tv Bloomberg Markets Americas Bloomberg November 30, 2016 10:00am-11:01am EST
vonnie: we are going to take you from new york to vienna and cover stories from anchor, led -- frankfurt, london, and washington, d c. first, the latest economic data in the u.s. julie hyman is that the markets desk. julie: pending home sales rose more than estimated. it is in line with what was estimated slowdown from the prior month. a bit of a misread from my part. down from 1.4% increase the prior month, revised downward a little bit. in terms of the other economic data, it has been largely positive. the adp jobs report coming in better the next amended -- better than estimated. personal incomes rising even as personal spending moderated to
some extent. we are seeing some strength in stocks today, although the nasdaq is trading lower. we have the dow and the s&p not currently -- s&p touched a record. dow is currently trading at record levels. catching up with what we saw the nasdaq jew yesterday. interesting what we saw the nasdaq do yesterday. opec unexpectedly struck an agreement on production and whether they stick to the agreement is a question. we saw oil have its biggest single-day gain since february. 48.35 a barrel. we have seen a surge in volume for oil trading. whether there was an opec agreement or not, it seems the where oil is traded, cme group a winner here.
in terms of daily volume, the green circle is an almost 2 million barrel in a single day in terms of oil contracts traded. that was on election day. that was, as you can see from the chart, pretty clearly a record. as you look at all of the oil opec surplus capacity in terms of number of barrels a day, this is a five-year chart. we have seen the surplus capacity go down as we have seen opec pump more and more. as you get this opec news, as you get the various economic headlines that has repercussions for rates, we are seeing a big increase in the 10-year treasury yield. prices are lower, yield is higher by about nine basis points, extending the worst month for u.s. treasuries all the way back to 2009. vonnie? vonnie: thank you for that.
we will check in with you in a little bit. what is going on 30 minutes in the trading day in the u.s. and further in the trading day in europe? nejra: exactly, we are 90 minutes from the european equity close. all eyes on oil here in europe as well, as julie was outlining there. we are hearing from 2 delegates who don't want to be identified that there is an agreement with opec. we are waiting for the news conference which was likely to come very soon. at the moment what we're seeing is that brent crude has rallied above $50 a barrel. going both $50 for the first -- going above $50 for the first time since october 28. biggest jump in price since the start of the year, january or february, i believe. if we take a look at the big picture, looking at the top market moves on the gmm function, russia's index of 1.2%.
showing a chart earlier about how closely the ruble is correlated to the oil price. .7%.100 up we are seeing some dollar strength today on the bloomberg dollar index. up .4% there. if you look at what is happening with the yen, down 1%. off by .5%.as well, in terms of what is happening in the yield space, a lot of focus on the 10-year treasury yields moving higher, which i will talk more about in just a second. i want to show you what is happening on the stoxx 600. .5%. second day of gains for european stocks. they are on track for the first monthly gain, three for the month of november. materials from which includes the chemicals companies. we have seen linda jump today after saying it is reviewing a revised merger proposal.
we are seeing commodity producers move higher as we are seeing metals rally as well. finally, want to show you this fantastic chart just showing the dollar moving in line as the treasury's premium does increase. the treasury yields premium, vs. its global counterpart from at its highest since 2007. if you look to the bloomberg barclays u.s. treasuries yield spread, dollar climbing with that. the dollar has risen above its 200-day moving average. every major developed currency except the new zealand dollar also poised for its best month since 2009 versus the end. -- y en. vonnie: thank you. lots going on in the markets and the weather politics. more from the newsroom. >> president-elect donald trump has chosen former goldman sachs banker steve mnuchin as treasury secretary. he was well known in hollywood, bankrolling "the x-men"
franchise. >> we need to make sure our infrastructure is set for the 21st century, that we have roads and power grids and infrastructure that support this country. that is going to be a big focus. >> trump also selected billionaire investor wilbur ross to be secretary of commerce. 'sss was an advocate for trump economic program went trump was still a long shot. rush has been in conflict with president-elect trump's economic program went trump's tm about the conflict in syria. he added that moscow was hoping for better relations with washington over the new and administration. ashes have begun a four-day journey to their final resting place in santiago. the route traces in reverse the victory tour castro and his bearded rebels took after overthrowing the forces of
bautista in 1959. and in south korea, the president may have bought some time for herself hit a faction of her ruling party that once was in favor of her impeachment says instead it would accept park's resignation at the end of april. lawmakers have given her nine days to make a proposal. her approval rating has dropped to single digits because of an influence peddling scandal. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. i'm elisa parenti. this is bloomberg. vonnie: thanks. as president-elect donald trump schedules a news conference to outline plans for extra getting himself from his business interests, we are joined by one of the democratic lawmakers who has been raising concerns about his potential conflicts of interest. senator richard blumenthal of connecticut joins us from capitol hill. first, connecting your thoughts on the latest appointment, steve mnuchin for treasury and wilbur ross for commerce?
