Higher by 0. 3 or greater. Look at the nasdaq. It has been a little more beatendown but today up more than 0. 5 . The best day from the nasdaq since november 30. Perhaps investors are feeling a little more certain around tax reform, d. C. Drama and more. One stock that is helping the indexes today we will be getting to in a moment. This seems to be a continuation of the trump trade. Here is this stock, General Electric is up nearly 0. 9 . This is after the Industrial Company announced they are cutting 12,000 jobs within their power unit. That is the biggest unit within their business, about 30 of the business. It is also the most troubled unit. The fact that they are flushing out the plan they gave back on november 13 to cut 1 billion in cost by cutting these jobs, investors seem to be cheering it to some degree thinking it is a solid first step in the turnaround plan. Shares on the year down more for theiron peak worst year since 2008. The industrial sector is the top on the day. Ge, boeing, and caterpillar higher. G is higher as bernstein thinks win as tax big reform passes. Here are some of the big cap tech writer. Winners. Relative to the trump trade, technology is a piece of it, but so are the small caps. Pop into the bloomberg and take a look at this. This is a oneyear chart. And yellow, were President Trumps approval rating. Clearccording to the real politics approval rating. And white, we have the russell 2000 relative to the s p 500. The russell 2000 is considered to be a proxy for the trump trade. The companies within the russell 2000 smallcap down within the u. S. , their business within the u. S. As the election is high relative to the s p 500, peaking higher around the prospect of tax reform. It seems to be tracking closely a President Trumps approval rating. As it dips, so does the russell 2000 relative to the s p 500. Never a dull day. Julia never able moment. Thank you for that. Let us get a check on the first word news with mark crumpton. Mark the groundswell of opposition from, his own party including from several female colleagues who said they consider him a friend, led senator al franken to his announcement today. The minnesota democrat said he is resigning in the coming weeks amid allegations of sexual misconduct. Franken made the announcement on the senate floor. Franken and import part of the conversation we have been having the past few months has been about how men abuse their power and privilege to hurt women. That during my time in the senate i have used my power to be a champion of women. Shery franken mark franken has been swift bike congressional standards. Wrayirector christopher testified before the House Judiciary Committee and was asked to respond to President Trumps continued tax on the agency. Republicans echoed the president and suggested they worry about political highest and bias in special counsel Robert Muellers investigation. He said there is no finer institution than the fbi. The Palestinian Authority president says he is rallying International Opposition to President Trumps decision to recognize jerusalem is israels capital, which president abbas called and unacceptable crime. Fortunately, there was a positive response from all the countries in the world, from europe and africa and countries close to america that do not support the u. S. Had tensionsident on his visit to greece. The first visit in 65 years. The government wants to rise revise a treaty that defines the border between turkey and greece. Ties between the fellow nato members have been frequently strained by competing claims of islands and resources as well as how to handle refugees in the eastern. Global news 24 hours a day. Powered by more than 2,700 journalists and analysts in more than 120 countries. Im mark crumpton. This is bloomberg. Scarlet . Scarlet thank you so much. Bitcoin is defying the skeptics. It surged past 16,000 days before the futures contracts starts trading. The frenzy actually buckled one of the biggest exchanges, as well. Janice hendersons bill gross mentions bitcoin and says he will not by the cryptocurrency until lava cools. Great to speak with you. And looking at your latest monthly Investment Outlook, you say be careful in 2018. In one area that certainly requires caution, bitcoin. Tell us what your read is on pastins relentless surge 16,000. Bill bitcoins search depends upon its potential for replacement for use. Exchange, aof dollarbased type of currency. For bitcoin to do that, first of all, it has to Gain Momentum in popularity. As a medium of exchange and stored value. The store value, the price of gone up so obviously theres sense of value there but sooner or later it will go up and down and it may inhibit bitcoin from being a currency, such as the euro are the dollar. In addition, the medium of exchange that bitcoin hopes to becausehas a problem there will only be 21 million of them in their price at 16,000 a unit. Find a bag of groceries at the Grocery Store with a bitcoin is going to be a little difficult. Scarlet i love how you can always bring it back to concrete uses here. What does this move tell us about the state of Global Financial markets . Roots, i think are based upon an expansion of the money and expansion of credit by the central bank. It has been ongoing for six or seven years. Central banks are still writing checks in terms of buying bonds and corporate