Lets take a look across assets. We can look at the bond market as well as currencies. The bank of japan decides not to change anything with their stimulus. The euro is also strengthening against the pound. The 10 year yield is falling by one basis point. The sell off is continuing in the german bund market. David lets see if there is newse outside the Business World. Mma the white house is taking a victory lap after Congress Passed a landmark tax reform bill. Sident trump thomas promise that u. S. Companys would stop relocating overseas in the bill that the Corporate Tax rate from 35 to 21 . Taxof americans believe the bill was written to help the wealthy. When ale were injured van was driven into people. They described the driver as an all trout an Australian Citizen of afghan descent. British Prime Minister theresa may is moving into a Charm Offensive in poland where she will try to win more friends before talks on brexit trade in march. Shes making the trip after toling her deputy he had reside. An investigation found he made misleading statements about pornography found on his computer a decade go. This is bloomberg. Thanks so much. Its time for our daybreak first the topre we discussed three stores of the morning. First up, it has to be about taxes. The legislation is passed another sales job begins. Bankshanks dots dots have a good run this year but maybe different. We say we wanted sabr banks are looks like we welcome our correspondent. The present has not signed the bill but the sales job has begun. This is what some of the companies are doing already. Boeing is investing a bunch of money and it goes on and on. The companies are trying to push to persuade everyone its a good idea. Will this sell to the American People . Instinct was i thought we would see a bunch of buybacks and Dividend Increase announcements. Its the way you see the bank stress test. I still think they are coming. Insteadprising to see the race for thepr initiatives. Some Companies Want to be out in front of the herd as far as doing stuff for employees. Feelinglly, i have a at t wants to be in the good graces of the white house. Probably, there are different motivations for each of the companies because at t in particular was to get this time warner deal done and curry favor with President Trump. They could have done this anyway . Thats the interesting thing. These tax cuts and changes dont go into effect until next year. They are disturbing money now. Thats an indication they have it and they were sitting on it. The other thing that comes into play is the fact that many people are not feeling that this tax cut will go to the individual. There is a lot of low back on andsalt deductions, state local taxes, feeling like the taxes will increase and a lot of middleclass americans feel they are not sure what will it mean for their paycheck or if they will even see any difference. Going ona lot of pr now to counter the overall malaise you are seeing. David all of these companies came out the same time. Probablyeople are pretty happy to get the extra 1000 in their paycheck. Last gap ofg the the massive tech rally of 20 17. Investors are getting increasingly bearish. People arecommended underweight the tech sector. A new survey coming out showing that investors are the most underweight or least position for these big tech stocks since 2015. What do you make of this . I think it depends on your investment horizon. Are you trying to beat the market quarter by quarter or month by month or longterm . The longterm picture for tech stocks is still pretty good. Yes, the value stocks, the bank stocks could outperform in the short term with a reaction to the tax cuts. Longterm, i dont know if i would sell my tech stocks. The longterm growth is most likely there. There is risk with regulation. President trump is not a big fan of jeff bezos. Is there a certain regulatory arbitrage going on . A lot of the hedge funds rode the tech wave this year and that was the one bright spot for many hedge funds. We have a story that says for 2018, this is the area many hedge funds are seeing as an opportunity on the downside. Valuations aree poised for a correction. There does seem to be some divergence and views on who the losers will be. Some people say it will be Big Technology because of the regulatory push. Others are saying you will see a consolidation ahead of us with big tech firms consolidating their power. Do you have a sense of where the consensus is falling . I think the Net Neutrality raises a lot of question marks that people are not sure how it will play out yet. I would not write the obituary for tech stocks just yet. I can see this value versus growth back and forth could continue and we could see value outperform for a little while. In the economy we will have in the near future, i think people will still pay for that earnings growth. Maybe not in the First Quarter. Maybe not for all of 2018 but in the long run, i think growth is far from over. David and they will get all that cash back, im sure. They already have it. David the third topic this morning as bank risk. Its more like risk aversion for the banks. They passed the living will test yesterday. It bank of americas brian gave us an interview yesterday. When you get to anonymous currency, thats a different question. Thats a policy question of whether we want an anonymous currency out there of size and scale and thats where you see people struggle. David do you think we want that . I dont think so. The reason why the 100 bill is the largest and nominations to make more money more difficult to move other than through a verifiable system. David he doesnt think we want an anonymous currency. Its because of the risk involved. Banks in particular have been under the gun the last several years. Theseknow your customer standards. If you dont know them, youre potentially lending to someone who may be money laundering. You can get a lot of trouble. The other interesting thing with her interview is that a lot of people see it as a global currency. I understand what he says as far as an anonymous currency but there seems to be this appetite for something global as well. Not only that but we see in increasing number of hedge funds getting into cryptocurrency and big banks getting in and going the opposite direction. David there is risk with the banks that goes way beyond bitcoin. This shows the extent to which bank of america has taken down the risk as far as chargeoffs. 39 are way down at percent. There is a story about a wall street banks getting out of Consumer Lending and hedge funds getting in. There is a question between how much banks should take risk in order to boost returns and how much they should strip it down in order to make themselves safer and less systemically important. The balance will be tested in the next credit cycle and bank of america will certainly be the poster child. David thats what Brian Monahan thinks. Thanks to you and we will bring you much more from my exclusive interview with Brian Moynihan. He will talk about tax overhaul in the u. S. Economy next. Live from new york, this is bloomberg. Emma theys 56 billion. They raise more than 4 billion and the Company Rules ridesharing in china. Renault is looking for a new ceo. Its the start of a new era for the magazine that cover pop culture the last halfcentury. That isstone is so selling its controlling stake. Values Rolling Stone at 100 million. David thank you so much for stop the impact of the biggest tax overhaul in three decades will be farreaching with big banks seen as benefiting. In my interview with Brian Moynihan, i asked him where he thinks that he thinks the was economy is right now and how the text cuts could change that. Much of what we are hearing. Its on the consumer side were people are doing and we see that every week. Spend a roll up what they money on. The spending your to date in 2017 whether its cash or atms or over the teller was checks written and bill payments and debit or credit cards. Its up 6 over the last year. If you look at the same. From the year before, its only 3 . What is driving that is people are spending more money. Checks written have gone up and it usually comes down. Cards are theit fastest big number growing but overall, consumers are spending well and when they spend well, that drives the u. S. Economy. Its a consumer driven economy and they spend an companies some stuff and then companies are successful and they invest in their house. Thats good news for the u. S. David are they borrowing more . On not worried about credit on the consumer set especially for us. Overall, there is some concern about excesses and car lending and that got pulled back with incerns about nothing mortgages because were working through the memories of what happened before and the conservative structure of what the industry does and what goes on in lending. The unsecuredn lending, Student Lending which is not what we are involved in. We are not worried about consumer credit. The Consumer Group spending drives our economy. In the u. S. , we believe we will finish this year in 2017 about 2. 