arrest of a tunisian man it acted -- suspected in involvement on the attack in berlin. described asld was of average height and weight with black hair and brown eyes. prosecutors warned that the suspect could be armed and ofgerous and urged members the public to notify police if they see him. vladimir putin is suggesting moscow does not believe the man who killed pressure's ambassador to turkey after -- acted on his own but he refused to off their theories. killed monday in front of .tunned onlookers russia flew a team of 18 investigators and foreign it administration officials in turkey to take part in the probe. treasury secretary nominee steve nugent is fate -- facing growing pressure from democrats to account for his leadership.

senator sharad brown, the top democrat on the committee sent a letter asked him to detail his views on fair lending laws senator and closure prevenn programs. he was asked to respond to 11 questions by january 6. a new report from the united nations find nearly three quarters of him in trafficking victims are women and girls. -- found thatat children comprise a most one third of all human trafficking victims worldwide. global news 24 hours a day powered by more than twice as hundred journalists and analysts in more than 120 countries. this is bloomberg. ♪ scarlet: live from farm --

bloomberg world headquarters in new york, i am scarlet fu. joe: i am joe weisenthal. scarlet: the dow jones industrial average still within striking district justices of 20,000. joe: the question is what did you miss? the restaurant giant, johnson & johnson are back of the table a week after ending earlier discussions. we will look at the deal and the future of pharmaceuticals or the italian inc. some black hole, not the most systemically important bank, a posh -- a botched rescue could lead to more worrisome financials. plus, investors are realizing despite the government toss his best efforts, china remains vulnerable to a stronger dollar. started with a look at where major indexes stand as we head to the close. abigail doolittle has the

numbers. abigail: not a lot going into the close. three major averages, the dow, nasdaq, all trading ever so slightly lower going to the close where they have been all day. the dow has failed to achieve at least so far. it was like that probably will not happen today. to exemplify how quiet it has been, we take a look at the chart of the s&p. this is 2839. the s&p 500 is having its smallest trading range day today. you see over here this is the year, competing with april 15 and one day back in july, but a very tired day, not to sue rising. we may see a few other days like .oday as for reasons to think this could come to an end, maybe not this year. of, but inlow melt the numeral -- in the new year,

another that we looked at before, this is 4350, the s&p 500 carving out the new record highs, and an orange, the vix is trading near record lows. last seen 2.5 years ago. setting, aus the scene for a possible shock and surprise that could pull back for stocks. another thing to make a note of, suggesting that could be a bit of a move and a russell ahead, we will take a look at the idea chart at a 10 year yield. the u.s. 10 year yield is on pace for its first weekly decline since the election. gained an amazing 70 basis points. a huge move. , the looking at the move other represents the bonds trading higher. we see a shift, and it is sometimes an inflection point.

foundational asset classes could cause ripples for stocks in the new year, scarlet and joe. miss, probablyou will fail for sufficient demand for 5 billion arch capital radix. according to people familiar with the matter. spanish banks may have to give an eu ruling tied to mortgages. portfolio manager of the new burger international equity fund. thank you for joining us. continue to be hobbled by one thing after another. what does the outlook look like for them for 2017? >> we have got a major issue, lingering for some time. other banks, capital rates

earlier before the eu rules came in. that now not allowed and is the problem. not a lot of demand for private investors. standoff andican italians. ultimately, the aid will be need toand banks will be recapitalized. the alternative is calamitous. it will be rocky as it has been for the last couple of months. scarlet: it is looking to ask the parliament to expand public debt. >> yields are low. bit, i thinkittle the eurozone holds together, as it looks like it is doing for now, we have to see how elections look in 2017.

that guaranteed between the banks and ultimate investors. joe: banks played -- called -- caused crises and all kinds of things. will they be to get the clarity on the questions? u.s., the bond market. larger companies can go directly with investors. bond market is far less developed. they meet the banks in the middle. get corporate capex humming again.

