End of the thursday session. Function. E w m germany and france are lower. The u. K. Is higher. The stoxx 600 down for a second day after rising for fight for consecutive five consecutive days. This is the msci all country world index. The 14 day rsi at 80. A multiyear high going back to 1988. Cleverly and clearly overbought. It doesnt mean a decline is imminent. 78 gauge has been positive, of the time with average returns of 2. 6 in the 12 weeks after its rsi crossover of 14 week readings up 17. Something to consider as Global Equities go from strength spread to spread. Gold futures running into technical hurdles. They climb play one year high in september to a oneyear high in september. The difference between bullying futures, moving average convergence and divergence indicator, the white line at the bottom just there and the socalled signal line which is the red line just below it, has narrowed, suggesting the rally could be losing speed. He does a we could see further upside in prices. Resistancehat macy will take resistance the relative strength index to 17, matching the indicators back on september 8 when prices reversed. A lot of technical analysis. Lets get to palladium. A shortage of palladium has seen prices skyrocketing 2001 levels. It has led to a drop in physical holdings. That is the lower line right there. Palladium did jump by 56 last year. Etf holdings did post their third annual drop. Will meet this deficit to satisfy industrial consumers ap. Investors are also liquidating holdings to take profit. Theres palladium, one of the bestperforming commodities of last year. 90 minutes into the trading session in the u. S. Julie we continue to see stocks push toward highs of the session. The dow at a record on an intraday basis. Hotter than it has over the last 20 days on average. We have a broadbased rally with Energy Stocks the best of the lot here. Oil pushes toward highs, the highest that we have seen since march of last year or so. Crude oil up 1. 5 . Chevron and that some mobile participating in that chevron and exxon mobil participating in that. Ive been saying it is throw back thursday today. Weve been seeing these big industrials outperforming. Xerox is one of them. A wall streetn journal report that it may extend or expand its relationship with fujifilm, may have more joint ventures with the company. Those ashares moderating their gains. , some investors subscribing to the dogs of the doubt theory that doesnt explain the gain in boeing. It is continuing to rise. Transports generally have been doing well. The dow jones transportation average one of the early leaders here in 2018. It is up 1. 4 . The company predicted its unit revenue could rise as much as 4. 5 this year on pricing power. Its comments helping the other airlines as well. American airlines and ual also trading up. Finally, a look at the bond market. 12 million of 30 year notes coming to market today. Change ine yield basis points for the different maturities. The twoyear has gained the most fivepart. The most by far. The 30 year, so little change over the last year. Mark thanks a lot. Equity euphoria gripping most of the world so far this year. Some indicators showing investors embracing european equities. Joining us now is james smigiel, head of portfolio strategies at sei investments. Thanks for joining us today. How much of a risk to that these this is the stronger euro which has received a big leg up today on the back of those ecb minutes or accounts . James thanks very much. You are exactly right. The euro level is a key risk to our view. We look back at the performance of european markets you performance the outperformance was baked in the currency. The weakness in the dollar will tend to persist throughout the first half of 2018 but much to to a much less degree. 2018, we think the dollar will be more range bound relative to europe, even with the minutes today getting a more hawkish tone from the ecb. Its at the back of our minds. We dont think it will be enough to overwhelm the fundamentals, the strong positive fundamentals we are seeing out of europe. Mark what is the earnings outlook for europe . James the earnings outlook is broadly the same. We expect europe to be growing earnings at doubledigit levels. A bit less on the u. S. The more interesting thing is the potential for upside surprise in europe. The starting point with european shares at valuations which are considerably lower than the u. S. The opportunity for multiple expansion is much more acute in europe than here in the states. Vonnie youre the head of portfolio strategy. How are you tweaking the strategies in metals . James great question. Broadly, we remain diversified. Theres always unknowns on the horizon. Wehin our equity exposure, tend to overweight those areas outside of the United States. Japan,looking at europe, we are considering emerging markets, weve been holding back and maintaining that exposure so far. In the u. S. , we are looking for sector leadership. Arab view on u. S. Markets is still positive our view on u. S. Markets is still positive. We are expecting more valueoriented names to do better in 2018 after a long stretch of underperformance for the last five years. We are very skeptical of bond proxies. We are not calling for rates to be rising much above 275 for 2018. Still, we think there will be added pressure on those bond proxies with highquality such as the utilities. Vonnie before this, you oversaw the global fixedincome team. Im