tv Whatd You Miss Bloomberg December 5, 2016 3:30pm-5:01pm EST
donald trump. i found it extremely interesting. to be continued. i would just leave it at that. thank you. with earlier sat down ibaka trump reportedly to discuss climate change. in 2007, he shared a nobel peace prize for his work on the subject. newark city mayor bill de blasio 's tongue the u.s. government to reimburse the city for the cost of protecting donald trump. he wants up to $35 million to help pay for security in and around trump tower. police have a full-time presence outside the building where the lives and has met with federal cabinet choices since his election. imposingarthy says tariffs on companies that move overseas could result in a trade war. donald trump says he will impose a 35% tax on companies that
close u.s. factories then relocate abroad to try to sell product back to the u.s. republicans have long approved such an approach. merkelchancellor angela 's christian democratic union party will harden it stands on immigration. the news comes as germany's ruling party sets the stage for her fourth -- her fourth term campaign. pressure within the electorate after more than one million refugees. inside, judges were hearing governmentether the has the right to leave european union without parliamentary approval. theresa may plans to trigger article 50 by the end of march. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. ♪
>> i am scarlet fu appeared -- u.s. stocks climbing while the euro recovers from early losses as investors largely brushed off the italian referendum. joe: but the question is, "what'd you miss?" scarlet: relative calm in the markets today. what is next in europe's watchlist? white trump takes a fresh at china, slim the country over currency and trade in breaking president by calling the leader of taiwan. we look at the consequences. les moonves sitting down with bloomberg today defending the cable television business and
why content providers need to be paid fairly. highlights from that conversation, coming up. lets you started with a look at where the major indexes stand as we head towards the stanford abigail doolittle is standing by. >> we have the dow on pace for yet another record closing high. the dow, the s&p 500 and the nasdaq, which gains the most. as you just mentioned come investors seeming to brush off the italian referendum in the vote to not make constitutional changes. averages weuity have the bigs trading sharply lower. on paper, it's worst decline since november 9, the day after the election. it is interesting the volatility gauge is dropping off. speaking to some complacency.
it is confirmed as well by pictures of sovereign bonds. we have the u.s. 10 year yield in white, italian 10 year yield in orange. even other is a divergence towards the side, it seems to tell the same picture. u.s. 10 year bonds spiked higher in yield suggests investors are selling those bonds. they see less of a need for safety. noteas the italian bond, is as much of a safe haven bond. it shows us investors are buying those bonds, in fact buying this news. interesting. we go into the bloomberg and take a look at a little more than a one year chart here. vix spiked the higher in the beginning of the aar on macro concerns among slowing economy, spiked higher during brexit, then again in the
election. in places he the vix backed out. it could carve out a new low. pictures ofhese risk on complacency, finally this is aart, year-to-date chart of the 10 year yield. again, safe haven. inversece rating yields, there was a massive decline in yield. then we see into the election an increase in yield. it appears the brexit was the of 2016. off event the entire referendum appears to be a nonevent. it is worth noting massive spikes up in yield since we have had in july, more than 1%. it could consolidate, so there could be some volatility ahead, especially right here for the 10 year yield. scarlet: thank you so much.
staying on the italy news, the reaction to the the constitutional referendum was the most orderly vote in contrast to the brexit vote and surprise election of trump. it shows how the market has reacted to all three events. outcome to this latest one was not a huge surprise. investors were correctly positioned and that removed the prospect of an overreaction. the blue bar is a reaction to the entire referendum. you can seeection most clearly in the mexican peso. the brexit was a shocker and the pound was pounded. joe: that is a great chart. they did not even waste their time to care about this on. onaw a quote today bloomberg, brexit took three days to get over, trump took three hours, this one took three minutes. in the meantime, the prime minister did offer to
resign when he met with the he asked, but instead to stay on in the meantime because they want to make sure that they get their budget approved by parliament before he steps down. of: there is a lot unfinished business left to do put the current government before they can have a new election. speakingwe will be with megan greene later to get her perspective on the -- on italy. coming up we will be hearing from cbs chairman and ceo les moonves and what the future looks like for the media giant. ♪
