tv Bloomberg Daybreak Americas Bloomberg December 16, 2016 7:00am-10:01am EST
.his friday, december 16 i am jonathan ferro alongside david westin. futures positive up 34 on the dell, up three on the s&p 500. in theyear it has been fx market defined by king dollar. move somewhatthat today and the bond market continues to move firmer -- trade firmer. david: here is what you need to know at this hour. the dollar and stocks taking a paz as the federal reserve shifted -- after reaching the highs in 13 years, and the yield on 10 year treasuries snaps a six day winning streak after .eaking at its highs since 2014 an exclusive interview with jpmorgan ceo jamie dimon why he
is not in donald trump's cabinet and how he thinks public policy should be made. verizon's deal with yahoo! could be put on hold after the latest hacking scandal, and the phone giant could have its sites on another potential media deal. jonathan: some of the moves last month captured by this chart, 10 year treasuries versus the bloomberg dollar and each one keeps moving north. are we in nosebleed territory? abramowicz and david bianco to join us to discuss the dollar, making a shift high yesterday. the bond market is interesting to the treasury curve balls over , the yield curve flatter. what is the message? lisa: the faster the hikes the slower the growth. people are talking about how it is good for the banks that you
are getting a higher yield curve but we are not getting that necessarily because of a fed hike and a faster pace next year. it is the exact opposite move you are seeing in the u.s. versus japan and europe, and this is something to watch. jonathan: a steeper yield curve, the banks are great. it rolled over a bit. david b.: there is a lot of things going on for banks. they should be a big beneficiary of a corporate tax cut that i at a, as the fed hikes faster pace in 2017 and 2018, i expect a flattening curve. do you expect of the u.s. dollar? it is way up there, touching toward record levels. david b.: it is hard to fight this trend. we are talking about the fed beginning to do a more proper hiking cycle particularly in
2017 and 2018, and there are troubles in the other part of the world. parity on the euro has got to become a base case. lisa: when we were talking about a flatter yield curve, how long can the dollar continued to strengthen if you have that kind of dynamic? david b.: i think the dollar is largely going to give it around short -- pivot around short-term rates. it is likely you get the stronger dollar from here and that should contain inflation expectations which will help to keep the 10 year treasury yields under 3%. jonathan: the market is getting away with itself, the euphoria on wall street. i heard a quote from santander, the dollar just saw a win-win, it cannot lose. or atb.: in the past least in recent years the equity market would take caution on a
stronger dollar. right now it is not hurting the equity market at all and i think the reason is tax cuts, fiscal stimulus, this reaction in the rates and currency market. the equity market to climb higher, we need to see signs of legislation saying we will need -- get a corporate tax cut. david: there has been a rotation from debt to equity. does that mean the bull market is over? lisa: there has been some rotation but a lot of pension funds and insurers are assessing their compositions and allocations right now. the are not going to make that shift until early next year, so whether we have seen the bulk of that shift is unclear. a lot of people have been underweight, equities in their allocations and bond stock. there is a question of whether people will shift their overall
allocations. to my knowledge it has not happened yet, and a lot of money managers say it is too early. we need to wait until we see legislation. jonathan: we are talking about a cyclical story and a recalibration of that. have a look at where we have come. lisa: it is over. thethan: if you go to 1980's, nominal yields getting crushed and the banks turning -- starting to target inflation. the debt overhang, demographic issues in asia that have come up in the developed world. we have this central-bank stimulus. fine that the central bank stimulus is over what the structural issues remain. lisa: i think that is the main issue and the main tension right now. people are saying we need to get back to a more normal yield, yet earlier this year for saying this may be the new normal. this may be, faced on what you
are saying about the structural issues and aging demographic, maybe this is where yields should be. how come people are throwing that out? david: it is the end of the year. i much of the markets are being affected by the people telling us about their books at the end of the year, and how much is a longer-term trend? david b.: i think a lot of people are optimistic until the end of the year. i think the right range for the rest of this year and early next year is about 2250 to 2300 on the s&p. when the dollar stabilizes and on the tax legislation, but i think a big enigma next year will be around normalized interest rates. we have seen this for a while on long-term yields that the new norm is still much lower than history. david: thank you to lisa
abramovitz and david bianco of deutsche bank. on what isn update making headlines outside the business world with emma chandra. obama issident promising to act on the cia conclusions that russia interfered in the u.s. presidential election. he spoke to npr. president obama: there is no doubt that when any foreign thernment tries to impact integrity of our elections, that we need to take action, and we will at the time and place of our choosing. explicit andy be publicized, some of it they not be. will holdident obama a news conference before heading to hawaii for christmas. that is that 2:30 p.m. eastern time. bailout auditors have
completed their recent round of talks in greece after raising significant concerns. the prime minister is pushing expensive social programs and that is threatening the bailout that kept greece in the euro area. choice of u.s. ambassador to israel may signal a shift in u.s. policy. lloyd david friedman opposes the two state solution with palestinians, and he said trump may support israel seizing parts of the west bank, although he backed off of that. global news 24 hours a day, powered by our 2600 journalists and analysts in more than 120 countries. i am emma chandra. this is bloomberg. jonathan: as we count you down to the cash open in new york, futures are firmer and we are about 148 points away from the 20,000 point milestone on the dow. let's cross over to abigail doolittle. abigail: we do have lots of health care shares on the move, starting out over in europe.
we have the shares of center up. -- sanofi they are closer to buying actelion in advanced talks and they are said to be close to share,g on $275 per representing a premium of 25% or more from where actelion is trading now. in the u.s. we have shares of gilead sciences trading lower after the company did lose a patent verdict to merck for $2.5 billion, over the hepatitis c franchise. franchise andest the biggest patent infringement case in u.s. history, gilead saying it will challenge the ruling through the appeal process. for the banks, mixed trading action. they are trading higher after the federal reserve said it banks are $70 billion -- big
banks are short in a bailout cushion. this comes as president-elect trump vowed to break these regulations. david: coming up, wall street to washington. an exclusive bloomberg interview with jpmorgan ceo jamie dimon. what he'd take a position in the trunk administration? why he did not want to be the treasury secretary and what he thinks of the choices so far. ♪
up 33 on theirmer, dow as we approach the 20,000 mark. for the euro, they are raising the losses for the 20 16th. in the fx market, dollar dominant. we finally break the line in the sand of the spring glow of 2015. we retraced some of that movement this morning, up 4/10 of 1%. a weaker dollar story. 10 year yields a little lower by 10 basis points. in the equity market we are flirting with all-time highs on the dow. on the s&p 500, we will check out this chart. the strategists are charged it -- targeting -- our guest of deutsche bank, our chief equity strategist has a year-end target of 2400. north of the median. what is going to take it there? david b.: the corporate tax cut.
i think investors in the new year are going to be hungering for details on this tax package, even in the first several months. whether the s&p gets over the 2300 or we revisit something under 2200 next year depends on how the legislation starts taking place. jonathan: you have your forecast with this asterisk. how do you make the calculation? you have the official or per tax rate signed into law and then you have the effective tax rate. david b.: that has been the question for the past few weeks. we have been talking about the u.s. statutory rate having a 10 point cut. 60% of s&p profits come from the united states so we are arguing there should be a six point reduction in the effective tax rate from 28 to 22%. that next the s&p go from keeping 72% of its profits to
78% of its profits. david: in that effective tax rate you also have to take a look at how they're are going to pay for the tax hike. they are talking about things like eliminating the interest reduction so that might make a difference between companies whether it flows to their bottom line. david b.: the 25% corporate tax that if helps us argue there are things like a loss of deduction, you will probably get a lower tax rate. i still think you get a net benefit of 10 bucks under almost all of the major scenarios proposed. figuring out who the winners and losers are is more difficult. i think in the end because of the complexity from interested actions and border taxes, they will find they need to keep it simple and drop the tax rate in line with the oecd average. it is not going to be revenue neutral in the first few years
but over 10 years i think it could be. jonathan: x tax rate cut, what is it? david b.: i think he would have the s&p at 23 hundred by the end of 2017, even with the risk of a good 5% to 7% decline. jonathan: in this market, the s&p 500 maybe less so than the dow, is euphoria around fiscal stimulus. how much do you pay attention to that and what is the likelihood we get it in a significant way? david b.: the infrastructure spending and tax cuts are all part of this package. i think the corporate tax cuts are most important. there's excitement around the infrastructure, and you pick your number. we talked to investors and point -- a year u.s. does of infrastructure spending. below the overall topline
number, differentiate among sectors. who are the winners and losers? david b.: earnings will be $119 in 2016. in 2017 one of the areas of growth should be the energy sector. that should add six dollars to s&p earnings by itself taking it to about 125. excluding energy and financials and before the tax cut i am expecting 5% earnings growth. that is the same 3% to 4% sales growth and flat margins. jonathan: we have had a huge adjustment over the last months. where do you think on a sector basis? david b.: i think the sectors that are about reflation or aggressive cyclical look -- rotation, energy, industrial materials, this infrastructure enthusiasm i think is overblown. i am underweight and find myself
bearish despite what i think would be a rising market overall. i agree there should be an excel and improvement in profits, and financials, we still see an upside, and health care is not to be ignored given the strong structural trends. david: you think they are not fully valued? david b.: i think health care is a good 20 plus percent undervalued. there are a very domestic sector and they should get a 10% to 50% boost from the tax cut and earnings. .avid: that is david bianco it is the largest hack in history. 2000 13 oneling in billion users have their account illegally accessed. what does it mean for verizon's deal? could it cost yahoo! $1 billion? ♪
david: this is bloomberg. i am david westin. bloomberg reported verizon is taking a hard new look at its deal to buy yahoo!, and one opportunity was taking a billion dollars off of the purchase price. might verizon want to take the opportunity to get out of the deal altogether and go hunting for bigger game? joining us is paul sweeney. welcome back. what did tell her reporting on what verizon is thinking about at this point? paul: i think the hacking scandal that got is closed a couple of days ago is a real problem for yahoo! in the sale process. if nothing else it is going to give verizon the opportunity to come back to the negotiating table and really look long and
hard at the books once again of yahoo!, to determine whether they are seeing any decline in their user base which would drive profitability and value for the company. it might be difficult for verizon to walk away, although that may still be on the table. i think what is more likely is verizon will come back with yahoo! and renegotiate the terms of the deal potentially including price. david: it does raise the specter that verizon might want to look for larger content companies to acquire. is that in the cards jim and what is going on with time warner and at&t and to some extent 20th century fox buying sky? paul: we have seen a big pickup in m&a in the media business across the world. if you are verizon, it's video strategy has been one based upon video in a mobile context. they bought aol. they are looking to buy yahoo!
