with julie hyman today, and david westin is on assignment today. 0.002% away from doubt 20,000 on friday from dow 20,000. in the fx market, this gets my attention. the pound falls to 1.2166. julie: we will be digging much more into that any moment. here is what you need to know at this hour. a volatile start to 2017 for the offshore yuan in particular, the currency falling for a second day as china weakens its currency for the most since june. the pound gets pummeled. theresa may hints at a single market exit for the u.k.. tightening. potential candidates to head the federal reserve next year, including glenn hubbard of columbia university, suggesting

monetary policy would be tighter if they were in charge. we turn to david westin, live in detroit at the north american international auto show. this is where the top automotive and technology executives defined vehicles and industry shipping announcements. david, it is good to have you with us. maybe a lot more about where they are going to be made? david: exactly right. this is the first day. there just about to get show started in detroit, my home state. there are really two big stories. one is trump, with the resident elect tweeting repeatedly last week about -- with the president-elect tweeting repeatedly last week about car companies. trump, it also goes into technology. technology is really big in technology. -- in detroit right now. those are the two big things we we have coming up right now. we will be talking with the

chairman and ceo. jon: she has been very tightlipped on the issue of china. many of these countries have been forced to go there and produce the cause of the tariffs within the country. ,ow does that situation evolved versus the united states? david: china has become terribly important. we talked with dan gilbert, the founder of a big force in detroit. -- evenugh he is but though he is for free trade, china imposes some pretty big import tariffs paid he wants the rules to be the same both ways. that werness is a word will probably hear a lot more. much more coming from david westin in the next three hours. looking forward to the mary barra interview coming up in the next few hours. julie: china reserves are

hovering above $3 trillion, inling $41.08 billion december. even after the steepest annual declining two decades. more from hong kong. enda curran joins us now. we got this news on reserves as china is still attempting to stabilize the currency. but that stabilization is certainly not working for the offshore yuan. enda: it is certainly coming at a price. we are seeing two things. they managed to hold above the 3 trillion mark last year, but not until they burned 300-plus billion. on the other hand downward pressure on the offshore here in hong kong, and the authorities managed to create a good liquidity squeeze that made it much more difficult and expensive to short you want. we are seeing more downward pressure on the currency again.

even though china held's reserves above $3 trillion, the continued pressure is down on the yuan, down on the reserve policy. hearing or are we what are we gleaning in terms of their continued willingness to do what they have been doing in the face of this continuing u.s. dollar strength? enda: i think they are very serious about keeping a flow on the yuan. they probably have some breathing room, and there is a sense that they have cracked down yet again on capital outflows on the private saver level and on companies that are much harder to get money out. in the near term, i would give them some breathing room. the bigger picture remains the dollar, on an upward in trends. as long as that is happening, that will put downward pressure on china's currency and put pressure on companies to get out. -- to get money out.

theaps china is ahead of curve a little bit. they will come under significant pressure as the year goes on, and a lot of may be at their own hands. enda curran, thank you so much for your perspective. jon: let's continue the conversation on china. by the silly celebrity a cough -- we are serebriakov.isili givent make much sense travel? vassili: it certainly has been a painful time of the year with macro trades. positioning was heavily long u.s. dollar against the cnh. that got really squeezed because

they made the cost of funding very expensive to hold onto those positions. but fundamentally the direction hasn't changed. the --at is more amp, what is more important? >> i think the flow is more important. for valuations, the number is closer to $30 billion. we think it is the direction that is still there. if anything, if the u.s. rates continue to go up and we see --e upstate in the u.s. upside in the u.s. rates, we could see outflows from china intensifying. they are trying to slow it down, trying to create an environment that is more difficult, putting doubt in the effects -- in the fx traders mines. julie: we have not talked so much about the incoming

president about his presumed policies toward china. how do you manage for that when you are trying to trade fx in this environment, and how do you think china itself will manage that? vassili: the market is getting stronger, should that reason that should that please the president-elect. he will not make much of a change. the interesting thing is, what happens if we do have a 10% tariff on chinese goods? that will make the supply and demand for currency even worse. also that in this case, if the yuan depreciate, that would mitigate some of the negative impact of u.s. tariffs on chinese -- then you end up with a weaker chinese currency. bring in the discussions that julie brings up and put it against the hard data. the data is saying that the climbing currency reserves, much

of that is used to try to support the currency, but the politics is very different. we are told the white house will call china a currency manipulator. if that headline crosses the bloomberg, does that mean anything to you? vassili: that one is priced in. you talked about it for a while. we know that is going to happen pretty early. basicallyt requires did with the treasury negotiating table with china. take a year to try to figure things out, and retaliatory measures can be done. i think it is more of the overall environment, and especially if there is any tariff protection. that will be more up for the markets. julie: so if the pboc is making more efforts to support the currency, aren't they spending in the wind -- aren't they spinning in the wind at this point?

if we continue to have the economic data out of the u.s. that we have been having? ammoli: they have a lot of , right? they could try to manage the pace of the move quite well. by market was caught surprise, so that might be slowsing that eventually the game. at 7:30, orill be maybe just above that. is consistent with the broader dollar strength. i want to get an update on the headlines outside the business world. a quick good morning to emma chandra. emma: top republicans are warning president-elect donald a rift withld face top members of the party on russia. will pushn mccain sanctions on russia.

british prime minister theresa may is signaling that regaining control of immigration and lawmaking are her top pair it is for brexit. in an interview with sky news, she suggested she is willing to gamble britain's trading relationship with its biggest market in return for greater sovereignty. she says she still wants the best deal possible for british companies. staying in london -- commuters had to find other ways to get to work today after thousands of london underground workers went on a 24-hour strike. the union rejected a last minute offer, and the some way -- and the subway systems service is significantly reduced. traffic in central london is almost at a standstill. global news 24 hours a day, powered by more than 2600 journalists and analysts in more i am emmaountries, chandra. this is bloomberg. julie? julie: i want to get back to the auto market because we have

headlines there. fiat chrysler -- we have it up .5%. the company will be investing in the united states as an increasing announcement as we -- as we got the announcement that three new jeep models will be introduced and ram production will be moved out of the country. we will be watching anymore out of the auto show. volkswagen -- a report says the fbi has arrested annexing executive on street -- -- has .rrested and ask executive show news thato we are taking a look at, the company going back to some of this route, introducing an electric version.

porsche is up 2% in european trading. mcdonald's -- shares not moving much on this interesting headline, the country selling 80% of its china unit. carlyle group will own 20%. but donald's will hold on to 20%. mcdonald's will get $1.7 billion as part of this deal. 1500 mcdonald's will be added over the next five years in china. up, sterling weakness. the pound hitting a 10-week low as you can prime minister theresa may plans for ac market exit from the u.k. -- from the e.u. that is all next from new york. this is bloomberg. ♪

the in new york city, london commuter faces a 24-hour strike on the subway system after station closings and job cuts. you are better off walking or taking a bus. -- you are better off walking than taking a bus. julie: there is one silver lining. it is not 16 degrees outside. jon: that is very true. -10 celsius, that is what it is like today in new york. so thanks for the small things.

joining us now is david owing, european analyst. we have been talking about china and we have to turn to the situation in the u.k. theesa may reiterating break with single markets. david, let's start with you. what does this mean for the u.k., that she is sticking to her guns? david: she is actually confusing people. we movesuggesting that forward with the deal. the problem is that the single market is not compatible with having restrictions on migration, and also having with sovereignty and everything else. if those were things that people wanted in terms of brexit, she has to put out the single market. may, that is --

it will be very, very tricky. the thing about trade negotiations, people say it is never over until anything -- until everything is done. we need transitional arrangements, particularly with things like financial services. is have to be pretty early on. for the rest of the e.u., they want to delay transitional arrangements for quite some time. it is going to be very messy. we haven the meantime, seen some u.k. economic data relatively stable, firming up here. does that mean it can better withstand some of the volatility that will come with the negotiations and the eventual agreement? david: for theresa may, the stronger the economy now, the more there is a hard brexit. that is part of the game. the issue about brexit is long-term issues, not something that we will see all the impacts

over the next 12 months. ,rticle 50, went to trigger it that is clearly about divorce proceedings. it has nothing about the new trade negotiation rate. trade negotiators also say it could take 10 years for all of these things to get adjusted. jon: the pound juice falling down toward 1.20. the politics is -- the pound just keeps falling down toward 1.20. vassili: i think what happened is aat the markets -- this market that wants to be long u.s. dollars. after the street -- after the squeeze on the short yen positioning and the short you the closer weng, get to march, the closer we get to article 50, the more uncertainty is going to rise.

this situation of the u.k. will have to leverage because the economy is ok, the economic surprise index for europe is terrific right now. the data coming out of it has been solid as well. on top of saying who has the economic leverage at the moment. david: i think the leverage will remain with the other 27 countries. u.k. -- the uk's so much smaller. the leverage is really on their side. once you trigger article 50, the clock starts ticking. once you get close to march of 2019, that is when things get messy indeed. this is a long-term game. we had policies with the bank of england in august last year. data flow has been generally -- it is all very encouraging.

julie: if you look at the euro-pound pair, the euro has been weakening versus the pound as well. when you look at that pair, since leaving the dollar out of it for a moment, what are your thoughts on that? it has been strengthening a little bit much more recently. vassili: it is a race to the bottom in terms of politics. in europe, markets are looking at the french elections in april and may. and what that could do to the kind of nonestablishment vote and so on. i think euro-sterling in the short-term is a sideways show for us, not really picking any direction here. i think as we move through the second half of the year, the euro could get a positive against sterling as well, against the yen, but also perhaps against sterling. the ecb has been saying they are not tapering, but they are reducing the pace of asset

purchases. the french are not going to leave unless there is major political unraveling. bank have to start thinking about how much it can hike rates? they still have a weaker sterling. that is part of the correction as well. julie: david owen, thank you so much. thank you both very much. jon: coming up on the program, trump's transition team facing tough questions this week. rex tillerson, the former exxon mobil ceo, will be the star traction that will push back on trump's transition. this is bloomberg. ♪

jon: senate confirmation this week.ll begin

democrat leader chuck schumer has reportedly handed a list two republican majority leader mitch mcconnell of what his party requires from the most troublesome nominees. kevin cirilli joins us from washington. the most troublesome nominees -- which ones are that? kevin: you have to start off by talking about rex tillerson, the secretary of state. of course, a lot of democrats are uneasy about his previous ties to russia, and of course the backdrop meaning what happened on friday with the intel report. he is also facing tough questions from certain republicans, most notably senator john mccain and senator lindsey graham. they have a lot of questions about his ties to russia. look for that. another one is steven mnuchin. he will face a lot of criticism from democrats for his previous dealings with one west bank several years ago.

