously, if you go back historically, and this chart deps back to 1998, pretty consistently we have seen opec pump more than its actual production quote, oliver. oliver: thank you so much, julie. earlier today from vienna, we heard from ecuador's foreign affairs minister, the country's
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representative at the opec meetings. he talked to our anne marie that today's decision showed opec is relevant again. >> we've demonstrated this cohesion, beyond what journalists or analysts thought, people around the world thought, and we also demonstrated that opec is relevant in the st century. this organization is alive and well. it's taking decisions, it's taken matters into its hands, n organization for the new century. oliver: someone else who also thinks today's deal is incredible joins us now here. bruno, obviously the market here today reacting pretty strongly, we're above $49 a barrel, haven't been there in a while. what do you mean by credible? bruno: look, certainly this isn't the first time we've heard opec say they're going to do something, right? you know, since their role in the world, the new world order has been diminished due to
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shale. you know, we've seen saudi arabia in particular waffle on sort of the intimate stations they made for the market about market share versus raising prices. so, you know, i think that the market wanted to see morgan lawyerity behind this deal, jawboning isn't enough anymore n. our opinion something, that was credible is basic what will we got, which is country-level quotas. and relatively sort of stringent compliance mechanism by which three of the opec nations, coupled with two opec members, who have actually seek to understand if everything was being complied to. and i think that most importantly, the production numbers they base the cuts off of were reasonable and relatively consistent with, you know, with what we saw as actual production. so those are sort of the underpinnings behalf we deem to be a credible dialogue. scarlet: the devil's in the details, and there are enough details to satisfy most observers. there are nonmembers who are also participating. russia, for instance, agreed to cut production by as much as
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300,000 barrels a day. does that matter if u.s. shale producers are not involved in any way? bruno: it does matter ultimately, because at the end of the day, again, we're in this new world of we like call it opec pulls prices when they get too low, that's the only job they have. and when prices get too high, u.s. shale pushes it back down. and i think at the end of the day, if you don't have u.s. shale producers involved, you're never going calibrate the upside. that's u.s. shale's job now, and opec really can't do much to control that anymore. as it relates to russia specifically, look, whether or not they cut is yet to be seen, whether or not opec complies is yet to be seen. the one specific challenge with russia, though, we to keep in mind is they've never cut during the winter. that's for a very specific water, and it's usually very doyle orchestrate a cut. so we'll have to keep a close
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eye on that. and russia has actually said, if there aren't any technical challenges, we will cut barledse. scarlet: condition on the technical ability. on the engineer: with that agreement, could russia say we'll do it down the road? bruno: they're leaving the door open, exactly right. i think what they're going see whether or not opec is complying. if opec is complying, i think they will find a way to get 300,000 barrels off the market. oliver: i want to bring in a chart that might have longer term implications, where we've seen the spread getting between the first month contract and about a year down the road, tighten a little bit today. you're looking at the orange area that's showing you the spread, $5 more expensive further out. that's now narrow. is this just purely a function of today's one move up here in reaction to the news, or is this going to tell us something
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that we can read through about more oil coming back online, positive personally people saying it's not as advantageous to store this stuff? bruno: the spread structure is really a manifestation of the market's implied need for oil. if you're taking supply off the market, those spreads coming in and getting tighter is a market telling thaw, look, fundamentally, we are getting tighter. what opec is doing is bringing forward the time frame by which stockpiles globally will start to draw down and escalate. because it's a six-month cut for now, you're going to see most of the concentration in that spread strength that you're referring to happen in the very front of the curve and much more muted in the further, dated part of the futures kmb. scarlet: put this all together. who are the winners and losers? how do you make money off this situation? bruno: that's the million dollar question, right? i think the u.s. is the clear winner, both from a business perspective and geopolitically, actually. but i think the u.s. is going
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to reap the largest rewards from this. i think from a relative value perspective, however, the supply, the service providers will probably start to outperform a lot of the e.m.p.'s at this level. the one thing we have to understand, that the investor opportunity has to understand, service providers are going to start to gain the upper hand at some point. opec is trying to orchestrate higher prices, drilling activity should start to pick up. the degree, we will see, because this is our first shale cycle. but at some point you're going to see a lot of the slack in the service sector start to tinet -- start to tighten. i think the equity market will start to price that in pretty soon. oliver: bruno, thank you, group director of commodity strategy. thank you very much. scarlet: let's get a check of the headlines on bloomberg first word news at this hour. alisa parenti has more. alisa: president-elect donald trump says he'll leave his business in total so he can focus on running the country.
