Equities. We will comedo, back to this in a second while we fix this. Vonnie i will check u. S. Markets first because we are 90 minutes into the trading day. The dow is up. 25 . The s p up. 1 and the nasdaq tax reform helping the. S. Profit outlook david from mainstay capital think the trading weve been seeing this year is equivalent to euphoria. Perhaps this wont end well. Theyre interesting when we contrast this to a great chart we have in the bloomberg. We are looking at the number of death without a 5 pullback or greater. We are looking at the number of without a 5 pullback or greater. The s p 500 in blue. We are looking at the number of days without a 5 pullback. We are on day 295. Week,eek, it was last it was day 292. You have to go back to 1965. One of the bestperforming sectors on the day helping the record high, the financial sectors. Citigroup and bank of america higher. We have regional banks higher. Behind this trend, not surprisingly, yields. The 10 year yield is up five basis points. Up for a fourth day in a row. That is represented in red. Haven bonds are selling off as stocks climb. The rising yield is giving a bit of a boost the bloomberg dollar index, up for a second day in a row. Pretty interesting trading action that we have here in the u. S. More record highs, consistent with what weve seen in 2018. Mark we are up, five days of gains, best run since november 1. I want to try you this chart. This shows the synchronized nature of the upswing in equities. The 14 relative strength index for all these top indices above world index,g msci asia index, emerging markets index the stoxx 600 lingers below 70. Also at a record high today giving you a sense of the upswing in global equities, this is the boj today. Yields rising today. The 10year and 30 the boj cutting its longterm purchases. We are talking maturities between 10 and 25 years. The move doesnt have any policy implication. Investors are right to expect the central bank to head towards the normalization in the longer term. The boj has been buying fewer government bonds since adopting that yield curve control policy back in 2016 when it shifted its focus to controlling Interest Rates instead of asset purchases. Earlier,inc in london rising to a highest in a decade. Global inventories dwindle, zinc is the white line. And has risen every day since december 19, more than doubled since the start of 2016. Lets talk u. S. Politics. Vonnie lets do it. President trump very close to taking a nominee for fed vice chairman or vice chair, even. It has been vacant since Stanley Fischer retired in october. Potentials include former fed governor Lawrence Lindsey and mohamed elerian. Other names were touted as well. Whomever the president chooses will have to respond to criticism that the fed should reevaluate its 2 inflation target. Joining us now, robert eisenbeis. Lets start with something very basic. What does the fed number two actually do . Robert theres some misconceptions about what the fed vice chairman does. The fed tends to change and modify responsibilities depending upon what people bring to the table. In the past, the vice chairman has quite often been the chief operating office are of the Federal Reserve officer of the Federal Reserve. Clearly, that is not what stan fischer did. Stan fischer brought to the table this international anutation as far as outstanding economist. His position was much more related to policy than it was the operations of the fed. And will really depend upon what skills the person brings to the table what impact they will do. Its a bit overblown to think that it is a critical position in and of itself. Its another governor position. There arent specific responsibilities that go with the chair. Vonnie who would be a good companion or seatmate to Jerome Powell . Robert in this particular case, you would like to have an economist in that position. He doesnt have that particular background. In this particular case, if Larry Lindsey were to be selected, he obviously knows the fed, hes been involved in the past, he understands how it operates, he would be someone who would be very wellequipped to be a complement to chairman powell. Mark phil dudley will have to be replaced. Randy quarles is coming in. A couple moreair, dovish members wont be voting this year. What does that mean for policy in the year ahead . Robert this is the really interesting part about it. Right now, we will end up with a situation after chair yellen leaves, there will only be three governors. As far as the fomc is concerned, the reserve Bank President s will dominate the voting. I can remember thats ever happened before i cant remember thats ever happened before. It depends on who gets dudleys position. The president of the Federal Reserve bank of new york is a permanent member of the fomc. Interestingly enough, the people who are the incoming members include a list of very accomplished economists. John williams has experience from San Francisco, Loretta Mester from cleveland and now, Raphael Bostic from atlanta. These people are not only first rate economists, but their views have been pretty much aligned, at least according to their Public Statements, with what the policy has been all along. What i think they will stick to and probably be a