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Franciscan PEOPLE. SHE HAD A POLITICAL DECISION TO MAKE. THAT IS TOAUTHORIZE. THIS AUTHORITY TAKEN WHEN SHE STARTED OFFICE. THE DECISION WAS TOARBITRATE ON ANISSUETHAT ALREADY HASBEEN DECIDED BY THE COURTS. THEBANKS OFFENSES HAVE NEVER BEENDENIED BY ACOURT WHEN THE OPERATION HAS STARTED. THESUPREME COURT DIDREFORM A DECISION BY THEAPPELLATE COURT. SHE POLITICALLYWAS CONFRONTED WITH THE DECISIONTHAT COULD BE CONSIDERED SOUND AT THE TIME. >>HER CHIEFOFSTAFF,WE KNOW THATTHEY WERE PUBLICLY SUPPORTING. IS THIS POLITICAL? >> ITWOULD BE DIFFICULT TO SAY IT IS NOT POLITICAL. ITISSTRANGE THAT ALL OF THIS HAPPENEDASHE STEPPED DOWN FROM HIS PRESIDENCY. IDOTHINK THERE IS A STRONG POLITICAL. >> THANK YOU SO MUCH. HEWAS A LAWYER IN PARIS. THE TRIAL KEEPS GOING ON. >> THANK YOU FOR A MUCH. MARK:IT'S TIME FOR ABERG BUSINESS FLASH. IT'S LOOK AT SOME OF THEBIGGEST BUSINESS STORIES. THEY WANT TO AVOID AGOVERNMENT BAILOUT FORTHE CAPITALRAISING. THEYWILL STEP UP EFFORTS TO INVESTORS FOR EQUITYSWAPS. THEY'VE BEENTRYING TO CLEAN UP THE BALANCE SHEET BY DISPOSING OF$30BILLION IN BAD LOANS. THEY WILL SELL AMAJORITYSTAKE. THEVALUE IS $2 BILLION. ALMOSTA YEAR AGO, THE U.S. GOVERNMENTLOST A TRANSACTION WITH A CHINESEIREFORNATIONAL SECURITY REASONS. THEY WILL SELLALMOST $17 BILLION TOIRAN. IT'STHE FIRST DEAL OF ITSKIND SINCE 1979. THEYMAY HAVE TOSELL THE DEAL TOPRESIDENT-ELECT DONALD TRUMP. DONALD TRUMP AS OPPOSED TO THE NUCLEAR DEAL WITH IRAN. THIS CLEARS THE WAY FOR THE BOEING. THAT IS THE LATESTBLOOMBERG BUSINESS FLASH. BATTLE OF THE CHARTS IS NEXT. WE BATTLE OVER THEYIELD CURVE. THIS IS BLOOMBERG. ♪ JULIE:IT IS TIME FOR OURGLOBAL BATTLE OF THE CHARTS. WE LOOK AT SOME OF THE MOST TELLING CHARTS OF THE DAY. YOU CAN ASKTHAT -- ASSESS-- ACCESS THEM ON THE BLOOMBERG. TAYLOR RIGGS IS RIGHT HERE BESIDES ME. TAYLOR: WE HAVE BEEN TALKING ABOUT THE 10 YEAR YIELD AND HITTINGTHE 2.5 RANGE. THAT IS ABIGDEAL. I WILLFIELD-- WANT TO TAKE A LOOK AT THE YIELDCURVE IN GENERAL. AYEAR AGO, WHERE WEWERE WHEN THEFED RAISED RATES FOR THE FIRSTTIME SINCE THE FINANCIAL CRISIS. THENWE GO DOWN TO THEBLUE, WHICH IS THE DAY AFTER ELECTION DAY. WEPOP UP. WE'REMUCH STEEPERNOWON THE WHITE WINE TODAY. THE 30 YEARIS APPROACHING THE 320MARK. THE10YEARISAPPROACHING THAT 2.5 MARK. ALOT OF PEOPLE SAYTHE 10 YEAR AT3%ISMORE ELASTIC. WE ARE SEEKING OVER 200BASIS POINTSTO JULIE:WHAT IF HEGOT? MARK:AND EASES PERMEATING IN CHINESE MARKETS. WEARE TALKING ABOUT THE FED IN ITALY. DOKEEP ONE EYE ON CHINA. THIS WATCHED INTEREST REDUCTION OFCIRCUIT BREAKERS. IT REALLYRATTLED DOUBLE MARKETS. IT REDUCED VOLATILITY. HAVEA LOOK AT WHAT HAPPENED SINCE THEN. HIMTODAY ALONE, WE HAVE SEEN THESHANGHAI INDEX, THE WHITE LINE GO UP2.5% THE BLUE LINE IS ONE DOLLAR WHICHISIN AT THE LOWEST LEVEL. ONEYEAR SOVEREIGNYIELD RAISED BY BUSINESS POINTS. THAT ISTHE PURPLE LINE. THEQUESTION IS, WHAT IS THE REASON FORTHIS SYNCHRONIZED SELLOFF? YOU'VEGOT DONALD TRUMP QUESTIONING OFTHE ONE CHINA POLICY. YOU'VE GOT THE CRACK DOWNON INVESTMENTS. YOUHAVE CONCERNEDTHAT UPDATE PRICES ARE ABOUT TO FALL. THEBIGFEAR ISMAKING A RETURN TO WHAT HAPPENSIN JANUARY. THE UNPREDICTABLE NATUREOF DONALD TRUMP ON TRADE POLICY ONLY ADDS TO THE UNCERTAIN. IS THE NATURISTLARGEST BROKERAGE. IT SAID IT WAS MORE WORRIED ABOUT THE MONEY MARKETNOW THAN DURINGTHE2013CRUNCHGIVING ACCELERATINGFUND FLOWS. AS WE APPROACH THE ENDOF 2000 EXCHANGE, ARE WE GOING TO SEE THE BEGINNING OF 2017. UNEASE IS VERY MUCH PERMEATING IN CHINA'S FINANCIAL MARKETS. SEE THE BEGINNINGI THINK-- YES IT . MARKSCHART SCARES ME MORE. I'M GOING TO HAVE TO GIVE IT TO MARK TODAY. CHINAIS A VERY IMPORTANT ISSUE AT,ESPECIALLY IN THIS POLITICAL ENVIRONMENT. THANKS TO YOU BOTH. TAYLOR,COMEBACK BACK AND GIVE US ANOTHER ONEIN-- ONE. MARK:HE IS GIVING THIS UPDATE ONTHEBUDGET FOR NEXT YEAR. HE SAYS THE GOVERNMENT HASMADE NODECISIONSON THE CUSTOMS UNIONPOST BREXIT. THEY AREEXPRESSED--EXPRESSING CONCERN. THAT IS THE END OFUS TODAY. IT WE WILL SEEYOU TOMORROW. >> IT IS NOON IN NEW YORK. I AM JULIE HYMAN. DAVID: WELCOME TO BLOOMBERG MARKETS. FROM BLOOMBERG'S WORLD HEADQUARTERS, WE'RECOVERING STORIES FROM NEWYORK TO THE UNIT. EXXON MOBILCHAIRMANREX TILLOTSON IS THE FRONT WANTED TO BE SECRETARY OF STATE. WELOOK AT WHAT THIS COULD MEAN FOR OIL AND THE ENERGY MARKET AREA NON-OPEC MEMBERSAYTHEY'RE READY TO DELIVER PRODUCTION CUTS. WE HEARFROMDAVE RUBENSTEIN WHO WEIGHSIN ON THE STATE OF EUROPE AND THE MOSTRECENTDEPLOYMENT BY DONALD TRUMP. ABIGAIL: WE ARE LOOKING ATMIXED TRADINGHERE. WEHAVE THE DOW SLIGHTLY HIGHER WHICH PUTS THE DOW ON PACE FOR ANOTHER RECORD CLOSE. THE S&P IS TRADING MODERATELY LOWER. AT WHICH TIME, DID CARVE OUT ANOTHER RECORD HIGH. THE NASDAQ IS THEBIGLAGGARD TODAY. THESEDIVERGENCEAREHAVING TO DO WITH SECTOR PERFORMANCE. WE TAKE A LOOK ATTHE S&P. WE SEE THETECH IS A BIG DRAG ON THE DAY. CONSUMER DISCRETIONARY IS ANOTHER. ENERGY IS REALLY HELPING OUT. MAYBE IF OIL CONTINUES THESE GAINS, IT CAN TURN THE S&P BACK INTO THE GREEN. AS HER WITH REALLYHAPPENING, THE DOWPERFORMANCE, WE HAVE A FEW MOVERS. JOHNSON & JOHNSONIS TRADING NICELY. ON ABULLISH MENTIONIPARENTS, THEYSEE20% UPSIDE ON JOHNSON & JOHNSON. EXXONAND CHEVRON ARE TRADING HIGHER ON THAT OIL STRENGTH. IT'S HIGHER THISTIMEAND IT COULD POWERTHE S&P 500 AND THE DOW. WHAT'S DRAGGING ON THE S&P500, WE ARE LOOKINGAT PHARMACEUTICALS AND APPLE. APPLE IS DOWN AFTER A BIG WEEK LASTWEEKTHEY HAD THEIR BEST WEEKSINCE SEPTEMBER. PHARMACEUTICALS IS DOWN 15% ON PAPER. ON THE NEWS THAT THECEOIS RESIGNING AFTER AN IMPROPER SALES PROBE. SHARES ARE DOWN ANDINVESTORS DO NOT LIKE THAT UNCERTAINTY. JULIE:GETTING BACK TO THE OIL STORY, THEY ARE GOING TO CUTOIL PRODUCTION MORE THAN EXPECTED. THEY ARE COMING AFTERNON-OPEC COMPANIES. IN ABLOOMBERGEXCLUSIVE,OIL COMPANIES ARE ALREADY TAKING MEASURES TO INTRODUCE THE COST. >>IN THE FIRST STAGE OF THE CUTS, YOU WILL BE ABLE TO SEE. WE HAVEALREADY DISCUSSED THIS. COMPANIESARE WELL AWARE OF WHAT THEY HAVE TO DO. THEY ARECONSIDERINGTHESE STEPS. HE UNDERSTANDS THE BENEFITS OF THIS DEAL. THE DEAL IS IN PLACE AND THEY HAVEAGREED TO IT. THEY ARE ALREADY PREPARING FOR THECOSTS WHICH WILLTAKE PLACE STARTINGIN JANUARY. AS WE SPEAK NOW, THEY ARETAKING MEASURES. >> HOW DOES THAT MATERIALIZE? EACHCOMPANY TAKE A PERCENTAGE? >> I WOULD LIKE TO STRESS ONCE AGAIN THAT COMPANIES HAVEAGREED VOLUNTARILY TO THIS. WE ARE AWARE OF THE TERMS. THEY SAID THEY WOULD JOIN IN. THIS ISCONCERNED -- CONFIRMED WITH MYRECENT READING. THIS IS BEEN REACHED BY THE MINISTERS TODAY. WE WILL DO WHAT IS NECESSARY. THEPRODUCTION COSTS WILL BE SPLIT PORTION AT LEAST BETWEEN THEM. WE WOULD ALSOCREATE A PRODUCTIONMONITORINGCOMMITTEE. WE WOULD BEDOING JUST AS THIS APPLIES TOMONITORINGTHEIR COMPLIANCE WITHAGREEMENTS WE REACHED. THE OBJECTIVE HERE WOULDBE A REGULAR BASIS. WE WANT TO HAVE A QUICK SETOF COMMUNICATION. I CANNOT STRESS THIS ENOUGH. THE COMPANY'SARE ON AVOLUNTARY BASIS CORRECTING THEIR PRODUCTIONWITHIN THIS AGREEMENT. >>THEY JUST SOLD $11 BILLION TO THE QATARIS. WHAT ELSE TO YOU SEE THEM BRINGING TO THETABLE THE ON THEY JUSTCASH? >>WE ARE VERY POSITIVE ON THIS DEAL. IT HAS GONE AS PLANNED. ITIS ONE OF THE BIGGESTDEALS IN RUSSIA. AND GLOBALLY OVER THE RECENT TIMES. WE VIEW THIS AS A POSITIVESIGN, BRINGING FOREIGN INVESTMENTINTO RUSSIA. >> WHAT IS A HEALTHY OIL PRICE FOR RUSSIA ANDMARKWHAT YOU TARGETING? CONSIDERINGTHIS DEAL GOT DONE BECAUSE OF THE NON-OPECMEMBERS, WOULD RUSSIA EVER JOINOPEC? >> AS FAR AS PRICES ARE CONCERNED, WETRY TO STAY AWAY FROM FORECASTING PRICES. WHAT I CAN TELL YOU IS THE CURRENTPRICE LEVEL IS FULLY SATISFACTORY TO US. RUSSIA ISNOT A MEMBER OF OPEC AND DOES NOT HAVE LANCE TOJOIN THE CARTEL. RUSSIA IS READY TO ENHANCE THE SIZE OF ITS OPERATION WITHOPEC COUNTRIES. I THINK THEDEAL PLAYS A SOLID FOUNDATION FOR THE FUTURE. JULIE:THAT WAS THERUSSIAN INTERVIEW-- ENERGY MINISTER. LET'S CHECK IN ONNEWS. MARK HAS MORE. MARK: DONALD'S LEADING CHOICE FOR SECRETARY OFSTATEMAY HAVE TROUBLE WINNINGCONFIRMATION WITH HIS TIES TO RUSSIA. SENATORS FROM BOTHPARTIESARE BALKING. HE HAS TIESTO VLADIMIR PUTIN. THEPRESIDENT-ELECTSPOKE ON NBC. >> WE WANT SOMEBODY WHO IS ACCUSTOMED TONEGOTIATING. HE HAS BEEN IN YEMEN AND CHINA AND RUSSIA. IT'SNOT LIKE VLADIMIRPUTIN ARE POUNDINGDOWNVODKA AT LOCAL BARS. MARK: A FEDERALJUDGE IS REJECTING A REQUESTTORECOUNT PAPER BALLOTS IN PENNSYLVANIA. JILL STEIN WAS LOOKING TO RECOUNTGOING-- VOTESIN A FEDERAL JUDGE HALTEDMICHIGAN'S RECOUNT. THEWISCONSIN RECOUNTWILL CONCLUDE TODAY. TWO MEN WHO PROVIDEDMONEY TO KEYSUSPECTIN THE PARIS AND BRUSSELS ATTACKS HAVERECEIVED PRISON SENTENCES IN THE U.K.. HE WAS GIVENA YEARS AND THE OTHERWAS RECEIVING THREE YEARS. THEYPROVIDED MONEY TO THE BOMBING SUSPECT INJULY 2015. IS THEMAN IN THE HAT SEEN ON VIDEOJUST BEFORE THE MARCH BOMBING ATTHE BRUSSELS AIRPORT. HE IS IN CUSTODY IN BELGIUM. GLOBAL NEWS 24 HOURS A DAY POWERED BY MORE THAN 2600 JOURNALISTS AND ANALYSTS IN MORE THAN 120 COUNTRIES, THIS IS BLOOMBERG. I AM MARK CRUMPTON. DAVID:REX TILLOTSON IS THE FRONT RATER TO BE SECRETARY OF STATE. YESTO DECADES OFDEALMAKING WITH RUSSIA. HISPOPULARITY IN MOSCOW IS BEING SEEN AS A LIABILITY. JOINING US NOWIS BLOOMBERG INTELLIGENCE ANALYST. TELL US A BITABOUT THE HISTORY HERE BETWEEN REX TILLERSON AND RUSSIA. HE WASABLE TO PUSH THROUGH A NUMBER OF BIG DEALS. >> IT'S THOSE TIESTHAT ATTRACTEDTHE INCOMING ADMINISTRATION AS A POSSIBLE SELECTION. IT'S A DEEP RELATIONSHIP. IT GOES BACK TOTHE 90'S. IT STARTEDOFF ANDCONTINUED THEREAFTER,ESPECIALLY. IT'S ARELATIONSHIP THAT CANBE LEVERED. IT COULD RESET THE RELATIONSHIP BETWEEN THE TWOCOUNTRIES ON SOMETHING THEY CAN AGREE ON, THE IMPORTANCE OF ENERGY SECURITY. JULIE:THERE HAS BEEN ATTENTION ONHIS RELATIONSHIP WITHRUSSIA. WHATABOUT HIS OTHER COUNTRIES? VINCENT: AS HEAD OF EXXON,YOU WANT SOMEONE WITH A GLOBAL SCALE. HAVING AN APPRECIATION FORTHE DIFFERENT CULTURES, DIFFERENT VALUE SYSTEMS, DIFFERENTSOCIAL MORALS. IT ALLOWS YOU TOAPPRECIATE THE INTRICATE RELATIONSHIP THAT ONE COUNTRY MUST HAVE WITH ANOTHER COUNTRY. IT'S TRANSACTIONAL. HE WAS THERE TO DO DEALS. IT'S MUTUALLYUNOFFICIAL, A SYMBIOTIC RELATIONSHIP. DAVID:HE HAS BEEN ON THE JOB SINCE 2006. HE HAD A QUOTATION IN THE NEW YORKTIMES HE WAS TAKING THIS JOB. HESAID YOU SEEIS THE SAME OLD WINE IN A NEW BOTTLE. EXXON KINDOFRUNS ITSELF. REALLY, THIS COMPANY RUNS IN THE DIRECTION ITALWAYS HAVE. HOW HAS HE CHANGEDTHECOUNTRY -- COMPANY? VINCENT: ONE ISHIS RELATIONSHIP WITH RUSSIA. THEOTHERIS XTO, THAT WAS A MAJOR BETON NATURALGAS. THAT WAS A $35 BILLION THATON NATURAL GAS. I WOULD SAY THOSE ARE THE TWO MOSTSIGNIFICANT ISSUESTHAT HE -- HAVEOCCURREDDURING HIS TENURE THERE. JULIE: IT LOOKSLIKE DARREN WOODS WOULD BE THE HEIRAPPARENT TO TAKE OVER FROM TILLOTSON. HOW DOES HE COMPARE? HOW WILL HECHANGE EXXON? VINCENT: THE ONE CHALLENGE FOR HIMIS TO VALIDATE THE INTEGRATED LAW. YOUALL HAVE CERTAIN CHALLENGES. THERE IS A CHALLENGEANDWITH ENVIRONMENTAL ACTIVISTS. YOU HAVE RENEWABLES. YOU HAVEUPSTREAM PRODUCTION THAT HASNOT THROWN IN A DECADE. HE COMES FROM ADIFFERENT SIDE OF THE BUSINESS. HE COMES FROM THE CHEMICAL SIDE OF THE BUSINESS. THAT HAS REALLY BEENTHE BALLAST OF THE ORGANIZATION. HE HASRATIONALIZED THE BUSINESS. HE HAS SOLD OFF SOME PIECES. I THINK THERE IS AN APPRECIATION ANDUNDERSTANDINGTHAT WE ARE IN ATIME OF UNCERTAINTY AND VOLATILITY IN PRICE OF OIL AND GAS. HE CAN BRING THAT EXPERTISE TO THETABLEAND THE OVERALL ORGANIZATION. DAVID:WHAT DO WEKNOWABOUT TILLOTSON'S ATTITUDESTOWARD CLIMATE CHANGE. VINCENT: I THINK THAT HIS SHIFTED SOMEWHAT. AS YOUCAN IMAGINE,AS THE HEAD OF AN ORGANIZATIONTHAT DEALS WITH OIL AND GAS THAT HE WOULD TAKE A SKEPTICAL POINT OF VIEW. JULIE:THAT HAS BEEN ONE OF THE EARLY POINTS OFCONTENTION REGARDING HIS POTENTIAL APPOINTMENT IS WHEN YOU TALK ABOUT THE PARIS CLIMATE AGREEMENT, HERE IS THE U.S. MAINE REPRESENTATIVE AROUND THE GLOBE AND HE WOULDNOT BE WILLING TO SUPPORT THAT. DO WE HAVE ANY REALINDICATION WHETHER HE WOULD OR NOT? VINCENT: I DON'T KNOW THAT HE IS OFFERED ANY ON THE RECORD COMMENTARY. ENERGY SECURITY IS A FUNCTION OF NATIONAL SECURITY. IF YOU VIEW THROUGHTHEPRISM OF THE GEOPOLITICALTENSIONS ACROSS THEGLOBE,ESPECIALLY IN THE ENERGY SENSITIVE AREAS, YOU CAN UNDERSTANDWHY AN UNCONVENTIONAL PICKLIKE THIS WOULD ACTUALLY HELP US BETTERAPPRECIATE THOSE TENSIONS ACROSS THE GLOBE. DAVID:THANKS SO MUCH. JULIE:COMING UP, IT'SOURDEALS REPORTER. WE WILL TALK ABOUT THEFAILED MERGEROFVIACOM AND CBS. THIS IS BLOOMBERG. ♪ JULIE:THISIS BLOOMBERG MARKETS. IT DAVID:THE FIRE, CBS DEALHAS RELAXED-- COLLAPSED. SHARES ABOVE COMPANIES FELL AS THE PLAN DISSOLVED. JOINING US ISTHEM&A MANAGING EDITOR. HOW BIG OF A SURPRISE WASTHIS? >> IT'SA BIT OF A SURPRISE. WEPICKED UP OVER THE WEEKEND THATLAST WAS RELUCTANT TO DO A DEAL. HE WANTED ASSURANCES THAT HE WAS GOING TO CONTROL ORHAVE CONTROL OFTHE SHERRYSUMNERREDSTONE. HE WANTED TO KNOW HE COULD RUN THESE MIGHTCOMPANIES WHICH ARE BIG AND WOULDREQUIRE A LOT OF WORK. OUR SENSE WAS SHE WASRELUCTANT FOR THAT. SHE AND HERLAWYERS AT HERSIDE WANT TO MAKE IT LOOKLIKETHEY WERE OUTFRONT ANDTHEY WERE THE REASON THE DEAL FELL APART. JULIE:WHAT SHE THE ONE THAT MADE THE CALL? JEFF: IT'S NOT ENTIRELY CLEAR. WE WERE MAKING CALLS YESTERDAY. WE UNDERSTAND HE HAS THESE CONCERNS. TO THAT PLAY INTO HER COMING OUT? HEDID NOT WANT TO PAY A PREMIUM. THERE WERE A LOT OF RESEARCH ANALYSTSAIDTHIS WAS GOING TO BE A VERY SMALL PREMIUM. VIACOM HAS MADE A PRESENTATION AROUND THANKSGIVING OR BEFORE THANKSGIVING THAT SHOWED THEY WANTED A PRETTY HEALTHY PREMIUM. IT'S A$15 BILLIONCOMPANY ALREADY. DAVID:YOUHAVE THESEDUELING VISIONS. YOUHAVE BOB BACK ISSUE IS RUNNING VIACOM NOW. WHATIS HISVISION? WHAT HAPPENS TO PARAMOUNT? JEFF: HE'S GOING TO HAVE TO CLEAN UP. THERE ARE PROBABLY GOING TO BE SOMEJOB CUTS. ITHINK YOU WILL PUSHMORE INTO INTERNATIONAL VIEWING. THAT IS PLACE THEYCAN USE THEMSELVESIN RETURN TO PROFITABILITY. CVS IS DOING OK. THEY DON'TWANT TO GIVE UP CONTROL. I DON'T THINK WERE GOING TOSEE CBS DOING A REALLY BIG DEAL. THERE ARE SOME SMALLER DEALS OUT THERE. LIKELY, THEYBOTH FEEL GOOD WHERE THEY ARE. JULIE:WILL THEY LOOKELSEWHERE? JEFF: I DON'T KNOW. THEY'VE BEENFOCUSEDONPERHAPS DOING THIS DEAL. THEYHAVEN'TGIVEN A GOOD SENSE OF WHAT THEIR STANDALONE PLAN IS. BY A, HAS BEEN ABIT MORE OPEN WITHRESTRUCTURINGAND TRYING TO FIX SOME OF THE AREAS LIKE PARAMOUNTTHAT HAVE BEEN LOSING MONEY. WHEN THESE COMPANIES BROKEINTO IN2006, VIACOM WAS A STRONGER COMPANY. SINCE THEN, IT'S GONEIN A BAD DIRECTION. IT DOES SEEMLIKECBSIS THE DOMINANT STUDIO. DAVID:DOES THIS AND THE SOAP OPERA? IS THERE STABILITY FORTHESETWO COMPANIES? JEFF: I DON'T THINK SO. I WOULD NOT BE SURPRISED IF IN 12 MONTHS WE WERE TALKING ABOUT SOMETHING AGAIN. THE DEAL IS DEAD NOW. LET'SNOT RULE OUT 2017OR2018. ATSOMEPOINT, THE REDSTONE FAMILY SEES THEIMPORTANCE OF BRINGING THESE TWO COMPANIES TOGETHER. JULIE: WE'RE NOT DONE WITH YOU. HE IS STAYING WITH US. COMINGUP, HISINTERVIEW. HE HAS BEEN INVOLVED IN SEVERAL MAJOR DEALS, INCLUDING TIME WARNER,YAHOO!, AND DREAMWORKS. THIS IS BLOOMBERG. ♪ JULIE:THIS IS BLOOMBERG MARKETS. DAVID:LET'S TALK M&A IN THE MEDIA SPACE. TIME WARNER SALE TO AT&T IS STILL PENDING. JEFF IS STANDING BYWITH A PARTNER. IWILL TOSS OVER TWO. JEFF: IT'S GOOD TO SEE YOU. YOU HAVE BEENON ALL OF THESE BIG DEALS. WHAT'S GOING ON IN THE MEDIAYOU GOT NOTJUST THEAT&TDEAL AND YAHOO!VERIZON. WE HAVE THECOMCAST DEAL FOR DREAMWORKS. WHAT IS PUSHING THESIN CELEBRATION-- CONSOLIDATION?>> I THINK IF YOU LOOK AT TWO OF THEDEALS, IT'S ABOUT EXPANSION OF AN EXISTING PLATFORM. WHEN YOU LOOK MOREBROADLY, ONE OF THE FORCES DRIVING CONSOLIDATIONIS THE NEED TO BE ABLE TO ADAPTQUICKLY, TO CHANGES HOW CONSUMERS ARE TAKING IN MEDIA ACROSSMORE PLATFORMS AND DEVICES. PEOPLE ARELOOKING FORMORE PERSONALIZED EXPERIENCES WITH MEDIA. ITHINKTHAT PROCESS IS GOING TO CONTINUEAS TECHNOLOGY EXPONENTIALLY ADVANCES. I THINK ONE OF THE THINGS YOU ARE SEEING IN AN EFFORT TOFIND CONTENT WITHDISTRIBUTION IS GETTINGTHE PRODUCTION OF CONTENT CLOSER TO THECONSUMER SO YOUAREABLE TO BE MORE NOBLE ANDINNOVATIVE AND ADDRESS THEIR NEEDS. JEFF: THIS IS AN INTERNATIONAL PHENOMENON. LASTFRIDAY, FOX ANNOUNCES THEY ANDSKY ARE INTALKS. CONSUMERS IN EUROPE ORASIA ARE THINKING THE SAME WAY. ERIC: IT'S THE SAME BASIC THESIS. I DON'TTHINKTHE FORCES DRIVING THIS CONSOLIDATION AREUNIQUE TO THE UNITED STATES. THEY ARE LARGELYWITHOUT BORDERS. JEFF: HOW MUCH OF THIS ISDRIVEN --HOW MUCH OF ALL OF THIS CONSOLIDATION IS DRIVEN BY TECH COMPANIES BECOMINGOBSOLETE IN A YEARORTWO? WHAT IS THE HOT PHONE IN2010? IT'SDISMALLY OBSOLETE IN 2016. ERIC: I THINK THAT SOMEVERYTHE PHENOMENONTHAT I JUST MENTIONED ISBIGGER THAN ANY PARTICULAR ADVICE. ONE OF THEUNDERLYING IDEA IS BEING ABLE TO ADAPT TO THOSE CHANGES. WE WILL SEEVIRTUAL-REALITY, WE WILL SEE ARTIFICIAL INTELLIGENCE. DEVICES ARE GOING TO CHANGE. YOUWILLHAVE VIDEO ON YOUR REFRIGERATOR. ITHINK AS THAT HAPPENS,BEING CLOSE TO THE CONSUMER IS GOING TOALLOW CONTENT PRODUCERS TO BE MORE NIMBLE. THERE IS A LITTLE BIT OF WHAT YOU'RE TALKING ABOUT. IF YOU LOOK AT TECH IN PARTICULAR, ONE OF THESTRATEGIC CHALLENGES OFANY INCUMBENT IN THATSPACE IS WORKING TO MAINTAINRELEVANCE, IF ANDHOW QUICKLYSNAPCHAT CANBECOME WIDELYUSED AND DISPLACE AN INCUMBENT. YOU HAVESEEN M&A STRATEGY TO DEAL WITH THAT. FACEBOOK HAS BEEN VERY SMART ABOUT ITSACQUISITIONSOVER THE LAST FIVE YEARS TO MAKE SURE THAT THEY OFALLJEFF:THEAT&T TIME WARNER DEAL WAS A BIG DEAL. FURTHERPRECAUTIONS, SPECIAL THINGS YOU DID TO KEEP THIS TO A SMALL GROUP OF PEOPLE? ERIC: AS YOU WELL KNOW, IT'S VERY DIFFICULT TO KEEP ANY PUBLIC A -- M&A. THERE ARE ONLY A FEW LEVERS YOU CAN POOL. YOU CANBE THOUGHT FOR ABOUT WHERE YOU HAVE MEETINGS, PARTICULARLYWHEN YOU ARE DEALING WITH A HIGH-PROFILE EXECUTIVE. YOU CAN TRY TOGETONAND TO AN ANNOUNCEMENT OR A QUICKLY. IT'S THAT KIND OF BLOCKING AND TACKLING. WHENYOU HAVE ATRANSFORMATIVE DEAL IN THE MEDIASPACE,WITH RECOGNIZABLE SENIOREXECUTIVES, THE REAL DIFFERENCE IS NOT SO MUCHTHE TACTICS. IT'S THE VIGILANCE. JEFF: SOMETIMES IT FEELS LIKE FOR ANYREASON THOSE DEALS SEEM TOLEAK, MORE SOTHAN THE INDUSTRIALMID-- MIDWEST KIND OF DEAL. ITHINK YOU SEE A LOT OF THOSE DEALS IN THE PRESS BEFORE THEY ARE ANNOUNCED. ERIC: IF YOU LOOK AT ANY PUBLIC DEAL, YOU START THE DEAL IN THIS DAY AND AGEPARENT FORTHE POSSIBILITY IT'S GOING TO LEAK AREAMEDIA ISPROBABLY MORE SENSITIVE THAN OTHERS BECAUSE IT ISVERYCONSUMER FACING AND HIGH PROFILE. JEFF: GOT IT. IWISH WE COULD KEEP TALKING. BACK TO YOU, DAVIDAREA-- DAVID. COMEUP, DAVID RUBENSTEIN ON TURMOIL IN EUROPE AND WASHINGTON BUREAUCRACYUNDER A DONALD TRUMP ADMINISTRATION. THAT IS COMING UP NEXT. THIS ISBLOOMBERG. DAVID:LIVE FROM BLOOMBERG WORLD HEADQUARTERS IN NEW YORK, I'M DAVID GURA. JULIE: I'M JULIE HYMAN AND THIS IS "BLOOMBERG MARKETS." LET'S START WITHHEADLINES. MARK CRUMPTON HAS MORE FROM OUR NEWSROOM. MARK:PRESIDENT-ELECTTRUMP IS SENDING FORMERPRESIDENTIAL RIVAL, CARLYFIORINA, AS DIRECTOR OF NATIONAL INTELLIGENCE. HE MET WITH THE FORMER HEWLETT-PACKARD CEO TODAY IN NEW YORK. >>WE TALKED ABOUT THE OPPORTUNITY THE PRESIDENT-ELECT HAS TO LITERALLY RESET THINGS. TO RESET THE TRAJECTORY OF THIS ECONOMY, TO RESETTHE ROLE OFGOVERNMENT, TO RESET AMERICA'S ROLE INTHE WORLD AND HOW WE ARE PERCEIVEDIN THE WORLD, AND I THINK THAT IS WHY HE IS GETTING SO MUCH FANTASTIC PEOPLE IN HIS ADMINISTRATION. MARK:TRUMP IS MEETING WITH AN ANOTHER FORMERPRESIDENT SHALL RIVAL TODAY, FORMER TEXAS GOVERNOR RICK PERRY. HE IS REPORTEDLY A CANDIDATEFOR ENERGY SECRETARY. JOHN KELLY HAS BEEN TAPPED TO HEAD HOMELANDSECURITY. HE JOINED THE MARINE CORPS IN 1970AND RETIRED EARLIER THIS YEAR, WRAPPING UP THE FINAL THREE-YEAR POST AS HEAD OFU.S. CENTRALCOMMAND. HEFACES SENATE CONFIRMATION. A GROUP OF COALITIONAIRSTRIKES TARGETING THE ISLAMICSTATE IS ALLEGING A LACK OFTRANSPARENCY AND A SENSE OF CIVILIAN CASUALTIES. THE REPORT BYLONDON-BASEDAIR WAR SAYS THE NUMBER OF CIVILIANS KILLED BY LASTSUMMER IS AT LEAST1500, MUCH HIGHER THAN THE U.S.ACKNOWLEDGED. PARASITES HAVE BEEN USED IN THE FIGHT AGAINST ISLAMICSTATE IN IRAQ AND SYRIA. THEU.S. SUPREME COURT HAS DECIDED NOT TO TAKEUP UNILATERAL SALES TAXES. A COLORADOLAWREQUIRES INTERNET RETAILERS TO TURN OVER CUSTOMER DATA TOPAY SALES TAXES THAT OWE. A RETAIL SALES GROUP SAYS THE MEASURE VIOLATES THE CONSTITUTION. GLOBALNEWS 24 HOURS A DAY POWERED BY MORE THAN 2600 JOURNALISTS AND ANALYSTSIN MORE THAN 120 COUNTRIES, I AM MARK COMPTON. JULIE:LET'S GET A QUICK CHECK ON U.S. STOCKS. THE MAJOR AVERAGES ARE LITTLE CHANGED. THE DOWIS VERY SLIGHTLY HIGHER, ONLY SEVEN POINTS. IT DIDTOUCH AN INTRADAY RECORD TODAY WITH THE S&P AND THE NASDAQ STILL DECLINING. LET'S GO NOW TO BLOOMBERG'S ABIGAIL DOOLITTLE FOR WHAT IS ON THE MOVE. ABIGAIL:ONE OF THE BIG LAGGARDS IS THESHARES OF LOCKHEEDMARTIN , WHICH YOU CAN SEE INTHISDROP IN THE TODAY CHART. THIS WASAFTERDONALDTRUMP TWEETEDEARLIER THAT THE F-35 COSTS ARE OUT OF CONTROL THAT BILLIONS OF DOLLARS CAN BE SAVED ON MILITARY PURCHASESOF SOME OTHERS AFTER JANUARY 20 OF NEXT YEAR. THIS ISABOUT 20% OF LOCKHEED MARTIN'S REVENUES. THESTOCK IS ON PACE FOR ITS WORST DAYSINCE 2011. QUITE A DRAW. THE COMPANY DID RESPOND BY SAYING, "WE WELCOMETHE OPPORTUNITY TO ADDRESS ANY QUESTIONS THE PRESIDENT-ELECT HAS ABOUT THE PROGRAM. IT'S A GREATPROGRAM AND SINCE THEBEGINNING, WE HAVE INVESTED HUNDREDS OF MILLIONS OF DOLLARS TO REDUCE THE PRICEOFTHE AIRPLANE BY MORE THAN 60% FROM THE ORIGINAL PRICE." A BIT OF A CONVERSATION THEREBETWEEN DONALD TRUMP AND LOCKHEED MARTIN. THIS IS CERTAINLY DRAGHI ONSOME OF THE OTHER DEFENSE STOCKS, INCLUDING GENERAL DYNAMICS. WHEN WE TAKE ALOOK ATSPENDING OVER THE LAST YEAR, WE SEETHAT SOME OF THECONCERNHEREINTHE U.S.IS $600 BILLION IN MILITARY SPENDING. THE NEXT CLOSEST IS CHINAWITH $215 BILLION. ANDPRESENT DONALDTRUMP COMES DOWN HARD ON THIS, IT CERTAINLY WILL BE PART OF THESE COMPANIES. WE ARELOOKING AT BOEING IN A BUS. -- AND AIRBUS. BOTHOF THESE COMPANIES HAVE REACHEDAGREEMENTS WITH IRAN AIR FOR DEALS. THE REASON FORTHIS ANDTHISIS THE FIRST POSSIBLEAGREEMENT SINCE 1979 FOR $16.6 MILLION IN AIRPLANES. ITCOULD REQUIRE THEAGREEMENT OF WASHINGTON. THATIS WEIGHING ON THE SHARES A LITTLE BIT. FORAIRBUS, IRAN AIR CEO SAYS THEY ARE CONFIDENT A DEAL WILL BESTRUCK WITHIN TWO WEEKS. JULIE:WE WILL BETALKING MUCH MORE ABOUT LOCKHEED MARTIN AND SOME OF THE OTHER DEFENSE CONTRACTORS IN THE 1:00 P.M. HOUR. DAVID:FROM BREXIT TOTHE UPCOMING FRENCH ELECTIONS, UNCERTAINTY SEEMS TO BE THE ONLY CERTAIN THING. EARLIER, DAVID RUBENSTEIN DISCUSSED HIS OUTLOOK FOR ITALY AND THE EUROPEAN UNION. DAVID RUBENSTEIN:THERE'SNO DOUBT THAT EUROPE IS IN A LITTLE BIT OF TURMOIL BECAUSE YOU HAVE FRENCH ELECTIONSCOMING UP IN THE WINDOWS WITH THAT IS GOING TO GO. YOU HAVE THE U.K. TRY TO FIGURE OUT HOW TO GET OUT OF THE EU. GERMANY WILL HAVE ELECTIONS IN TWO YEARSAND AN ITALIAN GOVERNMENTUNCERTAINTY. THERE'S NO DOUBT THATTHEUNITED STATES HAS AN INTERESTIN A STRONG EUROPE, STRONGER THAN IT IS NOW. WE NOT JUST SITTING THERE SAYING TOO BAD FOR YOU. IT'S REALLY A SITUATION WHERE WE WANTTO HAVE A STRONG EUROPE AND WE PROBABLY SHOULDEXERCISE OUR OWNINFLUENCE IF WE CAN TO HAVE SOME IMPACT ON IT. I SUSPECT IN THE END THAT THE ECB AND THEEU WILLCREATE SOME CREDIBILITY TO WHATTHEITALIAN GOVERNMENT WANTS TO DO AND BE MORE FLEXIBLE AND WORKING AT THIS BAILOUT. IF THE ITALIAN GOVERNMENT WERE TO BE IN SUCH TERRIBLE SHAPE, EUROPE WOULD BE GOING SOUTH BECAUSE OFITAND IT WOULD NOT BE GOOD FOR ALL OF EUROPE. JONATHAN: EUROPE HAS BEEN THROUGH TWO CRISES. WITH THIS POLITICAL FRAGMENTATIONNOWMORE THAN WE DID FIVE YEARS AGO,WE DO NOT TALK ABOUT THE DENOMINATION AT RISK IN THE SAME WAY. WHEN ARE WE GOING TO START HAVING REGULAR CONVERSATIONS ABOUT THE DOMINATION? >>I THINKIT'S POSSIBLE,BUT THE GREATER INTERESTINGTHING TO TALK ABOUT IS WHETHER OR NOT EUROPE CAN ACTUALLY COME TOGETHER AND LEADERS CAN COME TOGETHER TOCOME UP WITH SOMETHING MAKES SENSE. THETHEORY OF THE EUAND THE FURY OF THE ECB AND THE THEORY OF THEEURO IS THAT IT WOULD BE BETTER OFF IF EVERYTHING WORKED TOGETHERAND WAS CORRELATED. DESPITE ALL OF THESEDEVICES, EUROPE SEEMS TO NOTBE WORKING TOGETHER AS COOPERATIVELY AS IT SHOULD. YOU REALLY NEED THE LEADERS IN EUROPE TO GET TOGETHER AND RECOGNIZE THAT THEY HAVE A POTENTIAL CRISISTHERE AND THEY HAVE TO BE MORECOOPERATIVE AND RECOGNIZE THATITALY CANNOT DO EVERYTHING THAT ECB RULES REQUIRE. IF GERMANYAND OTHERS DO NOT RELENT, YOU WILL HAVE BIGGER PROBLEMS IN EUROPE. >>D.C. EVIDENCE IS MOVING IN THATDIRECTION? THERE WAS LOTS OF COMPLAINS ABOUT BUREAUCRATS AND BRUSSELS. THE LEADINGCANDIDATE FORFRANCE ISREALLY FOR REFORMING BRUSSELS. IS THERE MOVEMENT TOWARD REFORMATION? >>>>I THINK THERE'S A RECOGNITION THERE NEEDS TO BE SOME CHANGE. OBVIOUSLYTHE EU PARLIAMENT THE OTHER DAY SPOKE. IT'S CLEARLY A RECOGNITION THAT THERE HAS TO BE SOME ADJUSTMENT, IBELIEVE, BECAUSE THE RULES ARE LITTLE TOO STRICT. YOUHAVE A BROKERSEEIN -- A BUREAUCRACY IN BRUSSELS AND EVERYONE IS DISCONNECTED FROM IT. >>WITH THIS GROWTH AND STABILITY PACT, WILL THEY HAVE TO BUYBUDGETS ONTHISPILE? WHERE WE GOING TO GET SOME HELP THERE? YOU SPEAK TO A LOT OF FINANCIAL LEADERS REGULARLY. YOU SPOKE TOGOLDMAN SACHS RECENTLY. IT'S CLEAR THAT THEU.S.HAVE DONE A BETTER JOB OF ALLOWING BANKS TO FINANCE THE U.S. ECONOMY. WHEN ARE WE GOING TO SEE A PIVOT? >>IT'S NO DOUBT THAT AFTER THE GREATRECESSION,THEY DO NOT CLEAN UP THEIR BALANCE SHEETS LIKE THE U.S. BANK. THEY ARE ALSO NOT LENDING AS MUCH AS THEY SHOULD OR U.S. BANKS ARE. ITHINK THEYDO NEEDTO LOOK AT THAT AND THE ECB NEEDS TO BE MORE AGGRESSIVE IN TELLING THE BANKS THEY OUGHT TO LENDMORE AND REALLY PROVIDE MORE SUPPORT. I THINK MARIO DRAGHI HAS DONE A SPECTACULAR JOB. UNFORTUNATELY YES TO LEAVEAT SOME POINT, BUT I THINK HE IS PROBABLY THE MOST IMPORTANT FINANCIAL FIGURE IN EUROPE FOR SURE. WHEN HE DOES GO, IT WILL BE A BIG PROBLEM. JULIE:WE ALSO ASKED DAVID RUBENSTEIN ABOUT A DONALD TRUMP PRESIDENCYAND SPECIFICALLY WHAT WILL WASHINGTON LOOK LIKE AFTER NOT DURATION. >> THERE'S NO DOUBT IT'S A DIFFERENT GROUP OF PEOPLE COMING TO GOVERNMENT THAN THE LAST EIGHT YEARS. WEWILL SEE WHAT HAPPENS. I DO KNOW THESE PEOPLE. BEING SUCCESSFUL INBUSINESS DOES NOT MEAN YOU WILL BE SUCCESSFUL IN GOVERNMENT. BEING SUCCESSFUL IN GOVERNMENT DOES NOT MEAN YOU WILL BE SUCCESSFUL IN BUSINESS. WE WILL SEE HOW IT WORKS. SOMETIMES BUSINESSPEOPLE GOING TO GOVERNMENT AND DO VERY WELL AND SOMETIMES THEY DO NOT DO AS WELL. WE WILL HAVE TO SEE. >> YOUHAVE THECABINET LOOKING LIKE A C SUITE AND THAT WILL BE AWESOME FOR BUSINESSES AND THEY WILL GET TO GROW LIKEBANANAS AND THE CORPORATE TAX RATE REALLY LOWER. IS THAT THE CORRECT LINKAGE TO MAKE? >>IN THE EUPHORIAOF A POSTELECTIONPERIOD OF TIME, EVERYONE IS HAPPY WHO WON THE ELECTION. ANYTHING TOPEOPLE WHO HAVE DONE WELL IN THE BUSINESS SECTOR AND PRIVATE LIFE, YOU JUST DON'T KNOW. WHEN I WORKED IN THE CARTER ADMINISTRATION SEVERAL YEARS AGO, JIMMYCARTER HAD A DEMOCRATICCONGRESS AND HE HAD BEEN AND NEWLY ELECTED DEMOCRATIC PRESENT. WE THOUGHT WE WE GET EVERYTHING THROUGH CONGRESS. TURNS OUT THE DEMOCRATS IN CONGRESS HAVE THEIR OWN IDEAS. THIS TIME THE REPUBLICANS AND COMMERCE MAY HAVE THEIR OWN IDEAS AS WELL. THE BIGGEST RISK THAT THE PRESENT ELECT WILLHAVEIS THAT EVERYTHING HEWANTS YOU WILL NOT GET THROUGH CONGRESS, SO HE WILL HAVE TO PICK AND CHOOSE. THERE WILLBESOME DISAPPOINTMENT THAT ALL THE THINGSHEMAY WANT TO GET HE WILL NOT GET. >>IT'S ONE THING TO BE SECRETARY OF SOMETHING. THERE'SA STANDING BUREAUCRACY INEACH ONE OF THESE AGENCIES. HENRYKISSINGER WROTE ABOUT THAT. >>THEREARE 2 MILLION CIVILIAN EMPLOYEES INTHE FEDERAL GOVERNMENT AND THE PRESIDENT-ELECT IS GOING TO TAKE ABOUT 4000 OF THOSE NEW PEOPLE. HE MAY ONLY TAKEABOUT 50 PEOPLE OR 100 PEOPLE BEFORE HE IS INAUGURATED. YOU HAVE 2 MILLION PEOPLE WORKING FORYOU AND THAT BUREAUCRACY DOES NOT CHANGE. IT WILL TAKE SOME TIME. >> WHEN YOU HEARTHE RHETORIC AND PEOPLE BEING PUT OUT FOR NOMINATIONS, YOUR POTENTIAL TAKE FOR SECRETARY OF STATE, WHAT DOES THAT TELL YOU ABOUT U.S. FOREIGN-POLICY? IT'S MORE U.S. FOCUSED AND LESS GLOBAL AND COMPANY FRIENDLY. >> REXX IS A VERY TALENTED PERSONAND I RESPECT HIM A GREAT DEAL. HE SPENT MOST OF HIS LIFE REALLY WORKINGAND RUNNING AROUND THE WORLD WORKING ON ENERGY PROJECTS. HE'S A TALENTED ENOUGH PERSON TO FIGURE OUT HOW TO DO THIS JOB. THE BIGGEST CHALLENGE HEIS GOING TO HAVE IS THAT THE STATE DEPARTMENT MAY NOT LIKE EXACTLY WHAT HE REPRESENTS. HE WILL HAVETO DO WITH THAT, BUT I THINK IS COUNTED ENOUGH TO DO SO. >>IF YOU DID GETTHECALL, WHAT WOULD BETHE NUMBER ONE POLICY YOU WOULD WANT TOSEE THAT WOULD BE GOOD FOR BUSINESS AND THE ECONOMY? >>THE MOST OFWHAT BUSINESS PEOPLE WANT ISCERTAINTY. JUST TELL US WHAT YOU'RE GOING TODOAND WHAT YOU WANT TO A COP WAS. WE CAN LIVE WITH LOTS OF DIFFERENT THINGS. TELL US WHAT THE POLICIES ARE GOING TO BE. WITH CERTAINTY, BUSINESS PEOPLE CAN REACT TO IT. JUST HAVE A VERY CERTAIN REALISTIC POLICY. THAT'S THE MOST IMPORTANT THING. REALISTIC POLICY AND THINGSTHAT CAN REALISTICALLY GET DONE. I THINK THE ECONOMYWILL REFLECT THAT VERY WELL IF IT HAPPENS. JULIE:THAT WASCARLISLECEO RUBENSTEIN. THE ITALIAN PRIME MINISTER IS ANNOUNCING THE FORMATION OF THE NEW CABINET IN ROME. THE NEW GOVERNMENT WILL BE SWORN IN AT 2:00 P.M. EASTERN . YESTERDAY, THE PRESENT AS THE MINISTER -- THE PRESIDENT ASKED THE MINISTER AND THAT SWEARING-IN WILL BE TAKING PLACE. DAVID:THERE'S A NEW SET OF ISRAEL AS WELL. ASHTONCARTER IS SPEAKING ISRAEL RIGHTNOW DURING A CEREMONY TO WELCOME THE ARRIVAL OF THE F-35 STRIKE FIGHTERS. I DON'T THINK WE'RE LOOKING AT THE RIGHT FOOTAGE. THIS WAS AFTER PRESIDENT ELECT DONALD TRUMP TOOK AIMON THE PENTAGON'S MOST EXPENSIVE WEAPON SYSTEM YOU. COMING UP, WE'RE GOING TO THE LASVEGASMOTOR SPEEDWAY TO LOOK AT SOME OF THEMOST EXTENSIVE CARS AT FOR ASPIN. THIS IS BLOOMBERG. ♪ JULIE:YOUARE WATCHING BLOOMBERG. I AND JULIE HYMAN. MARK:I MARKBARTONAND THIS IS YOUR GLOBAL BUSINESS REPORT. THE FALLOUTFROM THE RUNS A VOTECONTINUES. -- BREXIT VOTECONTINUES. JULIE:BOEING MAKES ITS FIRST CELL TO IRAN AND MORE THAN THREE DECADES. NOW THE COMPANY HAS SELL THE DEAL TO PRESIDENT-ELECT TRUMP. MARK:INSIDERTRADING. A LOOK AT WHAT DEFINESITAND THE WIDE RANGE OF PENALTIES FOR THIS CORPORATE CRIME. JULIE:CHINA HASCOMPLAINED TO THE WORLD TRADE ORGANIZATION ABOUT U.S. AND EUROPEAN UNION TERRACE. THE CHINESE WANT THEU.S. ANTI-E.U. TO QUIT USING AN EXAMPLE PRICES FROMOTHER NATIONS AND ANTI-DUMPING CASES . THEY SAY IT HAS ARTIFICIALLY RAISED TARIFFS ON CHINESE EXPORTS. MARK:IT'S THE WORST RATEIN SIX YEARS FORTHELONDON HOUSING MARKET. ASKING PRICES FELLMORE THAN4% FROM LAST MONTHAND HOUSEPRICES ARE DOWN6%. IN APRIL TAX HIKE ON PROPERTY INVESTORSAND WORRIESABOUT BREXIT HAVEHURT LUXURY HOME PRICES. BOEING SAYS THEYWILLSELL AIRPLANES TO IRAN. IT'S THE FIRST DEAL OF ITS KIND SINCE 1979. NOW BOEING MAY HAVE TO SELL THE DEAL TO PRESENT ELECT DONALD TRUMP. TRUMP ISOPPOSED TOTHE AGREEMENT THATUSEDIRAN SANCTIONS AND CLEAR THE WAY FOR BOEING SALES, .PRESIDENT-ELECTDONALD TRUMP ISREJECTING INTELLIGENCE ASSESSMENTS THAT RUSSIA TRIED TO HELP HIM WIN THE ELECTION. TRUMP SPOKE TO FOX NEWS. >>I THINK IT'S RIDICULOUS. I THINK IT'S ANOTHEREXCUSE. I DON'T BELIEVEIT. I DON'T KNOWWHY. THEY TALKED ABOUT ALL SORT OF THINGS AND WECOULD SAY ANOTHER EXCUSE. WE HAD A MASSIVE,LANDSLIDE VICTORY AS YOU KNOW IN THE ELECTORAL COLLEGE. I GUESS THE FINAL NUMBERSARE 306 AND SHE IS DOWN TO A VERY LOW NUMBER. IDON'T BELIEVE IT AT ALL. MARK:A GROUPOF REPUBLICAN AND DEMOCRATICSENATORS HAS CALLED FOR AN INVESTIGATION. LAWMAKERS SAYRUSSIA MEDDLING IN THE ELECTION IS A GREAT THREAT TO NATIONAL SECURITY. JULIE:TIMEOUT FOR A BLOOMBERG QUICK TAKE WHERE WEPROVIDE CONTEXT AND BACKGROUND ON ISSUES OF INTEREST. IT SEEMS OBVIOUS THAT FIRST GLANCE THAT INSIDER TRADING IS CHEATING. HEDGE FUNDBILLIONAIREFAMOUSLY WENT TO JAIL FOR DOINGIT AND GEORGE SOROS PAID A BIG FINE, BUT IT IS AN OBVIOUS AT ALL. HERE'S THE SITUATION. IN THE U.S. WHERE PROSECUTORS HAVE VIGOROUSLY PURSUED INSIDER TRADINGCASES, THERE IS NO CLEAR LAW DEFININGPRECISELY WHAT CONSTITUTES INSIDERTRADING AND WHAT DOES NOT. THERE'S ALSO A HUGE VARIANCE IN PENALTIES WITH AMAXIMUMTWO YEARS JAIL TIME AND TRANSFERS IS 20 IN THE U.S. AND SOUTH KOREA. THE U.S. UP IN COURT UPHELD A CALIFORNIACONVICTION THAT RESOLVED WHAT SORT OFBENEFIT THE INSIDERMUST RECEIVE TO CONSTITUTE A CRIME. AN APPEALSCOURTIN NEWYORK NARROW THE DEFINITION OF INSIDER TRADING AND MADE IT HARD TO BRING CASES. HERE'S THE BACKGROUND. INSIDER TRADING BECAME ACRIME IN THE U.S. THROUGH JUDICIAL INTERPRETATION OF 1934LAW IN THE CLEANING OF MARKETS IN THE 1929 STOCKMARKETCRASH. ONE OF THE MOST FAMOUS CASES MADE A HOUSEHOLDNAME OF IVAN BOESKY,WHO WAS THOUGHT TO BE PART OF THE INSPIRATION FOR THE CHARACTER GORDONGEKKO IN THE 1987 FILM "WALLSTREET." AND THE U.K., INSIDER TRADING BECAME ILLEGAL IN THE 1980'S. WHILE LEGISLATION WAS NOT ENACTEDUNTIL THE 1990'S IN GERMANY. JAPAN TIGHTENED THEIR INSIDER TRADING LAWS AFTER A SCANDAL EMBROILED PROMINENT FIRMS. INSIDER TRADING PROPONENTS CONTEND IT ALLOWS INFORMATION TO BEINCORPORATED INTO STOCK PRICESQUICKLY, MAKING THEM MORE ACCURATE. THE CONTRARY VIEW ISTHAT ACCESS TO NONPUBLIC INFORMATIONALLOWS A SELECT FEW TO MAKE BIG BUCKS. TO COME TOLOCATE THE ISSUE, THE REALINSIDERS ARE ALLOWED TO TRAIN THEIR OWNSOCKSAS LONG AS THE INFORMATION THEY ARE TRADING ON IS GENERALLY AVAILABLE. YOUCAN READMORE ABOUT INSIDER TRADING AND ALL OF OUR QUICK TAKES ON BLOOMBERG. THAT IS YOUR GLOBAL BUSINESS REPORT. HEAD TO BLOOMBERG.COM FOR MORE BUSINESS STORIES. ♪ DAVID:MORE BREAKING NEWS OUT OF ITALY. THEPRIME MINISTER ANNOUNCED THE FORMATION OF HIS NEW CABINET. THERE'S A FINANCE MINISTER IN THE NEW GOVERNMENT ANDALSO THERE ISA NEW FOREIGN MINISTER FOR THE ITALIAN GOVERNMENT. THIS IS BLOOMBERG. ♪ DAVID:THIS IS "BLOOMBERG MARKETS." FOR $12,000, LAMBORGHINI'SMOST DEVOTED CUSTOMERSDRIVE EXCLUSIVE SUPERCARS. MATT MILLERATTENDED THE LAS VEGAS MOTORSPEEDWAYTO SEE IF THE PROGRAM IS WORTH THE HIGH-PRICED HEAD FOR DRIVERS IN FOR THE BRAND. MATT: HERE AT THE LAS VEGAS MOTOR SPEEDWAY, BRAND LOYALISTS HAVEGATHERED. >>IT'SA SECOND DAY OFTHE -- >>IT'S AN ADVANCED DRIVING ACADEMY OFFERED TO LAMBORGHINI OWNERS. >> EVERYONE HAS TO TAKE THE PROGRAM BECAUSE YOUR LEVELOF APPRECIATE IS JUST HIGHER. MATT:THEY GET A BIT OF CLASSROOM INSTRUCTIONLIKETHE BEST WAY INTO AND OUT OF A CORNER. THEHIGHLIGHTIS THE HOURS ON THE TRACK WHERE THEY GET ONE-ON-ONE COACHING FROM PRO-LEVEL RACE DRIVERS. $12,000 IT'S YOUA SEAT IN THESUPERCARASWELL AS COUNTLESS LAPSE IN THIS ROAD CAR. MOSTIMPORTANTLY, SINCE ALL THESEPEOPLE OWN AND LAMBORGHINI, THE GET TO DRIVE THE SUPERRACECAR. THAT IS THESUPER RACE THE CAR IN PRIVATE RACING LEAGUES. IT COSTS ANEXTRA $125,000. GETTING BEHIND THEWHEELS IS ONE OF THE MAJOR SELLINGPOINTS. >>THIS IS IT, DUDE. THIS IS A COMBINATION OF TWO DAYS OF INTENSIVE TRAINING. HOW WASIT? >>AMAZING. MATT:I CAN'TWAIT. >> HOW WAS IT? MATT:INSANE. ALL RIGHT, I WILL BUY WANTTOO. WHEN READING HOLDSTIME TRIALS WERE ALL THE SOFTWARE DEVELOPERS,SECURITY CONSULTANTS, AND BRAIN SURGEONS GET TO SEE WHO IS REALLY THE FASTEST. THOSE WHO WENT TYPICALLY GET AN INVITATIONTO ARACE WEEKEND, COMPLETE WITH TECH CREW AND A HELICOPTER RIDE TO THE TRACKS. >>IT'S FOR US WHO WANT TO BE SOMETHING WE WILL NEVERBE-- A PROFESSIONAL RACECAR DRIVER -- A PATHWAY TO GET AS CLOSE AS WE CAN GET. IT'S A MARKETING PLOY ALSO. MAYBE I SHOULDBUYTHE RACE CAR AND STARTED RACING. MATT: THAT'S RIGHT -- BY A TEAM. LAMBORGHINI HAS LITTLEPROBLEMS FINDING BUYERS FOR ITS PRODUCTS. MOST OF THEPARTICIPANTS ARE AMONG THE SUPER AND LAMBORGHINI WANTS TO PUT EVEN BIGGER BUCKS OUT TO START THEIR OWN TEAMS FOR PRIVATE RACING LINK. -- PRIVATE RACING LEAGUE. >>IFI DID WELL IN THE COURSE, I WILL CONTINUE ON AS A RACER. >>THIS EXPERIENCE MADE ME WANT TO BUY SUPERCAR. MATT:SINCE THE TWO YEARSAND CELEBRITY ME HASBEEN RUNNING THEPROGRAM, ONLY A HANDFUL OF PARTICIPANTS HAVE STARTEDTEAMS, BUT THENUMBER IS GROWING AND THAT'S THE KIND OF CONNECTION THE COMPANY AIMS TO FOSTER WITH ITS ACADEMIES, BUT YOU WILL WANT TO SIGN UP FAST. IT ONLY HAPPENS TWICE A YEAR. >>LAMBORGHINI WAS A SELF-MADE MAN. WHEN YOU TALK TOLAMBORGHINI OWNERS, SO MANY OF THEM ARE SELF-MADE INDIVIDUALS. WE DON'T HAVE TRUST FUND. WE WERE NOT GIVEN WHAT WE GOT. THATIS THESPIRIT. DAVID:THAT WAS OUR COLLEAGUE, MATTMILLER. FORMORE,PURSUITS HAS THE FINEST DESTINATIONS IN YOUR LIFE, TRAVEL, AND PROPERTY . JULIE:LET'S TAKE A QUICK CHECK ON MARKETS BEFORE WE GO TO BREAK. THE DOW IS BARELY HOLDING ON TO ITS GAMES. WE STILL HAVE THE S&P AND THE NASDAQ LOWER. DIVERGENCE WITH OIL PRICES, WHICH ARE STRONGLY HIGHERTODAY, BUT NOT HELPING THE S&P500 AS THE NASDAQOVERWHELMED THEIR LOSSES. OIL PRICESGETTING A BOOST FROM THATNON-OPEC AGREEMENT ON PRODUCTION CUTS. DAVID:FORMER AMBASSADOR TO SYRIA ON DONALDTRUMP'S POSSIBLE PICK FOR SECRETARY OF STATE. THIS ISBLOOMBERG. ♪ DAVID:IT IS1:00 P.M. IN NEW YORK AND 2:00 A.M. IN HONG KONG. I'M DAVID GURA. JULIE:I AMJULIE HYMAN AND WELCOME TO "BLOOMBERG MARKETS." ♪ JULIE:FROM BLOOMBERG WORLD HEADQUARTERS IN NEWYORK, WE'RE COVERING STORIES FROM SAN FRANCISCO TO PARIS AND INSMED PULLED THIS HOUR. -- INSTABLETHIS HOUR. TODAY'S NOW FROMTHEFEDERAL RESERVE DECISIONAND WE HAVE A THREE CHARGE YOU CANNOT MISS AHEAD OF WEDNESDAY'S MEETING. BILL GATES AND MORE THAN ADOZEN OF THEWORLD'S WEALTHIEST INDIVIDUALS REVEAL A NEW $1 BILLION INVESTMENT FUNDTO FOSTER MAJORADVANCES IN CLEAN ENERGY PRODUCTION. AND A SHAKEUP AT TO CHIPOTLE. THE CO-CEO LEAVESLEAVING THE CEO TO SURVIVEAFTER A FOOD CRISIS. ABIGAIL DOOLITTLE GAZA STRIP. -- JOINS US NOW. ABIGAIL:CERTAINLY MORE RED THAN GREEN. THE DOW IS ON PACE TO CLOSE YET ANOTHER RECORD HIGH. THE S&P 500 EARLIER DID CARVE OUT YET ANOTHER INTRADAY RECORD HIGH. MUCH OF THIS COULD COME DOWN THE SECTOR COMPOSITION. THE NASDAQIS BEING DRAGGED ON BY TECHNOLOGY AND BIOTECH. ITIS HELPING THE DOW ANDWHAT HAD BEEN HELPING THE S&P 500 IS STILL HAVING THE ENERGY SECTOR. THIS IS A CHART OF THE S&P 500 ENERGY INDEX. WE SEE THE EARLIERTODAY, IT IS STILL NICELY HIGHER. IF THIS ENERGY SECTOR CAN COME OFF OF THE LOWS OF THE DAY, PERHAPS WE WILLSEETHE DOW GAINS BECOME MUCH STRONGER AND PERHAPS THE S&P 500 CAN TURN HIGHER ONCE AGAIN. IT CAN PERHAPS JOIN THE DOW FOR ANOTHER RECORD CLOSING HIGH. THERE'S A LOT TO TALK ABOUT THE IDEAS THAT STOCKS OF THESE CURRENTLEVELS WITH ALL THESE RECORDHIGHS THAT STOCKS ARE FROTHY. TAKE A LOOK AT G#BTV 5285. THIS CHART MAY GIVE CREDENCE TO THE IDEA. THIS IS A LONG-TERM CHART OF THE TRAILING 12MONTHPRICE TO EARNINGS MULTIPLE ON THE S&P 500. IT'S BASICALLY AVALUATION METRIC. FOR ABULK OF THE TIME, IT HAS TRADEDBETWEEN 12 AND 18 TIMES. ONE NOTABLEEXCEPTIONBACK DURING THE TECH BUBBLE IS THAT WE HAD PE GO SKY HIGH. WE NOW HAVE THE S&P 500 PE CLIMBING ABOVE THATRANGEAT LEVELS LAST SEENIN 2002. PERHAPS THIS DOESGIVESOME IDEA THAT VALUATIONIS HIGH. WE ALL SEE BACK IN THE TECH BUBBLE THAT IT CLIMBED MUCH HIGHER. WILL BE INTERESTING TO SEE HOW THIS ALL PLAYS OUT. AS FOR WHAT IS THETOPSECTOR AT THIS POINT, WE'RE LOOKING AT THE TELECOM STOCKS. AT&T AND VERIZON ARE BOTH SLIGHTLYHIGHERWHERE WE HAVE AN ANALYST SAYING THAT AT&TSHOULD BENEFIT FROMDEREGULATIONAND LOWER TAX RATES. HE DID UPGRADE SHARES TO AN OUTPERFORM. SPRINT IS DOWN FOR ITS THIRD DAY IN A ROW. IT IS WORTHNOTING THAT THEFCC IS AUCTIONING OFF ANOTHERWAVE OFAIRWAVES TOMORROW. IT IS THE FOURTH WAVE AUCTIONS AROUNDAIRWAVES. PERHAPS INVESTORS ARE TAKING THAT INTO CONSIDERATION. DAVID:ABIGAIL DOOLITTLE WITH THAT MARKET UPDATE. NOWLET'S CHECK IN ON THE BLUEBIRD FIRST WORD NEWS. MARK CRUMPTON HAS MORE FROM OUR NEWSROOM. MARK:SENATE MAJORITY LEADER MITCH MCCONNELLSAYS HE HAS "THE HIGHESTCONFIDENCEIN THE U.S. INTELLIGENCECOMMUNITY." 'SLEAKING TODAY ON CAPITOL HILL,THE KENTUCKYREPUBLICAN DEFENDED THE CIA ANDITS REPORTED FINDINGS THAT RUSSIA TRIED TO HELP DONALD TRUMP WIN THE PRESIDENCY THROUGH CYBER MEDDLING. MCCONNELL ALSO TOOK AIM AT MOSCOW. >>LET ME JUST BECAUSE MYSELF. THE RUSSIANS ARE NOT OUR FRIENDS. THEY INVADED CRIMEA. SENATOR MCCAIN ANDIAND SOME OF OUR DEMOCRATIC FRIENDS MET WITH THE DELEGATION OF BALTIC COUNTRIES JUST THIS PAST WEEK TO SAY THAT THEY ARE NERVOUS ABOUT THERUSSIANS. MARK:MCCONNELL'S DEFENSE OF THE CIA PUTS HIM AT ODDS WITH THE PRESIDENT-ELECT, WHO HAS REJECTED THE AGENCY'S FINDINGS. KELLYANNE CONWAY SAYSSHE "LIKELY DECLINED ANOFFER" TO SERVE AS PRESS SECRETARYFOR DONALD TRUMP. THAT IS ACCORDING TOPOLITICO. SHE NOTED THATWHOEVERTAKES THE POSITION WILL INHERIT A HOSTILE PRESS CORPS. CONWAYRECENTLYHINTED THAT SHE WOULD AVOID A FORMAL ROLE IN THE ADMINISTRATION. DEFENSE ATTORNEYS IN THE CHARLESTONCHURCH SHOOTING TRIAL ARE TRYING TOGET TESTIMONY FROM THE FIRST WITNESS GOT FROM THE RECORD. ASURVIVOR FROM THE ATTACK TESTIFIED LAST WEEK THAT DE LA RUE BELONGED "IN THE PIT OF HELL." THE DEFENSE TEAMSATTEMPTFOR A MISTRIAL OVER THE REMARKS FAIL. PROSECUTORS SAY ROOF WAS TRYING TO START A RACEWARBY KILLING NINE BLACK CHURCHGOERS LAST YEAR. A MANHUNT IS UNDERWAY INFRANCE FOR FOUR THESE WHOSTOLEWHAT COULD BE MILLIONS OF DOLLARS IN GOLD. THEY STOLE IT FROM ANARMORED TRUCK ON A MAJOR HIGHWAY NEAR LYONS. THEY SAID THE VEHICLE ONFIRE AND THE TWO DRIVERS INSIDE. THE DRIVERS WERE RESCUED THANKS TO TIP OFF FROM ONE WITNESS. GLOBAL NEWS 24 HOURS ADAY POWERED BY MORETHAN 2600 JOURNALISTS AND ANALYSTS IN OVER 120COUNTRIES, I AM MARK UPTON. THIS IS BLOOMBERG. JULIE:FEDERAL RESERVE LEADERS ARE MEETING IN WASHINGTON THIS WEEK TO DISCUSS INTEREST RATES FOR THE FIRST TIME SINCE THE U.S. PRESENCE ELECTION-- PRESIDENTIALELECTION. IT'SSET BETSON GROWTH. MATT MOSLEY JOINS US NOW WITH A DECISION DAY GUIDE. WE COULD SAY THEEQUITY MARKETS HAVE BEEN SOARING IN ANTICIPATION OFSTIMULUS ANTICIPATION WITH THE FED. WE ARE LOOKING ATTHIS WITH CHARTS. I BELIEVE I HAVE YOUR FIRST CHART OF THE HER, WHICH IS A LOOK AT THE EMPLOYMENTRATE AMONGA SEGMENT OFTHE POPULATION VERSUS WAGES. CAN YOU TALK US THROUGH THIS ?> MATT:EVERYTHING STARTS WITH THE JOBS REPORT AND IT WAS SOLID. IT GIVES THEM AGOODINFERENCE INTO THIS UPCOMING MEETING WHERE THEY ARE EXPECTED TO RAISE RATES. THISCHART SHOWS THE WHITELINE IS 35 TO 44 EMPLOYMENT IN THE UNITED STATES. IT ISTHAT HE MIDDLE DEMOGRAPHIC THAT YOU WOULD EXPECT TO SEE MOST LIKELY WORKING OFAN YOU Y. YOU CAN SEE LAST MONTH THAT HIT A HIGH AND THE CYCLE. THE BLUE LINE SHOWS PRIMATES WAGE GROWTH. THAT HAS REALLY LEFT UP RECENTLY AS WELL. WE AREDEFINITELYGETTING THE STRONG EMPLOYMENT TRENDS AND FINALLY STARTING TO SEE THAT WAGE GROWTH WE HAVE BEEN WAITING FOR. IT'S A REALLY GOOD SIGN FOR THE FED AND IT MAKES AN EASY DECISION FOR THEM. JULIE:THAT'S THE EMPLOYMENT RATE AND NOT THE UNEMPLOYMENT RATE AMONG THOSE FOLKS. WE ARE SEEING STRONG EMPLOYMENT GROWTH AND STRONG WAGE GROWTH AMONG THE. THAT. DAVID:WHEN YOU LOOK ATTHE AMOUNT OF FAT SPEAK GOING INTO THIS MEETING, IS THERE CONCERN THAT WE ARE AT FULL EMPLOYMENT AND ISTHERE UNANIMITY? MATT:THE MEDIAN OF THE FOMC OFFICIAL SAID IT WAS AT 4.8%. THE JOBSREPORT ON FRIDAY SHOWED THAT UNEMPLOYMENT FELL FROM 4.9% TO 4.6%. IT WENT FROM ABOVE THE ESTIMATE OF THE NATURALRATE TO BELOW IT. THAT COULDBE A POTENTIAL FULCRUM GOING FORWARD. THAT IS LIKE A KEYMETRIC THAT IS A BIG PART OF THE FED NARRATIVE. ALREADY WE ARE HEARING FOR EXAMPLE SOME FEDOFFICIALS WHO ARE CONSIDERED MOREDOVISH SAYING MAYBE WE DO NOT NEED AS MUCH FISCAL STIMULUS NOW AS THEY WERE TALKINGABOUT A FEW MONTHS AGO. THAT COULD BE A POTENTIAL BIG CHANGE. DAVID:LET'S PULL UP YOUR NEXT CHART. LOOKING HERE ATTHE GOLDMAN SACHS U.S. SURPRISE INDEX. THAT IS IN BLUE. AND WHY IS THE EXPECTED PERCENTAGE POINTS OF FED TIGHTENING IN 2017. MATT:LOOKING BEYONDTHE RATE HIKE EXPECTED THISWEEK AND THE WHITE LINEISWHAT THISFOR NEXT YEAR. IT'S RIGHT IN LINE FOR THE FED'S LATEST PROJECTIONS. THE MARKET SEES TO RATE HIKES ROUGHLY NEXT YEAR COULD THAT IS . THAT IS BASICALLY WHERE THE MARKET WAS LAST YEAR. KIND OF A SIMILARSETUP. THE ELECTIONHAS PLAYED A PART IN THAT. THAT WHITE LINE WAS RIGHT AROUND THE BEGINNING OFNUMBERONE -- NOVEMBER WHEN THE ELECTION HAPPENED. THE BLUE LINE AND THIS ISREALLY IMPORTANT,TOO, THE ECONOMIC DATA HAS GOTTEN A LOT BETTER. THIS BLUE LINESHOWS HOW MUCH ECONOMICDATAARE BEATING OR MISSINGANALYST FORECASTS AND THEY ARE BEATING FORECAST BY THE MOST SINCE 2014. THATHASREALLY HELPED TO BOOST RATES ANDPROVIDE CONFIDENCE IN THE OUTLOOK FOR HIGHER YIELDS AS WELL. JULIE: LET'S GET TO THE NEXT CHART. THIS LOOKS AT WHAT IS HAPPENING IN THE HOUSING MARKET AND MORTGAGE RATES. AS EXPECTED, BECAUSE WE HAVE AN INCREASEIN 30 YEAR YIELDS, THAT MEANS AN INCREASE IN MORTGAGE RATES AS WELL. WE ARE SEEING ANUPTICK IN MORTGAGE APPLICATIONS. THAT'SUNUSUAL. WHEN RATES START TO GO UP, PEOPLEDON'T PANIC, BUT THEY RUSH TOGETHER MORTGAGE APPLICATIONS INBEFORE THE RATES GO UP EVEN MORE. IS THAT ESSENTIALLY WHAT IS HAPPENING? MATT:THAT DOES LOOK LIKE HOW IT'S PLAYING OUT SO FAR. WE HAVE HAD THIS BIG SURGE IN MORTGAGE RATES AS WELL SINCE THE ELECTION. MORTGAGE APPLICATIONS HAVE EXCELLENT GONE UP AND NOT DOWN. THAT IS KINDOF SURPRISING BECAUSE IFYOU GO BACK TO THE TEMPER TANTRUM AND 2013 13, THE OTHER RED VERTICALLINE INTHE BEGINNINGOF THE CHART, YOU CAN SEE THAT AS SOON AS INTEREST RATES REALLY STARTED GOING UP, THATWASTHE TOPFOR MORTGAGE APPLICATIONS AND THEN THEY STARTED TO FALL. THE BIG QUESTION IS THAT POTENTIAL DOWNSIDE OF BUYER INTERESTRATES IS TIGHTER FINANCIAL CONDITIONS. IF WE AREGOINGTO SEE THAT, WE WILL SEETHAT SHOW UP FIRST IN THE HOUSING MARKET. IT DOES LOOK LIKE WE ARE GETTING SOME OFTHAT IN BRINGINGBUYERS OFF THE SIDELINES NOW THAT RATES ARE GOING HIGHER. KEEP AN EYE ON MORTGAGE APPLICATIONS TO SEEIF THOSE TIGHTER FINANCIALCONDITIONSARE STARTING TO HAVE A NEGATIVE IMPACT ON THEECONOMY. THAT IS SOMETHINGTHE FED MIGHT HAVE TO TAKE INTO ACCOUNT GOING FORWARD. JULIE: MATTHEW, THINK YOU SO MUCH, GIVINGUSA LITTLE PREVIEW OF THE FED THROUGH THESE VARIOUS CHARTS. DONOT FORGET TO TUNEINTO THE SPECIAL COVERAGE OF THEFOMC MEETING ON WEDNESDAY BEGINNING AT 1:00 P.M. ON BLOOMBERG TELEVISION AND RADIO. DAVID:BILLGATES AND OF THE BUSINESS LEADERS ARE LAUNCHING A $1 BILLION CLEAN ENERGY FUND. WHERE THE FUND WILLINVEST ITSCASH NEXT. THIS ISBLOOMBERG. ♪ DAVID: THISIS"BLOOMBERG MARKETS." I'M DAVID GURA. JULIE:I'MJULIE HYMAN AND WE HAVE BREAKINGNEWS REGARDING APPLE. THEREPORTING IS THAT APPLE HELD TALKS TOINVEST IN SOFTBANK'S $100 BILLION FUND. REMEMBERTHATSUN WAS JUST HOW BE-- TOUTINGTHIS FUND AT TRUMP TOWER THE OTHER DAY I BELIEVE. THE DOW JONESIS REPORTING THAT APPLE HAS HELD TALKS TO INVEST $100 BILLION INTO THAT FUND. WE HAVECORYJOHNSON WITH US TODAY WHO COVERS ALL THINGS TECH. WHAT IS YOURTAKE ON THESE HEADLINES? CORY:TO MEHE'S A VERY IMPRESSIVE GUY AND HAS DONE AMAZING DEALS. HE DOES NOTHAVE $100 BILLION. HE WOULD LIKE TOHAVE $100 BILLION. I DON'T WANT TO SPEAKFOR YOU GUYS, BUT I'M GOING TOSPEAK AND SAYWEWOULD ALL LIKE TO HAVE $100 BILLION TOINVEST. APPLE IS A PLACE YOU WOULD WANT TO GO TO RAISE THAT MONEY. HE HAS GOT TOTALK TO SOFTBANK, AN IMPORTANTCOMPANY AND TELL ME CAN OCCASIONS IN JAPAN AND WITH THEIR ROLES IN SPRINT AND BEYOND. THEY'VE OPENED UPIN OFFICE IN LONDON AND HOPE TO DO A LOT OF INVESTING. THERE'S A LOTOFCOMMITMENT OF CAPITAL. SOMEOF THE BIGGEST COMMITMENTS WE HAVE EVER SEEN. SOME BIGFUNDS IN SILICON VALLEY RAISING EVEN BIGGER FUNDS TO GO FORWARD, EVEN AS THERE'S A SORT OFFEELING A FROTHY THIS IN THE MARKET AND THEY MAY NOT BE AS MANY BIG IDEAS TO INVEST IN. I THINKIT'S AN INTERESTINGTIME FORTHESE KIND OF INVESTMENTS BECAUSE WITH THE SUCCESS OF AMAZON WEBSERVICES AND RACKSPACE AND OTHER COMPANIES, THE COST OF STARTING A NEW COMPANYAND TECHNOLOGY IS MUCH LESS THAN IT HAS BEEN IN THE PAST. YOU HAVE THESE BIGGER FUNDS CHASINGCOMPANIES THAT NEED SMALLER AMOUNTS OF MONEY. IT'S A VERY INTERESTING TIME IN VENTURE CAPITAL. JULIE:DOES APPLE HAVE A HISTORY OF INVESTING IN THESE TYPE OF FUNDS?? CORY:IT WOULD CERTAINLY BE A STRETCH AND SOMETHING NEW. APPLE MADE AN INVESTMENT INDIDI NOT EVEN A YEAR AGO THAT TURNED INTOABOUTA 30% OR 40% GAIN IN ABOUT A THREE MONTHRETURN AFTER THE GROUPINVESTMENT. APPLE HAS USED THESE THINGS STRATEGICALLYWANTS TO GET TO A PLACE THAT THEY ARENOT OTHERWISE. THAT WAS UNUSUALFOR APPLE ON PAPER, BUT IT LOOKS ENORMOUSLY SUCCESSFUL. WE WILLSEE THESE TALKS GO ANYWHERE. DAVID:LET'S HAVEIT TO TALK ABOUT A SMALLER FUND BY COMPARISON AT ALLTHE $1 BILLION. ITIS THE BREAKTHROUGH ENERGY FUND THAT BILL GATES IS CHANTING HERE. WHAT DO WE KNOW ABOUT IT? CORY:IT'S A REALLYINTERESTING TIMEFOR INVESTMENT RIGHT NOW BECAUSEYOU HAVE THIS INCOMING TRUMP ADMINISTRATION THAT HAS BEEN OPENLY HOSTILETOWARD THE IDEAOF CLIMATE CHANGE, WHICH IS A REAL THING,BUT THEY DON'T BELIEVE IT. ANDBEHARDTO FIND A GROUP OF PEOPLE WHODON'T BELIEVE IT AS MUCH AS THEY HAVE DONE SO IN THE TRUMP ADMINISTRATION. IN PARTICULAR THEY HAVE BEEN CRITICALOF PROGRAMS AND DEPARTMENTOFENERGY THAT HAVE CHAMPIONED CHAMPION CLEAN TECHNOLOGY AND INVESTMENTS IN CLEAN TECHNOLOGY. NOW YOU HAVE BILL GATES AND JEFF BEZOS AND EVEN JACK MA AT ALIBABAINVESTING INCURIOUS THINGS. THENOTIONTHAT CLEANTECH INVESTMENTWILL HAVE TO COME FROM SOMEWHERE OTHER THAN THE FEDERAL GOVERNMENT, IT ALWAYS HAS, BUT CLEANTECH IS UNDER SIEGERIGHT NOWAND LIKELY WILL BE UNDER SIEGE UNDER A TRUMP ADMINISTRATION. THESE BIG INVESTORS LOOKING AT THE PROBLEM OF TECHNOLOGY ARE SAYINGTHESE ARELONG-TERM PROBLEMS THAT TAKE DEEP POCKETS AND LONG-TERM INVESTMENTS TO BECOME A SOLUTION. ITHINK IT'S REALLY AN INTERESTING TIME FOR THEM. JULIE:IT'S ALSOINTERESTING LOOKING AT THESE HEAVY HITTERS INVESTING IN CLEANTECH. CLEANTECH ON THE ONE HAND IS TRYING TO DOGOOD IN THEEYESOF THESE INVESTORS, BUT THEN YOU HAVE THE SUCCESS OF THESE INVESTMENTS. THAT PART HAS NOT BEENSO -- CERTAINLY HAS NOT BEEN CONSISTENT IF YOU LOOK AT CLEANTECH. CORY:AND THEN DETERMINE SUCCESS, RIGHT? WAS TESLA A SUCCESS FOR EARLY INVESTORS? NOT AT ALL. I DO NOT KNOW HOW YOUDEFINE SUCCESS. ITHINK THIS ISWHERE SOCIAL INVESTING GETS CHALLENGED. THEIR GOALS ARE GREATER THAN JUST A RETURN ON CAPITAL. THEYALSO HAVE THE GOALOF USING CAPITAL TO CHANGE THEWAY TECHNOLOGY ORBUSINESSWORKS. THAT CAN MAKE FOR TRICKY INVESTMENTS ANDNOT GREAT FOR THE BOTTOM LINE. DAVID: CORYJOHNSON, GREAT TO SEE. YOU'LL HEAR FROM HIM IN 40 MINUTESTIME ON BLOOMBERG RADIO. JULIE:THE LATEST VICTIMSOF TRUMP'S TWITTER ACCOUNT -- LOCKHEED MARTIN. SHARES ARE LOWER TODAY AFTER DONALD TRUMP WENT AFTER THE COSTLY PROGRAM ON TWITTER. THE IMPACT ON THE DEFENSE SECTOR AND A MECHANISM IS NEXT. THIS IS BLOOMBERG. ♪ DAVID:THIS IS "BLOOMBERG MARKETS." I'M DAVID GURA. JULIE:I'M JULIE HYMAN AND SHARES OF LOCKHEED MARTIN CONTINUE TO STEALTH AND-- TAILSPIN AFTER DONALD TRUMP TWEETED THAT THE F-35 PROGRAM AND ITS COSTS ARE OUT OF CONTROL. BILLIONS OF DOLLARS WILL BE SAVED AFTER PURCHASES ON GENERIC 20. ITIS THE COSTLY'S PROGRAM THAT HAS BEEN PLAGUED BY DELAYS ANDOVERRUNS. JOINING USNOWIS BLOOMBERG INTELLIGENCE SENIOR AEROSPACE DEFENSE AN AIRLINE ANALYST GEORGE FERGUSON. LOCKHEED IS NOT THE ONLYSTOCK DOWN TODAY. ANOTHER PARTICIPANT IN THE F-35 PROGRAM IS ALSO LOWER TODAY. IS THERE A WAY TO SORT OF REDUCE THE COST OF THIS PROGRAM? DOES DONALD TRUMP HAVE A POINT HERE? GEORGE:I THINK THERE'SAWAY TO REDUCE THE COST OF EVERY SINGLE DEFENSEPROGRAM. IT'S JUST A MATTER OF HOW HARD YOU WANT TO LOOK INTO EACH OF THEM. AND HOW AGGRESSIVE YOU WANT TO GET CUTS. HE TALKED ABOUT SAVINGBILLIONS OF DOLLARSPER WE ARE TALKING ABOUT A PROGRAM THAT WILLBECOME THELARGEST DEFENSE PROGRAM EVER,SOME $300 BILLION TO SPEND. TO FIND BILLIONS OFDOLLARS IN $300 BILLION ISNOTTERRIBLY AGGRESSIVE, BUT IT DOES SEND A SIGNAL TO THE REST OF THE DEFENSEESTABLISHMENT AND THAT IS DONALDTRUMP AND HISAND MINISTRATION ISNOT GOING TO INCREASE DEFENSE SPENDING AND NOT LOOK FOR MOREOUT OF DEFENSE CONTRACTORS. HE IS LOOKING FOR MORE VALUE. HE SAID THIS DURING THE CAMPAIGN. I THINK YOU WOULD LIKE TO BE ABLE TO BUY MOREDEFENSEWITH MAY BE SAME OR MAYBE A SLIGHT INCREASE INDOLLARS, BUT HE WANTSTOBUY MORE DEFENSE. DAVID:WE ARE JOINED NOW BY A SENIORDEFENSEANALYST. HOW MUCH OF AN OUTLIER IS THIS PROGRAM, THE F-35PROGRAM? THE PRESIDENT ELECT HOLDS ITUP AS ANEXEMPLAR. >>IT'STHEBIGGEST PROGRAM, SO IT'S GOING TOBE A STANDOUT AND ATTRACT LIGHTNING STRIKES FROM TIME TO TIME. A LOT OF THEPROBLEMS ASSOCIATED WITH THE PROGRAM HAVE ACTUALLY BEEN SOLVED. I THINK THE QUESTION WE THE TOADDRESS GOING FORWARD IS HOW MUCH AS THE UNIT COST AND HOW DO WE IMPROVE THECURVE? LOCKHEED HAS DONE A NICE JOB OF RECOVERING. JULIE:TO GEORGE'S POINTHERE, WHEN YOU GET,FROM TWEETING SOMETHING LIKETHIS AN INDICATION THATPERHAPS HE IS NOT GOING TO BEAS BULLISH OR AS FAVORABLE TOTHE DEFENSE INDUSTRY AS PERHAPS SOME HAD SUPPOSEDPOSTELECTION? HOWARD: WE CAN'T TELL YOUCOULD IT'S ONLY TWEETS AND NOT FULL STATEMENTS. WHAT'S IMPORTANT IS THAT IFYOU ASK THE QUESTION ABOUTTHE AVERAGE COST OF THEAIRPLANE, IT LOOKS BIG TO THE AVERAGE CONSUMER. YOU WANT TO SAY, WHY DOES THAT EXIST? I THINK THE QUESTIONS THAT HE ASKS -- WHY? IS A GREAT QUESTION. IT'S PARTLY TO PROTECTPILOTS AND PARTLY TOPROTECTTHE MOST SOPHISTICATEDFIGHTER IN THE WORLD ANDPARTLY BECAUSEIT CAN DO THINGS THAT NOBODY ELSE HAS EVER BEEN ABLE TO DO BEFORE. THERE IS A BALANCE HEREBETWEEN HOW MUCH ITCOSTS AND WHAT THEVALUE TO THE U.S. MILITARY IS. THEWHOLE POINT IS THAT MAYBE HE IS ASKING THE RESTQUESTIONS-- RIGHT QUESTIONS AND UNITS TO SIT DOWN AND GET REALLY COMPLETE BRIEFINGS BOTH CLASSIFIED AND OTHERWISE AS TO WHATTHE RIGHT OUTCOME IS. DAVID:GEORGE FERGUSON,QUESTION IN LIGHT OF BOEING AND THE AIR FORCE ONE ORDERS. THEY ARE ON ORDER. I WONDER HOW MUCH A PRESIDENT ELECT CANDO WHEN A DEAL HAS BEENINKED IN TERMS OF BRING COSTSDOWN. GEORGE:THERE'S A LOT OF FOLLOW-UPCONTRACTSAND FOR SURE HE WILL HAVE AN OPPORTUNITY TO REALLY PUSH HISAGENDA WITH F-35. I THINK THATIS WHAT MOST MILITARY CONTRACTS. HE'S GOING TO FIND OUT THAT THERE IS A CONTRACT CADENCETHAT YOU CAN GET INSIDE AND MAKE CHANGES TO. JULIE:HOWARD, DOES THISAFFECT YOURINVESTMENT THESIS ON THESE COMPANIES TO HAVE THESE TWEETS COMING UP? ISAT THE VERY LEAST A RISK YOU HAVE TO CONSIDER NOW? HOWARD:I THINK IT'S A VERY FAIR POINT THAT IT'S A RISK. WE HAVE NOTBEEN RECOMMENDING LUCKY. WEPREFER BOEING OR NORTHRUP. BUTYOU KNOW WHAT THE BEAUTY OF THAT IS? THE CEO OF BOEING WENT AND HAD A CONVERSATION. WHEN YOU HAVE A CONVERSATION AND ADIALOGUEWITH