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trump says he'll hold a news conference with his children on december 15 to discuss the details. he says he's not legally obligated to hand off his business operations, but he says it's visually important to have no conflict of interest. critics have said that trump should put his business in a blind trust. house speaker paul ryan is promising that a long delayed michigan, this led tainted water is on track to pass bit end of this year. he says the $220 million aid package will be addressed one way or the other. he said he hopes it will pass as part of a popular water project bill. supreme court justices suggested today they're likely to be divided on the key component of deportation. at issue is whether foreigners have a right to a periodic bond hearing while they're being detained. during proceedings, justices heard arguments on an appeals court ruling. it would give many people a bond hearing and possible relief. after six months of detention.
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air safety experts are probing the jet crash that killed 71 people. they're looking at whether the plane ran out of fuel while operating on a flight close to the limits of its range. the distance between santa cruz and bo i've i can't and its destination of medellin, colombia, is 1,500 nautical miles. the aircraft has a usual range of about 1, hundred nautical miles. there were six survivors of monday's crash. global news 24 hours a day, powered by more than 2600 journalists and analyst, in more than 120 countries. this is bloomberg. i'm alisa parenti. scarlet? scarlet: thank you so much, lease a. come up, the trump tack effect. we'll hear from the former c.e.o., john allison, on whether donald trump's plans will spur growth. linda mcmahon spoke with the president about a position at the small business administration. she ran for senate twice in connecticut, also the wife of wwe c.e.o. and co-founder,
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vince mcmahon. we'll keep you posted. this is bloomberg. ♪
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scarlet: it is now time for the bloomberg business flash, a look at some of the biggest business stories in the news right now. brazil's third biggest brokerage is planning biggest brokerage is planning to go public, according to two people with the direct knowledge of the matter, who also say that x.p. could file by the second half of next year. x.p. is packed by private equity firm general atlantic. x.p. is said to be expanding in new york, miami, and geneva to indicater to high net worth individuals. valiant has decided to keep its drugs division after talks to sell the unit fell apart.
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that, again, according to people familiar with the matter. the decision doesn't prevent valiant from pursuing future interest in the business. netflix is making an offer sure to please binge watchers everywhere. some tv shows are available for download to watch offline. they'll roll out the feature on phones and tablets for all subscribers, but only for select programs, such as "the crown." and that is your business flash pdate. oliver: let's get more reaction. earlier today, we spoke to john allison. you might recall allison was considered for the treasury secretary post before it was announced the job would go to steve mnuchin. mnuchin told reporters today it's all about getting the economy growing, and mr. llison agreed. >> definitely true. he believes that we've been undersandfing has had negative
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consequences. he thinks we can grow 4%, 5%. i don't think they want to talk about it for four, five years, and then settle in more at 3% rate. he's very focused on significant tax reform, not just cutting tax rate, but structural reform with lower, simpler, flatter taxes, and he's very focused on regulatory reform. he wants to get rid of obamacare, significant roll back of what the e.p.a. has been doing in the energy area, and he'd like to repeal dodd-frank, but mostly he's talked about radical reform. >> so let's take the two things, tax reform and regulatory reform. and tax reform, one of the questions is how you pay for that and how you pay for it without substantial deficits come in. do you have a sense of how that might be done? john: you can argue this is
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good or bad, i think they're willing to incower an increase in the short term, because they believe the only solution to a long-term deficit problems is much faster growth rates than we've been achieving, and they're convinced, donald trump is convinced that we can sustain a much more rapid growth rate. so i think they see the dealing with the deficit problem is secondary to accelerating the growth rate. >> there have been instances in history where that's worked very well. there have also been instances where it wasn't so good, where you basically borrow your way to growth. what is the difference between those two, and how can we make sure it will be directed to true growth? john: i think that's a great question, which, you know, i don't think anybody really knows the answer to that. i'm not a big fan of infrastructure investments unless they're really needed. just making investments for the purpose of infrastructure investments is not necessarily the best allocation of capital. i do think at this point in the cycle, just the psychology of focusing on growth is very
