Transcripts For BLOOMBERG Bloomberg Surveillance 20161111

Of you. Francine this was the curtains will change at the white house. Bloomberg news. We have plenty. Taylor several thousand people smashed windows and damaged cars on the second night of demonstrations. There were protests in a number of other cities, including new york and chicago. Donald trump called them rational protesters incited by the media. He said they are very unfair. Donald trump selection means talks for the tpp will be put on hold. The trade commissioner spoke to reporters in brussels. President , wew dont really know what will happen. We have strong reason to believe biggestll be not the irony for the u. S. Administration. Taylor this would eliminate tariffs and increase regulatory cooperation. Russias cautioning against excessive optimism. Up president disagreements will continue after donald trump takes office. He said relations are at the lowest point in decades. Taliban militants launched an attack on a german consulate in afghanistan. They killed six people before being driven off by special forces. There were no german casualties. The taliban says this is retaliation for the germans assisting a u. S. Air raid last week. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries, this is bloomberg. I am taylor riggs. Bloomberg. To get to the treasury markets are closed today. We will show you moments of silence at the beginning of the next hour. The euro is weaker. There is a turn it to this friday. The vix is 1531. You forget where the dow was a week ago. The mexican peso shows the emerging market weakness. Francine this is my picture and i am focusing on the emerging markets. This is the selloff we are looking at. Its deepening concerns the developing economies will face capital outflows and weaken exports. Lets say the donald trump riment tom be nice. Over to the bloomberg very quickly, this is the e. M. Story. Dollar peso, this is the complacency of a good nine or 10 years. This is a big deal. Where can it go . Three standard deviations out, its an interesting point. Right there, we are not there yet. A little bit of an unraveling. We are looking at others as well. Francine from what ive heard about policy, the last two or three days is this definite finance spending we are expecting plus tax cuts, there is a resemblance to the reagan era physical policy. Where are taking us back to 1976. I know you like history. Deficit as percentage of gdp is the underlying. You can see what weve done so far. Its a good chart. Its the reagan chart. This is something can he really do it . Lets get more on the president elect we are joined by michael mckee. First of all, lets start with you. What we learned in the last 24 hours . Michael we havent learned a lot. We learned that he can bury the hatchet with barack obama. Beyond that, we dont know where donald trump is going other than he is going to propose some sort of tax cut and some sort of Infrastructure Spending. The markets are betting on this. We see the emerging markets react to the kind of inflationary pressures that might generate which would lead to higher Interest Rates here. Thatine when i showed chart, it brought me back to something you were talking about earlier on. Differentvery positions. Reagan came in his being governor for eight years. He had strong policy people around him. We dont know much about Donald Trumps associations, the people who will be helping them. We know that he has made some commitments. One is an infrastructure package that will produce jobs theoretically. He hasnt said much about the deficit. No one really has. He hasnt said how he is going to pay for these things. Is narrow in terms of its margins. Assert itself to when they see a new president. I think we are going to see that happen as well. You are the democrat from kansas. I believe there are four left. If you were to run into secretary clinton hiking, what would you say . I would say nothing. I might go back there and run again. Its very interesting. If you look at the demographics of the election, Rural America voted overwhelmingly for trump. Rural urban divide. She was not able to crack that. That is one of the major things that probably cost her the election. Michael, what is your observation on this . Michael we are in a real experiment, the likes of which we have not seen since ronald reagan. We dont have any idea how this is going to play out. Reagan had a radical economic proposal. The idea that if you cut taxes it would what people to work in it was something that had not been done before. We are going back to , cut taxesl policy and increase spending. Francine are the markets giving donald trump time . Do they like some of the policy . Of whats happening is people are reacting in realtime to the fact that changes going to happen and its going to be big. I think you saw that in the aftermath of the election. The initial reaction would be oldfashioned playbook. It was we are going to see treasuries rally and stock arc its climb because there is uncertainty. People woke up and said this is different. Very quickly, within hours, people said you have to think about what the actual policy implications. This is the first step in that direction. Clear, you arees going to see more uncertainty in the market. Tom the crime is you have to get up early this morning. You are between two political guys this morning. In their world of change, is your world a level change or can the vector continue higher for the equity market . Is this just a oneoff level change in bonds, whatever, is there a vector to this change as well . I think we are going to have to wait and find all of this out. The tension between the things that are actually more difficult for a new president to achieve but could grow the economy, things that might be easier in the short run. Francine is volatility back thanks to donald trump . We will see more of this risk on risk off pattern. Past, this was really driven by the pattern of centralbank behavior. I think now we are going to see policy. Is your only like one week after brexit. Francine the violent reaction we saw on brexit didnt happen here. Im not sure why. When you look at the impact that this election could have on the world, its huge. Brexit is contained. This is a huge economy. Michael it may be because of brexit we are not seeing this. The Economic Data started coming in better than expected. I know from talking to people on wall street, maybe this will be that bad. Trying to talk in the previous hour. I asked if there were parallels between donald trump. He said no. What are the parallels between donald trump and breaks it . Parallel is the great anxiety of the working class, especially people over 50 years old who have Seen Technology and globalization have an impact on their lives. Its created that anxiety. It in do anything about our system of government where we have the separation of powers and a congress thats