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tv   Bloomberg Markets Americas  Bloomberg  January 13, 2017 12:00pm-3:31pm EST

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we're covering story from washington dc to san francisco. after leading higher reporting results. jpmorgan is hitting an all-time high. president elect on trump's national security nominees are not afraid of disagreeing with their boss if confirmation hearings are anything to go by. we will examine the point of contention and the implication for foreign policy. and we will hear from the president of nintendo america. halfway into the trading day. abigail doolittle joins us with the latest.
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>> the shares of fiat chrysler down. this of course after the epa software action firm yesterday. some bearish news. shares are reacting to the downside. averages, the dow, s&p 500 and nasdaq all trading higher. trading at an intraday all-time high. the s&p 500 is just fractions away. we are looking at a picture of strength. here is a two-week chart of the nasdaq. six of those days have been record highs. a little bit of a it here.
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it pocket of strength for the nasdaq. what does this mean relative to the nasdaq? and what could be ahead? it shows that the nasdaq could be pretty well extended above its 200 day moving average. this is the nasdaq over the last two years. this is the 200 day moving average. the nasdaq is 9% above that today moving average. this led to pockets of congestion. are setting up for something similar where we could see some congestion ahead, possibly even a big decline after that. we also have regional banks trading higher on the day.
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outperforming to some degree, even the big banks that have reported today. team did reach out to a bloomberg intelligence analyst who believes that the fact that the 10 year yield is up and pnc core -- pnc core and ousts -- we have another great chart. it shows the strength that we are in fact seeing for the regional banks. also to the financial sector. the regional banks are outperforming the s&p 500. the rsi is no longer overbought. >> let's get to the first word
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news. >> president-elect on trump says he will have a full report on hacking in 90 days. reports that russia has come from rising information on him was put together by political opponents. he called the allegations phony. lawmakers who want to repeal the ford will care act face their next hurdle today. a ballot was expected to take up the measure that would allow a switch repeal of the obamacare test of appeal of obamacare. several republicans oppose the measure and are concerned about the absence of replacement. hasjustice department issued a scathing report on civil rights abuses by chicago's police department. institutional problems have led to messieurs -- to major violations. here is attorney general loretta lynch. justice hastment of concluded there is reasonable cause to believe the chicago police department engages in a
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pattern or practice of use of excessive force in violation of the fourth amendment to the constitution. was launched in 2015 after the release of a video showing an officer shooting a black teenager 16 times. and fierce storms and france have left nearly 15 people injured and 200,000 homes without electricity. strong winds knocked a tree onto 200n tracks, stranding passengers from brussels to paris. dayal news 24 hours per powered by 2600 journalists and analysts in more than 120 countries. this is bloomberg. >> bank stocks rallying today. jpmorgan and wells fargo kicking off their earnings season for the u.s.. the entire index is also higher. let's get some key takeaways.
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julie, what were the key takeaways? julie: i want to start with wells fargo. just wrapped up their opening statements, which lasted 30 minutes, now only taking some questions from analysts. speaking,cutives are one of the interesting takeaways is in the wake of the company ofndal and the opening unauthorized accounts, there is still something of a hit to the business. folks have retail banking that refer to other types of business. company says slower referrals will reduce funding volumes and mortgages by 2.5%. mortgage application fell 25% from the third quarter.
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one would think that has to do with rising rates. the company talked about new measures it has been taking in order to prevent some of the abuses that happen with those unauthorized accounts, including changing the way they cave success in customer service, not counting the number of accounts but rather increases in primary customers. sloan spent some time detailing that on the call. one of the big takeaways was more political. that was the big take away.
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>> it seems everyone we spoke to this morning still firing out warning signals about wells fargo. they did announce was a $2 billion expense initiative that wasn't expected. they are going to use that to and invest in computer technology. that is something analysts have liked this morning. >> the idea that scandals is behind him, will that take a while? >> some of their metrics and their retail banks show they are still having problems with their and bringing new customers
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into the branches. until we see that return to the it isandal level, probably too soon to say they put this behind them. >> better trading in many of the areas. >> going into this quarter there was a lot of talk and excitement about what the fed rate hike in december meant. what we didn't see is a ton of that come through in the quarter results. jpmorgan said they expect their to be evencome
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higher. bank of america expect a first-quarter interest income to be higher. past orre listening investors are getting excited 2017. >> how have they now managed to differentiate themselves? >> the stock performance does not really seem to suggest that. there is a difference between the two are three. we will look for trading results. it will be interesting to see
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how morgan stanley and citigroup and goldman come out. costs were credit expected. we will look for that to continue and expense cuts. we will look for something similar next week as well. course, always thanks to senior correspondent julie hyman. we are going to have a lot more on bank earnings. we will talk with wells fargo cfo at that time. note,quick programming next week we are going to hear from all the biggest finance chiefs in the world. bank of american death bank of america, morning -- morgan stanley, and komen sacks. -- goldman sachs.
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tillersonll you how could impact foreign policy.
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>> this is bloomberg markets. the biggest business stories in the news. asset management in maine hedge fund. investors pooled money after three years of losses. returns recover to end the year. there is a report the season
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will be a happy one for investment bankers. the bank is cutting their bonuses by about 15%. managing -- 20 managing directors. london extended its lead. heathrow is ari operating to capacity. 76 million passengers use the airport and that is 1% more than in 2015. passenger total just rose 3/10 of 1%. that is after terrorist attacks. it is your bloomberg business flash. rex tillerson faced questions this week about his ties to russia. look under pressure is tillerson facing? we ask the former director of national intelligence.
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to use the analogy that right now mr. trump and his team are in the waiting room. after january 20 they will be in the situation room. is a great deal of difference between those two circumstances. lookare going to have to at these issues and come up with a coordinated and integrated approach to these very important questions. >> more insight from the national security reporter in us from washington dc. you heard what he said about the secretary of state and president being in the situation room. that is a far different situation from where they are now. there are also 17 different intelligence agencies contributing. electch did the president need to agree on positions when
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it comes to foreign policy? them ultimately there will be agreement between them publicly. big questions the we have been trying to answer, how much rex tillerson and other nominees who have gone before the senate, how much they will be implementing trumps policy and how much they will be shaping it. there was a pretty astonishing where during his hearing he basically acknowledged he had not spoken to donald trump at all about russia. that is going to be one of the big issues in his term. he did speak candidly about russia, saying it wasn't acting in u.s. interests. far as aeem to see so situation where nominees have felt free to come out and express their views on these issues. aside their to set own views to implement trump's views, or with ocean
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shape his policy once he takes office? short of calling putin a war criminal. he wouldn't agree with the senator on that one, but basically wartime -- war crimes had been committed. when something happens pretty soon into the administration, as whatgine something will, happens? who ultimately will make that decision? guest: this is a big issue we are trying to figure out. there are some indication trump will listen to the people he has nominated for these posts -- these posts. he said in a tweet this morning that he wants them to express their own views and his team said on a call he doesn't want .lones some people said it is a positive sign there seems to be a healthy divergence of views
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among his team so far. there are somend concerns his going to listen to the people who have the most axis to him, that would be mike flynn. he has been known to take a more moderate tone on russia than some of trump's nominees. mike flynn is working with him there in the white house and his other nominees are spread out, who is really going to have his ear? vonnie: we will have to leave it there. thank you. still ahead the president of nintendo of america about the company's newest consul in years. this is bloomberg.
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this is bloomberg markets. nintendo unveiled its newest gaming console in years. in sanine hyde is francisco and she is talking to the man behind the new device. >> good afternoon to you in new york. are with reggie, the president of nintendo of america. the price point seems to have taken and a surprise, higher than expected. how do you think this will justify the cost? >> we believe the price point is justified. we have made presales available. the feedback is very positive.
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a number of these presales have come up and have had to come down. the overall proposition, the , it ise, the support turning on consumers and that is our key focus, making sure that the consumers understand what is nintendo switch and they are excited about it now. >> many feeling there perhaps haven't been as many gains as expected. is there really support coming from the games maker? >> we are holding events where consumers tomorrow, media today are able to get hands-on with our content. contentnine pieces of with third-party developers playable here today. announced 80 different
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games in development for the system right now. what is critical is the quality of the games and a key third-party companies themselves that are participating. the big players in the industry that are supportive. that tells us again that these developers see something that excites them on the business opportunity and the games will flow in. >> this is a hybrid product. >> we have been very clear, the nintendo switch is a home consul you can take on the go. we see consumers are going to be spending a lot of time in front of their big-screen tv, then when they have to go to work or
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school, they will be able to take the system with them on the go. nintendo three ds is a vibrant platform. we have had year on year growth. we finished the last three-month sold mored, where we software than we ever had before. out throughe coming the may timeframe. we will be launching the next games. nintendo has a rich history of being able to manage multiple platforms. are in a position to maintain momentum on the three ds. >> how crucial to your market is the switch? we have been very clear in our business strategy.
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we have initiatives with brand licensing. initiatives in the broader entertainment space with universal studios. all of this funnels back to our dedicated game business. launching this product, making it effective in the marketplace, driving it forward making it part of making an important. for your time on this exciting day of launches. nintendo of america president. bonnie in the studio. >> down 6% right now. coming up.
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>> what you think about this supply chains across the u.s., it will be thousands and thousands of jobs. we can continue to drive costs down in the program, so was a great meeting. thank you very much. vonnie: that was a male in houston, ceo, chairman, and president of lockheed martin, visiting trump tower today. donald trump spoke about lockheed martin at a press conference he held wednesday and mentioned the f-35 program . you heard her say that she had
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comments for donald trump on how to keep costs of the program down and said the had a conversation about job creation in the united states as well. discussinguston lowering costs as well as job creation. she was in trump tower for not an insufficient amount of time. she went in about 30 minutes ago and just came out and left just a few comments for the press standing outside trump tower. let's get to the first word news now. taylor riggs is in our newsroom. taylor: president-elect donald trump is meeting with lockheed marilynnd ceo houston. says he ises mattis not opposed to buying the company's joint strike fighter, but trump wants to "it's the best bang for his buck." trump has attacked the cost of
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the f-35 is out of control. it is the pentagon's most expensive weapon system ever. president obama is easing but not eliminating sanctions against sudan. president obama says his executive order reflects progress by sudan, including reduced defense of military action, improved humanitarian access, and cooperation with the u.s. on terrorism. secretary of state john kerry is in vietnam today. he spoke at a university in ho chi minh city, saying that he is confident the incoming administration will uphold obama's principles for security in the city. he will back a peaceful process for conflicting territorial claims in the south china sea. mexico has nominated the current head of the north american development bank to be the country's new ambassador in the u.s.. will becomediplomat undersecretary for north america. he will be facing president
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electrons promise to build a border wall and deport thousands of undocumented immigrants. global news 20 for hours a day powered by more than 1200 journalists and analysts in more than 120 countries, this is goin bloomberg. vonnie: fiat chrysler is under investigation by the u.s. department of justice for a failure to disclose violations of standard could this is. this is yet another company under scrutiny for its sales practices. joining us now from detroit is david wells. veryeadlines are coming fast for many of the carmakers and reynold as well today. david: when it comes to fiat chrysler, the obama administration, its epa is taking a shot at the carmakers, shor sort of a parting shot
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. they are affirming that the fuel economy rules will stay tough and they are going at fiat chrysler with this investigation. you have the justice department weighing in and see if there's criminal wrongdoing . vonnie: the r investigation is renaulteenault -- investigation is in france. this makes it a lot more serious for sergio marchionne? david: you could have criminal charges against executives if involved. last year, there was a class action suit against the mercedes group. the initial suit was thrown out of court and refiled. even though the suit appeared to be weak, the justice department looked into that one and was investigating to see if there were problems with the diesel emissions.
