Before one of the major holidays. We are heading for the end of the year. That is the attitude today. All three averages at simultaneous highs. Tied to optimism over the tax bill and the effect andould have on corporate stock prices. All three averages are reaching highs. The nasdaq has been lagging. We have a graphical look at this. The white lines are the times that the major averages closed at highs. The dow 69 closing high, now counting today. The s p is 61, and the nasdaq is 71. That is the number of times those major averages closed at records. The dow is close to breaking its record in recordsetting closes for the year. The last time it was this high was in 1995. Some of the out that we have seen include elliott management. In thend a half stake company and it seems numerous strategic opportunities. Shares are soaring nearly 50 . Jp morgan calls it one of his top midcap ideas for next year. Products are improving. Maker wasipment upgraded at keybank. An analyst says the stock is underappreciated and has potential to break out. Amd being upgraded to neutral. Though shares up 5 . There is a lot of deal activity today. The at the targets of various deals. Amplify is going to be bought by hershey four 6 billion. Consolidationnued in the snacking industry. We are also seeing snyder acquired by campbell soup. 4. 9 billion and 50 a share. In the gaming industry, Pinnacle Entertainment agreeing to be tenant national. Big m a monday in the United States. We are at the highest level since july 12, showing where we are and where we have come. U. K. , germany, france, all key cores fall for the second day. Stocks areacap having a tough year, lagging behind Global Equities by the biggest margin since 14 years. It is climbing less than 5 . Surging 20 . Index the difference is the red line you can see. Some pessimism over brexit shows no sign of letting up. Sterlings recovery threatened. Relative lin weakness will continue. That is the u. K. Stock market. Lets talk about currency. According to bloomberg strategists, if the trade doesnt start working out, it could be a very messy run. The speculative position of the euro is the largest since july 2007, according to the latest data. The euro today is testing an a onemonth low. There could be a very painful followthrough. Getting into the m a monday, this is a big scene. Look at shares rising. The French Aerospace specialists knocking off an unsolicited attempt to buy the dutch cybersecurity. They outbid the rival. It rallied at 4. 7 6 billion euros heard it won backing from a target company. This comes less than a week after the 46 bid which was rejected. It is significantly undervaluing the company. It protects against data tax in an increase only connected world. We are speaking later to the chief executive. Vonnie we are looking forward to that. On to u. S. Politics. Congress expected to vote on the tax cut bill by midweek, making it ready for President Trumps signature before the holidays. To are the potential winners and losers, and how will it affect the markets . Anding us is the chairman Investment Officer at cumberland. There are many winners and losers potentially, but do you want to name some industries that you are looking to get in if this happens this week . Year, caphappy new the hanukkah, merry christmas. Where in a celebration on the tax bill. If i were any more bullish right now, i would be arrested. That is how good this is. Small caps, big rebound. A have underperformed the tech sector by a big gap. A are closing it. They have been doing so for a few they are closing it. They have been doing so for a few weeks. Nextwill continue into week. We like the banks and financials, particularly the banks. They are hugely benefiting from an accelerated activity and we believe we will see that. This is a frontloaded, fiscal , and itprou. S. Company comes to Monetary Policy, and it is gradually extracting. It is a confluence that is very powerful for economics and markets. Lead to a this permanent shift of the s p earnings . What sort of shift are we talking about . Think the range of s p 500 earnings, permanent shift, is between 10 and 14, a anent shift, not growth permanent threshold. How you price that is a rare occurrence. We would had 300 to 400 points to the s p 500 the threshold shift. Then you have to say what happens, and you get an accelerator of Earnings Growth because of it. That combination is very powerful. Yes, it is a permanent shift and it is large. Mark that is the Earnings Growth. Can we talk about the economic growth. . President trump is asserting the 3 to 4 . Ll grow you buy into that . The surprise will be growth on the upside, and the second part is, we have deferred recession for at least a couple of years. We have a pathway which is clear. We look at corporate rates and big rates. Take the Little Company that is about to get a tax cut on 315,000 dollars in income. There are millions of them. They are in the half of economy that doesnt trade on the stock exchange. They are the growth entities of the new jobs, entrepreneurial spirit. My firm is one of those. There are many. That is a piece that is hard to estimate. What do we know . We know it has an accelerator and a tax cut and we know it has Capital Spending advantage it did not have 30 days ago. Mark how does the fed respond, david . David there you go. If you get a growth of capex and you have low inflation, the fed has room for gradualism. I believe they will continue. Why should they cut off an acceleration of growth when the inflation rate is below their target and they have been having trouble getting it up to their target . We think the fed is gradual for the next couple of years. Vonnie david, and at some point was made in the last few days and he said stocks arent higher because of President Trump or tax reform or any of those, it is because it is a Global Growth scenario and global