Transcripts For BLOOMBERG Bloomberg Daybreak Americas 20171220

Action was yesterday. 10 year yields going down the touch after yesterday selloff and yields rising yesterday the most since september. German tenyear yields continuing their assent. The selloff is the biggest since the end of june. Dollar gaining today against currencies stacking up ahead of the open. David lets find out whats happening with first word news. Emma in the u. K. , theresa may is facing questions from lawmakers in the latest eu moves on brexit. These are live pictures from the house of commons. The eu brexit negotiator says the transition will in in 2020 and says there will not be anaa la cart transition. President trump is on the verge of his first major victory in congress. Earlier today, the Senate Approved the biggest overhaul of the nations tax code. The bill must go back to the house for another vote. Budgetdemocrats invoked rules to remove minor provisions. It slashes the corporate rate from 35 to 21 . South korea made delay or with the u. S. Until after the olympics in february according to the president ial office. The goal is to avoid provoking north korea. South korea is concerned that kim jonguns regime may try to interfere with the olympics. Global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Am emma Chandra David thank you. Time for our daybreak first take where we discussed the top three stories. First up, taxes. This is the day when the tax overhaul may become the law. Second story is the yield curve steepening as the long end moves up, and why is that happening . Tuesday was chaos for cryptocurrencies with an exchange shutting down, a halt in trading in one stock and a move down for bitcoin. Joining us now is julie hyman and marty shanker. Maybe we can talk about what this all means. Were going to put a chart up we have been watching since the time donald trump has been elected. It basically shows it went up, then came down when there was speculation and doubt, then back up again. It will be a historic day. There is an interesting chatter going on about whether donald trump will sign that bill today. Are bizarre scenario to wait until after the new year to gain political advantage. He will have a press conference where he will take questions from the press. As we all know, donald trump can some extraordinary things out of those moments, so we will be anxiously watching got it 1 00. I want to talk about the potential implications for stocks. This is a pretty big tax cut for companies. For shortlived Capital Equipment will see 35 billion in 2018 and the effective tax rate is 9 from 21 . Are you hearing there should be an extra pop in u. S. Stocks as a result . That is what most strategist are saying. We have lofty predictions for with most strategist predicting an eps bump. He just had fedex saying if you see the tax overhaul enacted, you will see another amount added to earnings per share, which is party between 12 and 13, so there is a concrete forecast from that company. Interesting is that if you look at the competitive advantage of some companies over words, in other everybody will get this tax cut at least on paper, but some companies will benefit more than others because some Companies Effective tax rates are already at or below that level, so what we have seen so far and what we saw in yesterdays trading has been some groups of the market were down because they were not seen as getting as much of a cut come and technology is part of that. That is one of the groups not seen as benefiting as much. We know that there will be unintended consequences. I wall street journal piece sent ae of the fx will likely be rampup in gdp because Companies Wont book profits overseas anymore. Same profits, so it will be a bookkeeping of justice. Its nice when that can happen without any behavior changing. It is interesting to me that the republicans are going to go out and sell this. Mitch mcconnell said this yesterday if we cant sell this, we should get new jobs, but the polling shows that at least half of america does not think this is a good thing, and they will have to go out ahead of the 2018 midterms and sell this to the public. David they may not have a choice. Become less popular as time has gone on, an important point to keep an i on. One of the big reactions was the bond market. Everyone is so focused on stocks. I want to show you a chart of the sovereign bonds selloff, not just in the u. S. , but the blue line is u. S. 10 year yields on a percentage basis how much they increased. 10 year german yields also rising in tandem. This raises the question, is this just year into repositioning, taking profits, or does this signal the material increase in borrowing costs for the u. S. As a result of a higher deficit . Julie, please answer that question. If you look at a year today chart of the 10 year rather than just a reaction over the past couple of days, there you see this in perspective. Up in yield snap over the past several sessions, but a year today chart of the 10 year is that the highest yield since march. I would have to see something a little more sustained to the upside in rates before you draw any sharp conclusions, or conclusions about the estimates the bond market is putting on Economic Growth tied to the tax bill. Of thepeople scared deficit widening income or is this a boogie man that people are throwing out there . Have becomeit hawks all but extinct in congress. My prediction is they will come back him up but in the context of democrats fighting against entitlement cuts that are going to clearly be subject to some discussion once these deficits do broaden and republican say we have to bring spending under control. How do you do it . Paul ryan himself has talked about welfare reform being one of his agenda items. Subject isher third cryptocurrencies. It was mayhem in the markets. As South Korean Exchange filed for bankruptcy after it had been hacked and shut it down. One ceo of eventually went on and said he was not sure why the stock and his company was worth so much. He said if your stock as of 2700 in one month than something has probably gone wrong. Its not because he thinks it will lose by you. He does not want to conflict of interest. And he has made money. A cousin on facebook but out. Engthy post on facebook again, the widespread usage, apparently and south korea it is extraordinarily widespread, so much so that the Prime Minister has warned of the youth being corrupted by cryptocurrencies. Driver Start Talking about it, you know it is a bubble. When it reaches the millennials in south korea, you have to start to wonder. Regulators at least in the u. S. Seem completely unable to get their hands around cryptocurrencies and its implications. Janet yellen herself downplayed its impact, but this is Going Forward. The thing that amazed me was. Regulators temporary temporarily halting trading. It was a reverse merger, a company that made water and resistant s and a descriptor and it is cryptocurrency now, so everybody is buying it. There were some disclosure issues by insiders of the of it itso on the face was not halted because it has gone up so much. It was other things going on. When you see regulation of this stuff, its sort of not entirely direct regulation, right question market is the sideways way. David this is the early stages of something, while variations a railroad stocks, and turned up to be a good investment longterm . That is the fundamental difficulty that regulators have is getting their head around what exactly is bitcoin. Is it an asset class . Or is it just an invention that people like tulips and people go mad about . I like flowers. At least a bulb you can grow a tulip out of it. David many thanks. Breaking news. Some breaking news, the European Union is deciding to sanction poland on democracy risks. We could see the euro gaining against the polish currency. The European Union despite saying saying despite recent affirmance in a constructive dialogue and the contraction of the rule of all their work that the bank of the gaza conundrum a clear what a pretty good what got you would you are going to ito the aisle will m will keep you uptodate on recent developments and how far reaching this decision will bp or do will be right back. From new york, this is bloomberg. I am emma chandra. Courtropean union top ruled uber should be regulated by a taxi service. That could force over to pay licensing fees and employee benefits. To the Holiday Shopping season for fedex. It raised its annual forecast and said it is on track for a record season of holiday deliveries and that it rebounded from an attack at its express unit in europe. The largest memory chip maker believes the boom in demand for computer and smartphone components is far from over. Micro Technology Forecasting a big jump in sales and says memory chip output will soar 50 next year, but the Company Predicts rise in demand will prevent a glut. That is your Bloomberg Business flash. Talkinge have been about tax overhaul for months, and most of the time we have been focused on what it means for equities. Is it possible that the bond market may be the most affected. We stalled the steepest selloff in the year yesterday. 