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tv   Bloomberg Markets Americas  Bloomberg  January 17, 2017 12:00pm-3:31pm EST

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we are covering stories from davos, switzerland and tokyo this hour. president elected donald trump says the currency is too strong, the pound rallies as theresa may outlines her plan for brexit. bloomberg white banks need options to deal with brexit. that's why banks need options to deal with brexit. we are halfway into the trading day. abigail: we are looking at declines for the u.s. averages. have the dow, s&p 500 and nasdaq all off of their lows. nevertheless, there is a sense of uncertainty here as the nasdaq is off of its record highs. the dow and s&p 500 lower. the big drag today from a sector perspective is the financials.
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on pace500 bank index for its worst basins brexit -- day since brexit. these banks did rally in the huge way at the end of last year, up about 30%. that -- thea cell year downn -- the 10 five basis points. the fifth weekly decline for the 10 year yield in a row. index, lookg dollar at an intraday chart, we are looking at a really big decline here. steady declines, down more than 1%. not being helped by rates coming down.
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lots of volatility here. some are associating it with president-elect trump's press conference the middle of last week. this chart may suggest the volatility, the shift we are starting to see for these asset classes could be around the fed. in white, we have the dow, still in rally modes and the election. in orange, we have gold. in blue, the 10 year yield. down since the fed did raise rates for the second time in a decade. buying bonds after the big selloff after the election. suggesting we are seeing a reversal here. haven assets going higher, the dabbled friend lower. -- the dow will trend lower. -- cvs, cbs and kroger
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and kroger trading higher. they have less volatility than the overall market. walmart today has outlined a plan to add 10,000 jobs even as they close stores. now, let's check in on the first word news this afternoon. emma: scotland by minister warns the new vote on breaking up the u.k. is likely after the prime minister's brexit speech today. the uk's heading for next it from the european union that could be economically catastrophic. scotland the not vote for the brexit vision. xinese president using jingping saying no one wins in a trade war. >> the point i want to make is
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that many of the problems troubling the world are not caused by economic globalization. emma: he also says he's willing to fight inequality in incomes. plenty of questions and few answers -- crews from malaysia, china and australia called up the search in the indian ocean. the bowling triple seven disappeared -- boeing 777 disappeared in march of 2014. --eral prosecutors have against the wife of the orlando nightclub shooter p. the indictment accuses her of impeding officers investigating the attack at the pulse
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nightclub. her husband died in a shootout with police after killing 49 people. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i'm emma chandra. this is bloomberg. lays out hera may vision for brexit today, bowing to quit the single market and promising a clean break from the european union. .he dollar came under pressure donald trump set to assume the reins of power in three days. care to help navigate the risks and rewards, the global market strategist for j.p. morgan asset management, samantha azzarello. we saw the market reaction to that speech today. how should investors interpret what she is saying? i do think the signs were there all along.
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she made references to the fact that she wanted to see a clean break. half income a half out what strong language in our view. this is still messy. there's uncertainty around all types of politicians. it is too early to say. likewise, here in the u.s., we have seen markets trading with a recent level of certainty around donald trump and yet come in recent days, we have seen wavering. where do you guys come down on that? samantha: it depends on the asset classes were looking at. equities,like he was the groundwork was already there pre-trump. the reflation trade already in action. you had inflation picking up, growth, and extra layer from political optimism that may be overdone. expectations may be missed. the u.s. dollar, we are all taking it as a given that we continue to see u.s. dollar strength whereas we would say we do not think it is a given.
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the dollar becomes a release valve in a sense. it is very sensitive to the fed and trumps statements. david: what accounts for the political optimism and how long are the markets willing to give congress and the white house to work this out? samantha: the markets are giving until the inauguration speech. that is not realistic. it's been 100 days. that is the benchmark. it is a wait and see. you look at the earnings recovery, you look at strong growth, strong manufacturing data, we do think there's reason to be optimistic. we are just cautious of things that have moved too much. there's reasons to like financials because of rates moving and less regulation. since the election, the s&p is up 6%.
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financials are up 18%. that might be a bit overdone. julie: are there any other areas conversely where you think they are undervalued right now? samantha: surprisingly, we have to look abroad to do that. we are still looking at emerging markets. many were quick to dismiss the asset class postelection on dollar strength and fed moves. look at the domestic situation. a lot of these countries are coming out of bottoms and they are higher beta markets. if we did get the pop in global growth and we get the true reflation aspect of this emerging-market equities will benefit julie: let's say we have a scenario where you see strengthening in the dollar, perhaps congress gets more aggressive, wouldn't emerging markets be vulnerable to those types of moves? samantha: it is a balance. the external situation has
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akened, but the domestic situation a strong. while u.s. equities have a ways to run, they are later on in the cycle. those who need help i may be looking abroad. -- alpha may be looking abroad. david: do anticipate they will will rates again here or they because his and wait to see what happens? samantha: i think they will wait and see what happens. this bed is unbelievably cautious. a lot of their forecasts are not pricing in any sense of fiscal stimulus yet. they don't want to be changing their forecasts around. they need stability with their outlook and they need to see 100 days of policy and action before they really start moving. david: will we see that fiscal policy? samantha: i think we will see some. i think the u.s. could likely use some in certain areas. come a harde it is
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to tell because of where we are in the cycle. some more probably not as much as was talked about on the campaign trail. julie: now that we see the incoming administration, the fed is being treated almost like a lame-duck fed. do you think the fed will be less important to markets this year? fed will i think the always be really important but i do think there is some truth in that idea. fed andet follows the the fed now has to follow the administration and that is a pretty big shift. david: thank you very much, samantha azzarello. vonnie: coming up, we will take you back to davos. julie: we will hear from axel what options banks will need to deal with the consequences of brexit. this is bloomberg. ♪
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julie: this is "bloomberg markets." david: time for the bloomberg business flash. traders in the $5.1 trillion a day fx market should be reading donald trump's twitter account. he expects trump to increasingly -- he told the wall street journal the greenback is too strong and "killing us." rise and maybe weighing the acquisition of a cable company. verizon would use such a deal to grow the demand for wireless data products.
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likely targets could include charter or comcast. is doubling its permian basin assets, acquiring companies owned by a family in the resources base will reach 6 billion barrels with the acquisition. brexit is just one of the hot topics in davos. francine lacqua caught up with axel weber at the meeting. axel: i think it has been pretty clear from the start that it is very hard to renegotiate the stance of the u.k. with european have seen that over many years that if you are outside the eu, it is very hard
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to issue bonds and entering to the market. sometimes these are long and winding negotiations. the european market had to be taken international law before we were compliant comparable with european regulations. to achieve.rd thing my view has always been britain has to start somewhere new. it is pretty clear that the your opinion relationship that european relationship will be not as good as it was. it's important for written to step aside and renegotiate with the rest of the world -- britain to step aside and read negotiate with the rest of the world. itis good for britain to do parallel and focus at the start to the end of the year on the foreign relations. the timeline of negotiations will be a lot
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longer than we think at the moment. if you are the chairman of a bank, what do you do? try to speak to your employees to move people toward your move now? the timeline is different. axel: what is important for banks is optionally. banks need to create up to now with the in case we do not have market access from the u.k. to the european markets. being swiss, we don't have it in the same fashion as european banks in their home market. we have created a european entity in frankfurt. we have optionally to move people around. francine: hammond many people are you thinking of moving? axel: there's no sense in talking about that now because it all depends on the final agreement. since the city of london is a big feature of the u.k. economy,
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i think we will get some traction in the negotiations on financial services. for us, it is important to create option out of the now. let's see what the final agreement brings. if we have market access, the pressure is not that high. the pressure is there to create the option out of the. , areine: because of brexit there clear winners and losers? things my all these know it's not too good to start with transition and regime -- regime transition. let's agree on what the new relationship is and then agree on what speed we will get there. the sheer process of putting european laws into british laws and then changing them to match the features of the u.k. economy will be a long time. francine: at a time when the
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u.s. is deregulating. what does that mean for the european banks? are you on a completely different playing field? axel: we will see less additional regulation and less intrusive regulation coming out in the u.s. in particular. i don't think there will be some parts of dodd-frank that will be a big rollback regulation. banks need better capital, better liquidity planning, more medium toity this -- long-term, we are concerned with the fact that we have a lot of isital -- further capital not the answer to every problem in banking. tool toing a single intensively. monetary policy has also run its course and the u.s. government is likely to put in more fiscal
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and more structural policy. so that monetary policy can rebalance. we are hoping for a rebalance on the regulatory side. ,ulie: that was axel weber chairman of ubs. david: coming up, big banks lose a bit in bloomberg pursuits. why it is a big deal. that is next. this is bloomberg. ♪
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the rain is coming. this is "bloomberg markets."
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david: bank of america, citigroup and j.p. morgan chase vulnerable to the prospect of billions of dollars in damages -- walk us through what they were appealing. the construct of the appeal before the court. >> this is a really complicated case. even know it has been around since 2012, we are still at the beginning. early on -- this was 16 banks, by the way. early on come the lower courts decided there was no antitrust claim here. this was about false libor submissions by the panel banks sometime around 2007 or after. she said it is not an antitrust event -- that is a big deal for the banks. if an antitrust violation is arend, damages our al
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automatically tripled. there are other claims. fraud, breach of contract, commodities exchange violations. big one. is a certain plaintiffs appealed that no,the second circuit said we have antitrust claims here. this is collusive antitrust conduct. it was the three banks in the u.s. that were appealing that -- it isourt opinion not classic price-fixing. it is libor. libor is a benchmark, not a price. we think of price fixing companies and sally product and say let's sell it for more because we're are the only one selling it. libor is a benchmark and competition can exist around libor. banks can compete for the top of it is notst rate -- necessarily a competitive process that sets that rate.
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julie: it sounds like it has taken so long because of the complex the of the case. it has gone back-and-forth. now, what happens now that it has gone over this hurdle? >> this is a motion to dismiss stage. you have not made enough allegations to keep going here. now, it has been established that they have. there are a lot of complaints come a lot of claims and a lot of different banks. the plaintiffs and defendants will go forward in discovery and you get into this trading evidence -- julie: it could still take quite a long time. >> it could take years. it is unbelievable that it has taken this long. only one bank so far has settled some of these cases. .hat is barclays you have classes of plaintiffs and individual plaintiffs bringing cases here. penalties could be
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huge. what are we talking in terms of size? the second circuit when they issued their opinion brought back antitrust and said there could be other reasons why it is dismissed year because, frankly, if antitrust is found and all these plaintiffs have a claim, this could bankrupt the world's biggest banks. one class of plaintiffs alone said damages could be 45 billion -- ,ulie: when we talk about tom lr most of the lending rates around the globe are in some way related to libor. we are talking about the allegation here, what kind of repercussions could this create? it creates repercussions because of what you said. it is huge. there are so many transactions that are based on libor or libor
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based on a european currency. we talking about a massive amount of transactions. there are other benchmark cases. they are waiting and hanging around in litigation. this decision could affect antitrust and some of those cases. -- in some of those cases. julie: coming up, arne sorenson on the incoming trump administration. what worries and about europe and starwood. this is bloomberg. ♪
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strong and secure. good for a door. and a network. comcast business. built for security. built for business. 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. david: live from bloomberg headquarters in new york -- vonnie: this is "bloomberg markets."