2 gdp growth for the year starting off with zero in the First Quarter. Next year we should be at 2. 5 so the Movement Across this size economy is very big. The rest of the world is also growing so this is the first time japan going slightly and europe growing and china growing. Big economies moving together is tremendously different than we were five years ago where europe was plus or minus zero. Those things are very interesting so now you have this Worldwide Growth and its good for the world and the United States help supply that growth. 2. 5d you are looking at percent growth next year. Is that before the tax legislation or after . The tax legislation passed today. Was not including any benefit for taxes. Our experts say that would add to that. To bring it higher. David taking into account the tax overhaul, you are looking at perhaps 2. 9 . Thats right. But maybe more like 2. 6 . Businesses infor america is a strong statement. They will be looking to do things. Around the world, you have brexit. We have the rest of the world growing in the high3s. David what are corporations likely to do with the money . Will they return that to shareholders in dividends and buybacks were invested that . If you think about tax reform on the corporate side, the goal was to get an effective tax rate in the United States which is competitive with the world. In the mid 30s, the rest of the world was 20 and 12, the money was being shifted to where final demand is. Billions of people are outside the United States and they buy things. They were shifting the investment dollar over. That is expected to reverse a bit. Was a core principle on the corporate side tax. My guess is you will see a little bit of everything. You will see some people buy back more stock because they have more aftertax profit. Some will invest in their business and build things faster than they would have otherwise. Some will fundamentally rethink their balance between inside and outside the United States. None of this can be bad. The money will go back into circulation if its a Share Repurchase of dividends. People will have to invest the money if they have it. If they invest in equipment, that will create jobs. We will do some things we were thinking about doing maybe more Technology Sides and maybe more branches. Each one is a several Million Dollar construction project that has to be done locally. That will create jobs and create pressure on wages and help wage growth. In this connected economy, anything that gets people more aggressive is good. David so you say the tax overhaul is good for bank of america and the country. Do you worry about the deficit . Deficit andbout the many have been focusing on that. The increment on this, no matter againsttimate you take, the total deficit is a small increment across 10 years. The promise does the problem is billion dollars. When you give tax relief, it goes back to people paying the taxes. Its not locked into spending capitalized into the ongoing budget. The good news is this money is right to the people who pay for the government. They will do something with it whereas if you have increasing spending levels, its hard to get that money out of the system. Aboute a serious issue the debt but im not sure this will affected as much as the first 20 trillion they got us here. We have to continue to work that down as a percentage of gdp. David it sounds like we will have to address the spending side at some point. There is Discretionary Spending and there is also entitlements. Most economists say thats what will hurt us. Can the come down off of that sugar high without hurting the . Conomy question mark there was a lot of work done and in the last administration and there is a lot of ideas there. Onot of money is spent medical and getting that straight and how that works. There is a lot of ideas out there but we have to look at them. The key is to do things which havearcs of 10 or 20 years. David that was part of mikes lose of interview with Brian Moynihan. Coming up next, we will talk brexit. Live from new york, this is bloomberg. David with brexit negotiations moving on, british prime mister theresa may is looking for european support where were she can find them. She is going to poland today a day after the eu moved to sanction the european country to make its courts more politically responsible. We welcome tim ross. And, whatspoll going on in warsaw today . Theresa may is there for a summit with the polish leaders. Thats very keen to stress when the u. K. Leaves the European Union in 2019, britain will be there beside poland on defense and security. She is proposing a new Security Partnership particularly with a view toward cybersecurity and russia. Was this trip planned before or after the eu came out and furthered its rift with poland over some of the steps its taken with its judiciary . The trip is been in preparation for a while but you are quite right, its a difficult. Backdrop theresa may needs to the support of the polish government in the runup to the next phase of brexit negotiations which will be some of the most difficult talks about future trade partnerships between britain and the eu. At the same time, she was to balance that with criticizing some of the judicial reforms the polish government has introduced and being clear that the rule of democracy and rule of law has to be defended. David she certainly needs the support of poland and her own government. It seems like not a day goes by where she has a problem with her cabinet. Forcedhave denny green out. Is this undermining her position in the negotiations . Its difficult and i think she is in a stronger position having got that first round of brexit discussions under her belt. They struck a deal a few days get thebrussels to divorce settlement agreed now its a matter of moving to the trade talks. A month or two ago, the departure of her trusted ally, damien green, would have been a very bad low for her but its a bit easier at the moment. I was just thinking that theresa may pause play my to pull in must be incredibly interesting to get inside her head as she thinks why he did this. Why did he look at pornography on his computer and then lie about it . Is there a feeling that more shoes will drop with others . It has come out after the weinstein allegations. Be a brave person to bet against anymore in this issue. David we know its not over until its over on both sides of the atlantic. Us fromu for being with london. Coming up, republicans are celebrating but when will the president actually get around to sign the new tax legislation . Thats our next conversation live from new york, this is bloomberg. Is this a phone . Or a little internet machine . It makes you wonder shouldnt we get our phones and internet from the same company . Thats why Xfinity Mobile comes with your internet. You get up to 5 lines of talk and text at no extra cost. So all you pay for is data. See how much you can save. Choose by the gig or unlimited. Xfinity mobile. A new kind of network designed to save you money. Call, visit, or go to xfinitymobile. Com. Bloomberg is daybreak. Lets get you caught up on where the markets are. Cac in paris is down. In hong kong, its up and the dax is dipping down by about 16 points in the nasdaq futures going up. Across assets, the spanish to 10 year yield is unchanged. The german to year yield is continuing its climb. This is continuing the threeday selloff. The euro is weakening against the dollar. The libor is now up. Its up from less than 1 earlier this year so there has inn quite a climb quietly threemonth u. S. Dollar financing. David i think its going away in a couple of years. Lisa there are still a lot of assets. David lets get an update on headlines outside the Business World. congress is coming down to the wire on the spending bill needed to company to keep the government open. They will vote today on a funding plan to avert a shutdown saturday. The vote will likely force the senate to give up attempts to add of the provisions. For the second year in a row, American Life expectancy has dropped. Is the first time that has happened in more than half a century. One reason may be the opioid crisis. 