tv Bloomberg Daybreak Americas Bloomberg November 28, 2016 7:00am-10:01am EST
i'm david westin. and alec still are both off today, but julie hyman will get us started with the markets. seeing recent trends postelection. we are seeing a selloff in stocks this morning. the doubt and s&p futures each down about a third of 1%. the dax off by almost .9%. a process -- we are watching weakness in the japanese yen -- i should say weakness in the dollar versus the japanese yen. a little bit of strength in europe. crude oil has been all over the place on each headline that comes out from this impending opec meeting. to 45.69 it is down per barrel. the 10-year yield is up about three basis points this morning. david: we are going to start
with oil. opec ministers are trying to salvage an agreement on production cuts as saudi officials are conceding they may not get a deal at wednesday's meeting in vienna. crude now falling below $46 a barrel. francois fillon clinched the french republican nomination in a landslide victory. everyone agrees that they spent less money and more time online. 20% overe sales are up last year. that is what you need to know at this hour. julie? julie: a editor for energy and commodities joins us. , there have been these bouncing headlines around on not only the opec numbers themselves , but also on russia. what is the latest in terms of
progress here? >> there are a couple of things going on today. and venezuelan oil ministers are flying to moscow, where they will attempt to persuade the russian government that they should also join in this deal as the largest producer outside opec and cut action. so for the russians have only offered to cap entries production. the most important intervention we have had in the last couple of days is the saudi oil minister, who said, it may be that we do not even need a deal. it may be that the market can do the job for us, which is clearly his way of signaling to people, you have to play a part of this agreement. saudi arabia will not do all the work on its own. and we may be willing to walk. julie: what about iran as well? that has been one of the other obstacles to this deal getting done, that iran and iraq have been reluctant to cut production because they are still ramping it up.
is exactly right. the iranian point of view is that their production had been held back for years by international sanctions, and now the sanctions have been lifted and they should be able to continue using adam moore natural level -- they should be able to continue producing adam moore natural level than 400 thousand barrels a day. the conflict against isis, we need to get all the money we can get so that we do not need to cut, too. telling this out is that we do not what it -- that we want to deal. you have russia, a major player here. as a practical matter, can you production that cuts for the opec nations and only a freeze for the non-opec nations? will: saudi arabia is reluctant to see that. ramp upas continued to
production to more than 11 million barrels a day. the saudi condition -- the saudi position is that if we are going to take $100,000 out of the market, there may be a fudge. it is a real situation for the saudi arabians as well. julie: thank you. will kennedy, coming to us from london. david: more now on special coverage with our focus on energy. that's go to willem buiter. welcome back to the program. where yousense of think this deal is headed. is this off the rails or part of the normal negotiating process? deals of this nature have been hard to come by. it is not just the usual suspects that are disagreeing. within opec, the saudis, iraq, and a radians come -- and a radians, and russia.
-- and iranians, and russia. there will be a boost in u.s. production. a is very hard to see successful and enduring outcome of this kind of freeze or cut, whatever they are trying to achieve. julie: even if you do have a freeze or a cut, or whatever it is they come up with, will we see low oil prices, low enough to remain stimuluses to the global economy? willem: it depends on what causes them. if it is a boost to supply, it will be stimulus. if there is big demand, it will be a reflection of weakness. if the u.s. starts producing in 2017,ntly more 2018, you will see weak oil presses. -- you will see
weak oil prices. how much of this is political, and how much of it is economic? respect to u.s. production, how big a factor is donald trump now, who says let's drill more and have more fossil fuels? it makes a huge difference. if the president goes easier on and othertal details controls that have limits to production and fracking and mining, oil production will be boosted. that should be reflected in prices, especially in 2018. julie: when you are looking at the energy landscape, whether it be the shale production in the u.s. or opec and you are trying to way that with the other
economic factors around the globe, how important is the price of energy at this point in terms of your calculus of economic growth? it is not my major concern. i am much more concerned that piece reigns in the international trading fields and fiscal get the kind of boost in this country that markets seem to have internalized. works, then the price of sourcesother energy will of course be lifted alongside economic activity. restriction of a highly successful opec round would be damaging to productivity because it would be negative supply shock. to return the
truck trade? willem: i do not think so. we have to wait to see what withlly transpires infrastructure spending off the composition of it, and of course the tax cuts, corporate and personal. the markets are assuming the best. buiter will stay with us. let's get an update on the business world with emma chandra. emma: president-elect donald ofmp claims that millions people voted illegally in the election but is not offering evidence to the claim. he said he would have won the popular vote if millions of illegal votes had been excluded. he also said the media was not voter fraud inus california, virginia, and new
hampshire. bead trump inn the popular vote by more than 2 million votes. francois fillon has wrapped up a surprise victory in the french presidential primaries. he beat alain juppe. vote. 67% of the he is promising economic reforms and a smaller government here it --and a smaller government. a group of british lawmakers is demanding an agreement with the -- europeans living in the u.k. would be included. , -- message to donald tusk the brexit negotiators for the e.u. have said talks cannot start on any aspect of brexit until the u.k. begins the formal exiting process. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries, i am emma
chandra. this is bloomberg. julie? julie: looking at some early movers, we are coming off a big holiday shopping weekend. today is still called cyber monday. looking at the online shopping site amazon and ebay, we have a mixed trade. we have amazon trading half a percent lower, ebay almost 1%. digital sales thursday and rose by 18%. it seems the overall theme of shopper traffic is that traffic was up, but the average spending was down. rose by 18%. we are also watching u.s. banks. they were downgraded at jefferies, specifically citigroup and wells fargo. the price target on citigroup goes up $63 a share. wells fargo is unchanged at the moment. the analysts are citing a rise in valuation.
the banking index up by 16% on the close on the day before the election. "the financial times" says that up to eight italian banks risk failing. we will talk much more about that. we see monte dei paschi down 1.55%. coming up, francois fillon wins in france with big promises for change, as italy prepares for a vote on constitutional reform. how big are the political risk in europe? and later, the greenback turns red. the dollar comes off decade highs. will gdp or jobs for some markets to rethink positioning? this is bloomberg. ♪
is thefrancois fillon french republican party candidate for the 2017 french election. he defeated alain juppe. he pledges tax cuts and major labor reforms, uniting the french right while the beleaguered socialist party remains split. for more, our guest joins us now from paris. caroline,en you -- when you talk about the primary, how did he manage to close the gap with alain juppe? >> as we have seen with brexit and donald trump, we should not all the time believe the opinion
polls. three weeks ago, alain juppe was clearly the front runner. francois fillon managed to dominate the last few televised debates, so clearly an impressive victory. francois fillon was considered the fourth man in this primary. does this now mean for the presidential election? it does not work like it does in the united states, where you have a primary and then the general election. it is sort of a three-stage situation. caroline: that's right. in france we have what is called -- according to the opinion polls, if you believe the opinion polls, francois fillon to defeat chance marine le pen next year in the presidential elections. and the interesting thing is that the victory of the more
conservative, more radical right wing francois fillon, downgrades the chances of marine le pen being elected. we had an opinion poll yesterday after the victory of francois fillon, and this shows that he would beat marine le pen in the 30% that withith and only 8% for francoise aland. -- for francois hollande. and in this situation, francois fillon would win by 71%, according to the poll. all right, caroline connan from paris. on thefor more now political shift in europe,
willem buiter is the chief economist. does the nomination of francois fillon reduce political risk in france? theem: it seems to reduce chances that marine le pen will be the next french president. , ais a social conservative reformer, the kind that france has not seen since napoleon, probably. definitely, if the socialists come up with a candidate that is independent, an then the odds that we will not have marine le pen as president are much improved. david: i suppose when it comes to the markets, one of the questions is, how solid is the european union overall? that brings us to italy with a referendum on sunday. how big a threat is that potentially pose, for example,
to the euro? obviously the european union is not that solid. the u.k. just walked out. there is a material risk. if as the polls indicated -- of course, the polls do not seem to be worth the paper they are printed on -- the referendum will be lost, which means the -- there is the material risk that the anti-euro five-star movement would take over the government. in which case there could be a referendum on its hellion membership -- on italian membership. this is a country -- this is the euro versus sovereign debt outstanding, with the eighth largest economy in the world. this is extremely serious. julie: how high do you think the risk is at this point? willem: it is hard to quantify
that. it is not my central scenario, but it is a material risk. it means the upper house is basically turning into the house of lords. there are checks and balances in italy that are much diminished. which is fine. there can be reform with the right kind of prime minister. but it is not so good if you have a radical populist alternative. david: we are starting to see this reflected in the markets. you look at the italian bank stocks today. they really got hammered, and it is largely because of the referendum, right? willem: it is clear that renzi is pushing the so-called markets with a solution with no loss provision for the italian banks. if this referendum fails, then
we may have to go the hard route of recapitalization. that would not go down well politically in italy, and it would spook the rest of the european banking sector. we are going to keep talking because, as we have been talking about, the political risk is not just limited to europe. the dollar is down as this three-week rally peters out. will job numbers make or break that run? and we will talk about all things energy and commodities with francisco blanche. this is bloomberg. ♪
donald trump victory. dollar -- this as the dollar edges lower for the second day. the session is now little changed. willem buiter is citibank's chief economist. ' chiefitigroup economist. he is still with us. we are getting a fiscal stimulus for the first time in years. so long yields rise, the currency strengthens. that is normal. how much depends on when, and how large the stimulus is going to be. we do not know. the market is very optimistic. there will probably be some payback, that we will not go back to a flat yield curve, roughly at zero that we have seen too long in too many advanced economies. how much is it going to
cost and how much are we going to pay for it? should be that markets do not look more than two years ahead. thatthe kind of numbers the candidates have been uttering, it only makes sense in terms of not having explosive debt increase if you have a massive response of output flows. if you are realistic about supply-side benefits and all the fiscal measures, you are going to have a major increase in debt, at a price to pay two to three years from now. the debt is the new millennial as far as the markets are concerned. immediately, the ability to get a fiscal package through congress -- and a lot of republicans are maybe reluctant to go along. is it possible the markets are overreacting? willem: it is possible. markets are difficult to predict. and the cheap party rise of conservatives, they like
tax cuts. doubt there will be a huge from getting a discounted package through. the package gets through, as you say, one these of it -- we are not talking about the effect of it being felt for quite some time. effects of infrastructure spending, they will be 2018 mostly. the tax cuts, and a lot of them, will benefit entities and corporates and richer households that have more to spend. the impact on aggregate demand may be less than people currently anticipate, yes. david: coming back to trade, you mentioned earlier you are concerned about that. what is the likelihood of a trade war, and how destructive with that look? willem: it is a huge negative -sum game.
