Marijuana. In states for pot is legal, attorney general Jeff Sessions has directed federal prosecutors to use their discretion in deciding how aggressively to enforce federal law. The death toll from a passenger train crash in south africa is now at 18. A South African officials said the train slammed into a truck driver mistakenly thought he could cross the tracks in time. Ministerrys transport said an additional 260 people were injured. In freedent occurred state province. The United States and south korea will not hold their angle joint military drills during the Winter Olympics next month. According to a statement from the office of the south korean president , in President Trump agreed during a phone call today at the gates the games in pyeongchang should be kept peaceful. South korea plans to cornett talks withs. For north korea that are scheduled for next week. Global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. Im Mark Crumpton. This is bloomberg. Julia live from bloombergs headquarters in new york, im julian chatterley jewel you chatterley. Thetocks are in the green, dow surpassing 25,000 for the first time ahead of the jobs report tomorrow. Joe the question is, whatd you miss . The storm batters the northeast. The band breakup takes another turn. President trump threatens legal action against his former top strategist. What can Ripple Effect will it have on the Republican Party . And wages back in the spotlight. Torsten slok says income inequality is likely driver of populism around the world with ramifications for asset classes. He joins us in the next hour. Cyclone, is that what were calling it . Scarlet or just a big, bad blizzard. Julia whatd you miss . , president eakup trumps very public separation from his former chief strategist. Steve bannon pledge his undyings or for the trump agenda this morning while the president told reporters today he no longer even speaks to ban it. Easeanddesist orders are out sue the publisher if the book comes out next week. Great to have you on the show, marty. Great to be here in a on cycle. Does this book even matter, because the pr around this has been pretty incredible. Marty the thing weve been trying to focus on, what are the practical effects of what this book does to the political environment . You not see any gop leaders coming out, maybe Mitch Mcconnell had a smile on his face, but knowing no one is seeing this as a groundbreaking move. Donald trump had already allied himself with the establishment. Its ae this as great story for the new cycle and it will continue tomorrow because Michael Wolff will be on all the news shows tomorrow morning. Scarlet and hes got the money behind him because the Mercer Family has aligned themselves with the president. Were hearing some dispute, the an end folks are saying its not true. We will see is the 2018 the bannon folks are saying its not true. Joe as the story unfolds, would you be shocked if in three months are stories about trump and bannon talking on the phone every day . Marty absolutely not. I think there is a narrative that a lot of people say even if its not true, it should be true. Scarlet or it sounds true. I dont think that should be the standard. , thereanders is right were no questions about policy, legislation, infrastructure, about the things that donald trump says matter, but this book is just to usurp that narrative. Julia what matters to voters here . Marty again, at the risk of being attacked in my newsroom, i think Sarah Sanders is right. There is so much focus on the dysfunction, they just passed a massive tax reform. They may not like it, but that was Donald Trumps victory. They do not want to talk about policy. Scarlet the Republican Partys pretty fractured right now. Sidead this conservative which was embodied by mike pence and ted cruz, then you have a call and ryan and the site thats aligned with wall street. They got the tax cuts done. How do they move forward . On their . What is some how do they move forward from there . Marty you have to look at act,ration, the dreamers and the wall. Donald is clearly focusing on that. Really like to be able to have a grand announcement of an immigration deal and some funding for the wall. Democrats are not going to vote for a wall. They will vote for increased Border Security. If everyone can declare victory and move on, theres a possibility for a deal there. Julia what is the workaround here . Can he get away with not having money directly for a wall . Marty donald trump is a master of turning facts into a narrative that he wants. If the increased Border Security funding without specifically saying it is for the wall, he can in some way declare that the democrats agreed to fund the wall. Donald trump himself has said, well, some places there may not be a wall, it may be a virtual chainlink,e, something. So its possible that can happen. Joe but how should be watching for . The steve bannon story is fun compared tout bloomberg whose looking for important market moving information, what should they be paying close attention to . Donald trumpoday announce opening up coastal waterways to all drilling. Those kinds of policy issues, things he can do from a regulatory standpoint that actually affect markets and businesses, those are the things we should watch for. Joe and of course, people might have thought it was a joke, but the marijuana issue, a huge market mover for a growing part of the economy. Marty no one is talking about that at the briefing or otherwise. Joe well we are talking about it. Julia bloombergs chief content officer, telling us what you are watching. Scarlet and dreams of legal weed mason go up and smoke. Smoke. Soon go up in this is bloomberg. Scarlet whatd you miss . A boost to cannabis stocks, but the federal government now has something to say on this. Attorney general Jeff Sessions assent these changing federal policy once again. This is driving our stock of the hour as well as other pop stocks lower in todays session. Abigail doolittle is here with us now. Abigail its the u. S. Version of the stock, the canadian ticker is we, not surprisingly. The biggest