, i still bit coin see a Financial Stability risks. Often, risks threatening Financial Stability rise when there is exposure of the Banking System to fluctuating asset valuations. See anyally dont significant exposure of our Core Financial institutions to threats from bit coin, if its value were to fluctuate. See a threat to our Core Financial institutions. Undoubtedly there are individuals who could lose a lot of money if bit coin were to fall in price, but i really dont see that as creating a fullblown Financial Stability risk. Michael mckee, last question. I suppose i should be asking you a valedictory question, but i dont you can topple you have already said, some of a do a couple of cleanup questions. President trump all you were speaking said he thinks his tax plan will produce 4 growth. Do you think that is possible . Second, do you think that there is any fed blame or complicity in the flattening of the yield curve and do you worry that their might be some sort of policy mistake built into that that could slow the economy . The last question, a bit of a valedictory, one that everyone has wanted to know for four years. Can you tell he which is yours . The answer is no, i have never been able to reveal ot is minemine di and im not going to change it now. ,y assessment, as i have said the impact of text tax policy on growth has been informed by my work as the joint committee on the joint committee of taxation with other analysts. Everyone recognizes that there is some certainty on the economic effects in what they would be. I wouldnt be willing to worry out. Le anything but in terms of growth as you mentioned, if the package were , let me justgrowth say again that the Federal Reserve would welcome that. If it is favorable to see supplyside as compatible with the attainment of our employment and inflation objectives, that very,ething that would be very welcome, but it would be challenging to achieve numbers like that. I think that you then also asked me about the yield curve. There is much discussion about yield curve in versions and whether or not a flattening yield curve could signal recession. Is that the brunt of your question . If there is a policy mistake embedded in that. Chair yellen this is something we have discussed and looked at. The yield curve has flattened some, mainly the flattening yield curve reflects higher shortterm rates. The yield curve is not currently inverted and i would say that withinrent slope is well the historical range. Between a correlation yield curve in versions and recessions. Let me emphasize the correlation is not causation. I think that there are good reasons to think that the relationship between the scope of the yield curve and the Business Cycle may have changed. That is that the expected average value of the yearsrange is set for 10 and the second piece of it is a socalled term premium that often reflects things like inflation and inflation risk. Typically, the term premium historically has been positive. So when the yield curve has meanted historically, it that shortterm rates were well above average expected rates over the longer run. Thats what it means. Typically it means that Monetary Policy is quite restrictive. Some of those recessions were situations in which the fed was consciously tightening Monetary Policy because inflation was high in trying to slow the economy. Well, right now the term premium is estimated to be quite low, close to zero. That means that structurally, and this can be true going forward, its likely to be flatter than it has been in the past. It could more easily invert if the fed were to even move to a slightly restrictive policy stance. You could see an inversion with a zero term premium. I think that the fact that term premium is so low and the yield curve is generally flatter is an important factor to consider. I think its also important to participantsmarket are not expressing hyper concern about the decline of the term premium. And when asked directly about suggestion, based the it as low and i would concur with that judgment. Thank you. Chair yellen thanks very much. Tom we welcome all of you on Bloomberg Television and Bloomberg Radio worldwide. The 15th chair of the Federal Reserve and what is assumed to be her final press conference, answering some pointed questions, including three in a row from our Michael Mckee at the end. I think that this has been an absolutely extraordinary press conference and i can honestly say i have never seen the combined news flow. ,he cacophony that we saw scarlet, crossing over. Scarlet President Trump was giving his Closing Argument for the tax growth. He predicts a jeep gdp of more than 4 . Tom this is the actual terminal i use every day. You can see that down at the bottom of this terminal, trump predict Economic Growth of more than 4 . Jim chanos calling bit coin speculative with decades of experience. Hes our chief content officer and he ran our washington shop for too long. Marty, i have never seen out of washington but i just observed, which was the chairman of the uptral bank buttressing against the president on 4 Economic Growth. But thats the political heat right now in washington. Marty that also speaks to how Donald Trumps strategic operation in the white house doesnt care about janet yellen having a press conference and what it means for the markets. Donald trump was going to speak at 3 00 and thats when it that she spoke. Tom do you assume that a tax bill is a done deal as we go into this wednesday evening . Marty in this political , i dontnt and year think that you can actually say with any certainty for sure, but it is beginning to look like there is an air of inevitability about it. Certainly the democrats feel that way. Just an extraordinary moment there, finishing up in front of the chair, the noise across the bloomberg terminal was just amazing. Certainly. Conflicting headlines from two sides of government. Talking about the tax bill or tax cut that is inevitable at this point, it got more dire for republicans to pass something before the end of the year following this special election in alabama. Marty when was that question mark 12 hours ago question mark [laughter] scarlet yes, it was. Marty there is no more impetus to mature they get this done before they see the new democratic senator from alabama and i think that they will. The plan is for the house vote on monday, president ial signature next wednesday. Scarlet the senate vote marty the senate is the issue. Scarlet collins has not committed. Marty she is playing her hand well. Shes