Manus very warm welcome to the show, the last one of 2017. , 5095 is thebye chart we are talking about on the dollar. Record after record, they just keep bringing home. The msci a sit pacific is up 20 in 2017. It was technology that took the triumph. Tencent is at the bottom of your screen, 113 return this year. The technology really led the page. The first annual gain in eight years. This was the year in which asia outperformed the United States the most since 2003 and the most against europe since 2009. Can we write anymore about bitcoin . 995, i love volatility, but this takes it to a whole new level. 14,000. We stumped from the record high we set in september. This has been one of the most popular guesstimates on the whisper function on the bloomberg. 243 participants suggested the average forecast would be around 15,000. Only 2 of americans have dabbled in bitcoin, weve written an awful lot more about it. Oil, what does 2018 hold for oil . The rising from the phoenix for two of a rallyar for oil. The symbiotic relationship between opec and nonopec and the russians. A bull market was turned in september. The debate as we go into the highest since 2015 is, will shell unseat the rally in oil . Will the drillers in the United States unseat that rally . Oil is trading at the highest level since 2015. A tortured soul victimized. Think about the dollar. Its up for its first yearly loss since 2012. In september, we were down around 10 . Think about it this way. You have a tax deal, a more aggressive Federal Reserve turbid why Federal Reserve. Why is the dollar not more resurgent . By the end of 2018, we are going to be 2 lower than where we are now according to the median estimate of the bloomberg family that we talked to every the most bearish estimate is that we will be 5 , 5. 5 lower by the end of next year. But not everybody is so pessimistic. The median estimate, 2 lower. The most perish, 5. 5 lower. The most public is 6. 4 higher. Perhaps we talked it into an early grave. Thats the debate. The fed resurrect the dollar . Withll get you up to speed sophie kamaruddin. Sophie happy friday to you from asia, donald trump has warned china over alleged sales of oil to north korea. According to seoulbased officials government spy satellites spotted vessels transferring oil to north korea. Tweeted,eted, trump caught redhanded. He has said that while the investigation into ties between his campaign and russia makes the United States look very bad, he believes Robert Mueller is going to be fair. The comments are made in an come as fellow republicans have argued the investigation is needed by antitrump bias and the fbi. The u. K. Government is withholding the publication of secret files on the creation of the european union. From 1992, the documents were due to be released today. Out of 500 files in the Prime Ministers office, 114 are being held back and a doesnt relate to european policy. The Cabinet Office denies hiding sensitive material and calls for the papers to be public. Theresa may will meet Emmanuel Macron next month for trade talks with the european union. Macron may use the meeting to discuss financing the border controls between the two countries after brexit. The issue of who pays for tighter border checks could prove a further headache for may as she seeks a transition period and trade deal with the block. George wale has been elected the countrys next president after a decisive victory after the nations first democratic transition in more than 70 years. Sidra mozzarella has dissolved parliament, setting the country on the path to a National Election march the fourth. They could lead to a on parliament and lead to turbulence in the eurozone. Opinion polls put the antiestablishment fivestar Movement Ahead of the Democratic Party and a potential centerright coalition. In the u. K. , a batch of government documents have revealed a remarkable tale of politics and is you all do. The papers from 1981 should the british Prime Minister refused to share concorde with a giant with on the first visit ronald reagan. The iron lady says the memo brought bad luck to politicians. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. You are going to find more stories on the bloomberg at top. At the marketsok in asia where we are getting so at ato 2017 and staring fresh closing record for asian stocks, even as traders are enjoying their holiday. Again of 29 for asia. Its a big superlatives, despite gains in tokyo fizzling out. They are clocking this best year since 2015. But no dice for the hung saying, hang seng. The Chinese Markets are up 25 for the year and investors piled into bigger names. Are headingai, they for the best year in three. The latest surge sparked by geo agreed to buy archon wireless assets, which is billionaire bailing out his younger brother. In hong kong, eunice lender is having a Splendid Team splendid time this week. High. Gaining at a record china, shares in the shabu shabu restaurant have surged to a record in hong kong. Manus sophie, thank you very much. Sophie kamaruddin with latest. The former fed chair says corporations will benefit the most from that new u. S. Tax policy and we can only expect. Odest boost for the economy speaking to kathleen hays, she also said the fed is on track to raise rates, but doesnt deflation doesnt see inflation on the horizon. I dont see inflation and neither does the fed. Inflation has been falling. Its very mysterious. A longbeen saying for time that we are in a