bonds. The ecb is doing that. The bank of japan is doing that still at about 1 trillion a year, although the fed ihas not only cut back but also reducing supplies. The line of credit over the past is really theears foundation for bitcoin and the foundation for other missed pricings an artificial pricings. It is not only the bonds at negative yields but stocks a high ratios. Scarlet is it in a bubble . I ask because if it is inevitable and it does pop, what is going to be the spill over into other Asset Classes . Stocks, bonds, currencies. Bill the going up does not seem to have affected asset prices and bonds significantly. Any time any bubble pops, however, it is an indication that Something Else may follow it. I think it is good to because just in terms of not only buying it but following it as it moves up and potentially moves back down. When bubbles pop, whether they are small and relatively insignificant in terms of the , ial credit of global credit think it is a potential forerunner for other assets. Investors should be careful. Inia you highlight this your Investment Outlook when you are looking at the difference between cash and credit and you look to when you start to see to cashs turning more in some of cash credit, that is how you mentioned that point is one of those cash equivalents, is that what investors should be looking at bitcoin as . The divergence between cash and cash equivalent and credit . Are i think investors looking at it as an investment means ofment, as a fulfilling this upward price movement. It is not really a currency alternative at the moment, but with low Interest Rates and in many cases, 4 trillion to 5 trillion in negative Interest Rates, ultimately small have a choice. They can go to cash, they can go to bitcoin. Is the foundation for this movement, not necessarily at 16,000 or 17,000 a bitcoin but maybe at its beginning down below 1000. Julia it makes total sense. Theso want to talk about cost of carrying. People looking at the return they are chasing her versus how it compares to whatever benchmark it is that they are looking at. You talk about the idea that we may be reaching a turning point here, and that is why you have to be more cautious. Give us a sense of why you are why you think we are at some turning point and how you define being more cautious. How do you trade that specifically . Bill think you for reading that investment very well. [laughter] the Treasury Bill has carry attached to it. A Treasury Bill does not have any volatility. It is a noncarry instrument. Anything that has risk has volatility. It basically has a carry or a higher return attached to it. When Interest Rates are low, or in many cases negative, around the rest of the world, carry itself becomes at risk because the instrument against which it is compared basically is selling at a very, very low yield. And so investors should because becauseng forward carry, whether it is in highyield bonds or stocks or ratios or any other type of investment, carry itself is priced based upon that rocksolid Treasury Bill that basically yields very little. And so if the fed raises Interest Rates, then carry itself or any risk investment becomes at risk. Investing ine emerging markets may say look, theyre not expecting too much strength in the u. S. Dollar. Emerging markets this time around can be resilient. Do you wish back against that principle, even in emerging markets . Bill i think emerging markets have a higher growth potential. It is in the developed countries, certainly the United States were Interest Rates are being raised. Brazil just lowered its Interest Rates to near cyclical records 7 . It used to be at 13 , 14 , 15 . Any emerging countries are moving the other way in terms of whileInterest Rates, developed countries, certainly the United States, is moving higher in terms of yield. At some point, the fed funds rate, to my way of thinking, is going to approach 2 . I think at that point, investors should because just because the leverage that is inherent in the United States and other developed countries argues for caution as we move higher in yields. Term cap be a medium for the federal reserve. Scarlet finally, i want to ask you about the yield curve. He talked about it in the past and we have seen the relentless flattening, whether it is the two times are the five 30s. It is not quite the reliable indicator that it once used to be. A lot of people say that. Do you think it is a symptom of slowing growth or a trigger for slowdown in growth . Bill i think the real trigger is the shortterm rates. The central bank has been raising shortterm rates much more than five sometimes. That is what five and tens. That is what is producing it. They are anticipating the fed fromlower Interest Rates its current level. I think the real indicator to look at would be real fed funds real fed funds closer to 2 . At that level, it is close to it twoyear or a 10year. At that point, it is not the 10year at 235 that threatens the economy going forward. It should stop soon or else the economy will slow down. I am going to argue against the expertise of the fed for a long time because they are based on models. The taylor model, the phillips curve, etc. Even though we have a new regime going forward, as long as they are model based on historical types of cyclical indicators as opposed to structural changes, with demographics and credit