the president looks for accommodation on issues of mutual interests. mcconnell and boehner call for an end to perpetual conflict. in 2016 maybeck and spoke parties go in search of votes from the middle class, solon, sour, and angry. good morning, this is "bloomberg surveillance." we are like from our world headquarters in new york. fum tom keene with scarlet and brendan greeley. let's get right to important top headlines. >> recapping, it could not have gone much better for republicans last night, picking up at least seven seats in the senate to regain majority for the first time in eight years. there will be a runoff next month in louisiana. for his final two years in office, president obama will face a congress controlled by republicans. the new senate majority leader is likely to be mitch mcconnell of kentucky who was reelected last night. >> just because we have a

two-party system doesn't mean we have to be in perpetual conflict . i think i have shown that to be true at critical times in the past. i hope the president gives me the chance to show it again. republicans added to the majority in the house and will have their biggest advantage since the late 1940's. >> republicans may president obama the issue, forcing democrats to run away from him. the white house is distancing itself from democrats who lost saying it is the quality of the candidates that determines whether they are successful. president obama has invited leaders from both parties to meet with him on friday. paul ryan says republicans are willing to work with the president up to a point. >> i think we should work with him on bills that move our principles in the right direction. yes, if there are certain issues we see so opposite on, and we

should define ourselves with our actions by passing bills that he may very well detailed. >> republicans also won governor races in battleground states and also some not battleground states. mr. scott of florida reelected. republicans stunned they win in maryland. in illinois. a bit of a surprise, scott walker wisconsin won a third governor's race as he considers what to do in 2016. those are our top headlines this morning. let me do a data check. i want to whip through it because there's so much to talk about. the surprises of last night. future celebrate, up 8. that affected by election, certainly. stronger dollar. crude oil, the global story, 76.820. vix well under 15.

dollar-canada crushed. nearing a 1.14. over to the bloomberg terminal, little bit of international, the malaise in canada. over here, this is the canadian boom. this is where the toronto maple leafs lost seven games in a row. and this is all we have come back. i think this puts scale on the china commodities -- >> driving the canadian lower. talks this is where you don't know what to give them at niagara falls. >> i think they're looking at that america'ses looking at. they have tar sands oil, we are tracking oil. a the price drops, that has huge effect on the economy.

"bloombergrs of surveillance" every day. things change, the dialogue changes in terms of lord short at $72. can we get to the election? >> i did not see the number of positions for republicans are now open and loving firms -- lobbying firms. >> we're going to rip up the script undo that post election. years on the hills. sleepless in washington. when philip mattingly looked at each and every moment. size thunderstruck by the of this republican wave. who is the happiest republican

this morning? >> it has got to be mitch mcconnell. rob collins is the executive director and he is pretty thrilled, too. you can pretty much go down the list. i don't know anyone the country with the exception of maybe new hampshire, where there is in a thrilled group of republicans. it was a big, big night. >> how to secretary clinton interpret this moment? >> it is interesting. a lot of candidates she campaigned for into the pleasing. however, this makes president obama look about as weak as he is looked over the course of his six years in office. he is steadily hit a low point on the approval ratings and on the perception. a low point within the party. democrats are very, very angry with her perception of how the white house handled this without president obama handled going out and campaigning for people. there is some sense within democratic circles that maybe this opens the door for clinton to come in a be the savior.

how she positions herself will be difficult. this was an absolute repudiation of what democrats have been doing. while there is widespread anger at all incumbents right now, hillary clinton has to be careful how she tries to come in right now. >> a massive shutout to brendan greeley. you now this yesterday morning -- you nailed this yesterday morning. >> i do feel like it is not an all clear with the democrats want, but it is clear america doesn't know that either. there are five quietly happy democrats in washington today, and those are the swing democrats in the senate. they will become crucial over the next two years. who are they? >> you have joe manchin number one, the big -- one of the big players. he is always willing to get into a room with republicans to start negotiations with people. he doesn't have great relations with the white house, but does across the aisle. you have independent lawmakers. angus king has been caucusing

with the democrats. he might move back over to the caucus of the republicans. it is up in the air. those are two guys i think you really need to watch. in both parties, there are people who will move into that group. one key thing, one of those lawmakers who was always willing to get in the room is mark warner in virginia, somebody we all assumed would have a very easy race. that race hasn't been called yet. national republicans did even put money to their because they adn't think ed gillespie had chance. mark warner is in danger. he is one of the most bipartisan guys in the senate. >> you are saying the holes were not skewed against democrats -- the polls were not skewed against democrats? >> not at all. -- put in muchts the best in the game when it comes to polling in iowa, pulling was spot on. joni ernst one by seven or eight points. democrats touting this big

ground operation that was going to allow for a turnout of voters that never voted in midterms before. it just did not happen. >> the president did not going front of the camera last night and we're not sure when he will be speaking. what is his top early january 20? >> we will hear from him today. i was at the white house last night and talking to officials about the evening. pretty somber affair over there. what we know so far, one of his aides have been meeting with probably the last four or five weeks working through different plans on what would happen to pending on how the senate fell out. over the last week or two, they were very aware this was probably going to happen. i think you'll see the president laid out in three different buckets. he is going to speed today and talk about where they need -- what they need to get done in the lame-duck. there are major issues including funding of the government they have to do. then he will talk about areas of ,ipartisan agreement

infrastructure, corporate taxes, criminal sentencing reform or he thinks he can get with mitch mcconnell and maybe strike some deals. i think for a be an important point. you will not go all in on bipartisanship. he will maintain the ability to go on and be political. that is not going to make republicans happy. >> folks, we bring you someone gifted this morning. he spent more than three cups of bible of fiscal policy. how does a hill change would you have a wave of majority? majority change last night. how does that marble palace change? >> first of all, in the senate you have leadership changes. committees will be chaired by different people so they will have different priorities. you mitch mcconnell instead of harry reid comes of the agenda will be a little bit different. all ofline, when you put this together, the majority -- the republican more jordy change doesn't mean much in terms of

