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tv   Bloomberg Markets Americas  Bloomberg  January 3, 2019 2:00pm-3:30pm EST

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more than a half-century ago. accepting the couple, policy will give a nod to the new era of divided government with a pledge to "brick -- reach across the aisle and cross the divisions in this great nation." congresse of the 116th has been sworn in. the new senators meikle -- mingled with their colleagues as they walk up to the dancing groups of four to be sworn in by vice president pence. the new senators found their desks, some looking outside to see which senators had left their signatures. 29 reelected senators were sworn in. senate majority leader mitch mcconnell says house democrats legislation to reopen a partially shuttered government is "political theater and not a serious attempt because it can't check all three boxes of being bipartisan, bicameral, and supported by the president." >> the senate will not take up
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any proposal that does not have a real chance of passing this getting and presidential signature. let's not waste the time. let's not to get off on the wrong foot. with house democrats using their platform to produce political statements rather than serious solutions. later today, the house of representatives plans to vote on two bills to end the partial shutdown that began december 22. last month, the senate passed a bill's to keep the eight departments funded and temporarily fund the department of homeland security. president trump said he would not sign it. russia reportedly is now charged a former american marine with spying. that is according to the news agency. inwas arrested last friday moscow. he is the head of global security for an auto parts maker. his family says he was in russia on a personal trip. is seekinga says it
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the death penalty against five suspects in the killing of washington post columnist jamaal khashoggi. the kingdom previously announced 18 people have been arrested. khashoggi was killed in october inside the saudi consulate in istanbul. prince mohammad bin salman on's entourage have been implicated in khashoggi's death. global news, 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm mark crumpton. this is bloomberg. ♪ scarlet: it is 7:00 p.m. in london. i'm scarlet fu. lisa: i'm lisa abramowicz. this is "bloomberg markets: the close." scarlet: u.s. stocks slide after
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numbers dropped the most since the 2008 recession, feeling concerns that u.s. growth is slowing. apple anxiety. the first guidance cut and almost two decades. weighs on global equities as they take back control of the markets. policy powered. the california congresswoman gets ready to reclaim her spot as speaker of the house. we will bring you all about this hour. let's go straight to washington. the 116th congress is now in session with democrats taking control of the house of representatives. hearing from be nancy pelosi, the new house speaker who will be laying up a agenda for the democrats. we are joined by eric watson, live on capitol hill and joining us by phone. is michael steele, republican strategist with hamilton strategies. thank you so much for being with us. what are you expanding -- expecting nancy pelosi to lay out in this address? eric? this is a return of -- of
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an american political legend. past the affordable care act, passed the dodd-frank legislation. now she is back in power. the american people spoke in the november elections and we see the house went to the democrats. she will lay out how she will deal with president trump, a very big challenge for speaker pelosi. but one she feels she is able to handle. scarlet: certainly it she has a big to do list. to oversee. my question to you, michael, with all of the deals that she cut to reclaim the speakership, can she be as effective as she once was? i know she had to promise different committee has two different democrats. also putting the self-imposed term limit. his paul ryan announced retirement, his fundraising suffered in some of his republican colleagues began ignoring him. how effective can nancy pelosi be? i think shehael: will be less effective the last time she wielded the gavel.
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less because of the agreements she made to secure the gavel. less because of the conditions or her status as a lame duck. more because she is facing a republican president, a limitscan senate, so the of what house democrats can accomplish letters -- very is a very limited. power over time, her oversight, the ability to investigate the trump administration, hold the administration accountable to the public, shine light on some of these practices, it is going to be very real. that will be the legacy most likely of her second shot at the speakership. lisa: i would love to get your sense of whether nancy pelosi, being the house speaker again, gives more power to republicans or less? this is a think fundamental reshaping of the balance of power in washington that we are washing today. having nancy pelosi as the
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speaker of the house, house democratic majority means that while we may not be seeing the beginning of the end of the trump presidency, we are seeing the end of the beginning. we are at the end of a narrow where house republicans, senate republicans, and the white house work together to accomplish things like tax reform. that is not going to lisa: be the case going forward. you are seeing nancy pelosi come of the incoming speaker of the house. she is doing this as her second turn at the position. ,aking her way to the front receiving congratulations from her colleagues. she provided -- presides over the house with the power of the purse, the power of oversight and that power of impeachment as well. jump in here. obviously, in order to gain the lot ofshe had to cut a deals. how united are democrats behind their new speaker? eric: there were only 15 democrats who either voted for someone else or voted someone else. she could afford a 17. it was very close.
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she had to cut deals. she did have two term limit herself to only four years as speaker. she says she will be running again in two years if they have the majority for speaker. she is very good at whipping these votes. she was facing larger numbers of freshmen who had come in and said they would not vote for her , longtime opponents like a jim cooper who has never voted for her for speaker. she was able to corral those votes. to add to what michael was saying, i think she will also be setting the table for the 2020 election. they will put a lot of things on the floor. hr one will be an anticorruption that will limit the role of money and politics. they will proceed from there. they will look at infrastructure, revisiting the tax code to benefit the middle class and provide more infrastructure spending. they will put issues on the table where even if they are rejected by president trump, could become fodder for the next presidential election and layout a democratic platform. nancy pelosi is a loan
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commodity in the democratic party for better or worse. she is also representative of the older group, cadre of democrats. leadership helped or hurt the democrats versus somebody who is newer? the incrediblen volume of freshman house of representatives we have here. questionre was some about that after the election. a pivotal moment was her meeting with trump in the oval office over the government shutdown. the way she emerged from that meeting, having school president trump, made trump take the blame for the shutdown, had democrats feeling, we need someone in the drivers seat. president trump, causes government shutdowns, to lead the country back to a more stable position. i think markets will take cover from that. joining if you are just us, nancy pelosi has secure the 220 votes needed to return as speaker of the house. she is the first speaker in more than six decades to reclaim the gavel after losing it since sam rayburn.