curious as to your read on the bond market the last few days and just generally in 2018. How are you looking at the fixed income allocations in your portfolios . James the two key stresses on the bond market facing investors this year, first, theres the removal of liquidity. Theres this interesting situation in the u. S. Where we will have a lot more supply in the market at the time when one of the biggest buyers is actually fading into the background. Just based on supply and demand alone, pressures are for higher yield. This mornings ppi print had a bit of a wrinkle to it. We are not going to read too much into any monthtomonth number. We are calling for a firming in inflation, particularly from Wage Inflation. Your earlier guest talked about this earlier. As we get into historically low unemployment and the fiscal stimulus from the tax cut comes to bear, we expect to see Wage Inflation bubbling up in the United States and even in europe. When you take those two things into account, we think firming of inflation around the globe and a supply and demand dynamic we havent seen in quite some time in the bond market we are calling for higher yields. We are not abandoning fixed income assets or duration by any stretch of the imagination. That is the good hedge to the risk on assets. We are counseling are investors to stay invested in fixed income. Vonnie how do you view bitcoin . Mark its down 11 today on south korea regulatory concerns. Are your clients interested in the cryptocurrency and its peers . Jon the interest is certainly there james the interest is certainly there. It is a frenzied environment. We view it as pure speculation at this point. The idea of having a medium of exchange a currency outside of any state actor certainly has its advantages. We are too early on in the development of any of these cryptos to qualify as a strategic investment in a clients portfolio. Your he much a venture exposure. Very much a venture exposure. If you have room in their portfolio, feel free. They should make up a small portion of your overall allocation. Mark what does it take to change that viewpoint when it comes to your clients portfolio . James really, it is just time. An understanding of how this will develop within the Global Capital framework. What regulations are coming down on the horizon. Can bitcoin and other cryptos evolving . N their can they act as a store of value . Can they provide a broader access to a medium of exchange . We are seeing those things. We are very early on. We are not at the point where we are calling bitcoin or any of the currencies a fraud by any stretch of the imagination. Very early venture type investment and should be treated accordingly. Vonnie thank you for joining. James smigiel of sei investments. Time,ey for the first states will be able to impose work requirements on their medicaid programs. The Trump Administration issued guidance today on how states can provide recipients volunteer in their community. That could increase the number of americans without health insurance. The Justice Department is forming a team of prosecutors to investigate Drug Trafficking and money laundering. Sessions filed a report that the Obama Administration prevented drug prosecutions related to hezbollah for fear of jeopardizing a nuclear deal with iraq. In southern california, rescue crews are searching for survivors from devastating mudslides. 17 people were killed earlier this week. Another 48 are still missing. One of the architects of the u. K. s departure from the European Union says the country should take a second vote. Nigel farage says a second brexit vote would settle the matter once and for all. He thinks the percentage would vote to leave would be larger than the first referendum. 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. Bad, wasing up, was it m s and tesco . We will break down the health of the u. K. Consumer, next. From london, this is bloomberg. Vonnie live from new york, im vonnie quinn. Mark live from london, im mark barton. The Holiday Season didnt bring many gets for retailers here. Dropping tesco and m s after underwhelming christmas sales. Andrea. Us with more, was it a super thursday or is that a misnomer . Most of thee updates were disappointing. Mark we were sitting here last week we were talking about next. You are damping the enthusiasm. Maybe we were right to be enthusiastic about the grocers. Earlier today, they stood out. Tesco was expected to be the clear christmas leader. They had a disappointing christmas. We got an indication this might be the case with market share data coming out showing tesco had been outperformed that wasnt expected. Mark tesco one might have assumed would do better. What about m s . Where did it not stand out . Where did it disappoint . Surprised the reaction to m s was so extreme. What has spooked people is the food business. Weakening over the last few quarters. They said we did well in the indulgence products. ,here we did and do so good those lowerpriced products. Shoppers simply went elsewhere. The valley wasnt there to encourage consumers to shop there. Didnt didnt do so good, those lowerpriced. Roducts vonnie this is a tesco story rather than a consumer story. Thats right. It was badly affected by a wholesaler which supplied their tobacco and some other food. Even if you excluded that, the results are still disappointing. Tesco is in the middle of a big takeover. They needed to show great momentum to convince investors to back