getting things -- >> we are tourists. we look at the statues and maybe we go to the basement and look at the old supreme court. all of that kind of tourist stuff. what happens four floors up, three flights over, six committee chairman from former senate majority harry reid? what changes in the sweat of the building? >> not much. the bottom line is, their senators. they have certain responsibilities. you will see the chairs change to match the number of members on each side of the aisle, but other than that, it is going to be put in business -- >> do they change the curtains? >> they changed some of the stuff on the wall, the frame to documents -- >> and the pictures of the former chairman. >> there were a lot of close races and ones that were not close. does i give politicians more license than i did not have otherwise? >> they will claim extra authority. i defy anyone to tommy with this

meant other than a vote against obama. you have more conservative people who have been elected in both houses and now talking about conciliation. it doesn't make a lot of sense. >> whose tax plans are getting dusted off right now? >> you can go back to ross and cap and anything like that. you're not going to see tax reform and tell 2019 at the earliest. >> very good. how to party is the house -- t ea party is the house? is not a huge number, but it doesn't need to be. they need 218 votes to move anything in the house. john boehner doesn't like to move things if he does not have 218 of his own members. that means with -- i think i picked up 12 seats. leaving 30 republicans john boehner, he doesn't have enough votes to move things through. it doesn't have to be a

substantial caucus, just has to be a stubborn one. that is what it is and that is what it will be. talks we will see you in the next hour, format only -- phil mattingly. there's a twitter question. >> it go straight to the heart of the matter -- tweet us. ♪

>> good morning, "bloomberg surveillance." it is the capital under

construction. republican majority. if you're just waking up, we knew the senate, but the senate aide and far more important, the house, bigger. a majority back to the presidency of harry truman. good morning, "bloomberg surveillance." the morning after. here is scarlet. >> we are back with stan collender. let's get you quick markets jack. u.s. equity index futures higher after the publicans won control of the senate. the dollar strengthened this morning a print crude oil retreating. to 76.84. russia's ruble also weakening. this midterm election did absolutely nothing in terms of your believe in this bull market. >> what it does is it tells you that as stan mentioned, we're probably the same place. we will have a lot of rhetoric and people pushing their agenda, so it will be more energy talk,

more free-market talk. at the end of the day, the markets as a whole with energy prices coming down, you are seeing more positive economic data coming through. >> let's rebut the script. the republicans control energy policy? >> no. >> with the midwest mckee stone for republicans control the dialogue? >> they don't control of because they still have to get past a potential residential beach oh, so the white house does have some influence in policy. go back to your question from five minutes ago, they're more ability to get that agenda moving -- >> how does he remember my question from five minutes ago? i don't. appeared on bloomberg politics a number of weeks ago, had a confidence to his death. did it disappear last night? completely. he was one of the big losers. as a result of the elections last night, you have at least three or four new republican bible candidates for president.

but romney was going to be the fallback. now you have everyone from john kasich a scott walker cool be so the considered sisley. -- who will be considered seriously. >> it is not so bad for mitt romney. he just once to go home and live in his houses and have his car elevators and be ok. >> i think he is done. he was hinting a little bit that he was available if the party wanted to come to him. >> i want to talk about the republican governors. governors actually have to govern. can we look at any policy successes they have had in the last four years were that might translate to washington 2016? >> you have some policies sale of -- failures. sam brownback almost ran the state into the ground -- >> but he won. >> winning and policy success

are not necessarily the same thing. if you look at what john kasich has done in ohio, you have to give him props for coming up -- >> how does ohio change two years for now -- from now? i want to give props to john heilemann. avoiding clichés with intelligent discussions. give me the new cliché on ohio. >> the democrats can't win it because the governor got elected was such a big majority. presidential voters are different than those who vote in nonpresidential -- talkrat sethi, i want to about what secretary clinton will talk about, which is the middle class. from the world of investment, what is the republican middle class that you perceive? $120,000 the year? $200,000 a year? >> a legitimate number a lot lower.

you are looking at the middle of the country and looking for to basicallyuents say, how are we going to get the middle class? i think that will be something for the next election. it is prime and center, how do you get your wages up whether you are democrat or republican? >> so you really believe this will be the economy elections. >> i do. i think the republicans will show, yes, the stock market did well, but it did not carry through to the middle class. >> we had the former white house speechwriter for obama on yesterday, and we asked him to describe what does the democratic party won. he said, we want to defend the middle class. it did not work. >> i think republicans will show it did not work and say we need a bital plan -- we need a better plan. fabulous. >> we will continue this discussion on the economy -- >> can i just watch the show one time? >> yes, go off and watch it.

we will take care of everything. >> we are waiting. >> coming up, we're only getting , former undersecretary joining us to rub out the midterm results and look at a 2016. foreign policy sure to be on everyone's agenda. this is "bloomberg surveillance." ♪

>> good morning, "bloomberg surveillance." we welcome all of you worldwide as we interpret what occurred last night in the midterm elections of the united states

of america. let's get to our morning must-read. >> so many people have in making the argument there will be more corporation in with this divided government, gridlock cannot be worse. i don't know if i buy that. i don't know if i buy that argument. >> i find the logic somewhat compelling they can't possibly defeat obama again. they have defeated them several times now. now they have to do something else. >> how does this wrap up into a massive bull market, sarat sethi ? does the ballet of washington test your patience? >> i think what we've seen going forward, voters have actually said, we don't like what is going on. the markets reflected more

positive, longer-term scenarios. i do think we need to see something happen that is positive. if we have the same old for the next two years, maybe the markets will start saying, we don't really trust it. >> brendan greeley, voters unease. solon. they are not in this bull market. quote fromking at a last night, from the chairman of the rnc. i know his post to make things up for a living but i think he said something that is true. august the, the president's lieutenants have followed his path off the plane. -- obviously, the president's lieutenants have followed his path off the plank. an, is it possible to run away from a president? >> you can underserved circumstances, but he clearly was a drag on never democrat running. look at mark warner, for example, my senator. no one expected that.

raceook at the governor's across the way. can you actually run away from a president? yes. i think you'll see democrats running for election it or the president or for senate or house will be running away from the white house. >> they tried it with bush and he did not work. >> is this potential vice president? >> elaine chao? >> yes. >> she is a political threat and her own right, absolutely. >> our twitter question -- stay with us. ♪