tad more hawkish than the current makeup inpresident s who were voting voted in in 2017. Mark it could be more than likely that we see more than three rate hikes in 2018 . Robert im not sure about that. Right now, because of the vacancies and all the rest of it, i think you will see caution to begin with. They will be data dependent. I know there were some expressions in the last minutes of the fomc about people being not quite so sure about whether the number of hikes they had forecastsin the sep would infect the realized. In fact be realized. They will be data dependent. It depends on how the economy evolves. Vonnie there were lots of people chattering after the release of the 2012 minutes from all the 2012 fomc meetings when Jerome Powell came on board wondering if there was anything statements that he made that would indicate how he might be policy stance wise now, six years later. Robert im not sure statementst you would see in the minutes then tells you much about how he thinks now. Hes been in the process, hes been in the system for some time. Hes been exposed to how things operate. He seems to be a person whose views evolved and hes a considered individual. We should be looking more at what his current speeches are than anything else. He seems to be pretty well aligned, at least from a Public Statement perspective, with whats happened. I understand that hes expressed a bit of concern about the qe policies. We are not in a qe world right now. I think we will see more of the same for the short run. Vonnie we saw yields rise overnight and a bit of a bounce for the 10 years, 2. 35 . To what do you attribute this . Will it continue . Will yields continue to rise here . Robert that is an interesting question. One of the things i did was to go back and look at the pattern of rates on the 10 year for 2017. They were quite variable. Theres a lot of shortterm reaction to whats going on in the marketplace. Theres a bit of nervousness at this point about where policy will probably go in the short run. , when you get a market like an equity market like we have, theres a tendency to shift holdings from fixed income to equities. Some of that selloff is essentially just a desire to participate in what everybody expects to be a continuing rally. Whether that is realized or not is another matter. I think the earnings season will be very important in the next few days to figure out where things are as far as economies concerned. As far as the economy is concerned. The jobs numbers werent quite as strong as perhaps they were in the previous couple of months. It looks like the Fourth Quarter will still be pretty steady. Vonnie our thanks to robert eisenbeis, Cumberland Advisors vicechairman. Lets check in on the first word news. More progress in the first highlevel negotiations between the two koreas in more than two years. After 11 hours of discussions, north korea and south korea agreed to hold military talks in further dialogue. The kim jongun regime said it would send a delegation to south korea for next months Winter Olympics. President trump will discuss immigration today at the white house with a group of 20 lawmakers. Congress needs to pass a bill to prevent a partial Government Shutdown. Republicans have accused democrats of holding that measure hostage to ensure young undocumented immigrants wont be deported. U. S. Military satellite launched elon musk spotted in orbit doubts about whether the mission was a success. Spacexond stage of the failed. Spacex is the rocket did everything correctly. A wall street trader who became one of bitcoins biggest champions is starting a Merchant Bank dedicated to cryptocurrencies. He wants to lift his new company, Galaxy Digital lp, in canada. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. Im courtney donohoe. This is bloomberg. Mark coming up on the close, theresa mays Cabinet Reshuffle becomes chaotic with senior ministers refusing to follow orders. What does it mean for brexit . That is next. This is bloomberg. Vonnie live from new york, and vonnie quinn. Im vonnie quinn. Mark im mark barton. The closing roughly 13 minutes. Theresa may is facing chaos as he attempts to reshuffle her cabinet. It was all smiles for the cabinet today, the first meeting of the cap and after the reshuffle behind the scenes, some senior ministers have refused to follow her orders. Ning us with the latest Something Interesting did happen. At 3 26 local time. An appointment. What was announced . A campaigner for brexit who continues to campaign for a hard brexit clean break from the eu. Shes quite highprofile. She was a potential threat to may on the back benches if make came back from brussels with a deal that conceded too much to the eu. You can to this appointment is keeping her inside mark is this the no deal brexit minister many were talking about . Its not entirely clear whether theres an additional role. Steve baker is another persons been advocating a hard brexit. He was brought into the government. Its been a repeat of keeping the intent the government. Mark this is the question that has been vexing me. Yesterdayeening resigned or didnt want to move. How does one not move when the Prime Minister tells you or nudges you not to move . To me, that is external right. That is extra