S p futures up by four points. Eurodollar a little bit weaker. The dollar is finally getting a rally. The first time in about five days. 10 year yield pretty much goes nowhere. We had the big selloff all across the bond market. By. 5 . The 10 year breakeven rate is up over 2 . Level it crossed that level just yesterday into the fed meeting. It looks like the market is starting to price in more future inflation. I am sure we will understand it all after we read those minutes. Lets get a on whats making headlines from outside the business world. Emma chandra is here. President trump has a warning for north koreas leader kim jongun. The president tweeted that he has a much bigger and more powerful Nuclear Button. He was responding to kims warning that the Nuclear Button is always on my desk. Theres been a major diplomatic right through between the two koreas. North korea called south korea on a hotline that hasnt been used in years. In germany the Unemployment Rate has fallen to a record low. In december was 5. 5 and the number of people out of work in germany fell for six straight months. Soonight labor market will lead to higher wages. Global news 24 hours a day powered by more than 2700 journalists and analysts in over 120 countries. Im emma chandra. This is bloomberg. Time to discuss the top three stories of the day. First up, mifid. What is happening as it is finally unrolled. The trend has been lower. Romney and what it means. I want to kick it off with mifid. Its finally here. Its a really clear way of looking at the disruptions but i am looking at volume. Looking at european stock volume versus s p volume and thats the red line. The movingine is average. Its really low. Is that a mifid thing . Theres a lot of uncertainty in the market. Not every platform is completely ready. We are seeing a few minor glitches. Some Goldman SachsAlgorithmic Trading facilities went down briefly. Ubs multilateral trading glitch. Had a one broker said they are not going to be trading etfs because another rule that comes into effect today at the same time on local language documents. Its causing some participants to stay on the sidelines and not every country has fully adopted this. There are a number of reasons for hesitation in the markets. David its too soon to tell. To blame the rooster for the sunrise. Thanks for complaining that nobody was trading because there was no volatility and so you got to figure this will get worked dont like it. Its clunky. It cost them a lot of mining money. They are offering much more risk of their own Balance Sheet to take on risk because of this at lower prices because they can get more business. They are finding ways around it. Alix the fact that nothing exploded, isnt that a good thing . They have been working on this forever. They had a big delay already. It was supposed to go in a year ago. The point is you have this in criminal incredible economic boom. Even though volumes are low in europe the stocks are up. Wait six months to a year and you will find big banks have done just fine. Some of the smaller research players who may not be able to compete. Some of the smaller brokerage houses that didnt adapt their systems. This will get worked out. Minutes of the december fomc meetings are going to be coming up this afternoon. Yellen addressed the question in her News Conference following the meetings last month. I think it is important to watch inflation outcomes carefully. If we do not see it moving in the manner the question in her News Conference following the meetings last month. At the moment most of my colleagues and i believe we are on track to achieve. Do we expect there to be much dissension within the fed on that view of janet yellen . Is temperatures are going to go up with the snowstorm coming in. Alix for like 12 hours. You dont want to be in boston. Janet yellen has pretty much told us what they talked about. There has been division on whether we are going to see inflation rise more quickly as resources get used up. Group of fed officials feel that way and others have blamed temporary factors. We are not going to see anything different in the minutes now. If there is a rethink it hasnt started yet. Alix lets go to break even that was my chart of the morning. The twoyear has had a huge jump at 1. 6 . If the fed is worried about market Inflation Expectations not living up and they start to live up what does that mean . Where talking about minutes of a meeting that was held december 13. We are three weeks away from that now. 2 markets only just crossed yesterday. None of that is going to be factored into what we learned from them today. David history happened yesterday. He willtch decided that retire. He is the longestserving republican senator and this is how he is explained his decision. Knows whenod fighter to hang up the gloves and for me that time is soon approaching. Thats why after much prayer and discussion with family and friends i have decided to retire at the end of this term. Miss serving you in the senate i look forward to spending more time with my family. David you covered this man for a long time. What does this mean . His influence and the gravitas he brought to a lot of issues is going to be gone. Intrigue is who replaces him. She romney comes in has a net favorability rating of plus 47 among all voters so he is likely to win and the question is does he come in as the antitrump the good republican who could position himself for president ial run against trump in 2020 . Does he help dean heller who is the most Vulnerable Senate republican in neighboring nevada . Does that change some of that calculus . Does he appeal more to suburban voters . It gives you something to think about as we go into 2018. Balance of the senate really hangs by a hair. Its now 5149. Its just one vote really. What about this issue with antitrump . Campaign mitt romney had some pretty harsh things to say about the president. We have also seen several people who were pretty harsh about trump become a lot less harsh about trump overtime. One of the things im going to be wondering is mitt romney got a lot of support from the wall Street Community when he ran for president. Are we going to see that mitt romney in the senate . Is he still want to be the wall street friendly free trade globalist mitt romney or is he going to be more of a trumpian mitt romney . Alix on the flipside i feel like him being part of been ranly hurt him when he before. Now its like we already elected donald trump so brain is like nothing at the end of the day. Utah has already had a couple of special elections. The general utah voter has been more towards the free trade oldtime central republican kind of viewpoint. There are a couple of interesting aspects for wall street. Who takes over senate banking. Is it Chuck Grassley who now runs judiciary, the drug. Like grassley because he has been antipharmaceutical companies. It could be michael crapo. Pat toomey probably takes over banking and he is very much a d regulator. Some important implications for wall street. Also, but schuster. Congress are present in pittsburghs mind. He runs the Transportation Committee and he says he is retiring so he can spin this entire year working on getting an infrastructure bill and if hes really dedicated some analysts are saying maybe he moves trump and the republicans closer to the democrats and we get an infrastructure deal. Its an interesting complication for wall street to watch. Mike covered politics. Thank you. Coming up, after seven years its finally here. Mifid ii. We will discuss the rollout of the legislation regulation next. This is bloomberg. Alix Dominion Energy is going to buy scana for 29 billion. The whole value of the transaction is 14. 6 billion dollars. Dominion is a Utility Company that operates a lot in the midwest and the northeast and midwest. Of regulated Utility Company. They operate in the carolinas as well as georgia. Moving and diversifying a little bit more south as well. It has been an industry that is needed a lot of shakeup and it has been hard to get a lot of deals done. 7. 