also charged the businessman whose company allegedly from the regular contact. two were also named. aircraft carrier into the contested waters pure challenge trump.ident elect donald leaving phil of japan and taiwan. these resident -- trump. rhetoric since the election has raised concerns in beijing. united airlines reached a settlement over working conditions at the international airport. installas agreed to conveyor belts so they do not .ave to manually list and lower global news 24 hours a day powered by more than 2600 and analysts in more than 120

countries. this is bloomberg. julie: i'm julie hyman. oliver: we are 30 mins away from the u.s. ande: a quiet trade day that's following the holiday read -- holiday weekend. oliver: the question is what did you miss? upmajor averages giving earlier gains in the dow has been flirting with 20,000. tech stocks like apple and amazon listing the nasdaq to another record.

brian moynihan after simply years of consolidation. there is more to come. -- gloomy before donald trump one and out the market is up. we will examine that claim. let's take a look at where the major averages stand. -- abigail doolittle is standing by. abigail: we have stocks rising. the dow 20,000 -- the dow is .bout 50 points quiet tire trading. we have met -- record highs both on intraday basis, the all-time high, on pace for a record

close. the s&p 500 had been there earlier. the s&p 500 is not on pace or a record. bloomberg commodity index is up 1.5%, having its best day this month. since thenning streak end of august. one point it million barrels per day starting this sunday. we, and itengthened looks like there are demand tailwinds there. recently it has been interesting. we take a look at gold on the year. the most recent trading action has been more bearish. surprising, asre gold's best year since 2011.

it is more a reflection of bear peak. out of the nominal 5218, aa look at five-year chart see the down trend and we have the within a channel. it is now tipping below the we-point and on the bottom, have a momentum indicator many have used. it is creeping above 30 right now. it perhaps signals a strength. joe: shares of bank of america of more than 30% since the trump victory.

brian moynihan sat down with david westin for an exclusive interview. they discuss consolidation and future growth prospects. >> when i interviewed for the job of being ceo in the latter part of 2009, i had a list of all the things that did not sit with the core franchise. it came through a lot of the enterprises required. we needed to deal with it over time. the riskis if we took out of those as mrs. come you could tighten the company down to we went from 2.7 train dollars in at that's to about 2.2 now. we went from credit card operations in five or six countries, to completing the next two or three quarters, down

one country. basic principle that the basic business model was all of the operating in the united states, global beings, you will have to be around -- around the world. when you flip to the other side, it is illegal for us to buy -- it has nothing to do with or whatever the bill was. more than 10%, you're not allowed to buy. it makes my life pretty easy. it has to be organic and that is why we are opening places like in minneapolis. branches in other cities over the next few years, rounding out the markets -- it is why we build new branches in places where it was not a strong.

philadelphia. it is all organic. private bankers, more commercial bankers. and more branches. if one of technology. we cannot buy anything. think about a company which has around for 200 plus years. i cannot do it. think every day how we can make the company better and it is a huge company and the burden is not small but it is an interesting place to be. an easy question to answer. joe: that was the bank of america ceo and chairman brian and -- brian moynihan. >> in out some financials stocks. a lot of interesting things going on with the sector. i will look at what is happening on the earnings space.

a lot of extra patience for earnings. for financials, maybe not quite as much. looking at the blueline, the financials actor current price to earnings in the white line is what is affected interests of the bloomberg months. earnings are on the bottom there. we shift over to next year paths earnings. financial indexes more than about 1/5 of the s&p, but the story here is they rally quite a bit. are -- quite a bit here. you will see the multiple in the .op part come down it may not be quite as fanatical. >> how much of this is just

about more economic activity. analysts, do we know why we backed to have these earnings? curve, it has in translated forward. >> if you look on the bloomberg, as a group, they are up 18%. interesting how many are up. it is the s&p. exchanges, the nasdaq is on the list. then you have the financial reasons. of the sachs is on their

regional banks have done the best. he look at the earnings estimates and you have the financial specific stuff like and deregulation and you have a strategists are doing, looking at the whole s&p these based on corporate tax cuts broadly. that on top of these as well. >> i guess we will be in a deregulated area. joe: their business models are fundamentally different. it shows as you are saying, tax of whyg a pivotal part people are optimistic and why multiples have gone higher. how much is riding on the line of these civic tax cuts?

