Transcripts For BLOOMBERG Bloomberg Daybreak Americas 20180104

We are printing, following higher euro markets as well. You have killer pmi data coming out across the board. Services are stronger in europe. That leads to a selloff in all the major developed markets, and courtonds developed bonds in europe as well. The curve is moderately steeper, and crude, only 4 10 of 1 , but almost 52 a barrel. What does that mean for production . David the saudis do not mind. Alix and at the top of Global Growth is copper, up 1. 3 , at 7,200 a ton, a big move for copper. We will discuss that Global Growth story. David lets find out what is going on outside of the Business World with emma chandra. Scott it has emma it has been a dramatic split between President Trump and one of the former architects of his campaign. He says steve bannon has lost bannond, after insulted his family in his book. Congressional leaders have signaled progress on a budget agreement needed to avert a Government Shutdown this month. There is no deal yet. Among the deals being discussed, living budget lifting budget limit on. And theresa may believes Michel Barnier a is bluffing. She does not believe the eus chief negotiator when he says there will be no special deal forexit settling. This wiki banks operating freely across the eu. Global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. Im emma chandra, this is bloomberg. Alex . Alix it is time for our daybreak first take, where we discuss the top three stories of the morning. First is this monster Global Equities rally that we have been seeing, all of this synchronized Global Growth moving out of different fronts. And the chip problems at intel, what do you need to do to secure your phone . And we know it is called, but what about flight cancellations, train issues, and Commodity Prices . Joining us now are carey price and lisa abramowicz. We will start with the Global Growth rally, but to me the highlight was hungry, selling , sellingebt hungary 10year debt under 2 . It shows the risk on feel that we are seeing. Crystallizes the whole story. I love that you brought it up, but i was interested in the fact that manufacturing was the best and the fastest growth that we saw in the u. S. Since 2004 last year. This was interesting because it is pressuring capacity. It reaches a point where factories cannot produce enough ands based on the demand keep prices where they are. They either have to increase they havelation to boost production, which means hiring more people and that means the shortage of hired skilled workers that they want to pay, so does this mean we will lead to wage growth . This is the key question for me coming into 2018. Carey i think lisa may overstate the capacity issue a little. Capacity data in the u. S. Is still relatively low by the swathess of long of history. Exactot member what the lisa 81. Carey it must have been release when i was on vacation. Ok, so it is moving in that direction, i will concede. Lisa or grudgingly. Begrudgingly. [laughter] carey thats what the data is. But on a global basis, there is still, i think, some degree of disparate capacity. But the needle is clearly pointing up. If you look at the j. P. Morgan Global Manufacturing pmi, we are at the highest level in about ixia years. Six years. So that is unmitigated good news in that regard. David any indications of concern at all . Since you brought up hungary, i will bring up indonesia, because they said take a look at the and theyn indonesia, have been struggling in the new year. Lisa that is a bit of a reach. If you look at the biggest emerging markets on etfs, the trades under emb saw the biggest oneday inflow earlier this week in six months, so people starting the year pouring money into emerging markets. First oftions all, china, how they will navigate this year, which could be a problem if there is a construction. That has been one of the main drivers. Number two, if there is faster inflation in the u. S. And the fed it does raise rates four times, we might keep the pressure at e. M. David lets talk about chip insecurity. We mentioned intel and nvidia you can see the moves here, and the reports are that intel has a problem, the others dont. But this is a hardware problem, lisa. Gf i do not do the phishin thing and open the wrong nowchment, we are vulnerable. Lisa intel has an 85 monopoly on chips and computers. This is a massive supplier of chips for computers people have in their home. So there is a question of is this going to dent their business . Unclear. Credit slowdown peoples operating systems as they put this patch over it . Es and there is a possibility that they will get you those hackers, no matter how you have protected yourself. Thinkn i still password123 is the problem and not delving into the innards of your hardware. You cannot rule anything out, but going through the software route is the easier way in the future. Alix but what i rather have a ,lower phone and fix the issue and potentially hackers cannot get into my phone, or do i want hackers getting into my phone . I do not know what the answer is to that, because can you imagine a world where your phone is slow and you cannot get to google in to second . Think it raises a lot of questions about the fact that one company has a 95 monopoly on the chip is nice, and they sensitive and hard to manufacture. That is why apple and microsoft do not manufacture these themselves. I think the third is there will be vulnerabilities everywhere, and at what point do you just not put your information that is sensitive in these formats . Avoid the issue altogether. The North Koreans are probably looking at your phone. The third story now is that storm. It is taking a little longer to get here than we thought. Here is a live look at what is going on. Right now in that is not a good job. Alix i would not like that job. David it will hit us particularly hard. We have some indications of the level of disruption, Something Like 3005 canceled 3000 Flights Canceled on the east coast. How is it affecting the economy . Lisa it is affecting my life, canceled last was night. I think this is a make it or break it for the Natural Gas Market right now, because demand is surging to alltime highs. If this is not enough to juice the price of natural gas, what will . The cash price of natural gas some say is six dollars. The futures price is at three dollars. Cameron, what he or think . In terms of Economic Growth and activity, there is a relationship between snow, cold weather, and people missing work. Will it impact the data as we see it reported for january . Maybe, maybe not. Rathervey is next week, than this week. The first survey of the year is fairly slow as people take off the holidays and slink back into work. Comparing to this, the average monthly temperature withw york and pittsburgh forbls data four days workers to have missed work due to bad weather. There is a good correlation of. 5. So what is that translate to into Economic Growth . The relationship is much, much weaker. The average temperature has a. 1, or. 1 of correlation with that government growth. I would say the coldest First Quarter in my data set was i guess three years ago now that we have turned, 2015, which the big polar vortex where we were all huddled in our focus for fur coats, and that was the strongest growth since 2006. So you cannot say because it is cold and miserable, we are at a 45 degree angle leading into the snow today means we will slow Economic Growth. David i love those retailers report i want to those retailer reports so we can see how well they have done. Thank you so much to lisa crease. Icz and cameron increas up next, the Biggest Software makers are coming to terms with a big chip bug. This is bloomberg. Is is bloomberg. We are risk on rally seeing today, it started in asia and has moved to europe and now in the u. S. European stocks looking at their best day, rallying the most in about two weeks. Energy, materials, and industrial leading the way higher there. The eurodollar is rising, up 4 10 of 1 , but all it Economic Activity in the eurozone. Fed dollar boost from the it did not last that long. And peripherals are big in europe, but Everything Else is off. Yields down by two basis points in the u. S. And crude up why 61 a barrel. Of a 14 a record run day rally talk about your Global Growth story. Omarosa