daybreak on thursday, november 10. the tone of the markets, the dow finished near record highs. dow futures up one third. s&p 500 futures positive 14th. treasuries, a aggressive selloff yesterday. crude lower but a big rally in base metals. alix: trump transition, president obama and president-elect trump or meet in the oval office at 11:00 a.m. -- his today well unlikely rise to power is providing a shot in the arm for global equities. muchbillion, that is how global bond investors lost in a single day as the trump victory sparked concerns that his plans to boost economic growth will lead to a surge in inflation.

the 10 year yield jumped its most since 2013. david: one winner appears to be bank stocks. the prospect of a president trump is affecting banks, we are joined by michael mckee. what is causing this bump up? michael: they will tell you hope is not a strategy but right now we are trading on hope rather than strategy. the trump folks have an official eatagain.gov, and on the website is this. the dodd-frank economy does not work for working people. here craddick red tape in washington mandates are not the answer. the policy team will be working to remove dodd-frank and replace it. on that hope it appears people are buying into banks. david: sort through that, what

does it mean to dismantle dodd-frank? michael: we do not know. one of the reasons that the people who voted were so upset was the outrageous profits that bank people make, and the little guy gets screwed. and yet we are talking about dismantling banks. i have another graphic, this is profits from commercial banks. we have dodd-frank but they are at wrecked of dutch record levels. -- record levels. it has changed the nature of banking. it is really hard to tell where they are going with this but the bat is that line will go even further up to the right. jonathan: the banks in europe are trading on the bottom paragraph of what is on this website. the big banks got bigger and the community financial institutions have disappeared as a rate of one per day.

i wonder whether a lot of people are going to be disappointed by what might come around the corner. michael: i have talked to people in the industry and it is not dodd-frank that is hurting the small banks. it has become harder to start a new community bank so there is very little community bank formation going on right now. it is not that they are disappearing so much. it is natural in that business for them to be bought and merged, but we are not seeing new one start. jonathan: michael mckee with us. financials rallying as president-elect donald trump plans to dilute dodd-frank. ubs up eight percentage points, credit suisse off almost -- up thomas the same. joining us is kate moore. an aggressive rotation into cyclicals on -- kate: changing inflation expectations. we are seeing a huge change on

what people think policy will look like under a trump administration. the break evens and the long and rises. it is taking all of the cyclicals and value trades with it. jonathan: i want to try and understand how people got the so wrong, and i do not mean the outcome of the vote at the short-term market reaction. a lot of people spent months trying to get their heads around this and they said donald trump was the risk off candidate. how did people get the so wrong? kate: a lot of people spent months and months analyzing clinton's policies and trying to figure out what the sector and trade implications might be. there was such a low probability of trump winning they were not thinking about how the market would react. if you follows through with his campaign promises and spend a tremendous amount it would be inflationary, and we will see a change in terms of inflation expectations in a more meaningful and sustained way,

but i do not think anyone knows. there is a lot of uncertainty so we need to see the market settle. --x: would you be a seller selling the rally? kate: it is more question of adding risk into it. a good third-quarter earnings season, i do not want to trade on stocks i do not like from a fundamental perspective just on this change. david: what will happen as the markets parse through what the president can do versus what the president needs to do with congress? you are talking about infrastructure spending and immigration reform. trade restriction the president can do on his own. kate: people are saying things are going to get done much more quickly. there needs to be a recognition that he is not part of the traditional republican party, is not of the party, and will have to build bridges. alix: if we see some sort of

financial regulation repeal on the first item of the agenda, what is the next sector we have to be looking at? michael: i am natural sure financial regulation will be the first thing you see because it takes time. look to trade because the president can do that unilaterally and he said he is going to name china a currency manipulator on the first day. it could be the beginning of some sort of trade war and you see china related shares react to that. if he does something with nafta, mexico is very paranoid and you can see that reflected in the peso. rolling back obama executive orders, they have dealt with trade issues and immigration so that is where the first impact will be if he follows through. jonathan: the problem is that yes, china is manipulating their currency and it will get weaker if they do not. isn't that an issue? youael: unfortunately if were to name currency manipulators you could name the

united states because we cut interest rates to zero and the dollar got weaker for a while. how far do you take this and why? david: supposed trade is the first thing that happens. how do the markets react if president trump cuts back on trade? kate: trade is one of the things that he talked about consistently and his campaign and you would expect companies -- countries that would be negatively hurt to have sold off disproportionately. watch how well china traded following the trump victory, pretty well. we did not have a huge selloff and it was not the worst performing market in asia, and that is interesting. let's see how china positions itself in 2017 as some of this noise increases. have a big political transition and lots of trade partners. do they pivot and try to increase their ties with other people if the u.s. is putting up more of a figurative wall with

trade? alix: at questions what will happen with u.s. multinationals. what do you do with that large basket of stocks? kate: it is not just about the trade but the impact on the dollar and how that affects businesses. we are seeing companies being cautious about spending. slow down meaningfully in the third quarter. ien if markets are rebounding think markets will not be there and multinationals will be in front of them. david: thank you very much to kate moore and michael mckee. let's get an update on what is making headlines outside of the business world with emma chandra. emma: the president-elect needs with president obama today. donald trump goes to the white house to discuss the transition with the president. they said a number of harsh things about each other during the campaign that president obama says americans should hope for his success in uniting the country.

trump will also meet with paul ryan. his election has led to protests all across the u.s. "notcarried signs saying my president." some say they were afraid he would carry out his threat to deport immigrants. donald trump's victory could give theresa may more leverage in brexit talks. she can argue that britain's military strength and capability maybe needed more by the european union. global news 24 hours a day, powered by our 2600 journalists and analysts in more than 120 countries. i am emma chandra. this is bloomberg. alix: a global rally underway again today. you also have u.s. dow futures opening at a record if they did today at this level. here are some of the earnings we are seeing. siemens up on most 5%.

it is going to spin off a $15 billion health care division but will keep a controlling stake, trying to transition to an alibaba in a single day tomorrow that will start at 11:00 a.m., 90% of chinese consumers are expected to take part. growth could be as high as 45% and sales may hit $20 billion. futures, itt copper is moving a lot of the metals up. this is the biggest winning since september 2014. many analysts reports say this upside due to growth and infrastructure spending from donald trump is overdone because there are still a lot of supplies coming online. watch as we continue in the days ahead. david: the transition to a

donald trump white house. the president-elect promising to boost spending and spur economic growth but how much can he do? larry summers joins us next. this is bloomberg. ♪

jonathan: from new york city, this is bloomberg daybreak. let's get a check of the markets viewed risk on, a little bit more nuanced than not. it is very much a rate story. utility selloff, banks outperform, that is the story in europe with the dax up 90 and so 1%. yields up across the board, up 20 basis points yesterday on the 10 year.

i can tell you today, $13 billion worth of 30 year debt coming into this market, an interesting time to sell that stuff. alix: a trump victory is putting one sector in focus, health care. their biggest intraday gain since august of 2005. kate moore is back with us. the index was up almost 4% yesterday. do you feel this kind of rally is sustainable if we see a shift in the affordable health care act? kate: there is definitely a reason for it to move from a laggard. anddemand growth is there they have contracted this year even if most markets have stabilized. i think more importantly looking at the sector, let's look at the rotation within health care because you had huge leadership by the drug companies, and a

concern of what would happen if there was a repeal of the affordable care act. could pick upou on the drug pricing issue, is this a comparative trade that one can do the same thing but it is not worse than the other, or is this not on the agenda? drug companies overshot but i do not think this will be out of the spotlight. both republicans and democrats recognize that the pricing needs to be examined and we need to think about how consumers are bearing these costs, and how drug companies have been benefiting. i do not think the pressure will be as bad under a trump administration but it is not out of the spotlight. let's just wait and see. david: go to the other half of health care, the providers. seems to beat

unifying the republican party is they do not like the affordable care act. kate: the question i have is how easy is it to dismantle this entire legislation? theeasy is it to dismantle system? i think we should instead think about reforming the process and making sure it is serving all of the individuals and companies that have to participate. getting rid of it altogether feels extremely challenged. alix: my other big equity question has to do with yields. as the search for yields over? if you look at the s&p health care stocks, their yield is 1.5%. have returned in that narrative? kate: bond proxies have been very important. fromill think that income equities will be a huge part of your portfolio return in 2017 onward. we need to look really closely at which sectors we are getting income. we do not necessarily want to look at utilities or telecomms

or staples if they do not have good sales and earnings growth, and just have good dividends. let's focus on companies that can pay a little bit of extra income. jonathan: 10 year treasury yields north of 2%. that was the trade three months ago, four months ago. what does that mean? kate: we are at 2% for the last 24 hours so we have got to wait and see how this happens and into 2017. it is too on to call for massive reallocation. have had a we should slightly steeper yield curve and that will be good for bank stocks. it will cause a sustained rotation in terms of sectors and how we think of income and equity. it is too soon to say 2% is our new normal. alix: kate, great to see you, kate moore, blackrock chief equity strategist.

