Transcripts For BLOOMBERG Bloomberg Markets Americas 2018012

Is the context here. Stocks are a little bit lower, but its from elevated levels. Interest rate sensitive stocks are leading declines with bond yields pushing higher today. To put it in perspective, we have seen an enormous rally already and stocks thus far this year. Take a look at the bloomberg with the s p 500 up 7 . We have seen 2 trillion added to the value of u. S. Stocks alone, not even global stocks. That is the most on record. We have seen a lot of wealth added as a lot more people have been piling into the market this month. The pullback today, take it with perhaps a grain of salt. That said, there are some interesting downward movers we should point out. One of them is apple after a report that the company is going to cut in half its Production Target for the iphone x in the three months from january in this quarter from the figure of over 40 Million Units it had projected at the time the phone came out in november. The shares getting hit on that. Wynn resorts following 10 on friday on reports of Sexual Misconduct by the companys founder and ceo steve wynn. A lot of analyst commentary out on the stock with jeffries defending o the shares and a lot of analyst saying it is steve wynn. If he was forced to step down, that would definitely be a big negative. Elsewhere the other big theme is indeed a a lot of deals news. Looking at the targets of acquisitions here, west rock a greeting to buy capstone for 3. 4 billion. Dr pepper snapple indeed being ,ought by curate Green Mountain which is controlled by jab, which also now owns other holdings like panera and petes coffee. Building quite a beverage empire. Finally, a Belgian Company being bought by sanofi for 4. 8 billion. Sin if you getting further into treatments for Blood Disorders with this deal and beating out novo nordisk. I mentioned whats going on with rates. An important story as we see the dollar rally. We have not seen that level on the 10 year yield since 2014. Crude oil falling and gold futures falling as well as we see the dollar and rates push higher. Mark just getting some breaking lenderussias biggest has held talks with possible investors for its whollyowned turkish units as russias biggest lender considers a cell. This is according to people familiar with the matter. Holding discussions with possible investors including dubai, emirates, and other gulfbased lenders. That is according to people who say the talks are private. Discussions are at an early stage and may not result in a deal. Sberbank has been under sanctions since tony fo 2014. Was turkeys ninth biggest lender. Thats according to the countries banking association. Breaking news crossing the bloomberg terminal from russias biggest lender. Lets look at what is happening to european equities. Stocks are lower today. Down for a third day in for after dropping for the first week in four. Dropping below that record set in april 2014. Lets get to sanity, one of the big stories of the day. Another mna monday with sanity agreed to buy a company from 3. 9 billion euros. It is topping this unsolicited bid from the french drugmakers fiercest rival. It will give a buyer the treatment for ray Blood Disorders. Santa fe will pay 45 euros per share and 40 above the offer of as much as 30. 5 euros a share. 2 four sanofi. This is the pounds winning run. Some say it means it could be vulnerable this week and strategists say sterling has gained more than 5 this month, hitting the post brexit vote high of 1. 43 last thursday. Demand for calls betting on a rise in sterling has over taken since 2009. St time hedge funds having the biggest bullish position since april 2013. Asset managers have cut their net short. Just want to show you the big moves in the marketplace today. This is the german fiveyear. What was significant is 0. 00 earlier and we rose above zero for the First Time Since september 2015. A member of the European Governing Council said theres no reason anymore to continue with qe and yields rising across the euro area after the program has done what could realistically be expected of it. The german fiveyear yield is flat. They did rise above zero for the First Time Since december 2015. Vonnie we will be speaking about that in just a moment. We have a currency trader with us and its a busy week for dollar traders as President Trumps first state of the union speech tomorrow in washington. Fed shared by janet yellen on wednesday and the u. S. Jobs report on friday. Seven weeks of declines. Does any of this weeks data matter to the dollar direction . The underlying trends in the data are important not only to the u. S. Dollar but foreign currencies. In addition to u. S. Data, we will see eurozone and cpi and these are factors that the European Central bank supply co. s attention to close attention to when deciding on Monetary Policy. Vonnie did we get a change of any kind in u. S. Policy last week . Eric with respect to Monetary Policy, as we see the key influence driving currency trends, you must Monetary Policy has been on a steady course of normalization or tightening. What has been changing in recent quarters and since last year is that other foreign Central Banks are now essentially catching up or moving in the direction toward catching up to Federal Reserve Monetary Policy normalization. That is really helping to support the foreign currencies and contributing to a broad u. S. Dollar weakness. Vonnie i do not mean Monetary Policy. I mean, terry out of washington, d. C. Eric it added to fluctuation to the u. S. Dollar. The comments by the treasury secretary added to the Bear Sentiment we see in the u. S. Dollar and some of those comments were a little more balanced afterwards. Trying to clarify those comments and then the president reinforcing strong dollar sentiment. Generally we dont place a lot of emphasis on those daytoday comments. We tend to look more at the underlying Economic Trends and Monetary Policy movements as the overall drivers of currencies over the medium term. Mark how are we to view the euro . Today we have had conflicting comments and clashing of the heads,entralbank suggesting we need to get on with qe. Who is going to win this debate the hawks of the doves . Eric this is a discussion that may go on for some time. Some sort ofbe agreement at least before september 2018. That is when we know the