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banks atetback for big u.s. supreme court. the justices have turned away an appeal by bank of america come citigroup and j.p. morgan chase refusing to stop antitrust lawsuits that accused the banks of conspiring to rig libor. of banks had sought a review an earlier decision saying investors had claimed they were harmed by the alleged asset that -- the suspect is an islamic state militant who was born in pakistan. the nigerian military has confirmed one of jetspider jets -- fighter on ad refugees while
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bombing operation against boko haram. divers are using data to pinpoint their lake erie search for parts of a corporate jet that crashed last month near cleveland. searchers found the cockpit voice recorder. six people were on board. we are looking at live pictures of president obama speaking at the white house -- it will be josh earnest's last press briefing. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. julie: let's take a quick check on u.s. stocks right now. we have a bit of a pullback today. .25%.w and s&p off by even though we have a dip in the
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s&p 500, there is a push and pull going on today between two of the sectors. abigail doolittle is taking a look at that balancing act. abigail: we have declines in u.s. averages. this is a great snapshot of what is happening sector wise within any index. we see a pretty even division between red and green. we are looking at the consumer staples, the worst being financials. up top here, we have reynolds american having a nice rally today after british-american did up their bid to $49.4 billion for full control of the company. altria trading nicely higher along with phil morris. morgan stanley reported today.
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the regionalof banks trading sharply lower today. down more than 4% each. the regional bank index today is having its worst day since july. quite a bit of a selloff today. it bloomberg intelligence analyst told our team he thinks banks have more sensitivity to changes in interest rates. we have a great chart that exemplifies the sensitivity to financials. we see this is a three month chart. in blue, we have the 10 year yield last quarter and the fourth quarter of 2016 having its biggest move ever.
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the banks, both regional and the big banks traded right along with correlated, benefiting from that increase in rates. around the yield december after the fed raised rates started to turn lower. investors are catching up to the idea that the 10 year yield is starting to trend down and this could weigh on the banks in the near term. the hotel industry include some of the biggest u.s. -- erik schatzker interviewed marriott international's arne sorenson in davos, switzerland earlier today. he asked if a trump presidency is a net positive for his business. arne: i don't know. obviously, the markets have reacted quickly. with optimism. you asked participants in the
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market why, as you do all the time, and the answers are around tax reform or infrastructure investing or the regulatory environment. this all could be positives. we are not a hugely regulated industry. , do we get into a trade war? it is not just a u.s. question. in environmentn in which we see less international travel? that is the place where we have to wait and see. erik: that concerns you, clearly. what can you do and what are you doing to try to influence the administration to that accord? arne: we are trying to communicate a point of view, both as a company and as an industry. we reach out publicly. we reach out to members of the
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incoming administration to talk about various issues. at the same time, you recognize, we do have a political reality in place. that is around a desire for national security and clarity around immigration policy. that is the case in the u.s. and england and other countries in europe. we need to be involved in the conversation about what are the policies going to be. we have to recognize that people want solutions that will protect them. at the same time that they want economic growth. those things can be resolved in a way that works for the u.s. economy. erik: you mentioned tax reform. your company and others in your industry have a high marginal tax rate. could that be hugely beneficial to you? arne: it depends on the way it develops. we have no tax benefits. we are not a real estate owner, so we don't have any depreciation associated with that. we're not investing in certain extractionneral
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to or other things where you get special rules. there is a possibility to get lower base rates. if we can get tax reform where money that is being kept offshore by american copies can come back to the u.s. and be returned to u.s. shareholders or entered into the u.s. economy, that would be good for the economy broadly, including us. erik: if the base corporate rate goes down to 25% come is the math as simple as taking what marriott pays in federal income tax and dropping that down to 25 and all of it flows to the bottom line? arne: you would have to look at what we make in the u.s. yes, it is that easy. erik: let's talk about what's happening in the international in my men. theresa may has cleared a path for a hard brexit. does it make a difference to you? arne: it might.
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england is an important economy in the world. one of the highest source markets for business to the u.s. we are a big operator in england. the english economy depends heavily on europe. what is the relationship there? the big risk is less brexit then it is what happens to the entire eu. if you have elections that to a certain way in france or the netherlands or germany and you end up with a very different approach to politics and economics in the european union, that is uncharted territory. david: how close are you to making your base case that eventually the eu unravels? arne: i don't think we necessarily need to make a base case, but it is something we need to watch out for. it will be years in developing. we would not pretend to have the insight to know what is going to happen with currency.
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you have to make sure that you are doing everything you can to generate demand. arne: these are becoming contingencies. arne: sure. erik: let's talk about the starwood integration. how would you characterize it? arne: we closed september 23. the response from our customers has been fabulous. we allowed them to link their loyalty pass. knew from the beginning that this was a really important place for us to do it well. by moving on the day of close, which none of the airlines have , we are having it work off to a great start. the customers still have two programs and we have to work through that. what decisions have you made about how you will change those programs? arne: these first steps are
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it allows 75% -- customers to move points from one side to the other and therefore earn across and redeem across the platform. we will likely get to one program over time. when we get there, we will have to reconcile the benefit levels. spg members are really interested in whether those changes will be to their benefit or not. we are obviously mindful of that. erik: is the program to generous? arne: i don't think it is too generous. starwood had a generous program because it was smaller in many respects. that could cause somebody to say that marriott might take another approach going forward. we know our future depends upon having a direct relationship with our customers. giving them clear reasons to
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book with us directly, allowing us to know them, allowing us to be able to customize vacations for them in a way that delivers value to them, the importance of the loyalty program grows with each passing year. the prince full reason for doing the deal. that means do not mess up that loyalty program. david: that was arne sorenson speaking earlier today from davos, switzerland. vonnie: donald trump meets with the boeing ceo for the second time since being elected. the latest on their meeting. this is bloomberg. ♪
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julie: watching bloomberg. david: samsung secession plans are in trouble with the next chairman possibly going to jail. the yuan in china trying to make its currency convertible by 2020. put -- inplan to charge of the south korean conglomerate may put him in jail instead. he has been caught up in a scandal that led to the impeachment of the country's president. him forors will arrest bribery and embezzlement. julie: china's president sounding the call for free trade in his first appearance in davos . he says protectionism hurts both sides. pursuing protectionism is
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just like locking oneself in a dark room. while wind and rain may be kept, so are light and no one will emerge as a winner in a trade war. he urged the world's business and political elites to come up with solutions to the problems caused by globalization. david: rolls-royce has agreed to pay $807 million to settle u.s. and british bribery investigations. the illegally used middlemen to conduct deals in a dozen countries. they will pay the majority of the penalty to the british government. chinese highrollers are finally returning to the casinos in macau. the world's largest gambling hub says vip gaming revenue rose 13% in the leslie moonves of 2016. mass-market gambling revenue was
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up 8%. -- in the last three-month of 2016. julie: china is an economic giant but its money is still in a bit of a rut. the yuan is little used away from home. china still restricts the buying and selling of its currency but that may change as china starts to promote the use of yuan throughout the world. donald trump has branded china a grandmaster at currency manipulation. a nation that effectively taxes overseas goods by keeping the yuan undervalued. have beenthorities forced to shift gears and are trying to stem the slide in the n and tighten rules on capital outflows. china has a long history of keeping its markets closed to outsiders. in 1994 come it's at a fixed rate for the yuan against the
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u.s. dollar. in 2001, select foreign institutional investors were permitted to buy yuan denominated stocks in limited amounts. china's economy become the second-largest and yuan used took off. make itseek to convertible by 2020. the inclusion of the yuan is expected to accelerate the rate of reform on widely used currency giving individuals and companies on the mainland more choice with their savings. alterable to swings in the currency that could aggravate its economic slowdown. you can read more about china on quick takes on the bloomberg. had to for more stories. ♪
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gura. i'm david julie: i'm julie hyman. this is "bloomberg markets." donald trump is busy tweeting about his success so far. alling this morning, "with the jobs i'm bringing back into the u.s. even before taking office with all the new auto plants coming back into our country and the massive cost reductions i've negotiated on military purchases and more, i believe that people are seeing big stuff." between coming ahead of his ceo afterth boeing's tweeting early last month that boeing is building a new air force one for future presidents but costs are out of control. joining us with the latest from kevington, d.c. is cirilli.
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do we have any details of what happened in that meeting echo ? kevin: this is his second meeting with donald trump since the election. they talk about renegotiating the price of air force one. he came down the elevator from trump tower and addressed reporters. mr. trump is doing a great job of engaging with business. together, we are working through simple find the requirements and streamlining the process and applying commercial best practices. that will reap financial cost reduction. i appreciate the teamwork approach on this. is again arly, this reader's asian from -- reader eiterate- reader
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-- it speaks to a broader issue which is the way the contracts are gold out in washington. -- doled out in washington. kevin: it's the battle between boeing and lockheed martin. trump has also battled with lockheed martin in particular for a 2001 contract for their fighter jet program. contract $379 billion to deliver 3000 jets. only 200 of those jets have been delivered as of january. trump and the sources i'm speaking with inside of the trump transition team feel they have leverage with boeing to say let's take a step back, you
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might be able to provide some of these fighter jets as opposed to lockheed martin. they also discussed that, according to the sources i'm speaking with as well. julie: it is not just the military contractors. it is the automakers as well. that is the other big industry that has been in focus. what is the latest on that? tweet he has continued to to a series of folks in the auto industry. boeing it is carrier or or what have you come all of these manufacturers are continuously intertwined. he has gone after them. a lot of the folks i'm speaking with inside of the business community tell me there is uneasiness as to how he is able to go after folks like general r sendingr their factories overseas.
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there's no streamlined process for notifying these companies he will be tweeting about them. take a look at market reaction to these companies. it seems the market has readjusted somewhat and recalibrated to his tweeting. julie: at the same time, he is effectively being rewarded. the strategy has been successful thus far. the companies are lining up to try to anticipate what they address.will kevin: you have seen this whether it was last week with the head of lockheed martin going into trump tower or today, the ceo of boeing. to bringay for him people into trump tower and bring people in to meet with his top advisers and the political strategists and get to business. on the campaign trail, these folks were not necessarily
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singing his praises, so to speak come in terms of his business model. david: a big confirmation hearing tomorrow, steven mnuchin on capitol hill. any sense of what we can expect in terms of lines of questioning from senators tomorrow? kevin: he will be on thursday, one day before president-elect is set to take the out of office. he will face intense pressure from democrats who will try to republicansor two to block his nomination. right now, all of trump's nominees are doing ok and are in ok shape to be confirmed. , his pick to lead the education department and wilbur ross to lead commerce. confirmation hearings continuing to get underway. steven mnuchin will face tough questions on one west bank, the
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bank he had financial ties to several years ago that democrats are looking to portray as out of touch with the middle class. david: thank you very much. coming up, kevin will be speaking with the president of the import export bank. julie: mr. trump tweeting "a big walmart."gm and coming up, we will hear from amin nass. this is bloomberg. ♪
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. . .