the democrats are going to try to paint him as someone who is out of touch with the more progressive, populist politics, someone who is more in line with big financial institutions rather than the middle class. the bottom line is that democrats face a really tough, tough battle. the folks i am talking with on capitol hill think all these appointees will go through. jon: there is the division between republicans and democrats, but division between republicans themselves around rex tillerson -- how will that play out? kevin: his confirmation hearing gets started on wednesday, and at the same time as this confirmation hearing during the news cycle, president-elect trump will be giving a press , aference in new york location to be determined, where he will talk about how he is dividing the trump organization from his administration.

look at the 70's of media dealing right look at the savviness of media dealing right there. senator mccain and lindsey graham have not said they will oppose, but they do have questions. jon: great to have you on the program, kevin cirilli. russia, russia -- a name that will come up again and again this week. julie: in tweets and press conferences, and on capitol hill. coming up, we are revving up for the north american international auto show. later, mary barra, the gm ceo -- how trade, china, and brexit are affecting the auto industry. this is bloomberg. ♪

jon: let's check the market quickly. we wrapped up friday at an all-time high. today futures are negative, down 26 on a dow. call it a tenth of 1%.

in london, a 10-day winning streak on the ftse 100, potentially the longest since 2013. if you switch up the board, weaker pound story in the f.x. market. pound falling to 121.68. three weeks gains for treasury. those gains continue. we're down on the 10-year. julie: a little reversal there we've been seeing. here's what you need to know at this hour. the yawn has -- the yuan has a volatile start. it's falling for a second day as china weakened by the most since june. the pound gets pummeled. sterling hitting a 10-year low as the u.k. prime minister hints at a single market exit for the e.u. fed tightening. potential candidates to head the federal reserve next year, including glenn hubbard of columbia, suggesting the monetary policy would be tighter if they were in charge. and that's what you need to know at this hour, and the last of those -- line line jon: is our morning must read. it's one of the most read

stories, the future of the federal reserve. head chair janet yellen's term ends in 2018. we've got a list of candidates. they've all criticized fed policy. they're all considered as hawkish, and they all spoke in the last week. the comments, yes, they're hawkish, but not overly hawkish. if you listen to what john taylor said, the federal reserve is a little behind the curve. comments saying maybe they should move at a more brisk pace. hawkish, yes. dramatically different. maybe not on the margin. >> this is a cyclically robust labor market, but structurally challenged labor market. cyclically, we're soft landing to about 150,000 to 160,000 jobs a month. wage growth about 3%. it looks good cyclically, but structurally, whether you look at the employment and population rate that danny mentioned, on you you look at labor participation, we are still challenged, and that speaks to the need, not just

for cyclical stimulus, but also for structural measures. jon: so that was mohammed el-erian speaking on friday. cyclically the markets are robust, structurally challenged. when you put that together, that means the fed doesn't have a role to play, as maybe it did a couple of years ago. for the likes of hubbard, taylor, walsh, they're in the same boat. take a step back, let the government take control. julie: the other issue is, whether you're talking about the potential fed chairs, any of the folks coming into this administration, it's very easy to make comments about what officials should be doing when you don't actually have the job. so it will be interesting to see if one of them is appointed and they're faced with that responsibility and faced with that economic data, what they actually end up doing. jon: of course, we should say whether there's actually a vacancy for the fed chair position, given she may well have been given the next term

by the time we talk about this time next year. julie: sure. who knows? it's very unpredictable. let's turn to david westin, life in detroit at the north american international auto show. he's joined by the volvo president. david? david: thanks so much, julie. we are joined by mr. samuelson. you were strucking about unemployment, and i'd like to start there with you. let's talk about autonomous vehicles. you really made a push in this direction with your partnership with uber, and you've got a big announcement under that piece of silk back there behind us. >> i think we have a bit different approach. it's most important to the consumers, how do they experience this and what do they expect from it? that's one aspect. and then, of course, it's the hardware, the car itself. it has to be redunn attend to be really safe, and that's what we do with uber. and then the third element is control software. how should a car react in the different situation?

i think what maybe makes us different is this approach. because, of course, we come from the safety side, and we see autonomous and next step in making the volvos even more safe. david: as i understand it, we haven't seen it yet, but understand you have a car that you're going to have as many 100 people driving around with the a moan advertise deal. but you've had this duber deal in pittsburgh, now arizona. how is it going? hakan: nice. that's related to the hardware of the car. we need the redundant car. we are developing that with uber. ut what we're doing is testing the technology with our customers to see how they're doing. it will be the biggest feel test in the world with customers. so 100 people will have the opportunity to test this. and i think we will really let cars develop, and that will be

put into traffic here in some weeks' time. david: what is the goal here with uber, to actually get this into volvo so we can buy or lease? hakan: it's really two concept. we cooperate on the hardware with uber. the car, to be really safe, is not just about software, because i mean, the software could give any command to the car, but if you don't have redunn tan a on the brakes -- redundancy on the brakes and electrical safe, it's not a very safe car. that has to be developed with them, and that's what we're doing. but then they have apply their control -- i mean, they have a car service very different, and we are building a sort of auto pilot. david: the auto industry has been very much in the news in the united states because of the president-elect. a fair number of tweets last week about the auto industry. you're about to open a plant down charleston, south carolina. you decided that earlier. why did you decide that? did you anticipate donald trump

being president? hakan: no, we're not that smart. but we really saw it like this. we have to develop the company into a global company. we cannot just sit and build cars in europe and export to u.s. i mean, we have been doing that. we have been it since 1956. i mean, it's a very long-term market for us. but now we have to come closer to customers. we have to understand scommers better, and then u to be present in the society on the market. and, of course, also it's very important for us to give a signal of commitment to rur retailers. we expect them to invest in our brand, and they will, of course, say if you don't believe in the brand, if you are not ready to invest in u.s., why should we? i mean, that's the logic. so we thought then -- we looked into mexico. david: so you considered mexico as an alternative. hakan: absolutely. we had two alternatives, either

south carolina or mexico. it is really that, in north america, u.s. is the biggest market. it's been very important to be present on that market. and i think it's a much more present on this market if you build in the u.s. so that's what was the tipping argument. and, of course, today we are very, very secure that that was he right decision. david: some tweets would have it go the other way. hakan: we took the right one. david: as you look forward to a trump administration, how could it affect your business, things like trade with mexico or china? hakan: i think we have a rather open and neutral stand on that. we think he's elected president of the u.s., and then we look forward to work together with the new administration. i think we have a strong concept. we have taken a decision to invest in the u.s., and it's not just a plan for local production. half of what we will build in

this factory will be exported. so this factor will also be part of a global trade system, if you will, like exchange system between our global production units. david: if the president-elect were and here said, ok, what would you like? what would really give you a conducive environment for the auto industry, for volvo? what would you ask of the administration? hakan: i think, of course, as a global company, we would like to have open trade. i think we cannot build every model in the local market. of course, most cars will be for u.s., but some we will import, and other models we will export off to u.s. i think an understanding for such an open, fair trading environment i think is something we would, of course, expect to see in the future. i see no reason why we shouldn't see that. david: just before the holidays, it was announced that

you were issuing preferred shares. you, of course, are owned by the chinese company, and this is now going in the equity market. is this a prelude to an i.p.o., a partial i.p.o. of your stock, and why do you need the capital, the equity capital? hakan: i think from the company point of view, i think it's very important for us to have a diversified funding strategy for our expansion and our turnaround. of course, we had to start with conventional bank debt, and then we went out on the bond market and now the latest step is the equity market. so now we have three major investment companies as owning shares in the company. so i think that gives us a much stronger balance sheet, of course, and it gives us an opportunity, of course, to go spew the market with an i.p.o., but that's, of course, a decision for our owner, and then currently we have no plans

for that. david: thank you so much. that's the c.e.o. of volvo cars. now back to you in new york. julie: david westin, thank you so much. with the president and c.e.o. of volvo cars. thanks to you both. jon: coming up -- more from detroit. this time with dan gilbert, quicken loans chairman and founder. how international trade is impacting the auto industry. that's coming up from new york. this is bloomberg. ♪

>> this is bloom daybreak here in the hewlett-packard enterprise greenroom. coming up in the next hour,

g.m.c. c.e.o. on how trade, china, and brexit are impacting the auto industry. julie: and barra is at the international auto show, bringing together leaders in the industry and showcasing the latest automobile companies have to offer. bloomberg's david westin arrived there yesterday, and he sat down with quicken loans and rock venture's chairman and founder dan gilbert. they discussed jobs in detroit and international trade. dan: i think percentage-wise detroit's employment is probably ahead of everywhere, but that's because it started so high. i don't know the exact numbers. i think at one point, i think literally with like 25% or something. so it's down significantly. and i think, you know, you've got a situation where there's a lot of jobs that are, you know, available, but there are certain kind of jobs you need certain skills, so you have a

shortage in some areas, technology front, things like that, and then you have unemployment in other areas, and the other lower skilled jobs, i guess. and so i think it's important we do two things. i think we have to, you know, create and find jobs that maybe there's going to be a certain amount of people, just for whatever reason, they're going to not go to college or not graduate high school even, but they're still employable, hard-working people. at the other end, we've got to make sure we train more and get skilled jobs, give people the skills we need for the jobs here. david: again, detroit is seeing something we're seeing more generally. it's not just getting jobs, what kind of jobs are we getting. and what's the salary level of those jobs? you mentioned technology. to what extent has technology taken away those manufacturing jobs. when i was a kid in michigan, you could graduate from high school and get a really good, well paying job and feed a family on it. dan: i don't know if it's technology that took it away. to me, it's probably more foreign labor it looks like, if you want to look at it that way, or manufacturing overseas. but i do think there are jobs

