america. alix: democrats take the house, republicans increase majority, washington faces gridlock. markets like that gridlock. the fed gets priced out. warning signs. warning of an economic iron curtain between china and the u.s.. david solomon says the biggest risk is an overheating economy. david: i am david westin. the white house is having a good time of it this morning. sarah sanders saying she will have a press conference. president trump will have a news conference at 11:30. he already tweeted this out. the president feeling good about himself. alix: trade deals. let's go back to work. this will be business as usual for him.

i will keep doing what i have been doing. david: there is nothing that would not cause president trump to say i will change my tact. see: the one thing we will is a free pricing of fiscal stimulus. that already reflected in the markets. i news conference from president trump today in washington at 11:30 from the east room. alix: let's look at markets. up.ty futures this follows a rally in europe. a weaker dollar story. dollar up. flatten herl yesterday. you can see that in the backend, yields lower by three basis points. a 30 year auction today. you saw a strong auction yesterday.

all of that filtering through the midterms and the deficit going forward. crude moving on its own, over 1%. we might see opec cut production. crude beating its own drum. we are oversupplied when iran is cutting back on oil. alix: opec is not used to dealing with this. david: we want to set the stage with the midterms. for that, we are joined by our crack team. kevin, set the stage. >> divided government and the u.s. republicans poised to make significant gains in the senate. they won back three seats. one democrat beating senator dean heller. we are still waiting on florida,

arizona, and montana. to narrows cleaning leads in each of those states. a different picture in the house of representatives, where democrats have and poised to take control of the house of representatives. they have gained 26 seats. we are still waiting on a couple of seats to come in, but this has fueled their ability to win suburban districts. are the centrist democrats who had big wins last night and make up the coalition in the house. david: a continued great job. take us below the numbers. what we know about how this happened? >> a big year for women candidates. the democrats gained in the house. we sought 95 women who have secured their victory in the house, a new record.

a lot of democratic women ousted their mail republican -- male republican incumbents by first-time candidates. reach, women women who have become the first in congress. in one case, the youngest ,ongressional candidate to win 29 years old, the youngest representatives in congress and the history of the country. we have seen the first native american woman in kansas city also winning her race as well. david: an important report. thank you very much. the bloomberg first take we are joined by gina martin adams. our bloomberg white

house reporter. start with the view from the white house. the president is happy. he is tweeting. he feels good. the white house was planning on doing before this happened, because they expected to lose the house and pick up some in the senate, said the message was focus on the the in the senate and push losses to the side and run up their victories in the senate. one of the biggest concerns is the president would take a lot woulde on this and this be treated as a referendum on his presidency. that is why they are coming out with this declared victory strategy, which is something the president is known for doing. this is part of a broader

strategy for them. you can see what sectors have done well since the 2014 election. , financials,ogy consumer discretionary. businessoing to be the as usual story? >> it looks like the cyclicals will lead. i don't know if it will be the same that led in 2016. over the last two and a half years, we have seen a tighter fed, meaning a different story for the cyclicals in general. if we see the dollar weaken, that is a different environment for sector and industry performance. i think a lot of it depends on different things. in 2016, all you saw into 2018 was accelerating economic growth. more likely we see a modest

deceleration and economic growth over the next two years, creating a different environment for an investment landscape. alix: 100%. morgan stanley said we could be entering a long-term bear market. yields move lower as buying came in. the dollar also lost the bid as well. when we thought it was a republican sweep, and up when we saw a mix congress. a fedhink it is stories, but partly fiscal. we will not see a whole lot of legislation. we have to focus on the fact we are still spending a lot. that is a drag on the dollar. going into 2019, what will matter is brexit resolution, all

the resolution outside of the u.s. david: no question about that. matter won't significantly for the dollar going forward. the dollar has gotten a lift because of these issues in europe, but also because of monetary policy. david: for our third story, we go to the bloomberg forum in singapore. david solomon warned about overheating. think the biggest risk is an overheating. >> you do? >> the question is can the fed in the context of how it marches forward with monetary policy, can it continue to normalize rates and away they can strike a balance and have a softer landing. i am not a prognosticator. our u.s. research says they think the fed can manage it that

-- in i would say they are there are few tightening cycles. the president is not worried about overheating. he wants more stimulus. congress, isvided that concern of david solomon less today than it was yesterday? know.on't i guess there was some hope that congressional republicans could come together and do something on tax legislation or tax reform 2.0. certainly now it's going to be a hold down the line, the "resistance" to block domestic legislation trump wants to have, unless he can reach compromise. we have seen him reach out to democrats before. he is very transactional.

things have gone so far with the two sides over the past two years that it is hard to imagine him a but he can change quickly. david: yesterday was the midterms. tomorrow is the fed. what are the equity markets looking for in terms of this overheating discussion and raising rates and balance sheet as well? >> it was that suggestion that the fed is no longer accommodative in september that triggered this downdraft we had through october. to markets are very keen hear what the fed has to say with respect to their inflation , how much019 outlook might the fed acknowledged that companies are trying to pass the price increases. that has a big story this earnings season. margins are getting constrained. companies are testing the market with price increases. that forces the fed's hand to

remain tight. and the critical question, where is neutral? 3%, beneath 3%? the equity market has voted that 2% is neutral, so we are at a point where the equity market thinks policy is tight, but the bond market is still struggling with that question. that will remain a source of volatility going forward. the fed is key to watch now that we have this midterm distraction past us. alix: gina martin adams of bloomberg intelligence. thank you very much. you can find all the charts we used and more on gtv . you can go through the recent features and check it out. coming up, markets suggest a divided government. on next guest will join us the political and business side of midterms. this is bloomberg. ♪ loomberg. ♪

have cometerm results in where the pollsters and markets thought they would, with democrats picking up 26 seats in the house, and republicans gaining seven seats in the senate. knowsg us now someone who how washington affects the business and financial world. he served in the white house and treasury and is now president and chief executive officer of evercore. it is great to have you here today. you have spent time in washington and wall street. take a look at what this divided congress may and made not do,

things like taxes, infrastructure, deregulation, obama care. >> i think there is plenty in the selection with democrats and republicans to speak positively about. the win in the house, the governorships, strengthen their position. you look back historically at divided government. -- government, it has been positive for markets, and after midterms has been positive for markets. that is a confluence of those 100,000-feet views. it means a lot less will happen in the next two years. david: we will be gridlocked, areas likere infrastructure where republicans and democrats could see i too high. eye.e to

