Transcripts For BLOOMBERG Bloomberg Daybreak Americas 20180108

Crew Getting Crude Oil getting a boost, david billionaire environmentalist and democratic Megadonor Tom Steyer goes to washington to announce his political plans for 2018. At 2 00 this afternoon, the house of representatives reconvenes after their holiday break and at 4 10 this afternoon eastern time, President Trump addresses the American Farm be all federation anthony annual meeting in tennessee. That makes him the first sitting president to do that in 26 years. Alix emma chandra is here with first word news. Emma steve bannon is trying to get in President Trumps good graces. He has issued a lengthy apology for comment at the remarks came in the new behindthescenes book that raised doubts about President Trumps fitness for option. To avert theng out parcel shutdown partial partial on january 9 Government Shutdown. Theres no indication either side has budged on key issues, immigration and the budget cap. Lawmakers may decide to once again pass a shortterm spending measure. Theresa may will reshuffle her cabinet according to a government spokesman. Newspapers report she plans a major reshuffle so she can promote more faces from a nation and more diverse of conservatives. Global news 24 hours a day, powered by more 2700 journalists and analysts in more than 120 countries. I am emma chandra. This is bloomberg. Alix its time for our daybreak first take where we did discussed the top three stories of the morning. Bannon says im sorry and cabinet shakeup in the u. K. , finally earnings are here. Jpmorgan and wells fargo kick things off on friday. David joining us is marty schenker, we will start with the d. C. Drama. A lot of the president s supporters were out in force yesterday saying he really is fit to be president. Lets have a sample here. The president s tweets absolutely reaffirm the plane, spoken truth, selfmade millionaire revolutionized reality tv and something magical happening in the heart of this country. No one questions the stability of the president. I speak with a multiple times a week. This is a man, he didnt become the president by accident. President is engaged and understands complexity and asks difficult questions about team so we can provide him the information he needs to make good, informed policy decisions. There is a level of genius to to personality as it relates his marketing, political judgment, his insight. When i work with the government president and people around him, he has been an active, engaged, and effective leader. David who was left out of there was the president himself. What we left out here was the president himself saying he was a stable genius. Never you probably have seen anything like this before specifically because there is social media and instant access to these kinds of venues. 100 years ago, president s do not have that kind of scrutiny. There were questions about Teddy Roosevelt way back when, but there was no news media to raise these issues. Its this constant barrage of Media Attention that i think is different. Solely generated by the president. The president could have let this Michael Wolff book go away, but he is after it constantly. Marty there is no way he is letting that go and he is not forgiving steve bannon no matter how much he apologizes. Alix shouldnt his allies have been on the talk shows talking about how to avoid a Government Shutdown, selling his infrastructure package, doing things to run a legislative agenda . Marty this is this a go chamber of is this president fit to be president and ignores the real specific policy issues that are confronting the country. We are facing a Government Shutdown in less than 11 days and no one is talking about it. David 8 legislative days and by all appearances, they are not coming poster together, they are going farther apart on things like the wall and dr. Daca. Alix what are the Sticking Point that this time, it seems i cant keep track . Marty without a dreamers solution, theres no way they are going to get democratic support for extending the government and without democratic support, they are not been a get there. They are not going to get there. The pieces are getting further apart, it seems. The wildcard here is donald trump. He could come as he did before, call in the leadership and cut a to theith democrats and detriment of some conservative republicans. Whether he is going to do that again this time is unclear. David second story is theresa may and the rumor about the shakeup in her cabinet. She took to the airwaves and said this is what is going on with the pound. Its a little surprising because all the reporting was maybe she is stronger and thats why she can redo her cabinet. Is this actually a symbol of strength . Marty there is some polling that shows conservatives in the momentum. Aining some it remains to be seen. Everybody is focused on the brexit talks. They have reached this very tenuous first stage and she is trying to reach up to younger leaders to gain momentum. The problem is there is no one else. Theresa may is it. There is no plan b for the british population. She is the only game in town. Alix who is more dysfunctional, u. S. Or u. K. Politics . Marty from this side of the atlantic, its hard to tell how any government could be less dysfunctional than the u. S. One, but it is possible the u. K. Is competing. Alix you have to wonder. If you are a european guy barnier for example, how do you look at this . You say take anything seriously out of the u. K. Because you are going to reshuffle all the time and you have no support. Negotiationes make difficult when you dont have somebody on the other side that can deliver on the deal. Marty and you think the e. U. Leadership are shaking their collective heads trying to think of what deal they can strike if the government changes in two weeks. Alix Bank Earnings start on friday and i am so excited and i am not being sarcastic. David she is not. Alix this is analyst earnings optimism. The white line is forward earnings estimates and the blue line is trailing 12 month earnings for sale. We have not seen that kind of gap since 2009. You keep having rerating of analyst estimates. From a bottoms up respective, they are not as amazing. I would have to credit this with more of a tax reform macro overhaul conversation. David loan origination has not been growing as fast as you like and trading has not been doing as well. Marty i totally agree. I think the tax bill and the process for prospect for increased earnings everybody thought this would benefit the banks because they are their statutory tax rate is much higher than the rest of industry. Bringing that down to 21 will have a significant impact. I think people will not focus on results of the Fourth Quarter, they are going to look at the outlook and they think its terrific for the banks. Alix overall, too, this is earnings revisions for analysts across the entire s p and i am curious to see how many times we heard tax reform in the calls come if you can chart that. Thats literally all we will be hearing about. Thats because the people believed donald trump. He said this would happen and analysts think its going to happen. Marty dont forget goldman said it will take a 500 million hit or whatever that number was in the Fourth Quarter and goldmans shares just keep barreling toward new heights. David all the banks are coming out with reports they are going to take a big hit. You say its the Fourth Quarter and that cleans up the Balance Sheet Going Forward and they will be in better shape presumably next year. Marty it looks like it and all sides point to continued economic strength globally and a concerted Global Economic rebound that has got to help the banks. Alix marty schenker, great to see you, thank you very much. Coming up, we are joined by david o in. We will david owen. We will discuss more on theresa mays cabinet shakeup. This is bloomberg. Emma this is bloomberg daybreak. I am emma chandra with your Bloomberg Business flash. Saudi aramco is ready to name Goldman Sachs and citigroup to help names according to people familiar with the matter, j. P. Morgan chase and hsbc, and Morgan Stanley are expected to be name as global coordinators. Aramco has said the offering is still on track to take place this year. Has offered tor buy for 3. 1 billion. It would give them treatments for rare bleeding disorders. Its the second offer the company has made. O nordisknordisk nov says declined talks. The upfront price is 1. 