sonali: welcome to "bloomberg markets," i am sonali basak. it is a tough day. the s&p 500 down 1.4%. and even bigger selloff in the nasdaq, 2.4%. the s&p 500 is down half as much as what you saw last week, wiped out of the postelection rally. the 10 year yield now at 4.43%.

we have been hovering around 4.5%. jp morgan ceo jamie dimon spoke at the apec summit in lima and said many banks are seeing the opportunity of deregulation that happens under a second trump administration. >> whether you voted for trump or joe, a lot of bankers are dancing in the street. they have had success of years regulations, a lot of which stymied credit. you could have kept the banks equally safe but given more credit. the average bank in america used to have 100 dollars in deposits and $100 in loans and now it is $100 in deposits and $65 in loans.

we have more with jim millstein. a great person to talk about regulation. as jamie dimon says, are your bankers dancing in the streets? jim: you saw the rally after the election in the equity markets. that is getting a little more muted now as reality sets in. there is a general expectation that the m&a environment will open up. the financing markets have been incredibly strong. there is no lack of credit availability. the private credit markets have boomed in the last 10 years. credit availability remains very strong. you can see that in the tight spreads, in the high-yield market and the investment grade market. on the m&a side there is a sense

among most investment bankers that there should be an environment to try to get deals done. sonali: one of the clearest traits you have seen is in the banks. you have seen investors for a lot of money into the banks thinking not only will basel iii be not a strong. the sec facing change under a trump administration. how significant my the rollbacks be for the financial industry? jim: first it depends on who is in the seat. we do not know who will be at occ, the treasury department, these are all open seats. people matter. that is first and foremost. the second thing is, the regulatory system is quite

complex with overlapping jurisdiction of different federal agencies. to actually have a relaxation of the regulatory constraints, there has to be coordination among various federal agencies. it takes time. it will take time. sonali: do you think there is a paradigm shift going on? you think about a whole generation of bankers that were not working in the 2008 run-up. they do not realize what it looked like. do you think deregulation could create that again? jim: it may be true in the financial institutions that there are few of us left who were there and went through that from a but it is not true in the regulatory community. there could be a wholesale slaughter of regulators at all levels under the trump administration i doubt it. the fed, the treasury department, the occ, they have a

deep institutional memory. i think there is still the experience of that crisis, it is muted over time but people understand we do not want to get so deregulated as to create risks like that again. sonali: let's switch years and go from the tempering of regulation to the trade and tariff policies. when you think about the entirety of what has been proposed during the campaign, do you expect moves that drastic into next year? jim: we have had campaign proposals, which ones of those turn into real policy and legislation still remains an open question. the president-elect has made a commitment to use tariffs as a negotiating tool to bring tariff barriers we face down.

the china relationship is entirely different. i think that is a strategic choice to use tariffs to try to onshore critical industries back to the united states -- critical defense industries back to the united states. i expect on the tariffs that president trump will use them vis-a-vis the rest of the world, europe and our other allies, he will use them in a way to try to create better reciprocity. with china i think it is a totally different story. using tariffs as part of a strategic agenda to improve our defense capacitors. sonali: what do you make of the impact for investors? i had a conversation with citigroup ceo. you can worry about inflation but the productivity could fill in some of that gap.

it might not be as big of a problem as a lot of people had initially pointed out. what you make of that argument? jim: that is what we are seeing now. the economy is incredibly strong and growing above trend. productivity is the highest it has been in 10 years. we have had a real surge of productivity, low unemployment. inflation remained sticky, particularly in the housing market, which takes time for rents to rollover the way fed counts house price inflation. most americans experience housing as a real constraint on their cost of living. i think inflation risk remains strong. both in prospect for what the trump administration may do on tariffs and deportation, which will create constraints in the

labor market. and with regard to the federal deficit. trump is a big spender and he ran up deficits in his first term, putting aside covid, which was a bipartisan effort that led to a huge increase in deficits. they are coming down but they are still huge. we are still running a 6% of gdp deficit which is unprecedented in peacetime. the fiscal strengths the new administration has to take over are much more restrained than when he took office in 2017. sonali: you have seen the 10 year hovering around 4.5%. what would you warn investors about where it could go? jim: i do not think it will go down much because the treasury department to refund the outstanding debt, which at the relatively short profile, and to