so they're really looking for online video in a mobile world to pair up with their mobile usage. the world has changed for verizon and others in telecommunications and media with at&t making that huge deal for time warner. it would not surprise me if verizon was actually sitting back and thinking about strategically, is there video strategy, aol and yahoo!, is that the best way to go or do they need to think about something bigger on the content side? jonathan: help me understand what is happening within verizon at this minute. i assume the integration team would carry on bringing verizon in led by tim armstrong. how do you do that with this office having a conversation about maybe killing the deal? problematick it is for verizon because one of the things they have to question now with the second disclosure is what really are the controls, the security controls at yahoo!?
what else could potentially be out there that once viacom buys this thing will be viacom's liability. it is the unknown that is probably also causing a lot of concern within verizon. they can probably get a handle on what the economic cost was of these hacks but the question is what else is out there. david: when you talk about other possibilities in the media, we talk about big content companies. moonves.n with les wouldn't it be of some interest to buy them? he did not rule it out. listen to what he had to say. >> i can imagine there are plenty of people out there, especially when you see at&t paying a lot of money for time warner, a company like us would be very valuable in the open market. they weredid not say
for sale and i asked if there were any discussions, and he said he was not going to talk about that. what companies are of interest to cbs besides ryan -- verizon? paul: we think there will be consolidation on the content side of the media business following a period of amc,lidation on the -- there are a lot of smaller and midsized content companies that are probably thinking about how do they fit into a consolidated media landscape. to the extent that they are may be open to discussions, that might be an opening for verizon should they decide to change their strategy and follow a little bit what at&t is doing. david: that is paul sweeney, bloomberg intelligence director of american research in london. this is driving it all, video on your phone. it is changing the entire world. jonathan: can you imagine being
at verizon right now? david: tim armstrong has wanted this deal for years and it has to get this deal. the fact it might get pulled back could be painful. jonathan: next up on this ceo jamiepmorgan dimon, what he ever want to be the treasury secretary? and what does he think of the washington landscape? we are about 148 points on the dow away from 20,000. futures positive 39 points on the session. s&p 500 futures positive as well. this is bloomberg. ♪
the greenback fell against the euro after reaching its 13 year high. wall street to washington, and exclusive bloomberg businessweek interview with jpmorgan ceo jamie dimon about why he is not in donald trump's cabinet, why he is surprised who is, and what he thinks about the policy position. -- the yahoo! deal could be on hold after the media hack. those -- how are those stories captured in the market? positive four on the s&p 500. the stoxx 600, euro stoxx 50 very close to closing and erasing all the losses for 2016. in the fx market, dollar dominant, the big casualty the euro.
down by abouts two basis point. it is like taking yesterday and turning it on its head. david: it is intraday. should not get quite -- we should not get too excited. j.p. morgan chase committed $100 million to help detroit's recovery, focusing on jobs and rebuilding communities. it is beginning the turnaround to detroit. bloomberg businessweek editor megan murphy interviewed jamie dimon in detroit and asked him about where he sees opportunity around the world. if you travel around the world, singapore does it. it was part of malaysia when it formed. in withminister came the same kind of vision and strength to get it done.
it's gdp is now higher than the gdp of the average american. the prime minister is pretty tough. he made them all in english. he made sure the streets were clean. they have a lot of affordable housing. he made sure that you could not an indiane was not building and malay building and chinese building. he desegregated. he wanted them to know each other's kids and smell each other's food. if you put some of my liberal democratic friends in singapore it will still be on backorder. you cannot force people to live they want to live. you cannot punish people because they spit on the streets and you cannot make people learn english . we have to think about policy, what works and what does not work. i mentioned germany's vocational schools and they are doing well in europe.
you learn these things when you go around the world about what works and what does not. argentina,ecuador, cuba, north korea, what did they do? popular is him, and the ones that worked. south korea, no natural resources, unbelievable story. i am not going to go on and on about what works and what does not. i worry about bad public policy causing constant damage. in america you keep on hearing productivity is low. secular stagnation, a new normal. it is just not true. we have had multiple wars. kids, not educating our government shutdowns, failures in the health system and extreme amounts of regulation, that is why we're going slow. it is not the economic model. people are looking for simple
answers and sometimes there are not. all of these things are fixable. david: we have with us the woman who conducted the interview, i get murphy. i must -- megan murphy. come panel -- comparing donald trump to leak one you, -- le kwan yu, i have never heard that. the point he comes to time and time again is that to and progress in america other western democracies were received problems like slow economic growth and a rise of populism, is the failure of policy. he does talk about that quite a lot, and if you can cut through the partisanship that has divided washington and our political system, that is leading to bad policy decisions and that is really what needs to be fixed. fard: it does not seem that removed from what people voted
for in donald trump. it is much as partisanship, it is bureaucracy. are the trump people prepared to deal with bureaucracy? megan: when you look at the cabinet he has formed, rex tillerson as secretary of state, what are theset executives bringing to the board and how will this shape if we are able to cut through this red tape and make some difference. i have been surprised, not just talking to jamie dimon but other senior executives throughout wall street, is how positive they seem to feel right now about what they are seeing from the trump cabinet. there is questions in particular about russia and rex tillerson's ties. people feel like, give these people a shot you'd it is an entirely new cast of characters. david: we want them to succeed, but at the same time, rex
tillerson never has dealt with the civil service. he can fire people and higher people and give them bonuses and shut down operations. it is harder running a big department. megan: that is the same thing with the economic council and having a business mentality to people who are used to working in a government situation. it is a different mentality. i think with rex tillerson, we know a lot about how he has struck deals and he worked internally with exxon mobil's quasi-state department that i got political risk assessments and are evaluating these issues -- where they got political risk assessment and are evaluating these issues. murphy.hanks to megan see more of jamie dimon next thursday, the full interview on bloomberg tv then. it will be featured in the
bloomberg businessweek good business issue coming out next week. jonathan: how is the politics shifting and shaping the fx market? euro-dollar parity, we played .his game last year the fed was going to have a series of hikes and the euro would just roll over. as we head into 2017, some political risks on the horizon. what does this mean? joining us is james foley, head -- jane foley, head of fx strategy. we do see it going down in the next three months and it could go there but we do not think it will be plunging beyond parity. we are dubious about the reflation story in the u.s. we have got uncertainty about what those policies will be. reason, wagectural
inflation is stuck around to and a half percent, that is much lower than in previous economic cycles. low inflation is something we see across the western world. look at australia, the lowest weight inflation ever despite the fact that there unemployment rate is relatively low. the other reason i suppose is the dollar itself. we look back to 2014, the second half we saw a huge amount of dollarthe other reason i supposs the dollar strength. that affected profits of many u.s. corporate's. they started to talk about that in the early part of 2015, and janet yellen at the start of this year around february admitted the strength of the dollar in the second part of 2014 was not something the fed had anticipated. what it did for the fed was its , iny lifting in the event 2015 the fed hiked wants. there is the chance -- hiked
once. then of course you get onto your , a huge amount of political risk -- onto your, a huge amount of political risk but we do not think the far right were populist governments will rule the roost. we think by the end of the year there will be relief for the euro. jonathan: spring 2015 was the previous low for euro-dollar and janet yellen said, she slapped the dollar back down you'd she had the opportunity to do that this week and did not take it. why do we assume she will do that in the coming quarters? honest, there are a few markers of uncertainty. trump may dow what in terms of reflation and fiscal spending and regulation. also we do not know what he will
do with respect to trade and isolationist policies. most economists would say isolationist policies could certainly counter some of the reflationary pressures that fiscal spending could put through. it is difficult for anyone, and the fed as well, to anticipate with those policies are going to do. if you look at the u.s. economy, it is near full capacity. we have seen unemployment come down quite a lot in the last two years. we have seen inflation ticked higher so i think the fed was probably right to be cautious on the outlook, but we do not believe on that reflationary policy as much as others. jonathan: earlier this year it was a market near obsessed with what was happening in china. the dollar rolled over as did the chinese currency. i charted it. it was a weaker yuan and dollar.