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healthy. i think we ought put more focus on cutting government spending, and i'm an advocate of less government spending. i think that's an bigger issue than deficits. i think that may become a priority, but i think today they're really focused on growth and are willing to take the risk that it doesn't work, because they think it's necessary risk to take. >> talk about regulatory reform, you mentioned also, and mr. trump has certainly talked about that extensively. how do you actually get that done? john: well, you know, they believe they can get it through congress, which, you know, i'm want a politician, so i don't know how to answer that. they do think that obamacare has clearly failed. they believe that was a huge issue in president-elect trump getting elected. the democrats on some level have got to know that, and without obama there, they're going to be willing to negotiate on that issue, because it's actually kind of a
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millstone around the democratic party. whether that's accurate or not, i don't know. but their belief is, hey, it's failed. if you look at what's happened to the cost, you know, it's going out the roof. people are very unhappy with it. all it's really done is loaded up medicare, medicaid -- medicaid, really. they think you got a failed program. at some level, moft democrats know it. they know it's a political millstone. on the engineer: that was john allison. scarlet: coming up, more on the trump transition. will fannie mae and freddie mac be losing control? steve mnuchin does believe so. we'll look at whether he will get that done. and taking a look at markets. you're looking here at equities. oliver noted it first, the s&p 500 turning negative following the release of the beige book, even though the beige book didn't tell us anything we already didn't know.
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oliver: throughout the day, the sectors that had been lagging are bond-related stocks, the dividend payers, just getting hammered. scarlet: the selloff in treasuries continues. we have higher yields and the dollar strength is another story that just keeps going. u.s. dollar index right now up to 101.49, up by half a 1%, and crude oil. oliver: energy stocks up 5%. scarlet: brent crude at $50.45 a barrel as opec agrees to a production cut, against market expectations. this is bloomberg. ♪
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scarlet: this is bloomberg markets. i'm scarlet fu. oliver: and i'm oliver renick. steven mnuchin and wilbur ross have both been nominated for the government, treasury secretary and commerce secretary both. mnuchin's comments today
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already moved markets. he told reporters mortgage lenders fannie mae and freddie mac should exit government's grip, sending shares to the highest since august of 2016. the we now talk about that and more. pretty big move there. so now markets just hanging on all these picks and what they say? >> yeah, fanie and freddie shares are up over 100% since the election. if you go back earlier this year to some of their lows recently, it's even more -- i mean, obviously these companies have been in an ongoing legal battle, because investors, they're public, but all of their profits are remid back to the treasury to pay back the bailout. scarlet: as you come inside the bloomberg, i want to show what joe was saying. this is normalized, so it starts at 100. you can see by mid to late january, fannie and freddie lost about half their value. so since then, it has gone up by more than double, 200%, a full 100% increase in the share price, from the start of the
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year. joe: yeah, so people think mnuchin is going to be perhaps more amenable to some sort of solution in which the equity is privatized and the profits can start flowing back to the equity owners. scarlet: this is another one of his advisors and supporters. joe: he not only backed donald trump, he did the q&a with him, so this has to go through reports. none of it is a done deal yet, but people see an opening for these companies to return to normal. companies that -- where the profits can go to shareholders. oliver: what does reform look like? any idea? joe: i don't think anybody knows for sure. there are a lot of different plans out there, but there's still a fundamental tension, why these e reason entities andithsd, because they were presumed to have the backstop from the government, which allowed them to back mortgages and keep rates down.
