The earnings season gets into full swing a little bit later on. I think a lot of investors today are trying to digest this surge of bond yields and what that means for a possible rotation. The flipside to this think synchronized Global Growth, the impact on asset classes. We had a story with yen and th e boj. We know Philip Hammond and david davis are separately in germany. Now, coming up, we discuss super cars and making motorsports very cool again when it comes to for example, sustainable gas ceo. We get commodity calls from jeff curry at Goldman Sachs and a little bit later in the day, we bring you the exclusive interview with elizabeth warren. We talk immigration and tax. The children of undocumented immigrants are facing deportation from the country and have won a court order temporarily blocking the Trump Administrations decision to end the dreamer program. A judge in San Francisco rejected the argument that the courts do not have the authority to secondguess whether the president had the authority to terminate the program. Left his job as executive chairman of Breitbart News. He was a longer host a radio show on sirius xm. The support of the mercer family, republican financiald an patrons. The European Union risks opening the door to another financial crisis if it refuses to give londons thinkers a good trade deal according to the u. K. Chancellor of the exchequer. The german newspaper, Philip Hammond and david davis said they want close cooperation as part of an expansive trade deal covering those goods and Financial Services. U. K. Businesses are morning that more price increases are ahead according to a survey by the british house of commons. 36 of Services Firms are expecting to raise prices in three months, the highest since 2008. U. K. Inflation accelerated the fastest in more than five years since november. South korean president moon has vowed never to accept north Koreas Nuclear program after the two sides met face to face yesterday and is agreed when the south propose talks on denuclearization. Union markets regulator has made a surprise move as it delayed a miiffid ii move. The plan to lift potentially hundreds of stocks could not be implemented on time because of a lack of data received from venues, meaning the planned start date of this friday will be pushed back as well. Global news 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries around the world. m nejra cehic this is bloomberg. Francine bill gross is common the bear market. Broke in f concerns ive years. Now, the 10 year u. S. Yield has climbed to a ninemonth high with the Treasury Curve steepening, just ahead of the governmentales of debt data. So, who is right . Is it gross or gundlach . Lets get the view from kristin keller. Thanks for joining us. Whos right . Gundlach. Oss versus i think the fact is we are in a situation where in the u. S. The growth is going up, we have the tax reform. Growth, butit to even with the relatively soft markets in the labor market, we will see a continued decline in unemployment. That should encourage Central Banks to move. We have four hikes for this year, which is more than the fed has. The 10 year is going up. That means, of course, bond yields increase from here. Marketut right there , im not so sure. We had a lot of flattening because the market underestimated how much the rates would go up. Francine do you think the yield curve is not going to can you flattening from here . This is a new trend . Christian we had most of the flattening towards the end of the new year. Francine i know you are not a markets guy, an economics guy. This is more about economics than equities. This is the 10 year yield. What kind of level can we see . 3 . , or can we reach we have 2. 7 . We have a very gradual path. Its going relatively slowly. Than more erratic forecasters see it. Overall, we see it remaining below 3 . Theres evidence that would keep rates from going about 3 . The biggest reason is, theres a lot of talk about the qualitative element, the Balance Sheet running off, the ecb stops buying, the bank of japan has reduced the program. The fact is, we need to say inflation rally. So far, weve seen the breakeven inflation in the u. S. Has gone up 2 , which is good news. We will see what cpi brings up friday. As long as we see pc inflation go to 1. 8 or so, thats below the 2 . I think markets need to see it within the inflation. Not only the unemployment numbers, but the inflation. In our forecast, we do not see it. Francine i have the dot plot. When we have cpi going up, maybe on friday if it does, is that when the markets start believing the dots . I think we are in a process that is very data dependent. Markets are looking at unemployment, the month on payro ll to see earnings, the hour ly earnings in the u. S. , 2. . In the labor market, that is very tight. They will see if this translate into pc core, which is a major inflation measure. Every month it will follow inflation. I think then if it comes, markets will move. Francine do you think it is more data dependent than in the past . Data dependent was, there was data to skew us off that. 2017 showed us was Inflation Expectations never really materialized. Christian markets are becoming cautious of believing the models. Frankly, Central Banks have been telling us there are things going on they dont understand. A lot has to do with technology automation, etc. , that inflation is not taking off as it should be within the labor market conditions. Therefore, markets, be on a path therefore, markets will not be on a path of unemployment. They we want to see it. The chances are getting higher that we will see it. We will get headline inflation