we do not know much about what will be in them yet. -- if tomf one of the lee is feeling positive. this is bloomberg. ♪

discuss the equity market is 2017 outlook. >> $7 trillion in the last decade. took $2 trillion out of stocks. they not only save money, but liquidated equities. the next 10 years, is reverting.

another seven joined dollars. do they put four train dollars into the stock market? joe: could there be a demographic a reason why they have to reduce risk over time? the u.s. population getting older for a while. >> you can do it on financial markets. billionr, there was 1.5 new bonds issued in the u.s. across all fixed income classes. the number will shrink. let's say is 1.1 trillion because deficits are shrinking and agencies are shrinking. coupons paid on existing bonds will be like $1.4 trillion. if people keep buying an hour kidding bonds, it just rates will go to zero in the u.s. even

with inflation. this is a mechanical restriction. lot cheaper. it is a huge dividend, bigger than the cost of debt. it is easy to see how the money gets into at the to generate income. >> one thing over the past month since the election it has them the crop up in the marketplace. stocks are moving in opposite directions. when you think about whether or not that brings people into markets, i feel one could make the argument in different directions, maybe some money comes into stocks. his dispersion and flow related at all? >> they should be related. depends on the experience level of a manager.

it challenge i see with clients and healthof china care consumer, every pullback they're are trying to buy 2015 greatest hits. guestsre you have talking about wanting to buy health care, it is led by 4000 basis points in the last five years. it is one of the biggest since 1920, it is not going to keep outperforming. electionve seen post shifts. financials have been on a terror. can you expect some of the shifts to last for a while? >> i think you can almost count on it.

we are really trying. i think next year, it is a lot more about, very zip code specific next year. reverting. is let's say the value growth is time zone. and states are more like sectors. i think it is about four next year. these groups are big sine waves. thepeaking of the bottom of perhaps there is an adverse headwind this year, do you buy on that? four or five years,

, i'm sure there will be a time where one of byse will be preceded someone warming you -- morning you it will happen. it will come. simon -- >> timeout for a look at the biggest business stories in the news right now are forced out of the country's finance minister, on the job for just a year. they have had disagreements over economic policy. hackers may more than $4 million after hacking the servers of top law firms. some transactions involved chipmaker intel and a business service company.

initial excitement surrounding the mobile release of super mario run may be short-lived. less two weeks after it launched on apple devices, it is no longer the highest in any -- in any country. it is down from 138 on december 17. those who want to move past the first three levels have to pay a $10 feet. amazon is calling it the best ever. -- than one billion items record sales force because, let's voice recognition. that is your bloomberg business flash update. julie: we will look at charts showing how bonds have changed since the election to we will walk you through it. this is bloomberg. ♪

♪ julie: what did you miss? those betting on the stocks they think will benefit the most from a trump victory may have done better to just bet on small test -- small caps entirely. stanley -- those benefiting the most through tax cuts, here is how they have done since the election. we have seen a rally of about 11%. a rally in 2000 has been larger, 16% here. comprised of small-cap stocks which are seen as an accident

because they are domestically from various fiscal stimulus policies, for his coming they are going to be enacted. an interesting comparison. past performance is not a guarantee of a future performance. joe: interesting it is not above where it was from the election. another area that has done poorly since the election is the emerging market bond etf. this is a look at inflows from the emb etf go here. a lot of deep red bars after november 8. that is a double whammy for investors. anything bond related is not in favor with higher rates we are

seeing. fixed income is out and emerging markets are out, the flipside of what julie was saying. anything other than that is not doing so good. if you are in a double combination emerging market inbox, everyone is rushing to the exit. will combine the two. what is interesting, getting long riskier assets. people do that within the u.s. and then they do not do it in terms of region. no one is putting money into emerging market stocks. i want to talk about bonds to treasuries. looking at a couple of bad months with november in particular a real bad month. the bars dropping down a 3%. not a great situation. months, the treasury is losing money. 2009, the worst since

they are taking some money and running into the stock. it is interesting that even though we had a selloff that is the worst since 2009, it has not shaken up broader markets much. classy would think with so much pain, it would raise multiples coming down. it is about quarterly inflation. as of now, not having a reverberation with u.s. equities. believe julie has the story out on bloomberg today talking about the crowded trades we have seen since the election. have sameoke to ideas. >> it is very at the focus. bonds,ersification, emerging markets, it has not done well. look and no one is really

talking about how much financials would rally. everyone is saying maybe it is more financial companies. never really a great thing. >> it usually does not turn out so well. the market close is coming up. less the four minutes from the close with the nasdaq on track for a close in today'session. this is bloomberg. ♪