71. 6 years is now the average. Fatal drug overdoses rose by 21 . In japan, the central Bank Maintain stimulus. The bank of japan says it will continue to target Interest Rates and by Financial Assets to achieve its goal of 2 inflation. The economy is moving at a healthy pace and inflation is headed in the right direction with little pressure on the boj to act soon. Im emma chandra. This is bloomberg. David President Trump got the win he wanted on taxes but may put up signing the legislation until after the new year. Lets go to kevin cerilli. Pay go, its payasyougo in which if you have a tax cut, you have to have cuts in entitlements. There might be a pay go waiver in the cr negotiations. Lawmakers have to pass a partial funding bill by the end of this week. They will likely pass a onemonth extension. Win, just, is still a a matter of a couple of days. He might decide when hes down at his winter white house. David sounds good. What comes next . This is whats interesting and whats being talked about behind the scenes. Late last night at the lawmakers were at the white house, they went to a closeddoor briefing on capitol hill. They have to decide not only on the cr but looking at the next calendar year. President trump is hinting he was to get infrastructure done. I have spoken with several lawmakers who dont know exactly what infrastructure plan means. House Speaker Paul Ryan was to get to welfare reform. I spoke with a source today who told me that essentially, what welfare and entitlement reform id in the spring is one giant tax fixit bill into the midterm election. Whether its entitlement reform or welfare reform or its infrastructure remains to be seen. I think they will get some type of doddfrank Community Bank relief in the First Quarter of next year based on the conversations in the house and senate with the Financial Services boat. David i hope we will send you down to that winter white house. Thanks so much. Its the biggest tax overhaul in more than three decades with the Corporate Tax rate at 21 and big businesses poised to be one of the big winners. Will the tax reform affect things like the trade deficit . Ucier joins us now. Heelys the energy, environmental and tax practices. You are a popular man these days. Its good to be here. Avid i want to focus on chart that we will put up now. What happens to the trade deficit . The president has been complaining about. I understand this might get automatically change without any money changing hands because of how they book the profits. He has more than cut it in half, how does that work . One of the big problems we have is that u. S. Companies which are Global Companies have lots of opportunities to keep their overseas earnings overseas. They can pay zero tax and that earnings as long as they dont bring it back. They book Economic Activities for example apple looking its patent revenue in ireland rather than the u. S. Which makes it look like value is happening in ireland when in fact, its u. S. Its a u. S. Creation. By changing the tax incentives to move production overseas or credit your earnings from overseas, we will have stronger gdp in the margin. Thats an important effect. Many economists believe that u. S. Productivity and gdp has suffered in recent years because the reporting mechanism, the tax returns, are distorted by Companies Moving the profits overseas and reporting them as being nonus profits for tax reasons. David gdp growth has been hampered or maybe misreported. Maybe its better than it has been reported. Further Behavioral Changes that would be triggered by this new approach between u. S. Versus foreign activities . One of the things you see right away is that investment in the u. S. Is suddenly much more attractive because the aftertax rate of return on capital is higher into the new tax regime. There has been a Major Economic study in germany that finds the u. S. Is now competitive with europe as an investment destination. A lot of capital that was outside the u. S. For tax reasons is now coming back here. That means higher productivity, higher wages and probably greater exports from the u. S. Because we are adopting a territorial tax system, companies have an advantage in exporting products from the u. S. Because those u. S. Sales will not he considered part of their u. S. Taxable income. To combine your tax expertise with your energy expertise. There has been a lot of focus on the possibility of potential drilling in the Arctic National wildlife refuge. Tore have also been benefits manufacturers in particular which might increase consumption of things like oil and gas. Of the netr sense effect on the Energy Complex as a result of the tax law . Anwar thing is a longterm project. Doing anything in the arctic takes a long time. Like those in ultra deep water or in the golf or other just and take about 10 years to set up. We are in a situation now because of low oil prices where, for a number of years now, the big projects have been postponed indefinitely. The commodity price cycle is somewhat range bound right now. From the 50s into the 60s and fracking has been able to maintain incremental production to keep the market balanced. If we see stronger demand either from industrials or stronger demand for refined product transportation fuels worldwide, we could be pumping up into the current range of production possibilities which means in up to five years, we could see another commodity super cycle and rises spike again which means investments in offshore or alaska which may not be attractive now would actually be indicated. Also, for the future development thing is t,he anwar important. It does not impact the commodity price cycle but it means that aaska would be viable as longterm energy source. They need that oil to keep the pipeline moving, the basic infrastructure. This is like an insurance policy to have the oil when we needed. As far as industrial demand, you are correct that expensing and encouraging Capital Investment and encouraging purchases of tools come all of these things could drive energy. David how much of what you see in energy in expiration and production is going to be driven like fundamentals by the demand . You have five years to expense that expensive equipment so there will be a real bubble in Capital Investment over the next five years. How much will it be driven by the tax plan questio . Its a little bit of both. The aftertax rate of return on capital will be permanently increased at least on these investments. Companies want to take advantage of this expensing in an opportunistic way. Are probably pulling investment forwarded to the future but this is a fiveyear timeline with a phase down that will be extended. Companies know that in the Corporate Planning so i dont think we will see a complete lack of capital discipline. Rather, i see it as a catchup situation. The expensing will definitely help. 35 the stock market up since the election, companies are looking forward to increase future demand. The limit is that Bigger Companies that operate with capital edge its, i dont think they will go overboard with expensing. I think its mostly a benefit to the Smaller Companies that dont have the benefit of longterm productions projections. David thank you so much. Coming up, with car demand waning, private equity firms are discovering how hard it might be to get out of the subprime market. More on that next. If you cannot watch television, you can listen to the radio. 7 00in to Bloomberg Radio to 9 00 each morning. Bloomberg surveillance can be heard in new york, boston, the bay area in washington and onoss the United States sirius xm radio. Live from new york, this is bloomberg. Emma the chief u. S. To. This is bloomberg. David we turn now to wall street where we cover three things wall street is buzzing about this morning. The first up is volatility and crypto taxes. Private equity firms have no way out of subprime and nomura is said to suspend to jump on traders in london. We looked at hedge funds before but the story of hedge funds over the years, they are not having a great time. They are looking forward to 2018 and the word that jumps out is volatility. Hedge funds thrive on volatility. They do better and make more money for themselves and their aroileds went there is market. They say volatility is on its way back. Lisa they have been saying that but it really is coming back next year . You are seeing more hedge funds getting into cryptocurrencies led by bitcoin. Grad novograd is taking that hedge fund approach. People are looking to see how the tax policy plays out and that could provide some opportunities. One thing that jumped out to me about this story is europe. People have been paused. They say there will be Less Research because of all the rules around paying for research. , thefore, the hedge funds stock pickers can go long and short. David we love that market imperfection. Notion that this will bring transparency and it will be good for hedge funds but im not sure thats working out. David talking about private equity, lets look at this chart. The top line is the delinquency rate for automobile loans. This is not a pretty picture. Private equities have piled into this and went in big after the Global Financial crisis. It has not turned out well. Story, this quotation captures have private equity works. E guys sailed into this with stars in their eyes. As out of favor a sector as i can think of. Lisa this is a fascinating issue because at a time of low sovereign debt youll come you could get yield if you went into lending to the less creditworthy consumer. 