Current Program of buying 30 billion euros per month comes to an end. Whats next after that . For the purchases be done altogether or world there be a further trimming . This is a discussion that should be continuing over the coming weeks and months. We do see the European Central bank is moving in a less accommodative direction. We think that qb could be done by the end of the year. When a central bank is moving toward these very accommodative monetary policies, going from negative Interest Rates to positive rates, we see that as having more of an influence on the currency and being more supportive for the euro or these foreign currencies as opposed to the fed raising Interest Rates where it is some ways along its Monetary Policy tightening cycle and that having less of an influence in terms of u. S. Dollar support. Mark how do you view sterling . As i said in my Market Report at the top, we are up 5 this month against the dollar. We are at the levels we have not seen since the day of the brexit referendum back in 2016. What is priced in when it comes to sterling . It has seen quite a leg up in the last month. Eric a lot of the recent movements or just general fluctuations in sterling is a reflection of the broader underlying Economic Trends and overall Monetary Policy to direction. You saw the bank of england remove that insurance rate cut late last year. Whats also important and driving some of the movement in the british pound is the Overall Development surrounding brexit. As you get these headlines coming, which may attribute to growing strength or weakness at times, that is just reflective of this overall uncertain environment. The evolution so far has been thethat is more benign for british pound which has been helpful for the medium term. Vonnie what is your target for the british pound then . Eric we see a getting up towards 1. 40. This is one of the currencies where we think it could be somewhat restrained by the Political Developments both in the u. K. And as it relates to brexit the moment. Vonnie the impact of yields has been pretty strong and im wondering about japan. It seems to be the outlier because were seeing 25 basis points rise in german yields and u. S. Yields and yet japanese yields not going anywhere. Eric thats because the bank of japan has a policy of targeting the 10 year Government Bond yield to keep a close to zero. Because they are relatively close to zero, whats contributing to the movement in the u. S. And Japanese Movement and 10 year yields. That correlation between the Exchange Rate and that yield ed a bitctually lessen the b relative to be high spread that we saw between the dollaryen last year since the bank of japan introduced a deal targeting policy. Its deal targeting policy. Still positive and more consistent with the correlation between the yield spread between the dollaryen when the bank was targeting the quantity of purchases. It is reflective that the market is looking at the quantity of bank of japan purchases relative to the yields. Vonnie a quick dollaryen target . Bloomberg markets. Eric we see modest moves, so maybe 1. 09. Ria. Ie eric vilo lets check in now on the first word news with taylor riggs. Taylor u. S. Authorities are preparing to crackdown on the manipulation of futures markets according to a person familiar with the matter. As many as a people will be arrested for their role. Deutsche bank and hsbc will also be fined. American shoppers splurged during the holiday season. 1 andes rose 4 10 of novembers gains was revived upwards to a tense of a percent. Incomes also rose. Eus warning President Trump if you want a trade war, you will get one. The block says that any of u. S. Limits on imports from europe would lead tos list retaliation to swift retaliation. The president said he has problems with the eu that could morph into Something Big from a trade standpoint. That massive cryptocurrency hike has led to calls for tighter regulations. On friday, someone hacked into the Japanese Exchange and stolen was 500 million in digital tokens. Coin check will reimburse customers. Global news 24 hours a day powered by 2700 a list and analyst in more than 120 countries, im taylor riggs. This is bloomberg. Mark coming up on bluebird oomberg markets, we are counting down to the president s state of the Union Address. This is bloomberg. Mark live from london, i am mark barton. Vonnie from new york, i am vonnie quinn. This is bloomberg markets. President delivers his first state of the Union Address tomorrow. He will spend time reviewing his successes over the past year, but investors will be more focused on what comes next. We are joined now by kevin cirilli. He is here with me in new york. Kevin so great to be here. I love new york. Vonnie tell us about the tone of the president s speech tomorrow night. He does, how will his Bipartisan Solutions to the rest of the term appeal to that based . Kevin i was talking to sources over the weekend and im hearing we are going to get a President Trump much more in line with what we saw and heard in davos. This will be him sticking to the teleprompter and him trying to have a message of unity. That is what they are pushing out from the white house at least. On the issues of infrastructure for example, it will be interesting to see if any democrats are going to get on board with that. ,peaking of democrats congressman joe kennedy from massachusetts is going to beginning the response to the democrats after the president s speech. Look for him to use this as an ability to kind of capitalize on this new rising star within the Democratic Party. Mark what areas can democrats and republicans worked together . You mentioned infrastructure. What is actually possible . Kevin i would caution on the issue of infrastructure because a lot of folks in the Democratic Party are against using private investment as a mechanism to find some of these infrastructure plans. Other areas of potential compromise daca. We are just a couple weeks away from that march 5 deadline that the negotiations are still going back and forth as we speak on the issue of daca. Thatould also note february 8 is coming up as well and the have to pass some type of partial government funding bill to over another potential shutdown. The backdrop of all this remains bob muellers investigation. Vonnie how does he keep the conversation on positive things following tomorrow