not going to sit idly by. I think there is a view now that the standard establishment doesnt have the answer to key questions. A lot of the electorate decided they want change, whatever that means. To the overpriced hotel in new york and there is your department of agriculture. How do you form a cabinet . Give me the back story on how abouttually forget it secretary of treasury. People have got to want to serve. In the administration of reagan and clinton the, people wanted to come in to government. Do you think Establishment Republicans will line up behind mr. Trump . I think they will. I heard the name bob corker as possible secretary of state. He would be a great secretary of state. I think donald trump is smart enough not to want to put incompetent people in his cabinet. Francine thank you so much. Coming up later this hour, we speak to the executive chairman. We will have his take on this emerging market round and what donald trump means for developing economies. This is bloomberg. Francine our last week in new york and then tom joins me in london next week. Tom im leaving america. Francine be nice. They had a higher earnings and its the Health Insurance unit. The German Company has been selling less profitable operations. The Worlds Largest Entertainment Company had a rare stumble. Disney is predicting that growth will pick up next year. The Company Posted lower revenue in the most recent quarter. Part of that was due to lower ad sales at a drop in subscriber at its cable networks. There are a couple of , the cost of the new nba contract for espn and we dont have a star wars saga film in 2017. We think the company is headed in the right direction. 17 is an anomaly and a lower growth year. Ivlor they were hurt calendar, the core the just ended with one week shorter. That sure Bloomberg Business flash area. Tom rich greenfield is a genius this morning. He nailed it. Francine we have to focus on it. Its getting lost in all of our coverage about donald trump. Donald trump could shift the game for a lot of european banks. They are rallying on him having lighter regulation and higher lending rates. Lets bring in our economist. Problem is that european banks have a lot of regulation. Repealsresident elect regulation in the u. S. , the european banks are going to suffer yet again. Yes. There is a lot we dont know about how free President Trump to tear uply be years of regulation and reform that have already been implemented. The benign view is that somehow there is a closing of this that opens up, that europe gets its act together. Arguments about brexit fade when you look at the priority of getting a regulation at the banks. There is so much that we dont know. There is so much global about this drive for reform. A lot of what we see is panic buying, positioning, hopes for growth. We just dont know. Francine do you think regulation will change because it will we see in spain . I think there is a lot left to negotiate this year. I think regulators are already calling each other going what do we do about the issues left to negotiate this year . Things like bonuses, we dont know if people are going to try to get everything nailed down to the floor now before trump or if there will be some sort of rollback that will happen prematurely. Francine weve got to keep it short this morning. Tom is it all clear for Deutsche Bank . I dont sense that at all. No. There is an idea that there is some kind of quick agreement. Im not confident this changes the narrative much. I hope there is a quick settlement in the next few weeks. I think there is another point about the difference. In europe, Monetary Policy is still driving the boat. In the u. S. , we are starting to see a shift where there is going to be fiscal policy and tighter Monetary Policy. Helps the bank. In europe, its not so obvious thats what youll get. Tom we will be back. We are trying to give you a friday per spec of into the weekend for a stunned america. We are thrilled that he will be with us. Neil ferguson will be with us from london. Stay with us. This is bloomberg. Francine youre looking at victors of london. Were trying to figure out the parallels between donald trump and brexit. The three means the pound has gone higher. Lets get straight to the morning mustread arid this is from the former elgin prime minister. Assumed for too long that it is cheaper and safer to let the u. S. Solve its problems in our own backyard. Given americas checkered foreignpolicy legacy, we must discard disbelief. That itsm is foreignpolicy that will shape world in the global economy. We see the pound it on the back of that. How much you need to become a political analyst in this day and age . I think you have to have an eye on politics, but think through the underlying impact. The political pressures are pointing toward deglobalization over the next two years. One implication is policy coordination that will be more rare and harder than it has been in the past. Precedented levels of policy coordination after the financial crisis. There are fewer cases of it. You may see a less policy coordination. We dont know. That is one of many uncertainties that we face in the years ahead. Currency wars are rarely intentional. They are usually the byproduct of other objectives people think they want until they realize they dont. Tom we have a major shout out to nail you nailed this. If i can drag this over here. This is strong sterling. Worldd just say its the over. We go. This is part of the reflation trade. Francine it really makes a difference. Chart, its an excellent chart. I dont know if it will make brexit more complicated. We are betting on exports so much or whether it reinforces negotiating power. She might be the leader of the free world now. I dont think people are going to conclude that. We have a world where the reality is going to change week to week in peoples minds. You were going to see flows of money and Market Movement that reflect those shortterm points of view. Because of the uncertainty and things around, there will be risk but opportunity if you can get it right. Tom i want to come back and talk to seth masters about the issue of the moment for global wall street, the global reflation. There is a regime change. We have a new president in the United States, with all the drama we saw yesterday we need e respect of area perspective. We have so much to talk about from kissinger to his wonderful books on a capitalism. Its great to have Neil Ferguson. From new york, this is bloomberg. Good morning. Francine we are look to live pictures of capitol hill. Its amazing to see the pictures from the oval office. Present obama is talking with the resident elect. I still cant get that out of my mind. You can see s p futures are down 158. More on the president elect. Taylor in portland, a demonstration against the election turned violent overnight. Thousands of protesters smashed windows and started the fire. The Police Called it a riot. It was the second night of antitrump demonstrations across the country. Thousands surrounded his building. Cap said they were professional protesters incited by the media. He spoke of working closely with congress in his first meetings on capitol hill. Cap had discussions with Mitch Mcconnell and paul ryan. He plans to work with congress to repeal obamacare and pass a massive Infrastructure Construction bill. The president told donald trump if you succeed, the country succeeds. Kurdish led forces are making advances on the assault. The Islamic State stronghold, they are surrounding an area north of the city. Uslede being helped by airstrikes. South korea, south korea organizers expect people demand that she resign. The government is concerned the protest may turn violent and illegal. Leonard cohen has died. His career spanned five decades and he was best known for the ballad all india. 