>> live from bloomberg's world headquarters in new york. >> we're 30 minutes from the close of trading in the u.s.. >> investors sold following last year's advance. >> the question is, "would you miss"? >> the biggest bear, tom leads thoughts on his faith. plus, will it take a hackett turn? at a trump fed with vincent reinhart. and ceos are gathering in detroit for the esteemed north american international auto show. , asaught up with mary barra well as other executives from audi and mercedes. let's get you started with abigail doolittle and the

numbers. abigail: looking at mixed trading for the major averages headed into the close, down ever so slightly, held back by energy. we do have the nasdaq trading modestly higher, helped by technology strength and carving out new record highs on the day. not a lot of conviction, but one thing that all three major averages have in common is apple, the biggest point used for each of the major averages. today, great fun fact, this is the precise tenure in -- 10 year anniversary of the introduction of the iphone. it was generally ninth, 2007 when steve jobs said, when he unveiled the iphone that today apple is going to reinvent the phone." i have to believe that he knew he was leading the way for the smart phone. on the bloomberg we have a look tothe great chart here, 20 44 here, going back 10 years.

tohave total revenue back 2007. you can't even see it from your view. iphone atwe saw the more than 50% of total revenue. but it has been at huge blockbuster for apple, changing the path of technology and smartphones. just a few fun facts around it, more than one billion have been sold since the introduction. last year $140 billion in revenue came from the iphone. amazingly, this puts apple 12 in terms of revenue for the s&p 500 . what stands out the most is the fact that since the introduction of the iphone, apple is up over 1800% -- 800%. not too shabby. scarlet: thank you so much, abigail. oliver: wall street's bowl is now it's biggest bear. , targeting at 3% lower

than the strategists at bloomberg. what is prompting his caution? let's ask him. eurowe got close to the call from a year ago. pretty close. a lot of these doubters were proven wrong. now you are the biggest bear, so what's going on? it's a relative term, right? we are not looking for a bear market, we are just below consensus in our views. look, i think this is a year where with good economic recovery, good earnings growth, there will be things that hold back the index. the most important is credit and derivatives. the fixed income market is not a list as the stock market. you can see it in the long-term yield curve, it has really flattened. the second is, it's a postelection year.

a lot of dynamics come into play , but the first six months, 93% of the time the market is down, year to date, in the first year after an election. look, wehat -- well, look at a bunch of them. some of them have to do with physical thrust in the first quarter for local governments to get reelected. there's payback. this year it is more about the inflation pickup in the labor market. it risks policy error. earnings, you look at it's coming from the five sectors we have highlighted with our acronym this year. crp, producing 10% earnings growth. the rest of the other five or six sectors are talking about 1% or 2% earnings growth. what about deregulation?

donald trump is going to dismantle the regulation from the last six years. everything is supposed to take off. this is a great chart that you included in your notes. showing a huge jump in regulatory burdens during the obama term. typically it goes up during a democratic term as opposed to going down in a republican administration. tom: that's important. we were shocked, the last eight years had seen the biggest jump in any administration. but when you look at -- we have data from the merkin institute. there are three sectors that benefit the most. the banking sector and energy, that's all part of the cra p call as well. deregulation will help half of the s&p, but health care is on the other end of that and they face a lot of regulatory risk on the pricing side. there are winners and losers. oliver: the question that i have -- hopefully you can help me

talking aboutre the bullish call throughout 2016 and a lot of what was behind the titanic shift in equities. did the titanic sink? what happened? there.at's still remember, we're not turning bearish, we are just the least -- oliver: less bullish -- scarlet: less bullish. tom: yes. keep in mind that there are a lot of good things to be positive about, but we have to think about what could cause surprise. at the start of last year, people were really negative about the election and it was easy for us to craft the opposite argument and say -- look, there's a lot of surprise, but now i think that when you speak to clients it's interesting, the feedback has been about -- come on, tom. what's changed? there was push back on the idea that the markets might not in the end. was people think it's 10% or

better. scarlet: one thing i noticed is that the obama administration represented the biggest jump in 50 years with higher highs undemocratic turns. but you also have higher lows. do we suggest that the regulatory burden will be higher than previous terms? will naturally expect -- this is based on restrictive words and the number should just grow. scarlet: got it. it's a sort of like linear relationship. i think that what's interesting is when you look at the charts, you can see the first term of and it -- of a republican administration with a massive deceleration. i think that what we should expect is, you know, in the outlook we really list specific instances, but you can see tens of billions of dollars per year spent on industries with specific regulatory action.

