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tv   Bloomberg Markets Americas  Bloomberg  January 12, 2017 12:00pm-3:31pm EST

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♪ david: from bloomberg's european , here's what we are watching. investors europe for a kickoff tomorrow morning. expectedet firms are to post the biggest fourth-quarter since the financial crisis. we speak to an expert on emerging markets and what is next for the country. and the senate took the first steps towards repealing the affordable care act in a razor thin boat. the tradingay to day. stocks pulledng back sharply. rallied goingy into today so this is the first decline we have seen this year.
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back thend s&p pulling most since october it some caution coming back into the market about what the future holds in terms of policies of the incoming administration and global economy. that is being felt in other classes. the rally is continuing in the treasury market even as investors call for a possible and to the treasury bull market. we are seeing tender yield down. the dollar is now lower and gold future is catching a bid. the dollar falling against the japanese yen. financials are down sharply today. bank of america, jp morgan, wells fargo, delta one of the biggest drags.
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banks,s of the interesting to watch the correlation between andy 10 year yield. -- and the 10 year yield. have moved pretty closely together, but recently there has been a little bit of divergence. financials have held up really well until today. this shows the correlation on the bottom. it broke down september and october, roaring back post election. it has been dipping as of late. it looks like they are coming back together potentially great finally, breaking news we got in the last hour and a half on fiat-chrysler, the epa alleging the company has come out with misleading information about software that perhaps head information -- in missions information on vehicles it sold in the united states.
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you can see those shares are sliding. down as they had been much as 16%. vonnie: thanks for that update created -- update. we're joined by david wells. thishrysler is not taking lying down. they will fight the charges. david: they are saying that the devices they have did not cheaper it they are going to fight this and continue to work with the epa. there are specific things that need to be known. is -- they are saying there were devices that the company did not disclose. that is a findable offense. if they did not cheat, then they
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would not necessarily have to be replaced. the fines would be much smaller. before you look at this as something on the proportions of volkswagen, we just don't know. what kind of pressure are they under to make their cars more efficient? factwagen acknowledge the had to do thatey quickly. has been going on for many years now. i would say in the last 10 years, diesel emissions have been under heavy scrutiny. diesel fuel is generally dirtier than gasoline. for the long time, it had a high sulfur content which made it dirty. containr problem is it
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oxide nitrogen. that is what creates the fog -- smog. down on it cracked and want diesel engines to become cleaner, but it is difficult to do that because it is a difficult -- dirtier fuel. companies put thousands of dollars in hardware on those engines to get them clean and everyone uses software to manage how the engine works and that is where we got into the cheating. for companies that make pickup , it isor large vehicles tough to meet those regulations. we are getting tougher all the time. vonnie: you mean on an average basis?? if you can take a little bit from one car and give it to another car, on average, then
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you meet the standard? what happens if those standards change? that is a terrific question because one of the things fiat-chrysler has said they look forward to working with the next administration on this. the trump administration says they are not fans of the epa and everyone is expected relaxation of clean air rules. .omething is going to happen the investigation is going to go on and then we will see if they be found guilty and it would of to the new administration to figure out how harshly they will punish them. based on the tone of ,iat-chrysler's press release they are hoping more leniency from the trump administration. david: what sense do we have of how long it might take?
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the volkswagen investigation started in 2015. it took 9-12 months to get a good fix on what went wrong. finding actual fixes for the vehicles took much longer. that is the gray area here because volkswagen has had a difficult time finding a fix. suppose fiat-chrysler was guilty and supposedly because need a fix, it may be very simple. it might be a software upgrade or if anything major mechanical then you get these long negotiations between the company and the government to figure out how it will be handled and that adds time. we could be 6-9 months before we get real visibility to a year. or longer. vonnie: david welsh, thank you for the update. david: let's get to first word news.
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giuliani has been tapped to help the income and menstruation with cyber security. him last tv spoke with week at the consumer electronic show where he appeared with blackberry chief come a john chen. all this dispute about the russians and chinese, all it does is underscore the fact that we have fallen way behind in cyber defense. saysumps transition team he plans on meeting with companies that have fought hacking. the u.s. house is excited to vote on a measure passed by the senate that is considered an initial step to dismantling the affordable care act for have promised to -- a growing number of a are uneasy with no placement undecorated theresa may will i have promiser
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vision for leaving the european union on tuesday. she will try to answer calls from businesses and politicians goals. her those negotiations are due to begin by the end of march. israel's prime minister says a conference next week aimed at reviving peace talks with palestine is rate. of nations plan to attend the gathering where they could endorse a framework of peace between israel italians. -- palestinians. vonnie: brazil's economic outlook is looking brighter. u.s. dollaring at riau. this is bloomberg.
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♪ vonnie: this is a bloomberg markets. david: we have seen a zillion assets rallying after interest rates were slashed more than expected. here with his outlook, he is the head of research in trust and focuses on emerging markets. bloomberg surveyed 48 analysts, predicted the rate
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cut that we saw. how surprised were you? think what we are going to brazilically in 2017 in is a process towards a recovery. harshk it has been a very process. with a very deep recession in 2016 that i think brazil is trying to get out and what i is the rate should continue to help the economy recovery and that is something i would say is going to continue throughout 2017 and is going to have an impact on argentina.
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, whichn trading partner is something i would like to focus on. interested are very in argentina bonds for it just one more question on brazil. rate down. kirkland saying it is too early crazy picture looks great but don't get involved yet. >> i would say it is too early. returns in 2016 were terrible peer i would say stay out for now. wait for signals of recovery that we are not seen yet. regionre credits in the that the risk and reward is much more compelling. david: let's turn to argentina now.
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what can you tell us about the timing here? why try to get it done before the inauguration of the president in washington? the trump administration is already putting pressure. inflationing that expectations are going up and has gone up rate and i would expect that to continue even though we are seeing a bumpy road right now. i would say it is going to get to 3%. argentina, to expect billion ino issue 20 debt once to make this more ahead of this trend that of course it will have an impact on the country's finances. vonnie: this is courtesy of
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bloomberg data and morgan stanley. it shows argentina performing yields.han u.s. high the main point is if you were to buy argentina, you would be doing a lot better than high yield. morgan stanley saying the tenure bond spread is 450 basis points u.s. 400 basis points. i think argentina is going to perform well in 2017. growth close to percent. inflation coming down 20%. below 18. we're coming from a recession in 2016 with a fiscal adjustment already ongoing that is going to continue. vonnie: below 18. we're coming from a would argeny with a lot more supply? >> it is a huge supply. i would say yes it is going to
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get away with it. in a good sense of the word, meaning that the -- i think that will continue. -- i expect that to happen with a target of primary fiscal surplus. david: let's close by talking about venezuela. what the ramifications are of the opec deal we saw a few weeks ago for the venezuelan economy. what is the way forward or the way out? >> the key bearable for venezuela is oil prices. of course, disagreement in the opec is something good in the the btu i i would say
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prices is something that will allow the government to debt in servicing addition to the political strategy, which is basically a protracted process of negotiation with the opposition that never comes to an end and allows the present demonstration time ofe imports at the debt payments in order for hoarding dollars and then administer basic goods and medicine to the population in order to remain in power. i would say that if that is the case, which i believe, venezuela could be a top performer again in 2017. you.: thank vonnie: donald trump's pick for
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different secretary james mattis on capitol hill today. want to bring you some of the headlines from the hearing. state solutionwo if it brings peace to the middle east. stated he supports a two saysl and palestine and he there is no lack of support for the past 35 -- s35. trading detailed the boom. this is a bloomberg.
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♪ this is bloomberg
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markets. i'm vonnie quinn. bank of america is set to report earnings on friday. the incoming trump administration and brexit negotiations could be key in 2017. before we afford, a look back. today's numbers don't lie. wall street numbers you see here some of the major banks trading in the third quarter. the trend is expected to continue in the fourth quarter with the urge bond trading. -- trump surprising when has pushed
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bank stocks higher. potentially offering fewer regulations and lower corporate taxes. the federal reserve also raising interest rates. -- looking at the different paths, they could add more than $10 billion by 2018. looking now, you see the spike in the tenure treasury yield. that could bring up the banks margin. last month, morgan stanley earlyent says it is too and there was over exuberance. the numbers for jpmorgan when it releases its earning friday. david: setting the table for bank earnings, she covers the banking industry here for us.
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americaart with bank of . what have we heard? head of bank of america has talked a lot about expenses. at the third quarter, he set a really good target. $53 billion of expenses by the end of 2018. that will be a huge finger the analyst will be looking for to see how they are getting to that and also what he talks about on trading is interesting. he says fix and come and trading is about 50% up. .t could be up even more they are looking upwards of 20%. bank of america has been cutting
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-- they something like also have a huge investment bank as well and also asset management. part, declining jobs for it david: this has been the first quarter where there hasn't been a scandal besetting the bank for some time. what do we expect to hear? >> analysts will be looking for .he banks not being clear they did disclose the sec is -- sec is investigating them.
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also, customers feel they were wrong. i think many investors on wall street are looking for some kind of update and in the past, wells this -- think could be set aside and they actually rose where other banks have been cutting back in many years. very. thank you -- this is bloomberg.
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♪ david.'m >> donald trump's pick to be
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defense secretary is on capitol hill today for a hearing. james mattis would be the first needs a officer but he waiver. john mccain urged the senate toed services committee grant a waiver. also, testifying today, cia dominate mike pompeo has taken a tough stand against russia. new, it is growing. america has an obligation and the cia has an obligation to protect the information. -- threatening europe and
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doing nothing to help defeat the islamic say. marie was spotted at trump tower today. it came four months before france's presidential election. a person familiar with the situation says she is not on steve bannon's schedule. has filed a complaint with the world trade organization. -- lleges there is a -- of aluminum. power 24 hours a day in more than one is a countries. quick checks get a
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on u.s. stocks. they look at how they are performing. 19,000.t at automakers not helping. down 7/10 of 1%. let's get more details. a risk offrtainly day. stocks trading lower. in fact, a risk off picture is confirmed. we have the 10 year yield trading lower by five basis points this is represented in green. not just today, but yesterday as well. we also have the dollar trading lower against the yen. four days in a row. thisve been talking about as a south haven bed.
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as i was his mentioning, this is not new. what stands out the most is the 10 year yield is on pace for its fourth down week in a row. basically, shedding during this time, 15 basis points. it is actually closer to 30 basis points. investors are- seeking the safety of bonds and that is the longest streak since july. one reason to think it could continue, we hop into the bloomberg. longer taken it look at charts. near-termrelatively chart. we see the big move up more than 85 basis points out of the election. we also see the area of congestion. there were other investors buying treasuries.