200 artists have recorded. More than 2000 recordings of the songs been made. He died in los angeles at 82. Tom Leonard Cohen it i would line him up with paul simon and bob dylan. In the year of sergeant pepper, he really gave everyone the permission to be quiet and have a more silent poetry. He was absolutely original and different from paul simon. He changed the cadence of song and poetry in 1967 when his landmark album. We change the cadence right now and try to move you forward into december. Holland joins us. He is he cant stand these highs in the market. How many charts have you and i seen with major street firms. We are going to have inflation. Is it finally here . Its going to happen. Its a function of what policies donald trump puts in place. If there is a significant tax cut for Infrastructure Spending, its likely you will see inflation going up over the next few years. Can impart itself in price change or goose real gdp. You take the inflation and it bring it right over to the revenue line . Happy friday. The answer is yes. The most recent example we have seen is in 2009 in china where they bet 5 of their gdp on a stimulus package that was much different. Theyfound the shovels and caused inflation. They spent the next two years trying to tamp down inflation. It could still happen. We have lost our memory of that. Tom the selection is a primal scream. Would you suggest the companies you own will initiate investment abroad or in the u. S. And if its in the u. S. , do they need a policy push from president elect trump . Do they go out and investigate . Tom i think we may have a private bodily probability. He has approached with his been a lack of leadership and Forward Movement among. People will find a way to make money office. Francine when you look at government bonds, there is a global on the that is tumbled since donald trump is been elected president. Im looking at italian 10 year yields. Where does this end . Do we wait for inflation to come . Will it move the on then. Market usually do anticipate what happens because thats their job. The big challenge is figuring out the winners and losers because those will be local, not necessarily global. There is a big policy divergent. Its not clear that you will necessarily see the same pattern everywhere. You probably shouldnt. Whats happening in the u. S. Makes a lot of sense. We will see reflation here given a President Trump. There is a u. S. , reason this is happening. Francine do you think it means the Central Banks will go back to the drawing board . We alluded to this with tom. If we see more physical spending, the eu has to do more . Theoretically, thats an interesting idea. In the u. S. , you have a president elected with a mandate for change. Many of the governments outside the u. S. And the Central Banks are not necessarily in the same configuration. Assume that money will pour into u. S. Equities because of what we are finding out his policies will be . We have one chance for a first impression. We got 1 trillion worth of losses in the bond markets globally this week. Massive move up and stocks. People will continue until proven wrong to say that what the president elect says he is going to do, he will at least do some of it. That continues to be the right trade. I think its important also what policies are pursued. Tax cuts and Infrastructure Spending is stimulative. It creates inflation and some real gdp growth. If there is protectionism another trade policy could undo some of the stimulus. Thats the same thing with immigration policy. We have to see with the overall picture winds up being. Tom i know you want to get down to have a cup of coffee. If you were to have a cup of we talk about a regime change in american politics. Is there a regime change this morning in american banking, steeper yield curve, more normalcy. Its time to bring cash to shareholders . Is that occurring . Its absolutely occurring. Those who are cautious lose an opportunity here. I do think jamie will lose an opportunity. I hope he doesnt become the secretary of the treasury. I dont think he will. I think he would be a good treasury secretary. I think at the end of the day, its like a dream come true. How could things be so good from one week earlier in respect to jpmorgan. Disclosure, Michael Holland hasnt sold stock in six years. Seth masters has to run a massive combine. Should our viewers worldwide change their portfolios as weekend . Change their allocation . Do you just try to get to the inauguration before you do something . Michael no. Tom give me something smarter. Clients to tell our stay with their longterm allocations and to the extent tuning, thereine are things you should leave to people who are looking at the daytoday and minute to Minute Movement of the markets. This, we were slightly overweight equities, mostly u. S. And a little bit emerging markets. What weve done since then is move the bit more to the u. S. And taken that out of emerging markets. We had option allete in the portfolio. That worked out well. You have an opinion on emerging markets . Seth i think its going to be specific to which market. The ones vulnerable. Tom you guys dont know what youre talking about. Our guest next hour does. Thank you so much for coming in today. What our team does in terms of getting us the right voices, he will join us from templeton. We will do that from a divide. This is bloomberg. Good morning. Francine we are here in new york with tom keene. We saw that clearly in the charts today. Developing economies will face weakening exports once donald trump is in the white house. Someext yes guest says policies good and if it emerging markets. He joins us now from dubai. Its great to have you on the program. Becausel be slammed investors will say if donald trump puts his policy in place, i want to be in the u. S. , not emerging markets. Mark i think thats a good way. That is a real problem going forward. The real challenge i think will be Interest Rates. I believe trump wants higher Interest Rates because