is the age of secular stagnation over? donald trump promising to boost spending. we will discuss how he will make that happen with former u.s. treasury secretary larry summers. ♪

alix: this is bloomberg daybreak. the yield curve has been steepening in light of donald trump's policy proposals. year, look at the u.s. 10 paring up gains for a fourth consecutive session. it was an unbelievable bond market yesterday. logan. us is kevin hsbc is the outlier. you see lower yields with the range as low as 1.35%. why did you see this bond selloff changing? kevin: yields have been trading down for years now with occasional backups such as we are seeing now.

think that the lower yields in europe and japan and the action of central banks with quantitative easing and other policies, keep yields low, will eventually pull u.s. yields low. the attraction of high u.s. yields will bring more money into the u.s. economy and we will probably see them trending down again. alix: your call is that foreign buyers will come in and take advantage, not that the growth will match the expectations of a trump presidency? kevin: we think the dominant force will be the inflow of capital. we will have to see how this plays out. i think why expectations change is the republican party has been seen as a long time as against higher deficits. the house of representatives every single year for the past few years past the balance budget. now we have a new regime coming

in with a president trump, who has proposals for tax cuts for corporate and individuals, and without any rhetoric at all and without any mention of what happens to the deficit we are beginning to see expectations shift that perhaps there will be a lot of pressure on the deficit , and people wondering what that will do to yields. jonathan: intriguing that people talk about the reagan era when the bull market started. why do the structural issues go away anytime soon? kevin: initially yields went up. reagan was elected right at the time of a recession and yields dropped, but shortly after the cuts in taxes and increase in federal spending, yields went right back up in 1984 and hit 10% on the 10 year yield. and then it began to go down because there was a reaction to that. we began to get things like the grand rudman bill, the grand rudman hollings bill.

that slowed growth which began to evolve. of course once it became clear that the deficit was no longer going to increase and the long-term path was for lower deficit than yields began to go down. alix: we did not really see foreign investors yesterday in the 10 year bond auction. will they bubble it and then start coming back? kevin: it is just a one-day phenomenon. everybody needs to stop and rethink what they are doing the day after the election. give it a little time, and people will begin to be faced with the situation where yields in germany have been slowing to 15% -- basis points. in the u.s. there is a 25 point -- basis point pickup. we think that will gradually pulled out the u.s. yield. david: a lot of people think the world changed tuesday night and

part of what they think happened would be more inflation and the president-elect would say more growth. do you think the world changed? do your expectations change over the medium to longer term in terms of yields? kevin: we will have to see how it plays out because right now there are a lot of proposals for tax cuts and spending increases in the military area. we will see how much comes about. as we get a clearer picture of how that will play out, then we will be able to make a better assessment of which way yields go. alix: it all leads to what happens at the fed. this is my chart of the day. it shows the market plied probability of where the fed funds rate will be. the yellow dot is where we were in the beginning of november and the green line is where we are right now. in the longer and it seems like we are starting to price in more rate hikes. that looks like another 25 basis point rate hike over the next

year or so. what do you see? kevin: i understand why this is taking place. fiscal and monetary policy work together. we have had very restrictive fiscal policy. the budget deficit increased over the last year by a substantial amount, by $460 billion to $560 billion. but yields went down. and increasing deficit and falling yields mean we have a weak economy, and that is why the market is predicting the fed will remain in a shallow path raising rates. if we had an expansionary fiscal policy with tax cuts that stimulate private demand, yields could rise and the fed does not need to be as supportive of economic activity if there is a big fiscal impulse. fiscal and monetary policy work together so for we take the restraints all fiscal policy, one would expect the fed could normalize short-term rates a little quicker.

that is what is going on right now. david: is the reason why you are not prepared today to take your projections up because you have doubts he will be able to accomplish what he wants to? kevin: there will be a conflict between cutting taxes and cutting spending, because part of the republican policy premise prior to donald trump was yes, we want lower taxes but lower spending as well. mr. trump has not talked about cutting spending at all. how are they going to get through legislation that cuts taxes and allows a rising deficit when the policy premise of to this point was a balanced budget? how are they going to square that circle. jonathan: kevin logan of hsbc. ♪

alix: this is bloomberg daybreak. i am alix steel. 7:30 a.m. on wall street. it is trump transition. president obama and president

elect trump will meet in the oval office today while the first lady will meet with melania trump. the rally rages on, donald trump's unlikely rise to power is providing a shot in the arm for equities. billion, that is how much global bond investors lost in a single day as a trial victory sparks concerns his plans to boost economic growth will lead to a surge in inflation. the 10 year yield jumping the most since 2013. jonathan: let's get to you morning must-read. donald trump's victories may have shunned -- sent shocks across the pond. marine le pen may also reap benefits from his victory as polls suggest she could be the clear winner in the first round of voting next april. the u.k.'s brexit vote has given populist across the country

fodder for their campaign. we talked about how this would rip through the eurozone. : i think trumps victory may be better for le pen then brexit. you can have a nonestablishment candidate being a serious candidate in an electoral race. yes, she will do well in the first round but in the second round of the two existing parties say that will not happen, but this changes things. jonathan: a negotiation between the united kingdom and the european union will be affected in two ways. if i am a bank right now and i faced the prospect of having to move out of the city, mi looking to frankfurt, dublin, or new york?

guy: i talked to a number of very senior bankers and they are not concerned about the story in frankfurt or paris. they think the big fight right now is between london and new york. if regulation has hit peak in new york, it is only going to make london's job that much more difficult, and that could be something that is about to happen. europe needs to take a closer look at this one. say, we to look and would rather have you in london and new york. jonathan: because we care about our funding costs. guy johnson with us a week in new york city. summersrofessor larry of harvard has played as important a role in managing the u.s. economy over the past years as anybody. he served as president obama's chief economic advisor. welcome to the program. larry: good to be with you. david: you have not made much of

the secret of what you wouldn't have liked to have happened on tuesday night. we have a president trump and he is all of our president. what advice to you have on what he could do, and could this be the end secular stagnation that you have warned about? larry: the most important thing do is too -- he can recognize there is to recognize there's a big difference between an adverb and a plan. he needs to propose serious and concrete plans to address the major economic concerns that are so clear to so many americans. he needs to surround himself with capable people, with extensive experience, and he needs to recognize that governing is about analysis. it is about judgment. it is not simply about ranting

and expressing dissatisfaction. the question is going to be to movehe is able beyond the bald statement that we will make it phenomenal, to propose serious visions and proposals that move the american economy and the global economy forward. revokingwalls and agreements does not make a contribution to prosperity. i do think that, i do welcome to applaud his commitment very substantial and sustained program to renew our nation's infrastructure, judge does think offers the potential of supporting job creation in the short run.

more importantly supporting and expanding the economy's capacity in the medium run, and i think that could be an important point to common ground for many people. but unless there is a clear aree that all americans welcomed and part of his vision of a prosperous america, and that all nations are part of his vision of a prosperous world, i do not think he is likely to succeed in creating the prosperity that we all seek. david: let's continue on the plan. you have long supported and infrastructure spending program which he has endorsed. what about tax changes, tax reform? you have talked about reform of the tax structure. are you encouraged by his commitment to address that issue? larry: i think there are tax

reforms that could make an important contribution to our economy. if those tax reforms primarily constitute reductions in tax burdens for very high income americans, i think they are unlikely to make a substantial contribution to increasing our prosperity. i do not think the blueprint he laid out during the campaign is a promising starting point for discussions of tax reform, though i certainly recognize that many presidents'thinking has evolved as the reality of governing came to them. indiscriminate and large scale tax cutting of the kind that was contained in his campaign plan, which would open up staggering new opportunities for tax sheltering, what i believe be

very inconsistent with our national economic interest. alix: in part donald trump one because of the upset in industrial midwest. what realistically do you think he can do policy wise to help manufacturing in that region? what is cyclical and what a structural? larry: i think some of these problems are unfortunately very hopemental, and i would that he would not hold out the prospect of a miraculous solution. tohink a serious commitment expanding infrastructure can make an important contribution. i think a prudent set of steps directed at promoting u.s. exports starting with providing bank, canport for the make an important contribution to helping manufacturing.

i think the right kinds of government support of -- for research in key manufacturing technologies can help to build successful ecologies of many different firms around issues like renewable energy and can make a positive contribution. i think a commitment to support for a strong and rapidly growing economy can raise consumer incomes, which in turn raises --and for man u manufacturers' products. all of these are viable models. there are important successes. if you look at the city of pittsburgh today, relative to the city of pittsburgh 25 years ago it is a very different and

muchappier place economically. if you look at the city of cleveland, it has been through an important transformation. if you look at detroit, it is starting its way through an important transformation. so there are important successes that can be built on, but they bringing largeof numbers of people together to do complex things. it is not simply enough to have aspirations. david: you mentioned exports specifically. , want to talk about trade something he talked about frequently during the campaign. put yourself back in the old job as the chief economic advisor in the white house. are there things president trump can do that would actually help the united states economy in dealing with for instance china and mexico? larry: there certainly are

abuses in other countries that can be pursued aggressively within the remedies that are contained in u.s. trade law. i think there is a bipartisan that.sus in favor of naming in the current environment, naming china a currency manipulator on day one is a ludicrous proposal. ,n the current environment repealing nafta or revoking nafta would do enormous economic damage to us. ironically, the consequence of canada trump's rhetoric already tocandidate trump's rhetoric destabilize mexico has led to a depreciation of the mexican a so which subsidizes every support -- every import by 10% and

represents a 10% extra cost on every export to mexico. what hisquence of rhetoric has done to the peso has in all likelihood morphed into -- dwarfed in terms of hurting trade flows any possible gain from whatever trade policy adjustments he contemplates. not to mention, what i think would be the enormously damaging concept of building a wall. jonathan: the federal reserve and governor brainard have talked about how policy options are asymmetric. it is a position you have taken, they be the federal reserve should do nothing because they will struggle to respond to any downside chalk. with this is our brand-new political backdrop, how does the fed manage this? larry: i will leave it to the

federal reserve to indicate its intentions. my view for some substantial time has been that the risks and policy are more to the downside than they are the upside. at a time when inflation expectations are still, as reflected in markets, well below 2% on the federal reserve's preferred price index, i have not seen the case for rate increases. david: you mentioned about the people around president elect trump. give him a bit of guidance. if he said give me a list of the sorts of people i am looking for in the key positions, secretary of treasury, omb, what sorts of people would you want him to be looking at? real: people with expertise and experience with the policy challenges that he faces.

