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tv   Bloomberg Markets Americas  Bloomberg  November 9, 2016 12:00pm-3:31pm EST

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and to bloomberg markets. vonnie: we will ring you global reaction over donald trump winning the u.s. presidency. president obama expecting to speak this hour. we are almost halfway into the trading day and julie hyman joins us. julie: as unpredictable as the election outcome was too many, probably even more unexpected is the market reaction. we now have a strong rally, the third straight up day for the major averages. this is the first three-day winning streak we have seen since september with stocks gaining more than 3%. the dow at the highs of the session as are the other majors. the s&p gaining almost a percent. the nasdaq is trailing as we see technology shares not a strong. the s&p 500 over the course of the day, there seemed to be a
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lot of indecision. we saw futures drop sharply overnight when it became clear that donald trump was going to be the victor over hillary clinton so earlier in the session there was bouncing around as investors try to figure out what to make of this. then we saw the strengthening around 11:00 a.m. we have had some strategists say this will not necessarily derail economic growth and a market rally in this environment. tom latham wei who has been able for quite some time did cut his target but that a rally as possible before the end of the year. we are seeing a lot of infrastructure related stocks doing well on the view that we will see more stimulus from a trump administration and more spending. rentalslar and united
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are examples. we are seeing an increase in bank stocks. more pertinent is what is going on in the bond market. wells fargo, jpmorgan, bank of america, we have been watching the yield curve very closely today because we have seen a surprising reaction. this gives you the yield curve of the five and 30. the spread tween them widening considerably today. we are seeing that between the two and 30 also. on the shorter end of the curve we have seen yields come down on the perception that the fed will perhaps not be as quick to raise rates in december. on the flipside, with this , presumedspending increased spending of a trump administration as well as tax cuts, that is something that has boosted the longer end of the
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curve, yields on the longer and of the curve considerably. the dollar has strengthened the most since currencies like the mexican peso, south american rand, and brazilian reality. -- riau. michael: the 10-year note yield has risen above 2% for the first time since january. mark crumpton has more from our newsroom. mark: hillary clinton delivered her concession speech after last loss to donaldg trump. she urged her supporters to accept the result saying they owed trump and open mind and a chance to lead. last night i congratulated donald trump and offered to work with him on behalf of our country. i hope that he will be a successful president for all americans. this is not the outcome we
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,anted or we worked so hard for and i am sorry that we did not win this election for the values we share in the vision we hold for our country. secretary clinton also said american democracy depends on what she called a peaceful transition of power. hasident obama congratulated donald trump and invited him to the white house tomorrow. they will discuss the transition of power. claimed victory, mr. trump urged americans to "come together as one united people," a sentiment that was echoed by paul ryan. he spoke earlier at a news conference in washington. >> this is the most incredible t i have seen in my lifestyle -- lifetime. donald trump connected in ways with people no one else did. he turned politics on its head
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and now, donald trump will lead a unified republican government. mark: speaker ryan said trump had earned the mandate to enact his agenda. say five the u.k. people were killed and more than 50 injured when a train derailed in south london. emergency workers were still at the scene more than six hours after the crash, trying to free two people trapped in the wreckage. transit police have arrested a man and they are probing the cause of the derailment. global news 24 hours a day, powered by our 2600 journalists and analysts in more than 120 countries. i am mark crumpton. this is bloomberg. michael: thank you. we are looking again at some breaking news from the bond market. the 10 year note yield crosses above the 2% mark for the first
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time since the end of january. right now we are at 2.006, just rounded up to 2.01%. at 87 basis the 10 year note yield is up 8% on the day, the five-year up another half. vonnie: that is exactly the level bill gross told erik cheapker that they look compared with other sovereign bonds around the world. michael: we will keep an eye on that. vonnie: for more on the historic election we bring in kevin's a really -- kevin cirilli. andas at the hilton hotel i'm sure you did not go there anticipating the results we saw. kevin: even my sources within think itign did not
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would happen. it was remarkable to see that and -- mood shift overnight see the realization within that room and across the country that donald trump would defeat hillary clinton. michael: how did it happen? kevin: i have been covering his campaign a year and half have seen this from the grassroots level. it comes down to a couple of things. we can say there is an economic recovery and when you look at statistics that seems to indicate that is the case, but americans who voted for donald trump felt the pace did not reverberate fast enough. when you look at things like obamacare, immigration policy, donald trump's message resonated beyond believed to these communities that i think a lot of us have overlooked. paul ryan just gave a speech and seemed like a kid in a candy store because everything worked out well for him. if they get on, will they?
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priebus, he isce very close to house speaker paul ryan. last night you had donald trump on that stage saying that reince priebus was "a rock star." let's takesnk, donald trump control of the white house with a republican controlled house and senate so he has the mandate. that being said, i think when you look at the market reaction, it is not only the tone he struck last night but the cast of characters that run the stage. chris christie, reince priebus, so the markets are seeing a little more, let's see where this goes. michael: a lot of questions but only time for one. have been told for months now that responsible, experienced republicans would not serve in a trump administration and end this morning we are hearing from
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people who are connected to the trump campaign that their phone is ringing off the hook. which is it? kevin: it is the latter. you are only as good as your next best day. kevin, something tells me we will be speaking to you a lot in the next coming hours. michael: for more on the market reaction we will bring in michael regan. we saw the reaction everybody anticipated last night and what we are seeing now, the dow industrial is up and the s&p 500 is up. that is not what they predicted. thing morenly surprising than the election result is there reaction we are seeing in the market. futures went 5% down to stop trading, and now it is the complete opposite. conventional wisdom was wrong
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about the election and wrong about the reaction. that said, i am not sure the volatility is out of this market . it is full steam ahead. as kevin pointed out, i think trump's speech overnight was very surprising. there were no insults. he talked about things that were very stock market friendly and bond market unfriendly like fixing the highways, ridges, tunnels, infrastructure spending. so we're seeing big gains in industrial stocks take united rental, caterpillar, and also defense contractors. vonnie: which is so funny because this is not really what he was saying during the campaign. it was hillary's pitch. mike: the stocks that were expected to do poorly under her administration are also leading the way. financials, everyone was worried they would crack down harder on banks. a hugeers, there is
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concern about drug prices so both of those sectors are taking off. whenever we see the bond yield rise, we are looking at a 30 basis point swing, that suggests there is still volatility left to play out in this market and it will not be a straight shot. vonnie: strong volume too. michael: 6 million shares trading. vonnie: more than brexit. michael: if we see the kind of news that we are expecting of the next couple of weeks, does the market react to each that of news or do we back off and trade on fundamentals and earnings? what is going to drive us further? mike: i think we are fixated on the trunk -- on trump and once you get comfortable with him. if he is more combative like we saw in the campaign and talking
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about nato, threatening nato, stuff like that, that is a whole different scenario. if he sticks to this message of rebuilding the infrastructure i think the market will like that. vonnie: have we taken out the hedges, the daytraders, and those that take advantage, the headlines? knows, i think we have to wait and see. we had a good story about this record amount of vix futures that were outstanding before this. the fix is collapsing today, but futures are not collapsing as much as the vix. they are not rallying and they had come down pretty sharply before this. i think we will have to wait and see. regan, thank you. set to president obama speak from the white house following donald trump's victory.
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stay with us for live coverage. this is bloomberg. ♪
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michael: you are looking at a live picture of the rose garden where president obama is set to make a statement on the election shortly. we will have that for you as seen as he comes out of the oval office. this is bloomberg markets, i am michael mckee. vonnie: i am vonnie quinn. as wall street grapples with the election, uncertainty rules the day. wagersaders are slashing that the fed will raise this month. ann will we be able to make
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informed decision or estimate as yearen the rate hikes next yields are backing up quite substantially. george: the bond market is reacting not just to that being in play. you expect a risk off kind of behavior. it was very short-lived overnight. if we continue to see financial condition stable and the economy took a hit on this transition of power, the fed should hike. howmuch is what -- michael: much is what we are seeing in the 10 year, how much of that is a risk cranium and how much might be an inflation premium if he is going to cut taxes and do additional spending? george: there were folks saying but 15% is his magic number
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when the facts change you have to change your approach. many of us around the world look to the u.s. bond market for higher yields but if we enter into higher inflation or stimulus induced growth, that will come with higher rates in the long-term and short-term sector. the question is how much of the back and move that we have seen starts to impact fed thinking? we have had a 67 basis point rise in rates. basis points with higher yields when the housing market was getting accustomed to low rates, futures investors in the stock market were getting all those inflows. the higher rate story will eventually crowd out other y on it, but this earl is too soon to say. , that couldou say change tomorrow if donald trump comes out with a plan that will raise the deficit by a certain amount, or do we care how big the deficit gets? george: it does play a role.
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we can look back to the 2010 era when obama extended the bush tax cuts. anytime you attack on more debt on the fiscal horizon you should expect higher term premiums, especially given how low it is. i think where the market might attentively get it wrong is expecting the 30 year bond to take most of the pressure but our finding is the 10 year and five year is where all the new debt will be issued. michael: we are watching the whole curve steepen and normally that is supposed to be a good sign. which you put that in the category of too soon to tell as well or right now professionals are looking at this saying he is going to spend more and that is good for the economy? george: people were thinking about steepen ours. had that narrative coming from several parts of the world where people wanted a stupor curve.
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-- steeper curve. now we have it so the question is how far does it go before it becomes problematic? with these low level of rights it is not much of an issue but it is the overall change in rates. vonnie: one market it is good for is european markets. the german 10 year has been dragged higher by the increase in u.s. yields and a weaker euro trading back below $1.10. is the ecb rubbing its hands today? george: trying to qualify what a success, being dragged up higher rates, probably also too soon to tell. every region to operate to their own devices will have lower rates to keep their stimulus an economy going. there will be a change of calculus on this idea that we need a fiscal policy and we have potential he a mandate to go
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through with a lot of fiscal policy in the u.s. does europe look at that and japan? michael: do you put more money to work or do you wait given the volatility? george: this is more of a fed type play, especially in the bond market. i believe you have to take time to assess the situation. michael: george goncalves, thank you for being with us. we are looking at president obama in the rose garden with joe biden. before thebama: votes were tallied i shot a video that some of you may have seen to the american people, regardless of which side you were on t election, regardless of whether your candidate won or lost, the sun would come up in the morning, and that is one bit prognosticating that actually came true. the sun is up. i know everybody had a long
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night. i did as well. i had a chance to talk to president-elect trump last night at about 3:30 in the morning to congratulate him on winning the election, and had a chance to invite him to come to the white house tomorrow to talk about making sure that there is a successful transition between our presidencies. it is no sacred that the president-elect and i have some pretty significant differences, but remember, eight years ago president bush and i had some pretty significant differences. 's president bush's's team could not have been a professional or gracious to make sure we had a smooth transition so that we could hit the ground running. one thing you realize quickly in that the presidency and the vice presidency is bigger than any of us. i have instructed my team to follow the example that andident bush's team set
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work as hard as we can to make sure this is a successful transition for the president-elect. because we are now all rooting for his success in uniting and leading the country. the peaceful transition of power is one of the hallmarks of our democracy, and over the next few months we are going to show that to the world. i also had a chance last night to speak with secretary clinton and i just had a chance to hear her remarks. i could not be prater of her. she has lived -- i could not be prouder of her. she has lived an extraordinary life of service. lady, senatorrst of new york, and could not have been a better secretary of state. i am proud of her. a lot of americans look up to her. her candidacy and nomination was
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historic and sends a message to our daughters across the country , that they can achieve at the highest levels of politics. i am confident that she and president clinton will continue to do great work for people here in the united states and all around the world. now, everybody is sad when their side loses an election. but the day after, we have to remember that we are actually all on one team. this is an intramural scrimmage. we are not democrats first, not republicans first, we are americans first. we are patriots first. we all want what is best for this country. that is what i heard in mr. night. remarks last that is what i heard when i spoke to him directly, and i was heartened by that. that is what the country needs.