fund the deficits this year, the treasury department will have to do a trillion dollars of financing. the firtash $8 trillion of financing. they have to figure out what he is doing to moderate the impact of the deficit and what deficit increments the trump administration might create from tax cuts. i don't doubt the depth of the treasury market but it is a question of the price the treasury department will have to pay for long-term treasuries when they are issuing $8 trillion of it this year. real money investors look to the 10 year as their benchmark. a higher 10 year that stays where it is or gets higher

because of the clearing price required to sell $8 trillion worth of debt will affect equity valuations. sonali: at what point does the bond market say "no more"? jim: i think we are a long way from that. it is about price. people can borrow short to fund long. how many hedge funds play in the treasury market. i do not think it is a question now of "no mas," it is a question of price. the federal government has been running persistent deficits that have been growing for 20 years. sonali: that is what i was going to ask you. you and i have talked a lot about the deficit. the idea of it getting bigger -- how do you reframe the problem going into next year thinking about the tax cuts?

jim: since the financial crisis, the federal debt to gdp ratio has gone from 50% to 120%. we are growing the debt faster than we are growing the economy. there are arguments among more sophisticated people than i that overhang of debt -- the interest burden -- we are now spending $1 trillion on interest. it is becoming the largest part of the federal budget. when you think about what the federal government does, we have a mixed economy. the government constitutes 20% of 25%, federal spending. it could have a huge impact on whether the economy grows or not. i believe the biden administration does not get enough credit for the public

investments it has made for the infrastructure bill, the chips act, the energy transition bill, the so-called ira, that spurred a huge amount of private investment. that has driven productivity increases and economic growth. as the deficit grows and the debt ratio increases, it starts to really crowded out the public investments the government can make and private investments. sonali: i want to switch years because your expertise is in bankruptcies. . it leads me into doomsday conversations with you sometimes. when you think about ai and the productivity boom people are expecting, i am wondering about the opposite. is ai going to create a different type of bankruptcy wave for companies that cannot keep up? jim: the challenge of ai, first

and foremost across our industry, law, accounting, those are the areas you will see the most dramatic changes because those are the areas productivity has stalled over the last 20 years. it is hard to make a banker more productive but ai will do that. it is hard to make a lawyer more productive but ai will do that. you will see a huge transformation in the professional services business very quickly. it is already having an impact. sonali: how will ai make a banker more productive? jim: [laughter] there is a lot of work behind the dealmaker that goes to the evaluation of strategy tactics and valuation. a lot of that valuation work can be done with these large language models. the same thing is true with the law and accounting. going back to your question about the transformation

required, businesses across the board will have to pay of it -- will have to pivot and take advantage of these new tools or they will find themselves on the wrong end of the stick with competition with people who do. the productivity impacts will probably lag, but there will be substantial. sonali: we have to leave it there. it is so good to see you in studio. jim millstein, guggenheim securities co-chair. pfizer -- president trump announced plans for rfk jr. and his plans in the next administration. we will dig into that, next. this is bloomberg. ♪ investment opportunities are everywhere you turn.

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sonali: this is "bloomberg markets," and i am sonali basak. it is time for the stock of the hour. we are watching pfizer and novavax trading lower after donald trump said he was tabbing vaccine skeptic robert f. kennedy, jr. to lead the department of health and human services. we are joined by a bloomberg reporter who covers that health care industry for us at bloomberg news. when you think about this nominee -- it is that, it is a nominee, still needs confirmation, we are seeing a significant reaction. how does that conflict for investors who were so excited about the pharma industry under president-elect trump? madison: it is like a reversal of the trend we saw after donald trump came ahead in the polls and won the election last week

