ban. corporate condemnation, multinationals including microsoft, google, and nike concerned about the consequences for business. and global equities shrank ahead of a week from the central bank decision. a warm welcome to "bloomberg daybreak." a weekend of news flow is dominated by the president's travel ban. looking at futures, we are negative, but only by about a third of 1%. the treasury is stable. alix: volatility is picking up. the vix is surging by about 6%. the mexican peso is climbing higher after a killer week last week. the safe haven trade, gold, goes nowhere. crude is stable at 53. david: friday, president trump signed an executive order

barring admission to the united states anyone coming from oferal countries accused harboring terrorism. kevin cirilli, help me here. why was everyone so surprised? this is something that president trump talked about as a candidate. kevin: just hours before president trump announced the executive orders, he signaled that perhaps he would rely on on core policy issues. no one saw this coming. the top republican members in congress tell me that there was a tepid response at best in this, andupport for clearly it is going to dramatically shape the legislative agenda and their ability to pass other reforms here in congress in conjunction with president trump's agenda,

and that is what everyone is talking about this morning. david: one cabinet member, the head of the department of homeland security, general kelly, reportedly was on an airplane and saw a video, and backed off with the green card revision. is this a retrenchment on the order? kevin: there is no other way to look at this as a retrenchment. nor is there another way to look response hashe been fast not only from democrats but also business leaders in silicon valley. virtually every democrat in the senate and the house are going to be standing on the steps of the capitol in opposition with the executive orders. david: kevin cirilli reporting from capitol hill. jon: throughout his campaign, took hisand supporters

most extreme promises seriously but not literally. that many of them were meant to be taken in fact literally. to begin with you. the story that we received, the man that is different in the white house from the one on the campaign trail, this is something that we were told about president trump over the last month. does that still ring true? >> when you think about the president, he is surrounded by three different groups of advisors. a populist, conservative, and pragmatist camp. as we saw with the orders over the weekend and even some of the first week of this administration, for now the populist side is in control. that is led by steve bannon. i think you will see him

continue to deliver as much as he can on these policy promises. jon: robert, that raises a question. it was the hope that we we get the good stuff and the belief that you would not get the bad stuff for the markets. do you have to rethink that now? robert: i do not think you do. the markets are sternly macro, especially if you talk about the bond market, currency stocks as well. you have to look at what will be the impact of these policies on the market. there was the open where you have the rally on the bond market. you had legal actions, political movement, and at the end of the day, it was a basis point where we were on friday. the big drivers of the market are on the policy front, what is going to happen with fiscal, monetary, their underlying analysis of the economy, and not just here but across major countries. alix: there is a story that

pretends perhaps we will see u.s. outflows if we want to tilt more to the negative out -- to the more negative aspect. what would be the catalyst for something like that to happen? robert: the risk that we saw on election night that played out in investors' minds is if you have a dramatic contraction in world trade. if you have threats that manifest themselves in a stoppage of the trading of goods, and then you have countering threats on the movement of capital. the united states is in that debtor country. no one is playing to lose. the benefits of trade are massive. i think that this is going to be the underlying fundamentals. the underlying fundamentals -- i step back to take a look at the , andrison of the 1980's

when reagan came in and taxes were cut and so on. it is stunning to compare that the rate of growth from the 1970's and the 1980's and 1990's is so much lower, from above 3, and now we are just above 2 in terms of averages. the markets have moved a lot in anticipation of policy. so 4% growth, that is what president trump is hoping for. can you rank what you will see out of the administration? we have heard so many different things out of the last six days. the way that you -- robert: they have to get past obamacare. obamacare is the big obstacle in the road. it really will preclude action on the broader agenda until a campaign promise can be delivered. then it is all about figuring out tax reform. there is still confusion on that front.

we are not hearing nearly the amount of interaction that one would expect from a new administration dealing with congressional leadership to try to work out a deal on tax reform. it seems to us like these are the two biggest things that are going to occupy this administration. our concern with things like the immigration order that we saw over the weekend is they are just giant distractions. it just creates another hurdle on the obstacle to getting stuff done, and the market -- i disagree a little bit. i think the market has brought expectations that stuff is actually going to happen and we are going to get lower corporate tax rates and broader reforms. that is not a cake that is finished baking yet. david: things are happening already. but how sensitive are the markets to how those things are being done? sudden surprises. it makes a difference.

you go back to the reagan administration, and it is different in 1981. there are a lot of differences but also some similarities. in reagan times you had a big cut in taxes. you had a very tight monetary policy. eventually you had a big easing on the monetary policy side, and then much more rapid growth. this time i think the markets have addressed what we have seen. a big increase in interest rates in this day and age. we have seen it here and also in japan and europe. but now i think what that is priced in is more stimulated policy on the fiscal side that will be headed off and passed by the fed. so the increase of long-term interest rates that would be due as veryolicy comes in stimulative and has been taken a cap -- and has been taken into account.

the if it talk about actually happens, the bridge between the executive branch and the republican congress. will that become unstable as the months progressed, or more unstable as the months progressed after? jaret: as i was listening to the conversation then about reagan and what reagan was able to get done, to me the big difference between reagan and what we are reagan'sday is that relationship with tip o'neill, the democratic speaker, was actually quite strong. we do not see those same kind of connections. nobody is going to accuse donald trump of being somebody who is cuddling up to them and trying to be everybody's friend. he is the guy who tweets at 6:00 a.m. and is willing to make a statement and take a stand. i am not sure we have the same type of relationships we saw

back then, and that will slow things down significantly. jarret seaburg, thank you. -- jaret seiberg, thank you. robert tipp is staying with us. this is bloomberg. ♪

jon: from new york city, this is bloomberg daybreak." i am jonathan ferro. in the markets, a little bit of drama and consolidation. futures softer. we roll over in europe. if we switch up the boards, the

fx market looks like this. it is a little bit risk-off, so a stronger yen trade developing. -- a stronger yen trade developing. treasuries up about a basis point brent crude stable at 53.30. alix: the market has to shift from taking president trump seriously and literally what is happening with volatility. lows,volatility is near treasury volatility is near highs. the lower it goes, the higher the move indexes going. we have not seen this level of volatility since bernanke's taper tantrum in 2013, and the 4.nd tantrum in 201 how do you respond to the pickup in treasury volatility? robert: the volatility is higher than it was.

you are looking at the relevance to equities. so the 80 basis points of expected volatility in treasuries is not unusual. what is unusual is the collection volatilities. alix: what is unusual is the move in yield since the fed move back in september. robert: you have first of all the domestic impact of expectations, of tax cuts, and structural. you have also had a revamping of monetary policy in japan. a lot of the tension has been placed on fixing the 10 year yield, but they are steepening the yield curve. the same is true, a different motif change in europe. the ecb has reduced the amount of purchases, and they never really commit or indicate on foreign policy, but i think it is pretty clear that if things stay on track, they are tapering.

there will be a big impact on markets there. bring up this chart right here on the bloomberg. political risk is really beginning to spread. .rench bonds, over bunds it is no drama if you take this back to five years where we were in 2012. the important matter is that we have seen a risk premium being built. read as to what is happening in europe right now? it is -- robert: it is very difficult to disentangle the causes. the political situation in italy is not so dynamic, i would say. based on the changes that we saw last week. so the common link here is to reduce ecb purchases. ecb ishe one hand, the saying, listen, the risk of deflation has diminished.

we do not need to be doing what for them is an incredibly aggressive policy. if you had asked me 3, 5 years ago, the ecb with qe, they did it. as soon as the deflationary threat diminished and inflationary movers -- inflationary numbers picked up -- one of the messages from the ecb is everybody has to stand on their own in terms of fiscal policy. we will not here to buy all of your insurance -- all of your issuance forever. not only is their political risk, but the fiscal side has not seen a lot of momentum. france is one of those places. david: we have seen the yield go up dramatically since the trumpet election. -- do yout does the think essentially that they are coming off these restraints? robert: in japan there is tight control.

the curve is steepening for the 10-year note. in terms of europe, they are letting the market fluctuate. the market right now for bunds -- they have no net issuance basically -- that market is priced to taper in the next few years. yields are probably going to begin to label a -- to level off. the other markets are going to be got it by supply concerns and the qe changes. jon: we just talked about a bond market, and you have nailed exclusively the fundamentals. emotional a negative buyer to a president trump, the brutal fact of the matter is you have lost money over the last couple of months because of that. you wake up this morning after a weekend of news flow -- if you had a negative emotional -- you would be buying treasuries this

morning. it is not happening. carry onve to divorcing the emotional response that you may or may not have from a president trump to the fundamentals. robert: you have to look at what is happening in terms of policy, what is going to be the reaction, and what is the end game that these policymakers are seeking. who are they surrounding themselves with, how is it playing out? you have to stay aware. maybe this is going to go back to where we were election night. markets were smart and we see the possible paths. markets have concluded that there may be an example made, some countries more than others on the trade front. ,ree trade is going to continue and this will not be cataclysmic , but we have the same terms. alix: markets are smart. good to see you. .obert tipp coming up, it is not business as usual. executives from some of the world's largest companies facing a test of doing business under

president trump after his immigration clampdown. reaction from ceo's next. plus, larry summers joins us in him exclusive interview. ♪

jon: 7:21 a.m. on the east coast. president trump tweeted this ofning, only 109 people out 325,000 were detained. there was a delta computer outage. alix: delta did resume domestic u.s. flights. they had to ground 170 flights, leaving passengers stranded throughout the country. 84 flights from monday have been scrapped. david: whatever the effect of

what happened over the weekend, president donald trump held true to his campaign trail promise, barring the citizens of seven majority muslim countries from entering the united states. major companies weighed in, jeff and mel.eo he said -- immelt. he said -- newsus is bloomberg reporter matt campbell. the subject of how ceos are reacting to the executive order. is there a change of u.s. executives? they have been favorable to the new president or at least quiet. so ofin the first week or the new year, the first couple weeks of the new year, we did hear a positive tone about donald trump from the global executive class, if you like.

