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This is bloomberg. Worlde from bloombergs headquarters in new york, i am scarlet fu. Joe i am joe weisenthal. 30 minutes from the close of trading in the u. S. Scarlet above 19,000 for the first time while opec deferred talks. Joe the question is, what did you miss . Faltering or losing a bit of steam today. Perhaps thethat games had gone too far, too quickly. President elect donald trump weight lays out his first 100 days but absent from the list is some of his most controversial plans like building a wall and obamacare. The current Prime Minister should gain power even if a referendum is rejected. More highlights from our conversation later. Lets first get you started and check out where the indexes stand. Abigail doolittle is standing by. We have stocks in the u. S. Finishing on a strong note. The dow s p 500 and asked at all trading in the green. Abovee the s p 500 back that psychologically importantly 200 level. All three of the major averages to close at alltime record highs. Less than 30 minutes will determine that. Strength extends right through to smallcap. We take a look at btv 3302. This is a oneyear chart of the major averages. Plus the russell 2000 which closed a record high. This is the first time we had all four of these averages closed at alltime highs since 1999. We are looking at some strength here. The fact that these averages are , he toldt record highs in an email that he considers it to be bullish and a likely signals that more strength is ahead. As for the s p 500 and what is ahead, katie stockton, the chief of technical strategy, was kind enough to share her thoughts yesterday. Looking at 5091, this they chart we just took a look at an hour or so. A very nice uptrend. Then we see volatility between 2014 and 2016. We have new record highs. Despite the fact that the uptrend is broken, we have new at bti g,hs and over katie is saying if the s p 500 can in fact close above the august highs, 20 194 yesterday and today, we know yesterday happened and today, it puts her eye on a target that she set back in july of 2400. Enough strategists out on the street bullish thinking the strength will continue. What could be a wrinkle, one last chart, this is 2005, in white, the s p 500. In blue, we have the s p 500 earnings stream. Have the s p 500 climbed to alltime highs, we have earnings in a recession. Unless earnings can turn around, it may suggest it could be troubled hyper stocks or perhaps strength in the s p 500 is suggesting there will be a bit of a turn for the earnings for s p 500. Quite somethings got to give their. Thank you. Joe u. S. Stocks reach new heights and a managers warning investors to take stock of potential risks in store. Here is what was said earlier today on bloomberg. Growth to pick up and therefore continue to rally. If and when legislation comes in and they are not at the level we would like them to be, rates are 50 basis points higher, there is the chance for a day of reckoning on that front. For more on the dangers that lurk ahead, we are joined by troy, senior Portfolio Manager of sky bridge. For joining us here the rally postelection has caught a lot of people by surprise. Even people who thought maybe trump would be good for the markets in the mediumterm, surprised by the speed of the doubt that we have seen. Why do you think that is an do you think it is possible investors are overlooking some aspects of trumps that forms that are less obviously business. It would take several days for markets to digest the fact that more growth is good. There was so much angst will to with that potential outcome. If you compare it brexit, there are negative and mediumterm consequences and it took the markets days to get past that. Other than trade, it is hard to see what the negative consequences are. A deep everyone took breath and cash levels were very high and jack to two sectors that were under the boot of. Egulation those two sectors have been beaten down strongly. Joe you say other than trade. It is interesting one of the first definite things trump says he will do is withdraw from the ttp. Even on finance, the republican platform as we were talking about earlier, it talks about the reinstatement of glasssteagall. Why do you think these aspects that most people would say are probably negative for stocks or finance or whatever, are not the considered . Im trying to expand what happened i know. Why do you think people are dismissing this . I think most would argue trade policies would take a while. It just means we potentially will have a little more growth and trade. Away from that if you look at the benefits from infrastructure stimulus, inother the shortterm, the market is weighing them higher. I think the glasssteagall comments you made is interesting. He talks a lot about how and othertax cuts stimulus measures will be good for banks and yield curves. The Trump Administration is concerned about the workingclass in the middleclass and Small Business. It is not the oldschool republican playbook of what lets do everything good for Corporate America and hope it trickles down. You think about regulatory regulatorys look at relief. It will be less about getting profits back for banks, which is and moreearnings, about expanding Small Business lending, and really cutting Corporate Taxes for Small Business, more impactful for Corporate America. The fixed tax rate for Corporate America is 24 . 