I am tom keene.
A quick data check.
A december data check.
Futures negative one.
Look at the 10-year yield.
A weaker yen as well.
Important data, not just today but this week.
Friday the jobs report for the month of november.
Later on today i sm manufacturing.
-- ism manufacturing.
It is a slow-motion recovery.
A recovery with record office.
We are at now 16,000. wholly invested with unemployment at seven percent.
Leading the portfolio strategy for cornerstone macro.
Bringing more than two decades of insight with them.
A powerpack team.
The cornerstone of your view on optimism, which is so against his outer equities, lower inflation seen by gold with equities going one way and gold going the other way.
Does that continue?
If you look at the source of lower inflation in the u.s., ironically, it is all happening because of developments are brought.
It is happening because food and energy costs are moving lower or commodity prices are moving lower.
In a weird way, china's problems are america's opportunities.
That is the way to think about it.
How will corporate behavior change?
What do you presume corporate officers will do in 2014. hard to say whether this is a 2014 story, but i think over many years if they continue to be additive to returns, you will see a lot less emphasis on dividends.
The only reason dividends have become so important is because we had a lot market for so long.
After a while it will inevitably change.
It is all about the use of cash.
People want it returned to investors because that became the only return you could get in the flat market.
I think you will see operation start to talk differently.
Not just about earnings.
I think you will see optimism eventually improve in this country.
Here is one person pushing back.
No real groovy need.
-- no real ruby knee.
He says the new housing bubbles may not the thebwe about to burst just yet.
-- nouriel roubini.
The idea it is not just the united states.
London, parts of asia.
Canada, new mexico.
The frosting this will need to be brought down at some point.
2014 with the talk about the fed tapering may be the catalyst.
Every time one of the countries runs into difficulties, commodity prices go lower.
We get 72% of gdp from consumers.
Every time a country runs into problems, you get the equivalent of a tax cut for consumers.
Lex we have talked about credit recovery as a linchpin.
Do we need housing to participate for your optimism in 2014? we still need housing to participate, what does not need to be a big driver as it had been.
Three percent of gdp.
I think housing slows 2014. well not be a drag.
-- it will not be a drag.
Housing is 12% of gdp, four times bigger than housing.
There are multipliers associated with that.
The multiplier if you put in new capital spending, new equipment, you get a multiplier job -- multiplier jobs created.
Housing you need it but there are other offsets.
Another big force of optimism has been the idea that the retail investor will come back to the market next year.
Do you agree?
I think slowly.
I call it the picky u.s. consumer.
Obviously people had been destroyed during the great recession.
Going forward, slow to moderate will be the same.
Gdp equals c + i. why isn't equity guy like you caring about error -- about her world?
That particular equation you .2 is in regards to china.
In china you currently have consumer confidence that is very depressed.
Consumption is under pressure.
A country rebalancing its act away from investments.
Investments under pressure.
Not left with a whole lot of avenues to boost the economy.
Lower inflation means more money in consumer pocket.
That is more money to spend on ipads and a host of other things on cyber monday.
A better consumer balance sheet means less credit called the fog -- default.
It gives you a more stable economy over all.
Does that mean emerging markets will revert to gains again?
Some people even call it a reversion to paying with the emerging markets index falling well developed markets has done fairly well.
That is exactly the way the world works.
The worse it is for emerging markets, the better it is for developed economies.
The low were emerging markets go, the weaker the economies will be and low were commodity prices will go.
If you look at the emerging market indices and you compare them to the commodity indices, they are basically the same thing.
China's pain is america's game is the way to think about it.
China came out with aggressive steps towards correcting the imbalances in the economy.
Are you heartened by the moves made by the chinese government?
We come to -- the same conclusion very differently.
I think we're headed into much lower growth.
I think chinese leaders realize it.
They have an investment bubble.
Pollution problem, china.
In order to deal with the issues, they must slow down.
Three years ago, 10% gdp.
I think next year china slows to six.
