regulation. a meeting was requested with senator sharad discuss key issues and that he will cooperate with the protocol of the finance committee. the nomination is subject to approval. senate minority leader chuck schumer is pledging to hold donald trump and congressional republicans accountable. the new yorker says democrats will hold on the promise to make america great again as long as that means trading jobs and protecting civil rights. he issued a warning about the supreme court vacancies. hold the president accountable if he does not nominate a mainstream supreme court justice. president obama nominated a mainstream candidate in merrick garland. president-elect trump should do the same. >> he also want against a twitter presidency saying the issues confronting america are

complex, and that we cannot tweak them away. arel groups say they suspending peace talks over what they say are violations of a is fire agreement. it was supposed to be followed by negotiations rebel factions and government representatives. the security council unanimously adopted a resolution's for the efforts to end the nearly six-year conflict. personnel at airports and border crossings into your said to be on high alert. a private news agency said anyone resembling the gunmen sought in the deadly weekend attack is being stopped and questioned by police. turkey state run news agencies say police are -- two foreign nationals suspected of having links to the attack that left 39 people dead. global news 24 hours a day -- 2600by more than 26

journalists and analysts in more than 120 countries. this is bloomberg. ♪ scarlet: live from bloomberg world headquarters in new york -- >> 30 minutes away from the close of trading in the u.s. by pmi data out of china and europe. joe: the question is what did you miss? scarlet: house republicans shopping there did to weaken the ethics after donald trump blasted their move. plus, the senate prepares to challenge obamacare. opie let -- what would be left? we will get an update. ard scratches plans to put plant in mexico after incurring

trump's's wrath. we will hear from mark later this hour. let's check where major indexes stand. abigail doolittle is standing by. abigail: we are looking at games for the u.s. major averages heading into a close. major averages are well off the highs. the data on the nasdaq have been up today. taking a leg lower mid morning in late morning. the dow transports had also been up more than 1% earlier today and heading into the close, if it read. one sector outperforming, we're looking at the auto -- the auto sector. the index is up nicely. it is a broad-based rally. ford, gm, feel -- fiat chrysler all high. car salesrom strong while florida is benefiting from the fact that they said they are canceling a $1.6 billion plan

plan in mexico. instead, the ceo said they would folk on bringing 700 jobs to michigan. investors are clearly cheering that. it seems to be trading up after president-elect donald trump tweeted earlier, pressuring gm --not move shed a cruise crude production out of ohio. the reason these stocks are up has more to do with the fact that it will be capacity and shops -- this was rolled out at the end of last year. this is a mass of north american plant production. ford in blue and jim yellow, right in the united states. a few plants in mexico. an ohio plant president-elect to nots pressuring gm

move down to mexico. down there is the plant that is canceled or little of the production is in the u.s. to the energy complex, they declines. natural gas on pace for its worst day since february 14. oil is down more than 2.5 cent. for itr -- had been up appears the strength of the bloomberg dollar index -- natural gas is being pressured i warmer weather forecast. scarlet: it is a relief for some of us here. iq. joe: president-elect donald trump has picked a lawyeriq. who was accused china of unfair trade practice, to head the trade deficit of office chair further indication that the trump administration will take a tougher line on china. how will this impact the u.n. and fx reserves? troy, thank you for joining us.

>> great to be here. abouteople are excited the trump administration and the potential for business in the u.s. with the ford ceo talking about that today and other stuff, stocks are rallying and everything. of the noises coming out of the administration are very hawkish on the trade asked that. >> and they are not sitting the investors andes ceos would get that about. you see the saints reconciling mark >> progress asked reform will be good for domestic. the thing people have not done their heads around this trump -- this is not the old republican playbook. he is trying to help the middle-class and work in >> and there will be issues with industries around that. you hit the nelnet head talking about china the as it is the ultimate risk to trump-pence's

policies. throughe burned hundreds of billions of dollars of these muscular currency artificially strong. up, that isar heats their ultimate fight back mechanism to let the reserve go, which can cause chaos to some extent. line is the blue estimated capital flow. spending to keep the currency artificially strong, the opposite of a lot of charges against china. >> rhetoric is rhetoric in a campaign season. if you look at a transparent risk, that is clearly the most damaging over the short term. good for china in the long term the reserves would be worth far more, they can do quantitative easing, cleanup thanks. we --s the biggest risk

we think we could see in retaliation for a potential trade war. >> they have a chart showing the dollar strength. inside the bloomberg here, we have overly currencies, how a chinese government -- going forward. does the fact that chinese government is measuring its currency mean we will not get the massive devaluation we got at the end of 2015 at early -- ? collects been devaluing it with the dollar. their goal is to have less dependence on the dollar. all that willerm, be converted is trying to go into dollars.