oryou can roll it back mitigate it, i can see it coming out for businesses. scarlet: i think about -- oliver: i think about some of what we have seen after the election with money coming in, more in the active management space as well. if we have an improving economy, which is what you are saying, the economy will likely be in a better situation that encourages the retail investors, the people who have not participated in the market to come in and bring an investment and if they do by assets in general, what's better than buying stocks right now? tom: i would agree with everything you just said. i mean, telecom technology, , they are ata p three times earnings. they're going to rate huge on top of earnings growth. you got utility staples, 19 and 20 times.

unless you think that there is a reason for them to go to 22 times, they are not really going to keep up. i think you got takes on the market. the s&p, the dow, the nasdaq, all closing at lowe's on friday. but outperforming them all has been the russell 2000, which hasn't closed at a record high month, december 9, i believe. is it a leader or a laggard? i think the russell is tracking the weaker performance credit. i think -- again, i kind of feel like the message from the credit market is that they are definitely feeling better, but not as optimistic as equities. we have done a lot of work in the past where we think the quality spreads, high-yield triple c, doubled the, there is some doubt being expressed. in the russell, yeah. oliver: for the record, your

call for cr eight he, computers banks,p, with american what would that be? [indiscernible] [indiscernible] [laughter] scarlet: not as exciting. oliver: all right, timely, thank you so much. tom: thank you, guys. scarlet: coming up on "what'd you miss," the electrification of sedans and suvs. this is bloomberg. ♪

"?arlet: "what'd you miss thechevy volt was named as car of the year in detroit.

we had a conversation with ceos about what the automaker means -- with the vehicle means to gm. i could not be more proud of the team. this is not an electric vehicle. it happens to be a great car that really is an electric vehicle. , 238, ando 200 miles in a shorter timeframe it is a great car and i'm so excited. >> it is for sale now? mary: absolutely. it has been delivered in california. >> how is it doing? it's really early days. there is a lot of interest in the vehicle, but this is just the start of the platform the we are going to use to get a much broader and into different vehicles. >> i have mentioned to the

traverse before. it has become so important to gm and north america. what is that about? mary: part of it is that people are on the go. we have very busy lives. an suv really allows you to adapt your lifestyle and have everything you need. grounded the traverse onhole crossover portfolio the tracks all the way to the traverse. saying that they want a car that fits their lifestyle. suv,nce someone drives an rarely do they go back to a sedan. we are really focusing on that trend and are very excited to have several suvs to roll out this year. we recently launched the equinox , which is right in the middle. we couldn't be more excited. it's a great new portfolio for

exactly what the customers are looking for. >> responding to consumer to my -- demand, but at the same time it's more possible for general motors than other automakers. it helps the bottom line. >> it's an important part of driving profitability, but we make sure we have the right products that warranted that investment in the capital and that is something we have been very disciplined about over the last few years to make sure that if we make an investment it will generate the right return. >> historically one of the issues with trucks and suvs is fuel economy. there are these requirements, that they hit fuel discharge limits. is that still a case? have changed a bit. the midterm review is something that we still need to look at to able toe that we are achieve, fuel efficiency and the most effective way, otherwise it will cost the customer from a bottom-line perspective.

across the whole portfolio of suvs and trucks, we have really improved the fuel efficiency of those vehicles. -- >> there may not be as much of a differential? mary: absolutely. the internal combustion engine all had a goal of making sure that we had fuel efficiency. >> you mentioned a midterm review this year. mary: essentially 418. for 18.ially we want to make sure that we have flexibility. technology would evolve, the marketplace would evolve. we need to make sure that we are able to put vehicles into a marketplace that customers really want. we are looking for flexibility. was the general motors chairman and ceo, mary barra. and caroline caught up with the

head of mercedes-benz cars, dieter zetsche. he talked about what we can expect. it was seen by many as the best in its segment. we are now expanding to provide all of that technology. the comfort, the safety on top of that. beautifulque, vehicle. at the same time, very pure styling. space,ing the interior it was very comfortable seating. it is a cross between the functionality and safety of her mercedes and beauty.

>> it took the crown in 2016. congratulations. take us forward into 2017. what will it take? getting to the: top is a difficult stack. -- task. getting there, more difficult. we think we have a good record and requisite of continuing to do what we needed to to get where we are today. meaning coming up with one great product and then another that customers would want to buy. the new gt versions, there will be many more coming this year and i do believe that that will maintain the great momentum we have, becoming younger and more ,elevant, cooler, if you want still with the customer base.

