tv Bloomberg Markets European Open Bloomberg November 8, 2016 2:30am-4:01am EST
♪ guy: welcome to this special edition of bloomberg markets: european open. what a day it is going to be. i am alongside jonathan ferro. caroline hyde is back at base in london. here is what we are watching. it is election day in the usa. hillary clinton has a slight lead on donald trump. how has such a divisive campaign changed america? the market rallies behind
hillary. u.s. stocks cap their biggest gain. investor confidence in a clinton white house. what does these data's quote mean --what does the status quo me? we speak to the ceos from two sectors sensitive to the outcome. jonathan: it is the adjustment correction.ter the some stability in today's session. dollar-yen, big move yesterday. we reclaim 104 handle. if you are looking at yields, higher yesterday by about five basis points. caroline, some real stability across assets. -- though today unchanged. caroline: caution creeping into european markets.
we have got -- we have gone down about one point on the euro stocks 60. there was a correction. mostw s&p 500 surging, the since march. the biggest move higher in eight months. the stoxx 600 up 1.5%. chinese exports not living up to expert -- expectations. german output falling. because bit of caution of some of the economic data. and some breaking news. investors see full-year adjustment margin at 13%-14% upgrading it. to be are continue positive win for investors on the back of a potential clinton victory. a big sector exposed to the u.s. election. let us get more on the bloomberg first word news. china's exports a felt
for a seventh straight month in october on tepid global demand. dropped 7.3% from a year earlier in dollar terms. 1.4% leaving a trade surplus. the yuan has depreciated 9% since last august but it failed to provide a sustained boost to exports. the u.k. chancellor philip hammond is facing a 25 billion pound whole in public finances halloween the brexit vote. that is the warning from the institute of fiscal studies. diminished growth will result in lost tax revenue. only partially offset by a reduction in spending. meanwhile, the brexit secretary david davis has been pressed by opposition lawmakers to provide more details regarding the uk's position on leaving the key --
leaving the u.k.. parliament must be allowed to vote on the start of the talks. he plans to press ahead with triggering article 50. >> the point of no return was passed june 23. we must lead in the way agreed by law by the u.k. and other member states which means following the process in article 50 and the treaty with the european union. juliette: samsung electronics has been dragged into south korea's presidential scandal after investigators raided its headquarters. it served -- they searched for evidence. it is at the center of an influence peddling investigation. the company confirmed the rate. global news 24 hours a day powered by our 2600 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top .
this is bloomberg. campaign season ends today as the u.s. selects its next president. the candidates and their supporters you added around the big swing states yesterday. they only wrapped up a few years ago in the final push to get the message out to voters. >> hello pittsburgh. >> florida is my second home. >> if hillary wins in north carolina, take it to the bank. >> in one day, we will win north carolina. >> we have one more day michigan. >> this is the most consequential election of our lifetime. tomorrow, is the election but that is just the beginning. we have to heal this country. >> we are a very divided country. we are an unbelievably divided country. we will come together. >> it now comes down to you.
it is out of our hands. it is in your hands. >> get your friends out. every vote counts. , really final push taking it to the last minute. donald trump wrapping up his final speech and hour ago. really taking it to the last minute trying to deliver those he states. market positioning is really interesting. we completely changed the story yesterday morning. the hedges appear to still be on. jonathan: would you want to take them off? let us talk about the status quo. the divided government. many are expecting clinton in the white house. and the democrats take the senate. the risk would be if something happened in the senate. stay up for the senate. the risk to markets would be there currently.