9ion buying scanf for billion in an all cash deal. Scan a is up by 27 premarket. Inid it is stocks or stock the m a has overwhelmingly it is stock for stock. We want to turn to mifid ii. It took effect earlier today with a lot of expense of preparation and a range of views about what it will mean. We should say that bloomberg lp competes to provide a wide range of services for firms complying with mifid ii rules. Nejrag us from london is cehic. I want to start with a chart about volume. Early reports that trading volumes are down. Trading volumes are usually down at the beginning of the year. Do we really know whether volume is being affected by mifid ii . Really interesting question and it comes back to the big issue weather today was going to come about as a soft launch of mifid ii or a big bang here at a big bang. Well. Lity is lower as its not quite clear right now how much of that exactly is down to the start of mifid ii and how much is down to just the first week of january and lower volumes generally. Of any glitches we were sort of anticipating there might be some issues on the first day that mifid ii is implemented. We have been hearing some things anecdotally. The legal entity identifier. It is simply a code that with firmsii brokers and other need to trade. The regulators did give some reprieve. We have beent hearing anecdotally that there have been some complications around that stopping people from trading. That is just one example not to mention some of the technical glitches that might have occurred as peoplehearing anecde have been some complications around that stopping people from trading. Move on to different platforms and try to absorb all the reporting requirements that are needed with mifid ii now. David thats terrific. Earlier today the Cfa Institute spoke with bloomberg tvs guy johnson saying one of the early effects of the new rules is a price war on Market Research. Going back to september, august we saw some very high prices being quoted for Research Coverage and we saw those price quotations come down quite significantly in recent months. Price evidence that competition is having a positive impact from the Research Consumer perspective. Because those prices are coming down. Alix it will take a while to assess that out. Firms that offer Investment Advice are under unprecedented pressure to prove their worth as a revised miss it forces them to charge for research and brokering services separately starting today. Joining us now is rob mccreery of libra investment services. To zone vehicle using lowercost manage accounts. His Research Firm sells to clients. Walk me through how this helps to mitigate some of the mifid rules. Primarily it offsets some of the price pressure that we are going to face and some of the unpleasant facts and the clients that we have been trying to sell recently are going to be unable to take our service because they have been forced to make choices between other people. We saw this coming some time off and we thought to ourselves if we are going to mitigate recents problem we have to have an alternative stream of business. A Sister Company was set up called lsa equities and they now manage money based on our best ideas and the best ideas is something we have running for some time because it was proof that we had recommendations that worked and we began to build up a track record overtime. Alix is the distinction that you want to make extra cash for the cash you are losing by not selling research or do you want to prove to the Market Research is that good they have to pay for it . True. Hink thats that has been happening for some time. Themay be familiar with capture systems that are out there. There are many more coming along the way as we speak. For some time brokers have been putting out their best ideas and getting paid by these systems on a quarterly basis, on a prompt quarterly basis and being able to quantify their worth. When you go into accounts youve got to be able to quantify your worth. It is something that we end many others have done historically and we were sufficiently good at it over time that people involved with libra looked at the overall marketplace and said why are we providing these good ideas to people consistently with no idea whether youre going to get paid or not when we could raise money against those good ideas . Two separate businesses these days. David which one do you want to succeed . If you are making them much money off of your Better Research can make more money that way and by selling research to people . To say thelike advisory business which is what we have always been paid to do with our product which is a valuation risk and market timing model that we use. Thats out there for customers to use to work alongside their investment process and without giving this too much of a plug thats going to be very valuable to people. Alix when you are looking at the market and how this winds up playing out how do you measure the damage for the benefit that its doing . What do you look at . Buying or not buying at the moment. Alix meaning if they are actually buying things in terms of research or not . The probable with independent research at the moment is there is only a finite amount of research that the buy side can take. That in the is short term at least independent research is going to lose out on that basis just because they cant be squeezed in. The other problem independent when people is that are having to choose what research they want your previous guest talked about the price people are being charged. We might be charging the same price as one of those larger cell side firms. If you put it like that which one do you think the larger institutions are going to choose in the near term . Great stuff, rob mccreery of libra investment services. Snaps its the dollar fiveday decline. Many analysts are skeptical that the greenback will see any kind of lasting recovery. More on that next. This is bloomberg. Alix the dollar decline takes positive after the release of the fomc minutes this afternoon. It is been a fiveday losing streak. Joining us is Richard Jones, bloomberg fx strategist. Im hearing call after call of weaker dollar. Sees 105 fory dollaryen. Why is it not getting any help from the fed . That wef the things have notice about any sort of fed tightening cycle and this is something that my colleague did on the blog just a few minutes every major tightening cycle by the fed since 1970 has been accompanied by a weaker dollar and i dont think it will be any different. In terms of the growth story theres reason to believe that the strong recovery we are seeing in the european economy still has some legs. It has some room to run in 2018. A lot of people are thinking that even with the tax bill being passed in the u. S. We are not really sure how much of a spurt to growth this will actually give and in the short term it might be positive for the u. S. Dollar put in the longerterm maybe not so positive and the fed is well advanced in this tightening cycle where is the ecb is not started to normalize policy in any serious way. All of those things and if you look at the politics in europe it is more subtle than it has been a very long time. That could be the perfect cocktail and thats why the euro is going to do well against the dollar. Is the germannel fiveyear real yield versus eurodollar. The bottom is u. S. Fiveyear really old versus the dollar. It feels like the market looking at the fed expecting them to be looking at the ecb expecting them to be hawkish. The yields are telling different stories. Its almost a momentum thing. Is five or six hikes into its cycles and the ecb has yet to get really involved in the normalization of policy and look at thatu going ahead theres more to come from the ecb than there is from the fed and thats why republican we are probably going to see a weaker dollar. Alix Richard Jones of bloomberg news. Coming up, the longestserving senator in u. S. History, orrin hatch. 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. Im alix steel. We have s p futures a touch as up three points us we close at another high. Stocks volumes a little bit light. Seeing a nice move of 57 points after germanys jobless rate dropped to a record low. Not helping the euro today. Eurodollar is a little bit weaker down. 3 . It had a nice move against the dollar so that could be a little bit of profit taking for the currency market. We had a huge selloff in the bond market yesterday. Now we are having yields move lower by about five points as buyers come back in to the market. A similar story for the 10 year yield. Crude getting a little bit of strength as natural gas rolls a touch over. Around three dollars for natural gas despite the fact that its like 12 degrees where i live. Lets get an update on whats making headlines outside of the business world. President trump is respond to kim jonguns latest threats on Nuclear Weapons. He tweeted that he has a much bigger and more powerful Nuclear Button. That came after the north Korean Leader warned that the Nuclear Button is always on his desk. President trump has threatened to cut off Financial Aid to the Palestinian Authority. Palestinian leaders have said the president s decision to recognize jerusalem as the capital of israel disqualifies the u. S. As a middle east peace mediator. In 2016 the u. S. Gave the Palestinian Authority about 660 million. The demonstrations in iran have led to more talks in the Trump Administration over new economic sanctions. Met yesterday with members of his National Security team. The president has seized on the crisis in iran to justify his longstanding opposition to the 2015 nuclear agreement. Global news 24 hours a day powered by more than 2700 journalists and analysts in over 120 countries. Im emma chandra. This is bloomberg. Senator orrin hatch marked the end of an era in washington when he announced he would retire after serving four years in the u. S. Senate from his home state of utah. We welcome chief washington correspondent kevin cirilli. This is the longestserving republican senator in history. How big a deal is this . 