>> this is "bloomberg surveillance." democrats probably did not see this coming, clear-cut victory for republicans in the midterm elections. republicans picked up more than the six seats they needed to recapture the senate. three races are still undecided. president obama will face republican majority in the senate and house first final two years in office. what wasonnell turned supposed to be a tight race for reelection into a landslide victory. there he is with his wife elaine chao. always is what he wanted. he is the only senator out of 50 who did not want to be president. he wanted to be majority leader. >> what to read this morning. there's so much to interpret. start at bloomberg politics.

great book on secretary clinton. how the president lost the senate. they minced no words. this is really a must-read digest of how the president got to this point. look for that across all of bloomberg news and bloomberg politics this morning. that is a good read to get you started. we have the markets right now. i would to cash october 15. our guest sarat sethi what long america. all of us six-your bull market, no adjusting to a new washington. he manages money at douglas lane. what do you do strategically today? do you buy america? do you go long and by the philippines? >> you don't rush in to do anything. down the road, we will see what the markets are telling you, energy prices are low and will be for a while, especially now with republicans in the

majority. i think that is a fantastic tale. but for industrials as well. 60% of gdp is consumer driven. you see oil is 30% less. >> how much of that is priced in? >> not that much. they have been beaten down for this year. what you're really going to look at is how can companies grow their top line? >> i failed this morning. down $24. to be honest, i missed some things with my entourage that i have. i failed. >> you failed to move the bullion out of your closet? >> that is the fear factor. the fear factor of people running to gold, buying gold, and have every other commodity price go through the roof. you are seeing the opposite right now. gdp issay a lot of

consumer driven. one of the big factors in the election last night is the utter inability of consumer of immediate income to climb. it is been stagnant. we have a chart. the kitchen table. it isnot the economy, cash flow, two households on a month-to-month basis. we know the effect that has had on politics. what does that start to affect the s&p 500? works,way consumption similar to inflation, you project it out to the future. so the american consumer is very much about, what am i going to earn down the road, not what is in my bank account? that, that is read get better earnings projections. if that doesn't happen, you will see a nice pullback. >> at the same time, all of these announcements of companies laying off workers. office depot with more than 1000. time warner when to fire 1000 workers at warner bros..

that is what people talk about at the kitchen table. >> but you see other companies hiring. skill set, that is where you will get the hiring in the higher wages. i think you ought to see more of a transformation of the workforce. talks does that make this election unlike other elections? i know i keep coming back to politics, but there was this question, the economy is doing really well, why isn't barack obama more popular? is the answer median wages? >> it is that and the change in the economic paradigm. >> i used the word paradigm? i should be fired. >> you could use it if you are doing a crossword puzzle. the demographics changing, workers leaving the workforce and not coming back because they are of an age. a lot of things we have come to expect the economy to do when it gets better, it is not going to do in the same way.

in addition, a lot of people are comparing it to the artificial boom of the late 1990's. >> does republican policy then have to adjust? cut taxes, remove regulation, those are ways to get the gdp up, but that may not do it anymore. >> you can't take what was said last night about working for the middle class at face value. that was election year rhetoric at the end of the election in the beginning of the 2016 campaign. >> i was drunk, i was hitting on you, i'm not responsible. >> is a true ronald reagan won last night? >> he would not fit into the republican party right now the way it is now. in fact, he would probably be drummed out in many ways. you need to have something of his earlier tax cuts were you actually cut taxes for the lower levels. talks you are our fiscal expert. the president at the minimum gets a massive victory lap for closing our immediate deficit. no one cares, right? >> and he doesn't get the

victory lap because a lot of people don't think it is a victory. the deficit was $483 billion last year. is that big or small? small compared to what it was in 2009, but to a lot of people, $483 billion is a lot of money. >> yet have to make something a priority in order to make -- get credit for it. >> and yet to be able to communicate. order, but iseat not a great communicator. he doesn't relate to the audience and the audience doesn't relate to him. >> and the republicans made the economy important, which for the last six or seven years has not been that important. not saying they were not good things to get done, but when you focus on the economy you focus on middle america and say, we have to look at you, yes, the 1% is doing fine, but i think that hit home. >> we are three weeks out from the turmoil of october 15.

is it over? >> everybody was predicting 10% correction. a bit of itou saw and then the ebola, couple of earnings announcements, some bellwether company says said -- >> ibm and mcdonald's. >> then all of a sudden people said, we're not sure this is the growth we've had for the last three years, but -- >> let's look at some photos, some images of the midterms that we have. >> here's the number three photo of the u.s. capitol dome coupled in scaffolding -- covered in scaffolding to repair the tiny cracks that have emerged. >> is that a metaphor? >> no, that would just be 100 cracks. takethink some metaphors care of themselves. this is the first time in 50 years -- >> and that photo of abraham lincoln, i first is -- i believe his first inauguration as they

constructed -- domes to looking bravely westward. our second photo is a voter letting mitch mcconnell no how he feels. early last picture night. it doesn't seem indicative of the election anymore. >> he missed the moment right afterwards would maybe mitch mcconnell gestured back. >> the joke is on the thumbs down back. >> what would governor chris christie have done? >> there you go. >> maybe mitch mcconnell is mooning that dude. we have no idea. seven years ago -- 70 years ago, crowds gathered by the hundreds of thousands in times square awaiting the election results. franklin roosevelt was elected to serve a fourth term as president. he defeated thomas dewey. >> that is when there was religious a patient, real drama. about 1994, 1995

changed everything. has changed. >> if you saw a pair company, -- parent company, you guys reported it rather big, but it changes in a variety of ways. you can get information quickly but also, politicians hear from their interest groups and constituents within seconds. of the day, wuote maybe talking about president obama is a great order either but not a good communicator -- president obama is a great or greater but not a good communicator. it is something individual politicians to come some do better than others. one of the big changes as well. to communicate.ul you cannot talk to record your constituents. >> are single best chart coming up talks about communications

and how it perhaps is continued into gridlock in washington. we will explain on "bloomberg surveillance." we will be right back. ♪

