gura. welcome to "bloomberg markets." we are covering stories from new york, vienna, and -- -- doubt000 watch 20,000 watch is still on today. trump'st-elect donald $6 million cabinet of mostly white men and men without much government experience. we will look at the experience the cabinet will have to policy and to congress. the latest report on why the economy and markets have unmarked -- and bark on a journey he calls "unknown." just: art we all journeying into the unknown. we have the majors higher today and as david said, we are approaching 20,000, but we are further away than we were a

couple days ago when we were within 50 points out that level. now we are still around 80 points away at this point in time. the s&p and the nasdaq are rallying in the wake of the said most -- in the wake of the fed. we have treasury yields at the highest in about two years. seeps into a lot of strength in financial. that is the best performing group. the telecom stocks are also higher. they have been mostly interest rate sensitive. estatels higher, real often tends to be real estate sensitive, is a little bit lower in the session. not only are financials the best performing group, but this is gm move. financials are accounting for 49% of the gain indy s&p 500 because -- in the s&p 500 because of their waiting.

-- weighting. elsewhere, we have to talk about the late breaking news that the verizon-yahoo! deal may be in jeopardy. it is considering trying to negotiate a lower price or even an exit of the purchase of yahoo! in the wake of new revelations about a hacking of yahoo! as one billion accounts. yahoo! shares falling on the headline and currently down 5%. also, after reports yesterday that kraft heinz might be interested in mont believes, for the reporting has shown that they are not in current talks shares are higher today -- mondo less -- mondelez shares are higher today. vonnie: i guess it is the old

story for this fire. that is julie hyman at the bloomberg markets desk. let's check in on bloomberg first word news. courtney: representative ryan think -- ryan think he -- ryan zinke is the pic for secretary of the interior. confirmed, he would oversee policy on a range of issues including federal land usage, national parks, and fish and wildlife issues. senate democrats have unveiled legislation to require donald trump to sell his businesses and put all of his assets in a blind trust. among the lead sponsors, elizabeth warren who said the public needs assurances that donald trump will "do what is best for the country, not using his office to do what is best for himself and his businesses."

russia's military says more than 1000 people who have been -- wed to leave aleppo they will travel to rebel controlled territory and drones will be used to monitor their progress. the president says "history is being made with the defeat of insurgents in aleppo." he made his remarks in a video message posted today. jurors will soon be asked to decide if the man accused of the shooting death of nine black worshipers in a south carolina courage is guilty of federal hate crimes. closing arguments are underway at dylann roof's trial. he waited until the group had his eyes closed for prayer before he opened fire. global news 24 hours a day, powered by more 2600 journalists and analysts in over 120 countries. vonnie: yesterday --david: yesterday we had the fed meeting

and stocks rebounding. gold is getting clobbered after a more aggressive path was announced for rate hikes. joining us is david, let's talk sincehe euro, the lowest 2003. what is your reaction to that and how does that change her position? zervos: i think the post trump world has been a sure wrong dollar world and we have been focused more on the dollar-yen more than dollar- euro. we think capping at zero creates feedback from crosscourt -- for cross quarter lows from yen to dollar. we have been focused on the trumper dollar in a post world because of the changes and expected real returns on capital that come from less regulation and lower taxes.

and a bit of infrastructure spending. really it is higher after-tax earnings and less regulation which is good for capital. 118.20 on thes yen. is koroda rubbing his hands in glee? zervos:rvice: -- david i think he is happy. inis what we saw august and august 2015 15 -- and january 2016. it prompted us to believe there january.cord in with the trump a court -- election, that a court is gone and we see room for the dollar. david: the swiss national bank this morning and us with meeting next week.

zervos: the boj is pretty happy with what is -- the way things are going. this will get them closer to inflation targets. the dollar swiss i think was above 102 or 103. kindnk it is all systems of stable into the holiday season, no surprises from anybody. is doing heavy lifting for the europeans, the swiss, the japanese and the nerf point nerve pointt -- will be the gm which was protected by the soft the dollar nowement pre-trump, but is uncovered is a flash point in the post trump world. vonnie: you have been an advocate of qe. is the federal reserve doing the right thing haven't risen another 25 basis points and

signaling almost three increases next year? dump the many to animal spirits that may be awoken? mr. zervos: i think the fed did the right thing. they will have to be clearer in the next quarter what the response is to this fiscal change and that will be tricky piecemealey will get stories coming in of what is going to be done on taxes, what would be done on spending, and what would be done on deregulation. i think they need to present the market with some scenarios if the tax rate goes down to 15%, if income tax rates go down the way the trump team has suggested, if there are border taxes come if there are other changes on the regulatory side. a run the models, tell us what it means. is the interest rate consistent with price stability? 2017it need to go up in

-2018 more than they are ready have? i think the answer will be yes if the plans go to fruition and that will put political pressure on the fed. they will be a buzz kill on the party the market seems to want to put in place to celebrate higher real returns. david: yesterday i was struck by the fact that janet yellen took the opportunity to talk about how some of her colleagues were taking note of the fact there is this conversation about fiscal policy happening right now. what she didn't discuss is the potential risk of new tariffs from trade and the fact there could be real weight on the economy in 2017. was that a missed opportunity to not big into that more? mr. zervos: potentially because it takes the heat off of them. given the pivot we have seen from the trump administration away from those very aggressive trade stories that were out there pre-election, i think it is fair to really focus on what

the market is focusing on, which is the incredibly large tax cuts , the large fiscal stimulus on spending, and the deregulation. at a 4.6 unemployment -- 4.6% unemployment is very important for the fed. you were talking about a fed that was running the economy hot and will now see a new punch bowl with maybe a new set of punch and they will have to figure o how to get the punch out of the party without upsetting the party too much and i think that could create a lot of spilled punch before all is said and done. vonnie: this punch analogy is continuing. i love it. the five year yield is that 2.09. tell us what you see. mr. zervos: i think the market reacted pretty well to what janet did. i thought she was hawkish. i thought her disavowing of the

some like it hot idea that she was pushing in boston was a surprise to many and suggests we have a janet yellin who is concerned about inflation and maybe some of the skewed effects inflation might have on the less educated and the poorer distributions. i think we have to be careful labeling janet a complete dove. the large-scale move we saw in the forecast for the fed funds rate out two or three years is warranted and that is the place where the curve will see the most volatility and the ratcheting higher. my expectation is for a flatten or. i think some of these forces, like the cross-border flow will keep a lid on the long end and it is interesting the 30 year yields did not move much yesterday. i think that bear flattening tow. is intel -- in

david: if you want to look at janet yellin's hawkishness, go back to what she did -- vonnie: president-elect trump's cabinet picks have a lot of money, but not a lot of government experience. this is bloomberg. ♪ ♪

vonnie: this is "bloomberg markets." i am vonnie quinn. david: and i am david gura. mylan is pushing back against accusations they were involved in a price-fixing scheme. says no knowledge of

actions of the company or awareness or evidence suggesting price-fixing occurred. the attorney general says the company conspired to raise prices for two drugs. wall street banks are short in funds. they will need to cap after a collapse -- tap after a collapse. financial biggest firms must build cushions. -- protecting sales and pretax year.s will rebound next the canadian maker of planes and trains says revenue increased by a low single-digit percentage and confirmed they will break even on a cash flow basis 2018 on a target to rate $25,000 in annual revenue by 2020. that is the bloomberg business flash. vonnie: president-elect donald

trump is building a cabinet in his own image. many nominees have little government experience and are worth millions of dollars. joining us from our washington bureau with more on trump's picks is ben brody. we have graphics of the cabinet picks and what they represent in -- s of white male >> rich. vonnie: and so forth. what does that tell us about how they may govern? ben: -- trumpre in the mold of himself. he did not have relationships in washington or know which people you need to court or who has close toicy thing their heart and that may be the case with a lot of these businessmen. they are mostly men. they may be able to go in there and make relationships and they may be able to work as they did

sort of in their business careers before. congress, at the ian did -- end of the day, works on relationships, the back patting and handshaking goes on here in the sea and they may not be as familiar with the players. david: he picked the number of former military people. what is that say about the leadership here? ben: donald trump has made no secret of the fact that he admires the u.s. military and there are things he wants to do to reform it and he has sort of insulted military leaders. that is trump speak for i respect them and want to bring them in. he likes this toughness and manliness and was not put off by the idea that traditions of american government normally do not put that many people in uniform or recently in uniform at the top of the cabinet. presumably, he is not worried about that and is willing to

bring them in and continue that style amongst his closest advisers. vonnie: does that kind of appointment speak to your most trusted followers, your voters? ben: certainly a lot of the people who voted for trump definitely view to the military is one of the last sort of u.s. institutions they really trust. certainly the press is out. washington, d.c. is out, congress is out, in some cases even religion is out. military often tends to be the one military -- u.s. institution people hold onto. it appeals to the core, white working-class voters that put trump over the edge. david: we saw donald trump responding on twitter to allegations there was russian hacking. what he have to say? ben: he basically said if the white house. it was real they should have brought it up before the election and -- instead of once quintin -- clinton won.

david: part of our exclusive interview with opec press secretary. cutting by 1.2 billion barrels a day. this is bloomberg. ♪ ♪

vonnie: this is "bloomberg markets." i am vonnie quinn. david: oil prices recovering as opec nations worked out a deal on limiting production. will we see 100% compliance? an exclusive interview, alix steel asked opec secretary-general what kind of compliance he expects from opec and not opec producers.

