Everything is in the green, but very, very small movements in low volumes as well. 45 when you down look at the 30 day average. Story is in commodities. Come over here, and you can see the commodities index is up. That is a lot by metals. Is that the highest in five years, copper in four years on its 16th consecutive gaining day. Freeportmcmoran gaining about 3 today. Take a look in this chart. This is the bloomberg commodities index. It is seeing its longest stretch of gains in 12 years, and the index has been up for the past 11 days. Finally, i wanted to take a look at some movers. Lets switch up the board again. What you can see, these are some of the s ps worst performers on the year. General electric, under armour, all down on the year. We know that with ge, they are in the middle of a turnaround. The long time ceo has left in the middle of the year, along with another of budget top company executives. A new ceo reported a turnaround plan that was introduced last month, but not received that well. Here are some of the companies that have not been doing well in 2017. You, emma. Turning to breaking news on uber , shareholders have agreed to sell a stake in the ride sharing leader to softbank. Thank you for joining us, brad. What is the key headline we should know about this sale . Maybe it is the long dramaawn or uber coming to its natural end. This was a deal that we were talking about, rumored at the end of the summer. Softbank coming in and buying a significant percentage of uber at a discount from those shareholders that have not have liquidity for a long time and by not get it until 2019 and later. It creates some stability and opens for a pathway for peace in some on probable countries like india and southeast asia. Julie is this the first time in a while that we have gotten a repricing of ubers valuation . When was the last time we knew in a concrete way what it was worth . Brad you are testing my history here, but i think that valuation was 2015. A lot of optimism around uber in that era, and we are familiar with the conflict and controversy in the past year, but i want to add a fundamental ambiguity about the success of this business and the size of the market. I think a lot of early shareholders have their confidence hit by all of the drama, and the fact that this company is still losing a lot of money, 4 billion this year according to the recording of my colleague eric newcomer. So it is unclear when the discounts and and what the market looks like at maturation. I think Masayoshi Son has come in very shrewdly and taken advantage of some of the ambiguity. Joe 48 million. Was there any sort of number in terms of what people are looking for . Is this good . It was way down from that 70 billion you mentioned. Is this the ballpark people expected from that tender . Brad this is a pretty big haircut. There was a lot of anxiety from investors about selling at this number. But one additional bit of context, softbank and its Investment Group are going to invest 1 billion into uber at that valuation. The number comes up closer to 55 billion, i think. Look, this is just opportunistic for this Investment Group, traumaadvantage of some on the part of the Investment Group, wanting to sell, and the fact that the new ceo has come in and said it will be a long pathway to an ipo. Julie and part of this pathway seems like softbank will get involved strategically, at least to some degree. The wall street journal is reporting that softbank will try members tosome new the board, like the sprint ceo. Is that something that will be welcomed that uber if there is a fake up shakeup at the board . Brad part of this deal has always been giving softbank two board spots. This enormous fund has made such an big impact over the past year, so that is expected. Also, thesehe deal governance reforms. Callus the dual class shareholder provision, allowing softbank to have more of a say those are the provisions that will give them a clean slate and allow them to recover from some of the turmoil in the past from how this business was run. Redstone, thank you very much. Brad lets get a check stone, thank you very much. Julie lets get a check on the first news. A lawsuit propagated by roy rejected. Been he wanted an investigation and new election. Democrat doug jones defeated in the the moore traditionally red state. President trump is taking to twitter to voices outrage over reported oil sales from china to north korea. He called them a violation of the Un Security Council resolution. Caught redhanded, disappointed that china is allowing oil to going to north korea. There will never be a friendly solution to the north korea problem if this continues to happen. China says there is no solid evidence to back the claims of south korean claims. Thatth korean paper says they allegedly spotted chinese ships transferring oil to south korean officials. Accusing the city of failing to comply with the deal. They want a federal judge to enforce it. Defenseral Resources Council and aclu, which filed a motion on behalf of local masters and residents, say officials are making it impossible to monitor compliance with the Court Ordered agreement. It requires the replacement of up to 18,000 led or galvanized steel types. The red cross says 16 patients and their families have been evacuated from a rebel controlled suburb of damascus. As war rages on in syria, the u. N. Says the government has allowing s state, refusing to allow hundreds of critically ill patients to leave to get medical attention. Islamic state has claimed responsibility for three suicide bomb attacks in cabell today, at least 41 people were killed and 80 others wounded in explosions culturalte muslim center. The attack took place during a Panel Discussion to mark the 30th anniversary of the soviet invasion of afghanistan. Global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Julie . With the dow jones up 25 this year, what can we expect next year . Will get some insight from bob hager. From new york, this is bloomberg. Joe this is bloomberg markets. Im joe weisenthal. Julie and im julie hyman. Lets get more on the markets with the countdown for 2018. Our next guest is bob hager, and he says this will turn out to be one of the greatest financial bubbles in human history. Chief Investment Officer of video capital partners, and joining us from profit sheol oapital partners profici capital partners. This is one of the protections and that you made, we would see a bursting of the negative rate bond bubble. We are not