♪ >> we're just moments away from

the closing bell. stocks edging higher on this quiet trading day. major averages giving up further -- earlier gains. the index coming within 20 points of that mark today. crude climbing for a seventh straight day. the bloomberg commodity index calving -- having its best gains in nearly a month. i'm julie hyman. joe: we welcome our viewers who are tuning in life. we begin with our market minute. are watching stocks today, the dow getting a little closer to 20,000, the nasdaq closing at a record. just keep moving closer and closer but were never going to get there. were taking a half step closer. i want to look at what is happening with a few sectors.

if you look throughout the s&p 500, there's early strength and energy. tech is doing pretty well on the back of a few companies that performed, and some gains in the big weighted stocks as well. the consumer confidence numbers came out this morning. bit ofals, little weakness but overall the sector was pretty good. let's look at volatility, even though the fix is dreadfully low, it picked up a little bit -- even though the vix is low. let's jump in my terminal and check out sector volume. it highlights the only places where the market was trading at a higher volume, those are the green spaces. , of -- butr here

ultimately a lot of red and that means everything was very slow. joe: let's look at the government bond market, not a ton of action. kind of the same theme we've been seeing for a while, not a dramatic move but the upward pressure continues. and on the commodities front, the big mover today was think, down 2% -- the big mover is zinc . probably more china than the u.s., down 2%. gold little changed, and nymex crude getting a nice long, close to $54 a barrel. julie: looking at currencies as well during the session, the dollar gaining a little strength versus the japanese yen. the euro unchanged versus the

dollar and the pound falling back just a little bit. we've been talking about return since the election. these are all the currencies versus the dollar since the election. the japanese yen, the australian and the new zealand dollar. the south korean won is also on the list but it is remarkable how widespread it's been, with the strength of the dollar. the pound the best-performing after getting clobbered earlier in the year. currencies.tay on a local strategist joins us now from london to share his top traits to kick off 2017. the first question has to be the dollar, it seems like everybody is a live shot it.

you rarely hear a negative take on it. what does the future have in store for the dollar? icarus, the great got -- the greek guy who made himself a set of wings and flew to close to the sun. sometime in 2017, probably after the french elections in may and before the middle of the year, the wax is going to start to melt. it's going to get back down to 120 in parity against the euro. unless you can find a way to generate gdp growth with three or four rate hikes next year. now the market right yesterday convinced the rate hikes are going to happen. his is a situation where the rate hike are too high for the dollar and were going to see some kind of shift happen that will drive it fundamentally lower?

dollar keeps going up at some point it's going to stop. increases coming out of the united states and some inflation, you get a stronger dollar and it takes a while for the fiscal easing to feedthrough. u.s. real growth is going to be to point something next year. if we don't get a lot of inflation coming through, we started 2016 thinking the fed was going to raise rates. i would guess two rate hikes is what we will get next year, three at the absolute most, but more likely two. that if theit mean dollar ins up rolling over in the second half of the year, that will be good for the euro and the pound, or are they going

to have a tough time of it as well? >> i was in the states for the u.s. election and the next 10 days afterwards. we talked about politics more than economics, then president-elect trump arrived on the scene. i don't think i can persuade a european investor to buy the euro this side of the u.s. election. chance want to risk the that marine le pen ends up the president of france. populism, get more the euro is very cheap. it's only held back by huge inflows of capital, i think the weak point of the euro comes within a week of that election on may 7. the danger is we are all short and bearish. wouldpeaking of europe,

