tv Bloomberg Markets Americas Bloomberg November 29, 2016 10:00am-11:01am EST
vonnie: from washington to johannes berg. first, breaking economic data in the u.s. julie hymen looks at consumer confidence. first since the election. julie: a last read was just before the election, so it is rising to 100.8 was the prior reading. it is coming in for a higher revision as well as higher than the prior months. consumer confidence of better than estimated. we saw this encompassed the election as well. coming on the heels of the gdp data that was better than estimated. we have been seeing bond yields
move higher this morning. if you look at another developing story that we have been covering, johnson and johnson raised its offer for actelion. the largest biotech firm in europe. j&j raised its bid from an earlier bid to $242 a share or $26 billion. this was company rejected it as too low. actelion is higher by 6%, getting a bump up after these headlines. we will continue to monitor this developing story with what is potentially a large acquisition on the part of j&j. hitting back to the u.s. and stocks, very little change in the major averages. a couple of competing impulses. you have economic data better than estimated with gdp being .evised to 3.2% from 2.9%
on the other hand, oil prices are falling. there down by 4%. that is ahead of the opec meeting tomorrow. the iranian oil minister is saying that country is not willing to cut production. there has been optimism expressed yesterday on the part of the iraqi oil minister. a lot of headlines coming out before the meeting, but there is increasing pessimism that a deal will be done. that is expressed in the oil price. chevron,s on the move, all lower. a check back to bonds as we talk the economic data. we are seeing a little rise in yields, of 2 basis points on the two-year and one on the 30-year. nejra: we are seeing stocks pretty much on changed in europe
. 90-minutes to the close in trading. european stocks near their lowest level in more than one week. we saw the italian banks were weighing on the stoxx 600. it is different today. we have seen italian ranks rising for the first time in five days. lifting the ftse index, rebounding at 1.4%. a mixed picture. down 9/10 of a percent. portugal down .5%. picture across the equities industries in terms of what is happening in fx markets, sterling of .6%. 1.2495.t the sovereign bond space, italy 10 year yield down eight basis points with yields coming down across a lot of the spectrum over the u.k. gilt market being
the exception. the stoxx 600, you mentioned energy stocks in the u.s. it is similar in europe. energy stocks down 1.9%, very much the lagarde. , thatals also down includes commodity producers. note to prize in metals markets stoppingstrial metals their rally. coming off of the highs. that said, we are seeing metals on course for the best monthly rally since 2009. al exchange met hit its biggest high sense 2015. finally, i want to show you what is happening with the south african rand. that is leading global currency
declines against the dollar. the south african ruling party said they did not support calls for president jacob zuma to quit. the grand falling for the first time in 4 days, some saying yesterday's rally was over doug. -- overdone. vonnie: they did not raise rates at the last meeting. let's go to our newsroom. >> president-elect donald trump begins a victory tour on tuesday with the first stop in cincinnati. a campaign official said the tour would go to states that trump won and swing states he flipped. trump says that learning the u.s. flag should be illegal saying that no one should be allowed to burn the american flag. if they do come there should be consequences like a loss of jail.nship or tied in trying to figure out why a jet
carrying a brazilian soccer team crashed into a mountainside. it was carrying a brazilian first division team to a game. it was moments from landing when the crew reported electrical problems and declared an emergency. colombian investigators are looking into an account that the fuel.ne ran out of the embattled president of south korea has offered to resign. president park is caught up in scandals and her approval ratings have fallen to single digits. in a speech she apologized for the third time. opposition lawmakers and some from her own party say that park should be impeached. government offices and schools in cuba will be closed for memorials for president fidel castro who died at age 90. hundreds of thousands of cubans have been bidding farewell and pledging allegiance to his
ideology. the president of south africa has survived the most serious challenge to his leadership yet. a group of officials from jacob to forcengress failed him from office. jacobson's time in office was marred by scandals and policy missteps. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. i am a lisa parenti. this is bloomberg. vonnie: the debate brews on how much does president-elect trump's campaign promises will relate into policies. the jump in yields may have gone so are and forces may bring them back into line. joining us is a the portfolio manager of bond funds. he is also the global fixed income strategist for prudential.