everybody loses, particularly sectors they get sheltered. it is going to hit the u.s. workers throughout the economy and globally. obvious,h an unnecessary loss for everybody, but the risks are there. citi: willem buiter, chief economist, is still with us. and after black friday underwhelmed, will retailers get the balance they are hoping for today online? this is bloomberg. ♪ ways wins.
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yet a deal. below $46 a barrel. we have a winner, francois presidentialed the primary in france against his challenger. everyone agrees they spent less money but they spent more time online. 20% overe sales are up the last year. julie: taking a look at what we're seeing in stocks. a selloff reversing the record highs we saw for the dow, the s&p, the nasdaq last week. the ftse and the dax are lower after the reversal of some of the recent dying we have been seeing. -- buying we have been seeing. the euro is little changed versus the dollar. the dollar falling against the japanese yen. crude oil falling on headlines
of the opec meeting later in the week. we are seeing a decrease in yields, increase in price this morning. david: those tricky bonds. julie: they changed the way they were showing them. david: holiday shopping has officially begun with black friday leading into cyber monday. how much will the american consumer is stepping up this year and what will it mean for the u.s. economy? we are joined now by shelly banjo, who writes for bloomberg gadfly. welcome. let's start with you lindsay. what do we know? >> people went out to the stores, at least that is what the 11 eric reports say. traffic was down a little bit on black friday. it was up a little bit on thanksgiving. spending was huge online. prices are down.
people are savvy. i can check my prices online and get the best deal. they are not necessarily interested in going to stores and getting trampled or waiting in line in the gulf. david: you mentioned prices, discounting. how rampant is this now? >> it is even worse this year. people spent less overall. they still went out and spent less. that had to do with discounting. david: what will that do to margins? >> margins are never a good thing for retailers in the fourth quarter. the smart ones planned for it. a lot of them set these discounts were planned. it was not like i was going to react to this other retailer that was suddenly dropping their prices. we will see that when we see results later this year. a lot of them could have been planned. some of them may not have been. david: take us through the rest of the holiday shopping season. >> super saturday. christmas is on a sunday, which
gives everyone extra time to shop. people are feeling good that the consumer is going to spend. there is optimism. things are going well for the consumer. gas prices are low. hopes are high. julie: going back to the issue of discounting, it has been a few years that retailers have been hoping that they would not have to cut as deeply. here they are cutting as deeply. are we seeing any optimism that the coming inflation that the markets are predicting will also be good for retail? >> the national retail federation president said yesterday that the consumer is still in a recession mindset. the consumer is interested in value. that often means price. i don't know that there is a lot of optimism we will get away from the discounting. there is more targeted discounting. urban outfitters did buy one, get one half off on apparel only.
i don't think we are going to get away from discounts entirely anytime soon. we cannot complete any conversation without talking about donald trump. is there a trump effect possible? >> i think people were very exuberant about what was going to happen. they saw a retail stocks go up quite a bit, outpacing the big gains in the market. you know, we are not sure what is going to happen because for those people around the coastal areas of the country who may not have been as happy, they do have more money and they might not spend more where is the rest of the country does go out and shop more. is that enough to make a difference and push the needle? julie: thank you. walking us through the retail landscape. let's talk more about the u.s. consumer. willem but are is still with us -- -- willem buiter is still
with us. willem: everything from employment growth, real wage up --, has braces are house prices are up and rising. householdssumers seem to be the one healthy component in the u.s. economy even before we start this fiscal stimulus talk. between the deregulation and the 2018, i don'tf think the consumer is going to slow down. julie: i am going to bring donald trump back to the conversation. we saw this election as a populist referendum in the u.s. on the other hand we have this consumer spending optimism. it just seems like there is a disconnect on the one hand you
have folks being upset about their economic situation, and of the other hand you have a consumer spending picture that looks positive. willem: it is robust. the election had very little to do that -- with that. whether you are an unhappy populist or happy establishment shopper, your job prospects are better, real wages are rising, you spend. i don't think mr. trump really has any direct impact on this. david: is there a connection between robust consumer spending and earnings? willem: yes. both employment and wages, both employment and wages, especially for inflation, are actually up. we actually may be seeing a slight reduction in inequality last year, median household income increased for the first
time since the 1980's probably. we are not at the end of the troubled road in terms of the sharingof globalization unequally, but there is hope. julie: it seems like there is hope even if you do get some of the disruptions in europe we are about and the uncertainty with stimulus packages in the u.s. the backdrop is strong. willem: as long as we don't get into trade wars. some really big caveats. willem: i think we will be fine. david: explain one thing to me. oth wayseard it b that wage growth hurts margins because you pay your employees more and that it helps because the consumer spends more. willem: both. obviously. remains --onstant
lower wage growth. case, itis weak in any is probably more helpful to have consumption growing faster than have investment coming out of the woodwork. as you say, trade is a major issue. trait can also affect consumption in the fact that you can have increased prices. it does not hurt the job prospect likely, but there could be a trade shock. the u.s. consumer has benefited from favorable import prices across the board because of the strength of the dollar. is inusehold sector robust shape and will likely
remain so. julie: given all this, what is your gdp forecast? willem: it is going to be in the again. ant year was underperformance, but the second half of the year things are picking up. given the deregulation and anticipation of stimulus, maybe we will actually even get some stimulus coming through on repatriated profits, that is possible, we might see some support from the fiscal side already in 2017. david: what are your inflation expectations going into 2017? willem: they will undoubtedly rise somewhat. headline inflation, the strength of the dollar, deregulation which is deflationary in many cases, i would not see much of
an impact in 2017. underlying inflation picking up because the output gap keeps closing. 2018, fiscal stimulus coming out the woodwork, that will relieve us. david: willem buiter, chief economist. think you for joining us. julie: we have some headlines coming out of that opec meeting. is iraqi oil minister pledging to cooperate with all members on the agreement. they are seeking agreement acceptable to all members. iraq had been along with iran one of the holdouts, at least in the weeks leading up to this meeting because both iraq and iran have been bringing productions back up to historical norms. it has really been volatile in the past couple of weeks. [crosstalk] david: iraq does not agree on
the numbers. they don't agree with the numbers being used by opec. we will see how that plays out. what will president-elect donald trump's fiscal policies mean for the u.s.? what kind of team does he need to put those policies in effect? ceo david abney gives us his outlook for the u.s. economy and the surge in online shopping. this is bloomberg. ♪
david: this is bloomberg. i am david weston. president-elect trump named more numbers of his top staff. toprt kennedy serves as a official at the u.s. state department. he is now senior international council at my old law form. thank you for joining us today. >> you are more than welcome. good to see you. david: let's start with treasury, which is something you know well. where are we on the treasury picks? where are we heading? >> my impression is that they are down to two or three candidates for treasury, both people with market experience and some people with government experience. i think treasury will be the most consequential department
during the first year of the trump administration for a number of reasons, both domestic and international. i hope we hear that named this week. david: you mentioned market experience and washington experience. when you take candidates, stephen engine does not have much washington experience whereas dave mccormack has both. robert: you would look for someone with the best combination of experiences in his or her background. i would say that david mccormick for example has spent eight years at bridgewater deeply involved in the market processes. he was a ceo of a company before he came into government in 2005. has had a close
relationship with the president-elect and deep market experience. we would look at who is selected for treasury, and it is also important to get that team around the treasury secretary to be balanced. we will look closely at the deputy undersecretary's for domestic and international finance. julie: what has gotten attention is not just the candidates but the process which has been a very public one. i am curious what your impressions are of this so far, and can this tell us anything about how donald trump will govern, or this is going to resolve itself by the time he takes office? robert: good morning, julie. i would say we are in the midst of the first social media transition. our last transition was in 2008. it was 2007 we saw the introduction of the iphone, and social media platforms.