11 up talking yields of to 25 for auto loans so you have this rush of money coming from the private equity firms the bige funds because banks are getting out of it. David Brian Moynahan laughing his way to the bank. What i find so interesting is this gets to the heart of the private equity business model. Get in and get out not like a hedge fund that they have about four to six years. This illustrates that a lot of choices they made to go deep sub prime, to go after some of the even less attractive borrowers really put them in a bad spot. Just to be clear and as a disclaimer, some people are still making quite a bit of money when it comes to subprime auto loans. It has not been a total wreck. Another area we are focusing on is about highyield bond traders at nomura that have been suspended. Reported and this story is fascinating. The head of highyield bond aading is included as well as traitor who reports to him. The issue is ms. Pricing assets. Booking highyield bonds at different prices and this is a huge issue. We have currently seen a number of prosecutions with respect to this that i find interesting. As did our customers. Suspended, what did they do and am i doing that . Lisa this has been the norm on wall street for a long time. You use the information to your advantage to make a profit. David its hard to price these things. There is this lack of ornsparency and this ability more of a needed to get in and make money when information is not perfect. Lisa and the legal liability is not worth it for big banks. They are sink david province go down anyway. David always great to have you. Coming up, this years stock picker goes against the grain and how the bet against President Trump is netting big returns. If you have a bloomberg terminal, check out bloomberg tv. Live from new york, this is bloomberg. David we know who the countrys top stock picker was for this year and the results may surprise President Trump himself. We welcome our editorinchief. Welcome and dont keep us in suspense. At fidelitylie chai and he is a return of more than 50 . Its all technology and its clean energy and its global. Its exactly the opposite of what donald trump is talking about which is reviving the coal industry and lets go back to rust belt america. This fund is basically saying the 21st century is about being everywhere and most importantly, its about digital and data. His two favorite companies, in a sense this year, have been tesla and alibaba. David we will put up a bar chart and so and show how much better he did than his rivals. This is the antitrump trade. Whats wonderful about being a reporter and a journalists you have to let the story take you where it will take you and thats the data. Its just inescapable. He has done this year after year and has been interested in technology and started fidelity 20 years ago. Out of dartmouth college. Now he is based in hong kong, a move there in 2011 and he said this is where the demand and the supply is best for technology in the world. You dont think of mutual funds and equity pickers. The focus has been on passive funds versus active. He is also very not like trump where he says that are lucky than smart. He says everything worked of this year. What does that mean . We have been talking about synchronize Global Recovery with basically all the parts of the world essentially moving in the right direction, all the major parts. That means Global Companies like apple are doing better than ever. They are selling more than ever before, the demand is greater than before in every market. Asia in particular is where the demand has been greatest. He really has hit the sweet spot this year. He has done a lot of his homework and he is convinced that we will make this transition to electric vehicles which is why he has put up big bet on tesla. The one big debate now and the equity world is how much do you diversify, how much do you own many different stocks . What was his take on that . His take is technology is the 21st century. There is already a lot of diversity, if you will, built into that subject. We dont know enough about technology anyway. Insights excites investors. Every Single Company has to become a technology company. Thats what he would say. Has had amazing year. Do you take some profits and takes a money off the table or do you . Not get to what he does next other than he is in and at the market day day out. One thing he was doing this your was focusing on 10 companies in particular. And of them are in the u. S. A couple in china and germany and japan. This is somebody who is constantly looking at three things its what he would call secular growers, companies that will keep growing and tesla is in that bucket. He looks at cyclical rebound companies that will make a recovery because its cyclical in the third thing is a special situation. If you think about those three categories, youre getting a lot of diversification right there. David its a great piece and its fascinating. Thanks very much. Thats our editorinchief. Its fascinating to make that kind of return. Lisa when you hear 50 return, i want to hear more. David coming up, more from Brian Moynihan. We will talk with him about his bitcoin on the banks, and more. Live from new york, this is bloomberg. The money will go back into circulation, if it is Share Repurchase or dividend. Bank of America David moynahan on how the tax overhaul affects the economy. More from my exclusive interview. U. S. Growth and inflation data out in 30 minutes, telling us if we are on track the fed things were on. And who will be the retail winners and losers in the tax lottery . Welcome to bloomberg daybreak. Im david westin. Alix steel is off today, a shortened trading day of the year. Taking a look at the markets, looking at the stoxx, ftse 100 up by half a percent. He dax down by nearly. 1 s p futures up, have gained on the nasdaq more. Of the stock market, the euro is gaining against the japanese yen as the Japanese Bank decides to stay put with her stimulus effort overnight. The euro gained against the british pound as turmoil in britain continues to depress the outlook. 10year yields are declining just a touch after the selloff in the past two days as the german 10year the continues its ascent, to a lesser degree. David lets get an update on whats happening outside the Business World with emma chandra. The white house is taking a victory lap after Congress Passed a landmark tax overhaul bill. Promised he was companies would stop relocating overseas now. The bill cuts the Corporate Tax rate from 35 to 21 . A majority of americans believe the bill was written to help the wealth a. Congress is coming down to the wire to keep the government open. The house is working on a barebones plan that would avert a shut down by saturday. In melbourne, australia, an suv rammed into pedestrians on a. Rowded street at least 14 people were injured. The driver and another men have been arrested. Police believe it was a deliberate act. They describe the driver as an Australian Citizen with afghan dissent with a history of Mental Health issues and drug use. Global news 24 hours a day powered by more than 2700 journalists and analysts in over 120 countries. Im emma chandra. This is bloomberg. Be prettyks stand to big winners as a result of the tax overhaul, and this comes after the industry went through revamping after the great financial crisis. The question is now whether banks will be taking on more risk to make their businesses grow faster. That is what we asked Brian Moynihan when we sat down with him for an exclusive interview. In our eight lines of business, there are