Moves and mixed trading for the major averages. We do have alltime highs for the three major averages. This follows similar action anticipation of the shortterm funding plan being passed by congress to keep the government open until february 8. Some asking what could possibly stop this bull market but lets ask what is the tailwind . Lets hop into the bloomberg to see one potential answer. This is a look at the earnings picture for the all world equity index. For several years, it was flatlining. That led into the correction that we saw in early 2016, thats turning to climb in 2017 and take a look at the spike early in 2018. Lots of analysts boosting the profit Outlook Companies based on that tax reform, especially here in the u. S. This could be a tailwind for the record highs that we have seen for the markets, more recently as valuation becomes more reasonable. Lets take a look at two winners laggers. Acquers netflix up nearly 10 . They also boosted the guidance nicely. The company now has a market cap of greater than 1 billion. Though shares trading sharply higher. Verizon had been higher earlier, today but now their shares are lower. Laggers, Procter Gamble down more than 2 after the company Beat Estimates but the growth is less than what some investors might like to see. Investors are wanting more growth out of the company as opposed to single digit growth. Johnson johnson down about 2 . They basically put up a inline quarter, another case where investors want a little more growth. The company is promising to use tax cuts to boost the Balance Sheet for rmb spending. 10 on a look at the 10 year yield. It is down three basis points. That tells us haven bonds are rallying for a second day in a row. That is the first time we have seen bonds rally for two days in a row. Stocks might not be all that worried about the drama in d. C. , but we are seeing more of that in the 10 year yield and the dollar is trading down with yields. Mark the gains continue on this side of the pond. We are up to the highest level led by health015 care, travel and leisure and technology. Traders are having second thoughts on the euro extending its rally since 2014. That is after the ecb meeting on thursday. Options. Um on core investors assess the risk that draghi could join that core of dovish policy makers that have voiced concerns about the currencys recent appreciation. This is a great chart. Thating on a type of rally traders dream about. It has risen over the last week, months, versus a basket of nine other major developed currencies. The only one of that fund to do so, time for traders to lighten up. The most bullish pound since before the brexit vote, that is the green bars. The brexit vote back in june 2016. Leverage funds raising net pound longs to 48,000. The biggest long position since august 2015. In the wake of that trumped news on so trump news on solar and washing machines, i felt we would look at the european impact. European solar stocks falling after trump imposed those tariffs. China already facing stiff tariff opposition in europe. There among billions of euros of levies imposed on chinese imports of goods including reinforcing steel, foil, bicycle screws, kitchenware and ironing boards. Shares of soy tech world of soitech were lower in the wake of those trump measures. Vonnie President Trump imposing those tariffs on imported solar machines, washing angering trade partners as he takes his first major protectionist move a full year into his term. Several countries condemned the move. German officials said the move could lead to trade conflict. Joining us now is michael mckee. Essentially, it is only 30 , it could have been more. How is this not business as usual . Michael this may be the start of a trade war, maybe the first shot that the Trump Administration fires in a protectionist effort. This is under these tariffs were imposed under a system that allows companies to claim injury from imports, from a surge of imports. Not from dumping, not unfair trade practices, just buying more products overseas. By putting up this barrier, until the rest of the world that the United States is interested in holding off some imports. Annie he did not impose tariff on all electronics, or all appliances, just washing machines. Michael this was a particular complaint filed by whirlpool corporation, in particular that samsung and lg were selling too many washing machines in the United States. Samsung and lg argued they sell more because people like their products better. Whirlpool says that is hurting jobs here. It is a industry specific country specific complaint and companies would have to file cases in order to try to get tariffs imposed. The interesting thing about the solar panels is it was filed by subsidiaries of the United States, one that is owned by the chinese and the other owned by the germans. It is understandable why china or south korea might be upset, but why are the europeans were rate . Michael i think you put your finger on it earlier, this is a concern about what happens to the Global Trading system. Obviously there are german manufacturers who sell washing machines in the wash in the United States, but they could be jeopardized by higher prices on imports. The rest of the world, the europeans are watching where the Trump Administration is going with this because they dont want to see a threat to the Global Trading system, to the wto and there are fears that that is what we could end up with. The chinese to the u. S. To the imposed george w. Bush similar tariffs and the u. S. Lost. Chinese dos if the it this time and donald trump loses . Vonnie we will say that for next time save it for next time. Lets keep talking trade and had to davos relievers were leaders have gathered. Erik schatzker is there with a economic leader of the center of one major trade