in davos just over a week ago, lots of ceos and investors talked about optimism and trump's promises. a real effort to look on the bright side of what many people feel is certainly a very volatile presidency. what we did see over the weekend was a pretty stridently negative response toward the ban on certain migrants, definitely from silicon valley. more measured, but quite concerned responses from other companies, notably general electric, starbucks. we are beginning to see cracks in this very brief embrace between big business and the trump administration. and if donald trump goes ahead with some of the situations on trade, that could go into a full rupture. david: and north american ceo also came out against the ban.

he said this country is a melting pot. everyone gets together and creates this great country, so we were not prepared for this kind of thing. the question that you pointed to is, is this a severe economic issue that will affect the company businesses, or is it more and emotional issue? matt: there is no question this is not a huge practical problem for companies. obviously the number of people it affects is small. not tiny -- i mean, there are plenty of people affected, but these are not massive numbers of people all over the world. but the message that it sends is one that really concerns executives. big successful american companies are, by definition, big successful global companies. they depend upon the free flow of individuals, of ideas, of goods. big is something that

global businesses need to be concerned about. so i do think that the tone was of great concern. the other thing that was of great concern was the implementation. and whatever you think of the aims of the policy, the weekend of a very confused set circumstances as border agents did not know what the rules were. raise an interesting point. if you are a ceo looking to make executive decisions in the united states and elsewhere, when you have that uncertainty and tone and rhetoric, how do you do that? matt: it is very difficult. we do not know what is going to come out of this white house from one day to the next. donald trump is not a conventional politician. he made some campaign promises about reopening trade deals, reevaluating u.s. commitments with allies at nato and elsewhere. do as a chief executive have to be quite concerned about whether the u.s.

, rather than being an exporter of stability, may become an exporter of instability because of this very unconventional administration that we have seen take office. jon: bloomberg's matt campbell joining us from london. world leaders and business leaders react to donald trump's executive order on immigration. wednesday we will have the ge chairman and ceo, jeff ml. -- jeff immelt. coming up next, nick burns on global reaction. and an exclusive interview with formerummers, the treasury secretary. worldwide, this is bloomberg. ♪

jon: from new york city, this is bloomberg. let's get a check of the markets for you. the headline over the weekend, the president's immigration ban confusing allies and businesses,

and there is some consolidation of moves we thought the upside last week, the dow coming in down. equities and futures rolling over by three quarters of 1% in london. here's how the scene is set in treasuries, pretty stable. yield, the dollar largely stronger in the g 10 space, but against the yen we are weaker. it's risk off on the margin. some ofhe leadership of america's largest companies came out strongly against president trump's ban on immigration over the weekend, but until now, business leadership has been largely supportive of the new president's plan, or at least wanted to keep an open mind. so less changed? a a few hours ago, larry summers tweeted that -- professor summers has served as the president of harvard, the secretary of treasury under president clinton, and president obama's most senior economic adviser. he joins us now. good to have you. >> good to be with you, david. david: last week, presciently,

you wrote a piece saying "time for business leaders to wake up. " this morning -- have they woken up? is this an economic issue? >> i have been glad to see what many in the tech community have said. i think they have recognized that, as global businesses, they have got a huge stake in the ofted states being a nation the statue of liberty rather than the nation of refugee camps and barbed wire. they have got a huge stake in the united states supporting an open, tolerant, global system. they had that stake for their employees, their customers, the reputation of the united states, and they have spoken out. i have been gratified by what we have heard out of the tech sector. we have heard rather less, so far, out of the mainstream business community, and i am going to be watching in particular the members of the

advisory board that president trump has appointed to help make him make america great again, because this action is an important test of that. we will see whether they will go along with it or whether they are going to speak out. i think what john mccain and lindsey graham did is really a very good example of principled leadership, and at moments like this, everyone is tested. about whether they speak out on what they believe or whether they decide to accommodate. david: right, but one leader of mainstream industry has spoken out. >> i was glad -- david: we haven't heard from any of the domestic u.s. automakers yet. to what extent are ceos really influenced by the front of that trump tweet? >> i don't know.

they can speak for themselves. i'm sure that most of them share the values of inclusion, the values of american tradition that were reflected in the statements that john mccain and lindsey graham made, the statements that jeff immelt made. i don't know whether it's a sadder thing if others don't have those values, or whether it's a sadder thing if they are being intimidated by the prospect of tweets. but it's an extraordinary thing, business leaders in the united states are being intimidated by of calling's threats them out, when the president has been in office for one week. that is an extraordinary change

in what the united states is about. it's not all new -- richard nixon had an enemies list -- there are other instances, historically. but if that is happening, and it's working, it seems to me that every american ought to be deeply concerned. whatever your views on particular questions about tax policy,or trade detaining people, detaining faileds, that's what we to do during the moments in the holocaust. they are generally thought of as some of the most shameful moments in american history. elevating that to high principal is, i think, deplorable, and the

only thing worse, in a way, is if people are being intimidated against --ng out david: yeah. jon: that's the business response -- let's talk about market participants. you know that many of them in the longer market have the belief we will get the fiscal stimulus, infrastructure plans, and the hope that we would get the stronger views on things like immigration and trade become a reality once he got to the white house. as you look up this morning and looked at the markets, which were to be fair pretty stable, do you think market participants need to rethink that approach? >> oh, look. each market participant will have to make their own judgment. i am a bit fearful that what we are seeing in markets is a sugar high. that doesn't mean that they can't go higher. that doesn't mean it can't happen for quite a while. i'm the last person to be able

to claim to time markets. but it does seem to me that there's a kind of euphoria that assumes that tax policy is going to pass fast. i suspect that is going to be very difficult. that confidence is going to remain strong -- i'm not so sure, with the erratic actions like the ones we saw -- and that provocations to the world aren't going to be responded to. and i'm not sure that's a good bet, either. a kind nervous that it's of sugar high in the markets, but again, that's not a judgment that can be a basis for near-term investing. what i think is a clear error is to confuse several months of

strong markets with strong fundamentals. postelection, when markets did best in the 20th century, was the period between herbert hoover's election and his inauguration. and of course, as a presidency, that was the biggest economic disaster that we had. i don't know what's going to happen next in markets, but nobody should be serene just because markets are behaving well. jon: your point on price. do you think price is setting the narrative? >> oh, you know, different people are responding to narratives. for many, what's setting the narrative is, frankly, fear about what their country might become.

look, this might all get cleaned up. the new administrations always have growing pains. i think we are going to know a lot more a week from now when we see whether the administration recognizes that this was chaotic, costly, and counterproductive, or whether they decide to double down on continue of thing and to make policy in this way. i think we will know more awake from now, and that will either because for reassurance or cause for greater alarm. nobody should make the mistake of making a definitive judgment about an administration on the basis of what happens one week in. at the same time, no one should

make the mistake of not taking seriously what's happened over the last week. alix: larry, i wanted to pick up on what you were saying, versus the fundamentals and the ministration. if you strip out the ministration, some of the fundamentals are quite good. we are near full employment, five-year break evens are now over 2%. how do you factor that in if you are looking at the markets, versus the day-to-day headlines that can cause some uncertainty in the market? >> again, that is something where every investor is going to have to make a judgment. i have to say that i am surprised by how low that vix measure of volatility is, because it seems to me that, whether you are optimistic or pessimistic about the new administration, you have to look at the last several weeks and think surprises are more likely than usual going forward. in a period when surprises are more likely than usual, it

wouldn't have been what i expected, that measures of volatility would be as low as they have been. on the other hand, markets have not been very volatile in the last month, and that is probably what is shaping the vix. but i have a feeling that at some point, more normal volatility will take hold again. david: so larry, all the focus is on the seven countries, muslim majority countries, but last friday was all of mexico. you had another tweet on that subject. "if the goal were to bring a hugo chavez figure to power in mexico, hard to find a better strategy than @realdonaldtrump." let's talk about mexico. is that overstating the case that there could be a destabilized mexico if we are too tough on them? >> i don't think so. bipartisan,nts,

going back to the first president bush, have worked very hard to bring mexico, which was traditionally truculent, angry, opposed to the united states, into a sense of partnership with the united states. that's what president clinton did in many ways. he called the financial support 1995 whend mexico in of the major foreign-policy accomplishments of his presidency. and this kind of thing has been done on a bipartisan basis. and rightly. we share a 2000 mile border with the country, with 90 million people. there is enormous amount of joint production, just as companies in japan have supply

chains with companies in thailand or malaysia or indonesia, so we have supply chains with the lower wage country like mexico, and it makes our economy much stronger. so politically and economically, partnership with mexico , it seems to me, is very much in our interest. it seems to me that to mexico, to threaten mexico, to literally not figuratively seek to mexico, waf mexico, is to put that at risk, and you just have to look at mexican politics to know that there are very strong, very far left elements and mexican politics that are quite strong, and that will be emboldened when those who have sought to be partners of the united states

are so firmly rebuffed. it seems to me that with challenges of maintaining civil society, the challenges of lawlessness, the challenges of the drug trade in mexico, the challenges of migration, the last thing we would want to do to beuff those who want partners with us and embolden those who want to follow the castro-chavez tradition of latin american politics. that's not to say that you can't discuss rules of origin in nafta. that's not to say that a 25-year-old treaty shouldn't be a subject of discussion. but the kind of approach that we have seen i think is very counterproductive, and you just have to read the mexican press to see what kind of effect it is