guy: the democrats need five seats to take back majority in the senate. i think that could be one of the crucial things. hass an external viewers been focused on the presidential story but it is that vote going on in the house where we could see republican losses and the senate that will be crucial. jonathan: let us bring in the market participants. --rnight -- dollar-yen trying to get a cleaner way of appearing the risk event's. moving away from the donald trump story. they do compare in terms of risk events. beforeyen, a big pop june 23 and a big pop today as well. the market is jittery in the near-term. longer-term, i think it is a different story. guy: how will this affect what
happens with market pricing on the fed? will that change significantly whether or not there will be a december story? that is something we need to be critical about. we hadn: last week when the havens and it was risk off -- you still have the pricing of the fed at 80% for the month of december. what that told me was that this is not a market pricing in doomsday. it was only a little more risk averse. put in a few hedges. you would expect that to happen. what you would not expect is for them to still be pricing in the fed at 80% if they really thought the significant indent with the character -- significant even would materialize. we keep making the parallel between brexit and donald trump. the frequent use of that analogy has been fostered by no one more
than donald trump himself. >> this will be brexit plus. this is brexit times five. this will be brexit times 10. this will be brexit times 50. this will be brexit plus, plus. jonathan: a lot of breaks it. if you search the stories -- you have brexit versus trump and an explosion in terms of word count. i am sick to death of this. and ae in a bar yesterday waiter came over and asked me if it felt like brexit because of my english accent. if there is a lesson you can learn from brexit, how many people came on the tv with us, y the ftse.id -- bu the playbook is that you sell stocks on a donald trump when. do you? what happens after that.
what happens if you get a weaker dollar. what is the playbook we have learned from right fit? -- from grexit? brexit? money was likely blow it. if you do an analysis on what happened with the homeland investment bank which allowed money to come back in a similar way, most of that money --where did it go? dividends and buybacks. that would be pro-equity as well. -- wean: i would add also talked about the data and what this would mean to the data. let us take the brexit equivalent. what did we have? the cyclical data showed up. ay would it be different with donald trump presidency if you assume that is a big risk? guy: it should not change the
fed bedding because the data will not become significantly worse. you could argue that the data might get better. jonathan: this is why the fed is in a difficult position. if you get a donald trump presidency, and you don't get the status quote, what does the fed do if the data continues to hold up in the early thing that moves is the market? again, that would be factored in. a lot to think about. we will carry on this conversation threw up morning. so much to kick around. we will get you what is happening with the race to the presidency but also with the senate. coming up, red, white, and green. how will this play out for the renewable energy sector. we will speak to the ceo. after the open, we will look at what the banks are predicting
jonathan: from new york city with the intention of global markets. futuresection day and are going nowhere. a little bit of stability after eight trading days of real instability. guy: yesterday was the change in tone but previous to that, we had nine days down. out whatng to work signals we are getting from the markets this morning. stephen, give us a sense of where we are this morning. what signal is a market delivering? stephen: no one really want to commit at the moment but early signals are that it is a slight positive risk we are seeing this morning. yesterday, a big day off in equity markets. that is key.
isseems that the market priced for a clinton victory. if that is the case, this is emerging risk rally we have is likely to continue. from our perspective, that is likely to be the key driver. foreign exchange -- we tend to in equitieshe risk in particular will set the tone and drive what goes on in foreign exchange markets. we don't think there will be an overall dollar movement. it will be more that if you do have the status quo, a clinton victory, you will probably see risky assets doing better. alsoeso doing well but things like the australian dollar and new zealand dollar will benefit as a result of the equity markets continue to rally. jonathan: when you sat around , what didaribas table
you think about? it would come from the theme of risky assets. the real barometer has been mostr mexico as a currency likely to move in either direction. the clinton victory would be supportive to the mexican peso. if we shift over to the g 10 markets, we would look at the currencies like the australian or new zealand dollar. byy are going to be driven risky assets. equity market rally should support australian dollar and new zealand dollar against the u.s. but vice a versa as well. versa as well. we have already kicked around the idea that this was not brexit. that an analogy does not work because of the subtlety that is
happening in the house and senate. how much attention has the fx market paid to those key races? be influential in how the u.s. economy performs in the next few years. stephen: good point. at the moment, a secondary focus. the presidency is that key theme and the market is quite black and white. once that is decided, there will be more of a secondary impact on what happens in the house and senate. this is an indication of how powerful the new president will be and how likely for example a big fiscal stimulus is likely to be. something donald trump has promised. -- it isties of brexit still important. shock in june and that still looms large. we remember back to that day. i don't think anyone wants to
jump to conclusions about an outcome because we have had the experience of really getting it wrong tack in june. jonathan: let us talk about where we are and the basic assumption of what could be wrong. the status quo. that essentially means clinton in the white house, a divided government, the democrats take the senate and republicans take the house. i want to know if a clinton presidency really is the status quo given the subtle shift to the left that we saw in the run-up to the election. are we overlooking that in a significant way? >> that is a good point. and the way that i would answer that question is to focus on a fiscal stimulus. the market is assuming that a donald trump victory would have a big fiscal stimulus but you could also see more stimulus coming from hillary clinton. if shelarly as you said had control of congress.
