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tv   Bloomberg Markets Americas  Bloomberg  December 20, 2016 12:00pm-3:31pm EST

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from bloomberg's world here'srters in new york, what we are watching. the berlin attacker or attackers may still be at large. we are live on the ground with the latest in just a few minutes. japan, the boj decides to keep its yield curve program unchanged. we will look at the winners and losers as the year comes to an end. abigail doolittle joins us. abigail: we have some good news and bad news. we have stocks changing higher. all three major averages are up. they have all carved out new highs. the s&pw, we don't have 500 on pace to finish at a new
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record closing high. the dow has failed this point to achieve 20,000. it has that frothy field. you can see a lot of movement. the big story is the fact that the dow was 12 points away from the dow 20,000. if it were to happen today, it would be the fastest gain for the dow ever. there is a lot of exuberance there. that is being matched. when we go into the bloomberg, it's amazing. you can find anything in there. this is the average volume. the green bars shows us the 20 day moving average. the blue line on the green bar shows what's happening today. the orange bar shows us what is
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predicted for the rest of the day. spikes on- see big the open. we do have stocks of these record highs. the volume is a little bit weston where it has been. we have the financial sector leading the dow higher. be as the 10 year yield moves up, we did agree to sell the u.k. credit card unit. iny are expected to close 2017. finally, confirmation when we do go across an asset class. we are looking at risk on. we have the dollar index trading higher. we have the euro yen. this is one of the most extreme and pairs in risk in growth. that is positive. bonds are selling off. they are trading a bit higher. the one point to make here is
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it's not completely on board. we are down ever so slightly. it's always important to pay attention to whether you have full confirmation or areas that may not be in full agreement. we will keep an eye on this. david: thank you very much. we will check in with emma. emma: anglo merkel addressed the german people today. in a nationally televised statement, she said the full force of the law will be deployed to clarify every detail. >> there is so much about this that we don't know yet with certainty. based on current evidence, we need to assume this was a terrorist attack. emma: 12 people were killed and others hurt when the truck rammed into a crowded market. it's not clear if the man detained was really the driver.
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there may be several assailants involved in the attack. aadimir putin is promising defense after the assassination of the ambassador in turkey. a gunman shot and killed them at an art exhibition. he is the first russian envoy to be killed in almost 90 years. policeailant was a officer killed by security forces. six others have been detained. agency. humanitarian says the syrian government's offer as plans to send 20 staff to monitor evacuations from aleppo. 25,000 people have already been removed from the city. 3000 are awaiting evacuation. more charges have been filed the michigan attorney general in the lead water crisis in flint.
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two former emergency matters were charged with multiple felonies for failure to protect residents from health hazards. nine others have been charged in the probe. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries, this is bloomberg. david: thanks very much. the bank of japan raised its assessment for the first time since may 2000 15. the central bank forecasts a moderate republican -- recovery. joining us now is one of the he joins us today from new haven. it 11779.-yen is where'd you think it's headed?
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up or down? >> thank you very much for the invitation to your program. a7 or so could be passed lower value of the yen. of anid a combination interest hike. the bank of japan status of monetary policy. david: i read an interview with you where you said you had reevaluated your sense toward
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monetary policy after reading a paper by the nobel laureate this summer. a fine balance between policy, what is your sense going forward in japan? i think the first phase of monetary policy worked well. it had an effect on the exchange rate. recently, because even the negative interest policy does not affect the value of the yen so much. the pace of the effectiveness of the monetary policy is sort of at the plateau.
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totally did i rely on various instruments of monetary forcy, we should also call more active physical policy. consumption tax rise was quite strong with negative effects. david: let me ask you about scarcity. we talk about it in the european central banks. there are not enough securities for the european central bank to buy. buys bonds it regularly, how big of a worry is therefore scarcity? about the asking
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scarcity of the bank of japan? david: their ability to buy securities. balance andcts the interest. it affects the bank of japan. effect have a moderate on the japanese financial markets. i think the bank of japan is not so much the people. that is what christopher sims is saying. david: thank you very much for your time today. he is a professor emeritus of economics at yale university.
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he is joining us from new haven. deadly have more on the truck attack in a berlin christmas market. this is bloomberg. ♪
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david: it's time for the bloomberg business flash. there was a system's favorite rippled through several features contracts last month. backed off the system malfunction causing errors in figures to show up on intercontinentalexchange. restated data on
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seven contracts. the british government will agree to selling green investment banks in january. the sale is on track to be completed before the end of march. lloyds bank will by bank of america's credit card business in the u.k.. acquisition is $8.6 million in assets. in deal is expected to close 2017. that is your business flash update. addressed the nation earlier today about what's being called a probable terrorist attack on a christmas market that killed 12 people and injured 48 others. there is so much about this day we don't know yet if
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required certainty. based on current evidence, we need to assume this was a terrorist attack. it would be difficult for all of us to bear if it was confirmed that indeed a person committed this crime who came to germany to ask for protection and asylum. david: what is the latest we know about the investigation? matt: it seems as though we know less now than we did this morning. the police this morning according to german press .ources by this afternoon, they think it's possible they had gotten the wrong man. the suspect, the true perpetrator may still be out
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there and armed. the truck that was stolen was also occupied by a dead body of a polish truck driver that had been shot. the concern is someone is still out there. police said they are not sure if they know very little about what did happen. you heard it anglo merkel say they fear it somebody from a refugee nation seeking asylum and protection. david: how have you seen the city responded? now to this news that there might be suspects at large. there are hundreds of people,
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thousands of people gathered around this christmas market. a highlyormally populated shopping area. expensive luxury stores are just down the street here. there are consumer market stores. ofs is the memorial church kaiser wilhelm. it was blown to smithereens during world war ii, but left that way to remind people of the tragedy. there is a church service going on right now. they are allowing worshipers to go in. they started a church service. attack,fter this vladimir putin spoke out. have we heard from anglo merkel in similar terms?
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matt: she has talked of the response they are preparing. using every measure of the law of available to her to find out who did this and to find out why and how this was done and to prosecute the person or people involved. as far as anything else, she has not made any comments about terrorist groups. no one has claimed responsibility yet. the suspect that they have, they are not sure it's the right suspect of this crime itself. david: is she able to deal with this outside the crucible of politics? are the people allowing her that? matt: it's obviously a very difficult situation. it would be made more difficult
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if it turns out that a refugee did commit this crime. to be frank, she does not have much opposition in this country. doesn't really have a strong candidate to run against her. right isparty to the the afc, which has won some state elections, but doesn't have any power in the federal government. david: thank you very much. i appreciate that. hedge funds will look to a drumming in 2016. we will take a look at the winners and losers over the past year. the hedge fund scorecard is coming up next. this is bloomberg. ♪
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david: this is bloomberg markets are in this busier to throw hedge funds under the bus. there might be submit your performances, but the industry has gotten a pick me up with donald trump winning the presidency. we have the fund winners and losers. before we get to that, let's go to the backdrop how grim this year was. >> everybody had an opinion and something to say about hedge funds not when he -- living up to their reputation. a lot of pension funds were withdrawing. suffered a loss of about 2% of assets. a the end, it's going to have positive asset under management
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from next year because of decent performance. it's not the performance people expect, but they were up for the year. hadin the industry, you macro hedge funds not performing well. macro hedge funds couldn't reverse their fortunes from the beginning of the year where a lot of them were along the dollar, short the euro. they miss called a lot of these steps of the big monetary authorities around the world and they were able to get to flat territory. a lot of them are still down in double digits. reverse and movers go in the black. we had rubicon go back in the black.
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the overall strategy was negative for the year. big was the election? was that the moment the started to write things? katia: louis bacon said it was the seachange. it's an expectation for next year. they are hoping this will be it. they hope there will be a divergent and interest rates and policy and monetary policy. there's going to be volatility around all of these asset classes that will provide opportunity for macro funds. you will have different groups and industries performing this ridley -- differently. consolidation, that's were the opportunity lives. distress funds performed well this year. they may see more opportunities
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as they are concentrating on energy bets this year. david: how significant is it that the secretary of treasury has an expectation with hedge funds? katia: there is that expectation. this could mean for example bringing back hedge funds. they have suffered under the lack of liquidity. that could be great. if everything continues to rally across the board because of these expectations as we've seen regardless of whatever political funds mighthedge have their moment back. they say they can't perform well. we will see.
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david: there were some fundamental changes to how hedge funds worked earlier in the year. is there a chance they might backtrack on those. is that now on pause? katia: everybody will continue to bring them. absurdlyem from an area thato 2.52 2.25 still above the industry average. as a whole, it has come down. there is pressure on new launches to forget about the old ways. everything has to be bespoke. nothing is off the table. you want money to come in if you want to survive in the industry. that's just the new norm. we are talking about reversals.
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does it go back to the black? he was writing about the economic environment. what are his expectations? katia: he has been one of the people out there, it's more of the same and more of the same. saying there is going to be a shakeup in he is confident in the new deal makers that are coming into all these positions, including the president of bridgewater who is said to be the front runner for the deputy defense position. he is one of those voices that says it's going to be a new year. david: thank you very much. common up, mohamed el-erian. this is bloomberg. ♪
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>> live from bloomberg world headquarters in new york, i'm david gura. with get to the headlines. anna has more from the newsroom. has summit merkel
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top security officials to discuss the response to the deadly attack in berlin. merkel toward the spot. 50 --ple killed in merely nearly 50 people injured. germany interior minister said authorities are questioning said. a man applied for asylum in denying involvement. authorities not question whether he was the truck driver. a shooting does not appear to be linked to terrorism. three people went -- witnessed the attack. his body was found near the crime scene. investigators say he may have had an interest -- accused of injuring 30 people after setting off ponds in new jersey and new york has pleaded to not guilty to
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attempted murder charges. today to faceance charges that he tried to kill police officer before he was captured. president-elect donald trump my face a financial loss if he has to sell his washington hotel now. trump would be unbroken -- both sides of the 263 room tron -- trump international hotel. for the trump organization to recruit is 200 $12 million investment, they would have to pay them what a hundred thousand dollars per room. it is not clear whether the property could attract a bid that high. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. check let's take a quick of the mark -- at the markets.