2018. Come to its moving very fast already. Yesterday at the white house i noticed that senator orrin hatchs picture was placed on the hallway leading into the west wing. Of the relationship that he shares with President Trump. He was a adamant supporter of as somee donald trump who has defended him in his first year in office. He is also a statesman in the senate. One of its most senior members. But his departure makes the political opening for a familiar romney. Tt someone who is the former governor of massachusetts and the former president ial nominee in 2012 for the Republican Party and also in adamant critic of President Donald Trump and some who could be compared to the likes of senator bob corker. Should he decide to get in the race in utah he would be without question the front runner and i spoke with several sources yesterday from romney world who say that a decision is likely to come within the next couple of weeks. He was fully anticipating that senator hatch would run for reelection and he is still weighing his options. Look at polling within the state he is very much the front runner. David is there any question that he would get the nomination . Therewill have to see if are conservative groups who come out against him. Onen tell you that conservative group is already saying they dont want mitt romney to one. The head of the conservative Freedom Works group says we will not be supporting romney, we think utahans deserve a competent to fill the seat. All remember when romney was rumored to be secretary of state. That didnt pan out and we all remember their tense relationship to put it mildly. David senator hatchs retirement potentially change the Playing Field with widespread speculation that mitt romney may run for that seat. There may havens been between orrin hatch and donald trump pale in comparison to the exchanges between the former Massachusetts Governor and the current president of the United States. Heres what i know. Donald trump is a phony. A fraud. His promises are as worthless as a degree from trump university. He is playing the members of the American Public for suckers. He gets a free ride to the white house and all we get is a lousy had. Hat. T is a lousy candidate. He failed. He felt horribly. The third debate you failed badly. Race that should have been one won. I dont know what happened to him. He disappeared through he disappeared. David we welcome marty schenker. What are the chances mitt romney might not get the nomination . Its not a slamdunk. Toone of the people you have watch is steve bannon. Mitt romney is certainly in the never trump camp and ban and has said and has taken action against any people who said never trump. Romney is one of those. The convoluted nomination process in utah leaves open the possibility of a very conservative outsider to come in and try to rest that from romney. What im saying is conventional wisdom youve got to throw out the window just like you did in 2016. Everybody is giving the nomination to romney but i would say lets wait and see what happens. Recentlyeve bannon have something to do with the senate race down in alabama. It didnt end up working out so well. To that extent he is somewhat discredited as a political strategist. The idea of mitt romney in the senate going after donald trump is something that steve bannon a terrible result. David kotok about going after donald trump. Romney as aitt senator be . What would his goals be . Hes a very independentminded businessman. He has very clear ideas of whats right and whats wrong and i dont think he would hesitate to speak out. In that sense he would be like john mccain. He has very clear principles and where he agrees with donald trump he will say so and vote with him and where he disagrees he will have no hesitation to come out and vote against any agenda item that he thinks is wrongheaded. Not an easy thing for donald to deal with. David also like john mccain in that he ran for president. Unlike john mccain he is a young enough man that he could have another run at it. Could you use the senate as a platform to provide an alternative for republican president . Thebsolutely and i am sure white house is contemplating that very thing. If romney were to become the replacement will want to work with him to get legislation done. But if he decides to take on donald trump in a primary fight he would be a formidable candidate. David its clear they did not care for one another. What about on policies . Particularly i am struck by health care because mitt romney really had a Health Care Plan in massachusetts that looks a lot like obamacare. He does. Theres the dreamers. Immigration reform were they have a very deep disagreement on where we should go with that. On certain other issues like tax reform i dont know specifically whether romney has come out but he certainly hasnt come out against this tax bill so there are areas of policies they get along with. Especially in Foreign Policy and in the tempered tweets donald trump has done romney will definitely speak out against those. David the midterm elections have already gotten more interesting. Many thanks to marty schenker, chief content officer. Story i am following is how cold it is. The eastern half of the u. S. Is seeing record temperature lows and i do not remember a winter this cold so far in years. The cold freezes having all of the Commodity Markets from fuel to wheat. Level since february. It has been up for 13 days. Are joined by Bloomberg Energy finance analyst. Why are Natural Gas Prices almost three dollars . Structurally speaking the supply is higher than it has ever been before. We have new pipelines that are taking gas out of places that we have not had adequate movement from before. Particularly appalachia. The of natural gas going to midwest. Overall the market was pretty oversupply from the start and prices as a result were lower than ever. Alix lets talk about the demand we are seeing. This is record natural gas demand. It seems like we do have the supply to meet it. We do. What is happening now is the reason we are seeing record demand is not only is gas going to heat homes and businesses but we have a record amount of gas being used for Power Generation now. That is something we didnt have. Its a good chunk of the reason why that is. Alix how our power plants operating . Are still operating now. So much demand is picked up for residential and commercial heating especially around new england we are seeing powerplants relying on fuel oil, diesel fuel to keep running. Alix does this give a needed boost to nuclear demand . Nuclear plants run regardless of demand but it does boost prices which help Nuclear Plants and Nuclear Plants need a higher price in order to break even. Analysis, my colleague cover that yesterday. We admittedly talk about fuel oil. We didnt talk about natural gas at all. Is that just a structural change in energy . Yes. The structural changes natural gas powers a lot more powerplants than it did before. Thats a big part of it right there. Alix coming into the inventory numbers theres probably going to be a lot of trading happening. Yes. The structural changes natural line is natural gastop inventory. The yellow line is the fiveyear average. Looking at the tops we have seen and we have had the most recent but we are still above that moving average. The bottom panel is what we are seeing for oil. Oil is much closer to its moving average than we have seen. What happens tomorrow when the numbers come out . I cant speak to oil so much. As far as Natural Gas Storage number that comes out every thursday we definitely expect a good amount of withdrawals. We are probably looking at over 200 billion cubic feet tomorrow the cousin of the amount of cold weather we have been having. Go away. It doesnt we have a snowstorm. Its going to heat up for a day. David and then it gets even colder. Exactly. The headline with the snow bomb is not actually the snow. The cold thats coming behind it. We are already cold