targeted six government entities. it appears to have come from iran, but the investigation is in its early stages. the determination could change. the u.s. has hit north korea with a fresh round of sanctions, what they call continued provocative behavior. freedead assets -- assets and the new penalties including u.n. sanctions on it revenue per trade. they called it an abuse of power and north korea is promising to retaliate. a judge has denied a request for a special prosecutor in a complaint against chris christie. the complaint is tied to the george washington bridge scandal, in which two of his former top aide were convicted on felony charges. the judge dismissed the motion by a former firefighter is said that chris christie failed to access the bridge -- open the

bridge for access. and bipartisan legislation on whether research and a storm predictions has passed in the u.s. senate. if approved by the house and assigned by the president committed become the first piece of whether legislation adopted since 1990. ♪ news, powered by 120 journalists in more than 120 countries. this is bloomberg. ♪ scarlet: live in new york, i'm scarlet fu. joe: we are 30 minutes from the close of trading in the u.s. scarlet: treasuries rising after the dollar declined after the jobs report delivered a miss picture on the labor market.

joe: the question is, "what'd you miss?" scarlet: unemployment falls to the lowest in nine years and of the growth could lead the fed on path to raise rates this month. and looking at europe as we go into an action-packed weekend up in italy's referendum vote. we look at the fallout areas. chris deanwn with lagarde -- christine lagarde, highlights from her conversation later this hour. ♪ scarlet: let's get you started with a look at where the major indexes stand. it is friday as we go toward the close. abigail doolittle has more. abigail: happy friday. going into the close, not a lot of action for the u.s. stocks. the dow is down and the s&p 500 and nasdaq trying to get small gains. this is a big reversal from what we are looking at on the week. the dow was the only one of the three major averages higher for

the fourth week in the row, while the nasdaq and s&p 500 are lower for the first time in four weeks. the nasdaq down more than 2.5%. the divergence among the major averages could have something to do with sector rotation. at the indexes, we see energy and banks are doing well this week. energy getting a nice boost from the opec decision, which has oilt did oil on -- boosted on paper, up more than 10%. the banks with a boost from the rising yields on the week. and we of weakness in retail and this tech has sold off week and it looks like some of the money has gone into the energy sector and continues to go into the financial sector. a lot of people are talking about not the sector rotation, but also asset class rotation. 5205, this is at

bondger-term chart of the index and the last month, it was the biggest decline in value. the biggest on record since 1990. not surprisingly, much of the money seems to have gone into the u.s. stocks. we take a look at market cap index or average for the month of november, we look at $1 trillion added to the u.s. stocks in november. interestingly, there is a $700 billion whole -- hole, with commodities having a strong month. a very good chance much of the money could be sitting on the sidelines in cash, especially ahead of the italian referendum and the decision for the fed later this month. scarlet: $1 trillion is incredible. thank you. joe: america's labor market getting tighter with the recent

wages drop seen as just a blip. looking at those numbers with matt. we have three charts. kind of an interesting jobs report, strong on the headline, unemployment rate at 4.6%. wages are a surprise. going with the first chart you brought. 35-44 years old looking good. matt: over all a good report. group we-year-old age think of as having the least excuses to not be working of any age group. joe: they are out of college. not retirement age. matt: exactly. we are looking at different age groups, but what we see here is they are the most employed as a percentage of the population. scarlet: that is the blue line.

matt: yes. getting back to those levels. participation has not risen as much as unemployment has, which they have a low employment rate for that age group. that is great. joe: cool chart. scarlet: that is a good sign. within employment rate falling, everybody is wondering if they are falling for the right reasons. matt: i think the science -- signs are that it is. labor force participation overall did drop this month, but not as much as unemployment. that is why this drop in unemployment rate we saw is not just people leaving the labor force or anything like that, it is people finding jobs. joe: what do people say about the wage number? you do not want to read too much into one month? matt: there was a statistical anomaly, it was based on the day of the month that the survey week fell into, so it is a technical factor we have seen over certain months in the past

year and then these things typically tend to reverse the following month. it could happen next month. scarlet: let's talk about part time work, it was seen as bad. that was the past -- best people could get. that is not necessarily the case. there ism -- s -- matt: they ask people if they are working part time because of economic reasons, or noneconomic reasons, maybe the better for a part-time job. what we see is, the blue line shows the percentage of employee workers who are working part-time for the noneconomic reasons. scarlet: because they want to. matt: exactly. the white line is full-time employment and it has flatlined, but the point is the bigger share of part-time employment is

coming from people who prefer to work part-time, whether it is older people who are retired and looking for part-time work, or maybe the sharing economy. joe: it is really important, because often you hear a criticism on part-time work. work, youn part-time need to look at how many people are doing it because they can only bind part-time work versus those who want to do part-time work. matt: yes. you probably heard that. it is usually for noneconomic reasons. joe: ok, looking at your third chart which is the white line aggregate weekly payroll growth, and to the blue line is u.s. personal consumption growth. what do you see? matt: the white line multiplies people working by the number of hours during the week, by the amount of dollars for our they are making. so it is the total paycheck. you can see growth in the total. yet it is slowing.