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ballyhooed, the dow 20,000, the dow is down, up sisi nine ballyhooed, the dow 20,000, the dowpoints, s&p up one third of . the nasdaq about one third 20 points. >> shares are up sharply. the today show -- today chart , alsoshares are surging high but still up more than 8%. the l simon drugs did pass these studies. and elizabeth are saying this could represent an inflection point, a very important point for pharmaceuticals. with this drug possibly on the horizon, the alzheimer's drug could help it meet its potential. mid-stage study but something positive on a.
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shares are being rewarded. other biotech stocks shery higher today. named ama drug has been breakthrough drug, a designation for a breakthrough drug, clearly helping those shares. also added to credit suisse passes top u.s. focus was. plus, trading higher on an upgrade over credit suisse to outperform. the firm is doing this ahead of the launch of the company's skin condition drug. .ore than 25% upside potential a lot of good stuff going on for biotech. into bloomberg, a bit of a different picture. remains stuck in the bear market. a peek back there in july down sharply from that peak. a battle between the bulls and the bears. the 50 day moving average passes through the moving average.
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happened,ime this biotech plunged quite a bit from there. we have strength from biotech today. the biotech sector may not be out of the woods yet. david: the u.s. dollar is at its strongest since 2002 but at a time when it is at its fastest tied to monetary policy. bloomberg view columnist and chief will advisor was on bloomberg daybreak america today and was asked when monetary policy becomes self limiting and become opposite of desired growth. too far when it does two things. titans financial conditions too much and when it fuels protectionist rhetoric in the united states. in order for the trump rally to be sustained, it is not just about implementing policies at home. there will have to be
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rebalancing in three key countries -- germany, japan, and china. too far if this is an inflationary move rather than true growth. if there is really inflation without the underlying growth, that would presumably hurt the dollar. >> absolutely. static flechette and because we have got -- that is even worse. right now, it is an open issue. the market has priced three distinct influences. higher inflation as you mentioned. higher roof. abroad back from into the stock market. that is why you're getting the reaction on the act of the market, the bond market, and the fx segment. >> i want to explore the two channels you have a death ride, one of the big find -- one is financial in dishes. the other is what could come
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about because of it. quite clearly, for trump to do what he would like to do, the stronger dollar is not part of the story. who steps in? it is not the fed at the moment. i want to gauge who steps in and who do anything about it. >> what is desirable as opposed thatat will happen, is governments in germany, japan, and china step in with two things. structural reforms and in the case of germany, more stimulus. if you get that, you get a rebalancing, you can maintain the act ready, and you do not get too much pressure from the segment. the end of the day, for mr. trump to succeed, it is not just that he has a pretty clear path domestically, because republicans control both houses of congress, but he will also need to convince the allies and china to move on their rebalancing.
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>> let's bring it back here. advising mr. trump right now as he prepares to take office, what are the structural forms specifically? let's start specifically with the tax code and core taxation. if you were advising him right now, what would you tell him? >> one is simple fight. the antigrowthf distortions. reform not had a tax since the midnight in 80's. we have had a lot of tweaks that resulted in a system that is less coherent and not progress. the first thing is simplify it. the minute you do that, you can lower the rates. third, you can move on infrastructure spending. remember president obama propose some of this, but he could not get any cooperation from congress.
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>> talking about a spread, or the united states would continue to deregulate but would go the other way. 10 years ago, we call this the race to the bottom, will it be the beginning of that all over again? >> yes, it's beef to the bigger issue. you are getting to spurgeon -- dispersion in economic performance and many elements of policies. much of a limit to how this you get. it goes back to the issue, the u.s. can do quite a bit on its own. in order to sustain all of this, it will need other countries to rebalance their policy mix. >> to what extent with the united states effectuate that change? the capital will float toward markets that are less regulated and that will make some of the more regulated markets after they loosen up regulation. >> correct. pulls upe u.s. everybody else or, because
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others don't and the currency gets too strong here in the u.s., the u.s. gets pulled down by everybody else. that is a tug-of-war that will play out in 2017. the markets are betting on others pulling out now. risk.are two sides to the one has to be careful not to over emphasize one side. >> another person, the two-way risk, help me out. i have got treasuries, 30 years, pushing 350 p wright the dow pushing 25,000 points of the moment. let's talk about animal spirits. what happens more -- what matters more? will mean for mortgage rates, or seeing down 20 k splashed across the front page on newspapers? >> i think 20 k will have an influence.
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we are getting higher rates for the right reasons. higherare pricing in nominal gdp. 20 k will be the signal of higher nominal gdp. mortgages will see, yes, that is not great but it is coming because we will get more income, more jobs, and more growth. that is the narrative that will play out for a while. ok, are thejanuary, measures following? so far, it is just expectation and announcements. we have got to go to detailed design, which is not easy. endohnson goes to the long of the curve with mortgages. let's go to the short end of the curve like auto loans. the fed says it will not raise the rates here. at what point will it affect sectors such as the sales of automobiles? weight -- a race between the cost of borrowing
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and income. yet at we are not tipping points in terms of funding costs. we still have some room. starting from artificially low levels. you may get a reverse reaction, as the rates go up, people accelerate up front. a reversetually get reaction initially and the payback later on. >> that was mohammed earlier today on bloomberg daybreak. ago, aup, 10 years change of the game. we will tell you what the future holds for the innovative restaurant next. this is bloomberg. ♪
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mark: you are watching bloomberg. mark: this is your global business report. despite conviction in a paris court. 2016 has been a tough year for uber. report of the they lost money to billion dollars in nine months. venezuela is facing tough times and many are asking if it is time for the nation's leader, nicholas maduro, to go. executive board is affirming its backing of christine lagarde. that is despite her negligence conviction in a paris court. the board is thanks and says she is happy not to appeal the decision. >> i am not satisfied with it.
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there is a point in time when one has to just stop, turn the page, and move on, and continue with those who put their trust in me. was convicted of toling to overturn a payout a businessman in an arbitration case while she was the finance minister. that was nearly a decade ago. she will not face a prison term or a fine. mark: bank of america credit card business in britain. deal.4 billion all-cash comes as the lender looks to expand in consumer finance. the transaction will at 800 $59 , an increase of its yearly sales. , shiftsg u.s. market two pickup trucks and suvs. general motors plans to permanently -- three car plants.
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depression of several models, including's chevrolet cruz compact, the largest u.s. automaker will also temporarily lay off employees across five factories. chrysler is trimming production in canada. uber lost more than $2.2 billion in the first nine months of the year even after exes -- exiting china. the company lost more than $800 million in the first quarter, not including its chinese operation. revenue is still slowing and set to be on track to exceed 5.5 the in dollars this year. julie: time now for the bloomberg quick take where we provide context and background on issues of interest. more oil than saudi arabia and more property than brazil here based with reduce oil prices,
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everything from toilet paper to antibiotics to food. is holding up tightly to power at a high cost to venezuela's them credit institution. here is the situation. in december elections, gained control of the national assembly for the first time in 16 years. the court worsened in october when they force a recall vote and that was suspended by the national a rectangular tauro council. the suspension was widely at a breach ofoad as democratic protocol. citizens wait in long lines. june, they probably the first major food right in decades. here is the background. hugo chavez was elected president in 1998 and revolutionize politics with fiery u.s. rhetoric. he nationalized thousands and assets, reducing the capacity to
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produce anything but oil. they have struggled for popularity. fall, ail prices had homicide rate second only to honduras. here is the argument. his critics argue he so thoroughly bungled management of the country that it is time for him to leave office. those skeptical of the opposition point out it is made of more than 1000 parties that range to center-right and it has no single plan. analysts increasingly question whether venezuela can and should -- on which it owes $90 billion over the next 10 years. you can read more about venezuela and all of our quick takes. head to bloomberg.com for more. ♪
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david: stk went open in new york city a decade ago. he livened up the traditional steakhouse with live djs. they now have details around the world and joining us now as jonathan siegel, the founder and ceo. before we talk about global expansion, let's talk about the meatpacking -- packing district. how important is new york still? >> very important.
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people do not want to go meatpacking. a gamble on the area. traditionallyre 80 send men. get by, we need a balance between men and women. couldk a gamble that we create a female fan environment that would level the playing field. biggest guyake the out and put the girl in an business chatter out and music in. david: how quickly did you realize it was taking off? >> it was fairly quick. we were lucky. eating more red meat because of the atkins diet. more.so, people wanted it was less about a great meal and more about a great experience. because we could blend the downtown with a successful fine dining experience, that is what
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you need to do. if you can catch imagination, you will be fine. money is it hard to make because of how many new ios 7ouses there are? >> next one is worth it. it started in new york and grew from new york and still, we have two stores here. they are still big contribution or's to success of the company -- of the company. david: tell us a bit about the expansion to the middle east and what -- what brought that about. operate in five countries. italy and spain, the united kingdom, canada, and the united states. the next step is to continue into europe, the middle east, the far east. we continue to contact people who want to take a brand.
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we wanted to take the partner carefully. venues, the address. we have a beautiful outdoor patio that overlooks, as if that was not amazing enough. our second location is in the hotel at them or in a bay area. >> is it something you would prefer that we like to see going forward? us the brand into international markets and capital involvement. does not take away the amount of energy and effort you put into it. find the right partners.
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when a client goes, she wants a certain experience in each country she goes to. our rationale, then we're more like a session it does not necessarily follow there just a great -- they have to understand private equity as well. david: you have been at this for a decade. what cities work well with stk? >> we have done all the big stores we are going to do, 10,000 square feet in new york, las vegas, miami. we have developed slightly smaller stores, 5000 square feet . it still has the same vibe in the same energy. it is designed to accommodate lunch as well and smaller cities. every city has the elements we need. they have people who want fine dining and good dining.
