To what we were seeing november and part of december as we saw some rotation. On a relative basis the dow having a much smaller gain than the nasdaq. Leadership in largecap technology. Its a bit broader. We see Consumer Discretionary also helping lead gains. I want to talk about the weather affect. Take a look at whats going on with some of the commodities. Gas rising to its highest in about a month. A 14 surge. Its quite chilly in the northeast. Temperatures hover well below normal. Coffee is also seeing a boost. Things that are hot. Some crop issues in columbia. Slowing brazilian exports also helping and cocoa also seeing a boost. Shirts are hitting a record in london. The u. S. Actually burned the most natural gas ever on record on monday. Natural gas consumption surpassing even the socalled polar vortex. 143 billion cubic feet was mondays usage in the United States and this is having a Ripple Effect within stocks so out Gas Producers are outperforming. Retail generally is seeing a lift today but specifically some of the makers of cold weather gear are also rising. Vonnie thank you for that. Shery stocks are starting the first trading day of the year in the green while the dollar is extending its decline after the s p 500 posted its best annual 2013 boosted by strong earnings and the success of the tax bill. Joining us now with what to isect from the year ahead chief investment strategist. Thank you for coming into the studio. Lets start with 2018. How much of the Market Performance will depend on Monetary Policy and how much on earnings and valuation . We have coming to this year already pricing and a lot of the good news we expect to see in 2018 with a very frontloaded tax andfor individuals corporations. A lot of that was priced into the market thinking last year. I am watching the fed this year for sure. The market is pricing in two rate hikes from the fed. Theres a good chance we see three or four this year. Shery whats the risk of that . I dont think its a huge risk to the market. If the fed is hiking four times it means things are going relatively well. Maybe we are on the cusp of overheating. It is not necessarily a bad thing for stocks. The ecb is also pulling back it can get messy for those longer duration bonds. Vonnie can this bull market last a ninth year . Earnings are going to support stocks this year. One of the latest versions of this tax cut bill didnt have the Corporate Tax cut coming until 2019 so theres going to be a lot of frontloaded good news for companies especially those paying much higher than 20 . That will be enough to keep stocks at or above current levels. I dont think we will see as little volatility as we saw in 2017. I do think we will see stocks grind higher. Vonnie why might the tax legislation hold stocks up . Investors are waiting to see what Companies Start to do with this money. I do think people will be waiting for announcements of share buybacks, raising paid tos, bonuses employees which could be seen as helping the economy along. Overall this is good Economic News other than the fact that it is so cold and the tax cuts are being offset by having to heat homes at a much higher temperature. Drop in timesl square apparently the second coldest on record. If you take a look at the chart you can see that markets abroad have outperformed the s p 500. Outperforming the stoxx 600. Is there more room to rise when it comes to markets abroad . Is there some where we should go for 2018 compared to just being domestically invested . The tax bill gave more fuel to u. S. Stocks. For most of 2017 International Markets were doing better. If you look at Europe Markets in europe did not perform as well as the markets in the event states. The reason u. S. Investors feel like they did better internationally is because the dollar weakened so much. I think the dollar is going to be more stable. Given the good news we saw economically Earnings Growth in europe really starting to take off. You still have countries emerging from recession like brazil, russia, argentina. Theres enough good news outside the United States to push earnings higher in the markets outside the u. S. Higher. Shery this chart shows you the daughter of theres enough goe the United States to push earnings higher dive the greenback has taken. Vonnie how much of a portfolio and to what kinds of markets . We hold somewhere between 25 and 35 depending on how high the risk tolerance is on the portfolio of the equity portfolio internationally. Of that about one third is an emerging markets. If you are going to be on the lower side of that. There is still room to get to that 30 or even a third of the equity portfolio internationally if you are a u. S. Based investor. Shery are you worried about geoPolitical Risks . Issues playingc into the markets as well. Italy dissolving its parliament. How much of that have you factored in when you want to allocate your investments abroad . One of the remarkable