tv Bloomberg Markets Americas Bloomberg December 1, 2017 12:30pm-1:00pm EST
♪ vonnie: live from bloomberg world headquarters, vonnie quinn. dan: this is bloomberg market. welcome viewers and listeners on bloomberg television and bloomberg radio who are used to seeing adhering "real yield" but it will be on this weekend on bloomberg television. we have the latest concerning the tax overhaul, and also headlines about michael flynn, former national security adviser admitting the lying to the fbi and saying the trump team is russia talks. a lot going on this afternoon. abigail doolittle is here now. take us through the sharp market
reaction to both pieces of news. abigail: very sharp market reaction. very sharp risk.off market reaction major averages lower at this point. dowling s&p 500 down .5%. the nasdaq down 1%. at session lows when michael flynn said he would plead guilty to lying to the fbi and would cooperate on the russian probe, abc reporting he may testify against president trump. all the major averages down more than 1%, on pace for their worst day since may. ofhave seen some moderation that selling action as investors try to figure out what this means going forward. it comes down to the u.s. profit outlook. investors assess these headlines are not going to affect profit, we could see the moderation continue. ultimately it will matter whether or not this could perhaps mean president trump is impeached over the rails policy in any significant way.
we see for the nasdaq 100, the five-day chart, the big selling action on wednesday. it was for no apparent reason. when you see market action of that type, it speaks to the possibility more news could be ahead. early investors knowing something, perhaps about these headlines. we see the selling has continued . down 1.75% on the week, on pace for the worst week since august. let's dig into some of the biggest losers on the week. we are looking mainly at the chip stocks. the stock is down more than 6% of the week, on pace for the worst week since january 2016. look at these five declines from macron, autodesk, western digital, land digital. western digital and lamb research declining, plus a morgan stanley analyst talk about peaking. could be the first downturn for the chip space since 2016. really weighing on the space.
autodesk down after they put out a disappointing guide for 2018. when go across asset class, a similar reaction. we look at the one-day chart of the bloomberg dollar index. down .4% at this point. the uncertainty. these headlines a run michael flynn and perhaps around president trump. could it damage president trump in some way or the u.s.? stocks, we will look at them in the future to suggest that uncertainty. rounding get out with a look at the havens. we will see as investors flee the risk assets and going towards the haven assets, the 10-year yield down. bonds are rallying. yen rallying against the dollar and we have gold rallying, up a 10 to 1%. 1%hs.0t of all these haven assets up on the year. the interesting tension we have,
haven assets and risk assets rally speaks to perhaps the uncertainty we're seeing around the michael flynn headline, plus tax reform. vonnie: abigail doolittle, thank you for that. shery: senator susan collins now tweeting the senate tax bill the amendment to allow taxpayers to deduct up to $10,000 for state and local property taxes. we finally have some confirmation that in fact those salt did options for property taxes will be included. ductions.ie lisa abramowicz and mike regan joining us. aboutyou were telling us how investors are keeping a close eye on what happens to tax cuts. it seems very close, closer than ever and we have never been.
still the dollar does not seem to be reacting. today we have other news the surrounding michael flynn. even yesterday when we kept tearing this tax reform could happen -- hearing tax reform could happen the dollar kept falling. why? lisa: if i could expire the dollar this year, i would not be sitting at this table. it is been a big question mark for a lot of people. there are questions about the gop tax overhaul. the changes that are coming are fast and furious and potentially.bad we don't know the exact content . a survey of economists by the university of chicago showed only one of many economists surveyed believe that the tax plan would increase gdp materially over the next few years. it will likely increase the debt load of our country because likely the deficit will increase. that will make the dollar less worthwhile.
i think this is what is factoring in here. on the flipside, and this does not square with what i'm saying, you have the fed and people saying the tax plan gets past, the fed will have to hike more next year. that should be positive for the dollar, but that does not seem to matter this year. vonnie: over 10 years? tweet,ou mentioned the if they will put the salt $10,000, that raises another question about the ultimate effect on the deficit going forward. vonnie: you're concerned about with going to happen? lisa: that means a bigger deficit, right? mike: what a fascinating ynn news,to the fl abc saying he is willing to testify against trump. at first it felt exactly like all the knee-jerk reactions we
had earlier in the year the little dribs and drabs of the russia scandal coming out. obviously, trump survived those in the markets went on to thrive over every little blip in the chart after those headlines are coming out. is this different? i think it is different. news reports --president trump has been very skeptical of them. his base has been able to sort of follow him along that. this is something different. we are talking about an actual guilty plea by his former national security adviser. the prospects he will testify with some incriminating information against president trump. it is a little different than sawthese scenarios we earlier in the year. it is hard to draw a straight line between that and corporate profits and gdp growth. vonnie: sometimes markets don't just move on fundamentals.