rising from commodity prices, which are all up. Is laborquestion markets, core inflation and wage growth. Thats seemingly a gradual process. Francine Christian Keller stays with us. Plenty coming up. Later we discuss the business of sustainable rating. We bring you the exclusive joint interview with u. S. Democrat senator warren. We talk regulation. This is bloomberg. Francine economics, finance, politics. This is bloomberg surveillance, im Francine Lacqua. Anotherisks financial crisis according to Philip Hammond and david davis. In a joint article, they said they want cooperation between expensivedes for an deal covering both goods and Financial Services. Joining us is david merritt, and Christian Keller is also still with us. This first of all, is quite odd. You have the chancellor and the brexit secretary writing jointly within a german newspaper. They are going for a domestic german audience. They will be there tomorrow, meeting with Business Leaders and officials. What we are seeing are the be ginnings of the offensive around europe and the diplomacy ahead of the negotiations on trade. Its interesting, this charm offensive. Of course, this is one of the levers, i think, the government thinks it has, the financial clout of london. This is one of the big debates we will have over the next few weeks and months, the degree to which Financial Services will be transacted through london and the rest of the European Union. Their argument is, why would you put up barriers . Its going to her to the european economy. From the european side, they are saying, maybe there is an toonomic hit we can take preserve the sanctity of the Single Market. Thats the debate playing out and this is there for shot. Francine there is no government yet in germany yet. Is this a good thing or bad thing for brexit . We have had reports from merkel saying she is ruling out aspects of this trade deal, but she has other things on her mind. They have had the longest Coalition Talks in history in germany. There is no certainty yet that the government can be formed. Yes, maybe you should question, is this the right time to start lobbying the german government. Francine christian, what have you been most surprised about from brexit . Europe is ok. Germany is powering ahead. It is a strong economy, the u. K. Less so. But the u. K. Does benefit from the growth environment. Theres an inexpensive currency with a global uptick. This country has a lot of manufacturing and that has been helping. Barclay cut spending. In december they had strong numbers. What seems to be is the u. K. Is doing worse than the continent, germany and that other countries are accelerating decelerating. S i will say, the strategy we just talked about, trying to scare the german public with the financial crisis, im not sure whether that works. Ini dont think the public germany is interested in the financial system. It could work if there is a s ense created that the german real economy, Manufacturing Companies could suffer. They need to finally calibrate this to the wider public. Francine throughout the last quarter we talked about ireland and Financial Services. Actually, is the first red line immigration . Does Everything Else fall into place . Public in the german havepeople across the eu been confused as to why brexit is happening. The explanation from the brexiteer side was the question of open borders. The eu has refused to make any concessions at all, the indivisibility of the four freedoms is something seemed to be sacrosanct. It does not seem that is up for negotiation at all. Were it to be, i think you might see Public Opinion in the u. K. Shift. A lot of this is up for debate. At the moment, it is turning between these key areas of how the trade relationship will work. Freedom of movement will stay in some format thorurough this transition period, but how long that transition period is will pon within the next few months. Theresa may has been very clear. Freedom of movement will end in the current format. Itstill do not know how easy will be for people to go back and forth. Francine christian, we have had a couple of things making the call the pound will finish the year at 1. 50, but i have heard explanation behind that being weaker euro and much weaker dollar. Do you have a 1. 50 call . A 1. 46 call, so it is not that far off and we see it strengthening. Think as negotiations continue, we do think we get to some kind of results that markets can live with. This currency has sold off a lot and the u. K. Is not going into a recession. In particular against the dollar, the pound looks relatively cheap. We think over time there is some stability to climb to levels of 1. 40 or 1. 50. Francine that is the chart we have been watching for the last couple of days on pound. For joining us, our London Bureau chief. Christian keller stays with us. Up next, kodak creates its own digital currency. What is next from the cryptocurrencies base . We discuss that next. This is bloomberg. Francine this is bloomberg surveillance, and im Francine Lacqua from london. Cryptocurrencies are far from dead. Kodak announced its own digital currency, kodakcoin. Joining us is Christian Keller from barclays. Ed, good morning. Im obsessed with kodak because i do not exactly understand what the venture is about. Ed yeah, it took the market by storm yesterday. It appears they want to use thekchain technology, decentralized ledger that underpins bitcoin, to pinpoint the rigthts photographers have. Photographers are always having there are two misappropriated on the web. Having their art misappropriated on the web. Francine at the same time, they are selling the coin. Ed they are