nights address . Kevin it will be tough because its an incredibly divided country right now. Beyond infrastructure, he will talk about strengths he feels he has on the stock market and look for him to push new deregulatory policies as well maybe even on financial services. Vonnie kevin cirilli, bloombergs chief washington correspondent. He will be watching it yo you glide for us. Eagle eyed for us. The state of the Union Coverage begins at 9 30 p. M. Tomorrow night. This is bloomberg. This is this i bloomberg markets. I am mark barton. I vonnie quinn. Three negotiators will be meeting privately ahead of a joint News Conference coming up in the next hour, which we will bring you. ,e are joined by Michael Mckee bloombergs International Policy correspondent in montreal for the nafta negotiations. Whatever happens, this round is wrapped up today. What will the results be . Michael at this point, the feeling is that there will be a push to hold the next round next month and to keep the negotiations going, which is perhaps a different story than we had been led to expect at the beginning of the Trump Administration when the president seemed anxious to pull out of nafta and get rid of the treaty. They do seem to have made progress over this past week. The real question is what did u. S. Think of the progress made . U. S. Officials have been very tightlipped. Robert lighthizer this morning saying nothing as he came and went other than to wish me a good morning. He has been the inscrutable one. We dont know where the u. S. Comes down on all this, but a call this man who talk to him yesterday said he seemed more optimistic. In an hour we should find out. Mark what is the sunset clause the u. S. Is proposing that could cancel nafta within five years . The canadians and mexicans maybe not so keen on that. What will come out of this issue . Michael the u. S. Proposed that the treaty would automatically end every five years unless it were renewed by the countries involved. Mexico, canada, and a lot of other people say you cant do that because it gives business uncertainty. Why would you invest in any place if you did not know if you would have the same rules five years from now . The canadians and mexicans have that if you review every five years and not automatically cancel and a group would be set up within nafta to measure the progress of the treaty and the measure of the results and be able to report to the three countries every five years, and it does appear that the u. S. Is at least listening to that proposal. Vonnie michael, will both the Canadian Dollar and the mexican peso being weaker today, what might the Foreign Exchange market be scared of that would be lost in terms of nafta for those countries . Michael theres probably a bit of a risk trade going on because they dont know exactly what the u. S. Is going to say. By all indications, they should be expecting the u. S. To say we want to continue the negotiations and will continue to talk. It may be more about the dollar strengthening on a more broad basis because it has lost a much ground and we had very strong Economic Data today that it is about what happens with nafta. Vonnie what might President Trump say tomorrow night if anything . Will he steer clear of the nafta issue . Michael we are told by our colleagues at the white house that he is going to steer clear of the nafta issue. He may talk about trade the same way that he did in davos, suggesting the u. S. Is looking out for itself and has been taken advantage of by other countries. He is not supposed to talk about the nafta treaty specifically or to threaten to pull out. Vonnie Michael Mckee is keeping and i on things and we will bring you that News Conference with trade representative light heiser in the next hour. Michael mckee in montreal there. Mark its time for the Bloomberg Business flash, a look at some of the biggest business stories in the news right now. A big transaction today in the Production Target<\/a> for the iphone x in the three months from january in this quarter from the figure of over 40 Million Units<\/a> it had projected at the time the phone came out in november. The shares getting hit on that. Wynn resorts following 10 on friday on reports of Sexual Misconduct<\/a> by the companys founder and ceo steve wynn. A lot of analyst commentary out on the stock with jeffries defending o the shares and a lot of analyst saying it is steve wynn. If he was forced to step down, that would definitely be a big negative. Elsewhere the other big theme is indeed a a lot of deals news. Looking at the targets of acquisitions here, west rock a greeting to buy capstone for 3. 4 billion. Dr pepper snapple indeed being ,ought by curate Green Mountain<\/a> which is controlled by jab, which also now owns other holdings like panera and petes coffee. Building quite a beverage empire. Finally, a Belgian Company<\/a> being bought by sanofi for 4. 8 billion. Sin if you getting further into treatments for Blood Disorders<\/a> with this deal and beating out novo nordisk. I mentioned whats going on with rates. An important story as we see the dollar rally. We have not seen that level on the 10 year yield since 2014. Crude oil falling and gold futures falling as well as we see the dollar and rates push higher. Mark just getting some breaking lenderussias biggest has held talks with possible investors for its whollyowned turkish units as russias biggest lender considers a cell. This is according to people familiar with the matter. Holding discussions with possible investors including dubai, emirates, and other gulfbased lenders. That is according to people who say the talks are private. Discussions are at an early stage and may not result in a deal. Sberbank has been under sanctions since tony fo 2014. Was turkeys ninth biggest lender. Thats according to the countries banking association. Breaking news crossing the bloomberg terminal from russias biggest lender. Lets look at what is happening to european equities. Stocks are lower today. Down for a third day in for after dropping for the first week in four. Dropping below that record set in april 2014. Lets get to sanity, one of the big stories of the day. Another mna monday with sanity agreed to buy a company from 3. 9 billion euros. It is topping this unsolicited bid from the french drugmakers fiercest rival. It will give a buyer the treatment for ray Blood Disorders<\/a>. Santa fe will pay 45 euros per share and 40 above the offer of as much as 30. 