15 rebound over the past three days. Orl 2018 bring more gains the traditional new york new year hangover . This or market focus on news of a trump tax gain . We are less than half an hour away from the start of european trading. Lets take a look at where we stand and what we will be doing. Lets take a look at the fair value calculations around europe. The london market looks at it will open in positive territory. It looks as if we will see some weakness coming through in some of the continental markets. That is what the bloomberg is kicking out. Lets show you what is happening on the gmm. The gmm is interesting in terms of what it will be showing us. Lets talk about why china sold off this morning, that was interesting. The rest of asia had a positive session but china was down at the close by 1. 5 on the 300. It was interesting to see the consumer end of the spectrum. Also showing signs of weakness. The chinese currency on the move overnight to keep an eye out what is happening. Lets move it on. The intriguing stuff is happening in the commoditys space overnight. There is a few things to be aware of. Copper is trading lower but the lme contract is in positive territory. The reason was a couple of factors, one of which is the supply side story. China shut down one of the biggest copper plans on the emissions of story and that is on the supply side and there is a demand side from china and from the u. S. We are beginning to price in the infrastructure story coming through from the president of the united states. The chinese expended the tax breaks for electric cars. The be why be one of the standout stories. A solid session yesterday and the reason is the supply side story. Have seenion we sending branch and of uti. Wti went to 60. It is an inflation story. We will talk about what is happening in the pips market. Lets get a bloomberg first word news update. Here is sophie kamaruddin. Sophie lets stick to the commodities claim. Oil is trading higher after an explosion. Aha explodedun by w yesterday. To expectia set oil to jump to help the kingdom report its first Budget Surplus in a decade. Copper his surged to the highest level after china ordered the combat airr to help pollution. Demand. Y optimism about nine days forat it the topat makes basement performer. And the Producer Price rebound appeared to soften. Compared withfits the purported 25. 1 percent in october. The yuan allete its sanctions and are being seen as unlikely ownun nuclearg ambitions. Sthe new restrictions are more likely to hurt ordinary people in the isolated nation, experts said. And gaining 1 trillion as stock markets shrugged off economic social and political divisions. That is more than four times last years gain. 20 increaseh a for the msci. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Thank you. Some breaking news on volvo. It we have been looking at the Ownership Structure on the debt scream debt screen on my bloomberg. Investing in new companies and that is how it is spending the money. But they will not invest money into fullblown. It will become the largest holder of Share Capital as a result. Developmentsurther coming through on the bloomberg this morning. We will bring you share price reaction to that. And it. 2 stake and private equity funds. Will invest in existing businesses and into some new businesses as well. Maybe some breaking news to what they are doing with the money. Lets talk about what is happening in the commodities space. Commodities are heading intos into 18 on something of a high. Rallying to its highest in three years. Goldmans is predicting a return on commodities. Has been a tough few years for commodities. Asking to beay be bought. Joining us to discuss all of this, paul dobson, mliv editor. If you look at the performance of the commodities index it is a little bit low which is kind of a surprise when you think about the goodwill that is out there in markets. Low levelse up from in the middle of the year and ,here are a number of standouts metals and copper as you have been talking about. Crude oil higher as well. Might be supply driven rather than demand driven. It is a sign that theres a bit more balance out there. This has been Agricultural Products that have been down there. Get the feeling there is so much optimism about the Global Growth story that should be as supportive environment for commodities. The structure of the market has to be right. The shape of the forward curve has to be in line. It is tough to make money. Are we in a position where it is easier to make money and commodities because of the structure and the way the market is set up . That does make things nicer for an investor. On the other hand you want to see the longterm demand is there. Is genuine impetus. I think theres a lot of investor enthusiasm, we are seeing people piling in and seeing a big jump in the long copper positions. What is to bear in mind the china story going to look like in 2018 . Youre talking when you had a drop in chinese shares, if it is going to be a growth slowdown. A is that going to impact