it's a real shift from automobiles to suvs and even trucks. do you see the same shift within mercedes-benz? does it power where you need to go more heavily? there is a strong demand for suvs around the globe. pickup is another element that's not that relevant across the world. we expanded the family of suvs at the samey and time when you talk about actual volume, there is a significant chunk of our total sales that do both. sedansup with great new and a hunger for suvs. >> besides taking the crown for election there was an

that has become a big subject in the auto industry. focused much more on where automobiles are being made as opposed to where they came from. how does that affect your operation? first of all, i do believe that we should wait for the inauguration day and then and less about speculation more about the administration. have had good cooperation with the administration in the past and we assume the same little prop -- apply in the future. 20, 20,000 people are working here, and we are growing in the task and into the future. exporting the gl e into the entire world. , i think weaver and applied to what we have done so far.

but again, let's wait for two weeks from now and see. ,liver: that was dieter zetsche chairman of the board of died -- daimler in detroit. scarlet: time to take a look of the biggest business stories in the news right now. carlyle group is preparing to raise its fund in the first half of 2017 according to people with knowledge of the matter. the private equity firm is planning to target $5 billion with its most recent north inrican real estate fund 2015, securing $4.2 billion in commitments. drugmaker says that it's window to make a deal has close now that johnson and johnson is back at the negotiating table. their global r&d president says that they expected the exclusive relationship they had right now. they had been in advanced discussions last month.

world tree executive says that he's considering expanding operations in the u.s., including sites in north carolina and the midwest. met with donald trump in manhattan earlier today. ago today, steve jobs introduced the iphone to the world. it is now the biggest tech seller by far and since then apple has generated $700 billion in iphone sales, netting $130 billion in iphone sales alone. it does bring changes for the company. iphone sales coming off their first year of decline with limited growth projected for the future. that is your business flash update. oliver: coming up next, rosy productions for the u.s. dollar into 2017. this is bloomberg. ♪

--ver: let's look at the scarlet: i'm scarlet fu. "what'd you miss"? big declines over four days, with carry over from last year, coming over to the far end of the chart you can see the gain in momentum recently. this is the top panel with the price action. the bottom panel shows momentum and there is certainly momentum burning -- building up, but it is not as robust as it was in 2001, coming here to when the dollar index also moved up or back in the 80's, when the dollar index was about 150 and the momentum was really robust. we have not gotten there yet. you want totimes see momentum measures, sometimes , but it may show that animal spirit looking back at these other peaks here. i'm look at where and -- looking

at her animal spirits are starting to build up. this is capex for the s&p 500 companies with showing what has been doing and what has already looking at what analysts are expecting for those companies going forward. they believed to see the peak that they hit in 2015. the first one is a yes, it has come down a little bit, but the relative history is still high with companies not spending on expenditures and that's not really accurate. what happens is it has slowed down. here it is showing that there is a pickup that is a big deal. companies do feel better about what's going to go on in the u.s. economy next year . whether or not that is good or bad. -- stocks is not clear. we will needarlet:

to get some clarity from the new administration first. the market close is next. major indexes trading up from the record highs. the nasdaq, not just yet, another all-time high. one quarter of 1%. this is bloomberg. ♪

♪ scarlet: we moments away from

the closing bell. "what'd you miss" [closing bell] the dow jones industrial average, pulling back after getting closer than ever welcome tooliver: our viewers who are tuning in live on twitter. you can catch our coverage from 4 p.m. to 5 p.m. eastern on twitter every weekday, live. scarlet: the dow, not getting any closer to 20,000. the nasdaq, meantime, making another all-time high to move at 3 p.m., it's not a market moving data point. ton of there wasn't a volatility throughout the day. it was just sort of quiet and we will be checking out some particular stocks. you can really see the breakdown in sectors with eight out of 11 groups moving down. i wouldn't even say it is the groups moving up but energy

stocks are up by one, 1.5%. none of the major names in the energy sector gained. all of that declined. resources and southwest, down by 3%. noteworthy as well. namesms of the individual we are keeping an eye on here, i wanted to highlight individuals as well. purchasingth is surgical care affiliates for $2.3 billion in cash, a 17% premium compared to the last up by 16%, though i should say more than 16%. area pharmaceuticals being taken premium.pan, a 75% a quick mention here of dca, and animal hospital chain. the trick here is oh mf.

it is expanding a footprint there. for $7.8 million. we can see it with the annual revenue that has been pretty attractive and it might be one reason why a company like that is willing to require it. one of the oliver: most popular stories of the day. can't go wrong with chocolate and puppies. thess the pond in the u.k., yield has moved down a little bit there, that's kind of the story in the bond market today. closer to home let's check out what happened in the u.s., where not only were we seeing things moving down a little bit, but there was just a basis point mood today with yields down in the two and the 10 year. i know that what joe and everyone has been talking about is basically what's happening in terms of the spread where you will look at two of them, or curve iswhere the

really steep going into the election. ther that we have faced in opposite direction and things are starting to flatten out. the flattening of the curve signaling how the bond market is complete used -- confuse, right? right, let's look at currencies. the pound, slumping over news of a hard brexit. that sheay signaling is prioritizing at reducing immigration overstaying in the european single market. she said she would unveil details of her strategy and coming weeks over all the majors. looking at the three month of the pound versus the dollar, falling below one dollar 20 two cents, it's at its weakest level since october. emerging-market currencies are also under pressure because of tensions between north korea and south korea. looking at the up arrow, it is gaining in value versus the yuan.