1 billion, but could end up paying 7 billion over time if the drug reaches certain milestones. That is your Bloomberg Business flash. May primer theresa minister of the u. K. Was forced to fire damien green last year, on sunday she had this to say about changes ahead. Prime minister may it snows apprise obviously the damien green departure means changes have to be made and i will be making some changes. Is davidning us now allen, chief european economist. Ok, talk to me about is this a good thing or a bad thing . Sterling is weaker, but how are you thinking about it. David she is being forced to do these changes and at the moment, they are not will lobby sleep continue with his role. At the end of the day, she has to plan for her successor. Its still unclear whether she will be the Prime Minister but the u. K. Going into the next general election, which probably have to be contested. Alix who is going to want that job. . Signed,nce brexit is sealed, delivered, the tories may want a new leader on the block. To improveve to try the tory standing against labour. They think they will hear the message around brexit, concern for theresa mays government is form theuld fall next government itself. They bring in new blood, a more diverse cabinet, a young cabinet that could potentially bring forward a new David Cameron for the tory party before she leaves. I think that is part of the game plan. This is being forced on her by damien greens resignation. David broaden the base among the constituency so she can gain more popularity. Its also worth noting dont wantu. 27 anyone else as Prime Minister of the u. K. At the moment. They will be very half the happy. Depending on who she brings income of the argument is for every eurosceptic or person who wanted the u. K. To leave the e. U. Who is leaving the cabinet will have to be replaced by someone with the same views. The market will focus on that. At the end of the day, think its about succession planning and trying to strengthen the torys position against labour. If labour has a consistent message on brexit and came out with a soft brexit story and sold it to the electorate, they could easily form the next government of the u. K. Alix joining us is bloombergs marcus ashworth. Walk us through the dirty details nerdy details of what is going on. Who is definitely safe . Of theink the big beasts jungle are likely safe. There has clearly been horse trading over the past week or two which kept the principal foreign secretary home secretary and chancellor, finance minister in place. Outside observers, theres isnt a huge amount to see here. Its a sign of strength the fact theresa may can do this. Really what it is about its a political move to put the conservatives in stronger position outside observers, against opposition party, which has had all the ,unning for the last year or so certainly since the election, which was a disaster for conservatives and this recent progress on brexit perhaps has allowed her to have strength to be able to shuffle the deck and bring in some new faces with some different, more upbeat tone. David might it also be a democrat have demographic move . We hear about young people and females being brought in. Is there a sense that maybe there are voters across the u. K. That would find the conservative party more appealing if they had younger women involved . Marcus without a shred of doubt. This is a relative thing. Some of the people you see may not be of everyones definition of young or exciting, but certainly there are a number of faces coming in, which will be a definite uptick from the old, gray, sort of male tory mp. I think all of us would like a change. A change for the changes sake. Younger and better and more representative of the newer intake of mps from 2010 and onward. Alix is that also sort of to wean people away from jeremy corbyn, too . Be if the concern would it moves to a very hard brexit scenario, obviously that would not appeal to the younger demographic at all and labor at the end of the day would probably win a large majority. Think abouthas to succession planning as well. From the tory party perspective, shes not going to be a leader for much longer. We see a leader running over the next couple years or so, but there are question marks about whether she will be there in 2026. Emma alix as we take a look at the bloomberg, this is u. K. Consumer spending that had the worst year since2012. You see real income not being able to keep place with inflation. Walk me through what the economy does in the backdrop of this brexit conversation . David o everyone except that cepts. K. Has slowed ace that the u. K. Has slowed. Also the Housing Market slowed and Business Investment has done ok, but it would have gone a lot better if it hadnt been for all the uncertainty. What we are noticing is things like m a activity is moving the other direction. The u. K. Has always been a magnet for m a, but the latest lessshows 2017, more International Companies acquiring companies in the u. K. I think the issue for us at the moment is brexit is not going to get settled over the next few months. Theres a whole issue of the required foral many businesses in the u. K. And nationally by the end of march this year and it may be the case that the simplest thing to do is to extend article 50. The problem with that, that would be toxic for the tory party because if the u. K. Extends article 50, then the u. K. Hasnt actually left the e. U. By march of 2019. Alix oh my god. David owen of jefferies, not making me feel good, staying with us. This is bloomberg. Alix taking a look at the fx market, eurodollar a little weaker, but positioning at a record. Bullish positioning is at a record for the euro and this morning, measure of sentiment touched the highest its late 2000 in december. David owen still with us. Give me your outlook for europe. David o im actually curious about the euro. We saw germany spending. They are running this current account surplus. If germany started spending and recycling the surplus in the eurozone, it could actually grow at over 3 . Alix even without a government . David o even without a government. Alix i am joking, but last year that could of been categorized as a risk. David o i think people are so assuming germany can survive. At the end of the day, the eurozone is outperforming expectations. If you get a recycling of german germanys surplus, it could be over 3 . Where we have come from, obviously thats a very good result. Remember the eurozone did have a double dip recession. The eurozone went into a deep recession and came out of it and went back into it. Theres a lot of pentup demand. On the one hand, merkel and micron macron and i you have italy, who knows where they are going. And the middle European Countries pressing in a different direction. David o at the end of the day, it would be interesting with the u. K. Leaving the e. U. Whether that forces integration within the also the u. K. Leaving changes the mix of the e. U. Level. Companies countries like poland particularly germany, france, italy, and spain. Levele voting at the e. U. Once the u. K. Leaves will be more driven by the very large countries and poland coming into the mix will have quite a big say in a you development. At the end of the e. U. 27 should come together and form a block and there should be a move to more of sort of a single european market. Alix is back on to lead to inflation . David o at the end of the day, the ecb remember is changing its focus has moved away from inflation in a way. Super coreot inflation, which in germany did touch 2 in the summer and they will be using that communication tool to exit their policies we think later this year. Qe could stop at the end of september and the market will stop discounting the ecb raising the rates before mario draghi leaves. I think the more more the market will focus on the ecb stopping doing what its doing currently. Draghi leaves october 2019. He will raise rates before he goes, but its possible they can raise the rate by december. Alix that is a call. David owen of jeffries, great to see you. Coming up, Sergio Ermotti. Retail. Under pressure like never before. And its connected technology thats moving companies forward fast. Ecommerce. Real time inventory. Virtual changing rooms. Thats why retailers rely on comcast business to deliver consistent Network Speed across multiple locations. Every corporate office, warehouse and store near or far covered. Leaving every competitor, threat and challenge outmaneuvered. Comcast business outmaneuver. Alix this is bloomberg daybreak. Two hours to the cash open in the u. S. Futures sloan it sliding a little bit. The dow off by 20, but the s p had the best start to the year since 1999. Its got a be like there has got to be like a song reference i can make. If you take a look at eurodollar, theres the y, record longs in the euro. Broadly stronger dollar, but 1. 19 is how we print. 