by market cap medical marijuana company, just insert your around what jeff general, the attorney is doing resending this obama era policy around the legalization of marijuana. Its actually the resending of a memo maybe basically giving attorney general in states the ability to enforce the idea that hot is no longer legal there. So lots of war consumers and officials. Joe so the stock has been on an incredible run, up tenfold on the year. The companys canadian, as are most of the listed marijuana stocks. Is a lot of the premise the idea that they will be the leaders in the u. S. As relate as regulations here get relaxed . Sane is likely to be 50 billion market, and not all companies are u. S. There is Canopy Growth and we have some other pot related stocks. Scotts miracle grow down 2 . Joe the urban white picket for growing marijuana, thats pretty amazing. Abigail constellation stocks are down as well. Etf, yourt about the space here . Abigail not surprising, the etf holdings some of these shares down on the day. To joes point, the popularity of the stocks and the performers weve seen most recently, if we look at the inflows into the alternative harvest etf, the inflows, and this is the etf on the day, down about 5. 5 . Inflows,y are, those just over the last five days, take a look at it. Actually up until tuesday. Will be interesting to see what it will look like after it is updated. Joe it already did give it to marijuana. Abigail doolittle, thanks so much per lets say with the topic of Legal Marijuana and what it means for the state themselves. We welcome jenny kaplan. Give us a little more context to what exactly attorney general Jeff Sessions it. He didnt so much change the law. S rescind a memo talk about how that manifests itself. Correct. What Jeff Sessions did is come he basically put out a memo today saying that he is resending what is known as the call memo and another call the ogden memo. What they did is put out exactly what the federal government was going to spend its time focusing on when it comes to the , whichion of marijuana has always been in this era and illegal plant. The idea was that before these theresaid guardrails, were certain things the government just was not going to prosecute and that included the state legal markets. Example, one, for say legalize marijuana, the federal government was not going to come in and do anything that would go against that state mandate. Anymore, so exist its now sort of all up in the air. What will the federal government to, what will happen when prosecution could theoretically increase all over the country in these states that have built a pretty large business. It was 6 billion in 2016 and it is expected to be 50 billion by 2026. So this isnt a small industry anymore. Are not necessarily going to start prosecuting businesses, they have just said essentially that theyre going to not not prosecute businesses. What do the onto partners in california who have been building up to this day, this must be very anxiety producing for them that they may now be trafficking in a substance which the federal government could theoretically come down on. They have always been doing that, in some ways. It has always been federally illegal. They are not averse to risk, clearly. But i do think that this is especially scary in terms of it could really dry up investment. I think a lot of entrepreneurs have been benefiting from the attention that this industry has been getting, the momentum it has had in terms of new states legalizing. I think more and more investment, more and more dollars are coming in. Just stopould really that, put a hold on that, so it down. I think that is the biggest risk. Thehe other hand a lot of pot stocks crawled back of it today because people are saying the cat is out of the bag, this is to let, you cannot put the whole industry back together, the tax revenues to much and Consumers Want it and voters voted for it. So i think there is risk, but maybe not against the whole industry. Julia Jeff Sessions has also compared marijuana to heroin. Certainly the industry cannot be that surprised by the announcement we got today. As you said, this is an established business. Surely theres going to be guys. Back from these ultimately whatever is going on at the federal level, they can still do what they like at the state level. Definitely, yes. A lot of what the new memo said, what Jeff Sessions put out here today, or the Justice Department, is that its really going to be up to the state attorney general to figure out what they want to do. Californias attorney general has previously said that californias Marijuana Industry would be defended from any sort of federal crackdown. Think there is a good chance that while there is increased risk, these companies will still be ok. Joe the republican senator from colorado tweeted his complaint i Jeff Sessions saying he broke some sort of promise made during the initial hearing. If isnt there a case that politicians want marijuana to be legal on the federal level, they should just change the law instead of dictating to members of the cabinet which laws they should and should not be in forcing . Thats definitely a strong perspective im hearing from people. Hes doing his job. This is a federal law and he is defending it. On the other hand, a lot of people are questioning the decision, why get into this right now . It was not that the government was not prosecuting any erewhon a, its just they were not prosecuting in the states where voters have voted to legalize the plant. Upset about the direction this is taking. It is getting in the middle of something where this is theoretically a states rights issue, which is something Jeff Sessions has previously been a big advocate of. So there is a lot of resting about what is going on here from that perspective. Julia follow the money, that is the answer here. Thanks to jenny kaplan. 