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she also ties rayburn is the oldest person ever elected speaker and oldest to hold the post. a reflection of her staying power. into policy elected speaker of the house for the 100's 15th congress. -- 115th congress. willirst order of business be to address the government shutdown and the democrats have this plan to pass a two-part plan to fund almost all of the agencies through the end of september and then to fund homeland security separately. through february 8. talk us through how this will work when president trump has made clear that he is not going to sign any of these bills? michael: right. this is the reason nobody has a really clear idea of how the shutdown and's or when. it is really just president trump driving the train on this. i think senate republicans are supportive of increased border security, i think most if not all of them think a $5 billion in additional funding is a onsonable down payment
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increasing border security care whether they supported building a wall or physical barrier over parts of the border or not. but i do not think anyone believes that anyone outside of the oval office believes that the president has improved his position since the beginning of the shutdown, or that the president has a clear endgame for the shutdown. has takenconnell senate republicans out of the game by saying that they will not do test votes, they will not do show votes, they will not pass anything in the united states senate until the president indicates he is willing to sign it. the question now is what can a democratic-controlled house of representatives that president trump is willing to sign? and when will that happen? lisa: we are watching, just to give you a sense of what we are looking at here, it is the swearing-in of nancy pelosi. she is about to address the house after being elected to speaker.
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michael, i have to think that republican strategist such as yourselves touch yourself will watch this closely to see whether or not nancy pelosi strikes a centrist town or caters to the more far left constituents of the democratic party. trouble important -- how important is that to you? it is-- michael: critically important. now that hillary clinton is not on the political scene, there is no more polarizing figure in the american politics. fact that she had been so long out of the in this lifeir cycle is one of the reasons that attacks on her were less effective. she remains deeply unpopular. leans into more she catering to the progressive base of her party, the bigger target she will be for republicans. i think he raised an important issue that we have not discussed in detail. the issue of impeachment. i think the base of the democratic party, the progressive wing of the
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democratic party, badly wants to impeach president trump. i think house democratic caucus chair numbers will face increasing pressure to vote on articles of impeachment. least at this at point, remains extremely unpopular among the vast majority of the american people. scarlet: it will be up to the new speaker to see how she prioritizes different investigations at the house can undertake. let me jump in here for a moment. we are less than two hours to go before the u.s. market closes. we are looking at the pluses for the major indexes are we had come off our lows at midday. now we are revisiting those declines once again. the dow off by 531 points. the nasdaq losing 2.4%. apple's first guidance cut on revenue for the first time since the 2008 recession, not helping matters. data that exacerbated global growth concerns. you had mentioned earlier that the democrats will be looking at a couple of different initiatives, including
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infrastructure and perhaps even tax reform for the middle class. what is the appetite for any and of tax reform in environment where investors and certainly policymakers are looking at the possibility of the economy slowing down, perhaps even entering recession if the markets are to be believed? erik: a lot of those things have been scrambled by the ongoing government shutdown on its 13 today. and alosi -- both pelosi talked about working together on things like infrastructure that the economy. that is up in the air. as they try to navigate their way out of this tense shutdown debate. that might be part of the reason the markets are reacting. the shutdown itself is not shaped much of gdp but what does it mean for the potential to get things done? another thing is trade deals. the new nafta 2.0 has not passed august. to makebe up to pelosi changes to it.
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president trump is talking about withdrawing from nafta. if it comes to that, it could be like a shutdown but on steroids. we will be looking to see if there is appetite to work together. they could, once it, stand, if impeachment,lving it will depend on what mueller comes up with. even though brad sherman another progressive members of the house are introducing articles of impeachment. that is going nowhere because pelosi wants to do something stable, wants to work with the president if possible. erik thank you so much to wasson, and michael. know, we areu waiting for nancy pelosi to take the helm at the -- as the newly elected house speaker. we will bring that to you when we have it. the focus is very much on currencies, currency traders across the globe, trying to piece together what caused the yen to search and a wild seven minute flash crash were rally. breaking through levels that have held for a decade.