PEOPLELEARNING ABOUT NEW PROCESSES, YOU GAIN AN UNDERSTANDINGTO APPROVE THE DECISION-MAKING. I THINK THIS INDUSTRY IN SOME WAYS IS MORE COMPLEX THAN ALMOST ANY YOU WILL EVER FIND. YOU THINK ABOUTTHE 787. IT'S THE LARGESTCIVILIAN ENGINEERING PROJECT THAT MAN HAS EVER UNDERTAKEN. IT TAKES YEARS ANDDECADES TO FULLYUNDERSTAND THE APPLICATION. TO SOME DEGREE, THE F-35 IS A LITTLE THE SAME WAY. I ALSOTHINK BOEING HAS GOT A COMPETITIVEAIRCRAFT AND F-18. WE ARE TOO HOT PRODUCTION LINES. MAYBE THE NAVY BUYS MOREF-18S AND COMPENSATES FOR SOME OF THE F-35'S. DAVID:GEORGE FERGUSON, LAST QUESTION TO YOU HEARABOUT THE WAY THAT CONTRACTING IS DONE IN WASHINGTON, D.C.. THERE'S A TALK OF REFORMING THEPROCESS AND SILICON VALLEY LEADERS TALKING ABOUT THE DIFFICULTY OF WHATIS. WITH THECONTRAST IN WASHINGTON IN THEYEAR-- WHAT IS THE CONTRACTOR WASHINGTON IN THE NEAR TERM? GEORGE:I THINK IT'S A GREAT IDEA ANDTHERE'S PLENTY OF WASTE IN THE SYSTEM THAT YOU COULD TRY TO TAKE OUT. THE CHALLENGE HEREIS THAT THERE'S NOT MANY COMPANIES THAT CAN DELIVER PLATFORMS LIKE THE F-35, NORTHRUP BOMBERPROGRAM, BOEING'S TANKER PROGRAM. YOU HAVE A LIMITED NUMBER OF CONTRACTORS THAT ACTUALLYDIDON THIS STUFF AND I THINK THAT'S WHERE YOU START TO RUN TO SOME OF THE CHALLENGES WHERE HEIS TRYING TO REFORM CONTRACTS AND DRIVE DOWN THE COSTS. YOU HAVE GOT A BASE OF CONTRACTS YOU CANBUILD TO MAINTAIN YOUR HEALTH AND THEN YOU HAVE A LACK AGAIN A BIGDIVERSIFICATION TO PROVIDE IT. JULIE:WE HAVE GOT TO LEAVE IT THERE. GEORGE FERGUSON AND HOWARDRUBEL OF JEFFERIESGROUP. ♪ . . JULIE:LIVE FROM BLOOMBERG HEADQUARTERS IN NEW YORK, I'M JULIE HYMAN. DAVID:I'M DAVID GURA. MARK CRUMPTON HAS MORE FROM THE NEWSROOM. MARK:PRESIDENT ELECT DONALD TRUMP HAS NARROWED THE SEARCH FOR ENERGYSECRETARY TO FOUR PEOPLE. RICKPERRYIS SAID TO BE THE LEADING CANDIDATE. TWODEMOCRATIC SENATORS FROM ENERGY PRODUCING STATES ARE ALSO IN THE MIX. THAT'S ACCORDING TO PEOPLE FAMILIAR WITH THE SELECTION PROCESS. IN DALLAS INVESTOR AND VICE CHAIRMAN OF THE TRUNK VICTORY COMMITTEEFUNDIS SAID TO BE A CANDIDATE AS WELL. PRESIDENT OBAMA HAS AGREED TO RESERVE-- TO LEASE OFFICE SPACE AT THE WORLD WILDLIFEFUNDIN WASHINGTON, ACCORDING TO THE "WASHINGTONPOST," CITING TO IDENTIFIEDOFFICIALS--TWO UNIDENTIFIED OFFICIALS FAMILIAR WITH THE PLAN. TURKEY IS STILL REELING OF THE AFTERSHOCKOF THE FAILED COUP ATTEMPT IN THE SUMMER. BEYONDECONOMY-- THE ECONOMY FELLAT ANAND HE WILL RATEOF 1.8%,THEFIRST TIME IN SEVEN YEARS IN TURKEY HAS ANNOUNCED A CONTRACTION. RECENT REPORTSINDICATE TURKISH CONSUMERS ARESPENDING MORE IN THE FOURTH QUARTER. THE VICTIMS OFTHE PULSE NIGHTCLUB SHOOTING IN ORLANDO, FLORIDA WERE REMEMBERED TODAY. SURVIVORS, STAFF, RELATIVESOF VICTIMS HAD A MOMENT OFSILENCE AT2:02A.M., THE EXACT TIME THAT THE GUNMAN STARTEDSHOOTING INSIDE THE GAYNIGHTCLUB. THE NAMES OF EACH OF THE 49 PATRONS WHO WERE KILLED WERE READ. DOZENS OF OTHERS WERE ALSO INJURED IN THAT SHOOTING. GLOBAL NEWS, 24 HOURS A DAY, POWERED BY MORE THAN 2600 JOURNALISTS AND ANALYSTS IN MORE THAN 120 COUNTRIES. I'M MARK CRUMPTON, THIS IS BLOOMBERG. JULIE:THANK YOU. PRESIDENT-ELECT DONALD TRUMP MAY BE CLOSER TO NAMING SECRETARY OF STATE AND THE FRONT RUNNERCOMES FROM THE WORLD OF BIG OIL. YESTERDAY, HE TWEETED WHETHER I CHOOSE HIM ORNOT, REXTILLERSON , CHAIRMAN ANDCEO OF EXXON, IS A WORLD-CLASS PLAYER AND DEALMAKER. STAY TUNED. AS ENTHUSIASTICAS MR. TRUMPIS, SOMESENATORS ARE EXPRESSING RESERVATION BECAUSE OF HIS CLOSE TIES TO RUSSIA'S PRESIDENT, VLADIMIR PUTIN. >> VLADIMIR PUTIN IS A THUG, A BULLY, AND A MURDERER. ANYONE WHO DESCRIBES HIM AS ANYTHING ELSE IS LYING. WE CANNOT HAVE ANACCOMMODATION WITHTHE RUSSIANS UNTIL THEY UNDERSTAND WHAT RONALD REAGAN TAUGHTTHEM, AND THAT IS PEACE THROUGH STRENGTH. RIGHTNOW, WE HAVE NOPIECE AND NO STRENGTH. I DON'T KNOWWHATHIS RELATIONSHIP WITH VLADIMIR PUTIN WAS, I TELLYOU, IT'S A MATTER OF CONCERN TO ME. JULIE:JOINING US TO DISCUSS THE GEOPOLITICALCIRCUMSTANCES AROUND THEAPPOINTMENT TO SECRETARY OFSTATEHASSERVED AS AMBASSADOR TO ISRAEL AND SYRIA AND IS THE FORMEROCCIDENTAL PETROLEUM COMMISSIONER. HAVING AN ENERGY INDUSTRY BACKGROUNDYOURSELF, PRESUMABLY YOU DON'TTHINK THAT WOULD DISQUALIFY REXTILLERSON FROM SUCH A ROLE. WHAT WOULD HE BRING TOIT, FROM HAVING HAD THIS CORPORATE EXPERIENCE? >> INMY EXPERIENCE, CEOS OF MAJOR ENERGY COMPANIES NECESSARILYHAVEGREAT INTERNATIONAL EXPERIENCE, BECAUSE OF THE MULTINATIONAL CHARACTER OF THESE CORPORATIONS. ESPECIALLY EXXONMOBILIS THE LARGEST AND HASOPERATIONSIN AT LEAST 50COUNTRIES IN THE WORLD. AND REX TILLERSON ASCEOAND CHAIRMAN OF EXXON MOBILHASTHE GREATRESPONSIBILITY IN THAT POSITIONOF NEGOTIATING WITH FOREIGNENTITIES, LEADERS OF THE WORLD. AND BASICALLY HAS TOKNOW A LOT ABOUTWHAT'S GOING ON IN THAT COUNTRYBEFORE A CORPORATION LIKE EXXON MOBIL MAKES INVESTMENT DECISIONS. ITHINK THE QUALIFICATIONS ON THE INTERNATIONALSCENEARE REALLY MORE POSITIVE THAN ANY NEGATIVES. DAVID:YOU KNOW THE SITUATION ON THE CORPORATESIDEAND THE STATE DEPARTMENT SIDE, THIS IS A BYZANTINE NETWORK ANDHIERARCHY IN WASHINGTON AND AROUND THE WORLD. IS IT ALL WORRISOME TO YOU THAT THE PERSON HEADINGTHAT ORGANIZATION WOULD HAVE NO FAMILIARITY WITH HOW THE STATE DEPARTMENT WORKS? MR. DJEREJIAN:THAT'S ALWAYS AN ISSUE WHEN YOUHAVE SOMEONE WHO DOESN'T HAVE THE POLITICAL EXPERIENCE AND HAS NOT WORKED IN GOVERNMENT. WHENTHEY COME INTO A TOP MANAGERIALPOSITION, AS YOU MENTIONED, THE BUREAUCRACY CAN BE QUITE BYZANTINE. WHENYOU HAVE SOMEONE WHO IS A GOODEXECUTIVE AND HAS GOOD LEADERSHIPSKILLS, HE OR SHE CAN SOMETIMES SEE THROUGH THAT WHEN THEY TAKEOVERTHE BUREAUCRACY ANDADJUSTED -- ADJUSTIT TO THEIR OWN REQUIREMENTS. LET'S NOTFORGET GEORGE SCHULTZ, WHOCAMEFROM DECK TELL. WHENHE BROUGHT THAT TYPE OF EXPERTISE AND MANAGEMENTSKILLS INTO THE JOB. JULIE:TURNING TO THE ISSUE OF RUSSIADIRECTLY, WHAT IS THE PROPER POSITIONING WITH REGARD TO THAT COUNTRY ATTHIS POINT? MR. DJEREJIAN: WE HAVEA VERY DIFFICULT, CONTENTIOUS RELATIONSHIP WITH RUSSIA. IT HAS DETERIORATED IN RECENT YEARS, ANDIT'S ONEOF THE MOST CRITICAL ISSUES ON THE INTERNATIONAL SCENE. IN MY PERSONALVIEW, THENEW AND ADMINISTRATION, THE TRUMP ADMINISTRATIONHAS TO TAKE A LOOK AT THE U.S. RUSSIA RELATIONSHIP. IT'S A RELATIONSHIP THAT MATTERS ANDIMPACTON U.S. NATIONAL SECURITYINTERESTS IN A MAJOR WAY. LET'S NOT FORGET THAT RUSSIA STRADDLES THE EUROPE AND MIDDLE EAST ALL THE WAY TOCHINA. THERE ARE MANY ISSUES THAT WE NEED TO COME TO CERTAIN COMMON UNDERSTANDING, IF WECAN, WITH RUSSIA. THIS IS AN OPPORTUNITY TO REENGAGE WITH THE STRATEGIC DIALOGUE. I DON'T MEAN A PHONY DIALOGUE, JUST FOR THE SAKE OFPROCEDURE ANDTHEATRICS,BUT A REAL SUBSTANTIVE DIALOGUE. WE ARE THE ISSUES THAT WE DIFFER ON? IS THEREANY POTENTIAL OF RESOLVING THOSE ISSUES, SUCH AS INSYRIAOR UKRAINE. AND ONE OF THE COMMONINTERESTS, THE COMMON INTEREST WE HAVE IN DEFEATINGISLAMICRADICAL GROUPS, SUCH AS ISIS. I DON'T AGREE SHOULD SEEITAS A PROBLEMATICINITIAL APPROACH, BUT ONE THAT CANPROVIDEA MOMENT FOR US TO RESTRUCTURE THIS RELATIONSHIP. JULIE:-- DAVID: SINCE RICH ELLERSON'S--REX TILLERSON'S NAME WAS FLOATED, PERHAPS THAT TELLSUSTHE ADMINISTRATION'S PRIORITIES WHEN IT COMES TO FOREIGN POLICY. DO YOU WORRYABOUT OTHER COUNTRIES THAT YOU WORRY ABOUT AT THIS POINT? ITHINK ABOUTCOUNTRIES IN THE MIDDLE EAST ANDCHINA. ARE YOU CONVINCED THAT REX TILLERSON COULD ENGAGE WITH THOSE COMPANIES ASEASILY AS HE COULD WITH RUSSIA? MR. DJEREJIAN:HE HAS EXTENSIVE EXPERIENCE IN THE MIDDLE EAST AND DEALING WITH COUNTRIES IN THE GULF. I THINK HE HAS THE KNOWLEDGE BASE. WE DO NOT KNOW HOW TO STAND TO SINCE HIS KNOWLEDGE OF CHINAIS, BUTAGAIN, IF HE COMES TO THE STATEDEPARTMENT, HE WILL HAVE A VAST ARRAY OF EXPERTISETHAT IF HEIS LISTENING TO THAT EXPERTISE AND GAINS THE KNOWLEDGE,IT'S REALLY THE LEADERSHIP SKILLS THAT ARE REALLY IMPORTANT. ONE THING THAT A LOT OF THE COMMENTARY ISMISSINGIS WHAT IS ESSENTIAL -- NO MATTER WHO IT IS, NO MATTERWHO PRESIDENT-ELECTTRUMPCHOOSES, IT'S THAT PERSONAL, PROFESSIONAL RELATIONSHIP BETWEEN THE PRESIDENT AND SECRETARY OFSTATE THAT IS CRITICAL. IF THAT RELATIONSHIP ISTHERE, AS EXISTEDBETWEENBUSH 41 AND SECRETARY OF STATE JIMBAKER, THEY WEREA POWERFUL SCENE BECAUSE NO ONE COULD GET IN BETWEEN THOSE TWO MEN ON FOREIGN POLICY. WHEN BAKER SPOKE, EVERYONE KNEW HE WAS SPEAKING TO THE PRESIDENT OF THE UNITED STATES. THAT IS AN ESSENTIALELEMENTS OF THE CHOICE OF SECRETARY OF STATE. HE OR SHE MUST HAVE THE FULL CONFIDENCEOFTHE PRESIDENTAND HAS TO BE PART OF THE INNER TEAM. JULIE:INTERESTING PERSPECTIVE ON THE RELATIONSHIP IS WHEN THE SECRETARY OF STATE AND THE PRESIDENT. ED DJEREJIAN. FORMER U.S. AMBASSADOR SYRIA AND ISRAEL. THANK YOU FOR YOUR TIME. MR. DJEREJIAN:MY PLEASURE. DAVID:WEDISCUSSED WHO IS STEPPING DOWNAND WHO IS RESUMING CONTROL, NEXT. THIS IS BLOOMBERG. ♪ DAVID:THIS IS "BLOOMBERG MARKETS,"I'M DAVID GURA. JULIE:I'M JULIE HYMAN. ABIGAIL: THE CHARTS DEALWITH WHEN WILL TIGHTENING WITH THE POSSIBILITYOF THE FED TIGHTENING HURT STOCKS. WEHAVESOCKSGOING HIGHER WITH THE THREAT OF TIGHTENING HURTING STOCKS. WE FIRST TAKE A LOOK AT G#BTV. THE BLOOMBERGECONOMIC SURPRISE INDEXAND WHITE WAS DOWN YOUR LOWS, BASICALLY TELLING US THE ECONOMY WAS SOMEWHAT ON SHAKY HAVE -- SHAKY GROUND. WE SEE THE S&P 500 AND THAT ECONOMICSURPRISECLIMBING HIGHER, TELLING US THE ECONOMY IS DOING BETTERTHAN ANALYSTS AND STRATEGISTS WERE THINKING. PERHAPS THAT TELLS US THE ECONOMY AND STOCKS CANHANDLE RATESGOING HIGHER, THAT'S WHAT WE DOHAVE A LITTLE BIT OF THIS DICHOTOMY. TAKE ALOOKOF THE NEXT CHART, WHICHSHOWS IN SLOWCYCLES, IT'S THE SECOND SLOW CYCLETHE PAINFUL FOR STOCKS. POSSIBLY THIS WEDNESDAY, WITH THE THATSTOCK WITH A LAG, THAT COULD BE WHAT WE'RE LOOKING AT. ANDFINALLY, WHEN WAS IT A LITTLELONG-TERM CHART THE GIVES GREAT PERSPECTIVEIN TERMS OF YIELD ANDSTOCKS, WE SEE THE S&P 500HAS REALLYSHOT TOTHE RECORD HIGHS. WHAT SEEMS TO HAVESUPPORTEDTHE S&P 500 PERHAPS TO SOMEDEGREE ARE RATESGOING LOWER, REALLY THAT EXTRA ORDINARY MONETARY POLICY HELPING TO FUELRATES AND STOCKS GOING HIGHER. YIELDS GOING LOWER TELLS US BONDS ARERALLYING. TO HAVE BONDS AND STOCKS RALLYING AT THESAME TIME AS A BIT OF A DIFFERENCE. ITCOULDBE INTERESTING, MAYBE WE GET BACK TO THE OLDPARADIGM OF BONDS SELLING OFF ASRATES GO HIGHER. GOINGBACK TO THE IDEA THATTHE ECONOMY SUPPORTS THAT KIND OF RETURNS THAT DYNAMIC THAT IS CONSIDERED TO BE MORE NORMAL. JULIE:MAYBE IT'S NOT. WHAT WE THINK IS THAT NORMAL PARADIGM ISN'T A NORMAL AFTER NOT -- AFTER ALL. DAVID:WE WILL GET SOME OF THE BIGGEST BUSINESS STORIES IN THE NEWS RIGHT NOW. WE START WITH CHAIRREDSTONE, THE PROPOSED MERGER OF CBS AND VIACOM. THEY NOTIFIED BOTH BOARDS TODAY, A PERSON FAMILIAR WITH THE MATTER SAYSVIACOM INTERIM CEO WILL BECOME THECOMPANY'S HERMIT LEADER. MEANWHILE, THE NEW YORK POST SAYS CBS IS PURSUING OTHER POTENTIAL DEALS. THE BROADCASTER ITSELF COULD BE OF INTEREST TO VERIZON. CREDIT SUISSEIS PLANNING ON SUBLEASING SPACE IN LONDON'S CANARY WHARF FINANCIAL DISTRICT. THE BANK AND SAID THEYWOULD CUT ABOUT 4200 WORKERS BY YEARS END. CREDIT SUISSE MAYSUBLET ELSEWHERE,INCLUDING ALL FOUR YARD, ASIT TRIES TO CUT RENTAL BILLS. THEY WILL START OFFERING GRAPHICSTIPS FOR ARTIFICIAL INTELLIGENCE USED IN DATA CENTERS. THE CHIPS OF THE COMPANY'S FIRST PRODUCT TO HELP COMPUTERS TRAIN THEMSELVES IN TASKS LIKE IMAGE RECOGNITION AND THEYEXPECTTHE CHIPS TO GO ON SALE IN THE FIRST HALF OF NEXT YEAR. THAT IS THE BLOOMBERG BUSINESS FLASH. JULIE:CHIPOTLE SHARES ARE HIGHERTODAY ANDTHECO-CEOS LEAVING THE EMBATTLEDCHAIN, FOLLOWING A TOUGH YEAR FOR CHIPOTLE. THEYSUFFEREDA SERIES OF FOODBORNE A LIST OUTBREAKS IN 2015 ANDARE STILL STRUGGLING TO REPAIR THEIR IMAGE. JOININGUSIS CRAIG GMONA-- CRAIG GMONA. HOW DOES THIS CHANGEHOW TO PULL IT WILL BEMANAGING? CRAIG: IT'S NOTCLEAR THAT IT WAS. IT'S THE FOUNDERSBABYAND HEIS TAKING SOLE CONTROL OF THE CRITICAL TIME. THE TURNAROUND HAS BEEN SLUGGISH ATBEST,IS NOT EVIDENT THAT THEY CAN TURN THIS THING AROUND AND HE IS SAYING I'M GOING TO BE SOLELYRESPONSIBLEFORRUNNING OPERATIONS. HE'S ADMITTING THATTHESE RESTAURANTS ARE NOT BEING RUN PARTICULAR WELL. HALF OF THE RESTAURANTS AREN'T UP TO PAR. THIS IS IN TAKING CONTROL. DAVID: THE CREATOR OF CHIPOTLE, AND MONTY WAS THEGUIDED-- THE GUY WHO WASBROUGHT IN TO BE THE BUSINESS PART. CRAIG:MONTY MORAN WASCEOWHEN IT WAS FLYING. FORYIELDS, -- FORYEARS,THE STOCK WENT UP UNTIL HE HIT THIS MAJOR ISSUE. I DON'T THINKIT'SA FAILURE, HE WAS THE CEO INCHARGE WHEN THEY REVOLUTIONIZED FAST FOOD WITH THEIRMODEL. JULIE:IF HE SAYS HALF THE STORES AREN'T UP TO PAR, WHAT DO YOU DO TO CHANGE THAT? CRAIG:THEY MADE THEIR BRAND BY BEING SIMPLE. YOUWALK IN AND SEE THE ASSEMBLY LINE,IT WAS A NOVEL CONCEPT. BUT ALL THE FOOD SAFETY STUFF HAS MADE A COMMENTATOR TO RUN THESE RESTAURANTS. THEY ARE NEARLY AS FAR AS FOOD PRINT AND ANEW SAFETY PROTOCOLS,BUT WE'VETAKEN OUR EYE OFF THE BALL WHEN IT COMES TO THE CUSTOMER EXPERIENCE. THEY SPENT MILLIONS OFDOLLARS GETTING PEOPLEBACK WITH FREE BURRITOS. WHEN THEY COME BACK, THEY NEED TO BE REMINDED WHY THEYLIKE CHIPOTLE IN THE FIRST PLACE. DAVID:PRESUMABLY IT WAS THE BOARD THAT INFLUENCE THE DECISION. HOW MUCH CONFIDENCE ISTHERE ON THE PART OFINVESTORS AT THIS TIME? CRAIG:THE BOARD HAS BEEN UNDER ATTACK, THEY'VE BEEN CALLED OLD, MALE, AND STALE. HEWOULDN'T SPECIFY IF THE END OF THIS YEAR OR ENDOF 2017, BUT WE ARE GOING TO SEE NEW BOARD MEMBERS. A LOT OFTHEM HAVE BEENON THERE SINCE IT WAS A PRIVATE COMPANY OWNED PARTLY BY MCDONALD'S. THEY NEED SOME NEW BLOOD, BILL ACKMANSAYS THISDECISION WAS NOT ATTHE REQUEST OF PERSHING, IT WAS HIS DECISION ON THE BOARD. PEOPLEDID SEE SIZE THEY CAN TURN IT AROUND. JULIE:ONETO PULL IT WAS HIGH FLYING TO EXPLOREDIFFERENT VENTURES. CHOPHOUSE, THE PIZZA CHAIN, WHAT IS THE STATUS OF THOSE EFFORTS NOW THATCHIPOTLE'SBUSINESSES DOWN. CRAIG:NO ONE QUESTIONED IT, THERE WAS ANASIAN CONCEPT, A PIZZA CONCEPT. NOW THERE'S A LOT OF SCRUTINY. SHOULD THEY HAVE THEIR SOLE FOCUS ON GETTING THE PERRIGO THING RIGHT? -- THEPERRIGO-- THEBURRITO THINGRIGHT? THERE'S A LOT OFQUESTIONS IN THE INVESTMENT COMMUNITY ABOUT WHETHER THEY SHOULD BE FOCUSING ON SIDE PROJECTS. DAVID:HE SAYS THE INABILITY TO RUN GOODRESTAURANTS IS ALMOST MIND-BOGGLING. HOWMUCH CAN YOU EXTRAPOLATE THIS TO HOW THE RESTAURANTS ARE DOING? HOW DO THEY SHAKEOUT THROUGH THEINDUSTRY? CRAIG:THE THING FORCHIPOTLEIS THEY HAVE TO FIGURE OUT HOW TO DO THE FOOD SAFETY STUFF AND RUN GREAT RESTAURANTS. IT SEEMS LIKE THEY SPENT THE LAST YEAR MAKING SURE THE FOOD WAS SAFE, WHICH THEY HAD TO DO. IT'S MUCH WORK OBLIGATED TO RUN THOSERESTAURANTS ANDTHEY HAVE TO GET BACK TO DOING THAT AND DOING GREAT RESTAURANTS. IT'SBEEN A STRUGGLE SO FAR. JULIE:CRAIGGIAMMONA, TALKING TO US ABOUT CHIPOTLE. COMING UP ON "WHAT YOUMISSED," DAVIDWUWILL DISCUSS WHY TRUMP RAISING DOUBTS ABOUT THE ONE CHINAPOLICY IS A BIG DEAL. THAT'S A 4:00 P.M. EASTERN. DAVID:AND IMFRESEARCHERTURNED VENEZUELANWHISTLEBLOWER AND POTENTIALADVISOR TO THE DONALD TRUMP TRANSITION TEAM. WE SHOULD ISSUE TO HIM, NEXT. THIS IS BLOOMBERG. ♪ DAVID:THISIS "BLOOMBERG MARKETS,"I'M DAVID GURA. THE GOVERNMENTOF VENEZUELAHAS A LOT OF ENEMIES INWASHINGTON, BUT FEW MORE CONNECTED OR COMMITTED THEN MARTIN MOBILE. WE SPOKE TO EVEN BRONER ABOUT HISPROFILE OF HIM. >> WE STARTED OUT LOOKING FOR A STORY ABOUT HOWLOOKINGATTHIS SHOWS YOU HOW VENEZUELAHAS FALLEN APART. WE FOUND OURSELVES WITH HIM AND COMPLETE FASCINATED BY HIS WORLD. HE HASBECOME A KINDOF BROKER, BRINGINGWHO WANTTO GIVE TESTIMONY, AND FEELING TO HAVE NOCHOICE BUT TOGIVETESTIMONY TO YOU AS OFFICIALS WERE PURSUING CASES OF DRUG TRAFFICKING. >>TAKE A STEP BACK. HE WAS A LOW-LEVEL EMPLOYEE. ATTHE IMF. HOW DIDHE BECOME TO BE THE CENTER OFWATCH-- MUCH OF WHAT IS BAD INVENEZUELA? ETHAN: HE CAME HERE TO STUDY ENGLISHFROM VENEZUELA. HE IS VENEZUELAN. HE CAME HERE IN2000AND HE STARTED WORKING AND MET A GUY IN A PARTY WHOBECAME -- AN ISRAELI GUY WHO WENT TOWORK FOR A CONSULTING FIRM THAT WASHIRED BY A BIG BANK THAT WAS WORRIED THATMONEYCOMING FOR A BANK THEYWANTED TO BUY INPANAMA HAD IRANIANMONEY COMING THROUGHIT, WHICH WOULD VIOLATE U.S. SANCTIONS AGAINST IRAN. FROMTHERE, HE HAD AFREELANCER. >> WHERE DID HIS BUSINESS START UP ROCK -- TOPROSPER? ETHAN: TO TAKEIT ONE STEP BACK, HE HAD BEEN AN INTERN FOR SEVERALMONTHS THEY ALLCOMPANY BEFORE COMING TO AMERICA -- AT THE OILCOMPANY BEFORE COMING TO AMERICA. WHEN THISGUY CAME TO HIM AND SAIDIS THIS COMPANYINVOLVED WITH IRANIAN MONEY, HE CALLED A FRIENDAND IT ALL SORT OF OPENED UP. THE WHOLE BUNCH OFDOCUMENTS, HE WORKS THESTORY AND IT WAS PARTLY OUT OF PATRIOTISM. HE WASN'T MAKING ANY MONEY. BUT ULTIMATELY, HEREALIZEDTHAT U.S. AGENCIES WOULD PAYHIM TO BRING THESE FOLKS AND HE COULD ACT AS ANINTERMEDIARY HELPING THE PEOPLE WHO WANTED TO TALK CUT ADEAL WITH U.S. AGENCIES. IN THE AGENCIES PAID HIM. AND THEN THEFOLKS,SOME OF THEM WHO WERE WEALTHY, WERE WILLING TO PAY HIM TO HELP THEM GET OUT. AND ULTIMATELY, HE WENT TOWORK AS A CONSULTANT FOR BIG BANKS AND HEDGE FUNDS. >> HE ACTUALLY BROUGHT SOMETHING LIKE TWO DOZENELITES FROM VENEZUELA TO THE UNITEDSTATES TO TELL ABOUT WHAT WAS GOING WRONG IN VENEZUELA. SPECIFICALLY, THEIR GIANT OIL COMPANY. TALKING ABOUT FORMER GENERALS. ETHAN: ABSOLUTELY. THESE ARE VERY SERIOUS PEOPLE, SOME OF WHOM HAD BEENINVOLVED OR SEEN BAD STUFF. SOME OF THEM WERE SUDDENLY BEING PURSUED BY THE REGIME IN VENEZUELA. ANDMARTINBECAME AGUY THEY KNEW WHO HAD LINKS TO U.S. AGENCIES, AND BECAME THEIR INTERMEDIARY. HE ALSO HAS A VERY CHARMING MANNER. HE SINCEYOUDOWN AND OFTEN THEY WOULDMEET AT A CARIBBEAN ISLAND. HE WOULD DOWNLOAD WHAT YOUKNEW, AS SOMEONE WHO WANTED TO GET THAT INFORMATION OUT. AND THEN HE WOULD FIGURE OUT WHERE IT COULD GO. HE ENDED UP BEING THIS AMAZING INTERMEDIARY. >> YOU MET HIM. ETHAN: I SPENT MANY HOURS WITH HIM. >> WEDNESDAYLIKE -- WHAT IS HE LIKE? ETHAN: HE'S INTERESTING GUY. THE WORLD WE ARE TALKING ABOUT SEEMS LIKE AN UNDERWORLD. BUT MARTIN IS VERY CHARMINGAND HE IS SORT OF A BULLDOZER AND THEPUSSYCAT AT THE SAME TIME. HE'SA GUY WHO CANGET HIS WAY, BUT ALSO SORT OF MOVES YOU THROUGH HIS SINCERITY. YOUDON'T HAVE THE FEELING THAT HE IS OUT TO SCREWYOU,TO BE PERFECTLY HONEST. HEWANTS TO MOVE THIS THING ALONG. AND HEISVERY UPSET ABOUT WHAT HAPPENED IN VENEZUELA AND HE WANTS TO HAVE THE GOVERNMENT BE MOVED OUT. DAVID:YOU CAN READ ETHAN'S LATESTSTORY IN THE LATEST ISSUE OF "BLOOMBERG BUSINESSWEEK." HEAR FROM THE REPORTERS EVERY SATURDAY AND SUNDAY ON BLOOMBERG TELEVISION. JULIE: COMING UP ON "BLOOMBERG MARKETS,"BILLCOHENDISCUSS THE NEW TELEVISION GIANTS. AT2:20 EASTERN. THIS IS OVER. -- THIS IS BLOOMBERG. ♪ SCARLET:IT'S 7:00 P.M. IN LONDON. I'M SCARLET FU. OLIVER: AND I'M OLIVER RENICK. WELCOME TO "BLOOMBERG MARKETS." SCARLET: WEARE LIVE IN BLOOMBERGWORLD HEADQUARTERS IN NEWYORK, COVERINGSTORIES OUT OF THE AND A, MOSCOW, AND LOS ANGELES. OILIS FIGHTING TO A 17 MONTH HIGH AFTER SAUDIARABIAPUTS DEEPER CUTS. AND THE 10 YEAR YIELD AT ONE POINT TOUCHING ITSHIGHESTSINCE 2014. EXXONMOBIL CEO REX TILLERSON SAID TO BE UNDERCONSIDERATION FOR U.S. SECRETARY OFSTATEWITH TWO DECADES OF DEALMAKING IN RUSSIA UNDER HIS BELT. THE KREMLIN IS A PRODDING THE MOVE WHILE U.S. LAWMAKERS ARE RAISING SOME RED FLAGS. PRESIDENT-ELECT DONALD TRUMP TAKESAIM AT LOCKHEED'S F-35 FIGHTER JETPROGRAM, HIS TWEET SENDING DEFENSE STOCKS LOWER ON THE DAY. U.S. MARKETS CLOSE IN JUSTUNDER TWO HOURS. AS GET A CHECK ON WHERE EQUITIES ARETRADING WITH ABIGAIL DOOLITTLE. LOOKS LIKE AN EXTREME. ABIGAIL:-- A MIXED BREED. ABIGAIL:ITIS, BUT IT HAS RECORD HIGHS. THE DOWUPTO A RECORD CLOSING HIGH. THE S&P 500 CARVED OUT ANOTHER FRESH INTRADAY RECORDHIGH. IT WILL BEINTERESTING TO SEE A STOCK-- IF STOCKS CAN TURN HIGHER CLOSING. BUT THE NASDAQ HAS BEEN DOWN ALL DAY, DRAGGED DOWN BY TECHNOLOGY AND BIOTECH. AS FOR WHAT'S HOLDING BACK THE S&PAND THE DOW, WE'RE LOOKING AT THE FINANCIALSECTOR, WE HAVE BANK OFAMERICA, JP MORGAN, ALL LOWER. STOCKSARE TAKING A BIT OF A BREATHER, THE FINANCIAL SECTOR IS THE TOPSECTOR SINCE THE ELECTION, UP ABOUT 18% AHEAD OF TODAY ON GROWTH EXPECTATIONS. AS YIELDS OF CLIMBEDHIGHER, THE 10 YEAR YIELDHITA LEVEL NOT SEEN IN QUITE SOME TIME. NOW THOSE GAINS ARE REPAIRING. WE TAKE AN INTRADAY LOOK AT THE 10 YEARYIELD, AND ALSO THE BLOOMBERG DOLLAR INDEX IN BLUE. THE BLOOMBERG DOLLAR INDEX HAS BEEN DOWN ALL DAY. IT APPEARS TO BE LEADING THE 10-YEAR GILTSDOWN-- 10 YEAR YIELD DOWN. THIS MAY SUGGEST A FED RATEHIKE IS PRICEDIN LARGELYON WEDNESDAY AND THAT WE ARE NOW STARTING TO SEE A YIELD TRADE DOWN INTO THAT. TURNING TOA PART OF THE COMMODITY COMPLEX THAT HAS BEEN UNDER LOOKEDTODAY BECAUSE OF OILSGAIN, NATURALGAS, IS DOWN SHARPLY, DOWN6%. HOPES FOR COLD WEATHER HAVE REALLY BEENSNAPPED, RIGHT NOW WE ARE SEEING WARMER WEATHER THAN EXPECTED ON THIS. SOUTHWESTERN ENERGY AND RANGE RESOURCES TRADING LOWER. AS ACTUALLY HAVING ITS WORST TODAY IN QUITE SOME TIME. THERE IS SOME REASON TO THINK THISCOULDREVERSE. THIS IS G#BTW42-28. THE LONG-TERM CHART OF NATURAL GAS. THEY PUT IN THE GOLDEN CROSS IN THE GOLDEN CROSS AND 50 DAY MOVING AVERAGE MOVED OUT TO THE 200 DAY MOVING AVERAGE. ITSPEAKS OF THE LAST OF THE BULLISH BUYING MOMENTUM. ONE WAS PUT IN EARLIER THIS YEAR, TELLING US WHILE IT MIGHT BE ABUFFER AND A VOLATILERIDE, THE GAINS COULD BEAHEAD FOR SOME OF THOSE E&P STOCKS AS WELL. SCARLET:ABIGAIL DOOLITTLE, WE WILL KEEP AN EYE ON THAT. JULIE:-- OLIVER: MARK CRUMPTON IS IN THE NEWSROOM WITH MORE. MARK: SPEAKER PAUL RYAN SAYS THE HOUSE INTELLIGENCECOMMITTEE WILL LOOK INTO CYBER THREATS SUCH AS HACKING BY RUSSIA OF THE DEMOCRATIC NATIONALCOMMITTEE AND HILLARY CLINTON'S PRESIDENTIAL CAMPAIGN. HE SAYS ANY INVESTIGATION SHOULD NOT CASTOUT ON WHATHE CALLED THE CLEAR AND DECISIVE OUTCOME OF THIS ELECTION. MEANTIME, JOSHEARNEST HAD THIS TOSAY ABOUT THE INVESTIGATIONS. JOSH EARNEST: HE DIDN'T NEED A SECURITY CLEARANCE TO FIGUREOUT WHOBENEFITEDFROM MALICIOUS RUSSIAN CYBER ACTIVITY. THEPRESIDENT-ELECT DIDN'T CALL INTO QUESTION. HE CALLED ON RUSSIA TO HACK HIS OPPONENTS. HE CALLED ON RUSSIA TO HACK SECRETARY CLINTON. MARK: ERNEST CALLEDGOVERNMENT INTELLIGENCEOFFICIALS ACCURATE. SHOCK OF THETOPHAS BEEN SENTENCED TO 10 YEARS FOR RACKETEERING SCHEME THAT INCLUDED MONEY LAUNDERING AND BRIBERY. THE FEDERAL JUDGE CALLED THE 60-YEAR-OLD DEMOCRATS CRIMES ASTONISHING. HE AND HIS TV ANCHOR WIFE HADA $500,000 ANNUAL INCOME. HE INSISTS THATJUST -- THE JUSTICEDEPARTMENT'S RACKETEERING CASES LYRICALLY MOTIVATED. EGYPT'SPRESIDENT SAID A SUICIDEBOMBER CAUSED THE EXPLOSION THAT KILLED 24 CHRISTIANSIN A CHAPEL IN CAIRO. HUNDREDS ATTENDED THE MEMORIAL EARLIER TODAY FOR THOSE KILLED. IT WAS ONE OF THE DEADLIEST ATTACKS ON A RELIGIOUS MINORITY IN RECENT MEMORY. THE U.S. SUPREME COURT IS ALLOWING THENFL$765 MILLION CONCUSSION AGREEMENT TO STAND. THE JUSTICES LEFTALONE A FEDERAL APPELLATERULINGTHAT THE DEAL, WHILE IMPERFECT, WAS A FAIRRESOLUTION OF CLAIMS FILED INBEHALF OF MORE THAN 20,000 RETIREDPLAYERS. FORMER PLAYERS WHO OPPOSE THE ACCORDFEARED IT WOULD INADEQUATELY COMPENSATE THEM FOR THE BRAIN DAMAGE THEY MAY HAVE SUFFERED. GLOBAL NEWS, 24 HOURS A DAY, POWERED BY MORE THAN 2600 JOURNALISTS AND ANALYSTS IN MORE THAN 120 COUNTRIES. I'M MARKCRUMPTON, THIS IS BLOOMBERG. OLIVER:THANK YOU, MARK. WILL WE SEE A DOWNTURN IN THE ECONOMY DURING A DONALD TRUMP PRESIDENCY? CARLYLEGROUPSTEVE RUBENSTEIN WARNED THE U.S. DOWAS-- WAS DUE FOR RECESSION. >> WE TEND TO HAVERECESSIONS EVERY SEVENYEARS IN THE UNITED STATES. AT SOME POINT, YOUCAN EXPECT A RECESSION. I DON'T THINK WEARE HERE NOW, THERE'S NO INDICATION, BUT YOU DO EXPECT SOMESLOWDOWN AFTER PRETTY GOODGROWTH IN THE LAST COUPLE OF YEARS. OLIVER:EARLIER TODAYON BLOOMBERG "DAYBREAK AMERICA'S," HEBACK STEPPED OFF OF ANY IMMEDIATE DOWNTURN. >> WHEN ALAN GREENSPAN WAS THE HEAD OF THE FED, THERE WASSOME TALK THAT THE BUSINESSCYCLE HAD BEEN REPEALED BECAUSE WE POSTPONEDRECESSIONFOR QUITE SOME TIME. THAT TURNED OUT NOT TO BE THE CASE. SINCE WORLD WAR II, WE HAVE RECESSIONS ON AVERAGE EVERY SEVEN YEARS, BUT WE'VE GONE AS LONG AS NINE AND A HALF YEARS. WE PROBABLY PUSHED THE RECESSION DOWN THE ROAD A LITTLE BIT BECAUSE THE STOCKMARKETIS MORE BULLISH ANDTHERE IS MORE CONFIDENCE IN THE MARKET. AND WHETHER OR NOT THIS ISA, THERE'S NO DOUBT THAT WE ARE NOT LIKELY TO HAVE A RECESSION IN 2017. >> USTINOV IN PARLIAMENT AND SAID IT'S THE END, BOOM AND BUST. IF WE DON'T GET FISCAL STIMULUS THIS LATE INTHE CYCLE,, JIM OF BOOM AND HOWMUCH OF ABUST WILL SOONFOLLOW? >>NO ONE KNOWS. IFYOU ARE PUSHING IT DOWN THE ROADAT SOME POINT, A DECLINE COULD BEGREATER THAN WOULD OTHERWISE BE THE CASE. I KNOW THAT WE ARE GOING TO SEE ANYTHING LIKE A 2006 ORSEVEN, WHEREWE ARE LIKELY TO GO INTO A GIGANTIC GREAT RECESSION. WHEN WE HAVE IT, WE WILL HAVE A MODEST RECESSION. IT'S NOTLIKE2017 WE ARELIKELY TO SEE A STIMULUS OUT OF THE CONGRESSAND LIKELY TO SEETAX CUTS AND ASA RESULT,YOU PUSH DOWN ANY RECESSION FOR QUITE SOME TIME. >>HOW YOU PROCESS THAT AS AN INVESTOR AND MAKE DECISIONS? WHEREYOU AND YOURCYCLE ABOUT BUYING AND SELLING. >> IN UNITED STATES, WE ARE VERY DETERMINED TOMAKE INVESTMENTS NOW BECAUSE WE THINK IT'S A PRETTY GOOD TIME TO INVEST. PRICES ARE NOT CHEAPBUT FINANCING IS AVAILABLE. IN EUROPE, PRICES ARE CHEAPER AND VERY ATTRACTIVE RIGHT NOW. ABOUT THE ANIMALSPIRIT -->> WHAT ABOUT THE ANIMUSSPIRIT? >> WE AREALWAYSSELLING SOMEONE IS APPROPRIATE TO SELL, BUT RIGHT NOW, PRICES ARE HIGH. AS A FAIR AMOUNT OF SELLING GOING ON. IN SOME SECTORS, PRICES ARE DEPRESSED AND YOU CAN MAKE GOOD INVESTMENTS. THE SECTORS THAT ARE DOING WELL ARE THE ONES YOU WOULD WANT TO SELL. >> HELP US UNDERSTAND WHICH IS WHICH? INERGY, HE SAYS I HAVE NOTHING. WHERE IS THE DISTRESSED OPPORTUNITY? >> THEY NOT BE IN THE UNITED STATES RIGHT NOW. THERE MAY BE OTHER PARTS OF THE WORLD. WE'RELOOKING AT GLOBAL INVESTMENTS. INTHE UNITED STATES, EVERYTHING IS DOING REASONABLY WELL. RIGHT NOW, I DON'T SEE A GIGANTIC AREA OF DISTRESS. SOME COMPANIES MAY HAVE BORROWED TOO MUCH AND WHILE THE SECTOR MIGHTBEGOOD, THE COMPANY ITSELF MAY NOT BE IN GREAT SHAPE YOURIT-- IN GREATSHAPE. >> WE'VE SEEN A LOT OF GEOPOLITICAL RISK IN MARKETS NOT BEING ABLE TO PRICE IT IN. ASYOU LOOK AT EUROPE, HOW YOU PROCESS THINGSLIKE ITALY AND FRANCE AND EVENGERMANY? >> THERE'S NO DOUBTTHATEUROPE IS MORE STRESSED THAN THE UNITED STATES. BECAUSE WHAT'S GOING ON IN ITALY AND THE BREXIT SITUATION AND FRANCE, THEUNCERTAINTY THERE IN TERMS OFWHO THE NEXT PRESIDENT WILL BE, AND THERE'S NODOUBT THAT THERE'SA CHANCE FOR LOWER PRICESTHAN BEFORE. EUROPE IS BEING HELPED ALOT BY QUALITATIVEEASING THAT THE ECB IS DONE ANDTHEY HAVE TO CONTINUE DOING THAT FOR QUITE SOME TIME. THERE'S NO DOUBTTHE PRICES ARE CHEAPER IN EUROPE THAN ELSEWHERE. >> YOU TOUCHED ON THE AVAILABILITY OF FINANCING. THE PRICE OF CREDIT IS GOING TO CHANGE IN THE COMING YEARS. PERHAPS SIGNIFICANTLY. WHAT IS THAT GOING TO MEAN FOR YOU? >>OF THE FED WERE GOING TO INCREASE BY 20 BASIS POINTS THIS WEEK,I'M BUILT INTO THE MARKET. EVEN IFTHEY WERE GOING 100 BASIS POINTS, THAT'S OUT OF GIGANTIC INCREASE. IF YOU WERE GOINGTO HAVE AN INCREASE OF SEVERAL HUNDRED BASIS POINTS, THAT WOULD BE DIFFERENT. CREDIT AVAILABILITYIS A MUCH GREATERPROBLEM THANCREDIT PRICING RIGHT NOW, BECAUSE THERE'S PLENTY OF CREDIT AVAILABILITY. IF THAT WERETO GO AWAY, IT'S A PROBLEM. I DON'T SEE ANY SIGN OF THAT HAPPENING. >> YOUR CENTER, AND WE ARE THINGS LIKE REXTILLERSON GOING TO BE SECRETARY OF STATE. ADULT OF YESTERDAYQUESTIONING THE ONE CHILD POLICY. HOWDOES THAT AFFECT YOUR INVESTMENT WILL. >> WE'RE REALLY LOOKINGAT LONGER-TERM INVESTMENTS, AND LONGER-TERM PROJECTIONS. BUT YOU HAVETO TAKE INTO ACCOUNT WHEN PUBLIC FIGURES SAY IN TERMS OF THE STATEMENTS. I DON'T THINK IT WILL AFFECT WHATWE DO IN TERMS OF A LONGER-TERM INVESTMENTS. WE'RE STILL BULLISH ON CHINA. SCARLET:THE MARKETS WERE FLYING TODAY BUT NOT ON CHINA. WHY ARE YOU BULLISH WHEN THERE SEEMS TO BE THE RISK OF TRADE WAR WITH THEU.S.? THEYWANT TO BURST THE PROPERTY BUBBLE. >> THEREARE1.4 BILLION PEOPLE IN CHINA. THEY ARE GROWING AT 6.5% OF THEIR GROWING AT 1.5, 1.7%. GIVEN THE SIZE OF THEPOPULATION , WHILE THERE MAY BE TEMPORARY UPS AND DOWNS, THE AMOUNT OF PEOPLEARE SIGNIFICANCE. IT'SA SMALL PERCENTAGE OF THEIR ECONOMY, THERE'S ENORMOUS OPPORTUNITY TO INVEST IN CHINA NOT BE CROWDED OUT BY SO MANY OTHER PEOPLE. >> ALAN GREENSPAN USEDTO FAMOUSLYSAY THE MANAGER LOOKING AT CHINA IS YOU COULDTELL THE NUMBER BEFORE THE QUARTERS WAS OVER. I THINK THE ECONOMY IN CHINA IS TWO DIFFERENT ECONOMIES. THE STATE OWNEDENTERPRISES ECONOMY MAY BE GROWING AT 2% OR 3%. THEOTHERNUMERAL -- THE ENTREPRENEURIAL ECONOMY IS ONLY 10% OR 11%. TOGETHER, ISABOUT 6.5%, AND THOSE NUMBERS ARE LEGITIMATE. CHINESELEADERS USE MANY THING TO FIGURE OUT WHAT THE NUMBERS ARE AND THEY USE ELECTRICITY TRANSMISSIONANDTHEY WOULDSAY 6.5% IS A PRETTY GOOD NUMBER. OLIVER:THAT WAS DAVID RUBENSTEIN, COFOUNDER AND CO-CEO OF THE CARLYLEGROUP SPEAKING EARLIERONBLOOMBERG "DAYBREAK AMERICA'S." YOU CAN CATCH YOU SHOW ANYTIME ONLINE ANDTHIS WEDNESDAY. SCARLET:PRESIDENTELECT DONALD TRUMPTAKES AIM AT LOCKHEED MARTIN,LOCKHEEDSHARES AT A ONE-MONTH LOW. YOU HAVE ROBERT BRUMMOND AND RAYTHEONEACH DOWN BY BETTER THAN 2%. AQUICK GLANCE AT ROME,ITALY THE SWEARING IN OF ITALY'S NEW PRIMEMINISTER, ALONG WITH HIS NEW CABINET. THIS IS BLOOMBERG. ♪ SCARLET:THIS IS "BLOOMBERG MARKETS,"I'M SCARLET FU. OLIVER:I'M OLIVER RENICK. SCARLET:BREAKING NEWS, BARCLAYS,CITIGROUP, IS HELPING THE U.S.GOVERNMENTBROUGHT IN A CURRENCY INVESTIGATION. THEY AGREED TOALLEGATIONSOF CURRENCYTAMPERING, BUT THE INFORMATION I GAVE UP ANDRETURN ISNOW BEING USED BY THE GOVERNMENT TO BROADEN THIS INVESTIGATION INTO MANIPULATION OF THE FX MARKET. YOU HAVEJPMORGAN, BARCLAYS, AND CITIGROUPOPERATING -- COOPERATING TOOFFER EVIDENCE OF AN ANTITRUST CONSPIRACY IN THE FXMARKETON DIFFERENT CURRENCIESTHAN THE ONE THAT WERE THE CENTER OF THE 2015 INVESTIGATION, ALLACCORDINGTO COURTPAPERSFILED BY THE GOVERNMENT AND BANKS IN ADVANCE OFSENTENCINGIS SCHEDULED FOR LATER THIS WEEK. WE'LL EVEN I ON THIS FOR YOU. MEANTIME, IF YOULOOK AT THE DEFENSE SECTOR, SHARES OF LOCKHEED MARTIN ARE UNDER PRESSURE TODAYAFTER PRESIDENT ELECT DONALD TRUMP TWEETED THE F-35 PROGRAM AT ITSCOST ARE OUT OF CONTROL. TRUMP ALSOMENTIONED THE PROGRAM DURING HIS INTERVIEW ON FOX NEWS SUNDAY. DONALD TRUMP:IDON'T NEED A $4.2 BILLION AIRPLANE TO FLY AROUND IN. I DON'T NEED THAT. ESPECIALLY WHEN IT'S TOTALLY OUT OF CONTROL. THEY LOST CONTROL OF IT. I LET THEMKNOW THAT I WANT THIS. I JUST SEETHINGSTHAT'S SO GOOD. THE F-35PROGRAM WITH THE MONEY, THE HUNDREDS OF BILLIONS OF DOLLARS, IT'S OUT OF CONTROL. SCARLET:MEANWHILE, LOCKHEED MARTIN SAID IN A STATEMENT TODAY IT HASWORKED TO LOWER THE PRICE OF THE F-35 ARE MORE THAN60% AND WE WELCOME THEOPPORTUNITY TO ADDRESS ANY QUESTIONS THE PRESIDENT-ELECT HAS ABOUT THE PROGRAM. IT IS A GREAT PROGRAM. FOR MORE ON THIS, LET'SGET TO THE PRESS ANALYSTFORBLOOMBERG. DOUG, GIVE USSOME CONTEXT. ITSEEMS LIKE THE PRESIDENT-ELECT JUST BROUGHT UP THE F-35 PROGRAM WITH MY -- WITHOUT MUCH PRODDING. WHY IS HE BRING THISUP NOW? DOUG:IT'S THE GOVERNMENT'S BIGGEST DEFENSE PROGRAM RIGHT NOW. IN TOTALITY, THE GOVERNMENT ESTIMATESITWILL COSTABOUT $400 BILLION TO BUY ALL OF THE F-35'S, AND THAT'S JUST THE U.S. ALONE. WEARE FAR INTOTHISPROGRAM, THERE'S A LOT OFRISKS BEHIND THE PROGRAM. IF YOU LOOK AT IT AND WILL BASIS, THE U.S. WILL SPENDABOUT $10BILLION ON THE F-35 THIS YEAR. IN TERMS OFLOCKHEEDNEXT YEAR, THEY EXPECT GENERATEABOUT $12 MILLION OF THEIRTOTAL REVENUE. QUITE ABIT MORE THAN 20%. ITPROGRAM, THAT'S THEGENESIS TOTHEPOINT WHY PRESIDENT ELECT TRUMP IS COMING OUT THIS. OLIVER: YOU MENTIONED THE PROGRAM ISWELL UNDERWAY, YET TRADERS IN THE MARKET CLEARLY REACTEDANDSOLD OFF LOCKHEED MARTIN PRETTY QUICKLY TODAY. WHAT ARE PEOPLE WORRIED ABOUT? WHAT WOULD YOU BE WORRIED ABOUT WHEN YOU LOOK AT WHAT THEY HAVE TO LOSE HERE? DOUG:THE BIGGEST CONCERN FROM ABROAD DEFENSECONTRACTOR STANDPOINT, NOW THAT WEARE TRANSITIONINGTO THE NEW ADMINISTRATION UNDER PRESIDENT-ELECT DONALD TRUMP IS THE ATTACK ORFOCUS ON DEFENSE PROFITABILITY. WE THINK THE BIGGEST RISKSARE IF THE NEW IT ADMINISTRATION FOCUSES ON COST AND CONTROLLING COSTS. IN ALLLIKELIHOOD, THE CONTRACTOR PROFITABLYMARGINS COULD SEE A DECLINE FROM THAT. THAT'S NOT TO SAY WE ARENOT IN MORE OF A POSITIVE DEFENSE SPENDINGOUTLOOK AND REVENUE AND PROFITS, WE EXPECT WILL RISE. THINK PROFITABILITY FROM A DEFENSECONTRACTOR IS GOING TO BE THE BIGGESTFOCUSAS WE MOVE WITH THE NEW IT ADMINISTRATION. SCARLET:IF YOU GOINSIDETHE BLOOMBERG, IT'S NOT JUST LOCKHEEDMARTIN THAT HAS BEEN SUFFERING IN THE WAKE OF HIS COMMENTS. RAYTHEON ISDOWN AS WELL. THIS IS A CHART FROM DANCURTIS, THE BLUE PART IS HOWMUCH RAYTHEON GETS FROM THE DEPARTMENT OF DEFENSE, VARIES BETWEEN60% TO 60% OF THETOTAL, CLEARLY THIS ISNOT-- 60%TO 68% OF THE TOTAL. CLEARLY THIS IS NOT JUST LUCKY BARTON. DOUG:THEY WERE SAYING DEFENSE COMPANY'S WERE GOING TO BENEFITS. SCARLET:ALITTLE BITOF A HEAD SCRATCHING. THANKYOU, DOUGROTHACKER. OLIVER:VIACOM IS LEFT OUT OF IN THE COLD AS DEAL TALKS WITH CBS COLLAPSE. THE CHANGE IN PLANS MAY BE GOOD NEWS FOR CBS. THIS IS BLOOMBERG. ♪ SCARLET:THISIS "BLOOMBERG MARKETS,"I'M SCARLET FU. OLIVER:I AM OLIVER RENICK. THE VIACOM CBS DEAL HAS COLLAPSED, THEY WITHDREW A PROPOSED MERGER,ENDING NEGOTIATIONS FOR A COLOSSAL DEAL. THE ENTIREDRAMAFROM THE GET GO,BILL: -- BILLCOHAN IS IN NEW YORK. HOW DO WE GET TO THIS POINT WHERE THINGS ARE FALLING APART? BILL: YOU KNOW, THEY EACH ESTABLISHED INDEPENDENT COMMITTEES OF THE BOARD TO ANALYZETHE POST TRANSACTION. THEY HIREDINVESTOR-- INVESTMENT BANKERS AND THEYHAD SERIOUSNEGOTIATIONS ABOUT ALL THIS. AS BEST I CANSURMISE, THEY WERE TRYING TOBUYVIACOM FORAS LOW AS HE POSSIBLY COULD AND TAKE CONTROL OF IT. I'M SURE THE VIACOMBOARD AND ITS BANKERS DIDN'T WANT TO SELL FOR THEPRICE THAT HE WANTED TO PAY. I THINK YOU SHOULD A LOT OF DISCIPLINEHEREIN THIS IS PROBABLY THE RIGHT OUTCOME FOR BOTH COMPANIES. SCARLET:HE ALSOATTACHED CONDITIONS TOA PURCHASE AND MERGER AS WELL. APPARENTLY HE WANTEDCONTROL OVER THE REDSTONE FAMILIES VOTING SHARES. DO THINK HE KNEW THAT WAS PROBABLY ASKING FOR TOOMUCH? BILL:NOT NECESSARILY. I THINK THATOBVIOUSLY, HE WAS THE GUYTHATTHE REDSTONEFAMILY WANTED TO RUN BOTH COMPANIES. HE IS A PROVEN MEDIA EXECUTIVE, HE'S DONE GREAT THINGS THAT CBS, WHERE IS VIACOM HAS FALLEN ON HARD TIMES. IT'S NOT AT ALL SURPRISING THAT LES WOULD WANT TOTALCONTROL AND BEABLE TO GET DONE WHAT HE WANTED TO GET DONE AND VIACOM. BEING ABLE TO VOTE THE FAMILY SHARES IS PROBABLY PART OF THAT. I'M SURE IF THERE WAS A SERIOUS DISAGREEMENT,THEY MIGHT'VE BEEN ABLE TO WORKSINCE AND NOW. I SUSPECT IT BECAME DIFFICULT FOR THE VIACOMBOARD TO GET A FAIRNESSOPINION OVER THEPRICE THAT LESLIE WANTED TO PAY. OLIVER:HOW TOUGH WAS IT FOR THE CBSBOARD TO BACK AWAY FROM THIS DEAL? SHOULD WE BE GIVING THEMCREDIT TO NOT GIVING IN AND HOLDING ON? BILL: I THINK LESLIE DESERVES A LOT OF CREDIT FOR BEING DISCIPLINED AND NOT GIVING INTO THE DEAL. THERE WAS A LOT OF DEALFEET AROUND THIS TRANSACTION. I'MSURE A LOT OF ICONS SHAREHOLDERS WOULD HAVE LOVED IF CBS HAD GOTTEN CONTROL OF THIS ANDHAD HIM RUN THIS. LESLIE HAS ALWAYS SAID FROM THE BEGINNING THAT HE DID NOTWANT TO LOSEDISCIPLINE ON PRICE. HE WANTED TO MAKE SURE THAT MADE SENSE. I APPLAUD HIM ANDGIVE HIM A LOT OF CREDIT. A LOT OF CEOS GIVE IN TO DEAL HEAT. HE SHOULD A LOT OF DISCIPLINE. IT DOESNOT MEAN THIS MIGHT NOT COMEBACK. IT MIGHT BE A NEGOTIATING PLOY. OLIVER:YOU DON'T WITH A LOT OF THIS TYPE OF INVESTMENT BANKING AND DEALMAKING. WHENEVER FORCES PULLING BOTH WAYS ON THE COMPANY'SLEADER, IS THERE MORE THAN JUST THE DEAL TO INVESTMENTBANKERS,ETC.? BILL:THE FORCES ALIGN WANTED TO GETA DEAL DONE,BECAUSE THAT'S HOW BANKERS GET PAID AND EVERYONE GETSPRESTIGE AND TAKES VICTORY LAPS. I GIVE LESLIE A LOTOF MONEY FOR HAVING DISCIPLINE HERE. BUT JUST BECAUSE THIS FELLOW PART INDECEMBER2016, IT IS MEANT TO BE,THESE COMPANIES WERE TOGETHER 10 YEARS AGO AND WERE SPLIT APART. IF IT'S MEANT TOBE, IF THE CURRENT LEADERSHIP OFVIACOM DOESN'T GET THE JOBDONEAND THEY ARE KIND OFUNTESTED, THEY MIGHT VERY WELL TURNAGAIN TO LESLIE AND HAVE HIM BE THE SAVIOR AGAIN. THEREDSTONE FAMILY WANTS TO CREATE VALUE. BY COMESBACK -- VIACOMSTOCKIS DOWN, AND CBS HAS BEEN ON A TEAR. THEY WANT TO GET THE VALUE OF VIACOM UP AND THEY AREHOPING THAT LESLIE CAN DO THAT FOR THEM. THIS WASN'T THE RIGHT PRICE AT THE RIGHT TIME. IT VERY WELL MAY COME BACK. SCARLET:A REMINDERTHIS DEAL WAS MORE ABOUT PROPPING UP VIACOM THAT CBS. BILLCOHAN, WHAT WOULD YOU LOOK AT THENEXT STEP OF THE SAGA? BILL:THE DISAPPOINTED BY COUNT SHAREHOLDERS ARE GOING TO PUSH FOR A DEAL AND WE WILL SEE IT COME BACK. SCARLET: BILL COHAN. OLIVER:BLOOMBERG TV GET YOUR BEING EDITOR AND A CONTRIBUTOR TO BLOOMBERG VIEW. THANK YOU. SCARLET:A COMMODITIES CLOSE, OIL CLIMBING TO A SEVEN-MONTH HIGH AFTERNON-OPEC COUNTRIES JOIN IN ON THE DEAL. THIS IS BLOOMBERG. ♪ SCARLET:FROMBLOOMBERG WORLD HEADQUARTERS IN MIDTOWN MANHATTAN, THIS IS "BLOOMBERG MARKETS." I'M SCARLET FU. OLIVER: I'M OLIVER RENICK. COMMODITY MARKETS ARE CLOSING IN NEW YORK. ABIGAIL DOOLITTLE HAS THE LATEST. >>LOTS OF MOVEMENT INTHE COMMODITY COMPLEX TODAY. WITHINTHE ENERGY COMPLEXWE HAVEA DIVERGENCE BETWEEN OIL AND NATURALGAS,OIL TRADING HIGHER AS OPECAND NOT MEMBERS AGREE TO CUT SUPPLIES. NATURAL GAS LOWER AS WEATHER IS WARMER THAN WHAT WASANTICIPATED EARLIER LAST MONTH. AS FOR PRECIOUS METALS, WE SEE SOMESTRENGTHAS THE BLOOMBERG DOLLAR INDEX IS FALLING. WHAT STANDS ON THE MOST IS THE PERFORMANCE IN OIL, A BIGRALLY. WE WANTED TO TAKE A LOOK AT HOW THIS LOOKS FOR THE STOCK. TAKE A LOOK AT THE BLOOMBERG. ON TOP WE HAVE THE S&P 500 ENERGY OIL STOCK INDEX. REBOUNDING NICELY FROM THE LOWS OF LAST JANUARY,UP50% SINCE THAT TIME. THE QUESTIONIS IS THIS SECTOR OVERBOUGHT? THE RSION THE BOTTOM MAY INDICATE YES, THESE STOCKS ARE OVERBOUGHT, HITTING THESELL LEVELOF 70. WE SEE MUCH OF THE MOVEMENT HIGHER IN THERSI HAS COME AFTER THE ELECTION. LET'STAKE A LOOK AT A FEW OF THE TOP-PERFORMINGSTOCKS SINCE THE ELECTION. TRANSOCEAN, CHESAPEAKEENERGY. INTERESTING THAT THERE ARE TWO DRILLERS THERE. ABSOLUTELY HUGE GAINSSINCE NOVEMBER 8. ONE SECTOR THAT INITIALLY FELL IN THE ENERGYCOMPLEX BUT HAS NOWRECOVERED, THE NEW ENERGY INDEX, THE GRAINSTOCKS. INITIALLY FELL AFTER THE ELECTION BUT HAS NOWREGAINED AND IS UP 1%. PRETTY NICE RECOVERY THERE. SCARLET:THANK YOU. WE AREGOING TO STICK WITH OIL. WE CAUGHT UP WITHRUSSIA'SOIL MINISTER IN AN EXCLUSIVE INTERVIEW. HEREIS WHAT HE HAD TO SAY ABOUT RUSSIA'S PRODUCTION CUTS. >>ALTHOUGH I HAVE AN IMPORTANT ROLEFROMTHE MINISTERS, THE KEY ROLE SHOULD BE GIVEN TO OUR LEADERSHIP. I WOULD LIKE TO ESPECIALLYNOTE MR.PUTIN'SROLE HERE, HAS BEEN VERY SUPPORTIVE OF THE DEAL, UNDERSTANDINGTHE IMPORTANCE AND THE NEED FOR THE DEAL TO BE DONE. HAVING THIS POLITICAL SUPPORT WHICH I JUST SPOKE ABOUT, THIS HAS HELPED US TOBUILD AVERY TRUSTFUL RELATIONSHIP WITH OUR PARTNERS FROMOPECAND NON-OPEC COUNTRIES, ESPECIALLY SAUDI ARABIA, WITHWHICHWE NOW HAVE A PATH TO WORK TOGETHER. >>ARE THESE NON-OPEC CUTS GENUINE OR NATURAL DECLINES? >>I HAVE TO SAY THE SITUATION IS DIFFERENT COUNTRY BY COUNTRY. I WAS PLEASANTLY SURPRISED TO SEE SO MANYCOUNTRIESRESPOND TO THE INVITATIONBY OPECAND RUSSIA TO PARTICIPATE IN THIS DEAL TO STABILIZE THE MARKETS. I WOULD SAY MOST OF THE COUNTRIES WHICHJOINED, IT'S IMPORTANTTHAT THEYJOINED VOLUNTARILY, SO NOBODY WILL FORCE THEM TO REDUCE PRODUCTION. MOST OF THESECOUNTRIES WOULD TAKE ACTIVE MEASURES TO REDUCE PRODUCTION, AND THAT'S IMPORTANT. >>WHAT ABOUTTHE REMAINDER, WHO WILL MAKE UP TO GET TOTHE 600,000 BARRELS A DAYTARGET? >>IT IS IMPORTANT TO UNDERSTAND WE ARE NOT DOGMATIC. 600,000 BARRELS PERDAYWAS NOT THE ONLY POSSIBLE RESULT FOR US. THEREWILL BE COUNTRIESWHICH WOULD JOIN THE ARRANGEMENT, A DIFFERENT CLIENTBASIS,AND I THINK WE WOULD LIKELY BE ABLE TO ACHIEVE AN OVERALL PRODUCTION DECLINEDHIGHER THAN THE 550 WHICH WE SPOKE ABOUT. ANOTHER KEY THING WHICHI WOULD LIKE TOHIGHLIGHT, THE AGREEMENT IS OPEN FOR OTHER PARTIES TO JOIN. THIS TIME THERE WERE 11 COUNTRIES HEREBUT THERE MAY BE OTHERS WILLING TOJOIN THE COULD NOT PARTICIPATETODAY. WHAT ISIMPORTANTIS THATTHE DOORS ARE OPENANDTHAT THE PROCEEDINGS HAVE BEENMADE,AND NOW WE HAVE A FRAMEWORK TO ACT. >>THE SAUDI OIL MINISTER SAID THAT HEWAS WORRIEDTOCUT EVEN MORE, MAYBEBELOW 10 MILLION BARRELS A DAY. WOULD RUSSIA CUT BELOW300,000? >>WE HAVE SIGNED A DEAL FOR SIX MONTHS. THIS IS THE FIRSTSTAGE WHICH WOULD LAST UNTIL THE END OF THE FIRST HALF. THEREIS A FRAMEWORKTHAT ALLOWS US TO EXTEND THE DURATION OF THE AGREEMENT,BUT WE WILL BE MONITORING CLOSELY THE EFFECT OF THIS AGREEMENT ON THE MARKET, COMPLIANCE OFCOUNTRIES, AND WE WILL BE MAKING A DECISIONABOUT WHETHER ANOTHER EXTENSION IS NECESSARY UPON COMPLETION OF THIS TERM. >>WHEN DOES RUSSIA BEGIN THEIR CURVING? >>THAT ISTHEFIRST STAGE OF THE CUT. HE WOULDBEABLE TO SEE AS EARLY AS JANUARY. I WOULD LIKE TOSAY THATWE HAVE ALL OF YOU DISCUSSED THIS WITH COUNTRIES. COMPANIES ARE WELL AWARE OF WHAT THEY HAVE TO DO. CONSIDERING THIS IS A VOLUNTARY STEPWHICH THESE COUNTRIES ARE TAKINGBECAUSE THEY UNDERSTAND THE BENEFITS OF THISDEALAND THEY ALSO UNDERSTAND THEDEAL IS IN PLACE AND HAVE AGREED TO IT. CONSIDERING THIS, THEY ARE PREPARING FOR THECOSTWHICH WILL TAKE PLACE STARTINGIN JANUARY. AS WE SPEAK, THEY ARE TAKING MEASURESAND IT IS ALREADY IN CLEAR PLANS. SCARLET:THAT WAS THE RUSSIAN ENERGYMANAGER ALEXANDER NOVAK. OLIVER:NOW TOPRESIDENT-ELECT'S SEARCH FOR SECRETARY OF STATE. REX TILLERSON IS REPORTEDLY THE TOP CANDIDATE. HEHAS TIES NOT ONLY TO THE OIL INDUSTRY BUT ALSO RUSSIA. RICHARD HAASJOINED BLOOMBERG WITH MORE INSIGHT INTO THE TILLER SIN-RUSSIARELATIONSHIP. >>THIS IS A HARD TRANSITION TO READ THE TEALEAVES BUT IT WOULD SEEM THAT HE IS THE CLEAR FAVORITE. UNTIL IT IS OVER IT ISOVER. THE PRESIDENT SPOKE ABOUT HIM ON FOX YESTERDAY. IT WAS 90% LIKELY BUT THE LAST 10%. AS YOU SAW FROM JOHN MCCAIN, AS YOU ARE HEARING FROM OTHERS, MORE THAN ANYTHING ELSE, THIS QUESTION OFRUSSIA IS GOING TO BECENTRAL TO HIS CONFIRMATION AND IT'S COMING ATATIME WHEN RUSSIA IS EVERYWHERE IN THENEWS BECAUSE OF THE WHOLE INTELLIGENCEBROUHAHA, TO WHAT EXTENT THERUSSIANS WERE TRYING TO INTERFERE IN OUR ELECTIONS. >> ASSUMINGIT IS MR. TILLERSON, ISITAN ADVANTAGE OR DISADVANTAGE? OF COURSE,HE HAS DEALT WITH MR. BRUTON. >>THAT IS THEQUESTION THATA LOT OF PEOPLE HAVE BEEN ASKING, THE NATURE OF THOSE DEALS, WHAT HAS HE ADVOCATEDFOR IN THE WAY OF SANCTIONS,AND WHAT DOES HE THINK GOINGFORWARD? IT IS WANTING TO BE A BUSINESSMAN, AND RUSSIA IS AN IMPORTANT PIECE OF REAL ESTATE. WHAT THEY WILL WANT TO HEAR NOW IS WHAT ARE THEPOLICIESTOWARD RUSSIA ON UKRAINE, SYRIA, THE CONTINUATION OR NOT OF SANCTIONS? ALL OF THAT WILL COME TOTHE FOUR. >>IN THE NEWYORKER, REX TILLERSON TOTHE STATE DEPARTMENT. HOWMUCH IS THIS ANADVANTAGE? >>REX TILLERSON, WHO I KNOW-- HE SPOKE IN MYORGANIZATION SEVERAL TIMES. HE KNOWS THE DETAILS OF THE PLACES HE OPERATES. HE HASALSOMET WITH A LOT OF GLOBAL LEADERS. ALLOF THAT IS CLEARLY TO THE GOOD. THAT SAID, HE HASNOT HADTHE PUBLIC-SECTOR EXPERIENCE. IT ISDIFFERENT. IF YOU REMEMBER WHAT HAPPENED TO PAULO'NEILL WHEN HE WENT FROM ALCOA TO THE TREASURYDEPARTMENT ,IS NOT EXACTLY IN THE ANNALS OF BUREAUCRATIC SUCCESS. THERE IS ALSO A DIFFERENCE BETWEEN KNOWING THE GROUND TRUTHSABOUT THE WORLD AND AMERICAN POLICY. MORE THANANYTHING,WHAT DON TRUMP THINKS. IFHECONFIRMS TILLERSON,THAT ISTHE ESSENTIAL PREREQUISITE. WHEN YOU CANNOT DO AS A SECRETARY OF STATE, WHAT WILL MAKE IT IMPOSSIBLE TOSUCCEED, IF PEOPLEAROUND THE WORLD SEE DAYLIGHT BETWEEN YOU AND YOUR BOSS. THEY WILL BELIEVE THAT THEY DON'T NEED TO TAKE YOU SERIOUSLY. OLIVER:THAT WAS RICHARD HAAS EARLIER. SCARLET:LET'SBOOKMARK THIS CONVERSATION ABOUT REX TILLERSON WITH SOME OTHER APPOINTMENTS THE PRESIDENT-ELECT COULD SOON BE MAKING. JOINING MENOWIS OUR NEXT GUEST FROM TRUMP TOWER. CATHYMCMORRISRODGERS JUST ENTER THE BUILDING, SHE HAD BEEN SEENLINGERING IN THE LOBBY. WILL SHE BE NAMED INTERIOR SECRETARY? SHEHAS BEEN LISTED ON THE SHORTLIST. >>OUR REPORT IS THAT SHE IS AT THE TOP OF THE LIST. RIGHT NOW THEY ARE MEETING AGAIN TO TRY TO SEAL THE DEAL ON THIS APPOINTMENT. SHE IS VERY MUCH A PROPONENTON DRILLING MORE ON FEDERALLAND. SHEWANTS TO DO MORE DRILLING ON FEDERALLY OWNED LAND. THAT IS SOMETHING DONALD TRUMP HAS ALSO SUPPORTED. IFSHE GETSTHISPOSITION, WE WILLSEE A DEPARTURE FROM THE OBAMA ADMINISTRATION'SPOLICY REGARDING FEDERALLY OWNED LAND. OLIVER:WE ARE LOOKING AT REPRESENTATIVE MCMORRIS IN THE LOBBY RIGHT NOW. AS YOU ARETALKING MORE ABOUT THIS, WHATELSEARE WE LOOKING AT IN TERMSOF APPOINTMENT WE HAVE BEEN SEEING AT TRUMP TOWER? >>WE HAVE SEEN DONALD TRUMP MEETING WITH A NUMBER OF DIFFERENT PEOPLE THAT HE RAN AGAINST IN THE REPUBLICAN PRIMARY. HEMET WITH BEN CARSON, WHO WILL BEIS HELPING AND URBAN DEVELOPMENT SECRETARY. HE ALSO MET WITH CARLYFIORINA, WHO IS REPORTED TO BE LOOKED AT FOR THE DEPARTMENT OF NATIONAL INTELLIGENCE. HE WILL ALSO MEET WITH RICK PERRYWHO IS AT THETOP OF HIS LIST FOR THE ENERGY DEPARTMENT. HE IS MEETING WITH PEOPLE THAT HE RANAGAINST AND IS TRYING TO MEND REPUBLICANFENCES ANDGET A STRONG START TO HIS ADMINISTRATION WHENHE TAKES OFFICE. SCARLET:MENDING REPUBLICAN FENCES, THAT'S AN INTERESTING PHRASE. WHEN DIFFERENT MEMBERSOF CONGRESS HEARD ABOUT REX TILLERSON AS POSSIBLE SECRETARY OF STATE THEY DID NOT REACT KINDLY. MARCO RUBIOAND JOHNMCCAIN BOTH PROTESTINGAGAINST A POSSIBLE SECRETARYTILLERSON. WHAT CAN YOU TELL US ABOUT THIS DIVIDEBETWEEN MAINSTREAM REPUBLICANS AND THE PRESIDENT-ELECT? >>THIS ISGOING TO BE A TOUGH CHOICE, IT DONALD TRUMPSELECTS REX TILLERSON FOR SECRETARY OF STATE. HE IS ALREADY GETTING PUSHBACK FROM A NUMBER OFREPUBLICANS WHO ARE THE PEOPLE THAT HE WOULD HAVE TO RELY ON. IT'S A TIGHT MARGIN IN THE SENATE. WE EXPECTDEMOCRATS TO BE STAUNCHLY OPPOSED TO ALL OF DONALDTRUMP'SPICKS. IF YOU CHOOSE ISTILLERSON, HE WILL HAVE AN UPHILL BATTLE TO BE CONFIRMEDWITH SENATOR MCCAIN, RUBIO, AND EVEN PEOPLELIKE LINDSEYGRAHAM, CONCERNEDABOUT HIS CLOSE TIES TO RUSSIA AND VLADIMIR PUTIN. OLIVER:OBVIOUSLY, DONALDTRUMP HAS TALKED ABOUT ENERGY ON THE CAMPAIGN TRAIL BUT IT WAS NOT HIS BIGGEST RALLYING CALL. NOW HE IS PUTTING A LOT OF EMPHASIS ONTILLERSON, A BIG ENERGY GUY, WE HAVE A LOT OF TEXANS HEADING TO THE WHITE HOUSE. WHAT ISPERHAPS BEHIND US REFOCUS ONENERGY? >>DONALD TRUMP SAYS HE WANTS TO MAKE AMERICA GREAT AGAIN, AND PART OF THAT ISREBUILDING A LOT OF THE JOBS THAT HAVE BEEN LOST IN ENERGY. HE WANTS TOMAKE SURE AMERICA USES ALL THE RESOURCES IT HAS AND IS SORTOF INCHING AWAY FROM PRESIDENTOBAMA'SFOCUS ON CLIMATE CHANGE. DONALDTRUMP HAS SAID HE ISNOT SURE IF CLIMATE CHANGE IS CAUSED BY MAN. HE WANTS TO MAKE SURE AMERICA IS USING ALL OF THEIRRESOURCES. AT THE SAME TIME, HE IS NOT SO SURE ABOUT CLIMATE CHANGE. THAT IS WHAT WE ARE SEEING WITH THESEPICKS. WE EXPECT DONALD TRUMP TO CONTINUE ALONG THIS PATH. SCARLET:THANK YOU. AVERY BUSY FIFTH AVENUE THERE, THANK YOU. WE SHOULD MENTION ASWELL, DAN YOUR AGAIN, THE PULITZER PRIZE-WINNING ENERGY AUTHORSAYS THATPOTENTIAL PICKUP TILLERSON WOULD BE TREMENDOUS. HIS EXPERIENCE ANDINTELLECT WOULDBE TREMENDOUS AND HE WOULD SEPARATE HIMSELF FROM EXXON. OLIVER:PLENTY TO SAY ABOUT HIS RELATIONSHIP WITH RUSSIA. SCARLET:LET'S GET A LOOK AT THE FIRST WORD NEWS. MARK CRUMPTON HAS MORE. MARK:IT ISOFFICIAL, JOHN KELLY HAS BEEN TAPPED TO HAVE THE DEPARTMENT OF HOMELAND SECURITY. THE ANNOUNCEMENT FROM PRESIDENT-ELECTTRUMP CAME THIS MORNING. KELLY, WHO JOINED THE MARINE CORPS IN1970, RETIRED EARLIER THISYEAR, WRAPPING UP A FINAL THREE-YEARTOUR OF DUTY AS THE HEAD OF THE SOUTHERN COMMAND. KELLY FACES SENATE CONFIRMATION. THE KREMLIN IS DISPUTING CLAIMS ITUSEDHACKING TO INTERFERE WITH THE U.S. PRESIDENTIAL ELECTION TO AID PRESIDENT-ELECT TRUMP. THE PRESS SECRETARY TO VLADIMIR PUTIN TOLD REPORTERS TODAY THAT ALLEGATIONSARE"NOTHING TO DO WITHREALITY." TRUMP ANDHIS TEAM ARE PUSHING BACK ON THOSE CLAIMS AS WELL. THE FORMERPORTUGUESE PRIME MINISTERWASSWORN IN TODAY AS SECRETARY-GENERAL OF THE UNITED NATIONS. HESUCCEEDS BAN KI-MOON AT THE END OF THE MONTH. HE IS THE NINTH U.N.CHIEF IN THEBODY'S 71-YEAR HISTORY. THEU.S. SUPREME COURT HAS DECIDED NOT TOTAKE UP A BATTLE OVER INTERNET SALES TAXES. JUSTICES LET STAND A COLORADO LAWTHAT REQUIRES INTERNET RETAILERS TO TURN OVER CUSTOMER DATAIN AN EFFORT TO GET SHOPPERS TO PAY SALES TAXES THEY OWE. ARETAIL INDUSTRY TRADE GROUP SAYSTHE MEASURE VIOLATES THE U.S.CONSTITUTION. GLOBAL NEWS 24 HOURS A DAY POWERED BY MORE THAN 2600 JOURNALISTS AND ANALYSTS IN OVER 120 COUNTRIES. I'M MARK CRUMPTON. THIS IS BLOOMBERG. SCARLET:THANK YOU. COMINGUP NEXT, IN THE MIDSTOF THE RALLYIN CRUDE, TREASURIES ARE SELLING OFF FOR A THIRD DAY. THE 10-YEAR TOUCHING HIS LIES LEVELS SINCE 2014. THIS IS BLOOMBERG. ♪ OLIVER:THIS IS "BLOOMBERG MARKETS." I'M OLIVER RENICK. SCARLET:I'M SCARLET FU. IT'SOFFICIAL NOW, GOLDMAN SACHS CEOAND PRESIDENT GARY COHN WILL BE JOINING JOB TRUMPAS DIRECTOR OF THE NATIONAL ECONOMIC COUNCIL. THE PRESIDENT-ELECT PUTTING OUT A PRESS RELEASE SAYING HE INTENDS TO APPOINTGARYCOHN AS THE ASSISTANT TO THE PRESIDENT FORECONOMIC COUNCIL. OLIVER:THERE WAS A STORY OUT TODAY LOOKING AT WHO COULD REPLACE COHN. THEY MENTION SOME OFTHE FRONT RUNNERS INCLUDE DAVIDSOLOMON. ALSO THE ISSUE OF WHETHER OR NOT LLOYDBLANKFEINWILL CHOOSE MULTIPLE EXECUTIVES TO REPLACE COHN. A LOT OF IMPORTANT DEVELOPMENT ISTHEREFORE THE BANK, WHICH IS ON A TEAR,THE ELECTION. SCARLET:MEANTIME, IT IS TIME FOR THE BLOOMBERG BUSINESS FLASH. THE U.S. GOVERNMENTIS USING INFORMATIONFROM BARCLAYS, J.P. MORGAN CHASE, AND CITIGROUP TO EXPAND ITS CURRENCY PROBE. THE BANKS HAVE COOPERATED TO PROVIDE EVIDENCEOF ACTIONS IN THE SPOT MARKETS. DEUTSCHEBANK COULD OPT FOR A MERGER, ACCORDING TO A REPORT, CITINGTHEHEAD OF INVESTMENT BANKING FOREUROPE, AFRICA, AND THE MIDDLE EAST. HEALSO DISMISSED SPECULATION ABOUT THE BANKS POSSIBLE WITHDRAWAL FROM THE U.S. MARKET. AETNA EXECUTIVES DEFENDED WITHDRAWAL FROM THE OBAMACARE HEALTH CAREEXCHANGE IN TESTIMONY TODAY. THEYTOLD THE JUDGE THAT THE COMPANY SHOULD HAVE EXITED ALL OF THE AFFORDABLE CAREACT MARKETPLACES BECAUSE THEPROGRAM IS NOT ECONOMICALLY VIABLE. THE WITHDRAWAL CAMEAFTER THE GOVERNMENT SUED INSURERS TO BLOCK THE MERGER. THAT IS YOUR BUSINESS FLASH UPDATE. OLIVER:THE SELLOFF IN TREASURIES EXTENDS TO A THIRD DAY AS OILS ROSE. THE YIELD ON10-YEARTREASURY BONDS ROSE TO 2% FOR THE FIRST TIME SINCE 2014. FOR SOME PERSPECTIVE, LET'S BRING IN JOE WEISENTHAL. NOT A HUGE SELLOFFTODAYBUT MORERED AND MORE WEAKNESS IN THE BOND MARKET. >>IT WAS QUITE A BIT WORSE EARLIER IN THE DAY, YIELD SHOOTING HIGHER AGAIN. THE BIG QUESTIONIS, IS THIS BONDROUT A FUNCTION OF WHERE WE ARE IN THE CYCLE, ECONOMIC DATA, DATA LOOKING STRONG, INFLATIONFIRMING, OR IS THIS AN EXPECTATION OF REAL POLICY REGIMECHANGE? IF YOUWOULD BELIEVE THAT, THAT ISWHY YOU KICKED INTO HIGH GEAR AFTER THE TRUMP ADMINISTRATION. WE DON'T KNOW THE ANSWER TO THAT YET BUT THAT'S THEQUESTION, DO WE HANG OUT INTHE2AREA OR DO WE SHOULD HIRE? SCARLET:WHICH ONLY TAKES US BACK TOABOUT 2014. >>IF WE ARE HERE AND THIS IS A REFLECTION OF WHEREWEARE IN THE DATA AND THEN YOU LOOK AT THE LONG, WE ARE STILL BASICALLY NOWHERE. IF YOU THINK THIS SELLOFF IN TREASURIES IS ABOUT SOMETHING CHANGING, AND THATWOULD BE A MEANINGFUL HANDOFF FROM MONETARY TO FISCAL POLICY, MEANINGFUL CHANGE ON TRADEPOLICY,DEEP POLICY CHANGES, IF THEY COME TO FRUITION, THEN WHO KNOWS WHERE WE COULD GO? OLIVER:WHAT I'M CURIOUSABOUT IS THE FACT THATTODAYWE HAVE YIELDS UP AGAIN TODAY BUTSOME OF THE BOND REPLACEMENTSTOCKS THAT WE ALWAYSTALK ABOUT ARE DOINGWELL, THEY WERE BACK ON FRIDAY AS WELL. AREYOUINTERESTEDIN WHETHER OR NOT THESE COMPANIES CAN DO WELL AS BOND SELLSOFF? >>I AM VERY INTRIGUED BY THAT. ON FRIDAY, WE WERE TALKING ABOUT THIS SWEET SPOT OF PEOPLE GOING INTO THESEBOND-LIKE STOCKS IN THE EQUITY MARKET TO GET THE BOTH OF BOTH WORLDS. THEY WANTTHAT COUPON, THE YIELD, BUT THEY ALSO WANT THE UPSIDE SO THEY CAN KEEP A FOOT IN BOTH WORLDS. ESPECIALLY THE SUMMER, PEOPLE LOVED IT. EVERYONE WAS TALKING ABOUT HOW THEY WOULD BUYREITSBECAUSE THEY WERE BEING SPUN INTO THEIR OWN THING. IT IS IMPORTANT TOLOOK AT THOSE AS A GAUGE OF MARKET ENTHUSIASM. SCARLET:I WONDERTO WHAT EXTENT THE THERATECHNOLOGIES THE SELLOFF IN BONDS? WE HAVE NOT FIGURED OUT WHAT IS DRIVINGTHE SELLOFF. WHETHER ITIS CYCLICAL OR STRUCTURAL, MAYBE IT IS JUST SAFER TO WAIT. OLIVER: WE WILL START TO TAKE MORE NOTE OF IT ONCE WE GET HIGHER THAN 2.5. JOE WEISENTHAL, TODAYON "WHAT'D YOU MISS?"DAVID WILL WILL GIVE HISOUTLOOK ON CURRENCIES AHEAD OF THE FED. DISNEY GOES WRONG WITH HIS LATEST STAR WARSFILM, JUMPING OUT OF HIS TRILOGY AND TESTING A NEW STANDALONE MOVIE. BUT WILL THE STRATEGYPAYOFF? THIS IS BLOOMBERG. ♪ SCARLET:DISNEY'S NEWESTFILM ROGUE ONE OPENS UP ON FRIDAY DOMESTICALLY. DISNEY IS TESTING ON SOME NEW TACTICS HERE. JOININGUS FROM L.A. IS CHRIS PALMERI. TALK ABOUT THE NEWTECH TAKES THAT DISNEY IS USING HERE. >>WHAT THEYHAVE PLANNEDIS SIX FILMS, FIVE MORE LEFT IN THE SERIES. THEY ARE DOING ONE EVERY YEAR THROUGH 2020,ALTERNATING BETWEEN THE TRADITIONAL TRILOGY FORMATWITH WHAT THEY ARE CALLING STANDALONE FILMS. ROGUE ONEISTHE FIRST OF THE STANDALONE PICTURES. IT FITS INTO THE OVERALL MYTHOLOGYOF"STAR WARS" BUT THE CHARACTERS WILL NOT BE RECURRING. OLIVER:GIVE US SOME PERSPECTIVE ON WHAT DISNEY EXPECTS TO MAKE FROM THE FILMS. THEY BOUGHT LUCASFILMS FORABOUT $4 BILLION. THEBUDGET FOR ROGUE ONE IS ABOUT $200 MILLION. WHAT WILL BE THEBENCHMARK FOR THEM TO SAYTHAT WAS A GOOD JOB, LET'S DO IT AGAIN? >>DISNEYHAS NOT SAID SPECIFICALLY WHAT THEY ARE HOPING TO DO. WE HAVE TALKED TOANALYSTSWHO SAID THEMOVIE MAY DOAHUNDRED MILLION DOLLARS WORLDWIDE, AND IN THAT CASE IT WILL BE PROFITABLE. IT CAN PROBABLY DO MORE THAN THAT,LIKELY THE SECOND-HIGHEST DECEMBER OPENING IN FILM HISTORY,AFTER ROGUE ONE. IT WILL HAVE A BIG OPENING, IT WILL DO WELL. IT ISJUST THAT LAST YEARS FILMS IT SO SPECTACULAR. $2 BILLION. IF IT DOES HALF OF THAT, IT WILL BE A HUGE HIT. SCARLET:I FINDITFASCINATING THE COMPANY IS TRYING TO MANAGE EXPECTATIONS HERE ANDTALKDOWN THE KIND OF MERCHANDISING OPPORTUNITY THAT ROGUE ONE PRESENTS. >>THEY EXPECT THIS QUARTER MERCHANDISESALES PROFITS TO BE DOWN ABOUT20%. YEAR-OVER-YEAR COMPARISONS, YOU JUST CANNOTTOPFORCEAWAKENS LAST YEAR, THAT WAS 10 YEARS OF PENT-UPDEMAND, PEOPLE WAITING IN LINE TO BUY THE TOYS. OLIVER:IT FEELS LIKE