-- for instance, we have a call center here, a separate business, actually, that has 800 people in it. you can start off at $12, $13 an hour, plus full benefits, and plus certain commissions based on what the call center duties are at the time. but those are like entry-point levels. you get people a chance at that, and all the sudden you notice how good they are, regardless of whether they went to school or not. and a lot of those people get promoted up. to me you need certain specific kind of close to technology, but not quite having, you know, real programming skills, because those jobs you can probably get anywhere. so if u those kind of pipelines, in those kinds of areas where it's not necessarily working at a gas station here or there, where a job is a job, but you don't have that growth, then you can really impact things. david: as you look at southeastern michigan, you find the international trade issue, at least as important as technology in terms of taking away jobs. does that make you sympathetic

to a lot of discussion now about really revisiting our trade agreement? dan: i don't know enough about the specific trade agreement. if i were president or if i were in charge of everything, i would say whatever country we're dealing with, whatever your trade laws are, those are ours. to me, that seems the most fair way to do t. you make the laws, then ours will be how -- but maybe that's too simple of a way of looking at it. but i have heard, besides the president-elect, other people have talked about the unfairness of it. i'm a big free trade guy, but it does have to be fair trade. if it's really true, which i don't have the personal knowledge to know, you have to make adjustments. to me it's about fairness. david: are you worried at all in trying to get to that fairness we may disrupt trade, may actual val trade war here? dan: i would think, if you're on the other side of it, i'm just thinking through, but if you're a country who you sort of know you've got the best bargain here, the best end of it, and now somebody is making

it equal, it's still in your best interest to stay in it. i think have to believe it was the other way. i think for the long term, fair trade is important, because then you won't have the kind of issues that we have, and you don't have the kind of discourse and negativity and all that. i think things really truly are written fairly. i think that plays itself out. julie: that was dan gilbert of quicken loans with our david westin, who's covering the north american international auto show. he is out there right now live with us. so david, it's interesting hearing from dan gilbert on the trade issue here, income detroit. and i'm really curious to hear what some of the other auto executives are going to have to say on this front as well, since it has been such a hot topic. david: well, it is a hot topic. of course, our auto industry has truly gone global. if you have a supply chain that really crosses borders all the time, and they've become increasingly dependent on

foreign trade. at the same time, they don't to want get cross-wise of president-elect trump. as dan gill bird said, -- gilbert said, there has been unfairness on some of these deals and maybe it needs to be revisited. they're also dealing with a new administration that has other issues like fuel economy f. they really accommodate them on trade, maybe they get a break on fuel economy and smell more of the profit-making s.u.v.'s. jew will he: what else, if anything -- julie: what else, if anything, did he have to say about the expected policy of the incoming administration and the effect that could have on business? david: he was very strong about regulation and thinking that regulation really has gone too far. he said some regulation is necessary and sensible, but in his business, for example accident quicken loans, regulated financial institution, he said it's gone way too far. there are ridiculous regulations that really need to be done away with, and particularly he wanted to go after the justice department, which has sued quicken loans, on mortgage fraud, and it said it's absolutely defensible, and

they've done nothing wrong. he was hopeful that may change in a trump administration. julie: our own david westin in his home state of michigan, covering the international auto show. we're going to hear much more from david, including his live interview at 8:40 a.m. with general motors chairman and c.e.o., mary barra. thanks so much. look fwoord that. it's time for other stories making headlines. here's emma chandra with your bloomberg business flash. emma: mcdonald's has agreed to sell control of its china business. consortium. a the deal values the mcdonald's unit at more than $2 billion. mcdonald's is revamping its ownership structure in much of asia in an attempt to streamline operations. fiat chrysler may be trying to head off credit victim from president-elect donald trump. the company will invest a billion dollars toward making three new jeep models in the u.s., plus a pickup made in mexico will eventually be made in michigan.

trump has been pressuring the auto industry to make more cars in the u.s. and there's a report that the f.b.i. has arrested a former volkswagen executive linked to the emissions cheating scandal. according to the "new york times," oliver schmidt faces charges of conspiracy to defraud the u.s. schmidt once led the regulatory compliance office in this country. v.w. says it continues to cooperate with the justice department, but won't discuss ongoing investigations. and that's your bloomberg business flash. i'm emma chandra. this is bloomberg. jon: eam, thank you very much. coming up, mary barra, g.m.'s c.e.o. is how the trump administration's position on china could reshape the auto industry. and we look a little something like this. it's the count up to 20-k. we're just away from it in friday's session. we closed an all-time high on the s&p 500. we're slightly soft during today's session, down 25, if you're looking at futures on the dow, negative two on the s&p 500.

in the other asset classes, switch up the board, here's the state of play. yields low on treasuries again. we're down two basis points on the u.s. 10-year after three straight weeks of gains for treasuries against, and it's sterling weakness the epicenter, with a cable rate falling to 121.64. next up, i'll run through what you need to know for the week ahead, the data points. this is bloomberg. ♪

jon: from new york city, this is bloomberg news. here's the currency cross. the turnish lira against the u.s. dollar, the market testing resolve. inflation way above target. will they intervene? no sign of it right now. dollar try up 2.5% on the session. this is an all-time low for the lira against the u.s. dollar at a time when the president would like the citizens and company to convert their currencies back into turkish lira.

there are no signs that have happening over the last three weeks. this is your worst performing currency through 2017 so far. that's something to look at today something, to look at for the day ahead. it's time for the trading diary on this week's u.s. economic agenda. tuesday, we're going to see $24 billion of three-year notes. wednesday, 10-year. thursday, $12 billion of 30-years. a lot of data this week as well. friday we'll conclude with u.s. retail sales. with a look ahead is bloomberg's reporter, great to have you on the program. retail sales book ends the back of the week. what have we got? >> this morning we're starting out with the new york fed's consumer confidence survey. that will come off the jobs numbers last week, because what we learned on friday is people continue to be going back to work and coming off the sidelines. but at the same time, employment growth is slowing a little bit. wage growth is picking up, but hours worked actually came down. the growth in the weekly paycheck is slowing. we want to see if that's reflected in the consumer confidence numbers at all. also, consumer credit later

this afternoon, see if people are starting to substitute more toward credit cards as that income growth kind of slows. jon: it's an indicator not just for the consumer, but small businesses as well, the optimism. aring with going to see it translate into buying, the confidence of the businesses, are they going to remain? matthew: so far we've had good readings on consumer and business confidence from the various surveys. we've only had one month post-election so far. this will start to see the second month to see if that boost in confidence is sticking so far, as we work toward inauguration day. and then, of course, retail sales as you mentioned on friday, a good way to wrap up the week. we had very strong auto sales numbers last week, so we want to see if that translates through to spending and other categories. jon: talk about how big the u.s. retail sales numbers are, and how much data actually captures smsm people will say the department store numbers were terrible, so why are u.s. retail sales going to be ok? matthew: well, that's true. we look at broader personal consumption expenditures, which is a much larger data set.

but retail sales is the fist read we get each month, and that's why it's so important for investors and markets, and also we can kind of look at autos versus apparel, like you said, it's not been doing as well. but we want to see how some of the other categories are holding up as we tend to transfer to doing more of the amazon shopping and that sort of thing. jon: matt, thanks for being here, as we look ahead to a week of economic data. coming up, the pound hitting a 10-week low as a single market exit for the united kingdom, plus later we're in detroit with the g.m. chairman and c.e.o. from. new york, this is bloomberg. ♪

jon: good morning and welcome to bloomberg's daybreak for our viewers on this monday, january

9. david westin on aexcitement. alix steel is off. the markets kick off a new week of trade, and futures slightly softer, down 1 on the dow. an all-time high on the s&p 500 on friday, slightly negative on that index, down about a single digit. if you switch up the board, treasuries really well. the curve flattening. yields lower by three basis points at 239 on the u.s. 10-year. front and center in the price action in the f.x. market, julie hyman, a weaker pound. julie: indeed it is. hard brexit concerns. here is what you need to know at this hour -- the yuan is sliding, a volatile start to 2017 for the off shore yuan. that currency falling for a second day as china weakens its fixing by the most since june. the pound gets pummeled. sterling hitting a 10-week low as u.k. prime minister theresa may hints at a single market exit for the u.k. fed tightening, potential candidates to head the federal reserve next year include glenn hubbard of columbia university, suggesting the monetary policy would be tighter if they were

in charge. and that's what you need to know at this hour. now let's get to david westin in detroit. he's at north american international auto show, where world's top automotive technology executives and designers debut brand-new vehicles and industry-shaping announcements. david, what is in store for us at this year's auto show? what are you looking for? david: so julie, there was a debut just across the floor here. mary barra, chair and c.e.o. of g.m., revealed the new traverse that they're very excited about. we're going to talk to mary barra. we'll be the fist people to talk to her shortly. we're going to talk about the s.u.v. phenomenon. there aren't many cars around this show. it's mainly s.u.v.'s and trucks. we'll talk about that development. we'll also have to talk to mary barra will the trump tweet from last week about importing it from mexico. we haven't heard from her about exactly what that means for g.m., what they're looking forward to in a trump administration. they've got a lot of irons in the fire, both with mechanics sandow china. they actually sell more

vehicles in china than they do in the united states. julie: speaking of china as well, when you look at the taverbs here -- tariffs here that donald trump has been attacking, what's going to be the discussion like at the auto show about this relationship with china? dade: well, it's interesting to me, because you would think that the auto show would be all free trade all the time, because they really do a lot of cross border transactions. but you do have some hint. we heard it from dan gilbert earlier, it has to be fair trade. they're a little sympathetic to that point. as you know, julie, china does impose some fairly hefty import taxes on luxury vehicles coming into their car. there's a little bit of hesitancy here. but also, it's a complicate relationship with the new trump administration, because there are a lot of things these auto make we're like to get, both tax reform, but also some help on fuel standards. it's a nuanced report so far from detroit when it comes to the trump administration. julie: thanks so much. as you said, we will be hearing

from dade with mary barra shortly. jon: bloomberg's tom mckenzie spoke to u.b.s. group chairman this morning in shanghai. he weighed in on the u.s. relationship with china and some key concerns. >> for the u.s.-chinese relationships, i think it's going to go through a period of longer discussions than weave seen in the past. and i think ultimately since china has actually opened up its current account, and we'll continue to do that, there's much the central bank is doing in order to drive the exchange rate. the exchange rate actually is very much driven by the market now, and it continues to be more and more driven by the market. and that was always the key u.s. concern. jon: with us is the f.x. strategist at b.n.p. paribas. dan, great to have you on the program. the back drop to today's f.x. market, you've got the concerns over sterling and what's going to happen with the trade relationship in the u.k. and europe, and then even china, to some extent, this political

rhetoric can't be helping what's happening with the currency as far as the yuan is concerned. >> so far we think the currency is doing what you would expect it to go in the context of the broader dollar, and that's what we expect to be the case for most of 2017. the dollar is going to be generally strong against major currencies and dollar will be part of that. lately we've had some big squeeze, but we think this is more short of short term management of the pace of the move and pushing, reducing speculative pressure on the currency, things like that. jon: is that an objective worth having? daniel: if you're trying to manage a slow demetion of your currency, every once in a while there's probably a need to get -- make it dangerous for speculators to be part of that trade, otherwise you wind up expending a lot of reserves to control the pace of depression. julie: in terms of trading the chinese currency at this point, is it attractive to even make a play by the offshore yuan, or would you look at, for instance, other asian currencies as sort of proxies, what's the best way to -- whether you're short or long,