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joining us is stephen engle under. global head of g10 fa's research at standard chartered banks. stephen, is is the all goes fault or is this dodd-frank and the volcker rule taking away market breakers, who do you blame? stephen: i think it happened at an unfortunate moment. we know that is the dead zone in terms of global asset markets. lisa: i have not heard dead zone, i like that. stephen: the only market that is trading as fx. japan was shut down. there was not even the normal low liquidity. many participants had not come back. the equities after markets were not able to do what they did. every investorit looking for something correlated with what they wanted to sell that they could sell. the turkey and look as good as anything else. scarlet: aussie yen and turkey yen. we do not pull them up on the bloomberg and talk about it as a gauge of where market sentiment is. why these particular pairs? stephen: it is a safe haven
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against the high beta currency. say it is and imperfect substitute for what they actually wanted to trade. it was the best it was trading. scarlet: who is doing the trading? there is this temptation to pin the blame on retail investors but i don't know, i find that hard to believe why it was responsible. who is doing this? steven: i think it is hard to pin down. i suspect it had something to do with automated trading and looking for some kind of way of exiting from positions. scarlet: our retail investors involved to the degree? steven: i would not think it would be primarily retail. i could be wrong. maybe japan on a holiday -- everyone is glued to their screens. on that, theyback idea that there are these traits that are alive and well. you have japanese investors who are delving into high beta
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currencies for the extra yield. lirarticular, the turkish and aussie dollar. does that indicate how much risk is still out there in bedded in markets that could get unwound if we get the bearish news? steven: i would say positions are much less. certainly among professional investors. i do not think there were too many can -- too many people coming into the year with ozzy yen position or turkey yen positions. professional investors were more cautious. if you are a private investor and saying, i only care about a coupon, and i can deal with 10% up, 10% down, because the coupon is focused on holding it to maturity, maybe there were more of those positions. again, i am skeptical but do not have deep knowledge that there was a japanese retail move. scarlet: do you think it is far-fetched to x cap you late out from this flash crash or rally that there is something fundamentally broken about fx
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markets, that used to not be so, and that this could pose a problem in a true downturn? it is: i would say -- uncomfortable in fx markets. nobody likes to see prices that are so obviously wrong in the sense that they get unwound 10 minutes later, an hour later. is a big word. i think most of the time, that does not happen. i think there is quick recognition that this was a novelist event. there were some investors who were going the other way saying this will not last. we did retrace much of this in the course of the day. scarlet: is the yen a safe haven currency? is that what happens, when foreign investors buy it when they want to get away from risk, or is it a case of japanese investors returning to it so they could do risk from pricey trades like their yen or aussie yen? of the i would say all above. i characterize it as a somewhat safe haven currency. the safe haven characteristics that i associated with it in the
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80's, 90's, the last 15 years, they have diminished a lot. doesn't mean they are not there. but you do not see the yen as so reliable a safe haven as was the case in the past. scarlet: let's talk about the dollar. everyone has been pinning their big macro bets on the dollar. either being weaker, stronger. i think we are hearing from pelosi. scarlet: do we have nancy pelosi? lisa: let's go now to washington. pelosi,of course nancy newly elected speaker of the house getting ready to address the house of representatives. the 116th congress. the transfer of responsibility to control the purse, it control investigations. lisa: and perhaps inflict more gridlock. it will be interesting to see whether or not that will be a negative or a positive for markets. some use rush some people look
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at gridlock with positive in a people are saying it is negative. scarlet: too much gridlock is no longer seen as something -- lisa: my mind is scrambled. scarlet: we will bring you nancy pelosi speech when she begins to speak. mr. mccarthy of california, the new minority leader, is going to be speaking. we are with stephen engle under, the global head of g10 fx research. what do you make of the overall market selloff? the flash passion in the yen, however you want to call it, triggered what we are seeing in equities today or is that separate? steven: i think it is separate. i think there are concerns that -- lisa: the political turmoil we have seen as reducing the
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appetite for the dollar as a haven currency? gridlock's come and go. we have them about every 18 months. lisa: do you think this is politically normal? steven: it is part of the world that we have lived in. the marketising would react so much to something you know will eventually go away. the dollar isay not a haven anymore. it is really the yen. it is because the dollar has been pummeled by uncertainty about trade, about the deficit, do you basically dismiss those arguments? steven: i would say the dollar -- again, like the yen, it has been somewhat of a safe haven. when dollar-yen was -- when the yen was rallying, the dollar was rallying with it. not nearly as much. it still rallying against everything else. in the morning when some semblance of normalization came back, the dollar was getting sold off. house minoritye
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kevin mccarthy getting ready to speak to the house of representatives. we are waiting for the new speaker, nancy pelosi, to take the podium and speak. president trump has invited congressional leaders for an 11:30 a.m. meeting tomorrow, presumably to discuss the shutdown and figure out a way to unlock this mess. i want to go back to the markets. when you look at what is going on with the data, the manufacturer numbers of discouraging for those who are hoping for a stronger u.s. economy. how much weight does that put on jobs report tomorrow? steven: i think less than you might think. scarlet: really? steven: for the following reason. there is the sense that employment may be lacking a bit. the fact that one of the leading indications of sentiment came off so sharply, still not below 50, but came off from very high degree it came up, we have only seen that in recessions or in very market
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downturns in the past. i think that is going to worry the market. if we get three months of strong employment data, they will say, that did not matter. but i think it is it -- it is important for markets in a following sense. the fed pays attention to isi more than it pays attention to other stuff. we saw it optimistic today. the fed is activated -- is the markets friend which is different than a week ago. scarlet: thank you so much for taking the time to explain everything. let's go over now to capitol hill to your watching house minority leader kevin mccarthy addressing the 116th congress. let's listen in. when ben franklin wandered out loud, whether this new nation was capable of keeping its government and its freedoms that have been granted to us generation to generation. centuries later, people still harbor similar concerns.
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they wonder if congress truly represents them. still capable of solving big problems. there is no guarantee. it is up to us, all of us in this room, to make congress work. , just likend debate our founding fathers did many years ago. with courage, with commitment, and resolve. we are a very small group with a very large responsibility. the burden on us 435 members is to represent 325 million americans faithfully. so thattogether, tomorrow is better than today. us,onald reagan advised america is too great for small dream spirit when we work together, we succeed together as one nation. we are now entering a period of
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divided government, but that is no excuse for gridlock or in action. we focus our best when not on retribution, but on building a more perfect union. [applause] mr. mccarthy: that while we seek cooperation, there is one core principle upon which we will not compromise. republicans will always choose personal freedom over government control. [applause] mr. mccarthy: this is very floor we serve on has hosted some of the toughest debates in the nation's history. mostit is also some of the noblest achievements have
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happened here. this house has weathered times of triumph and crisis. it still stands because it is sand, but on the solid rock of constitutional principles. today marks a new chapter in this house pursuit of a more perfect union. pelosintry knows nancy as an experienced leader. with three decades of service in for her, a fighter causes, and a true trailblazer. even when we disagree, with one another completely, it is important to remember that we are bounded together in a common cause, our love for america. [applause] mr. mccarthy: as fellow citizens and friends, let us lead together to show the people that we are truly their voice and vote.