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the epa has an issue with it and it will see of cheating is going on. the justice department is looking to see if the company misbehaved in a criminal way and not just the administrative law way that the epa governance and to see if any executives have personal possibility. vonnie: the adr is down 4% today and that brings us to a two-day drop of 14%. the epa announced today it is keeping the standards intact through the 2025 model year. it is significant because they made the decision now and it cannot be reversed by the incoming and ministration now. am i correct? david: they can be reversed, but now it takes a lot of heavy lifting. the administration is basically stoneg its lawmaking and and made it pretty firm. trumpnge that, the administration would have to collect a bunch of testimony and new data and get inputs from everybody. then they would have a review period.
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it would take a lot of time. standard tardy put in place and it would be hard to overturn. t would be very time consuming to try to overturn. vonnie: david welch, thank you for that against. . retired, the chairman and ceo of the metropolitan transportation association, thomas pendergraft, got to see .he extension of a subway he sat down with jason kelly for what it all means for new york city. thomas: we have to expand the system. the population is increasing and our ridership is increasing. for people who live in the upper east side, the most densely populated part of not only our country the western hemisphere, 110,000 people per square mile,
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they do not have to depend solely on the lexington avenue line to get north and south and other parts of the city. we have a tremendous new addition to our subway system. standardsd the new and it will be a much better experience for them, not only the people who write 2nd avenue but the people who are writing lex. >> obviously this was a highly intensive and extensive project. what did you learn along the way about construction going forward in terms of containing costs and even in terms of design? thomas: we learn from every project we do in terms of how we can do a better. certainly we can be more aggressive in using design build. it designs the construction rather than doing design away from construction. it puts risks in the hand of one person. haveructors generally better first-hand knowledge. these are some of the things we do as we go north from 96th street, stationed at 116 and one
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25th. >> in terms of economic development, is there a certain type of economic boost that comes from a subway specifically? is it more commercial, residential or retail? thomas: it is all the above. probably the biggest translatable difference in investment versus transit is the difference between real estate development and transportation investment. a boost tobe commercial development, residential the moment, and retail commitment. i was amazed at the number of restaurants an on every block. that's going to help. increase soues will there will be commercial opportunities and residential opportunities. >> when we think about what's next in terms of the big projects, obviously beside access is a huge issue. it is taking longer than initially anticipated,
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specifically long island railroad coming into grand central. where does that stand and what is next? thomas: that project is a very big project for us and it is something that's not quite as long 2nd avenue but something in the minds of people back in 1968 when the mta was formed. what it will do is open up capacity at penn station for people who come from the venture north. venture in the way amtrak comes into penn station now. there's a part of the bronx being redeveloped right now. it will provide access for people on the new haven line to come to the west side where hudson yards is being developed. it's another example of expansion of the system tied to increased population and increased development in new york city. >> you mentioned hudson yards. obviously there have been some pretty big shifts in some ways in terms of where people can get and how within manhattan. as you think about the five
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boroughs especially, how does that change sort of the demographics? how does it change the way people live and work in new york city? thomas: it is surprising you say that. inas a baby boomer born 1952. the model was they got married, moved to the suburbs, and commuted to the city. millennials are getting married later, buying a car later, living in dense urban areas, and they like density. in and around stations, properties are being bought up and changed over to higher density development. hudson yards is another example. is a change in the demographics brought about by the change in the population and the age of the people living there. also, it a lot of people who are retiring our stay close to their families instead of moving to warmer climates. all of that in combination has forced transportation for closer with the people who develop it to make sure there is a very smooth coordination between the
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two. >> infrastructure is not something necessarily on people's minds. i know it's always on your mind. we have heard that word over and over again for the last at least year and probably we will hear even more about it from president-elect trump. what does that look like in your estimation? wethere the possibility that will have a real infrastructure boom in united states? thomas: i think so. what will drive it is the need for america to remain relevant on a global level. when you look at the development of the united states at the turn of the 19th and 20th century, it was the investment in transportation, manufacturing infrastructure, highways and roads, sewer systems, etc. that enabled us to be in a position in world war ii to go from second or third to first. that is not lost on the people who live here now. we need to reinvest in infrastructure and we also need to expand it. new york would not be what it is today without the infrastructure
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from the 19th and 20th century. when you think of those types of projects, you have international experience and you worked in canada, which has been fairly progressive on infrastructure. prime minister trudeau is talking about spending more there. what is the first cut when it comes to u.s. infrastructure? what is most badly needed in your estimation? thomas: i much hesitation person. i spent all of my career and transportation. whether it's the transport of thes or people, transportation infrastructure that we already have on the ground need to be reinvested in to make sure it has useful life. if we are going to see another million people, and we are in the city of new york by 2035, we have to have an infrastructure. its transportation, sewers, water, all the necessary elements to make people be able to live. vonnie: that was chairman and chief executive officer of york's metropolitan transportation association. coming up, taking over of one
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manhattan's institutions is no easy matter. what a major food group has planned for the four seasons restaurant next. this is bloomberg. ♪
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vonnie: you are watching bloomberg coul . iron vonnie quinn. mark: i am mark barton and this is your global business report. sterling plunged in a matter of moments. investigators have a new report out. is nintendo's new switch gaming device a winner? the early reviews are in from tokyo. take, a today's quick look at the student debt issue
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in the united states and whether it could hamper the economy in years to come. bank of america, jpmorgan, and wells fargo kicked off the fourth-quarter earnings season for u.s. banks. sailed for wells, but jpmorgan and bank of america's both posted gains. moynahan discussed how the incoming trump administration may change the game. >> the optimism here and bank of america and among our customers is palpable and has driven bank stock prices higher. we will have to see how these topics play out, but we are optimistic. in the interim, we will continue to operate the company by controlling and driving what we can. found noinvestigation single trigger to last fall's flash crash in the british pound. onthe space of two minutes october 6, sterling fell more than 6% against the dollar to the lowest level in 31 years.
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bank of international settlements suggests factors ranging from the time of day to the lack of experience of staff as reasons. it's an underwhelming start for nintendo's new switch gaming console. the new tablet sized device will go on sale march 3 with a price of $300. that is higher than rival consoles. investors aren't convinced the switch will be a big hit for nintendo after presentation in tokyo. company shares fell on the 6%. -- almost 6%. boeing one in order of airplanes from india's budget airline. it is worth $22 billion in less prices although discounts are usually given for large purchases. it is the largest order ever placed by an indian airline for boeing jets. vonnie: timeout for a bloomberg quick take, where we provide context and background on issues of interest.
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in terms of american exceptionalism, student loan debt stands out. no other country imposes the kind of costs that the u.s. does and no other country deals with so much costs. theynor andrew cuomo said will forgive loans for families that are less than this. hisproposal goes beyond party's candidate for president, hillary clinton, who called for a reduced to student debt and to rein in the cost of college. president-elect donald trump has not offered the same level of detail on the subject. on the campaign trail, he mention of the government's current role and originating one billions of dollars annually and federally backed loans. he mentioned the biggest problems facing young people and the cost of repaying student loans. here's the background. when the student federal loan
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program began in 1965, the goal was to give students reliable access to funds that will help through college by deferring costs until they have an income. most loans were paid off in a few years. the benefit of the degree last a lifetime. as the cost of college raced ahead of inflation, the federal loan program worked into something larger and quite different. here's the argument. is the problem the loans or the cost of college the loans help students cover? a common criticism of proposals like clinton's is that they do not address the root problem of tuition hikes. a ratingbama proposed system that could be tied to eligibility for federal aid. colleges hated the idea and it was dropped. center bernie sanders, who lost the democratic nomination to clinton, was be the only presence of candidate to propose anything like countries to make public university free or cheap.
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you can read more about student debt and all of our quick takes on bloomberg. had to for more stories. ♪
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♪ vonnie: this is "bloomberg
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markets." i am vonnie quinn. these are some of the marquis restaurants that propelled the guys behind major food group to restaurant startup. now the group has taken over the midtown manhattan space that previously housed the iconic four seasons restaurant, and they have ambitious plans. ambitiousgely project, part of new york lore, why did your group take this on? jeff: we are all about new york coul. any project that led up to taking the four seasons space is rooted in new york history and there is no location that has no better location or architectural history as well as great food and restaurant history as the iconic restaurant spaces in the seagram's building that has the old four seasons.
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for us, this was one of the great dreams of our lives to be able to take over the space. vonnie: was there anything intimidating about this? it sounds like he immediately made up your mind and went for this. there must have been some intimidation and other bidders and other people interested. jeff: everyone wanted it coul this is th. this is the dream new york space. a lot of people think it's the greatest space from an architectural perspective. the idea is to restore it and bring it back to life, bring it back to having the impact it had 50 years ago when it opened. its once-in-a-lifetime opportunity, so people were looking for it. there was intimidation involved with it, but it's that intimidation that gets us excited. it is that challenge that gets us up in the morning. that is why we like it. vonnie: give us a little hand if you would. i'm sure some of it is a secret
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, but what would you do to make it a new restaurant and still keep the element of the old four seasons restaurant? jeff: you have to break it into two things. a lot of people think of the four seasons as a restaurant and they think of food. the four seasons and what's so important and historic about that restaurant is the space, large ign, and its ly regarded as one of the most important restaurant interiors in the world. it is one of the few landmarked restaurant interiors in the world. what we're doing is bringing that space back to life by restoring it and reinvigorating it and not touching too much. it is already the most pitiful space in the world. vonnie: how long before it's profitable against? ? jeff: how long before it's profitable again? a general restaurant cycle. we hope to be profitable from day one, but generally the first couple of months are
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gearing up and ramping up and then you start hitting the profit cycle. for us, the most important thing is bringing new food and service and a new level of quality and bring in things up-to-date. vonnie: what style will it take? have you chosen an executive chef, for example? jeff: my partners are both chefs and they will personally oversee the kitchen because it's such an enormous project. we have already chosen -- basically what we are doing which is very interesting is taking one restaurant made up of the grill room and the pool room and we are turning it into two restaurants. we will have two restaurants. one will be called the grill, and the former grill room. that will be more of a midcentury american chop house. what will be called the pool is a modern fish restaurant. there will be a much different style and different cuisine. they will have their own identities and they will be told totallye -- two different restaurants in two
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totally different spaces. vonnie: there are a lot of chefs opening in the downtown financial district. is there sort of a resurgence of restaurants? jeff: i think there is a midtown renaissance happening. that's one of the things we're most excited about. you see what is happening with other peers of restaurants? jeff: ours. when we came into the restaurant five to 10 years ago, midtown was not an option as the leases were there and they were too expensive. we had to start a group downtown and we built our groups downtown. now we are starting to move back to midtown, where for the last 10 years, there has been a real decline in the options for dining. it has been exciting to bring great food back to midtown. vonnie: pond has a home at yankee stadium. it makes it a little bit easier to bring in the customers. obviously there are wonderful stand-alone restaurants opening constantly. you have announced also in vegas
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and you may be interested in more of that. where and why? carbone inve a vegas. we are at the aria, and mgm property. it's been a great experience working there. the people there are great. hospitality is really the core of las vegas and it's a great place to work. i think we are right now looking at and hoping and looking at doing more in las vegas. vonnie: i'm looking my lips in this conversation. this may mean very hungry. jeff, good luck. for more, check out pursuits go on bloomberg. ♪
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vonnie: it is 1:00 p.m. in new york and 2:00 a.m. in hong kong. i am vonnie quinn. welcome to "bloomberg markets." ♪
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vonnie: from bloomberg world headquarters in new york, we are covering stories from washington, d.c. to charlotte and los angeles this hour. stocks are paring earlier gains. the dow industrial average in the red, but the s&p 500 is close to erasing its weekly loss. the nasdaq is poised for close. record jpmorgan hitting an all-time high. dimon says he is expecting a better political and regulatory environment. house leader says the bill to repeal the affordable care act will advance, but the confidence belies confusion and skepticism among republicans. we will get the latest from washington, d.c.. we are halfway into the trading day this friday. it's hard to believe it's friday.