on constitutional changes in the country, contributing to the one quarter of 1% move lower in the index. it was a lot lower earlier and has come back. oliver: i was myopic when i said it was a quiet day. you know what was not quiet? commodities. overall i want to take a look at the commodity index. back from july, we haven't gone anywhere. we have had some ups and downs with markets driven by oil, but that hasn't really been the case so much as the placidity in that market. topping over real quick just show the tiny bit of volatility intraday for crude, with a little bit of movement down just sort of a push back against the idea that production would be slowing as we had those counts in the u.s.. not a whole lot has changed there. some ideas that maybe that will

keep some of the oil flowing despite the opec cuts. standing close to what they agreed to. a lovely day for crude oil, for sure. policymakers are looking at how quickly to raise interest rates this year as they find themselves optimistic that the president-elect can shape the economy through its slow growth rut. saying that the economy is well-positioned for steadily improving conditions and less certain of the breakout to mark higher growth on a sustained basis. hear from that assessment -- year with his assessment is vincent reinhart. he worked at the fed for 24 years and joins us now from brought -- boston. great to see you, thank you so much for joining us today. your take on looking at the fed is that you should not rely on the fed signals, the fed minute,

the fed projections for any sign on what they should do next. why is that? >> if he were sitting here one year ago we would be talking about the policy tightening of 2016, but what happened is they found other things to worry about at each meeting until they about ran out of 2016 and had to slip one in in december. why do you think they will do three in 2017? events will probably improve. orther or not markets investors shouldn't, at the end of the day if you look at what has been driving the markets over the last couple of years, are we going to finally be moving past that? strategist saying that maybe it will be too, maybe it will be there's not a lot of volatility around it, it seems. the: that's a standard forecast

a vincent: you've got standard forecast if you are assuming no early personnel changes induced from the white house side. if we are fairly certain that will happen, there will be volatility surrounding each of the eight scheduled meetings and we are going to hang on every word of janet yellen because they do have in the past they have shown the potential to surprise. scarlet: in the end we will still be hanging on to the every word of the fed. i wonder whether the definition changes nowoyment that fiscal stimulus is looming. the short answer is that janet yellen won't be called out on a single number. she has labor market training in particular and recognizes that there is a lot of different ways to assess this utilization of labor resources.

are we close to full employment? i would think that most policymakers would have said yes. testnet yellen willing to how low the unemployment rate can go before declaring that we are there? i think yes, too. part of the reason i think that there will only be two times as opposed to three times is that is thatllen janet yellen is willing to tolerate a bit of inflation overshoot to find out just how low the unemployment rate can go. up on that,lowing probing the notion of full employment, what could be the backlash? >> well, if you have ever been probed by a doctor, it hurts if they push too hard. that's the basic problem. so far inflation has been well anchored and moved very little.

changes inwith resource utilization. maybe linear, maybe people get concerned about inflation picking up. rising more quickly than anticipated. that's one possibility and only a risk. thus far inflation has not been sensitive to read -- resource use and remains well anchored. the fed believes it can move gradually. path of the policy built into the markets is that if you need to respond, you don't have to do much more than they expect to get their attention. one of the most rheumatic, i think, shifts of the last couple of months was the concern that the fed would not hike quick enough to how many times are they going to do it. what are the data points key to ,ou in the first half of 2017 when we get this new trump transition question mark people

speculating on what he's going to do, how to you assess where the economy is going to go? you are absolutely right about the most interesting thing regarding the janet yellen tenure, up through the fomc. markets were always more dovish than the own rate guidance. they don't have to do much heavy lifting. now we are getting to the point where markets and the fed are about in sync. up at the point where markets believe that the fed is behind the curve. they are questioning your credibility. the environment had so much about governmental policies, fiscal stimulus, trade, financial policy. the chance you get your forecast wrong is probably elevated. what are we going to be looking for? how much resource slack there

is. we will be looking to see how it is received by the rest of the world with the exchange value for the rest of the dollar. they can significantly change the forecast. right, vincent reinhart, stick with us, we will get your perspective on what the fed might look like in four years under a trump presidency. this is bloomberg. ♪

♪ courtney: let's get to bloomberg's first world news -- first word in news. mitch mcconnell might with donald trump a day before the senate begins confirmation hearings on cabinet picks. mitch mcconnell: we had a good

