report by the transportation department inspector general says the faa over a two-year span more than 5500 exemptions, unmanned flight by businesses but it reportedly offered only limited training. an anglo merkel is making a liberal critics of her immigration policy. she says she will protect the country against future refugees and called for a ban on face fails one by muslim women. -- spoke at a convention global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. ♪ scarlet: live from bloomberg world headquarters in new york, i am scarlet fu joe: i am joe weisenthal. 30 minutes from trading in the u.s. oil: scarlet: --scarlet: slipping from a 16 month high. joe: the question is what did you miss? scarlet: the trump rally might be good in the short term but in the long run, it could hurt profits. according to bill gross. more highlights from my conversation with him. we will look at the cash chaos in india and one of the prime minister's biggest campaign pledge was too expose back -- black money. manager who foresaw the oil pungent .14 said the deal should drop prices up higher. joe: let's look at where the major averages stand. abigail doolittle is standing by. at very we are looking small gains for the major averages in the u.s., including the dow, the s&p 500, and the nasdaq. for the dow, the 10 point game is enough to put the dow on paper. potentially the third in the last four days. outperformance is coming from the s&p 500. both of the shares are trading up nicely. the director of north american research for bloomberg intelligence n.l. to our team from the ubs media conference and confirmed that ceo tom rutledge does expect to incorporate netflix's ads on its program. he says it is a plus for both expandes and will really distribution. what is helping the dow potentially claim yet another record high, goldman sachs. another disappointment from the dow by far. getting a boost with an analyst saying the banks may pullback in the new year as yields start to settle down among other reasons. but she recommends buying the pullbacks. she sees them as buying opportunities. interestingly, as we going to the bloomberg and take a look at btv 728, this chart supports the idea that we will in fact see a pullback probably in the early part of 2017. the s&po date chart of 500 bank index, we see a massive runabout of the election, 21% higher for bank index. we also see the relative bank index above 74 some time really since the election. typically, that is a signal that suggests we be ahead. the bank did pullback 6%. there could be decline. the case is more bullish than bearish. abigail: the aftershock is still being felt. many are struggling to get their hands on replacing currency and overall materialized. clampdown cause more harm than good? following this situation very closely, we are joined now from washington. we have all heard about the unattended affects and consequences. items. big-ticket first of all, thank you for having me on. i would argue it is more political than anything else in that the government needed to demonstrate publicly its campaign promise, undeclared, untaxed wealth that many have scrolled away. estimates of the black economy very substantially but something on it would've 20% of gdp. joe: bloomberg news is reporting that more cash has been brought into banks already so far than expected, suggesting perhaps that there is not as much so-called black money because theoretically, that would never come in. is it possible the problem was overstated and it is not as egg of a deal as expected? >> the estimates of black money in the economy show very little is held in cash. most people generate black money in cash and then invested in some way or form to generate a return, be that in cold war real estate or offshore in some way or fashion. other sectorsny of the economy and secondly, you see a massive invasion of government roles designed to catch people depositing what they do not -- large amounts of cash that do not square with income statements. you see people for instance use middlemen, go and get a number of people to deposit the cash for them under the limit for scrutiny by tax authorities with the assumption that money can get be reallocated and their hands back on it after their restrictions ease at the end of the month. >> there is a lot to sift through and it will probably take a while. i do not think we can quantify it well yet. evidence across the country across a wide variety of sectors across the slowdowns and across the board. indexes release showed a big slip. we do not have hard data yet. many economists are of the view that you will see a knock on 22016 and 2017 gdp growth, half of one percentage point to one percentage point. a pretty substantial drop but we do not know yet. joe: the chart we are flashing right now is the services pmi is the kick drop it deaf biggest drop on record. is over,ens after this do you expect that they will , and sayo with -- cash this could happen again in five >> habitually handle a large amount of cash. credit and debit card usage spiking. depending on the firm and the time, once people start trying electronic payments and more businesses start accepting small payments, people are relatively unlikely to go back to cash once they have experienced the convenience that electronic payments provide. that will be a major shift. to effectively subsidize point of sales, telecom companies and others, to find new ways of electronic authentication for payments including through the biometric id card system. as you: a political move stated earlier, did it work? more popular with his constituents now that he has delivered on the campaign promise? >> yes. this has been a shockingly popular move. probably one of the few politicians in the world that can see a boost to his by taking a policy step that would materially harm the policy in the short-term. the possibility -- the popularity is cached on his argument that this is a huge blow against corruption across board and that this is the last standing. he has to deliver on the promises as to why we have been that we will see more anticorruption measures come from the government and they will have an additional impact