the deal. It didnt provide that. Vonnie shares are not as high as they were a couple of years ago by any stretch of the imagination, but they had been on quite the tear coming into the christmas period. What happens now . Does there need to be a change at the top . The key thing that will be approved. E deal gets the shareholder votes are at the end of february. We will have to see how the share price performs up to then. Some shareholders are unhappy with the deal. The fall in the share price means the price for booker is lower. You could have two sets of unhappy shareholders. Mark they need this deal. Looking at the Retail Sector in u. K. , from what weve seen, give us a general up some. Whos winning and who is losing . That is all inflation. That is all food price inflation. They didnt have to do anything. The extra money we are spending on food, we are not spending on clothing and gifts. This has a link some credit insurers have withdrawn. Week,what a day, what a what a month. Exciting week. Super thursday. Vonnie great stuff. Still ahead, we look at brent. Thwti crude rallying. Brent getting close to the 70 threshold. This is bloomberg. Vonnie live from new york, im vonnie quinn. Mark live from london, im mark barton. China is growing dominant on the world stage, causing concern in the heart of europe. Germanys economy minister tells the region it is to rethink its approach to asias biggest economy. Matthias does europe have a strategy . Did the americans have a strategy . Towe have a common strategy go along with this challenge . This is the main question. Yes, we need an answer. Geoeed an answer strategically. Mark calling on southern economies to back chinas business on the continent. Matthias we cant look in detail in certain investment coming from different parts of the world. Including china. What we wanted in that was a germany, france, Italian Initiative with a legal base for people evaluations of this kind of investment and the possibility to say no to this kind of investment. Mark germanys deputy economy minister, Matthias Machnig speaking to us earlier. Vonnie time for the latest Bloomberg Business flash. Walmart is capitalizing on the tax overhaul to stay competitive in a tight labor market. They are boosting the starting hourly wage to 11. They are also giving up one time bonuses. Delta forecasting higher airfares this year. They are expecting revenue will q1, the biggest gain in almost four years. Rentstan apartment falling last month. 2. 7 . Rents down landlord have been making price cuts. Jonathan miller will be on bloomberg markets. Do tune in. Mark taking a look at where european equities are trading as we moved to the close. Three minutes to go until the and of todays session. The end of todays session. This is bloomberg. Mark this is the european close. Stocks finishing the day in european trading. Lets take you through the market reaction. Five Industry Groups rising today. Basic resources leading the advance. Oil and gas rising. Chemicals down. 25 . Miners rising for a sixth session. A lot happening across the globe today, including for pandora. Shares earlier were down 13 , the biggest decline since august. They will finish down 11 . Revenue from last year will be lower than previously expected after a number of external factors. This is the danish charm bracelet maker. Pandora lost a quarter of its market value last year. Speculated against the stock Short Interest peaked at 12. 8 . Share capital in november that is pandora. M s. Is tesco and wt investors appointed disappointed. The biggest decline since june of last year. M s down by 7 . Both struggling with Consumer Sentiment being described as fragile, volatile. We have brexit related price squeezes. Tesco was a genuine after investors were expecting it to outperform haveeers because grocers outperformed nongrocers so far this year. Ets finish up with up 0. 5 after it became more selective with its retail points. Gained by 7 excluding currency shifts. Demand for luxury goods surged last year. , cartier up by 1. 5 . Back to the 2. 56 level on the 10 year. All the jitters of yesterday and the possibility that the admin assertion official in china has said that maybe china was pulling back the market has calmed again. We are still above 2. 5. The Canadian Dollar has been on a tear with great Economic Data out of canada. A bit under pressure today thanks to nafta negotiations stalling. Some conflicting signals out of the Trump Administration. Nymex crude above 64 a barrel. We just saw brent hit 70 a barrel. Down over 3 . I will have a look at the view mw today. This is world markets. I will have a look at wm today. This is world markets. In the u. S. , we are green. Mexico not having such a great day. This might be an anomaly venezuela. That is columbia. Columbia is higher today. Mark well done. Oil trading at levels not hit since 2014. Crude has been on a climb since for a culmination of opec production cuts and you political risks and equip and failures. Geopolitical risks and equipment failures. Brent crossing 70 if you seconds ago a few seconds ago. Good timing. Reasons through all the why we have seen this real leg wti. D brent and th story of venezuela, libya and nigeria continues. As no great surprise, which is good for this market. Finally, look at the shape of the curve. It doesnt matter whether i think prices will go up or down. If i sit on the curb for a year, i will get a return. We are heavily in backwardation. Mark i know you dont tell us where prices are heading. We are next where next . That is a key level for us. People are saying at what point does opec come back into this market and try to talk it down . Weve had 2. 