Not big gains are necessary to get to that record. Abigail the rally continues. Eight days are looking at gains averages. Jor a lot of optimism around tax reform. Results for the big banks, but the effect on the markets overall is a tailwind, especially with jamie dimon talking about how it will be a positive for the country Going Forward. Where there is not a lot of optimism is facebook. We have an intraday chart of facebook cover which i can pull up. It is right here. There we go. Facebook is down 4 . His worst day since the end of november after the company prioritizehanges to not brands. Family, Mark Zuckerberg says people might disband less time on the changes,ecause of the but the time will be more valuable. Investors are a little shocked by the declines. The s p 500, looking at some of the Department Storerelated rbc and jpraded morgan went overweight from neutral. Citing tax reform, brick and mortar stabilization, and other factors. This is giving a tailwind to the entire Department Store space. Lets look at the 10 year yield. Up three basis points after cpi inflation data came in hotter yields rise. Lping the bloomberg dollar index is fluctuating on for its worst day on the year. Typically when yields rise a should support the dollar. Last year we had the worst decline since 2003 for the dollar. The Bear Sentiment on the dollar continuing into this year. This is a longterm twoyear yield. It is above 2 for the first data mark. Cpi it is above 2 for the First Time Since september of 2008 before the financial crisis kicked off with the fall of lehman. Pretty remarkable. European stocks up by 1. 2 . First gain on track for the second weekly gain. The best run since november 3. That is the european benchmark. Grr is the function. Controllinquishing after a decade sending shares down by 7 . That sharesg rest with gucci instead of the track and field developer. Hoping a buyer would pay a premium. That is why shares are down 7 . It did fall 15 , the biggest decline on record, earlier. The german 10year yield rising, the highest since december 22. Dominated by hawkish commentary from policymakers. 13, is the close on july the highest level in 18 months. The euro against the dollar, rising for a third day, the highest level since december 2014. Angela merkel and the social democrats reaching a preliminary accord to negotiate a coalition government. On track for the fourth weekly gain. 120. 68 is the close on january 28. As of now, we will talk more in detail about the euro later. Story,the facebook shares are following after the social network announced major changes to its news feed. The changes could mean users will spend less time on the website. Thank you so much for joining us on short notice as we see the shares fall. The thought is that facebook will give you fewer news stories and more interaction with your friends and family. It sounds warm and fuzzy. You think it will lead to user spending less time . There will be an impact if you look at the total time on facebook, the core facebook platform has been coming down because content from businesses is increasing. And a lot of users are using instagram more. It is good for facebook long term, but there will be a slight impact on revenue nearterm. Bloomberg writer for technology on gadfly says it is a depressing stressful, though says facebook did not put it that way. Will this succeed in making it a more positive experience to be on facebook . Is that what users want . Or, do they want the charge from arguing over the news stories or interacting with the news stories . A longerterm will be better experience. Keep in mind instagram is growing rapidly. They expected to double their revenues. Instagram growth is increasing at pricing. Advertising is going up. This would offset some of the issues, but overall it should be positive. Mark Mark Zuckerberg said his resolution for this year was to fix the social network that he cofounded. What are the measures and 2018 . Increasing investments to fake news and content security issues. All of the steps, like fake news and what they are doing with audience engagement, this is geared towards longterm. It might depress Revenue Growth a little, lets not forget the rapid growth instagram is facing. They have some offset. Julie covering the internet and electronics for Bloomberg Intelligence on the facebook story as it falls. Thanks, earning season underway. 30 7 whileported wells fargos earnings took a hit from litigation. The question is how tax cuts will affect profits. Jamie morgan addressed that issue in todays conference call. The effect of retained capital and increasing competitive American Companies that drive jobs. Theres no question we will be better off year after year for having done this. Julie joining us is allison williams. Thank you for joining us. Argument . The how much of a boost will this be for the banks . In the short term they took a hit. How is it going to translate this year, next year, Going Forward . Allison jpmorgan did the best job possible laying out what they think the fx will be. Broadly, the announcements were in line with expectations. The tax rate at 9 is more in line with the bullish expectations for the bank. In terms of positive impacts for the economy, we will see hopefully a pickup in loan growth, a boost to equity, more negative on the Debt Capital Markets side. Overall for jpmorgan solid quarter, solid on tax guidance. Expectations coming down into the quarter. The guidance was an early september, but we saw the most for fixed income trading coming down reflecting that. We are starting with a lower risk run rate that is negative, but not new news julie . It seems like trading revenue news, that narrative has not changed as we are into 2018. Volatility is still depressed. Is that something you dont count on in the