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people don't like that, because they think it contributed to the housing bubble, so it's hard to know exactly what a different model would look ike. oliver: are people saying this is what we should have been doing, but didn't have the opportunity to do it? joe: possible, but both names that did very well in the era, taking advantage of restructuring and bankruptcies and made a fortune on the way back up, so it's conceivable that they just had no space where they could get involved, but it was a very good time for them. scarlet,: as treasury secretary, presumably he'll get the job and be approved by congress for it, what kind of oversight or work will he be doing with the federal reserve? i mean, maybe not oversight. that might be the wrong word, but he has to work with the central banks. joe: ultimately, they're going to be in charge of the spending
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and tax policy that comes up, and they're going to set the agenda for the administration. it will be really interesting to see the degree to which the fed is see as accommodating that or offsetting that. you know, i do really wonder whether the fed is going to get much more politicized under this administration, because if it appears that they're working cross currents, it's easy to trump being unhappy with that. oliver: it's easy, because rump the entire in several instances, but now he's at a place where they could be looking and looked pretty good from his perspective now. joe: there's very interesting timing, because beyond just trump, in general, you have a lot of conserve tiffs who have been slamming the fed for years, saying you're keeping the rates too low, blowing bubbles, politicized. now you have to wonder, i mean, we have markets pricing in basically 100% chance of a hike in december, markets pricing in multiple hikes for 2018. if there are -- sorry, 2017.
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if there are hikes, you're going to have to imagine that a lot of republicans are going to be saying, wait, slow down, you didn't hike at all -- you hardly hiked at all under obama, and then we switch parties and suddenly the hikes go on? oliver: feed the conspiracy. joe: exactly. the people who criticize the fed for not hiking, may wonder, may criticize the fed, why they suddenly got more aggressive with the hiking cycle once there was a change of party. scarlet: very quickly, wilbur ross will be to renegotiate the trade deals that donald trump said he was going to rip up, whether it's nafta, something with canada or europe. joe: it doesn't seem like he's vehemently anti-trade, though did he write a thing in "the wall street journal" earlier this year. scarlet wilbur ross, yeah. joe: that he thought donald trump made good points, trying to use policy to eliminate the trade deficit. i think maybe he's seen as a slightly moderate pick on that, somewhere between the current
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consensus and where donald trump's campaign rhetoric was. oliver: great stuff. you guys are going to talk more about this. we'll bring you live coverage of president-elect donald trump's jobs announcement regarding carrier tomorrow at 11:00 a.m. eastern. a little reminder there, trump saying he's got the company to keep jobs in indiana after they said they were going to move some of them to mexico. trump will be in indiana along vice president-elect. scarlet: the cartel agrees to its first cut in eight years in an effort to clear some of that global glut. you can see crude up almost 9%. brent up to $57.40 a payroll. this is bloomberg. ♪
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>> it is 3:00 p.m. in new york. i am scholar -- scarlet fu. oliver: buckham to bloomberg markets. -- welcome to bloomberg markets.
