attorney general for refusing to obey his executive order. the fed convenes to consider a fiscal stimulus package. the stock markets pullback from record highs. and eurozone growth accelerates, inflation surges. the debate intensifies within the ecb about the future of its stimulus program. good morning for our viewers worldwide. this is "bloomberg daybreak." in the markets, the headline drops from peter navarra, the trade advisor to president trump, who has some comments on the euro. uro-dollar spikes by .5%, $1.07. futures are trading water. it looks like the euro and germany are very much in the firing line of this traded ministration, with the current account surplus coming out of germany. alix: the risk premium reverberates all throughout the market. vix up 15% in the last two days. said, you have the yield

backing up a two basis points as installation picks up in europe and you are seeing the selloff in germany. the safe haven trade is gold, taking to the upside heading into the open. and crude is a little softer, headed for its first monthly decline since october. jon: let's get to that breaking news. it's coming from the trade advisor to president donald trump, peter navarra, commenting on the trade surplus. the euro is far too weak, and germany is exploiting it. if you look at the reaction in the fx market, the euro is stronger off the back of it, up against the dollar. joining us now is abraham let's begin with you. if you run a trade surplus with the united states, you really shouldn't be surprised if your

currencies in the firing line, should you? >> absolutely. in rhetoric we have seen terms of expectations, that is something we have been talking about for months now. i don't think it's that shocking at this point. jon: if you look at the situation as it evolves, commenting on a currency is one thing, doing something about it is quite another. what can this administration do, if they look to a country and say your currency is too weak? a large number of actions that could potentially be taken, but i would at this point say that talking is much easier than taking specific measures. in principle there are all these institutions, including around how exchangees in rates are managed. i wouldn't get ahead of myself to necessarily go from some of these statements to direct or

specific action being taken between the u.s. and some of its major trading partners. that being said, clearly there are indications that these are areas that are under discussion and haven't been discussed between the u.s. and these trading partners for some time. we see this as a wretched thing of discussions previously taken place. alix: you hit on something we have been talking about for the last few days. the reality of the of ministration -- do you take it seriously or literally? the literal economic, fundamental backdrop in europe is improving when you have higher inflation, growth stabilizing, square that with the potential risk of u.s. president trump. in somedo think that aspects of the u.s. economic trajectory there are things which are good for u.s. growth that should have positive spillovers on the rest of the world. it would reinforce what we see as this benign economic trajectory out of rising inflation and growth. against that, you have to look at measures that are supposed to, in some sense, boost u.s.

growth. and of course, the increase of interest rates in the u.s. may have negative spillover of the rest of the world. but at this stage, i really would see the overall global environment as being a drag on the european growth. if anything, i think the relatively benign industrial dynamics around the world are quite good for european growth, in particular for growth in the capital goods exporters. david: this is not the first time we have heard this new administration address foreign-exchange. this is a bit different from the bank of japan for the pbmc. bundesbank can't really control this. is this a message to mario draghi? >> i think it's a message for the whole world. i think with the u.s. is saying is that these are the new u.s. policies, this is our new approach. i think it's a message for the whole world, including central banks, including the ecb. message to germany for

a long time has been do more to boost domestic consumption. do you think that will be lent on even more? and maybe not within the eurozone so much, but on an international platform, whole lot more? >> i think that there will be some ratcheting up of pressure on germany to increase fiscal spending. to be fair, it's not just external. we have elections coming up in germany this year. we have a new front person for the centerleft opposition. i suspect they will call for more fiscal spending. but certainly the u.s. of ministration -- and it is going to call even louder for more fiscal stimulus there may have been in the past -- the question as to what degree the germans will respond. it still will be a very modest move toward incremental fiscal loosening, as we have seen. jon: we have the eurozone inflation data.

the germans -- if you look at the front page of the newspapers tomorrow, i imagine they will lead with some of that data and talk about how the ecb should scale back stimulus. the u.s. administration won't be the only party in this. it is leaning on the ecb to do less. we will hear more from germany as well. >> yes. and of course we have had some comments now from bundesbank representatives on the ecb executive board, the what we have to keep in mind is that the ecb really isn't close to taking any decision. probably about six months. for the course of the next six months, the ecb will watch political risk very closely, at it is going to watch the inflation trajectory, because we have these bases coming out. it will take us into the second half of the year for the ecb to get serious about some of these discussions. that being said a number of hawks, will try and predispose that discussion to make it more likely that the ecb, in early

2018, will get serious about getting out of quantitative easing. alix: so we have a year until we really have to recycle the ecb pulling back debate. what does that do for euro volatility? euro-dollar when you're volatility has been picking up well off the highs we saw in september last year. >> in terms of central-bank policy, like you said, i don't think there's much expectation in terms of changing the course, in terms of being dovish or using. -- easing. euro volatility will be more influenced by other factors, such as geopolitical factors, we have several key elections in the eurozone, including the french election. i think that might have some givennce on the currency, what it really means for the european union as a whole. and of course there's the issue of brexit, where we will be seeing a lot more influence on the currency as we move forward. david: i wonder how much increased pressure the eurozone is feeling today. it's not as if they needed more.

what's happening with the other markets in europe these days? in light of what navarro has said. >> well, i think at this very somet i think there's discomfort in europe about what to expect, like anybody else. peripherye eurozone presents a very differentiated picture. clearly there has been more pressure on italy then there has been on spain. but i really don't see these most recent developments as some sort of a regime change. i think overall the dynamic for now in europe is still quite benign, and the primary risk factor that we are watching are political events in europe itself. alix: great stuff. thank you so much. citi research, you are sticking with us. breaking news out of under armour. it is missing on its earnings and revenue for the fourth quarter. for 2017, it was up on the high

end by 12%. they also see growth margins slightly lower versus the prior year. in addition, since the cfo has decided to leave the company, that stock is down over 60%. foot locker and nike are also down in sympathy, though obviously not as much. under armour missing on earnings and revenue. 2017 revenue up just 12%. david: ok. coming up, tom barrack, calling wurster take us through president trump's first week in office and what we should expect an s. this is bloomberg. ♪

david: the trump administration

remains of the top of the news that the president firing is acting attorney general overnight after she refused to defend his executive order on immigration. joining us is our white house reporter. when i saw yesterday the acting attorney general -- i thought, she's gone. this is not a big drama. >> right. this is to be expected, that somebody who most recently was confirmed and nominated by president obama to the deputy attorney general was going to be up,body who would stoo stand and there were's only a couple of hours between when she said that and when the of ministration came out, announcing a new acting attorney general. the sessions confirmation process is something the democrats at already been dragging out, and it's clear that with this executive order on immigration from these muslim countries that what you are seeing is democrats deciding to

drag out nominations, which is the only power they have, since republicans have a majority that will give them the ability to confirm anybody the president nominates. what we are seeing is the democrats trying to show that they at least have, to their base, some level of backbone and spine. david: how about today? there's a meeting at 9:00 with pharmaceutical ceos? >> yes. board members of the group are going to be at the white house to meet with the president. the president has said that the industry is getting away with murder, and that he believes the government should be able to negotiate with the drug companies the same way other foreign governments can do, and that has been something that has been a big sticking point, and one of the rare things that outlines the president with -- that aligns the president with democrats and his former opponent. this is very much something that the industry has fought against,

and every time he talks about fall.e industry stocks we will have to see exactly how he frames things when he meets with the executives later today, and see whether it is something he stays on or whether he ratchets it back. david: thanks very much. jennifer epstein, reporting from the white house. alix: uncertainty in politics creates uncertainty in the market. yesterday s&p socks were sold jennifer epstein, reporting from the whiteoff while the dow had t today since october, and the vix jumped 14% in two days. our investors starting to price a president trump risk premium? with us, citi research global economist in new york. onset, fx strategist with mizuho. i want to start with you. when you take a look at the broader reaction we have seen in markets over the last 24 hours,

are we appropriately starting to price in risk? >> well, of course it's always a bit premature to judge development after a single day or two. but we have always emphasized that there are these major risks and uncertainties in the outflow under a new administration. two kinds, one about new administration policy and also about the possibility of a regime change in economics, the fact that we are seeing rising interest rates, a stronger dollar, and the questions about the overall outlook that these potentially rather big changes are opposing. i would have thought that, against this backdrop of rising sentiment and improving animal spirit, that not all these risks have been fairly priced. alix: if you take a look at the dollar index, has the dollar value we have seen have a good rally or bad one? is it protectionism, safe haven

trade? >> i think right now there's a very high level of uncertainty. the recent gains we found were based on expectation. i think what's happening now is a case where we look at expectations and measure them against reality. so far, i think it's a good rally. so far, markets are giving the new administration the benefit of the doubt, that new policies will come in and help the u.s. economy, and that's always good for the global economy. i think the question is how valid is this argument. right now the kind of action we are seeing in the markets over the last week or so is that there is a little bit more uncertainty, a little more hesitation. but so far it seems like the balances for a stronger dollar. jon: the economic surprise index on the bloomberg, i can bring it to you now. on the top right of this page is when the surprise index is now currently, very positive.

but at the bottom right, what you see is a breakdown of why we have had the economic surprise index out before. it is almost brought exclusively by surveys in the business cycle indicators. by question to you, as an investor, you don't want to get in front of this momentum of optimism. but given the developments over the weekend, do you think some of those surveys, is confidence indicators, will begin to take a hit? >> my expectation of this point is that we will still see a pretty benign underlying sentiment backdrop. this of course is assuming that we will not see major adverse surprises, but i see a trend which is really quite brought across countries, improving business sentiment, improving animal spirit. my expectation that would be bleeding through into the hard data. it's not entirely true that we haven't seen improving real data, even on international trade.

certainly on the ip and industrial activity, things were starting to pick up. in the weakest parts of the world economy, including e.m. and manufacturing, we did see some uptick in activity in the second half of the year. i think there's a positive feedback of these factors, and we have seen more out of the u.s. administration with tax cuts and less regulation, probably reinforced. my expectation is that we will still have a benign sentiment backdrop, and that it will feed into overall better growth data in the first half of the year. david: how much of the strength of the dollar right now is a reflection of anticipation of growth, and how much is it protectionism? and if so, didn't the order reinforce that? >> i think a lot of it is based on expectation. what we saw the last two days --

sorry, over the weekend, regarding protectionism, that may have played into it a little bit, but given that the recent actions are mainly executive order and not registration and policy, i think that would make that a smaller factor in my opinion. i think it's more short-term. david: ok. sireen, thank you very much. ebrahim will be staying with us. alix: coming up, the boj keeps stimulus unchanged as it awaits clarity on u.s. policy. we will hear what mr. kuroda says about mr. trump. later, tom barrett calling northstar to take us through president trump's first week in office and what we should expect, next. this is bloomberg. ♪

jon: from new york city, this is bloomberg.