the people who elected him want low interest in their banks savings periods for the fixed income market, thats not it. Money will go back into the u. S. It will be temporary. In regard to the equity, thats a different story. I believe that equity will do fine as the u. S. Economy will be doing fine. The u. S. Administration will take a very practical approach in the negotiations with mexico, china, all these other countries. Trade . E what about a lot of these exports from emerging markets will be weaken. We saw yesterday Central Banks steppinga to indonesia in to stabilize currency. Mark thats no question. Thats a good point. What will happen is these emerging markets like china, india, others, depend more on their domestic market. Commodities will continue to rise. That will be good for some emerging markets. I believe from a point of view of the Administration Stance in the u. S. , it will be more practicality rather than a with exportstion and imports. Assume free you trade is going to be much more complicated . Mark definitely. It will be much more complicated. Agreements will go out the door. It will be more bilateral. I believe it will be fine. Donald trump is a negotiator. He will reach agreements with these countries. Emerging markets coming out of the crisis based in u. S. Flatrs, its nothing but a to bear market. You can see the arc of markets, nott in based in their own currencies but u. S. Dollars. When i look at that, i want you to state the case for e. M. Investment or do you have to move to the emerging market known as the United States of america . Mark if you look at the last three years, theres no question emerging markets over performed. If you look at it from january, i think it will continue for very good reasons. First, population structure is younger. There is great growth in consumer spending. Secondly, the internet is having an incredible impact and the transfer of technology is very big now. Third, emergent markets are growing at double the rate of the United States and europe. , i believe youre going to get reform in these countries. Tom this is critical. If we have a currency war within the macro economics of the global economy, do you have to own emerging markets hedged against currency depreciation . Do they need to affect every trade with a currency hedge . Mark in some cases that will be necessary. Some currencies will continue to get weaker. There are many currencies in the emergings markets that are getting stronger against the u. S. Dollar. I think they will stabilize at these levels. Francine this cannot be good news. Talk to me about the countries that are going to suffer if the policy we think donald will push through become reality. Mark i cant think of any countrys that would really suffer badly. The proof is in the pudding. It will really depend on what kind of negotiations they place. Lets take mexico for example. If you look at the situation, it looks higher. Donald trump is going to build the wall. I dont think these things will come to pass. I believe that the end of the day he will make an agreement with mexico which will be mutually beneficial to both countries. I want to bring up the mexican peso again. I showed this chart earlier. We are almost up three standard deviations on the latest runup of x ago. This is back a year and a half. Is there an opportunity where a truly unravels based on policies by republicans in washington . Mark i believe you can see the mexican peso has a great opportunity. The volatility is incredible. If you can catch it at a low level, you can probably make a lot of money speculating on just the currency. Lets say the mexican peso gets week. Exports will do very well. Exports are not going to stop. They are going to continue. I think we have to look and what the policies are. Francine lets wait for the details. Will there be a lot more volatility from now on, not only in equities and currencies but also emerging markets . Mark i think you have to differentiate between fixed income and equities. Equities in emerging markets have tremendous opportunities. They are much cheaper and i mentioned the growth and all the other factors. Thank you so much. We greatly appreciate your perspective this morning. Michael holland will continue with us. We have a lot to talk about. We will go to london for remembrance at the top of the next hour. Joining us in the next hour, Neil Ferguson on perspective in washington. Stay with us. This is Bloomberg Tom good morning, bloomberg surveillance. We are trying to recalibrate into a historic weekend. Lets go to the dow chart right now. The green circle are the dow highs. We will never see them again. The red is the gloom of the night. Michael holland pick up the phone and said no to cash. We wound up with a yellow circle election morning. Cash. Re 180 in michael i was short everything. Tom this is a great moment of humility for people. Assetsre going to deploy today, which sectors give you the most enthusiasm to just stay with it through 2017 or 18 . Michael its an important question this morning as a relates to u. S. Stocks. Lagged,area which has those have lagged. Bonds are down in price. The technology has been particularly good it. Something as an entry point for people who have not own that. I think we have a more beneficent background for people to own stocks in u. S. Companies. Tom how will behavior change . He bought a big French Company yesterday 18 months ago. I think it was two years ago. How do the multinationals adapt and adjust to President Trump and not an isolationist, but it uniquely Domestic Administration . Michael a cautious sigh of relief with respect to the headwinds he has been facing. He did this wonderful oped in the wall street journal saying we have nothing but headwinds as people running businesses. We have to get used to that and deal accordingly and do whats best given the constraints. Tom the people that voted for mr. Trump, nobody expected them to vote. You look at the people that voted in ox county, they voted for jobs in america. Will they put those jobs in arkansas or will they put those jobs in malaysia . Michael they want to continue to be able to do all the things they would like to do around the world so they will make these whatever they have to do with donald trump who want more jobs. Tom do we need to go back to lbj . Francine lets talk about policy. How much do we actually know about details . Michael very little. The Investment Decision is based on what Johnny Damon Jamie Dimon is going to do. He is going to make things less difficult for the two of them and thats a good thing. But with respect to specific policy, i dont care that much. Tom thank you so much for coming in. Harvard 10 this weekend . Michael he is a leader. They inspire people. They do things irrespective a whats going on. Harvard football on Bloomberg Radio in boston. The world stops. Francine ivy league football. Tom this is a great