going to play it through to the end. She has leverage. Tom it seems forever ago, 10 days ago, 12 days ago, i asked pass apass, how do you bill that is so unpopular with the public . You were talking about the poll from monmouth university, but how is the polling for this tax legislation . I think the public just thinks there is a dysfunctional washington and they havent done a great job of selling it to the population. Donald trump made point in his speech today that the average family making 75,000 would get a 2000 tax cut. Its not resonating with the public weary whats really interesting is that no one really knows the implications of this tax bill. They have not held hearings or spoken to experts. No one really knows what effect its going to have on the economy, on business, on behavior. Its basically a crapshoot. Republicans are using that in their favor. Steve scalise was saying that in response to the polls, many think that their taxes will go up. Before the reagan tax cuts, a lot of people didnt think that their taxes would get got and in fact later on they did, so hes using that as a model for eventually things will be right. Be right, buty the fact is, nobody really knows. And the legislative language is so important. Of unintended consequences is so real it comes to this legislation, no one knows for sure whats going to happen when this becomes law. You so much. Jim chain os, on fire across the bloomberg. Good morning on television. Good evening, i should wait, morning, evening, im lost. Is the sun still up . Good afternoon on bloomberg as we welcome you to the to our fed coverage. The market was up larger earlier. The vix was at a 9. 8 level, coming to the 9. 3. These are extraordinary moves in yield. Moving a solid six or seven basis points on the twoyear hours tor the last 24 reveal in two basis points the fed announcement of another two basis points in the balance of it, coming off of the Yellen Press Conference as well. This headline off of chain os comments, he goes on and this is. Really fiery email saying that the tesla departure is similar to enron before the fall. He has been talking and warning tesla for months now. Still with us is Michael Mckee. Hes coming out of the meeting there, the News Conference with janet yellen. Now joining us from chicago, the former fed governor who is now an economics professor at the university of chicago blues spool of Business School of business. The chair answered a question on the fell at ming yield curve. Or the pastn experience of an inverted yield curve signaling recession. She says we are not there yet. What did you make of her explanation . Think we have been seeing a significant decline in expectation and the risk of higher inflation. That is something that has been very different than in the past. If that is the key thing driving the flattening of the yield curve, its not as much of an issue or challenge. If its other factors that people are expecting, not much growth or demand for investment, thats more a problem, but i dont see that being the case. I think its more of the lower inflation expectations. Before we get to Michael Mckee, there is a your running on wall street for a normal fixed income market. For a reset to a normal 2006. Is that a hope and a prayer . Is that a myth . Is that a bad fear he . Can we ever get back to a normal or real nominal yield structure . Normal israndy always evolving over time. What was appropriate in the appropriate for today. There have been a number of forces, like the aging of the global population meaning that less of ae less with supply of savings for the global economy. All other things being equal, thats going to start to raise Interest Rates and in and of itself we are going to see some of those Interest Rates start to come back up. Will it be the same as before . Differentare demographics and different demands. We will get back to a normal situation but that doesnt mean its the same as before. Has it that mr. Mckee will be strung up on the Federal Reserve system rack after his rudeness with chair yellen. Michael, you did not discover doth. Is chair yellens, is chair yellens, but what did you gleam from the dynamics even the you dont know which one is hers . [laughter] mike i have to say, you so my question. See unusual you would stronger growth forecast with lower unemployment and no move in inflation. If you are a belt curve or, you should be forecasting that. There does seem to be disagreement in the open Market Committee about where inflation goes from here and how quickly it will ramp up. It will be interesting to see in the Administration Whether there is any kind of change in the way that they analyze inflation dynamics and the way that they react to them, whether they will continue to move the rates up because they think they need to be ahead of inflation or whether they think they can be more calm, more reactive to the economy. Also interesting that janet yellen suggested that the fed has looked at, all of them have look at the growth box abilities from the tax plan and so far they dont see it causing enough growth to boost inflation. Even though she wouldnt say it, it would lie to the 4 growth comments by the president. The fed at this point is steady as she goes no matter what winds are blowing outside in washington. Scarlet and whats happening in asset prices, too. Looking at the coin or the stock market, governor, when you listen to the chairs comments bit coin,ds to everyone tried to bait her on those comments and she wouldnt say much beyond that. She didnt see much risk from bit coin. At what point in a rising stock market would speculative mania in bit coin start to concern the fed and prompted them to say a little bit more . This far as she sees it right now, bit coin, while getting a lot of attention is still a relatively small amount on assets, given the world size of the asset market. Not a lot of direct bank exposure. The channels for fragility are not as clearly there, but they will be monitoring this just as they would monitor any rapid asset Price Movement to create interconnections and fragile interconnections that would be large enough to have an impact. What you go back to are saying before about the impact on growth. The fed raised its forecast for last year my almost half of a percentage point that made no change in inflation and a gets to what janet yellen talks about with respect to the tax reform. There are two parts to it. One is something that will affect longrun productivity growth, increasing the underlying growth rate to the economy. If