The best week since december 2016. Some of that bullish action is continuing. All time highs. Very small gains. A lack of conviction. Investors taking a breather ahead of earnings season. They had a technical analysis, this is 8605. She presented a version of this chart, and she believes we will see consolidation. This is the s p 500 over the last year. Area sheve a cloud likes to use. We will see the s p 500 pull back down to that. That is less likely and she believes the gains for 2018 will be smaller than 2017. Time will tell but that is an interesting view. Lets take a look at a five day chart. Earlier we were looking at the first declines in five days. In the way. Up 2. 7 . Last week was the best since the end of 2016. The gain may be small but it is a broadbased gain, small rally. We see most of the sectors are higher. Such as utilities in real estate , information technology. Health care is significantly lower. The big drag is the biotech sector. Lets look at the names that are down. These declines may have something to do with the possibility tax reform may not help these companies. They see the tax rate rising between 16 and 18 , higher than what it had been. We are seeing declines for this sector. Lets talk more about the market. Monthy has been a poor than in recent years but this year could be a different story with stocks off to a solid start. Joining us now, Bloomberg Intelligence chief equity analyst. Great to have you with us. What can we deduce about the rest of the month . Over the first week, people are looking at the year in targets. The first week implies strong gains, strong gains for the rest of the month. Historically, stocks in january with an above average performance 70 of the time. Statistics are working in the favor of the market. The other thing is investors chase returns. Over the last 25 years, the fact we have such a strong 2000 17 am a you have some flows benefiting in 2018. Scarlet and new money being put to work. We see it is volatile as a result. Talk about what january means for the market for the rest of the year. There is a lot of controversy. It depends on what time you select. If you look over a long time to read, the majority of the market year, it isy incredibly important you get a decent january to power decent returns. Last year we saw stocks have a soso january. It wasnt a great january. We had a great year for stocks. It is controversial, frankly. Scarlet this is what we see, the 8 gain is the blue bar. Nine and a half percent for the s p 500. Iswhat this chart shows you and overturns followed by january returns. I want to help highlight what happened in the late 1980s. Followed by a bump in january. Each of the januarys were relatively strong. Up, are chasing that melt you have heard that to describe the s p 500 a lot. If we are entering a melt up you will see investors chase returns like that. Confirm thats not maybe we are in something different. 6 what about julia what about analysts . We are now within a quarter of analysts within half a percentage point of the year in targets. What do you do . And what is going to happen between then and now or do you revise higher . We were making price target estimates. We said the fair value fundamentals suggest we probably get an 8 return to stocks. Take far away from fundamental fair value and we are in a point in time where projecting the earnings is dicey. Tax reform has taken that estimate and is moving around the estimate more so than we would normally see. We are going to see expectations move higher. The consensus has not moved expectations high enough for earnings in 2018. They have been skeptical. We are just starting to see that. To incorporate what . One analyst said the forecast, if you just said by two percentage point for the tax impact, and that underestimates the cac the kick we could get from this. They actually have incorporated the tax reform. 54 aid it would hundred 145 per share throughout 2017. This is the analyst consensus. Just moved that estimate by three dollars higher to 148. To move the tax rate from 26 to 21 my that has to go to 153. That is five more dollars to account for tax reform. 6 when we hear scarlet when we hear from the ceos, we are probably not going to hear discord . It is too early to make concrete plans. Think we will hear a lot of it. I think there is enough pressure on the companies to release expectations we will start to hear a lot. Maybe we will hear more shortterm things. They are passing along tax savings to employees. We probably wont hear any increase in distribution planned. Any increase in dividend, anything permanent they are planning to change, they probably will announce in the First Quarter. Like capitallans spending, allocation of cash, we longer forto wait that. I think this is a First Quarter event. Julia you might get left behind if you dont make a splash in this earnings quarter. Thanks to gina martin adams. Julia kaylee . A protest land for tonight where President Trump is expected to attend the College Football playoff title game. The Atlanta Branch president said the group is urging people to wear white to the game and wave white towels to mock the snowflake label Trump Supporters used to describe opponents. Another demonstration will be planned before the game. Tom steyer will put 30 million in two this years election but wont be running himself. He wants to focus on ending republican control of the house of representatives. He has donated 100 million to political campaigns. The Supreme Court has left intact a law that curbs gay rights. Businesses and government workers can refuse to provide services to gay and transgender people on religious grounds. An Appeals Panel found the law challengers failed to show it would harm the 02 bt community. The appellate judges did not rule on the laws substance. Refuse to clerk who chris issue marriage licenses is running for a second term. Kim davis cause an uproar when she stopped issuing marriage licenses after the Supreme Court struck down laws banning samesex unions. Theothers have filed for seats. Global news 20 for