strategies, responsible ways to get people to think about it. We want people to think about the transition. The world talks about being in crisis. We make Tremendous Investments in the pot warm. We had to get people switched. We have to win in the marketplace. The second part of responsive growth is we have to do it on a customer focused basis. It is illegal in the u. S. For us to make an acquisition. It is all organic customer driven. The third part is the risk. In good times you have to be more careful managing the risks. In the bad times, you know what the problems are. Be fourth is we had to sustainable. We talk about being sustainable, having the best pays for people to work in our Community Sharing success. Then having Operational Excellence. Getting all that to work is what we are driving at. If you think about us going forward, what are you going to do . We have a consumer business, accounts,ecking credit cards, home equity loans, auto loans, and we are driving that through, providing that her service, more technology, more locations, and you keep investing in the business. All the while, the cost of operations are coming down. That is what Operational Excellence is all about. How can we continue to take out cost because of historic inefficiencies, customer behavior, optimization, all of that driving through. Into the Wealth Management business, number one in the United States, have a profit, revenues, all the different ways you count it, it is great for us and merrill lynch. The question is how we deal with the revenue compression. People use the word robot advisor to describe it. How do you make a Financial Advisor do more and offload more of the work for them so they can spend more time working with a client as opposed to working in the back moving the client assets around . More planning. When you go to the corporate side, we have a tremendous commercial business. All over the United States, globally on the highend. The job there is how we can support these clients. There is tremendous opportunity to do Capital Market activities for midsized clients that our market share is Single Digits and should be multiple that. How do you deploy their . Then you go in the Corporate Investment banking markets. The markets is where we will always invest but it will be constrained a bit by the amount of risk we are willing to take. Our team did a great job looking back, projecting out this quarters revenue. It has basically gone between 12. 9 and 16 billion every year. Quarter,re quarter to so he has stabilized, the teams done a great job. Its all about driving Operational Excellence. Each of the businesses have those four tenets going through them. David fix trading right now is almost a nexus to question for the major banks. Every quarter, we look at that carefully. Are you saying we dont need to grow the top line . Doing that may incur more risk. We can increase profitability through reduced risk, is that the strategy . Now,r risk from 2010 to 10 of the risk level. If you look at todays portfolio, put that volatility in from 2010, it would be four times less. You are making as much revenue or more. It is moving stuff through the system, as opposed to having big Balance Sheets. By the way, the same is true in equities. Big fixed income players because we have the clients, income clients, and we bring them together. But you have to automate that business. Jimmy and bernie and the team that works on it, they are bringing the electronic vacation, just as we did in the equities business. They have the ability to trade all loans by getting bids around the market. Think about the nasdaq early market days. Have,not only the ones we but others originate. You get into these very important ways to improve the profitability of it without necessarily growing the top line beyond what the market will give you as a generally gross, as a generally ebbs and flows with volatility. That is what you are trying to follow. You are trying to follow the market and the client, not independent risk you are taking. David is there a similar approach to credit cards . You have not grown your topline as fast as others have. Is it your goal to catch up with them . You have managed your risk, you have lower credit costs than other people. How are you looking at that, how can you grow your credit card business . You have to think about the whole consumer business. If you look back a generation ago, we were in the credit card business as a standalone business, whose only job was to get another credit card. Thousands of partners, an independent origination platform, and then we attached on the front and the bank of america. We charge of 60 million of credit cards. ,175 billion of pure cards another 50 billion of unsecured business. We brought that down to about 85 billion or so. It has grown a couple billion dollars. But the risk went way down, the cost of origination went down, the origination of new cars goes up every quarter as opposed to staying in place. And we still have great affinity partnerships. But the affinities we are working on is bank of america. Our rewards program with our credit card, our bank account, the way that you qualify, is unique. Driven. Ou relationship we want david westin, his core account, he sends monthly bills out, they check comes into. We want his credit card, his mortgage, home equity loan, auto householdwe want that that he wants his significant other, kids, and you keep driving at that. You want your card to be used first. We put a lot of emphasis on that. That is how we use the reward programs. That is all about what we are doing. When we brought it down, it was really to get to the natural level where you grow it back out against. The good news is we are third or fourth largest credit card in america. It is as profitable as it ever has been, but it just doesnt completely differently. If you look at the risk that in the business, the other thing is, we charge 12 in one year in that business. Now we charge off in nine quarters with the stress test, 11, 12 . 10 employment, the risk is so different. That is what responsible growth means to us. It comes from the drive and penetration, Value Proposition of the customer to use the product because they get more for it from bank of america. David that was part of my interview with Brian Moynihan. Two very different products. He is consistent, he doesnt need to compete for market share. He needs profitability by driving the cost. Was i thought it interesting he emphasize the automation of the business come in order to reduce costs, we can automate more, including electric bond trading and loan trading in a way that we did with equities year ago. This raises a lot of questions about how they are doing that, especially because you dont have bonds traded on exchanges, they are overthecounter. How is he doing this, how is he leveraging is size . Which is what he was talking about as well. David he doesnt think they are close to the end of it here and there is more to be done because of digital. Lisa but how much is he willing to give up information in the process . That is one of the big hangups fying the markets. You have firms that have a higher proportion of the information then even some of the sell side. It will be interesting whether they speed that up. David we will continue the conversation on digital. More will Brian Moynihan and how much of the bank has spent on coating over the last years. You will be surprised, its a big number. Another loss for uber. We take a look at the ruling in th eu and what it means for the United States. This is bloomberg. Emma this is bloomberg daybreak. Im emma chandra. Corporate america may be trying to get on President Trumps good side when it comes to the tax bill. Hours after the measure passed, at t said 2000 u. S. Workers would get 1000 bonuses to celebrate. Meanwhile, wells fargo says they are raising the minimum wage. Investannounced it will three hundred Million Dollars in employee training and corporate giving. French automaker renault is working looking for a new ceo according to a french newspaper. The paper says he may remain chairman of run out. He is still the chairman of the japanese automakers. A new round of funding values chinas largest ride hailing it app at about 56 million. That is according to people familiar with the matter. They raised more than 4 billion. The company has dominated ride hailing in china and has driven into her out of the market. In a move yesterday highlighting the transatlantic split over regulation, dear up in court of justice ruled uber should be ruled as a transport company, not a tech company. The