ordinary. There was one job she wanted to do. She voted remain. Her constituency is very strongly remaining. She is now released from her responsibility. She could well turn into a rebel when it comes to brexit. Inch out for her reemerging a different role in parliament. May, it speakso of her weakness. What that means for brexit is we will have a difficult two months concessions will have to be made by the u. K. They need to have a premise there was going to stamp or authority to say this is the way we are doing it. The concerned people have been cant, whatif she kind of authority is she going to have when it comes to ling down the law in the cabinet laying down the law in the cabinet . The government still has agreed on what its trying to extract from brussels. That is a debate that still needs to play out. The cabinet is very divided. It will be interesting to see how theresa may handles that. Vonnie what is three some may theresa maywhy does keep making gambles that make her look weak domestically and particularly in new york . There are two ways of answering that. In the case of the election, the polls were in her favor. She thought she had everything to win by calling the election and then it went horribly wrong. On this occasion, she had to appoint a couple of people because you luster deputy at the end of last year she lost her deputy at the end of last year. It speaks to her weakness that she cant boss her ministers around. , many times it has been predicted that she will leave she has held on against all predictions. There is an eigh clear a clear candidate waiting to replace her. People on both sides of the Brexit Debate fear it may go the other side will win. Most, thewins the . Rexiteers or remainers as it one way is it one way or the other or the same . In the cabinet, she has pretty much maintain the balance. For tobacco deputy was a strong campaigner for remain. One a lot of strong comments the referendum. R de facto deputy was a strong campaigner for remain. Remainer. O still be a the balance in the cabinet has been pretty much maintained. I dont think that changes it very much. Replacediners remainers, but some like jog thatosborne is quite interesting. Mark thanks for filling us in. Vonnie straight ahead, european stocks are higher. U. S. Markets are also higher. Heres a look at some of the sectors today in the s p 500. This is bloomberg. Vonnie live from new york city, im vonnie quinn. Mark im mark barton with the european close five minutes away. Uses giveaways like netflix and unlimited data plans to add 1. 1 million customers in the Fourth Quarter. It was better than expected. Less than a year ago. Andomer growth for tmobile the other three major carriers in the u. S. Is slowing. A second airplane delivery that was driven by andnd for boeing seve737 787 jets. Take a look at whats happening to european equities. We are three minutes away from the end of the tuesday session. Stocks are rising for the fifth consecutive day. This is bloomberg. Mark live from bloombergs european headquarters, this is the european close. Im mark barton with vonnie quinn in new york. Stocks rising for the fifth consecutive day. Best run since november the first. Real estate and utilities lower today. Great start from goldman sachs. The world index enjoying its longest streak in history. The msci emerging market indextd at its longest streak in history. We think equity correction risk this years high after a strong rally and high valuations. We also think and equity benchmark is unlikely given the supportive macro backdrop. The words of goldman sachs. Lets talk about data. Eurozone unemployment. Joblessness in the eurozone declining to the lowest level since 2009. The 19to the evidence nation economy has found its feet. The Unemployment Rate falling to 8. 7 in november. Matching the estimate below a point it percent the previous month. Economic growth last year probably the quickest in a decade and the pace of expansion is forecast to be almost as fast. All looking upwards in the eurozone. Lets not talk about inflation or the lack of it. Portugal versus germany we are talking the differences between the portugal 10 year and the german tenyear. Calling time on recent gains. Portugal still looks attractive versus other euro area peripheral debt to current valuations reflect its positive growth story. Portugal by the way had the Top Performing european bonds in 2017 if you strip out the less liquid great market greek market. One of the big woody movers. Oday, up by 10. 5 today business will be distributed to shareholders by the end of the second quarter. Ts al ticets ce usa the top 50 billion. Shares are surging today. Vonnie itthe has been pretty frequent to have picked out the same securities and have not had much to say about them. Today we have a little movement. Look at the 10 year yield. 2. 53 . We are still talking about five or six basis points and this may open the way to 2. 60 . The becauses the pboc changed the range for fixing its Exchange Rate and the currency is back up to 6. 