The chart of the day, check out the yield curve. 210 spread. Points, we have seen the biggest decline in that 1980 ore like 2007. David what happens when we get to 50 . Do we have confetti . Alix that is bad. Get u. S. Adp5, we employment change data for the month of november. In london, Philip Hammond will be speaking at the Treasury Select Committee at 9 00. In washington, President Trump is set to make a statement on moving the u. S. Embassy in israel from tel aviv to jerusalem at 1 00 this afternoon. That is coming up today. Our top story this morning with the daybreak first take. Risk off markets overnight. Bitcoin hitting new heights. Of course, brexit because we always have to talk about brexit. Joining us are Lisa Abramowicz and joe weisenthal. Lets start with the risk off. What is going on . Joe good morning, i have no idea. It feels to me like the themes are international enough such that it is hard to point to one thing, except that a lot of things that have been working very well this year are not working now. In the u. S. , it is most notable in the underperformers in tech. We are also seeing emerging markets, which have had a stellar year, significantly underperforming, leading some of the way down. The Industrial Metals getting slammed the last couple of days. That is possibly china related. You can point to individual things anywhere and say, there is concerns in europe because brexit is a mess and there is concerns about taxes. There is concerns in Industrial Metals in china, but it feels like there is a systemic shift going on in portfolio allocations that may be bigger than any specific story. Lisa i do not think this is an accident after we get a clear sense of what the tax bill will be. There is some concern that they Multinational Companies will not benefit as much or will be penalized. Had a webcast yesterday and expects that 10 year treasury yields could go to 5 or 6 within the next four years. He says we are nearing the end of u. S. Credit outperforming treasuries. Basically, a bearish tone with respect to some of the most popular trades of the year, and he is echoing the sentiment of others. Alix he wishes shorting the treasury market would work out. Lisa fair enough. Alix if you come inside the bloomberg, it is the 530 spread , the 210 spread, flatter, lower. 30 basis points have come down in the last few days in terms of 210 spread. What does that wind up meaning . We do not know why, but in terms of what next . It is a scary thought. Lisa the yield curve has become a flashpoint of the year. To say yield curve and controversial is something that in the past might not have been imagined. Some people say it is not an accurate reading on what is going on and others say it is not flat yet so party on. Others are saying this indicates a slowing of the economy. The fed is going to hike rates, some people say four times next year. You will see the longerterm yields stay where they are or possibly go lower, and people ratchet back expectations for growth. Alix Jeff Gundlach will not be happy. David bitcoin is up. What is going on . Is it real . Joe i do not know if it is real or anything, but i know the level we are seeing now, a year ago the people who were bullish on bitcoin were saying things like this is the future of money. Now, it is very much like, a bunch of people are going to get in tomorrow so you might as well get in today, which is a different tone. You see these people pumping it and a lot of the ball cases, futures and etfs are coming. Why not buy today . It is a very zerosum view on it in this stage in the mania. Lisa the discussion has focused so much on whether or not to get in that people are not focusing perhaps enough on the feasibility of bitcoin. There have been a number of stories about the Energy Consumption of Bitcoin Mining and bitcoin transactions. These figures are shocking. Energyure said that consumption of one bitcoin transaction is equal to the energy needed for nine u. S. Homes for an entire day. Others are saying the entire Energy Footprint of bitcoin as it is now is equal to the Energy Output of denmark. To put this in perspective, as Payment System uses that compares to the equivalent of 2. 8 million u. S. Households to run 350,000 bitcoin transactions. This seems unsustainable sustainable at this point is a widespread currency. Also is unsustainable is the process in brexit and where we are going from there. Headlines keep rolling out. Theresa may at one point was speaking. Walk me through what we learned in the last two hours. Joe this week has been so funny, because on monday david maybe for you, not for me. Joe in a popcorn gift kind of way. On monday, they are going to have a deal, they are really close on this thorny issue which is the irish border. That did not happen. They do not have a deal, but at least they are getting closer. It turns out, they are not. The story today, which i find wild is david davis telling the house of commons that they do studies ony detailed the impact on various industries. What is disturbing to some as people are saying he said in the past that they did have all this stuff and they had it in excruciating detail. There might be some wiggle room in terms of the language, technically what did he say. That he said,nned we have not done any of the work in terms of how brexit will affect various industries. Every day you think it cannot get any worse. David you had one job. This was his one job. Sorry, we did not do that. Joe there is a whole brexit department. Alix there was a study that said people are disappointed with the way that it is happening, but yet they still would vote for brexit. This is all going to be about theresa may. She will get thrown under the bus and it may be good for the labour party, but at the end of the day they will still want to do brexit. Lisa i feel like people have gotten numb. The parallels of the u. S. With , i willit