let's get a check of the markets quickly. the day after the worst day so far in 2017, we stall. futures negative, down on the dow and s&p 500. we recover on the margin in europe, positive by 42 points. germany is using a grossly undervalued euro, according to president trump's trade advisor speaking to the "financial times." the euro reacting up against the dollar. what you see on the other side is a stronger japanese yen, down .3% on dollar-yen. and treasuries down. let's get the other stories making headlines this hour and say good morning to emma chandra. emma: good morning. here is your bloomberg business flash. warren buffett loaded up on stock after the u.s. presidential election.

he said that berkshire hathaway has books $12 billion of stocks since he was elected. he didn't say which securities he picked, but said he is skeptical of the president's push for 4% growth in the economy. royal dutch shell is cutting down by up to $4.7 billion. most of it goes to assets in the north sea. they're buying those for 3.8 billion, it was swollen with debt when it paid $54 billion. that's your bloomberg business flash. i'm emma chandra. this is bloomberg. david: overnight, the bank of japan announced it would leave its current stimulus plan in effect, which was no big surprise. but governor haruhiko kuroda, in his news conference, did address quite specifically what he described as president trump's "protectionist policies." >> [speaking japanese] >> trump's protectionist policies could shrink global trade and economic growth, but the importance of the global free trade framework is

recognized by g7, g20, wto, and imf. i don't believe protectionism will widely influence the global economy. david: our guest is still with us. as you listen to haruhiko kuroda, it strikes me that so much of this is outside of his control at this point. it was there was a time when he was most powerful central banker in the world, but now he has to sit down. >> well, more generally, even in the case of the bank of japan, what they say right now, that they are benefiting from some supportive tailwinds and had previously been held back -- i think that applies to the exchange rate, the trajectory of commodity prices, and some of the internal factors in japan as well. i don't think they were ever really masters of their own destiny, but they are certainly not complaining right now about the external forces that they are being exposed to. david: even with the tailwinds

they are not close to target inflation. >> no, and i and my colleagues in japan remain quite skeptical that they will get there anytime soon. even the bank of japan's forecast on inflation for the next year or so still look pretty optimistic to us. if you look at one of the major markets, these yearly spring wage negotiations, i don't think we will see major move toward the target. jon: let's take that headline again. germany using a grossly undervalued euro. let's reword it. japan is using a grossly undervalued yen. we are going to hear the same thing, are we, a whole lot more? >> it's possible, but i don't think rhetoric is dramatically different from what previous u.s. treasury secretaries would've done. in part, what the imf what has said. we will have to see how these statements factor into actual quality. that was one of the points the making, thatwas

there are standing policy commitments, standing coordination across these countries. it remains to be seen how these will be affected. jon: that is my headline, not actually a headline. appreciate your time. etf havingthe energy his worst day since december 14, closing at a two-month low. joining us, the cushing asset management partner and portfolio manager on the good and bad of president trump's energy policy. that's all coming up next as we can you down to the market open. this is bloomberg. ♪

jon: from new york city, this is bloomberg. for our viewers worldwide, let's get your market checked. the worst day so far this year in 2017, coming back from all-time highs. down .6% from yesterday, no real drama.

the dow little softer, down 29. -3 on the s&p 500. when you switch of the board, the trade advisor to president trump is saying that germany is using a grossly undervalued euro. a stronger euro story now. the dollar is now the lowest since november 11. that's the story we are focusing on throughout the program. yields are lower by two basis points. that wraps up the market action. let's get to the headlines outside the business world with emma chandra. emma: thank you. the site has no escalated over president trump's orders that citizens who sat in predominantly muslim nations from entering the u.s. the president has fired acting attorney general sally yates, an obama administration holdover who told the justice department staff not to uphold the order. she was replaced by a federal prosecutor from virginia, who

ordered a government lawyers to defend the president's order against legal challenges. meanwhile, the trump administration has asked the acting head of immigrations. no reason was given. tonight, trump announces his first nomination to the supreme court. according to people familiar with the process, the president will select one of two judges, one from denver and one from pittsburgh. both are considered conservatives likely to be opposed by senate democrats. and in the u.k., the house of commons begins a debate on a 137 word bill that gives the british prime minister permission to start the brexit process. the brexit secretary kicks off the discussion. he says lawmakers will consider a simple question -- do they trust the people who voted to leave the european union last year? global news, 24 hours a day, powered by over 2600 journalists and analysts in more than 120 countries. i'm emma chandra. this is bloomberg. alix. alix: thank you.

the stock that got hit hardest was energy, losing 2%, the worst day since december of 2014. joining us now is the cushing asset-management portfolio manager, and barclays commodity analyst for copper and metals. libby, the rhetoric yesterday was the ban from mr. trump, that would affect oil services. how do you square that with the pro-energy policy? >> well, i think it's important to recognize that some of these bigger integrated oil companies may not have done as much work as some of the smaller oil companies that, on their balance sheets, cutting capex back. this is comprised of many big companies, so it's not clear what's going on. for the smaller, independent energy producers, this policy of reducing regulatory burden, increasing production, increasing infrastructure,

promoting exports is going to be very beneficial. alix: how do you play that when you have guys up over 40%? what is the most undervalued way to play? >> i think the best way to play the energy story is the midstream space. the midstream companies don't need to have crude oil moving through $60 to do well. the $50 is a perfect range for them to operate normally, and that is great for those businesses. david: 19th-century standard oil, they made history, saying people go too far, too fast, and it drives prices down. why don't we have that riskier? -- risk here? >> i have already started to hear about will gluts. the stronger dollar, the fact that we have had rigged counts increasing -- or member, they were down to historic lows -- and we saw opec come out on

their compliance 800,000 or 900,000 when the target is 1.8 million. those fears are what drove it, but the reality is the bottom is in crude, and we know this because in a time when we saw opec 2015-2016 increase their production dramatically, thwe sw inventories drop. that tells us we are back into supply/demand balance. alix: the way libby is playing oil dovetails with what you look at, which is infrastructure. pipelines. what has your work shown, if we get a $1 trillion infrastructure plan -- what would that do? >> well, i think it's important to separate what would happen now with what's been happening and what could happen. alix: reality versus -- [laughter] >> absolutely. we have been saying for some time, the potential is there for

infrastructure to lift commodity demand. look at copper, an additional 30,000 tons. in a market that is pretty closely balanced, that could take the global market from surplus deficit. we produce 78 million tons of crude steel in 2016. potentially when you add up the policies of infrastructure, you can see the u.s. producing 88 million, 90 million tons. jon: the dollar isn't strong. so far this year, it has been weeak against everything in g10. a lot of people have talked about the dollar headwind, but i don't see one. >> you have to member that the dollar has gone to all-time highs. it is pulling back, but we are still, and relative and absolute terms, the dollar is still fairly strong. and with the pro-trump policy, we expect to see good things happen to this economy. and that may be the fear.

jon: worth noting that it's not quite at all-time highs. we have certainly not seen this dollar strength since 1980, and from that point, do you think we will? >> let's import about dollar strength is that metals have rally despite it. throughout 2016, if you look at copper and the dollar, that was one of the key factors. what's amazing to me as we have seen copper rally, iron ore go above $80 despite a period of relatively strong dollar. alix: when you take a look at the metals and you see the rally we have had, when do we need to see actual policy implemented to keep the rally float? -- afloat? >> i think we have to see something by summer. built inhe market has lofty expectations. if they don't see the tax cuts, the infrastructure money start to get deployed, the market is

going to have a quick reversion, and you can see a strong pull back. whencertainly possible, you have iron ore trading at $80 per ton, we haven't seen these highs since 2012. that to me, in a time of record high inventory, tells you that you could be set up for a quick reversion if we don't get what the market is expecting. david: what about a steel glut? you talked about oil ramping up production, but you have a structural capacity globally. we had a lot of trade cases against china. how does that factor in? >> that's absolutely right. the night it states produces -- the united states produces on average 80,000 tons of crude steel. there's a global crude steel glut, but you have to realize that these are regional markets. with the new year of protectionism, you could have a u.s. market running hot, rising crude steel production rates, but a chinese market that is

stagnant. alix: the question -- you are betting on nlps. that doesn't mean we are digging a hole tomorrow. we still have to get a final decision. how long do you think they can rally up 8% until policy comes down? >> you make a great point about hope versus reality. for the energy infrastructure space, these companies have continued to operate and continued to build the $500 billion of energy we need. we have seen headlines about keystone, and it's going to take time. even what trump did the other day -- it doesn't mean the shuttle is going into the ground tomorrow. it will take time, but the rest of the industry continues to go, and as long as that continues to build, the earnings will be there. they will repair their balance sheet and are in good shape. alix: fundamentals versus sentiment. thank you.

up, billionaire warren buffett betting on trump in a big way, loading up on stocks after the u.s. presidential election. we will reveal how much he wagered on the u.s. president, next. and tom barrett will join us. he will break down some of president trump's policies. this is bloomberg. ♪

alixemma: this is the hewlett-packard enterprise print green room. coming up, tom barrett is here to take us through president trump's first week in office. jon: from new york, this is bloomberg.

on today's agenda, 9:00 a.m. pmi.rn time, chicago the confidence board. here with us to look ahead to the fomc is bloomberg intelligence's carl riccadonna. let's begin with the federal reserve. there's a stimulus package that they need to predict that has not arrived, and at the end of the year maybe do something with the balance sheet. talk to me about the conversation that will erupt around the table in d.c. >> we have the new members of sworn in at today's meeting, and fortunately i don't think there will be much of a prescient discussion about the next rate increase, because that is a couple meetings down the road, as they have to wait to see what the fiscal package is going to look like. the fiscal package is drawing on the second half of the year, and i think they will have the gumption, if you will, to pull the trigger at the june meeting.

that is what the markets are pricing in. but with the lack of urgency to either tweak forecasts, they still don't know what trumponomics will look like, now they can take a bigger picture approach and start having a broader discussion to build a coalition of around what balance sheet unwind will look like. i think that former chair bernanke last week gave us some clues, saying that there is very little urgency to start this, and the fed needs more of a buffer built up on the fed funds rate so they can reverse course if things go poorly when they tried to revert. jon: how do i think about it? do i think of it as reverse qe? reverse qe would -- >> quantitative tightening. jon: do i think of it rolling off the balance sheet? and the on that, do you think about using if you need to tighten aggressively, as opposed to an objective to get to a

certain size? >> sure. it's a tightening. its pulling back on the throttle of the economy. when you are only growing at 1.9%, both last quarter and in your on your terms, that is telling you that there's not tremendous urgency to start stepping on the brake pedal. first things first, they can tighten rates at a faster pace. that is what we are seeing this year, two or three hikes per year is hardly an accelerated pace. they will let the balance sheet rolloff gradually. jon: let's talk about the data we have seen. ask an economist have a day has been, most of them will say the data has been solid. it's been good. but if you look at the breakdown on the bloomberg, and we can bring that up now, look at the economic breakdown by specific sects of data. on the far right side of the screen, bottom right, the outperformance has come from the sentiment surveys.