from that perspective, it is important to the dollar because the bottom line is the fed is still driving the dollar. where thetors see dollar is going, they want to know what the fed is doing. if we have faster ruth driven by fiscal expansion that means there is more pressure on the fed to raise rates. that could be very supportive for the dollar. you are right to focus on this point. it may not just be the status quo. that is why the secondary effects of what happens in the congress could be very important particularly if we do have hillary clinton in the white house. derivative of the fiscal story could be what happens with a tax mns the -- tax amnesty. maybe some of that money comes back. we know what happened with the homeland investment bank.
some of that money came back but went into diffidence. what will that -- went into dividends. --phen: home and investment those of us who have been in markets for a while remember that era. a key point here, if this is correct, you tend to get a big 1-1 flow back into dollars or demand for dollars. what is also interesting is that if we do get an announcement of a home in investment policy, it may not be the flows that drive things. it would be the markets speculating on the flows. if something like that is announced, you could see a big spike in the dollar on the anticipation of the flows coming home. irrelevant of whether the flows happen or not some months down the line. jonathan: stephen will stick with us for the next 30 minutes.
that is the brexit bid. i do not have one. -- that is the brexit beard. i just have some stubble. i think he is trying to get me into trouble with management. guy: let us move on and talk about what is happening in terms of the corporate story and what it means. the u.s. election is being watched by all investors. have alar sectors that sensitivity to the outcome of today's vote. the energy than sector. a hot topic for both hillary clinton who has vowed to reduce dependence on fossil fuels while donald trump has promised to roll back environmental rules that squeeze coal out of markets. let us talk to a man who has a dog in this race.
this is the world's biggest turbine maker. in thea big footprint united states. he joins us now on the line from copenhagen. how binary is this election for you? how significant is it for you? you are getting a lot of revenue from the u.s. what does the outcome mean to you today? >> good morning. you are correct. overall, it is our second biggest market for wind globally. it is an important market. vestas.us from if i look at what drives the u.s. market in the medium-term, it is fair to say, the tax credits. and they increase with winch. that has bipartisan support. change.t foresee any
that is what drives the market in the midterm. december, the u.s. congress extended the protection tax credit. that has had a big impact. are those policies at risk? the only way that the extension -- do youeversed think that has been vetted in? >> yes. it has passed the senate and .ongress it has bipartisan support, strongly. i do not expect any change in the current picture. guy: in terms of what you see right now in your overall business, give us a sense of where the business is at the moment and where you see the acceleration coming through. you had focused on the united states but when you look beyond, where next?
in, where. story beds is the next uplift for investors? see good increases in revenue. based on the 44% increase in delivery. we had the widest global reach and we have taken new orders in 29 countries across five continents for the first nine months. we see an overall favorable market for renewable and for wind. jonathan: great to hear from you and congratulations on the numbers.
guy: you are watching the european open. i'm guy johnson at bloomberg headquarters in the ark city, where i am joined by jon ferro. caroline hyde is back in london. we are at the start of the trading session. jon: it is election day and hillary clinton as a slightly on donald trump. how such a divisive campaign has changed america. the market rallies behind hillary. investors are going confident of a clinton white house. what does the status quo really mean for investors? and chief executives on the commander-in-chief.
do not miss the conversation with one of the sectors most exposed to the u.s. election. guy: european markets, just beginning to open up. let's talk about what is happening here. we have a few seconds to go until this happens. yesterday we did see a big open when we priced in what was happening with the hillary and fbi story. this morning we are expecting the story to be more muted. the market makers will be more mutual in their opening today. the ftse 100 is barely budging and the cac is opening softer. we are not seeing much in terms of market action when it comes to the equities. everybody is going to sit on their hands today. let's dig inside these markets and hand it over to caroline. caroline: remember what happened yesterday? the biggest rally in united
states sticks in -- united states stocks in eight months. check in on the imap. let's dig into the industries that are feeling the caution. we are flat on the stoxx600. financials are trading a little bit lower as well. industrial are in the red. but generally, this is a cautious morning ahead of a very busy day of voting in the u.s. remember, chinese data is not living up to expectations. german industrial output fell more than expected. u.k. yields are coming down more than expected. we thought yields -- we saw yields spike a little bit higher . yields are coming down one basis point on the united kingdom 10 year. i want to show you what is
happening in terms of fx. once again, the trade has been the mexican peso. today we are more cautious on th e peso. a soft performance on the downside of the aussi dollar south african rand. ld's most traded pair, the euro-dollar. what a reduction in volatility we saw yesterday. i want you to dig into this particular chart. the currency market is steady as the clinton prospect seems to be improving. o-dollar come down the most in a year. that happened yesterday and today it is a little bit higher, but we will be watching that particular currency pair. now, dig into the big stocks.