joining us from jpmorgan. What do you make of the rally in the last two days of trading . Think the optimistic note that we finished the year absolutely carrying lowered at 2018. Because we had a very Strong Performance here and growth year in 2017 does not mean it needs to end their this rally continues and there. , to broadencontinues out, and industrials and metals catch our eyes as well. David as you talk to investors, what are they see that is making them so optimistic . Growth, andlobal the level of optimism and the desire to be in the markets and do something and participate in this rally is probably the greatest we have seen in many years. We are entering this year with an particular. I think clients are looking for opportunities to put money to work, and what we are deciding is that Global Growth is there to support it. Alix dont you need inflation to black that up back that up . Lisa the goldilocks scenario anastasia the goldilocks scenario is that you have these policies but not this great inflation. Because of that takes up too much, we will be concerned about the fed andause other Central Banks might begin to tighten policy. Inflation is it rises from these low levels could be important for commodities. Out see that play Industrial Metals finished last year on a very strong note, and we are headed into this year to capitalize on this Global Growth story in the incremental uptick inflation. Alix david made fun of me earlier for the hungary debt. Spain had some great things earlier, but the appetite for risk we had slovenia, the demand for their bonds was quite high as well. Where is the risk in playing the rally . Where is the opportunity . The opportunity, to us, remains in some of the higheryielding emergingmarket currencies and debt. We are looking at the local debt of argentina, brazil, russia, and a few other countries. Tot is a risk to the risk all of this is the material slowdown in china. If you think about everything we are talking about today, it is really cute to one factor, the risk on actor that is geared to Global Growth. Which china slows down, is not our base case, that is a risk to all of this. David we hear about synchronized growth, which means they are happening at the same time, not at the same rate. The United States, europe, and china versus growth rates, china as it a different place is that a different place in the cycle then europe is. Anastasia europe is the place we are seeing the greatest growth delta. If you look at pmis in europe, they are about 60. That streak is continuing. As we think about the investment landscape and how we want to allocate our investment dollars, we want to position for the beneficiaries of the upside of ,he Business Cycle in europe and one of the things we are witnessing is a recovery in cap ex. Business equipment spending is picking up in europe and elsewhere, and there are a lot of companies that stand to benefit from that. Anastasia, you will be sticking with us. David and we will be talking about the man who wrote the definitive book on steve bannon not that book devils , the rise and fall of steve bannon. This is bloomberg. N. This is bloomberg. Yesterday, the world in washington politics blew up over by Michael Wolff that has not been officially released yet. First of all, the garden in lengthy and published fire and fewer he quotes, and then President Trump came out with a statement about 1 30 yesterday, saying President Trump steve bannon has lost his mind, and then the first ladies says it is entirely untrue, she always wanted her husband to be president , and then tom barrick came out and said he never said the president was stupid and no one ever asked him, and then a trump for donald sent a letter to steve bannon, telling him to cease and desist and they might sue him for violating the terms of his employment. Josh, give us, in a nutshell, how did we get to this pass . There was a time when steve bannon and donald trump were joined at the hip. Josh what has happened over the last year is that trump and bannon believe that they are responsible for trumps election, and they are the leaders of the nationalist movement that elected trump. Bannon has been frustrated with trump will most since the first weeks of the administration, did not think he could focus on a think ahand, did not lot about his intellect or political skills, and as you know, he was pushed out of the white house. He has continued to go out and campaign publicly, bannon has, claiming what he is doing is carrying the trump mantle forward, but i think he was building up his own political brand in hopes that he could advance this movement the on just donald trump beyond just donald trump. And then in was talking to was talking toon friends, speculating that if trump does decide to not run in 2020, bannon might run. He take upd following away from donald trump . He prides himself on being an economic nationalist, right . Not clear who this Movement Really belongs to. There is a sentiment within the Republican Party and within the country that supports the ideas that donald trump ran on and steve bannon advanced. The ideas of economic populism, and antiimmigrant, rightwing nationalism that we saw from the results of the president ial election, that has a lot more salient than people would have imagined two years ago. Trump has not been particularly faithful to the agenda he campaigned on, if you look at the tax reform bill, very heavily slanted toward corporations and the wealthy, much less so bluecollar workers. Trump has been willing to break with this pace, and bannon sees himself as the rightful inheritor of those ideas. What he has been doing over the past couple of months was going out into the country, campaigning for other politicians, and trying to build a splinter movement within the Republican Party he said was loyal to trump, but was i think about elevating bannons own political power. We will see in the next couple of weeks, do voters stick with steve bannon and these ideas, or are they more loyal to donald trump . I think trump will be the bigger draw here, but we will see. Plays out between high drama and farce, but what are in the real world . Are the odds of the democrats retaking the house and the Senate Higher today than yesterday . Josh i think the nearterm effect is this is going to weaken bannons movement, this insurgent splinter faction of white wing right wing republicans he has been recruiting to run against him, and incumbent republicans. It couldat damage incur in the Alabama Senate race. Royon got behind judge moore, the Controversial Supreme Court justice down there. Won the nomination and lost the election to a democrat, that could repeat itself. Something else that has not got a lot of attention worth focusing on bannons main benefactor is Robert Andrew lack of mercer, whose hedge fund has a lot of organizations that bannon has been in charge of, like breitbart news, that have been such a scourge to mainstream republicans. Ander came out yesterday indicated she will withdraw that support. I think that will make bannon much less prominent and be good news for moderate looking. David many thanks moderate republicans. David many thanks to joshua green. We will be talking about commodities. In light of the big storm coming through, what is going on with commodities and the storm, and what is driving the rally we are seeing . From new york, this is is this a phone . Or a little internet machine . It makes you wonder shouldnt we get our phones and internet from the same company . Thats why Xfinity Mobile comes with your internet. You get up to 5 lines of talk and text at no extra cost. So all you pay for is data. See how much you can save. Choose by the gig or unlimited. Xfinity mobile. A new kind of network designed to save you money. Call, visit, or go to xfinitymobile. Com. Alix this is bloomberg daybreak, im alix steel. The Global Growth rally we are seeing, the s p closing above 2700 the first time yesterday, and everything closing at record highs that spread to asia and europe, european stocks seeing the biggest gain in two weeks. The dax is up over 1 after really strong pmi across the board for the eurozone. Lets take a look at the other asset classes. Writinglar higher, up 6 10 of 1 . The euro takes the dominant strength again, and a selloff in the bond market in europe and in the u. S. As well, yields slightly higher by about two basis point. The curve a touchdown or today touch deeper today as well. A 14 dayporting winning streak for copper, a big part of that, over 1 . At 61s well, up over 1 a barrel. We got the minutes from the fomc december meeting yesterday, and we learned what we thought we knew already. Many members continue to be comfortable with a gradual pace of rate hikes, and thought the tax hike would only lead to moderate increases in spending and investment growth, and they are still puzzled over inflation. Joining us now is anastacia amoroso. Heare always anxious to what the fed things, because what they think can affect growth and investment. Anastasia they are responding to the global rally, but they are doing this at a gradual pace because inflation is not where it needs to be. As a result of tax reform, for example, and faster growth and then we saw in 2017, they did upgrade their growth estimates from 2. 