>> welcome to bloomberg markets. i'm scarlet fu. here is where things stand. the s&p losing about .1%. the stock market rally taking a breather after the 54th-record close for the s&p yesterday. small caps have been clear our performers since the election but today they are leading declines, with the russell 2000 off by .3%. some fairly modest moves across the treasury curve.

this comes before jay powell's remarks tomorrow and a jobs report friday. the big move your -- mover across markets is the korean won, the dollar surging in value against wan. it fell against all of the g10 currencies after the president of south korea declared martial law because of political deadlock. we will get to that story later on, but for now i want to stay on these. and take a look at some midday movers on the equity side. abigail doolittle has more on that. abigail: it is not just the korean won being hit by the turmoil in south korea. we have heard their parliament has voted to request to end the martial law. lots of social media posts about how south koreans are unhappy about this. you can see the south korean-etf's -- south korean-related etf's are down. the worst day going back to march 20, 2020 on the uncertainty and fear around

these events that have not occurred for a few decades in south korea. martial law has happened there before, but not in quite some time. right now the worst day since early november. turning to a stock trading to the upside, the shares of at&t are surging after very positive update with analysts. the 2025 profit guide better than what some analysts had been expecting. they are also talking about profit growth accelerating through 2027. shares up 4.2%, the best day in a bit of time. they also announced a $20 billion buyback. finally, tesla, these shares are lower. and of tesla's individual shareholders saturday in a social media post talked about how he is no longer all in on tesla, that he has sold some of his stake. he is putting them in three-month treasury bills. it seems like this story is taking a while to work its way into the stock.

of course, the interesting story that a federal judge has voted down elon musk's massive pay package, despite the fact that the board wants it and shareholders want it, and he hit the milestone. perhaps there is going to be more news on that right now elon musk not getting that pay package. some investors thinking he will not be putting as much focus on the shares of tesla and the company. and stock -- and the stock reacting negatively to the downside. scarlet: thank you so much. earlier today bloomberg spoke with cliff as nest, and he says he doesn't think equity market valuations are in a bubble right now. >> if you look at valuation differences we are still at a time of extremes, and that is not just the mag seven. you could do it within in the -- within any industry one. i would not call it a bubble. we still are in a time of extremes. scarlet: for more on the financial markets we want to

welcome a fund devitt -- ethan devitt -- aoifinn devitt. it feels like this post-election rally is losing a mentor. we are still making record highs. but the size of the gains have diminished and there is a sense of nervousness of what is to come with the new administration. >> i would agree with that. there was probably over exuberance after the election. trump trades have been extremely well telegraphed by investors, and they played out exactly as planned. what we did not expect is the zero-sum game we are seeing going on in retail. a shifting of consumer preferences. the volatility of these stocks would behave as a sector, so that is interesting. there is going to be a pause as we look at what the holiday retail sales look like and also

digest all of the other news as we prepare for the next administration. scarlet: which asset class is leading the way right now? aoifinn: it is going to be equities again. we have preached a balanced portfolio but equities are the only game in town, despite the fact that don's have been popular recently because of the steady interest expected there and the fact that cash is no longer a drag. every portfolio we run is going to be positioned for growth. it is getting increasingly more difficult to justify non-u.s. holdings, particularly with the strength of the dollar. we are underwriting the pace for the european developed a market holdings right now because the fundamentals do not stack up well. i would agree that the fundamentals, particularly in tech, have a lot further to run. but where we do need to ask is whether some of the fundamentals have changed that would set the

rules for diversification in the past. scarlet: we will be speaking later on with our in-house expert on salesforce, but salesforce is another example of the continued ai story and how it has evolved. it has moved from the chipmakers to the software companies. how much emphasis is being placed on a company like salesforce to really start delivering some of the return on investment that they have been putting into the technology? aoifinn: i think that is very much being increased. we can see that the pressure on companies to deliver the tolerance for underperformance is a lot less now than it used to be. you can see that around the ceo of intel and other ceos. investors are running out of patience. there will be need to see the return on the investment, as you point out, and also wondering whether we have got ahead of ourselves in the case of ai, crypto assets, and a bit of digestion. we are going to see some profit

taking, some rebalancing, some loss harvesting. i would say for the most part that is going to lead to a bit of digestion and discrimination by investors, which is a good thing. scarlet: you mention how the u.s. stock market is pretty much the only game in town, and that really comes home when you think about what else is going on overseas. . today, france over the last couple of weeks. how are you thinking through the events in france, especially with this no-confidence vote scheduled tomorrow and french bond yields, the premium investors are demanding surging versus the german bund? aoifinn: it is a really alarming development. we are seeing stresses in emerging markets move to the center. we would never have thought of south korea as having a high degree of political risk. there would have been associated with some of the fringe economies. in europe france and germany are always at the heart of the project. they were the stalwarts and both of them are suffering. it is ironically those on the fringes that are struggling.