bloomberg's david weston had a chance to sit down with cbs chairman and ceo les moonves. he asked him what cbs would like to accomplish without owning some distribution. les: we are primarily a premium content company. our job is to do great content for cbs, showtime, the cw, late-night, sports etc. if we do that come all the distributors are going to meet us. they're all going to pay us for what we are offering and we do not necessarily need to be in the distribution districts -- distribution business. >> at&t needed time warner so they bought the thing. at some point you have distributed going to knock on your door saying we need to so badly, we want to buy you. les: i am sure there are distributors out there who would want to do that. as you know, we are a can -- a controlled company. so that is more difficult. i imagine there are plenty of
people out there, especially when you see at&t paying a lot of money for time order, that a company like ours would be very viable in the open market. >> have you had any discussions yet? les: i'm not going to say. you have discussions with everybody and they also a very nice things about you. >> deal have any concerns about it in the sense that we have a -- at&t in wireless, they could favor time warner content over cbs content. les: we are looking at it appeared it was just announced a few weeks ago. we are taking a good, cold hard look at it to see if it is advantageous to us or not. we have not weighed in yet on what we think about it. we are looking at it. >> you opened to the possibility of regulators coming in? the wind aided with comcast and nbc? with comcastey did and nbc? les: i'm not a fan of
regulators. abouting on, let's talk directv now. -- they justt it launched it. why did you sit it out? les: we always said we would join any service as long as we get paid fairly and the conditions that we need are met appropriately. we are in active discussions right now with directv. we have different needs than some of our competitors who own a lot of cable networks. our centerpiece is broadcast network. there are some financial issues, other issues such as digital issues. i expect us to make a deal with them can i expect us to be part of it. but we expect to be paid fairly for our content. way tofigured out a include the broadcast stations
in that. as a move into the over-the-top world, can the broadcast stations participate in could that affect the evaluation of your station? les: it is resetting the table. -- enter ther the retransmission dispute or negotiation, they were already paying a lot of money to different cable networks. we were coming in after the party started. now that there is a grand new party, we are the most-watched network. the most-watched should be paid more than the cable stations because more eyeballs should mean more pay. we intend to be on all -- on every over the top service, but we do not think any of them can 6 -- can exist successfully without cbs, the nfl, "big bang colbert.n >> historically they have wanted
an advantage. they are building a new business. exclusive content so that their rival to submit or does not have it. are you willing to give exclusivity? les: no. that is where the problem comes in. stacking rights, the ability to get all the shows in a certain season, we only have on all access. if someone made a very high offer it would be available, but exclusivity is really tough for us. scarlet: that was david westin speaking with les moonves. joe: discovery communications ceo also joins destin whiston today. -- >> there is no question that if you close your eyes and open it up in three or four years, most -- whoever gives you your mobile will give you your multi channels at home. we are seeing it play out across europe much more aggressively. the 80 -- the at&t deal --
you see it in latin america as well. this pipe that used to be multichannel, it is now -- that it became hard phone and broadband. the person who sows to the pipe will sell you everything. i think the at&t deal stands for the power of that. the second thing that is more important for us as a content company, it talks about the real value and how important content --due d commoditize the ability to get margin on that pipe -- if you're sitting they can- france and all give you decent speed and good mobile signal, what's the difference? the only way to get scale is to either reduce price, which is what is going on now around the world in which is why most of
the mobile players have no margin, or g commoditize -- or decommoditize it. you have already seen it. sky now is getting into mobile and they own sports. deutsche telekom is getting into sports. if you just have a pipe it will not be enough. you need an exclusive i.p. scarlet: we're keeping track of the markets. stocks in the u.s. and europe advancing along with the euro. investors clearly looking past political turmoil in italy. the dow industrial on its way to another record high. italian benchmark stock index did decline. that opened the door to a new government. joe: remarkable reaction. joining us on the phone is megan crane, chief economist.