markets are getting used to the idea it will be weaker going forward. we point is not the chaos had in august and january. >> it caused a lot of turmoil. something like last august 2015 is the kind of thing that could derail this. >> certainly. we will let it go 10 or 15% and then we will defend because we now have huge reserves, you could eat 10 to 15%. we do not expect that. that is just a transparent risk. scarlet: in the netherlands and germany, when you look at european stocks, everything is

great. the stoxx 600 entered a bull market. >> i love that. finally proven right. >> even with the banks leading gains here, you are saying there is caution ahead. on the verge of potential fragmentation overtime. it has not grown in years and germany has a lot of mastic political issues. the question for investors, is the discount enough to compensate for all those unknowns. you have to assume more volatility. our premise with the at least now you have value. strategists these saying how europe is. at least now it is cheap. there has been very little written about this.

france. the upcoming are you talking about a center-right prime minister or president of france? they could move more progrowth in the u.s. >> the interesting thing about political risk in general is 2016 have a lot of political risk. adjusted not play out. assessing future elections harder. maybe in the netherlands, but if you are so used to before me twice, none of this will matter, assessing those risks. >> typically, it is a way to ite money except when occurs.

people hedge and make a lot of money and everyone rushes ahead and got slaughtered for months. most issues in europe have been widely discussed. it is hard to identify anything that has very little downside if it transpires. at the french situation in particular, if you from here,r-right that is an upside scenario meant -- few have confidence -- thought about. most investors, how can i participate in the upside. i'm highlighting one potential positive catalyst. could oil be a positive catalyst? ,n an -- an unprecedented way

it is that they are going to produce -- reduce production. >> no one expected it to go to 80 and it ended up in the 20's. it had a cascading effect overseas on the credit markets. most of the recovery in oil is already priced in. they raised new equity. most analysis we have seen, a and milesiability, credit, itorporate will not be a substantial upside. the biggest will be, can we get tangible economic and fits to grow this year? reform at least

two -- how fast can this impact the economy? >> pleasure to be here. happy new year. >> coming up, mark announces his company scrapped plans for a new plant in mexico. result of donald trump -- from new york, this is bloomberg. ♪

scarlet: fortis canceling plans for a plant in new mexico and donald trump attacks general motors. tweet, he wrote gm is sending a mexican made model chevy cruz to

u.s. card dealers a tax-free across border. make in the usa or pay big border tax. joe: art says his decision was not based on the incoming trump decision. >> lula would make the same decision. the main reason is our next inheritance -- next generation focus would be felt in that. capacity.need that it inhe focus and produce an existing facility. decisionthe same regardless of look at ministration have been saying? he did talk to the president-elect today. why did you give him a call? wanted to let them know the announcements we were making and they were

pleased we were making the announcement of investing $700 million in our plant to the high-tech, autonomous vehicle and very pleased we would be adding several hundred jobs which bills on the jobs we create in the last five years. they were pleased germany to economic development in the u.s. fourthsay it was a decision fair not something says.ent trump left >> as you can imagine, we look at all factors and we see more positive u.s. manufacturing business environment under president-elect trump. policies herogrowth is outlining and the tax and regulatory forms. this is a vote of confidence that he can deliver. jobs inmillion, 700 new

michigan. byl overall employment go up 700? >> yes, overall, the 700 jobs as a to the 28,000 over the last years. the largest employer of hourly on old of workers in the united states and larger -- largest producer of vehicles here in the united states and we are one of the top exporters and we are proud of that. >> we are all reminded of the tweet that can out of the press a let us to do with another car company. is the country went forward, and require action, what would that -- to 40's business across the mexican border? >> we would have to look at it in total.

the congress that will take office will be debating that. we will understand what it means for business. 80% of sales in the united states comes from vehicles produced here in the u.s. less than 50% of sales comes from imports from mexico. and we are one of the top exporters. it is not just with yet, will there be, for example, a tax or importer adjustment tax on imports? we have to also look at words and that is what we will look at. run the numbers? you are a major exporter and not just in importer. get a credit as you export it. would ford be better off? >> we are running the numbers and we are one of the top exporters, but we are going through the numbers to understand what it may mean for

the business. there is a lot in the announcement and everyone will folks on mexico and the conversation of the president-elect. vehicles and what ford sees as a future. tell us about that part of the announcement. >> this is a massive announcement for us. we are investing $4.5 million in vehicles and we will bring out 13 -- electric -- electrified vehicles and we spoke with several today including a hybrid, mustang hybrid, transit was just plug in hybrid, as well as a few others. what we are doing as a company is we are taking the most popular products and what people love about them, and making them even better with trucks, you get more capability. with performance vehicles, you will get more performance from sports cars. and from vans, you will get more productivity. to lead an electric dictation here in the u.s. and globally.

