Transcripts For BLOOMBERG Whatd You Miss 20180103

Things are not true. I cant speak to what the authors comments art i can only speak for the white house. Reporter does the white house have a copy of the book . Sec. Sanders i believe they are making some individuals that do. The president statement suggests that this deed that steve bannon had little influence in the white house. The president elevated him to this game to the same level as secretary. I would not sec. Sanders i would not say that he elevated him to the same level as chief of staff. The president was clear they did not have influence on him or the decisionmaking process throughout his time at the white house. Usorter many of [indiscernible] know he was here. Who gave him access to the white house . What was he here for . Can you explain any of that . Sec. Sanders so far, from what i can tell of the roughly over a dozen interactions that he had with officials at the white were, i think close to 95 done so at the request of mr. Bannon. Say it cameu would from steve bannon, other white house officials were not working with him . Sec. Sanders any that did so far as far as we can tell bit so at the request of mr. Bannon. Reporter the president [indiscernible] can we get details on that . Where will he say it . How many awards will be presented . I certainly do not want to spoil anything, but my guess is that there are quite a few individuals that could be up for those awards. Beyond that, i think we will have to see what happens on monday. Reporter will the press corps be in the room for that . Sec. Sanders it might be hard to present trophies if you guys are not there. There is a letter, suggesting the administration [indiscernible] i am wondering if the president if he supports the split on that. If not, what has changed . We dont have any new policy announcements on that front. As we get further into the year and the conversations on infrastructure, we will be rolling out more details on what we want to do. But we hope to accomplish. And what the plan is. Thereer second question, was a shorter list of demands on menstruation. Im wondering if that is something Mick Mulvaney and others [indiscernible] sec. Sanders that is possible it comes up your we are open to having conversations on that. The conversations today is on the budget. We would like a clean budget bill. That is not what our focus is going in todays meeting. What we would on hope to have in any immigration not and any daca deal have changed. They would include securing the border with a wall, ensuring interior enforcement, eliminating the visa lottery program. All of those things are the same. You said the last time the president spoke with him come a was the early part of december. Was that before or after the special election in alabama . Sec. Sanders i would have to look back at the exact date. Did he write it in his own hand . Sec. Sanders these are the president s words. There is not much to add beyond that. There are reports that he was furious. Sec. Sanders i think furious, disgusted, would certainly fit when you make such outrageous claims and completely false claims against the president. I wanted to ask you personally, i know you speak on behalf of the president and the american people, how surprised were you at what you read in these excerpts . Did that surprise you in any way, and if so, how . Sec. Sanders certainly surprising. I, for one, am somebody who believes that the president could and it would win. Otherwise i would not have dedicated so much time to that. I believe that, i worked in the white house since the first day. A lot of the characterization that i saw that he was pushing out was the opposite of what i saw take place every day that i have been here. Reporter quickly on north korea, there has been some folks who have said, it does not help. Saying we willa, push back, some have said it does not help when the tweets come out the way they do. Yet, we know the president has made clear, i am geoeye and, i going to tweet and the way i want to tweet. Either any considerations that tweets like the ones to north korea do not advance the agenda . Sec. Sanders i think what did not help with the complacency and they silence of the previous administration. Leadss a president who through strength, and he will do that. He is going to focus on everything he can do in order to keep americans safe. He will not be pushed around by ourleader of north korea, policy with north korea has not changed. We are committed to continuing to apply maximum pressure and working with our partners in the region, a colluding south korea. We have a better relationship now than ever before. We will keep working with them pushing forward. Hopefully, north korea will start making better decisions. People should question the Mental Fitness of kim jongun, isnt it dangerous for the president to do so over twitter . Sec. Sanders i dont think it is taunting to stand up for the people of this country. Whats dangerous is to ignore the continued threats. Previous administration had done anything and dealt with north korea, dealt with iran, instead of sitting by and doing nothing, we would not have to clean up their mess. It is a taunting tweet to say he has a larger button. What does it say about the president s priorities that he unleashed a four paragraph statement about steve bannon . Sec. Sanders the president has issued a number of statements, as have i, as has the administration, ambassador haley, secretary of state jim ,attis, secretary of defense all talked extensively about north korea to limit it down to one tweet. [indiscernible] the president is well aware of how the process ofks and what the capacity the United States is. I can tell you it is greater than that of north korea. Policyr two foreign questions. Yesterday, you said there would be more details on pakistan. Seeing reports that the administration plans to announce to cut off with pakistan. Sec. Sanders we will continue to keep you posted when those are finalized. Reporter regarding jerusalem and israel, the president tweeted that we have taken jerusalem, the toughest part of the negotiation off the table. Israel would have to pay more. First, taking that off the table, when the president that jerusalem was a capital of israel, the Administration Policy was stated as the borders were not being decided. This does not affect negotiations. The tweet seems to contradict that. Sec. Sanders it does not affect negotiations. We want to