new era in which the threat of inflation is almost nonexistent. Manus alan greenspan, the foreign fed chair there. The 1980s pop single, the biggest hit, welcome to the show, happy new year. You do channel the odd to. Odd tune. Inflation is the great look for. 2018 the year inflation is the surprise . Guest probably not and to be honest, its not just a oneoff spike in inflation. You might get one or two good things, but it is a sustained trend in inflation picking up. This is where the risks lay. You see a concern that low inflation is not just the transitory and him and on. Something more structured transitory phenomenon. Its something more structured. Its neutral, if not slightly dovish. That will keep downward pressure on the dollar. Even if the fed cracks with two more hikes this year, its ok, but its not good for the dollar. Manus what is going to be the key driver . This is what we are looking at. We are looking at the first yearly loss since 2012. Lets have a look. A dismal dollar is the title on this. Where do you stand . I look at bloomberg estimates, 2 lower by 2018 is the median estimate. The most bearish is down 5. 5 the fed isnt going to drive the dollar. How low can she go . A net inflowe get of capital into the u. S. In 2018 . The answer is probably not. Is economic of this tax package is ridiculous. Then we look at repatriation fx, ambiguous. Not just one way flows. The third, we dont underestimate u. S. Fiscal. What we saw in alabama could be a precursor in how tricky or type u. S. Policy will be next year and the fourth and most its stasis as an investment currency, especially when you look at the bright spots in the rest of the world. Investors are more likely to put money in these goldilocks Growth Opportunities and there is a genuine fatigue with the u. S. Economic story. I am gently strategically bearish on the dollar, a slight decline, but a small upside. Manus i have mufg here and they said, you can expect a little bit of a fading. Im trying to pick up a 1980s black, in terms of the growth story. Growtht not turn out the trump has promised. If you fear that move, that could lead trump to bash the dollar, sorry, bash other currencies as being currency when it glitters and push for a lower dollar. To have rhetoric. So you have rhetoric. Guest true, but trump doesnt want a stronger dollar himself. They are looking at stock market, not currency for their gauging of success. Thats driving that. Lets put it back to the dollar. Once i look at the dollar, when it comes to politics, its certainly the question of whether political risks in the u. S. Are slightly higher than they used to be in the precrisis world. Even if its a small additional increase in risk, thats profound for a reserve currency like the dollar so longterm investors will be questioning putting money to work in the u. S. Manus just before we move on, if the dollar is not the sexy reserve currency, sexy reserve currency doesnt together. If it is not the reserve currency of choice, what is your other plea reserve currency . Guest this is where the euro comes in. When you look at the euro share since 2010, its less than 20 . Thats a big move for a currency driven by longterm investors. Two factors for that, political risk, and lower growth. Manus hold your euro far. You are upsetting my schedule. Lets talk about the dot. Debate, there is this the terminal rate. The debate in the market is this. Ah does the fed have to kick their shortterm rates and inflect it above that flat term rate . Risk that. Ldnt this caps on out the momentum of moves from the fed. It . Selffulfilling, isnt guest its like 2. 5 is probably where the markets are right now. Is neither here nor there. Lets say we are in this region. We look at the fed, its two ca mps. They are can completely split they are completely split. We can take the neutral road, to hikes here. But unless you get these dovish or hawkish stories, youve got four feds opening god knows what if we get some john taylor like candidates coming through, you might get a bit of noise. But i think the bottom line is the economic will outplay and its all about the inflation story and your guest mentioned low inflation is here to stay in 2018. Manus the fed has met that inflation target year after year after year and policymakers expect inflation to accelerate to 1. 9 in 2018. Thats just a huge ask, isnt it . Guest yes. Its structural inflation, not to take more markets out of control. Manus thank you very much. You stay with us. Coming up on daybreak, bloomberg shareholders look to a tech billionaire to smooth the road ahead for the Ride Hailing Company. Theresa mays government withholds historic documents on the european union. This is bloomberg. Singapore, its 3 19 ,n the afternoon, nfci pacific what a cracker these asian markets are. Who wants america . Who once europe . Asia is where the action is. Technology took it home, 54 annual gain, the biggest in eight years. Msci asiapacific wins the award, or one of them. Sophie kamaruddin wins the award for me for business flash. Sophie . Sophie thanks very much. They apologized for customers for Software Changes to prevent unexpected shutdowns. They said they had not intentionally set out to shorten the life of their products. Apple said it is cutting the batteriesreplacement no longer covered by warranty. Stopks plot intending to american Tax Companies to shifting plants abroad might hit the foreign banks with significant operations in the states. Erosion, made by businesses to companies abroad must be counted when calculate tax liability. Because global banks move money among units, requirements would amplify china aircraft has bought airliners for 5. 