10 year yield saw the biggest today increase since january. Joining us now is Paul Richards. He has been saying more attention needed to be paid to the movement and bonds. Explain that to us. It looked like yesterday you were right. Three months ago we were talking about the flattening of the yield curve, and all the doomsayers were predicting 1. 7 five, and here we are at 2. 47. Why there is a concern to me is we are knocking on the door of 2. 6 two, the high this year, and it is generally thought if that breaks, where does ago . Why i am concerned is the market is so long credit, equities, no alternative investment. What if the 10 year goes to 3 and we get a rogue inflation number like cpi in january . What if that number upsets us . Peopleith a number of numbere that as their one concern from a risk perspective going into 2018 and it strikes me no one is talking about it. Part of the reason why is every time we get a hick up and what we saw overnight really is a little bit of a hiccup in the scheme of things, people call for the end of the world and the bond market to unravel, and it hasnt happened and it hasnt happened to come and why should to be different this time if you have Pension Plans still have to buy debt, worldwide investors looking for yield . Good point, but one thing i would add to that equation, Central Banks are buying less, and they will continue to buy less. As we have always tried to price quantitative easing, it is something we have been living with for 10 years and dont still get it, but we are conscious of the fact it has had a positive effect. In the unwind we dont know what effect that will have on the yield curve and the dollar and markets in general. Tot is the unknown we need plug into. And frankly we dont know the answer to that yet. David and the last segment we were talking about this. This is not so much about tax bills. This is about Global Growth and uncertainty about what Central Banks are doing in unwinding the balance sheets. Real question is why didnt the long and go up sooner . They wanted to see affirmation that trump could get this thing done. Its can be a good day in washington. But still investors from a perspective of Institutional Investors are quite confident on the effective growth as a result of this tax bill, but people on the street dont really truly understand it yet, and we will have to see what these numbers start to look like and see how they react going into 2018, but my sense is they will sit down over the holidays and say this is a pretty good thing. I should belong equities. Put their money to work him and the thing i always hate about the first part of the new is the first two weeks are the wrong moves, piling into equities, bitcoin, whenever they discuss around the holiday table, then Interest Rates pop, or if they pop, what did they do then . That is my concern. I want to put some numbers on this. Set toent debt sales double next year from a j. P. Morgan analyst who says no issuance will be 1. 3 trillion of u. S. Government bonds, the highest net issuance since 2010. What is thendering risk here . What is the potential consequence . Regardless of the demand out there, people will still find it. You take major buyers away in terms of Central Banks come of the risk i think is that the market is comfortable with risk in general as long as the 10 year is below 2. 52. We had that argument earlier in the year. That was a pretty active argument at the time. It didnt break through 2. 62. 2018, myaks 2. 62 and concern is that the move will be accelerated. This could be 3 in a month. The market is not ready for that shock. When we talk about playing it out, im talking about being aware of the risks. It may not happen, but could. On effect . The follow that has to hit equities and everything. That hits emerging markets, credit would take a real hit, 30 plus quickly percent this year, then it hits equities. I think in that order. Equities are doing finding can handle this entire everybody says, hold on. At 20 times valuation, can we it . Le equities are the last to get hit, but would not be immune in that situation. I am saying there is a risk that needs to be priced. David there is not enough liquidity in the marketplace and we could overreact. You can see that in the inflows into the emerging markets. Thele can see attractiveness of bonds, but i always it could be something more. David Paul Richards of Medley Global Advisors is staying with us. We will talk about china and emerging markets. Live from new york, this is bloomberg daybreak americas. China has unveiled its economic blueprint for 2018, taking an prudent and neutral approach to fiscal policy, as total that 260 . To this has led a lot of people to wonder if theyre doing enough to curb credit growth. Now is pauls richards of Medley Global Advisors. Perhaps china is putting too much emphasis on growth and not enough on its accelerating debt problem. Is that how you read the move overnight . There are so many headlines where we could rethink china 100 ways. I think about what they have done in 2017 come liquidity management and regulatory oversight. They are trying to deleverage , and i never bet against the chinese. Mistakenow the perceived to be made in january 2016 come up but as we approach 2018, you have to say they have had a good year. They have deleverage the economy slowly without a hiccup. Has long as they can achieve that, will we will be fine. A lot of people have grown sanguine about the risks. This year, everyone has piled into emerging markets. China will do great. Even last night after the news about the tax bill, we got this record oneday flow into currencymarkets local debt etf in one day. You have to wonder if china makes a mistake. What would be the consequence to emerging markets . First of all, a lot of money is going into emerging markets, but not necessarily china. People are more sanguine on the risk because they are not as long as they have been in the past. , what happens . N it would not be pretty. A 30 return on emerging markets in 2017 and a mistake happens in u. S. Rates or china makes a mistake and that possibility is always fair, you just have to look back to two years ago january 2016 to know what can happen to risk. Keep up capital controls and still integrate with the world . I think so. When you keep questioning china, you get it wrong. If they get it wrong, it seems to be a shortterm thing. I dont that against china. I love it. David that sounds pretty good. What is the biggest risk for china . That they get it wrong and gdp falls off a cliff. Believe the market is taking china a lot more seriously and believe in the numbers more and a really focused on the way they are managing this deleveraging and respecting it. David 2017 was pretty good for them. It was. Paul richards of Medley Global Advisors, great to have you here. Mayhem, whatypto yesterdays ride on the crypto coaster means for the future regulation of bitcoin. Live from new york, this is bloomberg. Is bloomberg daybreak americas. Im lisa abramowicz. Downally unchanged,dax. 2 . , p, dow jones both gaining. 