hours a day powered by 2700 journalists and analysts in 120 countries. Scarlet . Scarlet coming up the what President Trumps agenda means for m a deals. He has worked on major transactions. This is bloomberg. Julia this is bloomberg markets. Scarlet it is m a monday. We want to look at how President Trumps agenda will affect big deals in the year ahead. He has been involved in numerous mergerncluding crafts with heinz. Great to speak with you. When it comes to President Trumps agenda they have been clear about deregulation and how he wants to make it easier for companies to do business. It is not necessarily good for dealmaking. Goodregulation has been for business. That will lead to the drive towards consolidation. , as is not Ronald Reagan much as he talks about Ronald Reagan. Ronald reagan was a pure conservative. Trump is the populist. Populist themes override the pure probusiness conservative themes at times. As much as he criticized immigrants for picking winners and losers in business, the populism of trump does the same thing. Julia we can tie this down. We have the disney fox deal which seemed to get a thumbs up. We have the at t time warner deal which has not and regulators are saying they do not like it. The latter is a horizontal a vertical. The former is the opposite. There is a disconnect, a confusion for the industry. We were talking about this having a chilling effect. How do you deal with that . Seen when trump tweets certain things and attacks Certain Companies their share price goes down. That is his bully pulpit bully pulpit. You are right, if there is a company or transaction that he likes or dislikes, it has an effect. Historically antitrust review has been a political. How do you tackle this . As a company in particular this has to have a chilling effect. One of the things given his objectives about jobs, if you are combining to companies, you have to be cautious about elimination of jobs and facilities. You have to be more focused on how much more you are going to invest in the u. S. And how this allows you to expand. The message has to be crafted. We talked about media as one area the president has opinions. What industries in general are something he will not get in the way of . Alexi is less interested in tech probably because he doesnt understand tech. Knows abouteem he other technologies. Industries that he doesnt seem be of less will concern. Industries, transactions that on purely u. S. Combinations the other hand he will be concerned about crossborder deals, particularly if they are not with our usual allies. Overhauln how the tax changes the landscape for dealmaking. It changes it a couple of different ways. 2 trillionng to have or more repatriated. Technically it is already repatriated today. Companies have to pay tax on it over eight years. Future income outside of the u. S. Is automatically repatriated. There is an impetus to do more crossborder deals. In ase of this cash coming lot of this is going to be used for share buybacks that will boost share prices with make shares a better merger consideration. Third, companies will have more cash. All three things are going to be drivers. The additional thing is, having that lower tax rate means when they look at their irr, is this going to be a profitable transaction, the hurdle is going to be lower. I think youre going to see more m a. Julia do you sense what proportion of that, 2 trillion is going to be spent on m a versus buybacks. The second portion, we are seeing complaints about valuation. It makes acquiring assets more expensive. Looking for opportunities within the united states, a doubleedged sword. Sort of. Be a unclear, it will company bases as to how much capital they are going to return to shareholders. A number of share prices have gone up because of expectation of these repurchases. When you actually read purchase the shares earnings per share moves up hermetically. Intoyou get the evaluation line. Scarlet we were talking about a fear of missing out if the Previous Year gains are good. As companies consider consolidating acquisitions is it going to be defensive or offensive . I think it is going to their he by sector. In certain sectors you will see u. S. Companies combining because they feel they need to be bigger on the global scale. Which . Something, any of the consumer sectors. U. S. Companies are under scale. When you look at Something Like tech, that is going to be more defensive. They were already in a good defensive position. It is going to vary. Julia great to chat with you. Ahead, why the swiss bank is wrapping up its presence in the country. From new york, this is bloomberg. Scarlet this is bloomberg markets. Julia china is loosening its control over the banking sector. Ubs is moving in. We have started discussions with our partners about not only going after 49 , to grow it up to 51 . The new legislation allows that. We are pursuing that strategy to can continue to grow in china. What is the timeframe for that increase to 51 . It is always a backandforth discussion between us and our partners. We were happy with the experience with our local partners. We want to find a winwin situation for everybody. It is a matter of months. Up . Ow will that set you forwardd in china going once you have that 51 . In full control from a managerial standpoint in china. Financial about agreements dan from a strategic standing. We have been growing our business. Two years ago, we doubled our accounting in china. We are on track to achieve that. 600 people in back of 16. Were going to be 1000 at the end of 2018. We are in line with their plans to grow. Have a moref we can rounded financial participation in our business deal, it would be welcome. I find this fascinating. We were talking about the symbol of china trying to open up its Financial Sector allowing companies to own a 51 stake. Making the announcement after President Trump was in china make it clear they are making a commitment to allowing foreign investors. A lot of people questioned why the president did not make a bigger production of it. Julia it does feel like