5 euros a share. 2 four sanofi. This is the pounds winning run. Some say it means it could be vulnerable this week and strategists say sterling has gained more than 5 this month, hitting the post brexit vote high of 1. 43 last thursday. Demand for calls betting on a rise in sterling has over taken since 2009. St time hedge funds having the biggest bullish position since april 2013. Asset managers have cut their net short. Just want to show you the big moves in the marketplace today. This is the german fiveyear. What was significant is 0. 00 earlier and we rose above zero for the First Time Since<\/a> september 2015. A member of the European Governing Council<\/a> said theres no reason anymore to continue with qe and yields rising across the euro area after the program has done what could realistically be expected of it. The german fiveyear yield is flat. They did rise above zero for the First Time Since<\/a> december 2015. Vonnie we will be speaking about that in just a moment. We have a currency trader with us and its a busy week for dollar traders as President Trump<\/a>s first state of the union speech tomorrow in washington. Fed shared by janet yellen on wednesday and the u. S. Jobs report on friday. Seven weeks of declines. Does any of this weeks data matter to the dollar direction . The underlying trends in the data are important not only to the u. S. Dollar but foreign currencies. In addition to u. S. Data, we will see eurozone and cpi and these are factors that the European Central<\/a> bank supply co. s attention to close attention to when deciding on Monetary Policy<\/a>. Vonnie did we get a change of any kind in u. S. Policy last week . Eric with respect to Monetary Policy<\/a>, as we see the key influence driving currency trends, you must Monetary Policy<\/a> has been on a steady course of normalization or tightening. What has been changing in recent quarters and since last year is that other foreign Central Banks<\/a> are now essentially catching up or moving in the direction toward catching up to Federal Reserve<\/a> Monetary Policy<\/a> normalization. That is really helping to support the foreign currencies and contributing to a broad u. S. Dollar weakness. Vonnie i do not mean Monetary Policy<\/a>. I mean, terry out of washington, d. C. Eric it added to fluctuation to the u. S. Dollar. The comments by the treasury secretary added to the Bear Sentiment<\/a> we see in the u. S. Dollar and some of those comments were a little more balanced afterwards. Trying to clarify those comments and then the president reinforcing strong dollar sentiment. Generally we dont place a lot of emphasis on those daytoday comments. We tend to look more at the underlying Economic Trends<\/a> and Monetary Policy<\/a> movements as the overall drivers of currencies over the medium term. Mark how are we to view the euro . Today we have had conflicting comments and clashing of the heads,entralbank suggesting we need to get on with qe. Who is going to win this debate the hawks of the doves . Eric this is a discussion that may go on for some time. Some sort ofbe agreement at least before september 2018. That is when we know the Current Program<\/a> of buying 30 billion euros per month comes to an end. Whats next after that . For the purchases be done altogether or world there be a further trimming . This is a discussion that should be continuing over the coming weeks and months. We do see the European Central<\/a> bank is moving in a less accommodative direction. We think that qb could be done by the end of the year. When a central bank is moving toward these very accommodative monetary policies, going from negative Interest Rates<\/a> to positive rates, we see that as having more of an influence on the currency and being more supportive for the euro or these foreign currencies as opposed to the fed raising Interest Rates<\/a> where it is some ways along its Monetary Policy<\/a> tightening cycle and that having less of an influence in terms of u. S. Dollar support. Mark how do you view sterling . As i said in my Market Report<\/a> at the top, we are up 5 this month against the dollar. We are at the levels we have not seen since the day of the brexit referendum back in 2016. What is priced in when it comes to sterling . It has seen quite a leg up in the last month. Eric a lot of the recent movements or just general fluctuations in sterling is a reflection of the broader underlying Economic Trends<\/a> and overall Monetary Policy<\/a> to direction. You saw the bank of england remove that insurance rate cut late last year. Whats also important and driving some of the movement in the british pound is the Overall Development<\/a> surrounding brexit. As you get these headlines coming, which may attribute to growing strength or weakness at times, that is just reflective of this overall uncertain environment. The evolution so far has been thethat is more benign for british pound which has been helpful for the medium term. Vonnie what is your target for the british pound then . Eric we see a getting up towards 1. 40. This is one of the currencies where we think it could be somewhat restrained by the Political Developments<\/a> both in the u. K. And as it relates to brexit the moment. Vonnie the impact of yields has been pretty strong and im wondering about japan. It seems to be the outlier because were seeing 25 basis points rise in german yields and u. S. Yields and yet japanese yields not going anywhere. Eric thats because the bank of japan has a policy of targeting the 10 year Government Bond<\/a> yield to keep a close to zero. Because they are relatively close to zero, whats contributing to the movement in the u. S. And Japanese Movement<\/a> and 10 year yields. That correlation between the Exchange Rate<\/a> and that yield ed a bitctually lessen the b relative to be high spread that we saw between the dollaryen last year since the bank of japan introduced a deal targeting policy. Its deal targeting policy. Still positive and more consistent with the correlation between the yield spread between the dollaryen when the bank was targeting the quantity of purchases. It is reflective that the market is looking at the quantity of bank of japan purchases relative to the yields. Vonnie a quick dollaryen target . Bloomberg markets. Eric we see modest moves, so maybe 1. 