THERE IS SOME RISK BECAUSE THERE ARE NEW CHARACTERS, NEW PLOT LINE. THEY HAVE ANOTHER NEST EGG THEY CAN TAPINTO STORY WISE, HAN SOLO. THEY HAVE MORE COMINGOUT. >>THERE IS A STANDALONE PICTURE AND THEN A THIRD ONE WHICH THEY HAVE NOT SAID WHAT WILL BE. THEY FOUND A WAY TO KEEP THE STORIES FRESH. MARVEL HAS DONE A GREAT JOB OF THAT. NO MATTER HOW MANY SUPERHERO MOVIES THEY HAVE, THEY CONTINUE TO DO WELL. IT IS REALLYLIKE AWAR MOVIE. YOU FEEL LIKE YOU ARE ON THE BEACHES OF NORMANDY WATCHING THIS. IT WILL DO WELL. SCARLET:WE SHALL SEE. THANK YOU, CHRIS. OLIVER:I SHALL SEE WEDNESDAY NIGHT. THE RUSSELL 2000 RECORD. OUR MORE GAINS INSTORE FOR THE SMALL-CAP INDEX? THIS IS BLOOMBERG. ♪ OLIVER:IT IS 3:00 IN NEW YORK, 8:00 IN LONDON. I'M OLIVER RENICK. SCARLET: I'M SCARLET FU. WELCOME TO "BLOOMBERG MARKETS." OLIVER: WE ARE LIVE FROM BLOOMBERG WORLDHEADQUARTERS IN NEW YORK. WE ARE COVERING STORIES FROM DENVER, MOSCOW, AND CHINA. STOCKS AREMIXED TODAYAS THE DOW TRIES TO CLOSE AT A NEW RECORD WHILE THE S&PISGOING BACK-AND-FORTH IN THE RED AS TELECOMS AND UTILITIES LEADING THE WAY. CUTTINGCORPORATE TAXES HASBEEN ONE OF THE CENTRAL THEMES OF THE TRUNK CAMPAIGN. WHICH COMPANIES WILL BENEFIT THE MOST? IS THE DOOR CLOSING ONAAA'-- CHIPOTLE'SCHANCE FOR A TURNAROUNDWE ARE ONE HOUR FROM THE CLOSEOF TRADING. LET'S GET A CHECK ON THE MARKET WITH ABIGAIL DOOLITTLE. >>STOCKS ARE MIXED AT THIS POINT AND THIS MAYNOT LOOK LIKE A PICTURE OFSTRENGTH BUT WE HAVE A RECORD HIGH. THEDOW IS ON PACE TO CLOSE AT YET ANOTHER RECORD HIGH. EARLIER CARVINGOUT AN INTRADAY HIGH. THENASDAQHAS BEEN THE LAGGARDS TODAY, BEINGDRAGGEDBOTHBY ITS OVERWEIGHTING TO TECHNOLOGY AND BIOTECH. MUCH OF THE DIVERGENCE WE ARE SEEING AMONG THE AVERAGESTODAY SEEMTO HAVE TO DO WITH SECTOR PERFORMANCE. TAKE A LOOK ATTHE S&P 500. THIS IS A TERRIFIC FUNCTION, IT GIVES AQUICKSNAPSHOT OFTHE SECTOR COMPOSITION WITHIN AN INDEX. MIXED SECTOR COMPOSITION IN THE S&P 500. NOT TOOSURPRISING. AS OLIVER MENTIONED, TELECOM AND UTILITIES HAVE BEEN THE TOP PERFORMERS. AMONG THEWORST FINANCIALS. TELECOM STOCKS RISINGTODAY, WE ARE LOOKING AT AT&T AND VERIZON. ANOTHERBOOST FOR THE TELECOM SECTORBEYOND YIELDS FALLING OFF OF THEIRHIGHS OF THE DAY, AN UPGRADE AT BAIRD. THEY SAY AT&T IS LIKELY TO BENEFITFROM THE POSSIBILITY OF NEW REGULATION AND LOWER TAXES. VERIZON TRADING HIGHER IN SYMPATHY. AS FOR THAT WORST PERFORMING SECTOR, FINANCIALS ARE TAKING A BIT OF A BREATHER. LOTS OF BREAD HERE. --REDHERE. OF COURSE, AS I MENTIONED, YIELDS ARE OFF OF THEIR HIGHS. THIS COULD WEIGH ON THESE STOCKS A BIT MORE,TOO. AND IT IS WORTH LOOKING ATTHE 10-YEAR IYELLED, NOT JUST HAPPENING TODAY, BUT AHEAD OF THE FED MEETING POLICYMEETING -- POLICY MEETINGON WEDNESDAY. MOST EXPECT THE FED TO RAISE RATES. THIS IS A LONG-TERMCHART LOOKING ATTHE10-YEAR ONTOP, ON TOP OF A DISSENTING TRADING RANGE HIM A BUT AT THE BOTTOM WE HAVE THERSI,HITTING 60. THELAST FIVE TIMES THIS HAS HAPPENED, IT TYPICALLY SIGNALED AREVERSAL, SO WE MAY SEE A MOVE BACK DOWN FOR THE10-YEAR. ABIT OF ACONSOLIDATION, A PAUSE AFTER NOVEMBER'S BIGGEST MOVE UP IN THE 10-YEAR YIELD EVER. OLIVER:THANK YOU. THAT IS A GREAT CHART. SCARLET:I'M SURE IT WILL COME UP AGAIN. MOVING ON TOEQUITIES, PRESIDENT-ELECT DONALDTRUMP'S PLAN WOULDREDUCE TAXES FORMOST INDIVIDUALS AND CORPORATE. JOINING US NOW IS THE CREDIT SUISSECHIEF EQUITY STRATEGIST. YOU ARE LOOKING AT SMALL CAPS IN PARTICULAR. THEY HAVE HAD QUITE THE RUN-UP. CANNOT CONTINUE? >>WE WOULDN'T BE SURPRISED TO SEE A SMALLCONTROL OF DIGESTION, BUT THE TRADE IS NOT DONE. SCARLET:THIS IS A CHART THAT DANCURTIS PUT TOGETHER, SHOWING THE RUSSELL2000 20-DAY OF PERFORMANCE VERSUS THE S&P 500. HERELAST WEEK THE PERFORMANCE WIDENEDTO 9.3 PERCENTAGE POINTS. THAT IS THE MOSTSINCE 2000. YOUCAN SEE WHAT HAPPENED AFTER THAT, A MASSIVE UNDERPERFORMANCE. OLIVER: I AM CURIOUSBECAUSE THERE IS THIS OUTPERFORMANCE, BUT HOW DO WE FIGURE OUT WHY IT'S HAPPENING? IS IT BECAUSE PEOPLE LOOKING AT TRADE POLICY THINKING IT IS DOMESTIC AND FAVORABLE, SO THEY WANT TO GET INTO SMALL-CAP STOCKS? >>WESAW A EARLIERTHIS YEAR, OURMODEL ON SMALL VERSUS LARGE WAS BACK DOWN TO 1991 NOT QUITE THATATTRACTIVE IN EARLY NOVEMBERBUT STILL VERY DEEP IN TERMS OF SMALL VERSUS LARGE. OLIVER:SO SOME OF IT IS A VALUATION STORY. >>THAT IS HOW THE PARTY GOT STARTED ESSENTIALLY. TODAYYOU ARE BACK TO FAIR VALUE, BUT IT'S NOT EXPENSIVE YET. AS LONG AS STRONGERECONOMIC GROWTH COMES THROUGH NEXTYEAR, WE SEE SOME PROMISE ON THIS TAX REFORM. ALSO, THEIMPOST TOWARD PROTECTIONISMBENEFITSDOMESTIC NAMES AS WELL. IT LEAVES THE TRADE HERE IS DIFFERENT THAN WHAT GOT THE PARTY STARTED. SCARLET:TOWHAT EXTENT DO YOU THINK INVESTORSHAVE BEGUN TO PRICE THAT IN? >>IN TERMS OF THE TAXREFORM? IT'STHE NUMBER ONE ISSUE WE ARE HEARING ABOUT POSTELECTION. AT THEEND OF THE DAY,THOUGH, THERE IS STILL A LOT OF UNCERTAINTY ON THE TIMING. THE STREET WILL BE LOOKING FOR PROGRESS TO BE MADE. IT IS PARTIALLY PRICED IN AT THIS POINT. OLIVER:I KNOW FORA WHILE, YOU SPECIALIZED IN SMALL-CAP,BUT WHEN YOU LOOK AT THE BROADER MARKETOVERALL, WHAT STANDS OUT TOYOU WHEN YOU THINKABOUT -- WE HAVE HEARD A LOT OF PEOPLE TALK ABOUT HOW WE MAY SEE MORE CAPEXUNDER A TRUMP ADMINISTRATION. WHAT DOESTHATDUE TO THE SHAREHOLDER FRIENDLY STOCKS, THE BUYBACKS? >>WEHAVESEENTHAT KIND OF ACTIVITIES OF DONE MEANINGFULLY. DIVIDEND ACTIVITY IS ALSO STALLING OUT. HIS MONEYGOESTOWARD CAPEX, IT WILL BORROW FROM THE DIVIDEND STORY. AT THE SAME TIME,IF WE ARE REPUTED DOLLARS BACK ON, LOWER THE TAXRATE, I DON'TTHINK THERE IS ANY GUARANTEE IT GOES TO CAPEX. YOU COULD SEE THEM GO BACKTO THESE SHAREHOLDER FROM THE STRATEGIES AS WELL. SCARLET:LASTWEEK, WE HAD A GUEST TALKING ABOUT HOW A LOT OF PEOPLE ARE PICKING UP ON SMALL CAPS BECAUSE THE BIGCAPS CERTAINLY SUFFER FROM THE STRONGER DOLLAR. YET, ISSTRONGER DOLLARMEANS TIGHTER FINANCIAL CONDITIONS, WHICH TEND TO BE WORSE FOR SMALL CAPS. OLIVER:I THINKTHERE IS AN UNDERSTANDING THAT MAY NOT ALWAYS BEPERFECT,THAT A RISING DOLLAR ISLARGE-- BAD FOR LARGE-CAP COMPANIES. BUT IF THAT'S HAPPENING WHILE THE ECONOMY IS EXPANDING, ARE THESE STOCKS GOING TO DO WELL? >>A LARGECAPS TEND TO BEA TOUCH MORE SENSITIVETO THE STRENGTHENING DOLLAR, SO EVEN THOUGH IT IS NEGATIVE FOR EVERYTHING, SMALLCAPS MAY BE A LITTLE BETTER OFF THERE. ONETHING HAVETO THINK ABOUT NEXT YEAR IS HIGHER VOLATILITY IN THE MARKETS. TRADITIONALLY, PEOPLETHINK ABOUT AS BAD FOR SMALL-CAP STOCKS. WE HAD TOLDTOREMEMBER,WHEN THE NEXT SWINGSUP, HISTORICALLY THAT IS A GOOD BUYING OPPORTUNITY FOR THE LONG-TERM. WE DID A STUDY LOOKING BACK VARIESYEARS AT DIFFERENT AVERAGE LEVELS OF THE VIX. IF THE AVERAGELEVEL AS THE YEAR STAYS BELOW25, SMALL CAPS CAN STILL OUTPERFORM. WHEN YOUCROSS BETWEEN FIVE THRESHOLD,THAT IS WHEN ALL CAPS TEND TO HAVETROUBLE ON AN ANNUAL BASIS. AS LONG AS IT IS NOTTOOBAD, YOU CAN STILL GET OUTPERFORMANCE. OLIVER:TO YOUR POINT, THIS IS A CHART LOOKINGATYOUR POINT IN TERMS OF VOLATILITY EXPECTATIONS. THIS IS THE VIXAND THE RUSSELL 2000 EXPECTATIONS. THE NUMBER GOESUP IN SMALL CAPS . WHEN I THINKABOUTTHE VOLATILITY, ITHINK BACK-AND-FORTH, SMALL CAPS HAVING A HIGHER DATA. I FEEL LIKE THERE IS RISK ASSOCIATED WITH THAT. >>THE WAY I DESCRIBE SMALL CAPS, IT IS A SHOW ME STORY. YOU CANNOT BUY THEM ANYMORE BECAUSETHEY ARECHEAP. THE NEWS FLOW HAS TO COME THROUGH AT THIS POINT. WHAT'S INTERESTING, IF WE GET THOSESPIKES IN THEVIX, IF WE GET THOSE SPIKES, WE ARE GOING TO GET CHEAP IN A HURRY. THEN YOU WILL HAVE THE BUYING OPPORTUNITY. I THINKIT WILLBE A VOLATILE MARCH HIGHER, BUT YOU STILL HAVE THOSE OPPORTUNITIES. SCARLET:AND OF COURSE, WENEED TO DELEGATE BETWEEN SECTORS. FINANCIALS HAVE BEEN ON A TEAR BECAUSEOFEXPECTATIONS THAT THEY WOULD BENEFIT. WHICH SECTORS DO YOU WANT TO BE IN VERSES WHICH YOU WANT TO STAY OUTOF? >>WE LIKETHE BANKS BUT WE SEE MORE OPPORTUNITY IN AREAS LIKE INSURANCE. THEREIS STILL A LOT MORE ROOM FOR EARNINGS EXPECTATIONS TO COME UP. ONE AREA THAT STILL LOOKS VERY COMPELLING IS RETAIL. THATIS ANOTHER AREA WE ARE LOOKING AT. TRANSPORTATION IS ANOTHER. OLIVER:THEGENESIS FOR THIS IS A NOTE FROM YOUR FORMER EMPLOYER,CITI,LOOKING AT HIS MACRO TRENDWHERE INVESTORS ARE LOOKING AT RISKIER PARTS OF THE MARKET, LOOKING AT SOME OF THE BEAT UPNAMESAS OPPOSED TO THOSE THAT WILL SHOW GROWTH. THE ASSOCIATETHATWITH AN EMERGING MARKET A LOT OF TIMES, BUT INVESTORS HERE IN THE U.S. HAVE PREFERRED TO KEEP THE MONEY HERE. INSTEAD YOU HAVE THESE ARE STOCKS LAGGING A BIT. ANY CHANCE THAT IF YOU LOOK AT MORE RISK ON, THEY WOULD MOVE THAT TO EMERGING MARKETCAPITAL? >>WE DEFINITELY HEAR THAT FROM ANASSET ALLOCATION PERSPECTIVE. I DON'T DO WORK ONEMSTOCKS, SO I CANNOTCOMMENT THERE, BUT YOU TEND TO SEE THOSE ROTATIONS FROM SIGN -- TIME TO TIME. SCARLET:THANKYOU VERY MUCH. LET'S GET TO THE FIRST WORD NEWS. MARK CRUMPTON IS IN THE NEWSROOM. MARK:GOLDMAN SACHS PRESIDENT ANDCEO GARYCOHNHAS ACCEPTED A JOB AS PRESIDENT-ELECTTRUMP'S CHIEF ECONOMICPOLICY ADVISER, ACCORDING TO MR. TRUMP'S TRANSITION TEAM. HE SPENT MORE THAN 25 YEARS AT THEINVESTMENT BANK. SENATE MAJORITY LEADER MITCH MCCONNELLSAYSHEHAS THE "HIGHEST CONFIDENCE IN THE U.S. INTELLIGENCE COMMUNITY." SPEAKING ON CAPITOLHILL,THE REPUBLICAN DEFENDED THE CIA AND ITS REPORTED FINDINGTHAT RUSSIA TRY TO HELP DONALD TRUMP WIN THE PRESIDENCY THROUGH CYBER PEDDLING. MCCONNELL ALSO TOOK AIM AT MOSCOW. >>LET ME SPEAK FOR MYSELF. THE RUSSIANS ARE NOT OUR FRIENDS. THEY INVADED CRIMEA. SENATOR MCCAIN AND I AND SOME OF OUR DEMOCRATICFRIENDS MET WITH A DELEGATION FROM THE BALTIC COUNTRIES JUST THIS PASTWEEKTO SAY THAT THEY ARE NERVOUS ABOUT THERUSSIANS, TO PUT IT MILDLY. MARK:MCCONNELL'SDEFENSEOF THE CIA PUTS HIM ATODDS WITH THE PRESIDENT-ELECT TO HAS REJECTED THE AGENCY'S FINDINGS. INITALY,PAOLO GENTOLINI HAS BEENSWORN IN AS PRIME MINISTER AFTER HESUBMITTED THE LINEUP OF HIS NEWGOVERNMENT. MATTEORENZIHAD BEEN SERVING AS CARETAKER PRIMEMINISTER AFTER RESIGNING LASTWEEKFOLLOWING VOTER REJECTION OF HISPROPOSED CONSTITUTIONAL REFORMS. THE EUROPEAN UNION WILL SET UP FOR THE FIRST TIMETHURSDAY. HOW IT WILL DISCUSSED ITS BREXIT NEGOTIATIONS WITH THE U.K. ACCORDING TO ADRAFT, EU GOVERNMENTS WILL BE ASKEDTO PROCEED SWIFTLY IN AUTHORIZING THEOPENING OF THE NEGOTIATIONS. THAT WILL OCCURONCE BRITISH PRIME MINISTER THERESA MAY TRIGGERS ARTICLE 50OF THE LISBON TREATY TO FORMALLY START THE WITHDRAWAL. GLOBAL NEWS 24 HOURS A DAY POWERED BY MORE THAN 2600 JOURNALISTS AND ANALYSTS IN OVER 120COUNTRIES. I'M MARK CRUMPTON. THIS IS BLOOMBERG. OLIVER:COMING UP, SHARES OF AAA ON PACE FOR THEIR BEST DAY IN NEARLY A MONTH. FOUNDER STEVE BELL'S RETAKING THE TOP JOB. THIS IS BLOOMBERG. ♪ SCARLET:THISIS"BLOOMBERG MARKETS." I'M SCARLET FU. OLIVER: I'M OLIVER RENICK. TIME FOR THE BLOOMBERG BUSINESS FLASH, ALOOK AT SOME OF THE BIGGEST STORIES IN THE NEWS RIGHT NOW. ASENATETOP REPUBLICAN IS MOURNING THE CURRENT LEVEL OF U.S. DEBT IS DANGEROUS AND MAY WANT TO TAX OVERHAULINORDER TO ADD TOTHE DEFICIT. MITCH MCCONNELL MADE THE REMARKS ON CAPITOL HILL TODAYAND POSSIBLY PUT HIMSELF ON A COLLISION COURSE WITH PRESIDENT-ELECT TRUMP. HE ISPROPOSINGTO ANDI CAN BIGGEST TAX CUTS SINCETHE 1980'S. O'CONNELL ALSO POURED WATERON A MASSIVE STIMULUS PACKAGE. APPLE HAS HELDTALKS ABOUT INVESTING IN A $100 BILLION TECHNOLOGYFUND. THIS IS ACCORDING TO APERSON WITH KNOWLEDGE OF THE DISCUSSION. APPLE MAY CONTRIBUTE $1 BILLION TO THEFUND WHICHWOULD GIVE THE COMPANY INSIGHTINTO INCOMING TECHNOLOGIES. CREDIT SUISSE SAYS IT PLANSTO SELL THEIR SPACE IN THE LONDON FINANCIALDISTRICT,ACCORDING TO PEOPLE FAMILIAR. THE MOVE COMES AFTER THE BANK SAID IT WOULD CUT 4200WORKERS BY THE END OF THE YEAR. CREDITSUISSEMAY SELL OTHER SPACEIN BUILDINGS IN THE EASTERNLONDON FINANCIAL DISTRICT AS IT SEEKS TO CUT HIGH RENTAL BILLS. SCARLET: SHARES OFCHIPOTLE ARE RISING TODAY ON NEWS THAT MONTY MORANHAS STEPPED DOWN ASTHE HEAD OF THE BURRITO CHAIN, LEAVINGSTEVE ELLIS AS THE SOLE CHIEF EXECUTIVE. THE MOVEFOLLOWS ATOUGH YEAR AS THE COMPANY TRIES TO RECOVER FROMA SERIES OF FOODBORNE ILLNESS PROBLEMS. JOINING US NOWISOUR TWO GUESTS. GREG, LET'S START WITH YOU. WHOIS MONTY MORAN, WHAT WAS HIS CONTRIBUTION,HOW WILL THE COMPANY FEEL HISABSENCE? >>HEWASCOO WHEN THE COMPANY WAS DOING WELL. STEVEELLSIS SORT OF THE CULINARYBACKGROUND, THEFOODIE, MORAN WAS THE OPERATIONS GUY RUNNING THE RESTAURANT, MAKING SURE THE TRAINS RAN ON TIME. THAT HAS BEEN A PROBLEM WITH THEM, THIS RECOVERY HAS FALTERED. WE HADHEARDELLS SAY THAT HE IS NOTHAPPY WITH AS MANY AS HALF OF THE RESTAURANTS, WHICH IS STARTLING. OLIVER:TWO PEOPLERUNNING A COMPANY, ONE LEAVES AFTER A WHILE. DOES NOT SOUND LIKEA WHOLE LOT, BUT AS YOU HAVE BEENWRITING, YOU HAVE BEEN TALKING FOR A WHILE THAT THIS MAKE SENSE. >>PEOPLE HAVE BEENPUSHING FOR THEM TO DISBAND THE CO-CEO STRUCTURE. THEY SAY THEY NEEDED SOMEONE IN CHARGE RESPONSIBLE FOR EVERYTHING. WHEN THEREIS ONE PERSON RESPONSIBLE, YOU KNOW THE BUCK STOPS WITH THEM. BUT IT IS NOTJUST MORAN, WE ARE WAITING TO SEE IF THERE WILL BE MOREBOARD CHANGES. I WROTE ACOLUMN TODAY SAYINGTHATELLSJUST BOUGHT HIMSELF SOME MORE TIME, BUT HE COULD BE NEXT. SCARLET: WE HAVE SEEN THIS PLAY OUT FORABOUT A YEAR, AND THESE TEND TO SHOWSIGNS AT THIS POINT. I WONDER IF YOUCANCOMPARE AND CONTRAST THIS FOOD SAFETY ISSUE ATCHIPOTLECOMPARED TO YUM! BRANDS, WHO ALSO HAD ITS SHARE OF PROBLEMS. >>I THINK THEDIFFERENCE WITH SCHIPHOL LARRY, IT HIT AT THE HEART OF THEIR BRAND. THEY WERE KNOWNFOR HIGHER QUALITYINGREDIENTS, AND THEY HADTHISHEALTHHALO AROUND THE COMPANY,AND THIS HIT THEM HARD. IT HAS BEEN A SLUGGISH RECOVERY. PEOPLE ARE GETTINGIMPATIENTIN THE INVESTMENT COMMUNITY ABOUT WHEN THE NUMBERS WILL START TO TURN AROUND. IF WE DO NOT SEESOME PROGRESS THEREGOINGTO-25,THEY SHOULD BE ABLE TO DO BETTER ON THAT. THAT WOULD BE A BAD SIGN IF THEY CANNOT PUT THOSE NUMBERS OF. OLIVER:WHAT IS THE BENCHMARK WHERE INVESTORS WILL SAY, IT LOOKS GOOD, BUT SIX MONTHS FROM NOW, WE NEED TO SEE THE NUMBERS LINEUP? >>THERE JUST NEEDS TO BE A SENSE THAT IT IS MOVING INTHE RIGHT DIRECTION, AND THAT'S BEEN IN SHORT SUPPLY RIGHT NOW. SCARLET: WE HAVE SEEN FORMER FOUNDERSRIDETO THE RESCUE, HOWARD SCHULTZ, JACKDORSEY. THOSE COMPANY GOING IN DIFFERENT DIRECTIONS FOLLOWING THE RETURN OF THEIR FOUNDER. WHAT ISCHIPOTLE HOPING TO DO BY INSTALLING THE FOUNDER BACK IN THE POSITION OF SOLE DECISION-MAKING? >> I THINKELLSHAS THE CREDIBILITY OFSTARTING THE BRAND, HE HAS THE PASSION FOR IT,NOT UNLIKE WHAT SCHULTZ DID WITHSTARBUCKS. SOYOU SEE THESE FOLKSCOMING IN AND RE-ENERGIZING FOLKS. THE THING IS, ELLSHAS BEEN THERE THESEPAST YEARS, SO I DON'T KNOWTHAT IT HAS HAD THE SAME PUSH IT HAS HAD BEFORE. A.B. IFHE SAYS TO HIS EMPLOYEES, I'M INCHARGE, I'M GOING TODO SOMETHING DIFFERENTLY, MAYBE HE WILL GET PEOPLE EXPIRED AGAIN --INSPIRED AGAIN. OLIVER:WE ALSO KNOW ABOUT ANOTHER PLAYER ONTHIS, ONTHE INVESTMENTSIDE, BILL ACKMAN. WHAT DO WE KNOW ABOUT WHAT ROLE HE WILL PLAY IN THIS AS THIS COMPANY STARTSTOGETTHEWHEELS MOVINGIN THEOPPOSITE DIRECTION, IMPROVING THE SITUATION? >>AT EXTENT TO HEAR MORE ABOUT THAT TODAY AT5:00,THEY WILLBE HAVING A CALL WITH ANALYSTS AND INVESTORS. BILL ACKMAN HAS TAKEN A 10% STAKE IN THE COMPANY. HE HAS PRAISE THEFOUNDERS, HE THINKS CHIPOTLE IS THEGREATEST. HE EATS THERE. THIS IS NOTSOMETHING WHERE HE ISCOMINGIN AND SAYING I'M REALLY GOING AFTER THEM AND ALL WITH THEIRHEADSOR ANYTHING LIKE THAT. HE WANTS THEM TO DO WELL. WE WILL SEE WHAT HE CAN DO. SCARLET:I'M GLAD YOUBRING UP THE CONFERENCE CALL THEY WILL BE HOLDING TONIGHT. WHAT ARE INVESTORS AND ANALYST LOOKING FOR THE COMPANY TO ANSWER TONIGHT? >>PROBABLY SOME SPECIFICS ABOUT WHAT YOU ARE ASKING,ELLSHAS BEENTHERE, SO WHAT DOES THIS MEAN FOR THE COMPANYSTRUCTURE, WHAT DOES THIS MEAN FOR 2017? HE HAS SPECIFIC IDEAS FOR HOW TO GET THE SALES GOING AGAIN. HE SAYS THEY SPENT ALL OFTHESE MILLIONS OF DOLLARS GETTING THESE PEOPLE BACK INTO THE RESTAURANTS WITH FREE BURRITOS, BUT THEY ARENOT PAYING LIKE THEY WERE. SO HOW IS HE GOING TO CHANGE THAT? OLIVER:WHO KNEW THAT BILL ACKMAN LIKES CHIPOTLE. SCARLET: THANK YOU SO MUCH. OLIVER:STILL AHEAD IN TODAY'S OPTIONS INSIDE, WE ARE TALKING POTENTIAL. THE STOCK IS UP12% THIS YEAR. --POTASH. THIS IS BLOOMBERG. ♪ >> WELCOME BACK TO OLIVER: THISIS "BLOOMBERG MARKETS." I'M OLIVER RENICK. OLIVER: I'M SCARLET FU. --SCARLET:I'M SCARLET FU. IT IS TIME FOR THE OPTIONS INSIDE. >>JOINING ME TODAY IS JIM STRICKER OF MK M HOLDINGS. THINGS WERE JOINING US. YOU HAVE WITH YOU A TERRIFIC CHART OF IMPLIED CORRELATIONS. TALK US THROUGH THE CHART. >>LOTS OF TALK ABOUT A PARADIGM SHIFT POSTELECTION. A LOT OF DISPERSION. THE QUESTION IS OUT THERE, WHAT DOES THAT MEAN? THIS IS A GRAPH OF S&P 500 IMPLIEDCORRELATION. IT HAS MOVED TO CYCLE LOAD. THIS MEASURES THE FORWARD-LOOKING EXPECTATION OF CORRELATIONAMONG THE TOP 50 COMPONENTS OF THE S&P 500 BY MARKETCAP. HISTORICALLY, IF CORRELATION IS LOW, THE INVERSE OF THAT IS DISPERSION. THATMEANS INDIVIDUAL STOCKS, SECTORS ARE FLYING ALL OVER THE PLACE, MOVINGON THEIR OWN IDIOSYNCRATICFACTS. THAT, OVERTHE COURSE OF TIME, HAS BEEN A VERY HEALTHY ENVIRONMENT, PARTICULARLYFOR ACTIVE MANAGERS. THAT IS ONE WAY TO PUTCONTEXT TO PUT CONTEXT AROUND WHAT'S BEEN HAPPENING AFTER THE ELECTION. >>AND THATIS AN INDICATOR THAT STOCKS ARE OVERBOUGHT RIGHT NOW, THE DATA WITH AN RSIABOVE 25. BUT THIS SUGGEST THAT THEY COULD GO HIGHER? >>CERTAINLY WE HAVE BEEN TALKING FOR THE LAST SEVERAL WEEKS, USE OPTIONS TO EXPLOIT THIS. WEWANT TO REMAIN LONG, LEVERED INTO 2017. IF YOU NEED TO SELL LONG STOCKS, LOOKTO EPOCRATES THAT VIA OPTIONS. IF THERE IS A STOCK YOU LOVE, LOOK TO ADDLONG. THAT COULD MEAN BUYING CALLS OUT RIGHT, IT COULDMEAN BUYING CALL SPREADSTHAT ARE STOCK SPECIFIC. WE WANT TO KEEP THE PEDAL TO THE METAL INTO 2017. >>TURNING TO YOUR TRADE, I KNOW THAT YOUR TECHNICIAN IS SAYING THERE IS ROOM IN THE FERTILIZER STOCKS. YOUR TRADE IS ON POTASH. TALK US THROUGH THAT. >>MULTIYEAR DOWNTREND,FLAT LINE BLOWS ALL YEAR. WHAT JONATHAN TALKED ABOUT TODAY IS A BULLISH REVERSAL IN THIS SECTOR. YOU COULDPOTENTIALLY LAYER ON A REFLATIONELEMENT TO THIS TRADE. PLENTY OF FUNDAMENTAL ANALYSTS HAVE COME OUT AND DOWNGRADED A FEW OF THESEDOCS. WHAT WE WANT TO DO IS TAKE ADVANTAGE OF THISPOSITIVE BACKDROP WE SEE, IMPLIED VOLATILITY BEINGLOW, GO OUT TO MARCH OF NEXT YEAR,BUYTHE 21 STRIKE. YOUPAY ABOUT $.75 FOR THEM. NICETRAY TO GET LONG DIRECTIONAL EXPOSURE. >>WE HAVE TO LEAVE IT THERE, THANK YOU. SCARLET:STILL AHEAD, BANK OF AMERICA MERRILLLYNCH HEAD OF RESEARCH DAVIDWU JOINS "WHAT'D YOU MISS?." HE IS CALLINGU.S. CHINA RELATIONS ONE OF THE BIGGEST THINGS TO WATCH FOR IN 2017. IT SHOULD BE A GREAT CONVERSATION. OLIVER:WE WILL DEFINITELY BE WATCHING. THANKS SO MUCH. THIS IS BLOOMBERG. ♪ MARK:A FEDERAL JUDGE IS REQUESTINGDEBT REJECTING A REQUEST TO RECOUNT THE BALLOTS IN PENNSYLVANIA. GREEN PARTYCANDIDATE JILL STEIN HADSOUGHT RECOUNTS IN PENNSYLVANIA, MICHIGAN, AND WISCONSIN. A FEDERAL JUDGE HALTED MICHIGAN'SRECOUNT. WISCONSIN'S HAS BEENCOMPLETED AND THE STATE ELECTIONS COMMISSION IS PLANNING TO VOTE TO CERTIFY THE RESULTS. DONALD TRUMP NARROWLYWON ALL THREE STATES OVER HILLARY CLINTON. >> AT THE DIRECTOR JAMESCOMEY SWUNG THE ELECTION. THEY HADTO THE PRESIDENCY TO DOWNFALL. DEMOCRATS WOULDHAVE WON THE WHITE HOUSE AND REGAINED CONTROL OF THESENATE'S INTERNET FOR COMEY'S HANDLING OF SECRETARY CLINTONPLUSEMAIL SERVER INVESTIGATION AND ALLEGATIONS OF RUSSIAN HACKING. IN PHILADELPHIA, A CONGRESSMAN HAS BEENSENTENCEDTO PRISON FOR A RACKETEERING SCHEME THAT INCLUDEDMONEY LAUNDERING AND BRIBERY. A FEDERAL JUDGE CALLED THE SIX-YEAR-OLD DEMOCRAT'SCRIMES ASTONISHINGTHAT THE EDITORSTV ANCHOR WIFEHAD $500,000 IN ANNUAL INCOME. HE INSISTED THAT THE JUSTICE DEPARTMENT VASQUEZWAS LIKELY MOTIVATED. ANTONIA TARASWASSWORN IN AS SECRETARY-GENERAL OF UNITED NATIONS. HE SAYS THATTHE NINTH U.N. CHIEF INTHE71 YEAR HISTORY. GLOBAL NEWS POWERED BY MORETHAN 126COUNTRIES WORTH OF JOURNALISTS. LIVE FROM NEW YORK, I AM SCARLET AND I AM JOE. >>U.S. STOCKS ARE FALLING. THE ENERGY COMPANIESARE FAILING. JOE:THE QUESTION IS WHAT DID YOUMISS? SCARLET: RISING OIL PRICESARE SENDING THEM HIGHERTODAY. U.S.PRESIDENT-ELECTDONALD TRUMP HAS UPPED THEANTE WITH BEIJING SAYING HE WILL USETHE ONE CHINA POLICY ASABARGAINING CHIP TO GETABETTER TRADE YOU. WE WILL LOOK AT WHY THIS IS A BIG DEAL. ANDWHY -- UGLY EXPLAIN HOW PEOPLE MAKE CHOICESTHAT SEEMTO GOAGAINSTTHEIR INTERESTS. WE WILL TALK ABOUT THE NEXT. JOE:LET'S LOOK AT WHERE THE MAJOR AVERAGES STAND. ABIGAIL DOOLITTLE IS STANDING BY. ABIGAIL: WE'RE LOOKINGAT WHAT WE'VE HAVE BEEN LOOKING AFTER MOST OF THE DAY. THAT ISMIXED TRADING. THAT BEING SAID WEDO HAVE THE DOW ONLY OUT OF A VERY SMALL GAME. ONE THAT PUTS THE DOW ON PACE FORASIXTH RECORD CLOSE IN A ROW. LET'S REALLY FOCUS IN ON THIS DOW STRENGTH. HELPING THE DOW HIGHER TODAY TO ITSPOTENTIALSIX RECORD HIGH. THIS WAS AFTER JOHNSON AND JOHNSONLOOKED LIKEITCOULD CLIMB. IT IS HAVING HIS BEST THING SINCE THE ELECTION. THE COMPANY DID RAISE HIS COMPANYDIVIDENDS. FINALLY, EXXON MOBIL, TRAINING NICELY HIGHER. OILLEVERSLASTINGTHROUGH JULY 2013. THEY HAVE AGREEDTOCUT SUPPLIES AND REALLYHELPED THEOILPRICE. AS FOR WHETHER OR NOT THESE RECORD HIGHS FOR THE DOWCAN CONTINUE, ARE THE MARKETS FROTHY? LET'S LOOK AT THE #BTV3505. THEDOWIS TRADED NICELY HIGHER. IT IS UP 13% ON THEYEAR. ONPACE FOR THE BEST YEARSINCE 2013. ON THE BOTTOM OF THECHART, WE HAVE THE RELATIVE STRENGTH INDEX. THIS IS AMOMENTUM INDICATOR. TYPICALLY WHEN IT GOESABOVE 70. WESEE THAT THEDOW IS ABOVE THAT 70 MARK. IT HAS BEEN THERE FOR THE LONGEST STRETCH OF THE LAST YEAR. THEYARE ATTHE HIGHEST LEVEL SINCE 1996. BASICALLY IN 20 YEARS. BASICALLY, JONATHANKRINSKY, HE IS SAYING THAT OVERBOUGHT DOESN'TMEAN OVER. HE HASA POINT. IT WILL BE INTERESTING TOSEE WHETHER THIS IS A CAUTIONARY TALEOF CAUTION OR NOT. SCARLET: WE HAVE SOME BREAKING NEWS ONVIACOM. BECOME AN HE IS SAYING THAT IT HAS STOPPED THEEXPLANATION. IT HASNAMED BOB AS PERMANENT CEO. THE PERMANENTCEOOF MTV, NICKELODEON AND COMEDYCENTRAL WAS LOOKING TOBEREUNITED WITH CBS. REDSTONEAND HERFAMILY DO HAVE A CONTROLLINGSTAKE IN BOTH VIACOM AND CBS. YOU CANSEE THAT THE VIACOM SHARES HAVE BEEN TUMBLING ALL DAY, DOWN BY OVER 9%. WHAT DID YOUMISS? INTHE LATEST UNIVERSITY OF MICHIGANSURVEY,THERE WERE SOME EXCEPTIONS TO THE OPTIMISM. MAINLY AMONG THOSEWITH A COLLEGE DEGREE AND RESIDENTS OF THE NORTHEAST. REINFORCING THE EXTENT OF THE DIVIDE IN THE COUNTRY. THANK YOUSOMUCH FOR JOINING US PROFESSOR. WE SEE IT INTHE MARKETSAND DOMESTIC ALL SEE AND FORPOLICY -- FOREIGNPOLICY,WHENTHERE ARE NO SPECIFICS GIVEN YET ON ANY POLICY PRESCRIPTIONS OUT THERE. >> ITHINK THAT ANYONE WHO IS TRYING TO PUTLOGICANDDO ANYTHING THAT HAS HAPPENEDIN THE LAST SIX MONTHS OR SO IN ELECTIONS IS GOING TO HAVE A HARD TIME. BOTH BREXIT AND THETRUMP ELECTION,PEOPLE SEEM TOBE VOTING AGAINST THEIR SELF-INTEREST. >>FROMA BEHAVIORAL STANDPOINT, ISTHERE A REASON LIFE IN THE ABSENCE OF ANY REALDETAILS ABOUT WHAT TRUMP IS GOING TO DO OR EVENHAVEBREXIT IS GOING TO AFFECT THE U.S.ECONOMY,PEOPLE START TELLING A POSITIVE STORY? WE HEAR ALLKINDS OF STUFF. FISCAL STIMULUS. EVEN THOUGH TRUMP IS NOT REALLY TALK MUCH ABOUT THAT. PEOPLE HAVE REALLY GLOMMED ONTO THISREALLY POSITIVE STORY WITHOUT ANY OF THE NEGATIVE SIDES. WHAT MAKES US DO THAT? >>PEOPLE SUFFER FROM SOMETHING CALLED THE CONFIRMATION BIAS. THEY SEEK EVIDENCETHAT IS CONSISTENT WITH THEIR BELIEFS. THEY GO OUT AND LOOK BOARD. SOIF YOU WOULD LIKE TO THINK THATTHE ECONOMY IS GOING TO BE GREAT,YOU WILL LATCHONTO ANY BIT OF INFORMATIONTHATMAY SUPPORT THAT REGARDLESS OF WHERE COMES FROM. >> GOING OFF ONTHAT ALITTLE BIT, TO CONTINUE THATIDEA,HOW DO WE TALK TO PEOPLE WHO UNDERSTAND THAT THE CHOICES ARE AGAINST THEIR BETTER ECONOMIC INTERESTBUTDO IT ANYWAY TO SEND AMESSAGE. THEY ARE COMING OFF THEIRNOSE TO SPITE THEIR FACES. HOW DO WE EXPLAIN THAT? >>ONE WAY OF THINKING ABOUT THISIS LIKEWHEN YOU HAVE AN INCH, WHEN YOU HAVE A MOSQUITO BITEORPOISON IVY. THEY TELL YOU NOT TO SCRATCH IT. WHAT DO WE ALL DO? WE SCRATCH IT. THIS IS JUST HUMAN NATURE. THAT IS THE WAY PEOPLE ARE ACTING THESE DAYS. THEY HAVE AN ITCH AND THEY ARE GOING TO SAY NO, THEY ARE GOING TOREJECT THE STATUSQUOBECAUSE THEY AREANGRY. THEY WILL LOOK FOR SOMETHING ELSE. BEIT LEAVING THE EUOR VOTING FORTHE NON-STATUSQUO CANDIDATE. THE BELIEVES OF MANY OF THESE VOTERSHAS NOTHING TO DO WITH REALITY. ISAW AN INTERVIEW WITHONE TRUMP VOTER WHO SAIDSHEWAS VOTING FOR TRUMP BECAUSE OBAMA HAD RUINED THE ECONOMY. THE UNEMPLOYMENT RATEWAS VERY HIGH. INFLATION RATE WAS HIGH. THE DOLLAR WAS WEEK. NOW, IF THOSE ARE YOURBELIEFS, I DON'T KNOW WHERE YOU'RE GETTING THEM. >>ARE THERE CERTAIN CONDITIONS THAT ARISE IN A SOCIETY IN WHICH PEOPLE MIGHT BE MOREINCLINED TO CAST A VOTE THAT ISMORE BURN IT ALLDOWNAND IT NORMALLY WE HAVE ELECTIONS AND SOMEONE REPRESENTINGTHE STATUSQUO AND THE EXISTING NORMS OFPOLITICS. USUALLY, SOME MIGHT THAT EMERGES. THEY CLEARLY FLAUNTEDTHENORMAL STUFFWE HAVEAN ELECTION. WAS THIS AFLUKE OR COULD THIS HAVE HAPPENED ANYTIME? WHETHERQUESTIONS AND CONDITIONS THAT MADEFORTHEM? >>IT HAS HAPPENED BEFORE, WE CAN HOPE IT NEVER HAPPENS AGAIN. I THINK IT IS SAFE TO SAYTHAT PEOPLE ARE ACTING EMOTIONALLY. WE DO A LOT OF STUPID THINGS WHEN WE ARE EMOTIONAL. THAT ISAS DEEP AS WE NEED TO GO. IF SOMEBODY INSULTS YOU, YOU ARE LIKELY TO SAYSOMETHINGTHAT YOU WILL LATER REGRET. PEOPLE MAYSOMEDAY REGRET SOME OF THE BOATS THEY HAVE MADE. >> YOUHAVE BEEN SAYING THAT A LOT OFPEOPLEARE SAYINGTHIS, THEREISA SEEMING RATIONALITY. DONALD TRUMP CANTILEVER ON WHAT PEOPLE WANT TODELIVERORMAYBE THEY HAVE AMISCONCEPTIONINTHE EXAMPLE YOUCITED ABOUT THE CURRENT STATE OFTHE ECONOMY. IS IT ALSO POSSIBLE THAT ECONOMICSIS NOT EQUIPPED TO UNDERSTAND WHAT MOTIVATES THE VOTERS AND THATMAYBE PEOPLE HAVE THEPRINT-- DIFFERENT INTERESTS THAT TRADITIONAL MEASURES CAN REALLY GET AT YOU. >>ECONOMISTS ARE NOT VERY GOOD ATUNDERSTANDINGTHE PSYCHOLOGY OF VOTERS. VERY FEW PEOPLE ARE. WHAT IS CURIOUSISI THINK WE HAVE SEEN A BIG DECLINE IN THE VALUE OF EXPERTISE. THE MEDIA HAD A TALKING HEAD YOU BRINGON, PEOPLE DON'T PUT MUCH STOCK IN WHAT WE ARE SAYING ANYONE. SO,I PUT SOME OF THE BLAME ON THIS, IF WE WILL CALL ITCLAIM ON THECHATTERINGCLASSES WOULD HAVENOT GOT THROUGH. >> YOU BRING UPA VERYGOOD POINT. I WANT TO GO BACK TO THE EMOTION PART OF IT BECAUSE IT SEEMS LIKE THE EMOTIONCANBE CONTAGIOUS, INFECTIOUS EVEN. WE HAVE SEEN BRAZEN ALREADY. WE HAVE SEEN THE ITALIAN REFERENDUM. WHAT MIGHT GIVE PEOPLE PAUSE NEXTYEARTO HOLD BACK ON THE EMOTION AND THE BOTH MORE BUT WILL TEST BOTH MORE LOGICALLY? IN THE CASE WHEN YOU HAVE A COUPLE OF HOLES THATARE VOTED IN FAVOR OF THE EMOTIONS OF PEOPLE CONTINUE TO RUN WITH IT? >>I THINKIT IS TRUE THAT BREXIT AND TRUMP ARE THE SAME PHENOMENON. IT IS NOT THE TRUMPVOTERS-- I'M GUESSINGMOSTTRUMP VOTERS WITHOUT EVEN KNOWWHATBRAZEN IT WAS. IT IS NOT THAT THEY GOT CARRIED UP IN SOMEWAY THAT STARTED IN ENGLAND, AS MUCHASTHE WORKING CLASSESHAVEBEEN LOSINGGROUND FOR THE LAST 30YEARS AND THEY ARE ANGRY ABOUT IT. THAT SAME PHENOMENON IS HAPPENINGIN VARIOUS PLACES AROUND THE WORLD. OFCOURSE,EVERYTHINGMATTERS. I THINKIT WOULD BE WRONG TO OVER INTERPRET THE SELECTION. AFTERALL, 100,000 VOTES GOING A DIFFERENTWAY, WE WOULD ALLBE TALKING ABOUTHOW TRUMPLOST AND HOW ANYONE COULDEVER HAVE THOUGHT HE WOULD WIN. SO YES, ITIS A SHOCKING RESULT. HISFAVORITE SINCE THE ELECTION HAS MADE A MORE SHOCKING. WE HAVE TO REMEMBER THAT MORE PEOPLE GO TO FOR HIS OPPONENT THAN HIM. SCARLET: THANK YOU SO MUCH FOR JOINING US RICHARD. HE ISTHE FOUNDING FATHER OF BEHAVIORAL ECONOMICS. COMINGUP, WEWILLTALK ABOUT THE SELECTIONOF REX TILLERSON AS THENEXT SECRETARY OF STATE. THIS IS BLOOMBERG. ♪ SCARLET: MR. PICKENSCAUSEDTHIS ANDCAUSE THE SELECTION PERFECT. HE SAID ROUGHLY TWO WORLD OF THE WORLD'S ONOIL -- OIL,HE SAYS HE IS WELL SKILLED FOR THE POSITION. MR. PICKENS JOINS USNOW ON THE PHONE. MR. PICKENS, THANK YOU FOR TAKING THE TIME, MY FIRST QUESTION TO YOUISHAVE YOU BEEN IN TOUCH FOR REXTILLERSON,THE CAMPAIGN OR DOTHEY HAVE THE COMPANY SAIDHE WILL BE NAMED SECRETARY OF STATE? >> I KNOW WRECKS ANDI AM NOTA TOUCH WITH THIS DECISION ON SECRETARY OF STATE. OTHER THAN THROUGH THE TV AND OTHERNEWS MEDIA. BUT IKNOW REX TILLERSON. A GREAT ADDITIONTO THE CABINET. >> MR. PICKENS, AS YOU MENTIONED, MANY OF THE HOTTEST JAILLITTLE -- GEOPOLITICAL SPOTSAREOIL NATIONS. FROM THAT PERSPECTIVE, REX TILLERSON WOULD HAVE GREAT INSIGHT. ON THE OTHERHAND, WRAPS THE INTEREST OF THE ENERGYINDUSTRY IS DIFFERENT THAN WHATTHE INTERESTSWOULD BEOVERALL AS A PRETENSETO SECURITY, HUMAN RIGHTS ANDOTHER THINGS LIKE THAT. I YOU CONFIDENT THAT REX TILLERSON WOULDBEABLE TO SEPARATE THE INTERESTS OFOIL FROM THE INTEREST OF THE COUNTRY? >>YES, I WOULD. REX TILLERSON IS A MAJOR ALL COMPANY GUY. HE HAS HAD SO MUCH EXPERIENCE ANDHEIS A GOOD MAN. HE HAS WORKED BOYSCOUTSAND DIFFERENT ORGANIZATIONS. NO, I WOULD HAVE NO QUESTION ABOUT TILLOTSONBEING A GOOD SECRETARY OF STATE. HE IS A GOOD MAN. HE IS A HARD-WORKING GUYAND HE KNOWS THE WORLD. EXXON OPERATES AROUND THE WORLD AND I WOULD THINK THAT HEWOULD BE AN EXCELLENT CHOICE. LIKES THAT MAY BE THECASE BUT TO FOLLOW ON THE QUESTION, HOW DOESREX TILLERSON MAKE SURE THAT THERE IS AN CONFLATION BETWEEN THEU.S.'S INTERESTS AND THE ENERGYINDUSTRY'S BUSINESS INTERESTS? >> HOW DOES HE IS SURE OF HE WOULD NOT HAVE A CONFLICT? REX TILLERSON ISA WORLDWIDE PERSONALITY. HE IS LEAVING EXXON. HEIS OFF TO A DIFFERENT PART OF HIS LIFE. HE WOULD GO TO THE SECRETARY OF STATE AND HE WOULDPERFORM THAT FUNCTION DISLIKE HEWOULD IF HE WAS AT EXXON. HE IS GOING TO MAKE A DECISION FOR EXXON. HE WOULDBE WORKING FOR THE UNITED STATESGOVERNMENTAND DOING EVERY THING HECOULDTO BE SURE THAT OUR BUSINESS WOULD GO FORWARDAND BE WELL EXECUTED. NO, ILIKE -- I THINK TILLOTSON WOULD BE GREAT FOR THIS JOB. >>THIS NAME HASCOME UNDER GREAT CRITICISM. I THINK IT IS BECAUSE HE IS IN OIL CEO. ALSO, DUE TOHIS PERCEIVED RELATIONSHIPWITH VLADIMIR PUTIN. WE HAVE A STORY OUT ON BLOOMBERG ABOUT HOW REXTILLERSONARE CURRENTLY WENT TO THE WHITE HOUSE REGARDING THERUSSIAN SANCTUARY. HE WANTED TO MAKE SURETHAT COMPETITORS WOULD NOT GAIN AN EDGE THROUGH IT. GIVENTHATTRUMP IS ALREADY UNDERFIRE,IS THIS GOING TO CREATE A HEADACHE FOR TRUMP? THE IDEA OF HAVING A SECRETARY OF STATE THAT PRESENTS THEIDEA THAT THIS WHITEHOUSE WOULD BE MORE FAVORABLE TO RUSSIAN INTERESTS? >> THE HACKING, I HATETO TELL YOU ALL THISBUT I DON'T REALLY KNOWHOW TO HACK ANYTHING. BUTNO, REXTILLERSON, I THINK YOU WOULD BE GREAT. HE KNOWS PUTIN. HE COULD SIT DOWN AND TALK TO HIM ABOUT THINGS. HE IS NOT ABOUT TO MAKE SOME POLISH DEAL. I CAN'T EMPHASIZE THISMORE, WHEN TILLOTSONLEAVES EXXON AND GOESWITH THE STATE DEPARTMENT, HE IS100% STATEDEPARTMENT. EXXONHAS PLENTY OF PEOPLE TO RUN AND SON. THEY DON'T NEEDANOTHER CEO. THEYHAVE A CEO. HE WILL GO TO THE-- ALL LINKS TO BE THE VERYBESTSECRETARY OF STATE THE UNITED STATES HAS EVER HAD. >> AND LEAD YOU BRING UP EXXON MOBIL BECAUSE I WONDER WHAT YOUR THOUGHTS ARE IF YOU HAVE ANY ON EXXON MOBIL'S PRESIDENT DARREN WOULD. IFTHE COMPANY HAS A CEO IN WAITING, IS HE THE CEO IN WAITING? >> IS HE THE CEO IN WAITING? >>IS HE THE ONE THATWOULD SUCCEED REX TILLERSON? >> I DON'T KNOW WHOWOULD SUCCEED REX TILLERSON. DON'T WORRY ABOUT EXXON, THEY HAVE PLENTY OF EXECUTIVES. THEY HAVE GOOD CEOS WHO ARE AVAILABLE THERE. THE DAYHE LEAVES AND GOES TO WORK FOR THE STATEDEPARTMENT, HE WILL BE100%FOR THE GOVERNMENT. HE IS NOT WORKING FOR EXXON ANYMORE. >> I WANT TO SWITCHGEARS. JOE:THERE IS NEWS THAT THE ORGANIZATION SEEMS TO BE GETTING IT TOGETHER. THEY ARE LOOKING TO CUT MORE THAN EXPECTED. DO YOU THINK OF HAVE WILL BE ABLE TO EXECUTE WHAT THEY SAID? DO THINK IT WILLBE ABLE TO GO IT WELLWITHOUT CHEATING AND BOOSTING THE PRICE OFOIL? >> NO,I THINK IT IS LONG HAUL. THEY WANT MORE FOR THEIR OIL. THEYHAVE SAID, WHAT YOU ARE GOING TO DO? THEY WILL CUT SUPPLY. THEPRICE OF OIL WILL COME UP. THE PRODUCERSOF OIL, WHETHER THEY BE OPEC, THERUSSIANS, WHETHERIT ISTHE GUESS INDUSTRY IN THE NEXT DAYS, THEY HAVE ALL HAD ENOUGH. YOUWILL BEAT $60 A BARREL WITHIN 30 DAYS. >> $60 ABARREL IN 30 DAYS, THAT ISYOUR FORECAST? >>I THINKYOU WILL HAVE THOSE CUTS AND YOU WILLSEEIN JANUARY OF NEXT YEAR $60 A BARREL. >> WHAT ABOUT MUCH HIGHER THAN THAT? IFEEL IT WE CAN QUICKLY DISCOUNTEDTHE IDEA THAT WE'RE GOING TO SEE TRIPLEDIGITS. WOULD THAT BE ANYTIME SOON? IS ITPLAUSIBLE THAT WE COULD GET BACK THERE? WHAT DO YOU SEE FOR 2017 OR 2018? >>TAKING ME OUT TO 2018, YOU HAVE A CHANCE. YOU'RE NOTGOING TO HAVE $100 OILIN 2017. BUT I DO THINK YOU'RE GOING TO HAVE $75 OIL. SCARLETT: THERE HAVE BEEN A LOT OF INSTANCESWHERE OPEC IS NOT BEEN ABLE TO COMPLY. DO THINK THATTHEY EXPECT TOBE WOBBLING ALONG THE WAY? WHERE THEY CAN'T QUITE COMMIT TO LET THATHAVE PROMISED? WHAT MIGHT THOSE LOOK LIKE? >> USA THAT IF THEY WON'T STICK WITH IT. I BELIEVE THEYWILLSTICK WITH THE DEAL. I BELIEVE IT WILL HAPPEN. OPEC NEEDS MONEY. YES,I THINK THEY WILL STICK WITH THE DEAL. THE SAUDI'S HAVE SAID THEY WILL CUT BELOW 10 MILLION A DAY. SO THEY ARE CUTTING OUT A MILLION BARRELS A DAY. THEY HAVE TO BE THEBIGGEST ONE. THEYDOITWHEN THEY PERFORM. WHEN THEY SHOW THE LEADERSHIP. AND THEY WILL. THE OTHER COUNTRIES WILL COME ALONG. >>WE'LL QUICKLY,SOME OF THE SKEPTICS OF THE DEAL, INCLUDING GOLDMAN SACHS HAVE ARGUED THAT PRICES GOUP AND THE U.S. SUPPLY OFOIL, QUICKLY. HOW QUICKLY CANU.S. PRODUCTION REACT TO ANY PRICE INCREASE? >> I CANTIRE THATI KNOW THE OIL FIELD. YOU KNOW THAT. IT WILL NOT COME ON FAST. THE CAUSETHAT THEY HAVE A NEW OILFIELD, HAVE OTHER JOBS. ITIS THATWOMENMONDAY OFF FIELD. THEY TELL THEIR HUSBAND, YOU LOOK, YOU GET A JOB. >>NO, I WILL GO BACK TO JOB WHEN THE RATE GOES BACK TO WORK. NO, YOU GET A JOB, YOU'RE NOT HANGING AROUND THE HOUSE. THOSEGUYSHAVE GOT JOBSAND THAT'S IT. >> THANK YOU MR. PICKENS. HE IS THE PRESIDENT OF BP CAPITAL. THIS ISBLOOMBERG. ♪ ♪ SCARLET:WHAT DID YOU MISS? ANOTHER RECORDDAY FOR THE DOUBT. --DOW. ALL OF THIS AHEADOFWEDNESDAY'S DECISION. I AM SCARLETFU. JOE:I AM JOEWEISENTHAL. EVEN FOLLOW US ON TWITTER. SCARLET:WEBEGINWITHOUR MARKET MINUTES. FOR THE S&P 500 WHICH ISABOUT TWO POINTS DOWN. THIS ISTHE WORSTDAY SINCE DECEMBER 1. HARD TO BELIEVE. CRUDE OIL IS THE STAR IF YOU WANT TO .1 OUT. IT HAS GAINED 1.5%. >> ANOTHER DOW RECORD HIGH RETURNS TO THENORM HERE WITH THE DOW RALLY AND THE NASDAQ SELLING OFF. >> IN TERMS OF THEACTUALSTOCKS TO PAY ATTENTION TO, IT STARTED IN ASIA. I SEEA LOTOFRED ARROWS OVER THERE. THEY ALL FELL. CHINA TOOK A MUCH STRONGER TONE WITH DONALD TRUMP. IF YOU REMEMBERJOE, THEY CARE MOREABOUT THE ONE CHINAPOLICY. THEY ARE DOWN 2.4%. ENERGYSTOCKS ARE ALSO BIG MOVERS AS OILPRICESRISE. THEY RALLIEDIN THE EARLY PART OF THE SESSION. THAT IS AT ITS HIGHEST SINCE LAST JUNE. YOU CANSEETHEM UPBY1%. JOE: LET'SLOOK AT GOVERNMENT BONDS. YIELD IS MARGINALLY HIGHER. BOTHTHE TWO-YEAR AND THE TENURE AREUP A LITTLE BIT. LET'S LOOK AT THE CHINESE. WE HAVE THEEVERTHOUGHT ABOUT CHINESE GOVERNMENT BONDS. LET'S LOOK AT THIS. THIS IS A ONE-YEAR CHART OF 10 YEAR YIELDS IN CHINA. THEYHAVE REALLY SHOT UP A LOT LATELY. THISREPRESENTS ANOTHER FORM OF TIGHTENING. YOU CAN SEE THEEQUITIES SELLING OFF. THERE WAS ALSO BOND DEAL. THIS MIGHT BE SOMETHING THAT YOU WANT TO KEEP YOUR EYE ON. >> WE WILL TALK ABOUT THIS A LITTLE LATERWITHDAVID WILL. I TOLD US TOCURRENCIES WHERE OIL EXPERTS ANDCURRENCIES RISE. YOU CAN SEETHEY AREALSO THE MEXICAN PESO. EVEN WITH TODAY'S ADVANCE. A QUICK CHECK ALSO ON THE TURKISH ERA. DEPRECIATING FORATHIRD DAY. THERE ARE A NUMBER OF CONCERNS HERE. THEY ALSO INCREASE POLITICAL RISKBECAUSEON SATURDAY, THERE WEREMORE THAN 40 PEOPLE KILLED. OF COURSE THE BACKDROP OF OIL RISING. >>ON COMMODITIES, SPEAKING OF OIL, THAT IS THE BIG ONE. UP 1.7%. IT HADBEEN UP QUITEA BIT HIGHER EARLIER IN THE DAY. ON THIS NEWS OF DEEPER CUTS. >> UP AS MUCH AS 5.8%. >> WE HAD A MUCHBIGGEREARLIER GOAL. THEY HADBEEN HIGHER BUT THAT IS ALL GIVINGAN EYE ON THOSE INDUSTRIAL METALS. I WOULD TO TAKE A LOOKAT A ONE-YEAR CHART TO GIVE YOU THE PERSPECTIVE HERE. WHAT A MONSTER YEAR. UP46% IN THE LAST YEAR. IT IS REALLY REMARKABLE ISHOW THE WE WERE EARLIER IN THE YEAR. HE STARTED THE YEARWITHA 29% PLUNGE IN THE FIRST COUPLE MONTHS OF OIL. THAT HASREALLY COME SERVING BACK. IT HAD BEEN QUITE A YEAR FOR OIL. >> A PRETTY REMARKABLE MOVE THERE. WHATDID YOU MISS? THOSE WERE TODAY'S MARKET MINUTES. >> WHAT DID YOU MISS? MANY STRATEGIST AND ANALYSTS SAY THATIF HE WOULD WIN, THE MARKET WOULD TANKAND THE ECONOMY WOULD HEAD INTO RECESSION. DAVIDWU JOINS US NOW. >>I THINK OF ALL THE STRATEGISTS, YOUR POSTELECTION FORECASTIN THE EVENT OF THE DONALD TRUMP VICTORY WAS THE CLOSESTTO BEING CORRECT. MOST PEOPLE SAW DO ANDGLOOM-- DOOM AND GLOOM. >> THEREIS A BIG BOND COMPONENT. IT REALLY UNDERPERFORMED. EVEN MORE THAN THE EQUITYRALLY. THE DEFINING ASPECT OF THIS POSTELECTION. HASBEENTHE SELLOFF AND THE FAILURE OF DIVERSIFIED PORTFOLIOS. YOUCALLEDTHE POTENTIALFOR HIGHER GROWTH, HIGHER INFLATION IF DONALD TRUMP ONE. THAT CERTAINLY SEEMS TO BE THE EXPECTATION. AMUCH FURTHERCAN WE SEE THESE BOOKS PLAY OUT? DAVIDWU:THERE IS SOME ROOM FOR THESE TRACED TO CONTINUE. TRUMP WANTED 4% GDP. IFYOU LOOKAT THE CONSENSUS FORECAST, FOR2017,TWO POINT 2%. 2018, 2 .2%. MOST PEOPLE SAY THATTHESE-- MOST PEOPLE ARE WORRIED. I THINK HONESTLYTHATPEOPLE ARE FINDING EXCUSES FOR WHY THEY DON'T HAVETHE TRAITS BOND. I THINKTHEBOTTOM-LINE ISTHAT YOU CANNOTLOOK AT THIS ASPURE FISCAL STIMULUS. THIS HAS TOBE MEASURES TO BOOST CONFIDENCE. TO FREE UP THE ANIMAL SPIRITS. I THINK THAT THIS IS ALSO GOING TO BEABOUT EASING ACCESS TO CREDITS. THERE IS NO QUESTIONTHATTHIS IS GOING TO BE A VERYIMPORTANT PART OF THE REGULATIONS. ITHINK IS ABOUT SHOPPING THE U.S. ECONOMY TO DOWHAT IT DOES BEST. TAKE A RISK AND INVEST IN GROWTH. >>WHAT WITH THE NEXTAGE OF THE ROTATION LOOK LIKEIF THERE IS STILLROOM TO GO? WHAT WOULD IT LOOK LIKE IN THE NEXT AGE? >> THAT IS AN EXCELLENT QUESTION. MOST OF THE CELEBRATE HAVE HAPPENED IN THE BACKEND. IT HAS BEEN DRIVEN BYEVERY PRICING OF EXPECTATIONS. BREAK EVENS TEND TO BREAK EVEN AT 2%. IHAVE NO QUALMS. WHERE I THINK THEMARKETHAS GET TO APRICE FOR EXAMPLE, THE RACE MARKET IS THE BELLY OF THE CURVE. THINK ABOUTTHIS, THE MARKET IS STILL OWNING A. THE MARKET IS ONLY PRICINGFOR 2018. THAT IS INCONSISTENT WITH A 3% PLUS JP. ITHINK AS LONG AS THEMARKET IS STILL PRICING BELOW THEFED'S ON DOCS,FORGETABOUT ANY REVISION IN THE DOCS, IFIGURED IF MY HAVE MORE UPSIDE. EITHER THAT ANYTHINGLINKED TO RATES IS MORE LIKELY TO GO. >> LISTENING TO YOU SAY THE DONALD TRUMP IS GOING TO BRING WITH HIM A WHOLE COCKTAIL OF REFORMSREMINDS ME OF ALL THE DIFFERENTFISCAL ONES. THE MONETARYDEREGULATION. A NATIONAL GREATNESS MISSING. GETTING PEOPLE EXCITED ABOUT THE JAPANESE ECONOMY. I THINK THE VERDICTIS MIXED AT BEST. DO IT AT THIS COCKTAIL AS YOU PUT IT WILLACTUALLYTRANSLATE? WHY WILL IT TRANSLATE EFFECTIVELY? >>LOOKINGBACK, THIS LOST MOMENTUM. IT DOESNOTWORK OUT WELL. BUT INTHEFIRST THREEMONTHS, SIXMONTHS, 12 MONTHS, THAT IS ALLPEOPLE TALK ABOUT. THAT ISTHEONLYOF THAT HEDGE FUNDS MADE ON THIS MONEY, 2013. TRAINING OF ECONOMICS. ITHINK THE POINT THAT WE ARE ONLY ONEMONTH AFTER THE U.S. ELECTION. THIS IS A WANTED TO GO. ATLEAST UNTIL OPERATION DAY. -- INAUGURATION DAY. THIS IS A BUY THE RUMOR FACE. BUT NOT UNLESS YOUREMEMBER, MOSTLYTRUMP, WHEN HE WON IN 2012, HE DIDNOT A TROLL THE OPERAHOUSE. HESAIDTHAT I KNEW WE COULD BOOST TO GDP GROWTH. EXHIBIT WITH THE REPUBLICANS. WITHHIM TO DO WHAT THEY SAID THEY REALLY WANT TODO, WHICH IS REPEALOBAMACARE, THEY HAVENOT GOTENOUGH SEATS IN THE SENATE TODO IT THEY WANTED IT. THEY CANTHINK OF ANOTHER HC. THEY ARE NOT PUTTING THE POLITICALPOLICES. SCARLET: I WANT TO GO BACKTO SOME OF YOURCLIENTS'S QUESTION. THIS IS BEEN THE LONGEST RUNNING EXPANSIONINPOSTWAR HISTORY. HOWMUCH FURTHER CAN IT GO? I KNOW THAT PEOPLE SAYTHAT THESE MARTYRS OF DIEBOLD AGE, IT HAS GONE ON FOR A LONG TIME. YOU COULD ARGUE THAT IT WAS STARTED TO PETEROUT. >> YOU MAY BERIGHT BUT WHEN WE SAYTHIS? THEY CANNOT BE TALKING FROM BOTH SIDES OF THEIR MOUTH. ONLYA MONTH AGO, THE DAY BEFORE THEELECTION,THERE WAS NO WITH THAT THEFED WAS GOING TO BE ABLE TO HIRE THIS. WE HAVE ALWAYS UNDEREMPLOYMENT IN THE ECONOMY. WHAT,A MONTH LATER, PEOPLE WILL WORRY. I THINK THE HONEST TRUTH ASTHE -- ITHINK WHAT PEOPLEARE GETTING WRONG IS THAT PEOPLE WANT TO FOCUS ON THE INFRASTRUCTURE. EVERYONE IS SAYING THAT YOUDID --INFRASTRUCTURESPENDING EQUALS SUCCESS. ITHINK THAT THE INFRASTRUCTURE PIECE IS GOING TO BE THE LAST PIECE TO GET THROUGH. ONETHINGISTO GO TO THE TEA PARTY AS A WE WILL BLOW UP THE DEFICIT. ANOTHER THINGIS TOSAY WE ARE GOING TO BLOW IT UP FOR INFRASTRUCTURE SPENDING. IF YOU WANTTO BUILD A BRIDGE, YOU ARE GOING TO HAVE A BRIDGE TO BUILD. IT IS GOINGTOBELATE 2017 AND MAYBEEARLY THOUSAND 18. I'MNOTASWORRIED ABOUT THEM RUNNING AMOK. I AM MORE WORRIED ABOUT CHINESE HOUSES. >> YOU MENTIONED THATI LOVE THE SKEPTICISM OFYOUR THESIS IS CAUSED BY THE FACT THAT PEOPLE JUST DON'T HAVE THE-- THEY WERE CAUGHT REALLY UPSIDE. WE KNOW THAT PEOPLEWEREWILDLY BULLISH ON BONDS,EVEN WITHIN THE STOCKS, THEYLIKE THE BOND PROXIES. HOW FAR OFF SIDES AREINVESTORS STILL, GIVEN THE MOVES WE HAVE ALREADY HAD? >> I WAS SAY THAT THE BENCH-- HEDGEFUND COMMITTEEHAS WELL-POSITIONED. I THINKTHATTHE MUTUAL FUNDS, I THINK THEY ARE STILL LOOKING TO TAKE ITVANTAGEOF ANY OF IT TO BE DIPPED IN BONDS. I THINK THOSE ARE THE GUYS. >> DAVID WU, GLOBAL RATES AND CURRENCYAND RESEARCH AT THE BANK OF AMERICA AND MERRILL LYNCH. YOU ARE STICKING WITH US. WE WILLTALK TRUMP'S GEOPOLITICAL AGENDA WITH CHINA. >> AND SOME BREAKING NEWS. BOEING IS PLANNING A DEEPER CUT IN PRODUCTION NEXT YEAR. THAT IS THE COMPANY'S SECOND-BIGGEST SOURCE OF PROFIT. BOEING PLANS TO SLOW OUTPUT OF ITS TWIN ENGINEMODEL. THAT STARTS IN AUGUSTOF 2017. THAT ISA DROP FROM A PREVIOUSLY ANNOUNCED CUT. THATIS WHAT YOU EXPECT EARLY NEXT YEAR. THEY ARE TRADING MARGINALLY LOWER. THIS IS BLOOMBERG. ♪ ♪ >> GOLDMAN SACHSPRESIDENT HAS ACCEPTED THE JOB AS CHIEF ECONOMIC POLICY ADVISORFORDON FROM. THAT'S ACCORDING TO THE TRUCK TRANSITION TEAM. HE HAS BEEN WHETHER 25 YEARS AT THE INVESTMENT BANK. TRUMP IS I'M FORMER PRESIDENTIAL RIVAL COLLEGEARENA -- CARLY FIORINA. SHE MET WITH THEM IN NEW YORK. >> WE TALKED ABOUT THE OPPORTUNITY THAT THEPRESIDENT ELECTHASDO RESET THINGS. TO RESET THE TRAJECTORY OF THE ECONOMY, RESET THE ROLE OF GOVERNMENT, TO RESETTHE ROLE OF AMERICAIN THE WORLD, HOW WEARE PERCEIVED. I THINK THAT IS WHY HE'S GETTING SUCH FANTASTIC PEOPLE IN HIS ADMINISTRATION. >>HE IS MATED WITH ANOTHER FORMER PRESIDENTIAL RIVAL AS WELL. FORMER TEXASGOVERNOR RICK PERRY. HE IS A CANDIDATE FOR ENERGY SECRETARY. AND ALL COLLEGEMEMBERS. THEY SENT A LETTER TOJAMES KLAPPER, A DIRECTOR OF NATIONAL INTELLIGENCE. THEY SAY THAT THEY ARE CONCERNED ABOUT HIS DISREGARD OF THE INTELLIGENCECOMMUNITIES PRIVILEGES ABOUTTHEHACKING. AND DONALD TRUMP PLUSCONTINUING FRIENDSHIPWITH VLADIMIR PUTIN. IMEAN A MELENDEZ, THIS IS BLOOMBERG. JOE:DONALD TRUMP HAS UPPED THE ANTEWITHBEIJING BY SAYING THAT HEWILL USE THE ONE CHINA POLICY AS A TRADING CHIP TO GET A BETTER TRADE YOU. STILL WITH US IS DAVID WILL, GLOBAL RATESAND BANK OFAMERICA DAVID WITH. AND HE FOR STAYING WITH US. THE FIRST THINGTHAT DONALD TRUMP THATHE IS TRULY DONEHIS TURNOVER THE TABLE ONCHINA, BEING VERY EXPLICIT. THE ONE CHINA POLICY ISNOT SAYING THAT HE WAS TO USETHAT AS A BARGAINING CHIP. HOW DOES THIS PLAY OUT? WHAT YOUSEE BEING SOME OF THE NEXT STEPS HERE? DAVID WILL: THIS IS MY FACE WORRIED,I THINK THAT THE U.S. AND CHINA COULD BE ON A COLLISION COURSE. TRUMP HAS TWO MAJOR POLICY PILLARS. AS THE POLICY AND TRADE POLICY. HIS GOALIS -- FISCAL STIMULUS IS GOING TO BE RATE FORTHEU.S. DOLLAR. HE ACTUALLY NEEDA WEAK DOLLAR. DOES HE WANT ASTRONG DOLLAR OR A WEAK DOLLAR? THOSE ARE THE BIGGEST CONTRADICTIONS. NOW, ITHINK HE ISULTIMATELY GOING TO WANT AWEAK DOLLAR. THE PROBLEM IS THAT CHINA ALSO NEEDS THEWEEK ONE. COMPANY WILL HAVE WITH CURRENCIES? THE MORE SUCCESSFUL THE TRUMP IS GOING TOBE, MANY, THESTRONGER THE U.S.ECONOMY, THE STRONGER THE DOLLAR WILL BE. THAT WILL ONLY INCREASETHE PRESSURE ON TRUMP. IT IS A MOST SELF FULFILLING. HOW IT PLAYS OUT, I THINK THIS IS GOING TO BE THE BIGGESTHEAD ACHE FORINVESTORSIN 2017. SCARLET:BY SPEAKING WITHTHE PRESIDENT OF TAIWAN ON THE PHONE, HE IS MIXING IT UP EVEN FURTHER. DOES ITDERAILTHE AREAS WITH TRUMPET WE DO HAVE? >> THREE DAYS AFTER HE HADTHIS CONVERSATION, HE APPOINTED GOVERNOR OF IOWA. HE ISSTILLSTANDING -- 70MIXED MESSAGES TO CHINESE. I THINK THAT IS CLEVER. IF YOU'RE SEEING REBEL WITHOUT A CAUSE? THATTHEY MISSING WHEN HE WAS PLAYING CHICKEN WITH THIS GUY WHO IS GOING TO JUMP OUT OF THE CAR. IT WAS LIKE HE IS ABOUT TOPLAY THIS GAME WITH THIS GUY WHO HAS A REPUTATIONOF BEING UNPREDICTABLE AND RECKLESS AND DANGEROUS. I DO KNOW THAT THE CHINESE WILL BE SOMEBODY TO JUMP IN TO BEGIN WITH TRUMP. I THINK HISUNPREDICTABILITY WILL HELP LOWERTHE PROBABILITY OFCRISIS. BECAUSE WE ALL KNOW THAT IF THERE WERE TO BE A CRISIS, IT WOULDBETHE MOTHEROF ALL CRISIS. >> THEREMIGHT BE SOMEBODY SAY FOR THE STRATEGY. THEWHILE STRATEGY. >> I THINK SO. IT IS THE SAME STRATEGY THAT HE IS USINGTOWARD CARRIER, TOWARD BOEING,SO FORTH. AND SOMESENSE, BECAUSE PEOPLE DON'T KNOW WHAT HEWILL DO. PEOPLE HAVE NO IDEA ABOUT HIS POLICY REACTIONS. PEOPLE ARE GOING TO THINK TWICE. HE MAYBEABLETO ACHIEVE SOMETHING WITHOUT HAVING TO TRY TO HARD. JOE:CHINAIS FACING ITS OWN ISSUESABOUT LIMITS ON ATM WITHDRAWALS. THAT INITSELF IS PROBABLY NOT A HUGE THING BUTSIGNIFYING A MUCH DEEPER CONCERN FOR THELEVELOF CAPITAL OUTFLOWS. HOW BAD IS IT RIGHT NOW FOR THE COUNTRY ANDHOW--WHAT MORE DO YOUEXPECTTO SEE ON THIS FRONT? >>WHAT IS THE DIFFERENCE BETWEENTODAY AND A YEAR AGO? THE DOLLAR WAS GOING UPANDTHE COLLAPSE BASICALLY BROUGHTABOUT THECOLLAPSE IN MARKETS. IT CANNOTHAPPEN AGAIN THIS TIME. THE DIFFERENCE BETWEEN THIS YEAR VERSUS A YEAR AGO IS THAT A YEAR AGO, THIS IS BEFORE THE RMB WAS INCLUDED IN THE FDR. CHINA HADTO LOOSEN CAPITAL CONTROLS. NOWTHEY CAN AFFORDTO GO OUT THERE AND TIGHTEN CONTROLS THAT ANYCONSEQUENCEOF THER&B BEING KICKED OUT OF THE SDR. I THINK THAT ASMIKE REAL ESTATE AGENT IN NEW YORK WOULD TELL YOU THAT AT THISTIME, 20 APARTMENTS SOLD OVER $2.5 MILLION WERE SOLD TO CHINESE PEOPLE. RIGHTNOW,ZERO. ISBECOMING ORDIFFICULT TO GET MONEY OUT OF CHINA. IFCHINA ISINDEED SUCCESSFUL AND CONTAINING THIS OUTFLOW, WHICH I THINK YOU HAVE TO ASSUME THATI'M GOING TO GIVE THEM SOME BENEFIT OF THEDOUBT IN DOING THIS, THIS IS WAS GOING TO ALLOW THE U.S. TO-- FROM THAT POINT, CHINA POSSIBILITYTO CRACKDOWN ON OUTFLOWS,IT WOULD BE VERY IMPORTANT FOR DONALD TRUMP'S SUCCESS. SCARLET: IN ADDITION TO CRACKING DOWN ON CAPITALOUTFLOWS, THEY CANNOT PREDICTWHATTROUBLED IN NEXT. WHAT DO THEY DO TOPROCEEDWHAT THEY DO TO INFORM THE ECONOMY? DAVIDWILL:THAT'S OF THE TO SHOW FOUR. FROM THAT POINT OF VIEW, ITHINK THAT IT IS GOING TO BE MORE LIMITED FOR THAT RESULT. THEY ARE GOING TOBEMANAGING THE ECONOMY EVEN MORE CLOSELY THAN USUAL. I THINK THE GEOPOLITICAL SPIRIT IS MORE COMPLICATED. WE HAVE BEEN RECOMMENDING SELLINGTHE KOREAN WON. MAYBE THECHINESE ARE GOING TO BE NERVOUS ABOUT STICKING IT TO TRIAL. WHAT DOES CHINA REALLY HAVE? NORTH KOREA. EVEN DONALDTRUMPIS GOING TO STRUGGLE TO COME UP WITH OUTOF BOX PROMOTIONS. ITHINK THAT GIVEN THE POLITICAL CRISIS IN SOUTHKOREA, THE KOREAN PLIMSOLL A 10MINUTES-- >> DAVID BLUE. HE WILL BESTICKING WITH US AS WE TALK ABOUT HIS OTHER CURRENCY CALLS. THIS IS BLOOMBERG. ♪ ♪ >>DAVIDWU IS SUPER BOWL IS ABOUT THE MEXICAN PESO. TELL US WHY. DAVID: LET'S THINK ABOUT THIS. AS PRESIDENT OF THE UNITED STATES, HE DOES HAVE THE RIGHT TOTHROW NOW TO OUT THE WINDOW AND RIP IT UP. HEDOESN'T HAVE THE LEGAL RIGHT TO RENEGOTIATE THETERMSWITHOUT CONGRESSIONAL APPROVAL. I TELL YOU RIGHT NOW, FORGET ABOUT THE DEMOCRATS, EVEN REPUBLICANS HAVENO OPPORTUNITY AND THIS PATH. REMEMBER, MEXICAN AS WAS TO THE U.S., FROMTHAT POINT,MEXICO WILL BE THE BIGGEST WINDOW. JOE:ONEFACTOR THAT HAS DRIVEN THE PESO IS OIL. WHAT IS YOUR TAKE AWAY ONTHE SIGNIFICANT OF THIS AGREEMENT TO CUT. >> IS UNPRECEDENTED. I THINKTHERE ARE MANY DIFFERENT INTERPRETATIONS. NEVERTHELESS, WHEN YOU FIGUREIT WILL BE THE BIGGEST WINNER, I THINK IT WILL BE THE U.S.. IT IS ALMOSTLIKE A WELCOME PARTY. THINK ABOUTTHIS, THAT MEANS THAT OPEC IS COMING BACK ON PRODUCTION. IT MEANS THAT U.S. PRODUCERS ARE GOING TO PRODUCE HIGHER PRICES. THIS IS GOING TO BE BULLISH FOR THEU.S.GDP GROWTH. THERE IS NO QUESTIONABOUT RUSSIA IN APRIL WE SOUGHT BY TODAY. >> IS ONE OF THE BIGGEST THIS YEAR. >> ITHINKTHERE ARE TWO EMERGING MARKETS THAT I LIKE. MEXICO AND RUSSIA. RUSSIA ALSO HAS THE ADVANTAGE THATI THINK UNDER A TRUMP PRESIDENCY, WE AREMORALLY-- MORE LIKELY TO GET A DEAL UNDER UKRAINE. I THINK THAT WILL BEADDITIONAL BONUS FOR RUSSIA. >> REAL QUICKLY,I SEE YOU HAVE A CALL ON THE NEWZEALAND DOLLAR. THE D.C. FOR THEM? I THINK IS MORE OF A TECHNICAL CALL. I THINK THAT THIS CURRENCYLOOKS PRETTY EXPENSIVE. I THINK INGENERAL, IF YOU ARE WORRIED, THEWHOLE INFRASTRUCTURE STRENGTH --AND SPENDING IS NOT GOING TO HAPPEN UNTIL MUCH LATER THIS YEAR. BY THE TIMEU.S. HAVE AND SCAM OF THE SPENDING WILL SLOW. >> DAVIDWILL,AND OF GLOBAL RATE SECURITIES AT BANK OF AMERICA. DON'T GO ANYWHERE BECAUSE WE WOULDTALKING CENTRAL BANK POLICIES FROM THEFEDTO THE VUE, TO THE ECB. THIS IS BLOOMBERG. ♪ >> HOUSE SPEAKER PAUL RYAN SAYS THE HOUSE INTELLIGENCECOMMITTEE WILL LOOK INTO RUSSIAN CYBER THREATS OF THEDNC BUTSAYS ANY INVESTIGATION SHOULDNOTCAST DOUBT ON THEDECISIVE OUTCOME OF THE ELECTION. WHITE HOUSE SPOKESMAN JOSH EARNEST HAD THIS TO SAY. >>YOU DIDNOT NEED A SECURITY CLEARANCETO FIGURE OUTWHO THAT AFITTED--FIGURE OUT WHO BENEFITED FROMMALICIOUSRUSSIAN CYBER ACTIVITY. THEPRESIDENT-ELECT DID NOT CALL INTOQUESTION. HECALLED ON RUSSIA TO HACK HIS OPPONENT. HE CALLED ON RUSSIA TO HACK SECRETARY CLINTON. >> ERNESTCALLEDGOVERNMENT INTELLIGENCEOFFICIALSPATRIOTS. THE MOVE CAMEAFTER THE PRIME MINISTER SUBMITTED THELINEUPOF HIS GOVERNMENT TO BE PRIME MINISTER. HEWILL REMAIN IN HIS POST AS PART OFTHECOALITION GOVERNMENT. PRIME MINISTERRENZI RESIGNED AFTERVOTERS REJECTEDHIS REFORMS. AMANHUNTIN FRANCEFORTHIEVES WHO STOLE $1 MILLION IN GOLDFOR THE THIEVES TOOK ITFROMA HIGHWAYAND SET THE VEHICLEON FIRE. GLOBAL NEWS 24 HOURS ADAY IN MORE THAN120COUNTRIES. SCARLET:LET'S TELL YOU WHAT HAPPENED INTHEMINUTESWHILE NINA WAS SPEAKING. BOEINGHASINCREASED TO $1.42 PERSHARE. THIS IS ABIGGER THANEXPECTED INCREASE FORITS QUARTERLY DIVIDEND. BOEINGSETSA $14 BILLION BUYBACK OF SHARES. FINISHING AN ALL-TIME SIZE,THE DOW JONES. JOE:WHAT YOUMISS? FEDOFFICIALS ARESET TO MEET THIS WEEK. STILL WHAT DOES IS DAVID WU, BANKOFAMERICA, HEADOF CURRENCY RESEARCH. PETER WAS THE FORMER UNDERSECRETARY OF FORDOMESTIC FINANCE ATTHE TREASURY DEPARTMENT. TAKE YOU FOR JOINING US. EVERYBODY EXPECTS A HIKE. WE DON'T NEED TO TALK ABOUT THAT. THE QUESTION ISWHAT DOES THAT INDICATE GOINGFORWARD? A LOT OF FOCUS WILL BE ON THOSE. HOW DO YOUTHINK THEYWILL POSITION THE ONGOING HIKING CYCLE? PETER: IT IS HARD TO SAY. MY BESTGUESSISTHEYARE NOT GOING TO INCORPORATE ANY TRUMP FISCAL PLANS. THEY ARE GOING TO HAVE TO REFLECT THEFACTTHATTHE ECONOMY IS A LITTLE FIRMER THAT WASN'T SET TIMBRE. THELABOR MARKET IS A LITTLE TIGHTER. IT WILL BE INTERESTING TO SEE HOW MUCHTHEREINFLATION EXPECTATIONSANDHOWTHE FED MOVES ON THEM EVEN IF THEY ARE NOT ABLETOINCORPORATE TRUMP FISCAL PLANS. SCARLET: WHAT DO YOU THINK? YOU THINK THERE IS UPSIDERISK TOBOTHGROSS CONSENSUS ESTIMATES HERE. HOW MUCH DOES THE FED MOVE UP IN ITS FORECAST FOR GDP? DAVID:THE PEOPLE WHO ARE GOING TO BE CONTRIBUTING TO THE WHOLE CONSENSUS, ITHINK IT WILL BE STRANGE FOR THEM NOT TOMISSTHE PLIGHT. THERE WILL BE SOME VOLATILITY. AT LEAST IN THE INDIVIDUALS WHO WILL BEPASSING VOTES FOR THE DOTS. THERE IS GOING TO BE MORE UPSIDE. JOE:IT ISINTERESTING LOOKING AT THE SITUATIONNOWVERSUS WHERE WE WERE AT THE END OF NEXT YEAR WHEN THEY HIKED. THIS CHART DEMONSTRATES IT NICELY. ONTOP, THE WHITE LINE IS THE U.S.ECONOMIC SURPRISE INDEX. THIS ISFOR2015. IT WAS HEADED DOWNTOWARD THE END OF THE YEAR. YOU CAN SEE THE PURPLE LINE IS SHOOTINGUP, ALONGWITH THE MARKET. A VERY DIFFERENT VIBE. DO YOU THINK THAT WE MIGHT SEE A CONTINUATION THISTIMEDUE TO STRENGTHENINGECONOMIC CYCLES? DAVID:THAT IS APOSSIBILITY BUT THE HARDEST THINGFORTHE FED IS THEYDON'T KNOW WHERE THEY WILL BE INA YEAR OR TWO FROM NOW. THEY DON'T KNOW HOW MUCH ON TOP OF THAT WILLTHE TRUMP ADMINISTRATION PUT. THIS JANET YELLENNO THAT SHE HAS TO PULL BACKFROM FORWARD GUIDANCE? SHE HAS TO PULL BACKFROM KNOWING SHE KNOWSTHEFED POINT IN 12 MONTHS FROM NOW. THATUNCERTAINTY WILL COME BACK TO THE MARKETHEARD I THINK IT IS HEALTHIER. ITHINK FORWARD GUIDANCE HAS DONE ITS THING. SCARLET: WE HAVEMORETODISCUSS ON THE FORWARD GUIDANCE DILEMMA FOR THE FED. ITSEEMS LIKE CENTRAL BANKS FOR THE LAST COUPLE OF YEARS DROVE THE BUS. THEY HAVE DICTATED HOW ASSET PRICES MOVE. NOW WE ARE IN A SITUATION WHERE FISCALPOLICY TAKESCENTER STAGE. ASSOMEONEWHO LOOKS WHERE RAISING CURRENCYHAS COME AT THE WE NEED TO PAY MORE ATTENTION TO WHAT DONALD TRUMP TWEEPS? DAVID:I HAVE BEEN SAYING THIS FORALAST NUMBER OF YEARS. THEY KEPT RATES LOW BECAUSEIT FISCAL POLICY WAS TOO RESTRICTIVE. ITHINK GROWTH IS GOING TO MATTER A LOT MORE THAN INTEREST RATES. THE FEDCAN'T PRETEND TO BE ABLE TO SEE IN THEIR CRYSTAL BALL. GROWTH IS GOING TO SPEAK FOR THE FED AND THEMARKET. WE'RE GOING BACK TO TRADING GROWTHRATHER THAN THE INTEREST RATES GOING FORWARD. SCARLET:THATIS THE SCENE IN THE UNITED STATES. IF YOU LOOKAT THE BANK OF JAPAN AND EUROPEAN CENTRAL BANKS, THEY ARESTILLIN AN EXTRAORDINARILY EASY MONETARY POLICY. YOU LOOK AT THE BALANCESHEETS WHICH IS INBLUE AND HAS BEEN PRETTY STABLE. IT IS TRENDING DOWN. THE BANK OF JAPAN IS ANPURPLE ANDHAS COME OFF A LITTLE BIT. THE WHITE LINE IS THEECBAND THEY HAVE EXTENDED THEIR QE PROGRAM. JOE:IT FEELS LIKE IN THEU.S., THERE IS A LOTABOUTWHAT THE FISCAL PICTUREIS GOING TO LOOK LIKE. IN EUROPE, IT SEEMS LIKE NOT EVENFISCAL ASMUCH AS POLITICAL, WHAT WILL HAPPEN WITH THE ELECTION INITALY, THE ELECTION IN FRANCE. HOW DO YOU SEE THE RAWPOLITICAL RISKAFFECTING THE ECONOMIC SITUATION THATULTIMATELY WILL BE RECKONED WITH? DAVID:WHEN YOU ARE BITTEN BY A SNAKEONCE,YOU WERE AFRAID OF IT FOR THE NEXT 30 YEARS. THE MARKETWAS SURPRISEDBY TRUMP AND BREXIT, SO IT DOES NOT WANTTOMAKETHAT MISTAKE AGAIN. I AMNOT WORRIED ABOUTTHE