53. These are little signals as to how Central Banks are going to work in the next several quarters. Also higherndex is for a second day thanks to the rising yield. Its also a testament to how important the asian Central Banks are going to be in the coming years. That may be want to point out bitcoin. Its down for another day. 14,850. Trimming some of those losses now. Lets stay on markets. Equity euphoria grips the world. Withburger is here sentiment stands and what may come next. This wordwing a lot euphoria. Over a year ago everyone was calling it the bull market. Do you want this chart first . I really like that chart because i think it just shows the breadth of this rally. I like this one because it is not just u. S. Stocks. This is emerging markets. This is asia, japan, world indexes. The only one if you are looking at developed nations that isnt at overbought territories this is relative strength index. This measures the momentum and speed that the equity indexes are rising. The only one that isnt there is europe. Europe is atbought like 65. Its really close around the world. Really hard to continue to call this the most hated rally when he keeps going and people keep buying and the sentiment is there for optimism. Mark so many equities indices are overbought. Who is actually buying right now . The better question is who isnt buying. You look at individual investors, institutional investors. The other chart is individual investors. Survey ofe aaii individual investors. Say that they expect that stocks are going to go up in the next six months. Thats the highest percentage since 2010. So a lot of optimism in individuals, institutions. Mark is that a contrarian indicator or not . It depends who you ask. Some people say this means the end of the bull market because theres so much optimism. Morgan stanley has a more sobering view. Thisbasically say increases the potential that we get a shortterm correction. At some level it is just simple math. Built upto have that i optimism. A lot of wires in the market in order to have a run on the bank and their is a potential for a shock which could really send people running towards the exit and it would be violent because there is so much of them as been so many people buying. Vonnie is that why people dread the bully ands so much . Because something apocalyptic was about to happen . Hard tois level its actually expressed that view. We are talking about individual investors. If you look at prime Service Accounts from different brokerages to report this they are really having to hold their nose and continue to buy. Its very difficult to build a bearish case right now when nothing is able to shock equity markets. You can see it in the Options Market as well. The ratio is the lowest since 2014. Even options investors who typically will buy up protection because they are scared the games have gone so far cant do that right now because theres the chart right there. Since 2014 they are making a lot of money by buying calls and not making money off of puts right now. Ratio is notape the only one people are looking at. Peter lynch has his own. People who want to see this market go higher and cant find any reason for it not to have plenty of reasons for it to go higher. Absolutely. Its everywhere you look. Its quite remarkable right now. Marketsat happens to after they have reached all these sorts of levels . Its hard because if we are talking about this bull market span we havent really seen these levels of optimism to compare it to. Usually longterm this doesnt necessarily mean too much. We might need a quick wash of investors coming out from that optimism to pull back. What really gets people concerned is individual investors. They are the last people to the party. If the kind of people are there at the party are there any buyers left . Same time we have tax cuts lifting the market right now. Once that optimism from the tax maybe that is already priced in. How much can Companies Really improve their earnings to justify the market to continue to run higher to the levels that people believe they are going to right now . Burger, markets reporter for bloomberg news. Vonnie lets check in with courtney donohoe. The two koreas are technically still at war but today they made progress toward improving relations. The two koreas are technically stillnorth korea aga delegation to next months Winter Olympics in south korea and both sides said they would hold military talks and discuss plans for the next round of talks. Lawyers for President Trump are said to be discussing how he would handle an interview with special counsel robert mueller. According to the Washington Post he has raised the likelihood that he will seek to question the president in the Russian Election middling probe. The president s lawyers are considering how to set limits on an interview. China and france signed dozens of agreements today on a variety of topics. Among them nuclear energy, space technology, aviation and environment. Jinping macron and xi attended the ceremony in beijing. Unemployment in the euro area has fallen to its lowest level since 2009. The jobless rates fell to 8. 