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happy friday to you. abigail: we are looking at mixed trading action for the u.s.. the dow is ever so slightly down. the nasdaq is down on the week by just a hair, but the nasdaq the s&p 500 is down on the week by just a hair, but the nasdaq is carving up. declinea very small down fractions as mcdonald's, dupont, and other stocks away. as we look at the big bankshares, we have seen tremendous strength out of the big bankshares earlier today on earnings reports in the fourth quarter. bank of america and jpmorgan are really off the highs. allison williams said she was surprised by the strength out of all these banks in terms of
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their quarters. perhaps we are seeing a cell the news type of action here. the fact that they are not quite as high could help explain why the dow is no longer in the green. as for one pockets of banks doing especially well, we do have region financials all trading sharply higher. harvey lay did tell her team that he believes two things could be happening. they put up a good solid quarter and they have confidence around commercial lending. the other thing that could be helping the smaller regional banks is the 10 year yield. we take a look at the chart of the 10 year yield and it has been lower earlier as bonds have been rallying. solid banks did report quarters, we saw bonds selloff. it is off of the highs, but regional banks are especially sensitive to the 10 year yield since they have two silos of business insecurities and loans
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-- in securities and loans. relative to the 10 year yield, what stands out the most is on the week that it is poised for a move down. this is g #btv 5556. this is the recent intraday volatility we have seen after donald trump press conference call the other day. some are wondering if the trump trade is over. it has been shifting and for some time. we see be in full games and that is considered to be the trump trade rally. the bonds sold off and that is the other piece of the trump rally. we have gold which had been training lower, but now it's higher. there was a bit of an inflection point right around the time where the fed raised rates. beginning of for down weeks for the 10 year yield, the longest such streak of that move for the 10 year yield since july.
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a little bit of an inflection point, perhaps suggesting the volatility we are seeing in bonds could move over to stocks soon. vonnie: thank you for all of that. let's get more insight in today's bank earnings and what they will mean. i'm joined by julie hyman and our finance reporter. julie, let's begin with you. you are listening on the calls and her the executives and analysts. what was your overall take away? optimistic and positive on both sides of the aisle? julie: there was a decent amount of optimism on both sides of the calls. i want to focus on jpmorgan. jpmorgan tends to be the best in class and their numbers looked relatively strong. they kept on saying the word andng on both the media analyst call, but the shares have come back from their highs. jpmorgan did not get much of an outlook for the first quarter. some of the others gave more color on what it could look
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like. analyst say that is not surprising. there is more expectation they could give an update, but that might be one of the reasons we see jpmorgan come down from the highs and it touched a record earlier in the day. we saw the bank ceos talk about the bigger regulatory environment and and comin the ig administration and what changes they could bring jamie . jamie dimon was pretty outspoken and commented that we could see simple five securitization rules and safe harbors for underwriting mortgage servicing around the country. if we do see regulatory changes, there could be an opening of business for the banks could thi. this is what he said on the call. >> if we see more regulatory relief, we could see tanks adding cities to loan portfolios and adding clients they don't
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have could . i hope to see a little bit of that too, but that will have to wait for regulatory relief. julie: he was optimistic that changes would not just because of the likes of jpmorgan and other banks and corporations, but it would be good for the broader economy. of course, he is going to say that this is going to be good. he wants it to be good and he hopes it will be good. in the year of a lot of people in washington right now, trying to lay some groundwork. he is not going to kill it before it gets underway. my point is what he says and what actually happens are not necessarily the same thing . >> of course not. i think the other bank ceos and cfos talking about their earnings -- and everybody has act of auschwitz -- asked about this. they are highlighting other things such as interest rates rising. banks love that.
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as long as interest rates keep rising, they make more money. the net interest margins grow. vonnie: depending on their deposits. yalman: always with higher rates, the margin increases. they do pay more in deposits, but they rake in more from the loans. t is always good for banks when rates are the highest. jamie also talked about this, somet could hurt businesses, but overall in general, a tax cut helps the economy and the banks grow their loan books. they're so many other things they are looking at and not just regulation. as interest rates are rising, we were worried that mortgages would be easily hurt. they don't seem to be. wells fargo is the big mortgage play. that is why we look at regional bank stocks. that is why they are going up. their mortgage numbers are down. vonnie: not that much down. we have heard that it would be
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the end of the fourth quarter. yalman: the fed raised toward the end of the quarter, but interest rates have been rising and mortgage rates have been rising all through the fourth quarter. mortgage rates have been rising and re-pfizer not doing well. wells fargo did a decent amount of money -- $1.4 billion for the quarter for mortgage banking. it's not bad. they were making $1.5 billion overall, but i could live with that. vonnie: yes, julie? julie: it was also interesting with regard to mortgage banking for wells fargo. when they did talk about weakness, it was more having to do with the scandal at wells fargo. in other words, if you have retail banks or bank branches and the bankers referring customers, you had a sort of lower referral rate for the mortgage business. that is going to be responsible for declining volumes in the first quarter. they did not so much lay it on higher mortgage rates. vonnie: those that you mentioned
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earlier, there is a lot of uncertainty about what they are actually going to appear as. fred cannon was on earlier and saying that is the main question he gets from clients. any clarification on that at all? did they avoid the question or address it had on? allan: i did not listen to the wells fargo side and i'm not sure if they did address it. that has been the biggest thing to have been dealing with. wells fargo has really been struggling putting the scandal behind it and coping with it and trying to do different ways of keeping clients and compensating its employees in different ways so that they do not get into the same kind of problems. that is her biggest challenge. the things that we are worried about with interest rates rising, are they going to have enough mortgages? those seem to be going much better. with other banks, they are doing great on trading. not just interest rates, but market volatility and trading is doing great. from what you heard,
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what can we look forward to next week -- more the same, all good news? on the trading front, it seems the readthrough is relatively positive. the equities numbers for jpmorgan missed, but overall things are looking up. on thejamie dimon said this coe the end to a cyclical and secular decline in the fixed income trading business, which was kind of interesting, so we could see an improvement not necessarily for the fourth quarter numbers that perhaps going into next year. that is something to look forward to. iss net interest income going to continue to be a theme stanley and morgan goldman sachs, but less of an issue for them. but for citigroup and for some of these regional banks, it will definitely be a common theme. vonnie: something tells me we are going to have a similar conversation next week at this point. thank you both.
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next week, we are going to hear from all the world economic vps as we do interviews with ceos of jpmorgan, morgan stanley, and goldman sachs. taylor riggs is in the newsroom . taylor: donald trump says he will have a full report on hacking in 90 days. in a series of tweets, he says russia has compromising information on him was put together by political opponent and a failed spy. he called the allegations phony. he met with the lockheed martin chief at trump tower. lockheed martin was looking to add 800 jobs and possibly thousands more. she also discussed the cost of the joint strike fighter jet. >> i certainly share his view that we need to get the less capability to our men and women in uniform and at the lowest possible price. i am glad we had opportunity to
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tell him that we are close to a deal to bring the cost down severely from the previous cost of aircraft. james: yesterday general mattis said he is not opposed to buying the f-35 but once the best bang for his buck. trump has attacked the f-35 cost as out of control. lawmakers who want to repeal the affordable care act will face their next hurdle today. they will face a measure to appeal obamacare. the senate passed similar legislation yesterday, but several republicans opposed the measure. they are concerned about the absence of a little placement. inaugural planners have released a lineup for president-elect trump welcome cente celebration. headliners include toby keith and jon voight. other performers include three down, lead greenwood,
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and a concert at the memorial. global news play for hours a day power by more than 2600 journalists and analysts in more than 120 countries, i'm taylor rates. despite the euphoria after the election, we will take a look at the answer as ccw explains. ♪
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vonnie: this is "bloomberg markets." i am vonnie quinn. several of the popular trump trades have either stalled or
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reversed in recent weeks. the chief investment officer of fixed income at tcw oversees more than 150 billion dollars in fixed income assets. you wrote that investors remain cautious. that was before the election. why is that? what you mean by that phrase? when we say caution, what we are referring to specifically in the cos context of a fixed income portfolio is cautious with fixed capital preservation with respect to the interest rate strategy, so shorter maturities. it also means having lower the market level types of allocations and exposures to risk assets such as corporate bonds or high-yield securities . the reason for caution actually hasn't really changed since the election. we acknowledged that the trump trade has been the most powerful
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force in the capital markets for the last couple of months, but as powerful as it has been, in our estimation, you still have an eight or nine year period preceding that that shows financial excesses in large portions of the capital markets and the global economy. vonnie: he did not participate or would not have been in this why is now the time to be cautious? anything, it might be a stronger reason to be cautious now. you are quite right that we need to -- neither anticipated the events in november nor the consequences of them as they relate to what happened in the capital markets. our basic premise is this. first of all, business cycles, while they don't officially necessarily die of old age, they do accumulate a lot the way of excess in investment the longer they persist. what you also recognize is the lack of concern, the insouciance
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of the investor, also reaches a level that becomes very inconsistent with what we see as a deteriorating set of fundamentals. i will take off of a couple of those deteriorating fundamentals and it will tell you part of the reason to because th cautious. levels tandem with the of risk they have reached. you have the continuation of slow growth in the u.s. economy . notwithstanding the numbers in the labor markets, you have underlying weakness. you have a chinese economy, the second-largest in the world, that appears to be reaching or experiencing challenges with sustaining its growth model. you have deeply undercapitalized banks in europe. vonnie: sure, let me jump in. we have known all these things for a while. it is not like they have just come to our radar.