it is slower by the fact we could've had statistical -- with wages and hours. it is interesting to note that spending growth is outstripping the income growth for the first time in a few years. typically what is happening, when that happens, the income growth acts as a limits on spending growth. we could be getting to a lower peak in spending growth. joe: it is hard to be too bullish on spending if the white line keeps going down. matt: exactly. the white line could bounce back up next month and it will give more room to increase spending. scarlet: you are the fed and you are getting ready for the meeting in two weeks, how do you interpret this? does it change your view on what you will do? matt: no. of this is exactly what they want to see, it is a good report.

it is not putting a lot of pressure on them to increase the rate, because you have a weaker wage number, but it is kind of what they want to see and it keeps everything study and on task. joe: what about 2017, what do we expect? matt: this is an enchanting debate, because markets have gone and repriced the outlook dramatically at this point, and it just rates are higher, but that officials maintain that they need to see what actually happens when donald trump comes in and what policies they do. we may not see a big change in the economic forecast that they present in december, it could be in march story. scarlet: ok, going closer to what the fed has indicated. joe: thank you. scarlet: coming up, to economic powerhouses, we will hear from take for thed --

fed in two weeks. this is bloomberg. ♪

♪ scarlet: "what'd you miss?" anyway you slice it the labor market is getting tighter, which should translate to faster pacing for american workers. bill gross from janus capital had his reaction for the jobs report. 4.6% is getting closer to the lowest number we saw in the early part of the century. that will be the headline, but we are certainly not out of the clear. numbersaw the -.1 wage 2.5,oming down from 2.8 to

things are not as a hunky-dory as the stock market thanks. -- thinks. >> you have been critical of some of the statements of the president elect, there is the assumption of higher inflation and a better good for all in his administration, can you state that or is there i a a risk of no real growth? bill: there is that and inflation and productivity go together in terms of gdp. gdp will be elevated by many of the programs where there are tax cuts and infrastructure programs, but future growth is a bunch of productivity as is inflation. increased -- if productivity is high, it will be contained. but it has flatlined for the last several years.

remember, that is remarkable for republicans, one had measured 80 degree -- and a 180 degree turn. and there has been spending and -- for 2017 and 2018, they are likely to be temporary. there is a view that there is a strong dollar now and the continuing structural headwinds including aging demographics, d globalization and trade policies and accelerating debt that we have seen in almost all countries, that promises to contain productivity and perhaps 1% annual growth rate, for me gdp growth rate at two and perhaps inflation higher than that at 2.5 or three, it would be phenomenal at five. the majority is looking at inflation. >> we need incentives from washington. does it come from a good tax credit or can we really trust

the president elect to affect a broader tax policy? bill: to me, the tax credits, while they have been effectively days20-40 years ago, these they do not make as much sense. they do not have the multiplying effect they used to have. the reason is, corporations have ample use of money. they have been able to borrow at a near 0% interest rate for several years and if they wanted to invest in a thriving economy, then they certainly would have by now. a tax credit will do little to generate economic growth far and above what we see now, which is really 2% or 1.5%. i think the government have to get more involved and have to be oriented themselves as

opposed to the private sector. grosst: that was bill speaking with tom keene. joe: how will the fed read into the jobs data, we asked mohamed , a chief economic advisor at allianz. mohamed: third term it is a goldilocks report. we had solid job creation, but the wages were subdued. so short-term is goldilocks, the longer-term it point two the structural challenges. we had lower participation rate and real puzzles about wage formation. it is an interstate next -- interesting mix. it encourages the fed to hike in december, if it needed more encouragement, the only thing that would hold it back is a disastrous european follow-up to this weekend's election. the mystically, this encourages

-- domestically, this encourages the fed to hike, but more portly it does not begin change its mind about the future of rates. that is why the market response is subdued. >> a lot of people say, is what we really expect in december is important. is it to rate hikes next year? mohamed: that is the most sensible projection. we have to look at a lot of uncertainty, because of the fluidity not only on the economic front globally, but now on the policy front in the u.s. i think the central projection, the baseline is two hikes, but one must be humble about the degree of uncertainty. pullbacke saw a big in treasuries in november, the biggest on a monthly basis since 2009. does the market into this twice

next year? mohamed: the pullback was mainly because expectations of change on the basis of announcements. the expectation is now whether you look at the treasury market or whether you look at virtually any other market, it is higher u.s. growth, u.s. inflation, and that is what is priced in. markets have rushed to price it in based on announcements. the design and implementation, so there is still two critical steps. i think the market action is consistent with what we heard from the president elect and his team. anchor: there is tension with what they are pricing and with bonds and expectation of a rate hike. over the last several years when the market is agreed with the fed, the fed comes to the market. are you expecting the markets will need to readjust to fed expectations? mohamed: david, the markets that