right now. Definitely subzero wind chills after the storm passes and singledigit temperatures around here. David i am so happy we got through this discussion without talking about the polar vortex. Alix i am waiting for the moment i turn on my shower and there is no hot water. David thank you. Coming up, the u. S. Shoots jack ma down. His Financial Services company tried to buy money gram but the u. S. Government crushed it. Thats next. As your commuting today you can tom in to our colleagues keene and Jonathan Ferro from 7 00 to 9 00 every morning. Pimm fox joins the conversation at 9 00. Bloomberg surveillance can be heard all across the United States on sirius xm radio. York, this is bloomberg. This is bloomberg daybreak. Im emma chandra. This is the hewlettpackard enterprise greenroom. Coming up, former minneapolis fed president. Now to your Bloomberg Business flash. A big name in Silicon Valley is betting on bitcoin. Peter thiel has been buying bitcoin in recent years and the holdings are worth several hundred Million Dollars. Thats according to a person familiar with the matter. He is known for his early bets on airbnb and spacex. U. K. International trade secretary liam fox is in china where he is pushing the u. K. As a great innovating nation. Asked fox about reports the u. K. Is in talks to join the transpacific partnership. We are not ruling anything out. Its not something thats right at the top of our agenda at the present time. It would be quite wrong for us to rule anything out in terms of future relationships for the united kingdom. He also set a trade agreement between the u. K. And china this summer down the road. Out allies have dished thousand dollar u. S. Companies have dished out thousand dollars bonuses. Airlines, banks and insurers have led the way on bonuses. All industries that have regulatory business pending with the Trump Administration. David now we turn to wall street beat. Number one, jack ma of alibaba put hisin his bid to payments together with money gram. Fidel is said to be in talks to acquire talent from touching them capital and a new report of over the talk parties in Silicon Valley. Our new york bureau chief. Lets start with jack ma. Wall running up a brick trying to buy money gram. Sayingare very clever they were crushing the deal. I get it. If we go back a year and think about President Trump having all of the ceos coming in and promising to create jobs, jack ma was one of the very prominent people who met with President Trump. David million jobs. Now we have this deal that is being shot down by sify is. This is a group that has sort of played in the background for a long time. But does come into play when there are foreign transactions going on. Was the threat to National Security of owning money gram . They were said worried about obtaining data on u. S. Military personnel. Becausends like a reach there were other mergers that were shut down, too. A bit of afeel like reach. One of the things that jumped out at me was a quote from the ceo that is the understatement of the year to some extent. He said the geopolitical environment has changed considerably since we first announced the proposed transaction. I think the technical term for that is duh. When you think about the relationship between china and the u. S. On trade this is where the rubber is meeting the road for wall street dealmakers. Alix outbound chinese m a has been so key. If you dont get that in the u. S. Where does it go . You have had this pullback. David the waldorfastoria is sitting there empty because they cant do it. Exactly. Everybody says it dont read too much into this. I think we can read something into this. Heres one for you. You fail, no worries. The Hedge Fund Industry is one of the most fascinating corners of wall street bar none. Tim griffin is one of these other iconic figures in the world of hedge funds and what we are seeing here is the aftermath of what happened last year. A lot of times what we hear about is people spin off, they start their own hedge funds. Its hard to start a hedge fund but whats a little easier to the loving arms of tim griffin ken griffin. David its a good time to acquire. They dont even have to buy anything. They just have to hire the guys. Something of a harbinger for 2018 that as these hedge funds fadeaway they dont get caught. Its very complicated to buy a private equity firm or a hedge fund. The reporting shows that even neil chris himself may end up working for ken griffin. Alix heres one of my favorite things. Sex, drug and tech. Emily chang is coming out with a book and genuine called brotopia. She had an excerpt in vanity fair yesterday. It says theres a wide range of parties for a spiritual sexual behavior. Some devoted entirely to sex, maybe drug and alcohol free and demand a balanced gender ratio. Others are very heavily on drugs end in groupally cuddle puddles, the gateway to ever so slightly more discreet sexual encounters. End in group cuddle puddles, the gateway to ever so slightly more discreet sexual encounters. And this was the nice instead of the fair. This was the nice paragraph in vanity fair. I talked to emily and some of her team. They were getting emails all day long as people read this. This is a corner of Silicon Valley we have not heard about before. This reporting comes at a time when obviously Sexual Harassment and gender imbalance are very much at the four. This book is coming out next month. I cant wait to read it. David the followon is going to be who. Name names. Alix there were no names. David the new york times, the wall street journal are going to be saying lets go get some names. Interesting the differentiation between the public and the private face of Silicon Valley. This would be the private face. The public face is all about equality, we want to hire more women etc. As you read through one of the things that really jumped out at me be on the salacious bits was this notion of Silicon Valley has framed itself and frames a lot of this behavior in the guise of progressivism. Disrupting social mores and things like that. As the reporting continues this is a story for our times in many ways. It is not just limited to Silicon Valley or hollywood. Alix the cuddle puddles are everywhere. David i must say i have never heard of a cuddle puddle. Jason kelly, thanks so much. Coming up, white house chief of staff john kelly wont be part of todays meeting. More on what i will be watching over the next 24 hours next. Checkout tv. You can watch is online, interact with us directly. This is bloomberg. David this is what im going to be looking at for the next 24 hours. The Senate Returns wednesday with the republican majority down to one seed and democrats issuing a full list of demand such as funding Childrens Health care and protecting young undocumented immigrants just weeks before another possible government shutdown. Bek mulvaney is going to with the head of legislative affairs and meet with the leadership. Democrats and republicans today to say can we come to terms on this funding issue. Right now the democrats are feeling pretty full of themselves. Alix is that a danger to horse trade like that . There was an argument that after came outm those who strongly against it gave up some power in the negotiations and it went more to the far right than it might have done otherwise. David absolutely right. On the other hand, they need 60 votes. Really push itd through. The republicans have move toward the democrats in some respects. Could overplay their hand but if the government shuts down they will probably blame the republicans. Alix i want a Million Dollars and a brownstone on the west side and 20 weeks vacation. Coming up, for minneapolis french president fed whatdent will be here on 10year breakevens been for the market. This is bloomberg. Alix the biggest eu regulation in decades to start. Investors sit on the sideline as trading volumes drop off. Fomc minutes will be released at 2 00 p. M. Can it throw the u. S. Dollar a lifeline. Ever,ldest temperatures and its no deck is on and snow is on deck. David it is very clever very cold. Alix 18 degrees in new york city. I have not had this kind of cold. David westchester. Alix but you dont have to take a train. You can drive. David what is surprising, National Natural gas has not shut up. In the midwest in the northeast, it is particularly cold. As david pointed out, Natural Gas Prices lower today, sitting around three dollars. Some are saying that power prices are not as high as they were last week because you have some traders to bullish on the cold weather. Friday, it could be five degrees. David shall guys are pumping out too much natural gas. Alix they are, but with the deep freeze, how much are you really talking . One hour and a half before the cash open. Not cold open. David it will be cold. Alix it will be cold as well. Eurodollar is down. 3 . The dollar shaking off a fiveday losing streak into the fomc minutes. A huge selloff into the bond market yesterday that has halted. Yields moving lower by two basis points. Crude getting a pop versus natural gas, up by. 8 . David lets get an update now on what is making headlines outside of the business world. Emma chandra is here with first word news. Emma President Trump has a warning for north koreas leader, tweedy has a much bigger and more powerful Nuclear Button, responded to his warning that the Nuclear Button was always on his desk. There has been a major diplomatic breakthrough between koreas. North korea called south korea on a hot writing a Demilitarized Zone that has not been used for almost two years hotline on a Demilitarized Zone that is not been used in two years. A deep freeze has already sent temperatures to alltime lows. Now, a socalled snow obama is expected to race up the eastern seaboard tomorrow. Boston could get 11 inches of snow. Parts of new york city may get four inches. 