things about last year is it seemed like we had geoPolitical Risk. And none of this really had a blip of an effect on the equity markets. It seems like it is very diffuse. We have the protests happening in iran. We have negotiations related to north korea. Looming. Exit they have to get a lot of work done this year. The Political Risks are diffuse enough that i wouldnt worry about every single one and it usually tends to be one people dont expect in advance. It tends to be the one that has the biggest impact. Its very hard to hedge against what if things really go south on the Korean Peninsula . Vonnie what is the question clients are asking you these days when they call you up . Is the equity market overvalued and now it is why the yield curve is so flat. I didnt realize they thought so much about things like the yield curve. One rule is that the yield curve tends to flatten before a recession so this is a concern. In signal we are getting terms of being worried about the economy i dont think is particularly strong at the moment because we have come from shortterm Interest Rates being low and they just started to come to less abnormally low levels. Dont worrythem is so much about recession risk. This is not the year when the u. S. Is going to have a serious risk of recession. Much. Brian, thank you so lets check in on the first word news. Mark President Trump is wasting no time setting his 2018 legislative agenda. After arriving back at the white house following his holiday vacation the president reportedly sending his top aides to capitol hill tomorrow to meet with House Speaker paul ryan. The president is hoping to keep his congressional momentum going after scoring his first major win with the tax overhaul. To change thefort course of americas longest war. The top u. S. Commander for the middle east is pushing for a more aggressive stance in afghanistan. The general wants the Afghan Military to increase pressure on the taliban and in the slow winter months leading to a major spring offensive. The u. S. Has been at war in afghanistan for more than 16 years. Israels parliament passed a law today making it more difficult to divide jerusalem. A move that could impede peace talks with the palestinians. The law can be overturned by a simple majority vote. Palestinians want East Jerusalem land inapital of their any part of that deal. 2017 was the safest year ever in the skies with Major Airlines worldwide recording no fatal accidents. A dutch Consulting Firm says there were two fatal accidents involving small regional planes overseas. That works out to one fatal accident for every 16 million flights. President trump is taking credit, tweeting that he has been very strict on commercial aviation. Global news 24 hours a day powered by more than 2700 journalists and analysts in over 120 countries. Im mark crumpton. This is bloomberg. Year samead, new fiscal fight in washington. What to expect from the latest round of funding negotiations and what it could mean for the republican agenda. This is bloomberg. Shery this is Bloomberg Markets. Im shery ahn. Vonnie im vonnie quinn. It is a new year but the same unresolved issues in washington. Lawmakers were welcomed back to capitol hill with another deadline to pass a spending bill. Tomorrow congressional leaders are heading to the white house for bipartisan talks to try to keep the government open. Nnaare joined by an edgerton. We are starting off 2018 much in the same way we ended 2017. We are looking at how to reauthorize surveillance ability for the intelligence community. How to fund Childrens HealthInsurance Programs on a longerterm basis. Looking at how to fund the government passed january 19. Sites that were holding up congress at the end of december. Shery defense spending also a key issue in the chart. Showing that u. S. Defense spending as a percentage of gdp having steadily declined since 2000 10 almost at the lowest point in 20 years. Will thisf an issue be between the republicans and democrats when trying to get a budget deal . They have to reach an agreement on the level of ense and nondefense to Discretionary Spending and that is holding up a longerterm appropriations package. House republicans especially defense hawks had last year said they would not vote on anything that didnt include a full appropriations bill for defense. Up to the christmas deadline they ended up voting for something that just extended the current levels of funding until january 19. He will see that being a really big issue for conservatives in the house and something theyre going to fight really hard to make sure defense is not funded on another shortterm basis. Vonnie is it fair to say that most republicans were happy with the way the tax legislation was passed . House freedomthe caucus members and more moderates really came away with something. Could that be a blueprint for working together Going Forward . Definitely. There is a lot of goodwill amongst