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they want environments where people meet people. we can take stk to any u.s. city. success.ontrol it david: thank you for coming in. founder of the one group. that is from bloomberg pursuits. for more, check out and i pursuits on bloomberg here still ahead, find out why come you next. ♪ find out why coming up next. ♪
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david: it is 1:00 p.m. in new york. i'm david gura. welcome to bloomberg markets. ♪
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david: we are stories from san francisco to brussels to berlin this hour. thanks for watching. opec and non-opec, oil prices may drop. as when citigroup's global commodities research, we will thek about this later in hour. approval to buy whatsapp back in 2014 now. could face a multimillion euro fine. more than0 has gained 10% and nike has gone the other direction following than 10% and nike has gone the other direction following 118%. a chart you cannot miss for after the bell today. abigail doolittle joins us now with a look at the markets. abigail. abigail: feeling a little giddy and excited today, really hanging onto the gains. all major moving averages higher.
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the s&p 500 similar to the down the nasdaq earlier put in a record high as well. of strength and yet we have not achieved down 20,000. perhaps that they will come. perhaps later this week. we are looking at carmack shares . absolutely searching. on pace for their best day since april 2015. at their highest level since july of 2015. the largest retail of used vehicles beat third-quarter estimates here they beat total used vehicle estimates. clearly like this with the stock up nearly 6%. a nearly 15% shortage on carmax. the nice move up could be a bit of a short squeeze. well, another stock doing we have big cruise line stocks trading higher after carnival did the second quarter earnings
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and sales estimates, excuse me, third-quarter sales and estimates after management said it was the company's's most profitable quarter in history. as for .17, carnival is saying rising to cost could weigh on the profitable outlook. we see it helping norwegian cruise line. on the year, a different story. norwegian cruise line, somewhat significantly. it could be oil. we have oil forecast that the carnival management was talking about here and we have oil up pace for its biggest gain since 2009. a massive gain. turning to the energy complex, a little bit of a mixed picture. natural gas is trading lower as expectations for a mild start to the start of 2017 are coming in. i am happy about the forecast
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but it is weighing on natural gas to some degree. abigail, thank you. let's check in with the first letter news ran out. am a has more from the newsroom. ; -- meanwhile, chancellor angela merkel says this was a terrorist act. the suspect arrested immediately ther the attack is truckdriver. the group of eight -- no groove really came to responsibility for it. president obama spoke by telephone last night with angela merkel. he offered condolences to -- about the apparent terrorist attack and offered appreciation to leadership and efforts to defend our way of life. u.k. prime minister said it brings a deal could be completed by 2018.
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she is calling to outline plans in a speech earlier next year. in londonwere told and agreement could be signed months after it begins. >> we want to get this so people canace move on to the new relationship they have with the united kingdom. there is a willingness on that basis. >> in time for it to be ratified by the european parliament. well before parliamentary elections are held. lawyers for president-elect donald trump and's former students of his note to have filed an agreement in court. he it signaled the deal remains on track for the judge's approval next year. to pay 25 million dollars to settle class-action lawsuits in san diego and one by a new york attorney general. trump admitted no wrongdoing
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under the terms. global news 24 hours a day power by my 2600 journalists and analysts in more than 120 countries. this is bloomberg. david: u.s. stocks climb as investors by financial companies. the vix measure a volatility drop fourth lowest close since august thanks to a lack of catalyst. joining me now is mike regan, here at bloomberg news. start with the vix there. how unexpected is this when we talk about what a big catalyst it is. i would think the vix would be a bit more subdued. a the end of the year is strange time. one manager was a few percentage points ahead and set can you make it and today -- make the year-end today? you're ready to just let it ride from here on out.
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a lot of research and commentary is that there is a bit of economic data coming up, durable goods, other data points like that. we have a bit more certainty on what the fed will do. no real earnings to speak of so the trends are in chargewe now. it is really a technical analyst market. a lot can happen but a lot of what i'm reading is at least until the end of the year, they expect trends to keep going. impliedook at the volatility on the s&p 500, that skew is even lower than the vix. it is at a more than two-year low. the cost, you can see it on the cost to sell the index below the current level costs a lot less than calls to buy. people in the bullish frame of mind, they would rather buy it and sell it.
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one thing i read was from said, do not face the trend for now. come january, he calls it self inauguration. the question is, will the volatility be so cheap come january that people will be buying in january? just in case the inauguration causes a little bit of an event. impulse to look at certain sectors that might benefit from a trump presidency. have we seen that even out? where does that stand? >> to some degree, the rotation is not as pronounced as it was. it almost looked like it would come back a bit. people are still very bullish for financials. almost every strategist i read are saying bullish on financials because of a higher interest rate margin, they are bound to get water down to some degree.
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that is the general thinking. the thing that stuck out for me today described animal spirit. i think she narrowed it that. it is a feeling of exuberance in that is grounded a , and reallylation pricing in the ability for president trump to get his whole wishlist. it may set up for disappointment should the republicans not give him everything he wants, republicans in congress. should geopolitical challenges the little more than he can handle. now, we are priced for trump to get everything he wants. david: let me pull up the 10 year chart here. the headline looks way that there. give us a sense of the grabbed me here. >> it was a bad joke on my part.
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everyone bought a hat saying dow 10k. that is a horizontal white line there. you can see 10,000 was a tough number for the dow. there was a market bubble there in the late 1990's. the 10k hats were fashionable for a good decade. a lot of people will mock me for the fascination -- fascination i have. down a the dow coming lot. the dow is a ridiculous index based on an index -- a methodology, the cost of share price and not the market cap. if you look at the dow since yesterday, goldman sachs is alone. is a silly index but that said, everyone still talks about
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it. on thereet will react dow. could it possibly make people more bullish, we will see. it is something everyone will talk about when it happens. >> what we saw yesterday in , there were three large attacks, worry some attacks. the markets seem resilient. a rare terrorist attack will create huge market moves here. what do you make of the fact we did not see much? >> we have seen a lot of the terrorist attacks come over the years. a lot of it is a knee-jerk reaction that typically does not last long. the russian ambassador to me was a different story. more of a geopolitical sensitive topic. but again, people are in the animal spirits motive the markets. goingg to embrace risk into the new year. i do not think the markets were
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negative for a single tech yesterday despite the headlines. >> thank you for joining me here. breaking news out of berlin. we were talking with a colleague a little while back for the search for suspects. authorities have released the suspect who was temporarily detained. they are citing insufficient evidence and saying the suspect or accomplices may still be at large in berlin. search is on for a suspect or suspects in the city of berlin tonight. this is bloomberg. ♪
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thed: time now for
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bloomberg business flash come a look at the biggest business stories in the news right now. suffering a systems failure that rippled through several futures contracts last month. the systems the function causing errors in figures at the continental exchange. the data on seven contracts. ice cream chain dairy queen is in a deal to expand into south korea. the company plans to open 50 locations in the next five years. derrek lee has more than 2200 outside the u.s. including nations not known for hot weather. just kuwait and saudi arabia. puerto rico budget shortfall of $7.5 billion over the next decade. the forecast is $10 billion more than projected by the governor. that is your business flash
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update your european regulators are investigating whether facebook gave misleading information about whatsapp in 2014. the social network claim to could not combine whatsapp data with other services before doing so earlier this year. cory johnson joins us from san francisco with more. what are the next steps? johnson: we will see how it develops but it answers a great question. how does facebook make money off of something offered for free? whatsapp is massively popular around the globe. did facebook just buy it to keep people from using a social medium that was not face? keep them under the same tent? we know it might have seemed obvious. facebook garnered enormous amounts of data about users of whatsapp and was able to triangulate that into advertisements on facebook. the problem is they told regulators they could not do that and let alone they would not. it is clear that was not true.
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david: is the deal at all in jeopardy? they own it.lready the question is, what will behavior be going forward and can facebook continue to use the data? what will a fine be? it is a sizable amount of money. will they have to do to incorporate the business card forward and could it be different as a platform than it is today for global users? you look at european revenues, they are sizable in the last calendar year. the revenues have been growing at a nice clip. the notion that can be in pinch , the valuable data they are able to garner from want -- from whatsapp come if i text david gura and say let's go to dinner in the village and suddenly in the facebook feed --
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feet in the village, that kind of connection starts to go away, that could hurt facebook's advertising revenue. is staying in her is just fine. here, it is at name we have heard in conjunction with apple before. pretty broad mandate here. tech real friend of the community in silicon valley right now. cory: there is a different note for privacy and european your -- law. in the eyes of mark zuckerberg, privacy for -- that is different from privacy in europe. fundamentally, facebook, the business -- business gathers data from users. users supply data and they get marketed to because of that data. they may not have known they were doing that when it comes to
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setting messages but that is also informing what you see on your facebook feed. that is what makes the whole model work. david: the company has so much data. it seems to have some trouble with accuracy. can i draw the line i just drew? better with the metrics it just came out. cory: they are self-reported metrics that have been adjusted down and adjusted down a couple of times now as they try to come up with better measurements. we talked on the bloomberg markets radio. the company does a lot of advertising on the radio. to ceo said we have got focus on looking at results for advertising. we know if we run more ads, we get more of a response. , i thinkhem themselves you will see more advertisers the information
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from facebook has not been dependable, they will not lean on that information. they will have an outside metric. david: cory johnson, thank you. you can find his radio show and 40 minutes with carol massar. 2017 poised to be the year of everyday? this is bloomberg. ♪
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david: another year is coming to a close as we look at the deals. bloomberg gadfly columnist has the top m&a predictions as told through horror scopes.
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let's begin with aquarius. . will read the lines the year has been unusually challenging. needed a time of year to step aside. you must go out on a high note. >> he is supposed to risk higher in 2018. everything is supposed to be swimmingly. then that successor left the company. now it is like want they do? a huge company, theme park, movie studio, espn, not doing so well lately. i think people are wondering is there another big deal and is it a breakup? would that make it easier to manage disney and find a replacement? that is arecement, difficult. you need someone who is skilled tv networks and theme parks and movie deals. a breakup could be in the near future.