what's the best way to play it? daniel: people have been looking at broader structure dollars generally, and looking for the places where it's cheapest to be long dollar without paying a lot of carry. lately they haven't been in the right currency for that. julie: what would be? daniel: well, for us, dollar-yuan is very attractive medium term. we think short term there's some risk that we see a squeeze on yen shorts, actually similar to what we saw last week. jon: what am i magazine here, dollar strength against china, or am i playing chinese economy weakness, and if it's the latter, why is the aussie around 73? daniel: i think the main trade is dollar strength, and that's going to show up against c&y, just like other currencies. the days of trying to expect c&y to have this big depression because of weakness in the

domestic economy is probably not the trade you're going to see a lot of people involved in this year. jon: surely motes more about what's happening on the other side of this trade, and that's about what's happening with sterling. over the weekend, more comments from prime minister theresa may. seems to be what she doesn't say. what she does say is the priority to get control of the borders, therefore, people kind of extrapolate back from that and say, well, that means an exit from the single market. how do you interpret the latest comments and what they mean for sterling? daniel: i think we're heading into crunch time for the pound. it's going to be a difficult quarter. we're heading into the invocation of article 50. there's going to be interest in setting up positions on both sides of the channel. i would expect there to be a period like this where there's a comment from an official, which makes the market nervous about a hard brexit. we're not going to know how things play out for quite a long time in terms of negotiations, and this is the period where you're going to see a lot of jockeying for position, which makes it difficult for the pound. julie: when you're looking at these sort of major currency pairs we're talking about, whether it's china, whether

it's a pound, whether it's the yen, do you think the political risk is such at this point that you want to look froops some of the lesser known currencies, where maybe you're not seeing as crowded a trade? are you seeing opportunities in emerging markets or some of the other overlooked currencies? daniel: it's difficult, because people want to be in the trades that are obvious, and they get very crowded, very quickly. looking for overlooked currencies makes sense. but there is a limited currency that we're dealing with. swedish is an interesting currency. that's one people have been focused on, could actually outperform the euro quite a bit in the year ahead so. that's kind of one where maybe there's a little bit less. jon: you think the governor is one? daniel: they're going exit quite a bit earlier than the e.c.b. monetary policy settings look too loose to us there. jon: great to have you with us. you are sticking with us, as we swift toward the federal

reserve and dollar. let's get headlines outside the business world. good morning to emma chandra. emma: newly released video appears to show esteban santiago walking through the ford lauderdale. tmz posted the video on its website. santiago has been charged with killing five people and wounding six others. his first court hearing is today. top republicans are warning president-elect donald trump he could face a rift with members of his own party unless he's tougher on russia. senator lindsay graham says and he senator john mccain will push for sanctions against russia for hacking the presidential campaign. graham says he wants to hit russia in the financial and energy sectors. and in london today, commuters had to find other ways to get to work after thousands of london underground workers went on a 24-hour strike. the union rejected a last-minute offer, and the subway system warns that services are severely reduced. the london underground carries as many as 4.8 million passengers a day. needless to say, traffic in the

city is at a near stand still. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i'm emma chandra, this is bloomberg. julie? julie: thanks so much. we have deal headlines, relatively i had no small-size deals coming out. ar i can't pharmaceuticals of the u.s. is going to be bought by a company in japan, $24 a share in cash on the price. you can see their performance over the past year by aria, it has risen by -- more than doubled, in fact, 153% over the past year here. the shares are halted. that's why we're showing you the one-year chart. they were halted pending news. now we have that news. that's the deal headline within pharmaceuticals. then we've got mars, the chocolate/petcare company, greeing to buy a deal for $9.1 billion here. it looks like $93 a share is what those v.c.a. share holders

will get, as the ticker indicates, woof, a veterinary services company. those shares up 33% over the past year. those shares also have been halted this morning. and then there's yet another healthcare deal that was announced earlier. this is united health insurer, buying surgical care. it's an operator of outpatient surgical centers, $57 a share is what we're talking about here. the total value about $2.3 billion here. you can see surgical shares are up about 17%. there is also, i should mention, the j.p. morgan healthcare conference out in san francisco that's been going on, so we could see some more healthcare headlines coming out of that as it is going on. jon: i love that you actually woofed. julie: well, how could i miss that opportunity? jon: ok. coming up, potential fed chairs are weighing in on how they would change the fed strategy, tighter monetary policy on the horizon. that's next. this is bloomberg. ♪

jon: this is bloomberg daybreak. let's check the markets. if you're looking to equities, we came very close to breaking 20,000 on friday. 0.000, whatever it was. i can't wait. we're negative 20 if you're looking at futures on the dow. negative one on the s&p 500. we closed at an all-time high in friday's session, a little bit soft if her you're looking at equities today. switch up the board very

quickly. in the bond market, three weeks of gains for treasuries. we're lower again, some curve flattening out there, down to 2.39. front and center is that weaker pound story at 1.2140. the year-end median forecast is still 1.25. we trade there at 1.2140, weaker pound story. julie: the new year president new meeting -- the new year brings new meetings. we spoke to the dallas fed president on friday and got his outlook for the year. >> i think a higher fed funds rate in 2017 is going to be more appropriate, and the thing we're going to be debating as the year goes on is the rate at which we should be removing accommodation. but i think the s.c.p. that came out as the projections gives you a sense of where we are, gives you a sense of my views. and i think we should be removing accommodation. i still think we can do it in a

gradual and patient way. julie: with us is the f.x. strategist at b.n.p. paribas. there was also a note out this morning, or story out on the bloomberg, talking about the potential replacement fed chairs and that they're saying they might be a little more aggressive. two increases this year, three increases this year, does it matter that much when it comes to currency trajectory? >> it matters a lot. the only caveat is that the dollar has already moved a lot, because everybody has been easing elsewhere in the g-10 the last few years. we're coming into this with a dollar that's already pretty high. if the dollar moves too quickly, it could slow the fed down. but we think we'll get at least two and more in 2018, even with the current fed setup. jon: talk to me about positioning. we came into this year with a market with record shorts, if you're looking to treasuries. and then we try to squeeze. we've had three weeks of gains for treasuries. for the dollar have we had the squeeze yet? daniel: a little squeeze last week, a little squeeze on dollar longs. we could see more of a

correction in the short term. market is priced very good for the dollar, which is probably correct over the course of a year. but it wouldn't rule out periods of concern about implementation of u.s. policy or some geopolitical event causing a setback for the dollar in the near term. julie: you mentioned earlier when we were talking that your favorite pair here against the dollar is japanese yen. and your year-end forecast for 2017 is at least among the highest, if not the highest among the major banks we surveyed at 128. where do you see it going so high, so much higher than your peers? daniel: we're in a reflation air environment. inflation is going to be higher. the yen is very vulnerable, because the d.o.j. has committed to anchoring long-end yields. if you anchor long-end yields, while inflation expectations are going up everywhere, you get a much more negative real yield, and that makes the yen quite vulnerable. if the yen moves too far, too fast, the b.o.j. may allow the

yield to go up a bit. but as long as it's a measured appreciation for the yen, we think we can get to 128 in dollar-yen by the end of the year. jon: will the fed stomach the move? traditionally we talk about an unwarranted timing of financial conditions, a stronger dollar, a backup in risk premiums and what that would mean. now it looks like the stronger yields, high yields are reflective of optimism in the future. how clear a distinction is that? daniel: i think they will tolerate it. i think it's important to look at the change. which we see on our forecast peaking around 9% or 10% in q-1, even with the 128 number. that's much less of a head wind than we 2015, when you had the big devaluation of the chinese currency and euro and yen all within one year. you add up to about a 17% head wind. even with our numbers, we'll have less of a dollar head wind than we had a few years ago. but if the dollar moves too fast, this is a key feedback loop. it's almost too far, too fast,

the fed gets more cautious and that slows us down. julie: is that the biggest risk to the dollar this year, or would it be more of a political risk? daniel: i think there are a lot of risks we need to focus on, because it is a consensus trade. we believe in it. we're part of that consensus. but we need to be cognizant of things that can go wrong. so if the market is counting a lot of fiscal policy in the u.s., if that doesn't happen, that can be a problem for the dollar. if there's a shock ex-terribly, which shares markets and makes the fed more cautious, that could be a problem for the dollar. there's lots of potential things to watch. julie: serve waiting on fiscal policy. how quick zl it need to happen -- how quickly does it need to happen for the markets? daniel: i think it's been front-loaded quite a bit in terms of equity market pricing, and you see it in confidence measures, manufacturing confidence is really high levels. how much of that is specifically related to fiscal spending or how much of that is reeled to reduced regulation, it's hard to aggregate. but there is a lot of good news

reflected up front in markets, and that's why, you know, something goes wrong, if we seem to get into a gridlock situation in washington, things like that, you could see some pullback, and maybe you need some pullback to kind of keep the pressure on washington to deliver. julie: dan, thank you very much, f.x. strategist at b.n.p. paribas, talking us through the currency setup this morning. jon: coming up on this program -- we'll run through some of the nomination hearings coming up this week over in d.c. a full deck of confirmation hearings are scheduled on capitol hill. rex tiller son, the former exxonmobil c.e.o., will be the ar attraction, but will it push back trump transition? counting you down to the open in new york, about one hour away, futures negative, down 19 on the dow, negative about one point on the s&p 500. if you look at the ftse 100, up a third of 1% on the session, but a quick calculation on my bloomberg, that's 10 straight days, the longest winning streak since may 2013. if we close at these levels,

switch out the board, a weaker pound story, some of the stocks listed on the ftse, 121.32 is down 1.8%. the weakest currency in the space this morning. it is the pound. treasuries very well bid, yields down to 2.39. we talked about some of those crowded positions. one was the short treasury trade. three weeks of gains now. some of those have been squeezed. treasuries up, yields down. yield on a 10-year. coverage continues from new york. this is bloomberg. ♪

jon: from new york, this is bloomberg. senate confirmation hearings will begin this week, giving democrats the chance to officially vet president-elect trump's nominees. one candidate set to face heavy fire is senator jeff sessions, trump's pick for attorney general, who will be responsible for implementing much of the president-elect's

proposed agenda. for more, we get more from washington. the alabama senator, how tough a ride is he going to get, kevin? kevin: well, democrats are going to bring up past controversial statements that he has made decades ago that are racially charged, to be quite candid with you. of course, this is part of a larger effort for democrats to frame and shape the debate of the incoming cabinet picks that trump has chosen. but here's the bottom line -- it's going to be a tough road for democrats to block any of these picks, simply because of the numbers. so they are going to try to criticize folks like senator jeff sessions, who, to be quite frank, has a lot of friends in the senate. he's been in the senate for decades. he's a member of the club, so to speak. but also for folks like steven as well and, of course, rex tillerson, the secretary of state pick, whose confirmation hearing is on wednesday, which will -- which is sure to be another heated one as well.