220, it is not that big of a deal. Huge deal going from the highest marginal personal tax rate to a 15 or 20 tax rate. He would not know that the Trump Administrations per hosels will benefit the rest of america as opposed to wall street. Having said that, everyone got the election wrong and brexit wrong. A couple of big events are coming up in europe. The italian referendum, and elections next year. How do recent events influence how people influence of cells position themselves. Positioningve been themselves for them and liquidating europe. Prebanks brexit, before travis post trump. Liquidation continues and markets are voting in saying the populist movement longterm will lead to much stability so we arent taking the money and running. Markets have been an agreement pulls that the outcome would be negative. No outcome. Be markets are expecting no, pulls would be saying no. Be thatot destabilizing. Either way, i take the question back to the risk and reward. While we agree with those in europe who say there is finally liquidation, in the shorter term, we are more than happy to own assets that maybe have less upside but certainly far less downside if things take a doctrine in europe. Joe another thing that arguably works against the case in the postelection scenario, a significant backup in yields. The housing market, probably will fall off a cliff undisputedly. Do you see any risk from that . Quoted,inly, what you one of the biggest reasons is despite elevated multiples, how low long day today Interest Rates have been. How many people talk about dividend yields being higher than treasury. That is interesting, you look at all ofdata, lets assume the progrowth policies are worth 70 times earnings. Here is now at 2. 35, maybe trading higher at 1. 5. How do those things interplay with one another . 50 times earnings, unabashedly bullish. Well, youf things go can be less enthusiastic about long equities. We have very little equity exposure. This yield her yield curve move is awesome. A long time. Taco little bit about credit. And they be cheap for a long time . Yes. The thing about cash flow generated assets is they can stay cheap forever. When they stay cheap, that means you have less downside to the eventual recession, back a while here, and more upside if people show up and buy it. The Residential Housing market has in appreciating it too fast they level. A good thingare because they take up some excesses there perhaps. Seven the cheapest stuff of all, commercial real estate is a complex asset classes. A lot of issues are on risk retention. Yields,er very good cash flows are much better than highyield. Later, you will get a meaningful pickup in price. We will hold you over after the commercial break and talk about home purchases at a nineyear high and we will see if they have a further hurdle to jump if games were to continue. We will talk that it next. His bloomberg. This is bloomberg. Joe we are back with joy. Senior Portfolio Manager. One market that got hammered is emerging markets, a combination , higherrns about trade rates in the u. S. , what is your view on that . A lot of people are betting on emerging markets. Firstt went from worst to and now back to worst. It reminds people of how tricky it is to navigate the first and now back to worst. Emerging landscape. You think about the election outcome, immediately stronger dollars. A lot of funding issues, emerging markets. The lied hillary has increased a little bit more. Think about the risks from china. From china come it will be very problematic. If china decides to stop fighting currency depreciation and letting it go, that will have a very negative impact in the shortterm. The dollar is not strengthening for as long as it did in 14 and 15, 11 exacerbation of all of the funding. You bring up a lot of good points. We have seen india and indonesia and malaysia intervene. At anotheroking financial crisis . You compare it to back then, offshore liabilities are lower as a percentage of gdp. They have more reserves particularly with china. But the debt levels are higher. So you have a push and a pole. Still coming off in the side that there will be a meaningful downside. Our point is relative to other things, you have more risk and may be less now than preelection. Joe it sounds like there is a fair amount of headwinds that potentially for the u. S. , even , ah growth aspects of this slowdown globally is not ideal all things being equal. Doinglical growth is better p maybe a little worse. Bounced back. Joe another aspect, home purchases hit a nineyear high. This is obviously before rates trumped up. U. S. Economythe this year, a reason they like the growth story is housing had not kicked in foley, we had a long way to go until precrisis levels. Rates start to kickt to the kneecaps out of the housing market, that theoretically takes away one of the ball arguments. Things for sure. Higher Mortgage Rates mean activity. Affordability had been very close to alltime highs. Not as those as 12 or 11 went home prices were lower. Still, fairly inexpensive and two 2004 before the bubble. The bottom line is you will have marginally less growth than you would have with lower Mortgage Rates. You do get better growth and you get more exhilaration and crisiswhich is at post levels, that goes a long way. The key indicators for affordability are wages, influenced by wage gains, Mortgage Rates, credit availability, and prices. Wages picking up, prices may be picking up at a less health the, less egregious and less steep bubble. Higher rates are negative. Still supportive all in all. Or will have ae president whose specialty is real estate, might we expect him to come up with policies that are more beneficial to that industry . That is a great question. All of theugh rhetoric and there is probably a central message. What is best for the working and middleclass, not what is best for the 1 that made a lot of