60 of the American Population wants to make pot legal. Julia its time for the Bloomberg Business flash, look at some of the biggest business stories in the news right now. The California Public employees retirement system is seeking a partner to help manage its private equity portfolio. Partnert a strategic that will give them partners discretion. Mark zuckerberg said his personal goal for 2018 is fixing facebook. He posted his objectives on his facebook eight. The social network has come under criticism for failing to prevent russia from meddling in the 2016 u. S. Election and not doing enough to curb hate speech. Zuckerberg saying his company has a lot of work to do. American consumers were very lastdent in the economy year. The Consumer Confidence index hit a 16 year high with limited inflation and record stock prices boosting sentiment. Sales also. Ay that is your Bloomberg Business flash update. Up next, forng once, oil is not the culprit. What is dragging down Retail Stocks . The chart that you cannot miss, coming up. This is bloomberg. Scarlet scarlet fu. Whatd you miss . Of explanation for why inflation remains so tame. Theres lots of explanation set of been given, what about the continued growth of Dollar General . In contrast to brick and mortar retail, Dollar General has been steadily adding store locations and has now got almost 14,000 stores. A 7. 5 increase, the fastest and growth in a dozen years. It will add another 19 stores in fiscal 2019. Rosenbergs head is not so excited waning not sure why anyone get so excited when you have a world where price killers like Dollar General just keep adding more stores. Very impressive. Oil, we been talking a lot about that. Texas intermediate hitting 62 a barrel today. Typically with oil prices rise, you think higher prices at the pump, less money to spend. The correlation between Retail Stocks which are the blue line and the oil price are both going up. Retail ist outperforming could you can see the green at the bottom, thats the correlation. Normally it is red, now it is green. It does not look like people are worried about the oil rally at all. People are just bullish overall, they are excited, its a sign of growing economy. Unlike from the past several years, the oil rally is not spooking investors. Julia tax reform, everyone is spending those extra pennies in anticipation. Lot, given the a valuation in the United States right now, its a good day to talk about this when we see the dow topping 25,000. But im looking at here is the s p 500 which is the white line. Marketsludes emerging and developed rockets in here now. Im showing you the comparison, the priceearnings ratio waist on projected profits for both of these. This is a december 29 report from riverfront investment group. The advantage we can see has never been this big, are the discount hasnt been this big since 2008. Now appears to be a good time. Scarlet lets look at what is happening in the u. S. Record highs for the dow industrials. This is bloomberg. Julia whatd you miss . The dow surging past 25,000 today and the other major averages all at closing records. Im julia chatterley. Joe if youre just tuning in live on twitter, welcome to our closing bell coverage every weekday from 4 00 to 5 00 p. M. Eastern. Scarlet lets begin with the market minute, were between 5000 for the First Time Ever in the dow industrials. Record highs once again. Dayits the Third Straight of record highs on the third trading day of 2018. Of course financials are leading the way as well. Green all around. Lets start with the red. Lets talk about sprint. Tough times ahead for sprint because the company had hired industry veteran michael combs to help revive the company, which is still dealing with the collapse of its deal talks with tmobile in november. The stock falling as much as 6. 8 . Lower. Ds also they reported disappointing samestore sales for the month of december. Forecast alsoofit missing estimate. Tesla only off by. 8 , all things considered. Investors still giving e. On most elon musk the benefit of the doubt. About jeffking sessions in the federal government plan began adding confusion over what is legal and illegal when it comes to cannabis. Joe lets take a look at the Government Bond market. To your yield up to 1. 96. That is the story, that relentless march higher. 2. 45 ,year yield at which means if you do the math at the spread is now below 50 basis points. People have been watching that for a while. There you go. I saw people talking about this earlier, there has been a rally shortterm, if you used to think about greece as a credit risk, which the market clearly no longer does, its still kind of wild how far it has all in. Scarlet what a strange world we live in. Lower ine dollar index the wake of the report showing private payrolls rising last month. Take a deep dive into my , weve beenw talking in thusly about the weakness in the dollar, coming even as we see the u. S. Economic surprise data at the highest level this millennium. Normally strong Economic Data would drive demand for assets in that country. That divergence is quite interesting to look at. The dollar rand, the South African rand skyrocketing to its best level in more than two years. We saw the election of the Ruling African National congress, seeing optimism about the countries outlook. Analysts are saying dont get too excited, perhaps the market is getting ahead of itself but right now the run is that the twoyear high. Oil and gold rally continues its care. Oil at 62 a barrel at one point today, and gold continuing its gains modestly. Still about 13 1300 an ounce. Lets bring in mike reagan. We keep talking about how equity indexes are at record highs. It feels like we are obscuring the dow, which has been a strong index. It really has. Its interesting to see what has been driving it. Aeing has contributed thousand points to the dow since President Trumps election. Probably because the way the dow is rated. Is weighted. United health care, goldman, caterpillar, 3m all adding 500 points each since the election. Boeing is twice as important to the dow as apple is to the s p 500. Joe that is pretty impressive. Big picture, i think in our minds, new year is a time to reset coming years resolutions and stuff like that. The market is like it just didnt matter at all. People had this mentality