4 billion. Deliveries of the aircraft are expected in stages in 2023. The deal comes amid surging travel demand set to surpass the u. S. As the worlds biggest. Citigroup is being find 11. 5 11. 5 millioned for displaying Inaccurate Research readings. Cell. Aid buy instead of sell. Thats your Bloomberg Business flash. Manus . Manus thank you very much. Uber shareholders have agreed to sell a sizable stake in the group led by mafia she since softbank. Uyashisans softbank. This specifies the previous warring management team. Stocksrs are biting uber at around 48 billion, well below the and last financing round of 69 billion. The transaction is expected to close in january. Pablo joins us from tokyo area from tokyo. It looks like it will go through come up the key governance reforms . When are they going to kick in because that has to do with credibility. Thats the rocking horse within uber. Pablo thats right. The governance is something that made this deal a bit of a cliffhanger. The deal is supposed to grow in january and as part of that agreement, ubers board will be expended to 17 sees and something should have a claim to two of those. It would invoke twotier voting structures that has given a lot of voting power to the early backers and by extension, reduce the cofounder and former ceo Travis Kalanicks power. He will also get something out of the deal. And the 10 stake company, but as part of the agreement, early investment benchmark will drop its own losses. That will put to an end all this internal infighting that has set the company back in 2017. Manus how important is a stake in uber for softbank . Pavel over the past year, they emerged as one of the biggest investors in right hailing the portfolio includes didi in china, 1999 in brazil. Until now, it looks like an empty uber allies. Now getting uber on board makes things interesting. Markets excepte for china, cooper is competing with his other investments and this competition tends to be destructive. It comes in the form of subsidies to drivers or free rights for consumers free rdieides for consumers. It remains to be seen how active shareholders will be and whether he can strike deals in some of these regions and avoid costly fighting. Manus lets see how active softbank intends to be. Thank you for joining us from tokyo. To the issueu here. Softbank is doing the your world. What is your world is the strength of the yen. This empowers dealmakers like softbank. B2b toilet 30. This is the yen, the biggest rise against the dollar. This is a dollar yield curve flattening. Rather than something prophetic in terms of yen strength. ,oes that strength continue given you have the bank of japan giving it different trajectory . Guest our story is that the factor is driving the yen. On the one hand, you have this slowly rising yields and the rest of the world while the bank of japan has a state pat on policy. Then you have two political concerns. Also one thing that has changed with japan, is a stronger domestic outlook with the rest of the world. Activity has been booming. Manus good retail sales numbers. Guest when you look at japan and strong activity and low inflation, is that an outlet for the rest of the world at this stage . Probably not. Dollaryen and the divergent story just doesnt exist anymore. For now, we are looking at 1. 110, 1. 15, in that range. One of five by the end of next year, maybe its a positive japanese story, maybe its a change in the global risk environment. Manus that could be the bank of japan doing something with the yield curve. We will touch on that shortly. Coming up, right here, whats hot, whats not. It was a good year for bitcoin, but qatari stocks didnt fare so well. We discussed the best and worst performing assets of 2017. Do you have what it takes to trade the coin . Trade bitcoin . The median estimate on the list for function, we discussed the best and the worst on bloomberg. On 3 30 p. M. In tokyo. I took away an hour of everybody in singapore. My apologies. What a beautiful day. Certainly not like that here in london. Patel our guest. Its going to take something mighty and big to get you there. Reason there is a new edition of daybreak on your mobile, your terminal, the ayp go. These are the top stories. It will make some of our producers happy. Europes first major risk event of 2018, the president dissolved parliament to make way for National Elections. Hung parliament seems to be the thing in europe. What next in italy . ,peaking of germany and spain we have Inflation Numbers expected to come in, expecting to slow in december for lower few lower fuel prices. The forecast is set to 1. 