Are a little mixed. Nasdaq is down ever so slightly but earlier, the nasdaq had also been slightly higher. Looking at another round of record highs. Hope surround tax reform and the earnings season really kicking off on friday with some of the big banks. Investors on hold, taking a breather. Highs, relative to checker sector composition, tech lower as well but one of the best sectors on the day, health care. Almost 5 tific up up for the half percent. 4. 5 . Johnson johnson up 1. 9 . Investors liking what they had to say. Retail, a bit of a mixed picture. Season, butiday urban outfitters, not so much, down 5 . That is below what they had guided two, before and we also have under armour down 4. 4 . On brandside ahead risk and i know you love charts. Check out this chart on the s p 500. This is the rsi or momentum indicator on the s p 500. When it goes below 30, that suggests the market is oversold. We saw that back in the mid90s, for the most part in between those two levels, hitting levels we have seen all the way back to 1995. Interestingly, some technicians dont mind that. They say it is a signal of strength. It will be interesting to see how long it lasts. Mark i love that chart. Rising for a eighth consecutive day. The gator developed markets is enjoying its best street in history. Index is at markets its longest streak in history without a 10 correction. Great stuff from goldman sachs. This is wm morrison supermarkets, enjoying christmas season. Samestore sales beating estimates. Shares up by 2 . Premium rain shares up as much as 4. 8 rate shares up as much as 4. 8 . Retail sales rose a meager six point. 6 according to the british retail consortium. Clothing chains, Department Stores taking a hit as fast food Price Inflation eats into the amount of disposable income. With one of the biggest movers in european equities, up by 7. 1 . 10. 5 ,were up as much as the biggest increase in a month, after it announced it is going to spin off its Cable Television business. Disputed byill be the end of the second quarter. Vonnie thanks for that. Turning now to the health care deals, drug pricing and the u. S. Tax overhaul are some of the things he discussed at the jpmorgan, once. Erik schatzker is there and joined joins now with the ceo of a global pharmaceutical company. Erik dave ricks, of eu of eli lilly and company, good to see you. The president is not talking about drug prices any longer, that the remains a great deal of interest in how drugs are priced and drug markets appeared to be getting increasingly competitive. How have the dynamics change . Since last year changed since last year . Dave we have reigned in some of the most egregious actions. We did not see the headline grabbing my sister price increases last year. Massiveine grabbing price increases last year. Princess lily announced a program to discount for anyone who shows up at the counter by 40 . We need more of that kind of innovation because as you know, the insurance system is bearing less and less of the cost of medications and it is being shifted to consumers. We need to innovate and create new ways for people to afford medication at the counter, even if they have insurance. The final thing is new pricing on new innovation. Last year, we saw tremendous new scientific breakthroughs. It is expensive to do. You have Expensive Development programs for a small group of people. How do you spread out that cost . How to back value those and make sure that the Health Care System is paying for something that works . We need more room for experimentation. Cms which sets the guidelines for a lot of that has been a little slower than i would have expected in coming out with frameworks to do that but i would expect action this year to allow companies to do different things. Saying pay us when it works, not when it doesnt. Erik incomebased pricing. Dave exactly. Erik can you do any of that on your own . Dave we do that on our own. The places where it can work are in the socalled advantage plans where you have a provider for seniors that has all of the costs and they have some latitude to trade off a lot hospitalization costs. Some forward thinking commercial plans and the coast who own holocaust and want to see Movement Toward a valuebased scheme, we have several dozen of these where we take the risk on lowering and we get paid when the drugs actually work. Erik the impression people have is you feel pricing pressure most acutely in diabetes. Where else do you feel it . Dave we get more questions from the media on diabetes pricing. Consumers are very more of the cost of their diabetes medication. It is not necessarily because of a price increase. It is because of a shift to high deductible plan designs. Time, investors say can you hold pricing in diabetes . It is a bit of a paradox. Pricing has been very stable. We have not had big fluctuations. What is happening is patients are bearing more of the cost and there is more competitive pressure. Erik you cant talk about pricing without talking about benefit managers. You have been among those critical of the role in the drug supply chain. How would you fix it . Dave one principle i would encourage