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david: 1:00 p.m. in new york, 2:00 p.m. in hong kong. good afternoon. i'm david guerrero. julie: i'm julie hyman. welcome to "bloomberg markets."
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from bloomberg world headquarters in new york we are covering stories from davos, and seoul. morgan stanley is the latest thank you report better than estimated fourth-quarter results and sees a better trading environment ahead. amin nasser ceo of saudi aramco says he is committed to ipo plans. he speaks to bloomberg's editor in chief in davos. samsung's succession plans are in jeopardy. we are about halfway through the trading day. abigail doolittle is here with the latest on a bit of a fullback. abigail: nasdaq is on pace for its worst decline in 2017 after several record highs last week
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in the week before. the clients come as julie was mentioning, modest pullback. down for little more than .2%. a long-term chart going all the way back to the 1990's, and what we are looking at is the one-month rolling percent change for the dow. range8 we see a massive when the dow was losing each day. big, big range. we are right near the record low in terms of the 1% rolling range. not a lot. a real lack of conviction. decline,of the modest goldman sachs, jpmorgan, both of these banks are lower. goldman sachs will be reporting tomorrow. jpmorgan reported last friday. solid, solid report out of
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morgan stanley today. same out of jpmorgan. after putting up really big moves in the fourth quarter of last year, more than 30%, investors taking chips off the table, especially if the 10-year yield continues to decline. unitedhealth group is down sharply. a bloomberg intelligence analyst told us that despite the fact that the company beat fourth-quarter estimates, he did not like the fact that the backlog of contracts did not grow. bit of a drag there. to take on the weakness we're seeing in the banks, we are seeing what alison grimes are just as saying art -- alison grimes is saying our solid quarters. this is another great chart. personal consumption expenditures. this is the fed's preferred measure of inflation.
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master in was taking up. in blue we have the 10-year yield. in november we see that it started to tick down. hybridcontinue to trade we had the fed a few weeks ago saying that they will be raising rates gradually. this will help explain inflation ticking down. we could see yields drop, too. perhaps investors are connecting to that idea and taking profit in banks. david: abigail doolittle with the update. let's look at "first word" news. emma chandra as that from the newsroom. ma: on the agenda, boeing's contract to build the next generation version of air force one as well as an f-18 super hornet. a i think mr. trump is doing
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great job engaging business. we are working on simplifying requirements and streamlining the process. that will lead to substantial cost reduction did this is something we are working together and i appreciate the teamwork approach. i think it is the right way to do business. emma: trump has put pressure on going and other companies to reduce costs. theresa may is threatening to pull the u.k. out of the european union single market. she provided the most detailed britain in aof post-brexit world. will pursue a bold and ambitious free-trade agreement with the european union. this should allow for the freest possible trade of goods and services entering britain and the eu member states. emma: may also said the u.k. problem and will get a vote on the final brexit deal. in indonesia, lecanto has been spewing cause of action more than a mile -- a volcano has
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been spewing clouds of ash more than a mile into the sky. it had been dormant for 4 centuries before erupting twice in the last six years. it is one of 120 active volcanoes in indonesia. global news 24 hours a day powered by more than 2600 journalists and analysts in over 120 countries. i am emma chandra. this is bloomberg. julie. julie: saudi arabia intends to reduce the overall tax rate paid by saudi aramco to make the 2018 initial public offering, potentially one of the largest in history, more appealing to investors. john micklethwait sat down with the ceo, amin nasser, in davos to get an update on the trajectory. amin: a plan has not changed since last time. listing in 2018. john: second half for first half?
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amin: i would say first half. john: what do you need to do between now and then to make flotation work? when will you announce the further flotation? selectingt we will be for the listing. that hopefully will come sometime soon, after we complete selecting the banks. that would be followed by selecting which market will be listing in. course, we are looking -- john: markets such as canada, london? amin: looking at definitely, absolutely, new york, hong kong, london, the u.k. mentioned canada. all the markets being looked at, to decide where the listing will happen.
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it will be a dual listing in terms of saudi arabia and one goodt, or several listings it all depends on the assessment, evaluation. john: you have been stranded by bankers here. having made progress -- surrounded by bankers here. have you made progress in numbering that down? amin: yes, we have seen a lot of we came to davos, and a lot of bankers seen this not necessarily all related to the ipo. we are a global company and we have a lot in different markets. financing for our deals, saudi arabia is also being done by these banks. john: can i ask you about a couple of particular things?
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there is this big debate out here whether you will include the reserves, $260 billion barrels, for this will be inside saudi aramco or not part of the ipo? amin: the listing is based around saudi aramco maintaining the concessionary already have. you have the concession -- oil wouldthe physical also come with it? course, you have all that comes with it. you have the concession, and aramco has enjoyed that the last 80 years. john: other question investors bring up is the issue of the tax rate. i understand right now the company faces or guilty of 15 --- faces a royalty of 15-20% on top of that tax rate of 85%, which seems almost communist. is that -- those that get
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changed or is that going to be different? amin: today, you are right, we pay 85% taxes, 25% royalty. with what is remaining, the company is able -- for example, in 2016, execute one of our biggest capital programs. going to the market, definitely the regime will be changed. john: available the tax rate in some way. amin: exactly. john: part of the kingdom's aim, to live more of dividends and not taxes. amin: we will look to bring the company come when you look at the taxes -- it has to be aligned with other listed companies. we're looking at companies being listed in the markets. and based on the advice of the refuse durings
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the process -- we use during the process of the ipo, we're regime on us and fiscal -- on the fiscal regime that will meet emphasis required. john: will you reassure investors that there will always be the big dividend paid regardless of the oil price? amin: we pay dividend and we executed the biggest capital program in 2016. john: what are your priorities for investments the next few years? is a going to put money into refining --aramco going to put money into refining? amin: as you know, petroleum is heavy on the upstream side, oil and gas. we are maintaining a capacity of 12 million. ratee going to double our
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to 23 billion over the next decade. -- we are heavy in terms of oil and gas. looking somewhere in the range of 8 million to 10 million barrels of refining capacity not necessarily in the kingdom. this is global. petrochemical is an area we are expanding in. we just finished last year one of the biggest chemical plants in the world, with dow chemical. we are also executing germany. -- executing with germany. this is an area of interest to
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us, expanding our refining capacity global. julie: i was the saudi aramco ceo and president, amin nasser, with bloomberg editor in chief john micklethwait still ahead, british prime minister theresa may and the biggest open question about britain's future. we will hear from richard haas, president of the council on foreign relations, who says her plans are unsustainable. this is bloomberg. ♪
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julie: british prime minister theresa may says the u.k. intends to leave the eu single market, outlining a plan for a clear break from the bloc and secret customs agreement. the bloomberg daybreak:
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america's chief spoke with a roundtable of guests and spoke to council on foreign relations president richard haass on whether the plan is achievable. richard: this is a cake and eat it approach. all the benefits of trade but not doing the financial transfers, we will set our own immigration policy. good game if you can get it, but the bottom line is you can't get it. he doesn't begin the political process of repairing the british for thend parliament inevitable choices, inevitable compromise is. fine as an opening position but truly unsustainable. one of the things that did boost the pound on the intraday basis is the idea that this vote would go before parliament once you get the actual deal. does that make things better on the margin? >> i think only to the margin. to me the only thing that is new in the speech, like you are
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saying, she is prepared to give up access to custom union in exchange for the ability to negotiate freely a free-trade agreement with other countries. this we know. rumpalk of under the t presidency, more like this get the bilateral agreement. this is going to tremendously boost negotiating power vs. the eu. the emphasis is the upcoming trip to washington, from iran and seeing if she can get a better deal with the eu. jonathan: we are talking about the potential for a better deal with the eu. your perspective from london, please come on budget contributions? contributor to the budget of the european union the way we have been previously but if we maintain our access to certain programs we will make those contributions. what do you make of that? >> in terms of the speech itself, 25 minutes long, wide ranging setting up her vision of
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a clean brexit as opposed to a hard brexit. there was a warning for the rest of the eu as well -- if you don't play ball, they will come down on you. basically, tough ending to the speech. not going the u.k. is to be a single market. it may not be in the customs union. but it wants as much access to the rest of the eu as possible and she singled out certain sectors which are important and go both ways. financial services. there were certain things, consequences from the u.k. following. i actually thought it was a really interesting speech. commence, negotiations and there is going to be a long, torturous process, and will probably pay for access to some degree. >> richard haass, along, torturous process.
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you said it is not going to be what she just said. you have a new book out, "world of disarray," in which you suggest that maybe the brexit is part of an overall pattern of dissolving the institutions. can there be a new international order the comes out of this negotiation? richard: only if they are optimists on steroids, to be perfectly honest. the combination of what we just heard with the backdrop of what mr. trump said over the weekend in the interview with "the times of london," hard not to wash all this and feel that the atlantic era the european order as we know it is unraveling on a daily basis before our eyes. i don't know where we are going to be in six months after the article 50 period is gone through, but it will not look like this what new european project takes its place? ist is so stunning to me that for seven years, the united states and europe have benefited from order and prosperity -- 70
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years, the united states and europe have benefited from order and prosperity and the cavalierness with which it is being jettisoned is quite stunning. julie: that was richard haass with jeffrey wu and david owen on "bloomberg daybreak: americas." david: speculation on the successor to the samsung chairman ending up in jail. this is bloomberg. ♪
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julie: this is bloomberg. we have breaking news on qualcomm. qualcomm is set to face a u.s. antitrust case over licensing. apparently the federal trade commission has been investigating the company's business since 2014. this would follow a south korean fine. the eu is also investigating the company. qualcomm said it to face an
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antitrust case over licensing of its chip the stock took a sharp leg lower in the wake of these headlines coming out come down 1.25%. not down by that much in percentage terms. right now 1.5% or so. nonetheless, a sharp reaction to this, and we will bring you more details when we have them on this case. david: all right, thank you, julie. a south korean court is set to rule on wednesday whether to approve an arrest a friend of the president get us up to speed with the state of play. what do prosecutors accuse him of doing? >> they are accusing him of making illegal contributions, bribery, to parties and committees to receive favorable treatment from the south korean government when it turns to
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internal mergers and how samsung is structured. julie: what has been the company's history with the south korean government? samsung and martyr and marvin south korea are intertwined. if you go back to the years following the korean war -- samsung and modern south korea are intertwined. if you go back to the years following the korean war, it was decided that the expert industry was the way forward. the government worked hand-in-hand with specially family-owned conglomerates, to make them national champions. lendinghan favorable practices -- that gave comparable lending practices and support that allow them to become the lg's, samsungs that we know today. david: tell us about the father. sam: he has been presiding over samsung until about two years ago when he suffered a heart attack has been effectively incapacitated since. but he is the maker of modern
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samsung. it was his father who founded the company but it was he who brought it into the age of electronics, the internet, all the things we know it for today. humans very large oak -- he looms very large over the company culturally and it was expected that his son jay y. would become the next leader of the company in an orderly transition. obviously not so much right now. julie: you acquired this depth of knowledge because you have written extensively, including a "business week" cover story. you have been to south korea. when you talk about the country and company being intertwined in this way, the been corruption allegations in the past? sam: oh, yes, no no no, the history has been intertwined, has been -- lee convicted twice for bribery and tax evasion was pardoned by the government for his contributions to south korean society. this is not unheard of as well.
