Today. We will be discussing this later on in the show. David lets head over to emma chandra with the first word news. Were moren there deaths overnight in antigovernment protests. Iranian state television reports that at least nine people were killed nationwide. A dozen had already died in demonstrations that began last week over the governments handling of the economy. The president has defended the right of people to protest. The u. S. Has confirmed that mike pence is delayed trip to the middle east is on for this month. Arab leaders denounced the u. S. For recognizing jerusalem as israels capital. Global news 24 hours a day powered by more than 2700 journalists and analysts in over 120 countries. Im emma chandra. This is bloomberg. Alix middle east still front and center. We thought we might have put that a little bit aside. Not so much. That for an exclusive discussion on the global risks shaping 2018 including those from the middle east we want to join Bloomberg Radio. Our colleagues tom keene and Jonathan Ferro are standing by. We are joined on Bloomberg Radio and Bloomberg Television our conversation with ian bremmer of eurasia group. His top risks for 2018 and we are honored to have with us the 76th secretary of the treasury of the United States. Withne who served president obama. A massachusetts democrat. Jack lew joins us. Ian bremmer i want to give you to jack lew. Stion how would you frame the nations , our risks this year as you speak to jack lew. We were talking about the chaos. About how much it takes a very long time to make things work. It takes a much shorter time to break them. Jack is very worried about someone who was secretary of the treasury and spent so much time working hard and finding that washington is sclerotic and you cant make policy happen. If you now have a geopolitical actorshere the principal are trying to break. If the russians want to break the geopolitical order chinese want a new geopolitical order that goes towards them. How much does that chaos worried jack . Worry jack . If you look at the risks theng the world and i read eurasian report. Many ofit identifies the key risks. The thing that underlines so much of it is chaos. Its the unpredictability of key leaders. Its the lack of a many of the key risks. Northstar. Its the kind of destructive policy without anything construct to take its place and that is true on issue after issue in the United States. Look at markets over the last year. The calmness of markets, the enthusiasm of markets almost suggests there has been the decision to look beyond all of this chaos and uncertainty because what can we do about it. When the moment comes, when something happens that is a surprise that shouldnt be a surprise i worry about binary kind of changes. Tom i want to cut to the january chase. I want to go back to the beginning of your career with the most basic of politicians from another time. What does your Democratic Party leadershipto provide within this chaos. What do you wish from mr. Schumer and others . Fundamentally democrats are not in charge right now so i dont think its fair or realistic to look to democrats to lead the way out of this. You have an administration that chose to make policy in a very oneparty way. Did not include democrats in any of the conversation. Now they cant probably rally their own troops to do the basic business of running the government, making sure we dont default on the debt, making sure children dont get thrown off of Health Insurance. I think the challenge is going to be to truly Work Together and that doesnt mean coming with a acompli and say we need your vote. Reasonable compromise is the basis for working together and we are not seeing that coming out of the white house. Jonathan you called this legislation dangerous. What it does is almost the exact opposite of what anxious and angry voters were calling for in the election just a year ago. You have people who are worried about where do they fit in an economy where technology and trade and globalization seem to be changing all the rules that they grew up with and we need training, education, infrastructure. We need to invest in the workforce of the future that gives people the confidence they in it. Place what we have seen as a tax cut that spends money we dont have to have very concentrated benefits for Global Corporations and the top 1 and leaving us deal so that we cannot with fundamental problems. We are farther behind in actually making progress and i fear the next shoe to drop is going to be an attack on the most vulnerable in our society. How are we going to deal pay foe deficit caused by the tax cuts . Youre going to see proposals to cut Health Insurance from poor people. To take basic food support. One could not have made up a more cynical strategy. Going to reject things that otherwise are good when they dont work for them. Free trade. Good thing for the world but people reject it if they think it doesnt work for them. Technology obviously a good thing but they reject it when they see it doesnt work for them. What jack is saying now is that if you going to see cuts for the average people their response is going to be vastly greater rejectionism of the establishment and political polarization. Arrive with did not donald trump. He had states has been spending money it hasnt had for a long time. My question is why is this any different to what we have seen before . I have been in office in several different periods and i spent three years running the clinton ministration. We ran a surplus trade we fixed the problem. Ministration we went from a deficit of 10 of gdp to 3 of gdp. We have now consciously made decision clinton to add substanl amounts of debt at the time when the economy doesnt need fiscal stimulus. What it needs is targeted investment and things people need for a better future. Risk of this tax bill is both a further disenchantment with institutions and the rejection of institutions. To respectple going institutions more when they realize what the tax bill does . If youre just joining us now, jack lew and ian bremmer. Let me set it up in terms of boston where its going to be 13 below zero in brockton on saturday. Ian bremmer, you grew up tough in chelsea and when you are living fat and large in weston or Wellesley Hills you know where chelsea is. Your mother do it today in this environment in chelsea . Could you have gotten to tulane in this milieu today . I didnt grow up tough. I grew up getting my ass kicked. Today my mother would have voted for trump or she would have maybe voted for bernie sanders. No way sheolutely would have voted for a mainstream democratic republican. My brother voted for trump. Nobody else from my neighborhood got out of the chelsea projects that is now talking on no way se would have bloomberg and i think its precisely that environment that are saying this is working. Tom what is your party need to do to gain dominance in the chelseas of wisconsin or minnesota where you lost the election . That is a good question. What you are talking about used to be the base of the Democratic Party and we need to find a way to communicate with people talking about the things im talking about. You cant win by saying trade is the whole problem when thats not the whole problem. You have to talk to people respectfully and explain to them what it is you are going to do so they can have a piece of the economic pie going forward. We have a lot of problems that if we didnt have dysfunctional government we could have made more progress on over the last couple of decades. Thingst as if any of the i say we need to do our Rocket Science or particularly partisan ideas. We have at a government that has been incapable of working together and that dysfunction is really a problem. Thanks to tom keene and Jonathan Ferro, speaking groupack lew and eurasia president ian bremmer. This interview is going to continue on Bloomberg Radio which you can listen to in new york, boston, the bay area. Here on television we have Iran Protests continuing into a sixth day. Where is that all headed . Live from new york, this is bloomberg. This is bloomberg daybreak. Im emma chandra. Biggest audio making group in south korea is forecasting a sales slowdown this year. At d i and its facility kia motors the new u. S. Tax cut will cost of bp at first. The British Energy company says cutting the corporate rate to 21 requires reevaluation of its tax assets in america. For the First Time Since 2015 bitcoin began the year by falling. The cryptocurrency has extended since going over 19,000 on december 18. Its now trading for less than 14,000. It still ended up more than 