iron ore, key metals demand and is the rest of the worlds growth and demand going to pick up enough to compensate for that . Guy you talked to Commodity Funds and maybe that gap needs to be filled. There is the chart which is u. S. Tips. They have been rallying. How much of what we are talking is going to feed through and how much of it has fed through into an expectation . Inflation is starting to tick higher. Bad guy inn is the some ways. If inflation feeds through that could create a headwind for oil investors. It is starting to feed into expectations that are pretty modest. Guy the trend is important. Paul watch out for food inflation and metal and oil demand especially if it is demand driven. You look at the u. S. Long bunds, we have significant net long positions, investors betting on the curve the has been flattening a lot in the u. S. And that has to do with expectations for modest inflation. Are starting to make the trade look more precarious. Guy thank you for seeing us. Paul dobson, mliv editor. You can follow the rest of the team on your bloomberg. I thoroughly recommend it. We have been talking about it a little bit, oil trade is near its highest close after a pipeline exploded in libya. We will talk about what it means for opec and how serious the outage is. We will get updates on that. That is next. This is bloomberg. Guy 7 43 a. M. In london. Lets get a bloomberg first word news update. Here is sophie kamaruddin. Said itshell has expects the potential impact of u. S. Tax reform to be favorable to the company and its operations in america. It said that will be primarily due to the future reduction in the income tax rate to 21 from 35 . The expect the change to impact its thirdquarter results. Apple shares have fallen in new york trading after analysts lowered projections for the First Quarter of next year. Citing signs of lackluster demand. Shipments may be as low as 35 million or 10 million less than he previously estimated. Elon musk is planning a pickup truck after it rolls out the. Odel y he claims he has had the elements in his mind for five years and he is dying to build it. The next generation of autopilots are going through testing. That is your Bloomberg Business flash. Oil is trading near its highest close in more than three years after an explosion of a pipeline carrying crude. Waha oiline is run by company. How significant is it, give me a sense of how long the outage is going to last . We do not have an answer to that. Bear in mind that as the company has not made the details clear yet, the other question to ask is is it sabotage or Something Else in happened to the pipeline . To 100,000 barrels per day. That was one Million Barrels per day. Terminals pulled in the oil from the interior of libya. It is a key position and the question is whether they can 18 a sense of security but the other question that comes as a result is whether the be a is justified to be exempt from the reduction cuts. The security situation if it is is not undertack control. Terms of what this will mean for prices, prices have risen on the back of this. We do not know the answer so that will get locked in for little while but wti went through 60 yesterday. Saudis beginning to redo the math surrounding what their budget will look like or their expectations are looking like in 2018 . Absolutely. For wtiricing situation we put together a chart that shows the technical indicators and how long we have moved from that. That is showing you what has been happening with your band. This is a similar story across s and the rsi. Her to get back to your saudi question on how they see the energy world going forward, they are looking at an expectation of increasing oil revenues. Part of the plan to balance the budget. That would assume an oil price of 75 a barrel. We have not had an analyst who would make that bold a call for that kind of time horizon but it shows you how the saudis might operate in the next three years. Although it might not dictate oil policy it still shows you what kind of mindset you might go into negotiations with. Guy that is one of the Big Questions for 2018. Bringing you the latest on what we are seeing in libya. Lets shift gears and away. Lets go to the other and of the spending story. Confidence in highend Luxury Brands is mounting as the year comes to a close according to the analysts at bloomberg intelligence. The launch of new caught products and a rebound in asian markets stimulating demand. Sales growth figures around 5 are set to accelerate. Into the year ahead. Bloombergg back intelligence deborah aiken. Are the Heritage Brands doing well and they will outperform. We need a definition, what is the Heritage Brand . They have covered themselves so brands like ms, Louis Vuitton , there is no defined answer. Guy they encapsulate luxury and you think of the brands you think of the luxury sector and ares these lands that likely to do well rather than the upandcoming ones. Whereh we have had years they have outperformed but have a fashion brand more discerning in terms of the discretionary