nejra: i'm focusing first on the renewable sector. this is when we can look through the prism of the u.s. election with hillary clinton seen as the candidate more program renewable. -- more pro -renewable. dong energy plans to sell its oil unit and part of the plan is to focus on renewables. we are up 1.5% on dong. but we can see a rally on vesta s at the moment. orders expectations and rose by 17%. we saw it rally yesterday after the fbi sent that letter to congress and the market was interpreting that as more chances of a clinton win. and conversely, we saw the stock dropped 8% in the previous week. things seem to be very sensitive to the prospects of a hillary clinton win. keep an eye on vestas.
and then credit agricole as well come up 4.6%. profit has doubled from one year earlier as it booked ganins from a reorganization and bond trading in conversion. also, a number of u.s. and european banks have pledged a stable arising dividend for next year. guy: european markets are open and it will be an interesting trading day tomorrow. let's get back to steven saywell, the head of fx strategy at bnp paribas. we are going to talk a lot about risk on and risk off, these macro moves. i find it hard to believe it is actually going to be that simple. we have already discussed the equity markets, the fact that there will be the potential for buybacks. equities are going to be a much more nuanced story.
who is going to be setting the pace? where is that lead going to be coming from? >> that is a good question. from our perspective, we think the overall risk theme is going to drive things. we think equities are going to be the driver. it could be we saw the response yesterday. if that is the big move we had, if we are going to see the status quo, that could have been the move. however, if we get back to our currency pairs that caroline just book about comedy euro-dollar, the dollar-yen, and the dollar-swiss, these could be interesting because once we get beyond the election and talk about congress, we have the fed to talk about as well. i think that is where you could see the dollar start to rally again. certainly come against the low
yield and the risk off currencies. our view is, if we do get a clinton presidency here, as we go into year end, the dollar will do well, the euro-dollar wi ll fall. rally.lar-yen will that is what the market is shifting to price in, and leslie get a surprise. jon: what do you make of that break down, then? in a risk off environment over the last nine days before yesterday, we still had the market pricing in the probability of a hike around 80% for the month of december. what do you make of that short-term disconnect over the last 10 days? >> i think the theme is just tha t, it is a disconnect. we had extremely strong signals from janet yellen and the fed that they are very close to hiking. and without a surprise, i think
we get that in december. remember, we were thinking that fed had an opportunity to go in during the summer. so, the fact they hadn't gone then with this pent up demand in the u.s. economy, growth is strong. it is very much a done deal for december. we have seen probabilities spike as much as 75% for a rate hike in december. the market is super confident the fed is likely to hike in december, unless there is a big surprise. what will be interesting over the next 24 hours is what that means for the next year, whether the market needs to price in more fed tightening as a result of a new government in the u.s. guy: plenty more to come from steven saywell. jon, you made the point yesterday that another disconnect you have seen is oil.
the oil market has been one of those outliers because it has been working on its own factors. back effectve ripple has caused some of this breakdown. jon: there was a 3% correction, so i use the term loosely, falling out of bed. but you would have blamed oil. there was a huge return in the crude market. the big disconnect is not just what we saw yesterday, but the disconnect between the dollar. how those two things come back together. guy: let's carry on the conversation. uncertainty over the aftermath of u.s. election is high. we will get to the market , next. then, brexit, plus,
stability over the last couple weeks. equities are up marginally across the board .2% on the stox x600 and we climb higher on the margin. we had the biggest one day move higher on the s&p 500 yesterday. we snapped the nine-day losing streak in the united states. let's cross over to london and caroline hyde. caroline: we are seeing quite a few moves on the back of earnings. let's dig into the top earner on the stoxx 600, credit agricole. this is your mrr. go into your bloomberg. credit agricole, up 6%. they are seeing 1.2 5 billion euros gained from restructuring within that. number two on the leaderboard, associated british foods.