people who have some experience working within the systems of government, working within the systems of international negotiation. orientationave an to thoughtful analysis rather than rhetorical confrontation. and above all, people who are going to put the interests of the entire national economy ahead of any economic interest of their own, or any economic interest associated with whatever they have done previously in life. i do not believe there should be any litmus test in terms of past background for government service, but the most effective officials have been those who

thoughtfully weighed, analyzed options before making recommendations and choices. alix: thank you so much, it was great to get your perspective. larry summers, harvard university professor and former u.s. treasury secretary. we are going to talk emerging markets and the economies that stand to lose the most under president elect trump. ♪

jonathan: from new york city, this is bloomberg. i am jonathan ferro. a four-day winning streak on the stoxx 600, the longest in over a month. utility selloff, banks gain, yields higher. treasuries aggressively lower yesterday, yields up 10 basis

points on the 10 year and up another three today. crude rolls over but a big rally in base metals. david: when of the things that donald trump was international trade and the need he sees the night dates to get tough with trading partners such as china and mexico. what is it he can do to make good on his promises when it comes to trade, and what might be the consequences? joining us is robert kyl of hogan mobile, specializing in international trade measures. thank you very much for joining us. hobart -- hogan and hearts and. elect trumpresident do on the first day of august -- office without congressional support when it comes to trade? robert: the fact is he would be

able to do most of the things that he talked about with regard to trade without needing to go to congress. what has happened over the years is that although as you know the constitution gives the congress chief authority to regulate trade, over the years congress has granted authorities to the president as an institution to do certain things. for example, canada trump talked about either terminating nafta or renegotiating it. he talked about imposing 45% tariffs on china. all of these things he could do under his own authority without having to go to congress. with regard to nafta, he said he would terminate have to. under the authority the president has, he has authority to write a letter to canada and mexico giving them six months notice of termination of nafta, and he can do that on his own. then it would start a process of raising the tariffs. similarly in china there are

provisions giving him the authority to deal with excessive balance of payments deficits, and he could raise tariffs on china without having to go to congress. david: let's stick on china for a moment. we just had larry summers saying he thought it was ludicrous to call china a currency manipulator on the first day. what are the consequences having determined that? robert: it sets and process a series of negotiations that have to happen with china and much tougher discussion. past presidents have all decided not to go that route, so this would be an unprecedented step as would all of the other steps like terminating nafta. alix: what does it mean for an american company that wants to buy something from overseas to make a product and cannot get it? what is it mean when we are looking at a huge trade deficit of 500 alien dollars a year?

that's billion dollars a year? robert: it has the potential of raising prices. nafta trade with china has become part of the u.s. economy, while in the campaign there was a lot of reaction free trade. there are areas, for example, if a president trump were to terminate nafta there are probably a number of companies in texas and other areas that are very dependent on trade with mexico, or which that is very important. i think you will see constituencies throughout the united states very next. david: one of the things that has not been talked about is what the countries on the other side might do in response. the president could take these reactions, but what does a trade war look like? robert: i think you have to be very clear about that if you start down this path. other countries are sovereign nations and they are going to respond.

if past is in a prologue, what countries have done is imposed retaliatory tariffs on us, and those countries can be very smart about imposing tariffs on u.s. products that affect important u.s. industries economically and politically. they are nounwise about how to do that so if you are going to start down this path you have to recognize the other countries are probably not going to roll over, and that could lead to retaliatory tariffs. david: that is robert kyl. what is going on in the bond were a bond: if you investor yesterday you lost $337 billion. i wanted to dig deeper into what happened. this chart shows the basis point change over a five year time span of the 30 year yield. look at what we saw yesterday, this huge increase. the 30 year yield up 23 basis

points. if you adjust for current yields and magnitude of that rise in the 30 year bond yield it was the highest since 1977. that had a big impact on the yield curve. this redline is what the yield curve was earlier in the year and that blue line is where it is now. look at how much we have jumped. in the short-term it is relatively the same but the longer-term you saw that huge re-rating. it was the long end of the curve that saw that adjustment. the short-term is still by long-term and sell short-term. we saw break evens for 30's and tends jumping. another part to be a technical factor. we had a treasury auction yesterday for 10 year notes and it was not a pretty picture. this white lane is the bid to cover ratio coming in at about 2.2%.

bidders all across the board were pretty absent. if you take a look at indirect bidders, they are looking more at foreign buyers. mutual funds came in at around 52.5%. the average of the last 10 was about 65%. even the primary dealers have to buy the auctions, they came in at around 39% compared to the average of 29%. they had to make up so much more of the buying. ,oday we have another auction $15 billion of 30 year notes, and what will demand be like? scenario or aion technical issue? jonathan: thank you very much. you can find a full breakdown of issues on the treasury online. a look at the top stories terminal readers are reading on the bloomberg.

he get out the bloomberg on your phone, log in, see futures down 5%, so you got back to work. carl icahn did almost exactly that. i am sure i am dressing things up a bit. in a victory party with donald trump he saw things were down and then he did this. >> i tried to put a lot more to work but i could not put more than about a billion dollars to work and then the market got away. i am still happy about it. jonathan: then the market got away. the first question i ask, it is the middle of the night, futures are down 5%, you think you are putting a billion to work. i say where is the liquidity? he says it was incredibly liquid and he was able to put that much money to work. i wonder how much he put into futures and elsewhere. the idea that he was at the party and put a billion down. david: it would take more than a

couple martinis from a to make that call. alix: we do not have a billion dollars line around. he talked about some hedges he did not make. interesting to see that trade. jonathan: the bigger picture is how wrong a lot of people got this. everyone sat around this table and said you sell stocks, by treasuries in the short-term, and if you did that yesterday you got your face ripped off. david: is this a version of what happened after brexit? jonathan: in london we had two days of selling and things shook was due buy trade the ftse off the back of a weaker pound and that has continued. in the short term on a trump presidency, you sold stocks and bought bonds, and that did not translate yesterday. david: somebody who might be having second thoughts is latin america. he -- vladimir putin.

they had a celebration when the word game in the trump one, but now as they take a harder look it may be harder to have a rapprochement with united states than i thought. alix: we heard from john mickelthwait and he said in his interview with vladimir putin, perhaps it did not want trump because he was just as unpredictable as he was. david: there is only room for one unpredictable world leader at a time. from new york city as we count down to the cash open, about one hour 34 minutes away, futures up across the board. positive almost 10 points on the s&p 500. from new york, this is bloomberg.

morning and welcome to bloomberg. it markets, will the rally continue? europe up for a fourth straight day. the story is bank stocks are up. treasuries, and ugly day yesterday with yields high. they are up again today. base metals having a terrific session. alix: here is what you need to know at this hour. trump transition. and president obama will meet today while michelle obama will meet with melania trump. the's unlikely rise to power is providing a shot to equities. $337 billion is how much was lost in a single day.

the 10 year yield jumped the most since 2013 on wednesday. david: two days after the election, the country began his election to a donald trump white house. the president-elect meeting with president obama later today in washington. to take us through the next steps, we are joined by bloomberg's white house correspondent. tell us what will happen in the meeting today and what else the president-elect will be doing today. >> it will be a short meeting, will 30 minutes or so in the oval office. according to the trump campaign, it will be a get to know you meeting. there are people in the white house who say they will make the case that trump should stick with some international agreements, but he will be in the white house. it will be a beautiful day for him to see his new office. david: one of the things i have read is president obama will make a pitch for trump to stick with some of his policies, not undo it all.

without a ticket well by president-elect? >> he has me very clear that is not his intention. i don't know how much of a kc will be able to make it a brief meeting, but i think what the obama administration is thinking at least on the international front is that they can create some more realism about what the impact would be. david: thank you so much, mike. beyond the process of transition, there is the substance of all policies his administers will pursue it in what order. to help us sort it out, here is steve. . you have been for hillary clinton. that is not a secret. steve: not a secret. david: president from will be -- trump will be all of our president. that would be good for the country? steve: is not a question i was

expected to be asked because much of what he said would ideally not be in our interest. we talked about cuts for the wealthy, trade wars. he wanted to leave social security and medicare intact, but they do need some modifications. the best thing he has been talking about this infrastructure. david: infrastructure spending. steve: that is the best of it, that he wants to rebuild our infrastructure, which is a critical need. david: is that something you believe he can get through even a republican congress? steve: that is how it is paid for and how much it is. there is a consensus among republicans and democrats with the possible exclusion of the very heart right side of the republican party that we need to do something with our infrastructure. fiscally conservative republicans, there will be a limit to how much they want to. david: when president reagan came into office, there were a lot of things he talked about, some of which he pursued, some of which he did not.