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in the case where south korean executives do go to prison, they are still running the companies from the jail cell. david: i alluded to the conversation surrounding succession. how complicated is that likely to be? sam: well, now that is thrown in the air. samsung has a difficult and complicated connection of companies and divisions and shareholders. jay y. was supposed to be the one. if that is no longer the case, there may be other family members who could step in on an interim basis. but likely what would happen is one of the existing executives from one of the larger divisions would take control. julie: what is interesting is the stock has fallen but not by that much. it had a monster year over the past year or so. quite a bit over the past year -- now i'm not looking at the right thing, but anyway. there you go. the two days where we saw a bit of a pullback. seems like there's not much concern over the succession or the prosecution against him.
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sound don't mean to overly cynical, but to what degree is corruption priced in? the fact remains that while jay and certainly his father or culturally and strategically important to the company, they have a deep bench of executives day today. operationally, the company is not affected by this so much. david: sam grobart joining us on set in new york. julie: coming up, donald trump's comments on the dollar being too strong. his speech on friday and the comments that may shape the dollar outlook for the next few months. 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. 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. lightbank from bloomberg world headquarters in new york, i am julie hyman. david: i am david guerrero. -- david grubb. emma chandra has more from the newsroom.
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emma: president elected donald trump's transition as the approval of 40% of the american people, according to an abc news/"washington post" poll, well below those of his predecessors. former presidents bill clinton and george h.w. bush had a transition approval ratings above 80%. russia has invited president-elect donald trump to syria peace talks next week. the meetings in kazakhstan would be moscow's first formal contacts with the new administration. fight against the terrorism will be more effective with the u.s. under trump. and the foreign minister once that a new vote on breaking up the u.k. is likely after prime minister theresa may's brexit speech. scotland's nicholas church in the uk's heading for an exit from the european union that could be economically catastrophic.
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the hunt for the missing malaysia airlines flight 370 is over with plenty of questions and few answers. crews from malaysia, china, and australia ended the deepwater search in the remote area of the indian ocean. the boeing 777 disappeared on a flight from kuala lumpur to beijing in march 2014. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. i am emma chandra. this is bloomberg. david. david: thanks very much. the u.s. dollar fell against most beers after donald trump called the currency to high, in part because china holds down its own currency. in a speech today, new york fed president william dudley said " the strengthening of the dollar will put downward pressure on import prices and limit the ability of domestic producers to raise prices." joining us with more is michael mckee.
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maybe you can tell us about the interplay between the strong dollar and what the fed is charged with doing or has to do. michael: the fed is watching inflation. we have seen them so far this year bring down unemployment what we call full employment. they are watching inflation and think it is going to rise again. if you get a strong dollar, it puts downward pressure on inflation. at the same time, the fiscal plans of donald trump would put upward pressure on inflation. said today,dudley and also lael brainard, the fed is watching what is coming out of washington closely because if we get overwhelming fiscal stimulus, inflation will rise the interplay is what we have to watch. julie: we have a chart of the fed's dual mandate. they've done a good job -- they and market forces -- good job of bringing down unemployment as inflation has not gone up by that much. vince, what we have seen today is that the president-elect can
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jawbone not only general motors and boeing and lockheed martin, but even the u.s. currency as well. trumpt: basically, donald is coming into the rally he essentially started with his inauguration -- acceptance speech, rather -- back in november after the election. that pushed the dollar higher based on the promise of fiscal stimulus. really what we think was referring to china, not the broad dollar, made a statement about the dollar being too strong in the markets have jumped on that across the bandwagon, which probably speaks more to positioning than what he actually said. the fact that he is capable of tweeting anything leads everything vulnerable. julie: what is interesting about that is, yes, he tweeted it is too high, but mike what power does the president effectively have to actually affect the
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currency? there is what he says and what you could actually -- michael: he does have a lot of power. he can increase tariffs by 15% for short period of time after he takes office. this is where the forex traders have to start paying attention, because until now it is react to what he says. after friday it is react to what he does. the border adjustment tax plan -- he jumped that as well. who knows? , the dollarthat would have to adjust by as much as 25%. if the dollar went up 25%, you would see it at the level that countries ofthe g4 the time were forced to react to it. a coordinated effort to bring down the dollar. it is very hard to know how much of this sinks into the president's team, how much they understand and what they will end up doing. thed: do you think
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administration will pursue the same strong-dollar policy as the obama administration? pre-storm-dollar policy originated under bob rubin. they wanted to keep the dollar stable at a strong enough level so that it would not create impediments, necessarily, to investment or giving advantage to other countries. themedia ran with strong-dollar statements on a regular basis and everybody sort of felt they knew what they meant. since then, we've seen other administration, and go and they have not focused on it as strongly. it isn't clear what it means going forward. julie: vincent, in your arerience, our traders -- traders cognizant of the suite of issues they could be facing with the administration? vincent: i think they are. they are great people, brighter
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now than they were when i was trading you have this effect where what he says you just have to pay attention to because it is moving the market. a 25% increase in the dollar back to 1985 levels would make the fed's job miserable because every 4% or so equates to 25 basis points and fiscal tightening. julie: it would make in some measure trump's job miserable if we see a dollar like that. exports fallsee precipitously and that would create a whole new tweetstorm, i would imagine, from the president-elect. david: how much going forward into the february meeting -- we were talking about this in the last hour -- is there a sense of agreement among fed policymakers of how they will approach whenever donald trump does when he becomes president, or will they wait and see? michael: they will wait and see because nobody knows what he will do when he is president. february is too early. afterwards,eting they stress that they want to
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wait and see what impact their moves have had. it is hard for them to separate from what donald trump has been saying, but we did see the dollar rise after the fed and the market seals arise after the fed raised interest rates. let's see what effect that has on the economy. that puts them probably into the march meeting. by that time we will have at least some budget proposals from the president, the new president. julie: we have been talking about the bloomberg dollars index. vincent, is there a particular when you are keying in on? the yen has been on quite a run against the dollar. is there anything that is going to be key? vincent: from the volatility standpoint, sterling is a volatile, because you have the dueling composition between the mandate and what is going on with the dollar moves. the yen is most sensitive to these types of moves. from 120, 125, and we didn't below and that is
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a painful trade to be part of. more people are saying we're sticking with this trade, the long-dollar trade is still there. julie: definitely something to watch. thank you so much, vincent cignarella, and michael mckee, economics and policy correspondent. up, fred harbert will tell us why he is optimistic about the economy under a donald trump presidency. this is bloomberg. ♪
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david: this is "bloomberg markets." i'm david gura. julie: i am julie hyman.
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abigail doolittle has the chart of the day. short and sweet, we have a great chart here. fear gauge,vix, the trading near record lows, suggesting traders are complacent about what is happening in the real world. in blue we have a great index year, the u.s. economic policy uncertainty in the. it measures newspaper and other magazine headlines using three , economic uncertainty, and a variety of government terms. more recently at the end of last year, spiking much higher around the election, starting to come down, and that wide ranges suggest that investors, complacency among investors, is relatively low. the uncertainty about what is happening in the world is relatively high. to be fair, the last time there was this one of divergence, the economic policy uncertainty index fell down to the vix.
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it is interesting to see that there. interestingly, hedge fund investors would seem to agree with the sense that the vix is where it should be. we look at an index that measures the net shorts of hedge funds on the vix. last august and september, it hit a record low during the stretch when we did not see the s&p 500 move 1% up or down for more than 40 days. at that time, the vix hit a record low in terms of the net shorts from hedge funds, suggesting complacency was right. we did see a bit of a selloff. right now we are close to those lows. the hedge fund thinks that the vix is where it should be. lastly, to round this out, we have a great look at currency volatility. it is trading very low. this is a longer-term chart in the bloomberg. in white we have the s&p 500. orange we have to jpmorgan currency volatility index.
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we see the big moves up. currency, foundational asset class, perhaps moves ahead of stocks and what is happening here. we see that right now we are trading your lows and also near the bottom of the range, suggesting that we could see volatility within the currencies by suggesting that stock volatility is going to spike higher as well. interesting to see how this plays out. julie: it will indeed, especially as we get closer to inauguration day. david: the export import bank of the united states is the official export credit agency of the u.s. its mission, financing the expletive u.s. goods and services to -- exports of u.s. goods and services to international markets. it approved financing to support it million dollars of exports and 52,000 jobs were supported by the authorizations and small businesses represented nearly 90% of exim authorizations. kevingo to our colleague cirilli, who is with the head of the export-import bank.
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kevin: thank you. chairman hochberg, thank you for joining us president-elect donald trump met with the ceo of boeing, which has a long history with the ex-im bank. how important is it for the president of the united states to have a good relationship with boeing? to have as important good relationship with all her manufacturers -- boeing being one, caterpillar these are major job creators unsupported your chain of small business -- and support a huge range of small businesses. it is terrific that dennis mullenweg is meeting with president-elect trump. kevin: you when i know that the tea party in particular takes a lot of issue with the ex-im bank. overwhelmingly, they say that financing big businesses like ising, caterpillar, ge -- this going to be problematic for the trump administration as they navigate the more far-right
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conservative wing of the party, which is a get -- at -- against the export-import bank? fred: let's look at carrier, toyota, he has made it clear that we need good pain manufacturing jobs. at the end of the day, no pun intended, that trumps the agenda. kevin: but he has not appointed m chairman and you are the longest serving the banks is for at this point in the obama -- in the bank's history. at this point in the obama transition they had appointed you. have you met with anyone? fred: we had a person from the transition team come in. i met with him. oh, my goodness, in december, well over a month ago. he had met with a number of our key staffers. but i concur, they should name a
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new chairman quickly to send a signal to foreign buyers that we are in business and intend to support exporters. with the your meeting truck transition lending team, did they give you a timeline as to when the team would appoint an ex-im bank had? fred: i was on the transition team from that- -- for then-president-elect obama. they give you little guidance and feedback. kevin: you got back from mexico city meeting with international exporters and businesses. what is it going to mean to nextt certainty if come week and you are out of there and there is not a chairperson bank, what is it going to need to international trade financing for the u.s.? fred: president obama will have someone who is acting rise chair -- kevin: will at the you? -- will
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that be you? fred: it will not be me. we need to make sure that small businesses know that this bank will be there to support their jobs. there is a lot of market uncertainty and we do not need to add more uncertainty around the ex-im bank. i hope president-elect trump is watching this and names of chairman. kevin: you were in mexico and you are meeting with the same members that the transition team is meeting with and communicating. i was there with then-candidate trump in mexico city. tell us, what is it like on the run when you are dealing with mexicanis readers -- business leaders talking about this incoming administration? fred: i would say they are still optimistic and hopeful. we should all understand the ties between our economy and the mexican economy and canadian economy are very deep. opportunity. as an
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they are optimistic that we can find ways to work together. a lot of -- as you know, half the products that come from mexico to the u.s., 50% of them have u.s. content. we are doing a lot of assembling in mexico. our economies are more integrated and that will be a reality. kevin: do you think this republican-controlled congress will appoint the correct a number of board members? even if president trump appoints someone to lead ex-im, is the board is thrown out their hands are tied. fred: i've spoken more directly with republican senators and members of the republican leadership in the senate. i've spoken with the new incoming chairman, mike crapo, chairman of the banking committee. i have a very positive impact from a number of the republicans . as you said, kevin, this is a bipartisan issue. we had two thirds of a majority in the senate vote for ex-im.