thats the main effect, that doesnt necessarily mean inflation, so the fed doesnt have to offset that. Even if its just stimulus boosting demand, the feds going to respond. It seems that the people in the fomc who are boosting their growth rate are thinking of a longerterm type of thing and it wont be generating as much inflation. Thats how you kind of square the circle with higher growth but not a higher inflation forecast. Tom one more question and then we get you back here today at the booth school. Help us with potential gdp. All of these discussions seem to be about the glide path involving the mystery of many plugins. Does randy croson or, with your prodigious map abilities, do you have a clue of potential gdp . We have rough estimates, they are quite rough. One in three quarters to about 2 . We havent seen the final details of the tax plan or the analysis of it. Inducethe possibility to growth. Im not sure how much, but it would probably boost the underlying potential growth rate. Of 2 k that in the range to 2. 5 in the long run, thats perfectly reasonable. Ultimately Economic Growth is the number of hours worked and that is productivity. An aginghat we have population so we will have a few more hours worth. Canuctivity growth, then we get higher growth rates in thats where the debate is over the tax plan. How much is it going to boost productivity growth . Tom professor, thank you so much. Us today. Zner, with extraordinary day, i didnt expect these nuances. Scarlet especially the competing headlines between President Trump and chair yellen. We want to welcome everyone on Bloomberg Television and radio. This as we say farewell to chair yellen and her tenure in her final News Conference. We want to welcome our chief u. S. Economist and our chief rates strategist. The biggest take away for you, from chair yellens News Conference and the statement on Economic Projections . We went from goldilocks to goldilocks to even goldier still. If you add up in the initial forecast statement. Dropped chair yellen the punchline in her press conference, saying the reason you could get that much more growth was due to the expectations of stimulus in the economy. Nonetheless, we are getting free growth year. Unemployment getting below neutral growth, advised of more in the near and mediumterm. With no change to the underlying profile. Perhaps the prior guest was accurate on productivity rebounds here. Perhaps the favorite point will be the neutral rate is actually lower than what we are expecting. We have seen it drifting down. I expect we will see it moving lower as we get the rebate in march. The observation on the tax discussion . Mike nothing much changed in the forecast except for the added growth in the tax program. The fed chair did not sign on to the administrations view of how much administered growth could be produced. Lets listen to what she had to say. Yellen it will likely provide lift to Economic Activity in coming years, but the magnitude and timing of the macroeconomic effect of any tax package remain uncertain. Said that most people on the fed did incorporate some stimulus into their projections, but they were informed by the work that has been done by the various neutral scorekeepers who have looked at the tax program and found nothing more significant than perhaps a point or two of growth in the near term. She did point out that we are going to see the growth affects in the forecast drop off rather quickly. The question is, would they be wrong . Thats what we dont know. Tom never a neutral scorekeepers, i rough, your ira, your market moved more than anyone off of these meetings. Why are yields lower at 4 p. M. This afternoon . Those discussions of growth and not getting a huge boost from tax reform tom that was a surprise. Ira that was a bit of a surprise. Next year you are likely to have the more hawkish members actually voting, but the fact is you didnt have big changes and what you saw was expectations for the terminal rate actually coming down. When you look at what changed along the Treasury Curve it was the fiveyear notes that out performed after janet yellen started to speak and talked about the growth potential. Scarlet how do we think about and look at the yield curve from here . Beingight now whats price for the end of next year has the yield curve flattening, depending on what you are looking at. That seems like a reasonable. Mount for the curve to flatten especially as the Federal Reserve realizes its hike due to the markets operation that is pricing for this possibility in the Options Markets that are looking at the potential for even more than two hikes. Tom what you have heard today is chair yellen is all over good people. Are they working out of textbooks . Are they flying blind every day . I think they still believe that the phillips curve is alive and well, though flatter than it was historically. Lot ay now is a bunch of green men in the building that were starry i supply side ors who wanted more Growth Without the inflation and it boils down to what i think was the first question that President Trump asked jay powell when he was considering him for the fed chair post. Squelchlt not trumponomics with more aggressive fed rate policy and we are seeing the evolution of that. Get finalets thoughts from our Michael Mckee, who is in washington at the Federal Reserve. Michael . The thing that strikes me is that legacies take time to be written and as janet yellen leaves the stage you have to give her credit for what shes accomplished. Unemployment at 4. 1 and the fed sees it going to the threes. Steady growth in the 3 range with low and stable inflation that doesnt influence consumer decisions. All in all that is exactly what would have wanted to accomplish if you were a central banker. Scarlet and tom . I completely disagree with 2018, i think we will see some substantial surprises, like we saw a weaker dollar through the spring and summer. Its pretty clear that certitude doesnt get you anywhere in this environment. Michael, thank you. For both tom and myself, that does it here. Have a great day. What did you miss comes up next. This is bloomberg. [cheering] [closing bell] whatd you miss . The fed is maintaining its timetable for three rate hikes next year. Joe if you are term tuning in live on twitter, we want to welcome you to our closing bell coverage. It, its a julia put mixed day here for stocks. Its gains0 giving up in the final minutes, the dow still rising to a light record high when you look at it. He got the Rate Decision from the fed. The