5 years of opec taking the price up. Now, it is beginning to look quite dangerous for them. The shale producers are hedging. That guarantees supply for the next year or two. That will make it difficult for them to manage the market. Vonnie what would be the ideal price for opec . Art consensus seems to be around 60, maybe 65. Shale starts to expand rapidly. A lot of opec members really need the money. Of the socialtext unrest weve seen in some of these countries, its important that they maintain this prices. Vonnie why are we seeing such drawdowns in the United States . Demand. Part of it is we always talk about supply and rightly so. On the flip side of this, demand has been pretty strong. Look at the stock market to see that the Investor Community is pretty bullish on the Global Economy over the next year or so. That is shifting through into demand. Things are starting to look better mark are you nervous about Commodity Prices broadly . Commodities man. We were talking about palladium earlier. I was telling people about the basic resources component of the stoxx 600, at its highest in six years. What are the main areas of concern from where you are sitting when it comes to bubbles or prices going too far . Stuart theres no doubt that theres a sort of public going on in the smaller commodities. It really is madness out there. Metals, i dont think theres a sense they will fall off a cliff anytime soon. It comes back to Global Demand is pretty good and supply hasnt caught up. Producer, youve cut your costs. These prices go up, your margin start to look a lot better. Mark we were talking about the longevity of glencore and others. How things turn. They are ready for the next downturn. Investors have been quite aggressive in terms of saying we will not go back into a period of massive m a. We are still seeing that discipline. Within the oil sector as well. We havent seen any megaprojects being announced over the last few months. We will keep our eye on it. Stuff. Great lets check in on the first word news. Confidencemerican has risen to the highest level in 17 years according to the new Bloomberg Consumer comfort index. Greater confidence in u. S. Economy and the buying climate. European Union Foreign ministers saying an agreement curbing Irans Nuclear ambitions must be says todaycy chief that the deal is working and that the eu remains committed to making sure it is an plummeted. Is implemented. In the u. K. , a new study warns the danger of leaving the European Union without a deal next year. Costcould eventually britain 500 million jobs. 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. Vonnie breaking news. Dropbox is said to have filed confidentially for an ipo. In the last funding round, dropbox was valued at 12 billion. Goldman sachs and jpmorgan said to be leading this possible ipo. Dropbox has filed for an ipo confidentially. This is bloomberg. Vonnie the house has voted to reauthorize the pfizer law that allows for surveillance earlier, the house rejected the amendment that sought to limit u. S. Surveillance. The limitation of spying on foreigners digital communications. However, that failed. The fisa bill is now through. It hasnt been a slamdunk. Some lawmakers were looking for sticker limits. It has now passed. Dropbox is said to have filed for an ipo confidentially. Bloombergs ipo reporter joins us to explain. Sources have told you that the ipo is filed. It is filed. We expect this listing to happen in the first half of this year. Dropbox is this 10 million filesharing company, one of the unicorns weve been watching whos been waiting for quite a while to list. We will be watching this closely. It comes in the ranks of spotify, another deal looking to list this year. Wall street into laquon valley will be watching this deal very closely because of how snap performed. It listed in 2017. Dropbox does have very Different Things going for it. It sells to businesses, the company said last year that it is Free Cash Flow positive and profitable. Through houston the ceo, drew houston, said last year they this company has distanced itself already from the likes of snap, which listed as an unprofitable social media company. Vonnie why in secret . Why is this whole thing so cloak and daggerish . Last year, the sec allowed all copies to file confidentially before listing. Companies, and allows them to file and have conversations with investors before putting all of this, financial numbers and trade secrets, out there for the world to see. Mark after spotify filed to go public its been a busy year. Which banks will take the lead . Goldman sachs and jpmorgan will be leading this deal. Pictures toaking fill the rest of the book. Goldman sachs and jpmorgan have extended credit to this company in the past. Jpmorgan led a 6 billion credit line last year. Goldman sachs has been involved in the credit and helping the company raise as a private company. You will start to see this jockeying start to happen among the firms to get a name on these bigger deals, especially as the rest of these 10 billion plus evaluation private Tech Company Start to move closer to the public market. Mark we had spotify last weekend dropbox today. What does this tell us about the timing . People on the street. 