scarlet: what kind of measures will we see? >> i would point to something to rule out for property holders. people register property for other people's names to get out declaringnd to avoid it on tax statements. there have been new legislation passed recently two inch deuce penalties. we will see a larger drive that will further depress the property sector, hit quite badly given that a large percentage of the real estate deals are done in cash. >> the second might just be property. joining us from washington, thank you. still ahead, part of our exclusive interview with the membersand ceo, several called him before deciding on the latest production deal. putson that, plus where he prices. ♪ joe: underarm capitals one of the world passes most leading hedge funds. it has been returns for the s&p crude oil index this year. interview,sive capital management founder and cio was asked how bullish it was going into opec's latest meeting. >> have not been priced in, the opec deal has not been priced in yet. 70.ld go to 60 or not beens it has priced in because they have not done anything yet and some people do not think they will. >> taken 10 months to come to a deal. we agreed to it in april. committee we have a to deal with compliance. from the oil companies. i'm quite confident. part of the reason the market is so skeptical is we have production over 30 billion barrels per day. it would not take them to the goal that they wanted. they will pump as much as they want. come january, they are cutting from higher levels. why is the narrative not right for you? increased, then when it actually happened, -- >> talk about the pressure into the meeting. there were reports you are talking to officials before it happened. can he give us insight into how that pressure was applied? >> i think a few hours before so meeting, he did not know toy invite a few on tuesday get the market and understand what would happen because they were still quite far and they cannot rarely -- really trust them to be worried about it. so finishing a talk the day before, it is a way to put pressure on the older members to come to a deal and understand the market will punish them. >> central banks do a similar thing. them,hat you gauged from what are you worried about at this point? are they trying to take it to places crude will go? the conversations you had, which one was it? >> i think they want the market to rebalance. a deficit over the next few years. they feel like we might have it in the next few years. the phone numbers being priced in, they voted to go back to a .ormal level too late next year of investment,ck that has happened. we may speak about u.s. shale. the rest of the world is fast. major banks speak about like non-opec supply going up next year. to 2014,me similar because of. you said you are not that worried about compliance. is that because central saudi arabia is a guarantee or of the agreement? the iranians did not get that much up. i guaranteeing the success of the agreement? >> i do not think you need to be cut for the market to go up. it remains to be seen. it will not be under different compliance. markets -- e then?t is your price call >> next year, you know, is funny how the market can become complex and have short-term memory. high over the last 18 months. actually still at low prices. more than 50% lower two months ago. must put yourselves -- tohe said it is a committee oversee production on various companies. just saw is as the message that comes out of opec -- we could have a situation where they do not cut at all. how would you know? what would you look at? >> you can look at the buildings. >> founder and cio -- scarlet: a look at some of the biggest business stories right now. if the deal closes, it will be the fist -- fifth biggest in the u.s. based on -- is behind on miner bond payments according to its ceo. says the payments since they suspended operations. funding the cleanup, they stopped short of covering more than $3 billion in debt. toll brothers that is starting to pay off. the dealsid 22% of this year were made by people 35 years or younger. toll brothers claims it is not focused on the ultra luxury market claiming instead it liars -- will promote they have not touched. 99 new communities next year. that is your business flash update. joe: chipotle is still struggling to recover from the e. coli out rake. we will show you how this is hurting company sales. this is bloomberg. ♪ scarlet: chipotle is the biggest loser in the s&p 500 today losing as much as a .5% after the company said it is now a nervous about meeting its way 17 forecast. what we have here is same-store comparable sales in the white ours. you can see it has been pretty negative in the past four quarters. shows inventory turnover. a rise in the turnover could imply sales. what we see here is a pattern from 2012 22014. you see the inventory has a peak in the first quarter. has justee inventory been climbing while same-store sales have been negative. inventory has been shooting up. if falling demand shows up in same-store sales. they ares remarkable talking about the stores operating as well as they have in. a slower than expected recovery from the outbreak. good news.s positive surprises are all over the world. here is a messy chart with a bunch of line that even if you squint, you cannot tell what is going on. each one of the charts is one of the city's economic industries for a region. china manufacturing. see, theyng thing to are always oscillating. they take into account actual data. every one of these up -- is above zero lines. this is a 10 year chart. it is incredibly rare. here is a quick moment in 2012 when it happened. in 2003.one back one answer is data everywhere all around the world is coming in better than expected. scarlet: it is interesting that it does not feel that way. -- there is more than economics. less than performance to go before the close. this is bloomberg. ♪ ♪ >> we are moments away from the closing bell. "what'd you miss?" another day, another record high for the doubt it -- dow jones industrial average. [closing bell] scarlett: pushing the market of fresh eyes. i'm scarlet fu. joe: and i'm joe weisenthal. want to welcome the viewers tuning in live on twitter. you can tune in every day on twitter from 4 p.m. to 5 p.m. eastern. scarlet: the tao, climbing to a record high yet again. not quited nasdaq, there. it has been a slow-moving rally today. i don't know if you can qualify it as a rally. it is down less than -- i should say it's of less than 2%, 1%. joe: that would be huge. scarlet: having said that, volume was off, so it feels slower, doesn't it question mark joe: pretty much. scarlet: looking at the different sectors leading the advance, financials continue to blaze ahead. if you look at the etf the tracks financials, that has certainly been the best gainer. 