having. david: let's pick up on a discussion point you just made. is it possible that one week into this new presidency, we are over interpreting what's come out of the white house? you have served in the oval office, into different and mrs. rations, but this is a different -- into different administrations. but he is throwing things out there as a way of backing into a better deal. shouldn't we at least be open to that possibility? it'sok, as i said, david, one week in and all of us want the same kind of economic and civic and social success for the united states and for the global economy. forne wants to be rooting failure. everyone should be watching and adjusting their views as events unfold. i don't think the strategy of

humiliation and provocation is likely to be successful in international negotiation. i'm not aware of any previous instances in which this kind of strategy of humiliation and provocation has been effective in foreign policy, and certainly there have been many instances where it has set off highly charged reactions within countries that have been magnified hostilities, as leaders on both sides couldn't afford to lose face. the usual rule in international particularlys,afford when you are negotiating with democratic countries like mexico, that are democracies, you need to negotiate in a way that will enable your

negotiating partner to claim rather than to admit humiliation. it seems to me that the approach we are taking is making them more difficult, not easier. but look, time will tell, and we will be able to reach judgments with the passage of time. but it seems to me that it's incumbent with the new administration on those who have concerns to express them so that they can be fully considered. and again, many of the business leaders who advise the new president have a major business presence is in nafta, and i hope they will be heard from. perhaps they see wisdom in this approach. i doubt it. alix: i want to take a look at market reaction when it comes specifically to mexico and the u.s. if you look at dollar-mexican

peso, peso was the best-performing currency last week, and it is continuing to rise today. do you feel like markets have insulated and divorced themselves, then, and taken the reality of trunk in stride going forward, it is that the right call? >> i do think so. -- i don't think so. i think you have to look at these things over more than a daily or weekly view. if you look at where the mexican peso is today compared to where it was prior to the election, that makes it and much more attractive for mexicans to work in the united states relative to mexico, and it encourages migration. that, of course, makes ohio much less competitive compared to monterey, because thof the labor cost advantage. i think it's a mistake to try to read things into the daily movements. i'd much rather look at the

larger and longer term re i think and the you'll find that the mexican peso is quite depressed relative to where it was before the election. david: ok. thanks much for being with us today, larry. that is former u.s. treasury secretary, larry summers, joining us from boston. alix: global backlash to president donald trump's integration clampdown continues. leaders and key american allies distancing themselves from the u.s. president, like canadian prime minister justin trudeau, who took to twitter to reinforce his refugee stance. he tweeted "to those fleeing persecution, terror, and war, canadians will welcome you, regardless of your faith. diversity is our strength." germany also expressed its own concerns. chancellor angela merkel spoke, saying that the fight against terrorism "doesn't justify raising people of a particular origin or faith under general suspicion." joining us is nick burns, former

undersecretary of state and former ambassador to nato and greece. ambassador, pleasure to talk to you today. over the last 48 hours, a lot has happened in the geopolitical relationship between europe and president trump. >> there's a lot of concern about what's happening here in the united states. i think a lot of foreign governments know that we have taken in a hundred thousand 800,000 refugees. we have strong setting in place -- it takes 24-36 month for refugees to be admitted because they are so thoroughly scrutinized. i think there is also concerned that we don't want to give to the islamic state another radica propaganda advantage. there's an appearance at this is a ban on muslims from the seven countries that the trump administration designated, and that is worrisome. the islamic state wants to convince its followers that the united states is against muslim, and i contrast this to george w. bush after 9/11.

he came out and said "we are not at war with islam." he visited a mosque. he extolled the virtues of the islamic faith. we haven't seen that kind of sophisticated approach from president trump and his advisers. it has been a very ragged start. alix: and ambassador, talk about the fine line that leaders like angela merkel will have to take. on the one hand, she needs the trump white house. she needs the u.s. and nato. on the other hand, there are fundamental policies where she will have disagreements. what that create friction with the country like germany? >> there is a fear in germany, and in britain, and across europe, that the trump administration at its start -- and it's only the beginning -- at its start is not leading in the way that republican and democratic administrations have in the past. they are worried about the united states closing its borders, saying no to trade agreements, putting up a wall with mexico, saying no to

refugees, saying we are going to stop immigration for a couple months. they worry that the united states, the city on the hill, the country that has led the western line, the open, confident america, looks like a closed, fearful america. you hear that from europeans. they are also worried that the trump administration might swing its support to some of the right wing populist movements contesting the elections in the netherlands, france, and germany this year. i think transatlantic relations are in a very brittle state, and it really needs -- the europeans want to see a self-confident, open american president. they don't think they have seen that yet. david: nick, you served as the seniormost diplomat in the department of state under george w. bush. put yourself in mr. tillerson's shoes. you will be voted on shortly in the senate. how much more difficult is his job and the job of all his ambassadors across the world today? >> i think that secretary tillerson, when he is confirmed,

he has got the weight of the world on his shoulders. the rest of the world, particularly our allies in asia, europe, mexico, canada, are looking for reassurance that the united states will be with them, and that we aren't just going to break all the eggs and change all the policy of the united states government just because the administration's new. they are looking for constancy. particularly, david, when president trump talked to president putin over the weekend, it appears that president trump did not raise russian interference in our election and did not raise russia's invasion of ukraine. the two most critical issues for the united states and the ukraine issue is the most critical issue for the europeans. if you look at the white house readout, they list the issues that were discussed, and those issues are not on the agenda. the white house is not indicating they were talked about. the europeans want the united states to have their back, and right now, putin's division of europe is a major concern, of

germany and the east europeans as well as the other west european countries. jon: there's another concern, ambassador. you talk to a breaking the eggs. one of the key, defining characteristics of developed markets versus emerging markets is favorable and printable institutions. when of the companies at the back end of last year says maybe we have begun to take that for granted. would you agree with that? >> i would. president trump was elected, he has a right to change the policies of the united states, but you have to be concerned about this liberal order that the united states has largely built over the last 70 years. what was it based on? it was based on free trade. it was based on america's commitment to alliances. it was based on taking down walls, not putting walls up. theink that has confused allies of the united states -- i know it has world markets. it has been interesting to see, talking to my friend larry summers in the last segment, the number of business executives and the number of republican senators who have come out to question the wisdom of shutting

down america to refugees and immigrants. i think that is where the pressure is going to come from. not just from the democratic party, not from foreign governments, of from business leaders, ceos, and senators like john mccain and lindsey graham. alix: something i'm trying to wrap my head around, there's a bureau -- you aren't looking to make business investments, how do you do that in a world where you don't know what the relationship is going to be between europe, for example, and the u.s., when there are geopolitical risks in europe as well? >> right. you are exactly right. over the last three to four years there has been an assumption in the business community and in foreign governments that the u.s. would proceed with free-trade agreements in europe and asia. we now know that's not going to happen. we know nafta is being reconsidered. i think the trump administration fairly quickly needs to come forward with its own sense, a sophisticated sense, of how to proceed on trade. businesses are going to be reluctant to invest, as you

know, if they are not certain what the rules of the road are going to be with our major trading partners. canada, mexico, the european union, major east asian allies, and also with china. youou tear the house down, have got to quickly begin to rebuild the new house and show people what it's going to look like so they will have the confidence to be with you, and that's not the case right now. david: there enough, but i think it's fair to say that donald trump campaigning for president tends to tear the house down. that tends to be his modus operandi. how does this work, when you need constancy on the one hand, and on the other hand you have someone -- that's why he was elected. which one gets which adjusts? to the other? >> you have asked the key question. as you look at the power plays within the ministration, a lot of press coverage over the weekend, you have to hope that they will emerge as power

centers -- they are sophisticated people. they know how the world can work best. the united states is at the center of a global system with the strongest economy and political power. we need to send out clear signals of what the rules are going to be. jon: great to catch up with you. we always appreciate your time. that burns, former ambassador -- nick burns. coming up, more on president donald trump's clamp down on immigration. we will be joined -- later on we will get market reaction with fidelity investment's director of global macro. after the past week on the dow so far this year, futures indicate a softer session globally for equities. the conversation continues next. this is bloomberg. ♪

jon: the president's travel ban sparked insurrections.

allies begin to push back. usual.er business as immigration policy draws condemnation from multinationals, who face of increasingly uncertain policy environment. and global equity retreat. larry summers tells bloomberg he nervous as markets are on a sugar high. >> each market participant will have to make their own judgment. i am a bit fearful that what we are seeing in markets is a sugar high. jon: this is bloomberg daybreak. a warm welcome. from all over the weekend in airports here in the united states. not much drama in this market. a risk off tone with equity softer in europe. dollar-yen low as well. if the stronger yen story that shows it. alix: let's talk about risk. vix jumps by 7%, still right around historic lows. larry summers says he expects

normalization in volatility. the peso continues to grind higher. dollar-mex down. gold goes nowhere . david: president trump's order drew quick reaction from around the world, and from capitol hill, and prominent american ceos. during his distinguished career, george mitchell has covered all of those bases. he served 15 years in the united states senate, has played leading roles in attempting to negotiate a lasting peace in the middle east, and in bringing a successful conclusion to the strife in northern ireland. and he has served as the chairman of walt disney company, acting is my ultimate boss. welcome, george. good to have you. let's start with the senate and with the congress. if you are back there now and you are watching what's happening at the other end, how do you react? a lot of senators were apparently caught off guard by this order. >> i think the reactions would be divided as the senate is.