creation, there may be problems. Confident in the academic approach to fed funds in its entirety. Julia thank you so much for speaking to us. Bill gross of janice henderson. Were breaking news. Scarlet planning to sell of consumer business. According to bloomberg reporting, it does expect to get nonbinding bids for the unit early next Year Companies glaxo, and j, nestle. Theyre all working with Financial Advisors as they consider making an offer for pfizers consumer arms business. Havent moved really much on the headline, but any further details, we will bring them to you. Coming up, a bloomberg exclusive. By banker says tax reform threatens the diversity of new york city. This is bloomberg. Scarlet this is bloomberg markets. Julia it is now time for a bloomberg exclusive. Ken motz spoke to our very own eric about the effects of the gop bill, the tax overhaul bill on the american economy. Listen and. I do think it is very important for American Companies to get this tax rate down. Let us start with that. If you were running the u. S. As a business and you wanted to be competitive, you have to lower the tax rate from 35 down to something in the low 20s, just to be competitive. I think what you and i were talking about that people might be missing is what would happen if the state and local tax reduction continues to not be allowed. I do think it is a way bigger effect on really for five states butour or five states, the big states, california, new jersey, connecticut. When it would mean to lifestyles and distribution of population, i think it will affect the United States more in that way then the way people think. Why are you thinking about it . Why does it interest you . Ken i think you have to look down the road. Where world my headquarters be . Where will people want to work . Where will they afford to work . Wearable young purple where will young people take their talents . It will cost an extra 14 is notax because there deduction to live in these states. I think you have to think about that. How much is it going to hurt new york city . Ken i am concerned. I think people like new york city, so they think the lifestyle is something that they like. You have to wonder about the person who is about to lose 10 of their aftertax income. I am talking about the up and comer professional sort of high income, but who really supports these are the people who drive the real estate market. These are the people who drive the ken the restaurant scene. We like about manhattan is the diversity of culture and restaurants. You are wondering if someone has 10 less aftertax income which if you do the math, it is that they. 10 is about to go away if this law passes. You wonder, can you really support the same diversity of cultural restaurant things that in urban environment does. What about the diversity of the new york city economy . If youre right and young kids and professionals will not want to live in new york city in the future because it is too expensive, what will happen to wall street . Will happen to the media industry, will happen to Silicon Valley . Ken another city. Ken it is not obvious to me what happens, by the way, i do not want to say i know. But i do think people will choose and i think it is over a long period of time. This is not a cliff. But i think you look up 10 years from now and the united they population distribution might not look the way it does today as people elect one by one to maximize their own careers. And i think we will have to accommodate that to obtain the talent. Again, this is early. We do not even have a final tax bill. So let me say that. At the white house at the moment, we have president tomp signing a proclamation rubber pearl harbor day as the anniversary of pearl harbor. You can see him making some comments, as well. He talked about how the military got defeated and we are building it up. Appropriate on pearl harbor remembrance day. Julia today is the 76th anniversary of the attack on the Hawaiian Naval base. From new york, this is bloomberg. Pres. Trump our surviving world war ii veterans it is time for the Bloomberg Business flash. A look at some of the biggest business stories in the news right now. Global Bank Regulators have reached a new deal for tightening capital rules. Banks regulate risks and other assets. Newo draghi trace the practice to increase transparency. Milestone. A major review success and variability with assets without significantly increasing Capital Requirements i. Julia out of its name to a growing reservation list for semi trucks. Theyre making an order for 40 semitrucks, one of the largest preorders to date. Adding the electric trucks to the distribution will help the global goal to reduce operational carbon footprints by 30 by 2025. Fired anley has following harassment. The u. S. House of representatives for 10 years. He joined Morgan Stanley in 2011. That is your business flash update. Scarlet still ahead, the brexit battle drags on. Theresa may faces deadlock over the irish quarter. Can a deal be reached, and more importantly, can it be reached in time . This is bloomberg. Scarlet from bloomberg World Headquarters in midtown n, im scarlet fu. Oil is rebounding today after yesterdays selloff on surging gasoline stockpiles. Investors are covering some sort some shorts, so we have a bit of a rally now. Rising, if you look at natural gas its off by 5. 