spending, reacting to that for the 20s consumer. A high footprint in the u. S. Where Department Store sales are still quite soft. Guy lets talk about the u. K. We had the boss of harrods on before christmas and one of the things he said was the pound impact had been relatively short in terms of the way he felt. The big Luxury Brands have repriced. Is that what we are seeing or is the pound having an effect here . Deborah it has an effect in terms of bringing in tourists. People come here and spend. There is no arbitrage in terms of prices. Deborah if you think of chinese they do three quarters of their spend when traveling. The travel further afield. Europe is a key destination for them. The euroind is appreciates and sterling stays weaker. They have more for their buck. Not cheaper,h is it is the hotel is cheaper. Is that the way it works . Deborah it is. There is a slight time pricing element. Some prices are much higher in asia as compared to other regions. Guy we were joking about bitcoin and he was saying not anytime soon but he talked about the fact that they were the first to take alipay and they embraced the chinese consumer. Deborah absolutely. The chinese consumer, the latin american consumer, they do spend much. There also part of the luxury group and what he does overall. We can see what they are doing in terms of experiential as well. Certainly driving the top end. Guy china continues to be his biggest market and you are reinforcing that. Deborah and the fact that they are expanding themselves over there. With retail in airports. Guy thank you. On in 2018. Focus we are minutes away from the start of european trading. We will take a look at some of the stocks you are watching at the open including although. This is all tow trucks, not cars. Volvo trucks, not cars. That is one of the stocks you want to be watching at the open. Is fresenius. The market is open is seven minutes away. This is bloomberg. Guy we are four minutes away from the start of cash trade. Lets look at the stocks. Keep an eye on volvo. The truck maker, not the carmaker. An interesting story. The fda is concerned about drug india. In that may be mitigated by the fact that the company is out talking about the tax gain it make gain from the tax changes in the u. S. That could be a similar story for shell. It is getting its arms around what the decrease could mean in the u. S. It looks like we will see a fairly flat open. London may outperform. The open is next. It is four minutes away. A minutended guy to go in front of cash in europe. We are getting the slight indication on the pound. A dollar move that you need to be aware of. The nikkei closed flat but the Chinese Markets were down. To see thesting Chinese Car Company doing really well as china extends its tax out for lloyd vision vehicles. For low emission vehicles. Index closing down just a touch. Apple was the real story yesterday. And terms of what we are expecting in terms of futures, this is the picture we are looking at the moment. I think you see a fairly flat story. Keep an eye on the commodities. The oil story and to material stocks. Verynk will be very interesting. Copper is at a very solid run. Lets get into this market open. The open coming through here. Seere expecting to flattening get go. Let the market workers wake up from their turkey. A positive number been posted. A negative number being posted. We will wait until all the stocks are open to take a look at this. We will come back and do that in a moment. Some of these other markets are opening a little bit more of a negative story. There it is coming through. A small move. I think the story is going to be much more interesting at a stock level. You something about was going on. Energy is bigger there. For the energy story, we see it coming through from crude into the stocks. Plus you have the shale story. Benefit on tax. Im fascinated to see how percent he opens. Nnia opens. E financials fairly mixed. Consumer staples are the area we are seeing the most selling. Materials a bit more mixed. Financials mixed as well. Thats the picture were looking at. By 0. 4 . Is only down its a bit of a mix. What youre looking at is a picture where we have the tax story but also have this issue with what is happening with india. Lets talk a little bit about with happening with the monitor. At the moment, that we turn around and talk to about this. Ftse up a little bit. Futures didnt tell us that. Interesting to see whats trading higher the dax. Lets look at the movers. I can give you a heads up. Onepicture at the moment is where pichardo dialogue jupiters trading low. Diaz year was off. Know diaggio is off. So the Energy Stocks are well bid. I wonder whether the european car stocks will benefit from the tax change we are seeing out of china. The extension of that story. Thats going to be something to keep an eye on. Focus on the u. S. Economy. What were looking at here. Now are beginning to turn towards president trumps pledge to boost and for structure spending. Could face a little bit of disappointment. Inflation