underneath the coverage is a transition not dissimilar to transitions i have been through before. jim baker and i went into the state department in 1988, president obama named his national security team in december of 2008. i think the process is running like it has before. there is just much more coverage from various perspectives. i think it will be very important to see names this week, not least for the nominees who require nomination it would be important to get them started on courtesy calls with the senate confirming committees so they can have their actual confirmation hearings as early as possible in january to be nominated on the 20th. david: you said this is the most consequential appointment for president-elect trump your what
is at top of the list of his priorities for the incoming secretary to address? robert: the president has made clear that he wants to do major tax reform. that needs to begin immediately. treasury has the lead on economic and financial sanctions that is iran and north korea, and given what the president-elect has set on iran, i think treasury will be in the middle if not in the lead of what steps are taken with regard to the nuclear agreement. and third is china. treasury under hank paulson instituted a strategic economic dialogue in 2006. will that continue? two months after the president takes office, the next currency report will be due, including on china. julie: the secretary of state is the other contentious appointment that at least it seems contentious from the outside at this point between rudy giuliani and mitt romney.
on the most take important qualities for that appointment and the most important priorities for that person? robert: the secretary of state is clearly the seniormost officer. he or she will also be part of an important interagency communication that involves defense, treasury, cia, and the national security advisor working on behalf of the president. i think the most important thing is that the president put together a national security policy that combines foreign policy, defense policy, and international and economic policy resting on a strong intelligence base. it will be the secretary of state who largely communicates that policy to the international community. they will certainly be the lead on the foreign policy part of
the interagency process. i think someone who can be an effective part of the interagency team, and effective i hope ther, and person will bring creativity in policy formulation. i would say the new administration i hope will pay attention to policy implementation and execution. my experience is 90% of the formulation,nto and once the president makes a decision, people move on to the next fight. once the president makes the decision, it has to be carried out superbly and quickly. that starts with the secretary of state on foreign-policy matters. david: that is an important observation. thank you for being with us. robert kimmitt joining us from washington, d.c. julie: we are all on oil this morning. those headlines we just got out of opec. the iraqi oil minister is telling reporters that iraq is pledging to cooperate with opec
to reach an agreement that is acceptable to all members. some optimism there on the part of the iraqi oil minister for a deal this week. that is being reflected in oil prices, which are now bouncing. brent crude is up about .9%. time now for other stories making headlines. here is your bloomberg business flash. emma: we have seen the donald now itffect on stocks, is having an effect on economic forecasts. the oecd has raised global forecasts for next year. saying global gdp will expand 3.3%, the fastest pace in five years. donald trump's fiscal stimulus is expected to provide a boost to major economies. china's government is about to apply the brakes to overseas dealmaking. regulators will more frequently prevent chinese companies for making overseas investments of
$10 billion and more. more pressure on the chinese currency to weaken. calling for further strike action tomorrow and wednesday. that will make it the unions longest ever strike against the german airline. pilots staged a four-day walkout last week. there was no resolution last week. that is your business flash. this is bloomberg. david: thank you. we will look at the markets with about 90 minutes before the u.s. open. bank of america's head of u.s. a commodities francisco blanch will talk with us. this is bloomberg. ♪
.25%.s now down like the clients are smaller than they were earlier. the third line there, oil prices showing a reversal, up .9%. lowerllar still trending against the japanese yen. the euro has gone very slightly down versus the dollar, essentially unchanged. david: thank you. it is not time for bloomberg trends, a look at the top stories this morning. you can find them this morning. julie: it has to do with currencies. the big run-up we have seen in the dollar even though it is positive today. a lot of strategists think it will continue. one analyst in particular, royal
bank of scotland in singapore has made a call of 1.20 again for dollar, six months ago no one had thought of it, but now that is the more crowded call. he looks like people are catching up with him. thought?o would have francisco blanch joins us on set. he will explain the rally in metals. this is bloomberg. ♪
julie hyman, jonathan ferro and alix steel are both off today. julie: we are seeing a little bit of a reversal this morning. dow and s&p futures are trading lower after reaching record highs last week. the ftse and the dax are selling off to some extent. areerms of the dollar, we seeing a reversal versus the japanese yen. the dollar has been rallying recently. changed is little versus the dollar. crude oil is at a high of the session following optimism regarding an opec agreement. david: thank you. here is what you need to know this hour. opec ministers are trying to salvage an agreement on oil cuts. below $46 a barrel
but has come back now. we have a winner. thecois fillon clinched presidential primary in a landslide victory against his challenger. how many people went to stores on black friday, but everyone agrees they spent less money. they spent more time online. e-commerce sales are up 20% over last year. feeling isch while -- francois fillon is the presidential candidate in france. tax cuts and major labor reforms uniting the french right while the socialist party remains split. caroline, this was a bit of a reversal. fillon won a decided victory here. how did he end up opening that gap?