>> it is a washington awakening to a room majority -- went into a majority republican. great perspective last night with bloomberg politics from halperin and heilemann. the history going back to 1948. watching himat talk to absolutely every politician who came on. they all knew him. >> there was a real surprise last night. >> today single best chart ties it up and moves it forward. it is on politics and the politics of communication, how to much can be exacerbating gridlock. communications staffers. this is from a study, democrats

are the blue line, republicans are the bread line. you can see the ramp up over the last four decades. both parties have increased the percentage of staff with kim indication job titles to 45%. 1975, nine of the senate's top party leaders employed a press secretary. also, note pr aides working for any of the party offices. >> they employed stan collender sixwrote a four inch size book on legislation and policy. >> it was in paper. >> how quaint. >> i don't even do it anymore because they don't follow -- entourage ofn communications people. is anybody legislating? of thise's leverage research, her basis was, if any party in any given election cycle has a chance of pointing, they have no reason to legislate whatsoever. his legislation over? >> this is not as much of a

change as you think. when i worked on the hill, we were just trying to get a press released facts by four minutes of page to an afternoon newspaper. remember those? >> i used to deliver one as a child. that is over. >> you are being a child. i learned kim indication's by working on capitol hill. i had a boss who said, if the press wasn't interested in it, she wasn't interested. this is a all that different. now the party communications guides are full on delivering the party's message rather than helping the individual senator legislate or get ideas through. >> they would tell you that is the way to legislate him they help support by getting the word out about what they're doing. it has bid up the price of people we might hire in my firm in washington. , as we look at communication, i seen the twitter conversation and blocks in all of that of conference

calls, but is communication on wall street changing for the better? are you more knowledgeable about the companies you own? >> i think so. thelation fd which brings information to everybody the same time has helped and things like technology whether you are tweeting things or -- we get information as soon as everybody else gets a whether you are a 100 billion dollar hedge fund or not. i think that makes it easier for us to analyze. we are on the same table as an individual investor, etc. i'm a gives you everything right there. kudos to bloomberg who still survives, but a lot of other people are not surviving because all of that information we used to depend on other places for comes to us directly at pretty much free cost because the internet just lets you get it. >> let us all continue to survive. >> should you be doing this? >> we report on tax plans as if they mean something. dave camp's beautiful piece of work, the simpson bowles commission report. is it all vanity? >> of course.

you're not surprised by that, right? you get a major tax reform bill once a generation, and the last was in the mid-1980's. it has less to do with policy and more with politics. >> why was it easier to enact? started in all, they the 1980's tax reform was the idea to be revenue-neutral. wasn't social media or the tea party or any of the things that make life a lot more difficult for politicians these days. that is why i said, you're not going to see major tax reform. i don't care what they're talking about for three years or four years. >> stan collender with this, sarat sethi as well. coming up, a real straight talker from ohio. he is the former democrat governor ted strickland for joining us with prospective on his estate. did you see how i got through that without calling in a

battleground state? it is a battleground state. it is a battleground state. >> you did not collect purple, either. >> we will be back. ♪

>> good morning, our twitter question of the post-tuesday -- the back straight the midterms. what does washington need to do to make you care? tweet us. please send in your most cynical answers. and good ones as well. secretary clinton, if you're watching, we would like your response. >> last night, three states voted to raise the minimum wage. more may follow. the president try to make it one of his signature policies, but it looks like the minimum wage is bigger than the president. arkansas raised the minimum wage. alaska may do the same. ted strickland is with us from ohio, former democratic -- i'm sorry, he's with us from washington, number democratic governor of ohio and a president

of the center for american progress. he also lived on the minimum wage for a week. is a democratic idea. democrats had a bad night, but the idea had a good night. help me out. >> listen, the people in this country overwhelmingly believe that $7.25 an hour is not a sufficient and wage. and the people in these states, and many of them were red states , as you said, who elected republicans last night, that they approved the minimum wage in some cases well over 60%. and that says the people in this country want something done to help the average working person. i think it was a bad night for the democratic party, generally, but a good night for those of us who believe that this economy needs some adjustment and the working people need some help. and that is good news. >> what does that say about the

party? did the party need to tie itself to raising minimum wage were firmly? but,wish they would have, you know, the republicans were pretty smart in this election. night, them who won last during the later part of their campaign, started adopting some of the democratic rhetoric. they started talking about income inequality. they talked about underemployment and so on. so they really stole our rhetoric, in a sense. i hope that means going forward, they will continue to embrace what they've been talking about, but i have some doubts. >> i know you have been very busy with the lebron james exploratory committee for 2016 or 2020. it is good to see your guy back in cleveland. what is different about ohio now from the last time lebron james was back in ohio? there is a new ohio, isn't there? >> cleveland, ohio is doing

fairly well. it's city debt is on the move. republicans will come to cleveland for their national convention. we're hoping to get the democrats to take a serious look at columbus. >> critically, i don't mean to interrupt, but this is an important point. john kasich had a good night last night. is it now a more republican ohio than when you were in office? >> i don't think so. john kasich's opponent imploded. he had a disastrous campaign. it meant the win was more impressive looking than it actually was. it was all most as if he was running against no candidate at all. that is how bad the -- >> you nailed this. this is about democrats with no message. campaign, ithis absolutely know what republicans want. i don't know what democrats want. can you tell me?

>> yes. democrats want pay equity. to have aamericans fair tax system. they want a good education system. they want a reasonable economic policy, that do not just benefit the wealthiest, but the struggling middle class. i believe democrats should want an emphasis on eliminating poverty among our people. we have one out of five children living in poverty in this country. that is outrageous. >> if that is true, where were these bills coming out of the democratic senate when it was a democratic senate? >> listen, i don't want to sit here and defend what has happened in washington. it is indefensible. i think that is what the people expressed last night. but the people of this country have not adopted the republican agenda of cutting taxes for wealthy people and putting an increasing tax burden on working

people. they just have, you know -- both parties have some real work to do. i think the american people are suspending judgment, will decide later on what the country is going to do going forward. last that was a bad night for the democratic hardy. >> ted strickland, thank you, former governor from ohio. stan collender with us. what does it mean for the new politics coming out for years ahead if i've got a democrat like that stammering? >> look, democrats have generally not communicated correctly. they decided this time to keep everything local. to answer your question, there is no national message. >> what would be your presumed message nationally for democrats to years out? >> it has got to be, we are the ones that you need to trust because we're on your side.