it's this optimism. but you don't see it as yet translate into big surprises elsewhere in the hard data. >> absolutely. consumers business, etc., they put their money where their mouth is. we have seen these rallies and sentiment -- it's not just consumers, with consumer confidence out at 10:00, it has been homebuilders and large corporations as well. but we haven't seen a pick up in activity. in with those sentiments are these purchasing manager surveys, like chicago pmi. and all the surveys have been taken up, but there's a next act tatian, -- an expectation, and they haven't delivered on it. is it still early? absolutely. but we haven't seen a pick up in the pace of hiring, a meaningful exhilaration in consumer spending. jon: one thing we have seen, q4 gdp. never mind 2%. focus on business equipment standings.

finally, some business investment for the first time in five quarters. >> not very much. i think maybe we'll get a little bit of pushback after some weakness earlier in the year, but this is not going to be a major economic engine just yet. smallk it was a very contribution in the quarter. until the economy is rolling along at a faster pace and businesses are facing more capacity constraints, they are going to be very hesitant to make the outlays on infrastructure, equipment, software, technology, etc. jon: etc. being hiring. >> friday payrolls, i think you get a trend like -- this is the last payroll print of the obama administration, not the first of the trump -- jon: is that how we think about it? >> well, the survey was concluded before inauguration day. there's an expectation component, of course, but if we

clock it on the calendar, it was the last of the obama era. i think you will see more of the same, in the vicinity of 175,000 per month. the real question on friday's jobs report will have to do with wage pressures, because we had 20 states enact minimum-wage increases at the start of the year. that should show up in this jobs report. once again, we could get an unusual swing and average hourly earnings, which will make the fed's task all that more difficult. they are going to have a gauge that is temporarily crowded over in terms of wage pressures. jon: let's wrap it up with payrolls. >> i think it's going to be a trend like number. 175. jon: i expect nothing less from an economist. great to have you with you. a busy week for him coming up. david: great stuff. coming up, he has been a supporter of donald trump from the beginning.

does he think the president can keep up this pace? tom barrett joins us next. this is bloomberg. ♪

alix: the headline over the last hour -- peter navarro, director of president trump's trade council, said germany is using a grossly undervalued euro. joining us for more is bloomberg's international economics and policy correspondent, michael mckee. flashy headline, right? it moves the currency. but in reality, can germany actually devalue their currency to help their exports? >> the germans can't. the ecb could, i suppose. it's not so much that they are overvaluing the euro as it is

the relationship between interest rates in the united states in europe and around the world. the fed has been raising rates, the european central bank has been lowering rates, and that has brought down the value of the euro. also the united states economy has been in better shape. they can't clear what mr. navarro is talking about. he talks about how they are using this as a proxy for the deutsche mark. -- i pute call it up together a chart showing the euro and the deutsche mark, and if you go back -- let's see if i can go back. i can't. is euro, the orange line, obviously a lot weaker. the synthetic deutsche mark is what the deutsche mark would be if it were simulated. the german part of the euro construction is stronger, not weaker. alix: what is the endgame with this? do we have to rank it? mexico, germany, china, japan?

can we start ranking in order on how they will tackle trade surplus? >> we can't really, but what he seems to be getting at is that the administration looks at values of currency as a driver for trade imbalance. the germans have a trade surplus with the united states. doif that's the case, then they take action to change the value of the dollar in relation to these other currencies, or do they impose tariffs to change the trade relationship of the united states? particularly important, as a policy question when they look at things like mexico and china. david: i also wonder what this tells us about the new of ministration. 11 days in, the president, secretary of treasury designate, all talking about currency valuations. that's more than we have had during the entire obama administration. >> it goes back as far as i can

rubber. back to bob rubin and bill clinton, you don't talk about the dollar. you just say we are in favor of a strong dollar. they don't tell you what that means, we leave it to the markets. that seems to be changing now, because there is this focus in the new administration on trade as a problem for the united states. what they are going to do about it isn't clear, because mr. navarro has one view, and steve mnuchin has talked about the value of the strong dollar. jon: breaking news -- confirming what was likely reported that mentioned. the u.k. brexit secretary speaking in the united kingdom, saying that the u.k. will implement article 50 by march 31. he's speaking of the house of parliament. germany ran a trade surplus even when the euro was north of 1.40. it? a distraction, isn't >> it's the model of the german economy. i don't want to say it's

mercantile, but they are a trading economy. much of what they do is manufacturing, and most of their trade is within the eurozone, but it does have implications for the rest of the world. david: in fairness to mr. navarro, what he would say, i suspect, is it would have been -- the deutsche mark would have been even stronger. germany has been benefited by diluting its currency and being able to export more. >> that seems to be his argument, and his view is that a trade deficit is a sign of something wrong, that you are losing jobs because you aren't producing as much if you are buying more imports than exports, which isn't necessarily true. david: when is the last time we had a trade surplus? >> probably the 1930's. alix: are we in a situation looking at this article, that we are taking trump to literally? on a serious note, yeah, we want to fix the trade deficit. but literally, they are manipulating their currency

lower. is the market overreacting? >> markets react very quickly, and generally overreact. i'd say that trying to assign a particular meaning or policy implication to what peter navarro says is hard to do. as david noted, there are a number of voices within this administration on currencies, and they have been talking both sides. it's hard to know exactly. him tocampaign, you take literally and she just taken seriously. until we hear from donald trump, we don't know where the policy is going to go. jon: michael mckee, thank you very much. futures are little bit softer, the truck rally source. coming up, we will discuss with tom barrack, executive chairman, will take us through president trump's first week in office. from new york, we can you down to the market open in one hour, 35 minutes. let's get you up to speed on the markets. futures are soft, -47 on the

dow, negative six on the s&p 500. in london, treading water. da ux up and ftse up. here's the situation cross asset. weaker dollar. yields areare bid, lower. crude pretty much standing still. we're up by almost .1%. coverage continues on bloomberg from new york city. this is bloomberg. ♪

jon: conflict escalates in d.c.

trump fires the acting attorney general for refusing to defend his executive order on immigration. the trump risk really soars, with that convenes to consider a fiscal stimulus package. the stock market is pullback from an all-time high. and the euro rallies as the president's trade adviser accuses germany of using a grossly undervalued euro. this is "bloomberg daybreak." those comments are from peter navarro, who told "the financial times." a stronger euro session, euro-dollar climbs to on 1.0750. treasuries and yields lower by two basis points. alix: take a look at where volatility is. aysics began up 3%, total of 16%. earlier we had seen the selloff as blunt yields rose by two basis points, but now it's unchanged on the day. the safe haven rally continues,

gold up by about nine dollars, oil goes nowhere, looking at its first monthly decline since october. breaking news. big oil trickin coming out with earning. a very big mess. saw something similar with chevron last week. in terms of fourth quarter, became in heavier than estimated for the fourth quarter. i should point out that the earnings of fourth quarter includes an impairment charges about $2 billion, which explains why we see it so below what analysts estimated. production, it's coming in over 4 billion barrels of oil equivalent per day. that is bang in line with estimates. production, it's coming inthey say they are inveg strategically among all segments. the stock is off by about 1%. david? david: the trump administration

was at the top of the news today for firing the acting attorney general as she refused to defend his executive order. not big surprise. that the real news is the confirmation hearings. houseg us from the white is our white house reporter. tell us about this confirmation hearing. what is holding things up? rex tillerson, steve mnuchin -- withholding them up? >> democrats are using procedural measures to stall the processes. house is our white house reporter. republicans are increasingly critical of this, but i've got to be honest, a lot of the republicans i'm speaking with here on capitol hill, their aides tell me they are frustrated that the political capital the white house used over the weekend on the executive order and temporary has turned public perception against them, making it more difficult for them to move these confirmations. david: to push the point a

little too far, does it matter that much? if you talk about the executive order, he did have his secretary of the department of homeland has turned public perception againstsecurity in pd consultant. >> i put this question to a top aide yesterday, and what they told me is that here is where it matters. it matters in the sense that, in trying to craft a legislative agenda and trying to accomplish and work in conjunction with the appointees, cabinet are able to not only push that agenda and serve as a direct liaison with congress, but also bring on their own staffers, getr own policy makers, to in the weeds and move the needle. but in terms of wide sweeping, wide ranging executive orders, in the first week and a half of his presidency, president trump is not going to be beholden to anyone. jon: we have seen in the first week is businesses slowly pushing back. the were told it was a business friendly administration. the last couple days, it has not

been so friendly, has it? >> no. we have heard fast and furious criticism coming from everywhere -- silicon valley to financial institutions, all of which have been critical of the executive orders from over the weekend. a point i would note is that from a policy standpoint, the same companies that are criticizing the administration on this executive order are also the same companies engaged in the immigration debate. companies like facebook and google. they have a long history of being engaged on the immigration debate, and so their criticism, while it's not surprising, it is notable for the level of decibel and volume they have used in joining other folks in criticizing these executive orders. thanks.any it's been only 11 days -- hard to believe it -- since donald trump was in a jury did. -- was inaugurated. given the flurry of activity, it

might seem he has been in office for months. a good question has stirred some controversy. with us is the man who put out that inauguration, tom barrack, a diversified real estate investor. he's just under $60 billion under management. when he is not investing that, he remains a strong supporter of president trump. welcome back. >> great to be with you. david: i am reminded of the morning after the election. you had been up all night and came to talk with us. at the time, you said that this would be a different donald trump in the white house than what we had seen on the campaign trail. i will play for you what you said because it was prescient. >> i think what you saw is candidate trump. octagone trump and ufc saying everything goes, and he is reaching and grouping and analogies and allusions -- he has the liberty to do that. what you will see now is a very

serious, thoughtful man who says, i am going to leave a legacy of showing the world that an independent person coming from modest means with no political background can be the best president of the united states. david: you have had the rare experience of seeing your close friend as president. is that the man we are seeing? do you think you are right? >> i look much younger. [laughter] >> yes. and let me give you my point of view. all these policies are startling to all of us. and he as president has found a way to communicate which is unique. and he is communicating bits and pieces of a revolution which he promised, that he is doing it in

the only vocabulary which is available to him. theink the difficulty, discomfort americans are feeling, there's isolation of the white house. there is no team in place yet. he has a very smart group of people around him. steve bannon, jared kushner, reince priebus, his communications team, gary cohn. the cabinet is still not in place. all of these issues that surround it i think that he can do. what we all know is within the bureaucracy of a government, saying something and getting something done is amazingly, amazingly difficult. i think you will see, once the team gets a place, the difference between setting policy and communicating -- he's just doing what he said he would do -- and the implementation of that policy would be a more settling, smoothing way.