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♪ alive fromare bloomberg world headquarters in new york for the next hour. here's what we are watching. stocks are mixed with the s&p 500 turning negative. utilities,es, opec,ms, and speaking of the most since february after opec reaches a deal. production byshes one point 2 million barrels per day to will they keep their word? the latest from the tram transition, the trump tower for mr. trump gets set to hit the road for his victory tour tomorrow. julie hyman, what is going on? talking about the s&p 500
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turning negative here. the ripple effect from higher yield is having a greater effect than higher oil prices. the nasdaq most deeply in the .9%.down let's look at the breakdown in the balance i was talking about. green, energy holding near 5%. utilities are down more than 2.5%, consumer staples as well as technology are weak in today'session. broad-based weakness, some of which has to do with factors for example a note of from facebook saying the company's advertisement revenue may have peaked. catalyst seeing any
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there. clear, higher on prices because of those higher yields. to look at those higher yield, and you look at the race market, the 10 year yield, we have adp jobs report this morning that came out better than estimated personal income. just report on friday. rides,ing its earlier selling off in price. hanging onto a gain of half of 1%. oil prices, we are watching that closely. today, 49 per barrel. let's get to bloomberg
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first word news. courtney: president-elect donald trump will visit chicago tomorrow. police are making security preparations. expected to depart saturday afternoon. trump's team is not commenting on the nature of the trip. trump says he is leaving his business empire so he can fully focus on the white house. trump said he will hold a news conference with his children on december 15. u.s. senator richard blumenthal wants a special counsel for trump's business conflicts. he spoke earlier on bloomberg television. sell and needs to to ando an independent disinterested party and not his children. so long as he has an interest, and we know as parents if our children have assets, we have an interest. >> he says trump should put his
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interests in a blind trust to avoid conflict. jill stein is planning to request a full scale of michigan's presidential vote. she already requested recounts in pennsylvania and wisconsin. donald trump won all three states. syria.olence today in activists say a barrage of fire in aleppo has killed at least 21 civilians. tens of thousands have been displaced as pro-government forces reclaim a divided city. more than 50,000 of an estimated quarter million inhabitants have been displaced just in the past four days. a saudi prince is issuing a public call for women to be allowed in the conservative kingdom. the prince tweeted in arabic and english "stop the debate, time for women to drive." saudi arabia is the only country in the world that does not allow women to drive. global news 24 hours a day
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powered by more than 2600 journalists and analysts in more than 2600 countries. scarlet? announcing they have clinched a deal to reduce production. oil prices surging on the news. it would cut production by 1.2 million barrels per day. we spoke with the global head of commodities for goldman sachs about what the deal could mean for prices in the year ahead. >> our expectations for the market would trade down into the $43 range on year-end, and then spent most of the first half of next year around $45 per barrel. process, they the take that 45 price and turn it into a $55 price environment. potentially better for revenues but it speeds up the process of which allows them to pursue the market share strategy because it takes away the ability for producers to hedge. scarlet: joining us now is tina
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davis. chuck said was interesting. it takes away the need to hedge. how does this all play out going forward? what happens next? tina: a lot of steps to go. one thing that is important to nonmembers,pec and i think it is fair to say they have a checkered history of complying with what has been rolled out. it will be interesting to watch and see what the compliance system looks like. they talk about bringing non-opec members to monitor production. it will be interesting to see if this holds forward -- holds going forward. >> whether or not saudi arabia will continue conversations with non-opec producing nations. what are they waiting for and what do we know about the general situation? meeting scheduled
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for december 9 because there seems to be a meeting every other day these days. that will involve some non-opec members. they talk about has extended possibly mexico as well. what remains to be seen as what the cuts will be for each nation. russia has said 300,000 barrels per day is what they are expecting. mexico, nigeria has said that mets pledged an output. mexico is forecasting a decline anyway. scarlet: and making the case of earlier, russia saying it would cut by $300,000 per day, it is conditional on its technical ability. it does give it an out and potentially want to see if it sees opec go-ahead before it joins in. we have seen russia before pledge to cut and not actually cut. in some cases, they have increased production. it is not all state owned there. a large bulk of it is.
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how do you go about telling a rival company to stop producing the thing that makes the money? a tricky situation. >> hr here is not terribly complex but it shows perspective for the move today. this is looking at volatility. 30 days for commodity, and the blue line here is showing the 30 day volatility range. when the reporters here are trying to assess how this plays and what will be the driving forces for the commodity over the near term, is it ironing out the deal, examining what the relationship will be? all of the above. and most ofet moves it is not even entirely correct. it will depend going forward on what we see in terms of demand. drawdown inck i'll the u.s. which is encouraging
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but what does that mean? what is talking about coming in the year ahead. everyone has been forecasting that i third quarter, we would see the market balance. about speaking that up a bit but it was forecast to happen anyway. we trying to draw that sort and effect races, which worked today. saudi arabia had he was to walk away if certain conditions were met. if saudi arabia softening that a man's iran publicly have this done. tot does it need to do ensure it goes forward the late wants? >> it was iran and russia's participation. saudi arabia taught repeatedly about non-opec meeting to be part of any arrangement going forward. obviously what saudi arabia does matters the most. needed to feel was buy-in from everyone else.