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we know about the potential weakness in china and how they are modernizing and officials are trying to manage that. in fact,lso known -- the labor market in the u.s. is stronger than has been for a long time. we saw ppi coming in much longer than forecast -- stronger than forecast. even with negatives on the horizon, the market could still rally. tad: markets can kind of do almost anything that they want to do. your point is taken that markets could continue to rally. is as underlying strength consequential as the recent trump trade suggests, we're going to see higher rates. with those higher rates, we will see additional pressures on the more levered sectors of the economy, including the ones that were mentioned, corporate sectors as well. you will see a stronger dollar that will displace pressure into the emerging markets that in many cases have significant
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liabilities and dollars. we could live in a period of extended valuations and fundamentals for a long time. do you want to underwrite the risk of participating in the markets knowing what you know? our answer is no, you don't. staye: we could talking to you, but 10 year yield -- where does it go this year? high-yield -- is that a play at all this year? do you expect a lot of those? rapidfire round. tad: recognizing that forecasting interest rates is probably not necessarily well counseled by anybody, but we are at 2.4% on the 10 year and we expect it to be somewhat higher, somewhere between 2.7% and 3% by the end of the year. no, we do not think high-yield represents reasonable valuation. are veryd levels
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extended and the flow-through from the trump trade has taken a lot of triple c names and particular on the lower end of the credit spectrum to prices that are really inconsistent with where they are supposed to be. vonnie: thank you for that, chief investment officer at tcw. happy friday the 13th two you to you. the road for many of president-elect's cabinet picks may be a bumpy one. this is bloomberg. ♪
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vonnie: this is "bloomberg markets." i am vonnie quinn. pros i like donald trump's plans to get his team in jeopardy. joining us in washington is nancy. why might his plans be in jeopardy?
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obviously be saw the postponement of some hearings this week and we do not know when they will recur or occur. but why? that they aret all in jeopardy, but getting them done quickly like senate majority leader senator mcconnell wants to do might be a problem. news is that it looks as though he can get donald trump's national security and place pretty quickly, maybe by inauguration day. and maybe a couple others included elaine chao to be transportation secretary. after that, he gets a little bit murky because some of the nominees have their momentum basically slowed down, including rex tillerson to serve as secretary of state and senator jeff sessions to be attorney general. not that sessions may not go through, but he has had a rough ride this week in hearings. after that, the next group, we
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are not sure about the timing. we might not see a lot of confirmations until february or even later. vonnie: give us a comparison to past administrations and when the cabinet was in place. are there some standouts for being late? mcconnell has said on day one of the obama administration that they had seven or eight confirmed. democrats respond to that saying those people all had their fbi background checks, their financial disclosure forms, and so on already filed. a lot of them did not present the really complicated financial that aound -- background lot of the nominees have, and a lot of them being billionaires, including wilbur ross, who has a very extensive portfolio. he is said not to have his paperwork in to the commerce department. vonnie: what if they never did, nancy? what if they never do? do we wait for them to be nominated?
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nancy: i don't know if it's going to go that way. some will eventually just say yes, we will let this one go through. others, i think they will dig in. there will be delays. there is even some talk that amid all the discussion, some might withdraw. nancy from d.c., thank you for that. up next, we will hear from one of wall street's biggest dealmakers. blair efron on m&a under a trump administration. us is bloomberg. ♪ -- this is bloomberg. ♪
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is bloomberg markets. let's get to the first word news. >> the state government issued a
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abuses byeport on chicago's police department finding institutional problems have led to major violations including racial bias and the use of excessive force. here's attorney general loretta lynch. >> though department of justice has concluded this is reasonable cause to believe that the chicago police department engages in a pattern of practice of use of excessive force in violation of the fourth amendment to the constitution. >> the probe was launched after the release of a video showing an officer shooting a black teenager 16 times. senior staff members of president-elect donald trump's incoming administration are meeting with correspondence. the get-together with president obama's team is a symbol of traditional peaceful transfer of power. secretary tom vilsack is leading the guys leaving the office.
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longestresident obama's serving cabinet secretary. replacement announcements in. mexico has nominated the current head of the north american development bank to be the country's new ambassador in the u.s.. the current diplomats will become undersecretary for north america. he will be based -- raising the promise to build a wall and deport thousands of undocumented immigrants. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. : breaking news on to caught up. the corporation has agreed to plead guilty and pay $1 billion to settle an investigation into its exploding airbags which have been linked to at least 17 deaths worldwide.
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this just often the u.s. justice department. the company will admit to wire fraud for misleading regulars and consumers and car manufacturers about the state and safety of its airbags which would explode and spray passengers with shrapnel. are waiting on at press conference. this is a live shot from detroit. the executive will take the podium and you can monitor on your bloomberg. result, $1 billion and the guilty plea. and one of the biggest dealmakers on wall street. billion purchase and nabisco sales crossed $19 billion.
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we asked how donald trump's potential policies could affect them and what corporate america's mood is around the president-elect. let's put the term piece aside for the second. i think his or her mood is optimistic. for january as i have seen it over several years. a look at the commentary you have seen, they have talked in optimistic ways. typically the, with estimates, imf is 2.3%, 2.4% growth. in the u.s., 2.5 globally. the first time you talk to a ceo who will take the opportunity to beat that. good environment on markets and labor wages rising, retail good and investment good in optimism is a great stimulus. >> clearly there is a level of uncertainty which comes from
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waiting to see what the data points are. it is easy to say tax reform a good thing. whatact is we do not know it is going to look like. we do not know what congress will say it out to look like and we do not have a timetable. m&a when it part comes to cross-border or anything transparent -- transformational needs to get these data points before we go on the next leg. >> if things play out the way they are expected to, there is a range of expectations but a direction, what kinds of deals become more attractive, what kinds of deals become less attractive or less doable? >> great question. the deal environment is driven by two facts. undergoing rapid change on a global basis. whether it is technology, competitive threat. that is the biggest factor driving m&a combined with if you
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think you have a stable level economic backdrop you can be comfortable and more comfortable that the first 12, 18 months post closing your transaction you have a stable runway. that is the biggest factor. if i look at on a term basis it is cross-border. obviously it is consolidation. what will the regulatory regime say from that trust perspective on that consolidation, these of -- points.a parents my expectation is it will be lumpy and not necessarily a policy which for 2017 you can say there's an -- there is enough data points that you know how it will play out. every situation will have to be examined carefully. >> to i interpret lumpy is inconsistent? >> we need to know more. inconsistent, maybe your word, i look at it as there is you need a body of deals to go through
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the pipeline to figure out where we really stand. the >> will the president-elect once he is in office bully companies into doing different kinds of deals the way he has already started with off shoring and trade, for example? >> it is difficult anybody outside of any company to bully a company into doing something. you saw it with the financial crisis, highly unusual. companies -- >> what about what we have seen with ford and tell you. >> that is a different deal, that is m&a. symbols matter. what you say, language matters. the idea that you start to do a few of those data points and it becomes self enforcing. >> it is difficult to bully companies on deals why, because shareholderding capital and you wanted to make sense. >> the ceo has to turn out?
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policyre not turning out framework. you are turning out anything that is directed at a particular company. we already see that going on. >> do those trade policies affect a rationale for some deals? >> absolutely. china, china is our biggest trading partner, almost $700 billion of trade. what does that mean if there is a cooling in the ratio, put cooling aside but how does that impact my bottom-line business if i have exposure there? think trump kills at&t's purchase of time warner? that on theay merits from very far away, it looks like it ought to pass muster. in terms of the particular, hard for me to get into. >> is anything else vulnerable? >> i think a lot are vulnerable.
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deals are still under review. you have the insurance health care deals under review. >> how does eliminating the deductibility of interest which ,s part of the tax reform plan how does that change the map? >> i think m&a aside, of everything i have heard that is the most that i prison concern about. deductibility of interest goes from everything and the fact of an matter is it is such ingrained part of gory economy, such an ingrained part of capital structure that to do away with it i think has a potentially serious unintended consequence. >> let's talk about it as it concerns m&a. if you eliminate the deductibility of interest payments is there such a thing as a leveraged buyout ever again? >> the financial industry is smart and adopting. i would say they will figure
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things out. i am much less focused and concerned of what they do for the deal environment and much more focused on what it does for investment in the country, creating jobs on a rod base and making more investment. that will have an impact. >> it would be a game changer. >> of course it would be. vonnie: taking the first step to repeal the affordable care act. we had to capitol hill next. this is bloomberg. ♪
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vonnie: this is bloomberg markets. to abigailover
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doolittle. she has the chart of the day. abigail: what was the sales situation like? l'sknow that macy's and koh suffered. this is a longer-term short -- chart. we see that in e-commerce dominated about 11%. 10.4%, excuse me. 2.7% ofnt stores are at total retail sales. a big inflection point. in 1997 there was the department stores that dominated, e-commerce that did not. we have some weaker than expected retail numbers for december. 1.37%.y is down
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they could close up to 300 stores in the years ahead. i have nordstrom and under armour underperforming but were we had some big underperformance related to the gaming stocks ,ncluding gamestop and nintendo gamestop is down 8.62, the worst day in two months after disappointing holiday sales. sales were down 16%. the company is saying some of this has to do with industry weakness including the fact that concern -- consumers are buying less physical games and downloading more games and that is hurting the trend. as for nintendo, some of that could be weighing on nintendo but nintendo unveiled a new console. switch and itendo is underwhelming investors with the stock down 6%. we go into the bloomberg and -- take a look.
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these are retail sales over the last five years and we see that the retail sales are, this is not the chart we were going to pull up so i will toss it back to you. vonnie: all right. i can pull it appear -- up here. a look at some of the biggest business stories in the news. takata has been linked to 17 death worldwide. they admit to wire fraud for misleading regular leaders and will be subject to an independent compliance monitor went on cremation. we are waiting for a new conference -- and news conference to begin injured trite where we should get more details. -- begin in detroit where we should get more details. investors pulled money after almost three years of losses.
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october was down until and ending the year up through percent. earnings reports are out from three of the largest banks in the u.s., the biggest bank by posted profits that rose 24% and beat estimates. revenue was more than expected. that bank of america's interests missed estimates. has seen a decline in revenue from its mortgage business. they had a scandal with its retail unit. bloomberg business flash. has figures are predicting the timber will approve the measure to enable a swift appeal of the affordable care act today. --comes amid growing
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skepticism. if and when we do get a replacement how will it appear? the big question. thereupon 10 sources and 8:00 a.m. speaking with on capitol hill are divided into two camps. first and foremost, there are some who want an immediate replacement all-inclusive the top -- alternative plan but they have run into difficulties in trying to build a plan that would get all republicans on board. there are other folks, known -- most notably paul ryan. and something that would take over the span of several weeks, even months. they're looking in items that -- ridersgress as potential to affordable care act and take away popular components that they argue would help protect lawmakers up for reelection.