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. The day we get those minutes from the december fomc meeting and investors will be looking at anything they can glean from how the fed is looking at inflation and how it should affect rates. Englander,steven from Rafiki Capital Management, and Michael Mckee is with us. I want to put up the breakevens. Are trending up after a long. Of saying where is the inflation. We now see breakevens however you calculate it. Is this finally going to give the fed some reassurance it is having where it they thought it was going to head . Think itglander i will. I think the market is overestimating the concern about lowinflation at this point. If you look how core pce has behaves, it has moved up exactly in line with how they expected it to move, and it is close to 2 . Once we take out the beginning of last year, inflation seems to be on track. The other thing, they were all raised in this neokeynesian environment. What they are looking for is a tight labor market. They are beginning to see anecdotal evidence. Labor inflation is picking up. That is still the guiding light. Michael we get how many rate moves . Does it change your view that thato see some insipid we start to see some insipid signs of inflation . Steven there are still some disinflationary shocks that will be there, but it will be more balanced. We will not have core cpi falling again. I think with the fiscal stimulus that is coming, that the fed, if they thought they were going to do two, they will now do three. Those that thought there were going to do three are now thinking about four. They are more comfortable with the idea they dont have to worry about the downside is much as they did. The markets are overly discounting the feds intention in this respect. Alix there was the paper talking about procyclical versus a cyclical factors, and a cyclical will not respond to the taylor rule. That is a different kind of framework for the fed to think about inflation. Michael the rethink will have to wait a month until we get jay powell into office. We may see in the minutes of they talked about some of this stuff, but to see a real change in the phillips curve model they have used, a, they would have to see the inflation for much longer, and b, it probably has to be led by the new fed chair. You going to 2018 thinking the fed has been looking at inflation the way they have been. Steven im skeptical about those kinds of the compensations. It is description descriptive in saying historically they are correlated with trend disinflation, but for example, thinking nature of the inflationary shocks. There coming from very specific sectors at specific times, one after the other. Itld show up as wouldnt show up as trend inflation. It would show up as a volatile kind of inflation and inflation was to be moving because of these shocks. It decomposes, but it does not explain it. Michael a volatile part of the inflation is what the fed looks like. They are including the stuff we look at for the core. Been are areas that have moving up significant repeat we have seen oil prices go way up. We start to see gasoline prices rise. Home prices rise steadily. There is a great chart out this morning with how many Prescription Drug prices for wellknown pharmaceuticals went out by 9 or 10 at the first of the year. We will see some inflation starting to come into this, even without the supply constrained aspect of it. Powerand now we have prices topping, too. Alix i also want to broaden this out to the eurodollar. You reference this human note that came out last night. Real yieldfiveyear versus the eurodollar. The blue line continues in negative territory, down 143 basis points. The bottom panel is the dollar index, the purple line rolling over versus the u. S. Fiveyear real year, which is in positive territory, and positive 28 basis points. Why . Are two factors in the dollar right now. The first i would say you had a lot of good dollar news at the end of last year, tax reform, and stuff. Traders noted a did not go anywhere. That was not enough to stimulate it, and the question is what is next . The second thing is if you look at the way u. S. Real yields have gone, despite the fact that inflation applications have climbed steady, it has been steadier than bitcoin, any other asset you are not seen any response on the inflation side. I think the market is saying look, this is going to be a new fed. They are looking at the new names coming here, saying this is going to be a real break. It will not be the fed that more or less targets the taylor rule. You dont have to be strict about it. They are saying this will be a fed that is more tolerant of inflation than the yellen fed for the bernanke fed would have been. I think they are wrong, but if you look at the way inflation yields are moving, but not real yields or nominal yields to any great degree, it is telling you the market is saying we dont not believe they will respond the way previous feds have responded. David if the dollar continues to be we, does that not free up the fed to raise rates . Michael it does, but you will import more inflation if your dollar is weaker. The extending to me, the fed is raising rates. The ecb will not get around to it until sometime next year. They are still at negative rates. I called up the fx fc function on the bloomberg, and you see the forecast for the dollar 2016, where we were in 2017, and why cant the dollar get any love . You mentioned the positive news. Nothing happened. Steven some of it is political. There is skepticism both in the u. S. And outside the Economic Leadership and Political Leadership in the u. S. That is leading, probably, therrectly, to pessimism of dollar. Whenever you have a situation where europe has been in negative rates, real rates, nominal rates, for couple of years, positions are cut. Central banks have been getting rid of euro reserves. Euro reserves are going nowhere. There is a sense that if you begin to see some normalizing, t. Ey will get back i had boa i still see this as much more balanced. I do not think you can say until europe makes a move, or it is clear they are going to make a move, i would be reluctant to say this is the beginning of something big. Away from theg central bank what about the strength is that the euro is stronger . The dollar struggled in comparison. Steven i am more sympathetic to the em story. If you look at the chart of em affects versus the dollar, the less couple of weeks theres been a big move of weaker e. M. , big moves we have seen in the past. Recent moves are catch up, but they are not what they were before. I think em was oversold, and it is going to come back. With respect to g10, there is a story there, but i do not think it is compelling. The fixed income story imagine a world in which ages to edge up. Onwe get a couple of. 2s core cpi, which i dont think is that unlikely, i think the perspective on where inflation is going is going to have a much bigger impact on fixed income in the markets ignoring that possible scenario. Alix two quickies eurodollar, what is your target for the end of the year, and what happens with a 10year . Steven let me start with a 10year. I think it will be higher. I dont think it will go to the moon, but with the u. S. Economy doing well, fiscal stimulus, with signs that inflation is beginning to go up, we will let it up at new cyclical highs. Think the goodi news is coming up on the u. S. I think as the dollar rises, it is going to be soon on the back of indications that inflation is picking up. Once you get past midyear