50 basis points is how we sit right now. You are seeing buying coming in at the long end of the curve as we hit that 4 panel on friday. Crude up by. 5 , having the best start to the year since 2019 watch that level as we get going. David its time to find out whats going on outside the business world. Emma chandra is here with first word news. Emma President Trumps allies are defending his fitness for office in the wake of revelations from that exclusive hind the scenes book. Scenes book. The president announced the book by Michael Wolff and described himself as a very stable genius. President Emmanuel Macron is calling for the relationship between the e. U. And china to enter the 21st century. He is in china for a threeday visit. He wants more balanced trade ties and hopes to cooperate with the belt and road initiative. Thats a plan to spend billions of dollars on infrastructure between asia and europe. More problems at new yorks jfk airport following the storm last week. Flooding caused more delight flights to be delayed. Left thousandsdy stranded and others had to search through mountains of bags for their luggage. Global news 24 hours a day, powered by more 2700 journalists and analysts in more than 120 countries. I am emma chandra. This is bloomberg. Alix thank you so much. Bloomberg television corresponded Tom Mackenzie spoke ubs Sergio Ermotti at the Greater China conference in shanghai and asked him how ubs is preparing for new chinese brink bank regulations. Startedve been discussions with our partners a few months ago about not only going up to 49 , we also in the near future want to go up to 51 and legislation allows that to happen and we are pursuing that strategy to continue to grow our business in china and we are very pleased about those developments. What is the timeframe for that potential increase to 51 . Theres always backandforth discussions between us and our partners. We were very happy with the experience we made with our local partners. We want to find a winwin situation for everybody in a matter of months and over the weekend, the result is up to does that set ubs expand in china Going Forward about sergio we have been in full control from a managerial standpoint in china and its agreementsfinancial than it is from a strategy standpoint. We have been growing our business. Two years ago we set ambitions by 2022 to double our account in china and we are actually on track to achieve that. 2016re 600 people back in and we will be around 1200 by the end of 2018, so we are in line of our plans to grow our business. If we can have a more rounded financial participation in our business, we will develop from that. Alix joining us is Bloomberg Intelligence Senior Analyst for banks and Lisa Abramowicz of bloomberg news. Walk us through the transition of big banks diversifying into china. How they are doing it and who is doing it best. Alison i think ubs, they are kind of the leader in this effort. They are the leader in asia and like to call themselves truly the only Global Wealth leader and i think the data supports they are a leader in that region. Citigroup is also big in asia. I think ubs has been the most vocal about china. We are seeing announcements they are getting more aggressive, they are ahead of targets and we heard about reforms late last year. I think there was some excitement, but for the most part, those of us who have been around for a while have said we have seen this movie before and we will wait until we get a little too excited to see to see some meat to the reforms. Lisa we dont want to get too excited, we have seen this movie before. Theres a reason why china is theyup the 40,000 are trying to crack down and they are concerned about credit markets overheating. You have to wonder what risks these banks are assuming from a credit risk standpoint, but also with respect to the relationship with the chinese government. There was a story on friday that shocked me about one way china is trying to crack down on financial risk taking by limiting bond trader salaries to 154,000 a year. This just sort of shows the risk of that might not be fully appreciated. David why is it important that banks be on the ground in china . Bank of america actually sold out of their joint venture there and they said they can do it from hong kong or remotely. What can you do being on the ground particularly with a majority interest that you couldnt do from outside . Alison we have seen the divestitures from these companies. That goes back to there is only a few banks around the worlds, hsbc, Standard Chartered and citigroup that have made on the institutional side even though Deutsche Bank is another one they divested one venture, but they are still involved in terms of the institutional business. Its the institutional business they feel like they may have to have a presence and what we learned over time from companies in china and emerging markets in general is that you have to have a presence, you have to show that you will stay there overtime and stick with the market through the tougher times in order for clients to trust that you will be there and have a sustainable process. Alix i spoke to my we are in china, we are in china. We cannot go, we are in china. Sergio ermotti had this to say earlier. We always look favorably to any changes that make business where we operate more competitive to operate in we do expect those changes to growth in thesome economy and for sure, the profitability of not only the banking sector, i think the economy. Much of this has already been discounted in the prices as we speak. View, buty terrible its going to take time in to see exactly how its going to be implemented and how the market is going to react. You could see corporations in the u. S. Starting to expand and invest more in Going Forward as a result of this . That is the 64,000 question, thats the way to call it. I think we will he. End onenk that on one could say yes. A lot of on the other end, a lot of cash and ballots sheets were there before Balance Sheets were there before. Probably its going to be helpful more for small and midsize than it is for large companies. Alison andon and lisa still with us. Alison the big thing we watch trading is not going to be a good quarter. 20 is the guidance we got. The more interesting number on friday was Deutsche Bank and they expect their trading to be down 22 . Thats likely not indicative of the industry. They have sort of struggled to regain market share, so that 22 is even more negative when you consider the weaker comparison. I think the Competitive Landscape is going to be something people are watching. Goldman stepped up their efforts over the summer and those are areas where Deutsche Bank tends to be strong. Its going to be all about taxes. We want to hear what the impact will be. ,wo areas that have stalled mergers and acquisitions and loan growth, those are areas we could get a potential pickup. Weve already seen a little bit of pickup in m a as we have seen clarity. The other thing with loan grows has been the debt Capital Market, super strong. Trading week is strong due to debt fees and equity fees and asset prices very strong. Some of that has been taken away from loan growth. David the effect on the customers is terribly important. When will we get a sense whether this loan growth is going to come about . We have been hearing about it for a year now. Lisa it depends which Capital Market you are talking about. For companies it has been very robust. For consumers, the lending has come out of the banks from nonbank owned firms. Goldman sachs, however. And i were talking about this ahead of time. They have grown their market platform and they are wrapping ramping that up quickly. Imt to hear any guidance they have and to wonder which of the other major u. S. Banks are thinking about doing something similar. Yes we are reaching a point in the credit cycle where perhaps this is getting a little bit hot. That said, this is a very high profit area of is this and a lot of the other big banks have gotten out of it. Wells fargo in particular, which the expectations are very low, so you have to wonder what the profit equation is going to be for goldman and what that means for the other banks. Some i was talking to highlevel executives at goldman and i was like, 2 billion, give me a break. On the margin, it makes a difference. Lisa its a big deal and has a lot of potential to grow up much more. Also, Goldman Sachs saw all of the successes and failures of their competitors when it comes to online lenders. They underwrote the ipo of lending cup lending code. You have to wonder, they are ofing up this with a breadth knowledge and a broad base of capital and this has the potential to be profitable. The question is how profitable. How much do credit losses play into that and which banks are going to follow . David we may start to get insight friday. They will start getting Bank Earnings, you better be ready. Alison cry credit card credit, we will also be watching. David thank you both very much for being with us today. Coming up, the latest on what could be the Worlds Largest share sale. Said to consider two of the largest banks in the u. S. For its ipo. If you cannot watch television, listened to the radio. Tune into tom keene and jon ferro from 7 00 to 9 00 and pimm fox joined jon ferro. This ism new york, bloomberg. Emma this is bloomberg daybreak. I am emma chandra and this is the hewlettpackard enterprise greenroom. This is bloomberg. Now to your Bloomberg Business flash. Rivals areers stepping up the battle. Tax if i taxify wants to raise to fund expansion. My taxi is backed by mercedesbenzs parents daimler. Sergio ermotti tells bloomberg the swiss bank is ahead of its time to double headcount in china over a fiveyear period. A global banks have been taken advantage of chinas plans