continue to have conversations and continue the peace process. We are very much committed to that. We hope we can continue to push forward. He said that israel would have had to pay more. Sec. Sanders i would have to check on the details. Reporter in light of this book and the backandforth over all that, will the white house reconsider the public release . Reporter i do not sec. Sanders i do not anticipate changes to the policy. If it happens, we will make sure you guys are aware. Reporter two questions. The first, during the campaign, the president said repeatedly, entitlements were off the table and that he would preserve social security, medicare, were. Id, as they now, with the passage of the tax reform legislation, and of the recent statements of House Speaker paul ryan, that entitlements should be considered. Has the president changed his this his position . Not. Sanders he has as conversations go on, we will let you know. Other question, is it safe to say steve bannon is off the list for soquel social invitations to the white house . Sec. Sanders probably so. Those are controlled by the first lady. How would you describe Steve Bannons role in the white house when he was serving . Sec. Sanders i think the president addressed what he feels it was. To make him a that is the most important voice in this process. He is spoken clearly on that front. Could follow up, is the president looking for an apology from steve bannon . Sec. Sanders i dont think anything. Discussing earlier the idea that kim jongun would be the one who is mentally ill, is a president concerned that tweeting about nuclear war could cause someone like camden and to act with military force . Sec. Sanders i have addressed this. I think the president is concerned about the continued threats that this individual has made towards the United States and others. He is not going to allow him to continue doing that without saying something and standing up for the people of the country. Three former secretaries have said the deadlines for daca is this month. But there is not enough time. Do you agree with that . Feel like you you have to get this done sooner . I know there has been talks about not worrying about it until march. Sec. Sanders we would like to get something done. We want to make sure that we have complete and responsible immigration reform. We have laid out what our priorities are. And what it would take for us to make a deal. We look forward to having those conversations and getting that done. Reporter does it have to be done this month . Sec. Sanders i dont know that it necessarily has to be done this month. We would like to make a deal on securing funding for the border wall as well as ending chain migration, ending the these a lottery program. We would like to do that right away. If the democrats are willing to sit down, i think we would be happy to get that done by the end of the month. I dont understand the timing. Steve bannon left in the summer. President said he lost his mind when he left, why did he continue to talk to him . Sec. Sanders the president continue to have conversations , often asked for by mr. Bannon. That does not mean he cant hold that position. Your comments about kim jong in mental illness, is that based on a Psychological Assessment . Sec. Sanders i am not going to get into further details on that front. I will take one must question. Reporter the president enjoyed golfing in florida. Can you talk about when name if the americans like a more . Sec. Sanders i think americans like him or that he got the largest tax cut in history done. I think they like the fact that American Companies are investing that in this country and on other ones. I think they like the fact that American Companies are now giving out massive bonuses across the board, we are seeing every single day more and more Companies Announced decisions like that. I think that is what most americans certainly were happy about. Particularly as they went into the Holiday Season. To they had more money consider spending as they celebrated christmas with their families. Well the president is on theng critics, president engaging in authoritarian behavior . Sec. Sanders not at all. The president is responding often to the news of the day. I think of the president cant respond aggressively to an individual like the leader of north korea continues to threaten americans, then that is a dangerous place we do not want to go down. That is not the president of north korea. We have seen you and the president call for critics to be fired from their jobs. Sec. Sanders i dont think it is necessarily critics. Who hadappy for people different opinions. There is a difference between a different opinion and different facts. People are entitled to an opinion, but they are not entitled to their own facts. We have a problem with people putting out misleading information. Thanks so much, guys. That was press secretary Sarah Huckabee sanders. Ddressing the white house wideranging discussion on north korea, on the mental stability of kim jongun, they also talked about the critical thing we want to talk about which would be policy. Scarlet and the mental stability of steve bannon. Julia questions raised about steve bannon. I think Sarah Huckabee sanders did best to talk about little from the statement we talked about. There was a question mark about who was in addition to steve bannon. Were joined by megan murphy and businessweek columnist josh green who is also the author of the book about it about steve bannon. Dashcam i know we have you for a short while so i will go straight to you. Your thoughts to this moment. What does this mean for the base, if anything of the support for donald trump versus those who follow steve bannon . Josh i think for once, the theident she said president s words speak for themselves. It was pretty clear that the words were astonishing. It torched bannon on a personal level and threw him under the bus. I think what will be interesting to see is there are a number of issues coming up that are important to the president s base. The one bannon claims to speak for. That is, some kind of resolution with a daca, whether or not trump can win funding for the border wall, you heard Sarah Sanders layout the white house demands. Seeinga difficult time how the white house is going to be able to get all that, knowing they need to macron off. Knowing they need democratic sign off. Will swallowoters and go along with it or whether we will see a seizure in