,eeting about the senate getting further down the road towards revealing legislation, obamacare, we talked about the senate agenda once he gets down there. are takingemocrats issue with the hearing schedule as the ethics office said they haven't received financial disclosure reports for the nominees. the kremlin is echoing the criticism of the report accusing russia of cyber meddling in the u.s. presidential election, calling it a witch hunt. weekeport from last alleges that president vladimir putin favored trump over clinton and launched a campaign to do so. u.s. ethics officials have cleared scott pruitt as a and in justhe epa

four pages he disclosed an heldtment portfolio primarily in mutual fund bonds and state retirement plans. no date has been set for the confirmation hearing. ambassadorppointed to mexico said that his company will negotiate with trump with intelligence and common sense. he was responding to come -- criticism that mexico has been to tepid in reaction to trump. trump is proposing to tax sending business to mexico and renegotiating or scrapping trade agreements. global news, 24 hours per day, 2600 journalists and analysts in more than 120 countries. this is bloomberg. oliver? oliver: thank you. we are back your with vincent reinhart.

2018, we are already hearing about what the central bank may look like by that time. some are saying that they would pursue tighter monetary policy if they were in charge. what do you make of that lineup? what do you think? it is a republican administration and those are pretty conventional republican picks. you got john taylor and glenn hubbard, we talked about them eight to 12 years ago as in the mix with ben bernanke. they are going to be on the top of the list. commentator on federal reserve policy with market background, now at an academic institution out there at the stanford hoover institution. pretty conventional. but donald trump is

anything than a conventional politician, right? thoughtated that he janet yellen and the fed left interest rates too low for too long, yet at the same time you know from -- as a real estate guy that he benefits from low rates, so how do we square that with how we think he might behave? don't know exactly. if you look at the last 70 years of the federal reserve chair appointment, most of them were exactly the people you brought towards the top of anybody's reasonable list of potential fed chairs. every once in a while the president picks a ceo type. those generally don't work out quite as well. if you look at the cabinet , mostlyents so far conventional republican picks. leaning towards those more progressive agendas.

it's pretty wide open. i would suspect, however, that the secretary of the treasury and all those advisers, all the economic advisers to the president are not really going to want into roll the dice on the fed chair nomination. how much risk sort of is there involved in this process? looking at the trajectory we are expected to be on, we are talking about going into a rising rate environment. qe has been, right now, exhausted by many people's definitions. new or old fed chair, yellen, something new, does it make that big of a difference? is it a difference in terms of how quickly raise rates, two or three times per year, three or four? i think it's going to matter a lot. four years ago, and then before

settingople were of over who would succeed alan greenspan and ben bernanke six months to nine months before their due date. i think the same thing is going to happen with janet yellen. the difference between two fed tightening's and for fed tightening's is material for a bond portfolio manager and whether or not the fed starts or stops reinvesting their mortgage backed securities next year or four years from now, it really won't matter materially to a mortgage backed securities market. lots of attention, lots of volatility generated. scarlet: no matter who is fed chair, and you have indicated you don't think janet yellen will stay on, communication is an area where the federal reserve could certainly improve. you think of the fed is intentionally trying to obfuscate when it comes out with

its various signals on where it sees interest rates? nuven look at the bloomberg to see and get a sense of the projections that are kind of all tor the place when it comes wear fed officials see interest rates headed. is this the result of too many different imprecise communication tools? so, i think there are a lot of different communications tools. in some sense federal reserve policy is the elephant in the room and the 19 fomc participants are blindfolded to describe just one part of the elephant. the policy decision really is what the majority wants. the minutes describe what you try to describe, what everybody talked about, a much wider range of outcomes with economic projections being not the expected outcome, but the most likely outcome.

they find distinctions. another important part is that sometimes fomc participants are actually talking to each other because they are trying to influence their colleagues in advance of the meeting or just happen to be used dropping. so, there is a lot of theunications extraneous to main message, where you think that rates will be one year from now. talking about the natural rate of unemployment, trump has talked about how he thinks the economy needs a boost, that it has been struggling. look at the fed chair, how do you get a fed chair to corroborate what he has said and make action based on that if you have already driven down one of the major metrics? vincent: with an unemployment rate at 4.34% and potentially growing by 1.5%, if the goal is

to generate aggregate demand growth, you're going to have to explain how you get that extra output. do we have something that increases a lot? do a lot of workers come back into the labor force? are we going to allow a lot of we can haveso that foreign workers providing the extra out what? i don't think the third thing is going to happen, but that's part of the arithmetic. are notfficials convinced that the extra aggregate demand will be provided by aggregate supply, they will quickly get worried about pressures on demand. very interesting. vincent reinhart, fantastic conversation, thank you so much. in japan, one chairman

