Abigail doolittle is here to tell us what is moving. Abigail we have nice gains for the major averages, and for the doubt, another record high. We dont have that you can that yet, at least for the s p 500 and nasdaq. Interesting if we see more of the volatility we have had the last two days from where the s p 500 and the nasdaq have woven into small declines. The day is young, but the bulls are out. We have weekly gains once again. Lets hop into the bloomberg and look at g btv 6636. We have all the gains so far in 2018, and not surprisingly, that has led to the best month of the s p 500 of 6. 6 since march 2016. That was the big rebound after the correction we saw earlier in the year. Pretty bullish action for stocks. Hoping today some earnings winners. Lets look at the likes of intel, among other stocks. Intel trading higher, and its highest level since 2000. They also offered an optimistic avi, thea drugmaker, up 6. 6 but 8. 6 . And we have a report out where companies are beating the forecast. Mark abigail,. 58 percent is the magic number today. Buy a beastise amount today to rise for the fourth consecutive week. To keep an eye on that figure, europe is gaining to the combat highest levels of december 2014. The last time the euro was this overbought was march 2000 8 so says the head of g10 currency strategy at bbva. He says back then, the euro hit an alltime high of 160 before sliding to 123. He does not expect a drop on that scale. He sees room for the euro to correct back to 120. This is the german 10year yield the today. 62 is where we are today. The ecbs comments on the euro strength was seen as mildly yesterday. Volatility needs monitoring. Investors are taking it to me inflation. Could converge towards the central bank, 2 . Continuing to get a boost from luxury tax in china. Luxury demand in china. Demand for Louis Vuitton handbags racing ahead of the holiday season. There you go. Vonnie mark, great stuff. Thank you. Adding to the dollar, the u. S. Economy grew at a rate of 2. 6 i n q4, missing the estimate by economists. Business investment offset by drags in trade and inventories. Bloombergs david westin joins us on the white house state. David we are joined by dr. Chairman of the council of economic advisers in washington. , thank you for joining us. Kevin thank you, david. Please call me kevin. David ok. There were variations because of trade and inventories. Explain this to us. Kevin most people saw a number between three and 3. 5 and he came in a little bit below that. Remembering the average over the last three quarters was around 3 and it is always lose useful to look at negative surprises. The negative surprises were inventories and net exports. One of the things that is a very early thing we are talking about is the firms had the incentive to put costs in last year because the steps toward corporate rate was higher, and they get the sales this year at the lower rate. We expect some kind of surge in cost and imports for firms that would be prebuying materials, Raw Materials and so on, in december to get the deduction of the higher rate. I think right now the leading explanation in our minds for the surge in imports that led to this flight negative surprise in gdp is it is the first glimpse of the major effects of the tax bill in the data. There is another piece of news today that is even more important for the gdp rose, and that is the durable goods release. When you order the durable goods, it takes a while to get delivered. It is not like amazon where you get it in a day or two. The people who wanted to wrapup activity to give because of the tax bill should have placed more orders in december. The durable goods numbers were really, really optimistic for the bloomberg average was about. 8. You probably know better than me. The number came out more than triple that. The data right now looked very thatstent with the ceau the economy is growing at a rate north of 3 . David it was. 8 , you are exactly right. One more moment on growth, if we could. It wasnt part of the reason why the imports research they were artificially depressed in the Third Quarter because of the hurricanes. You cannot import through the ports in the southeast because of the hurricanes. Does that suggest that the numbers artificially low in the Fourth Quarter but taken out in the Third Quarter . Kevin yeah, there were also its of hurricane effects in the last couple quarters. Really about half a percent each way was what we were thinking. You are right that there is hurricane affected there, too. I think the anticipatory stuff that happened in december, and that academics look back on it and find really interesting, is something that will be a little bit of a story as we go through the Economic Data over the last few months. There is a famous paper by austan goolsbee, for example, who show that around tax changes, people tend to locate their bonuses on the right side of the tax rate change. If the tax rate is going down, as it is here, people delay their bonus from last year to january. If you look at the income side, it appears there was some of ist activity going on, which really good news for the most nerdy viewers, which means that there are interesting moments in the statistical discrepancy in the next few quarters as well. David lets return to the durable goods you raised. 2. 6 , compared to. 8 . At the same time, if you look below the numbers, if you take the x defense from a negative number,. 