the yuan is on the white line and has been remarkably stable at a time that the dollar is higher. what are you looking at as far as the chinese currency? are you looking at dollar-yuan currencies?t of are you optimistic looking at the white line? think -- is trump going to name china a currency manipulator? all of that could happen and we know china is spending a huge amount of its foreign exchange reserve propping higher the renminbi. jonathan: jane foley, great to have you with us. sailing down the reserve and treasuries, some people thinking maybe that is one of the root causes in the back -- selling down the reserve and treasuries,
emma: this is bloomberg daybreak. i am emma chandra. ,oming up, jonathan bush cofounder and ceo. bloomberg. is i am david westin. donald trump continues to use social media every day to communicate his views to the american public but another part of social media is getting a lot of attention, the so-called fake news and the role it may or may not have played in the election. mark zuckerberg told david
kirkpatrick that the issue was overblown. >> i do think that there is a empathyprofound lack of in asserting that the only reason why someone could have voted the way they did is because they saw some fake news. i think if you believe that, then i do not think you have internalized the message that trump supporters are trying to send in this election. david: now we are hearing reports facebook is considering a range of new initiatives to address fake news in its feed. joining us is david kirkpatrick, the man who did that interview. has he changed his mind? david k.: i think he has been evil in his views rapidly because when you get that kind of push back as facebook has gotten, you have to pay attention. he has gotten global push back
and yes, his views are changing rapidly and he is taking it seriously and they actually used the phrase "taking responsibility is quote in their rhetoric. jonathan: there is a deference between accepting responsibility for the outcome of an election and acknowledging you need to do something about it. david k.: he was not taking responsibility for the outcome of the election but taking responsibility for the fact that fake news existed on facebook. i do not think they spoke can be blamed for the election of donald trump. some people even criticized him for that. there is a lot of reasons why donald trump got elected and i would say facebook is not the leading one. david: some people would say take credit. david k.: i do not want to be as partisan as i probably am. i actually think facebook is starting to recognize they have
a set of responsibilities that include this, but that go way beyond just the nature of the news on facebook. they are the de facto information platform for an increasing percentage of the planet and that is a radical new responsibility that no commercial entity has ever had. david: putting aside whether it affected the election, it affected hundreds of thousands, maybe millions of people have wrong information. potentially,blem not only for our society but around the world. david k.: it is not just on facebook but it is a big problem for facebook, because the scale of their information dispersal is bigger than any other platform. david: what can they do about it? david k.: they have a lot of ideas. they are allowing users to flag things they think by be fake and they are working with abc news and others to fact check. they are going in and checking
things that have been flagged by users, and i think it is a healthy step. it is very hard to do this at the scale that is necessary. jonathan: i do not think anyone assumes it is going to be easy. i need your help understanding why tackling this issue is so crucial for them as they evolve this business. david k.: it is because of their scale of influence. they are literally the main source of news for something like 40% of americans. theountry after country same thing is true so this is a global phenomenon. reiterate, no commercial entity has ever had that kind of influence at the macro level. the range of implications that has is wide. david: that is a part of social responsibility but also is there a commercial aspect? problemsas had monetizing what they have done because of the things that appear on twitter and
advertisers do not want to be associated. could facebook have that problem? david k.: they could, that one of the reasons their critics say they have not addressed this, they get a lot of ad traffic as a result of this fake news and that benefits them commercially. i want to make one last point. this is the issue in many countries, not just here. it is being said in italy, it affected the outcome of the recent election. it is affecting the rise of marine le pen and has affected the outcome of brexit. if you really think it is facebook then maybe you are not internalizing the message coming from some of those people , is zuckerberg's point. david kirkpatrick, great to have you on the program. how did he know? other stories making headlines outside of the world of business , let's get over to emma chandra. in --sent off the is
sanofi is in advanced talks to buy actelion. the agreement they be valued at $30 billion. they made their bid after johnson & johnson abandoned talks to buy the company. italy's struggling monte dei paschi has been given another chance for a government bailout. if the share offering succeeds, monte dei paschi can bundle about $30 billion of bad loans into securities and sell them to investors. boeing may be sending the president-elect a message about protectionism. they say the airplane sales to china support about 150,000 american jobs. china will by about a quarter of the planes boeing builds this year. trump has threatened to impose.
of tariffs on china, a move that could lead to a trade war. that is your bloomberg business flash. a couple ofming up, things in the diary for the traders. rising mortgage rates, what will they mean for housing stocks and building permits and mortgage applications? from new york, this is bloomberg. ♪
jonathan: from new york, this is bloomberg. i am jonathan ferro. in a little over 30 minutes we will get u.s. housing. the federal reserve bank of richmond president will speak on a panel of the charlotte economic outlook. with us is matt boesler. great to have you on the program. you have charted this. we have a big backup and rates.
what will it mean for mortgage applications? walk me through it. i find it interesting that during that taper tantrum the bottom in yields when it starts coinciding with the mortgage prices, he saw an immediate effect when the lower rates were affecting the mortgages. we have actually had a bit of a rise in mortgage purchase applications so we are not seeing that dynamic layout i would say the housing data going forward has become a little more interesting than perhaps because of the election because of this backup in rates and what it might mean for housing. jonathan: the more forward-looking berm -- building permits, is that what you would expect to see showing up first? matt: yes. in fact, it could be that consumers are strong enough now that maybe the higher rates will not put a dent in housing as much as it did three years ago.
certainly we are all waiting to see what is going to happen. jonathan: the central reserve, jeff lacher, three hikes on the table next year. how does this fed speak evil, all the dovesve versus the hawks? matt: the hawks got their rate hike and it seems the doves are on board for increases in 2017. jeff black lacher thinks rates should be considerably higher and probably has more than three rate hikes priced in for next year. it will be interesting to hear his thoughts on how the inflation change the outlook and if he sees a path to steeper rates. --athan: matt: yellen said in her press conference that a few
participants had incorporated fiscal projections into their forecast and some have not. you have this set of dots we got this week that is kind of all over the map in that regard so perhaps in march we will get a more unified sense of where things are going. jonathan: four became one this year. a choppy year for the fed, for sure. coming up on this program, jonathan bush plus anthony , number of donald trump's transition team. a 20 k watch on the dow, this is bloomberg. ♪
welcome to daybreak. i am jonathan ferro alongside david westin. in the market, we are on 20 k watch. on the euro stoxx 50, close to erasing all of the losses of 2016. in the fx market we look like this, dollars dominant yesterday and we retraced some of that move against the euro. take, yields come in two basis points. david: here is what you need to know. speedbump, the dollar and stocks taking a pause after the federal reserve shifted to a tighter policy path next year. on 10 year treasuries snaps a six-day winning streak after going higher than it has been since 2014. wall street to washington, and exclusive bloomberg business interview with jamie dimon
on why he is not in donald trump's cabinet, i he is surprised to is, and what he thinks of policies. the verizon deal could be put on hold after the latest yahoo! they couldndal and have their sights set on acre media companies. jonathan: it is the chart that action, the yields going higher and the dollar going with it. let's bring in richard jones in salinas.nd how just want to begin with you. we kept talking about the lying in the sand was previously 100 and we have gone beyond that. what are people saying? it seems to be the consensus trade that the dollar will push higher. the interest rate differentials will play in its favor and it
seems to be the consensus trade now, dollar will keep pushing higher and probably considerably. jonathan: consensus that the base becomes parity? thee have broken through lows of 2015 and we are closer to parity. the problem is for next year, how do you play that dollar strength? do you look for it in dollar-yen or and other classes which is where we would prefer to go question mark -- prefer to go? david: trees do not grow to the sky. what structural forces will limit the dollar cost upward path? -- dollars upward path? greater have expectations from the fed next year. if the fed does not deliver that tightening the dollar will suffer. theyederal reserve, when
came out this week they had three dots as the media next year but they are not factoring in much in the way of fiscal policy so it could go further. jonathan: there is some natural insulation in the euro. also and ecb that seems more reluctant to do even more from here. how will that shape things in a month to calm? richard: one of the points that also makes is positioning, and as this call it comes mark and, positioning will become more crowded. it always raises morning bells -- warning bells. i think the interest rate differential story is great as far as it goes, but we sat here last year and the fed said they were going to go four times in 2016, and they have only gone once. i am not saying history is necessarily going to repeat itself but i would not be surprised if the fed was not
nearly as hawkish as many people think they are or as hawkish as the dots say. part of monetary policy? is that what is driving this? it used to be the president and his treasury secretary would talk the dollar down. with that have any effect because it will hurt donald trump's ability to get done what he wants to get done? elsa: clearly a strong dollar will not help and the question is what if anything a treasury secretary can do. up until now there has been a strong agreement among g-20 members do not talk down the currency and let policy do its job. as you say, there are a lot of things that could influence the dollar next year and one is tax reform. some big upside risk from their. jonathan: on the rapacious asian , how -- repatriation story
do you really gauge what impact that could have? elsa: a lot of people have been saying this is not going to have an impact because this money is a broad and dollars. people said the same thing in 2005, a similar story. people were questioning whether it would have an impact and it did. you can see it in the price action with a dollar trend higher through 2005. jonathan: just looking at rate differentials, you talked about it. we are negative around 80 basis points on a two-year in germany. on two-year treasuries, what are we positive, 120 around that? that spread is informing what is happening with the currency pair . when is the currency pair start informing the spread? if you look at the stronger dollar story that influences the thinking of how much higher the yields can go because of how much the fed can actually do in 2017.