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and in that spirit, in the spirit of a more perfect union, and in the unshakable belief that america was, is, and always will be the greatest nation on the face of the earth. [applause] mr. mccarthy: and in that spirit, i extend my hand of friendship to every member of this body. and to the speaker of the house, nancy pelosi, i extend to you this gavel. [applause]
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mrs. pelosi: thank you very much, leader mccarthy. i look forward to working with you in a bipartisan way for the good of our country, respecting our constituents, everyone one of you, i respect you and the constituents who have sent each and every one of us here. they expect and deserve for us to try to find our common ground. we must try to do that. stand our ground where we can, that always extend the hand of friendship. thank you kevin mccarthy for your leadership. i look forward to working with you. congratulations on being the leader of the party. [applause] mrs. pelosi: and congratulations to each and every one of you. as of congress, thank you for office,rage to run for
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and to serve in this distinguished body. every two years we gather in this chamber for a sacred ritual, under the dome of this temple of democracy, the capital of the united states, we renew the great american experiment. i am particularly proud to be a woman speaker of the house of this congress, which marks the 100th year of women having the right to vote. [applause] mrs. pelosi: and that we all have the ability and the privilege to serve with over 100 women members of congress, the largest number in history. [applause]
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mrs. pelosi: as leader mccarthy said, each of us comes to this chamber strengthened by the trust of our constituents, and a love of our families. let us congratulate and welcome all of the families who are here today. thank you. to our families. [applause] mrs. pelosi: let me take the privilege of thinking my dear husband, paul, and our five children. [applause] our five children,
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nancy, karen, christine, paul, and alexandra. and our nine grandchildren, madeline, alexander, liam, shawn, and ryan. thomas and paul. -- bella and octavio. we are so proud of all of our grandchildren. and we are proud of everyone's grandchildren, and children who are here today. we will see more of them. i am also proud of my debt lisandro family here from baltimore for us. spirit, my mother and father, my brother tommy who was also mayor of baltimore, taught us through their example that public service is a noble calling. that we should serve with our hearts full of love, and that america's heart is full of love. my comrade, and italian-american with all of that, i want to
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acknowledge tony bennett who is here with us today. thank you, tony. [applause] mrs. pelosi: he helped free the concentration camps during the time of world war ii, he marched with martin luther king, he is a true american patriot. thank you, tony. and again, i want to thank my constituents from san francisco. who has entrusted me to represent them in congress in the spirit of st. francis, the francisco,t of san and his song of st. francis is our anthem. " make me a channel of peace." we heard that in church this morning. but it is our mission. women thank our men and in uniform, our veterans, and our military families and
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whose service reminds us of our mission to make the future where they of their sacrifice. to our men and women in uniform. [applause] mrs. pelosi: we enter this new congress with a sense of great hope and confidence for the and a, and deep humility prayer fullness, in the face of challenges ahead. our nation is at a historic moment, two months ago, the american people spoke and amended a new dawn. they called upon the beauty of ourconstitution, that system of checks and balances that protects our democracy, remembering the legislative branch is article one, the first branch of government, co-equal to the presidency, and to the
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judiciary. [applause] they wanted a congress that delivers results for the people, opening up opportunity and lifting up their lives. we are hearing the voices of the future there, how beautiful. [laughter] mrs. pelosi: when our new members take the oath, our congress will be refreshed and our democracy will be strengthened by their optimism, idealism, and patriotism. a transformative freshman class. congratulations to all of you. and the freshman class. [laughter] -- [applause] working together, we will reading the promise of the american dream for every family. advancing progress for every community. we must be pioneers of the future. accelerate a must
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future that advances america's preeminence in the world, and opens up opportunities for all. economy -- an economy all the tools they need to succeed in the 21st century. public education, workforce development, good paying jobs, and secure pensions. too manyeard from families who wonder in this time of innovation and globalization if they have a place in the economy of the future? -- we must remove all doubt and say to them individually, we will have an economy that works for you. [applause] mrs. pelosi: let us declare that we will call about -- upon both thinking to address the disparity of income in america which is at the root of the crisis of confidence felt by so many americans. as justice brandeis said, we may have democracy, or we may have
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wealth concentrated in the hands of the few. but we cannot have both. injustice andat restore the public's faith in a better future for themselves and their children. we must be champions of the middle class. and all of those who aspire to it. because the middle class is the backbone of our democracy. it has been since the birth -- [applause] mrs. pelosi: it has been since the birth of our democracy, aristotle said it is manifest that the best political community is sworn by citizens of the middle class. in which the middle class is large and stronger than any of the other classes. we must fight for the middle fair and fiscally sound, protecting medicare, medicaid, and social security. [applause] we must also thank
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the existential threat of our time, the climate crisis, a crisis manifested in natural disasters of epic proportions. the american people understand the urgency. the people are ahead of the congress. the congress must join them. that is why we have created a select committee on climate crisis, the entire congress must work to put an end to the in action and denial of science that threatens the planet in the future. this -- [applause] mrs. pelosi: this is a decision, a public health decision about clean air, clean water, for our children's health, it is a decision for america's global preeminence and green technology. security, toion of
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keep us all safe, and a moral decision to be good stewards of god's creation. no illusions that our work will be easy and that all of us in this chamber will always agree. but many of us pledge that when we disagree, we respect each other and we respect the truth. [applause] mrs. pelosi: we will debate and advance good ideas in a matter where they come from. in that spirit, democrats will be offering a senate republican appropriations legislation to reopen government later today. [applause] [cheering] mrs. pelosi: we will do so to meet the needs of the american people to protect our borders,
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and to respect our workers. and i pledge at this, -- that this congress will be transparent, bipartisan, and unifying. that we will seek to reach across the aisle in this chamber and across divisions, across our nation. in the past two years, the american people have spoken. tens of thousands of public events were held. hundreds of thousands of people turned out. millions of polls were made. countless families, even sick children, our little lobbyists, bravely came forward to tell their stories. and they made a big difference. musthe floor of this house be america's town hall. where people will see our debates, and where their voices will be heard and affect our decisions. transparency will be the order of the day. [applause]
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mrs. pelosi: as mr. jeffries, are extinguished chairman said, we will follow our mandate for the people, and i thank you for exceptnd nomination, and those kind remarks on behalf of the entire house democratic caucus who made all of those victories possible. [applause] mrs. pelosi: some of them in a bipartisan way. and power our mandate for the people, to lower health care costs and prescription drug prices, and protect people with pre-existing medical conditions. [applause] mrs. pelosi: to increase paychecks by rebuilding america with green and modern infrastructure from sea to shining sea. we look forward to working with the president on that.