2 to 2. 5 . Our best Case Scenario is they will hike three times in 2018, but i can see the upside to that only if inflation actually cooperates. I do not expect that to be the case, by the way, given the yearoveryear comparisons in the next few months, but as we progress through the year we can see that inflation gauge move up toward 2 so we could get more hawkishness in the back end of the year. David the fed has been pretty signaling in three rate hikes, and the markets as we dont believe you. You think looking back, there will be three hikes . Isstasia our base case three, and i think since september, the markets believe the fed more than they have in the past, because if you look at the front and of the curve, it has moved up quite substantially since september. We do suspect there is more upside to the twoyear, and that is where the highest conviction income the fixed markets, that the front of the curve will continue to steepen while the back end should flatten out. Not seem to express a lot of concern about it. It is a level or velocity, when that becomes a true conversation with the fed . Lisa i would say both. It is an ongoing conversation on a lot of our minds, but what matters is the inverted curve, because that is a signal of what is the come, which is most likely a recession. We are not there yet. The speed of flattening does matter, and that what is what caught everyones attention in 2017. We think that slows down in 2018 , because not only do we expect the short rates to rise, but we expect the long end of the curve to back up somewhat. Alix how much . Lisa our forecast anastasia our forecast is 2. 75 . Alix so a little bit. Theou take a look at bloomberg, this was our favorite chart yesterday. And twoyear break even. Also on the climb. How do you play higher inflation . Througha we play it floatingrate securities. The reaction function from higher inflation is that the fed is going to hike more, perhaps more than what the markets expect. If that is the case, you want to be owning debt that is tied to viable rates that would move up in conjunction with the fed funds rate as well. So that is why we are seeing flowing rate securities, but we ry look for car elsewhere, which is why if you look in europe, we are looking for spread, where there is not a whole lot left in many places in europe. But one place we are finding it is in the european contingent convertible. Alix another thing we are looking at today has to do with commodities. Crude climbed to 61 a barrel, the best start of the year since 2012. The best start of the year on the Commodity Index overall. Also a higher rally of copper, aluminum, you name it, it is rallying. Vie javier, is this based on Global Growth or is there another factor here. Just oil, younot mentioned aluminum, copper, palladium. All, it is very strong Economic Growth everywhere. The United States and china in particular, but the manufacturing sector, we saw the tmi data showing the strongest factor activity in seven years. That is really what is driving prices. On top of that, we obviously have some hot money coming into the sector at the beginning of the year, in part because of those Global Economic conditions everywhere. Is the supply response here in the u. S. . There was a survey by the dallas fed that took into account hundreds of companies in the u. S. At what level are you going to be increasing production . 6160 five dollars a barrel was the number 65 a barrel was a number. Is what we need to be looking at now. The latest model numbers show shale from december 2016 to the end of last year grew by about 950,000 barrels a day. Because theg chunk, fed in dallas went to over 100 producers in texas in particular, and in oklahoma. If you see prices over 61 , would you increase, the majority said yes. That could make a big difference between [indiscernible] or deciding to drill. If you ask shale producers with prices below 61 a barrel, very few will increase production. Drilling, but when prices move above 61, that is a trigger point and where we april, maybably by this year, strong shale production. Alix and talk about hedging. Is very steep. Prices are more expensive now than they are in the future, and that creates that backward data curve. Take a look in the bloomberg, and you can see what is happening for 20182019. That spread is up 40 a barrel. Are we over the hill here . Javier that will cause producers and in the United States has with a to hedge with a backward data market. But if you look where we are close to 70 you have a hike of 70 and have to hedge for next year, maybe 66. That is a fantastic price for producers in africa, so i do not think backward data will be a big problem in terms of hiking. You so much, great to get your perspective. David. , david and anastasia, we are back fro with you. Is this sustainable . Javier this supplyside has been going on as well. If you look at the global inventories, they are well of the peaks and converging at the fiveyear average levels that have been key for opec. One thing we are thinking about, while in the past we are at talking about hedging Downside Risk in oil, we have to think about hedging the upside risk in oil. We are talking about a market that is balanced from the supplydemand perspective. That show producers goes to offset the Global Demand that we have. So with that response, we see the inventories drawing, and is a much tighter market that could be unnerved by potential geopolitical risk. That is why it is important to think about inflation, geopolitical risk, and potential upsides in oil. On the otheray commodities, the industrial commodities, we are seeing the same story play out. Supply isstrong, starting to decline, and will continue to decline into next year as well, and as a result, inventories are drawing. That sets up a market that is wellbalanced, wellpositioned for the continuation of the rally. Quite a we have seen bit of a rally since early 2016, but it pales in comparison to surges from 2004 and 2006, where the metals index rallied tremendously. We will turn back to the chip story. Intel is getting hit after a new report suggests the companies chips areompanys vulnerable to computer hacks, and amds getting its highest boost since november. Jeremy, first start out by explaining one thing to me. Intel says this is not that big of a deal, but does the vulnerability apply to amd and nvidia . Aboutis some confusion whether it applies more broadly than two intel . Jeremy it applies to intel, and they had Companies Like amd come out and say they are not to the same extent. But the researchers who found this on ability say there have been able to test this on systems other than intel, including amd and arms systems as well. So it affects the larger chip ecosystem, not just intel, but intel is the most effective. Problem isbig a that . I understand there is a software workaround, but it might affect the performance of your smart phone, for example. There is a patch for this. This is potentially a big deal. If this was not fixed, it would be a big boulder ability that hackers could exploit to get Sensitive Information vulnerability that hackers could offoit to get information your phone. There is a question about how much that patch will slow down the operations of your system it depends on what functions you are running. But from what we are hearing, this will most likely