formerrly it was the front-runner, and the opinion polls failed to understand that the people who voted in these republican primaries wanted to see a clear right wing program, a clear change, a clear conservative alternative to the policies of the current socialist president, francois hollande, which would explain the big gap we are seeing in these primaries and the impressive comeback francois fillon has made. david: we now have two right of center, one somewhat and one more, running for candidate, and base seem to be -- running for president and they seem to be the front runners. >> many observers we have been speaking with in paris believes that francois fillon has a better chance against marine le
pen and the nationalist front fillon'scause francois conservative right wing program may have been appealing to those who are tempted by the national but arerty platform hesitant to leave the european union. the other interesting thing we have, an opinion poll yesterday showing that francois fillon would probably be marine le pen in the next presidential election. for more on the shift we are seeing in europe, let's bring in alessio de longis. we don't only have the french elections last night, we also have the italian referendum coming at the end of the week. what does that mean? sio: the political calendar
in europe is heavy. you have italy next weekend. france, netherlands, germany, austria. the whole european spectrum is full of these minefields. the problem is there is this antiestablishment sentiment that is rising globally and markets are turning to europe to see if that is the next place we will see these concerns rising. the problem for markets is that europe is already plagued i a weak recovery -- by a weak recovery. more uncertainty leads to more reduction in supply and demand for credit. banks will be less willing to lead given the political uncertainty around policies. businesses less certain to borrow. the problem is europe has such a
weak growth profile. you don't have a lot of room for further setbacks in terms of monetary stimulus. this is what the ecb is worried about. the unprecedented level of policy that the ecb is offering for monetary accommodation is because they know that the transmission mechanisms in the baking channel are very weak due to political uncertainty and weak demand and the need for less austerity and more fiscal policy support. markets aree getting concerned. it is difficult to see a sustainable recovery when you have all of these elections on the way which are preventing reforms from accelerating. julie: how important is each country's outcome versus an tide?l populist type? -- victory in a fillon
france and a no in italy. a patchwork, what does that mean versus an entire populist wave? alessio: i think that certainly helps, not having a uniform wave of dissent. that will help. , for markets, some countries matter more. france and italy are bigger and more important. ii think at the moment italy is the canary in the coal mine. italy is the one with the biggest debt problem and the weakest growth problem. and that is where we will find out news sooner rather than later. there is the risk that one election outcome in the country has the potential to affect sentiment in the other elections. italy is important to see, if
you have a no vote for the constitutional reform, which seems to be the base case scenario, what will happen with the resignation, which he has recently brought back to the table. now his language is being more supportive of the fact that he does not want to be part of any -- ofment that supports any political landscape that supports no. david: he implied that last night. he sort of confirmed that. you mentioned the ecb. we will hear from mario draghi in less than an hour. to what extent does it lie within his power and the ecb to help the situation, or has it shifted over to physical the way it has done in the united states? alessio: the ecb cannot solve
all the problems. monetary policy cannot solve problems related to structural inefficiencies in the real economy. what they can do is to make sure that the supply of credit is .nlimited and present they are working towards making sure that the transition -- transmission mechanisms are in place. more than that they cannot do. to tension has shifted fiscal policy. that is true and the u.s. we have been talking about this for over a year in europe as well. this is what i was referring to. when you have such a heavy election calendar and it is all the synchronized between countries, you don't have the ability to have a synchronized wave of fiscal stimulus, which in europe means reduced austerity. we are not talking about crazy fiscal stimulus at work. julie: when you look at the investing landscape in europe,
is there any reason to buy european equities versus u.s. equities? alessio: all of developed markets are expensive. that is true for europe and the u.s. slightlyat the moment u.s. equities over european equities partially because of , whichlitical calendar we believe will deliver more of a discount to european equities and the euro going forward. what would be the reason to be optimistic? if some of these elections turnout the right way, and if some of these concerns proved to be exaggerated, you could have a positive run in european equities. we don't believe it is sustainable. the stage in the business cycle is very advanced. your potential -- you may be right on your directional call, but how much room, what are your
expected returns is really what makes you not want to fight this bet aggressively. we are seeing a cyclical recovery in emerging markets. are the equities highest day-to-day of global growth. because europe is a large open continent to the countries within itself and globally, it is one of the most open economies in the world, it benefits from the manufacturing engine in asia. all of these economies are beginning to shift higher in their cyclical aspects. typically countries like germany and italy benefit. julie: we are going to ask you to hang on and continue this discussion in a few moments. alessio de longis will stay with us. let's get a look at headlines
outside the business world. emma: president-elect donald trump claims that millions of people voted illegally in the election, that he is not offering any evidence of that claim. he said that he would have won the popular vote if millions of illegal votes had been excluded. he also said the media it not reporting serious voter fraud in california, virginia, and new hampshire. hillary clinton leads donald trump in the popular vote by more than 2 billion -- $2 million. ballots.n he did not repeat his campaign promise to reverse president obama's normalization process with cuba. former prime minister francois fillon has wrapped up a surprising victory in the republican primaries. the party's nomination
for next year's election. he had about 67% of the vote. he is promising stringent economic reforms. francois hollande is likely to be challenged for the socialist nomination. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am emma chandra. this is bloomberg. julie: thank you. i want to look at some of the movers today. prices, oil stocks in europe have not followed suit. afterremains lower even we see oil going higher. oil has been under pressure for much of the session. a lot of headlines coming out ahead of the opec meeting later in the week. oil and oil stocks have been reacting. we are seeing a little bit of strength in u.s. energy stocks. southwestern energy and congo. -- conoco.
capitalsachs saying will return in 2017 and 2018 after a buyback. southwest energy upgraded at the ml. -- bmo. the new york post saying the company ejected and $18 a share bid. we are seeing shares up 10%. david: too far too fast? the dollar comes off a decade highs as enthusiasm folders. -- falters. francisco blanch joins us to talk oil and opec and commodities. this is bloomberg. ♪
julie: after two years of trading in a limited range from the euro may be poised to resume its slide against the dollar and drop below parity next year. already begun,as one could argue. even this morning we have started to see an attempt at a pullback by the dollar. it did not quite materialized. how far and how long do you think it will take us? could -- you-- you have the potential for a move. typically at the end of the year you see rising dollar funding problems so that in offshore markets, outside the u.s. you see a lot of demand for dollar hedging activity which could
make the dollar stronger. in addition, we know that we have this heavy political -- thatthat may provide may create some discount in the euro next week. we start with italy next week. this is where concerns are moving. in addition there are several other stars lining up in favor of the dollar. you have anticipation of fiscal policy and the u.s. combined with monetary policy. those are strong economic forces. we are not really going to see fiscal policy delivered for a long time. with the market may try to do is front run the expectations of that trait. as we have learned with monetary policy in japan and the eurozone, abenomics was prized, the vast majority of it was riced six months before took place. andfrom the ecb took place
2016, but the euro collapsed six months prior to that. the euro has been in a flat range for about 18 months. haveieve the dollar could a fast and deep move sooner rather than later. julie: what happens if there is an unexpected outcome in the italian referendum? if it is successful, do you see a spike in the euro? alessio: in the near term, definitely. a yes vote would provide a little bit of relief in markets. the euro could spike. the stability of that rally is what i question more. because of all of the fundamental policy related factors. david: thank you for being with us. alessio de longis, oppenheimerfunds portfolio manager. black friday phase two great. we will discuss the rise of
david: this is bloomberg. the holiday shopping season has officially begun with black friday eating into cyber monday. how much will the american consumers up this year and what will it mean for the u.s. economy? joining us is mindy grossman, ceo of hsni. you have a lot of brands. mindy: we have six brands from luxury and all the way across. the spectrum of consumer and product. david: that gives you a good insight into what is going on this holiday shopping season. what do you know from the weekend? mindy: a combination of our
businesses and all of retail, people were engaged postelection. they were driven by the deals and promotions they were seeing. our perspective is it is not cyber monday. it is cyber every day at this point. i think people have an expectation of what they are going to pay for, and they are buying what they want, but they are waiting. i think the biggest news from the last week is this device is no longer a pos. this is your flagship store. that is what everybody has to be thinking about. we reported in the third quarter that digital was 53% of our overall business and mobile was 22%. that number, we will see jump. just in the last week, mobile traffic and engagement, even in high ticket brands, you saw mobile sales increase double
digits. just: i am interested not in how people are buying, but what they are buying. what trends are you seeing in luxury versus the other spectrum .f rice points -- price points what is popular? mindy: electronics drives a lot of businesses from four k televisions to drones to mobile. julie: you see that every year? mindy: correct. that is intact. moves us to work closely with partners to be able to provide values and promotions to the customers. we are seeing what i would call practical presents. gadget gifts. we saw a strength in nfl for example. less in things like apparel and jewelry, which we do not promote
heavily this time of year. we are seeing seasonal. if you look at the front gate is this, we saw strength in interiors, which is a new business. anything in gift, whether that is a gadget or anything else. people are definitely being specific about what they are buying. david: you mentioned value and discounts. that leads me to the question about margins. can the business make it up on volume? this instant comparison across the world about prices has to drive down margins. is the question. we are talking about sales. it will come down to margins. in the past week i have seen deeper discounts than we have ever seen before on top of shipping and handling. we are focused on how we drive differentiation in products. ust has been a big focus for
in terms of engagement and exclusivity, in terms of events. we had six live performances with keith urban. we are trying to do customization and personalization. we had in store monogram in driving its own traffic. ofesting more in exclusivity product. investing in the talent that can do that. that is a focus. julie: in terms of cost, not only are you seeing discounting precious, but in terms of shipping, yes you have lower oil prices, but people want stuff now. you have that pressure. you have wage pressure presumably as well. how much are you seeing those costs go up? mindy: shipping and handling is a reality we are facing. at the end of the day it is what the consumer wants that we are going to have to address to be competitive. that is why you're seeing seasonal so much closer.
you have to use the other clippers in your business to be able to balance that. that is gross margin, exclusivity of product, differentiation, the experience you are creating whether it is in store or in your digital experience. that is what has to differentiate people today. julie: thank you. great to see you as always. mindy grossman the ceo at hsn. oil minister pledges to cooperate with opec. francisco blanch will be with us. this is bloomberg. ♪
agreement on production cuts. they may not get the deal at wednesday's meeting in vienna. crude fell below $46 a barrel, but has now come back. we have a winner in the french republic nomination in a landslide victory over the challenger. sales reports are mixed about how many people went to stores on friday. everyone agreed that consumers spent less money, but they spend less time online. e-commerce scales -- sales are over 20% from last year. we continue to see a pullback in stocks after what has happened in europe. the dax is .75%. the context is that they were at record highs at the end of last week along with the nasdaq and russell 2000. we've been watching assets like oil. the prices are bouncing this morning.