to open its financial market. In hollywood, the awards themselves may have seemed like leader strys leading women expressed solidarity with those who have come out from the against the casting couch mentality. That is your Bloomberg Business flash. Where we cover three things wall street is buzzing about. Goldman and citi for the win. Saudi aramco will consider them for the lead and its ipo. Investors of Pension Funds are pushing apple to tackle teenage iphone addiction. Tom steyer will make a major announcement at 10 45 as he sets his sights on d. C. For his next gig. Joining us is jason kelly. Tom steyer will make a major announcementdavid how about th, aramco . When is going to happen . Jason they are still saying this year. This could be deal of the century. Dose 2 trillion we are talking about potentially that saudi aramco is going to raise. Youve got a couple different factors to unpack it, the shear size of that and second, the absolute Way Investment banks the biggest investment banks in the world have been salivating over the prospects because you start to do the math of what the fees are even a 500 billion type thing and it all comes of course against the backdrop of what is happening in saudi arabia. This is one of the Major Economic stories of our time, i think. Alix when we heard about their advisors, we heard was an advisor, Goldman Sachs was not on the list. I talked to greg lim tao and i was like, you lost to what is it like not being part of the ipo . Here is what he had to say. Greg we will see how things play out. It doesnt come with a specific transaction, but we are working our way to get into all the deals. Alix the idea being that was not small deal, that was an eno rmous deal. I think by the time that transaction happens, there will be large banks that will be underwriters. Alix at the time i was like, what you mean, what are you going to do . And then low and behold. Ason the little bit of cheshire cat about we will see. I do think he worries too much when it comes to getting big deals. Citi, its adjusting to see them. Alix they are expanding their or something . The little bit of a horse trade in their . You have to get in on a deal of this size and import because this reshapes global Capital Markets. The next leg of this will be where is the ipo going to happen, does it stage in saudi, london, new york are all competing for it. David the second story is are we headed to a transformation of the iphone . We have this fascinating story jana that owns 2 billion in apple saying you have to take action to protect kids. This is about kids being addicted to their iphones. I daresay adults are addicted as well. The backdrop of this is that is so fascinating is this seems like the latest chapter in the reshaping of how we think about Silicon Valley and these Big Companies that really set themselves up to be so progressive and so good for society and now if you think about facebook, you think about twitter and google and apple of all things, this does start to frame the company and really sort of the whole Silicon Valley ifos ethos. I like that it is not just apple pushing for social investing. Also led the charge against exxon. It is like, what is your timeframe for that because if you are not going to invest in apple because of Something Like this, apple has had a monster run. What is your time frame when you know investors want a broader term . Broader shift going on here in the Pension Funds are starting to hear from their constituents. Big Pension Funds, the calpers of the world, you look at whats happening in canada where they are much more active in doing a lot more direct investing, they are becoming much more demanding of the companies. David and when he talk about do good investing, that takes us to our third story. Tom steyer has issued this hes got a big announcement today in washington about his future political plans. What is it. . We dont know exactly what its going to be. We know tom steyer is one of the most vocal critics of president donald trump. David he voted for his impeachment. And one of the things that came up over the weekend the Michael Wolff book and tom steyer over the weekend said he was buying a copy of that book for every member of the house of representatives and the senate. Hes a very wealthy guy. David and Dianne Feinsteins numbers are not that great and there is wide speculation he might run for the u. S. Senate. And going back to what we heard coming into to our segment about the golden globes, opera may be running for president. Alix its all well and great, but really what everyone is going to be talking about is oprah 2020. I think that took the twitter sphere by storm. And then with our own David Rubenstein tongue in cheek, but she did talk about the notion of she never thought about running for president and i said that people said, opera, you should run for president and she never really talked about it and she had a great moment and she said then i looked what happened this past year and she said and yet david and says myers set it up by saying he he told donald trump he could not be president. Alix billionaires being president , there you go. This wednesday, tom steyer will join us on Bloomberg Television for more on the announcement expected later today. Coming up, what i am watching today. Georgia and alabama faceoff in the College Football championship. Why president will make an appearance in atlanta . Watchcheck out tv , us online and click on our charts and graphics. If you missed tom keene, you can go back and watch them. This is bloomberg. David this will not surprise you, this is what i am watching. College football tonight, the championship game. Alabamas crimson tide and georgias bulldogs. President trump is said will be there. Extra security and is going down to the college championship. Alix is he rooting for one of the other . David i dont know. The person getting tickets had trouble getting tickets. Alabama,ou might be in but i dont the key can admit inclined toward alabama, but i dont that you could admit that. I think georgia is going to have to play really well. I would back alabama based on their history. They are pretty ferocious. This is the big deal for College Football. Alix does the kneeling controversy apply to colleges . Alix that is just david that is just the pros. That is interesting though, why does it apply . David President Trump has never tweeted, to my knowledge, anything derogatory about College Football. Alix you are going to stay up for this . David no. Alix coming up, mark sandler will be joining us, his Marc Chandler will be joining. His thoughts on tax reform and the dollar. When will he get a boost . S p futures when will we get abused . A boost . European stocks also having a killer start to the year, the best in a few years and the dax up about. 1. 2 . In the fx market, its a story of broader strains for the dollar. The dollar index up over 92, 210 spread, pretty much flat on the day. Help not getting a lot of reads this is bloomberg. Alix d. C. Drama. Allies out in force defending President Trump against Michael Wolffs book while the clock ticks toward a Government Shutdown. Switching things up. Prime minister theresa may ready to reshuffle her cabinet. Armani exchange. The bank is in talks to buy a stake in the joint venture as Bank Earnings are on tap here in the u. S. David welcome bloomberg daybreak. Im david westin along with alix steel. Turns out you are right about the issue in College Football. Thetwo teams stay int locker room until after the fm because they are afraid place my meal. Players might kneel. Alix heres where were at. Futures around the lows of the session after a monster start to the year. 50 basis points after getting to a forehand the last week. The eurodollar slightly weaker as its a broader Dollar Strength story. Crude up by three tens of 1 , its best start to the year since 2013. David now for the morning brief , environmentalists and megadonorminut tom steyer heading to washington to announces plans. The senators reconvene after the holiday break. President trump addresses the American Farm bureaus Federation Annual meeting in tennessee. That makes him the first sitting president to do so in 26 years. Over the weekend, donald trump had his team take the field in washington, defending him against charges and Michael Wolffs book that everyone around him is questioning his fitness for office. This is what his team had to say. The present tweets absolutely reaffirm the plainspoken truth a selfmade billionaire reality tvzed right al attempted to something magical in the hearts of this country. No one questions the stability of the president. I work with the president and speak with a multiple times a week. This is a man he didnt become the present by accident. The president is engaged. He understands the complexity. He really asks difficult questions of our team at cia to provide the information he needs to make good informed policy decisions. The truth of the matter is there is a level genius to his personality to his marketing and insights. I work