15% since the election. goldman sachs and jpmorgan leading the dow higher. jpmorgan -- jamie dimon saying that they will reduce profit by as much hundred million dollars in the fourth quarter, but that it is nothing to sweat over because they are expecting $5 million in profit for the quarter. i included going in there. in there. donald trump singled them out, tsonga the latest air force one order should be canceled because of ridiculous cost. knowing ended higher by eight cents. another big down over was verizon, selling its cloud service business. centers being a company in california. this should help to replenish their cash, they spent $4.5 billion to buy parts of yahoo!. joe: let's look at the bond market -- market. starting with the two-year and 10 year. very little change going on in the yields. basically nothing were talking about. continueields in italy to go down. there is the intraday look. i want to go into the terminal and look at the italian german tenure spread. we are back to where we were a ofth ago, basically the time the ection. the entire referendum issue for blip on this.n a we are back to where we were, basically, at the time of a pretty remarkable turnaround and come back for italy on those government bond spreads. absolutely. in terms of currencies, what is happening with the dollar it is mostly higher. overall higher effect. keep an eye on europe for the ecb meeting. tumbling to a 20 month low after the italian referendum. it quickly rebounded in the rally on the day today. today, up slightly, holding near a three-week high. in other changing currencies, the pound is trading at a three versus the dollar. the u.k. top court heard a second day of arguments on the decisionocess, but the is likely days away. the pound, now down, half of 1%. the us trillion dollars declined just ever so much. the reserve bank of australia kept interest rates unchanged. the governor of the rba said that slow ending year-end growth is likely to happen. lavrov quickly a commodities. oil, finally snapped its big winning streak. down 2%. just below $51 per barrel. kind of like what scarlet was saying earlier, where it didn't feel like a ton was happening in the markets. today felt like a bit of a breather on the commodities market. scarlet: a bit of a breather across the asset classes. nowant to take a deep dive into the bloomberg. you can find our charts using the following function at the bottom of the screen. european stock seven pretty much stuck in a range since the start of the second quarter, but below the surface the razor-sharp sector rotation. what you see here on the blue line is the stoxx 600, the book -- the broad measure of european stocks. the white line is a cyclical defense. as it goes up, cyclicals outperform defenses. it really kicked into high gear in august. when bond yields really started rising. you can see, at the time, the stoxx 600 started rising. one thing pricing into that surge is deutsche bank and the global gp of more than 4%, rising another three points to 56. they say that it will save lives to help the sectors recover from their plunge. if you look at how the sectors have turned out -- joe: i love this chart. scarlet: this is go on the bloomberg. you have bond proxies on that lower left hand quadrant over there in the lagging quadrant. they have been doing badly because of course there bond proxies have been prized for their defense features and dividend payouts. investors have not been buying goes. they have been looking for cyclical stocks. they say that anyone who has not been buying the cyclicals probably missed their opportunity by this point. joe: iowa's say that looks like something that would be in a college dorm room hanging up, that chart. it really does show just how much people hammered those fond proxies and raced back into those cyclical stocks. thelet: by the way, that in corner is financials that have been going up the charts. joe: absolutely. let's talk a little bit more about italy. i want to look more at the italian 10 year bond yield and take a much bigger look at what's going on. if we go into the bloomberg, this goes back to last five years, the italian 10 year yield. there is this concern that we have at the end on the far right side of the chart that's pretty minor in the big context. it's important to remember what the context was five years ago late in 2011, that was the peak of the berlusconi prices, people saying that the ecb kind of forced and out, arguably, by letting the bond yields run to a political switch, putting in the inetaker government, losing 2013, but the idea is that the ecb is not just seen as a buyer for the qe program, but is a credit backstop. as long as italy essentially stays within his program, they are offering an implicit backstop. the italian bond is much more of a rate play than a credit play. political chaos? no big deal. joe: until he goes off the rails, it will still be pretty narrow. scarlet: great perspective. all right, "what'd you miss?" investors placing bets on what's going to impact the economy since the trump election. stephen nation, the government to sell long dated bonds to cushion the effect of rising interest rates. spoke with bill gross, janus capital fund manager, about what he thinks about potential ultralong bonds in the u.s.. here's what he said. bill: it was a better idea 40 basis points ago, but those are short-term considerations. to the extent that the country tries to match its liabilities, the people with bonds, with thets, at the end of longevity for the