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we don't need that many to come from the board. but we need to get the board in place to do the full operation of the bank, which includes a lot of the small businesses. kevin: it will be interesting to see if chairman crapo is speaking from the same political playbook as his house colleague, chairman jeb hensarling. you have a couple of days left. fred: this is my last day. you got me on the last day, last interview. kevin: and you look back on your im bank come the ex- what has been the highlight for you personally, chairman fred hochberg? fred: the highlight is the jobs. over 1.4 million jobs the time i was at ex-im bank. i am very proud of that. 90% of the companies we work with our small businesses. kevin: chairman fred hochberg, appreciate the time is always. have a good one. julie: thank you so much, given, with fred hochberg, chairman and
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president of the export-import bank. david: morgan stanley set the bar high, posting the biggest fourth-quarter profit since the financial crisis. this is bloomberg. ♪
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david: this is "bloomberg markets." i am david guerrero. julie: julie hyman. david: one trading revenue jumped to $1.47 billion. joining us is an analyst for ubs securities. rating on morgan stanley with a $50 price target. let's go to the report for today. how much is a one-off? how much staying power is there in the results we saw this morning? >> they were seasonally weak and yet nearly at or below the
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targets. they established. 9% to 11% return on equity. fourth quarter it was 8.5. nearly there. that is in a week seasonal quarter. i think that this is really pretty solid indication of what i would view as a low end of what is reasonable for what resume for 2017. julie: i'm curious, the connection we has seen between the brokers and what is going on with interest rate obviously, trending higher had been helping, the trending higher had been broadly helping the financial industry. the forecast for rates this year is actually relatively muted. how much of a benefit is that going to continue to be for the financial firms? brennan: for brokerage firms especially, we will be specifically for morgan stanley, but it is true of all the illicit investment banks. rate sensitivity is far more
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sensitive to the front end of the curve. when we see libor move higher and increased confidence in fed funds forward curve, more rate hikes starting to get embedded in the market metrics, you will see more earnings leverage for these big institutions. it is true with morgan stanley, where the yields on deposit is so important in the wealth management business, and when they are putting money to work in loans that are tied to libor at the floating rate. that will flow straight to the bottom line. david: give us your assessment of james gorman's turnaround plan, cost-cutting plan for the bank, compared to the other big banks. what is he managed to do that they have not? brennan: well, all the banks really have come out with solid cost-cutting plans. the reason we might have seen ms -- it is hard to know for sure. we are judging apples and oranges here. jpmorgan had a rather large cost-cutting plan. multi-billions of dollars. it is a bigger entity. morgan stanley is a smaller
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entity. the actual leverage to the bottom line is what you are seeing with the greater amount of success for ms. not trying to take anything away at all. the efforts that these firms have executed here recently has put a lot of operating leverage into the model. when we see revenue improvement, the expectation next year not only with the rates we just walked through lesser regulatory lesson tuesdayhe -- lesstory approach enthusiastic regular tory approach, that should lead to better opportunities for the capital market. more of that will flow to the bottom line. julie: you alluded to the regulatory environment and i want to ask about that for goldman's that -- morgan stanley and goldman sachs. we have seen a rally on the shares on the presumption that will be decreased regulation. as that part of the rally gone too far? presumably you don't think so. brennan: i still have outside with goldman sachs, too. i think that it is very hard to
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understand how it is going to work out because recent earnings indications are going to be a very bad predictor of earning power in a less hostile regulatory environment. what i would say so far is looking at who has been appointed so far, the most relevant examples of this would be j clinton as the chairperson of the sec. positive for very pro-market., and julie: ok, got to leave it there. brennan hawken, thank you so much. . .
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scarlet: it is 2 p.m. in new york, 11 a.m. in san francisco. i'm scarlet fu. oliver: and i'm oliver renick. welcome to bloomberg markets.
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scarlet: we are live from bloomberg world headquarters in new york over the next hour, plus we are covering stories out of london, davos and russia. president-elect donald trump meeting with the ceos of rolling. will boeing lower the cost of the new air force one? allprices on the rebound as signs point to opec members sticking to their agreement for now. we will hear from bob dudley about his company's plans for the year ahead. the ceo of conagra brands will join us. towill tell us how he plans grow his legacy brands. two hours.s close in let's check in on where financials are checking in with abigail doolittle. : financials dragging on the major averages.
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the nasdaq right now is on pace for its worst day of 2017. the loss -- the losses and declined are not huge. it is a continuation of the volatility we saw last week. ,f we look at a five-day chart we see this bumpy ride over the last five days as volatility and complacency is leaving the markets. ahead of the inauguration with news out of britain in terms of the brexit. scarlet was insinuating, we are looking at the financials as a big drag. these are the two worst point drags on the dow. jpmorgan reported last friday that jpmorgan's quarter was solid. these banks beat but
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happening is you could see some news action today. it is worth noting that the s&p 500 bank happening index is on s worst day since brexit. when weld be happening look at some of the other asset classes, the 10 year yield is down six basis points and tells us that bonds are rallying. really dropping ever since the fed did raise rates for the second time in a decade. action some by the news here for bonds. its worst day since july 29th, all pointing to a haven with the dollar trading lower and the yen is up for it a seventh day in a row. let's go into the bloomberg and
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look -- this is a chart of the dollar index in relation to its moving average and we've seen the dollar index extended above its 200 day moving average. we have seen it consolidate act recently, it's starting to pull back, suggesting we could see that consolidation, equating to a 3% drop or more and might suggest the yield could drop as well. check on the bloomberg first word news with taylor riggs with more from our newsroom. taylor: prime minister theresa may is pledging to pull out of the european union's single market. she spoke today in london and provided her most detailed outline yet of her vision in a post-brexit world. may: we willr
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pursue a bold trade agreement with the european union. this agreement should allow for -- freest possible trade between britain and the eu . --lor: she says the europe the british parliament will get a vote on the deal. justices have turned away appeal by bank of america, forgroup and jpmorgan chase refusing to stop antitrust lawsuits accusing big banks of conspiring to reg the libor. the banks sought a review of an earlier decision which investors claimed they were harmed by the effort to drive down libor. interior department nominee earn $85,000 from a company with a stock price of eight cents and accumulated a deficit of more than $100 million and no customers before being elected to congress. he was a board member and consultant for save the world
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air according to disclosure forms. the former navy seal is appearing before a senate committee for his confirmation hearings, set to get underway momentarily. president obama made a surprise visit to the daily press briefing to patriot to josh earnest. it was his final briefing. he touted his intelligence, integrity and actual interest in the issues. global news 24 hours a day powered i more than 2600 journalists and analysts in more than 120 countries. i'm taylor riggs. this is bloomberg. oliver: the wave of populism sweeping the globe has been dominating the discussion in switzerland. how worried are global leaders about the populist surge? rubenstein told erik schatzker.
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david: many people recognize there is a lot of angst among the middle class and lower middle class and blue-collar workers around the world because the per capita net income is not rising. erik: how do these people solve it? they have failed to solve it thus far. david: are cap at not been rising lately, but the middle class is growing. it's not as if the world economy is as bad as it was a hundred years ago. people are generally better off. erik: we saw each other last the brexitt after vote and you said you would be surprised if it actually happened. today, theresa may outlined a path for a hard brexit. , do the she has done it plans for the u.k. change? david: she obviously intends to go forward and the courts have ruled they -- that parliament has to vote.
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whether parliament would go along with it, i suspect it will, but nobody knows at this point. so you still might be surprised if it were to happen? david: we have all been surprised at what parliaments have done. i think we have to wait for the parliament to ultimately approve it according to the law in england. erik: of all the things donald trump as promised to do, which concern to youor and carlyle? it's something you have to be thinking about running a private equity firm. i'm more worried about the country and those issues and what affects carlisle. don't look at things only from the perspective of carlisle. from a carlisle perspective, we want higher growth. we would like some tax
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relief in the corporate world and he said he would produce that. we think less regulations would be good and he says he would produce that. saying you are going to do things and getting them done are two different things. taxcongress takes care of regulation and i suspect it will take nine or 10 months. there will be some uncertainty for a while. if you are going to reduce the tax rate, has to come with some concessions. there is the illumination of the duct ability -- i've said it before, i will say it again, that is if not a concern, a big deal for private equity firms. taxd: when you are doing reform, it is in the eye of the beholder. you can pay for three ways -- ,ou can have dynamic scoring
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you can have deficit spending, and you can close some loopholes deductions. my experiences you don't know what congress is going to do. it takes a long time and i don't know what's going to happen. it picks up a fair amount of revenue but it's not necessarily the only thing congress will look at seriously. him how muchappens of it is a problem for private equity? david: while we do deduct interest on file, i suspect we will pay lower prices for transactions. we probably get lower prices for transactions but the world will adjust. the world won't fall apart. i think there are better ideas congress is not going to eliminate any of these deductions completely. it may moderate them a bit but
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not get rid of them. erik: every time you talk to investors, you get grilled on the subject of realizations. bad, it hasd and generated $18 billion the year. yearu expect to do it this ? david: i guess i would go to jail if i said we're going to do something. we have produced between $18 billion and $20 billion a year for investors in our fund consistently. we are hopeful we can do it again so we cannot guarantee it. about ourimistic ability to achieve our past patterns. erik: achieve and exceed, perhaps? david: i don't want to say exceed. erik: what businesses are you focused on building out in 2017? creditwe have a good
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business and we are going to enhance our infrastructure business. we think that is a good business as well. oliver: that was david rubenstein speaking with eric shaq your -- erik schatzker. scarlet: sean connolly, the ceo of conagra is our guest. he will talk about growing scale in the market for packaged food. this is bloomberg. ♪
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scarlet: this is bloomberg markets. i'm scarlet fu. boyardee, orval redenbacher
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popcorn, those are just some of the iconic brands in conagra's portfolio. since taking over, the ceo has worked to breathe new life into the brand. the stock has climbed more than 30% under his tenure. and he is here with us now. conagra has been cutting costs and divesting assets. where are you in that process? : we are transforming who we are and for the first time in our 100 year history, we are a single-minded focused country -- company. scarlet: third inning or eighth inning? sean: we are maybe third or fourth inning. oliver: i want to bring up a chart using the bloomberg. this is the revenue speaking to scarlet's point. we are looking at margins.