around him and republican senators and hes been an active and engaged leader. David we now welcome kevin cirilli. If you watched the morning show yesterday, you would conclude that washington is only discussing one thing and that is the fitness of President Trump for office. Is that right or distortion of television . Kevin great question. The two big takeaways from this book are number one the democrats are united in their opposition in making this a question about present trumps fitness for office. It has clearly put republicans on the defense regarding that criticism that they have used this book as a political vehicle to form a cohesive political attack against that. We should note that candidate donald trump did the exact same thing to Hillary Clinton during the campaign. The second big take away from this weekend and from the past week is that Steve Bannons out. Hes done. He cannot get back in. I spoke with source after source after scioscia over th source oe weekend that said that Steve Bannons apology is too little too late. The white house is initially holding back their disdain in their statements and their tweets and the public fury against steve bannon. Waiting for an half hours because they were thinking that steve bannon was going to call into question the validity of the interview he gave and he never did. David there is business of the nation to be done down there as Congress Reconvenes now. We have the funding of the government. Is anybody paying attention to that . Kevin in addition to the funding of the government, they also have to release a budget by february 1, which will set the benchmarks for the remainder of the year and the priority of via the administration. The house of representatives gets back into session today, david. If you are outside of washington and trying to decipher what all this noise means and all this seemingly political chatter and volatility means surrounding the book, it means that steve ornon, the chief architect chief advocate rather of President Trump nationalistic agenda, someone who is holding a private think tank during the first 100 days in office for President Trump, is gone and his role is completely diminished even within conservative circles. David think you so much for your reporting from washington. Alix joining us now is mark chandler. Good to see you by the way. Marc happy new year. Alix how much of the weakness in the dollar overall can be explained by d. C. . Opportunity tohe sell the dollar and this book comes out and some people say that the dollar has been tracking the trump support. I dont believe theres much credence to that. We have had more bad news over the weekend and that the dollar is having its one of its best days in a couple of weeks. David take us through the rest of the year. What is the dollar going to the . Do . Marc i wish i could tell you. I thought the fed tightening was going to help the dollar, but its really the political aspect in europe. In france in march and april, the euro took off and has not looked back since then. We go back to economic fundamentals and im still struck with the divergent story havent really peaking yet. The big story is not so much the book, which Everyone Wants to talk about, but the next step after the tax cuts is going to be the infrastructure spending. On top of an economy growing 4 in q4, we have fiscal stimulus and we got infrastructure. Alix analysts expectations for earnings. The white line is forward earnings and the blue line is trailing 10 months earnings per share in the gap is widest since 2009. The bottomup consensus is not seeing that big of a growth. How much of that would you estimate is due to trumps hope . Marc i dont know. Stages ordle or late someplace after nineyear bull market, there seems to be a lot of excesses. A lot of my friends are nervous about the stock market over valuations. This week we get the Bank Earnings. Ill think the stock market is driving the dollar. I focus on Interest Rate differentials. We saw the chinese interest reserves and they came out for 11 months of the road now and their reserves go up. Lawof the reasons the u. S. Yield is lower than expected to be is because we have negative yields still in germany out six years. This is giving us more traction for the u. S. Treasury market. Alix all right, youre sticking with us. Today you have Central Banks still front and center. The fed president speakers will be in washington later on today where their 2 inflation target is going to be the focus of that conversation. Michael mckee will be attending the event and joins us now. The question that needs to be answered . Does the 2 target a cop was anything the fed wants done anymore . Lets go right i inside the terminal. Im looking at the pce headline inflation number. This is the feds target number. 1995, its been below 2 most of the time or at least half the time. Is this a realistic target anymore . Thats kind of the question. Over the weekend, the macon economic association, the group of all the academic economists, met in the united philadelphia and there was a feeling the inflation dynamic is broken and doesnt work anymore and the fed thinks of something new to do. David does it give you any positive tips have gone back up over 2 for the First Time Since march or so . A lot of people saying inflation is on its way finally. Michael it may be, but the question is does 10 giv 2 give you anything in regards as a target to that . Ben bernanke is going to be speaking at this conversation this afternoon and he says we should be about 2 for a while. You should do to inflation indexing where you let inflation run hot for a little bit to try to bring as much slack out of the economy as you can and ensure youre going to be around 2 . A lot of debate about whether the target itself is worthwhile anymore. Rke alix michael mckee, good to speak with you. Tying in the Central Banks and overvalued conversation, pimco came out and said this. Monetary overkill by banks more eager than ever to escape from blood of Balance Sheets and Interest Rates led by the global fed has the tide turning. When the tide is out, we will find out who is swimming naked. Marc i think that this is premature and i think that other Central Banks are pulling back. Ecb is slowing down there buying. They are buying to 70 billion worth of bonds. Its closer to 50 or 60 trillion worth of yen. I think the big question right now is who is next in Central Banks is canada. They had this monstrous number of employment and had more fulltime jobs last year than the previous three years together. We are likely to see the bank of canada raise rates january 17. David we had david owen on earlier and he was saying that they could raise rates. I dont know what he stricken, but i wish i had some. The ecb has told us they frankly the sequence of events. They will finish up qb and then after time, they will raise Interest Rates. Up until now, we think they will buy it september. I think that is pushing the gun way too much and i think listening to the hawks on the ecb rather than the majority. Alix we had a question from a viewer who says why do you think we will see 3. 5 or fou 4 growth in the gdp . Marc they are right. Its just below 3 . The new york fed is closer to 4 . I was taking a ballpark in that range. The market is a little more than 3 . Regardless of what it is, it will be the Third Quarter in a row about 3 growth. Im really reluctant to give that credit to the Current Administration and the dynamics have been in place for quite some time. David we have had some weakness before that. Its making up for lost time. Whats it going to be Going Forward . Marc i think theyre forecasting around 2. 4 growth for this year, which means that bump. Stimulus is a small it doesnt really change the underlying dynamics of the u. S. Economy. David thanks for a much, Marc Chandler. As european leaders continue to map out the political future, we will discuss what this means for eurozone confidence and growth of the markets. Thats next. This is bloomberg. Jonathanemma this is bloomberg daybreak. Im emma chandra with your Bloomberg Business flash. The Department Store chain raised its earnings forecast after reporting strong holiday sales. Call says sales rose 6. 