scarlet: one thing that is curious is how calm things are. thing, political risk on the rise. you would not know it by looking at your. this is a map of how it performs month after month. we noticed it has been declining at a two-year low even with a political move of the assassination of the russian ambassador in berlin. it is on pace for the biggest drop since 32%. if you go back a couple more years, it goes to the biggest monthly decline ever, down 32%. it tends to be a low month for european stocks. are we able to shrug off these headlines? >> a weak euro and a strong dollar. dollar is challenging

for the u.s. it is incrementally positive for europeans. you have got elections and instability. it is only very regional. the point of the eu is all of the countries coming together. one election in a certain geography does not necessarily or immediately destabilize the entire system in the way the u.s. election clearly has, a trend this -- transnational countrywide in the u.s. it clearly affects france that there is a limit to how much the government can do. clearly, whatever their issues are two france, a limited implication for the rest of the eurozone. companies operating across the continent and the stock market represents the overall european

economy. i do not think the individual events undermine the fundamental factor of a weak euro. joe: we have talked about italy a lot. all year and last year. relatede got a ruling to spanish banks which fell on the news they would have to pay back mortgage payments and customers. how healthy is it in your view? >> relatively unhealthy. of dubiousrtgages value. we have had investment in spain and spanish banks had operations outside of spain as we looked at it. the most cost-efficient way to access the opportunity in latin , underlying fundamentals

and spain, you have got a little bit of an economic recovery, they do not look that good to us. the risk with banks is not as profitable as in other parts of the world, u.k. and the u.s., there are better places to put capital. >> when you look at those problems, it is not comparable to italian banks. it is more like u.s. banks? >> yes. the italian banks have a capital and an asset problem. i think the spanish have raised capital. you get growth, it ultimately will rectify. effectshe major market you were talking about earlier with bond yields having risen, declined only this week, the first week since the election. rising bond yields would he positive. they happen first here in the

u.s. and only secondly in europe. the outlook for banking profits in the eurozone, it is much less compelling. joe: meanwhile, 2.4 5 billion also says theyt have got 1.3 9 billion euros from institutional investors. we will monitor the headlines relating to monitor policy capital ratings swap. thank you for joining us. coming up, we will talk oil prices with michael:, barclays head of commodities research. this is bloomberg. ♪

scarlet: it is time for a look at some of the biggest business stories in the news right now. the ceo of boeing meeting with president-elect trump today in florida appear trump has been vocal about criticism for the fighter jet program to the country passes most expensive west -- weapons system. he has complained about boeing and its deal with air force one. to createo a merger the world's biggest supplier of industrial gases after it lost $2 billion in value back in september when the original conversation -- operations that some , and no last and germany for at least six years. nokia is doing apple patent in u.s. and germany. it says it patented that agreement with apple 2011. apple has declined offers for diff -- additional patents -- patents.

the suit, covering technology, display, user interface, and video coding. if you have not already bought one, scratch the amazon echo off your christmas and am -- list. the devices sold out until january 19. it had been heavily discounted to compete with the new -- newly released google home. the gadgets can predict the weather and even order pizza for you. that is your business update. joe: oil futures have reached their highest in five months. opec and non-opec members continue to be priced in on bloomberg america. what effect asked the adjustments to oil supply inventories will have. >> we think prices are likely to average seven dollars. we think prices are likely to be on average higher in the first then in the second half.

i think what we will see is in the first half of the year, you will see refinery increase, so demand for crude will increase. and crude's supply will remain pretty level. you'll have a bump up in demand and basically level supply will result in a decline in inventory. arguably, there will be places around the world, whether in asia or the u.s. where the inventory draws will be quite severe and will lead to his regional pockets of tightness. at the moment, the opec deal to what is the guide for 2017 if you do not have access to the bloomberg and you cannot monitor the ships coming in and out, you cannot monitor what going to the pipeline, what is the guide to understand whether they are being compliant? user and are a lay tricking a bottle of water out of a plastic cup, you will not see much of a change for your

bottle of water. as a retail user of gasoline, your tank at the pump, you will see a retail price bump. not only because of what is going on for gasoline, but we are going to face a colder winter the normal compared to last year. heating oil, fuel oil, all of that will show up. all of the increases we are talking about, that will also in disposable income, where that disposable income ends up because your prices will be higher. >> saudi arabia is considering increasing retail prices in 2017 for a second year in a row. what happens when you hear the news? a part of that broader story and the reason they came back to the table. they believe that price-sensitive supply was going to adjust much more quickly.