republicans clearly will be reluctant to criticize the new president, recognizing that their futures and interests lie with him and his strength and how he will be able to proceed. at the same time, as some of them are recognizing, this has the potential to do real harm to american interests in the world. those who are primarily focused on international affairs will, i think, be very concerned about this. david: you already heard john mccain and lindsey graham come out opposed to the executive order. to what extent, going beyond the immigration issue, does this jeopardize or potentially sully the relationship between the new president and the congress? he needs them to get through reforms. >> he does. but they need him for the same reason, from their perspective. my guess is there are several other republican senators who are quietly urging the

administration to tamp is down, and not going public as senators graham and mccain have. i think the concern is more widespread than you are seeing publicly. alix: who can actually apply the pressure? larry summers spoke about ceo reaction to mr. trump's policies. >> i have been gratified by what we heard out of the tech sector. we have heard rather less so far out of the mainstream business community. alix: lloyd blank fine just now saying he does not support the ban. is the power going to come from ceo's versus congress? >> i think it will be mixed from ceos, but in my experience, what business in america mostly is concerned about is uncertainty. not knowing what's going to happen, and predictability is necessary for reasonable long-term and midterm planning. i think those views will be made

clear to the white house. some of them public, as you just mentioned, but i think substantially more of them privately conveyed. alix: i should point out, lloyd blankfein also saying that he sees possible disruption to the firm from the trunk orders. jon: what interests me -- we had a conversation behind the scenes with some republicans pushing back against the president. i wonder what the risk of this escalating is. there is a risk that he goes beyond this and looks at the immigration policy that tech companies rely on. what's the risk that this escalates? >> substantial. perhaps most remarkable about this order is not the substance of the order, but the apparent lack of any preparation, any internal communication, any reaction from those who are administering the law that is being changed. i think that has got to be a lesson to president trump and to

those in his administration, because he has got almost four years to go, and they need to have more deliberate processes getting a wider range of views before making dramatic changes. david: beyond immigration, there's a long agenda of this incoming president. i wonder about bandwidth issues. if they get distracted, will they get to things like corporate tax reform, bob iger? he had beene chair, for corporate tax reform for some time. is there a danger that they will get too distracted and not get to the core issues? >> that is a danger. but corporate tax reform ought to be at the top of the national agenda, and interestingly, it's one area where both parties agree on the need. they may not agree yet on the precise response to it, but i think that it can happen, provided the administration doesn't do their what they did immigration. jon: i think the question is

time. is this a 2018 story, not a 2017 story? >> the timing really depends upon what the administration and the congress want. i went through the last major tax reform under president reagan. i was deeply involved, on the finance committee. i participated actively. it seemed to take a long time because the tension didn't focus on it at the outset. the once everybody focused on it, it actually move fairly quickly. i think that can happen -- corporate tax reform is critical, not just to corporations as the name suggests, but to the entire american economy. that will go a long way to a dealing with issues that are so troublesome to americans, corporations moving abroad, money held outside the united states. it's a comprehensive issue that affects the economy and every ought to be near

the top of everyone's agenda. alix: doesn't have the power to offset the more negative aspects, like the potential trade war, like an immigration ban? >> one of the sad realities of modern life is that there are so many issues that -- it's good in some respects. you can move past mistakes quickly by doing something else. so the answer is yes, it does have the potential. there are a few areas in which cooperation on to be self-evident. that is one of them. the issue of a major infrastructure program is another one. republicans have rejected president obama's request repeatedly for an infrastructure program. but they are sympathetic to the request from president trump. democrats have long wanted it. they ought to be able to move on it quickly. there are other issues on which there can be cooperation, and i have always felt it is best when you begin with things on which you can agree, which tends to mitigate the hostility when you

get to those subjects on which you disagree. fortunately the president appears to be doing just the opposite. david: there seems to be a fair amount of disagreement. i want to turn to a different have to have worn, international diplomacy. -- hat you have worn, international diplomacy. as you look at what has happened over the weekend, what are the challenges tha for rex tillerson? >> of all of the sensational statements that president trump made in the campaign, the two that disturbed me most in terms of international affairs are his denigration of nato and his extraordinary warming up to putin. that is a very dangerous thing from the standpoint of the united states. nato and the european union were part of a peace project led by the united states after the second world war to prevent a third world war. 100 million people died in that conflict in the 20th century. it has been remarkably successful. all of a sudden, the united

states -- the president's position is to undermine the very things that have been the pillars of stability created by the united states in the second world war in the name of disruption or whatever. that is a very dangerous thing. the second area, to me, is nuclear nonproliferation. the united states led the world into the nuclear age and has led the effort to prevent the weapons from spreading, with remarkable success. there are now dozens of countries which have the capacity to produce nuclear weapons. only nine have done so. the rest voluntarily refined reliance on the united states's leadership and the nonproliferation agreement. the most damaging statement i think he made was when he said it may be ok for south korea and saudi arabia and japan to get nuclear weapons. that they can defend themselves and we will have to defend them. if that undermines the nonproliferation regime, we run the risk of a nuclear conflict

between nations or perhaps greater -- the leakage of nuclear paternal to nongovernment groups. jon: this rises a number of issues. it seems is time for a change of approach. what some investors are grappling with is what is the true intention of the president. when he talks about nato, he follows it up with not enough countries are spending enough on military. if you look at a percentage of gdp, only the likes of the united kingdom and the united states follow through on some of those. so surely he is right to turn around to a lot of these countries and say, if you want to continue nato in its current form, that things need to change. >> that has been true very administration for two decades. jon: and they haven't changed. >> well, son have increased, but not enough -- some have increased, but not enough. the question is what's the proper way to get them to do it. i don't think it is saying that if they don't do it we aren't going on with our treaty obligations.

that is like saying two wrongs make a right. we should be putting pressure on them, but theing answer is not the united states to renounce its obligations under the treaty. david: thank you so much for being here. great to have you. former senate majority leader george mitchell. coming up, trump's travel ban. the immigration clampdown sparks a global backlash as aids offer conflicting interpretations. we had to the white house to speak with the director to medications before trump's not duration, wars epstein. this is bloomberg. ♪

jon: from new york city, this is bloomberg daybreak. we want you to check the markets. the headline over the weekend's restrictions over travel in the united states. global equities retreating

somewhat. futures are softer, down on the dow and s&p 500. in europe as well. if you switch of the board, the fx market -- last week the dollar index consolidated for a third straight week, the longest streak of weekly losses since march of last year. a story this morning is dollar strength being the exception. dollar-yen is the risk proxy. a stronger japanese yen. that's the story of the markets. let's get you up to speed on the other headlines at bloomberg. here's emma chandra. emma: toyota lost its title as the world's best-selling automaker to volkswagen. it sold a record 10.3 million vehicles last year. toyota sold about 10.2 million. the automaker has been the world's best seller for the previous four years. vw was hurt by the diesel emissions scandal, but booming sales in china offset it. sony is taking a $1 billion write-down in its struggling movie business.

-- manyts recent films of its recent films have underperformed. a few weeks ago they said the entertainment chief is stepping down. that's the bloomberg business flash. david: thanks. theests erupted over weekend after president trump's immigration order, and ceos have voiced their disagreement with the ban. for more we are joined by boris epstein, special assistant to the president. boris, no synergy you get through a successful inauguration, then all of a sudden you are juggling hand grenades. i wonder what it must feel like these days. >> i'm not going to characterize it. it's a great honor to be here. i'm very excited for the american people about the leadership they will receive from this white house. is, this has not been a big secret. candidate trump talked about this, and no president trump is following through. it's not a big secret.

but there are people even within the republican party who are asking questions about how it was rolled out in can indicated. is it too soon to go back already and say, if we had to do it again we might do it differently,? >> we would not do it differently. national security is of utmost importance. as you said, candidate trump made national security the utmost priority, and the president wants to make american safe and secure. he is following through on his promises. that is why the american people elected him and that is what he is doing. david: no one question is the record. this is what he said he would do. at the same time, we had officials not really being prepared to implement this. we even had lawyers in brooklyn prepared to go to court to defend it. it did feel to some of us that you weren't prepared for it. >> the president has to act quickly to ensure america's safety. congress has to act quickly to give us a functioning cabinet

and approve the nominees. we don't have a secretary of state yet because of the obstructionist democrats in the senate. at this point in 2009, barack obama had 12 folks approved. we only have four, because the democrats are obstructing getting things done in the senate, and obstructing america's safety and another prosperity. jon: one question that came out over the weekend is why these countries are not saudi arabia. what is your response? >> this is based on the list but out by the obama and his version -- jon: of course, but why not saudi arabia? >> this is not final. that has already been said. jon: will you put saudi arabia on the same list? >> the considerations are ongoing. we need to ensure america's safety. david: you referred to the fact that we don't have as many cabinet members as places we would like. how difficult is that to this in ministration? tell us what it looks like behind the scenes. do you have people moving forward? >> absolutely, we have a fully

functioning government. what we need is the cabinet heads. we need people to be confirmed by the senate, it is absolutely key. the democrats of the senate need to stop obstructing the will of the american people. this president was elected with 306 electoral votes, and we need to act on that agenda. the senate needs to confirm the nominees. alix: some of the biggest protests over the weekend came from ceos, in particular silicon valley. we are getting more news today about lloyd blankfein saying to employees that their business could be affected by the travel ban. what is your response to them? are you looking at h-1b be next? >> i wouldn't call it a travel ban. it's a pause. a hundred 2120 days. alix: but boris, as ceos are concerned, particularly in silicon valley, particularly about hiring overseas are you looking at h-1b be next? individuals, can you tell the anything about h-1b these us?