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unity, a sense of inclusion, a respect for our institutionsour way of life, rule of law, and respect for each other. i hope that he maintains that spirit throughout this transition, and i certainly hope that is how his presidency has a chance to begin. i also told my team today to keep their heads up because the remarkable work that they have done day in and day out, often without a lot of fanfare, often without a lot of attention, work in agencies, work in obscure areas of policy that make government run better and make it more responsive and make it more efficient, and make it more
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service friendly so that it is actually helping more people, that remarkable work has left the next president with a stronger, better country than the one that existed eight years ago. election,lose in this that was always our mission. that was our mission from day one. and everyone on my team should be extraordinarily proud of everything that they have done. so should all the americans that i have had a chance to meet all across this country who do the hard work of building on that progress every single day. teachers and schools, actors and ,r clinics, small businesses putting it all into starting something up, making sure they are treating their employees well. all the important work that is done by moms and dads and , inlies and congregations
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every state. the work of perfecting this union. this was a long and hard fought campaign. a lot of our fellow americans are exhausted today. so,t of americans are less but that is the nature of campaigns. that is the nature of democracy. it is hard and sometimes contentious and noisy. it is not always inspiring. people who gotg into politics for the first time and may be disappointed by the results, i just want you to know, you have to stay encouraged. do not get cynical. do not ever think you cannot make a difference. secretary clinton said this
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morning, fighting for what is right is worth it. lose an sometimes you lose an election. the path this country has taken has never been a straight line. zi --g and and zag zag and sometimes move in ways that people think is forward and others think is moving back. and that is ok. i have lost elections before. joe has not. [laughter] >> you beat me badly. president obama: that is the way politics works sometimes. we try really hard to persuade people that we are right. and then people vote.
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and then if we lose, we learn from our mistakes. we do some reflection. we like our ones. we brush ourselves off and get back in the arena. we go back at it and try even harder the next time. the point is that we all go forward with the presumption of good faith in our fellow citizens. because the presumption of good to a vibrantntial and functioning democracy. this country has moved forward for 240 years, how we have pushed boundaries and promoted freedom around the expanded the rights of our founding to reach all of our citizens. it is how we have come this far and that is why i'm confident that this incredible journey we are on as americans will go on. to i am looking forward
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doing everything i can to make sure that the next president is successful in that. i have said before, i think of this job as being a relay runner. you take the baton, run your best race, and hopefully by the time you handed off, you are a little further ahead, you have made a little progress. i can say that we have done that and i want to make sure that handoff is well executed because ultimately we are all on the same team. and you very much, everybody. [applause] president obama, vice president biden leaving the rose garden after congratulating donald trump on his victory and pledging to work closely with him on the presidentia transition. with one sharp little note there that he got in about how we should do civil to each other and respect the rule
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of law and he said, "i hope the trump administration lives up to that." ,lix: i want to bring in kevin who's been covering the trump campaign. how will donald trump react to the president's speech and hillary clinton speech early on? kevin: sources are telling me that he will be at the white house tomorrow -- i think what you are going to see is a donald trump who is going to continue a long -- along the tone we saw last night. the tone calling for a unified nation. we heard that from hillary clinton in her speech and we also heard that from barack obama. president obama saying moments ago that we are patriots first gra.
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vonnie: what will unify the nation? of the first things that will have to be decided upon is the next supreme court justice. if there isn't something that is more divisive than that issue, i don't know what is. kevin: donald trump had focused so heavily on campaigning, the fact is, the transition team is still very much bare-bones and very much has a lot of work to get done. on the stump, he has talked about things he wants to do. there really wasn't a well-thought-out plan in comparison with hillary clinton, who had decades of experience of navigating inside the beltway of politics. there is a lot of work to be done. paul ryan and other republicans view that as an opportunity to
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push an agenda they want to do, but clearly, a lot of work that has to be done in these next couple of weeks heading into the inauguration of donald trump. mike: you have covered donald trump for a long time. you are talking about him being the restraint, call him, --ssuring donald trump today you think he might continue that. why? there were other times during the campaign when he did that and then reverted to the old donald trump. a lot of people have said we can restrain him -- are either of those two things likely to happen? trump's supporters will tell you that this is a billionaire who made his money by licensing his name.
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perhaps what we will see in the trump presidency is someone who wants to be the president but also allow other folks in congress and other folks in his cabinet to make the decisions that they feel are best. right,ond point, you are we will see a donald trump in ignite there he will crowd with joe arpaio and then a donald trump in new hampshire who would talk in a much more bins lombardi-esque type of political tone. we would see a donald trump going to inner cities. what balance he strikes remains to be seen. vonnie: he will be less defensive because he won now. perhaps things won't bother him so much. what will president obama do in the next couple of months? what can he do?
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what are the goals left that he can accomplish? kevin: supreme court from supreme court, supreme court. this was the last bipartisan -- whatn the congress in termsandidacy did of wrecking the transpacific partnership support cannot be understated. that was a key tenant of his campaign. watch carefully in the lame-duck for how republicans navigate that. now that they have a president againstt months railing the transpacific partnership. mike: get some rest. you will have a busy transition. stocks are inching higher again. the dow is up 1%. having been down overnight more than 800 at one point.
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s&p 500 up .8%. to abigail doolittle, looking at biotech and pharma stocks. abigail: a surprise rally for the global major averages. one sector outperforming in a massive way, biotech. the nasdaq biotech index absolutely surging. behind this is the fact that the biotech index is mired in a bear market. something hillary clinton sparked pressure around drug theing -- now, some think issues are likely to fade under the surprise trump win. regeneron, amgen and gilead sciences -- the sentiment around drug pricing not surprisingly is really improving.
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another factor helping the stocks is what goldman is pointing to, some big m&a action. we see absolutely huge moves -- the overall sentiment extends over to big pharma. squibb,bristol-myers merck, drug pricing pressure, lessen,te is likely to helping these companies. while we have morgan stanley saying there's likely to be a relief rally -- we certainly have that today. continue?relief rally biotech -- big pharma etf.
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this etf has dropped below the uptrend. orange, the buying and the solid line representing support. we've seen relief rallies indicated by the yellow. with the big pharma sector below the uptrend, it may suggest that today's relief rally may prove to be that, in relief rally somewhat short-lived. mike: one of trump's closest supporters was on bloomberg daybreak today. jonathan ferro asked him to outline what we can expect from a trump presidency. >> the market will react to consistency. in order to get growth, pondicherry policy -- monetary
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policy and productivity is waning. everywhere in the world has private in public partnerships. -- private public partnerships. you will see the world waiting transactionsts of to take place and he will do it thenmuch more elegant way the candidate donald trump appeared to be. the victory was his third everybody said pivot, be more practical, be more presidential, be softer. he found this fisher in america that was quite remarkable. how does he create that sense of consistency and that steadfastness? how much of it is which priorities he puts forward first? >> he has mike pence.
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there is no better congressional leader in the world and mike pence. he has a real advantage and a vice president that can do something for him, that has relationships, that has the power and the ability to move that legislation along. thatlike president reagan -- he had no foreign-policy experience. in the first 100 days, he surrounded himself with george scholz, richard allen, he took the best of the best and had them help him with the first 100 day plan. alix: who is the best of the best? what do you think his best of the best looks like? >> i think both. the first reach is to people who know the system who can use the
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system but are not part of the system. the vote in serious part was just a referendum on the status quo. the transition team has been working on this for months. the candidates available to him are not the candidates that are available to him today. people who want to be considered were not taking it so seriously at the moment. shift last 12 hours, the -- jon: the problem the pollsters had as well. david: you go back to george of az, they were part kitchen cabinet that ronald reagan had back when he was a governor in california. is there that sort of kitchen cabinet? >> yes, much smaller, and not so
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broad. on the business side, you have , you'vehn, wilbur ross had a series of business people who've always been close. whoassociates, people are just close to him. on the military side, he has a new man -- he has kept option alley. nality.on they have filled the vacuum -- every place we left, putin has filled. i don't really care what the bureaucrats say come i will send a new kind of diplomat to have a
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new kind of deal and we will see if it works. i'm drawing hard lines. ifn i draw a line and say these boundaries are invaded, there will be consequence, i mean it. you will see in the next 90 days the transition team come up with a slate and a venue of unbelievable people with deep experience who are just not part of this establishment system who can chip away slowly and just move it a matter of degrees. when you become the president, you assume a set of responsibilities. you also assume the capabilities to move markets. there was a series of faux pas is in the campaign. an outright attack on the fed chair. once you become president-elect and you say the kinds of things he said previously, that will move markets in a significant way.
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do we have a shift in approach in terms of real fundamental policy or will you still be going up to the fed chair? in a ufcate trump octagon saying everything goes, that's he has and the liberty to do that -- you will see a serious, thoughtful man sayi i will leave a legacy showing the world that an independent person coming from modest means with no political background can be the best president the united states has ever seen. that is his goal. his caution, his cadence, the advisors around him on all these things that have to do with the markets we live in everyday, we need to be thoughtful, deliberate and soft. some breaking news now.