decision reflects a basic difference looking at ride hailing in social media. Joining us from london is jeremy con. Give us a sense of how much this will affect ubers business. It may not have that much of an impact because the company was already starting to comply with heavier regulation in european cities. They had already said they would comply with the same kind of regulations for these taxi companies, some car for Hire Companies in some of these european cities. May not be asuber large as some are assuming. Lisa there is a bigger impact, what is uber, a tech company or Ride Hailing Service . Currently, the European Union is looking at it as a Ride Hailing Service where the u. S. Is looking at it more as a tech company. Why does it matter that they europeans are looking at it as a Ride Hailing Service. Going forward, could this be a template for the u. S. . One of the interesting things here, while the impact on the business in europe may not be as great as some are assuming, what may happen, a lot of u. S. Dates states decide to follow the lead of European Court of justice and start imposing more regulations on uber. The difference there often has ,o do with various employee law things they may have to follow in terms of maintaining the vehicles, certain standards that the consumer might expect from uber. There is a slight difference in what uber will have to do to comply with the regulations. In europe, in some cases they are already complying. The bigger impact could be in the u. S. , it some states decide to follow their lead. Lisa what is the implication for uber drivers . Will they need to treat them more as employees and not as part of the gig economy as a result of these changes . In some cases that will be the case. It will be easier for cities and countries to say you have to extend the same Employment Rights to these people that you would to a fulltime employee. Given this regulation, have they taken into account the possible fx on deterring future growth on these companies . The theory in the u. S. Is, if you are more laissezfaire, they will do more. As a practical matter, will this curtail some of the growth . It could, and there is a fundamental difference in innovation between europe and the u. S. In europe, they have tended to take a cautious approach, to assume that things could go wrong, to regulate ahead of trouble. The u. S. Takes a much more laissezfaire approach. Regulators have tended to say, let the innovation go forward, let businesses do what they want. If there is a problem we discover, we will regulate to prevent that from happening in the future. Europe has taken the opposite approach to say, what could go wrong, lets regulate to prevent those issues from arising in the first place. Discussion ofhis treating employees the same way as other Ride Hailing Services greens of expense. This could make it really expensive for uber, more than currently. Is anyone talking about how this potentially hits the bottom line . It could make things more expensive, that is true, especially if they had to extend benefits, pensions to these workers. In the u. S. , there could be issues around health care as well. It potentially makes it more expensive, makes it much less flexible to extend these platforms. Could definitely slowing down the growth in some countries. David thank you, jeremy. Will look into the longterm benefits of quantitative easing with michael gave been, barclays chief u. S. Economist. This is bloomberg. David 2018 could mark the end of an error for Central Bank Bond buying as the move toward normalization. The use of quantitative easing has proven effective for the Global Economy but a new study says the longterm benefits could diminish over time. Joining us now is Michael Gapen. This study comes out of bis. First of all, welcome. Does it surprise you that over time the markets adjust, investors adjust and it has less effect . No, it doesnt. I think thats been the general consensus out of Monetary Policy thinkers in Central Banks. The notion is that we were buying bonds to put downward pressure on longterm yields. We think that happened through a stock affect. How much you drive down longterm yields depends on the number of bonds you by relative to the outstanding stock of Government Debt. It Government Debt continues to rise and you stop buying, the impact of your purchases will diminish over time. There is a consensus there are diminishing returns and the effect of what you do fades over time because Government Debt is rising. Lisa are we hitting that Tipping Point . On thea beautiful chart bloomberg looking at the growth in Central Bank Balance sheets. The blue is the ecb, the tank is the boj, the white is the fed. The fed has leveled off but you see a massive increase in the boj and ecbs Balance Sheets. Are we reaching a point of no return . Is there any way they can continue the bond purchases, especially because the bank of japan pretty much owns japan at this point . Probably by the end of 2018. One other way to look at that is central bank talents sheets as a share of gdp. That should continue to rise through the end of 2018. Even though the fed is stopping and starting to shrink purchases of the ecb and boj are outweighing that. We believe over the course of the year you will start to see the ecb take a step back, and the boj adjust its yield curve targets, which means Central Bank Balance sheets as a percentage of gdp could decline. We are maybe a year away but i think your point is well made. David back to the stock and flow issue, particularly looking at borrowing 1. 5 chilean dollars for a new tax overhaul package, what is the danger for bondholders . If the u. S. Is issuing more bonds at the same time, maybe we see the ecb tapering off, and even the boj . Overuities have rallied the course of the whole year on expectation of tax cuts. 10year finally moves 15 basis points in the last three days, now at about 2. 5 . So you have a two fold. Deficits rising in the u. S. , fed buying less, upward pressure on longterm yields in the u. S. If the ecb stops buying and signals a may raise sooner than the market things or the bank of japan adjusts higher, you could have further aboard momentum on bond yields. In essence, their bond buying is keeping our yields low. But the fact that we have a deficit package and they may stop lying could push long and yields higher. Lisa speaking without histrionics [laughter] david which we appreciate. Lisa you would think the end of this all is this going to be a real problem . No one really knows. It may. I wrote a piece last week that says Central Banks are really reluctant to rock the boat now. They want to test how much further expansion can happen without pushing Inflation Higher but theres a limit to that. We think in the second half of this year you may hear a change in tone. David Michael Gapen will be staying with us. How, we will get a read on the u. S. Economy is faring with the latest gdp, jobless claims, and core cpe figures. Live from new york, this is bloomberg. Retail. Under pressure like never before. And its connected technology thats moving companies forward fast. Ecommerce. Real time inventory. Virtual changing rooms. Thats why retailers rely on comcast business to deliver consistent Network Speed across multiple locations. Every corporate office, warehouse and store near or far covered. Leaving every competitor, threat and challenge outmaneuvered. Comcast business outmaneuver. Lisa this is bloomberg daybreak. Im lisa abramowicz. Lets get you caught up with the Market Action ahead of key economic data. Dow jones futures up, nasdaq futures up. 2 . Utures up still more, are we going to see another record today . We shall see. We will definitely see some data, coming up with the gdp report for the Third Quarter, as well as the personal consumption index, all of the some indexes coming out. Jobless claims did rise by the storms to ahe fiveweek ip weekly jobless claims rose 20,000, 245,000. That is more than the estimate of 233,000. 10year yields not reacting to strongly. We are also getting some rightion data from canada now, inflation increasing more than expected. Jobless claim did rise more than expected. I have to wonder how much that have to do with the fact that this is still messy, or whether this is green. David that is last week. Judy p, consumption, that is the Third Quarter. They have all softened slightly. Gdp annualized growth, down to 3. 2. To 1. 3. From 1. 