>> very good. we could go another three hours. thank you so much, stan ,ollender and sarat sethi greatly appreciated. dollar-canadaer, 1.14. ♪

>> it is being called the

republican wave of 2014, the largest house majority since 1948. there will be a republican governor in maryland. the president looks for accommodation on issues of visual interest. mcconnell and boehner call for an end to the perpetual conflict. and 2016 beckons and both parties go in search of votes. good morning, everyone. it is bloomberg surveillance. we are live from world headquarters in new york. it is the morning after, november 5. runnymede, scarlet fu and raymond greely. but get to some important headlines. the gop needed at least seven seats to regain control of the senate for the first time in eight years. they got that, and maybe more. three races are still undecided. that means for his final two years in office, the president will face a congress controlled

by republicans. the new senate majority leader is likely to be mitch mcconnell of kentucky, who was reelected last night. >> just because we have a two-party system doesn't mean we have to be in perpetual conflict. i think i've shown that to be true at critical times. me ae the president gives chance to show it again. >> little surprise in the house, were republicans added to their majority, where they've had their biggest advantage since the late 19 40's. >> republicans may president obama the issue. democrats tried to run away from obama, and now he's returning the favor. the white house is distancing itself from the candidate who lost. ryan, congressman, says republicans are willing to work with the president of to a point. >> i think we should work with him on bills that moves our

principles in the right direction. and yes, if there are certain issues we are so stop -- so opposite on, they would should define ourselves by passing bills that he may very well be joe. but -- that he may very well veto. areeveral of the victories in states that are likely to be important in 2016. scott walker won me in four years. -- one in his third governor's race in four years. we believe you should build the economy from the ground up. that is new and fresh and organic and that is what we are going to do. >> much to talk about this morning. the markets like what they see.

are well out over 2000. oil, oil, oil -- lower. $76.81. 70's dollars is a critical price. -- $72 is a critical price. it is the morning after. with us this morning with domestic and foreign interpretation and perspective on last nights events, we are -- we are honored to bring you robert hormats, the former undersecretary under-secretary clinton. and a guest i worked with governor romney. and to further sweetness, phil mattingly. as the president meets on friday, what will be topic one domestic issue? >> the spending bill. they got a lame duck session.

they've got a couple of weeks to figure out how to fund the government going forward. it sounds really micro, but there are issues they need to get done before they leave for the holidays. it's on tax extenders, which are super important in corporate america. there will be bigger picture talks, though. obviously, foreign policy is a big issue with what is going on in syria and iraq. but more broadly, it's interesting to get readouts from , how they perceive the posture on each side. it seems semantic at times, but it matters. >> do republicans have a foreign policy? >> it's not a singular focus with them. it's like the democrats. there are different camps within the party that field of her things. when you look at the senate republicans, the new ones that will be coming in in january, they align more closely with the john mccain, lindsey graham, kelly ayotte policy of the

senate. of thee libertarian base policy. since the rise of the islamic state, there has been more of a push away from the isolationist, the libertarian, and toward the idea that the u.s. needs to have a more robust presence. >> brilliant but that is exactly where i wanted to go. phil mattingly, stay with us. republicanme of a yourthyism, but that then just heard mr. mattingly say, maybe not. >> isis has become so reprehensible, so brutal, that even those who were isolationist a little while ago are much more willing to play a role, though reluctant. but not a lot of american troops. >> these republicans represent so many people that happen to fight, or their families thought, or their sons and daughters fought in iraq and afghanistan. >> if you look at some of the

candidates that won last night in the u.s. senate, these are free goal in of a strong national defense. if the traditional republican position and it's one that will get a lot of traction in the new congress. but it's so hard to read the smoke is coming out of the negotiations with iran. what does this do to those negotiations? onthose are supposed to end november 24. that is the sort of d-day here. if the u.s. succeeds in the negotiations, one of the elements that the iranians want is a relaxation of sanctions. this congress may be more congress than the past to go along with that. they may say, we don't want to do this and we don't want to trust iran. if that happens, the negotiation results could fall apart on the grounds that the u.s. didn't hear -- didn't adhere to relaxing sanctions. >> the president will be heading to beijing later this month to

attend the apex summit. we've heard so much about his pivot to asia. stancee the republicans on that event? >> -- on that pivot. a lot of people in the republican party are very concerned about what china brings to the table, particularly with our allies in the region. when the president went over to asia to japan, south korea, the philippines, and it will be evident as well when he goes to berman next week. i heard about the china trip yesterday. cyber security is huge. area, there is an agreement on a bipartisan level that something bigger needs to be done. they have not been able to agree on legislation yet, but republicans and democrats can get behind the idea that cyber espionage coming out of the chinese government is a major problem and maybe they can work

together. >> one more question and we will let you go. what happens on k street this morning? >> probably a lot of former senators are starting to send out a few resumes, maybe make a few phone calls. no, look, this happens every single cycle. they will have great jobs waiting for them at various law firms and lobbying firms around the city if they want them. not everyone will take that position and i'm not saying that is the worst in the world, but it is the path that a lot of makers -- a lot of lawmakers choose. >> bill just spent all night at the white house. i will call him and ask them what the white house was drinking last night. kentucky moonshine. >> ambassador to you served in this administration.