market was substantially higher up until about 3 00. The gains evaporated, not big losses, pretty minor stuff, but couldnt hold on. Big moves were in currency and bond yields, which we will get to shortly. Lets go through some individual names. Caterpillar rising to a record high. Global Machinery Sales continuing to improve because of renewed strength in latin america, suggesting that the worst may be behind brazil as it recovers from recession. Global Machine Research sales were fairly decent and it accounted for the gain in caterpillar shares. We are also keeping an eye on 21st century fox. As foxest headline here and disney continued their discussions over sales and assets is that they have maintained a real estate portfolio, including the studio lot in los angeles, when they do sell that chunk of assets to disney. Discussions continue and we will bring you those details when it does happen. Cinestar, boosting production from apple for a maker of Laser Technology for the iphone x because of the facial recognition features. That was announced earlier this year. The goal here is to create more jobs in america. Lets take a look at those Government Bond yields. That really was where the action was today. Move, but really i want to focus on that twoyear. As they didnt upgrade or increase the number of expected hikes. No indication of that. That really kicked some wind out of their sales. We had this incredible selloff in rates starting around september 9 or 10th. Basically straight up. This was the biggest oneday a basis point basis in the twoyear yield since that selloff. We will see if it is a lip or a start of a trend. 2. 35 on the 10. Julia the fed, still behind the basis point hike in 2018. As joe was saying, the story the dollar snapping its longest winning streak in almost two years and it begin began with that u. S. November inflation rate rising less than expected and the fresh daily low points asfomc raising expected but not getting any further as far as an upgrade to the rate hike we could have seen in 2018. Dollaryen also in focus, down 9 10 of 1 . The japanese yen, even though im showing you the level there, and also showing you whats going on in sterling as well. Changingnteresting, the government bill. This is the one that in shrines all eu law and domestic education. Now is ites guarantees that parliament will get a meaningful vote at the end of the negotiations in 2018. They basically have the power to veto the treaty if they do not like the terms of the agreement. You know, 7 10 of 1 on the sterling here. Still for those who want a at somen brexit and point in the future. Guys, i want to show you this timeline and whats going on in emerging markets year to date. This is the currency index in 2017. As you can see, it is up a much steady rise. What they have done their, marked all the bad news moments just to give a sense of the resilience we have seen in the end. Tightening Monetary Policy, the firing of the finance minister, the referendum in turkey. The brazilian political crisis intensifies in may. The saudimber, crackdown. South africa downgraded to junk and no deal. Nafta deal. Year. Hat a finally, on the commodities front, nymex crude selling off a little bit. Gold gaining. The Precious Metals gaining today, kind of the flipside on that decline of rates of people buying anything safe haveny. Silver, up 2. 6 . The flipside of yesterday. Yesterday, u. K. Natural gas prices surging in austria. Today, thet all back price is down about 9 . Scarlet whatd you miss . Janet yellen gave her take on newsconomy at her final conference as head of the Federal Reserve. Commenting on the potential impact of the tax legislation making its way to congress, heres what she said. Chair yellen changes in tax policy will likely provide left to Economic Activity in coming years. The magnitude and the timing of the macroeconomic fix of any tax package remains uncertain. Scarlet joining us now to discuss, gina martin adams. Her answers during the News Conference were pointedly different from what President Trump said, which is that we will get gdp up over 4 or more. How does that play out in equities . Its really interesting, the equity market is totally ignoring whats happening on the monetary side. The fed is slow and steady as she goes, right . Focusing on the upside from tax policy, you cant really disentangle the two of them. Tax policy, if it is to be truly effective, you will see an improvement in a, growth and a follow on in inflation pressures that could incite the fed to move faster. For now, the equity market is saying no, thats too far in the future. One way that that would happen and yellen addressed it is the supplyside response. Suddenly of Companies Got more efficient and expanded their capabilities, thats theoretically how supply would increase. Through seen any feed from this tax policy to increase Capital Expenditures boosting the capabilities of this economy . Gina you could. I say that with a heavy grain of salt. I do think that you will get capex recovery with or without tax policy. No matter what is in the policy. Yes. We have had this sort of delay in Capital Spending as a result 2016. Energy spending in those companies pulled back tremendously. Looks like funding has been weak or the next year. It is starting to show signs of improvement and we will see recovery into the years ahead the. If you get stability and all the tax uncertainty, no matter what the plan says, having a plan in place allows for uncertainty on companies that might have an holding back to spend more. When you talk about the companies themselves, what do task . O when devolved from most of them will buy back the dividend. Just because they have more money that they would normally spend on equipment or some other form of cap ask, they got to see capex, you got to see the cycle giving a strong boost going forward. Julia we keep asking questions about at what point does the snapping of the yield curve, potential inversion of the yield affecting018, equities. Can we make a judgment about volatility and say that the further snapping of the yield curve for invasion inversion will mean more volatility . Julia when it first inverts, stocks gina when it first inverts, stocks take about a year to peak. What you do tend to see is volatility picking up first. There is some underlying weakness that emerges. It really is through volatility when the price changes become more volatile and dont necessarily go negative. Thats usually the way that it works. Worked in 1999, 2007. Watch for volatility