are readjusting to the fed expectations. if you see what is implied by the market, it is moving to the blue dots, or what individual members think of the rates look like. this is different. the reason why is because we have a whole set of policies that possibly will finally be at the beta. -- activated. fiscal, deregulation, and we also have other elements that are coming in, including corporate tax reform. finally, it is the market moving toward the fed. joe: that was mohamed el-erian, chief economic advisor of allianz. scarlet: time for the business flash, the look at the business stories in the news. apple and european union watchdogs clashed in public for the first time since regulators ordered ireland to recover back taxes from the tech giant.

the eu says ireland granted unfair deals that would give them a tax break. apple says of the decision implies the products were made in ireland and not the u.s. -- eu file the motion thought the motion. ireland has filed an appeal. and the pandora board looking at renewed interest in taking over -- ius's approach does not include a price. pandora has not responded to the latest approach. the chinese group looking to buy a soccer club wants to delay the sale until next year while they wait for authorization from beijing. that is according to people who say that the group is in discussions with the former prime minister of italy. deposital nonrefundable of $107 million to delay the close is one of the options on the table. and the ceo of starbucks has his next chapter mapped out.

luxury coffee shops with expensive beans but he will step will step down and start a new company called reserved. the first opened two years ago offering coffee at $20 a pound. that is your business flash of the. joe: as scarlet was saying, howard schultz will hand over new ceo, can he gets among them to going -- can he keep the momentum going? this is bloomberg.

♪ fu, "what'd scarlet you miss?" starbucks ceo howard schultz is stepping down. we take a look at starbucks shares. when the line goes up, starbucks is outperforming and when it goes down it is underperforming.

the yellow shaded portions are when howard schultz was ceo. he was there for two different times, he took a break and that was called back to rescue the company. we put this into log forms a can see the outperformance over here of the early stint of his tenure. the late 1980's until 2000. that was the first stint. kevin johnson who is the president and coo, he was announced to take over as the ceo of starbucks. howard schultz will be executive chairman to overlook the strategies, especially when it comes to premium stores. kevin johnson is a tech industry veteran and this speaks to how much of starbucks depends on the innovation from the mobile unit. joe: like every company, they want to be a tech company. scarlet: they really have done it. joe: they really have.

scarlet: people order over there smartphone and pick it up. joe: it has been impressive. i am looking at the opposite of text. i'm looking at gold. this is extraordinary. we go back to the end of the chart, this is total holdings of gold assets declining for 15 straight days. the blue line is the price of gold. gold is racing out of the etf. you can think of it as a negative yielding bond, because it is a safe haven, but you have to pay to store it. it is a high storage cost. so it has a negative interest rate, which means when the rates are rising like right now, it makes holding gold less appealing. so we see the flood of money coming out. scarlet: with inflation picking up, maybe that will start to turn over. joe: they could be buying it for that reason. scarlet: the market closes next. we have less than four minutes

until the close. the dow is down, the only one of the major indexes higher. and the s&p 500 is unchanged. this is bloomberg. ♪

♪ scarlet: we are moments away from the closing bell. u.s. stocks largely ready after

the stocks report showed ongoing strength and unemployment fell to their lowest numbers and five years. scarlet: i'm scarlet fu. joe: i'm joe weisenthal. we want to welcome viewers who are live on twitter. you can watch the closing bell coverage every weekday. scarlet: we begin with the market minute, kind of a ho-hum day for the u.s. indexes. the s&p 500 up less than one point. and the dow down 20 points. volume off by 80% for the dow industrials stocks. this is after we had a jobs report to get people excited. joe: the jobs report was not enough. --directional there was no wage inflation. this is kind of like no story and no rhythm to the trade. scarlet: confirmation of what we already knew. if you look at -- early weekend.

if you look at this year, this is a reversal of what we had seen for the last couple of days. i just rate sensitive companies are doing better. utilities, staples with dividends. they gained nicely while the financials which were the big winners postelection, down 1%. and even with the drop today, still up 13% after election day. stocks kind of altar and the rally stalls, we see this edging higher. taking a look at the vix, they are coming up a little bit. far from the levels we saw before the election. joe: taken a look at government bonds started with the u.s. two-year and 10 year. they are lower across the board. i think that the hourly earnings number relieved of pressure that the fed would have to hike faster than expected. it was a meaningful drop on the two-year yields and 10 year

yields, of course, they were reaching higher. taking a look at the chart, give us a picture. sharp m., shutdowns -- downs. everybody was digesting the jobs report. mostly lower throughout the day. a look at the italian, actually we do not have it, they have the referendum on sunday. scarlet: that is what people are paying attention to. treasuries recovering a little bit. the dollar is consolidating some of their game. taking a look -- its gains. taking a look. it is seeming to stall. it is falling for the fourth time this week the over all, if you look at a bigger and longer term picture, the index is at its highest ever. what we want to highlight is this huge boost. and this line shows the dollar declining in value versus the ran.