GERMAN ELECTION. ONETHING WEKNOW ISTHAT THE RIGHT AND THELEFT INEUROPE, THEY HATE THEFAR RIGHT SO MUCH THEY WILL DO ANYTHING TO KEEP THEM FROM GETTING IN POWER. THE THREE CENTRALCANDIDATESARE EQUALLY POPULAR. THEY MIGHT CANNIBALIZE EACH OTHERANDNONE OF THEM GETTING TO THE NEXT ROUND. RIGHTNOW THEMARKET IS ASSUMING THAT THEPEN -- LEPEN WILL WIPE THE FLOOR. I'M JUSTSAYINGTHAT IT IS GOING TO BEDIFFICULT TO GET ANY VOTES FROM THE LEFT. INTHE SECOND ROUND, THIS WILL BE EXTREMELY CRUCIAL. SCARLET: THIS SETS UP ANEXT-- UP AN INTERESTING SITUATION FOR THE ECB. THEY HAVE TOCOVERELECTION OUTCOMES INNETHERLANDS, FRANCE. PETER: IT SEEMS TOBE THEY ARE TREADING WATERAND HOPING SOMETHING TURNS OUT. THEY ARE JUST TREADING WATER. THAT IS THE ANNOUNCEMENT THEY MADE. THEY WILL NOT LIKELY GET A FISCALBOOSTMEANINGFULLY IN EUROPE. THE POLITICS, WHATEVER THE OUTCOME OF THEELECTION, IT WILL BE CONSTRICTING. THE PROCESS OF THE ELECTIONIS NOT GOING TO BE GOOD FOR CONSUMER CONFIDENCE. I THINKTHE ECB IS KEEPING ITS FINGERS CROSSED. JOE:SO YOUR INTERPRETATION OF THE LATEST ECBDECISIONISTHAT IT WAS BASICALLY THEPOLITICAL APPROACH TO KEEPING THE EXACT SAME POLICY? PETER: EXACTLY. SCARLET:KEEPING THE PEACE, BASICALLY. GIVING A BIT OF EVERYTHING TO THE HAWKS AND THE DOVES. PETER: THEYHAVEINTERNAL RAMIFICATIONS. IN THEU.S., THEREWILL BE SOME FISCAL POLICY THAT COMES AROUND. NOT IN JAPAN AND EUROPE. SCARLET:WHAT ABOUT JAPAN? WE TALKED ABOUTABENOMICS. NOW THAT TRUMP WILL BE PRESIDENT, DOES THAT GIVE AUTONOMIC'S ANOTHER--ABE NOW MIX -- ABENOMICS ANOTHER PUSH? DAVID:TRUMP IS THE BEST THING THAT COULD HAPPEN TOABE AND KURODA. DOLLAR-YENWAS GOINGDOWN. NOBODY CARES ABOUT THAT ANYMORE. YOUSEEDOLLAR-ANDGOING THROUGH THE ROOF. JAPANESEEQUITY MARKETS HAVE BEEN ONE OF THE BEST PERFORMANCE. THE KEY ISSUE HERE ISTHATTHE BANK OFJAPAN HAS GONE A STEP BEYONDQE. THEY ESSENTIALLY BECOME THE CENTRAL BANK OF THE YEARS. -- OF THE WORLD. YOU WILLSEE JAPANESE INVESTORS PILING INTO THAT MARKET. IT IS ALSO CAPPING LONG-TERM RATES GLOBALLY, INCLUDING THE U.S. JOE:IS THAT SUSTAINABLE? WILL THE BANK OFJAPANBE ABLE TO KEEP THEIR LONG-TERM RATES LIKETHAT OR WILLTHEY HAVE TO RUN AT SOMEPOINT? PETER:I THINK THEY WILL HAVE TO RUN. I INTERPRETED THE MOVE THEY MADE AN SEPTEMBER TO PAY THE 10 YEAR RATE AS A REALIZATION THAT OVER THE COMINGYEARS, THEY WILL HAVE TO LET IT BACK UP. IT WILL NOT HAVE THE STAMINA TO KEEP ITTHERENOR DO THEY REALLY THINK THEY WANTTO BECAUSE THE NEGATIVE RATES DID NOT WORK. THEFLAT CURVE YIELDHURT INTERMEDIATION. I THINK IT IS A LESSON FOR OTHER COUNTRIES THATTRIED EXTRAORDINARY POLICIESTHAT UNWINDING THESE, YOU DON'T WANT YOUR YIELDCURVE TOO FAST. CORRODEDGOT AHEAD OF IT SO HE CAN MANAGE IT OVERTIME. SCARLET:WHICH POLICY DOESN'T MOVE MORE ON? PETER:I THINK THERE IS GOING TO BE MORE CHANGES IN THE U.S.. I THINK IT IS U.S. CHANGE WILL DRIVE THAT EXCHANGERATEBECAUSE WE KNOW WHAT IS COMING INSIDE JAPAN. ITWILL HAVE A BIG IMPACT. JOE:I LOVETHE WAY YOUPUT IT, THAT BANK OF JAPAN IS GOING TO BECOME THE WORLD CENTRAL BANKER BECAUSEEVERYTHING BECOMES THE FACT OHUSINGMONEY TO RUSH TO BOND MARKETS AROUND THE WORLD. HOW BIG A DAMPENING EFFECT ON LONG-TERM YIELDS INEUROPE, THE U.S., WILL LEAD HAVE ULTIMATELY? DAVID: THIS YEARALONE THEYBOUGHT $300 BILLION IN BONDS. THAT IS A LOT. THEY WANTED TO ALLOWJAPANESE INVESTORSTO BUY MORE BONDS. I THINK THIS IS FOR THE MARGINAL BUYERS. THERE IS NO QUESTIONTHAT IF YOU LOOK AT THEPAST FEW WEEKS, YOUSEEMAGGRESSIVE BUYING FROM JAPAN. ITHINK LONG-TERM RATES IN THE U.S. WOULD GO UP A LOT MORE THAN IT DID. SCARLET:DAVIDWU, THANK YOU SO MUCH FOR JOINING US. PETER FISHER IS STAYING WITH US. WE ARE TO TALK ABOUT THE PROBLEM WITH THE FEDWATCH FORWARD GUIDANCENEXT. MRS. BLOOMBERG. ♪ SCARLET:FED FORWARD GUIDANCE PLAYED OUT. PETER FISHER IS STILL WITH US AND HE SAYS PERHAPS IT ISTIME TO GET RID OF THE DOTPLOT. THE FAMOUSDOT GO. THE GREEN LINE IS AMEDIUM WHERE MEMBERS HAVE PROJECTED. THE BLUE LINE IS THE MARKET PROJECTIONAND THEY CONVERGE IN EARLY 2017. WHEN WE TALK ABOUT FORWARD GUIDANCE, IT IS NOT JUST DOTS, IS IT? IT IS RHETORIC. IT IS THE COMMUNICATIONPOLICY THEY HAVE OVERALL THATHASADOPTEDTO USE DOTS. PETER:BERNANKEWAS TALKING ABOUT THIS WHEN HE WAS FIRST GOVERNOR, THE FOUR HE BECAME CHAIRMAN. DURING THECRISIS, IT WAS A POWERFULDEVICETO ASSURE EVERYONE MONETARY POLICYWAS STAYING EASY FOR A LONG TIME AND THE DOTPLOTWAS AN EASY WAY TO SPREAD THAT OUT. IT IS REALLY NOT CREDIBLE THAT WILL BE MAINTAINED OVER TIME. UNCERTAINTY IS GOING TO KICKUP. WE WILL HAVE STIMULUS FROM THE TRUMP ADMINISTRATION. AT SOMETIME WE WILL HAVE TO WORRY IF THERE IS A RECESSION IN THE COMING YEARS. THIS IDEA THATWE CANPUT DOWN EXACTLY WHAT WE THINK THE FORWARD PATHIS FOR SEVERAL YEARS AND THAT IS GOING TO BE CREDIBLE IS GOING TO BE EXPIRING. IDON'TEXPECT YELLEN TO SAY ANYTHING ABOUT THATITSELF, THAT I WONDER IF THERE WILL BE AHINT TOMORROW OR THE DAYAFTER THAT THEYREALIZE THEREIS WHITENING UNCERTAINTY. WE CAN LOOK IN THEIR FORECAST THISTIME OR IN THREE MONTHS TIMETHAT IF THERANGE OF THE FORECAST IS GETTING WIDER AND WIDER FORGNPINFLATION, WE WILL FIND LESS INFORMATION FROM THE DOT PLOT. JOE: PETER: -- JOE:ALL OFTHEINNOVATIONS THAT CAME ABOUT DURING THE CRISIS. THE. IS ONE OF THEM --THEDOT IS ONE OF THEM. SOME WOULD ARGUETHAT THE DOT FORCE THEM INTOADECEMBER HIKE BECAUSE IT WAS OUT THERE. WERE THESE INNOVATIONS VALUABLE DURING THE CRISISPERIOD AND PERHAPS OUTLIVED THEIR USEFULNESS, OR IN RETROSPECT, DID NOTFULLY SERVEEVEN IN THE CRISIS PERIOD? PETER:I THINK THE PRESS CONFERENCE IS A USEFUL DEVICE SO THE CHAIR CAN SPEAK TO THEWORLD REPRESENTING THE COMMITTEE. I THINK IT IS A SHAMETHATWE ONLY THINK WE ARE GOING TO FIND SOMETHING OUT ABOUT WHAT THEY ARE GOING TO DOWHEN THE CHAIR GIVES A SPEECH AWAY FROM THE COMMITTEE. I THINK WE WOULD LIKE TO KNOW THAT POLICY WILL CHANGE IT COMMITTEE MEETINGS, NOTJUST CAN'TSTROP DURING SPEAK -- HINTSDROPPED DURING SPEECHES. I THINK THE DOT PLOT IS A DIFFERENTPROBLEM BECAUSE IT ANCHORS POLICY. IT CREATESINERTIAIN POLICY THAT I DON'T THINK IS HELPFUL. THERE'S AN UNCERTAINTY ABOUT THE ECONOMYAND IT WILL BE PARTICULARLY BINDING ANAWKWARD TO PRETEND THIS ISHELPFUL TO SPELL OUT WHERE WE WILL BE. WHEN I RAN THE OPENMARKET FOR THEFED YEARSAGO, IT WAS A BIG DEALTO IMAGINE WE KNOW WHAT WOULD HAPPEN ATTHE NEXT MEETING. NO ONE HAD ANY IDEA. NO ONE WOULD WANT TO BIND THEIRHANDS AS TO WHERE THEY THINK THEY WOULD BE TWO OR THREE MEETINGS AWAY. THATIS A HEALTHY OUTCOME, TO REALIZE THAT UNCERTAINTY IS NATURAL IN THE ECONOMY. SCARLET:IS FORWARD GUIDANCE MORE OF A BLUNT HAMMER ORA DEVICETHATLACKS -- PETER:ITHINKFORWARD GUIDANCE WAS USED TO PUMPUP ASSET PRICES. HOUSE PRICES AND EQUITY VALUES. HE WANTED TO HOLD LONG-TERM RATES DOWN FOR A LONG TIME. YOU MIGHT NOT ALWAYS WANT TO BE DOING THAT. IT ISMORE DIFFICULT WHEN YOU WANT ASSET PRICES TO GO WHERE THEY WILLAND NOT JUST WHERE THE FED IS DIRECTING THEM TO GOTO THAT IS WHAT THE FEDHAS TO GET OUT OF AND THAT IS THE EXIT PROBLEM THEY ARE HAVING. JOE:WE HAVE SEENOIL ISHAVING A MASSIVE YEAR. IN YOURVIEW, HOW MUCH DID RISING OIL, RISING GASPRICES PLAY INTO INFLATION EXPECTATIONS AND ULTIMATELYINTO REAL POLICY? PETER:IT ISAN IMPORTANT PART, BUT WHAT THE FED WILL LOOKFOR IS TO SEEWHETHER A RISEIN OIL PRICES GETS EMBEDDED ELSEWHERE. ITHINK THE PUBLIC HAS MISUNDERSTOOD THIS AND THE FED HASNOT IN AS ARTICULATE AS IT SHOULD BE. THE REASON TO LOOK AT CORE AND CPIWITH ENERGY INIT IS TO SEE WHETHER BIGMOVEMENTS, VOLATILE MOVEMENTS IN COMMODITYPRICES GET EMBEDDED IN NON-ENERGY PRICES. IF YOU ARE EATING OUT ON THE HIGHWAY, DOES THE FOOD AWAY FROM HOME REFLECT HIGHER ENERGY PRICES? NOW IT IS GETTING EMBEDDED IN THE PSYCHOLOGY OF INFLATION. I THINK THAT IS THE THING THAT THE FED WILL BE LOOKING FOR. SCARLET:PETER FISHER FROM DARTMOUTHCOLLEGE. REMEMBERON WEDNESDAY, YOU WILL WANT TOWATCH OUR SPECIAL COVERAGE OF THE HIGHLY ANTICIPATED FED DECISION. THAT BEGINS AT 1:00 P.M. IN NEW YORK. ♪ JOE: EXXON MOBIL CEO REX TILLERSON IS SAID TO BEUNDER CONSIDERATION FOR SECRETARY OF STATE. >>TILLERSAND--TILLERSON,HE IS A WORLDWIDEPERSONALITY AND TO GO FROM CEO OF EXXON-- HE IS LEAVING EXXON. HE IS OFF TO A DIFFERENT PART OF HIS LIFE. JOE:KEVINCIRILLI JOINSUS NOW. HOW CONFIDENT DOES IT LOOKLIKE TILLERSON IS GOING TO BE THE PICK, AND HOW HAVE THESE PEOPLE HAD A CHANCE TO DIGEST THE NEWS? KEVIN: THE OIL INDUSTRY LIKES IT. I PUTTHAT QUESTIONTO TWOTRUMP TRANSITIONSOURCES TODAY. THEY TOLD METOEXPECT AN ANNOUNCEMENT SOMETIME IN THE NEXT TWODAYS ABOUT WHO THE PICK WILL BE. IS THEPERCEIVED FRONTRUNNER -- TILLERSONISTHEPERCEIVED FRONT RUNNER. SCARLET:IF HE IS CHOSEN, TILLERSON COULD HAVETROUBLE BEINGAPPROVED IN CONGRESS. NOT JUST FROMDEMOCRATS, BUT FROM REPUBLICANS AS WELL. JOHNMCCAIN, MARCO RUBIO. KEVIN:YOU HAVE FOLKS LIKE SENATORS MCCAIN AND RUBIO WHO HAVE HAD AROCKYRELATIONSHIP WITH TRUMP IN THEPAST, CRITICIZING HIM FORHIS PERCEIVED WRANGLINGS WITH RUSSIA. I WOULD ANTICIPATE THAT RIGHT NOW, THE TRANSITIONOFFICIALS ARE DOING EVERYTHING THEY CAN TO SHORE UP SUPPORT. WE DID SEE TRUMP GIVE AN INTERVIEW AND TWEETOUT. CLEARLYTHIS IS SOMEONE HE THINKS HIGHLY OF, BUTWHETHER OR NOT HE WOULD BE ABLE TO GET CONFIRMED REMAINS TO BE SEEN. ALOT OF INTRIGUEAROUND THIS PICK IS JUST A LATEST DEVELOPMENTIN WHAT HAS BECOME A FASCINATINGJOURNEY FOR THE SECRETARY OF STATE PICK. JOE:DO THE HEADLINES OVER THE LAST FEW DAYSOVER RUSSIA AND WIKILEAKS ANDITS REPORTED PREFERENCEOF DONALD TRUMP MAKE THETILLERSONPICK MORE DIFFICULT GIVEN THE LACK OF DESIREFORMORE RUSSIA HEADLINES? KEVIN:TRUMP KNOWS HOW TO DRIVE AND MANIPULATE THE MEDIA. IWOULDANTICIPATE MORE HEADLINES INVOLVING THERUSSIAN INVOLVEMENTIN THEELECTION WEDNESDAY. JOE:KEVIN CIRILLI, THANK YOU VERY MUCH. ♪ SCARLET:WHEN WE LOOK AHEAD TO TOMORROW, DON'T MISS THIS. OVERNIGHT YOU HAVECHINA RELEASING DATAFORNOVEMBER INDUSTRIAL PRODUCTION. JOE:TOMORROW IS THE START OF A TWO-DAVEFED MEETING THAT COULD DISCUSS THEFIRST HIKE SINCE LASTYEAR. ON WEDNESDAY,WE WILL HAVE SPECIAL COVERAGE BEGINNING AT 1:00P.M. ON TELEVISION AND RADIO OF THE ANNOUNCEMENT. SCARLET:THANKSFOR WATCHING. JOE:HAVE A GREAT EVENING. THIS ISBLOOMBERG. ♪ NINA: GOLDMANSACHS PRESIDENT GARY COHAN WAS THEHEIR APPARENT TO LLOYDBLANKFEIN ANDHAS ACCEPTED THE JOB ASPRESIDENT TRUMP WATCH CHIEF ECONOMIC POLICY ADVISER. THE KREMLIN ISDISPUTING CLAIMS THAT IT USEDTOHACKINGTO INTERFERE WITH THE PRESIDENTIAL ELECTIONS. THE PRESS SECRETARY TO VLADIMIR PUTINTOLD REPORTERS THAT THE ALLEGATIONS HAVE NOTHING TO DO WITH REALITY. TRUMP AND HIS TEAM ARE PUSHING BACK ON THE CLAIM. ABRAZILIAN SOCCER PLAYERWHO SURVIVEDTHE DEADLY PLANECRASH INCOLOMBIA HAS WOKEN UP FROM A COMA. THE PLAYER HAD NOMEMORY OF THE CRASH. HE WANTED TO KNOWTHE OUTCOME OF THE GAME. 71 PEOPLE DIED. GERMAN CHANCELLOR ANGELAMERKEL THIS A PRIESTWITH PRESIDENT-ELECT TRUMP ON CHINA. MERKEL SAYS SHE IS STANDINGBY THE ONE CHINA POLICY. TRUMP SAYS THAT UPHOLDINGTHE ONE CHINA POLICY WILL DEPEND ON TRADE. THIS IS BLOOMBERG. ♪ EMILY: IAM EMILY CHANG AND THIS IS"BLOOMBERGTECHNOLOGY." PRESIDENT-ELECTTRUMPINVITES TECH METERS TO MEET THIS WEEK. MY EXCLUSIVEINTERVIEW WITH INVESTOR,ENTREPRENEUR,AND FORMERGOOGLEVENTURECEO BILL GARRETT. WE FIND OUT WHAT HISNEXT FOR THE MEDIAGIANT. FIRST TO THE LEAD. A TECH-FOCUSED MEETING OF THE MINDS ATTRUMP TOWER. THE PRESIDENT-ELECT SITS DOWN WITH TOPEXECUTIVES WHO LARGELY BACKEDHILLARY CLINTON ANDSPOKE OUT AGAINST HIM. AMONGTHOSEATTENDING, JEFF BEZOS, SHERYLSANDBERG, ELON MUSK, AND CHUCKROBIN, LARRY PAGE,AND TIM COOK. THEMEETING IS A CHANCEFOR SILICON VALLEYTOFIND COMMON GROUND WITH THE NEW ADMINISTRATION. AFTER CLASHING ON KEYISSUES LIKEINTEGRATION,TRADE, IMMIGRATION,AND-- JOINING US IS BILLMERITS. I WOULD LOVE TOBE A FLY ON THE WALL AT THIS MEETING. WHAT DO YOU THINK IS GOING TO HAPPEN? DO YOU THINKTHERE WILL BE A RECONCILIATION OF SORTS? BILL:I DON'T KNOW. IKNOWALMOST ALL OF THE INDIVIDUALS WHO WERE REPORTEDLY ATTENDING AND THEY ARE ALL GOOD PEOPLE. TIM COOK IN PARTICULAR. AVALUE-DRIVEN PERSON. I THINK IT IS GOOD FOR PEOPLE TO TALK RATHERTHAN TALK ABOUT EACH OTHER. EMILY:DO YOU HAVE CONCERNS ABOUT TRUMP IN THE OVAL OFFICE? BILL:I THINK IT IS A WAKE-UP CALL FOR A LOT OF PEOPLE, ESPECIALLY IN SILICON VALLEYWHO FOR ONCE DID NOT GET WHATTHEY WANTED AND STOP REFERRING TOTHE REST OF THE COUNTRY AS FLYOVER COUNTRY. THERE ARE A LOT OF THINGSGOING ON THAT SILICON VALLEY HAS BEEN OUT OF TOUCH WITH. EMILY: YOUHAVE ANY CONCERNS ABOUT THE FUTUREOFSILICON VALLEY UNDER DONALD TRUMP? BILL:I HAVE CONCERNS THAT ARE DIFFERENT FROM THOSE. WE WERE TALKING EARLIER. I LEARNED THAT 62 PEOPLE IN THE WORLD CONTROL AS MUCHWEALTH AS THEPOOREST4 BILLION. THAT IS STUNNING. THEY COULD FIT IN THISROOM AND I PROBABLY KNOW HALF OF THEM. THAT IS DOWN FROM ALMOST 400 PEOPLE SIX YEARS AGO. I THINK THERE ARE REAL PROBLEMS TO TALK ABOUT THAT AREDIFFERENT WEATHER THAN SILICON VALLEY WILL GET ALONG WITH THE PRESIDENT. EMILY: YOU ARE A CLOSEFRIEND WITH PETERTHIEL, WHO WAS THE LOANSILICONVALLEYTRUMP SUPPORTER. HOW DO YOU FEEL ABOUT HIS VIEWS HAVING AGREAT INFLUENCEON THE PRESIDENT? BILL:PETER IS A FRIEND. HE CALLED IT. HE SAID THE ELECTION WOULDGO THISWAYAND HE SAID FOR A COUPLE OFYEARS THAT PEOPLE WERE UNHAPPY ANDPESSIMISTIC AND I THINK WE HAVEA NEW PRESIDENT WHO WAS ELECTED FAIR AND SQUARE. AS ANAMERICAN, I THINK WE SHOULD ALL WANT HIM TO BE SUCCESSFUL. IHAVE GREAT RESPECT FOR PETER. EMILY:HAS PETERASKED YOU TO HELP IN ANYWAY? BILL:PETERASKED, I WOULD HELP YOU. --IF PETER ASKED, I WOULD HELP HIM. I WILL LEAVE IT AT THAT. EMILY:YOU MOVEYOUR FAMILY DOWN TO SANDIEGO, INPART OF A DISILLUSIONMENTWITHSILICON VALLEY CULTURE. CAN YOUEXPLAIN THAT? BILL:THERE IS A BUBBLE HERE. A CONCENTRATION OFWEALTH, AND ON THEFLIPSIDE, A PURSUIT OF INNOVATION AND DISRUPTION, WHICH ISADMIRABLE, BUT IT IS EASY TO BE PULLED INTO AVORTEX OF BELLYBUTTON GAZING AND SELF INTEREST. I DELIVER MEALS ON WHEELS. WHEN YOU GO OUT AND SEE REAL PEOPLEWHO WERE NOT BUILDING APPS, BUT WHO ARE HUNGRY OR ALONE, IT PUTS YOU A LITTLE MORE INTOUCH WITH THE REST OF THE WORLD. EMILY:OUTSIDE THEVORTEX, THERE ARE STILL A LARGEAMOUNT OF PEOPLE WITH GREAT CONCERN ABOUT A TRUMP PRESIDENCY. THE CIA HAS TOLDCONGRESSTHAT RUSSIA NOT ONLY TRIED TO HACK THEELECTION, NOTONLY HACKED THEELECTION, BUT ALSO HACKED IT TOHELP DONALD TRUMP. TRUMP HAS ATTACKED THECIA FOR THISREVELATION, IF YOU WILL. WHAT IS YOUR REACTION TO THAT? BILL:I HAVE NOT SEENANY EVIDENCE MYSELF THAT THE OUTCOME WOULD HAVE BEEN DIFFERENT. EMILY: WE DON'T KNOW. BILL: NORFOREIGN -- NO FOREIGN POWER SHOULD INTERFERE IN OUR ELECTIONS. BUT AT THE END OF THEDAY, I THINKWE SHOULD JUDGE TRUMP ON WHAT HEDOES RATHER THAN WHAT HE SAYS OR WHAT OTHER PEOPLE SAY ABOUT HIM. ITHINK THAT IS A GOOD RULE IN LIFE FOR ALL OF US TO FOLLOW. I THINK THIS NEWS ABOUT THE ELECTION IS JUST BREAKING. ITIS HARDTO KNOW WHAT HAPPENED AND WHAT DID NOT. EMILY:WHAT ABOUT THE IDEA THAT REX TILLERSON COULD BE THE SECRETARY OF STATE? A CEOOF EXXONANDSOMEONE WAS STRONG AND FRIENDLY TIES TO RUSSIA AND PUTIN. BILL:HEIS NOT SECRETARY OF STATE. TRUMP IS NOT PRESIDENT YET. EXXON MOBIL IS A GIANT CORPORATION ANDINVOLVES A LOT OF RESPONSIBILITYTO RUN A COMPANY LIKE THAT. I WOULD NOT JUDGE-- I TRY NOT TO CORRALPEOPLE INTO WHAT THEY CANBEASTO WHAT THEY HAVE BEEN. I WOULD RATHER WAIT AND SEE. THE PROOF IS IN THE PUDDING. EMILY:TRUMP HAS SAID THAT CLIMATE CHANGE IS AHOAX AND YOU ARE SOMEONE WHO IKNOWIS VERY PASSIONATE ABOUT CLEAN ENERGY. YOU HAVE ANY CONCERNS ABOUT THE FUTURE OF CLEAN ENERGY? BILL:YEAH, I HAVE CONCERNS. THEY GO BEYONDTHAT. ITHINK RICK PERRY, WHO I DON'T KNOWPERSONALLY, BUTTHE GOVERNOR OF A VERY LARGESTATE, AND ENERGY PRODUCING STATE. HEIS NOT IN THEPOSITION YET. IDON'T KNOW IF HE HAS BEEN OFFICIALLY PICKED. EMILY:IT IS NOT OFFICIAL. BILL:IT IS PROBABLY NOT WORTH SPECULATING TOO MUCHBECAUSE PARTOF THEPROBLEM FOR ME HAS BEEN TURNING EVERYTHING INTO FANTASY FOR ALL-- FANTASY FOOTBALL. MAKING JUDGMENTS WHEN NOTHING HAPPENED YET. IHAVE CONCERNS AND WOULD LIKE TO SEE CLEAN ENERGY ADVANCE BUT I THINKBILL GATESHAD A GREAT ANNOUNCEMENT 24 HOURS AGO ABOUT THIS. EMILY:SOME OFTHISSTUFF HAS NOT HAPPENED BUT THERE HAS BEEN A LOT OF TWEETING GOING ON. BILL: I AM NOT A TWEETER. ITHINK WE WOULD ALL BE HEALTHIERTHAT WITH THECASE. EMILY:JACK MA, JEFFBEZOSARE NOW INTHIS CLEAN ENERGY FUND. THE YOU THINK THIS FUND WILL MOVE THE NEEDLE IN AN AREA THAT HAS BEEN SLOWTOHAVE A BIG EXIT? BILL: I HOPE SO. IKNOW ALL OF THEM AND I ADMIRE THEMAND I THINK BILLGATES IN PARTICULARHAS AN AMAZING TRACK RECORD, ESPECIALLY IN HEALTH CARE, HELPING TORID THE WORLD OF POLIO, ON THE WAYTO DOING THE SAME WITH MALARIA. IF HE CAN DO IN ENERGYWHAT HE HAS DONE IN HEALTHCARE, IT WOULD BE FANTASTIC. EMILY: BILLMARIS. WE WILL BE RIGHT BACK WITH YOU. APPLEIS SAID TO HAVE HELDTALKS ABOUTINVESTINGINITS $100 BILLION TECH FUND. APPLE MAYCONTRIBUTE UP TO $1 BILLION TO THE FUND, WHICH WILL GIVETHE COMPANY INSIGHT INTO UP ANDCOMING TECHNOLOGY. APPLE ALSOINVESTED $1 BILLION IN THE RIGHTHAILING --RIDE HAILINGCAPDD. HALF OF THE $1 BILLION FUND WOULD BE INVESTED IN THE UNITED STATES. ALL EPISODES OF BLOOMBERG TECHNOLOGY ARE LIVE STREAMING ON TWITTER. CHECK USOUT ON WEEKDAYS. 5:00P.M. IN NEW YORK. ♪ EMILY:ONLINERETAILSITEIS BANKING ONITSRECENT SUCCESS WITH PLANS FOREXPANSION. IT IS GOING TO DOUBLE ITS YOUTO --ITSU.K. MANUFACTURING. UNLIKE MANYRIVALS, THEY HAVE BENEFITED FROM THE DROP IN THE POUND AFTER THE BREXITVOTE BECAUSE ABOUT 57% OF ITSSALES ARE OUTSIDE THE U.K.. TURNING BACK TO OUR EXCLUSIVE CONVERSATIONWITHVENTURE CAUSED THELIST -- VENTURECAPITALIST BILL MARIS. HEOVERSAW GOOGLE TECH AND LIFE SCIENCES. HE LEFT EARLIER THIS YEAR. LAST WEEK, HE PULLED THE PLUG. HE JOINS US WHY TODISCUSS. WHY? YOU ARE ON TRACK TO CLOSE THIS WEEK AND SAIDACTUALLY, I'M NOT GOING TO DO THIS. BILL:IDID THIS CRAZY THING CALLED CHANGING MY MIND. WILD, I KNOW. I DID IT. ILEFT HUNDREDS OF MILLIONS OF DOLLARS BEHIND. I DID IT BECAUSE I FEELLIKE THERE ARE A LOT OFVENTURE FUNDS RIGHT NOW IN THE VALLEY. EVERYCOUPLE OF DAYS, I SEE NEW ANNOUNCEMENTSOF NEW FUNDS. I FELT LIKE AFTER 10 YEARS IN THEBUSINESS OR CLOSE TOIT, THERE MIGHTBE BETTER WAYS TO HAVE A BIGGERIMPACTON PROBLEMS I THINK AREWORTH TACKLING. EMILY:THERE WAS A REPORTOF $230 MILLION. DID YOU HAVE TROUBLE RAISING THE FUNDS THAT YOU WANTED? BILL: NO. THISIS ATIMEWHERE THERE IS TREMENDOUSCAPITALAVAILABLE, ESPECIALLY IF YOU HAVE A TRACK RECORDTHAT DOES NOT MEAN THAT IT IS THE RIGHT THING TO DO. INTEREST RATES ARE LOW. INSTITUTIONS ARE LOOKING FOR PLACES TO DEPLOY MONEY. VENTURE IS ONE OF THOSE PLACES. IT ISALMOSTOVERFUNDED. EMILY:YOU ARE PLANNING TO DO THIS ON YOUR OWN. I'M CURIOUS WHY. IFTHEREARE SO MANY OTHER FUNDS OUT THERE, WHY COULD YOUDO IT DIFFERENTLY? BILL:IDID THAT ONCE AT A PLACE CALLED GOOGLE VENTURE. VIRTUALLY EVERYTHING I HAVE DONE IN MY LIFE, APART FROM HAVING A CHILD, IHAVE STARTED IT ALONE. I WAS FORTUNATE TO BUILD AN AMAZING TEAM AT GOOGLE. THEY ARE DOING ANOUTSTANDING JOB. THERE ARE REAL PROBLEMS AS WELL. THERE ARE FUNDS OUT THERE I CAN HELP. I DON'T KNOW THAT BEING A PROFESSIONALVCTHAT THE WORLD NEEDS ANOTHER VENTURE FUND RIGHT NOW. EMILY: THE YOU THINK WE ARE IN A BUBBLE? BILL:I THINK WE ARE IN A HUGE BUBBLE. I THINK THE ELECTION IS A TESTAMENT TO THAT. ITHINK THAT THERE IS ALMOSTTOO MUCHCAPITAL AVAILABLETO INVESTORS, WHICH RAISESPRICES, WHICH RAISESEXPECTATIONS, AND THERE ARE A LOT OF PEOPLE WORKING ON WHAT I WOULD THINK OF ASTRIVIAL PROBLEMS AS OPPOSED TO THE REALPROBLEMS THAT THE COUNTRY FACES. EMILY:WHAT ARE THE TRIVIAL PROBLEMS? BILL:DO WE NEEDANOTHER MORE OPTIMIZEDADVERTISING SYSTEM TO FURTHER CONSUMERCULTUREBASED ON THE CONSUMPTION OF GOODS AND SERVICES? THERE NEEDSTO BE SOME BALANCE. EMILY:HOW DOES THIS PLAYOUT? IS THERE SOME SORT OF CATASTROPHE? BILL:DEPENDS ON HOW YOU DEFINE IT. MAYBE THOSE ARE GOOD THINGS TO HAPPEN. WHAT HAPPENS IS ULTIMATELY INTEREST RATES GO UP SOMETIME SOON. AS ARESULT, THE STOCK MARKET CORRECTSANYWHERETO 1000 OR MORE POINTS. THE PENDULUM WILL SWING THE OVERWEIGHT. -- THE OTHER WAY. IT WILL SEEM LIKEARMAGEDDON, BUT IT IS NOT THAT. WE ARE OVERDUE FOR A CORRECTION. EMILY:WHOISHEADED FORA WAKE-UP CALL? BILL:ALOT OF US GOT A WAKE-UP CALLIN NOVEMBER, YOU WILL SEE A LOTOF STARTUPS THAT WERE OVERLY OPTIMISTIC NOT BEING ABLE TO RAISE FUTUREROUNDS. EMILY:I'MCURIOUS ABOUT WHY YOU LEFTGOOGLEAND I WONDER, DO YOU THINKTHATVC CAN'T BE DONE FROM INSIDE ABIG COMPANY VERY WELL? BILL:HOPEFULLY, MY LAST 10 YEARS PROVES THAT IT CAN BE. EMILY:YOU THINK THAT MODEL WORKS? BILL:I THINK IT WORKED. MY LAST DAYWAS AUGUST 12. BEYOND THAT, IT IS VERY DIFFICULT. RUNNING A VENTURE FUND IS VERY DIFFICULT. DOING IT INSIDE A MASIMO CORPORATION IS ALSO DIFFICULT. IT WASSUCCESSFUL -- AMASSIVE CORPORATION IS ALSO DIFFICULT. ITWAS SUCCESSFUL. CREATING THE SAME MODEL OUTSIDE OFGOOGLE, I DID NOT FEELTHAT INSPIRING ATTHE END OF THE DAY, WHICH IS WHY I PULLED THE PLUG. EMILY: WHAT YOUMAKE -- WHAT DO YOU MAKE OFTHE TRANSITION WE HAVESEENINSIDEALPHABET? YOU ARE NOT THEONLY ONE TO LEAVE. BILL:EVERY BIG COMPANY HAS TURNOVER. IHAD A FANTASTIC TEAM OFPEOPLE WHO ARE ALL STILLTHEREAND I WISH THEM HUGESUCCESSBECAUSE I'M AN INVESTOR WITH THEM IN A LOT OF COMPANIES. EMILY:IS THIS JUST THE USUAL TURNOVER, OR ISITSPAWNED BY THE CLEANING OF HOUSE? BILL:I THINK IT IS INTERESTING TO GO ON IT WHICH-- A WITCHHUNT. AS FAR AS I'M CONCERNED, GOOGLE IS FILLEDWITHFANTASTIC PEOPLE WHO WANT TO DO IMPORTANT THINGS. MY TEAM FEELS THAT WAY. ICANNOT SPEAK FOR THE COMPANY AT LARGE OTHER THAN IHAD AN AMAZING EXPERIENCE. LIKE ANYONE WHO WAS HIRED TO DO AJOB, YOU NEED TO KNOW WHEN THAT JOB IS DONE. I FELT LIKE MY JOB WAS DONE. EMILY:WHAT WILL YOU DO NEXT? WILL YOU BE ANGELINVESTING? BILL:I DON'T KNOW. IWILL ANGELINVESTOR I WILL HELP FUNDS AND COLLEAGUESAND COMPANIES LIKE I ALWAYS HAVE. THE NEXT FEW MONTHS AREABOUT TAKING A LOT OF CALLS AND TALKING TOPEOPLE AND SEEING HOW I CAN HELP. EMILY:YOU ARE VERYVOCAL ABOUT FAIRNOTEAND FORESAW SOME OF THE PROBLEMS. BILL:THAT IS STILL OF ATHING. EMILY:WHAT IS THE APPETITE FOR FUNDING OF HEALTH CARE RELATED STARTUPS IN THE WAKEOF FAIR NOTE? BILL: I HAVE SEENAHUGE INCREASE IN THE INTEREST OF LIFE SCIENCE, ESPECIALLY WHERE MACHINE LEARNING AND ARTIFICIAL INTELLIGENCE CAN BE APPLIED TO IMPROVE OUTCOMESFOR PATIENTS. FAIRNOTE IS AN UNFORTUNATE STORY BECAUSE IT ENDED UP HURTING PATIENTS. IT HAS NOT PUT A DAMPERON INVESTORS' APPETITE FOR INNOVATION. EMILY: BILLMARIS. WE WILL BEWATCHINGTOSEE WHAT YOU DO NEXT FROM SAN DIEGO. THANK YOU FOR STOPPING BY. ADVANCED MICRO DEVICES IS TRYING TO MAKE UP GROUNDON RIVAL NVIDIA. ♪ EMILY:SKYPE IS WORKING TOMAKE LANGUAGE BARRIERS A THING OF THE PAST. THEYARE WORKING ON MAKING A CONVERSATION IN TWOLANGUAGES SEAMLESS. YOU WILL NEED TO PAY CREDITS TO USE THE TOOL. TRANSLATION RUNS IN NINE LANGUAGES,INCLUDINGENGLISH, SPANISH,GERMAN, AND ARABIC. AMD ISTAKING AIMATNVIDIA. AMD WILL BEOFFERING GRAPHICS CHIPS TAILORED FOR ARTIFICIAL INTELLIGENCEUSE INITS DATA CENTER. ITWILLSPEED UPTHE ABILITY FOR COMPUTERS TO TRAIN THEMSELVES AND GET BETTER AT IMAGE RECOGNITION. IN PLAINENGLISH, YOU SAY THAT AMD IS TRYING TO GET INTO THE BUSINESS OF RECOGNIZING YOUR VOICE, SORTING THROUGH PICTURES, AND OTHERTASKSTHAT COMPANIES ARE TRYING TO TURN OVERTO AI WITH THESE JETS. IAN:THE TASK THAT YOU SAID, TRANSLATING THINGS IN SKYPE, RECOGNIZING WHETHER IT IS A DOG OR A PIG OR WHATEVER INTHOSE PICTURES. DOING THOSEIN PARALLEL. AGPU ISGOOD AT THAT. EMILY:THIS IS A CHIP THAT NORMALLY GAINS ARE BUILT ON. IAN: THAT IS EXACTLY IT. ALLOF THESE TEENAGERS LIVING IN THEIR PARENTS'BASEMENTTHAT HAVE GAMINGSYSTEMS, THEY WILL PAY $1000 FOR A GRAPHICSCARD HAS A GIVES THEM THE MOST VIVID IMAGE. THOSE ARE THECHIPS WE ARE TALKING ABOUT. EMILY:DOESN'TINTELDOMINATE IN SERVICE? IAN:THEY HAVE A 99.4% MARKET SHARE IN SERVICE. THAT ISA $15BILLION A YEAR BUSINESS. CHIPS ARE GOODAT MULTITASKING, GOODAT COMPLEX THINGS VERY QUICKLY, BUT NOT IN PARALLEL. EMILY:WHY HAS ITTAKENTHIS LONG FOR AMD TO BRING THIS KIND OF A PRODUCT TO MARKET? IAN: YOU WIND THECLOCKBACK AND PEOPLETHOUGHT AMD WAS GOING OUT OFBUSINESS, THEY WERE RUNNING IN THEMARKET -- THEY WERE RUNNING OUT OF MONEY. THEY LOST A LOT OF MARKET SHARE. ITHAS TAKENTHEM A LONG TIME TO GETTOTHE POINT WHERE THEY ARE ABLE TO INVEST IN TECHNOLOGY AGAIN. EMILY:HOW BIG IS THE MARKET LIKELY TO GET? IAN:THAT IS THE QUESTION. RIGHTNOW, NVIDIA IS BRING IN A FEWHUNDRED MILLION A QUARTER. IT IS STILL A GOOD BUSINESS. COMPAREDTO WHAT INTEL IS BRINGING IN, $15 BILLION A YEAR, NOT VERY MUCH. EMILY:YOU COVER THEENTIRECHIP INDUSTRY. THERE HAS BEEN SO MUCH AND MANDATE, SO MUCHACTION, COMPANIES FALLINGBEHIND, BETTING ON TECHNOLOGY. ASSESS THE LAY OF THE LAND IN TERMS OF WHO IS IN POSITION TO CAPITALIZE ON THE RISE OFAI IF IT IS AS BIG ASPEOPLE THINK IT WILL BE. IAN: INVESTORS HAVEBEEN GOING AFTER VIDEO. STOCK HAS MORE THAN DOUBLED. IT IS NOW A $40 MILLION COMPANY ANDJUST ON THE PROMISE OF WHAT AI MIGHT MEAN. EMILY:WHO WILL BE LEFT TO SIGN? IAN:RECENTLY, INTEL MADE IT A LOTOF ANNOUNCEMENTS ABOUT HOW THEY WILL TRY TO BRINGTHEIR OUTSIDE TECHNOLOGY INTO THEIR LINEUP. THEY ARE TRYING TO RESPOND. IT IS THEIRS TO LOSE. EMILY:IN 2017, DO YOU THINK WE WILL SEE MORE AND MANDATE? A LOT OFPEOPLE SAY UNDER TRUMP, WE WILL SEE A LOT MORE M ANDA. IAN:PRETTYMUCH EVERYBODYHAS BEEN BOUGHT OR FOLDED ATTHIS POINT. ONE THING UNDER TRUMP IS FREEDOM FROM THEREGULATIONS THAT SOME OF THEBANKERSARE BETTING ON, THAT THERE WILL BE LESS RESTRICTION ON M ANDA. EMILY:IANKING, THANK YOU SO MUCH FOR THAT UPDATE. HOW VENTURECAPITALISTSARE PREPARING FOR A TRUMP PRESIDENCY AND WHERE THEY ARE PLACING THEIR BETSIN 2017. MEGANKING JOINS US NEXT. MAKE SURE TOWATCH "BLOOMBERGTECHNOLOGY"TUESDAY. MICHAEL WILL BE GOING TO THAT HIGHLY ANTICIPATEDMEETINGOF TECH LEADERS WITH PRESIDENT-ELECT TRUMPON WEDNESDAY. ♪ NINA: "BLOOMBERG TECHNOLOGY." YOU'RE WATCHING "BLOOMBERG TECHNOLOGY." LET'S BEGIN WITH THE FIRST WORD NEWS. THE EUROPEANUNION SETUP HOW IT WILLCONDUCTBREXIT NEGOTIATIONS WITH THE U.K.. ACCORDING TO ASTATEMENT, YOU GOVERNMENTS WILL BE ASKED TO COMPLY SWIFTLYWITH THE TALKS. PRIMEMINISTER THERESAMAYSAYS ARTICLE 50 WILLFORMALLY START WITHDRAWAL. THIEVES SET A TRUCK ONFIREAND POLICE SAID THE TWO DRIVERS ARE RESCUED. SENATE MAJORITY LEADER MITCH MCCONNELL SAYS HEHASTHE HIGHESTCONFIDENCE IN THE INTELLIGENCE COMMUNITY, AFTER PRESIDENT-ELECT DONALD TRUMP ATTACKED THECIAOVER ITS CONCLUSION THAT RUSSIA USE CYBER MEDDLING TOHELP INFLUENCETHE -- TO HELP THEM WIN THE PRESIDENCY. PRESIDENT OBAMA WILLLEAVE -- LEASE OFFICE SPACE AT WORLD WILDLIFE FUNDHEADQUARTERSIN WASHINGTON, ACCORDING TO THE WASHINGTON POST. IT'S LOCATED IN THE AREA OF WASHINGTON DC CALLED FOGGY BOTTOM. GLOBAL NEWS 24 HOURS A DAY AND MORE THAN 120 COUNTRIES. THISISBLOOMBERG. IT'S JUSTAFTER 5:30 P.M. MONDAY INNEWYORK,9:30 IN SYDNEY. PAUL, GOOD MORNING. PAUL: NEWZEALAND HAS BEEN TRADING FOR 90 MINUTESNOW,THE ONLY MARKET OPEN AND IT'S LOOKING FLAT AT THE MOMENT. IT'S BETTER THAN CAN BE SAID FOR THE FUTURESMARKETAT THE MOMENT. NIKKEI FUTURES POINTING LOWER AND FUTURES ON THEAFX EXPECTING A DECLINE OF.4% WHEN TRADING GETS UNDERWAY IN AUSTRALIA IN THE NEXT 30 MINUTES. WE WILL KEEP AN EYE OUT ENERGY STOCKS ON THEAFX,THEY LED THE WAY ON MONDAY AND AFURTHER 2% BOOST TO THE OIL PRICEOVERNIGHT COULD MEAN ANOTHER GOOD DAY FOR ENERGYSTOCKS. SAUDI ARABIAISINTENDING TO CUT PRODUCTION FURTHER THAN ORIGINALLY PROMISED. OILPRICESTHE HIGHEST INMORE THAN TWO YEARS WITH STOCKPILES AT CHINESE PORTS REACHING THE HIGHEST IN TWO YEARS. SHIPMENTS WEREUP10%IN NOVEMBER OUTOFNOVEMBER SO THE IRON ORE REALLY PILING UP IN CHINA, WARNING OF PRICE FALLS FOR IRON OREIN26 -- IN 2017. HERE IN AUSTRALIA WEHAVE THIRD QUARTER HOUSEPRICESAND THE BUSINESS CONFIDENCE SURVEY FOR NOVEMBER, AND CHINA CAPRETAIL SALES FORNOVEMBER ESTIMATED AT 10.2% ON YEARGROWTH THERE AND CHINA'S INDUSTRIAL PRODUCTION FOR NOVEMBER IS EXPECTED TO HOLD STEADY AT 6.1%. PAUL ALLEN IN SYDNEY, MORE NEXT ON"BLOOMBERG TECHNOLOGY." EMILY:THIS IS "BLOOMBERG TECHNOLOGY." I'M EMILY CHANG. SILICON VALLEYLEADERS HAD TO NEW YORK TO MEET WITHPRESIDENT ELECT TRUMPMANYBACKEDHILLARY CLINTON DID NOT HOLD BACK THEIR DISDAIN FOR THEM. THE MEETING WILL BE A CHANCE FOR THEMTO FIND COMMON GROUND WITH THE NEW ADMINISTRATION AFTER CLASHING ON KEY ISSUES. ONE KEY QUESTION IS WHAT IT WILL MEANFOR MOBILE TECH INVESTMENT ANDHOWVENTURE CAPITALISTS SHOULD BE PREPARING FOR THE COMING YEAR. THERE IS MEGAN QUINN WHO KNOWS THE INVESTMENT LANDSCAPE ALL TOO WELL. SPARK HAS INVESTED IN COMPANIES LIKETWITTERAND OCULUS. GOOD TOHAVE YOU HERE ON THE PROGRAM. WHAT DO YOU THINK THE TRUMP PRESIDENCYMEANS FOR SILICON VALLEY, AND HOW ARE YOU GUYS TALKING ABOUT THIS INTERNALLY? MEGAN:THERE IS A LOT OF UNCERTAINTY THAT FOLLOWS DONALD TRUMP. THERE HAS BEEN A LOT OF DISCUSSION AROUND THIS MEETING TOMORROW THATWILL TAKE PLACE WITH VARIOUS TECHNOLOGY LEADERS. MY VIEW IS THAT THESE PEOPLEARE VERYACCOMPLISHEDANDHELD AN EXTREMELY HIGH REGARD, AND WE NEED TO IS APROUD--SURROUND THE PRESIDENCY AND THE CABINET WITH MORE SMART, INNOVATIVE THINKERS. IHOPE THEYARE ABLE TO FIND SOME COMMON GROUND AROUND INNOVATION. I DON'T KNOW THERE WILL BE SPECIFICTOPICS THEY GET TO THE BOTTOM OF IN AN HOUR-LONG MEETING, BUT I HOPE THEY OPEN UP ADIALOGUE BETWEEN THE PRESIDENT AND SILICONVALLEY. EMILY:HOW ARE YOU DIGESTING THIS ATSPARK? THERE'S A LOT OF UNCERTAINTY, THE MARKETS HAVEREACTED POSITIVELY INSOMEWAYS, BUTNOT OTHERS. THERE WAS A LOT OF WEIGHT IN C. MEGAN: -- THERE IS A LOTOF WEIGHT ANDSEE --WAITANDSEE. WEADVISETOKEEP ON KEEPING ON. REALLY FOCUS ON YOUR BUSINESS. EMILY:YOUUSED TO WORK AT KLEINERHOGANS-- KLEINER PERKINS. I'M CURIOUS WHAT IS THE DIFFERENCE WHEN YOU LOOKAT GROWTHSTAGE COMPANIES VERSUS EARLY-STAGE COMPANIES AND HOW HAS YOUR OWN STRATEGY SHIFTED? MEGAN:WHAT YOU ARE LOOKING FOR COMPANIES THAT HAVE ARTIE FOUND RODDICK MARKETFITS --WE ARE LOOKINGFOR COMPANIES THAT HAVE ALREADY FOUND PRODUCTMARKET HITS. WEARE LOOKING FORMETRICS WE CANPOINT TO WITHOUT HAVING TO SQUINT TOOHARDTOINDICATE THE INFLECTION POINT HAS ALREADY TAKEN PLACE. EMILY:DOYOU THINKTHERE WILL BEMORE COMPETITION AT THE GROWTH STAGENOW THAT THE BELT HAS BEEN TIGHTENING AT THE EARLIER STAGE? IT SEEMS LIKE FEWERCOMPANIES ARE GETTING A LARGER POOL OF CAPITAL. MEGAN: THERE IS CERTAINLY A TREMENDOUS AMOUNT OF CAPITAL AVAILABLE. WETHINKTHEREISA DEARTH OF WONDERFUL INVESTORSWHO CAN ADD VALUE TO PORTFOLIO COMPANIES AT THAT GROWTH STAGE. EMILY:OURGUEST WHO WAS JUST ON THINKS WE ARE IN AHUGE BUBBLE. WHAT IS YOUR REACTION TO THAT? MEGAN: WETHINK IF YOU'RE BUILDING ANINCREDIBLE COMPANY, THERE WILL BE PLENTY OF CAPITAL FOR YOU BUTIT'S FINDING A PARTNERTHAT WILL BE GOODFOR YOUR BUSINESS, NOT JUST A BLANK CHECK FOR YOU CAN GET IT. EMILY:YOUINVESTED $20 MILLION IN ACOMPANY. THISIS ANENTERPRISE SOFTWARE STARTUP. WHAT DO WE MAKE OF THAT DECISION? MEGAN:SPARKHAS A LONGHISTORY OFINVESTING IN THESE COMPANIES. THERE IS A TREND WE ARE EXTREMELY EXCITED ABOUT. IT'S TICKLING CALL CONSUMERIZATION OF THE ENTERPRISE. WEEXPECTAS INDIVIDUALS FOR THE PRODUCTSAND SERVICES WE USEAT WORK TO LOOK AND FEEL LIKE THE PRODUCTS AND SERVICES WE USE AT HOME. IT DOESN'T MATTER IF WE ARE BEHIND A DESK OR BEHIND A BAR. WE WANT IN GAUGINGPRODUCTS IN THE WORKFORCE. THISOFFERSAFULLY INTEGRATED PLATFORM FOR ENTERPRISE COMPANIESTOBUILD BETTER PRODUCTS FOR THE END CONSUMER. EMILY:THEYARE BASED IN RALEIGH, NORTH CAROLINA, OF ALL PLACES. TALKABOUT GETTING OUTSIDE THE VORTEX. ARE YOU LOOKING BEYOND SILICON VALLEY MORE OFTENNOWTO FIND THOSE DIAMONDS IN THE ROUGH? MEGAN: WE ARE ALWAYS HAPPY TO GET ON A PLANE. MY VIEW ISBUILDING ACOMPANY OUTSIDE THEBAY AREA BUBBLE IS A COMPETITIVE ADVANTAGE. THEYSIT AT THE INTERSECTION OF THREE VERY WELL-KNOWN UNIVERSITIES AND HAVE INCREDIBLE ACTS US TOTALENTATMUCH CHEAPER COSTS, SO WE CONSIDER THAT A POSITIVE WHEN IT COMES TO INVESTING IN A PLACE LIKE RALEIGH. EMILY:WHERE ARE YOU LOOKING IN 2017, GIVEN THEUNCERTAINTY AND THE CLIMATE RIGHT NOW? MEGAN:WE WILL RIDE OUT THE MACROSHIFTTOWARD MORE CONSUMER FEELING PRODUCTS IN THE MARKETPLACE. WE THINK THERE IS TREMENDOUS OPPORTUNITYWITH COMPELLING, ENGAGING, DELIGHTFUL PRODUCTS IN THE WORK WASTE. IN ADDITION, WE TENDTO BE FOUNDER DRIVEN BY TREND. WE ARE EXCITED ABOUTAPPLIEDAI. HISTORICALLY BEEN RELEGATED TO R AND D DEPARTMENTSAND WERE STARTING TO SEE PRODUCTS AND SERVICES THAT CONSUMERS USE. NOWWITH VASTAMOUNTS OF DATA, THE ALGORITHMS CAN LEARN OVER TIME. WE ARE ALSO EXCITEDPERSONALLY ABOUTTHE R AND AR IN THE ENTERPRISE. THERE MIGHT BE MOREADOPTIONOF THE ENTERPRISE IN THESESERVICES THAN IN CONSUMERLIFE. IT MIGHTFOLLOWTHE PATH OF THE PC. EMILY:YOU ARESPARK'S FIRST FEMALE PARTNER AND I KNOW YOU'RE VERY PASSIONATE ABOUT THIS ISSUE OFDIVERSITY. I'M CURIOUS, WHAT DO YOU THINK IT IS GOING TO TAKE TO SEE ACTUALCHANGE? WHERE DO YOU THINK THE CHALLENGE IS STILL LIE? MEGAN: MY VIEW IS YOU CANNOT SEE WHAT YOU CAN'T SEE. I AM A GENERAL PARTNERATA VENTURE FIRM BECAUSE IHADA WOMAN GENERAL PARTNER ON MY BOARD IN MYPREVIOUSROLE AT SQUARE. THAT WASMARY MEEKER. SHE STOOD OUT AS SOMEONE ICOULD BE LIKE. WE NEED TO HAVEMOREWOMEN IN SENIOR POSITIONSSO THE NEXT GENERATIONS UNDERSTANDS THERE ARE MORE OPPORTUNITIES FOR THEM IN THEIR CAREER PATH. EMILY: THANK YOU SO MUCH FOR JOINING US. ONE DISCLOSURE, MEGAN IS A BOARD MEMBER AT THE COMPANYHANDSHAKE WHERE MY HUSBAND CURRENTLY WORKS. TWOTOPREPUBLICAN LAWMAKERS OFFEREDSTRONG SUPPORT FORU.S. INTELLIGENCE MONDAY. IN SHARP CONTRAST TO RESIDENT ELECT TRUMP WHO TOSTARTED -- DISPUTEDREPORTS THAT THE RUSSIANGOVERNMENT HELPED HIM WIN. SENATEMAJORITY LEADER MITCH MCCONNELL AND HOUSE SPEAKER PAUL RYANPRAISE THEM FOR TAKING ON CYBERTHREATSTOTHE GOVERNMENT. THE PRESS SECRETARY TOVLADIMIR PUTINTOLD REPORTERS TODAY THAT THE ALLEGATIONS HAVE NOTHING TO DO WITH REALITY. TRUMPAND HIS TEAMARE PUSHING BACK ON THECLAIMS AS WELL. COMING UP, VIACOM ANDCBSWALK AWAY FROM A POTENTIAL DEAL. MEANTIME, $.10 IS LOOKING TO COVER THE BLOCKBUSTER BOOM. THIS IS BLOOMBERG. ♪ EMILY: THE GOLDEN GLOBE NOMINATIONS WERE ANNOUNCED TODAY,BUT STREAMING NETWORKS APPEAR TO BE LOSING THEIR LUSTER. NETS-- NETFLIX SCORED FIVE NOMINATIONS, THE LOWEST NUMBER SINCE ENTERING THE AWARDSRACE THREEYEARS AGO. AMAZON STUDIOS GOT FIVE NOMINATIONS,DESPITETHE DRAMATIC INCREASE IN THE NUMBER OFORIGINAL SERIES ON THE PLATFORM. TURNING TO THEMEGADEAL THAT WASN'T. MERGER TALKSBETWEEN VIACOM AND CBS BROKEDOWN WITH SHERRY REDSTONE PULLING THE PLUG ON THE DEAL. LEAVING HIM IN CHARGE OF THE COMPANY'S TURNAROUND. LUCAS SHAW HAS BEEN COVERING THIS AND JOINS US FROM L.A. WITH MORE. THE COMPANY HAS BEEN THROUGH WHIPLASH OVER THE LAST SEVERAL MONTHS. WHAT DOES HE BRING TO THETABLE? LUCAS: HE BRING SOMEMEASURE OF STABILITY. HE HAS BEEN IT VIACOM FOR A LONG TIME BUT WAS NOT PART OF THE CABALLEADERSHIP. HE RAN THE INTERNATIONAL BUSINESS FOR ABOUT THE LAST DECADESO HE HAS A BIG PRIORITY THERE AND HE THINKS HE CAN APPLY SOME OF WHAT HE LEARNEDTHERETO ENERGIZE THE U.S. BUSINESS. I THINK MOST PEOPLE ITVIACOM HAVE JUST BEEN SUFFERING THROUGHOUT THEYEARAS THEY SEEM TO BE READINGNEWNEWS ABOUT THEIR COMPANY AND THE PRESS EVERY WEEK OR SO WILL BE HAPPY A COUSIN MEANS ALL THETURMOILIS OVER. IT'S NOT GUARANTEED,BUT IT SEEMS LIKE FOR NOW WE HAVE REACHED A STATUS QUO. EMILY:IT SEEMS LIKE THE DEAL FELLOW -- FELL APARTBETWEEN-- BECAUSEOF A POWERSTRUGGLE BETWEEN SHERRY REDSTONE AND LES MOONVES. >>I WOULD SAY THERE'S DEFINITELYNEGOTIATION AND HAPPEN BETWEEN THE TWO OFTHEM. HOWMUCH OF IT WAS A POWER STRUGGLE IS UNCLEAR. MOST PEOPLE I SPOKE TO SAID IT BROKE DOWN MORE OVERPRICED AND GOVERNANCE. LESMOONVES WANTED ASSURANCES THAT HE WOULD HAVE A GREAT DEAL MORECONTROL THAN EVEN HAS AT CBS. PEOPLE SAID HE WAS GOING TO GET THAT, BUT AS TIME WENT BY, SHERRYREDSTONEBECAME INCREASINGLY COMFORTABLEAND BOB BACK-ISH CONVINCED HER HE COULD MAKE IT MOREVALUABLE -- BACK CONVINCED HER HECOULDISHMAKE IT MORE VALUABLE. THEY COULD NEVER COME TOTERMS THAT EITHER SIDE WAS COMFORTABLE WITH. EMILY:THEREARE REPORTS OF INTEREST FROM OTHERCOMPANIES FOR CBS, INCLUDING VERIZON. WHAT DO YOU KNOW? >> NOT MUCH ON THAT FRONT. SOURCESARE SAYING THAT VERIZON PROBABLY DOES NOT WANT TO BUY CBS,AND I DON'T KNOWTHAT CBS IS A WILLING SELLERRIGHT NOW. CBS IS A VERY STREAMLINED COUNTRY. DOWN THE ROAD IT COULD BE MERGED OR SOLD TO SOMEONE. LESMOONVES MAY WANT TO SELL TO SOMEONE, BUT THERE ARE NO TALKS HAPPENING RIGHT NOW. THERE WERE PEOPLE THIS MORNING WHO WERE SURPRISEDBY HER MOVE. THATLETTER CAME SORT OF FROM OUT OF NOWHERE. EMILY:LET'S TALK MOREABOUT BACKISH'SSTRATEGY. WHAT DO WE KNOW ABOUT HIS PLANS TO TURN THE COMPANY AROUND? >> YOU HAVE SEEN A BUNCH OF LEADERSHIP CHANGES AT THE DIFFERENT NETWORKS ALREADY. MTV GOT A NEW BOSS A COUPLE OF MONTHS AGO. THE PARAMOUNT MOVIE STUDIO JUST GOT A NEW COO. COMEDY CENTRAL HADANLEADERSHIP -- HAD ALEADERSHIP CHANGE RELATIVELY RECENTLY. HE'S GOING TO MAKESURE THAT ALL THOSE DIVISIONS HAVE ASTRATEGY FOR HOW THEY WILL TURN THEMSELVES AROUND. SINCE TAKING OVER, HE HAS ASSEMBLED DIFFERENT LEADERSHIP COMMITTEES TO TRY TO DISCUSS WHATIS THE PLAN FOR MTV AND COMEDY CENTRAL. EVERYBODY INVOLVED KNOWS WHAT THE PRESSUREPOINTS ARE. THEY'REJUST HASN'T BEEN AN EFFECTIVE MEANS OF TURNING THEM AROUND. WHAT THE SPECIFICS ARE ON THOSE PLANS WILL PROBABLY COME OUT OVER THE NEXT WEEKS AND MONTHS. EMILY:LUCASSHAWIN L.A., THANKS FOR BRINGING US THAT UPDATE. STAYING WITH MEDIA, ASIA'S LARGESTMEDIA COMPANY IS GEARING UP FOR A MAJOR PUSH INTO HOLLYWOOD. THEY WILL MAKE THEIROWN BLOCKBUSTERS INSTEAD OF JUST WRITING CHECKS FOR THEM. THEY WILL BE WORKING WITH SOME OF THE INDUSTRY'S TOP TALENT ON THE BIG SCREEN. OUR REPORTERCOVERS 10 SENT. WHY ARE THEY HUNTING FOR ACQUISITION INHOLLYWOOD? >> LIKE YOU SAID,TENCENTNOT ONLY WANTS TOWRITE THECHECK, THEYWANTTO WRITE THE SCRIPT FORHOLLYWOOD MOVIES. ACQUISITION IS JUST ONEWAY TO EXPEDITE THEIR EXPANSION PLANS. THEY'RE COMPLETINGWITH -- COMPETINGWITHALIBABA FORA $10 BILLION MARKET. BY THESE ACQUISITIONS, ANYTHING FROMSTUDIOS TO CREATIVE PRODUCTION HOUSES, THEY CAN EXPEDITE THOSE PLANS. TENCENT SAID THEYARE VERY OPEN TO ALL KINDOF POSSIBILITIES, PROVIDEDTHOSE COMPANIES COMPLEMENT THEIR OWN RESOURCES AND THE PRICING IS RIGHT. EMILY:IN LIGHTOF RECENT POLITICAL DEVELOPMENTS,DONALD SELECTION, POTENTIALLY INCREASING TENSION WITH THE CHINESEGOVERNMENT? >> THE U.S. AND CHINA'S RELATIONSOR ATA VERY TENSE TIME RIGHTNOW. WEARESEEING A LOT OF RHETORIC AND CRITICISM SAYING THE U.S. NEEDS TO BE MORE CRITICALOF THESE CHINESE TAKEOVERS, ESPECIALLY WITH TRUMP CRITICIZINGCHINESE TRADING CURRENCY POLICIES. TENCENT AS PART OFA GROUP OF COMPANIES THATARE LOOKING TO INVEST OR HAVE ALREADY INVESTED INU.S. STUDIOS. FOREXAMPLE,ALIBABA INVESTING IN STEVENS THEWORKS --STEVENS -- STEVEN SPIELBERG CROSS COMPANY. MOVIESAREVERY POWERFUL AND INFLUENCE PUBLIC OPINION. GOING FORWARD, THESE COMPANIES COULD FACE SOME HEADWINDS. EMILY:WHAT KIND OF GENREWILL TENCENT FOCUSON? >>THEIR STRONGHOLD IS IN GAMES. WE SEE THAT THEYOPERATE LEAGUE OF LEGENDS. ALREADY THEY HAVE INVESTED INTO WAR CRAFT AND SKULLISLAND. FAN BOYS IS THE GENRE THEY ARE TARGETINGMOST. GOING FORWARD WE WILL SEE A LOT OFFANTASY ADVENTURENOVELS BEING ADAPTED INTO MOVIES. THATSAID, THEY ARENOT CLOSE TO ONLY INVESTING IN ONE TYPE OF MOVIE. EMILY:FASCINATING, THE RACE FOR HOLLYWOOD OFCHINESE TECH TITANS. THANKS SOMUCH,LULU. COMINGUP, MICROSOFT IS TAKING A SECOND SHOT AT CHATBOX. WE WILL SEE IF ITISNEWER THAN ITS PREDECESSOR. WATCH OUR SPECIAL COVERAGE OF THE HIGHLY ANTICIPATED FED DECISION THAT STARTSAT10:00 A.M. IN SAN FRANCISCO, RIGHT HERE ON BLOOMBERGTELEVISION, BLOOMBERG RADIO,AND BLOOMBERG.COM. THIS IS BLOOMBERG. ♪ EMILY:INSTAGRAM'S LIFEFEATURE IS COMING TO THEU.S.IN THE COMING DAYS. THE LIVE FEATURES WILL BE IN THE STORY SECTION OF THEAPP AND LIVE VIDEOS WON'T BE STORED ON INSTAGRAMMEANING THEY CAN ONLY BE SEEN WHILE YOU ARE BROADCASTING. THAT DIFFERENTIATES IT FROM FACEBOOK WHICHARCHIVES LIVESTREAM ON ITS PLATFORM. INSTAGRAMFIRST ANNOUNCES PLANS FOR LIVE CONTENT IN NOVEMBER. WE WILL BE WATCHING. MICROSOFT IS TESTING A NEW CHAT BOX ON THEAPPKIK. OUR BLOOMBERG TECHREPORTER TIED OUT THENEW -- TRIED OUT THE NEW BOT. >> A LOT OFPEOPLE EXPECT THE WAY YOU WILL INTERACTWITH ELECTRONIC DEVICES IN THE FUTURE WILL BEINCONVERSATION WITH ARTIFICIAL INTELLIGENCEBOTS. IT'S LIGHTLY BACKFIRED WHEN THEY CREATED THISEXPLETIVE SPEWING BOTNINE MONTHS AGO. THEY ARE QUIETLY TRYINGAGAIN. THEY HAVEABOT ON THEAPPKIK, AND WE ARE GOING TO TRY ITOUT. LET'S START WITH, WHO IS BARACK OBAMA? >> NO, I'M NOT TALKING ABOUT THIS WITH YOU. IT SOUNDS LIKE MY PARENTS AT THE DINNER TABLE WHEN POLITICS COMES UP. MAYBE MORE INTRICATE ONE. SHOULD WE GET RID OF THE ELECTORAL COLLEGE? >> I'M OUT, WITH A LITTLEWAVY HAND. ONE THAT IS CLOSE TO MYHEART. SHOULDBRITAINLEAVE THEEU? I'VE NEVER BEEN THERE, IS HER RESPONSE TO THAT. SHEIS MISSING OUT, QUITE CLEARLY. EVERYONE SHOULD GO THERE WITH THE POUND SO CHEAP. WHO IS CEOOFMICROSOFT? >> WE HAVE NOT METYET. FINAL ONE FOR HER,THE FORMER MICROSOFT CEO STEVEBALLMER, DO YOU LIKE STEVE BALLMER? >> I KNOW THEY ARE ASSOCIATED WITH THECOMPANYSO I AM EXCITED TO MEET THEM. I THINK IT IS QUITE AN INTERESTING TAKEAWAY. HER COMMENTS WERE NOT GROSSLY OFFENSIVE. EMILY:THAT'S ALEX WEBB THERE. THATDOES IT FOR THISEDITION OF "BLOOMBERG TECHNOLOGY." BE SURE TO WATCHTUESDAY'SSHOW, WE WILL DISCUSS THE SOUTHCHINA MORNING POSTANDMICHAEL BECKERMAN, CEOOF THE INTERNET ASSOCIATION. TECH LEADERS ATTEND A HIGHLY ANTICIPATED MEETING WITH PRESIDENT ELECT TRUMPAND BECKERMAN WILL BE ADVISINGTHEM. WEEKDAYS 5:00 P.M. IN NEWYORK, 2:00 P.M. IN SANFRANCISCO. THAT IS ALL FOR TODAY. WE WILL SEE YOU TOMORROW. THIS IS BLOOMBERG. ♪ ♪ >> FROM OUR STUDIOS IN NEW YORK CITY, THISIS"CHARLIEROSE." CHARLIE:WEBEGIN WITH CYBER SECURITY AND THE OBAMA ADMINISTRATION. THE PRESIDENTORDERED A FULL REVIEW OF RUSSIA'S ELECTION RELATEDHACKING. THEHOMELAND SECURITY VISOR TOLD REPORTERS ABOUT THE INVESTIGATION ON FRIDAY MORNING. SHE SAID THE ORDER WILLBE DELIVERED BEFORE PRESIDENT OBAMA LEAVES OFFICE ON JANUARY 20. ANNOUNCING THAT CYBER SECURITY ISSUES WOULD BE A SIGNIFICANT FOCUS OF THE SENATE ARMED FORCES COMMUNITY THAT HEWOULDCHAIR. JOINING ME IS SENATOR JOHN MCCAIN. WHY ARE YOU MAKING THAT ANNOUNCEMENT TODAY? JOHN: WELL, OBVIOUSLY, ONE OF THEISSUES, THESITUATIONS THAT BROUGHT THIS TO A BOIL IS THE ALLEGATIONS OF RUSSIANIN-- RUSSIAINTERFERE NOT ONLY IN OUR ELECTIONS, BUT IN OTHER ELECTIONS AROUND THE WORLD. THAT UNDERMINES, OBVIOUSLY, THE FUNDAMENTALS OFDEMOCRACY,IF THEY ARE ABLE TO SUCCEED. BUTMOREIMPORTANTLY, CHARLIE, TESTIMONY BEFORE THE COMMITTEE BY OUR MILITARY AND CIVILIAN LEADERS IN DEFENSE HAVE ALL STATEDTHAT CYBER IS ONE OF THE AREASWHERE WE DO NOT HAVE AN ADVANTAGE OVER OURPOTENTIAL ADVERSARIES. WENOT ONLY DON'THAVE AN ADVANTAGE, INSOME INSTANCES, THEY HAVEAN ADVANTAGE. THESEHEARINGSWILL BEFOCUSED ON THE OVERALL ISSUE OF CYBER SECURITY, ANDOBVIOUSLY,THEIR ABILITYORINABILITY TOEFFECT THE OUTCOME OFELECTIONSIN DEMOCRATIC COUNTRIES WOULD CERTAINLY BE ONE OF THE ISSUES, BUT ONLY ONE. CHARLIE:BUT YOU ARE SAYING YOU'LL HAVE YOUR OWN INVESTIGATION AT THE ARMED SERVICES COMMITTEE. JOHN: MY UNDERSTANDING AMONG OTHER THINGSISITSNOT WHETHER THEY ARE JUST HACKINGINTO THE LAST ELECTION. BY THE WAY, THE CHINESE HACKED INTO MYELECTIONIN 1980. THIS HAS TOBE BROUGHT AND ENCOMPASSING. WEHAVE ALREADY HAD HEARINGS IN THE ARMED SERVICES COMMITTEE ON THIS. WE'VE ASKED ALL OUR MILITARY WITNESSES. NOW WE HAVE TOFOCUS ON THE INCOMPETENTASPECTSOF A CHALLENGE, WHETHER ITBE THEIR ABILITY TOSHUT DOWN OUR SATELLITES OR STEAL OUR MOST IMPORTANTSECRETS, SUCH AS OUR NEWWEAPONSSYSTEMS, OR WHETHER IT IS TO BE ABLETO LISTEN IN ON COMMUNICATIONS, ORWHETHER EVEN TO DISRUPT ORDESTROY COMMUNICATIONS. THERE ARE SOMESCENARIOS,MY FRIEND,AND I'M ONLY EMPHASIZING SCENARIOS, WHERE THEY COULD SHUT DOWN EVERY SATELLITE IN BASE. SO THIS ISIT -- IN SPACE. SO THIS ISAHUGE CHALLENGE, AND FRANKLY THIS ADMINISTRATION HAS NO POLICY AS TOHOW TO PREVENT IT, WHAT TO DO INCASE OF AN ATTACK, AND HOW TO PREPAREFOR ONE. CHARLIE:DO YOU HAVE ANY DOUBT THAT THERUSSIANS TRIED TO INTERFERE IN THE U.S. ELECTIONS? JOHN: IDON'T KNOW IF ITWAS INTENTIONAL INTERFERENCE, BUT I DO KNOW THAT SOME OF THE LEAKS THAT CAMEOUT CANNOT BEHELPFUL TO THE POLITICAL PROCESS. I WILL LEAVE IT TOOTHERS, AND I DON'T HAVE SUFFICIENT INFORMATION TO MAKE A JUDGMENT ABOUT THE PASTELECTION, BUT I CAN MAKE AJUDGMENT THAT IF THEY AREABLE TODISRUPT COMMUNICATIONSAND TO PERVERT COMMUNICATIONS TO THE DEGREE WHERE THE PEOPLE WHO ARE MAKING A DETERMINATION AS TO HOW TO VOTE ISDISTORTEDOR DISRUPTED OR DESTROYED,THEN, OBVIOUSLY, IT'SA BIG CHALLENGE TO DEMOCRACY, WHETHER IT BE IN THE UNITED STATES OR ANY PLACE ELSE. CHARLIE:DOYOU BELIEVE YOU HAVE A DIFFERENT POINT OF VIEW THAN PRESIDENT-ELECT TRUMPONTHIS, WHO HAS TENDED TO DOWNPLAY THE IDEA THAT IT MIGHT HAVE BEEN THE RUSSIANS? JOHN: EVERYEXPERT I HAVE TALKED TO SAYS IT IS THE RUSSIANS, THEY HAVE PLAYED A VERY MAJORROLE, BUT NOT JUST IN ELECTIONS, CHARLIE. THEYARE EVERY DAY BOMBARDING SOME OF OUR INDUSTRIAL BASIS, PARTICULARLYTHE MILITARY-INDUSTRIAL COMPLEX. THEY ARE BOMBARDING OUR COMMUNICATION SYSTEMS. IT'S JUST A FACT, IT'S WHAT THEY AREDOING. THEY ARE THE BEST AT IT, THE CHINESE ARENEXT, AND THEN YOU HAVE THE EVERYDAYHACKERWHO IS ALSO A SIGNIFICANT CHALLENGE. CHARLIE:BUT WE ALSOHAVECYBER SECURITYAND CYBERSB NICE CAPABILITY. I ASSUME WE ARE USING IT AS WELL. --CYBERESPIONAGE CAPABILITY. JOHN: UNTIL THE PRESIDENT OF THE UNITEDSTATES SETS A POLICY AS TO WHAT YOU DO AND HOW YOU ACHIEVE IT, FOREXAMPLE, RIGHT NOW IFWE THINK THERE IS AN IMPENDING ATTACK, THERE IS NO POLICY AS TO WHAT TO DO. ONCE THERE ISAN ATTACK, THERE IS NOPOLICY AS TO WHAT WE DO IN RESPONSE. SO THEREIS REALLY A LACK OF COHERENCE FROM THEEXECUTIVE RANCH. OUR JOB ISTO LAY-UP -- FROM THE EXECUTIVE BRANCH. OUR JOB IS TO ENACT LEGISLATION IFNECESSARY, AND I AM SURE SOME LEGISLATION WILLBE NECESSARY. CHARLIE:YOU ARESAYINGMIKE ROGERS DOES NOT HAVE A POLICY TO RESPONDTOA CYBER SECURITY INVASION. JOHN: HE HASTESTIFIED THAT THERE IS NO POLICY. CHARLIE:COMING OUT OF THE ARMED SERVICESCOMMITTEE WILL BE A RECOMMENDATION FOR LEGISLATION. JOHN: NOTJUST A RECOMMENDATION, WEWILL ENACTLEGISLATION THROUGHTHE SENATE ARMED SERVICES COMMITTEE. I HAVE RECEIVED ENCOURAGEMENT TO ADDRESS THE SITUATIONBY OUR REPUBLICAN LEADERSHIP. CHARLIE:HAVE YOU HAD ANY CONVERSATIONS WITH PRESIDENT-ELECT TRUMPABOUT THIS? JOHN: I HAVE NOT. CHARLIE:SHOULD YOU? JOHN: I WOULDWELCOME A DISCUSSION ON THIS OR ANYTHING ELSE WITH HIM. I KNOW HIM VERY WELL AND IHAVE HADCONVERSATIONS WITH GENERAL MATTIS, A MANI HAVE KNOWN FOR THE LAST 12 OR 15 YEARS. CHARLIE:YOUR COLLEAGUE AND MUTUAL FRIEND, LINDSEYGRAHAM, ANADMIRER, SAID I'M GOING AFTER RUSH IN EVERY WAYYOU CAN GO AFTERRUSSIA. ITHINK THEY ARE ONE OFTHE MOST HE INFLUENCES ON THE WORLD STAGE. I THINK THEY DID INTERFERE IN OURELECTIONS -- IN OUR ELECTIONS AND I WANTPUTIN PERSONALLY TO PAY THE PRICE. JOHN: MY FRIEND LINDSEY GRAHAM IS ALWAYS SHY AND RETIRING. CHARLIE:NO, HE'S NOT. JOHN: I THINK WE NEED TO HAVE THAT AS PART OF OUR OVERALL PROCESSING OF THESITUATION,AND NOT ONLY WHAT THESITUATIONIS, BUT WHAT WE NEEDTO DO IN ORDER TO COUNTER THIS THREAT TO OUR NATIONAL SECURITY. THAT IS A PART OF IT. ACCORDING TO MOST EXPERTS I TALKED TO, THE RUSSIANS ARE THE LEADINGOFFENDERS, BUT THERE ARE PLENTY OFOTHERS. THE CHINESE, SOME SAY THE LATEST CHINESE AIRCRAFT HASSOME ALARMINGLY SIMILARFEATURES OF THE F-35. SO THERE IS NO DOUBT THAT A GREAT DEAL OFINDUSTRIAL ESPIONAGEIS TAKING PLACE, NOT JUST BY THE RUSSIANS AS WELL. SO WE KNEW TO DEVELOPAN OVERALL POLICY THAT NOT ONLYAPPLIES TO THERUSSIANS BUT TO EVERY OTHER NATION AND EVERY OTHER INDIVIDUAL THAT MIGHTSEEK TO HARM THIS NATION. CHARLIE:EVEN THOUGH THEY DON'T HAVEA POLICY, YOU UNDERLINED THE FACT THAT YOU DO NOT BELIEVE THEADMINISTRATION HAS A POLICY, LISAMONACOSAID SINGLINGOUT INTERNET RELATED DANGERS IS AMONG THE MOSTSIGNIFICANT NATIONAL SECURITY ISSUES FACING THE ADMINISTRATION. JOHN: SOMEONE SHOULD ASK LISA MONACO WHAT IS OUR POLICY IF WE DETECT ANATTACK THAT IS COMING TOTHE UNITED STATES, WHAT IS OUR RESPONSE IF THERE IS AN ATTACK, AND LOOK AT THE WHOLE SCENARIOOF HOW THE UNITED STATES OFAMERICA RESPONDS TO THIS THREAT. THERE IS NONE. CHARLIE:BUT WHY WOULDN'T YOU AS CHAIRMAN OF THE SENATE ARMED FORCES COMMUNITY, REQUEST A MEETING WITH THE PRESIDENT ELECT TO TALK ABOUT THIS? JOHN: I PROMISE YOU, THE BEST WAY TO HAVETHAT DIALOGUE ISTO DECLARE THAT THERE WILL BE HEARINGSANDPOLICY MAKING AND LEGISLATIONCOMING OUT OF THE SENATE ARMED SERVICES COMMITTEE. IPROMISE YOUTHATWILL PROMPT A DIALOGUE, AND IT'S GOINGTO TAKE SOME TIME, CHARLIE. IT'S NOT SOMETHING WE ARE GOING TO BE ABLE TO DO OVERNIGHT. CHARLIE: DO YOU BELIEVE YOU HAVE TO TURN THE PRESIDENT ELECT'S UNDERSTANDING AROUND ON THIS? HE SAID TO TIME MAGAZINE, I DON'T BELIEVE THE RUSSIANS INTERFERED WITH THEELECTION. IT COULD BE RUSSIA, AND IT COULD BECHINA, AND IT COULD BE SOME GUY AT HIS HOME IN NEW JERSEY. IBELIEVE IT COULD'VE HAVE BEEN RUSSIA AND IT COULD HAVE BEEN ANYONE OF A NUMBER OF OTHER PEOPLE, SOURCES OR INDIVIDUALS. JOHN: IN SOME RESPECTS, HE IS RIGHT. ALL OF THESE AREPLAYERSTHAT HE MENTIONED. THE PROBLEM IS THAT HE MAY NOT QUITEUNDERSTANDTHAT THE BEST AT IT IN THE MOSTHOSTILE, AND THE ONES WHO ARE PROBABLY HAD THE MOST SIGNIFICANTIMPACTOVER A NUMBEROF YEARS ARE THE RUSSIANS. THEY ARE THE BEST AT THEIR JOB. ADMIRAL RODGERS HAS BASICALLY SAID THE SAMETHING. ALL THESE EXPERTS HAVE SAIDOUR DIRECTOR OF NATIONAL INTELLIGENCE HAS SAID THAT IT'S THE RUSSIANSWHOARE, BY FAR, THE MOST ACTIVE IN THIS KIND OF BEHAVIOR, BUT IT IS NOTCONFINED TO RUSSIA. CHARLIE:SENATOR MCCAIN, I LOOK FORWARDTO TALKING MORE ABOUT THIS. THANK YOU FOR JOINING US. SEE YOU SOON. ♪ ♪ CHARLIE:WECONTINUE WITH MICHAEL AND DAVID, BOTH FROM WASHINGTON. DAVID,I BEGINWITH YOU. WHY DID THE PRESIDENT TAKE THIS ACTIONTODAY AND ORDER THIS INVESTIGATION? DAVID: I THINK THERE IS A SUBSTANTIAL REGION ANDFOR -- REASONAND FROM EVERYTHING WE CAN TELL, POLITICAL REASON. THESUBSTANTIVE REASON IS IT HAS TAKEN THE INTELLIGENCECOMMUNITY ALONG TIME TO COME TO ALL THE CONCLUSIONSON THE RUSSIAN EFFORTTOINFLUENCE THE ELECTION. THAT'S EVERYTHING FROM THE HACKING OF THE DNC, THE DEMOCRATIC NATIONAL COMMITTEE AND THE RELEASE OF THOSE EMAILS TO THESCANNING OF REGISTRATION DATA, THOUGH IT LOOKS LIKE IN THE END THEY DID NOT TRYTO AFFECTTHE ACTUAL VOTING PROCESS AND MACHINES, AND THEN ALL THE OTHERSURROUNDINGS OF THIS BECAUSE OBVIOUSLY THE RUSSIANS HAVE BEEN HACKING INTO MANY OTHERAMERICAN INSTITUTIONS FOR YEARS. THERE IS ASERIOUSQUESTION ABOUT WHY THE UNITED STATES WAS CAUGHT BY SUCH SURPRISE HERE. ITHINKSUBSTANTIVELY, HE WANTEDTOINFLUENCE FUTURE ELECTIONS. I THINK THEPOLITICALREASON IS EVEN MORE FASCINATING, BECAUSE PRESIDENT-ELECT TRUMPHAS BEEN DENYING THERE WAS MUCH EFFORT TO INFLUENCE THE ELECTION ATALL, AND SECONDLYHE SAID THEREIS NO EVIDENCE THATIT WAS THE RUSSIANS, WHILE THEREIS THIS FLOODOF INTELLIGENCE REPORTS FLOATING AROUND THECITY SUGGESTING IT WAS THERUSSIANS, AND WHO WITHIN RUSSIA DID IT? ITHINK WHATTHE PRESIDENT IS TRYINGTO DO IS FORCE THE INTELLIGENCE COMMUNITY TO PUT ALL THIS DOWN ON PAPER,GIVEIT TO CONGRESSIONAL COMMITTEES, PERHAPS MAKE PART OF IT PUBLIC, BEFORE PRESIDENT-ELECT TRUMP GETS SWORN IN AND IS ABLE TO COME IN AND SAY NOTHING HAPPENED HERE. CHARLIE:MICHAEL, WHAT WOULD YOU ADD TOTHAT? MICHAEL: I THINK DAVID HAS IT EXACTLY RIGHT. IF NOTHING ELSE, IT SORT OF BOXES IN PRESIDENT-ELECT TRUMP. I SHOULD POINT OUT THAT EVEN TODAY,THE ADMINISTRATION RATCHETEDUP WHAT IT HAS SAID ABOUTTHE RUSSIANROLE. ERIC SHULTZ IN BRIEFING REPORTERS AT THE WHITE HOUSE PRESS BRIEFING SAID THAT ITWAS HIGH CONFIDENCETHAT THE CYBER ATTACKS ON THE DNC AND OTHER POLITICAL ORGANIZATIONS AND POLITICAL LEADERS WEREDIRECTED AT THE HIGHESTLEVEL OF THE RUSSIANGOVERNMENT. THAT IS ABOUT AS STRONG AS YOU CANGET. THE PREVIOUS STATEMENT FROM THE INTELLIGENCE COMMUNITY WAS THAT IT WAS -- HIGH CONFIDENCE WAS A TERMOF ART. IN SOMEWAYS, THEADMINISTRATION IS THROWING DOWN THE GAUNTLET, SAYING HERE ITIS,ANDWERE GOING TO COMPILE ALL THIS EVIDENCE AND PRESENT IT TOYOU IN THE NEWADMINISTRATION, AND THIS ISCOMING THE SAMEWEEK THATDOLL TRUMP SAID IN THAT TIME MAGAZINE INTERVIEW HE DOESN'T KNOW IF IT WAS THE RUSSIANS -- THE SAME WEEKEND THAT DONALD TRUMPSAIDMAYBE IT WAS SOME GUY AT HIS HOUSE. CHARLIE:MIKE PENCE HASBEEN GETTING THE INTELLIGENCE BRIEFINGS. NUMBERTWO, THE PRESIDENT-ELECT HAS BEEN TALKING TO THE PRESIDENT WITH SOMEFREQUENCY, IF WE UNDERSTAND WHAT HEIS SAYING, THAT HE'S CONSULTED WITH THE PRESIDENT ABOUT THE TRANSITION AND A RANGE OF OTHER THINGS. HE'STAKENSOME PRIDETHATHE LIKES THE PRESIDENT SO MUCH IN HOPES THE PRESIDENT LIKES HIM, BUT IT'S BEEN A VERYPRODUCTIVE SESSION. YOU WOULD'VE THOUGHTPRESIDENT WOULD HAVE REMINDED HIM WHAT THISADMINISTRATION BELIEVES ABOUT THE RUSSIANS HACKING. >> YOU WOULD THINK,AND SHULTZ WAS PRESSED ONTHAT AT THE WHITE HOUSE PRESS BRIEFINGTODAYAND SAID HE'S NOTGOING TO GIVE A READOUT ON THECONVERSATIONS BETWEEN THEPRESIDENT AND THE PRESIDENT-ELECT. BUT IT'SHARDTOSEPARATEOUT THOSECOMMENTS THAT DONALD TRUMP MADE SORT OFDISMISSING WHATTHE INTELLIGENCE COMMUNITY ISSAYING FROM THE PRESIDENT'S DECISION TO MAKEPUBLIC THIS REVIEWTODAY ANDAS I SAIDBEFORE,RATCHET UP THE LEVEL OF CONFIDENCE THEY HAVE THAT THEY ARE RIGHT ABOUT THIS. CHARLIE:DAVID, WHAT WOULD YOU SAY ABOUTTHAT? DAVID: WHAT ADDS TO THE ODDITY, INADDITION TO WHATEVER BRIEFINGS THEY'VE GIVEN TO VICE PRESIDENT ELECTPENCE, YOU'VE NOWSEEN A RAFT OF MORE TRADITIONAL REPUBLICAN STEP OUT INSAYWE NEEDTO HOLD HEARINGS, WE NEED INDEPENDENTCOMMISSIONS, WE NEED TO HAVE MORE OF THESE DETAILS COME OUT IN PUBLIC. JOHNMCCAIN SAID THE OTHER DAY THATHEWOULD HOLD HEARINGS WITH THE ARMED SERVICES COMMITTEE, NOTONLYOF THE HACKS RELATED TO THE ELECTION, BUTPERHAPSTHE EFFORTS OFRUSSIAN INTELLIGENCE TO GET INSIDE U.S. MILITARY OPERATIONS. WE KNOW, OFCOURSE,THAT THE HACKING THAT TOOK PLACE AT THE DNC ANDELSEWHERE WAS NOTTHE FIRST EFFORT BY THERUSSIANS IN RECENTTIMES. THERE WERE HACKS ON THE STATE DEPARTMENT AND WHITE HOUSE, THE PENTAGON, SO THIS FITS INTO A BROADER CONTEXT. MY GUESS ISTHATIF THE CONVERSATION HAS TAKEN PLACE BETWEEN PRESIDENTOBAMA AND PRESIDENT-ELECT TRUMP,IT'S BEEN IN THE CONTEXTOF,THERE IS A BIGGER RUSSIAN CAMPAIGN OUT HERE ANDIGNORE IT AT YOUR PERIL. CHARLIE: MYIMPRESSION IS THAT