to increase first as a leading indicator. Wonder if it is 2018 or 2019, given the lag in onset. Gina it just keeps getting pushed back. Julia thank you so much, gina martin adams. On a programming note, we will be covering all of the Central Bank Decisions this week as regards the fixed income market this friday. This week the show will be held at j. P. Morgan Asset Management here in new york. A bit of a change of scenery there. Coming up, the president s closing pitchfork tax reform. What provisions will make the final cut . He will head to washington, next. This is bloomberg. Mark im Mark Crumpton, with first word news. President trump says an agreement on tax reform legislation is very, very close. But keep republican lawmakers have yet to commit their votes. Bob corker says that hes still undecided. He was the only republican to vote against the bill in the senate. Said shelins of maine wont confirm her support until the conference report is filed on the tax ill. Senate Majority Leader Mitch Mcconnell says that on tax will include the repeal of the mandate for individuals to buy health insurance, a core part of the if or dual care law. The Senate Version of the affordable tax bill proved earlier this month approved earlier this month had to repeal, while the other bill did not. House republicans are in support of repealing the mandate. That tina smith will be an excellent u. S. Senator in his place. The governor of minnesota wrote for appointed smith to fill frank ands seat until a special election next november. Franken announced his resignation last week amid growing Sexual Misconduct allegations. Sexualharassment is disrespectful to people and it cant be tolerated. And i think it is quite interesting, we are in the middle of a sea change in attitudes about this right now. I think that in some way it is being led by young women who tell women of my generation that some of the things we put up with during our lives we shouldnt have to put up with. Smith mark smith said she will run in the special election. Theresa may suffered a serious defeat for her key brexit law. Both european lawmakers and the conservative parties the fighter orders and gave armament veto power over the withdrawal treaty ,efore the u. K. Leaves the eu changing the bills so that it guarantees that parliament will get what is called a meaningful at the end of negotiations in 2019. Global news, 24 hours per day, powered by 2700 journalists and in 120 countries. Im Mark Crumpton, this is bloomberg. Whatd you miss . . The tax overhaul, with a wave of prosperity coming with it going to President Trump. Congress has reached an agreement on tax legislation that will bring tax relief for American Families and for American Companies erie of the typical family of four earning 75,000 will see an income tax cut of more than 2000, slashing their tax bill in half. Here with us now, craig gordon. Our Washington Bureau chief. The question is, can they get the votes to parse this as legislation question mark talk us through the details that we believe will be included. We have gotten glimmers of information. Craig the biggest change right now is the Corporate Tax rate, which donald trump fought very upd to get to 20 will pick to 21 , paying for a lot of the things they want to do in the bill, including allowing the top individual tax rate to fall from 39 and some change to about 37 . The wealthiest americans will get a smaller tax hike in the new year. I have to say, it goes counter to what donald trump talked about in the campaign, that this would be a tax cut focused heavily on the middle class. Really, a lot of their attention has been focused on tax relief for the wealthiest americans. Those are the big changes. Ridow that they are getting of the obamacare individual mandate, as Mitch Mcconnell told us. They do seem that they are coming coming close to getting this done with holdouts in the senate. I would expect the bill to pass. Cragg, there have been all of those stories of republicans in hightech jurisdictions, who like everything about the tax but the salt stuff. Is it basically a sop to new york city republicans . Thats right. That is if you can find a new york city republican, arent too many of them. But this was hitting folks on the same local taxes and we make it up with a higher rate. Right now he will be capped at 10,000. They are sort of robbing peter to pay paul, there. For a lot of folks around the country, it is a bit at odds with what donald trump said he was going to do. Talk a little bit about the holdouts, potentially, in the senate. Susan collins has not committed to this version, yet. Said that this remake doesnt address it at all. They said they did nothing to the concern on deficit increase. I would expect him to be in the know column. The other one might be susan collins. She got a variety of different promises. Mostly that there would not be cuts to medicare in this bill or in the coming budget fight. Im not totally sure how they will hold her feet to the fire on that. Lastly, jeff flake, from arizona, of course another retiring senator. Its not clear that hes a yes on the floor. Feels like they have a lot of momentum right now and they can afford to lose two of them and get away with it. Julia recriminations have been flying thick and fast in light of the loss of the Alabama Senate seat in the election. What do we make of this . Does it come down to one man and the allegations against him . Or does it Say Something more about the gop and can we spin it to the midterms . And in the shortterm, what does it mean for policy . The one piece of good news for the republicans is that doug jones wont take his seat until probably in the new year. Luther strange will still be the senator from that state and hes a yes on this bill. That election should not affect tax reform. They can feel good about that. The biggest problem for the republicans is look, alabama is hasnt elected a rebuttal democrat to the senate and 25 years. There is no reason that doug jones should be headed there as a democrat into the senate. Even with the support of donald trump and steve bannon, roy moore being a prominent figure, andt of people came out sent a pretty loud message to the Republican Party that they wont stand for that sort of candidate. The larger message for democrats is that there is a sort of resist vote out there. They have had trouble in past elections when Barack Obamas name wasnt on the ballot getting the democrats to come out. There is some evidence in virginia, new jersey, now alabama, that those