Transcripts For BLOOMBERG Bloomberg Daybreak Americas 20171211

04 . The trade the stock of the day the morning, the week is bitcoin. Bitcoin futures trading there. What are we at . 17,000. Friday we were at 10,000. David that was huge. Now time for the morning brief. A big week is ahead of us. Today nafta talks begin in washington and later this week we have three Key Central Bank decisions, the fed and e. C. B. And bank of england. Russian president Vladimir Putin will hold an annual presser and an e. U. Summit following the brexit breakthrough. There was a brexit breakthrough when you were away. Alix were hearing the rollbacks, is the deal binding, is it not . Is it legal . We have opinions on that. And bidding overed the weekend were worried about a labor party and snap election. Dave the labor party is taking over, jeremy corbyn. He said if they do take over theyll move the bank of england to birmingham. Alix that makes accepts. David that will be different, for sure. Alix to bloomberg first news word, heres emma chandra. Emma russian president Vladimir Putin made a surprise visit to syria and ordered most Russian Troops to begin withdrawing. Putin met with syrias prt, Bashar Alassad and the first time hes been to syria to back assad in the civil war. Frances president macron called President Trumps decision to call jerusalem the capital is a call at peace. He disagreed saying mr. Trumps action would help the middle east peace process. And alabama senior republican senator has urged voters in the state to reject federal republican roy moores in tomorrows special election. Shelby said alabama deserves better. Moore has been accused of inappropriate behavior with teenage girl ps when he was in his 30s. Global news 24 hours a day in more than 120 countries. Im emma chandra. Alix time for the daybreak first take where we discuss the top three stories of the mork. Bitcoin finally lands on wall street with futures surging 26 in the debut session. Then central bankers, big week ahead, in focus will be the Federal Reserve and their outlook for 2020. Finally, tax reform. Can the house and senate actually get it done in five days . I dont know. Well be joined by michael mckey, and Peggy Collins who leads the u. S. Investing team for bloomberg. Come inside bloomberg, its the chart of the day. Its bitcoin and the Circuit Breakers that were triggered. This when you had a 10 and here a 20 rise and futures were halted for five minutes. Any maferte my favorite stat of the day, bitcoin is 350 billion overall with crypto currency and not even facebook market cap and here it is all were talking about. Its a big step to open the exchanges and gives some legitimacy to bitcoin and now youll see what some investors decided to not only go long on the currency with their face in it as a legitimate currency or whatever you want to call it but also hedge funds who will say hey, now is our opportunity to short the currency. So weve had stories about whether or not bitcoin is the next big short. The problem with bitcoin is nobody knows its value. I had a fascinating conversation with robert schiller, the Nobel Laureate from yale whether were the problem and he said maybe, the fact we make such a big deal out of this. And one thing you can point to, you look at the number of contracts being traded. Right now since futures trading began, 2,882 contracts, 2,882. Gold in the same time period, 67,000 contracts. So is this really a broadly interesting financial instrument or is this a narrowly focused speculative bet by a few people that gets an awful lot of publicity . David im curious about legitimacy. Everybody talking about its more legitimate. Why is that, the very fact we have a market makes it legitimate . It doesnt change the underlying value of a bitcoin. Michael it may be the market itself gives it some legitimacy. You separate out what a currency is or what Something Like this is. Its historic value but a median of exchange. The Exchange Part has gone away and nobody is using bitcoin to buy things anymore. Its too volatile and why would you pay for something in bitcoin and have the value go way up in the meantime. Its really just sort of all about the price and the fact the price keeps going un. David they are using it to get value in the form of initial coin offerings and getting cash o finance movies and startups. Alix if you go to france you buy bitcoin in the a. T. M. Peggy it will be interesting to see if main street america will start to move towards it. What weve been reporting is when people call their Financial Advisors and say hey, this thing sounds great, people are making 100 in value, their advisors are saying you know what, we think its a bubble and do you really want to try and step in now when the bubble could burst any time . There are a lot of Financial Professionals who are still saying we think its a money laundrying trade than a currency trade. Alix what are big banks waking up this morning thinking about . They want to help and get into it but theyre in it and will they take all the share here . Michael probably wouldnt be if the big danks banks started to clear this and the customers would work with them. The fact the big banks dont want to at this point because it dont think the regulatory structure is in place and think its very risky still right now. If they continue to trade without problems theyll get into is it. I dont think the small brokers wimbledon the only ones in the long run. Alix were not taking as position but if youre a special client we may help you trade. We wont be special the end of the day. The other big event will be the official banks. We have the fed on thursday wednesday and e. C. B. On thursday and b. O. E. And it will be a big day and ill make mike sit on set with me all morning. The highlight . Michael Janet Yellens swan song. Her last press conference. We are expecting the fed to raise rates one more time. Well get a little bit of a look at what the fed is thinking about in terms of 2018. Through the eyes of janet yellen who is leaving but also the new economic and rate projections, the dot plot we ll love to hate. Alix i like that. Mike well see if they adjust bahama of the tax will. David will we get new projections . Michael does the tax bill lead them to boost their forecast for g. D. P. And inflation and therefore change the number of Interest Rate moves we see next year . Alix if rates go up and jp morgan said wed see the steepest rate hikes next year out of 2006 and people come out of bitcoin. That bitcoin is a ball of money and if we wind up seeing substantial hikes and fightening somewhere, is that the disruptor . Peggy people have been searching for yield for years because rates have been so low. So if you start to see more Asset Classes including fixed income get more money or Interest Rate rise and coupons, you might see people move. What i think is one of the most interesting things this week is the juxtaposition of bitcoin and its volatility and janet yellen essentially saying goodbye because shes been a steady hand in the markets in terms of when the different central bankers speak. Oftentimes people say shes almost boring but in some ways its been very steady for the market. It will be interesting to see if we see more volatility as the new fed chair takes over. David ill be interested, will the fed say yes we need to take into account tax overhaul and theyve been reluctant saying its not going to happen. Theyre getting close. Dont they at some point say yes, we have to take it into account . Michael they do and the reason being they might not want to do it yet is because they dont have a good handle on the bill. Some have incorporated some boost to growth in the forecast. We spoke with loretta a few weeks ago and shes done that. Those who are doing it are doing it very small. He thinks maybe. 10 ad to g. D. P. But nothing spectacular. David there are discrepancies between the house and senate but theres a lot of Common Ground there. Peggy it will be special. David President Trump tweeted that over the weekend. Peggy all along the goal of any tax reform which people have been working for for decade has been to make the tax code simpler but honestly for people in the metro area and california, people are confused to whether or not their taxes will go up or down and in certain states where you have salt, the state and local taxes potentially going away but maybe your income tax will go down or Corporate Tax go down. People cant figure out whether its good or bad out of the gate. Michael interesting story out of bloomberg. 2009 as part of the stimulus bill then, people got a tax cut that amounted to 12 a week and polls showed nobody noticed. 