republicans. It put muchneeded wind in their and so you could see that goodwill carrying into the new year but there was a little bit of resentment bubbling up underneath the surface as people left for christmas at how the last spending discussion was handled right between the tax bill passage in the last spending deadline so we are going to see how House Speaker paul ryan and Mitch Mcconnell can maneuver within their own conferences to keep that unity and spirit of working together just in the republican conference. Its entirely possible the government could be largely shut when President Trump delivers his state of the union address. This is his first state of the union. What impact could unresolved issues such as the budget have on him and is this even possible . Its definitely possible. Theres no guarantee that they will be able to reach negotiation before january 19. They gave themselves a short deadline and part of the reason is because i didnt want to ask defense hawks to extend temporary funding for the military into march. They only gave themselves until genuine 19 january 19. Resolve a slew of issues before then. The most important of course is just funding the a slew of issues before then. The most important of course is just funding the government, keeping the lights on. They have done it three times year so we are going to see when democrats decide to draw the line on immigration. When conservatives in the house decide to draw the line on defense. Who is really spoiling for a fight and who wants to dig in to make their point. Vonnie a big meeting in Congress Tomorrow which will include majority and minority year so weleadership. Will anything emerge from that particular meeting . We hope so. There probably wont be any public announcements. We are hoping they at least make progress. Before appropriators can even on Appropriations Bills for the rest of the fiscal year and immigration is going to be a huge issue in that meeting tomorrow because you have the argument for the protections for the socalled dreamers brought galicianof their own versus trumps demands to end chain migration as he calls it. And to build a physical wall on the southern border. You will see those issues working together, coming to ahead. Thats going to be a lot of what is resolved in that meeting tomorrow. Vonnie thank you. Time for the Bloomberg Business flash. Ry a look at the business biggest business stories in the news right now. The tax cut will actually cost bp. Cutting the corporate rate to of requires a reevaluation its deferred tax assets in america. That will lead to a onetime noncash charge of 1. 7 billion in the fourth quarter. Steve cohen will launch his new hedge fund with a little help from big brother with his twoyear ban for securities fraud now over. He is taking steps to ensure a level of oversight. These employees will listen in on traders conversations in realtime, comb through emails for suspicious language and veto job candidates. Tesla is leaving wall street guessing about sales of its model three. The electric carmaker have war modelfour times threes last quarter than it did in the previous three months. Another analyst says sales may have risen by a factor of 40. The wide range reflects how little tesla has disclosed. Thats your business flash update. Still ahead, north koreas bold move. China is high on Eurasia Groups list of top risks. Kevin rudd says all roads point to beijing and the year ahead. This is bloomberg. Vonnie this is Bloomberg Markets. Im vonnie quinn. Shery im shery ahn. The Eurasia Group is beginning the year with a fresh look at the geoPolitical Risks to watch and china is high on the list. Kevin rudd joint bloomberg surveillance exclusively to weigh in on tensions between australia and china. If you look at the australian dimension to this its just one path amongst the broader picture which is been painted by the Eurasia Group risk analysis for 2018. The rise of china, the response of government within the region to the rise of china and of course more broadly the response of regional governments including the United States as well to how china will handle the ongoing challenge with north korea. So i think for the year ahead all roads continue to point to beijing. On the question of geopolitics but also on the future of the Global Economy as well. Where do you see the relationship between specifically australia and china going and will that hurt trade and investment in australia . Obviously there are political tensions between the governments at present. Has madeister trundle a series of statements about chinese activities in australia. This has caused reaction from beijing. This serveshow alliances or it doesnt. See how economic consequences flow from the current political instability is in the relationship. I go back to my earlier point in the relationship between china of australia is part broader equation involving all regional governments. The rise of china