Smaller rate than in perceiving years. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Julie i am julie hyman. Joe i am joe weisenthal. Oliver im oliver renick. Are fallingstocks the most in two weeks. Energy, materials, weighing on the is hundred the s p 500. Joe the question is what did you miss . The big moves are in currency and crude. Dropping the highest level in more than a decade. Bill films the phones may push the studio for 2017. Yet another stumble in the rebirth of the Nuclear Power industry. We are looking at the clients for the u. S. Major averages heading to the close. ,he nasdaq all trading lower trading more than 100 points at this point, putting down 20000 and record highs out of mind. This is the second worse selloff in u. S. Stocks since the elections. On the intraday basis, looking at an intraday chart of the s p 500, we see the end the index opened higher and steadily lower as the day has in progressing. 96 of members of the s p 500 are trading lower in late 20 he higher here it is a broadbased selloff. All of 11 sectors as well. The s p 500 is that it slows is 2008, a roundtrip from the rally we have seen this month. On the day, were looking at natural gas. A great chart here. Look at this spark higher. The nasdaq has been up by about 5 . It had been up earlier after dropping 2. 5 earlier. A lot of volatility in the marketplace on a report that the arctic chill could cause stockpiles last seen since 2013. The year, natural gas is up in a huge way about 6. 8 . As for other asset classes, we look at the dollar index, the yen, the 10 year yield. We see a little bit of a haven bid. The bloomberg dollar index is up but earlier, the dollar index have been up. The yen is trading higher. A bit of a reversal from earlier. 10 year yield about five basis points, and it tells us investors are buying stocks or bonds as they are selling stocks. Indexs hurting the dollar. We see reversals as the dollar is of of its highs. E have in the bloomberg 2256. S in blue, we have the 10 year yield and and white, the fiveyear inflation swap. At inflationk expectations. Typically, the 10 year yield goes up and then sits back down. We see several instances, right now, suggesting the 10 year yield the fall go lower. Perhaps taking the bloomberg dollar index off of record highs as well, we could see a reversal in the new year. Thank you, abigail. Joe u. S. Stocks surging in celebration of the president elect agenda. Lets get insight into the year strategist. Arket thank you for joining us. A huge split in the way people think about the Trump Administration since the election and since the night he was elected, futures and people are coming up with all kinds of reasons why some people are good for the market. Will he deliver in 2017 or will it he ate this of women . I think there will be disappointment but i think he what the agenda is supposed to be and the market after going crazy the at the thought he could win, even remember the peso went down, gold went up and basically, it zero dan on a few key things. Taxes, pro growth, lower and chances are, he will deliver on the rollbacks to some degree, finetuning and regulation, financial services, energy. They can take a while before they are actually simulated by the army. You know the market looks ahead and if you look at financials, that is one of the most important sectors. This was not, trump one. It was the 10 year yield moving higher, the 10 year yield suggesting a stronger economy. Something financials badly needed. Once they got that, the financials took off. You could say that is a byproduct of trump coupled with maybe a little bit here and there. No one is expecting and expunging of any of these regulations but a bit of finetuning. You look at what has happened in terms of strategists, i do not think we have seen a year in isch so many people contingent on something. A lot of it is related to tax cuts. Thinking about it properly when we say here it is for next year, but if a certain tax cut or corporate test goes 20 level . To a certain level . It is the lowest weve seen in many years in terms of where the market will end. The consensus is we may move up 4. 5 . Not very much. Every time we go into an earnings season, what do you see happening . Why do markets go up . Estimates go down. It is easy to beat those but also, you going to an earnings season and there are a lot of shorts in the market. You need positive surprises and the shorts covered in the market moves higher. Strategists have been fairly conservative. Very few said we would see 7 return or 8 . The consensus is or. 5 . Do andists have a job to they change those estimates along the way. Else, you have to see the economy improve. If you can see the economy underpinning for the stock market, you should see corporate earnings move higher. Today, you see the dollar pulling back a little bit. There is always something in the market. The multinationals are probably a beneficiary of that. Emerging markets are probably beneficiaries of that today. As we go through, there are headwinds but but plenty of tailwinds. Expecting,rkets are and i hate to use the term, and economist phd, the animal spirit , the return of animal spirits, the ability for companies to say, you know what, we could do this and we could do that. For the last number of years since the recession, it has been almost fear. Just hebe careful, careful, just be careful. That is why we are looking at Consumer Confidence but also ceo conference confidence. It has to be implemented and materialized but the market is betting to a large degree we will see some of it. We have the election, seen stocks and risk assets go up but oliver and i talked about this briefly. High level of a dispersion. Some sectors disproportionately lead the game. Going into 2017, are you safe just buying the stock and forgetting it, order do you have to really be more careful about where where you put your money . It is difficult to say this because we have been wrong for years but it looks as if active 2017ement may work in versus passive investment. It looks as though perhaps, you want to be joe something we have talked about a lot on this show is sentiment. We in the sentiment cycle . Is there room to go higher given of election bullishness strategists . Do you sense a reservoir of skepticism out