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a big tick up in the margin as those revenues are starting. go much further can this without that topline growth? sean: we are sacrificing some volume we're generating by deep discounting and by backing off that practice and driving more margin into our sales, you see a 500 basis point improvement over a couple of years which is terrific progress. is the growth investors want to see right now going to is it goingrgins or to come from fundamental development of the brand? sean: at the end of the day, you cannot cut your way to prosperity. we have great legacy brands and we are adding new brand to the portfolio. it will be a mix of things to reshape our portfolio. last year, you spun off
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your frozen potato business. a select would say you are setting up the company to be purchased. is that part of the strategy? is toour strategy maximize profit. we are a big company and we can continue to participate in industry growth and opportunity. there are a number of ways we can create value, but we look at it by strengthening our brand and innovation. when you talk about those spinoffs, it sounds like you're becoming a leaner and meaner company. does that not draw more attention from potential buyers? people areully looking at our practice and saying maybe that would work for me because fundamentally, what we are doing is not rocket science. we are focused on our brands and on innovation. the secret, not to
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discount your way to prosperity. that never works. how does them and they fit in here? sean: we have talked about two kinds of m and 8 -- modernizing is the frontera type. smaller, contemporary bands -- brands that drive our growth profile. more strategic, day tends to be larger and drives financial returns in the short term. we will over time participate in both. acquiring blakes all-natural foods and fun terror this year. oliver: folks who watch the packaged goods space, there's a lot of anticipation that there some kind of deal. we've seen a lot of companies that could get hot out. assumed m&a level baked into the price is right now? always rumor and speculation.
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we don't focus on any of that. we have so much we can do to create value by improving our own business and adding to it using our balance sheet. as you can see, it's starting to have a positive effect. scarlet: you took a 44 million-dollar interment charge because of the week mexican peso. what is the outlook for that business given a trump administration coming to power? do you have plans to leave the country? sean: we are a u.s. company. a small mexico business, a small canadian business. that comprises our entire business and our successes going to hinge on our success here at home. it is about growth. if we grow through innovation, we will be able to add jobs. that mean expansion
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into places like mexico could be on hold? sean: i think we have one plant in mexico. all of our plants are in the united states. the crux of our business is in the united states. that is our opportunity. do we have international opportunities? of course, but they are more tactical. look at we wanted to your institutional shareholder base. janice partners taking a stake in your company. talk about how that relationship has involved. sean: we have a great relationship with them. like a lot of our investor relationships, it's incredibly constructive, a lot two-way dialogue. we are trying to create dialogue so if our investors can give us ideas beyond what we thought of
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ourselves, we are all ears. we have a healthy relationship because we have aligned objectives which is maximizing value. if you guys talk to them, i think they would tell you they like what we are doing. the have not been shy about taking bold action to transform our company and it is paying off. we have a long way to go, but i like where we are. scarlet: do you see yourself raising the dividend? sean: it is a balanced portion to the capital valuation. oliver: sean connolly, thank you for joining us. scarlet: still ahead, president-elect trump is not in davos but his presence can be felt around the alpine village. we will hear about what banking leaders have to say about our coming president. theconfirmation hearing for
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interior secretary getting underway. he will be taking questions from the senate energy and natural resources committee. the entire hearing is available on the bloomberg at live go. ♪
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scarlet: this is bloomberg markets. i'm scarlet fu. renick.i'm oliver time for the bloomberg business flash. mark zuckerberg denying claims that virtual reality headset maker required by facebook stole the technology for the oculus rift toggles. he was called to the witness stand buys any max media that poached oculus media one of its star designers and looted its intellectual property. cases in its second week. president-elect donald trump has been good for business for the new york times. according to the ceo who says the newspaper's online business
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delivered off the chart performance in the fourth quarter of 2016. no word on the actual number of new digital subscribers. seeingpany says it is numbers in the quarter we've never seen before. that is your bloomberg business flash update. at davos, it goes without saying that the trump presidency is a major topic of discussion. >> he is doing all the right things or talking about doing all the right things, things that should probably have been done in the past. i think the banks have had a good run. thank -- the u.s. bank ceos are ecstatic. he's done for them what they've been trying to do for the last five or six years. finds most ofrump the wounds from the financial crisis healed, finds more dynamic labor market and it
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unemployment rate almost at equilibrium. there's very little they need to additionally do, but there are risks. take the focus away from the economy to geopolitics and you could see an escalation of conflict that could be negative. >> we have to expect they will be pragmatic. there are a lot of is as people, old -- some of whom you and i know. believe theson to of ministry will not listen to business. we have to engage with government and make our case and hope things will evolve. we have more conversations tomorrow coming from davos, including microsoft cofounder bill gates who will be discussing his latest philanthropic efforts in his role as chairman of the bill and melinda gates foundation. oil climbing higher
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today on signs opec countries are sticking to their deal. oil moving down about 40 basis points. you can see some of those energy companies paring some of those gains today. those companies up about .6%. markets a little weaker today. scarlet: if you look at equities, not getting any closer to doubt 20,000. the nasdaq retreating by two thirds of 1%. from new york, this is bloomberg. ♪
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scarlet: from bloomberg world headquarters in mid-down manhattan, this is bloomberg markets. commodity markets are closing in new york. gold rising today with the
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precious metal at its highest level since mid-november. gold has climbed every single trading day this year except for one. you have the risk from trump and brexit reemerging but increased physical demand for gold from asian buyers ahead of the lunar new year holiday. with out --imbing with opec members saying they are bringing the market into balance. the weaker dollar helps dollar-denominated commodities. let's look at shares of exxon mobil, slightly higher. they have extended their advance. exxon makes a major deal with more than double its stake in the permian basin. for the rights to the land upfront. exxon is also paying contingent cash payments totaling as much as a billion dollars. from exxon to bp,
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francine lacqua spoke with bob dudley and they discussed opec's bp'sto reduce output and growth strategy. >> i think there will be volatility in the market but the agreement is a milestone event in the industry. if you look at what is happening around the world in terms of reduction of output, it does appear real and the countries are working to reduce output. , 56 versus a 45 before hand. it is significant for our industry. francine, how do you view the oil market? you have the shale producers who can come back online. at the same time, these production cuts don't go to plan or people cheat, what kind of level do you have to base your forecast on? on planning compliance and
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curtailment happening out of the middle east and the reductions coming from some of the russian companies. there will always be some cheating on the margin. that happens historically with opec, but the big players are cooperating. we have felt for a while that the markets are essentially balanced. there will be some ups and plan, but we think we can solidly but we will be disciplined with how we spend our capital. moreine: is price important than market share? >> i think it comes down to the fundamental economics. it doesn't fit the economics for the country, so i think a window as i look out this year with volatility, it's probably a good place for us to plan. coming see the rig count back in shale, so there will be
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an effective as well. it is the price as much as anything. fiscal terms in the u.s. are not bad. it's more the price that drives the economics. francine: what is your priority? guest: get back growing. we've been working hard to get back online in the united states. we have been able to complete new deals and new projects. we have six new major projects coming on in 2017. our focus is to get our own engine moving again. francine: and you need to make sure you have your own investment, the risk of sending us back into recession five years from now. guest: i don't think bp will be able to drive that. we have a good plan at the end of the decade and it has been a long time coming for us.
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year thatis 2017 the you come back in force? reaching the agreements with the u.s. government was a big milestone and allowed us to milestone what our was going forward. francine: will you be able to cover your dividends? we are working to balance the funds. francine: what if it is 50? can you still cover the dividends? our financial framework a strong but 55 is the target we have laid out for ourselves and we feel good about our ability to cover the dividend. francine: how much of a priority is that? guest: they really wanted this year.
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francine: what happens if they don't get it? don't think there's much risk of not getting it. spend about $16 billion of capital and we have operating costs of $25 billion. we have a lot of flex their. francine: you are talking about some of your investment projects coming online and some deals at the end of the year. are you expecting more deals in 2017? guest: this is a good batch of deals we have done. we use 2% of our shares to extend working in abu dhabi with an extension 22055 and we reached an agreement in azerbaijan. these are bolt on acquisitions to what we do. this is rebuilding a good portfolio for the long-term and we've got to be a long-term company.