and you start thinking about what the ecb will do next, you have to be cautious and say there may not be a story in eurodollar. It might not be the trade. I will not give you a longterm trade because i think there will be several trends within that longterm, but i would say Dollar Strength is nearterm. Second half of the year is more like it to be a euro story. Michaelloombergs mckee, thank you. Beven englander will sticking with us. Later this hour we will speak with narayana kocherlakota. Shocker, he is dovish. We will ask him what 2 means. And we will discuss the wide sweeping regulation next. This is bloomberg. Emma this is bloomberg daybreak. I am emma chandra with your Bloomberg Business flash. Dominion energy has agreed to buy scanner. Serve gas and electric customers in the carolinas and georgia. It has been failed by hurt by a failed Nuclear Project halted last summer. Shares of Advanced Micro Devices are up in premarket trading. Intelrising off of news has a flaw in its product that makes it vulnerable to hackers. And apple will have to use patches them to fix the problem. A big name in Silicon Valley is betting on big going. Peter thiels holdings are now worth 700 million. He is known for his early bets on airbnb and spacex. With mifid took effect speculation on what it means. To oomberg lp competes what we found out when we and id the legislation was a responsible person to negotiate all that stuff was that Product Development was driven not by the interest of the clients. I think is a cultural change. Alix Steven Englander is here with us. Join us to break it down, nejra cehic. Walk us through any market distortions we have seen today. Nejra we have seen lower volume, lower volatility, but you could question how much of it is down how much is 2 and due to the first week of january. One thing for example that mifid 2 requires is for any firm traded to have a specific code lei. N as an there have been cap locations we have heard about anecdotally, so that is just one example of where we have seen some glitches, but overall it has been fairly quiet. David what is different for alix what is different for you guys at Rafiki Capital Management . Steven fortunately we are based in asia. The impact is not nearly what it is elsewhere. When the things i find surprising is the range of responses that i have seen. People i have corresponded with infant research to and sent research to, some of them say dont send me anything anymore. We dont do business with you, i dont want to see it. Others are very cool about it and think this will blow over and things will get much more. Ormal very quickly so, for us it is ok, but we are seeing a lot less people are little nervous about how it will play out. David is it too early to tell whether some players in the marketplace have done better than others in their preparation because there has been reporting that people have spent as much as 2 billion to get ready for this . Nejra that is right 2 billion in Compliance Costs across the industry. I would say at the moment it is too hard to tell exactly who the winners and losers are going to be. It is also not that straightforward. On the one hand come if you look at banks for example, some, and there are different views around us some might say certain elements could lose out to a certain degree because of the new laws and research unbundling, but there are opportunities mifid when it rules the mifid 2 when it comes to the mifid 2 rules on banking. A lot of banks have said they will become a systematic internalizing it sounds jargon he, but it means that the firm is trading with its own capital, and it allows a workaround and it could be an opportunity for some of the banks that is one way the banks could lose out in the research and win out if they become a systematic internalizing. Ultimately the aims of the regulation are more transparency, more competitiveness across markets. They aim to do this with the reporting around trades with the research unbundling, and also bringing more trading on two markets. There are questions how with each of those issues it will play out for different firms. Go forward a year will this be a better mousetrap . Alix is the mousetrap every good . [laughter] steven i think they went ahead and try to create a better mousetrap without consulting the mice or the homeowners. Alix i like the analogy. Large extent, and ive said this before, i think they are fixing a problem that wasnt there. I will say that paradoxically i think Bank Research will do much better. If you go to a major bank, and they say we will charge you however much not that much for our research, you will say that is not a bad deal. If you are going to a small boutique place and they say we will charge you almost as much for this narrow slice, and it comes out of the same budget, think it will be in trouble. David too expensive. Thank you so much, Steven Englander, vicki capital management, and nejra cehic. Up aters might be caught the red light or at least slowing down the yellow. Why many analysts are picking lower sales for automakers. That is next. This is bloomberg. David u. S. Automakers will report december sales figures in about an hour from now, and analysts are projecting declines across the board. It is the first annual drop since 29 2009. We are joined by Michelle Krebs, Cox Automotive financial analyst. I will put a chart up. It tracks auto sales over time, which went up to record numbers, now coming off somewhat. It is tracked against the cost of credit, essentially, automotive loans, which went way down after 2008, but then came back up a little bit. Is that explaining some of the tradeoff in the sales . Michelle krebs it could be. We have had this longterm trend since 2009. It is a cyclical industry. Iran had to come to an end. Were still at a strong level. We are concerned about Interest Rates. We think that will be a headwind Going Forward this year, but they have been edging up. David as a practical matter, what have we been expecting for automakers they have been curtailing production lines to adjust capacity as there has been a trailing off, as you say. Michelle i think there is a huge plus in the business, not if you work at a plant. There has been a lot of discipline by automakers to match production with demand. We have seen little hesitancy to close a plant, particularly car plants because car sales are softer than truck and sportutility sales. I think we can expect more of that Going Forward. David we tend to focus on vehicle sales which is number of units rather than profitability or margin. To some extent they can make up by curtailing production costs, and also by the blend of the product mix. Theres been a move toward trucks and suvs. Is that continuing . Michelle we will close out the year with fullsize pickup trucks being the secondbiggest segments. We think that will be 14 of all vehicle sales, and there are huge profits in those. That is why detroit automakers are doing particularly well. This year will be a bigger year for trucks because there are new ones coming. We know that Fiat Chrysler will am generalcing a new r motors has some new pickup trucks. Ford has some new additions to the f series. It will be the year of the truck. David we tend to focus on the United States. There is a different story globally vehicle sales are moving up. Does that make a difference for u. S. Automakers . Michelle china is a place where he looks to, and increased sales there are importing. We are big into fullsized pickup trucks, but i will say the whole sports utility trend is global. If you are strong in sport utilities anywhere, you are doing well. David ok, thanks very much. ,eally good to have you with us michelle. That is Michelle Krebs of Cox Automotive reported today from detroit. Coming up, we will speak with narayana kocherlakota. He is a former fed president. We will talk to him about what the fed should be talking about, what they should be doing. Live from new york, this is bloomberg. This is bloomberg daybreak. I am alix steel. Happy wednesday, everybody. Dow jones futures up by 49 points. The s p did close at another record yesterday. Features are now up by three points. European stocks getting a nice boost. German unemployment slipping to a record low, and the dax has been up by 0. 5 . The euro not getting the jews from germany, down 0. 3 . Downice from germany, 0. 2 . The bond market falling off down by two basis points. 2. 45 is how we print on the 10 year a few hours away from the fomc 2 00 p. M. Release. Nymex crude getting a bit, up by 0. 