lost a staggering amount on paper. we will show you how to get the data on that. this is bloomberg. ♪

scarlet: let's take a deep dive now into the bloomberg. you can find the following charts using the function at the bottom of the screen. i want to start with china, it came out over the weekend and if you look at this, the white bar indicates reserves for a sixth straight month at a five low, inling below 3 trillion january, which has a lot of people worried. in terms of the onshore yen, the line did go down and the u.n. went down versus the dollar. a big debate over how significant the drop in the reserve is, because most

economists believe in a stronger reserve balance, a psychologically important number to implement capital controls. on the other hand the chinese debt market is dominated by domestic choice with liquidity's . that the actual levels don't matter as much since they don't rely on next are no forces asthma. thiset: oliver: -- oliver: is a pretty big chart, but it really also -- i love the way that it looks brilliant in line with the win, seeing that depreciation or weakening that we have seen. scarlet: certainly: -- correlation. you can go to this profile here, click on it, billionaire profile. this is great, just a good way to assess how much you are making. over here is net worth based on former composites of all the

different avenues as well. dropping off at $1.4 billion. scarlet: on paper. oliver: of course. perspective, you can really go anywhere, but it is a wealth of change going back to the other index. whose wealth has changed the most? scarlet: i like that part in the background. source? oliver: that's an important one. inherit -- not entirely self-made, to say the least. coming up next, what is behind the rise of the populism that led to the trump victory? we will speak with a harvard professor and get his prescription on what progressive parties need to learn. this is bloomberg. ♪

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show me house of cards. finally, you can now find all of netflix in the same place as all your other entertainment. on xfinity x1. courtney: chuck schumer is taking aim at the hearing scheduled for president-elect trump's cap that nominees. schumer is jamming through the lists weren't many nominees have held similar positions. according to a person to with the matter, kushner's attorney says he is looking to step down to meet epic standards. prosecutors have rested their death penalty case against dylan roof.

he rested his case without calling witnesses or presenting any evidence. jurors are likely to begin deliberation tomorrow. cuba and united states have signed an agreement designed to prevent oil spills in the gulf of mexico. it calls on both states on a bilateral plan in the event of spills and shared water. global news 24 hours a day powered by more than 2600 journalists in more than 120 countries. this is bloomberg. scarlet: let's get a -- oliver: let's get a quick recap. i was saying it was a quiet day earlier but that was just in the local area. you were down about 40 base points on the dow. the nasdaq is in the green. bonds were quiet. we had volatility in oil.

also in emerging market currencies. federal reserve bake of boston sounding hawkish, saying the fed is running the u.s. economy a bit hot. he said the fiscal stimulus could influence a federal rate hike. he is saying that a positive surprise could be inflation overshoots. it seems like he thinks we need to get moving on the hikes. scarlet: the possible surprise would come from global markets. what did you miss? the rise of populism stems from political elites' inability to recognize grievances. to michaelording sandel. that the populism

ascendant today is a rebellion against establish parties, but those parties have suffered the greatest casualties. this is mainly their own fault. let's bring in michael sandel. great to speak with you. you have identified a couple of issues, one of them being income inequality. there is a recognition of income inequality, but the prescription seems to be the same thing. fighting discrimination. his social mobility dead? michael: social mobility is languishing. opportunity,ater combating discrimination, these are important. i think with the populous anger limited a sense of opportunity and lack of respect for the dignity of work. that is something that parties across the political spectrum need to consider. oliver: explain what that means.

talk about this disdain. scarlet: there are a couple -- michael: there are a couple of things. social mobility has stalled. in the united states we have been worried less about inequality in europe. reassuring ourselves that because of the american dream, you can always rise. we don't have to worry so much about how far apart the rungs on the latter are. what we are finding today is that social mobility has stalled. people born into the bottom 1/5 of the income scale, 70% will not even reach the middle. only 4% will reach the top 1/5. simply assuring people that hard work and talent will get you ahead, that is beginning to ring hollow. i think both political parties need to take more seriously problems of inequality but also

how we regard success for the lack of it. there is a smugness on the part of those who land on top and i think many working people since this. the work they do is not respected in the way it was. scarlet: you say it is dangerous as well because this emphasis on seeking a meritocracy is flawed because the winner interprets their success as something of their own doing. is a measure of virtue instead of their standing beforehand. michael: there is a tendency today for those who went on top to pat ourselves on the back and say it is really all our doing. it is my doing. the consequence of that is a tendency to look down with this stain on those who are less fortunate, those who are disadvantaged. if we landed on top thanks to our own doing, what does that

mean about those less fortunate than ourselves. there's something toxic in this way of perceiving our success solely as our own doing. this is a moral and a cultural attitude toward success that goes way beyond questions of jobs and questions of equal opportunity. oliver: when you look at the failure to grasp some of these concepts by the political elite and the coastal elites, if you will, do you feel that in the past two months after the election that the party that democrats, are they being introspective? do you find this can be a constructive opportunity for them to learn? michael: i think it is an open question. i think the democratic party will be more likely to re-examine its assumptions since it is now out of power. it has been beaten pretty badly.