compliance has been one of the key players of the did -- decision on november 30. that was a historic agreement we were reached with non-opec on the 10th of september. has the establishment of the -- the firstrial of its kind. will sub oninisters this committee together with the russian confederation, chaired by kuwait and the russian federation as an alternate chair. compliance has been an intricate part of the decision itself. alix: do you expect 100% compliance? historically, opec does not have a record of compliance. do you believe 100% compliance? mr. barkindo: compliance will be

the high as they go through first six months. the process beginning from january 1 would be small due to operational and logistical problems, but the high level of commitment and resolve by all 24 participating countries in this agreement, which is historic, is a very incredible agreement and very transparent and with a high level of commitment. 90%, 80%, 100%? can you help me quantify? mr. barkindo: this committee will be meeting regularly. we will probably have an integral meeting this january to work out the modus operandi of

insuring a very high level of compliance and i am very satisfied with what i am getting from all the participating countries, the first of its kind. 24 countries that are presenting almost 60% of global supplies coming of their own volition to enter into this agreement in order to restore stability in the market. alix: two points analysts are highlighting, the first is that the cut wouldrds not even meet the target. in addition, you have more oil from libya and nigeria. how do you manage that in a world of cuts? mr. barkindo: it is a very flexible and realistic agreement. alix: does opec need to cut more to offset nigeria? mr. barkindo: the cut of 1.2

million barrels a day together with the 550,000 barrels from the 11 non-opec participating countries. together, in the first six months, the duration of this agreement, we are going to witness significant stock grow down that will accelerate the rehabilitation of the market. alix: how significant? mr. barkindo: it will be very significant because of the high level of stocks that the tested -- necessitated this historic agreement. we have never seen this large number of producers coming under one roof of their own bullish and. --of their own bullish and own volition. it will bring down stocks

significantly, bringing it to near the five-year average by the second going toward the third quarter of 2017. david: that was an exclusive interview with mohammed behind barkindo, opec general secretary. forie: pimco's outlook 2017. this is bloomberg. ♪

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saysney: a new study taxpayers will fork over more than $14 million more next year. says taxpayersnonpartisan center forh and economy comes as congress appears -- prepares to appeal the affordable care act. -- subsidy will increase to $263. tom wheeler said he will leave office on january 20 as donald trump is sworn in as president. the departure of wheeler will to-one majority of democrats. -- 2-1 majority to democrats. aviation ministry says traces of explosives have been come on the victims of a needed air flight that crashed in may. officials say a criminal

investigation will begin into flight 804. no one has claimed to have hacked the plane. japan is trying to resolve territorial disputes with russia that have lasted decades. shinzo abe met with lanier putin -- vladimir putin at a resort. putin a lettere from a former residents of the island -- resident of the island who was forced to leave by the russians. global news 24 hours a day, powered by more 2600 journalists and analysts in over 120 countries. i am courtney donohoe. this is bloomberg. vonnie: let's take a check of u.s. stocks. we can see the major averages are higher again today. the dow is up .6%. thes&p 500 up .6% and nasdaq up almost .7%.

the scope to abigail doolittle. assetl: when we go across class, interesting is the fact there is not truly a risk on or off theme to the trading today. we obviously have strength and we are back on doubt 20,000 watch. commodity is lower. taking a look at the bloomberg dollar index at record highs. some may consider this to be a signal of growth for the u.s., is as may say the strength sign of safety. clear sign is the u.s. 10-year yield up 10 basis point and what is the fact that we had the bloomberg dollar index hit 2.64%, the highest level since 2014. one question could be whether or not that is a knee-jerk reaction

on the part of investors. we have a terrific chart. probably my favorite chart right now coming from vincent #gtb 2366.be on top in blue we have the 10 year yield. basically inflation expectations for five years after five years. expectations between 2022 and 2027 and vincent cigna wrote us as historically -- vincent cignarella has -- says historically swap leads. we see this as pretty reliable. the 10-year yield is popping up and it could suggest we will see the 10-year yield perhaps move back down closer to 2%. perhaps supporting it is a look at the dollar. we looked at this chart -- g --y g #btb 5340

btb 5340. we have box to the areas well it -- where it is well be -- above the 200 day moving average telling us investors perhaps are above of -- ahead of themselves. this could suggest we could see the dollar index moved back down to the 200 day moving average, supporting the idea that rates may move back down. we had the good opportunity to host or moderate a panel with three or the best technical out of there. bullish on the dollar. they agreed that in the near-term we could see consolidation. it is sort of interesting to see the big move up with the possibility of a move lower. taking a look at commodities on

the year, really amazing here. the fact that commodities on the year -- actually the board is not coming up so i will toss back to you. vonnie: thank you for that. david: come with us on a journey into the unknown. our tour guide. on that journey there could be a lot to see, a donald trump presidency, brexit, more trouble for the chinese currency. he even made a mixture -- mix tape from our -- for our trip. great to see you. let's start with the transitions you outlook -- outlined in your outlook for 2017. transitionse sweet are really the drivers of the outlook and we think the outlook is highly uncertain. that is why it is titled into the unknown.

there are scenarios possible made by how much markets are romancing the outcome. it is important to focus on these three transitions of that will determine the outlook. the first is the transition from military policy is the only game in town to fiscal policy. the question is how much fiscal boost will we get and how will central banks respond and that is pretty uncertain. the second transition is also crucial from globalization, which has been the story for the past few years to de-globalization. there is uncertainty over how much protection people will get and that will determine the theook and that defines left tail of the distribution. then there is a third tricky transition, the one in china regime and will probably move to something like a management or even a

free-floating and the question is how much devaluation will we get over the next six-12 months and that will depend on the policies that will get enacted by the trump administration. -- on: you made mention my bloomberg you can see the spread has narrowed. something to do with the federal reserve come everything is connected now. why is the treasury market not looking for higher inflation further out in the 30-year area? hasfels: i think the market priced in higher inflation. that was the big move after the election. we are getting now little bit of a relapse in inflation expectations after the big widening in breakeven rates. i think this is a temporary relapse. we still think inflation is

headed higher. almost any scenario you can imagine for u.s. economic policies going forward, either you get a big fiscal boost or protectionist boosts or a connection of the two, both would tend to raise inflation. i think one of the strongest is that inflation is headed higher and driven by what we expect from economic policy. david: there is a prospect for fiscal stimulus. let's see what janet yellin had to say. >> i would say at this point that fiscal policy is not obviously needed to provide stimulus to help us get back to full employment. you hear her talking about the difficulty of forecasting what the fiscal stimulus would look like. mr. dhillon: i think -- mr. fels: i think the way we look at

this is to think in different scenarios. in this environment you do not want to make a big bet on one specific assumption about fiscal -- policy. we are assuming something like 1.5 trillion dollar fiscal package, this is less than what the trump administration has been proposing. wherecussed a scenario you get a bigger boost, $2.5 trillion over the boost, $2.5 trillion over the next 10 years. in that scenario, if we would get that boost on top of the situation where the economy is already at full employment as janet yellin was indicating yesterday, in that scenario you could even see inflation going to 3% in the course of next year and you might get far right rate hikes. that is something you have to consider if you think about the range of outcome. vonnie: injure baseline -- in

your baseline scenario, you title that "staying alive." dark side of the moon" and "here comes the sun." 8 we are positioned -- mr. fels: we are positioned for the left-hand scenario. we have been taking risk off the table in this rally. we think that is a prudent thing to do and we think markets are exuberant at the moment and we would like to build up liquidity that we can the ploy. generally, we think inflation is headed higher. the second strong view we have is that mortgage-backed securities will still be doing well. we have a positive view on the housing market here in the u.s. and on the consumer. that should help mortgages

further. the credit spectrum, we really want to be in the safer parts of that spectrum. we like the short raided and the higher rated corporate securities and credit. generally, we think this is not a time to take big bets on one or the other outcome, this is the time to be prudent and patient and wait for better opportunities. david: as we look ahead to next year, it is useful to look back to january and february of this year when china was the story and there was concern about the reserves and we saw fluctuation in the chinese currency. do you expect we see that play out more in the new year? how does that affect the u.s. and european market? mr. fels: i think there is a clear risk that we get something like a replay. china reacted in the form of a sharper currency depreciation.

we already got indications that the currency is depreciating further. news were some noises by agencies out of china probably reflecting official views that china is not happy with a more aggressive fed. policies wetrump can expect. i think this is a key risk for markets and one of the key transitions we are focused on is the transition in china to a new fx regime. that is why i think markets are too exuberant and optimistic at the moment. vonnie: thank you for joining us from newport beach. david: despite being with us for a major impactr, on the gm brand. we will find a what is next for the company. this is bloomberg. ♪ ♪

vonnie: you are watching bloomberg. i am vonnie quinn. mark: and i am mark barton. this is your global business report. tv empire,g its agreed to buy sky. his son says the merger would create an "consumer powerhouse." vonnie: spent $36 million to build the world's largest airport and will likely depend on funding for the project. mark: with major automakers and tech companies investing billions into developing vehicles, the day of the driverless car is getting much closer. vonnie: rupert murdoch just

expanded his tv empire. they will acquire europe's dominant pay-tv company, sky. in sky.ady holds a 39% >> combining our consumer platform, including our streaming apps like fx now, the interest in hulu, with europe's leading over the top service create the computer -- consumer approximately 100 million households directly. market sharegen's in europe has gone up. accounting for 24.8% of sales in november. that is up .2% from the year before. vw also did better than the

industry of a whole, sales up more than 6%. the by plans to spend 36 my in dollars to build the world's biggest airport. to by -- dubai is likely rely on debt funding. it is already -- they already have the busiest airport when it comes to international traffic. vonnie: time for our bloomberg quick take where we provide context and background on issues. alphabet is separating the self driving car company into a new unit called waymo. the day of the driverless car is getting much closer. >> the thought of cars without drivers is exciting and terrifying. there is now little doubt robots will one day be behind the wheel. they offer hope for the elderly, disabled, and bad drivers.

car companies like the end pouring billions into developing vehicles that use sensors and cameras to react to traffic, infrastructure, and people. the driverless feature is so appealing that it is not just automakers in the race. google has clocked over 2 million miles testing driverless cars and struck a deal to develop another 100 self driving prototypes. iphones aret make involved, too. it is also a technology that can save lives. >> driving accident on the number one cause of death for young people. >> driver error is blamed for 94% of crashes. is the argument. the speed of invention is overtaking the ability to regulate. the first cars capable of talking to each other will be

driving soon, but the rules of the road are yet to be finalized. some of -- semiautonomous vehicles came under scrutiny following a tesla accident. can we really hand life-and-death decision making over to a robot? if a car is to hit another person or a vehicle who will it hit? while the cars of the future like this, big automakers see a changing dynamic between vehicles and humans with more and more people to -- moving to cities, they see autonomous pods replacing cars in the driveway. vonnie: you can read more about driverless cars and all of our quick takes at ni quick on the bloomberg. had to bloomberg.com for more stories. ♪ ♪

david: welcome back to "bloomberg markets." despite the challenging climate for luxury goods -- double-digit growth things to partnership. bloomberg, blooming -- limning dales, barney's -- bloomingdale's, barney's. talk about why you decided to open this store. why open a flagship in new york? >> the store is new mobile we had been in new york since 1964. this time, we it

more signembrace language. david: when you look at the health of the american consumer, are people buying an interested in the goods you are selling? >> i think we are lucky in the sense that people globally really have taken into the scandinavian design language which we represent. we see a big interest in that. they have shown a broader interest. david: how important our partnerships with department stores? department stores are worried about their future, are you? how important are they to your line of business? >> you have to really optimize

distribution in your market and your relevance. when we look at u.s. we are also looking into how many stores we would need and the importance of online. i think it is a mix. ikea beforeere at this job. what did that to you to experience -- to prepare your for this job? >> i think it is about a being relevant and where the consumers would like to meet you. i think it gives an enormous opportunity to reach out to more people faster. i think you have to be set out from the whole value chain. ikea is a lot bigger and i was globally responsible for that journey there. even though this is smaller, you have to do the same amount of work. david: you looked in -- passedion before away at in untimely age. the you see more collaborations?