what are the things he should be putting up, and which may he let drift a little bit? steve: president reagan came in and control neither house of congress. donald trump and paul ryan and through annell can process known as reconciliation do whatever they want and emasculate the democrats from any role. tax respect to trump's plan, it is similar to the republican tax plan. you see that happening with the republicans on the hill will try to get them to back off of the trade war stuff. by nature,ee traders but they do not have the power. the president has a lot of power over trade. alix: we heard from investors it depends which trump we get in the white house. a trump surrogate weighted with us yesterday. >> i think we just saw candidate

trump. ufc octagonump in a , and he hasing goes the liberty to do that. what you will see you now is a very serious and thoughtful man who is saying i will leave a legacy of showing the world that an independent person coming from modest means with no political background can be the best president the united states has ever seen, and i think that is his goal. david: he knows donald trump. i have not met him so i will look at it more from a policy point of view, and what i see is substantial overlap between trump the house and senate republicans on a set of programs that would transform our economy and our whole apparatus. in other words, repealing obamacare, all kinds of

deregulatory measures, a different approach to climate change, a different approach to the energy industries, they completely different fiscal and budgetary approach. let's assume he backs off of the trade war and some of his crazier things. you still are going to have potentially a bigger transformation in the role of the federal government than we had under reagan. jonathan: let's talk about the market. what do you make of it? is in the wrong reaction? steve: it is the right reaction in the short run because if trump were to get what he wants, this is what people like larry summers have been pushing for, which is using the deficit to get the economy going again. in the short run, that is going to create a lot of demand for the products. secondly, it will be a very business from the administration. i don't want to say it will be a christmas tree, but business

will be down there getting the kinds of regulatory relief they want. the short run is good for business. longer run, $5.8 trillion in tax cuts is not so great for business because of inflation, interest rates, and so on, so the market is not acted irrationally, but there is a long way to go. it is with vonta leach the investment manager for bloomberg's personal and philanthropic assets. alix: we have some breaking news for you on macy's. the company coming out with earnings, but the headline is macy's is developing its real estate portfolio and explain options for causing about 100 stores. and is looking to consolidate two main union square stores. whether you are macy's or sears, a macy's is taking another step to that. $.17 a share.

were weaker than earlier down 3.3%, but is the headline of developing the real estate portfolio impacting the stock. taking a look at kohl's, they beat estimates. cite a preschool season that was pretty strong. they are managing the inventory pretty tightly. that health profit rise -- that helped profit rise. shake shack, same-store sales up 3%. they are also going to open more new stores next year than they did this year. let's get an update on what is making headlines outside of the business world. trump's election led to protests across the u.s..

thousands marched in new york, los angeles, and other cities. some said they were afraid trump he woul would carry out his threat to the board illegal immigrants. the white house issuing a part to protect hillary clinton from prosecution by trump. president obama is hoping a part it will not be necessary. during the campaign, donald trump assigned a special prosecutor over clinton. iidiot prime minister has lost the most extensive -- inda's prime minister has launched a campaign. globaglobal news 24 hours a day powered by more than 2600 journalists in more than 120 countries..

bloomberg. david: thank you so much. coming up, trade preparation. china watchers the two largest economies under the world under a trump presidency. that is next. this is bloomberg. ♪

jonathan: from new york city, this is bloomberg daybreak. this get a check on the markets for you. purchased positive. -- futures positive. yesterday's rally continued today by six cents of 1%. the banks outperforming.

brutal day for anyone with long bonds in the treasury market. ieldsyields up. in the fx market, look to china, the u.n. the researchw global head of fx strategy in london and steve still with us. we were told he was labeled china a currency manipulator as soon as he enters the white house. they are manipulating the currency to keep a stronger so i assume if they stop manipulating it, it will get a lot weaker so what happens from here? >> listen, i think previously on your show, alix made a very good reference, which is we do not know. this is a very good description of reality because the way

in the markets have reacted so far is indicative of the amount of uncertainty that surrounds us. i think a lot of the policies that have been announced so far are likely to be moderated to a certain extent. i think this is largely going to allow fundamentals to play out, by think we are there yet. i am expecting a lot of volatility. jonathan: there was a narrative out there and it was a weaker dollar story. that is what would happen if we got a president trump. we have a stronger dollar. what do you make of that? reality is that yesterday all of us were very much confused. the initial we are and in line with what we expected. speech, whichory

turned out to be more conciliatory, the market turned surprisingly. it was not just the dollar. it was pretty much everywhere. it continues today. the market right now is playing somewhat of a reflation trade in the sense that the policies about the fiscal stimulus are likely to drive u.s. growth going forward and the market is paying much less attention to all of these flamboyant statements about policies on trade and immigration. that is what is driving u.s. yields higher and taking the dollar with them higher as well. jonathan: steve, i have heard this so many times. the market turned on the softer tone in the acceptance speech. then it can turn it we do not get a softer tone in the next six months, can't it? steve: sure. during the campaign where trump

appeared to be winning, the markets are going down, and i was a lot of the year about trump. when he adopted this conciliatory tone, that assured the market, but the market realize that having massive fiscal stimulus which is what he is calling for, massive spending on infrastructure, incredible amounts of deregulation of business win in the short run be good for stock profits so the market goes up. alix: from where you sit, do you think trump will have successful attempts to label china as a currency manipulator? steve: i think it is too soon to tell. he obviously can do it. the last several administrations have avoided doing it, even when china was a currency manipulator. at the moment, china is trying to keep its currency from devaluing too much. will back offump

on this. it is too much. i think cooler heads will prepare. david: beyond china, it is trade issues generally. assuming trump does move forward with this trait issues, one other currencies can be most effected? vasileios: aside from the mexican peso, which has been the most obvious one for a few weeks now, i think the canadian dollar is definitely one to be watching. the number of asian currencies as well ashe korean born taiwan, all of these currencies have the common denominator, basically that they had a large exposure to the u.s. at the same time, they are quite open as economies, meeting their share is a big share of gdp and at least a vulnerable to changes, especially changes in

trade policies. david: are there some currencies that are a bit more protected because they are not as dependent on trade? vasileios: well, i think the ea region isn -- sim probably the one least exposed to the trade with the u.s. from that perspective, they seem to be a bit better insulated. let's make a point here. we know very little right now what will be in the lancet and to what extent if anything -- be implemented and to what extent if anything. keeps global growth, i suspect it will be generalized. to that extent, a lot that selloff becomes indiscriminate. david: how do you havedavid: -- al how do you hedge all of this?

vasileios: my favorite expression is by being long in. right now, it the only safe haven currently out there. there is a fundamental reason and largely because it is a very undivided currency. the past couple of months have gone against this view. the swing we saw yesterday was unbelievable. we went from nearly 101 to 106, 107, which is quite an extreme range. alix: great to hear your perspective. thank you very much. steve is sticking with us. i will take off now for about an hour. i look at you guys later. jonathan: coming up on this program, donald trump's impact on emerging markets.possible revisions to trade deals . we will discuss that next. from new york, this is

bloomberg. ♪

jonathan: from new york city, this is bloomberg. the top of president electron's agenda is try -- electr trump's agenda is trade. ae u.s. makes up almost quarter of chinese exports, and joining us now is jeff dennis. the. with us is -- steve. the unknown, how do you think this advances because we have candidate trump and president trump, and they are two different people. where yo do we go from candidate trump? >> we think it will focus on the domestic agenda at first.

there is a lot to do, deregulation, tax reform, possibly some infrastructure spending. we think that is a decent chance he will indeed name china as a currency manipulator fairly early once he gets into the expectouse, but we think gradeicantly small changes will not happen or will happen in the medium to long-term. it is the fact that the markets wonder whether this would be negative events thawill happen is why these markets have done pretty well obviously after the initial selloff. people are focused on the agenda of trump, not the concern of trade. david: take us through your thinking on that. why is that? he talked about trade an awful lot throughout the campaign. he is much more able to

effectively work on trade immediately without the congress. geoff: i accept that. this sense is that he is probably going to want to put some policies in place to stimulate the domestic economy first. i accept the point and again i am getting into politics here that he will pull the various wings of the republican party together in congress to get some of these policies in place especially what kind of tax reform you will get, but we doubt he comes on day one and chinese tariff on imports. advisors who will say this is not the right thing to do, so the compromise will announcee for them to that china is a currency manipulator. that could be a danger in the short-term, but we just feel

like we have to wait on the trade front, generally. jonathan: i want to bring in steve. this is similar to the brexit discussion. this is not your victorian era supply chain. is very different. you cannot apply tariffs and expect to come home. how does this work? steve: first, let's separate the politics and economics. from a political standpoint, i agree with the last point, which is there's not a lot of support within the republican party for doing this. trump will be very much out on his own and because it to bernie sanders than anybody on his own team. he will sayional, to himself this is not the most important part of my agenda. secondly, to your point, jonathan, we know the consequences would because i disasters -- would be

quasi-disastrous. prices will go up dramatically. the average american who buys a of imported chinese stuff will be happy and it is not practical. at the end of the day, he will realize that. jonathan: great to have you with us. thank you for your time. coming up on this program, heading into the holiday season, what really trump presidency meeting for the strength of the u.s. consumer if anything at all? futures up again. bonds are lower with treasury yields higher. this is bloomberg. ♪

jonathan: from new york city, this is bloomberg daybreak. let's get a check on the markets for you. futures doing well. a story and it

continues as it drives banks higher and utilities lower in europe. yesterday with yields of over 20 basis points. crude lower. some breaking economic data in the u.s. can jobless rates go lower? yesterday can to 250,000. can to 250, 000. 254,000. .he slow-growing lower it started years and years ago. the chart is phenomenad looks something like this and keeps going down. david: exactly right. we want to bring in mike. this has been a long-term trend of strength in the job market.