this is after the s&p 500 approved the credit rating for south africa. so the s&p is keeping it above that that is. however, it did lower the currency rating and the fiscal policy could lead to a downgrade. joe: a quick look at commodities. across the board, oil gaining another percent. they had a huge week thanks to the opec meeting. and industrial metals are doing well. gold is little bit less than 1% today. and you have to look at this chart. 12% gain on crude oil for the week. that is the huge story and commodities. the opec meeting to cut, that was not expected by the traders. you can see how significant it was. scarlet: they said the decision was more political than economical, many people. joe: apparently the 2:00 a.m. phone call field the deal --

sealed the deal. scarlet: now we are taking a dive into the bloomberg. i want to show you this report card, the economic report card before the referendum on sunday. it began in 2014 when the premise are of italy took power. the white line shows households that say that the income does not meet expenses. it has come down by half. when the line goes down it means people are meeting expenses by the measure of consumer confidence. the improvement has come out as at a heavy price. the debt is at 1.2 trillion euros -- 2.2 trillion euros, the highest of those european countries. is a reporters who writes about european banks. italy really in the spotlight. there are multiple stories going on, the economic one, the

political would with the referendum. and the banking one, all tied in. what is happening with the banks? are they making more progress on the green out a resolution to this? >> there are many different types of banking problems in italy. we have a small bank with a huge problem. but they have a radical plan they are trying to pull off and they are doing so in the middle of this referendum and that is one of the issues. much of the referendum directly affects the banks, if renzi resigns, there could be political instability and it could be harder for the banks to raise capital and it could make it harder to negotiate. small bank,d of a so how emblematic is it of the bank problems? far more banks like it and not? >> there are big all it banks -- solid banks, that do not look

like this small bank on the surface. but there are problems where the market perception sentiment, if the non-performing loans are not cleared up, -- could accelerate and that has been share price and sentiment around it. it is all linked. scarlet: if you come inside the bloomberg, this is returns from this year of the top 600 bank index, these are the worst performers. five out of the six names are italian banks, you have ubi banca, unicredit. joe: you mentioned they have a bold plan to restructure themselves and they need to go to the market for credit. what is the mechanism of the plan? how hard is it to execute? >> it is complicated. they want to raise 5 billion euros of equity. the market cap is one billion

euros. a very big number. and there is an equity swap. there is a need to get cornerstone investment, to get fresh equity in. and they need to offload and a spinoff a huge pile of 27 billion euros. that is a three-pronged solution and it is risky and complicated. the hope is whatever political instability that comes, they will be of the smooth it over and maybe the ecb can help. it makes things that much more complicated. joe: we talked about it on this show, part of the issue of nonperforming loans is they take a long time to work through the system. people have a hard time valuing them in italy because there may be value with them, but it takes a time -- a long time to realize them. >> and the legislation in italy is different. so some of these loans have been kicking around for 10 years. so if you want to buy it, you

are not sure to recover the cash flow on the loan, even with a discount. joe: and that is the need for reform. scarlet: coming full circle. you could make the argument that they are resilient, the banks, because we've been talking about the italian banks for years and they are all still there and kicking around. they seem to be doing some of the share prices have fallen, but they have not died off. >> nokia but it is very political. -- no, but it is very political. if you think of the bailouts, that is destroyed capital. and it is so political, because the government -- in a bank -- it is pure politics. it is a systemic that it fits -- pits brussels against rome. scarlet: that is the problem surrounding them that is different, the italian household

owns more bonds than the banks. >> and italy has had weak economic growth and in terms of tough reforms, it has not had the pain or the tough medicine that spain has had. joe: and the ecb, is there a role for them to play? or is this an italian solution? >> they are in a tough position because they are a central bank and they are a regulator. the regulator part of them wants to be tough on italian banks. it has been the worry of the banks. if it needs to soften on the central bank side it may need to soften on the regulator side too. joe: thank you. scarlet: political risk building across europe. we will discuss the elections on sunday and what it means for the rest of the continent. this is bloomberg.