the party and the man in wing might turn on the president if he decides to cut deals with democrats. We have already seen some republicans say they will sever times with him. Is he really week and now . Josh i think that remains to be seen. Breitbartand the crowd have influence, if they can set an agenda, if they can raise an army of protest, if trump doesnt strike a deal with Chuck Schumer and nancy pelosi, then i think bannon could continue to have real power. He seems better able to channel the anxieties and frustrations than just about anybody. It may be trump himself can maintain a connection. Maybe he can figure out a way to keep his base satisfied. If he cant, bannon could prove to be a real thorn in his side in which case republicans would have to continue dealing with him and the voters he speaks four. Megan josh is exactly right in that this is the risk in terms of who this base is aligned to carry one thing that will be interesting to watch is how this tax cut plays out with middleclass americans. And whether or not to the economic tailwinds the president will receive, stronger wage growth, is really going to swatch that base. Here is the thing with steve bannon, there is the other issue josh mentioned daca, the other flashpoint is trade, steve bannon has been at the four front of demonizing china. That is something that is very court at the base in terms of how they look at this framing of americans economic role is. That will be interesting. Day politics of what is coming out in this book will cause a lot of chatter. We are still marking the shift of the Republican Party and where Establishment Republicans come out. Julia lets bring this down to immigration and the daca deal. As a result of the shenanigans we have seen today, josh, the little bit more, less, or likely they will sign a deal in the president push deals to find its it find something with the dreamers . Joshs gone. Josh is gone. That happens to me a number of times. At daca,en we look this is the issue that for democrats, this is seen as a perfect issue in the sense of, these are immigrants who are brought to this country as Young Children who have worked hard. Their own aret of in violation of our current policy. They view it as something they can really hinge on. As we heard sir huckabee say, feel acans fear border wall will be instrumental in the process. This will be massive arguing between the two in terms of whether or not they can get that. Democrats will not give any wiggle room in terms of securing the protections of these immigrants they find to be the very embodiment of the american dream. Josh talked about the base there. This is a shrinking base. Have to look at the pool numbers the president got when he was elected and look at how that base has come down. It is not really true, we have seen people peeling away already, particularly among women, workingclass voters. We will see that play out in the near west and midwest. Daca is something democrats feel confident they have the side of morality. Whether or not they will tie border while funding, controversial at best, popular with this base, but controversial controversial. Julia i wanted to see whether he plays more to the base or if he sticks it to steve bannon. I think people are looking to see what he does Going Forward with democrats. I am not holding my breath. This is a man who pickets from issue to issue. It is only january 3, people. Scarlet megan murphy, think is so much. And josh green, for speaking with us. Breaking news. A law partner has been named interim manhattan u. S. Attorney to replace him. He replaces him on an interim basis. This is jeffrey berman, former former law partner. We will keep you posted on any further development. Coming up, what hazards can make the euro zone economy stumble in 2018. It had a blistering 2017. This is bloomberg. Scarlet it is time for the Bloomberg Business flash. Tozils petrobras has agreed take 2. 5 billion to settle lawsuits. Lossesrs were suing for after an investigation exposed widespread corruption in the company. Petrobras claimed it was a victim as well. Has been said to be searching for a bank to help them by natural gas assets. Also said to have invited banks to pitch for a role as courting aiders and book ipo. Rs for its planned the initial Public Offering could be the worlds biggest share sale. Blackberry has signed a deal with baidu to Work Together on driverless car software. Bundled into their platform, called apollo. Baidu has been signing prop partners to become a dominant software company. That is your Bloomberg Business flash. Joe we talk a lot about global synchronize growth. What does it really look like . Formerm oneill, the Asset Management guy who founded the term breaks, has this great dashboard he looks at. If we look at the chart, it is a series of indicators that shows how well the Global Economy is looking. The top line up here, we can see it going back to 2003. Really trending down. The , global pmis, really nicely trending up. That is that blue line. You dont new orders in relativees, the orders to inventories looking very good. The the nextil sales line, china retail sales. Also trending up yearoveryear. Finally, the german ifo index which is the survey of german industrial also looking very well. Everywhere you look, the Global Economy is looking good. Scarlet since we reflected, record highs for the s p and dow. This is bloomberg. [applause] [closing bell] whatd you miss . The s p rising past 2700 for the first time. Im julia chatterley. Am scarlet fu. And im joe weisenthal. We want to welcome you to our closing bell coverage every day from 4 p. M. To 5 p. M. Weekly. Scarlet two trading days in 2018, 2 days of record highs. Joe just like last year, off to the races. Roundt and the next number for the s p 500 getting past that 2700 level the day 7000. Nasdaq surpassed individual names here, a couple of big names have climbed quite a bit. Dominion resources, off i almost 4 . Dominion energy striking a deal to purchase a trouble utility owner. They will need South Carolina officials to approve the after investigations into a failed Nuclear Power plant in the state where costs have soared. After the chipmaker confirmed a report saying the chips had a feature that made them vulnerable to hacking. Although it says other companys chips are also susceptible as well. In recent reports they have said that exploits are caused by a bug or a flaw that is unique to the companys products, but they say that is incorrect. We will dig into this later as it has ager in public repercussions not just for intel. Julia major pushback from that firm. Scarlet General Motors at its highest since november. They reported a less than dramatic monthly drop than expected. Silverado sales climbed one and 5 . Shake shack, up 8 . Sales surging after, or i should say shares surging after analysts said that they would get a boom after the tax reform package was passed. Joe getting a quick look at government bonds. Not a whole lot of action except for a little bit of flattening on the shortterm rate selloff continuing. 