25 of the people thought their taxes had gone up. If you wont get a tax cut it ont lead you to spend more. David the tax cut is the same were looking for this time. Alix i had to pay for bills and i bought an air conditioner back in the day. David thanks for Peggy Collins and Michael Mckee our colleague. Coming up well continue our conversation with bitcoin with scott bauer of trading advantage. Live in new york, this is bloomberg. Alix bitcoin lands on wall street up 26 . It shows the price versus the volume. Bitcoin futures grinding higher and volume is superhot when it started trading. Now volume is like two contracts are traded right now. Joining us from chicago is scott bauer. What was it like to trade bitcoin over the last 12 hours . Scott its been orderly. The futures market here has been orderly like you just said. , just a couple contracts being traded now. Were just under 3,000 total contracts. When you look at a total value youre around 50 million or so compared to the market cap of bitcoin being 300 billion. But this is really good. The market has been very orderly. Most of the contracts that traded, the futures contracts have been in the january expiration cycle and a few going to february or march. But what weve seen since this was launched is the spread between months has really come in. Started out about a 2,000 widespread to go from january all the way out to march. And that has really come in. So you know, listen, its a growing market here. This is just in its infancy in terms of futures here and the market is kind of getting a feel. Overall very orderly. Alix i want to see what youre looking at, scott. The other chart is Bitcoin Futures versus the underlined bitcoin price which is trading lower and traders trade that called the basis. You also can wind up trading that versus another exchange. Whats your popular trade right now . Scott i looked right now and the spread between february and march futures is only about 100 right now. It started off much wider than that. The january to march started out billion 2,000 wide. So to me thats a spread worth looking at is buying yourself a months time from the feb rather expiration to march with the 100 edge. That could wind up being a 2,000 spread or inverted spread. We dont know. The market will figure that out, fly and demand will make that come into line. To me it seems to perhaps be the favored edge if there was one out there. David thanks to scott bauer. For more we welcome aaron brown, the former head of Financial Market research, a. Q. R. Capital management and writes for bloomberg profits. And hes written a fascinating column. In your column you say there is underlying value to bitcoin. Xchain. Aaron we put in tens of millions of developer hours and billions of dollars and created this thing i sort of compare to internet startups back in the early 1990s before there had been any i. P. O. s. Tremendous value there. Hard to estimate what it is or who is going to capture it but its there and i think bitcoin is the first major main stream financial instrument that gives you exposure to the pace. Taved back in the dotcom days with the Stock Options issued and they raised money and started new companies, underlying the option was a right down the road to have a stream of income from the underlying asset. Thats not true here. When you buy a bitcoin and give money to somebody to start something up, you dont get a ride to participate in the revenue or profits from the company. Michael youre thinking moderate terms. In 1990s it wasnt clear the companies would make money and didnt have intellectual property and didnt have plans to get revenues or earnings. It was fate, the internet would be big and if you gauged your gave your money to Mark Anderson or some of these early developers that somehow or another youd get rewarded and you did. It doesnt mean youll get rewarded this tile. Zls agent work that day. There is a tremendous debate. Trustwood will be a value and i dont know who makes it. It the users may like it and its like we get the protocols. It all remains to be seen but its a exciting area. Lix are you long bitcoin . Yes, yes. I put 2 of my portfolio in crypto, and is my feeling what sensible allocation is. Alix we dont understand how to value bit down and the latest from chief cramer over at unicredit. He said in the g7 countries, is the sum of Central Bank Money equals turnover 5 billion and contrast to with 21 million bitcoin. One bitcoin is worth 257,000 and if you do just m1 supply, its one million. What do you think . Thats very 20122013 and i wrote similar things back then. Bitcoin never will be a major transaction. There are better crypto currencies. Alix and its not a good indicator. And existing companies are getting in and going to compete strongly with it. Bitcoin is a transaction courtesy than store value. Its just not in the card. Where i do think, its a financial currency, a way to get exposure to the crypto space and people use it to put money into it and hopefully somebody uses it to take money out though youre correct there may not be money coming out out and thats its value. I have to disagree with scott about the opening on this cboe. Im talking to developers, talking to crypto. And half of these people are teenagers. None of them are over 30. Theyre very suspicious of finance. They went into crypto space because they didnt believe in traditional finance. So the cboe opens and immediately the republican site crashes. Didnt have anything to do with the trading but for technically sophisticated people that looks bad. And then the hit limit twice. This does not look like a good opening. I think this is a battle for the hearts and mind of these developers. Sol far were losing. David the good sneeze is were off and running. Alix at least the limits work. To a financial person nobody went broke and the contracts went through. To a technical person it looks alix it looks bad. David author of the poker face. Thanks for being with us. There will be more with ed tilly, and hell be here at 4 30 london time. Ok. Now coming up, the Republican Party on a final sprint to merge their two tax bills by friday. Well tell you where that stands live from new york, this is bloomberg. Republicans have one week to get to an agreement on a common approach to taxes if theyre going to get a bill to President Trump for signature before the holidays. Our chief washington correspondent kevinner isily and Andrew Brenner are both here to take us through what need to get done. Kevin, down there in washington, what do they need to do to get this to the president . Kevin down to the wire. In a couple days President Trump will be expected to deliver his closing pitch to lawmakers on capitol hill as the first major policy win of his presidency is just around the corner. Everyone im talking to signals this definitely will get done within the next week, week and a half. And this is something the administration really need. Mind you there will be other political distractions and december 27 you have the looming thutdown threat and tomorrow the nesh election in alabama, sure to drown out headlines around the country. Much, hanks so long kevin. Alix deep on the jobs report, flatter today as you come inside the bloomberg. Is steeper the way to go if youre going to factor in tax reform as well, infrastructure spending. Andrew brenner is here. Whats your call . Andrew my call is i think because of the tax plan and what its going to do for pension funds, i think the curve will continue to flatten. When that changes and the incentive for corporations to fund their pensions minimizes a bet as they conduct 35 this year and 25 next year the curve will steepen out a bit. Alix were seeing calls for First Quarter and Third Quarter and well get to totally flat on the yield curve. Whats going to be the distinguishing factor that will flip it for you . Andrew theres no way the currency will get that flat. Ill go on record saying that. What you have is an economy thats rocking and rolling right now. The new york fed last week said the Fourth Quarter is 3. 