THE INVESTIGATORY EFFORT IS BEING YOUR HEADED BY THEFBI, AM ICORRECT? MICHAEL: THAT'S RIGHT, FOR THE IMMEDIATEDNC JOHNPODESTAAND SOFORTH, BUT THEREHAS ALSO BEEN OTHER MEMBERS OF THE INTELLIGENCE COMMUNITY BEING BROUGHT IN. MICHAEL: THE FBI TOOK THE LEAD ON THIS THROUGHOUT, BUTTHIS CLEARLYWILLENCOMPASS THE ENTIRE INTELLIGENCE COMMUNITY. I SHOULD POINT OUT THATPROBABLY THESTRONGEST PUBLIC STATEMENT HAS, FROM ADMIRAL MIKE ROGERS AT THE NATIONAL SECURITYAGENCY, WHO, ALTHOUGH HE DIDN'T SAY RUSSIA, MADE IT ALL THATCLEAR THAT HE WAS REFERRINGTOA NATIONSTATE THAT TRIED TO INFLUENCE OUR ELECTION. HE SAID SOMETHING EVENFURTHER, INTENDING TO AFFECT THE ELECTION. THAT IS OPERABLY THE BIGGEST OPEN QUESTION HERE. IF INDEED IT WAS THERUSSIANS, WHAT WORKSTHEREMOTIVE? -- WHAT WAS THERE MOTIVE? WAS IT TO CREATE CONFUSION IN THE AMERICANPOLITICS, AS THEY HAVE DONE IN MANY OTHER COUNTRIES? OR WASIT A CONCERTED EFFORT TO INFLUENCE THE RESULTS OF THE ELECTION? TO HELP ELECT DONALDTRUMP AND DEFEAT HILLARY CLINTON. THAT ISPROBABLY THE BIGGEST MYSTERY ABOUT THIS. WE DON'T KNOW THE ANSWER. CHARLIE:IS THERE ANY DOUBT THAT THIS WOULD BE TAKINGPLACEHIM IF IT'STAKING PLACETO THE DEGREE THAT THE VARIOUS INTELLIGENCE AGENCIES BELIEVE IT IS, THAT IT WOULD BE CARRIED OUT WITHOUT -- WITHOUTPUTIN'S KNOWLEDGE? >> EVERYONE I'VE RUN INTO WHO WAS IN SENIOR LEVELSOF INTELLIGENCE SAYIT IS INCONCEIVABLE TO THEM THAT SOMEONE WOULD TAKE THERISK OF DOINGSOMETHING THISHIGH PROFILE THAT COULD DRAW A MAJOR RESPONSE FROM THE UNITEDSTATES WITHOUT CLEARING IT FIRSTWITH THE BOSS. MICHAEL:IT'S ALSO TRUE THAT THE RUSSIAN INTENTIONS AND GOALS HERE MAY HAVE CHANGED OVERTIME, THATPERHAPS THERE WAS SOME INITIAL,WHEN THIS BEGAN, IT MAY HAVE BEEN AN EFFORT TO HELP TRUMP. IT MAY HAVE BEEN ANEFFORT, THEREARE CERTAINLY INDICATIONS THATPUTINAND HIS TOP AIDES WERE NOT ENTHRALLED WITH HILLARY CLINTON. AT SOME POINT,THOUGH, THEY MAY HAVE READ THE POLLS THE WAY EVERYBODY ELSEDIDANDASSUMED THAT HILLARY CLINTON WAS GOING TO WIN, AND THEY MAYHAVE SCALED BACK SOME OF THEIRACTIVITY. ALTHOUGH THAT IS NOT ENTIRELY CLEAR, EITHER. WE KNOW THEY WEREINTHE DNC, THEY WEREHACKING EMAILS AT LEAST THROUGH THESUMMEROF 2016. IT ISSTILL NOT CLEAR HOWLONG IT WENT ON. THERE ARE SOME INDICATIONS IT MAY HAVE CONTINUED FOR A LITTLE BIT OF TIME AFTER THAT. AND ALSO ISHOULD POINT OUT THAT THERE WAS A LOT OF CONCERN OVER THE SUMMER ANDFALLABOUT THOSE PROBES OF STATE ELECTION SYSTEMS. THAT REALLY RANG ALARM BELLS, SUGGESTING THEY MAY HAVE BEEN TRYING TO HACK THE ELECTIONS THEMSELVES,ANDI THINK THE ADMINISTRATION HAS MADE CLEAR THAT THAT DIDN'T HAPPEN. CHARLIE:A COUPLE OF FINAL QUESTIONS. AS SOON AS WE HAD SOMEEVIDENCE THAT HACKING HADTAKENPLACE AND THE FBIJUMPED ON THIS, MY UNDERSTANDING IS THAT THE PRESIDENT OF THE UNITEDSTATES, PRESIDENT OBAMA SAIDTHERE WOULD BE A PROPORTIONATE RESPONSE, THAT INTELLIGENCE AGENCIES HAD IMMEDIATELY DUGINTOTHIS, FROM THE FBI, THE CIA, DEFENSE AND OTHERPEOPLE,AND THAT THERE WAS GOING TO BE A PROPORTIONATE RESPONSE. HASTHERE BEEN A RESPONSE, AS FAR AS WE KNOW? >> THEMAIN RESPONSE WE'VE SEEN SO FAR HASBEEN SOME WARNINGS TO THE RUSSIANS THAT PRESIDENT OBAMA GAVE DIRECTLY WHEN HE LAST MET PRESIDENTPUTIN INCHINA. AWARNING SENT THROUGH A SYSTEM THAT IS USED FORBOTHCYBER AND NUCLEARWARNINGS, BUT IF THERE HASBEENA PUNISHMENTTO, OF COSTTOPRESIDENT PUTIN FOR THIS, WE HAVEN'T SEEN IT. MAYBE THERE HAS BEEN SOME KIND OF COVERTEFFORT, BUT IT HAS BEEN PRETTY SUBTLE. IT WAS JOEBIDEN WHO SAID ON ONE OF THE SUNDAY SHOWS BEFORE THE ELECTION, WE WILL COME AFTER PUTIN, ANDHE WILL KNOW IT EVEN IF NOBODY ELSE DOES. BUT SOFAR, EVIDENCE OF THAT IS PRETTY SCARCE. MICHAEL: THIS BECAME PUBLIC TODAY BECAUSE LISAMONACO HAD BREAKFASTWITH THEREPORTERS. SHE STARTEDWITH AN OVERVIEW ABOUT THREATS TO THE COUNTRY, THREATS TO THEHOMELAND, AND TALKED ABOUT THE CYBER THREAT. SHE SAID WHEN THEREARE CYBER ATTACKS THAT THREATEN AMERICAN INTERESTS, WE WILL ACT TO PROTECT OURINTERESTS. I ASKED HER LATERIF THE U.S. GOVERNMENT HAS TAKEN OR WILL BE TAKING STEPS TOIMPOSECOSTS ON THE RUSSIANS AS A RESULT OF THESE CYBERATTACKS,AND SHE DID NOT ANSWER THATQUESTION. CHARLIE:SOMEONE ONCE SAID TO ME AFTER THE RUSSIANS WERE ACCUSED OF DOING THIS THAT THERESPONSE, THE PROPORTIONATE RESPONSE WOULD BE SOMETHING THAT WOULD BE DONE SO THAT PUTIN KNEW WHAT ITWAS ABOUT, BUT IT WOULDLOOK FOR CREDIBILITY WITHIN RUSSIA, SO IT WOULD NOT BE DONEWITH A LOTOF BELLSAND SOUNDINGS. >> THAT'S RIGHT, CHARLIE, BUT THERE IS A RISK TO THAT AS WELL. THERE'S ALWAYS A TEMPTATION, LET'S KEEP IT QUIET AND IN THE FAMILY,BUT ONE OF THE BIGGEST PROBLEMSINCIBER, AS WE'VE DISCUSSED ON PAST SHOWS, IS ESTABLISHING SOME SENSE OF DETERRENCE. IT DOES NOT EXIST IN THE CYBER REALM THE WAY IT DOES IN NUCLEAR. IF YOU'RE GOING TO ESTABLISH DETERRENCE, YOU HAVETO HAVE A PRETTY PUBLIC RESPONSE SO THAT THE NEXTTIME, IS NOT THE RUSSIANS, BUTINSTEADTHE NORTH KOREANS ARE THE IRANIANS ARE THE CHINESE OR SOMEONE ELSE WE ARE NOT INKINGUP, THEY UNDERSTAND THIS IS NOT A FREE FIREZONE. CHARLIE: DAVID,MICHAEL, THANK YOU SO MUCH. BACK IN A MOMENT. STAY WITH US. WE NOW TURN TO THE LATEST NEWS FROM THE TRUMPTRANSITION. JOINED BY MAJORGARRETTOF CBS NEWS, WHO'S BEEN COVERING NOT ONLY THE TRUMP CAMPAIGN BUTTHE TRUMPTRANSITION. MAYOR RUDYGIULIANIWITHDREWHIS NAME FROM CONSIDERATION. GIVE US SOME SENSE OF WHAT WAS GOING ON THERE? >>RUDY GIULIANI APPRECIATES OPERA. HEENDORSEDDONALD TRUMP RIGHT BEFORE THE NEW YORK PRIMARY IN APRIL AND BECAME HIS MOST AGGRESSIVE AND MOST DEEPLYLOVED -- BECAUSE I THOUGHT THIS SO MANY TIMES ON THE CAMPAIGN TRAIL --SURROGATE FOR DONALD TRUMP, AND HE IS THE ODD MANOUT. SPECTACULARLY THE ODD MAN OUT IN THE TRUMPTRANSITION. IT'S ALMOST INCONCEIVABLE TO SOME IN THE TRUMPTRANSITION THAT RUDY GIULIANI WOULD NOT FIND A PLACE WITHIN THE TRUMP CABINET. THAT'S RELATED TO TRUMP'S ON INSTINCTS, BUT IT'S ALSO RELATED TO GIULIANI'S MISSTEPS. TRUMPOFFERED HIM THE POSITION OF ATTORNEY GENERALANDDIRECTOR OFHOMELAND SECURITY AND HE TURNED THEM DOWN. FOCUSING ENTIRELY ON SECRETARY OF STATE, THE POSITION HE WANTED AND COVETED, BUT IN THE END, TRUMPWOULD NOT GIVE HIM. GIULIANISINCETHAT, ANDPULLED HIMSELF OUT BEFORE SUFFERING THE INDIGNITY OF SOMEONE ELSE GETTING THAT SLOT. SO IN EVERY WAY, THIS DEEPLY IMPORTANTAMERICAN POLITICAL FIGURE,WHOREVOLUTIONIZED NEW YORKCITY, ANDWHO WAS THE BIGGEST, IF NOT MOST CONSPICUOUS EXPONENT OFTHE TRUMPAPPROACH TO THEPRESIDENCY, WILL BE LEFT ON THE SIDELINES. IT'S AN AMAZING STORY. CHARLIE:SOCIALIST LEFT IN THE RUNNING FOR SECRETARY OF STATE? >>I'VE BEEN TOLD THAT THERE ARE ONLYTWOREALLY LEGITIMATE FIGURES WHO MAKEIT THE POSITION OFSECRETARY OF STATE. MITT ROMNEY AND THE CHAIRMAN OF THE BOARDOFEXXON MOBIL, REX TILLERSON. HE BRINGS FOR DONALD TRUMP A COUPLE OF THINGS YOU MAY NOT ASSOCIATE WITH THE POSITION OF SECRETARY OF STATE. HEHAS NO GOVERNMENT EXPERIENCE. HE'S NOTA TRAINED FOREIGN SERVICEDIPLOMAT BY ANY STRETCH OF THE IMAGINATION, BUT HE IS A BIGAMERICANBUSINESSMAN, A CORPORATE CHIEFTAIN WHO HAS DONE DEALS. BECAUSE EXXON MOBIL OPERATES IN MORE THAN 50COUNTRIES, IT EXPLORES FOROIL AND NATURALGAS ON SIXOF THE SEVENCONTINENTS ON EARTH, HE HAS, IF YOU WILL, OHCORPORATE WORLDVIEW. HE HAS EXPERIENCEWITH LOTS OF DIFFERENT GOVERNMENTS, AND POSSIBLY MOST IMPORTANT, HEHAS LONG EXPERIENCE IN RUSSIA AND WITH VLADIMIRPUTIN. THEY KNEW EACH OTHER BACK IN THE 1990'S, WHENPUTINWAS AKGB FUNCTIONARY IN THE GOVERNMENT. IFYOU'RE LOOKING FOR AN ANALOGY, LOOK FORTHE CHINESE AMBASSADORFOR DONALD TRUMP, CURRENTLY THE GOVERNOR OFIOWA, WHO GOTTO KNOW THE CURRENT HEAD OF CHINA WHEN HE WAS A FUNCTIONARY IN THE CHINESE BUREAUCRACY. IF YOU LOOK AT THAT AS A TEMPLATE, YOU MIGHT SEE REX TILLERSON ASSOMEONE PARTICULARLYAMENABLE TO PRESIDENT-ELECT TRUMP'S WORLDVIEW. CHARLIE:IT'S CLEARTHAT THE PRESIDENT HAS WHATEVER DIFFERENCES THERE WERE WITH MITT ROMNEY, WHATEVER WAS SAIDABOUT BOTH MENIN THECAMPAIGN, THAT THEY WORK THEIRWAY THROUGH THAT AND THIS NOW IS A CONVERSATION WHICH IS APOSITIVECONVERSATION ABOUT THE DIFFICULT PROCESS OF SELECTING A SECRETARY OF STATE. ONTHE ONE HAND, THE MENU HAS TO MAKE THE DECISION FOR THE BENEFIT OF THECOUNTRY, AND ON THE OTHER HAND A MAN WHO HAS HIS OWN INTEGRITY AND IS PREPARED TO GO TOWORK,OR AMAN THAT HE WAS DEEPLY CRITICAL OF DURING THE CAMPAIGN. >>WHEREVER THISLANDS, IF MITT ROMNEYBECOMES OR DOES NOT BECOME SECRETARY OFSTATE, WHEN HE LEAVES THE PROCESS WITH IS A DIFFERENT APPRECIATION OF DONALD TRUMP, AND IMPORTANTLYTO MITT ROMNEY, ADIFFERENT APPRECIATION OF DONALD TRUMP TO MITTROMNEY, JUST AS DONALD TRUMPHAS A DIFFERENT APPRECIATION OF THE CURRENT PRESIDENT, BARACKOBAMA. I ATTENDED MORETHAN70MITT ROMNEY RALLIES AND THERE WAS NOT ONE SCINTILLA THE--NOT ONE SCINTILLA OF APPRECIATIONFOR DONALD TRUMP. DONALD TRUMPHAS A DEEPER APPRECIATION OF BARACKOBAMA AS PRESIDENT,AS A MAN, AND A FIGURE IN HISTORY. SO THERE ISEVOLUTION WITH DONALD TRUMP. MITT ROMNEY IS IN THE FINALTWO OF ANEXHAUSTING, EVER-EXPANDING LIST OF POTENTIAL SECRETARIES OF STATE. CHARLIE:WITHRESPECT TOOBAMA, THE PRESIDENT-ELECT IS REFLECTING A VERY ADULT BEHAVIOR. >>IT IS ANDADOGBEHAVIOR, BUT A BEHAVIOR I WOULD CAUTIOUSLY, CHARLIE,SUGGEST --ADULT BEHAVIOR, BUT A BEHAVIOR IWOULD CAUTIOUSLY SUGGESTINAWE. IREAD A LOT ABOUT THOSE BEFORE THETHREE HOURS PRIVILEGED ENOUGH TO COVER. ITIS, IN ITS OWN SENSE, ANSWE- INSPIRING --AN AWE-INSPIRING INSTITUTION. THE AMERICANCULTURE NEEDS TO APPRECIATE ABOUT DONALD TRUMP THAT IN SOME AREAS, HE ISAWED BY THE INSTITUTION AND SOME WHO HAVE ACHIEVED IT. IN WAYS PERHAPS SURPRISING TO HIMSELF, DONALD TRUMPHASCOME TO APPRECIATETHAT. CHARLIE:HE IS A MAN WHO WOULD MYERSSUCCESS --WHOADMIRES SUCCESS. LET US TALK ABOUT THIS IDEA OF HOW HE DOES IT, FAR MORE THAN BA3 HAS THROWN HIMSELF INTO THIS PROCESS, INTERVIEWED PEOPLE, IS ON THE PHONE CONSTANTLY. THE IMPRESSION I HAVE IS THAT BY SELECTION OFOTHERPRESIDENTS WAS MUCH MORE A PRODUCT OF A TRANSITION TEAM ANDINVOLVEMENT BY THEPRESIDENT-ELECT,MUCH MORE INVOLVEMENT OF A TEAM. THIS PRESIDENT WANTS TO TOUCH ANDTALK TO AND GET A PERSONAL SENSE OF THE MEN AND WOMEN HE WANTS TO SERVE. >>EXACTLY. I THINK IT'S FAR TOOEARLY, CHARLIE, TO OFFERAN APPRAISAL OF THISAPPROACH THAT IS EITHER POSITIVE OR NEGATIVE. ITHINKTHE COUNTRY AND THOSEOF US OBLIGATED TO COVER THIS PROCESS AS IT UNFOLDS BEFORE US NEED TO TAKEITSTEP BY STEP AND JUDGEITASTHERESULTS SPEAK FORTHEMSELVES. REMEMBER, JIMMY CARTER WAS THE PRESIDENT WHOWAS DEEPLY INVOLVED IN THE DAY-TO-DAYAND HOUR-BY-HOUR DETAILS OF HIS PRESIDENCY. ITBOGGEDHIM DOWN ANDSEPARATED HIM FROM THE LARGER VISION. THERE IS A DANGER INVOLVED IN A KIND OF INVOLVEMENT ANDGET, WE TEND TO APPRECIATESOMEONEWHO HAS AN APPRECIATION FOR DETAILS ANDEVALUATING SOMEONEATTHE PERSONAL GUT LEVEL. IFI HAVE LEARNED ANYTHING ABOUT PRESIDENT-ELECT TRUMP IN MY 18 OR SOMONTHS COVERING HIM IT IS THAT HE MAKESVERYIMPORTANT AND CRUCIAL SNAP JUDGMENTS ABOUT PEOPLEBY APPRAISINGTHEM HIMSELF, AND NOT GETTING IT FILTERED BYTHOSE AROUND HIM. THAT IS AN IMPORTANT CHARACTERISTICOFANEMERGING TRUMP PRESIDENCY. IT JUST IS A REALITY. CHARLIE:THANK YOU SO MUCHFOR JOINING US. IT IS A PLEASURE. WE'LL BE RIGHT BACK. STAYWITH US. ♪ CHARLIE: MORE ON THISWEEKEND. THE ANNOUNCEMENT, I HAD HEARD BEFORETHATGIULIANI WAS OUT OF THE RUNNING. IS THAT SIMPLY TODAY'S ANNOUNCEMENT TO MAKE THATCLEAR THATTHISPOSSIBLE NOMINEE WITH A JEW HIMSELF BECAUSEOF --WITH JEWHIMSELF --WITHDREW HIMSELF? >>HENOTONLY MADETHE OFFICIAL WORD THAT GIULIANI WAS WITHDRAWING HIMSELF FROMANY ADMINISTRATION JOB, BUT REINCE PRIEBUS STATED IN AQUOTE ON THIS ANNOUNCEMENTTHAT GIULIANI WASVETTED THOROUGHLY BY THE TRUMP TEAM AND PASSEDWITH FLYING COLORS. ITCLEARSRUDYGIULIANI OF ANY RUMORS OF WHETHER HE WAS PASSED OVER FOR SECRETARY OF STATE. YOUR REPORTING IS CORRECT. IT MATCHES WITH MY REPORTING WHICH ISTHATRUDY GIULIANI IS FADING IN THE VIEW OF DONALD TRUMP. CHARLIE:DOWE KNOW WHETHERHE COULD HAVEBEEN ATTORNEYGENERAL WHETHER HE HAD NOT INSISTED ON BEING SECRETARY OFSTATE? PHILIP:I DON'TKNOW FOR SURE. THERE WOULD HAVE BEEN SOME DISCUSSION ABOUT WHETHER JEFF SESSIONSSHOULDGET IT OR RUDY GIULIANI, SO YOU KNOW, POTENTIALLY, HE COULDHAVE GOTTEN HIMSELF A JOB. HE IMAGINEDGIULIANI --BUT GIULIANI WAS INSISTENT FROM THE BEGINNING THAT STATE WAS ALL HE WANTED. CHARLIE:HE COULD HAVE PROMISED SESSIONSA SUPREME COURT APPOINTMENT OR SOMETHING LIKE THAT. PHILIP: EXACTLY. CHARLIE:WHICH WOULDHAVE BEEN ENTIRELY WITHIN THE SORT OF THING HE MIGHT WANT BECAUSE OF HIS LIFE WITHIN, YOU KNOW, THE JUDICIALPROCESS OFBOTH IN TERMSOFLAW ENFORCEMENTALSO IN TERMS OF JUDGING. LET ME TURN TO THE SECRETARY OF STATE. WHAT DO WE KNOW? PHILIP:WELL, WE KNOW THAT THERE ARETWO PEOPLE CONSIDERED LEADING CANDIDATES. MITT ROMNEY WHOHAS BEEN A CANDIDATE FOR SOME TIMEAND A NEW FIGURE, REX TILLERSON, THE CEO OF EXXON MOBIL, AND INTERNATIONAL BUSINESS EXECUTIVE WHO HAS DONE WORK AROUND THE WORLD BECAUSE OF HIS ROLE IN THE OILINDUSTRY ANDINCLUDING WITH RUSSIA. HE HAS RELATIONSHIPS WITH THE PUTINGOVERNMENT AND HAS BEEN AROUND THE WORLD. HEDID-- MITT ROMNEY MIGHT BE AMORE TRADITIONAL POLITICALFIGUREIN THAT DIPLOMATIC POST. BOTH ARE LIKED BY DONALD TRUMP. THERE AREPOLITICAL CONSIDERATIONS. TRUMP SUPPORTERSARE HOSTILE TO THE IDEA OF MITTROMNEY, OF REWARDING A FORMER ANTAGONIST WHO WAS NOTLOYALON THE CAMPAIGN AND WAS TOLISTEN -- WITHTILLERSON, HE IS MORE OF AN UNKNOWN. I DON'T KNOWOFLINDSEY GRAHAM WOULD SCRUTINIZE HIS TIES WITH RUSSIA. CHARLIE:TAKE US INSIDETHE TRUNK TRANSITION TEAM. WHAT OTHER CONFLICTS BETWEEN DIFFERENT GROUPS? PHILIP: THERE ARE DIFFERENT PERSPECTIVES ON SECTORS OF STATE. THIS HAS BEENGOING ON FOR SOMETIME NOW, REALLY FOR ABOUT A MONTH,THIS DISCUSSION ABOUT WHO THEDIPLOMATS SHOULD BE. MIKEPENCE IS SAID TO BE IN COURAGE AND REINCE PRIEBUS. BOTH HAVE RELATIONSHIPS WITH ROMNEY AND SIT IN WITH THE PARTY ESTABLISHMENT AND THERE ARE OTHER ADVISORS INSIDE THE CIRCLE,ESPECIALLYKELLYANNE CONWAY,WHO HAVE BEEN HOSTILE TO THE IDEA OF ROMNEY. THAT IS WHY TILLERSON HAS EMERGED. HE MATCHES THE QUALITIES FROM TRUMP LIKES IN ROMNEY. HE HAS ACERTAINSTATURE AND GRAVITAS ANDCAN TRAVEL THE WORLD WITH THE AUTHORITY OF A PRESIDENT. AND THEN TILLERSON ISSEEN AS SOMEONEWHOCARRIESHIMSELF IN A SIMILARWAY AND I THINK WHEN HE CAME TO MEETWITH TRUMP THIS WEEK ATTRUMP TOWER, HE WAS VERY IMPRESSIVE AND THEY HAD A GOOD CONVERSATION. THAT IS WHAT PEOPLE ARE SAYING. THOSE ARETHEQUALITIES TRUMP IS LOOKINGFOR IN A DIPLOMAT. IT IS ATTHISPOINT A POLITICAL CALCULATION OF WHETHER HE GOES WITHROMNEY, WHO IS MORE OF THE PARTYINSIDER, ATTHE RISK OF ALIENATING HIS LOYAL BASE AND ADVISORS, OR GOING WITH SOMEONE NEWLIGHT TO LISTEN. -- LIKE TILLERSON. CHARLIE:IS THERE PUSHED BACK BECAUSE HE PRAISES THE PRESIDENT? PHILIP:NOT WITHIN THE TRANSITION TEAM THAT I HAVE HEARD OF. ITHINK A LOT OFHIS VOTERS ARE TRYING TO GIVE HIM THE BENEFIT OF THEDOUBTHERE. ITIS ONE THING TO HAVE A MEETING WITH AL GORE BECAUSE YOUR DAUGHTERTRIED TO SETUP A MEETINGAND HE LISTENED TO WHAT THE GUY HASTO SAY. IT IS ANOTHER THING TO CHANGE HER VIEW ONTHEPOLICIES. TRUMPIS AS FAR TO THE RIGHTON THE CLIMATE ENVIRONMENTAL ISSUES AS HE CAN BE. HE JUST APPOINTEDPREWITT, -- PRUITTTO BE THE HEAD OF THE EPA. IT IS PRETTY CLEAR, WHATEVER AL GORE TOLD TRUMP IN THATMEETING, HE'S NOT REALLY HEATING THAT COUNSEL. CHARLIE: WHAT MIGHT WE LEARN ABOUTHOWPRESIDENT-ELECT TRUMP WILL GOVERN BASED ON HOW HE IS RUNNING THE TRANSITION? PHILIP:HE'S VERYHANDS-ON AS YOU GUYS WERE TALKING ABOUT IN THE EARLIER SEGMENT. HE IS INTERVIEWING ALL OF THESE PEOPLE PERSONALLY. HE'S WEIGHING IN ONTHEM PERSONALLYAND MAKING ASSESSMENTS ABOUT WHETHER THEY WOULD BE A GOOD FITAND HIS CABINET,WHETHER THEY HAVE THE LEADERSHIP STRENGTH HE IS LOOKING FOR. HE HAS BEEN REALLYDRAWN TO ALPHAS,TO LEADERS, TO PEOPLE WHO ARE CEO'S IN THE CORPORATE WORLDORMILITARY GENERALS. HE'S NOT LOOKINGATACADEMICS, POLICY MINDS, FOLKS WHO SPENT YEARS READING BOOKS ABOUT THINGS. HE WANTS PEOPLE WHO HAVE BEEN IN THE REAL WORLD, MAKING DECISIONS THAT HAVEIMPACTS ON MARKETS AND GLOBAL AFFAIRS. THAT IS THE APPROACH IS TAKING TOO GOVERNING. THE BIGQUESTION MARK I HAVE IS WITH THE POLICIES WILL LOOK LIKE. WE HAVE NO IDEAWHAT KIND OF POLICIESTHEY WILL MOVE FORWARD WITHOUT THE THE INAUGURATION. THEREISA POLICY TEAM IN WASHINGTON DEVELOPING ANAGENDA FORTHE FIRST HUNDRED DAYS, BUT THOSE DETAILS HAVE NOT BEEN RELEASED PUBLICLY. CHARLIE:THE PRESIDENT-ELECT HAS TALKED ABOUTSOME OF HIS PRIMARY PRIORITIES IN TERMS OF -- PHILIP: OFCOURSE. CHARLIE:IN TERMS OF IMMIGRATION, TRADE, AND TAX REFORM. PHILIP:OFCOURSE. WE HAVETO LOOK AT WHATSOME OF THOSE DEALS WITHCONGRESS MIGHT LOOK LIKE. THERE ARE A LOT OF DETAILS TO FILL IN. CHARLIE:WHAT ROLE IS STEVE BANNON PLAYING? PHILIP:A VERY INFLUENTIAL ROLE. HE ISWITHTHE PRESIDENT-ELECT ALMOST EVERY DAY, WEIGHINGIN ON A LOT OF THESEAPPOINTMENTS. HE IS MAKING HIS VIEWS HEARD ON SOME OF THESE BIGJOBS, CERTAINLY SECRETARY OFSTATE EIGHT AND SOME OF THE OTHERS. THEY-- SECRETARY OF STATE AND SOME OF THE OTHERS. THE ASSISTANTSECRETARY AT THE AGENCY, THEY HAVE ALSO NOT YET ANNOUNCEDSENIOR WHITE HOUSE STAFF POSITIONSBEYONDREINCE PRIEBUS AND STEVE BANNON AND THE WHITE HOUSE COUNSEL. THERE IS GOING TO BESOME GIVE ANDPULL ABOUT WHOFEEL THEM AS JOBS. WHO IS THE WHITE HOUSE, WHO IS GOING TO BE THE DEPUTYCHIEF OF STAFF, LEEIS ON THECONGRESS, VICE PRESIDENT-ELECT PENCE'S OFFICE. THE REPUBLICANNATIONAL COMMITTEECHAIRMANSHIPISA JOB THAT REINCE PRIEBUSIS VACATING. ITWILL BE THE POLITICALARM. IT STARTS TO TAKE SHAPE EARLYON AND THERE IS A LOT OF DIFFERENT CANDIDATESIN THE MIX FOR THAT. WE ARE HEARING THE LEADING CONTENDER SEEMS TOBE RONA ROBBIE MCDANIEL. CHARLIE:IS IT AN ACCURATE STATEMENT OF WHICH SEEMS TO BE THEIMPRESSION THAT WHILE DONALD TRUMP ISURGED NOT TO TWEET AS MUCH AS HE DOES, IT IS IRRESISTIBLE FORHIM? PHILIP:THAT IS A GREAT QUESTION. HE HASINDICATEDHE WILL CONTINUE MAKING HIS VIEWS KNOWN ON TWITTER. HE HAS BEEN DOING IT EVERYDAY. HE PLANS TO CONTINUE INTO THE WHITE HOUSE. THERE HAS BEEN SOME SUGGESTION THATPERHAPS HE WOULD BACK OFF OFTWITTERAND ONE PERSON MENTIONED SECRETSERVICE WOULD HAVE SOMETHING TO SAY ABOUT THAT, BUTIF HE ISABLE TO TWEET, HE WILL TWEET. HE WANTSTOCOMMUNICATE DIRECTLY WITHTHE AMERICAN PEOPLE AND THATIS WHAT WE HAVE BEEN SEEING THROUGHOUT THE CAMPAIGN AND DURING THIS TRANSITION. HE REALLY WANTS TODOEVERYTHING HE CAN TO BREAK THROUGH WHAT HE SEES AS A PRESS FILTERANDSPEAK DIRECTLY TO PEOPLE. THAT IS TWITTER, RALLIES,DOING COLLINS ONRADIO, AND --CALL -INS ON RADIO. CHARLIE:WE WILL BE RIGHT BACK. STAY WITH US. ♪ CHARLIE:AS ITHAS,SINCE 1927, TIME MAGAZINE ANNOUNCEDITS PERSON OF THEYEAR THISWEEK. THIS TIME ITIS THE INDIVIDUAL WHOFOR BETTER OR WORSE HAD THE MOST INFLUENCE ON THE EVENTS OF THE YEAR. PRESIDENT-ELECT DONALD TRUMP MIGHT BETHEOBVIOUS CHOICE BUT THE NATION REMAINS DIVIDED OVER WIDE. WITH ME AS NANCY GIBBS, THE MANAGINGEDITOR OFTIME. I'M PLEASED TO HAVE HER BACK AT THIS TABLE. YOUHAS ALWAYS FRAMED THIS AS THE PERSON WHOHAS THE MOST INFLUENCE, NOT THE MOST POPULAR. THIS IS A SLAMDUNK, ISN'T IT? NANCY:WHAT IS INTERESTINGTO ME IS, WHOHAS HAD THE MOST INFLUENCE ON THE YEAR FOR BETTER OR WORSE? IT SEEMS LIKE UNIVERSAL AGREEMENT THAT HE HAS THE MOST INFLUENCE ANDHIS AGREEMENT OVER WHETHER IT WAS FOR BETTER OR FOR WORSE. THIS IS ONE OFTHE THINGS THAT WEREALLY LOOKED ATIS THAT EVERYPRESIDENTIAL ELECTION,WE NAMED BARACK OBAMA FOUR YEARS AGO AND EIGHT YEARS AGO. WE NAMED GEORGE W. BUSH 12 YEARS AGO AND 16 YEARSAGO. IN PRESIDENTIAL ELECTION YEARS, IT WOULD BEUNUSUAL FORSOMEONE OTHERTHAN THE NEWLY ELECTED PRESIDENT TO BE THE DOMINANT FIGURE THAT YEAR. IN ANY PRESIDENTIALYEAR, THE COUNTRY IS DIVIDED. ROUGHLY HALF THE COUNTRY VOTES FOR ONE OR THE OTHER. THERE IS SOMETHING THAT FEELS DIFFERENT THISYEAR, AT LEAST FROM WHERE ISIT,OF THE LEVEL OF SURPRISE AT THE OUTCOME, WHICH SPEAKS TO HOW MANYPEOPLE WHO WERE MEANT TO BE THEEXPERTS AND THE DATA ANALYSTS AND POLLSTERSDID NOTSEE HIS VICTORY COMING, AND THEREACTION SINCETHENTHAT EVEN WHEN YOU THINK ABOUT BUSH ANDGOREIN 2000 WITH THE EXTRAORDINARY FIVE-WEEK LONGDRAMA,EVEN THAT ONE DID NOT FEEL ASDRAMATIC AND FRAUGHT ASTHISONE, AND THAT IS A LOT OF THE CHALLENGE THAT THE PRESIDENT-ELECT I THINK FACES. HE TALKS ABOUT WANTING TOBRING THE COUNTRY TOGETHER AND HE APOLOGIES THAT THAT REPRESENTS A SIGNIFICANT --RECOGNIZES THAT THAT REPRESENTSA SIGNIFICANT CHALLENGE. HE TALKS ABOUT IT AS AN HONOR. WE HAVE RUN INTO THAT FORYEARS. IT SOUNDSLIKE THE KINDS OF THINGS PEOPLE ON WITHPEOPLE WITHOUT THE END OF THEGEAR AND BE A NOISEHAS -- THEYEAR,AND WE HAVE ALWAYS SAIDTHAT ITISA MEASURE OF INFLUENCE. LAST YEAR, WE PICKED ANGELA MERKEL. THE POSITION SHE TOOK ON THE REFUGEE CRISIS AND THEEUROZONE AND ON THE ECONOMIC POLICY IN EUROPE MADE HER PRETTY DIVISIVE FIGURE AS WELL. SHE WAS BY NO MEANS UNIVERSALLY ADMIRED. CHARLIE:AND SHE SUFFERED POLITICALLY EVEN THOUGH SHE WILL RUNFOR REELECTION. SHE IS UP FOR REELECTION. WE WILL HAVE SOME CHANGE GOING ON IN ITALY. THE NETHERLANDS I THINK HAS AN ELECTION. WE SAW AN ELECTIONIN AUSTRIA. THE WHOLEIDEA --IF I THOUGHT OF ANYTHING OTHER THANTRUMP, TO BEOBVIOUS, AT THIS PARTICULAR YEAR, BECAUSE YOU HAVE FRAMED THE QUESTION, IT WOULDBE POPULISM AS AN IDEA. NANCY:WEHAVE A STORY ABOUT THE RISE OF THEPOPULISTSAROUND THE WORLD. NIGELFARAGE,THE PERSON IN THE PHILIPPINES. ONE OF THE REASONS WE WERE NOT TEMPTEDTODO A GROUP ISWHAT IS REMARKABLE ABOUT ON TIME THAT WE HAVE NOT SEEN BEFORE ISSOMEBODY WHO COMESINAND DEFIES ALL EXPECTATIONS, BREAKS ALL THE RULES,SHATTERS EVERY SORT OF NORMAND CONVENTION OF HOW YOU RUN FORPRESIDENT, DEFEATED NOT ONE BUT BOTH MAJOR POLITICAL PARTIES ON HIS WAY TO WINNING, IT -- CHARLIE:AND DEFEATED TWO DYNASTIES. NANCY:AND DIDITWITH LARGELY BASED ON HIS OWN INSTINCTS, NOT AHUGECADRE OF ADVISORS AND POLLSTERS, THE HELP OF THE REPUBLICAN PARTY INFRASTRUCTURE OR DONOR CLASS. THE ALARM ISARMY OFPEOPLEWHO ARE USUALLY A MOUNDOPENING PRESIDENTIAL CANDIDATE AND TAKING SOME RESPONSIBILITY FOR THEVICTORY, -- HE HAS A SMALL COTERIE OF ADVISORS AND HIS KIDS. CHARLIE:THIS WAS A TRANSFORMATIVE ELECTION IN TERMS OF THE WAY PEOPLE WHEN THE PRESIDENCY? NANCY:THERE ARE QUESTIONS FOR JOURNALISTS COMING OUT OF THIS, ONE OF WHICH WILL BE,DO WE SEE OTHER POLITICIANSTRYING TO COPY HISMODEL AND CAN THEY? IT'S POSSIBLE THAT HE WASUNIQUE IN THE ABILITYTOACCOMPLISH WHAT HE DID. I THINK OF THE MANY THINGS ABOUT THE 2016RACE THAT WAS UNPRECEDENTED,WE HAD TO BEEN CANDIDATES WHO WENT INTO IT WITH 100% NAME RECOGNITION. ITIS EASYTO FORGET THAT DONALD TRUMP HAS BEEN A VERY FAMILIAR FIGURE INMILLIONS OF PEOPLE'S LIVING ROOMS FROMHIS TELEVISIONCAREER QUITE APART FROM HIS LIFEAS A REAL ESTATE BARON AND CASINO OWNER. SELF-PROMOTION WASCENTRAL TO HIS BRAND. PEOPLE FELT THEY KNEW HIM. YOU KNOW, THE LIFETIME THEM, THEY HATED HIM, THEYFELT THAT THEY KNEW WHAT HE WASABOUT FROM THE BEGINNING. THAT IS HARD FOR SOMEONE ELSE TO REPLICATE. CHARLIE:I THINK ALSO, AND I THOUGHTABOUT THIS MORE RECENTLY THAN I DID BEFORE THEELECTION, IS THAT,AND HE MAYHAVE UNDERSTOOD THIS, IN TERMS OF THE WINNING OF THE PRESIDENCY, THE DISRUPTIVETHIS OF THE WAY HE RAN HIS --DISRUPTIVENESS OF THE WAY HE RAN HIS CAMPAIGN, THE ATTACKS ON OTHERPEOPLEMADE HIM BE PERCEIVED BYHISPEOPLE WHO WERE ENTHUSIASTIC ABOUTHIMAS A LEADER, A STRONG LEADER. THAT WAS PART OFHOW HEVIEWED THEDISRUPTION, THAT IT WAS NECESSARY TO OVERCOME THE CHALLENGE HE HAD ACHIEVED. CHARLIE:THE --NANCY:THE SUBTEXTOF IT, WHATEVER OUTRAGEOUS THING HE WASSAYING, THIS IS SOMEONE WILLING TOSAY CONTROVERSIAL THINGS ANDSO, EVEN ON ELECTION DAY, AS HE INJURED UP WINNING --ENDEDUP WINNINGTHEELECTORAL COLLEGE ROAD, SIX OUTOF 10 VOTERSDON'T THINK HE HAS THE JUDGMENT OR TEMPERAMENT TO BE PRESIDENT. CHARLIE:AND ONLY 40% OF PEOPLE DO? NANCY:YEAH, AND PEOPLE FOR WHOM JUDGMENT ANDTEMPERAMENT WERE THE MOSTIMPORTANT ISSUES, HILLARY CLINTON WON BY MILES, BUT BY A FACTOR OF TWO TO ONE, MOSTPEOPLE CARED MOST ABOUTWHO COULD BRING CHANGE TO WASHINGTON AND HE WON THATGROUP BY 60 POINTS. THAT DESIRE FOR CHANGE AND THE BELIEF THAT HE WAS MORE LIKELY TO BRING IT, I MEAN, THE IRONY THERE ISTHATHILLARY CLINTON, WHAT SHE PUNISHED FOR THE VERY EXPERIENCEAND LONGTRACK RECORD THAT SHEHAD? CHARLIE:YOUR INSTINCT WOULD BE THAT SHE WAS, PUNISHED BY THE FACTTHAT HE WAS ABLE TO GRAB THE CHANGE MANTLE? NANCY:EVERYONE KNEW THIS WAS MEANTTO BE A CHANGE ELECTION. AMERICANS TYPICALLY DON'T RANT THIRD TERMS. AGAIN, --GRANTTHIRD TERMS. ONE OF THEREASONS THAT THE POLITICAL EXPERTS ALLALONG THOUGHT THISCOULD NOTPOSSIBLY SUCCEED WASTHAT HE KEPT DOING THINGS THAT NO ONE HAD DONE BEFOREOR TO THE EXTENTTHAT PEOPLE HAD, IT PROVED FATAL. CHARLIE:LOOKING BACK,IT IS THE CAPACITY TO STAND INFRONT OF A HUGE AUDIENCE AND HAVE A CONVERSATION WITH THEM IS TOME ONE OFHIS, ONE OF THE QUALITIES THAT MADE HIS RALLIES DIFFERENT. IT WAS NOT A SPEECH. IF IT WASASPEECH, ITWAS A REGURGITATION OF WHAT HE WAS SAYING BEFORE, BUT MUCH MORE OF IT WASREACTING, IMPRESSIONS, TALKING ABOUT--HE ALMOST WAS HAVING A CONVERSATION WITHTHEM ABOUT WHAT HE READ IN THE PAPER OR HAD SEEN ONTELEVISION, AND WHAT DO YOU THINK OF THIS, OR DID YOU AGREE WITH ME? IT WAS MUCH MORE THAT KIND OF DIALOGUE. NANCY: THAT IS WHY, ONTHE OCCASIONS HE WAS BACK ON THE TELEPROMPTER, IT FELT SO ODD BECAUSE THAT WAS NOT THE VERNACULAR OF HIS CAMPAIGN. CHARLIE: AND THE SPONTANEITY. YOU HAVE INTERVIEWEDBEFORE, YOU INTERVIEWEDHIMLAST TIME WITH THE EVIL AND ALL THAT. YOU GO BACK A WEEK AGO, HOW WAS HE? WAS HEDIFFERENT ANYWAY? NANCY:I WOULD BE THE FIRST TO SAYTHATTHERE IS EVERY CHANCE THAT BECAUSE I EXPECTED HE WOULD BE DIFFERENT THAT I SAW A DIFFERENCE. BUTI DID SEE ADIFFERENCE, THE MAIN ONE BEING,THE THING THAT STRUCK ME SO MUCH, I'M INTERESTED IN THE RELATIONSHIP THE BETWEEN PRESIDENTBECAUSE OF WHAT THAT JOB DOES TO YOU. THE NIGHTBEFORE, HE HAD BEEN ON THEPHONE FOR 45 MINUTESWITH PRESIDENT OBAMA, TALKING WITH HIM ABOUT IDEAS FOR HIS CABINET CHOICES, AND OTHER TOPICS THAT WERE ONHIS MIND, AND HESPOKE WITHEXTRAORDINARYWARMTHAND RESPECT. HE TALKED ABOUT THE CHEMISTRY HE FELT BETWEEN THEM. HE FELT THAT HE EXPECTED THAT DAY HE WENT TO THE WHITE HOUSE AND THEYSATTOGETHER,HE HE SAID,EVERYONEWOULD HAVE THOUGHTTHAT WOULD HAVE BEEN AN AWKWARD MOMENT. WE STARTEDTALKING, WE TALKED FOR A LONGTIME,I FOUND ITVERY GRACIOUS ANDHELPFUL, AND WE TALKED SINCE THEN,AND, YOU KNOW, INLISTENING TO HIM TALK, PARTICULARLY ABOUT HIS CONVERSATIONS OF PRESIDENT OBAMA, YOU START TO SEE A GLIMPSETHAT HE IS HAVING TO GET HISHEADAROUND WHAT HAS JUST HAPPENED, AND ISOMETIMES WONDERED, DID HEEXPECT --OF COURSE THEY WILL SAY, WE ALWAYS KNEW WE WERE GOING TO WIN -- CHARLIE:EARLYINTHE EVENING, THEY DID NOT THINK THEY WERE GOING TO WIN. IT WAS ONLY AFTER 8:00 THAT THEY BEGAN TOSEEWHATTHE POSITIVES WERE IN PENNSYLVANIA AND WISCONSIN AND MICHIGAN THAT THEY REALIZEDVICTORY MIGHT BE POSSIBLE. NANCY:SO THEN, YOU WIN AND YOU WAKE UP. IS IT LIKETHEDOG THAT CATCHES THECAR? NOW, I AM ASKED TO GOING TO HAVE TOBE PRESIDENT, AND WHAT DOES THAT MEAN, AND HOWIS THAT GOING TOWORK? THECONVERSATIONS HE IS HAVING WITHEVERYONE,THIS IS THE NEXT SEASON OF THE REALITY SHOW THAT HE HAS BEEN STAGING. CHARLIE:IT IS INTERESTING IN TERMS OF THE PEOPLEHE IS TALKINGTO, NOT ONLY MITTROMNEY SAYING THETHINGS HE SAID ABOUT HIM, BUT AL GORE SHOWS UP. NANCY:IT IS APECULIAR --HOW IS THIS BETWEEN BUSINESS LEADERSAND POLITICIANS AND PRIVATESECTORACTIVISTS? THATTHISPART OF HIS OWN PERSONALTRANSITION, YES, THERE IS THE ADMINISTRATIVE INSTITUTIONALTRANSITION, BUT A PERSONAL TRANSITION, TOO. THATIS WHAT I WASSTRUCKWITH, TALKING TO HIM THISTIME IS THAT HE IS VERY MUCH IN THE THROES OF THAT PROCESS. CHARLIE:THANKYOU FOR JOINING US. SEE YOU NEXT TIME. ♪ >>WORKING WITH HIS HANDS GAVE HIM THE FREEDOM THAT HECRAVED. >>I FEEL LIKE A BUTTERFLY. IFEEL LIKEIAM FLATTERED AROUND. IWORK 12 HOURS A DAY, 13 HOURS A DAY. I WASTHE HAPPIEST I HAD EVER BEEN. AND YOUKNOW, HE SPENT SIX WEEKS MAKINGONESCULPTURE, OBVIOUSLY THAT IS A BEAUTIFUL KIND OF FREEDOM. ANCHOR:ASIA-PACIFIC MARKETS ARE POISED TO FALL FOLLOWING THE WORST DAY FOR CHINESE STOCKSIN JUNE. OPECMOVES PRODUCTION NEXTMONTH DESPITE AGREEING TO HISTORIC CUTS. NO ONE WANTS TO LOSE THEIR MARKET SHARE. DONALDTRUMP NAMES AND OTHER GOLDMANEXECTO HIS TEAM BUT POSTPONES NEWS OF HOW HE HANDLES HISEMPIREAS PRESIDENT. CONSIDERING JOINING SOFT THINGS FUND --SOFTBANK'S FUND. THIS IS THE SECOND HOUR OF "BLOOMBERG DAYBREAK: ASIA." IAMYVONNE MAN IN HONG KONG. >>IT IS JUST AFTER7:00P.M. IN NEW YORK. I AM A BETTY LIU. WE ARE WATCHING THE FEDMOVEAND WHAT THAT MEANS FOR THE MARKETS AFTERWARDS. LET US JOIN --JOINING US IS SU KEENAN. BEFOREWE TALK ABOUT THE FED, WHATCAUSED THE STOCK SLIDE TODAY? NERVOUSNESS INTHEMARKET? >>HE SAW THE OILUPAND AWAY. YOUSAWFINANCIALS MOVE LOWER. THEY HAVE BEEN A BIG LEADER IF YOU LOOK AT THE BOARD. SU: WE HIT A RECORD FOR THE DOW. THERE IS APAUSE IN THE CAUSE. BIG MOVERSANDYOU CANSEE THE DIVIDE OF FINANCIALS ON THE DOWNSIDE. PFIZER HAD A DIVIDEND ANNOUNCEMENTAND EXXON AMONGTHE WINNERS. AS GOIN THE BLOOMBERG BECAUSE IFYOU WANT TO LOOKAT THE BIG PICTURE OF HOW THE MARKET WAS DOING LAST YEAR WITH THE ECONOMICSURPRISES IN THE WHITE AT THE TOP, YOUWILLSEE TOWARD THE END OF THE YEAR ECONOMIC SURPRISESWERE NEGATIVE. BAD NEWS. THE MARKET WAS IN TOP SHAPE. THEECONOMIC SURPRISES MOVING HIGHER AS WELL AS THE MARKET AND THAT IS RISINGALMOSTTOKISS THE FEDAT ITS MEETING ON WEDNESDAY. THEY ARE EXPECTING ANDEMBRACING THIS RATEHIKE THAT IS PLANNED. ANCHOR:APPARENTLY, THEY ARE. LET US TALK ABOUT THIS OIL RALLY. IT LOOKS LIKE THEMARKETS BELIEVE THESEOUTPUT CUTS ARE REAL. SU: YES, YOU ARE SEEINGTHATNOT ONLYIN THE HIGHEST FOR THE OIL PRICE,BUT VOLATILITY DROPPING IN A VERY BIG WAY. VOLATILITYDROPPING, THE LOWEST SINCE JUNE 2015. WHAT YOUARE SEEING HERE ISA WHITE LINE THATIS THE VOLATILITYGAUGE FOR OIL. SEE HOW THAT HAS DROPPED PARTICULARLYTOWARD THE RIGHT-HAND SIDE OF THE SCREENAS THE PRICE HAS GONE HIGHER. WHAT THAT TELLS US ISTHATTHE PATH IS CLEAR FOR PRICES TOGO HIGHER. GO QUICKLY TO THE CHART OFOIL FOR THE LAST FEWWEEKS AND YOU WILL SEE IT HAS BEEN ON A TEAR. INFACT, IT GOES MUCH HIGHER FROMHERE, AND WHAT IS UNIQUE ABOUT THE NEWS THAT CAMEOUT FROM MANY TRADERS THAT EXPECTED THE AGREEMENT BETWEEN THE NON-OPEC MEMBERS, IT IS THE SAUDI MEMBERS THATJUICED THE GAINS. >>THE PRODUCERS OF OIL, WHETHER THEY BEOPEC, THE RUSSIANS, WHETHER ITIS THE OILAND GAS INDUSTRY AND THE UNITEDSTATES, HAVE ALL HAD ENOUGH, ANDSO, YOU WILL PAY $60 A BARREL WITHIN 30 DAYS. SU:HE BELIEVES WE WILL SEE $75 OIL NEXT YEAR. HERE ISWHAT IS KEY FROM TRADERS ON THE NEW YORK TRADING FLOOR FOR OIL. THEY BELIEVE THE FACT THE SAUDIS RULED IN WITHA STATEMENT SHOWS THEY ARE SERIOUS, UNLIKELY TO BAIL,AND THAT IS WHAT GIVES THISDECREE OR ACCORD TOCUT REAL POWER. ANCHOR:TRADERS NOW TALKING ABOUT TRUMP'STWITTER RISK, WHICH ISSOMETHING WE HAVE TO LOOKINTO AS WELL. THIS TIME, HIS POST WAS TARGETING LOCKHEED MARTIN. SU:THE ARGUMENTHERE FROM TWITTER POSTS BYTRUMP IS THAT THE FIGHTERJETS ARE WAY TOO EXPENSIVE. TAKE A LOOK AT WHAT IT DID TO THE STOCKS. KABOOM. THIS IS EXACTLY WHAT HAPPENED WITHBOEING, TOOK AHIT WHEN TRUMPSTARTED TWEETING ABOUT COSTSOFAIR FORCE ONE. HIS CONCERN ABOUT BOEINGJETS IS THAT THECOSTS ARE IN THE BILLIONS AND THEY HAVE JETS AT 35 PROGRAMS THAT IS ATTHE CENTER OF EVENTS. HE SAYS THE COSTS ARE OUT OF CONTROL. WHAT IS THAT LOOK LIKE IN TERMS OF THE DEFENSE GROUP? TAKE ALOOK AT THE STALKS. THEYWERE ALL LOWER IN A BIG WAY. TRUMP IS PROMISING THAT WE ARE GOING TO -- THE STOCKS. THEY WERE ALL LOWER IN A BIG WAY. ANCHOR: TAKE A LOOK ATHOW THINGSARE LOOKING AT THE MARKET OPENED IN ASIA. >>WE SAWYESTERDAY, THE WIND GETKNOCKED OUT OF THAT OPEC OIL DRIVEN RALLY. WE HAVE DOWNWARD PRESSURE COMING THROUGHFROM A LOWER OPEN ON WALL STREET. HAIDI:THATIS THE PRESSURE WE ARE SEEING PLAYING THROUGH IN THE EARLY MARKET OPEN. WE ALREADY HAVE THAT LOWER START. JAPAN NOW JOININGIN. THENIKKEI225FIVE DOWN. IT REALLY ISDOWNTO THAT STRONGER YEN. WE HAVE THE DOLLAR INDEX FALLING ITS MOSTIN G 10 AS WELL AS EMERGING MARKETCURRENCY. THEJAPANESE CURRENCY IS WEIGHING ON EXPORTERS IN PARTICULAR. TAKE A LOOK ATTHE TOP LOSERS. WE ARE SEEING CURRENCY SENSITIVE STOCKS MOVING. ELSEWHERE AROUND THE REGION, THE KOSPI LOOKING FLAT AT THE MOMENT. SOME DECLINEDYESTERDAY, BUT THIS HAS BEEN ONE OF THE BETTER PERFORMINGMARKETSIN THIS REGION OVERTHE PASTCOUPLE OF WEEKS,SOON THESE EXPECTATIONS, THE POLITICAL TURMOIL, IMPEACHMENT PROCESS WILL ACTUALLY PRODUCESOME REJUVENATION WHEN IT COMES TO THE GOVERNMENT IN SOUTH KOREA. QUICK LOOK AT SOME OFTHE MOVERS. THAT HUGE RAMP UP WHEN IT COMES TO OIL PRODUCERS AND REFINERS. SAME, THOSE STOCKS GIVE BACK TODAY. ORIGINDOWN. WE ARE SEEINGSOME OF THE MINERS CONTINUING TO EXTEND THOSE DECLINES DESPITE A FLAT RECOVERY IN OIL. FINALLY,QANTAS COMING UNDER PRESSUREDESPITE LAUNCHING THE SUPERLONG FLIGHT TO LONDON. DOWNBY2.9%. YVONNE:FIRST WORD NEWSWITH PAUL ALLEN, JOINING US FROM SYDNEY. PAUL: CHINA HASFILED OILTRADED ORGANIZATION COMPLAINTAGAINST THE UNITEDSTATES AND THE EUROPEAN UNION. BEIJING WANTS ITS TWOBIGGEST TRADING -- ANTIDUMPING PROBES ON CHINESE UNIONS. THEY SHOULD BE USING DOMESTIC PRICESIN THEDISPUTE, SAYING THIRD COUNTRY MODEL TESTING DUTIES ON CHINESEIMPORTS ARTIFICIALLYINFLATED. THEEUROPEANUNION WILLFIGURE OUT HOW IT WILL CONDUCT BREXIT NEGOTIATIONS WITH THE U.K. LEADERS WILLMEET ON THURSDAY WITHOUTBRITISH PRIME MINISTER THERESA MAY TO DISCUSS THE STRATEGYONCE SHE TRIGGERS ARTICLE 50 OF THE LISBON TREATY. THE DRAFTSTATEMENT SEEN BY BLOOMBERG SAY THE DRAFT STATEMENT WILL BEEXCLUDED. HONGKONG'S OUTGOING FINANCIAL CHIEF AT JOHNSAYING SAYS HE WILL MAKE --TSENG. HE NEEDS BEIJINGTO FORMALLY ACCEPT HIS RESIGNATION. CURRENT CHIEFEXECUTIVESAYS HE WILL NOT SEEK A SECONDTERM, CITING FAMILY REASONS. >>THE PRINCIPLES OF ONECOUNTRY ,HONG KONG PEOPLE ADMINISTERING HONG KONG, AUTONOMY HAS BEEN SUSCEPTIBLEAND THAT HONG KONG CONTINUESTO BE PROSPEROUS AND STABLE. I THINK ALL OF YOU ARE CONCERNED ABOUTWHETHER I WOULD RUN FOR CHIEF EXECUTIVE ORNOT. AS I HAVE SAID BEFORE, WHETHER I WOULDRUN WERE NOTRUNIS A SERIOUS AND SOLEMN MATTER. I SHALLTHINK THROUGH THIS IN THE COMING DAYS AND MAKE AN ANNOUNCEMENT WAS READY. PAUL: DONALD TRUMP HAS NOMINATED ANOTHER GOLDMANSACHS EXECUTIVE TO HIS ADMINISTRATION. HE IS THE 25 YEARVETERAN, GARY COHN. AN OFFICE THAT INRECENT RECENT DECADES -- IT WILL HELP COORDINATETRUMP'S PROGRAM. POWERED BY MORE THAN 2600 JOURNALISTS ANDANALYSTSIN MORE THAN 120COUNTRIESG. I AMA PAUL ALLEN. THIS IS BLOOMBERG. --COUNTRIES. I AM PAUL ALLEN. THIS IS BLOOMBERG. >>LET US GO STRAIGHT TO WASHINGTON AND BLOOMBERG POLITICSREPORTER KEVIN. HISAIDES SAID HE WASBUSY WITH THE TRANSITION AND THAT IS WHY HE ISDELAYING THIS. IS THERE ANYTHING MORE TOTHIS? >>UP WITH A QUESTION TO THE SENIOR TOMTRANSITIONSOURCES THAT I SPOKE WITH EARLIER TODAY AND WHAT THEY TOLD ME IS THAT THISANNOUNCEMENT WOULD BE COMING SOMETIME IN JANUARY OF AHEAD OF THE INAUGURATION ON JANUARY20, HOWEVER, IT DOES, AT ATIME WHEN HE IS FACING MOUNTINGCRITICISM,BIPARTISAN CRITICISM ON CAPITOLHILL TO RELEASE SOME SORTOF ARRANGEMENT FORHOW HE WILLCOORDINATE OR NOTCOORDINATE WITH HISBUSINESS WHILE HE IS IN THE WHITE HOUSE, SOCLEARLY, TODAY, HIS TEAM SAYING HE NEEDS A BIT MORETIME, THAT HE WANTSTO REALLYTHINK THIS THROUGH, BEFORE RELEASING THATPLAN, BUT A DELAY ISA DELAY AND HE IS POSTPONING. >>HE HAS BEEN VERY QUICK TO TAKE CERTAIN ACTIONS AHEAD OF HISOFFICIALASCENSION TO BECOMING THE PRESIDENT, OFFICIAL PRESIDENT OF THE UNITED THEY. HIS -- THE UNITED STATES. IS IT SURPRISING HE IS DELAYING THIS? >>I THINK WHAT WEARE GOING TO HAVE TOWAIT AND SEE IS WHETHER ORNOT HE FOLLOWS THROUGH. I THINK IF HE DOESRELEASETHE PLAN, HE WILLRECEIVECRITICISM REGARDLESS, BUT IF HE DOES RELEASE THEPLAN, HE NEEDS TO DO ITBEFORE AND ONDURATION, AND SHOULD HE FOLLOW THROUGH WITH THAT, I DO THINK ANYBODY WILL DELETETHEM --REALLY REMEMBER THAT HE DELAYED FOR TWO WEEKS. EVERYBODY AS WELL AS OUTSIDE COUNSEL,HEIS TAKING A LOT OF ADVICE ONTHIS ONE. ANCHOR:KEVINCIRILLIJOININGUS ON BLOOMBERG POLITICS. THANK YOU FOR YOUR PERSPECTIVE ON THIS WITH DONALD TRUMP DELAYING HIS PLANS TOANNOUNCE HOW HE'S GOING TO HANDLE HIS EMPIRE ONCE HE TAKES OFFICE. TUESDAY WILL BRING US ANOTHER GAUGE ON THEHEALTHOF THE CHINESE ECONOMY AS WE HEAD TOWARDS THE END OF THEYEAR WITH A TRIPLE DOSEOF DATA. HEWILL BE BREAKING THAT DATA DOWNFOR US IN JUST ABOUT TWO HOURS TIME. WHAT CAN WE EXPECTHERE? >>A STUDYSTABLE PICTURE IS 10000 WHAT WEARE -- ASTEADY,STABLE 1000PICTURE IS WHATWE ARE 10002 EXPECTING. 10003 WE ARE TALKINGABOUT INDUSTRIAL 10004 PRODUCTION, RETAIL SALES, AND 10005 FIXED ASSET PRODUCTION. 10006 WE HAVE SEEN WERE THEYCOME FROM 10007 FROM 2013. 10008 THIS IS A FAIRLY STEADY DECLINE 10009 IN THE DATA POINTS. 10010 IT HAD LEVELED OFF INTHE LAST 1001FEW MONTHS AND WE ARE TAKING 10012 THAT TO CONTINUE. 10013 TOM: RETAIL SALES A KEY 10014 GAUGE. 10015 INDUSTRIAL PRODUCTION IS 10016 EXPECTEDTO COME IN AT 6.1%, THE 10017 THIRDMONTH. 10018 FACTORING INTO THAT OF COURSE, 10019 THECOMMODITY PRICES AND DEMAND 10020 FOR THOSE PRICES. 1002FIXED ASSETINVESTMENT EXPECTED 10022 TO COMEUPA .3% SECOND MONTH IN 10023 A ROW. 10024 THOSE WILL BE INTERESTING WHEN 10025 YOU LOOK --8.3% SECOND MONTH IN 10026 A ROW. 10027 THOSE WILL BE INTERESTING. 10028 THE MOREPOSITIVE MANUFACTURING 10029 PICTURE, THE INFLATIONARY 10030 IMPROVEMENTS WE HAVESEEN 1003BEATING CONSUMER PRICES THE 10032 FIRST TIME INFIVEYEARS. 10033 SOMETHING OF A POSITIVE FOR 10034 CHINA'S FACTORY SECTOR. 10035 ALL OF THISISLAYING A 10036 FOUNDATION. 10037 GOLDMAN SACHSECONOMISTS THING 10038 THAT THIS GIVES THE PBOC 10039 GROUNDINGON FINANCIAL RISKS 10040 THEYEXPECT THEMTO FOCUS, AND 1004BECOMEMORE HAWKISH. 10042 THAT SEEMSTO BE THE CONSENSUS 10043 THAT THERE WILL BE STABLE 10044 ECONOMIC DATA THATGIVES 10045 POLICYMAKERS MOREOF A PLATFORM 10046 TO TACKLE THOSE RISKS IN THE 10047 PROPERTY SECTOR. 10048 YVONNE:TOM, THANK YOU SO MUCH. 10049 TOM MACKENZIE IN BEIJING. 10050 STILLAHEAD, ESCALATING HIS 1005FIGHT AND SEEKING MORETHAN $5 10052 BILLION IN DAMAGES. 10053 BETTY:PLUS, KEVIN ANDERSON OF 10054 STATESTREET GLOBAL TELLS US WHY 10055 HEFINDS EMERGING-MARKETDEBTS 10056 STILL ATTRACTIVE. 10057 THIS IS BLOOMBERG. 10058 ♪ 10059 ANCHOR:THISIS PARK GEUN-HYE-- 10060 THIS ISTHEY MAKE ASIA. 1006I'M BETTY LIU. 10062 YVONNE:I AM YVONNE MAN. 10063 A COMPANY WANTS TO BUY 50 10064 MILLION SHARESOF A MOTOR 10065 COMPANY. 10066 THIS COMES AS THECONSULTANCY 10067 REPAIRS TO HOLD ITSAGM ON 10068 TUESDAY. 10069 IT IS THE FIRSTOF SUCH 10070 MEETINGS. 1007SHAREHOLDERSWILL CHOOSE BETWEEN 10072 TATAAND-- 10073 BETTY:KOREA'S BUSINESS 10074 NEWSPAPERS AS HANJIN SHIPPING IS 10075 LIKELY TOBELIQUIDATED. 10076 THE ACCOUNTING FIRM IN CHARGE OF 10077 DUEDILIGENCEWILL RECOMMEND 10078 THAT OPTION TOA SEOUL COURT. 10079 THE VALUE OF THE COMPANYIS 10080 ESTIMATEDAT$1.5 BILLION. 1008HANJINSHARES TRADING DOWN 10082 ALMOST 7%. 10083 HONG KONG HAS ARRESTED 29 10084 CURRENT AND FORMER STAFFOF FIVE 10085 FINANCIAL INSTITUTIONSFOR 10086 OBTAININGCUSTOMER CETACEAN TO 10087 MARKET PERSONAL LOANS. 10088 THE AGENCYSAYSTHE OPERATION 10089 BEGANLAST WEEK AND IT LED TO 10090 THE ARREST. 1009IT DOES NOT NAME THE 10092 INSTITUTIONS INVOLVED, BUT FOR 10093 THEM ARE BANKS --FOUR OFTHEM 10094 ARE BANKS. 10095 THE INVESTIGATION CONTINUES. 10096 >>MARKETS HERE. 10097 ASIAN STOCKSLOOK TO FOLLOW WALL 10098 STREET AND RETREAT AS THE OIL 10099 RALLY LOSES STEAM. 10100 CHINESESTOCKSSINKINGTHE MOST. 1010OLDREBOUNDAT A10 MONTH LOW. 10102 KEVINANDERSON,HEAD OF ASIAN 10103 PACIFIC INVESTMENT. 10104 GOOD TO SEE YOU. 10105 TELL US THE RECENT MOVES WE HAVE 10106 SEEN OVERNIGHT. 10107 IT ISJUST MOSTLY ONFED AND 10108 REALLY STARTED TO FINALIZETHESE 10109 POSITIONING THE HEAD OF THE FOMC 10110 DECISION? 1011WHAT DO YOU MAKE OF IT? 10112 KEVIN:WE HAVE THE FED COMING UP 10113 THIS WEEK. 10114 WE THINK WE WILL SEE AHIKEAND 10115 IT WOULD BE A HUGE SURPRISEIF 10116 WE DIDNOT. 10117 AN ADDITIONAL SURPRISE OVER THE 10118 WEEKEND WAS THENON-OPECOIL 10119 PRODUCING COMPANIES SIGNING THAT 10120 ACCORD. 1012ANADDITIONAL PIECE OF 10122 VOLATILITY AND NEWS INTO THE 10123 MACRO PICTURE. 10124 ANCHOR:CHINA, WE HAVE SEEN 10125 QUITE ABRUTAL DAY ON 10126 MONDAY. 10127 DOLLARRENMINBIONE MONTH 10128 IMPLIED VOLATILITY. 10129 I DATED BACK TO 2011 WHEN WE SAW 10130 THE DIFFERENT CIRCLES HERE. 1013FIRST CIRCLE, FIVE YEARS AGO AND 10132 THEN AUGUST OF2015DURING THE 10133 U.N. EVALUATION AND MARKET 10134 TURMOIL IN JANUARY THAT 10135 FOLLOWED. 10136 THERE WE ARE IN A VERY FAR RIGHT 10137 CIRCLE. 10138 WEARE NOT CLOSE TO THE PANIC WE 10139 SAW, BUTWHAT DOES THIS SIGNAL 10140 TO YOU, KEVIN? 1014KEVIN:A COUPLEOF THINGS GOING 10142 ON. 10143 FIRSTLY, THERE IS ASLOWIN THE 10144 OVERALL INTERNATIONALIZE ASIAN 10145 OFTHEINTERNATIONALIZE -- 10146 INTERNATIONALIZATIONOFTHE 10147 RMB. 10148 WE ARE GETTING TO THE END OF THE 10149 EURO PERIOD AND GETTINGINTOA 10150 PERIODWHERE THERE MAY BE LOWER 1015LIQUIDITY. 10152 ITMAY BE NOT WITHOUTTHOSE 10153 ENVIRONMENTS, WE WOULD SEE AN 10154 INCREASE INVOLVED, CERTAINLY. 10155 ANCHOR:THOSE HAVE LEDTO DROPS 10156 IN STOCKS WHEN YOU TAKE A LOOK 10157 ATNOT JUST CHINA, BUT THE U.S. 10158 AS WELL. 10159 SOFAR, WALL STREETSEEMS 10160 UNHINGED ATTHIS,NOT AFFECTED. 1016WE SAW STRESS INSHANGHAI, BUT 10162 WHAT DOES THISMEAN? 10163 WILL THIS CHANGE QUICKLY AS WE 10164 SEE MORE RHETORIC FROM DONALD 10165 TRUMP AND BEIJING HITTING BACK? 10166 KEVIN: THERE ARE TWO BIGPLAYERS 10167 INTHIS. 10168 POLICY CHANGES IN THEU.S. MAY 10169 TAKE PLACE,ANDDURING A PERIOD 10170 OF TRANSITION, WE MIGHT SEE THE 1017LARGESTRISK OF THE POLICY AND 10172 HENCEGREATERVOLATILITY. 10173 THE CHINESE POLICYMAKERS EARLIER 10174 THISYEARGAINED A CERTAIN 10175 AMOUNT OF CREDIBILITYTHROUGH 10176 THEIRGENTLE MOVEMENTS INTHE 10177 CURRENCY, SOTHAT IS PERHAPS WHY 10178 WE ARE NOT SEEING THE SAME 10179 REACTION IN THE GLOBAL MARKETS 10180 AT THE MOMENT. 1018ANCHOR:SPEAKINGABOUT THE 10182 MARKETS,KEVIN, I WANTED TO PULL 10183 UP ACHARTWE HAD ON THE 10184 BLOOMBERG ABOUT GLOBAL MARKETS 10185 OVERALL, AND YOUSEE SUCH A BIG 10186 CONVERGENCENOW INTERMS OF 10187 STOCKS AND PEOPLE TAKING THEIR 10188 MONEY ESSENTIALLY OUTOFBONDS 10189 AND PUTTING ITSTRAIGHT INTO THE 10190 EQUITY MARKETS. 1019YOU CAN SEE JUST HOW MUCHTHE 10192 BLOOMBERG WORLDSTOCKMARKETHAS 10193 JUSTSKYROCKETEDSINCE 10194 NOVEMBER, AND I WONDER,IS THAT 10195 MOMENTUM GOING TO CONTINUE TO 10196 2017,ORARE WE GOING TO GET 10197 SOME REPRIEVE IN THE BOND 10198 MARKET? 10199 KEVIN:WELL, WE ARESTILLUNDER 10200 WAY TO THE U.S. TREASURY 1020MARKET. 10202 WE HADBEENFOR SOME TIME. 10203 IF WE LOOK AT ASNAPSHOT A YEAR 10204 AGOFROM NOW, U.S.TREASURIES 10205 ARENOT THAT FAR AWAY FROM 12 10206 MONTHS AGO. 10207 WE THINK THE FEDIS ON AHIKING 10208 CYCLE NEXT WEEK AND ALSO TWICE 10209 NEXTYEAR. 10210 THERE IS ROOM FORTREASURIESTO 1021SELLOFF, BUT I THINK SOME OF 10212 THIS IMMEDIATE MOMENTUM MAY 10213 DISSIPATE. 10214 ANCHOR:KEVIN, IF YOU WERE TO 10215 GIVEUSONECONTRARY AND THOUGHT 10216 FOR 2017, WHATWOULD THAT BE -- 10217 CONTRARIAN THOUGHT FOR 2017, 10218 WHAT WOULD THAT BE? 10219 KEVIN:WE MIGHT SEE RETURN 10220 INFLATIONIN 2017AND INFLATION 1022THAT IS UNANTICIPATED. 10222 ANCHOR:ALL RIGHT, SO PERHAPS 10223 THATWILL REAR ITSHEAD FINALLY. 10224 KEVIN ANDERSON, HEAD OF 10225 INVESTMENT TRADE ASIA-PACIFIC AT 10226 STATESTREET ADVISORS. 10227 WE'LL TELL YOUWHAT IT STANDS TO 10228 GAIN FROM THATINVESTMENT. 10229 THIS IS BLOOMBERG. 10230 ♪ 1023ANCHOR:THIS IS "DAYBREAKASIA" 10232 I AM YVONNE MAN IN HONG KONG. 10233 BETTY:I AM BETTY LIU IN NEW 10234 YORK. 10235 YVONNE: APPLE MAY CONTRIBUTE AS 10236 MUCH AS ONE BILLION DOLLARS. 10237 BUTI LIKE A LOT, BUT IT IS ONLY 10238 1%, HOPING TO GAIN INSIGHT INTO 10239 NEWTECHNOLOGY. 10240 LET US GET MORE FROM RAMY 1024INOCENCIO. 10242 >>I'M SEEINGIT AS A SEARCH FOR 10243 INNOVATION FOR APPLE. 10244 A LOT OF CRITICS HAVE SAIDTHAT 10245 MAYBE THEYHAVE RUN OUT OF 10246 IDEAS. 10247 ON THE OTHER HAND, THERE IS A 10248 SEARCH FOR ABILITY IN TERMS OF 10249 REVENUEANDPROFIT. 10250 PROBABLY, A MIX OF BOTH OF THOSE 1025THINGS. 10252 RAMY: LET US GOI INTO THE 10253 PROFIT STABILIT FIRST. 10254 WE HAVE TO LOOK AT APPLE'S 10255 RELIANCE ON THE IPHONE BECAUSE 10256 TWO OUT OF EVERY THREE DOLLARS 10257 IT MAKESISFROM THE IPHONE. 10258 66%THERE, FOLLOWED BYMATT 10259 LAPTOPS AND IPADS. 10260 THAT IS OURFOUNDATION --MAC 1026LAPTOPS AND IPODS. 10262 THATISOUR FOUNDATION. 10263 REVENUE ISFALLING QUARTER ON 10264 QUARTER. 10265 TAKE A LOOK AT THE THIRD QUARTER 10266 OF 2016. 10267 YOU SEE THE ORANGE BARGOING 10268 DOWN, THAT IS THE REVENUE. 10269 A23% REVENUE DROP ONA 10270 SHIPMENT DROP GOING DOWN 15%. 1027APPLE LOOKING FOR THE NEXT BIG 10272 TECHTHING AND ITS LINEUP. 10273 IT MIGHT PUSH THE APPLEWATCH, 10274 OFCOURSE, THAT HAS BEEN OUT FOR 10275 A COUPLE YEARS OR SO. 10276 IT GOT AREBOOT EARLIER THIS 10277 YEAR. 10278 APPLEIS THE MARKET LEADER WITH 10279 A 40% MARKETSHARE, BUT GET 10280 THIS, LAST YEAR, YEAR ON YEAR, 1028IT HADA 70% MARKET SHARE SO WE 10282 ARE LOOKINGATA 30 POINT DROP 10283 THEIR ACCORDING TO IDC. 10284 GARMAN'S NUMBER TWO. 10285 SAMSUNG IS ANUMBER THREE. 10286 NUMBERSCOULD, FROMAPPLE -- 10287 COMEUP FROM APPLE. 10288 THIS CONTACTLIST BUYING MODE, 10289 BUT IT IS STILL AFEWYEARS 10290 AWAY. 1029THERE IS THE APPLECORE,BUT 10292 BLOOMBERG OURSELVES HAS BEEN 10293 REPORTING THAT WE PUT THE BOSCH 10294 ON THAT --THE KABOSH. 10295 ON THAT. 10296 THEY ARE LOOKING FORTHE NEXT 10297 BEST THING. 10298 A LOT OF PEOPLE ARE SAYING THAT 10299 IS NOT IT. 10300 >>$1 BILLION WOULD BE THE 1030FRONT. 10302 WE DID SEE APPLE PUTTING IN MORE 10303 INVESTMENTS EARLIER THIS YEAR. 10304 SOFTBANK, ARE WE LIKELY TO SEE 10305 MORE? 10306 RAMY:IF THEY WANTED TO, THEY 10307 DEFINITELY COULDDOLEMORE MONEY 10308 OUT. 10309 LOOK AT HOW MUCH THEY HAVE HERE. 10310 THAT IS $237 BILLION, SO THEY 1031COULD MAKE THEIROWNTECHNOLOGY 10312 FUND IF THEYWANTED TO. 10313 $1 BILLION, CLEARLYADROP IN 10314 THE BUCKET. 10315 IN MAY,THEY DID INVEST AND 10316 THROUGHOUT $1 BILLION. 10317 IN2013, THE LAST TIME THEY DID 10318 SOMETHING EVEN MORE THAN THAT, 10319 WAS$3 BILLION FOR THE HEDGE 10320 FUNDMAKER. 1032APPLE, IF IT DECIDES TOANTE UP 10322 COULDGET SOME OF ITSMONEY BACK 10323 BECAUSE THE CEO SAID $50BILLION 10324 OF THAT 100 BILLION WOULD GO 10325 INTO U.S. INVESTMENT. 10326 >>THANK YOU SOMUCH, RAMY. 10327 SO MUCH MORE AHEAD. 10328 HONG KONG'S MONEY MARKET SQUEEZE 10329 IS SENDING A --SQUEEZE. 10330 >>TAKE A LOOK AT MARKETS 1033TRADING IN THE ASIA-PACIFIC. 10332 YOULOOKAFTERHALF AN HOUR OF 10333 TRADE, THE NIKKEI 225 LEADING 10334 SOME LOSSES THISMORNING, DOWN A 10335 LITTLE MORE THAN.25%. 10336 WE DO SEETHE DOLLAR AT A BIT OF 10337 AHALTHERE. 10338 WE ARE COMING OUT OFTHE OPEN IN 10339 SINGAPORE. 10340 THIS IS BLOOMBERG. 1034♪ 10342 CRAIG'S IT IS A 11:30 A.M. IN 10343 SYDNEY. 10344 WE HAVEBREAKINGNEWS ABOUT THE 10345 MONTHLY BUSINESSSURVEY, A 10346 SLIGHT IMPROVEMENT IN CONFIDENCE 10347 DESPITEUNDERLYING STRIFE INTHE 10348 AUSTRALIAN ECONOMY. 10349 THIS IS GOOD NEWS. 10350 CONFIDENCE GOT TO FIVE IN 1035NOVEMBER, HAVING DIPPED TO FOUR 10352 IN PREVIOUS MONTHS. 10353 WE ARE IN HONGKONG. 10354 ALITTLE BIT OF APERK THERE FOR 10355 SYDNEY. 10356 BETTY: IM BETTYLIUIN NEW YORK. 10357 YOU ARE WATCHING "DAYBREAK 10358 ASIA." 10359 >> OHPEG BOOSTED PRODUCTION IN 10360 NOVEMBER AHEAD OF NEXT MONTH'S 1036COLLECT OF --OPECBOOSTED 10362 PRODUCTION IN NOVEMBER AHEAD OF 10363 NEXTMONTH'S CUTS. 10364 TOTAL OUTPUTIS 38 MILLION 10365 BARRELS PER DAY. 10366 ANALYSTSEXPECT OPECAND 10367 INDEPENDENT PRODUCERS TO 10368 INCREASEOUTPUT. 10369 DONALD TRUMP IS SAID TO BE 10370 POSTPONING UNTIL NEXTMONTH 1037DETAILS OF HOW HE WILL HANDLE 10372 BUSINESSOPERATIONSWHILE AT THE 10373 WHITE HOUSE. 10374 A NEWSCONFERENCE SCHEDULEDFOR 10375 THURSDAYWILL BE DELAYEDBECAUSE 10376 THEPRESIDENT-ELECT'S BUSY 10377 FILLINGHIS ADMINISTRATION 10378 FIRST. 10379 TRUMP HAS ABOUT3.6 BILLION 10380 DOLLARS INASSETSINOVER 500 1038COMPANIES. 10382 CHRISTINE LAGARDE HASTOLD AN 10383 IMF -- HAS TOLD THE TRIBUNAL 10384 THATSHEACTED IN THEPUBLIC 10385 INTERESTAS FRENCH FINANCE 10386 MINISTERIN 2007 WHEN SHE DID 10387 NOT TRYTOBLOCK A PUBLICPAYOUT 10388 TO A BUSINESSMAN. 10389 SHEWILL RETURN TO COURTON 10390 TUESDAY. 1039SEARCHING-- THE LAST VESSEL 10392 SEARCHING FOR THEMISSING 10393 MALAYSIA AIRLINE HAS HEADED OUT. 10394 THE AREA MIGHT HOLD THE REMAINS 10395 OFTHEAIRPLANE AND THE PEOPLE 10396 ON BOARD. 10397 LOCAL MEDIA SAY IF THE PLANE IS 10398 NOT FOUNDIN ONE OFTHE 10399 TRENCHES, THESEARCH WILL BE 10400 CALLED OFFIN JANUARY OR 1040FEBRUARY. 10402 GLOBALNEWS 24 HOURS A DAY 10403 POWERED BY MORE THAN 2600 10404 JOURNALISTS ANDANALYSTS. 10405 THIS IS BLOOMBERG. 10406 >> LET'SLOOK AT HOW THEASIAN 10407 MARKETS ARE SHAPING UP THIS 10408 MORNING. 10409 >> WE HAVEHEADWINDS COMING 10410 THROUGH FROM THE U.S. WHICH 1041CLOSE LOWER OVERNIGHT. 10412 THIS IS WHAT WE ARE SEEING. 10413 INTEREST IN AUSTRALIA HAS 10414 MANAGED TO TURN POSITIVE. 10415 NEWZEALAND FALLING DEEPER INTO 10416 NEGATIVE TERRITORY. 10417 STILL,THEY HAVE PRETTYMUCH 10418 ERASED THEIRLOSSESFOR 2016 AS 10419 WEGO INTO THE WIDELY 10420 ANTICIPATED FED MEETING WHERE 1042ESSENTIALLY, WE ARE LOOKING AT 10422 UNCERTAINTY WITH THE TIGHTENING 10423 OF THE RATE HIKE. 10424 JUST TAKING A LOOKAT SOMEOF 10425 THE MOVERS, WE ARESEEINGSOME 10426 INTERESTING MOVES WHEN IT COMES 10427 TO THE JAPANESE SESSION. 10428 NINTENDO IS DOWN 2%. 10429 UNIVERSAL STUDIOS AND NINTENDO 10430 WILL BELAUNCHINGA THEME PARK 1043THAT WILLOPENIN TIMEFOR THE 10432 JAPAN 2020 GAMES. 10433 THECOMPANY PLANS TO SPENDABOUT 10434 $24MILLION TO DEVELOPA THEME 10435 PARK. 10436 TOSHIBA OH IS A COMPANY THAT HAS 10437 GONETHROUGH INTERNAL SCANDALS. 10438 THENIKKEI SAYINGTODAYTHAT THE 10439 TOKYOSTOCK EXCHANGE IS 10440 CONSIDERING KEEPING TOSHIBA ON 1044THEIR WATCH LIST. 10442 THIS IS WHERE CONTROLSARE BEING 10443 REVIEWED. 10444 THEY ARE EXPECTED TO MAKE A 10445 DECISIONBY 2017. 10446 THERE AREREPORTS IT MAY STAY ON 10447 THEIR ALONE LONGER OVERCONCERNS 10448 THATINTERNAL CONTROLS HAVE NOT 10449 BEEN ADEQUATELY IMPROVED. 10450 THE BIGGEST DECLINE WHEN IT 1045COMES TO THE AUSTRALIANSESSION, 10452 WE HAVE THIS STORY ABOUT CHINESE 10453 CARRIERSPUTTING QUITE ABIT OF 10454 PRESSURE ON FARES FROMMAJOR 10455 AIRLINES LIKE WANTUS, DOWN 10456 ABOUT2.5% TODAY. 10457 BETTY: THANK YOU. 10458 WE HAVE BREAKING NEWS RIGHT NOW, 10459 MOREON PRESIDENT-ELECT DONALD 10460 TRUMP, MONITORINGHIS TWITTER 1046FEED. 10462 TRUMPTWEETING,"I WILLBE 10463 MAKING MYANNOUNCEMENT OF THE 10464 NEXT SECRETARYOF STATE TOMORROW 10465 MORNING. 10466 HEWILLBE MAKING THE 10467 ANNOUNCEMENT OF WHOWILL TAKE 10468 THAT SPOT. 10469 THERE IS LOTSOF SPECULATION 10470 THAT ITISEXXON CEORICK 1047STILLER, EVEN THOUGH HIS 10472 APPOINTMENT HAS COME UNDER 10473 SCRUTINY ANDCRITICISM --REX 10474 TILLER, EVEN THOUGHHIS 10475 APPOINTMENTHAS COMEUNDER 10476 SCRUTINY ANDCRITICISM BY SOME. 10477 BOND TRADERS ARE WAITING UNTIL 10478 WEDNESDAY-- NOTWAITINGUNTIL 10479 WEDNESDAY. 10480 THEY ARE PUSHING UPYIELDS IN 1048ANTICIPATION. 10482 SO, NOWTHEY ARE PUSHING UP 10483 YIELDS? 10484 LIKESTHISSTARTED MONTHS AGO. 10485 IN FACT, AS WE GET INTOTHE 10486 ASIANTRADING SESSION, WE ARE 10487 SEEING A LITTLE BIT OF ABOUNCE 10488 BACK. 10489 AFTER MONDAY INTHE U.S.,IT WAS 10490 FUELED ALOT BYTHERISE IN OIL 1049PRICES. 10492 17 MONTHHIGHS,YOU CAN SEE ON 10493 THE FAR RIGHT HAND OF YOUR 10494 SCREEN, THE 10YEARNOTE TOUCHED 10495 THAT LEVEL. 10496 THAT LITTLE RED CIRCLE SHOWSYOU 10497 THISYEAR,1.32%, A RECORD LOW. 10498 LOOK AT THAT MOVE IN BONDS. 10499 SEE THE YELLOWLINE GOING OVER 10500 TO THE LEFT-HAND SIDE OF YOUR 1050SCREEN. 10502 OF COURSE, DONALDTRUMP'S 10503 VICTORY, THE PROMISED STIMULUS 10504 AND TAXCUTS, POSSIBILITYOF 10505 MOREGROWTH HAS HELPED FUELEDA 10506 SELLOFF. 10507 AND NOW ASSUMING THAT WE HAVE 10508 THE25 BASE POINT HIKE ON 10509 WEDNESDAY, WHAT DOES THAT 10510 INDICATEFOR 2017AND 2018? 1051THAT ISWHAT PEOPLE ARE WAITING 10512 TO SEE. 10513 BETTY:WHYARE INVESTORS FINALLY 10514 BELIEVING THE FED FORECAST FOR 10515 THE ECONOMY? 10516 >>IT LOOKS LIKE FISCALPOLICY 10517 IS GOING TO PUSH THE ECONOMY 10518 FORWARD. 10519 AND INSTEAD OF SELLINGOFF,WE 10520 ARE SEEING BOND TRADERS FALLING 1052IN LINE. 10522 LET'S JUMP BACK INTO THE 10523 BLOOMBERG. 10524 GO TO YOUR BLOOMBERG. 10525 THEYELLOW DOT,THOSE ARE THE 10526 2016,2017,2018 NUMBERS. 10527 REDLINE, AT THE SEPTEMBER 10528 MEETING, THATIS WHAT BOND 10529 TRADERS THOUGHT THE FEDWOULD 10530 DO. 1053IT'S A LONG WAY FROM THE GREEN 10532 MEDIAN LINE. 10533 TRADERS ARE GETTING MUCH MORE IN 10534 LINE WITH THE FEDS. 10535 THE UNDERSECRETARY WAS ON 10536 BLOOMBERG TELEVISIONEARLIER. 10537 HE SAID ITMIGHT BETIME FOR THE 10538 FED TO RETIRE THOSE DOTS. 10539 >> THE HARDEST THING FOR THE 10540 FED'S THEY REALLY DON'T KNOW 1054WHERE THEY ARE GOING TO BE A 10542 YEAR OR TWO FROM NOW. 10543 THEY DON'T KNOW HOWMUCHTHE 10544 RECOVERYIS GOING TO GROW. 10545 THEY DON'TKNOWHOW MUCHTHE 10546 TRUMP ADMINISTRATION ISGOING TO 10547 PUSH. 10548 JANET YELLEN HAS TOPULLBACK 10549 FROM GUIDANCE. 10550 SHE HAS TO PULL BACK FROM 1055PRETENDING SHE KNOWS. 10552 SHE REALLY DOESN'T KNOW. 10553 >>HE SAID FORWARD GUIDANCE HAS 10554 DONE WHAT IT CAN DO. 10555 WE WILL SEEIF JANET YELLEN 10556 SIGNALS ANYTHING LIKE THAT. 10557 HEROPPORTUNITY WILL BE THE 10558 PRESS CONFERENCE ON WEDNESDAY. 10559 BETTY: WE MIGHT BE TALKING ABOUT 10560 WHO THE NEXT SECRETARY OF STATE 1056IS THISTIMETOMORROW, BUTRIGHT 10562 NOW, WE ARE TALKING ABOUT GARY 10563 COHEN. 10564 DOES HE HAVEANYAPPLICATIONS TO 10565 THE FEDQUESTION MARK>> NOT. 10566 THE FEDERAL RESERVECONTROLS 10567 MONETARY POLICY. 10568 IT WAS CREATEDBY CONGRESS TO DO 10569 JUST THAT. 10570 THE NEC WASCREATED BY EXECUTIVE 1057ORDERBY BILL CLINTON IN 1993. 10572 HE WANTED TO BRINGBOBRUBEN, 10573 THEN ITGOLDMAN, INTO HIS 10574 ADMINISTRATION, BUT LLOYD 10575 BENTSEN WAS ALREADY SECRETARY OF 10576 STATE. 10577 SO HEWANTED TO GIVE HIM A ROLE 10578 IN SETTING ECONOMIC POLICY. 10579 HE BROUGHT TOGETHER ALL THE 10580 DEPARTMENT CHIEFS TOFIGURE OUT 1058NEW BANKING POLICIES, NEW TAX 10582 POLICIES. 