richard: it is a question of how far and how fast we go up in the dollar. if we get a sharp rise been that will start to figure into the fed's thinking as conditions tighten. up until now i think it has not get a problem -- but not been a problem but once we get a leg up on the dollar it could be. why are we going to get three hikes? elsa: we have unemployment below the fed estimate. we are really beginning to see inflationary pressures. the fed has been allowed to be patient because we did not have inflation and if that is changing we have to act faster. jonathan: the base case is dollar strength all over again. how do you play it? you have talked about the yen, but where does the heavy work it played next year? elsa: that is why we are getting a little more selective next year. dollar-yen has moved quite
significantly. long dollar-cap. .- dollar- cad jonathan: let's get an update on what is happening outside business. emma: president obama is vowing to retaliate against russia for interfering in the election. told npr the u.s. will respond at a date and time of its own choosing, and some of the response will be publicized and some may not be peered president obama will hold a news conference at 2:15 pm eastern time and you can see that on bloomberg tv and bloomberg radio. it may take days to evacuate all of the syrian rebels and families from aleppo according
to the red cross. rebels seized the eastern part of aleppo where than four years ago and syrian fortune -- forces have recaptured the city. russian president vladimir putin says it is time to end the " ping-pong" over the island russia sees from japan. he and shinzo abe decided to start talks. them frome has kept signing a formal peace treaty for seven decades. global news 24 hours a day, powered by our 2600 journalists and analysts in more than 120 countries. chandra. this is bloomberg. jonathan: stocks positive in europe, firm or if you are looking at futures in the united states. shares areneywell plunging after the company management lowered its 2017 forecaster earnings. the low end of $6.85 per share is below consensus by more than
3%. investors are not liking this. management will discuss this on a conference call at 9:00 a.m. honeywell did recently hit record highs. turning to an industrial stock doing better, general election after bernstein upgraded shares from an outperform. , theyle catalysts ahead see more than 25% upside for shares of ge. train a solar, shares of the largest solar panel company are trading higher in the premarket after agreeing to a one point $5 billion go private plan. this equates to about $11.60 per share. what could be holding the stock up is the shareholders waiting for more approval from the chinese government. david: coming up, wall street to
in london and frankfurt. the euro stoxx 50 just inches away from closing and erasing all of the losses so far for 2016. in the bond market yesterday, brutal for treasuries but yields come in two basis points. dollarfor the euro, this dominance, the dollar ripping through everything in its path. the euro is a little firmer, up one quarter 1% on that currency pair. that is the story on the fx market you'd time for bloomberg the fx market. time for bloomberg trends. japan overtaking china as the largest holder of u.s. treasuries. between them these two countries, 37% of american government debt. the white line is effectively china and the blue line is japan. they have overtaken each other.
they have both been selling but the one that has been selling more significantly is china, and this is a fascinating story for the fx market. you have the chinese currency weakening and the chinese authorities trying to strengthen it. selling effectively dollars to buy their own currency and support the whether that trend continues well-defined much of 2017. david: that white line and how , there it is going down was a time when there was a fear in this country the chinese could have an effect on the strength of the dollar by selling off reserves. they have been selling off reserves at a rapid pace and the dollar has been rising. jonathan: another example of some of the rhetoric that comes out of a potential government saying china is a currency manipulator. david: it has been coming down in value. something weend,
were looking forward to for the next two months or so, the aftermath of what the tax cuts may be. we talk about these tax cuts with donald trump the republican congress but we do not talk about how they will pay for them. they may cut the interest deduction for companies, and this would have a substantial effect on the u.s. corporate bond market, shape -- shrinking it by up to one third. attractivemust last -- much less attractive to borrow money you pay the interest on. jonathan: if you get that repatriation and all of that comes back, think about apple and all of the debt. you can bring the cash home and do what you will with it, and you will not have to issue debt. david: it may be a mistake to assume these sorts of reforms can go through congress without paying for it has there are a lot of deficit hawks who say we
megan murphy asked him about being a potential pick for treasury secretary. been quiteve always public about i do not think i am .uited to be treasury secretary i like what i do and i do and i'm not ready to do something else. megan: that is the answer. what i look now as recently as september, when you were talking about what you thought the next administration would be, and this is before the outcome, you said you thought it would be difficult for wall street guys to get confirmed. now we look at the landscape we have. we have several wall street figures, some of whom you know very well. mobil.lerson from exxon when you are looking at that cast of people, what do you think they will bring to the administration that is different? what is new in terms of experience?
jamie: obviously i was dead wrong that you are not going to see a wall street person in washington but you had a complete upheaval. the republicans have not been antibusiness like you have largely seen the democrats be the past few years. i think it is a mistake for the american public to constantly be told if you work for an oil company or a bank that automatically makes you bad. you want the best team so i think it is a good thing because i think a lot of these people are qualified who are patriots and want to help the country. they are not going to try to help their former company. these are people with deep knowledge who hopefully will do a great job. megan: when you look at that shift in terms of wall street that this is a bit of a recent moment for the industry more broadly in terms of what the american people are expecting or are likely to see? is a resetink it moment for how businesses will be treated.
140 5 million people work in america and 125 million work for private enterprise. if you did not have the 125 you cannot pay for the other 20 so i think this is is a huge positive element for society, and for years it has been beaten down as if they are terrible people. detroit is a perfect example where a civic society, not-for-profit, government, business working together to improve the lives of american citizens. i think the reset has a chance to do the same thing. if you can duplicate what you are doing and detroit around the country you will have a huge renaissance. jonathan: sitting alongside mr. dimon was megan murphy, who joins us now. reset, theabout this idea that we are going to see a different approach to business. are we?
i want to.: -- megan: point to a word that jamie used, patriot. he uses that in terms of the expectations he is setting and the expectations he thinks american people will have. whether or not the american people, we have remember this was an election where both the right and the left, both hillary clinton and donald trump and others in the campaign ran a very antibusiness platform, and anti-wall street platform. income equality -- inequality on both sides. jamie and others i think are looking where we are now and the types of legislation we might be able to get through my comprehensive tax reform. at the moment we are we might very well reset it from the legislative side, whether american people will look up and say, that is not exactly what i was looking for when i chose donald trump, that will be interesting.
andthan: the personalities talking about the conflict of interest. when jamie dimon talked about someone ultimately moving having -- maybe having a contract -- conflict of interest, i assume it would be a hit about rex tillerson becoming the chief democrat -- the chief diplomat. applying the model to d.c., how effective is it going to be? all you wantn say that these people are bringing a ceo mentality and that is going to run up hard and fast against the washington ms. jean -- the sheen. -- machine. get congress, we have a republican majority in the senate, in the house, and a republican president. democrats are going to have to choose their battles very carefully.
they cannot block everything, so yes, we are going to see legislative programs get through . it is going to be more interesting to see what democrats try to do to shift those programs and that agenda anyway they can, and i think that is what democrats are looking at. david: if there was a mandate in this election, it was for a change. maybe not this particular change , but they wanted something other than what they had before. this is going to be a big change . i am not sure we have had a time in history with this many see test senior executives running the country. -- senior executives running the country. megan: we do not know what this model is going to look like. is this the change the american people wanted? we will find out. david: many thanks to megan murphy. interest ine key
eastern europe and russia, 30% comes from eastern europe and 56% coming from western europe. that was back in 2012 and that story has changed dramatically because of sanctions on russia. listen to what the ceo of carlsberg had to say. you see and russia that the decline of the market is bottoming out a bit. we indeed see a 4% or 5% for the decline in 2017 but it has a -- there has been trading very big bottles and that will have an impact on the volume. we are confident about the value and the margin of the market for next year. jonathan: russia absolutely critical for this business. was 29% in 2012
and is 16.7% now. they have been hit hard every time the rescue -- russia situation changes. putin six months ago and where he is now, it is extraordinary. of the companies doing this, the ones that were impacted by the sanctions. coming up, jonathan bush and anthony scaramucci. in the markets, from new york futures are firmer and equities rally in europe. bonds a bit as well. this is bloomberg. ♪
we are raced some of the gains from the session. switch of the board very quickly. yields come in 2 basis points. we have an aggressive rally on the bond market. what does that mean for the housing market? you the housing numbers right now and it is a significant downside surprise coming at a -18.7% for the month of november. that is housing starts. building permits dropped 4.7% month on month. the median estimate in that bloomberg survey was -1.6%. some revisions to the previous , there is a significant downside surprise on housing and building permits. david: as the yields go up and interest rates go up, you wonder
how that is going to affect housing. jonathan: typically, mortgage rates rolled over. you would assume that would do something to building permits. , it hasberg pointed out not hit mortgage applications yet. david: we want to turn to health care, health care in the future a trump administration. one of those in the center of the health care changes is athena health, which wants to provide internet service to doctors and other professionals. yesterday, they took their revenue a trump administration. one of those in the center of the health care guidance and thk rose as much as 28%. joining us to tell us about the changes in health care overall and what they mean for his company is the company's cofounder and the ceo. welcome back to the show. is there a connection between the way you took your guidance up and what you anticipate coming out of revisions in health care under the truck administration? >> i assume so. people were nervous with the , that of administration
companies that sell health care information technology will suffer because so much of the sales of health care information technology over the last seven years have been government-subsidized. nobody is expecting a trump government subsidy program. $39 billion went from the obama administration into doctors pockets for meaningful use of an electronic or mechanical -- or medical record. it was not meaningful use. it was a parlor trick to get the money. end.pect that to unless they not buy are at the tip of the ban it. for some and it is the beginning for athenahealth, who operates a software enable service. we are cutting costs for doctors. we are going to do very well. david: you are cloud-based. >> that's right.