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today, we have the 10 year yields crossing below the 200 moving average. we could see more movement and a fact, that is a popular pattern within technical analysis called a head and shoulders pattern. drop back below 2% on a haven bid. likely stocks would still -- selloff. drop back below one less thing, a chart of the yen against the dollar. this is the yen against the dollar. see that it is starting to reverse at the end 2015 into 2016. right now, appears to be finding support suggesting it could trade higher. the yen seeking higher, it suggests investors are certainly seeking havens and that stocks may follow by selling off. lots of supply this week
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as well. thank you for that. david: california public employee retired system plans to external billion from managers to internal managers. asked him efforts to reduce the pension -- 100e want to get to asked him y external managers over the course of the next five years and we are at about 160. down from more than 300 five years ago and down from many hundreds more than that seven and 10 years ago. that is one of the challenges of our scale. over time, you had to the portfolio. you can also add to the witholio in the --
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internal managers. you hope to concentrate with those who are most successful. david: isn't one of the consequences is you tend to invest over time more with larger firms? >> you do. particularly in private equity. looking at a real estate thefolio, when i took over portfolio in 2007, we had roughly 100 x or managers and moved it 20. many are boutique specialist. they are grocery anchorage shopping centers. we are a significant portion of their overall assets under management and that is another way of taking advantage of our size is you can invest in scale
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with specialist. >> that maybe on the real estate side. with equity, that may be different. the larger firms tend to be diverse a fight and his critics might point out, better at gathering then managing assets or delivering returns. that has to be an issue for you. >> it is an issue for us. in favor ofrguments broadly diversified equity is they have scale to access opportunity all over geographically and across sectors. what we have seen is some of the big private equities -- equity managers have been successful in rotating and using their heft, the size of their investment portfolio to access opportunity more favorably. that is a debate that rages within our office and throughout
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marketplaces. advantages and private equity, scale, andy for being more of a generalist rather than a specialist. >> do you agree with the criticism of those publicly managers now that have shareholders to report? they spend more time raising money than delivering off the? >> we worry about that. -- to be worried about gathering assets at the same time the point that capital. timeuld much prefer see and focus and attention on the investment case and it is something we monitor quite a bit. weis a concern and one that regularly monitor. >> do you find yourself staring
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more money towards the private firms as opposed to the publicly traded gps? >> we haven't. the publicly traded gps have performed quite successfully overtime. >> you're happy? >> we are. -- our private equity portfolio overtime has been quite successful over long periods of time. 20 years, 15 years, 10 years. they have been able to outperform our global equity. 300-400k portfolio but basis points. it is a very consequential decision to move away from the business model when you have seen that level ups -- of success over the number of years. eric joins us more on
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his exclusive interview. is it as simple as saying i wouldn't you just the with one of the top 100 managers instead of the top 300? >> if you invest withis it as si wouldn't you just larger asset managers, they have more to do. it is harder for them to curate individual funds and many accuse them of working harder together assets been to deliver returns. if you invest with smaller managers, you might find yourself with a better return because they are more focused, more nimble, they can take withtage of opportunities a limited scale. the issue for koppers is managing that many different managers is extreme a challenging. my interpretation tape -- my interpretation of what he is
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trying to do is three things. one, simple five. that is why he is reducing managers. two, reduce costs. that is why he is bringing in as much as $30 billion of money in the hands of external managers to his own people and finally, add a measure of control. can control himself, the more likely the outcome. david: 1.5 million participants here. it is a huge fun. how are their funds looking to make this move? >> among u.s. pension plans, calpers is at the vanguard. the canadian pension plans led by ontario teachers created this idea of direct drive. it required special legislation in the province of ontario to allow teachers to become a firm that is a blend of a traditional
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asset manager or private equity and hedge fund, all most all internal. most of it they do in-house. legislation in california does not allow everythingreplicate teachers are doing or in some cases, nor does bank is doing, but ellie oculus is trying to work into the constraints that he has. he pays for basis points to run money internally and 152 handed out to an external private equity manager. ceci divisor of bringing it in-house is obvious. it is just he can do it in every way that he might like. vonnie: thank you for that exclusive. david: coming up, the u.s. senate took the first step
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towards repealing the affordable care act in a razor thin vote. from be speaker of the house, paul ryan. this is bloomberg. -- from the speaker of the house, paul ryan. this is bloomberg.
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bloomberg'sfrom european headquarters, this is boomer markets. vonnie: donald trump tweeting thehs ago congrats to senate for taking the first steps to repeal obama care. addressed it ryan in a news conference.
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>> this we, congress is in track to put together the tools to repeal obama care. we will do this through the congressional committee system. vonnie: repealing and replacing obamacare was a major topic yesterday. what is the update? what actually happened last night? >> it was well into the evening and early morning where republicans on a partisan vote were able to set up the put the places and set to repeal the affordable care act. here's where it gets interesting. whether or not they had an immediate replacement for obamacare remains to be seen. there are several republicans, including rand paul who are -- are you there must be an immediate fix an alternative to be put in place after they repeal. are indicatingns
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that it must be a much more piecemeal approach and take several steps for it all that fighting is will we put to kellyanne conway. know he will keep his promises. that he means what he says. happening.seeing it we have seen it with the ball and mexico paying for it and being tougher. >> your hearing that the incoming administration what like to fulfill but now they are faced with the reality of governing and the reality of an electoral map.
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vonnie: we go have any other proposals, do we? >> not right now. electoralas weak and closer to inauguration day, the president-elect and some of his advisers would like to have a moment within hours after he is sworn in and other republicans are urging him to not slam on the brakes, but take a more to protect thech more moderate swing state republicans. david: you talked about tax reform, everett the sharks are spending and what is going to heaven and senate. what did she have to say about the economic infrastructure? trump feels this is an economic agenda that he would like to aggressively pursue within his first 100 days of office. there are some in the republican
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party who would like to take a less government active approach on items like infrastructure thating, but this is think was the crotch of trump's presidential campaign and now he faces the political landscape where there are some in the economic communities are perhaps more weary that an aggressive stimulus plan could lead to inflation. be in acott pruitt will hearing on wednesday. how many members of cabinet are likely to be confirmed before the president elect becomes the president? couple of expect a confirmations to go through. earlier today, general mattis is facing questions as well as dr. ben carson to leave the housing and urban development department. speaking with regards to dr.
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carson, it would seem that one the democrats are not particularly targeting and their questioning some of the more high-profile hearing such as rex tillerson, general mattis, continue to draw the ire of democrats for again, tough them to- battle for block any of the nominations because the math is not on their side as we saw last night with the affordable care act vote. vonnie: thank you. david: coming up, the comfort and ease of an airbnb. we will to you all about oasis. this is bloomberg.
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vonnie: this is bloomberg markets. is blurry line between
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hotels and airbnb. it takes rental properties with additional lecture perks such as jams, concierge and insider tips. parker seminary is founder and ceo of oasis. how do you sell the experience? -- do you differentiate yourself or luxury hotels any higher and airbnb? two thatblending the creates a on a category where you're getting all the benefits of a high-end property rental in terms of the space and value and great design, but you are not sacrificing those perks and services you expect at a hotel. you can go to a hotel and get services, cleanliness, and consistency.
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today you can go to a peer-to-peer online marketplace such as airbnb or rbl, but then you are sacrificing the consistency of a hotel. what we are celebrating is the intersection of two. vonnie: so like airbnb with jim access and maids? think the other key is to understand we have local teams in every market. we actually have full-time staff is 23 cities which right now and they are handpicking every single one of these properties. they are betting it themselves with a 50 point checklist. they are providing local expertise from a concierge level. vonnie: do you have to pay to join? >> there is no cost to join and from a price point perspective
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we are apples to apples and usually much less expensive than a hotel room for twice the space for it our revenue model is where taking a share of income from what the owner generates and earning it that way. vonnie: what are your margins like? that is a great question. in terms of the margins, the basic premise is we are working with property owners to which we are providing a premium, high low service and we are able to take a larger share of the transaction of eight property looking than a peer on marketplace. with that extra revenue. we are able to justify all of the actor services to the guest. vonnie: what kind of margins are we talking? 20% to 30%.etween
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where peer-to-peer is 15% to 20%. we are doubling year-over-year. we have gone from nine cities to 23 over the past 18 months. vonnie: thanks to parker seminary. he is ceo of a company called oasis. , just head to the bloomberg. this is boomer.
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david: good afternoon. vonnie: this is bloomberg markets.
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a: from bloomberg headquarters in new york, we are covering stories from san francisco to sao paulo. the power donald trump swords before the markets, we look at move depending what the president-elect says. president-elect trump has been pushing companies to employ more americans. a plan to be everywhere around the globe and beginning in brazil. we are halfway into the trading day in the u.s.. julie hyman is here with all the latest. continue toe stocks decline, but not by as much as earlier in the session. it is the first down session for the nasdaq.