there about the market . Is still skepticism because we can see him much money goes into the market. If you compare today to the tech which reached parabolic stages, the fear of missing out, no one is in that camp now. Perhaps we see windowdressing for hedge funds, institutional Money Managers tweaking their isurns, the Retail Investor skeptical this was brewed by cheap money by the Federal Reserve central banks, and now donald trump, it is one thing that always seems to work. Money goes to where it is test treated. The Pension Funds are rebalancing and many people think the bond markets are doing well versus the equity markets as the rebalancing goes along now. They will probably be putting money into markets, all of the areas right now say the stronger areas hurt us. Thank you so much. Coming up, we will hear from another strategist, chief equity strategist from citigroup. This is bloomberg. Joe the possibility of president elect donald trump have his economic agenda reducing corporate earnings. Bloomberg tv was joined last week to talk about this. Lets start with the numbers are we are looking for 130 one dollars next year for the s p 500 earnings. Of the 9 in key increase, itpercentage points translucent to better numbers for the Producers Oil and gas. In terms of the Stimulus Program effective taxi for the s p 500 currently. That would add only the fourth quarters phenomenon. Coming from the rest of the market, which is pretty modest. At 100 46 and nine dollars of that improvement comes from the child tax cuts. We are not assuming anything about capital spending, giving a potential boost. We will find out a lot more details next here on this. Result, we do not think you get quite the same bump to the market as we do for the earnings. Value improvement because it is leverage. Quite honestly, you have a future administration take away the tax cut. When you talk about valuing the earnings, i have a chart i am not sure you can see. Price. The forward this is the five man chart. The fiveyear average of the forward pe we have this run since the election. Given the outlook for earnings the run and we have seen, there are probably three problems, to be fair. Even if i have valuation metrics, the notion of fair value, my opinion of fair value does not really matter when you have investors determining where they think the value is. Arrogant that everyone would listen to them. We talked about putting up the price to yield on the 10 year treasury, we see fabulously multiple on them and no one ever talks about on markets being value. If you look at a 20 year or 30 year history, we have had massive diversions between the two. The stock did not get any of the benefit. The fiveyear history distorts the perspective. The third piece, we think about this, we do it in a normalized on guilt basis. Profitability probability markets will be higher over the next months. Before your earpiece falls for 2016, not quite an ape. Where did you fall short, and lets also go to 2017 on a sector basis. What will give you the age rate in 2017 . I did not get many as in school because i did not apply myself. Things we missed where the extent to which the rally would occur. I do not think everyone would assume that since the election. Of0 for this year is part the the second piece was small caps have run hard here again since the election. Most of these are tied to the stronger dollar which we had not anticipated here those were the two failures. We got a number of other things right. Continuation of the outperformance and financials and energy. There is a fair amount of pushback that this may have run too far. Given we do not believe in it may be wrong, mark thatll each other over in the last couple days, lack of volatility. When you look at futures, you see a gap between now and three or four months. A large cap, a multiyear gap. Does that tell us we are storing up volatility in months to come . Is a returnor 2017 to volatility. I think most people focus on we look at the shape of the yield curve and it has been a twoyear lien indicator for volatility. It is indicating the pickup in 2017 and 2018. With regard to political dynamics, a new administration and different bills that want to theres going to be some political backdrop to repeal and replace obamacare. Issues around what the tax cuts look like, deductions from personal tax rates or a border tax issue being discussed in congress. It will not be beautiful and smooth sailing. Buy, chief to strategist at citigroup. The biggest some of business stories in the news right now. Hey want to move ahead that is according to people familiar with negotiations. They circumvent an environmentally brain area that has been a flashpoint of controversy. Decision 260 for the year. A consumer related company with a market cap of more than 5 million. Targetedand prices are at. 4yearolds. It is only much faster. Kate spade is working with an Investment Bank according to dow jones and sighted people familiar with the matter. Contacted buyers including other retailers after coming under pressure from activist investors. The company is not commenting. That is your business flash update. Up next, were taking a look at shutting light on the housing markets. And the relationship between stocks and inflation. The home sales number four november out this morning, down 2. 5 . Analysts and economists looking for a gain of 2. 5 percent. Economists say do not get too concerned about the housing market. Homeu look at pending sales and blue, you see a decline that we saw over the past couple of months. The white line is mortgage applications. In december and a 2. 