what you're saying is that we have not need in of the bear market in bonds? >> we haven't seen the end of the bull market. vonnie: right. >> by the past few decades of rates have been coming down, people are looking for the end. we are on a detoured. trump is coming in and we will have stimulus and an effort to bring back infrastructure spending. more private sector investment. there's optimism that will push of rate of growth in the economy. there are problems with this thesis. they stem from the backdrop that was going on economically in the united states prior to this, but globally. excess capacity, the downward price pressures of globalization, high levels of debt, those factors will not be trumped by this. we are on a detoured.
you'll to have risen, and most of that may be behind us. vonnie: you don't believe the federal reserve or the new administration will take over the narrative? that we will see yields dropped to 2%? rates: the fed will raise pushing up interest rates at the front end of the curve. ist you see in a cycle typically at some point the backend of the curve stops rising. the curve flattens. instance, as strange as it may seem, u.s. yields are high from an international perspective. yields of 20 basis points, two basis points on jgb's after their recent selloff. you get to a point that it begins to really do quell a break the financial flows. tightening to the front-end of the curve. we have seen an increase in
interest rates already, that might be enough. vonnie: you are talking about treasuries versus bonds globally. we have been talking about how the treasury 10 year yield versus the german bund yield is the highest since 1989. the treasury jgb premium has been rising. our things down to the fact we have seen qe from the ecb and bank of japan? my question is, where do you see them central banks taking policy? if we do see any tapering, how does that change the dynamics and the appeal for treasury? the policies of the central banks have been very powerful. arguably, in the last six months they have realized they have into successful. in the case of the bank of japan where they are buying massive amounts of jgb's they need to be as accommodative. they realized they can get that
done by telling the market where they want yields to be and they need to buy fewer bonds to force that. the ecb, the story is the same. they have created a tight environment that although the short come rate is -40 basis points, to your bunds have been -60 basis points below zero showing a tightness in the market. the ecb might be coming up on a tapering. where they reduce the amount they are buying. the underlying reason of no change in inflation, we need to accommodate. we need to make sure the monetary accommodation goes across europe and economies. that, as the case in japan, is likely to keep it low. vonnie: if you look at italian yields versus treasury yields,
it seems like we are in a strange paradigm when you look at italy and the 10 year yield is lower than a treasury yield. how long can this go on? as an investor, how do you position your self for the possible tapering from the boj or ecb? robert: the european situation is complicated. between the european economies economies, the japanese economy, there are different natural levels of growth. natural levels of growth, natural levels of savings and investments will drive differences in rates that will persist. -treasury split will remain wide. those qualities spreads will range. italian yields have risen about as much as treasuries. .ecently
although they are lower than treasuries in the european complex some of they offer spread relative to the bund. coming back to the united states, use a high-yield has not gone away, something that would attract you for the potential return of bond funds. robert: the market is probably still in a bull market. within that treasuries are one of the least attractive. a range of nongovernments look attractive. they are high-yield with instructor product, evenr-quality clo's or subprime, as well as some emerging markets. whole range of spread products that will outperform treasuries. vonnie: an emerging market or two that you find attractive? robert: the currencies, local
markets, hard currencies. the hard currency emerging markets are probably the most attractive for that kind of a strategy. the latin american countries have been beat up with the trump election, but funds on investment grade, the triple b universe, are the most attractive. names like mexico, do some extent brazil, and close eye arernments like amex attractive. vonnie: robert tipp. you will have to join us again. thank you. nejra: president-elect trump takes the health and human services that could dismantle the affordable care act. a look at congressman tom price who has been studying how to dismantle this law for years. this is bloomberg. ♪