5 . Daybreak focuses on out with the old, and in with mifid ii. And the Complaints DepartmentCompliance Department will be just around the corner. It really is from farreaching issues, rules and returns is the place and destination if you want to understand mifid ii. If you want to understand markets, guy johnson is patiently standing there and he will put the special appearance on daybreak. Guy im not sure much understanding is going to be generated, but lets give it a go of it lets work our give it a go. Lets work our way around. Australia is having a relatively bad day. Commodities have come off the boil. In commodities space, the like of copper, this could feed their into the london market trade little bit later today. London got out of the date yesterday with strong performances from bhp. That may not turn out to be the case today. Australia is Trading Software this morning. Copper is a little bit negative, gold is Trading Software. Trading softer. The flipside to this story, crude is very well bid on the back of the day that we have seen in terms of inventory. They are trading strongly. Cpi is north of 60 a barrel, something to Pay Attention to. Take a look at the inflation metrics. It will be interesting to see whether oil has a meaningful impact. Of tradeoil producers are doing in europe. Thats something to Pay Attention to. Europe was generally negative yesterday. We look for data out from germany later on in the inflation story. Is how strongg the bid for chinese currency is, reasonably well bid. That is nothing to Pay Attention to. You are looking forward to the european session, not a big takeaway from asia other than the fact you may see some minus and weakness there, but you might see that counterbalanced by the fact oil stocks could do a little bit better on that much stronger performance from the crude complex. Manus it just depends on what the show producers do next year. Thank you, guy johnson. He will be back when the market opens. The u. K. Government are going to withhold papers on the creation of the european union. It dates back to 1992 and were due to be released today under the 25 year rule. However, almost 500 files on the Prime Ministers files, 114 are being held back and a dozen of those relate to the european policy. The Cabinet Office denies hiding sensitive material and calls for the papers to be published. Patel is with us. What strikes me as telling is that the files that were released, those that have been released around 1992, the expulsion from the Exchange Rate mechanism that really turned the conservatives on themselves, it was a christmas moment for the right of the conservative party. It personifies black wednesday. Have a look at the pound. I know we have it ready for you. The roaring that went on. I think this is quite deliberate to release the most aggression side of these papers versus the creation side of these papers. Setting the pound against the dollar. Is evocative do think that to release the 1992 papers . Guest when we look at the pound and domestic politics, our message has been to sell the pound actively on domestic political issues and noise around what we describe as the trashy pound. Its unpredictable, its been noisy. Is pretty high now. Manus im going to take you to task on that. He said a trashy currency. You use all of these phrases. It hasnt. I want to show you this year. This is where im going to challenge you. First and last year. Have a look. Why is it trashy . Guest it noisy, at times unpredictable. But resilience matters. If we look at the speculative positioning as we mentioned, the idea that what happened is that not necessarily the pound longs have been increasing, but pound shorts have been failing over the past couple of weeks, which concerns the view that shorting the pound is not attractive anymore and i think we are going into 2018 and going into the catalyst of went it will come back. We think too much pessimism has been priced in. We are looking for 140. Again, ive said it before, we are not shooting for the stars. The bank of england story comes back online, it is you momentum going into the First Quarter, takes you to 1. 40, after that its anybodys game. Manus i presume thats what you get living on a prayer from. Guest we are living on a prayer at times, but as the song manus i love the songs analogy. Guest we like it as well because its holding on to what its got and we are technically halfway there. Manus we have three top 10 singles and one hit. On a more serious note, if you look at the speaker the additions, they have been building at the speculations, they have been holding. Sector data shows that fourthquarter output was the highest in two years. So a lot of people, a lot of eminent economist have utterly been disproven. Guest this momentum can continue into next year. The key driver for the u. K. Economy has been High Economic uncertainty and we have started to get progress with brexit, the biggest catalyst to take uncertainty off the table. You see this momentum continue, strong activity, still high inflation, that will be a warning sign from the bank of england. Manus you dont buy into this that inflation story has topped out at 3 . Guest it tops out, but its the persistence with staying at that level. It may actually go above 2 for a long time and that, when youve got the added tailwind of domestic activity coming through some signs of mystic activity picking up, thats a trigger point for the bank of england. Manus do you think the market is underpricing the ability of the bank of england to raise rates again in 2018 . Guest the risks are that we get this may rate hike. If we get this transition or some of this momentum as we to at, that leaves it self speaker curve for the u. K. Economy. Not too steep, but the slightly steeper curve. Manus transition, where does that take me to . One,get transitioning onto we need transition details in q1 to stop traditions around this, building from paris to frankfurt, etc. Where is my outset on transitioning . Guest sterling has two cyclical tradingso potentially at the lower of that 80 point range. Manus what brings me to the upside above the 1. 