4 gain in november. , thats room for optimism we could not see an increase in the pending home sales. If rates are rising, it could be another tailwind for the housing market. Willis something people not talk about much but will talk about and 2017, the debt ceiling. It used to be a big crisis every once in a while. It is still out there. Here is a look at how much cash is at any given moment. The debt ceiling will be reinstated back in march, temporarily suspended. The treasury will draw down its cash on hand all the down from 1930 5 billion over and nearly 2 trillion to 23 billion in the months ahead as part of a conservation measure. Keep an eye on this. We will see this is smoother for trump than it was for obama. Thing for me, i am looking at expectations. Inflation and stock prices because right now, they are moving pretty dramatically. In the stockidence market is shooting up to the highest it has been in years. Our people under the impression the two can go together . Out. Ll find the market close is next. A quick check on the major averages. A little red on the screen closing down today. This is bloomberg. We are moments away from the closing bell. Breather, all a 11 sectors are in the red, financials, materials and Energy Leading the declines in the nasdaq falling the most in a month. Meanwhile treasuries are rising eightday on an winning streak, its best in nearly seven years. We want to welcome our viewers who are tuning in live on twitter. You can watch our closing bell coverage on twitter every week they from 4 00 to 5 00 p. M. Eastern. Julie we begin with the market minute, as we see stocks fall today. Oliver not a great day. Another day and no doubt. Heres what we did see, some opposite interesting moves in the opposite direction. Real estate and financials in particular, bringing the s p 500 down. Real estate was the biggest loser on the day. Lower, not great news after we had some housing numbers for pending home sales that were a little worse than expected. Then if we look at some of the individual features, there were some interesting movers. 7 , chesapeakeut energy down over 4 with energy not doing well despite oil flat on the day. Twitter some chatter on on best buy, down over 2 . Sector volume on my bloomberg, it looks awesome. There was a little bit of activity today, a big chunk and video right there, trading about 270 above average. Then check out what happen in the energy space, chesapeake trading way above average. The will ofa was on volume yesterday, it was higher yesterday, the best performer in the as he 500 this year. Lets look at government bonds. With a fair amount of action there, particularly at the long end, when we saw the 10 year. 05, one of the bigger drops in yield for the 10 , fairlynce election significant move. Interestingly the short end was higher, so definitely some significant flattening today. Keep an eye on that, its been a while since the 10 year yield made new highs, back to levels we last saw in the day of the fed meeting, so about two weeks ago exactly today. Quincy crosby from prudential three minutes ago suggested perhaps its in of your pension Fund Positioning potentially contributing to some of that reversal. Lets look at currency, the dollar falling versus the japanese yen. A pound each weaker versus the u. S. Dollar. The dollar not showing uniform weakness. If you look at the dollar index, it is now trading at its lowest, going all the way back to 2002. Not the bloomberg dollar index in this case, because it was yonceived in 2005, but the dx trading near its high since 2002 as we see this pretty consistent run in the dollar. Joe i commodities, not a time of action anywhere. Actually, basically nothing. We could just skip this part. Oil harley changed and the one loser which was marginal was copper, but basically no action in commodities. It still had a winning streak. Those are today that is todays market minute. Finch, joining us is bob a global strategist. Lets start by checking out oil. Some interesting moves you have been looking at. Showing some of the Technical Levels weve been looking at, this autumn in january and february, closer and 25. Now 54 on crude. When you look at the gains, theres obviously quite a bit of rally here, but the past six months is basically flat. Joe may regret these words, but today could have been a very important day. If you look back early in the year, january and february, we had a Double Bottom and then of potentially double top. Technically we had a high early early december. We got as high as 54 point 37 today, close enough to a potential double top. It could be interesting that going into yearend, we might be here inin a double top oil. This could turn out to be a very important day. If you get conditionally through 54. 51, thats meaningful that you are going higher. We may look back a month from now and say we had a double top. 50,ecember 28 at roughly 54 and oil has come down since then. And the other thing pushing in that duration, inventories are higher than last year, and the rate count is starting to not only pick up, but in the last three weeks, it has been accelerating to the upside. We are still less than half of k, butwe were at the pea u. S. Suppliers are beginning to pick up activity. This could end up being a pretty important week for oil. Joe if oil does top here and sells off, what are the knock on effects of that . Highyield benefiting from the rebound and energy, oil tends to have movement, impact on inflation outlooks in the market. Lets say we do selloff, where do we want to look for the damage . Be the most interesting for me about this is whether it signals that opec is swing producer. If opec agrees on cuts and nonopec members agree on cuts, and yet u. S. Production picks up in the oil price rolls over a little bit, i think thats going to be very meaningful from a big picture perspective. , the biggestr term beneficiary might be the bond market. The barn market quietly has retraced over half. The 10 year yield has retraced over half the selloff that took place on fed day. Fedyield before the announcement, up to 2. 64. Halfway back at 2. 53, we are under that today. If we do get some retracement oil, one of the beneficiaries could be the long end of the bond market. Maybe thats a little bit of the flattening we referred to earlier happening today. Julie what about knock on effects on the u. S. Dollar . What happens with the relationship between those two going into 2017 . Starting with an assumption, but it oil comes off and yields continue to come back down a little bit, that makes it a bit of a top here for the dollar. As we look at it, the dollar has been driven by Interest Rate differentials. The corollary is about as tight as it has ever been. Earlier today it was suggesting a pretty good rebound on the dollar, which we got. Lower yieldhese levels, that could signal were getting a little bit of a top here in the dollar. They are all correlated, its not clear what is driving which. I think the ke