3 seemingly poised for another record today. Gold gaining today. You can see the yield curve is steepening, a different from what we have seen for most of 2017. The 210 spread widening. German yields continuing to rise. The biggest today rise in german yields since the end of june. The euro is now strengthening a bit against the dollar. Is this fundamentals or lack of liquidity toward the end of the year . Lisa it is some excitement. David i like excitement. Now lets get an update on headlines outside the business world. Emma chandra has business news. Emma President Trump is about to get his first major legislative victory. Democrats meanwhile think they are getting a top Campaign Issue next year. The senate voted to rewrite the biggest tax laws in a decade. It gives temporary related to middleclass workers. Democrats say it favors the rich and will help them Retake Congress index tears Midterm Elections. The eus executive branch is recommending action over poland. They say poland has bound to uphold the blocks democratic values. With the first time, it is urging member nations trigger a process that could lead to economic sanctions and poland losing is Voting Rights in the block. Saudi arabia is stepping up its crackdown on alleged corruption. Saudi authorities are questioning more people and freezing more bank accounts, trying to reach a deals windows already detained, such as talal. Aire alwaleed bin global news 24 hours a day powered by more than 2700 journalists and analysts in over 120 countries. Im emma chandra. This is bloomberg. It was a wild day in crypto land yesterday with korean Coin Exchange ubit saying it had been hacked, shutting down, regulators shutting down trading in crypto. Questions about possible stock manipulation. Litecoins creator announcing that he is cashing out. It was a wild day for cryptos overall. Withsame day, we talked former sec Dan Gallagher. From a pr perspective, there will be a lot of light brought to bear because of futures getting up and running. We have seen a registration, reregistration of etfs that the sec holding these contracts. Truth be told, the substance of the concerns the sec had will remain. Anont expect this to be area in which the sec moves precipitously because you have some futures trading. Now paul welcome atkins, another former sec commissioner, now a potomac Global Partners ceo. A wild day yesterday, fair to say. Lets go back to what we talked to Dan Gallagher about, what kind of pressure will there be on the sec and other government regulation regulatory stew address bitcoin . Both the sec and others have made statements about how their jurisdiction extends to cryptocurrency and to what is called initial coin offerings. That will continue. I think their focus on this particular area will continue as they sort their jurisdiction. David you are very much involved in the chamber of digital commerce. Exactly, is this is this some form of selfregulation, is the industry sorting itself out . Paul that is basically what it is, Market Participants coming together to come up with weines with respect to are focusing really on these initial coin offerings, these offerings of Digital Assets that have started to multiply over the past year. Cftc is talk by the sec, about how their jurisdiction extends to that, whether or not most of these things are securities offerings. What we are trying to do is focus on guidelines that will who buyuers and people these particular assets. Of course, government regulators and others who have interest in marketplace. Lisa im sure you still have conversations with people currently at the sec. How much muscle does the sec had to go after some of the ico schemes, have they stopped up this unit . Paul they have set up a special unit in the Enforcement Division to look at the flood of tips and other things they are getting about things, so they had brought some cases. I think they have approached it in a very studied way. At the beginning, they cannot with a report that basically told everybody to stop look, listen, a lot of these initial coin offerings are securities same laws thate need to be complied with and that the sec will enforce the laws. People want to comply, there are a lot of people who are looking forward to having a cop on the beat because that will help to give some confidence in the marketplace for people who are buying some of these assets. If you are looking at the risk overall to the system, how much of the risk for other cryptocurrencies is an fine to people who are just dealing with those currencies, how much could spread into the economy more generally . That is the issue, whether it could spread more broadly and have a bubble that would pop that would affect other parts of the economy. Paul whenever you have a runup of an asset it causes concern from people looking at the systemic aspects of some of these, whether you want to call a bubble or not, definitely the explosion of value attracting attention. The various banking regulators, securities regulator, we just talked about, here in the united. Tates are looking at it a lot of these things are global markets, a lot of it is anonymous. Still, you have a number of exchanges, more than 100, i guess, that are dealing in bitcoin. More than 1000 cryptocurrencies. It is a complicated marketplace but i think the sec and others are well armed to go after people within their jurisdiction. Of course, they have relationships with other authorities are broad. Criminals can be tracked down, ultimately. Much ofe we making too this, our people selling their homes, taking out mortgages to buy bitcoin . I know there are stories to that effect, maybe one or two have done that, but is there a wholesale move into these cryptocurrencies by momandpop investors . Paul we never know until a bubble bursts or whatever. But i do think people need to be very careful. They need to know what they are investing in. They should not that their last penny on Something Like this. There are potentially a lot of uses for cryptocurrencies, especially for the Underlying Technology, blockchain technology. About a year ago, people were poohpoohing bitcoin, focusing on the Underlying Technology with blockchain. Now with a runup in value, people are forgetting about blockchain, focusing on bitcoin itself and other cryptocurrencies. I think that will come back around. Cool. While there are potential uses for bitcoin and others, there are also drawbacks to it as far as having it be a real store value, real component of commerce and payment system. Great to have you. Fascinating, and great that you know so much about it. For more on what the future may hold for cryptocurrencies, we go to sam potter has been covering all aspects of the stories. He joins us from london. We have already come through a list of what happened yesterday, a pretty harrowing day. What happens next . The 17,000 question, i think, as far as bitcoin is concerned. The news is coming so thick and fast, it can be hard to keep up, indeed come in a time im sitting here, im worried headlines may have crossed the wire. The latest a short while ago, we had a story that the tax bill will include increases on taxation liabilities for people exchanging cryptocurrencies. Lisa hold on a second. Are you saying the tax bill incorporated bitcoin issues into the tax bill, really . Yes, it is a story on the wire from our people. I urge you to check it here that is how fast things are moving. As your guest was talking about, and he is far more qualified for me to say, but the future is about regulation. The question is about how long this bubble can go on. There is no shortage of bulls and bears in this game. Out talking about this being the biggest speculative bubble in history, urging clients to stay in global stocks, to invest instead in blockchain, as your guest mentioned, is the Underlying Technology. When you look at the bitcoin right now, it seems like that biggest cryptocurrency is taking a pause in its parabolic upward trajectory. Whether that is a turning point or a breather before another leg of is anyones guess. David that is the Bitcoin Futures number. Exactly whatl show you said, it has come off a bit. I am faxing needed about the tax aspect. One of the biggest dangers, that is one of the easiest ways to shelter away. There it is now, bouncing up off of its lows. The real danger is that people can shelter income, shelter wealth from the tax authorities through bitcoin, because its secret. Indeed. That has always been at the core of bitcoin. Cryptocurrencies, we should say. There are a lot of other options. It has become a tool very much in use on the darknet that has very opaque way seduce transactions to keep things hidden. That will probably be what draws the eye of the regulator. When that happens, or when there is some sort of major hack or compromise to the system, which proponents will tell you cannot happen, but as we saw with the South Korean Exchange yesterday which went bust after a hack, still worry some investors. If we see either of those things, regulation or a major breach, that could be the pin that perks the bubble. David sam potter, thank you. This is fascinating, the tax bill references that. Lisa bloomberg put out this story that there was a provision that would increase tax liabilities for investors looking to exchange bitcoin, either, and other Virtual Currencies that have soared in value. All of the stories merging together. David if it is on the irs radar screen, it must be big time. , they up, bank of america figured out a new way to retain