david: as you look forward, we now have mr. price who is going to be the secretary of hhs. >> tom price. ofid: we have had proposals what to do with obamacare, let's take it down to the private sector. does that help or hurt your business? >> it helps tremendously. tom price is a great pick. we are thrilled with his entering that role. this is a private practice orthopedic surgeon from our district in atlanta. we have worked with him in the past. he gets private practice and gets other can be more of a -facing positive effect in health care and that is very good for athena. athena creates savings that they can use to grow market share, improve patient care, and devote more time to that moment of care we all think of when we think of health care, not all the paperwork doctors are doing with 40% of their time and money
today. it is a great development for athena. once the investors who came in yesterday, we had our investor day yesterday, lots of fun for them to meet my people and see what we are planning on doing -- i guess they see it the way i do, which am thrilled about. david: you follow this very closely. it is at the core of your business. do you have a sense of your for the incoming president-elect? do you have a sense of where this it in the list of priorities and when it might be done? if fundamental reform of obamacare? fact, a reform of obamacare is not what athena needs. athena needs an end to the programs being pushed out and forced to the top of our research and development priority list. for the last seven years, there have been big federal mandate and they have dithered. they have said, we have to do it this year or next year, and we were ebbing and flowing with
these mandates. if there are no mandates and no reforms, that would be fine. if there are no mandates and some reforms, that would be better. the key to us is no meaningful new stage 5. you could not me over with a feather of donald trump got a bunch of phd's to harvard to come down and create a new federal bonus program. what we really need is silence .or a while we want to dig down into the long tail of administrative pads and take them out. we expect to double the savings. if nothing comes out of washington for the next year, we will double the administrative work that we pull out of a hospital on the same price that we charged today with all of the resources we used to spend on government programs. david: if silence is your base case. >> tweet all you want, just don't create any policy. david: if silence is your base
case, mr. prices have proposals -- dr. price has had fundamental proposals for changing obamacare. if that happens, what is the upside? >> most people think of obamacare as the insurance program, so it was this big wealth distribution mandated .ccess to health insurance at some level, more people, more federal dollars being siphoned into health care is good, but most of it, if our client makes more money, we get a larger percent, a percentage of the client collection. what is important to us is to get new clients, to get new nodes on the health care internet. we have 12% of all ambulatory medicine right now. if we can do unique things that no one else can do, we will keep the growth rate going right through and everybody will be on the internet in some way. what happens with health
insurance per se is not our problem. we are focused on what happens with the doctor quality programs , various doctor facing, hospital facing mandates coming from washington, trumping our r&d projects. david: so to speak. [laughter] david: well done. jonathan bush, athenahealth cofounder. jonathan: let's continue the conversation. entrepreneurs turn failure into success. anthony is a prominent member of the president-elect's transition team. let's do some housekeeping to begin with. you have seen the reports, you have heard the gossip. are you in serious negotiations to scale -- cell sky bridge? >> i'm not really a liberty to talk about sky bridge. i promise you that if something magnificent happens with sky bridge, i will bring it to you on "good day", how is that?
not good enough. are you looking at selling the firm? >> if that were to come to pass, it would have to be a combination of things. bit ofgive you a little breaking news, how's that? i have greg fleming, the former president of morgan stanley, that is working on the transaction for us. i also have ed hurley. i have a serious group of players that are analyzing this for the firm. our number one objective is to make sure that our clients are well treated and the families and the members of my team are very well treated. if it were to come to pass, i have a great team working on it. with the who has been firm, most of them 12 years now, i think they will be very happy if a transition were to happen. how's that? is that good? jonathan: that is good, but you are in the process,
conversations have begun? toit is a little bit hard avoid that. in the age of social media, you send out one selling memorandum and it ends up on twitter or i want to be very up front with your viewers and you guys. we are having some discussions. i don't know if it is going to come to pass or not. i did not say anything about price. i'm more focused on my clients. i'm more focused on the people that work inside the firm than anything else. by the way, since i'm a patriotic american, i'm really here to talk about president-elect trump and vice president pants and what they're going to do for the country and the world. i thought the discussion you are having earlier was also very interesting about how people are relaxing now that america can go back to business and start the growth that we need for the middle class and the working class families. david: that is exactly what we want to talk to you about.
let's be a little more specific about the economic team. some members of the team are on board or will be nominated. we have steve nugent, wilbur ross, we have others. cohn. what are the next critical roles to be filled? how is that process working? >> listen, i think one thing you guys should look at, we have one of the best project managers in the world at the top on the 26th floor. i have said to people here on 14 that it does a lot like a building project. we are laying out the foundation first and then we will put the sheet rock in and then the other ornamentation of the building. , itink it is a very regular is an intense process. you could see from the secretary of state selection process, that the president-elect really wanted a wide range of people to look at.
he is doing that for each of those jobs that you mentioned. i honestly don't know if that is next week's business or the week after, but what i can assure your viewers and the american people, it is coming timely and what they are getting used to is that we will be on time and under budget in a place like this. i think you guys have to be impressed with the selections that we made and the speed at which we've made them. we have a world-class cabinet we are putting together here to serve the president and the american people. don't hear anybody saying you're dragging your feet. this is moving at pace. at the same time, you do have a hard opt. you have to take office january 20. what do you need in the economic sphere to be ready to go? you have a republican congress, senate and house. is tax first up? is that what you need your team in place to put together? weone of the conversations
had yesterday was around the tax proposals and the implementation of that plan. we will need someone at omb. you guys know that that job is a very technical, very detailed in its orientation. we have had a situation with the obama administration where we have not really had a budget. maybe we had one last year, but the fiber six years prior, we did not have one. the president-elect is keen to make sure we are putting a budget up to the hill to get passed on and ratified. we need those ingredients. i would say tax reform is going to be a very big component of this. regulatory reform. in the early part of january, we have to get the 12 major cabinet positions confirmed. that is a process we are working on as a transition team. in general, spirits are very high, it is christmas time or hanukkah season. we are very happy about the win and you can feel it in the stock
market and in the american people. when i met traveling, there is a lot of gratified and appreciative people. david: you are not somebody who was going to just go out on a book tour when you are done on the transition team? you said you have a full-time job and are fully engaged. would you be open to or interested in a position on the economic team given the enthusiasm you just portrayed? >> listen, i said this to many people and i will say it to you. i serve here at the discretion of the president-elect. i want tory day as help the most amount of people with the least amount of drama. i don't want to make this about me. if it turns out that there is a spot in the administration were vice president-elect pants or president-elect trump wants me to do, i'm an american patriot and i would be willing to serve the country. i also know there are things i can do outside of the administration that can also be effective. for me, my goal is one of the executive transition team
members is to help the president-elect find the best people who can put their egos in a jar, on a shelf, in the 14th floor pantry, not focus on themselves, and really focus on driving this agenda that we know will be very powerful for working-class families and the middle class. with thed president-elect the summit he had with some of the african-american leaders, which included legendary football player jim brown and ray lewis, we had marcus allen and a whole group of guys and my sense from that meeting, i was so excited, i turned to kellyanne conway and i said, this is one of the most exciting things we are doing in our lives, it could be the most exciting thing, the chance we have to repair and restore the inner cities, because we have a president at the top of the food chain that understands that we have to do that because it will help the community for all americans, it is super exciting to me.
if i'm asked to serve, i likely will. i want to leave that open. our eyes will keep glued to see exactly where you end up. thank you so much. the comanaging partner and sky bridge capital and also an author. so, jonathan ferro. jonathan: the man in the firm negotiations having some developments of selling sky bridge. greg fleming working on the sale. i guess this all depends on whether the man himself gets the job. david: i suspect he might be in line for something, it sounds like. the euro is down more than 1%. owen has his outlook next. this is bloomberg. ♪
emma: coming up in the next hour, city private banks chief executive stephen weisinger. jonathan: let's turn to our morning meeting. we are looking at the euro down more than 1%. the future of the eurozone continues to mount. joining us for his outlook is david owen, great to have you with us, joining us from london. will the eu ever achieve escape velocity? not on the time horizon we are looking at. is a is inflation which
target. it is one of the key reasons. the u.s. that is raising rates and will raise rates. just to be clear on this, the 's work in terms of additional qe, it would be probably equivalent to a 50 basis point cut in policy rate. we also know that they are going in 2018. they are going to taper over a long, drawnout process. jonathan: at this point, a lot of that story is already captured in financial markets. in 2018. when you sit around the table and you already see the two-year note yield, -80 basis points in germany, how much longer can actually get? it is difficult to think about getting much lower. at the end of the day, in germany in particular, there is
not much difference. they're running a primary low-budget surplus. is the biggest borrower in the program. germany has its own particular in -- issues. the eurozone was recovering quite strongly and inflation was rising. on the timeframe we are looking at, that is not going to happen. the big concern for next year, you have major political events with elections in the netherlands, france, germany itself. now probably italy. u.k., which the starts the torturous process of negotiating its exit from the eu and that will start when they trigger article 50, likely in march of next year. the ecb has a lot of problems ahead. they don't want the u.k. and the rest of europe facing a cliff when the u.k. does exit in 2019.