my colleagues to adopt is to really make their return to add the value based on what whicho for their sponsors is in ministry formulas and process claims, not based on plan designs that allow them to make money on the transaction of the drug it will. Based of the drug itself. Sometimes the Insurance Company is actually making money on the drug being built and that seems upside down to us. They should act more like visa or mastercard and get paid on the claims processing not necessarily on the sale of the medication. It is a concentrated market. We would welcome more competition so that people with different models like the one just described erik anthem starting its own pbf pbm. Dave exactly. Some say shouldnt you worry about consolidation but that is a better scheme for us because whenever we can have a conversation with the pair about pharmacy costs and medical costs, we are able to get into that valuebased pricing. It is more procurement that is a tougher environment. Upk so at night is a thumbs aetna is a thumbs up. Dave you have one less entity to deal with. Erik what is lily going to do with tax windfall that comes out of the recently signed piece of legislation . We will be able to repatriate cash we have kept overseas which future global rate down. We are going to follow the priorities that played before capital allocation. Erik more investment . Dave i would expect so. We are going to look at m a and Business Development to build build a broader pipeline in places like ontology and diabetes. We will return it to shareholders. There are lots of opportunities to invest in our business and so we will have to work through that as the year progresses. Erik do you have an idea of what it is going to mean to you, financially . Once you account for what you plan to set aside . What percentage of that is going to be left over . Dave we have not spoken about that publicly yet. We have a Earnings Call at the end of the month and we will comment more on that, then, along with the new rates we have said today and how much cash we will be paying to the u. S. Government. Repatriating is expensive. Erik a specific question for you about one specific drug. You have one of the best growth victories in big pharma. It has been widely technology. A lot of that future hinges on the success of to the city of trulicity. How confident are you . The outcome data it has demonstrated is good. Dave that is true. We have a cardiovascular study that we will have out late, this year. The outcome data itthe competito products in the class, one of them does have a cardiovascular claim. The weekly form does not have that in their labor in their label. They will have to repeat that to get the claim. We like our Competitive Position because we have a lot of momentum and easeofuse. We know with the we know people with diabetes truckle with daily monitoring their glucose levels. This offers a once a week shot. You put the device to your skin and it goes. It is very effective medication. We expect continued growth. That is not the only part. We have a number of products coming including ultrarapid route insulin ultrarapid insulin. We welcome competition. I think it helps get the products to more patients. Does that play to your manager make Competitive Dynamics more challenging with drugs being approved at a faster rate . We have long argued for more competitive situation through the fda. Starting with generic markets. There was a fouryear backlog in generic approvals and that makes generic markets inefficient. Consumers can save money. On innovative therapies, we welcome breakthrough designations, more rapid and adaptive regulatory pathways. It does have the effect of increasing competition on incumbents because you are speeding up therapies but we are here to do that. If we cant out innovate ourselves, if we can speed up our own innovations to create Something Better for patients, then we have a different kind of problem, so we welcome it overall even though it does put pressure on our business sometimes. Erik the world needs more successful therapy and medicine, but with the cost of developing and marketing a new drug, doesnt the change in anemic create the risk that there will be too Many Companies developing too many benefits to treat the same problem . Dave it could be. What you would hope is lifecycles Oncology Products can be just a few years because you can launch successfully and then someone can come on top with Something Better. If i am a patient, i say good. The economics of that, it is solved by Big Companies saying lets invest in other therapy areas with less competitive noise. Disease is boundless. We have so much room to go. Areas like neuroscience were there is not enough investment. It is not nearly as competitive as oncology, so that is the answer from Big Companies, to think about how you allocate your r d budget to places that are less competitive but are still significant. Erik thanks for being here. Eli is dave ricks, ceo of lilly. Vonnie our thanks for a fascinating conversation to erik schatzker. Lets check in on the bloomberg first word news. Here is emma chandra. Emma four progress in the highlevel