>> we started the company in 1904. this is something we have always done and always will do. us tremendously through her architecture and her buildings and we made this out of that together. we will do a lot more collaboration, but only with designers. we are also looking to more innovative collaboration and how to expand ourselves. david: you see expansion into the u.s.? moving out of new york? what other cities? >> we are really expanding online. we are investing in new online platforms, which is mobile first and then we are really waiting to see the success of this store in new york. david: what goals have you set for yourself and how difficult

it has been to meet them? eva-lotta: the goal is to look at what kind of people and culture we have. i find that extremely important, being globally responsible. we could have one culture here and that is something i really enforce to make happen. beyond that, it is about going more from an analog business into digital. david: thank you very much for being here. check out pursuits, your destination for the finer things in life. we are joined to discuss the global impact of the federal reserve decision yesterday. this is bloomberg. ♪

david: good afternoon. vonnie: welcome to bloomberg markets.

from bloomberg world headquarters in new york, we are covering stories from all over the world. steinlio manager eric joins us to break down the fed decision from yesterday and look ahead to next year. verizon is looking for a possible exit from its pending acquisition of yahoo!. this is after the company reported a second major email hack. ceoill hear from incoming of pioneer natural resources about how president-elect donald trump will impact the oil industry. we are halfway into the trading day in the u.s. got this rally that is resuming in the wake of hearing from the fed yesterday with potentially or interest rate increases coming down the pike. points awaybout 100

from 20,000 but major averages are higher. the nasdaq is set to close at a record potentially today and the russell 2000 is playing catch-up. the gap has narrowed a little bit with the s&p 500 but it is up today. as we watch the dow in its performance since the election, there were 27 trading days following other elections and following the election of donald trump which is the white line, we have seen the dow rally by 8.5 percent. in terms of the other close performances we have seen, calvin coolidge second 1924, we were up 5.5%. in 1900, about 3% and eisenhower in 1952, nearly 5%.

and clinton and 1996, we were up as well, about 3%. this seems to be the best p timermance in thateriod of following an election. financials have been a big part of the story. the best performing group today in the s&p 500. it touched the highest since 2008. banks were among those rallying because we continue to see rates move higher, their highest since 2014. banks are doing well on that. we are watching the credit card companies, these and mastercard are higher on upgrades. bank of america merrill lynch likes the credit card companies on optimism over the macro economic environment.

cowan on the view that these it will get more cross-border revenue as a result visa europe. the 10 year yield is actually unchanged. seen big gains recently and the dollar is moving higher by 3/4 of 1%. david: let's check in on first word news. the transition team of donald trump is looking at u.s. navy admiral michelle howard as a candidate to lead of veterans affairs. howard serves as commander of u.s. naval forces and is the first african-american woman to command a u.s. navy ship. move, president obama has declined to sign legislation renewing sanctions against iran but let it become law anyway. he faced a midnight deadline to

sign the ten-year renewal of the sanctions. the president has vowed to respond if the sanctions were renewed arguing they violate terms of the nuclear deal. the taxes gold coast city is warning its residents not to use tap water. there are concerns that two chemicals may have contaminated the water supply. a backflow incident in an industrial area may have let the chemicals seep into the water and there was a rush on gross restorers. -- on gross restorers. were concerneds about the problem of online misinformation. of adults encounter fake news online and 15% say they are not confident that they can identify it when they see it. pope francis on president have condemned fake news.

global news, 24 hours a day come up powered by more than 2600 journalists and analysts in more than 100 26 countries. this is bloomberg. vonnie: the federal reserve latest signal is ripping through global markets. u.s. stocks are climbing and the dollar is hitting a 14 year high. investors are selling bonds and gold. our next guest said we could be in a new period of inflation. already, it's been helping. >> we have floating bank loans and things that are being helped as well as tips. you want to hold tips in a higher inflation environment.

plot showed the potential for two rate heights -- rate hikes >> next year. >>i was surprised they did it at this meeting. got threehat they dots was a hawkish inclination but the dot plots will go up in 2017 as well. we were talking about the dot plot but looking at the historical version. how little it has changed over the last year or so. that's the historical version. given that we are looking at a scenario where the fed is looking at increases, what could change that? if the dollar keeps

strengthening like it has since the election and the fed meeting yesterday, that could stop that or of growth underwhelms. when trump got elected, the distribution of market outcomes widened. that's the same with fed policy. there is a potential per more rate increases but the distribution as wide as well. >> janet yellen commented on the potential for fiscal increases. >> i would say that fiscal obviously needed to provide stimulus to help us get back to full employment. david: she says it is not necessarily needed. she thinks we could get a big fiscal stimulus plan. how do you see the dynamics central banks and politics playing out now? >> i think it's an interesting

dynamic. global central bankers have been begging fiscal policymakers to act and now we will see that it seems like in the u.s. i think the intersection between politics and the fed, we did not see a tweet from donald trump about the fed and we may see that. we had a big move up in the two yield as well as the five year yield. potential in your outlook for a spike in inflation? >> there is a big potential. even bad policies like trade protectionism are inflationary. soald trump likes inflation we think we will see higher inflation. tip toe a duration head capture the inflation premium. donald trump is a real

estate guy and real estate guys tend to like low rates. what do you think about the personnel at the federal reserve? >> during the campaign, donald trump attacked john at yellen -- janet yellen. will he put in more free market leaning? yes. will he put in people that will jack rates way up? no. we will see who fills the open -- the vacancies at the fed. you arei'm wondering if anticipating inflows to different funds of. if you take a look at my bloomberg chart, you can see when it comes to dividend yields in stocks, treasuries are gaining the advantage. will equity investors just pull the plug and moved to bonds? >> they certainly may and there is opportunity in the bond market. , a long and short

strategy has a low volatility and high adjustment return. the environments next year will be perfect for that. give us a sense of the interplay in london between the fiscal side of things. >> they have the brexit element. boead one rate cut from the post-brexit. we have dollar strength but it was more brexit specific issues and that should help at the intersection between politics and central banking, boe is right there as well. you look at the spreads between european yields even the german ten-year yield, what does that tell you about what investors will do relative to the coming

future? >> if we have a fiscal policy expansion and it -- and you have to issue more debt, it's a question of where it is issued. who will buy that debt? there will be some bid for u.s. treasuries. it might have to be a higher yield level but other countries may be our friend to fund the fiscal deficit. does the dollar lead treasuries or to treasuries leave the dollar? >> i think they are somewhat independent but they move together based on a hawkish fed. sometimes they move together and sometimes they move differently depending was driving both markets. vonnie: thank you so much. david: coming up, a second major mayl hack of yahoo! users

be killing their deal with verizon. this is bloomberg. ♪

david: this is bloomberg markets. vonnie: it is time for the latest bloomberg business flash. mylon is pushing back that they were involved in a price-fixing scheme. any have no awareness of evidence of fixing prices. -- it's ag mentor drugmaker being accused of

raising money on to drugs. regulators in new york are finding an italian bank $1 million in an investigation of money laundering. the bank was accused of deliberately concealing information from bank examiners. lombardi is predicting that sales will rebound next year as cost cuts start to bear fruit. of planes andaker trains says revenue increased after dropping this year. projected breaking even in 2018 and a target to reach 25 billion dollars in annual revenue by 2020. that is your bloomberg business flash. david: shares of you who are falling after verizon is looking for a possible exit from its

$4.83 billion deal after yahoo! announced its second major hack affecting one billion yahoo! users. here is cory johnson. we have been through this once before. verizon is rethinking their offer. cory: there is some saber rattling going on. they say they are still working to integrate the two companies together. certainly this makes yahoo! less valuable but by how much. it will hurt their ability to grow topline and be difficult to add new users. , it wassterday, yahoo! easier to add users. furthermore, there is a greater expense going forward. they've got to spend more on security been may have been spending. we have seen this over and over

again. if you were yahoo!, wouldn't you come up with a number and get this deal hashed out? cory: the question is what's the real loss and what's the liability of this incident? it's the biggest hack ever. yahoo! found out about it from law enforcement. somehow, some federal organization has been looking at this state-sponsored hacking. when you look at the value of what verizon is getting, the price of yahoo! stock, let's say , one analyst says the value of operating businesses 10% of the stock price. so ithe stock is down 5%

has not gone in half in value. the value of the selloff is overdone. after the first announcement of the hack and then this one, -- cory: what did verizon know? they were caught flat-footed with the early announcement. this is twice the size so why didn't yahoo! know about this? why didn't they have the security steps to prevent this? surely, the attacks were targeting other companies as well. fair to assume that verizon does not want to walk away from the deal but they want price cory:.er of course, marissa mayer and her bankers know of any other offers are on the table so they know how low they can go. away,izon were to walk they would have to start the process all over again. verizon thinks they are getting

a good deal. they think the price they are paying per user is of tremendous value and when they incorporate that with other advertising , and the advertising serving assets from aol, it's a big mobile media business. david: thank you so much. still ahead -- we will talk to five one of students who won the most prestigious economic competitions next. this is bloomberg. ♪

vonnie: this is bloomberg markets. top economist surcharging the nations financial future, team of rutgers university students beat competition from princeton and dartmouth among others to be crowned the winner of the 13th college federal reserve challenge. the team had to present their outlook for the u.s. economy and monetary policymaking and answer questions from fed officials. five of the team joins us now. you've got big shoes to fill and you did because you one so

congratulations. you are cocaptain of the group so tell us how much you put into preparing for this? >> we have a 15 minute resin tatian about current economic conditions with our forecast for what the big indicators will be in 2016 and the next couple of years. then we give a recommendation for what the federal reserve should do. like our outlook on monetary policy including how monetary policy should ultimately implement with how much work we put in and we probably put in about 15 hours of work per week after the second week of september. vonnie: are you all economics majors? >> yes. vonnie: you had 15 minutes to present this after all of that work.