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congratulations to 84 partners , the most newhs partners at goldman sachs in years and 2010. coming up, donald's plans for wall street and why many bankers consider him a wildcard. this is bloomberg. ♪
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vonnie: you are watching bloomberg. matt: this is your global business report. buyer had a reason to sell its radiology business as the company focuses on its prescription drug business. vonnie: burberry reports a first
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half drop -- operating2016 forecast raised after beating expectations. vonnie: there's no reason to sell the company's radiology business -- he says the assets are important for cash flow. yer is working with goldman sachs to explore the potential sale of the unit which could be worth more than $4 billion. the british luxury goods maker was hurt by weaker demand in asia. burberry says it is still on track to meet its financial goals for the year. --st half revenue rose 7% the man's weekend that the man's
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home --ds weekend at demands weakened at home. profit toy forecast rise 5%. vonnie: time for our quick take where we provide context and background on issues of interest. you on musk is known for his ambitious ideas and big -- elon musk is known for his ambitious ideas. the company is run under musk are facing challenges. driver of a tesla sedan engaged in autopilot mode, crashed and died. struggling to manufacture cars and expected rates. the proposal for tesla to
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acquire solar city has faced criticism. spacex has suffered a mysterious rocket explosion in september. that has but the company's future in a precarious position. moved to canada at age 17 before attending the university of pennsylvania. in the 1990's, he founded a company that merged with a rival to form paypal. after a few rough years, he found success best tesla the model s. solar city went public. current problems are less tired than those he faced in 2008. tesla, space x and solar city are no longer experiments.
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his companies have already changed the world -- the extent that electric car is a commercial reality is largely thanks to tesla. that is your global business report. had to for more stories. ♪
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mike: this is "bloomberg markets ." vonnie: let's turn to another aspect of donald trump's victory. many traders and bankers see trump as a wildcard. what we know about trump's plans for wall street? we knew a lot more about hillary clinton's plans.
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we don't know so much about donald trump, do we? >> he is the ultimate wildcard for wall street. wall street does not know him very well. many of the people he has surrounded himself with thus far he has saidwhat about some of the policies that he would pursue have often been very confusing for wall street. some of the policies seem to conflict with one another. he has called for reinstating glass-steagall. called for a moratorium on all new financial regulation. that leaves wall street lobbyists scratching their heads. bank stocks are up today. a lot of that is coming from conventional wisdom or historically republicans have been better news for wall street
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and for the banking industry in terms of policy than democrats. there is speculation that that could open the door for deregulation or put wall street on the offense. doe: what does donald trump two or about the federal reserve? or about the federal reserve? does he move to rein them in? something a lot of people here in washington are asking about. he could turn to congress for a number of these -- should he look to republican leaders in the senate or in the house for a path forward on those issues on nominees and more broadly on financial policy, you have the chairman of the house financial services committee who has put
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forward a very aggressive .verhaul of dodd-frank thehe senate, you have senator from idaho who will be taking over the senate banking committee. , he has been pursuing reform -- housing will be another issue that he may tackle. paths in variety of leaders in congress that trump could turn to. wall street did not exactly embrace donald trump, did not fund his campaign all that richly. will he take revenge in any way? elizabeth: that remains unclear as well. he would say things about going after wall street and certainly
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criticized hillary clinton's ties and support from the financial industry. you look at the makeup of his own economic advisers and a lot of them do come from hedge funds. that remains a wildcard and unclear. vonnie: a lot of wildcards. victoryll the donald's influence the fed as they consider a rate hike? is bloomberg. ♪
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vonnie: it is 1:00 in new york, 6:00 in london, and 2:00 in hong kong. i'm vonnie quinn. mike: i'm mike mckee. welcome to "bloomberg markets." from bloomberg world
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headquarters in new york, we are bringing global reaction from donald trump winning the u.s. presidency. first, we are halfway into the trading day. julie hyman is here with the latest. julie: we are seeing a rally now in what has been a dramatic turnaround from the declines we saw overnight when it became more clear that donald trump would be victorious in the presidential election. all three major averages hovering around the highs of the session as investors are shaking up some of the worst fears about a truck residency -- trump presidency. this wing has been incredible. look at this from the intraday lows to the intraday highs in the s&p futures. here is a look at that swing going all the way back to 2012. the line up here is where we have been to date during that swing, bigger than what we experienced in the wake of the u.k. vote to exit day you, the
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-- the eu. it is pretty extraordinary to see this in today's session. what is driving us there? take a look at steelmakers. thatnalyst earlier said these companies were uniquely positioned to do well under a trump presidency in part because of protectionism of the u.s. steel industry and spending. speaking of infrastructure spending, at least suppose it infrastructure spending, what people are expecting, we s an increase in construction machines. as well, construction parts, different parts going into materials as well. all of them seeing an increase. one group not participating in
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the gains today, automakers. in part, this is because a company like ford gets some of its sales south of the border. also a question about what kind of effect various policies internationally will have. general motors announced today that it will be laying off 2000 people. that is part of the movement we are seeing today. industrial today are trading at a record. i also want to talk about the treasury market. we have seen his huge increase in yields on the longer end of the curve, 17 basis points increase in the 10-year. there is now a treasury auction crossing in the past few moments, and it looks like there is relatively high demand. i will give you the full details on that, coming up. points 114 basis now. let's go to erik schatzker who
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has carl icahn on the phone. >> you were among donald trump's earliest supporters in the financial community. you have been within consistently through the campaign. if you will, to put a voice to what we are seeing in the stock market today. the dow is up 185 points. what do investors see here that they did not in the middle of the night? it wasally feel like tremendously overdone overnight. trade -- youively partyi was at the trump when i saw the market fall apart. sense. no damn i went home and i made a purchase, one of my best investments. i am saying it to you, not to
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boast about it, but to make a point. i do not think donald will be bad at all for the economy or the market. happened is an extremely important event in the history of our economy. trump thought that since started out and as you said, have been with him. the situation, in any economy, in a free enterprise system, you cannot have what we went through with obama, with eight years of gridlock. but more importantly, where the perception is that the government is at war with business. that was definitely the perception. the pundits will try to study this and say, what is going on, there is no productivity. there is no productivity because business is afraid to invest. you need regulatory agencies,
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in fact, i am a supporter of dodd-frank, and i think you need wall street regulations. there are good, regulatory agencies that have done good but there is a terrible perception out there -- you take the epa. they are for no reason putting refineries out of business. for no reason at all. i will not get into the whole agrees it ise epa no good, but they keep doing it. it is like how the rulers would do it in a feudal system. so therefore you need a perception that the government is with you in a huge, free enterprise market that we have. trump came along and said i'm going to change things. it really is not that much of a surprise that the middle-class
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ander is listening to trump says that he will make my life better. listening to hillary, it is the same old stuff. look at obamacare. you cannot have big government. big government is good to incentivize, but not to tell you how to run your business -- and to regulate, to some extent. that is why i think this is so good for the markets. you have been consistent saying bennies to be a balance between regulation and incentive ization. how will donald trump incentivize business to buy more capital goods, to hire more people? specifically how? >> i just started with number one. cut a lot of the regulation or just cut it out. and then really clean it up. erik: beyond energy?
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i think the ftc has done some good stuff. thing,y, the dodd-frank i think you have to regulate wall street. when hea businessman no builds a factory, built machinery, when he goes to invest the money, that he has the government behind him as opposed to coming in with all these regulators. even the health care business, the regulations have gotten completely out of hand. even in education. i was talking to the head of a large college the other day and he says every time i turn around to do something, i have all of these regulators on me. you have got to stop that. i think that is the major point. what else can you do? there are many things that the government can do with some fiscal stimulus. look at after world war ii, the
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marshall plan. if you look back, everyone said after the more we would have a depression. it turned out the other way because the government went in and did not run things -- that is the great mistake. we don't want communism or socialism. on the last two want that. but you don't have that. the government should not be running anything. the government should not be going in and deciding what business should go out of business and the epa does in the refineries. they should not be doing that but they should be going in and helping you in a lot of ways. i built a real car business from the mid-1980's. you can walk from new york to ohio on the rail cars i put up. the government incentivized you through tax benefits. is why you have a healthy real car business in the country. erik: if i hear you clearly,
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when you say we could use more fiscal spending, the trump administration should go out and borrow more. long-term rates are still pretty low. they have been going on lately, including today, but they should borrow more and use that to grant tax breaks and other incentives to businesses so that they do the kinds of things you are talking about -- >> you want me to tell you something? if you did this right, if you did this right, you don't even need that much fiscal stimulus. and you need, erik, -- actually it was ironic that hillary said it in one of her speeches -- we will unleash the great powers of our companies. she was right about that. but the next sentence almost was we are going to regulate them more and tax them more. so you are not going to unleash it. there is a tremendous amount of in our dammed up
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companies, and you could do the repatriation. bring it home. if you have that going, you really do not need the fiscal stimulus, except for the infrastructure, which donald is right on. you could do that, which would pay for itself. if you get the economy going and you get the businesses to spend more onand i mean mundane things, not just technology. all of the e-mails and all of that, it doesn't mean anything. ist you really want to do build the bricks and mortar part of a company. get the middle-class working. when they heard donald talk about that, you almost laughed. west that the middle doesn't have much money, doesn't know where his next job is, he is a skilled worker, he doesn't know where his next job will be, and then he listens to trump who
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says i will get you back to work. erik: i don't want to drag you too far into economics, but where will the demand come from? this economy, i think we can all the knowledge, faces some structural obstacles. the baby boomers are at the point now when they are past retirement. we have technology, people texting each other, technological innovation and automation obviating a lot of jobs. we have a global economy not growing very quickly. look what's happening in europe. who is going to spend the money on the things that these countries might produce in these incentives were created? >> who would spend the money on it? i'm not sure that it is necessary that we import -- look, i am for free trade, perhaps more than donald. but i think we have the ability, the machinery to produce a lot
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of goods and services for the rest of the world also. godnows the rest of the world needs it. not just cheap labor. we have technology, we have guys that are very skilled in this country. eventually, you can build businesses here and bill johnson here. if you do that -- build jobs here. produced ahat -- we great deal of goods for the rest of the world in the marshall plan. it's interesting to go back to the late 1940's and how that worked. i am not an economist either and i will not say that, but what i see in the immediate problem in this country is for our economy is you cannot have it zero interest rates and think the economy will think going -- keep going. what you have to have is, let business understand they are not at war with government. it is not me. the federal reserve has been begging to see that business starts investing. you have no productivity because
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you don't have machinery. it is a simple thing. let business put money into -- into the actual manufacturing sector so that we can get productivity back. it is simple. right now, i don't think anyone will disagree that it is perceived that the government is at war with business. that happened over the eight years of obama. is, i think,e absurd. obama had the opportunity to do a lot of what i'm talking about and instead, they just built regulatory, regulatory. that is my point. you need to change. erik: it was partly as a result of this opinion that you had of the success or failure is obama administration over the past eight years and the regulation you describe to us.