senator blumenthal: i think will ross has a record of favoring investment tax credit for infrastructure construction, and i believe that these kinds of giveaways, or special tax breaks, offer less than a full solution to the challenges we face in building more roads and bridges and ports and airports. there are to be public funding, public-private partnership. we may have a disagreement on how to fund and invest in the infrastructure that we do agree is absolutely necessary. i'm sure that this agreement will be ironed out. i'm hoping there will be a compromise that builds and provides more jobs, more new projects, without special interests having tax breaks for giveaways. vonnie: senator kumar you saying you are hoping you could vote -- senator, are you
saying you are hoping could vote for him but at the moment you will vote against him? sen. blumenthal: i want to hear what he has to say as the nominee and what his position is, for example, on trade. i'm against the tpp. so is the president. i'm assuming he will be, too. there are a wide range of issues. vonnie: what about stephen mnuchin for treasury? sen. blumenthal: at this point i am not going to say one way or the other. hopefully we will explore whether in fact the trump plan for building roads, bridges, rail, desperately important to the state i represent, because it means new jobs and hopefully new projects, are going to be , thed out of tax credits 82% tax credit that is part of his plan, which is supposed to generate $1 trillion. the question is whether it will, or whether it will have a real
public-private partnership, bringing back, for simple, some of the money parked overseas for profits made up short -- made offshore, and other forms of investment from the private sector, but also a public investment in new funding from the federal government. vonnie: calls have been growing, including your own, for the president-elect to exit some of his business interests, all of his business interests. he does now say he will have a total exit. those are his words. he's scheduling and his conference to discuss it december 15. -- a news conference to discuss it december 15. your specific complaint to the attorney general is deutsche bank. is that all you have a problem with? sen. blumenthal: he owns or is a borrower from deutsche bank for property that he owns now. and so i have suggested that the investigation of deutsche bank should be done by an independent prosecutor.
it could be a criminal investigation. it should be independent of the department of justice. that likely will be headed by a campaign surrogate, personal supporter. that creates an inherent conflict of interest, unless he severs himself, and the administration separates itself from the investigation, which potentially is criminal. it should produce not just a civil penalty, but a criminal penalty, if there is a finding of criminal culpability on the part of the bank. vonnie: your specific problem, though, it seems to me, to be with deutsche bank and not a silly the president-elect'does not necessarily the president-elect's -- and not necessarily the president-elect's business dealings. do you have any other problems that might arise? sen. blumenthal: yes, deutsche bank is and will medical be interests that create --
create -- emblematic of the interest that create problems for trump right now. he says he will leave that his words, leave totally, is a vague and an adequate description -- vonnie: what would you require? wishing you to divest his businesses, exit ownership -- would he need to divest his businesses, exit ownership? en. blumenthal: you do toat do
enforce ethical standards, particularly given that your letter has been sent to the current attorney general, and we know that jeff sessions is at least in contention and possibly will be the next attorney general? sen. blumenthal: the deutsche bank example offers a good model for what should be done when there is a potential conflict of interest. the appointment of a special independent prosecutor there for larger bank, which -- for deutsche bank, which may well have been the law, they offered to billion dollars to $3 billion to settle the claims against them. the justice department said $14 billion is more likely the result they will seek. the point here is not what the specifics of the outcome are, but the approach of using impartial, objective, independent counsel or prosecutors that are independent and impartial not just in reality but in appearance.