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i think compliance will be a big part of that as well. >> we talked about how the cut discussed here could potentially .dd to the new world order u.s. shale being in a position of power here, is that the case, does this affect to a large -- a large degree what is being produced in the u.s. and around the world? tina: it will be interesting. it could shoot itself in the foot. you are encouraging producers to come back into the market. we have seen in the past few months a lot of it to shuttle texas where it is economic right now to drill and produce oil. by sending the signal, you are encouraging competitors to come back. balancing delicate act. all right, tina, thank you so much. will hearming up, we what the former fed vice chair says about credit --
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president-elect donald trump us his economic plan, including infrastructure spending and tax cuts. that is on the. this is bloomberg -- that is all next. this is bloomberg. ♪
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scarlet: annualized revenue for the corporate crop -- corporate cloud business. $13business already hit billion. intelligence built into new machines. earnings forecast for the andical holiday seasons, 37
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$.39. analysts predicted 45% share. european central bank president move quicklyto while interest rates are still low in order to cap allies on what he says is a window of opportunity. it is been criticized in germany as reducing pressure to modernize the economy. that is your business flash update. president-elect donald trump has made more picks for his team, including goldman sachs executive as treasured in death treasury secretary. ,e spoke with the vice chair now a senior fellow at the brookings institution. we asked what she thought about the trump land. hard to say what trump's fiscal plan is exactly, whoit means he wants people
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are very familiar with finance and how wall street works economicis departments. he is not picking an outsider. he is not picking someone who will go after the big banks as he suggested in his campaign. >> what would be your main priorities were you in his in fiscal terms? can trump really execute the major fiscal plans without blowing up the deficit? the long-run prospects for rising debt are serious. in the short run, we do not have a high deficit. withnk he should go ahead his announced plan to make a egg investment in infrastructure. we have neglected infrastructure for a very long time in this
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country and there is support in the republican and democratic party for modernizing our in structure. plan to getor a big it through congress. he has also said he wants to cut taxes. think he should be very cautious about cutting taxes. we do need a reform of the corporate income tax, which everyone agrees is not doing us much good. we are out of line with the rest of the world. a corporate income tax reform that broadens the base and cuts the rates down to where most countries are, would be a good one. drastic rateed a cut down to 15% from 35. in my opinion, that is going to far but it might be an opening off of -- offer. >> let's listen to what had to be said this morning. i want to -- want you to hear.
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>> the first priority is going to be the tax plan and that has both corporate acts next to it, blowing corporate assets, making sure we repatriate chileans -- trillions of dollars back to the united states. we will have the most significant task that since reagan. >> how doable is it? do you see a return to some kind of bipartisan agreement on anything when it comes to corporate tax reform? >> i hope so. i think it is very important to get from both sides from both individual and corporate tax reform. selling do that. i do not know whether this administration now that they have control of both houses of congress and the white house, will pay much attention to what democrats think it on the other hand, they do not have 60 votes
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in the senate. they may need that for some of the things they want to do. return tosee any orpson bowles on the debt the paul ryan plan? or will this be a newly created land? -- plan? not think they will just pick someone else's plan. theou are looking to reduce gross of debt and reform the tax system, you have a limited number of options and the things we have talked about in simpson bowles, brought in the base and lower the rates, are the right thing to do. we can have an individual tax system which actually raises more revenue with a lower rates, of the bigid
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arealled loopholes that mostly helpful to upper income people. this does not sound very republican, but it would make a out orsense to phase change the form of some of the things that are hot button issues like the home mortgage reduction, turn that into a credit so it did not lose as much revenue and was not as much of a big advantage to upper income people. a credit could be better for the people who elected mr. trump. oliver: senior fellow at the brook -- brookings institution. scarlet: still ahead, options insight. we are getting trading ideas for xle. another check on crude oil today after the historic opec deal.