>> the big decision they will have to make is do they want to help pass legislation that they and the president past. congress congressional groups typically make a decision, are they going to legislate and move the country forward, even if it may help the president and his reelection in 2020, or do they want to be obstructionist and accomplish not much in the next few years? it remains to be seen how that shakes out. members at new house least have backgrounds which would suggest they are going to washington to get things done, not to obstruct. alix: i like the optimism, i

really do. life just got harder or easier if you are a ceo? >> it hasn't changed a lot for me, honestly, but what today does is we had a result in the elections. fair assumption that whatever happens in washington over the next two years, it will not have a dramatic effect on our clients come of all over the world and the united states, or on our business. the world will pick it back to what is going on in the real economy, what is the fed going to do, and then the exhaustion ,s things that can derail that a real escalation of trade differences between the two largest economies in the world, italy, which is a potential

threat to the euro experiment. david: let's talk about china. hank paulson had some conscious words. >> i see the prospect for an economic iron curtain. david: and economic iron curtain. that sounds dramatic. does this election last night encourage president trump to be tough with the chinese? >> i am not sure president trump is affected by those things. historically,ck there are a lot of things he has not had long-term views on. them he has had a consistent and long-term view. it is a view, by the way, that

is supported by a not insubstantial number of members of congress on both sides of the aisle. there are not many people in washington who will say go easier on the chinese. at the same time, he can't ofsibly not the cognizant the effect a true iron curtain or trade war would have on the china, andy here, around the world, and therefore on the markets. david: what does that mean for the world of m&a? outbound m&a in china was the hot topic. what about now? obviouss the uncertainty, and uncertainty is the enemy of m&a activity, and uncertainty about how the real economy and regulatory

environment you false. evolves.nd -- you there is a huge amount of uncertainty how chinese regulators and the u.s. will cross-border m&a transactions. the canary in the coal mine for xpat was the qualcomm-n transaction. it did not get this approved, it just got filibustered. that has caused people to think about large transactions that might require a significant amount of regulatory approval in china. david: hold that for a moment. we want to go back to the new economy form in singapore. overnight, we set down with

david sullivan in an exclusive interview. he had this to say about the banks recent trading performance. byour securities business any metric is one of the top three global market making businesses in the world. to is ourre referring business based on market shares it had a decade ago in what was a very different world, different regulatory in foreign come, different structure of that business on a relative basis lost market share. it is an institutional market-making business. 1300 top institutional clients come we have the second leading market share in market mediation. there is room to improve. improving, buton one of the things we can do is explain more clearly the strength of that business, how that business is positioned at goldman sachs versus other firms , and i still think we have the

best people in that business. i hear that from our clients. >> you do? >> i travel around and see our clients. they tell me repeatedly you have the best people, so we have pivoted to making sure our clients recognize we are in a client services business. we are working to solve their needs. we are seeing our market share grow. last quarter, we were one of two funds with institutional clients the largest market share growth. >> does that extend to the leadership and the people running it? >> i have made some changes. i am confident in the leadership team we have in place. this team represents a diverse group of people with a diverse group of skill sets, from huge client experience, huge macro and micro trading experience,

huge technology experience. greatk we have a leadership team and i am excited about what they will do in the coming years to continue to position- cement our as one of the leading market makers in the world. >> some measure the importance of sales and trading by the percentage of revenue it generates. it is down to a third. not so long ago it was two thirds. in the distance past -- distant past, it was well north of that. what is likely in the david solomon era? tradingthe factors take to 25% or 50% of revenue? it being 50%s of is extremely low. it is just math. if you add businesses and those weinesses grow revenue, of who isugh the lens

our clients and the opportunities to serve them. this is something stephen spoke to, something the leadership is extremely focused on. alix: that was an exclusive interview with david solomon. still with us is the evercore president and ceo. has moved upore the ranks in investment banking. how do you continue to steal market share from the big guys? >> we are fortunate. we are in a business that is a secular growth business, the m&a.ory and it is highly correlated, historically with an upward bias .

we are in a growth business to begin with. what has happened in the last 20 years is a substantial market ,hare shift from the large universal banking firms to the independent firms. that has happened, i believe, for a number of reasons. number one number are maniacal about confidentiality, and our model allows that. we don't have to let a lot of people in the firm no when we take on a piece of business. we are maniacal about conflicts. we don't have financial conflicts with our clients. ,e are attracting very senior experienced investment bankers. , they spend 100% of their time working with clients, rather than managing or overseeing lending or other capital commitments. that model is getting a lot of resonance evercore for evercore

and some of our independent from competitors as well here it in of u.s., probably 30% advisory revenues are going to the independent firms. 15 or 20 years ago, that would be 10%. alix: you are staying with us. bank of america is trying to ramp up. david: they are in the market for 50 new people in investment banking. has passed them by. alix: coming up, the future of tax reform. we will break that down with david camp. this is bloomberg. ♪

alix: this is bloomberg daybreak. we have a rally underway across the world. dow jones futures up by triple digits. futures were even higher but we

thought it was a republican sweep but overnight when we got a split congress, features state high. european stocks are in the green the matter where you look. -- no matter where you look. in other asset classes, it is a weaker dollar story. euro-dollar up by 4/10 of 1%. is story after the midterms is this good for emerging markets? do they get relief as the dollar takes a pause? her, thatull flatten is what we saw yesterday -- flattener, that is what we saw yesterday. buy the long. crude up by 1%. a weaker dollar but opec is

perhaps going to cut production now in 2019. david: we will wait around a couple days and it will change again. now it is time for an update on what is making headlines outside the business world. we turn to taylor riggs with our "first word news." taylor: democrats have ended two years of republican control of both houses. democrats took control of the house of representatives. republicans held on to the senate. democrats will end up with more than the 23 seats they needed to flip the house. house majority leader nancy pelosi is expected to become the next speaker -- minority leader nancy pelosi is expected to become the next speaker. >> today is about restoring the constitution's checks and balances to the trump administration. tookr: republicans democratic senate seats in florida, missouri.

ted cruz of texas nearly beat o'rourke. beto >> is my hope that with the bitterness and division we see nationally, that texas can be a model for how we can come together. stability -- with but with civility, respecting each other's humanity. taylor: democrats at least pick -- democrats picked up at least six governor seats. abrams is waiting for absentee and provisional balance to be counted. at the bloomberg economy forum in singapore, some candid root -- candid remarks about president trump from chief economic advisor gary cohn and david rubenstein. give us any insights on why he is so concerned about trade of facets? deficits?rade