this is a very different administration than two or three years ago, isn't it younger >> absolutely, it is. ,here are many more problems but they also narrowed the problems are on the road president -- around the president to a certain degree. want tothink they would widen the circle and get more people involved to broaden support. asia and there is an opportunity on this trip to asia to make some progress. the chinese now understand some of these tensions with the u.s. should be reduced. the u.s. has the same view. that will be a plus. >> scarlet will be talking to a guess about this later in the hour. an interesting point of how much the presidential staff will turnover in the next couple of weeks. >> a lot of them will turnover, because there is a sense of a lack of progress on the big issues. just like former congress

members on k street looking for people in the administration will be looking for jobs. number one thing you learned on the set last evening? electionow big of an this was for republicans. i don't think anyone expected it to be like this. you have massachusetts and maryland with republican governors and you have a number like ede races gillespie in virginia where no one expected it to be that competitive. it was a nice surprise. onwith us for the hour here bloomberg surveillance. >> what does washington need to do to make you care, to make you feel invested at? tweet us. ♪

the idea of bigger government makes sense to a lot of people, but in practice, that is what we've seen in the last couple of years and why obama was rebuked so much last night. >> but if nobody is hearing it, it's because nobody's talking about it. but part of the issue is we've seen very little public policy out of either their dash into the senate or the white house and the possible of years. it's been difficult to say what it is the white house stands and what it is that the congress stand for. , a need for aats

bigger deficit. well, we have one. how can we get traction for fiscal responsibility? fiscal responsibility has been a key part of the debate for a long time. the budget deficit is way down. oil prices are now coming down. the average american is now better off and has more money to spend. there are a lot of positive things are going on in the economy. the problem is they have not happen rapidly enough and a large number of americans do not perceive that they have benefited substantially enough. it's very hard for the president to make this case and he has not made it very well. when roosevelt died, there was a man who was crying along the side of the treat and they said, did you know roosevelt? you seem so emotional. and this fellow said, i didn't know him, but he knew me. problem for a lot of americans is they don't think

obama really has a good feel for what is going on in their part. >> and that is not limited to the president either. a lot of people feel that way about our elected officials. >> i would say members of congress would suffer from the same thing. there is a feeling that big money plays a big role. >> stay with us. market later this morning, robert reich felt on the nasdaq in the eight mam our -- robert wright felled. ♪

>> good morning, everyone. bloomberg surveillance, and i'm tom keene and with me scarlet fu and brendan greeley. fascinating headlines this morning. >> away from the midterms, let's start with ali baba. they are doing fine. sprint is the problem. to -- k is unable

for dish network ceo, what is the next move? touting plans for an upcoming internet television service. he's also talked about possibly acquiring more assets. such as t-mobile. if you thought you saw a lot of -- a lotnd princesses of frozen princesses, wait until christmas. disney was caught unaware by the movie's popularity. not this time. it is doubling the items in stores. >> do you let your daughter sleep with the whigs on neck of >> we don't have those costumes. i witnessed this at a bus stop.

-- it's a code. who do you identify with? i am more of an anna guy myself. i still haven't watched the movie, so i have no clue. >> tom and i could see the whole thing to you from memory. and the democrats should be singing "let it go, let it go." >> let's move on. is truly for american retirees and about to retire. scarlet, stop looking at me. nothing has changed. the vast majority of americans cannot retire. it is the republicans fault, the democrats fault, your fault. part of it is the get the social security check. retirees leave millions on a table. of ahief executive officer

social security advisor survived both the recent legislature and a written marriage to an economist. congratulations. it is too different world here. he does foreign and you do domestic. how messed up is our social security believe? belief?ocial security the reality is, if we do we are operating between a 70% to 20 3% across-the-board cut. that is if we do nothing -- 17% to 23% across-the-board cuts. that is if we do nothing. but we can make a modest array of changes to the program. it's the third rail for washington. how strong is that believe that they cannot touch the issue?

or is there any ability to see domestic change? >> i think there is. i think it is up to the american people. my generation, which will per -- will bear the burden in action. stanley johnson miller has talked about this concept of generational theft and what is left for my generation if we do not do anything. >> what are the minor changes that need to be made? makes right, we cannot them, so they cannot be that minor. >> that is because people look at it in absolute terms come as a single issue area in terms of, you know, do we just cut benefits, or just indexed for taxes?on, or increase if we look at it as an adjustment or an amendment commenced very feasible. >> this goes right to the heart of 1980 six. tip o'neill, the president combat that time there was a discussion. forou see an opportunity

president obama and the new majority to have a 1986 moment? >> i would think so. it's not a tough policy perspective, but a political perspective. on taxes, that is the third area where the republican congress can work with the president to come up with a solution. >> brandon, get in here. use your boy muscles photo >> i will see your prop and raise you some shtick. about? thistalking is quite heavy. overhead.to do you tell me what i'm doing. what is this thing? hormats, this describes what we know about our bureaucracy.

how will we cut through 1200 pages of social security? >> hold on, i need to hear the thump on the table. year is the 2728 laws of social security. is a mockup, because the government office quit printing it because it was too voluminous. this is what the average american has to wade through in order to figure out how to get the social security benefits you are entitled to. chaseill cut to the within your operation. when should i retire? what is the optimal age? >> right now. your depends very much on circumstances and your financial needs. if you wait until 70, after 70, you cannot increase your benefits by anymore. earlier,by claiming that may be advisable depending on your financial needs.

>> catherine hormats, thank you so much on social security. >> our twitter question of the day -- what does washington need to do to make you care? tweet us. ♪

>> this is bloomberg surveillance. i'm scarlet fu here with tom keene and bring in greeley. we will give you a recap of the midterm elections. democrats probably did not see this coming. a clear-cut victory for republicans. they picked up more than the six seed they needed to recapture the senate. in his final two years office, president obama will face republican majorities in the senate and the house. this is -- the new senate majority leader is likely to be mitch mcconnell from kentucky. he turned what could have been a tight race into a landslide victory. is the former labor secretary on what the next step is. someone had to run back to the convoy and get her id for her, because she had gotten

there without her id. >> we are here with robert hormats of kissinger associates. chen joining us as well. bit to the in a sitting governor's race in maryland. right now on the president, my morning must-read is from the veteran, dan balls. dan balls from the washington post on our president. ambassador met, i have to go to you. this was a resounding defeat for the white house, wasn't it? >> it really was. and i said in part earlier, the

president has a record working with the economy and energy and a number of things. a number of things have improved, but they have not improved enough. a lot of americans don't perceive that improvement. he has not been able to get that message out. and the politics have been very negative on both sides. >> this is than the 2014 of discontent. how do you fold in foreign affairs into this defeat for the democrats? >> i don't think the election was based primarily on foreign affairs, but foreign affairs went to the question of confidence and the ability to get things set in. i think there have been a lot of missteps, on serious ink -- on serious in particular, and the feeling we are not tough enough on putin in the ukraine. not so much major problems, but areas where the president is not looking as bold or decisive as americans would like to see. but on the issue of 2016, lanhee ahead, who isok