near term to change . Alison if you look at volatility and believe in cycles, we are hitting new lows across several Asset Classes last year. If you believe in cycles, you will see a pickup. Goldman has talked about the correlation between volatility and the magnifying effect on revenues when you get to pick up in volatility. That has been the issue for volatility and equity trading. That is why we are seeing a decline from jp morgan and worse for Morgan Stanley and goldman last week who had the strongest quarters Fourth Quarters last year. For wells fargo, the net interest market and was a bit of a surprise in the form of the biggest legal charge yet. Is it not yet passed the Consumer Banking scandal . Alison what we expected at wells fargo was a big charge. This is a bigger charge than we expected, but the offsets that they had with tax benefits from the new reforms, they had a of aive impact of the sale business. When we get those onetime gains we see onetime charges. Wells fargo is the one bank that has Outstanding Litigation related to the department of justice and legacy securityrates backed issues. It was bigger than expected here they have taken a 1 million charge last quarter. How much of that is related to the doj and how much is ongoing issues . To the extent they are saying lets be as conservative as we can, that is a positive for investors. The other thing is a negative in ongoingter which is operating expenses. The guidance is a little higher than people expected, but investor day in may gives them another bite of the apple in terms of how are things running at that point . It will be the guidance and what terms of they in ongoing profitability. Hopefully most of the issues are behind them at that point. Standpoint iny the Fourth Quarter and moving on. Julie thank you, so much. Bloomberg intelligence Senior Analyst for banks. Bloomberg first word news. President Trump denies saying anything derogatory about haiti here are the president is said to have used foul language while asking lawmakers why the u. S. Exits immigrants from south haiti, but not places like norway. The president says he has a wonderful relationship with haiti but those made Oval Office Say that the president used the hateful words. Sanctions to iran, according to a person familiar with the matter, the white house will announce the president will leave the 2015 Nuclear Accord congress tolow develop legislation to impose new restrictions. A holiday gift for u. S. Retailers. 4 after jumping. 9 in november. The strongest again for november and december since 2010. Global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. I am emma chandra. Coming up, stocks are up. Still be value from insurance to technology. We look at the sectors. This is bloomberg. Mark live from london, i am mark barton. I am julie new york, hyman. Stocks rising in the u. S. To records, and in europe. Joining us is the Global Equity hsbc security. Looks like potentially more upside from here, though not as big of again as 2017, which seems to be the consensus. With this momentum, do you rethink that irma or do you think it will moderate . Or do you think it will moderate . I think it will moderate. I do not think he will see a repeat of the blowout from last year. Strong Earnings Growth, double digits will be delivered. The question is, what do you pay for that . Was Central Banks paying for a interestg, raising rates, whether it be the ecb, the bank of england, or the fed, where you going to pay for the multiples . Were seeing a big beginning of the year reallocation from local investors and retail investors. A lot of growth momentum, oil prices, 70, that is fueling the beginning of the year rally. Julie the bond market, we see the deals hitting 2 . Are rising yields going to be a headwind for stocks this year, or will we see rotation out of bonds into stocks . Ben i think theyve become a headwind. That is one of the ingredients of valuation multiples. Historically, when the fed does proxy by high bond yields come you see a 10 percentage point decline in equity valuations. We saw the opposite last year. We think we will see some of the valuation compression that will offset some of the strong Earnings Growth we expect to see, especially in the u. S. Mark you are seeing a divergence among defensives . Ben things like Consumer Staples are looking good. Quite out of favor but with earnings recovering things like utilities are very sensitive to the rise in bond yields. On a positive side, the only 2 industries globally that are out of favor between positive earnings and momentum is tech hardware, which even after last years outoffavor, and insurance. If you want to be overweight financials, which a lot of people do, insurance is the place to be. Mark you talk about thematic investing. You have a new barometer. What is the highlight, what is flashing . Ben the two things out of favor . One is the lower for longer investment same. Inflation and bond yields staying low, the market doesnt believe that. People are going to come back to that theme. Interestingly, the facebook story, environmental, social, and governance investing is an outoffavor theme. Some of the companies are beginning to be forced to take some of these themes more seriously. We could see people revisit that. More broadly, the investment world is changing and we will be investing more on a thematic aces than a sector and country basis. Julie the key things are the future consumer and tech disruptions. What is the way to play them right now . Ben we have a bunch of screens on ways to play it. The consumer and tech theme is and tech theme is an em and asia theme. Basically all of the young tech adopting consumer growth is coming out of asia. It is a very em it theme. Julie good to see you. Global equity strategist at hsbc securities. Dialing up concerns. Whether telecom etfs are about to take off. From new york, this is bloomberg. Mark this is bloomberg markets. I am mark barton from london. Julie i am julie hyman. Rejiggeringhey are sectors and which companies go into sectors. Telecoms etfs, in no mans land for a decade, are about to get an influx of hot stock. Bloomberg intelligence is here to explain. What does the reclassification look like . It was announced 12 months ago but they gave the specifics. I have numbers for you. 52 Companies Moving to telecom, which will be renamed the Communications Services sector. Netflix, disney, the total market cap is 2. 