talent, by letting them leave. More on their paid sabbatical program. And as you commute into work today, you can listen to the radio you tune into our colleagues tom keene and Jonathan Ferro every morning. Pimm fox joins the conversation at 10 00. Bloomberg can be heard all across United States of america on sirius xm radio. This is bloomberg. Emma this is bloomberg daybreak americas. The next hour, David Miliband, the International Rescue Committee President and ceo and former u. K. Secretary. This is bloomberg. Now to your Bloomberg Business flash. A morning for the board at sky tv. According to a person familiar, they say the government locks 20 per century foxs takeover, the british paytv broner will not be able to count on a bid from disney. Fox has a 35 stake in sky. Disney would acquire that in a deal expected to close next year. Onlineremains the top destination for american shoppers but others are catching up. Amazon9 of all my go to first, but that is down from 55 in 2016. Google and other Search Engines rose from 26 to 36 . Most go to individual retailers only 15 of the time. The new tax bill congress is about to pass lives a 40year ban on oil drilling in alaskas wildlife refuge could be years before anything is extracted. Will be exhaustive environmental reviews and communities and activist groups are likely to file lawsuits. That is your Bloomberg Business flash. We now turn to wall street. It has been a year for hedge Fund Closures for some of the biggest names in the business from Richard Parry to paul tudor jones. Goldman sachs has its fifth new partner brought in from outside, this one an outside lawyer to be cogeneral counsel. Bank of america announced it would allow senior people to radicals,eek painted a new approach to talent retention. Joining us now is jason kelly. On that hedge fund story, we have a bar chart showing this. Not a pretty picture. At thishen you look chart, you see the inversion. From launches to liquidations, liquidations being blue, launches in orange. For a nice run from 2010 post , it wasp through 2015 on parity in 2015. The past two years, more closures. Lisa i have to wonder how much is people getting out of business, forced out of the business, and how much is Hedge Fund Managers have gotten rich, they are happy. One industry analyst from Cambridge Associates says this is a generational shift. The early founders are now in a place in their lives when they have achaemenid and great wealth and most of them are trying to figure out back to. Jason i dont know if i buy that. [laughter] a number of guys, these are guys in their 50s. If we look across wall street, private equity, you have guys working into their 70s, in some cases 80s. They love the game. Yes, they love the money. You hear this all the time at cocktail parties if i had that much money most of these guys love what they do. Want to hearken to yesterday when we talked about the increased bonuses for hedge fund guys. How do you square that with those numbers . It looks like the money is leaving. Be thethat seems to case. These guys are taking the money and going on to the next thing. It will be interesting to see how this plays out into 2018. Lower volatility, active versus passes, these debates are not going away. Lawyers. Ant to talk you are one, you have served as general counsel. Someone whos hired was hired as a partner. A departure from Goldman Sachs because normally they promote from up in the ranks. What do you make of this, what exactly, how much control will she be observing . Greg, 69 years old, a very successful lawyer. This is part of the success ion plan. Fifth partner from outside. Goldman is going outside than before. I wonder what that says about them. It definitely says something. What it has to do with Going Forward, this has been a bank goldman is doing just fine, obviously. But it has to be competitive with its peers, competitive from a talent perspective. We will talk about that. You had gary cohn leave to go to the white house. David general counsel at the bank right now is very different from 10 years ago. It is a much bigger an important job. It is integrated into every part of the bank. Lisa lets talk about talent retention. David bank of america, sabbatical programs. If you have been there 10 years, every five years, you have six weeks off above your vacation, paid. Jason i remember back in the day when i covered technology companies, intel used to do this. I believe they still do. This is not outrageous in the broader world. But on wall street this is novel. For us yesterday. One of the things that is interesting, banks have been looking at the junior ranks to find ways to ease back those crazy hours you have when you are an analyst. This is about retaining people as they go further and further. Lisa i wonder how many will actually take it. David when we were in a law mandatoryad a sabbatical, because if you took it, there was a stigma. Coming up tomorrow, i will sit 10 with Brian Moynihan and will ask him about this program. We will have an exquisite interview in a 7 00 hour tomorrow. Coming up, why more are investing into the future of teslas electric trucks. This is bloomberg. David this is what caught my eye. I like cars, trucks. Tesla may be seeing an uptick in their electric semi truck sales according to morgan stanley. Since last month, they have orders, ander 1230 the momentum is expected to grow. People are putting down deposits. A 5,000 deposit on a 100,000 truck. ,ut ups is up there with 125 pepsico, 109. There is real interest for these big trucks. Lisa there is real interest in tesla. Just ingenious coming up with new ways to take money from people. They are getting these 5,000 deposits, basically, a way to raise money in the short term as they burn through billions of dollars of cash a quarter without having to go to public markets, which have jacked of their borrowing costs. David they are burning through it, but they did it with the model three. People were lined up around the block. Lisa then they had issues with production, so that it becomes an issue of, are they going to be able to deliver, will they make their production lines efficient enough, costeffective enough to make these 200,000 price tags worth it . That is not as high as it could be. David there has been so much says all, people have not demanded the state. So exciting. To know, since the person who owns so much of the shares are elon musk. Ahead, aill conversation with David Miliband. International rescue committee ceo. We will talk about refugees, brexit, and saudi arabia. Live from new york, this is bloomberg. David pick up on taxes. Congress passes sweeping tax overhaul but has to clean up some issues in the house. The president says he is ready to sign a bill this afternoon. Along and finally moves up in bonds. Is it a blip or a sign of what is to come . And crypto mayhem. An exchange goes bust, trading is halted in one Company Stock and the creator of the fifthlargest cryptocurrency says he has had enough. Bloomberg daybreak. Im david westin. Alix steel is off today. We aret looks like heading toward another record in u. S. Stocks. How many times can you possibly say that . Dow jones futures up 1 . The dax in germany down about one quarter of 1 . Selloffkets did yesterday, but pretty much flat right now out there. Hat is what we are looking at david emma chandra is here with first word news. Trump is getting his first major legislative victory. Democrats think they are getting a Campaign Issue for next year. The senate voted early today to pass the tax overhaul. It gives only temporary relief to middleclass workers. Helprats believe this will them Retake Congress in the Midterm Election next year. The u. K. Executive branch is recommending action over port poland. They say poland has failed to uphold the democratic blogs values. It is urging the member nations trigger a process that could lead to economic sanctions and poland losing is going right in the block. The was ambassador to the United Nations warns President Trump will be watching a key vote on jerusalem this week. Nikki haley is pushing other countries to oppose a General Assembly resolution criticizing the president s decision to recognize jerusalem as the capital of israel. Global news 24 hours a day powered by more than 2700 journalists and analysts in over 120 countries. Im emma chandra. This is bloomberg. As emma just mentioned, the big u. S. Story this morning is tax overhaul. Overnight, President Trump tweeted this joining us now, kevin cirilli. Lets put aside the president s claim that this is the biggest tax cut in history. A lot of