she is in rome a following the election. thank you for calling in. how big of a deal is this? i've seen some people say this is not a big deal, it does not open the door to anything bad. other people saying this is a huge rejection of the euro. where do you fall on this? >> i'm going to fall somewhere down the middle. i would say a lot will depend on handles --ernment it looks like it is very possible that the consortium investors were meant to underwrite the deal will pull out. if that is the case and the government does not handle it swiftly and credibly, you could see some of italy's other banks -- including unicredit which is expected to announce a 10 billion euro capital rights
week week -- if unicredit has trouble getting that issue off you can easily see it spread beyond italy. but forget deutsche bank was on the front page of every newspaper about two months ago until suddenly it was not let's -- wasn't. that is the real risk. all andes not grow at to some degree that is just business as usual in italy. it is used to not growing and political instability. but this is being viewed with more drama broad that it is in italy. scarlet: more than usual. for those of us who are watching the financial markets we are used to thinking about the italian referendum and the anti-banks in a direct line. what extent is the rest of the populace making that connection between the vote and the italian banks? informed aremore
making the connection certainly between the referendum and the electoral law, which is connected to the referendum. no vote winning the electoral has to be completely rewritten, which changes the politics. also looking at the banks. there was a survey done shortly before the referendum that chose only one in 10 italians was actually claim -- planning to vote with the actual constitutional reform in mind. everyone was voting for something else. he said he would step down if the no votes won, which of course it did. it is a vote for something other than what they had, they did not have to specify what spirit -- what. joe: this seems like a common theme. there was a clear idea of what staying in the eu meant but lots
of different ideas about what leaving with me. what side won here? anti-euro, anti-establishment? which force emerges as the strongest from this victory? megan: i think it was mainly antiestablishment and anti-status quo. i do not think it was anti-euro. those who voted no in the referendum, therefore voted along the lines of the populist five-star movement, made it pretty difficult for the five-star movement to ever come into government. that because additional reform is defeated, now the electoral law has to be totally rewritten. that was the only realistic path for the five-star movement to run the government. so now that path is totally blocked. scarlet: so they have less of a chance to become the next government. what happens to matteo renzi? it's his political career over
or could he make a come back later on? megan: i think it is incredibly likely that he will be back. he is only 41. he has a long career ahead of him. i think he will be back in the next election. the end ofhappens at this legislature in may of 2018, or it might happen early. they might have a snap election in q2 of next year. either way he will probably be a big player. joe: what is your assessment of the next steps in italy? when is your guests for when we will see a new national election in italy and how would you handicap that race at this point? megan: the first thing they need to do is choose a new prime minister and i think either technocrat or more likely some candidate acceptable to the entire centerleft party would be
instilled. most likely candidate would be the finance minister. that would be positive for those worried about italy's banks, since we have in dealing with the banks for quite a while. once you have a prime minister at the cable try to reform the electoral law. somewhere in the middle of next year we might have a snap election. ideank it will be a better for italy to wait until the end sothe legislature in 2018 that a new government can come to power with a mandate and not be stuck trying to negotiate with partners in europe in the midst of a french and german election. i think they should wait until 2018 what they might go ahead and have one earlier. scarlet: thank you so much. we will have more on india and japanese stocks. this is bloomberg. ♪
in the u.k. and the u.s. we have seen banks take a leadership role at the equity had bondslied and you sell any yields rise. that is starting to happen in japan as well. the white line is the topics bank index. in the ratio versus the topix index overall. when the line goes up, banks are outperforming. when they go down, banks are underperforming. you can see that both heaven moving up since the u.s. election in november. you can really see it higher in november. if you do -- in late july it really began taking off. that is when the boj disappointed investors. the yend yields up and surged. the yields are rising by the yen
is weakening because of a stampede. joe: it shows what a global strong yields are. i looking at india come we do not talk about their pmi numbers very often what they have a monthly pmi like evelyn house. this is the monthly change. , we see the the way biggest ever drop in the history of the index. the steam of the government really having a hit on the economy is all these people have in forg their rupees exchange. this drop is way out of proportion for anything we have seen. it is going to be temporary, it will pass it someplace -- at sometime. scarlet: 836. joe: so many fascinating things happening. are closing markets
record high as investors looked at the political turmoil in italy. joe: we want to welcome our viewers were true -- tuning in live on twitter. we begin with our market minutes. dow jones climbing its way to another record high. closing at its all-time high but it's best level since november 25. the nasdaq, the best gains as november 15. no news is good news. joe: markets did not even bother pretending to care about this. pretty stunning. scarlet: if you look at the different sectors, energy shares have been one of the leaders earlier in the session. 9/10 -- up by nine