negotiations just say that it is sort of a numbing of the possible population. It will keep being a mess. Joe are you being funny . If you look at the pound. Lisa look at markets, they are not reacting that seriously to anything. Joe the pound is well above its lows of the year. Only since late november. You can see it is down to where was november 28. Like thet you feel asymmetric risk as to the upside . It is so underpriced. Joe the pound is way down versus where was after the brexit vote. I cannot believe it is getting worse, the marketers are going, it is a little bit of a big deal. Alix theresa may speaking about p. M. To use, and she said good madeqs, good process has this has been made. I wonder what people in that room are thinking. Lisa abramowicz and joe weisenthal, thank you. It is the longest losing streak in u. S. Equities since august. Exactly what is causing that selloff. This is bloomberg. Alix this is bloomberg daybreak taylor us is bloomberg daybreak. The Worlds LargestHome Improvement chain home depot plans to buy back 50 billion shares. Before today, home depot stock Steinhoff International punished in europe after a ceo quits amid counting accounting irregularities. The company owns pound went in the u. K. , a french furniture chain, and mattress firm. Goldman sachs is trying to revive its struggling commodities unit. Goldman hired deutsche banks david costa do star to lead energy sales in europe. The unit is on track for its worst year since the firm went public. That is your Bloomberg Business flash. Jonathan i love that story, because the question with goldman alix i love that story, because the question with goldman is how do you measure success and i think it is higher. David they are redoing their commodities unit a lot, and this is a big higher. Hire. The in the markets, it was longest selloff in u. S. Equities since august, but the last two sessions were interesting because we were flattened to the close and then we sold off. That is unusual for the s p because usually we were buying into the close. Last week and next week, flat. Down those last two days, what does that mean . Joining us is Stephen Parker and Chris Watling. Three options book swearing, china, tax . Early december in what has been a great year for equity markets. Clients are happy, feeling good and want to lock in profits. I do not think this is unusual. What has been unusual is the lack of selloffs we have seen, 13 straight months in a row. We have never seen even 12 months in a row, so this is just a little bit of a normal clearing of markets and profit taking, nothing we are worried about. Alix do you agree . Copper might tell you differently. Hris i agree positioning was extreme and stretched toward things rotating the other way. December has classic seasonality and generally sells off until the 13th and 14th. Maybe a few days early on that pullback. Then you get your santa rally in twoyear end. I like it. The market is doing what it is supposed to be doing. David what does that tell you in the new year . You are long equities . Values are pretty stretched. Chris valuations really never signal the end of bull markets. When the corporate sector becomes under pressure and there is excess, and there is none of that at the moment. I think we are in a bull market and theres plenty more to go. David what about the financial conditions . Like they get tighter tied to tax reform or tax overhaul . Might it drive the fed to raise rates faster . See somewe could tightening. Markets are pricing in possibly two hikes nest year and we think it could be three or four. They are doing it more because of the globalized growth story more because more than because they are forced to. We do not think financial conditions will tighten to a point where we can stop the synchronize Global Growth story. David the Balance Sheet of a lot of these companies, a lot are strong. Are there some that borrowed on the margin . Who could get squeezed with more of a rate increase . Stephen a lot of these companies have taken advantage of really low rates, easy credit conditions, to refinance their debt. They have extended out maturity so what makes it may be harder for them to access markets but they may not have to. Alix there was a bloomberg article yesterday from Charles Lieberman who says investors are dismissing out of hand any consideration that inflation pressures will emerge with the fiscal stimulus. The bond market has to worry about it and they are discounting it. They both cannot be right. Chris i think equities would be right. I would buy bonds, not seldom everyone a short not sell them. Everyone is short. We are back to greenspans conundrum, the idea that the fed raises rates and the curve should steepen but it was not steepening. It was doing the reverse and 10 year bond yields were not going up, they were flatlining. We are in a world that is very indebted. We are more indebted than 2008, so raising rates causes problems for the yield curve and that is why it has seen this flattening as we anticipate more fed tightening. I would not be a seller of 10 year bonds, i would be a buyer. David what about treasury issuance, does that give you pause . They will have to issue a lot more and they are going to shorten their duration. Chris just look at japan, if you are worried about issuance. They have been doing a heckuva lot for 20 years and we know where their yields are. I do not think it is a problem. The call, was equities are still good any want to buy bonds . Chris yes. Stephen we are more cautious on bonds, but still definitely long equities. We think this is an earnings supported rally and the doubledigit growth you have seen this year can continue into next year. As a result, this is not so much a question around valuation. We are not looking for valuations to expand for good, but if you can get doubledigit Earnings Growth with a 2. 