talk about europe and is almost entirely dominated by politics this year. the brexit, and italy, next year it's the french and dutch election. there's almost no talk about the underlying economic conditions and people argue they are better than people realize. i have on my chart of current job seekers in france, it has fallen to its lowest level since 2014. unemployment is falling, the labor market is tightening. when you talk to people, do they realize that a lot of that a lot of the data out of europe has been getting more positive? quick some people realize it in quite a lot of people ignore it. there is a high correlation between the direction of u.s. growth and european growth. if the u.s. economy does well, europe does well. european economy is not flying, it's trundling along in the way the european economy does. the downside risk to grow, the

risks are all political at this point in time, and it some point, we get certainty one way or the other. julie: going back to the french election in may, people are caught trying to paul into the euro if there is a not -- trying into the euro ahead of that, is there any way to tactically play it without taking on too much risk? >> that is what they are struggling with. i like buying the swedish krona are, which i said to you -- this time last year. the swedish economy is doing much better. the economy is very strong. the central bank has negative at the samees and time they have 3% real gdp growth because they don't want their currency to go up, as the inflation returns, i would bet

that the central bank start to rethink and finally they will start seeing a stronger currency. >> one of your trades in the u.k., not just shorting are going long in particular, but basically expecting a shift. tell us what you think is going to happen to the yield curve across the top. >> i look at it as two flat relative to europe in particular. interest, when we see rate expectations this low, what uncertainty is about the political outlook, a dreadful fiscal outlook, frankly. country's finances are not in great shape. at the same time, at the front end of the curve, it's anchored by monetary policy that is

insured for what is going to happen. because of the fallen the pound and the rise in sterling, throw that altogether and i don't why the yieldand curve isn't higher in absolute terms and relative to the u.s. in terms of the shape of the curve. is the rush over for the pound, or is there still more pain ahead? earlier, thesaid pound has stabilized since the the swedishn, but krona are i think will outperform the pound. i don't think sterling is a big mover. the pound will go down 3% against the dollar on the same thing. we are waiting to see how the economic data pans out.

i'm hoping the pound will be more boring and a focus on to be the switch more to what happens in the market. joe: stay with us, because we will talk about the yen and the u.n., next. this is bloomberg. ♪

>> let's get to the first word news this afternoon. shinzo abe is the first japanese leader to visit pearl harbor with an -- with an american

president. aey placed a wreath at military cemetery and then he and president obama held a meeting at the headquarters of the u.s. pacific command. they show cans but made no remarks. president-elect donald trump has to theed the assistant president for homeland security and counterterrorism. he was a former deputy homeland security visor for president george w. bush. his responsibilities will include advising president trump on cyber security matters. a mated guys will be his special representative for international negotiations. his attorney jason greenblatt has been named for the role. for two decades he has worked for the trunk organization. he serves as the executive vice president and chief legal officer. actress carrie fisher, who found enduring fame as princess leia

in the original star wars movies, has died. sinced been hospitalized friday when she suffered medical emergencies on board a flight to los angeles. she made her feature film debut opposite or and 80 and the 1975 hit shampoo. carrie fisher was 60 years old. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i'm taylor riggs. this is bloomberg. julie: let's continue our tour around the world, our currency tour with our global strategist. we've been talking a little bit about the dollar and european currencies. i want to turn to south korea. you are looking at the dollar-won a pair in particular. we've seen the dollar perform well versus the won. do you think we will see that turn effective with that pair where the dollar perhaps will

not do as well in the second half of the year? >> i think it takes longer, the taiwan dollar, and is driven by china. they will live the currency in an orderly fashion, so it has fallen 7% so far this year. it's a slow, steady decline. it's gone up an enormous amount over the last decade. it's an expensive currency, slowly coming down. to be clear, were talking about the chinese .urrency, the won >> they are in danger of losing control over their slow normal decline. this is relevant for korea, it's the most effective economy for what happens to china. they have a slow economy, the have a very rapidly aging population and a certain amount of political trouble, but if

there trading partner is weakening its currency and the japanese weaken their currency extremely quickly over the last , they are caught in a difficult place. the chinese side of it is important. i think the yuan will go on weakening for most of next year. i want to put a visual for our viewers to what you are talking about. this is showing the korean person see -- korean currency versus the chinese currency. since july, is weakening versus the u.s. dollar. take it back a little further, a decade or so, and suddenly it looks a little bit different. wondering, does this show you that the chinese currency right now is still more overvalued? >> chinese currency is more overvalued at this time.

