Transcripts For BLOOMBERG Whatd You Miss 20171227

Of evidence. The comments come after u. S. Satellites allegedly spotted chinese ships on the lets see around 30 times since october. In liberias National Election commission, expected to release provisional approvals today. More than 2 million voters are the soccer star and the countrys vice president. He led the first round of voting on october 10 but did not get enough votes to win outright. Ellen johnson steps down in january. Global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Julie live from bloomberg World Headquarters in new york, im julia julie hyman. We are 30 minutes from the close of trading in the u. S. The dollar weakened against most peers. What taxwe are 30 minutes from e of trading in the u. S. Reform could mean for private equity firm, we look at a question of how leon black post and how it could alter the wall street model. Plus, betting against boredom, 2017 going down is the least exciting year for stocks collectively on record. What to expect with volatility next year. Loans taking on big tech by trying to lower top tech from detroit, facebook and google. We bring you those details. What did you miss . The new u. S. Tax regime is a boom for private equity firms that may now consider changing to a fully fledged Corporation Thanks to a lower Corporate Tax rate. It could alter the model on wall street but what are the tradeoffs . Bloombergs team leader for u. S. Investing investing has some details. Walk us through this. Companies work out before . It is competition but they were structured for partnerships. People talk about them and you ,ill hear this word a lot passthroughs. The tax overhaul change the taxation of partnerships and if you are structured as one of those as many hedge funds are structured as, you are taking income in and passing it through and the owners were paying the individual income rate. If youre adding a number of different things, including the interest rate, taxing the they wereins rate, getting a better deal as a partnership overall. Top all the way down to 21 , the calculus is much closer and there are tradeoffs but it is simple more simple. Youre trying to balance how taxed and trying to see which is actually better for you. It seems clear that in theory with the corporate rate coming down and the advantage of having it being taxed at the individual level, it disappears. What is the other consideration to make . Essentially,ration your attacks to two times in some cases. Also when youre paying out owners, private equity players to see their taxes go up in some ways. Do we become a corporation because as a corporation, we could be more easily added into index funds, which are in many 401 k plans . Joe to be clear, the way the tracks the tax treatment works, there is just no way to do that. That is right. Tooas essentially complicated for many to do. This combo kit tax filing partners share with their shareholders, is february and some people send out in march, it is a headache for accountants. Essentially why a lot of Asset Managers said we would not deal with this in terms of index funds. Essentially why a lot now restructured as a corporation, that would make it a lot simpler and it would add to the index which could be a expose them to a lot more shareholders. I am glad i am not an accountant. It is not the year. Pain curious where the private equity lobbying was pushing. As you say, it could sort of go either way. Im curious what they wanted to tax policy to look like. A lot of people i think were more focused on the lobbying rate. N keeping the tax that essentially did maintain itself, a surprise for a lot of people because trump campaigned against it. It is still there. For private Equity Fund Managers and some hedge fund managers, it because they get preferred tax treatment on their profits. Individual profits and not corporate profits. Going back to calculus on which Corporate Structure they might want to take, for a companys whose Shareholder Base is heavy with retirees and people do not typically have a highlevel of income and mostly , with thoseds companies be more inclined to keep current structures, and the tax rate might be higher than the income tax rate of the shareholders . Interesting question people are probably asking but i do think so going back to calculusn which Corporate Structure they might want to take, for a because that has in a lot ofuch, cases, the individual tax rates, the percentage of change is a lot smaller. Smaller, where a lot of people would say, it is not different. At thetions may win out end of the day. A lot of accountants will work a lot. That is what it was supposed to be. A think we all knew it was not true. New jersey had ordered local government to accept the 2018 properties taxes repayment. Because there was a question of whether it would be kosher. Are we still not sure . Here is situation with what people call state and local taxes. You can only deduct property taxes up to 10,000 now starting in 2018. A lot of accountants have been saying to people to bring you ct property that into income into 2017. A lot of people can pay 2018 taxes in some states, into 2017 into 2017 and use tht deduction. Another interesting thing that may not be apparent is the 10,000 cap is for married couples or for single people people. You get the same cap a single people as a married person. That is different than the usual tax code. You get 10,000, not 20,000. A lot of people are not are rushing to get it in in december. If you bring it this year, remember you do not bump yourself to the higher tax rate. Payee, thank you so much. Coming up, bitcoin has resumed a downward trajectory. Bitcoin on the stunning december. Ceo ofoyd blankfein, Goldman Sachs, sat down without steel to discuss whether coin was on its way to being mainstream. For Small Businesses and businesses in general, when do they need a Bitcoin Strategy . Lifetime. Our whether forget about you think it is a fraud or a