after two years, they finally said, it did not adjust as quickly as we thought. we have a problem in yemen and all over the middle east. want tosomething we implement. concerns about social unrest. they already took measures last year to increase retail, decrease fuel subsidies. this is another step along the path of reducing the burden of pay for thist to social contract they have with the people. accomplishnough to what they want? and is it enough to trigger more shale production? >> these are important questions. for saudi arabia, i think they believe mid 50 and something more certain is something they are more comfortable with then prices fluctuating between the mid-30's in the high 40's. from their perspective, it does help.

they have a lot of different measures at there's -- there's -- their disposal. not have it.do on the other side, it is a big risk that they face. prices do move-in to the high 50's and the loaf 60's, as we project, that could lead to a much more robust u.s. shale response than what opec is bargaining for. that is the risk. doing this, they are eventually cutting off their market share retention, or their ability to retain long-term. this was the credit survey. worries about populism is the biggest concern for those investors. for the commodities, what is the biggest concern for next year? >> couple of things. china is obviously front and center. the other risk is issues demand generally. as macroeconomic concerns related to china have a domino

effect on the rest of the world and then effect on trade, the protectionist policies of a trumpet ministration could conceivably lead to less demand for fuel and trade and have long-term implications for global economic macro growth. the demand side is one of the biggest concerns we have. other concerns for the oil market briefly is the fact you have some supplier right now in the neutral zone. a half-million barrels per day of oil that is off-line and could come back. we do not think it is sustainable but that is a risk until we get an influx of half a million to 800,000 barrels a day of supply. it completely negates all of this opec rhetoric we are seeing from those countries. michael: head of

commodities research. up next, investors in u.s. high-yield debt saw the luck turn this year. this is bloomberg. ♪

scarlet: breaking news. ceos met with donald trump in florida. dennis spoke to the media as he left. >> we are committed to working together to make sure this happens. give the president elect my personal commitment. it is a business that is important to us. >> he was referencing the air force one program, saying they can do the next leg for less than $4 billion. in the meantime, what did you miss? the misery index.

the jobless rate, basically the higher the bar is, the more miserable people are probably feeling. brazil, italy, the least , germany, south korea and canada. those commodity economy -- economies. joe: isn't it funny the fed wants to get inflation higher so technically, they would be making people more miserable? it is already very low. i love that chart. brazil, that really demonstrates it perfectly. scarlet: it is a rate of change. things have gotten better.

joe: also very bad though. junk bondng at the index. the chart shows the yearly return for high-yield debt returns. in 2016, high-yield debt is up over 16 points, or 6%. if you remember a year ago at this time, last november and december, the story was about how the high-yield energy companies were in a total tailspin. remember all the segments we did about liquidity of the high-yield bonds. that was the story everyone was talking about last year. totalmed it would be a disaster with ripple effects, but then it went away and we had some volatility but it did not really continue. those assets did a lot better this year and we ended up doing better. returns if you bought during the turmoil.

worries thise the december will be nothing by next december. the market close is next. take a look at major indexes with less than four minutes to go. little change on the dow, s&p, and nasdaq. this is bloomberg. ♪

in >> we are moments away from

the closing bell. what'd you miss? rally is one of the top four in the developed market this year. i'm scarlet fu. joe: and i'm joe weisenthal. i want to welcome our viewers turning in live on twitter. scarlett: we begin with our market minute. day. in a ho-hum trading off 27% from the 20 day average as the s&p loses 5.5 points. joe: another day of waiting. scarlet: you have eight out of 11 sectors in the red. energy is the best performer that it only gained 3/10 of 1%.

there is not a lot of conviction . real estate investment, those were the biggest decliners. some of the bond proxy still getting hit. dax -- vix.at the that is the longest stretch of declines. you have to take it back to july of 2014 to find a lower level. joe: let's take a look at government bonds. a fairly quiet day. global markets, yields backing down, significant decline at the long end. paying closeto be

attention. scarlet: absolutely. especially with divergence. the dollar drifted lower today following -- falling for the first time, a five day chart of the dollar. liquidity is then. -- the yen. most of the focus was on the swedish krona, a big winner against the dollar in major currencies. if you look at the swedish krona, the strongest and more than two months. policy members extended qe and indicated there is lots of opposition. the economy is holding up. joe: on the economy front some interesting moves. over 1% on hope that exports are going to rise after analyst report. natural gas having a huge day

after a acre than expected drawdown. that is up nearly 10%. those are today's market minutes. joe: what'd you miss? there are signs of market euphoria on the horizon. citigroup has been climbing recently amid better-than-expected economic data. what does this mean as donald trump prepares to take office? at global chief strategist whiting, thank you. is this euphoria? it feels like people are getting so excited. people have talked about how the vix is plunging. the economy is doing well. stock market is doing well.