what was the main indicator that you concentrated on to present your case questio? >> we focused on the dual mandate. we expected inflation would pick up as measured by the headline price index. pressures we saw toward rising inflation caused by real wage growth and downward pressure over time. vonnie: very well put. you looked at the labor market conditions? >> yes, the main problem of the federal reserve being faced with is that inflation does not look -- that they are not ready to tighten on the inflation front but labor looks pretty good.

jobless claims are doing well, below 300,000 but one of the things that is different is the broader measure of unemployment, i looked at the different components and one of the conclusions is that a lot of this rising unemployment is structural rather than cyclical and it's not clear the fed can be do anything about it. vonnie: that's interesting. you are the captain of the group, was it all consensus? 2 dissenters and three people who agreed with the median which was to rate hikes going forward and the dissenters said it would be three. summary of the economic projections say there will probably be three rate hikes next year, we think it should still be to due to low inflationary pressures. innie: did your team factor

the fact that there might be fiscal implications next year? >> there is still a lot of uncertainty and we don't know what the consequences of the new administration will be. it will enter into our policy moving forward. vonnie: who wants to be a central banker? [laughter] you could all be convinced. thank you and congratulations to the rutgers students. all beating out serious competition. next, the thoughts on why president-elect trump asset chance to be better than his republican predecessors. 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. vonnie: it looks like the snow from earlier has melted.

we are at world headquarters of bloomberg in new york. this is bloomberg markets. let's go to first word news. taylor: montana congressman brian zink he is donald trump's pick for secretary of the interior. he is a retired navy seal and was awarded two bronze stars for combat missions in iraq. if confirmed, he would oversee policy including federal land usage, national parks, indian affairs and fish and wildlife issues. he just won a second term in the house. to requirecrats want president-elect donald trump to sell his businesses and put his assets in a blind trust. among the lead sponsors of the bill's massachusetts senator elizabeth warren who said the public needs assurances the donald trump will do what's best for the country not using his office to do what's best for himself and his businesses. russia's military's is more than 1000 people have been allowed to leave aleppo.3

officials say the evacuees will travel to rebel controlled territory and drones will monitor their progress. the president of serious as history is being made with the defeat of insurgents. of double digit postal rate increases for first spur lawmakers to finally agree on legislation to overhaul the u.s. postal service in a year. the postal regulatory commission will issue an order to review rates tuesday. it is required to start 10 years after the last overhaul which was signed by george bush in 2006. global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. vonnie: thank you. trump,nt-elect donald

can he outperform republicans of the recent past question mark our next guest says yes and he has the opportunity to succeed. he has a republican-controlled congress. donald trump remains a mystery in the new administration. soweng us now is thomas ll. the book is -- his book is in its second edition. what is mysterious about donald trump now that we know who his cabinet picks are for the most part? >> i think he has taken a number of positions that have changed. of things thatr had to be walked back sometimes with them the same week. outlines andof his positions but we don't know what he will do. president, ifnt

we listen to what he said, we could've expected this would end up as a post-racial society as many expected. in point of fact, racial polarization is worse than it was before. you cannot judge any politician by what his proclaimed goals are. you have to wait to see what he will actually do when the time comes. would make you -- what are the most important priorities of this administration in order to rebound the economy a little bit? -- to rebalance the economy. >> i don't think the government should be in the business of trying to rebalance the economy. i think they should be in the business of making sure the market has the freedom to operate and that should determine, not presidential

jawboning or regulations. say sounds hopeful and if they do it, i would expect things to get better. vonnie: let's focus on obamacare. see in its place if they replaced it? >> not another piece of legislation but an attempt to break down the existing governmental interventions that have made things worse. for example, people no longer have the right to choose what kind of insurance they would like. many of us would like to have no more than catastrophic coverage. at the state level and at the federal level, we have politicians determining what we must have in our insurance. be covered for pregnancy and so on which would not be my choice. it's something i would pay for. we should bemagine

on her own when it comes to our choices in terms of insurance. how would that work at a national level? so there wouldn't be any such thing as i am my brother's keeper? >> there are many things you can do. the government can always set up a separate program for people of low income or whatever. that's very different from saying that every person must be subjected to governmental control because we want to help some people in special circumstances. help those people if you wish but don't saddle everybody with mandates. level, theretate were all these requirements that insurance must cover this or that. there is no reason for everybody to be covered for everything or even for everything that politicians can think of.

everything the politicians think of adds to the cost of health insurance. vonnie: you maintain that rebuilding the military will be a good thing. need for a see the rebuilt military given how many generals we have and the potential for cabinet nominees? do you think that will make for a hawkish united states? >> not at all, people who have been shot at are usually seldom anxious to start wars. it's the people sitting comfortably behind at home thousands of miles away who start wars. vonnie: what about the rebuilding of the military? if we are not going to be involved in war to a greater extent, why would we need a bigger military or do we? you go back to roman times, when you have a large military, people don't

attack you. the roman peace came about because the romans had built such a military establishment that nobody in his right mind was going to attack them. peaceea that you can get through disarmament has been tried so many times and has failed disastrously so many times. i am surprised there are still people who think that is a good idea. what about housing cycles in the united states? on dr.e your thoughts ben carson as housing and urban development secretary? his have no idea what talents would be in that area. i think he is a man of honesty and integrity and that in itself would perhaps be a novelty in that job. the government running the housing market is extremely poor. the government's track record in the housing market has been a disaster and especially a

disaster for low income people who may claim to try to help. your second edition is out so what is your hope for 4 years time, that wealth and poverty will no longer be as extreme in this country? all, my hope is that the american people as a whole will be economically better off. i am not into this thing about where we must judge by how someone else is doing. i don't care how many billions of dollars bill gates makes. i care about whether 300 million americans will have more prosperity with one set of policies than they would with another. vonnie: thank you very much, thomas sowell. coming up, we will dig into the most famous nintendo game and

will talk to the cofounder. this is bloomberg. ♪

david: this is bloomberg markets. vonnie: let's go over to julie hyman with the chart of the day. julie: i'm talking about the bond market, the treasury market in the wake of the fed saying we could see three interest rate hikes next year. it got a mixed reaction in bonds today. yesterday we saw yields rise and the selloff continue. the selloff continued on the shorter end of the curve. we are seeing buying on the long end of the curve and the yield

on the 30 year going down by three basis points and this perhaps reflects at least some level about whether the fed will stick to three interest rate increases next year. plot in the past is been revised lower. we have been talking about the treasury selloff that has been occurring. this is the u.s. aggregate index year to date. we are pretty much unchanged, only up 45/10 of 1%. /10 of 1%. strategists including folks at black rock and hsbc and pimco are saying that a demographic shift in the united states could provide a floor under treasuries so we will perhaps not see the selloff continue, at least not with the same velocity and there is a limit to the selling that will happen.

we are seeing an aging population in the united states. this chart is fascinating. you can see the percentage of u.s. citizens 65 or older. percentage has been climbing, it's about 15% of the population and has gone up about 3% over the past decade. this comes to us from an invested -- from the investment company institute. if you look at the taxable bond funds and that includes those for treasuries and corporate's, we are still seeing a high level of investment. this does not give us granularity into longevity. it shows us that there has been consistent demand for bond funds

and some of these strategists are saying that will remain at a certain level because of this line. people are looking to the bond market because as you get older, you tend to look to treasuries as a source of income. thank you so much. it's time for the bloomberg business flash. j.p. morgan chase is looking to sell structured notes online in a website that will help retail brokers offer the securities. the bank plans to launch its site is soon as the middle of next year and has hired ibm to help build it. shares of pier 1 imports are surging today. it is raising its annual profit forecast. it rebounded the last two weeks of november suggesting consumers are hitting the malls again after the election ended. delta airlines has the slowest growth level in two years. they want to regain more pricing powers and are curbing the expansion of flights.