china was trying to send a message and it was not necessarily picked up by the white house. Scarlet the banks are picking up on it. Julia very much so. Move beingbolic acted upon. Other corporate news, the biggest Business News in the news now. Pimco and citigroup telling clients there is cause for concern as global stocks are at record highs and volatility remains muted. They say geopolitical factors and and overshoot could halt expansion in market exuberance and warns the u. S. Economy is in business stages of its cycle. The engineer fired after criticizing the diversity policies on gender is countersuing. He alleges he was harassed over conservative views while working at the tech giant. Still ahead, gopro shares are dropping off of a cliff. Is a sale in the works . Bloomberg world headquarters, this is bloomberg markets. We cap Commodity Markets closing in new york. Lets check with crude oil. Wenting around, it briefly negative, unable to break past that 52 mark. Uncertainty with protests in , and anxiety over u. S. Production as well. Crude unable to get past that point. ,old has been trading lower snapping the 11 day winning streak. Gold is down as the dollar enjoys the last day since middecember. Checking the stock commodities, coffee and sugar heading south. Rainfall was above normal, and if you look at sugar, it is falling on a surplus crop. That is eroding demand outlook. Julia lets check the headlines on the bloomberg first word news at this hour. Time is running out to avert a partial government shutdown. The next deadline is january 19 republicans and democrats are far apart on a spending bill. Of the key issues, immigration and a budget cap. Lawmakers may decide to pass a shortterm spending measure. A fire broke out on the roof of trump tower. Dozens responded and the fire was put under control. Son called amp small electrical fire. The human Migration Agency has raised the death toll to 64 thinking of the in the sinking of a rubber dinghy that began sinking due to a puncture. The Italian Coast Guard has rescued 86 people. The worlds most expensive bottle of vodka has been returned empty. The bottle with a diamond encrusted cap was stolen from a bar. The thief appears to have consumed all of the vodka and dumped the bottle at a construction site. The owner says he plans to just refill it. Global news powered by 2700 journalists and analysts, this is bloomberg. Julia what an amazing story. Scarlet you love that. Vodka and thenhe chucks it somewhere. Coming up, one of our top forecasters. We speak with jason about moves in the currency and commodity market in 2018. Dont miss it. From new york, this is bloomberg. Scarlet this is bloomberg markets. Gopro could soon be putting itself up for sale, said to have hired j. P. Morgan chase, paring earlier losses. They announced it would cut 20 of its workforce and exit the drone business. Selena is standing by with the ceo. Thank you for joining us today. Bloomberg has reported gopro do ar j. P. Morgan to potential sale. I can conform confirm j. P. Morgan is our banker but we have not engaged them to help us sell the company. With that said, if there were an opportunity for gopro to partner up with a Larger Organization that could help us scale, scale our brand and our reach that is something we would consider but it is not something we are actively engaged in. Do you think you will . Is there a catalyst . Have potential suitors reached out . I will answer so far as would we . This is something we explore from time to time as it is our job to grow the business in the most are tedious way possible. That is one way to do it. It is not a new profit topic but i cant share more information than that. From your perspective how are you evaluating the different options . This is not a new topic. Is something changing now . In world is always changing. Our job is to align with Consumer Behavior and look for ways to scale the reach and relevance of gopro. Sometimes that is easier if done with a partner or an acquiring company but we have to build gopro as though we intend to run independently for ever. I cant really share any more information other than we are building a strong business with strong sales in our products. Black is now at 399. We are expecting big things there. As we build for the second half we may, it makes sense be considering other options may exist. Can you talk about organizations you would love to work with if something did work out . Number ofk of any Electronics Companies that gopro could fit well into. How are you thinking about it . Going to go into too companyail but, being a enabling people to capture and share themselves and exciting ways, gopro is an exciting company. We have one of the strongest brands that is well regarded for our ability to help people capture and share active lifestyles. We are primarily focused on spreading our brand, our Hardware Solutions to reach as many consumers around the world as possible. Scarlet shifting gears, gopro is continuing to narrow its vision. The entertainment unit shut down. How should we understand the product roadmap of gopro . Arehat you are seeing is we listening to customers more and more, investing in development of products and solutions our customers want from us. In the past, i am on record as having said one of the things that makes a strong is we are our customer, we develop products we wanted and that seemed to resonate with the market, we realize we are in the business to build products for our customers and we need to identify what they want, and invent for them. That can be difficult. As you are inventing, new solutions, the consumer does not always know what they want. That is their job, it understand trends and builds. Our customers love the entertainment gopro enables but they did not need us to be an entertainment business. Our customers have told us they really love buying cameras, and while a passionate number wanted to buy drones, the majority want to buy gopros that connect to a great app experience and that is what we are investing in. There was weaker demand for hero five camera