pressures are starting to pick up. It set for its highest close since april. Lets talk now through what is going to be an interesting year for this man. Hes a Senior Investment manager at aberdeen standard. Good morning. Paul good morning james good morning. I expect inflation to be a theme in 2018 . James i think thats quite close to consensus now. The market season as a greater chance of having a higher average inflation rate. A notch sure the market is prepared for anything that is aggressively higher than centralbank targets. Thats one of the potential risks. Certainly for the end of q1 and into q2. Inflation going to look . I think the market is to some degree underestimating how much inflation we may see. Itt i have the u. S. Guy have the u. S. Tips up. We are 1. 95 now. Around centralbank targets. The rate of change is important. As we see these metrics pushing on, where does the market start to repricing the backend . Its more, tune in just inflation. Ouncessome of the tax have been part of that story as well. Inflation, ito think tce inflation is the dog doesnt bark. That is really lacking. I find a little frustrating because it think there are statistical reasons that is the case but those are things you should be looking through rather than looking at. The way consumers shift to pare spending away from expensive goods cheaper goods. Looks more closely at the consumer basket. That can mask the signal of projection price pressures. If there are domestic price pressures and consumers are switching away from those goods, potential something imported maskingaply, you are this producer reduction side of the economy signal which is tied to labor markets for increasing production costs. I think cpi is the best of the bad bunch. That has been much higher on average than we had seen. I think we need see something more sustained. Guy the fed believes in pce. Largely. Its a somewhat strange decision because as investor, it is that will beation a nominal return rather than a real return over longterm. Taxu think the pack benefits are probably greater than the market is seeing they are. Your bullish on that. What about the situation with infrastructure plan . In many ways, infrastructure is easier to get done but hard to enact. With tax, its been a traveling and arrive story. Maybe there is a little bit more on the upside. Story, infrastructure democrats are more likely to be on board. We need to fix our bridges and roads. Shovel ready projects are quite hard to deliver and the effect of them take a long time to come through. Less concerned about the notion of Shovel Ready Projects. I think thats an oversimplification or somewhat strange view of the world. I think there are plenty of Shovel Ready Projects in the u. S. And you can economy beset think we catastrophically underinvested in our infrastructure. Guy the bureaucracy gets in the way. We are going to build a bridge there but then you go through planning and tendering all of these kinds of issues. James i think those are issues that can be done with easily provided there is the political will to do so and the funding to do so. Things morere difficult to achieve is that its not a natural republican policy. Theyre about the stacks and less spending that more tax and more spending. With the tax change policy, that was right in the republican wheelhouse. Trump really isnt a republican president but that set of policies were right in the usual gamut of what we can expect from republican party. Infrastructure spending is not. Also the relationship between federal and state. These things are occurring very low level. About roads and bridges. Andoccur at the state level you have this division between was the responsibility of the state and the responsibility of the federal government who is getting funded and how. Explain to everyone who is not a u. K. Transponder. Its plan to link up with the north. Because that one. James the point to the u. S. Theomy next year, guy point about the us economy next year, your senses the risk is to the upside. The u. S. Economy has exceeded expectations in 2017. The fed deliver what it wants to do. We think it could exceed think its going to do in 2018 . I think thats one of the interesting debates and discussions to have. Although the changes in personnel, just the rotation, i think we have a more hawkish than. You lose two of the most dovish. Think you are getting a more hawkish look. A lot of the things that have concerned the fed over the last few years and of probably led them to this much more coffee those dovish position, fears and concerns are receiving. Not least of the fact that the Global Economy is performing much more consistently and strongly that it has in previous years. I think that gives them the freedom to get policy back. Unemployment, which is headed for the pointer percent. You have cpi inflation at 2 . The fed says somewhere around for now percent. Lets assume its a little the most in that. 3. 