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david: it seems there is a lot .f attentional for deals part of the family controls the cbs corporation. .t has been a volatile year just last week, we had the end of a talk of a deal within cvs and viacom. what you looking for? ago, cvs and viacom but obviously she changed her mind. you have to wonder if there is a reason she did that, is there another company that could be interested in merging? for instance, espn could make a .ot of sense all of the media companies, there is so much movement that viacom may not be the best option any longer.
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maybe it is something else they can do. it is totally possible. david: he has run the company for a long time. was a darling for a long time and now is not. perhaps at the end of his career, he is laying off what he has created. >> right. craft beer is different now. from a merger standpoint, it makes a lot of sense in terms of .hat he is thinking of doing something like sam adams is very profitable. it just have better margins. something like sam adams could make a lot of sense for them. and maybe they are more of a friendly buyer.
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warren buffett always talked about in the context of deals here. his last one was a different road to go down. dealnow how crucial his will be. have a sense of maybe what he wants to buy, the food industry with kraft heinz. it is hard to guess what industry he will look at. successor, which is becoming more of a focus of the story, i think he needs to involve that person a little more. maybe they will have a little more of a say and that will bring back that trust that investors will need when that person ends up taking over berkshire and it is no longer warren buffett running things. it is important from the standpoint they are generating so much cash so i think the next deal will be a big one.
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there were no cancers. we found there was a study from a few years ago that said the fewest number of ceo's's were born in the month of june and july. the cancer side. if you are a cancer, you will not be the ceo. comedy --e fast commentary, bloomberg gadfly on the web. 's oil prices could drop. more on how that deal could unfold. this is bloomberg. ♪
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david: live, this is bloomberg markets. more than 10% this year, nike has gone the other direction falling more than 18% and
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analyst sent investors worry about market share losses to adidas and under armour in the u.s. let's look at the numbers in today's the numbers don't lie. competition,ace of stocks rising with annual games, two dozen 16 is a very different story for nike. it has always gotten worse. has fallenarget since the beginning of the year. bank of america downgraded on halloween. in aompany lost ground critical area, innovation. future orders for north america, you can see the key indicator of , orders were not a proxy for revenue and remains confident north america would be strong for the company. you can see were north america is for other parts of the
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company. the biggest growth driver, that is positive for nike. an area for revenue growth is nike. more than 50% over the past five years. the 70's fortune largely ride on the running segment. building on endorsement guilt of high profile players, nike became biggest seller of basketball shoes, more than 90% of the u.s. market. after the u.s.e closing bell. let's get to the headline this afternoon. and the has more from the newsroom. survey says russia, a ron, and turkey already down between syrian government and the opposition. the goal is to target syrian television -- terrorism.
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this comes a day after russia's ambassador assassinated. -- t forget aleppo france's government attacking securities christmas markets across the country. working closely for months to help improve security in both countries following deadly terror attacks. mitch mcconnell is rejecting -- possible interference in u.s. elections by russia pure the finding he was intelligent officials, democratic in mills in technology -- elevate the donald trump is a serious issue that is not require a select committee and that the intelligence committee should be able to investigate this. they claim the companies
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provided material support to the islamic state helped to radicalize the shooter. 49 people died in the july shooting and dozens more were injured. news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. doubts.ncreasing our next guest says oil prices may trot next month. joins us from his trading floor. let me ask you what you make of the signs of the cuts here. we can talk about enforcement and emotion -- in a moment. but how much of a difference do you think they could make? >> i think they could make a lot of difference here they are hoping for $.70 -- 70% compliance. i think market watchers including at the iea in paris,
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where the global balances are and they are missing out on what is a very significant -- significant think so far. david: i will describe this to you. you are looking at crude production over the last 10 years. it seems like it has been difficult to enforce this thing overtime. how much of the deal do you expect to be enforced? a i think it will be around million barrels per day. remember a significant amount of the 1.8 million and a source about the doubts about is what they are calling managed to climb. countries like mexico are achieving something that is already taking place in already is part of our understanding of the markets going forward.
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it is really considerably less than what appears on paper. between the five countries, qatar, which is really think about close to a million barrels per day. it is in the interest of these countries to get the financials in order to reduce the amount of cash they are burning as the results of their unprecedented deficits on the budget side. they felt financial pain and have the desire and the ability to get the markets to rebalance in short order. the question should not be whether or not they rebalance the market but what happens afterward. also, are they underestimating the resilience in canada and production going forward.
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>> they were exempted from the deal. howe see more out of libya, does that change the picture? >> it depends on your starting point. we calculated an average of 1600 thousand barrels per day. there is not likely to be any more than that. it could be less. we think production volumes will be volatile. and 1.6 barrels per day. has been no resolution of the problems that exist that should facilitate any kind of increase on a sustainable basis. david: how should all this play out, first the meeting of week ago. i wonder what the last two meetings have said to you about the future of opec and the role
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of non-opec users? >> a clear messages this is something about tinkering at the margin. i think the underlying pitcher has been the same for the last three years. non-opec got going in a higher-priced environment. oil sands and share have seen phenomenal cost inflation which may be slightly reversible on the shell side. and thisrly permanent puts a little the ability of opec to manage prices, and their ability to create a big margin in the market clearing price has been eroded. we get to $70 per barrel and i think we can expect short cycle play andme back into we can see other forces into work, the cost of getting these projects going has fallen closer
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to 60. i think it is a fundamental change. >> we have seen a stronger dollar in the past few months. how strong would have to get to be problematic for oil? >> a lot stronger than now. oriented to sustainable and negative correlation. u.s. dollar and other commodities. returning to the old normal from the early 80's , until had oil prices around 2007, there is a random relationship tween the price of the dollar, the value of the dollar on the one hand, and commodities on the other. prices have gone up and down together and are positive league -- positively correlated. we see a dissipation of that.
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look at the last year. a surge in u.s. soybean exports. appreciating the whole time. you cannot explain what is going on as much as you could between 2013 and 2014. david: there has been a lot of talk about tax reform congress is considering here. how much of an effect cannot have on controlling prices? >> we have to see what the final proposals are and believe the toerest rates will not work derail it. we see the effort to equalize taxes against those abroad. the tax is not levied on exports and what the rhine those trying
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to do is have an equal opportunity for u.s. exports on that tax rebate. there is a reduction in and above the basic reduction by third of corporate taxes. in addition, there are different treatments under the new proposal of imports as it may or may not be deductible versus cost. result is an effective point five cent tariff on imported goods. there is no doubt a to exporters and that the laws passed in its , one resultsion would be higher prices for gasoline and diesel and crude impact onprofound that relationship. to auld probably push wti premium and see exports of gasoline growing at a time that
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prices are going up here it would not be good for the consumer. punish -- - thet is emerging from concept that will -- almost certainly lead to a final bill that looks very different from what is tending now. david: i look at donald trump us is preferred. , to perry and right pinky fuel the most influence over oil prices going forward and what role do think the interior department can play here when it comes to production? asterix --reating aspects are the availability of acreage on federal lands to be available both onshore and offshore.
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that would give a positive boost ,o supply and a negative impact also whatever they turn out to be, a looser interpretation of a change inlations, the nature of regulations to make it easier and cheaper to build pipelines as well as produce oil and gas. that is where we can see through environmental readings of , natural gas, and the country. almost certainly an impact, lower prices on the u.s. market, and through the lower prices to the world. this is particularly the case in the natural gas side. pennsylvania, could see a
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phenomenal new source of production. already, pennsylvania would be the third-largest natural gas producing country in the world. we could see them or takeaway capacity, keeping u.s. oil prices at a three dollar level, or lower for a long time. the u.s. becomes a bigger and bigger exporter of natural gas. this would weigh on the price of gas in europe and asia, anywhere where u.s. can be exported. it is a profound impact, potentially over the next four years. david: thank you. coming up, getting lapped up by u.s. investors will look at what is driving the -- this is blumberg. ♪ -- this is bloomberg. ♪
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david: let's head to abigail of thele for the chart day. stock and bond markets p is a great chart. shows the value of global bond markets. higher in value. another good year for investors. as for the bull market, the second longest in history, here is an interesting chart we have. in 2009, is our
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quarterly. each of these are areas that represent a quarterly performance. quarter is tracking similarly to the fourth quarters several yearss are the fourth quarter of this year is the strongest quarterly performance for the dow since 2013. it has only been one down fourth quarter in the bull market back in 2012. many are -- it may be worth noting the second strongest with the strongest quarterly performance back here in 2012 or lead to a first quarter decline. perhaps it is the strength we are seeing that will lead to a bit of a pullback. a reason to think that could is our final chart. it shows the dow on top with massive gains in the relative strength index momentum
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indicator that many investors use. you see it is at levels last seen back in 1996, suggesting overbought.may be perhaps a pullback is due by the of 2017. david: the u.s. bond market is increasingly -- $69 billion worth of debt. the 12% from a year ago. give us a sense of a comparison here. >> you mentioned $69 billion in u.s., once adjusted for currency is up -- it is about the same amount, $70 billion. from 2015r 2016, down and it illustrates flows into the u.s. and the issuance of corporate debt.
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by far larger american market. high-quality corporate debt from canadian companies really being lapped up as he said there. taking into this, it is available in the terminal today. david: it sounds like a win-win situation for canadian companies. how about investors? canadian investors, it is a little difficult in the sense they cannot get at them first. u.s.,eals done in the offered to u.s. investors first which will leave some investors in canada trying to pick them up in the secondary market. it is not ideal for them but head of global debt capital markets says north american financing model. wentys largest insurer back for the first time since 2010.