markety enough, the job gets stronger even though it is the worst economy we have seen according to the president-elect. of until last week, companies were not feeling the need to cut back on employees. david: is this good news for president elect trump or bad news? >> had a recession early in your term is the best political advice. this is good news because the economy is still growing, and the labor market is strong. jonathan: the question i would ask is the market and what it trades on, two very different things. the way wecting anticipate from households and people when they go to vote, they do not look at the payroll support like we do, so something is happening. we should probably pay a little bit more attention to it,

shouldn't we? mike: at this point, people are starting to make more money, the income is starting to go up. wages and salaries have started to rise. we have a relatively strong labor market. there is a move in the middle of people that donald trump appealed to that lost jobs in manufacturing and may have a harder time getting a job, but for a lot of other people, it is a relatively good labor market, and that has been keeping the economy going. david: that does not give much solace to the people, often middle-aged white men, who feel they are not getting a fair shake. there are specific counties where the shift between the obama margin in hillary clinton is dramatic they are feeling a lot insecurity. mike: it does not show up in the data the same way as it does in motions. when you look at the state that some of the most manufacturing job losses, it was the northeast.

lost the listork and they went for hillary clinton, so what is happening? is hard to say. there is a feeling something has changed in the economy. there is a feeling that things are not getting better. jonathan: there is a narrative and you pushed against it with the data. the working-class traditionally leans to the left. they are starting to lean to the right. you see this in europe as well. why? mike: it is really hard to say in the united states because donald trump has been right and left, a member of both parties, but in general, people are to close up the doors. the far right wing has argued we need to go back to the way things used to be before the more liberal on social policies came into effect and a lot more immigration changes in our society. you can also argue that the

right wing is offering things like tax cuts and things that appeal to people who think that will make things better for them. david: how much is maybe the decline of organized labor when it comes to the workforce? traditionally, the democratic party link to the people has been through that and that has gone down. mike: it has broken down, but what are people complaining about? the size of the government. the biggest you use out there are a public-sector unions and donald trump was to emulate scott walker in wisconsin who broke the back of the unions there. jonathan: great to have you with us. vice president biden to meet with pence at the white house at 2:45 p.m.. we will renew coverage review coverage of that right here on bloomberg. the treasury secretary joined us the trump say what

administration will be able to publish. >> the question is whether he will be able to move beyond the bold statement that we will make seriousmenal to propose visions and proposals that move the american economy and the global economy forward. building walls and revoking agreements does not make a contribution to prosperity. pplaudelcome and a his commitment to a very substantial and sustained program to renew our nation's's infrastructure, which data offer the potential for job creation in the short run and supporting an expanding the economy's capacity in the medium run.

that could be an important point to common ground for many people. sense there is a clear that all americans are welcomed and part of his vision of a prosperous america and all nations are part of his vision of a prosperous world, i do not think he is likely to succeed in creating the prosperity we all see. david: i want to come back to the people part of it, but let's talk about the plan. you have long supported an infrastructure program, but what about tax reform? are you encouraged by his commitment to address that issue? reformsnk there are tax that could make an important contribution to our economy if the tax reforms primarily

reductions in tax burdens for very high income americans. tohink they are unlikely make a substantial contribution to increasing our prosperity. i don't think the blueprint he laid out during the campaign is a promising starting point for discussions of tax reform though i certainly recognize that many presidents's thinking has evolved as the reality of them, butcame to indiscriminate and large-scale taxcutting pichai that was ,ontained in his campaign plan which would open up staggering new opportunities for tax would i believe the very inconsistent with our national economic interest. jonathan: that was larry

summers, former u.s. treasury secretary. the tone of that is incredible diplomatic. he endorsed some of the policies of donald trump. a question about the federal reserve that we will get all of this stuff maybe, but the fact should still go nowhere. what do you make of that? larry has been arguing for a long time about interest rates and they may raise rates at the end of december because they have basically said they will do that if the data does not change. why not? they don't know what is going to come out of the fiscal side of the economy so they will wait. twocannot say that 2017, rate cuts will be priced in anymore. david: a sort of expansion in the economy that markets are reflecting day. prepared.to be praye >> it will be interesting to see what kind of expansion we get. there have been a series of large tax cuts in history.

sed in 1964 after his assassination. ronald reagan and 1981, that brought the tax rate from the 70's and you saw "after that but you look at the tax increase after clinton. the bush tax cuts, we do not get much of a pop because they were alone already. david: not much of a correlation. up, donald trump's energy agenda. we will speak with the energy next.er norway, this is bloomberg. ♪

>> this is bloomberg daybreak. up in the next hour, president of the minneapolis fed . jonathan: from new york city, this is bloomberg. let's talk about a commodity market and oil specifically. campaign, trump said he will seek to lift the moratorium on energy production on federal lands, and he will renegotiate the iran nuclear deal. norway's energy minister joins us now from london. great to have you with us on the program. we faced the unknown. it is difficult to answer this question, but trump's selective promises, when the need for

global energy markets as far as you are concerned? >> i think in this situation we are in right now, it is important to stay calm and carry on as they say in britain. hows too early to say things are going to develop when it comes to the new administration taking office in the united states after christmas, and i think it will be important for norway to and probably also for the global energy markets. jonathan: while we are likely to see potentially is fewer , andictions on production i could meet even more output in the u.s.. what would that mean for you? >> norway has been used to competition from profitable resource extraction globally since we stopped our own gas and

oil production for years. we're in a spot where we are prepared to face competition. when it comes to something many have pointed toward, the u.s. could develop to a more coal friendly strategy. there is a law of measurements, but it is in place at the state policymaking, and there is a strong drive in u.s. economy, u.s. economies reducing co2 emissions, so i am not concerned about coal having a huge renaissance in the u.s. david: what pressure does a

trump energy policy put on that supposedly opec agreement? i know norway is not part of opec will we saw oil prices spike. how much pressure is put on particularly saudi arabia the u.s. is producing more? in the u.s., a lot of the production coming out of the u.s. is not coming from federal lands and the continental shelf. grounds ing from the the midwest and western states of the united states. they have the capability of ramping up production from the land-based oil and gas production. we will see a ramp up of federal play for aoming into

lot longer. so i think that this is something opec in addressing in the short-term is probably not very much concerning. jonathan: the you still see a market rebalancing it 2017 -- in 2017 regardless of what we see in opec? tord: as i said, we see the increase in demand not as high , but expected to years ago still a development on the increase on the demand side and investments globally and new production has fallen significantly so the markets will rebalance. i think the rebalance will be in place next year. however, there is a huge overhang in the storrage. so what effect it will give to

the oil prices is something we will have to wait and see, but the market will rebalance in the ndnths and 80 years ahead -- a maybe years ahead. david: now it is time for other stories making headlines at this hour. : macy'sacy's -- emma released is sales forecast and sales fell in the fourth quarter. macy's is creating a development plan of about 50 pieces of real estate, most of them in shopping centers not owned by major mall companies. according to the international energy agency, oil prices may fall again unless there is an agreement. the agency says non-opec of pennies expect to increase production next year.

but it came long .fter anti-trump messages that is your bloomberg business flash. this is bloomberg. david: we want to take a moment to mark the passing of jack risking. he was a good friend of bloomberg, frequent guest, and an important voice on investment banking. he died tuesday after a battle with cancer. jack was 76.

jonathan: from new york, this is bloomberg daybreak. martin gilbert joint bloomberg surveillance a little earlier to discuss how president-elect trump will impact market and the facpeso.

>> i think it would be pretty pragmatic. he is a businessman. he has run big projects. i think he will surprise on the upside and will be a good president. >> because of regulation, because he will surround himself team?uthorit a thorough he needs to begin for this country and for business. will you do both? : i think so. i think he will take advantage of his very low interest rates. if i was in his position, i would borrow money and spend it on infrastructure, and that probably within his dna to do thaose sort of projects. >> a lot of people in the business community were anti-trump. do you think there will be retaliation? martin: i don't think so.

a lot of what is said in a election campaign is rhetoric and we have to remember that what politicians say and do our two different things -- are two different things. let's forget the rhetoric now and see where he goes from here. his acceptance speech was very balanced and fair. >> martin, what did it mean for the markets? we see rallying stocks. will he be great for volatility? martin: he has been good for volatility so far. i think he will be good for volatility whether using volatility is good or not is a different matter. market. a nice calm he will be good for equities. bonds probably will be under slightly more pressure, but certainly for equities, i think he will be good. but as usual, it is choosing the right equities.