>> no. one economist on amazon who thinks trade deficits matter and he listens to him. taylor: global news, 24 hours a day, on air and at tick toc on twitter, powered by over 2700 journalists and analysts in more than 120 countries. bloomberg. david: gary cohn unplugged. alix: found some guy on amazon and went on to say trade deficits can be good. you tend not to hear that from people india administration. david: he does not seem to be pulling his punches at all. alix: that was pretty great. -- one of of a host the hopes of republicans was to change the tax code in their congress. the so-called tax reform 2.0. with democrats taking the house, the question is whether that remains on the table. we will come someone who knows the inner workings of congressional tax legislation, dave camp, he served in congress for 24 years from michigan,

including as chairman of the house ways and means committee. he is now a senior policy advisor to pwc. thank you for joining us. dave: great to be here. think that what you have with divided government is some stability and tax policy. i don't think you will see a lot of change going forward. that means you will not see a lot of fixes. treasury was hoping congress would make some of the adjustments to the tax bill and congress was hoping treasury would. clearly the responsibility will departmente treasury to make the adjustments and fixes that any large tax bill needs. david: does treasury have via 40 two do the things they need to be doing? authority to do the things they need to be doing? dave: there was a lot they can

do and the responsibility will be with them. some hearings on the new tax reform bill but not a lot of progress in terms of moving legislature. david: as you talk to pwc clients about taxation, what are their main concerns? companies saying needs to be fixed or preserved? dave: the biggest question i get is the sustainability of the tax bill. years ofeveral potential stability on the tax bill. .epending on the 2020 elections i do think you have an opportunity to have at least more stability then folks thought if the senate and house had changed parties. david: no relief on the limitations of local and state taxes. that was a big issue in some places. dave: policy there remains the same.

you will have hearings on it and discussions about it but i don't see any changes. david: how important was it to make those tax cuts permanent because that was an important part of the 2.0 proposal. dave: it certainly gave a talking point in the election that somehow republicans had raised taxes on the middle class because they expire in the next google of years. that is going to be an important issue going forward but i don't think you will see a change or adjustment. there are several years of legislating to be able to address that issue. you will have potentially a number of things coming together that will focus not in the next congress but after that. david: take one big step back. purposeerstand it, the of taxation is to pay the nation's bills. we have a very big deficit. what is the prospect of as a

matter of tax policy, figuring out a way to get that budget deficit down? dave: as we know, even the has increased and so has spending. that is an unsustainable scenario. i don't know with divided government, if you are going to see long-term attempts to address that problem but clearly with some certainty, whether this bill generates productivity -- growth p over a you willriod of years, have some stability in terms of legislation. david: thank you so much for your time. that is former representative and former chairman of the house ways and means committee, dave camp joining us from orlando. alix: still joining us is rough schlosstein -- ralph celestine

-- ralph schlosstein, evercore ceo. ralph: most of the tax reform thewas addressing individual side of the tax code rather than the corporate side of the tax code. there are some cleanups that may be able to be done through regulation rather than through legislation but i would not hold 2.0. lot of hope for a tax david: whether it is deregulation, how much of a distraction will he democratic house be, particularly with investigations. toyou look at who was going take over, you have maxine waters on financial services, jerry nadler on judiciary, a lot of new chairmen and want to go after this president -- who want to grab the president, and they

have said that, i am not speculating. ralph: we expected them across don't go too far down that path. if you look at what happened in this election, the people who were elected, many of them are new to politics. they want to get something done. democrats think the would be wise to do a little bit less investigation and a little bit more legislation. a lot of pent up energy for the former. alix: it depends on if they are going to govern or campaign for 2020. ralph: and that is the dilemma the out of party legislative branch always faces. i would like to say one thing about taxes and that is, we have

a pretty irresponsible fiscal policy right now and david made the point, taxes are supposed to pay for the government that we have. we are at or very near full employment. normally fiscal policy during those times has very low deficits or surpluses. if you recall, in 2000 at the end of the clinton administration, we were talking about the disappearance of treasuries and how with the markets function without any treasuries because of the entire -- because the entire national debt was going to be paid off. we now have a $21 trillion national debt. we are at full employment. our deficit is almost 5% of gdp. is honestlydoing completely irresponsible for the next generation.

our kids are being -- are having a huge amount of debt dumped on them. we are stillaid collecting a lot of taxes, it is true, but the proportion of gdp that is going to u.s. government 2000 is down from 20% in to 17% today, which is what explains the irresponsible fiscal policy. david: if we're going to have a real fiscal discussion, the first person we want to hear from his larry summers, the former treasury secretary and he is joining us now from massachusetts. thenew goldman sachs ceo at economy forum in singapore said an biggest concern was overheating economy, suggesting the fed should be raising rates. a differenthave concern. larry: my biggest concern is a

frustrated population because wages have not gone up in a very long time for most people. we just saw a frustration election. the agenda going forward, we are not going to see agreement on everything but there are some things we can see agreement on. that should start by increasing the minimum wage, the federal minimum wage is lower after adjusting for inflation that it has been in a very long time -- then it has been -- than it has been in a very long time. there is no reason why it should not be a first order of business to make sure there is health care or health insurance available for people who already have a pre-existing condition. we put that in place in 2010. that has been stripped away by the trump administration. there wasn't anybody voting who wanted to see kids with leukemia

being ineligible for health insurance. there is a lot we've got to do on you have a lot of people your show who won't like this but there is a lot we need to do to confront excesses of corporate power. we are capitalists, we should stay capitalists. socialism is lunacy, but why should it cost three times as much to get inhaler for your kid in the united states as in canada or england or france? why should that happen? people disagree on lots of things, but nobody wants our politics to be the way it is right now. if every corporation can contribute, almost no questions asked, money, why shouldn't every citizen should be able to vote without leaping through a number of hoops? most important and i know that

is what bloomberg is talking about in singapore, our country faces an economic challenge the likes of which we have not faced before, from china. we are not going to win that by trying to hold china down. we have to pick ourselves up. that means reasonable investment in infrastructure. that means cleaning up the laguardia airports and the roads with potholes. that means investing in our basic science. people are frustrated, people are mad, people disagree about a lot of things but i don't think anybody is for falling behind china. behind think anybody is -- i don't think anybody is for children not being able to afford inhalers. we can agree on and move forward and that should be the agenda going forward. david: we have ralph schlosstein

here and a note you two know each other very well. i think you agree with a lot of what larry summers just said. at the same time, aren't there larger forces that really increase returns on capital and hold them flat or reduce them in labor and can the government do anything about that? ralph: that is one of the hardest issues in my view to do it -- to address. our current president has blamed that larryhe issue focused on which is probably the single most important issue economically, not only in the united states but virtually all of the developed world, the returns that are going to capital and the holders of , the upper 1% or 5%, continue to be very strong and the returns to labor,

particularly not highly skilled off or in flattening real terms actually declining. how do you fix that? in the long run, you fix it with education and retraining. people are likely to have several jobs in their lives. look at you, david. you were a lawyer, executive, and now you are sitting here. fortunately he did not drink the water in flint. alix: larry do you want to jump in? larry: there are all kinds of fundamental forces, but there is no reason why if our country could not afford a certain minimum wage, and cannot afford that minimum wage at the federal level today. we've got all of these ceos talking about how they want to