nejra: live from london and new york, i am nejra cehic. vonnie: i am vonnie quinn. the latest cabinet pick. fromsentative tom price georgia will be the latest representative of health and human services. he could possibly oversee the overturn of the affordable care act. one of the top legislative record is for republicans. now the reporter for bloomberg news in washington. of obama been a critic care. does this mean we will see at least an effort to appeal the whole thing? will see anected we
effort to repeal obama care. it is possible it will not be to repeal the whole thing. president-elect trump said there are aspects he would like to keep. at the same time, there is not a makeup in congress that might allow for a full repeal right now. there might be a need to refine that repeal. get rid of some of the biggest things that republicans dislike, including the mandate that all americans have health insurance. then do something else to replace obamacare and aspects they don't like. vonnie: the other aspects are medicare and medicaid. when trump was campaigning, he said he would not mess with those programs. is he going to go back on that promise? anna: the speaker of the house has very much wanted to reform medicare. he has a plan where medicare would be privatized. where seniors would get
doubters to afford their premiums. price has to this before and recently said, as chairman of the house budget committee, that would be some ring they would look to do quickly in 2017. nejra: what kind of market reaction can we expect? anna: what we are seeing now is that this might have been expected. that tom price was going to be the nominee. that insurers have taken a little bit of a tick up, which is interesting given they may be patients when this changes and not everyone has to have health insurance. you can see some of the drugmakers down a little bit here that might be uncertainties about the fact that they are not
sure of people will be buying as many prescriptions if they don't have health insurance coverage. right now, it seems to be small changes. people are waiting to see what will happen exactly. what will be proposed as far as repealing and replacing obamacare. we still don't know exactly what that will look like and how republicans will move it forward. nejra: do we have indication if there might be impact on m&a in the pharma sector? anna: there were big insurance companies looking to merge that lawsuits.through recently, with the department of justice, if they could merge. a trump presidency and with tom price at hhs, that could change in they might not have as much opposition.
is ready and willing to walk out q failed to ira compromise on a deal. saudi arabia really playing hardball. the arabian minister has arrived. the iranian oil minister has arrived. they are saying they will not cut. oil prices really taking a div e e down. early this morning in europe, the iranian petroleum industry tweeted they will not cut production. we heard from the minister's mouth himself. both taking a hard-line. before they bridge a gap, it will be hard to break a deal. one analyst called it a greek tragedy. saudi arabia still
saying libya and nigeria are excluded from everyone having to agree? >> yes. this was agreed in algiers. of this inso part algiers. libya and nigeria will be exempt again as their countries have dealt with so much external strife -- internal strife. a will be exempt from a cut. however, the saudis will not budge on iran. vonnie: it is a gesture. they want iran and iraq to hold together opec nations? >> in the 10 hour talks yesterday with the governors, not the ministers, there was talk of the saudis proposing the iranians cut -- they only produce 3.7 million barrels a day. the iranians say they should pump pre-sanction levels of 4
million a day that it is the will of the people to get back to pre-sanctioned levels. it is a 7% difference that the saudis want them to cut. this comes down to political baggage to be honest. vonnie: thank you. keeping an eye on the opec cummings and goings. ahead, we are joined from the robin hood investors complex. everything from marriott lying starwood hotels to expectations for the u.s. economy under president-elect donald trump. this is bloomberg. ♪
vonnie: a lovely shadow we london. live from london and new york, i am vonnie quinn. nejra: i am nejra cehic. this is "bloomberg markets." it is very cold in london, though it may look nice. more from our newsroom in new york. the european union citizens in the city will not be forced to leave after brexit. we spoke with francine lacqua. >> the idea that people can be used as bargaining chips is offensive. i have been told this by the government. that theynceivable would be forced to leave london. that certainty is crucial. if you are londoner, you are welcome here. >> the mayor's office says one million eu nationals live in london. the man who attacked fellow students at ohio state complained about the poor treatment of muslims. law enforcement officials