what we can see with france is that there are no accepted incumbent investors anymore, or very few. that is where global investors are moving. nobody has to be invested in the home market anymore. when you don't have that incumbent demand who will demand your government bonds? the u.k. has seen if they falter investors will vote with their feet extremely quickly and even the domestic investors too. it is alarming what is developing there. it is undermining the case for investing in europe. now we see what can rebut the presumption. scarlet: that turns everyone's attention back to the u.s. again. if not the equity market, then what someone like jay powell will be saying in the next day or two. what are you anticipating from jay powell when he does speak? do you expect any kind of clarity on how the fed might proceed in january? aoifinn: i think he has always been consistent, data dependent,

and exuding an air of confidence. that is what we need after having years of less competence. nothing is going to change there, especially with the economies stacking up so well. they still feel confident enough that a very small decrease in rates can be tolerated and is being expected. we see that markets rallied well and response to an indication that would continue. i see more of the same. there is nothing in the data and increased confidence that this soft landing is being well executed. scarlet: really appreciate you joining us today. aoifinn devitt in london. back here in the u.s. bloomberg spark -- folk with peter king crowe and peter describe what is next for the submarine sandwich chain after closing an eight lane dollars deal to partner with flagstone. here is a bit of what he had to say. >> the brand now is so strong, but them coming in and getting

great international possibilities, we are close to an announcement with london, england, united kingdom. maybe in a month or so. we started in canada outside toronto. the expansion looks great. the u.s., we have a long way to go as well. scarlet: you can catch that interview later on on "the close." this is bloomberg. ♪ ♪

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scarlet: this is bloomberg markets. it is time now for the stock of the hour. it is salesforce, which is due

to report earnings after the bell today. the stock has rallied 27% since its last report in august. for more let's ring in anurag rana. revenue for the quarter is seen slowing, a pretty dramatic slowing. the stock is up about 27% since this last earnings report. there is a big disconnect there. anurag: what is happening with sales forces, during their annual user conference they announced some really interesting ai products that are very interesting but may not generate revenue in the near term but shows the promising nature of what they can do with all of this customer data. we think the revenue generation from this ai new product may not happen for a year or two years but it is helping investor optimism about salesforce. scarlet: you are talking about a one to two year transition

period before we see it show up. salesforce has been on a marketing and product release blitz. they are talking about hiring 1000 new people to sell this product. our customers ready to see an increase in spending without the payoff in the revenue numbers? anurag: one of the things you want to look at, these salesforce products will save you money. from their point of view it works. as far as salesforce is concerned there revenue basis is so large that these products will take some time to move the needle. salesforce in total is still getting impacted by companies spending money on ai infrastructure and taking money away from other areas, such as sales automation and other areas. this company is based on seed growth, which is if you are a bank or retailer and increase the salesforce for your companies, these guys don't get paid much. that is the dichotomy you have to look at when examining

salesforce. scarlet: really appreciate you joining us. anurag rana giving us a preview into salesforce's earning report this afternoon. political turmoil moving markets in yet another corner of the globe. uncertainty in south korea is high after the president declared martial law. opposition lawmakers quickly moved to reverse that action. he will tell you more next. this is bloomberg. ♪ i can't believe you corporate types are still calling each other rock stars. you're a rock star. we're all rock stars. oooo look look at my data driven insights, i'm a rock star. great job putting finance and hr on one platform with workday. thank you! guys, can you keep it down. i'm working. you people are (guitar noises).

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scarlet: we have some breaking news out of france. or i should say about france. emmanuel macron says he will not resign before his mandate ends in 2027. he made these comments to reporters in riyadh. he is in saudi arabia right now. he does not believe marine le pen will join the left to vote to topple the government. there is a no-confidence vote

scheduled for tomorrow. emmanuel macron says many will not vote the top of the french government where the extreme left and right have banded together and want to vote out michelle monier. we will keep you posted on any further developments. we do want to stay on this theme of political turmoil but turned to south korea, where budget battles have led to an unexpected climax. the president cleared martial law in an emergency national address that was televised live. >> i hereby declare an emergency martial law in order to defend the free republic from the threat of north korean communist forces and to eradicate the shameless pro-north anti-state forces that are depriving our people of their freedom and happiness. this measure is necessary to safeguard our constitutional order of freedom. scarlet: opposition lawmakers have quickly voted to undo that action.