jon: some of these nominees have a big web of financial interest that need to be untangled. there's an accusation, an argument coming from the democrats that republicans are looking to get this done quick, a fast and dirty process, so they avoid the vetting that needs to be done. is there an argument there? kevin: well, two things. first and foremost, there's a procedural step in congress that republicans can take, which would allow them to bypass some of the more ethics procedures that we're used to. the second thing is, trump himself never released his tax returns, so the bar isn't really set that high. but i would expect democrats and the folks that i'm speaking with even this morning on the left are telling me that they are looking to press some of these picks such as the treasury spot on their previous financial disclosures and financial dealings. most notably, of course, with one west bank. julie: if the democrats don't have a hope of blocking any of

these nominees, what then is the goal? so if they're coming out, whether it's trying to get some of these financial statements from examining sessions' past, what's their end game? kevin: that's a great question. they're heading into 2018 midterm elections, and so they want to characterize all of these folks as being for big banks, you know, the nti-populist type choices. they're opposed to main street folks, mainstream folks. this is part of a broad strategy to try to lay the markers for the coming cycle. let's see if it will work. but, you know, they still have their work cut out for them. at the end of the day, things like infrastructure spending are in the pipeline, tax reform, and, of course, the repeal and replacement of obamacare. democrats strategizing right now on how best to lay out

their case heading into 2018. jon: big week ahead for you, a busy one as well. kevin, thank you very much. julie: coming up -- the dow inches away from hitting 20,000. just how important is this milestone? i bet jon has an answer for you on that question. and live from detroit, we'll bring you an interview with mary barra, g.m.'s chairman and c.e.o., how the trump's position on trade and china could reshape the auto industry. this is bloomberg. ♪ with the xfinity tv app,

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download the xfinity tv app today. i've spent my life planting a size-six, non-slip shoe into that door. on this side, i want my customers to relax and enjoy themselves. but these days it's phones before forks. they want wifi out here. but behind that door, i need a private connection for my business. wifi pro from comcast business. public wifi for your customers. private wifi for your business. strong and secure. good for a door. and a network. comcast business. built for security. built for business. julie: this is bloom perfecting, i'm julie hymen. here's what you need to know at this hour. the volatile start to 2017 for the offshore. falling for second day as china

weekened by june. the pound gets pummeled. u.k.'s prime minister hints at a single market exit for the u.k. and fed tightening potential candidates to head the federal reserve next year, including glenn hubbard of colombia university. monetary policy would be tighter if they were in charge. that's what you need to know. jon: thank you. futures are negative. a little bit soft recession. down about 37 points on the dow. .1 on the s&p 500. in the bond market, if you switch out the board, treasury very well a bit ahead of this. threes, 10s and 30's. the five basis points. you look across the curve a little curve flattening in today's session. outside of bonds, a weaker pound. significantly weaker. 121.43. down over one full percentage point. to today's morning meeting.

jill joins us from banc of america merrill lynch where she is a u.s. equity strategist. jill, stocks record highs. the dow friday almost 20 k. we smoke with muhammad who weighed in on the significance of this number last month. >> i think the 20 k will have an influence because we're getting higher rates for the right reasons. and the right reasons are people are pricing in higher g.d.p. so the 20k will be the signal of higher nomal g.d.p. and the higher mortgages are going to seem, yes, that's not great. it's coming because we're going to get more income. more jobs. more growth. jon: jill, the hype, the excitement around 20,000 points on the dow. significant because of the rally we have had. what does it mean to you? jill: i think it's a number people have been fixated on recently. whether you are looking at the dow or the s&p 500 which is the main large cap benchmark we

forecast, markets have been continuing to make new highs. we could be in a period where the markets start to digest whether we will get the pro-growth and stimulus policies from the new administration. there could be a little volatility as we wait for that. the big thing to watch for is the sign that we're starting to seat optimism that turns into what we have been missing this bull mark, which is euphoria. if we get the policies everyone is looking for that could be a positive sign for the market going forward. and even though our base case on the s&p 500 index is 2,300. if we get that typical late stage bull market rally, we could go as high as 2700. jon: backing up you need earnings growth. we'll get to that. you mentioned euphoria. i have seen you talk about participation and where the money on the retail side of things begins to start to come into the market and start pinpointing. are we going to see that? jill: we're seeing early signs

of it. tracking flows. investors have been buying u.s. equities post election. it's really just a small amount to offset the massive bond inflows we have seen since the crisis relative to equities. it's still a relatively small amount. that big rotation hasn't happened yet, but if we do see more signs that policy and stimulus and all that are going to come through, then we could get there. jon: the great rotation is a little bit of a myth. we should think about it as a risk rotation within asset classes. is that the appropriate way to think about it? jill: with what we look at, the sentiment indicator we have been tracking, suggests that -- strategists are only investors put in about 50% of your money in equities. which is still pretty low relative to the traditional benchmark, 60%, 65%. most of the rest is in bonds and cash. i think we're at the point where we could see allocations shift. more toward equities. for some investors allocation

equities is high but that's just because of the movement you have seen in prices. i think for here earnings is the next big catalyst. we're trading 17 times earnings valuations do look expensive. that's a near-term risk. if policy disappoints -- jon: how quickly does the fiscal stimulus need to come to back up how the market has already moved? an extension that have is how quickly does the earnings growth that a lot of people are predicting for this year need to actually be at the bottom line in the earnings reports. for that matter q-4 jill: the bad news when all is said and done even with earnings coming in better than expected for the full year 2016, we're still only going to get about $118 in earnings for the s&p 500 that's the same level we saw at the end of 2015, 2014. earnings have gone nowhere for two years no earnings growth. i think the good is that we have started to see pick up in the

quarterly data. earnings growth term positive last quarter for the first time since the earnings recession started. this quarter we're expecting a further pickup. looking for about 5% to 6%, about 1% higher than consensus currently expecting. top line is going to be one of the biggest things to watch out for. we have been in a period where companies have been doing everything they can to pop up top ngs via buy p.a.c.s, line growth has been missing. jon: great to get your thoughts. julie: oil now falling for the first time in four days on and increase in u.s. drilling activity. fueling speculation that opec's production cuts could provide output in north america. tom petrie, thank you for joining us. this has been an interesting relationship. we're getting headlines on the one hand that the opec members are indeed carrying through on

their promises to cut. at the same time we have seen the count in the u.s. up for the 10th straight week. which narrative wins out when it comes to how oil is trading? >> i think we have a generally constructive outlook for pricing to improve. the u.s. will come on, but there's going to be a bit of a lag to really turn production up. tom: we did bottom about three months ago. and we're now seeing some up turn. but i don't think that's enough to offset the cuts that opec is talking about. both russia and more importantly saudi arabia look to want to cooperate on this. the big risk in my mind as we go through the balance of this year will be how strong the dollar becomes and what does that portend for global demand growth. i think opec is working hard to implement its cuts, but if

global demand growth falls short, that's when we'll get into a real period of indy jesston. -- indigestion. julie: when you look around the opec members and nonmembers who have promised to participate, who do you see as the most vulnerable if we start to see somewhat of a demand drop if we see that continuing dollar strength you are talking about? tom: well, in terms of vulnerability, sternly the weakest members of opec have real issues. venezuela, it falls in that category. nigeria to a degree also. i really think those are the two that have the greatest sensitivity to a shortfall here. and we've got embedded declines beginning to show up in mature production across the board. both within opec and in non-opec contrifments that may be the other -- countries.

that may be the other cushion that helps this all stay constructive. which i think it will in the course of 2017. we have to remember, however, we're still looking for a draw on inventory to get us back into balance. it's going to take a fair amount of this year's draw on inventory to get us to that point. julie: inventory still at high levels here in the united states. tom petrie, got to leave it there. thank you so much. petrie partners chairman joining us from denver. we're going back to the north american international auto show in droy. that's where david westin is sitting down with general motors chairman and c.e.o. mary barra. david. david: thanks very much, jewelly. we're joined by mary barra heemplet we want to talk about the traverse which you announced an hour ago, the new crossover. first big news about the volt. mary: we're excited it won north american car of the year. it really -- this is not an electric vehicle. it happens to be a great car

that's also electric vehicle. the features of functionality. it's a platform of technology. the team was able to do 238 miles. we challenged them to 200. they got 238. did it it in a shorter time frame. it's a great car. david: it's for sale now. mary: you can buy these right now. and we delivered already to some customers in california. david: is there any track record now on how it's selling? mary: it's early days. as we look there is a lot of interest in the vehicle. this is just the start of the platform we're going to use for electrification to go much broader into much more different vehicles. this is the jumping point. david: i mentioned the traverse before. this is the new version s.u.v. from chevy. the s.u.v. has become so important. certainly to g.m. and your fleet, more generally in north america. what is that about? mary: part of it is people are on the go. we have very, very busy lives.

and s.u.v. allows you to adapt to your lifestyle and have everything you need. launching the chevrolet traverse rounds out a full chevrolet s.u.v. crossover portfolio from the trax all the way to the traverse. it is people saying, i want a car that fits my life style. one of the interesting facts is once someone drives an s.u.v., rarely do they go back to a car. to a see fan. -- see dan. we're excited we have several s.u.v.'s to roll out this year. we also just recently launched the equinox, which is right in the middle. we couldn't be more excited. we think it's a great new refresh product portfolio for what the customer is looking for. david: you are responding to consumer demand. it wouldn't work otherwise. at the same time, are s.u.v.'s somewhat more profitable than other automobileser. it helps your bottom line. marery: s.u.v.'s and trucks are an important part. but we work across the whole

portfolio to make sure we have the right products. that are also warranting the investment in the capital. that's something we have been disciplined about over the last few years to make sure if we make and vestment it generates the right turn. david: historically, one of the issues is fuel economy. there are fleet requirements for fuel economy and making sure you balance it with more fuel efficient cars. is that still the case? how is that evolving? mary: the fuel standards have changed a bit although we're on a way to the 2025. the midterm review is something we still need to look at and make sure we're enabling -- able to achieve fuel efeshencies most effective way. otherwise it costs the customer. i would also say across our whole portfolio of s.u.v.'s and trucks we have improved the fuel efishency of both vehicles as well. we're trying to do both. david: there may not be as much a differential in fuel efficiency between trucks and

cars. mary: absolutely. light electrification. all with a goal to make sure we have the most fuel efficient fleet. david: you mentioned the midterm review. that's this year. mary: for 2018. david: what do you expect from that particularly as we see a new administration coming in. are you expecting relief? mary: what we're looking for is make sure we have flexibility. one of the reasons i think they put the midterm review in is because technology would evolve. the marketplace would evolve. we need to make sure we're able to put vehicles into the marketplace that customers want and do that as effectively as possible. we're looking for flexibility. david: electrification is important. given what's going on in the country right now also the new administration coming in. terribly important. it can affect all of us including the allo industry, g.m. itself has been in the news. as you look forward to this new add martial -- administration, what are you anticipating? mary: there is a lot of opportunity. we have more in common with the

administration and president-elect than we have at odds. we're looking to strengthen the country. strengthen business performance. we're a big provider of jobs. we provide over 100,000 really good-paying jobs. and also looking for some reforms. some regulatory streamlining and he's already made statements about the tax. those are all things that are going to improve our business. allow us to reinvest. david: opportunity there four. mary: i believe there is. and also people needing to understand this is a very complex business with long lead times. products, the bolt built in michigan and the traverse we just launched is built in lansing, michigan. those were decisions made a few years ago. so we need to understand how investment is made. then look for the opportunity. david: it's also complex in terms of the supply chain. parts cross borders and come back. assembly is done someplace else. what is your interest in terms of trade?