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to pass hr one, to restore integrity to government so people can have confidence that will work for the people, not that special interest. hr1. [applause] mrs. pelosi: this house will take overdue legislation that has bipartisan support, bipartisan support, in the congress and across the country. we will make our communities safer and keep our sacred promise to the victims and survivors of families of gun violence by passing common sense bipartisan background checks, legislation. [applause] mrs. pelosi: we will make america a fairer by passing the equality act to end
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discrimination against lgbtq community. [applause] and we will make america a more american by passing -- by protecting our patriotic, courageous dreamers. [applause] mrs. pelosi: all three of those legislative initiatives have body.isan support in this and when we are talking about the dreamers, let us remember what president reagan said. in his last speech as president of the united states, i urge you all to read it. it is a beautiful speech. he said, if we ever close the door to new americans, our leadership role in the world will soon be lost. ronald reagan. [applause]
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mrs. pelosi: our common cause is to find and forge a way forward for our country. let us stand for the people to promote liberty and justice for all as we pledge every day. and always, always keep our nation safe from threats old and new, from terrorism and cyber warfare come overseas and here at home, to protect and defend, that is the oath we all take to serve in this body. that is the oath we take. to protect and defend. [applause] close my -- by remembering a cherished former member of this body. the road to become a beloved president of the united states and who last month, returned to the capital once more and became
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this time to lie in state. that week, we honored president george herbert walker bush, with eulogies, tributes, and tears. today, i single out one of his great achievements, working with both democrats and republicans withite to the americans disabilities act into the laws of our land. thank you, steny hoyer, for being an important part of that. [applause] in 2010, we marked the 20th anniversary of the act i making it possible for our colleagues with disabilities to preside over the house. changing the mechanics -- scarlet: you are listening to nancy pelosi, addressing the 115th congress as she took the gavel from house minority leader kevin mccarthy. comments inumber of
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her speech that gave us some kind of clue on what issues she as speaker.ize let's bring in chief washington correspondent kevin cirilli who joins us from capitol hill. lisa and i were listening. are a lot ofly personal comments. she brought up climate crisis pretty early on. even before mentioning efforts to end the shutdown. kevin: it was a partisan speech with bipartisan undertones at a time when she retakes the gavel to reclaim her position as speaker of the house. during a partial government shutdown. she raised the issue of climate change, of amending gun control writes, as well as the issue of lgbtq writes. on the flipside, she also extended a political olive branch to work with republicans and find common ground where she can. drawing from the recent funeral of former president george h.w. bush. she now promises to advance a budget out of the democratic-controlled house of representatives that does not
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include president trump's demands for a wall. that, according to republicans, is a political nonstarter. lisa: when people back away from this speech and they label it centrist, radical, will this be decidedly centrist? i think therevin: were centrist undertones but it comes at a time when she has made an alliance with a new freshman representative, alexandria cortez. and putting her in charge of a special committee to investigate climate change. granted, that committee does not have subpoena power. but it was a large illustration of the bridge that speaker walk, which is uniting centrist with a far progressive wing of the new democratic party. at a time which bipartisanship in washington has cap to this government partially shut down. scarlet: great context. it explains why she mentioned climate crisis in her speech. i want to ask about infrastructure.
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that came up as well. she mentioned she is looking forward to working with the president and discussed hr1. what is the appetite for any kind of spending on infrastructure? lisa, she looked up bond yields when that happened. lisa: and they went down. scarlet: the bond market does not believe anything will happen here. there is a clear divide amongst economists about whether or not this economy can handle the appetite for the economic stimulus that would be impacted by something like infrastructure reform. ais is largely republican-controlled congress. it comes at a time when many republicans are calling for entitlement reform as a result of the growing national deficit. on issues like medicare and medicaid, and entitlements, that is going to be a remarkably divisive issue, especially when we get to the debt ceiling in a few short months. remember, the acting chief of staff for president trump, is a cofounder of the freedom caucus.