4 it is the third before a quarter that is long past but it is slightly softening. Lets bring back in Michael Gapen. You know how to read these numbers. What should we care about in these numbers . Wasven though the gdp data revised down, i think personal consumption was solid in the quarter and we also had another Strong Quarter of business investment. You are seeing a couple of things. One of them, as you mentioned, very strong global growth, pick up in business spending. Part of good news domestically but a lot of good news externally. The economy has a pretty solid pace and momentum heading into the fourth quarter. Lisa i am struck by the pce. I feeling this gets to the heart of the question everyone is looking at, which is is inflation picking up . This indicates it is not as quickly as people are expecting. Is this the key did appoint the fed will be looking at, and that perhaps two rate hikes is where they will stop next year . Ishael i think there tension in this. What i think will happen is, i think the Unemployment Rate will keep drifting lower. That makes the fed nervous. They will continue to look forward and say, if the Unemployment Rate is dropping toward three, which i think is where it will be going in 2019, 1. 5 pce cannot hang around. There is tension between inflation data pointing to softness but labor market data continues to be quite solid. Over time, the drop in the on implement rate will continue to make them hike at a regular pace, more three or four with tax cuts, than two or three. Lisa you really think jay powell will go into office after just being appointed by President Trump and say we are going to offset any growth from your tax cuts by hiking rates more than the market is currently pricing in . Michael some of the transitory. Will be we will know that in april when the march of data hits. We will have a feeling of how much of this is more persistent, how much is transitory. I would be shocked if inflation is not a little higher over the course of the year. If we came back a year from now, it would be around 1. 7, 1. 8. Not robust but above where we are. That policy will be keep thing up keeping up with where inflation is going. 200e or four hikes gets you basis points over the right next year, so not too tight. I still think the fed is in a position where it can raise rates and not choke off activity and not offset a lot of the fiscal stimulus. It is more 2019 were that would take lace. That another thing chairman powell will have to take into account now is tax legislation. They will have to take this into account. What will that do to their equation next year . Michael in coming out of the last meeting, they clearly revised up growth, revised down the path for unemployment. Path forn unchanged policy, unchanged inflation outlook. The only way to reconcile that is to think perhaps they would have reduced inflation had we not had the tax cut. We will get another view on that in january. If the tax legislation spurs activity and continues to push the Unemployment Rate lower, my bet is they will continue to normalize. Lisa im struggling to make the connection between how the tax cut will lead to higher inflation. I can see how that kelly to possibly more share buybacks, capital expenditure. Where does the inflation coming here . Traditionalt to the view that if the economy is expanding, the output gap is getting positive, then there must be some resource scarcity somewhere. I dont think the tax package will put a tremendous amount of a Party Pressure on inflation but it should not nor it. Lower it. And our forecast, a tax package of this magnitude only as about. 1 on here on your inflation. David what about growth . Brian moynihan says that his economists are saying summer percent gdpnd. 4 growth next year. I think thats right. It supports consumption and investment but when domestic demand picks up in the u. S. , we get more imports of goods, so you should get an offset through trade. We net around the same number. I think thats a reasonable estimate. Yesterday, the head of marathon asset energy says he expects the dollar to appreciate by 10 or more against the euro and yen next year, as companies repatriate about a trillion dollars of money back to the u. S. Do you agree . Michael our strategist would say no. Most of these assets are held in dollar denominated assets already. We dont look for tremendous pressure to put upward flows on the dollar. Our guess is the dollar is weaker over the mediumterm as the boj and ecb move closer toward normalization. You will get a weaker dollar on the back of those changes. This is from thirdquarter numbers come in the Rearview Mirror at this point. Tomorrow, we get numbers that are more current. How important will those numbers be to adjust whatever views you have about growth and inflation . Michael personal income and spending data in november will be important. Consumption is 70 of the economy, so any signal on that is important. We expect to be strong, personal spending to come up around. 4 , adjusted for inflation, which would signal solid growth for consumption in the quarter. We are tracking gdp growth somewhere around 2. 5 , so a modest slowing from the Third Quarter but well above potential growth. Lisa what is your most contrarian idea . The one that you talk to with other economist at cocktail parties . Will circle back to what i said before. We have been very aggressive in how low the on implement rate can go in a modest rate environment. Most people think at some point we run out of available workers, on implement rate has to flatten out. That is what is in many peoples forecast. Case. t think thats the history suggests the Unemployment Rate continues to decline throughout the cycle. With this tax package, i think the on implement rate will be around 3. 5 next year and pushed 3 in 2019. David how much of that potential to further reduce the on implement rate is because wages are not going up faster. They are not drawn people in from the sidelines as you normally would if wages were higher. Ichael there is some of that participation among prime working women has surged. If these were workers on the margin in the sense that Employment Opportunities were not good enough to say bring in home health and transition over, i think you could argue that the labor force is Strong Enough now, opportunities are good enough now and you are seeing the surge in participation. It is happening, but only in certain categories. David you say specifically among women. That is what jay powell said in his testimony. Kruegers has done work on this as well, and i believe it. I think there is something to be said for that, unfortunately. David sad statement for the country, really. Thank you for being here, michael. The winners and losers from the tax overhaul. And as you commute in today, you can tune into tom keene and Jonathan Ferro on the radio. Pimm fox joins the conversation at 9 00. Bloomberg surveillance can be heard all across the United States on sirius xm radio. Live from new york, this is bloomberg. Emma this is bloomberg daybreak. Im emma chandra. Coming up later, a conversation with william lee, the Milken Institute chief economist. This is bloomberg. Now to your Bloomberg Business flash. A Media Labor Union in the u. S. Is suing amazon, tmobile, and Cox Communications for age bias. The communication workers of america say the companies discriminate against Older Workers by targeting their ads to younger people on facebook. Those Deadly Northern California wildfires in october prompted a west coast utility to suspend its cash dividend. Pg e has lost almost 9 billion in market value since investigators say they were looking at its equipment as a possible cause of the fires. So far, the cause has not been determined. It is the start of a new era for the magazine that covered american pop culture for the last halfcentury. The Rolling Stone cofounder. Old his stake in the company according to people familiar with the matter, the deal values Rolling Stone at 100 million. Isa thank you the impact of tax overhaul on companies will spread far and wide. One of the sector seen as a big winner is retail. Among the companies that stand to benefit the most, macys, according to oliver chen from callanan company. He joins us now. Oliver, macys stands to benefit. Can you give us a sense of who the other retailers are and why they are focused on here . Areompanies that domestically focused, also companies with high existing tax rates. Others apartment stars such as kohls, nordstrom, and mallbased retailers. This is a better tech or, so this is a nice holiday gift in terms of whats happening. The question is how these benefits will filter through. It is a tough retail environment. Retailers could pass along