we know from this election that the american people want change -- vonnie: but, senator, specifically, how do you intended to raise this issue more broadly? raising the deutsche bank issue with the current attorney general is one thing. how do you try to stop a father speaking to his children, for example? sen. blumenthal: the dilemma and the challenge really is to make people more aware so that the american public demands and donald trump heeds this message. it will depend on people knowing and terry and making their voices heard, which is a lesson of the past campaign, because that is what they did in the election. vonnie: will you support jeff sessions for attorney general? sen. blumenthal: i'm asking tough questions and i will be scrutinizing very closely over the next weeks what he has to say in response to those questions. we have disagreements on issues like voting rights and immigration reform and marriage
equality that i think really need to be answered. vonnie: who would you want to see replace richard cordray at cfpb? you have been a consumer advocate for most if not your entire career. sen. blumenthal: i am a fan of richard cordray. i worked with him when he was attorney general of the state of ohio and i served in the same position as attorney general of the state of connecticut. i hope he will serve for the remainder of his term. vonnie: finally, senator, and dexia time, who will house democrats choose to lead the democratic caucus? sen. blumenthal: the house democrats? you know, i have enough to do in the senate. i'm not for investigating what will happen in the house -- not prognosticating what will happen in the house. vonnie: senator richard blumenthal, thank you for your time. we are seeing oil
prices soared today. brent rose above $50 a barrel. 48 spot 63 on the bdi. delegates -- opec set to agree on its first production cut in 18 years. at hisqi delegates country agreed to cut output. let's get more market reaction and analysis. annmarie: very busy day at opec after 48 hours of everyone being pessimistic they weren't going to get a deal. the delegates were able to put aside their differences and they actually decided on a production cut of 32.5 million barrels a day. excited to be joined by a chief oil analyst -- she joined me before the deal. people have said it is the funny to -- it is the end of opec.
is opec alive? >> i think it is a wake-up call for them because they clearly put aside their differences and after come together with a very concrete deal. this will help rebalance the market a lot quicker. the details are still to be announced, but i think this is very positive. annmaire: who do you think is the biggest winner? amrita: any oil exporting country to -- any oil export in country. it gives him a lot of breathing room. annmaire: a lot of talk is swirling about indonesia. it is said they were kicked out of the cartel. what does this mean? amrita: i think we should wait for the press conference, because indonesia is a net importer of oil, they were allowed to come in and whatever the differences were, they are no longer a part of it. it is important to clarify it
because the 32.5 that they talked about would be lower, because the indonesian baseline needs to be taken out of the number. 1.2 million barrels a day or whatever it costs has been announced does not include from indonesia. it is a genuine opec cut. annmarie: so they have actually potentially cut more? amrita: well, they will redistribute the indonesian cut within opec. in an issue -- indonesia will be a non-opec member. annmarie: who else is going to cut? amrita: i think the rest of it is a bit of rhetoric. we know that their production is declining already. i think as long as they say we are cutting production equivalent to the original declines anyway, that is fine. annmarie: how are they going to implement this, and more importantly, monitor this deal? is beinghat is what
decided in the room and that is why the press conference hasn't happened yet. they need to come up with a high-level committee that involves ministers and aids which would monitor -- and aides which would monitor this process, the month on month changes, and if there are issues with implementation, there would be more talks. this is likely to be a short-term deal. it was meant to be a six-month deal. annmarie: iran is cutting between the .7, three point hundred looking to be 3.79 in change. can they sell the stockholm politically? -- sell this back home politically? amrita: i think they agreed to this beforehand, otherwise i don't think iran would've agreed to that. annmarie: how i can we go after this deal? and thegiven the market options out there, i would not be surprised if we see $55 easily, but also $60. hard to know when we will see it, but the position is important.