.ake the world better you are is what we did at harvard. we said that everybody who we , if we hired a subcontractor to mow our lawns or serve food to our students, they had the meat the same wage policies that we met for harvard employees -- had to meet the same wage policies that we met for harvard employees. we could see a big increase in tens of millions of people's wages and we would see a more equal income distribution. there are fundamental forces but it is not like companies can't afford to pay higher wages and oft we are seeing is a time of socialof -- ton dumping. we don't pay high wages, we hire somebody to clean our gutters --

corporations should move past that. people when i hear coming on your show and saying at a moment like this that the top policy agenda for the united states is to raise interest rates, and a think about the degree of frustration that is out there, i just don't think ist raising interest rates one of the most important things we need to do to make this country work for ordinary americans. alix: so you agree with president trump. larry: stopped clocks are right twice a day. i don't agree with president trump. i think it is crazy to bash the fed in the way he is. i think the fed has a responsibility with respect to inflation.

but somehow the idea that the principal policy problem we should be discussing is that too many people are working or that there is too much pressure or it is too hard for companies to find workers, that that is the principal problem we should be discussing? when there are kids dying because they can't afford inhalers because we stripped away health insurance? that is just not right. it is not right for business for the long run because the frustrations and the conflict that it is going to engender are going to calls all kinds of irresponsible -- cause all kinds the responsibility -- solvingind ways of these problems were america stays a free market economy, a place in the world where entrepreneurs can best start

their companies, where businesses -- where business is an engine of innovation. we can't do it if our agenda is simply to fight with each other or our agenda is simply to start with the concerns of those who are already best off. david: let me put ralph schlosstein on the spot here. a lot of these corporate entities that have gotten so powerful that larry says are part of the problem are your clients and you help them get more powerful through mergers and consolidation. they don't want to make the world a worse place. what factors are there to drive us to conglomeration of power by corporations? ralph: the factors that drive them to do it is that historically, we have had a relatively slow growing economy. that means topline growth is relatively slow and by putting

two companies together, you can take out some costs and that boosts earnings. the point larry is making about minimum wage, it is unconscionable that we have enough small part of the country that is working full time and itlly can't make ends meet would actually be a positive addition to the economy for both democrats and republicans to get together and not only the longer-term things like investing in education and making sureut also that if somebody is going to work 40 hours a week, they can put a roof over their head and get health insurance and feed their family. would a raise in the

federal minimum wage siphon off -- ralph: you would not find a massive amount of resistance to that except from certain industries that have a lot of entry-level jobs, probably the most visible is the fast food industry and the retail industry. your: larry, come back to original thesis. it affects both the labor situation as well as the pricing situation. typically we address those through antitrust enforcement and organized labor. we backed off of those as a government. go back to the midterms. where have the democrats failed to communicate to the american people to elect people who say yes, let's have more organized labor, and more antitrust enforcement? they: you are going to see democrats in a variety of ways

point out the failures of antitrust and other regulation in the weeks and months ahead. they certainly should be doing that. it is not a fashionable issue of laborbut our system democracy, somebody tries to organize a union, their management fires them, they have to go through six years of legal appeals and then they get a pittance back in damages. that is not how it should be. there are prompted -- plenty of problems with traditional models of unionism and there are models we can put in, going forward that are more cooperative between employees and employers. to howf this comes down

the politics work and when every corporation is a citizen with the privilege of contributive as much money as they wish to influence the electoral process, but they don't give election day off to their workers and we have everya workday unlike in other major country, we are affecting who is voting and that is affecting what the outcome is. there is a lot that people can do to communicate messages more effectively. we have to think about the ways in which our political system is fundamentally not fair and look at who is enabled to vote and who is not enabled to vote. david: ralph, the you agree? ralph: -- do you agree? agree that we have one

party that has consistently been an advocate for legislation and regulatory action that has made the opportunity to vote both available and accessible to as many people as possible. the most recent is the referendum in florida to allow convicted felons who have been released to want to again be citizens. the other party has basically taken an opposite view and tried to make it not only more difficult to be allowed to vote but also to actually vote. hasn't the failure then to get -- convince people that is consistent with growth? that is what president trump came to office saying, that the obama administration was about putting up with 2%, 3% growth.

ralph: we have excellent growth going right now, fueled by the sugar high of a fiscal policy that has a trillion dollar near full employment and a reasonably accommodative monetary policy. is if you looky back at the last 40, 50 years of economic history, america has had the strongest growth of any developed country. europe has been collectively somewhat behind us and japan has been way behind. why has that happened? growth is a function of population times productivity, workforce times productivity. we have a president who claims to be in favor of growth.

most important differentiating factor about been at states versus those other economies is immigration -- factor about the united states versus those other economies is immigration. we don't have the birth rates to support a strong growing economy. immigration has been the fuel for the american economy. a broaderh brings question of can the u.s. outperformance continue if the fed is going to retract some of their monetary policy? larry: i think the fed has to be careful. with longolicy works lags and the history as they tend to underrecognized those long lags and that can tip the economy into a recession. i want to come back to this and this theory that david talked about that somehow democrats with the regulation slow the economy down. look at the last 50 years of data. here is what you will find.

unemployment was lower on average under the democrats, corporate profits were higher on average, the stock market rose more rapidly under democrats. you will find that as a consistent pattern. you will find that the budget and the were lower stage was being set for a stronger economic future. of course we have had excesses of regulation. of course there have been issues of identity politics that sometimes get into regulations that don't push the economy forward. from time to time, there are excesses in the name of environmental protection. ofyou look at the core protecting the american middle class, that pushes the economy forward and makes people live

better and more comfortable lives. when i see that being stripped away, when i see financial regulations to protect another -- protect against another financial crisis being stripped away, when i see the licenses to be a payday lender being put back in place, that is just wrong. that is not helping the economy grow. that is breeding more of the frustration that we saw. alix: to be fair, i don't think david is a proponent of it, he was just posing the question. ralph schlosstein of evercore, such a pleasure to spend the hour with you. larry summers, former treasury secretary, thank you very much as well.