formerto point out the fbi director james comey has come out and reacted to what is going on today. it appears to be a first instagram post. we have that for you. he said, let justice roll down. it is an instagram post and not a twitter post. let justice roll down like an ever flowing stream. he has been reading a little bible. is -- this has potential to really escalating. mike: absolutely. as far as political volatility for sure. how do you draw the straight line from the politics to gdp to earnings to the markets? i think the one think you have to wonder about is the confidence surveys and how much this booming confidence everyone has, how long that will
continue. if any sort of deterioration in consumer confidence and business confidence starts translating into the market. lisa: i was speaking to an analyst who said the big question is how president trump will respond to this. will he go after bob mueller and get him fired? could be enter into a constitutional crisis? this, from what i'm here in is one of the biggest risks at this point. the turmoil legally that comes around this and look at a backdrop that sets for both markets and corporate confidence, i think that remains to be seen. shery: do you hedge for that expect the volatility? lisa: i am not equipped for that. mike: i think that is what everyone is trying to figure out right now. the futures. we had this weird scenario where the vix was rising. you did not see the futures price so much, which suggested it was not necessarily people -- we see the futures is writing a
little today so i think people are wondering if this will be here for a while, this volatility. shery: the flattening yield curve does also not help the narrative. people keep saying it's another recession, and then where do we go from here? it was one of the reasons given as the dollar not rising. how big of a threat is there from a national -- for an actual economic problem next year? mike: all i have read is the yield curve inverts the for a recession, but is often a year or more before the recession. the reaction today was fascinating. 10-year yields lost 10 basis points in a blank, basically matching the range they traded in all month, a tight range. to match that range in the blink of an eye is remarkable. we did see the curve steepening earlier and now it is flattening out again. iee-jerk reaction or not, think there is a lot of information to be had in
analyzing the knee-jerk reaction. i look at the equity movers from 1133.1106 to pc financials drop 2.3%. everything except the yield proxy stocks dropping about 1.5%. the narrative of markets can change very quickly. vonnie: they will change again in a moment because we have the gulf line's -- michael flynn's statement made public by prosecutors. part of it where he admits the false statements about work for turkey. it is just trickling out now. a statement of offense has been made public by prosecutors who anticipate this. we will bring you each juicy detail as we get it. our thanks to bloomberg's lisa abramowicz, and blogger for markets live, mike regan. shery: let's get the first word news. mark crumpton is here with more. mark: as we have been reporting, t michael flynn is pleaded
guilty to lying to federal agents. speaking in federal court as part of his plea agreement today, he said the trump campaign team asked him to make contact with russia and he told the incoming administration what he was doing. he admitted calling senior officials from the transition team for guidance before talking with russian ambassador sergey kislyak, and the reported back to the transition team after the call. a white house attorney says nothing about his guilty plea implicate anyone other than michael flynn himself. we will continue to follow this story and have more throughout the day. former fbi director james comey tweeted a bible verse shortly after mr. flynn's guilty plea. he tweeted, "let justice roll down like waters and righteousness like an ever flowing stream, amos 5:24." the u.k. is pushing back against eu demands. there is still at an impasse on the question of the border
between northern ireland and the republic of ireland. prime minister theresa may says it will have a deal complete by december 14. that would allow negotiations to move on to trade. a former federal prosecutor says the law enforcement response to a white nationalists rally this summer in charlottesville, virginia that erected in violence was a series of failures. city officials asked former u.s. therney 10 haiti to conduct review after facing scathing criticism over the rally that resulted in the death of a woman when a car crashed into counterprotesters. he got a lack of preparation and poor coordination between the city and state police. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. crumpton. this is bloomberg. on, therefore the go is now a vote for 2:00 p.m. the senate will hold a vote at
2:00 p.m. eastern on tax reform. formerpresident trump's national michael flynn has agreed to cooperate with the special counsel in the russian probe. he pleaded guilty from line to the fbi about his communications with russia's ambassador. -- a congressman from texas joining us now from capitol hill to discuss the latest developments. congressman, thank you for joining us. now we are here in mr. flynn has admitted to false statements about his work for turkey. we have heard allegations. what does this tell you about the extent to which foreign entities could have been influencing the trump campaign and subsequently his administration? nots an indication that only rush of a perhaps other countries very much heather clause not only -- had their claws in the trump campaign manager trump administration. this is a major development in the mueller investigation.