>> are there any parts of the market you are concerned about, martin? weren: i suppose if you taking it at face value, the issue may be protectionism or a return to more protectionism because i agree there is no such thing as free markets and you have to look at which countries may be disadvantaged by that and which may benefit from it, so that is how i would look at it at a country level on this occasion rather than a stock level. >> are you worried about china, mexico, most emerging markets? i think emerging markets are doing fine, and we have seen sentiment return to positive. and flows returning to emerging

fundsts, sadly not our pho which are closed. i am happy with the emerging markets, india, the sort of countries. the reaction of the mexican peso is being overdone because well was said during the campaign and what will happen afterwards are two different things. david: that was martin gilbert speaking earlier on bloomberg surveillance. now, it is time of the battle of the charts. lisa, you get to go first. >> investors generally do believe what martin gilbert was saying, which is that trump 's policies will bolster earnings. a sudden rush into the riskiest debt. over here, the biggest one day flow on record yesterday.

almost $700 million. pretty choppy. hisle now seem to believe policies as president of the u.s. will bolster at least temporarily in the short-term the appetite for riskier credit. david: consistent with markets going to risk. what are you doing? >> on the flipside, people are not playing defense, so i am looking at utilities. utilities in the white line at the top going down quite sharply yesterday even as we were seeing the s&p 500 rally. down here is the utility sector etf and the outflows from that. there are a couple of pitches for utilities. one of them is the longer duration interest rates going higher and dividends competition between so that is affecting them and we have seen a growth area for utility be renewable energy. the presenter is the trump

administration will not be good for that. david: eliciting versions of the same point with two beautiful graphs. >> we can both win? david: i hit that earlier this week and was yelled at. >> can we not come together? david: bring the country together. jonathan: who won? david: lisa. >> why? david: former minneapolis fed president on the donald trump impact on the federal reserve. from new york city, 34 minutes away from the cash open. yesterday's rally continues in europe as well. this is bloomberg. ♪

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i am jonathan ferro. we have the panel back with us very shortly. 30 minutes away from the opening bell. for as in europe up fourth straight session. doubt futures up 96 and s&p 500 futures positive at 11. the yield story, rates are high. bank stocks are rallying. u.s. treasury yields are up after a rough ride for the treasury yesterday. david: at this hour, trumps transition, president barack obama and president-elect donald trump will meet in the office for the first time today well the first lady michelle obama will meet with melania trump. toald trump's unlikely rise power is providing a shot in the arm for global equities. $337 billion is how much global singlevestors lost in a

day as trumps victory made people start to think seriously about a surgeon in nation. -- a surge in inflation. jonathan: let's continue the conversation. portfolion senior .anager, managing nearly all the natural start for me seems to be, i am surprised, not by the election outcome but by how wrong everyone was. me you go have told aggressively long treasury and you go aggressively short and you would have gotten your face ripped off. >> that is my guessing tomorrow is dangerous. what happened yesterday was uncertainty trumps certainty. the uncertainty of what the world may look like going forward in terms of growth expectations and inflation

expectations, tax breaks trumped the certainty of what the clinton presidency may have looked like. it is astonishing that the hillary trade on monday around the fbi -- so good news there was interpreted as good news and bad news, if you -- jonathan: that was the whole campaign for the last couple of months. then all of a sudden it changed. in certainty -- uncertainty becomes good news. i'd hate to define the next four years by today's trading and we really should not do that but are we entering a new regime? >> that is the debate that is going to take place for now and well into the future. we are always going to take a measured approach and we think about investing from a long-term perspective. there is no question there will be more volatility because you have more uncertainty around what policy may look like, what

trump may look like as a president, what his team may look like. but yesterday and today, the fixed income markets are debating not just inflation but growth as well. there was any will move in both growth expectations. and shock and ought in the bond market and in the end market -- equity market as well. a trillion dollars in value changed hands. maybe we will get less regulation and more investing. interpretedhas been as uncertainty is worth it if you give me more growth. david: from where you sit, is this a matter of uncertainty so it could go back down again and back up and back down because we just don't know where we are going? on the other hand is the market seriously taking a look for the first time at donald trump's plans and how they might affect them.

level, everyone reached to one side of the boat, we are in that market where everyone is connected. he do want to believe what the next four years may look like the higher return on capital view is winning the day. is really difficult, as identified by your first question. yesterday, ient can't speak to others, but the way we spent yesterday was having a debate around having a conversation changing in board america.oss corporate investing in one's business just got a lot less riskier with the potential of higher tax returns. if that happened that is good for equity values. the ceos went, wait a minute, i am going to offense, investing and spending my days with product development and sales and marketing.

jonathan: four to six months ago the only story was i look at treasury yields and then i look at the dividend. i said you would have been going by the bond proxy. now we've got a rate of 2.1% on the 10 year treasury and 2.1% on the s&p 500 so that kind of story is done with and now we can look at companies. . listed on the companies you are going to be looking at. >> we are looking at companies through the lens of how competitive are they and how are their future tax returns on capital looking? we always take the total return approach to investing so when we make a capital appreciation or i think for income, us we are going to be ripping up our models and thinking about, is it more aggressive on cash

repatriation? is investing in people just became cheaper, that is very attractive. on the margin, the businesses that have more u.s. profits have higher taxes and are likely to be better positioned if this view of the world is likely to happen, and people believe it is certain today. a tremendous amount of heavy lifting between now and then but i would say one comment on this income bond yield versus dividend yield. we believe, for today, the world is interconnected on a global therefore, there has to be some natural cap on 10 year treasuries because the global investors will wake up and think about, our yield on treasuries versus their yields. and our currency.

you can't just invest in an isolated way. i still think there will be tremendous demand for long duration assets that have inflation links to them. the world is still growing slowly. david: if companies are saying it is less risky to invest, that is because they think demand is coming. they can invest because of demand. what are the sectors that you think are most elastic or most sensitive to that demand research and? -- demand resurgence? jonathan: you saw it yesterday in terms of the sectors that are the best. regulation,less health care possibly more pricing and industrials, more infrastructure investing. i think you saw it yesterday. i am cautioning people to believe with complete certainty that yesterday was a fact but

ultimately, it has the potential .o become self-sufficient a circle of positive things, which is a positive drive investing, you don't call the lawyer every morning, you call your branding people. jonathan: the last seven minutes has been us talking about this theoretically. i would hate to define the next four years by today's trading. something could change on a dime. david: we are not going to be calling lawyers, which is not good news for us lawyers. >> i think it is important to frame the debate and make sense of uncertainty and trumps certainty yesterday. for now, lower taxes and more investing, those are all more productive conversations. that is charles kantor. senior portfolio manager at

newberger berman and now it is time for an update on news outside the business world. emma chandra with bloomberg first word news. >> donald trump heads to washington today. he will meet with president obama to discuss transition matters and pose for photographs. his wife will meet with first lady michelle obama. mike pence will have lunch with house speaker paul ryan. the russian government says it was in contact with the trump campaign before the election. trump's have denied that any links existed. a spokesman says they met with members of trump's campaign. hillary clinton's campaign refused requests for similar leadings -- meetings. donald trump's victory could give theresa may more leverage in brexit talks, arguing that military strength and intelligence capabilities may now be needed more by the european union. global news, toy four hours a day powered by more than 2600

journalists and analysts in more than 120 countries. i am emma chandra. >> we are looking at futures that are once again climbing. the dow could open at a record if it does hang onto its gains. it looks like this wave of renewed optimism following the election of donald trump could continue into today's session. we are also looking at a number of retailers who are reporting .arnings earnings per share are missing on a wide margin. sales fell less than estimated and companies hired asset management to squeeze money out of its real estate holdings. kohl's, as well, out with its numbers. profits at 22% despite a 2.3% decline in sales. ralph lauren, under ceo stephane larson, has been trying to turn around the company.

second quarter profit cutting it ahead of estimates. those shares indicated higher, 1.6%. david: coming up, what does a trump presidency mean for the future of the fed. what the president-elect can do to help the central bank and why he thinks there will be no rate hike come december. this is bloomberg. ♪

david: this is bloomberg. i am david westin. the u.s. dollar rallies to its highest since early march. in place next dictations are

rising over donald trump's proposed plans. we are joined by vincent cigna rela. welcome back. explain this to me, what is going on with the dollar? we are expecting more growth and inflation. it would make the dollar worth less. we have gone back to monetary policy diversions. one of the big reasons why we are seeing it and why it is so drastic is markets had completely mispriced it going into the election. the idea prior to the election was the odds of the fed rate clinton winmber, yes, trump win no because of uncertainty. with trump speaking about infrastructure spending, positive economic growth rate prices that situation and now we see the odds of a rate hike back on for december. the race is on.