country, in the united states that is a 1500, 200 centuries, along proposition, all the better. because it locks in that low rate of financing and gives investors, perhaps a choice for a higher-yielding treasury. to a certain extent it allows investors to move out on a yield if they think that interest rates are in moving up very much. i, myself, with the 50 or hundred year treasury, offered an extreme reward in terms of a higher yield. we will have to see for the next six months, right? whatet: can you quantify you mean by extreme higher yield? bill: what's the markup in terms of the tens, the 30's? probably something like 80 basis points. what is the market between the 30, a 50, and a hundred? we get some title of idea in terms of the foreign markets. i would say that there should be at least a 40 to 50 basis point premium on the issue. andied through the duration 50 years or hundred years, a significantly higher proportion relative to a 10 or even a 30. an investor would have to because this and therefore demand maturity extension. a lot of people point out that there are a lot of obstacles to contend with, if it is feasible to sell the debt in the treasury option and they worry about the liquidity and challenges that might be there. what do you think? bill: liquidity in which part? >> the challenges and selling the treasuries, fixed or 100 years. bill: with tips, when they were first introduced, there were liquidity issues for a number of years and there still are. you build up a sizable issue in but inger term maturity, think that you wouldn't have liquidity problems in the first several years and would therefore demand a liquidity premium relative to the curve. know, i think that buyers would have to analyze that and realize that they would withsarily be the most securities, like a two, a five, a seven or 10. since the election, janice unconstrained has avoided losses compared to other fixed income funds. do -- give me to key reasons for that. bill: because of duration, it hasn't been a part of the portfolio. we have taken the view here on the beach in terms of the unconstrained fund that there are substantial negatives in terms of the trump election for the bond market area that being higher fiscal deficits and potentially higher inflation. those are always enemies. to the extent of the started off at very low levels before the election, you know, it was certainly prudent after the , trump was elected toected get out of bonds and prefer other carried types of terrains, which were more equity oriented as opposed to bond oriented. that was bill gross, janus capital fund joe: manager, joining us, forney up. joe:coming up, pimco agrees to settle allegations that they didn't properly value etf securities. we will discuss bond market pricing and its market applications, next. and you are taking a look at live pictures of president obama delivering remarks at an air force base in tampa, florida. he is currently thanking service members and discussing his administration's approach to counterterrorism. in the last hour the airport said they budgeted $2.7 million through 2021 for air force one r&d. this following the donald trump comment or tweet that the order should be canceled. obama'sget president remarks on the bloomberg at live go. back ont obama: pushing the terrorist message, on social media motivating people to kill. a recent study shows -- ♪ to first word news this afternoon. president-elect donald trump is aiming at building a seawall to protect his golf resort in ireland. the plan was submitted on behalf of trump in may. they bought the 400 acre property in 2014 after a u.s. hedge fund placed it into her seizure -- receivership. he has invited check leaders, many of whom supported hillary clinton, to a discussion in new york next week. the co-ceo will attend the talks themeeting is scheduled for 14th and will include peter thiel, the facebook board member at trump tower earlier today. the italian prime minister, matteo renzi, confirming his decision to resign his post at the meeting of the democratic party tomorrow according to an italian news agency citing lawmakers who also say that he will not push for snap elections . he offered to resign after coaching defeat over the weekend. the italian president has asked to remain until the budget is improved. day, hours 24 hours a by 2600 journalists and analysts in 120 countries. this is bloomberg. joe? joe: thanks, nina. "what'd you miss?"? inconsistent pricing, how did they boost to this and what does it say about the market? ,ith us now is chris white talking about a recent incident involving pimco where they paid to the sec for misleading investors about etf performance. in financial taint -- terms, that's a very small, not huge. what happened with pimco recently and what does it say about the broader bond market? chris: if you look at the details of the case brought by the sec, it was mullah -- more of a willful attempt to exploit the retail pricing and the bond market and institutional pricing across all bond markets. not just the nonagency mortgage-backed market where they are creating this etf. we see massive discrepancies between obama and the retail sizes -- the bonds in retail sizes and those where we would consider anything that would be notional or higher. was the sec was claiming basically exploiting the differences between those markets and then boosting the value of their etf. scarlet: why does that happen? chris: outside of anytime there is arbitrage in the market? scarlet: between retail and institutional. chris: the story is that smaller pieces of bonds are not just attractive to the market and therefore are at a discount. what we may be dealing with is a lack of integrity making it so that uninformed retail investors don't know that it's trading at a discount. it's not like there's a way to measure the execution quality. what you're seeing is basically the people that don't know getting worse prices and the people that do are getting prices more akin to what the actual value is of the security. talking about the stock, talking about a share of microsoft, it's pretty easy to at any given moment. but it's not the same in the bond market? chris: yeah, joe, not only do you have that in the stock market, you have rules in which retail orders must be executed at the best available. the national market system, these are rules that have been put in place to protect the retail investor. not only are there not rules in the bond retail market, we also don't have visible pricing. markets a saying in the -- if there is nobody, there is number. if there is no information on what the best offer was, there's no way to prove whether or not a fair price.got scarlet: is there moved to move towards more transparency to be able to make it so that people can see pricing much more clearly and maybe use the equity market as a model? chris: there was an excellent abouton this from s fsc transaction causing trade through's on principles in the bond market and he estimated that $700 million a year was being wasted by retail investors just getting in and out of the bond market at prices that were not the best. so, if that didn't start the sort of gears moving towards improving the quality for retail investors, i don't know what will. what i do know is that there are a couple of rules happening right now, in particular with finn rough, where they are starting to collect bond pricing data from the electronic pricing platforms, telegraphing what's coming up next. if you look at the symptoms in the equity market, it is basically taking all of the feeds from the exchanges so that you know the best is on one exchange and this is on another, but the overall film market .alue has been determined, it may be coming to the bond market, but we don't know when. joe: does it have to be some sort of entity in government or a regulatory body that pushes it? it's hard to see who really would push for this in the private sector to reduce all of these fees for retail. chris: i think that clearly one of the issues that is happening is just the growing size of debt markets in general. we can't keep operating in a marketplace where you don't know what the best offer is at any given time or you are not able to value securities. it was around last year at this time when we had issues that had to do with bond pricing, talking about 3rd avenue, asset capital, these are issues that were basically around the misunderstanding of the value of the portfolios being represented to customers. i do think we are going to see more and more incidents because clearly the bond market is getting bigger. people want to trade the market and they just have to see the market to trade it. joe: christopher white, always great to have you on. thanks for joining us to explain the complicated, you stop it. -- topic. scarlet: next week i do look at the ramifications of trump on the financial world. this is bloomberg. ♪ joe: "what'd you miss?" there have been a number of threats to globalization is here, from brexit to donald trump. what are the dynamics of driving the potential or theoretical de-globalization? >> i wrote a piece, recently, taking a look at financial globalization on a big scale. thatong and short of it is the rates of expansion across the border for financial assets is slowing down, but it is probably premature to say that financial room is asian business -- financial globalization is going into rivers. there are a lot of moving parts in the equation, but financial globalization is probably not staging a retreat. it is just expanding at a slower pace. joe: all right, how do we measure financial globalization? what are the key yardsticks? sid: there are a couple of metrics. one is the favored metric i a lot of analysts, -- favored by a lot of analysts. that looks at the stock of cross-border financial claims and liabilities. it is really looking at the quantum or international debt securities that are outstanding in the world. , international debt securities, debt that is either issued cross-border or issued in a foreign currency, it has expanded quite significantly since the financial crisis. the rate ofame time growth has reduced somewhat in the last two years. there's also another data point, the imf proxy for financial globalization, which is cross-border holdings of debt and equity assets, it really is a consolidated overview of how much countries are holding of debt and equity in other countries. ,hat paints a similar picture saying that it is an increase since the global financial crisis, notably, but the increase in recent years has slowed down somewhat. joe: what are the key levers they go into the pace of financial globalization? is it just a reflection of world trade and economic growth? or are there other aspects like regulation that afflict -- affect it? sid: it's a pretty complicated question. but there are a couple of different forces going on at the same time. global trade as a proportion of global output has actually staged a retreat in the last couple of years. basis, on that cross-border bank credit has reduced. that means that financial globalization has actually decreased on that measure. but at the same time, bond markets have increased rapidly. there is probably not a better sign for that then emerging-market bond issuance. become more have globalized, they have increased their demands for cross-border credit, but they have gone to the bond market rather than the bank market and banks really are not the driver of financial globalization anymore. scarlet: that -- joe: that was bloomberg's sid verma. one of the other things we talked about was the question of whether -- he knows the trade may be globalizing and by some measures it is already shrinking , who knows, trump is talking about tariffs, he has tweeted about it. the u.k. has diminished its role. the question is -- can the financial industry continue to become more integrated? it's hard to imagine that they could be separated for very long. joe: do politicians -- scarlet: do politicians take aim at that, though? joe: i don't know, but populists have always gone after banks, historically, and financial , so it's not difficult to imagine that they wouldn't mind knocking down financial institutions to some extent. scarlet: certainly something to watch out for. coming up next, we will talk more about trade. president-elect trump's trade