pairing of news. Francine we need to look at the economics of donald trump and local growth. Tom i want to go back with Neil Ferguson to Henry Kissinger and the formation of the in 1968. This is bloomberg. Tom when the facts change, we change. America and World Leaders adapt. They adjust to president elect trump. Farage suggest the special relationship is faltering. Good morning. Welcome on this armistice day. Francine we have just observed two minutes of silence. Armistice day commemorates every the and of hostilities on the western front of world war i. Its particularly important every year. This is why in the u. K. They take it very seriously for veterans day, to remember the fallen over the last century. Its more important than ever because of Foreign Policy and the uncertain world. Tom i think every year there is a different tinge to it. This year is the stunning events of brexit and in the United States. Whats interesting is each nation is different. Is so good on the compare and contrast of veterans day. To me, its that church in the strand. Its just remarkable to me the Royal Air Force went inside that church. As a tourist, thats the uniquely reddish moment. Wars are fought on different fronts. Its good to be different for people that lived through it. Tom its veterans day in the United States. There is a moment of silence here. We need in this friday and into the weekend to readjust and recalibrate. Our first word news on mr. Trump. Taylor police in portland say an antitrump demonstration turned into a riot. Several thousand people damaged cars and smashed windows. There were protests in a number of other cities, including york and chicago. Donald trump called them professional protesters incited by the media. He said they are very unfair. Russia is cautioning against optimism with the u. S. A spokesman said disagreements will continue after donald trump takes office. Relations between the two countries are at their lowest point in decades. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries, this is bloomberg. I am taylor riggs. Tom thanks so much. We are honored in this hour to have with us William Bauder of citigroup. Extraordinary. Te teachers are 11. Em currencies are weaker. Next, stunning with a record high. You would think that the peso is absolutely stunning. Francine i really like your charts. My charts are very similar. Im looking at emergent markets. This is the major rap we see on the donald trump presidency. Look at the pound, the biggest winner over the last three days. Different u. K. In terms of Foreign Exchange that we saw. We will have this all through the day for you. Are thrilled he is back on this special friday. Join us from london, one of the greatest historians. Theessor ferguson of hoovered institution. The great degeneration is one of your books. The degeneration that got us to this historic election in america . I tried to sum up the selection a while back by saying the American Voters had a choice between snafu and foobar. I think that is what Hillary Clinton was offering. Change to say a dramatic to the status quo which was Donald Trumps pitch. Thats got to such a point there were enough voters ready to gamble on donald trump because of their dissatisfaction with the current policy not just in the last eight years, but the last 16 years. This was a repudiation of the bush era. Tom in your study of regime change in cultures, what is your immediate disappointment for the new regime . There is going to be an inauguration and all that. When does the first disappointment set in for a republican president , a republican president senate, and eight republican house. Niall im trying to work out. Therepublicans control entirety of the key institutions of the federal government. They also have extraordinary strength if you look at state legislatures and governorships in whats not to like from a republican Vantage Point . The issue is if Donald Trumps agenda can be aligned with the agenda of his own party since he is such a candidate. He is a protectionist. Some people would say its nativism. A this isg strongly for the republican traditionalist. That may be a disappointment with how much of that they can actually swallow. Francine i thought the republicans would keep a check on donald trump. This is the thing that will be interesting to watch. I think there has been so much everyse at his victory, everybody underestimated him. People are enthralled to the victor. The humility of his victory speech. The way he handled his meeting with president obama yesterday. All of this is carefully calibrated to reassure people he is not a crazy man. I think we see a peculiar have it, its from populist Campaign Rhetoric to statesmanlike president ial rhetoric. People thought for some reason he would do this in the debates before the election. The date to be reasonable is the day after you one. Tom everybody got it wrong. America spoke and weve got a new president. This is my chart of the year. Gdp is down to a 1 level. Bring the chart up. The banner for this chart is a huge deal. If she got in, gdp would be less than zero. Can donald trump boost gdp . His fiscalts stimulus through. He can boost demand in the economy cyclically. Trend growth. Thats where i want to go. The idea of stimulus is one off. It may be gets them to the elections in 2018. That doesnt change the trend that was the cause of the primal scream of america. If he stimulus is part of the infrastructure, if its well if the regulation takes some of the shackles being held act that, there could be some improvement. The lack of x and jerk, the lack of dynamism in the economy. The lack of mobility. The u. S. Economy is a much older economy. Francine had to you funded . You are increasing fiscal spending it, where do you get the money from . You get it from the markets until the markets become unhappy. Some of his more energetic supplysiders do dynamic scoring on steroid and think every tax cut pays for itself. Showsite some work that some Infrastructure Spending can pay for itself. In practice, this does not happen. A lot of Infrastructure Spending is wasted and a lot of tax cuts do not do anything to boost enterprise. Francine its my understanding that president obama had asked the senate and the house to pass this spending because he wanted to build more and focus on infrastructure. They said no. Will they say yes to donald trump . Niall i think its highly likely. He is in a stronger position. He has the senate and he has the house. He has the initiative. I am slightly more lush with him on this. Toms terms,se regime change is here. Refers to a major change in policy. Change ath a regime the end of the 1970s. It launched a time of falling inflation and falling rates. I think the trump regime change is going to be in the opposite direction. Are going to see upward shifts in Inflation Expectation and then nominal rates. This is risky from a fiscal point of view. The deficit will explode. We could see an increase in boring costs. Ive been warning about that so long. I do believe its real. On the other hand, Business Expectations will shoot up. We already see that and that could change the game when it comes to an investment in the private sector. Francine we will be back. Thank you so much. Tom keene will be joining me. Tom im leaving the country. Thats it. Im moving to london. Francine that starts at 6 00 in new york. This is bloomberg. Tom good morning to all of you. After a long weekend london, we will travel to london next week and keep our eye on whats going on in washington. We are here with citigroup. Year of theion last first volume on dr. Kissinger. The book is extraordinary. Ive talked about it many times. I cant say enough. This is the money quote from mr. Trump this morning. Cabinet, weing of a are told to soldier was wooing the nixon campaign. You could have written that about two sows and 16. 