sensitive generally to what the chinese might do in terms of trying to put on capital controls, to make it difficult to trade. although it looks to me as if the yuan is the more overvalued currency that could weaken most, i would rather sell the korean won because i think it will react more smoothly. they put capital controls on in china, they will find it difficult if they do it aggressively, but the korean won would fall on that. confident of what they will do. joe: let's talk about again. there's an argument to be made that the yen has a lot more to all, thanks to the bank of japan and its efforts to tap the long end of the jgb curve.

rates are rising everywhere and that's not happening in japan, then you could see significant weakness due to the yield app. what do you make of that story? where is the yen going next year? quickly,weakening so to my mind. the trouble with the yen is at fair value for dollar-yen on most of the models i've been able to build is somewhere between 100-110. around 105, so that got it really cheap, really quickly, which is back to where they were at the beginning of this year. they have a policy of keeping longer dated yields down, but that is the right policy to weaken your -- it's good for their equity market. the dollar-yen peeks out at 120-something. 125 seems like a good guess. 130 seems like a stretch.

incrediblybe undervalued currency, which is what happened at the beginning of this year. it sat around and went sideways for a few months and then rallied really fast. when dollar-yen gets 125, but i don't know when that will happen. julie: another one of the rapid moves we have seen has been in ruble-yen are ruble-pound, that's another one we have been seeing. you have this geopolitical spike thrown into this trait as well. what are you looking ahead at four rubles for next year? >> i think the ruble will continue to do well. it's the single currency most correlated with the price of oil. if the oil price goes up another 10%, the ruble will get stronger. they have political stability and at least the perception at

the moment of a brighter geopolitical environment. that it isn economy fair to say is not getting worse. to ruble is fighting it out thumbnail with the brazilian re-all to be the winning currency of 2016. sets in.oint fatigue i was in moscow last week. feel like i should be buying anything more than a few souvenirs. i paid a lot more for my starbucks coffee in moscow than down the road from you in new york. thank you so much, i don't think there is a currency we didn't cover. areng up, more americans upbeat about the economy than they have been in 13 years. u.s. consumer confidence jumping to the highest level since 2001, but there's a general -- generational gap beneath the

numbers. this is bloomberg. ♪

-- take a deepke dive into the bloomberg. first up, consumer confidence came out today. it's interesting here because if you look specifically, the conference board asked all kinds of individual questions as part of the survey. one question is, will stocks go up? we sell the biggest increase in the number of people who said yes since november of 1998. this isn't necessarily a shock, given the rally we've had in the wake of the election and given the talk about the rally in the wake of the election.

the question, however, and we will talk more about this in a see it getwhen you to this level, people start to worry. joe: it's interesting looking at this chart, because it doesn't look like, since the crisis we haven't even had one month where the majority people see higher stock prices. no one has believed in this rally. but that is just extraordinary, and seeing a number like that coming is everyone gets bullish, you have to take note of something like that. something else i notice in the consumer confidence numbers today, a really big gap in demographics. look at the difference between how people under 35 felt and people over 55 felt. the blue line is consumer confidence for households with an age of household over 55, surging to its highest level

since the financial crisis, whereas on the flipside, the white line, people under 35, their consumer confidence dived. it is better, but this is the trump effect right here. over 55 euros liked him a lot and under 35 did not like him that much. younger people have been more optimistic than old people for a long time, but that flip right there is pretty astonishing. it tells you so much about what these surveys are really measuring. quick people under 35 either , because stocks clearly they're not going in the same direction. i chart is also stock related. analysis.me technical it speaks to the range that we went through this year. this is open, high, low, close. this is the hi, this is the low.

a lower high and a higher low. what is called an outside year. we haven't seen this since 1982. very little predictive value in this, but it is interesting, it just speaks to the range we have had in stocks this year joe:. you remember how gloomy it looked back in january. in february. a pretty extraordinary come back , speaking to the range of possibilities that we saw this year. >> i like the technical analysis stuff, it's pretty interesting. up next, >> it and a trump -- some are nervous the stocks may have gotten ahead of themselves. is not extreme by