particularly if there were things like cross border tax, would it help g.m. or hurt? mary: it's too early i would be speculating. it depends how it's put together. we very proud of the fact that our strategic -- strategy is to build where we're. over 70% of the vehicles we sell are built here. we're the highest u.s. content of the -- all the manufacturers. we have a lot of jobs here. we're going to look to make sure that it recognizes the significant investment that we have already made in this country anti-jobs we're providing. david: talk about autonomous vehicles a little bit. where does that project sit right now at g.m.? everybody now is announcing some adventure.n must mary: we feel very good about where we're at. we have vehicles getting real world experience in san francisco. in arizona. and now in detroit. and it's not just about miles traveled. it's about experiencing all the different situations.

san francisco, downtown san francisco, there's not much better place to experience a lot of traffic, a lot of things that just come into the roadway, double parked cars. our vehicles are learning a lot. i think you'll see significant, ovement from us early this year. david: last june we talked about changing a moled from where you're selling cars to providing a service for a fee. where are you in that process? is that realistic? mary: as we get to aton must vehicles it will start in a ride share-type environment. customers will define how it goes. ultimately today's business we're also excited about what we just launched with cadillac. we have a subscription opportunity for people who really want to drive that performance v-series car on the weekend but need the functionality of an escalade, those are the types of things we're looking at and experimenting. david: explain that new service. last week.

mary: piloting it. david: book by cadillac? mary: it allows a person to pay that fee and with an app select among a group of cars, cars that they want for different periods of time. throughout the year. a monthly bay sifments we're very excited to pro-- basis. we're very excited to provide that. one of the great things about a business like that you can tweak it with customer input. david: record year for vehicles, 2016 couldn't possibly match that in effect it beat it. you set a new record. what is 2017 hold in store? could you beat that record again? mary: we think we'll have another very strong year. much like 2016. general motors, we're looking to continuing to improve. that's our goal to build on the momentum of 2015, 2016 carry that into 2017 carry that on the traverse, terrain, and bolt. we think we can have that and deliver another strong year.

david: you have a great product. you also have to have the money and be willing to part with t as you look at the factors that could drive 2017, to the up side or down side, what are the ones most important to you? wages? disposable income? overall consumer confidence? what drives it? mary: consumer confidence is very important. we're seeing household wealth go up. we look at a number of different indicators. if they all stay in the direction that we think they are. barring some unforeseen shock, we think we'll have another strong year. david: one of the topics is wages. we just had numbers come out on friday. are you a big employer in the united states and elsewhere. are you seeing wages wagse go up materially? mary: they are going up as expected. as we look across -- that's very important we manage that but also understand where we fit. i'm proud of the fact of the 100,000 jobs, whether they are technical jobs, assembly jobs, manufacturing unit, we have good-paying jobs that allow

people to live a very good life. david: thank you very much. mary barra, president and c.e.o. of general motors. ulie: thanks so much, david. mary barra at the north american auto show in detroit. jon: sterling slide. the pound hits a 10-week low. the prime minister hits a single market exit for the united kingdom. that's next. we take you to the f.x. market. this is bloomberg. ♪

jon: from new york city this is bloomberg daybreak. get a check of the markets beginning with this pair right here. the turkish lrye against the u.s. doll amplet we're up 2.28%. all-time low. the pressure has been building. the lira now the worst performing currency so far in

2017. last year the back end, the president of the country came out and said he would like the citizens to convert their holdings into turkish lira. for the last three weeks residents, nonbank companies have been decreasing dollar deposits. beyond that inflation running wild above the central bank's target. and they are not willing toint convenient. in the f.x. market. the market testing that resolve. significant lira weakness. the border markets, run you through the state of players. another trade. dow futures, negative 42 points. s&p 500 closing an all-time high in friday's session. down by about .1%. if you look at the ft-se, 10 days of gains, up .2% and change. really bucking the trend for global equities. soft recession emerging. i'll run you through the bond

market. yield curves flattening on treasuries. down four basis points. a ton of supply coming into the market this week. you're going to get $20 billion in 10-year notes. $12 billion, 30-year notes. we have had three straight weeks of gains for treasuries. in the f.x. markets, the cable rate at 121 -- 1.2142. this as the u.k. prime minister sends the pound lower after the u.k. p.m. continues to lay out her precksit goal signaling a single market exit in order to curb immigration. rexit what's next. signaling, she doesn't talk about it so much. what she focuses on is this control of our borders. then we have to kind of like extrapolate from that what she's going to do on the trade side. how difficult is that? guest: it's a breckset it math

metics going on here. she could well say as she said this morning she doesn't care for such comments as hard or soft brexit. for her the financial markets do work in those binary terms. we saw those today and yesterday. this feeling in the market, whenever she down plays the single market, leads with immigration and control of lawmaking and as her priorities and puts single market or trade aside, that's the reason to set browned and we saw that this morning. jon: from the reporting you do anti-conversations you have, is there a sensitivity towards the market moves for the government when they see the pound rolling over? is it something they are sensitive to? simon: the british government is traditionally, this plies to both governments of conservative and labor persuasion, they tended to not worry about the pound. the u.s. treasuries secretaries have struggled with the market and strong dollar there, they talk about the pound being something for investors to

anti-not their concern. certainly were the pound to plunge in a disorderly way they would be concerned. for moment they aren't. at the moment they are quite happy for the pound to fall. provides them with a safety valve against any economic pain later on that results from brexit. she was asked about the pound and pushed it aside in her morning press conference. for now they are not too worried. julie: on the flip side, simon, from the other angle, if the administration is not concerned about the market, is the market growing impatient with the lack of detail and lack of more glaret? simon: absolutely. as jonathan said at the top, if you're relying on signals or hints or indications, you are probably a bit worried you don't know exactly what's going on. nobody knows exactly what's going on. traps prime minister may does. points out it does take a little while to get all the ducks in a

row. they'll be coloring in details in speeches she has planned over the next month. certainly does worry the market they don't know what's going on. but teresa may's message in her time she'll fill them in. jon: this is martial test time. you come down from mars and give them this set of data points and look at them and wonder what's happening in the world. if i came down from mars and been away for a long time and looked at the u.k. economic data points, it's hard to spot brexit, or anything hasegawa happened at all. -- anything has happened at all. simon: certainly the economy has done much better than people thought. banks including. morgan stanley saying last week it's been forced to eat humble pie because of its recession forecast having been to be shelved. the feeling in the economics community is that last year was a bit of a surprise.

the economy proved more resilient. if you look at the forecast, they are still weak for this year. still expectation that something will occur at some point to hit the consumer. perhaps slow business investments. for the large part it's matter of timing. most of the major banksings say there won't be a resefplgts there still will be a slowdown. it -- won't be a recession. there still will be a slowdown. jon: simon kendy. come up on this program. headlines from boston president erik rosengrin. three hikes in 2017 if g.d.p. growth continues. that's his message. we'll cover that nefpblgts this is bloomberg. ♪

jon: good morning. bloomberg daybreak on this monday, january 9, alongside

julie. david is in detroit. alex is off. we continue to count you down. the opening bell just over 30 minutes away. nd five seconds as well. we switch on the board quickly. treasury -- down five basis points on the 10-year at 237. f.x. market a weaker pound storyment some of the market moves. get you to what you need to know this hour. we're on record for the s&p 500 and nasdaq sitting at record highs as the dow continues its quest toward 20k. futures signaling a softer open in about 30 minute' time. the f.x. based currency gripped by political risk. sterling touching a 10-week low and u.n. volatile start to 2017 shows no signs of abating in today's session. and fed timing potential

candidates to head the federal reserve next year, including glenn hubbard of colombia united states suggests tighter money policy could be on course if they were in charge. that's what you need to know this hour. julie: you also need to know we have a few deals that have been announced thus far this morning. we're looking at the targets here in terms of movers. first of all we have united health care buying surgical care which is an op prayive care center. $57 a share. trading higher by about 15%. d.c.a. wolf is the ticker. as i mentioned earlier to john's amunes the. 31% premium. the deal value there. $9.1 billion including -- ariad farms taking the cake here with a 73% gain. it's being bought by decata of japan. the premium there 75%.

$4.7 billion is the total deal there. it owns a leukemia drug and lung cancer drug. that's what they are getting in that acquisition. that's the deal picture that we're looking at this morning. what about the deal picture for 2016, bloomberg news had an interesting story this morning looking at the tally for 2016 and the top advisors. goldman sachs which has been a big outperformer since the election, 309 deals last year what it advised on worth $876. followed by morgan stanley. then j.p. morgan at number three. and banc of america merrill lynch at number 4. predictions were it wasn't going to be a very strong year for deal making in 2016. then things started to heat up. and the prognosis for 2017 is already looking relatively positive as well as we get this handful of sort of small to mid-sized deals this morning. jon: thank you very much. we're about 27 minutes away from the open and about 10 seconds. futures all time, all time

session lows. down about 50 points on a sefplgts down about three points n the s&p 500. 0.0002% from that line in the sand everybody is discussion. keeping you busy. >> i don't know if i'll have a job after 20k. here's the thing. we always point out. you want to approach it from a sober standpoint. it doesn't change anything. it's the same market we had a week ago. it's a nice round number. it's interesting to look at. it does speak to how far we have come. we moved through that last 1,000 points quickly. what's interesting is since the election we have had strong outperformance of the dow compared to the s&p 500. a lot has come from the big banks. goldman has been on a tear. that's an interesting story that's been propelling it forward. at the end of the day the valuation on the dow is it pretty high as well as the s&p, but the dow is about 18% above

its 30-year average. the s&p is 20 to 25. it's not like some huge apocalyptic event. jon: dig deeper into the price. morgan stanley, compared stock investing buying a dream hoping to sell it to a pittsburgh sucker with a bigger dream. what's the price of the dream? oliver: you basically got people feeling pretty good allege willing to pay a price. especially when you look forward and basically looking at an environment we haven't had in the past year which is likely an earnings growth in the environment. that really is sofert foreign concept to stock investors the past year where earnings have been flat. that does kind of bring some different sort of analysis to it next year instead of just looking at multiple increase next year, you might have earnings growth as well that will provide a market that's rallying not just on the p.e. but a fundamental level. who knows they'll stay flat or won't grow quite as much if we have earnings growth. jon: thank you very much.