we will talk about why in just a moment. the dollar is falling against the japanese yen. there has been little change against the euro. the 10 year yield has followed by three basis points this morning. david: let's talk about oil. all this week, we were focusing -- all last week, we were focusing on energy. we go now to our bloomberg colleague will in london. well, welcome back. since we spoke last, they have come out to say that they will go along with a deal after all. how important is the statement out of iraq? will: it is missing one crucial detail whether or not the market will be able to cut production at the level they want to make the production cuts. iraq has been a hurdle in putting this deal together, because they want to be continued to be exempt from research and. they also have a fundamental
disagreement with opec and other market observers about how much oil is actually pumping. so, we are lacking on details. the market is moving on every headline. lacking on details seems to be a pattern with all of this. we have had so many people come out and say we have had a deal, but we do not want to commit to anything. what will it take to break this jim? -- jam? will: it depends on saudi arabia. this but -- they have talked about rolling back by about half a million barrels a day. we want toid continue raising production. saudi arabia says that is ok, but they want to cap the levels. they cannot agree on a cap. another important element of the deal is russia. saudi arabia is locked into an opec deal and that will get
approval from one of the biggest producers outside of opec. ill, thank you for joining us from london. francisco blanch joins us now from his office in new york about the possible opec deal. welcome back to the program. where are you on this? you say you continue to be optimistic about the deal? francisco: there are three elements of an opec deal. there is the economic aspect, there is what saudi arabia once the needs, and their are internal cartel politics. i think the first two, we can agree that it is pretty compelling. we can agree that saudi arabia once a deal, because they need money. they are facing a pretty steep budget situation next year. so, this is really just internal cartel politics in which we are
stuck. that is how we are hearing so much noise. i do not think opec wants to eliminate that noise. remember, the more noise than the more confusion around the deal. the less likely that producers outside the cartel are likely to make investment decisions. the less likely they are to put money to work. that will keep management teams in the u.s. and canada and other countries on their toes wondering if the deal, if there is one, will hold. so, they want to maintain uncertainty. that is one of the key elements of restricting investment. back to your initial question, we have any initial evidence? not really. it is a very complicated process. i think we should see a deal. it makes economic sense, and it makes internal pol -- internal politics a little bit easier compared to a few months ago. julie: what concessions might
saudi arabia offer to some of like iraq inence order to make the deal happen? saudi arabiathink has realized they may have acted too quickly in algiers. now, they are trying to play a little bit of hardball. they are trying to force -- i think they want to get iraq to be measured externally. they need to have some sort of external verification of a third party source. the other issue is setting a cap with iran. that is important for saudi arabia. the biggest enemy of opec for the last few years has been opec itself. production with in the cartel has increased significantly from the 2014 lows. unless they can restrain their production that it
could be a problem on the saudi arabia side. so, the elements are very important. they need to have third-party verification, and they need to have iran commit to a number. they can get that, then i think it in russia to go along will be much easier. julie: francisco, that brings me to russia. we have a chart on the bloomberg of russian production compared to saudi arabia production. their production is higher. it has been higher for a few years, although the gap is now whitening even further. even further. does russia need to be on board with some agreement for it to be done? it sounds like you think the agreement will be done and then russia will get on board? francisco: russia is heading into a presidential election in early 2018.
saudi arabia is not the only country that needs money. russia also needs money. in particular, i think putin needs money. so, he is also very keen on the deal. the problem is that russia's investment and production suggests to us that in the absence of a deal they may increase production this year and the you're after. -- next year and the year after. so, they could see incremental increase in supply. that is what opec wants to see and. it is very clear what is happening externally in places like china. production is falling apart there. it is down 10% year after year. is can real question russia commit?
we think they can. our analysts in russia has signaled that -- have signaled that to us. russia is pushing for a deal. they are pushing for saudi arabia and i want to come together for a deal. come together for a deal. it just depends on opec deciding on what they want to do. david: tell us about exactly what the deal should look like. they want to get the oil price up, but not too much. if they bring it up too much, then they will get a lot of production that will defeat the purpose. with deal would work? -- what deal would work? francisco: opec once a triple-double. they want to normalize inventories, so they want to reduce the amount of oil in that theo the point
stock price goes forward. now, stock prices are not going forward. they are trying to push the --ket into back ported backwardization. now, they can collect 55 or 60 and have the shell payers still sell oil at a reduced amount. the margins have been very good for the past couple of years. the last thing, the third thing, they want to minimize down service. when the prices are up $45 or even $65, saudi arabia still has to issue that next year to fund their budget deficit. investors want to tell bondholders that they are in control. the risk on the downside is
minimized, because that is what bondholders care about. they want to minimize bondholder risks, and want to downsize oil price risk. penalizeey want to forward standards. julie: bottom line, it sounds like long oil. francisco: bottom line, long oil. but it is cautious because the deal is not a given. it is hard to tell at this point. the biggest likelihood is that a deal will get done. that is our position. we will see in a couple of days. julie: we well. francisco, thank you for joining us. theng up, shoppers opt for couch instead of the crowded malls. will it be the new normal for black friday?
year. -- from last year. we are now going to talk about shipping and handling. david abney joins us. he is the ceo of ups. thank you for joining us. so far this holiday season, what are your numbers showing us? david a.: we got off to a very good start. planning for this season since the beginning of the year. our volume over the weekend came in about where we planned. it was higher than last year. we look forward to a number -- another record-setting season. david: an important part of your ,ob is planning for this season planning for how much capacity you need. how much are you prepared for? david a.: this year, we are going to deliver over 700 million packages between
thanksgiving and dismiss. that is an increase -- christmas. that is an increase of 14% over last year. we are prepared to handle the increased loads. julie: we have seen shipping growth by leaps and bounds along with online shopping. it did not seem like it is going to slow down anytime soon. is there a level at which the capacity -- not just for you but for the global logistics system is going to be too much? i we far from that place at this point? david a.: speaking for ups, i can tell you that we are increasing capacity. we will continue to do that as the demand increases. we are adding people. we added aircraft, vehicles, buildings, temporary buildings buildings.ally -- it is really about collaborating
with our customers to find out what they need. we added the capacity, and we give our customers more control. we have the commitment of all of our ups around the world to meet the needs of our customers. david: how directly correlated is your growth to amazon's? david a.: we could correlate our customer. anyone no one customer would be responsible for 10% or more of our revenue. however, all of the big certainly as a group, has helped our volume to increase this time of year. julie: in past years with the late-season surge to get deliveries on-time, you have taken special measures. what kinds of things are you guys doing this year? david a.: we plan to do the
exactly same thing this year just had a greater scale. we opened new buildings throughout the country. temporarynother 23 buildings for peak season. we are making sure we have the people and the beagles to handle handle those new buildings. david: as you know, we have a new president elect. could seeing how that possibly affect consumer spending, infrastructure, and trade. growth is tied to international sales. what you project for 2017 and beyond? david a.: we look forward to working with this administration as we just have with the past administrations.