they want to pump up revenue. that is your business flash update. vonnie: after almost two years of waiting, the big day is here for nintendo. the release is a test of the mobile gaming market in some industry analysts say super could be a bigger hit than pokemon go. it's hard to equate the two, it pokemon go, you travel around and mario run is a burst of adrenaline, is that correct? >> this is one of the most exciting mobile titles to ship in history. it's the first time we are seeing mario since the late 90's on any platform that's not a

nintendo owned and operated piece of hardware. pokemon go is only in terms of revenue so what will this bring in? >> pokemon go did about 500 million downloads. in theo is a part owner pokemon company so it saw some of the upside. it's fair to assume that they have high hopes for this game of one billion downloads at a premium price of $10 per download. that's $7 billion for nintendo and $3 billion for apple. david: we have seen nintendo have great success. with demandkeep up of the vintage console. so long foraken nintendo to come to the mobile platform? >> having control over its own system is a part of that. understanding the retail

experience, things on mobile are free to play versus premium pricing. you have an ongoing monetize a book relationship with your customer. of superthe creator mario, does not like that. children heading up repeatedly is outside the trusting relationship they have built with their customers. while there is a lot of nostalgic value, think super devices,ng on mobile will capture a whole bunch of new people. ,onnie: there are mixed reviews some saying it's great because it's something you can play with one hand. other viewers say it's a compromise to the original. on the way over here, it shipped half an hour ago, and i

was playing nonstop and it's very addictive. so yourendless runner character keeps running from one side of the screen to the other and you occasionally can make the character jump or fly or power up. the idea of playing it on one hand lends itself to make mario intrinsic to a mobile device. it's something that's designed to play in short bursts casually with one hand. what does the $10 price point say about the future of games like this? >> i don't think there is many are ablet there that to charge that kind of premium pricing for a game. it's the nostalgic value and the quality that demands that upper echelon of pricing opportunity. most games that are top grossing

or top three game loads -- game downloads are free to play. you pay for power ups. try.always free to ofre is a small segment brands that will be able to charge for that. that is a reflection on where mobile gaming is now. david will give us a full rundown tomorrow. david: i will download it. we will hear from the pioneer natural resource ceo. this is bloomberg. ♪

vonnie: this is bloomberg markets. david: pioneer natural resources is the biggest player with a massive position. it has been seeing strong pricingn growth besides

challenges. company'ss the incoming ceo. >> if you look at the last eight years, it's hard to make the case there were energy friendly mines that were promulgating the rules. whether it's on the environmental front or legislative. having more energy minds can only help the industry so we are positive about this and constructive. this could be a time when the industry can flourish. >> what are your thoughts for rex tillerson as energy secretary? >> he has been the ultimate diplomat. i think is an outstanding choice. alix: with oil executives moving to d.c., will we see the world pumping more oil in the next four years question mark >> we cannot control other countries. cooperates, we

cannot control that. will be more oriented toward the business approach internationally. he is an expert in energy so we will see what happens. alix: do you pump more oil because of the donald trump presidency? >> i think we had a plan already, this multiyear plan of action. it's a 15% growth rate. less regulation will allow us to do it easier. it will allow us to make more money and do it more profitably without as much intrusion. sox: what specifically was onerous over the last eight years? pioneer killed it over the last eight years. >> our industry is independent to a great extent. we have learned to unlock the shale secrets. it has nothing to do with the federal government. keepng as those minds

generating those ideas to drive down costs and increase margins, the shale business will be here for a long time. so terrible about the obama presidency? >> you saw extra costs to comply with regulations. they were too far-reaching and two owners from an administrative standpoint. that means heavy costs for people like us. we can deal with it. we are an industry leader with regard to environmental stewardship. we are putting machinery out in the field to limit methane in the atmosphere but we are doing it for the right reasons. regulationsules and is on top of what we think the highest quality company in the industry.

we should get back to a mode in which we have more of a balanced approach to development. we are a big proponent of doing things the right way and of being an environmental steward. you have to in our industry. alix: what would you want to see the change in your business question mark >> i want to see energy development. making sure legislation supports our current investments today. there are certain tax benefits like every industry. we need to maine those -- maintain those sore cash flow was strong. we discussed the environmental combination. it's all those things that encourage energy development that will help us. over there's a story that the next 4-8 years that you will go crazy in pump like mad. is that story right? >> that's the craziest thing i've ever heard. the truth is, we regulate ourselves. we pride ourselves in doing

things the right way. we deal with our investors as well. that's craziness. midland, texas, that was alix steel with tim dove, incoming pioneer ceo. vonnie: dow jones is reporting that larry kudlow is being considered up for the chair of economic advisers. fors said to be considered chair of the council of economic advisers. he served in the reagan administration. coming up, the morgan stanley chief next. this is bloomberg. ♪

scarlet: it is 2:00 p.m. in york and 7:00 p.m. in london. oliver: welcome to "bloomberg markets."

scarlet: we are live from bloomberg world headquarters in york, covering stories out of san francisco, washington and detroit. u.s. talks resuming their gains as banks and tech shares lead the way higher. the nasdaq on pace for a new record high. we will be speaking with adam parker for his you and call and 2017 outlook. more bad news for yahoo! after stunning new resolutions as revelations that a billion users had their information stolen. later this hour, we will be speaking to john hofmeister. , theiews on rex tillerson opec cut and the future of u.s. shale. check on where stocks are trading with abigail doolittle. back to the races.

a fade ine do have the rally that we had, stocks are off of their eyes. that's off of their highs. here's an intraday chart of the dow. to the 20,000oser level that everybody is watching for, but we have back quite a bit off. similar to a day of trading after a big federal reserve decision last time, knee-jerk reactions that can take several days to settle down. a look at sector composition, this is the imac function in the bloomberg come a we arelance of what -- starting to see some red creep into financials. the strength is robust. 50 mins ago come i financials

accounted for 33% of the s&p 500 gains. now, 50%. we have the other sectors fading. we take a look at the 10 year yield, we see the massive move higher. priceare selling off with trading in verse two yield. this area of congestion looks rates, is bearish for bullish for bonds and it could move right back down. we could see the 10 year yields dropback down to levels seen prior to the big fed decision. taking a look at the bloomberg dollar index and commodity index, we've seen some nice strength in the bloomberg dollar index. fitting to the rise in rates that we've seen. this is weighing on the commodity index. interesting to see this bit of a mixed picture of risk on risk off.

thank you so much. chandra has more from our newsroom. transition team a president-elect donald is looking at u.s. navy admiral michelle hallet as a possible candidate to lead veterans affairs. as -- she'sserve the first african-american woman to command a u.s. navy ship. of explosives have been found on some of the victims of an egyptair flight that crashed in may. a criminal investigation will .now begin into the crash no one has claimed responsibility for attacking the plane. in paris, a prosecutor has called for the dismissal of an negligence charge against imf chief christine lagarde.

the public prosecutor says it was the prosecution's opinion before trial that christine lagarde to not be found guilty. in france, it is not highly unusual for prosecutors to disagree with an indictment. charges for killing nine black worshipers -- the decision must be unanimous. if convicted, the same panel will reconvene on henr january . global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. oliver: now that the federal reserve has put 2016 in the rearview mirror come all eyes are firmly on the road ahead for 2017.

janet yellen issued a vote of chaired thisd morning as she prepares to navigate a donald trump presidency. operating under a cloud of uncertainty at the moment and we have time to wait occur and tohanges factor this into our decision-making as we look for clarity. oliver: joining us is adam parker, chief u.s. equity strategist at morgan stanley you are bullish for next year. less so as the market keeps rallying, but still an upward climb. , rightng yellen said now, when you look at equities next to yields elsewhere in the bond market, things seem normal. do you agree with that? adam: i don't know if they seem normal. that is a multi variable problem. you always try to isolate into one. for us, the election cycle has

changed our views quite a bit. for the last four years, we've had a bullish move on u.s. equities but with lower earnings growth and a higher price to earnings ratio or higher multiple. we changed that call completely now. we think there will be a lot thatearnings growth but will be partially if not ultimately all upset by price-to-earnings decline. the fed will continue to be a big factor on share prices. a lot of people had noted that the fed was taking a bit of a backseat. my tray policy was no longer the driver and we would be looking to the fiscal side for a catalyst. that's monetary policy was no longer the driver. adam: was a notion for several years where you had bad economic news and was good for the markets because the fed was there and good economic news that was good for the markets because there was that everything is good kind of era we were in.

we've transitioned to good is good and bad is bad. , i think if the fed and that to act and o unfolds, you will be talking about lower multiples and maybe even good news is bad and bad news is bad and everything is bad mentality at some point in 2017. oliver: let's talk about the shift that has happened. some of the major indexes here since the election with the russell 2014%, dow up 8% -- the russell 2000 up 14%. the dow doing better than the s&p. what is happening where investors find both those areas to be attractive some of small companies and dow industrials? adam: i would not make too much of it. thehave a sense where

biggest driver of s&p earnings or corporate earnings the next couple of years will be the specter of lower taxes and the small caps pay a higher tax rate. the large-cap universe has more non-u.s. exposure to small caps and therefore get pinched more by a strong dollar. the small cap is a pure way at the macro level to play lower taxes and a stronger dollar. of meaningless to me. it could be one or two companies driving the performance. we have talked so much about this cycle being a reflation story. as we are attempted to go back in history and look at how

things have played out, how will this cycle differ from the past? what is different this time? adam: there's a ton of things that are different. , when you have growth picking up more than inflation, it is bullish for markets and bullish for multiples. the problem is the starting when is way higher than you had low real yields. valuation is stretched versus history, profit margins are stretched versus history. fed created a trillion dollars buying its own securities. there's been a lot of unconventional policies that need to be unwound. it is multifaceted and multivariable. you had record low rates nominally. it is an unusual cycle. if people want to be normal in terms of 10-year gilts backing off, you should be normal in

terms of p/e ratios being lower. outlook --i call the you determine what percentage of the move is going to be based on the idiosyncratic factors and the macro. as we look at dispersion cropping up in the market, what are the models telling you right now in terms of why stocks are moving? adam: we try to break down returns and say how much came from macro factors and how much is left over from stock specific? our client would like stock specific student when a higher amount of returns. represent a higher amount of returns. hope that people have is that it gets more idiosyncratic and enables them to generate more long short spread. oliver: are you seeing that's

what is happening? adam: for context, it depends on how much history you want to look at, you go back to the 1980's and 1990's, i can only -- 80 present was left over poor idiosyncratic risk. for0% was left over idiosyncratic risk. you are up 1% or 2% from the it is not really a stock picker's market yet. arelet: you've moved you waiting in financials up to 15%. it is now equal waitresses the benchmark. do you think big cap financials benefit disproportionately from the decline in regulation story and the higher yield story that is percolating?

do they benefit disproportionately? adam: we have had to bets within the financial sector, the large-cap banks and a sizable bet versus the credit card companies -- we don't own any asset managers or insurers. i think you are right that you have the number of things that banks,r the large-cap the specter and reality of less regulation and huge growth and shareholder return, potentially the benefit from lower taxes on an incremental basis versus other companies and the move and the slope and level of the interest rate in miami. it feels like there's a lot of positives there. -- interest rate environment. ultimately, what is being discounted is higher r.o.e.s.