40 . Is it the rate hike in may . Im trying to get the sequencing. That is one story. The transition in the repricing would come simultaneously, taking you to 1. 40. After that, we are back to focusing on the long run story, where is brexit negotiations heading . I dont think we will get massive details on this until early in 2018. Probably a late 2018 story. Back to resilience stability for the pound and trading in that 1. 40 range. Manus if i ask you to sing the song walking away, would you . Thats the optimistic side. Why not . Lets have optimism going into 2018. , walking away,ng which it all falls down. How real is that prospect . That was our story yesterday. Its not all rosy. Damien green is gone. She is losing ministers like hot potatoes. Its not politically stable, is it . Guest no, and thats one reason it goes back to resilience. But they sell the pound and make them as an attractive prospect on domestic noise. Its not proven a profitable strategy in 2017. The resilience tells you that. Manus theresa may lives through 2017, but does she make it politically through 2018 . Guest we are not looking through a general election, so these tail risks are main tail risks. Manus viraj, stay with us. We are not walking away just yet. It has been a great year to host it going if you had the nerve and you had that to host the coin bitcoin if you have the nerve and you had the. We look at the winners and losers across the globe. And the riskiest assets that performed. There were perhaps no investing ideas that attracted more attention in 2017 than the cryptocurrency. Our asia and economy government editor joins us. You have to be pretty big bag of talk about the major assetrs, the classes that delivered the return for 2017 . Looking at my cheat sheet here, one of the things that struck me is that its essentially many of the former communist countries that have seen the outside gains and its always going to be the emerging markets that are the outliers. If you look at stocks, you have ukraine, has extent, estonia, poland, mongolia, all around the top performances. The currencies, the Central European currencies stand out. Serbia,encies of moldova, albania, croatia, all doing well. Aat youve got here is continent of europe that has put the crisis the on it and you have the peripheral economies here doing well in an environment of sickness global list Global Economy expansion. And strong appetite for risk. All of these guys in central hes europe have done well looking at their stocks and currencies by and large. You look at the bond space, the out performers here are in the developed world and argentina in the emerging markets and greece has come back from the brink, argentina. You have a promarket, probusiness president in charge consulting power and the bonds and stocks have responded. As you say, nothing has done better than the cryptocurrencies sector, predominately being a recent story just the past few months. You look at the huge runup just over the past couple of months , coming back down several thousand dollars now, but Still Standing on a 4000 or so gain 1400 or so gain. This is not a huge market, so bitcoin is a large cryptocurrencies market. Thats a little less than wells fargo. 2 of americans have actually traded the cryptic currency. Traded the cryptocurrency. Do you know whos driving that market . The mainly us. What are the mishaps . Interestingf the things is that it has been such a good year for markets that even the lemons arent so sour. You look at stock space, the pakistan market is the worst at 20 2 drop. That barely qualifies for a bear market. 22 is not great, but its not a huge loss and the number two is come which is down 17 , not even a bear market by the traditional definition. Then the bond space, you dont want to be in venezuelan bonds another they have defaulted on dollar securities. Manus lets see what 2018 brings for us. Have a great new year. Daybreak, we are going to look ahead at what will be a pivotal year for european banks. They are preparing for new regulations and the u. S. Inflation mystery was meant to keep economists up at night. What are they predicting in terms of rice growth for next year for price growth for next year . This is bloomberg. York, 1 49 a. M. Dropping the ball is going to be the game in new york on new years eve. Yeargoing to be a pivotal for european banks. Who better to discuss that then our resident analyst on the banks . Patel as ourviraj guest host. Talk to me about valuation. Then a heck of the year for the banks. How did it look for you . You have to standout winners, Congress Bank commerzbank and a few underperformers. Are moreg else, we booked than the discounting prospect of it all makes sense. You need capitalists this year because its difficult to be excited about the variation of earnings. Cans so the catalyst, you think of the songs about coming back to normal. You have some wildcards. The wildcards are tied back to the drivers for next year, long performing loans and cross cuts. Show me your wildcards and why. We know the European Mission and ecb are coming at it from different angles. That will be a lot of newsflash. They are swinging 10 daily. That is a big one. Then the banko bpm credit, the smaller ones are in play. Same with the irish. They have a big problem they need to address. Thats one area you will get plenty of news. I think basil for, we been waiting for them. Got the details in december. Should expect to see