agreement and that is nafta. Erik i am here with ildefonso secretarythe economy for mexico and certainly in the middle of nafta negotiations. Good to see you. Let us begin with this question. What are your reactions to tariffs . Trumps what prevails is that nafta is in place. The original nafta has a provision in place where American Farmers can apply through third parties that they have to abide by the terms of the agreement. Exports are not tremendous. We are. 7 of the u. S. Market. It was basically directed towards korea and china. I believe it is not the right message and i believe we have to review on which grounds we have to go about this position on tariffs. Erik do you expect it to be taken to the wto . Sec. Guajardo we have lawyers doing analysis. The first thing i will do is have dinner with karen davos and the first thing i will do is talk to him about this and what the rationale of imposing these tariffs and including mexico in these measures. Erik one year into the trump presidency. Talk shop on the mexican economy. Sec. Guajardo remember when the president started the peso dropped. 18, which means we are in much better shape than a year ago. Sec. Guajardo you think of the currency as a report card. Erik that only that. The mexican economy behaved much better than expected. The growth rate was not higherthanexpected, but better than any other country in latin america. We are still not done. We believe we can find solutions for this negotiation that will accommodate the three countries involved. Erik you are sounding a note of optimism. Sec. Guajardo i am always saying that i am not a optimist. I am a positivist which i believe is working on something you can get it done. Erik what is it going to take for a breakthrough . These nafta talks are in their sixth round. Sec. Guajardo basically what you have is i would put it in three baskets. The energy chapter, the telecom, the regular trade which is improving for all parties involved. But you also have the things that make sense in terms of disciplines like intellectual property. Is this view items out of washington in terms of the relevance of trade deficit for the u. S. Administration and the main element in manufacturing and the car industry. We have to be creative to find ways that will work for the trade conference. Erik lets pick up on that point about auto manufacturing. The United States wants a minimum of 85 north american content for tariff free shipments under nafta. That is way up from 62. 5 . What is a starter . Sec. Guajardo i will start negotiating with you in front of the cameras. My job is to do it with my partners from canada and washington. You can read on the reaction of the u. S. Auto industry. Your own ministry was not pleased with this kickoff your own industry was not pleased with this kickoff. Erik it would be challenging for them and they know it. Sec. Guajardo that is why the negotiation has to concentrate in things that will work out for everybody. Erik is that the biggest stumbling block, that rules of origin issue is a concerns card . Sec. Guajardo when you have regional rules of ownership, of origin, it strengthens the production process. Erik if cars are the biggest cars thethe are biggest stumbling block to a deal . Sec. Guajardo we have to be careful about how we solve that equation. 40 of mexicos exports to the u. S. Are cars. What makes them accessible to u. S. Consumers. We have to be very careful in how we manage this solution. Erik what about the fiveyear sunset clause . Sec. Guajardo we have been being that we have been very stringent we have been very stringent. With understand that the original nafta was not well designed because it does not have a negotiation process. What i am proposing is lets do a negotiation. Erik and reevaluate every five years. How the americans been receptive to that proposal . Sec. Guajardo we are going to find out and see if we can find a compromise. A mexican proposal and the u. S. Proposal. Erik so that has not been on the table yet. Sec. Guajardo it has. We have to find a creative solution to accommodate. It destroys the fundamentals of an agreement which is give certainty and credibility. Erik since we are talking about death, is there a dropdead date for mexico . Is there a point at which there is really no sense in continuing the negotiation or will you be at the table so long as there is an american and canadian there . Sec. Guajardo that is what we have been doing and we will be at the table as long as is required. Erik indefinitely . Sec. Guajardo you always have some restrictions like elections. Erik i was about to get there. Timeyou get a deal done in for Senate Approval by july 1, when mexico hold elections . Sec. Guajardo not necessarily. The position that the illustration is taking, this to negotiation should be done when we have a good deal. I could happen anywhere from march, the beginning of march or it could happen in july. It will depend upon our ability to get a good agreement. Mexico is ready to work constructively towards getting it. Erik at what point does finishing the job which is to say getting congressional approval and mexico for whatever deal is struck becoming the job of the president elect and not after what day . Erik a new congress sec. Guajardo a new congress will come in september. If theredent of mexico is an agreement before he leaves office, he will submit that to , andew Mexican Congress the senate will decide upon this initiative and their terms. Is you know that it will depend on the new senate but we believe that in order to get an agreement approved, you have to majority. Y important that will be the responsibility. That thereimportant was a lot of trust and credibility for what we are doing and we know that on the other side, the midterm elections are a key date for the u. S. Government. That