leading his and -- is terribly important you do not want to be caught behind us come -- customers think about car companies and who is big and who is big electrical vehicles. can you be a leadership position? >> absolutely. we are the number one seller of bug in hybrid and the number two seller overall for electrified vehicles. we want to build on that and you can see that through our announcements today. we only talk about seven of the 13 electrified vehicles coming. there is more to come. joe: that was the ford president and ceo mark fields earlier today. up next, we will take a look at charts examining chinese bmi performance over the last year. this is bloomberg. ♪

scarlet: today was global pmi data at we had readings across the u.s., fairly encouraging. s&p 500 industrials, relative in

blue, the equity performance in blue-and-white line shows, it came in at 50.7, is pace in two years. it reinforces the recovery we have seen in an industrial relative to the s&p 500. . i which means industrials are outperforming the broader market. you see the recovery in the death been asked for like higher following the u.s. election. this is an to neil who pointed this out to the -- there is something fundamental driving of the rally. joe: it is a reassuring thing which shows -- it is not all just that and emotion. i'm looking at more good data on a china. a lot of disengages of chinese any factoring, here are three of them.

pmi, that is the blue line. the business conditions and deaths is the purple line. they are all ending the year on a solid note, generally, the trend being hired. they are two stories happening in china now. the data has an solid. by with nor has gone dramatic slowdowns. there are still concerns over the u.n. outflows. those artigas countervailing stories. from that standpoint, it is pretty good. you --relationship with >> market closes next. look at the major indexes. we are to end the first trading day if 2016 with gains, industrials up, the s&p 500

gaining 17 points as well. coming up next, we have breaking news, and tiffany, chairman, is january 20. we will keep you posted on the headlines. this is bloomberg. ♪

anchor: we are moments away from

the closing bell. what did you miss? changed when an two dollars per barrel on concerns about opec. i am scarlet fu. >> i am joe weisenthal. welcome to the viewers tuning in live. you can watch our coverage on twitter every with a 4:00 p.m. to 5:00 p.m. et. >> we begin with our market minutes. the dow adding more than 100 points within the s&p 500. 10 out of 11 major groups were higher on this global pmi day. >> at one point we were closer to doubt 20,000. only 60 points away. scarlet: the gains in overseas markets set the tone. the european stoxx 600 index set -- operating in a bull market. it is at its highest december of

2015. here in the u.s., the dow did get off to a strong start. it jumped 110 points at the open. you have people like morgan stanley's adam parker warning the postelection rally may fade. i want to focus on carmakers. a lot of interest or because of donald trump's tweets. are adding 700 workers in michigan instead of expanding operations. however it is equivalent to 0.34% of its staff. nice headline and they took advantage of that. investors rewarding the stock as well. out by motors got called donald trump for building a version of its small car and mix ago but that stock is up 0.8%. joe: let's look at government bonds around the world. u.s. two-year yields rising 0.3 cent -- 0.3% today.

some strong data with inflation pressures building. the long end of the yield curve did end up unchanged. -year yields of the u.k. moving up significantly. post-brexit collapse does not seem to be happening. we have not had brexit yet. strong upward move in the u.k. here is germany. remember when the 10 year yield was negative? you can see the lift happening originalnd 3.30, after german inflation data came in hotter than expected. you have to wonder if there will be tension at the ecb. the inflation-disliking germans. let's look at commodities. natural gas getting crushed. expectations of warmer weather. a rough start to the year for natural gas.

platinum rallying 4%. the kind of have some precious metal characteristics. industrial doing well. sugar gaining 5%. oil -- i don't know if we have a chart on oil, but you have to mention it. it rallied early in the day but faded not long after 10:00. scarlet: it ended with its worst day since december 14. joe: turnaround tuesday. scarlet: you mentioned brexit. the pound took a tumble at 10 a clock a.m. et. et. -- at 10:00 news broke that the ceo unexpectedly quit. people at of the few the top of the british government who understood the eu and was meant to be a key figure in those negotiations. the expandingra, major currency versus the dollar. a new record low.

this tracks the dollar strength versus the lira. punch ofn the 1-2 faster inflation. and the perpetrator of the night club attacks are still at large. that is weighing on the currency. numora says it-- will strengthen. i want to take a deep dive into the bloomberg. you can find our charts using the function at the bottom. i want to stay with the turkish lira. what happens is, not only is the lira at a record low, but traders are increasingly bearish. it is the 25 delta risk reversal. it is the measure between the bearish and bullish options. what you are seeing is this huge move in terms of sentiment on the turkish lira.