When you talk about washington, what we hear interview after interview is it is washington's fault.
The uncertainty dampening that equity market.
How do you respond to that allegation?
Absolutely watching tim has had a negative impact on consumer confidence.
We have been able to put in roughly two percent of gdp.
From a confidence standpoint and fiscal restraint standpoint.
That is not bad.
I did not know any other country in the world that could plow ahead in the face of that uncertainty.
Are you fully invested for 2014? i have not even looked.
S&p 500 of 26.6%. lex that is just.
Not even counting dividends.
Speaking of total returns, the number is 266%. that is the increase from 2010 until today.
How about the link to the top line growth?
That is coming up next in the single best chart.
Streaming on your tablet, phone and bloomberg.com and on bloomberg television.
? good morning, everyone.
With me is scarlet fu and cristina alesci.
We start with high land where protesters are trying to storm the offices of the prime minister for a second straight day.
Demonstrators have been trying to overthrow the country's government.
Three people were killed in the violence over the weekend.
Manufacturing increased at the fastest pace in 2.5 years.
The activity exceeded forecast with an increase in demand for japan.
Automakers kicking off end of year push for the most cars on the lots and more than eight years.
3.4 million at the start of november according to a research firm.
The buildup the old 276 day supply, the highest for the month since 2005. interesting.
15 million units.
Automaker renaissance is something to behold.
The question is, does that last beyond the year?
They are not be -- they will not be buying new vehicles.
I was taken back by the idea of drones delivering packages by amazon.
Our single best chart has to do with amazon.
What it shows is the number of employees growing from 30,000 to about 110,000 today.
Sales growth to climbing.
Still comfortably in the double digits.
Just slowing down.
About 25%. not great news for amazon's puny margins.
Sales growth slowing down.
Profits have been a lucid.
Sometimes they profit, sometimes they do not.
Lex france law -- franc½oise with us.
Do you care about the twitter world?
Do you care about the ferment of 2013 in silicon valley?
Not for what we do.
We operate in a world that is very regulated.
It is a recipe for trouble to be honest with you.
What do you think about the push into drone territory?
We will see if that ever happens.
I think it is an amusing headline.
I have one of those little things at home.
You can buy them.
You can buy them on amazon ironically.
They are like $300. control them with ipad.
The one thing people .2 is the fact that amazon is trying to be cool.
Maybe distracting from the fact that it has perhaps a weakness in the business model, in the main business.
Lack of consistent profit.
It has transformed from the viable, exciting innovative company to one that is low were growing and regular internet three point oh kind of company.
It is like look over here.
It is like when -- if they announce they would have sunday delivery all the sudden.
Drones are cool.
Cory johnson live inside amazon's the film and center bringing you a look at the cyber monday operation.
That brings us to the twitter question of the day.
Do you want a drone to land in your front yard delivering a package?
We will be right back.
? this is bloomberg "surveillance." deutsche telekom planning more job cuts.
They will reduce jobs of the corporate client unit according to a person familiar with the plan.
This is already been reduced by five percent.
Panasonic looking to expand the auto business.
In talks with automotive parts business over possible deals.
And apple objects to lawyer fees.
Charging the company $1100 per hour.
Plus a 15% administrative fee.
Apple says the fee is unprecedented.
That is today's company news.
We will stick with lawyers.
I just ruined my monday.
Help me out.
Phil hughes was re-signed for $24 million.
I am scratching my head over that one, too.
It is a pitchers game now.
Are you kidding me?
He was terrible.
Every single yankee at this terrible tends to go on and do just fine.
I am sorry i interrupted their, but that was painful.
Bp in for some pain, two.
Cannot forget over the massive fight over the oil rigging and gulf of mexico takes a new turn today.
An engineer goes on trial on charges of destroying evidence on the side of the spill.
-- on the size of the spill.
In a separate case bp battling what it calls the dishes image claims.
The oil company appealed to a federal appeals court for a second time to complain about the judge.
