Report by the Transportation DepartmentInspector General says the faa over a twoyear 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 ministers 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 lets 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 netflixs 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. Bigticket 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 wouldve 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 socalled 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 shortterm. 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 peoples 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 opecs 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. Im 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 nonopec 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 shortterm 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 samestore 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 samestore sales have been negative. Inventory has been shooting up. If falling demand shows up in samestore 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 citys 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. Whatd you miss . Another day, another record high for the doubt it Dow Jones Industrial average. [closing bell] scarlett pushing the market of fresh eyes. Im scarlet fu. Joe and im 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 slowmoving rally today. I dont know if you can qualify it as a rally. It is down less than i should say its of less than 2 , 1 . Joe that would be huge. Scarlet having said that, volume was off, so it feels slower, doesnt 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 lets look at the bond market market. Starting with the twoyear 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 threeweek 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 yearend 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 didnt 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 razorsharp 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 iowas 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. Lets 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 whats 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 thats pretty minor in the big context. Its 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, whatd you miss . Investors placing bets on whats 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. Heres what he said. Bill it was a better idea 40 basis points ago, but those are shortterm considerations. To the extent that the country tries to match its