1300 . Time for our daybreak first take where we discussed the top three stories of the morning. The eurobond firesale. Iran protests. D. C. Getting back to work. We welcome mike mckee and lisa abramowicz. European bond markets are getting totally handled today. You wind up having a first data of the ecb reversing other bond purchases. You also have a killer pmi reading particularly in germany and then you wind up having ecb member coming in and saying the next round of stimulus is going to be the last. This is a really interesting way to start the year. It is sort of surprising that hasnt happened earlier. A lot of traders have gotten nervous about the possibility tf ecb withdrawing stimulus. Out thatnt to point still we are looking at a pretty massive to virgins between european bond yields and the u. S. Even though the European Central bank is moving toward what the fed is doing. If you look at the bloomberg this is a two year yield versus the same maturity in germany still at the highest level since i believe 1998 so we are still looking at a pretty massive to virgins and the question is asked the ecb moves toward normalizing are we going to see a collapse of this with european bond yields catching up to where the u. S. Is . This year for the economy may be the seed of it. Our markets prepared for stronger growth than they anticipated and higher inflation . European investors are starting to readjust their thinking. We will see if that happens in the United States as well. Continued ints iran yesterday with an estimated 20 dead and more than 350 people detained in tehran alone. The head of the National Security council saying there is no need to worry at all. The revolutionary guard commander in tehran said protesters must know that improper behavior will be to their detriment in the nation will come out and stand against these actions and throw hard punch in their faces. Trump just tweeted the people of iran are finally acting against the brutal and corrupt Iranian Regime. All the money that president obama so foolishly gave them went into their pockets. The people have little food, big inflation and no human rights. The u. S. Is watching. His is interesting they were tied to an election. This seems to be more economically motivated. It doesnt seem to be as large as the 2009 protests nor does it have many of the things that made that somewhat successful. There is no unified leadership. They are having difficulty communicating and the iranian government is very united against it. The revolutionary guards have been brought in and this is probably going to be over in a couple of days. The iranians do have a problem with their economy ever since the nuclear deal. The iranian economy has started growing again. Its about the 29th biggest economy in the world. Not particularly significant. The growth is not trickling down to the people and you can see the unrest in this chart that i brought along. If you look at per capita gdp since the revolution the white mid 70s was in the just before the iranian revolution. It fell significantly and has only started growing again in recent years and the uptick on the right side is the iran nuclear deal. The blue line is what has happened to the United States . We have all gotten better off, they have not. David theyve got a very large young population many of whom are unemployed which is dangerous. Under 30. Like 50 and weve got a chart for that. It shows iranian youth unemployment. The wonder how much of story is a social media story. We are not getting these reports from official iranian sources. Under 30. We are getting them from other types people know where to gather because of this. You have to wonder how much that interesting stat. Iranianse one million with cell phones. Now there are 48 million. You can see how the spread of social media has affected things. We are probably not going to see a whole lot of change out of this no matter what donald trump says. Congress is returning from its holiday recess with a full agenda of things to get done this year. He says he wants Bipartisan Health care bill that has been promised to senator collins. Immigration reform and border wall. They have to keep the governmentfunded about the 19th of the month or so. A lot of those arent the Biggest Challenges ahead. The government funding is a big challenge. Youve got the 3ms hanging out. , molars and the maybes in congress you were just putting up on the board. The midterms are going to color everything. It will be interesting to see when they come back and go to the spending bill. To the democrats give any ground on the wall. That will be the first real battle. For may the Big Questions are where are they going to cut spending. Does that mean Infrastructure Spending is off the table completely. Are they going to be having discussions about entitlements and Cutting Health care and welfare this year. And how is that going to fly. We will have discussions but we wont really have any action. The house wants to take on welfare reform and cut back spending for the programs for the poorest. Has already said there is no chance thats going to happen. They have one more shot at reconciliation which they might use for infrastructure. They might use it for another run at obamacare. Margin its going to be very hard to get anything done. Stasis and at of lot of talk about how great the tax bill is for everybody because thats what the gop is going to have to run on this fall. David there you have it, mike mckee and lisa abramowicz. What real benefits companies can expect this year as a result of what the Trump Administration did last year. Is the president delivering on his probusiness agenda . Thats next. This is bloomberg. Trump came tont office promising a progrowth and probusiness administration. With passage of a historic tax overhaul officials are saying they are delivering on those promises particularly when put together with a pullback on regulation. What will it mean for equities and 2018 . The s p 500 is the red line across. The blue line is the financials. White is the russell 2000. We welcome dan clifton coming to us today from washington. In a nutshell are they delivering on this progrowth probusiness promise . I would say yes. This is a very historic tax reform that went into place. Theres been a lot of deregulation policies that went into place and more coming in 2018. What does this mean for the u. S. Andomy, the stock market the individual. Last year we had very good equity market growth. This year we are going to see Stronger Economic growth. The irony is that the Financial Markets are going to have to compete with the regular economy after about eight years of low interest rates. More money is going to be put into investment, job creation. Thats good thing for the United States overall. Actually going to see Capital Investment and the increase in productivity, jobs and wages . What makes you think that . Anything can happen to so its not guaranteed. Corporate tax rate from 35 to 21 and then says if you make an investment of capital good order investment we will allow you to write that off by 100 off your taxes. You have lowered the hurdle for new investment and all else being equal that should lead to more Capital Investment and fewer Share Repurchases and when you get the investment you get higher job creation and higher wages overall. It may take until the second half of the year before you see the productivity investments coming into effect. I think its being very much underestimated by investors given the pessimism around the tax bill overall. David if you are right where is it going to show up . Which sectors will be benefited . Believe the sectors are going to stiff this out before it actually translates into higher growth. Think about industrials. Theyre going to make those factory orders that are going to be purchased. Youll also see it in financials because you will have higher loan growth and youll see it in consumer staples. Six months ago everybody was talking about the death of retail because of amazon. We are giving 122 billion of tax cuts to consumers that are then going to be able to spend the money and those Companies Already have high tax rates. You will see it in consumers, financials and industrials. Will dan clifton, we stick with you. Well discuss President Trumps new years resolutions. Whats topping his d. C. Agenda. Live from new york, this is bloomberg. Is this a phone . Or a little internet machine . It makes you wonder shouldnt we get our phones and internet from the same company . Thats why Xfinity Mobile comes with your internet. You get up to 5 lines of talk and text at no extra cost. So all you pay for is data. See how much you can save. Choose by the gig or unlimited. Xfinity mobile. A new kind of network designed to save you money. Call, visit, or go to xfinitymobile. Com. Alix this is bloomberg daybreak, i am alix steel. Two hours until the cash open. Points,s futures up 48 s p 500 up seven, but the real action is in the currency and bond market. The dollar continues to get pummeled. Morgan stanley seeing dollaryen at 1. 