2016. How does mr. Trump form a cabinet . Most people were amazed at when nixon announced Henry Kissinger as his National Security advisor. He had been the advisor of nelson a rockefeller, one of nixons arch rivals for the republican nomination. It was completely unexpected that a rockefeller loyalist should get the job. Peopletrump can choose who opposed you and criticized you during the campaign. You certainly should or your bench is not going to be deep enough to staff a really high quality administration. Can invite them. They have to be on board. They have to want to serve you as president. Thats right. Richard nixons reputation in 1968 wasnt exactly a golden one. He was well known as tricky dickie. Rockefeller said hes the president of the United States. You cant really refused to serve. I think a lot of people who have criticized trump during the campaign. I was one of them. They will now say he is the president elect and we all our loyalty to the president elect because the constitution has been followed to the letter. Now we need to work with him before whatever our bombs. That was rockefellers advice to Kissinger Niall the president elect is here. Screamere was a primal about the ascent of money and the ascent of the 7 , not the 1 . How does he get the republican cabinethment into his and stay true to his core constituency . Niall i think there is a way of doing it. We will have to look more closely at some of the measures that he has proposed. The populist measures to restrict immigration and engage in a trade wars with everyone from mexico to china seem to be a debatable merit. There are not many examples where those measures have improved the Living Standards of working class people. The tax cuts that trump has promised would disproportionately benefit the top 1 . Its clear those should be looked at again. There is an argument and its ironic and argument made by the likes of paul krugman and larry summers. Tolary clinton we were going offset Infrastructure Spending with higher taxes. The issue i think is how far trump can execute given the allergic reaction some republicans will have two largescale Infrastructure Spending and large deficits. If he does raise the rate of itwth in the private sector, could be a winwin. For me, donald trump is the ascent of money. Dont onf you wednesday, we speak with the former minister of scotland. We are back. This is bloomberg. Francine the president elect has been tweeting. This is one of his latest tweets. Thats a very different tweet to what he tweeted about six hours ago saying they were professional protesters and very unfair. Fromlked about spending the house. If donald trump does not unify and support diversity in this he spur growth . Willem he should encourage it. Six scientific nobel prizes in the u. S. This year, all six were born abroad. He was elected on the platform. Will he follow through with it . Willem i doubt it. At least not anything like the intensity of the rhetoric on trade where he was talking about 45 ericsson chinese goods. As far asration shipping 11 Million People back to mexico. There will be some protectionism, but it will be measured. Ofs not going to be a policy openness and diversity. Francine does it need to start with the cabinet . Does he need democrats in there . People that think independently and are wellinformed and it may have just read with them in the past. Tom we are getting perspective this morning. The markets are on the move. Its a subtle market. The bond market is closed. There are some serious currency moves at the bottom. Thats all you need to know. , 2112 onncies crushed mexico. Thats extraordinary. Stay with us. This is bloomberg. We aim to please. The capital and the drama yesterday of president elect donald trump on the balcony with his wife. The library of congress in the background. More importantly for the democrats on the hill, in the foreground to the left is the Canadian Embassy for those wanting to move to canada, your past thete right promenade. Francine i dont think you can because i was looking at the website earlier. The story, the website crashed 24 hours after donald trump got elected. Historicell news. Donald trump spoke of working closely with congress in his first meetings on capitol hill. Donald trump was in discussions with Mitch Mcconnell and paul ryan. Work with congress to repeal obamacare, restrict immigration, and pass and Infrastructure Construction bill. Earlier he met with president obama, and the president told donald trump if you succeed, the country succeeds. Demonstrations against donald trump selections turned violent overnight. Protesters started a fire. Portland Police Called it a ride. It was the second night of antitrump demonstrations across the country. In chicago and new york thousands surrounded his buildings. Horses are making their advance on the Islamic State stronghold in iraq. The Kurdish Forces are being assisted by usled airstrikes. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. I am taylor riggs. This is bloomberg. Tom thank you. Willem butler with us. Bookuthor of a wonderful on Henry Kissinger and so much more on the dynamics of western civilization. George will writing in the washington post, it is a superb essay on the republican party. He spares no one. It is skating. The simultaneous sickness of both parties surely reveals a crisis in the u. S. Regime. Republicans want a ruinous try and to convince them that they can forever prosper by capturing an ever larger portion of an ever smaller portion of the electorate. I thought this was extraordinary on the realities of a demographic america. Is this the final stand for republicans . Respect fore utmost george will, but those same demographic arguments were being used a few days ago to explain a 99 certainty Hillary Clinton was going to be the next president. I do not buy the story that is now more or less conventional was them that this victory was a white flash. When you look at the numbers wasely, while