game or not. To businesses have worry about how the two attract to produce a product and how to sell it and keep the door open and cleanup at the end of the day. Small businesses are aware that rubber meets the road. They are not dealing an extensive Financial Transactions but trying to create radix that people want to buy. It is one person selling to one person much more so than all the things we are talking about. Blend is goldman have to have a Bitcoin Strategy . Not today. I would say life must be really rosie if this is what we are talking about. I was talking to jeff curry he said the only people who are asking him you are a Huge Investment bank, you have to think about this. Im thinking about it because i get asked about it. It is not for me but there are a lot of things that were not for me in the past thatit is not foy but based on everything i know, i will not guess that it will work out. But i will not stand there and be strident and say it is not going to work or it cant because it might. Wherere is a technology you can have different different accesses that people can control it and you can see whos doing what and that sort of thing and there are places where that is you where that is a useful thing. The bloomberg system is a blockchain. Instead of having users control it, we do. But it has all of the attributes of that. Bitcoin is very different and there is a whole bunch of crib go currency and every day you have a new one. That is something very different. Whether or not the governments of the world will lose control of monitor policy, i am skeptical. They will just not let that happen and they should not. It does not feel like a store. Sure. Maybe not currency but the commodity. It goes to your expertise. You grew up in the commodity business. Where is the fraud going to come . The whole concept, i dont know. First of all is it buyer or seller price discovery . Where is the risk. A vehicle to perp or it perpetrate fraud. But it is hard to accumulate cash. The world is going in a different direction if you think about it here look at china where they are basically getting rid of cash. Everyone is paying with smartphones. People begging in the street have a little signed next to them, they are sitting there begging for money and they have a sign with a qr code. If you want to give them money, you put yourself on at the code and hit a button and they have a bank account and that is how they are getting their money. That is heading in direction and they have gone a large way. One reason is you can then stop the black market and the junk dealers and stop where it is all going. Ready to gonot be there. It is a much more efficient way to pay for goods and services. Google already knows. And that raises the question that you have to be thinking about banking strategy with it coin. I cannot believe that you are not. We will see. If it works out and trades like a store value and does not move up and there is liquidity and it, we will go put the original question was, when to Small Business people have to think of the Bitcoin Strategy . People want to buy business planning. That was Mike Bloomberg and lloyd blankfein. Bitcoin went on a wild ride after that conversation before plunging below 11,000. It fell again today in trading. The currency dropped about 100 for the open. Lets check in with lloyd saying saying Goldman Sachs itself is now a market in Bitcoin Futures and the saying Goldman Sachs itself is now a market in Bitcoin Futures and the underlying bitcoin as well. Obviously, goldman had a bit of an interest there. What has been driving trade in the past few days . Low volume there is not a lot of liquidity around and minor traits can cause a bit of a move. Of people were relieved to see the big selloff we had up 22nd, coming to a little bit of a stop around 11,000. A few days earlier, kicking off 28,000, that was a most in half in a matter of a few days. We have seen the rally fizzle out in the last couple of weeks. The crypto related equity, should put that in quotes, it unabated. Ontinue you are being generous by saying just some of them. There seems to be a new one every day. Even with the selloff, pretty modest all things considered, people are betting on it. Same thing like stocks and cryptocurrencies. Whereas it or 20 coin looks like it is below 15,000 again. Other Crypto Assets are doing fairly well but it coin is finding a bottom here around 15,000. Joe it was last thursday our headline, putting to have ahe plan crypto dedicated hedge fund. The story is still, you heard now, just aation few weeks ago. The increased interest among institutional money and there is a fundamental steam for 2018 . It still is as long as it finds some stability. It is hard to try to find out where bitcoin is going next you do not know which direction it will go. Once people feel more confident they can trade it, i would think Goldman Sachs was start to dive in a little more. Cory johnsony really dug into, a great piece on bloomberg. Com and i encourage everyone to read it. This is a company where, it has not developed anything at. His executives interested in an technology,ing 15,000 in cash on hand. And the stock surged because just in the. Com days, if related wouldething internet be there, stocks would surge. Lied to people keep falling for it . It is day trading, people can get out and call it a day. I do not think there is a fundamental trader deciding to buy these types of names. At least i hope not. The penny stocks out there are very busy these days. Thank you. We appreciate it. Time for a look at one of the biggest business stories in the news right now. A lawsuit against kkr and their founders could produce new legal challenges. The Group Accuses them of not delivering Hedge Fund Returns as advertised. The investments left the system virtually insolvent. Ups and fedex report they deliver nearly everyones package in time to be of an on Christmas Morning to 99. 1 of ground deliveries were on time. Fedex, 98. 