selling this coin. The stock soared. Iconic think of this company was exhibit a in how you get disrupted by technology. Thingpart of this where everybody is adding blockchain or cryptocurrencies to their name. At first blush, everybody is s aying, there they go again. Francine how much of your reporting focuses on how asian markets with bitcoin compares . Areouth korea, the premiums 40 higher. Ed the premiums are outrageous. Thats why south korean regulators are trying to clamp down. The pricing for the south korean exchanges being taken out of the u. S. Based exchanges and other exchanges because it is so distortionary. It underscores just how mad south korean investors are for cryptocurrencies. Francine christian, do you look at cryptocurrencies . Does it translate into your world of economics, or will it . We have to look at it. Theres a technical aspect of it. At the moment, we see bitcoin started it. But bitcoin has Blockchain Technology and use. The fact that it has a lot of other aspects, like mining, whi ch has energy costs, thats something thats not necessarily associated with blockchain itself. I think what the market is now understanding is there are many different areas. Bitcoin itself is interesting. Its ultimately block chain can lead to differentiated currencies. Something that has been discussed for francine a long time. Francine francine because the regulators. People who pay that kind of value for it must believe that at some point, they cant or in fact in it. At the moment, it does not. There is speculation that it is a currency you can use worldwide. From a macroeconomic perspective, i think of two things. We will be going to the area where we have private money and the financial crash, given the volatility of the asset. Francine weve got to get ed back, because i want to ask of people will be borrowing to purchase bitcoin. That will have to come at another time. Christian keller stays with us. , trump up next, trump hits the slopes. The America First president goes to davos. How will he be perceived . This is bloomberg. Economics, finance, and politics, this is bloomberg surveillance. I am francine london Francine Lacqua here in london. Nejra the children of undocumented immigrants facing deportation from the country blockinga court order temporarily the a judge in San Francisco rejected the government argument that courts do not have the authority to secondguess whether the president incorrectly has left his job as executive chairman of Breitbart News. He will no longer host a radio xm after sirius feuding with President Trump over the book fire and fury. Trump spoke with from echo mercer Rebekah Mercer by phone. The European Union risks opening the door to another financial crisis if it refuses to give london bankers a trade deal. Germanint article for newspaper, Philip Hammond, and david davis say they want close to munication between e. U. And u. K. Regulators. Global news global news 24 hours a day, powered by more 2700 journalists and analysts in more than 120 countries. I am nejra cehic. This is bloomberg. Francine lets look at japan, we are getting a little bit of a a little bit of data out of the u. K. A lot of talk about whether japan will touch 150 by the end of this year. This is what i am looking at. Its pretty much the forecast actually. The estimate was 0. 3 for manufacturing. Industrial was as forecast. Im not sure its having that much of an impact on pound, but something we need to keep a close eye on. As we go through what negotiations brexit has on pound and manufacturing. Donald trump is expected to attend the upcoming Economic Forum in switzerland. The White House Press secretary said the president was looking forward to the gathering of foreign leaders and business executives. U. S. President s have rarely attended the event in part out of concern socializing with the richest individuals could send the wrong message. Joining us is Andrew Barden, who i think has been to davos as much as i have. Surprise as a complete to everyone. We got it yesterday and didnt know if he was going and thought he wouldnt. It feels quite significant. It feels like the Trump Administration is taking over the gathering. No doubt. You remember last year i remember sitting in one of those small rooms listening to trumps address and there was Anthony Scaramucci theyre sort of representing the Trump Administration before he had any kind of role. He then served 10 days as director of communications. That took over davos. I can imagine this year having trump is going to completely up thethe meeting upend meeting and the agendas that have been set. Normally when a head of state comes in, they have a preliminary address for 20 minutes. Sometimes a little bit more. Last year we had chinese president xi who spoke and kind of set the tone for globalization, pushing back a little bit against trump and now he comes in and is totally taking it over. He will have a chance to change the channel somewhat from his domestic woes and he will have the ears and eyes of the world hasthat he is often often attacked so much. Certainly a big surprise. Francine my first thought was going to be fun covering this, but also, this is a president that will go in front of probably a skeptical audience to defend his position. I also thought this is this a is traction for people to distraction for people to stop focusing on the book . Itrew Andrew Andrew could be both. He could be going there to push the America First message. He could go there to play to his base and we have seen that trump has no problem going to these world gatherings and taking hard tack other way. He did it at the g7 meeting when he was the