not impact most consumers, but Large Enterprises using computers were seebase operations might significant slowdowns. The effect could be larger, and the companies that run those clout systems are working on various workarounds. They are trying to minimize the impact on speed as much as possible, but there are researchers out there saying in tests, the slowdown could be as much with some older systems up to 30 . Alix david thanks, jeremy. Talk more can you generally about tech . It had a great year in 2017. Some people are saying maybe it will turn around, maybe it will keep going . We had to take a long, hard look at tech, because it is a sector that has done phenomenally well. We are valuation heavily rated, and it is one of the favorite overweights by many of the fund managers. So from the positioning standpoint, it is not a contrarian trade. That will restent but where we stand at the end of the day capext some of the dollars can go as well. It is not just the limits and Construction Side of things, but increasingly it is spending on software. That is why i think software is wellpositioned in this part of the Business Cycle, and Semi Conductors are geared to about every secular theme we see out there, whether it is connected cars, electric vehicles, by the way, which require a greater power Semi Conductor content than a traditional vehicle all of that is very important for Semi Conductors. Alix anastasia, great to see you. Happy new year and thanks for being here. Some breaking news, l brands stock getting hammered, at one point down 10 . The estimate was for them to rise 1. 4 , and they also see earnings for the Fourth Quarter about two dollars. The estimate for analysts this two dollars and five cents. A negative story for the retailer. What wall street is talking about today, including plans to invest or not to invest in cryptocurrencies. And if you cannot find us on television, listen on the radio. Joins tom from 9 00 to 10 00 on bloomberg surveillance, and you can hear them in new and, boston, the bay area, washington dc on sirius xm. From new york, this is bloomberg. Rom new york, this is bloomberg. Emma this is bloomberg daybreak. Coming up in the next hour, michael steele, the former rnc chair. This is bloomberg. Alix we now turn to the wall street beat, where we cover three things where wall street is buzzing this morning. First, hedge funds getting into cryptocurrencies, big names, small number. From tower, 140 Million Union square ventures. Our second story has to do with the crazy ride that michael has been on. Formally audited and charged with 10 counts of rod. Fraudmpany was charged. The family was charged with fraud years ago it is a crazy story. Response wall streets to Michael Wolffs new book fire and fury. How much does wall street care about the story that we read yesterday . Lets start out with block tower. 140 million is not a big deal, but it got me excited. David this is a headline where you have cryptocurrency, hedge funds, but lets throw in Warren Buffett and tiger woods and make it the most red headline ever. Where the money is actually going, and as you mentioned in the intro, union square these are real Venture Capital firms. Obviously, they are in the business of risk to some extent, but they are putting some of their money where a lot of mouths are. David they have such a track record, but this is the first time i ever read about blockchain was in horowitz. They were saying we are interested not in bitcoin, but blockchain. We think that will change things. Jason and i notice evolving story, and we have been all following the ebbs and flows of bitcoin pricing, but it is an interesting point that lock chain, the Underlying Technology is what these people are going after. David lets talk about bitcoin, because at the same time, bank of America Merrill lynch said you cannot get involved at this point of investment trusts, because their divisors cannot sell it or allow their customers to acquire it. I thought that was a fascinating scoop, because that gets into how the Broader Market may or may not be able to access it. Clearly, what we saw in november and december was this widening aperture, as it were, of people. Eing able to get in if the Broader Market is not able to get in, if retail brokerages, and brokerages in general cannot get it to their customers, that starts to feel a little more bubbly. Sachs. 800goldman david and the second story is michael . Michael cohen. This is a spinoff off of that story. Michael cohen is being charged with fraud in loaning money for a yacht in libya . Anastasia african african super yachts, bribes, the countries involved, but you pull this thread as it quites to it, and it is astounding. It should be a movie at some point. Maybe just a movie that nerds like us would see. Hedge funds gone wrong . [laughter] anastasia just jason the elements of this dewpoint to the risk that comes r investing. Africa wind large, and there are lots of countries and opportunities there. This does seem like something of an ongoing warning signal as to how you have to alix frontier is ok, but dont bribe people. Dont house funnel money if you are in securities. David and it does not involve Warren Buffett, but it is President Trump, steve bannon, and Michael Wolff in one story. Is this anything else beyond mild interest . Anastasia i read jason i read this somewhat graciously. Michael wolff has been inside a stories in our time. He wrote a book about the. Com and ventures in the mid90 90s 1990s. One thing that jumped out to me is that this is a reminder that some of the key players in this white house to hail from wall street. There is an excerpt i read this morning from politico about and even a purportedly talking about gary cohn thinking, tom barrick was mentioned yesterday, someone who is familiar to people on wall street and private equity in hedge funds. Said but he came out and that he has not said it, and nobody actually checked it. But this brings in the credibility of Michael Wolff. I went back to a new republic 2004 article that look at what he had done in the past. Scenesson his columns in his columns are not just creative, they are created. They also referenced my favorite story, why he has table five at this particular restaurant and i work ato be seen that restaurant and i know what table it was, and it was the last good table, so it was not that amazing. One through four were better tables. Anastasia everything you are jason everything you are saying is so interesting. And clearly, our colleague likes to talk about the zeitgeist every day. Alix you do too, you are the zeitgeist guy. Jason i copy him, but this is a very zeitgeisty type story right now. And one thing that jumped out at me to from the excerpt in new York Magazine was how much purportedly trump was looking to impress people back in new york . That part of one of his driving elements, according to wolffs book, was this notion of satisfying or proving that he in manhattan. David that is not important at all, of course. Alix table five. David jason kelly, thank you for being with us. Coming up, the east coast races for the worst storm. Why we are watching this storm, coming up next. Out tv. Ck interact with us online, check out our chart and graphics, and interact with us directly. This is bloomberg. Wont surprise you how i am going to get home . Alix how are you going to get home . David i have my parka and snow boots so if i have to walk i will walk. Alix how cold is it . David this no has just begun, but the reports are awful. It has gotten a bit warmer. Alix and that he heatwave 40 degrees . Much more coming up on this global rally thursday. This is bloomberg. Thursday. This is bloomberg. Retail. Under pressure like never before. And its connected technology thats moving companies forward fast. Ecommerce. Real time inventory. Virtual changing rooms. Thats why retailers rely on comcast business to deliver consistent Network Speed across multiple locations. Every corporate office, warehouse and store near or far covered. Leaving every competitor, threat and challenge outmaneuvered. Comcast business outmaneuver. Alix Global Growth rally. Asia is footing with historic market highs. Commodities have extended their record runs. Chip securities chip insecurity. Are allest chipmakers at the risk of hacking and snow bomb parts of