all of the strategist who thought follow would be negative have bullish outlooks for the year. >> it is great expectations. you can look at the tips market. inflation expectations and real growth expectations rise. to getpends on having the good stuff without the bad stuff. i would be cautious on that particular front. like we saw the requisite there was a fear of doomsday. that wasn't behold story. three months later you so you had to accept things that markets didn't like along with that change. scarlet: the pound has been weak in the has pushed up the volatility. >> the mexican peso it is clear if we have large tax gods, tax

gods in the republican plan, that make george w. bush look timid, these are big tax cuts. things that do boost economic growth. it does require more borrowing. you can't say it will be entirely paid for. taking >> tasks money away -- tax money away is what boosts the outcome. grow.s. usually is able to and get that money from the rest of the world. things,f the striking the degree to which there -- they are premised on donald trump being able to deliver on changes. of policy stimulus, taxes, deregulation. what are the risks of that? what if the republican congress does try to block some of the policies that would expand the deficit?

what happens to markets? think about infrastructure spending. something that will be cumulative, that will be there .nd grow year after year the tax cut's are very large and discrete. but they may not get done until late in 2017, at earliest implemented by the third quarter of the year. there is certainly some risk that if republicans in congress try to be too ambitious, with too many reform items all at once that may inhibit the things markets are confident in right now. the argument that it is similar to people anticipating quantitative easing. given all of that in the movements we are saying ahead of what can we learn from how

the market digested qe2 what will likely happen with fiscal easing? >> when markets are bullish and they have watched policy easing time and time again, you get expectations that account for the bulk of the immediate impact. if you think of the federal bank, there have been less convinced investors, after years of seeing how markets would behave, the expectation of fiscal easing is priced in very quickly. 3% growth in gdp. lots of reasons. since the middle of this year, the american economic outlook was showing more signs of

sustainability and growth anyway. payment.ad a nice down if the implement large tax cut's, deregulation and a robust , there for business would be opportunity to test that over the coming year when things may not go that smoothly. things, of the striking how hard it is to predict the future, and the things we talk about we think are going to matter, we were talking about the high-yield collapse. china was thought to be a huge risk in the beginning of the year. that may notthings be on most people's radar that perhaps should be? >> in the current context we have these expectations.

now you have had the federal reserve do what it did last december. investors feel really comfortable with it. even though three tightening's can shake loose fruit off of the trees. there are some potentially vulnerable borrowers in emerging markets. italy,erendum in tapering by the ecb. these have come and gone. whenan find the next year the expectations are for lower tax rates, if you look at the u.s. stock market, there may be no selling because of the anticipation if you were to sell next year you would have a low tax rate. we have had the same fit but a different reaction. i don't think it is as bad as it was last year with the portfolios, the energy sector collapsing. even china, i don't think it has

had the same level of risk. bring upi'm glad we oil. oil has been rising. the opec agreement helping to put a floor under those prices. what does that mean for inflation? you are looking at 4%. >> if you had zero and your trend is 2, and you anniversary that, it is familiar oil prices. just about half the 2014 level. before going to come there is any actual stimulus. expectations have to keep is rolling along. joe: all right. stick around. we will be talking about the increased political risk of the global economy. scarlet: we have breaking news from micron. they have adjusted earnings. it is a nickel better than what analysts were looking for. net sales missing estimates, 3.2

$2 billion. analysts were looking for $4 billion. the stock is moving better. 5% in after-hours trading. the outlook for second-quarter adjusted revenue does seem to be better than the consensus estimate. $4.3 billion. from new york, this is bloomberg. ♪

scarlet: we have some breaking news from the wall street journal. a special adviser to president elect donald trump on regulation, he will advise on of the next head of the securities and exchange

commission. carl icahn is being named as special advisor to donald trump on regulation. if nothing, carl icahn has been very vocal about what regulations he think the government should get rid of. aboute has been talking this. he was a big donald trump supporter for a while. he made a bunch of money trading on the markets the night donald trump one -- won. scarlet: he definitely has skin in the game. he is being named especially advisor to donald trump on regulation. he will advise on the selection of the next sec head. steven wieting, the global chief strategist is still with us to talk about his risk outlook for the global economy. i want to bring up this chart from mike mcdonough h. of recession are holding steady and falling

across g7. the u.k. is the blue line. the data has been better than economists have been anticipating. that is the red line. the u.s. has helped study 20%. these are all recession forecasts. >> take a look at those when you are about to approach a recession but not yet in them. they tend to stay quite low. >> you don't have any warning? >> there are usually some recklessness preview build something up. there is something to recess. we can become more optimistic about the u.s. this year. six out of seven years we saw wage growth.r