people say that is not true. He is having a victory lap, exaggerating a little bit. What is Congress Move on to next . They are pretty much done with this. Procedurally speaking, some hiccups with the senate parliamentarian. The house representatives will be voting on this again, will likely pass. All but a done deal. Then lawmakers have to pass a continuing resolution to avert a possible government sat down by friday. We have been talking about daca and how democrats are united on daca. Spoke with several lawmakers who told me republicans are having some division on two issues. First and foremost, it really for disaster funding. The second being csrs. We have heard a lot about obamacare, susan collins, and republicans are not entirely on the same page when it comes to csrs. The house budget is very different from the Senate Budget , but that said, all the sources i talked to indicate they will pass a onemonth temporary continuing resolution to kick the can down the road to january 20, when they will have the larger political battle. Like the idea of a Government Shutdown is off the table. Even if there are disagreements, they are planning on kick the can down the road anyway. Could be somere lastminute glitches, as we saw last night with tax reform, they are punting the larger battle until january 20. We should note, the house of representatives yesterday, right after they voted on tax reform voted on legislation that would increase the threshold of systemically important financial institutions. Again, talking about this behind the scenes. Dog crank rollbacks doddfrank rollbacks potentially in the beginning of the year. Great to have you with us, kevin. Of tax overhaul largely behind us, the process that begins of sorting out what is in the legislation and what it means for individuals and corporations. To begin the process, we welcome scott hodge. There are few people who know the legislation better as got has been directly involved in drafting and lobbying the bill. On similar bills in the administration of george w. Bush. It comes to us today from washington. Good to have you here. Will unpack this, there clearly be winners and losers. There may be some surprises in there. What should we look at first . The best news for business is the corporate side of the bill, we see a dramatic cut in the Corporate Tax rate. Historic in nature, combined with immediate expensing of Capital Investments and a shift in the way that we Tax International businesses, moving from a worldwide tax system to a territorial tax system. We are making the u. S. One of the most competitive systems in the world. Compared to today where we have one of the least competitive tax systems. Starting january 1, american businesses are going to start blooming globally and the much more competitive against their foreign competitors. This processow well. One of the things that appears to be coming out of the bill is a preference for companies that are capital intensive because they can expense their investments right away. This benefits company that are highly levered because they cannot deduct the interest income. Was that a policy decision that was made . Was it just a matter of paying for the cuts . Economists and policymakers have looked at the tax code and said it incentivizes over leveraging as opposed to capital investment. Ist we are trying to do equalize the treatment between debt and Equity Financing of capital investment. Thatg to fencing increases productivity which leads to higher wages for workers. This is not only probusiness but proworker at the end of the day. Lisa can you talk about the frontloaded effect of the tax cuts . There has been a lot of criticism that companies will get a big tax boost emotionally, will fade out by 2025. What is the thinking . Scott this is due to Senate Budget rules. The byrd rule does not allow budget deficits through the next 10 years. They had to sunset a lot of the provisions on the part of the comply with this requirement. By frontloading these Capital Investments, expensing of capital investment, we will see a big uptick in gdp in the first five years. Growth will taper off toward the end of the decade that we will see substantial Economic Growth in the first five years of the plan. Lisa you talk about the byrd provision that prompted this measure of the bill. Wonder,perspective, i do you feel like this bill is not as good policy as a could of been because of the political way it was drafted . Basically done by the republicans without the input of democrats . Scott i do think the senate rules have made this bad tax policy. It is unfair to people to sunset their tax provisions sometime in the future, makes it difficult for people to plan. If you are going to buy a house, you have to think, in five years, that provision may be gone and i will have to change my entire financial system. That is very unfair for taxpayers. Permanence is one of the cornerstones of good tax policy. Unfortunately, Senate Budget rules make that really bad. David let me go through the numbers. I saw some estimates coming out of your shop, that this would create some 339,000 new jobs. But if there are 150 billion a year in deficits, if i did my math, that is over 200,000 a job. Is that an efficient way to do that . Dynamic taxingur model, we find the macro Economic Growth effects from the plan will clawback a lot of the deficit impact, reducing the overall cost of the plan by a trillion dollars. Instead of being 1. 5 chilean dollars over a decade, we expect it will come in at less than 500 billion. If you compare that to the amount of gdp you get, 5 trillion worth of new gdp over the decade, that is a pretty good trade. A little bit of Government Debt for a lot of gdp and jobs. I think that is a pretty good trade. David great to have you with us. A great start to try to unpack this tax legislation. Next, we will get a read on private equity from bill sonneborn, the president of Eig Global Energy partners. This is bloomberg. Mrs. Bloomberg daybreak. It is a setback in europe for uber. Says then stop court Ride Hailing Company should be regulated like a taxi service. That could hurt expansion by forcing and then to pay for employee benefits. Fedex raised his annual forecast and said it is on track for a record season of holiday deliveries. Fedex has also rebounded from a. Une cyber attack amazon remains the top online destination for american shoppers seeking products but others are catching up. Research firms, 49 of Online Shoppers go to amazon first, down from 85 . Google and other Search Engines rose from 26 to 36 . Consumers go to individual retailers sites only 15 of the time. To the private equity world, Eig Global Energy partners recently partnered with Fs Investments to create a joint venture to finance energy and infrastructure companies. We are sitting down with bill sonneborn. I am here with bill sonneborn, one of the most influential investors out there in the energy space. You worked at kkr, tcw. Thisus about this deal, tie up, what does it tell us about the state of investing right now . Bill it is fascinating. They partnered with their credit subsidiary to create a large bdc platform. Over the last week, there was a large announcement where an access of 18 billion in assets one from blackstone to a combination of ei and kkr. Scott really big names in the business. Bdc, Business Development company, what is it . Bill the same act that governs mutual funds has some exemptions. One of those is called the Business Development company, which allows individual investors to get access to provide financing to small and midsize businesses in the United States. It allows individual investors to invest in private credit, private originated credit, helping grow the american economy. This has been the holy grail for private equity, tapping into beyond Institutional Investors, sovereign wealth funds, pensions him a ticket to that retail investor. Is it exhilarating . Scott there is a big demand for the same sort of alternative investments, private investments that pension seven been able to do for decades. There is 7. 