9 . The Worlds Largest Wind Power Company is boosting its forecast. Its driven primarily by more orders. The Danish Company shares rose by 6 . Outspoken criticism of the sec appears to have cost as hedge fund. In a letter to clients of a megaadvisors, the longtime auditor has stepped down. The move was tied to negative comments he made after he sees the firm an inside of Insider Trading allegations. David british Prime Minister theresa may reinforced talks about a shakeup in a cabinet that could come as early today after a bbc host asked if that stri shakeup was coming. Obviously damien greens the parts are before christmas means some changes do have to be made. I will be making some changes. Onid for an update now where things stand, we welcome our brexit editor in london. No prizes for guessing, but lets guess about whos going to be in and out. That the we think is big for jobs are not going to be we affected by the shuffle and it will be an opportunity to bring in some new talent and bring in some fresh young faces, possibly minorities. On the margins of the reshuffle itself, theres this beater of the minister arriving at downing street. We have heard this morning that the Northern Ireland secretary has resigned because of ill health. This is important because he is a key person keeping the party in Northern Island on her side. They are propping up theresa mays government in london, but they are also crucial in the brexit talks. If you remember in december when we got close to a deal with the eu, it was scuttled at the last minute and had to be put back on track. He was really an important figure in that role. We start off the day with some slightly negative news for theresa may automat on a day tht was meant to be her big reshuffle. Have thisuming we do reshuffle later, whose the principal audience for what shes doing . Is at the British Public generally . Or is it her cabinet or the europeans she is negotiating with . Emma the main audience is always the voters, isnt it . There is one appointment which perhaps is targeted slightly to the eu side, which according to the daily telegraph, is that shes going to create a new role for no deal brexit. This person would be in charge of making preparations in case the u. K. Feels it needs to walk away from talks without a deal. You can interpret that possible appointment for voters and frexit backers it her cabinet and to a certain extent the eu that they are serious about it. David thats Emma Ross Thomas in london. Aix take a look at sterling little weaker on the day in the midst of the stronger dollar. What is your take on whats happening with a Cabinet Reshuffle and sterling . It tells us something about the balance of power between the soft brexit camp led byard exit boris johnson, i think that mostly this is a function of sterling weakness thats a function of the dollar. I think we are neutral. We want to watch it break out of that range. Alix what is your estimation . Is it a harder brexit after the shuffle or a softer brexit . Marc it will be pushing toward that hard brexit camp. The First Quarter is the discussion is going to be about this transition. End ofleaves in the march 2019, but they will have a transition and thats what theyve got to negotiate under whatever conditions of that transition. What is the uks ability to negotiate thirdparty trade agreements . That all has to be worked out during this transition. Thats before a new relationship can negotiate and start in march or april. David putting more emphasis on the commercial side of this, particular the banks. At the beginning, she was saying thats their problem and not worried about it. What could she do to really help the banks and the commercial side of it . Marc saying that she will stay in the common market. David whats the second thing she could do . [laughter] marc the issues that if the u. K. Leaves, the regulatory equivalent has been maintained, which at first might be maintained on day one. Euetime down the road the will make a rule that the u. K. Banks dont want to pass or except. This will make this equilibrium and as when the trouble will come. I think the u. K. Still wants its cake and eat it too. Are of the zynga markets trade purposes but not in terms of the European Court of justice and not terms of immigration. David what kind of damage can be done on the eu side of the . We tend to hear that its all bad for the k and not for europe. Its sort of like the u. S. With mexico. Its all fine and good to say we are going to cut you out, but theres a lot of back and forth across the channel. Marc they have the closest trade ties with the u. K. I think europe is so much bigger. Theres going to be a knock on effect and its not come up to be good for your. Not than just good economically, but heres whats happening. Leaving for the west and the u. K. Is having conflict with poland, and the east. A future going to need of what its going to be like postbrexit. David Marc Chandler staying with us. We will talk about saudi arabias efforts to revamp its economy. The conference appears to be according ordinary citizens courting ordinary citizens. Thats next. This is bloomberg. David the Saudi Crown Prince is continuing to shake things up in the kingdom. This weekend authorities change their budget plans, giving more to ordinary citizens and putting 11 princes in jail for protesting the government refusing to pay utility bills. We welcome in glen carey emaar bureau chief for saudi arabia. He comes to us from riyadh. Chandler. Us is marc explain the significance of the changes of the weekend. Glenn over the weekend, the government announced hea handouts to the saudi population and at the same time arrested 11 princes. They want to offset the impact that saudis feel given the recent price hikes that have come within the 5 increase in gasoline and electricity costs in the country. They want to offset that. Its really crucial for the crown prince of the country to maintain that ace, which is his public. At the time, hes also doing things shaking up the kingdom. He has arrested princes and rich businessmen and billionaires in an anticorruption campaign. That has been welcomed by the public, but over the last week, you have seen the people grousing over these changes and the increases in cost of living. David theyre going to have an increase in pay essentially for ordinary workers. Do we have a sense it will be enough to overcome that grounding as you call it . Glen it depends on how long it lasts. The saudis we are speaking to say it will not be long enough. If you look at the breakdown of what has been given, it is 5,000 for the military on the frontline and the border. Its 1000 for government workers for a time. It depends on how to use that and the length of duration. David that is glen carey. Alix what i are your clients asking about saudi arabia right now . Marc aramco could be the largest ipo in the world. The saudi stock market is not integrated into the world indexes. Msci willn july, the make a decision on to include saudi stocks. People are beginning to follow saudi stocks and more industries and really doing their homework in preparation for what could happen in the middle of the. Year. Alix would they be interested in the saudi aramco idea . Marc because of the size of it and the dominant player in the oil market. Alix its not basically an independent company. He would not get exposure to everything. How do they factor in that . Marc im not sure. We have got experience now in the market trading chinese stocks. A lot of chinese stocks are state owned or state participated. Its another wrinkle in it. Whats interesting about where the ipo gets launched is that the uks talking about wanting it and they might even change the rules to allow precisely this. I dont think the u. S. Is quite is willing to dilute the rules to accommodate the saudi oil company. Alix didnt trump said he wants the ipo in u. S. . Marc chandler, youre sticking with us. December payrolls show the u. S. Added more than 140,000 jobs come about retail was down 20,000 in otherwise strong retail buying season. What gives . We will break it down. This is bloomberg. Alix this is bloomberg daybreak. Im alix steel. We are in our until the cash open. Futures down by five points, but they have had for record closing highs and thats the best start to the year since 1999. European stocks losing a little steam although they had their best start to the year since 2013. And asset classes, its a story of a stronger dollar. The dollar index up, putting pressure on the euro. 1. 19 is how we print there. Spreads flatter, but 50 basis point higher than that for handle we saw friday after the jobs report. Nymex crude up 3 10 of 1 , the best start to the year since 2013, right around the pre crash highs. Lets get an update on whats making headlines outside the business world. Emma chandra here with headlines. Emma making revolutions from the explosive behindthescenes book. The president again denounced the book by Michael Wolff and described himself as a very stable genius. Here in new york, theres a report of a fire on the top floor of trump tower. More than 80 firefighters have responded. And the smoke eventually dissipated. There are no reports of injuries. Trump tower is President Trumps primary residence before he was elected. More problems at new yorks john f. Kennedy airport following a severe storm last week. Flooding at one of the terminals caused more flights to be delayed or diverted. The storms have left thousands of passengers stranded and others had to search through mounds of bags for their luggage. Global news 20 for hours a day powered by 27 journalists and analysts in more than 120 countries, im emma chandra. This is delivered. Bloomberg. Alix look at that picture for a second. Can you imagine if that was your life . David im not surprised. Alix and laguardia is a hot mess. David jobs numbers came out on friday and it showed the