7. Ups was overwhelmed over after black friday, sparking fears of a backlog and was able to catch up and have a successful season. Astakeholder in supposing takeover deal for the company for capital management, the nine dollar a share offer, they say is too low. Humana made that offer last week. That is your bloomberg is this flash. Did you get your packages on time joe . Joe i did. I am hanukkah but i did get everything on time. Up, find out who could be thrown the online dethroned the Online Shopping king with a chart next. Julie with all the talk of not theit is actually best performer in the s p 500 this year. Buy to bestst buy. He see the share price in blue and amazon and white. They have outperformed retail and the s p 500 overall. It was november that you started to see best buy take a sharp wink upward as amazon went more or less sideways. Thus by had been in the mists of a multiyear turnaround and that is what was driving the stock prices. It is the second year in a row that rest by shares had outdone amazon shares in terms of performance. It is not something you would know if you listened to us all day. We talk about amazon day in and day out. Joe if you said best buy beat amazon one year, ok, but two isrs in a row, that impressive. Another trend to watch, the big rally in copper and other Industrial Metals lately. When youre trying to figure out what is going on, one of my favorite charts is the white line here, the ratio of Industrial Metals relative to gold. In make sense when things are looking up, you buy Industrial Metals and you sell gold and vice versa. The feline is a 10 year yield. The lens moves move together. They do not go together lately, you see a pullback in the longterm range. Gold ntinued rally to industrial metal to gold ratio. One saying perhaps just inflationary trend, warning that growth, yield curve, another indicator saying people are optimistic about growth, not as eager to hold out on sick havens. Wins out there. Interesting pair the market closes next. Eager to hold out on sick havens. Interesting to pay some attention to. We will see if theyve reconversion whohere are major s than four minutes until the close. Little changed for the major averages. From new york, this is bloomberg. Julie whatd you miss . Closing slightly higher this afternoon, amid it like trading on the holidayshortened week. I am julie hyman. Joe i am joe weisenthal. Scarlet fu and julia chatterley are off today. If you are tuning in live on twitter, we welcome you to our closing bell coverage every weekday from 4 00 to 5 00 p. M. Eastern. Julie we begin with market minutes, with stocks limping along, but limping higher. S p 500, 41 below the moving day average. Not surprising the tally for the year for the s p remains 20 . 20 5 , and the nasdaq, 9 higher on the year, as we have seen the push ever higher for the major averages. Individual stocks we are watching, we were watching tesla today. That is going down 2 after brad erickson, an analyst at keybank said fourthquarter checks indicate model 3 deliveries are tracking 500 units below the estimate. Although as joe highlighted, it is still accepted on the buy side, which bid up the tesla shares. And were watching energous. Wireless charging Technology Gives them a first mover advantage. Interest inso short the stock, back at help account for the pop. Canopy growth corporation, a canadian marijuana stock. Stocks seen wed weed rally ahead of the january 1 legalization policy. Looks like some traders setting up for that. Joe lets take a look at the Government Bond market. Two year yield, i think it hit 1. 92 . The highest since late september, 2008. The big move at the long end, substantial downward move. We did not have a real risk off of vibe in the market. Not much in terms of data. Nonetheless, here is a look at the flattening curve. This is one month of the twoyear and 10 year spread. It shot back up close to 64 basis points on the spread and back down to these lows. We are firmly back and keeping an eye on the possible inversion at some point. Julie it was interesting, some of the Economic Data was mixed. Consumer expectations in home sales were positive. The dollar follow the yield curve and the yield on the 10 year. On thelook at wcrs bloomberg, it shows the dollar versus a wide basket of currencies. Versusere trading lower the u. S. Dollar, but Everything Else was rising versus the dollar. The South African rand doing the best, continuing to rally. That is been happening since the recent election. And we have been talking bitcoin, happening over the past several days, not just today. Over the past week, the coin was down 9 . We saw the big rally up and the come down, as it continues volatility. Joe nothing quiet there yet. On commodities, oil and gold. Not much, crude. We had the surge on the libyan pipeline explosion yesterday. Some concerns dissipating a bit today. But still elevated compared to where we have been. Just under 60 a barrel on west texas. This move, it will be one of the stories we talked about in 2018. Stillup a little bit but below that rotation of bitcoin into gold. Julie whatd you miss . Christmas has come and gone, but where is the santa claus rally . Stocks changed most of the day, not hitting the fiscal highs we see during the holidays. Here to break down what is Holding Investors back, michael block from Rhino Trading partners. Maybe they are on the couch instead of at the office. Of the quietest postchristmas weeks i can remember. Not a lot going on. The s p 500, even of the tax bill passed, there is supposed to be A Santa Claus rally, markup that the year end, but it not it has not had a high since the 18th. Russell 2000 has not had a high since december 4 or so, which i find surprising, given it past the 21 Corporate Tax it past the 21 Corporate Tax rate. I find it very curious. Joe is it too early to talk about selling . Pause. As been a is it too early to say, it is priced in, now what . Michael Something Interesting is going to happen. Home of folks are staying and they will stroll back into work on january 2 and clear cobwebs off their desks and open their buggy xl models from 2002 and say, new tax rate, 0. 