jonathan: i still struggle to grasp how they got it so wrong. david: the thought was because of all the rhetoric trump was bringing in with the election and prior to the election that there was going to be this great uncertainty, with a lot of volatility and a lot of market risks, that the fed would not raise rates given all the volatility. the risk seems to be gone. he was talking about how the equity markets have rallied. david: i am confused at a lot of relationships we thought between access -- asset classes that seem to be holding up. if you have a stronger dollar equities would go down because companies wouldn't make as much money. now we have equities going up and the dollar going up, what is going on? >> you have to look at foreign investment. if the asset managers of the world and the pms of the world think the u.s. is a good place to invest. that drives the dollar and

foreign money into the united states. the 1990's, the equity markets rallied and so did the dollar. jonathan: dollar-yen higher, although straight back on. i want to ask whether a stronger dollar story actually bails bcb out as they start thinking about what to do with qe? >> it is going to take a little bit of pressure off of them. they won't have to in terms of weakening the euro but the regal -- the weaker euro isn't the answer for the ecb. a lot of the trade in europe is the eurozone. germany andn france, currency is nonexistent. it matters for external trade. i don't think the pressure is going to be off the ecb at all. jonathan: great to have you with us. coming up, we will look at how a trump presidency could change the federal reserve. that coming up with a former fed

official from new york. this is bloomberg. ♪

david: this is bloomberg. i am david westin. the innerworkings of the fomc. writing in bloomberg view, the professor gave his thoughts on where the fed goes under president donald trump. he wrote increasing debt and spending would likely stimulate growth, pushing up on the national weight of interest. this would allow central banks to reach higher rates, giving them more ammunition to fight future recessions. now is professor of economics, joining us from the campus. it is good to have you. >> my pleasure. david: you said there is a

short-term effect on the fed and a medium-term effect and it is quite different. that the short-term that the the fed is new administration, there is going to be uncertainty about what policies are going to get prioritized. i think if they prioritize the new vision towards trade agreements, that is going to create a lot of uncertainty for the global economy. monetary policy is going to be very nervous about removing a combination in the face of that uncertainty. i think the election of mr. trump is going to be another reason to be prudent about raising rates. i certainly would not be favoring a rate increase in december, given those kinds of uncertainties. the markets seem to be going the other way, right?

the w.a.r. p function of the terminals is up to 86%. >> i agree with that. we will just have to wait and to, iw the fed reacts think, the level of uncertainty that has been created by the trumpet election. -- trump election. you are not going by the markets. you're going by what is best for the economy and if there is uncertainty, the fed has to be taking that on board. jonathan: what kind of problems could we experience down the road because there are many stories written the last 24 hours, the discussion of a handoff for fiscal policy and monetary policy to fiscal policy . if you don't make that handoff in the right time, if you can't gauge what is coming down the pipe, don't use that the wrong way. that you are always

facing tremendous uncertainty making monetary policy. but you try to do the best you can given those uncertainties. i think the broader vision that president-elect trump offered in his acceance speech of very massive infrastructure investment in the united states is definitely positive for the u.s. economy. and positive as a result for the federal reserve. it would make it easier for the fed to achieve its inflation targets without worrying about running into the effect of lower bound on interest rates. jonathan: let's talk about something not helpful for the fed or the fed chair. some comments on the campaign trail targeted at janet yellen. the idea that she may be not removed but certainly wouldn't get a second term. how damaging is some of that rhetoric in the federal reserve? felt that was i

completely appropriate. about what the time kind of supreme court justices they will appoint and they are pretty free to express their views on that. it is very important for the public to know what kind of federal reserve chair a new president -- a new candidate -- is going to a point. mr. trump was very clear. i didn't agree with him, i think chair yellen is doing a great it is good to alert the american public of that before they had a chance to vote. david: i want to get back to your view about the medium-term. you think president-elect donald trump could make it much easier for the fed to raise going out. not necessarily december but going out. >> what happens if you end up doing a massive infrastructure

expansion, that is going to put upward pressure on prices and if you areand borrowing a lot for that, you will be putting upward pressure on what economists call the natural rear end of -- rewrite of interest. a lot of work has been going on to document and estimate that there has been a big decline. one of the main reasons we see that the central banks are about their pinterest rates -- their interest rates pinned so low, interest rates at a big scale is going to put up her pressure on that and allow central banks both here and abroad to hit their targets with higher rates of interest. are going toey have more ammunition to cut rats. if there is ae to

recessionary shock. david: it is clear that he has persuaded the markets there is inflation coming. you can have inflation without growth. how concerned should the central banks be about that? i think the central bank, through its tools, has a lot of capability to dampen inflationary risk. fed, as long as it is allowed to retain its independence of action, it has a lot of tools at its disposal to control inflationary risk. the problem for the u.s. over the last six or seven years is about that inflation. it has been subdued growth and i think that if we had policies in place at the federal level that in still more growth that is just a win for both the american economy and the fed. jonathan: my special thanks to

bloomberg view columnist and minneapolis president. i have some sympathy for the federal reserve, for once. david: i wouldn't know it to start. jonathan: the easy decision is whether you pull the trigger on rates. david: i am not sure that even president trump and his team know where they are headed, much less what congress wants to do. jonathan: we'll see what fed chair janet yellen thinks might happen. up, theing bell coming rally set to continue with futures up 95. from new york, this is bloomberg. ♪ wow, x1 has netflix?

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♪ the crown, marco polo, lost and found ♪ ♪ grace and frankie, hemlock grove, season one of...! ♪ show me house of cards. finally, you can now find all of netflix in the same place as all your other entertainment. on xfinity x1. we're opening more xfinity stores closer to you. visit us today and learn how to get the most out of all your services, like xfinity x1. we'll put the power in your hands, so you can see how x1 is changing the way you experience tv with features like voice remote, making it easier and more fun than ever. there's more in store than you imagine. visit an xfinity store today and see for yourself. xfinity, the future of awesome. jonathan: this is bloomberg. i am jonathan ferro. let's get you up to speed. positive nine points on the s&p

500. big rally yesterday in europe. utilities -- sounding off. 10 seconds away from the open, switch of the board. -- switch up of the board. the yen weaker. that is not what we were told would happen. you'll points are high. after an aggressive selloff yesterday, crude over a touch. base metals having a pretty good day so far. nasdaq is notthe open quite yet but the dow and the s&p are and they are continuing yesterday's rally. it looks like the dow was at a new record on a closing basis, not on an intraday basis. at least 46 points today, 46.37 to be exact. the dow will close at a new record. that will be something to watch throughout the session.

we will be watching that as well . as we continue to see this well following election day and following the election of donald trump. we will also see a continuing trend in many of the things that we are gaining yesterday. many of the stocks we have been lending to the overall gains in the market. let's look at these trends. lockheed martin rising once again, the aerospace index rose to a record high yesterday and lockheed and other aerospace stocks are being upgraded by berkeley today as well. -- berkeley as well. generally on the yield curve, whitening rates on the longer end going higher as well. leading to hope that these companies will see better before continuing to see rates go higher. , it has beenields such a monster move. it was up 20 points yesterday,

another five this morning so that means it is continuing. copper has a huge rally. it is the 14th straight session. that is a record street -- record streak. in part, this has to do with the idea that we will see more infrastructure spending. jonathan: the big story in the .uropean session is back again the u.s. gaining as well. during his campaign he repeatedly spoke about rolling back regulation including plans to dilute dodd-frank. the dodd-frank economy does not work for working people, bureaucratic red tape is not the answer. the financial services policy implementation team will replace it with new policies to encourage economic growth and job creation. during us with details is bloomberg wall street reporter laura keller. that is enough to get some

people excited. let's talk about what might happen. actually veryp is well aligned with congressional republicans who very much want to pull back dodd-frank and are looking at old notes from compass point analysts. he calls what jeb hensarling wanted to do in the financial choice act, which he proposed a little while ago, to roll back and offramp on dodd-frank. this will really got the copd as much as possible. so really, what donald trump has said is that would very well match what republicans want to do. jonathan: on the republican transition website he doesn't talk about the big banks. he complains about how the big banks got bigger. i wonder, how does this translate into real policy. i was talking to

yesterday, i asked, do we actually know what donald trump will do and they said no. we presume the small banks will be helped but we don't know. david: how do you square a republican caucus that will be in favor of dialing back on dodd-frank from the bank bashing that was on the campaign trail. donald trump out floyd lightman by name. does the caucus have a problem of getting out over its own constituents? >> those policies are at loggerheads. you've got on the one hand a populist movement from 2008 from the financial crisis and big banks are bad. at the same time there is roomen -- there is little for smaller banks.