annmarie: thank you. sen, chief oil analyst joining us, saying we could possibly see the 60's. good news for the oil market. bloomberg's and reporter reporting from vienna. we are waiting the news conference with bated breath. we are keeping a close check on oil. friend has gone above $50 a barrel -- brent has gone above $50 barrel for the first time since october. still ahead, we will look at some of the biggest market movers in the early u.s. session, including energy stocks , what else can getting a boost from the opec deal. this is bloomberg. ♪
nejra: live from london and new york, i am nejra cehic. vonnie: and i am vonnie quinn. this is "bloomberg markets." time for the biggest business stories in the news right now. china has added restrictions to pulling yuan out of the country. china will not approve investors to bring overseas for foreign currency unless there is a valid business reason. the government is trying to prevent capital outflows from destabilizing the financial system. the concept has made a concession to restart contract talks with the striking pilots. agreed to give back some benefits paid a series of walkouts have led lufthansa to cancel flights. serious xm satellite radio has agreed to pay $99 million to settle a suit brought by members of the 1960's group the turtles.
they are seeking unpaid royalties for songs recorded before 1972. the sox are not protected -- the songs are not protected under copyright so the group sued sirius under california copyright law. julie hyman is looking at the opec affect. julie: the direct effect on the ripple effect. one of the groups we have been watching his airlines. the effect is not terribly clear. we could see an increase in jet fuel prices as a result of the opec agreement. delta and southwest are little changed at this point. another group we are watching is the railroads. be a more attractive, lower cost alternative for the companies that need to ship goods around the country? presenting or is
did present in a conference today and he said that earnings per share will be flat to slightly higher in the fourth quarter. the company's prior forecast had been flat to slightly down. he says 2017 feels a lot better. he said the company is likely to announce a new buyback program in april. all that is helping this group as well. of course, the most correct effect from the increase in oil prices is on energy stocks -- most direct effect from the increase in oil prices on energy stocks. 14.5%, andathon oil, murphy oil up 11%. all of this is propelling the s&p energy index to its highest 2015.july although still well below the levels where it was in the beginning of that year. coming way back with this increase in oil prices. nejra? nejra: thanks, julie, for putting that in context for us
♪ grace and frankie, hemlock grove, season one of...! ♪ show me house of cards. finally, you can now find all of netflix in the same place as all your other entertainment. on xfinity x1. ways wins. especially in my business. with slow internet from the phone company, you can't keep up. you're stuck, watching spinning wheels and progress bars until someone else scoops your story. switch to comcast business. with high-speed internet up to 10 gigabits per second. you wouldn't pick a slow race car. then why settle for slow internet? comcast business. built for speed. built for business. lightbank from bloomberg world headquarters in new york and london, i am vonnie quinn. nejra: and i am nejra cehic. this is "bloomberg markets."
opec clinched a deal to curtail supply. julie hyman has the latest. julie: we are waiting for the numbers to come out in a couple of seconds. inventory data came out last night that looked at a drop in the weekly inventories number. we will see if the government data does support that. the government is reporting a drop of 884,000 barrels in the weekly inventory. a gain was estimated. it looks like gasoline inventories climbed 2.1 million barrels. this is up on nearly 5 million barrels. mixed report on that front. however, it looks like oil is not really budging as a result of this in part because opec is the big news today vs. the .nventory vs. the supply
presumably attention will shift back to it after we get past the opec meeting and we will see what the individual companies actually do in terms of pumping. again, we're not seeing that much immediate reaction because of the opec news. nejra: thanks, julie. staying on oil, we want to dig in to how the opec deal to cut production will impact the global markets. joining us with mark is tom clark, portfolio manager at william blair. tom, let's just look at this deal first. i have this chart that shows options volatility. we saw fit spiking and now it is coming down a little. we have morgan stanley staying end of this news that we have the agreement, $40-50 five dollars, even if no deal. what is your view on the upside and downside for oil? the deal is quite
significant, the first coordinated production cut for many years. today's announcement is the high point in that regard. the opec cartel is not so much in global production these days, about 40%. it has seen come edition as well as cooperation. they have a mutual incentive to cut production but they also have an incentive to cheat, as we have seen before. was breachedcap and this one may be as well. the impact on oil prices may not be that great from here. the other thing that is relevant is the competitiveness of shale oil in the u.s. probably comes in a focus somewhere between $55 and $65. that probably lowers overtime. we have the trump administration probably likely to build out for the supply infrastructure,