5 trillion dollars in u. S. Individual retirement accounts between defined contribution and individual accounts. That matches almost exactly the amount of capital in definedbenefit pension claims. It is a sickly doubling the Market Opportunity for alternative investment firms, if they can find ways to access that individual investor market. Sense thatou get the Retail Investors are understanding this, are they hesitant, how is the sales pitch going . Bill typically they investor and advisor. We are talking about a smaller portion of their investment portfolio. Private equity and private court credit have vastly outperformed historically public markets. Being able to allow individual investors access to that ultimately will help their overall returns and ability to retire someday. Scott lets talk about private credit. You and i have been talking about private equity for a number of years but credit has been your specialty, you ran the business at kkr, on the management committee, really grew the business. Why has credit become such an attractive investment area for folks . Scott two things. One is the disintermediation of banks. 2008, 2009, lbo, private equity space, directly financing to middle market companies. Now it is on the next leg which is how you finance Energy Assets in the context of what is going on in the u. S. , a transformation of how we produce power from what was cold to a combination of natural gas and renewable generated power. What it sounds that youre saying is energy is one of the big destinations. Obviously, that is your specialty. Inaig, what are you seeing the Energy Landscape right now, Going Forward into the next year . Bill it is fascinating. The Energy Landscape has changed over the last five years. The u. S. Was in oil importer, now an exporter, with the ability to now export. We have been the biggest financers privately of lng export facilities, being constructed to export natural gas around the world. You have the transformation of how power is being produced. The cost of solar and wind have gotten down to where it is at parity with thermal power in many markets around the world. So the combination of that influence and change creates a really unique opportunities. 35 what is a market that is of global gdp, 50 of capex . That means it is extremely capitalintensive, which means the ability to find privately structured Credit Investments, for us, is not that difficult in the context of a market that large. Scott what makes it a Credit Investment versus an equity investment, what makes it more attractive for credit and equity . Of yieldsmbination Downside Protection but also trying to create some asymmetric upside participation. Versus capital markets, if you look at the highyield market, you have an instrument that has very low yield, fewer rights than a citizen in north korea, if you invest in a highyield bond market. When you are privately originating a transaction, you are not only doing Due Diligence on the company when you are structuring something that has security, covenants, investor protections, and generally substantially higher yield than what youd be up to find in the capital markets. Comingmore opportunity if we see and infrastructure plan coming out of washington, what is the net effect if you model it out . Bill if we get a big infrastructure plan, Public Private partnerships, that means lots of opportunities in infrastructure equity but even greater opportunities in infrastructure debt. Scott you live in washington, you live in that world. How confident are you that there is an infrastructure plan coming . Bill not confident at all. We finally have a tax plan. Infrastructure has moved way down the list of priorities. That being said, we need a lot of infrastructure in this country. Whether it comes from washington, d. C. Policy or private investors going after opportunities to generate returns, we will fix him of the infrastructure problems in the u. S. Scott bill sonneborn, congratulations on the deal. Looking forward to hear more about it. David thank you. Coming up, the refugee crisis is a humanitarian disaster with massive geopolitical fallout. We discuss what needs to be done with David Miliband, ceo of the International Rescue committee. This is bloomberg. David the plight of refugees is one of the greatest crises in the world today, affecting over 65 Million People. After David Miliband left his post as foreign secretary, he took on the enormous challenge of becoming the head of the International Rescue committee. In his new book him he explains why he has taken on this daunting task and what needs to be done. Great to have you back. Lets start with the size of the problem. Give us some understanding of how big a problem this is for the world. Say 65you are right to Million People forced from their homes through conflict or persecution. Not people choosing to go to another country but people forced from their homes. 25 million of that 65 million are refugees or asylumseekers from a meeting they have cross the border. Serie a is a classic example, the room hinge a in bangladesh. 7 million syrians being kicked out of their homes. It is not just those across borders, but those within their borders, too. David there is some degree of apathy about this because there is a feeling that there is not a lot that you can do other than donate to an agency. Lisa really, it comes from creating more stability at home. David there is a crisis of diplomacy. Metyou and General Assembly in new york, where was the conversation to find a solution to yemen, syria, south sudan . You could bring diplomacy to bear, to bring these wars to an end. The truth is, civil wars are running for 20 or 30 years. That is the root of the problem. My argument, though, is this is a source of instability, but also something that can be managed. People are apathetic, but they are more than dispirited about whether something can be done. Part of it is discouragement about what government can do. One thing from your book, you say the disbursement crisis is not just a policy problem for governments but a test for all of us. When governments fail to see the danger of the course they are on, it often requires the voluntary sector, faithbased community, and private citizen to take the lead. Thing privategest business can do is its job, hire people. Some of the most productive and patriotic people in the country are refugees. Mostd the world, too, refugees are in poor and middle income countries, not rich countries. Refugees. Starbucks says they will hire 10,000 refugees from around the world. Businesses can also be interested. People come on your program and a talk of a corporate responsibility. I say corporate social results. Dont just think about the check that you write, but what is the difference you will make . Lisa we will get into the soulful social implications that the crisis has had. Is the crisis accelerating, slowing down . David accelerating. The numbers are going up. The trends, weak states, to malt within the islamic world, pointing to more displacement. This is a trend. We have to learn to manage it better or we will pay the price. One in 113 people in the world is displaced. It is that big of a crisis. Extraordinary. David miliband of the International Rescue committee will stay with us. Coming up, we will talk about brexit and how that may have affected the refugee situation, as well as saudi arabia. This is bloomberg. Lisa this is bloomberg daybreak. Im lisa abramowicz. Lets get you caught up on where markets are trading. The ftse 100 up. 02 . The dax is down almost. 4 . S p futures and Dow Jones Futures up by about. 4 . Looks like we are heading to another rise in equities. Ofhange in the trend flattening. Suddenly, the yield curve is getting steeper. German 2year yields rising for a second day, biggest to the rise in yields since the end of june. The euro gaining against the dollar. David lets check on whats happening outside the business world. Emma chandra has First Business days. Emma President Trump is on the verge of his first major victory in congress. Earlier today, the Senate Approved the biggest tax code overhaul in three decades. The bill is the Corporate Tax rate from 35 to 21 . Most middleclass workers will get temporary tax cuts. The European Union says the uks brexit transition period will end december 30 1, 2020. Europes chief brexit negotiator says the u. K. Will keep its benefits and obligations during that time. A lays it will not be an carte transition period. Meanwhile, europes top court has taken aim at uber and the gig economy. Justice hasrt of ruled that while hailing service should be regulated as a transport company. The ruling is aimed at uber pop which allows drivers without a taxi license to use their own cars to pick up passengers. Global news 24 hours a day powered by more than 2700 journalists and analysts in over 120 countries. Im emma chandra. This is bloomberg. I will pick it up. We have some breaking news right now. Gary cohn speaking with a reported today. Of course, chief Economic Advisor to the president , saying the republican tax plan will create wage and Economic