the terrorism attack in istanbul is not good. it is the new year. joe: often, the years turn out differently than they seem at the beginning of the year. scarlet: that is a good point. joe: here is a theme around the world. inflation seems to be gathering steam everywhere. let's look at data that has come out. we have a white line, which is germany. german cpi year over year is 1.7%. strongest number since 2013. scarlet: close to 2%. cpi atst week, spain's 1.5%. today, the u.s. manufacturing reports. that is the purple line. one of the indices is the prices-paid index. that absolutely exploded. 65.5 you can see on the left

y-axis. everywhere you look we are seeing signs of inflation pressure building. the question is, is this something really big? is it just a blip? that is one of the key questions. what did you miss? risk will have to analyze several macro issues this year and they are not all about donald trump, believe it or not. -- camerorist is here n is here. you have a piece out on the big themes people have to be looking for. one of those is based on the chart i just showed. how are you thinking about it? are we going to get to a new moderate plaque to or will -- moderate plateau, or will we return to more disinflation? mixt: the polity -- policy

in the u.s. is loser fiscal policy. monetary policy is associated with higher nominal gdp growth and a stronger dollar. -- much of reflation, stronger dollar would imply weaker currencies and more inflation for them. macro investors is, is this it? is this a generational term? 2% in say, close to europe. kei is baking the ca because of the base effect from oil. thereafter, we will need to see supply and demand come into balance. there is a reasonable chance that happens. the real key is how investors behave. macro investors, over the last

five or six years, it was about quick hit. let me make my 3%. i will stop if i lose 1% and move on to the next trade. classic macro investing is hunting for marlon, not herring. you're trying to make 15%-20%. if it starts going your way, you give it a push. for the last five years, when it was going your way, you swept the money off the table and moved to the next train. but the last couple of months, it is like, i don't know what donald trump will do for market, but for the he has made macro great again. there is this feeling that we can trade like we used to trade, we can push and make decent money. there has been a lean half decade for global macros and investment strategy. scarlet: do you see that has a

research a happen since the end of 2016 or do we not have that ability to get the marlon? guest: you have seen it. the sentiment among the macro guys i speak to is that it has been a complete 180. it has been knows to the to pickne, not trying up pennies in front of a steamroller, because that is not macro investing, but picking up pennies left right and center. people are willing to give the market a chance to move along my. joe: reflation question. what is another big theme for 2017? guest: we cannot talk about 2017 without talking about the donald. wwdd? what would donald do? we have had a lot of promises based on the narrative and hope. come the inauguration, and even

before, perhaps, the hope train starts to ebb, and we need to see a difference. tax cuts will probably happen. infrastructure, on the other hand, maybe not. we have had a republican congress for the last -- how many years? telling us that deficits are bad, that spending is bad, that we need to tighten things up. are they going to start sitting around the campfire singing come by you -- kumbaya? probably not. we've seen with the ethics is this, that donald trump and the gop in congress are not necessarily on the same page. it is a reasonable expectation on the infrastructure side that there is room for disappointment. on the other side of that is geopolitics as we tilt away from embracing free trade and toward

protectionism antagonizing china. it plays up to the domestic butrs and his constituency, what does that mean if prices go up across the board. that basket of goods that is $20 at walmart is suddenly $30. that becomes problematic. i think it feeds through into the third area, which is risk. we have had a long period of what i would term financial repression. what equity investors would call saladuse e.on -- halceon days. at some point, the negative effects will come into play. if we see a real return to inflation globally, it is not good for stocks. you see the top of equity market cycles. there is a rise in inflation

sufficiently strong enough that central banks have to act. credit has been distributed on the basis of free money across most of the world. you have seen delinquency rates across segments of the credit markets start to rise, i'll be at -- albeit, at low levels. as lending rates rise and they need to be refinanced, vulnerable borrowers. joe: cameron crise, thank you for joining. we have some breaking headlines on tesla. the company releasing vehicle delivery numbers after hours. the company says it's q4 produced this number of vehicles. total production up 624% from 2016 --the stock is dropping however. scarlet: but 600 units were transferred to customers by the end of the quarter.

net was up about 62%. that might be a reason why there is a disappointment in the stock price. there were factors that affected quarterly deliveries. joe: amazing product. always concerned about its execution. scarlet: tesla down 1.4%. this is bloomberg.

>> house republicans have dropped their bid to weaken the independent office of congressional ethics. the move came after president-elect donald trump blasted their decision as counter to his plan to train the swap of corruption. wrote, on twitter, trump

with all that congress has to work on, do they really have to make a weakening of the independence ethics watchdog, as unfair as it may be, their number one act and priority? deeperle, trump will dig into allegations that russia interfered with the presidential election. here is advisor kellyanne conway. have a briefing -- briefing by our top intelligence officials in new york, at which time he will perhaps learn more. we are tired of the insinuations that a blind quotes and people leaking to the press, rather than dealing directly with what may or may not have happened. >> trump has repeatedly cast aside allegations by u.s. intelligence agencies that russia tried to influence the presidential election through hacking. moscow denies the allegation. paul ryan has formally been reelected house speaker.