1%.ths -- tenths of speculation that donald trump will loosen regulation and rollback regulation that held that the financial sector. i also included the etf that track italian stocks. the gainsd lower, were cast by big losses in banks. three of the four worst performers in the stock 600 in europe were italian banks. joe: let's look at government bonds. we have yields ending just slightly higher on the day. they had been higher earlier in the morning. strong economic data out of the u.s. when we have nonmanufacturing pmi at its highs level since october, 2015. as you can see by the end of the day essentially flat. i want to go in real quickly into the bloomberg to talk about italy. this is the italian german
spread of 10 year yield. that is probably the cleanest expression. we did shoot up instantly right after the referendum went down. the spread started to narrow again and in fact spreads on this italian german 10 year lower than where they were last thursday. it gives you a real sort of indication of how little this result ended up affecting the market. scarlet: absolutely. you also have the european central bank as a backstop for banks as well. joe: it is a remarkable level of calm. scarlet: let's take a look at euro-dollar. this is the today charge. the euro finished friday, a gap lower. it held to as low as 105.05, a 20 month low. it required quickly. lots of explanations on how it recovered so quickly. that is less likely to
contain italy is actually a stronger euro. it is one explanation. the euro also gaining against other major currencies. allus the yen, the pound, green hours. joe: looks like parity is going to wait for a little while. let's look at commodities. not a ton, low copper continues to power ahead. industrial metals were the last several weeks have been doing very well. gold and oil slipping a little. remainss intermediate above $51 a barrel. scarlet: those are today's market minutes. president-elect donald trump's phone call with a taiwan leader marking protocol. he told his twitter followers that he would not be told by china on who he should or should not talk to. the yuan reacted by declining for the first time in three days. joining us now is a senior
fellow who served on the state department during the clinton administration. we also have with this lead analyst for geopolitical -- let me start with you. did the trump can't fully understand all the ramifications of the -- did they understand the ramifications of the phone call? >> no. let's give them the benefit of the doubt. the united states has been to, derivative of china. there would be some kind of strategic review. with this be the way they want to introduce that review? want to respond and say i can take a call from anybody? china has a lot of tricks up their sleeve and this is a very delicate, very strategic relationship. in my view there may be some
ideology that has woven its way through this process, but it is a very, very dangerous first step. joe: it certainly does that seem like trump want to antagonize the chinese. a big part of his campaign was doing things by surprise. it also seems very much how he wants to act. do you think there was something deeper or is this just a weird thing that happened? >> i think it was intentional. his team has been advocating for a pro-taiwan position. whether he personally signed on, i think we can question. but i think the bigger story here about the trump administration and china policy will not be about taiwan. it is clear trump himself reason taking a much harder line position vis-a-vis china and taiwan will not be the flashpoint. it'll be a much bigger issue of the economic relationship. scarlet: trump reference that
the u.s. owes billions in military equipment to taiwan. was his motivation into why the hisi phone call -- was t motivation into the phone call? >> the u.s. should not be constrained with who they communicate with. they felt they had some space to do that. have administration's felt they had to be so constrained on this issue? >> is a nice principle in life to talk to anybody, but the united states presidents -- fo veryixon, carter -- made complicated relations with china and we agreed at the height of the cold war to this set of relationships between china and taiwan. if we are deciding the united states government are deciding to renegotiate that, we should do it based on strategy.
the stability in the world depends on people's believe that the united states will stand by its commitments, both for our allies and at -- and our adversaries. if we're going to do foreign policy by tweet based on a whim or ideology when we are not bring in the full force of u.s. expertise to bear, we're going to be the loser of that new world. ultimately it is trump's prerogative if he wants to great a new u.s. foreign-policy. >> it is absolutely the president-elect's prerogative. the question is is it smart to do this way or not smart? seems to me this is not a smart way to do it. >> there is a deeper truth here. is the we're seeing trump administration will reduce the relationship with china. st the relationship with china. we absolutely entering uncharted waters. >> we can reboot but china can
respond. right now there is a truce between china and -- let's say china says where go to knock off 10 of those china sayo knock off 10 of those countries, get 10 of those countries in latin america primarily to recognize china versus taiwan. that is a major blow to taiwan and that will be on trump's shoulders. so what are we going to do? if we have not thought about the repercussions it is very dangerous. scarlet: what does this mean for other countries in the asia-pacific? japan, korea, singapore? >> the biggest take away is this significantriod of increase in uncertainty for those countries as we try to interpret what exactly the policies of the trump administration will be for the region. it looked at the individual countries, the country that has gotten -- been the most successful is clearly japan.