any stretch of the imagination. this is bloomberg. ♪

>> on taylor riggs. let's get to the first word news this afternoon. u.s. secretary of state john kerry will speak at the state department on middle east speech. the boat opposing jewish settlements in occupied territory he said is just not true. the u.s. abstained from voting on the resolution on friday. israeli prime minister benjamin netanyahu sharply rebuked the obama administration for its passage. president-elect donald trump may have to delay plans to dismantle his charitable foundation ahead of the operation. the new york attorney general's office at prosecutors are looking into whether trump personally benefited from it

trumpng and the donald j. foundation cannot legally dissolved while the investigation is ongoing. the transition team said it potentialrase any conflicts of interest before he takes office. the u.s. navy program that's become a target for critics is preparing to commission a new ship named after a well-known shooting survivor. it said gabriel giffords is scheduled to give me -- to be commissioned. it is designed to navigate in shallow coastal regions. senator john mccain has cited the combat ship is the worst pentagon spending. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i'm taylor riggs. this is bloomberg. oliver: let's get a recap of today's market action real quick. a little bit of green across the equity market but still not much in magnitude.

six basis points on the dow, so pretty much unchanged after 20ng -- the s&p up about basis points. that's what we've seen in days when the tech stock has done well. dows&p has been lagging the and now it has slipped. julie: are we doing a drinking game every time we hear that today? joe: "what'd you miss?" u.s. equity markets are honored will run. market cinnamon has been on the rise. for more on large market trends we have a macro strategist joining us via skype. george, thank you for joining us. thee showed the chart in last segment, people who think the stock market is going to go up next year, the biggest jump in one month since 1998. are we in new territory with how

people see the market? what is your read on sentiment here? >> i don't think we are in euphoria territory but there has been a change over the last few months. this coupled with where you see the previous trends, the example of the consumer confidence index released today, the spread between the percentage of consumer bullish equities versus bearish is at the highs level since february of 2007, which should be fairly significant. i don't think we are headed for anything like what we saw in 2008-2009. put a nailer try to ahead of a 40% move like that. i think that sentiment is starting to get properly bullish after a bull market that has

climbed the wall of worry consistently for over half a decade now. speaking of that, stocks have done just fine, thank you, even though sentiment has been pretty low for quite a long time. we are sort of not used to it anymore because it is been so long since sentiment has been bullish. so what does it mean? what can we take away from that more positive sentiment? think about it is almost from a contrarian perspective. it is hard for assets to lose value when everyone thinks they are going to lose value, and the opposite is also true. when everybody is long stocks, there's no one else to come in and buy stocks. saygain, i think we can without sounding outlandish or aggressively bearish that sentiment has started to turn around in a way that it had not previously. during the last seven years or so there have always been people

who think the market cannot go arehigher, and those people starting to capitulate, finally. that's how it looked in a number of different surveys. we are not there in term of extreme excessive bullishness that we've seen in bubbles in the past, but the direction and level are both firmly in the camp where the market is quite bullish relative to where it was a year ago or five years ago. oliver: i thought it was interesting in that chart you it's also very bad when the market is just that. when you talk about sentiment, sentiment come flows. since the election or has been money flowing back into equities, mostly through uts. when you look at flows, is that they couldign that

be back into a rally, or do you look at flows from a contrarian standpoint as well? >> what we saw in the month following the election was the largest ever etf flow into small caps in the history of u.s. equity markets. does that necessarily mean that those flows are the wrong people? not necessarily, but when you see such a huge historical data point following a singular event, you tend to ask some questions. from our perspective, the election doesn't necessarily have clear-cut parish implications for equities, but is not clear-cut that everything is going to be great either. we think the market has been, as demonstrated by price action, the markets have been very optimistic about what a trump administration means for u.s. asset prices. we would strike a more cautious tone.

we're having a hard time reconciling what we think a trump administration means and what the distribution of outcome means. joe: going back to year ago, we didn't expect that 2016 would be dominated by trump and brexit, and a lot of people were concerned about high yield and the oil crash. these were the things that were really on people's mind a year ago. i has had a phenomenal year. to credit markets, what do you see is the prospect for that space? >> spreads are still off the pre-oil crash credit market. at a sector level, it's a different story. from the middle of 2014 through the beginning of this year, we saw massive spread flows in commodity sectors, oil, coal, that kind of thing. the result is press right back down. now most sectors are tighter