-- labor force growth. it didn't require us to dig deeper into our existing resources to grow as we have. if backing continue, and there is a good chance that it can, we can come back from what has been the forest productivity growth rate we've seen in 35 years. then putting fiscal stimulus late and economic recovery is an experiment i think that can work. joe: this is one of the longest u.s. expansions on record. could this go on another 2-34 years? >> they have to be matched by supply. bustu end up with a boom policy you get that later on. you can change the contours. a mild recession not so far out in turn into a deeper recession after a couple of years. scarlet: i want to ask about the

productivity. we can't figure out why we can't get it going. very weak.een we don't have a lot of history on there. this recovery has been profit strong, decent on headcount. we have seen periods in the past where it seem at there was a lot of innovation but it wasn't getting measured in the economy. maybe on the custom -- custom again where some things let us make more with less. it may not help with employment growth. but it could mean we get a faster speed limit for the american economy. joe: in the press conference , back in, janet yellen october she gave this speech about proposing more research to be done on a high-pressure economy. foring the economy run hot

a while. reversing some history we've seen since the financial crisis. conference,t press either way you think there are merits to this? the economy were to run hot that would cause new investment and snap us back out of this productivity? >> this is to be seen. , it looked to do several things. the corporate tax rates. make adjustments of who wins and loses. repatriate foreign or earnings. -- there is such a long list of things. mountains of financial assets move the economy a few inches. there's going to be a lot.

it may be three percentage points to get growth out of the economy. scarlet: so it is a volume of the policies that are being proposed. what about in europe. what is the likelihood of productivity moving to a point where it is going to effect gdp in a positive direction? there are certain things. e-commerce, seven years ago it was the same size as department stores. now it is three times the size. things that shed labor demand, you don't look at that as being good. level ofsome activity, you can use those resources elsewhere. it is possible some

technological breakthroughs that joe:oost economic growth can be transplanted. speaking of europe, more election. france is the big one. the lessons of 2016, markets don't care about elections people get hyped up about. is that a lesson to take into this or are there still risks? upsidee are plenty of for still depressed europe with support from the central bank if they let -- run this gauntlet. can you say that cooperating in europe doesn't matter when you have a common currency in euro debt? i think you could overrate the risks that are easy. get some level

of concern heading into the next several elections into the spring. thank you a much. scarlet: bed bath & beyond coming up with results. period.opped for the profits missed estimates as well. the consensus estimate was $.98. , thegiving its outlook earnings estimate is at the low end of its forecast. joe: you see the stock getting slammed. the anxiety gripping the bond market showing no signs of spreading to equity. this is bloomberg. ♪

. the cfo is going to accept a position at another company. red hat off by 13%. their quarter revenue missed analyst estimates as well. revenuefourth quarter of 614 to $622 million missing the consensus. joe: down 13%. this is up tenfold since the financial crisis. it has done extremely well.

you can see the revenue coming in shy of expectations scarlet:. third quarter billings growth as well, 9.5% increase. missing on that measure as well. joe: what'd you miss? gold holdings have dropped. you can find all of the following charts at the bottom of the screen. look at this chart of outflows. different etf's, the last day there were inflows into gold was november 9. still saying he would cause nervousness. of stuff in gold. personally. we should go along. all these writers is were saying to go along because of donald. everything the strategists have said has been incorrect.

we see massive outflows. every single day since the election there have been outflows in gold. etf holdings. a similar story with a sellout and treasuries. anything deemed to be a safe haven has done pretty bad since the election. it is negative yielding. you have to pay for storage. it is a hassle. if you are selling stuff that has low yield you don't want to have stuff that has negative yield. scarlet: you linked it with donald trump liking gold. i applaud that. something we have been talking about for a while, the china's bond market. is it spilling over into equities in a big way? the blue line is the 10 year yield on china. you can see it is by. thewhite line here is volatility on the china etf which is listed.