7 in november. Sign that the euro area economy has gotten stronger. Last years Economic Growth was probably the fastest in a decade. Global news 24 hours a day powered by more than 2700 journalists and analysts in over 120 countries. Im courtney donohoe. This is bloomberg. Up, we will continue to check the pulse of the Health Care Industry. The chief executive of express scripts joins us. This is bloomberg. Mark im mark barton. Vonnie im vonnie quinn. Ons is the european closed bloomberg markets. Many of the biggest players in the Health Care Industry are looking over their shoulders at amazon which may make moves to disrupt. For more on how executives are tackling the looming threat lets go to Erik Schatzker at the Jpmorgan Health care conference in San Francisco. We are bringing you the biggest of ceos in health care from San Francisco today. Tim wentworth the ceo of express scripts is with me now. Good morning. There is lots of talk in your business about amazon. , i want to talk about where your company fits is merging with an insurer. Its going to put a drugstore chain, a pharmacy benefit manager and ensure under one roof. How do you respond . We respond by doing exactly what weve been doing which is working with our health plans and clients to help them compete and provide the benefits to their constituents at the lowest cost and highest level of service. When we think about the culmination you just mentioned and you break it down it doesnt make care market better pbm to have a health plan inhouse. Weve got a hundred health plans we vertically integrate with today. It doesnt make them more formidable. It doesnt make cbs a better cvs a chain cbs better drugstore chain. Our health plans could do the same thing if we chose to do that. Our clients are going to look to compete with that model and look to us to go out and win, manage down drug cost and increase sales. Erik if being a standalone pbm is such a good idea why are you the last man standing . A greate great pbm the others got scooped up. When you focus on managing drug cost its the tip of the spear in health care. When you do it well it enables a broader set of great health outcomes. Completely how valuable it is to a drugstore chain to own a pbm. The pbm is a value creator and thats why we love our model. Cigna oror Humana Humana came along with an offer i couldnt refuse, i couldnt refuse it i guess. There is no question they understand the value that we give. The decision to own a pbm would be a significant strategic decision for them. They saw the perspective that are bored and shareholders have for our future opportunities and they were able to get their head around that we would have to be at least listening to that. Erik have you turned down an offer . I am not going to talk about conversations or offers. Erik hang on a moment. People want to know if you have contemplated this. We contemplate absolutely. We constantly with our board have an evolving Strategic Dialogue to say was the best thing for our model and the value that we create an right now creating the value that we are creating as a standalone and growing into next year from my perspective continues to be a good half. Absolutely we look at all alternatives. Erik what does anthem do now . They have some real work ahead of them to convince the market they can go and compete against our model and other models. Erik given the fact that one of their competitors aetna now has cvs as a partner. Might they reconsider their decision to end the relationship with express scripts . They always have the opportunity to reconsider. I dont know the contract they signed with cvs and how it would work in terms of their ability to back out of that. Our i would say is this, door is always open. We are going to care for the patients until the last patient migrates away. If they reconsider any time in the next two years i would welcome that. Erik the pbm industry has written up and down waves over the past couple of decades. There is a debate and controversy over rebates of course. Now generics are a big deal. What is the next wave . Creation value which is the bio similar wave. As we look out to see bio similars coming over the clinicallybased model where our Clients Trust us to manage their members in the choices their members are given to make is going to drop billions of dollars off the drug cost bills for our clients alone as those come to market and we substitute those patients the end of those products. Erik what happens if amazon gets into this business . What youve got to think about is what is this business . Erik thats why i phrased it so vaguely. I dont see amazon getting into the pbm business. It requires you to redirect to sites. T appropriate could they decide to get into the pharmacy distribution business . Or the Retail Pharmacy business . Of those cases we would welcome them if they can compete on price and value and clinical because what you see in the retail channel for because n the retail channel for drugs is about adherence and patient counseling and those are the kind of contracts we are building with cvs, Walmart Walgreens and others. I think the other pieces there are 30 million cash paying customers today in the marketplace and amazon could certainly work with someone like us to potentially bring an offer to those customers and i have said publicly we would welcome the opportunity to work with amazon to think that through as something theyre interested in. Erik daybreaks from eli lilly aid he would like to see company that focuses on claims processing for which it charges a fee. Of pbms being in the design