05. The other story to switch up the board comes from the bond market, european bonds leading the sellout. The sellout spreading into the u. S. , the 210 curve steeper, up about one basis point. What is interesting, in equities we get this nice risk on feel. Yields backing up, but gold is on the rise. Over 1300 an ounce, up 3 10 of 1 . Crude staying pretty much flat at 60, despite the protests in iran. Not seeing the ripple in the oil market due to geopolitical risks. David that 60 will get your attention. Emma chandra is here with first word news. Emma President Trump will continue to withhold 255 Million Dollars in military aid to pakistan. The white house will review their level of cooperation in fighting terrorism. The u. S. Dent tweeted has given pakistan more than 33 billion in aid and gotten lies and deceit and return. Hackers in north korea are Hacking Computers to mine cryptocurrencies. Kim jonguns regime is widening its hunt for cash because of financial restrictions. It is the strongest sign of dissent in a run in years, protesters have rallied in a rare show of unhappiness with leaders. Over nine people were killed overnight. The protests have been legitimized by the president , who defended the rights of the iranian people to demonstrate. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. I am emma chandra. This is bloomberg. David january looks to be a busy month for washington, with congress in return, a deadline for funding the government, and another set of agenda deadlines. Joining us is kevin cirilli. What we think up are the pillars of the president s agenda. That may be what the president wants to get in. What does Congress Want to get in . Good morning, david. President trump down in maralago still, will meet with Vice President mike pence to lay out their vision of this year. There are a host of issues the administration looks to get done. They will have to pass a partial government funding bill by january 20 to avert a shutdown. Rich mcconnell has said he feels they have a bit more time on the ,ssue of daca or immigration potentially into the spring to get that done. Democrats are adamant they be able to get something done by the january 20 deadline. They feel they need to get it addressed sooner. Whether President Trump wants to negotiate with the likes of mark meadows, or democrats on the issue of infrastructure remains to be seen. I have spoken with several Top Republicans in the past week and a half who say they like the sound of infrastructure, that they need details on a plan. David for those who might not follow this over the holiday weekend, dark meadows said he did not expect congress to come back and sing the sound of music. How much will they have to depend on the democrats, and when the will the democrats play along . Kevin the democrats feel they have significant leverage, especially when you look at National Polling and the approval rating. Republican controlled congress does not have much better of an approval rating. They also feel that they like the sound of infrastructure, but there has been no concrete plan. Later this week, general kelly is scheduled to be meeting with ramana democrats in congress. Prominent democrats in congress. Many are still waiting to see what will get done. House Speaker Paul Ryan extending the congressional recess for the house by one week. They are still basking in the glory of their tax reform plan. David thank you so much. Alix sound of music, really . That wouldve been something. David get them all out on the steps of a capital. A great tv moment. Alix that is my favorite movie. David i did not know that. Lets bring back in dan clifton. What are you focused on most going into 2018 . Dan kevin just laid out a short timeline with a lot on the to do list, but there is a little bit here for both sides. It will have to be bipartisan because you need 60 votes in the senate so you need at least nine democrats. What do the democrats want . Higher nondefense spending. Coming together where defense spending will go up about 60 billion, nondefense by 56 billion. That is a good enticement for democrats, but the key is they want immigration changes, and that will be hard to swallow for republicans. That is really where the fault line will wind up. We had a Near Government shutdown on december 9, one close around labor day. We are ways figure out a way to extend those of they do not reach a deal, so i expect there will be a lot of hype about a theible shutdown going into 19th, but if they are not close to what that deal will be, you may see it get kicked back until a final deal can be resolved. Also in there will be health care and other provisions as well, so it may take longer. Alix where does it wind up going with trade . What about foreign . A week ago with the New York Times company President Trump has said he has been on soft on china on trade. Economic protectionism may see like a benign means of economic competition. Spilling oversks into other areas of diplomacy. Reductionism will place greater geopolitical damage on those who practice to expect it. If you saw 2017 as the year of tax reform, 2018 will be the year of trade. The reason we isolate this is a larger risk than what happens in congress is because the president connect unilaterally on trade, and is signaling he will get more aggressive on this front in 2018. There are a number of catalyst in the month of january after negotiations, aluminum and steel security decisions, a president ial decision on solar, and news over the Christmas Holiday that china was delivering oil to north korea despite the u. S. Sanctions, which is why the president is talking about getting tougher on china. Even if he does not act in a unilateral way on trade, it will be a story that plays out month after month after month. This is why the tax bill was so important. We built an insurance policy on growth in case you get a major geopolitical or trade event that would reduce growth overall. I think trade will be a headwind for the year. Alix how do you expect the administration to measure success on trade . What will be a metric question mark metric . Dan if you are looking at nafta , the trade deficit is the metric they are looking at. You really have got to go after autos, because that is what is driving the trade deficit overall. The reason i find that important is because our leverage in those negotiations is that we do not need nafta, so that is why people are talking about this idea that maybe the president will issue a notice of withdrawal. That is not withdrawing from nafta, but an intention in six months to withdraw, and that could create significant disruption to the supply chain if you saw some sort of negotiation. A president is trying to get more auto parts manufactured in north america so that less are produced in china overall, and canada and mexico have not been playing along. That is why you might see a larger escalation in the nafta negotiations. David explained the strategic consequence of giving that sixmonth notification. As a matter of negotiation strategy, why does that make sense . Isnt that a game of chicken . Dan it is, but if you are from the Trump Administration you are looking at the u. S. As a 19 trillion economy. We end nafta and a little bit of a hit to the u. S. , but if you are mexico, you really need nafta. What the president would likely be saying is you need us more than we need you, so give us concessions on autos so we can continue the negotiation. The big winner would be canada, has we already have a preexisting trade agreement that happened before nafta, so we would revert back to the old trade agreement, that mexico does not have that same luxury. Do your point, if canada and mexico see this as a false promise, there is no reason to negotiate, that is where the macro risk would emanate from. David dan clifton, thank you for being with us. Cohens return. As you come in, you can tune in to tom keene and Jonathan Ferro on the radio, and then pimm fox joins the conversation from 9 00 to 10 00. Bloomberg radio can be heard in boston, new york, the bay area, and washington, d. C. This is bloomberg. Emma this is bloomberg daybreak , and