voters are upset and restive. Very bad night for the Republican Party. certainly was scarlet certainly was. Thank you for making sense of those developments for us. Coming up, data behind the best and worst performing sectors. Charts you cant miss. This is bloomberg. Scarlet whatd you miss . We are bringing in the streets top technicians. Abigail . Abigail joining me today is jeff white, chief Technical Analyst at clearview. Thank you for taking your time for us. Jeff always an honor. Of course the s abigail of course, the s p 500, upon its record highs. Lets talk into the bloomberg to use one of its great functions. The group rate returns see if you can break this down for us and take a look. Up top, no surprise to you or , with one of our other charting experts concerned if there was a sector declining to the tune of 20 . Not even close. I would love to know your technical perspective on the Energy Sector. Jeff well, when i look at the Energy Sector, it needs some work. It needs to close above the 71 area for a chance to get to this line zone. Which is in a 75. 5 monthly closing area. Being a technician, and my , can vouch for this, this is equivalent to the number of people who live in ghost towns. If one looks at the january, 2015, or the end of 2014 monthly closing low and the december 2016 monthly closing high, you will see how a prior low when broken became a closing high area there. On a longterm basis if someone says where do we need to go to have that above that Energy Sector moving on in investment basis . That would be the signal for bullish, above 75. What about the Technology Sector in the nasdaq . Jeff this is an interesting chart and the reason it is is because a lot of folks think that just because an index, or a stock, makes a new high, even an alltime high in the case of the nasdaq, theres no further resistance. Not true. This is an example of that. This trendline dates back to Early September of 2006. And then you will see in the box area on the left, a second daily closing high. When i extend that line, notice the you have two highs in first half of june, either on or darn close to that line, which is also in the boxed area. That line is now approximately 70457050. That will be a zone where is looking. That vicinity is what i would point out our daily basis. Meaning you think the nasdaq is going to had significantly higher. Jeff yes. Until and otherwise proved why the market in in itself, its in an uptrend and it is a generally bullish market going into the new year. I dont look at sentiment. I look at structure. Thats the key difference. This is a market that has looked high but has gone higher and we have broken out of some key trendlines. That the xles say goes in the other direction, is that a concern you would keep no, not as . Jeff long as there is fresh leadership. Abigail what would cause you to not have his bullish view . Jeff if the big indexes show weaknesses for the several months. 27 35. Ow abigail thank you so much. Scarlet all right, abigail doolittle, thank you so much. Up next, turning cigarette butts in dirty diapers into cold hard cash. We will discuss. Craig im Mark Crumpton mark im not Mark Crumpton. Rod rosenstein defended Robert Mueller after facing questions about antidonald trump Text Messages exchanged between two fbi officials assigned to the russia probe. Rosenstein told the panel that he saw on okra no cause to fire mueller and saw no pressure to do so. The decision came one day after the Justice Department provided hundreds of Text Messages between an fbi counterintelligence agent assigned to the team and an fbi lawyer who was on the same detail. The suspect in the attempted suicide bombing in manhattan appeared before judge from this hospital room. And if convicted on charges of providing to real support to a terrorist group, use of them weapon of mass distraction, and three bomb related counts. Theoud abbas is calling on u. N. To replace washington as the middle east mediator. He focused on a summit in turkey where arab and Muslim Leaders them to as an trump us recognition of jerusalem as the israeli capital. Might notggested he cooperate with their administrative efforts to negotiate a peace deal. The state Department Said that they would continue to work on a mideast peace plan that he believes will benefit israelis and palestinians. Global news, 24 hours per day, powered by 2700 journalists and analysts in 120 countries. Im Mark Crumpton, this is bloomberg. Scarlet u. S. Stocks did rise today, if you are in the Dow Jones Industrial average. The s p 500 turned negative after the decision to raise for 2018, butmove not the number of rate increases for next year. The big moves were really in treasuries, which rose, and the dollar that declined. Biggest in the wake of that press conference. One mans trash is another mans treasure, or rubbish, in my case. A 24 million business around the belief that everything, from cigarette butts to old chewing gum, can be recycled. He is the founder and ceo of paracycling and he joins us to say how he sees the new economy. We kind of explained that there, but talk to me about what your business does. 2 eliminatele 1, the idea of waste. If you think about it, waste only came onto the scene in 1950s, when two things happened, complex materials and consumerism. Tote Management Companies is their job is to get things done as cheaply as possible. Julia and convenience. Scarlet you are trying to raise money through a preinitial Public Offering and take your pitch on the road to davos in 2019 as well. Talk about what you have seen and what you hope to accomplish. Tom we have had tremendous success so far. Theched the words worlds first shampoo bottle made from 25 ocean plastic. We are just now waiting on confirmation from the fcc. Really we are focusing on this new for new style of fundraising that allows us to crowd raise for equity. Butally that isnt allowed, now that we are a profitable business and operate in 21 timeries, its the right to do that and gives us the taste for what an ipo could look like. We have been showing images of some examples of waste being turned into products. What about the energy expended to go into it . It of course requires energy. How does the Environmental Impact workout in the end once you figure out what that takes . Tom thats a great question. Many thing recycling, of course , theresransportation processing, you got to shred things apart, make them into new products. When you compare that to the environmental cost of extracting materials from the ground again, its