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vonnie: what are we going to see today? >> we're seeing the debate about setting up the procedural components in order to allow for there to be a vote to repeal the affordable care act. thators voted to set up procedure and the house is following suit. friday to have president-elect donald trump swearing-in and he will have a photo op moment that lawmakers are saying will help to set the inge for him to again usher the impetus needed to repeal obamacare. there is a court case as well. completely swept to the side of things perceived
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patriots and click they are proceeding in the house? by contact people in the health-care industry, you talked to the trade groups and they note that the notion that the president-elect wants to get rid of obamacare immediately. they say it is far-fetched because of the hurdles whether they are legal or procedural hurdles. all of this is going to take a much longer time in order to alternative to the affordable care act. democrats are organizing. i spoke with one prominent member of congress earlier who told me that the same voters -- voters who helped propel donald trump into office in coal country once they see they will lose their health insurance can quickly turn back to the democrats. a lot of things happening and a very fluid seen and a lot of moving parts. other thing is congress is looking at wall
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street and it looks like a hearing date has been set for january 19 before the inauguration. >> one day before the inauguration. i interviewed center elizabeth warren and i have been speaking to some more progressive age in the senate who are carefully watching how the commerce committee will question steven mnuchin. and now the treasury secretary nominee. you can bet they are going to be organizing not only members of progressive also activist groups. they are already doing that in order to try to raise a lot of noise so they will not be able to stop him. raise a lot of noise and characterize him. is anyone talking about potential hiccups in any of the nominees?
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>> it is difficult for democrats to block them. this is about characterizing them to find the opposition. they are going to continue to attack these nominees people who are not in line with the middle class. republicans vehemently refuting that but the organization is starting on the left. vonnie: we appreciate it. it should be decision on that later on. we will be asking some tough questions. this is bloomberg. ♪
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vonnie: this is bloomberg markets.
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the evolving relationship between the u.s. and russia is a major focus for world leaders gathering and davos this weekend. the white house and the kremlin may find common ground in oil production. there is global elites on douglas -- hopefully some deals being done behind the scenes. why will oil be an important discussion point? >> this is not really on the formal agenda but this will be a topic of conversation in the back rooms and hallways. what does it mean in a new trump administration to have the u.s. and russia looking for ways to improve a relationship as it was in the past. it was true in the prison that energy and oil and gas will be
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the common ground that these countries can improve their relationship. vonnie: the u.s. is ramping up conduct -- production. why would oil be the common ground? >> let's not forget the u.s. and russia are the two biggest -- suppliers of oil and gas. in the early 2000's couldn't and george w. bush decided let's improve our relationships through the oil industry. in october 2002 there was an energy summit in houston. and the second in st. petersburg that run together members of and executives from 70 oil and gas companies to do deals. that fell apart as the kremlin nationalize these private companies and as u.s. records storage ring progress on the new technology. we do not want to share this with the russians. that has been a freeze for the past 15 years or so.
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members of the russian oil industry and members of the putin government see this as a chance to restart that negotiation especially with rex , the nominee for secretary of state. that is a nominee they think they can deal with. you have an incoming administration and a secretary of state who has been the ceo of xo with huge ties to russia. he had the different wars in the middle east and brushes cyber hacking. this look like? >> sanctions are going to be the key lever by which any negotiation will start. and maybe and with. u.s. get out of this, if we remove sanctions what do we get out of this and that leads to the question, what howerence exists between
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you define national interest in the interest of oil companies likes it -- like exxon. stranded billions of dollars in investments they had made in russia. if these get removed to they can go back to that. vonnie: a good feeling toward davos this year? how hot will it be? >> it will be pretty hot and the big topic of conversation. let's have you back. you can read his story in bloomberg businessweek. this is bloomberg. ♪
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oliver: welcome to bloomberg markets.
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scarlet: we're live in new york over the next hour. we're covering stories out of abu dhabi and japan. jpmorgan and bank of america are reporting. the stocks are losing steam as the trading day evolves. president-elect donald trump meets with marilyn houston as the has gets ready to take a key step in repealing the affordable care act will take a spin around the globe looking at the outlook for inflation in china, also brazilian interest rates after the central bank stepped up the pace of rate cuts. u.s. market close in two hours time. check onoolittle has a where things stand and not a lot of consistency in terms of tone. abigail: we have mixed trading action for the major averages are the dow trading slightly
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down and it has been higher earlier. the s&p 500 well off of its highs. they are on pace for weekly losses. the nasdaq continues to carve out a record high paying held by some of the bigger internet names and is on pace for a weekly gain. as for the loss, that is a one-week chart of the dow. lots of volatility. the on the fact that the dow is down this week, what stands out more is that volatility. lots of it today volatility when il,see intraday volatility it lends itself to daily volatility. this may suggest in the days or weeks ahead we will continue to see more of the same and perhaps more volatility on a closing basis in terms of gains or losses of more than 1%. one thing that has not happened on this decline is down 20,000. we take a look at this, this is a great long-term chart of the dow showing the amount of time
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from the doublings of the dow. we see back here in 24 years in the mid-1990's from 2500 to 5000. 20,000,ow can achieve it would be a 17 year stretch technician last friday after the dow hit 19,000 1999 -- 19,999. work says in the near term that a pullback is probably likely over the next week to two weeks. a may not see down 20,000 for bit longer. part of this could be a shift we seeing around the trump trade. some are talking about the end of the trump trade. the reason that the trump trade is still in place, we still have
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stocks in white and we have a 10 year yield. bonds are lower than they were before. gold is still lower than where it started off. we do see that the 10 year yield has started to trade lower. -- startedanding to to trade higher. we could see the dow have some of that volatility. down for theoting fourth week in a row. the longest such streak since july after brexit. oliver: let's get to first word news. taylor: president-elect donald trump met with ireland houston at trump tower. she said lockheed is adding 1800 jobs and possibly thousands more. cost ofcussed the --
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the fighter jet. >> we need to get the best capability to men in uniform and at the lowest possible price. i am glad i had an opportunity to tell him we are close to a deal that will bring the cost down significantly from the previous lot of aircraft. taylor: general james mattis said trump is not opposed to the f-35 but wants the best thing for the buck. he attacked costs is out of control. it has been a hearing date for treasury secretary nominee steven mnuchin. weinal confirmation vote how he will not happen before february. congress has to dig into the nominees disclosure and the agreement he released. he it -- tax returns and the standard background questionnaire. lawmakers who want to repeal the affordable care act face the
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next hurdle. the house is expected to take out the measure that would allow a swiss repeal of obamacare. the senate passed similar legislation yesterday. several republicans opposed the measure. they are concerned about the absence of a replacement. easing butbama is not eliminating sanctions against sudan. he said his executive order reflects [inaudible] efforts to improve humanitarian access and cooperation with the u.s. on terrorism. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. oliver: we learned just how optimistic this banks are about the year ahead. jamie dimon praised the incoming
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trump administration. one linersaside the and election rhetoric, i am comforted by the fact he is putting real professionals in the playing field. they wanted to get on detail on tax and trade. i have some comfort they will do the right thing for america. : let's bring in allison williams. there is a lot to dissent. what was the most important thing you wanted to find out? allison: the factors that we can see that supports optimism and what we did get today, a positive share purchase announcement from bank of america. this is one of the most positive things with regard to the outlook.
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that is another positive human's capital was hurt by some of the long-term interest rates. wells fargo, we saw progress on the account scandal. aey also gave details around cost initiative in said that will not drop to the bottom line. giving that visibility like companies do in terms of we are making all these savings and we are investing. that is better than having a higher cost of doing business. oliver: there are a lot of investors who want to see the company spend more on. that they sign to you think stocks are valuable? stories one of the big that investors look for is capital return. we have a company that is -- group of companies that are undercapitalized and investors
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are waiting for some of that to be returned to bank of america and citigroup. the bigger companies that have lagged their larger peers. why investors are looking for is to improve their profitability and that should be able to improve the amount of capital they have to return and returning that back to shareholders. coming to thisre earnings season and stocks had a huge run and investors are looking for the optimism justified or what can i have to feel better about? after the stock has had this run purchases tol up the maximum allowed regulations related to the 2016 cycle, they will give a further list. that is what investors are looking at as positive. now entering a time when we're expecting less regulation on the financial industry. did we get any indication during
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the earnings statements on what the less regulated environment will mean for their options? >> is tough for anyone to say muchse there is still so not known about the regulations. for a lot of those questions banks are talking about a weight -- wait and see approach. important regulation related to asset management that could change. capital return, it is a long-term theme. it is for bank of america and citibank. for all banks we can get the potential tax reform. that could be helpful in terms of the amount of capital they could return to shareholders and that is going to be a big issue when we hear from citigroup next week. because of their specific situation, they have these different tax assets and they impacted depending on
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the changes. that will be the question for next week. scarlet: for jpmorgan this tory was about earnings growth. less about the core retail business. what are we looking for in terms of capital markets from these big players? this is where they will make the bulk of their money. >> goldman sachs does earn the most from trading. morgan stanley earned relatively morealthough they are much tied to the equity trading business. we saw bank of america commend this morning, there estimate was a little bit later. jpmorgan made that act by having --h eager estimates, there --y are more indicate indicative of the market.
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i think jpmorgan is coming in strong on a fixed income side. equities not as strong. all the indicators said equities would not be as strong. derivatives were the source of strength. it is harder to tell what is going on in that business. jpmorgan did miss on that business. in general did say that the rivet his business was doing well. fromll see what we hear goldman and morgan stanley next week. oliver: we will see you back here next week again. we'll hear from all the biggest finance chiefs of the world economic forum in davos. we will bring you interviews with jamie dimon and lloyd blankfein. as well as james gorman, ceo of morgan stanley and brian moynihan of bank of america. we have everyone in the lineup. the white swan about to reignite growth in europe?