80% of moves driven by idiosyncratic nature seems like such a far cry from where we are right now. you have more hedge funds than stocks. it's a different world. right now, it is illegal to know anything that isn't known by others. that level might be unreachable at this point. adam: i believe so. oliver: let's talk about what people have been doing since the election. the sp people are buying up value companies, companies they identify more with value than growth. , inhat is the case here terms of money shifting out of u.s. into some more emerging-market type places where you think you would see more of that value, that hasn't quite happen yet. call on theuse

institutional side is we are overweight japan equities. we went from the biggest overweight the last four years to neutral. our biggest underweight is e.m.. if you believe the dollar is strengthening, those impede progress for e.m. as a whole. there will be countries we like more than others in the firm, but we think the stronger dollar path and rising rates are generally going to result in inability for expansion in e.m. as a whole. give us a sense of how much cash is still sitting on the sidelines after a three-week postelection rally. is there enough where you are going to get a scenario like this every time? adam: i don't think so. it depends. there's a number of ways to look

at that from discretionary macro -- there are some people whose jobs are to be fully invested. people are really focused on positioning. they have seen a powerful move in financials and the rebuild ocks,ca industrial st -- i thinkas staples one of the things that is challenging when you look at hedge fund positioning data, 45% of all volume was in etf's. you had people buying the financial index or industrial index. it's murky to understand how people are really positioned where. investment controversy for q1, q2 will be

went to fade the reflation trade. where do you see the most excess already? some of it is in these companiess, materials , the rebuild america fiscal stimulus companies. you are talking about one trillion stimulus over 10 years. you need to feed the reflation trade a little bit. the banks have more possibles then maybes. coming up my shares of yahoo! falling to a four-month low as rise and considers a price cut or even impossible exit from its pending acquisition of yahoo! assets. this is bloomberg. ♪

scarlet: this is "bloomberg markets." oliver: time for the bloomberg business flash. says its relationship with wells fargo which led to a whistleblower lawsuit and state probes over a suspected that generated a fraction of more than 50 billion in revenue last year. policiessmall life brought in about 4 million. prudential is looking to address concerns of wells fargo's clients. facebook is changing its news feed to stamp out fake stories. the new future has rolled out to select u.s. users today. one month ago, mark zuckerberg said the changes were coming,

responding to criticism after the u.s. presidential election. shuttinge capital is asian hedge funds. the chief investment officer sees better opportunities in the -- thann europe europe. businesshe bloomberg flash. still ahead, tech shares to lift the major averages today. one stock bucking the trend is yahoo! shares at the lowest in seven months as verizon is set to be reconsidering the deal and possible annexes with yahoo! -- an exit with yahoo! ♪

scarlet: this is "bloomberg

markets." front's troubles are and center after the company disclosed another major email hack affecting over one billion users. is -- he covers telecom, media and the tech sector. he has a neutral rating on verizon. the tech sector, the telecom sector, how does verizon leverage this news? walter: for a lower price. there are headlines that they may think about walking away. this is a pretty major hack. the eyeballs that yahoo! still provides to them for their key websites are still of value to a company looking for scale looking to leverage their mobile business. they want to get people on the mobile side and use these add

d tech. beenr: does yahoo! have to to that because there's all these headlines clearly in verizon's favor now? does it materially change the value? t is $1 billion. that is pretty material. scarlet: doesn't the latest hack existing users's to not use yahoo! anymore? risk.: that is a what else is out there for verizon to get some level of scale? samsung has a major issue with every plane telling you to not use your samsung phone. is still a pretty big scale

business for verizon to add. oliver: when does this start to have repercussions in yahoo!'s corporate structure? walter: when the company ultimately gets bought, the corporate structure, there is an opportunity for change. for verizon to put their own management team in there that can execute better and prevent these risks. scarlet: why is yahoo! so vulnerable? walter: that is a great question. we have the democratic party that believes they were hacked. it will continue to be a challenge for everybody, no matter how large or small the company is going to be, to protect your customers' information.

it is a billion accounts, it's , the magnitude of the accounts that would make them a larger target. oliver: what else does verizon potentially have their eye on? walter: they're looking for scale in general. i think they should by dish -- buy dish. we will have to see. 2017 will be a big year. theer: still ahead, commodities crude bouncing between gains and losses, briefly dipping below $50 a barrel in new york earlier in the session. ♪

scarlet: this is "bloomberg markets." i'm scarlet fu. commodity markets are closing in new york. let's get a check on where things stand.

is he's all for wti commanding the session lower by .3%. day for wti,aw ending the session lower by .3%. crude still on pace for a weekly decline that would be the biggest in a month. gold declining to a 10 month low. other metals such as silver and zinc also tumbling as the u.s. dollar climbs to its strongest level since 2003. oliver: today come in exclusive she asked him what he thought about exxon mobil ceo rex tillerson being picked for secretary of state by donald trump. >> he is highly respected around the world, he is deeply knowledgeable. oile is a thin line between

, diplomacy and geopolitics. i congratulate president-elect donald trump for making such a choice -- such an excellent choice. oliver: joining us is john hoffman, the former president of shell oil. he's known tillerson for many years. >> first of all, he is a serious player. he knows what he's about, he knows himself extremely well, he is extremely knowledgeable and well prepared to be a leader of a major organization. it is not just knowing the oil business, is knowing how to manage the complexities and the sophisticated dealings of his own corporation as well as dealing across the table from the many other corporations, companies and governments. he's been around and he knows what he's doing. scarlet: has he ever shown any

interest in going into government service? john: i was a little surprised when i first heard the announcement because of his commitment, dedication to the oil industry. he is coming to the natural end of his career. he has had many, many dealings with government. you cannot be the head of an oil company in the u.s. without having intimate relationship with a variety of cabinet officers and the white house and members of congress. you are spending a great deal of time walking the halls of dealing with everyone from department of state, department of energy, department of interior, department of commerce and all the major committees on capitol hill. you know your way around town. you also have foreign capitals where you were also very well known. if you are the head of a major oil company, oil is so dependent , you do have a

government relations role as part of being the head person in the company. oliver: a lot of what trump said about his new leadership, these will be people that have been walking the halls of bc, not people involved in the backdoor deals. do you think tillerson will orng that corporate mindset will it be a politics guy? john: mr. tillerson has never been in a swamp. he's worked independently for the sake of his shareholders, he's worked through political storms, he's been through difficult trial periods brought his career, not the least of which was the high oil prices. that is where we ran into each other. he was in the position of challenging policy, as was i, asking the government to come together.

where is our plan, where is our government led strategy or plan for energy? there is none. it never has been one. why can't we have something that we can base our future judgments on? when you are looking at a business that has a 20, 30, 40 hassed in front of it -- pat in front of it and the government changes every two years and policy changes every two years, you have to be a critic but you also have to cooperate. scarlet: you said that he's a dealmaker. in the context of his u.s. oil know anythinge about his overall philosophy of geopolitics? where the u.s. stands, where the u.s. relationship with russia and china should be? john: when oil executives get together, there's certain things they shy away from. anything that might give away a competitive point of view or position.

we never entered into philosophical discussions of what one person's philosophical belief might be versus someone else's. you are dealing with transactions not what is, what could be. we competed, we cooperated on joint venture deals and so forth. of ourback of each thinking, he had shareholders he was reporting to and i had shareholders i was reporting to. you look up for your shareholders. the opec potential supply cut, is it going to happen, is it enough to keep things on a more even keel? john: it needs to happen because saudi arabia, iran, russia, all the opec countries are basically putting $50 bills on every barrel of oil they sell if they are trying to use oil revenue to run their nations.

this has been going on for two years, they've been dipping into fund sovereign wealth because they are not making enough off the oil revenue to keep going. at some point, they will either collapse or have to change their oil policy. scarlet: thank you so much, john hofmeister. let's get a check of the headlines. emma chandra has more from our newsroom. emma: donald trump has selected strategicwley to lead mitigations for the national earlier inuncil -- her career, she worked for president next and. nixon.esident the governor of idaho is being considered as a possible candidate for agriculture secretary.

the republican governor is currently being vetted by president-elect donald trump's transition team. ryan binky is donald trump's pick for secretary of the interior. he is 55 years old and a retired abc will who was awarded -- retired abc all -- retired navy seal who was awarded two bronze stars. and france have voted overwhelmingly to extend the national state of emergency for another six months. the fit extensions and the day after the paris attacks that left 130 people dead. the attacks have been claimed by islamic state.

global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. scarlet: coming up, more on what's being called donald trump's $6 billion cabinet. rich,t of his picks are white and without much government experience. you are taking a look at a live shot of john kerry at the state department, making remarks on the situation in syria. you can watch his remarks live and in full on your bloomberg. secretary kerry: we will continue to do our part. the united states of america will continue to drive -- ♪

scarlet: this is "bloomberg markets." oliver: president-elect donald trump appears to be building a cabinet in his own image. closef his nominees have ties to wall street, little government experience and worth millions, sometimes billions of dollars. give us the breakdown on how cabinet compares to the past couple of administrations. >> when you look at gender and diversity, it is similar to other republican cabinets we've seen in the past, male, mostly white cabinets. different from president obama's in that sense. what is unique about donald's cabinet so far is that money. these are very, very rich people that he is nominating for these

cabinet posts. we've seen some of that, but not to this extent. a number of these people are worth billions of dollars. scarlet: 11% of the cabinet are billionaires. 11 present are also former generals. that's where it really differs from george w. bush. -- wasld trump is elected and he believes has this mandate to shake up washington. with that comes come in his mind, two things. he believes you don't need government experience to run the government. running a business, being a smart person is all the politics needed to run the government. generals, he has shown a preference for strong leaders, strong businessman. the other thing is big bank accounts mean big brains in his mind.