United States added 148,000 jobs in december but it lost 20,000 retail jobs. This comes at a month went retail is usually at its peak. To help us understand these numbers, we welcome Julia Coronado here in the studio. We are still joined by Marc Chandler. From washington we have sarah hall set. And she covers retail for us beautifully. What is going on with retail . These are the traditional retail jobs and they are disappearing. For the year as a whole, there was a loss of those jobs and warehousing ads jobs. This is a transformation from instore to amazon. Its not like stores are going away, but theyre not growing the way they were in the past or the way they would have with robust consumer spending. David is that right . Is this another instance of the online taking away from the brickandmortar . Sarah thats exactly right. This is a disadvantage for workers obviously who are affected by this, but if we look at the bigger picture, theres a lot of indications that this doesnt suggest weakness in retail. Suggests a shift from brickandmortar to online. Just this morning we had holiday sales from coals that really blew the doors off. We had pretty strong holiday sales from macys and jcpenney reflect a consumers are willing to spend right now. Alix that stock really blowing past in premarket. Online sales did accelerate, but they also said physical stores did also see strong traffic. Is it fair to keep making these broader statements that the shift to online with some physical stores and Companies Still doing right . Sarah i think that retailers are really figuring out how to retailers,ni channel which is a turn for both brickandmortar and ecommerce blended together to satisfy the customer. The most troubled area in the entire retail sector. If we see those stores performing strongly this holiday season, to good imitation its a good indication that a rising tide lift all boats. David how strong is the economy overall given the consumer role in the u. S. Economy . Marc i would think some of the decline in retail may not just be the amazon effect. When i go Grocery Shopping now, i have to check out my own groceries. Say its not just online, but its replacing the people at the store with machines. Thats a bigger development. Alix i wanted to be a cashier when i was younger like five or six. [laughter] julia it satisfies that dream. Alix if we do see physical store traffic Getting Better and online Getting Better, can we read through in terms of productivity at all . Julia we did see productivity improve in 2017. We did see a better mix of growth. There was more investment. As the labor market tightens, theres a tendency to invest more in automation and other efficiency enhancing technologies. So yeah, that is the stage of the cycle we are at. David basic economics says if we have your people came less money for it, but we are selling more stuff, the margins must be going up. Is that right . Sarah i think we will see some of that. Also, retailers have got this big gift from washington in the form a core protection form. This is the thing to have been agitating for more than else and they have that wind at their backs in terms of profitability in 2018. Alix crocs also have an they are boosting their Fourth Quarter margin outlook to 45 . They were discounting for sure. That is your point that its definitely happening. Marc two things is that one is productivity. When it comes to Service Sector jobs, what about productivity . Walmart uses sales by employee to measure productivity. Sales by employee goes up. The other thing i would say is broadly speaking how important the consumer still is, but im not really convinced that this is a brandnew world and this is incremental. We replaced a lot of tellers with atms years ago and thats just the next stage of this. David this sounds good for retailers and the margins, but what about workers . Its not just number of jobs, but its also wages. Julia thats what we saw and the report that which growth remains subdued. We are not broken out of that 2. 5 range we have been stuck in the last couple of years despite an Unemployment Rate at 4. 1 . Thats the conundrum for the worker absolutely. Was what i thought interesting is that we saw deceleration mostly in the Service Sector. But wages, he saw better wages in the Service Sector than the good sector. Julia there are some noise in the monthly wages. I tend to look at the annual numbers, but both sectors, the goods producing and the Service Sector, are seeing subdued wage growth. Even manufacturing wage growth as you noted is adding jobs at a pretty robust pace. Wage growth is decelerating. There is this mystery there for a nontraditional relationship between a robust and tight labor market and the lack of wage growth. Marc one of the factors we dont talk about so much is the mergers and acquisitions that lead the concentration industry. You have fewer choices to go to an employee and fewer places to go shopping as a consumer. The monopoly explains the wider Profit Margins as well as the slight growth in wages. Julia although we still dont see a lot of inflation pressure. Right now you have amazon, which is a different business model. They are monopolistic firm, but they are not using it to raise prices. They are squeezing the cost margin and keeping prices low. We have neither wage growth nor inflation at the moment, but a Pretty Healthy economy. David sarah . Sarah i think thats right. Zon has clearly tried to their strategy is to get you into their ecosystem with low prices. They want amazon to be your hub for everything, for your photo storage, for your media conception. Keeping this prices low and being competitive with walmart is part of their strategy and will continue to be for the long haul. Alix we talk about tax reform and is that going to boost inflation . Jeffries says its going to be Companies Using tax reform benefit for competition purposes. It will be a more deflationary effect than inflation oary,. Thats the market th we are in and its hard to see that changing and time soon. Stuckularly when you get in this equilibrium where consumers dont have a lot of growth in their purchasing power, which growth is subdued so they are still pretty pricesensitive. They are choosy and one deals and thats still the case even though the economy is humming along nicely. David does the wage phenomenon show any times is turning around anytime soon . Is it just driving us an extra blue lower inexorably lower . Marc we will see this in the cpi later this week where the Service Prices are beginning to rise with the momentum in the share prices being the turnip, some of the things that yellen warned us about last year. The Service Sector measure of prices is fading. The goods measure of prices is still very weak. David what you looking for in terms of gdp growth in United States this year . Julia we are starting off at a nice 2. 5 pace. We will see moderation as the year progresses globally. We see china intending to slow its economy down from a redhot pace and that will spill over into some moderation in the Global Manufacturing sector. David two point 4 more or less and a little bit of increment with the tax cut. You see in increment with the tax cut . With coupletle bit times on investment and Government Spending because i do expect to see a spending bill that increases the federal budget a bit. David sara, thank you so much for being with us from washington. Julia coronado and Marc Chandler, thank you both a much. Prominent figures from d. C. The hollywood are weighing in on freedom of the press. More on that conversation next. As you commute in today, you can tune in to radio and hear our colleagues tom keene and Jonathan Ferro from 7 00 to 9 00 and then tim fox will be joining tom. Icad be heard in boston, the bay area it can be heard in boston, new york, the bay area and all over on sirius xm. This is bloomberg. Emma business bloomberg daybreak. This is bloomberg daybreak. I, emma im emma chandra in the hewlettpackard enterprise greater. Joseph nine, Harvard Kennedy School Professor at 10 30 a. M. New York Business time. Making the largest share ever. Him andgan chase, hsbc Morgan Stanley are also expected to be named as global court vendors along with goldman and citi. Aramco said the offering a star trek to take place this year. A danish drugmaker has offered to buy a Belgian Company for 3. 