3 is still well away from that. They need to shoot for the middle path. Higher rates. Guy james stick around. If your bloomberg customer and of what these terminals, you can watch on tv. You can also follow all of our charts and fragility. You can also i bs directly. Let us know what to think of these markets going to 2018. Singer that. Y folk well be a bumpy arrival . They had a great tony 17. We will look at what is in store next year. Thats next. This is bloomberg. Looking back. Youre watching the european open. We are 14 minutes into trading. Lets look at what the market is doing. Volumes will be a little on the light side. The trade desks arent exactly well staffed. A london market that despite all expectations is no underperforming the rest of the continent. What we are seeing is london only up by 1 10 of 1 . Germany is up by. 3 . French market up. 2 . Similar theme around the rest of europe. Turkey is down. 3 . Bring up turkey for some reason. Lets focus on the emerging markets. Bonds if you to power had. Thats according to a survey of investors. Currency may struggle to stay in front. We bring back in james. Emerging market bonds have had a fantastic run. When does it end . And is the fed that will end it . It would seem that its not necessarily going to be the fed. Previously, the fed hike three times in order to unwind the balance sheet. Emerging markets, equities, bonds, hard currency, local currency. I point more to the u. S. Dollar. Its the more relevant fact. That the fed has been hiking rates because the economy is strong but the dollar has weakened. I think its more relevant. Obviously, things are also falling. Aggressive flattening. Tens have not. This is a chart of local indonesian bonds. This is how the market is positioned itself. Piling in. That chart goes in one direction. He goes to 2003. The market is continuing to move in and in and in. The breaking upgrades have held. Indonesia had another rating upgrade recently. When does the market reach the point where you think it is significant . It is overweight enough of the emerging markets story . The portfolio positioning story has gotten to where it needs to be. We need to go further . James the positioning story is fuel for the fire rather than the spark of light. Position is something that makes you cognoscenti of the likely magnitude of an unwind. Rather than what causes the turnaround. You mentioned ratings upgrades. He seemed south africa and brazil downgraded and it had started performance. Been volatileas because of politics. The story is somewhat next. Theres not a particular good reason why my views guy they believe developed markets will receive more of rates in 2018. The balance was in favor of the em and 27 in the battleship back. Em but that will shift back. James theres a story there. Portugal getting back into Government Bond industries. Im not a huge believer that the rating stories are the necessary reason investors make massive shifts. Liquidity. Ck to to me this is a story of liquidity. Theres abundant liquidity in Global Financial markets chasing a return. When you squeeze the u. S. 10 yield 10 year yield down. Fixed income investor, yearandahalf going ahead to look further a field to get a decent expectation. You pick up a real yield in the united states. With every the kind of story the folks at around . James i think all these things will happen. Not necessarily that one thing happens in that shift the landscape for emerging markets. As we go to 2018, what ims expecting is more realization and the dollar to regain some strength because the u. S. Is furthest advanced and will be more willing and able to try to policy. Ave also seen what could be significant boost to the economy that is more direct and powerful than a Monetary Policy stimulus. It doesnt operate through a hole budget transition mechanisms. All these things, i see upside. I dont think the dollars price for that. The dollar. E short you see it squeeze tighter higher, that affects commodities. Tell meot of people they believe the dollar still overvalued. You believe its undervalued. By what order of magnitude. Difficult the same. If you look at rate differentials against europe it should be closer to 110. Its been a decent guide over a longer time. 2017 was the operation. I dont think we can throw out the notion of looking at rate differentials. There are certain currencies which are not as directly affected. There is always subtlety and nuance. I dont like things like purchasing power parity because of think they have even less. They should be an anchor of the longterm. For me, the notion of the dollars overvalued is purely a function of arbitrary point of time in which we choose to compare it. I would still look at the state of the u. S. Economy, the fear of time over which is posted solid growth numbers, and so what i expect to be supported, i would suggest the dollar should not be falling. That is the trade the market does not want. If thats the case, a lot of things are significantly mispriced. James will stick around. Next, where should investors be position for 2018 . Will look at the new year. This is bloomberg. Welcome back. If youre watching the