Growth, says he expects another quarter of gdp growth of more than 3 in the u. S. , expect equity markets to rally, ongoing rally in which result to the tax cut. He says he is not worried about stocks being too hot despite much discussion about whether we are heading into very frothy times. David i have an unfair question on my mind. How much longer will gary cohn stay in the job . What he really wanted was this tax legislation. What is his next job . It is interesting what is next for gary cohn. Turning to David Miliband, the International Rescue Committee President and ceo. He focuses on refugees but earlier he was the British Foreign minister. When it comes to brexit, both of his responsibilities come into play. Concern about immigrants was front and center in the referendum. Sides seem to be playing hardball. Every trade agreement is actually a disposal agreement during the parties concerned. They have similar elements to them but they are specific to the various countries concern. That is certainly what we will be looking for in our negotiations with the eu. Be an a la carte transition period. The eu Regulatory Framework and all eu policies, all policies would still apply. You watch this, blessedly, from a distance what do you make of it . Is this natural negotiations, is this just an historically difficult thing to do . Both. There is one negotiation with britain and the rest of europe, and within britain in the conservative party. There are people that want to crash out of the European Union tomorrow and others who are very concerned, the more pragmatic and, about the economic and social and political consequences. That is what is causing this trauma across the u. K. In europe. Lisa can you tie the refugee vote, theo the brexit recent austrian vote that elected some very rightwing members to their leadership . David no question the migration pressure in europe has been a real factor destabilizing european politics, the failure to ensure the people in jordan were properly cared for means that a million of them came to europe. The british case is different come in that the main issue in the referendum was not refugees coming from outside europe but european citizens, polls, hungarians, romanians, coming within the European Union. Both of them point to a single issue. As is an issue in the u. S. Well. How can you give middleclass families a chance to get on, give their children a chance to get on in a postindustrial economy . 80 services, old economies are dying and new ones are not creating the jobs in the kind of fashion that happened before. David you used a critical word, pragmatic approach to brexit. As you look at your old party, the labour party, is that pragmatism humming from them . On the labor issue, labor is the more pragmatic about it. Esther corbyn, the leader of the labour party, is seen as a dogmatist. On the brexit issue come historically, he has not been a fan of the European Union but is being pretty pragmatic. The danger for the u. K. Is all of our options narrow postbrexit. Options,pending economic options, regulatory, political, and social options. That is an argument we lost in the referendum campaign. There is an air of inevitability about frexit. I would say one thing. The will be very challenging. Off of then Living Investment decisions made before june 2016. In 2018, we will be living with the Investment Decisions made after the referendum. Att will color the decision the house of commons have to take next october, november about whether to go through with this withdrawal deal. Lisa from the outside, it seems like the degree of disagreement is just widening, the gap between people in different positions david European Union and u. K. . Too, and within the u. K. , those that want to remain and those that want to leave. What could be done . I dont think the divide is deepening but the consequences of the decisions are becoming clearer, and that is making stark the two futures that britain has. The biggest challenge at the moment is the government has interpreted brexit in the most hardline way. A lot of the Single Market and customs union. You reported on the tragedy that is confronting northern ireland. Does it have to choose between its links to the u. K. And to the republic of ireland . You are seeing the consequences of the brexit decision come through in the hard brexit that mrs. May has chosen in order to keep her party together. David going back to the middle east, something essential to you. A quarter of our workings right now. David saudi arabia has stepped forward in an assertive way, the crown prince has really taken a lot of positions, including in yemen, qatar, israel, and iran. At this point, is saudi arabia a force for progress in moving forward in a constructive way . Is it sometimes not so much . David there are the internal reforms, were most people would say the commitment to a more moderate form of islam, the commitment to make women more citizens, the reform internally, most would say is a step in the right direction. You areere is concern, right, yemen, 20 Million People with human interior need. It is not just a moral issue. Who are the winners . It is the iranians. It is not the saudiled coalition. They are not winning. The yemeni people are losing hand over fist. We have 800 staff in yemen. An independent humanitarian organization, we do not take sides, but we can tell you where the people are going. They are being bombed from the air from the saudiled coalition. You can guess what side they are going to. David are the saudis receptive when you say you can help with the refugee situation . Saudi arabia has its own someitarian aid and paying money through the United Nations, has reduced the amount of support it is giving to jordan. They have had no humanitarian aid in the last two years. Jordan is the second closest ally of the u. S. The king is at a bowling point with its refugees. When i hear President Trump say that we cannot manage 90,000 refugees in america, and the king of jordan has a population of 7 million and he has 600,000 refugees here and they have been there six years, you can see why people are saying america is talking with forked tongue. Lisa President Trump recently made the mood to move the American Embassy to jerusalem from tel aviv, much criticized move. How much does this really exasperate tensions in the middle east, is this just being talked about in more hyperbolic terms than it actually is . David the suggestion that this would pull the rug from the peace process, which was made at the time of the announcement, had one flaw in it. There is no peace process. There is such a little confidence either in israel or the palestinian territories in the prospects of the socalled two state solution, it is not like people had high hopes that were thundered by the decision. There has been a genuine argument about when is the right time to resolve by negotiation the future of jerusalem. It has always been the position that it should be resolved in negotiations rather than preemptively. David let me ask an unfair connection connection. Oftalk about the connection refugees, moral economies, lack of political leadership. From your perspective, if there were one thing you could change that could address these problems, what could it be . David the western world has to regain its confidence in international engagement. The retreat from the world that is symbolized by brexit, by the decisions of President Trump, with respect to the transpacific partnership, paris Climate Change agreement, it remains the e we will not aggress address the problems of the global common, we will not manage that without western engagement. Deglobalization is not a recipe for addressing the problems come it is a recipe for compounding it. David David Miliband, great to have you. Lisa i do want to bring you some more headlines from the event of gary cohn is speaking at the axios conference. He says trump may sign the tax bill this year if the conditions are met. He expects a twoweek spending bill to avoid the shutdown. Not the monthlong bill we were expecting. He says the government will not shut down yet. He also says that he is not worried about the stock market being too hot. He even expects u. S. Equities to rise further on the tax plan, which is expected to be repassed this morning in the house after some technical hiccups yesterday. David we will monitor that. The year ahead may see a possible downturn in the u. S. Credit market. We discuss potential reasons for way that why that may be. And to into our colleagues on tom keene and Jonathan Ferro from 7 00 until 9 00 every