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you told me the last time we spoke that you were more hedged then you have ever been before. are you taking them off today? on the basis of a trump win, will you take them off? >> i took some of them off last night. but i'm not telling you that the market will run away on the upside overnight. you're not going to wipe other problem because donald is coming in in january. there are still problems in the economy. zero rate interest rates are problem. i am not telling you overnight that this is a complete change, but i think it is a major step in the right direction. --k: when you saw last night it's an amazing story by the way and perfect for you. you are waiting to celebrate the trump victory with donald and his family and his other backers
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like yourself, and you cannot resist the opportunity to trade when you see the s&p 500 futures tanking. >> i make it a point of that. i thought it was absurd the s&p was down 100 points on trump getting elected, where i think, by and large, there may be problems with getting elected, but to me, it's positive. how positive? am i telling you next week it is going up? no. we are not out of the woods yet. there are some overriding problems. but i think what you have to do is change perception. if you do, i think we have great opportunity in this country. this is a great country. we have a great country, we have a willing workforce. we have great ability to manufacture. and yet, we sit back and don't do anything, build regulations
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on regulations on regulations. and they wonder what is wrong, -- ok, one of the major problems that the economist have, who know more about this than me, they will say that productivity is not growing. when productivity does not grow, you cannot compete. why isn't it growing? businesses are scared to spend money. it is simple. i own these businesses. a guy like me likes to take shots and i'm afraid to put money in. today i'm not as afraid anymore. erik: your portfolio is measured in the billions. when you put the trade on last night, how much money were you putting to work? >> i would have tried to put more to work, but i could not more than about $1 billion to work. then the market got away. but i'm still happy about it. erik: you bought $1 billion of -- >> the s&p was so liquid.
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the world was going nuts. the world was going into a panic for no reason. i think donaldt, coming in is a good thing for the economy, not a bad thing. -- i'm notaying it doing it to boast. i am not a traitor and i don't do much of that. but i'm saying, i am making the point, donald coming in is a positive for our economy, not a negative. think,the naysayers, i literally live in a certain world where i don't think they on outside ofing new york city, the wall street area. this is going to be terrible, donald will be terrible. he will not be terrible, in my opinion. has a little problem. everyone has faults.
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there are plenty of fault on the other side. the point that i things will turn around overnight. erik: let's talk about the next four years of a donald trump presidency. when you survey the economy, what industries will be the most attractive, where do you see donald trump taking action on regulation? where do you want to see him investing today or quarters from now, where you did not want to invest yesterday? >> where i am involved is energy. energy has really been pushed down the by, literally, the administration.
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you do fracking. all of a sudden, you should not do that, you cannot do this, and you know what? we should be oil independent. , ite are with fracking gives you a whole new look at the middle east and all of those problems. one of the reasons we are involved in the middle east -- and let's face facts -- we could go into the whole borrowing issue, but the real issue is the oil. africa has more issues than the middle east and we don't do a damn thing in rwanda and things like that. so now you are building your energy backup. saying because of what you think he will do in energy, that is a sector, fracking in particular, where you want to be making investments? >> i am not telling people how to invest.
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i'm just saying to you, with the whole fracking industry, with regulations coming on regulations, i think we now have a new perception. everything is perception. well, most things are perception when it comes to business. what i'm saying is, if you think about it, the perception that will be, ok, let's become energy independent. look at our refineries. the epa was literally making decisions with guys up in ann arbor deciding which refineries would go bankrupt. even meantnk they to, but just because they could. now hopefully that will not happen anymore. that is there an industry you see benefiting from less regulation that you would want to put money to work in? >> the refineries.
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i will not go into each refinery. i own a refinery. erik: i was thinking outside refineries, perhaps health care. >> there is another one. the government got way too far into some of this stuff. now, i want to make it clear. the ftc has done some good stuff. you have to start monopolies from happening, ok. even the epa has done some good stuff. over as far asy many of the regulatory agencies. now that is going to move back. when it does, i think it will incentivize business. erik: what about anti-trade? specifically, trump talked about breaking up at&t time warner. a lighter regulatory hand, the kind that you describe, does not .ound like that
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what do you expect him to do on antitrust, what do you want him to do? i am talking broadly on antitrust, i am no expert. where i ownreas businesses, i see what happens, and i see the reluctance of business to invest. antitrust,t into yes, a large monopoly, oligopoly is very bad for a free enterprise system. hate to get back into the energy business or the refinery business, but there, too, with the epa was doing by putting these refineries out of business would set up -- they were going to do for big oil when they could nevedo for themselves. it was going to become an oligopoly and you would have very bad repercussions. erik: you don't see a role for antitrust? >> definitely, and regulation.
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there is a role for regulation, especially on wall street. wall street could be better regulated and there would not have been 2008. don'tot telling you regulate, but i'm telling you in many areas the regulation has run amok. erik: i hear that. i'm just trying to get a sense from you how heavy or light a hand donald trump and his administration will have when it comes to antitrust, when he appointed the attorney general and the antitrust cops at the doj or the ftc for that matter. >> i could talk about markets and businesses i am in. i am not the one to talk to about antitrust regulation. i am not the right guy. generally, i do not think: coppola's or monopolies certainly are good for the company. however, i will not get into time warner. i have not studied it. have a lot ofhey
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great companies under it, but i'm not here to tell you should there be or not be antitrust concern with time warner. you can ask me about my companies if you want, but don't ask about time warner. erik: i will finish by talking about aig. you have said before maybe they should consider selling off its japanese business. do you still feel the same way? last week, they had a disappointing quarter, stocks of marginally today. what is your current view? >> i stick with it. aig -- and i have to be careful because we are on the board, i have confidentiality there. i am hoping that peter hancock agrees, which i think he does, but i cannot speak for him. i look at the big picture. you look at companies with unique values.
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there are a lot of legacy companies at aig that should be sold. peter has been doing some of that. i would like to see it being done quicker. is being done, so aig is selling below its equity value, which is important in the insurance industry. so you sell those, get out of those legacy businesses. we talkedtent, what about in japan, life insurance. that will make that company worth a great deal more. that said, i cannot go into what is going on more than that. erik: one quick question. you increased your position in hearst. are you increasing your position? the past few over days, i bought a great deal, as you know. it is public. rst is a sort of
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misunderstood company. obviously, has taken some steps they should not have taken. i will not get into it. buying close to 15% of the company in one day, which is sort of unheard of, i think that speaks for itself. it does speak for itself but it doesn't answer the question as to what you will do beyond this. >> i am not going to tell you what i will do beyond it. in fact, i'm not even sure if i know. erik: thank you very much for spending some time with bloomberg television. icahn, ahat was carl man who clearly need no further introduction. vonnie: and a very generous amount of time that he spent with you. i was fascinated at the amount
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of things that he put forward that would be interesting to see for the results. the idea of repatriating cash. we have heard donald trump talk about it. how much cash will come home from corporations? erik: the one thing i will walk away from from this conversation is a billion dollars. that is how much he put into the stock market after futures plunged last night. mike: now we know why it went the other direction. hard to know if carl icahn is single-handedly responsible for the turnaround in equity futures last night, but they made a sharp turn. he told us he was spending a considerable amount of money. was five to one yesterday that donald trump woodwind. i think carl icon did a lot better than just putting a punt on the books. mike: clearly he talked about the company that he likes and what you want donald trump to do. that is what strikes me about all the people we have spoke to.
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everybody says, we think donald will do this. often it is not one donald has sent on the campaign trail. you have to wonder, will they get their wish? erik: all of these people whom you mentioned, carl icahn, donald trump, wilbur ross, tom derek, have known donald trump for a long time. , have knownectorate donald trump as a politician for a very short period of time. you are right, it is almost impossible to know whether he will do any of these things they say he will do. i think we can presume that some conversations have taken place behind closed doors between the legs of donald trump and carl icahn, for example, which lends him the confidence that trump will do what he says he will do in terms of rolling back obamacare. trump himself has been forthright about that. but what he may do in areas like education.
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trump has talked about rolling back dodd-frank, or at least modifying. that he thinks banks data be regulated and dodd-frank may not be a bad thing. but he also volunteered that a trump administration may do something about education administration or regulations. first that i have heard of it. vonnie: he also said that he was more for free trade and perhaps donald was. thank you for bringing us that interview. let's head now to the first word news desk with mark crumpton. hillary clinton is urging her supporters to accept the results of her stunning defeat to donald trump p he delivered her concession speech this morning here in new york city. >> this is not the outcome we wanted or worked so hard for. and i'm sorry that we did not win this election for the values we share and the vision we hold for our country. also secretary clinton
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said american democracy depends on which she called the peaceful transition of power and that she would work with president-elect trump to heal a divided nation. as he claimed victory, trump asked americans to come together, a sentiment echoed by paul ryan. he spoke today in wisconsin. >> this is the most incredible political feed i have ever seen in my lifetime. donald trump heard a voice out in this country that no one else heard. he connected with -- in ways with people no one else did. he turned politics on its head. and now, donald trump will lead a unified republican government. ryan also said trump had earned a mandate to in 19 agenda. the u.k. point man on brexit is trying to gain the support of scotland, wales, and northern ireland or his negotiations. david davis is offering their
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first minister monthly meetings and access to department analysis. opponents are trying to force the british government to maintain close relationships with the eu. scotland government arguments the u.k. must have the agreement of its parliament before beginning brexit talks. global news 24 hours a day powered by more than 2600 journalists and analysts in over 120 countries. i'm mark crumpton. this is bloomberg. the federal reserve's path to raising interest rates smooth 24 hours ago, but when donald trump's unexpected victory, the path may be rockier. on more of what a trump fed could look like, we bring in joel prakken. he used to work at the federal reserve. at this point, is there any reason to think that what is happening in the markets, the economy, or on the political scene, would deter yellen and
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company from a december move? >> we think not. there will be a lot of volatility in markets over the next couple of weeks as people sort through the implications of yesterday's election results. but given our projections of were economic growth is, how close to full employment we are with inflation heading up to the fed's 2% objective, unless there is some significant turnabout in the data between now and the december meeting, we still accept --expect the fomc to hike rates in december. fed has been very respectful of markets, not deferential to markets -- it doesn't get dictated to by markets -- but markets are allowed to digest at the moment. not just u.s. markets, but emerging markets, developed , frontier markets around the world. the fed will have to take note of that. joel: for sure.