the u. S. Brace were Hurricane Force winds harrying snow. We are new yorkers. Get out there. Go shopping and get to work. David all the schools are close is mike close and my wife home from work. Alix here is where we stack up, just about half hour until the open. 2700 was the close from yesterday. That rally continued in asia and here in the u. S. This is the first time in decades that we have had a two s p for the the dec start of the year. Pma data out of europe at 4 10 of 1 , and a stronger dollar after the fed meeting did not hold any water. Most bonds on offer today, but two basiss up by points, and crude having a nice move over 61 a barrel. The range where producers will start adding riggs. This has to do with copper and Industrial Metals copper up and speaking of Global Growth, is it sustainable . David time to get a check on what is going on outside the Business World with emma chandra. Emma a dramatic split between President Trump and one of the former architects of his campaign. The president says former white house strategist steve bannon this camehis mind. After the release of excerpts of the book after been insulted President Trump then and criticize President Trump and his family. The storm has knocked out power to thousands of homes and has forced the cancellation almost 3000 flights. The storm is threatening blizzard conditions along the eastern seaboard, possibly up to a foot of snow. And in the u. K. , Prime Minister theresa may believes Michel Barnier is bluffing. Officials say she does not believe the eus chief negotiator when he says there will be no special postbrexit deal for settling the financial services. This would allow banks to keep operating freely across the eu. Global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. Im emma chandra, this is bloomberg. Alix . Alix thank you, emma. The story for the dollar, you get a reprieve from five days of selling, and that is a weaker dollar, eurodollar. Take a look at the dollar index. It is bouncing off some undersold levels. The bottom panel has to do with the rsi, and the green line is where green is oversold. We are bouncing above that. 91. 89 is where we sit on the dollar index. Did you buy the dollar . Not really. Look, i think it depreciated by about 8 last year. It will not we can buy as much year. The fed is still hiking, if you look at the bond market since the start of the year, the yield is heading higher the. Dollar should not follow the yield completely, but the preshow pace will be slower. They were talking about bonds are not in the bubble. Year will stay0 lower. One, transparency of the fed chair, too, lower volatility of Inflation Expectations, and 3 can the same be said about the weaker dollar . Vassili we would agree with that view. That would imply a relatively flat yield curve, which is what we expect. Expectot deepening in the yield curve. But i think that is vertical for the dollar. The two paths were Dollar Strength either we are underestimating the growth impact of the tax reform or some kind of productivity boost, so the endpoint for the fed is higher than we think, or we are underestimating inflation. If there is inflation surge, that fed will have to hike faster. So i think the dollar would do better under those scenarios, but that is not our base case. Ford what is your estimate the increase in growth because of the tax overhaul . We were talking to someone who said thats. 2 10. 4 incrementally. Vassili that is where we are as well. David and they say this will really support the dollar . Vassili that is an interesting issue. Many people compare it to the hia, homeless investment act of 2004, where Companies Got one year to bring back overseas profits. This is not how it works. The corporate got a tax bill stability over eight years on all of their stability retainings overseas. What they do with the money is their choice. If they bring the money back , it will be relatively gradual but i think the majority is in u. S. Dollars. David they would have to pay no taxes they brought it back, so it is even stevens. With a bring it back . Vassili that has been freed up from tax liability, but it is an economic decision. Growth picks up and then there is more scrutiny bringing it back. Some Companies Might decide to buy back shares or payback that impact onthe direct the dollar will not be that high, because you bring back the money already in u. S. Dollars, which is about 85 of it by our estimates. In might help the dollars in the equity market. If it does really well, it could support the dollar, but they are also pricing in some of that tax already. I think you are looking of the european currency is doing well, the scandinavian currencies, those are the ones that will do well. You still have a lot of opportunities for some of the Central European currencies, and maybe some of the latin american currencies outside of the mexican peso, which has its own idiosyncratic issues. Mentioned eurodollar, so what is your call for the end of the year . We had 1. 23 at the end of the year. If we were to take regions in general and qualify our effects for you, we would say europes first, america second, and asia third. Alix nt talk about how we are not really tracking real yield when it comes to currencies . This is the german fiveyear. Eal yield on the top panel you can see the real yield is negative, which means inflation is not picking up that much, but the euro continues to climb. On the bottom panel, the dollar index is lower but the real yield is higher. Why the distortion . Interestingis an question. Typically, we follow nominal yields in the Foreign Exchange markets. I like to think about the research that we have done that real yields matter when expectations move a lot. Alix they are moving. Vassili a lot in a short amount of time. When you had qe1 and Inflation Expectations surged, real yields fell dramatically in that short amount of time. Investors were worried about inflation limiting their returns, and that encouraged them to take money overseas. If it is a gradual divergence in real yields, i think it is less important. That being said, i would argue that europe and the euro will need to see real yield picking up eventually to keep the euro going. David where do you see the yen going this year . Is that a good investment . Vassili i do not think it is yet. I think the boj is lacking the hiking cycle, the global tightening cycle is starting in 2017. 2018 is still the year where the yen is your funding currency in a sense that where if you want to play Monetary Policy elsewhere, higher yields elsewhere, you use the yen to fund it. When you look at the valuations of the yen, it is clear that it is cheap. Am a longterm perspective, the yen is cheap, the dollaryen will be closely trading to 100. When is the trading point . We think it is later, based on the boj outlook. Top or the bottom of the pond . Vassili it has a scenario where it has autumn doubt, but the risk is pretty large. Out, but the risk is pretty large. I think we will see some weakness and volatility if we see brexit negotiations stumbling. [laughter] vassili when or if. Expects us torket get to a constructive point eventually, but i think some kind of accident along the road like the european debt crisis we got that resolved, but there were many bumps, to put it mildly, along the road. Alix so we talk about the global rally in the batter global sink nice recovery and meaning foris that hedge positions . What will be a Sustainable Growth fx rally . Vassili in terms of the hedges , we find that Equity Investments are less hedged been bond investments. I think that is the key relationship here. When the dollar did better this year, when we saw some equity inws into the u. S. September, october. In terms of the head to head to and investment, large square equities are going, and we think they will be going to europe. That is the growth recovery story. Flows have been strong this year last year, and they will be strong this year, which is why the euro will be ok. David alix vasily, thanks. David . David up next, repercussions of about a book out next week about trump and the white house are already being felt. We talked to an insider about the fact the effect. This is bloomberg, and that is a live shot of new york, if you want to come visit. I think it will be bad. Youre watching bloomberg tv. E watching bloomberg tv. This is bloomberg daybreak, and i melenchon with your bloomberg is this flash. This alliance reported earnings that beat estimates. Walgreens posted strong prescription sales and is in the midst of buying more than 1900 bright a locations at about 4. 