of Health Benefit plans and paying less for drugs than the end customer gets doesnt make any sense to him. How do you respond to that . Dave is a great guy and we have a lot of regard for his company. Was all we did, the 34 billion that we saved our patients and clients last year alone with our Clinical Programs , drug choice and optimization programs would just vanish. Because daves company and every other form a company are setting prices in such a way that weve got a batch much bigger job to do. Erik is he overcharging . The would say they have set price at level that we think is too high. Even for our cash paying customers daves company played a role in helping us get rebates for a number of drugs that we can take to cash paying customers. Outlier orterally an would you make the same accusation of all big pharma . Most of big pharma would have to look in the mirror and justify their price increases and really struggle to do it in terms of improving value. Erik that is tim wentworth. Of expresseo scripts. We are live from the Jpmorgan Health care conference in San Francisco. Many more interviews coming your way. Schatzkeranks to erik in San Francisco. I want to mention that at 2 30 eastern eric is going to be back. He will be speaking with the ceo of medicare and medicaid provider 17. Aesident trump is hosting bipartisan meeting on immigration at the white house. Headlines have been crossing and president saying that representative Bob Goodlatte from virginia will be submitted immigration bill in the next few days. He also talked about the need wall for aaw fairly good portion. New york times is reporting that President Donald Trump will attend the World Economic forum. This is particularly interesting as the president would have run as the antidavos man. This is bloomberg. Vonnie President Trump meeting at the white house with republican and Democratic Senators to discuss among other things immigration policy. He just said that representative Bob Goodlatte will be introducing a bill in the next few days. Lets get to kevin cirilli. As far as we know from the headlines anything that we werent expecting out of this meeting yet . President trump according to the New York Times will be traveling to the World Economic forum in davos. His administration largely skipped out on last years event. President trump on the campaign trail was very much against these types of Global Economic gatherings. Reversal from his previous position to avoid them. It also is notable given that you have someone like Steve Bannons clout with republican certains greatly diminished. Someone who had really advocated against attending these types of global gatherings. That we areift watching and following here at the white house. Vonnie anything about the meeting that we werent looking for . Of thecrats coming out meeting suggesting they are still very much in favor of extending the Obama Administration stock a proposal daca proposal. In order to look that with the january 19 deadline that lawmakers on capitol hill must pass. To avert that Government Shutdown. The political battle lines are very drawn clearly. Democrats versus republicans. Whats interesting is that the president will need some type of democratic support in order to avert the Government Shutdown particularly when the continuing resolution gets to the senate because they need to clear whats known as the cloture threshold of 60 votes. Thats why the democrats are here. Else why the ministration is reaching out to democrats to try to get some type of deal. The president has said he wants to work with democrats on this but its unclear right now if we are going to learn anything new about whether they got a deal. Mark demos just got a whole lot davos just got a whole lot more interesting. You wonder how is America First his America First agenda is going to go down in davos. The bottom line is that with steve bannon out your seeing a shift in terms of how this administration is doing global outreach. It will be very interesting to watch the welcome trump receives overseas. Vonnie thanks, kevin cirilli. We will bring you the playback of the meeting any moment. Ceo kazuod, sony from las vegas. What are sonys next blockbuster products . We will be asking mr. Hirai. This is bloomberg. Met at thedent Trump White House where a group of 20 lawmakers discussed immigration. Congress needs to pass a bill by jennifer 19th to prevent a partial Government Shutdown. Republicans have accused democrats of holding that measure hostage until they can be assured that young undocumented immigrants wont be deported. The two koreas are technically still at war but today they may progress towards improving relations in their first highlevel talks in two years. The north agreed to send a delegation to next months Winter Olympics in south korea and both sides said they would hold military talks and discuss plans for the next round of discussions. British prime Minster Theresa mays attempt to reboot her cabinet has turned into chaos. Several senior ministers refuse to accept their new roles. Education secretary justine grady quit rather than take another job. In south africa more than 200 people were hurt this morning when a commuter train rearended another train. Officials blamed human error for