2 2017 2017great year point to is a great year. The quantity was one we hadnt seen for years. Now, with spotify and dropbox, adt looking to raise more than seemslion in its ipo, it theres a lot of momentum from these Tech Companies to actually get public. Which hasnt been the case since 2014. Inhave seen a big lull u. S. Companies deciding to get their cash from the public market. Vonnie why now . Why this quarter . S the final opportunity equity markets are still good. The buy side investors are still willing to snatch these chairs. Folks are starting to look at equities. A pc the groundswell of uncertainty from equity investors, that dampens ipo markets. If you are ready, the getting is good. You better get out and take this Company Public while theyre still appetite there is still appetite. Alex barinka, are ipo reporter, thank you. Go on thepo < bloomberg. You can click into the various different sectors. Offeringspos, other also. Mark time for the Bloomberg Business flash. Ferrero is on the verge of buying nestles chocolate business. They would pay 2. 8 billion. The brand includes baby ruth and butterfinger candy bars. In trial the British Energy company settled claims they overcharged california for natural gas. The company says the claims were entirely without merit. Higher after a report the company is in talks with fujifilm. Xerox and fujifilm already have a joint venture. The two were discussing various possibilities. A full takeover of xerox is in one of them is not one of them. Thats the latest Bloomberg Business flash. Vonnie time for our stock of the hour. Abigail it is expedient. Expedia trading higher after it was upgraded over at Morgan Stanley to an overweight. This reminds me of an upgrade we saw last week at bank of America Merrill lynch. Call was the idea that numbers are really low. If we look at a sixmonth chart, we see the Stock Plunged back in october. They had a terrible quarter and lowered guidance. Use the ee function or the earnings function on expedia, we see an interesting relationship over the last year. In white, we have the price. Expedia is flying high. Estimates in red were also rising. Was flying high and then all of a sudden the stock cut up the numbers caught up to the numbers. This is a low bar quarter. That guide down in the Third Quarter wasnt enough to reset things. We will find out that very second when they report february 2 when they report. Theres reason to think they will in fact not just meet but beat in a big way. The stakes are high. This is a really interesting chart. Years,e last five expedia has done very well. Check out 2013. There was a big selloff. In bearish break away a bearish break away. Here, the buyers over to the sellers. This is called an island reversal. Heres the overall uptrend. The sellers once again crushed the buyers. If they do beat in a big way, we could have a huge move higher. Meet,y miss or even just you could see this uptrend really falter. Right now, this looks a bit more bullish. Vonnie thank you. Up, battle of the charts. Botc in the s p 500. This is bloomberg. Mark breaking news. The Senate Banking committee will vote on the nomination of Jerome Powell as the next fed chair next wednesday. Just crossing the bloomberg terminal. The first of a few hurdles mr. Powell will have to overcome to become the next fed chair. Botc, taking a look the most telling and compelling charts of the day and what they mean for investors. Today, things off christine. Christine my chart is all about shoturies, japan, and a at rekindling a fitting romance. Japans purchase of treasuries after china made waves this week with speculation over its treasury holdings. Recent history shows that they have sold they sold ¥2. 1 trillion in october. Not quite a repeat of the record we saw in march of 2016. Take a look at the Market Conditions back then. The yen was just as strong in march of putting 16 as it is now march of 2016 as it is now. The yields are much higher. Thats why you see the cross here. Narrowed worr treasury yields moving higher in 2018. We might see a rekindling of this love. Mark always topical. You know i like my topicality. Vonnie should i even bother presenting . Mark always. Surprise us. Vonnie you know how we been looking at various different measures . Placed earnings pricetoearnings, the s p 500, trying to see if theres things that are overvalued. An interesting report yesterday citing opportunities. Having your money in cash as opposed to the s p 500. , . 43ollar in the s p 500 of sales and 29. 5 cents of assets. That is a historic low. The lowest since march of 2000. Maybe one good reason to dont bother buying the s p 500 and keep your money in cash. What opportunity cost versus fitting romance fading romance. Bill gross on the bear market. He joins bloomberg at 2 00 p. M. Eastern, 7 00 p. M. London. Do not miss it. This is bloomberg. The house water today the house voted today with a measure known as fisa that gives the Government Authority to review American Communications with suspected terrorists overseas. Today it was called controversial and president said it may have been monitored to monitor his campaign. Eliminatingveiled affordable plastic waste. Leaving the European Union will not lower standards and all existing eu regulations will be incorporated into u. K. Law. European Union Foreign minister nucleart limiting ambitions must be preserved. Eu foreignpolicy chain that the eu is working and committed to make sure it is implemented. She spoke and talks in