only one republican voting for someone else. ryan called the job a once-in-a-lifetime opportunity. day,l news, 24 hours per powered by more than 2600 journalists or analysts and more than 120 countries. this is bloomberg. scarlet: what you miss? obamacare. the process to get the health care law repealed officially began. the senate moved quickly on this. this was through a nonbinding budget resolution that instructs commodities -- committees to begin repealing the legislation. there is not a replacement in place either. what happened today? guest: what happened today is the senate budget committee what out a budget resolution, nonbinding, to instruct the committees with jurisdiction over health care.

this -- they recommend by january 27 to construct a repeal bill. this is trying to figure out how much they can do through the process of reconciliation, through 51 votes, meaning they can bypass the democratic filibuster in the senate. what has happened next is replaced. that will be on an unknown future date. this resolution does not touch that. that is still a big mountain that republicans have to climb. repent --epublicans prepared to kill obamacare without a replacement in place and let millions fall off the roles of the uninsured? guest: this is the subject of a big debate inside the republican party. the senior members know that repealing this without a replacement in place would be disastrous. people are talking about a two-year or three-year bridge.

they are even talking about delaying the repeal until after the 2020 election. that is how afraid some of them are about the fallout. there are about 20 billion people who do not have a replacement. republicans are very divided. -- 20 million people who do not have a replacement. republicans are very divided. they can talk about choice or lowering costs, but the coverage aspect is a major challenge. that is what democrats will throw at them when you try to move through this. scarlet: what has the democrat response been so far? is it going to be to put up roadblocks the way that republicans did for president obama? guest: the only thing that democrats can do is make the politics of repeal untenable. they will keep hammering the fact that repeal without a replacement would put 20 million people out of coverage. republicans do not have a plan, and democrats are demanding that they show a replacement before moving forward on repeal. they intend to move on repeal with delayed enactment.

there are a lot of moving parts. democrats do not have the votes to stop them under reconciliation. they can withhold the vote for a replacement and make it difficult for republicans. joe: let's switch gears and talk about this thing with the ethics committee where the house republicans originally planned to weaken, now they are backing off. what is the real story? why the turnaround? was it the outrage? was it trump tweeting about the timing? why the about-face? guest: it wasn't so much trump's tweet. he didn't criticize the substance, but the timing and the priorities. it was a pretty mild and trump putt thing that up. it is a very powerful tool. the fact that this is easily digestible, this is something the democrats could make political hay out of.

they could say the first act of the republican congress was to got the independent watchdog. the issue of ethics is the kind of thing that could imperil what seems to be an invincible house republicans are. house leaders recognized it was a political disaster. scarlet: a bit of a stumble on the first day back. speaking of the first day, paul ryan was elected as house leader easily. what did he lay out today? guest: paul ryan's agenda has been known for many years. since he was on the budget committee, he has proposed a series of deep spending cuts, deep tax cuts. he wants to make entitlement changes to medicare. though he hasn't mentioned it this time around, social security. one interesting thing i would say about the fact that ryan was elected overwhelmingly, is that every member of the house freedom caucus voted for paul ryan. this is unusual. two months ago they were plotting a coup against him in a

dissipation of trump losing the election, trying to blame ryan for that. the election of trump has put a 'smper on the far right enthusiasm. joe: i want to restate the headlines. the stock is falling after the company's fourth quarter vehicle deliveries were lower than geithner -- guidance. 2200 vehicles versus guidance of 25,000. that brings the year-end total to 76,230, below tesla's guidance. scarlet: in the meantime, we'll use the bloomberg to show the fallout stemming from jpmorgan's downgrade of indonesian stocks. this is bloomberg. ♪

scarlet: we want to take a deep dive into the bloomberg. you can find all of our charts using the function at the bottom of the screen. let's start with the news that the indonesian government is ending all deals with jpmorgan. after the election, j.p. morgan analysts downgraded indonesian stocks. indonesia's government says it will stop using jpmorgan as a primary dealer and underwriter of sovereign bonds. this is the table that shows banks issuing indonesian debt. jpmorgan is right here, tied for sixth place. total debt issued for indonesia was just over $12 billion here, but only $9.4 billion was credited to these banks. of that, jpmorgan sold it hundred $50 million in two issuances. that puts it tied for sixth place with stocked in and

barclays. it is behind all of the major western banks only ahead of dubai islamic bank and cnb. jpmorgan's ranking had not moved either because last year it was previously also in sixth place. it is an interesting response. joe: it is a fascinating story and it shows the power that governments have, theoretically, over companies that would issue ratings. scarlet: it makes you question -buysell recommendations. jpmorgan said this was a tactical response to the vote. everyone was bearish on emerging markets anyway after donald trump because the dollar rallied, and other currencies tumbled in value. joe: here is an industry not doing so great in the market. restaurants. this is a chart going back to the beginning of the year of the s&p restaurant sub sector.