recovery. How much of this is due to the presents dereg president s deregulation . David to pieces. Question addsno to profitability emilys burden on a company. The second part is there is very low inflation and low Interest Rate environment each has had 10 years, and is likely to persist for a while. We still have 9 trillion in debt trading at negative Interest Rates because of the central bank policy. Interest rates pressure down, even as we go out. And an why we have time accelerator in earnings and growth worldwide. Theu. S. Is now leading it, largest economy in the world getting stronger. Vonnie when does this cycle peak . When do we start to see it come to an end . David i can give you the time. It is 11 00, but i cant give you the day. We dont know. Prolonged cycle. If Monetary Policy is able to have gradualism, if inflation remains low and gradually improves, we have a very long cycle. It is a very positive environment. We could be shocked, of course. Anything can happen, a war, pestilence, we could have shock. Outside of shocks, we have a possibly long positive trajectory, very much a source of optimism. Mark on the subject of Central Banks, looking at what has been happening in south africa with the ecb holding the bonds of Steinhoff International and they are taking a loss. Question, to what beent have Central Banks distorting the credit markets . David there is no question they have been distorting the credit markets, absolutely. They maintain a zero Interest Rate, they expand the balance sheets, and they have done so in response to a financial crisis. Now they have to figure out a way to normalize things. Our Federal Reserve never went beyond federally guaranteed securities with the exception of a small piece in the midst of a firing of a financial crisis. Otherwise, we did not stray. European central bank went beyond it. The bank of japan has gone beyond it. They own stocks through etf. Normalizing out of those settings takes years, and it must be done in baby steps. That is why we have this very long cycle. Vonnie i have to ask you about the market given the tax changes and also the idea that january and february will see low issuance from bank of america this morning. David we think so. There have been changes in the area. We have advocated for the taxfree, highgrade u. S. Dollar bond. It has traded above its treasury yield comparison. It has been a gift. It still is a gift. We now know what the tax rates will be in if you are in a hightech state, your maximum rate is still going to be about 40 or higher, maybe into the mid40s. You can achieve a taxfree yield that makes that very advantageous. We advocate for taxfree bonds. We have been doing so and still do. . Onnie anyone to take care of any states or offerings that you would take care of . Differentt is a question. The issue of states and credit is paramount now. Likelesome states connecticut or illinois or new jersey have to be watched carefully as their credit situations deteriorate. We are dividing the United States into the weaker states and jurisdictions. They must be monitored closely. The stronger ones, which are very desirable, there is a huge gap. Theres a big get between utah with a triplea credit and new jersey which is 50 unfunded in its longterm liabilities. By utah over new jersey, you would never touch new jersey bonds, is that what you are saying . David no, you have to be careful which one and what the claims rp if youre in new jersey or the highest personal property tax states, you have to make a decision. Be careful about which ones you own. He is david kotok chairman and chief Investment Officer at cumberland advisors. Lets check in on first word news. Incident byificant the u. S. Air force. There are reports a car tried to ram the gates. The bbc says one person was arrested. The gate is on lockdown. President trump will declare china a strategic competitor in a speech today on national security. According to senior officials, the president s speech will be heavily influenced by his views on trade and economic relations. He is expected to outline actions that could target china. In chile, Sebastian Pinera has been elected president. He won almost 55 of the vote. He pledged to reverse four years of sluggish economic growth. He has occupied the president s office before between 2010 and 2014. In atlanta, flights are resumed at one of the worlds busiest airports after a blackout grounded more than 1000 flights. The effects are likely to be felt for days. Thousands of people are still stranded at the airport. 400 flights have been canceled today. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. Im emma chandra. This is bloomberg. Bitcoin future, started trading on the cme. The cryptocurrency continues. We are live on the Trading Floor in chicago next. This is bloomberg. Mark live from bloombergs new European Headquarters in the city of london, im mark barton. Vonnie and im vonnie quinn. This is bloomberg markets. Cmeoin began trading on the. The trend higher is unaffected, even though there was a drop at the opening. Joining us to talk is scott bauer of trading advantage. How much interest was there in the beginning of trading of these new contracts . We did see a major drop at the open. Scott it is not bad for the first day here. Some of the firms that will participate are feeling their way around the market. Right now, there is probably around 800 contracts or so that have traded. Remember, the cme contract is worth five bitcoins. It is really five times the notional value. That is a significant amount. The biggest thing we have seen so far is trading has gone off without a hitch. Things are going well here. Find coke we did see a drop in the price and a vonnie we did see a drop in the price and up a little. How much interest are you seeing . Is a good thing. One thing that is interesting is that even though we see a drop any