year, you needw new leadership, we have the steady grind higher, tech is probably going to lead again. Joe i know we are only three days into the new year, but is there anything we can say about it yet . The fascinating thing is the massive commodities rally. The rapid increase in commodities, the futures , energy, index materials shares are in the lead early in the year. Obviously the dollar is on everyones mind right now along with the flattening yield curve and the linkage between the two. A lot of handwringing going on this year as far as the relationship between yield differentials and the dollar, not really following some of the old textbook things that people look at. For now, its really very much of commodity striven story in both the stock market and commodities market. Be demand ledd because everything is going to a. The economy is looking very happy right healthy right now. Not just the u. S. Economy, the Global Economy. Looking at global pmi, its hard to find anything to get nervous about. That alone will obviously make people nervous. Goldilocks, like everything firing on all cylinders type of situation that should keep the party going. Oil at 80 seem sort of hard to believe, based on the notion that the frack ares will just increase output in the u. S. That will be an interesting call to followup on. Rising begin oil prices , every time someone brings it up i think of inflation. The price of oil has been transitory one way or another as described by the fed. Breakeven rates have been steadily increasing as well. Inflation expectations are getting a bit loftier. Peoples Inflation Expectations are basically where the fed target is. The breakeven has been above 2 in this business cycle, so its not anything brandnew, but its something people are keeping an eye on as a potential risk. Joe on the markets live blog that you edit, what are people saying about the yield curve . What is the buzz about where that is going . Michael the kneejerk reaction is this is terrible, the yield curve flattening. I do think weve shown over and that its really considered a strong signal. Distance and the yield curve tends to stephen again before the recession takes hold. Julia the fundamentals matter. Thank you for that. Will talk with torsten slok. From your, this is bloomberg. From new york. R im Mark Crumpton with first word news. Islamic state is tiny responsibility for a deadly suicide bombing in afghanistan. The New York Times reports at least 20 people were killed in thursdays attack, including a number of police officers. The bombing took place as officers were monitoring protests by shopkeepers in eastern kabul. The u. S. Is suspending Security Assistance to pakistan. The state Department Spokeswoman made the announcement today during a briefing. The u. S. Was already withholding 255 million in military aid to pakistan as the white house reviews the nations contributions in the fight against terrorism. The United States treasury today impose new sanctions against five iranianbased companies. In a statement, treasury secretary Steve Mnuchin said the sanctions are aimed at key entities involved in irans Ballistic Missile program, which the regime prioritizes over the economic wellbeing of the iranian people. The statement also said that more sanctions are likely. Is Trump Administration promising to open almost all u. S. Coastal waters to oil drilling, including those off california and florida. The proposal released today by the interior department is proposing 47 possible options of drilling rights in more than 90 of the u. S. Outer continental shelf. Global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. I Mark Crumpton. This is bloomberg. Julia whatd you miss . Tomorrow we get jobs data for december. ,ets bring in torsten slok chief International Economist for deutsche bank, and he braved the snow to come here and see us. What are your expectations . Above, its a little and unemployment of 4. 1. The thing joe and i have been talking about for long time, wages, we think its relatively slow going, 0. 3, which bring you to 2. 5 on average. Joe can we just pretaped tomorrows segment and do the whole thing . Then we will run this tomorrow. I think its unbelievable that the market only waits for inflation as usual. Were still not quite seeing the actual inflation data. Rarest parts of the labor market index, were seeing signs of Wage Inflation but were just not seen it in this report that comes every month. Scarlet what are the patterns we can extract from what we do see . Torsten one thing that is important, if you look at wages for lower skills and lower education, weve seen a fairly significant lift in Wage Inflation. Minimum wage has gone up, the retail sector, its a tight labor market. Skill and low education part of the labor market. The mystery is why the Unemployment Rate for people with College Degrees is 2 . Were still looking carefully at what is the composition of where wage growth is an jobs. That will be very important tomorrow. Joe its an interesting dichotomy. Can some of it be explained by the Labor Force Participation rate still being so subdued . If the wage growth is more at the low end and we associate people whom after get out of the workforce and not associate them with people who are highly educated, it doesnt totally explain it. Torsten also theres a lot of with people who are on the fringes of the labor market, its getting more more difficult to get people to come back with low skills into the labor market. Nevertheless, we still see people come back and were seeing nice wage eanes at the bottom of the income distribution, but were not seen it yet at the highend. One reason is the highend used to be finance, real estate, and though sectors are not expanding as the medically as it were in 2006 and as they were in 1999. Nevertheless, it remains difficult to explain what were not see more wage pressure across the income distribution. When you look at the labor market, the dynamism is really at the lower end. People are just hanging on to their jobs for dear life at the top end. Torsten thats exactly right. If you have significant Corporate Tax cuts, and weve talked about whether this will be used for buybacks or used for thestment, the intent of decisionmaking process, can you put anything toward whether or not they will use it to hire more workers or whether theyll look at the workforce they have perhaps give them a wage rise here . Torsten theres a real risk that were underestimating a powerful the fiscal package might be. We lower the Corporate Tax rate from 35 to 21 and ask how much would that lift gdp . 