there, and you graded yourself in a recent column. When do you think we do get there, or did you give up on timing at this point . Bob i think we are kind of in motion to getting there. The timing is tough, but with a little bit of context, last year there was about 12 trillion of negative yielding bonds around the world. It is the first time in 5000 years of recorded Interest Rate history that we have had negative yielding bonds. Money printing and negative yielding bonds we know will not work. This is a bubble because of its jillion dollars plus. It is a bubble because it had lasted long enough so people do not get excited about it, they are on to the next thing 10 trillion plus. It is a bubble because it had lasted long enough so people do not get excited about it, they are on to the next thing. In italy, there are still negative rates, up to about three years. Italian gdp is up near one of its highest rates in the past 15 years. Italian gdp is close to 2 . Almost the entire yield curve after 10 years in japan is negative yielding. Japanese unemployment is now about 2. 7 , which is the lowest it has been in 25 years. These economies are not doing poorly. What we have come up early and have, purely and simply, is overprinting of money , and that has never worked. We are constantly looking at this. O profit from joe what does it mean when a Government Bond bubble bursts . A stock market bubble, we have seen examples of market crashing 80 , 90 percent, and a devastating loss of principal that you will not get back in your lifetime. Do you think italian Government Bonds are dramatically overpriced and in bubble territory, and where is a fair value looking like . With m more familiar in the u. S. , for example, if you take a 20 year Government Bond, it tends to move and is attracted to the nominal gdp. So it is easier for people to ,hink about, the nominal gdp lets take 2018. You look at the bloomberg, people are assuming 2 inflation 2. 5 or 3 t gdp. Sometime during the year, there will be pressure on that bond to percent 25 . Currently, it is 2. 75 . That is devastating capital loss , and that will hit p e ratios. Europe and japan have are there to go than we do. Julie tied in with this is the idea that we still need inflation insurance of some kind. A long time waiting for inflation to come up. Do you think it will happen this year, and even if it does not, do you think it is worth it to at least protect yourself in case it does happen . Are on highly diversified portfolios. We have about 15 of our portfolios in commodities and precious metals. We like to set up. Some have been doing very well. There are great fundamentals the some of them here, and dollar unexpectedly but definitely seems to be weakening, and it seems to be hitting positively to the precious metals. I think that is the most important insurance that diversified investors can have, inflation insurance. Typical 6040 bond and stock portfolio will be hit very hard if Inflation Forces Interest Rates up. Both sides will be hit very hard. Joe so is it the rising inflation that will be the catalyst for the pricing of the bond market . Is that when we say oh, investors, we have to sell . Bob i think so. Central bankers must be feeling great about themselves because they have created the negative rates, pumped up asset prices, there really has not been the many kinds of effects that people would have thought. But the cycle seems to be moving along, and toward the back end of the cycle is when we see inflation. Once inflation hits, what will those central bankers do . They will have to raise rates, and that rate structure will start to normalize. Julie as you look at some of the inflation insurance vehicles you talked about, palladium is one that you like or at least like in 2017. Is that your favorite in 2018 also . Bob we still like palladium. We still like the setup of palladium. It is interesting in that 2018,ium is up a lot in and there is no speculation. I think all the speculation has gone to bitcoin. This commodity ringer for 35 years. Usually, when a commodity is up 35 , 40 , 50 , 60 , as palladium is, people will be interested in it. The opposite has occurred. People are selling their etfs. They are being extinguished to help the margaret market supply deficit. I have never seen that before. At some point, we think people will buy the palladium etfs around the world. That will take physical mental off the market, and the market is very tight. Still like palladium, but we have started to increase our Silver Holdings pretty substantially as well. Is, so what you are saying as soon as these market cycles and, there is a law for people who want to gamble on it a blow off for people who want to gamble on it, and when we are seeing palladium, which we had an incredible year for, we are not seeing that mentality that signals the move . Bob it has attracted no interest from the investing public for speculators. That is the piece that is missing. It is similarly the piece that is missing in the stock market, but it is really clear in palladium. Julie bob, we will leave it there. Bob haber, thank you so much. Joe coming up, how banks are holding cashstrapped homeowners gain President Trump tax plan. This is bloomberg. Plan. This is bloomberg. Time for the Bloomberg Business flash, so of the biggest some of the biggest business stories and that is right now. Citigroup has agreed to pay multimillion dollar fine for giving investors wrong information. They gave incorrect ratings, such as buy, when it meant to say sell to some of its customers on 38 of the equities it covered. This went on for nearly five years. Citigroup will pay an 11. 5 million fine. Apple ceo tim cook has received a 74 increase in his annual bonus for 2017. The bonus comes as the iphone maker posted higher revenue and net incomes after a rare decline a year earlier. Cook stands to make 102 million this year. Top five lieutenants each got bonuses of around 3 million, bringing their total compensation to around 24 Million Dollars each. And we close of the year with an increase in mortgage rates. The average 30 year mortgage. 05 from last week. That is still lower than the 4. 