, you can seen restaurants have been tumbling the last few weeks. for a while, people were bullish on restaurants, consumer spending, the fact that restaurants are not so threatened by the internet the way other retailers are. people are coming up with negative arguments due to rising labor costs. there is a big gap between food at home costs, which are very cheap. buying at grocery stores is very cheap, so it is more expensive to eat out. homeit is more fun to stay and watch netflix, play video games. who wants to bother going out? lots of arguments emerging against restaurants. scarlet: the need to make the restaurant experience more experiential. joe: a new industry for you. scarlet: coming up, large institutional investors helping -- into theer

recovery market after the crash. we take a look at the real estate empire. this is bloomberg. ♪

>> i am courtney collins, let's get to bloomberg's first word news. president elect donald trump's numb and he for treasury secretary when not be replying to the letter from a democratic senator asking for clarity on their views about regulation. he has requested a meeting with senator sharad brown about key issues and will cooperate within the protocol of the finance committee. in's nomination is subject to senate approval. senate minority leader chuck schumer is pledging to hold donald trump and congressional republicans accountable. to hists will hold trump promise to make america great again as long as that means

creating jobs, raising incomes, and getting real opportunities to the disadvantaged, and protecting civil rights. he issued a warning about the supreme court vacancy. >> we will hold the president accountable if he does not nominate a mainstream supreme court justice. president obama nominated commission candidate in merrick garland, president-elect trump should do the same. >> schumer warned against a twitter presidency sing the issues confronting america are so complex we cannot tweet them a white. -- away. --syrian rebel groups are the truce was supposed to be followed by negotiations this month. over the weekend, the un security council unanimously adopted resolutions supporting efforts to end the conflict. personnel at airports and border

crossings in turkey are said to be on high alert. anyone was unlike the gunman being socked in a deadly -- attackin a deadly is been questioned by police. they are holding two foreign nationals for working detained at the airport who are suspected to have links to the event. collins, this is bloomberg. scarlet? scarlet: let's get a recap of today's market action. first trading day of 2017. u.s. stocks rising thanks to a string of robust economic data. the fastest pace in two years. joe: all solid manufacturing. all solid on the inflation front. scarlet: we need to bring you up-to-date on what is going on with tesla. shares are falling in after-hours trading. this is after they fell short of

estimates for fourth quarter deliveries. we are tesla delivered approximately 22,000 vehicles in the fourth quarter. that brings the year-end total to 72,230 which is below the company's guidance. production issues continue to plague the company. this has been an issue for tesla. joe: the products are great but there are always questions about the execution and timing. what'd you miss? in a business long dominated by mom and pop landlords, their shifting collections from call centers to courtrooms as they try to maximize profit. private equity firms are more likely to file in fiction notices on single-family tenets. joining us is tom shapiro, president and cio of gti partners, a real estate private equity firm, with about $3 billion in asset management. thank you for joining us.

during the crisis, the money that private equity put into housing was seen as a key stabilizing factor in the market. people were encouraged the money was coming in. naturally, there are side effects and the financial industry is not used to having to foreclose on people. it is another pr issue for the industry. how do you see private equitie'' role in dealing face-to-face with renters? guest: first, i would take a step back about why the business existed. after the housing crisis, it was an issue because the were families -- with exceptions like new york city, families raise their families in single-family homes. after the crisis we had the credit pendulum which was loose, then it became tight. you had all these families unable to afford to buy a house. we've gone from 11 million rented homes to 60 million or so soted homes -- 16 million or

rented homes. it is a drop in the bucket of a two point $5 trillion business -- $2.5 trillion business. trying touity is allow more families to raise their families in single-family homes. it is a byproduct of any business, where you have defaults. whether it is a homeowner defaulted on a loan or a rental payment. we take the approach that we try to work with everybody to the best we can. we try to bring in people who want to raise their families in a house. we look at their criteria and people have reversals, lose their jobs, etc.. we try to take an approach and look at them and say, how can we work with you and keep you? at some point, people have not been paying their rent, you have to make hard decisions. it is a small default rate.

nevertheless, the study by the atlanta fed from the institutional investors are twice as likely to file eviction notices as smaller owners. this professional class of landlords approaches a defaulted payment, or nonpayment, in a different way than a retail investor. guest: maybe so, maybe not. the data is fairly limited. they are trying to assemble the 16 million homes owned mostly by mom and pop. the data rates are extremely low. with institutional management comes better-run properties. we can more efficiently run properties and charging different rent stream. you have to take the approach, why is it any different at how a multifamily institutional system would run a building with 300 units or that a large commercial bank would have with people?

you have to look at the business holistically. we are creating the ability for people to raise their families in a way that there is no other way that they could. joe: tell us about what your fund is doing and what you see that the opportunities are for the single-family in the residential? guest: we have approached several different businesses in this space. we saw early on after the housing crisis, we stopped producing homes. we were producing 600,000 homes after the crisis. that was about half of what we were producing right before the crisis. it was the lowest level since world war ii and the great depression where we saw demand at 1.5 million homes. it wasn't long before we had a 12-14 month supply, now that supply is about four months. we have a chronic undersupply. we are prison about 1.1 million homes even this past year. 1.1 5 million in 2015. .15 million.