we want to increase american competitiveness. that means adding infrastructure which meeks -- makes a big difference. corporate tax reform also makes a difference. we want to encourage technology and productivity gains. with trade, we believe it is very important. we believe the trade agreements field forthe playing the united states across the world. david: are you and your team already getting ready as far as what could happen with treasury and commerce? with the administration, we work together. we have had conversations with staff members and the like. as the administration comes into office, we will certainly have much more time to discuss the key issues and explain how we
think we can accomplish making america much more competitive than we have been in recent years. julie: one of the market reactions already to the election has been with the u.s. dollar. around 4% is up against a basket of currencies since the election. what kind of effect will that have on your business? i believe you get about a quarter of your revenue from outside the u.s.? currencies and how they fluctuate is something we pay a lot of attention to. it gives us some protection over temporary gains. it is not just the currency you have to look at. you have to look at the strength of the dollar and how it affects exports to the rest of the world. howard also affects important -- rts it also affects impo
coming into the u.s.. usid: thank you for joining during this particularly busy time of year for you. that was david abney, ups ceo. here is emma chandra with your bloomberg business flash. further strike action is being called for. it will make the union -- it will make it the union's largest strike against the german airline. the two sides met yesterday, but there was no resolution. samsung is speaking with investors about a proposal from a billionaire activist investor to overhaul the company. shareholders are unhappy with the status quo at south korea's most valuable company. the annuity for apollo global that is meant is going --
retail and retail today. godsay, we want you to first. what is going on? lindsay: people bought a lot of stuff on sale over black friday. 32 point 6% got everything on sale. there were some that got nothing on sale. i think the take away is that the discounts were deeper this year than in previous years. that had a lot of downward pressure on pricing. spending seems a little soft, but that is unclear if it was just because people do not have as much money to spend. julie: it would be interesting to see how much was available and how much they actually spent. >> this is kind of what lindsay was talking about, but in aggregate numbers. this is the average amount that shoppers spent, which is actually down from one year ago. the issue is whether or not this is discounting or spending less
money. julie: overall, it does not seem seemed veryay -- healthy for the holiday season trend. i will go with lindsay on how many shoppers. i am astonished by how many people are not buying things on sale. as we spoke earlier, it looks like consumer spending overall is relatively robust. earlier, wetold you bought things over the weekend that came on sale after we purchased them. julie: you have to return it and then get advantage on the sale. david: i think the big story right now with this retail season is the key count -- is the discounts. it is going to put a lot of pressure on margins. julie: that in addition to the higher wages that are expected. it looks like the minimum wage
debate has slowed down with the outcome of the election. nonetheless, wages are creeping higher with this tightness in the job market. that will put pressure on margins, as well. david: donald trump does surprise every time. maybe it will have an impact on global sales. coming up, we will be joined by cap realist santos -- gabriela santos. this is bloomberg. ♪
alongsided weston julie hyman. julie, how are the markets? they are reversing somewhat from what we had seen in previous weeks. the dax is pulling back this morning. we see one of the causes that have become typical of this postelection time. on a similar note, we have the dollar point back a little bit against the japanese yen. it was down more earlier. the euro is now lower against the dollar. crude oil is at its high of the day. this follows comments from the iraq oil minister. david: those are the markets. here is what you need to know at this hour. oil is back and forth after iraq's oil minister said he is optimistic that a deal will happen. opec will meet again to discuss
supply levels. the dollar has dropped in its biggest decline against the yen in nearly three weeks. sales have slumped. mixed reports on how many people went to stores on black friday. everyone does seem to agree that they spent less money and spent less time online. e-commerce sales are up from last year. that is all you need to know. let's get a check on the market again with julie. julie: we were talking about reversals, but one thing that is not reversing our industrial metals. they are -- i take it back, copper is not a little bit lower. it was rising for the fifth straight session. it is now a little bit lower. iron ore did rise on the day for its sixth straight game. raise its margin requirements for iron ore to cut down on speculation.
is added highest price in nine years. goldman sachs is saying that chinaigh metal demand in is potentially being caused by short covering. we are watching banks in the u.s., as well. we spoke about the italian bank falling today. we have a downgrade against jeffries from citigroup and wells fargo. partially because of the increased valuations we have seen against banks since the election year. david: futures indicate that they will open stocks in little lower today. -- gabrielatos santos recommends a different kind of focus. welcome back, gabrielle. e many aretrump trad calling it. you said this started before donald trump was elected? these areyes, many of
celebrations of teams that were seen in the second half. we had a very defensive first half of the year. we already had a rotation towards cyclicals toward the end of june. that is when we started getting better u.s. economic data and the perspective of positive earnings growth in the first time in five quarters almost. i think this is just an acceleration of a theme that was already present. julie: given the big moves we have had, you think it has accelerated too much? the snap upward we have seen to record highs has been very rapid. gabriela: it has been a rapid one, but these have been in sectors that have been relatively unloved for a while. financials had not participated at all in the rally earlier this year. so, i think to some extent it
was justified for a catch up. now, where we go from here? i think it is about the outlook for 2017. what can we expect from earnings? can we expect double-digit earnings growth in 2017? that is a little unclear to us. david: what at this point is the market pricing for earnings growth going into 2017? gabriela: it is a little below $130. it was still be below double-digit earnings growth. for us, that is still a little too optimistic. the crux for 2017 is going to be great growth. how much pressure do you get from that since we have such a tight labor market already in the u.s.? julie: how much is that going to be offset perhaps by loyal -- lower taxes? you could throw in higher rates. cost overall, how is that going
equal out?- to it can bei think offset by stronger revenue growth. an even stronger u.s. economy. we could argue that before the election it was already a healthy economy that was set to accelerate to 2%. you add on the potential of lower individual taxes, and you could have higher growth in 2017. there could be an offset to all of these margin pressures from the top line, as well. david: companies were not investing for the most part. people said that was because they believed the demand would not be there. as you look toward 2017 and a trump administration, you think think the demand will be there? theiela: it is something that has focused on so much. it is really the strength in consumer spending, but how much
investors spending has been lacking. that has been the trend for the last decade. i think a lot of it has to do with uncertainty around corporate taxes and regulation. to that extent, if we do see the changes they could be a big positive for best see the changes, it could be a big positive for investment spending. julie: what would your view on u.s. stocks be at this point? what is your value for stocks in the united states given that you think the earnings outlook is a little too optimistic? gabriela: a little too optimistic, but it is still a good one. we might not get a double-digit return your fork u.s. equities, but it is natural. we still see a lot of pockets for opportunities. we are looking at what sectors are still fairly valued. what once could have more earnings growth any general index.
that's it us justifies much more the cyclicals then the defensive. julie: you look at something like financials, and yes they were unloved and have rallied -- but there are a lot of contingencies. are the rates going to go up? how favorable are wrigley tory changes going to be -- are regulatory changes going to be? that,la: even before there already positive fundamentals for financials. that comes from the perspective of higher rates. it does not have to be a very aggressive cycle. it does have to be a little bit more than what the market was already appreciating. it also to do with the volume of credit growth. that has been picking up for a few quarters here. we are finally seeing consumer credit take up. that is not only the trend for this year, it is a medium to long-term trend. david: given opec and consumer
discretionary, where are you on those two sectors? discretionaryumer -- it is still considered by us to be one of the healthiest part of the economy. that is before you take into account any policy changes for 2017. i think the consumer is still a very interesting story in the united states. as we have seen in the past few years, it is not a consumer that goes out and buys everything. it has been very targeted. the story of the recovering housing market and associated sectors is very distant. julie: i am curious about health care, too. it used to be defensive, and now it is semi-defensive and semi-cyclical. that is another group that has done quite well since the election. what is your view? gabriela: that is an interesting point. we talk about these sectors overall, but those are subsectors within them. with health care, i think it
could be a very interesting trend. it is an overall secular story. it goes beyond just policy. i think there are very interesting sub stories within health care that are very structural in nature. julie: gabriela, thank you so much. david? david: mario draghi is speaking in front of european parliament in which he will speak about the consequences of exit. -- brexit. he says so far, he believes the euro has weathered the brexit fallout with resilience. he expects a gradual trend for gradual, upward trend for the economy that will continue. look -- he did a little back patting as well. he said that the ecb policy was an ongoing positive. david: we will keep you updated
on that as we get more headlines from mario draghi and his statements in front of european parliament. we now go to emma chandra with the first word news. emma: president elect donald trump is back in new york. he will resume meetings for choices in his cabinet and top white house staff members. kellyanne conway said that trump's supporters would feel a trade if you picked mitt romney -- if he had picked mitt romney for secretary of state. meanwhile, donald trump says that he would have won the popular vote in millions of illegal votes had been excluded. donald trump offered no evidence to his claims. hillary clinton leads the popular vote by over 2 million ballots. the process in the trial for the white man that had killed nine black churchgoers was stopped. the judge did determine that he