9 and thats the latest and the tax plan that will be stimulative. And the president now is talking about on his state of the union coming up with an San Francisco plan and thats stimulative and the other thing going in your favor is the fact the fed will continue to raise rates. Theyll raise raise it this week and probably three more times next year. I dont think the curve inverts still and dont think it gets that much flatter. Maybe another 10 basis points. David what about the tightening. Andrew regulation kicks in and what you see is more restrictive, i think the deregulation and the way the Trump Administration is going about it will make things easier. So i really think its going to be easier to get money. In question about the fact a lot is going on and the fed will tighten and we may see stuff out of the e. C. B. Alix Andrew Brenner, head of international fksed income. Fed coming up next. This is bloomberg. Alix this is bloomberg daybreak. Two hours before markets open. Dow jones futures up by 54 points, a the bit of futures climbing higher in the u. S. European stocks flat on the day. You wind up having a pound rolling over a touch on some potentially bad breaking news. Causing a lot of performance with yields down. In the u. S. You have a curve steepening with a 10year yield down by one basis point. Crude is softer and bitcoin on the board officially trading up by 7 , around 17,000 is where we traded a bit ago. David can you imagine wed have a market check with bitcoin on it . Alix surprised copper or sterling didnt make it in there and had to put bitcoin in there. David there are headlines with emma. Emma the largest of the wildfires in Southern California is moving north. Hundreds of people have fled their homes in Santa Barbara county. So far the fires have burned more than 270 square miles and forced the evacuation of 30,000 people. Just 15 of the fires have been contained. Q. E. Said the global cuts could end early if the market rebalances by june next year. Kuwaits oil minister tells bloomberg russia wants to end the output capping deal as soon as possible. Opec and allies agreed to extend the curb until next year to prop up prices. Crown prince is trying to Institute Social reform. Global news, 24 hours a day powered by 2,700 analysts in more than 120 countries. Im emma chandra. Alix what movies will they show at the saudi cinema. Im curious, what movies will we see and who will be allowed to go to the movies . Will they separate the male and female or go together . More questions. Also a question, what are Central Banks doing this week . A big week coming out. Fed is the first to go on wednesday. The latest survey by bloomberg economists say the fed will increase by 25 basis points in december and say revised 2018 growth forecast to 2. 3 . 63 see upside risks and 45 say financial shock is the greatest risk to 2018 stability. Whatever that means. Joined by seth carpenter and with us is andrew benefiter ndrew brenner. What is your best case . We think theyll take onboard a tax cut package. They did the summary and half were onboard with a big stimulus package. At that point no legislation was winding its way through college and now were at a point the house and Senate Passed versions so i think theyll take that on as part of their base case and as a result will write in a couple more hikes than in september. Alix by a couple, 2019 moveup . Seth another hike in 2018 and another hike in 2019 relative to september. David this is poor scoring by the fed on what growth well get. A lot of disagreement between the republicans and economists on how much growth there will be. Will the fed come out . Andrew the fed has to increase their outlook to what the economy will do. David by how much . Andrew as far as number of fed rate increases, the market is building in between 1. 5 and 2. The fed is on record at this point as being three. You have some of your big shops like goldman, j. P. , deutschea saying four for next year and is on top of what youll get wednesday. The only thing i can see happening is the middle of the ar, you havent had a equity correction forever as fars that that goes. If theres an equity correction it will slow them down or there will be three, possibly four next year. David does the core of c. P. I. , inflation, justify that rate increase at this point . Seth one of the key things to keep in mind about the fed at this point is theyre not hiking on where inflation is or has been, theyre hiking on where they think inflation is going. What have we seen since the september meeting when they wrote down three hikes for 2018 . We see some stabilizing in c. P. I. , the last report that came out was over. 2 and well get another print on wednesday and the committee will have that information in time to adjust their statement to adjust their s. E. P. And their dots so as long as that comes in the way we think it will which will be another. 2, it will be enough to give them confidence where inflation is going. Alix what about the markets . You know what ill say what the fed is predicting what the market is pricing in, the green line is the fed and the median dots projection and the white line is what the market is valuing it as. Seth, you work at the fed as an economist and worked at treasury. If you were still working at the fed and looked at this, what would you say or do . Seth i would remind the committee of what i think they already realize and why i dont think theyre worried about the difference between their dots and the market pricing. The dots represent their forecast, what they think of as the single most likely outcome. Thats a very, very different thing than what the Market Participant has to price when theyre trying to figure out what position to take. Theyre trying to figure out the mean, the expected value on a mathematical sense. So if your headline before said people thought maybe there will be external shock, if something happens to the economy you cant rule it out and causes the fed not to hike. We think inflation will be softer than the fed does. You have to add that probability in. The market is doing this probability weighting whereas the fed is looking at one outcome. David the fed is not operating in a vacuum, we have the e. C. B. And b. O. J. And increasing at least speculation that they may be heading towards tightening as well, even b. O. J. Might be buying a few less bonds than e. C. B. To what extent does the fed have to take that into account . Andrew even though the fed has raised four times, i think financial conditions continue to be easier and not tighter. I think whats really hurt the fed is the fact the e. C. B. , theyre only going to change from buying 60 billion a month, this will be the last month of that, starting next month through september theyre going to drop it in half to 30. Its still going to be additive. The bank of japan is cut back the bucket from 25 to 40 years theyre going to buy. And there is talk on the bloomberg today about them cutting back some of their equities which we think is huge. So yeah, we can see a real problem. Im not so sure its a 2018 problem but its going to be over the next few years youll have the whole Central Bank Experiment reverse and you know what, you have 11 trillion debt with negative yields. How dumb is that . You really want to lend European Countries and Companies Money at negative Interest Rates . I dont. Alix many see 2019 as the issue and jp morgan had a note talking about the rate height tightening cycle for the whole world next year and they see that forecast rising to 2 . They see the biggest Interest Rate jump since 2006 next year. Seth, when does that bite . Seth when it bites is hard to say. One thing ill point out is it you look at the chart you have open which i think is great, the path at which its going up for the projection is just much flatter than you saw in the last hiking cycle and i think thats a very key point for everyone to keep in mind. The fed has consistently used the word gradual and think thats a very true statement and that chart shows it. Alix are other Central Banks gradual . Seth we have to wait and see, we talked about the e. C. B. Making adjustments but its not theyre making adjustments, adding accommodation to withdrawing it but reducing the pace at which theyre adding accommodation. David in 2019 well see the global tightening to some extent. Does it make it the right time to do tax cuts or the wrong time . The right time because you want fiscal stimulus but wrong time in the sense that for the fed to go in and issue a lot of new debt is a little awkward. Andrew the one thing ill say, not answering your question directly but youve got to wonder why treasury secretary mnuchin doesnt issue Long Term Debt and lock stuff in. This idea of funding it in bills in the short end when you know youre going to have higher rates, plus you look how flat the yield curve is, you and i talked about it a minute ago. He should be issuing 30 years, 40 years, 50 years. Theres tremendous demand. But to answer your question, look, the president wants a tax cut. He wants to go down as the jobs president. Hes going to do everything in his power for that and if Interest Rates go higher, hats the way it goes. Alix if you have a lower increase than the fed what do you see between tax reform and inflation . Seth tax cuts are a stimulus on demand. The question is how big will it be and then given the amount of increased demand, whats it going to do to inflation . To be clear we think inflation is going to rise. We think its going to rise over the near term by the end of next year. But we think it will be just a bit slower than the fed does. If you look at goods inflation, its been negative for a while. Thats not going to change and part of an ongoing landscape of competition and technological change. David what is been reported is the treasury is moving towards shorter debt than long term and fed and treasury, does it make sense and what are they doing . Andrew theyre looking at the yield curve and asking themselves pricing on as many models as you can, where is it cheaper for them to issue . Right now looking at pricing it looks like its cheaper at the front end of the curve. The question about should they