money already, and could potentially make more. Go back to the basics. Better growth, more inflation is good for real estate. Housing has in the ultimate. Nflation hedge people forgot about that in 2010, 2011. Going forward, if you own commercial real estate and the debt backed by commercial real estate and assets, you have got to feel better with inflation picking up. Financial assets, stocks are better than bonds. It is not like it is all that rosie. Joe all right, troy, we appreciate it. The markets close less than 10 minutes away. Their 39 points above 19,000 for the first time ever. We look at the record levels for u. S. Equities next. This is birth. This bloomberg. Scarlet the nasdaq s p 500 and the dow all ready to close at record highs simultaneously. How often does that actually happened . Our producer doug into the numbers and this is what he found. It happen a couple of times, at least this current cycle. Each bar highlight on a quarterly basis. We did that so you can go back to the early 1970 six. You can see there is a long time from 2000 until 2015 when it did not happen. It happened a bunch of times in the mid to late 1990 passes in the early 1990s. Droughtsee there was a in the 1970s. Not kind as you mentioned it all the way over to the lefthand side of the screen, you can see where the s p 500 did not all make highs. Another record, but the simultaneous synchronize ties are not that common throughout history. Absolutely. Enjoy it while it lasts if you are able on equities. Joe the euro everyone is wondering if it will go to parry against the u. S. Dollar. You can see this is a fiveyear chart. Out with a note saying it is now or never that the euro is that it has frequently been at. It has frequently been there was a lot of reason to think maybe this is the time when they go to parity. The u. S. Growth story, all the political stuff we were talking about in the last segment. France. D huge convergence. Huge yield gap between the u. S. And germany, so keep an eye on this. Aligning for parity to happen. Scarlet time for joe to go to europe. The market close is next. Less than four minutes to go before the close. Record highs all around except for the dow, the s p and the nasdaq. We are not talking massive games massive gains, but yet another record high. This is bloomberg. Scarlet we are moments away from the closing bell. Another day, another record high for u. S. Talk. U. S. Stocks. The nasdaq at an alltime best and dont forget the russell 2000, a new high as well. Im scarlet fu. Want to welcome all of our viewers who are tuning in live on twitter. You can watch our closing bell coverage on twitter every week day from 4 00 until 5 00 p. M. Eastern time. Scarlet we begin with our market minute. A record high for a second straight day for all four indexes. Yet when you look at how Trading Volume fared, it dropped certainly from the 20 day average. The dow looking at a 14 rock, the s p 500 off by about 9 . The dow looking at a 14 drop. Most of the sectors of today, health care and energy are the two in the red. I dont know what that means necessarily. Consumer discretionary, real estate doing well as well. A closerlets take look at health care. There were some noticeable laggards here. Care shares are the big drag if there were any on the s p 500. Medtronic said secondquarter sales missed analyst estimates and it cut it for your forecast. Looking at the telecom companies, there is some cheer about the prospect of Net Neutrality going away. Theoppenheimer analyst said Trump Administration will likely craft it will be good news for Internet Service providers. Joe lets look at government bonds starting with the u. S. Action once again, except that twoyear yield is sensitive to rate hike expectations and continues to creep higher, at one point hitting the highest level since spring 2010. Tomorrow will have further insight on how it might progress. I want to look at german yields because this is the exact opposite story. There arelds negative yields in the world, not all rates are going up. This is a oneyear chart of german twoyear yield, sharply lower. Higher rates in europe anytime soon, so a real divergence from the u. S. Story. Scarlet especially as the ecb gets ready for its meeting and people are looking for an extension of qe. The u. S. Dollar erasing early losses. If you look at the bloomberg , Still Holding around 11 month highs. Is priced into once it happens you could see more expectations of further tightening which could further support the dollar before eventually giving up some of those gains. The bestperforming currency is the rant. That the cost of the program would be too much of a strain to the economy and to the government budget. This comes as Rating Companies are descending ons south africa to review that countrys Credit Rating this week. Joe a quick look at commodities. Look at iron ore, a massive surge, of nearly 9 . ,opper continuing to dowell all these Industrial Metals doing well. Rubber having searched yesterday , down nearly 2 . Tomorrow we get minutes from the november fed meeting and their likely to confirm that officials were closer to the first rate increase in a year before the election. The committee that next meets on december 13 and 14 with another read on inflation before the decision. Is the economy prepared for another rate hike . Joining us is a cheap International Economist at deutsche bank. The market thinks it is an absolute lock chief International Economist. Makes sense. Even before the election, the Economic Data was getting better. Look at the gdp numbers. It does make sense, were seeing signs of wage and placement wage inflation. Scarlet yet when you