joining us to continue the conversation on the markets and some of the world's biggest banks, banc of america, j.p. morgan, and wells fargo will be releasing their latest quarterly results at the end of the week on friday. and get a read on retail spending. for more on what investors are atching, margaret, portfolio manager. march greth, great to have you with us. talk about the financials. it's where the big rallies come from over the last couple months. give me the why. march greth: they certainly have rallied and we hate to not own anything that's rallied dramatically. within financials we think we can find better growth elsewhere outside the large money center banks. are you correct that we now are after a period of nearly a decade of low interest rates and regulation, we're entering a period where you may have this double whammy of higher interest

rates, maybe a triple whammy of fucts as well. that means the fundamentally landscape has improved. julie: where are the better opportunities within financial it is not the banks? margaret: schwab. opportunities still beneficiaries of higher interest rates. the large money center bangs aren't -- we're growth investors. julie: do you 20,000 if nothing else l. it draw more retail investors back to the market? we still have had remarkably since the financial crisis this some mentality among investors that the system is rigged or that the stock market is not worth investing in. does that change? margaret: gosh, i'm not sure. it does seem like retail investors tend to be later investing after a market has always rallied. we try to get in and think about where's the fundamental value. when we think about the market, and where we're in relative

value, we generally think that the market's approaching fair value. that doesn't mean there aren't pockets of opportunity. health care is an area we still think is undervalued and could make good money in health care. that's where we have focused. jon: some of the small caps on the russell have rallied pretty aggressively. the tax cut story as you pointed out. expectation doesn't always equal reality. talk about market moving towards fair value. where is it overextended right now? margaret: there are some areas -- i would say within financials you have to separate expectations from reality. i guess the big learning there is if you look at the fundamentals and valuations within the financial sector, most of the financials have multiple rate increases factored into the valuations. yes, rates are probably heading higher. if there is one thing we learned from this fed it's that they are constantly incorporating new economic data points into their thinking. not just u.s. but data points outside the u.s. that's a new thing for the fed.

between here and mid 2018, a lot could happen to change the slope of the curve. i would caution you to separate what you see as something that's perfectly valued in the stocks versus there is a lot of room for volatility between now and the next three fed hikes. julie: you mentioned health care. certainly that has been a very volatile area. biotech has been struggling. there's been all this scrutiny on drug pricing. what do you think happens there in 2017 and are you within health care, are you looking specifically at biotech? or are you staying away from it? margaret: we think biotech is trfplgt it helps it was one of the worst performers last year. the subindex skpwrund performed by 18 percentage points. it's interesting i think company management teams have gotent message that pricing needs to moderate. and you have seen that with messaging. you have seen that with their targets.

there is a big health care conference this weekend. i would expect as companies talk about their 2017 outlook, they'll be very specific to disclose how much of their guidance is including what level of pricing increases as opposed to what level -- jon: the issue of pricing is going to be a massive issue this year. you talk about the health care providers bringing their pricing down. talk to me about the price tolerance of some of the consumers that could face higher prices given we could have protectionism on the table as well. margaret: we think innovation will gearn returns. if you are, for example, immune oncology where companies are creating new and different drugs to treat cancer, they'll get prycing. if you have drug that's been on the market for five, 10 years and still taking price increases of 8% a year every year, that's not going to be sustainable. i.m.f. has shown branded drug pricing increasing has moderated from high single ding it pace in

2011 to a low one now. that's sustainable. jon: great to have you with us on the program. futures a little softer ahead of the open. let's get your headlines outside the business world. >> jon, the war veteran accused of killing five people in the fort lauderdale airport on friday makes his first court appearance today. he could face the death penalty if convicted. santiago spoke to investigators for several years. authorities say it's too early if the shooting was terrorism. taylor: in rondon today a traffic nightmare. commuters had to find other ways to get to work after thousands of underground workers went on a 24-hour strike. their unions rejected a last-minute offer and the subway system warned services were severely reduced. the london underground carries as many as 4.8 million passengers a day. british foreign secretary, boris johnson, looking to build ties with the incoming trump

administration. johnson flew to new york for meetings with trump advisors last night. he then traveled to washington to talk with congressional leaders. global news 24 hours a day powered by more than 2,600 journalists and analysts in more than 120 countries. jon: thank you. coming up on this program what trump said hawkish turn potentially candidates for the chair suggest monetary policy will be tighter if they are in charge. later on, crude falling for the first time. we'll head to the futures to reveal what's behind the sharp drop in oil prices. from new york as we count down to the cash open, 18.30 away. futures soft down. ♪

jon: from new york this is bloomberg. janet yellen's four-year term ends in january, 2018. we're hearing from three of her potential replacements. glenn hubbard and former fed governor kevin war said they would pursue tighter money policy if they were in charge. the basis for this conversation, is the assumption she doesn't get a second term. michael: a reasonable one given what donald trump has said. jon: hawkish but not outright there saying we need 200 basis points from here. it seems to be quite hawkish on the margins. michael: they spoke at the american economic association

conference in chicago this weekend. none put a particular number where the rate should be right now. they just said basically they think the fed is behind the curve. you look at the taylor rule named after one of those candidates, it would put the fed funds rate at about .2%, the fed's at 66 basis points. on that basis they are a little behind. hubbard said the feds overstated shelf life. wharf saying they are pursuing a will-o'-the-wisp policy aimed at a very short termism and they should be longer termism. a lot of criticism for the fed for not having the funds rate higher. jon: we had a conversation on friday and talked about the labor market report and structurally challenged, that's a job government not the fed. if these guys got a point anti-committee of the federal reserve, central committee, are

they drifting toward the kevin walshes of the word. michael: they all agree at this point it is too low. the problem is how fast do you get there? what do you do to the markets when you raise rates? that's a point they make the fed does not take into account financial markets as well as it should. other officials say yes, we have a problem with that. it's not good in our models. we're not sure how to put the impact of market gyration noose there. it's something they have to work on. jon: any idea john taylor would want his own rule? michael: he does want a rule. the problem with the rule you need to specify the parameters. the neutral rate is lower than the taylor rule anticipates. the potential growth rate is lower. so there would have to be some tweaks to it so it isn't clear whether that's the best idea. you might want to watch warsh. he's not only a former fed official, but he is independently wealthy, which trump seems to like.

there may be something to a warsh candidacy. does trump want higher rates? does he want the fed leaning hard against his stimulus? jon: we have heard a lot from kevin in the past. to your point about the high rate story. the basis of this conversation was the assumption that fed chair janet yellin wouldn't get another term. if he's a low-rate guy, why wouldn't the president want a low-rate fed chair? michael: he was critical of her during the campaign. some his appointees are now saying nice things about her. it all depends on how they get along once they finally meet. and what the president really wants by the time he gets to the fall when he needs to make a decision about who the next will be. jon: got a great stamp collection. maybe they can talk about that. great to have you with us on the program. julie: thanks, jon. stamp collecting. let's talk about oil now.

opec output curbs are offset by growth us in us grilling, we have been seeing oil trend lower. turn to the grade. joining us is chris, director of strategy at bell curve. on the one hand we're getting these headlines that it looks like the opec members are going through with their production cuts. on the other hand, we have people -- reramping production here in the u.s. is that what's really putting pressure on oil prices? chris: i believe absolutely that's putting pressure on oil prices. that carry through from friday and that count up a 10th week in a row. more or less it's in the forecast coming out. we have bar clays coming out -- barclays coming out saying there will be a 60% increase in rig count. e're going from 527 up to 875. with that increase a production in the u.s. has nothing to do with any of these opec cuts. we're going to see a follow

through, a lot of people think the u.s. is trying to undermine opec in increasing as fast as they are. i believe it's price driven right now. very profitable for a lot of those companies that produce that $55 a barrel. julie: is the opec production cut priced in at this point so we're going to continue to see re reaction to inventory and production and news out of the u.s. versus these headlines about opecual actually enacting the production cut? chris: i believe the production cut is still in question. i know a lot of people can tie iraq to the u.s. and their strategy. but being second largest opec number, they had a report come out from their state organization that put their deliveries to european and asian counter parties, their biggest trade partners, with no reduction whatsoever. the jury is still out on that opec. i believe right now it's going to be up -- enthaily focused on this new regime with trump and

that rig count getting close to 800 will be huge news. julie: we're creeping up there. as we see oil fell back by 2% this morning. 5274. thank you so much. director of the strategy at bell curve capital. coming up, the future of autonomous vehicles. can detroit compete with silicon valley? we'll head whack to the north american international auto show to hear from dan. as we get the president-elect once again tweeting about u.s. auto makers. this is bloomberg. ♪

julie: president-elect donald trump tweeting this morning about the auto sector. praising fiat chrysler. it's finally happening. fiat chrysler announced plans to invest $1 million in michigan and ohio plants. adding 2,000 jobs. this after ford said last week it will expand in michigan and

u.s. instead of building a million dollar plant in mexico. thank you ford and fiat. turning to detroit, there was a time we thought technology as being in silicon valley and manufacturing in michigan. with the auto and tech industries betting on furet of autonomous vehicles, can detroit compete with silly von valley? -- silicon valley? >> i absolutely think they can compete, especially in car tech. distance always dilutes things. if you had your druthers, if you're running a car company, and you could say i'm going to have my manufacturer, design, and technology all here in one place, you probably want that. there are huge benefits for that. collaboration and the the cost and everything else. one of the manages, you are biased and want to have it close to other parts of your business.

people in this area and you're seeing more and more of it and people who are mi lenials coming from these universities all over the -- millennials coming from these universities all over the country. we had 205 university interns represented. detroit has a real sort of mystique about it right now. among young people primarily the technology gist in this world. not a lot -- not all of them but a lot. that has to be pushed by car companies, government, business community. everybody in the education system. i was asking i was c.e.s. the last few days in vegas and talking to a guy who knew a lot about the virtual reality stuff. he also knew about the autonomous vehicles and cars. they announced this thing, i forget which company, in pittsburgh, a couple companies in pittsburgh, they are using pittsburgh as the test city.