negotiations between the two koreas. North korea and south korea agree to hold military talks and further dialogue. Kim jonguns regime said it would send a delegation to south koreas Winter Olympics. President trump is discussing how he would lawyers are discussing how he would in mandalay interview with special counsel robert mueller. The post says the president s lawyers are considering how to set limits on any interviews. Energy sector secretary rick perry had proposed subsidizing coal is a way to keep power grids dependable. The federal register a Commission Said no, instead it has asked grid operators for their ideas. The wall street trader who became one of bitcoins biggest champions is starting a merging bank dedicated to cryptocurrencies. Company to list his new in canada. Global news, 24 hours a day, powered by over 2700 journalists and analysts in over 120 countries. Im emma chandra, this is bloomberg. Mark coming up on bloomberg markets, a bloomberg exclusive with saudi arabias top market regulator. Vonnie live from new york, i am vonnie quinn. Mark and i am mark barton live from london. This is bloomberg markets. Saudi make it jake it saudi arabias market regulator announced joining us now explicitly over the phone from is it excellently, that is his excellency, mohammed elkuwaiz, Capital Market authority chairman. Flows from abroad are you expecting from the tweaking of these rules today . Thank you very much. The regime we have that were released today are the third version and the most significant change in the licensing regime for Foreign Investors. Our hope is that this new release makes the process of investing in saudi for Foreign Investors easier than it has ever been over the previous two versions by making the qualification more and more an embedded part of the account opening process, rather than a separate process that was previously long and may have been document heavy. Mark do you have a target for how many investors, how much in inflows is expected . Mohammed the new qfii regulations that have been issued today are going to be enforced two weeks from now. We have already started to see because of the deregulation of many assets in the saudi markets, and increased amount of regulation. One of the things we have seen is more than 20 of qfii investors have been licensed in the last month to month and a half. We are looking for that pace of licensing to accelerate even further with the addition of the regulation of the qfii regime. Mark ownership of shares by foreigners and saudi arabia are still very low. Are you thinking of any further measures to boost that . There still are a few products that are being planned and going to be launched soon by our colleagues in the exchange. Which is a most notable improvement that many investors have been looking for is a change to the independent custody model which helps a lot of International Investors deal with independent custodians which has been a requirement for most International Investors. The other significant change is introduction of a on the bus model of a omnibus model from audible accounts to make the process of buying and selling securities a lot easier and more streamlined. Mark has the recent corruption hit the inflows at all . Original after the announcements were made, there where initial period there was a cooling off of foreign investor interest, but after it stabilized and after news from the local policymakers came out with respect to the progress that was being made, we started to see stabilization and reversal in terms of additional inflows starting to come back into the country since then. That has continued in the most recent period. Mark i must ask you about aramco because the company thats the country recently changed the state ofrecent aram. Do you intend to amend rules to fit the offering in any way . We have been using the opportunity of the listing of saudi aramco as well as the significant privatization plans of the saudi government as a litmus test for the saudi regulations in terms of their readiness and capability. But we have found is in almost all cases, our regulations have passed with flying colors. There were a few opportunities for improvement which we just rereleased recently, like a rerelease of modified offerings of security regulations. We believe that our regulations are fully enforced to accept and accommodate and offering a listing as large as saudi aramco. Mark is anything else to speed up the process . From our standpoint, we are fully ready, generally as is the case with most privatizations, the filing of a ipl ipo perspective such as a cma is usually the last step in the process. We have been in constant discussions with our colleagues in saudi aramco as well as Financial Advisors to clarify any questions that they have. Prospectus tog a be filed soon. Mark how soon do you think that will be filed . Question that is a that is better responded to by the company and its Financial Advisors. Mark thank you very much for joining us today, his excellency, mohammed elkuwaiz, saudi Capital Authority chairman. Vonnie wonderful interview. Up next, we stick with the middle east. President