Paul barrett assisting managing editor and senior writer for bloomberg " business weeksweek." what is next?
Today we have the first criminal trial stemming from the gulf oil spill.
This is from a senior engineer who is accused of destroying evidence.
A classic case of the cover-up catching somebody after the crime.
Not someone blamed directly for the oil spill but for deleting messages from a cell phone that may have been incriminating the company.
Companies do not normally go out of their way to humiliate judges like this.
Like this is now a second segment of the bp litigation.
B.p. initially try to conciliate many billions of dollars to settle.
In one portion it felt it was being taken advantage of by plaintiff lawyers in the gulf region and has gone on the offensive.
Against the plaintiff lawyers and the judge to set up the settlement.
A very risky strategy because there is potential liability.
That is what the federal government is seeking in its portion.
How much has bp reserved for these losses already?
Bp has sold $40 million worth of assets.
So it has the reserves set aside.
A question of how much it will have to spend.
Explain why no one cares about this?
I know you care.
It has not attracted the interest that i see out there as americans.
I think that maybe a new york perspective.
It helps shape politics.
It is pretty much all anyone talks about.
You have a pool of elegance of dollars that people are scrapping for.
A large company that says we are a big economic layer and are being at -- and are being taken advantage of.
Is there a distinction they are a british company?
Are they doing this differently because we perceive them as british petroleum versus an american company?
I think some of the local populace spirit in some of the go for it, grab whatever we can get is exacerbated or heightened by the fact that people can say these guys are foreigners.
That is really a misnomer.
B.p. the biggest player offshore in the gulf and in many ways in the global economy.
The fact that they are headquartered in london rather than houston is pretty much irrelevant.
This speaks to processes getting in the way of business.
Why would anyone invest?
A lot worse outside the united states.
It is better and there are long- term drivers of growth in the u.s. for putting production facilities, creating jobs.
There are certainly headwinds on growth.
Whenever the headwinds totally disappear, you wonder if you are at an extreme.
Clear we are not yet at an extreme when it comes to the business cycle.
Here in the united states there is still plenty of slack.
As you keep mentioning, unemployment rate still above seven percent.
You are going to get me on the unemployment rate.
I think outlook is positive.
No question a lot of dislocation.
The unemployment rate is just one number.
No one actually goes beyond the one number to peel back the layers of the onion and determine how consumers are getting paid him up because all of this feeds back into a larger economic action or -- larger economic excerpt.
It is a big part of growth, but does not have to be the sole driver.
It has been the driver of growth, but going forward, it does not have to be.
I am not bearish on the consumers.
There are going to be jobs, i think better jobs.
I think it is a healthier consumer.
Talking about the big oil companies.
I have heard very few people talking about investing in them.
Mining is beleaguered.
Oil is beleaguered.
Those are the success stories of the past decade.
All of those stories only work because of the investment boom in china.
That is the reality.
The growth engine of the planet.
When you hear china talk about rebalancing, it will create very different group success stories.
What about the shale gas revolution in the u.s.? for some companies it will work him about overall if you look at the commodity complex, and i would group energy into that, the crv is fitting at a three -- sitting at a three-year low.
What has fueled commodities for so long was the story of china.
So what is happening there is going to change the way you make money in the u.s.? bringing money back to paul barrett in british petroleum.
What are they investing in the u.s.? i think they are trying to play a very fair -- careful gain.
They have pulled back certain projects but projects they would have pulled back on anyway.
Those are specifically alternative energy areas.
The companies that had been poking around are pulling back.
They are going all in on oil.
The shale revolution that was referred to earlier.
Thank you for the important story.
Number business week leading the story on that.
Wonderful to have you here with cornerstone macro.
A rare visit for them on 2014. much more coming up.
Forex report, foreign exchange always moving.
I cannot go to harass to buy scarlet christmas present.
Francine looks at euro sterling.
There is a canadian weaker as well.
Much more next.
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