as general flynn cooperates with mr. mueller, the connections among donald trump, his campaign associates and russian operatives during the campaign and after the campaign will become more clear. vonnie: what would you hope and be the outcome, congressman? rep. castro: we have to get to the bottom of the main question for americans, which is whether any part of this was an inside job. whether any americans cooperated or conspired with the russians to interfere with a 2016 presidential election. flynn, who puts mr. was inside the administration, getting closer and closer to president trump. it will be the next target as we had higher up the levels? rep. castro: there were so many things he could have been charged with, and it only get
charged with simply lying to the fbi, which is a light charge or a small charge, it probably means there is somebody higher up than general flynn in the administration or around president trump who they are probably going to pursue. that is what it seems to indicate to me and i think most folks who have witnessed what is happened today. talking about this and there will be a procedural vote at 2:00 p.m. eastern. it looks like there is some kind of tax reform now that will emerge from the senate. what the your constituents make of this? rep. castro: it is bad for taxes and bad for americans. he will raise taxes on millions of middle-class americans, double blow up the deficit. at something like $1.5 trillion. it is a bad deal for the country. shery: how can the democrats do anything at this point to influence the debate? chuckastro: i'm sure
schumer and everybody over there is doing everything they can to stop what is a home run this bill, but we will have to see how it turns out. vonnie: what are you constituents telling you and what you telling them? rep. castro: i told him that i tried to do ever been possible to stop this bill from becoming a law. at theve looked demographics in my district and the fact i have a working-class district, this would hurt many families in san antonio. in the long term it will hurt more and more americans in the out years, the later years. as democrats we resolved to do everything we can to stop it. republicans have a clear majority in the house of representatives and the senate, went so if they can call their 50 votes together, 51 votes together to get this passed, that is what they may do today. vonnie: if this does pass, it could be a win for the
administration or at least the gop that can help in the midterms. can you react to that? americans gets more and more familiar with exactly how this is going to impact them, i don't think it is going to be see as a win and the effect will just grow more harmful to the republican party overtime. shery: i want to go back to the mueller investigation. you are part of the house intelligence committee, which is known for its bipartisanship. you've had a little bit of problems when it comes to getting the right documents to question witnesses. how far are you along in the investigation and how challenging hasn't been for you to put up a united front on the investigation that you in the house intelligence committee are carrying out? rep. castro: we have tried very hard to make sure it stays bipartisan. there have been many bumps along the way. i feel like we are not even halfway finished with the
investigation that we have to do. i know others on the committee, particularly republicans have a very different view of that. i guess i will say this, we should not artificially end the investigation early because the midterm elections are coming in 2018. the politics should not play a part and how long or how short this investigation goes. shery: think you so much for your time -- thank you so much for your time, congressman castro. vonnie: stocks fall the most in three weeks. michael flynn pleaded guilty to lying to federal agents. we will bring you a roundup of all the market action. this is bloomberg. ♪
vonnie: let's dive vacuum of cameron. it appears we are off the lows when it comes to stocks and every other asset class taking a breather. there was a huge reaction, i don't want to say a panic, but there was a spike in yields were much lower by 10 basis points earlier after michael flynn's news. camera: is a bit of the agony and the ecstasy. you have the flint situation which is a smoking gun that will embroil the administration into a scandal we have not seen in nearly two decades. you probably have to go back to the clinton impeachment vote since we have seen a president this closely embroiled in scandal. we have some positive developments on the tax reform. that is what everyone has an waiting for since january 20. we are caught in this pendulum between scandal and tax cuts. we are sort of left a little bit lower on the day in stocks, the well off the lows. shery: if we were at the start
of a political scandal like you mentioned, the clinton impeachment, to run contra -- iran contra, what happens to the rest of the economy? cameron: not a whole lot. tendencya natural because politicians are so much in our face and they do impact policy in a large way to think they have a tangible impact on a day-to-day basis. evidence is really that is not really the case. if you're involved, in the markets you are much better looking through political noise because that is really what it is. generally speaking there is not a lot of -- vonnie: why didn't we see a bit of a rally -- we are not certain yet but was like senator collins said she will make her announcement in a few hours and a said the salt deduction is included. why has it not been a market reaction?
cameron: we were down 30 in the s&p and now we are down 13 or 14. that is two thirds of a percent or whatever, which is some sort of reaction. it speaks to the fact we rallied and have two days of 20 plus points rally in the s&p earlier this week. to some extent it has become more priced than it was a week ago. itimately we need to see passed the senate but then the reconciliation between the senate bill and the house bill. you might think that's a foregone conclusion, but i think the last year has demonstrated with this government nothing can be called a foregone conclusion. shery: the only thing we know for the markets is volatility is back. even treasury volatility is back. sort of last month was the narrowest range and 10-year yields since 1979. potentially, because we don't have daily high and low data,
essentially back to the 1960's. we have more or less matched that by lunchtime on day one of december. shery: what about santa claus rallies? cameron: it is interesting. statistically, going back to 1928, december has never been the worst month of the year for the s&p 500. it only started in 1957, but you can replicate it going back further. the worst month has been down three basis points. flat. that would certainly that's the weight of history would indicate yes, we will get one but just because that's as the old saying goes, past returns are not guarantees of future results. cameron ofnks to bloomberg news. a fascinating morning of news on bloomberg. shery: stocks continue to fall. we are seeing the s&p 500 now down half a percent, while the dow is that 24,176.
we were talking about the volatility we continued to see in the markets. the vix rallying throughout the week. now at 1288, and the dollar is also down .25%. we will bring you the latest developer thought of washington. we do have the senate trying to pass its tax bill. we will give you the latest numbers on the vote count as we yet them. plenty more coming up on bloomberg markets: balance of power. this is bloomberg. ♪
intersection of politics and the economy. stocks of all of the most in three weeks as investors watch dueling stories out of washington. mitch mcconnell says republicans have enough votes to pass their tax bill. a procedural vote is set for 2:00 p.m. washington time. kevin: ousted national security adviser michael flynn pleading guilty to making false statements to the fbi. little break on what it means on the republicans'policy proposals. ♪ shery: let's get a check on where markets stand. abigail doolittle is here with the latest. abigail: you are certainly right about that. there is red across the board. take a look at the dow, s