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we are seeing these declines. and take a look at the s&p 500 over the course of the session. theave seen a bounce from lows. at one point, it was down .8%. you can tell exec we would is going on here. a couple of areas of green before this was already. we have seen broad-based selling. the groups in green are those who stand to benefit as interest rates go down. recentbeen the most trend as buying has resumed within the treasury markets and the yields are lower. telecom is higher. real estate edging into the green. are little changed. slightly lower. financials are the worst performing group. although not down by as much as they were earlier. interesting jockeying for position we are seeing among the various groups. are somelly, there
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groups to talk about as we get closer to earnings season. we have companies pronouncing at analyst -- and analyst commentary. corp. came out with its announcement today, saying oil 3.5%,s output will climb which is lower than projected by some of its rivals. then there is amir source burgundy. analysts are raising the earnings-per-share forecast for the full year and saying benefit byhould the a number of drugs that walgreens will receive from rite aid. david: we will dig more into
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equities in a moment. but first, first word news. helor: dr. ben carson says wants to focus on learning what "actually works" when it comes to helping urban development policy. the senate banking committee is today. carson says his background makes him a strong candidate. >> some people say the medicine. why would you go into something like hud? i believe there is a tremendous neck says, a tremendous intersection. because good health has a lot to do with a good environment. taylor: carson says that it's important for all hud programs to be evaluated. congressman tom price's ethics agreement has been posted online. if confirmed by the senate, he
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says he will do best himself of mother for a companies and resign his position with the american medical association. and three's of may will outline her vision for leaving the european union in a's -- and theresa may will outline her vision for leaving the european union. talks are due to begin by the end of march. vonnie: breaking news. the department of justice auditor is commenting, saying the department of justice is opening an investigation into the fbi actions during the campaign. once again, the justice department auditor is opening a probe of the fbi actions in the campaign. markets are fallen sharply since donald trump's first news
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conference since the election. the s&p 500 is down. we had a drop in the biotech after headlines saying we need more competitive drug eating -- drug bidding. a biotech gets our attention for a day or two. but is it indicative of anything more large, anything larger in the markets? thomas: it's the volatility that the market is going to see from announcements from the president. views of the's two president. there is the president-elect and the men the campaign. yesterday, he appeared more like them in the campaign, which has more volatility. people are more concise messaging and they want to hear more about tax cuts and fiscal and pricing limitations
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or trade protections. vonnie: is the market listening to the president-elect right now or is it looking at proposals that are already in the house? thomas: it's both. in the short run, yesterday, it was listening to the president-elect. but what the market has done since november, they're looking at possible tax cuts. i don't know that it is certainly priced into a border tax adjustment. help me with the strategy. by all accounts, it will take several months to get a tax cut. it might take several months to scale back regulations. how do you invest in that environment where you are inviting to see -- where you are waiting to see what happens? thomas: that's a challenge. it is a time pricing question. you have to look at the underlying valuations of the company and you have to handicap at the likely hood of the -- the likelihood of the policies are. i think there is a strong likelihood there will be a reduction in the tax rate and increase her fiscal spend -- and
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increased fiscal spend. you have to counter the fiscal spend with the structure of the tax cuts. vonnie: what are you scoring out right now? the taxif you look at cuts, if you handicap at 25%, that's probably a good middle the market think to is the fully discounting the border tax adjustment. that is pretty extreme on certain companies. you can drop your tax right from 35% to 25%, but if you don't have -- for some companies, let's say like a walmart, that is a high percentage of the goods that they sell. get forso it's not certain companies, but good for others. will it be a net benefit or what will be the overall impact? thomas: the benefit will be by sector. the one clear beneficiary is financials. is worried about
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a stronger dollar. that benefits financials. people have penalized banks because of the regulatory environment they lived in the in the last four or five years. to the extent there is any relaxation or flexibility around see car, they are the beneficiaries. are you going to be looking for commentary tomorrow for the banks? are you concerned, at a time that they are doing well, they are not putting capital aside? thomas: i did abate them put a more capital on the side. i would be very -- i would debate them putting more capital aside. i would be very cautious. they are in the same situation as everyone else. the banks don't know what the regulatory environment will be. think about it. you don't want to get ahead of your regulator. they don't want to aggressively stake that we expect more
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relaxed realtor environment. that would jeopardize that. vonnie: what is ubs betting on? the president ought -- the president-elect always sounds like you wants to get started and do things quickly. kellyanne conway said that he will make it on his promises and he will do it soon. are you looking for results within the first quarter? is dangerousnk it to handicap the timing of the results. some people would say, boy, they are pushing the stuff through the house and the senate. and trump wants things on his desk and he wants to sign them. and then other people say, look, there is a reconciliatory should and aonciliation process could get tied up here and you want to focus on valuation 10 i don't think this is a time to focus on political handicapping. and there are investors who can go outside their area of expertise. vonnie: on valuations, where is it still attractive? technology? energy?
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thomas: bell technology and energies to look attractive. if you look at energy from a supply and demand -- both technology and energy look attractive. if you look at energy from a supply and demand, you see excess inventory taken off. opec just accelerates that. for joiningk you us. he is head of u.s. equities at ubs asset management. david: donald trump promise to be the greatest president for jobs that got ever created. to hold true that particular promise. this is bloomberg. ♪
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david: this is bloomberg markets. vonnie: it's time for the latest bloomberg business flash. ford is adding more than 816,000 vehicles in north america to the growing takata airbag recall. passengerront inflated bags. apple is planning to create original tv shows and movies to offer to subscribers in their streaming service. s has been talking with producers to buy shows. apple wants to introduce live tv service online in 2015. after failinglans
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to get enough deals. is setior -- a hearing for oliver schmidt in miami. five other volkswagen executives have also been charged. that is the latest bloomberg business flash. moves intold trump the white house next week. expectations are high for him to bring back jobs. kellyanne conway was asked how the president-elect plans to meet that goal. >> it includes a number of things. first of all, rolling back some of these corrosive regulations. we hear from business owners and aspiring business owners daily that it is a regular toy
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framework that is suffocating them. he has a very ambitious, doable taxing plan. he will create when he 5 million jobs over 10 years and reduce taxes across the board. -- he will create 25 million jobs over 10 years and reduce taxes across the board. thank you for being here. let's start with the realism and the need for that many jobs in the u.s.. we see what the and implement rate is. is it realistic and is a needed right now? we've clearly strengthened dramatically in the last eight years in terms of the employment situation. but we are also coming out of an incredibly deep recession. yes, numbers we are seeing today are clearly much stronger. however, some of the numbers themselves can be reinterpreted other ways. certain government numbers now actually show unemployment rates of 9.2% rather than the 4.7%
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that was spoken about last year. vonnie: working nation is a not-for-profit. what is the major problem with the labor force are now? art: working nation is focused not so much on what happened yesterday about what will be happening going forward. the employment situation in this country is going to change dramatically and it has been changing dramatically. presidential the campaigns, the bernie sanders and donald trump campaigns that were built, there are millions of people that are already anxious or in pain as it relates to jobs. there are four key factors that are coming together at the same time. like never before in history. vonnie:? detailsart -- vonnie: details?
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art: globalization. and just pure technology. automation and technology will eliminate jobs. vonnie: so we saw that coming. art: but we see it coming at a much faster rate than ever before anticipated. third variable is longevity, people alive an extra 5, 10, 15 years. that's terrific. but units of labor staying in the market. let the fourth one, broadly defined, education. not keeping up with the needs of educating and skill required. vonnie: there is an argument of how much should be proactively done. if you answer those questions, what should president trump's incoming do about it? clearly, there are federal-type policies -- and i am not the expert in federal policy -- but there are federal policies that can deal with
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pieces of this. the idea of infrastructure job programs is an example where you can create jobs. but i must say i and working nation -- i am much of a believer that the oak is at the local level. is the local level. it is local government understanding the issues and then designing. you, there are many solutions that are already being developed out there. the primary purpose of working nation is to highlight through storytelling one of the issues. but at the same time, tell the stories of solutions that are out there. vonnie: your delly -- you are doing well so far. david: let me ask you about what we have seen in the labor market. minority unemployment is still very high. youth unemployment is still very high. how can the government better target those populations? : as i said, there are many
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local solutions. as i said, it is local government that really has to be focusing on a lot of this. yes, at the federal level -- i'll give you an example of something we have on our website at workingnation.com. americorps, which did a vista program to re-skill a major number of coal miners who lost isir jobs in kentucky, fabulous. they trained 250,000 workers to who are now gainfully employed. those are things that can be done at the federal government level. i do believe that apprenticeships, internships, training are very important pieces of this whole equation. this chart illustrates a little bit of what you are saying.
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although it is a little bit controversial. some say that technology is taking their jobs at other jobs will take their place eventually. current incoming administration doing about what you want them to do? what do you want them to do? they say they will create jobs. donald trump said yesterday that he is going to be the biggest job creator god ever gave us. art: i heard that. i don't know what programs they are talking about. policy can have influence. but the solutions are at the local level. i really believe that is the key here. effort is totion's tell the stories of what is happening at the local level. vonnie: all right. david: thank you. still ahead, amazon is planning to create 100,000 jobs. we will dig into where the other
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-- whether the move is due to donald trump. this is bloomberg. ♪
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david: this is bloomberg markets. amazon says it plans to hire 100,000 people across the united states in the next 18 months p.m. the announcement comes with pressure on the technology sector by donald trump to create jobs. a hundredcreating thousand jobs over 18 months. how many jobs does it typically create in 12 months? years, in the past five amazon has created 500,000 jobs. so this is a huge job. but if you really look at it, it is not all surprising that
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amazon is making the plan. vonnie: they also lose jobs over the course of 18 months. alina: they are try to get more into groceries and apparel, deliver goods even faster to people, opening many more fulfillment centers, and all of those efforts require a huge ramp up in workforce. so it's not too much of a departure from what we have been expecting. david: a spokesman for donald trump was quick to take credit for this, saying the president-elect had a role to do in this. put this in a broader context. this is something that is becoming a bigger and bigger issue here. maybe folks outside the technology sector looking at tech to do something about this jobs crisis, to create more jobs for people in tech. salina: i think we have to be tooful about extrapolating much out of these announcements. amazon in particular was less
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politically motivated than some of the more recent announcements, like ibm and jack ma at trump towers. if you look at those two companies as an example, for alibaba, they said we are going to -- jack ma talked with donald trump said they announced we are going to create one million jobs in the u.s. him let's dig into that headline in a bit. it's not like amazon. they are not actually harrying one million workers in the u.s. a will continue executing on their goal, which is to get more u.s. businesses onto their platform. so they want to get one million more businesses onto their platform and that will theoretically spur those businesses then to hire more people to deal with that extra commerce. they have sparred publicly over twitter. where exactly will these
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jobs be created and what different units of amazon? many of themsay will be created in the fulfillment centers. but it will run the gamut in terms of education and skill. it seems it is beneficial for a -- beneficial, though a lot of critics still say that they kill a lot of jobs by disrupting a lot of these traditional industries. vonnie: thank you. david: next, more to citadel than just a hedge fund. we will look at all the firm has to offer. this is bloomberg. ♪
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live from new york, i am vonnie quinn. david: live from london, i'm david gura.
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taylor riggs has the first word news. taylor: the justice department inspector general is looking to see if the fbi followed investigationits of hillary clinton. the internal investigation involves examining whether nonpublic information was in properly release prior to the november presidential election. tapped.liani has been bloomberg tv spoke with him last week at the consumer electronics show in las vegas, where he appeared with john chen. all this dispute about the russians in the chinese, all it does is underscore the fact that we have fallen way behind in cyber defense. taylor: president-elect trump's transition team say that he is planning on meeting with tech companies on hacking.
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republicans have promised to ask a bomb in a space care, but a growing number of republicans -- toeasy about doing so obamacare, but a growing number of republicans are uneasy about doing so without a replacement. eu wouldrkel says the withive to rely on others global instability. dozens of armored vehicles are being deployed in poland. the kremlin calls it a threat, but hasn't said how would will respond.