5 due to mild weather which is hurting demand. Posted theories first inventory gain in the past week, and in fact it was the first latefall gain in stockpiles since 2012. Gas is down, again, ill must 5. 5 percent at this point. Moving onto precious metals, down day for gold, silver, and platinum. Bold as lower as traders take on more risk overall. 1248. 80. 2 48 it has been a rough week for silver. The metal has been down in the past five days as demand from china and india is forecast to decline. Lets check bloomberg first word news with mark crumpton. Mark. Mark senator al franken has resigned has announced he will resign in the coming weeks. One of the members of the liberal wing of his party, he heeded calls from several colleagues in the wake of allegations of sexual conduct. Of all people, and aware that there is some irony i am leavinghat while a man who has bragged on tape about his history of sexual assaults sits in the oval office, and a man who has repeatedly preyed on young girls campaigns for the senate with the full support of his party. Mark senator franken said it is time to listen to women, but he still disputed some of the specific allegations against him. In the west bank, palestinians protested against President Trumps decision to declare jerusalem israels capital. The head of the militant Palestinian Group hamas has called for a third uprising against israel. Thousands of palestinians and previousdied in the two uprisings. A man holding a palestinian flag smashed the windows of a restaurant in amsterdam, before policeetained by two officers. And a video statement posted on twitter, a Police Spokesman said the suspect was a 29yearold amsterdam man with a temporary residency permit, but police did not provide the suspects nationality. The suspects nationality. Emanuelrime minister mack brown is in qatar. France will provide qatar with military and transportation issues. The two sides signed contracts contracts today that president Emmanuel Macron says are worth 40 billion. Global news, 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. Im mark crumpton. This is bloomberg. Julia. Julia irelands foreign minister says his want says his government wants to be helpful in finding a solution to the irish border issue. But he also says ireland isnt budging from its opposition to a hard border with the north following brexit. Meanwhile, negotiations between the eu and the u. K. Appear to be focused on justice in british cases. John, great to have you with us in new york. Everyone we have spoken to says a solution here, preventing the establishment of a hard border between ireland and the north, postbrexit, is going to remain elusive. So when the foreign minister says he wants to be helpful, how can he be . This is the problem. All sides right now have dug in on their negotiating lines, and on the talking points. So for now, there is an much sign of any of those people changing tack. However, we have heard in the last hour or so, news that the eu president is going to come out tomorrow morning at don with a statement of the situation. We dont know what is in that, what he is going to say. But it looks like that is going to do next app on the way, to seek we kenexa late do this deal. Scarlet when it comes to the hours border, is this decision out of theresa mays hands . Because really has to do with the Irish Government and the dup, the irish party that is the source of her support in parliament. Find of, depending on how you look at it. But you can also flip it and say she is the only person who can square the circle. You have these apparently irreconcilable positions, but she is the Prime Minister of the united kingdom. She is the person who will have to take a deal and righted on a piece of paper and take it to brussels and see if the rest of the eu will agree to it. So she is in a very difficult position. She doesnt have much power in this, but is still ultimately up to her to find a way through it. Scarlet shes kind of like a messenger here, in some ways. Yes come up to appoint. But if you look down in history, the great medical dealmakers, if you want to say you are a leader of historical importance, you will find a way through this. Has his critics but everybody said a good friday agreement could be done. And you heard the former Prime Minister of ireland say that the good friday deal worked. Now its theresa mays deal theresa mays turn to see she can square the circle. Julia kinds of deals are on the table here . If we talk about Something Special for Northern Ireland postbrexit, that raises questions that we have seen raised in the last couple of days. What are some of the alternatives that could perhaps be brokered here . Thats the problem. So much of these solutions are going on behind closed doors. We dont know a lot of the nittygritty as to what has been decided. And every time, this is the problem. We are in a sort of heated political mood right now, a heated political environment right now. Every time a scrap of new information comes out about what this deal could look like, the other side of the table, whether it is the eu are the Irish Government, says no, we cant do that. We are pretty much still in the dark about what a final outcome will look like. Julia which is what worries me. Because as you and i both know from spending too much time in me that, a concerns there is it some form of