it is going to be a very interesting year. politics are going to be key. ecb will continue printing money. jonathan: a quick question. we have learned a lesson that low probability outcomes can become reality and that they don't actually have to mean significant downside risks for markets or the economy. is that going to be a lesson we will learn again next year? we don't really know what is going to happen. angela merkel faces some degree of fatigue. we don't know where the german elections are going to play. wildcard ins a big all of this. that got to resolve the banking issue in italy. politics is rearing its head. for the ecb, the ecb would like to bind all these countries together for a closer union, but that is not going to happen. it is going to rely on growth recovering. with the economy moving. it is going to be risky.
david w.: it is time for battle of the charts. i'm david weston. >> we have risk indicators. it is going to be the cboe correlation index. that is the purple line. then we have a risk on, risk off. this is just plunging. both of those things. showing us that investors are so much less risk-averse than they have been after the fed movement, the rate rise, and
president-elect donald trump. this is my favorite chart in the last two weeks. it mirrors the conversations i've been having with traders and hedge fund analysts. david w.: that plunging line says risk on. >> absolutely. more and more risk. we are less and less risk-averse. >> great chart, but my chart suggests that the risk on indicators may start to move higher. look at thecally a big move in the 10 year yield, the record quarterly move up about 100 basis points. in blue, we have the 10 year yield. in white, we have the inflation plot. a future look at inflation. this comes to us from a bloomberg strategist, who says that historically, swaps of led. the 10 year yield has gone up through the swap. when the swaps have gone down, the 10 year yield has followed. this may suggest that the big
move higher in yields could be about to reverse as investors become less risk on. david w.: that means we will buy bonds again? risk off? >> exactly. david w.: this is a true battle of the charts. i'm going to pay -- take abigail. this is interesting. at some point, it is self-correcting. >> we also love vincent. david w.: vincent and abigail. jonathan, back to you. coming up on this program -- jonathan: stephen weiting. the stage is set as we count you down to the cash open in the united states. from new york, this is bloomberg. ♪
to "bloomberg daybreak." alix steel is away, but we are still counting it down to the cash open in new york. futures are up positive. yesterday, a story of dollar dominance. the significant casualty, the euro, makes a marginal come back. the yield is down. david w.: here is what you need to know at this hour. the fed driven rally in stocks take a pause. the greenback fell against the euro after reaching as high as it has been in 13 years. wall street to washington, an exclusive interview with jamie dimon about why he is not in donald trump's cabinet, why he is surprised at who is, and how thinks policy should be made
under a trump administration. rough patch, verizon's deal with yahoo! could be put on hold after the latest hacking scandal. know atwhat you need to this hour. abigail: u.s. futures do indicate we are looking at a higher open for stocks. dow, the nasdaq are trading higher. it is worth noting that it is quadruple witching day. volatility around the open and close, be prepared for anything. as for stocks trading higher in the premarket. did do well. they also said they are seeing unusually strong fiscal. they are ramping up for this. apple, what could be ahead for them, a five-year chart is pretty bullish.
we go to the bloomberg and we take a look at it. this is apple in relation to its 200-day moving average in yellow. it's 50-day moving average in orange. basically telling us how apple's position relative to the buyers and sellers above those averages. on the recent weakness, apple 200-dayed -- tested the moving average. we could be looking at bullish action ahead for apple. jonathan: talking about bullish action, a lot of people are going to get excited in 28 minutes at the prospect of doubt 20,000. the big story is outside of equities. and to talk about it is joe vincent, both of bloomberg. here is the story. yields higher. 10 year treasury yields higher. on the dollar. go along or go home seems to be the story for the fx market with the dollar in mind. >> it is the old by dollars, where diamonds story.
wear diamonds, story. you would tend to see some repositioning and rebalancing of long dollar positions that will happened and is going on through the end of the year. by and large, the large dollar trade is not as large as people think it is, otherwise we would not come this side. >> it is remarkable and it is the only interesting question right now. we can talk about stocks being at record highs. jonathan: in round numbers. >> 20,000, whatever. this is the only interesting question. it feels like a lot of strategists are starting to gravitate around this 3% level as the safe place to save, where they can make a call that is interesting, but not to out of consensus. with the 10-year and long-term rates do from here is probably the only interesting question. jonathan: positioning is one thing. you look at the positioning and
say it is not stretched, so the can of the oxygen in the trade, but i keep going back to that position in spring 2015. when the fed chair came out and just battered the dollar back down again. why is this time so different? >> i don't the get will be. i think they will come out in the first quarter of next year and do the same thing. i expect we will see tepid growth in the fourth quarter, somewhere possibly close to 1.5%. that is going to put all the bulls back in their cage. a lot of folks will be angry with the fed once again. david: i think about a year ago right now, we were saying we are going to have the four races and we got one. i worry a little bit. are we setting ourselves up for the same sort of disappointment? >> one thing that interests me and i've been playing around on on the bloomberg am one thing that is interesting is last year, the fed was looking for 4
and we only got one. if we go back to last year, there was a very big gap between the green line and the redline. the red line being the market estimate and the green line being the fed. if we flash forward to this week , they are a lot closer. already, the market has much more confident in the fed's outlook than it did at this time last year. get one or zero, but there is already more consensus than a year ago. those twoyou look at comparisons again, there was a lot more compression in the. a a year ago the dots than they are now. >> that's true. another interesting thing be that the 2017-2018 dots, the long-term dots went up for the first time in the history of the dots. it does feel that between the markets in the fed's new
perspective on the economy, there has been some set of shift. they have not changed their economic forecast, but they have changed their rates. >> if they were traders when i was trading, i would have been retired a long time ago. they have their 2019 gdp long 1%.projection at these are up marginally from 2016 projections. the huge increase in fed funds from the current levels. how we get this boost in rates without comparable growth. jonathan: let's play the 24-minute game away. the bond market and the dollar .ould be critical stronger dollar.
we are ignoring both of those things, it seems. >> there was a really good piece from threadneedle investments published this morning trying to reconcile some of these questions. part of the answer may be that there are these headwinds coming from higher rates. there is always the tax cut effect, they believe earnings are going to go up because there is going to be some estimate. but it is an interesting question because a lot of things that we have been told for so long that are headwinds to the market are not apparently of concern to people. david: there you have it. that is joe weisenthal and vince. we have another chapter in the saga of chipotle. they have come to terms with pershing square and have appointed for new directors as part of that. there was the shakeup in the sea suite is little bit earlier. this story keeps on going. jonathan: matt miller is a big fan.
i wonder whether business has dropped in new york city. who knows? david: for an update on news outside of the business world, let's go to bloomberg first word news. emma: president obama is promising to act on the cia conclusions that russia interfered in the u.s. presidential election. the president spoke to npr. president obama: there is no doubt that when any foreign government tries to impact the integrity of our elections, that we need to take action and we will, at a time and place of our own choosing. explicit andy be publicized, some of it may not be. emma: president obama will hold a news conference today before heading to hawaii for the christmas holiday. you can see that right here on bloomberg tv and radio. in syria, the evacuation of aleppo has been suspended. 8000 people in the former syrian rebel stronghold left on buses
and ambulances before the process broke down. syrian state media says rebels are trying to smuggle weapons out of the city. antigovernment activists say pro-government militias have blocked the passage out of town. there is a red alert for air pollution in beijing, the highest warning level in the first time it has been issued this year. the chinese city will cut some industrial production under the warning and the number of cars on the road will be limited. global news 24 hours per day powered by 2600 journalists and analysts in more than 120 countries. this is bloomberg. david: coming up, bloomberg businessweek's exclusive interview with jamie dimon. we asked him why he did not want to be the next treasury secretary and what he thought of donald trump's cabinet picks. also ahead, the verizon-yahoo! deal is a rough patch, but the phone giant is not backing off its push in the media.