-- vias? >> seven countries have argued that identified a state sponsors of terror. let's not blow this out of proportion and make sure we are making america safe and strong. alix: set is that media ministration is not looking at h-1b visas to constrict them in any way? >> we are looking at all options to make sure america is safe and secure. alix: so that's a yes. >> that's not a topic i will be talking about right now. what i will be talking about is a productive first week the president had. alix: so what do you say to the ceos who are worried? >> what we say to them is that take a look at the facts of the executive order, not what's put out by the liberal media. you will see that the executive order is to keep america safe and secure. david: give us a peek into that exciting week ahead. give us a tease. what should we be looking forward to?what's the next thing up ? >> just as the first week was unbelievably productive, this

week is going to be full of action, for conversations with overseas leaders, completely focused on making sure we move forward as a country. we need the senate democrats to stop obstructing. alix: we just know what those will be. thank you very much. boris epstein, special assistant to the president. coming up, central banks are in focus. the bank of japan, bank of ireland, and federal reserve scheduled to make decisions this week. could an unpredictable president trump need an unpredictable fed? we will preview the bonanza next. this is bloomberg. ♪

jon: from new york city, this is bloomberg. time now for today's trading. just a few minutes, we will get u.s. personal income and spending. later at 10:00 a.m., home sales. here with us to look ahead not

just today but the rest of the week is bloomberg's matt basel are. some of the data comes on some out of germany. the inflation out of germany is said to be strong, across all those regions we are seeing a spike. saint a company netted states? >> they will be adjusting to s y ee. we have been talking about seasonality and inflation data. these next few months, we might see a bit of a boost in inflation. also with the effect of the gas price drops starting to roll out of the calculation headline inflation, it will be back in that 2% range. it could be conducive for monetary policy makers who are trying to raise rates. jon: president draghi would say it cannot be transient, it must be sustained. the bass affect of energy are in their, but in the united states, -- howbor market much is that going to fuel inflation pressures in the years to come, and will we finally get

wages picking up in significant ways? >> that's a great question. we will get a lot of data on that. one of the interesting things in the data we are about to get here in a few minutes is that inflation has been outpacing wage growth a little bit, such that real wage growth is starting to fall off. the that catch back up to trends we are seeing in prices? tomorrow we get the employment cost index, which gives us another view on wage growth, which is one of the only measures that has been lagging. of course we have the jobs report on friday, which will have those key wage metrics. jon: those things bookend the federal reserve. when it comes to the squeeze, what is the job of monetary policy? >> they would say to keep inflation around that 2% target. right now it's a little bit below the target, so they probably have a little bit of room to catch up and maybe even let it drift above. but it doesn't sound like anyone

on the fed is very worried about runaway inflation at this stage, which argues for the go slow approach. jon: we have all the research reports from wall street looking ahead for the federal reserve, the base cases three hikes. but the conversation increasingly is around how to optimize that $4 trillion huge beast of the thing. what are they going to do with that? whatever going to say in the months to come? >> that's a great question. one of the big questions is where it are they going to go, what size do they wanted to be in the longer run? some of the people you talked to on the fed right now told us the that we really need to get started with this, even before we know where we are going with it. ultimately. then you have ben bernanke write that post to said the that we ro get started with opposite, maybe you should get that figured out first and then start the process. it will be interesting to see how it continues to unfold. jon: an ultimate goal to get it down to a certain size? just usedomething you

to more efficiently deliver monetary policy on a quarter by quarter basis? >> yeah. really getting into the weeds of monetary policy implementation, one of the big questions is, now that we have raised essentially reserved requirements of the banking system after the crisis, what level of reserves is the level that banks need to make the reserves requirements? we don't know where that is yet. jon: matt boesler. a lot of data. david: and coming up, we will get u.s. economic data. that's moments from now. what will the results say about inflation, and what could it mean for the fed? that's next. this is bloomberg. ♪

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private wifi for your business. strong and secure. good for a door. and a network. comcast business. built for security. built for business. jonathan: from new york city, this is "bloomberg daybreak." .utures are up 70 on the dow after the best week so far last year -- this

week. we roll over in europe as we await take a coming out of the united states. to switch up the board. a stronger dollar story the risk off tone with a stronger japanese yen and treasuries on offer up a basis point. the data drops, 1.7% is where pc core year on year comes in. 1.6 is where we were previously. spending? see the that comes up 0.5% and that is in line with the estimates here at bloomberg. personal income comes in a positive 0.3%, just below the median estimate of a bloomberg survey of 0.4%. that pretty much in line with expectations across the board. alix: with us is michael ashton. a big nerd guy when it comes to inflation data and michael mckee.

michael ashton, we start with you. we have 1.7 on the cpe. why are we seeing this massive discrepancy? there is always a spread between these indicators. and that spread is about normal right now. and that happens for formula reasons and number reasons. it is and where -- it isn't surprising. it is about where it should be. 1.7 is not unusual. jonathan: we had an upward revision to the previous month. things are actually pretty stable. around one point 7%. south of 2%. inflation is not exactly running away. m. mckee: that is one of the issues for the fed.

the lovely talking about it saying we don't need to move quickly because we are not seeing inflation move quickly but we do expect this to continue to go up because oil prices will fall out and they will go back up again. so you should see a little bit of the inflation. medical care costs are also rising over the open debate. jonathan: the germany came in with a preliminary read of 1.9%, just under 2%. mario draghi gets a little bit of a break, maybe. inflation pressure is building in germany. david: but do these numbers take pressure off of janet yellen as she goes into the meeting on wednesday? think there don't is a lot of pressure on janet yellen for almost any quarter. clearly inflation numbers are moving higher. and the fed, if you believe the fed should have been tightening, they are round numbers behind. it is not 25 basis points

behind. history,ts to go down however long she is still going to be chairman, she wants to go down as pushing for the economy to go too fast rather than trying to slow it down, i think that is how she would rather be remembered as putting to a people to work and not that it is not enough people. alix: market expectations of inflation -- you have a survey out on friday where you had household expectations at two .6% for long and short term. and what point does the fed need to more aggressively update the forecast? or are they m. ashton: starting to get behind the curve? m. ashton:if they're starting to get to the five-year forward, that is something that is referred to. if you look at short data inflation or consumer expectations, they tend to track gasoline prices. longer-termok at

expectations of inflation, they are up quite a bit. but they are still way below what they have been in the past and even as recently as 2014. the fed has lots of opportunities to tighten when inflation was a lot higher than the expectations were higher. david: so there are other numbers as well. like pmi's. and they tend to be indicating both here and in europe that things are on the rise. a dip in we saw manufacturing in the fall and that has reversed. so on wednesday we get the first read for this year of manufacturing with the pmi number coming out. are looking for something in the 60 range which would be very very strong. so far, numbers are very good. i brought a chart along here of wages. wages were up 4/10. on a percentage basis you can see the ratcheting up and that

is wage levels on a year over year analyzed basis. we are seeing people get more money, which feeds back into the economy if we get additional spending. and hopefully, back into manufacturing and reduction. .onathan: breaking news this is the $9.4 billion merger -- the headline just crossed the bloomberg. walgreens and rite aid have agreed to reduce the fair share value. look at what is happening to the stock. walgreens is pushing higher by .3%. alix: interesting. at theto take a look border tax adjustment. something between 50%-20%, in your research, what will that do to inflation? the big picture about protectionism and in reversing the globalization dividend -- the story of inflation since the 90's has -- you could describe

it as saying, we have been able to have more growth for the given level of inflation because and theglobalizing berlin wall came down. we were able to export manufacturing and that kept in place. up, it will going reverse the globalization dividend and you will have higher inflation for the given level of the growth. so that is disturbing. what the picture of 20% tariff would do to inflation nott away -- the answer is, a whole lot. it takes a while. i think we are thinking more in terms of a global picture. brexit is part of this. you are seeing trade barriers come up. and that will tend to push upward pressure on inflation globally. david: and that is not inflation tied to growth. that is just prices. ofmckee: it isn't the kind

inflation that would boost corporate profits. it probably won't be adopted, if anything, until the end of the year. is one reason why we are seeing the forwards move up a little bit. alix: what do as an investor? we had the huge business demand -- will this be the trade go now? i think that given where interest rates are generally? on thei have said this program before -- but it is hard to come up with a reason why you would want to have nominal treasury bonds with tenures at 2.5%. you can win a little bit on that that it is hard to win big. it is pretty easy to lose big. so i think that what we have seen so far this year is that we have flows in the tips and i think that will continue for a while. eric nielsen with unicredit this morning said that

with the volatility going on in the white house and the possibility of trade barriers going up, maybe people don't look at the dollar as a safe haven anymore and don't rush into the bonds anymore. and that could change the dynamic. m. ashton: there will be a lot of changes in all of these dynamics compared to what we have been used to for the last 40 years. david: i like that. michael ashton, thank you for being here. also thank you to michael mckee. coming up, the winner of six emmy awards and the director of hbo's newest release, "becoming warren buffett." chronicling how losing the love of his life prompted him to give away almost all of his fortune. we talk to the director next. this is bloomberg. ♪

emma: this is "bloomberg daybreak," i'm in the hewlett-packard enterprise green room. ♪ david: this is bloomberg. buffett is probably the most famous and admired investor in his generation and he is always right on the news. wall andon the immigration over the weekend. this is what he had to say. country hastt: this

been built and blessed by immigrants. you could take them from any country you want, they come here and they found something that unleashed the potential that the place they left did not. will: tonight, hbo premiere "becoming warren buffett." with us now is the creator and director of the film. ed six emmy's.ard congratulations. this is quite a film. thisus a sense about where came from. and her stand you wrote a letter to warren buffett? peter: i heard from him and he said he prized his time but i could have one hour. so the hour went very quickly and we realized we needed a lot more time than that. so he opened the doors after that. david: what sold him on this idea?

peter: i think it happened organically. he was at a reflective state in his life. he was ready to look back. my twoed out there with sons who are my producers and i think he liked that. there was a sense of trust that we weren't sleazy producers shooting in and shooting out. and as time went on he gained more trust in us. and halfway through he opened up his archives to us. is an extraordinary film and some of it is how he got to be warren buffett. things but when we came from and his relationship with his father. we have a bit of a film clip here. oh, i'm sorry. we don't have it. i wish we did because he sits down with students. he tried to get into harvard and he didn't make it.