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to data compiled by bloomberg, one billion dollars of that from -- they are borderless. , will help me understand the activity continue now as we see rates continue in the u.s.? arranger the biggest corporate bond sales. they expect to see this continuing. going to the market in the u.s., it might not be as robust because of interest rate swings. the cohead of debt capital markets says companies here might have to be more nimble and but he does expected to continue. volatility will continue and lending in u.s. turns will
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continue as well. rbc is down $7.2 billion worth this year. number two in that regard is about $13 billion. expected the federal government will likely return further this year. >> thank you. time now for the biggest business stories in the news right now. morgan stanley will pay $7.5 million. you's transactions with an affiliate to reduce the amount it was required to keep in a customer reserve account. the rule is meant to say great -- segregate assets in case they bank failure. morgan stanley did not deny the findings. $1.2 billion. according to court documents, theaters, give15
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up control of media and transition to screen vision. pay $955nt will million. it is part of all great's plan to complete deal with rite aid. it thel will make third-largest pharmacy chain in the u.s. up, live the american dream all has been a nightmare to get off the ground. this is bloomberg. ♪
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david: this is bloomberg market day time for a look at some of the biggest business stories in the news right now. we begin with a system syria that rippled through several last month regarding to people familiar with the matter. thatng errors in figures showed up on the intercontinental exchange. later restated data on contracts. deal to ask is in a and to south korea. they plan to open in the next five years. gary crane has more than 120 stores outside the u.s. kuwait and saudi arabia. the island of water ago is facing a budget shortfall of $67.5 billion over the next 10 years according to the federal
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board overseeing finances. is $10 billion more than projected. that is your thing -- business news flash. ♪
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scarlet: it is 2:00 p.m. in new york and 7:00 p.m. in london. i am scarlet fu. oliver: i am oliver renick. elcome to "bloomberg markets."
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live in we are bloomberg world headquarters in new york over the next hour and covering stories out of san francisco, washington, berlin, and moscow. the dow jones industrial average climbed to a fresh record and within 13 wins of breaching 20,000. financial markets are proving to be resilient to geopolitical quite. jeffries saw profits triple as revenue from trading stocks and bonds more than doubled. we are digging into the results and what it might foreshadow for bigger wall street firms. and citigroup's head of commodities research and morse joins us on the outlook for oil. how he sees brent crude a year from now. u.s. markets close in just under two hours so let's look at where stocks are trading with abigail doolittle. i guess we need to start with the dow. doubtl: we now have the creeping closer to those levels once again. the trading has been somewhat
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excited and giddy, and sometimes you see that kind of trading action reversed, but not today. the dow had been within 13 points of dow 20,000, then fell back a little bit. now creeping higher again. all three of the major averages are higher today. at various points, all-time record highs. the dow and the nasdaq are on pace for record closing highs. the s&p 500 still lagging a little bit. lastast s&p 500 record was tuesday. let's see if the s&p 500 can catch up. as far as the dow funny thousand, if it can make that techniciansday, one telesis more psychological than anything else, but if it can hit 20,000 today, it would be the fastest 1000-point gain in history. the fast this is 35 days back in 1999, when the dow hit 11,000. interestingly, we have this
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strength for stocks, but it is not on a ton of volume, or less than average volume. this is the average volume overtime. on the bottom, we have in green the average volume over the last 20 days. the little blue bar shows where we are today. the orange is the prediction for the rest of today. up here this is where we are below the average going. 11% below the average volume. we are trading at these record highs, but not as many participants. perhaps not so surprising ahead of the holiday weekend. as for what is helping today, a few different stocks on the dow helping out. caterpillar is trading higher as the stock was raised to a positive. positive or bullish on caterpillar prospects on emerging markets. we have nike trading higher on earnings. goldman sachs trading at levels last seen in 2007, oliver. oliver: thank you very much,
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abigail. "firstheck on word" news. courtney collins has more from the newsroom. tney: chancellor angela merkel is addressing the german people today in the aftermath of the fatal truck accident at a berlin christmas market. force ofedged the full the law will be deployed to clarify every detail. merkel: there is so much we don't know yet with the required certainty, but based on current evidence, we need to assume this was a terrorist attack. courtney: 12 people were killed and another for doesn't hurt dozenhe truck rammed -- 4 hurt when the truck rammed into a market. a male suspect from pakistan who was detained and questioned has now been released. the u.n. humanitarian agency says syria's government has authorized plans to send 20 staffers to monitor evacuations from aleppo. a you official says the monitor
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says the monitors will be deployed as soon as possible. up to 3000 are awaiting evacuation. ceo is underp consideration to be donald trump's choice for u.s. trade representative. the former ubs executive meets with trump today in florida. the transition team says trump plans for commerce secretary nominee wilbur ross to direct the administration's trade policy. he says there is no plans to combine commerce with the office of the trade representative. more charges have been filed by the michigan attorney general in the lead tainted water ices in flint. -- crisis in flint. 2 former emergency managers with multiple felonies for their failure to protect residents from health hazards caused by contaminated drinking water.
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9 others have been charged in the probe. global news 24 hours a day powered by more than 2600 journalists and analysts in over 120 countries. i am courtney collins. this is bloomberg. oliver? oliver: thank you, courtney. well president-elect trump's plans have fueled optimism for growth, mohamed el-erian warns that the successes will depend on other major economies. trumpd: in order for this rallied to be sustained, it is not just about him many policies at home. there's going to have to be rebalancing in three key countries -- germany, japan, and china. china isoining us from president of a sovereign and opportunities.
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it seems like the investing community at large sees the surprise election as an opportunity. where do you fall? >> it views it as an opportunity, oliver, but the rest of the world continues to be very important. we are not in the situation we were 10 or 15 years ago when u.s. economy dominated the whole world. and we could take the rest of the world for granted. the variousr, among countries that mohamed el-erian talked about earlier in the bloomberg program, i would consider china to be particularly challenging. i was in china all of last week. and the situation with respect to capital outflows, the pressure on the chinese currency, have all increased after the fed rate hike, and because of the concern over the trump presidency. those will have to be taken care of if we truly want to have healthy economic growth in 2017. scarlet: of course, china faces
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its own political changes as well. 2017 is a big year in the political transition in china. will of people think ensure stimulus efforts to grow stability. want ai think they would surprise move, scholar, particularly in terms of the sharp change in the exchange rate. however, even as they are try to boost the stimulus, the chinese as asset holders want to move the money out of the country as a result of the higher interest rates in the united states, and the fed's suggestion of three more rate hikes during 2017. while there is going to be stimulus from the chinese authorities ahead of the congress later in 2017, you find that the cash that is newly created finds its way out of the country to take advantage of it. in other words, if you are pouring more water into attacked
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and there is a leak -- into a tank and there is a leak in the tank and money starting to flow out. scarlet: we have already seen it flow out. where does it go to? komal: the money is going anywhere out of the renminbi-yuan. the immediate port of call is generally hong kong. there are various ways to take this. one way is what you are going to see is effective january 1, every chinese resident will be $20,000 per person per year, and in january, you will see a lot of capital outflow, and that might go anywhere. in terms of whether it goes into hong kong dollars or new york or vancouver real estate, or london real estate, any one of those as far as chinese money is concerned, the point being that the slowed evaluation of the chinese currency is putting a lot of pressure on capital because the holders are expecting a bigger moved to
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come. oliver: you can't see what i'm about to bring up, for the themberg terminal shows term premium on the 10-year treasury. this is looking at the acm model, where you see the huge jump up since the election but also since the middle of this year, with the common sense september, people starting to price in the premiums, basically rising yields in the 10-year. what is interesting about this is when you go back and look, of course we know that the fed hike last year, guess what, he didn't really do anything for yields. is this a fake out? how much do people bake in the hiking outlined in the treasury forecast? komal: those are timely questions, oliver. when the fed hike in december 2015, i said the yield curve was going to flatten, which it did, and shifted down a few months later. this deepening of the yield curve that had been expected prevailed only for a few days
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after the fed rate hike on december 16 last year. i think what you're going to see this year is once again, the fed be unable to raise rates three more times in 2017 because the global conditions simply will .ot permit it to do so there are issues with the european banking system. we talked about china. there are other issues as well with emerging markets as a whole which would stop it. so the answer to your question -260 don't think the 250 range for the 10-year to prevail. i think the 10 year yield is likely to go closer to 2%. in other words, the bond vigilantes have overstretched, and we are going to see a reaction to that. scarlet: part of that is you don't believe inflation is heading towards a sustainable pickup. do you see it coming back -- have we seen the conflation? -- peak inflation? komal: absolutely, scarlet. i don't see inflation picking up
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in a big way. the rest of the world will have deflation into the united states. despite what we have seen in commodity prices, overall there is going to be downward pressure on commodity prices. as far as the fiscal deficit is concerned, it a trump presidency i see lower corporate tax rates, the move of cash from abroad coming back into the country, boosting tax revenues. i don't think the deficit is going to increase as much as the market anticipates. all of those suggest to me that inflationary expectations are yields haved the gone up to sharply and they need to come back post to where they were before. oliver: thank you so much for joining us. komal sri-kumar, president of sri-kumar global strategies come out of l.a. scarlet: coming up, trading revenue for stocks and bonds more than doubled at jefferies. we will find out what it might mean for wall street banks. this is bloomberg. ♪
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scarlet: this is "bloomberg markets." i am scarlet fu. oliver: i'm oliver renick. time for the " bloomberg business flash," biggest business stories in the news right now. volkswagen has reached an agreement to fix or buyback audis. the company admitted last year that 11 million diesel cars worldwide were outfitted with a gameled defeat device to environmental tests. several french banks are suing the european central bank. it is a bid to change the way capital levels are calculated. french banks are contesting the way the ecb calculates their
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leverage ratio, a key piece of post crisis banking regulation. antitrust regulators have given amc entertainment approval to acquire rival carmike cinemas for $1.2 billion. according to court documents, amc, controlled by chinese company, cost to sell 15 theaters to give up control of cinema advertising company inemedia and transfer an additional 24 theaters. the agreement requires court approval. that is your "bloomberg business flash" update. scarlet: jefferies is ending the year with a strong finish get earlier today the investment bank said fourth-quarter profit could quadruple. is this a sign of good news to come for the bigger wall street firms? spring in bloomberg finance reporter laura keller. how reliable a barometer is jefferies? laura: they can be. it is a good question, scarlet.