>> i think a lot of these people are going to try to the country. they are not going to try to help their former colleagues. they have deep knowledge of the hopefully will do a great job. david: for more on that exclusive interview, megan murphy is with us now. congratulations again on this interview. >> thanks. david: they are relieved that they think they will get a president who will do things for them. >> i asked jamie dimon to give obama a great letter on how he would rate the president on his relationship with business and you are right. this has been a huge tension across several industries. what they felt with the obama administration, not so much that they did not understand business or antibusiness, but that the default was regulation and rain
in the excess and that they did not listen enough to businesspeople. of course, jamie dimon, with stuff like dodd-frank, that was a big factor, but that goes across several other industries from health care to energy to a variety of different places, where people felt the administration was not really listening to them. i think he feels that alternative will. david: if you talk to people across those different industries, there is a perception that it is way too much regulation built up. is that true? they say i have saved all kinds of money, but nobody ever knew it. >> one of the funny things about covering 2016 is when donald trump talked about lowering corporate taxes. his most popular thing that he would say when he talked to small business leaders was rolling back regulation. that got thunderous applause quite frequently. in a political game, a lot of this is politics.
when you say to people you going to strip back regulation and break through red tape, that is going to resonate. the amount of regulation, it is true, that the amount of regulation is too high. if the truck administration is successful in going forward and peeling back some of that, that is going to do a lot to smooth the waters early on. david: you are back in my home state in michigan, detroit. >> it was nice and cold. there you were specifically because j.p. morgan has committed $100 million to help detroit. you also talked to them about what they use that money for. let's listen to that. >> detroit is a perfect example , not foric society profits, government, business working together to improve the lives of americans the distance. i think the reset has a chance
to be duplicated around the country to have a huge renaissance. david: i was out there recently and it is different than it was 5-10 years ago to the better. they have a long way to go. it is early to declare victory. what progress of the most proud of? >> it is good you may that point. there is definitely an energy there.l when you are i talked to a lot of professionals who are coming back because they want to be part of the rebuilding. mayor mike duggan, one of the things he first did when he took the mayorship. the garbage picked up and get streetlights. yesterday, they put in extra 65,000thace desta replaced streetlight. we talked about where the holes are. one is in real estate. houses they need to be cleared and demolished. they are thinking about innovative ways to rebuild these neighborhoods that have been so
left out for so long, that looked like a bomb has gone. and think about ways to build from the ground up in a nonpartisan way. that is one of the things that jamie dimon talks about as well, there are no democrats and republicans in detroit, there is just policy. megan many thanks to murphy. next thursday, you can see more of the exclusive interview with jamie dimon. the interview will be aired in full and, most importantly, it will be featured in the magazine's good business issue. jonathan: coming up on the program, we will look at how traders are hedging with the reopening of one of the biggest fields. this is bloomberg. ♪
yesterday, alix steel spoke with the opec secretary general. production cuts and how they could affect the markets. >> what we're focused on is stability. there is a convergence of views between ourselves in opec and non-opec and consumers. it is the stability of the market that is paramount. we are not interested in market shocks. jonathan: let's turn to the trade. .oining us is alan ackman great to have you with us on the program. general iscretary expected to tell us he is going to be compliant. are you buying it? opecs, he is going to be in check, that is a tough job. we are seeing the energy in energy waning a bit because of the cell after the meetings. we will see how you can hurt the
cat, so to speak and keep these production numbers down. also, the weather factor. the markets moved up with all of the cold weather in the forecast. thethat it is happening in states, that increases demand. i think, psychologically, the perspective is that things are getting better and that is a positive for oil in the long run. jonathan: the psychology and supply dynamics is one thing. how do those two things reconcile that tug-of-war in the months to come? >> that is very impressive. that could have been an excuse for crude to unwind. $52raded between $42 and for a few months. we had a false breakout on sunday night. on monday with the new relative highs. we want to pay attention technically. it may be setting up for a key reversal on a weekly basis. there could be a sign of caution in the near term. in the longer term, $62 is the
first target from the range and that i'm looking at $85 as the i andy level of the $147 the $26 lows. jonathan: am i going to see a $49 handle? i want to see how the market reacts when we get below 50. >> you can shake out some of these recent long. the first out, obviously, when you get a shakeup. a lot of the traders are market -- focused on how the markets react when we get that did. let's see if we can hold at $47 on a weekly basis and see where we go when we shake the tree is little bit. jonathan: great to have you with us on the program. crude heading for weaker losses, but just on the margin, the strong dollar story is front and center. david: absolutely. the story coming up in about seven minutes and 20 seconds is going to be the equity markets
in the united states. the ninth weekly rush of cash in history. according to bank of america merrill lynch. joining us now is the bloomberg stocks reporter. this is quite a turn of events. >> a lot cash. this is pretty unique. you basically had an entire year in which money was coming out of the stock market. this is a big deal. you had $31 billion that went into exchange traded funds. the blood loving the stock market, but they are hesitant about active managers. david: overwhelming, this is in u.s. equities. but the emerging markets stock markets. >> that is a shocking thing. one of the key components of the rally has been that investors have been buying value stocks. if you look at the value factor model right now, it is done very well. people are finding companies
that meet their standard of being undervalued. what is interesting is that that principle exists at large in the emerging market space. you would think that if investors want to have that mentality, maybe they will start to look outside the u.s. and maybe those emerging-market flows will go up going forward. that is a component of a theory by the city's equity strategist. i think it would be very interesting to watch the number. david: europe not so much? >> not so much. lots of questions with brexit overhang. we were talking with david lafferty yesterday. he just said, that is still going to be an issue, to see how that all plays out. when you look at the whole political shift, i think there is a lot of bullish sentiment that has just shot up. it is there. david: as we look forward into 2017, the question becomes what does the rotation go too far and start coming back the other way? we are seeing the returns. just look at the dividends alone. the returns from yields and
bonds have already flipped. you can buy bonds and do all right with them. >> that is a good point. there is this question about what higher rate are going to do for equities. the historically higher rate environment is not necessarily bad for stocks, but the alternative of being able to look at bonds is a key component. not only has to hurt utilities and telecoms, they were not nearly as bad as predicted, if that is going to stay the way it has been, that is pretty solid. if you have a market that keeps turning over sector by sector. if you take this huge infusion of cash, how much was financials and energy? >> that is a good point. i think there has been a lot of bullishness on the bank stocks. energy companies, as well. you had opec, the idea that there are some of those companies, a lot of those companies are still pretty beat up after 2014-2015.
the most interesting thing about the market is that we have a new leader every day. david: we will find out. that is for sure. "bloombergp next on daybreak," four minutes away. futures positive, up 16. positive only s&p 500. we roll over as we head forward. yesterday, a story of dollar strength. today was a story of dollar weakness. the trading gets underway in the united states. this is bloomberg. ♪
the dow flirting with an all-time high at 148 points away. as you hit the opening bell ringing, switch up the board. the stage is dominated by a stronger dollar and now is treading water. -- yields down one basis point. let's wrap up the final day of the trading week with abigail doolittle. abigail: we are looking at a nice open for u.s. stocks. we had the three major averages trading nicely higher on record watches. everyone is waiting to see if the dow could achieve -- we could see big volatility. be prepared for that possibility. as for movers on the open, we are looking at honeywell trading lower.
2017 earnings outlook. upgrade.1% on an analysts citing multiple catalysts ahead. they see 25% upside potential for ge. not bad for a big cap stock. earnings and revenues are seeing in much stronger outlook for the fiscal fourth quarter. oracle trading lower. they messed revenues for the second quarter and it looks like legacy products are weighing there. chipotle, trading higher this afternoon --trading higher after the company named new board members. worth noting, lots of shakeup. moran step down.
maybe a turnaround is ahead for chipotle. jon: thank you very much. 19,900 is how betrayed -- how we trade, 100 points away. stephen, great to have you here. oliver renick, our colleague, getting the biggest rush of cash. you have a pretty healthy cash position. how do you communicate when the stock market keeps ripping higher? >> we have not had another -- what we want to take account is areas where there are undiscounted risks, including currency, and a good deal is outside of the united states. the eurozone, you can see some gains. what you get that in u.s. dollars? parts of asia?
parts of the emerging market for we are seeing depreciation? by and large, stay invested and mitigate risks with a bit of cash when we see the opportunity and do it in a variety of other ways. this is very much the opposite of last year's market where investors wanted to sell everything at the turn of the year and not invest. look at the goodyear who have had. year we havee good had. david: where are the opportunities. to global fixed income, u.s. equities are a great value. , ifink credit investments you count the lower volatility in some of the potential returns, like loans and high-yield bonds, you get a good deal on that. you have to keep in mind that share prices have moved up nine percentage points more than earnings this year. i think earnings will grow. i think taxes will be cut in the coming year. but we have done a pretty
efficient job of starting to get into prices. what extent are your strategies based on anticipation of what a donald trump administration will mean? >> this is guesswork. when you have a whole range of guesses, it is not the same as certainty. we will be more cautious about assumptions about fiscal policy then we would have been. knowledge will come and be priced in very quickly, but we have to be careful. will taxes be cut for every corporation? whether the offense to that? will there be -- will there be an off set to that? fiscal easing, this experiment great deal, taxes a which we think is likely, is experimentation that is going to be dominant in the outlook for u.s. and global markets in the next two years. jon: there was a dispersion of forecasts.
next year, is set to be a very uncertain year. look at the dispersion in 2018. let's be fair, the committee has not got a clue. does this feel a whole lot more uncertain next year will attempt to last year? on top of that, the market used to be a whole lot bullish. >> that is absolutely right. you take a look at what we just traded. we had slow growth with much more certainty of low interest rate policies, fiscal gridlock. what would that mean? slow growing stable investments would do well. this is a hail mary pass for something to accelerate economic growth, but with much more greater range of possibilities around that, both on the interest rate front, so that federal reserve's response, the economy -- how the economy will perform?