you have seen that hold steady. what is going on? chinese policymakers are trying theap down the leverage in chinese market. that means higher yield as a result. equities shrugging it off completely. so much talk about the degree to which the government tries to regulate and control these markets. you wonder the bond side, cooling that real estate. an official statement from the donald trump campaign. carl icahn will be a special .dvisor on regulation donald trump says he was with me from the beginning and has been one of the world's great businessman. that is something i truly appreciate it. rewarded foring being one of the early backers of donald trump. this is bloomberg. ♪ ways wins.

especially in my business. with slow internet from the phone company, you can't keep up. you're stuck, watching spinning wheels and progress bars until someone else scoops your story. switch to comcast business. with high-speed internet up to 10 gigabits per second. you wouldn't pick a slow race car. then why settle for slow internet? comcast business. built for speed. built for business.

>> let's get to first word news. the boeing ceo told president-elect donald trump that his company can build a new version of air force one for less than $4 billion. donald trump criticize the cost of the plane. >> we are going to get it done and we are committed to working together to make sure that happens. i was able to give him my personal commitment. this is a business that is important to us. ceo,ckheed martin criticized by donald trump, will meet with him today as well according to aides. donald trumpct

came outside of his estate to speak with reporters. that's an attack on humanity. that is what it is. it has to be stopped. comment about terrorism and his idea of a muslim registry have been proven right. he said he has not spoken to president obama about the attack a in berlin. --er navarro has been chosen he was an economic advisor for donald trump during campaign. a trade to create council and set of the white house oversee industry policy. and a spokesman were vladimir putin is suggesting moscow doesn't believe the man who killed the russian ambassador to turkey acted on his own but he refused offer series -- theories behind the assassination. he was killed in front of stunned onlookers.

global news 24 hours a day powered by 2600 journalists and analysts. on courtney collins. this is bloomberg. scarlet: president-elect donald trump announcing carl icahn will be helping him as a special advisor on issues relating to regulatory reform. president elect donald trump announcing that carl icahn will be serving as a special advisor. no nomination process is needed. he is a noted investor and has lots of money at stake in industries including energy that are currently under regulation and has made it widely known. joe: it will be interesting to see how that is dealt with. potential conflict of interest. scarlet: red hat shares are plunging in extended trading as revenue outlook missing analyst estimates.

the cfo is leaving the company. he has accepted a ceo position when i look at. who shamed her is -- shander is, i'm looking at the function here they will haveg, a temporary cfo in the meantime. joe: shares of bed bath & beyond falling after the company came out with net sales below the lowest end of the range. well below estimates and below the range, the lowest was 2.9 7 billion. q3 eps, $.13 below estimates. pretty ugly all around. shares are down. 7% int: and micron rising extended forecasts. outstripurning to

supply. you can see micron up in extended trading. joe: for much of the year stephen roach has said the u.s. economy is in a balance sheet recession. the pattern has not allow the recovered to recover fully. youbloomberg surveillance is asked of the american consumer is still struggling. >> it was a balance sheet recession occurred in 2008 and 2009. it left and horrific hole. they are digging out. savings rate is still low. it is higher than it was. there is still more work to do.

>> will donald trump make the american middle class great again? >> he would certainly like to but it is going to take more than a politician to transform the rough dynamics that are bearing down. the president-elect is focusing to his credit on jobs. get jobs growing, it's going to take more than a phone call and a threat to bring workers back from offshore. we have had fundamental problems bearing down on manufacturing sector and other sources of job creation for a long time. ford administration that wants to be muscular using trade policy to bring jobs back home, that could back fire. our budget deficits are going to get larger and our trade

deficits are likely to get bigger. that is a big disconnect that could have significant implications for the u.s.. policiest a since the are progressive, progressive, what is the mixed? >> income distribution is not an act of consideration by the incoming trumpet ministration. that was characterized as one of the flaws in the obama administration. going back to classic trickle down economics with tax cut's skewed to those who they perceive to be at the heart of job creation. >> what is your experience on trickle down? >> the drips were slower than we