negotiation here. Scarlet i did want a very simple answer to, what is the deadline we are watching for . The only deadline that really matters is 2019. Thats the date the dup. What then scarlet about the trade talks. Made up deadline. But at some point, its very soon, maybe at the end of january at the latest. But it does have to be in a position where i can start future trade negotiations. Asap. T the deadline is julia the eu needs to move on to trade negotiations. Germany. Headlines today, that the social r coalitionforme partners with Angela Merkel are willing to have talks toward a future coalition. It looks like that. The deputy is really in a tricky position here. All points to tec a coalition of the german president has let it be known that he would like to see that outcome. But there is huge pressure now to do a deal with Angela Merkel or it. With Angela Merkel. The problem is that these negotiations havent worked out well for the party. Julia the basically being penalized. And from the youth wing of do thisy, says dont again. It has hurt us too many times. One other outcome that we havent thought of would be a minority government led by Angela Merkel. She doesnt want to do it but merkel has managed to give the party the strategic run around for years now. The trick they could try to belong off here is to put merkel into a corner. Her special skill is to somehow always come out on top. [laughter] bloombergs executive editor joining us in new york. Thank you, very much. Loom for index providers but that could change. We will find out why. This is bloomberg. Scarlet this is bloomberg markets. Im scarlet fu. Julia im julie chatterley. Warren buffett is a giant in the business world, and Berkshire Hathaway is nearing a market cap of 5 billion. Who could fill his considerable shoes when the 87yearold leaves . Great to have you on. Obviously, there is speculation about this. We have seen a lot of turnover and coming and going as far as Berkshire Hathaways concerned. But we seem to be fixating on to names. One is greg abel, the other is eric james. Who is most likely come at you think . Jane runs a pretty big swath of berkshires insurance businesses and has been around berkshire since the mid1980s. Greg abel runs the energy operation. He runs a much of utilities throughout north america and u. K. In this article i just wrote really talks about how investors on able ashoned in the most probable candidate. One reason is he is the right age. He is 55. Is more than a decade older. Affett obviously shows that ceo can do well by investors will pass retirement age. But able can check a bunch more boxes. s model is to go out and buy more businesses. I think another thing important to note is that the next ceo isnt necessarily going to have to be a stock picker. Buffett has hired some former to help picknagers stocks and those folks will help the next ceo with that side of archers business. Julia a few interesting things to me stand out from your article, about greg in particular. He has a potential laundry list buffett has. Rren and buffett has said he wants to give his successor many years in the role, and when you look at the Energy Business like greg has run, you have kind of described it in a way that it is a mini Berkshire Hathaway all of its own. It has 22,000 employees. Describe to us the kind of business he is running right now and the similarities he already seems to display with warren himself . Berkshire Hathaway Energy sich is the name of abel business is very decentralized. Utilities ineral north america and the u. K. , like i said, but the headquarters 2000 is really about people. Thats a model buffett is been using for the whole conglomerate for a long time. Overall berkshire has about 350,000 employees but the home office in omaha numbers only about two dozen. So there is this management philosophy that you really should be putting a lot of the decisionmaking at the business level, with the managers who are actually overseeing daytoday operations. What that does is it keeps the overhead low but it also frees up the people at the home office to be thinking more strategically, to be thinking about acquisitions or how you are going to allocate capital. And that is something we have seen abel adopt and employ to great effect at his businesses. Scarlet berkshire has about 400 billion that it wants to spend. As Warren Buffett commented on how quickly you would like to commit that to investments . Thats an estimate he gave in may about how much p thinks berkshire is going to have to employ over the next decade. Its a lot of money. Berkshire is not in a rush to do it. Buffett is looking for the best opportunities available. Know what, thank you so much. And i just realized that jane and abel rhymes with cain and abel. Coming up, the most important jobs indicator comes out tomorrow. With j. P. Morgan asset management. This is bloomberg. Julia is 3 00 p. M. In new york. Im julia chatterley. Julia im scarlet fu. Welcome to bloomberg markets. Julia were alive and bloomberg World Headquarters in new york. Here are the top stories we are covering on the bloomberg and around the world. Banker versus bitcoin. Our exclusive interview with Howard Davies, chairman of rbs, who has a warning about cryptocurrency. The president is pushing his toughest project, and plans to release his longawaited infrastructure planned in