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he is negotiating with a former congressman turned vice president mike pence. they have agreed to things like the balanced-budget amendment and that is something that democrats will not likely get on board with. lisa: thank you so much for all of your contributions. are preparingwe for newly elected house speaker oath pelosi taking the after giving an address to the entire house of representatives in the united states. nowlet: 116th congress is in session. she did promise the democrats will advance in an appropriation legislation to reopen the government later today. lisa: later today. scarlet: we will keep you posted. we are about one hour and 10 minutes away from the u.s. markets close. you are looking at the kleins and u.s. stocks. we have come off the lows. the dow a was lower. a big reason for that is apple
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off 9.5%. taking up almost 20% of the indexes drop. nancy pelosi is now taking the oath to take office. being sworn in as the speaker of the house. let's listen in. >> that you will bear true faith and allegiance to the same, that you take this obligation freely without any mental reservation or purpose of evasion, and that duties ofischarge the the office on which you are about to enter, so help you god. mrs. pelosi: i do. [applause] >> congratulations, madam speaker. [applause] mrs. pelosi: let us thank dean young. thank you, dean young. [applause]
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mrs. pelosi: i now call the house to order. lisa: that does it for house of representatives speaker nancy pelosi oath of office. worth noting that it is a replay of her january 2017 swearing in ceremony with her family surrounding her. scarlet: it is time for our sector spdr report with our own emma chandra. emma: we are taking a look at , the technology select spdr etf down 4.3%. was down closer to 5% at the lows. apple shocked, warning the catalyst. technology is the worst performing sector on the s&p 500. see information technology there at the bottom of the screen. it is falling almost 2% more than the next worse sector. today on the s&p 500. what is leading way down?
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it is apple suppliers. apple down 10%. the suppliers also really suffering. we have qualcomm and microchip technology all following -- all falling. works gets about 47% of its sales to the taiwanese apple manufacturer. broadcom gets 37% of its revenue from apple. said to be the sole supplier of chips. the hour.ur stock of it is headed to its worst day in five years. scarlet: i am struggling with what we did not know. they revise their estimates lowered. we knew about the slowdown, we knew china was slowing down. why did they do this? what is the surprise? emma: what we are realizing since they gave their sales back in november, we have had these rumors about apple doing poorly. we have heard the left cut outlook.
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as known as quite it was today. i think also a number of the things i have been reading as analyst investors thought christmas would help apple pull it out of the bag. they would get more sales of their iphone. that clearly has not happened. when you think about and we look back to the beginning of october when we were talking about the fews of apple, and now a months later, $400 billion have been wiped off the market cap. scarlet: i think you hit the nail on the head. apple did not articulate this is everyone was aware. talkings a great column about this talking about how apple failed to be honest about what could go wrong or they did not acknowledge the hiccups. i'm curious, what are we wanting to figure out whether this is something that will have a more prolonged effect on all of the suppliers? and that: i think everyone is waiting to see if we will hear more from outlook cuts from suppliers. what they will say over the next
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few weeks. we have heard a number of analysts saying they expect to hear more from the suppliers and we will meet -- see more profit warnings come from them as they see their sales cut. we are also seeing analysts turning bearish on apple. before the iconic iphone, it investors avoiding shares of apple. after it plunges and comes out. scarlet: maybe don't buy apple. lisa: honestly. are you hearing anybody come out and say, this is a great buying opportunity? emma: i think there are some analysts who think tech more broadly could be. what i think they are still waiting to see how the dust settles over today in the next few days. scarlet: pretty remarkable. if you look at anr for apple, the stock has 23 buys and 23 holds. that is a sea change from what we had earlier.
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emma: we saw a number of analysts taking action. scarlet: there we have it. if you come inside the bloomberg, the grange -- of the green bars show the by ratings. now they are even with the holes. the mustard yellow bar. the reds are the cells. which did not exist for a couple of years. isa: it counts for 48% which the first time we have seen that for a long time. lisa: there is also a focus on other luxury brands that cater to wealthier individuals in china. marriott for example, those shares lunged in response to something similar. marriott shares down by 4%. people saying that -- emma: we are seeing the luxuries down. ralph lauren, down today. lvmh, struggling. same clientele. people who buy expensive iphones are the ones who buy that as well. scarlet: walking around in their coats. emma: not to, but another story
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there. lisa: we have just stereotyped people. thank you so much for being with us to let's get caught up on what the markets are doing. it has been an ugly day. it was not as ugly as earlier. the dow jones down nearly 2.5%. the dollar still losing against the yen. down 1%. look at the 10 year treasury yields. nearly a one year low. --n as people are expecting now they are expecting a fed rate hike, gold is gaining a haven amid the storm. scarlet: vc money going into the yen, money going to gold. clearly apple is the catalyst. one of the catalysts for today. that's along with the numbers which puts a spotlight on tomorrow's jobless numbers. stephen made the point that it is a lagging indicator but that -- but nonetheless, you will want to see how the fed interprets the latest data because -- lisa: up 22%.
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down from earlier highs. after the purchase from bristol-myers, it is getting a boost and raising questions about other emerges and acquisition activities. not all is lost. scarlet: even so, just to put a spin on that, -- that is the enterprise value. you are seeing the stock get nowhere near that level. bloomberg intelligence was saying that they may not approve of the deal. another one is bristol-myers may get a bid. york, this is bloomberg. ♪
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mark: i'm mark crumpton with bloomberg's first word news. house speaker nancy pelosi is laying out her agenda for the new democratic majority, saying the american people have in her firstw dawn
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remarks after winning election as speaker. pelosi said the house must address climate change, which she called the existential threat of our time. pelosi was elected speaker with 220 votes. of the 15 democrats who did not support her -- three voted present. she held this post from 2007-2011. she's the only woman to ever be speaker of the u.s. house of representatives. the ongoing partial government shutdown won't do much harm to the u.s. economy if the impasse in soon. hassett spoke to reporters at the white house today. our estimate is that gdp could go down in the first quarter by about .10. i don't expect to see big economic effects if it ends relatively quickly.