is a culpable phenomenal for us all. Trump andsee donald the u. S. Being a little bit more engaged in asia in 2018 and therefore rebuffing are pushing back china little bit . President undertook a significant visit to the region in the latter part of 2017 and many elements of that will be judged in regional capital in washington as successful. The bottom line is we have one big unresolved security and strategic dynamic and called the north Korean Nuclear program and that will be front and center not just for the next month but for most of 2018 and the risks of miscalculation in either direction on the part of the handling and debt crisis should have all of us concerned if we are calculating to Political Risk for the year ahead. Tom what does australia need from President Trump . What projection for america does australia need . Of all of on behalf us is one simple request and thats predictably. Not glowing hot and cold within a 24 hours new cycle and when it complex asmething as the china relationship that becomes fundamental. Also when it comes to the future of managing north korea it becomes fundamental. We cannot afford to live by tweet fiat another year ahead as the stakes are raised even higher. In terms of handling of the unfolding north Korean Nuclear crisis. Predict ability. Shery Kevin Rose Kevin rudd on bloomberg surveillance. Comingorea a key issue up in 2018 as we have President Trump again kim jongun rocket man. Up, the hedge fund giant whose downfall was dramatic enough to inspire the showtime series. Hes back and making compliance a centerpiece. We will check in on stephen next. This is bloomberg. That is a beautiful shot of midtown manhattan. I can guarantee you it is cooler than that shot makes it look. Live from bloomberg world headquarters, im vonnie quinn. Shery lets get a check of the major averages. We are seeing a strong first day of trading for 2018. The nasdaq surging 1. 2 . Continuing that rally. Having its best year since 2013. The dow is up. Stocks leading the gains. It is around territory around that 70 level. The s p 500 up 6 10 of 1 . Health care is gaining. Nine out of 11 s p 500 sectors ended 2017 higher. We are seeing another strong day of gains. Vonnie lets get to the first word news this afternoon. It is with mark crumpton. Mark President Trump is labeling the Justice Department part of the socalled deep state. That is the alleged entrenched bureaucracy mr. Trump and his allies promised to eliminate. He tweeted this morning Hillary Clintons top aide has been accused of disregarding a six security protocols. She put classified passports under the hands of foreign agents. Remember, pictures on submarine. Deep state Justice Department must finally act. Also on comey and others. Vice president pences office says his delay trip to the middle east is off this month. Hadvice president pence postponed it after arab leaders to announce the u. S. For recognizing jerusalem as israels capital. Peoplent trump says the of iran are finally acting against what he calls their beautiful brutal and corrupt government. He tweeted about the largest antigovernment protest and iran since the 2009 election. The president wrote the iranian people have little food, big inflation, and no human rights. Iran Supreme Leader blames the protest on what he calls the enemies of iran. Of meddling in the countrys internal affairs. Talkskorea once to hold with north korea about the upcoming winter olympics. If kim jonguns regime agrees, it would be the first formal meeting between the two koreas since 2015. Tough korea is hosting the olympics next month. The north Korean Leader has offered to send a delegation there and improve overall times. Global news, 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. Im mark crumpton. This is bloomberg. Shery thank you. After a twoyear battle, steve cohen is back in the game. Is one ofdge fund wall streets most anticipated comebacks. What can investors and onlookers expect from the financial giant . Bloomberg Hedge Fund Summit reporter kathy burton is here with the latest. Have a 50oing to member compliance team. That is huge. What are they going to be doing . Kathy they will be doing everything from listening in on peoples phone calls, looking at their emails, they have an ai programs that take out suspicious wording. They also have veto power over people being hired. Vonnie it is fascinating. It makes it sound like people want to do ill things in this industry and you need some kind of big other machinery in order to not do it. Will the people who are hired to be some of the old people that used to work at acc . Runningteve has been money for the past few years at something called point72, which he has been managing his private fortune. All of those people will be the same people who manage money at this new entity. They still have not said that they are opening it. They are out there talking to investors. 