trump faces deadlines on the iran nuclear deal. We speak with joe lieberman. This is bloomberg. Vonnie live in new york, im vonnie quinn. Mark im mark barton. This is bloomberg markets. Lets get on the first word news. Koreas arewo technically still at war but today made progress towards improving relations. North korea agreed to send a delegation to next months Winter Olympics in south korea. Both sides said they would hold military talks. Dozens of agreements today on a variety of topics among them, nuclear energy, aviation and the environment. Emmanuel macron and his chinese counterpart attended the signing ceremony in beijing. In the euro area has fallen to the lowest level since 2009. That is in line with estimates. One more sign that the euro area economy is at its strongest. President trump will discuss immigration today at the white house with a group of 20 lawmakers. Congress needs to pass a bill by january 19 prevent a partial government shutdown. Republicans have accused democrats of holding the measure hostage. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. Im emma chandra. This is bloomberg. Mark thank you. Chinas central bank has shaken up the currency market. Is Hibbett Sports biggest drop in two months after changes the way it manages the currency. What does this tell us about their approach to the yuan and its overall policy . Its a combination of the pboc unwilling to tolerate anymore currency constraints. Earmarked comfortable with they are more coupled with the level of volatility. It was viewed as a way to curb volatility in the currency. Now, that is not such an issue anymore. Maybe the central bank is wes less willing to impose control on that front. Vonnie is some sort of pushed back due . Absolutely. Weve been approaching that key 65. 50 level. We have seen them push back against this. Shortly after they responded with the reserve requirement raciatio cut, that made it easier to this feels like a bit of a response to that price. Mark im looking at the Broader Market response. Are we going back in time . Its very interesting. We have certainly seen the set up for higher yields this year in terms of other factors like better economies and more believe now that this policy Development Comes in, you concern the interpret that as one of the catalysts for a higher yield regime and higher dollar or a rebound in the dollar after some declines. Mark we could see the ccs redeployed by the pboc if necessary. It volatility returns, could we go back a step or two . Absolutely. Because of the way they responded to the bloomberg story today, it seems like they are exercising their optionality when it comes to this measure. The story we wrote today, the suspension of the measure rather than a definitive end, their goal is currency stability. Mark is this opening the door to a clear flow . As this one step down the road china form wrote for road for china . You concern we see that as a consequence of todays move. It does mean the yuan will be more subject to outside to decorate. For instance, the dollar. It is more subject to market forces. I dont necessarily think that was the goal. Mark what are other central bankers in asia thinking today . We are already seeing some pushback against currency constraints from other Central Banks, such as south korea. We see that as a factor impacting samsung earnings, for instance. A lot of Asian Central banks are weary of excessive strength in their currencies and the pace it rises. We will see more central bank pushback. Mark a volatile year or less volatile year . Last year was remarkably calm when it came to the chinese Financial Market environment what is the outlook for 2018 . It depends on a lot of Global Factors as well as within china. We have seen some potential for volatility given that the head of the pboc or the next head of the pboc will be coming into desk given the Current Governor has indicated his intention to retire soon. That sort of development could pose volatility. Other Central Banks are due for leadership changes as well. The fed, for instance, with powell coming into the fold. And makes for a year of uncertainty. Mark thank you for filling us in. Vonnie great stuff. The Iran Nuclear Agreement is at the hands of donald trump. The president has until friday to decide on sanctions waiver and deal compliance. More than 1000 iranians have been arrested in the protests. Almost two dozen killed. Joining us now, joe lieberman. The former independent senator from connecticut and former democratic Vice President ial candidate. Also joining us from washington, d. C. , kevin cirilli. Lieberman, thank you for your time. We have this key deadline coming up on friday. What you think the administration should do . Joe lieberman i think the administration should respond to the continued bad behavior by iran by increasing sanctions. Theres plenty of authority the president has under existing law to impose sanctions on the iranian government and the leaders of it. To speak up for Human Rights Violations and support of terrorism throughout the middle east and beyond. Ope the sanctions rules sanctions will focus in on the. , the