this is the hewlettpackard enterprise greenroom. Michaelext hour, shaoul, market Field Asset Management chairman. Us is bloomberg. This is bloomberg. This is bloomberg daybreak. Six analyst gene munster amazon will acquire target this year. This would be the ideal offline target for amazon and he estimates amazon would have to pay 41 billion. In california, retail sales of Recreational Marijuana are legal on a limited basis. Stores that have been obtained one of the roughly 100 licenses so far. Los angeles and San Francisco did not offer our eyes authorized shops in time. An executive at Bridgewater Associates has been killed in a plane crash in costa rica. Bruce steinberg and his family were among 10 americans killed when their charter plane crashed into a mountain sunday. Ray dalio called steinberg a wonderful man. That is your Bloomberg Business flash. Alix this comes on the heels of the compass ceo dying in a plane crash near sydney with his cousin. It is unbelievable. David terrible, all of these people with their families on a recreational trip, small airplanes. Alix do not charter small planes, apparently. David it raises questions. The ceo from the british company. Alix compass point. David what you need to do tos to support your ceo and make sure they stay safe. Alix the three drinks wall street things wall street is stevecoheout steve cohens come back, mifid. I love the story. Here are three points i want to illustrate. The client money could reach between 3 billion to 4 billion. The fees are crazy. Two and three quarters and 30 . Talk about two and 20, forget it. Three and 30. You will also be dealing with an intelligence team. Jason this is going crazy on the terminal. His comeback has been one of the most anticipated in wall street history, probably. You think about Michael Milken and that sort of level of attention. One of the things that really jumps out is this idea that apparently in the middle of the trading floor, this could be 50 people keeping an eye on everything. Alix who had to have five to 10 Years Experience in the Intelligence Industry to some capacity, it was incredible. Jason this is what happens when you are accused of having something akin to a criminal enterprise. David listening to phone calls the traders are making, why is he doing this . He has 10 billion of his own money. Why does he want to add another 3 billion and have this compliance brought in . Ason back in the game it is one thing to manage your own money and another thing to manage other peoples, and that is how you prove you are a winner. Alix you have to prove you have the clients to do that. If you are thinking of putting cohen putting your money with steve cohen and 50 regulators. Dont know why he ended up with three or four versus 10. There could be a little bit of hesitation on going all in with steve cohen at the point, but the proof will be in the pudding. David now we will go to mifid. I know that. Ii. N numeral the thing that strikes me about this is that they did not put it into effect over the weekend. A weighted an extra day, so they are going to have to do this overnight tonight which is a bit big transaction. This is something that has been talked about and talked about and talked about. January 3 has been a date looming on the calendar because this is nominally about europe, but really is about the entire banking and financial world. 2 billion that banks around the world have spent getting ready for this, and no one is exactly sure how it will play out. You hit some of the highlights. One thing that jumped out in the area about dark pools, they are saying instead of dark pools people will be using systematic internalize ares. Internalizers it sounded like something that would be said in an Upper East Side psychiatrists office. They are going to get around it basically by having public auctions where people are still a little bit in the dark, maybe not the complete dark, but we will see. Alix to your point why it did not go into effect this weekend, i read it was an error, a total mistake. Overnight, what are we expecting . Some banks are staffing 24 7. Jason people were thinking about this, you think about y2k. If you think about all the sturm ,nd drang and Nothing Happened but there are a lot of things that have to go on in these systems so there could be some flareups happening. Alix and liquidity, as people sit back and wait. David we anticipate there will not be as much trading. Jason it seems like it will take a while to play out. There could be some job shifts and losses. Alix rounding it out, Deutsche Bank. John cryan giving an interview says he promises the staff normal bonuses and pay increases in the first time for two and half years. A year ago, he was like forget it, you are not getting anything. Their revenue is still not good. Jason it is surprising is at the same time we are reading this, there were reports his job is in jeopardy, and that follows reporting we had last fall at bloomberg about big investors sort of agitating for a change. One way to keep your troops happy is to pay them, so maybe they are like, cryan is doing a great job. David there is a sense that Deutsche Bank has been on the defense for some time. With this potentially help Deutsche Bank in the market . Does that help his company . Jason it is an interesting point, and it could be, because one place they are lagging is the investment bank. Some of the reporting over the weekend is that they are currently fourth. They have not been out of the top three since 2009, based on one report, and that seems to be the what will determine his future in Deutsche Bank going forward. They have a Shareholder Meeting in may. Our reporting shows that will be the catalytic point. David so he has got five months, as far as we know. Eye. G up, what caught my while we have all been focusing on creek though currency turkmens cryptocurrency tokens, is the biggest story in tow tokes . Alix go to bloomberg online, check out our charts and graphics, interact with us online. This is bloomberg. David this is what caught my eye. The new year brought in a new approach to marijuana in california. Sales of pot for Recreational Purposes became lawful, leading jack in the box to start its team up with snoop doggs Digital Company to have a new meal out for people on pot. Alix seriously . David seriously. It has huge calories. 4. 20, which is significant for marijuana users. Alix 420, yes. David this is what i found most remarkable. In the bloomberg, there is an index for marijuana stocks, publicly traded companies. This is how they have done over the last six months. Thelar just has largest has a market cap of like 4 billion and they add up to 14 billion in market capital. Any of them are canadian, because the legalization started in vancouver. This is getting to be big business, and people are going out to california to buy pot. Alix my favorite pot story over the weekend came from the New York Times. States like new jersey, california, and new york are worried about the salt cap and one of them was, why dont we raise taxes, cut taxes on individuals and makeup that money by legalizing pot and taxing marijuana . Usiness cash cow you think it will never end, it will have success, lets tax it. David is that a progressive or regressive tax . It helps everybody else in terms of their salt deductions and it is a cash cow. David the federal government still thinks it is against the law. The states are legalizing it and the federal government has not enforced it, but it is still technically a crime. Alix if you look the other way when individual states legalize it, they are not enforcing anything so they are not deregulating anything. David the more this business grows up, the harder it will be for the government to shovel it down. Alix they will get taxed on it. Coming up, we will talk markets in 2018 with Michael Shaoul. The story, stronger euro around a threemonth high against the dollar after killer pmi data and a huge selloff in the bond market, yields backing up 8 in some peripheral countries. Alix happy 2018, european bond bears. The currents hit stimulus may be the last. To the streets, protests escalate for a second day. The death toll rises as officials threatened tougher action. D. C. Is back to work. David welcome to bloomberg daybreak on this tuesday, january 2. I am david westin alongside alix steel. Alix one and a half hours before the cash open in the u. S. Stronger euro, weaker dollar, selloff in the bond market. S p futures up about eight points off the highs of the session. Eurodollar and a threeweek high. Yields moving slightly higher in the u. S. , 2. 