2y have commitments between billion and 4 billion in capital. The word is they will start picking out capital next month. To increasepoints scrutiny. If that happened if this happens, what happens to Money Management talent . Will they be tempted to leave the company . Kathy we have been told there are people there who are a bit set up with the level a bit fed up with the level of scrutiny. They think, i can go elsewhere and have a normal environment. Vonnie in a way, it is nice to have that taken out of your hands. It is 50 people in compliance, regulators will have a hard time arguing the case they should look into anything at the firm. Does this buffer the firm too many from any investigations . Kathy i would think they would have a lot of scrutiny because i think the government is quite unhappy. They expected steve would not be managing money. They had been pushing for a lifelong ban. They ended up with two years. That is a big difference. Shery building a compliance will cost money. Who will end up paying for that extra money that they have to pay in fees . By theis be shouldered company itself, will they pass it on to their clients . Kathy they are in this structure of the new firm. We are told there are some expenses that will be passed through. Also the fee is higher than normal. The clients will be the ones who will be paying for most of it. Vonnie the we know what kind of strategies they will employ . Kathy they are mostly long short equity. They have been adding other strategies for the family office. Those will probably continue. Shery they said last year they wanted to raise 10 billion of outside capital. Are they on track . Kathy no. They seem to have skilled down that goal between scale down that goal between 2 billion and 4 billion. Maybe they will try to raise more money, but that is the initial raise they are looking for. The former word from attorney general . Kathy we have not heard anything from him. Im sure he is not happy. Vonnie great to have you with us. Thank you. Bloombergs hedge fund reporter. Vonnie coming up, former apple analysts and the venture capital, has new year predictions for amazon. Find out who he thinks the internet giant will target, next. This is bloomberg. Shery this is Bloomberg Markets. Im shery ahn. Vonnie im vonnie quinn. It is time for our stock of the hour. Netflix is getting a boost. Pays forn pas their best day. We have a few analysts out their bullish. We have analysts upgrading to outperform saying the companies ott streaming services are ahead of their peers. We also have that was mccoury to we have capital same the top pick for 2018. This is the best make a growth story in media. Those are two of them. There are three factors, first of all, the bread and butter streaming business will continue to grow. We have a great chart showing their growth. This is in the Bloomberg Intelligence function for streaming growth under netflix. We see since 2012, take a look at this. Growing,growing, growing. Not a dent in this uptrend. They aim to be the top at 115 million plus they just boosted prices. That should help. Another big thing here is content. Will they continue to grow content . They are expected to spend 8 billion on that. Third, profitability. They have been sacrificing margins of la paz. They are going for 7 margin. Vonnie not only netflix shery not only netflix. I am hooked on hulu. Abigail i have not seen hulu at all. Shery i just started paying double yesterday. It is worth it. I was hooked on blind spot. It is very good. That is the only thing i did for new years eve and new years day. Talking about hulu, viables. There must be holes in the story when it comes to netflix. Abigail they are on top. One of the reasons mccourty upgraded the shares, the analyst theyre saying netflix is ahead of their peers. Relative to all that, investors seem to not care since they are spending to build up the content. Another possible whole is we help hopped back into the bloomberg, this gives us a great snapshot of what is happening for the stock. Here, we have the performance on the day. Up 4. 4 . Well abovevolume is the average. We also see most of the stream here is bullish. The hole in this stream, look at that. Premium, up 409 . We have a wonky metric, but nonetheless, this stock is rich. Vonnie Pretty Amazing because it is up 55 as of last year. Abigail sometimes momentum keeps going. Investors simply adding. Vonnie you brought up hulu. It will be interesting to see how disney, how this plays out. Abigail the analyst over at mccoury saying they are two years ahead of disney. Clearly they have reached for content, distribution. Shery i trust hulu. Vonnie but they are not the same. Abigail interesting. Abigail doolittle, thank you so much for that stock of the hour. About anotheralk company, amazon shakeup of the retail landscaping may not be over. That is according to one wellknown technology analyst. The internetsaying giant could acquire target, noting that both companies