what we all know is the schedule of appointees -- only one has been appointed amongst 4500 jobs. the rest of them are civil servants, and that goodness they are there because things keep running. i think what you will see over time is the implementation of that policy being smoother because there's a team in place to do it. david: one of the things he certainly got done was the clamping down on immigration. we saw it at jfk right here. that got done. that didn't require other people. some of these policies are startling -- particularly the ceos. are you taken aback a little bit by lloyd blankfein and their reaction to that order? >> no, because business relies on predict ability and transparency, and at the moment, people are confused as to what that means. the reason the man was elected is because that segment of america is fed up with consistency and transparency of

the elitists, including the business elitists, with business as normal. way anybody expects anything different. this man is doing exactly what he said. he is communicating in a harsh way, but he was communicating that message to get elected. jon: we expected something different last year. respectfully, people like you would say to expect nothing different. why should people have expected something different? >> what is it that's upsetting at the moment? the policy of immigration -- if you talk to the arabs themselves , of course it's a ban. but saying we are going to have a timeout and go back to our country counterparts and our allies in that part of the world, and we are going to say you have to help us, it's not refugees who are causing the problem, it's the exporting of what people considered radicalism. the only way to end radicalism is help goodism. it's the imams and the good

mosques preaching and teaching and helping us to curate the refugees coming in. all they are doing is having a timeout. the problem -- the acting attorney general did the right thing.she says , i'm not going to implement it. i think it was a little grandstanding, doing it the way she did rather than just say she wanted to resign, but she was right. everybody expected that would happen. i'm sure the white house didn't expect -- david: as you say, during the campaign, donald trump made it clear he was going to clamp down on immigration from some countries where there had been terrorists. at the same time, this was so abrupt -- to make it your personal, i know you're the proud descendent of lebanese immigrants. you have some of this in your blood, and you are proud of that. we don't get from the president right now the nuanced message you are giving now.

we don't hear that immigrants are terribly important. when we get to a stage where we are hearing the nuance -- >> yes. i think you will get there when you allow the system to have a multitask middle east solution. you have general flynn, casey mcfarlane, steve bannon on the national security council. general mathis on the defense side. rex tillerson. you need a generic middle east solution. this is just a portion -- by the way, the leaders of many of these middle east countries will agree, which is to say you have to help us help ourselves. there's a thousand factions. it's not just al qaeda. when you go to syria or somalia, or you start with the muslim brotherhood and move across to the islamic state, and you have 75 factions, it's not that those factions are exporting people,

they are exporting philosophy. how do you quell that philosophy? 80 this was abrupt, but this president's method of communicating is a abrupt, because it's a revolution we are all getting used to. david: ok. tom barrack will be staying with us for the entire hour. alix: let's take a look at stocks on the move. if you strip out the $2 billion impairment charge, exxon earnings were $.89 per shar e. it produced about 4.1 million barrels of oil a day in the fourth quarter. ups is a different story. 2017 forecast well below estimates -- actually, under armour. revenue for 2017 also missed estimates. they see revenue growing only about 2% on the high, and the cfo is dragging down competitors like nike and foot locker.

the global barometer is off by 3%. 2017 forecast below estimates. currency headwinds -- i have the feeling this is going to be a theme. jon: might be, might be. coming up, the euro spikes after the financial times says president trump's trade advisor had some choice words about the euro. we discussed the $5 trillion per day fx market, next. much more with tom barrack. all that ahead. this is bloomberg. ♪

jon: from new york city, this is bloomberg. in an interview with "the financial times," the director of president trump's national trade council says germany is using an "grossly undervalued euro." this pushed the euro currency to

session highs versus the dollar. joining us on the phone, the global strategist with amherst. still with us, tom barrack. i want to begin with you. unemployment in italy this morning came in at around 12%. unemployment in germany came in south of 6%. calling the euro undervalued grossly, it' difficults a conclusion to come to -- it's a difficult decision to come to when you look at the entirety of his own. >> it is. that thet like saying dollar should have different values across u.s. states. similar in that there are sovereign states within the eurozone. example,that, for california would like to have a weaker dollar so we could export more rich produce. new england might want to have a stronger dollar to keep down energy costs, particularly during the heating season.

it's kind of difficult to pull country out and do this analysis. jon: if it's difficult to do the analysis, it's difficult to get any kind of desired effect on the back of it. what is this administration the likes of germany to do? they run a big trade surplus with the united states, with the world. that's not going to change anytime soon, is it? >> i think so. -- i don't think so. one thing that's pretty clear coming out of all this is that we won't be hearing much about the strong dollar policy in this evisceration. -- this administration. that is the commentary that has long since passed. but i do think that there could be some further gains in in germany activity that has been a chronic issue, that has been focused on by international agencies, that there should be stronger andstic demand in germany,

that would limit trade surpluses. but in general, this whole tone of analyzing the world through trade deficits and trade surpluses i think is a dangerous one. it ignores comparative advantage of different countries. there is some makes of truth in here, but i think we are getting tradeoint where the balances itself, becomes a goal of policy. i just something that makes much sense economically. jon: i want to focus in on that -- why is a dangerous? what are the consequences? >> you know, we can have attempts to manipulate markets to try to achieve a goal that really shouldn't be a goal. that can lead to unintended consequences and other markets. that can lead to destabilizing policies. i think trade balances, trade deficits, trade surpluses are in

that of exchange rates, of comparative advantage in production, and really are not an appropriate economic variable. as i said, when you start to go down that route, you end up with all sorts of unintended consequences. we have been seeing that in china, where there are efforts to destabilize exchange rates leading to big increases in reserves and big decreases in reserves. we are better off letting economic fundamentals run their course, and not try to interfere too much to impact these variables that have a lot of complex forces behind them. jon: appreciate your time. the prospect of this terrorist on mexican -- this tarriff on mexico. running trade surpluses with the united states. the conclusion is we will hear more of this. here we are on tuesday morning hearing more about it. david: we heard about china, japan, mexico -- this morning

appears to be the morning to do it. tom barrack joining us. how as a practical matter, much influence over the fx is there, as opposed to trade? is this really an edge of the wedge into trade relations with europe? >> sure. peter navarro has a much better view than i do and a much more experienced cadence. but this is just more of what's happening. there is a multilateral trade discussion going on with the european union. as you said earlier, there's really no european union. we have a series of countries who are on different venues and different constituencies. germany and france have led the league in the euro because it was good for them to do. when you talk about currency, you have this in. of factors -- you have this.

factors, and an administration saying they don't want to export trade policy. tip, all the multilateral negotiations are not of benefit to the united states and it's better to have direct, bilateral discussions in trade agreements. my own, personal view is that the dollar in this cycle will continue to get stronger. the european currency for where it is, in my own personal views, stays about where it is. these tradeof discussions will take time to play out. nothing happens abruptly, and the currency is just a result of what happens, especially with central bank intervention. alix: it's a measured view versus what we might care from the white house. if i am an investor and i get a headline, what do i do?

do i take that seriously, like they will make trade changes? or do a make it literal? bewell, my advice would nothing is going to happen quickly. concept,n idea and a and implementing it through these systems, it's a long pipeline. that pipeline has a way of creating a leveling. the bureaucracies that have to interpret all this will smooth it. whether the administration starts us moving or not, the in ministration is doing what needs to do. it needs to evolve a vocabulary, even as it has with the media. alix: that's negotiation, then. >> no, it's understanding how government moves. government doesn't move by dictating. it moves through a labyrinth of bureaucracy, and to get the drop,cracy to eke out a

you have to start with a river at the other end. that's the reality of the system. the federal employee base is 15% of the united states employee population. when you add all the subsidiaries, it's almost 30%. you don't have a lot of people cheering every time you say we are going to do something to reduce government. it just doesn't happen in an instant. you have to startle it, an then the conversationd will bring it back to normal. jon: i wanted a pet your comment about bilateral trade agreements. you can't do that with germany. the eu has to deal with the bloc. i don't understand the comments from peter navarro. focusing on germany and saying they are using a grossly undervalued euro, a kind of message they want to get to germany? you can't go to germany and have a bilateral trade agreement and then have another one with italy. that's not how it works in the european union. it goes back to the story that -- it's one thing to put a ceo and many ine house,

our audience would find this refreshing -- it's another having the experience negotiating with the european union. is kind of comments validate that, that the in ministration doesn't have the experience to deal with places like the european union. to understand that? do you appreciate that argument? >> your point of view is enlightened for sure because you have detailed experience. another point, maybe, with what happened with brexit, what appears to be happening in france and italy, that you have a new kind of bubble that is shot suchthat a rifle as this with peter navarro firing is just starting a rekindling, a rethinking of what the european union does. the european union is in jeopardy. germany,rance, italy, it's all trying to redefine

itself. i think my answer to the question is what do you do? you stay the course, you watch your business, you don't try and outguess what is going to happen and currencies if you aren't a currency trader. the growth of america against this backdrop will continue to get better and better as we fight through these difficult issues. david: as a businessman and someone who knows the trumpet ministration well, if you take us out five years, will there be more global trade or less? we are under a regime with multilateral agreements -- there may be unfairness is, we agree, but can you eliminate those unfairness is without curtailing trade overall? >> yes, my belief is yes. i have gone through the brain damage of trying to understand trade agreements. the majority of trade agreements is us imposing on other countries or trying to impose on other countries things like work rules. trying to equalize the balance

between the cost of producing a product in america and in vietnam. the implementation and enforcement of those are impossible. there has hardly ever been an enforcement. we are the largest consumer in the world. you do it with strength, with confidence, and you do it with kindness when it is met with kindness. i think it will be awesome. jon: tom barrack is sticking with us. angela merkel was waiting in, say she doesn't want to influence the euro exchange rate. can change the situation with respect to monetary policy. coming up we take a look at trump,'s tax reform, next. this is bloomberg. ♪

jonathan: from new york city, this is "bloomberg daybreak." i am jonathan ferro. yesterday, the worst day, futures down 34. we closed yesterday down .6 of