market open, we are 23 or 24 minutes and. Minutes in. German healththe care company. Its interesting to see what the markets focus on. This morning you have to stories floating around. One is that the fdas concerned about its quality testing in india. The company is also the same time, out and said it will be a significant beneficiary of the u. S. Tax changes. It seems this morning that it is the latter rather than the former that the market is focusing on. More companies coming out of the next few days talking about similar things with attack story. Take a look at the story of the volume. Not a great volume day, as you would expect. Maybe today isnt one of those days you can take a significant clue. The digestion of the story may change. At the moment, the markets is to be taking it reasonably well. You can get the dashboard to work your way through. Lets talk about what were talking about next year. Release you should be thinking about next year. Fundamentals are improving in most major economies. Is 2018 the year that you should start to be a little bit more nervous . Or do you start to get the full benefit of some of these economic gains . Is still with us. In ind of a guy have glass happened bigeye. Glass half empty guide. I recognize tightening Monetary Policy. The markets are discounting mechanism. We price this, right . Cynical to much more how good a forwardlooking machine the market is. You have to look at much longer term trends to get the view of what the longterm outlooks are. Economically, i am glass halffull. All of the things we have seen from Central Banks have been about borrowing the asset performance from the future. We didnt have the economics to justify some of the asset performances. I potentially think we have come too far. The performance doesnt recommend represent the economic picture of today. We need to unwind some of this. Are looking forward only next 18 to 24 months and pricing, were expecting economically. I dont know. Guy this is bloomberg. Guy lets talk about the headlines. Oil trades at its highest total in nearly two years after the explosion and 80 libya in libya cut supplies. Be back inears to business with a 40 rebound of the last three days. Well 2018 bring more gains . Keep on trucking. A Chinese Company agrees to buy a stake involve vote making it the largest single shareholder in the swedish truck market. Good morning and welcome. This is the european open. At our headquarters in london. We have been talking about it throughout the morning. Its what is happening in commodities that is driving things. The market is only up by 2 10 of 1 . Is having a fairly sordid story. U. S. Ve the data out of the sale of favorable. Out of the u. S. Is favorable. Decent story coming out of china. Byd doing well. Health care also doing well. Technology is where we are seeing some weakness. I wanted to is a supply chain story. Onsaw apple week yesterday concerns that may be sales are not doing as well as and dissipated. Lets get a first world news update. Oil straight highs close in more than two years after the explosion in the pipeline carrying crew to libyas biggest export terminal. The pipeline carried through the terminal and exploded yesterday, reducing output by 70,000 to 100,000 barrels a day. Meanwhile, saudi arabia is said to expect oil revenue to jump 80 by 2023. Copper has surged to its highest level since 2014 after china ordered its top producer to halt output to combat pollution. Is part of a rally in the metal this year driven by optimism about demand. Days, theun to nine longest streak since 2004. It the london metal exchanges top base metal performer. Chinas industrial firms saw profits grow slow. Rose 14. 9 profits ramy year earlier. Compared with previously reported 21. 9 in october. The United Nations latest sanctions of north korea are seen as being unlikely to slow the countrys nuclear ambitions. The Security Council unanimously approved new steps on friday. According to experts, the new restrictions or more likely to hurt ordinary people in the us live nation. Global news 24 hours a day ered by more than 2700 2700 journalists and analysts. This is bloomberg. Is on a mission to transform its business. Hosting a portfolio of 24 International Bands brands, its investing in the crevice. Francine lacqua talks with the ceo about how demand in china is growing. Askinge begins by important questions. This year, luxury has been booming. Mostly the chinese consumers. Chinese consumers are fantastic. They love beauty. They love luxury. They love our brands in our business. With chinese consumers everywhere. Not only in china, they are everywhere. Hong kong, japan, london. Have you had to adapt . The Luxury Brands are the same but for our mass brands like loreal or maybelline, the product we sell in china is made in china and formulated in china by chinese labs. Because of regulation . Not only but because we want to create a product that is right for them. , their aspirations are specific. We are formulating our chinese labs and manufacturing in our chinese