spot price, some features havent moved. We have january through march, and there is right now at the last quote i saw was a little bit of inversion from january to february, where january future is trading higher than february. Not many contracts have traded yet in those contracts, but that is a little bit of an inversion. When the future came out, we saw 20,000. It settled in around 19,000. The market is kind of feeling forway around and looking price discovery. The main goal here for cme and for the big firms that are trading this is that this is technical logical a gone without technologically gone without a hitch. It is slow and steady. Michael lets talk about oil. We are seeing strategy vonnie lets talk about oil. Strategy is optimistic. What do you think for oil in 2018 . Scott in the short run, there is a push and pull. We know opec extended cuts all the way to the end of 2018, which remains to be seen whether that holds. On the flipside, we are seeing u. S. Ramp up production to the highest it has been. It is supposed to get to 10 Million Barrels a day. In the very short run, we are seeing reduced u. S. Drilling. Rig count last week was down four. That is putting pressure on the market, but we have titrating of 55 to 59, which i dont see changing in the interim. 2018, ierm going into think the pressure will be to the downside. Will be sub 55 and maybe even down towards 50 before we see 60. Bauer, that is todays futures in focus. Ahead, cybersecurity from is being bought. An exclusive interview. Coming up next hour. This is bloomberg. Vonnie this is bloomberg markets. Im vonnie quinn in new york. Mark im mark barton in london. Here is some of the Business News in the story. Campbell soup has agreed to buy snyders. Chips andkes potato snyders pretzels. Snacks have been selling. Her shes is buying amplify is buying amplify. Thatrcent premium at close include skinny pop popcorn. Hershey sees the deal adding to earnings in the first year. History, pinnacle is 10. Ng that combines two of the largest casinos outside of las vegas. That is the latest Bloomberg Business flash. Still ahead, Prime Minister theresa may is due to speak in parliament, laying out her vision for the next phase of brexit talks. 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. Monaco live from bloombergs World Headquarters in new york , im vonnie quinn. Mark im mark barton. This is bloomberg markets. Lets check on first word news. Tax bill, lawmakers trying to get the public and support for the measure. Estate companies to take advantage of a new tax break. , House Republicans are challenging the senate for the take it or leave it spending bill to keep the government running another month. The house is moving ahead with a the government at current levels through january 19. Senate democrats block it, and that means there will need to be a compromise to keep the government from shutting down after friday. The owner of the Carolina Panthers is caught up in an harassment allegations. He is now looking to sell the team to Jerry Richardson says it is time to turn the team over for new ownership. He is 81. According to sports illustrated, their accusations of races comments and sexual harassment. In austria, a new chancel is sworn in today. The Peoples Party struck a deal with the far right party. There is preempt concerns that austria could stray from the e. U. He is the youngest leader in europe. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. Im emma chandra. This is bloomberg. Mark while we wait for headlines for the theresa may speech, i want to bring in an author of bloombergs pessimist guide to 2028. Why 2028, john . Better wayut what a to make it more interesting. The look ahead is more interesting 10 years in the future we are looking at the potential shock of 2018 and looking at how they could shape the next decade. Beeness years have dominated by disruption across the board from politics to finance. We want to zone in on the key pressure points. It has been an entertaining venture. We are leaders to think outside the box. Corbyn make socialism great again. Lets start with that. What is the point you are trying to make with the rise of corbyn . John trying to shake up corbyn becoming Prime Minister would automatically be a disastrous thing. The scenario we are facing is that you get more chaos when he comes into power. He has pledged to spend more on health care and education. It proves to be a remarkably popular and he got reelected for a second term. He also ends up in this scenario spending too much money. There are rising concerns about a bailout 10 years down the line. Mark lets make you aware that Prime Minister theresa may is speaking. Heridea is to outline vision of what she wants the transition deal. Infighting is being done. What do we want the u. K. To brexit . Not much more assertive or enlightened about what brexit will look like than we were on the day after the conservative party is still split. Then again, you never know. There are reports that they are planning to tell theresa may that she could get some labor votes with her. Mark as to corbyn, he has been wise and ambiguous and letting the bad news m a and saying emanate and saying nothing. Government that is bounding around a little bit. In he has to do is not be government and keep your cards close to your chest. The labour party itself is divided. Mark lets listen in to Prime Minister theresa may. May negotiations have brought the summit down by a amount. The estimate is estimated to stand between 35 billion pounds and 39 ilion pounds and current terms. In currentpounds terms. We expect this to become covered by the implementation. On northern ireland, we have committed to maintain the common travel area with ireland, to opal the belfast agreement, and to build the border while holding economic integrity of the whole United Kingdom and we will work closer