is competent to stand trial. the prosecution is pursuing the death penalty. telecom says that they cannot exclude the possibility that resources may have been tempered with. global news 24 hours a day, powered by 2600 journalists and analysts in more than 120 countries. i can emma chandra. this is bloomberg. david: coming up, opec members try to salvage a deal. oil a be able to agree on a freeze -- oil production priest -- freeze? coming up, we explore what this holiday season will look like for smartphone sales. this is bloomberg. ♪
♪ julie: opec is the focus on our futures focus today. the iraqi oil minister said that he is all for a deal. >> we will deal with opec. will work with all members. we want to reach an agreement. joining us for more is michael cohen. i guess the frenzy over opec is reflected by the rotc there. the oil minister -- iv paparazzi there.he paparazzi that was the oil minister being swarmed. michael: for them, they do not want to agree on what
second-order -- secondary sources say is there limit of output. that is one of the biggest sticking points right now for an agreement. it is the same case for chiron -- iran. they do not really need to agree on any particular level of reduction at this point. i think the biggest issue right now is that there are three things that have really changed from the meeting that happened in algiers. the first thing is that you had production from nigeria and libya to have ramped up. you also have the election of donald trump as president. that means u.s. energy policy and foreign policy are an even bigger and they do is question than before. we also just got through third quarter warnings. u.s. producers have shown to be very resilient. iranu are saudi arabia and
trying to come up with an agreement, those uncertainties are new compared to where we were in algiers. we think that will lead to continued uncertainty as far as any sort of cut agreement or freeze agreement. at the end of the day, we think they will come up with a face-saving measure. david: on the one hand, it becomes more difficult to come up with a deal, but on the other hand it is very important. those sorts of pressures actually make it essential for saudi arabia. that could increase the likelihood of the deal. michael: if you are saudi arabia, you put a lot of your credit ability on the line. -- credibility on the line. opec also is putting a lot on the line. the date to keep in mind is that all of these ministers have been through this before. they have the ability to come up
with some kind of political agreement. the question is what the market thinks of it. if the market is trading lower today -- is trading even lower compared to today on the eve of the meeting, then there could be a very low expectation on what will come. if they do come up with a face-saving measure, the reaction could be positive. is very difficult to read at any one point in time. i think saudi arabia is in a position right now where they are hurting more than where they were in algiers. they had an ipo on the line. have a lot of other things happening domestically. alie: stated you come up with real agreement or a face-saving measure, how much does it change the fundamental picture for oil? one thing we have talked about production compared to opec production. non-opec has been writing up significantly compared to --
ramping up significantly compared to opec production. is oil going to be sort of capped anyways? athael: you have to look what is happening on a production side. we have had to years -- two years of caps. it does take time for it to really term. non-opec production is writing on the wave of very high oil prices from a couple of years ago. we continue to have new fields getting at it. companies continue to want to add that production. they are not going to stop that right now. you have a couple of different countries within the group of non-opec countries that are increasing their output and outpacing the declines of countries seeing lower production. opec is actually replacing every single bit of non-opec
elsduction with new, two barr of opec production. david: what is the number that the market needs to take this readily -- credibly? michael: i think at this point, we have to seek non-opec companies come together. i think on november 30, we are not going to see specific country level allocations. notay see a hand that is 33.5, but it could be. david: coming up, oil is not the only commodity that investors should have their eye on. we will speak more with michael cohen. julie: 10 minutes until the markets open in new york. teachers have taken a test futures have taken a -- futures
♪ david: this is bloomberg. i am david weston. china is wasting roughly half $1 million by building more coal plants that it needs. this comes as the coal production rose 1.8% from the last month. to join us for more still is michael cohen. i hear that the marketplace is going to take over, because natural gas has gotten so cheap. what is going on? michael: at the end of the day, the market is going to drive this. of the last couple of years, we have seen increasing regulation that has led to a number of different plants getting shut down in the u.s.
at the same time, utilities are taking it upon itself to switch over more to natural gas. the writing is on the wall. eventually, they are going to have to comply with what is going to be increasingly stringent regulations. whether they deal with this four-year or eight year in the road as far as coal coming back, in the end of the day natural gas is are going to take on a much bigger role in the upcoming years then coal. important a much more role over all in the power sector. moderateas can help to the increasing amounts of renewable electricity into the grid. source has anuel important role, but it is important to understand that it is because of the much new natural gas our plants that natural gas is picking up a much larger share in the united states power mix. julie: it has been down over the
past couple of years if you look at the five-year chart. -- will energy policy that be bullish for natural gas? er or with of an eith coal. will natural gas benefit? because of what donald trump plans to do seems to be open up more energy for drilling , both coal and natural gas in federal lands, those incremental sources of energy will lead to lower natural gas prices. if you end up not having the 2022 power plant in the 2025 timeline, that could be a net negative for gas demand. david: how important is the infrastructure? i think it is very much
likely to be the case. the thing to keep in mind is that the environmental organizations are going to take their fight not to the federal level so much anymore but back to the local and state level. one of the reasons we continue to be bullish on natural gas into the winter is because a number of these highflying projects have been laid. you are not going -- in contrast to the past, you are not going to have a lot of new natural gas production because it is constrained at this point by headlines. david: what about renewables like solar or wind? did they just take a big step down? michael: there are certain tax credit that extended for another year. in that timeframe, we could see technology come into play with the cost of the technology continues to go down. time, you may have a
situation where solar and wind becomes more competitive by 2018 or 2019. where those tax incentives are not needed as much as they are right now. julie: michael, thank you so much. we appreciate your time. the opening bell is coming up next on "bloomberg daybreak." we take a look at the features going into it. we are seeing a little bit of a pullback this morning in futures as well as european stocks. we are seeing some weakness in the u.s. dollar compared to the japanese yen. this is bloomberg. ♪ generosity is its own form of power.
you can handle being a mom for half an hour. i'm in all the way. is that understood? i don't know what she's up to, but it's not good. can't the world be my noodles and butter? get your mind out of the gutter. mornings are for coffee and contemplation. that was a really profound observation. you got a mean case of the detox blues.
don't start a war you know you're going to lose. finally you can now find all of netflix in the same place as all your other entertainment. on xfinity x1. we're opening more xfinity stores closer to you. visit us today and learn how to get the most out of all your services, like xfinity x1. we'll put the power in your hands, so you can see how x1 is changing the way you experience tv with features like voice remote, making it easier and more fun than ever. there's more in store than you imagine. visit an xfinity store today and see for yourself. xfinity, the future of awesome. david: this is "bloomberg daybreak." i'm david weston. you can see the stock market is giving up some of the trump rally.
s&p futures down a quarter of a percent. this is all coming back from the lows in the precession. now, if we can go over to zürich, the fx, you can see that -- i'm going to talk to it. the u.s. dollar has weakened against the yen, although it has come back against the euro. oil is up after the oil minister in iraq said he would comply with what opec want to do. let's go to julie. julie: we are waiting for the nasdaq to start trading. the dow and the s&p are showing declines out of the gate, and little bit of a pullback from the record levels out of the gate. 0.2%.sdaq down we have this phenomenon since the election, a rally, then a pa le bit of a cause --
use, where investors say, are these gains worth it? one of the other things we have been watching has been metals. inhave been seeing a rise industrial metals that have been continuing. we are also seeing a rise in precious metals. they have been there verging to some extent, but they are coming back today. gold having its worst months and about three years. stocksh all of these have had huge gains, newmont mining, baron, they are rallying as freeport is under pressure. let's turn to joe weisenthal, the bloomberg digital news executive editor. thanks for being here. >> thanks for having me. david: the equity markets of
really ramped up's install trump was elected. the story is still pretty remarkable. almost every guest in the week or two prior to the election would have said that a donald trump victory posed a bigger risk. david: not only would have, but did. >> did. international has not been nearly as well. a lot of the popular strategies are not doing well. straight of u.s. equities have done phenomenally well and reasons grasping for why the market changed its mind. people are saying, he has changed his tone. come on let this come on, look at his tweets. the perception of his policies. during theas also
election. more spending on infrastructure, nothing new. everyone is grasping for some new story, but i don't think it is good one. david: the thing that did changes the expectation of rate hikes. bond yields have been rising since late december, but really took off after the election. people are talking about stimulus, the steeper yield curve, bank stocks have really led the way. ever forst month market cap gains. financials are loving it. on the etfve a chart that tracks the financials. flowsyou have the fund back to 1999. that would be
pre-financial crisis. thatyou have this spike looks like record inflows into the financials. as we are seeing them look so popular. i talkedomething about. you have the narrative switched. everything hunky-dory, the financials are going to benefit. didn't we just learned that narratives can be wrong? absolutely, but this administration has provided so much evidence that it could be wrong. we have provided evidence come of closing out of this administration targeting janet yellen and lloyd blankfein. nobody really knows. everybody has come up with this new story that trump is great for banks. there has been nothing specific on this and there is an anti-finance populist element that needs to be considered as a possibility that could come out