january. And the California Wildfires continue to blaze across los angeles, displacing tens of people and shutting down major highways. Close ofour from the trading, lets check our markets with julie hyman. Julie. Julie stocks have been relatively steady and a little but still a down, bit of a bounce back in todays session. Trading action, the safed the past several sessions of seen a lateday save him into an extent. We will have to see whether it ends up shaking out that way. If you look at the bloomberg terminal we have a look at past several days. If you look at the best free sessions, the fourth session we do see that happening. We closed down near the highs but we then had a couple of days in a row that showed very clear downward patterns at the end of the day. Once again, it looks like maybe a little bit of a debt as we look to close out the session. We shall see. Terms of the group, Consumer Staples are a bit of a drag your. Industrial are higher and that was true even before these headlines on a potential Infrastructure Spending plan, although we are seeing Construction Materials shares benefit. Investors are trying to hash out out the plan. Itslemon has boosted forecast with comparable sales of 8 at the athletic wear maker. This, as the company has tried to revamp its offerings and improve its image. Are up 7 . Dollar general is also out with it numbers. Also out with its numbers. Shopper traffic and the amount shoppers spent grew in the third quarter. And finally sears holdings, rounding out a retail trifecta. That companys shares are rising after a recommendation that he sayingr going private, excessive shortselling has hammered the stock. It is a firm thats known as an investment manager for a family in switzerland. Those shares up seven and a half percent. Bitcoin, ofs and on course. We have been watching not just today, but over the past several days, and this year. This chart is interesting because yes, it shows that 63 rise. Seenagain today, we have remarkable volatility in the price of bitcoin. At one point it was above 16,000 and it then came back down toward 15,000. White now it about 15,600. If you look at the coinbased exchange the high price was 20,000. So the range is enormously wide and the volatility has increased. And there is a lot of debate is be going to the introduction of the first Bitcoin Futures contract. Its happening on the 10th, that is sunday. Scarlet perhaps adding some urgency to the moves we see there. Next, julia. Now, more evidence that u. S. Job market is strengthening. You are workers file for jobless claims last week, and tomorrow we get the monthly jobs report. Economists expect payrolls to grow by 200,000 in november, while inflation held that 4. 1 . While unemployment held at 4. 1 . The consensus estimate is 195,000. When you look at the jobs report, david, you pointed out that hourly average earnings have become a focus for policymakers. David you have the fed which has the dual mandate for full employment and price stability. I would say that four point 1 on the Unemployment Rate in the prospect of bracketing below four percent next year, they have achieved that side of their mandate. That leaves the price stability piece, which we see inflation coming back, that summertime lowell seems to have been lull seems toeem have been driven by idiosyncratic factors. The fed at the end of the day looking for inflation at around 2 of we need to see that manifest itself in the jobs julia . Market before anywhere else. You think the fed will hike three to four times next year. We were speaking to build grace this morning and he was saying the fed should not go above 2 . A number of analyst talking about flirting with the possibility of an in your did thus ability of an inverted yield curve next year. Does that worry you, you guys when we are talking about 3 to 4 , 3 is fine, but 4 is a tip over the balance. David the fed is settle along they are going to be data dependent do nothing about that approach is going to change next year. The data remains on the trajectory is currently on. Think three or four rate hikes make sense but if you dont see inflation pick up or the labor market starts to look soft, i think you can certainly see them hit pause on the hiking cycle. Julia you got unemployment that 17 year lows. Creatingt job numbers being the slowest since 2010 which is find a guess, when we get to this point in the cycle. But what do you mean by slowing in this case . A veryit would be unexpected song. But if we saw the Unemployment Rate rise for some reason other rate,he participation that would likely lead the fed to pause. Case. S not our base we think the labor market is going to tighten and that is going to pass through to inflation, and once we do see inflation, think that is what the long and at the yield curve needs to break that inversion which everybody is so concerned about. Julia and that takes the worry out of the front end of the curve as well. David exactly. Tax billwe have the that make it signed by the end of the year and also the president today, saying he is readying his public works climb is this stimulus, this jolt to the economy coming at the wrong time . David i think it is probably coming up runtime. Historically want to see fiscal stimulus coming right after a recession, to inject it with some physical jews to get going after a pause. But late cycle fiscal