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this is bloomberg. ♪
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oliver: department of justice heads are holding a news conference on to cut a -- takata . they pled guilty and agreed to pay $1 billion to settle in investigation into their exploding airbags. shares in the u.s. are soaring on the news that this could be moving behind them. up twice as percent. are talking about china. take a look at my bloomberg. we have data overnight out of china and exports which is the yellow line saying 6.1% in
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december. imports which is the white line rose at less than half of pace. this data highlights the uncertainty and challenges that china faces with president-elect donald trump appearing to take office next week. joining us now to discuss the outlook is the chief economist at cambridge investment which has $83 billion of assets under management. thank you for joining us. and looking through your notes and thinking about where you see things headed, one thing i picked up on was your idea that the risk of a trade war or protectionism is vastly overstated. we looked at the trade numbers and those are numbers that donald trump looks at and his blood gets boiling. why is the threat of a trade war overestimated? i made these comments a couple of weeks ago before we saw more detailed proposals border adjustment tax that you talked about early this
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morning. i do think in general the way i look at this is if the administration would do anything that would be disruptive to businesses and the flow of goods in and out of the country i would assume that k street would take -- kick into action and the phones would bring in congress. that is where the legislation has pastor. trip may have ideas how to become more supportive of thestic exporters and terror imports. when the legislation goes through congress and passes through the muster of u.s. businesses it will come out not in a way that will eventually be disruptive and detrimental to u.s. businesses. that is the way i look at it. oliver: if trump does put up these barriers to trade, does put up legislation and rules that hinder those emerging economies, they will get hit really hard. i wonder at the same time if
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that is also boosting u.s. growth to a gdp we have not seen in quite some time. are riding thes coattails. >> that is the way i look at it also. there may be a case here and becauseere trump through him, congress will impose tariffs and import barriers on certain products. right now we see his approach is very much accompanied by a veryny approach and not a broad based approach. the u.s. can go half a percent or even a percentage point faster. the policy will float all the boats. if the dollar strengthens more that will help all the exporters into the u.s. and that is one of the reasons where we believe the u.s., asia, latin america is where we look for
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growth in the next two years. we see more business invested -- investment coming up and it helps exporters in asia. and also boosting commodity demand. that is a triangle right now with europe, china, and japan someone on the outside but -- with their own business cycle issues. scarlet: the central bank cut rates than -- much more than congress had anticipated. inflation is slowing which gave room to do so. want that send inflation higher again? what is your confidence that influence -- inflation will stay low? guest: that is a difficult problem to handle. my concern is the opposite. my concern was the bank stocks cutting interest rates and growth expectations come back and the rail would appreciate
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too much to get your weight globe stimulus but that is not happening. that is why the bank is more confident cutting faster to bring interest rates down in order to stability growth because that is the problem right now. the recovery that most of us had expected in our forecast numbers is not materializing. it did not materialized last year and is questionable of how much that will be materializing. motivation behind the faster than expected rate cuts. oliver: this is the risk-free versus the market return. ios bring it up when we talk about brazil because brazil had a sickly a negative ibm. -- basically a negative premium. the market has done very well. he still had 11% risk-free return. what does it tell you about a country when that is what the dynamic looks like?
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had higherl always interest rates than any other place in the world. you have to shave almost 500 basis points to bring it back to where other markets are. on the other hand if you're not too worried about currency it -- aty, it is an good investment play. this is where we have some of our overweight in brazil. scarlet: we will discuss more on europe as well. this is bloomberg. ♪
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scarlet: this is bloomberg markets. oliver: we're back with the chief economist at time bridge which has $83 billion under management. but continue the conversation. i want to get a little bit
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lyrical if you do not mind. we're talking about the economic there is data from china. there is economic strain amid this rebound. strain,dd political does it concern you about what could happen when these countries get back to into a corner on both fronts? >> yes, it does. world growth around the is becoming more synchronous. i am seeing more business investment. as a result of low productivity. that typically means more synchronous global growth, that is the underlying economy. on top of that is the politics, absolutely right. that poses a risk in equity. we do not get to this more
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synchronous growth and we go back to having pockets of growth on countries that are fairly independent of the global cycle like india was always the darling of the merger markets. it is not connected to the rest of the world. it has a great domestic story. harsh thet matter how wins are outside. the way for india is for the more connected countries like korea and taiwan and commodity producers. the risk of for and threatens that regime. scarlet calling you have to look ahead to europe and the number of elections. the shift to the right in france game changer. >> look at the upcoming elections in france. are you talking about a pro-right, center right prime minister? this is unheard of. this is a country that has been leftward for decades. i could move into more progress
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in the u.s. that is a white swan. scarlet: do you agree that france could move toward a more progrowth a look then the u.s.? -- i was focusing very much on the number of elections, as much as france and march andlands in germany later in the year and italy at some stage. it is four out of the five largest economies in the eurozone having elections. i think he is right. one-tail rt it as a isk. for fivecolas sarkozy acts and before him, sure -- shirac. that is what could change.
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tail openingsitive up. scarlet: thank you. we will be back with more coverage on the commodities coast-to-coast. new york's trading has ended for the day or is about to in four minutes time. this is bloomberg. ♪
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show me house of cards. finally, you can now find all of netflix in the same place as all your other entertainment. on xfinity x1. anything with a screen is a tv. stream 130 live channels, plus 40,000 on demand tv shows and movies, all on the go. you can even download from your x1 dvr and watch it offline. only xfinity gives you more to stream to any screen. download the xfinity tv app today. >> this is "bloomberg markets." i'm scarlet fu. >> i'm oliver renick. abigail doolittle is standing by
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with the latest. abigail: we are taking a look at gold. gold is really starting to stand out. this is a weekly chart of gold. gains of 2%. gold is actually up three weeks in a row, this is a bloomberg dollar index is down three weeks in a row. the dollar weakness giving gold a bit of a bid. 10 year yield coming off a little bit, so that could be helping gold trade higher as investors are taking a little bit more of a haven. the 10 year yield tells us safe haven bonds are being bid up as well. take a look at g #btv 2015. what's happening on this chart. the bottom line is we do see that gold is starting to take an uptick here, after the big decline from the july peak. for itsr gold was off first time in 2011 but also those oversold conditions, the rsi had been well below 30. we are singled climb higher. what stands out is that net long positions are quite low it happened in the past,
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sometimes from a contrary of standpoint, gold has traded higher. we could continue to see strength ahead for gold. as for another commodity market on the move, you are looking at oil. we looking first at the baker hughes oil and gas rig counts. for the first time in nine weeks we are looking at a bit of a decline. this may suggest that some supply is coming off. even so, not helping oil. oil on the week is down for his first down week since december. oil getting a big boost for many weeks out of the opec supply cut week,down about 3% this and earlier this week, one of the current concerns with u.s. supply, the idea that u.s. supply could offset what the opec cuts had done for the price of oil. tonow have that irig count suggest maybe that won't be the case. one last point, it's interesting that oil is trading lower, even as a bloomberg dollar index is lower too. usually you would see that lower dollar helping out oil. oliver: thank you. crude oil has posted its first
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weekly decline and a month, with brent crude falling, wti crude lower, traders are waiting for proof that opec member nations are following through with their promises to cut production. earlier bloomberg caught up with the opec secretary in of the dottie. >> we are looking forward to several markets in 2017, where we hope to see ballast retirement. equilibrium price ofieved, as well as return investments into the industry that has been constructed in the last two years. bloomberg caught up with the oil minister for the united arab emirates. here is some of that discussion. >> what is expected, first of --, from everyone is to have
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that they committed to. anything beyond that is something extra, it could have some reasons for it. maintenance or something else. on average for the first six months -- scarlet: let's take a listen right now. we want them to be themselves. i told them, be ourselves and say what you want to say. don't worry about me. i'm going to do the right thing, whatever it is. i may be right, and they may be right. i said, the yourselves. let them do it. i could've said do this, say that. want that. i want them all to be themselves. is everybody ok? everybody good? thank you. [inaudible] scarlet: again, president-elect
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donald trump speaking to the press straight he's with steve harvey, the host of "family feud." oliver: it's an opportunity for reporters to yell at him and answer questions. scarlet: he did say something about repeal and replace. that is a priority. not just for him, but the republican congress. oliver: let's get to the bloomberg first word news. taylor? >> u.s. secretary of state john for his lastnam official trip. he spoke at ho chi minh university about the relationship between the u.s. and vietnam. sec. kerry: our friendship on individuals or personalities, one president or the other, one party or the other. our friendship is rooted in share, and in we the things that we agree upon about the future. heads next to paris where he will attend a
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conference on middle east peace. we are learning the president obama will hold a news conference on wednesday, which will be the final news conference of his presidency. senior staff members of president-elect donald trump's incoming administration our meeting today with the white house counterparts, incoming white house press secretary says, to get together with president obama's team is a symbol of the traditional peaceful transfer of power. is leavingom vilsack the agricultural department a week before his tenure ends and president-elect donald trump takes office. forack serve the department eight years and was present obama's longest-serving cabinet secretary. trump's spokesman says he expects an announcement on a replacement soon. fierce storms and france have left nearly 50 people injured without000 homes electricity. strong winds knocked a tree onto train tracks, stranding more than 200 passengers traveling from brussels to paris.
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they spent the night on the train without heat or electricity. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i'm taylor riggs. this is bloomberg. scarlet: we have some breaking news. a retailer that sells those heavy, expensive winter parkas, is said to plan and ideal for as soon as february. the company is aiming to raise million in a dual listing in both new york and toronto. again, toronto-based retailer canada goose, backed by pain capital, aiming to go public in capital,or -- bain aiming to go public in february or march. look at those prices. coming up, amazon will hire up to 1000 -- 100,000 workers in the u.s. this is bloomberg. ♪
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oliver: this is "bloomberg markets." i'm oliver renick. scarlet: i'm scarlet fu. big banks kicked off their earnings season today. regional banks are outperforming today. julie hyman has a check. even thoughcials, they paired their earlier address, still remain in the top spot in the us and the 500. it's why the most heavily weighted groups, definitely help support overall stocks when it's rising. percentagewise at least, it's a regional banks, not the companies are reported earnings that are doing the best in today's session. while j.p. morgan and bank of america have come back a little bit, we are still seeing pretty
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substantial gains in companies like regions financial, keycorp, and fifth third bancorp. many of these companies set to release their earnings -- report their earnings next week. it's really since the election we've seen these companies outperforming. here's a chart here. the blue line looks as the regional banks versus the financial index, the white line is the regional banks versus the overall s&p 500. you can see that they want positive on that outperformance, in particular after the november election. outperforming the s&p 500, but outperforming the financials as well. a lot of this has to do with what he's companies make money from. as opposed to say, a j.p. morgan are some of the other larger banks. they get a higher proportion of their revenue from lending money out people and taking in money from people. so, the net interest margin and its connection to interest rates is a more important relationship
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even for these banks than it is for the large banks. here another way of looking at that. this looks at the regional banks reliance on net interest income. that is expressed as this spread between the money that they are loaning out to people and the money that they are essentially borrowing from people in the form of deposit. if you are looking at this chart, this looks a net interest income as a percentage of overall revenue, combined for the regional banks and purple, and then for jpmorgan just by way of comparison in white here. percentage point spread between the two. this just shows you how much reliant the regional banks are collectively on this particular measure. and so, that was one of the areas of strength and some of these larger banks. and not only that, bank of america for example said interest income should grow by $600 million in the first quarter as we continue to see the effects of the federal reserve rate increase in december playing itself out in the markets.
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should be interesting to see the outperformance of the regional continue, and any commentary around this issue in their earnings reports which begin next week. scarlet: welcome news finally for those regional bank share owners straight thank you so much, julie hyman. amazon pledged it is creating 100,000 jobs in the u.s. the question is, is it part of a bigger strategy to get on the good side of the incoming trump administration? caroline hyde is here to discuss this, plus the other big tex stories grabbing our attention this week. >> great to see you. i'm joined by a key lineup, alastair bar from bloomberg news. what a week we had. let's kick off with these amazon hiring, hiring across the board. sense on whether this is a payoff on 100,000. >> i want to start by saying that over the next 18 months,
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i'm planning to hire about 100 u.s.e myself in the i think it's a pr stunt. one of my colleagues did an analysis of 2015 and they hired about 77,000 people just in that one year. so, it's probably already in the pipeline. >> this could be showing us slightly more about amazon's strategy here, where they might be beefing up. >> it was coming any which way. you look at the headcount growth over the last couple of years, it's pretty strong. demand, it at the has been through the roof. can userty sellers amazon logistics and make their services and products available to prime members. that is their fly reel they keep talking about, more prime. that is one thing. there are other initiatives like amazon go. continued expansion with cloud.