of this administration. david: not all banks are the same. if you read his policy positions , a distinguished between small community banks and the big ones. >> if you look at the community banks index, it is up. money is flying at all of the banks without any sort of whatever. [laughter] >> i'm looking for some word. julie: they have been correlated. you talked to investors that are bearish. it is hard to find them. >> it really is. if you look at all the bank calls for next year, the last couple weeks have really defined how they see the future. ,igher rates, more inflation u.s. equities are skeptical of emerging markets. this snapshot has really
informed everyone's views. a lot of potential for disappointment in the future. julie: that is the story of the markets to some degree. >> but always, right? julie: black friday weekend spend less consumer money last year. consumers continue to look to online shopping. to take us to the winners and losers, we are joined by shelly banjo. i did not buy anything over the weekend. for the record, people did. what are some of the trends that are really standing out from the weekend? is something interesting, this divergence of discounts. i saw kate spade this weekend. off for anything on
this website, but then if you want to kate spade website, retailers are really targeting who they are discounting, but the discounts across the border getting larger and larger. julie: interesting. i'm also curious about who is doing the best and who is doing the worst in this environment. amazon, is there any slowing amazon down? shift, moretinue to people shopped online than in stores. that shift is going to continue to accrue toward amazon. not just online, but also on mobile. mobile is another big theme of shopping. are usingore people that. ceo on who said there was a dramatic uptick of
mobile purchases. >> hsn has been turning to mobile. fication, getting people to engage on the phone. julie: why is mobile so attractive to retailers? do people spend more? >> it is exactly the opposite. the conversion rates are so much lower. who goes on the website is going to buy that thing. julie: as opposed to in the store? >> if you compare them to the desktop, it is 5%. david: but mobile is where the traffic has been so dramatic overall. space, do weet sense whether amazon is holding market share of just the e-commerce, growing market share against other possibilities? certainly, we will see at the
end of this quarter, but amazon continuing to grow market share online. a lot of the growth of online sales is going to amazon. some of that has to do with the amount of data. we don't release es as much from walmart or target, we are not sure how much of the sales outside of amazon are coming from walmart, but you are also seeing walmart, target, macy's, they are talking about how online growth is the key for them. david: thank you so much for that, shelley. coming up, consumers scoop up ipads, driving online tales over black friday. more on holiday sales for apple's next. ♪
emma: this is "bloomberg daybreak." the growth of e-commerce, coming up next. ecb president mario draghi is still talking in front of the european parliament. he said the ecb will preserve monetary policy and says that the corporate bond buying program the ecb has has been quite a success. a little bit more of the backpacking you referred to earlier -- back patting you
referred to earlier. julie: indeed. let's take a look at u.s. stocks. we are seeing a pullback in line we've beens that indicating. we saw a record levels for them last week. for more on what is moving, let's go to abigail doolittle. abigail: we may have stocks pulling back from record highs, but we have two big winners to take a look at. time, the shares trading sharply higher on pace for their best day ever in more than two years on a new york post report that the "time" board has rejected an $18 per share bid in partner with access capital. because it is only 30% below,
speaking of unlocking shareholder value, elliott management, a letter outlining a pass to bring this stuff up to $80-$90 per share. management is one of the top shareholders in cognizant. the question is whether or not that valuation is reasonable. five-year church. we see a beautiful uptrend. over the last year, cognizant technology as been trading down. on today's strengths, we have the stock back above the 200-day baby thatrage. $80-$90 per share is not a reasonable. julie: as we have been talking about the holiday shopping season has officially begun with black friday leaving into this leading into cyber monday, we are looking at where the world's most valuable companies dance,
apple, of course. we are joined by a tech analyst who covers apple. is this holiday shopping season going to be a big driver of the latest iphone? are neverriday sales the make or break for apple. there have been some promotions. has gotten a little bit aggressive. at&t hasas responded not responded. it is not going to swing it back and forth. i think the trajectory is that apple can return to growth. they have not grown revenue for three quarters. it could be positive news for apple investors. julie: the promotions you are talking about, how do they compare to the iphone introductions and to they tell us anything about demand? >> those operators are trying to hold back on letting the monthly bills to the customer's. they are more milling than they
were to offer promotions because they are saying, bring your used phone back in and we will give you a free iphone or one at a significantly reduced price. as a result, you were getting a lot of these used phones. is that thereing is a lot more customers paying for insurance programs and they are taking these used phones and trying to lower cost by using the insurance programs and the iphones. david: millennials in my house are not talking about a new phone, they have a phone. they are talking about virtual reality, drones. as apple missed out by not having competitive attempts in those areas? >> they have been spending a time on r&d. they are investing more and more in new products, they just have not announced anything more than an apple watch, which investigators -- investors are
looking for new services and hopeful they can return to some level of revenue growth that is driving the profitability, the ability to buy back additional shares. by the company more time. we have said this quarter after quarter, it all seems like a couple years ago now. buy some more time to address opportunities that exist out there. julie: is it a question of going into the holiday season from an iphone?y somebody has some of the misfortunes of apple's competitors, is that enough to buy them the kind of time you are talking about? >> i think we have heard that from the operators. the lack of availability from the note as driven increased demand for the larger's -- .arger 7-plus i'm not sure if that is going to make its corner in and of itself. it is not necessarily something new and great that everyone is
running out to get. hopefully, that will be next year. people just an old phones that .re running out of capacity it is returning to growth if you are being offered more attractive models. david: the stock is trading somewhere around one dollar -- 111. if it returns to growth, will that be enough? sothe stock has moved up there is an expectation of growth. cannot growth continue and subsequent quarters. we are going to have to rely on operators to tell us of the building -- business is going. againerts to a decline next quarter. we think there's an opportunity for growth to continue, so they have visibility into this next phone everyone is excited about. i know we are two months into the corner.
we will see if that growth continues. if so, i think the stock continues to move. much, think you so walter. coming up at the top of the next hour, it is "bloomberg markets." what is coming up? >> we are kicking off the show looking at stocks, not just u.s. stocks falling from record highs, but also european stocks, the longest weekly run of european gains by the end of last week. three weeks of gains for the stoxx 600, now heading down. we will be breaking all of that -- with looks into equities and other sectors. we are also talking about opec. we are seeing wti and brent reversing losses from earlier
about comments from the iraq oil minister. we will be talking to jan stuart the credit suisse on where markets have to go from here. then i spoke to the trade minister from the u.k. and we will be playing an exit of that this excerpt of that interview on brexit and the trade relationship with the you key that she u.k. and the u.s. following the trump election. david: david trias is said to be ader consideration for cabinet pick. this is bloomberg. ♪
eyes have been developing around his secretary of state pick. all eyes have been focused on rudy giuliani and mitt romney, but bloomberg notes that former general david the trias -- pe looked at asn well. >> i just spoke with a senior transition team and they say that david petraeus thisbe at trump tower afternoon and that he is under heavy consideration for secretary of state. there has been increasing in fighting amongst trump top sources and his top advisers about who exactly he should pick. kellyanne, including conway, very skeptical about
mitt romney, who is perceived as being the front runner for secretary of state. julie: is there nothing that would disqualify people from variousminated for positions. the manic resigned after allegedly leaking classified information -- the man resigned after allegedly's leaking classified information to his biographer, who he admitted to having an affair with. sayingeard donald trump that he thought general petraeus got a raw deal in comparison to then secretary of state hillary clinton for how she handled her use of a private email server and he made that a point of comparison several times through the campaign trail. have that he does checkered past, as you alluded
to. he did resigned following the fallout of the investigation regarding leaking, perhaps, of classified material as a result of that extramarital affair. donald trump gave him a lot of praise on the campaign trail. several times i can remember on the trail. david: this is a pattern of the president-elect. he has a three-star general who will be his national security advisor. he is considering a four-star general for the defense department, general mattis. surges inaeus led the iraq and afghanistan. donald trump, who called the rubbish, he is now turning generals across the board, it seems like. >> i spoke with one source who made that point directly in that he seems to be surrounded himself with military type of folks. of course, general david petraeus, as you alluded to,
someone very well respected inside of the intelligence community, despite that checkered past. again, i think the comparison between hillary clinton's use of a private female server and general petraeus is something we will be hearing a lot about, particularly if he decide to not prosecute hillary clinton, but pick general david petraeus. david: lots of irony here. julie: we are almost half an hour into the session. we do see a pullback, though the dow and s&p are on pace for their best month since march. that does it for "bloomberg markets." this is bloomberg. ♪
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markets." "bloomberg >> we are going to take you from washington to vienna and cover stories out of paris and the united kingdom. oil is trading $47 a barrel in new york. we will head to vienna for an >> the value of american financial firms has been them later by more than $300 billion in the days following president-elect trump's election. we will see whether this spell signs for the danger -- of danger for the sector. speaking of trump, the president-elect returns from the holiday and we are expected to get more cabinet picks. he is holding a meeting with retired general david petraeus