32 from one year ago. That is your business flash update. Joe lets stick with housing. Homeowners in hightech states are racing to prepay 2018 property levies before a cap on deductions for state and local taxes, and to affect, come into effect, and banks are offering new way to gain the system game the system. This is like the most confusing story, because nobody really knows if you can really prepay or how to do it or whether you will actually save any money, so break it down for us. What is happening . It is coming under the gun. A couple days left in 2017, and what you are referencing is this infusion over ok, i know that will have limitations on how much i can deduct for different local and state taxes, including my property tax. How can i tried to prepay those so i can use the deductions i can take this year in the affect . People are trying to figure out ways to do that, and in some cases, banks are providing some help. Julie and they are not helping in the sense that they are not telling them whether or not they can, they are just giving them a way to do it if they want to. Hinges on, and it something that i do not know much about, because i do not have a mortgage, but many people who do pay their property taxes, or their bank does for them. The bank is the one who goes ahead and pay the local tax office the property taxes. What people are doing is finding out ways to get a bill sometimes the bank is doing it on their behalf, from the local Tax Collector for 2018, and the bank is able to prepay those fees in 2017, thereby saving people that deduction. Joe so this all has to happen in like two days, because friday is the last day . It is the last day of the year. Julie the last business day or the last actual day . [indiscernible] whether they will be open to accept that payment, i do not know. Can imaginebanks, i they are getting all of these calls and i picture on people waiting all the people waiting on hold for four hours. People are waiting to pay these, but for the banking side, bank of america, that is where i cover it. They are not offering this to every single client with a mortgage with them, because they do not offer personal loans. The ways the banks are finding this is having you, the hone owner, take out a personal loan for a credit line. So they are dealing with clients and the Wealth Management division whether it is a Merrill Lynch client or a u. S. Trust client. A lot of people have money tied up in bank of america, and that is used as collateral for a short loan that you would need to go ahead and pay. Are they seeing a lot of demand for these kinds of services, whether it is bank of america or the other bank . Of alls an overfill incoming questions. We have had several banks we had bank of america, suntrust, and pnc telling us yes, we are getting inbound calls and helping offer this to clients. I want to say it is not a new product, it is something you have to already have with the bank, a relationship that is already there. Joe and the structure that it is a loan from the bank i was to go to my bank, if i did not want to do it, the bank would be extending me a loan. Is there an Interest Rate on that . Is it is shortterm loan . What is up . Loan, and shortterm you pay as you are go, as you go. But it varies, depending on what client you are. Laura keller, thank you very much. Julie still ahead, commodities. Gaining, crude has been fluctuating. The biggest weakness todays in the agriculture. Elsewhere, a lot of green on the screen. The commodities closes coming up next. Natural gas is getting a big bump, as is cold. It is really cold. 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. Joe from our World Headquarters in midtown manhattan, this is bloomberg markets. Im joe weisenthal. Lets get the first word news with nabila ahmed. Has been certified as the winner of the Alabama State election. The democrat defeated roy moore theier this month in traditional red state after accusations of sexual harassment. This comes after a lawsuit was ofpped to keep the secretary state from certifying the results. Roy moore was claiming voter fraud and demand a new election. The talent the Italian Government dissolved parliament today. Speaking today in rome, the Prime Minister says a Campaign Leading up to the vote is imminent. It will not distract current lawmakers from doing their jobs. Italians are aware that in the next few weeks, the spotlight will be focusing on the electoral campaign, as is normal. I can guarantee, dear, fellow citizens, that the government would not back down from carrying out its work. The election data set for march 4. Russian authorities will investigate whether the Opposition Leader alexi novelli is breaking the law by calling for a boycott of next years president ial election. He has been campaigning all year, despite being convicted for fraud. He was officially barred from the ballot this week. With an Approval Rating as high as 80 , Vladimir Putin is expected to win a fourth term in the United Nations says airstrikes in yemen have killed 109 civilians over the past 10 days. The humanitarian core said it shows both sides of the warring factions have no regard for human life. The Saudi Led Coalition has been backed forran three years, leaving 3 Million People displaced. Global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. On the deal on it, this is bloomberg. , this isbila ahmed bloomberg. Julie a quick check of commodity markets. Gold is extending its big week, posing in on 1300 an ounce. This is that its highest level in four weeks. Gold has been gaining as the dollar has been declining. In addition, golds moving averages golds moving averages have turned bullish. And the spike in natural gas is amazing. Most of that gain is coming today. Frigid temperatures have been blasting much of the eastern portion of the United States, as well as central portions, like chicago. And oil today it is not doing much, up about 31 . It has been bouncing around. Crude inventory did fall 4. 6 Million Barrels in the past week. Two key pipelines are a set set to resume normal operations soon, which could be overshadowing the continued decline in u. S. Stockpiles. Joe lets stick with commodities and get the forecast for the new year. The Senior Energy analyst for Bloomberg Intelligence joins us now. Vincent, thank you very much. This oil rally in west texas is nearing 60, catching people by surprise. The story has been the endless gusher of crude in the u. S. Does this look sustainable to view . To you . Vincent lets take a step back. Energy is competing for the worst performing sector in 2017, even with the minor rally we sought recently in wti. Gas is obviously, despite todays move, it has been underwater all year, almost down 30 before todays move. When you think about crude even at 60, the thing we have to em er is 2018 domestic have reset hedges. You could see an output of roughly 10 Million Barrels a day. That is a Significant Development when you consider that we bottom somewhere around notmillion, 8. 