thank you, pound. they are getting international money in as well from the sugar. the weakening pound is helping loose that international money. also notably, they are seeing the sugar profit likely to rise. on the downside, i leave you with a laggard, arsenal, down 8%. down 4.7% on the stock market today. the earnings warmest ever so slightly, as -- the earnings were missed ever so slightly, as was the revenue. guy: it is interesting to see these stocks with the u.s. election. today is a to mull just presidential -- today is a tumultuous presidential election. here is what the market voices have been telling bloomberg. >> i don't think the market understands exactly what type of
future is out there. that is causing a considerable amount of conservatee with either possible nominee. so, i don't think this is the usual strictly analytical approach. on ground not covered previously. we will have to fend our way along. >> with a trump presidency, we would expect a reaction on trade immediately. that has no lag. that would affect companies that import more because the with the tariff values increase. >> i think the market would not be happy if we had in all democratic sweep. i think that we say we do not like gridlock, but had the end of the day, wall street does not want to see a more left leanin agenda in washington. what they would like to see is
the summit go democrat, the white house go democrat, and the republicans keep the house. guy: interesting voices chiming post the market elections results. what will happen with the s&p is the critical question. a trump presidency is seen as a negative for equities. i question that on so many levels. it will be an interesting one. it is the same story with the mexican peso. it has become the trump-omoter. steven saywell still with us paribas. his seems like a very asymmetric outcome here. we see small gains in the direction for travel for markets. is it really as asymmetric as it looks, and how quickly will the
market narrative change outside of initial shock reaction of the result to pricing it in? i have seen so many notes now telling me the initial reaction is not the final reaction. what is that gap between shock and rationalization? itwell, i would suggest that actually depends on how things pan out. like i said, if we do get a clinton presidency ,that is more or less what the market has priced for. if we do not get, there is a big repricing coming. that secondary effect of how congress looks could actually have a bearing on hillary clinton's ability to get policy implemented, if she does win. having said that, and focusing on a word you just picked up there, asymmetry, i think back
to foreign exchange, you could see different responses. that is probably due to the current positioning in the market. if you look at the market and the foreign exchange space, it is currently against the yen and australia dollar. if the u.s. dollar does rally, those currencies could weaken up a little bit. if we go to the other extreme, where the market is very short is the pound. now, we saw quite a significant week for the town last week, quite positive. our view here is that the pound is significantly undervalued. if you put that in that, if the dollar does rebound, the pound is not the currency to sell against the resurgent dollar. my on money would be more on the yen or australia dollar to
weaken off, and the key driver is the way the market is positioned going into the election. guy: let's talk about intriguing price action in a currency we can typically call a haven. swiss currency is behaving typically. that is the currency pair i want to talk about. if you are going to look at euro-swiss, what is the advice you are giving to clients? >> i think it is a key one to focus on. i would be with you looking at it. we have been looking at the 1.08 though it euro-swiss, has fallen below that. that is a strengthening of the swiss franc. i think this is a little bit of nervousness before the election. but, if we do get a risk rally, we would suggest a weakening of
the swiss franc is likely to happen. we would not be surprised if the swiss national bank would actually be supporting that move as well. remember, if you look at the f oreign exchange reserves over this year in switzerland, you can see they have been intervening in the markets to try and prevent an appreciation of the swiss franc. what that means is, the bottom line is, the downside is quite limited in euro-swiss, because you got the swiss national bank there as something to take quite seriously, as far as the foreign exchange market is concerned. guy: we still will talk about what this means for mr. draghi as well. up next, policy and politics. what will this election mean for the federal reserve, and central banks around the world? this is bloomberg. ♪