told cnn that abdul razak ali artan said in a facebook post that he was tired of seeing most homes killed and tortured. victims remain hospitalized. president-elect trump named a critic of obamacare to be the secretary of health and human services. tom price of georgia is an orthopedic surgeon. he said the affordable care act interferes with the ability of doctors and patientss to make decisions. he will announce his transportation secretary this afternoon. a lame-duck congress holding its final session of 2015. a december 9 deadline or spending legislation to keep the government running. they want to pass a short-term spending bill to extend levels into next year. also want to finalize legislation to address
lead-tinted water in flint, michigan. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. hoode: now to the robin investors conference. it is in brooklyn, new york. erik schatzker is talking to in the the biggest names investment and hedge fund industry. we are joined by special guest. erik: thank you. i am here with barry sternlicht, the man behind starwood capital, one of the most successful real estate and private equity investors. it is good to see you. you, just like everyone in your industry and finance, perhaps all of industry, trying to figure out what a trump presidency means for your business. what conclusions can you draw? change.t is a seat
it is a republican senate, house, and a president who wants to do things like infrastructure spending. we are moving to a faster growing economy. determineill interest rates. the question is how much hope is there in the senate with tea party candidates that will let us increase the deficit before we see it in tax? that is the regulator on trump's fuel on the economic fire. we were going to do fine. in the economy with either president after the election. 4.8% unemployment with a wage increase, with walmart increasing minimum wage. we were seeing companies pass profits onto workers, listening to the rhetoric of the nation. wage increases leading to more spending. that is good for the economy, we are a consumer nation.
we would see higher interest rates regardless. the infrastructure spending bill with a 4.8% unemployment rate. we do not have guys to build roads, tunnels, bridges. it will take more time than the market thinks, but the direction is clear. it is going higher, the question is how fast. will real estate keep up? if rents rise quickly, that is more important than rates rising. wagesy are rising because go up, that is good for real estate value. also, everything is getting more expensive to build, that is good for existing real estate. i was positively sloped, now i am more positively sloped. i am worried about too mcuch. you saw the gdp number, 3.2%.
we are not far from 4%. we have not started infrastructure spending. we have not cut taxes. erik: are you saying you would like to see the president elect, when he is in the white house, go slower than he is indicating? this. i would stage i don't know if i would take corporate taxes like that. i think you have to be thoughtful about the deductions even eliminate and the impacts on your plan. it is not something -- this is complicated. i love simplifying the tax game. we spend so much time on tax returns. it is amusing that companies have low tax rates primarily because they are incentivized to invest. there is an industrial scale behind the tax code. we have to think about everything they take away and if
that is what we want as a nation going forward. erik: what about the money you have invested. if bond yields are going up, which they are, and if they rise, that cannot be good for cap rates. barry: that is why i said rents matter. were 30%,ught rents you did not care. you were making so much money. if you fixed your real estate, rent rising is great. and the pace. we want slow and steady. the pace of the economy is that it is too hot, the dollar will soar and put a brake on the economy. it will weaken. has happened what with the 30-year and the 10-year already. barry sternlicht we cannot handle the 10 year 5%. the dollar will be so strong. 1982 whenmy career in
i got out of college. the interest rate was 12% or 13% in a great beer market. we talk about it at the robin hood conference, this generation of traders have not seen in nation. we had 30 years of that, now we will have 10 years of this year you cannot make it too hot. we do not have the workers that are skilled for these jobs to build bridges and tunnels. the economy will go into recession and the stock market will fall. erik: have the stock and bond markets got ahead of themselves already? barry: no. if you're cutting taxes from 39% corporate taxes to 20%, 15%, everything is worth more. the russell route would like that because we know we are getting a tax cut. what will the impact to be on the deficit, and what will happen to rates? what kind of break will that be?