stimulus, particularly in an economy that is running on a supply side and running out of available workers, this is just going to generate inflation. And i think the question is, how much inflation does it generate . Even if we see wages pick up, a little fiscal stimulus on top of that could push prices higher. Scarlet as we wait for that inflation data, what do you do investment wise . Where do you go . We like industrials, materials, financials to continue writing that cycle. Its interesting. We are at the end of the year and a lot of people are talking about their predictions for 2018. Ive seen a number of articles today with people calling for basically 10 correction. On average during the past 37 market is stock falling by over 40 during the course of year. Largestact that the drawdown your to date has been 3 is frankly, abnormal. I think we could see that correction materialize in the next couple of quarters, but with Earnings Growth looking so solid that provides bit of a safety net for the equity market. If the fundamentals were deteriorating we would be a bit more cautious. Scarlet at some point comparisons might get a little tougher, especially for technology perms technology firms. Organically, i think S P Companies can generate operational earnings by about 7 for 2018. If we see Corporate Tax reform take old next year, that could at six or seven dollars six dollars and seven dollars to earnings per share. I think the bottom line is that even with Earnings Growth slowing, it is still present. And with the other opportunity being 2. 4 on a tenure treasury, trade, sure that that that there is no alternative trade, and has finished running its course. Talking a lot we been talking a lot about the tech sector and the rotationals we have seen. You think if the tech that you think the tech sector will be higher next year . Path forday think the technology is still likely higher. If you look at the tech sector today relative to just before the tech bubble, it is market cap and its controversial and its contribution is more balanced than was 15 years ago. And we have seen two backtoback quarters of 3 growth. Thats well above potential growth for the u. S. Economy so, we do see growth not slow but just cooling off a little bit. And i think you could see the resumption of that trade of investors looking for growth. Wheres the growth . It is still in technology. Thats where revenues are growing. Tech,t although within the relative value may be overseas and not necessarily in the u. S. Probably less in europe because there are not a lot of Tech Companies there, but asian technology. David exactly in what weve been telling investors of late is that the u. S. Market does look expensive. I dont can fudge that as being cheap. I think there is Technology Emerging in the energy sector. I think pump, pump, drill, drill, drill is taught is starting to subside. Consensus is that the relatively unappreciated play right now might be energy. I actually think that the next step, particularly for these Shale Companies to make, is to get away from where the oil price is. Breakevens are well below the price of oil at this point. These companies for the most part are profitable with oil at their current levels. What they need to do is focus on maintaining that profitability rather than allowing their drilling activity to be subject to fluctuations in the price of oil. Its much more of an adjustment to how the businesses are run thats going to be required for Energy Stocks to really break higher. So we close the circle and President Trump planning to push infrastructure, is an announcement right the president still to they to make Investment Decisions . We are big proponents of separating the signal from the noise but we do like industrials from the reasons, with global activity picking up, particularly in industrial markets. Julia you think the infrastructure plan is still noise . At the spot we are going to wait for concrete information. Julia david, great to talk with you. Analyst at j. P. Morgan asset management. Lets check headlines on bloomberg first word news this afternoon with mark crumpton. Julia, as excepted, minnesota democrat senator al franken will resign from office in the coming weeks there were than half of his democratic colleagues including several that he step down from the senate after multiple allegations of sexual misconduct. In remarks on the Senate Floor Franken referenced the irony of similar accusations against President Trump and Alabama Senate nominee roy moore. That he stepa white former soua Police Officer has been sentenced to 20 years in prison for fatally shooting an unarmed black motorist in the back in 2015. A bystander recorded the shooting on his cell phone and it was shared around the world. The bystanders video started after the struggle between officer Michael Slater and walter scott, and shows scott running away and the officer firing eight times. Scott was hit in the back five times. Wildfires continue to burn across southern california. The blazes are forcing a wave of new evacuations and shutting down major roadways. Authorities have warned that conditions could worsen. One of the fires is burned homes in upscale belair and led to a partial closure of one of the busiest freeways in los angeles. Palestinian Authority President muff would a boston says he is the Palestinian Authority