6 million too long ago. Were talking about resilient output from the u. S. Has been at a very resilient time in 2016 and 2017 for the u. S. Industry overall. Julie resilient for production, but not from the stock. Even as we have seen wti bounce, the stocks have gone sideways. Because of that ample production you are talking about . Vincent we talked about a tight range. 40 some odd on the low end, 60 on the higher end governing that price. And for that reason the output of production is so prolific from various plays. It is there, we know it is there, and the operators are using Technological Advancements to get this stuff out. We are looking at the relative price as 4060 as a long way from where we were in triple digits not long ago. Looking at the variables that could change her to find 2018, what about opec . Did they have influence anymore . Vincent they do in the margin, really that is marginal producer. The u. S. Is bringing on as depleting that inventory. So drilling uncompleted we lls. So allowing them to respond more quickly to price movement. Is the key and 2017, 2018 as well. I think that is the big surprise that opec has probably globally over the past year or so. Julie as you look at 2018, how closely are you watching geopolitical risk . Not had some pipeline necessarily tied to geopolitical conflicts we had some pipeline issues and other issues that have hurt supply around the world. Does that stuff sort of happened in the oil market . Vincent i think we have become more used to it. Think about where we were 10 years ago. We were producing roughly half the level we are today. It does have more of a transitory, intermittent, temporary effect because of our ability to produce at the levels that we are producing, allowing us to react more quickly to those price movements. Outset, vine cent piazza, thank you so much. Julie you have heard the outlook for oil and gas, but how could the sectors move . We will have that report on oil and gas. From new york, this is bloomberg. This is bloomberg. Joe this is bloomberg markets, im joe weisenthal. Julie and im julie hyman. Time for our sector report and stock of the hour with emma chandra. You are looking at energy and natural gas . Ata i wanted to take a look the sector, given the cold snap we are seeing in the northeast and much of the witnessed that midwest today. This is the energy etf. It is not really moving much today as general markets are not. If you take a look down further into natural gas and bring it up itthe u. N. Gtd ung etf, is up over 6 today. This is due to the cold weather dude due to heating, but this season will be a lot better then we saw in the past couple of years, which have been much warmer winters. Temperatures are also forecast to stay very cold over the next 10 days. Many people are hoping it will stay that way, particularly as the january and february the past few years have not been great. I wanted to look at another thing with ung. Chart here,o this you can see that if you look at the cumulative total return, the if youre in the corner, look at it on the year, return is down about 38 . It was not looking good right now and hoping to look good in the next few months, not necessarily that way for the whole year. I wanted to bring us to the stock of the hour. If we can bring up the intraday there, that is getting its spike off of this cold weather. Prices are up about 4. 5 there. The stock has been boosting, and the best of the highest since early november. Iss cold snap we are seeing going to be music to the ears of chesapeake. Is heavily indebted and has been trying to sell down a number of assets over the past few months and years and introduce more crude oil into its mix as it tries to diversify a bit of what we are seeing with natural gas and chesapeake. Joe thank you very much, emma. It is the final flat in her we need flattener we need that music here. Spreads are near the highest levels in a decade, and this is giving the fed pause for caution. Michael asked dallas fed president Robert Kaplan if he was worried about the yield curve. I have worried about it as well, and i think we need to watch it. The 10 year treasury, the high is 2. 30, 2. 40, is meaningful. The history of inversions is such that it is tended to be a reliable forward indicator of recession. Now is the head of u. S. Rate strategy. She says in a flatter yield curve will challenge the fed in 2018. Thank you very much for joining us. Is the fed looking at that curve and seeing that 210 spread around 50 basis points, and thinking this is a reason potentially to ease off of its rate hike pace in 2018 . I think they are watching it closely. I think the fed chair is distancing from some of the flatness that has happened. Commentsif you look at from a variety of president s, whether it be kaplan, carry, williams, we have heard the same sort of comments and concerns. Joe is the flatness of the curve reason for caution, or does it tell us something about the economys Bigger Picture that we should be paying more attention to that perhaps we are discounting . Absolutely. If you look at the two 210 spread in the flatness of the curve versus growth, there is a strong correlation between the shape of the curve and growth. A oneyear lag. Typically, when the curve flattens or inverts, that is a signal that a year from now, growth is going to start falling down. Thus far, even though it is data dependent, it things like lack of inflation have certainly even though it has proven to be a bit more persistent than the fed has anticipated, the fed is still going ahead with its plan. The yield curve be similar . In other words, we could continue to see this activity, but the fed, unless it is convinced that economic slowdown is happening, keeps going on with its plan . It is possible. The fed in the past has made that mistake several times. Have rate hike cycle, they ignored the flatness of the curve and continued to raise it until it is too late. If you look at some of the denvers that came out of nokia 2006, he said the same thing. Bernanke in ben 2006, he said the same thing. Lo and behold, 1. 5 years later, we were in a recession. Particular bout of flattening, particularly what we have seen lately, is being driven by the selloff on the from yields up to 1. 9 , 1. 