-- or two weeks ago, i am losing my mind. there was enthusiasm that m&a would pick up, trump would be better for the economy overall, which would be good for health care and pharma. with this nominee of rfk jr., that throws that into a little bit of a flux. he has been really critical about vaccines. he has walked back some of that criticism more recently and said he will not do away with vaccines entirely but he wants more information and once the studies to be more accessible. for years -- this is not a recent thing -- for decades he has been critical of vaccines. he has said he does not want the corrupt influence of pharmaceutical companies and big food in government. he is somewhat anti-big pharma and anti-using medications and

drugs to sort of fix american health care and chronic disease. that is one of the things that we are seeing now. we do not know what that will look like in terms of policy but it has affected the drugmaker stocks. sonali: let's talk more about the company's. on a closing basis we are seeing pfizer's stock down the most since december. who are the biggest losers in this scenario? madison: one of the big things are vaccines. pfizer, biontech, moderna, the big vaccine makers. rfk has also been critical of ozempic. he has had some tweets about ozempic. that is something we could see down the line. it is interesting, he is also on

the flipside of that, there was an op-ed he wrote in the wall street journal that said he is in support of lowering the price of drugs and named ozempic as an example. as we have talked about it is more expensive in the u.s. than other countries. we do not know what will happen yet. he has said he is supportive of lowering drug prices but does not want us to rely on drugs like ozempic. sonali: what are your sources saying? what was the initial reaction? madison: people are careful about what they are saying right now. there was definitely some surprise, definitely some worry, even talking to sources before the announcement. there was disbelief he would be the nominee for this position because of, 1, his lack of health care experience, he does not have a medical degree.

2, because of the very firm anti-vaccine stance he has had. a lot of drugmakers did not think he would be in this post compared to the first trump administration, where there were more sort of reasonable or expected pix for these positions. it was a little bit of a surprise. they are trying to figure out what it means for them. sonali: we know you will bring us all of the implications. that is bloomberg's madison muller. coming up, we will talk about electric vehicles. ev stocks are sputtering after reports that $7,500 ev tax credits could end with trump returning to office. this is bloomberg. ♪

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markets," and i am sonali basak. we are taking a closer look at the ev maker lucid. shares are falling after reports of president-elect trump will try to end ev tax credits. >> i think like so many of american innovation, a better example of american ingenuity, lucid motors. the most advanced in the world. i think america is truly blessed with technology and the advantage it has in the ev space right now. i think we need to think of the jobs created as a consequence of this. great, high tech jobs in middle america. any incentive is truly investment in the future of the american economy and job

creation. i think we should be cognizant of that. because lucid has the most advanced ev technology on the planet, -- if there was a situation where incentives -- lucid among all the ev makers is really the most immune from that. >> what do you make of the relationship between the president-elect and elon musk? do you ever worry tesla could get more favorable treatment? >> i am internally optimistic that lucid will prevail because we are attack company. we have taken them -- we are a tech company. we have taken the mantle of leadership from tesla. sonali: that was the ceo of lucid motors talking. the broader markets also facing pressure.

the s&p 500 down 1.5%. the nasdaq down 2.5%. that does it for "bloomberg markets." i am sonali basak. have a great weekend. this is bloomberg. ♪ how? godaddy. coding... nah. but all that writing... nope. ai, done, built. let's get to work. create a beautiful website in minutes with godaddy. drop everything and get some magic of your own create a beautiful website in minutes during the xfinity black friday sale. xfinity internet customers, our best deals of the year are back! switch to xfinity mobile and get your choice of a free 5g phone, plus your next unlimited line free for a year. get amazing savings and connect to wifi speeds up to a gig on the go with xfinity mobile. fly don't walk to get our best deals of the year. connect to the world of wicked this holiday, only in theaters november 22nd.

>> from the world of politics to the world of business, this is "balance of power."

live from washington, d.c. ka welcome to "balance of power" on bloomberg tv and radio. we are wrapping up a busy week in american politics as we learn more and more about the composition of donald trump's incoming cabinet. he is still keeping us waiting on some criminal nominations, including treasury secretary. we will have a reaction from our political panel. we have to keep an eye on geopolitics. president joe biden and chinese president xi jinping are set to meet on the sidelines of the apec summit. i will speak to a member of the house select committee. i will be joined by her colleague from across the aisle.