09. Ria. Ie eric vilo lets check in now on the first word news with taylor riggs. Taylor u. S. Authorities are preparing to crackdown on the manipulation of futures markets according to a person familiar with the matter. As many as a people will be arrested for their role. Deutsche bank and hsbc will also be fined. American shoppers splurged during the holiday season. 1 andes rose 4 10 of novembers gains was revived upwards to a tense of a percent. Incomes also rose. Eus warning President Trump<\/a> if you want a trade war, you will get one. The block says that any of u. S. Limits on imports from europe would lead tos list retaliation to swift retaliation. The president said he has problems with the eu that could morph into Something Big<\/a> from a trade standpoint. That massive cryptocurrency hike has led to calls for tighter regulations. On friday, someone hacked into the Japanese Exchange<\/a> and stolen was 500 million in digital tokens. Coin check will reimburse customers. Global news 24 hours a day powered by 2700 a list and analyst in more than 120 countries, im taylor riggs. This is bloomberg. Mark coming up on bluebird oomberg markets, we are counting down to the president s state of the Union Address<\/a>. This is bloomberg. Mark live from london, i am mark barton. Vonnie from new york, i am vonnie quinn. This is bloomberg markets. President delivers his first state of the Union Address<\/a> tomorrow. He will spend time reviewing his successes over the past year, but investors will be more focused on what comes next. We are joined now by kevin cirilli. He is here with me in new york. Kevin so great to be here. I love new york. Vonnie tell us about the tone of the president s speech tomorrow night. He does, how will his Bipartisan Solutions<\/a> to the rest of the term appeal to that based . Kevin i was talking to sources over the weekend and im hearing we are going to get a President Trump<\/a> much more in line with what we saw and heard in davos. This will be him sticking to the teleprompter and him trying to have a message of unity. That is what they are pushing out from the white house at least. On the issues of infrastructure for example, it will be interesting to see if any democrats are going to get on board with that. ,peaking of democrats congressman joe kennedy from massachusetts is going to beginning the response to the democrats after the president s speech. Look for him to use this as an ability to kind of capitalize on this new rising star within the Democratic Party<\/a>. Mark what areas can democrats and republicans worked together . You mentioned infrastructure. What is actually possible . Kevin i would caution on the issue of infrastructure because a lot of folks in the Democratic Party<\/a> are against using private investment as a mechanism to find some of these infrastructure plans. Other areas of potential compromise daca. We are just a couple weeks away from that march 5 deadline that the negotiations are still going back and forth as we speak on the issue of daca. Thatould also note february 8 is coming up as well and the have to pass some type of partial government funding bill to over another potential shutdown. The backdrop of all this remains bob muellers investigation. Vonnie how does he keep the conversation on positive things following tomorrow nights address . Kevin it will be tough because its an incredibly divided country right now. Beyond infrastructure, he will talk about strengths he feels he has on the stock market and look for him to push new deregulatory policies as well maybe even on financial services. Vonnie kevin cirilli, bloombergs chief washington correspondent. He will be watching it yo you glide for us. Eagle eyed for us. The state of the Union Coverage<\/a> begins at 9 30 p. M. Tomorrow night. This is bloomberg. This is this i bloomberg markets. I am mark barton. I vonnie quinn. Three negotiators will be meeting privately ahead of a joint News Conference<\/a> coming up in the next hour, which we will bring you. ,e are joined by Michael Mckee<\/a> bloombergs International Policy<\/a> correspondent in montreal for the nafta negotiations. Whatever happens, this round is wrapped up today. What will the results be . Michael at this point, the feeling is that there will be a push to hold the next round next month and to keep the negotiations going, which is perhaps a different story than we had been led to expect at the beginning of the Trump Administration<\/a> when the president seemed anxious to pull out of nafta and get rid of the treaty. They do seem to have made progress over this past week. The real question is what did u. S. Think of the progress made . U. S. Officials have been very tightlipped. Robert lighthizer this morning saying nothing as he came and went other than to wish me a good morning. He has been the inscrutable one. We dont know where the u. S. Comes down on all this, but a call this man who talk to him yesterday said he seemed more optimistic. In an hour we should find out. Mark what is the sunset clause the u. S. Is proposing that could cancel nafta within five years . The canadians and mexicans maybe not so keen on that. What will come out of this issue . Michael the u. S. Proposed that the treaty would automatically end every five years unless it were renewed by the countries involved. Mexico, canada, and a lot of other people say you cant do that because it gives business uncertainty. Why would you invest in any place if you did not know if you would have the same rules five years from now . The canadians and mexicans have that if you review every five years and not automatically cancel and a group would be set up within nafta to measure the progress of the treaty and the measure of the results and be able to report to the three countries every five years, and it does appear that the u. S. Is at least listening to that proposal. Vonnie michael, will both the Canadian Dollar<\/a> and the mexican peso being weaker today, what might the Foreign Exchange<\/a> market be scared of that would be lost in terms of nafta for those countries . Michael theres probably a bit of a risk trade going on because they dont know exactly what the u. S. Is going to say. By all indications, they should be expecting the u. S. To say we want to continue the negotiations and will continue to talk. It may be more about