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francine: is it if you find something cheap for an asset you can't afford to miss? accreted tos to be our shareholders. that's how i think about it. often times must of those acquisitions are things you are already in. it will be the occasional really good thing that comes along, but we are not on the hunt to do deals. francine: do you think deals will come back to the oil sector because of the animal spirit and ceos seeing the world and are willing to take cash? you will see some consolidation. that generally has to happen. there's a sense that we are somehow coming out of the bottom of the cycle now so they have to do a deal. i don't look at it that way. i think we are coming out of a tough time in the industry. that was bp ceo bob
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dudley speaking with francine lacqua in davos. scarlet: let's check on first word news with taylor riggs in the newsroom. for thethe hearing republican of montana to be interior secretary is underway. he's likely to take questions on the topic of selling federal land and managing natural resources. you can watch the hearing on the bloomberg at live go. senator elizabeth warren is not sold on tom price possibility to fulfill responsibility is health and human services secretary according to a 20 page letter massachusetts democrat sent the nominee. among the grievances, repealing the aca and trading and health pursuingile legislation. turkey is taking into custody the person who killed 30 people
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at an inestimable nightclub on new year's eve. he's been described as an islamic state militant captured in an apartment where authorities found almost $200,000 in cash. sonar are using data from scans to pinpoint their search for parts from a corporate jet that -- that crashed last month near cleveland. today.rch is resuming some 270 pieces have been found, including parts of the fuselage and human remains. researchers also found the cockpit voice recorder. six people were on board. global news 24 hours a day powered by our 2600 journalists and analysts in more than 120 countries. this is bloomberg. coming up, president-elect donald trump meeting with the ceo of boeing. he touts progress bringing jobs to the united states. this is bloomberg. ♪
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oliver: this is bloomberg markets scarlet:. time now for the bloomberg business flash, a look the biggest business stories in the news right now. we begin with u.s. regulators lining up a lawsuit against allegedly using unfair practices to license its technology. the world against maker of smartphone semi conductors disclosed in 2014 that it licensing methods were being investigated and a major final as possible. qualcomm makes most of its profits from technology licensing. verizon may be weighing the acquisition of a cable company. verizon would use a deal to grow demand for wireless data
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products. the paper says they are not in talks with any company but it could include charter or comcast. saudi arabia is planning to reduce the tax rate paid by its anional oil company to make ipo more appealing to investors. a 20% royalty on revenue and an 85% tax on income. bloomberg business flash. breaking news with deutsche bank. the bank has agreed to pay $7.2 billion in residential mortgage-backed security settlement with the department of justice. it's going to be a 3.1 million civil -- $3.1 million civil penalty. they will provide $4.1 billion
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in relief to underwater homeowners. $3.1 billion in a civil penalty with shares moving down and actively trading on the news. surprised the stock came down on that. this number was pretty much in line with what people had indicated. certainly a long way off from what had been speculated on earlier on. oliver: financials kind of depressed through trading this morning. it's not going to be a huge settlement compared to what it had been. politics, it just is days away until donald trump is sworn in as president but he's wasting no time getting to business talking with corporate leaders. the president-elect met for a second time with the boeing ceo to discuss the contract to build
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the next generation of air force one. -- our reporter also spoke with the ceo. this is the second time he has met with president-elect trump since election day. they have had a little bit of a back and forth on twitter and trump is taking issue with the $4 billion price tag of air force one, which going is contracted to build. however, boeing suggests it will be able to lower the price tag and the ceo spoke with reporters at trump tower after the meeting. let's listen to what he had to say. air force oned and fighter aircraft. we made great progress on the simplifying the process, using build aal practices to
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better airplane at a lower cost. guest: so obviously what you are seeing with traders expressing confidence in the comments after that meeting, i would anticipate there to be some kind of announcement between boeing and the trump office in the next couple of weeks. why the any idea president-elect is taking aim at defense companies? he also called out lockheed martin. guest: what you are noticing his trump is engaging with boeing and lockheed martin on fighter jet programs. back in 2001, lockheed martin government91 billion defense contract to build close to 3000 fighter jets. however, they have only delivered on a couple of hundred of those jets as of january. perhaps signaling that
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owing could get into this game and that's creates leverage for the trump transition team just days away from gentry 20th, when he will be inaugurated. but the sources i am talking with her telling me they anticipate those couple of days to be jampacked with significant executive orders and actions designed to send the message that this is a president that once to get down to business. shifting to the overall situation with donald trump targeting u.s. companies, we see gm with trump saying these jobs coming back in. walmart, he cited in a tweet. these are specific in short -- specific instances, but how many of these moves back to say they are going to bring jobs in america, can we say maybe this is something he's just going to keep doing? there are two points i
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would make. all the business community sources i'm speaking with in washington at the trade groups are uneasy that they could wake up and see trump tweet negatively against them. these tweets are very unpredictable and can cause quite the headache for ceo level executives inside the beltway and around the country. is second point i would make the transition sources i speak with tell me president-elect trump views this as a way to get the business community and to his office, meeting with senior level advisors, senior-level strategists to bring them to the negotiation table. we see this unfold with boeing and lockheed martin as we speak. is to --donald trump is taking aim at the mws well. tell us about that. the m w has a big plant
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in upstate south carolina, a battleground political state, and he is looking to inject himself and his policies into the trade debate. we interviewed the outgoing governor of the saying and he's hopeful that what we see from the incoming trump administration could lead to continuity within global trade economic policies. what the business community and manufactures in particular are theg to be looking for in first 100 days is to see whether or not president-elect trump for phil's a key campaign promise of ripping up the transpacific dealership, 12 state trade and starts new or uses it as a benchmark for his trade agreements moving forward. great interview this morning. mark halperin and john heilemann
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will be taking a look at the key issues facing the incoming trump administration. we will have special coverage of the inauguration on friday starting at 11 a.m. eastern. head over tos abigail doolittle for today's sector spider report. abigail: we are looking at the spider retail etf with a nice pop higher. we wanted to show the pop higher. this could reflect comments from president-elect donald trump from an interview yesterday were he signaled hesitation around the border adjustment tax. we do have big-box retailers popping higher including walmart, best buy and target. border adjustment tax is a major tail risk and we see a in that it may go away or be moderated. but the rally extends into luxury with some retailers lorenzng coach, ralph
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and michael kors. we do see tiffany trading down more than 2.5% after the company reported disappointing comps for the holiday season and that the year earnings will be a mid-single-digit decline. some weakness out of tiffany and appears that some of this is regionally-based. sales at the flagship new york city store on fifth avenue appear to have been hurt in what the company called a postelection traffic issue. but there is strength from japan but overall, some weakness for tiffany on that disappoint holiday season. up, the pound rallies as theresa may outlines her vision for brexit. the parameters as parliament will have a chance to vote on a final deal. deutsche bank shares continuing
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to fall. we have learned the bank has agreed to pay 7.2 billion dollars to settle a dispute over its handling of mortgage backed securities. that is in line with the september announcement that it reached an agreement. still down 2.6% on the day. this is bloomberg. ♪
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oliver: this is bloomberg markets. scarlet: british prime minister theresa may gave the most explicit outline yet of her vision for exiting the eu. she pledged to pull the eu out of a single market and parliament will get to weigh in. prime minister may: the government will vote on the final deal in both houses of parliament before it comes into force. the pound surged after the speech. is joe us now
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weisenthal. it was a rebound from yesterday's plunge. legs to the rally because we are looking at pound-dollar. the dollar was week, perhaps related to trump plus comments about the dollar being to strengthen, so it magnified by two different forces moving out there. -- is: is this sorrow this what we are going to see going forward any time trump feels differently? that strikes me is that trump has expressed interest in weak dollar politics in the past. during the primary, he talked about how the strong dollar wasn't that good and think about how he lasted countries like china for keeping their currencies to week. if you accuse other countries of keeping your currency to week coming you are saying your currency is too strong. he just doesn't put it that way very often.
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but he clearly seems to prefer a week -- weaker currency. he has been consistent set investors are deciding once he takes office, he's going to take a different tack. : with the tax has and deregulation, everything kind of revolves back to trade. if you think a strong dollar hurts trade, he's not going to be into a strong dollar. control not have much over it if rate hikes go up and the dollar might strengthen, he doesn't necessarily have the tools to weaken it but we have seen in other countries were people try to job on their currencies. he's really the fed nor the administration talk about targeting some level we associate with other countries. oliver: you can't have it both ways. joe: there will be challenges for him if he wants to spend one
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hour boost the economy. he does not control the fed as of now. at some point, he made get to replace janet yellen but if she hikes into that, it's going to be hard for them to jawbone the dollar lower. he does that is what have his job opening. joe: and he's not afraid to use it. the global head of fx strategy will be with us to talk about the moves in the pound and the slump in the dollar. oliver: anthony scaramouche e and c advisor to incoming -- advisor to donald trump discusses donald trump's economic goals and more. this is bloomberg. ♪
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it is 3:00 p.m. in new york, 12:00 p.m. in san francisco. i am oliver renick. scarlet: i am scarlet fu. welcome to bloomberg markets.
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we are live from bloomberg world headquarters in new york for the next hour. we will be covering stories in silicon valley, washington, and davos, switzerland. lower market, stocks are with selling accelerating with draggings and banking heavily on the market. citigroup and goldman sachs reporting earnings tomorrow. can the banks post big numbers and reversed the slump in share prices? sellingscare emoji is sky bridge capital and joining the incoming trunk white house. we'll get his thoughts on the trump trade agenda and his agenda toward vladimir putin's russia. selling is accelerating. abigail: indeed it is -- lots of red on the screen. the russelldaq, and
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2000 down your session lows following the weekly declines of the s&p 500 and the dow next week -- last week. a continuation of the bearish trend. cap growth area russell cap 2000 is down. we look at an s&p 500 intraday chart, we see the index is at session lows, trading down. the question is whether or not this congestion moves to -- proved to be bearish continuation patterns, or perhaps we see a reversal up. either way, lots of uncertainty here and a continuation of the small bouts of volatility we started to see last week. he for return to financials that are dragging, let's look at the top point boost -- apple p look at the self-rally. back near $120 after falling last year after the september quarter. we had morgan stanley's analysts picking up her revenue estimate
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by 6%. she also increased her iphone shipment growth rate. she sees upside for those shares per we had a nice rally in the consumer staples space. as for the financials and what is dragging today, we have weakness across the board. morgan stanley, jp morgan, bank of america, citigroup. with the exception of citigroup, all these are the banks have reported. solid reports across the board. the banks that rally in a big way at the end of last year, and the move up in the 10-year yield -- some of this could be sell the news. plus, when we go across asset classes, we have a 10-year yields down once again. today, the 10-year yield is down about five basis points, continuing a theme we have seen over the past five weeks of rates coming back in. that tends to not work for the bank. it is also dragging the bloomberg dollar index, down more than 1%. we do have gold trading higher, , this might be where
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it is at. yen is up for the seventh day in a row. this is telling us the little bit of risk off we see for stocks could accelerate in the days ahead. scarlet: i'm glad you bring that up. something we will be keeping an eye on. let's check the headlines on bloomberg's first word news. taylor riggs has more from the newsroom. taylor: president-elect donald trump's transition has the approval of 40% of the american people. the number is well below those of his predecessors, including president obama's katie percent, and george w. bush's 72%. former president bill clinton and george h.w. bush had transition approval ratings above 80%. amazon.comany's like are vulnerable to unfair competition from internet service providers if the fcc open internet rule is reversed. that is according to the agency
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chairman tom wheeler says "no one is safe. wheeler is a democrat, and says the gop will not find it easy to reverse the open internet will. orforbids isps from locking slowing competitors web traffic. scotland's first minister once in a new vote on breaking up the u.k. is likely after prime minister theresa may brexit -- theresa may's brexit speech earlier today. says scotland did not vote for may's brexit vision. a volcano has been spewing out clouds of ash more than a mile into the sky. authorities have been watching it after placing it at the highest alert level in june. it has been dormant for four centuries before writing twice in the last six years. it is more than -- one of more than 120 active volcanoes in indonesia.
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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. scarlet: thank you very much. president-elect donald trump is not at the meeting in davos, but his presence is being felt. erik schatzker spoke with ed about-- and eric ask the nontraditional way of conveying his messaging. anthony: he has an extinct communications style to the more you get to know him, you recognize what he is doing. erik: that is not working for these folks? used to these folks are a certain, find up political correct and it is not the right word, but is more simple five. it is like the federal
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chairwoman is designed to say a lot but not have anyone to understand it. the president is designed to say in art,but those are and they will not cause an issue anymore. i think he has a much more authentic, refreshing delivery system, and people will start to appreciate that more once he is president. people you talk to is carol dimitrov, head of the russian investment fund. you are working to bring a delegation of u.s. ceos to russia. anthony: i was as a private citizen working on that. we met [i have known him a long time. you and i have known him from being at the delegation. was private citizen, i working on that. what i sent him last night in my capacity inside the administration, i would certainly reach out to some people to help him, but i have to obviously check -- they give you this big, thick government ethics book and you have to go through everything to make sure you do everything appropriately.