the economy is set up well to sustain an increase in rates. for us, mortgage rates, we have floating rates and will make a fortune. some other businesses, single-family homes, people get stuck to rent. we have 90,000 apartments. you won't be able to buy house because interest rates are higher. the rental complex is good, housing market solid. h onepends on the breadt how they parlayed the goodies. will they go to cleveland? michigan? the blue states? california, new york? where's the money for infrastructure? will they fixed laguardia airport? i was in orlando, the airport is fine. as a real estate player, you have to figure out where the money will flow, because you want to invest in those markets. erik: on a personal level you went from being the wall street
democrat, socially liberal and fiscally conservative, to embracing a government that will be socially conservative and fiscally liberal. barry: did i say i was embracing it? erik: you are very critical of the obama administration. barry: trump is the result of obama. the message is populism didn't work. they were saying billions did share a your fair elected a billionaire that pays no taxes. the nation voted for him and he is putting billionaires in his cabinet. people want equal opportunity. i agree with that. we should offer everyone equal opportunity. equal outcome? it will crush our country. , leaned republican
significantly, because we did not fix this country and fix education, we would not have a social agenda, we would have a war. we were pitting these paths and have-nots at war like every one of the haves had cheated. that is not our country. erik: the chinese are putting byves on overseas investment chinese buyers, specifically real estate transactions of billions of dollars or more. what happens if you take the chinese buyer out of action? barry: china limiting capital corelows and rising rates, -- people who were buying real estate as a yield alternative, which was significantly a number, moved money out of the mortgage market into real estate. gaining 200 to 300 basis points by doing so.
as the 10 year rises, you will see a change. core real estate, some bought a 2% yield. you will see them, they will follow the 10 year to 100 plus basis points. for real estate. the other argument is inflation. if costs go up and rents rise, those buildings are worth more. if i knew that, i could be really rich. erik: the lower end of greenwich is fine, below $2 million. that is greenwich, connecticut. new york city has units coming online at the wrong time. when it started it was priced for the $6,000 a foot. it gets thinner as the dollar get stronger and foreigners are feeling the pain.
did they bailout on the high end of the real estate market? barry: i don't think so. not short-term. th when it has confidence will buy the units. will the russians be here? they left. the brazilians left. the chinese came in. i think they are nervous moving money around. you made the point about china. it is important to leave have to wonder is this the first step on limiting chinese investment in foreign assets, or one and done, or sequential? keepre just trying to capital at home? you will see china flow. when i think about our of theses, the economics target will be 5. huge number, but
the world will have to adjust. the u.s. is doing really good for investors on a global base. that is why people are with us. the euro, the chinese are slowing, we will win almost by default. duck at theking ugly duck dance. are you a buyer or seller? if you are buying, where? congress'want to see response to trump's plan. the pace. need to see it will dictate rates and change pricing. we are being cautious. we continue to look at the angst that have worked well. apartments have worked well, delivering good returns to investors. the markets have slowed in new
york and san francisco. we have been buying secondary office or gets. -- office markets. those will continue to do well. logistics have done well. distribution centers, hotels probably will pick up, except in places like new york. they will go to london, though. that will be a big beneficiary. europe, selling assets, the italian banks in particular. i do not know what will happen to the government. they will have a vote in a week. renzi is likely to be out. long --you could be
right or wrong. i'm not smart enough to find out the side. erik: not smart enough, confused, this doesn't sound like the barry sternlicht i know. barry: caution. caution. you have to be super careful. one voice of interest is retail. retail really works because the american consumer has wealth. the middle class, incomes rising 5%. erik: does retail work as a retail investment? barry: exactly. we had reasonably good sales in our malls over black friday, cyber monday, sales were ok. we are diversified in our portfolio all the way from florida to a suburb in seattle. the numbers weren't bad. somewhere down, but they were pretty good. for: the bell doesn't toll
the american mall yet? barry: it is a flexible animal. it will just change your you will see them offer more detainment, restaurants, more pandora or victoria's secret. see -- i walk the malls and i see stores i've never heard of. the fabric keeps changing. we will be ok. there will be an equilibrium between online and physical retail. physical retail will not disappear. erik: is there anything outside the united states that appeals to you? now my macro cloud is cloudy. hotels inking at continental europe. in eb'ibiza.