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sometimes they are, sometimes they are not. the fixed income operations are a little bit larger like many of the banks. in the past couple court they have been pretty much on the barometer. we had a really bad fourth-quarter last year, really terrible quarter to start off in the first quarter. i was very much how the big bang -- that was very much how the big banks fared as well. oliver: what was the inflection point at which banks turned the corner, other than trump? the winds of change had been coming before that, right? we had layoffs at the beginning of the year. throughout the year we had restructuring of businesses. what got these things to turn the corner? laura: four jefferies specifically, they had a lot of problems with -- whether was the distressed debt, which i reported on a lot, a lot of problems there. and also for different trading divisions as well, claims not is
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doing -- clients not doing as much when they don't have conviction on where the trades are going to go and volume is important to jefferies. for jefferies, it has been the back half of the year. little bit maybe in q2 as well. it has been getting those things back and leverage credit is a very big thing for jefferies and bank of america, for example. that has come back pretty well. carlet: what is jefferies' approach to splitting up equities versus fixed income? where has the emphasis been over the past year? as you noted, it started off pretty badly and ended on a decent no. -- decent no. historically, it has more of a debt trading shop but they have used equities overtime to fill in the gaps. this quarter we saw them go back to the extent come platform. we were recording a lot, too,
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about changes in management they made in the equities division to boost profits there. overall for this year, surprised to see that p a littleraised com bit rather than cutting. oliver: as we continue not just for the other banks, but for jefferies in particular, is this just a temporary blip or something that is sustainable going forward? laura: i would love to see more commentary from them but they don't actually have a conference call and this quarter they did not talk much about what they were seeing in the market. sometimes the ceo will talk in a letter about what he has seen, whether it is regulated or something to do with the u.k., but he did not postulate a lot. not necessarily know at this point. scarlet: laura keller, thank you so much. jefferies is part of leucadia and leucadia is up $.44. isver: still ahead, nike
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the worst performer in the down jones -- dow jones industrial today. how it is stacking up against its competition. that is up next. this is bloomberg. ♪
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scarlet: this is "bloomberg markets." i am scarlet fu, along with oliver renick. oliver: the s&p 500 has gained more than 10% this year. .ike has fallen more than 18% analysts and investors worry about market share losses to adidas and under armour in the u.s., nike's largest region. let's take a look at the numbers in today's "numbers don't lie." nike has been rolling since the election even in the face of all of that competition. as you can see, 2016 has been an entirely different story. it has only gotten worse for the
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world's largest sports friend. the analysts average on the target price has fallen since the beginning of the year. bank of america downgraded the stock since halloween and it lost in a critical area, innovation. you can see this key indicator of demand just rose 1% in the fiscal first quarter. nike says orders aren't a proxy for revenue, and it remains confident that north america will continue to be a strong region. when you look at futures globally, you can see where north america stands compared to other regions for nike. china can which generates a quarter of the company's offering profits, is the biggest growth driver. that is a positive for nike, actually, as merchandise held profit margins about 30%. one area for revenue growth is the training session. grew byge bars here, 50% over the past five years. the company's fortune largely rises on running shoes, which you can see in the yellow bars,
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and the sport of basketball, which you can see in pink. building on endorsement deals with many high-profile professional players, nike became the biggest seller of basketball shoes and has more than 90% of the u.s. market. we will be following the results today when they release after the closing bell. scarlet: thank you so much, oliver. when it comes to energy, the outlook for oil remains uncertain. earlier today, the chief investment officer for global credit at pimco share his top investment ideas. >> one sector that we came into the year very overweight was energy. we bought a lot of energy in january, february, and over the last several months we had been selling into the strength, particularly after the opec agreement. you have oil back at 55. remember, it was 26 back in february. we have been selling energy, we
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have been selling a lot of our riskier high-yield bonds, a lot of the emerging markets. mainly over the last month we have been the risking credit positions at pimco. >> are you surprised by the high-energy trading right now? i am surprised because this is a commodity price that is highly cyclical, very volatile, and quite frankly, opec has proven, as it did two years ago, it is a cartel and people can ultimately walk away from these deals. importantly, the higher oil prices, you are going to bring back online the shale players. hose areas particularly, particularly permian, very profitable after oil prices. at these oilhat prices, the risk-reward is far less attractive than it was at the beginning of the of the >yer . >> when you talk about how under terms policies the high-yield
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credit might not do as well, do you have the recession, worst-case scenario baked in the next year? do you think the likelihood of recession is significant? mark: our base case forecast is year5% real growth next for the economy. we think the probability of recession has increased. it has probably gone up from 15% to 20%. the reason it has increased is, yesterday we acknowledge all the positives under trump -- tax cuts, infrastructure. but at the same time, there is tail risk of deterioration in foreign relationships. i'm thinking of the china-u.s. relationship. also, the potential for terrorists, anti-immigration policy, protectionist policy-- tariffs, anti-immigration policy, protectionist policy. there are 2 risks in the market. it is no longer one way. now is the time to actually
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de-risk positions. scarlet: that was the chief investment officer for global credit at pimco. we have the commodities close for you next. take a look at where oil is trading right now. currently up by .25%. we will get you more context on that move. this is bloomberg. ♪
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from bloomberg world headquarters in midtown manhattan, this is "bloomberg markets." i am scarlet fu. commodi markets are closing so let's get a check on where things stand.
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we begin with wti crude, trading near $52 a barrel. this is after libya said several of its oil fields were reopened. this will help boost oil production to 270,000 barrels per day within three months. you have american petroleum institute data out later today. the data is expected to show a drop in u.s. crude stockpiles for the fifth straight week. meanwhile, gold futures resumed their decline as gains in the dollar reduce demand for safe havens. earlier in today's session, futures revisited their january lows. let's take a look at copper, rebounding from the because level in almost a month. lme data showed a drop in stockpiles for the first time in seven days. oliver: thank you, scarlet. oil prices may drop next month as a result of doubts over compliance with the opec non-opec production cuts deal, according to the citigroup global head of commodities research. in an exclusive interview earlier this afternoon, he was asked about the possibility
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of cuts being enforced and whether that would make a difference. ed: i think it has made a lot of atference communities it is most 70% compliance, and they are hoping for 70% compliance. this is a rebalancing of the market that is already taking place. i think market watchers, including in washington and paris, are understating where the global balances are and are missing out on what is, to us at least, a very significant inventory draw so far. david: i will pull the chart on the bloomberg. you are looking at crude production, and the last, let's say, 10 years. it seems like it has been difficult to enforce these things overtime. what is good enforcement look like to you? how much of this deal do you expect to be enforced? ed: i think around one million barrels a day, 1.8 million, muted in terms of real enforcement. a significant amount of this 1.8
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million, source of the doubts about compliance, is what they decline."g "managed you have countries like mexico contributing something that is already taking place, something that is part of our understanding of the markets going forward. the cuts are something considerably less than what appears to be on paper. i think that as between the gcc countries -- saudi arabia, bahrain, kuwait, uae, oman, and qatar, and russia, we could think close to one million barrels a day real cuts. gets to these countries to their finances in order and reduce the men of cash they are burning as a result -- the amount of cash they are burning as a result of the unprecedented deficits on the budget side. pain,elt the financial they have the desire and ability to which the others don't have, to get the market to rebalance in short order.
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i think the question should not be whether they are going to rebalance the market but what happens afterwards. going tois u.s. shale come back, and are they underestimating the resilience of the oilsands in canada and production going forward? david: let me ask you about libya nigeria. the oil fields could be reopened. if we see more production out of libya how does that change the future here? ed: it depends on what the starting point is. we captivated an average of 50,000 barrels a day, or 2016ction from libya in 2015. it could be less than that. we think the production volumes will be volatile. the other country you mentioned, we are penciling in 1.6 million barrels a day, about the same as 2016, because there has been no resolution of the problems that
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exist that should facilitate any kind of increase on a sustainable basis in their production. watching all this play out, the opec meeting in vienna, the non-opec meeting, i was struck by how much power seems to be out of opec, and i wonder what these last two meetings have said to you about the future of opec and the role of non-opec producers. ed: i think the clear message is that this is something about tinkering at the margins. i think the underlying picture has been the same for the last three years. non-opec production got going in a higher price environment. all sorts of non-opec production -- deepwater, oilsands, shale -- have seen phenomenal cost deflation. that cost deflation might be slightly reversible on the shell side but it is fairly permanent deepwater and the oilsands. i think this really puts a lid on the ability of opec to manage prices. it remains that their ability to create a big margin between the
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low cost of production and the market clearing price has been eroded. $70 aget to 65 or even barrel, i think we can expect short-cycle oil as from u.s. shale to come back into play. i think we could see other forces at work, where the marginal cost of getting canadian oil sands projects going is falling closer to $60 than the old and $90 range it was in. oliver: that was the citigroup global head of commodities research, ed morse. scarlet: let's get your check of the headlines on "first word" news. courtney collins has more from the newsroom. courtney: the islamic state is claiming responsibility for the berlin attack. that is according to the group's news agency. it is a new salad that functions much like an official part of these lot -- news outlet that from just much like an official part of the islamic state apparatus. german chancellor angela merkel has some of the top security officials to discuss the response to the deadly truck
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attack in berlin. she toured the site earlier, laying white ruses on -- white roses on a christmas market. the german prosecutor says there may be several assailants involved. a male suspect from pakistan who was detained and questioned has been released. president-elect donald trump might face a financial loss if he sells his washington hotel now. as president, trump would be on both sides of the lease for the trump international hotel in washington, d.c., which opened in september. for the trump organization to recoup its $212 million investment, a buyer would have to pay more than $800,000 per room. it is unclear whether the property could attract a bid that high. fbi agents were convinced that former congressman anthony laptop contained classified information connected to the closed investigation of
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hillary clinton's females, according to -- e-mails, according to a search warrant application unveiled today. was about the investigation revealed in the final days of the presidential election. global news 24 hours a day powered by more than 2600 journalists and analysts in over 120 countries. i'm courtney collins. this is bloomberg. scarlet: coming up, as 2017 approaches, investors, and policy makers are focusing on what my goal right with the global economy. we are taking a look at how investors are shaking off the blues. this is bloomberg. ♪
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oliver: this is "bloomberg markets." i'm oliver renick. scarlet: i am scarlet fu. time for the "bloomberg business flash." a troubled lender will probably fail in getting investors to back a capital increase, according to people with knowledge of the matter. qatar's sovereign wealth fund can which had considered the investment, has yet to commit to buying shares. it will probably make a final decision on the share sales on thursday. morgan stanley will pay $7.5 million to reserve securities and exchange commission claims that the firm used customer cash to lower borrowing costs. the agency says the bank used transactions with an affiliate to reduce the amount it was required to keep in customer
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reserve accounts. morgan stanley did not admit or deny the findings. lloyds has agreed to buy bank of america's credit card business in the u k for $2.4 billion in cash. it is the first major deal since lloyds was rescued by british taxpayers eight years ago. acquisition, which has about $8.6 billion of assets, will add just over 800 really dollars a year to lloyds' revenue. it is expected to close in mid- 2017. blackberry is raising its fiscal 2017 profit outlook and posting a slight profit in the third quarter. it suggests that the bat on the move more into software is paying off. it expects to post a full-year profit. here is the blackberry ceo earlier on "bloomberg markets." , growing software company could definitely do better than 70%, yes.