>> thanks to you, tomorrow will be a new day in america. alix: a split congress, democrats take the house, republicans increase their senate majority. washington faces political gridlock. markets like that gridlock. markets strong. hank paulson warns of an economic iron curtain between china and the u.s. while goldman sachs is the biggest risk is an overheating economy. david: welcome to bloomberg daybreak on this wednesday. it is of course the day after the midterms. that is the white house where there are some happy people led by the president. he has been tweeting he is going to have a news conference at 11:30 this morning to discuss success in the midterms. alix: back to work is what he said. you pointed out that the moderate republicans did not

make the showing we thought. it was still sort of the fringe which is interesting for president trump's agenda going forward. david: interesting when you have , the moderate senate -- lost in the in general, it seems that the moderates did not do so well and some of the more extreme republicans did better. alix: that gridlock or confusion reflected in the market. it feels like a risk on rally, a goldilocks kind of scenario. despite the fact you get that split congress, it is a weaker dollar story. euro-dollar up by 5/10 of 1%. it was a bull flattener. we are going to reprice the fed there is no overheating risk, no

extra sugar high, does the fed need to hike as fast as the market was worried about? crude off the highs of the session. nonetheless, it has had a horrible last eight weeks. david: to bring us up to speed, we turn now to kevin cirilli, bloomberg's chief washington correspondent. tell us where we are right now in the senate and the house. kevin: republicans picking us that picking up two seats in the senate so far as they one bank -- as they won back north dakota and nevada. -- a state that president trump lost back in the 2016 cycle. we still don't know the precise breakdown because three races including arizona remain too close to call. it is a different picture in the house because democrats have slipped -- flipped 26 seats.

they only needed 23. why they won is because they were able to win the suburbs. take a look at virginia 10 where the democrat defeated the republican incumbent. democrata 26, the beating gop incumbent and illinois six, suburban chicago. this was an interesting race because of the president's tax policies. this was a district heavily influenced by the state and local tax the duction. stick with me in illinois because just like suburban chicago, we should note that a billionaire democrat was one of the governors who had a big night. democrats made inroads in governorships but have not been able to overall take back

control of the governorships. in florida, this was something that democrats had hoped, that they would be able to win. they were unable to do that. ron desantis, a politician crafted in the image of trump. meanwhile in georgia, stacey abrams is refusing to concede p but that is too close to call. alix: pick up on where we were -- david: pickup or on what we were talking about. who ise ron desantis very much with trump. you also have a centrist outside of chicago. is this something the white house may interpret as a mandate to say if you want to win next time, you have to come my way? kevin: that is exactly what the president is going to say. i have been communicating with

sources who work in the white house and they say the president feels emboldened heading into 2020, particularly because they feel that in order to get out that vote, they're going to need to rally the base. the key race to want on that point is going to be arizona. narrow lychee has on the democrat senator there, that is going to be interesting because of how immigration which the president focused on so crucially in his closing argument, some would say even more so than the economy, and arizona is such a key state for that. david: the question is whether the president made a big difference because in illinois, it is not surprising a democrat would win in an upper-class suburb of chicago. is it just that the red got redder and the blue got bluer? taylor: absolute -- kevin: absolutely. -- a state that the president

had carried by double digits. when you look at how the president did and how they fared in the nine or so states that he , theyd in the 2016 cycle fared quite nicely -- quite well .ith the exception of nevada david: that is kevin cirilli, thank you very much. midterms obviously grabbing the attention of many leaders and political voices. here is what they had to say throughout the morning. >> i am not a big believer that this is going to have a big impact on policy or action or washington or where we are. >> a little but more of a mixed message, but it does look to me in some respects that the economic issue did play into the election. >> sometime between now and the next general election, the

market will he will have a correction. >> democrats and religions did work together in the 1970's. -- >> a big surprise in the markets. obviously you had a pretty big setback. >> if you look back at divided government. it has been a positive for the markets. what you are seeing this morning two confluence of those from 100,000 feet the use. -- feet views. a lot less is going to happen in the next two years. alix: joining us now is anne lester, jpmorgan managing director and portfolio manager. the market reaction very clear in the past 24 hours. is that the correct reaction? anne: i don't know if i would

say correct reaction. from my perspective, this election played out like the polls were telling us which was a reassurance after the last several election cycles, i think there was a do we even know how to understand what is going on. i would say this is a win for the polls and our ability to get a pulse on what is going on. i think this means there are not going to be any big shifts. if the market was worried about more turmoil, more uncertainty, a bigger deficit, i think those worries are gone because i just don't see how much changes with the exception possibly of a democratic house causing more distraction for the administration. in terms of shifts in policy which is what we are looking to see, is it going to ship the

macroeconomy or the regulatory environment, i don't think we see much change happening. alix: because of that, you have that weaker dollar and yields are going lower. is this a perfect scenario for an equity buyer as you are not going to have that risk of an overheating, that sugar high. distractions but the market has clearly not been moved by those distractions the last couple of years. anne: when we look at our macro forecast for the u.s., we do not -- it is definitely later cycle now that was a year ago, but we still did not see that and coming. the question for us is global growth and the dollar may be something that is going to give more support to a broader global growth which might benefit the u.s. even more. the goldilocks an area is what we are seeing -- goldilocks scenario is what we are seeing now. david: anne lester of jpmorgan

is staying with us. roundtable, business president and ceo will be joining us. this is bloomberg. ♪

david: the first two years of president trump's administration has been good for american businesses, particularly when it comes to cutting corporate tax rates and pulling back on regulations. what happens now that the republicans no longer hold both houses of congress? we welcome now the president and ceo of business roundtable, joshua bolten. thank you so much for taking time with us today. josh: good morning. david: tell us what washington looks like to you this morning

as you look at the opportunities and challenges facing your corporate members. this morning, from the business perspective, washington looks a lot the same as it did yesterday and a month ago, which is a challenging environment, but with plenty of opportunity and some good policies in place that are creating tailwinds for businesses and the economy over not -- and the economy overall. david: let's talk about specific. corporate tax cuts are done. we are not going to get further tax reform but i don't think corporations were looking for that in the first place. take for example, technology. one thing maybe the democrats and the publicans might agree on is technology. how do you see it? josh: there are a lot of opportunities for bipartisan agreement and the technology

area is one. everyone agrees that we need some kind of structure for privacy in this country. the business roundtable companies which are a group of ceos of america take a largest companies -- of america's largest companies agree we need some kind of federal privacy legislation. we will be coming out with a proposal in the next months of what we think federal privacy legislation off to look like -- ought to look like. a divided government creates an opportunity for success on that front. areas wheref the corporations have not been is pleased with the president has been trade and particularly china. there has been a lot of concern about this. we had hank paulson overnight talking about a potential iron curtain being imposed.

josh: the election does not change much but we are looking for some significant changes in u.s. trade policy. when i mentioned headwind at the outset, that is what i was thinking of mostly. we have had terrific tailwind during the trump administration, coming from tax reform and regulatory reform, but that has been substantially offset in some cases by trade policy. what we are looking for is a trade policy that seeks to open markets, that is aggressive about doing that, but that recognizes that we have to cooperate with a lot of different countries in the international environment and we should not be willy-nilly imposing tariffs on some of our best friends and allies and trading partners. what the business community will be looking for over the next two

years of the trump administration is a lessening of the conflict with our good friends, allies and trading partners like canada, sicko, europe, and japan. hopefully we are on target to do that. and a responsible approach to china that brings those allies the chinesenfronts about the reforms they need in their system without going overboard on threats and tariffs that are counterproductive. alix: the other part -- you brought up regulation. the other part of it, we will have new house committee chairs and potentially maxine waters at financial services. what would you tell the financial services company today about their life and regulation going forward? effortsere will be some

again house to ratchet up on regulation in the financial services area, but remember that the senate remains in republican control. we still have a president who is committed to a responsible regulatory environment. that means not imposing unnecessary burdens. i don't think the business community will look at the as aes in house leadership particular threat. for the most part, we look forward to working with them on constructive legislation. david: thank you so much for taking some time today. of business bolten roundtable, a man who has his finger on the pulse like nobody else. alix: also with us is anne lester of jpmorgan.