peter: and the worst thing that ever happened to harvard. david: exactly. peter: his father instilled in him the values he still lives by today and ethical code and the fact that all lives have equal matter. he believes every individual has equal value. and you may be born into lucky circumstances but that doesn't make you better than anyone else. -- his portrait hangs behind his desk. he sits at his father's desk and his father is never far from anything he does. the second influence was his wife who came into his life at age 21, 20. odd younger guy and she rounded him into a person who could fit into society and who could talk to people more easily than he could early on. and he said by the end of the film that warren buffett

wouldn't be warren buffett and berkshire hathaway would not be so successful otherwise. david: he says that in the film and she also agrees with that principle. i had the fortune of knowing her as well as ham and you couldn't imagine people who are more different but they had an unusual love story. the heart, this is a love story. they were completely different but suzy pointed out to warren buffett that he should care about women's rights. his heart, instinctively and his logic told him that this was right. him toand she wanted give away the money and he refused because of the principle of compound. that's right. he always thought he could make a larger mark on society if he got it compounded.

so she was butting heads with him trying to get him to give it away earlier and he was undergoing a lot of criticism for not doing it away but he was right. he has now given this gift that will change the world. what led to that was the sad parting of suzy. because he says in the film that he always envisioned that he would die before she did and she would get to give it away that she passed away. peter: that's right. she was going to give it away. suzy died of a stroke unexpectedly and warren buffett went into a dark time in his life and when he came out, he made the decision to give it away quickly and he did. david: from this extraordinary experience that you have had. what is the one essential experience that todd you how warren buffett got to be the successful investor that he is? buffett's case,

it is the remarkable mind that doesn't forget. he has a hard drive that never fills up. he is constantly reading. mistakethree zeros by off the value of berkshire hathaway on a screen and that was his only comment. he picked up on it. his mind imprints numbers. isn't a risky investment, it is an investment. he knows what he is doing. i think the lesson for all of us is to be patient and to lead a good life and do what you want to do and the money will come. trade as often as you think you need to. david: a wonderful film and it is premiering tonight. peter kunhardt, the director of "the coming warren buffett." jonathan: thank you very much. the twitter of

donald trump. he has made the decision of the supreme court nominee. two nations ever closer to a trade war, we look at the possible fallout. this is bloomberg. ♪

alix: this is "bloomberg daybreak." across the lighter board. time for other stories making headlines at this hour. emma: keizai technologies has agreed to buy network testing company at one point $6 billion that represents a 45% premium to her the stock traded in december before reports that they were considering a sale. outsideepot is going the retail industry for the next ceo. they have named lenovo chief operating officer to be the next

chief executive. last year, regulators prevented office depot's merger with staples. and the world's largest oil company may invest up to $5 billion in renewable energy firms according to people with knowledge of the matter at saudi aramco. the companies trying to diversify oil production. that is your bloomberg business flash. this is bloomberg. jonathan: a few months ago we lawrence summers who emphasized the political importance of a strong u.s. relationship with mexico. lawrence: the kind of approach that we have seen is very counterproductive. you have to read the mexican press to see what kind of effect it is happening -- it is happening. jonathan: that was lawrence summers. joining us now is duncan wood and luis costa.

great to have you with us. a broad question. is this just a mexico story? we believe it is an em story, a story where the markets are acknowledging that the reaction functioning of the trump administration may not be as accelerated as we thought. and most importantly, taking the example of the last 48 hours, that could be a revolution when it comes to investors finally understanding and getting a grip of the magnitude of real economic policy actions. over the next 3-6 months. so there are many questions out there that have to do essentially with bringing markets to a tough situation in terms of deciding whether to go long dollar or sell dollars and

whether to stay relatively positive. but definitely, it it is difficult to say given the trade relationship and the shock of u.s. funding costs. look at this story, whether to go long or short dollars, you have to understand the politics. and the politics is drawing a distinction between noise and legislation. we have had a lot of noise and we haven't had any legislation. how do you think that story will evolve? locatedi think it is a, political story here in washington. the executive branch is trying to push for a negotiating position with mexico. that is an advantage early on a familiarush position in the renegotiation of nafta. and the wall is involved in that

t conversation. there is a strong push back right now from a lot of people in washington, particularly on the republican side of congress. they are saying this is too important a relationship to jeopardize for something like the wall. or the question of who pays for the wall. no one is disputing the right of the united states to build a wall on its own territory, that is behind the point. and why keep pushing the question of who will pay for it? jonathan: that provides the question of whether this turns into legislation. you look at the reaction to the noise and the potential legislation and it is a weaker peso. time wek, -- that every get the weakness, we are buying. why isn't that the story? luis: it is an important aspect here to jump into, the position. , we had theection pipeline of potential measures toward the end of last year when

we had a significant relaxation on the position. they obviously raised significantly be hedging ratios so they bought a lot more dollars and this is the situation we are now in. that manyelieve clients will probably ask themselves -- ok, do i really need to stay with my position? or should i become a little bit more relaxed when it comes to the final outcome? and i do think given the short term revision we could go lower in the dollar now, despite the fact that we are not entirely comfortable. jonathan: to wrap things up with costa lives in free busy emerging markets. is very stable characteristic that makes up a developed market?

it is looking a little bit more unstable and unpredictable. will there be more of that? duncan: the first week shows we are looking at high-levels of volatility. if the mexican example is anything to go by in terms of the administration's negotiating position and posture with reference to other countries, we can expect her to be a much more combative approach with foreign economic relations in general. jonathan: great to have you with us. duncan wood and luis costa. coming up on the program, market reactions. we counted down to the cash open from new york. this is bloomberg. ♪

♪ john: from new york city, a warm

welcome to "bloomberg daybreak". i am jonathan ferro. the market like this. drama over the weekend, futures dow.r, down 59 on the it is a largely stronger dollar theme emerging. treasuries are bid on the margin. that's the story across assets. alix: one big mover to the right aid. the type with walgreens could be in jeopardy. the original price was nine dollars a share. the real question is how many more stores will be walgreens

conglomerate have to sell? it could be 200 more than anticipated. the presidential ban , we didn't want to highlight airlines off 2%. .merican will refund affairs fares affected by the travel ban. sony had to take a $1 billion write-down on its movie unit. csx on the upside .6%. , hunterist investor

arison could be offered the lead role at csx. john: tom keene, how is that dvd player? 28 minutes from the open, futures negative, stocks all-time highs. we caught up with larry summers, who weighed in on what he thinks is a sugar high. each market participant will have to make their own judgment. i am fearful that what we are seeing in markets is a sugar high. now are twog us guests. it a sugarto call

high winds stocks are near all-time highs, but give me your view. remarkableetty looking at the world to the lens of volatility, last friday, the 10.3.uched in the face of all this political and policy uncertainty, why is it that volatility in general seems to be projecting a high degree of certainty and markets? our view, there are a couple of technicals driving that. ironically, number one, investors have been so bearish or so pessimistic that they've been holding cash instead of buying options for protection. the real story is the fact that we are emerging from an environment in which volatility has then artificially suppressed

mid-2014 from the action of global central banks. beende of the u.s., it has a tremendous amount of external qe. inside the u.s., the reason we believe volatility is so low is the fed has implicitly adopted a third unofficial mandate, which is targeting equity volatility. the real change going for it we could see is that with more inflation, with a shift from monetary to fiscal, the fed inevitably will have to give up at third mandate, and that will be a change for dynamics in the market. , i have this land grab like this. .he fed is providing stability three pillars, one is the reflation theme, improving earnings, and the third is policy. i want to talk about the third pillar of this and the certainty

that we will get all of these initiatives because we have a republican congress and president trump in the white house. that bridge has not been crossed yet. how stable will that bridge be in the coming months? >> at barclays, we spend a lot of time analyzing the impact of trump policies on the market. we put out a note on his domestic policy agenda, health care reform, tax reform, infrastructure spending, so the more time you talk about this immigration ban is less time you get to the things investors in the market are worried about. topmmigration is not at the , but what is number one? the act, it will be eight repeal and replace, followed by tax reform and infrastructure spending.

the overlay in his first hundred campaigntalked about and poetry, governing and prose, immigration and border security, the idea of a deregulation agenda. can gete the things he done, but if he's going to spend time differing with people in his own party on these issues, it's difficult. alix: for seeing capital investment taking up because you have these policies coming down. how do you manage that when you have that uncertainty? >> i talk to different investors around the world, and i think they are worried. ceos are standing back and waiting to see what happens. if anything, they are reaching out. i've seen government relations and clean mutations teams talking about how many jobs we've created, how much week then investing in the united

states to get ahead of the curve ball. the: to really understand markets, you have to strip out any negative emotional bias towards this president. my question to you is as follows, as that process got more difficult as the weeks have progress, even though we should be conditioned by experience to ignore the emotional noise and focus on what is happening elsewhere. >> it is difficult to strip out emotion. is clearly market optimistic about what the new administration can achieve. we ourselves are quite positive on what may transpire in the market. is for the real key people to get over that whentainty with respect to

they happen, stop effectively sitting on their hands and maintaining higher cash levels, waiting more information to gain clarity for stronger investment decisions. so low,ket volatility we are saying take advantage of relatively cheap option à l nality. with the cost of protection prices low, you can afford to hedge the risks that things really go wrong. that is the real opportunity with a lot of investors that they are missing. >> do you take trump serious or literal? hismany investors they took economic policies literally, reform the tax code, infrastructure spending, but issues of trade, building the wall, the muslim ban, social policy, they took him serious and not literal. on the trade side, they are

thinking they will not see a trade war developed. now some of the investors have to reevaluate. third element, the bandwidth issue. the emotion might just be a motion except if it is distracting everyone. obamacare could distract from corporate tax reform. >> you have a very limited calendar. you have this year. come november, we have elections, two governors, and mayor of new york, and next year will be midterm year, so folks will be focused on keeping congress republican. their goal is to get health care reform done in the next few weeks and spend the summer working on tax reform. he would probably like to sign a tax reform bill between may and august. he could sign something in april. maybe he picks tax day, his

first 100 days and say it took congress 30 years and it took me three months. john: a lot of investors are theng to game where consensus is. when you sit around the table with investors and try to gauge from them where the consensus is versus where you think public a lessee is heading, where is the biggest disconnect? >> i think people have rose-colored glasses. they are minimizing trade issues, and now they have to re-create, higher people, re-create processes, and i think they are giving credit that things will work out and focusing on getting this corporate tax deal done, a repatriation deal done, as if it will automatically happen. they need 51 votes in the senate to get a deal done. there are 52 republican senators. you're talking about a

multi-trillion dollar increase to deficits over 10 years, so a lot of republican senators will start to raise their hands. john: thank you for being with us. , president trump sparks fear across global markets. snapping a four-day skid and climbing off a two-year low. why there could be more turbulence around the corner. we count down to the cache open, future softer across the board. this is bloomberg. ♪

alix: this is "bloomberg daybreak". i am alix steel.