donald trump the winner of the white vote, he was not a winner by a bigger margin than four years ago. Moreover, 29 of hispanics voted for donald trump. The same kind of proportion of Asian Americans voted for donald trump. About 37 of other minority groups. Only africanamericans rejected donald trump wholeheartedly. Only one in 12 voted for donald trump. That is a very different picture when you think about it. Given that Donald Trumps historic possibility, he could turn around in the space of four years and appear much more convincing at the next election. I was reading Time Magazine of all things this morning, and they put it simply. They sent Hillary Clinton built the machine. What this nation wanted was a movement. Is that true . Does the whole world what this kind of movement . It is absolutely true that a movement one. It was not heavily financed or bureaucratic. The famous ground game of the democrats did not deliver. This tells us about the changing politics. It is not necessarily all that. I think the reason the republicans have one is that they did not lock down their nomination process in the way that the democrats did with the superdelegates. They lost control of it and allowed the nomination to be hijacked by a reality tv star. That worked politically. I dont believe it is some kind of last gasp of was frenzy. I think that is a smear on what happened in the smear on the people that voted for donald trump. The Washington Examiner is way out front on this. Talking about the lack of certitude and process the democrats had. Help us with the demographic economics of any given nation. We learn in economics, immigration is always good. A diverse economy is always good. The america in 10 years, what does it signal about Economic Growth with such diversity . Immigration tends to boost growth. Does people that live in the country that are competitive with the immigrants lose out unless there is active policy to counter that. Things like active labor market or cash, training, payments. That is unlikely in the u. S. The economy gets more dynamic with the immigration and the younger population, but the distribution is to economic institutions. The u. S. Has been very poor like most western countries in sharing its fruits in a way that is politically acceptable. Francine you had a call about nine months ago on recessionary pressures on the u. S. Economy. If every western democracy is looking inwards, will that put us in a recession in the next three years . Protectionism destroys growth. That is not the only thing that is happening. The u. S. Happy physical stimulus. Happy fiscal stimulus. It could be contagious to other parts of the world that need fiscal stimulus. Europe, the u. K. , and japan. Protectionism is a negative sum game. Ifcould easily weaken growth it is out of control. U. S. Where it is least needed because the country is near full employment. Tom help me with a cliche. You have the great columbia professor on the Financial System and Federal Reserve system locked in here. Help me out with a cliche of the 1 for president elect trump. I believe he is part of the 1 , but now he is representing the 100 . How does he get away from that cliche . I think part of Donald Trumps political genius and his skill as a demagogue has been his ability to talk to languagelass voters in they can relate to. It causes great offense to liberals, the kind of people who hang out at universities like harvard and stanford when they of saloon bar language, but that has been one of the keys to his success. When they say he tells it like it is, that is what they are talking about. He uses their vocabulary. He himself was born with a silver spoon in almost every orifice. Just let me finish. For himing to be hard to show that he is not actually part of the 1 if the tax cuts deliver benefits primarily to the 1 . Then people will be saying bait and switch and the rust belt. Francine doesnt not change. The rhetoric you use when you get elected cap actually backfire if you use it when youre trying to implement policy. Im not so sure that the tax cuts he proposed at the Economic Club of new york could be regarded as rhetorical. They are pretty much standard republican playbook tax cuts, disproportionately beneficial to upper income groups. That does not make any sense. It is not go with the rhetoric that worked with the rust belt voters that gave him the presidency. If theres something he needs to rethink, then it is that. He has to deliver to the voters in which again and wisconsin made him michigan and wisconsin who made him president. They are not stupid. If you want to think about Charles Murrays argument, this is been the coming apart election. It was a revolt against the elites. Donald trump has to prove he is not one of them. Francine thank you very much. Neil ferguson and willem bruder. Joining me live in london, we speak with Deutsche Bank chief economy is. We will talk about mario draghi and donald trump. That is at 6 00 a. M. In new york and 11 00 in london. This is bloomberg. Francine bloomberg surveillance new york. Lets get straight to the bloomberg is this flash. Or that could pose problems for the cartel whose members are due to finalize how much each will cut production later this month. Saudi arabias oil output stayed near record lows. Another recordbreaking single day for alibaba. They said by midafternoon beijing time, they had already beat last years sales mark of over 13 billion. That is your business flash. Tom thank you. On this important credit we will do a little bit on markets here. Here is the chart of the moment. There are about 10 of them we could put up. This is what is called an elegant chart. Cases, 1, 2, three, 4, 5, 6, 7. This is a perfect chart. The mother of all inflationary breakouts. Is this such an important moment that it is a regime change for your world of equities and commodities where we get a shift . I dont think so. I think it is the fourth quarter. There is a reminiscence here for me of 2015. Your member in 2013 when bernanke first suggested that the fed might start tapering bond buying. At the end of the year we were at 3. 