president says hes rallying opposition to President Trumps decision to recognize jerusalem as israels capital, which the president calls and unacceptable crime. At a meeting in jordan with king abdulla the president said, fortunately there was a positive response from all the countries around the world, from europe to africa and countries close to america, that dont support the u. S. Global news, 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. Crumpton. This is bloomberg. Scarlet. Scarlet coming up, bitcoin breaks another barrier of 40 in 40 hours. But as these gains continue, Howard Davies voices his concerns. This is bloomberg. Julia bitcoin mania is hitting new highs. Bitcoin currency smashed 16,000. Howard davies speaks to bloomberg about his concerns in an exclusive interview. Im afraid this is a rational exuberance. This was greenspans famous phrase. Of course then he found that the market kept on going up after he said it should stop. I do think that the idea of it transmitted ledger, which makes systems faster in real time, is a good one. Is now time for the Bloomberg Business flash, look at the biggest business stories in the news right now. Pfizer expects to receive a nonbinding it for its Business Unit early next year. According to people familiar with the matter, the drug giant is expecting a range of offers from Global Health care and consumer companies. We are talking about j and j, glaxosmithkline, among others. 15 billionould fetch to 20 billion. A french bank is moving ahead with plans to combine its equity markets activities with germanys otto bhs. Between 10 and 20 front office natixis could bex affected and the company has artie offered and the company has already offered exit packages to staffers. Ge is losing 16,000 jobs. Losing the jobs ge is 12,000 jobs. Most of the jobs will be out of the u. S. Market. That is your business flash update. Julia President Trump says he hopes a budget deal can be reached. He made the comment while meeting with congressional democrats. They said that they do not want to see a shutdown despite the fact that they of course have their own demands. Scarlet where is chock . Chuck . From new york, this is bloomberg. Julia is time now for options insight with julie hyman. Joining me now is Steve Sosnick of interactive brokers. We have been talking about the sideways, choppy trading, we have been seeing rotations and what is your take away with that , because we have seen correlations go down as well . Steve this could be a buy the rumor, sell the news event. We have been buying the rumor but the news hasnt really settled yet and the market is trying to pick out winners and losers. I think that is pretty healthy. A lot of times you see correlations really converge toward one in a big downmarket. In a big downdraft you are really selling everything. Now i think we are starting to see the market pick out sectors that they are favoring and not favoring. That is healthy. At least in the intermediate term. You dont want to see everything going in one direction at once. You want to see some rationality to it and have the market really express its views through what they are buying and selling. Some differentiation. One stock is potentially g. M. This stock also did well, but also modeled and meandered uddled and meandered. Steve this one bothers me because it really hasnt participated in the rally is the market picked up steam. It sold off a little bit which is ok, because things selloff. At this trade is saying, if this bounced fails, what happens next . This is protection, this would be protection if you are a nervous holder of gm. Julie a nervous holder. So what with the nervous holder trade look like . Think that nervous holder would buy puts here. You can really see a breakdown of 36 and this would protect you , the trade would be to buy and sell it all off at 39 and make a little bit of money. If it really breaks down, you should be well protected. Its a so essentially, hedge. Steve sosnick of interactive brokers, thank you. Julia. Julia still ahead, counting the costs for california. Wildfires continue to blaze across los angeles. We discuss the impact. From new york, this is bloomberg. Retail. Under pressure like never before. And its connected technology thats moving companies forward fast. Ecommerce. Real time inventory. Virtual changing rooms. Thats why retailers rely on comcast business to deliver consistent Network Speed across multiple locations. Every corporate office, warehouse and store near or far covered. Leaving every competitor, threat and challenge outmaneuvered. Comcast business outmaneuver. Ryan House Speaker paul and minority leader and diplomacy are blaming each other for not being able to work in a bipartisan fashion to get tax reform done and keep the government from shutting down. Both held press conferences today. The defenders of the status quo is either old, broken system slipping away. We believe it is time for hardworking people to get a break. People living paycheck to paycheck get a relief. To pillagean assault the middle class. Tax breaks to wealthy people and Corporate America . Of 2 trillion to Corporate America . Mark as you saw, right closed ryan and pelosi joining senate colleagues. In the west bank today, palestinians protested President Trump decision to declare that juicer is limited jerusalem is israels capital. Thousands of