1 billion. Its a second offer the company has made. Novo nordisk said it has declined to engage in talks. Cbs is in talks to buy a majority stake in its Chinese Security joint venture. The swiss bank is ahead of its plan to double headcount in china over five years. Global banks have been taking advantage of chinas pledge to open its financial markets. Thats your Bloomberg Business flash. David hollywood gather less night for the Golden Globe Awards with a focus very much on the me too movement in the wake of explosive reports of Sexual Harassment in the industry. Opera address the Historic Developers in the wake of the Harvey Weinstein scandal, but she also reached out to emphasizing the importance of the press in helping to bring it to light. We are tired of the victims and the secrets and lies. I want to say that i value the press more than ever before as we try to navigate these complicated times. David and on the very same day that oprah was talking about how important the press is, President Trump was tweeting once again about the prevalence of fake news. This is what he had to say. Ive had to put up with fake news for the first day of our from the first day i announced that i would be running for president. Now i have to put up with a fake book, written by totally discredited author. Ronald reagan have the same problem and handled it well. So will i. Joining us now is Marty Shanker. Thistices position juxtaposition of fake news and uppe Oprah Winfrey on the other. Marty its an interesting juxtaposition. The Immediate Reaction on the twitter sphere is that opera is a candidate in 2020 for the democratic nomination. Alix we can no longer laugh at that. Pause it also speaks to a to a real leader coming through in the Democratic Party although Elizabeth Warren may not say thats correct because she has a big war chest already. David theres a lot to talk about here, but one way is that all this attack by the president on the fake news hurting or helping ratings . Paul the ratings for the news organizations across the dial, whether its cnn, fox, or msnbc, have generally held up very strong after the election. Typically we would see the ratings decline after an election by 40 or so and the ratings are holding at very high levels. For the networks, trump is actually good business. Even if you look on the print side of the equation, a lot of the newspapers are seeing significant increases in their online subscriptions, again being driven by consumers need for news and information. Trump has been good for the media business. David its ironic to me that its good for both sides, left and right. I watch some last week and msnbcs coverage of the Michael Wolff but had the opposite of fox newss and yet both of the ratings go up. Paul its been interesting. Clearly we have seen a polarization of some of the agendas of the various networks, but again, i think the audience is finding the network that they generally align with and we are seeing those ratings hold up across the board, which again is the bread and butter of a lot of these Media Companies to get the big ratings and sell advertising. Trump and the current political environment crazily has been very good for the media business. Alix do we have a read on the demographics for that . Paul i think fox tends to skew a little bit older, but news in general skews a little bit older than some other programming genres. Fox tends to skew a little bit older. Theres a lot of advertisers that like to target the audience that consumes news. It tends to be a very profitable business for the networks. We know that fox news is very profitable for to for century fox. Cnn on a global basis is extremely profitable for time warner. Ae News Business is generally very profitable business for these big Media Companies. Thats why they continue to put a lot of resources behind them. Marty is not lost on formal trump himself how important he is to those media businesses. He infamously tweeted that the media is going to back him in 2020 because they know if they lose him as president , their ratings are going down. Alix what would happen to cnn if they cannot trump about 24 hours a day . David i want to talk about going be on the networks. Its at this point a very traditional business. Whats really coming on liking busters is streaming. Example, butix as netflix versus cable subscribers. Cable subscribers is white and its flat and coming down a little bit, but netflix keeps going up. You can see this through streaming service after streaming service. People are getting their news and entertainment and sports for that matter as we are looking toward the bowl championship tonight off their mobile devices. Marty theres tech talk by bloomberg, another example of that very thing. Paul can speak to this better than i, but its something that the media companys have to come to grips with. David how are they coming to grips with it, paul . Paul we are seeing the media companys recognize the need to have a direct relationship with the consumers. The most recent example that would be the Walt Disney Company and bob iger finally recognizing that issue and disney announcing that they are going to have a direct consumer netflix type app for espn and for the traditional disney programming. Its kind of bypassing if you will the traditional the and reallyr try to establish much like netflix has done a direct relationship with the consumer. Consumers are consuming more of their content online and a Wireless Environment and the big Media Companies need to be there as well. Alix im going to make a weird parallel so bear with me for a second. Iin you wal talk about mifid and investors getting more aggressive, is it the same thing for media . Will they have to get more aggressive and partisan interviews to get money . How do you know whats actual news . David thats completely happening. It started out with afternoon talk shows. They went into cable news. The fact is if you are vivid in your opinions by the way its cheap. You dont need many reporters. You get one person with a strong opinion and put him in the studio with the camera on and theres money. Marty president obama talked about this recently about house to has to be a multitude how there has to be a multitude of voices. His concern is the people that have the view of those voices never have another view. That is the real warning sign for our political process. David does this mean the death knell for mass media as it were . Paul i dont think so. Clearly we are seeing the bundle of 300 and 400 channels really fraying on the edges and declining 2 to 3 per year. We are still seeing Network Television doing very well and broadcast television doing very well in terms of attracting advertisers. Learly there so much more competition for consumers time and we are seeing everybodys audience be fractured and actually declining. At the end of the day, some of the big media Companies Still attract the big audiences and the big advertising dollars and suspicion fees. David many thanks to Marty Shanker and paul sweeney. Alix when i was making the switch to bloomberg from digital, i was going the opposite direction. What you doing . Six years later we are still here and theres a lot of voracious hiring in terms of talent because there is not a love talent out there for tv. David i was in abc 19 then you want in 1991 and they said evening news would be dead in a. Ur year or two alix if you have a terminal, watches on tv. Just go to tv on your terminal and scroll through a chart you may have missed. This is bloomberg. Alix heres what im watching today. The fed speaking circuit is really ramping up and today we have the atlanta fed president speaking at 12 40 p. M. And the San Francisco president speaking at 1 35 p. M. And boston fed president speaking at 4 00 p. M. The question is going to be how did they start categorizing inflation and what are they looking for for rate hikes . David are they waiting for jay powell . Are they waiting for the new chair . Might make you spoke with jim bullard last week about inflation and whether aspects we should be targeting. I think the 2 target is quite important and has been very beneficial in keeping inflation low and stable. If anything, keeping it low and too stable. I would not want to mess with that. What we could do is put a process in place where every five years we thoroughly reviewed the inflation target and think about why we have it and what we think it should be. The bank of canada does this and i think thats a best practice right now. The fed could adopt that. A calendar basis and not let it interfere with the daytoday Monetary Policy decision. Alix to me that means the phelps curve doesnt work and we have to figure out whats going on. David the we want a replacement or not . I was around when there was a lot of inflation and thats not a good thing. They seem a little disappointed were not getting more. Alix if we do get a little bit, what does that wind up meaning . Does that help you source out whether you are going to hike or not . David not sure their model works. Alix at the end of the day, thats what it comes down. Coming up next, Merrill Lynch and sean darby sees a 5 correction in the first half of 2018. This is bloomberg. Jonathan its 30 minutes until the start of trading. This is the countdown for the open. The record run continues in 2018, 4 days and for all time highs. , the eurozone confidence surges toward a two decade high. The tax bill will shape earnings season. Jpmorgan kicks things off friday. We kicked off a brandnew trading week, we are 30 minutes away from the opening bell. Futures are little bit softer. It was the best week on the s p in over a year. Eurodollar is on the back foot. 5 . Own about point for the equity markets, its pretty straightforward. Four days of trading,