21 to read they will say earnings are higher, im a genius, look at that. Will goehold, estimates up for individual stocks and indices, overall. Gee, earnings are higher, i have to buy stocks to make the multiple. I can make the argument we will not see multiple expansion. Work. Ne will get back to we will probably see new highs in the market here. It is hard to fight that dynamic. Q4 earningsonce kick in, we can see what happens next. Joe you are talking about multiple expansion. One of the theoretical threats is the rising rates. The yield, highest in september 2008. How much are you watching that relentless . Michael everyone seems to be in this mindset the fed will write rise two to four times next year. The fed is watching the market nervously, watching the yield curve, and what guys like you and me and everyone in between is doing and saying. They know we are scared of the yield curve inverting. Maybe this time is different, maybe we should not be scared. Does not matter to them. They do not want to cause that. It may go down as one of the biggest policies in recent history. Lets face it, there has been quite a bit of competition for that. That is a big risk for next year and 2019. Will they shove that curve into inversion, which could cause chaos and markets . Julie that is one of the risks you are looking at next year. It does not seem in the near term a selloff in stocks is a risk . Michael i am playing rotations here. Everyone wants to say, deregulation plus tax cuts will be important. They want transports and industrials for the infrastructure bill supposedly coming i think it is coming. I am worried about q4 financial earnings. It is hard for banks to make money. A slight yield curve makes earning interest margins harder. I do not think Capital Markets activity is backing up anything that will lead to g4 numbers. You can argue it is priced into expectations. But i see stocks going up every day, i am not sure it is priced in. Joe the conversation comes back to bitcoin. You have an interesting take, you see a correlation between bitcoin and a bull market. Bitcoin has had big crashes before. Do youwas a tiny thing, think were at a point where we saw major correction in one of the two, that we would see ripple effects in the other . Michael we are closer to that. Last week heard about Goldman Sachs getting into the cryptocurrency arena, which means they have been involved in an for a while. They have been looking at opportunities, playing around. We will find out more about that. If youedge funds are to buy someone a cocktail and ask what are you doing in crypto . They would probably say it is classified information, which means they are involved. What,rrelations, who owns what are they going to do about it . There is a point where you have a situation where there is a big pullback or crazy moving bitcoin. It did pull higher once everyone got short in the futures market. We could see ripple effects from that. I am mindful of that, watching for that. It is a back burner, tail risk of that. I do think it will become whiter spread. Goldman is not getting into this just to play around and dabble. There is big boy involvement, i guess you could call it right now. It is going to matter. Just like things that happen in the golden currency markets affect stocks, we are headed in that direction for crypto, as well. Julie thank you so much, michael block, Rhino Trading partners chief strategist. A guideagainst boredom, to volatility trades in the coming year. This is bloomberg. This is bloomberg. Lets get your first word news this afternoon. Former president obama gave his first interview since leaving the white house. Obama warns about the use of social media by world leaders. In leadership have to find ways in which we can recreate a common space on the internet. One of the dangers of the is, people can have entirely different realities. They can be cocooned in information that confirms their biases. Mr. Obama did not is, mention President Trump by name. It was recorded in september. The library of congress ending its practice of archiving each and every tweet on twitter. Starting next year, they will only archive tweet related to major events and those of national interest. They say the sheer volume of tweets make it difficult to collect them all. British labor lawmakers have urge them to publish the treasurys analysis of brexits potential impact on the u. K. Economy. Lawmakers said it is total it is vital that light is shed. Previously told the committee his ministry was prepared for a wide range of potential alternative structures, but has not revealed specifics. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Julie whatd you miss . 2017 will go down as the least exciting year for stocks on record. At least if you are looking at the vix. The vixs average level has been 11. 11. Will this trend continue into the coming year . Join is joining us to discuss is elena. It was not boring, we had lots of interesting things to talk about cmon. I have been talking to analysts all year, they said, dont worry. There is a feeling that something will change next year and volatility will pick up as the macroeconomic environment changes. Joe historically speaking i have a chart here showing the average vix going back to 1990, g btv 7362. Reverting a meme index . When anda matter of what will trigger that. That is the biggest question everyone on wall street is trying to figure out. What will happen for the vix . When it does spike, goes up quickly. People are invested heavily and can lose a lot of money. Julie also we are seeing and get more and more expensive to hedge against a rebound like you are talking about korea we have another chart, g btv 7470. The vix is in blue. The threemonth 35 delta call versus put, you can see