you've got technology which we financials that benefited from deregulation and consumer discretionary which benefited from tax reform. on the macro level, does this change now? anne: i don't think so. but we think about whether there is a tailwind for any financials is deregulation and interest rates, or anything else, i don't see a whole lot that would dramatically shift this. i think our view and what i am hearing from everybody is there is not a whole lot of change coming, at least from a political perspective. i don't see anything that would derail these terms. a form of fiscal stimulus is infrastructure. a lot of people say that is a long shot but at least a possibility. if that happened, how would that change your world? anne: i think you get the sugar high and i don't know what the

pay for is going to be for that or assuming there is not a pay for, which seems to be the way things go. on the one hand, it is necessary and could put people back to work. that conversation to or four years ago is a very -- two or four years ago is a very different thing. it is needed, it is something the economy needs. we need to be replacing -- i am a new jersey transit commuter. that has not been a fun ride lately. i don't know how you pay for it and i don't know where those workers come from. mcabee the thing that tips us over the edge. -- that could be the thing that tips us over the edge. alix: do we want that? when you think about the cycle ending, one of the things that is going to make it end is

a big boost in inflationary pressure. a deficit that the bond market gets very worried about and decides to fix and you get the bond vigilantes coming out. not trivial risks but you get a lot of momentum around another big deficit spending package which this economy does not need right now, and -- david: where are the bond vigilantes, like where are the deficit hawks? alix: they are democrats now, didn't you hear? david: i will believe that when i see it. anne: i wish we were in a world and maybe this is naive and we never were, but i actually worked on the hill in the senate in the 80's when there was more collaborative government. it feels to me that people are first thinking about doing win or lose by this conversation. what is the perception of the

win by any of the parties that would need to come together to do this? that is the wrong way to do policy and it leads to ignoring long-term consequences because you are focused on a short-term win. david: why is the bond market apparently so patient with united states and how much of it is because of demographics globally? does that keep going or might that end at some point? anne: this is not a view that i have solidly, but there is academic research that looks at inflationary trends going back centuries and says inflation is fundamentally linked to demographics. we are in a slowing demographic to shrinking demographic world, the base taste for massive inflationary pressure is gone. the other thing that has helped keep a lid on inflation is globalization. if that stops, you are moving back to a world where you could see more closed economy inflationary cycles because you cannot offshore, you cannot

bring in imported goods from somewhere else. do not fight with your banker, it is not a good thing. you borrow so much money from these people and you make demands. alix: anne lester of jpmorgan asset management is going to be sticking with us. david: time now for the bottom line. first is a group of companies, it is tech. i sat down recently with a linkedin cofounder and this is what he had to say about regulation of the tech sector. >> it is possible that some regulation could be good. it is a lot easier to do a lot of damage to the tech industry, to our position in the world, to the future and this lead in the industry we have, so we should be very careful. i think where the dialogue should be is not so much should be regulated or not, as much as what should the target be? david: didn't watch my entire

interview on bloomberg big decisions tonight at 9:30 p.m. eastern time. it fits with what josh bolten just said with a have a proposal proposal. they have a the question is the details. alix: not just the regulation, but what is happening in europe. we had two days in brussels for they are talking about taxing the big tech companies like facebook. that is a legit monetary overhang. -- u.k..k. has going has come up with one and you saw amazon stock get hit on that news about taxes coming down the pipe. alix: i am taking a look at anadarko. proposition 112 would have prohibited drilling point 500 feet away from sensitive areas like a school or water source. it did not pass. it past two years ago and had to

pass again but did not. a huge sigh of relief for the likes of anadarko. it would have been really hurt if that actually passed. they threw a lot of money into getting this defeated. david: what i know about this came out of your special. they shale oil special where you interview people about this and people were very concerned about drilling shale horizontally. alix: the reason why it was interesting to see was it was a new way for environmentalists to work at a problem, they go through the ballot, not through the lawsuits or representatives. it did not pass though. david: for our third story we bring in brooke sutherland. it is dell. brooke: the company is considering raising its offer for dvmt. david: which is surprising, why would they do that? [laughter] ooke: it is the tracking stock

that dell created when it did the buyout of emc in 2016. those shareholders have pushed back and said this offer is not high enough. those dvmt shares are supposed to track vm ware. ands the fastest-growing some of the better areas of this infrastructure technology. what is going to be interesting is to see if they'll -- if sweetener is enough to sway some of these shareholders. i wonder if they are late to the game. david: one of theirs shareholders is named. brooke: carl icahn. carl says he wants 144 dollars and right now the offer on the table is worth $109. there is some debate as to whether it is worth that because it is probably dependent on what you think cordell is actually worth.

he is willing to buy out those holders who need the liquidity so that he can continue on this fight and make sure he gets the price that is fair. that is why i wonder if dell is too late to come in with a sweetener because carl icahn changed the stakes here. they want to do a modest bid and i don't think that is going to be enough. david: he will do the arbitrage. alix: don't go against him. brooke sutherland of bloomberg opinion, thank you very much. an overheating economy, the biggest risk according to goldman sachs ceo david solomon. this is bloomberg. ♪

alix: this is bloomberg daybreak. welcome to the day after election day. s&p futures up by about 19 points. lowve richard burr is

writing this is the honeymoon, not the rest of your life. in europe, a nice rally across the board. banks as well, up over 1%. spanish banks are doing really well. that optimism spreading out throughout the sector. other asset classes a weaker dollar is helping boost the euro and also emerging markets. the jpmorgan index up 3/10 of 1%. the relief rally palpable of you are not going to get more deficit spending or issuance for the treasury market. that is helping the dollar and yields. it was a bull flattener. the 10 year option, well off bid. $17 million of 30 year notes today at 1:00. will that take down be a strong with that fed meeting in the spotlight tomorrow and crude up by 1% but opec is going to talk

about cutting output in 22 -- in 2019. if you ask goldman sachs ceo it is anomon, overheating economy that he is worried about. we spoke exclusively to solomon at the bloomberg new energy economy forum in singapore. david: we had kind of landed in a place where the polls were right. house,ts took back the the republicans are picking up a couple seats in the senate. i think you are seeing a shift in the governorships. and a market perspective from an expectation perspective and even historical context, not too unexpected. look forward, i am not a believer that this is going to have a big impact on policy or impact or washington or where we are for the next two years.