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the way it would factor in their decision is if asset prices in the u.s. weekend so that consumer balance sheets declined and equity across the capital rises. if the dollar strengthens against some currencies, making our goods and services less competitive in global markets, slowing the trade sector of our economy, that would cause forecasters like us and those at the fed to revise down there projections of growth, perhaps , slow to delay the pace the pace at which monetary accommodation is removed going forward. but we don't know what will happen, we don't know what resident trump will propose in terms of economic policies. until we have a clearer view of that, it's hard to handicap how the things will be changing next year. mike: but you know i'll be asking to do it anyway. 28 forecast path is for interest rates before 2016. interest rate hikes
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before 26. joel: if we think about a large tax cut implemented partway , with the economy close to full employment, the fed taking about raising rates, inflation close to 2%, there could be enough stimulus in that tax cut to prompt a quicker rise in interest rates than otherwise. that part of his policy plan would work in that direction. immigration is another story, though. slow theort people and influx of people, the economy will grow slower, there will be labor shortages, a lot of chaos. that could work in the opposite direction. trade policy is a big question mark. he would like to negotiate more symmetric agreements with our traitor and partners, but he is
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ready to do that within bludgeoning of punitive tariffs on certain countries which would raise inflation in the short run but also weaken the economy. so the fed will have lots of crosscurrents to sort through depending t poon whacies are implemented and how much they resemble the policy proposals that have been made by the candidate. the 10 year yield in the u.s. is now 2.0553%. huge steepening. is this a move that reverses itself in the next few days, or does the market stay like this until we know more about things like deficits, the next fed rate hike? i expect there to be considerable volatility in all the markets for the next several weeks if not months, until a new congress is seated, we get past the funding of the government in december, pass the debt ceiling in march, the new president , so we canudget
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start to try to assess the impact of those policies. to point outo want the offshore renminbi is trading at six point 83, the weakest ever. -- 6.83, the weakest ever. mike: when the fed starts to make policies toward 2017, into 2018, who will do it? donald trump has made it clear he has no love for janet yellen. who could you see leading a trump fed? the million-dollar question. i don't have a good answer for that. yellen could well decide to leave when her term is up, maybe go back to being a regular member but not the chair. it's possible stan fisher could take over. we don't know the answer to that or any of the other quite important position that president trump will have to fill at treasury, regulatory
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committees, council of economic advisers. we have a lot to learn about who his team will be. joel prakken, things for joining us today. you will have a very busy 2017. vonnie: thank you. coming up, how will a donald trump administration impact canada? prime minister justin trudeau promises to work with him, but will trump's trade policies hurt or help our neighbors to the north? this is bloomberg. ♪
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vonnie: this is "bloomberg markets." i'm vonnie quinn. mike: i'm mike mckee. julie hyman has a look at chart of the day. julie: it has to do with inflation, which all of a sudden has reared its head today.
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on the perception that the donald trump victory could mean an increase in inflation as we see increased government spending both potentially for stimulus and a tax cut. a lot of talk about what that could mean. we are already seeing inflows into a tips etf. we saw a spike in fund flows going into november on this perception perhaps by some, anticipation that this could be one of the potential outcomes. really interesting the spike that you see at the end of the chart. another way that this is being expressed today is that we are seeing a steepening, widening of the yield curve. this is the treasury yield spread here. on the shorter end of the car is a decrease in yields on the expectation the fed will not be as aggressive in raising rates, and an increase on the longer end of the curve having to do with his inflation perception.
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we are seeing the increase today at the widest since we have seen since the beginning of the year, the biggest one-day move we have seen in several years. speaking of the biggest move in several years, the move in the 10-year note has been fairly remarkable. 5%, the highest we have seen since in january. the magnitude of this move is what we're talking about. it is the biggest one-day move since at least 2011. at one point during the session at the peak we saw an increase of 23 basis points. ,hat would be a record move one-day move in a 10-year. inflationing this expectation being reflected in a number of ways within the treasury market today. mike: thank you, julie. vonnie: for more on the markets, all of her running joins us with how investors hedge this outcome. i'm not sure everyone wants to hear anything about anything
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about hearing that carl icahn put $1 billion to work overnight. for those of us that do not have $1 billion, what were the hedges that worked out? acrosshad a consensus the polling, across expectations , prognostications, everything that turned out to be bunk, that was protecting a win from hillary clinton. at the same time, there was such asymmetryween this between the likelihood of trump and clinton, for a lot of people on wall street, it made sense to hedge your bets because when investors are positioned one way, if there is a surprise, which there ended up being, there could be an immediate drop, which we saw in futures overnight. you looked at what people were doing, you look at vix
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bets, volatility bets, there were a lot of investors who went into this ahead. in thenot come in morning and your portfolio asks you why you did not have any trades to cover our backs on this. perhaps that is contributing to the quick rebound. when you are looking at is basically the first month futures, the open interest got really high. mike: these expire when? >> this is tracking the front month. when you look back in june or september, those will expire, ,ut this is a decent indicator not to figure on which way they are betting, but having a presence in the volatility market was advantageous. you are hedge because of the election itself, 90 have to implement things. are we still seeing hedging going on against the various possibilities of a truck policy? what you are seeing today is
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a beautiful day for math and not so much speculation or prognostication. all of the analysis going inward were that some parts of the market were sensitive and responding positively to trump's better numbers. what you are seeing is a pretty clear result of that. financial companies, health care company leading the market today by a massive amount. these are companies that we showed earlier in the month had the strongest correlation to donald trump victories. this is what is turning out to happen. also showed industrials doing well. financial companies rallying. theie: we should mention nine-day decline. maybe some of this is now clamoring back. >> i think that is a lot of what this is. you have to try to figure out trump's policies, but people are trying to do it because there is dispersion in the market. financials are doing well, health care is doing well. ,ut staples, discretionary
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which were tied to clinton, or not doing well. so,your point, very much there was a big asymmetry going ,nto the market where people are would argue, work founded by what they wanted to happen, so they started making predictions about massive drops in the stock market. case,hat was not the suddenly you have to recalibrate what will happen. in this case, it means that there are sectors that could do well. mike: but do they continue to? a lot of analysts continuing to write today, don't watch today, this is just the knee-jerk. we will see a drop of going forward. >> very good point and completely reasonable. as we point out, there are two sides to this study that we did about the day after stock moves. that 5% done move in futures do not project to be read on the screen going forward. but on the flipside it's true as
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well. his rebound that does not mean anything about the next 12 months. we have to figure out who trumpet is as the president and there is not a lot of clarity. he sounded different in his victory speech last night, so we don't know. that will be interesting. one thing is for sure, the nging onwill be havin everything that this man who is now our president says. vonnie: congratulations to those who hedge well. and use math. canadian stocks edging higher today, energy stocks gaining as well on speculation that president-elect donald trump and the united states will buoy candida's beleaguered oil industry. there is still some concern over his policies from trade to foreign relations. canadian prime minister justin trudeau pledging to work toward stronger ties with the trumpet administration saying --
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joining us now from toronto, bloomberg tv's mark bunting. correct what justin trudeau said today, the two sides have had a very good working relationship, even when they disagree on policy. but canada is so dependent on trade with united dates -- states. talksis already about a trade war over lumber. how concerned are people in the trudeau administration about how this may play out? question.'s a good the liberals and democrats in the u.s. have a long history together. ought thathave th the independents would have preferred to work with hillary clinton, but prime minister trudeau, who was not saying much in the run-up to the election, now came up with a statement and say there is no closer ally and
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partner and friend than the united states and is looking forward to working closely with mr. trump and congress on trade, investment, international peace and security, talking about the shared values which you alluded to between the two countries which goes back many years. talking about trade, listen to these numbers. the north american free trade agreement came into effect in 1989. since then, trade between the u.s. and canada has tripled. 73% of canada's exports go to the u.s. of the direct investment united states into canada is nearly $400 million. nearly $500 million going the other way. however, there is uncertainty. mr. trump is a bit of a wildcard. nobody knows what to expect. that could hurt business confidence, it could hurt business investment on both sides of the border. many are hoping that a lot of the rhetoric that came from mr. trump leading up to the election was just that and that he was
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just hoping to get elected. now that he is, he will be a and perhaps not follow through on some of these trade barriers that he has been talking about, such as ripping up nafta. vonnie: exactly. at some point, he will meet with justin trudeau, i'm sure, and will speak about it. what if he does rip up nafta? does canada have a plan b? mark: i miss the last part of the question. vonnie: does canada have a plan b, are there other countries that canada could look to for what it sends and gets from the united states? mark: that would be a long-term process. the country has been trying to branch out in terms of trade but still about three quarters of trade is with the united states. we have a free trade deal with korea, for example, souh korea, but that would be slow going.
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one area in which the two may but has right away is in terms of climate change strategy. president obama and prime minister trudeau met back in march in washington, and they agree to a program whereby methane emissions in the oil and gas sector would be reduced over time by 45%. mr. trump may not want to adhere to that. also, president-elect trump has said that he would like to see transcanada come back to the table with an application for the keystone pipeline. regulationsg to cut for oil and gas companies. one person at a think tank says, as far as energy, he thinks trump is a bit of a black box come you don't know what you are going to get right now. mike: we seem to find that on a lot of issues at the moment. mark bunting, thank you. it does not look like we will need to go very far to see how far trade will affect the u.s. vonnie: that is for sure.
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coming up, we will look at how a truck residency will affect the federal reserve -- trump presidency will affect the federal reserve and monetary policy. this is bloomberg. ♪
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mike: this is "bloomberg markets." i'm mike mckee. vonnie: i'm vonnie quinn. mike: the fed's path to raising interest rates does not look as smooth as it did. president-elect donald trump has plans to overturn international trade deals and build a wall on the u.s.-mexico border. market volatility could stay there and if this persists and conditions tighten. jeanna us now is smialek. if you are a betting woman, what are your eyes on a december rate increase? jeanna: it is an open question.
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it depends on what markets will do in the coming days. sustained sees a period of volatility, it will give them cause because they will not want to tighten at a time when financial conditions are already tightening because of market volatility. at the same time, they are seeing inflation buildup, so they will want to raise rates to do rather than later. i don't think the fact that donald trump one will diminish that in any way. mike: i know there has been a lot of talk about new regulations to rein in the fed, to make them use a rules set of interest rates, or to be audited. how concerned are fed officials about that now? we know historically, over the last couple of years, as the proposals have cropped up in congress time and again, fed officials have been very word about them. i remember a speech john morgan gave a couple of years ago that laid out the reason for that was a terrible idea. it really constrains the fed's ability to react to incoming
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data and incoming changes that might direct with each other in a way that the rule does not tell you they might. the fed definitely does not want a robust policy. there is concern that one could come from a trump presidency. that is because we have seen trump's economic advisers support rule-based policies in the past. theis yet to be seen if candidate followthrough but that will be top of mind. vonnie: what is the next thing on the federal reserve calendar, will we hear any fed speakers in the next week? several speakers in the next week. today we have neil cash carvey, we will get john williams. kashkari, we will get john williams. it will be a matter of listening to them and seeing what they are saying. something to keep in mind, they were probably not talk about politics, per se, because the
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fed prides itself on being a political. it's important to keep this image of a political because they don't want any sort of political meddling in their affairs. i think they view that as something that starts with them. it, economicsmile reporter from washington, d.c., thank you. kashkari begin right now. he sees a link between low rates and asset rates. vonnie: would you call them an outlier? mike: everybody is at the moment until we see where they come down. coming up in the next hour, we will speak to harold hamm, ceo of continental resources. he has been mentioned as a possible energy secretary. this is bloomberg. ♪
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scarlet: it is 2:00 p.m. in new york. matt: welcome to "bloomberg markets."
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we are live from bloomberg world headquarters in midtown manhattan, covering stories out of chicago, london and manila. ,resident-elect donald trump stocks are rallying on the news. the dayswe expect in and weeks ahead? what will president trump's energy policy look like? .e will ask harold hamm and trump's impact on business in general. eric cantor tells us why obama era regulations will be cut. julie hyman joins us with the latest. 12 -- 24en an amazing hours for markets. we are seeing stocks hover around the highs of the session.