term things out now because Interest Rates are going to rise later is hard because once this is a slow moving ship and if they issue more Long Term Debt now and theres less demand than maybe otherwise think and longer term Interest Rates rise they lock themselves into paying up at the long end. Alix a trader guy said about models, theyre useful tools but only as good as their dine is in inputs and if you dont know the flaws you have a financial equivalent of a sucker at the poker table. If youre short the front end are you a sucker at the table and should you be buying . Andrew should you be buying the short end of the marketplace . We said youll have four rate hikes next year, i wouldnt buy the short end just yet. On the other hand i think the Pension Reforms and other things going on are going to keep the curve flatter for longer and i really think its a mistake by the treasury not to take advantage of that today. David seth, you agree . Seth i think the logic of the treasury is using is pretty sound. David its a bargain essentially . Seth theyre always going to be issuing so the question is not is the short end longer than the long end but what do you expect the cost to be if you issue two years and roll it several times versus issuing 10 years from now and that you only can do in the context of a model and all the shortcomings and models under stoot. David thank you for Andrew Brenner of natalliance. And seth. Coming up, is wall street beat, there are reports disney is buying a good part of tax and what it might mean for bob iger and if he has to stay on as disney c. E. O. So make sure the last big deal of his is a success. This is bloomberg. Emma this is bloomberg daybreak and this is the hewlettpackard enterprise greenroom. This is bloomberg. Now to your Bloomberg Business flash. E struggling global retailer stenhoff is in talks with banks for a margin loan. According with people with knowledge, they want banks to agree not to sell stocks that banks financings until next year. Stenhoff saw 80 after they said they couldnt publish results. If disney reach as deal with fox to buy assets, the fox movie studio could be scaled back according to the wall street journal which sites people with knowledge of the deal. A agreement with bring to the end a decade long dominance of six major studios in hollywood. And in the u. K. , the labor party is debating whether to move some of the bank of englands operations to birmingham, birmingham is the u. K. s second largest city. Labor would have to win the next general election before instituting any moves. The partys plans are aimed at spreading investment across the country. Thats your Bloomberg Business flash. David . Alix why birmingham . David bluecollar and the core f labor, an industrial town. Alix President Trump with coal and labor. David like donald trump saying lets move the fed to dayton or birmingham, alabama. Alix wall street is buzz building some stories. Emma highlighted a few of them. One is steinhoff on deaths door with Value Investing and futures joining the index crowd and disney and fox hiring bankers and bob iger may extend his tenure to oversee the deal. My favorite over the weekend, bill agoman cannot get out from drama. Here to take us through the wall street buzz is ed hammond who covers m a and much more. Stein hoff, four of the top red. Headlines on the bloomberg terminal. The stocks fell 80 last week. Ed its savage. Stein hoff had ongoing problems where theyve been accounting properly and there have been i go regularities. Its one of these companies thats grown through acquisitions, its unclear whats in there and what pieces are doing well and whats doing badly and they fear theres constam nation across the portfolio. They obviously came out and said there was accounting irregularities and delayed their results and the market hates that uncertainty and is absolutely mullered this stock and its down 80 and if you look at it down last summer is 94 and saddled with this enormous debt burden with 21 billion debt on the market cap of 2. 6 million. Where do you go . Alix invesco comes ought and say we are exposed to debt and derivatives and they are hiring others to deal with the debt and its like hey, maybe well e taking it seriously now. And sell the same way. Ed theyve hired guys to help them in negotiations with the banks. The banks are at the moment seems like theyre agreeing to hold off from the share sales so steinhoff put up their stock as collateral with loans to buy the u. S. Company Mattress Firm a store in the u. K. Alix like a dollar stars ed pound land. You can buy anything you want there for a pound. When i was a student id go in and buy all my household cleaning products. Its kind of a hellish place. Theyve had a horrible time and the fascinating thing, crystal weiss was a chairman and worth 4 billion last week and 1. 8 billion today. Alix it hurts. We have breaking news concerning a situation developing here in new york at Port Authority. According to the nypd, the a, c, and e line being evacuated because the nypd is responding to reports of explosions at 42nd street and eighth avenue. Thats what we know so far. Well keep you updated as any kind of news wind up breaking. David you may think of terrorism but theres all sorts of reasons we could have an explosion. You could have a transformer low up or something. The second story, this is from Value Investing. A series were having. Greenblat, value investor. And hes saying maybe we need to change our plan a little bit. Maybe we should have value plus a little bit of indexing. Ed a benjamin graham, Warren Buffett school of investing. The traditional strategy, people dont like it anymore because its just not delivering the output it once did. You look at the s p and how well thats done. People say why would i pay a hedge under fuge fees and why not hold the market . What he said, what greenberg said which is interesting and this piece is great, one of the fascinating things hes doing is he created this package where you can have a index. So its sort of a hedge against hedge fund within his fund and you have half which is active and half which essentially tracks the index. You have a little bit less risk exposure. And cheaper as well. The fees are 1 versus the traditional 2 . David like smart beta, lets put some of the money in indexing and make decisions who is overpriced or underpriced. Ed jirgese its hedged out or whatever you want to call it. Having your cake and eating it but seems to be making a success. David up your alley in acquisitions, reports of disney buying a good piece of 21st century fox. Over the weekend i saw according to bloomberg both companies retain bankers to get serious about had. Is this going to happen and when . Ed this is probably the best entertainment story of the year and better than anything ive seen at cinema this year. Its fascinating, disney seemed to be the natural buyer and we heard of other people being around it and others. Disney has been there the longest and they would fit very nicely with the film studio. Theres a lot of franchises they could bring together and even actually some characters, some of the marvel characters sit at disney and some at fox. Alix my husband who could not care less about finance said my god, do you know disney might buy fox and have all their arvel comics under one roof. David its not just all those characters but perhaps James Murdoch under the same roof as bob iger. Now reports are the board is saying to bob, you do this thats great but you have to stick around past your 2019 deadline. Ed iger is lying this never seems to end. He was going to go in 2017 and then said 2018 and now extended it to 2019. Now they decided hell have to be the one to integrate these two businesses should this deal go ahead and stick around longer. Whether or not James Murdoch comes across is an interesting question. If he ask you potentially have a world two of the murdoches running the fox and James Murdoch running or being senior at disney. I dont know. It seems weird. Too much murdoch control in one industry. But these guys are very savvy. Theyre very sort of inventive in the way they do deals so that could be part of the ticket. Alix how will well he do with the fantastic four movies. Ok. Im done. David thanks to ed from the bloomberg zone. Alix earlier today the a, c and e line are being evacuated after an explosion on 42nd and eighth. Youre looking at live footage. You see traffic coming to a stand still as well. We dont have more information to why this has happened and what could have caused the explosion but nonetheless there was one on 42nd and eighth avenue and Port Authority is now also being contained and a, c, and e lines are no longer running and well bring you updates as we have them. This is bloomberg. David its a december which is christmas and means well have a tax bill but also it means its the end of President Trumps first year in office and were starting to see people leave the white house. Dina powell well known to our audience from goldman sachs, close to gary cone has said shes going to step down in early 2018 and over the weekend we had a second person say hes going to step down and he is paul winfrey, the director of budget policy at the white house and said hes leaving as well. This isnt entirely unusual the end of the first year and people are saying its time to move on to something else. Alix is this normal for an administration . David dina powell was involved in the middle eastern and after jerusalem and could be a coincidence or related but the main thing is well welcome her to new york. Alix developing news at times square, 42nd and eighth saw an explosion, acc and e lines being evacuated. Traffic at a stand till. Alix bitcoin features trading debut triggered the 26 rally would move so big, certain breakers are triggered. 