why pittsburgh? are carnegie mellon? there are two or three certain educational tracks they have there in robotics and virtual reality or whatever it may be they are pushing out these engineers who are very, very specifically educated in those spaces. that's why it's there. it could be that simple. university of michigan, michigan state, wayne state, they create a couple of programs that are specific in technology and start pushing out these people who have a unique skill, all of a sudden that whole area can grow. a lot of things are playing with each other here. julie: that was quicken loans dan gilbert with our david westin. david is in detroit at the north american international auto show. as we hear about the sort of advances in technology that the auto industry is making and we also hear about the job, the push to keep jobs in the united states, is there talk about how many jobs that tech push is going to add in detroit?

david: they believe it really can revive detroit and all southeastern michigan. you just stutched on the two sides. on the one hand they want to turn this into a silicon valley in michigan because of the autonomous vehicles. on the other hand, you have the trump tweet about the chrysler fiat investment. you'll notice the big cars, the s.u.v.'s and trucks are being made here, the small ones in next cow. jon: more coming up from david and the auto show over in detroit. futures down across the board. negative three on the s&p 5 hufpblet they open up next. this is bloomberg. ♪

jon: moments away from the opening bell. we closed on friday. smp 500, a slightly softer session for futures.

rolling towards the session lows, negative three on the s&p 500. you can hear the opening bell rang in new york city. by over aown percentage point. curb splattered down five basis points on a 10 year. crude rolling over, 52.84. we did close at a record for the s&p and nasdaq. the nasdaq is poised to continue that run. we see the dow and s&p pullback to some extent. i want to start off by looking at the losers we are looking at. if we get $16 billion in deals announced today, not enough to boost stocks.

what are some declines we are watching? a german company that trades in the united states under scrutiny by the u.s. it has gotten a subpoena on possible overcharges. an interesting call on coca-cola and procter & gamble. have beenle stocks under pressure since the election. goldman sachs is cutting both stocks to sell from neutral. another reason is dollar strength, urban outfitters as well. we are seeing that company come out with holiday sales. those sales up less than anticipated. latest of the retailers to report weakness for the holiday season. these are some of the companies dragging on. for the returns right now, the

nasdaq holding on to a gain of .10%. we are opening a little bit lower. ick.ing us now is olli rehn he has -- is calls are contingent on a few things happening. he says there has in the buyers in the market. -- he sayset to this the enthusiasm has gotten us to where we are. there is not enough to take us to the next level. jon: we were having a debate on go too may be let's not

deep. the issue with participation and when the retail money starts to come in in a significant way is a conversation we keep having. >> there has been a reluctance of sentiment and retail investors for some time in this market. has been driven by companies buying back their own shares. have seen specific shift when you look at flow, people are coming into the market, buying stocks. there are still positive flows. since our crash, if you will, in january this time last your, people were panicking. flows never recovered until the end of 2016. it is difficult to gauge how much buying power is out there. look atf you fundamentals, it points to earnings rebound and you wrote

about more capex. >> this is a fascinating story. it can go either way. what is a trump administration and potential economic growth going to do to shareholder friendly activity, whether the or, can they capex do both? can they buy back shares and higher new people? that will be a big part of the story. julie: we go back to detroit. david weston's lives. weston's lives. live.id weston is david: chris, you and your family founded little caesars.

of thee taken so much money and we invested it in detroit. why? >> this is our home. we are proud of our city. since the turn of the century, it is the manufacturing of, ran into decades of difficult times an obligation to bring our city back. lot has been done. as we talk about infrastructure investment, private public partnerships, what could we learn? what worked well and what should we avoid? >> what we are doing injured troy -- in detroit is the power of great private public partnerships. the state of michigan stepped in and our governor had the vision to enter into a public private partnership with our organization.

$450bligation was to spend million in private funds. the 450 has grown to $1.2 billion. the private spend has accelerated and we have 900lyzed an additional million. the state thought it was going , in turn, it is about $2 billion spent in private funds. economicreation and impact has been incredible. david: you are not there yet. what determines whether detroit realizes the potential you hope for it? >> continued jobs. our automakers are doing a phenomenal job at that. record-setting year for vehicle sold. they are bringing a lot of jobs into the area area young people

want to be here. to be in detroit. the key is jobs first and foremost and second is the continued evolution of our education system. david: there has also been participation from the universities. >> we have great research universities. i'm very important to the overall fabric of our city and what they bring to it. they have been a big part of it. when you look at the mobility and ovations in our community and region, our universities are paramount in that regard. one of the criticisms of michigan was it was too dependent on the automobile industry. is this the automobile industry

driving this? to what extent have they diversified? one folks say that, i say any community in america would want this industry. any country would want this industry. have it.rtunate to it is a powerhouse. it is what moves our economy. effort madeen great and there are a number of firms , folks who are moving forward and investing in our community at a time that marries well with the resurgence in the automotive business. those two in concert are moving the city in a positive direction. go.e is along way to there is a lot that has to happen. we are on the right trajectory. david: how much of this is

istiment and how much of it solid business sense? the majority of decisions, we were the first, my parents, when the moved into the city in late 1980's, when a lot of firms were moving out of the city, it was a decision made through the heart. as time has gone on, a lot of decisions have been emotional, to try to restore the pride in our community because this is our home. detroit is a great investment. there is phenomenal opportunity for employers and businesses, entrepreneurs, developers. opportunity abounds. spirit and aa

rebuilding vibe that cannot be matched. affordability is big and the opportunity is huge. many of our decisions were from the heart. a lot of them make great fiscal sense now. that is what is exciting. it is all coming together. david: thank you so much. that is the report from detroit. jon: breaking news on the car industry. u.s. attorneyroit is confirming the arrest of all of her schmidt, a vw executive, related to the omissions probe company in the u.s. we will bring you further details we have on this. confirmation that oliver schmidt has been arrested in that probe.

has led to care gains in 2017. a top portfolio analyzer gives his outlook. we go to san francisco next. ♪

>> coming up, and interview with a.m. eastern30 time.

jon: we are about 14 minutes into the session. andhe s&p 500, some move deal flow out there. this have movers on monday. pharmaceuticals, on pace for their best day in about 17 years. bought.ing as for another health care mover, we have surgical care up 16%, having its best day ever on news united health is buying the company. surgerys an outpatient

unit to the largest health insurer, diversifying their business. we see over the last several years, the m&a flow. more than 27,000 deals were done. we are already off to a good start to the new year. we talked to an investor at the top of the hour who likes health care now. biggest gathering of health care investors. erik: another investor who likes health care a lot. thank you for spending time with us. issuesalk about the big looming over this industry

health care. it is really a number of industries, particularly of health care policies of the trump administration. what are some of the biggest unknowns and how will they affect drug companies, insurers and the like? biggest issues are the repeal and replace of the affordable care act, the outlook for drug pricing and tax reform and the implications of that. aree are some things we going to look to understand more of and get a better view of. >> how much can you expect from the trump administration when it comes to obamacare? republicans want to get rid of it. we don't know what they are going to replace it with. >> the repeal is one of the first items on congress' agenda.

we don't know when the appeal will take hold. 2019 or 2020. that would give republicans time to come up with a replace strategy. there is little visibility on what a replace strategy would look like. esther trump has not outlined a specific plan. made comments that no one will slip through the cracks. and erik: which companies hang in the balance? and managed care companies. if i take the hospitals, they have the most to lose because they were the largest beneficiaries of an increase in the insured population. managed care, it is a bit of a mix. these companies have lost money in the health care, but they have been beneficiaries of the

medicaid expansion that occurred. the last positive i would mention would be medicare advantage. have seen a privatization of medicare and medicare advantage as a way to control health care costs. erik: is there any services company you think will benefit regardless? >> we like united health. this is a company that is diversified and has a great manage team. erik: let's talk about drug pricing. it was a hot button issue. undergoing to be less so a trump presidency or more so given that he is the guy in the corner of the little guy? >> the last six to 12 months, health care investors have speculated what would happen here. most of those concerns have subsided with the republicans

sweep that we saw in november. trump has the populist streak. a lot of this depends on the behavior of the industry and there is some chance we could see drug pricing resurface if that is an issue. erik: if he takes a light handed to regulating and putting pressure on drug companies overpricing, who stands to win? >> in general, managed care companies. erik: isn't that interesting? corporate tax reform is an issue for any company that does a lot of international businesses which may have built up cash balances overseas. who are the winners and losers and health care if there is some kind of holiday overseas profits not a fullit is

holiday to bring that money in at a low tax rate. >> there are the companies that have large overseas cash balances. the secondary winners are the m&a targets for the companies that would become m&a targets because larger companies have more cash to spend on m&a. any biotech company that has a product or --ased platform. erik: there are companies under pressure to explain what they are trying to do with their cash flow. >> correct. isompany like gilead generating huge amounts of cash.

investors have asked what the plan is for that cash. we will likely learn about that in the next 18 months. erik: we have seen a couple of transactions this morning. been talking about united health buying surgical care. gileadh pressure is under to make a financial deal? to dofeels the pressure an acquisition, but it has always been extremely disciplined about not overpaying companies and buying special cornerstone drugs that stand the test of time. big a year is 2017 going to be for health care m&a? >> when you consider the dynamics, you have 10 to 15 large companies with -- pipelines. all of these companies need to

grow. there are a number of innovative .mall companies it will be a year for m&a. erik: thank you. it is great spending time with you. he manages the health sciences fund. back to you. jon: thank you. coming up, our takeaways from the show. equities with a marginal moved to the downside. this is bloomberg. ♪

taking a look at what is moving in equity markets. the s&p pulling back from its record close on friday. look at the map on bloomberg.

energy shares down the most. prices fall. consumer staples taking a hit. financials are down. we have been seeing this rally in the law and market that is taking yields lower. jon: the flat curve weighing on the financials in the session. wrapping up three hours of programming here. weston,oke with david weighing in on what donald trump means for the future of her business. >> we have more in common with the administration that we have at odds. we are looking to strengthen business performance. we provide over 100,000 really good paying jobs. we are looking for some reform, regulatory streamlining. those are things that will improve our business and allow

us to reinvest. jon: the messages we have more in common with the president-elect than not. you get on the wrong side of the president-elect, bad news. the right side, he tweets out thank you to ford for the --. we had the tech industry come to new york to make nice with him. we will see more of that. look like this. a marginal moved to the downside. julie pointing out financials under pressure. treasuries up, yields down. this is bloomberg. ♪

from new york, i am vonnie quinn. am mark barton. welcome to bloomberg markets.

vonnie: we are going to take you to detroit and london and cover stories from san francisco and brussels. in global markets, a mixed picture. the dow looks to be rich reading. in thises in oil moving monday's session. mark: the pound tumbles may,wing -- by theresa implies the country may seek an exit from the eu that prioritizes immigration control. we are live at the auto show in detroit. ary barra says she has seen strong year. top executives from ford and toyota