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it would take us a while to get there, but we could do it. scarlet: and that is your " business flash" update. let's get to abigail doolittle. abigail: the spider etf we looking at today is the financial sector etf. here we see the two-day chart. up by about 1%. we see the xls on top with the 1% gain held by goldman sachs, wells fargo, and behind us strength, not just today but since the election, is the 10-year yield, up about two basis points today. bonds are selling off. with this relationship, which we can see when we go into the in white, we at the 10-year yield. in orange, thein orange, the xl. as rates go, so go the financials. with a 10-year yield, roughly a
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100-basis point rise, xlf shooting higher with it. double rsi, with the rsi for the 10-year yields an index both an overbought territory, suggesting we could see a bit of a pullback for the financial sector that, again, is up 18% since the election. really an amazing move. one last thing where we perhaps will see a fullback is this chart. this basically shows the flows in and out of the xls. the week of the election was the greatest inflows into this etf 2008, and that came before the crisis of 2008. some say retail investors are late to the party. you almost have to wonder whether that massive spike higher inflows into the financial etf perhaps suggests that there could be some volatility ahead for the
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financial sector and probably the stock market overall, scarlet and oliver. much,: thank you so abigail. as we say goodbye to 2016, we say goodbye to irrational despond in secret investors, economists, and policy makers are focusing on what could go right in 2017 rather than what could go wrong did joining us with what is fueling this optimism is richard miller in washington. this sounds pretty good. a little bit of optimism here. but when you have the optimism, a real risk of people getting ahead of themselves a little bit. >> well, there is always a risk of that commence answered -- risk of that, and certainly come as was mentioned earlier in the show, with the markets. while economists are marking up the forecast for growth, they don't seem to be as exuberant as some people in the markets to. scarlet: maybe investors and traders are the ones getting head of themselves.
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yet, when you look at economists' forecast, we talking about the united states and less so about europe and japan. rich: that is true. it is not just the forecast, but the balance -- where the balance of probabilities are. pimco -- everyone was worshiping at the secular stagnation church. they thought there was no upside to the economy. now for the global economy, u.s. economy, anywhere, people are focusing on the upside. it is not just the fact that some forecasts, particularly in the u.s., or being marked up. people are seeing more balanced risk around the forecast. oliver: from my perspective covering markets, i definitely see what you are talking about. stocks are doing well and it is pretty much across the board. i wonder, from the economist front, you were a lot of people heralding nothing short of the
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end of times it trump -- if trump won. rich: you still have some economists like mark zandi, for example, at moody's analytics, still very skeptical about trump. the economists who are skeptical about, are focusing on those parts of what he ran on that could hurt the economy. the heated rhetoric on trade. on,ats to put tariffs threats to throw a lot of people out of the country. economists who are focusing on the upside are saying, well, don't worry about that. he is going to get through big tax cuts and a lot of deregulation and that is going to send us off to higher growth. scarlet: as usual, the reality will fall somewhere in between. you also talk about the spillover effect into places like japan and europe, where monetary policy remains very accommodative. the net effect for those places
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they will have a weaker currency and that should benefit them. rich: exactly. it is a little bit back to the u.s. as locomotive for the world economy. especially if the fed raises rates at a little quicker pace. if they do so, as you say, the currencies we can overseas and there will be less pressure on the central bank and the bank of japan to go further down the quantitative easing route. well, it might not be that much of the balance to growth. -- of the balance to growth. it will probably lessen fears that the countries will go to deflation. oliver: that something i'm hoping to elaborate on a little bit. will is a fear that trump put into place policies that will be very pro-america and put essentiallyiffs and kind of hold some of these emerging-market countries back, potentially. at the same time, if we're looking at 4% gdp expectations,
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if the world does well and the u.s. does well, it may be will be as much, if the borders are not quite as open, but how does that situation fall out? i guess it i mean depends on how far ranging the tariffs are. if he puts tariffs on some specific goods, it might not be as bad as if he puts them on a broad range of most chinese imports into the united states, for example. as we were just talking about, there is also not only the u.s. , maybe something more imports from overseas. you also have the dollar making it cheaper for the u.s. to import. that is sort of a double bonus for some of the other countries. oliver: great stuff, rich. great article on bloomberg right now. check it out. rich miller, thank you. scarlet: and that quotation was fantastic.
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the opposite of irrational exuberance. everyone was worshiping at the secular stagnation church. coming up, talk at the united nations. how the organization tried to elevate the role of women by making history her story. ♪
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oliver: this is "bloomberg markets." i am oliver renick, along with scarlet fu. scarlet: time to look at the pressure points of social change and where it is outpacing our ability to adapt. it is not just america we are talking about, because today's focus is in gender parity at the united nations. the organization recently story, aiming to present greater representation of women at the u.n. colombia'sh ambassador to the u.n., who is behind the initiative.
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our next secretary-general, after 71 years without, we need a woman, and using the momentum, he committed very strongly using the momentum. need more women in leadership in the organization that represents the 50-50 idea of men and women shaping the world. this idea came because your effort to get a female secretary-general did not go as planned. talk about what you learn when he went to the archives because it was striking comes some of the things that came out. ambassador mejia: we found out anthe basements of the u.n., archive of the very important moments for the organization, for the shaping of the world, and laid by women. in san francisco in 1945, the war ended, and suddenly, women appeared fit typists -- they
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told them, you go to type. delegate," some said. a delegate woman? it was a big surprise that they ship the preamble -- it was a big surprise. they shaped the preamble. eleanor roosevelt and women's rights. at different times, women should moments, pillars of security, development, and of course, human rights. scarlet: women played a critical role in the formation of the united nations and its pursuit of its ideals. the new secretary-general was just sworn in. tell us about his commitment to advancing female parity. he hasdor mejia: well, had 2 important moments over 20 years of his political career. first, his years as prime minister of portugal. scenario, apart from the nordic countries, but he did
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it. he did it also when he was in charge of refugees. head, the humanity, the and the heart. in most places now, only 22 of the leadership positions. scarlet: 22? soassador mejia: 22, still very far away from parity. u.n. ambassadors 37 out of 193. we need to work, and he has to commit. scarlet: do you worry that the engagement and willingness to advance gender parity takes a backseat when you look at its geopolitical tensions that are brewing? we refer to the assassination of the russian ambassador to turkey , or the seizure of a u.s. drone by china in international waters, or even donald trump's rhetoric. ambassador mejia: i hope not. i see trouble around the world. geopolitics are not helping very
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much. that we have one of the most important leaders of the geopolitical direction, angela merkel of germany, and she is a woman. she is running for president. i think we have to make an effort, and i think women will have to continue to play that role of leadership. if we are there, i think the results could be better. i'm sure the results could be better. scarlet: sponsorship is a big part of this, and as a ombia,entative from col you have worked with germany, qatar, the united arab emirates come on this exhibition. that kind of surprised me because women in the gulf states don't appear to have as many rights as men do. is there a misperception of women's rights in the gulf states? ambassador mejia: it surprised me, too, how encouraging they were and how they immediately reacted to my proposal. not only excited, but participated in the group, and presented to the secretary-general of the united nations paper of what to do in
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the first 100 days and what to do in the middle and long-term. i was surprised. the list of countries ready to do something, to engage with women's leadership positions. and from there onwards, i hope make the world better. scarlet: that was my conversation with the colombian ambassador to the united nations. oliver: i want to point out something in the markets. it has been a quiet day, but i did in stocks just a moment ago. basically, what happened, microsoft and facebook did a little bit. that is it. this is bloomberg. ♪
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>> it is 3:00 p.m. in new york. i am oliver renick. scarlet: i am scarlet fu. welcome to bloomberg markets.
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♪ a bloomberge live world headquarters in new york for the next hour. covering stories out of san francisco, washington, berlin, and walked -- moscow. stocks are peering earlier gains though the dow and nasdaq are still on pace for another record close. the dow inching back down from that level. keyill talk about the technical market whether the strategist thinks the equity gains we have seen since the election will continue into next year. pimco weighed pimco weighed ine chum rally. why it is not all about the rallies at home. it is about talents and risk in countries around the world. despite pulling the plug it it remains eye-popping. we head to san francisco for financials. we are one hour away from the close of trading or let's check on the markets with abigail doolittle.