than ever with all Northern Irish partners and the government as we enter the second phase of negotiations. Published, thees shared desire of the eu and the u. K. Will make progress on implementation. With formal talks beginning soon. Give certainty to employers and families that we will deliver a smooth brexit. During this time limited diplomate tatian. And limitation. , we not be in the Customs Union will have left. We will prepare and implements the new processes and systems for partnership. Period, we intend to register new arrivals from the eu as preparation from our future parent we will prepare for our future independent trade policy by negotiating trade deals with third countries which will come into call a conclusion of the implementation. Period. Finally, the council confirmed friday that discussions will continue on trade. Set the framework for our approach at my speech in florence. We will now work with our European Partners with ambition and creativity to develop details of a partnership that i believe will be in the best interest of those in the u. K. And the e. U. Mr. Speaker, since my lancaster house speech, we have close negotiations in the first phase. We have done what many say could not be done, demonstrating what can be achieved with commitment and perseverance on both sides. May Prime Minister theresa addressing the house of commons on her transition deal. What might be a Sticking Point with the eu, yes they will abide by rules. To be able to seek thirdparty trade deals and we will register new arrivals from the e. U. The e. U. Will not like either of those two things. John she expects the transition to be two years. There are a lot of people on her side said it needs to be longer than that. Brushed over that they were committed to maintaining a soft border or no border with the republic of ireland. That is a pledge and a commitment, but we are not getting any wiser about how that will be implemented. That is a short snippet from what we heard from theresa may, but there are cont contradictions. It will take a long time to see what it looks like. Happens, the e. U. Has to respond, right . She said in a public forum that britain will register migrants from inside the e. U. , and she says it will talk to third parties about trade. The e. U. Needs to respond to this, doesnt it . John yes, that is right. The e. U. Will be aware that there are politics going on here. Theresa may needs to say certain things. It was interesting when she council, at the e. U. She was met with a standing ovation from other e. U. Leaders. You can see in that is a recognition further from other e. U. Leaders that she is in a political spot very they may need to respond to this, or they may choose to turn a blind eye and except affect that it is the cost of doing business with theresa may. Vonnie what is better for the conservative party, being led by theresa may or not for the future . John it is far from me to comment on the list above the anty, but if you are likeious party who might to imagine himself or herself asking in the front door Prime Minister, i think this is not the time to do it. What you are seeing is a strategy to let her do the hard part and it is a long road and long nights of negotiations ahead, not over the next 15 months but over the next two or three years. We are already hearing parts of the conservative party say it may be longer than that. You are seeing a lot of opportunistic conservative members in the background biding now my not but be the time to force her out given there are so many difficult issues. Mark we were ambushed by theresa may, and i dont want to this wonderfuln piece. Trump wins second term. That stands out. John that is one of the provocative ones to run with. Thatdea we are pushing is the consensus is he is struggling with the approval rate. There are hopes in some quarters that he will be a one term president. He says he is unbeatable. We are not going so far as to say that, but if you look at divisions in the democratic party, there is reason for optimism on his side. Do improve the economy, what if the tax cuts continue . Not be aserm might difficult as the situation he is facing now. That leaves you to wonder what America Politics will look like after two terms of donald trump. We look more at that. Mark theresa may is still speaking in the house of commons. Senior editor for bloomberg news. Coming up, results from south africa. They elect a new leader we will bring you all the details from johannesburg. This is bloomberg. Mark live from bloombergs new European Headquarters in the city of london, im mark barton. Vonnie and im vonnie quinn. This is bloomberg markets. Time for our stock of the hour. Enda gaining 1 after agreeing to be bought by penn national. Julie hyman is with us for the details. Julie it was higher out of the gate. Part of the reason is that it is reported that this has been talked about and they had confirmed that they were in talks. The first reports of this came from wall street journal back in october. If you look at a year to date of Pinnacle Entertainment, you see it had solid gains. The stock is up 40 plus percent since the reports surfaced and it has doubled this year. It look like it was a buy the situation. We are seeing a pause there. Combined company, you are talking about 41 casinos and horse tracks across the nation in different locations. Vonnie is this something you might see more of, consolidation of casinos . It could be. We have artie seen consolidations thus far. We haveyou already seen consolidations thus far. There are other regional casinos out there. One of them is buying some of the casinos. It is a point national gaming. They will buy some of penn nationals operations and some of pinnacles for about 575 million in cash. You see buoyed gaining up 4 . Penn national is down. Many Casino Companies have been spinning off their real estate