43 on the 10 year, and crude flat despite the issues in iran. My chart this morning is the 30 year german bund yield, up 30 basis points and a huge selloff. The periphery is getting seriously hit with yields up about 8 . Good pmi data. Ecb officials talking about not extending qe at all, and perhaps september will be the end. David we want to turn back to the very important story developing any ron, six days of protests days with approximately 20 dead and 350 people detained in tehran. We welcome our bloomberg reporter in tamron on the ground. Give us the latest, what is going on . Clearht now, it is not whether protests have started again. There have been over the past protests starting in the early evening so we have a couple of hours yet maybe before everyone comes back out to the street. Downtown, there is a very heavy presence of Security Forces and antiriot police. That was the case last night as well, and on saturday and sunday evening. So far, we have had official confirmation from state media that around 20 people have been killed in protest since they started on thursday. First steps were on saturday deaths were on saturday and the last were announced overnight. In tehran altogether, 350 people of been arrested so far. David do you have any sense of whether there is any organization to these protests . Is there leadership or is it spontaneous . Golnar it is very complicated. I can see how from outside it looks like a kind of spontaneous , kind of almost i have seen on twitter people saying it is catching on like wildfire. While i do not know if that is the case or not, i think they muched definitely pretty as an organized protest against the government and against hassan rouhani. We have had even hardline analysts themselves say to state media that hardline elements opposed to rouhani were supporting those protests starting on thursday. Therefore, rouhani supporters and the government have come out and said this shows is that it is a politicized situation. After the third day, on friday, those protests grew. We have protests in other cities in different parts of iran, and the slogans were different. They were not targeting rouhani, they were targeting the wider state here. That suggested there is more than one concern or grievance at play. It is a certain demographic, and it seems to be more of a workingclass demographic who are involved. There is no leadership and there is no single political motivating factor that we can identify. David thank you so much. She is reporting from tehran live. To take us through the larger a professorwelcome emeritus who teaches iranian and middle eastern history at the City University of new york. He is the author of many works. Welcome, professor. Lets take up on where we just were and start with the geographic disbursement. We have a map showing different cities where they have had protests. As a student of iran, what does that tell you . One, that it is very spontaneous and another is that iran is very much a nationstate. Basically, there are no differences between one town and another. The grievances you would have in the north would be very much the same as in the south. I think what prompted, sparked off these protests a couple of days ago was the budget that introduced budget cuts on subsidies, which affects the poor classes. In a period of rising thattations, the hope that end of the crisis will lead to an economic job start, which has not happened. Economy has proved improved in the last couple of years, but not to the extent that people expected and now people expect a tightening of the belt which is affecting the poorer classes. I think that is where the upsurge comes from. Alix why hasnt the lifting of the sanctions helped the rural and younger populations . The uns sanctions were lifted, but the u. S. Sanctions were not lifted, and many other countries like the European Countries are reluctant to invest any ron, fearful they might be invest invest in iran, fearful they might be penalized. There is concern of what the Trump Administration might do. David tell us about the reaction from the Iranian Regime , because we are hearing somewhat contradictory messages. Some are quite specific and some andaggressive pacific some are aggressive. This follows a pattern that happened in 2009. The politicians, especially the president , is much more openminded. People have the right to protest. Arerevolutionary guards always talking tough, we will beat you up, to scare people off the road. I do not think those are the crucial things. The crucial thing is what the commercial middle class is going to do. And iran, in history it is always them that is crucial. So far, i have not seen any indications that they have protested or gone on strike. If that happens, then i would say the situation is critical. That,the buzz ours and to the regime will weather the storm. In 2009, you had 3 Million People out in the streets against what they claimed was a rigged election. But nothing came of that, mainly they stood by and watched and were not interested in getting involved. This time, it might be different but we do not know. Alix i want to point out what President Trump tweeted. The latest today the people of iran are finally acting against the brutal and corrupt Iranian Regime. All of the money that president obama gave them went into the pockets of terrorists. The people have little food, big inflation, and no human rights. The u. S. Is watching. He continues to get verbally involved and more aggressive, what does that do to iran and the Systemic Risk it might pose to the reason . It helps the diehards any ron because they say, desk in iran, because they say you cannot trust the United States. The president is talking about rights of iranians, that he himself has characterized iranians as terrorists and cannot come to the United States. They know the history, basically, of the Trump Administration. And ithink that really weakens the rouhani administration. David what about saudi arabia . Overnight we saw accusations that the saudis were involved, particularly in social media. Is that plausible or scapegoating . Whenever there is a crisis, it is easy any ron to point to some is easy in iran to point to some foreign power. In 2009, it was the british. Her is no evidence, and i do not see how the saudis they obviously love to see this happening, but whether they have a capability or any role, and anyone in iran would be listening to the saudis, it is beyond expectation. David thank you very much for being here, professor. Alix oil prices pretty much flat on the day. Coming up, european stocks are starting the year in the red after a killer year in 2017. European drop bonds are dropping, yields are spiking. What is in store for the market in 2018 . And eight percent increase in german we will discuss. Emma this is bloomberg daybreak, i am emma chandra. Tech analyst gene munster predicts amazon will acquire target this year. He says it would be the ideal offline partner for amazon and estimates amazon would have to pay 41 billion. The new u. S. Tax cut will cost bp at first. The British Energy company says cutting the corporate rate requires a reevaluation of its preferred tax assets in america. That will lead to a onetime noncash charge of 1. 7 billion in the fourth quarter. In south korea, a number of stocks could get a boost from north koreas call to talk to ensure the success of the winter olympics. The north Korean Leader says he wants to improve relations. South korea has proposed talks were next week. That is your Bloomberg Business flash. Slipping onan bond the first day of 2018 trading, it has been my chart of the morning. Yields moving higher in italy, france, spain, germany. At one point the portuguese tenyear bund yield up eight basis points. Oining us now, Michael Shaoul there are a lot of moving parts to what we are seeing. What caused it . Decent michael Economic Data and the yields are very low. Alix the killer pmi. Michael it is the first day of the year. The first week and we can a half of the year is always dominated by decisions people made in december to reallocate portfolios. It is reasonable for european yields to start the year moving higher. It was a general feeling that europe had a good year economically, and the data we get in the first week of january confirms that. Alix are we in a situation where we will finally see shortterm spreads meet to where eurodollar is . Michael no idea. No idea on that one at all. Seen thening we have euro gained so much but have not seen yields catch up to that. Is a selloff in the bond market going to be more sustainable . Michael the move in the euro has been driven more by the equally market equity market. Sign of money being reallocated across countries in fixed income. In equities, people feel good about the european economy and earnings, and i think the euro at 1. 