the in this world hiking their dps. Manus this is the dividend payout . Dividends ine those lists. As well. They have a one hurdle to get over. I sat down with the ceo a couple of weeks ago and there are Mortgage Backed securities. Upsides . Hese still 18 on the year for d b. It had a good run. Is it priced in . Not really. The banks, the standard charts are thomas banks, they havent started paying yet. I cant see them starting dividends until next year. Manus you got 50,000 hits on your blockchain story. While of that transfer into bank equities . The provision stories point out. Its all about costs going forward. You look at things like energy trading, trade finance. You will see revenues, but you will see the efficiency from the investment on the back end of 2018. Blockchain, not bitcoin, is a huge story. For so many different sectors. Manus thank you very much. Great to get your input. Thank you for you and your team for everything in 2017. With a forward to your views in we look forward to your views in 2018. Atel has been sitting silently. Whats your song . Life. Back to manus no, i wont sing on this career. I did that and it didnt end well every there is one currency that which stood out as it were. More retro with our song choice for the euro. Of course, ecb normalization and politics, merkel, macron, that coalescing could be the off a for the euro. Alpha for the euro. Really . Guest we just have to get past the First Quarter political risk. When we look at it, we are not factoring too much of a risk going into the First Quarter, but we think it will be capped at 1. 20 in the First Quarter. The next is the real life in the merkelmacron integration story, plusng inflow costs, repricing of the deposit rate hike. That will come much in advance of the actual move itself and we think it could be manus do you think they could raise rates . Guest repricing. Manus repricing. Guest and that story could kick in some of the 2018 eurodollar at 1. 25. Thats just the catalyst of strong data, strong economic activity, and potentially slowly grinding higher inflation. Manus that comes to fruition, they changed the language in guest mario draghi lets his foot off the pedal again and gives a good signal that things are going to normalize. ,anus if its central mark there will be an unraveling in the bond market, but at the shorter end of it shorter end. Orderly. D nothing too in an environment where you dont have strong macro fundamentals, you are not going to get a massive bond bear Market Dynamics pushing in the eurozone. Manus the consequence of that euro strength might be manifest most prevalent in euro swiss. You talk about return to rate for euro swiss. That tothrough using closing at your call for 2018. Guest its that divergent story ande the swiss franc loss the ecb stepping up and taking the lead here. Potentially1. 20, one point. 5 next year. Manus thank you very much. I look forward to your repertoire for next year. Thank you for being with the daybreak team. Always great to get info from you. He is going to continue that conversation on radio. We are global. Up next on daybreak, the mystery of vanishing inflation. We have more from our interview with the former fed vice chair, that and more still to come. Equity markets are trading on record highs in asia and that is transferring to itself into the european markets. Its daybreak. Good morning from our new European Headquarters in london. This is daybreak europe. Is your top stories. Good rings for the greenback. The dollars on track for its first annual decline in five years. A ride, uber agrees to sell a sizable stake to softbank. The right healing from a less bumpy journey . Not for publication. The u. K. Government has decided release information on the creation of the year. The Cabinet Office denies hiding sensitive information. Manus welcome to daybreak europe. Its the last show of 2017. What a roller coaster year to spend. A tortured dollar, indifference bit going but only 2 of americans actually traded it. Shifting gears to softbank. Got evaluation 20 years lower. Japanese benchmarks setting records from the 1990s. Or the, apple apologizes reason my iphone has been almost as tortured as the dollar. The battery. Finally apologizes. Good job, apple. The dollar inns with a whip whimper. Not the stellar reserve currency that was. Its going to be cuffed to hang on to your dollar. But this is how European Equity markets are opening. Asian markets trading up. Benchmarks in japan the highest since 1990s. Thats probably the Biggest Little statement. You are seeing the euro stakes will make 85 of the eu economy post. Making statements about what is it you happen post. Brexit. The index rose. We surpassed the 2007 highs. Absolutely bring it home. 2600 percent return. Its technology that has busted it out of the park. We are up 54 . The topics is up 20 . Bit coin. What do you do . Have you got big enough boots and pockets . Where will bit coin trade . Where is its value going to 2018 . Have you found a next her 14,000 . We dropped 24 since the record high. Only 2 of americans have actually dabbled or traded in bit coin according to block Chain Capital survey. Is a block chain that you maybe want to get your broker or your analyst . They advise you on what you want to do with bit coin. You can get the bank sentiment. , went backn for me into a bull market in september. The clash of 2018. What happens next . Will the producers come back in . With a symbiotic