agenda continues to be an issue for concern in countries like china and mexico. this is bloomberg. ♪ ♪ nina: i mean no more and as. melendez.a president-elect donald trump, lobby ofat, in the trump tower, they agreed to invest. trump: he just agreed to invest $50 billion in the united states and 50,000 $50 billion in the united states and 50,000 jobs. he is one of the great men of industry, so i just want to thank you. >> thank you. >> as the founder and chief executive of softbank, he controls u.s. telecom and sprint. asres after noon were made t-mobile was long mentioned as a possible partner for sprint. jason miller did not provide any proof of the stocks that were sold, but miller was responding to a question him reporters about whether trump had stock in boeing after trump said the government should cancel its multibillion-dollar order for the new air force one. he confirmed to the associated press that he was referring to all trump stocks. more than 75% of new jersey voters disapprove of their governor, chris christie. only 19% approve. the lowest approval rating for any governor in any state in the 20 years of the survey. meanwhile, the farley dickinson university poll finds 71% of voters in the state think that kristi should have been a defendant in the bridge gate trial. news, 24 hours per day, powered by 2600 journalists and analysts in more than 120 countries. this is bloomberg. scarlet? scarlet: thank you so much. the dow, climbing to -- maybe not climbing, rising to a record high. the nasdaq, also finishing higher. financials were clearly the winner once again on the postelection rally, rising bond yields and the prospect of deregulation. there's very little to stop them. joe: they just keep going up. another day in the green for equities. "what'd you miss?" mexico overtaking canada as the number two exporter of goods to the u.s.. we've got a chart here, or hundred $25 billion in the first few months of the year. this comes as president-elect terra trump pledges to trade agreements, protect domestic jobs, and put an end to what he calls unfair deals. joining us now is international trade lawyer, scott lindsay succumb scott lynn --linci -- linci come. whether it's good or bad, is it a policy that could theoretically be workable? scott: everything is, theoretically, workable in the sense that you could pass it along -- pass a law and do it. however, there are pretty significant legal, practical, and economic hurdles to any kind of outsourcing of tax or tariff on that sort. very likely you would get pushback from the u.s. congress. we have already seen house gop leadership saying that they do not some or those types of 35% tariffs. that, you have the practical aspect of how the hack the government would monitor this type of investment activity . and, of course, you would see corporations immediately getting their lawyers and accountants together to try to find ways to circumvent the new rules. joe: i was wondering, could you just theoretically set up another company and create some sort of shell ownership and redefine it without having it just be -- you know, you moving or factory down to mexico? scott: that's exactly the practical problem. five years ago the obama administration was looking at a similar type of outsourcing tax plan. they wanted to remove tax breaks for companies that supposedly shipped jobs overseas and one of the biggest criticisms was that it was theoretically unworkable from a practical perspective. because that's exactly what you see happening. you see corporations getting together with lawyers and accountants and finding ways to circumvent these rules by, like you said, either setting up shell corporations and foreign countries or moving, separating theirinvestments from manufacturing, domestic manufacturing decisions. just not workable. it doesn't take into account how complex the current global supply chain is and how people set up different companies. having said that, which other of trump's trade proposals are not workable, feasible, or practical? scott: well, we could start with the whole idea of withdrawing from nafta. withdrawing from the world trade organization. these types of threats that he has made with respect to if he doesn't get his way on renegotiating either the wto agreements, nafta, or any of the other fta. the practical implications of that are enormous. you just mentioned bilateral trade between mexico, canada, and the united states. we are talking about hundreds of billions of dollars in annual goods and services. plus these complex supply chains that u.s. manufacturers depend on. those are u.s. jobs dependent on either exports are imports. the idea that you would simply rip up that agreement, from a practical and economic perspective defies reality. and then of course there is the legal aspect. the idea that congress would sit around and let the president unilaterally withdraw the united states from trade agreements that have been a pillar of not just the u.s. economy, but the global economy for almost three decades, it kind of strains credibility. joe: business environment is more just a set of laws about what you can and cannot do. there are also cultural elements. is it possible the trump, with his making big shows about going or attackinganies, the ones that leave very aggressively on twitter, we'll just change the mindset of corporate boards? whereas they will be less inclined to do this, even if there is no actual -- nothing legally enjoining them from doing so? scott: it's too early to say that what he has done so far will have that kind of effect, but there's no doubt that if he keeps it up, you are going to see corporations, multinational corporations altering their business strategies and investment decisions. joe, you mentioned that they might be more hesitant to engage in some sort of off shoring program, but the other issue is they might be more hesitant to invest in the united states at all. i mean, if you are a foreign multinational and you are looking to, perhaps, moved to the united states because of the tax reform we are undertaking, you might think again if you are going to have your relatively small business decisions being scrutinized by the more -- most powerful man on the planet. scarlet: very good point. you also point out all the things that work here. candidate trump pushing the idea that the u.s. is some sort of free trade paradise. that manufacturing is dying. but there's evidence that that is not necessarily the case. let's talk about u.s. manufacturing and how it's not dying. what is the case for why and how it is actually thriving? scott: you need to separate between manufacturing jobs and every other metric of american manufacturing performance. on the jobs scale we have been losing american manufacturing jobs since about 1979. that's an atonal number. as the chair of the workforce we have been losing manufacturing jobs since the 1940's. at the same time, since the late 1970's u.s. manufacturing output in sheer numbers has gone up and up. it set a record last year we're talking about 2 trillion in value added. 