4 aidion write rite locations that about 4. 4 billion. Karen katz is stepping down and will be replaced by an outsider. Ceo of theen the luxury retailer since 2010. The company is struggling with debt from two leveraged buyout. Shares of this Department Store are plunging today, after the company warned they will earnings will be less e than expected after a week holiday period. David thank you, emma. Washington learned about a new book due out next week by media , calledt Michael Wolff it hasnd fury, and elicited extreme reaction. We have some quotes from the a copy of it. Ad new York Magazine came out with a lengthy excerpt recounting with what happened to the campaign and the white house. Round 1 20 yesterday afternoon, President Trump is youd a long statement by a male issued a long statement by email, saying onlysteve bannon had not lost his job, but his mind. His spokesperson came out after 2 00, saying there are a lot of untruths and it should be disregarded. The spokesperson for the first lady came out, denying some parts of the book that apparently say she did not want her husband to be president in the first place. And tom barrett, yesterday afternoon, came out and said he never said what was attributed to him in the book. According to published reports, he called president stupid. He said he never said it and Michael Wolff never checked with him seeing if he had said it. Finally, trumps lawyer sent a letter to benin in, telling him badin,nd desist telling him to cease and desist. We now want to go through the aftermath of all of this drama, and we now welcome michael steele. During his career, he has held a number of Senior Communications including handling communications for jeb bushs president ial campaign. Michael, good to have you here. A someone who has advised number of republican leaders, put this into some context for us . How is this going on with the Republican Party in the white house at this point . Michael there is so much news these days that it is difficult to tell the signal from the noise, but this is an extremely big deal. President trumps election victory and his administration have relied on an often Uneasy Alliance between conventional republicans in the led by steveing bannon. Another break between bannon and the white house is a big deal in terms of the consequences Going Forward for the president s agenda, the future of the administration, and trumpism itself. What ramifications might this have for the president s agenda on capitol hill . Does it affect his standing with democrats and republicans in getting refunding of the government later this month . Michael i think it changes the s agenda and terms of priorities. I think you will see less emphasis on more of the nationalist agenda items, and more emphasis on traditional republican or democratic leaning priorities, like a large infrastructure bill. Onid you have spent time capitol hill with john boehner when he was speaker of the house. Is a win for mitch mcconnell, who was never close with steve bannon . Michael yes, i think mcconnell and his team are extremely happy. Especially in the Alabama Senate seen aseve bannon was someone working against the best interests of Senate Republicans or having a government majority who can get things done for the american people. He was a disruptive element and backing candidate who could not win because they were loathsome kooks. David and by extension, could this be bad news for the democrats . At President Trump or to move more toward the center of the Republican Party, is there a chance he could be more successful and popular than he has been . Regular having some cadence to governing, having a feeling of response ability and respectability would help responsibility and respectability would help. Happen ine vote will the next year and a half. What will happen for progress to be made on big issues like infrastructure and immigration is bipartisan efforts, and i think that will be easier because mr. Bannon is no longer part of the picture. David finally, take us forward to november, where we have the midterm elections. Whatever probability would put taking back the house and the senate has the number gone up or down . Michael it has gone down, and substantially, because eliminating bannon as a Political Force it limited concern about divisive primaries that leave republicans weekend going into the general election. Alix adp breaking a few moments ago. Private Companies Added 250,000 december. E month of that was larger than the estimate, 190,000 jobs. This is just about 24 hours until jobs friday. Will that kind of matchup . In november, we had that crazy and then you have the jobs number that was solid but missed the estimates there. Dollar index is off the lows of the session, but there. The 2 10 spread is lower, but a bit of movement around the highs of the session. Coming up, the continuing saga of tesla and its model three, manufacturer disappointed once again on the pace of production shocker. How much money do they need . This is bloomberg. Need . This is bloomberg. Alix tesla breaks another production promise. Of companys pushback production targets for its allimportant model three. Teslas stock down by 3 in premarket. Overall, tesla delivered over 5500 model threes in the final months of the year. Here at the tesla cars produced each quarter, around 250,000, but less than we have seen in the past, although it did beat its own forecast for the model s and model x. We are joined on the phone from stanford. He has an underperforming rating on tesla. Give me your strongest conviction as to why, jeff . Keeps breaking down here in terms of the ability to hit overambitious targets from management. The tone of the release last night has been a bit watered down, and they are starting to try and regain some more credibility. In general, we have seen continued execution delays, a lack of profitability over the next two to three years, and with elon musks World Domination strategy and the factories he wants to build around the world. How much w feel like he needs the next two to three years, or six months, quite frankly . Next six months, the 1 billion, 1. 5 billion range. I think they will step off the gas, no pun intended, on the production in fremont. Out by 69een pushed months as opposed to initial expectations. That will lead to a pause in spending in 2018. But the key question is to fill that hole, you will need about 1. 5 billion in the shortterm. 2019ook out for 19 and 2020, the question is do they want to be in china or not, which is the largest 80 market in ev market in the world. They will need to spend an additional 4 billion or 5 billion for that. Alix you say that, but investors have been lapping up the money they put out. When did that change . Was the first bond offering they did and it was nice to see it get done. It was an junkbond status, and it has broken the deal price. Our senses that the next debt deal will need to be a lot more transparent about the overall ambitions and Capital Needs of the company will be . Spend 10 million or more over a threeyear basis for these additional factories 10 billion or more over a threeyear basis for these additional factories will remain to be seen and will remain to be cash flow positive, which we are questioning . David tesla is not the only game in town, there is also a piece about the chevy bolt and how it is gaining, selling at a rate of 3200 cars a month in december. It is no eating now beating the previous. Ius. Pr is tesla running out of time . Jeff you are right, the bold is outselling the model three by 31. One is a more mature platform than the other, and tesla did launch the three with employees as guinea pigs and did not go through the teasing of beta production, which they are suffering for now. But the competitive market and the luxury market, where most of the sales are, that is intensifying over the next couple of months. Alix jeff osborne, great to get your insight. The adp initial jobs claims is next. This is bloomberg. Next. This is bloomberg. Alix this is bloomberg