8 . Natural gas up by 1 despite the cold. David defies understanding. The more we use natural gas, the cheaper it gets. I dont get it. Were using a lot in westchester. Lets get enough to know what is making headlines outside of the business world. We have emma chandra here with first word news. Emma President Trump is responding to kim jonguns latest threat on Nuclear Weapons with his own message tweeting he has a much bigger and more powerful Nuclear Weapon after the european north Korean Leader said a button is always on his desk. Palestinian leaders have said the president s decision to recognize jerusalem as the capital of israel disqualifies the u. S. As a peace mediator. In 2016, the u. S. Give the Palestinian Authority about 660 million. On capitol hill, the next big question, who will succeed utah senator orrin hatch . The longestserving publican in the senate wont seek reelection. He is 83 and was first elected to the senate in 1976. The departure might open the door for former republican candidate mitt romney who has flirted for running for the senate with running for senate in the past. 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 . David thank you. Later this afternoon we get the minutes from the december fed meeting, and we will look at them carefully to figure out what the fed might be doing with respect to rights. Heres what policymakers and Market Participants have said already. It anyellen i consider important priority to make sure that inflation does not undershoot our 2 objective, and i want to see it move up to 2 . It is the trajectory of Interest Rates next year that is really of importance. There is some uncertainty about that. Be 3 , it turn out to time will tell, but i think we should be removing accommodation in a gradual, patiently. Were looking for three rate hikes next year, the same as the fed. It is not price the market yet. We expect the fed to hike only twice, our office cautious outlook. They could trigger out inflows into the u. S. We also expect three further hikes next year. Now if the tax bill leads to more Capital Spending that is still an if, because with respect to corporate, we do need that incentive. In that environment, the fed could be faster with rate hikes. While chair yellen bringing inflation up to 2 is an important priority, and we dont think it will get there in 2018, it is also an important priority to stabilize the labor market. They now think the labor market has just about improved as much as it really can on a sustainable basis. Yellen while changes in tax policies will likely provide lift to Economic Activity in coming years, the magnitude and timing of the macroeconomic effects of any tax package remain uncertain. David we welcome now narayana kocherlakota, Bloomberg View columnist and former minnesota fed president and welcome back to the program. We want to talk about what the fed should be doing. You heard talk about inflation. Say we haven improved the labor market as much as we can. New you agree with that . thanks aocherlakota lot for having me on, first of all, and happy new year to both you and alix. I think the evidence shows there is more room for improvement in the labor market. We continue to have strong implement increases month to month relative to what i expect to be true in the long run. 175 in the past year, and the longer we will be closer to 100 per month. Even if you look prime age, the fraction remains low relative to what it was 10 years ago, and even lower to what it was a beginner the millennium. I think there is room for growth and continued improvement in the labor market. David except there is room for growth. Is Monetary Policy a way to get there . You can talk about two different things, probably more one is per dissipation. Dissipation rates have not come back to where they were. Participation participation rates and not come back to where they were. His Monetary Policy the way to get there . Narayana Monetary Policy, i think, has to play a key supporting role. We saw Congress Pass a major is a policy bill in the last month. You know, asked chair yellen referred to in the remarks she made ready for i came on, that is going to have stimulated stimulate of affects on the economy, stimulative effects on people spending more. Stimulus ikinds of think are things that could lead to better growth and more demand for workers, and that is when you put upward pressure on wages. That is all positive. The key is the fed has to not get in the way of that, and they can get in the way by raising rates to rapidly. I wanted to zero in on Charlie Evans decided that happened at the december meeting. Publics Inflation Expectations and how they have if you lookr, but at the bloomberg index, they are all grinding higher. Twoyear had a nice pop, and the 10year sits at 2 . How do you justify not maintaining a rate hike cycle path5 narayana so, path . Narayana so, i worry there is still a risk that they have drifted downward, as president evans referred to. I share his concern. Alix but theyre up 2 , 10year breakeven inflation, they are up. Narayana i agree with that. More you want to be focusing on where inflation is. Inflation remains low. I expect my own expectation stimulushe appropriate the effect of stimulus that i anticipate, meaning we will see more capx, more investment expansion of the supply side of the economy. I think that will represent downward pressure on inflation, meaning that the fed should stand by and let that growth filter into the economy. David one thing i cannot fathom is why this will trickle down to regular workers . The one inflation we have had is asset inflation i dont think anyone can deny that. No matter what asset it is, it is inflated, but what the fed has not been able to do is have that trickle down to the workers. Allyana i think first of you do see some increases in wages appreciation. Obviously, we want more. The way to get that is to have firms competing more aggressively for workers. Why would they be doing that . If they feel the need or the desire to be building more factories, more plants, they will need workers to do that. If there is more demand for their goods and services because people have more money in their pockets, they will be hiring more workers. Now, that does not necessarily mean you will bring people get off the sidelines. It might mean you are competing with each other for workers. That will drive up wages as well. The key to this is the fed cannot get in the way of the growth impulse coming from the tax bill. Alix i want to pick up what david was talking about in terms of asset price inflation. It was written in the financial times, that failing to act now would be delaying the great unwind until inflation and asset prices are even higher and in the later stages of the growth cycle, making the adjustment riskier. Taking away the punch bowl never makes partygoers happy, but leaving it out on that can result in a far worse hangover. What is your response to that . Narayana i look back to the data i had a post on Bloomberg View where i look at the data of the next millennium last millennium, the less 17, 18 years, and i think the fed has been overly cautious throughout. You look at output it has been below potential through much of that time period. Inflation has been below target much of the time frame. That is robbing workers of Bargaining Power that could drive up wages, and that is an opportunity that the fed could a valid selflove in the coming years. Alix a veil itself of in the coming years. Alix the coming years that means who it will will actually be in the fed. Walk me through what you see in what kind65 days of mines will we have the businessman, traditional, not . Narayana i think that is a great question to the one name we have heard floated out there being nominated to the fretboard is marvin fediend, and economic board is marvin goodfriend, and academic. I think in the coming years what you will see is a continuation of what we have seen under chair yellen, which is a focus on ofdual normalization Monetary Policy, meaning they want to continue to raise rates at a slow pace. David there is a report on the bloomberg right now but the search for the new york fed president , saying there is a premium put on diversity whether it is gender diversity, or ethnic and racial diversity. How important is it in that institution to have that kind of diversity . We see it in other institutions will we generally think it is a good thing to have different people having different points of view. Is it important for the fed . Narayana i think it is very important for the fed. The fed is based on the idea that Regional Economic diversity it is important to capture that. As a move for, we realize women and men have had different expenses in the economy, and africanamericans and whites have had different expenses. I think it is important to have those kinds of voices