10583 IT'S THE KINDOF THING THATGARY 10584 COHEN PROBABLY HAS A LOT OF 10585 BACKGROUND IN. 10586 IT'S MORELIKEANECONOMIC THINK 10587 TANK. 10588 FROM THE WHITE HOUSE 10589 PERSPECTIVE, TRUMP PERSPECTIVE, 10590 GARY IS THE GUY WHO HAS STARTED 1059SPEARHEADINGTHINGSTO DOALL 10592 KINDS OF THINGSFOR THE ECONOMY. 10593 >> WHATIS GOING TOHAPPEN TO 10594 GOLDMAN IF HE GOES TOTHE WHITE 10595 HOUSE? 10596 THANK YOU SOMUCH. 10597 AS THE FED PREPARES TO TIGHTEN 10598 FUNDINGCOST,SHARESIN HONG 10599 KONGARE SURGING. 10600 KEEPING PRESSURE ON EQUITIES. 1060WEARE JUST ABOUTAN HOUR AWAY 10602 FROMTHE OPEN. 10603 WHAT IS THE RISK HERE? 10604 >> WEARESEEING INCREASING 10605 FUNDING COSTS. 10606 ITCOULD BECOME MORE EXPENSIVE 10607 FOR PEOPLE TO BORROW. 10608 WE ARE TALKING ABOUTTHE 10609 THREE-MONTH INTERBANK RATE IN 10610 HONG KONG. 1061THECREDITCRUNCH SIGNALS 10612 CONCERNABOUT A CASH EXIT US. 10613 -- EXIT. 10614 INPREVIOUS BOUTS OFCASHFLOWS, 10615 WEHAVE SEEN CURRENCY 10616 DEPRECIATING ALONG WITH THE 10617 RATE. 10618 IN JANUARY,THE HONG KONG DOLLAR 10619 PLUNGING TO A28 YEAR LOW. 10620 THAT IS THE BLUE LINE. 1062HIGHER U.S. INTEREST RATES 10622 CAUSED OUTFLOWS FROM EMERGING 10623 MARKETS IN HONG KONG. 10624 >> IS ITHERE WEGO AGAIN? 10625 SHOULDWE START WORRYING ABOUT 10626 CAPITAL OUTFLOWS? 10627 >>SOFAR, WE SHOULDN'TBE TOO 10628 WORRIED. 10629 WE ARETALKING ABOUT IMPLIED 10630 VOLATILITY. 1063THE HONG KONG EXCHANGE RATE 10632 ISN'T APPRECIATING THAT MUCH. 10633 NOTTO MENTION THAT ECONOMIES 10634 SAY OK, IF THE U.S. GOES AHEAD, 10635 THE RATE CAP WITH HONGKONG -- 10636 GAPWITH HONGKONG WILLSTILL 10637 NOT BE AS HUGEORAS WIDE. 10638 KEEP IN MINDWE AREGETTINGMORE 10639 MAINLAND INVESTORS COMING INTO 10640 HONGKONGTOHEDGE WEAKNESS IN 1064THEIR CURRENCY AND BY EQUITY IN 10642 HONG KONGHOMES. 10643 >> MORE BREAKINGNEWS. 10644 MUDDYWATERS COMING OUT WITH 10645 THEIR LATEST REPORT SAYING THEY 10646 ARETARGETINGTHEIR FIRST SHORT 10647 ON A JAPANESECOMPANY, UNITED 10648 SHARES, SAYINGTHE COMPANY 10649 CONSTANTLY MISSES SALESTARGETS 10650 AND IS A HIGHLY AGGRESSIVE 1065ACCOUNTINGBOOST. 10652 THEY AREINFREE FLOW ASOF 10653 DECEMBER NIGHTAND SHARES ARE 10654 FALLING AT THIS POINT AS MUCH AS 10655 5.5PERCENT. 10656 THEY HAVE NOIMMEDIATECONTENT 10657 FROM MUDDY WATERS. 10658 MUCHMOREAHEAD. 10659 CHINA TAKING ASTANCEAGAINST 10660 THE U.S. AND THEEU. 1066WHY THEY THINK THEY AREBEING 10662 RIPPED OFF. 10663 THIS IS BLOOMBERG. 10664 ♪ 10665 BETTY: THISIS DAYBREAK ASIA. 10666 I AM BETTY LIU IN NEW YORK. 10667 >> BOEING SHARESRISING IN 10668 EXTENDEDTRADING TO $1.42 PER 10669 SHARE. 10670 THEY ALSOSET A NEW $14 BILLION 1067BUYBACK PLAN. 10672 THERE IS DEMAND FOR LONG-- 10673 THERE ISWINNOWING DEMAND FOR 10674 LONG-HAULJETS. 10675 THE COMPANY SAID THECHANGES 10676 WANTA FACTTHE 2016 FINANCIAL 10677 GUIDANCE. 10678 VIACOM HASNAMED A NEWCEO. 10679 HE ISA 20 YEAR VETERANOF THE 10680 COMPANY AND HAS BEEN ACTING 1068CHIEF EXECUTIVE SINCE LAST 10682 MONTH. 10683 VIACOMSHARESTUMBLED IN NEW 10684 YORK AFTERTHE REDSTONES 10685 WITHDREW THEIR PROPOSED DEAL 10686 WITH CBS. 10687 >>INVESTING IN A NEW AIRLINE 10688 VENTURE INMYANMAR,THE NEW 10689 CARRIER PLANS TOSTART FLIGHTS 10690 IN 2018. 1069THEY HAVEA 49%STAKE INA LOCAL 10692 COMPANY. 10693 THE JAPANESECARRIER IS 10694 EXPANDINGABROAD AS MOREPEOPLE 10695 TAKETO THE SKIES IN DEVELOPING 10696 ECONOMIES. 10697 >> SPENDINGPOWER AMONG PEOPLE 10698 IN MYANMAR, ESPECIALLY INTHE 10699 NEW MIDDLECLASS, ISGROWING. 10700 WE WANT TO SERVICE THESE 1070CUSTOMERS. 10702 WE WANTTO CONTRIBUTETO 10703 MYANMAR'S ECONOMICDEVELOPMENT. 10704 >>TENSION BETWEEN BEIJINGAND 10705 WASHINGTON IS BEING RATCHETED UP 10706 ANOTHER NOTCH. 10707 >>STEPHEN ENGLE JOINS US NOW 10708 WITHMORE. 10709 THIS IS SUCH A LONG-STANDING 10710 ISSUE. 1071ASWEARE ALREADYSEEING, THERE 10712 IS RETALIATION OVER TRUMP ONE 10713 CHINA COMMENT. 10714 -- TRUMP'SONE CHINACOMMENT. 10715 >> GIVENTHE TIMING, OF COURSE, 10716 AFTER THE ONE CHINACOMMENT, 10717 THEREIS FRICTION THAT THIS 10718 MIGHT BE A BIT OF A TIT FOR TAT. 10719 KEEP IN MINDTHECOMPLAINT FROM 10720 CHINACAME A DAY AFTER THE 50TH 1072ANNIVERSARY OFCHINA'SEVAN INTO 10722 THE WORLD TRADE ORGANIZATION. 10723 THEIR CAMP--ADD INTO THE WORLD 10724 TRADE ORGANIZATION. 10725 CHINA SAYSTHATPRICES OF 10726 SANCTIONS ARE BEINGUNFAIRLY OR 10727 ARTIFICIALLY LIFTEDAGAINST 10728 THEM. 10729 CHINA WANTS ALLWTO MEMBERS TO 10730 USE TOMASTICPRICING, NOT THIRD 1073COUNTRY PRICING INREFLECTION OF 10732 CHINA'S EXPORTS --DOMESTIC 10733 PRICING,NOT THIRDCOUNTRY 10734 PRICING, IN REFLECTION OF 10735 CHINA'S EXPORTS. 10736 BETTY: THE STATEMENTS COMING OUT 10737 OFTHE PRESIDENT-ELECT ABOUT THE 10738 ONE CHILDPOLICY ARE THE 10739 BEDROCK. 10740 WHEN DOTHESE TIT FOR TAT JABS 1074BETWEENCHINA AND THE U.S.START 10742 TO BE A SERIOUSCONCERN? 10743 >>WE HAVEBEEN THINKINGABOUT 10744 THE ONE CHINA POLICYFOR SO 10745 LONG. 10746 AND OF COURSE, TAIWAN'S VIEW ON 10747 IT. 10748 THE 1992CONSENSUS, THEY AGREED 10749 THERE ISONLY ONECHINA,EVEN 10750 THOUGHTHEY DISAGREE ON THE 1075DEFINITIONOF WHAT THAT IS. 10752 EITHER TRUMPKNEW EXACTLY WHAT 10753 HE WAS DOING ORHAD NOIDEAWHAT 10754 HE WASDOING,BECAUSE CHINA WILL 10755 NOTGIVE ON THIS ISSUE. 10756 THISISA CORE PART OF THEIR 10757 RELATIONSHIP WITH THE UNITED 10758 STATES. 10759 THE GLOBALTIMESIS OUT WITH 10760 MORECRITICISM OF DONALD TRUMP, 1076SAYING HE ISACTINGLIKE ACHILD 10762 IN HIS IGNORANCE OF FOREIGN 10763 POLICY. 10764 THE ONE CHINA POLICY CANNOTBE 10765 BOUGHT AND SOLD. 10766 DAVID WU OF BANKAMERICA MERRILL 10767 LYNCHSAIDIT'S THENUMBER ONE 10768 WILD CARDFOR 2017. 10769 >> THIS IS MY SINGLE BIGGEST 10770 WORRY. 1077I FEAR THEU.S.AND CHINA COULD 10772 BE ON A COLLISION COURSE. 10773 >> AGAIN, ITCOMES BACKTO 10774 CHILDLIKE INNOCENCE COMING FROM 10775 DONALD TRUMP. 10776 >>BILLIONAIRE BENNY STEIN IS 10777 HAS ESCALATED A DECADEOLD ISSUE 10778 WITH RIOTINTO OVER THE RIGHTS 10779 TO AMINE. 10780 HE CLAIMS RIOTINTO MAYHAVE 1078AUTHORIZED A PAYMENTTOA 10782 CONSULTANT WHOIS ALSO A FRIEND 10783 OF GINNY'SPRESIDENT-- NEW 10784 GUINEA'S PRESIDENT. 10785 DAVID, TELL US MORE ABOUT THIS 10786 NEW DEVELOPMENT. 10787 >> GOOD MORNING. 10788 LAWYERSFORISRAELI BILLIONAIRE 10789 BENNY STEINSENTA LETTER TOTHE 10790 CHAIRMAN OF RIO TINTO SEEKING 1079BILLIONS INDAMAGESFOR WHAT 10792 THEY SAY WAS ABREACH IN THEIR 10793 RIGHTS. 10794 LOOK, INFACT,ADIRECTOR TOLD 10795 BLOOMBERG NEWS YESTERDAY THAT 10796 THE COMPANY COULD SEEK AS MUCH 10797 AS$5 BILLION IN DAMAGES. 10798 IFTHE COMPANY DOES NOT RECEIVE 10799 A RESPONSE WHICHINCLUDESENOUGH 10800 COMPENSATION BYTHE THIRDOF 1080JANUARY, IT INTENDSTO FILEA 10802 LAWSUIT. 10803 ALL OFTHIS RELATES TO THE 10804 ONGOING ISSUE FOR RIO. 10805 JUST LAST MONTH,RIOALERTED 10806 AUTHORITIES IN THEU.S.,U.K., 10807 AND AUSTRALIAAFTER HE CARRIED 10808 OUTAN INTERNALINQUIRY INTOTHE 10809 10.5 MILLION DOLLAR PAYMENT TOA 10810 CONSULTANT ACTINGFOR THE 1081COMPANYON THATPROJECT. 10812 THISIS YET ANOTHER ISSUE 10813 RELATEDTO WHAT IS PROVING TO BE 10814 QUITEUP PROBLEMATICPROSPECT-- 10815 QUITE APROBLEMATIC PROSPECT FOR 10816 RIO. 10817 >> THEYHAVE BEEN FAIRLY 10818 MEASURED IN WHATTHEY ARE SAYING 10819 PUBLICLY ABOUT THESE 10820 INVESTIGATIONS. 1082HAVE THEYRESPONDEDTO THIS 10822 LETTER? 10823 >> YES, THEY HAVE. 10824 AND THEYSAIDIF THERESOURCES 10825 -- IF THEYDO HAVE ALAWSUIT, 10826 THE COMPANY WILL ROBUSTLY DEFEND 10827 ITSELF. 10828 UP TO THIS POINT, THEYHAVE BEEN 10829 INCREDIBLY GUARDED ABOUT WHAT 10830 HAS BEEN SAID. 1083OBVIOUSLY, THE ONGOING 10832 INVESTIGATIONS THE AUTHORITIES 10833 ARE CARRYINGOUT-- THE CEO WAS 10834 ON BLOOMBERG ANDSTICKING TOHIS 10835 SCRIPT. 10836 HE SAID THE WHOLESITUATION IS 10837 CHALLENGING,BUTUNDER HIS 10838 WATCH, THE COMPANY WILLDO THE 10839 RIGHTTHING INEVERY TERRITORY 10840 ITOPERATES IN. 1084THECABIN HE HASBEEN PRETTY 10842 GUARDEDUP UNTIL NOW, BUT WE ARE 10843 EXPECTING --COMPANYHASBEEN 10844 PRE-GUARDED UPUNTIL NOW, BUT WE 10845 ARE EXPECTING A RESPONSE. 10846 >> MUCH MORE AHEAD. 10847 THE FLOODOF CHEAP LONG-HAULAIR 10848 FARES OUT OF CHINA. 10849 WE WILL ASSESSTHE IMPACT ON 10850 OTHERGLOBAL CARRIERS, NEXT. 1085THIS IS BLOOMBERG. 10852 ♪ 10853 >> CHINESE AIRLINES FLOODING THE 10854 WORLD WITH SOME OFTHELOWEST 10855 FARESWE HAVE SEEN. 10856 WHATIS BEHIND ALL OF THESE LOW 10857 AIRFARES? 10858 >> GOOD MORNING FROM SYDNEY. 10859 I THINK IT'S FAIR TOSAYWE HAVE 10860 SEEN A NEW ORDER, NOT JUST IN 1086CHINA'SAIRLINES,AND KOREAN 10862 AIRLINES, BUT SPREADINGACROSS 10863 EUROPE ANDINTO NORTH AMERICAAS 10864 WELL. 10865 BRITISHAIRWAYS, DELTAAIRLINES, 10866 AMERICAN AIRLINES ALLAFFECTED 10867 BY THISFLOOD OF CAPACITY, 10868 PARTICULARLY ACROSS THE PACIFIC. 10869 GREAT NEWS IF YOU ARE A 10870 PASSENGER. 1087PERHAPS UP TO 50% OFFARES, IF 10872 YOU'RECOMPARING CHINA AIR, 10873 CHINASOUTHERN, CHINA EASTERN, 10874 LEGACYCARRIERS,IT DOES RAISE 10875 OTHER QUESTIONS ABOUT THE 10876 LONGEVITY. 10877 >>I AM SUREEVERYONE WATCHING 10878 THE REPORT IS CHECKING THOSE 10879 FLIGHTS RIGHT NOW FOR THE 10880 HOLIDAYS. 1088WHOESSENTIALLY GETS HURT THEN? 10882 >>WE HAVEHAD DELTAAIRLINES 10883 ANDAMERICANALREADY POINT TO 10884 EXCESS CAPACITY ACROSS THE 10885 PACIFIC. 10886 FROM LAS VEGAS INTO HONGKONG 10887 INTO OTHER ASIAN AIRPORTSINTO 10888 TOKYO, WE HAVESEEN US. 10889 THE QUESTIONIS, CAN THEY KEEP 10890 THIS UP? 1089WE ARE NOTSURE IF CHINESE 10892 AIRLINES CANSUSTAIN THIS WITH 10893 PRESSURE ON YIELDS ALREADY 10894 BEGINNING TOTAKEIT BACK. 10895 >> ICANIMAGINE THEY HAVETO 10896 WATCHTHE OIL PRICES PERDAY 10897 CLOSELY. 10898 ANGUS, THANK YOU SO MUCH. 10899 THAT IS IT FORUS. 10900 PLENTY MORE STILLTO COMEON 1090BLOOMBERG MARKETS ON BLOOMBERG. 10902 ♪ 10903 >> 9 A.M.INSINGAPORE, MIDDAY 10904 IN SYDNEY. 10905 >>FROMBLOOMBERG'SASIA 10906 HEADQUARTERS IN HONGKONG, THIS 10907 IS BLOOMBERG MARKETS ASIA. 10908 >> RETAILSALESIN CHINA 10909 AND SUGGEST MORE STABILITY. 10910 >>PRESSURE ON CURRENCYAND 1091EQUITIES. 10912 >> DONALD TRUMP DELAYING HIS 10913 PRESIDENTIALBUSINESS 10914 CONFERENCE. 10915 >>AND BEIJINGHASLAUNCHED A 10916 TRADE COMPLAINT AND HAS CONCERNS 10917 ABOUTHIS ONE CHINA REMARKS. 10918 WE ARE 30 MINUTES AWAY FROM THE 10919 OPEN IN HONG KONG. 10920 SINGAPORE JUSTCOMING ONLINE. 1092HOW ARE THE MARKETS LOOKING? 10922 >>WE ARE LOOKINGATA PRETTY 10923 MIXEDPICTURE, TRENDING OUT A 10924 BIT LOWER. 10925 WE REALLY HAD THE WINDTAKEN OUT 10926 OF THE SAILSOF THE OIL DRIVEN 10927 RALLY YESTERDAY. 10928 OIL PULLINGBACK ABIT. 10929 STILL SEEING GAINS IN THE 10930 SESSION. 1093WEARESEEING THAT COME OUTOF 10932 THE EQUITIES MARKET AS WELL. 10933 SO FAR,LITTLE BITOF AMODEST 10934 BY WHEN IT COMESTOSYDNEY UP. 10935 WE ARESEEING WEAKNESS COMING 10936 THROUGH FROM THE NIKKEI 225. 10937 WE HAVE ACTUALLY MANAGEDTO COME 10938 BACK FROMSTEEPER LOSSES WE SAW 10939 AEARLIER ON. 10940 WE DO HAVE THE YENWHICH IS 1094STARTING TO WEAKEN. 10942 THATIS GIVING A LITTLE HEADWIND 10943 TOTHEJAPANESE EXPORTERS. 10944 STILL, JAPANESE STOCKS HAVECOME 10945 BACK FROM THEIR LOSSESAS WE GO 10946 INTO THATFED MEETING. 10947 THINGS ARE LOOKING PRETTYGOOD 10948 WHEN ITCOMES TO JAPANESE 10949 EQUITIES. 10950 NEW ZEALAND UP. 1095WE'RE STRENGTH COMING THROUGH 10952 FROM MALAYSIA. 10953 BIGDATAWEEKIN SINGAPORE. 10954 OIL EXPORTS OUT OF THEEND OF 10955 THE WEEK. 10956 TAIWAN OPENINGUP. 10957 LOTS TO DO WITHSOME 10958 GEOPOLITICAL CONCERNS GIVENTHE 10959 WAR OF WORDS BETWEEN CHINA AND 10960 PRESIDENT-ELECT DONALD TRUMP. 1096THE IMPEACHMENT VOTE IN SOUTH 10962 KOREA GOING TO THE 10963 CONSTITUTIONAL COURT FOR 10964 CONSIDERATION. 10965 WE AREABOUT IT OUR AWAYFROM 10966 THE CHINA NUMBERS. 10967 WATCHING THE AUSSIE DOLLAR, 10968 REACTION TO ANY CHINA MACRO 10969 NUMBERS,WE HAVESEEN RESISTANCE 10970 AT AROUND THE 75 LEVEL. 1097IF HE GETS TO 76, WE CAN SEE IT 10972 BUILDING -- IF ITGETS TO 76, WE 10973 CAN SEE IT BUILDING. 10974 THERE IS ALSO A SPACE THAT CAN 10975 REACTPOORLY,PARTICULARLY ON 10976 FIXED ASSET INVESTMENTS AS WELL 10977 AS INDUSTRIAL PRODUCTION. 10978 COPPER FALLING FORASECOND 10979 SESSION. 10980 GOLDSTAGING A LITTLE BIT OF A 1098RECOVERY. 10982 MONEY GOINGINTO SAFE HAVENS AS 10983 OIL REBOUNDS. 10984 FINALLY, WEAKNESS IN THE DOLLAR 10985 INDEX. 10986 A LOT OF EMERGING-MARKET 10987 CURRENCIES, INCLUDING THE YEN 10988 AND THE YUAN, ANDWE ARE HEADING 10989 TOTHE 115 HANDLE FOR THE N. 10990 --YEN. 1099>> WE WILL HAVE ANOTHER GAUGE OF 10992 HEALTHOF THE CHINESEECONOMY AS 10993 WE COME TO THE END OF THE YEAR. 10994 TOM, WHAT ARE WE LOOKING AT? 10995 >>WEARE NOTEXPECTING ANYTHING 10996 ISGOING TO DERAIL CHINA'S 10997 ECONOMIC STABILIZATION. 10998 INDUSTRIALPRODUCTION, RETAIL 10999 SALES ANDFIXED ASSETS ARE WHAT 11000 WE ARE FOCUSED ON. 1100WE HAVE ACHART THATSHOWSTHEIR 11002 PROGRESS AND DATAPOINTSSINCE 11003 2013. 11004 THE ECONOMY OVERALL HAS SLOWED 11005 IN THOSEOF ALL DROPPED DOWN. 11006 IN THE LASTFEW MONTHS, THEY 11007 HAVESTABILIZED,AND WE CAN 11008 EXPECT A CONTINUATION OFTHAT 11009 THEME. 11010 PRODUCTION IS EXPECTEDTO CALM 1101INAT6.1% FOR THE THIRD MONTH 11012 IN A ROW. 11013 RETAIL SALES ARE EXPECTED TO 11014 COME INAT 6.2PERCENT. 11015 FIXED ASSET INVESTMENT EXPECTED 11016 TO COME IN AT 8.3% FOR THE 11017 SECONDMONTHIN AROW. 11018 IT WILLBE INTERESTING TO SEE 11019 HOWMUCH PUBLICSPENDING ON 11020 FIXED ASSETS THERE IS VERSUS 1102PRIVATE SPENDING. 11022 WEGOT BETTER THAN EXPECTED 11023 MANUFACTURING DATA. 11024 AND AN IMPROVEMENT IN THE 11025 INFLATIONARY PICTURE. 11026 IN FACT, WE ARE OUTSTRIPPING 11027 CONSUMER PRICES FOR THE FIRST 11028 TIME IN FIVE YEARS. 11029 MORE DETAILS AROUND WHAT IS 11030 TURNING OUT TO BE ASTABILIZING 1103CHINA HEADINGINTO2017. 11032 >>GIVEN THIS POTENTIALLYMORE 11033 POSITIVE PICTURE,WHAT CANWE 11034 ANTICIPATE FROM BEIJING IN 2017? 11035 >>WESPOKE TO ANECONOMIST AT 11036 GOLDMAN SACHS BASED IN HONG 11037 KONG. 11038 SHE EXPECTS A MORE HAWKISH 11039 STANCE NOW THAT THIS MORE SOLID 11040 ECONOMIC BASE AND FOUNDATION IS 1104BEING WEIGHED. 11042 THAT SEEMS TO BE THE CONSENSUS 11043 NOW, THAT WITH A STRONGER 11044 ECONOMY AND THAT GROWTH TARGET 11045 LIKELY TOBE METEXPECTSBY THEF 11046 THE YEAR,THE POLICYMAKERS WILL 11047 START TOTACKLE THEFINANCIAL 11048 RISKS WE TALKABOUT ALL THE TIME 11049 INTHE CORPORATESECTOR, THE 11050 HOUSING MARKET, WHERE WEARE 1105ALREADY SEEING CURBSPUT IN 11052 PLACE. 11053 THAT SEEMS TO BE THE EMPHASIS 11054 NOW. 11055 THEECONOMISTS WE HAVE SPOKEN 11056 TO, INTERESTINGLY,BLOOMBERG 11057 ALSO SPOKE TO ASTRATEGISTIN 11058 CAPITAL MANAGEMENTWHO SPENT TWO 11059 DECADES INCHINA. 11060 HE SAIDTHE RISKS OF CHINA'S 1106ECONOMY ARE BEING OVERPLAYED. 11062 THERE IS NO MORE CHANCE OF 11063 FINANCIAL CRISISIN THE NEXT 11064 DECADE THEN THERE WASIN THE 11065 LAST DECADE. 11066 HE THINKS THE HOUSING MARKET 11067 DOES NOT FACE A BUBBLE PROBLEM 11068 BUT ISON STRONG FOUNDATION 11069 BECAUSE OF LEVERAGE HERE. 11070 HE ALSO THINKSTHERE IS A BIG 1107PROBLEMWITH THE BANKSAND THAT 11072 GOES AGAINSTTHE VIEWS OF MANY 11073 ECONOMISTS WHOTHINK THE CHINESE 11074 BANKS WILL NEED TO BE BAILED OUT 11075 INTHE NEXT FEWYEARS. 11076 SO, HEPAINTS A MORE POSITIVE 11077 PICTURE OF WHERECHINA'S ECONOMY 11078 LIES. 11079 WE WILL GET MORE DETAILS AND A 11080 COUPLE OF HOURS. 1108>>ABOUT 53 MINUTES AWAY, TO BE 11082 PRECISE. 11083 OUR CHINA CORRESPONDENT. 11084 >> FROM CHINA TO THEFED, WHICH 11085 IS EXPECTED TO ANNOUNCE ARATE 11086 HIKE ON WEDNESDAY,BUTBOND 11087 TRADERS ARE ALREADY PUSHING UP 11088 YIELDS. 11089 WHATIS DRIVING THE ROUTE WE ARE 11090 SEEINGIN THE BOND MARKET? 1109>> ITCERTAINLY HAS BEEN 11092 DRAMATIC. 11093 WE ARE SEEINGA LITTLEBOUNCE AS 11094 ASIAN TRADING GETS UNDERWAY. 11095 THE LATESTFACTOR IS THE RISING 11096 OIL PRICES. 11097 IT'STHE HIGHEST LEVEL IN 17 11098 MONTHS. 11099 THATIS THEENEMY OFBONDS AND 11100 THE LATEST THINGTHAT HELPS 1110DRIVE BONDS DRAMATICALLY LOWER. 11102 THE 10 YEAR YIELDGOTUP ON AN 11103 INTRADAY BASIS JUSTOVER2.5 11104 PERCENT ON MONDAY. 11105 THAT IS A RUNUPFROM THE RED 11106 CIRCLEIN THE LOWERRIGHT-HAND 11107 CORNER. 11108 1.3 2% ON THE 10YEARIN JULY, A 11109 RECORD LOW. 11110 ADOUBLING OF YIELDSIN SIX 1111MONTHS. 11112 NOW LET'S GO BACK TO THE LEFT 11113 SIDE OFTHE SCREEN. 11114 THE YELLOW LINE WILLTAKE YOUIN 11115 THAT DIRECTION. 11116 THAT WAS THEHIGH-END JULYOF 11117 2007 GOING INTO THE RECESSION. 11118 JUST PUTTINGTHAT IN 11119 PERSPECTIVE,WE ARE A LONG WAY 11120 AWAY FROM THERE. 1112NOW, OF COURSE,TRUMP'S PLANS TO 11122 BOOSTTHE ECONOMY ARE ALSO 11123 WEIGHING ON THE BONDMARKET. 11124 THE QUESTIONNOW IS IF THE 11125 ECONOMY IS GOING TO PICK UP 11126 MORE, IFIT ISCHANGING, WILL 11127 THAT CAUSE THE FEDS TO CHANGE. 11128 RATE HIKES ARE EXPECTED IN 2017. 11129 WHATABOUT 2018? 11130 WHAT WILL THEFED SIGNAL ABOUT 1113RATE HIKES THEN? 11132 >>WHEN IT COMES TO THE ECONOMY, 11133 WHENIT COMESTO RATE HIKES, 11134 THEY WERESKEPTICAL,TOBE 11135 DIPLOMATIC. 11136 >> SKEPTICAL TO SAY THELEAST. 11137 INFACT, AYEAR AGO, THE 11138 FORECAST FOR RATEHIKESDID NOT 11139 CAUSETHEBOND MARKET TO SELL 11140 OFF. 1114THEY HAD A RALLY. 11142 NOW IT LOOKS LIKE THEY'RE GOING 11143 TOGET THAT. 11144 THE BOND TRADERSARE STARTING TO 11145 FALL IN LINE. 11146 DERIVATIVES TRADERS ARELOOKING 11147 FOR MORE RATE HIKES THAN THEY 11148 WERE BEFORE. 11149 ON THETERMINAL, YOU CAN SEE THE 11150 CLUSTERS OF YELLOW DOTS. 1115THEY DEPICTTHE 2017 RATEHIKE. 11152 BY 2018, 3 HIKES. 11153 THE GREEN MEDIAN LINESHOWS YOU 11154 THAT. 11155 THE BOTTOMREDLINEIS WHAT 11156 TRADERSWERE LOOKING FOR. 11157 THEY DID NOT BELIEVE THEGREEN 11158 LINE. 11159 THEY SAIDYOU ARE BARELY GOING 11160 TO HIKE RATES AT ALL FORTHE 1116NEXT TWO YEARS. 11162 THE PURPLE LINE ISVERY CLOSE 11163 NOW TO WEAR THE GREEN LINE IS. 11164 THAT'S WHATTRADERS ARELOOKING 11165 FOR. 11166 THEY HAVE DEFINITELYCOME 11167 AROUND. 11168 PETER FISHERWASON BLOOMBERG 11169 EARLIER. 11170 HE WAS THE EXECUTIVE VICE 1117PRESIDENT OF THE NEW YORK FED 11172 AND A FORMER TREASURY SECRETARY 11173 -- UNDER SECRETARY. 11174 HETHINKS IT MIGHT BE TIMEFOR 11175 JANET YELLEN TO SEND A SIGNAL. 11176 >>WE REALLY DON'TKNOW WHERE WE 11177 ARE GOING TO BE A YEAR OR TWO 11178 FROM NOW. 11179 WEDON'T KNOWHOW MUCH OF THIS 11180 RECOVERY IS GOING TOCOME 1118THROUGH. 11182 WE DON'T KNOW HOW MUCH ON TOP OF 11183 THATTHEADMINISTRATION WILL 11184 PUT, CONGRESS WILL PUT. 11185 DOESJANETYELLEN KNOW SHE HAS 11186 TO PULL BACKFROM FORWARD 11187 GUIDANCE? 11188 SHE HAS TO PULL BACK FROM 11189 PRETENDING SHEKNOWSWHAT WILL 11190 HAPPEN 12MONTHS FROM NOW WHEN 1119SHE REALLY DOESN'TKNOW. 11192 >>PETER FISHERKNOWS ALL ABOUT 11193 THIS. 11194 HE SAYS FOREIGNGUIDANCE-- 11195 FORWARDGUIDANCE HAS DONEWHAT 11196 IT CAN DOFOR NOW. 11197 ITIS PAST ITS EXPIRING DATE AND 11198 TIME FOR THE FED TO STEP BACK. 11199 THE FED CANNOT TELLUS WITH ANY 11200 CERTAINTYWHERE IT IS GOINGTO 1120BE IN 2017OR 2018. 11202 >> BANKS, KATHLEEN. 11203 -- THANKS, KATHLEEN. 11204 >> LET'S GET OVERTO SYDNEY FOR 11205 THE FIRST WORD NEWS. 11206 >>CHINA HAS FILEDA WTO 11207 COMPLAINT AGAINSTTHE UNITED 11208 STATES AND EUROPEAN UNION. 11209 BEIJINGWANTSITS TO TRADING 11210 PARTNERS TO STOPUSING EXAMPLE 1121PRICES FROM OTHERNATIONS. 11212 BEIJING BELIEVES AUTHORITIES 11213 SHOULD BE USING DOMESTICPRICES. 11214 THEY SAY DUTIES ON CHINESE 11215 IMPORTS ARE ARTIFICIALLY 11216 INFLATED. 11217 THE EUROPEAN UNION HAS NOT SAID 11218 HOW IT WILL CONDUCTBREXIT 11219 NEGOTIATIONS WITH THEU.K. 11220 THEYWILL MEET ON THURSDAY 1122WITHOUT THERESA MAY TODISCUSS 11222 STRATEGY. 11223 A DRAFT STATEMENT FROM BLOOMBERG 11224 SAYS THEU.K. WILLBE EXCLUDED 11225 FROMOFFFUTURE-- ALL FUTURE EU 11226 MEETINGS. 11227 DONALD TRUMP HAS POSTPONED BY A 11228 NEWSCONFERENCE SCHEDULED FOR 11229 THURSDAY ABOUT HOW HE WILL 11230 HANDLEHIS NEST TRANSITIONS 1123WHILE IN THE WHITE HOUSE. 11232 TRUMPHASABOUT $3.6 BILLIONOF 11233 ASSETS AND $630 MILLION IN DEBT. 11234 DONALDTRUMP HASNOMINATED 11235 ANOTHER GOLDMAN SACHS EXECUTIVE 11236 TO HIS ADMINISTRATION. 11237 HEHAS PICKED GERRY COHEN TO BE 11238 HIS TOP ECONOMIC POLICY AND 11239 VISOR. 11240 -- ADVISOR. 1124COH WAS AGOLDMAN-- COHN WASA 11242 GOLDMAN SACHS EXECUTIVE. 11243 GLOBALNEWS 24 HOURS A DAY 11244 POWERED BY MORE THAN 2600 11245 JOURNALISTS ANDANALYSTS. 11246 THIS IS BLOOMBERG. 11247 >> NICE WORK, PAUL ALLEN. 11248 >> STILLAHEAD, GETTINGINTO 11249 JAPAN'S TOP RESTAURANT CAN BE A 11250 CHALLENGE FOR FOREIGNERS. 1125THE CEOOF THE COMPANY IS 11252 PROMISING TO GET YOUR 11253 RESERVATION -- FOR A PRICE. 11254 >>ANDA WEALTH MANAGER IS WITH 11255 US NEXT. 11256 ♪ 11257 >>WE ARE 15MINUTES INTO 11258 TRADINGIN SINGAPORE. 11259 TAKE ALOOK ATHOW SOME OF THE 11260 MARKETS INTHE REGION ARE 1126TRACKING. 11262 TAKE A LOOKAT WHAT'S GOING ON 11263 IN AUSTRALIA. 11264 THE NIKKEI LOSING ABOUT .2%. 11265 >> BOEINGSHARESUP,WAY AHEAD 11266 OF WHAT THE THINKING WAS BY 11267 ANALYSTSWHOEXPECTED A $14 11268 BILLIONBUYBACKPLAN. 11269 BOEING SAYS IT EXPECTS TO 11270 PRODUCE FEWER AIRCRAFTS. 1127THEY HAVE SLOWED ALPA 25 PLANES 11272 A MONTH. 11273 THECOMPANY -- SLOWEDOUTPUTTO 11274 FIVE PLANES A MONTH. 11275 THE YIELD ON BOEING AT3.5%. 11276 >>CHINA LIFE WILLPAY $2.9 11277 BILLIONFOR 44% OF THEPIPELINE 11278 STICK. 11279 THE STAKE. 11280 -- STAKE. 1128>>THE CHIEF EXECUTIVE IS 11282 SCRAPPING MERGER TALKS WITH CBS 11283 AFTER30 YEARSWITH THE COMPANY. 11284 SUMNER REDSTONE AND HIS 11285 DAUGHTER HAVESCRAPPED A 11286 PROPOSED DEAL WITH CBS. 11287 >> LET'S CHECKBACK IN ON THE 11288 MARKETS. 11289 WE ARE JOINED BYTHEDIRECTOR OF 11290 AWEALTHMANAGEMENT COMPANY. 1129WE SAW AREVERSAL INTHEFORTUNE 11292 OFASIAN MARKETS YESTERDAY 11293 FOLLOWING THE RALLY BY OIL. 11294 WHAT DO YOU MAKE OF THE FED 11295 DECISION? 11296 -- WHATYOUMAKEOF THE MARKETS 11297 MOVINGAHEADOF THE FED 11298 DECISION? 11299 >> THEREISCLEARLY QUITEA BIT 11300 OF MOMENTUM. 1130I THINK THEMARKETS IN THE 11302 SHORT-TERM ARE AHEAD OF 11303 THEMSELVES. 11304 WE CERTAINLY EXPECT TO SEE 11305 MARKETS DOWN QUITE A BIT. 11306 AS YOU KNOW,WE HAVE CHINA DATA 11307 COMING UP LATER TODAY. 11308 IT WILLCONTINUETO REINFORCE A 11309 FAIRLY STABLE OUTLOOK FOR CHINA. 11310 CHINA ISHOLDING AT ABOUTA6.7 1131PERCENT-7% GROWTH RANGE. 11312 --6.5%-7% GROWTH RANGE. 11313 WE ARE SEEING OIL GOING HIGHER. 11314 IT ISPROBABLY GOING TO KEY CAP 11315 IN THE MIDTERMASTHE U.S. 11316 STARTSTORAMPUP PRODUCTION. 11317 THE COMMENTARY OUT OF SAUDI 11318 ARABIAHASPROBABLY SURPRISED 11319 MOST OF THE MARKETPLACE. 11320 ITHINKTHAT ISWHEREWE WILL 1132SEESOMEMORE MOMENTUM ON THE 11322 OIL PRICE. 11323 >>LET'S TALK ABOUT THE FOMC. 11324 WEAREESSENTIALLYLOOKING FOR 11325 WHAT HAPPENS NEXT. 11326 IT'S A DONE DEAL PRETTY MUCH. 11327 PEOPLE ARE GOING TOGETINTO A 11328 TIZZY ABOUT THENEXT RATE HIKE. 11329 HOW MANYRATE HIKES ARETHEY'RE 11330 GOING TO BE IN 2017? 1133>>WELL,ECONOMISTS IN THE U.S. 11332 HAVEBEENFORECASTING FOR SOME 11333 TIME A RATERISEINDECEMBER. 11334 THAT'S PROBABLY COMING UP IN A 11335 COUPLEDAYS TIME. 11336 THAT'S A HIGH PROBABILITY. 11337 THEY HAVE ALSO BEEN FORECASTING 11338 TOFURTHER-- TO GO FURTHERRATE 11339 RISES IN 2000. 11340 IF WE STARTSEEING INFLATION 1134PICKUP ASA RESULT OF HIGHER OIL 11342 PRICES, TO BECOME'S. 11343 I DON'T THINK THAT IS YET PRICED 11344 IN-- TWO BECOMES THREE. 11345 I DON'T THINKTHAT IS YET PRICED 11346 IN BYTHE MARKETS. 11347 RIGHT NOW,THEY CAP OUTABOUT 11348 2%. 11349 THERE MIGHT BE POTENTIAL UPSIDE 11350 FROM THERE. 1135AGAIN,THAT IS WHAT WE HAVESEEN 11352 INTHIS PARTICULAR CYCLE. 11353 THEREHAS BEEN A LOT OF 11354 DISCUSSIONAROUND THE 10 YEAR 11355 BOND MARKETSELLOFF. 11356 AGAIN,FROMANOTHER PERSPECTIVE, 11357 THETENURED -- 10YEAR BOND 11358 YIELD WAS 2.2%AT THE BEGINNING 11359 OFTHE YEAR. 11360 SO, JUST SEEING A REAL JUMPBACK 1136TO WHERE WE WERE AT THE 11362 BEGINNING OF THE YEAR. 11363 SHOULD NOT BE SUCH A SURPRISE. 11364 >> LET'S LOOK AT A PERSPECTIVE 11365 WITHCHINA. 11366 WE ARE EXPECTINGSIGNSOF A 11367 STABILIZATION STORY,BUT YOU ARE 11368 SAYING IT ISNOT ENOUGHTO 11369 OFFSET THE WEAKNESS IN THE 11370 BROADER ECONOMY. 1137>>THERE ARE SOME CONCERNS IN 11372 ELEMENTS OF THE CHINESEECONOMY. 11373 THERE ARECONCERNSIN THE 11374 BANKING SECTOR,ON THE 11375 POSSIBILITYOFA PROPERTY 11376 BUBBLE. 11377 WE DON'T SEE THOSEAS MUCHAS 11378 CONCERNS, BUT THEY ARE CLEARLY 11379 IN THE BACKGROUND FOR US. 11380 WETHINKTHE ECONOMY HAS BEEN 1138WELL-MANAGED FOR THELAST YEAR 11382 OR SO. 11383 WE HAVESEEN6.5%-7% GROWTH. 11384 BUT THERISKSHAVE THEPOTENTIAL 11385 TO BE THERE. 11386 THEAUTHORITIESWILL CREATE 11387 POLICIES THATSTEM THOSE 11388 POTENTIAL RISKS. 11389 WE THINK IT IS ASTEADY ASSHE 11390 GOES TYPE OF STRATEGY BY THE 1139AUTHORITIES, NOT SO MUCH-- THAT 11392 ISWHATWE AREFORECASTING GOING 11393 INTO THECOMING YEAR. 11394 AND WE ARE PRETTY COMFORTABLE 11395 WITH THAT. 11396 >> THANK YOU SO MUCH. 11397 >> COMINGUP,GROWING PRESSURE 11398 IN HONG KONG'S MONEYMARKET. 11399 DETAILS ON THE WAY. 11400 ♪ 1140>> LET'SRETURN FOR AMOMENT TO 11402 THE RATE HIKE EVERYONE IS 11403 EXPECTING THIS WEEK. 11404 THEREIS PRESSUREON HONG KONG'S 11405 CURRENCY ANDEQUITIES. 11406 WHAT ARE THE RISKS HERE? 11407 >> THERE ARECOUPLE ON THE 11408 EQUITYMARKETS. 11409 IT IS BECOMING MOREEXPENSIVE TO 11410 BORROW INORDER TOBUY STOCK. 1141WHAT THIS MEANS ISTHAT THE 11412 THREE-MONTH INTERBANKRATE IN 11413 HONG KONGHAS BEEN SURGING FOR 11414 THE PAST 10 DAYSAND IS NOWON A 11415 2009 HI. 11416 IT IS BECOMINGMOREEXPENSIVE 11417 FOR PEOPLETOFUNDTHEIR 11418 PURCHASES. 11419 THIS CREDIT CRUNCHCOULD BE 11420 SIGNALING CONCERNS OF CASH 1142OUTFLOWS. 11422 INADSENSE, IFYOU -- INESSENCE 11423 , IF YOU LOOK IN ISOLATION, 11424 HIGHER RATES SHOULD SUPPORTTHE 11425 U.S. DOLLAR. 11426 WHAT WE HAVE SEEN INTHE PAST IS 11427 CASHOUTFLOWS THAT COME WITH 11428 HIGHER U.S. INTEREST RATESAND 11429 CASH OUTFLOWS FROM EMERGING 11430 MARKETS LIKE HONG KONG. 1143THAT HAS LEDTO THE CURRENT 11432 DEPRECIATION,ALONG WITH THE 11433 JUMP IN RATES. 11434 YOUCAN SEE IN JANUARY,THE BLUE 11435 LINE RIGHTTHERE, THE HONGKONG 11436 DOLLAR PLUNGING ALONG WITH A 11437 SURGE IN THE HIBOR RATE. 11438 THIS ON FEARS OFTHE YUANON THE 11439 GLOBAL MARKET. 11440 >> TELL MEHERE, WHATABOUT THE 1144CAPITAL OUTFLOW STORY? 11442 HOW DOES ITPLAY TO THAT 11443 NARRATIVE? 11444 >> RIGHTNOW, WE ARE SEEING THAT 11445 THESE INVESTORS DON'T SEEM TOO 11446 CONCERNED ABOUT IT. 11447 YOU SAID IT. 11448 THE EXCHANGERATEIS NOT HUGEIN 11449 ITSELF. 11450 WE ARE SEEING THAT THE EXCHANGE 1145RATE ISHOLDINGAGAINST THE 11452 GREENBACK, NOT TO MENTION THAT 11453 ECONOMIST'S ARE SAYING OK,FINE, 11454 IF THEFED HIKESRATESTWICE 11455 NEXTYEAR, STILL THE GAPWANT BE 11456 ASBIG, SOCASH OUTFLOWS WON'T 11457 BE AS HUGE. 11458 INVESTORSARE HEDGING FOR 11459 CURRENCYWEAKNESS. 11460 LIKE SONOT MUCH TO BE CONCERNED 1146ABOUT. 11462 THANK YOU FOR THAT. 11463 >>CHINA FILING ACOMPLAINT WITH 11464 THE WTO ABOUT HOWTHE UNITED 11465 STATES AND YEAR UP HE AND UNION 11466 APPLYTARIFFS. 11467 WE WILL LOOK AT THAT STORY ON 11468 THE WAYUP-- AND EUROPEAN UNION 11469 APPLY TARIFFS. 11470 WE WILL LOOK AT THAT STORY. 1147♪ 11472 >> THIS IS BLOOMBERG MARKETS 11473 ASIA. 11474 >> LOOKING AT OILPRICES, EVER 11475 SINCE SAUDI ARABIA MADE THEIR 11476 VERSIONOFTHE STORY, THERE HAS 11477 BEEN AN ABSOLUTE BINGE. 11478 >>TEAMS LIKE WE ARE LEAVING 11479 BEHIND THE FOUR NUMBER. 11480 >>-- SEEMS LIKE WE ARE LEAVING 1148BEHIND THE FOUR NUMBER. 11482 >> HE SAID HE COULDSEE IT GOING 11483 UP TO 60, BUT ITMIGHTTOUGH OUT 11484 THERE. 11485 >> AND AUDACIOUS CALL THAT ONE. 11486 I THINK YOU HAVE BEEN 11487 HIGHLIGHTINGTHIS, THAT THIS IS 11488 OVERBOUGHTTERRAIN. 11489 THISIS THE RELATIVE STRENGTH 11490 INDEX, RIGHT? 1149>> AND WE ARE SEEING IT HEAD 11492 TOWARD THE 70 MARK. 11493 >>REDLINE THERE. 11494 GREENLINE IS OVERSELLING. 11495 THAT IS CURRENTLYWHAT WE HAVE. 11496 LET'S GET TO THE MARKET OPEN 11497 HERE IN HONG KONG. 11498 HEIDI? 11499 HAIDI: YESTERDAYWAS A HORRIBLE 11500 DAY FOR THE MAIL ANDMARKETS. 1150THERE WAS THE WORST ACCLAIM WE 11502 HAVE SEEN IN SIX MONTHS AND 11503 BROUGHT BACK SOME OFTHOSE 11504 CONCERNS WE HAD A YEAR AND A 11505 HALFAGO, THE GREAT RISE AND 11506 FALL OF THE CHINESE STOCK 11507 MARKET, THE SUMMER OF2016. 11508 THOSE EMERY'S ARE STILL PRETTY 11509 FRESH. 11510 IT IS NOT A GREAT START. 1151--MEMORIES ARE STILLPRETTY 11512 FRESH. 11513 RETAILSALES AND INDUSTRIAL 11514 PRODUCTION, THE DOMESTIC 11515 ACTIVITY INDICATORSNEEDING A 11516 BETTER PICTURE OFTHIS 11517 STABILIZATION. 11518 WE HAVE SEEN GAINS COMING OUT OF 11519 AUSTRALIA, .1 OF 1%. 11520 IT ISTURNING TO MORE OF A MIXED 1152PICTURE. 11522 AS WESPEAKTHE NIKKEI 225 HAS 11523 MANAGED TO GET ITS HAVEA-- 11524 HEAD ABOVE WATER COMING OFF 11525 THOSE EARLIER LOSSES. 11526 WE WERE LOOKING AT SOMEHIGHS 11527 WHEN IT COMES TO TOKYO EARLIER 11528 ON. 11529 HOW ABOUT YOU TWO OF 1%. 11530 THE --OPTIMISM THAT THIS 1153IMPEACHMENT PROCESS IS GOING TO 11532 GIVE THE GOVERNMENTA SHOT IN 11533 THE ARM AND GET FISCALPOLICY IN 11534 PARTICULAR BACK ON THE AGENDA. 11535 WECAN THROUGH FROM THE STRAITS 11536 TIMES. 11537 OIL IS STARTING TO RETREAT A 11538 LITTLE BIT. 11539 PULLING BACK FROM THE17 MONTH 11540 HIGHS THAT WE SAWLAST-- IN THE 1154LAST SESSION. 11542 WE ARE STARTING TO SEE QUITE A 11543 BITOFMODE -- MOVE IN TERMS OF 11544 THAT DOLLAR INDEX. 11545 WE HAVE TWO DAYS OF LOSSES WE 11546 ARE STARTING TOSEE A LITTLE BIT 11547 MORE WEAKNESS. 11548 OIL IS TRACKING LIKE THIS,THAT 11549 EXUBERANCE THATWE SAW THE TOP 11550 OF THATOILRALLY. 1155THIS IS TO PENDING ON WHETHER WE 11552 GET UNEXPECTED WEAKNESS FROM 11553 THIS CHINA NUMBERS. 11554 THE AUSSIE DOLLAR ISPOSITIONED 11555 LIKE THIS AHEAD OF THE CHINA 11556 NUMBERS. 11557 75 HAS BEEN THAT RESISTANCE 11558 LEVEL SO IT IS SAFE THAT WE 11559 COULD GET A GOODNUMBERPUSHING 11560 TOWARD 76. 1156>>LET'SGET YOU TO SYDNEY AND 11562 GET YOU THE FIRST WORDNEWS. 11563 HERE'S PAUL ALLEN. 11564 PAUL:PROMINENT-- THEY TARGETED 11565 AJAPANESE FIRM WITH NEGATIVE 11566 REPORTS. 11567 THEFIRM MUDDYWATERS SEES THE 11568 TOKYO-BASED COMPANY FALLING. 11569 SHARESHAVE PER LOSSESAFTER A 11570 SHORTPLEDGE. 1157AND DISCUSSING INVESTING INTHE 11572 $100BILLION BANK. 11573 APPLE INVESTEDABILLION IN MAY. 11574 THE BIGGEST OUTLAY SINCEBUYING 11575 THEMUSICSTREAMMAKER BEATS. 11576 SHE TOLDTHE TRIBUNAL SHE ACTED 11577 IN THE PUBLIC INTEREST. 11578 SHE DID NOTTRY TO BLOCK THE 11579 $300 MILLION PUBLICPAYOUT. 11580 JUDGESREJECTEDHER REQUESTFOR 1158A DELAY IN THE TRIAL AND SHE 11582 WILL RETURN TO COURT ON TUESDAY. 11583 THE MISSION WILL BE A FINAL 11584 SWEEP OFDEEP OCEAN BEANS THAT 11585 MIGHT HOLD THE REMAINSOFIMAGE 11586 370 ANDTHE239 PEOPLEON BOARD 11587 THAT DISAPPEAREDON MARCH 8, 11588 2014. 11589 LOCAL MEDIA SAY IF THE PLANE IS 11590 NOT FOUNDIN THE TRENCHES THE 1159SEARCH WILL BE CALLED OFF IN 11592 JANUARY OR FEBRUARY. 11593 GLOBAL NEWS 24 HOURS A DAY, 11594 POWERED BY MORE THAN 2600 11595 JOURNALISTS AND ANALYSTS 11596 IN MORE THAN 120 COUNTRIES. 11597 I AM PAUL ALLEN. 11598 THIS IS BLOOMBERG. 11599 RISHAAD: LET'S HAVE A LOOKAT 11600 BENNY STEINMETZ,ESCALATINGA 1160DISPUTEOVER THE RIGHTS TO A 11602 MINE IN GUINEA. 11603 >>CLAIMS THATRIOTINTO MAY 11604 HAVE AUTHORIZEDTHE PAYMENT. 11605 TELL US MORE ABOUT THIS NEW 11606 DEVELOPMENT. 11607 IT IS THE LATEST TWIST IN WHAT 11608 HAS BEEN ARUNNINGDISPUTE. 11609 THE COMPANYCONTROLLEDBY MR. 11610 STEINMETZ, A BILLIONAIRE. 1161SAYING THIS ISA BREACH OFTHE 11612 RIGHTS TO MIND AND IRON ORE 11613 DEPOSIT. 11614 THECORRESPONDENT WHICHWAS 11615 BEFORE ACTION SETS OUTTHE -- 11616 THEY DONOTRECEIVE A RESPONSE 11617 THAT INCLUDES AN OFFER OF 11618 COMPENSATIONFROM RIO BY JANUARY 11619 3. 11620 IT INTENDS TO FILE A LAWSUIT. 1162THE COMPANY COULD SEEK MORETHAN 11622 $5 BILLION IN DAMAGES. 11623 ALL THIS RELATES TO THEONGOING 11624 ISSUE. 11625 RAO SAID IT WAS --ALERTED 11626 AUTHORITIES IN U.S. AND 11627 AUSTRALIA AND THE U.K.. 11628 ITCARRIED OUT AN INQUIRYBY 11629 CONSULTANT ACTING FOR RIO TINTO 11630 ON THE PROJECT. 1163IT ISFACING THE THREAT OF LEGAL 11632 ACTION. 11633 RISHAAD: RIOHAS BEENMEASURED 11634 ON WHAT IT HAS TO SAYONTHE 11635 INVESTIGATION TAKING PLACE. 11636 HAS THE GOVERNMENT UNDERSTOOD-- 11637 HOW HAS THE GOVERNMENTRESPONDED 11638 TO THIS? 11639 >> THEY CERTAINLY HAD. 11640 THEY SAID THAT SHOULDITFILED A 1164LAWSUITTHEN IT PLANSTO DEFEND 11642 ITSELF ROBUSTLY. 11643 WE ARE EXPECTING THE COMPANY TO 11644 RESPOND MORE FORMALLY TOTHE DSU 11645 RESOURCES. 11646 RIO HASBEEN MEASURED ON WHAT IT 11647 SAIDPUBLICLYONALERTING THOSE 11648 AUTHORITIES. 11649 THERE ARE ISSUES WITH RELATED TO 11650 THE PAYMENT AND GUINEA THAT ARE 1165CHALLENGING. 11652 THEYARE INSISTINGTHAT COME 11653 THEY WILL DO THE RIGHTTHING 11654 WHEREVER ITOPERATES BUT NOT 11655 REALLY COMMENTING MUCH ON THE 11656 SUBSTANCE OF THE INQUIRY OR 11657 SPECULATING ON WHEN THEYWILL 11658 SEE RESULTS. 11659 >> ISTHERE ARESPECT -- IS 11660 THEREA ROLE FOR RIOTINTO IN 1166THE PROJECT IN THE FUTURE? 11662 >> THE COUNTRY -- COMPANY DOES 11663 NOT LOOK LIKE THEYWILL 11664 [INDISCERNIBLE] 11665 RIO TOOK THE DECISION TO EXITIN 11666 OCTOBER. 11667 IT AGREED TO SELL ITS HOLDING IN 11668 THE PROJECT TO ITSPARTNER. 11669 ITWAS STRIPPED OF ITSRIGHTS BY 11670 GINNYAND 2014. 1167IT HAS FOUND EVIDENCE OF 11672 CORRUPTION IN A PROCESS TO AWARD 11673 RIGHTS, BSG HASALWAYS TONIGHT 11674 ANY WRONGDOING. 11675 BOTH OFTHESECOMPANIES 11676 EMBROILED IN LEGAL DISPUTESAND 11677 NOT WITHOUTANY PROSPECT. 11678 >> DAVID STRINGER OUT OF 11679 MELBOURNE. 11680 RISHAAD:BEIJINGFILING A 1168COMPLAINT TOTHE WORLD TRADE 11682 ORGANIZATION. 11683 >> STEPHEN ENGLE JOINS US FOR 11684 MORE. 11685 WE ARESEEING RETALIATIONOVER 11686 HISONE CHINA COMMENT. 11687 >> YOU NEED TO PUT EVERYTHINGIN 11688 PERSPECTIVE. 11689 YOU'RE GOING TOHAVE US THERE 11690 HAVE BEEN A NUMBER OF CASES 1169BETWEEN THE U.S. AND CHINA AND 11692 THEEU TO THE WTOAND -- ON 11693 ANTI-DUMPING METHODOLOGIES. 11694 COINCIDENTALLY ON THE ONE DAY 11695 AFTER THE 50TH ANNIVERSARYOF 11696 CHINA'S ACCEPTANCE THEY MADE THE 11697 COMPLAINT ABOUTTHE PRACTICES OF 11698 USING WHAT ISCALLEDSURROGATE 11699 COUNTRY PRICING FORANTI-DUMPING 11700 BASICALLY CHINA WANTSTHE 1170DOMESTIC PRICES TO BEUSED FOR 11702 ALL THE RETAIL MEMBERS ON THE 11703 ANTI-DUMPING. 11704 THEY SAY USINGTHIRD-PARTY 11705 COUNTRY PRICINGARTIFICIALLY 11706 RAISES TARIFFSONCHINESE 11707 PRODUCTS. 11708 WE HAVE TALKED TO A NUMBER OF 11709 PEOPLE THAT SAY THIS IS THE 11710 CONCERN. 1171HOW GENERALLYTHEOVERALL 11712 RELATIONSHIP IS GOING TO GO 11713 FORWARD. 11714 DAVIDWUHAD THIS TO SAY. 11715 >> I AM PRETTY BULLISH ABOUT THE 11716 WORLDOUTLOOK EXCEPT ITHINK, I 11717 FEAR THE U.S. AND CHINA COULD BE 11718 ON A COLLISION COURSE. 11719 >> AND WANTED TO REDO THIS-- I 11720 WANTED TO READ YOU THIS QUOTE. 1172THEY ARETWO IMPORTANT POLICIES. 11722 SAYING TRUMPISLIKEA CHILD IN 11723 HISIGNORANCE OF FOREIGN POLICY. 11724 >> THANKYOU, GIVING USSOME 11725 HINT OF WHAT U.S.-CHINA 11726 RELATIONS MAY LOOK LIKE. 11727 RISHAAD:WHATCOULD BE 11728 DRIVING BANKSTO INVEST IN THE 11729 $100 MILLION INVESTMENT FUND. 11730 THIS IS BLOOMBERG. 1173♪ 11732 >>A QUICKCHECK OF THE BUSINESS 11733 FLASH HEADLINES. 11734 THEACCOUNTING FIRM INCHARGE OF 11735 DUE DILIGENCE OVER THE BANK 11736 [INDISCERNIBLE] 11737 THEMAIL SAID VALUE IS ESTIMATED 11738 AT$1.5 BILLION. 11739 SHARES TOUCHED A RECORD LOW ON 11740 MONDAY. 1174NOWDOWN 11.25% IN SEOUL. 11742 RISHAAD:JEFF BEZOS HAS BEEN A 11743 VOCALCRITIC OF DONALD TRUMP. 11744 HE ISATTENDING WEDNESDAY'S 11745 GATHERINGOFTECH LEADERS CALLED 11746 BY THE PRESIDENT-ELECT. 11747 ELON MUSKAND SHERRY SANDBERG 11748 AND LARRY PAGE WILL BE THERE. 11749 THEY MAY HOPE TO FIND SOME 11750 COMMON GROUND. 1175>> THERE IS A COUPLE OF THINGS 11752 THAT ARE PRETTYIMPORTANT 11753 POTENTIALCHANGES THAT WE COULD 11754 SEE IN THECORPORATE FINANCE 11755 ARENA FORUS. 11756 THE FIRST IS A SHIFT ON 11757 REPATRIATION OF FOREIGN EARNINGS 11758 AND THATISGOVERNMENT PERMANENT 11759 SOLUTION, NOT A TAX HOLIDAY. 11760 WE WOULD BEHIT -- VERY HAPPY 1176WITH IT. 11762 THATWOULD GIVE US MORE 11763 FLEXIBILITY AND WETALKABOUT, 11764 IT GIVES US FLEXIBILITY ACROSS 11765 M&A AND DIVIDENDS, ACROSS 11766 BUYBACKS. 11767 AND THENTHERE IS ALSO TAX 11768 REFORM. 11769 >>APPLE HAS HAD TOHELP -- CAP 11770 TALKS-- TO HAVETALKS AND APPLE 1177MAY CONTRIBUTE AS MUCH AS $11772 BILLION TO THE FUND. 11773 WE EXPLAIN WHYAPPLE MIGHT BE 11774 INTERESTED. 11775 GREXIT COULD BE THE SEARCH FOR 11776 INFORMATION AND THE OTHER IT 11777 COULDBETHE SEARCH FOR PROFIT 11778 STABILITY. 11779 LIKELY IT IS BOTH. 11780 ACCORDINGTO ONE PERSON FAMILIAR 1178WHO WANTED TOBE ANONYMOUS IT 11782 WOULD GIVE APPLEANDTIM COOK 11783 INSIGHT INTO UP-AND-COMING 11784 TECHNOLOGIES. 11785 WE HAVE TO START WITH APPLES 11786 HUGE RELIANCE ON THEIPHONE 11787 FIRST. 11788 66% OF ITSREVENUE COMES FROM 11789 THEDEVICE. 11790 THATIS TWO OUT OF EVERY THREE 1179DOLLARS THAT IT MAKES. 11792 WE HAVE TO LOOK AT IPHONE 11793 REVENUE. 11794 INTHE THIRD QUARTER, THAT FELL 11795 23%. 11796 THAT AS SHIPMENTS FELL15%. 11797 APPLE DOESNEED TO FIND THE NEXT 11798 BIG THING. 11799 THATCOULD BE IN PART WITH THE 11800 APPLEWATCH. 1180IT IS A MARKETLEADERWITHA 40% 11802 MARKET SHARE AT LEAST IN THE 11803 THIRD QUARTER OF 2016. 11804 THE LASTYEAR, YEARON YEAR, IT 11805 HAD A70% MARKET SHARE. 11806 WE ARE LOOKING AT A DROP OF 30 11807 POINTS ACCORDING TOIDC. 11808 SAMSUNG IS THE NUMBER THREE. 11809 THEYARE-- THERE IS ALSO APPLE 11810 PAY EXPECTED TOHIT$200 BILLION 1181IN TRANSACTIONS BY 2019 BUTTHAT 11812 ISSTILL A FEW YEARSA -- AWAY. 11813 THERE IS THE APPLE CAR. 11814 WE REPORTED THE COMPANY DECIDED 11815 TO SCALEBACK PLANS FOR THAT 11816 WITH HUNDREDS OF JOBCUTS. 11817 AS FORTHEPOSSIBLE INVESTMENT 11818 OF$1 BILLION, THAT WOULD BE A 11819 DROP IN THE BUCKETOF ITS CASH 11820 ON HAND. 1182LOOK AT THEBLOOMBERG TERMINAL. 11822 APPLE HAS A HUGE CASH PILE. 11823 ABOUT237 BILLION DOLLARS. 11824 YOUREMEMBER IN MAY, APPLE 11825 INVESTED $1 BILLION INCHINESE 11826 -- A CHINESE RIGHT HAILING 11827 COMPANY. 11828 THE LAST IT INVESTED WASIN 2013 11829 WHENITBOUGHT HEADPHONE MAKER 11830 BEATS. 1183IT DOES HAVE A LOT OF MONEY IF 11832 IT WANTED TO INVEST EVEN MORE. 11833 AS FOR THE SOFTBANK VISIONFUND, 11834 THAT IS SUPPOSED TOBE UP AND 11835 RUNNINGIN 2017. 11836 THE CEOSAID $50 BILLION OR HALF 11837 OF THE FUNDWOULD GO BACK INTO 11838 U.S. INVESTMENT. 11839 IF APPLEDECIDEDTO INVEST THE 11840 MONEY COULD GO BACKINTOTHE 1184COUNTRYAS IT LOOKS TO CONTINUE 11842 TO INNOVATE AND TO PROFIT. 11843 RISHAAD: OURNEXT GUEST WAS A 11844 TRADER AT GOLDMAN SACHS. 11845 HE SETUPTABLE WHICH ALLOWS 11846 MEMBERS TOGETRESERVATIONS IN 11847 SOME OF THE MOST SOUGHT AFTER 11848 RESTAURANTS IN TOKYO. 11849 THANK YOUFORJOINING US TODAY. 11850 TELL USHOWIT WORKS ANDHOWYOU 1185FOUND THIS IDEA AND HOW YOU CAME 11852 UP WITH THE IDEA. 11853 GUEST: GOOD MORNING, THANKS FOR 11854 YOUR TIME. 11855 IT IS A SERVICE FORHIGH-END AND 11856 THE BEST RESTAURANTS IN JAPAN. 11857 YOUCANBOOK THE BEST 11858 RESTAURANTSWITH A FEW CLICKS 11859 AND THEIDEACAMEBECAUSE I LIVE 11860 IN SINGAPORE FOR FIVE YEARSAND 1186I HAVE SOME-- I WAS ASKED BY 11862 FRIENDSABOUT A JAPANESE 11863 RESTAURANT. 11864 SOMETIMES ITTAKES TIME OR THEY 11865 CANNOT BOOK. 11866 [INDISCERNIBLE] 11867 IKNEW LOTS OF THECHEFS AND I 11868 HADLOTS OF ENTERTAINMENT AND I 11869 LOVE EATING. 11870 I-- THEYWANTTO WELCOME 1187FOREIGNERS. 11872 >>YOU HAVE ABOUT500 REGISTERED 11873 DINERS. 11874 WHAT KINDOF PLANTS DO YOU HAVE 11875 TO EXPAND AS A MARKET-- FOR THE 11876 MARKET YOU ARE EYEING? 11877 GUEST: WEHAVE[INDISCERNIBLE] 11878 BUT WE WILL EXPAND TOKYODOAND 11879 WE WILL TRY TOEXPAND TO 11880 SINGAPOREOR MAYBE SYDNEY OR 1188HAWAIIIN2017. 11882 RISHAAD:I WANT TOGET A TABLE 11883 IN APARTICULAR RESTAURANT AND I 11884 HAVENOWAY OF GETTING IT. 11885 YOU HAVE ALREADYPRE-BOOKED 11886 TABLES AND THEN YOUCHARGE A$26 11887 RESERVATION FEE, RIGHT? 11888 GUEST: THAT IS CORRECT. 11889 WEPREPARE --TAKE ITAND LIST 11890 IT ONTHE WEBSITE. 1189YOU CAN PAY 26 BUCKS AND YOUR 11892 BOOKING IS CONFIRMED. 11893 >> THE COSTMANAGEMENTIS 11894 VERTICAL HERE IT WOULD SEEM. 11895 GUEST:-- CRITICAL HERE, IT 11896 WOULD SEEM. 11897 GUEST:[INDISCERNIBLE] 11898 RISHAAD:THETHING IS, THE 11899 SCALABILITY IS BASED ONYOU,YOU 11900 ARE SURELY GOING TO HAVE MORE 1190THAN YOU IF YOU'RE GOING TO 11902 SCALE THIS BUSINESSUP. 11903 GUEST:THAT IS CORRECT. 11904 FORNOW [INDISCERNIBLE] 11905 AND TALKING TO THEM BY MYSELF. 11906 IF I EXPAND TOINASIA INEED 11907 MORE PEOPLE. 11908 IWILLNOTEXPANDONLY IN TOKYO 11909 OR SOMETHING. 11910 I WILL MAKE SURE WEHAVE THE 1191BEST SPOTS IN EACHCOUNTRY AND 11912 EACH CITY. 11913 AND WEDO WANT PEOPLE TO EXPAND. 11914 >> GOOD LUCK GETTING DINERS 11915 THROUGH THE DOOR. 11916 RISHAAD:ITIS ONEOF INDIA'S 11917 BIGGEST BOARDROOM BATTLES 11918 HEATING UP. 11919 VOTING ON THE MOVE TO DUMP ITS 11920 CHAIRMAN. 1192THE LATEST COMING UP. 11922 ♪ 11923 >>THEME BATTLEBETWEEN -- THE 11924 BATTLE BETWEENTATAGROUP AND 11925 ITSCHAIRMANTODAY. 11926 RISHAAD:THIS IS AN INCREASINGLY 11927 BITTERFIGHT. 11928 WHY NOT JUST GET ON WITH MAKING 11929 MONEY? 11930 IGUESS IT GETS MUCH DEEPER THAN 1193THAT. 11932 >>IT CERTAINLY DOES. 11933 THAT IS WHAT THEY WOULD LIKE TO 11934 DO IS GET ON WITH MAKING MONEY. 11935 HE IS HOLDING ON TO POWER WITH 11936 EVERYTHING HE CANAND THAT HAS 11937 UNLEASHEDTHIS WIDENING BATTLE 11938 THAT STRETCHES ACROSS THE ENTIRE 11939 INDIANBUSINESS ESTABLISHMENT. 11940 WE ARE TALKING ABOUT A COMPANY 1194THATIS DIVERSIFIED INTOA 11942 NUMBER OF KEY INDUSTRIES. 11943 IT IS A GLOBALCOMPANY AND YOU 11944 HAVE GOT INVESTORSINVOLVED NOW. 11945 WE HAVE LEARNED FROM OUR 11946 REPORTERS, WE HAVE A NUMBER OF 11947 SCOOPS ON THISTHATCITIGROUP 11948 ANDJPMORGAN HAVEBOTHBEEN 11949 RECRUITED TO COME IN ON THESIDE 11950 TOOUST CYRUSMISTRY ON THE 1195POSITIONSHEIS HOLDING ONTO. 11952 YOUHAVE INVESTORS WHO ARE 11953 INVOLVED AS WELL. 11954 THEY'RE GOING TO BE HAVING BIG 11955 BLOCKS OF VOTES ATTHESE 11956 UPCOMING SHAREHOLDERS' MEETINGS 11957 LIKE THE ONE THAT IS AGILE DO, 11958 THISEVENING, IS ITTIMEFOR-- 11959 ASIATIME FOR TATA CONSULTANCY 11960 BUSINESS. 1196THE OUSTER OF MISTRY ISFROM 11962 ALLIES THERE, THAT WILL BE A 11963 GOOD SIGN THAT HE IS ON THE WAY 11964 OUT. 11965 >> DOES THIS HAVE THE POTENTIAL 11966 TOSPILL OUTSIDE INDIA? 11967 >> IT DOES. 11968 THIS IS A GLOBAL COMPANY AND 11969 SOME OFTHE CONFLICTS THAT LED 11970 TOTHIS IN THEFIRSTPLACEARE 1197SOMEWHAT GLOBAL IN NATURE. 11972 FOR EXAMPLE,TATATELESERVICES, 11973 THEWIRELESSUNIT OF THE 11974 CONGLOMERATE HAS ADISPUTE GOING 11975 ON WITH THE BIGGEST WIRELESS 11976 SERVICE PROVIDER IN TOKYO. 11977 IT ISA DISPUTEOVERAPAYMENT 11978 ON A JOINT VENTURE. 11979 THAT IS COMING TO A HEAD PARTLY 11980 AS A RESULT OF THIS. 1198RISHAAD:GREATTALKINGTO YOU. 11982 JOINING US FROM TOKYO. 11983 >> COMING UP, A TRIPLE DOSE OF 11984 DATA. 11985 THAT IS NEXT. 11986 ♪ 11987 RISHAAD:IT IS ALMOST 10:00 A.M. 11988 IN BEIJING. 11989 SOPHIE:THISIS "BLOOMBERG 11990 MARKETSASIA." 1199♪ 11992 RISHAAD:SECONDAWAY FROM THE 11993 LATEST SNAPSHOT OFCHINA. 11994 SOPHIE:FUNNY CASA SURGING IN 11995 HONG KONG. 11996 --FUNDINGISSURGING IN HONG 11997 KONG. 11998 RISHAAD:GARY CURRAN ISBEING 11999 ANNOUNCEDAS DONALD TRUMP'S 12000 ECONOMIC ADVISOR. 1200RISHAAD:WEARE GETTINGDATA 12002 COME WE ARE LOOKINGFOR RETAIL 12003 SALES -- 12004 >>6.2%ON YEAR FOR NOVEMBER, 12005 THE FORECAST WAS FOR 6.1%. 12006 RISHAAD:TOM? 12007 TOM:THESTANDOUT NUMBER WASTHE 12008 RETAIL SALES COMING INAT6.2% 12009 --WE SAW 10% RISE IN RETAIL 12010 FIRE -- SALESIN OCTOBER. 1201THIS10.8% A SHOWING THAT THE 12012 CHINESE CONSUMER REMAINS 12013 RELATIVELYCONFIDENT. 12014 WE HAVETHATNUMBER COMING IN AT 12015 6.2%MARGINALLYABOVETHE 12016 ESTIMATES OF 6.1%. 12017 ITWASALSO 6.1%IN OCTOBER, AND 12018 THE FIXED ASSETS INVESTMENT CAN 12019 IN LINEWITH INVESTMENTS, A.3% 12020 FOR JANUARY-- 8.3%IN JANUARY 1202THROUGH FEBRUARY. 12022 THERE HAS BEEN SOME DISCUSSION 12023 AMONGST ECONOMISTSAS HOW MUCH 12024 CURBS AND HOUSEPRICES WOULD 12025 HAVE ONPEOPLE'S SPENDING POWER. 12026 WE HAVE IN INFLATIONDATA 12027 SHOWING A PICKUP IN CONSUMER 12028 INFLATION BUT LIKELY THATWILL 12029 SEE THROUGH THE MONTH AHEAD. 12030 THAT1.8% IS APOSITIVE IN TERMS 1203OFWHATCOLOR -- POLICYMAKERS 12032 ARE TRYING TO DO. 12033 IT IS MARGINALLY ABOVE 12034 ESTIMATES. 12035 WHEN WE ARE TALKING INDUSTRIAL 12036 PRODUCTION,WE TALKING CEMENT, 12037 GLASS, AUTOS. 12038 WE'RE GOING TO GET A BREAKDOWN 12039 OF EACH OF THOSE COMPONENTS PLAN 12040 TO THAT NUMBER. 1204WHAT COMES TO ASSETINVESTMENT, 12042 WE'RE GOING TO HAVETO BREAK IT 12043 DOWN AND SEE HOW MUCH THE PUBLIC 12044 STATE WILL HAVETOSTEP UP ITS 12045 SPENDING, BECAUSE WE HAVE SEEN 12046 THESTATE HAVING TO TAKE THE 12047 PLACE OF THE DRIVE ITSECTOR, 12048 WHICH HAS PULLED BACK ON SOME OF 12049 ITS FIXEDASSET INVESTMENTS. 12050 WE WILL GET SOME OF THOSE 1205DETAILS IN THENEXT HOUR. 12052 IN TERMSOFPOLICY MAKERS, THIS 12053 PAINTS A PICTURE OF ECONOMIC 12054 STABILIZATION AT THE END OF THE 12055 YEAR. 12056 ITDOESHAVE A BASIC 12057 POLICYMAKERS CAN USE TO REIGNIN 12058 SOME RISKS. 12059 EXPECT TO SEE IT CONTINUE TO 12060 PULL BACK OF CREDIT,AND WHEN WE 1206GET MONEY SUPPLYDATA, WE ARE 12062 EXPECTINGTOGET THAT SOMETIME 12063 THIS WEEK, THAT WILL GIVE YOU AN 12064 IDEA OF THE LOWSIN CREDIT, AS 12065 WELL, WHICH HAD EASED BACK. 12066 GOLDMANSACHSTHINKS THERE WILL 12067 BE A MORE HAWKISHLINE, BECAUSE 12068 IT HAS SPACE NOW TO ACT. 12069 THE BIG UNKNOWNS GOING FORWARD 12070 INTO TOY 17 ARE DONALDTRUMP-- 1207INTO 2017 ARE DONALDTRUMPAND 12072 HOW HEWILL HANDLECHINESE 12073 IMPORTS. 12074 THAT WILL BE AFFECTED TOWATCH, 12075 AS ISTHE RATING-- RAINING 12076 CREDIT AND SET TO-- STEPSTO 12077 CHANGE THE CREDIT MARKET. 12078 WHENTHEY STARTTO PULL BACK AND 12079 YOU THROW CROP INTO THE MIX, 12080 THERE IS SOME UNCERTAINTY ON 1208CHINA. 12082 SOPHIE:THANK YOU SO MUCH. 12083 RISHAAD: THE AUSSIE DOLLAR IS 12084 OFTEN ONE OF THE FIRST TWO 12085 REACTS. 12086 >> WE HAVE SEEN A SPIKE IN THE 12087 AUSSIEDOLLAR, ITWAS TRADING 12088 WEAKER AGAINSTTHE U.S. DOLLAR 12089 DESPITE THE FACT THAT WE HAVE 12090 SEEN A BIT OFDOLLAR WEAKNESS 1209ACROSS THE BOARD. 12092 YOU'RE NOW SEEING THAT PULLBACK. 12093 FAIRLY UNCHANGED,THE AUSSIE 12094 DOLLAR. 12095 A LITTLE BIT OF A SPIKE 12096 INITIALLY WHEN THE NUMBERS HIT 12097 THEWIRES. 12098 BETTER THANEXPECTED, SO FAR NO 12099 REAL REACTION IN THE CASH 12100 MARKET. 1210WE'RE SEEING THE SHANGHAI 12102 MARKETS DOWN 4/10 OF1%. 12103 IT WAS DOWNAROUND2.7%. 12104 STILL SEEINGSOME WEAKNESS 12105 COMING THROUGH. 12106 A LOT OF ANALYSTS ARE SAYING IT 12107 IS LIKELY MARKETS WILL REMAIN 12108 LISTLESS HEAD OFTHE FED 12109 MEETING, EVENTHOUGH WE HAVE 12110 SEEN A POSITIVE UPSIDE IN CHINA. 1211IT IS STILLFLAT AND SLIGHTLY IN 12112 THERED FROM SOME OFTHEMETALS 12113 PLAYERS IN AUSTRALIA. 12114 AND IN HONG KONG, IT CONTINUE TO 12115 DECLINEBY2/10 OF1%. 12116 SOME WEAKNESS COMING THROUGH 12117 FROM FINANCIALSANDSOME OF 12118 THOSE REAL ESTATE PROPERTY 12119 TRUST, ALTHOUGH YOU ARE SEEING 12120 SOME UPSIDE FROM A LOT OF THE 1212ENERGY PLAYERS,AND PETROCHINA 12122 IS THE FRONT RUNNER ONTHE HONG 12123 KONG EXCHANGE. 12124 FLAT INTHE NKAND TROPIC 12125 TRADING AT LEVELS WE HAVE NOT 12126 SEEN SINCE LAST YEAR. 12127 THEOTHER ACTION WE ARE SEEING 12128 TODAY IS IN THE BONDMARKET, AND 12129 IF YOU HAVE A LOOK AT THE 12130 AUSTRALIAN10 YEAR, YOU ARE 1213SEEING BILLS BEING SOLD ALL DAY, 12132 A DIFFERENT PICTURE THAN 12133 YESTERDAY. 12134 BONDS ARE GETTING MORE TRACTION 12135 ON THE TENUREBASIS, DOWN BY 12136 THREE BASISPOINTS. 12137 AT THISSTAGE, NO REAL POSITIVE 12138 UPSIDE IN TERMSOFCURRENCIES OR 12139 CASHMARKETS FROM CHINA. 12140 BUT IT WAS ABIT BETTER THAN 1214WHAT THEMARKET WAS LOOKING FOR. 12142 RISHAAD:THANK YOU. 12143 GETTING INTO ASSETS NOW. 12144 SOPHIE:THE NUMBERS ARE PRETTY 12145 MUCH COMING IN LINE WITH 12146 ESTIMATES GIVEN WHAT WE SAWIN 12147 NOVEMBER. 12148 WHAT IS YOURASSESSMENT OF THE 12149 LATESTACTIVITY? 12150 >>I THINK WESEE STABILIZATION, 1215STABILIZING OF INDUSTRIAL 12152 PRODUCTIONAND ROBUST CONSUMER 12153 SENTIMENT. 12154 WE ALSOSAW DECENT INVESTMENT 12155 DATA, SO I THINK OVERALL THE 12156 DATACONFIRMS THAT INTO THE 12157 FOURTH QUARTER, THE ECONOMY 12158 REMAINQUITESOLID IN GROWTH. 12159 THE GLOBALIZATIONSTORY AND JUST 12160 HANGING ON. 1216RISHAAD:MOVING 6.7 OVER THE 12162 QUARTER, THAT HASBEEN STABLE 12163 ALL YEAR. 12164 THAT COULDTRANSLATE INTO 12165 SOMETHING EVEN STRONGER THAN 12166 THAT LOOKING AHEAD-- WELL, 12167 LOOKING AT THE PRESENT QUARTER. 12168 >>THERE COULD BE SOME MODEST 12169 UPSIZE RISK, BUT I THINKTHE 12170 ECONOMY IS SEEING SOMEHEADWINDS 1217DOWN THE ROAD. 12172 NUMBER ONE, WE HAVE UNCERTAIN 12173 TRADE POLICIES COMING FROMTHE 12174 -- TRUMPPRESIDENCY, AND NUMBER 12175 TWO IS THE CHINA HAS BEEN 12176 TIGHTENINGTHEMARKET. 12177 DESPITE THE NEAR TERM 12178 STABILIZATION, ITHINK-- WHICH 12179 ALSO OFFERSSOME ROOM FORTHE 12180 POLICY TOSTAYNEUTRAL TO 1218TIGHTENING. 12182 SOPHIE:WHATDOES THIS MEAN FOR 12183 POLICYMAKERS, ESPECIALLY WHEN IT 12184 COMES TO THE BALANCING ACT? 12185 >> WE ARE SEEING THE SHIFT OF 12186 POLICY PRIORITIES OF THEPBOC 12187 SINCE AUGUST, WHENIT RESUMED 12188 THE 14DAY LOOPHOLE. 12189 WE SEETHE POLICY BROKERS HAVE 12190 SHIFTED FROMSTABILIZINGGROWTH, 1219SUPPORTING GROUPINTO CONTINUED 12192 FINANCIALRISK, AS WELLAS 12193 MANAGING THE IMPOSSIBLE TRINITY, 12194 THE CURRENCY PRESSURES. 12195 RISHAAD:UNDERLINING THAT, THE 12196 WHOLE CABINET OUTFLOW STORY, AS 12197 WELL. 12198 IT LOOKS LIKE CAPITAL CONTROL IS 12199 BEING TAKEN DOWN. 12200 A CONVERSATION ALONG WAY OFF FOR 1220NOW. 12202 >>ITHINK INTENSIFYING CAPITAL 12203 CONTROLS IS ONLYNECESSARY, 12204 ESPECIALLY WITH VERY STRONG 12205 DOLLAR MOVEMENT AFTER DONALD 12206 TRUMP'SVICTORY, AND GOING 12207 FORWARD,OUR BEST CASE IS THREE 12208 FED RATE HIKES BY THE END OF 12209 2017, AND WE CONTINUE TO HAVE A 12210 VERYSTRONG DOLLAR THAT WILL 1221FURTHER ADD TO THECURRENCY 12212 DEPRECIATION PRESSURE. 12213 WE KNOW THATTHE --ALSO 12214 HOUSEHOLD,ANDHASCONTINUED 12215 INCENTIVETOCONTINUE THEIR 12216 ASSETS. 12217 SOPHIE:THERE ARESOME 12218 ASSESSMENTS THAT THE CHINA 12219 PICTURE IS NOT AS WORRISOME AS 12220 SOME CONTENT. 1222THAT DESPITEWHAT IS GOING ON, 12222 HOUSING MARKET IS RELATIVELY 12223 STRONG. 12224 RISHAAD:AND MANAGEABLE. 12225 >>I THINK THEREIS CLEARLY A 12226 SENSE OF COMPLACENCY FROM THE 12227 MARKETS, WHICH IS ALSO TRUE. 12228 CYCLICALLY WITHIN THEOLD 12229 ECONOMY WITH A STRONG REBOUND 12230 SINCE THE BEGINNING OF THE YEAR 1223WITH A VERY STRONGCREDIT. 12232 BUT WE KNOW THIS ISANOTHER 12233 ROUNDOF DEBT FUELED INVESTMENT 12234 GROWTHAND STABILIZATION, WHICH 12235 ONLY BRINGS MORE RISKS DOWN THE 12236 ROAD INTHE MEDIUM TERM. 12237 INTHE NEAR TERM, I THINK IT IS 12238 FAIR TO SAYTHATCHINA NEEDS A 12239 STABILIZING FACTOR FOR THE 12240 GLOBAL ECONOMY. 1224RISHAAD: THAT IS JUST IT. 12242 THERE IS A BITOF-- THECAPITAL 12243 OUTFLOW ANDHOUSING. 12244 WHERE DOESTHAT ALL LEAVE YOU 12245 WAS LOOKING AT THEYUAN? 12246 PEOPLE OFSAID,OH7.2,7.3 12247 MAYBE BEFORE THE SUMMER. 12248 >>OUR VIEWIS THE CURRENCY WILL 12249 CONTINUE TO DEPRECIATE TO 7.35 12250 IN A YEARS TIME. 1225THERE'S ALSO A RISK IF WESEEA 12252 RECENT FAST DEPRECIATION OF A 12253 CURRENCYADDED TO THE OUTFLOW 12254 PRESSURES. 12255 THEREISSOME INCREASING 12256 PROBABILITY THAT THE GOVERNMENT 12257 MAY SHIFT TOWARD MORERAPID 12258 SHIFT OF FLOATINGCURRENCY. 12259 SOPHIE:ARE CAPITAL CONTROLS 12260 ANTICIPATED? 1226>>THEY WILLBE NECESSARY TO 12262 FACILITATE THIS SHIFT TO A MORE 12263 FLEXIBLE EXCHANGERATE, WHERE WE 12264 SEE MOREVOLATILITYAND REDUCING 12265 OFINTERVENTION. 12266 SOME OF THE TIMING,WITH 12267 PRESIDENT TRUMP CONTINUING TO 12268 HIGHLIGHT SOME OF THE POTENTIAL 12269 TARGETING OF CHINASOPHIE:. 12270 LOOKING AT THE WAY THAT CHINA'S 1227ETHICS RESERVES HAVEBEEN 12272 DRIVING DOWN. 12273 WHAT YOU MAKEOF THE LABELING BY 12274 PRESIDENT FROM? 12275 -- PRESIDENT-ELECTTRUMP? 12276 >> THERE IS CONSTANT 12277 INTERVENTION IN THE MARKET. 12278 IT IS NOT REALLY CONSTITUTE A 12279 STRONG ARGUMENT THAT WE ALL 12280 KNOW,THEPRESIDENT'S YOU MAY BE 1228HASTHE POWER OF MAKING SOME 12282 TECHNICAL ADJUSTMENTS, BUT OUR 12283 BASE CASEIS THAT THE KEY IS NOT 12284 NECESSARILYJUSTTHE CURRENCY 12285 MANIPULATOR COME UP A KINDOF 12286 TRADE POLICIES HE WOULD HAVE 12287 IMPOSEDWITH TRADING PARTNERS, 12288 INCLUDING CHINA. 12289 RISHAAD:WE JUST OF NO. 12290 THAT IS A BIG PROBLEM. 1229HEHAS SAID HE WOULD YOU SOME 12292 THINGS ON HIS FIRSTDAY THAT I 12293 DON'T THINK HE WILL HAVE TIME TO 12294 DO. 12295 >>OTHER THAN THE POLITICAL 12296 COMMENTS HE HASMADEIN THE 12297 REGION, HE IS NOT YETMOVED ON 12298 THE TRADEFRONT ONCHINA. 12299 BARELY THERE IS ARISK THAT WE 12300 SHOULD NOTBE UNDERESTIMATING. 1230RISHAAD:THANK YOU SO MUCH. 12302 LOOKING INTO ALL OFTHISDATA. 12303 BROADLY SPEAKING, WE WERE PRETTY 12304 MUCH-- EXACTLY. 12305 >>THE EUROPEAN UNION WILL SET 12306 UP HOW TO CONDUCTBREXIT 12307 NEGOTIATIONS WITH U.K.. 12308 LEADERS WILL MEET ON THURSDAY 12309 WITHOUT PRIOR MINISTER THERESA 12310 MAY TODISCUSSTHE STRATEGY. 1231THE U.K. WILL BE EXCLUDED FROM 12312 ALLMEETINGS WERETHE 27 12313 REMAINING EU MEMBERS DISCUSS 12314 BREXIT. 12315 CHRISTINE LAGARDE HAS TOLD A 12316 PARIS COURT THAT AN IMAGINARY 12317 PLOTHASLED TO HER IRAN TRIAL 12318 ONNEGLIGENTCHARGES. 12319 SHE SAID SHE DID-- JUDGES 12320 REJECTED HER REQUEST FOR A DELAY 1232IN THE TRIAL AND SHE WILL RETURN 12322 TOCOURT ON TUESDAY. 12323 DONALD TRUMP IS SETTO-- SAID 12324 TO BEPOSTPONING UNTIL NEXT 12325 MONTH THE DETAILS OF HOW HE WILL 12326 HANDLE HISBUSINESSOPERATIONS 12327 IN THE WHITE HOUSE. 12328 TRANSITION OFFICIALS SAY ANEWS 12329 CONFERENCE SCHEDULED FOR 12330 THURSDAY WILL BEDELAYED BECAUSE 1233THE PRESIDENT-ELECT ISBUSY 12332 FILLING HIS ADMINISTRATION POST. 12333 THAT ONTOP HASABOUT $3.6 12334 BILLION IN ASSETSAND $630 12335 MILLION IN DEBTANDHOLDS MORE 12336 THAN 500 COMPANIES. 12337 DONALD TRUMP HASNOMINATED 12338 ANOTHER GOLDMAN SACHS EXECUTIVE 12339 TO HIS ADMINISTRATION. 12340 HE HAS PICKED 25 YEARVETERAN 1234GARYCOHEN TO BEHIS ADVISOR. 12342 -- ECONOMICADVISOR. 12343 HIS ROLE ON THE NATIONAL 12344 ECONOMIC COUNCIL WILLSEEHIM 12345 HELP COORDINATE COMES ECONOMIC 12346 PROGRAM. 