than they were in 2014. not all, and the market weighted averages as a whole are not tighter. we could see some further spread tightening from here. it's a combination of a bunch of different factors, the fact that new issuance is coming in a relatively lower treasury rates and the coupons are lower, the fact that new issuance has come in at lower spread issuance. juices a lot less coupon than for issuance from 2009-2012. we are not negative on high-yield here. there is certainly no chance we will see the gaudy returns of an improvement of commodities sector specifically. julie: i have a chart on the bloomberg of the high-yield

energy index this year. it bottom and in february and in totaloutperformed investment great debt in the u.s. in purple. i know you cannot see it, george, but i know you're familiar with the performance we have seen. energy, will we continue to see some gains in that area? really hard to say. a lot of that will come down to what happens in commodities markets and what happens with opec and the specific micro-economics of the shale sector supply functions. these are complicated issues. the energy sector in u.s. high-yield was pricing in armageddon, and probably rightfully so at the end of 2015. this now not pricing anything of that kind. we would be much less optimistic on high-yield energy.

it has reversed out almost everything it priced in and is now looking relatively optimistic. the economics have improved a of and it has forced a lot production discipline across the energy patch. whether that on his own is enough to overcome the fact that they are still the swing producer and vulnerable to the changes in the price of oil and the function of other suppliers is a very open question. much less room for optimism on energy than there was even three months ago, in my opinion. joe: george, great to have you back on the show. up, the outlook for food retailers and mass merchants and 2017, according to our very on bloomberg intelligence. walmart with the return of 14%. beside that, not a lot of outperformance. we will talk about that and what

comes next. this is bloomberg. ♪

julie: "what'd you miss?" intelligence has released its 2017 outlook and we will look at what you cannot miss in various sectors for the next year. today we're looking at food, retail, and mass merchants. jennifer, mass merchants like walmart and target are fighting amazon with varying degrees of success. how's it stacking up so far in the holiday season and what can that tell us about next year? >> with regard to the holiday season, things seem to be off to a pretty good start for target and walmart. they take good traffic in the

stores, they've had a lot of people ordering online and picking up at stores. it does give some confidence that going into 2017 these retailers are on the right track to be able to compete with amazon. taxes, onetalk about of the huge issues for the market, big retailers have their own specific concerns. walmart obviously would not like to see anything that limits imports because they sell a lot of imports. how important is the overall tax situation, and who do you see are the potential winners and losers from tax reform? jennifer: this is a big topic that everyone is thinking about. walmart is probably less exposed than its peers. the reason for that is they sell so much food. over 50% of their revenue is from food that is mostly produced domestically. that means there is the ability for them to then continue on and -- they cant

actually battle against other retailers, whereas target, which is a lot less reliant on food, has a much larger problem dealing with imports and the tax consequences thereof. oliver: i'm looking at this chart, it's pretty interesting because it shows your today the s&p 500 has gained. there has basically been a big rally in the mass merchants. julie: i think she has inadvertently unplugged herself. upver: i have the chart right here. you're looking at the s&p 500 in the blue. the mass merchants had a big rally, and now they are coming back down. julie: she cannot hear us, you guys. let's talk about the chart. the point ofally

the report is, there's a lot of questions up there because of the turn that's happened in the retail mass market space. m&a happening and at the same time you have the idea bet america -- there will gdp growth. some -- for some reason, since the election these stocks have not done so well. there's a story about the consumer and how the american growth story will be forefront. you have to keep an eye all the idiosyncratic stuff that's going on within these companies. some of them are dying off and some are merging. going into the break we were looking at a chart of the mass merchants. walmart to clear out performer versus target, for example. it, too, has not changed since the election. that's something that we will continue to keep an eye on.