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vonnie: thank you. citadel is one of the most outspoken defenders of the dodd-frank act. arm,ts market making citadel securities come is looking to expand its business to compete with big banks. earlier today, erik schatzker interviewed the global head of fixed income currencies and commodities. he was asked how citadel provides liquidity. interest rate swaps in dollars and euros. so we are present outside the u.s. now can in u.s. treasuries. indices, cd x and fx. erik: you build a huge business in the shadow of the banks. how? >> we sorted with the simple premise of was there an opportunity? were investors looking for a different experience, looking for new sources of liquidity and new and innovative ways of getting at that liquidity?
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we tested that started out with interest rates and proved quickly there is a huge demand for that. tend to be defensive of their market share. they like to protect what they have. their shareholders like it that way, too. what was it that allowed you to take advantage of the opportunity that you saw? was it just a cat -- a changing capital rules or was at the growth of electronic trading or the electronic sopping securities? >> a commendation of changes. to secure regulations the market. away fromks pivot strategic priorities. ultimately, this is a customer-driven business and we knew we had to have a great product. erik: let's give people a sense of the scope and scale of the business you built thus far. what's the best way to measure it? emotional value traded? >> could be rankings.
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we trade on platforms like the bloomberg trading system. interest rates for small business, the credit businesses, the top three businesses on there, the treasury business. that is measured by the true risk platform on the customers. a value on it. emotional value is what? >> $8 trillion. erik: over the course of the year? >> yes. erik: do you warehouse risk? yes. it's important that people understand that. our customers ask that that is what it means that a good product. customers are looking to transfer risk. it is not enough to be in and out all the time. so we warehouse risk. we do it efficiently and effectively and intelligently. erik: how big a book do you
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carry? >> that can be identified in a number of ways. i don't wantto -- to give specific numbers here. but it is a global book that in normal banquet. erik: how do you define your ambition? what is the ultimate objective? what do citadel security's want of a? -- want to be? mentioned ino be the same conversation with j.p. morgan and bank of america? >> we already are. in some areas, we are the benchmark to compete with with some of the products that we offer. but let's be clear. we are not always the underdog. we want to be the number one global market maker. erik: how do you get there? you are already in markets. into which markets this citadel securities plan to expand where it isn't currently?
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>> off the run treasuries. that's a meaningful step for us because that's an area that is heavily dominated by the banks. it's much more focused on relationship-driven trading, intensity of balance sheet, a much bigger commitment. that gives us access to a broader and deeper [indiscernible] based that's the focus this year. erik: what is coming later? off the run treasuries, and then what? more ofgetting into spoke-likes swaps? anything more in europe? anything more globally? believeirst thing is we we have the best people and the best technology. we have the general belief we can go anywhere where it makes sense for us to go. but it will be driven by the customer demand and if we can have edge. to be clear, i talked to
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customers and investors all the time. if they don't think we can be a top-five provider of liquidity for them, there isn't much point in getting started. erik: but the biggest opportunity is what, credit? >> it continues to be rates. we will expand in europe. asia, we haven't got certain yet. yes, deeper to swaps, custom swaps. packages of swaps. erik: what's the next currency? >> probably sterling. japanese yen. the g4 is what we are looking at. erik: if regulators take a lighter touch approach with the banks under the tribe administration, what happens? i was at a conference in sacrament -- incense -- in san francisco where they say banks need more leeway to make markets. doesn't thatt, present a risk to your business and its growth potential? certain things present rest
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to other things. but we have a high degree of confidence in one key premise. i talk to customers and investors all the time certain e not met a single one who wants to go backward to less transparency. vonnie: that was paul hamill. with the u.s.up, border tax introduced by the president-elect, will it be hugely detrimental? this is bloomberg. ♪
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david: this is bloomberg markets. vonnie: let's head over to julie hyman. at him asare looking we see the equity fat -- equity rally fade, what are some of the signs we are seeing that folks are getting worried in the market or that it's too complacent here? one of the things we are looking at is short interest versus float. the ratio for stocks here in the united states. short short scales -- sales at the lowest they've been since spring 2015, after reaching a high last month. 2.38%.it fall off this shows fewer people are in stocksainst a rise
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are fewer people are betting on a decline in stocks, to put it another way. this is another thing that folks are looking for to see if we are getting too overly complacent levels. some of these charts were compiled by the team at bloomberg news, so you can find it on the bloomberg as well. another thing is correlations and volatility. how much are things moving together and how much risk aversion is being priced into the market? how much hedging our people doing? on -- how much hedging are people doing? they are not moving together very much. we see a breakdown in correlation. ,hat speaks to the idea that going into this year, there will be more of a stock-seekers market. there is a flatlined since the election. not a lot of people hedging him a not as measured by the vix. what these charts are saying is there have been, alleys going
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into this week, a high level of confidence -- at least going into this we, a high level of confidence. elevatede things, levels set us up to the pullback that we saw yesterday and today. we will see if it does continue to go. that.: thank you for david: it's time for the bloomberg business flash. we start with citigroup who reimbursed for thousand customers who are overcharged more than 22 point $5 million in fees on managed investment accounts. million in fees on managed investment accounts. it also paid a $1 million penalty to new york to help cover the cost of the probe.
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ebay is taking aim at phony goods. the company will begin authenticating handbags and shoes and other handbags -- and other items. enlist inexpert to verify that the items listed on the site are real. as donald trump pushes on with his anti-trade crusade, according to some, the auto sector north of the border is bracing for the official consequences. the ceo of when amar, the largest auto parts manufacturer, weighed in on what is at stake for her company. issue broadlys an
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for the industry, not just for the automakers, but for the suppliers as well. the contemplation of a border tax would be hugely detrimental to the entire automotive industry in north america, simply because the whole intertwined so between our countries. we had free trade for a very long time and there is an enormous amount of investment in pass acrossies that the border multiple times. overall, it means adding a huge amount of cost which ultimately ends up by hitting the consumer. that could be detrimental to vehicle volume. overall, we cannot look at it in isolation is one little slice. you have to look at the consequences of these decisions broadly and i think the consequences will be very negative. >> given that fact, have you
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been surprised by the oem response to some of this rhetoric from some a is not even in office yet? a variety we've seen of responses, most of which, by the way, have been, look, we have capacity in mexico. we have capacity in canada. we are committed to investment in those regions and we will continue with them. i think there is not clarity on what's going to happen in terms of the new administration. i don't think anybody wants to jump the gun at start making big strategic decisions on something that may or may not happen. to me, there's way too much emotion and not enough facts. we should be making decisions based on facts. policies should be built on facts, not emotions of what we think and hope will create jobs. i mean, the fact is the average
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auto part crosses the border in north america seven times before it ends up in a vehicle. you can add 10% tax time seven? an enormous cost. who is going to pay for that? don't want to pay for it. the supplier doesn't want to pay for it. was going to pay for that additional cost? who ist are we doing -- going to pay for that additional cost? and what are we doing when we are tried to be globally competitive? 80% is outside of america. and we are going to add all of this cost and efficiency to the system? or cut off access to technology, great technology, in these three countries? how does that make sense? we are trying to be competitive, all of us, the whole industry, from a global perspective. limiting access to technology and adding cost is not the way
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to do it. it is something that will affect all of us. and we need to understand the numbers. let's understand the dollar level of trade. let's understand the billions and billions of dollars of investment, that this is not something you can just shift, just say, oh, you know what, i am not going to buy all the stuff in 10 at a and mexico all the time and suddenly build it in the u.s. who is going to pay the tens of billions, the hundreds of billions of dollars to reinvest to the u.s.? ultimately, who pays for that in the long run? and i do believe who pays for it is the consumer. vonnie: that was the ceo of linamar. breaking news about to cut a -- about takata.
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guilty.lead it is expected to pay a $1 billion penalty for the airbags that ruptures, injuring and killing many people. ,onnie: coming up today inflation air he shares are overblown. he also says environment will remain positive for high-year-old bonds. -- high yield bonds. david: netflix looks to apple and google for how to expand its global audience. this is bloomberg. ♪
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david: this is bloomberg markets.
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netflix sees international markets as key to its long-term success and brazil is central to that goal. with the plan for worldwide video domination. what have they set out to do? lucas: if you listen to reed hastings talk, he founded netflix in 1997. 20 years ago, he was a much younger man, we were much younger man. over the past 20 years, he has watched some of these big tech proliferation a of the internet to build the biggest companies in the world. google search, facebook with social network, amazon with e-commerce. of that set.is he is not a hollywood guy. he sits on the board of facebook. he is an entrepreneur who started a couple of different companies. he believes the future of television is on the internet and he wants netflix to be the primary and if possible the dominant network in that area.
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that means not just being successful in the u.s., which it already is, but be successful everywhere, or at least in a lot of different companies -- countries in the world. david: why did netflix pick brazil as the first draft for its international played? -- international play? lucas: the international expansion started after going to canada, which really counts. they went to latin america, 43 countries at one spirit and close, on the stolen language, brazil being the one big exception. there is a heavy appetite for hollywood content. brazil is the biggest market in latin america by a lot. it accounts for a third of the population in the nation. it is one of the biggest economies come if not the biggest, in the region. and it's got this language, portuguese, which is only spoken in a few territories. so if it succeeds there, it is a
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good sign of success in other places. is also a good case study for what is happening around the world is that it has a lot of the traits that netflix and a lot of the hurdles that netflix will encounter in markets everywhere, including in some of the biggest developing markets. brazil, with a large economy, it is still a developing entry where most people will be considered poor by american standards. the infrastructure, which is shoddy, particularly five years ago, people couldn't use credit cards, access to internet is limited in some places, and so out how to figuring tackle brazil, netflix learned a lot of things that it is applying everywhere else. this is not saying that the market in indonesia or india will be the same as brazil. but generally speaking, a lot of those hurdles are the same. david: you mentioned the internet was shoddy and brazil. theously, the internet is lifeline for netflix. how did the company work to correct that, to make the infrastructure more vital, more robust so the service will work
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the way they wanted to? lucas: they have this program called up an, where they supply servers to a lot of the total communications providers so that the data with your video doesn't from somewhere in rural brazil to miami back to brazil. fromesn't have to ping somewhere in rural brazil to miami back to brazil. you have the big internet providers, telecommunications companies wanting to spread internet far and wide because it is good for their business. so if they can get more people on the internet, using data, they make more money. netflix sees that happening and they are there to reap the benefits. david: they are -- they spent an extraordinary amount of money. is the goal to make a show in brazil that will appeal to brazilians but also to customers in the u.s. and canada and
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around the world? lucas: there are hope is that a 3%, their first brazilian original, will be popular not just in brazil, but everywhere. programs have original that they had a good feeling popular in the u.s. and the u.k., but they want to be global shows. as long as you offer a diverse enough range of shows, you will have someone -- something for everyone everywhere. david: thank you very much. vonnie: coming up on bloomberg markets, ceo of female quotients on facebook. ♪
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scarlet: i'm scarlet fu. all of her: and i am oliver renick. welcome to bloomberg.