pipeline infrastructure, and will probably be regulation-friendly, corporate tax-friendly. there is the abundant supply situation for oil. we recorded it as being in a range of between $14 and $16, with the bias more bearish puts the top of the range. -- towards the top of the range. that range is likely to fall overtime, not rise. nejra: ok, if you look at commodity currencies, there are several that are more highly correlated to oil. one is the russian ruble. where are you looking in the currency space for winners and losers, or are they all going to move in tandem? tom: commodity exports are the relative losers and they've been battered significantly over the last two or three years because oil has come down a long way. but that is in the price already. for the very long-term
competitiveness perspective, most currencies including the peso, areuble, fundamentally attractive, cheap. but the oil super cycle has weighed on them. less,eadwind is probably despite what i just said going forward. there is a reason to be relatively optimistic on the long-term perspective. and the big winners, oil imports. vonnie: does this have any impact on demand at all? for manyemand changing this whether it be the currency moves all the costs? tom: demand for oil is largely impacted by growth prospects around the world, which, you know, carving helped by the efforts of the world central-banks to a greater or lesser extent. we are dealing with a situation
where demand is generally sluggish, and the supply situation is the mover here. nejra: right, exactly. demand won't change -- therefore, according to what we were, it is not going up anytime soon. one does this mean for producers, then? are they looking at a long period of stagnation when it comes to demand? tom: yes, i believe so. vonnie: where do you see long-term prices going, then? $40-$60 rangein a with a bias to the downside. they might be of further blip if the opec news is digested over the coming days. with the abundant supply situation looking forward, the bias is still probably modestly down, but nothing like the declines we have seen since 2013, 2014. nejra: tom, i want to get your view on india.
here we have a chart showing foreigners seeing overseas holdings of indian stocks and bonds dropping this month. you did mention the india relation to the oil price, and we have the gdp data today. been the bigs emerging economy that you didn't have to worry about. it is an energy importer. it a lot of macro tailwinds that of power growth, lowered inflation, closed the account deficit. of course commit is growing faster than china right now. it is a bright spot. reformer, as a introducing significant policies. this experiment with changing the rupee note is an exercise where in the short-term the best case is no change. the worst case is a temporary but sharp contraction in the
economy. it is coming at a time when india doesn't need this. nejra: we are going to get a rate cut on december 7? tom: that is not a short, although inflation has been falling for other reasons. at some point, and meeting or the one after that. -- next meeting or the one after that. various issues, logistic and other issues, remedy monetization process does raise short risks. clarke, great to have you on the program. vonnie: let's take you to the "first word" news. >> president-elect donald trump resumes his auditions for secretary of state today. had dinner inmp new york with former republican presidential candidate mitt romney romney was harshly critical of trump during the campaign but now he is full of
praise. did something i was on his successful in pg one the general election. -- he won the general election. and he as a message of bringing people together and this has connected with the american people in a powerful way. the last few weeks she has been carrying out a transition effort and i have to tell you i've been impressed with what i've seen with the transition. >> today a retired marine general returns to trump tower for a second interview. donald trump says he will leave his business in total to focus on running the country. he will hold a news conference with his children on december 15 to discuss the details. he says he is not legally obligated to hand off his business operations but says it is visually important to have no conflict of interest. critics have said he should put his interest in a blind trust. the death toll of a storm across the southern u.s. is now five. tennessee emergency management says a husband and wife died and
2 others were injured. three people were killed in northeastern alabama. a suspected when interviewed a mobile home in jackson county. the european council president is rejecting calls by british lawmakers to protect expatriate right after brexit. members of parliament asked to broker a deal guaranteeing that u.k. nationals living in other eu countries and eu nationals in the u.k. would not be forced to leave. he says if the u.k. wants a deal, it should start formal brexit talks now. global news 24 hours a day powered by more than 2600 journalists and analysts in over 120 countries. i am a lisa parenti. this is bloomberg. vonnie: coming up, the former u.s. federal reserve vice chair alice rivlin joins us to weigh in on donald trump latest cabinet appointments. this is bloomberg. ♪
vonnie: you are watching bloomberg. i am vonnie quinn. nejra: i am nejra cehic. globalo operator has the expansion plans, including a million-dollar hotel in macau. vonnie: the bank of england is out with results of its latest stress tests and a like the royal bank of scotland has a lot of work to do. nejra: and a closer look at the controversial u.s. electoral college that picks the president. china has cracked down on high rollers and the general slowdown in business has done little to curb the ambitions of a casino operator. the chairman is launching a new billion-dollar hotel in macau called morpheus.