13 Central Banks meet this week to ecb, boe, and the fed a highlights. Investors say to brace next year for the steepest rate hikes since 26. President trump says tax reform is special and will press congress to get it done. David welcome on this monday, december 8. I am david westin with alix steel. Now unchanged. Es we were up earlier, but s p futures took a leg lower as we got those headlines that there was an explosion at 42nd and 8th. We do not yet have any more details on what the explosion is, but there was a risk off move, slight risk off move, to those features. Eurodollar heading a little bit higher as the dollar is marginally weaker against the euro. 10year yields overall coming in at 2. 35 . Buying pretty much everywhere in the bond market, and particular in the u. K. Youre looking at that live shot of 42nd. David there are a lot of Emergency Vehicles there. We do not know the cause or the damage, but there is a lot of response from the nypd. Can see the vehicles and a lot of Emergency Vehicles, and the train lines ago through 8th avenue are halted. We do not have any more details on what that explosion is, but we will continue to update you. Viewers not from manhattan, this is the center of manhattan, very close to times the portd close to authority, a Central Nervous System Center for new york city. Of course, police have had experience, sadly, with dealing with very some urgencies. They are all over it with the Fire Department. Alix apparently, the a ,c, and e line are evacuated. David time for the morning brief. We have a big week this week. Toks in washington today later this week, three key centralbank decisions, the fed, ecb, and bank of england. Vladimir putin will have his annual presser. An eu summit following the brexit breakthrough that happened last week. Lets see what is making headlines outside the business world. Emma Vladimir Putin made a surprise visit to syria and ordered the withdrawal of Russian Troops there. He met with bashar assad, the first time putin has been to syria since he sent Russian Forces there in 2015. The french president says tosident trumps decision recognize jerusalem as his reals capital is a threat to peace. He met with Benjamin Netanyahu in paris. Netanyahu disagrees with macron. President trump will make closing arguments on republican tax cuts on monday. This these will take place in washington. House and Senate Negotiators are trying to work out the differences between the two versions of the tax bill. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. I am emma chandra. This is bloomberg. Alix we have breaking news concerning a commodity hedge fund. Commodity hedge fund specializes in mostly coffee and cocoa trading. It will shut this month in return money to investors. Both coffee and cocoa took a leg lower. Cocoa is a little bit weaker on the news. They say the markets have been overwhelmed by systems and algorithms, that the volume of overwhelming supply and demand for metals and does not leave room to trade. The risk reward is not attractive. If it were the old world of commodities, they seem to have a difficult time closing and returning money. David robots strike again. Alix yeah, kind of. Coffee, sugar, con, they really based on weather patterns. David the world world. Crazy asset we are watching his bitcoin. It cory future sister to trading Bitcoin Futures have started trading. Julie hyman has been following this. If i can work fast enough, i can get you that chart. Julie i have a bunch of charts. Halt one . The alix yes, walk us through appear julie teachers began trading, and you had a couple of halts triggered by Circuit Breakers, when you have movements that happen too much into fast. This happens in the stock market, basically in the asset that trades. The volume we have seen thus far, about 2800 contracts have traded this far. We saw a surge of over 18,000 per bitcoin. Ishas been volatile, which not a surprise, but it has also been relatively orderly. You had some turmoil on a website, as well, crushing briefly, but it is not a surprise. Expectations with traders going into this were relatively low. They were sort of bracing for potentially volatility, potentially some kind of turmoil. Given those low expectations, it has not materialized that it has been that bad, at least not yet. It trades 24 hours a day, seven days a week. The cash settle everyday is at 3 30 new york time, 2 30 chicago time. That is something to keep in mind if youre looking for pricing. Also, the pricing comes from one exchange, the gemini exchange, which is the one run by the winkle foss twins. When the contract launches on december 18, it will draw from a number of different exchanges to come up with its price. Interesting to see this as a test case for what will happen in the wild west of bitcoin. David a lot of arbitrage between exchanges . Julie potentially so, and we have that up, as well. We have a look at the futures versus the spot price. The question is who is in these two markets, because what we have heard from various banks this far is they will not be trading Bitcoin Futures. Some banks will allow some. Lients to alix selective client spirit julie one brokerage is going for 50 d beyond, asking margin requirements, not allowing shorting. At least initially, there are some constraints being put on this. Alix breaking news from times square there was an explosion on 42nd and 8th. The a ,c, and e lines are stopped and are being evacuated. The mayor has been briefed on the incident and midtown, and that is according to his office. We do not yet know what caused the explosion, but we know the train lines have been stopped and evacuated. Information is preliminary, but there was an explosion at 42nd and 8th. A standstill in traffic and a lot of Emergency Vehicles. We will continue to watch out for any kind of headlines that cross on this news, david. Were getting reports trickling out about possible conflicts. We have to be careful not to report things unless we know it is true. I have learned the hard way that often the first information is wrong, particularly when theres that much sensitivity about things like this. We want to be careful about making sure we know what is right or just know that there was an explosion and that they are investigating. Has been the mayor briefed in all of the trains they go through 42nd street have been rerouted. They are bypassing 42nd street. Q, r,the 1, 2, 3, n, and 7 that are bypassing. Looks like no trains are going to 42nd street at this time. David top cnn is reporting that one person is in custody. It may he related or may not be related. One thing i will say is the nypd is better trained in dealing with these sorts of incidents, whether it is simply a transformer blowing up or something more sinister. The nypd is among the best in the world in doing this, with the Fire Department, in all fairness. Update onnt to markets. Look at the intraday chart of the us of the futures market. As the news broke. Now were back up into positive territory. Futures pretty much flat on the day. At the margin, there was an initial shy away from risk. The dollar did not really move on the news, still trading around 93. Trading at 2. 