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nymex crude coming off of its best lows of the session. still gaining. this is bloomberg. ♪
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scarlet: this is bloomberg markets. oliver: time now for options insight with julie hyman. julie: thanks. joining me today is taught, chief strategist at bubba trading joining me from the cboe in chicago. great to see you. we have a sideways session today. the vix is up a little bit just over 13. we now have a drift after the recent rally. doesn't look to you like the drift continues? >> great to be with you? ,omething we're not looking at the high today, if you look at the nasdaq, that is getting
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clobbered. two out of the last three days, it is tting hurt here in maybe a little risk is coming off the table but until the vix plays along with it and starts a little higher, it is still probably age rift. we are seeing warning signs that say we might see some profit here because as i said, the nasdaq is down 55 points and futures i 10 points. a pretty big move for both. scarlet: -- julie: are there any others for you? we're not even past jobs. it is usually based on what the fed will do but the fed will not be force to raise her looking at the treasury bonds, we are taking 10 year from 13 to 25 ist we're seeing here injuries will have to ride, and the fed will be forced to raise into this because that is all
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they will do now. the jobs are meaningless right now because we know the jobs are not good to matter what they are. >> interesting perspective. let's talk about your trade of the day. sounds a you share some of my skepticism here. we showed a chart showing consistently how opec jumps above its target. proxy, theking at a etf that tracks the industry. hereme through your trade because it has a couple of different legs. >> i agree with you opec is a little fishy but i think xle is a great trade. if we are right, we can make a lot of money for a short time. by in december, we will december 16, two week from friday, the 74 foot, what we thisdo is we will sell friday, 73.
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we are putting a tag will spread on for a total risk of like $86 right now. if the trade goes completely against, we can lose $86 but after friday's expiration, we stay above 73 and then we can on the short oil for free and then we can take a run in 42 weeks to see that you and i are both right that opec will go in and this is just a short recovery in the rally. xle. have seen the it has outperformed oil if you go back over the past couple of years. what is the path going forward, the relationship between xle in the oil prices? >> i think it will come back to perform more with oil. what you're seeing here now is we have so much trading in oil and people were trying to use the proxy. now that we see oil staying in this range and go down to the $40 level before it is all over, i think it will come back down
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into it because a couple of months ago, it was backtracking again. a lot of money will go out to the futures market and we will run into these other products. i think you see money running here trying to buy oil. -- we will see what happens, todd. scarlet: thank you, julie hyman. coming up, we are speaking with new river investments portfolio manager as well as bloomberg's new columnist out with a calm saying cutting off global trade will not revive the american -- this is bloomberg. ♪
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private wifi for your business. strong and secure. good for a door. and a network. comcast business. built for security. built for business. hey, drop a beat.flix? ♪ show me orange is the new black ♪ ♪ wait, no, bloodline ♪ how about bojack, luke cage ♪ oh, dj tanner maybe show me lilyhammer ♪ ♪ stranger things, marseille, the fall ♪ ♪ in the same place as my basketball? ♪ ♪ narcos, fearless, cooked ♪ the crown, marco polo, lost and found ♪ ♪ grace and frankie, hemlock grove, season one of...! ♪ show me house of cards. finally, you can now find all of netflix in the same place as all your other entertainment. on xfinity x1. courtney: former vice presidential candidate sarah palin is under consideration for the position of secretary of veterans affairs accorded to a report from abc news citing
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eight and a top trunk transition official. sarah palin has reportedly been in talks with trump's team. spoke earlier at trump tower in new york. >> i have already spoken to sessions. courtney: he has been at its current posts since 2009. the pilot of a plane with 77 people aboard told air traffic control -- controller he run out in a few moments and according to their traffic power, a pilot in the -- total electrical failure and lack of fuel.


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