factories. Number oneis is the beauty brand in china. Tell me about your success. Is it about distribution, ads, celebrities, with the attraction. The success of our brands everywhere is always the same. Quality. Brands, are absolute priority is the quality and the safety of our products. Chinesehing that the respect a lot. Its important to them. Plus innovation. Its extremely important. You have to innovate a lot. More than 50 of our products are new to keep innovation flowing. Its the imagery of the brand. Especially brands like George Armani and loreal paris. Its beautiful imagery. Chinese consumers are very sensitive to that. They like it. Guy the ceo of loreal speaking to francine lacqua. You can see that interview in atl tonight in new york 9 30. You can catch it in the u k and europe at 7 30 tomorrow night. Lets look at china. James is back with us. We talked a little bit about the u. S. And its impact. We havent talked about china. Its going to be one of the drivers in the story. The global ghost story. Global growth story. What are your expectations . Roughly more of the same. I dont think anyone is expecting a dramatic shift. Whether or not thats a dramatic impetus, its always difficult to tell. If you look at some of the underlying activity indicators, they do not track particularly well. Its a more volatile that. Volatile path. Weve had quite a lot of mixed messages. Over the last three months, shall we say. Weve been through the political event. Leadership has come through intact. We startr whether now to see the effects of that coming through. If we had to be super stable into that, you wouldve thought instability would come after it. James even people who have been ,uite concerned about china probably were of the opinion that its not going to happen now. Its not going to happen before the Party Congress but now that its out the way to see shifting. Pboc. Ene the weve also heard other messages. Maybe do not as worried. Preferred messages suggesting that deleveraging will be the case. Were going to see a series of meetings that may generate a new governor. A new governor, with the market expects continuity over the market expect to bring in someone new to sort out the issues. James i think probably the former. Ultimately the objective of chinese policy is to maintain the veneer of stability throughout. Even if there is an attempt to slow the pace. Were not near to talking about deleveraging talking about slowing the pace of stimulus. Even if were talking about that, the overall objective is keeping things ticking along. There are huge amounts of social problems that can occur if we allow the growth story to decelerate to wrap. I dont think the markets would immediately lead to the conclusion that new governor would bring in a whole new approach to things. Small attempts on the monetary aussie side. Monetary policy side. Realistically, if you look at the money gross numbers, youre talking about some pretty big numbers. Relative to the amount of gdp growth. It some incredibly inefficient policy. Still more to come from him. Up next, is the euro area covering recovery completes . Lets look at what we can expect. This is bloomberg. Guy we are 43 minutes into the trading day. This not a great era volume out there. Lets look at was happening with economics. The outlook in 2018. Momentum is continued expected to continue. How long can we sustain the current pace of growth . I urge you to look at the data. If you believe that kind of thing. Analyst comes. Can we sustain it . The recovery is likely to be sustained in 2018 but it will eventually slow in the eurozone. The rate of growth will move towards what a half or so. Were going to eventually slow to that level. It will still be a bright year for the euro. Especially as a completes its recovery. We have continued easy money to your policy . We select qe going on despite the high level of growth. Inflation hasnt really responded. Thats likely to continue. Probably in all likelihood, there will be one final stage of tapering. That will bring a since the early part of 2019. Guy are they really ready for the withdrawal of stimulus . But is not ready now think its getting close to the stage. That wed it incredible seem to think about Monetary Policy and terms of quite the street movements. Quite discrete movements. You do a little and you do when you are able to. Into this have got model central banking whereby we wait until we are 100 certain that everything is brilliant. And then only been doing move policy. Even with a place like sweden, they were only recently able to do qe. Uncertainty versus the lag of when full employment would lead to these pressures means you could be talking about a. Of two to four years. A major way out of step with the economy. Guy what we have learned from other economies is that employment levels, the output gap being eroded, is not a generator of inflation. I dont know when u. S. Inflation is going to kick in. At what level of employment record to start seeing that acceleration that you would normally except that expect to