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the amazing turnaround that we saw from the depths of the 107 point decline in the futures in the s&p overnight to now, 18 point game. you can use sbf on the bloomberg to check volume versus what we typically see at this time of day. it is about double the 20 day average. not only are we seeing this game today, it is the third straight session that the s&p 500 has risen for a three-day gain of more than 3%. the best three-day performance going back to june and the first 3-d again going back to late september. going back toain late september.
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asset managers, look at franklin resources and some of its competitors. ,nder a trump administration there is speculation that the will be a scrapping, compelling them to put clients interests and of their own when handling retirement investments. there is actually news that had nothing to do with the election today. i wanted to mention those movers as well. trip advisor is down by 17% today. the most in more than four years. the company said its rocky transition making money from hotel bookings to referral peaceful transition through 2017. coty shares down sharply as well. and gopro is doing a recall of its new karma drones.
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shares down by 5%. these are definitely below the radar today because of the election. a quick mention of the 10-year note. , the highestpoints since january. the 23 basis point climb in the 10 year was the most on record on a perception that the trump administration policies potentially will fan inflation. matt: let's get a check on the first word news this afternoon. president obama is promising a smooth transition between his administration and that of president-elect donald trump. president tried to put a positive spin on last night's results. >> regardless of whether your candidate won or lost, the sun
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will come up in the morning. that is one bit of prognosticating that actually came true. mark: the president invited mr. trump to the white house tomorrow. hillary clinton is urging her supporters to accept the results of last night's election. she do lizard -- she delivered her concession speech this morning in new york city. >> this not the outcome we wanted or worked so hard for. win this we did not election for the values we share and the vision we hold for our country. secretary clinton's that american democracy depends on the peaceful transition of power . penaan president enrique is congratulating the u.s. on its presidential election, though not directly the winner, donald trump. alarmed many -- the
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president sent a series of readinesseating his to work with mr. trump in favor of the bilateral relationship. more world leaders have sent their congratulations to the u.s. president-elect >> i'm looking forward to working with president-elect trump and i look forward to welcoming him to brussels next year. forward andhe way how we can strengthen the transatlantic bond in challenging times. trump rattled the military alliance by suggesting america will look at whether nato members have paid their fair share before deciding whether to come to their defense. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries.
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this is bloomberg. matt: president-elect donald trump's path to victory had markets headed for a rocky start overnight. things quickly changed this morning. the dollarnearly 1%, rallying, treasuries continue to plunge. ash alankar.n so many asset classes showing big moves down and up or up and down, depending. you think inflation break evens were the most interesting. ash: we believe the election outcome strengthened the most significant trends taking form. it's a trend which has been taking form over the past many months, namely inflation. matt: one of the best ways to -- the break evens is
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white line is the price and the yellow line is one-day moves. 1.86%, 13 basis point move. >> and very large move. the significance of the move is respond to only must inflation to maintain its credibility, but the real risk here, the fed wants to respond to it. dry in currently is left terms of the tools it can use to combat any negative shock that happens going forward. let's go back to the price action during the vote count and afterwards. we had this initial knee-jerk selloff and then a snapback. it felt like the reaction to
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brexit but compressed within an overnight spam. sh: i was surprised at how quickly the market process whether or not a trumpet three -- trump victory would be bullish or bearish for the economy. the turning point is what was he going to say during his acceptance speech? his acceptance speech was a brilliant acceptance speech where he mentioned fiscal stimulus. he mentioned we are going to spend to rebuild roads and infrastructure and hospitals. scarlet: is that why the trump residency will be inflationary? source of inflation has thengthened because with gop winning all three chambers, the probability of a fiscal package getting past is significantly higher. the cost of government has
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increased. whether or not you believe he's going to do these things, there is still a great deal of uncertainty in a donald trump presidency. he doesn't know the inner workings of government. the vix has come down. ,his doesn't capture the speech but you can see that the vix is a two-day chart has come down now substantially to 15.5. why does volatility come out? sh: if i were to tell you and someone anonymous told you the agenda going forward is reduced taxes,reduce corporate repatriation of foreign capital, deregulation of key industries, increased government spending, would you buy stocks or sell stocks?
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you would buy stocks. it's all program. ,nce you look at the agenda aside from the stands he's been up being a protectionist and imposing trade iteris -- trade tariffs come everything is progrowth. bill gross says growth is stunted, i don't think a trump victory will do much there. with that in the sense that every measure he is taking, one can question, is it progrowth? it's hard to argue against the fact that everything he said will backstop the economy, it reduces the risk of a tipping point. what has made the fed so cautious in increasing rates as they are worried if they are decrease rates, it will push into recession. slowdownwhat kind of
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or recession might we see if we don't get this fiscal stimulus? ash: that is the real tail risk the market is facing. if the fed has to increase because inflation expectations , you all of ang sudden bring to the picture the risk of stagflation. stagflationent that , the handholding by the fed is given to the u.s. treasury. the u.s. treasury is that backstop. spending,.s. treasury the probability of a recession fall significantly. i don't think there's ever been a case historically where the government has been spending and a recession has hit. matt: what do you do in the next weeks and months as the head of asset allocation?
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ash: we have been staying away from long bonds. if you need to source bond exposure, better to get that duration exposure holding short maturity bonds. the yield curve. in. steepen.eld curve will inflation is a permanent force. it has permits you to it, it is not as transient. assetst to hold real come inflation protected notes are a much better place to source duration. other sources of real assets are commodities. you see the real snapback in commodities. scarlet: what happens to all the cash sitting on the sidelines? ash: if you are holding cash and inflation is down the road, you want to spend it now versus spending later. it is a very good environment
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for more normal conditions to persist. the allocation of capital will be more efficient. the idea of propping up zombie mystery disappears. bloomberg terminal users will be watching their inflation breakeven's. , head of asset allocation for janus capital management. coming up, harold: hamm, a leading candidate for energy secretary. this is bloomberg. mcconnell says he spoke with the incoming senate democrat leader about working together. more on theh >.oomberg at live
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this is bloomberg. ♪
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matt: this is "bloomberg markets ." scarlet: the nation and world reacting today to donald's presidential win. eric cantor lost his seat back in 2014 and is now a co-vice chairman of -- telling whaty peter thiel said at the republican national convention. somehow, the press was taking everything donald trump said literally, not seriously. the voters were the opposite. they took everything he said seriously, not literally. that's what we can expect in terms of a president trump and
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working with congress. he will be about growth, tax soorm, regulatory reductions we get rid of this burdensome regulatory close on business so we can begin to see growth again. you caught a glance of this populism back in 2014. not a stranger to surprises and elections here. what you saw in my race was very againstut a push back what was going on in washington. this one clearly caught most people by surprise. my partner here at bloomberg predicted trump would win a month ago. the country now has an opportunity to come together. i think donald trump will prove to be a pragmatist. that paullot of plans ryan and others have laid out
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that i think we will see come to fruition. >> this experience matter in washington anymore? >> people matter everywhere. washington is a people town. the ability to work with others matters. political sensitivities, for sure. that is something donald trump ran on. we have to get back to what people are about in this country and we have to give them some optimism going forward. his campaign was much about tapping into the anger. whatwhat we need to say is is the execution to get that more optimistic growth oriented future. >> what will you be listening for here before he is inaugurated in january? >> everyone's reaction has been that he was really conciliatory and gracious in his acceptance speech.
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different from a lot of the vulgarity and negativity around the campaign. perhaps that bodes well for the future. granule off proposals is he talking about? will he talk about replacing obamacare? there was a lot of emphasis on that in my party. will he start with his infrastructure bid? how is he going to balance that with those who believe we have to watch the deficit as well? you've been thinking a lot about the future of the republican party. is this party going to split, how is it going to split here? are you seeing a cohesive republican party but one that has evolved into the shape it is in now with donald trump? >> the lessons i take is the fact that the party has not been addressing what has in really playing with summit people who
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have been left out -- i believe in pro free trade policies. donald trump says there is a downside. we need to go in and help folks. i hope that's where things evolve so that everyone in america can be lifted up. >> you have donald trump saying he will push forward on infrastructure spending -- yet members of the public and party who are proponents of fiscal discipline. --in terms of cost savings those are the kinds of things that must be coupled with tax reform in order to bring about an infrastructure package. there's a lot on the line here for the first 100 days, for sure. the democratic party is not going to lay down and go away. they have elizabeth warren and bernie sanders, who i believe will be the new leaders of their
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party. that does not bode well for the program does pro growth oriented democrats. you are in the financial services sector now. what does this mean for deals? does that market change now? >> anybody in the regulated ,ndustries, for pharmaceuticals the energy industry, they are listening to what trump has said. that he will put a moratorium on regulation. and also asked for a total overhaul of regulations in washington. he's said for every new regulation, there has to be to that go away. that speaks well for investors, for deals, for people looking to grow. new era wherea growth will be a priority.
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we will have to see what happens. i hope that what we see is an environment in which investors and lenders will take respirator -- will take risk. elizabeth warren focuses on financial services -- watch what the trump cabinet picks and watch what his agency picks. that was eric cantor. matt: coming up, what will president trump's energy policy look like? we will ask harold hamm, who is seen as a leading candidate for energy secretary. this is bloomberg. ♪
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matt: time for our bloomberg business flash.
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falling demand is leading general motors to lay off more than 2000 workers at assembly plants in ohio and michigan. the cuts take effect in january. the automaker is also suspending third shifts at factories in ohio and lansing, michigan. invest $900rs will million at three other factories. coca-cola and pepsi both lost at the ballot box yesterday. they are facing new soda taxes -- new proposals are set to become law in california and colorado. finance records show michael than 18g gave more million dollars to campaigns in support of the oakland and san francisco initiatives. bloomberg is of course the founder of bloomberg lp. mexico's wealthiest person lost $5.1 million after donald
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trump's stunning upset over hillary clinton in the presidential race. the 10 mexican billionaires on lost a combined $6 million in trading. scarlet: coming up, harold hamm is our guest. he will tell us what the energynt-elect's policy will start to look like. this is bloomberg. ♪ seeing is believing, and that's why
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there's more in store than you imagine. visit an xfinity store today and see for yourself. xfinity, the future of awesome. speed always wins. especially in my business. with slow internet from the phone company, you can't keep up. you're stuck, watching spinning wheels and progress bars until someone else scoops your story. switch to comcast business. with high-speed internet up to 10 gigabits per second. you wouldn't pick a slow race car. then why settle for slow internet? comcast business. built for speed. built for business. matt: from bloomberg world headquarters in new york, this is "bloomberg markets." scarlet: markets and analysts
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are dissecting what we know of the president-elect's policy to gain clarity. we know mr. trump wants to expand domestic gas, oil production. wants to lift drilling restrictions. in iran, he hopes to renegotiate the nuclear agreement. he also wants to withdraw from -- many haveord accredited continental resources ceo harold hamm with assisting mr. trump on his energy plan. i know you worked very hard with mr. trump over the last two years on this. congratulations on your part in that win as well. we need to know who will be forming his cabinet. will you be the next u.s. energy secretary? harold: i have a full-time job at continental.