focus on mothers and families. He talked about the potential synergy on Bloomberg Radio your radio earlier today. Is aazon views the future combination of mostly online. But some offline. I think adding that 470 excuse me, 1500 stores that target would bring in, that would be valuable. Shery predicting amazons next deal has become a common theme for analysts. Had is not commenting. Here with more details, spencer soper. Would is target a good offline partner for amazon . Spencer it is a bold prediction. It is just that, a prediction. What it highlights is the main weakness that amazon has now in its fight against its biggest rival, which is walmart. Theon does not have physical store presence. It purchased whole foods, it got 400 to 500 stores there, that is 1 10 of the store presence of walmart. If you combined whole foods and whole, itto amazons would have has to half of the whole presence of walmart. This is a big weakness for amazon. Its lack of a physical store presence. These are more signs of that not just with the whole foods acquisition, but they are partnering with kohls in chicago and los angeles to let people make returns. Foranuary, it is a big time people to return gifts they have received. Amazon does not have that instant gratification of going somewhere to return the item that walmart has. Highlights what remains a weakness for amazon in its fight with walmart. Vonnie we might ask why, why does amazon need so many brickandmortar stores . I can see the attraction of having some. But why once why do they want the number of Walmart Stores . Spencer if you are going to have a brickandmortar presence, it has to be uniform. If they have a brickandmortar presence to provide that convenience to customers, that easy access, they need to be everywhere. Walmart brags that 90 of the u. S. Population lives within 10 miles or a 10 minute drive of a walmart. A vast store presence of more than 4000 stores. Between 400 and 500 with whole foods. If it wants to give shoppers the choice of being able to go somewhere to return things, to buy things, pick things up, it has a lot of catching up to do. Shery what about other sect errors other than other sectors other than retailers . Amazon could be buying a bank. Spencer that is the thing. The predictions about amazons next persian purchase is a dime a dozen. There is talk about them buying into the finance industry, auto parts, buying a benefits manager, amazons Revenue Growth is not necessarily going deeper in one particular category. It is going broader and broader into more and more categories. There is a lot of predictions. Latest one. Vonnie why would amazon look to target as opposed to sears or another type of retailer . Sears has plenty of storefronts, too. Hascer target actually people in their stores which is important. They have partnered with sears on appliances. You cant rule that out either. For right now, what they look for the strategic partnerships. Where can the partner fill a glass a gap that amazon has and fill it more quickly than amazon could fill it itself from scratch. What sears did was help them get into the bigger appliances game. It helped them around out there inventory of appliances. And potentially get them into the more heavily into the service of those appliances which amazon which would like to get a piece of that action. Target is getting them into that market with a brickandmortar presence and a more vibrant successful store. Know what was interesting recently, i purchased a House Cleaning session from amazon. I did not really like it. I was really surprised they even have these services coming up as one of their products. Not just physical products. Is this a new segment of the business they will be looking into . Have amazon Home Services. Your experience points out the problem. If you want a regular housekeeper, you do not need amazon as a go between. Amazon is taking a shape of that money. They are trying to get into that. They have got the key to let people into your home. That seems to be the latest advantage they are trying to carve out. If you have a made coming to your home once a week every other week and you are happy with that person, you do not need amazon is a gobetween. Where they might do better on these Home Services as they are trying to offer them as you purchase something, so say you buy a ceiling fan on amazon. Com. You want someone to install it. They will make that part of the transaction. Forcan add that Service Buying the ceiling fan. Those kind of things would make more sense than something that you have a regular relationship with someone, you need amazon at all . Shery also the problem i found with that is amazon does not necessarily provide the services. They hire a thirdparty seller and that is not that is not necessarily good. It is a little bit more expensive despite the discount. That that was my experience. Thank you for that. I will have to try it out. It is time for the