also we are watching what is going on right now in hawaii. and primebarack obama minister shinzo abe are participating in a wreath laying at pearl harbor. sailors and honors marines killed in world war ii. visit is a gesture of reconciliation, matching president obama's trip to hiroshima earlier in the year, both of them the first since world war ii by the respective leaders of the two nations. so historic events here as they go to that memorial on the uss arizona. next, a call for the s&p 500 next year. this is bloomberg. ♪

oliver: "what'd you miss?" there are still a few trading days left this year but were arty looking forward to 2017. our chief u.s. equity strategist discusses what needs to happen in order to reach his s&p 500 target of 2400 and 2017. david: the corporate tax cut is crucial to getting to a number like 2400. investors in the new year are going to be hungering for details on this tax package, even in the first several months. under 2300 s&p gets really depends on how the legislation starts taking shape. forecast, how do you make the calculations? you've got the official corporate tax rate signed into

law, then you have the effect of tax rate. david: that's been the key question the last few weeks. we been talking about a scenario of the u.s. statutory rate going from 35% to 25%. s&p profits come from the united states, so were arguing there should be a six point reduction in the effective tax 28% to the s&p from about 22%. a 9%makes the s&p go from boost to $10 per share. has talked about things like eliminating the interested actions. that might make a difference between countries to the bottom line. david: one reason were doing our analysis with the 25% tax rate is that it helps us argue that if there are things like a loss of deduction, you would get an

even lower tax rate. i think you would still get a net benefit of $10. theare right, figuring out winners and losers is more complicated on the details of the proposals. in the end, because of the complexity about things libor taxes, -- things like border taxes, it's in line with the average and it's not going to be revenue neutral in the first couple of years but over 10 years, it can be. let's look at the forecast on tax rate cuts, what would it be? solidh the risk of a 5%-10% decline on the disappointment. the euphoriarket, around fiscal stimulus, how much do you have to pay attention to that and what is the likelihood we get it in a significant and

material way? david: the deregulation and in for kutcher -- infrastructure spending, i think the corporate tax cuts by far are the most important. there's a lot of excitement around the infrastructure. and pointto investors out that the u.s. does $250 billion in europe infrastructure spending, and i think it will be very difficult to get that over 300. >> differentiate among sectors, who are the winners and losers? $119 inarnings will be 2016. one of the big sources of earnings growth in 2017 should be the energy sector. i'm expecting about $55 average oil. that should add six dollars to the s&p earnings. excluding energy and financials and before the tax cut, i'm expecting only 5% earnings growth. that is basically the same maybe

4% sales growth, flat margins. >> we've had a huge adjustment over the last few months. sectors that are about reflation or aggressive and energytation industrials, materials, i think that is overblown. i'm underweight energy, industrials, and materials and thereh -- where i agree should be an improvement in liket and this cyclical i a lot is financials. we still see upside. and health care is a sector not to be ignored given the strong structural trends. it's time for the bloomberg business flash, a look at some of the biz -- biggest business stories in the news right now.

the u.s. is investigating some the brakers because pedal may lose pressure, making it hard for drivers to stop. three crashes were blamed on the issue according to the ntsb. officials say they were about 475,000 of the vehicles on the road. it is cooperating with the investigation. airbus troubles with the jumbo jet are deepening. they say they are delaying deliveries over the next two , the to emirates double-decker's biggest customer. to make up for the financial track, airbus will accelerate cost cuts. and ups expects to deliver 1.3 million packages back to retailers on january 5 as the delivery service celebrates what it calls national returns day. it will be the busiest returns day ever if they are right. year and they expect almost

6 million packages to be sent back. oliver: and that's your bloomberg business flash. up, what you need to know to gear up for tomorrow's trading day. we will give you the events to watch. this is bloomberg. ♪

emily: what did you miss?

we had a record from the nasdaq composite. the dow got closer to 20,000. it got close, then came back. what's the word? dow is becoming acid tonic. >> tomorrow, we will get a report on u.s. pending home sales for november. that comes out at 10:00 a.m. some of will see how the recent event affected the consumers. in europe, retail sales coming out at 3:00 a.m. be sure you are awake.

>> you are watching "bloomberg shinzo abe will become the first japanese prime minister to visit the u.s.s. arizona memorial and pearl harbor.

he went to hawaii and placed a wreath at a military cemetery. john kerry will speak tomorrow at the state department on middle east peace. officials deny that the u.s. orchestrated the human security council vote opposing jewish settlements in occupied territory. the u.s. abstained from the vote. israel plans to continue construction in the contested area. they will review requests for hundreds of apartments. one of the president-elect trump advisors on u.s.-israeli relations will be a special representative for international negotiations. jason greenblatt has been named to the role. carrie fisher, who played princess leia in the star wars movies, has died. she was hospitalized since friday when she suffered a medical