0. 2 , which is relatively small. What if it actually leads to more hiring, what if you have a behavioral change away from just doing dividend payouts to more hiring and more cap thats more spending . That are some upside risks we could see a change in hiring and potentially in wages as we go through this year. Scarlet when might that become a parent when might that become apparent . Torsten in the next few months if Company Start turning around, and we do have anecdotes of companies that will pay more bonuses and higher wages, it could potentially come in the next few months that both wages and hiring will start to rise to the upside. For godot. Ng up, we willt discuss income inequality. We have a couple of charts to show you. This is bloomberg. Scarlet whatd you miss . Plus,w at a record 25,000 the Global Economy firing on all cylinders, but income equality, particularly in the u. S. Is worse. This is borne out of something you put together for your clients. You get a lot of questions from your clients on income inequality and what ramifications that has for equities, for economics and bonds. Torsten absolutely. The issue is there is this thing lingering in the background, that societies, not only in the u. S. But in europe are becoming more and more unequal and inequality is just getting worse and worse. The question becomes, how does this matter . Will this trend be reversed . That thist any sign is reversing in any country. Julia the first chart for me is actually quite shopping shocking. 30 of homes have no wealth. Its actually quite shocking. You see it evolving over time. Scarlet right now we are at a record high. Torsten the latest data for 2016 is at 30 . Households have essentially no wealth other than their home. Its at the highs level basically ever since i started measuring this. Prices are essentially at the highest level ever and youre seeing the median family measured as how many people do not have any wealth is basically at the highest level. Chart speaks to the importance of housing wealth. It shows the median family net worth, despite stock and home prices, we are still nowhere near precrisis levels. Even with the stock market going gangbusters, because of the housing collapse in the loss of equity in peoples homes, we are nowhere close to that. Torsten this chart shows the median net worth for house kohls households. The average includes all the millionaires. This shows the median is a lot lower than even where it was in 2007. Household median network is only 78 thousand dollars. Down from the 119,000 that you saw in 2007, so it is a significant drop relative to where it was earlier. Illustrates it broadly for the United States relative to other countries, to what degree we have got to with inequality. It measures how much income has to be redistributed, how big a share of income has to be moved around to make everyone even in society. The higher the number, the more uneven society is. The u. S. For quite some time had the highest coefficient, but what is also important is this has been deteriorating, being going up, for all countries. Its not only in the u. S. We are seeing this change in income inequality. It is also another countries. Bys true not only by also technology, globalization, polarization of education. There are a lot of complex factors that are the reason for this. The bottom line is, why is this important for investors . These trends are not about to reverse and theres nothing in the 80 pages we put out that show or reversal of this trend anytime soon. Scarlet if thats the case, it will somehow manifest itself in pick and how people align themselves politically. Torsten that of course remains to be seen. We know that Different Countries have seen his swing to the left, and others have seen a swing to the right. But we feel confident saying is the source ofy is populism in many different ways. For investors who worry about the future for the next few years, not only in the u. S. And globally, who worry about what populism might do, its quite important if these trends continue or not. Joe defenders of the current system, others might look and say financial inequality is very have but in the u. S. , we such a dynamic economy, and even the relatively poor members of our society are effortlessly wealthy by historical standards, other standards at the entire globe, so the price of a wealthy, Thriving Society overall maybe that on paper, some people have Incredible Bank accounts and assets to financial assets. How do you respond to that, what are the problems created specifically by inequality even when people in america by many standards are quite rich. Torsten the trend in inequality were things that gotten more and more unequal has been associated with populism. People who measure populism show there is a decent relation more inequality and populism starting to pop up. Both to the left and right side of the political spectrum. Your right to say this is not a political statement about we like this or that. We are just saying there seems to be some correlation between what inequality has been doing and what populism has been doing, and therefore, openly, the risk and challenges that investors need to think about our the consequence of consequences of populism Going Forward. Also athere is divergence of the pattern of older voters versus younger voters. Youve also brought a chart that shows the median net wealth is accruing increasingly with the older portion of the population. That is also worsening over time, but its the this is critical. Torsten the millennials network has been going down. The bottom line is, it