around the table. Take on the difference between africanamericans and whites, which is for the moment, systematically in recessions, africanamerican unemployment goes up a lot more than what unemployment during recessionary times. White unemployment during recessionary times. That speaks to how diversity of expense could matter on how people approach the economy. David narayana kocherlakota, thank you so much. A reminder, those fomc minutes will be released at 2 00 p. M. This afternoon eastern time. We will be coming to details and Market Reaction right here on Bloomberg Television and radio. Coming up, as Tech Companies grow in power, is Silicon Valley appear to deal more closely with regulators . Well have that conversation next. As you commute in, you can turn into tune into our colleagues. Bloomberg surveillance can be heard in new york, boston, the bay area, and washington, d. C. , or for that matter across the United States on sirius xm radio. Live from new york, this is bloomberg. Bloomberg is daybreak. I am emma chandra. Coming up in the next hour, audi of americas president. This is bloomberg. Bloomberg business flash. Financial might have to rethink its ambitions. The chinese financial giant controlled by jack ma has abandoned a plan and failed to win approval from the committee on Foreign Investment in the u. S. Two u. S. Airlines have joined banks in dishing out 1000 bonuses in the wake of many tax overhaul. American and southwest announced the bonus after the close of business yesterday. Airlines, banks, and insurers have led the way on bonuses. Here in manhattan, home resales fell in the fourth quarter. Sales of previously owned condos ad coop dropped from 11 year ago. That is your Bloomberg Business flash. Alix thank you so much. Good start. Off to a nasdaq reaching 7000 for the first time you First Time Ever yesterday. Amazon one of the drivers. The stock pushing higher after gene munster said it may acquire target. The future of retail will be a combination, and i would investors would view amazon is taking over the world, and that is a good thing. Alix our next guest to much disagrees. Scott galloway, nyu stern professor. He joins us now. Scott galloway the occurrence of getting harder and harder. Alix gene munster says it would be a good thing if amazon bought target. While you disagree . Scott anytime gene munster says something, you question your own beliefs because he is a fantastic analyst. Target would get scale and relationships with Consumer Brands and they have those things. I think amazons strategy is to go after the affluent consumer comments and target does not afford to that. In a itli retail. Alifraser of retail. Amazon has been able to break into the Beauty Counter or your closet, and they have had a hard time getting highend Beauty Brands that do not trust amazon. Having said this, amazon is coming under such intense scrutiny, i would not be surprised if they go under the radar and not announce any big acquisitions in the shortterm. David why did they go after whole foods, and how difficult will it be to absorb that . To amazon whatbe instagram was to facebook. Alix you called it. Scott i think the week before. They have 500 clean warehouse is within two miles of the 70 of the effluent population in america just from a distant vision standpoint, they could justify the 14 billion acquisition price. They have relationships with long tail organic highend food brands. In addition, we are about to have something amazon prime grocery. Amazon will be able to offer a grocery office in offering that will be the equivalent of a price of ar the toyota. There is a 0 return hurdle that we are talking about. What is the one thing that is not perfect about whole foods the only reason we dont shop there all the time prices. In medially after closing on the acquisition, kal down 70 . E a mercedes for the price of a toyota. Whole foods is about to become awesome. Alix the conversation seems to be turning toward regulation. Brian wayne says the public will begin to think Tech Companies have too much power and it will ripple through europe and the u. S. What are the best practices for amazon to combat that . Fulltime lobbyists in washington and the washington post. Youside from that wrote a post about how they might want to spin off a ws, look at a headquarters in detroit come and not new york. Scott not they listening to me, but if i was on the board of amazon, i would spend aws prophylactically. Breaking themselves up before they are broken up would be smart. I personally believe going to detroit and saying we will revitalize the heart of america would be a depth move. I dont think that will happen. Secondst ceos headquarters hundred and buy one thing and one thing only, where the ceo wants to spend more time, where his or her summer home is. Article be in the tristate area. Executives from amazon would like to spend more time in new york. And one business factor is the attraction and retention of key young talent, and every man and woman graduated from dartmouth and stanford likes the idea of spending time in new york and san francisco, and every other place in the world is a distant third. David no matter how big you are, how successful, there is a natural rival that could take you down. If you are on the amazon board, who were you looking at . Amazon was the company of the year in 2017, the first retailer to get off their heels. Jet. Com, which i thought was a bad idea, ended up being a genius idea. Make a report ecommerce sales growth of 60 . The stock was way up. They are announcing things. They are killing things, but its doubly the primary threat to amazon will come out of washington, brussels, or an ag in a red state, not in that order. Like the great conflict of the 20th century, the war against big tech will break out in continental europe. Alix who is the most vulnerable . Scott i would argue it is facebook. They have been the most tone deaf. General, the in damage the crises does is not the crisis itself, but the reaction. They finally got the narrative by after planes lowball, the people are getting angry at facebook. Unwittingly, Mark Zuckerberg has become the poster boy for a total death industry called big tex. Alix what is the result for that . More . Unable to acquire scott the answer is yes it is happening in europe. You are seen recently legislation in the u. K. Where they want to treat them as companies, not tech meaning they are liable and responsible for content. I would argue Margrethe Vestager is literally going to go gangster on these guys. Keep in mind, in the u. S. , where netgainers we are gainers. E get a lot from tech in europe, they register the antitrust issues with a fraction of the upside. There are not university or hospital wings named after google billionaires in europe. Sternscott galloway, nyu professor. I wish i wouldve taken a class with you at some point. Scott not too late. Alix coming up, the u. S. Faces a deep freeze apparently it is scolding snowing in florida. If you have a bloomberg terminal, check out tv. Watch us online, interact with us. This is bloomberg. Alix here is what im watching over the next 72 hours how cold it will be. Take a look at this map. The eastern u. S. Is seen frigid, frigid weather 10 degrees below in some areas of the u. S. , particularly the northeast. It will get warmer over the next 24 hours because of a snowstorm, on then even called her friday. I feel like a weather woman, but im interested in what it means for commodity prices. Check it out. This is the commodity index, up by about 2 over the last five days. Natural gas prices are little bit softer today. Power prices off the highs of where we were last week. Why is that . Run on what they thought would be the cold snap, and it is not as bad . Is there still too much storage . Will see how this plays out. They are using natural gas to generate power, why does the power price go up . Alix Natural Gas Prices still have rallied. But not, everybody. It is going to be called. Theng up, Bloomberg Markets open. This is bloomberg. Forrom new york city our viewers worldwide, im Jonathan Ferro. This is the countdown to the open. Jonathan coming up, below target inflation remaining the only job left undone for 2018. German unemployment dropping for a record low. Will roll in on a sleepy wednesday in january. Thepe says do not blame regulations. 30 minutes away to the opening , alltime highs kicking things up in january 2018, just how we left them in 2017. 62 record high close as last year and one in the books were 2018 at an alltime high into wednesday. Day winning streak on the eurodollar and, starting just north of 1. 20. A weaker euro, a stronger dollar, and treasury bids. We find ou