2. 21 5 . Ar is at if we look at the oneyear term of the 210, real quickly, putting it into perspective, we are basically right here at the lows. No steepening at all, really, in the new year. The trend towards 50, watching for a potential inversion, thats very much one of the themes to start the year. Julia currency london, extending games against most of the g10. November Construction Spending also rising more than expected. Thats just above 120, the figure. We were talking yesterday about the comments that we got from the ecb board members, echoing to whetheroices as it had played out as anticipated and whether when we got to october we would be done as far as stimulus was concerned. Others, pushing back on this and newng is there anything in this statement . Its what we have already heard from the ecb. ,uick look at my chart here 1578, looking at the dollar here, the dollar positioning, data showing investor positioning conforming to a small, on 26izing for the first time in six months. Its only relevant because of the time of the positioning that has been short. Is this a change that will be more permanent . Who knows. Joe well see. Finally, on commodities, look at oil, up another 2. 3 , nearing 6. 2 per barrel. This is one of the start stories of the year so far. Pay more attention to that. Gold futures, basically flat on the day. Those are todays market minutes. Scarlet for more on the Market Action and the dollar gaining after the summer policy minutes were released, lets get to Marc Chandler. Yes, the dollar rose to day, but it has been down, down, down of late. An might be seeing Inflection Point here in positioning on the dollar. What do you make of this slight recovery that was seen today . Is this a permanent shift or just a muchneeded consolidation . Marc in some way of zika hangover from the new year. The dollar fell almost every day. Sessions. Of 15 before today the euro was up five or six days in a row. Todays move was anticipated. Think of it as a turnaround wednesday with a shortened workweek. We had a little correction yesterday. Im not convinced its going to turn but right now i think they are close. Predicated partly on what we saw with a higher Interest Rates in the u. S. I hesitate to call it tax reform, but these tax cuts with Infrastructure Spending ahead of the state of the union speech, with these, repatriation, if you look at the International Break evens, you will see that the 10year is above 2 now for the First Time Since march. The twoyear break even, this is the difference between the inflation and the conventional notes, the twoyear is getting close to 2 as well. Julia we heard from the fed minutes, saying that there was a little bit of a concern that expectations were tilting again to the downside. Yet when you look at what the markets are anticipating here . Fed the point from the really was that they were not concerned about the flattening of the yield curve, which so many other economists seem to be. Joe you have talked a lot on this show before about these big macro cycles on the reagan dollar bull market. And then the obama dollar bull market. Some sort of get bounce from the dollar due to these macro conditions that you would expect, is an obama era bull market dollar over . Marc im not convinced that is, heres why. From the technical point of view , the chart tells us that the euro has bounced so far and has barely retraced a little bit more than a third of its big decline. Sterling has an even retraced 30. 1 . So far i would say that the dollars pullback, a 2017 story after a twoyear rally, is still not be on the levels it you could see in a technical bounce. It wasnt triggered compared to what we can link it to. The bottom was in for the euro and the merkel selection in germany put it at the top. Politically driven, not so much economically. Scarlet why not . The economy is doing well there. Which is something we will talk about. That with the prospect so bright as well and the European Central bank looking to change its view on qe and shift towards tightening policy, it should get much more of a tailwind. Marc i think its a diversion story. The ecb is going to taper and move towards tightening. We are more than one year away from that. Buying,he ecb stops expanding their Balance Sheet through september, 270 billion, billion euros, they will shrink the Balance Sheet in the second half of this year. To me we are still not yet at peak divergence. Im still not convinced that the ecb is not is going to necessarily stop in september. For me the key issue is that in the middle of the year, when the europeans make their decision, the Balance Sheet is going to shrink. They will still be buying, but the people get to pay back the longterm borrowings early. Around the same time, greece leaves its last aid program. Then you have the leftovers of the italian election, which may not be fully resolved. Months into the german elections, we still dont have a german government. Julia an upset to the people concerned. Marc i think so. Julia you just mentioned as well that there was very little discussion about the yield curve in the United States. Discussion be taking place . There are those analysts out there that we could even invert in the back end of this year. Does that stop the fed hiking . Marc i dont think so. We know that the short end is going up. Why is demand going down . Where is it coming from . I would say it is partly coming from europe and japan. Country is the only issuing a net interest in bonds. They will have to come to the u. S. Julia inflation in europe, it could all change. Marc speaking joe speaking of, the commodity indexes up for 13 straight days. Its the longest since we have been tracking it. An 11 month high. Oil, above 62. I dont think anyone was predicting that. What you make of this nude interest . Is something there special about oil. It seems