the white line going up and up as the cost is climbing. Is this still the way people are hedging or they getting more creative . The good Options Market is one of the ways for hedging against volatility. The white line is something for investors to be concerned about. It looks like the s p [indiscernible] we have had 62 record highs this year. The biggest question is, will the market revert . The vix and the stocks usually move in the opposite direction. There is an interesting study by the bank of america that says a Record Number of investors are predicting a decline in s p next year, which is a concerning factor for volatility. Joe in the end, if stocks have another amazing year, probably the vix will stay sleeping. In the end, what is the underlining going to do . Is it possible to narrow . The reality is, no one knows. Mike wilson from Morgan Stanley says the economic environment proposal is going to shift. This will likely put downward pressure on the stock market and upward pressure on the vix. It is something to be worried about for next year. Julie we will see what happens. Thank you for joining us in bringing us the vix charts. Cush bottles. The for cannabis sellers at the highest level since 2016. Cannabis stocks as a whole are gaining as california will launch its Recreational Use pot market on monday. Here is what is happening. Jenny i have, been up to california, i thought people were already smoking pot everywhere. What is actually going to change . California has had legalized Medicinal Marijuana since 1996. Change . Certainly no stranger to regulating cannabis. Is the firstthat day the state, which is the largest u. S. State, well have Recreational Use. That is when dispensers can sell and adults can start buying cannabis without a doctors recommendation. Julie obviously it is really early on in the industry the industry side of marijuana. That maybe the indicator will be when i can enteringling when i am one of these stores. Perhaps that is my issue, as well. It is very early in the maturation process of marijuana. What kinds of signs are you seeing in your coverage that we are starting to see it become more of a real business . There definitely is that giggle factor. It is also a benefit of the industry, that it is a sexy thing that is new, people are not sure about. It still is a gray area because it is still federally illegal. But it is a big business and is expected to get much bigger. There was 6 billion last year, the legal market. It is expected to hit 50 billion by 2026. It is not a joke, it is a big industry. A lot of market people think it is the biggest step forward. It is going to be the biggest bit market. Estimates are between 4 billion and 7 billion next year. This is a really big deal. A lot of people are going to make a lot of money in this. You have to get over the giggle factor. We are talking about a Company Called kush. Joe how are we seeing legacy consumer goods companies, particularly in areas like alcohol and tobacco playing in this space currently . And do they have plans to expand into it . Alcohol, bigig tobacco, most everyone is staying out of it. That includes the banking system, which makes it difficult to be in the cannabis industry. We are starting to see that change. Constellation brands, the sellers of a corona and many other kinds of alcohol in the u. S. Invested in a Company Called canopy growth, a Canadian Cannabis company, that was seen that really took action. They did not react negatively. It is a sign of things are starting to change. Saying, companies are the industry is still small, i will let these entrepreneurs fight it out, seaworld see who will be the top dog. When it becomes federally legal 10 years from now, i will scoop up the biggest player. That is what a lot of the Big Companies have been thinking about. From the perspective of entrepreneurs, that is their goal. They would love to fight it out for 10 years without the threat of big players. They can sell it to the highest bidder for a huge sum. Jenny kaplan, fascinating stuff. Thank you. Julie if you are in new york, you may have noticed it is freezing outside. One industry that is thankful is natural gas. This is bloomberg. S bloomberg. Julie it is time for our weekly segment, charts. Our host Abigail Doolittle is out, so i have the honor of introducing Walter Zimmermann from icap technical analysis. So gas little chilly, has been rallying. What do you look at for natural gas . Gas has beenal range bound all year long. , with this frigid, arctic hundredtype weather, the rebound has to be a little bit disappointing. It does not have the same a vigor that past rallies had. I think it is because it is such an amply supplied market. This is the february low, 2. 52. The lowest we have been since then. In between it has been a whipsaw. It has not been a happy time for the bulls. Julie what does this tell you about the future direction . Walter what i have been waiting for is bearish sentiment and the test of key support. Julie looks like that is not necessarily happening yet. Ister this low last week the most bearish sentiment extreme we have had since this lull. It is also the most oversold market condition here since this low. And, it is holding a key support for me, which is the 2. 