in 2015. we have been backing construction. we have been doing vertical on long-term housing construction. we provide single-family rental homes. it is all about the millennial owners. the millennials, at this point, are getting into their mid-30's. at that point in time, as this are to have families, they have demand for single-family housing units. 36% of all renters in this country are renting single-family homes. it is a huge market. there are 16 million rented homes in this country. picture,re play, macro the millennials read the story. a lot of them do not qualify for mortgages. we look at certain markets where we view there are positive demographic trends. people should be buying homes,

but a lot of them aren't for a variety of reasons. that is where we see the general play. scarlet: is this geographically focused? are we talking urban centers? not necessarily manhattan, but near big cities. research has shown that millennials do not necessarily like being in the suburbs the way their parents or grandparents do. guest: we are of the leg believer -- we are big believers in have and have not places. we have been looking at the smile of the country. we have been looking through texas and the carolinas. we have been actively buying single-family homes in dallas, houston, nashville, atlanta. we bought homes in vegas. we have been looking at chicago as well. we definitely take a macro view on the markets, of where the job growth is, and we play in those markets where the yields make a lot of sense. we buy at about 6.5%, and we

leverage those investments. joe: you mentioned the president-elect. what are the key policies that you are watching? this is the question. what is he going to do? what are the policy questions this year and how they affect real estate? guest: anything that creates jobs. infrastructure. we are looking at how far does president from go with and for structure spending? $1 trillion was the headline number. how much gets spent? more people employed. anything that creates jobs is good for our business. anything that affects interest rates is important. interest rate and started to move up but we will take job growth over interest rates. people do not have the conviction and do not feel good about where and planet is headed. they will not be dutch -- about where employment is headed. they will not be -- it is about where the consumer is headed. how does the consumer feel?

how does that tie into housing affordability and how will they behave? a lot of it is to the graphical trends more than anything else -- a lot of it is demographic al trends more than anything else. scarlet: we have seen with housing that there has been an insufficient number of construction workers available to build the homes needed. isn't that going to be an issue? guest: it is and the immigration policy. a lot of the workers are immigrant workers who work on these housing projects. one of the biggest issues in building new single-family homes is the fact that we have had a lot of expense-running single-family homes. we have seen that across the markets. we see areas like in houston right now, given the backup and oil prices until recently. we set labor prices started to come down. moste end of the day, the

important thing that we have is consumer confidence, feeling good about their jobs, feeling they have made more money. that ties into the best they have had. that has been a really important play. joe: of this lead the president-elect has a real estate background, in tune with the issues of the industry. are there certain regulatory -- or other things of interest to you, things specifically related to real estate that you think are important for the industry that this incoming president may do? guest: a lot of things deal with the debt markets. dodd-frank. this credit pendulum has a lot of effect on real estate. how do you finance these projects? the extent to which some of that gets loosened up would be helpful. it is starting to slow back and setting to decelerate the debt markets. anything like that will be helpful. on the headlines it looks very good.

big picture, we feel good about what is happening. joe: tom shapiro, president and see a yellow of gti partners -- gti yes partners. scarlet: what does 2017 hold for apparel and the retail industry at large? this is bloomberg. ♪

scarlet: what'd you miss? bloomberg intelligence has released its 2017 outlook. we have a list of what you cannot miss this year. joining us now is a bloomberg analyst. before get to the outlook for 2017, give us a sense of what we saw at the end of 2016. discounting had been rife in the

lead up to the holiday. after the holiday, discount here, 50% off their, 60% here. what did it look like compared to previous years? guest: it is pretty early. we just got back from the vacations, but what we are seeing is if you compare year-over-year, there are still discounts out there. year-over-year, the stiffness of visit -- of the discount is not as bad as last year. it is a good sign but it is very early in the game. joe: do you have any sense of who the big winners were? when looking back, who knocked it out of the park? chen: it is a bit early to say that, but the athletic trend out there is very strong. the companies like nike, foot locker, they might be some of the brands that do better than others. scarlet: in terms of the outlook for 2017, julie hyman and i

spoke with the ceo of a company who on several brands. he was talking about the confidence the industry has at large because of the incoming administration. let's take a listen. >> i have a great gil of confidence with the new administration coming in. -- i have a great deal of confidence in the new demonstration coming in. the tax policy is very positive. scarlet: the tax policy is having that comes up again and again with retailers yet they depend on factories in low-cost locations such as china and pakistan to keep goods cheap. isn't that going to be an overriding issue over tax policy? chen: it is very early. we do not know what the new tax rules will be. i am throwing this stat out there. between 95% and 98% of apparel and footwear sold in this