morning. Can be heardio across the United States of america on sirius xm radio. Live from new york, this is bloomberg. Mark this is bloomberg daybreak. , carson block, founder of muddy waters research. This is bloomberg. Now to your Bloomberg Business flash. Blackberry is rising expectations it can hit its growth target by the end of the fiscal year in march. And the third quarter, the former smartphone maker one Software Customers from the government and private sector. Revenue beat estimates. Americans are eating breakfast cereal again. General mills posted Quarterly Sales growth for the first time in more than two years. Sales of cereals were up, offsetting a decline in yogurt. In the u. K. , a warning from the board at sky tv. Advisers say if the government blocks their takeover, the british tea paytv provider would be able to count on a bit from disney. Disney would require that stake in a deal expected to close by the end of next year. As you look forward to 2018, one thing to keep an eye on may be a downturn in the u. S. Credit markets and the led by a runup in auto debt, student loans, and credit card loans. All this according to our next guest, jody lurie, a credit analyst. To speak with you about this because a lot of people dismiss the buildup in corporate personal debt, Consumer Debt in the u. S. As simply being a blip, not as big as it was last time, not something to Pay Attention to. Why do you think they should . Jody i actually agree that i dont think the issue will be as massive as the real estate market. Being, if you look at the consumer balance sheet, 70 is made up of residential real estate, mortgages, home equity lines. If you strip that outcome of the remaining portion, 27 , a small about that is other, is in Consumer Debt, credit cards, student loans, auto loans. If you look at each individually, they are not that massive portion of a balance sheet, so they should not be too much of an issue, but together they could create a problem. The reason is emma the same consumer borrowing the auto loan is also using the credit card to finance the acquisition. The same consumer using the student loan may be using credit cards to offset some of the student debt. Lisa you have smaller segment thate u. S. Consumer base is highly leveraged and more vulnerable. How does that bleed out into the broader economy . Jody that is more of a description of the remaining economy. When you think about the recession, think about what has happened since. You have a scenario where the auto market has been a symbol or what has been the growth environment. This story that has been a great momentum story for the economy. The story behind that is the debt. Look at myan bloomberg to see the total amount of auto related debt over the year. Rising to an alltime high of 1. 2 trillion. Jody correct. You have this scenario warehouse can the auto market have so much omentum . Momentum, butas now you have is buying spree from investors. They are leasing out longerterm. People have heard this be what we have 7, 8year leases. The biggest problem we have here is a lot of consumers are taking on negative equity, meaning they are upside down on their loans. Taking out more in terms of the loan than actual car value is worth. When you have a depreciating asset, which is different from real estate, it creates an unsavory environment. David we have talked about the balance sheet, lets talk about the income statements. You have tobit. D cover the debt service. Are we doing on income compared to the debt we have to service . Jody if you look at the household and notforprofit together, they are doing well. A large portion of that is related to the equity markets. It goes into that concept of over valuation has been fueled by the Corporate Bond market. It is all of this nebulous of a web of different over valuations going on in the various markets but fueled by quantitative easing and this low rate environment that is encouraged buying and borrowing. Lisa you started by talking about Consumer Credit and corporate credit. Next year, we could see some hiccups. How does this call come together at a time when most people believe growth will concede to accelerate, maybe slow, but will be positive, and people have a pretty sanguine view for equities. Comment on equity markets, my colleagues are very bullish. That said, i think we will start to see cracks in the surface next year, indications that we are late in the cycle and things are starting to turn. I think we will see Corporate Bonds will get a little hairier. Individual investors will say, maybe i should not buy that highyield Corporate Bond, maybe im not getting the proper riskreward scenario for something giving me 5 , when i should be going higher up. Lisa is there a particular sector that you expect to see more hairiness . Jody i would say autos, but i would caveat with saying that the automakers are in a good situation because of what happened in the recession. Certain types of lenders, not the large banks, because they have had that regulatory scrutiny, but other types of specialty lenders may be exposed. And then telecom and media. Particularly if you look at the highyield sector, and if you blend that in with the tax reform situation, you have this scenario where a lot of companies at the lower end of the rating spectrum are under pressure. Lisa jody lurie, thank you for joining us. Coming up, fedex and gets a special delivery from uncle sam. How christmas came early for the Global Shipping provider. David if you have a bloomberg terminal, check out tv. Check at our graphics, charts, and interact with us directly. Live from new york, this is bloomberg. Lisa here is what caught my eye. Fedex posted earnings yesterday that beat earnings estimates and boosted its forecast to add onto the good news. The company also issued guidance suggesting the new tax bill 5. 50 to its40 to earnings, that is equal to 1. 3 billion. That is an earningspershare measure. David great news for the republicans who want this, but what are they going to do with this . That is fascinating. Is this going just to go back to buying that dividends and paying shares . The ceo of fedex said that they would Fund Pensions beyond forecast, extend dividends, or make acquisitions. This goes to the other issue. People expected tax bill to increase merger and acquisition activity. David an earlier report what it will do with fedex. In fairness, the next is benefiting from some very real trends, which is why their shares have been doing so well about why their earnings are so much better than expected. David particularly timely going into next week, looking at the holiday. How many packages are getting delivered . Ecommerce expected to increase by 15 over last year. Everybody wants those brown packages delivered to them, rather than having to go to stores. It also is not surprising. I should say that this fedex ceo came out and excessively laid out how much they stand to benefit from the tax bill, before it was signed. That is somewhat unusual. They were big backers of the republican agenda, big donors. David now that they have passed this, they have to get elected on it. They have to persuade the american people. I cannot believe they are going to ceos, saying talk about how great this is. Going tois one thing the ceo and another to go to the average american. They have a lot of work to do. David approval is really low. Coming up, the open. Michael darda, mkm chief economist and strategist. That is coming up next. This is bloomberg. Retail. Under pressure like never before. And its connected technology thats moving companies forward fast. Ecommerce. Real time inventory. Virtual changing rooms. Thats why retailers rely on comcast business to deliver consistent Network Speed across multiple locations. Every corporate office, warehouse and store near or far covered. Leaving every competitor, threat and challenge outmaneuvered. Comcast business outmaneuver. Im Jonathan Ferro. 30 minutes until the start of trading. This is the countdown to the open. Counting off, the gop on the brink of a policy victory. A most expensive rewrite of the tax code in over 30 years. Investors putting america first. U. S. Stocks set for their biggest end of year win over europe since 1991. The bond market reawakens, delivering a big unwind. The market 30 minutes from the opening bell. Yesterday defined a retreat from an alltime high. Today, we erase some of those losses. Nowhere. Dollar going if you are looking for price action, go to currencies, steepening for a Third Straight session. A 30 year up, up three basis points are so so far. The biggest story