52 area. You do have an oversold market, a bearish extreme, and support, the trifecta for a rally are in place. The question is whether that will be enough, because this is such an amply supplied market, to be diplomatic about it. Julie gotcha. Talk to be talk to me about the next chart. The nasdaq versus the bloomberg commodity index. Walter this is the nasdaq divided by the bloomberg commodity index. What i am trying to capture is the ageold conflict between paper assets and physical assets. What should be the value of a paper asset versus a physical asset . And how can you tell when a paper asset is overvalued, relative a physical asset . Nasdaq extremes of paper speculation and the bloomberg commodity index, a very well put together, broadbased commodity index. You can see paper assets are a little rich. [laughter] walter somebody might look at god, i have, oh my to sell equities and commodities because commodities are so cheap. Unfortunately, we see commodities as still supplied by bursting theult of commodity bubble into it in 2007. That spike traded in overpriced market. Maybe at this and say, you should forget about buying commodities in short equities. Is this is a bubble and it bursts when this dotcom bubble burst, crude lost 55 of it. Julie he can take it down with it. Walter yes. Because equities are so high compared to commodities, it does not make commodities a buy. Julie i guess that is the unifying theme for our two charts. Thank you so much, Walter Zimmermann for icap technical analysis. Joe how quicken loans is luring millennial to detroit. This is bloomberg. This is bloomberg. Cannot live without it. So if you cant live without it. Why arent you using this guy . It makes your wifi awesomely fast. No. Still nope. Now were talking it gets you wifi here, here, and here. It even lets you take a time out. No no yes yes, indeed. Amazing speed, coverage and control. All with an xfi gateway. Find your awesome, and change the way you wifi. 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. Lets get your first word news this afternoon. Ministrynterior Getting Police reinforcements to catalonia and the road in the runup to the independence referendum. A declaration of independence by the catalan parliament. The Central Government has dismissed the Catalan Government and dissolved to the regional parliament. Erdogan callsent Bashar Alassad a terrorist. Speaking in indonesia, erdogan bash should not be part of the peace processa in syria and accused himr of killing one million of his own citizens. Turkey saw a flood of refugees during that conflict. Meanwhile, syrias government allowing 30 critically ill people to leave a siege damascus suburb. Thousands have been prevented from reaching hospitals just minutes away. The region is home to some 400,000 people. Ofled to a severe shortage food, fuel and medicine. The International Red cross is assisting the evacuation. Russia stands to limit the number of air bases the u. S. Can use to launch reconnaissance under the open sky treaty. The head of the Russian Foreign Ministry Said the restrictions, they response to u. S. Measures to limit Russian Military flights and its airspace. It is set to take effect january 1. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Julie lets get a recap of todays market action. We saw major actions marginally higher, with the holidayshortened trading week. In terms of groups on the move, utilities and real estate got a bump up, as we saw a decline in bond yields. Interest ratesensitive sectors. Joe lots of stuff in the green today. Whatd you miss . Billionaire dan gilberts quicken loans caught up to the big guys in banking. Now it is learning top tech talent to detroit, with top tech giants like facebook and google. How do they plan to lower lure millennials . About how talent clusters around big cities new york, los angeles, san francisco, silicon valley. He at quicken loans thinks can get people to detroit. What is the pitch . For millennials it is a good pitch. Lower cost of living in detroit after the bankruptcy and the last 20 years it has been revitalizing downtown. The cost of living and enjoyment sectors, i think millennials seem to like it. There are also financial incentives. Joe for example . If you are a tech person, one of the things offered to those employees are Stock Options for the company. Essence,private, so in he is giving away to these hires. People who already work for the company, there have been nice bonuses as well. If you consider the employees of the company to be the best advertisers for the company and the region, he is focusing on that also. Exactly. A lot of employees at quicken espouse this culture. Fromfferent for working at any other financial firm, more of the younger vibe. I got a book from dan gilbert on the culture of the company, something they take seriously. Joe explain how it is different. Is it just a front . Someone applies for a mortgage equity quicken loans versus a legacy institution, is there something that happens differently on the backend in terms of processing it . They are doing the same thing whether it is a bank or quicken. You have to make sure it is the same rules selling to fannie mae or fha. But on the back end it looks different. Backendloans said its and front end are more integrated than the banks. You have to upload documents, how do you do that the bank process is more paperbased of than what quicken would be. It results in quicken giving you your money faster. They have an average of 33 days to fund your loan. The average for the big banks was between 40 days and 45 days. Julie any idea of its growth rate and how successful it is that attracting talent . In terms of attracting talent, they have been doing more hiring. They spent about 50 million the first nine months of this year, mostly technology employees. We also have some sense of how they have been doing as a company. Their revenues have gone down this year, the first nine months. Expenses have gone up, so profits have gone down. But i will say come other revenues have not gone down as sharply as you see at the big it bigger banks like wells fargo. Joe what is next for them . Will they do more traditional banking, an ipo . Dan gilbert said he is not interested in an ipo. I do not think an ipo is on the horizon. One thing he said i find interesting, this company, quicken loans, will be the biggest mortgage lender. If you are wells fargo, that is something you should be worried about. Julie i am curious about the effect on detroit, also. Having thefamous for housing downturn affecting people fleeing in the area. I did not focus as much on quicken, but i used to write a lot about the Larger Company dan gilberts