20 is heading towards its fair value. David giving an interview over the weekend, saying october may be the end of the asset purchase business. Is he saying what we already know . Michael there is already no need for the ecb to be buying. Economic reason for the central bank to be as active as it currently is, and yet, they do not want to book a battle response in markets. David what does that tell us about a rate hike versus and doing Asset Purchase Program . Think 2018 will be a year of adjustment in global monetary policy, and investment banks will be considering rate hikes and less asset purchases. David do you think the ecb might consider a rate hike in 2018 . Michael i think if data continues to move as it does, and if asset markets can move in 2018 as they did last year, then yes. Alix we have a 43 probability of a december rate hike in 2018 for the ecb. I other question ones up being in terms of the euro, when do we get pushback from the ecb . Yields andgher bund the euro is grinding higher. Is there a response mechanism we need to look for . Michael the euro was created at 1. 15 and it is a little bit more expensive at 1. 20. I think you get the euro into people 30s, one 40s, will start to argue it is getting too expensive. It should never have been 1. 10, 1. 05. 1. 20 seems reasonable. Alix are you interested in european bonds . Michael know, we will never invest in this kind of fixed income. We are an equity house, and i do not think it is giving you any interest to turn out. David is there a Tipping Point . Or as long as it is gradual it will not make a problem . Michael eventually, the cycle ends and this will indeed because i think Corporate Investment will get too concentrated and supply will overwhelm demand. Monetary policy will have a stronger role to play in this Business Cycle then in the past, because they have waited so long to start doing anything. Monetaryighter Global Policy will have a part to play at the end of the cycle. Alix do you see that coming into japan . Michael bank of japan will probably be the last centralbank to move the has they have 25 years of being wrong and they are determined to be right, but they have a slightly different policy. Bank whichne central has been using the long end of the curve as a policy rate. If european yields moved higher and u. S. Yields moved higher, i think the japanese would be willing to declare a victory and let their 10 year get into positive territory. David starting to talk about normalization because of the synchronous global growth. I much of that has been because of Central Banks and if you take it away, all of a sudden maybe we do not have as much . Michael i think some has in some hasnt. The global has and some has not here it global cycle has its own path. , we have had 125 basis points of rate hikes with no obvious impact. Trades mid last year, by european and Japanese Equities is what we kept hearing. Will that be a sustained trade this year . Michael Japanese Equities in particular, yes, because the market is levered to the domestic chinese economy. Still oute nikkei is of the developed markets, the one to watch. David mike it shall Michael Shaoul will be staying with us. President trump managed to squeeze out a tax revision by the end of 2017, but what will the tax cuts mean in the new year . Alix unintended consequences. Now the tax reform has passed, the question is how do you avoid the bad parts . You are looking at state and local tax deductions. The deeper pink you are, the more you were hit by the salt cap deduction. You are looking at california, new york, new jersey. Joining us with more is lori davis it laura davison. There was a great piece i read over the weekend that talked about what states like new york will do to help its residents offset the 10,000 cap on salt deductions. Laura now that states are looking at, how do they get creative . How do they help their residents . To make sure their residents do not get hit. Because they could deduct it off the federal returns, they did not feel the tax increase that much, so states are getting creative. How do you make this as a donation to the state, perhaps . Tore is a lot of maneuvering figure out how to keep their residents and tax base in their states. Tax lawyers and accountants are getting requests to run the numbers, if i have an expensive home or high earning job. It might make sense to move too low or no tax states. Real Estate Agents are already getting requests, what can you show me . People are weighing their options. David i have no idea whether any of these things may work, but if it did work, what would it do to the scoring . What would it do to the deficit . Laura reducing the salt deduction to the 10,000 cap was one of the big pay floors. If you see a lot of people basically looking to get around the system, it could cost a lot more than the 1. 5 trillion that republicans estimated it would, which means that when these tax cuts expire in 2026, there could be a lot more pressure. The deficit could have ballooned by then and pressure to raise taxes down the line. Alix what about just lowering taxes, meaning if you are in new york state and getting hit with the salt cap, lower the taxes enough to offset the damage that you will see from tax reform . Could that even happen . Laura it is always a possibility, but states are very hesitant to lower taxes as it means they need to cut their social services at a time when there is more pressure for them. Medicare and medicaid funding is decreasing. The childrens Health Insurance program in congress has not been extended. It is not really a good situation if you are in a state legislature or governor. David the republicans would declare victory in washington if high tax states cut taxes, that is their whole point. He can tell the voters, i cut your federal and state taxes. If the democratic governors and mayors say, you can prepay your taxes early for the last week in 2017, trying to stick it to donald trump, saying , im going to help my democratic voting state. Alix or you could legalize pot and tax it. Laura davison, thank you very much. Biggest market calls for 2018, and what is the biggest risk as we head into the new year . A rally on the futures market, with s p futures up about eight points. European stocks not happy as the euro grinds higher, a threeyear high against the dollar. A story of a selloff and bond markets. Bond bears getting a nice move as bonds selloff across the world. Alix this is bloomberg daybreak. Im alix steel. The first trading day of 2018. S p futures are up 8. Im david. N the back foot the euro grinding higher after a killer pmi out of europe, and particular germany, grinding higher at 4 10 of a percent. Now at a threeyear high as the dollar index continues to get pummeled, down from about five straight sessions. That reverberating in the bond market, a selloff in europe. It is portuguese debt and italian debt that are really getting hammered, as the curves are steeper. 52 basis points, although the steepest measurement so far. What i find interesting is a see their risk assets, they yields moving higher in the wind of having golden moving higher. You can say a little bit of a celebrity yields moving higher, gold up by 3 10 of a percent. This is how we are trading. Oil flat, despite the turmoil in iran, killer positions there. Now we are getting an update on what is making headlines outside of the business world. Emma chandra has first word news. Emma it is the strongest kind of defense and iran in years, protesters across the country have rallied with unhappiness against the countrys leaders. Another nine People Killed in protests overnight. The process have been legitimized by the president of iran who defended the rights of people to demonstrate, but says they should not make the public fear for their safety. President trump will continue to withhold 255 million in military aid to pakistan, the white house will review what it calls their level of cooperation in fighting terrorism. Tweeted that the u. S. Has give pakistan billions of dollars in aid, and has given lies in return. In the u k, coming off a fouryear high. The market purchasing index dropping more than expected in december. British manufacturing has had a solid year, exports have been boosted by the weaker pound. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. Im emma chandra. This is bloomberg. Thank you. As we start a new year, after finishing a year that ended a pretty darn good for a lot of people, we are spending some time saying will be in store for 2018. We have talked to market leaders and this is what they had to say. So in the u. S. , we believe we will finish about at 2. 1 gdp growth for the year, starting off with zero in the first quarter, it was interesting. Next year we have it at 2. 5 and this is the first time that you have seen japan grow slightly, europe grow faster in the 1. 5 range. We are very positive about the world economy. We are positive about the u. S. , very positive about emerging markets, and china. And positive about europe, which is new, because with the election of macron, you have a thingggerman should there. For once we have the three Major Economic zones doing well at the same time. The economy and 2018 is one of firm footing, i think going into that here on firm footing and i think that it will continue to be strong. Now at the u. S. Markets leveling off, still doing well, emerging markets are back and people realize that is where the growth is. I expect we will see at least 20 more growth in the emerging markets going forward. We have not surpassed the 2007 peak, that is going to happen, no quest in about a. Repatriation of the three chilean dollars, not all of it comes back, with 3 trillion coming back we think the dollar will not be number one for next year. Do you think it will rally at 13 . 10 plus. It is all about earnings. Earnings right now, bottomup, it is from analysts, not from me, r 145 for the Third Quarter of next year. That is without tax cuts. Add about 10 and you get 155. And if you were to go three years with growth, 10 , you get to 200. These are huge numbers. 2018 is a year where we see a greater fragmentation of the global marketplace, because governments are becoming more interventionist. I think part of that is because the chinese have an alternative model for their investments and they will be seen as increasingly the most important driver of other economies around the world that will align themselves with beijing than with washington. , we haveo of heard a lot of different views. Break it into two parts. What is your strong as conviction for this year . The part of the world people are not positive enough about is still asia. I think that everything shifted last year. There was a gap between where the Global Economy was and where people thought it was, i think it has shifted in europe, i think in the u. S. People will follow it as the main positive. I think about big chinese economy, the one that people are asking, when will it blow up, as opposed to how well it could better. I think if things go right that is the part of the world that will drive us and one of the last comments you had in that section with somebody saying the impact of china on other economies is going to be the thing that people focus on this year and i think that is correct. David when it comes to china, with the asian area grow because of china or despite china . Even if it does not blow up, the Chinese Government is sending messages they are willing to grow more slowly in order to do with things like credit and pollution, so if it slows down its growth rate how will it affect things . Michael growth is not what it was. It is not a country growing uniformly, it is, it has now very much parts of that the government is trying to clamp down, and other parts that they are allowing to accelerate. Technology growing 20 in certain sectors, probably continuing next year. It is important for an economy such as japan, it is important for taiwan. Chinese consumption of commodities may be accelerating because it is shutting down domestic, its domestic mining industry. People have looked at chinese data and in many cases have turned it upside down. I think that chinas impact on asia and a Global Industrial commodities, i think both of those are potentially underestimated. Alix one thing where not talking about is tech and he cannot talk about cm without talking about tech, and of tech rolls over because it was an outperform or michael i believe that they are intertwined. It is less true if you go in deliberately purchase individual commodity producing emergingmarket companies, but i think there are reasons to be bullish about tech, although i think you will ask what i will be worried about. Alix how did you know that . Michael i think that that technology, you over invest and theres,ustry cyclic; and a sales is as opposed to genuine demand. That is what we saw the end of the 1990s, early 2000s, and that is something that youll have to track and be aware of this year. David we will see continued concentration in tech, because i think we have seen the u. S. And in china, with a big tech companies, the bigger have gotten bigger and to some extent they have squeezed out smaller rivals. Michael i think there are these tendencies within technology and one of the ways that you of made money investing in Smaller Companies is they have been bought. You know, it is not only for five names. They may have dominated market cap, but not market performance. There were plenty of midsized, the smaller cap company that had a good year last year. Alix and more on the oligarchy on tech in a second, but what do you see as the biggest detriment or risk . Ishael Corporate Management too optimistic and it will over invest in certain sectors and you can even tory build up that inventory buildup and it is a classic cycle. Alix how do you know when the inventory buildup is because we need to build up because demand is picking up, versus when it becomes loaded . It is michael it is very difficult. You have to be disciplined and when you see a sector where everybody supporting the higher sales and investment, you start to see the industry shipment data, it starts to move. I do not think we will be the only people looking for that. You saw the end of last year a couple of red flags with semiconductors and people warning that this may be going on, my tendency is to dismiss the first couple times the red flag goes up, but we will have to take a more seriously this year. David increased demand, do you see demand picking up and what will drive it going up . Michael we are in a Corporate Investment cycle, there are many countries in which corporations have underinvested over the last decade. And i think the pursestrings are being listened this year. Alix michael, you are sticking with us. Coming up, could amazon be adding target to its shopping cart . That is a production for 2018. And both companies up in the premarket. David and you can tune into our colleagues tom keene and john farrell this morning, then pimm fox at 9 00 a. M. Bloomberg surveillance can be heard in the bay area and all across the United States of america on sirius xm radio. Live from new york, this is bloomberg. Bloombergis daybreak. Francisco blunt, bank of america global and merrill lynch, head of commodity strategy, coming up. This is bloomberg. Not your Bloomberg Business flash. The biggest automaking group and south korea is forecasting a sales slowed down. Kia motors says that performance in the worlds major markets will be hurt by stalling growth, rising protectionism and dangers posed by geopolitics. The latest chapter in the star wars saga became the top grossing movie over the weekend. Disneys the last jedi taking 535 million in north america for 2017, beating out beauty and the beast. Has grossed more than 1 billion worldwide. And an executive at hedge fund Bridgewater Associates has been killed in a plane crash in costa rica. Steinberg and his family were among 10 americans killed when a charter plane crashed into a mountain on sunday. Bridgewaters founder called him a wonderful man. That is your Bloomberg Business flash. Alix thank you. One stock that is moving come amazon and target, a report at a look ahead, as potentially amazon buying target. Target shares over 1 as well. Joining us is Michael Shaoul, ceo of marketField Asset Management. And david, i love the aggressive calls. Emma chandra alix amazon buying target . David i would say it is unlikely, only because of the political environment. I think that bloomberg is the one that did the research that showed that amazon was the most widely used word on earnings, on earnings calls last year. I think that every industry is really scared of amazon. So they will not take much further until they have consolidated gains a little bit. On the other hand, they want physical presence. Whole foods is a step in that direction, and they have physical bookstores, so it is not crazy. David what about the politics that you