the democrats now that they run the house and the committees, begin a never-ending series of investigations with subpoena after subpoena into things that they trump administration and the trump family and maybe even the republican party have been doing for the past couple of years, that would probably slow down the business. it makes you wonder if it would be bad for the economy. it goes back to what you started, balance can be good in government. when there is balance, both sides have to work harder to get things done. what i would say is i don't think it would be an effective strategy for the democrats to go down that road, but if they do go down that road, i think that would be a missed opportunity. candidly, i would hope

that the path or the process forward here is one where given balance and shared responsibility in the government , there was a focus on where can we find compromise and get some things done. the economic environment in the united states continues to be quite volatile. we can talk about that if you like but in that context, let's take advantage of that and continue to move forward. michael: is that sustainable because you know the market has been shaky the past couple of weeks. the fed seems committed to raising rates. it makes one wonder if there is no where to go from down -- nowhere to go but down from here. david: things can continue for a. of time although i would say that we are certainly later in the cycle so at the end of the cycle, it does not take a rocket scientist to notice that. erik: how late though? david: i think the biggest risk and our u.s. economists have echoed this, i think it is in

overheating. fed instion is can the the context of how it marches forward with monetary policy, can it continue to normalize rates in a way where they strike the right balance and we have a softer landing? i am not a prognosticator. is aresearch says there good chance the fed can manage it that way but as a student of history, there are very few tightening cycles that at some point in time, the cycle does not create some volatility. we are going to see that a little bit is my guess. the underlying strength of the economy is pretty good. i always look for small data points that give me a sense of what is going on. that struck me a little bit, there was a big financial services conference in new york. a lot of the big banks spoke.

if you listen for the consumer banks, all of them reference the fact that when you look at the underlying data they have, they feel like the pipeline for the next 12 to 24 months is still pretty good. that is only one data point but it is a relatively positive data point. maybederlying view while the forward trajectory is slowing a little bit, it is still pretty strong. david: that was part of our exclusive interview with david solomon, goldman sachs ceo. still with us is anne lester of jpmorgan asset management. you can see -- is going up. maybe mr. solomon does not have much to worry about in terms of overheating. anne: that is going to be one of the big questions, to what extent does this benign environment continue and there are a whole bunch of reasons to say we don't see any catalysts on the horizon. these -- thehand,

longer this goes, the sooner this end is imminent. i think normalizing interest rates continue to be a sign of strength in the economy. alix: what are you expecting then from the fed meeting tomorrow? in terms of the details, where neutral is. anne: i don't think we believe there will be much to read in those tea leaves. i think less is more in this circumstance. we're not expecting a massive change and the question is, is it three or four next year? i don't think it matters all that much. alix: why not? anne: a quarter-point? the actual economic impact of a quarter-point or not. alix: we have issues about slowing car sales or slowing home affordability.

have anen you individual when you aren't individual making a financial purchase, you care deeply if you are interest rate is 2% or 5%. if your interest rate is 3% or 3.25%, the you guys do the math and say i am not going to buy that now? alix: maybe not. thingit is a big picture and it is a perception by consumers or businesses that this thing is going high, we better do it now and maybe that is going to be the fuel to get people in, if there is a perception we can wait, they that keeps the goldilocks go with -- maybe that keeps the goldilocks going. i think that is noise. david: anne lester of jpmorgan asset management will be sticking with us a little longer. let's get an update on things

making headlines outside the business world. we turn to taylor riggs with the "first word news." recaptured thets house of representatives while republicans held on to the senate. that will make a deeply divided nation more difficult to govern. the final figures are not in yet but democrats will on down -- will end up with more than the 23 seats they needed to flip the house. nancyminority leader pelosi is expected to become the next speaker. >> today is more than democrats and republicans, it is about restoring the constitution's checks and balances to the trump administration. taylor: meanwhile, republicans to democratic senate seats in florida, indiana and missouri and perhaps the most-watched senate race, ted cruz of texas narrowly beat democrat beto o'r ourke. >> it is my hope that with the bitterness and division we see

nationally, that texas can be a model for how we can come together, disagree but with civility, respecting each other's decency, respecting each other's humanity. taylor: democrats picked up at least six governor seats, crucial for redistricting battles that will take place after 2020. kempy abrams trailed brian but she is waiting for absentee and provisional balance to be counted. warnsaulson wars that -- that trade issues could divide the world if the u.s. and china cannot solve their dispute. he spoke at the economic forum in singapore. >> i now see the prospect of an economic iron curtain, one that throws up new walls on each side and unmixed the global economy as we have known it. global news, 24 hours a day, on air and at tick toc on twitter, powered by over 2700 journalists and analysts in more than 120 countries.

this is bloomberg. david: still what does is anne lester of jpmorgan asset management. economic iron curtain, a pretty strong words -- pretty strong words. everyday we are closer to the end. one of the chances, one of the concerns that might trigger that end? i think the reality is we don't know. maybe it rolls over gently. one of our thoughts is you have seen this super shallow recovery. you could see a shallow drawdown on the other side from a macro perspective. thinking and our strategy team's thinking has shifted able but on the danger of that and i think it is as high as it was six months ago and that is because the calculus that seems

to be driving the administration's view of the risks and benefits of a trade war, i think it really is not necessarily fundamentally about gdp calculus and is it better or worse? the old tools for assessing that may need a slight revision. i don't think it is the outcome we feared but i don't think it is off the table either. david: anne lester of jpmorgan, thank you so much for being with us. alix: the bloomberg economy forum continues in singapore. erik schatzker spoke to the -- about how the aging population is creating investment opportunities. andet's focus on the u.s. you have an aging population. tose over 65 are going

outnumber those under five years of age at some point down the road. what does that mean from an investment standpoint? it means that you have a real opportunity to focus on investing in health care, ,ellness programs, better food travel, leisure, technology that is going to enable people to do their banking and insurance much more easily. we are focused on what is the demographic, what role will demographics play? if you are here now in asia, your millennials are about six times the number of millennials in the u.s. they will play a very important role. in the u.s., if you ask most millennials, do you think that you are going to be better off than your parents or

grandparents, the answer is probably not, with exceptions. here, it is totally different. the millennials and asia will be significantly better off -- in asia will be better off than their parents and grandparents. we are in the investment business and we tried to make decisions based on where we think the puck is going as they say in hockey, as opposed to where it has been. our focus is very much what do we see as far as demographics. next, which i think is very important and critical are esg issues. ,e focus a lot on environmental sustainable and governance. that is going to play a bigger role in investing that it has in the past -- than it has in the past. that will continue as the millennial population and jen z