Parent Company that owns quicken and resources in detroit, which has a lot of holdings as well as a casino. He has been a catalyst for changing downtown. Partly because he owns a lot of the property down there. Julie good stuff. Detroit is supposed to be one of those places that when Climate Change gets bad, it will be an away sis. An oasis. Thank you so much, our bloomberg banking reporter. December Consumer Confidence numbers are out. How americans are feeling about the economy. This is bloomberg. This is bloomberg. Julie whatd you miss . Americans are ending 2017 feeling good about the economy, according to Consumer Confidence numbers. The strongest numbers since 2000. Where is the confidence coming from . Here with the Key Takeaways from the report, mat. Matt. I brought you a chart on wages, but i wanted to start with the good news. It looks like 2018 will be the year of the vacation because according to this report, we are seeing the highest percentage of americans planning on taking a vacation in the next six months, than we have seen in this entire expansion. This year we broke above the 50 mark. You can see in the second half of this year, it has accelerated. It suggest people are feeling better, have more money to spend. They will take time off. Joe i am planning a vacation, and i am horrible about planning and scheduling. Anecdotally, this feels correct. [laughter] joe there is a dichotomy in terms of the confidence of people in different areas of the income ladder. Titled bechart you unequal recovery, showing the gap between people making more than 50,000 versus less than 50,000, and the spread. What is the story at this moment . Matt this recovery has been different from past recoveries in that if you look at these two lines, the white line at shows Consumer Confidence for people making more than 50,000. Consumerline come up confidence for people making less than 50,000. And the yellow line is the difference between the two. The yellow line has risen far and away in this expansion. The lower income people have been left out, relatively to the relative to the high income people. Ostensibly that can be problematic for consumer spending. We are seeing other signs of that in the data with the Household Savings rate falling to multiple year lows. That is concerning. Hopefully we can see that cap start to close as we go forward. Consumeren doing confidence surveys, presumably they are designed to get a broad range of people from different incomes, right . Are the numbers skewed, or do they succeed in capturing that . Matt certainly they say they do. This is part of the methodology, to have that represented sample. Institutionsnotch ticians working on that. Chartou have another showing the percentage of consumers expecting a higher income in the next six months versus the employment rate. What do we see here . Line shows the net percentage of consumers expecting higher incomes in the next six months. You can see that is only 12 . 12 more people think they will get higher income in the next six months than lower income. It has been rising throughout the expansion. But it is relatively low compared to previous expansion. We have equipped eclipsed the peak of the previous expansion. Even though the Unemployment Rate has fallen so much, it is not climbed to previous levels. You can see that lines up nicely with this wage and Consumer Confidence. Joe this is a function of the declining Labor Force Participation rate, or the subdued Labor Participation rate in primeaged workers, which is why you can have one of the lowest unemployment ratings of all time, while the actual unemployment level is that precrisis levels. Matt absolutely. Pairing that with wage low laborns, the force participation might be restraining worker Bargaining Power and keeping wages low. You might be more convincing about your story of a wage breakout being around the corner if we had higher employment, higher Labor Force Participation rate. Joe still a large amount of shadow slack. Companies know there is a potential pool of people in that Unemployment Rate, may be keeping a lid on wages. Matt it seems a consistent story from the survey and the hard data in the jobs report. Julie to come back to where our beginning question, where is this coming from, it seems the confidence is coming from the having of the job and the preponderance perhaps from higher income individuals, as opposed to those expecting higher wages. Certainly. Since the election we have seen a rise in confidence. If you look at the confidence numbers broken down by age, a lot of our surging Consumer Confidence since the election has been in the age group of 55 and older. We also see disproportionate gains in the flyover states in the middle of the country. Joe they break them down by state, as well . Matt that is right. Those that tended to vote for President Trump. Earliero call back to in the show, it will be interesting to see if congress eventually does tackle entitlements and what affect about will have on the confidence of those the cohort of 55 and older. Thank you so much, matt basel boesler. Highlights from our interview with president bill clinton and george w. Bush. This is bloomberg. This is bloomberg. Joe whatd you miss . Divisiveness between democrats and republicans at an alltime high, with Neither Party able to agree on anything, from health care to tax reform. It is hard to remember two politicians from opposite parties maintaining a relationship. But former president s bill bush, where able to form a strong bond across party lines. You ran against president bush 41. It was a bitter campaign. He was defeated for reelection. How did you manage to develop a close relationship . Wasnt that difficult or awkward at times . You are called him names, he called you names. Mr. Clinton i think it helped we had some contact before i represented the democratic governors when he decided to embrace his goals. We started working together. I tried never to take a cheap shot