significantly better from for the environment. When you just look at landfilling, its not that expensive to do it. But then you have to extract things from the beginning again. I get that its damaging for the environment but one of the criticisms of these companies is that they have these negative externalities that hurt the environment but not their bottom line. If you were expending the energy to make that conversion, it is coming out of your bottom line. Tom this is the interesting part, what terracycle focuses on our generally nonrecyclable materials. The key is that we get the producers, the Consumer Product companies to pay for that difference. They leverage it by having now recyclable goods. Major retailers from target to office depot funding these programs in a way that drives for traffic. Its critical to monetize these programs, but we get the actual to a in a voluntary way, internalized the costs. These guys are profit maximizers, though. It actually costs them more to recycle the shampoo bottles they are using. Netnet, are they seeing a benefit . Tom this is the key. Over they are primarily growth organizations. Yes, while it costs money to run see thatgrams, they their sales go up. The retailers seek foot traffic increase. Today they are getting crushed by ecommerce. Amazon has taken another big chunk of market share. Brick and mortar retailers are closing. We saw toys r us, they need foot traffic badly. Julia they are being rewarded. Tom its a key for anyone looking at sustainability services. Its not just convincing them that it is the right way to do it, but this is how you win the traditional way. Julia yup, bottom line. Joe this equity crowdsourcing the you are doing, its kind of a hybrid of a kickstarter and an ipo. How sophisticated are the people buying into this . Its a really good question. Had to our website to learn more. Before you make an investment, read it all. This is an interesting question. The entire rule around what was created . It was to make sure that sophisticated investors could take the risk. That precluded the majority of able tos from being invest. But you had to do your research and read the paperwork. how liquid is the exit equity once they get it . To be fair, its not very liquid. The real win here is that we pay dividends every year and on top of that we intend at some point in the future to ipo and create foundational liquidity. How much interest have you had . Today we are taking preorders and when it is confirmed we will take actual orders and it has been very strong. Julia you are confident you can get the 25 million . Easily. We have 100 Million People collecting on our platforms globally. All of these folks want to invest but they cant do it in traditional ways. They dont want to cut 50,000 checks. This year you are looking for 24 million with just under 1 million in profit . How is that . That seems like a pretty small amount of profit given the revenue the you are raising here. What is your plan to raise profitability . Joe 0 no question, we are a small company. Our focus today is less on profits and it is much more on growth. We do things like no other company does. We see that we cannot track and gain a lot of Revenue Growth and when we add perhaps another zero onto the revenue, that is when we will hone in on profits. The key is maintaining profitability throughout. You have seen other companies do this. We will lose phenomenal amounts of money and gain the revenue. We say, look, lets not just focus on profit as a primary goal, but maintaining profitability to demonstrate that we can do that julia . Julia scarlett often talks about Higher Education. We have spent the last couple of days talking at the cost of Higher Education. I have looked through the details of what you have done and you are one of many wellknown entrepreneurs have have dropped out. You decided to dropped out drop out to become an entrepreneur. Are you an advocate of that . Bypassing Higher Education and getting on with it in a sense . Tom i love school. Even if i was sick i wanted to show up. School is a phenomenal thing and no one should think that dropping out is a recipe for success. The key here though is that the Company Started to get going and i had to choose between excelling at school or excelling at the business, it was hard to do both. The key to entrepreneurship is to get on and do it and learn from the market. Dont over think things, just start. Look, maybe you will leave your job or school to do so, but dont think that leaving is the recipe. Make an amazing jump and then maybe you are dropping out of school or maybe you are not. Scarlet you seem to have done pretty well. Tom szaky, thank you very much. Tom thanks for having me. Up, assessingg whether the good times will roll into 2018. This is bloomberg. Scarlet whatd you miss . Lets put the spotlight on one of the major stars of 26th 2017. They have a room e. M. Has had a remarkable run this year. Joining us to discuss, their cia of cio, jorge. Something that my colleague fruitfully points out, despite all of these rate hikes, financial conditions have been continuing to get easier. How important is that to the em story, that the fed doesnt do anything to meaningfully tighten those conditions . Its important. But we are seeing at this point is the survival of five rounds of tightening through now. They have done relatively well. As long as growth remains strong, and we think it will, they can probably digest higher rates. Strongyou say that the dollar regime has gone into the story that we have seen here in this rotation and in europe and it is facilitated by what we are seeing as far as the dollar is concerned. Is that continue, too . We continue to ask this question about whether the ecb might surprise us and could be the one that precipitates some sort of second guess about the emerging market. Jorge we might get a shortterm bump up in the dollar, but it will be temporary. We still think it is overvalued over the last 10 years. Probably about 30 to 40 overvalued. In 12 months we it at one 25th in the euro. Speaking of supportive environments, in the u. S. They have been leading the gains and certainly before looking at tech stocks in europe as well, asian tech stocks have done remarkably well. Tech is now 30 of the original market index, but gains beget market cap and it is a kind of momentum driven thing. At what point is that not comfortable . Scarlet jorge a lot of those stories are from china. The key is whether Earnings Growth will maintain momentum or not. If the earnings