relationship between opec and nonopec continue . The regulation by trump . Lets look at the german bond market. Out. s a nice piece you want to be underweight treasuries. You want to be underweight european sovereign debt. Do we have the bond market there . Will get that for you verys very shortly. Stability are saying this will be the year inflation picks up. Tell mark cudmore aviraj patel says it will be trading market. Sophie u. S. President donald trump has warned china overloaded sale of oil to north korea. Saidth korean newspaper somebody spy satellites have seen chinese vessels transferring oil to north korea 30 times since october. Trump tweeted, caught redhanded, very disappointed chinas allowing oil to go to north korea, there will never be a friendly solution if this continues. President trump said that investigations into his campaigns collusion with russia makes the u. S. Look very bad. The comment was made in an interview with the new york times. Some argue theres antitrump binds within the fbi. U. K. Documents dated from 1992 were due to be released about the creation of the european union. However, almost 500 files from the Prime Ministers office, 114 of those are being held back. The cabinet denies to the billy hiding sensitive material amid calls for the papers to be published. U. K. Prime minister theresa may will beach french president manuel micron next month and begin trade talks with the european union. They will discuss financing afterafter brezit. Xit. Liberia, they have a new president. First democratic transition. Global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. You can find more stories on the bloomberg. Lets check in the markets in asia. So long to 2017. Asia is winning the award for the world this year. Up 29 in 2017. Topics havecanada their best year since 2014. Chinese stocks are in dean the year on a high note. Its cutoff the games after punishing year for stocks. Surging again. Assets to rival geo. They are extending gains at a record high. Lenovo,shareholder in , theolks in China Restaurant operators surgeon to record high. Manus sophie, thank you so much. Corporations will benefit the most from the u. S. Tax policy. We can only expect a modest boost for the economy in the short run. Said the fed is on track for rates. I dont see any size inflation and you does the fed. Its mysterious. I have been saying for a long era that we are in a new with these threat of inflation is almost nonexistent. Does he agree . Shes not bothered by the inflation. Fed are caughthe about this lack of inflation. Well 2018 show its inflation to us . And say,ing to risk it we are optimistic about the prospects for inflation it here. If you look at. In history where Unemployment Rates have dropped, germany, you need to go about a half percent or so into you see a proper wage gain. Theres other measures of inflation. Theyre pointing to higher inflation next year. The fed underestimated the drop in Unemployment Rate this year. You reckon we continue lower in a transit into Wage Inflation . Is very hard to predict. Its a moving target. Think its a lot more than many economists thought, but we do anecdotally, whether its from analyst calls, Federal Reserve regional president s, they are saying theres a labor shortage out there. Manus is that service case . Lets take it into the bond space. 2 of the threeyear paper. ,erhaps the Biggest Movement oregon a break that 2 . Is that quickly important . Nick i think it is. I think one of the reasons were going to break 2 is that bank function is changing. Youve heard from yellin and rivlin. Is hard toflation come by that theyre going to hike anyway. I think Central Banks realize bute are structural issues they see growth is very strong and they see Financial Stability is an issue. They want to hike regardless of the inflation. Mandatethe central bank is not as tight inflation as it was five years ago. Manus they want to do three hikes. Our guests you yesterday was that they can get away with three hikes and it wont unseat the economy. Can they . , not unsinkable bond market. Lets pull the bottom curve up again. What does three hikes due to the bond curve . What does it do to the curve . Is the flattest and 10 years. Factor but i is a think of almost equal importance is what happens to the bank of japan of the European Central bank. What we are seeing this year is a huge amount of printing from the ucb ecb and becky japan. Curve. S compressed me a compressed that yield curve. The ecb is more confident they can take away the stimulus. Bank of japan may be turning towards yield curve control. Up and moneygo will be repatriated back and what takes on the pressure off the u. S. Treasury. When people say theres a recessionary risk because the curve is flat, i think thats more a function of global liquidity rather than recession. Hikes, butthree rate that is anywhere had torture session. Manus i like some of the goes against the crowd. Yoution another mentioned a number of other banks. Ive askedo this before, are we in the foothills of the synchronized turn from Central Banks . Are we underestimating the propensity for global Central Banks to move higher, more aggressively . Nick i believe so. Its a bit of scare, but if you , their the north bank mandate is threefold. Growth, robustness, and i think they get those three boxes ticked and you see more confidence. Do we need a new language at the fed and the European Central bank should mark we have a hard enough time understanding what inflation leg which they use. Doing it need new language on growth . Its hard to change their mandates, legally speaking. You can always wrap up inflation target language. If you look at the ecb, core inflation has been steady. They see growth higher. Manus we will go a little deeper into that. Manus that subjective opinion as opposed to factual view. Nick wall stay with our team. Why europe has become the hot spot for mergers and acquisitions in 2017. And, you guessed it, we couldnt finish the year without a bit point session. Cant find a spot them after yesterdays tumble . This is bloomberg. This is bloomberg. They get readyn, for a new years celebration this weekend. 