91 . The story quick, does that make a difference in terms of the story is the long and going down or the short and long end going down or the short end going up . The 20052006to rate hike cycle, there was a lot of by back in the curve, and the fed kept raising rates and the part of the curve flattened. This is the same scenario, where you have what we call a new conundrum. Demand is coming from overseas, you have qe, global qe, which is keeping pressure on those premiums. The fact things are causing the curve to flatten right now are different than what we saw in 2004, 2006 rate hike cycles. But the conditions are the same and the impact on the economy will be the same. Julie so when you are formulating your strategy, do you have confidence in the fed or not . Which way do you go . That would then determine what your strategy is going to be . Is the fed going to keep ahead with its plan or will it be responsive . We think in 2018, the fed morenot be able to hike than, say, 2. 3 times. Two or three times. That is twofold. Lesss the fact that we are sanguine on inflation than the rest of the street. In the first half of the year, you will see inflation start to rise because of the base effect from a slowdown in march and april of this year. After that in the second half, we think that inflation is going to start cooling off. We are expecting to end the year in a 1. 5 , 1. 8 . Well below the 2 target. Joe i am already envisioning the conversations we will have next year if this is the case. We have talked about economists scratching their heads, but they will be taking their hair out if it is the same case this year. What is going on . It has been a tough call. If you look at the factors that have caused inflation, they have all been a oneoff. The fed has been thinking it is transitory. After 4, 5, 6 months of inflation, it does not become transitory anymore. Joe thank you so much, sue bagram a job of subarda rajappa. Julie uber shareholders have agreed to share a stake in the company to an Investor Group led by softbank. That deal implies a 48 ilion dollar valuation for 48 billion valuation for the company. Softbank had been seeking at least 18. 4 stakes in uber. Has picked five banks to manage bond sales of about 5 billion. Hsbc,anks include citigroup, j. P. Morgan chase, morgan stanley, and abu dhabi. For added investment in the United States. This coming will expand employee benefits, including bigger contributions to 401 k plans, and offer more Training Programs and Insurance Programs to workers free of charge. Boostexpects to 250nt by two p million of it next five years. And now, the drumbeat of the companies. Joe coming up, a regulatory threat dragging down bitcoin will give you the latest on the cryptocurrency roller coaster ride. This is bloomberg. Loomberg. This is bloomberg markets, im julie hyman. And im joe weisenthal. Bitcoin keeps sliding, now trading below 14,000 as the ride continues. South korea is eyeing fresh regulations for the cryptocurrency. I want to bring in rob irving, Senior Finance editor for bloomberg. Arehink that people here fascinated by bitcoin. It is that a whole different level. Rob it has always been driven by asia. If you look at what the south koreans are talking about doing, the chinese did that a few outline low exchanges. China had been the biggest market, then it went from china to japan to korea. Regulators globally are trying to figure out how to deal with it. Julie one of the things south korea has demonstrated to shut down some of the exchanges, but they have also threatened to make it more transparent in terms of who is trading bitcoin, not just identified by your number, but by your name. Is that a good thing or bad thing when it comes to people who are trading stuff . Rob that depends on who you are. Even purely on ideological grounds, bitcoin purists believe it should be anonymous. This is an issue for governments and Central Banks everywhere. They want to know what is happening, who is behind these traits. They also want to know if their citizens are putting their life savings at risk. One of the things with all markets is we tell these stories about what drives the market, and it is never really clear when the story that drives the , or the price happens first and it is because of this. Bitcoin changed last week and is fighting the week before, so is this about south korea, something new happening there, below 14,000,f or the market is starting to look shaky and this is something to add to the narrative . Rob i have about 27 different stories i could tell. Many of them are mutually contradictory. On the regulatory front, everyone is trying to deal with it, and in previous efforts, like china, it fails to pass. Have a situation where wall street is now involved. You haveo short, and more institutional investors, hedge funds trying to show an end of your game possibly. Joe i was going to ask about the institutions. Oft was one of those stories 2017, the story of institutional money coming into the space. The futures i hardly hear anything about them . Rob they are trading, and the volume is picking up. The bitcoin decline started in the week that cme introduced its futures, one of the reasons why i wonder if the futures are leading were following it. It is not Crystal Clear at this point what is happening. But it is a more efficient market in some ways. The thing that is an efficient in the markets is transferring bitcoin two dollars or two south korean won or whatever. If this were any kind of a normal market, that would be a massive arbitrage opportunity. People do arbitrage between the different markets, but it is very expensive. Trading is very expensive, so the opportunity is quite limited. And it is risky. You have to put up a lot of cash. Yourewhatever market talking about, to find out who is shorting you have to talk to people, and it is not publicly filed here in what are you hearing in terms of whether there is a lot of shorting going on in the futures market . Rob thank you very much for all of the opportunity to invite our viewers who are shorting bitcoin to please let me know. Joe please send us messages. Rob i would honestly like to hear from us people. I wonder if it is the complicated market it is worth remembering that bitcoin is now back to where it was 2. 