and they may just do the operations. In this particular case, there is a Company Called gaming and leisure that was started by penn national. Pinnacle has also sold some of its real estate to its investment trust. Its shares are higher today. Ticker on that company. Many Casino Companies are just operators. Mgm has done a similar on the with a structure. That could be a trend that has been happening. Vonnie that is true for the retailers these days. Julie hyman, thank you for the stock of the hour. Mark a final vote on the u. S. Republican tax plan is expected to pass. Went as far as writing a letter to the treasury department. The eu commissioner for Economic Affairs ask for outlook on the we are not disputing the fact that the United States of america are free to fix their banks rates and reform their tax system. The question is, does it have consequences . The action that we have together at the International Level in order to fight tax avoidance and tax fraud, and is this compatible with the rules of to . Tl wto there is another issue is if the gigantic deficit burden has consequences for the world and the e. U. Vonnie what will the e. U. Do if address your concerns that have been laid out clearly . Pierre it is worry. We have been mandated by the council to enter into dialogue with the United States, and we want to have clarification about that. At this moment, it is not yet been voted. I understand there is an agreement between the house and senate going. We are in the dialogue the process. We Work Together in the summit of the g20. Willow that way, and the europeans will set their own positions. We talked to ministers from g5, which is the Biggest Country inside the e. U. A i imagine this is technicality, but what happens if they pass a law without , letsing your queries not call them concerns, but your queries . If they dont respond, what can you do . Do you bring them to court via the wto, or do you just leave it . we expect an answer to the letter, and then we will consider what will be the consequences of differences that can be here or there. Will have to examine that first. Would be that they address our concerns. Mark that is the eu commissioner on taxation and customs earlier on bloomberg surveillance. Now looking at the bloomberg flash. Th hass made based made a successful bid for aales cybersecurity. Eli lilly has hired Goldman Sachs help review for a Animal Health business. According to people familiar, they are considering a potential ipo. It is with one of 15 billion. Older polls look shallow voter polls look shallow this year. Traders at banc of america are looking at their bonus fall more than 10 . Bonusesn are set to get that are 5 smaller than a year earlier. That is your Bloomberg Business flash. Still on bloomberg markets. We will take look at the outcome for trading in 2018. This is bloomberg. Marta live from bloombergs new European Headquarters in the city of london, im mark barton weak and in new york, im vonnie quinn. This is bloomberg markets. 5 ders are likely to see a bonuses. It is more than other banks. Environment, marianne lake said this. Not many catalysts are that exciting. After low volatility, what can we expect next year . The Senior Analyst for your banks is joining us. If you are grumbling, you should be thankful it is only down 5 . Allison revenue will be down more like 8 , and rates trading which is the biggest piece of revenue down the bit worse. ,onnie we should mention that bonuses were up 20 . Allison jp morgan had a great year last year. They are the biggest in this business and they do a great job. It will depend on the environment to some extent. It is not been a good environment, especially on the macro side of things this year. Outlook inabout the general for investment banks in 2018 . What are we looking at . Allison in terms of overall outlook, gdp growth is still good. That is the bottom line driver for investment banks. For trading, you need volatility. We have not had that this year. Weakve seen equities very after a very strong year last year. The credit business is doing a little bit better, but what we wont need next year is volatility to pick up trading. Good,g has been very because they benefit from lower volatility. With had strong asset Price Movement and that has been good for banks. Vonnie i just had the index on my bloomberg. You can see just how much volatility has gone down in treasury trading over the year. I want to ask you about the european banks. U. S. Banks thinking you have a comment european banks may see some donuts . Are calling this a final restructuring year. They have been trying to recover and get traction following legal times they had around this last year. I would say one of the positive at third if we look quarter fixed income headcount was flat year over year. That is the first time that has happened in six years. We have seen nothing but clients, and a lot of that stabilization is because the european are done with their restructuring. Vonnie our thanks to Allison Williams of bloomberg intelligence. Mark we have coming up for the close, we are less than 35 minutes from the end of the monday session. Stocks are rising today. The close is next. This is bloomberg. York,it is 11 00 in new there are 30 minutes left in the date in the trading day in europe. From bloombergs grand European Headquarters in the city of london, i am mark barton. Vonnie and i am vonnie quinn in new york. This is the european close on bloomberg markets. Mark here are the top stories we are following around the world. Theresa may laying out her vision for brexit. As her speech than enough to satisfy critics as well as investors . South africa is about to announce a new leader for the anc. Latest reaction from johannesburg. Exclusive and interview with the chief executive of thales, patrice caine. A look at what is happening in european equities, a few of