7 18 in london. 8 19 in berlin. Sophie . Apologized tohas customers for Software Changes that reduce the performance of older iphones to reduce unexpected such downs shutdowns. They say they had not introduced indus purchase of newer products. New tax law might hit withargest foreign banks big hits. Because global banks frequently move money among units, this requirements may compensate their income for the apartment. To sell agreed sizable stake to softbank. Transaction implies a 14 billion value for the company. One . 25ny will put billion directly into the company. Thats your Bloomberg Business flash. I dont offer good to see you again in the rest the program so happy new year. Lets talk about europe. Turned out to be the hot spot for mergers and acquisitions in 2017. U. S. , activitye has been boosted on the back of more stable economic outlooks and growing confidence compared to the u. S. Or you have a battle over texas that was finally settled. Are they for real and will they last . What can we expect for the year ahead . We brought in the big guns. Nick wall is still with me. To you, first of all. Global him and day global m a. Its nowhere near where we were at the peak of 2000 and seven 2007, but hows it looking . It was looking slow until december with them we saw a huge boom. Europe is leading the way. That isits new york much busier than us. We were very busy in london. We saw deals like luxottica. Overseeing Economic Growth and return of confidence in europe where u. S. Was uncertainty. Chunky men and everything to go longer than expected. Manus there are some names a come to mind. We cover them throughout the year. Invoking bigger payouts and structural change. Activist investing and activist m a. Years about for activism and when will it come to europe. When nestle was targeted, we knew it was finally happening. Activists are still very active in the u. S. Theyve almost exhausted the options whereas in europe theres so much low hanging fruit. It will see more and more of that going forward. They have been extremely busy. Thats the impact you will see. They will push for big conglomerates to sell noncore. The view has been that European Companies might move back to the u. S. Is that part of the chatter at all . Could that take 2018 . Tax reform is the big topic. I think the bigger impact will be on u. S. Companies. Cost pull back their cash that has been stuck abroad. I think the use that for m a, dividends, buybacks. Manus all the research, we make the most of it. Nick wall is at old mutual. Lets take it to you in terms of the conversation. We have this story, a world beyond treasuries. Extent does this corporate debt look appealing when you see this kind of the year . Think in europe, especially, corporate debt will be more of a function of ecb action. Bondss been buying core and spreads are tight. Story get a better growth and start to see inflation pickup, i think you see the market speculate that the programs might be taken away. Manus in terms of europe, i want to get through some of the big calls for next year. Greece is been one of the standout returns. D like greece . Do you want more greece on board going to 2018 . Nick i think theres more to go in greece. Politics is probably the key factor behind greece bonds. You need the politics to align in europe and greece. I think greece, the Prime Minister has worked out colliding with europe constantly. It doesnt really work. From thea clean exit program and playing ball with European Probe europeans. Politics will perhaps be one of the most honored forces. Lets look at italian bonds. Youve just seen dissolution of parliament. We are going to have elections. Have a bigng to clinical risk in terms of italy. The propensity for a Hung Parliament is slightly higher. Story unravel . We travel to heck of a distance. Does that begin to unravel . Do you want to be long italy . Nick four italy, we like the short side. Versus most other markets. Thats largely down to argue that europe is growing strongly. Its a lee is the main beneficiary in terms of the amount of bonds the ecb buys. If you take away that, the risk becomes a bit more to way. Goinge election, we are to end up with something disjointed and unstable but thats not unusual for Bond Investors in italy. Perhaps you will get a little bit more volatility. Manus thank you so much. That is nick wall. From the shorty side. Thats it for us. We will see you in 2018. Guy 30 minutes ago until the start of castrating. Good morning this is the Bloomberg Markets european open. Talk aboutg, lets what we are talking about. Hitching a ride. Softbank buys a big stake in uber. Keep an eye on this story. Will the massive investment create a smoother ride for the Ride Hailing Company . Does it solidify the position of the new ceo