5 weeks ago. Joe keep things in perspective. Julie robert litan, bringing us the perspective. Urban, brady is the perspective. Coming up, we will be talking about another big currency the dollar. The downturn, it has not had a big year in contrast with bitcoin. We will speak with john silvia is the greenback faces its first annual decline in five years. From new york, this is bloomberg. Julie it is 3 00 p. M. New york, 12 00 p. M. In san francisco, and 8 00 p. M. In london. I am julie hyman. Joe and i am joe weisenthal. Welcome to bloomberg markets. We are live in bloomberg World Headquarters in new york over the next hour. Here are the top stories are coming on the bloomberg and around the world. It has been a largely bright and sunny picture for the u. S. Economy, but should investors prepare for more Turbulent Times ahead. 2018 ill look with a chief economist at wells fargo securities. Is aheadwnturn what for currencies as the greenback touches its lowest level this month . We speak with the ceo of exante data. From a decade ago could have major implications as casino mogul steve when battles his exwife with more than 8 million on the line. We are one hour from the close of trading. Lets get an update with what has been going on with stocks at this hour. Little change pricewise as volume remains below the 20day average. All three major averages higher. The dow gaining the most, just 0. 2 . We are seeing a big move in the dow jones transportation average, which recently was trading at a record. Many of those companies in the transports are domestically oriented and seen as benefiting from the tax rate cut more than other companies in the u. S. Today. Down about. 5 if you look at the Movement Today in the context of what we have been seeing, here is the daily trading range for the s p 500. 3. 86 point6 today. Not a lot of wobbling around to it is not the tightest of the year, it is up there or down there, depending on how you look at it. Getting back to transports, we see railroads falling. Big, but again, considering they have had a runup from those levels. Among the things that might be pressuring them, we see a decline in the shipping of coal the country,oss and perhaps peripheral effects of week numbers coming up from jb hide, a transportation company. Frigid temperatures are actually crimping some transport routes, rivers, for example. Finally, yield curve we have been talking a lot about this today, but it theres repeating that we are seeing the final flatten or. I will let joe do the music this time. Whether you are talking about the spread between the five and the 30year where the two and the 10year, it is near the flattest it has been all year and we will discuss the implications. Joe lets focus on what to expect in 2018 tax cuts take effect on the fed considers more hiking, join us, john silvia, chief economist at wells fargo securities. Things looking pretty sunny right now for the u. S. Economy. Not a lot right now to obviously, worry about. How do you think things are looking . John silvia things are looking very good. Well have good Consumer Spending, disagreement spending, especially with the expensing provisions, but you are right to focus on the questions marks going on here. The yield curve is getting flatter. To what extent will the fed continue to raise rates in the second half of 2018 and early early28 early2019 with a shorter Interest Rate. Then there is the question about home luxury loans, and finance, all impacted by higher, shortterm Interest Rates. Julie what affect is that going to have on the u. S. Economy . As we see the flattening of the yield curve, is it a signal for the u. S. Economy, or is it also something that is going to negatively affect the u. S. Economy. Well, julie, certainly the flattening yield curve is one of a couple of indicators that would indicate economic weakness in the year ahead. 2018 looks pretty good good pretty good, but for 2019, we are going back to maybe 2. 5 , 2. 25 because there is more stimulus in the frontend, but what is sustainable in overtime in a higherInterest Rate environment, especially at the short end will be a question mark. Joe john, what about the tax bill . Does that change your outlook for 2018 in any direction . John yeah, joe, it did increase our short run look for 2018 as you are adding to consumer incomes and corporate profits, but that is what we get the 2. 7 . 0. 2,e giving you about 0. 3 on that. But for us, joe, it is a short run impact. There is no Sustainable Impact until we see some gain in Labor Force Participation rates and productivity numbers. That is going to give us something more like 2. 5 to 3 if we can get those changes. Julie what would trigger, then, those changes, john . Many of the economists and strategist we have spoken to are saying the outlook is a little rockier as we get toward 2019. We have not heard a lot of folks talking about, finally, the bump in wages, for example, that could help things out. John that is a challenge, julie, you are saying i can give you a tax package, but will that change your longrun behavior . In the short run, yet, capital is better, but will that improve the educated workers, make more workers willing to participate . One of the challenges, julie, we have the Unemployment Rate below 4. 5 in the second half of next year. Why dont we get that . Labore we dont see the force Participation Rate picking economy. U. S. Joe what about if we saw a big infrastructure plan . Of course that could take many different shapes, so it is hard to know what that would look like, economy. Joe what about if we saw a big infrastructure plan . But could that potentially move the dial in terms of increasing the productive capacity of the economy . Yes, joe, it certainly could, not only different shapes, but different types of infrastructure spending, over what time period are you going to put in place this infrastructure spending. For me, it is more like a three deal. Year you have to have the designs, the regulatory inspections that have to be there before you even begin. It is a longrun story, joe. John besides the yield joe this is the yield curve flattening, what are the other warning signs you are looking for . Either industries were Economic Indicators . John for us it has to be capital goods orders perhaps flattening instead of picking up. Again, short one, first half of 2018, it looks pretty good, but as Interest Rates rise in the second half, that will be a question mark. Factory orders Consumer Confidence we are at an alltime high right now. We are having a great time, but does thatnges how Conference Get moved into actual Consumer Spending . Joe john, going back to the text bill for a second, one of the big areas tax bill for a second, one of the big areas im adjusted in is the relationship between tax reform interested in is the relationship between