36 . You did see some buying coming into the market as that news had crossed. Some sort of a buy the bond feel today, the outperform over in europe. Nonetheless, a little bit of buying coming into the market as yields are down by about one basis point on the 10year. Youre looking at live footage of what looks like new york police officers, as well as traffic at a standstill. Prettyopout i am confident that is just outside the Port Authority on 8th avenue. I saw the New York Times building, as well. Alix what we know at this time there was an explosion on 42nd and 8th avenue, trains a ,c, and e lines have been shut. Other transit go through 42nd street, like 1, 2, 3, n, q, r, and 7 have been rerouted. The mayor has been briefed on the incident. We do not know why and what has happened. We will be tracking all of this for you as we continue. We take a quick break. This is bloomberg. Alix breaking news there was an explosion at 42nd and 8th avenue. Traffic coming to a standstill. It Emergency Vehicles, as well. Is nowc, and e lines suspended at times square. All other subway lines have been rerouted to not pass times square. The mayor has been briefed on the issue. We do not have a clear read as to what caused the explosion. You can see there, 42nd and 8th. A looked on 8th avenue where you see the Emergency Vehicles. It is right outside the Port Authority building. Police evacuated the Port Authority. They are trying to sort through what happened, whether anybody is responsible, and they are worried about other injuries involved. Alix on twitter, there is a news stream from these agencies. Cbs news says it appears that was a possible type bomb that went off inside a subway tunnel in times square. Bloomberg has not confirm that. According to cbs news, it could have been a potential height from inside a tunnel bomb inside a tunnel. Recipe futures took a leg lower as the news broke, now back to flat territory. When thelso saw a pop news broke. Yields move down by about one basis point. The dollar pretty much went nowhere. On the margins, a little bit of safe haven. David my experience is the first information is often wrong, but i have syrian reports about as but i have seen reports about a possible pipe bomb and reports of somebody was apprehended. The news is trickling out slowly but surely. Over the course of the day, i am sure we will get a much better picture. Dean curnutt is with us. What is your philosophy with things like this . Reactmarkets are going to to the extent that there is something that truly changes risk appetite. Risk appetite has been incredibly strong in equities in global markets. Take a lot to kind of run this market off course. One of the metrics we look for in terms of capturing the geopolitical tone right now is volatility on the korean yuan. In august when some of the rhetoric heated up between kim jongun and donald trump, that has retreated, now at a threeyear low in the korean yuan. This incident, i do not think it will be enough to push a market off track and effectively damage the risk appetite. Alix i should point out that were learning from the white house of President Trump has been briefed on the explosion in new york city. Sarah sanders, press secretary, and formed us of that. He has been briefed on the situation, as has the mayor of new york. A reminder, 42nd and 8th, there has been an explosion. Cbs news reporting it could have possibly been a pipe in one of the tunnels. No trains going to times square. Other lines, like the 1, 2, 3, n, q, r, and 7, have been rerouted. David standard for the president to be briefed with things like this. The markets have shown such resilience to geopolitical risks isall sorts, whether it elections in europe or whether it is north korea or events at home. Why are they so resilient . Dean it is a fundamental question right now. Macro risk advisors, we look at volatility as part of the risk environment. We look at whether markets have been forced into risk, the Central Banks grand plan, to lower the opportunity in sovereign markets, forcing people into equity markets. It is a little bit of a chase. It feels like there is a chase. The Economic Data is approving and there is kind of this wall of capital that needs to be put to work in the markets. I think that is part of the low vol story. David one thing that is being chased is bitcoin. One thing we know about bitcoin is it is volatile. In yes. Futures trading should reduce some of the volatility. Do you expect that to happen in the case of bitcoin with futures trading . Dean we have been asking all in s p . O ate the vol bitcoin. This is not a bad start, actually. More volume that people anticipated. But you triggered the Circuit Breaker twice in the first day, firm charging 50 of collateral on a futures contract. That actually may not be enough. I would be concerned that the volatility in the asset is so high that even 50 of the margin, it may not be enough to prevent people from getting too asset the word bubble is kind of a loaded term, but if you look back at the last atple of instances, you look the defining characteristic of an asset that may be in a speculative bubble, when volatility rises are medically as the spot prices rise dramatically, think housing bubble, thing crude oil bubble in 2008 all of these things were kind of a blowoff to the end, with volatility spiking even as the asset spikes. It is lack ofh of liquidity . There are not that many transactions. Is a good point, there is a lack of transparency, like of liquidity, and an unbridled amount of enthusiasm for it. It will be interesting when you get to listing options and using liquidity in the options. You cannot imagine with the premiums will be. They will be very high. Alix i want to update you on the breaking situation in times square. So 42nd and 8th, there was an explosion. Multiple reports, one from cbs news, the kates there potentially was a pipe bomb that exploded in a subway tunnel. All trains have been stopped. Seems that the Port Authority says the bus terminal is still open but betray my has been stopped. Traffic to a standstill, ton of Emergency Vehicles. That should be 42nd and 8th right there. We will bring you more news as it winds up coming. Nypd responding to the explosion manhattan. Uare in also joining us is harm bandholz, unicredit chief u. S. Economist. You look ofn, when Something Like this on the television screen, how do you factor that into the market . Harm first of all, i agree with dean i think the market has become numb to those types of events. We have seen north korea shooting a rocket over japan and there was a bit of it to, then the next there was a bit of a dip, and then the next day was back to normal. Not affect the underlying Economic Situation for the economy in the market. It is not changed by those there is some bigger plot behind it which requires geopolitical reaction. We do notnted out, want to talk about Something Like that. Bottom line, no reaction. That ultimately a healthy thing that we do not react to these things . Harm we have to distinguish the impact on society, on the wellbeing and the impact on the Economic Data. Still seems there to be incentives for some people to do these dreadful things. Had a report that there was someone in custody, and reuters is confirming that, saying one person is in custody. They are not confirming what type of device was used in the incident at Port Authority. The new york city mayor and President Trump have been briefed on this. At 34th street, so that is what you could be looking at. Reports indicate that it was a pipe bomb. The a ,c, and e lines have been evacuated and other train lines are rerouting around times square. David i think were looking at 8th avenue the other way. I believe that is penn station on the right, that round building. Alix thank you. David i think were looking up and the bus terminal is on the left, Port Authority on the left. Alix in the market, a little bit of a risk off appetite with the s p, now flipping into negative territory. Not a big deal, down by about half a point. But we were higher and took a leg lower as the headlines broke. The dollar pretty much went nowhere, but you might of have the 10yearg into market. Yields to down by about one basis point, almost two at this point. The 10year getting a tiny bid. A little bit of a safe haven on the news. S p futures barely down, but you lower. The move were waiting for any other official remarks that may come from President Trump or the new york city mayor. That explosion about 45 minutes ago on 42nd and 8th. Reports indicate it was a type bomb exploding in a tunnel it mb exploding in a tunnel. We will keep you updated on the news. David one additional piece of news is that the Port Authority is temporary temporarily closed. Alix it had been open. David it is confirmed that they have closed the Port Authority. It is sort of up there on the left. You are just joining us, but 45 minutes ago, there was an explosion in times square on 42nd and 8th to review are looking at live shots there. Also boys rerouted. A, c, and e not moving through times square. The port of is closed peer group boards they could have been a and they in a tunnel, potentially have one suspect in custody at we will continue following it. Toid it is way too soon know what is going on, but i am encouraged that there are no reports of any injuries. It is somewhat encouraging at this point, because you typically circuiting some one was so perhaps no injured, which would be wonderful news. Alix yes, indeed. Dean curnutt and harm bandholz are here with us. In general, all hedges have been paid off, so what do you do . Closed below 10 more times in a single year than we have ever seen before, but the bigger story is the motionlessness of the s p. Even a 10 or 11 vix, it is way too high for people who want to be defensive and express a little skepticism around risk management. Carrying the hedges its next on possible, so what do you do . We have advocated for using spreads. An example on a trade we have been active in is in the vix out to december 20, the 13, 14 call spread for 12 cents. It will not take that much for the vix two up to 14 or 15. We have seen it happen three or four times this year. It took about a 1. 