in his mind, they don't have to have experience in the sector they are leading these departments in, it's about being a problem solver and being a smart person in general. maybe there is not diversity in terms of demographics. what about in terms of ideology? it doesn't make complete sense. the common thread through all of these are the things we been talking about, the business background, strong leader and moneymaking potential in their past careers. ideologically, it's a little scattershot. donald trump is a little scattershot when it comes to ideology, too. he doesn't have a full spread that he has a full spread of ideas that don't quite make

sense when you look at it as a whole. when you dig into each issue, he has picked these people because he agrees with the stance they take on trade or free market or what have you. that is what we are seeing with these picks. there is no common ideological thread -- scarlet: has he thrown a bone at all to democrats? >> a lot of these will be confirmed. a lot of them will be confirmed without a con of contest. there will be some tough questions. most of them will get appointed. the bone he threw to democrats seemed mostly to be in the interview process. he did show some effort in the interview process of making sure he was reaching out across ideological lines, reaching out

to more centrist people and hearing their take and considering them for the job. in the end, he did not take many of those people. oliver: we will have to get to kanye next time. abigail: the sector spider we are looking at today is the xls, the financial select sector spider, up more than 1%. this after the federal reserve to raise rates yesterday by 25 basis points. is on pace for its best quarter since 2009 comes adjusting investors think we are in a rising rate environment. that more are to come. this as the 10 year yield is up 100 basis points, its biggest quarterly move ever. one sector or area doing less well is gold.

we have the gld etf down. you can see that plunge as is boosting the dollar, weighing on cold. on gold.ighing we have gold come in white, we have the gld asset holdings. a strong correlation over the last two years. in the most recent trading over the last couple of weeks, we have seen a big divergence. gold is down 17%. it will be interesting to see how this connects. whether gold trades higher or if there's more weakness ahead for the gold etf holdings. we are acoming up, little over an hour away from the close of u.s. trading. gains across the board here. sectors500, nine of 11

are moving higher, led by the financials. the nasdaq also higher by 22 points. this is bloomberg. ♪

scarlet: this is "bloomberg markets." time for walk the talk where we where we look at the pressure point of social change and where it's outpacing corporate america's ability to adapt. today's focus is why employers overlook age as a diversity factor. i spoke about the issue with shelley balis. >> i think first welcome and

diversity must be about gender, race and age. pwc just did an amazing study with global ceos were they found that 64% say they are committed to diversity and inclusivity but only 70% include age. age is definitely lacking in the diversity bucket. there's five generations in the workplace from boomers to the millennials to z's.en scarlet: some say age bias is worsened under obama's tenure. i think about slick and valley and the cult of youth there. there's no retirement parties anymore because no one is hitting that stage to retire. that is one of our challenges. we are neglecting and not

valuing wisdom. you can teach snapchat but you cannot teach experience. we have to open our minds and our hearts to understand we learn from every age. person has to be in instagram expert. it is not just about technology. there's life lessons. a lot of wisdom we gain from experience in business is. let's talk about some initiatives like home depot keeping older americans employed. do you think donald trump's initiative to bolster manufacturing in the u.s. means there will be more jobs available to this older generation? >> i sure hope so. if we lose this older generation, we lose a lot of experience from the past. you cannot innovate the future if you don't understand the past. we have to bridge the past them of the peasant -- the past, the present and the future.

part of bridging that is through mentorships. scarlet: talk about how important mentorships need to be . >> i don't think it needs to be top-down. we learn from each other. we talk about mentorship, we talk about reverse mentorship, sponsorship. at the end of the day, it's about creating multicultural mentorships where we all learn from one another. all generations from all ages. women age out at 45. at 45, they are considered old. men have a tenure advantage at 55. there considered distinguished. year advantage at 55. they are considered distinguished.

we have to embrace our knowledge at every age. you see how do corporate america discriminating or ignoring the younger worker? >> the younger worker in technology, technology is the driving force of a lot of new hires. thet of people look at older generation and say we have to pay more for experienced employees. we can get three people for the price of one. that is becoming a cost-benefit. what we have to understand with the younger generation, they might understand digital but haven't had the corporate experience or the cultural experience yet in life. sure i'm seeing the discrimination with the younger generation. the younger generation is rising very fast. the younger generation is coming in with purpose in their dna and they are expecting a modern workplace. adopting --that is

adapting to this multicultural environment today. scarlet: they are very used to disruption. they are used to seeing things not pan out how they planned. they have to fend for themselves. is it understandable when they are so eager to push aside a lot of the norms? including showing respect to those who have set a precedent because they only know how to scratch things up. is a disruptive culture right now and also a sense of entitlement and also a lack of loyalty. millennials today like to stay somewhere for three years and then move on. we have to work with that as well. they want the sound bytes information, they want everything done now. they are a much more disruptive mindset. scarlet: that was my conversation with shelley zalis.

meantime, it is time for the bloomberg business flash. mylan pushing back against accusations it was involved in a price-fixing scheme. the companies conspired to raise -- prices of two drugs that federal regulators have closed an investigation into five of airlines.t u.s. american matilda, united, united, continental, southwest and jetblue were all part of the probe. it is separate from a broader biggestinto the four u.s. airlines. regulators in your cap find an --lian bank $400 million

cleared $11 billion on behalf of radiant clients and other blacklisted parties -- iranian clients and other blacklisted parties. that is your bloomberg business flash. scarlet: coming up -- oliver: coming up, post fed analysis. michael shaw on "what did you miss?" this is bloomberg. ♪

oliver: it is 3:00 p.m. in new york, 8:00 p.m. in london. i am oliver veronica. scarlet: -- i am oliver renick. scarlet: and i am scarlet fu.

welcome to bloomberg markets. however: we're live in bloomberg world headquarters. we will be covering stories out of san francisco, washington, and detroit. u.s. stocks trading higher after the first and only fed rate hike of 2016. the dollar not quite there yet. -- the dow edging toward the 20,000 mark -- not quite there yet. we'll have exclusive conversation with jamie dimon, who talks wall street and washington in the wake of a donald trump election. ken rogoff on the curse of cash -- what he says hashes facilitating corruption and tax evasion in countries like india and venezuela are it are one hour away from the close of trading. let's get a check on the markets. what happened to the vega rally? >> this question. we do have stopped -- stocks

higher. we have stocks off of the highs earlier. a few of the major averages had been on pace for the record closes. right now, none of the major averages -- all three are on pace to finish below the previous record. stocks are higher. we hopped into the bloomberg and looked at a really great function, the s&p 500 group rank returns. this is another way of looking at sector performance. we see a lot of green here. on top is the energy sector. it is really the financial sector that is boosting today, the most, in the expectation rates will continue to rise. we look at the banks. we see lots of strength there, including bank of america, jp morgan, and wells fargo. jpmorgan is on pace for a record high. bank of america was upgraded to outperform over at raymond james. michael rose says he sees this as a proxy for the economy, and he sees "better days ahead under

donald trump." a macro call. 10% upside from current levels. are off of thees height of the day, but we see over the last two days, a big move up there. earlier, they had been on pace for its best day in two years. yesterday after the close, a delez could that mon be acquired by kraft heinz. some suggest they are in play. yahoo! -- shares are lower, on pace for their worst day since january. we see the big decline as it is bed verizon may reconsidering the price of the acquisition -- the merger to buy yahoo!, or they may exit the deal altogether. it is worth noting, though, yahoo! may be down today and on pace for its worst day since january, but on the year, it is a different story. shares of you who are higher by 50%. oliver: good perspective. thank you so much, abigail doolittle. scarlet: let's get to first word

news. emma chandra is in the newsroom. a top candidate for chairman of the white house council of economic advisers under president-elect donald trump according to "the wall street journal" according to people familiar with the situation. the transition team at the president-elect is looking at u.s. navy admiral michelle candidatea possible according to "the new york times" which did not say where they got the information. she is the first african-american woman to command a u.s. navy ship. secretary of state john kerry says the regime of syrian president bashar al-assad is carrying out nothing short of a massacre on its citizens. at the state department, john kerry said the attacks in the city of aleppo are inexcusable and the violence must end. what we want in

aleppo, which is a precursor before moving to other thing is an immediate, verifiable, durable cessation of attacks by the regime, allies, and other combatants in aleppo -- all combatants in aleppo. emma: russia's military says mother 1000 people have been allowed to leave aleppo. in paris, a prosecutor has called for the dismissal of a negligence charge against imf chief christine lagarde. she has been in court over her handling of a multibillion-dollar dispute over her -- during her time as a french finance minister. it was the prosecution opinion before trial that she should not be found guilty. in france, it is not unusual for prosecutors to disagree with an indictment written by investigative magistrate. 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. oliver: thank you so much -- scarlet: becky so much. let's turn to an interview with jamie dimon. megan murphy caught up with the banking chief. he spoke about wall street and washington following the trouble election. jamie: i have always been quite public about i do not think i am suited to be secretary of treasury. i love what i do. i'm not ready to do something else. i think i can add a lot of value to america just doing what i am doing. megan: there we go. there is the answer. recently asas september, you were talking about what you thought the next administration would be, and this is before we knew the outcome of the election. you said you thought it would be very difficult for wall street guys to get confirmed, get in, and now we look at the landscape we have. we have several wall street figures -- some of them you know

very well, including gary cohen from goldman sachs, rex tillerson from exxon mobil -- when you are looking at that cast of people, what do you think they are going to bring to the administration that is different? what is new? this is a good thing? jamie: obviously i was dead wrong that you will not see a wall street person in washington anytime soon. you had a complete of people. are in charge, and the republicans have not been antibusiness the way you have seen democrats largely be antibusiness for years. if you are going to be president, you should have the best people sitting around the table. i think it is a mistake to constantly be told that if you work for an oil company, a bank, this, that automatically makes you bad. you want the best team. i think a lot of these people are very qualified people who are patriots who will want to help the country. they will not try to help their former company. these are people with deep knowledge that hopefully will do a great job.

megan: do you think that now, when you look at that, sort of, street,n terms of wall that this is a reset moment for the industry more broadly in terms of what the american people are expecting or what they are likely to see? jamie: i think it is a reset moment for how businesses will be treated. 145 million people work in america. 125 million work for private enterprise. 25 million work for government -- we hold them in high regard sanitation, teachers -- but if you did not have the 125, you could not pay for the other 20. it is a huge benefit for society. for years, they have been being down as terrible people. i think it is a good reset. detroit is a perfect example where you see civic society, not for profits here, government, business, working together to improve the lives of american citizens. so, yeah, i think the reset has the chance to do the same thing. if you can do locate what you

are doing in detroit around the country, you are going to have a huge renaissance. oliver: that interview took place in detroit because j.p. morgan chase committed $100 million to help in the city's recovery and building commuters. megan murphy asked jamie dimon's techniques used in detroit could be replicated elsewhere. jamie: if you travel around the world -- and i get to travel around the world and see all these things -- singapore does it. it is a country. it was part of malaysia when it formed. it was partly chinese, partly malaysian -- a prime minister came in with a vision and strength to get it done. its gdp is now higher than the gdp of the average american. the prime minister is pretty tough. he made them all learn english. he made sure the streets were clean. they have a lot of affordable housing. he made sure you couldn't live -- it wasn't an indian building, a malaysian building.