daybreak. It is a Global Growth rally underway. The s p closing about 2700 for the first time yesterday. A two day rally in the beginning of the year. We are right around the highs of the session after that blowout. European stocks also participating in that rally. Pmi crushing and. Eurodollar crushing it. Eurodollar on the front foot. You do have a little bit of selling in the bond market, picking up steam. Yields up in the u. S. By about two basis points. Thatr and nymex crude, commodity rally continues as Global Growth continues and initial jobless claims coming out in line with estimates. Jobless claims coming in at 215,000. Slightly higher than estimates but still within the range and it all tells the story of a solid jobs market and the question mark continues to be where all the wages where are the wages . Joining us now is tom porcelli of rbc capital, managing director and chief u. S. Economist. Where are these just coming from . Tom i make what is more critical than where theyre coming from is the fact that we continue to pull people from the sidelines. That is something we have been surprised by. Not in the of people labor force continues to decline because they are making their way into the labor force. A pretty fascinating development. Onyour earlier question wages, we think that is one of the things acting as a ceiling over the wage profile for most folks. If you keep pulling people from the sidelines, it is going to act as a suppressant. Have advanced, not as much as some people might want, but they have advanced and that is acting as a ceiling. David no question we are pulling them in, but it is as a it is at a slow pace. What is going to be required to really pull people all in . Actually askedo the question, do we want them all in one fell swoop . This nice steady approach, i think is much less volatile and i think it means it could also go on for much longer and that is something that i think has to be kept in mind. Think about it from a Unemployment Rate perspective. If we get down to levels from before the downturn, you could see an Unemployment Rate that has a to handle. 83 handle is a foregone conclusion, this year. The thing we are wondering about is if we are able to continue casually pulling these people from the sidelines. Does that enable us to get down to a two handle . We think that is a high probability of event. Alix a two handle is a big call. Lets pretend we get there. What is the fed going to do about that . Tom the thing that is driving the fed. Process is we are clearly in the realm of full employment. If we are able to continue to pull these people from the sidelines, that is going to add to this narrative of potential wage pressure. Financial context of conditions that remain easy despite the fact that the fed has hiked rates multiple times already. That is what will keep the fed fully engaged. We had this call since 2016 that the fed will hike rates four times. We have to wonder, do they do more than that . We are saying we have another for hikes in for next year and we think all of that is on the back of this idea that the labor market will continue to grow tight and will usher in this bout of continued wage pressure which should feed into the inflation narrative and all of that in the context of a much softer Financial Condition despite the fed raising rates. It is the perfect recipe. David we talk about averages. We dont talk about the median. It is a real distribution issue that is growing across the country. They can affect the economy because typical dastardly people with lower incomes spend in the increment. What is causing the increase in wage disparity . Idea of people sitting on the sidelines is playing into that idea. That is obviously going to secure obscure the that is obviously going tos you the median. It has been a slow process and we expect it will continue to be a slow process but you should see some catch up on that front. We do think that the broader narrative will be constructive. Rally, theuity dollar index is trading around 91, a 2 10 spread that is dangerously close to breaking 50. Argue the right market reactions for the scenario you are laying out . Right marketthe reactions for the scenario you are laying out . Tom a pretty pristine economic backdrop. We are talking about means and averages. On average, we exist in this pristine backdrop for the average of people. There are people who are doing better than that and there are people who are doing worse than that, but the reality is we exist in a really nice economic profile and we think growth will easily be post 3 this year in part on the back of a bump we are going to get. Markets will continue to advance and i think the dollar will continue to strengthen and by the end of the year, i think we will all be pretty happy with where we are from a economic perspective. Alix what is the risk . Tom this is the thing we need to focus on. It is true that i think it is going to be a nice year, but the risks from our perspective. One in the near term is that the fed does not raise rates enough. The fed just lets this get away from itself. The fed is all too aware of what happened in 2004 when they went on a slow fashion, did not raise rates enough. I think that is one of the things that you need to keep in mind, just to sort of distill that idea. A lot of people will tell you , thethe fed raising rates risk there is to snuff the economic backdrop. Our stance is the fed does not raise rates enough. It lets those financial imbalances builtin. That is risk one. More longterm, one of the biggest risks remains the demographic reality. That is something that is going to continue to clamp down on Economic Activity. To us, that is the single biggest structural problem facing the backdrop. Job expectations coming in a 190,000. Still over to 12. Are going adp, people to goose of expectations to some extent. 250 was a really nice outcome. That will get the whisper to elevate to some extent. We are not going to change our payroll number. Keep in mind about that adp report, the average miss for december is amount 50,000 so if you love that off, you are at 200,000. Tom porcelli of rbc capital markets, thank you so much. As you crews in, today, you can tom keene on bloomberg surveillance. You can hear them in new york, boston, the bay area and all across the United States on sirius xm radio. That whether you are seeing right now, a live shot off of the roof of this building. A big snows a big storm coming up the east coast. This is not a serious storm, yet. We will be talking about that storm and its affect on markets, next. This is bloomberg. Alix emma this is bloomberg daybreak. Brian wieser, Pivotal Research Group Senior Research analyst. This is bloomberg. Now to your Bloomberg Business flash. Morgan stanley Wealth Management warns it is too late in the market cycle to belt to bet on junk bonds. It is completely slashing highyield debt allocations. The new tax cuts may lead to the at t plans to be the first mobile carrier in the u. S. To offer six generation 5g service to regular customers. That will put the company against verizon and tmobile. At t says they will introduce a commercial 5g service in a dozen cities. London was the worst performing performing Housing Market in the u k, last year for the first time in more than a decade. London home values fell 1. 5 one half of a percent in 2017. Meanwhile, home prices nationally in the u. K. Rose 2. 