is the time span to try to get something within this administration. Erik mr. Guajardo, thank you very much. That is ildefonso guajardo, the economy secretary for mexico here at the World Economic forum in davos, switzerland. Vonnie great interview, erik. We are back with much more from davos, including a conversation with canadas finance minister. That is a little bit. Later on little bit later on. Mark live from london, i am mark barton. Vonnie and i am vonnie quinn. Lets check in on the first word news. Taylor riggs has that. The battle over the u. S. Government shutdown is over but the fight over immigration has just begun. President trump signed a spending bill that and they threeday long shutdown. Senate democrats broke the impasse by agreeing to a big promise that congress would address immigration over the next three weeks. Mitch mcconnell pledge to open a debate on protecting young undocumented immigrants from deportation. In kentucky, there are multiple casualties in a shooting at a high school. It took place in the town of benton in southwestern kentucky. Authorities say a least one person was killed and many others were wounded. A suspect is said to be in custody. The state Department Says multiple americans were killed and wounded in a Taliban Attack on a hotel in cabell come after in kabul, afghanistan. According to afghan authorities, 22 people were killed in the attack on the intercontinental hotel. If Vladimir Putin is elected to up with president ial term, it plans to offer rush russia the biggest increase in domestic spending in years. He is not talking about tax hikes and spending cuts that will pay for it. According to people familiar with the matter, he will propose increases to the pension age and income tax. He also calls for cuts in some tax breaks. Global news, 24 hours a day, powered by over 2700 journalists and analysts in more than 120 countries. This is bloomberg. Mark contact us on twitter. Watch the 20 the first 24 hour Global News Network streaming live on twitter. Here are some of todays highlights. Mark time for the Bloomberg Business flash. Employees at jpmorgan will see some of the money the bank saved from the tax cut. The bank plans to spend 25 billion over the next five years , increasing wages and expanding its branch network. May help counter a push. The activist investor for more radical change in the worlds biggest Consumer Products company. That is the latest Bloomberg Business flash. Ahead, thell chairman at bae systems, europe s biggest defense manufacturer joins us live from dallas. From dow rose. This is bloomberg markets. Lets check in now with the first word news. Taylor Vice President mike pence says u. S. Must retain its dominant role as the mediator in the israelipalestinian conflict. Say the u. S. Eaders has forfeited its role in the Peace Process by recognizing jerusalem as israels capital. The worlds most active ashano pewed an plume today. It is 210 miles southeast of manila. Japan cut its price and Economic Forecast unchanged. At the same time, the boj says expectations were inflation have water leads of the race for most oscar nominations. Dunkirk received eight nominations, including best picture. The oscars will be handed out march 4. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. Im taylor riggs. This is bloomberg. Davos,ets get back to were World Leaders are at the World Economic forum meeting. They discussed whether new u. S. Tariffs could reroute chinese money to norway and europe. Innovation force of america, theres opportunities to grow entrepreneurship. Can have that throughout our transition. We have some money we are investing. We have invested one third of our Sovereign Fund in the United States. To develop and other areas of the economy, investments to norway as the economy of the world goes better. It is the Worlds LargestSovereign Wealth Fund at 1 trillion. It wanted to divest its Oil Company Assets last week. That is something for you to approve. We are scrutinizing their suggestion. They can continue to invest, but it becomes more obstacles if they are investing in that. That is the view they have because so much of the International Economy they dont want to be overexposed. Do you agree . We believe we are decreasing activity, we are looking at more areas. , we willterm policy not get the same type of income from the oil sector as we used to. I cannot say i agree or not. We are doing the scrutiny work. Is there a danger that that makes norway more complacent . I dont think so. We have been through a shock in our economy. It used to be 140. We have a swimming of the supply slimming of the supply sector. As they get more marginal projects done because of cost i dont think we will get the same type of complacency because so much of our agenda is directed towards getting the benefits. What the norwegian economy has done better than last year, we had deals with partners in the , they have said that they want to make sure that the Wage Development doesnt go too high so that we continue to an effect the Prime Minister of norway speaking with Francine Lacqua and Erik Schatzker earlier. Erik joins us now with the chairman ,rik im here with roger carr the chairman of bae systems. One year into the trump presidency, United States has not had a commander in favor of the military and defense since ronald reagan. s donald trump good for bae business . Roger donald trump is committed to the military. That means a commitment to ensuring each of the countries and nato is equally committed to defense. Youve given the right sort of encouragement to spend 20 of gdp throughout the whole of nato membership, which is clearly good for bae business. Onk he is coming to davos thursday. What do you hope you will telik l tell delegates are . Roger a positive message about world trade. The america