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flattered that they would think that. it is a very responsible, important position. a lot of people can fill that that know a lot about energy as well. i hope i've been helpful with mr. trump. he knows a lot about energy now. alix: would you consider it? the confirmation process is pretty tough. harold: it's all speculative. i have a full job at continental. runningour hands full the company and we've done very well. coming out of this, looking good. what i wanted to get the idea is, do you see that his
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cabinet will be more people who have knowledge in the industry who've done the work? you've been in the shale industry since you were a kid, basically. or, will it be more of the thought thinkers? harold: mr. trump has expressed that he will have the best of the best, the people out there getting it done. that's who we can expect in his cabinet. the people he has great confidence in. that's who you will see. what qualities would you look for? harold: there's a lot of people with a lot of experience that know the sector very well. we saw the leadership council in together over 10 sectors technology and energy and everything else. the best of the best. certainly, those leaders within
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their fields. last week talk committee said you guys had not had the conversation. now, it feels like there has to be a scramble, there has to be the transition team. do you feel that coming on? harold: there is a transition team. he will not be caught offguard. the transition team is working, but you have not had the conversation -- harold: everything has been awfully busy. guy is the hardest working that nobody expected -- alix: you worked with him on his energy policy.
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has hend of reassurances given you? harold: putting the right people in the right places and making those things occur. this is pretty easy. can get some regulations off of business and let them go back to work -- i don't care if it is manufacturing, you have to tell that business to do what it does best. the same thing reagan did. lower taxes and deregulate. policies of the energy , lifting restrictions on the energy industry to boost output by $100 billion a year. producer demand for that kind of land? harold: sure.
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there are prospects on federal lands and people have development plans and things like that. you cannot work if they are not going to give you a permit for three years. efforts,uplication federal regulators and state regulators overlapping. agency or the other, state regulators can do the job just fine. get rid of that duplication, let's go back to work. we need to move back about 10 years ago when permeating did not take two to three years. part of the issue has been a tremendous amount of shell , so we've had in the world much has come online here in the u.s., we are still one million barrels off a day from record production but fairly high.
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why do we need the land drilled to get the oil? harold: we still have demand at 1.3 million barrels of new demand per year. we will need that going forward. a lot of that is going to come from america. we don't need to be as dependent as we've been on the middle east. and embroiled in every disturbance over there. we will save american lives. alix: we aren't using all the oil we make now. will we be in a position where too much oil comes on and prices go down again? harold: the cycle ended the second quarter, just like we had predicted, supply and demand bounced, came into balance. or 11 weeks,10 we've been almost consistently week to week pulling from inventory. inventory has gone down.
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you will have that with refinery shutdowns -- it depends on how much oil is imported come all those things. overall, we need more oil. in order to bring about this agreement that is imminent that they have agreed much shouldogether see the final workings of that this month. they forced prices down to get everybody back in line. they weren't going to cut they added a million barrels while we cut a million barrels here. they drove the price down. the other rhetoric in the market has been emerging-market
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weakness on a trump presidency will wind up hurting commodity demand. how do you see that pass through? alixharold: all commodities folw the same -- if one is down, they are all down. markets, when china is down or europe is off, that affects the world. usually, they find a bottom and start building back. it affects demand. everybody thought demand would --off this year alix: if you get a trade war with china or mexico, that might have an impact on demand. harold: trade is important. you don't have to give the farm away to trade. we've seen american jobs go to mexico. i was talking to a friend of
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-- i asked, how's it going down there? we have a carbon and factoring down here and everyone's doing well. where did that come from? it came from the u.s. alix: you will want to export your oil. you will want to have favorable trade relationships with commodity heavy countries. to death were able lifted a 40 year ban on crude oil exports last year. that should not have been in place. to lift a 40le year ban on crude oil exports last year. alix: does mr. trump open to --ter trade deals than harold: absolutely. -- he isr trade
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for fair trade. alix: you're looking at corporate taxes being cut. you going to change your business plan over the next 12 months because donald trump will be the way highest that's white house this will be in the white house -- because donald trump will be in the white house? harold: he's not trying to put us out of business. the other administration was. donald trump is pro-business and he is pro-america. he wants to see companies grow and do well and create jobs. and bring consumer prices down for the american people. that makes me feel a lot better.
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i'm not worried about someone telling me and going about putting me out of business by passing all these regulations that we call that by 1000 cuts. -- death by 1000 cuts. alix: record u.s. oil production -- what specifically is so hamstrung for your business when it seems like your business is doing really well? harold: we've grown our business but the last few years has not been the growth cycle that anyone would want to see in this country. you had not seen 3% gdp. you talk about bumping along the bottom. this economy has done that. for eight years. could we have done much better? absolutely.
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there have been more regulations passed in this administration the last year then there was all during the bush administration. alix: i will ask you, you've been at continental for decades. have you laid any secession plans? harold: absolutely, we have a secession plan at continental. yes, i've been around a long time. next year, we celebrate 50 years. since 1967 when it was incorporated. you feel like continental would be the same continental under different leadership? harold: everyone has to prepare their company for the day they step out. we have a lot of great people at continental. alix: i appreciate your time today.
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thank you very much. alix steel talking with harold hamm. scarlet: coming up, the transition of power begins for america. what donald trump's next moves will be. this is bloomberg. ♪
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matt: eric a has voted. donald trump will be the 45th president of the united states of america. -- america has voted. the transition of power begins and many are asking questions as to just what kind of president trump will be. in this, i want to bring john heilemann and mark halperin. i know you've been up all night
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long covering this. what was the biggest surprise beyond the horse race win? what was your biggest surprise from last night? that theond the fact victory itself was just the scope of it. hillary clinton is almost certain to be ahead in the popular vote. he won every single battleground won the bluen states that have not been in play for a long time like wisconsin. he is almost certain to win michigan and pennsylvania. that is not a narrow victory. it is not a landslide, but a decisive victory. matt: he did this in spite of
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the gop establishment. now that he is the president-elect, can we presume that he will water down his proposals or they will bend to his way? mark: he's based with a situation where it's all republican control. i think mike pence will be key. he's one of the most experienced washington hands. you will see an attempt to harness of the white house to the congressional wing of the party and try to pass some things in a hurry that will be than any of the kinds of things trump floated as a candidate. matt: the surprise of risk assets this morning -- everyone had been hiding in safe havens and selling futures and that reversed completely.
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why is the market all of a sudden so sanguine about donald trump at the helm of the american economy? john: markets are resilient and adaptive and networking nice -- and the recognize this is the president-elect, get used to it. i don't think his speech last night could have been a more calming speech. about trying to make things work in a way that people felt comfortable with. using lots of members of the establishment reach out and be welcoming of trump. president obama, hillary ryan.n, the bush's, paul markets see that and say maybe he will be a more normal president. was america not ready for a female president or just not ready for this female president? john: maybe a little of both.
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there is no doubt that hillary this was not like the donald trump went out and found this new swath of voters. what killed hillary clinton was her inability to perform anywhere near the level of in 2008 and an 2012. you look at the way white, college-educated voters who told pollsters or months -- four months that they would vote for hillary clinton, she ended up losing that segment by 12 points. there are a lot of factors that could be in play there. a lot of women think there could be some degree of misogyny --
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mark: 24 hours ago, we all thought what hillary clinton she thought it was inevitable. it is stunning how in an instant, she is basically -- unless she finds some extra very resurrection, she is now irrelevant. she may do good work for the foundation. she goes from being president of united states to having no formal or even serious informal is within her party. -- place within her party. she thought she was inevitable in 2008. she thought this nomination would be easy and she fought for her life with bernie sanders. trump,ld not be donald got beaten by him thoroughly.
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matt: who takes over the reins of the democratic party? elizabeth warren? mark: chuck schumer will be influential. it is up for grabs. as of the dominance of the clintons and barack obama, they don't have the deepest bench. there's a lot of populist energy on the left. bernie sanders will have a big voice. matt: looking forward to the show tonight. and markemann halperin. it is time to buy on this weakness, according to our next guest. this is bloomberg. ♪
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julie: time for today's options insight. joining me now is scott bauer from trading advantage.
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great to talk to you today. we've got the vix down today by -- theentage points biggest one-day drop since the post-brexit bounce. what do you think here? where will we find equilibrium? scott: it is a dramatic move. the expectation was banks would drop. , even with trump win the market down, we were still looking at volatility being down. but not this much. this is a contraction way too quickly. we still got some real big headwinds coming up in the next few weeks, especially going into early december with the next potential rate increase. six months from now, this is the norm, the 14-15 range. over the next four weeks, i have to think we trend higher.
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this is way too quick of a contraction. julie: would you be a buyer of volatility, then? >> absolutely. this snapback right here, i would love to buy some volatility going out to the first, second week in december. julie: united health pulling back today. a lot of turmoil in health care, a lot of questions about what a trump residency is going to mean. -- presidency is going to mean. : with everything that's happening with the aca, some of the health insurers are all over the board. unh is one of them. it was down three dollars a while ago. like in the short run here, taking an upside play here. there was way too much of a reaction last night. i'm looking to buy the five
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dollar small trend going out to december expiration. about a littleor more than a dollar now because the stock has rallied back. a dollar, do that for dollar $.25 or so, the overreaction last night, especially unh, there is real opportunity there. julie: we will be watching that and all the other health-care shares. that is scott bauer. we will be right back with more "bloomberg markets." including our interview with sir martin sorrell. ♪
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matt: i am matt miller. scarlet: i am scarlet fu.
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welcome to "bloomberg markets." ♪ fromet: we are alive bloomberg world headquarters in new york for the next hour. plus, covering stories from mexico city, london, and tokyo. u.s. stocks are rallying as investors digest the surprise outcome of the election. plunging on speculation donald trump and the gop controlled congress will be good for business. promised to up and global trade, threatening to withdraw from nafta and block ttp. what heask carlos thinks about the plan. saying the u.s. election outcome is effectively a second brexit. how does the leader manage his company in these uncertain times? we are one hour from the close of trading. julie hyman is here. we have rallied and held onto the gains. highs of the the
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session. a three-day gain now for the major average. sincet we have seen september and the largest over three days that we have seen since june. we should offer a caveat. do not judge a whole trump tenure by today's action. the action following election day does not necessarily predict how stocks will perform during administration. that is something we have learned over the past several different presidential cycles. under thek through , deep declines within the major averages. utility and real estate notably falling back by 3% and 2%. a big increase in longer dated on deals. increases and financials as we see the yield curve widening.