best poised to lead us on foreign policy echo >> i think there are two views on this. clearly, there is the branch of the party that goes with rand paul on this perspective. the u.s. really needs to think carefully about its engagements abroad. i think that point of view has slipped an interest in the past couple of months and you have the ascendancy of people like marco rubio who have been more forceful in their advocacy for a strong national defense and a strong u.s. posture abroad. and then there are people who comesblank slate when it to foreign policy. i think of governors like scott walker and chris christie. >> they are up for grabs. >> yeah, i think so. >> i want to make it clear that lanhee chen is seen as someone is for the republican effort, and the ambassador is seen as someone who is supportive of democratic efforts.

i don't mean to paint him as a democrat. >> the working pieces year -- here is that it is middle-class wage stagnation more than anything. as you whisper into republican -- into interop republican ears, what is your impression of that? >> it's about more than just a headline and employment number. we focus on that, but it's really about the people who are working part-time that want full-time work. it's about wage stagnation, and the continuing difficulty to create quality jobs. >> what is the republican answer? >> couple of things. we got to get going on trade, on the keystone pipeline, and our tax reform. those are the key issues. >> those are all gdp drivers. they don't drive median wages. >> but it's the question of creating quality jobs.

you will create the kind of solid manufacturing jobs. but that is where we need trade. you need trade in europe and asia. >> futures are higher and we have adp employment change to me out at 8:15 a.m. >> good morning, everyone. bloomberg surveillance on bloomberg radio and bloomberg television worldwide. the united states of america picks up the debris of the midterm election. let's go to our headlines. >> allegan is moving closer to a takeover, either hostile or friendly. bill ackman has won his round in the latest fight. a federal judge rejected allergan's request that ackerman be locked from voting. he is their largest shareholder. a record year for mutual fund in the u.s.. vanguard attracted more investors in this year than --

than they've ever brought in over a full year. meanwhile, bill gross's departure from pimco has brought a record number of redemptions. million from the total return fund. half of those occurred in the first five trading days of october. those are your top headlines. >> i believe it was monday you saw full ad for pimco, i will say in the ft -- i can our member where. in the same part of the paper, a full ad for mr. gross and janice -- janis. >> i would suggest bill gross would tell you that is true, but overweighted. i think the asset size is valid, but overweighted. himhe numbers prevented

from being able to actually maximize his return. >> the performance of large numbers is definitely there. but in terms of leading in and out. but i think of bill gross less as an investor and more of -- >> i think of bill gross less as an investor and more of a shakespearean character. -- if you look at , did russellxt, brand sayed? it doesn't matter about bill gross. stars running money still sells. but i think we need to -- >> i think we need to play that on surveillance. was this bill gross or russell brand? our next guest spent some of her time at the baltimore sun. maryland, republican governor, crab cakes and football -- what happened?

>> it was one of the biggest shocks of the night, not only for people like me, but people on the ground in maryland. i spoke to some folks there this morning that were flabbergasted that anthony brown, it am a grad in a blue state could blow an incredible lead and lose by six points. >> and brown just pulled on the same lovers that democrats in maryland always do. it's about the environment. and it did not work this time. >> he was talking about guns and little else. >> lanhee chen, you had the same shock about maryland. this goes back to who the republican party is. are they that stereotype of spiro agnew in white america? >> if you look at last night, the republicans that did well to my you got people who did not run

conventional campaigns. colorado, able to defeat udall because they had a different type of blueprint. >> and they did not take the standard vote. once again, republicans crushed by minorities. >> if you look nationally, asian went almost 50-50 in this inction, which was 70-30 2012. >> i think that we all woke up this morning and immediately turn to the annapolis capital for analysis. i know that i did. and i mustltimore say, i was shocked. if you had asked me a week ago, i would not have believed it. , realignment or exhaustion? >> i think it is fatigue with

the president. >> are we surrounded by marylanders? >> we all are. >> we will be back. ♪

flex -- >> we are doing a postmortem on the midterm elections, but life goes on in the nations capital. the president will be speaking later today. like a press conference at 2:50 p.m. that is new news. we thought it would be a silent white house today. that is not the case. look at our -- look for our coverage on bloomberg television. reaganchen is a former advisor -- >> romney advisor. excuse me, i'm aging you. >> does he look like a reagan advisor? >> could i screw this up anymore? see dr.oy yesterday to kissinger at the council on foreign relations yesterday. he was in fine form. ast is the new asian order america is challenged by this presidentnd now the will travel to beijing?

>> what is new is that the united states is again reestablishing emphasis on asia. there was concern in asia that all of the events in the middle east and the events in ukraine would cause the united states to lose focus on asia. this trip will enhance the presence in china, myanmar, and elsewhere. >> you say this is a more important trip. why is this? >> it's important for two reasons. he has to demonstrate to the asians that after this negative he ison and its outcome, still in a strong position. that is the big challenge. >> have you spoken to secretary clinton about this trip? >> i have not. but i think the key point is that the president also needs, and the chinese need to patch up some of the tensions that have emerged in the past several months, or years really. will be on closer

cooperation and coordination between the two militaries. they are both concerned about islamic fundamentalism and rattler -- radicalism, and they are both concerned about ebola. and there may be progress on a bilateral investment treaty. not an agreement, but progress. >> phil mattingly was on earlier talking about cyber security being an area where the president might be able to find the bipartisan support. do you think that is something he could make progress on in beijing next week? tenset will be one of the issues. that cyber issue and the question of stealing of trade secrets, which a lot of americans are concerned about. although the chinese themselves are trying to make an effort to reduce intellectual-property theft and trade secret theft, but there is still a lot of problem. cyber issue will be his -- the cyber issue will be critical. be intense political pressure for the president to

raise that issue. that will be one of the top issues on his agenda with beijing. how does the selection weaken his finger power abroad? >> it weakens it a lot, because people will say his party is in negative posture in washington. it has lost both houses. it weakens him. he will have a much tougher time on this visit. do soert hormats, they much. we will have much more for you. robert hormats, thank you so much. we will have much more for you. ♪