the first meeting of a foreign head of state would trump. i think that was a huge success. about the more potential ramifications of conducting foreign-policy this way. haveorld looks to us to clear commitments to both our allies and our potential antagonists. what happens when the world perceives us as not necessarily sticking to what we has said in the past? >> we don't really know. the world for the last 70 years, particularly big chunks of asia and europe, have existed under an american security umbrella. america has never had a large enough military to enforce every commitment. so it is the belief that the united states could and would keep its commitments -- if trump is saying we may or may not on of those types of commitments, whether to our allies or adversaries, that is
putting us in a very new world. if our adversaries or allies believe that is the case, then we're going to bed -- to go back to the spouse of power world that existed before the second world war, and we know how that ends. he is not on campus in the field for potential secretaries. the secretary of state will have a very difficult job. they are trying to manage is to work relations. the state department is dedicated to massaging these very long-term relationships. if you have a president-elect or president who is lobbing bombs at 3:00 in the morning, that is a very difficult situation. the good news is somebody who i have a tremendous level of respect and trust for, jon huntsman, has entered the list of potential candidates were secretary of state. having someone who understands asia, china, taiwan as well as he does, particularly if this
he was standing trial for killing a 15 euros after stopping in -- in oakland, california, authorities now say 36 people died in a fire at a warehouse dance party. firefighters expect to find more bodies in the ruins. up to 100 people may have been inside when the blaze erupted. it is the deadliest fire in the country for more than a decade. in north carolina, the governor has lost his bid for reelection. today,eded the election leading the way for the democrat to be declared the winner. up.omes after appeals dried in france, the prime minister will run for president in next year's election. inwill face other contenders
the socialist primary next month. he says he will quit his job tuesday in order to focus on his presidential bid. last week, president francois hollande said he would not run for reelection. news 24 hours a day powered by more than 2600 journalists and analysts in 120 countries. this is bloomberg. joe: we're back with jamie, senior fellow, and nick. we talked about the trump, taiwan, china stuff. how is this being perceived internationally? taiwan this is obviously a big victory. the president came into office reform. hopes for she needed a boost, thickness we very well received. neededt: her approval --
wil be, i think it very well received. this is a big win. joe: in china we have not seen much of a reaction. it seems like it has been muted. do you expect to see more of a reaction from the chinese government or do you expect them to wait and see what develops? >> it has been muted so far but there has been an escalation over the last couple days. there will be pressure on the chinese government from their own nationalistic bloggers and others to respond. we should keep in mind, china is an extremely strategic international power. they have been waiting for opportunities for the united so that theyp up can take some steps and the world would say all right, they were provoked. as i was saying before, if we are taking these steps, if we are poking at china and we do
not have a strategy on how we're going to respond when they respond, that is a very, very difficult place to be. i am sure there are a lot of meetings happening right now in beijing on how to manage this process. >> i completely agree. china is entering its own period of political transition. there is a massive turnover coming up. there is a line of thinking that this is an opportunity for xi. it also might leave him vulnerable. he probably does not want a big follow-up with relations with the u.s. at this juncture. >> he does not but he cannot look weak right now. he is breaking a lot of eggs in china, particularly anticorruption. the worst place he can be is being soft on a core nationalist issue like taiwan. i think there will be a lot of pressure on xi to see tough and strategic.
donald trump in same ways is the same. he campaigned as a strong man. in retrospect he made a mistake. he keeps doubling down. everything is getting stronger. if there is a situation of escalation and counter escalation, that will be bad about the united states because china cares more about taiwan than the u.s. does. scarlet: give us an update on where xi stands? they once advocated for independence. since then, they made their position more nuanced. not seeking outright independence from china anymore. >> i think we can say expectations when he was elected were quite negative. the xi team did a better job than many give them credit for.
i think it is still on a negative trajectory. joe: what does this mean for areas where the u.s. would like to work with china say on north korea or theoretically climate change? >> the united states, there are people on the trump team saying we will get more leverage over china is our relationship with taiwan is variable. at the same time there are a lot of things we want from china. we need interesting for help with north korea. on the south china sea the united states is saying that we're going to happen tougher line. but china has a lot of cards to play. china has friends in the region, maybe not as close as the united states, but china has a lot of leverage and they are going to use those leverages if they see the u.s. being more aggressive. it means we need to be thoughtful on how to do it. scarlet: the trump
administration has not even taken office but it is set the tone. what kind of secretary of state would be best positioned or who would be the best person to navigate these waters? want someone who has significant experience with the china relationship. this is the most important bilateral relationship in the world. that is think it's a key criteria. -- think is a key criteria. joe: thank you both so much for a great conversation. scarlet: coming up, upending diplomatic relations, is it the worst case scenario? this is bloomberg. ♪