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industrials come a lot of speculation about infrastructure spending. the s&p industrial index is at a record high. journey, here are the s&p futures. as 107 on as much overnight, now up 24 for the s&p futures as investors try to figure out what exactly a trump presidency means. to put the movement in context, you can take a look at the spread between the low and the high. here is the swing we have seen today. larger than the futures we saw following the u.k. vote to exit the eu of the 10 year swing in today's session, once the 10 year yield was up as much as 23 basis points, which would have been a record move here, definitely the swing in the 10 year treasury is also known.
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atk at where it is trading the moment. we are seeing a substantial gain , up 21 basis points. this is a reflection, speculation, that we have seen more stimulus, more spending tax , of course with a republican congress cooperating as well. blush this is all first reaction as people try to suss out what will happen. we do not know all of the plans yet and we will not know more until trump actually takes office in january. we have breaking news on markets. the reserve ba cutting interest rates to 1.75%. it is cutting a key interest rate from 2%. policy is strong enough for target inflation. matt, you have got the chart. matt: although it still has not
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come back from losses, it is making -- it is only a slight move. i pulled up the currency here on bloomberg and i looking at expanded majors. you can see the new zealand notar is one of the movers, as much of a move as we see in the pound and not nearly as much a move as you see in the peso and the south african rand. scarlet: up almost 8%, it certainly has its share of strength so far this year. on theet's check headlines. we go to mark crumpton in the newsroom. paul ryan and donald trump had their differences on the campaign trail but the speaker struck a tone of admiration today when discussing mr. trump's stunning general election victory. he said the win was the most incredible political feet of his lifetime and he thanks the president elect for keeping the house in republican hands.
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paul ryan: our house majority is bigger than expected. than anyonestates expected. that is thanks to donald trump here he provided the coattails that got a lot of people over the finish line so we could maintain ourtrong senate majorities. we now have important work to do. speaker ryan said the president-elect had earned a mandate to enact his agenda. around the world, congratulating mr. trump today. among them is the british prime minister theresa may. >> i congratulate donald trump being elected. the united states and britain will remain strong and close partners. we have a long-standing and enduring special relationship built on our share values of freedom and democracy and enterprise. vladimir putin also sent his congratulations and says he
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hopes the u.s. and russia can have better relations. staying with yesterday's's election, seven states passed measures that legalized marijuana inside. california, massachusetts, nevada, approved recreational use of pot. north dakota and arkansas, medical marijuana, while montana loosened restrictions on medical marijuana law. several people were killed and more than 50 injured when a tram -- rainstorm in south london. the train tipped over on its side. police arrested the 42-year-old driver on suspicion of manslaughter. news 24 hours a day powered by more than 2600 journalists and anysts in over 120 countries. this is bloomberg. matt: we have breaking news. crash trader set to
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plead guilty in chicago. millionwith making $40 that prosecutors claimed set off the flash crash. if you recall, this guy was found essentially in his parent's basement in london suburb. prosecutors allege he is responsible. scarlet: back to the dominant story of the day. donald trump's victory and the impact on financial markets. joining us now is brian, chief investment strategist. you look at what is happening now, we have an initial selloff from risky assets and a move from safe havens. are you in there making moves? are you waiting for the dust to settle more? >> if you saw what was happening at midnight last night and he
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saw the market, you would have been very unhappy when you woke up. advice has been to hold tight. political elections and political realignments do not tend to be huge catalyst for financial market change. there will be a lot more between now and the end of the year. we will find out how the administration will take shape. we'll find out about global central banks and what the plans will be. totality of the agenda heading into next year. matt: if you saw the dow futures down it hundred points at 1:00 in the morning, would you not have pressed thebuy button? >> we do not know the market will open down further than 5%. it turned out not to be case. the mexican peso had to rally back. i heard earlier, agreeing with the speech he -- trump gave, the just theory nature
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fact that the race was called at all was a little bit of a relief for the markets here the idea that we could go into today or tomorrow with multiple states in the recount that could tip the ballots. the market did not react too kindly to that. the fact that we did not get clarity at all may have helped a bit. >> more than $50 trillion of cash holding that have yet to be the assets. the uncertainty of who will be in the office in the next four years -- >> we have been proponents of owning a little more stock than normal versus bonds especially internationally with bonds having sold off and interest rates higher and slightly less compelling parity look inside the market and say, what are some sectors that have not benefited this year that could potentially be added in going
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forward. consumer stocks, especially if you see the stimulus bill, that could be good for the consumer. technology is another we like to higher levels of growth perhaps on account of increased spending. do you look at certain areas like infrastructure, big machine makers? >> absolutely. that was a scenario not priced and until today. we see the bond markets with interest rates going higher. the idea that you will have a large budget deficit next year, it could be tax cuts or infrastructure built, companies that could benefit just from higher levels of business investment and business spending, industrials would be one sector that comes to mind. muchet: we do not know about the president-elect's monetary policy agenda. do we assume janet yellen will
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not stay through the end of her term? >> he certainly has things to say about the federal reserve both good and bad. there are times where he said there should be raising interest rates. it seems like when her term expires, he would appoint someone else and possible they would ask her to stay on. it is not normal for the federal reserve chair to tender resignation early. we still see the probability of a hike at 82%. assuming we do not see financial then, isetween now and that a lock for a hike? >> this is a roller coaster and and an backup basically to yesterday. the riskets could make of a fed hike even greater than it was before. not something i would have said yesterday.
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if donald trump were elected yesterday, but look how much steeper the yield curve is. it could be because of the spending package. more comfortable tightening monetary policy, fiscal policy will be sooner rather than later. thanks to brian, chief investment strategist. global asset management. coming up, donald trump's surprise victory is assessed -- basically a brexit. we will ask what that means. ♪
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scarlet: this is "bloomberg markets." what could be a first
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test of global interest, $23 billion 10 year treasury today saw the lowest demand since march of 2009. the seven-year low comes with increasing investor concerns over trump's foreign policy agenda and worries that his plans to ramp up spending -- inflation, the u.s. plans to sell $15 of ions tomorrow. trump's campaign trail resistant to at&t and time warner merger, it could be a precursor in broad intervention of megamergers. and may derail the largest deal announced globally this year. a poison tolled it democracy. and christianity and aldo have extended their long-term sponsorship deal. the star has had a contract with nike since 2003. for life even
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though terms are not released. a three-time world player of the year, captain of the porky cheese -- portuguese team. that is your business flash. we will beming up, joined and talk about the recent election outcome and how it compares to a second brexit. this is bloomberg. ♪
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scarlet: how will donald trump's election impact the business investment in the short-term and long-term? gianto of the advertising joins us from washington. the temptation to like in this election outcome to a second brexit, having gone through likes and seeing some of the damage done, from questioning pulling outcomes to questioning
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the wisdom of the media elite, how does this prepare companies how they talkin to the public? there is a new suspicion now in terms of what you hear and what you read in the news. immediate to the impact has increased levels of uncertainty, not just in the u.s., but around the world. i am not sure. figure it allt to out. we do not know the specifics of any trump administration policy in the u.s. argument that we will see lower tax rates, maintenance of lower interest rates, for some time. infrastructure spending. maybe bringing back earnings from abroad and reinvesting them. to make good on a promise to be at 5%. butably not of the qe type,
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more of the infrastructure type. domestically, in the medium-term, it might be positive. we have to wait to see the details of who will do it. i think it was kissinger who said you need four or five good people, men and women to run the u.s. depends on who the others are. will it be reaganesque in terms of people? we have other issues, the issue of immigration and free trade, counterterrorism. .nd america's role as policeman row politics and disputes, that will leave a vacuum. will that be filled by china and russia, whoever. a lot of uncertainty there. economies like
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india and indonesia, they may not be quite so bad as people think. some of the emerging-market reactions would be better. , maybe india,azil china itself, and even russia. certainly, president putin welcomes a potential president trump with enthusiasm. in your garden optimism for the short-term effects of this -- , but maybepessimism guarded optimism on what may happen in the u.s. economy in the medium-term. matt: i was in london over the brexit vote. immediately on the friday after, you saw the ftse drop more than 3% and the pound dropped about 10%. .ields were down 20%
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here we have the s&p and the dow rallying i'm more than 1%. the dollar index rallying, bond yields -- >> the dow average rising to a record high. matt: people are buying risk assets and shunning safe havens. why? >> we saw because of the middle-of-the-road statement, bringing together the factions trying to bring people together. people were guessing what it might be, more accurately. we have to wait and see what happens. maybe it will not be in a u.s. context quite as bad as some in thethink, medium-term. in the short-term, the immediate impact many companies today will
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uncertainty, the enemy of growth and the enemy of decision-making. that is not good. 26 membership -- member states more cautious. will the french german italian referendum that is coming up will that make populist voters more enthusiastic or less enthusiastic? will negotiations become more difficult? a lot of imponderables. a lot of times when a ceo is faced with uncertainty and cost cuts, advertising -- clearly when uncertainty is increase, not just investment in advertising or branding, but it goes down that. it goes to all decision-making.
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there is a tendency to hesitate and postpone. people will do a key at what they will do in 2017 and beyond. this is an element of uncertainty. you have to wait and see what happens. thehave to see who administration will be. i remember when president reagan was elected. a lot of uncertainty. he did pick some very good people to run the country. we may be faced with the exact same situation again. there will be increased uncertainty. but one thing we are more certain of is donald trump relied heavily on the use of twitter. i am curious to get your point of view. he used social media and he's -- he exploited it.
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>> we invest about 75 billion dollars around the world. what is the biggest investment we make? where? it is google. what is the third largest investment they make? facebook. 75% or so of digital investment is made with google or facebook. electione saying the demonstrates the power of social media or the power of online media, deja vu. you is thetelling effectiveness of an overall approach, whether that be a mixture of traditional media or new media, further development , programmatic for us and the u.s. is running at $2 billion which we just recently acquired hear it i think the u.s. is probably around $16
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billion. it is a little murky and uncertain. .rogrammatic google will account for 5.7 billion dollars. this year on facebook, about $1.7. up by 70%. is a bit sensational to talk about the rise of social media. we have doubled the investment to $40 million in the last few years. scarlet: we have got to leave it there. thank you so much. ahead, the former commerce secretary weighs in on donald trump's trade policy. his favorite city is mexico city. this is bloomberg. ♪
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mark: president obama is promising a smooth transition between his administration and that of president-elect donald trump.
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today at the white house, the president trying to put a positive spin on tuesday night's results p or obama: regardless whether your candidate won or lost, the sun will come up in the morning. -- bit ofe big prognosticating that actually came true. invitede president has mr. trump to the white house tomorrow. hillary clinton has excepted the results. she gave a concession speech today in new york city. theclinton: this is not outcome we wanted or that we worked so hard for. and i'm sorry that we did not n this election for the values we share and the vision we hold for our country. secretary clinton also -- tomerican democracy heal a divided nation. history trump is about one week away


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