certainly the case that the older generation is getting more and more, and the Younger Generation is getting less and less. This opens up the discussion about what are the consequences of this. Its a very complicated issue and complex problem. Its important to take that into account. Julia and the blue line is prime age, 4554. That has also deteriorated. From 1989ou can see up to today, it is basically going down. , thanks sorsten slok much for joining us today and coming in on this snowy day. From new york, this is bloomberg. I am Mark Crumpton with first word news. Afterwards that hours after a personal attorney for President Trumps sent a ceaseanddesist letter to Michael Wolff and the publisher of the upcoming book on the president , Michael Wolff announced it will hit shelves four days early. The book comes out tomorrow. It seeks to portray chaos and incompetence inside the administration. Michael wolff took to twitter to thank President Trump for the publicity. The president says chain migration provides a gateway for terrorism, he made the statement as he sat down with republican senators to discuss the future of immigration policy. Hundreds of thousands of young immigrants brought to the u. S. Illegally as children remain in limbo. Ahe president ended the dac program last year. President trump any legislation must secure the border border and lets give immigration officers the resources they need to stop illegal immigration and and thep visa overstays legislation must end chain migration, it must in the visa lottery. President trump says he hopes the overhaul will attract democrats support. Two republican congressman want general attorney general sessions to resign, mark meadows of North Carolina and ohios jim jordan says Jeff Sessions does not have control over the Justice Department and call recent information leaks from former fbi agents and doj officials alarming. It isontinue quoting, time for Jeff Sessions to start managing and a spirit of transparency to bring all of this to light and stop further violations. After heavy snow created Hazardous Conditions throughout most of the northeastern u. S. Today, the region can expect a belowill of 2030 degrees zero in some parts of the region , nearly 4000 flights grounded because of the harsh weather with temporary closures in place at jfk and laguardia airports. Global news 24 hours a day, powered by more than 2700 journalist and analysts in more than 120 countries. I am Mark Crumpton. This is bloomberg. Lets get a recap of the market action, financials led the way with stocks skating with the dow, s p, nasdaq with new record highs and the dow above 25,000 for the First Time Ever. Julia you cannot have missed the blizzard conditions battering the northeast, the storm call the bomb cyclone. The coast with strong winds and more than a foot of snow. Natural gas prices are skyrocketing to 60 times the going rate and making the fuel much more expensive in the United States and anywhere else in the world. Jacob meisel is the cofounder and chief meteorologist, great to have you, thank you for braving the snow. Tell me it will get warmer . Of cold andfew days this weekend will be brutal but give it a few days and it will slowly ease off. Julia defined brutal . The negativeinto teens, windchill advisories will likely go up across the northeast. Next week it will start to ease off. Scarlet no precipitation and it is that cold. This weekend will be dry across the northeast. Joe a lot of interest with what it means for energy markets. What happens when you get such a sudden and intense burst of cold and snow . The u. S. Energy grid is very diverse and able to handle it pretty well. You saw spot electricity and Natural Gas Prices spike when the first goal came on an elevated for a few days. They are starting to pull back today as the goal gets more regionalized, generally in the northeast. Teacher prices like natural gas futures, there was a future prices like natural gas futures, they were elevated through the week but fell back today in hopes we will turn warmer. As muchres did not move as the spot markets because we know we had the production and supply to withstand the cold. Scarlet the fact we are slowing snowing and up to our eyeballs in natural gas and crude oil is a good things. Especially natural gas. Scarlet temperatures will get warmer, how does that change the dynamic of how people position in the gas or electricity . There is a huge split from what will be really cold too much warmer. A lot of the futures markets took the recent cold in stride. They were elevated and state elevated for a time based on the risk of the cold could stick around. As soon as it was clear the cold would not sustain, they pulled back. Joe this is weeke climate models for three is predicting significant warm up across the country. Is aume model sizable warmup in the week three timeframe for the country and we expect energy to temporarily pull back. Julia define warmup . 10, maybe 15 degrees above average in some parts of the country and this looks to be a national warmup, a week where all across the country, we will be flooded with mild, pacificare. Pacific air. Joe it was 25 out because it felt warm so i look forward to 35. Julia what about the widow maker spread. The march, april spread on the natural gas market. Spread got going this past cold risks, this is the spread. It tends, when concerned the National Natural gas market is, april is the first month we inject gas into storage. If there will be a supply shortage, this is what is important. It take of the past week on the cold risks but today pulled back as did the entire natural gas futures on the easing concerns about the gold. Traders went back to their complacent stance that in the shell era we have enough production to produce ourselves out of any problem. Joe trading aside, different structurally happens in april where the industry and the inventory starts to put it into storage. Lets set you get a really cold first week of april, does that mean you could have incredibly volatile trading . Is it timing why such that the market is vulnerable right now . It depends, the market is more vulnerable as the winter moves on and you deplete stockpiles, you reach a critical point where losing the 100 billion cubic feet could really skyrocket prices. No indications that will be the issue because of the warmth later in january but if stockpiles are far below average and you severe cold late in march and april you could he wild swings, like what happened in 2014 were stockpiles were low and a severe march gold but no indications of that yet. Mark cold but no indications of that march cold and no indication of that yet. Scarlet is this extreme weather . In terms a few records of the cold and on genworth first, the first day on record where we hit amount ofa record natural gas. This is not your average cold. It will not be sustained enough to cause and in the natural gas market. Julia do we have any indication of what it will be like beyond january 28 . Very volatile. It is above average volatility for february, looking like it would be a bit warmer and recent trends have been colder across the midwest, ohio river valley, a warm south and a warm east coast are generally good thats into february. Good bets into february. Scarlet can you make it snow in colorado in february . Jacob meisel, thank you. His intelligence on the weather patterns we are seeing and the applications for natural gas futures and my future. , whyg up, unrest in Iran Protests are different than the protests that had royalty country since the 1979 revolution. This is bloomberg. Scarlet the u. S. Treasury announcing sanctions on five iranianbased companies it says are tied to irans Ballistic Missile program as the white house support protesters who have spent a week with demonstrations against the government. The number of civilians arrested in protests have near 1000. With his reaction and analysis of the unrest in iran and how the world is reacting is the senior fellow at the Atlantic Council south asia center. Why iranians are protesting, you look at their anger over Economic Conditions and how the economy has not done as well. How much can be tied to the sanctions against iran . The iranian economy has been bad since the revolution, 38 years with nepotism, corruption, huge state organizations that control large swaths of the economy. Sanctions, the architecture of the u. S. Eu, and United Nations sanctions have had very negative impacts on the iranian economy. They are by no means the reason the only reason the economy has struggled and the reason people are in the streets. Joe to what degree does the government in iran blame all of the problems in the economy on sanctions and the west and do what thats to what degree do people buy them . Iran has a history, since before the revolution, of blaming foreign interests and foreign parties for their problems. , in the it is justified 1950s the british and u. S. Spy agencies overthrew a democrat elected prime minister. The psychology of that and the memory of that is seared into the iranian consciousness. However, these protests have little to do with u. S. Policy. United nations policy or eu policy and have to do with mismanagement of the economy and protesters coming out, what is different in flavor with these protests, the protesters are coming out now, they are not the urban elite that came out in 2009. They are rural protesters coming out from cities and villages that are traditionally be base scarlet the hartline. Heartland. Lets call them the red states these are the red the base of donald trump like an that makes them noteworthy. Julia what about future policy direction Going Forward . We have seen some protesters calling for the death of the Supreme Leader and you have a battle between him trying to reform and them hardliners battling him, to what extent can he use this and bring torics, hardliners, on board see his way of thinking as far as reform . A good question, this is a shot across the valve for the regime and i think ronnie is widespreadmplement Structural Reforms in the economy and has been blocked by the hardliners. One of the biggest things he has tried to do is pull back these cash handouts that the firebrand former president mongo. Image on monday that they did to john gave t. Iran cannot afford them anymore and he has to pull them back. Going past these protests , he can use them and leverage them to strengthen his mandate and tell the hardliners, time is on our side and you backed me now and let me get the reforms through or we will have more protests down the road. Scarlet that would make it seem like he has control of the protests but who is leading them . Is there someone for him to negotiate with . The protests have gotten a lot of media coverage, but they are not large in scope. They are desperate and in different regions. There is no indigenous leadership or no demands. For the time being, a lot of people have gotten together. Thousands, maybe 100,000 or maybe 200,000. Iran has 80 Million People. In 2009, you had 2 million and three main people on the streets of toronto which you do not see now 3 Million People on the streets of tehran, which you do not see now. It is a lot of people caring grievances with the regime. Thethe President International community will make a decision over the Nuclear Agreement that was signed. What is better for the United States, a stronger reformed iran or a weekend of iran . The support of hezbollah, the , i struggle assad to see what outcome they would prefer . We have to say grade segregate the nuclear deal with the protests, the nuclear deal powers. L with iran and if the u. S. Backed out of the nuclear deal, which President Trump indicated he would like to, you will have an International Backlash and hardliners in a rent will point to that and try to deflect. The best thing for u. S. Policy is, however this is worked out, it is worked out in iran by iranians, not to influence it in an overt way. Scarlet a hard crackdown versus things just dying out . It went into the villages today, it is petering out. Willie completely go out . No one knows will it completely go out . No one knows. A burst last wednesday or thursday