3 . Is that right . Kevin you are right about airplanes being a big deal and being volatile. The part of their mobile goods orders that i have looked at and Alan Greenspan taught me to do this when i was at the fed more than 20 years ago, is to look at the nondefense capital goods, including aircraft, and the cumulative relationship as we go forward. Right now the upward trajectory of Capital Spending for next year is something suggesting a Capital Spending boom along the lines of what we saw in the 1990s. That was very evident in the durable goods stated today. If you see orders above shipments and both trending up, that is very bullish for Capital Spending. That is really the big takeaway. You are right about the headline. The headline can be moved around by one extra airplane. Deep down inside, the fact that the nondefense capital goods, including aircraft, or on these favorable trends is consistent with the view that ive talked about on bloomberg last few months that the Corporate Tax cut is going to cross a Capital Spending boom, and all of that capital is going to drive wages higher. David whatever the ups and downs from quarter to quarter, clearly the economy is growing at a nice pace. Not overwhelming, but a nice pace. Where are we at the Business Cycle . Kevin you know, im not going to give you an ending, and i apologize. I am not an avoiddequestion kind of guy. People study if recoveries tend to die of old age, and they dont. It can to die because of tightening or oil shocks. University of san diego did this careful analysis of oil shocks. The fact that we are deep into this recovery doesnt mean we need to have a recession in the next year or two. I would argue the opposite, because we have fixed so many broken policies that people should be really bullish about gdp as we go forward. That is what you are seeing in equity markets. That is what you are seeing if you look at international agencies. Everybody is jacking up their growth forecasts for next year, and that is because we have an International Consensus about what the right policies are. A bunch of countries around the world if you look at macron in france, cutting the corporate rate a bunch of countries around the world are pursuing policies like President Trumps that are turning their economies on, the markets are happy about that. Who is avin hassett, doctorate in economics, thanks so much. Vonnie david westin here in the studio. Lovely that you brought up the capital goods course because it was negative. 3 . Word news. First taylor riggs has more. Tim President Trump says the u. S. Is open for business. The president warned that the Playing Field has to be leveled when it comes to trade. President trump we cannot have free and open trade if some countries exploit the system at the expense of others. We support free trade, but it needs to be fair and it needs to be reciprocal. Because in the end, unfair trade undermines us all. Taylor the president said that American Economic growth promoted by his policies would help the rest of the world. President trump says a report that he wanted to fire special Counsel Robert Mueller back in june is a fake news. According to people familiar with the matter, that raised concerns among his top aides and closest supporters that the president would be putting himself in legal jeopardy. The New York Times says President Trump backed off after the White House Counsel Don Mcgahn refused to the order and threatened to quit. New york, new jersey, and connecticut are mounting a legal challenge to the new tax cut. New York Governor Andrew Cuomo says 12 states are bearing the burden of tax cuts for the wealthy. Opponents of the tax overhaul say unfairly penalizes people who pay high estate taxes. And the bush economy and it a challenging year british economy ended a challenging year with suppressing pickup in growth. Gdp rose better than expected in the Fourth Quarter. Still, for all of 2018, the economy grew just 1. 8 . That is the u. K. s worst performance in five years. Global news 24 hours a day powered by more than 2700 journalists and analysts in over 120 countries. I am taylor riggs. This is bloomberg. Mark coming up, market dollar doomsday. We will tell you what is behind the move. That is next. This is bloomberg. Vonnie from new york, i am vonnie quinn. Mark live from london, i am mark artan. This is Bloomberg Markets on bloomberg television. Dollar gold from best toys for its longest weekly dollar poised for its longest weekly losing streak in use. Forumne lacqua hosted a about a currency war. I do believe that currency will be a big issue this year. There is a reconsideration of how important the dollar is as a World Reserve currency. More on theg us for dollar and currency wars, richard jones. Trump, had mnuchin, draghi weighin on the currency issue. Do we get the sense that the dollar is on that losing streak, that it is mnuchins original comments that we now believe are the true u. S. Policies . Well, i think that is what the market has picked up and run with, mark. It is very much if the u. S. Administration is not worried about a weaker dollar, that is what the market is going to deliver. I also think the comments from wilbur ross were also important, because if we are heading into a protectionist trade policy, and first trade policy, that will have an effect on the dollar. There will be reconsideration of the dollars reserve currency status. I dont think it will shift overnight, but if we get, for example, the chinese pulling away from the u. S. Treasury market and start to diversify their reserves, those flows away from the u. S. Dollar could have a Significant Impact on the current the market in 2018. Mark we often talk about this up again. Who wins, who loses if a currency war really does unfold here across the world . , i think that is kind of what mario draghi was hinting at yesterday. It makes it challenging for exporters to successfully ask their goods export their goods if there currency is very expensive. That is one of the things were mario draghi and mr. Kuroda in japan is worried about, that if the currencies become too strong, it