discounts to consumers. They also need to reinvent their stores in the battle versus amazon. Before we move on to what you think they should do with the money, jcpenney, a perennial loser in the market. Certainly, has been struggling this year as well. Not a beneficiary. In fact, the tax plan may hurt them. Has been tough because you have to make profit in order to benefit from this. That is a dynamic that is true lisa that is such a burn. You have to make money to get a benefit. What we see is a renewed effort on apparel as well as appliances. I am wishing and hoping for the best, cautiously optimistic. We have a marker perform on jcpenney. David what about the leverage issues . Retailers tend to borrow a lot of money to buy their goods, so they can sell them. Greatare looking for Balance Sheets as we look ahead. We like tiffany, walmart. Leverage has been a very difficult problem because storesls in the has been difficult. Lisa what should retailers be doing with their money . Should they be doing dividends, buybacks, investing on making a better experience, how should they do that . You are bringing up some great points about generation z. It is about duration, culture, community, reinventing the store. People today shop differently. You dont necessarily go to a store to buy a product. You may buy it on your phone, you may go and buy after. Its important for physical stores to be reinvented. Think about culture, food, museums, wanting to immerse herself in a brand. A Bigger Picture topic is really the battle of the brands and how you can go into a store and how it can improve your life. David if you make that story as good as you can, can you survive without the online component . Walmart seems to be doing good in part because they have improved their stores but also made a big investment in jet. C om. Point. Bring up a good the retail superpowers are merging. Target, walmart, amazon, and then everybody else. We will see a lot of unlikely bedfellows in terms of m a this year, combinations of businesses. It is up to you as a brand to curate and drive an experience for the new generation of shoppers. It is a lot about internationalism, ambition, creativity. Retailers need to think about how to engage that customer. Lisa internationalism brings me to a point that makes me scratch my head. Take a look at the bloomberg. U. S. And european retailers have diverged. The blue line is the s p 500 retailers, the big u. S. Ones, and the white is the european ones. They have done poorly, even as retailers in the u. S. Gain. What does this say about the state of retail on both sides of the atlantic, what does this say for internationalism and globalism amongst the retailers . But we have seen in the u. S. Is better inventory control as well as the colts that. We have had a few years to think about this in terms of mobile and the fall of footfall, as well as retailers closing. They are more in line with a new reality, in terms of why the u. S. Has performed better. As we get global, its a good question. Have of the u. S. Retailers not been great global concepts. If you think about independent brands like zara, they have translated well. We think tj maxx, costco translates well. The cemeteries there are great value. Similarities there are great value. David you do see zara all over the place, but what about uniqlo . Look at lululemon, for example. They have great fabric, technical, femininity. Unico has great stuff as well. Going through a casual as asian phase in terms of how people are dressing. And suitlonger suits separates, it is about the yoga pants and dressing that up and down. Uniqlo picking about fabrics, that is a key learning. Zara, it is all about speed. There are microtrends, and they can execute very quickly. The principles there are speed. T. J. Maxx and victorias secret do that well, something to watch for the long term. David i just learned something, fourway stretch or antistink. Lisa i think we have been doing casual as asian in the past few decades. It is the ondemand consumer who wants it all. You want your clothing to serve a purpose and look great. Lisa what is the retailer that you think has gotten beaten up too much . Tjx companies. They have had some issues with inventory flow. This year is off to a great start. Concept, as well as younger people loving brand names on discount, will resonate. They have a good home Goods Division as well. Lisa any company that you think will do poorly next year . We will continue to watch the mall retailers. There are still too many malls in america. There is a big repurpose midcycle. Hopefully, the momentum we are seeing in holiday will continue but inventory control and speed are big issues that these Companies Need to rethink. A lot of analysts say that next year we will see a lot more store closures, the further capitulation of a lot of these retailers. The big concept here is also amazon and what is amazonable. We like the bow tie theory. You buy a highend luxury retailer like tiffany, or you go deep value, like costco, tjx, ross, and dont get stuck in the middle. That is basically the mall and retailers, those that dont have the balance between technical and greatlooking. Lisa if you dont have antistate, you dont have a chance. Thank you for being here. It appears all the leadership of the Republican Party is out in force in washington. Mitch mcconnell appearing at an event, talking about the tax legislation. Sayingan also out on tv that it is not nothing that people are living paycheck to paycheck, even if you get a small bonus. Also kevin brady, the house ways and Means Committee chair, saying this tax break means a lot to the middle class. We will bring you headlines as they develop but it is clear the house and Senate Republicans are out in force trying to sell this tax law. Bank of america bets big on coding. The enormous figure behind the companys tech future. We hear from Brian Moynihan next. And if you have a terminal, check out tv. Check out our charts and graphics and interact with us. This is bloomberg. David here is what has caught my eye you may have your rethink what kind of company bank of america is. From my exclusive any with Brian Moynihan, they say they have a lot more in common with Silicon Valley that you may have thought. We are 25 billion in coding. You start to think about that, that is a lot of feature functionality, improvements. About 2. 5, three billion dollars a year, higher when we are doing mergers. We are basically a very talented group of 200,000 teammates in a huge Computer Technology system, analytical frameworks. David that really did catch my eye. That was a genuine wow. 25 billion over eight years. 3 billion a year on coding. Lisa my question is, is it enough . If you look at other banks, they are doing the exact same thing, and they have to. You look at all of the online lenders, companies that are competing with payment systems, you think about blockchain, how people are interested in streamlining some of the transactional cost. If they dont do this, they risk becoming obsolete, and they know that. David his entire Business Plan is on getting cost down through automation. This is his whole future, controlling the cost and getting profits of. Lisa this is interesting as the occ looks at allowing Companies Like walmart and amazon, along him to act more like banks than they have in the past. What does that do to a bank of america if they have such a direct line into their customers . David and what about the regulator . How do you regulate an algorithm rather than a person . Line ofere is a whole law talking about algorithms. David and what kind of regulators will we need to have . They will need to be programmers themselves as a practical matter. The open is coming up next. Todays guest is jim bianco, the founder of younger research. Live from new york, this is bloomberg. From new york city, i am Jonathan Ferro. This is the countdown to the open. President trump takes a victory lap after the gop sends the tax bill to his desk awaiting his signature. Companies are not waiting. At t and comcast promises 1000 bonuses. Wells fargo promises to hike wages. The global bond market refuses to end the year on a quiet note. Counting down to the opening bell, lets go through some of the action. Two days of losses but still on course for a fifth straight week of gains. The s p 500 looking firmer. In the fx market, eurodollar stable. All is quiet in g10 through the morning. Nothing quite about the last three sessions in the treasury market. 2. 50 yesterday, just south of that now. Story of the last 24 hours, President Trump taking a victory