germany, logistics, we really sweden is going pretty quickly. residential in sweden is fantastic. there is a lot of opportunity. we are trying to figure out the beneficiary of banks leaving london. the impact on london. you haven't seen the impact on the real estate markets, no one has left. ? they're wondering, do i have to leave i was talking to one bank, they said where are you going to go? wants wants us, holland us. we're trying to anticipate where they will move. erik: you can't figure that out? barry: i will tell all the people. we have an idea.
we don't know if they have to move. erik: the city of london has become the equivalent of a real estate short? barry: i think yes. i think yes. i think there are better risk rewards. this to anining investor yesterday. calgary, canada was one of the strongest markets in north america. today there is a 30% vacancy rate. it is possible to see vacancy rates like that where financial firms are. i don't think the west end would be impacted much, but the financial sector, is a big bank has to move -- will the mayinental banks, doesn't seem to care much about the banks. my team in london is saying a lot of tech firms are backfill
ing. google and amazon announcing expansions in the kings cross area north of the city. london is an amazing city. it is a trading opportunity. i don't know the answer, if i did, i shouldn't be sitting here. erik: thank you so much. great to have you. barry sternlicht, the founder and ceo of starwood p. we're live from the robin hood investors conference. vonnie: thanks for bringing us that. atnot miss another interview 3:45 eastern, 8:45 london time. breaking news, president-elect donald trump and vice president-elect mike pence are meeting with the goldman sachs coo. they're looking for treasury.
it is unclear if he is a candidate. others mentioned in relation to the position include former bb&t ceo. , andhile, politico reports jennifer jacobs has mentioned, alain cow has been named transportation secretary. she is the wife of mitch mcconnell. for treasury secretary, chao -- transportation secretary.
joining us with the latest is our south african economics reporter. give us the latest. we had a press conference an hour ago. indeed. 2:00 p.m. south african time saw the african national congress, the leading political party in the country, give an update into what happened over the past couple of days went to international elected committee. they decided not to go ahead with out sting president jake -- with outing president jacob zuma. they had the general secretary amc say they discussed with no regrets, and was happy to discuss the matter. it is the first time, which makes it a big deal for the ruling party, and shows deep in theare showing
president's leadership within the party. it was a mad by the -- it was led by the minister of tourism. the general secretary called the matter a closed case. nejra: yesterday, we saw the rand rally down for the first time in 4. this comes ahead of an assessment by s&p at the end of the week. south africa managed to escape a downgrade. is all of this likely to make it more likely it could be downgraded to junk i s&p? >> who knows. last week they said political turmoil is bound to hurt south africa am a leading up to the national electric conference by 2019mc into next year and when a new president is elected for the country. political turmoil becomes a big has ledr the agency and up to it being almost number one, as important as growth when
taking south africa's rate into account. it is a big question mark, budget volatility is bound to come into the markets. it is unsure what will happen with s&p. a downgrade means we go into junk status for the first time in a few years. vonnie: the rand is not suffering too much. below 14, but the central bank did not have to do anything on rates to stabilize the rand. what is the outlook for the currency? >> inflation currently sitting at 6.3%. the rand rallied hard and that was probably because of what with southth regards africa awaiting a downgrade. a lot of positivity has come through, but perhaps it was running too hot. today, we saw a tracking
backwards with regards to the currency. people saying perhaps we had run it too hot. political turmoil is worrying investors, the volatility going through the end of the week according to one of the analysts we have spoken to. it will be an interesting time for the currency. anks for that. nejra: coming up, looking at the pound rising and continuing to look at opec. we are 30 minutes from the equity market close. higher, a600 edging rebound in italian banks pushing stocks higher, particularly in italy.
"bloomberg markets." ♪ nejra: we will take you from washington to vienna and cover stories out of london and berlin in the next hour. here is what we are watching. goldman sachs out with a new note calling for 30% chance of an opec aspen deal. we will head to vienna and saudi arabia, said to reject a deal unless all members participate. ubs wealthie: management arm said donald trump breaking down the latest moves in currencies. the president-elect has chosen congressman tom price a fierce critic of the affordable care act