country are not made here, they are imported. any change in the tax rules, where it concerns trade, will have serious implications. both on brands and retailers. joe: there is a lot of interest in the border adjustment tax and how that will affect importers, including some retailers like walmart. it.h the risks for how big of a deal could it be in the worst case scenario if it gets fully implemented? how should investors be thinking about this challenge? chen: if that is really going to happen, they will have to weigh it category by category. some will not be as exposed to imported goods. apparel and footwear is the highest. to a lesser extent, automakers. home improvement to some extent because lumber is made here, but apparel and footwear by far will be the category affected more

than anyone else. scarlet: talk about the supply chain improvements. that is one area where the companies do have some control and are not necessarily waiting for the trump administration to make policy. what kind of improvements have we seen on that front and how will that be refined in 2017? chen: traditionally, if you look at retailers like ralph lauren and gap, it used to take about nine months from design, doing the sourcing, and bringing the product to shelf. looking at retailers that have been successful as of late, the process is shorter. a lot of those companies, like the one i mentioned, ralph lauren, and gap, are looking at the process to make it shorter. nike and adidas created a new tool, that within a month, a designer can choose the fabric, choose the cut, and within a month have the product on shelves.

making that timeframe shorter is enabling them to chase the trend instead of just planning based on some future estimate. joe: thank you very much. scarlet: coming up next on what'd you miss?, part of our exclusive interview with the governor of the bank of india. trump, and trade, u.s. manufacturing. from new york, this is bloomberg. ♪

scarlet: a few months ago, raghuram rajan finished a three have in your term at the reserve bank of india. now he is back at the chicago school of this this. a joint tom keene this morning for an exclusive interview and tom kicked things off i asking him when he thinks the great

bond market distortion could come to an end. raghuram: i think we are in the process of exiting. with the federal reserve seeing limited room for continued accommodation, and starting to raise interest rates, i think you will see the pressure on other central banks come off as much as it has been over the last few years to continue accommodation. my guess is, we are in the process of exit. how fast it will be will depend on some conditions in the united states. what policies the new administration brings. how comfortable the federal reserve feels with those policies and whether it feels it needs to move faster or slower, and how quickly it will come in. it seems to me that as one pressure comes off, another comes on. we heard the rhetoric about politics and the federal reserve. we are seeing what is happening

on capitol hill. new congressmen and senators being sworn in. many hellbent on changing the relationship between congress and the federal reserve. how does this administration deal with that politicization? raghuram: it is very important and it is felt across the world. the central banks have been the only game in town for the past few years, so they have also acquired a sense of political power that certainly creates apprehension amongst the political establishment. they would like to control that power. unfortunately, is coming at a point when increasingly, central-bank independence will become important as inflationary pressures rise and central banks are asked to do normal things, which is control inflation. for many years, we were getting an apparatus that ensures they can raise rates at the time needed without feeling

constrained by political pressures. these pressures come at a time when it is a delicate situation for central banks. >> delicate, indeed. the backdrop is the possibility we could see policy changes, tax reform, big infrastructure changes. the fed is in a damned if you do, damned if you don't. they could be blamed for doing the wrong thing whichever way they go. raghuram: absolutely. given the political situation, this is a time they have to tread carefully. i have no doubt that, given the tradition they have established, the fed will do what it things his right, rather than cater to political opinion. scarlet: that was raghuram rajan. he is the former governor of the reserve bank of india. joe: coming up, what you need to know for tomorrow's trading day. this is bloomberg. ♪

scarlet: what'd you miss? the global equity rally kind of fizzled a little bit as u.s. trading went through the motions. joe: still some gains. scarlet: european stoxx 600, for instance, entering a bull market.

up from its low of february last year. the dow add more did -- added more than 100 points. joe: getting closer to 20,000 again. scarlet: tomorrow, i'm looking at european cpi. that will come out at 4:00 p.m. tomorrow. joe: we will see if we get there. i will be looking for the december meeting. they raised hikes in that december meeting and they increased for next year. those minutes out of 2:00 p.m. et scarlet: president obama will be visiting capitol hill tomorrow. he will be meeting with democrats and strategizing how to best protect the affordable care act.

>> let's start with a check of your first word news. the senate budget committee has released a 2017 budget resolution that hints at the process to partially repeal

obamacare. early in the next administration, the senate will consider a bare-bones bill this week. paul ryan won the post of house speaker with the overwhelming majority of the vote. he called it a once-in-a-lifetime opportunity. the decision comes after criticism from president-elect donald trump. trump suggested that republicans focus on tax reform and health care. three former presidents will attend the inauguration on january 20. george w. bush and his wife laura. bill and hillary clinton will also attend. a spokesman confirmed that former president george h.w. bush, citing his age, will not attend.