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is what's going to happen any choice, but maybe they accelerated that, which is a good thing strategy wise. >> what about the automation part of it? >> it's a little longer term, the automation aspect of things. if you look at the window the next 18 months, next 2 years, this is a good thing for amazon. >> hiring big and spending big on real estate for jeff beozos. let's talk about how the growth in one company and the demise of one that continues to argue is always been an hour mind's eye. marissa mayer going to be leaving the board, but potentially not that much of a surprise. she is an operations woman. when the deal is done with verizon buying the web elements of yahoo, there's not much operations to be done anymore. >> that's right. i think this is the first part of her exit plan, and probably
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the idea -- we don't know what she's going to do yet, but i imagine she's going to spend a year or two rebuilding her reputation, which has been pretty tarnished. she might be an entrepreneur at a vc firm, something like that. i imagine a couple of years she might turn up as ceo of a new company or start your own company. >> it's interesting to analyze what is left behind once the web service element of the business goes to verizon. this is basically investment. what is inherently left of the business and where do you see it going? >> if you look at the value of the holdings, it's higher than the market cap. you take the tax implications out of the equation. that's still interesting. number is big. we will have to see what tax implications, what workarounds for that sort of come about for the shareholders on the term, but essentially it's every engineering play at this point.
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>> there's been quite a few jokes around silicon valley and the world. what else are you hearing about it? >> there's a funny jokes about it. it sounds like a drug. lastly, this was an interesting week in terms of celebrations or worries about the future of happy birthday iphone. this is still such a killer product for apple. i yes, $50 billion a quarter, think it is. it's pretty amazing. the best comment i heard this week was from peter thiel, where he was asked whether the ceo of apple ebony said yes -- i bought another one.
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which wasn't the iphone. caroline: i actually can't tell. >> it is the google phone. it took them 10 years, but it's just as good. he said, we know what they look like. there's not much innovation left. i think that's probably true. caroline: when you look at the revenue that is still so dominated by this power force that is the iphone, we are expecting things from the iphone 8. what about the services element of the business? what about other products might come in and when? >> as far as the iphone is concerned, this will probably be the last spurt of growth the device sees, given the expectations around the device. about-term, it's really services and accessories and other devices surrounding the iphone. so they have opportunity with ar and vr longer-term if they are able to solve the design problem
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the industry really has, and the services business, they are talking about content. the innovation execution has not been seen with apple. there's a lot for them to prove. it's a wait and respect to their other opportunities. they are there and they are real. as for his execution, we need more proof. >> tim cook is the operations guy. i think in the next 1 or 2 maybe carglass, software, those things have to start hitting it otherwise. i don't think the valley will hold up. caroline: it's been wonderful speaking to you. thanks for your insights, your humor as well. bloomberg technology. president,er and nintendo of america president.
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oliver, without i send it to you. had liveoming up, we to capitol hill and the house takes key steps to repeal president obama's affordable care act. this is bloomberg. ♪
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scarlet: in washington, house leaders are confident the chamber will approve a measure to repeal the affordable care act today. that contradicts the skepticism among some republicans about the lack of a replacement plan. given still he is on capitol hill as this debate unfolds. we are still not pass the point where they have approved the measure just yet, right? talk about the level of resistance. >> i would anticipate that within the next hour they're going to see a vote, so we're close to that step that will allow the republicans in the house and senate to begin work on an alternative to the affordable care act and how
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exactly they will replace it. i just spoke with the vice chair ,f the republican conference representative doug collins. what he told me is that they think they are going to have a more piecemeal approach in how they're going to repeal obama , so there is some growing differences of opinions within the republican conference about what exactly the alternative will be. >> we've heard a lot of different varying answers from different congressmen and trump himself, either being vague or having different answers in terms of when they want to get this done by. is it realistic to put a date on it? can you figure out how long it takes to do this? is it still in the realm of theoretical? >> i been reporting on that for the past day, trying to get a more clear timeline on when exactly this will all go down, and i have to be honest, on the campaign trail, president-elect trump said he would like to do within hours of him taking
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the oath of office. recently this past week we've heard from house speaker paul ryan, who has said he would advocate for a more piecemeal approach. there are procedural hurdles that the incoming administration is going to have to clear. representative collins told me he would anticipate the first pieces of the repeal to begin an alternative, beginning to take place in around mid-february. again, there are republicans who are up in political swing districts in 2018 who are a bit uneasy right now. obamacare remains largely unpopular as a whole, there are some portions of the law that are incredibly popular. scarlet: including the provision that allows coverage for pre-existing conditions and allowing children to remain under their parents' insurance plan until age 26. talk about the resistance that their repeal would have in the senate. there are a couple republicans
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there that were very vocal in their concern. >> yes. what's going to happen is that this will very quickly move through the house, and type of alternative package to obamacare and repealing and a replacement, that will move easily through the house. when you get to the senate, you get to more politically defeat that i going to be quite difficult for republicans to hang on in 2018. a lot of these republicans are understanding of the fact that the reason they are able to have a republican majority is just because of how unpopular obamacare was, but then you take a step back and the absolute reverse of that could prove true, and by repealing obamacare without an alternative, could prove to be the political poison that sinks their majority in 2018. for thesions coming of republican congress and the president within the next couple of weeks. oliver: obviously we still have
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a lot of people coming down the trump nomine pipeline. one of them that is taking a while's steven mnuchin. i think bloomberg news and bloomberg businessweek have done is great of a job reporting is anybody else about the intricacies of this guy, where he came from, and what we know about the timing in which he could possibly be confirmed and how they move forward with that. >> this just hit the bloomberg, where his hearing was scheduled before the senate banking committee for january 19, one day before president-elect trump will take the oath of office. he's facing tough opposition from democrats who are bringing relationshipss with one west bank as well as his ties with goldman sachs. republicans are pushing back vehemently as is the incoming administration, arguing he has the economic experience to grow the economy and would work with gary cohen, also of
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goldman sachs, to help pass through trump's economic policies. the numbers in the senate are very tough for democrats to wity block any of trump's nominees. this is all about midterms, all about framing the political to date, and they are going to try to portray these picks, whether rex tillerson earlier this week or jeff sessions or attorney general, as people who are out of touch, and republicans have to defend. scarlet: kevin cirilli joining us from capitol hill, and oliver, manage and would have interest in 43 companies to avoid conflict -- steven mnuchin interest ino divest 43 companies to avoid conflict. ♪
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oliver: i'm oliver renick. scarlet: i'm scarlet fu. welcome to "bloomberg markets." ♪
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oliver: we are live from bloomberg world headquarters in new york for the next hour straight we will become a stories in san francisco, chicago, and london. just one hour of trading left for the week, and u.s. stocks are bouncing around, almost unchanged, may be positive. the s&p heading for its second straight weekly decline, if we continue at this pace. is the trump rally about to run out of steam? the chief economic advisor tells us what the market needs to see details and needs to see them soon. wells fargo, have they turned the corner after their faulty accounts sacndcandal? the bank is also cutting costs. we are about one hour away from the close of trading, let's get a check on the markets. we are looking at mixed trading action for the major averages in the u.s. we are looking at the dow
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trading down slightly, s&p 500 is still moderately higher but well off its highs. the nasdaq, the nasdaq on pace still. we're seeing a little bit of the intraday volatility landmarks trading action this week. we take a look at the one in the s&p 500, down ever so slightly in contrast to last week's gain. what really stands out are the swings, we're looking at a bit of a roller coaster ride. typically when you see an increase in intraday volatility, this lens or leads to an increase in daily volatility on a closing basis. we hopped in the bloomberg and take a look edgy #btv 4350. this is a one-year chart. that it is at lowe's, near record lows. investors are very complacent while stocks are at record highs. then we have the s&p 500 at those record highs, even though it's off of its high slightly today. earlier on pace for yet another record close. we see that in the past we had big divergences there.
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it does tend to work out with a re-convergence as the vick stocks shoot and lower. it will be interesting to see when this likely happens. it will be interesting to see what the precise trigger is for that. as for today, the top point boost for today, our facebook, comcast and amazon, both facebook and comcast getting a nice boost from upgrades. amazon trading higher on strong e-commerce data, and color. stock is upook, the two weeks in a row, its highest level since the election. it has taken quite a beating since the election but recovering ahead of that since the quarterly report. perhaps some investors think it will be better than the last report. as for the banking sector, we take a look at the big banks. they all reported today, alice williams said all three put up solid quarters. she said she was surprised by the strength of these quarters. these stocks are well off their
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highs. earlier had been up much more, helping to explain perhaps why the dow and s&p 500 are off of their highs. perhaps a bit of the cell, the news action here. you take a look at the intraday chart of the 10 year yield. it is off of its highs. this is a one-week chart. we see earlier the 10 year yield slightly lower and the day shot higher. up about four basis points. tail wind or headwind, but before the banks and also been getting that tailwind. the bigger point is the fact that we have the 10 year yield down on the week, down four basis points, for its fourth weekly decline in a row telling us there is a bit of a still haven bid out there -- stealth haven bid out there. we do have stocks at these highs. scarlet: think you so much, abigail. let's get to bloomberg's first word news. >> lawmakers who want to repeal the affordable care act faced an external today. the house is expected to take up the measure that would allow swift repeal of obamacare.
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the senate passed legislation yesterday. several republicans oppose the measure and are concerned about the absence of a replacement. president-elect donald trump says he will have a full report on hacking within 90 days. in a series of tweets today, trump said a report that russia is compromising information on him was put together by political opponents. he called the allegations phony. and inaugural planners have released their lineup for president-elect donald trump's welcome celebration. headliners include country star toby keith, singer jennifer holliday, an actor jon voight. trumps team says other performers include the piano guys, lee greenwood, and bobby german. the groups will perform for a free concert at lincoln memorial. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i'm taylor riggs. this is bloomberg. scarlet? scarlet: president-elect donald reformas been promising
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when it comes to taxes and regulation. earlier we spoke with mohamed el-erian on what trumps plans could mean for the market going forward. mr. el-erian: these are not new announcements. a lot of them featured in the obama administration but they got nowhere, because congress was in no mood to enact economic reforms. that is also changing. what the market is seeing is a congress where both houses have republican majority. they see a repeat of the policies plus a bit more, and they see greater probability of passage. >> you mentioned the chinese trade data. it's been a year dominated by the chinese once again, meddling in markets. we've got interbank rates rising, similarities to the beginning of last year. how do you expect the exchange rate to pan out in 2017?