1%. treasury stable throughout the morning. 249 unchanged on the u.s. 10 year, the dollar weak across the board. dollar-yen heading back toward 1.13 -- 113, down .34 of 1%. bloomberg, very quickly, the u.s. fourth-quarter employment cost index at 0.5%, .6.estimate was i want to cross over to emma chandra. you, the fight over president trump's executive order on immigration has taken a turn. he is sally yates, acting attorney general, telling government lawyers not to defend the ban. the new acting attorney general has been the u.s. attorney for eastern virginia. he told justice department lawyers to defend the

president's ban against legal challenges. meanwhile, president trump announces his first nomination to the supreme court tonight. the president will select one of two federal appeal court judges, either from denver or from pittsburgh. both are considered conservatives, likely to be opposed by senate democrats. u.k., the house of commons has begun to date on a 100 -- 133rd bill, giving theresa may permission to stop them brexit process. he says lawmakers will consider a simple question, did they trust the people who voted to leave the european union last year. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am emma chandra. this is bloomberg. alix: thank you. goldman sachs and jpmorgan down over 1%. banks are up 18%.

is the timeline does not match up with investors timelines? we are with tom barrick and joining us is libby cantrell, pimco had the public policy. what kind of timeline for tax regulation is there for rollback and what is the reality? after the election, we think there is optimism about donald trump's rhetoric on tax reform, fiscal stimulus infrastructure spending and deregulation. tax reform is much more i thinkt to do then many people expected. that is now complicated with the replacement of obamacare, likely to take much longer and other things like a supreme court nomination in the senate. sort of the reality is that this will take longer, the more complex, smaller and i think valuations reflect that. same sector market

priority is no tax reform regulation stimulus, but we have heard about immigration and obamacare. can you help us sort that? tom: i think you have to be patient for another week. [laughter] steve mnuchin is not yet confirmed as treasury secretary. collins, one of the most experience hands in the white house is just finding his chair, and congress has a predetermined view of what has to happen, which is a refined and astute view, which now needs to be compromised. an easyer tax being place to start, same we will move from a source base to a destination-based system and i think business looking the same, or the is most important is regulation and not really tax. corporate america navigates corporate tax pretty well to its own benefit. but they do not navigate well is

to increase plethora of the regulatory bodies. will take will happen time, or time that anybody anticipates, which is why we drive forward on the basis of the knowledge that we have at the moment. jonathan: you are always nice, give it another week, and we are the have had one. at the same time, we will find out the bigger picture quickly and what the administration finds out his trying to reconcile up using your base with losing business. they will find up harder than other participants. tom: absolutely. but we are all finding is appeasing all about base in the midst of the policy dialogue is complicated, but the great thing about it is even we talk about the attack on the media, i find theo be most beneficial for media. everybody is now interested in the first amendment, dialogue, z.x -- a team x, y or

it is in you focus on the policies which ultimately is good for business. base, only talk about workers, employees, to be structure -- infrastructure is easy to talk about and say look at how many p3 programs have been implemented in the united states in the last four years, it takes 11 years to get an infrastructure project done, so they don't happen simply, but someone has to keep trying to push that aircraft carrier slowly toward a destination. i think that is what this administration is doing. longer, whichkes area of the economy and markets is underpricing the duration? thanks, infrastructure, where will be the longest lifetime -- lag time? libby: all are pricing in, infrastructure, tax reform, certainly be impacted by tax reforms, the border adjustment taxes. that really does create some

significant winners and losers, retailers are already seeing some of the lobbying on the hill. i think in general, the markets have sort of gotten over there skis in terms of the pace and fiscal stimulus and that might be with the reality of governing. it is a lot harder than campaigning. david: when you talk about them be more difficult than they seem, tom says regulation key to american business. it is not as easy as striking it off the books. yesterday, there is an announcement that you have to take to regulations for one new and would zero increase cost, but if you have regulations, you cannot just take it off the books. tom is right to focus on regulation particular get the executive authority with the have discretion, the president has more on regulation, especially those signed into existence by second the board by president obama, so

those are as easy to roll back with this nature of a pen, but lots of things that have gone through, the ap process is more drawn out. david: administrative procedure. exactly, and it will be much longer. president obama put up a lot of executive orders in his first six months, including the closing of guantanamo bay and we did not see that comes they have to put it into context on what is realistic. alix: markets can get impatient. one big question over the markets, the border tax. and how it might impact different sectors. month, we this weighed in on the potential of border tax adjustments. >> it is a terrible idea, a huge revenue sink. because of the other tax cuts and will not make enough to pay back for them. the dynamic effects will be very low. it is not on investment, it is probably allocation -- it is

pro-reallocation. congress like the border tax, trump cause it to complicated. where do we meet? tom: in the middle. alix: what do you think? not airst, border tax is tax on the gross amount. is rather than a source-based -- all it says is rather than a source-based tax like now, or you take domestic, foreign, deduct domestic cost and foreign cost and reach goals, that foreign experts are no tax and foreign imports are deducted from your ability to use as a form of production on tax, so the 20% tax eliminates from your deduction the foreign import. goese thought is, which back to currency, that actually, the currency will strengthen

that the amount of the point detection that you are not allowed is class because the dollar is more. all of this is theory. nobody knows, so the retailer is right. alix: he is already lacking. tom: it is difficult and complicated but going on a long time. this discussion is a type of a vat tax about the vat tax comes corporationsstop from forming where they have to have the tax, which is now off the money, and all of these are terribly complex. by the way, you have civil servants who are sitting in government who have been doing this for 25 years, who are laughing and saying, he can do whatever you want and it has to be implemented by me, and i'm going to go so slowly in implementing this and frustrate the system into compromise. .hat is what you see happening it does not happen quickly. saidresident, as libby with executive orders, can only

influence 2% of the federal employee base, 2%. we all freak out but there's nothing different out about. the system is built we don't move it -- it is not a speedboat but tebow. david: to reduce this to one question, if paul ryan wins, he has been at the tax thing along time and has a specific plan and donald trump adopted that. except for the border adjustment tax great he was silent on that, donald trump was, so the idea is that paul ryan will push his plan through the house, but i think this is where for the nuance that is important, while a border adjustment tax is appealing and raises revenue and levels the tax playing field, it is controversial among retailers, refiners, but it also might not be wto compliant and the house might not care about that but some senators might. 50-52 tohose votes,

the senate might be more difficult if the border could tax is included. it is not necessarily completed but we will see that in the final bill. you, libby to have cantrell, and tom barrick is sticking with us. ow coming, the d off its biggest decline. the vix had its best game since early november. our investors pricing the net president trump risk premium and is that the right trade? we will debate that next. this is bloomberg. ♪

jonathan: from new york, this is bloomberg. uncertainty. yesterday, the s and p saw its worst and the dow jones at its worst since october. our investors pricing and trump risk premiums? , tom barrick.s not much of a risk premium in there. we talk about the worst day this year but this year has been pretty good so far. i think there is some truth that people are reassessing and trying to figure out how to go forward. when you look at what has driven the market, a lot is the "trump trade." i do want to know how they will be enacted, when, and that doesn't mean dear getting bearish.

is stillns market bullish, elevations still pretty capex, corporate outlooks still pretty strong. the question is how long investors can bid on those without seeing something more definitive in terms of policy and something that will back up where they are putting their bets. jonathan: one moment, euphoria, the next moment, the worst in with with the dow down .6 of 1% to eight when you talk to the ceos, are they more cautious and say the market is currently positioned currently? i don't think so, i think they're more optimistic than what you see. what is important them is at fort an apparent warrior productivity. if you have a 4% goal, you have to be pushing constantly in front of you, whether you like the policy implementation or not .

at the same time, if you look at proxy for dollars, what better proxy is there then america's equity market exchange? there's nowhere else to go. think end of the day, i hope and aspirations, which drive the market, are not going to be exceeded easily, but on the downside, i think the pressure we find, which is on the policy issue, is because he don't have information. if you take people, business, the national security council, i have steve bannon on their, but what they do not know is steve bannon, so i look at it and say, are you kidding me? here's one of the brightest and smartest human beings i have met national security background, he went to georgetown before harvard business school, he was in the navy at the pentagon in an operational role, i'm sure that was not counting jellybeans. timeshare he had a viable cash i

am sure he had the viable option, so considering that we are criticizing low melt into a program which ultimately will be great for equities and business. we will grow ourselves out, no matter what happens, the dialogue is going to push to growth and optimism. america first will drag the rest of the world. , not anglobal mechanism global mechanism. what is good for america is good for the world. ver: most great ceos don't overpromise but over deliver. possibility that we will over deliver -- that we were oval promise and how did the markets react? possibility that we will overtom: we are in a new v, regime, quite complicated, which is why i think we need to turn over a personal beings and say, let's get behind the system,

congress, the president, and their judiciary and allow them getollaborate a plan and behind the plan rather than us engage in a continued campaign dialogue for another year. jonathan: that was the conversation yesterday on this program, if you had any negative emotion of you about the president, you needed to divorce it from your investment strategy or you lost money probably. another conversation we have had presidentialed [indiscernible] in the market, we talk about this in the fed but now we're talking about trump. you know him as well as anyone us, does he watch bloomberg? does he look at the dow and say, this is good and does he react to it? is that what we see? president, or sensitive to the stock market? tom: i think a president more sensitive to everything. the men is a vacuum for knowledge and information, so if

you are out there, mr. president -- he watches everything and takes input from all directions. nobody controls them, so on i a personal basis, i have never seen a more voracious appetite, so if you don't go to the white house, you don't have a philosophy, you have a group of very talented people, all with different points of view, auntie curates it, listens to everybody and every information in the marketplace, so he may be ,t battle with one of the media but he looks at what is happening. you look set the stock market and what happens with the economy, it is like an espresso machine. he looks beyond the phone and -- sees the espresso been a bit quicker than anybody i have seen. a difficult job, steady hands, 335 people monitoring it, and i think it will be the best thing for business over the long term

because it would be the best thing for america. alix: the vix up 15%. thank you for joining us. tom barrick is sticking with us. coming up, president trump hosts another sit down, welcoming big pharma. what is on the agenda and the possible fallout, next. this is bloomberg. ♪

drew: came out and surprised everybody, and sent the s and p punching. with his remarks of price negotiations with medicare, -- david: the president has said he wants to get the government together to negotiate from a deep discounts, is that going to be one of the main topics? ew: i would presume so. caught off guard, but nearly not as much of a focus as it was for hillary clinton. i'm sure it will be on there, this has been one of the top priorities in just about every administration over the last years. democrats have wanted to do this idea for a long time and all the

enough, republicans are the one who have been against this. there is a report out on bloomberg earlier today with about the industry efforts down to counter this. david: tom barrick, there have been a lot of differences, but when is the president directly intervening in industry. we had lockheed, boeing, ford, gm, is the president in ceos?keep calling tom: i would say absolutely. he is an advocate of do it now, so if the season on something like pharma -- the difficulty has been you have two sources of payment, medicare and private insurers, and medicare cannot negotiate and private up with retailers, such unwrapping it needs to be done and i think accountability is a new concept in government, so he is approaching it from a the unusual way because

institutional tone has been, you don't get so particular to distort the market by picking on one corporation or when industry and i think we just need to get used to it and it will happen. david: do you think it is in his mind he wants to get ahead of the lobbyists? by the time to actually get to doing things, it is too late. casey trying to steal their march? tom: i think he is trying to change the vocabulary and dialogue. special interests are no longer going to play the role that they play. they will always plate particular role, but he is getting ahead of it. he has a workload, these executive orders i really like pets, notations of saying, i am keeping up with my promise of the constituency, which is what you discussed.