to me, i grew up in chicago. With the board of traders, they always said it would be bad for the greats. Clearing coal, we have had the iranian protests and a pipeline blowing up in the u. K. Libyan problems. I think this is primarily supply shock. On the other hand, industrial nickel, theseed, are not about the u. S. Chinese numbers are doing much better than people thought. I think the key point here that is interesting is that in the u. S. We would view Higher Commodity Prices not as inflationary, but the more money we have to fill it up with gas, the less we have to spend on other things, like new pairs of shoes. Scarlet why are you looking at us . Look at joe. Joe my cowboy boots. Julia very quickly, how do you make money . Marc i wish i knew. I think they use a printing press. [laughter] marc the real thing right now is that people are uncertain about nearterm regression. We see clients hugging the benchmarks. Julia market, great to talk to you. Ofc chandler, global head Brown Brothers harriman. We continue our discussion and we will discuss that. From new york, this is bloomberg. Mark im mark crumpton, with first word news. President trump is blasting his chief strategist ahead of a release of a new unflattering book. The statement that when steve bannon was fired, he lost his job but lost his mind. Series ofok offers a explosive revelations, including that mr. Trump never expected to win the 2016 president ial race. Sarah Huckabee Sanders was asked if this would heard the president with his base. I dont think it does anything to the base. The base of the people that support this president , support his agenda. Those things havent changed. The president is exactly who he was yesterday as he was two years ago when he started out on the campaign trail. His agenda hasnt changed and he is continuing to fight for and push for that agenda. The base is extremely excited and happy with the job this president has done with his first year in office. From thexcerpt guardian says the ban and described a trump tower meeting between the president s son and russians as treasonous and unpatriotic. Paul manafort, firing back against his indictment. He is suing the special counsel, the Deputy Attorney general, and the department of justice. He claims that rob mueller overstepped his authority by fingering by zeroing on crimes unrelated to the russian involvement in the election. The newest senators are on the senate floor, two democrats took their oath of office today. Joe biden was next to doug jones as he was sworn in today. Walter mondale himself a former minnesota senator sat next to tina smith. Jones attracted National Attention when he defeated the conservative republican nominee roy moore in last months special election in alabama. Smith was the Lieutenant Governor when mark dayton report appointed her to replace al franken, who resigned after a series of Sexual Misconduct allegations. In a, the elite Republican Guard has declared an end to antigovernment protests. The commander of the guard was quoted as saying that sedition is over. 20 people have been killed in the protests, more than 1000 iranians have been detained. Over 27ews, powered by hundred journalists and analysts in 120 countries. Im mark crumpton, this is bloomberg. Scarlet whatd you miss . The eurozone, seeing strong growth in 2017. Can it repeat the act in 2018 . Our guest joins us now from newcastle, england. Thanks for taking the time to speak with us. Tell us about the conditions that led to the faster growth that we saw and why those factors are unlikely to persist in 2018. Inwhat lifted the eurozone 2017 was effectively a broadbased recovery on two fronts, all the Major Economies did well. Gdp growth accelerated across economy. Eurozone 2006,e to go back to before the financial crisis to see something similar. My view for 2018 is that this benign combination of very high gdp growth and low inflation is going to change a little bit. I think that inflation will go up and that growth will come down a notch. The euro zone economy is doing absolutely fine. We are in the middle of a strong cyclical upturn that doesnt just end from one wit one day to the other. Joe we still see a pretty big divergence between the economies. Spanish unemployment is down a bit, but still at 16 . Canny expansion last long enough so that some of these deeply damaged peripheral economies can get back to something resembling a precrisis norm . Claus well, we have to believe that it can, joe. In and that thats what policymakers are setting themselves up for, which is exactly that. D. C. , for example, doesnt care about a German Economy running hot, and in my view it is definitely running hot. The legacy cost of the financial crisis, it has recovered, as it were. We have to be optimistic that the recovery can continue. Whether spain then grows 3. 2 or 2. 5, it doesnt matter in terms of, for example, the headline unemployment rate. Have a very different view of how growth can compare link can compare and grow in 2018. You have been calling it a by and Large Consumer led growth. Towhat point do we expect see investment catchup and, dare i say it, can we get to a point where we see some sort of start to a good investment cycle . To the point that joe made, thats the point that joe thats the point of what we need here. Signs of ane seeing investment cycle in the eurozone, but its important to come back to this customer divergence that joe it mentioned before. Germany has been doing fine for a long time. Manufacturing, for the rest of the major eurozone economies, but now we are seeing signs that that is picking up and that is what i would be looking for in terms of marginal strength coming through on the construction in italy, france, and spain, where you would expect it to catch up to be strongest. Again, the investment cycle in the eurozone started last year. We can see that in the gdp revisions and i think it has continued in q4 and it will continue in q1. Scarlet claus vistesen, thank you so much for joining us from newcastle, england. Coming up, a season of breakouts and beating trends. Three things you cannot miss. This is bloomberg. Our weeklyme for segment, charts ago, with abigail doolittle, where we took a look at in depth charts and other functions. Abigail thank you, scarlet. With me today is ari wald. Here we are with a new year and new record highs. You have been bullish for quite some time and you have brought an incredible chart with you. I love it, its so distinct and creative, coming from someone who has not had as many good calls as you, i would be skeptical, but from you its incredible. Take us through it. Ari you got it. We published our target for the , and heres how we get to it. Its just a measurement of the pace of the current trend. One trick is the s p 500s to day moving average. This moving average projected levels itcurrent would put you at about 3100. However, given the very high rsi readings that are indicative of the fast pace of the trend as it stands, we think that piece is going to slow, so our view is that the current premium trend is going to get balanced out and we will wind up with more of a Church Rectory that is closer to 2900. Theres ag enough, guidepost there. 