in the governors association. If we disagreed, we focused on things we could do together. The other thing is, he deserved a lot of credit. If we had not done the sunol me work together, i am not sure ami work together, i am not sure it would have blossomed the way it did. Sometimes you click with people and sometimes you do not. I always admired him. I completely supported what he did in the aftermath of the collapse of the soviet union, supporting german reunification, the efforts he made and i made as you see with mixed results, to integrate russia into the family of democracies. We just started working together it isunami thing easy to forget because it was a long time ago. Countries thenpresident bush said people have to do their part. Most people cannot find those countries on the map, but they were part of the Global Community and he was willing to take our fair share of responsibility for. How did you become close . Mr. Bush i have a different take. [laughter] mr. Bush one of the most unique relationship and most important in u. S. Political history, i think it starts with bill clinton being a person who refused to lord his victory over dad. Being humble in victory is important. Was willing to rise above the political contest. It starts with the individuals character. Both men, in my judgment, displayed strong character. Therefore, the friendship was able to be formed. Why do i have a friendship with him . He is a brother with a different mother. [laughter] mr. Bush he hangs out in maine more than i do. You are campaigning against some of the things the Clinton Administration had done in 2000 assuming youre running in 2000. Mr. Bush probably. We are both baby boomers, southern governors. He got along with people in his legislature, i got along with mine. We had friends in common. There was a natural ability to respect and like each other. Therefore, if you disagree with someone, does not mean you do not like them. Mr. Clinton i recognized he was 44 days older than me. [laughter] mr. Clinton i called him on his birthday and said, i am calling you on bended knee, because this begins my 44 days of respect for my elders. [laughter] mr. Bush when i was president i would call bill. He was very helpful. He know a lot about a variety of issues, particularly international affairs, that i was interested in. I knew i could count on him for good advice. He was gracious in receiving my calls. Joe that was president bill clinton and president george w. Bush speaking with David Rubenstein earlier this year. Julie time for the Bloomberg Business flash, the biggest business stories in the news. Said to be moving its Global Headquarters for financial crimes compliance from tokyo to new york. A team of 1350 staff will strengthen efforts against Terrorism Financing and money laundering. Mufg processes the transaction linked to Companies Facing international sanctions. Agreed a Softbank Group to buy Fortress Investment group. In march the first time a publicly traded u. S. Equity firm has been listed. Softbank said fortress would operate independently and remain headquartered in new york. The boston fed president said financial securitysoftbank saidd by low Interest Rates are something to monitor globally in 2018. In a blog post dated today, he said he worries about reach for yield kind of behaviors on investments that could have broader implications at a time when monetary or fiscal policy cannot react if we get a big negative shock. He also said the geopolitical risks were more severe than in recent years. It is the season to be gathering with friends and family. That means eating and drinking. Investors looking at the food and business Beverage Industry look at the ticker we all know and love. It is Peanut Butter jelly time for etf. Weight almostrket entirely in the u. S. With only 31 holdings including hersheys and pepsico, they are very concentrated. That, plus a 31 allocation to small and midcaps, give it extra kick, resulting in pbjs volatility levels, around three times the s p 500. Pbj nearing 100 billion. They have returned more than 120 since its inception. I love these catchy etf ticker names. You can catch all these etf animations and the news on bloomberg etf iq each wednesday. I wonder how well they work in terms of sales . Joe like the good ticker . That is a good question. Julie i am going to ask them to do analysis. Joe what you need to know for tomorrows trading day. This is bloomberg. This is bloomberg. Julie take a look at what went on in todays session. We did not see much trading action in terms of volume, but a little bit of a lift. Joe a rally in london treasuries. Julie that was more significant. Italian Prime Minister expected to hold a News Conference marking the end of his and ministration. Elections will likely be march 4 or 11. Claims, one jobless of my favorite indicators, come out at 8 30 a. M. Eastern time. Julie that is all for whatd you miss . Joe have a great evening. This is bloomberg. Wax you are watching bloomberg technology. Lets get a check of your first word news. About 152,000 mexican nationals were reportedly repatriated between january and november. Some 2005000 were sent back in the first 11 months of 2016. The president will kick off the new year by meeting with top republicans. He will meet with Senate Majority leader met Mitch Mcconnell and paul ryan at camp david during the first week of january to draw up a game plan for the 2018 legislative agenda. In jerusalem, plans are underway for a new train station next to the western wall, and it could be named for President Trump. Israel transportation minister says the move will be a thank you to President Trump for recognizing jerusalem as israels capital. Former president obama and Hillary Clinton remained the most admired men and women among americans. Mr. Obama beat out the current president 1714 . Pope francis rounds out the top three. Hillary clinton is on top of the womens list for the 16th straight year, ending former first