he desegregated, not just by building, not just by floor, but by apartments. he wanted them to know each other's kids, smell each other's food. if you took democratic and liberal friends, it would still be back water. you cannot punish you for living in the street, make people learn english. that is what happened. people have to think what works, what does not work. the same thing with other countries. i mentioned germany's vocational schools. germany is doing well in europe, when most of the countries aren't. you learn these things when you go around the world about what works and what does not. they're been books written about it. venezuela, ecuador, argentina, cuba, north korea, what do they do, largely populism, and the ones that worked? south korea, no natural resources -- unbelievable story. singapore, no natural resources,

unbelievable story. i can go on and on about what works and what doesn't. for some reason, i worry about bad politics policy causing constant -- that public policy causing constant damage other. in america you keep hearing productivity is low, secular stagnation -- it is a new normal. it is just not true. we have had multiple wars. we are not educating our kids. we had government shutdowns. daily spend money. failures in the health system. failures in the -- badly spent money, failures in the health system, failures in extreme amounts of regulation -- that is where we are going slow. it is not the economic model. people are looking for simple answers. sometimes they aren't. all these things are sensible. scarlet: that was an exclusive interview with j.p. morgan chase's jamie dimon. that interview will be in full and featured in the issue available next thursday. oliver: we will talk to one investor who has bad news if you are counting on double digit

growth next year. we will look at stocks less than an hour from the clothes. a little bit of green on the screen, but less so what we saw a earlier. the dow doing well. .he s&p up 40 basis points the nasdaq up, as we see straight in markets, despite coming off the highs -- strengthening markets, despite coming off the highs. this is bloomberg. ♪

oliver: this is bloomberg markets. i am oliver renick. scarlet: and i am scarlet fu. oliver: time for the bloomberg business flash. chemical giant dupont will release -- pay around $50 million for releasing pollution

into the river. the company used mercury to manufacture rayon from 1920 92 1950. some of the toxic chemicals seeped out and spread downstream. scarlet: j.p. morgan chase is looking to sell structured notes online ad is looking at a website that will help brokers offer the securities according to people with knowledge of the matter. the bank will launch the site at the middle of next year and has hired ibm to help build it. facebook is changing its news feed in an effort to stamp out fake stories. the new feature has rolled out today and has options for readers with third-party fact checkers and tweak algorithms to provide more restrictions on advertising. a month ago, ceo mark zuckerberg said these changes were coming responding to extensive could assist in the wake of the u.s. presidential election. and that is your business flash update. oliver: now that we have a trump presidency and the fed did raise

rates as was expected yesterday, many are turning their outlooks to 2017. our next guest falls in the bearish camp with earnings growth. he is under what strategists are expecting, which he describes as overly optimistic. david lafferty is here. you help oversee a lot of money -- about $900 billion across quite a few funds. you have insight into how people are reacting after the election. tell us about the earnings expectations -- how come people are getting ahead of themselves? david: i think the trifecta of presents -- official sure, tax cuts, a deregulation program -- the market clearly likes this. it is a pro-growth, pro-business policy. i understand that. i still think we are constrained across the global economy with a lot of supply-site issues. we probably still live in a real global, real gdp world of maybe

three, 3.5%, and if you throw inflation on that, maybe now little growth -- nominal growth globally is 5%. aretations on the s&p 500 11, 12 -- i think it is hard for companies to grow nominal earnings at 10, 11, 12%, when the world is growing at 5% or 6%. scarlet: the outlook has not changed -- the election has not change your outlook and if anything, the gains have made you less confident about what is going to come. david: that is a great assessment. when we saw the senate was always going to go republican, here comes the pro-business agenda -- that made us optimistic, but in the gains started to come immediately, and i am worried those gains have been siphoned from next year into this year. we were optimistic. i would not say we are pessimistic or irish, but i think we are probably not as

you've -- bearish, but i think we are probably not as euphoric as what seems to be the general consensus. let's talk about the next year expectation -- i want to jump into the terminal, the earnings estimate overview. here is what you are talking about -- the year plus one growth. we are expecting right now and average 19% growth -- analysts surveyed by bloomberg, to get to where we want to be a year from now, roughly 133 at the end of 2017. massive move. what happens when people think about these double-digit numbers are not realistic? david: i think it will take wind out of people's sales. what i am worried about his valuations in general. our earnings going to move up? but we are already at something like 19 times forward earnings on the s&p 500. we could in for a good bull market if we get the earnings growth people are expecting and multiples keep expanding.

i do not see how that is likely given two factors that tend to drive multiples are inflation and fed policy. we looking to get more inflation, tighter fed policy. i do not know how multiples keep moving up to the more likely scenario to beat these numbers is we have to grow into these numbers. i do not think we are going to see price expansion on top of earnings growth. we will probably see multiples may be, at least, stay the same, contract a little bit, as these earnings materialize. they will not be that good. scarlet: do have to deal with the effects of a strong dollar as well. what is notable, yesterday at the new stuff is, nobody asked janet yellen about international development. that was the big theme, concern earlier this year, but crickets on that front yesterday. fewow you are looking at a political shocks that could shake up your base scenario. david: two of the ones out there -- the first is china, always a risk, the nonperforming loans, the build up of dead in the banking system -- i do not know if anyone can predict a

triggering event. scarlet: that has been a concern for a couple of years. david: it continues to build over time. we do not know when that happens, but we have to factor that in. china controls both the borrowers and the lenders -- the borrowers are typically the state-owned enterprises. the lenders are the banks. they can play extend and pretend for longer than most of the pure lending economies could, but they cannot do it forever. meeting infrom a london, meeting with them as a parliament and policymakers. while the tone from the regular citizens around the u.k. is pretty optimistic about brexit, when you meet with policymakers, it was really eye-opening how little of a plan, i think, there is in place, and i think the markets have decided they will figure it out. it will be in the best interest of the eu and the u.k.. i am not sure -- i am a little bit worried that brexit is going

to work a little bit harder. if there is a plan, they are not talking about it. the more likely scenario is maybe there is not a great plan. oliver: that feels like something that is not really on the forefront of discussion. will that be the biggest unexpected -- we are concentrated on the u.s. markets and trump, as we are talking about. david: i do not know that is the biggest one. i think the one that is more likely to get us in the u.s. is what janet yellen was referring to yesterday -- inflation picking up a little bit. you saw in the forecast estimates that the on implement rate is not excited to go much lower from here, and if you have a lot of stimulus to the economy, you have 5.5 million unfilled jobs. you are already close to where the low in an opponent rates will be according to their estimates. maybe this just becomes more inflationary. you get some growth, but not as much growth, just more inflation. i am worried in a highly levered economy, higher interest rates derail the market.

it --brexit or china do yes, but closer to home, i am more worried about inflation. oliver: great stuff, david lafferty. down from boston. david: having me. scarlet: a long list of work -- worries. while u.s. stocks are up 8% post the election of donald trump, russian stocks are up almost 20%. we are talking about the russian etf come out for the 11th time in the past 12 sessions. from new york, this is bloomberg. ♪

is "bloomberg markets. i am oliver run it. scarlet: time scarlet fu. time for options insight with abigail doolittle. abigail: thank you. we are joined by tim from the

cle in chicago. a lot to talk about -- we have the federal reserve rate hike in place. we had stocks trade off. now off a little bit from the highs. what is your take here? tim: digesting the selloff post-fed, tried to break above the intraday highs. think we will digest further. i think the fed raising a quarter point was baked in. to euphoria over the fed work three rate cuts next year is misplaced. if you look back to plaster, they basically said the same thing, only delivered on one. i expect the same thing where the fed is boxed in with the strong dollar, a week worldwide economy could i think the market will be muted going forward. at his image standpoint. look at the 10-year yield, it is on pace for its biggest move.

it suggest we will see consolidation -- maybe investors will reconsider whether that actually happens. what are your thoughts on bonds and rates? bond rate is well above the yield on the s&p 500. not too long ago it was well below the s&p 500 yield. that will be a headwind for stocks. your previous guest talked about valuations. i think i will be a headwind as well. buybacks will be slowing. a lot of stuff to work through even though the rate hike was only 25 basis points. abigail: what about russia -- it sounds like you have thoughts on russia and a trade idea. can you talk about some of your trade? tim: absolutely. our market has had almost an historic rally post-trump, almost up 8%. russia is up almost triple that -- up about 20% from the november election. ran into a little trouble finally yesterday, but on almost every metric, the highest level

ever. abigail: and your trade is? tim: the traders to buy the january 22 posts on cheap and five volatility, paying about $1.50, looking for a huge up move. abigail: great stuff. have to leave it there. scarlet: think so much. still ahead, michael shaoul will be joining "what'd you miss?" for his post-fed analysis. we will talk china. we will talk europe. this is bloomberg. ♪

emma: i am emma chandra. let's get to first word news. hasident-elect donald trump elected monica crowley for the

national security council. she had been floated as a possible white house secretary. earlier in her career, she worked for richard nixon. keith kellogg has been named as chief of staff and executive secretary of the -- senators, claire mccaskill and lindsey graham says russia needs to pay a high price for its election meddling. mccaskill says she supports tougher sessions against moscow. lindsey graham told cnn his goal is to put "crippling sanctions against russia on the desk of incoming commander-in-chief donald trump." senator bernie sanders has undergone an outpatient procedure for skin cancer. the procedure was completed today, and sanders returned to work afterwards. french lawmakers have voted overwhelmingly to extend the national state of emergency for another six months, until july 15.