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scarlet: we are live in new york over the next hour, covering stories out of san francisco, detroit and china. their worstposting a of the year so far, but they are off their lows. financials and industrials leading the kleins as optimism of a trump economic boom may be fading. declines as optimism of a trump economic boom may be fading. we get the latest from the cio of calpers and his new plan to cut fees. in two hours.lose we are bouncing off the lows. all major averages are lower. but they really hlaved their
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earlier declines and then some -- halved their earlier declines and then some. trump did not give any details about fiscal stimulus. but paring some of those declines. i do want to take a look back at yesterday, the map of the day. this is not the last we will see of a reactive market to donald trump in either tweets or future press conferences and commentary. let me walk you through it. this is the market yesterday, the press conference beginning at 11:00 a.m., just of the green of this dotted -- the left of this green dotted line. so the blue circle here is when costs,ed about new plane china to get them down. so we see stocks take a leg lower pin the yellow, he talked about a new potential bidding process for drugmakers and the drug market. and then we saw stocks continue to move lower, making their lows just after 11:30.
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that seemed to be when he was taking a break and his attorney was speaking. then the green is when he said 2017 would be catastrophic under obamacare. the red is when he said there would be a major border tax for companies leaving the u.s. the press conference ending at the orange line. the stocks trending lower for much of the day. this is something of a map of what we might be seeing in future occasions, when he is coming out and making comments about various things that could impact specific sectors or the market as a whole. getting back to today's session, we saw drugmakers and biotech stocks fall sharply yesterday in the wake of his comments on bidding to get drug prices down. they are rebounding today. up nasdaq biotech coming .6%. but there is other news crossing that is pushing down some sectors. one of them is the philadelphia semiconductor index.
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it is down 1%. we have apple weighing on it. it is weighing on suppliers to apple. and we have amd and sky works lower. so that group in particular is under pressure. oliver: thank you so much. taylor riggs is in the newsroom. taylor: the justice department inspector general is looking into whether the fbi followed appropriate procedures in his probe of hillary clinton and her handling of official emails while secretary of state. the internal investigation is the germany whether nonpublic information was released prior to the november election. the firstis could be career military officer in charge of the pentagon since the 1950's. today, at his senate
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confirmation hearing, the former marine targeted russia as its strategic adversary. >> right now, the most important thing is that we recognize the reality of what we deal with and mr. payton -- mr. putin we realize that he is trying to break the north american -- the north atlantic alliance and we take the steps, diplomatic and military steps with our allies to defend ourselves where we must. he said the u.s. should be open to working with russia, but the prospects of cooperation are narrowing. rick perry will go before the senate panel next week for his confirmation hearing. he is the nominee for energy secretary. as the longest serving governor in texas, he was the advocate of american energy. eric holder has announced an effort aimed at challenging partisan gerrymandering. legal anddevelop
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political resources on redistricting maps. it will happen again after the 2020 census. the group will be backed by president obama. oliver: thank you. america's largest pension fund is developing a bold plan. covers may move $30 million from external -- calpers may move $30 million from external managers to internal managers. >> it's a big deal. you can see that 70% we have in currently, we pay for basis points for that. done -- we've done very well in the fixed income in global equity portfolio with attracting talent.
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very proud of the teams that we sacramento --at here at sacramento. it is a great deal for the caliph when a taxpayer. billionto invest $220 at minimal basis points. more of thatloy strategy in the private markets, we have to make sure we can compete. oliver: joining us now is jeff snyder. what do you make of those comments? in andidea to bring it pay internal managers to get investment done inside the firm, is that a strategic move or just to say we have to cut costs? jeff: if you have investment staff like calpers does, the analysts, etc., this is a strong move him a good move, and a good way to reduce overall extensis. scarlet: well -- overall expenses. scarlet: will it inspire others
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to do the same? it is seen as the leader here and others follow in its footsteps. jeff: yes, others measure themselves to calpers. they will take a look at it and consider it. when you start looking downward to some of the municipal plans, they may not have the staff to do this type of work. scarlet: if that is the case, how quickly or slowly do we expect these pension funds to move when implement in this plan? how long was this in the works at calpers? jeff: this may have been discussed for a longer time. these folks have game plans and they work through game plans, like their succession planning etc. it doesn't just happen overnight. oliver: the other thing that doesn't happen overnight is boosting returns. return wasear, the in the basis point range. they did not get close to the 6% where they wanted to be, where they have been.
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yearhey are saying next will be 7%. will this be a concrete step to cut fees or maybe bring people in another business better? will this substantially improve the story of investment to get them where they want to be? jeff: this is a longer-term decision. when you look at the market and the traditional portfolio, you are looking at 7.5% return. this is in line with common thinking. i think this is a longer-term play. to use theire internal staff, but also begin rotating cyclically and looking at other sectors and asset classes in the next 12 to 36 months. oliver: what they have been looking at to get to those returns? they have already taken plenty of rats by going to assets and yields. jeff: they dialed back the hedge funds and they look more into real assets, private equity can i think that is where their real play is. their concerns are around fees. scarlet: so the fees side is
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understandable p.m. in terms of being able to stock in-house with the right kind of talent, can they hire talent on par with equity firms and money management? jeff: it is a challenge, certainly. compensation is major in the financial services world. for thattition exists type of resource and talent. but you can attract the right people. right calpers has the culture, the right philosophy and you can attract the people that want to work in that type of organization. about: we talked a lot how to 2017 is a call for an opportunity to make choices that will give you return for fundamental reasons. instead of everything moving together. funds have the ability to go in and be more choosy?d will this be the year of opportunity for this as well or are they down to certain requirements to hit a certain return? out. you can't go too far
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you have an investment policy statement. it's a balancing act. it's like an iron maiden. if you go too far one way, you get pulled back the other way. the boardthing that decides. it is not just one individual or a group of individuals. it is the board that has a collective governance over the plan. oliver: give us some of the restrictions, some of the hurdles or speed bumps? jeff: you are looking at managing your assets versus your liability. you have to handle it over a long period of time. you have people who will retire in 20 or 30 years out and you have to bounce or portfolio. all of that is taken into consideration, as opposed to foundation or endowments. there is a methodology, different processes you will use in selecting investments. scarlet: with so much less correlation between different asset classes, do you envision pension funds moving back to just looking at equities as fixed income and less into the
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exotic stuff? jeff: right now, there is a struggle for return. given the unfunded status of many pension funds around the country, not just calpers, they will go, look him in terms of alternatives, i think it's got to fit within the invest in policy. it has to fit within what you believe. every pension plan is unique. california will be different from vermont and other places. oliver: that hits the core point, which is the takeaway. investors are always try to figure out what the next unforeseen event is going to be to move markets down. not to be an alarmist, but when you look at unfunded pensions and you look at them taking more risks, is there a scenario where that could be more of a concern?
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jeff: it is something that people are taking a pause at you look at the recent election. you look at the credit rating downgrade we have seen in illinois and other places. this is now. this is real. it is about adjusting tactically, strategically, and try to find opportunities to boost your unfunded liability. and we will see this play out over the next five years or so. oliver: of course, we are still waiting for legislation coming down the pike as well. jeff: that's right. oliver: thanks so much. scarlet: gaming -- coming up, j.p. morgan chase and wells fargo share their earnings tomorrow. this is bloomberg. ♪
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oliver: a big day tomorrow for u.s. banks. fargo do to wells report earnings before the bell. >> we only have a hundred basis points of increases by the fed through 2018. even with that subdued outlook, banks get back in black. they start running the cost of capital in 2018. there is a trump bump and i agree with you that these stocks have moved some on the expectations of faster economic growth and more interest rate hikes. and if rates come back down, that sentiment could change. stocks fact is banks
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will be higher in three years. oliver: full coverage of those bank earnings throughout the day tomorrow. i'm still ahead, will trump policies help or hurt the market for initial public offerings? this is bloomberg. ♪
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scarlet: this is bloomberg markets markets. volatility crippling the pace of initial public offerings in 2016 p but now you have a trump administration upon us. will we start to see things pick up? carol: i welcome everybody on bloomberg tv. this is bloomberg markets on bloomberg radio. had comments in san francisco. talk to us about what's to come
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in the ipo market after a pretty weak market in 2016 in terms of the listings here in jeff: in 2016, we saw a slowdown in q1. oil hit an all-time low could we had brexit in the summer. that slowed things down in the first half. afteren in q3, we saw a the fall. postelection, we are looking for a really good outlook, especially for q1 and q2 in the u.s. ipo markets. carol: you have a lot companies reaching out to you at this point question mark jeff: we were inc. -- at this point? jeff: we have been incredibly busy. we expected busy calendar as we get off and running. carol: what kind of companies are looking to you to do a new listing? are we seeing them across the board in terms of companies out there? think we are continuing
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to see a lot of enterprise offer companies. plate of them. we are expecting consumer technology to come out here in q1 as well. we are starting to see an interesting pipeline in the gore -- the oil and gas industries. carol: what about some of the unicorns and decca corns? decacorns? do they want to stay private or go public? jeff: we see a lot of them gearing up for an ipo. it was also a slower 2016 in the private market. off about 30% from 2015. so there was less capital available in the private markets in 2016. so the big rounds in 2015 are looking for the next financing option and many are considering the public option. carol: what's going on in terms of the overall market environment?
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it's kind of a tale of two markets last year for the ipo market. not so great in the first half, but it picked up momentum after the election and the market became more enthusiastic in the second half. if we start to see some volatility once again, all bets off in terms of ipo listings? jeff: you said the keyword, volatility. if we look at q3, coming out of the summer, from july 1 through labor day, the volatility index never went above 15. that is what opened up the window post labor day. seen the election, we have the same time so the volatility index, which we like to see below 20 for a healthy ipo market, has stable of 15. that is what is causing the enthusiasm for companies as they get ready for a listing. thatmething happened caused an increase in volatility, that would obviously somed some -- cause companies to put the brakes on. carol: it could be a slowdown in economic growth or it could be , but we don't quite
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know exactly and specifically what we are going to get and how that might impact the markets. like i said, global growth is a concern. the fed raising interest rates and what that could do in terms of growth. what is it that worries you in terms of the macro environment that could ultimately impact the equity market and then the ipo listings? jeff: as unexpected as the outcome of the u.s. election was, i think the market performance was morning spec it. we have seen an amazing rally here. the volatility has stayed extremely low. when you look at why that is, people are speaking lower tax rates. they are expecting repatriation. we got through a rate increase without a huge hiccup in the market. now they are expecting multiple rate increases this year. those expectations are built into the markets. a pullback on any one of those fronts would definitely some the market to see increased volatility. carroll: how do you see the health and the private market at this point.