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mark: he also said the economic -- workers are usually awarded backpay once the incident is resolved. china usesay arbitrary enforcement of local laws. the state department is also warning that china can you so-called exit bands coercively and doesn't recognize dual nationality. today's warning updates a previous advisor after two canadian citizens were detained in china, so far for more than three weeks, without a hearing. north korea's ambassador to italy has disappeared, raising the possibility of a rare defection. saying he and his wife went into hiding in november just before his posting was scheduled to end. global news, 24 hours a day, on-air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm mark crumpton.
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this is bloomberg. scarlet: live from bloomberg world had work -- headquarters, i'm scarlet fu. u.s. stocks slide after i said fueled -- after numbers reports of slowing. bears take back control of the market. the california congresswoman reclaims her spot is bigger of the house. what happens now that she wilts wields the gavel? we have a selloff underway. 1%.: we cut our losses to
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scarlet: a decline as opposed to a selloff. we haven't in to the five-day lift tothat provided a the s&p 500. , note are back in the red near those levels of 40 or 50. lisa: across the board, people piling into those havens like bonds and begin as well. the end searched -- yen surgned. let's start with abaco. >> let's take another look at apple. shares plunging down about 10%,
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the worst day since 2013. the iphone maker slashing guidance, but this is it new. this chart, we've been showing bearish shares of apple in the last few months. this is a three-year chart, we see the beautiful uptrend out of 2016. that was the last time we were looking at negative revenue growth for apple. so you see this beautiful uptrend. then in november when they offered guidance below the it was lower numbers that did not meet the street. case theould make the stock is confirmed to go closer to $120. the reason investors care so much, this binary on the fact that the headlines are so bearish, take a look at these revenue numbers.
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in the december quarter last year, they have now got into $84.7 million, a decline once again. we also have another decline on year over year and a sequential basis. we're looking at year-over-year growth for the fiscal third and fourth quarter for apple. anyway you slice it, it's not the growth that investors want, suggesting we could see more declines ahead, not just for apple but probably for the stock market overall. there's one group of companies that may see declines further into the future. i'm talking about luxury goods companies. they rely on the same chinese consumer to buy the latest expensive goods.
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in europe, closing deeper in the red today. chinese consumers account for 30% of the $1 trillion global luxury goods market. it should reach 50% by 2025. analysts are now saying that it chinese markets will be more significantly more challenging, that is something luxury goods companies have started to realize over the past few months. the s&p 500 mobile luxury index down 15% in the last six months. i'm going to look at the bearish sentiment being expressed in the bond market. measure by the san francisco fed as a gauge of potential investment and it has hit a new post crisis low. you can see the past few weeks, this gap has collapsed. what this means is that traders are now expecting a rate cut by
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april 2020. this is new, this is showing the cut, in the of a interest rate buying. people are now looking forward to the next round of quantitative easing. itslet: apple revising down revenue projections for the itst quarter and seeing biggest monthly decline since 2008. let's bring in sarah. you wrote a story about how people are questioning economic fundamentals, which were supposed to be rock solid. sarah: you look at the selloffs we've had over the past three months, especially in's december. the earnings are still supposed to come in strong.
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people still say the economy is supposed to grow. a bit of a slowdown, but really all good. atufacturing data falling the fastest rate since 2008. it is still above 50 but it raises the question of what does this mean for global economic growth, especially here in the united states. you also have a cut to revenue forecast for apple and that gives a point to the earnings side of it as well. asa: and delta was thought of bellwether for the u.s. economy, and also came out and cut its forecast for revenue, indicating it didn't have as much pricing power is people expected with respect to airplane tickets. where is this coming from? orit a u.s. focused picture is it just a reflection of what we're seeing around the world? it was also over the
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holidays that we saw this weakness. this begs the question of is the u.s. consumer actually a strongest people think the u.s. consumer is? you look at apple, and they said the majority of their weakness came from demand over in china. talk about a consumer story, apple is very much a consumer story. that's people going out to buy their product. people are questioning if the , if growth is a strong as we have been expecting it to be. scarlet: a lot of things point to that, computers, algorithms, machines accelerating. etf flows carefully. apple being such a big member of so many different fines, talk to us about how apple fits into the etf landscape. on one hand it is a growth company, on the other hand it is a value stock.
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apple has many different faces. as one ofink of apple the main technology companies. of course is going to fit in with some of those growth funds, but if you look for valuations for apple, with the slide we have seen, apple is trading close to 10 times 12 month forward earnings. that is pretty cheap, especially compared with some of the other things. >> it seems like the bearish sentiment has got overplayed considering the u.s. economy is still going well. a very robust labor market. preliminary data over the holidays indicate consumers are spending more than some had expected. where is the disconnect here? sarah: that's what people have been arguing about, say investors and the market and the economy are very disconnected
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from one another. questionbrings up the if the market is sussing out something that economist come that investors have not yet seen. people are still very bullish going forward, many are saying that in the fourth quarter we can expect more volatility, but we also have kevin hassett coming out today saying it is not just apple, we should expect is across the board. if someone out of the white house is saying that, you also have to ask yourself, if earnings are going to come down and we see more cuts, the valuations we are looking at as with apple could change even more so. are note stocks necessarily as cheap as they would be if the earnings are down. scarlet: how often are you hearing the word recession from the people you talk with? sarah: most people are saying i do not yet see a recession.