6 trillion in total output. the united states remains the world's second-largest manufacturer, with 17% of global output in 2015. we are also the second largest .xporter in the world so, you know, the idea that the u.s. manufacturing sector has been crushed by globalization or any other economic force just simply defies reality. . so, you know, the idea thatcertt we could do better. and regulatory reform, there are things that weld help, but the idea that have seen a rampant deindustrialization in the united states just isn't true. joe: have people in the coastal who read stories about this gigantic commiserated central part of the country but never go back there except the holidays, do they have a skewed perspective about how awful everything is? scott: there is definitely a regional aspect of that and you are right. i would invite those same coastal journalists to maybe come down to the carolinas some time take a trip from, say, raleigh, north carolina, to atlanta, georgia, and see all of the gleaming manufacturing enterprises lining the interstate. that, there are a lot of manufacturing enterprises in the rust belt area that are doing well themselves and depend on imports as a part of their manufacturing. right, scott s lincicome, great stuff. coming up, president-elect donald trump taking on boeing, saying the costs are out of control. this is bloomberg. ♪ scarlet:" , saying that the newest order -- boeing --7" "what'd you miss?" president-elect trump saying that boeing's order for the government should be canceled. trump: we want them to make a lot of money, but not that much money scarlet:. -- money. scarlet: the spokesman for boeing said that they looked forward to working with the u.s. air force, allowing them to deliver the best plane for the president for the best value, adding that they are currently under contract for $170 million to deliver the capabilities to serve the unique requirements of the potus. joining us now with more is alex wayne. my first question to you is -- what got this started? why is donald trump tweeting about boeing when a couple of hours earlier he was talking about something else? why is he focusing on them and as air force one project? >> we are not entirely sure, but i will note that in the hours before he issued his tweet, the washington post published a story reporting that boeing and lockheed are planning to move manufacturing of older model fighter jets to mindy. also, the chicago tribune published an interview with the boeing ceo in which he was mildly critical of trump's trade policies, saying that if we shut with asiarade deals in particular that boeing's business and u.s. business will suffer. whatwe don't really know happened, but it is possible that trump was on his iphone or whatever, whatever he's using these days, clicked on an article and saw a ceo being critical of him and then fired off a tweet. we don't know for sure that that happened, but that's a plausible timeline of how this came about? any reports't have on him receiving a briefing on pentagon for german and air force one came up and he decided it would be an easy target, we don't have reporting like that. i don't have a better theory for you. that's a reasonable. in terms of the timeline. what does this say about how the president-elect is going to be targeting companies, shaming companies, picking winners or losers in the economy? that first, it's notable when president barack obama took office, he did some similar. he killed a project for a presidential helicopter that he thought was getting out of control. there is a precedent for president to come into office and immediately whack one of their trappings. scarlet: i didn't know that. alex: he's following in obama's footsteps a little bit. but it certainly does come as one more plank in his apparent strategy of negotiating by social media with american companies to get them to do business on his terms. scarlet: you are not -- joe: you're not going be -- to be surprised that he has tweeted about this a lot. he said that for beauty and flight, he would take the boeing 757 over the 787 any day. that is one of his numerous tweets about boeing. he doesn't like the batteries in the dreamliner, all of the stuff that makes him uncomfortable. is it possible that he would prefer to just keep flying his plane? alex: he said that his plane is better than air force one. he -- unfortunately, what doesn't have is the secure communications equipment that the president wires when traveling. all of the believed classified this fence systems on board air force one. have the space't for the presidential staff were secret service agents who have to travel with the president. or the press, i will go ahead and note. joe: so that's a nonstarter, hint -- in continuing to fly his plane? alex: as much as he might want to. scarlet: although i don't think you would be bothered by the fact that there is no room for the press. joe: probably not. [laughter] alex: sadly, you might be right. scarlet: at one point he had -- he was an owner of shares of boeing as well? right. he apparently sold all of his stocks in june. before that he fired -- filed a disclosure in may saying that he had stock in boeing, but it's gone now. we can't can -- accuse them of a conflict of interest here, even if he did still