thought. it trickle but not nearly enough to make a difference to the median worker whose real wages didn't grow at all. >> i want to talk about china as a domestic issue. you've got a great quote, a bilateral fixed to a multilateral problem. president-elect, the dealmaker, he loves to do deals. we can agree on that. a deal maker doesn't do multilateral, do they? does it oneer transition at a time and doesn't have a big appreciation to the big picture. the big picture is hurting the united states. -- you haveng in a been the most critical economist of the concept of hard

landing. from 7% to a 10% in a five-year moving average, that is not a hard landing, is it? >> this is a conscious effort to toalance away hypergrowth more moderate growth and can services -- and services lead consumption. if they are successful growth will slow further. it will be more sustainable, more balanced and set them up for a stronger economy in the decades ahead. >> what is the glue crew? >> they're looking at china through the western lens. japan -- ais, all of la japan. they have a lot of savings. double the savings rate that

japan has. they all the debt to themselves. they need to progress ahead. spence, china is a continent. the massive scale they are, what is the partition of pacific rim china from the rest of china? is it coalescing together or is it ever apart? seeing a lotbeen of economic growth and development concentrated in eastern coastal china. gigantic city is. it's a metropolitan city. >> twice the size of new york. >> exactly.

and they are taking advantage of cheaper labor and greater connectivity. having just suffered whiplash coming down the drive to see you this morning. does the next generation of politicians see the same china as the current generation of politicians? >> in china or in -- >> in china. next year is going to be a political moment for the chinese. like the next generation is the current generation. xi jinping is not going anywhere. they are tightly aligned with his thinking on the rebalancing toward the services.

>> i think he needs to get a deeper more personal appreciation of the challenges. i would welcome the chance to have the president-elect make a trip to china and see what is going on elsewhere. scarlet: that wasd stephen roach. next up we will tell you why the deal is a major piece of a bigger m&a puzzle. this is bloomberg. ♪

miss? rite aidou stock got a huge pop rowling the most in a year. that was after the pharmacy chain was in the process of

being acquired by walgreens agreed to sell drugstores to fred's for $950 million. let's dig into why. physical stores are at the center of antitrust concerns. extent of store overlap between the pair in states from california to new york, to michigan to ohio. the plan to sell stories is to help ease those concerns. it is still subject to f c c -- sec approval. you can see here how rite aid has decreased its store count over the years since 2008. as for the original walgreens, both sides agreed to as many as 1000 storage the vesture jurors. -- divested.

yeareens bid follows a -- comparable sales, the orange line has fallen to .5% on the back of a 3% decline in pharmacy sales. prescription sales also declined as well. the rapid consolidation of the health care industry from drugmakers to managed-care companies is driving a race to achieve scale and the supply chain. when completed the deal would be the biggest in its space. we will be looking for details on how that is pending when friday releases earnings. joe: what you mess? johnson & johnson and exclusive talk for a transaction. it appears to sideline a rival

suitor. joining us, jeff mccracken. thank you. this is a surprise. there were talks that they would be together. and they collapsed very thin they are back. they want it back. the reality is a week or so ago, they asked them to bump their offer which was around 216. but they couldn't come to an agreement. i think j&j thought it was a fair offer. they were getting the exclusivity they were hoping for. we reported they had hired a bank. they had let them know of their interests. they talked for 4.5 days. it is a contingent value that you earn over time if the drugs hit certain goals. it was complicated to be honest. most shareholders prefer the offer they knew j&j was willing,

to 60 or more a share. backlet j&j no if you come and bump your offer we will make this exclusive. >> what do they have exclusively that is so appealing to j&j? >> they have a drug for hypertension that for j&j get them into a new area, a disease area they are not in. they have perspective offshore cash. a lot of money is sitting there that they would like to spend before repatriation comes along next year. those are two of the things going on for the j&j perspective. they are not going to risk themselves. they are one of the highest credit ratings that exist. this is a deal that makes a lot of sense for them. scarlet: nothing to do with tax and version. >> no. run hasthe inversion

probably gone. i don't think you're going to have the issue. rates, to see lower tax repatriation. a lot of interesting impact. you might not see as many countries going into europe. they use that money often to go after targets in europe. not to change their tax basis but to use the money sitting over there. >> you see bankers overseas trying to get deals done before that theoretical sorts of demand for companies goes away? >> i do think you're going to see that. i think we are one see more u.s. companies take the money they will repatriate an increase for their executives, buy back shares. i think they will spend that money here on m&a. joe: what do santa fe do?