12347 GLOBAL NEWS 24 HOURS A DAY, 12348 POWERED BY MORE THAN 2600 12349 JOURNALISTS AND ANALYSTS IN MORE 12350 THAN 120 COUNTRIES. 1235THIS ISBLOOMBERG. 12352 SOPHIE:STILL AHEAD, TRADEAND 12353 TREASURY. 12354 CHINA LAUNCHES A WTO COMPLAINT 12355 AGAINST THE U.S.ANDEU. 12356 RISHAAD:THEGLOBAL BOND ROUT. 12357 YOU ARE WATCHING BLOOMBERG. 12358 SOPHIE: THE FED IS WIDELY 12359 EXPECTEDTO ANNOUNCE A LATE HIKE 12360 ON WEDNESDAY AND ABUNCH--BOND 1236TRADERS AREWAITING -- 12362 >>WE CAN SAY TO A CERTAIN 12363 EXTENTIT STARTEDWITH SOME 12364 SURPRISES ON THE U.S. ECONOMY. 12365 THE U.S. ECONOMYWILL GET MORE 12366 STIMULUS, THAT REALLY GAVE IT 12367 SOME SPEED. 12368 WITHAN THE LAST FEW DAYS, WITH 12369 OPEC ANDOIL PRICES SURGING TO A 12370 17 YEARHIGH,IT IS PUTTING MORE 1237FUEL ONTHISBOND MARKET SELLING 12372 FIRE. 12373 LET'S LOOKATBLOOMBERG. 12374 AT ENDOF DAY BASIS, IT TRADED 12375 AT2.5%, THE HIGHEST IN TWO 12376 YEARS,THE LITTLEREDCIRCLE 12377 BENEFIT LOWER LEFT-HAND CORNER 12378 OF YOUR SCREEN. 12379 YIELDSDOUBLING IN SIXMONTHS. 12380 GO TO THE LEFT-HANDCORNER,JUST 1238BEFORE WENTINTO RECESSION. 12382 YOU CAN GET A SENSE OF HOW MUCH 12383 FURTHER THIS WOULD HAVE TO GO. 12384 THE QUESTIONNOW, WHERE IS THE 12385 FED? 12386 DONALD TRUMP SAYS HE IS GOING TO 12387 BOOST THE ECONOMY. 12388 THISIS WHAT IS REALLY ON 12389 TRADERS MIND NOW. 12390 SOPHIE: WHY ARE BOND TRADERS AND 1239INVESTORSFINALLY BE LEAVING THE 12392 FEDFORECAST FOR THE ECONOMY AND 12393 RATE HIKES? 12394 >>THEY ARE SEEING MOREEVIDENCE 12395 THATTHEFED IS RIGHT AND THE 12396 ECONOMY IS GOING TO PICKUP. 12397 A YEARAGO, THE FED WAS 12398 FORECASTING FOR INTERESTRATE 12399 INCREASES, THE BOND MARKET DID 12400 NOTSELLOFF AND A KEPT RALLYING. 1240ALL OF THE THINGS I JUST 12402 MENTION, IF THEY BUILD UP, THEY 12403 ARE CHANGING THEIR VIEW. 12404 LET'S GO TOTHE TERMINAL. 12405 THE MEDIUM GREENLINE IS 12406 CONNECTING THOSE YELLOW 12407 CLUSTERS. 12408 2017, 2 RATE HIKES, 2018 IN THE 12409 MIDDLE. 12410 THAT IS THE FORECAST, THEMEDIUM 1241FORECASTFORTHREE RATE HIKES. 12412 THE RED LINE AT THE BOTTOM IS 12413 WHATTHE TRADERSWERE BETTINGON 12414 IN SEPTEMBER. 12415 HARDLY ANY RATEHIKESIN THE 12416 NEXT FEW YEARS. 12417 THE PURPLELINE IS WHAT THOSE 12418 TRADERS ARE BETTING ON NOW. 12419 NOW,WILL THE FED CHANGE THOSE 12420 DOTS AT THE MEETING? 1242IT HASSAID PUBLICLY IT CANNOT 12422 CHANGE HIS VIEW ON THE ECONOMY 12423 AND MONETARYPOLICIES, AND THAT 12424 IS WHAT DONALD TRUMP SAYS HE'S 12425 GOING TO DO. 12426 PETER FISHER AT THE NEW YORKFED 12427 SAID MAYBEIT IS TIME FOR THE 12428 FED TO STEP AWAY FROM THOSE 12429 DOTS. 12430 >>THE HARDEST THING FOR THEFED 1243IS THEY DON'T KNOW WHERE THEY 12432 WILL BE A YEAR OR TWO FROM NOW, 12433 THEY DON'T KNOW HOW MUCH OF THIS 12434 RECOVERY IS GOING TO COME 12435 THROUGH, THEY DON'T KNOW HOW ON 12436 TOP OFTHATTHE CHILDREN 12437 MINISTRATION AND CONGRESS WILL 12438 PUT. 12439 WHAT I'M LOOKING FORIS,DOES 12440 JANET YELLEN KNOW HE HAS -- SHE 1244HAS TO PULLBACK FROMPRETENDING 12442 SHEKNOWS AN ESTIMATE ON THE FED 12443 FUNDS RATEFOR12 MONTHS FROM 12444 NOW, WHAT SHE DOESN'T REALLY 12445 KNOW. 12446 >>HE BASICALLY SAYS FORWARD 12447 GUIDANCEIS PASTITS PRIME. 12448 EARLIER THIS YEAR, JIMFULLER, 12449 ONE OF THE GUYS OUT FRONT ON 12450 MONETARYPOLICYIN THELAST 4-5 1245YEARS, HE PULLED AWAY FROM THE. 12452 FORECAST ANDDOES NOT THINK THEY 12453 WORK FOR A WELL. 12454 ITWILL BEINTERESTING TO SEE IF 12455 JANETYELLEN WOULD SIGNAL 12456 ANYTHING LIKETHAT AT THE 12457 MEETINGON WEDNESDAY. 12458 SOPHIE:WE ARE NEARING THE END 12459 OFA COUNT ON TO THAT FED 12460 DECISION ON WEDNESDAY. 1246RISHAAD:A LONG TIME COMING. 12462 SHARESOF SMC CORPORATION ARE 12463 TUMBLINGAFTERINVESTMENT 12464 RELEASED A NEGATIVE REPORT ON 12465 THE COMPANY. 12466 THERE ARE QUESTIONING OFTHE 12467 ACCOUNTING. 12468 SELLERSHAVE BEEN TARGETING 12469 JAPANESE FIRMS THIS YEAR. 12470 SMC'SSPOKESMAN SAID HE HAD NO 1247IMMEDIATE COMMENT. 12472 WE WILL BE TALKING TO THE WELLS 12473 INVESTMENTSECURITYSEOABOUT 12474 THISCALL. 12475 SOPHIE:A PROMINENTSHORT SELLER 12476 HAS TARGETED A JAPANESE FIRM FOR 12477 THE FIRST TIME FOR THENEGATIVE 12478 REPORT ON MOTOR MAKER NIGHT AT. 12479 -- NIDEC. 12480 HE SAYS THEYCONSISTENTLYMISS 1248SALESAND PROFIT TARGETS AND HE 12482 USES -- ANDUSE AGGRESSIVE 12483 ACCOUNTING. 12484 RISHAAD:APPLE IS SAID TO BE 12485 DISCUSSING INVESTING INTHE $12486 BILLION TECHFUNDBYSOFTBANK. 12487 APPLE INVESTED A BILLIONINA 12488 RIDESHARINGCOMPANY. 12489 THEY PAID $3 BILLIONFOR BEATS 12490 IN 2014. 1249SOPHIE:UPNEXT, WE WILL LOOK AT 12492 WHYHONG KONG MONEY MARKETS ARE 12493 ALREADY FEELING THE STRAIN FROM 12494 THE FEDMEETING THIS WEEK. 12495 THIS IS BLOOMBERG. 12496 ♪ 12497 ♪ 12498 RISHAAD: WE HAVE A RATE HIKE 12499 FROM THE FEDERAL RESERVE THIS 12500 WEEK. 1250SOPHIE:PRESSURE IN HONG KONG ON 12502 THE CITY'S CURRENCY. 12503 >>IT IS BECOMING MORE EXPENSIVE 12504 TO BORROW IN ORDER TO BUY 12505 STOCKS. 12506 WE ARESEEING THEINTERBANK 12507 RATE, THE THREE-MONTHINTERBANK 12508 RATE SURGING FOR THEPAST 10 12509 DAYS. 12510 THEY ARE SAYING THIS CREDIT 1251CRUNCH SIGNALS CONCERNSOF CASH, 12512 CAPITAL OUTFLOWSFROMHONG KONG. 12513 HIGHER U.S. INTERESTRATES COME 12514 WITH CASH OUTFLOWSFROM EMERGING 12515 MARKETS AND HONG KONG. 12516 THE FACT IS THAT INISOLATION, 12517 HIGHERRATES WOULD BOOST OR 12518 SUPPORT THE HONG KONGDOLLAR, 12519 GIVENTHECOME -- COMPARISON TO 12520 THEU.S. DOLLAR. 1252BUT YOU CANSEE A PREVIOUS BOUT 12522 OF CASHOUTFLOWS HAS LED TO 12523 CURRENCYDEPRECIATION ALONG WITH 12524 A JUMP INRATES. 12525 THAT SPIKE YOU SEEIN JANUARY, 12526 THE BLUE LINE, THAT WOULD BE THE 12527 HONG KONG DOLLAR PLUNGING TO AN 12528 EIGHT YEAR LOW. 12529 RISHAAD:WEDID SEE THE YUAN 12530 STEADILY WE CAN, AND THIS IS THE 1253HIGHBALL LINE, THE WHITE LINE. 12532 THISIS A TENTHS OF1% OR 12533 THEREABOUTS-- 8/10 OF1% 12534 OR THEREABOUTS. 12535 >>YES. 12536 WHAT ECONOMISTS ARE SAYING RIGHT 12537 NOW, WE'RE SEEING THAT THEFED 12538 WILL HIKERATESTWICE NEXT YEAR, 12539 THE RATE IN HONG KONG WILL NOT 12540 BE SO BIG SOWE WERE NOT SEE 1254SUCH YOU GET OUTFLOWS. 12542 NOT TO MENTION WE HAVE SEEN 12543 MAINLAND INVESTORS POUR MONEY 12544 INTO HONG KONGEQUITIES AND TO 12545 HEDGE THE DEVALUATION OF ZERO 12546 CURRENCY. 12547 THERISK SO THERE, BUT STILL THE 12548 EXCHANGERATE PEGGED TO THEU.S. 12549 DOLLAR IS TRADING AT ASTRONGER 12550 LEVEL OF THATBANK AGAINSTTHE 1255GREENBACK. 12552 SOPHIE:THANK YOU SO MUCH. 12553 RISHAAD: UPNEXT,DONALD TRUMP 12554 HAS MADE A FRIEND OF TAIWAN. 12555 SOPHIE:WE'LL SEE WHY SOMETHINK 12556 HIS OBSESSION COULD BE MISLED. 12557 RISHAAD:PLUS,A FULL MARKET 12558 UPDATE ANDTHE TOKYO CLOSE AFTER 12559 THE LUNCH BREAK. 12560 WE HAVE THAT 60 MINUTE LOW, DOWN 1256AT THE MOMENTBY 28 POINTS. 12562 WE'REBACK IN OF IT. 12563 ♪ 12564 >>IT IS 10:29 IN HONGKONG. 12565 CHINA'S ECONOMICSTABILIZATION 12566 HELDIN NOVEMBER,WITH 12567 INDUSTRIAL TRACTION CLIMBING 12568 FROM A YEAR EARLIER. 12569 SLIGHTLY ABOVE ESTIMATES. 12570 RETAIL SALESADVANCED TEMPLATE 1257PRESENT LASTMONTH-- 10.8% LAST 12572 MONTH. 12573 POLICYMAKERS HAVE MORE ROOM TO 12574 SWITCH FOCUS FROM STIMULUS 12575 TOWARD CURBING FINANCIALRISKS 12576 THIRDINBOOST TO PRODUCTIONIN 12577 NOVEMBER AND NIGERIA, LIBYA AND 12578 ANGOLA ALL PUMPED MOREOIL, 12579 RATINGTOTAL OUTPUTTO 28 12580 MILLION BARRELS ADAY. 1258ANALYSTSEXPECTOPEC MEMBERS AND 12582 INDEPENDENT PRODUCERS TO 12583 INCREASE OUTPUT AHEAD OF THE 12584 CUTS TO ENSURE NO LOSS OF MARKET 12585 SHARES. 12586 CHINESEGROUPS PURSUINGA 12587 FOOTBALL CLUB HAS FAILED TO MEET 12588 THE DEADLINE FOR A DOWN PAYMENT. 12589 THEYWILL -- THEY AGREE LAST 12590 WEEKTHAT THE MONEY WOULD BE 1259TRANSFERRED ONMONDAY,WITH 12592 MARCH 3 THE DATE FOR COMPLETING 12593 THE SALE. 12594 THE AGENCY SAID THE MONEY WAS 12595 NOTPAID SIGN OH EUROPE DID NOT 12596 HAVEIT IN PLACE WHEN THE BIG 12597 MILAN. 12598 THEMISSIONWILL BE AFINAL 12599 SWEEP OF DEEP OCEAN ROAD MEANS 12600 THAT MYCALLED THE REMAINS OFMH 1260370 ANDTHE200 ON BOARD. 12602 LOCAL MEDIA SAYTHAT IF THE 12603 PLANE IS NOTFOUND IN ONE OF THE 12604 TRENCHES, THE SEARCH WILL BE 12605 CALLED OFFIN JANUARYOR 12606 FEBRUARY. 12607 GLOBAL NEWS 24 HOURS ADAY 12608 POWERED BY MORE THAN 2600 12609 JOURNALISTS IN MORETHAN120: -- 12610 COUNTRIES, THIS IS BLOOMBERG. 1261RISHAAD:LET'S HAVE A LOOK AT 12612 WHAT IS GOING ON MARKETWISE. 12613 WHAT IS THE FLAVOR OF THE DAY? 12614 >>NOT A LOT OF CONVICTION AND 12615 MARKETS TODAY. 12616 WE ARE SEEING THE REGIONAL INDEX 12617 FLAT THERE. 12618 WE THOUGHT WAS BETTER THAN 12619 EXPECTED CHINA, YOU'D SEESOME 12620 UPSIDE. 1262THIS IS MOSTLY AHEAD OF THE FED 12622 MEETING THIS WEEK. 12623 ALSO INDUSTRIALPLAYERS. 12624 HEALTH CARE VERY MUCH THE FRONT 12625 RUNNER TODAY. 12626 THAT SHOWS YOU HOWMUCH A 12627 DEFENSIVE PLAY TODAY'S TRADE IS. 12628 DOWN BY CLOSE TO 5%. 12629 THISISAS ITS TRADING VOLUME 12630 ALSO DOUBLES. 1263THE BIGGEST FALL THESCENE IN 12632 THE STEELMAKERSINCE JUNE 24. 12633 QUITE A LOT OF MOVEMENT GOING 12634 THROUGH IN THAT STOCK. 12635 THIS IS A HEALTH CARE STOCK IN 12636 JAPAN. 12637 REALLY SHOWING YOU THAT LINE WE 12638 ARE SEEING AN HEALTH CARE. 12639 THIS IS ONE TO WATCH. 12640 IT IS RESUMING TRADE FOR THE 1264FIRST TIME SINCE JUNE. 12642 ALSO 1.1 7 BILLION --1.1 7 12643 BILLIONYUAN. 12644 WE KNOW A LOTOFTHESEPROPERTY 12645 STOCKS HAVE BEEN COMING UNDER 12646 PRESSURE. 12647 A LOOK AT HOW THE OVERALL 12648 SHANGHAI HONG KONG MARKETS ARE 12649 GOING, STILL A LOT OF WEAKNESS. 12650 YESTERDAY HAVING THAT BIGGEST 1265FALL IN SIXMONTHS, STILL THINK 12652 A LOT OF DOWNSIDE COMING 12653 THROUGH. 12654 ALSO, HOME APPLIANCECOMPANIES. 12655 AND IN HONG KONG, YOUR SING THE 12656 HANGSENGUP. 12657 THAT IS LIMITING THE LOSSES 12658 SOMEWHAT ON THE HANG SENG. 12659 PETROCHINA LOOKING GOOD THERE. 12660 FLATFINISH YESTERDAY ASWELL 1266DESPITE THE RALLY WE SAW IN 12662 ENERGY PLAYERS. 12663 ALITTLE WEAKNESS COMING THROUGH 12664 IN SOME OF THOSE OTHER COMMODITY 12665 PLAYERS. 12666 A LOOK AT THEREMEDY-- 12667 RENMINBI. 12668 PRETTY FLAT. 12669 THE FIXINGTODAYCAME THROUGH A 12670 LITTLE STRONGER THAN WHAT IT HAS 1267BEEN. 12672 NO REAL REACTION THERE IN 12673 CURRENCIES. 12674 SOPHIE:THANK YOU SO MUCH. 12675 RISHAAD: DONALD TRUMP ACCUSING 12676 CHINA OF RIPPING OFF THE U.S. ON 12677 TRADE AND THREATENINGTO BRAND 12678 THEM AS A CURRENCY MANIPULATOR. 12679 SOPHIE: THEREARESOME 12680 ECONOMISTSWHO SAY THAT HIS NEW 1268FRIEND, TAIWAN,ISMORE FITTING 12682 OF THAT LABEL. 12683 >>THAT IS IMAGED IN QUESTION. 12684 TAIWAN IS A FALSEMULLAHECONOMY 12685 -- A FAR SMALLERECONOMY, HAS A 12686 FAR SMALLER STAKE IN GLOBAL 12687 OPTICS --POLITICS. 12688 CHINA IS THE SECOND LARGEST 12689 ECONOMY IN THE WORLD. 12690 I THINK WHAT TRUMP IS TRYING TO 1269DOIS HE IS TRYING TO USE HIS 12692 RELATIONSHIPOR THE SO-CALLED 12693 BEGINNING OF THISRELATIONSHIP 12694 WITH TAIWAN AS A BARGAINING CHIP 12695 AGAINST CHINA. 12696 CHINAIS EXTREMELY SENSITIVE 12697 ABOUT THE ONE CHINA POLICY. 12698 RISHAAD:TRYING TO BRANDANY 12699 COUNTRYASA CURRENCYAMID 12700 LATER, MOVING BEYOND THAT, IF WE 1270LOOK BEYOND THERHETORIC, WHAT 12702 ABOUT ANY REALIMPACT? 12703 >>I'M NOT SURE ABOUT REAL 12704 IMPACT. 12705 TRUMP IS WALKING A VERY 12706 DANGEROUSLINE. 12707 AT SOME POINT IN TIME, YOU WANT 12708 TOPUSH, BUTBEYONDA CERTAIN 12709 POINT, YOU DON'T WANT TO TAKE A 12710 CERTAIN CHANCE. 1271ON THE OTHER HAND, IF YOU LOOK 12712 AT THE EVIDENCE OVER THE PAST 12713 YEARS, THE TAIWAN DOLLAR HAS 12714 RISENAGAINST THE GREENBACK, BUT 12715 THE CHINESE CURRENCYHAS DROPPED 12716 ALMOST 6%. 12717 THAT IS A HUGE ALMOST 12718 DEVALUATION,DEPRECIATION IN 12719 ANY. 12720 OFTIME. 1272-- IN ANY PERIOD OFTIME. 12722 I'M SURE HE HAS HIS REASONS. 12723 THE REAL IMPACT IS HEGOOD PUSH 12724 THINGS BEYOND ACERTAINPOINT 12725 WHERE IT COULD AFFECT THE ENTIRE 12726 ASIANECONOMY. 12727 A GOOD HAVE A KNOCK ONEFFECT 12728 AND CURRENCY STOCKS AND ALL OF 12729 THAT. 12730 SOPHIE:LEADING INTO PERSPECTIVE 1273HERE, CHINA ISA BEHEMOTH. 12732 BUTWITHTAIWAN,BUT WE ARE 12733 SEEING WITH THE U.S. 12734 RELATIONSHIP IN THIS REGION, 12735 WHAT ELSE CAN WE ANTICIPATE 12736 HERE? 12737 TAKE A LOOK AT THE ECONOMICS OF 12738 TAIWAN. 12739 >>THEY HAVEBEEN PLANNING. 12740 ON THE OTHER HAND, YOUSEECHINA 1274IS DECLINING. 12742 YOU SEE THE TWOOPPOSITE. 12743 THEY HAVEBEENDEFENDING THEIR 12744 CURRENCY AS WIDESPREAD 12745 SPECULATION. 12746 NOBODY BELIEVES THEY HAVE LEFT 12747 THEIR CURRENCY DROP. 12748 THEY HAVE BEEN TRYING TO CONTROL 12749 IT. 12750 THERE IS A LOT OF MEDDLING IN 1275THE CURRENCY. 12752 HOWEVER, TAIWAN, WE HAVE SEEN 12753 FOR SEVERALYEARS, WE HAVE SEEN 12754 THEM OF ALLOWING THE CURRENCY TO 12755 APPRECIATE, AND TOWARD THEEND 12756 OF TRADING, THEY TRY TO STEP IN 12757 AND WEAKEN THE CURRENCY. 12758 THATISSOMETHING THAT CREATES A 12759 PROBLEM IN THE CURRENCYMARKET, 12760 THAT CREATES THESE ARTIFICIAL 1276MOVES. 12762 I THINK THAT IS A PROBLEM. 12763 IF TRUMP PUSHES, HE HAS TO KNOW 12764 WHEN TOSTOP. 12765 SOPHIE:THANK YOU SO MUCH FOR 12766 THAT. 12767 RISHAAD:YEAR TO DATE, 3.8%, TO 12768 PUT THAT INTO CONTEXT. 12769 LET'S TALK ABOUT THESE TENSIONS 12770 BETWEEN BEIJING ANDWASHINGTON. 1277A BIT MORE HEATHERE. 12772 BEIJING FILING A COMPLAINT TO 12773 THE WORLD TRADE ORGANIZATION. 12774 SOPHIE:WE ARE JOINED FOR MORE. 12775 ARE WE ALREADYSEEING 12776 RETALIATION FOR TRUMP'SCOMMENTS 12777 ON THE ONE CHINA POLICY? 12778 >>I JUSTMORPHED FROM ROBIN TO 12779 MYSELF. 12780 IT IS INTERESTING WHAT HE HAD TO 1278SAYABOUT TRUMP AND HIS 12782 ADMINISTRATION NEEDING TOTREAD 12783 CAREFULLY. 12784 CHINA NEEDS TO TREAD CAREFULLY 12785 ASWELL. 12786 LISTEN, SO MUCH IS AT STAKE IN 12787 THIS CHINA U.S.RELATIONSHIP. 12788 CHINA DOES NOT LIKE THIS KIND OF 12789 UNCERTAINTY. 12790 IT DOES NOT NECESSARILY KNOW HOW 1279TO REACT TO IT. 12792 DO YOU PUSH BACK STRONGLY? 12793 DO YOU HAVE A MEASURED APPROACH? 12794 SO FAR THEY HAVE BEEN FAIRLY 12795 MEASURED, AS IFROM A FEW 12796 INFLAMMATORY COMMENTS COMING 12797 FROM STATE MEDIA. 12798 THIS LATEST DEVELOPMENT IS 12799 PERHAPS NOT RELATEDDIRECTLYTO 12800 WHAT TRUMP HAS SAID ABOUT THE 1280ONE CHINAPOLICY. 12802 ITCOINCIDES AS WELLWITH ONE 12803 DAY AFTERTHE 15TH ANNIVERSARY 12804 OF CHINA'S ASCENSION TO THE 12805 WORLD TRADEORGANIZATION. 12806 THIS IS SOMETHING THEY HAVE BEEN 12807 PUSHING FOR. 12808 THEY WANT THE U.S. AND THE EU 12809 ANDOTHERSTO USE FAIR IN THEIR 12810 ESTIMATIONPRICINGFOR 1281ANTI-DUMPINGCOMPLACENT -- 12812 COMPLAINTS ANDTARIFFS. 12813 THESE USE WHAT IS CALLED 12814 SURROGATE COUNTRYPRICING, WHICH 12815 TAKES THIRD COUNTRYPRICING 12816 APPLIED TO DOMESTIC COMPLAINT. 12817 IT IS KIND OFWONKY. 12818 VERY COMPLICATED. 12819 BASICALLY, CHINA SAYSIT 12820 ARTIFICIALLY RAISES THE LEVELS 1282OF TARIFFS AGAINST CHINA IN A 12822 CASEAGAINST CHINESE EXPORTS. 12823 WE HAVE A U.S. TRADE OFFICIAL 12824 SAYINGTHAT THE UNITED STATES 12825 HAS NO PLANS TO MODIFY THE WAY 12826 THEY CALCULATE ANTI-DUMPING 12827 MEASURES, AND THE QUOTE FROM 12828 THATOPEN HILLSIDECHINA HAS NOT 12829 MADE THE REFORMS NECESSARY TO 12830 OPEN UP ON MARKET PRINCIPLES. 1283RISHAAD:THE DANGERHERE -- WE 12832 WERE TALKING ABOUT THIS EARLIER 12833 --YOU GETA SERIES OF 12834 TIT-FOR-TATMOVES. 12835 BEFORE YOU KNOWIT, YOU GET INTO 12836 A TRADE WAR. 12837 >>THAT IS THE BIG CONCERN FOR A 12838 LOT OF PEOPLE. 12839 WE ARE IN UNCHARTED TERRITORY. 12840 DONALD TRUMP SO FAR TALKING AND 1284ACTINGOR TWEETING UNLIKE ANY 12842 OTHERPRESIDENT SITTING IN THE 12843 WHITE HOUSE. 12844 THAT IS WHAT IS THE CONCERN. 12845 I MENTIONED THE STATEMEDIA, 12846 THEY SORTOF GINGERLY 12847 CRITICIZINGTRUMP. 12848 HE IS NOT PRESIDENT YES. 12849 WE DON'T-- HE IS NOT THE 12850 PRESIDENTYET. 1285HE IS ACTING LIKE A CHILD WHO IS 12852 IGNORANT OF FOREIGN POLICY. 12853 THE ONE CHINA POLICY CANNOT BE 12854 BOUGHT AND SOLD. 12855 THIS IS WHAT THE BANK OF AMERICA 12856 HAD TO SAY ABOUT2017. 12857 >>THIS IS MYSINGLE BIGGEST 12858 WORRY. 12859 I FEAR THEU.S. AND CHINA COULD 12860 BE ON A COLLISION COURSE. 1286>>SO WE LIVE IN INTERESTING 12862 TIMES. 12863 TRUMP'S HORSETRADINGTACTICA 12864 BIG TRADE FOR CHINA. 12865 RISHAAD:I'VENEVER SAID BIGGER 12866 TIPS AND BIGGER TAX ON 12867 TELEVISIONBEFORE-- BIGGERTIT 12868 ANDBIGGERTAT ON TELEVISION 12869 BEFORE. 12870 SOPHIE:COMING UP, THE ACTIVIST 1287WHO IS FAST BECOMING JAPAN'S 12872 MOST INFLUENTIAL BEAR. 12873 RISHAAD:WE'LLBEJOINED LIVE 12874 FROM TOKYO. 12875 ♪ 12876 SOPHIE:A QUICKCHECKOFTHE 12877 LATEST BUSINESS FLASH HEADLINES. 12878 EXTENDED TRADE AFTER BOOSTED 12879 DIVIDENDS OF30%. 12880 ALSO A $13 BILLION BUYBACK PLAN 1288TO. 12882 THERE ISYOUR AIRCRAFT BEING 12883 BUILT DUETO DEMAND. 12884 CHANGES WILLNOTAFFECT ITS 2016 12885 FINANCIAL. 12886 RISHAAD:A 50%STAKE IN THE PIPE 12887 BY DIVISION II A $3.3 BILLION. 12888 IT IS SEEKING FUNDS TOTHE -- -- 12889 TOEXPAND. 12890 THEDIVISIONOFSTATE ABOUT THE 1289CORPORATION WILL TAKETHEIR -- 12892 SOPHIE: HANJIN SHIPPING IS 12893 LIKELY TO BELIQUIDATED. 12894 IT'S AS THEACCOUNTING FIRM IN 12895 CHARGE OF DUEDILIGENCE 12896 PRICEWATERHOUSECOOPERS,WILL 12897 RECOMMEND AUCTION. 12898 LIQUIDATION ISRECOMMENDEDAT 12899 $1.5 BILLION. 12900 RISHAAD:A LOOKAT JAPANESE 1290PNEUMATIC EQUIPMENT MAKER. 12902 ITWASA SHORT RESEARCH ANDWELL 12903 INVESTMENT ISSUING. 12904 SOPHIE:THIS IS A GROUP OF 12905 ACTIVISTSHORT-SELLERS THATHAVE 12906 BEEN TARGETING JAPANESE FIRMS 12907 OVER THE PAST YEAR. 12908 JOINING US FROMTOKYO IS THE 12909 HEAD OF RESEARCH. 12910 WE'RE SEEING IT FALLAT 11%. 1291YOUR PSYCHIC COULD FOLLOWS MUCH 12912 IS 85%THATYOU ARESAYING IT 12913 COULD FALL AS MUCH AS 85%? 12914 >>THANK YOU FOR HAVING ME 12915 TODAY. 12916 SOPHIE:WHAT IS DRIVING YOUR 12917 VIEW? 12918 >>OURACTIVITY JUST STARTED 12919 LASTYEAR. 12920 MYPOINT IS TOPROVIDE 1292PROSPECTIVE TO THE JAPANESE 12922 MARKET. 12923 THISTIME [INDISCERNIBLE] 12924 SOPHIE:THERE IS A QUESTION 12925 ABOUT THE ACCOUNTING MEASURES 12926 TAKEN. 12927 YOU'RE SAYING IT ISBEING 12928 AUDITED. 12929 WHAT OTHERFACTORSARE SENDING 12930 OF REDFLAGS -- UP REDFLAGS? 1293>>WE GOT ANEVAL -- AND EMAIL 12932 THATINDICATESTHEIR PRACTICES A 12933 DUBIOUSONE. 12934 WE LOOK ATTHECOMPANY, ANDWE 12935 SAW THAT THE AUDITING FIRM IS 12936 QUITETIDY --TINY. 12937 IT IS VERY UNREASONABLE FOR THIS 12938 SIZE COMPANY. 12939 SO WEACTUALLYDOUBT THE 12940 CREDIBILITY OF THEIRFINANCIAL 1294STATEMENT. 12942 RISHAAD:WHY ARE YOU TOUTINGIT 12943 -- DOUBTINGIT? 12944 YOU ARE SAYING ESSENTIALLY THAT 12945 THIS COMPANY IS BROKE HERE. 12946 WHY IS IN THE STOCK EXCHANGE 12947 INVESTIGATING IT? 12948 >>THERE ARE SEVERAL POINTS I 12949 WANT TOMAKE. 12950 FIRST OF ALL, THEFIRMSFOR THE 1295OVERSEAS SUBSIDIARIES HASBEEN 12952 CHANGED FREQUENTLY. 12953 EACHDIFFERENTSUBSIDIARYUSES A 12954 DIFFERENT ACCOUNTINGFIRM. 12955 IDON'TKNOWWHYTHEY HAVE TO 12956 APPOINT ALL THESEFIRMS. 12957 ALSO, WHEN WE LOOKINTO 12958 FINANCIALSTATEMENTSHA -- OF 12959 SMC,WEFIND IT IS QUITE DUBIOUS 12960 WHEN COMPARED TO THEIR 1296COMPETITORS. 12962 THOSE ARE THE MAIN POINTS I MADE 12963 IN THE REPORTS. 12964 SOPHIE:THECALLS ARE EIGHT 12965 BUYS, SEVEN HOLES. 12966 CLEARLY YOU'RE SAYING THIS IS A 12967 STRONG SELL. 12968 WHAT OTHERMARKET ARE YOU 12969 LOOKING FOR TO INDICATE THE TYPE 12970 OF WEAKNESS THAT YOU HAVE 1297OBSERVED? 12972 >>AN ACCOUNTING ISSUE I FOUND 12973 THAT THE HOLDINGCOMPANY BY THE 12974 CHAIRMAN, WHICH HAS MORE THAN 5% 12975 SHARES IN THISCOMPANY,PLEDGED 12976 ALL OF THE SHARES TO ABANK, 12977 WHICH IS THE MAIN BANK FORFNC 12978 -- SMC. 12979 RIGHT AFTER THEFAILURE, I 12980 COULDN'T FINDWHERETHE FINANCED 1298MONEY WENT TO. 12982 THIS KINDOFFACT IS A STRONG 12983 SMOKINGGUN. 12984 RISHAAD:THAT'S JUST IT, ISN'T 12985 IT? 12986 YOU SAY YOU HAVE ALL HISDESPAIR 12987 ACCOUNTING FIRMS --DISPARATE 12988 ACCOUNTING FIRMS. 12989 THEY WOULDHAVE LOOKED AT THAT 12990 AND THEY DID NOT SEE ANY FLAGS 1299HERE. 12992 WHY ARE YOU SEEING THEM AND NOT 12993 THEM? 12994 >> FOREXAMPLE,IN SINGAPORE 12995 SUBSIDIARY OFSMC HAS AVERY 12996 TINYFIRM, WHICH HAS A TRACK 12997 RECORDOF ACCOUNTINGSCANDALS IN 12998 AGENTREGION -- ASIANREGION. 12999 THIS HASA LOT OFCASH AMONG THE 13000 GROUP. 1300THE ACCOUNT AUDITING APPEARED 13002 THEY CONDUCTED IT QUITESHORT. 13003 THATIS WHATWE HAVE A DOUBTFUL 13004 VIEW ON THIS COMPANY. 13005 SOPHIE:TAKING INTO THE BIGGER 13006 PICTURE,THISIS THE FOURTH 13007 STOCK YOU HAVE MADE THIS REPORT 13008 ON. 13009 LOOKING WHATIS GOINGON THE 13010 PAST YEAR,ARE YOU SAYING THERE 1301ARE OVERALL CONCERNS OVER PUBLIC 13012 GOVERNANCE,OTHER TYPES OF 13013 ACCOUNTINGMEASURES? 13014 WILL BE SEE MORE OF THIS TYPE OF 13015 ACTIVITY? 13016 >>YES, I HOPE SO. 13017 ACTUALLY AS YOUMENTIONED,SEE 13018 PIF AND BOJ IS NOW INVESTING A 13019 LOT OFMONEYIN CAPITAL MARKETS 13020 INJAPAN. 1302IF THIS KINDOF ACCOUNTING 13022 PRACTICE ISALLOWED, THATMEANS 13023 THAT HURTS OUR NATIONALASSETS. 13024 IHOPE THEY'RE GOING TO TAKE A 13025 STRONG ACTIONAGAINST THESE KIND 13026 OF ACCOUNTING PRACTICES. 13027 RISHAAD:DO YOU HAVE ANYBODY 13028 ELSE IN YOURSITES --SIGHTS 13029 WITH ACCOUNTING IRREGULARITIES 13030 AS YOU WOULDSAY THAT ARE 1303ENDEMIC WHEN IT COMES TO 13032 CORPORATEJAPAN? 13033 >>ITHINK A LOT OFPEOPLE ARE 13034 NOWSUPPORTING MYACTIVITIES, 13035 ESPECIALLYSINCE SEPTEMBER,WHEN 13036 [INDISCERNIBLE] 13037 ALOT OF PEOPLE ARE CONNECTING 13038 ME. 13039 ITHINK THEREARE A LOT MORE 13040 COMING IN THE COMINGMONTHS. 1304RISHAAD:THANK YOU FORTHAT. 13042 HEIS THE CHIEFEXECUTIVEOF 13043 SORT CHILLINGRESEARCH--SHORT 13044 SELLING RESEARCH. 13045 SOPHIE:MORE TO COME. 13046 WE'LLSEEHOW SOME OF HONG 13047 KONG'S WEALTHIEST PEOPLEHAVE 13048 TRIMMED THEIR TAX BILLS. 13049 THIS IS BLOOMBERG. 13050 ♪ 1305SOPHIE:THIS IS BLOOMBERG 13052 MARKETSASIA. 13053 RISHAAD:SOME OF HONGKONG'S 13054 WEALTHIEST INDIVIDUALS HAD TO 13055 FIND LEGALWAYSTO SIDESTEP THE 13056 REAL ESTATE CURVESTHAT HAVE 13057 BEEN INSTITUTED. 13058 IN THEPROTEST, THATIN THE 13059 PROCESS, SAVING A SMALL FORTUNE 13060 IN TAXES. 1306SOPHIE:IS ASAVED $70 MILLION 13062 HE-- $17 MILLION IN PROPERTY 13063 TAXES. 13064 >>HEMANAGEDTOQUALIFY AS A 13065 FIRST-TIME HOMEBUYER. 13066 THIS IS SOMEBODYWHO OWNS 13067 HUNDREDS OF PROPERTIES THROUGH 13068 HIS COMPANY. 13069 BECAUSE HE NEVERREGISTERED ANY 13070 OF THEM IN HIS NAME, HE QUALIFY 1307FOR A PROGRAM THAT IS MEANTTO 13072 ENCOURAGE PEOPLE IN THE BOTTOM 13073 OF THE INCOMEBRACKET TO GET 13074 THEIRFOOT ON THEPROPERTY 13075 LADDER. 13076 GUESS WHAT, IT WASN'T JUST ONE 13077 PROPERTY. 13078 HE AND HIS FAMILY BOUGHT THREE 13079 PROPERTIES. 13080 TWOOF THEM, HE PLANS TOCOMBINE 1308INTO MORE THAN 8000 SQUAREFEET. 13082 THAT ISNOT 10 TIMES THE AVERAGE 13083 APARTMENT HERE. 13084 ANOTHER FAMILY MEMBER GOTA 13085 THIRD. 13086 BECAUSEIT IS ALL CONSIDERED ONE 13087 TRANSACTION, THEY ARE ALL 13088 CONSIDERED FIRST-TIME PURCHASES. 13089 SOPHIE:ALL THREE ARE $155 13090 MILLIONU.S.U.S. 1309HOW WIDESPREAD IS THIS PRACTICE? 13092 >> IT IS HARD TO SAY EXACTLY. 13093 A LOT OF IT HAPPENS SORT OF 13094 BEHIND THE SCENES. 13095 THEY BUY PROPERTIES THROUGH 13096 COMPANIES. 13097 IF THOSE COMPANIES ARE 13098 REGISTERED OFFSHORE, GUESS WHAT? 13099 ZERO TAXPAID IFHE RESELL THE 13100 PROPERTY, OR IF YOU BUY A 1310PROPERTY THROUGH A REGISTERED 13102 COMPANY. 13103 THIS IS. 13104 POPULAR AMONG MAINLAND CHINESE. 13105 IT IS ONLY WORTHWHILEIF YOU ARE 13106 VERY WEALTHY. 13107 LEGAL EXPENSES CAN BE HIGH. 13108 RISHAAD: WHAT DOES IT MEAN? 13109 DOES ITMEAN ANYMORE IN TERMS OF 13110 THESE GOVERNMENT ATTEMPTS TO 1311CURB THESE PRICES? 13112 WHAT DOES IT DO TOTHAT? 13113 >>GOVERNMENT MEASURES ARE MEANT 13114 TO TRY AND CURTAIL THEDEMAND BY 13115 INVESTORS AND SECOND TIME 13116 BUYERS. 13117 WHATTHIS DOES IS IT BASICALLY 13118 UNDERMINES THE GOVERNMENT'S 13119 EFFORTS. 13120 A VERY WEALTHY PERSON CAN SAY 1312THERE IS A NEW DEVELOPMENT, I 13122 THINK I WILL BUY 15UNITS. 13123 I HAVENEVER BOUGHT ANYTHING IN 13124 MY NAME, AND I CAN QUALIFY FOR 13125 THE CONCESSIONARYRATE. 13126 IT IS A GOESAGAINST,ALL IN ONE 13127 TRANSACTION. 13128 SOPHIE:THANK YOU SO MUCH. 13129 TAKING A LOOK AT HOW THE WEALTHY 13130 AND HONG KONG ARE SIDESTEPPING 1313REAL ESTATE TAXES. 13132 RISHAAD:COMING UPAHEAD, WE 13133 WILL BE UPDATED ON THE BIG 13134 STORIES OF THE DAY. 13135 WHAT IS IN STORE? 13136 >>CHINA'S ECONOMIC 13137 STABILIZATION CONTINUES, AND IT 13138 MEANS THAT CHINA IS FEELING LESS 13139 PRESSURE ON FISCALSTIMULUS, AND 13140 PERHAPS IT CANCONTROLITS 1314MARKETLITTLE MORE WITH 13142 TIGHTENING. 13143 IS THAT WHAT IT IS GOING TO DO? 13144 WE WILL ASKTHAT. 13145 BUT IT IS UP TO KYOTO WE GO. 13146 RETURNING TO A JAPANESEFORM-- 13147 FIRM FOR A VERY FIRST TIME. 13148 WHAT IS THAT MEAN FORCORPUS -- 13149 CORPORATEGOVERNMENT? 13150 THE MYSTERY SAGA CONTINUES. 1315ALL THAT IN THE NEXT HOUR OF 13152 BLOOMBERG MARKETS ASIA. 13153 ♪ 13154 >> FROM OUR STUDIOS IN NEW YORK 13155 CITY, THIS IS "CHARLIE ROSE." 13156 CHARLIE: WE BEGIN WITH CYBER 13157 SECURITY AND THE OBAMA 13158 ADMINISTRATION. 13159 THE PRESIDENT ORDERED A FULL 13160 REVIEW OF RUSSIA'S ELECTION 1316RELATED HACKING. 13162 THE HOMELAND SECURITYADVISOR 13163 TOLD REPORTERS ABOUT THE 13164 INVESTIGATION ON FRIDAY MORNING. 13165 SHE SAID THE ORDER WILL BE 13166 DELIVERED BEFORE PRESIDENT OBAMA 13167 LEAVES OFFICE ON JANUARY 20. 13168 SENATOR JOHN MCCAIN ALSO 13169 ANNOUNCED TODAY THAT CYBER 13170 SECURITY ISSUES WOULD BE A 1317SIGNIFICANT FOCUS OF THE SENATE 13172 ARMED SERVICES COMMUNITY THAT HE 13173 WOULD CHAIR. 13174 JOINING ME IS SENATOR JOHN 13175 MCCAIN. 13176 THANKYOU JOINING US. 13177 WHYARE YOU MAKING THAT 13178 ANNOUNCEMENT TODAY? 13179 SEN.MCCAIN:WELL, OBVIOUSLY, 13180 ONE OF THE ISSUES, THE 1318SITUATIONS THAT BROUGHT THIS TO 13182 A BOIL IS THE ALLEGATIONS OF 13183 RUSSIAINTERFERING NOT ONLY IN 13184 OUR ELECTIONS, BUT IN OTHER 13185 ELECTIONS AROUND THE WORLD. 13186 THAT UNDERMINES, OBVIOUSLY, THE 13187 FUNDAMENTALS OF DEMOCRACY, IF 13188 THEY ARE ABLE TO SUCCEED. 13189 BUT MORE IMPORTANTLY, CHARLIE, 13190 TESTIMONY BEFORE THE COMMITTEE 1319BY OUR MILITARY AND CIVILIAN 13192 LEADERS IN DEFENSE HAVE ALL 13193 STATED THAT CYBER IS ONE OF THE 13194 AREASWHERE WE DO NOT HAVE AN 13195 ADVANTAGE OVER OUR POTENTIAL 13196 ADVERSARIES. 13197 WE NOT ONLY DON'T HAVE AN 13198 ADVANTAGE, IN SOME INSTANCES, 13199 THEY HAVE AN ADVANTAGE. 13200 THESE HEARINGS WILL BE FOCUSED 1320ON THE OVERALL ISSUE OF CYBER 13202 SECURITY, AND OBVIOUSLY, THEIR 13203 ABILITY OR INABILITY TO EFFECT 13204 THEOUTCOME OF ELECTIONS IN 13205 DEMOCRATIC COUNTRIES WOULD 13206 CERTAINLY BE ONE OF THE ISSUES, 13207 BUT ONLY ONE. 13208 CHARLIE: BUT YOU ARE SAYING 13209 YOU'LL HAVE YOUR OWN 13210 INVESTIGATION AT THE ARMED 1321SERVICES COMMITTEE. 13212 SEN. MCCAIN:MY UNDERSTANDING 13213 AMONG OTHER THINGS IS ITS NOT 13214 -- IT IS NOT WHETHER THEY ARE 13215 JUST HACKING INTO THE LAST 13216 ELECTION. 13217 BY THE WAY, THE CHINESE HACKED 13218 INTO MY ELECTION IN 1980. 13219 THIS HAS TOBE DRAWN AND 13220 ENCOMPASSING. 1322WE HAVE ALREADY HAD HEARINGS IN 13222 -- BROADAND ENCOMPASSING. 13223 WE HAVE ALREADY HAD HEARINGS IN 13224 THE ARMED SERVICES COMMITTEE ON 13225 THIS. 13226 WE'VE ASKED ALL OUR MILITARY 13227 WITNESSES. 13228 NOW WE HAVE TO FOCUS ON THE 13229 ENCOMPASSING ASPECTS OF A 13230 CHALLENGE, WHETHER IT BE THEIR 1323ABILITY TO SHUT DOWN OUR 13232 SATELLITES OR STEAL OUR MOST 13233 IMPORTANT SECRETS, SUCH AS OUR 13234 NEW WEAPONS SYSTEMS, OR WHETHER 13235 ITIS TO BE ABLE TO LISTEN IN ON 13236 COMMUNICATIONS, OR WHETHER EVEN 13237 TO DISRUPT OR DESTROY 13238 COMMUNICATIONS. 13239 THERE ARE SOME SCENARIOS, MY 13240 FRIEND, AND I'M ONLY EMPHASIZING 1324SCENARIOS, WHERE THEY COULD SHUT 13242 DOWN EVERY SATELLITE IN BASE. 13243 -- IN SPACE. 13244 SO THISIS A HUGE CHALLENGE, AND 13245 FRANKLY THIS ADMINISTRATION HAS 13246 NO POLICY AS TO HOW TO PREVENT 13247 IT, WHAT TO DO IN CASE OF AN 13248 ATTACK, AND HOW TO PREPARE FOR 13249 ONE. 13250 CHARLIE: DO YOU HAVE ANY DOUBT 1325THAT THE RUSSIANS TRIED TO 13252 INTERFERE IN THE U.S. ELECTIONS? 13253 SEN. MCCAIN: I DON'T KNOW IF IT 13254 WAS INTENTIONAL INTERFERENCE, 13255 BUT I DO KNOW THAT SOME OF THE 13256 LEAKS THAT CAME OUT CANNOT BE 13257 HELPFUL TO THE POLITICAL 13258 PROCESS. 13259 IWILL LEAVE IT TO OTHERS, AND I 13260 DON'T HAVE SUFFICIENT 1326INFORMATION TO MAKE A JUDGMENT 13262 ABOUT THE PAST ELECTION, BUT I 13263 CANMAKE A JUDGMENT THAT IF THEY 13264 ARE ABLE TO DISRUPT 13265 COMMUNICATIONS AND TO PERVERT 13266 COMMUNICATIONS TO THE DEGREE 13267 WHERE THE PEOPLE WHO ARE MAKING 13268 A DETERMINATION AS TO HOW TO 13269 VOTE IS DISTORTED OR DISRUPTED 13270 OR DESTROYED, THEN, OBVIOUSLY, 1327IT'S A BIG CHALLENGE TO 13272 DEMOCRACY, WHETHER IT BE IN THE 13273 UNITED STATES OR ANY PLACE ELSE. 13274 CHARLIE: DO YOU BELIEVE YOU HAVE 13275 A DIFFERENT POINT OF VIEW THAN 13276 PRESIDENT-ELECT TRUMP ON THIS, 13277 WHO HAS TENDED TO DOWNPLAY THE 13278 IDEA THAT IT MIGHT HAVE BEEN THE 13279 RUSSIANS? 13280 SEN. MCCAIN:EVERY EXPERT I HAVE 1328TALKED TO SAYS IT IS THE 13282 RUSSIANS, THEY HAVE PLAYED A 13283 VERY MAJOR ROLE, BUT NOT JUST IN 13284 ELECTIONS, CHARLIE. 13285 THEY ARE EVERY DAY BOMBARDING 13286 SOME OFOUR INDUSTRIAL BASIS, 13287 PARTICULARLY THE 13288 MILITARY-INDUSTRIAL COMPLEX. 13289 THEY ARE BOMBARDING OUR 13290 COMMUNICATION SYSTEMS. 1329IT'S JUST A FACT, IT'S WHAT THEY 13292 ARE DOING. 13293 THEY ARE THE BEST AT IT, THE 13294 CHINESEARE NEXT, AND THEN YOU 13295 HAVE THE EVERYDAYHACKER WHO IS 13296 ALSOA SIGNIFICANT CHALLENGE. 13297 CHARLIE:BUT WE ALSO HAVE CYBER 13298 SECURITYANDCYBER ESPIONAGE 13299 CAPABILITY. 13300 I ASSUME WE ARE USING IT AS 1330WELL. 13302 SEN.MCCAIN:I'M SURE WEARETO 13303 SOME DEGREE, BUT WE DO NOT HAVE 13304 A POLICY. 13305 UNTIL THE PRESIDENT OF THE 13306 UNITED STATES SETS A POLICY AS 13307 TO WHAT YOU DO AND HOW YOU 13308 ACHIEVEIT, FOR EXAMPLE, RIGHT 13309 NOW IF WE THINK THERE IS AN 13310 IMPENDING ATTACK, THERE IS NO 1331POLICY AS TO WHAT TO DO. 13312 ONCETHERE IS AN ATTACK, THERE 13313 IS NO POLICY AS TO WHAT WE DO IN 13314 RESPONSE. 13315 SO THERE IS REALLY A LACK OF 13316 COHERENCE FROM THE EXECUTIVE 13317 BRANCH. 13318 OUR JOB IS TO LAY OUT THE 13319 SCENARIOAND ENACT LEGISLATION 13320 IF NECESSARY, AND I AM SURE SOME 1332LEGISLATION WILL BE NECESSARY. 13322 CHARLIE: YOU ARE SAYING MIKE 13323 ROGERS DOES NOT HAVE A POLICY TO 13324 RESPOND TO A CYBER SECURITY 13325 INVASION. 13326 SEN. MCCAIN:HE HAS TESTIFIED 13327 THAT THERE IS NO POLICY. 13328 CHARLIE: COMING OUT OF THE ARMED 13329 SERVICESCOMMITTEE WILL BE A 13330 RECOMMENDATION FOR LEGISLATION. 1333SEN. MCCAIN: NOT JUST A 13332 RECOMMENDATION, WE WILL ENACT 13333 LEGISLATION THROUGH THE SENATE 13334 ARMED SERVICES COMMITTEE. 13335 I HAVE RECEIVED ENCOURAGEMENT TO 13336 ADDRESS THE SITUATION BY OUR 13337 REPUBLICAN LEADERSHIP. 13338 CHARLIE: HAVE YOU HAD ANY 13339 CONVERSATIONS WITH 13340 PRESIDENT-ELECT TRUMP ABOUT 1334THIS? 13342 SEN. MCCAIN: I HAVE NOT. 13343 CHARLIE: SHOULD YOU? 13344 SEN. MCCAIN: I WOULD WELCOME A 13345 CONVERSATION WITHHIMONTHIS OR 13346 ANY OTHER ISSUE. 13347 CHARLIE:YOU KNEW VERY WELLTHE 13348 NOMINEE TO BE SECRETARY OF 13349 DEFENSE. 13350 SEN. MCCAIN: I KNOW HIM VERY 1335WELL AND I HAVE HAD 13352 CONVERSATIONS WITH GENERAL 13353 MATTIS, A MAN I HAVE KNOWN FOR 13354 THE LAST 12 OR 15 YEARS. 13355 CHARLIE: YOUR COLLEAGUE AND 13356 MUTUAL FRIEND, LINDSEY GRAHAM, 13357 AN ADMIRER, SAID I'M GOING AFTER 13358 RUSSIA IN EVERY WAY YOU CAN GO 13359 AFTER RUSSIA. 13360 I THINK THEY ARE ONE OF THE MOST 1336DESTABILIZING INFLUENCES ON THE 13362 WORLD STAGE. 13363 I THINK THEY DIDINTERFERE IN 13364 OUR ELECTIONS AND I WANT PUTIN 13365 PERSONALLY TO PAY THE PRICE. 13366 SEN. MCCAIN: MY FRIEND LINDSEY 13367 GRAHAM IS ALWAYS SHY AND 13368 RETIRING. 13369 CHARLIE: NO, HE'S NOT. 13370 SEN. MCCAIN:I THINK THE POINT 1337IS WENEED TO HAVE THAT AS PART 13372 OF OUR OVERALL PROCESSING OF THE 13373 SITUATION, AND NOT ONLY WHAT THE 13374 SITUATION IS, BUT WHAT WE NEED 13375 TO DO IN ORDER TO COUNTER THIS 13376 THREAT TO OUR NATIONAL SECURITY. 13377 THAT IS A PART OF IT. 13378 ACCORDING TO MOST EXPERTS I 13379 TALKED TO, THE RUSSIANS ARE THE 13380 LEADING OFFENDERS, BUT THERE ARE 1338PLENTY OF OTHERS. 13382 THE CHINESE, SOME SAY THE LATEST 13383 CHINESE AIRCRAFT HAS SOME 13384 ALARMINGLY SIMILAR FEATURES OF 13385 THE F-35. 13386 SO THERE IS NO DOUBT THAT A 13387 GREAT DEAL OF INDUSTRIAL 13388 ESPIONAGE IS TAKING PLACE, NOT 13389 JUST BY THE RUSSIANS AS WELL. 13390 SO WE NEED TO DEVELOP AN OVERALL 1339POLICY THAT NOT ONLY APPLIES TO 13392 THE RUSSIANS BUT TO EVERY OTHER 13393 NATION AND EVERY OTHER 13394 INDIVIDUAL THAT MIGHT SEEK TO 13395 HARM THIS NATION. 13396 CHARLIE: EVEN THOUGH THEY DON'T 13397 HAVE A POLICY, YOU UNDERLINED 13398 THE FACT THAT YOU DO NOT BELIEVE 13399 THE ADMINISTRATION HAS A POLICY, 13400 LISA MONACO SAID SINGLING OUT 1340INTERNET RELATED DANGERS IS 13402 AMONG THE MOST SIGNIFICANT 13403 NATIONAL SECURITY ISSUES FACING 13404 THE ADMINISTRATION. 13405 SEN. MCCAIN:SOMEONE SHOULD ASK 13406 LISA MONACO WHAT IS OUR POLICY 13407 IF WE DETECT AN ATTACK THAT IS 13408 COMING TO THE UNITED STATES, 13409 WHAT IS OUR RESPONSE IF THERE IS 13410 AN ATTACK, AND LOOK AT THE WHOLE 1341SCENARIO OF HOW THE UNITED 13412 STATES OF AMERICA RESPONDS TO 13413 THIS THREAT. 13414 THERE IS NONE. 13415 CHARLIE: BUT WHY WOULDN'T YOU AS 13416 CHAIRMAN OF THE SENATE ARMED 13417 FORCES COMMUNITY, REQUEST A 13418 MEETING WITH THE PRESIDENT ELECT 13419 TO TALK ABOUT THIS? 13420 SEN. MCCAIN: I PROMISE YOU, THE 1342BEST WAY TO HAVE THAT DIALOGUE 13422 IS TO DECLARE THAT THERE WILL BE 13423 HEARINGS AND POLICY MAKING AND 13424 LEGISLATION COMING OUT OF THE 13425 SENATE ARMED SERVICES COMMITTEE. 13426 I PROMISE YOU THAT WILL PROMPT A 13427 DIALOGUE, AND IT'S GOING TO TAKE 13428 SOME TIME, CHARLIE. 13429 IT'S NOT SOMETHING WE ARE GOING 13430 TO BE ABLE TO DO OVERNIGHT. 1343CHARLIE: DO YOU BELIEVE YOU HAVE 13432 TO TURN THE PRESIDENT ELECT'S 13433 UNDERSTANDING AROUND ON THIS? 13434 HE SAID TO TIME MAGAZINE, I 13435 DON'T BELIEVE THE RUSSIANS 13436 INTERFERED WITH THE ELECTION. 13437 IT COULD BE RUSSIA, AND IT COULD 13438 BE CHINA, AND IT COULD BE SOME 13439 GUY AT HIS HOME IN NEW JERSEY. 13440 I BELIEVE IT COULD'VE HAVE BEEN 1344RUSSIA AND IT COULD HAVE BEEN 13442 ANYONE OF A NUMBER OF OTHER 13443 PEOPLE, SOURCES OR INDIVIDUALS. 13444 THAT IS WHAT THE PRESIDENT-ELECT 13445 SAID TO TIME MAGAZINE. 13446 SEN. MCCAIN: IN SOME RESPECTS, 13447 HE IS RIGHT. 13448 ALL OF THESE ARE PLAYERS THAT HE 13449 MENTIONED. 13450 THE PROBLEM IS THAT HE MAY NOT 1345QUITE UNDERSTAND THAT THE BEST 13452 AT ITAND THE MOST HOSTILE, AND 13453 THE ONES WHO ARE PROBABLY HAD 13454 THE MOST SIGNIFICANT IMPACT OVER 13455 A NUMBER OF YEARS ARE THE 13456 RUSSIANS. 13457 THEY ARE THE BEST AT THEIR JOB. 13458 ADMIRAL RODGERS HAS BASICALLY 13459 SAID THE SAME THING. 13460 ALL THESE EXPERTS HAVE SAID OUR 1346DIRECTOR OF NATIONAL 13462 INTELLIGENCE HAS SAID THAT IT'S 13463 THE RUSSIANS WHO ARE, BY FAR, 13464 THE MOST ACTIVE IN THIS KIND OF 13465 BEHAVIOR, BUT IT IS NOT CONFINED 13466 TO RUSSIA. 13467 CHARLIE: SENATOR MCCAIN, I LOOK 13468 FORWARD TO TALKING MORE ABOUT 13469 THIS. 13470 THANK YOU FOR JOINING US. 1347SEE YOU SOON. 13472 ♪ 13473 CHARLIE: WE CONTINUE WITH 13474 MICHAEL AND DAVID, BOTH FROM 13475 WASHINGTON. 13476 DAVID, I BEGIN WITH YOU. 13477 WHY DID THE PRESIDENT TAKE THIS 13478 ACTION TODAY AND ORDER THIS 13479 INVESTIGATION? 13480 DAVID: I THINK THERE IS A 1348SUBSTANTIVE REASON AND FROM 13482 EVERYTHING WE CAN TELL, 13483 POLITICAL REASON. 13484 THE SUBSTANTIVE REASON IS IT HAS 13485 TAKEN THE INTELLIGENCE COMMUNITY 13486 A LONG TIME TO COME TO ALL THE 13487 MAJOR CONCLUSIONS ON THE RUSSIAN 13488 EFFORTTO INFLUENCE THE 13489 ELECTION. 13490 THAT'S EVERYTHING FROM THE 1349HACKING OF THE DNC, THE 13492 DEMOCRATIC NATIONAL COMMITTEE 13493 AND THE RELEASE OF THOSE EMAILS 13494 TO THE SCANNINGOF REGISTRATION 13495 DATA, THOUGH IT LOOKS LIKE IN 13496 THEEND THEY DID NOT TRY TO 13497 AFFECT THE ACTUAL VOTING PROCESS 13498 AND MACHINES, AND THEN ALL THE 13499 OTHER SURROUNDINGS OF THIS 13500 BECAUSE OBVIOUSLY THE RUSSIANS 1350HAVEBEEN HACKING INTO MANY 13502 OTHER AMERICAN INSTITUTIONS FOR 13503 YEARS. 13504 THERE IS A SERIOUS QUESTION 13505 ABOUT WHY THE UNITED STATES WAS 13506 CAUGHT BY SUCH SURPRISE HERE. 13507 I THINK SUBSTANTIVELY, HE WANTED 13508 TO INFLUENCE FUTURE ELECTIONS. 13509 I THINK THE POLITICAL REASON IS 13510 EVEN MORE FASCINATING, BECAUSE 1351PRESIDENT-ELECT TRUMP HAS BEEN 13512 DENYING THERE WAS MUCH EFFORT TO 13513 INFLUENCE THE ELECTION AT ALL, 13514 AND SECONDLY HE SAID THERE IS NO 13515 EVIDENCE THAT IT WAS THE 13516 RUSSIANS, WHILE THERE IS THIS 13517 FLOOD OF INTELLIGENCE REPORTS 13518 FLOATING AROUND THE CITY 13519 SUGGESTING IT WAS THE RUSSIANS, 13520 AND WHO WITHIN RUSSIA DID IT? 1352I THINK WHAT THE PRESIDENT IS 13522 TRYING TO DO IS FORCE THE 13523 INTELLIGENCE COMMUNITY TO PUT 13524 ALL THIS DOWN ON PAPER, GIVE IT 13525 TO CONGRESSIONAL COMMITTEES, 13526 PERHAPS MAKE PART OF IT PUBLIC, 13527 BEFORE PRESIDENT-ELECT TRUMP 13528 GETS SWORN IN AND IS ABLE TO 13529 COME IN AND SAY NOTHING HAPPENED 13530 HERE. 1353CHARLIE: MICHAEL, WHAT WOULD YOU 13532 ADD TO THAT? 13533 MICHAEL: I THINK DAVID HAS IT 13534 EXACTLY RIGHT. 13535 IF NOTHING ELSE, IT SORT OF 13536 BOXES IN PRESIDENT-ELECT TRUMP. 13537 I SHOULD POINT OUT THAT EVEN 13538 TODAY, THE ADMINISTRATION 13539 RATCHETED UP WHAT IT HAS SAID 13540 ABOUT THE RUSSIAN ROLE. 1354ERIC SHULTZ IN BRIEFING 13542 REPORTERS AT THE WHITE HOUSE 13543 PRESS BRIEFING SAID THAT IT WAS 13544 HIGH CONFIDENCE THAT THE CYBER 13545 ATTACKS ON THE DNC AND OTHER 13546 POLITICAL ORGANIZATIONS AND 13547 POLITICAL LEADERS WERE DIRECTED 13548 AT THE HIGHEST LEVEL OF THE 13549 RUSSIAN GOVERNMENT. 13550 THAT IS ABOUT AS STRONG AS YOU 1355CAN GET. 13552 THE PREVIOUS STATEMENT FROM THE 13553 INTELLIGENCE COMMUNITY WAS THAT 13554 IT WAS -- HIGH CONFIDENCE WAS A 13555 TERM OF ART. 13556 IN SOME WAYS, THE ADMINISTRATION 13557 IS THROWING DOWN THE GAUNTLET, 13558 SAYING HERE IT IS, AND WERE 13559 --AND WE ARE GOING TO COMPILE 13560 ALL THIS EVIDENCE AND PRESENT IT 1356TO YOU IN THE NEW 13562 ADMINISTRATION, AND THIS IS 13563 COMING THE SAME WEEK THAT TRUMP 13564 SAID IN THAT TIME MAGAZINE 13565 INTERVIEW HE DOESN'T KNOW IF IT 13566 WASTHERUSSIANS, MAYBE IT WAS 13567 SOME GUY AT HIS HOUSE IN NEW 13568 JERSEY. 13569 CHARLIE: MIKE PENCE HAS BEEN 13570 GETTING THE INTELLIGENCE 1357BRIEFINGS. 13572 NUMBER TWO, THE PRESIDENT-ELECT 13573 HAS BEEN TALKING TO THE 13574 PRESIDENT WITH SOME FREQUENCY, 13575 IF WE UNDERSTAND WHAT HE IS 13576 SAYING, THAT HE'S CONSULTED WITH 13577 THE PRESIDENT ABOUT THE 13578 TRANSITION AND A RANGE OF OTHER 13579 THINGS. 13580 HE'S TAKEN SOME PRIDE THAT HE 1358LIKES THE PRESIDENT SO MUCH IN 13582 HOPES THE PRESIDENT LIKES HIM, 13583 BUT IT'S BEEN A VERY PRODUCTIVE 13584 SESSION. 13585 YOU WOULD'VE THOUGHT PRESIDENT 13586 WOULD HAVE REMINDED HIM WHAT 13587 THIS ADMINISTRATION BELIEVES 13588 ABOUT THE RUSSIANS HACKING. 13589 >> YOU WOULD THINK, AND SHULTZ 13590 WAS PRESSED ON THAT AT THE WHITE 1359HOUSE PRESS BRIEFING TODAY AND 13592 SAID HE'S NOT GOING TO GIVE A 13593 READOUT ON THE CONVERSATIONS 13594 BETWEEN THE PRESIDENT AND THE 13595 PRESIDENT-ELECT. 13596 BUT IT'S HARD TO SEPARATE OUT 13597 THOSE COMMENTS THAT DONALD TRUMP 13598 MADE SORT OF DISMISSING WHAT THE 13599 INTELLIGENCE COMMUNITY IS SAYING 13600 FROM THE PRESIDENT'S DECISION TO 1360MAKE PUBLIC THISREVIEW TODAY 13602 AND AS I SAID BEFORE, RATCHET UP 13603 THE LEVEL OF CONFIDENCE THEY 13604 HAVE THAT THEY ARE RIGHT ABOUT 13605 THIS. 13606 CHARLIE: DAVID, WHAT WOULD YOU 13607 SAY ABOUT THAT? 13608 DAVID: WHAT ADDS TO THE ODDITY, 13609 IN ADDITION TO WHATEVER 13610 BRIEFINGS THEY'VE GIVENTO VICE 1361PRESIDENT ELECT PENCE, YOU'VE 13612 NOW SEEN ARAFT OF MORE 13613 TRADITIONAL REPUBLICAN STEP OUT 13614 AND SAY WE NEED TO HOLD 13615 HEARINGS, WE NEED INDEPENDENT 13616 COMMISSIONS, WE NEED TO HAVE 13617 MORE OF THESE DETAILS COME OUT 13618 IN PUBLIC. 13619 JOHN MCCAIN SAID THE OTHER DAY 13620 THAT HE WOULD HOLD HEARINGS WITH 1362THE ARMED SERVICES COMMITTEE, 13622 NOT ONLY OF THE HACKS RELATED TO 13623 THE ELECTION, BUT PERHAPS THE 13624 EFFORTS OF RUSSIAN INTELLIGENCE 13625 TO GET INSIDEU.S. MILITARY 13626 OPERATIONS. 13627 WE KNOW, OFCOURSE, THAT THE 13628 HACKING THAT TOOK PLACE AT THE 13629 DNC AND ELSEWHERE WAS NOT THE 13630 FIRST EFFORT BY THE RUSSIANS IN 1363RECENT TIMES. 13632 THERE WERE HACKS ON THE STATE 13633 DEPARTMENT AND WHITE HOUSE, THE 13634 PENTAGON, SO THIS FITS INTO A 13635 BROADER CONTEXT. 13636 MY GUESS IS THAT IF THE 13637 CONVERSATION HAS TAKEN PLACE 13638 BETWEEN PRESIDENT OBAMA AND 13639 PRESIDENT-ELECT TRUMP, IT'S BEEN 13640 IN THE CONTEXT OF, THERE IS A 1364BIGGER RUSSIAN CAMPAIGN OUT HERE 13642 AND IGNORE IT AT YOUR PERIL. 13643 CHARLIE: MYIMPRESSION IS THAT 13644 THE INVESTIGATORY EFFORT IS 13645 BEINGSPEARHEADED BY THE FBI, AM 13646 I CORRECT? 13647 MICHAEL: THAT'S RIGHT, FOR THE 13648 IMMEDIATE DNC JOHN PODESTA AND 13649 SO FORTH, BUT THERE HAS ALSO 13650 BEEN OTHER MEMBERS OF THE 1365INTELLIGENCE COMMUNITY BEING 13652 BROUGHT IN. 13653 MICHAEL: THE FBI TOOK THE LEAD 13654 ONTHIS THROUGHOUT, BUTTHIS 13655 CLEARLY WILL ENCOMPASS THE 13656 ENTIRE INTELLIGENCE COMMUNITY. 13657 I SHOULD POINT OUT THAT PROBABLY 13658 THE STRONGEST PUBLIC STATEMENT 13659 HASCOME FROM ADMIRAL MIKE 13660 ROGERS AT THE NATIONAL SECURITY 1366AGENCY, WHO, ALTHOUGH HE DIDN'T 13662 SAY RUSSIA, MADE IT ALL THAT 13663 --BUT CLEAR THAT HE WAS 13664 REFERRING TO A NATIONSTATE THAT 13665 TRIED TO INFLUENCE OUR ELECTION. 13666 HESAIDSOMETHING EVEN FURTHER, 13667 INTENDING TO AFFECT THE 13668 ELECTION. 13669 THAT ISPROBABLY THE BIGGEST 13670 OPEN QUESTION HERE. 1367IF INDEED IT WAS THE RUSSIANS, 13672 WHAT WAS THE MOTIVE? 13673 WAS IT SIMPLY TO DESTABILIZEAND 13674 CREATE CONFUSION IN THE AMERICAN 13675 POLITIC, AS THEY HAVE DONE IN 13676 MANY OTHER COUNTRIES? 13677 OR WAS IT A CONCERTED EFFORT TO 13678 INFLUENCE THE RESULTS OF THE 13679 ELECTION? 13680 TO HELP ELECT DONALD TRUMP AND 1368DEFEAT HILLARY CLINTON. 13682 THATISPROBABLY THE BIGGEST 13683 MYSTERY ABOUT THIS. 13684 WE DON'TKNOW THE ANSWER. 13685 CHARLIE: IS THERE ANY DOUBT THAT 13686 THIS WOULD BE TAKING PLACE HIM 13687 THAT'S TAKING PLACE IF IT'S 13688 TAKING PLACE TO THE DEGREE THAT 13689 THE VARIOUS INTELLIGENCE 13690 AGENCIES BELIEVE IT IS, THAT IT 1369WOULD BE CARRIED OUTWITHOUT 13692 PUTIN'S KNOWLEDGE? 13693 >> EVERYONE I'VE RUN INTO WHO 13694 WAS IN SENIOR LEVELS OF 13695 INTELLIGENCE SAY IT IS 13696 INCONCEIVABLE TO THEM THAT 13697 SOMEONEWOULD TAKE THE RISK OF 13698 DOING SOMETHING THIS HIGH 13699 PROFILE THAT COULD DRAW A MAJOR 13700 RESPONSE FROM THE UNITED STATES 1370WITHOUT CLEARING IT FIRST WITH 13702 THE BOSS. 13703 MICHAEL: IT'S ALSO TRUE THAT THE 13704 RUSSIAN INTENTIONS AND GOALS 13705 HERE MAY HAVE CHANGED OVER TIME, 13706 THAT PERHAPS THERE WAS SOME 13707 INITIAL, WHEN THIS BEGAN, IT MAY 13708 HAVE BEEN AN EFFORT TO HELP 13709 TRUMP. 13710 IT MAY HAVE BEEN AN EFFORT, 1371THERE ARE CERTAINLY INDICATIONS 13712 THAT PUTIN AND HIS TOP AIDES 13713 WERE NOT ENTHRALLED WITH HILLARY 13714 CLINTON. 13715 AT SOME POINT, THOUGH, THEY MAY 13716 HAVE READ THE POLLS THE WAY 13717 EVERYBODY ELSE DID AND ASSUMED 13718 THAT HILLARY CLINTON WAS GOING 13719 TO WIN, AND THEY MAY HAVE SCALED 13720 BACK SOME OF THEIR ACTIVITY. 1372ALTHOUGH THAT IS NOT ENTIRELY 13722 CLEAR, EITHER. 13723 WE KNOW THEY WERE IN THE DNC, 13724 THEY WERE HACKING EMAILS AT 13725 LEAST THROUGH THESUMMER OF 13726 2016. 13727 IT IS STILL NOTCLEAR HOW LONG 13728 IT WENT ON. 13729 THERE ARE SOME INDICATIONS IT 13730 MAY HAVE CONTINUED FOR A LITTLE 1373BIT OF TIME AFTER THAT. 13732 AND ALSO I SHOULD POINT OUT THAT 13733 THERE WAS A LOTOF CONCERN OVER 13734 THE SUMMER AND FALL ABOUT THOSE 13735 PROBES OF STATE ELECTION 13736 SYSTEMS. 13737 THAT REALLY RANG ALARM BELLS, 13738 SUGGESTING THEY MAY HAVE BEEN 13739 TRYING TO HACK THE ELECTIONS 13740 THEMSELVES, AND I THINK THE 1374ADMINISTRATION HAS MADE CLEAR 13742 THAT THAT DIDN'T HAPPEN. 13743 CHARLIE: A COUPLE OF FINAL 13744 QUESTIONS. 13745 AS SOON AS WE HAD SOME EVIDENCE 13746 THAT HACKING HAD TAKEN PLACE AND 13747 THEFBI JUMPED ON THIS, MY 13748 UNDERSTANDINGIS THAT THE 13749 PRESIDENT OF THE UNITED STATES, 13750 PRESIDENTOBAMA SAID THERE WOULD 1375BE A PROPORTIONATE RESPONSE, 13752 THAT INTELLIGENCE AGENCIES HAD 13753 IMMEDIATELY DUG INTO THIS, FROM 13754 THE FBI, THE CIA, DEFENSE AND 13755 OTHER PEOPLE,AND THAT THERE WAS 13756 GOING TO BE A PROPORTIONATE 13757 RESPONSE. 13758 HAS THERE BEEN A RESPONSE, AS 13759 FAR AS WE KNOW? 13760 >> THE MAIN RESPONSE WE'VE SEEN 1376SO FAR HAS BEEN SOME WARNINGS TO 13762 THE RUSSIANS THAT PRESIDENT 13763 OBAMA GAVE DIRECTLY WHEN HE LAST 13764 MET PRESIDENT PUTIN IN CHINA. 13765 THAT WAS BACKIN SEPTEMBER. 13766 THERE HAVE BEEN CHANNELS OF 13767 COMMUNICATION ELSEWHERE TO 13768 SECRETARY OF DEFENSE, SECRETARY 13769 OFSTATE, A WARNING SENT THROUGH 13770 A SYSTEM THAT IS USED FOR BOTH 1377CYBER AND NUCLEAR WARNINGS, BUT 13772 IF THERE HAS BEEN A PUNISHMENT 13773 TO, ACOST TO PRESIDENT PUTIN 13774 FOR THIS, WE HAVEN'T SEEN IT. 13775 THERE HAS NOT BEEN SANCTIONS. 13776 MAYBE THERE HAS BEEN SOME KIND 13777 OF COVERT EFFORT, BUT IT HAS 13778 BEEN PRETTY SUBTLE. 13779 IT WAS JOE BIDEN WHO SAID ON ONE 13780 OF THE SUNDAY SHOWS BEFORE THE 1378ELECTION, WE WILL COME AFTER 13782 PUTIN, AND HE WILL KNOW IT EVEN 13783 IF NOBODY ELSE DOES. 13784 BUT SO FAR, EVIDENCE OF THAT IS 13785 PRETTY SCARCE. 13786 MICHAEL: THIS BECAME PUBLIC 13787 TODAY BECAUSE LISA MONACO HAD 13788 BREAKFAST WITH THE REPORTERS. 13789 SHE STARTED WITH AN OVERVIEW 13790 ABOUT THREATS TO THE COUNTRY, 1379THREATS TO THE HOMELAND, AND 13792 TALKED ABOUT THE CYBER THREAT. 13793 SHE SAID WHEN THERE ARE CYBER 13794 ATTACKS THAT THREATEN AMERICAN 13795 INTERESTS, WE WILL ACT TO 13796 PROTECT OUR INTERESTS. 13797 I ASKED HER LATER IF THE U.S. 13798 GOVERNMENT HAS TAKEN OR WILL BE 13799 TAKING STEPS TO IMPOSE COSTS ON 13800 THE RUSSIANS AS A RESULT OF 1380THESE CYBER ATTACKS, AND SHE DID 13802 NOT ANSWER THAT QUESTION. 13803 CHARLIE: SOMEONE ONCE SAID TO ME 13804 AFTER THE RUSSIANS WERE ACCUSED 13805 OF DOING THIS THAT THE RESPONSE, 13806 THE PROPORTIONATE RESPONSE WOULD 13807 BE SOMETHING THAT WOULD BE DONE 13808 SO THAT PUTIN KNEW WHAT IT WAS 13809 ABOUT, BUT IT WOULD LOOK FOR 13810 CREDIBILITY WITHIN RUSSIA, SO IT 1381WOULD NOT BE DONE WITH A LOT OF 13812 BELLSAND SOUNDINGS. 13813 >> THAT'S RIGHT, CHARLIE, BUT 13814 THERE IS A RISK TO THAT AS WELL. 13815 THERE'S ALWAYS A TEMPTATION, 13816 LET'S KEEP IT QUIET AND IN THE 13817 FAMILY, BUT ONE OF THE BIGGEST 13818 PROBLEMSIN CYBER, AS WE'VE 13819 DISCUSSED ON PAST SHOWS, IS 13820 ESTABLISHING SOME SENSE OF 1382DETERRENCE. 13822 IT DOES NOTEXIST IN THE CYBER 13823 REALM THE WAY IT DOES IN 13824 NUCLEAR. 13825 IF YOU'RE GOING TO ESTABLISH 13826 DETERRENCE, YOU HAVE TO HAVE A 13827 PRETTY PUBLIC RESPONSE SO THAT 13828 THE NEXT TIME, IS NOT THE 13829 RUSSIANS, BUT INSTEAD THE NORTH 13830 KOREANSOR THE IRANIANS OR THE 1383CHINESE OR SOMEONE ELSE WE ARE 13832 NOT THINKINGOF THEY UNDERSTAND 13833 , THIS IS NOT A FREE FIRE ZONE. 13834 CHARLIE: DAVID, MICHAEL, THANK 13835 YOU SO MUCH. 13836 BACK IN A MOMENT. 13837 STAY WITH US. 13838 ♪ 13839 CHARLIE:WE NOW TURN TO THE 13840 LATEST NEWS FROM THE TRUMP 1384TRANSITION. 13842 JOINED BY MAJOR GARRETT OF CBS 13843 NEWS, WHO'S BEEN COVERING NOT 13844 ONLY THE TRUMP CAMPAIGN BUT THE 13845 TRUMP TRANSITION. 13846 MAYOR RUDY GIULIANI WITHDREW HIS 13847 NAMEFROM CONSIDERATION. 13848 GIVE US SOME SENSE OF WHAT WAS 13849 GOING ON THERE? 13850 >> RUDY GIULIANI APPRECIATES 1385OPERA. 13852 HEISAN OPERATICCHARACTERIN 13853 THE TRUMP TRANSITION. 13854 HE ENDORSEDDONALD TRUMP RIGHT 13855 BEFORE THE NEW YORK PRIMARY IN 13856 APRIL AND BECAME HIS MOST 13857 AGGRESSIVE AND MOST DEEPLY LOVED 13858 -- BECAUSE I THOUGHT THIS SO 13859 MANY TIMES ON THE CAMPAIGN TRAIL 13860 -- SURROGATE FOR DONALD TRUMP, 1386AND HE IS THE ODD MAN OUT. 13862 SPECTACULARLY THE ODD MAN OUT IN 13863 THE TRUMP TRANSITION. 13864 IT'S ALMOST INCONCEIVABLE TO 13865 SOME IN THE TRUMP TRANSITION 13866 THAT RUDY GIULIANI WOULD NOT 13867 FIND A PLACE WITHIN THE TRUMP 13868 CABINET. 13869 THAT'S RELATED TO TRUMP'S ON 13870 --OWN INSTINCTS, BUT IT'S ALSO 1387RELATED TO GIULIANI'S MISSTEPS. 13872 TRUMP OFFERED HIM THE POSITION 13873 OF ATTORNEY GENERAL AND DIRECTOR 13874 OF HOMELAND SECURITY AND HE 13875 TURNED THEM DOWN. 13876 FOCUSING ENTIRELY ON SECRETARY 13877 OF STATE, THE POSITION HE WANTED 13878 AND COVETED, BUT IN THE END, 13879 TRUMP WOULD NOT GIVE HIM. 13880 GIULIANI SENSEDTHAT, AND PULLED 1388HIMSELF OUT BEFORE SUFFERING THE 13882 INDIGNITY OF SOMEONE ELSE 13883 GETTING THAT SLOT. 13884 SO IN EVERY WAY, THIS DEEPLY 13885 IMPORTANT AMERICAN POLITICAL 13886 FIGURE, WHO REVOLUTIONIZED NEW 13887 YORK CITY, AND WHO WAS THE 13888 BIGGEST, IF NOT MOST CONSPICUOUS 13889 EXPONENT OF THE TRUMP APPROACH 13890 TO THE PRESIDENCY, WILL BE LEFT 1389ON THE SIDELINES. 13892 IT'S AN AMAZING STORY. 13893 CHARLIE:SO WHO ISLEFT IN THE 13894 RUNNING FOR SECRETARY OF STATE? 13895 >> I'VE BEEN TOLD THAT THERE ARE 13896 ONLY TWO REALLY LEGITIMATE 13897 FIGURES WHO MAYGET THE POSITION 13898 OF SECRETARY OF STATE. 13899 MITT ROMNEY AND THE CHAIRMAN OF 13900 THE BOARD OF EXXON MOBIL, REX 1390TILLERSON. 13902 CHARLIE:HE BRINGS WHAT? 13903 >> TILLERSON BRINGS FOR DONALD 13904 TRUMP A COUPLE OF THINGS YOU MAY 13905 NOT ASSOCIATE WITH THE POSITION 13906 OF SECRETARY OF STATE. 13907 HE HAS NO GOVERNMENT EXPERIENCE. 13908 HE'S NOT A TRAINED FOREIGN 13909 SERVICE DIPLOMAT BY ANY STRETCH 13910 OF THE IMAGINATION, BUT HE IS A 1391BIG AMERICAN BUSINESSMAN, A 13912 CORPORATE CHIEFTAIN WHO HAS DONE 13913 DEALS. 13914 BECAUSE EXXON MOBIL OPERATES IN 13915 MORE THAN 50 COUNTRIES, IT 13916 EXPLORES FOR OIL AND NATURAL GAS 13917 ON SIX OF THE SEVEN CONTINENTS 13918 ON EARTH, HE HAS, IF YOU WILL, 13919 A CORPORATE WORLDVIEW. 13920 HE HAS EXPERIENCE WITH LOTS OF 1392DIFFERENT GOVERNMENTS, AND 13922 POSSIBLY MOST IMPORTANT, HE HAS 13923 LONG EXPERIENCE IN RUSSIA AND 13924 WITH VLADIMIR PUTIN. 13925 THEY KNEW EACH OTHER BACK IN THE 13926 1990'S, WHEN PUTIN WAS A KGB 13927 FUNCTIONARY IN THE GOVERNMENT. 13928 THEY GOT TO KNOW EACH OTHER 13929 THEN. 13930 IF YOU'RE LOOKING FOR AN 1393ANALOGY, LOOK FOR THE CHINESE 13932 AMBASSADOR FOR DONALD TRUMP, 13933 TERRYBRANSTAD, CURRENTLY THE 13934 GOVERNOR OF IOWA, WHO GOT TO 13935 KNOW THE CURRENT HEAD OF CHINA 13936 WHEN HE WAS A FUNCTIONARY IN THE 13937 CHINESE BUREAUCRACY. 13938 IF YOU LOOK AT THAT AS A 13939 TEMPLATE, YOU MIGHT SEE REX 13940 TILLERSON AS SOMEONE 1394PARTICULARLY AMENABLE TO 13942 PRESIDENT-ELECT TRUMP'S 13943 WORLDVIEW. 13944 CHARLIE: IT'S CLEAR THAT THE 13945 PRESIDENT HAS WHATEVER 13946 DIFFERENCES THERE WERE WITH MITT 13947 ROMNEY, WHATEVER WAS SAID ABOUT 13948 BOTH MEN IN THE CAMPAIGN, THAT 13949 THEY WORK THEIR WAY THROUGH THAT 13950 AND THIS NOW IS A CONVERSATION 1395WHICH IS A POSITIVE CONVERSATION 13952 ABOUT THE DIFFICULT PROCESS OF 13953 SELECTING A SECRETARY OF STATE. 13954 ON THE ONE HAND, THE MENU HAS TO 13955 -- A MANWHO HAS TO MAKE THE 13956 DECISION FOR THE BENEFIT OF THE 13957 COUNTRY, AND ON THE OTHER HAND A 13958 MAN WHO HAS HIS OWN INTEGRITY 13959 AND IS PREPARED TO GO TO WORK, 13960 FOR A MAN HE WAS DEEPLY CRITICAL 1396OF DURING THE CAMPAIGN. 13962 >> WHEREVER THIS LANDS, IF MITT 13963 ROMNEY BECOMES OR DOES NOT 13964 BECOME SECRETARY OF STATE, WHEN 13965 -- WHAT HE LEAVES THE PROCESS 13966 WITH IS A DIFFERENT APPRECIATION 13967 OF DONALD TRUMP, AND IMPORTANTLY 13968 TO MITT ROMNEY, A DIFFERENT 13969 APPRECIATION OF DONALD TRUMP TO 13970 MITT ROMNEY, JUST AS DONALD 1397TRUMP HAS A DIFFERENT 13972 APPRECIATION OF THE CURRENT 13973 PRESIDENT, BARACK OBAMA. 13974 I ATTENDED MORE THAN 70 MITT 13975 --70 DONALD TRUMP RALLIES AND 13976 THERE WASNOTONE SCINTILLA OF 13977 APPRECIATION FOR BARACK OBAMA. 13978 DONALD TRUMP HAS A DEEPER 13979 APPRECIATION OF BARACK OBAMA AS 13980 PRESIDENT, AS A MAN, AND A 1398FIGURE IN HISTORY. 13982 SO THERE IS EVOLUTION WITH 13983 DONALD TRUMP. 13984 HE HAS EVOLVEDWITH MITT ROMNEY. 13985 THESE ARE SERIOUS CONVERSATIONS. 13986 MITT ROMNEY IS IN THE FINAL TWO 13987 HE IS CARNIVAL EVER-EXPANDING 13988 LIST AND IF HE LANDSIT IT WILL 13989 BE AMONG THE MOSTFASCINATING 13990 TORIES IN THE TRUNKTRANSITION. 1399CHARLIE: SO MUCH WAS SAID ABOUT 13992 TEMPERAMENT AND BEING FIT FOR 13993 THE PRESIDENTDELIVERS NEXT TO 13994 OBAMA ANDROMNEY, THE 13995 PRESIDENT-ELECT IS REFLECTING A 13996 VERY ADULT BEHAVIOR. 13997 >> IT IS AN ADULT BEHAVIOR, BUT 13998 A BEHAVIOR I WOULD CAUTIOUSLY 13999 SUGGEST IN AWE. 14000 I READ A LOT ABOUT THOSE BEFORE 1400THE THREE HOURS PRIVILEGED 14002 ENOUGH TO COVER. 14003 SUGGEST IN AWE. 14004 IT IS, IN ITS OWN SENSE, AN 14005 AWE-INSPIRING INSTITUTION. 14006 THE AMERICAN CULTURE NEEDS TO 14007 APPRECIATE ABOUT DONALD TRUMP 14008 THAT IN SOME AREAS, HE IS AWED 14009 BY THE INSTITUTION AND SOME WHO 14010 HAVE ACHIEVED IT. 1401IN WAYS PERHAPS SURPRISING TO 14012 HIMSELF, DONALD TRUMP HAS COME 14013 TO APPRECIATE THAT. 14014 CHARLIE: HE IS A MAN WHO ADMIRES 14015 SUCCESS. 14016 LET US TALK ABOUT THIS IDEA OF 14017 HOW HE DOES IT, FAR MORE THAN 14018 BARACK OBAMA OR GEORGE BUSH 43 14019 HAS THROWN HIMSELF INTO THIS 14020 PROCESS, INTERVIEWED PEOPLE, IS 1402ON THE PHONE CONSTANTLY. 14022 THE IMPRESSION I HAVE IS THAT BY 14023 SELECTION OF OTHER PRESIDENTS 14024 WAS MUCH MORE A PRODUCT OF A 14025 TRANSITION TEAM AND INVOLVEMENT 14026 BY THE PRESIDENT-ELECT, MUCH 14027 MORE INVOLVEMENT OF A TEAM. 14028 THIS PRESIDENT WANTS TO TOUCH 14029 AND TALK TO AND GET A PERSONAL 14030 SENSE OF THE MEN AND WOMEN HE 1403WANTS TO SERVE. 14032 >> EXACTLY. 14033 I THINK IT'S FAR TOO EARLY, 14034 CHARLIE, TO OFFER AN APPRAISAL 14035 IN WAYS PERHAPS SURPRISING TO 14036 OF THIS APPROACH THAT IS EITHER 14037 POSITIVE OR NEGATIVE. 