the different between constituency and business views may have a rub, but it is between the dialogue is created, so rather than waiting for lobbyists to slowly put trade issues, which takes david: years, we are in day 12. r's -- years, we are in day 12. ceos are you think changing or it is spent? tom: i think it is all spin. jonathan: tom barrett, we appreciate your time. the battle brewing between the u.s. and mexico. mexico's consul general, and donald trump's trade agenda. this is bloomberg. ♪

jonathan: this is a bloomberg

daybreak: europe i am jonathan and david alix steel tweed futures down, negative five points for the s&p 500 after the worst day so far in 2017. not that dramatic create down .601%. ,witching out the board treasuries unchanged, 248 the yield on u.s. tenure, but the dominant story is the weaker dollar story. 500, cross, november s&p city home prices rising 5.2% year on year, more data in a moment. over to alix steel. drama, thek at retail sector, under armour off by 25%, fourth-quarter sales missing estimates and the u.s. could continue the rapid growth. it has doubled, failed every three years on average and the

most short in stock in the s&p 500, so taking it on the chin and the cfo will be leaving the company, dragging down some of the years like lululemon and nike. a look at big pharma, pfizer down by 1%, and getting hit by down 8%. pfizer cutting the 2017 forecast due to the generic affect on its business. missing, sales fading on an older insulin drug. the ceo will meet president trump at the white house. we will her eyes on the headlines. fourelva, losing patents on its drug for ms, about 20% of sales comes under pressure. you have got to look at earnings from ups and fedex. ups off almost 5%. it did see it earnings miss but it was the revenue that missed

its target by 100 million dollars. it puts a lot of the blame on currency headwind, saying it will cost the company $30 -- 30 earnings orres per 2017 and fedex being dragged down. jonathan: ceos only talk about one it moves against them, not a strong dollar story but a weaker one. welcome to 2017 and the trump presidency, about politics. peter navarro, the trade adviser, says germany is using an undervalued euro. the euro apart from the dollar rose over, south of 100, briefly, 99.99. joining us is michael, morgan stanley strategist. you read headlines like that. it is hard to gauge what it means for him real hard legislation of policy. what did you tell them?

we are telling them that policymaking reality is different than policymaking. you see this on display in different areas. to the most questions on tax reform, one place where it is an object lesson. we do think tax reform is coming this year but there are a lot of different ways they could come. you could take longer than people expect, it could get hung dipping on the affordable care act and be quite disruptive if you have the style of reform that includes limitation of interest deductibility and border adjustment or the positive outcome where it is a rate cut and implies fiscal stimulus, but the point is there is a range of outcomes that is at odds with market optimism, which we think more or less is ignoring the bad. the base case will take a lot more time to maybe people realize a couple of months ago and that risk of policy failure, you think people are under appreciating that?

think so. our base case is it gets done in a relatively market from the way under would be naive to appreciate the risk of failure. there is a risk that the affordable care act bogs down republicans because of the procedure they are following to which iseform passed, budget reconciliation, which means sequencing us to be affordable care act first through reconciliation and then tax reform. there is the risk because they are trying to stick to the rules of regulation, they have to include provisions like interest the stability, border adjustability, a lot of unintended consequences that go along the could be underappreciated by markets. markets?ch area of the we have seen energy, banks, industrials rally hard, so which is most at risk? michael: the most sectors are consumer focused -- alix: and the ones that have been up in the hope, and that

will be the biggest hit? michael: we have been looking at a broad sense, so in our view, equity markets in general are underappreciated the market and the risk-reward going forward around policy catalysts is not terribly good. corporate credit market we think particularly around border adjustment in the mid-interest that the ability and then there are unintended consequences where you have higher leverage that one might think in that amplifies the existing problem of the corporate credit team highlighting. thethen in the fx markets, dollar depreciation could go quite a bit further if you have border adjustments or fx thinks about 10% to 15% on the u.s. dollar it the policy was implemented and that as negative future effects of earnings for the s&p 500. jonathan: i would not get you to disagree with london watching say ofht now, but i will the story, gone the bloomberg to gratuitous right now with the weaker dollar story.

it is down again today. you specialize in public policy and it seems to be the death of the strong dollar policy that we has for decades. how do you reconcile that with this world? michael: donald trump himself has said this is one of the reasons he is wary of border adjustability that it would check in the dollar too much and that is against the idea that they want more export growth. in our base case, though it gets reconciled is that we think it could get tax reform done by creating a fiscal stimulus deficit spending that allows you to take out the border adjustment asset, tax reform and it would take the strong dollar story off the table. however, because of the path paul ryan is following and the fact that border adjustment stalls per to do political issues, one, raise revenue to makes tax reform revenue neutral, and the second is to satisfy the imperative to

overseascompanies with supply chains, we cannot not take that seriously, so there are crosscurrents i think a relative -- relevant come up we cannot under appreciate the risk. david: at this point, is the uncertainty around donald trump going down? if you look at what he has done, a lot already, i do not think of one he did not say he would do. michael: interesting point. theink this is probably -- answer is probably on a person by person basis. i would note anecdotally from our conversations with investors after election, there is a high degree of faith trump would pursue a business-friendly tax reform and some of the more distasteful elements of his policy universe, and were not to be taken literally, and maybe what is happening over the course of the last week's undercutting some of that but we have yet to see what that means for tax reform because you more or less only heard from paul

ryan, kevin brady and congressional republicans about specifics of what they would donald see and with trump, we have only seen thinking out loud, border adjustment was something he stated the weeks ago. he walked it back. lastly, he implied he did like it and then his press secretary walked it back, so a wildcard. alix: the fed is meeting for the next 48 hours, and no fred rates hikes -- and a fed hikes expected, but how did the monument of potential tax reform? excellent question. our chief u.s. economist talked about this quite a bit. there are two mines around that, -- minds around that come you cannot necessarily project lowered on the political process, and there is one way you have to take it in somewhat, it seems the fed has effectively taking a hybrid approach so far, where some members have been suppose that the

administration will be successful with fiscal stimulus and others have not. i think you continue to seek the divided mind about that and this continues to be an important policy variable that we may or may not have a lot of information from the fed on what the pr expectations are in the near term. alix: so the fed will be confusing and unclear? [laughter] wait a minute. david: haven't seen that before. michael zezos -- jonathan: confusing and unclear. alix: predictions. david: thanks for being with us today. coming up, running out of gas, the biggest in the dow so far, exxon mobil heading steady despite the fourth quarter miss. we discuss energy under president trump, next. this is uber. ♪ -- this is bloomberg. ♪

jonathan: this is bloomberg. i am jonathan ferro. teachers negative, down 38 after the worst since october last year -- futures negative, down 38 after the worst since october last year. we had a little bit of a reversal, 248 the yield on the market year, the fx right now a weaker dollar story. euro-dollar up .5 of 1%. since 2013, but the real story is politics, peter navarro, the head of the new white house national trade council, blasting germany for what he caused exporting the undervalued euro. alix: watching in the open

exxon, slightly higher after reporting earnings that missed estimates after a $2 billion write-down. joining us on the phone is oppenheimer company energy strategist. the expectations or just type the big oil. you had a pro-energy white house, oil rallying 18% since the election and then you get chevron, exxon missing. what is happening? >> a couple of things. it is not who is in the white , it is where oil prices are and where the are going. it is a key driver for the industry. it is not the company or government, it is a commodity price the industry has no control over. alix: we're looking at exxon with their profit declines, the longest streak since 1988. when does the oil rally turnaround for big oil? correct one thing, adjusted for the $2 billion

right off, exxon exceeded analyst expectations. the real 71 cents, number is 90 cents, so this is a big rebound and we're looking at 2017 to be significantly higher for the industry and exxon, celexa night now is expected to double its earnings, almost right now ison expected to almost double its earnings per dimension on why it has lagged great you have to remember that oil had two terrible years back to back and ,lso, with smaller companies you know, traded at multiyear lows. oil prices hit early last year and they were the lowest in 13 years, so the industry is crawling up, if you will, from a deep hole but they are not there yet. -- heyou said that randy

said that really matters is ramifications on the oil price break if we get the tax border, you could see domestic prices rise by 20%. this that create a dynamic of local emts in the u.s. versus bigger losers? youl: unfortunately, then administration is doing trial and error. they are trying to float an idea and if not shut down," slide but -- shut down, it will slide, but it will most likely be shut down. [indiscernible] that thedustry is not to play with winners and losers. the government has to provide the economic atmosphere to attract capital. not force companies to invest where the administration wanted to invest. that is not how business is run.

the white house [indiscernible] alix: we strip out the border tax adjustment and the other issue is trade. if we get a trade war, that could hurt demand in emerging markets, a potential negative for internationalf oil companies. fadel: absolutely, and especially when it is shooting from the hip before you really know what the issues are. help thelation will industry. we are going to have to wait three years before years to build a pipeline if we submit all the needed, necessary permits, and we should go ahead and build the pipeline. it will create jobs, economic growth, all these things, but not all regulations are bad regulations. smart regulation is what we need, not more regulation or no regulation whatsoever as the answer to anything. tox: what is the best way

play this potential uncertainty and the rollback of some regulation? fadel: i play defense. i would want to sit on my lead right now. i would say that the larger integrated oil companies will offer better risk profiles. the risk adjusted return will be higher for companies and have strong balance sheets that can the within their cash flow, that they are not growing barrels for the sake of growing barrels but creating shareholder value. we are seeing the companies or stocks that have lagged and have all these attributes, lower debt, andon, lower the diversification of assets, that will minimize risk, so most investors should look at the lower risk profile are trying to gamble and hope for the price to go higher. i didn't think oil prices continue to rise, but we will

not see the same saw last year. oil prices almost doubled from january last year to december last year. we would not see that again. we will probably see a two dollar to three dollar increase. we'll get when i believe will be the new normal and it will be about $60 per barrel. it is not $100 but it is not $20 either. to do so regulation has with the operating results over the next months or so. we have a new ceo of the company. what is the strategy and where do they invest their stocks? do they invest in ramco? said. this is one thing i exxon is sitting on what i call a tremendous value, the shareholders are not benefiting from that because it has to be anding it to assets, energy profit generating assets.