5 trillion. The total market cap now is 500 billion. This is five times coming in on top of the telecom sector. Etf assets are almost invisible compared to other sectors. Whatis 1 40th of technology has. This is like all of the cool moving to ait farm town and making a cool again. This is what i think will happen. ,hen real estate came a sector im guessing a new sector will be launched and do a dividend in the new etf. There will be capital gains. If you look at the telecom are, there are five etfs. Vanguard has one, vox is the biggest. Ishares hast, and one, fidelity. Five etfs. That will quadruple. Julie they will be renamed communication mark you will see the whole product line get launched. Would imagine this means money into the individual Telecom Stocks as they are jiggered in the re etf. Theyre are having all of the money being dumped into them the way that ashares are moving into bigger benchmarks. Julie really quickly, the first etfs are launching next week, before any bitcoin etfs. , it isity shares anticipated, not certain, but on wednesday they will hold Companies Like accenture, ibm. Anything with blockchain in the name goes to the men. It is interesting with 2 launching in the same day. Within a couple of weeks, it will be which one people choose. Julie blockchain, bitcoin, crypto, it is all been going up. Thank you. Mark still ahead, retail sales continue. Of theef executive National Retail federation and looking at the drama surrounding germanys thinking today. Julie live from bloomberg World Headquarters in new york, i am julie hyman. Mark in london, i am mark barton. This is bloomberg markets. President trump insists he did not use foul language to describe haiti, el salvador, and africa during an Oval Office Meeting on immigration. A democratic senator disagrees, saying the president said things that were hatefilled and racist. Commerce department put together a report on whether foreign shipments are harming national security. The president has 90 days to decide if to impose tariffs or enter talks with foreign steel producers. U. S. Core inflation rate accelerated more than expected. They Consumer Price index increased 1. 8 over a year ago. Costsg region was higher for housing thanks to lower energy prices. Wealthy russians do not want to be on the list. U. S. Treasury department finishing its list of oligarchs close to president putin. The report will amount to a blacklist of russian elite. Global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Julie after a year of dark headlines, u. S. Retail is hopeful for the 2017 Holiday Season. Sales data was released and holiday sales were up 5. 5 year over year. With us is the ceo of the nrs. 5. 5 growth, nearly 692 billion. What was driving this . It was a rocky year for retail, particularly certain areas. One ceo described it as a hockey stick year. The beginning was at that good and in november and december things took off. That is due to stronger than expected employment gains in october and november that led to increased wages and consumer spending. Closer to the Holiday Season, thanksgiving weekend had strong numbers. We knew that we were in for a good year. Closer to the end result the tax reform deal come together. The animal spirits were unleashed. People felt confident. Companies were announcing bonuses and wage increases. A lot of positive momentum carried through because of that. Of sectors,reakdown the biggest increase was Building Materials and supplies. Not something you think of coming in your holiday stocking. Was this a lingering effect of hurricanes and people rebuilding . Was there something there are fundamental retail spending . Matthew probably a combination. Virtually every category was up. In electronics, clothing, home goods, that one just happens to be of the highest. 8. 7 , something, a pretty big number. Nice distribution across the segments. Some of that could be recovery after the hurricanes. That was input that would into a lot of the forecasts put out. When you are doing your report in october youre looking at hurricanes in the third quarter. That created uncertainty, and things turned out better than expected. Julie i think that we ran a chart recently showing amazon took 89 of online holiday sales. When you talk to members, how are they learning, participating, in that and trying to get some of that share back . Matthew we represent amazon and walmart. We have everyone from a to w, or a to z if you include set if you include zappos. Of the top 10 ecommerce platforms, they are operated by retailers that have been in the bricks and mortar business for a long time. The ceo of the walmart ecommerce business is the founder of jet. Com. Lastid at a conference september that ecommerce is only supposed to make us better merchants. Means to an end, how do we become better merchants . The Holiday Season demonstrated that. Department stores under pressure did well. Ulta, inlmart, target, every category they have found ways to compete in the hyper repetitive hypercompetitive environment. Smaller base, but they are making Great Strides and connecting with consumers. Julie so it is not online versus brick and but amazon versus ever