the dollar strengthening on a more broad basis because it has lost a much ground and we had very strong Economic Data<\/a> today that it is about what happens with nafta. Vonnie what might President Trump<\/a> say tomorrow night if anything . Will he steer clear of the nafta issue . Michael we are told by our colleagues at the white house that he is going to steer clear of the nafta issue. He may talk about trade the same way that he did in davos, suggesting the u. S. Is looking out for itself and has been taken advantage of by other countries. He is not supposed to talk about the nafta treaty specifically or to threaten to pull out. Vonnie Michael Mckee<\/a> is keeping and i on things and we will bring you that News Conference<\/a> with trade representative light heiser in the next hour. Michael mckee in montreal there. Mark its time for the Bloomberg Business<\/a> flash, a look at some of the biggest business stories in the news right now. A big transaction today in the Beverage Business<\/a> as coffee iant keurig Green Mountain<\/a> has agreed to combine with dr pepper snapple. It will pay 18 billion to shareholders of the soft drink company. It will be run by ja be holdings. Shares of billionaire steve wynn resorts resuming its fall after fridays 10 drop. The wall street journal reporting that wynn sexually harassed female employees. Asnwhile, he step down o the finance chairman of the public and national committee. To more thanngs double this past year come the worlds biggest defense contractor believes tax cuts will help in the delivery of fighter jets. It also profit lockheed to take a oneoff charge related to the deduction and its deferred tax assets. That is your latest Bloomberg Business<\/a> flash. Vonnie still ahead, its a crackdown come back. Why shares of Kingdom Holding<\/a> re racing all losses from the socalled saudi Corruption Purge<\/a> back in november. You can see Kingdom Holding<\/a> up 2. 5 . U. S. Stocks are lower, not by much. This is bloomberg. We use our phones and computers the same way these days. So why do we pay to have a phone connected when were already paying for internet . Shouldnt it all just be one thing . Thats why Xfinity Mobile<\/a> comes with your internet. You can get 5 lines of talk and text included at no extra cost. So all you pay for is data. Choose by the gig or unlimited. And now, get a 200 prepaid card when you buy an iphone. Its a new kind of network designed to save you money. Call, visit, or go to xfnitymobile. Com. Vonnie that is just one of todays highlights from ticktock on bloomberg. Live from bloomberg World Headquarters<\/a> in new york, i am vonnie quinn. Mark live from bloombergs headquarters in london, i mark barton. This is bloomberg markets. Lets check in with bloomberg first word news. Taylor riggs has more from new york. Taylor the European Union<\/a> has told the u. K. It will not have any say in eu decisionmaking during the transition period. They met with a new set of orders for brexit negotiations. It runs from march of 2019 to the end of 2020. In turkey, more than 300 people were detained for terrorist propaganda. Authorities say they used social media to chri criticized turkeys military offensive. They are accused of supporting the kurdish militia. North korea has canceled a planned joint northsouth cultural performance in advance of the winter olympics. North korea criticize south koreas news media for defaming the north. South korea called the cancellation regretful. It will be a sellout crowd went elon musks spacex makes the launch of its falcon heavy rocket. There are tickets with a Champagne Toast<\/a> and commemorative glass. The new rocket could be launched from february 6 from cape canaveral. News 24 hours a day powered by 2700 list and analysts in more than 140 countries, i am taylor riggs. This is bloomberg. Mark after more than two months in lockout, he is finally out. Islionaire prince ali released after reaching a settlement with sally authorities. Recovering all the losses from anticorruption crackdown which started in november. Joining us now from dubai is bloombergs middle east equities reporter. Do we know the deal that prints alwaleedlead prince struck with saudi authorities to gain his release . Felipe we dont and thats the biggest question investors have in their minds right now. The Kingdom Holding<\/a> stock has recovered all the losses that they had since the prince was detained. They are trading pretty much of the same level they were in the beginning of november. What investors want to know now is actually if he will have to disperse some of the state that he has within the company. He is the major shareholder with 95 of the company. We know that he is a very wellknown figure in wall street outside of saudi arabia. So what exactly is he going to give to the saudi government . What are the terms of what has ever been agreed between them . Its in the spotlight for investors now. Mark thats the question. How do overseas investors view this whole process . It seems to be approaching its latter stages. To what extent does it hurt investment . Filipe thats a very good point. Saudi arabia is going through major reforms at the moment. Its the biggest economy here in the middle east and we know that the country is working on several different prompts to actually reform its economy, to diversify away from oil, and to bring investors to the kingdom. A lot of people say this whole crackdown on corruption, while it is a way for the government to raise a lot of money, we are talking about maybe 100 billion all at once. This also brings a lot of uncertainty. It raises a lot of questions of how the kingdom is actually dealing with some of its biggest businessman and what are the rules . What exactly is being treated . Its actually being questioned. All these questions are yet to be answered. Investors are pretty eager to have more clarity on how the government is dealing with this. Vonnie will the government give any clarity . Does it need to . At what point will we and the he willworld know if continue to play a role in Capital Markets<\/a> globally . Need to payo attention very closely to all the headlines from riyadh at this moment. The government has been very on how itsry clear important to have International Investors<\/a> coming to the saudi market. Big decisions for saudi stocks this year. The country is under the