he told bloomberg it is the beginning of a global plan. >> we're looking for the next place to build something special. operators,ny global would be interested in a big jurisdiction like japan or other parts of asia, where you could spend this type of money. cuta: opec has agreed to output, according to a delegate at its ministerial meeting in vienna. the oil cartel will cut output by 1.2 million barrels a day to slightly less than 33 million barrels. we got word that russia may join in. a person familiar with the matter says russia wants to cut back its own output. royal bank has failed multiple hurdles in the bank of england's toughest stress test yet. the boe says 2 of the banks also showed what recalled capital inadequacies, barclays and standard chartered.
neither of the banks was required to submit a new capital plan. go pro will eliminate 15% of its workforce and shutdown its entertainment division. the company will cut more than 200 full-time positions. gopro says the restructuring will reduce operating expenses and achieve its goal of returning to profitability next year. bates, who joined as president in june 2014, is stepping down by the end of the year. vonnie: time for the "quicktake," where we provide context and background on issues of interest. the u.s. constitution has three requirements to be president -- you must be 35 years old, have lived in the u.s. for at least 14 years, and be a natural born citizen. not much else about becoming president. it is simple. here is the situation -- republican donald trump was elected november 8 after winning key swing states such as north
carolina, ohio, and florida, even though democrat hillary clinton won the most votes nationwide in that election. ae president is selected via tricky mechanism called the electoral college, created by the nation's founders, as a compromise between those who favor a direct popular vote and those who want lawmakers to pick the president. every state is assigned as many electoral college votes as it has members of congress, the formula that amplifies the importance of small states. here's the background -- the u.s. has had an elected president since the constitution went into effect in 1789. the contest is held every four years, a tuesday in november. since abraham lincoln won the job in 1860, all presidents have been members of the republican or democratic party. the winner take all system previously called the electoral college -- caused the electrical it to choose presidents who didn't win the overall vote come in 1876, 1888, and 2000, when
beatlican george w. bush al gore after a weeklong recount. after each election there is a renewed push to make the total tally of ballots decisive. but many states, especially the small ones, are unwilling to switch. this broad agreement that money plays a big role in campaigns -- each party spent more than $1 billion by election day, mostly on advertising. more on the bloomberg global business report. head to bloomberg.com for more stories. nejra: staying on u.s. politics, president-elect donald trump filled 2 more top spots on his economic team, picking financier wilbur ross to head up the commerce department and former goldman sachs executive steve mnuchin as treasury secretary. joining us with her take on these picks and other requirements is former fed vice chair and budget official alice
rivlin, now a senior economic fellow at the brookings institution. so wonderful to have you on the program. , what start by asking you do you think of the latest picks of mnuchin, for example, means for trump's fiscal plan? alice: well, it is hard to say what trump's fiscal plan is, exactly. it certainly means he wants people who are very familiar with finance and how wall street economicning his department. he is not thinking an outsider, he is not picking someone who will go after the big banks, as you suggested in his campaign. -- as he suggested in his campaign. nejra: what would be your main priority, were you in his position come in physical terms? can trump execute those plans
without blowing up the deficit? well, the long-run prospects for rising that are fairly serious. but in the short run, we don't have a very high deficit. and i think you should go ahead with his and out -- i think he should go ahead with his announced plan to make a big investment in infrastructure. we have neglected infrastructure for a very long time in this country and there is support in the republican and democratic party for modernizing infrastructure. i would go for a big plan and get it through the congress. he has also said he wants to cut taxes. i think he should be very cautious about cutting taxes. but we do need a reform of the corporate income tax, which everybody agrees is not doing us much good. we are out of line with the rest of the world. a corporate income tax reform
that broaden the base and cut the rates down to where most countries are would be a good one. now, he has proposed a drastic from 35. down to 15% in my opinion, that is going to far, but it may be an opening offer good vonnie --opening offer. vonnie: let's have a listen to what steve mnuchin had to say this morning. will beirst priority the tax plan and it has the corporate aspects to it, lowering corporate taxes so we make u.s. companies the most competitive in the world. making sure we repatriate trillions of dollars back to the united states. on the personal income taxes, where we have the most significant income tax cut since reagan. dr.ie: how doable is this, rivlin? do you see a return to bipartisan agreement when it comes to corporate tax reform? alice: well, i hope so.