becomes a drug on the economy and maybe tightens policy drag on the economy and maybe tightens policy more than the boj would like. As we get more protectionist trade policies, i think that becomes more complicated. Vonnie richard, to what extent does it make trade negotiations more difficult, more thorny . Richard well, i think that is the rub, vonnie. If you look at the nafta negotiations, currency becomes a tool in this negotiations and we get into a currency war, it undermines the traded negotiations and it makes them more difficult, because it comes more of a zerosum game. And a trade negotiations are supposed to any trade negotiations are supposed revenues on both sides. Vonnie who should the market listen to on this, the treasury secretary, the president . Both are saying someone Different Things right now. Richard i think the key thing here is that the treasury secretary said in the short term that the administration isnt worried about a weaker dollar. The president and the treasury secretary in the longer term are saying that we think that the strong dollar is important. But in the short term, if there is no worry about a weaker dollar, that is what the market is going to focus on. It will focus on what mnuchin said about the shortterm, and if that is what the u. S. Investors and is say, that is what is going to be delivered. In the shortterm those considerations are driving things more than longterm considerations. Mark we have had 24 hours to comments. Ghis is there anything in the shortterm stopping the euros assent . Winningn a sixweek run, the highest level in over three years. Richard well, i think we could ofin for a period consolidation. I dont think the euro will go off in a straight line. What we heard from mario draghi yesterday is that the ecb is going to be slow, going to be cautious, but normalization of rates, Monetary Policy including rates, it will we might get qe ending perhaps by the end of this year, and those rates could be centralized sometime next year. The reaction in the interestright market in europe is once those Interest Rates start to rise, they will rise quite quickly. Mark richard come always great to see you. Great job, bloombergs richard jones, as ever in berlin. Vonnie time for the latest Bloomberg Business flash, the biggest business stories in the news right now. Bnp paribas u. S. Unit has pleaded guilty to conspiracy. Pay and 90will billion fine and cooperate with the investigation. Dell technologies is considering whether to go public again. According to people to later with the matter, the Computer Company founded by michael dell is raising options to boost revenue and raise funds including an ipo. Dell one private in 2013. That is your latest Bloomberg Business flash. Mark still ahead, big tex ranks are coming next week. We will talk to the chief u. S. Equity strategist with Credit Suisse. This is bloomberg. Mark this is Bloomberg Markets. I am a mark barton from london. Vonnie in new york, i am vonnie quinn. Interest rate etfs keep going. Is a Bloomberg Intelligence analyst with our own julie hyman. Eric, you went to this big inside etfs Conference Last Week and a lot of takeaways from one of them is how big the event was. How many people were there . 2300. This puts it on par with the morningstar investment conference. It is still way below schwab impact, but this could be the biggest conference overall. Etfs have 5 trillion right now and you look at the growth rates , etfs took in more money than they had in assets when this conference started in 2008. 2 things vanguard and blackrock are invested in the conference, and they are taking it will stall the money. That is a good sign. Accountants, custodians, lawyers. It involves the whole ecosystem. That is why this thing could in a decades time be the biggest investment conference. Julie your second observation 955at you are calling the phenomenon. Explain in etfs when you talking about. 95 of the Media Coverage and was affects 5 of your port for you. At this conference they had quincy jones, who is going to be promoting an etf called qj coming up. This is the stuff that people buzz about them but almost all of the money goes to the chief data and smart beta products. That is part of what you saw in the panels. Ago smart five years beta was a controversial topic. Now it is accepted. Now the country is a topic is bitcoin. Julie see if that is accepted in five years time. Hedge funds was a big theme of the conference. Eric derivatives from a single securities, and now they are aiming at hedge funds. They feel that if the markets shake a little bit, there are these hedge fund etf that invest like hedge funds. Revenue thathat hedge funds make. One presentation showed Hedge Fund Managers on a yacht and says, look, these guys are vulnerable, the etf will do the same thing they do but for a fraction of the cost and better efficiency. This area in which has largely is something that the etf industry is looking at. Literal Hedge Fund Etfs that do isntdriven, managed teachers thank you eventdriven, managed futures. Julie an etf for that from even more stuff. Thank you very much. Vonnie qj for quincy jones i love it. Still ahead, with any season off to the strongest start in years, the big question is, will it keep running, or is it time to sell . We will ask the Credit Suisse u. S. Equity strategist this is bloomberg. Vonnie that is one of the highlights of tictoc by networkg, the first available by twitter. Im vonnie quinn in new york. Mark i am mark barton in london. This is Bloomberg Markets. Lets get first word news with taylor riggs. Taylor gdp rose at an annual rate of 2. 6 . Trade and inventory depletion were drags on the economy. That offset the best growth rate of Consumer Spending in more than a year. Meanwhile, business equ