the vix having its best day in weeks. this is a great chart. theorange line the s&p, white line is the put to call ratio. of bearish bets changing hands relative to bullish ones is lowest since 2009, 1.4 points for every s&p call. that means that there are so many calls being bought then puts. to mes really interesting is that we keep hearing the volatility will pick up, but we don't see it. curve. the vix the green line is election day, and the orange line where it is now. if you think the markets are pricing in policy uncertainty, you would think the vix curve is higher than it is, but it is lower than election day. we can see that clearly when it

comes to cross asset correlations. see that ratio there is at its lowest since 2015 and 2013. is that because we are seeing volatility in treasuries pick up? or because we have seen volatility in stocks come way down? earlier, we spoke with larry summers about the low volatility and he voiced his surprise. >> i am surprised by how low that vix measure of volatility is because it seems to me are optimistic or pessimistic about the new administration, you have to look at the last several weeks and think surprises are more likely than usual. guests.ill with us, our volatility is your baby here coming can you give me a date when it will pick up? is tough to put an exact

date, but our view is we are a highly out of unusual environment for the last several years in which the fed has taught the markets to buy the dip, and that set all kinds of records and financial markets. classesty a cross asset hitting lows in summer 2014. record high trading ranges in 2015 before the august shock. we did the last year, 42 trading days in a 1.77% range. this was a record in 1928. just last month, we traded in a tight trading range and the dow back to 1900. markets have been behaving in a highly unusual fashion. the has originated out of fed being hypersensitive to financial market conditions.

they have effectively adopted this third mandate. that by the depth strategy has worked in an environment where you have had the fewest active asset managers outperform their benchmark in history, and it becomes self-fulfilling. the big surprise for markets in 2017 is a fed which implicitly has to lower that put strike, can no longer be dovish, during market shock as a result of changing inflation conditions. inflation is the biggest driver of change in terms of volatility. the fedu mentioned poet, bank of america merrill lynch came on this program and talked about a new president trump put we might have to think about. we now have a president who tweets out doubt 20,000. do we have an administration now that is sensitive to market prices? >> absolutely.

he does follow the markets quite closely. he obviously follows the media and tv, so there is some level of concern. is there a negative feedback loop in volatility does pick up? >> i'm sure there is. he is very good at keeping ahead of the curve on this. caucus, comeswa out with his proposed ban, and the entire weekend agenda was talking about the band, not that ted cruz one the caucuses. he's very good at staying ahead. john: that scheduled for tuesday, so guess what? >> two different scenarios. one, the market assessed all this properly and decided things are good, the central banks will back us up, donald hasbrouck spansion's policies. the other is they don't know what to make of them so they don't know which way to bet, which seems a risky alternative.

>> i think the issue of not sure what will come next. i think a lot of investors took him serious, not literal. some of this other stuff, don't worry about it, and now they realize he may move forward on some of these other issues. some investors call it trump light, and now we are getting the darker side of what we thought might happen. why volatility will eventually pick up. can you tell me your best way to express potential rising volatility? number ofre quite a options that give you relatively cheap protection. one of the concerns we have is the sharp backup in yields. largest shockshe to the 10 year yield relative to the trailing volatility in the 10 year postelection.

market has taken backup yields as a good bear market in bonds, but there is a fine line between sharply rising tipping overually and causing a broader selloff across the board, including markets, but because the has had such negative correlation between bonds and equities, you can still find protection against equities declining conditional on rates rising to be extremely cheap. in other words, the market is now projecting a very high probability of a coordinated bond and equity selloff, and i think that is an is pricing in the market. alix: what about individual companies, we have seen a big run-up in banks? >> a lot of investors in our

experience are still sitting on defensive positions with higher cash levels, waiting for more clarity. it is a bit like the deer in the headlights, just waiting to see how things pan out, and our point is you need to take a strong stand. the possibility of higher equities is there, so utilize that, get long equities exposure, but hedge, have an asymmetric payoffs for a while. alix: thank you so much for your insight. good to see you. john: thank you. fitbit downs, almost 17% in the premarket, confirmation of news we have been reporting that the company sees fourth-quarter results forecast and is cutting 6% of jobs. the stock down 16% in the premarket. stocks around the globe getting hit.

fidelity investments had of global macro and the new president trump trade, that is next. ♪

alix: oil in focus, relatively stable, but this is the chart you want to watch on whether opec is cutting production. ubai, you track this pairing to see if the opec cuts opecorking, and currently cuts are happening. how do you trade that? the whipsaw and oil is purely on how much opec compliance we are seeing.

how do you trade that? is gettingeverybody a long and the market is stable. i love talking about volatility. there has been none in crude oil. i think that is a big contributor to the stock market stability we have seen. it has actually gotten tighter. got to happen. i don't know which way she will go, but we have had a lot of opportunity to push lower with harish information, but it has held its ground so far. alix: how do you protect yourself against that? >> you have to lean on $50. it's like the last guest was talking about, asymmetrical risks, upside potential. crude oil has been trading between $42 and $52 for six months, so now that target is $62, but there has been a 20%

run in crude. alix: if stocks give up gains, what happens to oil? isoil at that $50 level something you have to watch on a weekly basis. i've been waiting for a sellout to see how the markets react. we have not seen that in oil or sessionsmore than 70 since we've had a 1% decline. john: coming up next on bloomberg daybreak, the scene set like this, the open four minutes away, futures down. this is on the heels of one of the best weeks on the dow this year. we will bring you the open. that is next. this is bloomberg. ♪

john: from new york city, this is "bloomberg daybreak". i am jonathan ferro. futures lower, down 66 on the dow.

call it negative, a third of 1% across the board. have you lost faith in the president trump rally, or is it just a consolidation after decent gains come of gains in 2017? , shaping upe board like this. treasuries stable throughout the morning. the dollar has been consolidating for the last three weeks, the longest move since march. today the stronger dollar theme with the exception of this one. that risk policies creams risk off, on the margin at least. you are seeing selling across the board, the dow jones off .4%. as nasdaq getting hit well. is it something fundamental in the market? we have seen earnings growth, or is this a pause?

a pause or something more fundamental? some individual movers we want to highlight to it i want to take a quick snapshot of tech after the trump and. technique companies have been opposing the band. , bute down by over 1% google hit a record high last week. apple off, apple reporting after the closing bell. all of them have had a monster run recently. a pause or something different? by 10%, cutting its full-year adjusted eps to $.61 a share. been expecting upside, and now a loss as much as $.56. analysts downgraded the stock today. , twoeens and rite aid stocks we are watching. the deal here is they will pay

less for rite aid than before. the original deal for walgreens was nine dollars a share. the big question is how much will walgreens have to sell. as 1200ld sell as much stores, 200 more than previously estimated, and the deal time getting pushed back as well. john: the fundamental question for these markets over the last few months, whether you should take president trump seriously, but not literally. spoke earlier on that topic. take a listen. hisany investors took economic policies literally, reform the tax code, infrastructure spending, but trade, building the wall, muslim ban issues, social policy, they took him serious and not literal. on the trade side, they're not saying they will see a trade war developed. now investors need to reach of

ie wait and think whether i need to take some of the issue seriously. head of global macro joins us now. it has been a fundamental question that many investors have had to watch and if you answered that i took him seriously and not literally, you did ok. you have to revisit the question now. >> yes, i agree with that assessment. it is a very big moment in our history. you have a disruptor that got elected with a republican house in congress and state legislatures, so if there is ever a time we can expect changes in terms of corporate policy with regulation, tax reform, i would not want to bet against of that happening. the question is how much will happen versus what was promised in the campaign, and when you look at the markets, they are basically doing exactly that. they rallied halfway to where the potential is, but around the

middle of december, the market stopped and has been an a sideways range, and the market is now taking a wait and see attitude because they do take him seriously, but until we see the legislation on tax reform etc., we don't know what more to price into the market, so the market has met him halfway, but once to see more before continuing and that is why the market is in a stalemate here. narrative, the questions come of the vix has spiked, the biggest intraday jump in 12 weeks. the lesson of the last few months has been to put the emotional response if it is a negative emotional response to one side and focus on the policy. over the weekend, what you got was a tide of emotional responses.

this morning, do have to put that to one side once again? >> i think that is true for a lot of things in life. there is the reaction to events and two impulses, then there is the need to take a step back and think about it and respond, so i difference between reaction and response, and especially in the markets where we are shepherding other people's money, we need to think carefully about what this means and get beyond the initial impulse to react to something and to take a step back, detach a little bit, and think about what it does this actually mean for the markets, the economy, that sensehe fact is about march or so, the global economy has been in a synchronized acceleration, and that is letting the fed off the hook in terms of unconventional policy. the ecb can get an escape here in terms of normalizing policy, so there is

a lot of good things going on, but with those positive changes tweets,lot of noise, and the question for investors is not so much are earnings going to grow, but what is the price that investors will want to pay for those earnings? what is the right valuation? and 17.3trailing, times forward, with policy on the menu, i wonder if that valuation is too rich and whether we will not get a headwind, even while we get an earnings tailwind going forward. upx: i love that you brought valuation. a lot of investors are opting for calls rather than buying the s&p itself, so on the margin, what ship will you see and how you allocate assets and invest? >> for me, the big call for 2017 is the dollar.