it is important to get by on both individual and corporate tax reform. i think there are plans that would do that. i don't know whether this administration, now that they have control of both houses of congress and the white house, will pay much attention to what democrats think. on the other hand, they don't , and60 votes in the senate they may need that for things that want to do. rivlin, do you see any return to simpson-bowles or the paul ryan plan, or will this be a newly created plan on the part of steve mnuchin and his team? think well, i don't just they will pick up some of plan, but if you are looking to reduce the growth of debt, and reform the tax system, then you have
limited number of options. i think the things that we ,alked about in simpson-bowles broaden the base and lower the rates, are the right thing to do. we could have an individual taxes them from which actually raises more revenue in the long run, with lower rates, if we get so-calledy of the big loopholes that are mostly helpful to upper income people. now, this doesn't sound very republican, but it would make a lot of sense to phase out or change the form of some of the things that are hot button issues, like a home mortgage deduction, turn that into a credit so that it didn't lose as much revenue and wasn't as big an advantage to upper income people.
a credit could be better for people that elected mr. trump. rivlin, i would like to ask you about the fed. as a former federal reserve vice chair, i would like to get your view on where the fed goes from here. the markets are pricing in a 100% probability of a rate hike in december. do you think donald trump make the fed's job easier? alice: well, i don't think the fed's job at the moment is very difficult. it hasn't signaled, and the market certainly understands this, that they think it is time for a small-- has signaled, and the market certainly understands this, that they think it is time for a small rate increase. and slowly and deliberately march in direction, if the economy continues to strengthen over the next few months. nejra: what about the impact of
a stronger dollar? what impact do you think that might have on policy? i don't know that it will affect policy all that much. is theomething that possible effect of all of the things that are going on in the world that are less favorable than they are here in the u.s. economy at the moment. vonnie: dr. rivlin, as we're speaking, donald trump is tweeting, and we have a full screen of his latest tweet. i will read it out for you. it is actually a tweet from carl icahn, saying he will not take the treasury secretary job from donald trump. ross mnuchin and wilbur
will help to do when american needs most, stimulate companies to invest. he is optimistic about this. what type of corporate tax rate would be fair? what type of corporate tax rate would keep companies here? alice: well, i think we need to get down to where most of the world is, and that is in the 25% range. president-elect trump wants to go below that. i don't think that is necessary. but this will all shake out in the negotiations. one of the things that is important is what do they do earnings thatting are stashed abroad at the moment. that in want to incent some pretty vigorous way and use say, theance, infrastructure plan. rivlin, in the
campaign donald trump said he was not going to touch social security or medicare. however, it looks like there will be at least some kind of partial repeal of the affordable care act, and especially with tom price as hhs secretary from the looks more likely to what your concerns regarding social programs? alice: well, there never was any doubt that the republican president would do something to repeal and replace the affordable care act. slogans been a trump from the beginning, and it has been what all republicans have been saying. the easy part is repeal. the hard part is replace. my hope is that president trump sees this as an opportunity to build what he said he wanted. he wanted to replace the affordable care act, known as obamacare, with something great.
"great" was his word. that would give all americans access to affordable coverage. andink he can do that, trumpcare, if that is what is i -- it's called, could be great. but he needs to keep the system in place until they figure out what to replace it with. the basic idea of the affordable care act is actually very republican. choosing among private plans on an electronic exchange -- vonnie: dr. rivlin, i'm afraid we have to leave it there. our very large appreciation.
this is the european close on bloomberg markets. nejra: we're going to take you from new york to vienna and cover stories are frankfurt, london and washington in the hour. opec is said to have clinched a deal to curtail oil supply, confounding skeptics in its first cut in a years. markets are reacting favorably, but does this group still have to prove its credibility? vonnie: president-elect donald onmp looks to outline plans the same day steve nugent and wilbur ross are nominated for top jobs in his administration. and the bank of england's toughest stress test.