-- gen z feels it is very important. it is not just dollars. do you have a purpose in your company, are you doing the right thing as far as the environment is concerned? i are making sure you are taking care of the employees? there are a lot of factors that will go in. where that will lead in 10 years, i don't know but i can tell you today our focus is very areasn those couple of and i can go on for a long time on others. kkr's that was cochairman. you see a lot of challenges in italy or japan and increasingly in china as an aging population is not as productive, but there are opportunities in things like health care. alix: we talked about the growing workforce but again, they don't make a lot of money. if the job growth is going to be in areas that don't pay the

right kind of salary or benefits, what does that wind up doing you are structural gdp and the phillips curve? david: it is a great point when people are concerned about the increasing wealth and income disparity. does it exacerbate it because people will be not be making the same amounts of money in their 30's. alix: senior citizens are replacing teenagers as fast food workers. that is something to think about. david: it could be my next job. i was wondering what i was going to do next. alix: he does flip burgers and gets really mad when he messes them up. david: enough of that. let's get a read on business stories dominating headlines. taylor riggs is here with the bloomberg business flash. taylor: third-quarter profits fell more than expected at bmw. the automaker significant we boosted provisions to pay for recalls and an increase in reducedtariffs on bmw's

earnings by several hundred million dollars. softbank once to raise $18 billion from japanese investors in the ipo of its mobilephone unit. the company is targeting people who often get no interest on their savings. -- holdings will sell the biggest part of its shares to investors. bank of america is trying to bolster its investment banking as 50ise by -- as many fell by 18% in the third quarter. that is your bloomberg business flash. david: where going talk about a different kind of dealmaker right now, dealmaker in congress. when the two houses are heading in different directions, it is harder. we welcome someone who took on that task as both majority and minority leader of the united states senate, trent lott. he is now senior counsel at squire patton boggs.

thank you so much for being with us. trent: glad to be with you. david: give us a sense into what the leadership on both sides are looking forward to in this divided house. is gridlock in inevitable? trent: it does -- david: is it gridlock inevitably? trent: it does not have to be. -- ase in the minority is republicans but those eight years, we did not have the republican senate but reagan had great influence. together and went after a legitimate battle. example was the 90's when clinton was president and we would leaders in the senate -- we were the leaders in the senate, but we talked to each other, we had a chemistry, a vision of what the -- of what we

wanted to do for our country and a president that would work with us. i'm hoping we have a president who will say let's work together on things like infrastructure. does anybody in america think we should not be putting more investment in infrastructure, and pay for it? see if they can get speaker mccarthy and work with mcconnell and schumer and see if there is something that can come out of the gate being for. they can side of it is have gridlock and investigations and they can fight every day. trade is a tough issue, immigration is tough, a lot of things that need to be done that maybe will be very hard to get done, but i hope they will try to make it happen. in the past, divided government sometimes seems to produce more than a unified government because if you have the white house and the congress all of one party, they tend to overplay

their hand sometimes. maybe they will be forced to work together. david: we can certainly hope for that but at the same time in recent days, we have not heard so much about bipartisanship. aisle, thees of the first thing they say is i want to make sure that the other guy does not get elected next time. what are the chances of infrastructure if democrats come out and say our goal is to make sure we don't have donald trump in the white house come 2021? trent: that is a huge mistake. that is totally partisan. does anybody care about the country anymore? does anybody think we should not be investing in lanes, planes, trains?? do it next year and you still have a year to fight over the presidency. see if there are not a few things that could be done for the good of the country. that is one thing i enjoyed about working with tom when he was the democratic leader and i was the republican leader.

we talked and we worked to get things done. even when we had a 50-50 senate. it takes leadership and you will have to have the men and women in leadership talk to each other and see if they can get things done. i remember one time i said this is for the good of the country and if we get it done, we will both get credit. and read for spec, he got more credit than i did because we wound up losing the majority for a while but you don't come here just to get reelected. hopefully you come here to get some things done. can we deal with immigration reform? we have not done it since 86. there is a path to an agreement on immigration reform. david: as you talk about speaker o'neill working with president reagan, there is one potential difference and that is speaker o'neill was not investigating the president at the time. we have the president weeding out that the democrats think

they're going to waste taxpayer money investigating us, that we will likewise be forced to consider investigating them for all the leaks of classified information at the senate level. that is not sound very encouraging. given this change in the leadership on the house side, don't expect there to be a lot of investigations now? trent: maybe we could in that -- maybe we could expect that. i am wishing both sides would calm down. we have to get some things done in the lame-duck session for the good of the country. they have to get a farm bill done, work on flood insurance. see if we can lower the temperature a little bit on both sides. we aredemocrats decide going to investigate and subpoena and even look at contempt of congress and maybe even impeachment and by the way, we're going to try to pass legislation rolling back the tax bill and other things that the public and congress passed, if

they do that, then nothing will get done. if instead they say are there a few things we could work together on, but it is going to be very hard to be investigating and attacking legislation and getting positive things done. it is going to require serious leadership. david: to wrap this all up in terms of the midterms as you look at those elections, is there anything a prospective candidate or current candidate member takeaway and say my chances of getting reelected are increased if i do something good for the country because politicians are partially responsible for what they do -- for what voters will do to them at the polls. trent: they should spend more time up here getting their jobs done, even when my constituents disagreed with me, if i explained to them why i was doing what i was doing, they tended to go along with it. if all your focus is the next two years is how to get reelected, then we are in for a maybe they will find

some things they can work together on. they will have to deal with the trade issue and the president is going to have to work with congress whether he likes it or not in approving trade agreements. david: some hope from former senator trent lott. always great to have you with us. president trump is going to be holding a news conference at 11:30 this morning eastern time and we will be taking that live on bloomberg television. alix: and at noon, nancy pelosi will have her own press conference. coming up, oil gains on reports that opec is discussing output cuts and more of what i am watching next. this is bloomberg. ♪ ♪

alix: here is what i am watching. i am watching oil getting a nice pop. apparently opec is going to meet over the weekend and they might talk about cutting production next year because some are

worried that inventories are rising. david: how can that be what we are cutting back iranian oil -- iranian oil? alix: apparently these waivers really caught the market off guard. the countries that got waivers or exemptions will now resume buying weather -- where is they cut it before. ,pec is not used to this switching the point of view every four minutes. david: we have seen it in other places. alix: brent up over 1%. coming up, bloomberg markets: the open. this is bloomberg. ♪

>> the countdown to the open starts right now.

>> coming up, government divided. the democrats taking control of the house, republicans holding onto the senate. possible policy gridlock. treasuries rallying. the dollar rolling over. investors turning their attention to the federal reserve. the f1 c meeting beginning today. this is what a gridlock trade looks like. futures positive 6/10 of 1%. dollar weaker. treasury with a bid yields lower by three basis points at 320 on a u.s. 10 year. investors responding to a government divided. i'm not a big believer that this will have a big impact on policy, or action, or washington. >> it looks like a cyclical lead. the politicians will center in on trump and a history, the president, the history, investiga