if you are going back from these major changes that we put in to hopefully hold off on another financial crisis, then you really are seeing what the big banks would like to see. jonathan: thank you very much. the thoughts so many people would come and say donald trump would be elected we would be talking about a doubt that would rise to an all-time high? the dow up by 126 in the s&p 500 of like 11. maybe a market reaction surprise. david: there is a lot of humility. a lot of us were wrong, in all fairness. now we are talking more about what we can anticipate with donald trump in the law office. desk in the oval office. it is not just the banks that are benefiting from this. there is a move towards risk

right now. how do you explain that and is it good? >> i think asia went the wrong way from the start. they can see trump winning. you saw a massive shortcoming on the back of that and then the market woke up and saw this could be very stimulatory. that is the whole key. have forgotten that globally, central banks have been screaming for fiscal assistance. andn said they would do it suddenly there is a glimpse and the hope and the market had to adjust. jonathan: the market has a whole campaign to come up with the playbook. why did it take the morning off to finally realize? >> we had the fbi news on friday. we know the playbook and we got abrasive. -- got a brexit. this one had an after plan and

the market loves that. david: there is a lot of talk about tail risk. it was either donald trump getting elected or the senate going to the democrats and the house going to the democrats in this is the one we didn't anticipate. how do we reposition ourselves? there is a big pivot that we have made. >> i think you get the short-term reaction that we need. they think treasury yields can go higher. the dollar can rally. stocks can rally. >> i think what happens is there between the 10 year and the stocks. to me, that is to 25 and the 10 year. towards the 250-to 20, look at germany. .3%. if you get a positive view from the 10 year there is an alternative foreign investor and that is -- alternative for an investor.

we were wargaming it s&p the idea to look at the 500 and the 10 year and make ur mind up where you want to go. is that still in play? as far as you are concerned it sounds like that is still in play. they have had an absence of investment alternatives so they have been pushed into high-yield and now you can get treasury yields to the point where investors say "i will take that." it is proposed but we have some implementation. we need to see a cabinet that will implement it. but it cancan move also stall and await for the development. david: how much of this is a true conviction trade? .e were holding a lot in cash at least we know who the president is going to be and we

have that behind us. it could reverse again. >> the algorithms are driving a lot of this. momentum out of rhythms would have to jump and you will see whether dollar is rallying so there is conviction, however, we still need to see the details. i love waiting for the acceptance speech and then it was bye-bye-bye. i wish we could kill the cliche that markets hate uncertainty. >> we spoke to 30 odd clients and they all said the same thing. macro is back and that is uncertainty. we need a little bit to try to raise money. >> macro is back. paul richards, medley global advisors president. coming up, the economic agenda and the impact of the united states. rhode island governor gina

raimondo joins us next. into the session with an all-time high on the dow when the s&p 500 rallying as well. this is bloomberg. ♪

>> this is bloomberg daybreak. i am emma chandra in the green room. later today, chairman and ceo of disney. >> we have a new administration here in the united states. small businesses account for a lot of the growth, half of gdp and the driver of two thirds of

new jobs in the u.s. since the 1970's and among those investing is goldman sachs. it is 10,000 small businesses that aim to provide small business owners access to education and capital. the bank partnered with the state of rhode island, committing $10 million. now governor jinnah rondo is here -- governor jinnah draymond .ut is here we have a new it ministration that wants to create 25 million new jobs. how much does that need to come from small business? >> probably the majority. in rhode island most people work in small business. paying to have good jobs, decent paying jobs, so i have been very focused on small businesses, making sure that small businesses have what they need to be successful and grow and add jobs in rhode island. >> how do you do that? the interesting thing is, do we

have the people to fill those jobs? talk about the skills gap you are seeing. >> it is real. there is a skills gap. i have issued a challenge, i said that we want to have 70% of our adult population to have some degree pass high school. the reason is that 70% of our jobs require some post secondary degree. that is an important way that government can make sure small businesses grow. alix: is this like the liberal arts degree i got or specialized skills like coding and manufacturing? >> it is going to be both but we are leaning heavily on the specialized skills. so i am doing a lot about career and technical education, revamping our community college to make sure our community college is a workforce development engine for people right out of high school but also for that middle-aged person , 52-year-old woman who has lost

a job and needs to retool her skills. she ought to be able to go to our community college and get a credential and go get a job. alix: the part we study in the markets is inflation and how rising wages will lead to inflation that impacts the fed. what kind of wage growth are you seeing? >> not what we would like. that is what i am focused on. since i have taken office our unemployment rate has fallen substantially. stuck which is why i am focused on skills. we want people to have the skills that matter to get jobs that pay. to get a high-paying job, you need some skills. that is why we are constantly reaching out to businesses, saying what skills do you need? so then we can train folks. alix: if the market is tight, why would wages be going higher?

>> there is a lot of pressure on that and some of them are out of my control. on what i have an influence on, high-quality high-qualitys and affordable college education, career and technical programs and programs like this one. these 10,000 small businesses are huge for rhode island. it is a $10 million investment. that is real job creation. everyone of those small businesses is going to add jobs. alix: what do you expect your relationship to be in the new administration when it comes to sales gap and regulation? >> i need to find a way to work with them because my job is to get rhode islanders back to work. i am a relentless advocate for the people of rhode island. i will talk to anyone and work with anyone to get my people good jobs, good schools and good infrastructure and that is what i am going to do with the trump ministration. alix: how?

.> make our needs known put our infrastructure needs front and center. rhode island has really some of the worst roads and bridges in america and that is not that different from the rest of new england. the federal government needs to step up and rebuild our infrastructure. a lot of it is advocacy for what we need. alix: are you worried about it? >> iamb have trying to keep an open mind. the last few days of an emotional. but the campaign is over and we have got to get to work. on, -- put your close put your clothes on and go to work. i don't worry so much as i try to figure out how best i can work with you ministration. alix: you are known as being fiscally responsible.

now the president that could add 5.3 million to the deficit, what kind of challenges do you face? >> i will be putting together my third budget in january. my third as governor and everyone has had a substantial deficit which is why i am so focused on growing the economy. i have often said we are not going to cut our way out of it. we have to grow our way out of it. that is wage growth. i do worry about that. states really can't afford a greater debt burden and that is something i worry about. alix: thank you for joining us. it is a great pleasure to have you. jonathan: coming up at the top of the hour, it is bloomberg markets with vonnie quinn and mark barton. >> talking about treasuries and sovereign yields following the election, we will be speaking --h james yellen ski of

james a linsky. talks going to see anytime soon for those yields? we will also be talking about fx. you have the dollar index now at 99 and the yen very close to 1.07. we will be following all of the comings and goings from the white house as well. jonathan: looking forward to the program. in the markets we are 20 minutes into the session. equities gaining across the board. an all-time high on the dow. we saw the banks rallying in europe on the back of a steepening yield curve and also the prospect may be of softer regulation. that continues with goldman up 2.85%. bank of america at 5.29.

up, facebook has been a major platform for political discourse that how will the social network and other media giants fair as political traffic drives up? that is next. this is bloomberg. ♪

jonathan: im jonathan ferro and coming up today, the trump transition. president barack obama and president-elect donald trump will meet at 11:00 a.m. eastern time. yesterday was the 10 year auction, the demand gazed by the cover ratio. we will get $15 billion of 30 year bonds coming to the market. vice president joe might in -- joe biden will meet with vice president-elect mike pence that

2:45 eastern time. 23 minutes into the session, an all-time high on the dow. within that, some interesting moves for the financials. a two pronk move. good for maturity transformation. this is how basic banks work. story, theide of the softer regulation story, you wonder whether they can continue to fuel the rally or whether it was just a couple of days. david: the obama administration said hope is not a strategy but maybe it is this time. alix: the bigger question is what it means for the overall economy. moreu have banks become powerful, does that increase the multiplier effect of any fiscal stimulus?

david: this is before we have a president-elect who has never spent much time in washington, run into the machine of washington politics. jonathan: joining us now is cory johnson in san francisco. two days, a knee-jerk reaction, maybe, but we were told it wouldn't happen. it was meant to be risk

>> you are right to focus on the financials and i loved your description on how banks make money. i think the regulatory thing is driving this. in today's moves you've got 5% gains. it is very clear that the notion of the repeal of dodd-frank and the safety net put in after the crash of 2008, the notion that that repeal will somehow take the banks, one hand from behind their backs and the very big banks will get even bigger. since the reforms after the 2008 crash, the notion of the repeal of that, will the banks run amok and throw off massive profit? i will quote oliver renick's wonderful story from earlier in the week. the last 13 presidential elections, the move the day after holds up half the time. it is up in the air whether it means anything in the long-term. the fact that i was being correct move for the markets. just insideas not the beltway, it was a response to a broad center across the country and people were pushing the hardest for it, the core of donald trump's support. the core of donald trump's support was to let goldman sachs do what they want. we will see if the trumpet

ministration wants to listen to what the voters said that i don't think that was the main issue they were pushing for. looking at issues like international trade, things are louder. thanks very much for being with us. that is it for this program. let's wrap up the market so far. it is an all-time high. jonathan: within that, the financials are very much on the move. they lead the gains in the united states. switch of the board, treasuries backed up yesterday. the yield up six basis points. that is your yield on the u.s. 10 year. that does it for bloomberg daybreak. bloomberg markets is up next.

vonnie: it is 10:00 a.m. in new york. i am vonnie quinn. mark: live from london, i am mark barton. welcome to bloomberg markets.

vonnie: we are going to take you from washington dc to london and cover stories out of germany and china internet hour. president-elect donald trump leaves his tower in new york to head to washington. we will have the latest on his meeting with president obama and house speaker paul ryan. new forow rising to a the day well closing records in stocks europe. on whether we should be concerned of trump's plan to cruise -- to boost growth will lead to a vonnie: surge in inflation. and we look at a ragtag group of investors who backed trump even though it was a long shot. they may now get a chance to control the levels of power in the world's biggest economy.