2016 was donald trump in brexit, but there might be a lot more in store next year for people to worry about. helped put together a pessimist's guide to 2017. i feel like people are already pessimistic about the state of the world, and now you have written us a public guide on how things can get even more crazy. let's start with some of them. you're talking about china from it -- one is a trade war. >> they're not necessarily thinkingns, but through the risk implications of next year. we have looked at the idea that donald trump could launch a trade war with china via twitter . joe: i laugh but it is not that funny. >> is very nearly came true last
weekend. the scenarios are supposed to get people to think outside the box, but it is close to reality. joe: always scary when he things that are supposed to be crazy aren't so much. scarlet: the u.s. could get distracted and not deal with something like north korea, which is a looming threat. idea that the north korean regime might be a lot closer than people think to not only miniaturizing nuclear war but fitting it on a missile that could hit the west coast. that could play into trump'sw hole china policy. joe: not to make light of it but don't the rockets usually go one mile into the sea? speculation in south korea that they might be closer to it than you might think. if you are the president, do you really want to take that risk? we just saw a graphic
on how that might unfold. you have in the middle frame, islamic state -- explain that. >> one of the ideas we explore is this idea of america retreating from the world. talking aboute islamic state in afghanistan. they could perhaps choose to tap into the drug moneymaking machine there. that's another thing -- a possible scenario. joe: another scenario you have, you call -- >> this is looking at eastern europe. angela merkel, for decades, western europe has been relying on america's nuclear shield or military shield to expand the west influence into eastern europe. this is been the case is the berlin wall. imagine a scenario in which donald trump carries through a threat that the u.s. might
withdrawal some of its support for nato. he talked about that, and that could put angela merkel in a tough position. -- orou have to decide would she learn to deal deals with russia. we can see a reorientation of the politics of eastern europe just like we saw after world war ii. we also have elections coming up next year in the netherlands and france. we very well could see populist win again. >> it cannot be ruled out. look at the u.k., a lot of potential there. theresa may appears to be in a strong position. but the government is completely divided over brexit. so there is the possibility that
her position might not be as strong as it might seem. polls, if you the believe them, the party is doing well. scarlet: what will be the straw that breaks the camel's back in terms of breaking up shenzhen? >> another refugee crisis. if you look at the euro, these getive pillars -- if you a government that is fundamentally opposed to these pillars, that could be the straw that breaks the camel's back. joe: fascinating study. frighteningly plausible. scarlet: up next, brothers release which earnings before the bell tomorrow. we will discuss if mortgage rates -- this is bloomberg. ♪
nina: i'm nina mullen does. let's get to bloomberg first world news. in charleston, south carolina, a whiteal in the case of a police officer charged in the shooting of a black motost. the jury was unable to unanimously agree on a verdict slater, charged with scottg 50-year-old walter a brokenpping him for tail light. president-elect donald trump met with former vice president al gore in what gore said was a
lengthy and productive session. mr. gore: i found it an extremely interesting conversation and to be continued. i'm just going to leave it at that. thank you. gore sat down with a bronco trump, reportedly to discuss lima change. ivanka trump,n reportedly to discuss climate change. engineers in the army corps of engineers refused to grant an easement that would allow a pipeline to be built on the lake. the standing rock sioux tribe said it would threaten their water source and disturb cultural sites. donald trump supports the project and says the decision will be reviewed. matteo renzi's resignation -- voters overwhelmingly
rejected a referendum he called to push through constitutional reforms. -- ends i euro five star movement wouldar gain power if there were an election held. wednesday marks the 75th anniversary of japan's attack on pearl harbor, which pulled the u.s. into world war ii. global news 24 hours a day, powered by 2600 journalists and analysts in more than 150 countries. very much, nina. the dow jones closing at yet another record high, the s&p 500 also finishing up for a second day. themakers and miners led gains in europe, and this was even after matteo renzi's referenda did not go his way . -- joe:body cared
nobody cared. nobody cared except for italian bank stocks. earlier on bloomberg daybreak americas, olivier blanchard, the former chief economist of the about the signals from italy's referendum results. >> it seems to me the signal from the results -- not the fact they did not win, but the 60/40 outcome signals deep issues in europe and italy in particular. >> the market is nowhere near where it was 2012. what would be the recipe, the circumstances where we would see a repeat of the european sovereign debt crisis we saw in 2012? isi think the form it takes there is again a lot of unhappiness.
that is what we saw with the referendum. it's not only a lady. it's elsewhere as well. -- it's not only italy. slightly different reasons. there's a good chance you will get populist governments elected. in italy it's not an impossibility. other countries, it is not either. these countries will go with policies that do not make much sense, which worries markets. markets start putting a large price on sovereign bonds, and in some states, there is a crisis. the issue is how is it resolved? is it resolved through restructuring? is it resolved through exit from the euro? we are likely to see revaluing over the coming years, not just the coming weeks, but coming years. >> is the eu itself in it as exempt stole -- existential situation?