instrument of the ayatollah at the top to suppress and brutalize the people, which they have in the streets recently. This is a different situation we are coming to. The transition from president obama to President Trump has toughened our position against iran, which i appreciate. Theres no reflexive desire to defend the Nuclear Agreement. The people of iran have now risen up with tremendous courage and risk and protested this government, which they want out. They want freedom and opportunity. Kevin a lot of republicans on capitol hill suggesting this was a bad deal to begin with. Now, they want to see it enforced. You said there needs to be additional sanctions. Should Oil Sanctions be on the table . Additional Oil Sanctions . Joe lieberman i would put everything on the table. One of the things our organization is focused on from its beginning is convincing businesses to stay out of iran. It is to risky too risky. The risk is raised with whats going on in the streets of iran. Im confident that tough new sanctions i hope some directly against the supreme republicd the islamic and the Broadcasting Corporation which has been used as an instrument of suppression of the iranian people, i hope they are sanctioned as part of this. Its not so bad to do the same to the oil industry in iran. This is all part of the same conglomerate. Iran as ao view theological corporation. It is a business. Thugsrun by a bunch of who have tyrannized their own people. Kevin some of our european counterparts are still doing business there. How can President Trump get the europeans out of dealing with iran . How would you grade President Trump and this administration in how theyve dealt with iran so far . Kevin how can President Trump ge europeans out of dealing with i would give them sen. Lieberman i would give them an a. I disagree with a lot of other things President Trump has done, we went from an individuation that was so focused on reaching this Nuclear Agreement that they tolerated suppression of human rights and turned a deaf fear to the protests in iran by the people after the elections, the stolen elections, supported hezbollah, as, hootie rebels in yemen President Trump has said we know who our friends are. The arab nations and israel. We will support them. We know who our enemies are. Iran and the radical islamic terrorists. I give them an a. The regard to europe, sanctions that we have continued will and should discourage european businesses back into iran. European banks have been very principled on this. They have good financing deals in iran because they are too risky they have pulled financing deals in iran because they are too risky. It is possible that President Trump not break out of the Iran Nuclear Agreement altogether, even though he will sanction and punish the iranians for their bad behavior. He may want to give himself more time to bring the europeans to recognize that as long as this radical government is running iran, the rest of the world is not safe. Theres a lot of other moving geopolitical parts and some of the sources ive talked with in the Intelligence Community tell me the concern betweene relationship iran and north korea could pose certain geopolitical risks moving forward. What are your concerns about the dynamic between iran and north korea . Sen. Lieberman this is a really important matter, which has been discussed all too little. I will go based on public sources, not any classified intelligence. Sources,w from public cooperation between iran and north korea on Nuclear Weapons development and on Missile Development you can find in public reports indications of at the critical moments in the development of those two programs. This is a suspicion. Im not saying it is a fact. The North Koreans have advanced their Nuclear Weapons and missile programs so dramatically years years thate of the money had to come from somewhere. I worry that it essentially came from iran. Iran hasays, contracted out its Nuclear Weapons Development Program to north korea while it is technically a bank the iran opening the Iran Nuclear Agreement provisions. Its doing everything its not supposed to do with north korea. You were at one point being considered for fbi director. Is there a position you would like now . Sen. Lieberman that was a terrible surprise. Im very happy doing what im doing. More time with the family, im practicing law parttime, im on. Couple of corporate boards if a president asks you to serve, you have a responsibility to think about it seriously. I did at that time. That would be my answer. Im not yearning for anything in the federal government. Vonnie the Michael Wolff book, has it changed your perception of the job the president is doing . Sen. Lieberman i take the book with a grain of salt, frankly. I didnt know much about Michael Wolff. Now, the book is startling i havent read it, but the reports in the media let me hear more about Michael Wolff. He doesnt have a reputation for being the most responsible journalist around. He tends to report what he hears without validation. Liess the whole book is a i dont think the whole book is there are things to be concerned about. Not reaching