03. By january of 2014, people were thinking there was going to be a recession. Definitely in the wind. You can feel it. It is not dangerous inflation. Tom i believe last friday, the crewy before, the gloom over any given weekend said go to cash. The world is going to end. You have courageously pushed against that. What are you going to write on monday to have Willem Buiter stay in stocks . I think we have a longerterm reinstallation. Period. Nflation factoryrobotics on the floor on a global basis, increased factory competition. We have a long way to go. Tom i want to make clear that Willem Buiter listens to when it comes to economic observations. Francine i have an inverted axis. We need to medicate tom keene. This is copper versus the chilean peso. We talked about this yesterday. Another sign that donald trump is inflating america, copper is moving. Thewould expect it that chilean peso in the blue would be rallying. It is selling off. How do you explain this . Is this just shortterm . I think it is. If the chilean is selling off and copper is going up, that says there are two different thoughts on this. That would support our argument that it is the first chance of reinflation in a while. I dont think it will stick. Francine what will stick . The anticipation of rising Interest Rates in the u. S. Drives down emerging markets currencies, including chile. Yet serious fiscal stimulus comes through in the u. S. , if you dont get massive protectionism, and especially if continues,expansion and the rest of the world does the same thing, then you will have Commodity Prices except for oil where the u. S. Deregulate further and encourages production. Tom one final question for today. When i look at the equity markets, it is it about Corporate Executive behavior. In 2013, will we continue to see the deployment of cash to shareholders . I think we will. This is an environment that is highly transitional between slow growth and growth picking up. I think they will stick with their shareholders to attract more support for stock prices. Tom thank you very much. We will get you back here for a little longer in the coming days. We will continue to look at the global economy. Amazing turns in emerging markets for exchange. On monday, we begin a week in london. We are honored to bring you on tuesday the London School of economics. This is bloomberg. Markets closed on veterans day. Pharmacist day in london. Before an exchange doesnt know it. They did not get the memo. Mexican peso deteriorates through three standard deviations. A managed appreciation on the renminbi. Willem buiter of citigroup with us. Very clearly reminding me of the sunday times of london and boston globe columns before the election where he modestly suggested mr. Trump had a passing comparison to the chicago cubs. Im sorry that i missed that earlier. Lets get to Willem Buiter right now. Very importantly on your 18 month call on global recession. Do you amend that . Willem first, the fiscal stimulus will be sometime coming. The tax cuts can come through rather fast, but it will have minimum spending effects. A lot of those are great tax cuts. Corporate tax cuts. Infrastructure spending will be limited, but we will see that in 2018. That will help a little bit. The fear and uncertainty is still great ive is which is negative for demand. Is still created by this which is negative for demand. Tom let me steal from professor ferguson and his book, civilization, it is about trade. It is about relationships within countries. Growth of world trade is back to late 1980s levels. We have a collapse in the enthusiasm for the atlantic charter. Were going back to regional trade. Wish and be the prescription for mr. Trump to jumpstart world trade . Willem it is worse than a move around multilateralism to regionalism, now it is i lateralized them. Bilateral is him. Is unlikely to be we should expect we should see the opposite of what we need which is a continuous asian of continuous asian of global trade. Get gradual but noticeable further step in the due globalization process. Other capitalor flows as well. Francine does this actually give a hand to theresa may . She may negotiate better with the eu. We do not even know the u. S. Is commitment to nato. Neil i think christmas came early for theresa may this week. Until this point, it looked as if brexit was going to be the longest and most expensive divorce in history with no real obvious economic upsides. Along comes donald trump and announces that the special election relation is back. Her nose, by monday, we could be hearing talk of the north Atlantic Free trade agreement. In which case, the brexit czar is are saved. And anglosphere that privileges britain and the United States and maybe canada and australia can become more credible. If you look at the pound emerging as the surprise winner in the aftermath of this election, that does not help the u. K. Economy. It does not. The notion that the u. S. Is going to negotiate their he favorable trade deals once isxit occurs with the u. K. Probably a fantasy. It takes years to negotiate trade agreements. This will be no exception. Most unexpected populist corruption in the world for most of the year, the u. S. Has now diverted attention to its own populism. Britain has company. There is no substantive improvement in the prospect of the british economy as a result of this. Tom you have a wonderful chapter on the lands of unbelief. I would suggest thats what we have been buttressed by in recent weeks is disbelief. This believe in brexit. Disbelief and president elect donald trump. How do we as a society get through these shocks to stability . What is the action plan to get to the middle of next year . Get out of your bubbles elite people. I am suffering from postbrexit dramatic stress disorder. I did not anticipated. On the day, i thought it was 5050. I was not psychologically prepared for it to happen. That is why i expected donald trump to win this week. It felt very similar. The problem was the people who comment on all of these issues are on the coasts and have no connection with people in michigan, pennsylvania. My one advantage was my wifes security detail explained to me from day one that donald trump was going to win. I started listening to them. They got it. Francine please expand. Elite people, who is that, much to the make, how do they make their money . Askhey go to dallas and them and live in new york city on the Upper East Side and Upper West Side and read the New York Times and the washington post. Francine how is donald trump different . For all of his advantages understood the preoccupations of those people. He said you have had stagnation for the better part of 16 years. Here is why, immigration, free trade, and the corrupt little league. That was a better answer that anybody else have. Tom we are done. Get to work on volume two of kissinger. Bloomberg surveillance and radio. Shadow. Our podcasts, we are stunned at the response. Next week. London. Francine higher pound. Tom look for you next week from london. Good morning. Jonathan good morning. Happy friday. Welcome to bloomberg daybreak. Markets, futures negative, 11 on the s p 500. What a week it was. The stoxx 600 heading to its biggest week of gains since july. The market is closed for veterans day. Here is what you need to know at this hour. Donald trumps taper tantrum. Currencies taking a beating around for month lows as nearly 1 trillion have been wiped off the values of global bonds this week. U. S. Banks getting their highest level since 2008 on speculation that president elect donald trump could repeal parts of doddfrank. To talk about his potential cabinet. The present as Homeland Security secretary. And i well card could be jamie