5 dividend, that is attractive for global equities. Alix for the 210 we are down 53 basis points. When do you get concerned . Stephen there are a couple of things to think about. You worry about it when it actually goes flat to inverted, still so we still have some time. We think that probably slows down. Keep in mind, recessions which everyone points to the inverted yield curve is an indicator of 10 to happen 12 months after that yield curve inverts. Over the last 40 years, a flattening yield curve with the spread between zero and 1 has been one of the best environments for equity market returns relative to steepening ,eriods or wider spread periods so we are in a good place. The long end of the curve is being driven i think by foreign buyers. Theus investors, u. S. Is yielding more than 90 of developed markets in terms of their government bonds, so i think that is pulling rates down a little bit and part of what is impacting the yield curve. David Stephen Parker and Chris Watling, both will be staying with us. Tim cook helps the iphone x success in china, more on this as well as their partnership with tencent. This is bloomberg. Part of the rotation we have seen over the last few days has come from tech. You buy financials and sell tech. Is there something more substantial . We are going to drill down with Stephen Parker and Chris Watling. , what wasly interesting as we saw the s p stay flat whereas the tech fell but the s p did not go with us with it. Chris it is a really good sign it tells you about the underlying strength of the equity market and bull market, and it is encouraging. If you look to the positioning they are extreme towards tech and away from other stuff, particularly defenses. People have kind of given up on the staples a month or two ago. It is interesting to me, the market keeps going higher, rotates, and is not selloff. David is there a direction to this rotation or is it just Milling Around . Stephen it kind of goes along with economic and inflation expectations. This is the question around the cyclical versus the secular growth story. We like a barbell approach but the weakness in tech, this is healthy and a sign that markets are feeling the cyclical growth story can continue. That is positive for banks. When you look at technology, the Earnings Growth story in the sector is so strong we do not want to give up on the sector, so you can continue to see weakness through the end of the year as people take profits. David we want to talk about one specific company, apple. Tim cook says the iphone x has been a big hit in china. At the fortune global forum, cook says he could not be any happier with their sales and spoke about their partnership with tencent. Icy tencent as a great partner. I see tencent as a great partner. I probably have a different view than the popular view. David adam set triano covers global tech. , becausettle surprised i understood apple was struggling in china because of the price point. The apple 10 is far from cheap. I bought one and it is not cheap. Adam it is running at about 1000 in the u. S. We will have to see what the exact numbers are when they release financials later, but tim cook is saying they have not had the headwinds that many analysts were expecting. David what about the relationship with tencent . Explain how important that is with apple. They are a big player over there. Adam it is hard to overestimate how ubiquitous and popular this platform is. It encapsulates games, payments, you can hail cars. Everything you can do on a phone. The concern among some is that it overtakes a lot of the cases for what apple does with its own software. What tim cook was saying was that the Services Work really well on the iphone and it makes it easier for people to switch from an Android Phone to an iphone, because all of your stuff is still with we chat and tencent. He is saying it is a good partnership, and it is a company that apple i am sure wants to stay in good graces with. Alix adam, thank you so much. Stephen parker, and Chris Watling, both of you guys are sticking with us. Coming up, it is the drama unfolding in the u. K. S continue, the u. K. Prime minister stuck between a rock and a hard place. David davis said that economic study i promised never happened. This is bloomberg. Retail. Under pressure like never before. And its connected technology thats moving companies forward fast. Ecommerce. Real time inventory. Virtual changing rooms. Thats why retailers rely on comcast business to deliver consistent Network Speed across multiple locations. Every corporate office, warehouse and store near or far covered. Leaving every competitor, threat and challenge outmaneuvered. Comcast business outmaneuver. Alix this is bloomberg daybreak, i am alix steel. A risk off tone this morning but we are paring that drama. Dow jones futures are up, the s p off by four. Selling into the close have been the theme of the last two trading days. The dax down almost 1 . Eurodollar a little weaker. Lookryen if you want to at the safety trade, down 4 10 of 1 . The 10 year yield lower by two basis point as the curve stems its flattening for the second. 52 basis points is the strength spread between the two and the 10. Gas is off by over 1 . Watching production, watching the build and where it comes from and what it winds up meaning or opec. That should be a good trade. Lets get an update on what is making headlines outside the business world. Taylor riggs is here. Itlor President Trump makes official he will declare jerusalem as israels capital and will order the u. S. Embassy be moved there. It is likely to anger team is lump allies. The white house says the move could take years. If Alabama Republican Roy Moore is elected next week, he can expect to face an ethics investigation according to Senate Majority leader mitch mcconnell. He has been accused of having inappropriate relationships with teenaged girls. British Security Forces have broken up a plot to k