were in talks that were exclusive, pfizer came along and beat them badly and then they actelion. scarlet and i were talking earlier, there is a company called regeron. that may make sense for them. scarlet: how urgent is the need for it them to acquire these specialty drugs? quite santa fe has a lot of drugs where generics will come in or others have come in and taken some market share. they are going up to do a big deal. wouldere hoping actelion be it. i would not be surprised if we are here talking about some deal sanofi is trying to do.

howlet: coming up, obamacare and donald trump's threat to repeal it has affected the health care industry and what we can look ahead to in 2017. this is bloomberg. ♪

intelligencemberg recently released his 2017 global health care outlook. every day we are taking a look at what you cannot miss in different sectors in 2017. joining us now is jason, let's start with obama care. if donald does rip he'll parts of obamacare there are going to be winners and losers. we presume insurance will be one of the winners?

they have dropped out of the exchanges. >> it is a good assumption. -- he near term it is a handful of them, they are still in the exchanges for 2017. it could be welcome news. losee longer term they do potential revenue and earnings. for hospitals they lose insurance coverage and earnings potential. for them it is a negative. joe: every republican basically wants to repeal obamacare but there is a lot of disagreement about how that is done, if you rip it out right away you create disruptions. how much of a fight is there going to be about the exact steps to repealing obamacare, and which side will the hospitals and health care companies -- they have different visions for how to do it.

tine was talking about medicaid at the state levels being complex because each governor might have their own agenda. you can first see this as being very complex. 2018 you have elections people have to run again. do you want to do this all in 2017 and 2018 or do you want to extend it a little bit beyond the election and take longer so maybe investors should be as concerned in the near term. could be status quo for a number of years potentially before anything is done. our investors getting ahead of themselves by trying to -- we have some breaking news right now. of -- trump is coming out he had been meeting with a number of military generals. meeting with folks already because he is on holiday in florida. he held a national security

meeting. he spoke with the ceos of lockheed martin and boeing as well. joe: we got that commentary you can seean, decorated military officials coming out of palm beach. we expect donald trump to say something to the press. scarlet: perhaps. it is unclear. he improvises as he goes along. >> primarily the f-35. we're trying to get the cost down. it is very expensive. [inaudible question] >> we are going to see. it is a little bit of a dance. we are going to get the cost down and we're going to get it done. these are great people. amazing people. i'm very impressed with them. good negotiators.

>> and your conversation with boeing? >> we have the chairman of boeing, the ceo. we are looking to cut tremendous amount of money. thank you everybody. are you comfortable? not bad, right? general. thank you. scarlet: donald trump after meeting with his advisers, attendees at this pentagon said he is trying to get f-35 costs down. he said the military officials are amazing. let's go back to our guests now. , you were talking about health care and medicare. >> regardless of what happens with obamacare, costs continue to rise. some of these providers of outpatient centers have a real opportunity because hospitals, the costs are very high.

for some ofwth these providers looking more like 15%. that is an area we think is underappreciated by investors. about medical devise makers? how have they fared? what are the risks? theym sure you have heard have made a lot of noise about the devise tax. they have fought it the hardest of anybody. this year in 2017 they don't have that. they will tell you they have not gotten a major boost. i think that they have. there may be a bit of a mixed but they are hoping republicans will repeal that tax, they will have more money for innovation and jobs. on the whole it may be a positive for them. longer-term, maybe fewer patients have coverage. what about drug pricing? donald trump as indicated prices are too high.

previously we thought it would be hillary clinton who would be pressing down on this. it is going to be an issue with donald trump. >> you have a number of players involved that are going to lobby pretty heavily against that the government is going to push to keep costs down. scarlet: all right, jason gorman. you can read his research. joe: that is all for what'd you miss? economic data coming out tomorrow, including gdp. this is bloomberg. ♪

courtney: you are watching bloomberg technology. let's start with a check of your first word news. authorities are offering

a reward of $100,000 for the the suspect. he should be considered armed and dangerous and he has used various aliases. germany says it rejected an asylum request for him in july. the president-elect declared a aadly truck assault was attack on humanity. peter navarro has been chosen to lead the national trade council for the incoming administration. navarro was an economic adviser to mr. trump during the campaign . carl icahn will be special advisor to trump on issues related to regulatory reform. and will play a role in the selection of the next head of the sec. aleppo, evacuations have resumed. a dispute had delayed the final round