5 down live from the us a fee, so just a little bit of a pump in the road is enough to make the vix essentially go up 50 . Curnutt, harm bandholz, theyre both sticking with us as we follow the incident at Port Authority. This is bloomberg. Alix following that breaking news from earlier you are looking at a live shot of men town manhattan of midtown, manhattan, 42nd and 8th. News alex indicate there was a pipe bomb and their is a suspect in custody. The a ,c, and e lines have been suspended and other trains through times square have been rerouted. Lord authority has officially closed the bus station. S p futures now unchanged on the day. We did see a leg lower as the heavens crossed about the incident in times square. You are seeing a touch, and i mean a touch, of safe haven and two other Asset Classes. The dollar, a tiny bid. Yields moving lower by about two basis points. The dollar spot index no flat on the day. Oil up by. 3 . But gold getting a bit of a bid, like 26 cents. I am pointing of the reversal in the market, slight risk off safety seeking reversal on the sidelines. David the president of the United States has been informed of this incident. Lets get more washington reaction from kevin cirilli. For us of reported the president was informed. House press secretary Sarah Huckabee sanders announcing the President Trump has been briefed on the situation unfolding in new york city. New details in terms of what the motive is, at least from the administration. The situation very much unfolding. We should also note that some lawmaker reaction has started to trickle in, mostly from the new york delegation as they look to support the nypd and to alert and disseminate information authorities. We should note that this incident is coming just several weeks after the truck incident in new york city. And we should know President Trumps reaction to that. Right now, there is no motive for this particular incident that we are aware of, but following the isisinspired thatent on october 31, truck incident, the president did call for more extreme vetting just hours after that incident. Alix you can see that traffic is at a standstill with the Emergency Vehicles. HasFire Department confirmed one nonlifethreatening injury at the scene of the explosion, confirming one nonlifethreatening injury at the scene of the bludgeon. Explosion. The david one more than what you want to happen. And deanarm bandholz curnutt with us. This is a week when some big things are happening, centralbank events, a tax overhaul bill they are trying to put together in congress, and now we have this incident in new york. And thenthe daytoday a longerterm and then the longerterm an important how do you process those . Harm we have to digest it, and that is what we are doing. We talked about trying to grasp the situation and the followup, but it is unlikely to have an impact on the Market Outlook beyond a couple of days. I think very soon the main focus will be back on Central Banks, tax overhaul, and the shutdown and all of that. Economist, what do you think is more important to driving the economy in 2018 . Harm i think it is the hope for the tax cut. We do not know how much is priced in, that there was a big riskon move for several months now, and i think it started before President Trump came into office. But there was more oil added to the fire. I think that has been the story. Looks like Central Banks finally have found the rhythm. 2015 and the forecast was three or four rate hikes but there was only one. Ons year if they hike wednesday, it is the first time they are actually hitting the forecast. I think Financial Markets will take it as a bit of reassurance that the central bank knows what they are doing. I think fiscal policy is a bit more important than the central bank. Alix i love that you brought that up because we keep talking about how the markets do not meet up with the fed while the fed always comes to the market. You are a little pessimistic on the strength and her ability on the u. S. Economy, more so than others. What do you see . Or one. 5 . T 1 or do they get that wrong . I got it wrong. Ok, 2. 5 . European banks look at annual averages. What i am writing about right 3 growthhink the rate we have seen over the past to pluck quarters in may see again, it overstates what is going on in the economy. It has been bolstered by inventory buildup, strong exports. U. S. Has a strong trade deficit, so i do not think that lasts. I think the underlying growth rate in the u. S. Right now is Something Like 2. 25 . It has not really changed for like two years. We may see strong headline numbers in the Fourth Quarter. More so you think it is timing, rather than fundamentals . Harm shocks came together the same time. Consecutivehad two corners with growth rates more than 4. 5 . Nobody was arguing that it is normal. You have times when things go in the right direction and sometimes when things go in the wrong direction. Overall, you must not look at the side effect and the underlying rate of growth is 2. 25 . I think the potential is between 1. 5 and 2 . I think the potential growth rate is a good deal smaller that has not changed. Alix nypd is reporting that no injuries other than a suspect are being reported. They do say that one male suspect is in custody. Here is what would have learned of the past 45 minutes. There was an explosion at times square Port Authority, 42nd and 8th. A ,c, and e lines have been stopped. Trains going to times square have been rerouted. The buster normal has the bus terminal has been stopped. It was reported that a pipe bomb was detonated in a tunnel, and one male suspect is in custody. No other injuries besides the suspect at this time. There was a report of one person with nonlife threatening injuries from the scene, as well. David sounds like that is the suspect. Alix if you are linking the dots. David dean curnutt, how do you put together the urgent versus which wereay, watching right now in new york, with the longerterm . Dean the urgency is about the severity. It is unfortunate, but in the grand scheme of the things we are seeing on the geopolitical and terrorist front, it is not in terms ofe infrastructure or loss of life, at least from what we know so far. It could be disruptive from the psychology, and then market psychology is incredibly strong and has been strong for a number of months now. David harm was talking about the fundamentals of the economy. About 2 , 2. 1 if 2. 25 for growth, rather than 3 . Dean markets have been prone to over extrapolation. We take what we see right now and get kind of giddy about it. Forces of institutional Money Management require you to participate. There is the fear of missing out, fomo. Are coming together. The Global Economy is in a secret eyes of suing synchronized upswing. It is not getting busters, but developed markets and emerging markets are moving together. Markets are catching up to fundamentals a little bit. The concern is it is a little too far, too soon. When a look at options prices and risk premiums, i just see no margin for error. I look at correlation it we talk as a the korean yuan geopolitical proxy, the vix itself. It is just a little buffer to protect folks from something and inevitably something will go wrong. It could be external or it could be that the Business Cycle runs into the headwinds that ultimately Business Cycles run into. I think we should step back and look at the nirvana that has been the growth in inflation experienced this year. You have got the dollar and a sweet spot, not rising too far. Inflation is in a sweet spot to her the message. The is all happening at slow pace, market friendly pace. Alix jpmorgan said what will be an Inflection Point in rescue cashts and volatility is ready for inflation at 1 , and we are at. 5 . Do you agree, and how do you see that evolving . Harm i think they have a bit more of an aggressive call than we ahvhave. I am wary about certain Inflection Points. Often morenge is gradual. Along the tone of what we have said before, the risk on environment is still there. Global growth is solid. We have liquidity. All Central Banks are still very accommodative, including the fed. So what do you do with your money . Stocks have gone up quite a bit, but is still might be a good place we think europe is a better place than the u. S. Because there is room to grow. Alix interesting. An update on the breaking news, our top story. There was an explosion about an hour ago on 42nd and 8th avenue, Port Authority. The bus terminal is closed and train lines are being rerouted or suspended to times square. Nypdis what we noted the is saying there is no injuries other than the suspect, and one male suspect is in custody. Governor cuomo is at the