tax reform and housing. It interacts with the reduction of the threshold for mortgage reduction. Is there anyway, you know, in your view is this a marginal change . Does this change the market at all . Will he do anything for affordability anything like that . Affectt certainly will affordability in certain states where the property tax burden is quite high. One of the odd situations in the United States, joe, is that most of our housing stocks are really down in the south and the west, and in general, except for california, there really isnt this big property tax burden that is sticking out there. But there is a huge distributional issue with Housing Starts across states in metropolitan regions versus rural regions, and the price difference is because of the property tax burden. It is a national story. It will make some headlines and some regional areas, but we are not depending on that to generate better housing going forward. It really is the overall gains in consumer income and the availability of credit. Of a relatedmewhat note, john, at the end of next year to you think we are in any different place when it comes to the income and wealth gap in the United States . Is that going to close at all . John from the data i look at the answer basically is no, and you are talking about an election at the end of 2018 which could change the balance in congress, and therefore the outlook for change over time. My biggest challenge, julie, is getting to the second and third quintiles of income in terms of their education, their skills, and how they participate in the labor force. We do see the top two quintiles fairly row fairly welleducated, fairly well emily with computer technology. , and alsooving ahead they own a significant amount of the mutual funds and etfs in the marketplace. They are moving ahead. It is the second and middle quintile that really needs the education, the improvement, the ofeducation and some sense participation in the improvement of overall equity markets. Joe thank you very much, john silvia, chief economist at wells fargo securities. Now lets get the first word news with nabila ahmed. weather nabila worries continues in erie, pennsylvania, where residents are digging out after five and a half feet of snow fell over four days. The temperatures are excited to hang around. Meantime, people out in the midwest and northeast regions are being warned by forecasters to be weary of hypothermia and frostbite. It is so cold in philadelphia, the fountain in Franklin Square is frozen. The white house says President Trump has been briefed on the Islamic State attack on a Shiite Cultural Center in kabul, afghanistan. The president is considering to monitor the situation with chief of staff john kelly. The attack, which killed more than 40 poodle people and wounded dozens more was the latest in a local assault by the extremist group. The u. S. Embassy in the on car has announced an and to the visa with turkey. The u. S. Stopped issuing visas after a u. S. Employee was arrested. Turkey retaliated with a similar ban, but beazer visas have resumed. Former International Soccer star george weir could be on the verge of winning liberias presidency. Of ballots tell it tallied so far. The challenger had received about 38 . Both are competing to replace africas first female president. Launch failures are forcing the kremlin to take a look into the struggling industry. The concessions come after satellites were lost after a failed russian launch. In another blow, indications with the russianbuilt can indications settle it went silent after a lunch on tuesday. The string of failures calls into question russias ability to remain retain high standards for manufacturing space equipment. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. I am development. This is bloomberg i am nabila ahmed. This is bloomberg. Julie . Julie thank you. It is not all paradise at wynn resorts. We will tell you about the fiveyour battle for the company. They are outpacing rivals like Las Vegas Sands and ngm resorts. From new york, this is bloomberg. Julie this is bloomberg markets. I am julie hyman. Joe and im joe weisenthal. The war at wynn is escalating. Casino mogul steve wynn has been fighting for five years over his exwifes ability to control her stake in wynn resorts, but she has an ace up her sleeve a 2005 settlement with a former employee. Bureauring in l. A. Chief, chris palmeri. You have to break this down. What is elaine wynn alleging . Chris she is pointing out in her longrunning feud there is paid,ettlement steve wynn a multimillion Dollar Settlement with a former employee in 2005, and she discovered it in 2009. She is saying this space to a problem at the top of speaks to the problem of the company that the board was never notified about this and that companies shouldnt be, you know, paying the settlements without more scrutiny, and in the wake of the weinstein scandal, her attorneys have been playing it up in court that this happened and they are requesting more documents. This month they won. The Nevada Supreme Court gave you may access to some of those documents, and that is the latest. Some ofe access to those documents, and that is the latest in the trial is set to go to court in april. This could hurt steve in his case. To be clear, we do not know what is in the settlements. Knows what is in the settlement, and she has spoken somewhat about it. Is she allowed to reveal in detail what was in it, or has she just hinted around the issue saying there is more to it . Chris there is not a lot of clarity. Lots of filing to discussions in the case, but always redacted. Her lawyers have called this sexual harassment. Denied not only that claim, but said that nothing happened, and they have evidence to prove there was no incident with an employee. Have not denied having a settlement, but they have not disclose specifically what happened or their evidence for why this womans allegations were not true. They cited a court order with confidentiality surrounding that. Joe so the divorce proceeding is set to start next year. Could there be a settlement before that . Chris the wynns are already in court. What is happening is a corporate divorce. Elaine had granted the right to vote her shares and restrictions on her ability to sell her steak it is a must pay 10 stake in wynn resorts. This dates back to the idea that steve wynn lost control of his former resort company. Since then, he has tried to control as much of his new companys stock as possible. He had an agreement