continue, and we think there is a good chance they will, the recovery as you said was just starting in be up tothat that will consumer demand for electronics and technology. That should keep momentum for earnings going. The earnings could carry the party forward. Joe the story of asian tech stocks is getting fairly wellknown but what i havent seen anyone else bring to it is that you seen you have seen signs of a versioning tech boom. Forty brilliant moniker versioning tech there. What is going on . Is this investable yet . Jorge not at the public level yet. Many of them are small to mediumsized companies. Mexico is now producing airplanes and highend computers. Argentina has a Great Software design population. We are beginning to see the inklings. Brazil has a very good manufacture of airplanes. Its not so much in the microchips area, they are moving into the later value added industries of higher technology. Julia i showed a great chart. I think it was a great chart. Earlier on in the show. It looked at some of the political factors that have hit in 2000 since 2017. Despite that the currency index continued to rally. For me, 2018, politics will be critical. Mexican and venezuelan elections. Brazilian elections. Russian elections as well. At what point are they going to matter or even will they matter in 2018 in a way that they kind of didnt, really, in terms of event risk in 2017 . Jorge the lesson for the last five years is the best thing you could have done around politics is to close your eyes, your nose, sometimes, and continue to invest. We think that that will probably continue to be the case in 2018. The key, fundamentals. His policy supported . Is it Getting Better . If you can put a check on us factors, politics, you have to keep an eye on it. Its fun, also. Or heartbreaking. Policy orf it affects a change in fundamentals that matter. Otherwise they are mostly noise. Great to get your insight. Thank you for joining us there. Stamford. Edemption in Stephen Cohen is just three weeks away from launching his new hedge funds. Our clients taking the bait . The details on next. Julia whatd you miss . s first try at a come back. Be allowed to resume trading outside investor money. Everyones eyes are on stamford, connecticut. Is here with all the details. Talk to us about what the options are here, it seems, for investors. Steve has hired marketers to discuss potential new funds in the new year and some of the terms being discussed with potential admit potential investors are concerning to them. That includes a lockup of one to through years. He wouldnt be able to pull money in that time without paying an additional fee. That has some people saying that they have concerns. Joe three years seems pretty long. Is this a matter of he has strategies that he thinks will take multiple years to execute . Or is it just a matter of he can get away with it because so many people will want to be in their and he says why not . Hema it could be either. Details are sparse. Its hard to say with certainty, but it could be that he is trying to launch a brandnew vehicle and it is helpful to have some security and money that you would potentially start to trade. The question is whether investors will commit that kind of money over that time. Flipside, we have heard that steve himself might have much more flexible terms with better liquidity. Of scarlet the benefit of doing your own hedge fund and running it. Hema we have heard that the target window has narrowed. He is looking between potentially 2 billion and 3 billion. A few months ago, certainly is lower than the 10 billion from earlier this year that we were hearing was the target. Julia we know that at this market and at this moment, investors are very heightened. Pullingtalking about the money, what does it mean in terms of managing it in the first place . Hema it would be in addition to the fee on assets. Profits are as much as 30 and potentially a passthrough, passing those expenses down to the investors as well as. Julia how much will it be . We are keeping the year to the ground. You could pass through some or everything. We do want to be sure. Far beyond two and 20. Thank you for the details. Julia which are in short supply. Scarlet i guess they are. Its link season, lets raise a glass to an etf that returned over 30 this year. This whiskey and spirits etf goes by wf ky, with whiskey challenging vodka as the most popular experience, its focused on the Companies Directly involved in the alcohol economy. Holdings represent the u. S. , france, and south korea, including Companies Like brownforman. Like most niche etfs, there are small caps with higher volatility. Exactly drunk with assets, only about 10 million. Investors should also watch the wide spreads in the above average fee. tis the season. I wonder if anyone will buy that because its the holidays. Up, what you need to know for tomorrows trading day. This is bloomberg. Scarlet whatd you miss . Bondsves and currency and , with the dollar weakening. Coming up, dont miss the retail sales for november. Joe, i will be watching for that Net Neutrality vote. Tom wheeler joins us at 5 p. M. Eastern time tomorrow to discuss the rollback of rules. Dont miss this, centralbank decisions continue. National bank as well . Add that to the list. That does it for whatd you miss . Julia Joe Bloomberg technology is up next. Have a great evening. This is bloomberg. You are watching bloomberg technology. We start with a check on your first word news. President spoke to middle income americans and young republicans at the white house today to pitch the tax overhaul plan working through congress. Trump said he is just days away from delivering a massive tax cut for everyday working americans. Final votes on the bill could come next week. Chief sayslection uncounted ballots are unlikely to force an automatic recount in tuesday special senate election. Republican roy moore has refused to concede chief says uncounted ballots defeat to demt doug jones who won in the deeply conservative state. Alabama allows for a recount when the winters margin of victory is less than half of 1 . The suspect in the attempted suicide bombing in new york was m a video today fro his hospital bed and a courtroom. He is charged with five federal counts of terrorism. Hes being held without bail and will remain in custody until his court date. Deputy attorney his hospital bea courtroom. He general Ron Rosenstein defended special counsel Robert Mueller before a House Judiciary Committee today. That testimony comes after the