scene. The new york mayor and President Trump have been briefed. Multiple reports indicated could have been a pipe bomb in a tunnel. We now know the suspect has been taken into custody. No injury except for the suspect. We will be updating a much more as we go, david. Toid it was first reported the Fire Department at 7 19 this morning eastern standard time. The explosion happened were two subway tunnels intersect, basically under the Port Authority. Marketn terms of reaction, it was a tiny, modest, risk off move. By about onep now point, so recovering from any kind of down move. A did see s p futures take leg lower and saw a touch of buying into the bond market. Dollaryen basically flat on the day. A little bit of money coming into gold, but gold has given up a lot of its gains, now off by about one dollar and ounce. Looking at the treasury market, as well, on the terminal. For the yields, off the lows of the session. We will be following this as a develops throughout the day. This is bloomberg. Alix the breaking news of the morning an explosion on 42nd new york city. In we have a reporter on the ground. Where are you . Erin i am at 43rd street and 8th avenue right now, looking south, about a block north from the station. A pretty big crowd here right now. Andce tape starts at 43rd there is aligned of armed officers keeping everyone away. That the neweems York Police Department is saying they have one suspect in custody and there are no other injuries other than the suspect. What else do you see on the ground . Erin a ton of rescue personnel, a few hospital vans, ambulances, a stretcher out. I have not heard or seen anyone coming out, anything like that. And the carsens, really start at 46th street. Pretty much everything on 8th avenue up to 45th is just, you know, like fire trucks and police cars and no other traffic coming down here. Ared give us a sense, there more Emergency Vehicle still coming to the scene or are there some leaving . Is it the flow . Same number. He i have not seen any coming or going. Coming here, i saw sirens, but it has been about the same number for the past 10 minutes or so. Outd are people being kept of the area . What about people on the streets . Erin they are kind of just watching to see what is going on. A lot of people taking cell phone video. I heard a few people frustrated they cannot get to the station. I do not think they realized what was going on at first. Kind of just people stopping and looking right now. No one seems scared. It is pretty calm. David how far is the perimeter away from the Port Authority . Erin excuse me . David the perimeter, how far away from the Port Authority is it . Erin about one block. Alix not that big. In terms of the other news we know, there are no trains going through Port Authority, and a ,c, and e lines have stopped service. Other train lines, 1, 2, 3, n, q, r, and 7, they go through times square have been rerouted. The bus terminal at Port Authority has been shut down, as well. Governor cuomo is on the ground. The mayor has been updated, and President Trump has also been updated. Thank you very much, erin, for joining us on the ground at 43rd and 8th avenue. David dean, we have been talking about the effect this does not have on markets and we have not seen a lot of market reaction. How big does it have to be for the market to react . Dean either physically deceptive, so the terrorist attack from 9 11 was tremendously physically disruptive to exchanges. The exchanges had to close. Of course, there was a large social and psychological impact. I think it is when something that, even if it is at a mass scale, stops the end looked at as an isolated incident and something starts together momentum on a rhetoric standpoint and the judo political front and the geopolitical front. You follow the heated rhetoric, and i think that is where you start to get concerned that the brash talk can become something more an Impact Market psychology. New york times is now reporting that two people are in custody, there is a second. It was a fear1 that the terrorism would have to Chilling Effect on the economy and would interfere. Has there been a negative effect on gdp growth in the u. S. Are globally because of the influence of terrorism . Harm after 9 11, the u. S. Moved closer together and there was a lot of stimulus coming into the economy to prevent the negative effects of the economy. It was the central bank and car dealers offering incentives, all that stuff. Many households were just happy to take the incentives, those who were not directly affected. Broader, talking about potential growth and the longterm trend, we see that these numbers have deteriorated. I do not think it has anything to do with fear about terrorism. David even beyond fear, what about security measures . More the airport today than we did before, and we have barriers up all around. Even at the ports. Has that affected growth or trade at all . Harm i mean, longer wait times and stuff, that is bad for productivity. Is oblem as economists we have had so many improvements with better security measures, so you can make the case that it is in isolation, and without this, there would the even if it affects millions of people, the overall impact on productivity is really small. Alix lets wrap up the breaking news you are looking at 42nd and 8th avenue. There was an explosion about an hour and change ago. It was the intersection of two subway tunnels. David where pedestrians go. Alix it looked like it was a pipe bomb explosion. That is coming from multiple news outlets. It is reported that there are now two suspects in custody. The new York Police Department saying only one individual has been injured. It appears that would be the suspect. No official word yet on any p staking claim or david taking credit. Alix claiming responsibility or the nationality or religious affiliation to the suspect. In the market, the middle of a risk off tone, but that seemed to reverse itself. The s p now back in positive territory after moving lower on the headlines. There was a risk off move into the bond market, some buying at the margin, but that has dissipated somewhat. Some money moving into gold, but that has also dissipated. So a modest risk off field. A similar story with the vix, well off the highs of the session. Much more coming up. This is bloomberg. David we returned to breaking news, a live shot down 8th avenue, just about at 42nd street. About 7 19 this morning, the Fire Department was called because of an explosion at the intersection of two underground subway tunnels, just about where the Port Authority is. Several subways go through there, and they have closed the a ,c, and e lines. New york police have reported they have at least one suspect in custody. Apparently that suspect has nonlifethreatening injuries. The New York Times is reporting that there was a second suspect. Nbc news reporting that this is being investigated as a terrorist activity potentially. It would not be surprising if there was a possible terrorist link. The mayor and president have been informed. Governor cuomo is on the scene at 42nd and 8th avenue. Alix Governor Cuomo saying the Fire Department and First Responders are still working to secure the area. Here is the market reaction. Back to normal is how we are in the market. We saw some price action. The s p did take a look lower as the news broke but has recovered, now in positive territory. There was more buying coming into the treasury market, modest buying into the dollar market but still negative on the day, and that seems to have stalled. Some money coming into gold, but now gold is down about one dollar an ounce. 2. 36 on the 10year. The reaction in the market having some kind of laws as we try to digest the news of this attack in times square some kind of positive public briefing will happen shortly. This is bloomberg. Cannot live without it. So if you cant live without it. Why arent you using this guy . It makes your wifi awesomely fast. No. Still nope. Now were talking it gets you wifi here, here, and here. It even lets you take a time out. No no yes yes, indeed. Amazing speed, coverage and control. All with an xfi gateway. Find your awesome, and change the way you wifi. City, i from new york am jonathan ferro. This is the countdown to the open. Ataking news an explosion new yorks time square. Lets get straight to emma chandra. Investigating and exposing in manhattan. According to the associated press, an explosive device was set off on a subway platform around 7 20 a. M. One person has been arrested and one person has been treated for injuries. Morning thrown the commute into chaos. The white house says so and the president has been briefed. Emma chandra, thank you. 30 minutes away from the opening bell. Looks Something Like this no big moves off the back of that 1. 1778. U eurodollar at largely stable for the u. S. Dollar and g10. As far as features are concerned, dead flat as far as futures are concerned, dead flat. 2. 37 on the u. S. 10 year