$320 billioning on treasury stock. this stock will eventually have to be released to create shareholder value. if you could send in context here, that would be 50% more than the market value of exxon. .0% more than value exxon can buy any large oil company provided that regulators would allow them to do that. i doubt it very much because of nationalism, oil, we will see figure mergers but we will probably see the consolidation $50he u.s. because even at oil, not on the companies will survive. a lot of the companies will generate return or cap employees. alix: great to talk to you. heit. g

started pricing at trump dollar [indiscernible] is fear starting to emerge? this is bloomberg. ♪

this is a bloomberg. the fxinant story is in market and weaker dollar story, south of 100, down by .5 of 1%. of few moving parts. surprising for inflation, but the dominant fax, and into the with the president trade advisor, mr. peter navarro, saying that germany is using the "grossly undervalued euro." joining us is michael mckee.

michael, taking on a country without its own currency, getting you into a difficult position. michael: it is hard to understand as a pinch made a valid point earlier. it is the california one and one dollar policy in connecticut wanted another. it is not like germany has control over the value of the euro. we were looking earlier in the show at the difference between what the torch market would be now -- at the deutsche market compared to the euro and dollar, and you'd find it would be stronger, not weaker. jonathan: what do they want to achieve? the german imbalance in trade with the rest of the eu and u.s. underscores it within the eu, a altilateral deal and in bilateral dress. ok, i think a lot of people would agree with him at this point that germany gets a huge advantage from a week euro because of what --weak euro,

surely, there is an objective if you are in the business of making policy and what is it? dump, one, the transit -- two things, one, the transatlantic, the trump demonstration does not like that, but peter navarro spew, and we had a famous argument a couple of months ago on the program, trade deficits by and of themselves are bad things because they suggest you are making less, employing fewer people international income goes down. almost all economists would disagree but that is his view and that is probably why he is making this view about the german trade deficit. if you go inside the bloomberg, i brought up the deficit with the united states and it has narrowed. it is down 12%, so i am not sure why they are picking this time to pick on germany. sort of the same issue with

china, the chinese deficit with the united states down 6% but they have been bashing the chinese. alix: headlines out of the president trump meeting with arma ceos now, he says that they have to get the prices down on medicare and medicaid and says we need to get the price is way down. prices have been astronomical and he says we will get the approval process much faster and and a lot of freeloading. this is in mind is what we thought he would say, hammering drug companies about pricing, but approval process is interesting. david: reminiscent of automobile companies, a carrot and stick, make sure to produce everything but we will give you a lower break. alix: in attention of high say, ok, president trump, don't want to make you angry, but you have shareholders to offer profit, so don't get mad at me, either. michael: an issue republicans are concerned about because telling the company how to set prices is unorthodox to republicans.

jonathan: you have hit on it, what do you look at down the road? smaller government that will unleash capitalism or the government taking a bigger role because a lot of people say it is capitalism and good -- yes it is. michael: it is hard to figure out. david: this is not the first republican coming to town say we will cut and how did that work out? michael: under republican presidents, and i did the research, under george w. bush, the size of government went up and under obama, down. jonathan: great to have you come coming up, futures the work, the opening bell. this is bloomberg. ♪

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hi grandma! and the fastest internet. [ girl screaming ] [ laughter ] jonathan: this is bloomberg daybreak: asia i am jonathan -- this is. i am jonathan ferro. the s&p 500 a quarter of -- .25

of 1%. without the drama, negative about .6 of 1%. the bell ringing in new york, switch the board. treasury on the margin, down the basis point. in the fx market, a significantly weaker dollar. it is the politics to pay attention to, the trade advisor to the president saying germany was using an undervalued euro, but not so undervalued today, up .75 of 1%, let's get the markets opened, over to alex steele. alix: good losing streak for the s&p 500, off by .3 of 1%, and nasdaq by .5. the s&p was down over 1% soterday, closed .6 of 1%, modest updates. and the dow jones not down triple digits the triple digit loss that we saw yesterday.

you're getting a flurry of earnings before the bell and lots of movers. mastercard down by 2.5%. revenue is up by 9.5% but to not miss estimates because they have to spend more on incentives. under armour gets beaten up, almost down 27% and expecting a first-quarter operating loss, not necessarily seeing growth in the u.s. as before. also, the cfo is resigning and macy's off by over 2%, downgraded as high competition and the s -- and the catalyst and harley davidson, off by 5%. consumers basically spending less on their big play toys. shipments were down 12% for the fourth quarter, a similar problem to the rest of the retail space. some issues we watch into the market and dollar strength something companies site in earnings report. always, and another

story, here is the state of the white house. the president addressing the pharma industry leaders. president trump on medicare and medicaid, saying we need prices way down. trump telling ceos that pricing is been astronomical. president trump same drug approvals are not going to take 15 years. is that a big carrot? david: a lot of people really could, but he wants to talk about ethics. -- about fx. unfair advantage of trade. much weaker dollar off the back of it in today's session. we are at 100 on the dxy. theas been the beginning of go back may be. our next guest says yes, jonathan, chief market technician says he will see a pullback next month and he joins us now. great to have you with us. it's begin with the chart to a

looking at, the lack of a 1% down basin, october 11. why does it matter? jonathan: the are seven days and from the 1% down day, longest since november 2006. it matters because to say the odds favor that we get that 1% down, we have gone much longer and history, but this is a bundle and we will get that. when you go 70 days without a 7% down day, and get that 1% down day, the next two weeks continue to see you could then average returns, so we think if we are going to get that, that would be to further falls on the downside in february. jonathan: the other argument for we see ao think pullback, and the other chart you look at, the average pattern totelection from 1977 2009 and we are here.

why does it matter again and lies it so important what we did last time around? jonathan: first, november through april is the strongest six-month period of the year, regardless of election year, and february is the weakest of the months. ,ou go to postelection years february is weaker, averaging at 1.8 5% in decline since 1977 during postelection. youseasonal backdrop is want to use seasonal in context. if we have been selling not the summer, january, coming into february, we will not say that is a week month the cousin has been priced in but we are coming to february dimon all-time high, so that sets up the odds are growing for a pullback into next month. ,lix: that's crystal ball it are you buying on that tip is the pullback happens? jonathan: markets are a game of probabilities and uncertainties. probabilities say you want to buy that treaty have to wait to

see if you get there. one of the reasons it gives us the confidence is if we do see weakness, it is not the start of something bigger, it is because of internal breath measures. last week, we saw some of the ratings that were the best on the s&p 500 and the accumulated advance decline lines declined. ofyou go back to the summer 2015, when the market was floundering around new harness, breathless rolling over, so that tip was more serious and that is why it gives us confidence it will be ultimate viable opportunities. story,n: that is the bringing up s&p 500 over the last 12 months, and it will put the moving averages onto the chart. on the a line along the bottom, a 200 day moving average. that was pretty much the support of the november low and you think the 5% to 6% pullback is a move toward the low? thethan: we think that is case for the pullback. we are more concerned with what the trend is, so the scope of the 200 day that rises. when you pull back into a rising

long-term moving average, that is a buying opportunity more than a selling opportunity. alix: translate to what happens with the vix. it is falling back below the 50 day. compare the six with what you expect up and with the s&p 500. john thing: we look at x futures and positioning -- jonathan: we look at the vix futures and positioning. alix: false are expensive for the vix. we want to look at the in that position relative to the open interest comes of that is not quite as extreme as the absolute but still an extreme low. suggests maybe have to see some unwinding of the short positions in vix, or should be bearish for equities. jonathan: in this kind of market, with the lack of certainty we have, why do technicals matter in this market when politics are so important? jonathan: that is the beauty.

try to take out the noise. if you look at what people are predicting the head of brexit, -- year andertyea tax selling, then of that matters. -- none of that monitors. we look at probabilities and probabilities suggest that markets go up and down and we have had a good move up, so there is pullback before the next late higher. alix: what happens to the dollar? it is kissing its 100 day. jonathan: we think the dollar is in a pretty strong uptrend. we know it is heavily weighted toward the euro, euro a pretty good countertrend move, but in a severe downturn. we think euro, maybe a little room, and then pulls back, which should be bullish for the dollar. jonathan: great to have you at this. about eight minutes into the session, looking something like this, down for a point, s&p 500

negative, the dow jones down about .34 1%. of 1%.pple off by .34 over the last weeks, or where he from the analyst community about apple quarters and here is a small list. jpmorgan worried about the stronger dollar, barclays worried about growth in china and india, morgan stanley worried about weaker iphone 7 and the list goes on could what can we expect when earnings cross? we are joined from san francisco. what i found interesting about the series about look changes and downgrades as they were for a variety of reasons, growth, weaker sales, fx, what do you expect? parents,nds like the always something to worry about. i think we will have a better tone and expectations are muted. this stock, like other technology stocks, has climbed the wall of worry in the first month of the year and that

expect decent reports by apple but by no means the blowout earnings that would take the stock higher. i think this would be a good year for apple and protect, and that is what you pay attention to. a distinct the fundamentals we hear out of apple versus the macro picture, repatriation of cash, tax reform, help us. mark: apple is still the dominant player in the march. in the phone category, obviously, they talk about driverless cars, and their areas of growth. on the macro front, you see potential tailwind for them, again, repeat of the creation of cash and what they do with it read the bigger plays i want to acus because those took off 2016 year in the stock and between apple, facebook and larger tech companies, you will have those tailwinds with easier comparisons, expectations into 2017. fourth quarter, saw huge gains

in financials, cyclicals and not technology. i think you have an opportunity to take advantage of the stocks going into 2017. david: with regard to apple, other people are in the a ton with spiegel area and they are not by themselves. isn't that down the road? pun: that is, but no intended, not as far down the road as expected three do about lots of announcements and technology going into all the cars that are being sold in 2017 and beyond this you come and the reality is much closer than expected. have a fully autonomous vehicle and the drivers of the road, that is down the road a lot, but to have the kind of technology bursting on the seems in an economist equal and other areas is much closer than people expect. the pace of innovation is accelerating. ist is a fact area and it about the pace exhilaration that does not decelerate and that is an important point going into technology.