♪ bloomberg first word news. more meetings today a trump tower as donald trump fills up his cabinet and senior staff did among those on the agenda - -staff. among those on the agenda the former u.s. ambassador john bolton and democratic senator heidi heitkamp. this weekend, the goldman sachs president will return for a second meeting with president elect trump, he has been mentioned as a possibility for several jobs, including budget chief. michigan's election board is deadlocked on the request for a recount.

it could start next week. meanwhile, the attorney general of michigan want the state supreme court to stop the recount. and it was got to, one is already underway and chum supporters have filed a lawsuit to stop it. in pennsylvania, donald trump is asking the court to discuss -- dismissed the request for a recount. and the premise or ireland says the u.k.'s decision to leave the european union is in contrast with them as a player on the international stage. he sat down today is recalled the reaction to the brexit news. >> the result was important and was a voice for change and for the future. came asy, the decision a shock. it is something we do not want to see. i must however respect the decision and get on with it. >> he also said the u.k. will

not be allowed to pick and choose which aspects of the european union they want to. in south carolina, jurors have a failed to reach a verdict in the trial of a police officer charged with killing a motorist in a traffic stop. cell phone video shows michael slater -- slager shooting walter scott as he left his car and tried to run. slager testified he feared for his life after scott got a hold of his taser. global news, 24 hours a day, powered by more than sick under journalists -- more than 600 journalists. this is bloomberg. scarlet: italy's referendum may be hugging the headlines of austria as a big bow on sunday. they go to the polls in a historic election that has seen to parties absent on the ballot. the real challenge for people

on monday will not be the italian referendum, it will be the austrian election, it is likely that the far right candidate, the first time a far right candidate is going to head a european country since the end of world war ii. this could be the third populist president. joe: it is always entertain to pay attention to international politics. everybody is paying attention. scarlet: wasn't it the first election in may and they thought it was squared away? now we have a post trump world where anything is possible. joe: they are running it again. and i talked about chandler's answer and whether austria is the one to watch this sunday. we will play the conversation. >> to be polite come i think it is something that sounds good, but if you look at the potential of fallout from the italian referendum, it is holding as

much water as you like. i would respond by saying we have already seeing the populist insurgency in austria. if you think back to earlier this year, we had the first round of the election for the first time in seven decades, both of the two establishment parties failed to get a candidate into the final round, so i would argue that they are fully already in the throes of a populist uprising. joe: for those who are not paying attention to this story, why is the presidential election being run a second time? john: literally, the second round of the election earlier this year, it was so close to call. it would into wednesday after the sunday vote. and it was really narrow. essentially went to the constitutional court and they decided there were so many irregularities in the process that they needed a rerun. joe: this is the presidential

election, not the prime minister. what is the role of the president in austria and remind us to the candidate are and what would be the significance if the right wing candidate were to win ? john: historically speaking, the role of the president has been incumbent of the position, it is interesting if you look at the structure of the austrian politics. the president has more power than you would have thought, they can call elections, dismiss government and both candidates have said they are willing to push the power of the president to the maximum. we will see, whatever happens, we will see the practice of the austrian politics change and i can tell you briefly about the candidates. we have the green party candidate who is standing as an independent, but supported by the green party, alexander van

der bellen who is pro-free trade and wants to keep austria tightly into the european union. and then we have norbert hofer. what is interesting about him, yes, he is from a right-wing populist and skeptical with resistance to immigrants and refugees coming into the country. he questions austria's role in the eu, but the distinguishing others, heen him and is not advocating immediately a withdrawal from the eu. if you look at the constellation of the european populists, he is the conservative one. joe: interesting. what are the key issues? is it about immigration and refugee issues? theirit is and about role in the modern world.

there are a lot of people who think it is ok -- who are confused by free trade and its dynamics. the difference between europe and the u.s. come on the fringes of europe you have a human catastrophe, this demographic catastrophe and a huge number of dislocated people who are swarming toward europe. and again, it is one of the questions dominating every democracy in the eu -- how many of these people can we take? how many can we would stand? -- withstand? that is the other key issue along with trade. but, the question of what is our role in the modern world it had we fit into it? joe: after this election, what is next in austrian politics? the next step in terms of which direction the country will go?

traumatic is such a you that -- event, and it has gripped of the population so much in terms of what the country will need, of course brexit will dominate the agenda of every government over the next few months. and whoever wins, these questions that have dominated the campaign, immigration especially, they just will not go away. joe: that was our executive editor. scarlet: and donald trump forming a panel of business leaders that will give strategic advice on the economy. stephen schwarzman will chair the panel including jamie dimon and lawrence bank -- fink. jason? jason: great to be with you. it seems like a big job that the president-elect has asked you to do. how did it come about? >> he called me.

i have no donald trump for a long time. he was looking for advice on different appointments into different approaches, and he asked me if i would like to help him form a group to give advice, because they were about to do a lot of different things and it is important to get a sense of, for them, whether they are going in the right direction or the wrong direction. and he said if we could meet frequently and get enough people so we can sit around the table, not in an auditorium, i want the best and brightest in the country. i do not care if they are republicans or democrats. i do not care about anything other than how wise, smart, engaged and a successful they are at running their businesses,

wherever they are. and people who have the range of things that go on all over the world, and you pick them. and you tell me do you think we should engage. and i will tell you if i like ask and if i do, go out and them and let's get to business. i came up with a list of a lot of terrific people who could be that criteria in the united states. it was remarkable. he liked them all. he said, what terrific people. he said, let's go. he said the objective of the exercise is not to make an announcement or if it a lot -- photo op. he said, it is really for me to learn what people have to say in an unconstrained way. they do not report to me. they are independent.