2014 had a fast trend, not a lot of pull back. 2014 you had some pullback and you lined up with where that originally started. Mainly you have been bullish but the one time that you were bearish was through that shot. If we get the base case as opposed to the bowl case, could be lean into a choppy time . Ari thats when credit started to widen out, when internals started to get much more narrow. Volatilityed to low stocks. Thats what we are going to be watching for. Checklist. Top as it stands now we are seeing none of it and thats it you point why we do expect a continuation of this upturn. Abigail another great quality you had last year, you were bullish on technology. Right now you like the transfers. Take a look at this just breaking out. Mark ari the dow trance ari the dow trance ari the dow transports in a cyclical area. Heres a group in which we pause that the prior breakout level, in the last couple of weeks it has really started to get going again. This group has underperformed since that time in 2015. Thats where it was in 2015. We see rotation potential, thats the next group to really get going. To presentwanted you one value add chart, here we are. This is the s p high data index. What we are seeing here are the high beta stocks just starting to reverse a major multiyear downtrend. These are just getting going on the upside. One, good for the market. Historically leadership is followed by aboveaverage returns and this is where you want to be positioned as well. Financials, technology, industrials, those are the top three sectors within high beta. Abigail great stuff, eric. Scarlet, back to you. Scarlet breaking news now on tesla, the Company Coming out with deliveries of model three and other vehicles. Thanhave delivered more analysts had expected the company to deliver. That is a big miss here on this critical vehicle. Tesla does say that they plan to ramp things up and in the First Quarter they want to end with a weekly rate of 2500 model vehicles. We will wait to see they can measure up. Joe there you go. Scarlet from new york, this is bloomberg. Mark President Trump firing back against his former chief strategist, steve bannon, after bennett called donald trump junior treasonous for holding that infamous meeting with russians. In a statement president said that steve bannon has nothing to do with me and my presidency. When he was fired he not only lost his job, he lost his mind. For the first time in years, north korea has called south korea on a. They conducted technical checks. The south korean president has proposed holding talks next week. Kim jongun has called for better relations between the countries. Authorities in ireland say an 18yearold Egyptian National is in custody in connection with the stabbing death of a japanese man and the stabbings of two other people. It happened just south of the border of more than island. We endeavor to look into the suspects background, who they are, where they come from and why they are here. Those other questions. We endeavor to ask and answer. And as to why the attacks. Mark Police Believe the suspect may have been seeking asylum in recent days. The superintendent said the suspect had been in contact with authorities two days earlier when questions were asked about immigration status. The death toll from across the United States due to freezing temperatures has gone up to 16 and it is not letting go with this socalled bomb cyclone heading for the east coast. Sioux into cells falls south dakota are frozen solid. Howard by 2700 journalists and analysts in over 120 countries, im mark crumpton, this is bloomberg. A recap onts get todays Market Action. Record highs for all the trading indexes. Two days into the new year, two days of record highs. Joe nice, round number. The nasdaq, getting around 7000 yesterday as well. Whatd you miss . Tesla out with a big mess. Production of the model three numbers, the company had anticipated reaching, analysts had anticipated reaching tesla as delivering 2719 of these when in actuality they delivered 1550. This was not the only automaker to report these sales figures for the day. We heard from gm, ford, and the other big automakers. For more on that, we are joined , Senior Analyst for edward jones company. There is a tendency for people to conflate what happened in december two it happened in the full year. December ended on a fairly strong note, even though for most of the year we had seen kind of a pullback. Jeff definitely, the middle part of the year, things were a bit tougher. But december really highlights the trends we have been seeing over the last several months. We have seen consumers gravitating more to trucks and suvs. We have seen rising transaction prices and thats a good news story for the automakers. We are going into 2018 with the actual number expected to decline next year. Of is that just a function people having spent so long basically there was such a drop off after the crisis with people coming back up to replace their cars . Aff definitely, we have had seven extension and its been a good, robust market. We are coming off some several years of selling 7 Million Units per year. Some of that pentup demand has been met at this point. We are entering a time in which we have had low gas prices and Interest Rates, which has been positive for consumers. Going into 2018 we face the fact have gone up a little bit with a little bit of pressure on the number. We think it will be healthy, just lower. Julia what about the tax overhaul and the certain amount of people seeing a tax cut, more money in their pockets potential he fueling a greater demand for car purchases here . Jeff internally we look at our revise and started to them upwards, slightly. We are going to have