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cory johnson and i spent a lot of time talking about how much money there is out there and that has enabled a lot of companies to stay private longer. what are you hearing about the health of the private market? is there still plenty of money around? jeff: there's still plenty of money. we are not in a slow fundraising environment. but his death -- but it is definitely slower in 2016 than it was in 2015. the nasdaq credit market, where we helped cap and he is prior to an ipo -- helped companies prior to an ipo get liquidity, there was definitely a pullback. there were fewer programs, less capital available to those private companies. mutual funds pulled back from being as aggressive. int will be one to watch 2017, where nontraditional sources of capital are investing in private companies. carol: something differently to
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watch in 2017, we are excited of deaths excited about snap, formally snapchat. what are you hearing? any: we don't comment on specific deals. we compete heavily for all listings. we are proud to be the home for technology in nasdaq. we hope to continue that growth. when some of these larger companies do go out, we watch for market reception. if you get a big headline deal out in the market and it performs well, that can really be a positive impact on the overall ipo market. so is something that a lot of folks are watching. carol: that you would love to have it, right? sorry, i'm having trouble hearing you. carol: but you would love to have snapped in terms of the listing, just quickly. jeff: i apologize. i cannot hear the question. carol: not a problem.
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jeff thomas over at the nasdaq, head of western listings. scarlet: thank you so much. you can catch more of carol and cory johnson's raider -- radio radio.ews on xm it is time for the bloomberg business flash. ford is adding more than 850,000 vehicles a north america to the airbag recall, including mustangs and the ford fusion. all have front passenger airbags made bytakata -- airbags made by takata. has agreed toson buy a swiss biotech company. jj would spin off assets into a new company and shareholders would be able to keep some of
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the stock. earlier, j&j had offered to pay within $28 billion for actelion. to "the washington besos tends to convert a house into a private home. scarlet: still ahead, the commodities closed. looking at oil and [indiscernible] this is bloomberg. ♪ with the xfinity tv app,
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only xfinity gives you more to stream to any screen. download the xfinity tv app today. i've spent my life planting a size-six, non-slip shoe into that door. on this side, i want my customers to relax and enjoy themselves. but these days it's phones before forks. they want wifi out here. but behind that door, i need a private connection for my business. wifi pro from comcast business. public wifi for your customers. private wifi for your business. strong and secure. good for a door. and a network. comcast business. built for security. built for business. >> from bloomberg world headquarters, this is bloomberg markets. oliver: let's take a look at today's movers. cocoa is rebounding from a
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four-year low, posting the biggest gain in a month. it's up almost 5%. now let's take a look at oil which is rebounding for a second straight day. this is saudi arabia's production deeper than required by the opec agreement which of course we've all been waiting to see whether or not these countries will abide by that. let's check out metals. we've got gold futures surging at bo 1,200, the weaker dollar boothsing demand for that commodity as well. basically moving the other direction in the middle of the year, not getting too much help since trump's election. now rebounding a bit. it's going to be an interesting one to watch. let's look at one more commodity, aluminum, the u.s. filed a complaint with the world
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trade organization, alleging the alume anymoreizes producers, president obama said china gives its aluminum producers an unfair advantage. scarlet, back to you. scarlet: it's sent aluminum prices higher. is this unusual for the w.t.o. to focus on aluminum specifically? >> it is. we have not seen a case like this before with the aluminum industry. we have seen plenty of cases with steel. last year, we had a tv package here in bloomberg, talking to the c.e.o. of semblingry aluminum , he said he wanted a w.t.o. case against china subsidies and claimed if nothing happened that aluminum smelter would have to close. joe: others have said the same
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would happen to every aluminum smelter in the united states this actually finally went through. it's actually a big deal. aluminum eople in the industry are talking about it in a way they were almost laughing at it last year. oliver: what's the backdrop here when the w.t.o. gets involved? how aluminum industry quickly and how substantially does china have to move on this? joe: it could take a year, could take two years, it's uncertain how long it could take. and this doesn't assume this will have to go through a whole w.t.o. process. there is the possibility of dialogue with china. the chinese have come out even before the w.t.o. case and said we do believe in dialogue. they have defended their position, saying overcapacity, the capacity increases have come actually when we've seen more demand rise in china, which is fair, but these things could be taken and handled outside of the w.t.o. if not, the next administration would actually have to be the ones to deal with it because
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this came from the obama administration. scarlet: i'm glad you bring that up, politically it seems curious that the obama administration would bring this up days before he hands the reins over to donald trump. joe: a lot of people ask, why would they do this now? this is the obama administration trying to cement its legacy, it has been tough on china with relation to trade issues. last year was huge for the steel industry. they won a slate of trade cases. we saw u.s. steel manufacturers, producers, see some of the biggest gains they'd seen in a year in decades. we saw anti-dumping cases that had 266% numbers put on top of this. this is their way of trying to say, listen, despite the rhetoric from last year from both candidates, we have been on the case for a very long time. this is one that could be transitioning to the trump administration that they may actually be happy to pick up.
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oliver: it could be low-hanging fruit, or metal in this case. when you look at the moves in the market for commodity in the past week, it's been green across the way, is this going to be something that changes the dynamic for china's involvement in this market? or is this repricing on now what we know they actually have? joe: there's the assumption that some action will be taken, that china may pull back on production or capacity or eventually some sort of ruling will have to be levied and ultimately that would force some sort of downdraft not in the price bus in production which would ultimately help prices. at least in today's trading, what we're seing from analysts right now is the speculation on this. scarlet: you said last year was a big year for steel, maybe not appreciated by the markets, now you've got this complaint on aluminum. any other metals under scrutiny here? joe: i think these are the two
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that are in the spotlight. steel did get a lot of attention in the metals world. there are not too many people out there complaining that there was not enough done. there are still a few more cases to be determine thsmed esteel guys probably won't -- probably won't say it too publicly but they're pretty happy right now. i think it's the alum numb guys that are sur -- aluminum guys that are surprised that this has come to transition. steel and aluminum are quite different when it comes to trade cases and their markets, compared to copper, zinc or nickel. scarlet: how so? joe: outside of china if you exclude china, there's a 25,000 ton deficit in the aluminum market according to harbor research. if you add in china, it's a 1.8 million ton surplus. you don't see that in copper, you're not seeing it in zinc or nickel. it's an outlier. and steel has a similar case.
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scarlet: all right. bloomberg news base metal reporter, congratulations on the scoop. some headlines from a tnt, c.o.e. is discussing job creation and investments in the u.s. with donald trump today. he said they did not discuss at&t's pending purchase of time warner and whether it would win cleernts. also passing thru trump tower earlier, google executive eric schmitt. oliver: and let's check on the news at this hour. taylor has more from our news room. taylor: an investigation is under way by the justice department by the inspector general, whether the f.b.i. followed proper procedures in its use of a private email server while secretary of state. it will look at what led to james comey's decision not to pursue charges. it will also look at comey's announcement he was reopening
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and then closing the investigation just before the election. democrats say those moves damaged clinton's candidacy. also, mike pompeii owe taking a tough stand against russia. the congressman is appearing in front of the intelligence committee in the debate over hacking. >> this is very real. it's growing, it's not new in that sense. but this was aggressive action taken by senior leadership inside of russia. and the c.i.a. has the obligation to protect that information. taylor: pompeiie said russia has invaded ukraine and done nothing to help with states in the middle east. officials are concerned fighting will further derail proposed talks ending syria's civil war. and british prime minister
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theresa may will outline her vision for leaving the european union in a speech on tuesday. she'll try to answer calls from individuals and businesses that want to know her goals for brexit. global news 24 hours a day, powered by more than 2,600 journalists and analysts in more than 120 counties. this is taylor riggs, this is bloomberg. scarlet: chrysler shares tumble, they deny wrongdoing. how tough does it get for the company? from new york, this is bloomberg. ♪
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scarlet: it is time for the bloomberg business flash, a look at some of the biggest stories in the news right now. citigroup will reimburse customers who were overcharged fees on managed investment accounts, according to the c.e.o. they will pay a $1 million penalty to new york to help cover the cost of the four-year investigation. ebay is taking aim at phony goods. the company will begin authenticating luxury hand baggs, shoes and other items that are commonly counterfeited. they say they'll use a network of brand experts to verify that items listed for sale are real. j.p. morgan chase's c.e.o. says he's optimistic about the trump administration because of the group of people he has pulled to fill his cabinet. he said trump has hered a lot of
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successful people who are very patriotic he praised the pick for treasury secretary, saying he is very qualified and, quote, wants to do the right thing. that's your business flash update. oliver: u.s. shares of fiat-chrysler tumbling after they were accused of emissions test cheating. chrysler pushed back saying it meets all applicable regulatory requirements and will work with president-elect donald trump's administration to contest the allegations. sergio markioni says he's really ticked off here. joining us is bureau chief david welch. i saw some comment they feel take lyre -- feel like they're being unfairly targeted, unfairly maligned rather. it seems like fairly soft language. was there any idea this was coming down the pipeline? david: there was been a number
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of announcements after the v.w. scandal broke. we have had an idea this was coming down. what we don't know is are they guilty yet? they do have eight devices in eir diesel engines, in the jeep grand cherokees and dodge ram pickups, they have devices that they didn't disclose. that is against the rules but that doesn't mean they're cheat devices to help them meet requirements they wouldn't otherwise meet. if they did, then fines come in. oliver: "we feel unnecessarily maligned," it feels like there's an emission, we realize we're being target bud not to this degree. david: they know they should have disclosed this. what he's saying is as you read the stories and get on social media, you're reading that these guys are being accused of
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cheating, they haven't been accused of that yet. they've just been accuse of not disclosing. i've talked to people who said, if you have eight of these not disclosed, the odds of all of them being under accepted exemptions are pretty thin, so it doesn't look great but fiat chrysler is saying these devices didn't cheat and are in full compliance. scarlet: is the company cooperating with the investigation? david: they are. their tone today is on strubtive but they have been according to them answering all the questions and turning over dumontation so they've been giving the government everything it wants in order to figure out whether these vehicles had cheats or not. scarlet: compare and contrast what they're being charged with compared to what v.w. was charged with. david: v.w. lied for a long time and didn't have a fix once it's
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being -- once it was found out. volkswagen had some dwisses that changed the output of vehicles, those are legal. in volkswagen's case it was done to cheat the emissions testing. in this case, fiat chrysler is saying it wasn't. but that's the allegation, they have a software fix in these vehicles that wasn't disclosed. what those devices actually did is what the e.p.a. is trying to find out. the similarity ends there. once the e.p.a. figures this out e can know what will happen. oliver: any chance this is going to get to the 20 billion plus bill that v.w. is facing? david: it wouldn't be that big, at least at the moment, because you're talking 104,000 vehicles, versus well over 500,000. the cost to volkswagen got big because they had to buy vehicles
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back because they didn't have a fix for out or compensate the cost to the owners of the cars. we don't know what the fix. is suppose fiat chrysler is guilty but the fix is a software upgrade that keeps the vehicles' software brains from changing the emission output, that could be cheap. in volkswagen, there was heavy hardware that had to be changed, in some cases they couldn't fix the vehicle so they had to buy them back, and bought them back at a premium. e fines could be bad but not as big as volkswagen. arlet: so we had volkswagen, others have said they cheated. there are no american carmakers being named here. are their vehicles being tested? o we know? david: i think once the scandal
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roke, the government started testing. the u.s. carmakers haven't relied on diesel the way europeans have. for a listening time, the way to meet emissions standards in europe was diesel. toyota and honda set the tone on those in the u.s. they came out with gasoline-electric hybrids. they have diesel powered vehicles, all three detroit big three do, but it was never a big part of their fuel economy solution. they don't have as many of them over here and american consumers didn't embrace them as much either. it wasn't their solution. it wasn't something they used to meet these regulations. it's tough to meet regulations with diesel. because diesel fuel is inherently dirty and you have to put a lot of hardware on it to make the emissions clean enough o pass the test.