so that is how we did it. jason: you hang up the phone with the president-elect, how do you give it to the task of -- pivot to the task of choosing these people? >> i have a range of people i know, so i thought about who would be interesting in terms of their knowledge, whether it was in an industry or a certain area, and who touches a lot of different parts of the economy? so you can get an overall view of domestic and international thinking. people were selected not further narrow focus, but for what they could add overall. jason: it seems when you go down the list you do have jamie dimon finnk,ence -- laurence these are people with expertise, but they also have networks of people they are speaking to all the time for business reasons. >> you look at somebody like

mary, she has a huge number of suppliers. you know what is going on there. she operates and sells vehicles all over the world. she is involved with technology, self driving cars and other elements of technology that is put into vehicles, so car companies almost by accident found themselves on the cutting edge of technology. and there is many other things, for example, that she would touch. she is on the board of stanford. she has a wide range of networks and things she sees. everybody involved is summarily situated -- similarly situated in different industries. if you look at one of the great things in the world, this happens to be jpmorgan, the

largest corporate lender in the world, they know what is going on and have a huge consumer business in different countries, so they know what is going on. they are global, one of the most global banks, so they have input on every part of the world. group, if you assemble a of 15 people with that kind of knowledge base, you will be able to have some really fascinating discussions. jason: many people stood on the sidelines during the election, not choosing sides, you among them, at least publicly. what was the response people gave you when you called and asked them to do this? >> they wanted to know what he was like. we got into different things with him. whether it was his wedding, or him coming to my house for dinner, things like that.

and i have had a good number of conversations with him since he was elected and before he was elected. so i have a feeling that he is really, he really likes to learn things. and he had a reasonably narrow launch intoe this politics where he was basically doing buildings and doing the mostly in the united states, some outside. like a sole proprietor of a business that builds office towers and residences. so he is aware that he does not know a lot of other things, because how could you if that is what you did? so what i found from talking with him, he says he is curious and he wants to learn and he wants to be successful. he has his own unique style, but outside of that style, in

private settings, he is really curious and he wants to make sure that he is not making mistakes. what you would logically do in situations like that, you would reach out, and it said that as part of why i think he asked me to do this and to the people that wanted to know whether they should do it, they wanted to know it would work well. nobody wants to waste their time. everybody in this group is super busy and engaged and there is a lot of important responsibility. explained whati it was like having conversations, you know, positions and change. if somebody says this is a bad idea, we could get in trouble here. who wants to be in trouble? so every discussion requires pretty much -- once they were

satisfied that this was important for the country, they now can make good use of their time. it is to keep the country on a good path and this could end up being a group that is clearly nonpartisan, it could be a republican -- you could be a republican, a democrat, nothing politically. donald does not care. it is about talent, judgment, experience and insight. so, just about everybody said, if this is really important, i do not want to be on the sidelines. the country is going to go through a lot of change, most of the positive. some of it is in the who knows pile. and i should be at the table. i should be helpful for the good of the country. and it was nice to see people put aside narrow interests and

things of that type. jason: you mentioned positions changing. there was a sense early on in the president-elect's transition willing toreally -- consider the things he said in the campaign. is everything on the table at this point, especially when it comes to things you care about as an investor? and a wall street executive? >> i have a lot of things i care about, but what i care about principally is that the country does well. there is almost no one in the business community that does poorly when the country does well. you have to work in that kind of environment. and so that is good for the middle income people, for sure. it is good for lower and middle income people. it is good for business. so things that can be made into

a positive sums game are things i like to be involved with. i think that is where he is going. the route to getting there will not be straight, but there are lots of things that are straightforward. tax reform, a change in the regulatory posture where we have by oneng constrained foot on the gas, low interest rates, and one foot on the brake as we have substantial amounts of regulation. jason: do you think that regulatory policy will change fast in this regulation? stephen: absolutely. and has limits on the past. there are certain presidential actions you can take and those

will be done quickly. there are other actions that they would like to take which need hearings. that cannot be done with a stroke of a pen. there are others that require people in certain regulatory agencies to finish their term. little will happen instantaneously. there are certain regulations that should not be changed. no one is looking at unconstrained environments. whatever can be done really fast will be done. the hearings will happen as soon as they can happen. most of those will get done. then you will get to the part where you change personnel. then there are the parts that require legislation. the parts that require legislation will be tough to get done and the reason is that on a philosophical basis it appears