>> you have to distinguish the european union -- which i think will stay, is a fundamentally sound construction -- it has to work out how it operates. there are improvements to be made. that will remain. the euro is a technical construction where the cac onstraint is the common currency. this may disappear or apply to a much smaller group of countries in the future. i think we have to separate the two. separate the do we two? it's an important question i think. they will remain in the eurozone, but the euro will be gone. how does that happen? >> they can get rid of some arrangements and take care of the rest. clearly, it will be a very complex and messy process. but you can keep all of the rest
-- which is single market, freedom to move from country to country, the uniform is nation of values, rules -- all of this you can keep. getting out of the euro individually or together is an incredibly complex task. jonathan: that's the destination. let's talk about the potential journey. in the bond market, the eurozone debt market has been heavily insulated by the european central bank. what would be the conditions to lead to an exit? take italy. it's not in the constitution for them to have that kind of referendum. how do you see a eurozone exit taking place? what is the pain trade? what is the price is not the bond market? >> the institutions can be adapted to the circumstances. i think the most likely scenario is in some countries it looks as fiscal situation is not
under control, the government does not seem to be willing to do what it takes -- the country has to go into a program with what is known as the stem and maybe the imf program is put in place, maybe it works, maybe it doesn't work. have a point, we discussion which took place in the context of grease behind the scenes, comes back into play -- is this going to work? re: going to get going? if not, maybe there should be a plan b. kind of scenario i envision. which country will be affected by it? i'm not sure it would be italy. some of these countries are already struggling. they have an undervalued currency, they have done in enormous things, and there is the potential for populist governments to come to power. i think this is the kind of scenario i envisage. joe: that was olivier blanc
chart, former imf chief economist. scarlet, you're looking at u.s. housing? scarlet: yes, we have a spike in mortgage rates. we saw the purchase of new homes at a four-month low, while the fixed rate fell. what does this mean for homebuilders? let's dig into toll brothers in today's the numbers don't lie. according to freddie mac, the 30-year fixed rate is at its highest rate since july 2015, closing in on four point 1%. the sudden spike in borrowing costs may have a dampening effect on the prices of new homes. those are the yellow bars. existing homes are the orange bars. new homes of bounced back on the financial crisis, but new home shoppers are likely to reduce the amount they spend on options and upgrades and that trickles down into the economy. toll brothers customers are not your average homebuyer. they are less sensitive to
interest rates. they are the biggest u.s. luxury homebuilder and its buyers tend to be more financially secure. 22% of toll brothers buyers pay in cash. 80% put 30% down. yet its stock is one of the worst performers and the home-building sector. the first barll, there, rose 4% today to make up losses, but still very dismal -- pretty dismal returns. because of that price drop, toll is trading at a discount compared to its peers. that could present an opportunity for value investors. in a previous quarter, toll delivered 1500 homes with the average selling price of $843,000. all of these numbers reflect the growth income we have seen come back since the housing collapse.
the question is whether they can sustain growth in the face of rising mortgage rates, as well as uncertainty from the incoming white house administration. we will be tracking the results before the opening bell on tuesday. joe? coming up, donald trump has chosen ben carson to be the secretary of the department of housing and urban development. the latest on trump fell cabinet is next. this is bloomberg. ♪
ben carson has accepted donald trump's offered to become his secretary of hud. enzi pelosi says that he does not have the credentials to have with consequences for families and communities across america. we are joined by our white house editor. so, ben carson -- what is the story here? what's the deal? >> a pediatric narrow surgeon, what more credentials do you want to run an agency responsible for billions of dollars in housing subsidies? joe: i want to go through a few tweets from donald trump about ben carson during the campaign. ben carson has never created a job in his life -- maybe a nurse. i created 10,000 -- tens of thousands of jobs. it's what i do. wanted to hit his mother in the head with a hammer. don't people get it? and
finally, the carson story is either a total fabrication or -- i'm-- even worse sorry, i can't get through all of these. this matters, right? pretty much anyone can be named for anything. we can probably find a lot of these equivalents, right? >> he is going to name a bunch of his former opponents to jobs in the administration. obviously, people do different things and campaigns once they get in office. even now the relationship between president barack obama and donald trump has changed significantly. they were at each other's throats all last year or all of this year, i guess, and now they are talking regularly about how to be president. at scarlet: there were reports initially that ben carson was reluctant and did not want to take the position. do we have any sense of what might have pushed him over the edge in terms of accepting this position in the end? at one pointe said
-- maybe it was through his spokesperson -- he was not qualified to work in government. scarlet: that was the quote. think that was through a spokesman, not ben carson himself. i think in this case, when the president-elect asks you to serve your country in any capacity, you consider it and you probably take the job, especially if it is a cap net position. alex, speaking about appointments, we are still waiting for the big one, or one of the big ones, secretary of state. at a report over the weekend that the search has expanded. he's talking about jon huntsman or maybe a former ceo of exxon. mitt romney, who you have said if he is nominated you will pay as each a dollar or your hat or something, where is this now? >> i think i get to keep my dollar. romney is not going to get it. it looks like romney is out of the running.