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the marketike saying is pricing in a recession, but i still don't see it. back to the disconnect. bank of america came out expecting an increase of 5.5% december, just based on the volatility and tightening credit conditions. there is a material shift in people's outlook for the impending recession, based on what we see in the markets. scarlet: but any recession or downturn doesn't have to shape up to be what we saw in 2008-2009. it has just been a long time since we've had one. >> it does get to the point where if you continue to see this volatility, it starts weighing on confidence and business investment. it's a vicious cycle and if we keep seeing it happen, it can
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see through to the numbers. lisa: thank you so much for being with us. coming up, more on our top story . we talked to an analyst who slashed his target, later this hour. and dealmaking off to a strong start with the storm myers. -- with bristol-myers. talks mark zuckerberg about shares tumbling. this is bloomberg. ♪
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scarlet: time for social climbers, you can find all this on the bloomberg. with up is apple,
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struggling iphone sales in china showing is hurt by cheaper, more comparable competitors in the world's biggest market. apple cider struggling iphone sales in china when it cut its quarterly revenue forecast yesterday for the first time in almost two decades, it's the worst performer in the dow. delta airlines plunging the most in more than three years. this follows disappointing ticket pricing, forcing the carrier to cut its revenue forecast and adding to investor concerns around slowing global demand with the ongoing trade wars. buying in theers biggest pharmaceutical at -- acquisition. they are all but 15%. those are your social climbers. this let's talk about
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bristol-myers deal. i want to start with a headline to a analyst report from bank of america. they were talking about bristol-myers just minutes before this announcement. question got to us feel sorry for the -- >> you have got to feel sorry for the guy. let's not get too carried away. people are excited going into the health care conference next which is typically a kick in all .4 many deals in the sector. volatility in the market, the trade war, and these worries do persist. think this won't be the best year for megadeals and that may yet be true. the celgene look at share price, yes, it is down.
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sorry, i mean bristol-myers. not rising as much as you might think. some cash, getting alongside is trading where you would think. it is not as high as the offer price right now. last year was not a great year for either of these companies, by the way. both their shares were hit quite hard. >> am wondering what the regulatory pressures will be like. nancy pelosi was talking about high drug prices. how much pressure will there be from a governmental standpoint to stymie this type of deal? a legal pressure and then there is regulatory pressure. these are companies that are complementary. they don't have overlapping
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drugs. advisers i speak to on the still expected to go through on that basis. scarlet: so if this goes through, who else is likely to be targeted as a potential acquisition target? >> drug prices are really under the gun here. topeople are pushing them cut prices. >> you have names that were linked to celgene to start with. maybe bristolying itself could be a target because their shares are hit so hard. scarlet: is he going to be the year of health care m&a? technologyare and were some of the biggest drivers of him in a last year and we expect that to continue this year. care is also the health technology space that is
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attracting a lot of interest, particularly from private equity buyers. there are a few companies like that, and even smaller ones. remember amazon is trying to make a big push into this area also. a lot of the health care players are thinking about how they can contact that risk before it becomes too big. as we head toward the close with about 40 minutes to go before the closing bell, we're looking at stocks holding, the s&p 500 losing more than 2%. celgene is higher, but we also have treasuries higher as well, up 1.2%. gaining for a fit straight day. biggest everh its
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inflow to that fund yesterday of a billion dollars. scarlet: dollar-yen is another one we are watching carefully, not because it was moved around quite a bit. this is bloomberg. ♪
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abigail: time for options inside . andrew, thanks for taking the time. happy new year to you. andrew: i was surprised and tour december we started hearing about global growth concerns. i don't think the government shutdown really matters at all. the trump trade policy should be interesting.
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i think we will get a rally on the news when it comes out. sentiment is broken. apple is down 7% overnight. just showing that the deal with china is going to hurt so many companies and we will see that when earnings come out in the next couple of weeks. you think apple is the shot across the bow? we could have a lot of other companies that may meet numbers for the december quarter but they guide lower because the wasorate profit outlook shaped at the beginning of 2019. historically it is a good valuation to invest in the stock market with a long-term effect. i think it is a prelude to the market but we have global growth slowdown.
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there are broken stocks that held lows, if you look at lows from christmas eve, a lot of stocks are holding those lows, but once it brexit, there is not much support for a long time. it can go higher than anybody thinks but can also go lower. enter: i think this is a rally that should be so. futures are up 150 points from the lows. we talked about it, if it breaks below to 35, is a great way to play the market in short-term and have a good reward and risk set up. if he goes under 230, the spread goes to five dollars. it will quadruple in value. rebound. read route --
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abigail. the nasdaq is breaking back down into an official bear market. thank you so much for joining us for options inside. lisa, back to you. lisa: we are looking at a selloff broadly for all u.s. indexes. the dow with a 2.7% decline. sixear yields dropping basis points to nearly a one year low. we talked a lot about the dollar-yen, but the dog -- the dollar is weakening. it will be interesting to see if we see more volatility there. scarlet: brazilian stocks, a new record high. this is bloomberg. ♪
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mark: i'm mark crumpton with bloomberg's first word news. u.s. house of representatives has elected nancy pelosi as it speaker as democrats take command of the chamber for the new congress. it returns her to the post she held from 2007-2011. >> we have heard from too many families in this time of innovation and globalization who wonder if they have a place in the economy of the future. and saymove all doubt to them individually, we will have an economy that works for you.


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