to kind of see again where everything falls out. Again, we do see potentially some positive news from the tax reform and tax cuts. Not only from the corporate standpoint, but also a potential uptick in sales from customers. We also acknowledge that these companies are investing more in autonomous vehicles, refreshing their product line. Its kind of a balance of those pressures. You mentioned the important trend of song strong sales in suv and trucks. Oil prices rose at the end of last year. Its just a matter of time before that feeds through two gasoline prices. At what point does it get people to think about not buying an suv . Challenge of the would be volatility in the prices. If we see a slow and steady uptick, i think that consumers can kind of factor that into what they are doing. But if we see volatility, there will be a lot more uncertainty that ways on the impact of the ighs on the wayek impact of that decision. For auto loans you suddenly start to weigh in on the demand for trucks and suvs. That isat 2018, something we are watching for. Julia thank you. Now it is time for the stock of the hour. Of ford microprocessor. Intel fell 7 after reports that its chips are vulnerable to hackers. Anyg that would affect computer with an intel chip from the last decade. Just give us a sense of what the vulnerability is an of whether or not this is specific to intel or semi conductors in general. Its not justff everybody. Microprocessors have been given this new functionality that allows him to go out and guess whats coming next. At the same time, it has apparently created this vulnerability whereby they might inadvertently access areas of the data that you really wouldnt want them to. Kind of swings and roundabouts, but intel says it is not a flaw and it is something that Everyone Needs to address. Joe can you parse the intel statement question macau big of a gap is there between the allegations originally reported by the register, a tech news site . The original accusation was that this is an intel specific problem. Thats other companies dont produce products that are vulnerable in this way. If you have to face the value into that because the names of ,hose companies are in their that they have endorsed what they said, its a fundamental feature of microprocessors across the industry that have created this issue. Scarlet intel has said its not just us and theyre working with other companies to come up with a fix. Howdy you address this . Jeff this could be more of a problem than the accusation. Fixing this, you will have to do some can of software workaround writers for processing that could potentially slowdown computers in general. If you are taking away something that speeds computers up. Of numb nowe kind to the incidence of cyberattacks, but as we talk about volatility and keep throwing the term around, what do we mean . How vulnerable are these materials that we are talking about . Jeff first of all, there have been no reports that anyone has actually taken advantage of this gap to do anything malicious. Its just a preventative step. What you have to remember also is that one of the big selling points from Companies Like intel is, look, this is more secure and the software loaded onto your computer causes problems, but our chips are rocksolid, no problems. They have all of these marketing terms for what they do with the chips. The fundamental thing being that their hardware is better but this seems to indicate thats not the case. Scarlet trust zone, i like that. Thank you so much. Coming up, economic theories helping one of our colleagues take off the pound. Food and economic austerity resulting in better bodies. This is bloomberg. Scarlet whatd you miss . Onyou feel like you put extra pounds, you might be able to show that way by using the power of economics. Rob barnett did just that and he lost 70 pounds. How did he do it . Its all outlined in his new book, the economists diet. Welcome, rob barnett. Before we get to your formula, tell us about your weight loss journey. How long has it taken and what have you done to get there . Rob there is no quick solution. At my peak weight i was around 700 nds and im about 70 pounds less than that today. It takes a long time, about a year to lose all the weight and thats only half the battle. Once you have lost it you have got to continue on this austere eating routine that you adopted when you lost weight. Its no secret. Thin people eat less. Much younger. K so that to me is the most astounding thing. Its quite fascinating. Do you feel healthier . Rob i do. I lost most of the weight quelled my wife was pregnant with our second child. Was kind of expanding and i was losing, there was a bit of jealousy i would say. [laughter] joe how did you do it and specifically what does it have to do with economics . Rob the reason that we tired to economics is if you look at the data, our gdp per capita has increased over time, consumption of food per capita has increased in lockstep. I think that there is some kind of sense out there that if you eat this and not that thats our you lose weight. But frankly we think its about consumption in general. People say that most already have a sense of healthy food. There may be some nutritional education the needs to occur, but what we would say is that if you cant measure it, you cant control it. We would tie a lot of things back to data. People have a good sense of a healthy diet. But anyone trying to lose weight knows that so much of it is the psychological part. So many people lose weight, they put it back on. Everybody knows the challenge of sticking to it. What are the actual techniques to not lose it only, but change her lifestyle . Julia everythings emotional as well. A lot of people are emotional eaters. Wouldhe core principle we recommend is stepping on the scale every morning. It provides a feedback loop. It tells you that if i eat a pizza tonight, im going to way more tomorrow. I can see the effect of my eating on the scale. But the bigger thing is, when are hungry you are sent essentially an irrational actor. Seeing your weight on the scale in morning helps to sort of cut through what economists call the bandwidth tax on thinking, to help you keep yourself in line and overcome that irrational , snack, ao indulge candy bar, when you know you shouldnt. This also owns rational, and is julia said, eating is emotional. We just went through a Holiday Season where people are with the families, happy to, how do you account