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you cannot buy me a beer, i don't think. that is good news for you, but bad news for me. i have to make sure everything is done appropriately. the idea was too many months ago have more outreach with russia, but also other countries --not just russia, china -- other countries. erik: will you be an intermediary between a trump administration and perhaps other members of the russian government? i would not say russia as much could the right -- the way i have read through my job discussion. it is more of the liaison function to help businesses, large and small, see if they can get help from the white house, vice versa. they will have some role in the competitive council to make sure we bring people in and get plans out of them. there will be an international component to it as well. erik: anthony, many of the people to whom i have talked to sitting in the chair you are
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sitting in right now say that the one thing that concerns on the most about the incoming administration is his policy toward china. anthony: ok. sorenson, david rubenstein from carlisle -- serious people who i know you respect. you say donald trump does not want to start a trade war with china. so, why the tough talk? it takes a lot to frighten these guys. why get these guys worried? anthony: this is been my observation -- i am not saying it is correct. people hear the words free trade and they think we have a current global free trading system. when you look at the trade deals, you find the trade deals are asymmetrical. goods and services flow freely into united states, but they are embargoed on the way out. erik: i know that, but you and i both know there is a reason the united states and europe, for that matter, has taken a light-touch approach to trade with china and that is to give
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u.s. companies market access in china, and in some cases in the hope of seeing progress on human rights. is the president-elect prepared to give that up? anthony: you just how china in that three-sentence statement to a different standard you are holding the united states and europe. china is the second largest economy -- it is 1.3 billion, one point 4 billion people. you basically said they can embargo our goods and services, protect their markets. honestly, if i go to china and buy something, i can only own 49% of it. that is not the case in the other direction. erik: all i said was what is at stake. anthony: i am trying to explain to you china is the second largest economy now. all the things we did to help china get there -- we need some help with the american taxpayer, the american worker, and the american middle class. i think american people find that refreshing. they want an advocate in chief, someone looking out for their interest. erik: is donald trump going to rip up the tpp, and what will he replace it with?
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anthony: i do not know the answer specifically, i am not working on that policy, but my guess is the tpp will be done away with and there will be some other trade agreement. it probably won't look like the tpp. scarlet: that was anthony scaramucci. mark halperin and jon hyman will be looking at the issues facing the incoming truck -- trump administration. they will also be part of the special inauguration day coverage friday. you can catch that some of casting on bloomberg tv and radio. up, bank stocks are doing very poorly today after morgan stanley reported earnings, even though it blew past estimates. we'll talk about what is ahead for the industry up next. this is bloomberg. ♪
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scarlet: this is bloomberg markets. i am scarlet fu. oliver: and i am oliver renick. it is time for the bloomberg business flash. breaking news on qualcomm -- the federal trade commission has filed a suit against the chipmaker in a san jose court, sewing for unlawful maintenance of a monopoly, and saying its practices have caused higher cell phone prices. qualcomm makes most of its products from technology licensing. unpaid taxes in ireland is inching higher as authorities try to put an exact figure on how much is owed by the world's largest company. island toog ordered call back nearly $14 billion plus interest in unpaid taxes from the iphone maker last year. appealed ireland both amidst the january 3 deadline,
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but apple says the eu is satisfied with progress so far. deutsche bank has reached a final settlement with the u.s. justice department over its handling of mortgage backed securities before 2008. they admitted to misleading investors according to the justice department. the agreement now closes one of the bank's biggest litigation risks. the penalty was in line with an announcement last year by deutsche bank that it had reached an agreement in principle over the matter. and that is your bloomberg business flash update. scarlet: he will stay with deutsche break -- deutsche bank and that settlement and bring in alison williams. when it comes to the settlement, was it a given that the agreement in principle was going to carry over to a final settlement, because it is not always the case, is it? i think the key help here is that it happened a lot
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sooner. morgan stanley, it took almost a year. elliott stein pointed out time is a principle, not a final settlement. and credit suisse is the next one we are watching. they actually made an announcement the same day as deutsche bank that they were settling with the doj -- their settlement is not as comprehensive. i think there are some other state suits outstanding. the total amount there could still rise, so i think what is positive for deutsche bank is closing the door, and that is the final number. oliver: what does it say about the speed with which this was determined -- the saving -- in terms of what is ongoing for some of its peers? alison: deutsche bank had been trying to put this behind them. before the election, the thought was deutsche bank had more of a need to settle, and perhaps there was more negotiating power with the doj, but once trump was elected, both sides were more incentivized to settle rather
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than's -- sooner rather than later. scarlet: there was a gamble. they said they would bring the number down. did that payoff for the u.s. government to target $14 billion and settle on $7 billion? alison: in general, with any negotiation, the higher the starting point, potentially the higher the settlement. i am sure there were a lot of factors that went into that number. to your point, they came out with a $14 billion number. "the wall street journal" had reported a two billion two 3 billion number. if you look at the approach, where would that settle in the middle -- and if you look at other approaches, but the fh fa ittlements, based on that, was sort of within the range of that, although at the higher end . i would point out that bloomberg reporting had pointed there were about $300
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million in debt with deutsche bank have there were some issues with a conflict of interest if that were still ongoing. of course we have some stuff going on with morgan stanley. we have earnings going today. what you make of the banks falling despite recent earnings? alison: i think it speaks to the fact that it is not just about today's earnings. we have had a huge rally in the banks coming into the earnings. friday, we sell relatively solid toolts, but nothing that is out of the realm of possibility and we did get the share repurchase from bank of america, for example. jpmorgan, think people wanted more, and i think he is saving that for the investor day, and the stocks, they traded around a little bit, but closed the day flat. i think that was pretty impressive, all things considered. today, the stocks are less about the earnings, perhaps than some other things going on. are two keylation
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things that are going to affect capital returns of these copies, profitability of these companies, and we have more questions about that. ofrlet: speaking profitability, when it comes to morgan stanley, everyone is paying attention to the pretext operating margin of its business . that is where morgan stanley is focusing its efforts. --t is key to that success it is less dependent on where key -- where they are today. it will benefit from rights. think you're talking more about the volatility. businessh management is really going to be held, like a lot of other lending ininesses, by an increase short-term interest rate we have had a couple from the fed. will we get more next year -- that is a help to the margin you speak of because the revenue flows through to the bottom-line. it is a macro of increasing the bottom -- the spread.
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that should be helpful to the interest margin. i am on the etf events function on bloomberg -- goldman sachs, citigroup earnings -- what are you looking for? alison: after the results today, the bar has been raised for goldman given the key militant beat we have seen across the countries. goldman earns more from overall trading from the global peers and more from fixed income trading than most of the peers. citigroup as well -- their dead business -- the trading business is much more tied to fix income. the fixed income business multiples -- a much bigger picture perspective. that is a bigger issue for citigroup. there have been questions around the call. they has spoken to that. it will be tough to get answers because it will depend on the ultimate policy.
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we may see them overshadow some of the things the companies have to say tomorrow. scarlet: citigroup and goldman sachs on the docket tomorrow. .hanks so much, alison williams later today, do not miss our schools of interview with hsbc ceo -- gulliver. rpm andl be area six p.m. new. in -- 6:00 york time, and 11:00 p.m. in london. oliver: we're switching from banks to earnings. this is bloomberg. ♪
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oliver: this is bloomberg markets. i am oliver renick. scarlet: i am scarlet fu. it is time for options insight with abigail doolittle. abigail: join me as kevin kelly, chief investment officer at recon capital. kevin, great to see you as always. thanks for joining us. kevin: thanks for having me. abigail: today feels interesting -- like we are moving toward a
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risk-off move. would you see your relative to the options market? kevin: there is still significant uncertainty happening right now, even though we're headed into earnings season, with typically volatility is muted, but you see it picked up about eight percent into today's trading session. what drives the market is earnings. earnings were not that great. they -- banks did well on cost-cutting. guidance was not that great. we need banks and energy to lead the market higher. geopolitical the risk. republicans are now focused on repealing and replacing obamacare as opposed to focusing on taxes. we do get 3% to 4% gdp -- not know, neither do companies. ." lots of uncertainty -- abigail: lots of uncertainty out there. relative to the vix -- what is happening there? abigail: the vix -- volatilityvix is the of volatility. it has picked up into the 90's. it is a telling sign that volatility is starting to come
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back into the marketplace. we saw a big trade call buying in the vix futures. that is pushing the vix up, and also showing in today's trading action, getting into the 12's, which is still low, but people are still anticipating a hike of volatility into february and march as well. shift fromu see a the complacency. it will be interesting to see. as for earnings -- netflix tomorrow. the stock today had a record high. investors are looking for earnings to more than double from last year. what are your thoughts here? kevin: well, as an avid reader of "business week," the description was netflix is turning consumers into global, binge-watching addicts. they are changing the consumption of media as we know it. it'll cannot really focus on the fundamentals -- it is like amazon. people are focused on subscriber growth. that is what you need to do with amazon. guess what -- you disappointed last year, and the stock is still near all-time highs.
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when we are looking at it, what you want to do is a risk reversal -- this is deliberately for earnings. the best part about options is there are weekly options. you can trade earnings and you do not have to worry about paying up premiums for later strikes at what you want to do is go out -- it expires this friday. you want to do the one .35 call. you want to buy that. how do you buy that -- it is expensive. financing by buying the 1.28 put. -- the $128 put. relativelyity is high. on her insides, we see 13% moves on average. this time around, we only see -- on earnings sides, we only see 13% moves on average. abigail: we're talking about how netflix is a consumer discretionary name. do you think this could bode well for the space? kevin: it should bode well for the consumer discretionary side,
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as well as when you are looking at amazon. those are the names that will push the sector higher. we have seen harder times for other retailers. these are the two key coxswain int we'll for this -- cogs wheel for this earnings session. scarlet: thank you. discuss hisn will take on the weak dollar. the dow starting off on a week note. worsely currencies faring are the mexican peso to some extent, the british pound. this is bloomberg. ♪
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alisa parenti: let's get to first word news. president obama met with his national security team to discuss operations for president-elect's donald trump inauguration according to white
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house press secretary josh earnest, who said the president directed them to maintain a high state of vigilance during the ceremony friday. you can watch president-elect as the 45thin president right here on bloomberg. our special coverage sets friday at 10:00 a.m. eastern, three cup p.m. in london, and 11:00 p.m. hong kong time. wilborn ross's financial disclosure shows holding of apple and boeing shares as well as cash accounts with more than $150 million combined. the 57 page filing released today the government office of ethics also says the billionaire has an art collection that is valued at more than $50 million. a senate confirmation hearing for ross is set for tomorrow. repealing the affordable care act without an adequate replacement lined up would increase to america's uninsured by 32 million people and double according to a congressional budget office report citing numbers from a veto01


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