you see this also with the labour party in britain and other social democratic parties in europe. there is an exhaustion of ideas on both sides of the political spectrum. the democratic party being out of power now has an opportunity to rethink fundamentals, what it stands for, what is its mission. the first question i think it should ask itself is why is it that the democratic party has really lost the confidence of its once working-class base, going back to the new deal? scarlet: just to underscore that, democratic policymakers can seem like poverty is foreign or black. the treasury secretary said he made trips to latin america, africa, inner cities to review these anti-poverty programs but does not recall going to akron, ohio, flint, or young town. that is telling. should these elites and policymakers start thinking in terms of american borders when

they look at poverty instead of globally? michael: i think that elites in the u.s. and democracies throughout the world need to do a better job of listening. need to do a better job of listening to ordinary workers, people in the middle class, and not to assume that they, the elites, are on top thanks to their superior wisdom and talent and effort. part of the anger fueling the populous protest is rebelling against the smugness, the sense of disdain. this is a legitimate grievance. this goes well beyond the legitimate concerns with the bigotry that also animates the populist protest. i think there has to be a better job of listening and learning from elites on both parties. oliver: there is one point that you bring up, that politics have

lost the ability to inspire. this is interesting coming out presidency because there was inspiration early on. he was well-liked by his base. he was the first black president. there were a lot of things that signaled change. what about his policy, to fail inspiration? michael: i think that president obama stirred hope and inspiration during his 2008 campaign, but failed to translate that moral and civic idealism into governing, into his presidency. i think the reason is he became the captive of a kind of technocratic approach to politics that is rife in both parties, especially at the top. it is the tendencies to leave values outside of public discourse and try to govern

mainly by working through various views about what will make the economy work well. of course it is important to make economy work well, but that can't replace debate and public discourse about values, justice, about the common good, about equality and inequality. that requires listening and that requires deliberation across society. it can't be delivered by technocratic elites. i think that the technocratic turn of public discourse in democratic societies in recent years is also part of what has created a hollowness that has been filled often by narrow, intolerant, angry reaction. scarlet: michael sandel, professor of government at harvard university, thank you so much. oliver: up next, back to cars. we will hear from scott keogh about audi's new conference cars

at the auto show in detroit. ♪

scarlet: audi is looking to push higher into ultraluxury with a concept suv. david westin startup -- caught up with scott keogh. david started i asking him about how the automaker planned on luring luxury suv buyers. scott: we are going to make this car. these are the biggest segments in luxury. the second thing is, they are no

longer utility vehicles. these are proper luxury cars. it is loaded with technology and looks great as well. david: so we will be able to buy one of these? scott: around 2018 will be a great time to hit the market. david: you also have the q5, surrounded by people. scott: believe me, it is back there. david: this is a crossover. you announce this today. scott: it will hit the marketplace in april of this year and this vehicle is the biggest segment and luxury. the luxury market. this is a sporty version, the sq5. q5,id: between the q8 and you have a story playing out across the country as people increasingly by a suv or a truck instead of an automobile. scott: the mix of suvs went up

in 7% in luxury. 54% of all luxury cars are suvs. why is it happening? people like this body style. generation y is forming families. fuel economy is good and packaging is good. we do not see it going backwards. david: one of the things you're moving forward on is artificial intelligence and video. why? scott: we believe in on taunus -- pilot -- in on taunus autonomous and pilotless driving. when you get out in the real world, it is complicated. all we use right now our cameras and sensors and you have to use computer software. computer software, what you need is endless. if x, then y.

to will never be able do with all the complexity on the road and that is why you need artificial intelligence. that is the way to get there sooner. david: you will be doing some real life experimenting in california. when does that happen? tott: we're going to start test these models starting next year to gather the intelligence. we will be the first with artificial intelligence, level four autonomous, and that will happen in 2020. there is no way to make autonomous safer in sooner than artificial intelligence. david: there is a lot going on across the country. donald trump got elected. 2017, move forward into if you got to write your list of policy that you would like to see this administration adopt that would help your business, what would it look like? scott: i don't get into speculation. i am not a politician, i am a

businessman. the biggest thing the businesses love is stability. if you look at the u.s. car market, record sales. if you look at the consumer, they have never had better cars at better pricing. we like stability. stability is the number one thing. one of the things out there is a lot of pressure on automobile companies to manufacture in the united states. produce in the united states. does that put you in a vulnerable position? scott: we make these cars all over the world. we ship them all over the world. as it exists right now, it does not. we will brace for whatever comes our way. david: would you consider investing in the united states? scott: always. we have 13,000 employees in america. we have dealerships. the 80% are dealerships. we are invested in our communities.