interest rates shot up a little in too much too soon december, the dollar went up too much, and now the dollar has come down and the 10 year yield has come down a little bit. menu, look at the global u.s. stocks, non-us, emerging market, and i look at how europe for instance has been left behind in the rally. europe was only of 0.2%, whereas the s&p was up 12%. the opportunities are elsewhere, not that the u.s. would go down, but that other markets, especially europe, can catch up, and the emerging markets as well, so to me, i would reshuffle the portfolio in that direction in terms of what is the dollar going to do and what kind of opportunity desecrate for investors. small caps, almost 21

times forward earnings, and we talked about the three pillars of this rally, that reflation theme, creeping earnings, and then the presidential trade, so you lose the third leg and you have the other two, where in europe do you go for that? what is the risk a goes wrong given the political backdrop? >> one of the reasons europe has lagged is because people look at election inr november, and they are wondering is your owing to be next, france, holland, germany, or italy? right wingbe a far candidate taking control, and then will there be a referendum on the eu? i am a dutch citizen, in the dutch elections, even though the candidate may get the

most votes, nobody in the political spectrum will work with him, said they would not get a majority, and if that risk is mitigated for that reason, then europe could be a very good story. we are pushing late cycle europe, europe is early to mid, the economy is growing better, germany is trading at a 13.8 multiple, a pretty good discount against the u.s., so europe is in the sweet spot to catch up to the u.s. in 2017. this,there an upside to particular the equities, but for other markets? maybe he really means taking corporate tax rates to 15%, really means $1 trillion plus infrastructure, and even the dollar, maybe he would do something to get it down? >> we don't really know this

yet. i have not heard much about tax reform in the last couple of weeks, but at some point, the sausage making has to get underway in congress and they have plans and blueprints available, but then you get the occasional tweet -- >> thank you very much. john: david, your point is an important one. willingness is one, ability another. ande he loses the ability that bridge to congress? david: it is an important point. the president has a lot of leeway, but tax reform has to go through congress. coming up, not business as usual, executives from some of the largest companies facing a test after the immigration clampdown. this is bloomberg. ♪

>> this is "bloomberg daybreak". up, chairman of the house natural resources committee. a.m., bob 10:50 bishop. david: this is bloomberg. we are getting video from donald trump's breakfast meeting with small business leaders and the white house. let's listen in. >> general motors has made big announcements, fiat chrysler, the head flew all the way from

italy to make that meeting last week. , number at lockheed one, we are cutting the price of their planes a lot, but they are also expanding. they will be better off. boeing also is very much involved, new hirings, and also coming in with good pricing. we are cutting pricing. we all know about that. approximately $600 million off the f-35 fighter, planest only amounts 90 out of 3000 planes, and when you think about $600 million the head of lockheed martin, i got involved in that a month ago. a lot was put out, and when i see a lot, about 90 planes. there was no movement, and i was

able to get $600 million approximately off those planes, so i think there was a great achievement. that really means much more than that. if you think about the fact that that is 90 planes out of close to 3000 planes, so i appreciate lockheed martin for being so responsive, and that will be appreciated very much. i appreciate boeing for coming in and competing, and now they will be competing during the process for the rest of the planes because there are thousands more planes coming. we have a lot of planes coming. these are contracts that everybody knows about, the f-35 fighter jet come a great plane, by the way, i have to tell you. lockheed is doing a very great job. there were great delays, seven years of delays, cost overruns. we have ended all of that and we got that program really now in good shape.

i'm very proud of that. i started working on that when i was president-elect, and the reason i was working on it and you folks will understand it is because we love doing that stuff, right? somebody said why don't you take a vacation before you become president. i said i like doing this. we will be saving billions and billions and billions of dollars on contracts. as you know, we approved the pipelines, but as i'm sitting there and looking at the approval, i said where is this pipe made. these are massive pipes bigger than this room, and a lot of it is made in other countries, including china. you can make pipe in china and other places far away, ship it to the united states on massive boats, put it on trucks and deliver it to the middle of the country, and we can't make it cheaper? right? what are talking about here?

and these are big pipes. the only way i imagine they can do that is they have to cut them. they take up so much room, i can imagine you could put that much pipe on ships. it's not long enough. so i assume they have to fabricate and cut, which hurts the pipe by the way so i said to myself, if they're going to do the pipe in the united states using the powers of the united states, including imminent or main for those who used to criticize me about eminent domain. i said have you ever ridden on a highway before? they used eminent domain. they need eminent domain to do pipelines. powers,oing to use our then i want the pipe to be manufactured with united states steel. that doesn't mean the company is in the united states. that means united states

steele will be a bitter, and i wanted to be fabricated in the united states, so we are doing these massive pipelines, i want workers in the night it states the fabricate the pipe, and that makes sense. , somall business owners that makes sense and we are doing a lot of rate things and we are proud of it. small business has been a big part of american economic success, although there has not been too much success because we are having our products made around the world, but we are bringing them back, coming back fast. you see the difference already, right? 28 million small businesses in our country, fewer than 500 employees. employeesve over 500 here question mark if you do, we will get you the hell out of here. [laughter]

>> small business is our biggest business. workforce, the private workforce, big percentages employed by small businesses. general motors, ford, boeing, lockheed, all the companies, but a big percentage are small business. we want to make life easier for small business owners. last week, we had big distances. this week, we have the really big businesses set up by steve schwarzman and others. we have the greatest businesses set up, and that is happening very soon, but the small business, we will simplify, reduce, eliminate regulation. we are doing that for big business by the way. anyan't be i discrimination, right?

the stock market has gone up massively since the election. everyone says the market will go down. the smart people know, the business people know me. they know what i am a about, the market when massively up. elected, aen i was lot of the really smart people went out and bought a lot of stock, and they have been rewarded. we want to simplify taxes, unless you'd have higher taxes, right? [laughter] business owners can spend more time and money finding and responding to customers. they have more money and more opportunities to hire more employees, so essentially we are getting rid of regulation to a massive extent, could be as much as 75%. we will have great protection for the consumer, but we don't need 97 different rules to take care of one element. there are individual economic

success will support american success. the unfairness between small and big business caused by regulation, regulation that has been horrible for big business them a but has been worse for small business. can'tsmall businesses hire the kind of talent that the big businesses can higher, so it is very unfair. big businesses can so often afford compliance, but i don't want them to. i want them to build new plants and sell more cars. , youll be doing tremendous saw the head of ford and general motors leaving here last week. they could not believe. said it was one of the greatest meetings. the unions were here last week, they said it was the single greatest meeting they ever had. that was a nice statement. i did not tell them to say that, but it was a nice statement. [laughter] >> it is unfair to small business.

small business has been treated very badly. as you people know, it is somewhat impossible possible now to start a small business, and it is virtually impossible to expand your existing business because of regulations, and because of banks that don't loan you money. dodd-frank is a disaster and we will do a big number on dodd-frank, so that is one big reason why i and taking this action and taking actions later this morning. if you would like him you can join me at the signing to begin our effort to dramatically reduce federal regulations, and them bige reducing league and the damaging effects on our economy, our entrepreneurial spirit, and it has been very badly damaged come us of american dream is back. we are going to create an environment for small business like we have not had in many, many decades. on presidentknock obama. this is a knock on many

presidents preceding me. it is a knock on everybody. it got particularly bad in the last eight years. .t is not a knock on anybody it is a knock on many. i want to be here, and now, let's talk. david: that is donald trump, our president speaking from the roosevelt room, speaking with small business leaders. the thing that strikes me more than anything else is that this sounds like a ceo. you talking about the labor, the business, big business, small business, like a ceo at a budget meeting. can the market, we might as well take you there, climbing . down across the board. on the nasdaq, quite

interesting, on point, not a percentage move, the biggest losers today out for bet, apple, facebook, amazon, microsoft. those are increasingly concerned about immigration, and what could happen with things like they rely on to get talent and staff through the door. highsgoogle was at record last week, so you have to factor in this kind of selloff. john: likewise the move we had on the dow last week. alix: what is popping. look at that. up 16%, the biggest move since early september, but still at historical lows. every person comes on the show and says that, but when will we see volatility picks up. david: what is your take away?

alix: larry summers weighed in on volatility. >> i am surprised by how low measure of volatility is, because it seems to me that are optimistic or pessimistic about the new administration, you have to look at the last several weeks and thinks of prices are more likely than usual. the one hand, president trump sang the markets are flying to it on the other hand, larry summers saying i have no idea. today?where is the vix alix: it is a 15% rise, so it is something. revisit a fundamental question for these markets, where the take the president seriously and not literally, and we have had to revisit the question this morning. to get results in this market,

we have seen it from an investor, you have to divorce yourself from any negative emotional response you might have on the policies of this president and focus on what is to come down the road. on top of that, the data has been good, in the united states, and in europe as well. does make a stock picker environment more appealing than four months ago. john: that wraps up this program. thank you very much. 26 minutes into the session, down across the board globally. equities in the united states softer. from new york, this is bloomberg. ♪

it's 10 a.m. in new york, 3 p.m. in london and 11 p.m. in hong kong. >> live from london i am mark barton. welcome to bloomberg markets.

♪ vonnie: breaking economic data, pending home sales are coming out for december home sales, giving us to headwinds, mortgage rates and hike inventory. we have the fed meeting this week. julie: these numbers coming in better than estimated. a rebound from november. that a 6/10 of a percent better than estimated. still a decline of 2%. rates begin to rise and as investors try to either get in their mortgage application before holding off for the moment.