happen. Thes the ecb guy lesson things to be that even with the outward output gap is closed, you dont get that inflation. James its important to understand the difference between traditional stimulus and resolves the us. Its adding stimulus to the economy. Even when qe comes to an end, its not withdrawing stimulus. They dont withdraw until they raise rates or reduce the number of bonds they hold. If you look at the first rate 19, that will be a small baby step. When do we think the u. S. Economy is going to roll over . When we think the u. S. Session comes, what time . James 2019. Not soon. Ecb issimilar point the looking to withdraw stimulus, we could see the u. S. Economy running over. How money could water become . We are not very good at forecasting recessions. It doesnt comfort me about the ability of central bankers to create a oneyear a twomonth plan. Guy thank you very much indeed. James is not quite done. Morgan a ring every little bit we can out of him. Up next, the year in bitcoin. 2017s most divisive asset. And an outlook for cryptocurrencies and 2018. Thats next. This is bloomberg. Guy welcome back. For bitcoin, 2017 was a very real roller coaster ride. Gains, losses, some amazing opinions. Bestocurrencies doing its to show his long that longevity. In a peek middecember and in battered women comes. As the year comes to an end, heres a look at what some of the worlds biggest names in finance have to say about 20 17th most divisive asset. Im very excited about the coin. Its a global currency. Its frictionless. Party a trusted third isnt subject to the whims of political force. Ofit is not a stable source a store value and doesnt constitute legal tender. It is a highlanders spectrally highly speculative asset. It has to serve as a meaning of exchange of a store value. The demand is for people who want to engage in illegitimate activities. The destination cryptocurrencies feels more like a speculative mania. How do you value it . How to decide with price will be . What in the Institutional Investors are evaluating. Bitcoin is pretty valueless. It has no intrinsic value. Intrinsic value in our definition of intrinsic value. Anything that goes to one dollar to 20,000 and then back to 60,000, with nothing behind it, its very dangerous. I think is going to be more for bubble but its been a bubble for two months and shocked me and surprised me. Really in the business of advising clients to invest in bubble assets. Dont put your life savings and it. Guy volatility was a feature and that continues into yearend. Eric lam joins us. We are seeing a bit coin rebound. What is interesting is that usually bitcoin sells off the new year. How would you define it . , its similarsay to what we have been seeing to the second half of this year. Weve seen several drops, significant drops, like what we saw last week. Its just after the rally at have to the year the dollar numbers we have seen, eyepopping numbers, every move seems more magnified. I think its the same question we have been struggling to throughout the year. Still not sure exactly how to value bitcoin. Once the fair market value . 20,000 which is where got to or where it is now . I still dont think anybody in the industry has a good answer. Guy what we can take away, watch it big lesson . Volatility . Are we any closer to understanding would bitcoin is . We figure that out, the market becomes a better pricing mechanism. 317 was the year of normalization. It shoehorned its way to the conversation. Investors weree looking for something to buy and sell into. Bitcoin is one of the few assets that was significantly volatile. It shows that there was not a lot else for investors to speculate in. Now you have bitcoin and bitcoin rivals, the real question after this is where you get to the point they use utility. At the moment, you really cant spend bitcoin in many places. Once you have some practical uses for bitcoin, we might have a little more clarity. That still seems like a long way off. Theyre still grappling with how to fit these cryptocurrencies into the traditional capital structure. Guy thank you so much. Final, from james. What lessons can we learn . You have a rational exuberance. The liquidity. Coming an example of it out irrationally and the market not having a grip . Trying to rationalize it fitfully like the coin . James possibly thats contributed but really this is not Market Participants other driven it up. Its been outside of the traditional investors. Something thats reduces the future. Im little less convinced about myself. It seems to be a technology that isnt scalable. Ont see why that choice black chain should accrue to bitcoin. Blockchainain should accrue to bitcoin. Is usually borne by the payment network. But now its on consumers. Guy great stuff. Join us on radio. Copper surges to a threeyear high. The potential impact of the new legislation will be favorable to the u. S. Operations, says tencent. Homeowners in hogh tax states maneuver ahead of the new tax plan. The worlds biggest Digital Currency revises after a five day sell off