david: the question the paces accelerating and it is exciting in the sector, but with respect to apple, they have had been able to get the margins of because the heavy in the branded product, so does it carry over into what the you buy a car? there are a lot of other brands in the space. mark: great points. there is a question here, but if you look at what kind of brand cachet they have, they benefited out as an investor and it will be placed in apple's back pocket. i think they will get the benefit. it is time to get the kind of cachetcachet -- brand that is much shorter, the ability protect companies to get grand cachet faster but apple has that now and continues to have it. i think you see it in other tech companies, and narrow list, but i think apple is right there and will get the benefit forward. alix: apple has three straight quarters to the weakness -- quarters of declining due to

weakness in china, and they're competing off of that. but can expect in the short term? i get innovation longer-term, but short-term, they have an uphill battle. mark: they do. they have easier comparisons and they have not had a great three quarters in a row. i think if the comparisons ease a little bit and you see some benefits of the comparisons in 2017, and in addition, you get some of those technology announcers. they are quite until they burst on the scene. [no audio] jonathan: thank you. president trump meeting with members of the pharma industry and these comments recorded a moment ago. let's listen. president trump: you folks have done a terrific job of it years, but we have to get prices down for a lot of reasons. we have no choice. medicare, medicaid, we have to get the price is way down. we will also be streamlined the process so that from your standpoint, when you have a

drug, you can get it approved instead of waiting for many years. companies have produced extraordinary results for our country, but the prices are astronomical for our country . we have got to do better. to longer,ead healthier lives, but we have to do better accelerating cures. we are forced and focused on accelerating fda approval, so you'll get the approval process faster. one thing that is disturbing, they come up with a new drug trade patient to his terminal and -- patient who is terminal and fda says we cannot have this the use on the patient, but patient within four weeks will be dead, well, we still can approve the drug. we do not know if the drug works or does not work, but if we cannot approve the drug, but the

patient will not live from more than four weeks, so we will change a lot of the rules. we are going to be ending global freeloading, foreign price controls, reduce the resources of american drug companies r&d innovationd preview people know that well. it is unfair to the country. our trade policy will prioritize that point countries pay their fair share to u.s. manufactured drugs, so our drug companies have greater financial resources to accelerate and develop new cures. that rightportant now, it is unfair what other countries are doing to us. one thing i want you to do. i see this a lot over the years, but a lot of companies don't make the drugs in our company anymore and a lot has to do with regulation, the fact that other countries take advantage of us with money, money supply, and

devaluation because we do not know. we know nothing about devaluation. everyone in other countries live on devaluation. theyook at china, japan, play the money market, they played the devaluation market and we sit there like dummies. you have to get your company's back here. we have to make products back. we're going to get rid of a tremendous number of regulations. i may have some problems with cannot even think about opening up new plants produce cannot get approval, and then you cannot get approval to make the drugs. other than that, you are doing fantastic. [laughter] we are going to get that taken care of, cutting regulations at the level that no one has seen before and we will have tremendous protection for the people, maybe more. instead of being 9000 pages, can be 100 pages. anddo not have to double up

quadruple up. we have companies where they have more people working on regulations than with the company, so it is unfair. we have to lower the drug prices. the competition, key to lower drug prices, we have competition, but a lot of time, it dissipates. i will oppose anything that makes it harder for stronger, younger companies to take the risk of bringing their product to a competitive market. that includes pricing by the biggest on in the market, medicare, which is what is happening. we can increase competition in bidding wars big-time. we have to do that program. the numbers we pay, we had cases ande if i go to a drugstore buy aspirin, it cost me less than with united states pays for it and the united states is the biggest purchaser of drugs anywhere in the world by far. so i can buy it at the drugstore for less money, right?

we will talk about that i like so much [laughter] will do something about that. we'll have national security priorities, terry important. we will basically work on innovation, price. we can save tens of billions of dollars and you people are going to do great three do a going to do great, so what one is we have to get lower prices. we have to get even better innovation, and i want you to move your company's back to the united states, and we want you to manufactured in the united states. we will lower taxes, get rid of regulations that are unnecessary . somebody said the other day, what is the percentage of regulation? i said maybe 75%, it could be 80%. you cannot even function. other countries have no regulation and to go there for

that reason and you produce good products. you want to produce good products also, so we will produce great products and streamline the fda and we have a fantastic person i think we want them fairly soon. he will streamline the fda and you will get your products, either approved or not approved but a quick process and it will not take 18 years. we are going to do i think the tremendous difference. we have sometimes $2.5 billion on average to come up with a new product. 15 years, $2.5 billion to come up with a product where there is not a safety problem, so it is crazy. [indiscernible] i am very disappointed. [laughter] right? would love to go around the table and introduce ourselves and let's see and

maybe we will start a little seconds,nd so, two save for a couple of minutes. the former chair of pharma, head of [indiscernible] all over the country, 60 countries around the world. years ago, we rent one of the top 10 countries to go bankrupt and rehab relief provided a lot of cancer treatment for patients , so in the board to engage. >> bob bradley from hampton trade mr. president, measured to be here. we sure do the desire of to eradicate some of what you talk about in your speech. we are confident about the outlook of innovation in the country and we will be adding 1600 jobs at the end of the year. they are confident in the

outlook of innovation with the company and to the industry in the forward to continuing to advance [indiscernible] trump: i just heard your substantial job situation. thank you. >> greg walden, i checked the energy and the fourth two working with the administration -- i chair the energy and look forward towards what the administration. president trump: t library much. >> i am -- president trump: thank you very much. i am the newyou -- chair, and we are manufacturing jobs which is good news for people in indiana, but also some of the policies you have come out and suggested could help us do more, so i'm looking forward to it. deregulation, those could help us stay in operation. trump: our great vice

president. >> [indiscernible] i perceive the company [indiscernible] george, ceo, we have spent about $3 billion in research and development. our global headquarters is near boston, about 13 manufacturing sites in the u.s. and the play about 20,000 people. trump: within the united states? [laughter] >> one of the things to help is lower tax rates. that is a massive help. president trump we will ge: we t it. >> we have employed 4.5 million americans, directly or indirectly. billion of r&d in the

united states, more than any other industry, andrea glad to be here this morning to talk about reducing regulation, lowering taxes, and we think stronger trade deals will mean a lower cost for american patience and the tax they are. >> iambic am can for sure, chairman and ceo, we have been in the country for 125 years and a play 23,000 american employees. we have about seven point billion dollars a year in r&d -- david: we just heard from president trump speaking to pharma executives. bonus, at the top of his list, the president, his trade with mexico, which he addressed aggressively in his first week of office, saying we will build a wall, and having a meeting with the mexican president ballpark. we spoke with very summers and he had doubts about the trump policy toward mexico. larry: the kind of approach we have seen i think is very

counterproductive and you just have to read the mexican press to see the kind of effect it is having. we have supply chains with a lower wage country like mexico, and it takes economy look much stronger, so politically and economically, partnership with mexico it seems to me is very much in their interest. david: joining us is counsel general of mexico to new york city, diego gomez pickering. he served as the mexican ambassador to the united kingdom and was foreign press secretary for the president of mexico himself. so welcome back. i want to start with the reactions of mexicans to what is going on right now with the white house and washington. i will quote the headline of a piece at a bloomberg that says "outraged mexicans to trump, tear up nafta, we are sick of it, to." president trump has managed to

unite mexicans because they are so angry, is that your impression representing the mexican people? diego: thank you. i think what we see now is in alignment of all the sectors in mexico, we have private companies -- we just heard mr. carlos addressing the nation a few days back. we have all the parties, including opposition parties, which have been very vocal, calling the unity. we have the president, and the society, so there is an alignment of interest rate answer is yes, i do see that what we have now in mexico is voice that unites all sectors of aim, which is mexico's national interest piece of the what we should -- interest of what is the relationship between nafta and the u.s. david: isn't mexico dependent

upon the benefits from nafta? diego: being clear, we have never wanted to tear the power. we are still on the table trying to convey that this treaty is beneficial for all parties. things andespectable things that should be added and we can make it better. we have never been vocal about tearing it apart. we are still interested in let's keep forward with it and try to [indiscernible] david: is the progress being made in that respect toward negotiating with the top administration? diego: no. after today, we have reached no agreement. the telephone call lasted no more than one hour friday, both keep on talking on a regular basis, but so far, no agreement has been reached. david: are there people designated to be talking, and agenda for getting together, whether on the telephone or in person, to make progress?

diego: certainly. david: our the date set? diego: there is a schedule of constant communication, in which the parties are talking regularly. that has been set. so far, there is nothing that has come out of that. david: i'm sure an agreement will take time, but give us some sense. are we -- is the united states as mesko things, proposing things, are there things on the table to be negotiated? diego: it is about continuing the beneficial agreement that we have had a really have a tremendous relationship, not only on economic terms, but if we talk about security, and many we have been putting that on the table. that is clear on our side. on the top administration side, it is acknowledging what we want and with what we believe. yes, that is hopefully what will

get some work. david: you mentioned security. some of the reporting has been this is not just the trade issue but security issue, and that mexico really wanted to be a broader negotiation on security because mexico gives the united states a lot in terms of security. is that on the table from the two points of view, u.s., xo, is expanding up to security, as well as trade? table everything is a when you think of relationship. you have to look at it in all of the context and if we were to negotiate, there are plenty of things to negotiate about. if we are stopping conversations on this france, we could also stop on the other front. yes, we are not close to discussing all the things that are relevant for both of us in this entree. alix: you mentioned negotiation. when you see eight trump tweet -- we see a trump to come out on the hard-line come to you viewed

that as a negotiation tactic, literally, how serious you take it? diego: when the president of the united states comes out with a statement, regardless of whether it is on television or a press statement or twitter, we do consider it a statement by the president of the united states, as serious as that can be. david: there is a third party named canada. nafta is amongst the countries. are they participating in what is going on? diego: we talk on a regular basis, as well. on monday morning, it was a lengthy call between prime minister trudeau and president nieto regarding nafta and we share information regarding individual and binational conversations, as well. david: we are one week into the administration could you have an idea for who the pinpoint person will be, the incoming trade

representative? diego: considering the relationship, i would limit it to one person. there are some in the interest, so many things to say, and we're taking them into account as possible. david: thank you so much. jonathan: that wraps things up from this program. daybreak" team, thank you. 29 minutes into the session. ,ow on a four-day losing streak the longest since the election. our coverage continues. "bloomberg markets" is coming up with vonnie quinn and mark barton. ♪ vonnie: it is 11:00 p.m. in hong kong. from new york, i am vonnie quinn. to "bloomberg markets."

vonnie: we will take you from london to frankfurt in the next hour. plus, stories out of washington, d.c. and tokyo. here are the top stories we are following. expertsrump meets with from the pharmaceutical industry. he tells them competition is key and he says he wants to get prices way down on medicare and medicaid. mark: from trump to brexit. what are the main risks for investors? fordham.peak with tina and angela merkel says germany is not trying to influence european central bank policy. advisores after a trump