that democrats like more regulation. that is what they said in the last election and probably true. the republicans like less. those will be difficult things to change. jason: if you had to press for one specific change in regulation with the president-elect, you have his ear, what would you change? stephen: i don't think like that. i would like to see a laundry list. what should we be doing? i think lending has been constrained. advances, for the most part, have shrunk. safety and soundness issues, some of which are important. on the other hand, it is difficult to have a country grow quickly while it's ranking system is shrinking. this is one of the problems that europe is experiencing. if you can't get enough consumer credit, if you can't have enough thentaken to move forward,

smaller companies don't get credit, they can't hire people. it is a cycle. and do ito break that with safety, but don't do it under astonishing constraint. things thatat some have happened, citibank for shrunk $1.5has trillion. a $500u talk about billion infrastructure program over five or 10 years, that is $100 billion compared to the shrink of just one bank. it is not really that impactful. it is a good idea, not as impactful as one bank. around the world there have been massive shrinks. one reason we have frustrated people as we have basically

shrunk. it is time for that to be over. fiscal stimulus is not big enough to make that happen. it would involve taking on debt as well to basically reform the financial system without introducing much in the way of efficacioust more than just doing fiscal policy. jason: you have been one of the biggest supporters of china in of the program announcing it second-class. china was very much part of this campaign. what you think about president trump on china? stephen: i think he is thinking about china and chinese are thinking about him the way many people in the world are. i think he is basic we in favor of more open markets.

i think there is an evolution that happens in developing worlds. we forget that china is a developing world economy, somewhere around $8,000 per capita, but distributed in a very odd way. the interior of the country has little,ttle -- has very $2000 per year, and the coast has more. there are a variety of rings that they lace in terms of the chinese developing their economy . the u.s. economy has not worked out so well. you now have 60% of americans whose disposable income in real terms is less than it was in 2000. 16 years with 60% of our people being losers. i think the chinese understand

that that the current state of play and that is not sustainable. i think there is a win-win game here. markets can be opened and that is helpful for americans. how you get there is at least as important as where you get. it is a question of not losing people,not embarrassing not putting them in a corner. believe that the understanding of the american system, which is not optimal, has to be addressed in a consensual way. despite bumps in the road, which inevitably there will be, there for be a win-win solution both countries.

jason: steve schwarzman, great to see you. scarlet, back to you. scarlet: jason kelly and stephen schwartzman. gasquet recap of today's market action. we had a jobs report but it did not aspire a lot of conviction in equities. you have the dow down by 21 it's. s&p 500 changed little for the week. the jobs report did not seem to change anyone's mind. joe: no, because the headline was strong but the internals were so-so. what did you miss? it crunch time for italian voters and prime minister renzi with a constitutional referendum vote on tuesday. he is trying to change the constitution to streamline government. joining us on the phone is

former director general of the lorenzo.reasury, there is a view that the referendum will not pass. question?l an open could he win? lorenzo: yes, he could still win. it is a 50-50 probability. opinion polls suggest the no caps on win. i think it will be important, the turnout. if the turnout is not big enough, it might be that the yes camp wins. i think it will be key to see of nonresidents. for the first time, nonresidents

like myself can cast their votes by mail, which is a novelty. i think it is 50-50. scarlet: we understand that you voted yes already. talk to us a little bit about the opposition to matteo renzi. who are they? are they fractured groups that have little common ground aside from the fact they oppose matteo renzi? lorenzo: exactly. the opposition is very much fragmented. the reforms tot go beyond what he is proposing right now and some others want to oppose completely the reform. i think if this proposal fails to get the popular vote, it would be extremely difficult to come up with a different proposal. if you want to talk about constitutional reforms for the next 10 years. joe: the referendum is to streamline the creation of laws.

let's say it does pass. what is on the reform agenda for this government with the new ability to get things past? what is the task ahead? lorenzo: first of all, the next elections are in the spring of 2017 unless there is something very that forces -- very disruptive that forces early elections. i think if the current government of matteo renzi goes to elections and they win the election, they have an outside majority with a majority of seats in the lower house, which would be the only lawmaking house according to the reform, then you might expect a more reformist stance in the next political term. between now and the next election difficult to have any significant fiscal or structural

reform simply because it is election time already. has turnedis vote into a make or break vote on matteo renzi's future in his vision on italy and how the economy can move forward hearing -- forward. . done -- has he not had enough time to deliver? lorenzo: he took office in february of 2014. initially it was a honeymoon. later on, there were european elections and the party got nearly 41% of the votes. people were very excited about the new government and prime minister. after 2.5 years, the economy is recovering with a pace that is strong enough to generate jobs