conclusions about President Trump based on Michael Wolffs book. This is part of my whole reaction and its not easy, trying to separate the facts, the tweets, everything going on around him from his policies. There is some i disagree with, like his policies on climate change, there some i agree with, like his policies on iran. , thank sen. Lieberman you for joining us joe lieberman, thank you for joining us. A possiblext, breakup of continent. Shares up 5 today. This is bloomberg. Mark im mark barton. Vonnie im vonnie quinn. This is bloomberg markets. Time for our stock of the eurho. Exploring options for a major revamp come including a possible breakup of the company, pushing shares higher by 7 this morning. Joining us now with the backstory is taylor riggs. Taylor at one point, the most percent change going back for 2. 5 years. You are getting quite a move on this and a good move. Theyre looking at this strategic review. You would have the Holding Company and shares of the most profitable units held separately. This comes down to the parts valuation, whether that is worth more together or separately. They could break it up. You could spin off list separately some of the more reofitable units like the ti business and combine them with better rivals to compete. Have two key divisions. The more profitable is their rubber business. Those margins are 21 . Then theres the automotive unit which has some of the lower operating margins. Safety, interior, large powertrains, more conveyor belts that power off road vehicles. Said he pushed for a change for conti already to split itself off. This is receiving investor interest. Mark any split would mean the blessing of the family that owns 45 of continental. We have any idea what theyre thinking . Taylor you can see that there is 46 ownership from that family. We havent heard anything from them. The company has declined to comment. Shareholder t black rock vanguard. They say they like this idea. Competitorsother have done some other things where they have split into two parts. A lot of this is based on electric cars and the future of self driving vehicles, how to make those segments more flexible to change and react and grow in those areas and separate that out. Riggs with our stock of the hour. Mark top of the Bloomberg Business flash. Samsung electronics came up short in the last quarter. A south korean giant reported lowerthanexpected profit. Samsung lost momentum in memory chips. The Company Plans to release its latest smartphone next year. Hedge fund biggest is turning on dollar bonds. The evaluation still doesnt make any sense. The premium on e. M. Dollar bonds is now the lowest level since 2007. That is your latest Bloomberg Business flash. Vonnie straight ahead, if ferrari can do it, maybe they can, too. We are talking about aston martin as they consider an ipo. This is bloomberg. Mark this is bloomberg markets. Lets get to aston martin. They are exploring an ipo. They are known globally as the preferred ride of james bond. They are targeting evaluation of 6. 8 billion a valuation of 620 billion. How would this compare with the ferrari ipo . They are targeting a valuation of 6. 8 billion. How would this compare with the ferrari ipo . We are hearing from people familiar with the matter, essentially, aston martin is seeking a valuation of as much a valuation pound, similar to the one obtained by ferrari in 2015. Ferrari is now valued at 18 times its operating profit. That means aston martin would be valued about the same, taking into account that its a big aston martin production in 2019 as they roll out their suv. Tonie ferrari manages achieve phenomenal margins. Could aston martin ever manage that . The ceois clearly what is trying to do. At the moment, aston martin is making a profit margin of about 20 . Ferrari managed to go up to 30 . Andingmartin is exp into the lucrative suv market. Aston martin is also expanding beyond the car business into hotels and other luxury goods. Thats where it is going. Hopefully profits are there. Mark great job. Well done. Coming up, its the european close. We are less than 35 minutes away from the end of the tuesday session. Stocks rising for the fifth day today. 1. Best run since november check out whats happening to the ftse, the dax and the cac 40. I believe you with those. I will leave you with those. This is bloomberg. Mark it is 11 00 in new york and midnight in hong kong. From bloombergs brandnew European Headquarters in london, im mark barton. Vonnie from new york, im vonnie quinn. This is the european close on bloomberg markets. Mark here are the stories we are covering from the bloomberg. U. S. Stocks hitting new highs before the start of the earnings season. European equities climbing for a fifth day and unemployment in the region falls to the lowest level since early 2009. As janet yellen prepares to leave the central bank, the Trump Administration is set to be said to be making a decision on the vice chair. We speak with the chief executive of express scripts. Potential changes ahead for obamacare. Have a look at whats happening to european equities
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