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to what extent are the chinese going to allow the yuan to decline further this year? it's interesting. i've learned two things over the last few months from just watching the exchange rate in china. the first is that chinese officials learned very quickly. a year ago, it was the offshore market that was leading the onshore market. this time around, the onshore market has acted as more of an anchor. the second thing is the chinese realize you could have excessive depreciation, and that's when they realized over the last few days and weeks. the more you depreciate, the more you encourage capital outflows. what we are seeing is a tweaking in the policy stand. less depreciation and more controls on capital outflows. the key thing is that, can they get the overall economic balance
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correct. that's what we will see over the next few weeks. it's amazing to me the extent to which the chinese tend to learn about how to conduct their policies, as opposed to repeat mistakes. geeks, iose currency know you are in that category, 120, 123 was the october low. we came through it on an intraday basis but we haven't managed to close through it. massive week next week, theresa may outlining her brexit vision. what is your forecast for sterling? aght now this is trading as purely political currency. this isn't trading on the macro fundamentals. this is trading on fear of hard brexit. what's may going to deliver next week, and how is the pound going to react? it should be trading on politics. a decision between soft or hard brexit is a political one these
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days. and it's a big deal. you're talking about the trading relations of the united kingdom with its main trading partners. this has massive impact on the foreign exchange market. the foreign exchange market got comfortable with the notion of slow brexit, that it would take time, we don't need to worry about it great over the last few days, and with the announcement of the speech you just mentioned next tuesday, suddenly the realization that we may go back to getting a lot more evidence between hard and soft brexit. volatilitysterling is higher, and i don't know what we are going to get on tuesday. my hope is we will get indications of a soft brexit. my fear is that we will get indications of a hard brexit. i really don't know what theresa may is going to say. speaking of trade
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negotiations, let's move back to china for a moment. what if there is a cooling of the relationship between the u.s. and china? what does that mean? does that impact financial markets on trade between the two? mr. el-erian: it's one of the major risks for 2017, that you get disruption to trade china,ns, not just with the mexico. these are the two countries most often cited by the president-elect. i don't think markets will be comfortable about this. so far, as i said earlier, the rhetoric has softened. that's why markets have embraced an element and set aside protectionism. we get more trading, more tensions on the trade side, that certainly wouldn't be comforting for markets. >> final question, give us an idea of a trade you are making, thinking of making, or we should make at the start of 2017. what is top of the pile, given
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all the themes we have discussed? mr. el-erian: if you have an appetite for lots of volatility and you are able to maintain your position, foreign exchange in emerging markets is attractive. they have overshot in many cases. back,ill over time come but it's going to be an incredibly volatile -- you have to put it in that part of your portfolio that can tolerate significant volatility. mohamed el-erian speaking earlier on bloomberg markets. oliver: coming up, wells fargo tries to recover from its phony account scandal and announces it will close another 400 branches. this is bloomberg. ♪
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oliver: just a quick revisit to breaking news in the ipo , an exclusive report from bloomberg. canada goose said to plan and ipo. -- an ipo. our ipo reporter joins us here now. alex, what we know about this? thehis is canada goose, coats you see around financial districts in manhattan. and theas, big circle arctic on the shoulder. and the big price tag. $900 minimum for one of their parkas. this is a coat, it's a brand that has been focused on luxury buyers. it's a company that was -- a majority stake was bought by bain in 2013, when the company's -- come when he was valued at $250 million. three years later they are looking for $2 billion valuation in this ipo.
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especially ining, the u.s. ipo market, for a retailer to go public. we haven't seen one in years. will be interesting here to see how they do. and if we really kind of take advantage of a list that we have seen with this culture. people love these coats. they love these coats. the timeline is aiming to go public in february or march, while people are still walking around wearing these gigantic coats. >> the trademark parkas are fairly plain. when you look at what some of the comparables are out there too, it seems like a decent time because montclair is basically the only other publicly traded -- the italian company. it has done well since early 2015, that stock is up quite a bit. that's going to be th comp investors will look at. you can think of when this
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company is pitching its wares on the roadshow, they are hoping that the bankers and financiers who are buying into this are familiar with the brand and recognize the brand equity there. oliver: is it just the jacket? >> they have other, smaller lightweight coats. accessories. 1/2 century almost ago as wear for outfitters, people who are hiking and in intense cold situations. more functional rather than fashion. in the fashion scene it has taken off in the past couple of years, you have david beckham wearing them, daniel craig, and the likes of the celebrities like them. oliver: sounds like i am way behind the curve on this one. there hasn't been much in this space. >> we got this, we have to lose -- rewind to lululemon in the 2000's. other than that, it's a bunch of small deal since then. oliver: thanks so much. scarlet: bank stocks have been
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bouncing around a bit today with jpmorgan, wells fargo releasing fourth quarter reports. wells fargo under pressure after the phony account scandal. the company did post a drop in profits. joining us jpmorgan, wells fargo releasing fourth quarter reports. wells fargo under pressure after the phony account is laura kell. she covers wells fargo and bank of america. can we say definitively that the scandal hurt the bank in the fourth quarter and it's ready to move on? will there still be a draghi effect on the banks? a lot of the analysts we talked to before the earnings report were expecting to see in this quarter a lot of impacts happening. ,ertain lines of income business from this scandal. we did not see that at all. , we willhave thought see about accounting advertising spending as we try to figure out damage control. wasn't -- we also got
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certain ski lines were customers are paying to have deposit accounts, see the charges we often see. people thought that maybe they would see that pulling back, and they didn't. on thers spending more cards they have with wells fargo. thought, maybe people will pull back because i don't want to be using our wells fargo card anymore. oliver: those are the transition mechanisms the scandal could have had on the bottom line. do you have any idea whether or not this is something that will crop up in the future? scarlet: -- i spoke with john shrewsbury and asked him essentially that, will we see maybe next quarter some of the service charges filtering down? and he said no, that is probably not something we will see. there was one thing that the bank did say. in terms of deposits in interest rates and things like that, we
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could see some changes. we just really know at this point in time. the bank has been giving us updates each and every month, as first credit card applications. -- as far as credit card applications. iarlet: net interest margin wells fargo did improve in the fourth quarter. why is this a more important metric for wells fargo? >> i don't know that it's necessarily more important for wells fargo. that was something they sort of exploded on as well and said, going forward, we expect $600 million more in net interest income in the first quarter, and if interest rates continue to keep rising, we will see in 2017 even more. both of those are lenders will expose to interest-rate products. bank of america would be more exposed than wells fargo would be. oliver: when you look at breakdowns in the wealth management business, wells fargo numbers pretty good, pretty solid. >> pretty solid. it is part of their business.
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all of the big banks have it, whether it's big of america, jp morgan. that is not something most of the banks focused on. about deposits, consumer heavy mortgages was a big topic as well. oliver: do they think this will be something that is an indicator economically, people are more willing to either take -- or take on loans? did they give guidance for that? >> i think jamie dimon is the only one who pontificates about the consumer, a lot of the other bank leaders can be a bit backward leaning. certainly if there are consumers or commercial lending as well where there are more loans being taken out, that is major. and part of the reason why bank of america is saying, the money we get from these interest products will go out. scarlet: thanks to bloomberg's laura keller, who covers the big banks. the wells fargo cfo will be joining us at the top of the hour. oliver: still ahead, is there value to be had in pfizer?
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one of the quote unquote dogs of the dow last year. .45%, about this is bloomberg. ♪
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>> what do you make of all of this? the nasdaq at its highs. a lot going on. >> i'm keeping an eye on the
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nasdaq. that's important if they come back. they were the laggard in 2015 and they are of 4% so far this year, making new highs almost every day. that's a very positive side for the blog market and all components in general. we saw the vix get within one penny of making the annual lows. we did bounce a bit and we are essentially unchanged. down 18% since the year started. the vix continues to move lower, it stocks continue to move higher in the bigger picture. >> i will take the other side of that. we have the vix at all-time lows, lots of complacency. we have stocks at all-time highs. case thatmake the these extremes aren't going to we will see a reconnection on the vixen s&p 500 a bit of a selloff? >> not necessarily. the real extreme low in the vix is way down below 10 in 2007. we've got down the annual lows, but i still think there's more downside there. i am interested to see now that the bond market has come back and rates have come back down.
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they got a little ahead of themselves, and now we are back below 3% in the 30-year. i think that got way overdone and we are getting a bit of a pullback. i think that is a positive as well. the trends remain the same. they just needed to sort themselves out a bit. >> what about the banks? jpmorgan, bank of america, wells fargo all report today. solid reports those are off the highs. politics, not about but i do want to make the point that people have been belaboring the issue that banks will have a tough time because of dodd-frank and politics have been holding the back because of overregulation. the banks had record profits once again. jpmorgan, $5 billion for wells fargo, $5 billion for bank of america pretty jpmorgan for the year had its best ever bank year, $25 billion for the year. i don't think ranks are being beaten -- banks are being beaten
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up politically. scarlet: one of the dogs of the dow last year, pfizer. around drug pricing, saying those companies -- what is your trade and why do you like it? risk-reward play. back to my boring stock substitution traits. 32 is an important level at pfizer. that is the midpoint. between 28ng nowhere and 36. 22 is that midpoint, we pushed above that. i'm looking at the june 30 call, trading for about three dollars. the break even as $.50 higher. the june option has five months. all of these things add up to positives, if we can see pfizer get a little more support, pushing on 33, topping the range at 36, and that option would double in value. ofrlet: alan not men
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bullseye options straight scarlet, back to you. john shrewsbury will be joining us to break down the company's earnings. wells fargo also cutting costs and closing at least 400 branches over the next 2 years. oliver: next week we will hear from all the biggest finance chiefs, and i mean all of them, at the world economic forum in davos. we will bring you interviews with jamie dimon, lloyd blankfein, james gorman, plus brian moynihan and bank of america. don't miss any of those next week from davos. this is bloomberg. ♪
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private wifi for your business. strong and secure. good for a door. and a network. comcast business. built for security. built for business. hey, drop a beat.flix? ♪ show me orange is the new black ♪ ♪ wait, no, bloodline ♪ how about bojack, luke cage ♪ oh, dj tanner maybe show me lilyhammer ♪ ♪ stranger things, marseille, the fall ♪ ♪ in the same place as my basketball? ♪ ♪ narcos, fearless, cooked ♪ the crown, marco polo, lost and found ♪ ♪ grace and frankie, hemlock grove, season one of...! ♪ show me house of cards. finally, you can now find all of netflix in the same place as all your other entertainment. on xfinity x1. parenti: let's get to first word news. you are looking at a live shot of the house as they telling us, as congress goes about the business of trying to repeal
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what was a landmark piece of legislation under president obama, and that is repealing the affordable care act, largely known now as obamacare. we saw similar action in the other house, and now we are seeing this here, as they continue to tally and look to repeal the affordable care act. it is interesting -- summer, kids are looking to have something in place before they completely repeal the act. the vote is still ongoing at the moment. we are keeping track of that and we will bring you the tallies as we get them. president-elect donald trump met today with lockheed martin chief marilyn houston. they discussed the cost of the f-35 joint strike fighter jet. >> i certainly share his views that we need to get the best capability to our men and women in uniform and we need to get at the lowest possible price.


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