latest Bloomberg Business flash. Shares of oil fields weatherford are plunging. They scrapped a plan to join venture vendor. The company agreed to sell its fracking units. Stanley ranks as the second largest competitive Municipal Bond underwriter in the United States. Morgan stanley won 11 billion of longterm debt bid. This is according to something comprise by bloomberg. Handing more than 63 billion of sales last year. As a permanented coanchor of the today show. He has been filling in alongside the other anchor when matt lauer was fired for sexual misconduct. Despite a decline in ratings, the Morning Program generated more than 500 Million Dollars in advertising revenue in 2016 according to a research firm. That is your latest Bloomberg Business flash. Shery coming up, it is high time in california as a legal sale of marijuana begins. We will have the latest. This is bloomberg. Vonnie this is Bloomberg Markets. Shery im shery ahn. The new year brought in a new approach to marijuana in california. Retail cannabis shops in california opened their doors yesterday for the first time in my creating the largest legal pot market in the country. A wided it is seen as stream of marijuana. They can possess as much of an ounce and gross explants. Here to talk about it, janet kaplan. She is with us from l. A. There are so many puns. Tell us how this rolled out, how does how did this launch of legalize marijuana go on this first day. It was a historic day for the industry. It was interesting in california because while there were people waiting in lines and excited to be part of day one in certain cities, there also were a lot of cities where cannabis was not available yesterday, including los angeles and san francisco. Those cities, people will have to wait to get legal Recreational Cannabis until the local licenses are all set and they can move forward on that front. I cities like san diego, spent yesterday there, there were lots of people waiting in lines excited to be part of this new movement. And excited to buy pot for the first time without having to have a doctors recommendation. Vonnie it was only 100 licenses that were given out. If you were not among those 100, you have to wait. Were there long lines . There were 400 licenses. Those were split between all sorts of different things, whether they are stores or distributors or manufacturers. There were a lot of different licenses. There were long lines. Largely, people were sort of piling up a little bit because they had to give their id, you have to be put into the system. People seemed pretty happy to wait. I did not see anyone waiting longer than half an hour while i was there. Though i have heard there may have been people waiting longer. Think, people are excited to be part of that day one. That was the sense i got yesterday. People wanted to be part of the historic moment, even more than ifary necessarily they want to dig cannabis, they can probably get it. Shery lets talk about the market. This is the largest Cannabis Market in the country. The worlds sixth largest economy. What impact will this have on legalized pot, pop prices, and so on . Jennifer estimates show next legalize california market will hit almost 4 billion. That is from bbs analytics. That will contribute to growing the overall the national Cannabis Markets which is expected to hit 50 billion by 2026. This is a big business. Room,s not like a back shady thing anymore. There is a lot of money in this. There are a lot of investors and big cpg companies and wall street and ulcers of things. This is becoming very professionalized. Biggest thingthe to happen yet. This is the biggest market. It will have the biggest players. Will stay tuned and read your stories. Thanks to jenny kaplan. Shery we will talk to david wessel, senior fellow, about the economic challenges in the year ahead. Vonnie as a quick reminder, you can catch all of our interviews on the bloomberg. Type in the function tv. You can look at charts and functionality. You can even ask us good ask us a question. This is bloomberg. Shery it is 1 00 in washington, 6 00 and london, 2 00 in london. Im shery ahn. David im david westin. Welcome to Bloomberg Markets balance of power. Where we focus on the intersection of politics and the economy. Shery here are the top stories. A new year is upon us. Happy 2018. New challenges for congress and president donald trump. We walk you through the year ahead. Tensions over iran. The Trump Administration threatens new sanctions on the country as nationwide protest cause political turmoil we dig into what is being called the most regulatory shifts in history. Shery new year, same fiscal things in past in washington. Lawmakers will be welcome back with their heard third deadline to pass a spending bill. Leaders will head to the white house to iron out a bipartisan plan to keep the government open. Chief washington correspondent Kevin Cirilli is at the white house with the latest