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 o