6 . That is your Bloomberg Business flash. Alix parts of the u. S. Northeast are bracing for winters worth storm worst storm so far. Boston in areas of new england could get more than 18 inches. Nearly 3000 flights have been canceled and new york citys Ferry Services have been suspended. My kids are home. Basung us now are shunondo , our Bloomberg New Energy Finance analyst and kit konolige. Through what the bulk of the storm is and what we can focus on. Shunondo the real difference with this storm versus the tip typical snowstorm is the winds. Expecting maybe somewhere between six and 10 inches and even more as you go up into new england and the boston area. Alix what i need is heat and electricity. Are the Power Providers able to provide all the power that we need . Kit so far. I took a look at some of the outage maps that are recommended for people if you want to know how it is looking around where you live. There are not a lot of outages yet in north carolina. It is in thelina, hundreds but it is not a massive wipeout of the system. If it gets heavier snow and stronger wind up into the northeast, and we are looking for the new england area to be possible problems for power lines falling. Alix you brought a chart a long. Oil, jens capest aggregate which shows demand for northeast oil and gas and you see the gas demand staying high because it is cold but then you see oil demand. Kit especially in new england but also new york city and upstate, gas demand has to go for both heating and electricity , so what happens when it gets cold, obviously the gas needs to go to peoples homes to heat them. There is less gas available for power plants to run in those areas and that is when the oil peaks. Fact that there is a not there is not enough Pipeline Capacity to get to new england means a dirtier fuel has to get used for electricity. Alix what does that mean for inventories . We are expecting a pretty high withdrawal from search facilities. Definitely over 200 bcf. We are expecting quite a bit less than what we had, last year. Alix do we have enough supply . Shunondo we do. We started off this season with not a recordbreaking amount of natural gas that certainly higher than the 10 year normal. Alix you were also looking at what industries are using it it really piggybacks with gas demand for residential and commercial uses, that has really shot up in the last few months. Areaeneration is that blue , so that purple is pretty much flat. Shunondo the main story is residential, we are very cold. January 1 was the coldest day and that was the day when when the most gas was used. Have why arent henry future prices having the same kind of rally we saw in the other cold snap . Shunondo that is a great question. It boils down to the structural system, the way to markets are sort of set up right now, we have a lot of supply right now. A lot more infrastructure than we had two or three years ago. That is able to move supplies out of parts like appalachia and the midwest and get the gas where it needs to go. The second thing is, we might still have a warmer second half of january, so the markets are not anticipating this sort of shortterm demand to carry on into the latter half of the month. Alix i am also finding power prices surprising. Power prices for the northeast and we saw huge spikes on friday and we knew the storm was coming but when a but now we have backed down. Is this a demand thing or is this that traders got too far over their skis . Kit i think it is some of both of those as well as the overall commodity price structure is lower now than it was in the last big peak of electricity prices, especially in the northeast. Now oil is 60, so the difference in what you can burn, you see that spike in oil usage, you did not see that, last time. Oil was so expensive that you would not switch over. Oil holds down the price in new england and new york. Alix how much are we drawing in other sources . Kit nuclear runs steadily. Electric companies are going to say this is a great example of why we need nuclear. Did if the power plants were not running, you would be in a different situation and that is a lot of power to replace and we want to leave that in place. David it is winter and it is cold, that is not entirely a shock. Is per Capita Energy consumption in this country going down . Both in the summer with the air conditioner war and winter, with the heat or. Is it going up or going down . Kit it is going down. Household consumption of electricity is going down. Half a percent per year, really. Much,thank you so Shunondo Basu of Bloomberg New Energy Finance and kit konolige of bloomberg intelligence. Phil streible,is senior commodity broker for rg road rj obrien and associates. Gas go upaw natural to 310. You would expect it to continue to have upside. I think natural gas might be thawing out at these levels until you have Inventory Data coming out. More sophisticated traders are looking at this cold front and into the snow into the snow coverage and they are coming up with different trades. You are having less people drive as a result of these types of storms or even across the country, you look at the hard winter and the snow cover. Now weve got that cold front coming through and a winter chill in place. We are above the 50 Day Moving Average and you cannot forget the live cattle. It is going to take more protein to keep those cows alive. More beans than corn. You cannot forget or stews down in florida. S is a crowd entelechy crowd mentality. Everyone comes in and everyone has to go out, so this might be a trade where we see a temporary spike but we come down and normalized levels. Alix i like that you brought up week wheat. If you dont have snow on the ground when a chill comes, it in supporting you. What is the shortterm trade . Do you want to see shorting into the rally . Phil we are still looking at caller margins. Larger expectations, but you start looking at the good to excellent ratio on oklahoma, illinois and also kansas. Those are weekly reports that come out. You monitor those and look for the continuation. I like going along into the weakness. Alix wrapping up with oil, help me out. You have wti at 61. I think that is going to come back as well. Oil does not have much room at the upside. Analysts coming out with 80 predictions. You have the possibility of a conflict with iran coming out. It could cause it to have that temporary spike. We could see less oil in the pipeline but i think there is a burden of oversupply and i think we come back down before 60. Alix thank you very much, Phil Streible of rj obrien. Sprint stock is halted. There is a delay in opening. News is pending. I have lots of thoughts. David any of them involving tmobile . Alix a little bit. About that was done. The stock is halted. Gas andoming up, crude other numbers will be out this morning. Alix if you have a bloomberg terminal, check out tv. Interact with us directly. This is bloomberg. Alix what i am watching, today. Looking at production. We are going to get a read on production for the u. S. And we have seen high prices. Take a look at this chart, wti above 60. Does production start to catch up . Do we see production reacting to those higher numbers . David you said 61 to 64 was the key number. How much of a lag is there . Alix a six to 12 month lag depending on where you are operating. This is a dallas fed study. Anywhere between 61 and 65 is when producers want to put more rigs to work. Can we export that oil and if not, is it going to sit here and that is going to be a downside for prices. David are we already higher than we thought we would be given shale . Alix no. We had all the analysts revise their numbers at the end of last year. It was 57, maybe 58. I think we are going to have to have upgrades again or we just way out over our skis. You are making money like a bandit if you are a shale guy. The cost of extracting is not that high anymore. Alix unless you are hedged at 50 a barrel. You are not making money at 61. Interesting point. Get homesick, by the way. Get home safe, by the way. Coming up, brian wieser, Pivotal Research Group Senior Research analyst. That does it for bloomberg daybreak. This is bloomberg. Retail. Under pressure like never before. And its connected technology thats moving companies forward fast. Ecommerce. Real time inventory. Virtual changing rooms. Thats why retailers rely on comcast business to deliver consistent Network Speed across multiple locations. Every corporate office, warehouse and store near or far covered. Leaving every competitor, threat and challenge outmaneuvered. Comcast business outmaneuver. Jonathan 30 minutes until the start of trading, this is the countdown to the open. Coming up, two days of trading in 2018, two alltime highs. Advertiser, the adp report comes in betterthanexpected. The commodity complex strings together 15 days of gains and crude climbs to levels not seen in three years. Lets whip through some of the action with futures firmer, up almost eight points on the s p 500 after a close north of 2700 for the first time ever. Upthe fx market, eurodollar 4 10 of 1 off the back of that one off of the back of that strong day in the eurozone. 2018 is picking up where 2017 left off. Two record closes with the dow clos