and provide some kind of good feeling. you start thinking, well, stocks are going particularly well. this is what is happening now. there are people who are disillusioned with the current government and prime minister. i think it is difficult to recover to have a recovering economy when you have heavy headwinds such as problems in the banking sector like we have seen in italy. i think it is difficult to see a strong recovery right now. expectations by voters are pretty high. they have been a little disappointing. on: if italy vote snow sunday, nothing necessarily happens immediately, renzi does not need to step down. it ishe road, you think plausible that a sequence of offense would happen that sees -- sequence of events would happen that sees italy leave the

eurozone? lorenzo: i don't see that, to be honest. this is about a constitutional change. i think there is very little risk of early elections, very little risk of prolonged instability. if this government will not find the proper support in parliament, there will probably be a large coalition. having said that, i do believe there are risks in terms of financial stability. the situation of banks is a little bit fragile. there are a number of banks that need to increase capital over the next weeks and they will probably announce pretty soon whether they will increase capital. of politicalon instability for a few weeks combined with the fragility in the banking sector, i think it

is a delicate mix. i think there are some risks here. joe: lorenzo, thank you very much. the london school of economics visiting professor. appetitethe market's for risk has been the opposite of the surprise of election outcome. ♪

scarlet: are we risk on or risk off? it depends on how you define it. what we have here is a proprietary index created by a hong kong application specialist. he used 18 different indicators, sovereign yields, volatility, liquidity, which creates this

gauge of risk on, risk off sentiment. anything that is green is risk on. there were all kind of predictions that a trump victory would be a recession. instead is what you saw this for risk appetite and it is the highest in a year. and saysyone comes on -- everyone got it totally wrong. scarlet: we are seeing this is different from what we have seen in the past written usually you have emergent market currencies. it is different. joe: i'm looking at a chart sent to us by an old friend and it looks at the bloomberg consumer comfort index broken down by party affiliations. check out the blue line, which is how democrats feel about the

economy. major collapse. independents and republicans taking up. still not a surge in republican sentiment. it is really fascinating to see how one's own view of the one'sy is shaded by ideological affiliation and how quickly it can turn around when your party is not in power. kind of fascinating behavioral things going on. scarlet: this would suggest that independents see donald trump is one of theirs. joe: maybe they are just happy it is over. scarlet: coming up next, an interview with christie lagarde on brexit and how to solve financial inequality. this is bloomberg. ♪

scarlet: imf managing director christine lagarde spoke with john nichols late as part of our enterprising women in industry. she gave her thoughts on france's economy. christine: we certainly view france as a country that needs to continue seriously in depth reforms of its economy. nexter is elected comes may will have to tackle head-on the need for structural reforms, the labor market has begun to reform but it needs to be faster and deeper. product markets have begun to reform a little bit. great, but we need more than that. that economy needs more than that. thiss the benefit of

accommodating monetary policy by the ecb which presumably is going to continue for a while. the price of oil is still low, even at around $50, which is where it will maybe hang for the next two months. 1.05 to the dollar. it is not bad when you are in exporting country and you pay a low price per barrel. the whole scenery, the whole landscape should be favorable to structural reforms and a limited use of fiscal space. fiscal space can only be used appropriately to support the structural reforms. it cannot be an invitation to increase public spending. there is plenty of public spending in france at the moment. it needs to be reorganized.

john: is it moving from hard brexit to soft brexit? christine: it seems to posit we are still looking at a hard brexit. imf is the the , becausety is cleared that is the first factor that is, for the moment, questioning investment decisions. i know there are numbers that indicate there is still investment, movement. when you talk to people, they are concerned about what the outcome will be. in the financial sector, it would help because the banks located on british territory -- that i said british or english? i never know. , whichcludes the islands are independent countries.

those banks on british territory will want to know and shareholders will want to know whether or not there is a passport needed to act. john: the two-year deadline. -- it iseally becoming going to take longer than two years. the prime minister was saying that. christine: most people close to the preparation, on both sides, they are preparing and trying to move along the curve. they are all saying it will take longer than two years. it is going to be something like 60 different eye lateral trade treaties that will have to be negotiated to begin with. then you have to disentangle the systems. scarlet: she also gave her thought on how to lessened inequality around the world. christine: we tend to save because we want less inequality because we are demonstrating

that inequality is not conducive to sustainability of growth. those, more growth, less inequality, or diversification, including women in the economy addresses those three issues. it increases growth significantly, and you know the numbers. you have them as well and many in the room have them. you can increase u.s. gdp by 5%, but you could increase indian gdp by 27%. we have documented evidence of when women participate in the labor market as much as men do, you have a much more diversified economy. the laborg women to market and giving them access to finance, you reduce inequality. scarlet: that was christine

lagarde in an exclusive interview on bloomberg. joe: what you need to gear up for next week. ♪

scarlet: a dizzy weekend coming up. had to theitalians polls. they will vote on constitutional reform. possiblyister renzi staking his political future. the i will be watching austrian election this time.

manufacturing and services comes out at 10:00 a.m. on monday.

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