we do believe in investing in america. david: another really good year. you are up and sales almost 4% globally. what is it going to take to have another good year, to continue to grow in 2017? scott: i think we can do it. we had a record year, our seventh in a row and i expect another record year in 2016. it is all the new products coming. we have a strong brand and good products. we will grow but we will maintain our business model. inventory, mixed levels, we will get it right. scarlet: that would david westin's conversation with scott keogh. fields on what is new under the hood of the most popular truck in the u.s., the ford f1 50.

a hybrid version on the horizon. ♪

ford's decision to cancel the car factory in mexico was seen as a political victory for the president-elect and a victory for u.s. workers who will benefit from ford's decision to add jobs in michigan. in mexico, it was a different story. >> we had a machine rented two days ago. they told us we had to remove it because the ford project was canceled. indeed, the other contractors were taking out their machinery. scarlet: let's get more on this situation. , you visited the site of that plant.

.ell us what you saw this is a state of uncertainty in northern mexico. this is the place the plant was going to build. team of reporters and what we came up with was a lot of uncertainty. the state was expecting to move forward on this planet. this was going to be the biggest deal in the state's history. gdp was going to skyrocket. now they are left with a lot of uncertainties. a lot of companies had already moved there to help build the ford plant. that is not going to happen. he somewhat one of the contractor said. a lot of contracts are being canceled at this point. a lot of workers moved to this part of the country expecting work. now what is left is an empty shell. the building, the factory was

already being built and now it is just going to stay there like a carcass in the middle of the desert. oliver: we have a sound bite from mark field, the ford ceo. >> we had good working relationships with every administration and policy makers through the years and what we would like to see is free and fair trade agreements. we want to see regulation and regulatory policy that is more reflective of market realities. we want to see corporate tax reform. highest.s., we have the corporate tax reform and we think that would be good for the economy. oliver: there it sounds like that mr. fields making it sound like business as usual. as we know, trump has targeted specific companies. our people in mexico worried that this will be something that does not go away soon? victor: indeed. this has been the main

discussion topic in the past few weeks. i can say that the past week was really a nightmare for the mexican government when we saw that ford announced the canceling of the plant and we saw this unsettling announcement by nissan and chrysler. chrysler just said today that they might rethink their investments in mexico if president trump imposes a tax on the border. this is creating a lot of uncertainty here in mexico and maybe we are starting to edge towards panic because we don't know what is going to happen. there are a lot of investments that might evaporate. hoping towas basically increase its gdp and now they are thinking about a recession next year. that is one of the scenarios that they might be facing in mexico. the situation is complicated at this point. the political establishment is starting to get worried.

the mexican finance minister was sacked when candidate-elect trump came to mexico. you might remember that situation. he was just reinstated as the mexican foreign minister because the mexican government inks that his good relationship with jared kushner might save us from the brunt of this mexico-bashing politics announced by president-elect trump in the last few weeks. scarlet: interesting twist. victor hugo michel joining us from mexico city. oliver: what you need to know to gear up for tomorrow's trading day. ♪

scarlet: if you are only focused on equities, he only missed the nasdaq closing on a record high. has gone on a slide today after some rig count numbers that show the u.s. is going to pump a lot of oil. that brought down the market as well. commodities did not do so hot. scarlet: emerging market currencies as well.

turkey reaching another record low. oliver: i am looking at u.s. wholesale industries release tomorrow at 10:30 eastern time tomorrow and small business data. scarlet: and don't miss this. ending it where it began. president obama giving his farewell address in chicago at 9:00 p.m. eastern time. primetime speech by the current president. oliver: i ensure you would like to be handing it off to someone in his party. scarlet: that does it. inks are watching. ♪

haidi: let's get you started with a check of your first word news. leader mitchty mcconnell says he is hopeful

that a half-dozen of president-elect donald trump's cabine takes will be in place by day one. the hearing schedule is to be rushed. ethics officials have cleared scott pruitt to proceed through process.rmation he provided an investment portfolio. jared kushner will be named a senior advisor to the president according to a person familiar with the matter. kushner is working on a plan to step down as ceo of his family's real estate company. prosecutors have rested their death penalty case against dylann roof. roof rested his case without presenting any evidence. deliberations could again tomorrow -- begin tomorrow. the estimated cost