and we will see what happens in the coming days. Julia thanks to Amir Ali Handjani at the Atlantic Council south asia center. Rest trump steve bannon that risk and the future of the gop. Bannons splitve with donald trump go well for Corporate America and the gop . Robert nardelli, the former ceo of chrysler and home depot joined as other to discuss. Betweenurrent rift steve bannon and donald trump is unfortunate. Never a good time but with all the other distractions, you do not need that for the administration. You do not need it for our country. We have so many positive things going, the dow today, the board is green. We have a lot of role that in regulation. That rollback in regulation. Rollback in regulation. You hate to see this other level of distraction. Will the three wings of the party put the differences behind them for the tax cut and what can they do to continue it, where do they have Common Ground . They have to look at infrastructure, there has to be Common Ground there, driving around new york, and in the airports, 3000 flights were closed, canceled. There are areas of where they can come together, not only the Republican Party but the democrats could join in. You talked earlier in the segment about daca and what has to happen with immigration. There has to be some coming together for commonality for the good of the country. We have to set aside partisanship. It is like sports, and football when a team takes the field, they should all be playing for the brand on the front of the jersey and not the name of the back of the jersey. There are areas, i am encouraged that President Trump is getting Mitch Mcconnell and paul ryan together. When you think about the administration, there are a lot of cultural differences and when you run a business, it is important for harmony among cultures with businessmen and businesswomen, government officials, military officials, private sector and we have to keep bringing together, like when you do a merger and acquisition, Acquisition Integration have to be a core competency and if it is, it is a competitive advantage. That is true for the administration. Julia the steve bannon scenario was unfortunate but can it be fortunate, if you take out what is perceived as an antagonistic influence on the president , he can take more of a traditional role in helping public and lawmakers protect their majority. This is critical towards the midterm. You are exactly right, if the rift can settle himself down and apologies can be expressed, and you can bring the faction you mentioned, the state that steve bannon led, and it comes together, you have more unification than separation. Julia is that likely or difficult . Verythink they were supportive of steve bannon and what he stood for. He brought a portion of the gop. We have to make sure those individuals, the ones high financially supportive, see that, from an administration point, the direction we are going and the new regulations and new bills are for the good of the country and we need to set aside personality and be focused on what is good for the population. Both small, medium, and large business. Scarlet does this hurt or help the president standing with the leaders . I do not think so, hard to speak for all of them but those i have spoken with are pleased, almost 40 companies that immediately get a bonus for their employees as a result. Think about the repatriation of funds. Littleave done it a differently and suggested that 25 of that goes into a Government Bond directly for infrastructure. I would have suggested another 25 would have gone in strictly for Research Development and innovation. 50 , you let the companies do what they will and i hope they do not buy stock back because that is playing into the hands of the detractors and not necessarily true because all of us that have 401 k s or pensions are getting a lift. You hate to see them, what will happen is they will be brought brush to sate we are raising the stock price and putting money in your own pocket. Perception is not reality all the time. , the Robert Nardelli former ceo of home depot, and chrysler and ge power systems. Joe coming up, what you need to know for tomorrows trading day. This is bloomberg. Scarlet record high across the indexes with the dow at 25,000. Coming up, earnings from Constellation Brands tomorrow before the bell. , the bestbs report day of the month and we are excited about the segment. Julia do not miss the factory orders and herbal gets tomorrow at 10 00 a. M. Eastern. Scarlet that does it for what did you miss. Joe have a great evening, this is bloomberg. Is bloomberg. Is this a phone . Or a little internet machine . It makes you wonder shouldnt we get our phones and internet from the same company . Thats why Xfinity Mobile comes with your internet. You get up to 5 lines of talk and text at no extra cost. So all you pay for is data. See how much you can save. Choose by the gig or unlimited. Xfinity mobile. A new kind of network designed to save you money. Call, visit, or go to xfinitymobile. Com. You are watching bloomberg technology, lets get a check of the first word news, after heavy snow created hazards throughout most of the eastern u. S. Today, the region cannot expect to feel a win show up 2030 degrees below zero in some areas by friday. Nearly 4000 flights have been grounded so far with temporary closures at new yorks jfk airport and laguardia airport. The United States is is minting security to pakistan, a state Department Spokesperson made the announcement today. The u. S. Was already withholding 255 million in military aid to pakistan as the white house reviews the nations contribution to the fight against terrorism. Is Trump Administration proposing to open almost all u. S. Postal waters coastal waters to oil drilling, including those off of california and florida with the proposal released today by the interior department proposes 47 possible auctions of drilling rights. In more than 90 of the u. S. Outer continental shelf. The department of justice has issued a memo rescinding an obama era policy that helped states legalize Recreational Marijuana use