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oliver: david, thanks for breaking that news with us on chrysler. scarlet: and let's go to our next report. >> we've got the metals and mining, a lot of the drop has to do with steelmakers. steel dynamics all town sharply, after sweat swis downgraded the stocks in particular -- after credit suisse downgraded the stocks. the overall sector view to market weight versus overweight and flat rolled prices saying they should peak in the first quarter. also some other commentary around this. the analysts saying he's concerned the trump-led rally is overdone and there are limited benefits from infrastructure spending growth that the heavy lifting on u.s. steel trade policy has been largely finalized already. take a look at the bloomberg
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here. i'm looking at u.s. steel stock price versus analyst targets. analyst targets in purple, the stock price in white here. we've seen analyst targets below. so we are starting to see steel come down here as analysts have been get manufacturing and more pessimistic, not just for u.s. steel, but for the other steelmakers as well, oliver. oliver: thank you, julie. we'll talk about why facebook's diversity push is being hampered by its own hiring practices in today's "walk the talk," this is bloomberg. ♪
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scarlet: this is bloomberg markets, call it a facebook fumble. the social media giant has been incentivizing recruiters to ioritize engineering candidates of diverse backgrounds but its diversity
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hasn't changed much at all. i spoke with the founder of the female quotient and a bloomberg contributor. i started by asking her about facebook's effort. >> i want to applaud facebook first of all for making diversity a priority in the recruiting process. i think we have to, for change to happen, which does take steps and it takes experimenting and seeing what's working and what's not working, i think this is a really good step forward which is being conscious of the fact we need more diversity, more women, more women of color, more latinas in the workplace, i think that's very important. i think the problem really is, they've incentivized the recruiters to bring more diversity into the pipeline but where the decisions get made is with hiring managers and the hiring managers are senior engineers that typically are white men or asian men. and so when you look at the
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hiring process, they go back to the traditional questions. where did you go to school? where have you worked before? who do you know here? which has been a completely -- which is going to completely eliminate hiring diversity again. so i think while we've made, you know, giant strides in making diversity a priority in the recruiting process, we have to take it one step further and look at the hiring process, how do we get past the traditional met recks in the interview and look more at the interview process. they've already been screened. and i think that's the step we need to work on now. scarlet: is there a role government can or should play in this? shelley: i would love to see a quality incentive just reich with the recycle tax. i think if we incentivized companies to have a more diverse population and there's some kind of tax benefit, i think we'll be
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forced to move there faster than we're moving. because right now we're going backwards. so what will it be? unfortunately, it might be an incentive, some kind of economic reward for force -- in exchange for forcing this through the process. when we get to the hiring manager level, their mindset will be different. scarlet: do you see companies doing that, reimagining the rules, reimagining the workplace, ripping up the crypt and making progress? shelley: i spent a lot of time thinking about this and i thought, what's the root cause? why are we here? i don't think people are consciously creating a situation of inequality but think back. the rules have been written over 100 years ago. by men, for men. because women weren't really in the workplace. and now we have five generations in the workplace. four for sure. with genz coming in,
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traditionalists moving out. traditionalists are retiring later. right now we have five generations in the workplace. millenials coming into the workplace have equality in their d.n.a. when they get married or when they have partners in life, they're not saying to themselves, am i going to work? which partner is going to work? scarlet: they're going to say, where am i going to work? shelley: and yet they come into the workplace and none of the rules have been reimagined. we need to think through our organizational cultures and modernize them. we're writing a modern fwide to equality, looking for tips and advice from best in class company, from companies that emerged in the last 1 years to companies that have been in existence for the last 100 years. and trying to welcome at the best many class practices. so for example, one thing i find fascinating, because flexibility really matters. we want to have all people be able to work and have a family. or go on dates and enjoy their life outside of the office.
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maternity leave. maternity leave. when you take three months off for maternity leave of course you're a valuable person who is going to fill your role? someone is going to fill it you come back in and sometimes it's daunting. maternity leave, the modern company, say we're going to have paternity leave. the problem is, when you look deep under the root cause, men don't take paternity leave. why? it show assign of weakness. scarlet: that was shelley zalis, founder of the female quotient and a bloomberg contributor. coming up, "correlation," this is bloomberg. ♪
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oliver: it is 3:00 p.m. in new york, 8:00 p.m. in san francisco -- 8:00 p.m. in london. scarlet: welcome to "bloomberg markets."
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oliver: we are live from bloomberg headquarters in new york for the next hour. plus we'll be covering stories in chicago, pittsburgh and switzerland. stocks rebounding from what was at one point the worst day of this year and the worst day since october. has volatility returned? with just eight days until he get one of we'll president-elect trump's top advisors. she'll explain his strategy for going after the pharma industry. and who has been meeting with the president-elect. we are one hour from close of trading. let's check in with julie. julie: it seems to some extent market participants are turning away from politics after the hubbub surrounding the president-elect's first press conference in several months. we're seeing stocks decline but
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they have trimmed considerably. the s&p was up about .8%. we've seen quite a bounce from the bottom here as we have seen a little bit of a bounce back for some of the groups affected yesterday by some of the commentary that the president-elect did make. something else we have been continuing to watch is the 10-year yield. as we have seen this sell off in the treasury market realy a bait and buyers come back in. we did see it climb initially after the election, hitting its high right around mid december, now coming back to levels where it was in early december. now at 2.36% here. so really interesting the curve we have seen and the comedown from the highs in those yields. we've seen something of a ripple effect of that across u.s. marks as well. in terms of some of the stocks contributing the most to the gains, or should i say that are
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limiting the declines in the s&p 500. we've got amazon up 1.5% on the announcement it plans to add 100,000 jobs in the united states. we've got at&t higher, again that meeting between randall stevenson and the trump team and also the fact that we are seeing yields come back in again has been helping some of the telecoms. e've also been seeing from the drugmakers, merck and eli lilly, surrounding some positive news from one of its immune drugs. and fiat chrysler, we've been talking about that company a lot, on the news that the company's software may have hidden some emissions. it and cummings are being defended by analysts. bank of america saying the fiat stock decline appears somewhat extreme, that it exaggerates the effect that this could have.
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cummins likewise, mar clays saying the talk today does not implicate the summings engine specifically. delta airlines fell after that company's commentary in its conference call. j.p. morgan said buy the company amidst confusion that people are misinterpreting comments made on that call. scarlet: let's get to bloomberg's first word news. taylor is in the news room. taylor: dr. ben carson wants to focus on learning what, quote, actually works, when it comes to housing and urban development. the senator banking committee is considering his nomination to be h.u.d. secretary. carson says his background makes him a strong candidate. >> some people say, but medicine, why would you go into something like h.u.d.? well, i actually believe that there's a tremendous nexus, a great intersection, because good health has a lot to do with a good environment. taylor: carson said it's
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important for all h.u.d. programs to be evaluated. president-elect trump's nominee will sellth secretary off companies. dr. tom price's disclosures were posted online. he said he'll divest himself of shares in more than 40 geans and resign from a position with me american medical association. goldman sachs partner deana powell is leaving the bank to join the trump administration. she'll be assistant to the president and senior down -- counsel for economic initiatives. she'll build efforts around entrepreneurship, small business growth and the global economic empowerment of women. israel's prime minister said a conference aimed at reviving peace talks with the palestinians is rigged. netanyahu said it pushes talks backwards and israel isn't bound by it.
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global news 24 hours a day powered by more than 2,600 journalists and analysts, more than 120 countries. i'm taylor riggs, this is bloomberg. scarlet: returning now to the markets, with the s&p 500 up about 6% since the victory of donald trump, what's the best way to ride the trump rally? joining us for a look is the chief market strategist at convergence and the answer is, not what we've done in the past, risk on, risk off. >> historically since the 2008-2009 financial crisis, correlation across all secors of the s&p have been extreme arely high. we've tracked this month by -- monthly back to the crisis. only in the last two months have they broke undown to close to 50% level. it's a big sea change versus what we had since twipe. oliver: let's bring up nick's first chart here that shows
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correlations. there's always a ton of different ways to look at correlations. one you do is looking at the most versus least correlated e.c.f.'s and you've got basically a 30-day sector correlation. you can see from the chart, this is goinging to be several year bus that last edge there, right. scarlet: the orange line is the spread between the most and least correlated and white line is average 30-decorlation between sectors in the s&p 500. nicholas: that's right. you'll see you had 0% to 90% correlation among sectors and more relently -- recently a big dropoff to a new paradigm for how they trade individual sectors. lip oliver: in your notes you say this is the second best thing about the trump rally. the first is they went up in general? nicholas. yes. oliver: i would challenge that. the fact that you could pick
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stocks them they wills, do your clients come to you differently? nicholas: clients come in and do more rotation. financials were universally underowned and unloved for the entire post-2000 period. e've seen people wading -- weighting back into it, going from underweight to at weight, we haven't seen overweights yet. scarlet: let's talk within equities, how far along are we until we get real evidence? that my might not be for another couple months of actual policy. nicholas: i took a quick survey of senior traders and clients, 90% plus of them thought we'd see a pullback because we have had that big run morely in financials and now we got to see what's going to happen and get late bit of that in the first week of the new administration. there is going to be some change here for sure.