>> good morning, everyone. interview in our 8:00 hour, robert greifeld. -- robert nine delhi nardelli will be in that hour as well. lanhee chen is with us. his been giving us perspective this morning. theyou are talking about formula for republicans. the champagne is out, but -- and i put the champagne is out, but everyone is looking ahead to -- the champagne is out, but --

>> the champagne is out, but everyone is looking at 22016. does it mask of some of the problems, the challenges that the party faces adding into the 2016 elections? you don't want to necessarily say there are no problems at all. the reality is, there are still some fundamental issues that republicans have to address. one is a policy challenge, which is, can the republicans in congress actually get things done? >> they want to? >> i think they do. they want to set up a nominee. and they have to win with the female vote and the hispanic vote. but they didn't do that this time. on the ballotas in florida, and there was a huge youth turnout, but it did not bring the democratic governor.

the kids went out to vote for pot, but not governor. tendency to be more conservative on economic issues and more liberal on social issues. >> are there enough candidates out there in addition to you mentioned to bridge that gap in my back end straddle both worlds? >> i think there are. it's a met -- a question of communicating policy. that is what makes rand paul effective. and chris christie as well, his ability to communicate. down and shut up. ,> if there are two americas how do the republicans address those two american? -- those two americas? >> the reality is, you've got to figure out a way when you talk about conservative policies, when my colleagues talk about conservative policies, think about them in terms of opportunity. people who are trying to

raise themselves on the economic ladder. isservative economic policy about upward mobility. that is something the republican party has not done enough of in the past couple of years. >> i spoke to a professor out of north carolina who said that republicans cannot talk about identity. >> is important for public and to speak to people and to their concerns. we talk about wage stagnation and how jobs are created. that is important. >> did the tea party win last night? >> i don't think the tea party one. the republicans demonstrated is that you can do well in different states. the reality was, last night was a referendum on president obama. i don't think there is any other way to see it. there is a perceived lack of confidence on a host of issues. >> a dozen senior public and have solved this problem that they had last time around -- it doesn't seem like republicans have solved this problem that they had last time around, but

, tell me about that. that shek people see has a very promising future. you said problem solver and share the values those of you could say that about any candidate. what issues did she run on that matter? >> economic issues and she stressed or military background. >> scarlet just wrote a note, who would you castrate first in washington? [laughter] >> she is really interesting. this war on women rhetoric. many women candidates that were successful. >> and we really saw an experiment in colorado. udall just bang the gavel again

and again. >> i'm also interested in the polarity on the other side twin senator from massachusetts and secretary clinton. -- between the senator from massachusetts and secretary clinton. how do you see that divide? >> first of all, i would love to see that contest. i would love to see elizabeth warren get in because i think she would push secretary clinton in a lot of ways. people talk about the division in the republican party, but there is a huge division in the democratic party as well. it has been masked in some ways. it is also a loose coalition of different interests. >> our twitter response was huge. of anger.ave greg's let's get to our twitter answers. the twitter question of the day is -- what does washington need to do to make you care? lots of responses. many speaking from a tired, fatigued tone of voice.

here's the first one -- pass bills. the second answer -- listen. answer -- do their dam jobs and move the country forward. >> i want to have a map before we drive anywhere. what direction? >> those twitter answers could have come from another era. >> they could have come from four years ago, eight years ago. >> what will be the most productive thing out of this congress in the next few years? >> i think trade, energy, and changes to the affordable care act. >> dare i say, immigration? see senator mcconnell up there? >> everyone says trade is a good idea, but republicans have to give obama a little leeway to go out and negotiate. givethink republicans will

trade promotion authority. it will be up to the president to get those agreements negotiated. this is an election focused agenda. >> i'm looking at the middle class and i think the most important moment of this campaign were the two clintons in iowa finally addressing the focal point, which is the middle class. there are two definitions of the middle-class. i think it will be fascinating to see how the distinctions made their between democratic middle-class and were public and middle-class going forward. in this election, democrats tried some experiments that did not work. the candidate in maryland focused on guns. that did not work. the gifted in colorado focus on women's issues. that did not work. i'm looking to see if they can come up with an -- a coherent economic thing. >> a platform. my agenda, make me care.

i felt so disconnected and disengaged. do i need to move to las vegas or ohio, to columbus to make this work? for someone to talk to me, for a politician to speak to me directly. >> if your income love us, they will micro target -- if you are in columbus, they will micro target you. what is the first thing out of your mouth to students about what you witnessed over the past six months? think it is an electorate that remains very unsettled and angry with the status quo. i wonder if that will stay until 2016. >> do we get a 3.2% run rate and it goes away? correlated to an economy that does not create jobs for millenial's. >> i agree. >> is in wages or gdp? >> it is both. it is quality jobs that allow people upward mobility. jobs tove the quality

make and mean -- to make ends meet? with hispanics, blacks, asian-american, that is a core base for them. it didn't happen this time. >> it will be interesting to see what happens in 2016. will hillary clinton or whoever the nominee may be, be able to do the same thing? >> you need to give them something to vote for. >> otherwise, they become like me, disengaged and disinterested. make me care. , thank you so much. on behalf of bloomberg news, thank you so much for the work you did in the past several hours. and advancingp

through the morning, commodity prices are lower and gold plunging. >> and we have adp employment in the next 15 minutes. and the jobs report on friday. "in the loop" is next. ♪

>> good morning. it is wednesday, november 5. are you recovering from a postelection hangover?

a sweeping victory by the gop. stay with me in the loop in the next two hours as we take you wall-to-wall on what happened next in washington. last nightt it was with the republican party roaring back in the midterm elections. winning crucial government races and solidifying their majority in the house. we will hear from the c suite on what the new republican leadership means for them, including bob, the ceo of math that. crisler.eo of all joining me. our stop -- top stories. democrats got swamped by republican ways. up more than six seeds it needed. plus, republicans in the house. ir his last two years