a little bit too much. maybe the markets overly priced this clinton story, and today they are feeling a little bit more cautious. people might be taking the opposite position, mabye getting their hedges back into position. steven saywell is still with us. is that the correct interpretation here, steve? are we looking at the situation where the market is not prepared, given recent history, offl ty to take its foot the pedal when it comes to the hedge story? >> that is the correct interpretation, i think. that was a dramatic move yesterday. as i said already, maybe that was the market reaction yesterday. following after that, to see little bit of retracing the next day and that is what we are seeing this morning. is a very important day for
the market. it could go one day or the other. much, harp on a story too but remember, the memory of brexit is still very strong. that was just back in june and it was a day were pretty much the entire market got the result wrong and we had an experience of the market actually pricing in the opposite first, and then retreating sharply. with that fresh in peoples' minds, i think people do not want to count any chickens just ye. -- just yet. i think that is the correct interpretation of that retracement. jon: what was fascinating about that chart is it is higher than the euro-peso. the trump volatility story, and if you believe the more significant risk event, at least in terms of the probability at hand, then you would not be playing the peso story, if you
were looking at a democratic clean sweep. a sleep on the democratic side, has that been -- a sweep on the democratic side, has that been fully priced in? going ahead from here, what are the lessons learned? -- would you guys set up what are the lessons that you guys have learned over at bnp paribas from that event? operationally, how would you be set up? >> this is very much a joint effort with yield, as you would imagine. with brexit, it is all about the u.k. this is very different. and we will be taking over from new york tomorrow morning as the results come in. just linking it to the brexit
story, remember, it was a very difficult trading environment inaaususe the market priced initially when the results came out opposite of what came out ther e at the end. that is very firm in the mind of investors. guy: stephen, are there going to be any gaps in liquidity? maybe this is a fully staffed liquidity issue. >> i would say the letter. -- i would say the latter. this is going to be around the clock, very seamless from new york and the back to london again in the morning. the way this happens is we should be getting the result just as london starts to come in around 4:00 to 5:00 in the morning. there should not be any issues and i think most banks are looking at this as an s event they want to staff
guy: a big day in the usa. what will the results bring? how are the markets going to react? at the moment, the markets are going nowhere. jon: the attention of the world is on washington d.c. 3:30 here in new york city. guy johnson about four copieffis dowees down already. we look like this. the yen, strong, strong, strong until yesterday. we tred water until today's
session. a stronger pound story. guy johnson getting trolled by the fx market after already changing hsis money. we come down on a basis point. and a little bit of stability with crude. caroline: i think we are seeing the ftse the relative number n your.outperform orer i this is on the back of its numbers. remember, it is heavily exposed to sugar. the say the sugar news is strong and they will the prices rise worldwide. wind, upye on investorvestas t2%.
orders are up 70%. on the downside, steelmakers. as we see fallout from the third-quarter numbers. earnings, a miss. and sales, a slight miss as well. now, let's get up to speed with the bloomberg business flash. reporter: more on the u.s. election now because investors are pricing in a victory for hillary clinton. the final bloomberg poll shows clinton leading by 44% to 41%. the poll was conducted before jim coney said clinton should not face charges for her use of a personal e-mail server as secretary of state. de monte paschi made a
bid after it was authorized by the board of directors. according to people with knowledge of the matter, fortress investment group also made a binding offer. representatives declined to comment. syngenta is expected to close 60 u.k. stores. the domestic closures will take place over five years. the retailer also shut 53 stores out with 2100 workers. the move comes as the ceo warr ants expansion efforts in an effort to compensate for under performance. credit agricole said the third-quarter performance doubled from one year earlier. bond trading income surged. the lender also pledged stable arising dividends for next year.