mentioned . For the second industry overall, you hear increasing stories from washington and also from europe, that we will figure out some way to get a handle on you guys. Europe ismaybe further ahead. There is no caution that the big story of 2018 will be trying to rationalize what is the relationship between government and tech, particularly the tech giants. Europe has been talking about this for a very long time and they have big changes underway, including the privacy rules coming into effect. In the u. S. , we have a government that does not understand the degree to which we live in a technology iced society and wall mark warner and other senators have made noises, we do not really see any real impulse toward regulation or even guidance from washington at the moment. Alix you mentioned regulation in europe, over the week there was a report that said that britain would impose taxes on google and facebook because they want to do more to combat all my extremism by taking down material and that radicalizing people. So it is not will they shrink, but will it prevent them from getting bigger. What is the risk . Michael that Technology Gets regulated. There has been history of sectors, from the politicians perspective, they get too big and regulators come in and whack them down. Microsoft ran into that problem, so as investors, we would view any move by regulators into technology as negative. I agree with our guest, that in the u. S. That seems like it would be state led, not led at the federal level. But europe likes regulation and of european publisher believes in it and i think that is the continental watch. David it strikes me that there is a potentially dangerous combination, not just of size and mass, which some of these companies have, whether it is amazon or facebook, but also politics, because they are involved in elections now. Not to likeds companies that with elections. David k. that is a trend information that we saw further proven in the russian fake news scandal. Well i think frankly is that we have to have regulation for the tech giants, even in their own interests. If i were an investor i would be nervous about that, definitely, however we cannot have a world iswhich the public space controlled by a commercial entity without government involvement. That is effectively what has happened, especially in the u. S. With facebook and google. David how do you regulate that . David k. nobody has the answer. David is it regulating speech our commerce . David k. it is a form of partnership that has to be invented, because we cannot allow facebook to be the one that decides what is allowed to be said and did not allow to be said. We want them to take action to keep the public space that they control more civil, less violent, etc. We do not want to them to be the center to control the first amendment, yet we do not want bad stuff to happen now facebook, so the government must get involved. Alix we are talking about social media companies, and weve talked about amazon getting too big, which regulation needs to happen . David k. we need to have more creative people in washington and to some extent they are emerging in brussels, who tried to think of new ways to envision a world where these companies are restrained, but the Economic Activity that they promote is not restrained. Is simply breaking up sibley breakup google is a crazy idea, nobody will propose that. And amazon, how could the government come down on that without they would get a backlash against the voters, from the voters. Amazon in some ways is too big, so this is about logical problems that do not have an easy resolution but they must be grasped. Alix take a look at this, this is the s p on the terminal, the red line is the s p, all the other stocks above it are the a huge outperformance. Michael, do like them, do you want this momentum that the winners will continue to be winners . Michael there are present technology that we like. Chinese global Technology One reason we believe is because they have not had interest in regulating technological companies. They have had a system of cooperation with the censorship. It is not very pleasant. David i would not call it a cooperation. Alix they have been there. Theael they government government has grown with the Technology Sector there, but for me as an investor i can understand the relationship going for a little bit more. The Chinese Government has been led by engineers for decades and they understood the power of the internet, they have encouraged the growth of these companys because they saw the benefit of a digital society, happening faster in china than anywhere else. In order to succeed, the companies had to tow the lines that the government set, which has been to their advantage thus far. David there are parts you like about technology and parts not so much, so have we seen this in iran where the number of people of smartphones has exploded since 2009, the last time they had demonstrations. How do you preserve the good while screening out the bad . David k. i was speaking with the iranian expert earlier it was a guest and he argued that the government had the advantage when it comes to digital tools. It is certainly an arms race more than it was in the arab spring or during the green revolution, when twitter was used by the protesters in iran. I think it is pretty much an equal weighted thing, where citizens have the ability to make political statements and organize in ways they cannot before. In a country like iran, there are cyber police active overtly and covertly. They go inside and, they go inside the protest groups and try to mislead them and they are cognizant of what is happening and they know how to fight back with propaganda and fake news. This is true in every repressive or nondemocratic regime, or democratic regime, in the world today. Alix at the same time, their president is on twitter. You have him tweeting. David k. they say one of the reasons that the state led news agency was forced to acknowledge the demonstrations, was because of trump tweeting. Donald trump tweeting has forced the issues out onto the service in a way that in the past may not have been there. Twitter is influential in iran. Alix thank you for joining us, David Kirkpatrick andMichael Shaoul, always a pleasure. Bitcoin gets a big boost. Nah, it is a bad start to the year. The cryptocurrency seeing users going to other platforms. We will look at the year for bitcoin and why we are looking at a selloff today. Check out tv and interact with us directly. Scroll through and check us out. This is bloomberg. Alix here is what caught my eye, bitcoin. Starting on the back foot after a surge 1400 last year, over the last two days down by 2. 5 . House,rty at my friends her husband disappeared, he was trading cryptocurrency at like 10 30 p. M. On new years eve. David is he addicted . Alix he does not trade bitcoin, he trades others. Take a look at the chart, it shows the outperformance of the nonbitcoin cryptocurrencies versus bitcoin. Ripple having the biggest percentage of by 700 . Clearly that was a good trade for him. But im interested in two things, how it plays out in the market and the regulators point of view, and what winds up happening in terms of other platform traders in china, north korea, we just heard about the hackers. They are hacking bitcoin. David so they are actually going into not bitcoin but other cryptocurrencies, trying to make money off of them. Is he trading futures or buying the stuff . Alix he is doing ripple. He is buying it. He is actually trading ripple and the actual coin. It was an interesting story, interesting anecdote. North korea, they need the cash. Coming up on bloomberg markets, identical analyst will be joining jon ferro. Markets half hour until the cash open in the u. S. The story, selloff in the european bond market, stronger euro and a weaker dollar. That is what you need to know. This is bloomberg. Jonathan from new york city im , Jonathan Ferro. This is the countdown to the open. Jonathan coming up, the s p 500 delivers the best performance as 2013, strategists predict more of the same. Treasuries in the fast lane to nowhere, the tenure ending with its narrowest trading since 1965. The dollar kicks off 2018 extending recent losses, fueling golds winning streak. Lets go through some of the action. Upures with a nice bid, about nine points on the s p 500. The eurodollar testing levels we have not seen since january 2015, at 1. 2058. In the treasury market, a little bit softer in court in Court Government bonds. 10 year treasuries are lower as well. Yield at 2. 42. R the s p 500 recording its