apparently donald trump did not like the candidates he had in front of him, so he expanded the pool. you mentioned the exxon ceo is coming in. jon huntsman has not been scheduled for a meeting at comes our yet, i don't believe, but he is another name on that list. that would surprise me a little bit because he was president obama's ambassador to china, so that would be a funny promotion. he would be extremely qualified to be secretary of the other names floated before. >> i can't argue with you there. scarlet: there were reports that donald trump looking for cabinet position says he is looking for people who look the part. can you explain what that means? >> i cannot. scarlet: part of it was mitt romney looked the part of a secretary of state. in that context. >> yeah. i don't want to get into donald trump railhead too much. 's head too much. if i were a cynic, i would think
that he thought mitt romney looks the part because he's a fairly handsome white man, i guess. i want to think better of my president-elect and think he is something else in mind. i don't know what he meant by that remark. talk about trump's use of twitter to make news. obviously there were the china tweets over the weekend, then more tweets about the aftertionist stuff, going manufacturers, another manufacturer in indiana. what do other republicans in d.c. feel about this question mark are they saying, that's donald trump, that's what he's going to do? are there deeper misgivings? about hise thing tweets, when my phone buzzes at 6:30 a.m., i'm pretty sure what is happening right now. republicans, along with everyone else in this town, are still trying to wrap their brains around how this new government is going to operate. he appears to be prepared to use social media in ways we are not
used to. the platform has not been available before president barack obama, but donald trump appears to use social media as a primary means of conversation with the american public and may be policymaking. in my job, i'm going to have to pay their he close attention to donald trump felt with her feet for the next four years. joe: do people expect him to be tweeting in the same capacity? he will get a secure phone specifically designed to treat safely? ll he well inherit -- he wi @potus, but that has a lot fewer photos then @realdonal i think he will keep tweeting from his own personal handle. joe: thank very much. scarlet: coming up, we will be hearing from the founder of the
closer to the markets. we will be talking about uber just buying a new artificial intelligence startup to uberrate aim to the platform, first to potentially improve the matching of drivers and riders, improve delivery routes, integrate speech and recognition software. we will be talking to our uber reporter about that. we will also be touching on the mobile game that is giving pokémon go are run for its money to me out of sunny. -- for its money coming out from sony. breakthroughed the .rime ceremony this was founded by mark zuckerberg, yuri milner, sergey to fund an award breakthroughs in the sciences, as opposed to technology -- all
of these people know how money can empower technologists. they want to do the same for science. i got to sit down with yuri milner. we will be bringing you those interviews. aboutt: let's hear more what yuri milner had to say. what did you learn from him? emily: so, yuri milner, fascinating guy, from russia originally, a physicist himself. one of the first investors in twitter and facebook. i tried hard to get him to share his thoughts on the election of donald trump and diplomatic issues between the u.s. and china, the u.s. and russia, and he deferred on that thing he's not a policy expert, but one thing he knows, the forward march of technology cannot be stopped by a single election. we talked about what this means for the global economy, as specially the -- especially the global tech economy. listen to what he had to say. we have $12 billion
of value created, 25% in china, and then the rest in the rest of the world -- my prediction is in the next 10, 20 years, this trend will continue and many more trillions of dollars will excitingd in this space. so, i'm not good at short term predictions, what's going to happen next year, but i would bet the next 10, 20 years we will see a lot of value coming out of places like silicon valley, beijing, tel aviv, london, bangalore. milner, a guy with very lofty ambitions. he is spinning about 40 5% of his time and funds in the night of states. of his time and funds in the united states. he spins very little time in russia. he recently contributed a hundred million dollars to find
extraterrestrial life. he believes it is possible we will find extraterrestrial life in our lifetime. joe: tech stocks have underperformed since the election and there are no tech at ceo's on the job counsel donald trump has put together. what is the perspective out there for how things are going so far? i think silicon valley is the warming up to the idea of president trump. silicon valley was very vocal about their lack of support for trump. i spoke with the ceo of 23 and me, who supported hillary clinton very she was very optimistic, very wait and see. her company, a genetic testing startup, could potentially be very affect did by the policies -- affected eye the policies of a trump association with comes to drug prices, funding for science and innovation, and the affordable care act. take a listen to what she had to
say. >> the benefit of the affordable care act is there are millions of americans saying, wow. it is great to have health care. be harda doubt it would -- people want those benefits. people want to feel empowered to take charge of their health. i'm open-minded, but i know once those people have gotten their health care, it's going to be hard to take it away from them. emily: -- scarlet: and she will be on "bloomberg technology" with emily chang a little later on. you can get more of the top tech headlines on "bloomberg again airing now at 5 p.m. eastern time, 2 p.m. pacific. to: coming up, what you need know for tomorrow's trading day. this is bloomberg. ♪
met with president-elect donald trump and what gore said was a very lengthy and productive session. was am what gore said very lengthy and productive session. in a victory for protesters, the army corps of engineers refused to grant an easement to allow an oil pipeline in north dakota to be built under a lake. these standing rock sioux tribe and its supporters argued it threatens their water source and -- culturalhts sites. a mistrial in the case of a white former police officer charged in the shooting of a black man in soft. the jury was unable to unanimously agree on a verdict by michael slater. cell phone video taken by a bystander sparked national outrage. the death toll from that massive leis an oakland this weekend has risen to 26. firefighters expect to find more bodies in the ruins of the warehouse