and salesforce third quarter -- and deutsche profit surged to 350 million euros. raising the profit forecasts for this fiscal year. operating profit will drop for march. improvement on the company's forecast in august. toyota has been provided with some resespite. guy? guy: we have live pictures for you. secretary clinton arrives in westchester, new york north of manhattan. down, after how many years we have been doing this for, we are finally here on voting day. decision day, in the next 24
hours. guy: i suspect she will be happy if she never sees that plane again. jon: the polls have tighten over the next month or so. we had a scandal a month or so of the with the lewd comments for donald trump. it looked like the spread was widening, and then it tightened as the fbi reopened the case against hillary clinton. it has been a really volatile month. i don't think anybody has seen a presidential election quite like this ever, mabye? guy: and i think the divisiveness of the campaign is something america will have to deal with after this. this is as polarizing as it has ever been. as they work towards somehow come here, what is written on that plane, "stronger together," is something that will be difficult to figure out for whoever ends up winning this. the london bubble did not
understand what the rest of the country was thinking. and i think america has an idea now of just how divided it is. jon: they were two conversations you and i had around the brexit conversation. one of those when the voting intentions of the people outside of the metropolitan area, they were very different. people wanted to leave the european union. i heard those conversations a lot more out of london. the london bubble is where the media is. it is the same with washington d.c. it is the same with new york and with california. conversationother we both had. even inf the u.k. voted to stay in the eu, things would not go back to normal. there is a general conversation we both had. even inf the sense that things will not go back to normal, even if that lady walking down right now does go into the white house. guy: and i think that will be manifesting itself as they come
back to the idea regarding, what happens in the senate today and house today will be just as critical. will we continue to say democratic nominees being held up? all of this, the mix, that clashing of forces will be hugely -- jon: there are still a couple of fed governors who still have to be nominated. they can also have significant sway on the federal reserve. guy: and those nuances are going to come out over the next fe w day. that will be the more interesting narrative. he buildup has been fascinating, but i think the fallout will be more interesting to watch. the key sectors that will be impacted by this vote. sector routing footing for trump?
westchester new york, about 40 minutes north of manhattan, of course, her hometown and where she is here to vote. guy: we will watch that take place a little bit later on. the miles that have been traveled. 3:41 a.m. and1 she seems to be buzzing. just really telling the story of the 24 hour nature of what has been happening here. both candidates going to the absolute limits of what is possible. jon: and some very committed voters out there, too. guy: we will see how committed the voters are a little bit later on. america will choose its next president a little bit later on. let's talk about what that will mean. uncertainty is incredibly high. not unlike the brexit vote back in june, which donald trump also, on many occasions, has
been drawing a link to. this is goinghi: to be brexit plus. this will be brexit times five. this is going to be brexit times 10. this will be brexit times 50. this is going to be brexit, plus, plus, plus. caroline: we get it, it is kind of like brexit. toression have rocketed an almost five months high. -- five month high. we have been charging all the use of brexit and trump together across the bloomberg terminal, almost 500 articles. you can graph the pair using the bloomberg. phillipp lahm is with us. is this as big a risk to the market, to the economic
status quo, as brexit? >> i think donald trump is right. it is probably brexit times five. if you look at the trade, the dollar as a reserve currency. if donald trump is elected, the globalization will rapidly accelerate. the world's trading economic system will be apocalyptic. i mean, what is really fascinating is the forces that were behind brexit are almost exactly the same the forces that are behind donald trump. those who have lost from globalization are voting against more of that same. and hillary clinton, for them, offers more of the same. donald trump offers protectionism, but the trouble is, protectionism is no protection. in 1931 the americans introduced their great tariff act, that on manyerracariffs
products. trade,decrease and as destructive as they can be in the modern world, we lose jobs. that is what might happen if trump is elected. it would take longer to come. it would take years. but looking at brexit, for example, the figures that br itish exchequer will lose as a result of lower growth and trade are just extrapolating away. caroline: yet, the economic damage that has been foreseen by so many economists has not really been, as yet, fed into the numbers in the u.k. will we see the same thing in the u.s.? maybe we would see a sustainment of growth within the united states. is this something we do not see the -- >> it is apocalyptic.