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abigail: we have gains and record averages. as you were mentioning, we are off of the highs. all three major averages have put in a record all-time high today. are both on nasdaq pace for record closing highs. the s&p 500 is not. it is lagging a little bit. the record high has fallen off of that fast paced momentum. index is offt the of its early morning high and has been meandering lower. hopefully hire, time will tell. some trading feels a little shopping and tired. we reached out earlier. the head of technical analysis at bt ig told us she believes the markets are overbought. 5430, this is not -- what she
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suggestsas her work the s&p 500 major averages are overbought and would not see a surprise to see a fall back to the 50 day moving averages. the s&p 500 in white, and we do see the s&p 500 is well above the moving day average by about 4%. few timese the last this has happened, the s&p 500 consolidated and pulled back. that could be ahead for the s&p 500. as for what is tracking the most or the worst percentage before -- performers, a mixed break here. -- a mixed bag here. buying $435 billion for a merger and constellation brands put in what is being called the rare death cross and shares oliver:
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are down more than 30%. thank you. check oflet's get a the headlines. courtney collins has more from the newsroom. islamic state is claiming responsibility to the berlin attacks according to the group's news agency which functions much like an official part of the islamic state apparatus. german chancellor on one merkel has summoned top security officials to discuss the response to the deadly attack in berlin. earlier.d the site nearly 1500 people injured. there may be several assailants involved in the attack. a suspect from pakistan was detained and questioned and has now been released. saythird of americans russia and forced the presidential election according to a new political poll. thesaid russia influence
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election results and 34% said they didn't. 24% said they were not sure or had no opinion. brexit dealsays a could be completed by september of 2018. she is promising to outline her negotiating plans in a speech early next year may to lawmakers in london. signed 18nt could be month after the exit process begins. >> we do want to get the arrangement in place so that people can move on to new relationships they will have with the united kingdom. there is a willingness to undertake it on that basis. leaders want the deal to be completed in time for it to be ratified by the european parliament well before parliamentary elections are held in 2019. north carolina's outgoing he willan governor says call legislators for a special session tomorrow so they can repeal the law known as hb two,
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which limits lgbt protections. republican legislative leaders say they will take us to repeal. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. scarlet: let's get back to the financial markets. jonesticipation the dow could hit that mark. briefly climbed within 13 points of the 20 k milestone. in the meantime, bonds and gold is retreating. how is this for the new year? joining us now is the chief at global strategist asset management. great to see you. thank you for joining us today. a lot of cash potentially comes into the market for the new year. have got contributions. do we presume they go into the election? >> what we have started to see since the election is a huge
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bonds. into we see more good news on public policy and central banks and headlines, maybe under allocated for stocks that a money back in which should further fuel the rally. >> to your point, this is a chart i stole from deutsche bank. a coincidence, $2.4 trillion going into the stocks in the election, are the numbers a collected and or is this a clear shift in terms of where that capital is going? bonds are funny. you expect people to buy more of it but bonds at the opposite way. investors tend to want to own less.
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it is sometimes a good opportunity but more likely than not, we see the end of this caution risk off. all of these worrisome terms thrown around him are perhaps beginning at the end of this up., we see them pick it we see it in the data as well. that an indicator that everyone is turning bullish at the same time? >> the question is will this be backed up by the mentalist #and much -- i am much more focused on is it good value based on the earnings? what we have not seen this close to risk assets, we have not seen earning aspects move up. we see the rally extended.
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corporate earnings will deliver on the promise of the rallies. more stuff inmuch here. you like the fundamental story, or they go higher. let's look at what is expected. .133 expected going from 21 right now to about 17. it is a big shift here. will we have enough earnings to have a price multiple that moves upward on a fundamental basis? drop. could see a we could see earnings in november. we have not seen an upward revision based on the promise of carpet tax reform, fiscal stimulus. probably did not think we would get it.
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not something we usually see coming into the year. where we are now, i think it will come down. >> a few easy places where the food is hanging low, some other groups got in line with that as well. the real growth that will drive the market, financial and tech, percent of the s&p, will they see that kind of growth? >> the big effects are pretty powerful there. we already expected that here and we were going to get a bigger earnings come back because of energy. you now have other parts of the making this a broadband story appeared industrials on the back of potential if structure bill, higher overall growth. higher interest rates. a more advantageous environment for the business model. scarlet: is it that up by macro
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fundamentals as well. >> we have been raising it. the economy was already improving before the election. we saw economic surprises really searching, not just in the u.s., but globally. throughout the second half of 2016, that is giving us more momentum in 2017. if you track economic surprises, how often and by how much is economic data beating expectations, that is tracking closely to the s&p 500. scarlet: in the u.s., the economy dng better. europe and japan is seeing benefits of a weaker currency. look at fx, your shop is not forecasting dollar-yen to reach 130, as the dollar continues.
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why not? market is good at anticipating. the market agrees with that the fed is saying is going to do. i get a little worried the dollar might go higher. i do not think it is a welcome story for equity global risk appetite. we have seen that in the past stroke fears about china. overall, the dollar goes much higher. i do not see the dollar going much higher. yellen talking about three. year in the heat. is that too much or too little or just right? >> we think it is just right. we continue to think they will
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sketch -- skip march. assuming all is going well. much.t: thank you so coming up, even as over exited is in china, financial losses remained huge pair of we will bring you the latest numbers next. this is bloomberg. ♪
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♪ from a beautiful sunny but frigid new york, this is bloomberg markets. time now for a look at
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the biggest business stories in the news right now paired volkswagen reached an agreement with u.s. car owners to fix or buyback about 8000. admitted last year about 11 million diesel cars devicede had a so-called to gain environmental test. rippled. the banks back office six -- system has malfunctioned, causing figures to show up on intercontinentalexchange. restated data on seven contracts. dairy queen is in a deal to expand to south korea. 50 locations within the next five years.
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stores outside the u.s. including nations known for hot weather where the ice him is delicious like kuwait and saudi arabia. that is your bloomberg business flash update. i would argue -- scarlet: i would argue ice cream is delicious even if it is cold. the s&p 500 is on pace for its best to assist my 14. the next guest says you may want to hedge against the pullback in the first few months of 2017. this is bloomberg. ♪
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oliver: this is bloomberg markets p i am oliver renick. fu here isam scarlet abigail doolittle. abigail: joining mass -- joining me is an equity derivatives
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strategist. thank you for joining us today. make story today, the dow is 12.5 points away and what our options markets telling you? >> options markets are telling to avestors have shifted bullish stance, more than before the election. one way to look at this is through skew. the marketremium charges you for downside protection. you see the skew flying out dramatic the. before the election, trading at a high premium. you now see that has depressed quite a bit. people are reaching for calls to keep pace with the rally. >> you brought a great chart on correlation. dispersion in and
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u.s. equities. seen financials, industrials. , a lot oftive stocks interest section action with some sections doing really well and all of this translates into a flat s&p. some parts are going up in some parts are going down. at the same time, you have a high ball at the within the stock and within sectors. is thert i like real-life correlation. it is looking at how closely stocks are looking at. everything was moving, back in
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2011, wings are risk on and risk off. this number is at the lowest level in five years with so much dispersion. >> interesting. can you talk us through this? >> i mostly like it because it is a cute name. like the trade. i have never been want to call tops. there is still probably more time to go. in the newng or year, maybe people will sell their winners or what have you. some of this year for -- euphoric guys off with trump entering the net -- the white house. the 195, buying two of the 185 and you are buying a dollar 18 for this.
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scarlet: it turns out this was the year to reduce phil hedge funds. closing operations and others scaling back. offer -- five-year and author of the report. .eighed in on the health >> for all the to do their how everyone had to say about how bad it is and what a waste of money it is, to sin of asset were withdrawn. it is not a ton. i'm not sure you can really say it was a her think year. >> you would think the industry were dying. >> you might think maybe people do not like us. undertone.tle
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year.down about 2% or the the guys would cut their left arm off for 2% decline year. active management is seeing massive declines in multiples of what we're seeing in the hedge funds taste. reality, i think investors are getting the joke better than many of the critics. classless talk about what might it better next year. talk morecome we about this, and focus from fiscal policy away from honest -- monetary policy. >> you have got a series of ink in play that will differentiate from good stocks and that fast. you have got help here in play. 16% of the u.s. economy. out, who monetary policy offset coal -- fiscal?
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get any number of questions facing found on which are now in play and no one really knows what he will do, get them right and you will have an extraordinary year. >> is that your sense as well? >> yes. the sense is it could be a turnaround year. a dispersion and health care stocks and tech stocks. financial consolidation,'s mullen midsized banks, and for macro funds, it could be the year of a comeback. currencies and rates, global growth differing and various -- various parts, rates. but you have to be nimble and cannot be a monster. it is good to be benefiting the smaller guys who are morphed oldest and more nuanced, that they can really pick. if you can only get into the big
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staff, you will have the same problems with crowding that you had this year. >> donald trump himself, we know has been in hedge funds. peoplel have participating in the marketplace running the government. >> i think it is good to have people with that experience. the question out there will be what do you do with freddie mac and fannie mae. all of those questions are up there. this guy has a pretty good feeling for what is the right thing to do. he expressed his views on that. doing. it is worth people say he is not running a hedge fund. you're right. that is nothing like a hedge fund. it is somewhat the same thing
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done in a different way. we have had things there for a considerable time. >> coming up, weighing in on the trump rally. what he says it is not all about the rallies at home and is rebalance in other key countries. oliver: this is bloomberg. ♪
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courtney: a bond a death a bomb went off where dozens of people were gathered for a christmas tree lighting event. celebrations resumed a few minutes after the device went
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off. blaring music as they rallied around a giant tree decorated with christmas lights. ongoing merkel has summoned top security officials to discuss the government passes response to an attack in berlin. on the groundses for the christmas market of 12 million killed and 50 people injured. the islamic state claimed responsibility for the bombing. a pentagon panel outlining donald trump's defense priorities is not included russia according to it. which obtained a copy of the memo. primary concerns listed included islamic state, cyber strategy, improving efficiencies. the number of inmates put to death due in part

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