14038 I THINK THE COUNTRY AND THOSE OF 14039 US OBLIGATED TO COVER THIS 14040 PROCESS AS IT UNFOLDS BEFORE US 1404NEED TO TAKE IT STEP BY STEP AND 14042 JUDGE IT AS THE RESULTS SPEAK 14043 FOR THEMSELVES. 14044 REMEMBER, JIMMY CARTER WAS THE 14045 PRESIDENT WHO WAS DEEPLY 14046 INVOLVED IN THE DAY-TO-DAY AND 14047 HOUR-BY-HOUR DETAILS OF HIS 14048 PRESIDENCY. 14049 IT BOGGED HIM DOWN AND SEPARATED 14050 HIM FROM THE LARGER VISION. 1405THERE IS A DANGER INVOLVED IN A 14052 KIND OF INVOLVEMENT AND GET, WE 14053 TEND TO APPRECIATE SOMEONE WHO 14054 HAS AN APPRECIATION FOR DETAILS 14055 AND EVALUATING SOMEONE AT THE 14056 PERSONAL GUT LEVEL. 14057 IF I HAVE LEARNED ANYTHING ABOUT 14058 PRESIDENT-ELECT TRUMP IN MY 18 14059 OR SO MONTHS COVERING HIM IT IS 14060 THAT HE MAKES VERY IMPORTANT AND 1406CRUCIAL SNAP JUDGMENTS ABOUT 14062 PEOPLE BY APPRAISING THEM 14063 HIMSELF, AND NOT GETTING IT 14064 FILTERED BY THOSE AROUND HIM. 14065 THAT IS AN IMPORTANT 14066 CHARACTERISTIC OF AN EMERGING 14067 TRUMP PRESIDENCY. 14068 IT JUST IS A REALITY. 14069 CHARLIE: THANK YOU SO MUCH FOR 14070 JOINING US. 1407IT IS A PLEASURE. 14072 WE'LL BE RIGHT BACK. 14073 STAY WITH US. 14074 ♪ 14075 CHARLIE: MORE ON THIS WEEKEND. 14076 THE ANNOUNCEMENT, I HAD HEARD 14077 BEFORE THAT GIULIANI WAS OUT OF 14078 THE RUNNING. 14079 IS THAT SIMPLY TODAY'S 14080 ANNOUNCEMENT TO MAKE THAT CLEAR 1408THAT THIS POSSIBLE NOMINEE 14082 WITHDREW HIMSELF? 14083 >> HE NOT ONLY MADE THE OFFICIAL 14084 WORD THAT GIULIANI WAS 14085 WITHDRAWING HIMSELF FROM ANY 14086 ADMINISTRATION JOB, BUT REINCE 14087 PRIEBUS STATED IN A QUOTE ON 14088 THIS ANNOUNCEMENT THAT GIULIANI 14089 WAS VETTED THOROUGHLY BY THE 14090 TRUMP TEAM AND PASSED WITH 1409FLYING COLORS. 14092 IT CLEARS RUDY GIULIANI OF ANY 14093 RUMORS OF WHETHER HE WAS PASSED 14094 OVER FOR SECRETARY OF STATE. 14095 YOUR REPORTING IS CORRECT. 14096 IT MATCHES WITH MY REPORTING 14097 WHICH IS THAT RUDY GIULIANI IS 14098 FADING IN THE VIEW OF DONALD 14099 TRUMP. 14100 CHARLIE: DO WE KNOW WHETHER HE 1410COULD HAVE BEEN ATTORNEY GENERAL 14102 WHETHER HE HAD NOT INSISTED ON 14103 BEING SECRETARY OF STATE? 14104 PHILIP: I DON'T KNOW FOR SURE. 14105 THERE WOULD HAVE BEEN SOME 14106 DISCUSSION ABOUT WHETHER JEFF 14107 SESSIONS SHOULD GET IT OR RUDY 14108 GIULIANI, SO YOU KNOW, 14109 POTENTIALLY, HE COULD HAVE 14110 GOTTEN HIMSELF A JOB. 1411HE IMAGINED GIULIANI -- BUT 14112 GIULIANI WAS INSISTENT FROM THE 14113 BEGINNING THAT STATE WAS ALL HE 14114 WANTED. 14115 CHARLIE: HE COULD HAVE PROMISED 14116 SESSIONS A SUPREME COURT 14117 APPOINTMENT OR SOMETHING LIKE 14118 THAT. 14119 PHILIP: EXACTLY. 14120 CHARLIE: WHICH WOULD HAVE BEEN 1412ENTIRELY WITHIN THE SORT OF 14122 THING HE MIGHT WANT BECAUSE OF 14123 HIS LIFE WITHIN, YOU KNOW, THE 14124 JUDICIAL PROCESS OF BOTH IN 14125 TERMS OF LAW ENFORCEMENT ALSO IN 14126 TERMS OF JUDGING. 14127 TERMS OF LAW ENFORCEMENT ALSO IN 14128 LET ME TURN TO THE SECRETARY OF 14129 STATE. 14130 WHAT DO WE KNOW? 1413PHILIP: WELL, WE KNOW THAT THERE 14132 ARE TWO PEOPLE CONSIDERED 14133 LEADING CANDIDATES. 14134 MITT ROMNEY WHO HAS BEEN A 14135 CANDIDATE FOR SOME TIME AND A 14136 NEW FIGURE, REX TILLERSON, THE 14137 CEO OF EXXON MOBIL, AND 14138 INTERNATIONAL BUSINESS EXECUTIVE 14139 WHO HAS DONE WORK AROUND THE 14140 WORLD BECAUSE OF HIS ROLE IN THE 1414OIL INDUSTRY AND INCLUDING WITH 14142 RUSSIA. 14143 HE HAS RELATIONSHIPS WITH THE 14144 PUTIN GOVERNMENT AND HAS BEEN 14145 AROUND THE WORLD. 14146 HE DID -- 14147 MITT ROMNEY MIGHT BE A MORE 14148 TRADITIONAL POLITICAL FIGURE IN 14149 THAT DIPLOMATIC POST. 14150 BOTH ARE LIKED BY DONALD TRUMP. 1415THERE ARE POLITICAL 14152 CONSIDERATIONS. 14153 TRUMP SUPPORTERS ARE HOSTILE TO 14154 THE IDEA OF MITT ROMNEY, OF 14155 REWARDING A FORMER ANTAGONIST 14156 WHO WAS NOT LOYAL ON THE 14157 CAMPAIGN AND WAS TO LISTEN -- 14158 WITH TILLERSON, HE IS MORE OF AN 14159 UNKNOWN. 14160 I DON'T KNOW OF LINDSEY GRAHAM 1416WOULD SCRUTINIZE HIS TIES WITH 14162 RUSSIA. 14163 CHARLIE: TAKE US INSIDE THE 14164 TRUMP TRANSITION TEAM. 14165 WHAT OTHER CONFLICTS BETWEEN 14166 DIFFERENT GROUPS? 14167 PHILIP: THERE ARE DIFFERENT 14168 PERSPECTIVES ON SECTORS OF 14169 STATE. 14170 THIS HAS BEEN GOING ON FOR 1417SOMETIME NOW, REALLY FOR ABOUT A 14172 MONTH, THIS DISCUSSION ABOUT WHO 14173 THE DIPLOMATS SHOULD BE. 14174 MIKE PENCE IS SAID TO BE IN 14175 COURAGE AND REINCE PRIEBUS. 14176 BOTH HAVE RELATIONSHIPS WITH 14177 ROMNEY AND SIT IN WITH THE PARTY 14178 ESTABLISHMENT AND THERE ARE 14179 OTHER ADVISORS INSIDE THE 14180 CIRCLE, ESPECIALLY KELLYANNE 1418CONWAY, WHO HAVE BEEN HOSTILE TO 14182 THE IDEA OF ROMNEY. 14183 THAT IS WHY TILLERSON HAS 14184 EMERGED. 14185 HE MATCHES THEQUALITIES TRUMP 14186 LIKES IN ROMNEY. 14187 HE HAS A CERTAIN STATURE AND 14188 GRAVITAS AND CAN TRAVEL THE 14189 WORLDWITH THE AUTHORITY OF A 14190 WORLD WITH THE AUTHORITY OF A 1419PRESIDENT. 14192 AND THEN TILLERSON IS SEEN AS 14193 SOMEONE WHO CARRIES HIMSELF IN A 14194 SIMILAR WAY AND I THINK WHEN HE 14195 CAME TO MEET WITH TRUMP THIS 14196 WEEK AT TRUMP TOWER, HE WAS VERY 14197 IMPRESSIVE AND THEY HAD A GOOD 14198 CONVERSATION. 14199 THAT IS WHAT PEOPLE ARE SAYING. 14200 THOSE ARETHE QUALITIES TRUMP IS 1420LOOKING FOR IN A DIPLOMAT. 14202 ITIS AT THIS POINT A POLITICAL 14203 CALCULATION OF WHETHER HE GOES 14204 WITH ROMNEY, WHO IS MORE OF THE 14205 PARTY INSIDER, AT THE RISK OF 14206 ALIENATING HIS LOYAL BASE AND 14207 ADVISORS, OR GOING WITH SOMEONE 14208 NEW LIKE TILLERSON. 14209 CHARLIE: IS THERE PUSHED BACK 14210 BECAUSE HE PRAISES THE 1421PRESIDENT? 14212 PHILIP: NOT WITHIN THE 14213 TRANSITION TEAM THAT I HAVE 14214 HEARD OF. 14215 I THINK A LOT OF HIS VOTERS ARE 14216 TRYING TO GIVE HIM THE BENEFIT 14217 OF THE DOUBT HERE. 14218 ITIS ONE THING TO HAVE A 14219 MEETING WITH AL GORE BECAUSE 14220 YOUR DAUGHTER TRIED TO SET UP A 1422MEETING AND HE LISTENED TO WHAT 14222 THEGUY HAS TO SAY. 14223 IT IS ANOTHER THING TO CHANGE 14224 HER VIEW ON THE POLICIES. 14225 TRUMP IS AS FAR TO THE RIGHT ON 14226 THE CLIMATE ENVIRONMENTAL ISSUES 14227 AS HE CANBE. 14228 HE JUST APPOINTED PRUITT TO BE 14229 THE HEAD OF THE EPA. 14230 IT IS PRETTY CLEAR, WHATEVER AL 1423GORE TOLD TRUMP IN THAT MEETING, 14232 HE'S NOT REALLY HEATING THAT 14233 COUNSEL. 14234 CHARLIE: WHAT MIGHT WE LEARN 14235 ABOUT HOW PRESIDENT-ELECT TRUMP 14236 WILL GOVERN BASED ON HOW HE IS 14237 RUNNING THE TRANSITION? 14238 PHILIP: HE'S VERY HANDS-ON AS 14239 YOU GUYS WERE TALKING ABOUT IN 14240 THE EARLIER SEGMENT. 1424HE IS INTERVIEWING ALL OF THESE 14242 PEOPLE PERSONALLY. 14243 HE'S WEIGHING IN ON THEM 14244 PERSONALLY AND MAKING 14245 ASSESSMENTS ABOUT WHETHER THEY 14246 WOULD BE A GOOD FIT AND HIS 14247 CABINET, WHETHER THEY HAVE THE 14248 LEADERSHIP STRENGTH HE IS 14249 LOOKING FOR. 14250 HE HAS BEEN REALLY DRAWN TO 1425ALPHAS, TO LEADERS, TO PEOPLE 14252 WHO ARE CEO'S IN THE CORPORATE 14253 WORLD OR MILITARY GENERALS. 14254 HE'S NOT LOOKING AT ACADEMICS, 14255 POLICY MINDS, FOLKS WHO SPENT 14256 YEARS READING BOOKS ABOUT 14257 YEARS READING BOOKS ABOUT 14258 THINGS. 14259 HE WANTS PEOPLE WHO HAVE BEEN IN 14260 THE REAL WORLD, MAKING DECISIONS 1426THAT HAVE IMPACTS ON MARKETS AND 14262 YEARS READING BOOKS ABOUT 14263 THINGS. 14264 HE WANTS PEOPLE WHO HAVE BEEN IN 14265 THE REAL WORLD, MAKING DECISIONS 14266 THAT HAVE IMPACTS ON MARKETS AND 14267 GLOBAL AFFAIRS. 14268 THAT IS THE APPROACH IS TAKING 14269 SOME OF THESE BIG JOBS, 14270 CERTAINLY SECRETARY OF STATE AND 1427SOME OF THE OTHERS. 14272 THE ASSISTANT SECRETARY AT THE 14273 AGENCY, THEY HAVE ALSO NOT YET 14274 ANNOUNCED SENIOR WHITE HOUSE 14275 STAFFPOSITIONS BEYOND REINCE 14276 PRIEBUS AND STEVE BANNON AND THE 14277 WHITE HOUSE COUNSEL. 14278 THEREIS GOING TO BE SOME GIVE 14279 AND PULL ABOUT WHO FEEL THEM AS 14280 JOBS. 1428WHO IS THE WHITE HOUSE, WHO IS 14282 GOING TO BE THE DEPUTY CHIEF OF 14283 STAFF, LEE IS ON THE CONGRESS, 14284 VICE PRESIDENT-ELECT PENCE'S 14285 OFFICE. 14286 THE REPUBLICAN NATIONAL 14287 COMMITTEE CHAIRMANSHIP IS A JOB 14288 THAT REINCE PRIEBUS IS VACATING. 14289 IT WILL BE THE POLITICAL ARM. 14290 IT STARTS TO TAKE SHAPE EARLY ON 1429ANDTHERE IS A LOT OF DIFFERENT 14292 CANDIDATES IN THE MIX FOR THAT. 14293 WEARE HEARING THE LEADING 14294 CONTENDER SEEMSTO BE RONA 14295 ROBBIE MCDANIEL. 14296 CHARLIE: IS IT AN ACCURATE 14297 STATEMENT OF WHICH SEEMS TO BE 14298 THE IMPRESSION THAT WHILE DONALD 14299 TRUMP IS URGED NOTTO TWEET AS 14300 MUCH AS HE DOES, IT IS 1430IRRESISTIBLE FOR HIM? 14302 PHILIP: THAT IS A GREAT 14303 QUESTION. 14304 HE HAS INDICATED HE WILL 14305 CONTINUE MAKING HIS VIEWS KNOWN 14306 ON TWITTER. 14307 HE HAS BEEN DOING IT EVERY DAY. 14308 HE PLANS TOCONTINUE INTO THE 14309 WHITE HOUSE. 14310 THERE HAS BEEN SOME SUGGESTION 1431THAT PERHAPS HE WOULD BACK OFF 14312 OFTWITTER AND ONE PERSON 14313 MENTIONED SECRET SERVICE WOULD 14314 HAVE SOMETHING TOSAY ABOUT 14315 THAT, BUT IF HE IS ABLE TO 14316 TWEET, HE WILL TWEET. 14317 HE WANTSTO COMMUNICATE DIRECTLY 14318 WITH THE AMERICAN PEOPLE AND 14319 THAT IS WHAT WE HAVE BEEN SEEING 14320 THROUGHOUT THE CAMPAIGN AND 1432DURING THIS TRANSITION. 14322 HE REALLY WANTS TO DO EVERYTHING 14323 HECAN TO BREAK THROUGH WHAT HE 14324 SEES AS A PRESS FILTER AND SPEAK 14325 DIRECTLY TO PEOPLE. 14326 THAT IS TWITTER, RALLIES, DOING 14327 CALL-INS ON RADIO. 14328 CHARLIE: WE WILL BE RIGHT BACK. 14329 STAY WITH US. 14330 ♪ 1433CHARLIE: AS IT HAS, SINCE 1927, 14332 TIME MAGAZINEANNOUNCED ITS 14333 PERSON OF THE YEAR THIS WEEK. 14334 THIS TIME IT IS THE INDIVIDUAL 14335 WHO FOR BETTER OR WORSE HAD THE 14336 MOST INFLUENCE ON THE EVENTS OF 14337 THE YEAR. 14338 PRESIDENT-ELECT DONALD TRUMP 14339 MIGHT BE THE OBVIOUS CHOICE BUT 14340 THE NATION REMAINS DIVIDED OVER 1434WIDE. 14342 WITH ME AS NANCY GIBBS, THE 14343 MANAGING EDITOR OF TIME. 14344 I'M PLEASED TO HAVE HER BACK AT 14345 THIS TABLE. 14346 YOU HAS ALWAYS FRAMED THIS AS 14347 THE PERSON WHO HAS THE MOST 14348 INFLUENCE, NOT THE MOST POPULAR. 14349 THIS IS A SLAMDUNK, ISN'T IT? 14350 NANCY: WHAT IS INTERESTING TO ME 1435IS, WHO HAS HAD THE MOST 14352 INFLUENCE ON THE YEAR FOR BETTER 14353 OR WORSE? 14354 IT SEEMS LIKE UNIVERSAL 14355 AGREEMENT THAT HE HAS THE MOST 14356 INFLUENCE AND HIS AGREEMENT OVER 14357 WHETHER IT WAS FOR BETTER OR FOR 14358 WORSE. 14359 THIS IS ONE OF THE THINGS THAT 14360 WE REALLYLOOKED AT IS THAT 1436EVERY PRESIDENTIAL ELECTION, WE 14362 NAMED BARACK OBAMA FOUR YEARS 14363 AGO AND EIGHT YEARS AGO. 14364 WE NAMED GEORGE W. BUSH 12 YEARS 14365 AGO AND 16 YEARS AGO. 14366 IN PRESIDENTIALELECTION YEARS, 14367 IT WOULD BE UNUSUAL FOR SOMEONE 14368 OTHER THAN THE NEWLY ELECTED 14369 PRESIDENT TO BE THE DOMINANT 14370 FIGURE THAT YEAR. 1437IN ANY PRESIDENTIAL YEAR, THE 14372 COUNTRY IS DIVIDED. 14373 ROUGHLY HALF THE COUNTRY VOTES 14374 FOR ONE OR THE OTHER. 14375 THERE IS SOMETHING THAT FEELS 14376 DIFFERENT THIS YEAR, AT LEAST 14377 FROM WHERE I SIT, OF THE LEVEL 14378 OF SURPRISE AT THE OUTCOME, 14379 WHICH SPEAKS TO HOW MANY PEOPLE 14380 WHO WERE MEANT TO BE THE EXPERTS 1438AND THE DATA ANALYSTS AND 14382 POLLSTERS DID NOT SEE HIS 14383 VICTORY COMING, AND THE REACTION 14384 SINCE THEN THAT EVEN WHEN YOU 14385 THINK ABOUT BUSH AND GORE IN 14386 2000 WITH THE EXTRAORDINARY 14387 FIVE-WEEK LONG DRAMA, EVEN THAT 14388 ONE DID NOT FEEL AS DRAMATIC AND 14389 FRAUGHT AS THIS ONE, AND THAT IS 14390 A LOT OF THE CHALLENGE THAT THE 1439PRESIDENT-ELECT I THINK FACES. 14392 HE TALKS ABOUT WANTING TO BRING 14393 THE COUNTRY TOGETHER AND HE 14394 APOLOGIES THAT RECOGNIZES THAT 14395 THAT REPRESENTS A SIGNIFICANT 14396 CHALLENGE. 14397 HETALKS ABOUT IT AS ANHONOR. 14398 WE HAVE RUN INTO THAT FOR YEARS. 14399 IT SOUNDS LIKE THE KINDS OF 14400 THINGS PEOPLE ON WITH PEOPLE 1440WITHOUT THE END OF THE YEAR, AND 14402 WE HAVE ALWAYS SAID THAT IT IS A 14403 MEASURE OF INFLUENCE. 14404 LAST YEAR, WE PICKED ANGELA 14405 MERKEL. 14406 THE POSITION SHE TOOK ON THE 14407 REFUGEE CRISIS AND THE EUROZONE 14408 AND ON THE ECONOMIC POLICY IN 14409 EUROPE MADE HER PRETTY DIVISIVE 14410 FIGURE AS WELL. 1441SHE WAS BY NO MEANS UNIVERSALLY 14412 ADMIRED. 14413 CHARLIE: AND SHE SUFFERED 14414 POLITICALLY EVEN THOUGH SHE WILL 14415 RUN FOR REELECTION. 14416 SHE IS UP FOR REELECTION. 14417 WEWILL HAVE SOME CHANGE GOING 14418 ONIN ITALY. 14419 THE NETHERLANDS I THINK HAS AN 14420 ELECTION. 1442WE SAW AN ELECTION IN AUSTRIA. 14422 THE WHOLE IDEA -- IF I THOUGHT 14423 OF ANYTHING OTHER THAN TRUMP, TO 14424 BE OBVIOUS, AT THIS PARTICULAR 14425 YEAR, BECAUSE YOU HAVE FRAMED 14426 THE QUESTION, IT WOULD BE 14427 POPULISM AS AN IDEA. 14428 NANCY: WE HAVE A STORY ABOUT THE 14429 RISE OF THE POPULISTS AROUND THE 14430 WORLD. 1443NIGEL FARAGE, THE PERSON IN THE 14432 PHILIPPINES. 14433 ONE OF THE REASONS WE WERE NOT 14434 TEMPTED TO DO A GROUP IS WHAT IS 14435 REMARKABLE ABOUT ON TIME THAT WE 14436 HAVE NOT SEEN BEFORE IS SOMEBODY 14437 WHO COMES IN AND DEFIES ALL 14438 EXPECTATIONS, BREAKS ALL THE 14439 RULES, SHATTERS EVERY SORT OF 14440 NORM AND CONVENTION OF HOW YOU 1444RUN FOR PRESIDENT, DEFEATED NOT 14442 ONE BUT BOTH MAJOR POLITICAL 14443 PARTIES ON HIS WAY TO WINNING, 14444 IT -- 14445 CHARLIE: AND DEFEATED TWO 14446 DYNASTIES. 14447 NANCY: AND DID IT WITH LARGELY 14448 BASED ON HIS OWN INSTINCTS, NOT 14449 A HUGE CADRE OF ADVISORS AND 14450 POLLSTERS, THE HELP OF THE 1445REPUBLICAN PARTY INFRASTRUCTURE 14452 OR DONOR CLASS. 14453 THE ALARM IS ARMY OF PEOPLE WHO 14454 ARE USUALLY A MOUND OPENING 14455 PRESIDENTIAL CANDIDATE AND 14456 TAKING SOME RESPONSIBILITY FOR 14457 THE VICTORY, -- 14458 HE HAS A SMALL COTERIE OF 14459 ADVISORS AND HIS KIDS. 14460 CHARLIE: THIS WAS A 1446TRANSFORMATIVE ELECTION IN TERMS 14462 OF THE WAY PEOPLE WHEN THE 14463 PRESIDENCY? 14464 NANCY: THERE ARE QUESTIONS FOR 14465 THE VICTORY, -- 14466 JOURNALISTS COMING OUT OF THIS, 14467 ONE OF WHICH WILL BE, DO WE SEE 14468 OTHER POLITICIANS TRYING TO COPY 14469 HIS MODEL AND CAN THEY? 14470 IT'S POSSIBLE THAT HE WAS UNIQUE 1447IN THE ABILITY TO ACCOMPLISH 14472 WHAT HE DID. 14473 I THINK OF THE MANY THINGS ABOUT 14474 THE 2016 RACE THAT WAS 14475 UNPRECEDENTED, WE HAD TO BEEN 14476 CANDIDATES WHO WENT INTO IT WITH 14477 100% NAME RECOGNITION. 14478 IT IS EASY TO FORGET THAT DONALD 14479 TRUMP HAS BEEN A VERY FAMILIAR 14480 FIGURE IN MILLIONS OF PEOPLE'S 1448LIVING ROOMS FROM HIS TELEVISION 14482 CAREER QUITE APART FROM HIS LIFE 14483 AS A REAL ESTATE BARON AND 14484 CASINO OWNER. 14485 SELF-PROMOTION WAS CENTRAL TO 14486 SELF-PROMOTION WAS CENTRAL TO 14487 HIS BRAND. 14488 PEOPLE FELT THEY KNEW HIM. 14489 YOU KNOW, THE LIFETIME THEM, 14490 THEY HATED HIM, THEY FELT THAT 1449THEY KNEW WHAT HE WAS ABOUT FROM 14492 THE BEGINNING. 14493 THAT IS HARD FOR SOMEONE ELSE TO 14494 REPLICATE. 14495 CHARLIE: I THINK ALSO, AND I 14496 THOUGHT ABOUT THIS MORE RECENTLY 14497 THAN I DID BEFORE THE ELECTION, 14498 IS THAT, AND HE MAY HAVE 14499 UNDERSTOOD THIS, IN TERMS OF THE 14500 WINNING OF THE PRESIDENCY, THE 1450DISRUPTIVENESS OF THE WAY HE RAN 14502 HIS CAMPAIGN, THE ATTACKS ON 14503 OTHER PEOPLE MADE HIM BE 14504 PERCEIVED BY HIS PEOPLE WHO WERE 14505 ENTHUSIASTIC ABOUT HIM AS A 14506 LEADER, A STRONG LEADER. 14507 THAT WAS PART OF HOW HE VIEWED 14508 THE DISRUPTION, THAT IT WAS 14509 NECESSARY TO OVERCOME THE 14510 CHALLENGE HE HAD ACHIEVED. 1451NANCY: THE SUBTEXT OF IT, 14512 WHATEVER OUTRAGEOUS THING HE WAS 14513 SAYING, THIS IS SOMEONE WILLING 14514 TO SAY CONTROVERSIAL THINGS AND 14515 SO, EVEN ON ELECTION DAY, AS HE 14516 ENDED UP WINNING THE ELECTORAL 14517 COLLEGE ROAD, SIX OUT OF 10 14518 VOTERS DON'T THINK HE HAS THE 14519 JUDGMENT OR TEMPERAMENT TO BE 14520 PRESIDENT. 1452CHARLIE: AND ONLY 40% OF PEOPLE 14522 DO? 14523 NANCY: YEAH, AND PEOPLE FOR WHOM 14524 JUDGMENT AND TEMPERAMENT WERE 14525 THE MOST IMPORTANT ISSUES, 14526 HILLARY CLINTON WON BY MILES, 14527 BUT BY A FACTOR OF TWO TO ONE, 14528 MOST PEOPLE CARED MOST ABOUT WHO 14529 COULD BRING CHANGE TO WASHINGTON 14530 AND HE WON THAT GROUP BY 60 1453POINTS. 14532 THAT DESIRE FOR CHANGE AND THE 14533 BELIEF THAT HE WAS MORE LIKELY 14534 TO BRING IT, I MEAN, THE IRONY 14535 THERE IS THAT HILLARY CLINTON, 14536 WHAT SHE PUNISHED FOR THE VERY 14537 EXPERIENCE AND LONG TRACK RECORD 14538 THAT SHE HAD? 14539 CHARLIE: YOUR INSTINCT WOULD BE 14540 THAT SHE WAS, PUNISHED BY THE 1454FACT THAT HE WAS ABLE TO GRAB 14542 THE CHANGE MANTLE? 14543 NANCY: EVERYONE KNEW THIS WAS 14544 MEANT TO BE A CHANGE ELECTION. 14545 AMERICANS TYPICALLY DON'T GRANT 14546 THIRD TERMS. 14547 ONE OF THE REASONS THAT THE 14548 POLITICAL EXPERTS ALL ALONG 14549 THOUGHT THIS COULD NOT POSSIBLY 14550 SUCCEED WAS THAT HE KEPT DOING 1455THINGS THAT NO ONE HAD DONE 14552 BEFORE OR TO THE EXTENT THAT 14553 PEOPLE HAD, IT PROVED FATAL. 14554 CHARLIE: LOOKING BACK, IT IS THE 14555 CAPACITY TO STAND IN FRONT OF A 14556 HUGE AUDIENCE AND HAVE A 14557 CONVERSATION WITH THEM IS TO ME 14558 ONE OF HIS, ONE OF THE QUALITIES 14559 THAT MADE HIS RALLIES DIFFERENT. 14560 IT WAS NOT A SPEECH. 1456IF IT WAS A SPEECH, IT WAS A 14562 REGURGITATION OF WHAT HE WAS 14563 SAYING BEFORE, BUT MUCH MORE OF 14564 IT WAS REACTING, IMPRESSIONS, 14565 TALKING ABOUT -- HE ALMOST WAS 14566 HAVING A CONVERSATION WITH THEM 14567 ABOUT WHAT HE READ IN THE PAPER 14568 OR HAD SEEN ON TELEVISION, AND 14569 WHAT DO YOU THINK OF THIS, OR 14570 DID YOU AGREE WITH ME? 1457IT WAS MUCH MORE THAT KIND OF 14572 DIALOGUE. 14573 NANCY: THAT IS WHY, ON THE 14574 OCCASIONS HE WAS BACK ON THE 14575 TELEPROMPTER, IT FELT SO ODD 14576 BECAUSE THAT WAS NOT THE 14577 VERNACULAR OF HIS CAMPAIGN. 14578 CHARLIE: AND THE SPONTANEITY. 14579 YOU HAVE INTERVIEWED BEFORE, YOU 14580 INTERVIEWED HIM LAST TIME WITH 1458THE EVIL AND ALL THAT. 14582 YOU GO BACK A WEEK AGO, HOW WAS 14583 HE? 14584 WAS HE DIFFERENT ANYWAY? 14585 NANCY: I WOULD BE THE FIRST TO 14586 SAY THAT THERE IS EVERY CHANCE 14587 THAT BECAUSE I EXPECTED HE WOULD 14588 BE DIFFERENT THAT I SAW A 14589 DIFFERENCE. 14590 BUT I DID SEE A DIFFERENCE, THE 1459MAIN ONE BEING, THE THING THAT 14592 STRUCK ME SO MUCH, I'M 14593 INTERESTED IN THE RELATIONSHIP 14594 THE BETWEEN PRESIDENT BECAUSE OF 14595 WHAT THAT JOB DOES TO YOU. 14596 THE NIGHT BEFORE, HE HAD BEEN ON 14597 THE PHONE FOR 45 MINUTES WITH 14598 PRESIDENT OBAMA, TALKING WITH 14599 HIM ABOUT IDEAS FOR HIS CABINET 14600 CHOICES, AND OTHER TOPICS THAT 1460WERE ON HIS MIND, AND HE SPOKE 14602 WITH EXTRAORDINARY WARMTH AND 14603 RESPECT. 14604 HE TALKED ABOUT THE CHEMISTRY HE 14605 FELT BETWEEN THEM. 14606 HE FELT THAT HE EXPECTED THAT 14607 DAY HE WENT TO THE WHITE HOUSE 14608 AND THEY SAT TOGETHER, HE HE 14609 SAID, EVERYONE WOULD HAVE 14610 THOUGHT THAT WOULD HAVE BEEN AN 1461AWKWARD MOMENT. 14612 WE STARTED TALKING, WE TALKED 14613 FOR A LONG TIME, I FOUND IT VERY 14614 GRACIOUS AND HELPFUL, AND WE 14615 TALKED SINCE THEN, AND, YOU 14616 KNOW, IN LISTENING TO HIM TALK, 14617 PARTICULARLY ABOUT HIS 14618 CONVERSATIONS OF PRESIDENT 14619 OBAMA, YOU START TO SEE A 14620 GLIMPSE THAT HE IS HAVING TO GET 1462HIS HEAD AROUND WHAT HAS JUST 14622 HAPPENED, AND I SOMETIMES 14623 WONDERED, DID HE EXPECT -- OF 14624 COURSE THEY WILL SAY, WE ALWAYS 14625 KNEW WE WERE GOING TO WIN -- 14626 CHARLIE: EARLY IN THE EVENING, 14627 THEY DID NOT THINK THEY WERE 14628 GOING TO WIN. 14629 IT WAS ONLY AFTER 8:00 THAT THEY 14630 BEGAN TO SEE WHAT THE POSITIVES 1463WERE IN PENNSYLVANIA AND 14632 WISCONSIN AND MICHIGAN THAT THEY 14633 REALIZED VICTORY MIGHT BE 14634 POSSIBLE. 14635 NANCY: SO THEN, YOU WIN AND YOU 14636 WAKE UP. 14637 IS IT LIKE THE DOG THAT CATCHES 14638 THE CAR? 14639 NOW, I AM ASKED TO GOING TO HAVE 14640 TO BE PRESIDENT, AND WHAT DOES 1464THAT MEAN, AND HOW IS THAT GOING 14642 TO WORK? 14643 THE CONVERSATIONS HE IS HAVING 14644 WITH EVERYONE, THIS IS THE NEXT 14645 SEASON OF THE REALITY SHOW THAT 14646 HE HAS BEEN STAGING. 14647 CHARLIE: IT IS INTERESTING IN 14648 TERMS OF THE PEOPLE HE IS 14649 TALKING TO, NOT ONLY MITT ROMNEY 14650 SAYING THE THINGS HE SAID ABOUT 1465HIM, BUT AL GORE SHOWS UP. 14652 NANCY: IT IS A PECULIAR -- HOW 14653 IS THIS BETWEEN BUSINESS LEADERS 14654 AND POLITICIANS AND PRIVATE 14655 SECTOR ACTIVISTS? 14656 THAT THIS PART OF HIS OWN 14657 PERSONAL TRANSITION, YES, THERE 14658 IS THE ADMINISTRATIVE 14659 INSTITUTIONAL TRANSITION, BUT A 14660 PERSONAL TRANSITION, TOO. 1466THAT IS WHAT I WAS STRUCK WITH, 14662 TALKING TO HIM THIS TIME IS THAT 14663 HE IS VERY MUCH IN THE THROES OF 14664 THAT PROCESS. 14665 CHARLIE: THANK YOU FOR JOINING 14666 US. 14667 SEE YOU NEXT TIME. 14668 ♪ 14669 ALIX:CHINA FACTORY OUTPUT AND 14670 RETAILSALESSHOW FURTHER 1467STRENGTHEN THEECONOMY,BUT THE 14672 REASONS ARE ABOUT TO CHANGE. 14673 ANDOPEC NATIONS BOOSTED 14674 PRODUCTION LASTMONTHDESPITE 14675 AGREEING TO HISTORICCUTS. 14676 NO ONE WANTS TO LOSE MARKET 14677 SHARE. 14678 DONALD TRUMPNOMINATESGOLDMAN'S 14679 PRESIDENT AS ECONOMIC ADVISOR. 14680 HE'SALSO DELAYING HIS BUSINESS 1468PLAN WHILE IN THE WHITE HOUSE. 14682 ANDTURKEY GETSA $140 BILLION 14683 BOOST TO THEECONOMY, WILL 14684 THANKS TO A NEW WAY OF 14685 ACCOUNTING. 14686 ITIS8:00 A.M. ACROSS THE 14687 EMIRATES. 14688 I'M TRACY ALLOWAY INDUBAI. 14689 ANGIE:WELCOME TO 14690 BLOOMBERGMARKETS MIDDLE EAST. 1469THE OIL SURPRISE THAT SAUDI 14692 ARABIAADMINISTERED --ITLOOKS 14693 LIKE MAYBE WE ARE NOW NEAR 14694 OVERBOUGHT TERRITORY. 14695 TRACY: THAT'S EXACTLYRIGHT. 14696 ITHOUGHT THEY WOULD BRING A 14697 LITTLE PESSIMISM ENTIRE TUESDAY 14698 SHOW THIS MORNING, ALITTLE BIT 14699 OF A REALITY CHECK AND SOME 14700 TECHNICAL ANALYSIS. 1470TAKE A LOOK AT THISCHART. 14702 THIS SHOWS THE PRICE OF OIL,THE 14703 WHITELINE,BUT MORE INTERESTING 14704 FOR OUR PURPOSES IS THE WHITE 14705 LINE ON THE BOTTOM HALF OF THE 14706 SCREEN. 14707 THAT IS THE RELATIVE VALUE 14708 INDEX, ATECHNICAL INDICATOR 14709 THAT LOOKS LIKE THE SPEED AND 14710 DEGREEOF MOVEMENT OFPARTICULAR 1471ASSETPRICE. 14712 YOU CAN SEE IT IS NOWABOVE 70. 14713 WHEN THAT REACHESABOUT70, 14714 TRADITIONALLY IT IS VIEWED ASAN 14715 OVERBOUGHT INDICATOR. 14716 ITSUGGESTS TO SOME THAT THE 14717 RALLY INCRUDE MAY HAVE GONE TOO 14718 FAR, TOO FAST. 14719 ANGIE:WELL, TOOFAR, TOOFAST 14720 LOOKS LIKE IT MAY BEMORE 1472SIDELINE ACTION RIGHTNOW ACROSS 14722 THE ASIA-PACIFIC TRADE SEEN. 14723 LET'S GET YOU A QUICK CHECK THE 14724 STATE OF PLAY. 14725 MUMBAITRADING FOR 20MINUTES, 14726 RIGHT NOW IT IS FLAT. 14727 THERE IS A VERY INTERESTINGMOVE 14728 IN TERMS OFTHE-- 14729 SHAREHOLDERS ARE BEINGASKED TO 14730 PICKSIDES. 1473HANGSENG SHRUGGING OFF THE 14732 POSITIVE DATA OUT OF CHINA,AND 14733 WE ARE SEEING FLUCTUATIONS IN 14734 THE JAPANESEBENCHMARK, NEAR THE 14735 YEARHIGHS. 14736 IT'S REALLY ABOUT THE FOMC THIS 14737 WEEK, IT APPEARS. 14738 TRACY:ALLFOMC, ALL THE TIME. 14739 HERE INTHE MIDDLE EAST IT IS 14740 JUST UNDER TWO HOURS AWAY FROM 1474THE OPEN OF THE EMIRATES MARKETS 14742 AT 10:00 A.M. LOCAL TIME. 14743 LET'S TAKE A LOOK AT HOW THEY 14744 DID YESTERDAY. 14745 YOU CAN SEE THE DUBAIMARKET WAS 14746 UP ALMOST A PERCENTYESTERDAY, 14747 LED BY MORE THAN 4% INGAIN 14748 ON THE BACK OF THE IDEA 14749 THATTHE RALLY IN OIL WILL FEED 14750 INTO BUSINESSOPTIMISM. 1475BUT YOU CAN SEE SAUDI ARABIA AND 14752 STOCKS ARE ACTUALLY DOWN 14753 YESTERDAY,PERHAPSABIT OF 14754 PROFIT OFF THE BACK OF THE BIG 14755 MOVE THEY HAD ON SUNDAY. 14756 WE WILL HAVE TO SEE WHETHER THEY 14757 RECOVER LATER IN THE WEEK. 14758 BEFORE WE DO THAT,HOWEVER, 14759 LET'S CHECKINONTHE FIRST WERE 14760 HEADLINES FROM AROUND THE WORLD 1476WITH SOPHIE. 14762 SOPHIE:THANKS. 14763 THE ASSOCIATED PRESS AND "NEW 14764 YORKTIMES" SAYS DONALD 14765 TRUMP HAS CHOSEN THE EXXON MOBIL 14766 CEO AS SECRETARY OF STATE. 14767 TILLERSON'SCLOSE TIES TO RUSSIA 14768 COULD COMPLICATE HIS 14769 CONFIRMATION. 14770 TRUMP IS ALSO POSTPONINGGIVING 1477DETAILS ON HOWHE WILL HANDLE 14772 HIS BUSINESS OPERATIONS WHILE IN 14773 THE WHITE HOUSE. 14774 HIS TEAM SAYS HE IS TOO BUSY 14775 FILLING ADMINISTRATION 14776 POSITIONS. 14777 THEEUROPEAN UNION IS LOOKING AT 14778 HOWTOWORKOUT WITH THE U.K. 14779 LEADERS WILL WORK WITHOUT 14780 BRITISH PRIME MINISTER THERESA 1478MAY TO DISCUSSTHESTRATEGY 14782 ONCE SHE TRIGGERS ARTICLE 50. 14783 ASTATEMENT FOUND BY BLOOMBERG 14784 SAYSTHEYWILL BE EXCLUDED FROM 14785 ALL MEETINGS WITH THE 27 14786 REMAINING EU MEMBERS. 14787 IMF CHIEF CHRISTINELAGARDEHAS 14788 TOLD THE PARIS COURT THATAN 14789 IMAGINARY PLOT HAS LEDTO A 14790 TRIAL OF NEGLIGENCE CHARGES. 1479SHE SAYS SHE ACTED IN THE PUBLIC 14792 INTEREST, AND DID NOT TRY 14793 TO BLOCK OF $300 MILLION PUBLIC 14794 PAYOUT. 14795 JUDGESREJECTEDITIN THETRIAL 14796 AND SHE WILL RETURN TO COURT ON 14797 TUESDAY. 14798 PARLIAMENT SHORT SELLER MUDDY 14799 WATERS HAS TARGETED A JAPANESE 14800 FIRM FOR THE FIRSTTIME WITH A 1480NEGATIVEREPORT OFA MOTOR 14802 MAKER. 14803 THEYSAYTHEYCONSISTENTLY MISS 14804 SALES AND PROFIT TARGETS AND USE 14805 HIGHLYAGGRESSIVE ACCOUNTING TO 14806 BOOST PROFIT REPORTS. 14807 INVESTORSQUESTIONED THE 14808 ACCOUNTING. 14809 >>WHENWELOOK INTOTHE 14810 FINANCIALSTATEMENTS OFSMC,WE 1481FINDTHAT INVENTORYLEVEL AND 14812 OPERATING MARGINSINDOMESTIC 14813 MARKETIS QUITEDUBIOUS WHEN 14814 COMPARED TO THE COMPETITORS. 14815 THOSE ARE THE MAIN POINTS THAT 14816 WE MADE IN THE REPORT. 14817 SOPHIE:GLOBAL NEWS, 24 HOURS A 14818 DAY, POWERED BY OVER 2600 14819 JOURNALISTS AND ANALYSTS IN MORE 14820 THAN 120 COUNTRIES. 1482I'M SOPHIE, ROOTED. 14822 THIS ISBLOOMBERG. 14823 TRACY:THANKS. 14824 LET'S STICK WITH DONALD TRUMP, 14825 BECAUSE THE NAMES OF HIS TEAM 14826 ARE COMING IN SECOND TEST. 14827 HE WANTSFORMER TEXAS GOVERNOR 14828 ASENERGY SECRETARY HAS CHOSEN 14829 YET ANOTHER GOLDMAN SACHS 14830 EXECUTIVE, GARY COHEN,AS 1483ECONOMIC POLICY ADVISER. 14832 OURCOUNTRY EDITOR JOINS US NOW 14833 ON THE LINE FROM NEW YORK. 14834 BILL, WE SAW ANOTHER GOLDMAN 14835 VETERAN,STIMULATION, PICKED AS 14836 TREASURYSECRETARY. 14837 NOW WE HAVE GARYCOHENTAKING ON 14838 ONEOFTHE MOST IMPORTANT 14839 ECONOMIC POSITIONS AVAILABLE AT 14840 THE WHITE HOUSE. 1484LIKE A REMAKE OF THESETAKES? 14842 WHAT IS THE LOWER, AND -- THE 14843 ALLURE, AND WHAT HOLE DOES IT 14844 LEAVE AT GOLDMAN? 14845 >> AS FAR AS DONALD TRUMP IS 14846 CONCERNED, HIRING PEOPLE FROM 14847 GOLDMAN SACHS AFFIRMS HIM 14848 IMMEDIATELYIN THE WALL 14849 STREET/CAPITALMARKETS. 14850 IN HIS PUBLIC AFFIRMATION FOR 1485DONALD TRUMP,THATYOU HAVE 14852 PEOPLE FROM GOLDMANSACHSWHO 14853 ARE WILLINGTO BET THEIR 14854 CAREERS ON HISPRESIDENCY,AND 14855 THIS IS A MAN THAT GOLDMAN SACHS 14856 WOULD NEVER DO BUSINESS WITH. 14857 IT IS IRONIC THAT HE IS NOW 14858 TURNING TO GOLDMANSACHS TO GIVE 14859 HIM CREDIBILITY WITH THE PUBLIC 14860 MARKET. 1486ASFAR AS GOLDMAN SACHS IS 14862 CONCERNED, WE ALL KNOW IT'S A 14863 BIT OF ACLICHE, BUT THEY HAVE A 14864 VERY DEEP BENCH. 14865 THEY HAVE A LOT OFTALENT, AND 14866 THISIS VERY HEALTHY FOR GOLDMAN 14867 SACHS, BECAUSE A LOT OFFIRMS, 14868 PEOPLE WOULD NEVER LEAVE ANDTHE 14869 JUNIORS WITH GET 14870 DISCOURAGED AND FEEL LIKE THEY 1487NEVER HAD A CHANCE TO MOVE UP. 14872 NOW AT THE SPACE OF A FEW 14873 MONTHS, MICHAEL SHERWOOD, MARK 14874 SWARTZ, GARY COHN WITH, WHOPUT0 14875 YEARS WAITING FOR LLOYD WHITE 14876 PINE TO MOVE ON. 14877 NOWIT LOOKS LIKE GARY IS MOVING 14878 ON BEFORE HIM. 14879 THAT'S A AS ASURPRISE. 14880 ANGIE:DEEPBENCH,BUT IN TERMS 1488OF THE PECKING ORDER,CAN 14882 SOMEONE -- NOT A BANKER OR A 14883 TRAITOR -- TAKE THESE LEADERSHIP 14884 ROLES? 14885 COO,CEO? 14886 >> YOUKNOW,LOOK --IWOULD 14887 NEVER SAY NEVER. 14888 IT'SALWAYS IMPOSSIBLE TO KNOW 14889 EXACTLY WHAT THE CALCULUSIS 14890 INSIDE OF GOLDMANSACHS. 1489I'VE ONLY WRITTEN A BOOK ABOUT 14892 THEM AND I AM NOT SURE I 14893 UNDERSTAND THEMBETTER THAN MANY 14894 PEOPLE WHO WORK THERE. 14895 BUT IT IS CLEAR THATTHEY HAVE 14896 NEVER TURNED TO ANYONE OTHER 14897 THAN A BANKER OR TRAITOR IN THE 14898 PAST. 14899 IS SEEMS TOMETHATWE ARE IN 14900 THE PERIOD OF TIME WHERE BANKING 1490IS IN THE ASCENDANCY. 14902 THAT WOULD MAKE SOMEBODY LIKE 14903 DAVID SOLOMON, WHO IS A VERY 14904 SMART AND VERY GOOD GUY, BEIN A 14905 STRONGPOSITION. 14906 TONEGATIVE OF DAVID SOLOMON IS 14907 THAT HE CAME FROM--THE 14908 LAST TIME THEY DID THAT WAS IN 14909 THE1920'S WITH A GUY WHO NOBODY 14910 REMEMBERSANYMORE, WHOENDEDUP 1491ALMOST CAUSING THE FIRM TO GO 14912 INTO BANKRUPTCYIN 1929BECAUSE 14913 HE WAS THE ARCHITECT OF THE 14914 SO-CALLED GOLDMAN SACHS TRADING 14915 CORPORATION. 14916 IT SEEMS TO BETHAT, ALTHOUGH HE 14917 HAS BEEN A GOLDMAN-S SINCE1999, 14918 HE MAY NOT BECONSIDERED A TRUE 14919 OUTSIDER, BUT HE WASN'T BORN 14920 THERE,AND A LOTOF THE OTHER 1492PEOPLE WHO WERE CEOS WERE BORN 14922 THERE. 14923 LLOYD BLANKFEIN WAS 14924 INHERITED THROUGH AN 14925 ACQUISITION, BUT HE IS IN A 14926 SENSE TRAINEDTHERE. 14927 ANGIE:BILL THANK YOU SO MUCH 14928 FOR JOINING US ON THE LINE. 14929 WEWANT TO CONFIRM THAT BREAKING 14930 NEWS FORYOU,BLOOMBERG HAS 1493CONFIRMED THAT EXXON MOBIL CEO 14932 REX TILLERSONHAS BEENNAMED AS 14933 PRESIDENT-ELECT DONALDTRUMP'S 14934 CHOICE FOR SECRETARY OF STATE. 14935 THISIS THE CEOOF EXXON MOBIL, 14936 SOAPPARENTLY THE PECKING ORDER 14937 THEREWILL HAVE AVACANCY,AND 14938 JUST LIKE GOLDMANSACHS,THEY 14939 WILL HAVE TO FIND SOMEBODY TO 14940 FILL THE SLOT. 1494CHINA'S ECONOMY CONTINUES TO 14942 SHOW STRENGTH IN NOVEMBER, 14943 WHICH SHOULD GIVE POLICYMAKERS 14944 MORE ROOM TO REININ AND TACKLE 14945 FINANCIAL THREATS. 14946 WEHAVE OUR CHINACORRESPONDENT, 14947 TOMMACKENZIE, WHO HAS BEEN 14948 THROUGH THENUMBERS. 14949 THESE NUMBERS LOOK PRETTYGOOD. 14950 >>YES,CHINA'SECONOMIC, ENGINE 1495CHUGGING ALONG NICELY AT LEAST 14952 ON THESURFACE. 14953 RETAIL SALES UP10%,THE NUMBER 14954 FLATTENED BY A BIG PICKUP AND 14955 AUTOSALESBECAUSE THERE WAS A 14956 TAX INCENTIVE THAT MIGHT COME TO 14957 AN END IN DECEMBER. 14958 INDUSTRIAL PRODUCTIONIS ROUGHLY 14959 IN LINE WITHESTIMATES AND FIXED 14960 ASSETINVESTMENTTHAT CAME IN 1496LINE WITHESTIMATES. 14962 INTERESTINGLY, THERE IS STILL A 14963 LOT OF FIXED ASSET INVESTMENTS 14964 COMING FROM THE STATE AND A 14965 MARGINALPICKUP IN PRIVATE 14966 INVESTMENT. 14967 THESE ARE BUILDINGON THE STRONG 14968 NUMBERS IN TERMS OF 14969 MANUFACTURING, EXPORTS, AND 14970 INFLATION CAUSING APAUSE -- 1497PAINTING APOSITIVE PICTURE. 14972 THERE ARE PLENTY OF HEADWINDS 14973 FOR 2017. 14974 TRACY:LET'S TRY TO FEED THE 14975 BEARS. 14976 WHAT ARETHE THREATS THAT ARE 14977 FACING CHINA NEXT YEAR? 14978 >>LET'S GIVE THEMSOMETHING. 14979 TRUMPIS TOPOFTHELIST, AS IS 14980 A REIGNING IN OFCREDITAND 1498CONTINUED CURBS ON THE HOUSING 14982 MARKET. 14983 WE HAVE SOME INSIGHT FROM THE 14984 CHIEF CHINA ECONOMIST AT 14985 BARCLAYS-- TAKE A LISTEN WHAT 14986 SHE HAD TO SAY EARLIER. 14987 >> I THINK THEECONOMY DOES SEE 14988 SOME HEADWINDS DOWN THE ROAD. 14989 NUMBERONE, I THINK WEHAVE 14990 CERTAIN TRADEPOLICIESCOMING 1499FROMTRUMP,ANDTHEN THERE IS 14992 THAT CHINA HAS BEEN TIGHTENING 14993 ON THE HOUSING MARKET,WHICH 14994 COULD LEAD TO A KEY DOWNSIDE 14995 RISK IN 2017. 14996 >>JIANCHANG, FROM BARCLAYS. 14997 POLICYMAKERS HAVE BEEN QUIETLY 14998 RATING IN FUNDAMENTAL LIQUIDITY 14999 IN THE MONEY MARKET TO REIN IN 15000 THISCREDIT. 1500WE HAVE HEARD FROM BLOOMBERG 15002 INTELLIGENCE-- THEY SAY THIS 15003 ECONOMICDATAWE HAVEHAD GIVES 15004 POLICYMAKERS CONTINUED SPACE TO 15005 DO MORE OFTHE, THAT THE SPACE 15006 IS CLOSING. 15007 THERE WAS A SWEETSPOT, BUT FOR 15008 HOWLONG IS THE QUESTION. 15009 TRACY:OK. 15010 OURCHINACORRESPONDENT, TOM 1501MACKENZIE, LIVE INBEIJING. 15012 LATER IN THESHOW, THE MIDDLE 15013 EAST IS A MAGNET FOR SOME OF THE 15014 WORLD'S COSTLIEST CYBER ATTACKS. 15015 WE TAKE A LOOK AT WHAT IS BEING 15016 DONE ABOUT IT. 15017 ANGIE:COMING UPNEXT, WE GAUGE 15018 THE STATE OF DUBAI'SECONOMY 15019 WITH THEEMIRATES. 15020 ALL OF THAT STILL TOCOME. 1502THIS ISBLOOMBERG. 15022 ♪ 15023 ANGIE: THIS IS BLOOMBERG MARKETS 15024 MIDDLEEAST, LIVE ON BLOOMBERG 15025 TELEVISION AND RADIO. 15026 I' ANGIELAUM. 15027 TRACY:I'MTRACYALLOWAY. 15028 BREAKING NEWS-- THEEMIRATES 15029 ECONOMY TRACKER IS JUST OUT WITH 15030 AFRESHREADING OF 55.24 1503NOVEMBER,UP FROM58IN OCTOBER. 15032 JOININGUS TO DISCUSSIS THE 15033 HEADOF NINARESEARCH FOR 15034 EMIRATES NBD. 15035 ISUPPOSE WE SHOULD START WITH 15036 THE OBVIOUSQUESTION -- WHAT IS 15037 DRIVING THISECONOMY? 15038 >>INNOVEMBER IT WAS STRONG FOR 15039 TRAVEL AND TOURISM. 15040 THEY ACTUALLY REACHED A SERIOUS 1504HIGH IN TERMS OF PMI RATING. 15042 THAT CERTAINLYSIGNALS A VERY 15043 STRONG RATE OF GROWTH IN THE 15044 TOURISM SECTOR. 15045 TRACY:SOIF TRAVEL ANDTOURISM 15046 --IFTHEY ARE THE 15047 BEST-PERFORMINGSECTORS, IS THAT 15048 A VINDICATION OFDUBAI'S 15049 ECONOMICTRANSFORMATION, OR ARE 15050 THERE SHORT-TERMFACTORS AT 1505PLAY? 15052 >>ONE OF THE FACTORS WHICH MAY 15053 HAVE HAD AN IMPACT ON THE 15054 NOVEMBER NUMBERS IS THE 15055 INTRODUCTION OF THESE ON ARRIVAL 15056 FOR CHINESEVISITORS, ANNOUNCED 15057 INSEPTEMBER, BUT ONLY COMING 15058 INTO EFFECT LATE OCTOBER TO 15059 EARLY NOVEMBER. 15060 ITHINK THAT MAY HAVE 1506CONTRIBUTED SOMEWHAT TO THE 15062 EXCEPTIONALLY HIGH READING FOR 15063 TRAVEL AND TOURISM. 15064 BUT ITHINKITHASBEEN 15065 ADJUSTING REALLY WELL TO THE 15066 FACT THAT THEY HAVE HAD 15067 COMPETITIVENESS ERODED BECAUSE 15068 OF THE STRONG CURRENCY. 15069 HOTELS HAD REDUCED THEIR REVENUE 15070 PERROOM,TRYING TO MAINTAIN 1507HIGH OCCUPANCY LEVELS. 15072 AT THISTIME OFYEAR IT IS 15073 NORMALLY A HIGH SEASON FOR THE 15074 HOSPITALITY SECTOR. 15075 ITHINK TRAVEL TOURISM WILL BE 15076 ONE OF THE BIG DRIVERS GOT 15077 GROWTH GOING FORWARD. 15078 TRACY:LET'S TURN TO THE WEAK 15079 SPOTS, BECAUSE WEDID, FOR 15080 INSTANCE, SEE CONSTRUCTION DOWN 1508A BIT. 15082 >> IT WAS FAR FROM OCTOBER'S 15083 READING, BUT IT IS QUITE A LOW 15084 INDEX NUMBER. 15085 UNDER 52 SHOWING A LITTLE BIT OF 15086 EXPANSION, BUT NOTNEARLY AS 15087 MUCH AS SOME WOULD LIKE TOSEE. 15088 ITHINK OPTIMISM IN THE SECTOR 15089 IS QUITE HIGH. 15090 THESURVEYSAYS TO CHECK FOR12 1509MONTHS AND THAT REMAINS ABOUT 15092 70. 15093 THAT'S VERY STRONG OPTIMISTIC. 15094 I THINK A LOT OF THAT IS DRIVEN 15095 BY EXPECTATIONSABOUT SPENDING 15096 AND PROJECTS RELATED TOEXPO,I 15097 WILL PROBABLY START KICKING OFF 15098 IN EARNEST NEXT YEAR. 15099 WE ARE HOPING TOSEE SOME 15100 IMPROVEMENT IN THE CONSTRUCTION 1510SECTOR INDICATORS FROM THE 15102 BEGINNING OF NEXT YEAR. 15103 TRACY:HOW YOU GAUGE THE 15104 CURRENCY VOLATILITY AND 15105 FLUCTUATION AS A RESULT OF THE 15106 STRONGER U.S.DOLLAR, AS A 15107 RESULT OF ALL THINGS BEING FOMC 15108 TIGHTENING? 15109 >>WEWHERE EXPECTING THE STRONG 15110 DOLLAR GOINGFORWARD,BECAUSE WE 1511ARE EXPECTING THE FED TO 15112 CONTINUE WITHITS TIGHTENING 15113 PROGRAM NEXTYEAR. 15114 WE ARE LOOKING FOR TO RATE HIKES 15115 IN 2017, ANDOBVIOUSLY WITH THE 15116 CURRENCIES,THAT IS 15117 AUTOMATICALLY GOING TO HAVE AN 15118 IMPACT ON THIS REGION AND ON 15119 DUBAI'S SERVICES SECTOR. 15120 WE THINK FIRMS HAVE ADJUSTED TO 1512THAT, TO A LARGE EXTENT. 15122 WE HAVESEEN CONSISTENT PRICE 15123 DISCOUNTING IS ONE OF THE 15124 STRATEGIESEMPLOYED TO TRY AND 15125 MAINTAIN VOLUMEGROWTH, EVEN IN 15126 THE FACE OF STRONGER CURRENCY. 15127 ANGIE:THAT ISDEFINITELY GOING 15128 TO HAVE TO BE THE CASE WHEN WE 15129 MOVE FORWARD, ANEXPECTATION OF 15130 THE CONTINUED WEAKNESS IN THE 1513YUAN,AND FOR CHINESETOURISTS, 15132 THAT IS GOING TO BE A REALLY 15133 IMPORTANT FACTORWHEN THEY 15134 DECIDE WHERE THEY ARE GOING TO 15135 GO. 15136 >>ABSOLUTELY. 15137 IDO THINK ITIS EASIER FOR 15138 CHINESE VISITORS TO COME TO DO 15139 BY THEN TO TRAVEL TO WESTERN 15140 EUROPEOR OTHER AREAS WHERE THEY 1514NEED TO GET VISAS IN ADVANCE. 15142 WE HAVE ALSO SEEN A LOT OF FIRMS 15143 IN THEHALF ITALIAN SECTOR 15144 TARGETING THE CHINESE MARKET 15145 SPECIFICALLY,WITH OFFICES AND 15146 INCENTIVES TRYING TO TRACK 15147 VISITORS AND GROW THEMARKET 15148 WHERE WE ARE SEEING SLOWER 15149 GROWTH FOR TOURISM. 15150 TRACY:CORRECT ME IF I AMWRONG, 1515BUT I BELIEVETHISPARTICULAR 15152 TRACKER DOESN'T TAKE INTO 15153 ACCOUNT WHAT IS HAPPENING WITH 15154 ENERGY FIRMS IN THE REGION. 15155 WITH YOUR HEAD OF RESEARCH HAT 15156 ON,PLEASE GIVE US SOMEINSIGHT 15157 INTO WHAT'S GOING ON WITH THE 15158 OTHER SIDE OF THE PICTURE. 15159 >> YOU ARE RIGHT. 15160 THE TRACKER JUST LOOKS AT NONOIL 1516SECTOR ACTIVITY. 15162 WHAT WE HAVESEEN WHEN WE LOOK 15163 AT THE OVERALLPMI'S, EVEN 15164 THOUGH THEY ARE NONOILSURVEYS, 15165 MANUFACTURING IN THE REGION IS 15166 VERY HEAVILY OIL RELATED. 15167 TO THEFACT THAT A PMI CONTINUES 15168 TO SHOWEXPANSION, EVEN THOUGH 15169 OILPRICESAT THE BEGINNING OF 15170 THE YEAR FELL TO $35 PERBARREL 1517AND HAVE BEEN SIGNIFICANTLY 15172 WEAKER THAN2015, WE CONTINUE TO 15173 SEE GROWTH IN THE MANUFACTURING 15174 SECTOR. 15175 I THINK THAT REFLECTS A STRONGER 15176 OUTPUT GROWTH. 15177 LOOKINGIN A 2017 WITH THE OPEC 15178 AGREEMENT TO CUTOUTPUT, I THINK 15179 THAT WILL WEIGH ON THE PMI 15180 READINGSIN SOMEASPECTS, 1518PARTICULARLY RELATED TO THE 15182 MANUFACTURING SECTOR. 15183 WHAT WE ARE HOPING IS THAT WE 15184 START TOSEEAN ACCELERATION OF 15185 GROWTH, INCONSTRUCTION, 15186 INFRASTRUCTURE, ESPECIALLY IN 15187 THE UAE, WHICH ANDHELP 15188 OFFSETSLOWING. 15189 TRACY:ASLYLY LONGER-TERM 15190 QUESTION -- WOULD YOU EXPECT A 1519BIG RALLY IN OIL PRICES IF IT 15192 CONTINUES TODENTSOME OF THE 15193 ATTEMPT ATDIVERSIFICATIONIN 15194 TERMS OF THE ECONOMY THAT HAS 15195 BEEN MADE? 15196 >>IT'S A GOODQUESTION. 15197 ITHINK A LOT OF THE CHANGES 15198 THAT HAVE ALREADY BEEN 15199 IMPLEMENTED,THAT CUTS AND 15200 SUBSIDIES AND ATTEMPTS TO OPEN 1520UP MARKETS FORINVESTMENT FROM 15202 FOREIGNCAPITAL,I DON'T THINK 15203 THOSE ARE GOING TO BE REVERSED. 15204 EVEN IF WE SEE OIL PRICES 15205 SUSTAINED, RALLY UP TO$65, $80 15206 ABARREL,I DON'T THINK 15207 GOVERNMENTS ARE GOINGTO 15208 SUDDENLY COME BACK IN AND SAY WE 15209 WILL REINTRODUCE ENERGY 15210 SUBSIDIES. 1521I THINK THOSE SORTS OF THINGS, 15212 THE DAMAGE HAS BEEN DONE. 15213 CONSUMERSARE GOING TOHAVE TO 15214 CONTINUE TO ADJUST TO THOSE HIGH 15215 ENERGY PRICES. 15216 THAT IN ITSELF IS GOING TO 15217 PROVIDE ANOTHERFACTOR,WHICH 15218 MEANSWE TAKE INTO ACCOUNT -- 15219 WHEN WE LOOK AT CONSUMPTION AND 15220 DEMAND, IF WE SEE ASUSTAINED 1522PRICE,THAT IS GOING TO FEED 15222 THROUGH TO INFLATION IN THE 15223 TRANSPORTSECTOR. 15224 THAT IS SOMETHING THAT WE 15225 HAVEN'T REALLY SEEN IN THIS 15226 REGIONBEFORE, AND WE WILL HAVE 15227 TO SEE HOW IT PLAYS OUT. 15228 TRACY: IT'SALLCHANGING. 15229 THANK YOU SO MUCH FOR JOINING US 15230 TODAY. 1523COMING UP, HOWNEWACCOUNTING 15232 METHODS HAVE CATAPULTED TURKEY'S 15233 ECONOMY AHEAD OF INDIA'S. 15234 THIS IS BLOOMBERG. 15235 ♪ 15236 ANGIE:A QUICK CHECK OF THE 15237 HEADLINES. 15238 APPLE IS DISCUSSING INVESTING IN 15239 THE $100 BILLION TAXFUND AS 15240 SOFTBANKENDS TO LAUNCH -- AIMS 1524TO LAUNCH NEXTYEAR. 15242 THERE IS A CONTRIBUTION OF ABOUT 15243 $1 BILLION TO GAIN ACCESS. 15244 APPLE HAS INVESTEDINDIDI, ITS 15245 BIGGEST OUTRIGHTINVESTMENT 15246 SINCEBEATS IN 2014. 15247 TRACY: SINOPECISSELLING A 50% 15248 STAKE IN A PIPELINE UNITFOR 15249 $3.3 BILLION, SINKINGFUNDS TO 15250 EXTEND ITS NATURAL GAS BUSINESS. 1525CHINA WILL PAY2.9%BILLION 15252 DOLLARSFOR 40% OF THEPROJECT. 15253 AA DIVISION WILL TAKE THE 15254 REMAINING 6%. 15255 ANGIE: KOREA'S NEWSPAPERSAYS 15256 SHIPPING IS LIKELY TO BE 15257 LIQUIDATED. 15258 THE ACCOUNTINGFIRM IN CHARGE OF 15259 DUEDILIGENCE SAYSHANJIN WILL 15260 RECOMMEND THEOPTION. 1526THEIRVALUE AFTER LIQUIDATION IS 15262 ESTIMATED AROUND $1.5 BILLION. 15263 TRACY:WHERE REFORMS AND A 15264 SERIES OF RATE CUTSFAILED,NEW 15265 ACCOUNTING METHODS HAVE 15266 SUCCEEDED INDELIVERING A $140 15267 BILLIONBOOST TO THE TURKISH 15268 ECONOMY. 15269 BOBFINKEL JOINS US FROM 15270 ISTANBUL. 1527WALKUS THROUGH WHAT EXACTLY 15272 TURKEY HAS DONE, HERE. 15273 >>WELL, WHAT TURKEY HAS DONEIS 15274 PRESENT A DRAMATICALLY 15275 REVISED PICTURE OF ITS ECONOMY. 15276 ITHAS GONE BACK ANDREVISEDITS 15277 GDPACCOUNTING,ANDTHAT HAS 15278 RESULTEDINGROWTH FIGURES 15279 IMPROVING. 15280 AS YOUSAID,WHEREAS LAST YEAR 1528THE ECONOMY WAS SUPPOSED TO HAVE 15282 CONTRACTED IN DOLLARTERMS--WE 15283 THOUGHT WE HADA $720 BILLION -- 15284 IT TURNS OUT THE ECONOMYGREW. 15285 IT'S LESS PEOPLE REALLY HASTHEY 15286 TAKECOUNT. 15287 TRACY: HOW ARE PEOPLE REACTING 15288 OVERTHERE? 15289 >>WELL, WITH SOMECONFUSION. 15290 THE STRANGE THING IS NOT THE 1529NEWLY RELEASED THIRD-QUARTER 15292 FIGURE, WHICH SHOWS THE ECONOMY 15293 SHRUNK1.8% YEAR-OVER-YEAR IN 15294 THE THIRDQUARTER,WHICHIS 15295 EVERYTHING YOU MIGHT EXPECT FROM 15296 AN ECONOMY DEALING WITHTHE 15297 FALLOUT OF A FAILEDCOUP,WITH 15298 SLOWINGINVESTMENT. 15299 BUT THE STRANGE THINGIS THE 15300 UPWARD TRAJECTORY OF THESE OTHER 1530FIGURES --WHICHSITS VERY 15302 STRANGELY WITHOTHER,MORE 15303 HIGH-FREQUENCY MEASURES OF THE 15304 ECONOMY, INDUSTRIALOUTPUT,3% 15305 YEAR ON YEARGROWTH,IT TURNS 15306 OUT IT GREW6.1%HIGHER THAN 15307 PREVIOUSLY THOUGHT. 15308 THE GAP BETWEEN THESESETS 15309 OF FIGURES IS HAVINGPEOPLEPORE 15310 OVER THE STATISTICSCLOSELY. 1531ANGIE:ABSOLUTELY. 15312 BUT IN TERMS OFCONCRETE THINGS 15313 THATTHE ACTUAL GOVERNMENT IS 15314 DOING, ARE THEY DOINGANYTHING 15315 CONCRETE TO IMPROVE THE ECONOMY 15316 OVER THERE? 15317 >>WELL,IT SEEMS LIKE THE 15318 GOVERNMENT IS THE ONLY ONE DOING 15319 ANYTHING. 15320 IF YOU LOOK AT THE MOST RECENT 1532FIGURES,THAT 1.8 CONTRACTION, 15322 ALMOST ALL SECTORS EXCEPT FOR 15323 GOVERNMENTCONSUMPTION, WHICH 15324 INCREASED 24%. 15325 IT IS DEFINITELY GOVERNMENTLED. 15326 HOW HEALTHY THATIS IS SUBJECT 15327 TO SOMEDEBATE. 15328 ANGIE: ALL RIGHT. 15329 WE WILL LEAVE ITTHERE. 15330 ISOBELTHINK OF, THANKYOU. 1533COMINGUP,THE OIL OUTPUT DEAL 15332 SENT CRUDE PRICESSURGING AND 15333 SENDING BOMBS TUMBLING AROUND 15334 THE WORLD. 15335 THIS IS BLOOMBERG. 15336 ♪ 15337 ANGIE:12:30 IN HONGKONG, 11:30 15338 IN NEW YORK. 15339 THESE ARE THE FIRST WORD 15340 HEADLINES FROM AROUND THE WORLD. 1534SOURCES HAVE CONFIRMED THAT 15342 DONALDTRUMPHAS CHOSEN EXXON 15343 MOBIL CEO REXTILLERSON AS 15344 SECRETARY OFSTATE. 15345 AFOR THE ANNOUNCEMENT IS DUE ON 15346 TUESDAY MORNING. 15347 SOURCESCLOSETO RUSSIA ARE 15348 LIKELYTO COME UNDER QUESTION 15349 DURING HIS SENATE CONFIRMATION. 15350 THE PRESIDENT-ELECT ALSO PICKED 1535A THIRD GOLDMAN SACHS EXECUTIVE 15352 FOR HIS TEAM. 15353 GARYCOHN WILL HAVE A NATIONAL 15354 ECONOMIC COUNCIL. 15355 CHINA'S STABILIZATION HELD IN 15356 NOVEMBER,WITH INDUSTRIAL 15357 PRODUCTION CLIMBING 6.2% FROM A 15358 YEAR EARLIER, ABOVE ESTIMATES. 15359 RETAILSALES WERE UP 10.8% LAST 15360 MONTH, WHILE FIXED ASSET 1536INVESTMENT INCREASED 8.3%. 15362 ITGIVES POLICYMAKERS MORE ROOM 15363 TO SWITCH FROM STIMULUS TOWARD 15364 FINANCIAL THREATS. 15365 PHARMA HAS BEENCRITICIZED BY 15366 THEFDAOVER SOME INADEQUATELY 15367 DESIGNED TESTINGPROGRAMS,WITH 15368 POTENTIAL CONTAMINATION. 15369 AT RECENTVISITO SUNPHARMA 15370 SAYS REPORTS WERE NOT SUBMITTED 1537WITHIN THE 30 DAY TIMEFRAME. 15372 IMPACT VIOLATIONS HAVE PREVENTED 15373 NEW PRODUCTS FROM BEING LAUNCHED 15374 IN THE U.S. 15375 SOUTH KOREA,JAPAN, AND THE 15376 UNITED STATES HAVE MET TO TALK 15377 NEW SANCTIONS ON NORTH KOREA. 15378 THEY DISCUSSED SECURITY COUNCIL 15379 RESOLUTION 2321, ADOPTED LAST 15380 MONTH. 1538HADHOPES THE MEASURE WOULD 15382 LEAVE NORTH KOREA WITH "NO 15383 CHOICE" BUT TODENUCLEARIZE. 15384 THE U.S.SENATEIT WILL ENGAGE 15385 WITH THE NORTH IF IT GIVES UP 15386 ITS NUCLEAR PROGRAM. 15387 GLOBAL NEWS, 24 HOURS A DAY, 15388 POWERED BY OVER 2600 JOURNALISTS 15389 AND ANALYSTS IN MORE THAN 120 15390 COUNTRIES. 1539THIS ISBLOOMBERG. 15392 ANGIE:THE FED IS WIDELY 15393 EXPECTED TO ANNOUNCE A RATE HIKE 15394 ON WEDNESDAY, THAT BONDTRADERS 15395 ARE ALREADY PUSHINGAPPEALS. 15396 KATHLEEN HAYS HASMORE. 15397 >>THE GLOBAL BOND MARKET 15398 SELLOFF. 15399 IT STARTED WITH SOME UPSIDE 15400 SURPRISES ON THE U.S. ECONOMY 1540THE PAST FEW MONTHS,AND REALLY 15402 PICKED UP STEAM WHEN DONALD 15403 TRUMP WAS ELECTEDRESIDENT, 15404 PROMISING TO STIMULATE THE 15405 ECONOMY, CREATE JOBS, ANDMORE. 15406 ONMONDAY, THE RUN UPIN OIL 15407 PRICES TO A 17 MONTHHIGHPORT 15408 MORE FUEL ON THE BOND MARKET 15409 SELLOFF FIRE. 15410 LET'S GETAG-CHART. 1541ON THE FARRIGHT,YOU CAN SEE 15412 THE 10-YEAR NOTETRADED AS HIGH 15413 AS 2.5%. 15414 COMPARE THAT TOJULY, WHEN IT 15415 HIT A RECORDLOW. 15416 THAT'S THE LITTLE REDCIRCLE, 15417 1.32%. 15418 THAT IS ADOUBLING OF YIELDS IN 15419 SIXMONTHS, QUITE ARUN. 15420 GO TO THE FAR LEFT OF YOUR 1542SCREEN, UPPER LEFT CORNER. 15422 YOU CAN SEE THE YIELDS WERE AT 15423 5.29% IN 2007 JUST BEFORE THE 15424 U.S. WENT INTO RECESSION. 15425 SO WHAT ISNEXT? 15426 WHERE IS THE FED TAKINGUS? 15427 AFTERDOUBTING THE FED WOULD 15428 RAISE KEY RATES FOUR TIMES IN 15429 2016 AND PROVING TO BERIGHT,.ON 15430 TRADERS 1543ARE STARTING TO SHIFT THEIR 15432 VIEWS. 15433 THEY ARE ALSO GETTING ON BOARD 15434 WITH THE FED DOING MORE. 15435 LET'S LOOK AT THIS-- YOU HAVE 15436 TO WATCH THIS IN THE NEXT COUPLE 15437 DAYS. 15438 THAT YELLOW DOT SHOWSCLUSTERS 15439 FOR THE FED FORECASTS OF RATE 15440 HIKES. 1544WHAT THEY SEE FOR 2016THROUGH 15442 2019 -- IF YOU LOOK AT THE GREEN 15443 LINE,ONE RATE HIKE IN 2016,TWO 15444 IN2017, THREE IN2018. 15445 THEREDLINE ACROSS THEBOTTOM IS 15446 WHAT TRADERS WERE FORECASTING IN 15447 SEPTEMBER. 15448 NOT MANY RATE HIKES AT ALL. 15449 BUT LOOK AT THE PURPLELINE, 15450 MOVING UP NOW. 1545DERIVATIVE TRADERS ARE BETTING 15452 IT WILL GET CLOSER TO WHAT THE 15453 FED IS LOOKING FOR. 15454 EXPECTATIONS OF DONALDTRUMP 15455 BOOSTING THEECONOMY,DOES THAT 15456 MEAN THE FED WILL NECESSARILY 15457 BOOST THE NUMBER OF RATE HIKES 15458 IT SEES? 15459 MANY FED OFFICIALS HAVE MADE IT 15460 CLEAR,THEY CAN'T CHANGE THEIR 1546VIEWS OF THEECONOMY UNTIL THEY 15462 SEE WHAT DONALD TRUMP CANDO, 15463 NOT LET HE IS PLANNING AT HOPING 15464 TO DO. 15465 . 15466 FISHER'S FORMER EXECUTIVE VICE 15467 PRESIDENT OF THE FEDERAL RESERVE 15468 BANK OF NEWYORK SAYS IT MAY BE 15469 TIME FOR CHAIR YELLEN TO SIGNAL 15470 LESS OF A ROLE. 1547>> YORK THE HARDEST THING IS THT 15472 THEY DON'T KNOW WHERE THEY ARE 15473 GOING TO BE A YEAR OR TWO FROM 15474 NOW. 15475 THEY DON'T KNOW HOW MUCH THIS 15476 RECOVERY WILL COME THROUGH. 15477 THEY DON'T KNOW HOWMUCH ON TOP 15478 OF THAT THE TRUMP ADMINISTRATION 15479 WILL PUT. 15480 WHAT I AM LOOKING FORIS WHAT 1548CAN WE GET ABOUTTHIS? 15482 SHE HAS GOT TO PULL BACK FROM 15483 FORWARD GUIDANCE. 15484 SHE WILL HAVE TOPULL BACKFROM 15485 PRETENDING SHE KNOWS A POINT 15486 ESTIMATE FOR 12 MONTHS FROM NOW, 15487 WHICH SHE REALLY DOESN'T KNOW. 15488 >> ONWEDNESDAY, THE RATE HIKE 15489 ISIMPORTANT. 15490 BUT FOR THEMARKET, IT MAY BE 1549ALL ABOUT THE DOT. 15492 ANGIE:WEARE GOING TO BE 15493 DISCUSSING MOREON THE BOND 15494 MARKET SELLOFF IN JUST A FEW 15495 MINUTES, BUTFIRST, LET'S GET 15496 THE LATEST FROM MARKETS WITH 15497 HAIDI LUN. 15498 HAIDI:WE'RE LOOKING LIKE A 15499 PRETTY FLUCTUATEDMARKET,NEXT 15500 AS WE HEAD INTO THE LAST FEW 1550HOURS BEFORE THE FED DECISION 15502 DAY. 15503 ALOT OF UNCERTAINTY ABOUT WHAT 15504 THE FED WILL DO, BUT UNCERTAINTY 15505 ABOUT HOW THIS TRUMP TRADE WILL 15506 PLAY OUT FOR ASIAN MARKETS. 15507 LET'S TAKE A LOOK AT THESE -- 15508 THE NIKKEI 225, HIGHERGAINS FOR 15509 MUCH OF THE MORNINGSESSION,AND 15510 WE ARE UPBYA LOT OF UNCERTAINTT 1551THE FED WILL .5%. 15512 THE YEN FLUCTUATING, WEIGHING ON 15513 SENTIMENT. 15514 WE HAD SOME NICE BUYING EARLY 15515 ON,GIVING UPALL THE GAMES AS 15516 WE HEAD INTO THE AFTERNOON. 15517 ELSEWHERE, THE BIGGEST STORYOF 15518 THEDAY HAS BEEN THAT CHINA DATA 15519 DUMP. 15520 ITWAS PRETTYDECENT, 1552ACCELERATIONWAS A REALLY NICE 15522 BEING ONEXPECTATION. 15523 AS YOU CANSEE, THAT HASN'T 15524 PLAYED OUT FOR THE GREATER CHINA 15525 MARKET. 15526 LIQUIDITY ISSUES CAME TO THE 15527 FOUR,SHANGHAI BREAKINGTHROUGH 15528 THAT 55DAY MOVING AVERAGE FOR 15529 THE FIRST TIME SINCE 15530 MID-OCTOBER. 1553WE HAVE SEEN THAT SUPPORT 15532 BRIDGE,SAYING IT'S AN 15533 OUTSTANDING INDICATOR OF WHAT WE 15534 WILL SEE IN THE LONGER TERM, 15535 POTENTIALLY NOT VOTING VERY WELL 15536 FORCHINESE EQUITIES. 15537 WE HAVE ALSO SEEN SHENZHEN 15538 BREAKINGTHROUGH, COPPER 15539 BREAKING THROUGH THE DAY MOVING 15540 AVERAGE. 1554.5%. 15542 NOT DOINGTERRIBLY WELL IN THE 15543 SESSION. 15544 SOME WEAKNESS COMING THROUGH 15545 FROM JAKARTA, DOWNBY .8%. 15546 INDIAN STOCKS ARE UP BY ABOUT 15547 .2%. 15548 ALSO TAKING A LOOK AT THE FX 15549 SPACE, THIS IS WHERE WEARE 15550 GOING TO SEE SOME MOVEMENT. 1555TWODAYS OF DOLLAR WEAKNESS IS 15552 HELPING PUSH UP THE STRENGTH 15553 WHEN IT COMES TO THE JAPANESE 15554 CURRENCY. 15555 YOU CAN SEE IT PLAYING OUT WHEN 15556 IT COMES TO EQUITIES. 15557 THE AUSSIE DOLLAR HAS BEEN 15558 STUCK,75 RESISTANCELEVEL. 15559 WE ARE HOPING WITH THAT 15560 STRONGER-THAN-EXPECTEDDATA, WE 1556COULD SEE IT GOINGTOWARDS76, 15562 BUT THE AUSSIE DOLLAR HAS BEEN 15563 PRETTY MUCH UNMOVED. 15564 WHAT WE ARE SEEING IS A LITTLE 15565 BIT OF ABREATHER WHEN IT COMES 15566 TO THEWEAKNESS,COMING OFF 15567 THESE ASIAN CURRENCIES. 15568 YOU WILL HAVE TO SEE HOW THE 15569 DOLLAR INDEX GOES FROMTHERE, 15570 BUT CERTAINLY THAT WEAKNESS HAS 1557BEEN TAKING THE PRESSURE OFF A 15572 LITTLE BIT. 15573 TRACY: THANKS SO MUCH. 15574 LET'S TAKE A TURN TOWARD FIXED 15575 INCOMEAGAIN, WITH THE HEAD OF 15576 ASIAN FIXED INCOME MATCH ROTOR 15577 INVESTMENT MANAGEMENT. 15578 I WANTTO START WITH THESHARP 15579 THAT ITHINK SUMS UP ALL WE HAVE 15580 BEEN SEEING IN THE BOND MARKET. 1558YESTERDAY, WE HAD A TREASURY 15582 AUCTION OF 10YEAR,SOME 20 15583 BILLION SOLDYESTERDAY. 15584 THE YIELD ON THOSE NOTES WAS AT 15585 2.48%, THE HIGHESTSINCE 15586 SEPTEMBER2014. 15587 THESELLOFF CONTINUES, 15588 ESPECIALLY IN THEMARKET, FOR 15589 NEW TREASURY ISSUES. 15590 I QUESTION ISESSENTIALLY HOW 1559MUCHFURTHER, HOW MUCH HIGHER 15592 COULD WE SEE U.S. BOND YIELDS GO 15593 FROM HERE? 15594 >> WELL, THAT IS THE QUESTION 15595 BONDINVESTORS ARE ASKING 15596 OURSELVES AFTER THIS SIGNIFICANT 15597 INCREASE INYIELD OVER THE LAST 15598 SIX MONTHS,PRACTICALLY DOUBLE 15599 SINCE THEU.S. 15600 ELECTION. 1560WELL WE HAVEPRICED IN SOME FED 15602 RATE HIKES FOR NEXTYEAR AND 15603 SOME FOR THE YEARAFTER, THERE 15604 ISPROBABLY STILL MORE TO GO FOR 15605 THE SELLOFF. 15606 INVESTORS HAVE TO REALLY GET 15607 USED TO THIS NEW PARADIGM. 15608 ALREADY,GROWTHAND INFLATION 15609 NUMBERS ARE GOING UP EVEN BEFORE 15610 THE U.S. ELECTION,AND NOWWITH 1561THEPOTENTIALLY NEW POLICIES TO 15612 BE IMPLEMENTED IN THE COURSE OF 15613 THE NEXT YEAR, THOSE SHOULDBE 15614 FURTHERSTIMULATIVEAN 15615 ENVIRONMENT WHERE THE U.S. 15616 GROWTHIS ALREADY ATPOTENTIAL 15617 AND WOULD LEAD TOHIGHER BOND 15618 YIELDS. 15619 THIS IS A CHANGE INPARADIGM 15620 FROM SOMETHING WE HAVE SEEN AND 1562GOTTEN USEDTO,LOWER BOND 15622 YIELDS. 15623 ANGIE:YOU ARE MENTIONING A 15624 CHANGE IN PARADIGM. 15625 I WANT TO BRING A BOND MARKET 15626 VOLATILITY. 15627 ONEPIECE OF RESEARCH THAT 15628 REALLY CAUGHT MY EYE RECENTLY 15629 WASHSBCWARNING THATWE COULD 15630 SEE THE 10 YEAR YIELD AT2.5% 1563AROUND THE FIRST QUARTER OF 15632 2017,BUT THEN IT WILL TUMBLE TO 15633 1.35% BY THE END OF THEYEAR. 15634 THAT ISAHUGE CHANGE FOR A 15635 MARKET THAT HAS BEEN REALLY USED 15636 TO YIELDS GRINDING LOWER. 15637 >>ABSOLUTELY. 15638 WE'RETHEREAT 2.5%, SO I THINK 15639 WE CAN PROBABLY GO HIGHER. 15640 IDON'T REALLY SEETHE WAY BOND 1564YIELDS WOULD TUMBLE IN THE 15642 SECOND HALF OF THE YEAR,UNLESS 15643 SOMETHING OUT OF THE BLUE 15644 HAPPENED. 15645 IWOULD THINK HEELS WOULD TEND 15646 TO DRIFTHIGHER,AND GO CLOSER 15647 TO THE 3%BY NEXT YEAR. 15648 IT'S QUITE DIFFERENT FOR 15649 INVESTORS WHO ARE USED TO LOWER 15650 YIELDS AND CAPITAL GAINS COMING 1565FROM LOWERYIELDS. 15652 THIS IS ANENVIRONMENT 15653 WHERE GROWTH IS PICKINGUP, 15654 EXPECTATIONS ARE REVERSING 15655 THEMSELVES. 15656 YOU TALKED ABOUT HIGHER OIL 15657 PRICES EARLIER IN THE PROGRAM. 15658 THEY WILL CONTRIBUTE TO HIGH 15659 INFLATION AS WELL. 15660 THOSE AREFACTORS WHICH ARE 1566QUITE DIFFERENT FROM WHAT WE 15662 HAVE SEEN IN THE LAST COUPLE 15663 YEARS. 15664 ANGIE: YET, LET'S TALK ABOUT 15665 EMERGING MARKETSFORFX. 15666 HOW DO YOU SELECT THE WINNERS IN 15667 THE LOSERS HERE,AND WHERE DO 15668 YOU SEEITSITTING IN THE GLOBAL 15669 STORY? 15670 ISITALL FIXED TO A GLOBAL 1567SUPPLY CHAINFACTOR? 15672 >>WELL, PART OF THE FXSTORY IS 15673 LINKED TOTHEDOLLAR. 15674 WHAT HIGHER RATES AND VARIOUS 15675 TAXINCENTIVES WHICH WOULD BE 15676 FAVORABLE FOR U.S.CORPORATE-- 15677 I WOULDTHINK THAT WOULD LEAD TO 15678 A STRONGER DOLLAR. 15679 SO THAT WOULD BE ONE PART OF THE 15680 STORY. 1568THE OTHER PART IS THE 15682 DIFFERENTIAL OF INTEREST RATES. 15683 THE FED PROBABLY HIKES RATES 15684 NEXT YEAR AFTER HIKING THIS 15685 WEEK,AND THAT CONTINUES INTO 15686 2018. 15687 CENTRALBANKS IN THE REGIONHERE 15688 ARE LESS LIKELY TO FOLLOW IF 15689 THEY CAN AVOID THAT,AND THAT 15690 SHOULD LEAD TO STRONGER DOLLARS 1569AS WELL. 15692 THE OTHER COMPONENT IS, OF 15693 COURSE, ON THE TRADE SIDE. 15694 PROTECTIONISM AND PROTECTIONIST 15695 TALK IN THE U.S. IS NOT GOOD FOR 15696 GLOBALTRADE AND NOT GOOD FOR 15697 THEEXPORTERS OFPRODUCTSWHO 15698 SHOULD COMPETE WITH THOSE MADE 15699 IN THE U.S. 15700 MORE ADVANCED ECONOMIES INASIA 1570WILL PROBABLY BEHIT BY THAT 15702 TYPEOF PROTECTIONISTMEASURE. 15703 THECHINESEEXPECT TOWEAKEN, I 15704 WOULDEXPECTSOME CURRENCIES TO 15705 WEAKEN ASWELL. 15706 WHEREAS SOME OTHER COUNTRIES 15707 WHERE IT IS MORE COMMODITY 15708 EXPORTING,UNLESS THE 15709 COMPETITION TO THEU.S. IS LESS 15710 EFFECTIVE. 1571THOSE TYPICAL COMMODITY 15712 PRODUCING COUNTRIES IN ASIA -- 15713 MALAYSIA,INDONESIA -- BY 15714 THEMSELVES,THEY WOULD HAVE LESS 15715 IMPACT FROM THE PROTECTIONIST 15716 MEASURES. 15717 ANGIE: BUT IT REALLYSOUNDS LIKE 15718 WHEN IT COMES TO EMERGING 15719 MARKETS, ALL EYES ARE ON THE 15720 UNITED STATES, ON THEFOMC, 1572WHETHER OR NOT THAT TIGHTENING 15722 WILL CONTINUE,THE Tompkins New York City College of Technology.

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