watchlist for msci emerging markets. It could be added to the index in june. Theyre also about to make a decision on whether to add the country to its emergingmarket group or not. The saudi government is doing whatever it can to actually make all the process clear to those who are actually looking at saudi arabia right now. The crackdown brings a lot of questions, but at the same time, it happens at a moment that the saudi government is trying to open itself to the world. We have to bring those questions. Of course, they will try to come up with answers and we will Pay Attention<\/a> to it. Mark what is the view there . Is it a crackdown or a power grab or a shakedown . Its to help this economy constrained by low oil prices. Whats the general held view . Filipe there are many different ways of looking at it. If you ask the saudi government, of course they would say this is a big battle against corruption within the country and they are just doing whatever they can to raise money to the government at a moment that they are trying to diversified the economy away from oil. If you talk to investors or arabia,men in saudi there is a lot of concern of what exactly they are looking for. Theres a lot of uncertainty on couldrms or what exactly be seen as corruption or could be classified as corruption. Say whatshard to the final whats that main trigger or main reason behind all this. Mark thanks for joining us. Pacheco giving is the latest going ons. Vonnie from coffee to soda, jab expanding its empire. White adding dr pepper snapple holdings under its umbrella. We look at this massive beverage deal next. This is bloomberg. Mark live from london, i mark barton. Vonnie from new york, i am vonnie quinn. This is bloomberg markets. It is time for our stock of the hour. Soaring today is shares of dr pepper snapple. This as the Beverage Company<\/a> entered into an agreement with keurig Green Mountain<\/a>. Abigail doolittle has been looking into the details. Abigail this deal is all about distribution. Labeledcompany will be keurig dr pepper. This goes beyond warehouses. If you think about many markets across the United States<\/a> or offices, youre going to have greenmount coffee anywhere. Its a nice crossselling opportunity. Has a Licensing Agreement<\/a> with amazon and other companies so that is also great. In the press release, the couple says this gives them unrivaled distribution capability to reach every pointofsale in north america. I dont think thats an over exaggeration. The have about 36 warehouses. Think about all the opportunities in places where Green Mountain<\/a> or other brands are sold. Its a great crossselling opportunity. Vonnie and not just in the United States<\/a> either. They have their eyes on nestle and this conglomerate would be a rival to the likes of pepsi and cocacola. Keuri abigail it really puts them squarely in the north american Beverage Market<\/a>. Cocacola not surprisingly up top with about 37 of the market. 28 going to pepsico and 18 going to other companies. The next biggest Standalone Company<\/a> was dr pepper snapple. Thisoldings, getting into food and Beverage Market<\/a> with other recent acquisitions such as panera bread and krispy kreme, it is pretty clear that they are brand hungry and distribution hungry. Company will be publicly traded, but it will be 87 controlled by jab holdings. The current keurig ceo is going to be the new ceo. In 2017, they had a pro forma revenue run rate of 11 billion. A good company and really ready to take on those big companies. Vonnie should be great for monta leaseholders as well. Abigail doolittle with our stock of the hour, thank you. Mark lets stick with m a today. The latest in a biotech blood battle as sanofi beat out novo nordisk. It gives sanofi a blockbuster drug for a rare blood clotting disease. The french drugmaker has agreed to more than 16 billion and acquisitions in the last week, dwarfing past years of deal activity. Joining us now is bloombergs managing editor benedict campbell. Active onofi being so the m a front in the last week . Benedict its been an active week and this is interesting from a company that has been quite absent from the deals in the last couple of years people. They tried their hands at transactions a few years ago and now the ceos coming back to deliver this knockout punch had bid foro who this asset. Not a very well known company. A familiar area of rare blood diseases and novo came with a relatively low bid, which they said they did not like. That left the door open for sanity who walked right in this morning with a much higher bid, ablynx not surprisingly decided to take. This is exactly a week after they spent top dollar, about 12 billion, on another drug. It shows the direction they are going in, which is this new area hemophiliaia blood diseases and that is where the growth is. Mark we know sanofi and novo are big players and the diabetes market. It has been under pressure. Where does this leave novo nordisk . It says it will not come back to the table. Benedikt they will have to look out for other targets. They have already built up a business here in the hemophilia area. Its not like theyre are totally exposed, but there are not many targets out there. The question is can they find something similar an interesting for them . Novo has not historically made many acquisitions and its not really a central part of their dna. We will see about changes Going Forward<\/a> or if they will retreat into their shell now and look their wins as if somewhere it were. Its an area that these companies have pushed into quite aggressively. The diabetes market is under pressure. These companies are looking for ways to branch out into more promising areas. The experience of drug area is one of these fields. Vonnie talk to us about this new report that shows several carmakers including volkswagen and daimlerchrysler contributed to funds to test diesel emissions on people and also monkeys. Benedikt thats right. Thats a story that kept people on their toes today. It a lot of outrage in the public today. The government came out and announced this report and said if true that this would be abhorrent. What appears to have happened is a couple years ago, 2014, so even before the infamous vw scandal broke into the open, before that these carmakers, vw and be done bu bmw looked at whe the possible harmful effects of diesel. As