with elaine and a former Business Partner that he would vote their say shares and control the sale of the stock, and elaine is now saying since the former Business Partner is gone, she should now have control of her own stock as well. Joe from the julie from the outside legal experts you have been speaking to obviously this has been going on for a long time now is there a sense that whatd you miss . Wynn is grass is there a sense that elaine wynn is grasping at straws . Thes when she first raised settlement a year ago in Court Filings and this postweinstein era things will get more closely looked at, and it may be more difficult for steve wynn to completely conceal what happened, and this puts a lot more pressure on him, and elaine wynn and her attorneys realize that. Joe thank you very much. Bloombergs chris palmeri. Julie it is time for the Bloomberg Business flash. Has resumed its tumble after south korea said it was eyeing options and a shutdown of at least some cryptocurrency exchanges. Asias fourthlargest economy has been the center of a surgeon Digital Currency to my private prompted the Prime Minister to worry about youth. U. S. Banks are getting creative as customers in hightax states rush to pay 2018 property levels before the new year. Lenders like bank of america and suntrust are urging some to take on new debt by tapping into homeequity lines of credit and securitybacked loans to lessen the burden of a lump sum outlay. And that is your business flash update. Still ahead, who is afraid of amazon . Apparently everyone. Why the tech giant is causing concern. We will have your top tech chart of 2017. From new york, this is bloomberg. It looks so sunny and warm out there. It is not. This is bloomberg markets. I am julie hyman, along with joe weisenthal. Joining me now is Steve Sosnick with interactive brokers. I know you are looking at ideas going into next year. One of the things you are looking at is shake shack. Shake shack has had a rocky time of it as of late, despite having delicious burgers. What is your take here when youre looking at a company like this and looking back at the year how do you figure out what the next step is . Steve sosnick it is a tight time now for ideas. People are doing some yearend position squaring. It would normally get rid of losers, but there are not that many to get rid of, or locking in their gains. But with tax reform, and the market being a straight line, it is tricky. It started with an outsized move. Looking at shake shack i was like wait a minute, this thing is up over 10 in about a month. Moreatalysts tend to be external and internal. It went up on an upgrade. Now it is, sort of, popping out on a downgrade on price. That is the sort of thing i would be looking for as a countertrend trade. The best trades are usually when you can find a longterm trend and stick with it. The shortterm trades are when you see something that seems a little out of line, extended in the short term. You can see from the chart we have had quite the rally in a stock that had been a sideways mover of late. Julie i guess i can see my perceptions of shake shacks performance are outdated, because i was thinking it was not performing as well. Characterizes this particular stock is there is relatively high Short Interest, so there are people betting that it is going to go back down. Steve there have been plenty of people taken the other side on this one. What is interesting is a lot of the recent move has been a tribute to a short squeeze, one of the hallmarks of the short bursts higher. If you have this graph loaded up, you can see the Short Interest has, kind of, declined from a high of over 11 million shares. The last meeting was at 12 15 p. M. It was in the nines. People have been getting squeezed out or at least covering their short, and that probably gave ammunition to the shortterm rally, which is another reason why when the shorts and uncovering you want to look for a bit of a pullback. Are done covering, you want to look for a little bit of are done covering, you want to look for a pullback. This is basically saying the stock is extended, we will look for a pullback. The train that i highlighted was buying some january 42. 5 puts. You are paying about . 60 for them. It is a win or lose proposition. If the stock goes back down to the 40 support level, that would retrace a big piece of the move. You profit very nicely. If it doesnt, you are out your premium. , again,simple bet hoping there is a pullback. Julie quickly, one of things you mentioned in your notes is how ordinary options traders can spot a hard to borrow stock. Is shake shack a hard to borrow stock . Steve shake shack has been. Right now it is not hard to borrow. There is a little trick. You would normally see the implied volatility column if you have that highlighted, but the implied volatility on the puts him the calls tend to be roughly equal because of put call parity. They are never exist because of bid offer spreads. They should be in the ballpark. A lot of times you see implied volatility on the puts is much higher than the implied volatility on the calls. It does not mean the implied volatility is higher, it just means a standard pricing model normally put in whatever the stock loan rate is and that gets translated into implied volatility. Julie Steve Sosnick, taking us to option school, as he tends to do. Chief options strategist at interactive brokers. We will be right back with whatd you miss . Talking about the dollar. 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. Nabila doug jones has been certified as the winner of the Senate Election in alabama. The democrat defeated roy moore earlier this month in the traditional red state amid accusations of sexual harassment. A judge today rejected a lastminute lawsuit by moore to stop the alabama secretary of state from certifying the results. Voter fraudaiming and wanted an investigation and a new election. The government said it. 7 million americans 8. 7 million americans signed up for Health Care Last Year this year. The administration cut its advertising budget by 90 , and the individual mandate was terminated as part of trumps tax bill. Top labor Union Official is urging social democrats to join a new Coalition Government under chancellor angela merkel, saying failure to do so hurts both sides. Angela merkel begins talks january 7 with the social democrats. The party initially ruled out teeming with merkel after a disastrous performance in
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