caroline: will be not see these devastating issues until much later? >> actually come if you look at what donald trump is proposing, in terms of massive tax cuts, in erm terms economic activity, it is consumer. that will be a huge boon to the economy and repatriate american capital to corporate. because lower tax rates will he normally increase their bottom line. caroline: and bring some money home, potentially. that anyis no doubt short-term things will be quite different. and i think the brexit debate lost out by the silly ideas that there would be an immediate fall. five think it is undoubtedly true that in the longer term, the penalties, just like theound interest, loss to the exchequer is in the billions. and in the u.s., it will be the
same. arguably, economic historians debate how much harm the did.ff act it actually helped accelerate the fall into the deep depression. here is the interesting thing. if protectionism cannot protect ordinary working people, at least the white working people, andump's globalization doesn't help that either, then what is the response? if one believes the polls, what policy to sponsor will hillary clinton -- what policy response will hillary clinton have? it is not clear. imagine if people lose -- anyone who drives a car over 10 years loses that job. that will arguably be greater, in terms of working class and middle class insecurity than globalization. and nobody in the western world
has an answer to that either. guy: i am looking at pictures of hillary clinton's plane. it has on the side of it "stronger together." does that mean inversely, weaker apart? >> i think, um, if you look at any turn in history, countries fall when they are divided amongst themselves. there is no prospect in my view that hillary clinton can unite the country. whites to speak to the working class, to those who feel culturally alienated, but she has not got anything in her locker that can do that. nobody has any ideas about how to respond. semi-skilled people are now out of jobs. isi said earlier, nobody
responding to automation. if you look at who supports clinton, for the first time since 1925, the democrats lead is responding toamong college-educe voters. that has never happened. the educated classes, which is the same thing that happened in brexit, are siding with the clintons and the status quo. and those who are uneducated, or do not have a high level of educated qualifications, feel they cannot benefit. i do not see anything in the democratic offer that can speak to those people. we will see an increasingly divided america. i will imagine that litigation is a tool of american politics. i can imagine there will be multiple attempts. here is the interesting thing. a few weeks out, we were all thinking that maybe hillary clinton could help propel the tbact back control in tehe senate, and even the
house looked possible, but because of the e-mail turmoil, that no longer looks possible. we will have deadlock within. across the world, democracies not seem able to answer the problem. if you actually look at the far horizon, what we are seeing is popular authoritarianism. from putin in russia to dare i say it, to trump in america. we are at one of those times in western history. if the west does not get it back together, we could see the west completely surpassed by economic developments in asia, and indee d, deeply in china. that, i thin,k, is a prospect that nobody has recognized. i don't think america is yet equal to that. america has burnt many of its air risllies post iraq.
it is not clear how we will reestablish western order, but that is where we are. arguably, people can make a convincing case domestically, but nobody can make a convincing case in terms of international affairs. guy: philip, we could put this in a book. phillip blond, great to have you with us on the program. dividedif you do get a government and it remains a divided country, even on cross party issue, will they agree on those things when it comes down to voting because they have their respective constituencies, and they want to be seen as agreeing with the other party anyway, even if at the core they do? guy: i think one of these critical things will be to see how donald trump response if he loses. will paul ryan have to effectively fight against donald
trump's influence on the party? does he have to step away from working across party with hillary clinton? that will be one of the interesting areas we will have to watch for. up next, we will break down how the market is positioned going into polling day. is either candidate fully priced in? this is bloomberg. ♪
jon: from the ark city with the attention -- from new york city and the attention of global markets on washington d.c. it is election day. the ftse..3% on get to the cross asset board very quickly. yields are up five basis points. the 1.04ar-yen at handle. it was a stronger dollar story and a softer japanese yen. but, richard, spare a thought for guy johnson. the bare went into yesterday, admittedly around 11:30 eastern time. :24, felt so guilty because he ordered a bottle of fiji water to make sure his
expense in sterling was not so big. guy: we will get to the end of the week mr. ferro, don't worry. jon: he is going to order a real drink at 1:26, and then i will get the bill for it. guy: rich, how is the market position? how will this work through the next 24 hours? richard: yesterday's pricf e action was leading to a status quo result. in other words, a democrat in office. we were back towards the unofficial floor for the snb. it strikes me there is a little bit of a position adjustment going on, but keep an eye for the euro-swiss rate. i think that will be something very interesting to watch and it is back below 1.08 this morning.
guy: people will be watching out for gaps, any volatility shortfall. sorry, any liquidity shortfall that could cause a problem. we will work our way through this one. everything is going to work smoothly, right? richard: he would not be surprised if you did see volatility, guy. i am not saying there will be a flash crash, but you would not be shocked if they were because the best laid intentions, if there are any surprises, it could be quite volatile in the currency space. jon: richard jones. richard joins will be joining us on the radio space after this. guy: the conversation will follow on bloomberg radio. francine lacqua will be joining you next on "surveillance."
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you wouldn't pick a slow race car. then why settle for slow internet? comcast business. built for speed. built for business. america votes. it candidates make final pitches in michigan, new hampshire, and north carolina as the race to become america's president nears its end. predicting a second president clinton, the polls put the democrat ahead with a projected edge on the evil of the election. and the money is on a blue victory. falls,rise, volatility and markets down back hedges against a republicaup