part of that, they tested it on people and monkeys. The university has said this is all fine. We took this very carefully. Ethics standards were upheld and so on. That the perception of diesel is such that these companies are going to such ends to try to prove that its not harmful. The reputation of diesel already had a big knock the last couple of years. Revelations certainly have not helped. Mark a great piece today by chris on gadfly saying vw customers do not give monkeys about cheating. You have to agree about share prices back before the scandal undrafted. Vws namesakef brand picked up last year. Does it tell us that customers are pretty loyal to the vw brand . Benedikt they are roughly speaking, but you have seen a decline in diesel sales. These companies are obviously taking it very seriously. Customers are moving on and looking more at alternative vehicles, electrified vehicles, nondiesel vehicles. If you speak to somebody like sergio marchionne, he will tell you that diesel is the fact of dead Going Forward<\/a>. It still sells and is a vital component, but look forward to a couple of years or a decade or so, diesel will probably be a far smaller part of the mix than it is today and its something that they are taking very see seriously. Two years ago, vw looked to be on its knees. Its ave come back and testament to the strength and size of the company to be able to absorb this together with billions and billions of payments they had to make for the diesel scandal. Mark great job. Thanks for joining us. Giving us an update on vw. More deals on this m a monday. Lets chat about the governor of the swedish central bank. What he is watching next. He spoke to us earlier. This is bloomberg. Vonnie live from new york, i am vonnie quinn. Mark from london, i am mark barton. This is bloomberg markets. As well as being governor of the worlds oldest central bank, he is also chairman of the basel committee. Meets in frankfurt today to explain what has been accomplished i the landmark regulatory reforms. Francine lacqua spoke with him. When it comes to the implication implementation, all the members have signed up to this and we are in agreement that is important for everybody to implement. Having said that, given that thats the agreement that people are about to implement, edition to that, it will take a number of years to actually go through the whole implementation process. Its a bit too early to tell because we are talking about an implementation period ranging from 2022 until 2027. Too early,its way but everybody so far has stuck to their promises to implement. Francine governor, without being too pessimistic about it, it seems that basil deals with the foundations of the 2008 ks have but the ris changed. Do you need to look at cryptocurrency and bitcoin . Stefan we are dealing with the aftermath of the great financial 2010s in 2008 and depending on which corner of the world you are talking about. The world always changes so lurking around the corner is certainly what we call in the Community Cyber<\/a> risk in one form or the other. I do think we will have to spend and more on cyber risk focus will be on supervision in general Going Forward<\/a> and not so much working on very technical details. Francine governor, what worries you . Where do you think the next crisis will come from . Is very hard to tell. Generally speaking, if history gives us any guidance, it is always to keep track of where leverage seems to be present in one form or the other. One of the difficulties with all that is in good times people are not so worried about various sectors getting overleveraged. Whenery quickly find out various phenomena thats too much leverage built into them. The general principle withholds so go look for the leverage and reflect on to what extent that seems to be getting dangerous or not. When banks ask about cryptocurrencies and bitcoin, what do you tell them . Should they stay away from them or looking at it until its regulated . Think that its important to choose words here because these crypto things are not really currencies at all. Most of them, you cannot really use for payment purposes the way we do it when it comes to using what we call our oldfashioned regular dollars and euros and so on. To watch out when it comes to dealing with these new phenomena. Its a bit like trading stamps or metals. Thats really what it is. There is no supervision on where these phenomenon either. I think overtime Money Laundering<\/a> and financing of terrorism potentially could be dangers in all of this. One should really be careful and be mindful of the fact that this is more participating in a lottery or going to the casino. This is not banking as we know it cou. Tom you wrote an acclaimed summary of the nordic banking crisis. You seemed shocked as anyone from central banking has. How do you respond to secretary mnuchins week dollar discussion vos . N dosa are they playing with fire when they job own away from a strong dollar policy . That is very, very hard for me to judge. Coming from a small country and having a small currency, basically the way i look at it from my perspective is like sailing and a small ship on the ocean. From that perspective, you just have to live with whatever happens out there when the big guys are around you. Mark that is the riksbank governor speaking with Francine Lacqua<\/a> and tom keene earlier. We are following stocks less than 35 minutes away from the Embassy Monday<\/a> sessions. Gains decline and in frankfurt and paris. I will leave you with the currency boards. A lot of data out of gdp inflation, a massive week. This is bloomberg. Mark is 11 00 in new york and midnight in hong kong, 30th left in the trading day in europe. From Bloomberg European<\/a> headquarters, i mark barton. Fromnew york vonnie new york, on vonnie quinn. This is the european close on bloomberg markets. Mark here are the top stories we are covering from the bloomberg and around the world. Prime minister theresa may comes under increasing pressure from her own party over brexit negotiations. Some calling for her ouster, others rallying to her defense today. Heist, . 5pto billion in digitals of an stolen from a Japanese Exchange<\/a>. The security of cybersecurity in a digital from regulation. Exception to the down day. Spencer if heck sees sell signals flashing. 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