for that . Rob you absolutely have to. Any diet that requires you to give up festive time is never going to work in the long run. You have to make room for going out with your friends, celebrating at the holidays. Its all about budgeting. In advance of the holidays, i in to sort of avoid food higher frequency and as we come out of the holidays and on a few pounds heavier, im trying to get back on this sort of relatively constrained day to day eating process that i go through. Up burgersd to give and texmex, it would never succeed. Its just cutting out the other foods that dont provide me with utility or happiness. Julia like what . Rob theres nothing worse than sitting i dont want to pick on a particular restaurant, but lets say that you are sitting at Cheesecake Factory and they have a big menu and you order something that you dont particularly need what would enjoy having, youve got to cut all of those things out. Scarlet you also say cut out certain meals. Not just portions, but remove a meal entirely . Rob some folks talk about relatively extreme fasting were you go maybe a day without food, but i would say that look, if im going to have a big dinner out with friends, i certainly might skip lunch before or maybe breakfast the next morning depending on how things shake out. I break bread three times a day those days, but if i know i am going to have a splurge, thats ok, just budget for it. Julia eat when you are hungry. Four years in, you are maintaining it. Congratulations. Rob thank you. Rob arnett, Bloomberg Intelligence Senior Intelligence analyst. Julia Cheesecake Factory . Scarlet you havent done that yet . Julia added to my list. [laughter] julia up next, topic change, concerns about lowinflation approaching a Tipping Point . Not on these scales. [laughter] julia i know. From new york, this is bloomberg. Julia whatd you miss . The december reserve officials expect tax cuts to boost spending, where they remain unsure on the impact of the tax law overall with strong support for further red jewel rate hikes, setting the stage for a further hike in march. But here to talk about some of the inflationary concerns, you bloombergs map below felt. Great to have you with us. Talk about inflation or lack of it. Going into the fomc minutes, what was the discussion on inflation and how would it change between meetings . What we saw is that there was not a lot of difference in the and intive discussion terms of the Risk Assessment around inflation the chart shows you that fewer people in the fomcs all risk on the downside. Thats the blue line the number went down from four in september to two in december. We are back to the point where the committee is seeing the risk as balanced on the upside and the downside. On the margins, slightly less worry than before. In 2016 there were 10 people that saudis greater risks. Elsets right right, more people were worried about Downside Risk all over the place, and it is a different story from that. Julia what about Inflation Expectations since then . We were talking about this with Marc Chandler earlier in the show and he said that in the last couple of weeks what we have seen is Inflation Expectations starting to lift. Will be anight, that incursion sign and that was partly reflected in some of that chart. That was reflected in the fomc discussion as well. Looking at this year, two different ways, what are they showing us . Is getting to the mystery of why inflation is so low. Its due to the San Francisco fred fred calling it procyclical inflation. But a cyclical inflation is the kind of stuff that the fed likes to blame for low inflight low inflation. Thats the oars line. The white line is the components into labor market tightness and you can see that that has declined this year and equal amount. There is a real question here about the phillips curve and Everything Associated with it. Joe if i look at this chart, just procyclical could be working. Serenity tonted the not affect the things they cant change . Some would argue that, but many are reticent to establish Something Like that over the long term where they are trying to hit the target. Julia just fitting the story to the database . [laughter] theres always the exhalation of why things arent working out and thats the current. Joe you have a chart here, four years ahead, with three years ahead, what do we see here . Its an extended discussion on the flattening yield curve and what it means. A lot of people are taking that as what it used to be, proceeding recession. Its been a reliable recession signal. The interesting thing this time is that in the feds own plot it shows Interest Rates going higher in 2020. Implying that the fed itself under appropriate policy would in 2020. E yield curve looking at the fouryear curve here, that exhibit that exact spot on the curve is close to inverting. Seems that they are getting the message that if all goes to plan, this is what the yield curve is going to look like, right here. Scarlet you have to come to terms with that to some extent as well. Exactly. Julia and theres other policies there. Interesting. Matt, thank you. Need toing up, what you know for tomorrows trading day. This is bloomberg. Carlet whatd you miss . Record high for u. S. Stocks. Joe round number, too. I will be watching for the avp employment report tomorrow, a little preview at a friday. Julia and the east coast is preparing for a brutal noreaster with record low temperatures and potentially damaging winds. Scarlet that does it for whatd you miss . Joe have a great evening. This is bloomberg. Alisa im Alisa Parenti in washington and you are watching , bloomberg technology. Lets start with a check of your first word news. President trump struck back at steve bannon after steve bannon called donald trump, jr. , treasonous. President trump said in part, when he was fired, he not only lost his job, he lost his mind. Suing the whole department of justice. He claims mueller overstepped his authority by charging him with crimes unrelated to russias meddling in the 2016 election. The former Trump Campaign chair is charged with Money Laundering and other counts. Authorities in ireland say an 18yearold Egyptian National is in custody after the stabbing death of a japanese man and two others. The attacks occurred just south of the border with northern ireland. Police believe the suspect had been seeking asylum in the republic of ireland in recent days. The death toll from the freezing temperatures across most of the