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oliver: does that mean they think market weight is where they want to be or will there be more buying power behind these companies? nicholas: a lot of why you've seen this pullback is it's gone from 260 down to 230, that's flattened the curve and taken some wind out of the financials. that's got to reverse itself before i think the client base says ok, financials are still a place that are overweight. oliver: what i'm looking here on the terminal, the top panel to speak to that relationship, the top panel looks at the correlation between high yield, t.f.'s here, bottom is the l.t.d., investment fwrade versus s&p. they've both come town here a little bit in terms of how strongly correlated they are to the s&p 500. that's in part because of the trade and also because of the higher rate narrative for next year has been the core of the investment thesis.
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so how do we expect to see this play out as people start to, i guess, kind of regear and find out what policies are going to bring the inflation? nicholas: it's been the theme not only on income but equities. the market wants to see an acceleration of news flow about infrastructure spend, those tax cults we're expecting, we haven't had much of that this year. that's why we've seen this pullback in yields and equity levels from a couple of days ago. this is the missing piece of this puzzle. the 10-year is a keystone asset behind this entire market. >> what's the risk we go back to risk on, risk off again? nicholas. for the near term, not very high. we have new fundamentals shaping upful we've seen just yesterday what happens when the president elect talks abpharma for example. it doesn't seem like we're going back to risk on, risk off any time soon but doesn't mean it's going to be easy either. oliver: are we going to get
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anything meaningful, you have an -- you were an equity analyst for a while you know how analysts have to reprice expectations for earnings. i'm hearing a people talk about how it's not going to have the same as it should. as an analyst how do you assess what the future is like for your company? nicholas: it's like back in the 1990's, where investors aren't looking for one quarter out but what's the power one, two, three, four, five, six quarters out. we're talking about earnings in 2017 and 2019 based on what happens in 017. the best thing you can say about the current earnings period is it's the baseline from which we then build up. that's what market mace be looking at. oliver: interesting stuff, nick. president obama set to deliver remarks at a tribute to vice president joe biden.
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that's the state dining room you're looking at right there in the white house. obama said that biden was his first and best choice in the nominee and through the bargain he gained a brother. you can catch his remarks online.
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scarlet: this is "bloomberg markets." oliver: time for the bloomberg business flash. a look at some of the biggest stories in the news right now. takata may plead guilty to criminal wrongdoing over rupture-prone air bags. this comes as ford motor adds more than 816,000 vehicles to the growing air bag inflator
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recall. all front passenger air bags that can explode with too much force and spew shrapnel. jessny lipnak gets to tell his side of the story as the defense begins to present his case in the trial over bond pricing. they began rolling out expert witnesses they hope will explain the i wantry kacies of pricing to the court. at his first trial he was barred from presenting such testimony but a federal appeals court reversed the conviction. that's your business flash update. scarlet: with president-elect donald trump due to be sworn in next week, focus will intensify on his promises to boost the economy. they asked trump counselor kellyanne conway how he intends to meet these goals. >> his job creation plan includes a number of things. he will first of all rolling back some of these corrosive
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regulations. we hear from business owners and aspiring business owners daily that it's regulatory framework that's suffocating them. in addition, he has a very ambitious, very doable tax relief plan. he'll create 25 million jobs over 10 years and he will reduce taxes across the board. middle class tax relief, those who don't pay taxes will have relief as well. also energy investment. this is something we just haven't had in the last eight years. we have been hostile as a nation to energy investment. you know, david and kevin, we hear from people all the time they complain that nothing is made in america anymore. you know what's made in america? our energy torses -- sources. it's under our feet and off our shores. it's time we have presidential leadership who will help develop it in a responsible and profitable way for all of us so we have less dependence on foreign sources of oil and we can create jobs and stimulate the economy right here at home. it's a multistep plan, very much -- we hope we can have what
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president george w. bush has by 2001 , he had passed a tax relief package with the help of dozens of senators because they knew their constituents would like it. >> those are all big issues. let's take one or two, for instance, infrastructure spending, when will we know what the timing is. >> we've gotten some joyful noises about infrastructure from democrats and republicans alike, and americans are excited about this because we don't build anything in america anymore and we all know our roads, bridges, infrastructure is in desperate need of repair and innovation. this is a guy who builds things for a lives, this is the right person to be stewarding and putting as a major priority in his first 100 days infrastructure. >> one last specific. we heard if elected president, hich he now has been, he would declare china a currency manipulator first thing.
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when can we expect that announcement? >> if he said it then, he means it now. we're very respectful of one president at a time. i've even heard it on your network, so we can't have it both ways, we have one president at a time yet we want donald trump to pronounce presidential policies now. but i think donald trump was elected for many reasons but i would put in the top three to five the fact that people know he will keep his promises. that he means what he says and he says what he means. we already see it happening with plans to repeal and replace obamacare, to certainly build that wall and have mexico pay for it and i think to your point, to you know, be tougher on people around the globe that just have not really -- have not been called to account by this administration. and that of course would include china. >> kellyanne it's not just foreign countries. we heard him talk about big
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pharma, saying they're getting away with murder. traditionally it's been moneys -- republicans who have been a bit uneasy about regulating big pharma. so how is he going to be able to get republicans in his own party on board? are the days of big pharma getting away with this type of stuff other? and the markets seem to be reacting strongly to that? do they have it right or not? >> kevin, all of that will be unfolding in the next couple of weeks and months. i will tell you that to repeal and replace obamacare and not have a conversation about drug pricing seems, you know, not like a reasonable prospect and not responsible prospect. at the same time, i think the president-elect will bring along republicans and democrats the way he has even in these last couple of weeks. they wanted to totally overhaul an ethics office and he tweeted about it they changed their mind. he talked about how important it
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is to repeal and replace obamacare in private meetings and publicly, they're taking steps to do that. he's talking about keeping manufacturing jobs here and factories here since over 7,000 have closed and private industry is responding to that in a positive fashion. i think you see the trump effect on any number of issues already before he's sworn in. if you apply that to drug pricing, if he can talk to private industry and bring along the public sector, meaning other republicans in the house and senate and other democrats and independents who would like to come along, it's a healthy conversation to have. we hear from people daily as i'm sure journalists at bloomberg do that they feel crushed by the cost of the drugs they need. we should at least have that conversation. donald trump is the right person to lead it. scarlet: that was kellyanne conway, counselor to president-elect donald trump speaking on bloomberg earlier. oliver: still ahead, how you can hedge his comments, we'll look into that next.
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this is bloomberg. ♪
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oliver: this is "bloomberg markets." scarlet: it's time now for options insight with julie. julie: thanks scarlet and oliver. the pressure now on u.s. house republicans in order to take the next step toward repealing obamacare. that's after a razor thin senate vote early thursday to repeal it. house speaker paul ryan spoke earlier today at a news conference. >> this week, congress is on track to put in place the tools necessary to repeal and replace obamacare. we're going to do this the right way. we're going to do this the way it was designed to do, through the congressional committee system. julie: joining us to discuss this is an equities -- equities jade viors, joe.
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we have seen reactions increasing in recent days to different political developments. what is your takeaway not just from paul ryan's comments and the vote overnight but the press conference yesterday and the volatility injected into the market. joe: i don't think i'd be surprising anybody when i say trump is an increased risk to the market, increased uncertainty, that will inject volatility into the market. we saw that in the mark. trump came out saying that drug prices need to be more competitive. that hurt pharmaceutical companies and we saw a drag on that of course the repeal and replacement of obamacare could be a market risk for that sector, specifically, and for the economy as a whole. i'd be looking to protect my portfolio, while i'd remain cautiously optimistic, i think there's political risk in the health care system. julie: the trade you're looking at is f.v.l., encompassing a
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pretty broad basket of health care shares. i'm cureouts why you're looking at that, why you went with that versus something more targeted toward, say, drugmakers or individual stks? do you think we're going to see volatility overall within the sector? joe: yes, specifically with the obamacare whether or not that's replaced if it's repealed. fewer people insured, fewer people go to the doctor, that will put a doctoring on that sector. i'm looking at the march options in the first 100 days of the presidency, when a lot of that implementation will take place. i'm looking to protect my port foal crowe by buying a spread on to -- i'm, just a way looking to buy the march $70 or $1.14, if it
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finishes below 65. so i'll give myself a good 4% protection to the downside if there is a market correction over that period. julie: that's health care specifically. do you think we'll see overall volatility pick up? as you say, there are potential implications not just for health care but for the broader economy. do you think, today, for example, it's up the most it's been in about two months. do you think we're going to see more of that? do you think more people, including yourself are going to be having downside protection? joe: absolutely, yeah. today and yesterday we've seen a little larger range for the market. we've been at a tight range as we finish within 1% of 20,000 for the dow jones every day this year it seems like. we're having more range. any time i see that coming out of a consolidation period, we're going to experience a change of a trend. it means we're going to be having a must've in the short-term coming up and
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specifically options yesterday and today we're seing a lot of interest, a lot of players coming out, bidding on a short-term increase in volatility, specifically in february. 100,000 options today, 100,000 options yesterday creating players betting on increased volatility in february. julie: thanks so much joe. back to you guys. scarlet: thank you so much, julie. still ahead, scot minor, c.e.o. at guggenheim partners, says inflation fears are overblown and the environment will remain high for bonds and stocks. and bloomberg will be airing a town hall address tonight at 7:00 p.m. new york time. ♪
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>> let's get to bloomberg's first word news. the inspector general is looking into whether the fbi followed proper or seizures in the probe of hillary clinton's use of a
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private server while secretary of state. director's fbi to -- n not closing the investigation days before the election. expected to have an initial step toward dismantling the affordable care act. to make sure want we move these things come currently at the same time, repeal and replace. we need to show there is a better way forward, to show that even though the law is we can bridge ourselves to a better system. >> republicans were promising but a growing number of them were doing so -- more to secure

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