on that stock, it would be an anti-conflict. joe: the exact opposite. non-boeing related news, what is the latest on the cabinet search? are there any new developments we should be appraised of? alex: well, he's going to james mattis, the mad dog, as his defense secretary tonight in north carolina. we don't have a knitting new today, though, on any of the open spots. secretary of state, i haven't heard a pick for secretary of labor, some of the other lower profile decisions. scarlet: and secretary of state, we didn't see jon huntsman, for instance, in trump tower, or any of the other new names floated as possible candidates? no, today was mostly business meetings. kind of. you saw headlines earlier about the softbank ceo coming up to trump tower. they apparently made a deal for softbank to make considerable investments in the u.s.. i don't joe: know if they were already planning to or -- that's a question i was going to ask. do people know, is alex: it new alex: money or is that just a repackaging of an existing idea? my suspicion is repackaging. softbank had already said that they were planning to raise a very large investment product. the figure that i saw was $100 billion. so, now they are saying that $50 billion will go into the u.s.. honestly, you know, i think that $50 billion of it at least would have gone to the u.s. anyway. this is the best place in the world to invest right now. i don't think that they are going to pour more than half of their fund into developing markets these days. scarlett: all right, alex, thank you so much. joe: up next, chancellor angela merkel to lead her party. we examine the obstacles in front of her in 2017. scarlet: a company that is gaining in late training -- late trading, dave and buster's, up and trading. same-store sales, beating earnings and revenue estimates for the third quarter. this is bloomberg. ♪ -- joe: luke ellis saying that markets are looking for what's happening next after the brexit vote. earlier this year, he did not anticipate those events coming in 2016. in an exclusive interview today, he expressed some of his misjudgments for the year. >> i probably would have had the wrong positions at the beginning of the year, if you had given me those three things. one has to recognize that markets are looking for what happens next. they are looking forward quite aggressively at this point. >> what does that mean, putting together strategies for next year? yes, the many people didn't predict, but the moves in the markets were the most surprising thing, holding up in equities, after the brexit referendum. the moves we don't have to talk about after the trump election, what does that mean for you in 2017 for man group? there are two big effects. first, people have forgotten those moves in the markets. it has been a long time since we had things that were significant moves. if you look at the u.k. equity market, it's all about fx. we are still in the state of guessing about what trump is actually going to do. there is a lot of talk on the campaign and different talk over the course of fixing the cabinet . it will be january when we start to get a sense of what is real, the initial ideas, the things he's focusing on. i think that you won't really know who it's going to happen to the markets until you have some sense of an agenda. but sitting here today, i think that the best estimate is that the last 5, 6 years have been characterized by complete consensus between governments and central banks within countries and across the globe. they have basically been following the same playbook, the same set of policies. brexit,ure first of certainly some of the other moves going on in europe, suggesting that we might see a situation where the consensus breaks down. consensus breaking down will be good for some markets and bad for other markets. breakdown in the high correlations we have had an something that has required an interesting active management environment or a long time where they have been of work. joe: that was an exclusive interview with the man's ceo, luke alice. -- man group's ceo, luke ellis scarlet:. scarlet:-- ellis. scarlet: the portfolio in an interview was called an area that rio intends to grow. long street capital plans on making direct loans the u.s. companies to invest in income producing real estate next year. that is according to a ceo who says that the firm is also preparing what it calls a global credit fund. allocating money to the global street open ended investment vehicles. alaska and has secured antitrust approval in a $2.6 billion cash deal. the takeover gives them more access to the lucrative cost contra market. if it closes, the combined carrier would become the six largest based on passenger traffic. and that is the bloomberg business flash. joe: coming up, what you need to know for tomorrow's trading day. this is bloomberg. ♪ scarlet: fx reserves, you will want to pay attention to those. the bank of canada rate decision is tomorrow. you will want to pay attention to that. expectations are for no change. scarlet: half of 1% right now. don't miss this, corporate earnings reporting results after the close. we will be keeping an i on that for you. that does it for "what'd you miss?" thank you for watching, everyone. joe: have a great evening. this is bloomberg. ♪ >> you are watching the "bloomberg technologies." let us start with your first word news. in your name added for the expanding list of candidates for secretary of state. the exxon president is set to meet with donald trump. other names being floated include jon huntsman, mitt romney, rudy giuliani, and david petraeus. the president elect will be in fayetteville, north carolina later today and use the rally to introduce his choice for defense secretary, james mattis. mexico could seem top canada as the second-biggest exporter of goods to the united states. officials say shipments from mexico total $225 billion ahead of canada's 230 billion. it would be the first time the u.s. bought more imports from its neighbor from the south. 36 people died in a warehouse fire. the owner's apologizing. he says he's incredibly sorry and describes

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