you do this recovery, we have guesses that the american economy can do better than it has. but interest rate in inflation are in certain. -- but interest rate and inflation are uncertain. jon: you get it priced than on wall street. what else do you get priced off that sells off aggressively? the discussion we have had is when does that damage the risk/rally inequities? >> so far, most everything that has driven up bond yields has driven up volatility in the bond market and has been equity-friendly. look at how donald trump's picks for his cabinet. this is a very focused business-first agenda. so sorts of things can work long as there are no challenges to that. congress may have a few
challenges. david: risk is the upside and the downside. as an investor, how do you make sure you're hedging the downside, but don't lose out on the upside? stephen: hedging is a complex subject. there are times when hedging is cheap. when they are, we want to take advantage of those. it is usually a time when you can invest, monetize hedges. ofmeans having a bit of cash markets where we think the risks have not been fully priced. if you think a populist victory in the united states and u.k. -- were corporation between countries is so much more important, will all of that play out fight is bullishly? of course, the things you cannot control. if you are poorly positioned going into a news event, you don't get yesterday's prices. you have good knowledge the fact that yields have moved up, growth expectation is moved up and equities and the with
today's valuations. stephen, thank you for being with us. coming up, verizon has been on the future of video as a phone giant considers whether to go through on its deal to buy yahoo!, the company eyes more details for his video business. -- for their video business. more on that next. mrs. bloomberg. ♪\
will about to go public. the firstng action in 10 minutes. 19,000 888. it s&p 500 up 2/10 of 1%. let's cross over to abigail doolittle. abigail: two stocks we are watching -- yahoo! and verizon, after the news verizon was considering walking away from it $4.83 billion deal for yahoo! or altering the terms. when we take a look at the today chart of yahoo!, we see how negative it was. a bit of a pop higher, but not too much within the realm of that decline. a bloomberg analyst told our team that this is a big negative for yahoo!. when we take a look at the chart of yahoo!, it appears to be a big negative, and not a surprise. uptrend on the
acquisition possibility, but we see bearish, lower highs that tele-sellers have been moving in as the end of august. 50 day moving average move below the 100 day moving average in the purple line. -- david, we could see a move out of this range all the way down to $33 per share. we may have yahoo! a little bit higher today. there could be some more bearish action ahead. david: thank you so much. we will talk about what this means for verizon and yahoo!. we are joined by scott galloway, a professor. and a former member of the new york times board of directors. sweeney, ae paul bloomberg intelligence director. that start with you first, scott. take us through the options for verizon. scott: the most likely is that
they extract their pound of flesh, and reduce the price, and the other is to walk away from the deal. other is to try to create some legal entity where they andd create aol -- put aol yahoo!, creating a firewall. david: you do not know what you are buying. you want to try to protect your basic company. there is a possibility of someone taking that alibaba stock and saying, we have a lien against that in case we are in trouble. ,cott: that is a great idea instead for those who own the alibaba stock. you really don't know how big the infection is because if somebody is going to do an analysis of all the major hacks, and try to correlate that the likelihood of being hacked if you had a yahoo! eagle account, and if that correlation is higher, then everyone who has been act -- hacked could go
after horizon. -- could go after verizon. let's turn to you. jonathan makes a point that there is a lot of momentum behind this deal. they have wanted to do this deal for a long time. is it awfully hard to climb back down off of that horse? the initial deal with aol and that is business strategy on the video side as opposed at&t that doesn't the content deal with time warner. verizon has always been focusing on mobile/video and aol brought a lot of technology to the table. they were hoping to get more of the same with yahoo!. it is a consistent -- consistent with their strategy. if you are verizon, you have to step back and say this is only a $4.8 billion deal in the context of a huge verizon.
with theirtting down lawyers are talking about the risk/reward. david: whether they go ahead with this deal or not, it is clear that verizon has a longer-term strategy and wants to be bigger in mobile video. what are the other alternatives available to verizon to get bigger in that business? paul: there are not a ton of properties that have the scale of the yahoo! at that price. anyone who has gone to scale is expensive because they are growing whereas yahoo! is a melting ice cube. the keywords are mobile and video and we had the $70 billion bleeding carcass of television advertising were people are leaving and going to their phones and watching video, and verizon is trying to get in front of that. david: cbs makes a fair amount of money. to a down and talked
representative to see if they would close the door. can imagine plenty of people out there, when you see at&t making a lot of money for time warner, that a company like ours would be very viable and open market. a lot ofnd cbs with content so they could put on their mobile phones. >> everyone has to pencils out. because about management's missteps. you have to give credit to him, who is ringing the bell at the high. the firewall has been breached. the premier league in europe have declined in viewership for the first time we can remember, and that was the anchor of live tv and of television. we are in a periods structural decline around broadcast tv. as you said, the firewall has been breached. thank you, scott, for being here.
paul sweeney, bloomberg intelligence director of north america research. jon: coming up, it is bloomberg markets with vonnie quinn. what is coming up? vonnie: so much is happening in the world. we do have a guest on the show, jeremy siegel, who calls it the reasons why he was making the call. likingket is suddenly the environment we have had for the last seven years. later on, we will have the former advisor to donald trump, carter haze with strong ties to russia. also, we will talk about donald trump's energy plans. contradiction,a
or confusion, given the people who are been nominated to gary scrolls -- been nominated to various roles in the cabinet. david: we will be looking for to that. coming up here, they years that central banks learned their limits. toa use of monetary policy stimulate the economy peaked? we will look at that. this is bloomberg. ♪
lacher will speak on a panel at the charlotte chambers economic conference. later, at 7:00 p.m. eastern time, the president-elect will hold another "thank you" rally. jon: it is been a another year with monetary policy dominating the headlines. reserve raiseeral rates a quarter of a percent. last week, we saw the ec be signaled that bond purchases may not be infinite, and out 2017 looks to be the year where bankers will quietly shuffle from center stage as a loan a limit of what monetary policy will do. i do regret that we cannot reach the 2% inflation target as planned, but it was hard to predict falling oil prices when he made the policy and 2013. europe are banks in in the same situation as us. >> the outlook for real gdp
growth is broadly unchanged. the risk around the euro area remains filtered to the downside. acting and a pragmatic and sensible way. >> changes in fiscal policy or other economic policies could potentially affect the economic outlook. of course, it is far too early to know how these policies will unfold. moreover, changes in fiscal policy are only one of the many factors that can influence the outlook in the appropriate course of monetary policy. we are operating under uncertainty at the moment, and we have time to wait and see what changes occur, and do factor those into our decision-making as we gain greater clarity. is a reporter.
it has been year percent for banks. early this year, it was rumored that it would happen in japan. that is where the excitement really started. matt: that is a really interesting storyline next year. something that is happened over the last several years since we zero bound on interest rates globally, there has been a monetaryon between conditions and exchange rates. on the other hand, financial conditions is what we think of the stock market interest rates that companies pay to borrow. on the monetary conditions front, they have gone to a point where they cannot cut interest rates much further and they are out of gas on that front. on the financial conditions front, it is important for antral banks to maintain financial market environment where there is not a lot of
volatility. that is conducive to business as being able to finance themselves going forward. that is going to be very important. the whole thing did not go off the cliff for the fiscal people to come in. we said, we need fiscal, we need fiscal. even though it is rumored in japan, you don't hear about austerity in europe anymore. did they really do their job? matt: they did. if you look at financial markets, luckily has been very low -- docility -- volatility has been very low. you cannot do much more to reduce interest rates, or politically, you cannot act on exchange rates, then you need to have that handoff to fiscal stimulus if you want that higher justh that you cannot get by making sure that markets are volatile. jon: they can say they did their job, but they did not achieve
their goals. a point to step back when they are not achieving their goals? matt: the question is, do they step back, or are they saying this is where we are at now and you need to take the baton and take us forward? there is talk in the united states, we are stepping back concerns of the market are too buoyant. jon: how tough is janet yellen's job next year? pretty difficult because you have a ton of uncertainty about what the new administration is going to bring to the table. the fed was begging for stimulus a few months ago, but all of a sudden, 4.6% unemployment -- the narrative is changing quickly. jon: we going to have a janet yellen going front of congress and say too much fiscal stimulus? [laughter] matt: shia muslims their last
month when she was before congress and say that we don't necessarily need it. it will be interesting if we get to that point. perhaps it is not too far away. david: she has to be careful. it will all be politicized. jon: and the responsible be on twitter. that wraps up this program. nearly 26 minutes into the session. --'s get to you up-to-date we will potentially end with another week of gains but the dow of 32 points. margin of a 10th of 1%. happy friday. up next, "bloomberg
♪ vonnie: we are going to take you from washington to moscow and cover stories out of denmark, u.k., and china. u.s. stocks open higher with european shares in the green. jeremy siegel joins us as we march for that record. nejra: mario draghi speaks in brussels today warned me european leaders -- morning european leaders that explosive politics could expose the euro area's underlying weaknesses. vonnie: president obama bows the u.s. will take action to respond to russian cyber attacks attempted to interfere with the