the korean won weekend, slumping to as much as 14.44 against the dollar. it's bring in roslyn matheson. you are based in london. you cover global economics for us. everyone was caught off guard by this declaration of martial law. >> the president's party was caught by surprise. you can see how quickly opposition parties have come out and said this is a very risky move in a country like south korea, with a long history of trouble over not just martial law, but military rule. the question, where is this going? a very quick move by parliament to try and unwind it, to vote against it. he does need parliament to approve emergency martial law. the question is, will he listen to that? will he do what parliament is saying? will he try to push on somehow regardless? the backdrop is a long-running dispute over the budget, but is that a reason to call emergency

martial law? a move that really not just stunned the people of south korea scarlet:, but his own party. this battle has been brewing for a couple of months now, ever since elections in april when his party was basically voted out of parliament. what will you be watching for to determine what happens next? >> it is, what does he do in the morning? does he try to circumvent parliament when it comes to martial law? does he try and bypass parliament when it comes to some of these bills? there is gridlock in parliament, where he does not have a majority and the budget has been held up. that is part of the fabric of political life. not necessarily meaning that society is requiring you to declare martial law. what does he do from here? is he back down because parliament has said no? does he try and push on somehow regardless? what does that mean for confidence in south korea? we are seeing that move in the

market, immediately concerned about proxy stocks. samsung getting hit out of hours. does this undermine confidence in south korea at a very delicate time for the economy? so, lots of questions there. scarlet: really appreciate you joining us. roslyn matheson, who heads up our political and economic coverage around the globe. thank you so much. we want to stick with this story. and bring in another expert, sydney seiler, senior advisor and korea chair at csis. it is a pleasure to speak with you. i question to you is that when it comes to what happens next, you have made the point that president yoon is a lawyer. he has considered his actions carefully. how do you see this playing out? is a tip into violence possible here? sydney: i certainly hope not. my first tour in korea was two

years after martial law that accompanied a coup d'etat that a general eventually launched. this is far from that. even though the military has been mobilized i don't believe president yoon has any intent to let things devolve to use military force. in justifying these actions because of a north korean nuclear threat do reflect a worldview that there are anti-r.o.k., deep state maybe, this is the korean version of deep state, that there are forces out to undermined conservatives and weaken south korea vis-a-vis north korea and it justifies the action. as we all know president yoon is known for taking action decisively, acting without much consideration to domestic political responses because of

his confidence that what he is doing justifies. somehow the end will justify the means. then i think the measure of south korean leaders ever since the coup d'etat, moving from conservative to progressive, the constant theme is wanting to protect the economy. i think this would be a driver for him. scarlet: i'm glad you bring up the economy. present human was elected with a pro-business agenda, at this year we have booted the incumbent out of office, out of general dissatisfaction. did he deliver any of his campaign promises before his party's electoral defeat in april? was he able to get any of that done? sydney: the challenges he faces the democratically-elected leaders in many countries that are suffering economic downturn, social, cultural transformation internally, and increasing political chaos enabled by

social media and other tools by which the previous pulled -- previous predictability of political developments is gone and we have developments like this. no, he did not satisfy those needs and the korean people turned to the opposition. scarlet: we know president-elect trump has been threatening sweeping tariffs on imports. south korea, usually reliant on trade. you see trump taking advantage of this political week this in korea to impose tariffs or press for concessions, or from north korea to exploit this in some way? sydney: president trump comes in, south korea had about a $51.4 billion trade surplus with the united states. in terms of the military spending we need that 3% mark that president trump expects allies to produce. already we knew that korea would

be within president trump's target range, as it were, in terms of an unfair trade balance that president trump would seek to exploit president yoon's weakness. it would be a natural instinct to see president yoon as vulnerable. but in a way that president trump would not want to totally undermine the relationship and undermine a partner domestically. he would have to balance out his instincts in this regard. scarlet: fair enough. what about north korea? we have about 30 seconds. sydney: north korea probably sees a weakening of president yoon, divisions in the u.s. potentially resulting from this. north korea may see an opportunity to wait and let this play out and become worse on its own rather than play into president yoon's hands by doing

something that would only prove president yoon was right. scarlet: really appreciate you giving us your analysis. sydney seiler is the korea chair at csis. to follow the latest up dates visit t live go on the bloomberg terminal. this is bloomberg. ♪ it's our son, he is always up in our business. it's the verizon 5g home internet i got us. oh... he used to be a competitive gamer but with the higher lag, he can't keep up with his squad. so now we're his “squad”. what are kevin's plans for the fall? he's going to college. out of state, yeah. -yeah in the fall. change of plans, i've decided to stay local. oh excellent! oh that's great! why would i ever leave this? -aw! we will do anything to get him gaming again. you and kevin need to fix this internet situation. heard my name! i swear to god, kevin! -we told you to wait in the car. everyone in my old squad has xfinity. less lag, better gaming! i'm gonna need to charge you for three people.

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

live from washington, d.c. joe: washington is reminded of a dangerous world. welcome to the fastest show in politics. as the president of south korea declares martial law today president biden is being briefed on this and we will have more head from bloomberg's national security team. the former soviet republic of georgia suspends negotiations to join the european union amid a standoff with vladimir putin. we will have a special conversation ahead with the president of georgia. analysis from our panel today. it is all after a look at wall street. we start there as always with amy morris. how is it looking? amy: let's look at france. the president saying he does not believe marine le pen will join a left-wing coalition to top of the french government,