Melt away. All three major averages were at record highs early in the session. The russell 2000 late the declines. 5 . Caps down with the catalyst for this pullback today . What was the catalyst for gains earlier in the session . We did have earnings reports that came in stronger than estimated that there has been this continuing momentum trade where we just see more and more traders piling on including more participation from retail investors. Now it seems that is turning at least for the moment as we head towards the close of todays session. I noticed the 10 year yield. Earlier in the session we had seen it lower. Only by a small amount. Now we are seeing it unchanged. At one point it has been up slightly. A little bit of rejiggering in today in the major averages and other assets as well. At the groupsook on the move and was responsible for the pullback. We have real estate that has been strong throughout the session. Positive analyst commentary on the tower operators has sealed that. Materials and energy which have consistently been relatively weak their declines have been accelerating throughout the day. Dragsey are the biggest on the s p. Industrials have also rolled over. Been declining after announcing a breakdown of its Insurance Business. Lets look at the worst percentage performers in the s p. Under armour was downgraded to underperform at mccrory. The Company Might need to raise capital if its revenue and gross margin continue to deteriorate. There has been are new to talk about combining cbs and viacom. Bristolmyers squibb after finallyafter merck mosaic falling after some on over commentary positive sentiment surrounding nitrogen. Credit suisse making those comments. Mosaic down 5 . Lets get a check on the first word news. An extraordinary fourday sentencing hearing is underway in lansing, michigan. Destroys former michigan sports dr. Larry nassar who pleaded guilty to molesting young females at his Michigan StateUniversity Office and other locations is facing those he abused. Many of the survivors were victimized when they were teenagers or preteens. Some may he scared to share their experience. I was. I still am sometimes. There are some days that this horrifying experience fills my brain and i cant think about anything else. It left a mental scar that unfortunately will always be something that happened. Believer am a strong that scars become stories that you share and heal from each day as time goes on. The michigan attorneys general Attorney Generals Office is seeking 125 years in prison. The maximum represents a year for each of the 120 five girls and women who filed reports of abuse with Michigan StateUniversity Campus police. We will get more details about president Trumps Health later today. Dr. Ronnie jackson declared the excellentto be in Health Following last fridays exam at the walter reed military hospital. Aday dr. Johnson will provide readout of the checkup and will take questions from reporters. A manhunt is underway in kosovo for the killers of the leading serb politician. He was gunned down outside the offices of his political party. Authorities say he was shot at least five times by assailants who escaped in a car that was found burned out. A kosovo court convicted him of war crimes. That verdict was overturned in a and a retrial was underway. Seven people remained hospitalized a week after they were injured in mudslides that devastated the coastal california town of montecito. 20 people were killed. More than 500 homes were damaged or destroyed. Three people including a twoyearold girl remain missing. Global news 24 hours a day powered by more than 2700 journalists and analysts in over 120 countries. Julia lets get to washington. Lots going on as President Trump met with the president of cassock stan at the white cosmic stan cosmic stand catholics dan has asked stan mi of public is Head Policy Research at barclays. Great to have you on the show. Think they will kick the can down the curve once again. A ice i still think it is low probability event. This seems to be building on offices from that over oval office meeting. The reason i have this outlook is to go forward. It is in no raise interest to shut down the government. Republicans might try to dame the democrats put when you fully control congress and the white house people will pin a lot of blame on you. Past what policy issues have triggered a shutdown . Oftentimes its a larger spending discussion. Historically you had not really government shutdowns. We did a long review of this. You had funding gaps. President reagan was very good at using this as a Public Perception situation by talking about democrats overspending. Under president clinton and obama we did see lengthy shutdowns. Of annt have as much impact on the economy as some thought. They were over larger spending issues. Julia weve got a problem with immigration. Both sides trying to point the blame. The president tweeted today the democrats want to shut down the government over amnesty for all and border security. The biggest loser will be our rapidly rebuilding military at a time and we needed more than ever. We need a meritbased system of immigration. The democrats keep pointing to daca and a solution that is required. As you pointed out there has been so much controversy over that bipartisan meeting which actually started out very positive and the press surrounding it was very positive. Even if they dont manage to do something in the short term for this week how do they come to some agreement beyond it . I think they will come to some spending agreement cuts it is in nobodys interest. For some democrats they are in trouble. You have a significant number of democrats running for the senate in 2018. 10 in state trump won. They go home and say im shutting down the government because these immigrant children who were brought over illegally are being kicked out of the country . Its a really big problem for them. Theyre are the ones the republicans are relying on. Scarlet the deadline for dreamers is march. It is sort of an artificial deadline. Untilndividuals from now march 5 do get pushed out of that process. You are hearing about a lot of individuals who were brought over and folks that were dreamers being kicked out in this process. Letstalk about talk about trade. Many oft really gotten the aggressive trade actions he has threatened. Our investors inking this is ammo saberesident rattle. He did not label china currency manipulator, we didnt tariffs on china. All of these broadbased tariffs were put in place. Steve bannon is out. A lot of the more protectionist individuals have an pushed out of the ministration. On nafta Going Forward we have another negotiation and round coming up at the end of the month you are hearing rumors about the u. S. Pulling out. We are an escalating series of tensions. We havent given a call on whether we think the administration will pull out. The odds are increased and there is a substantial risk. Julia are those odds greater than even . Could that could change with one tweet in the morning. He may announce the withdrawal hoping to get additional concessions from the mexican and canadian side. We have seen him do this before and he can say Congress Tell me what you want. We saw this in the paris climate deal. We also saw this with the iran deal by asking for congressional input on what triggers should be in place. He seems to like walking in and saying republicans in congress have been complaining for a long time. Tell me how to make this better. Scarlet do we know how Congress Wants the government to make nafta better . I want nafta 2. 0. I want to have it more free and fair. Members of congress are really torn on this. Andcultural states individuals definitely want to see nafta in place. You are seeing a lot of governors under political pressure. Scarlet there is no unified view. They dont like this dangerous rhetoric Going Forward. For the president he knows , when nafta came aback george h. W. Bush passed nafta. Clinton had it signed into law. Naftall have this implementation act that Congress Passed and there is going to be some discrepancy as to whether the u. S. Can actually unilaterally withdraw. Also got the possibility of welfare reform. Weve got infrastructure. What do you think is most easily achieved . The democrats would love a bit more spending. What can be most easily achieved, what matters most for votes heading into the midterm . Keeping the economy going is what matters the most. Right now the president s approvals, look at thirdparty averages. It is still really low compared to averages for prior president s. You are looking at a potential wave in the house. Julia people arent honest. Its a shiite vote for the president. Youre absolutely right. His heart is on infrastructure. You could see democrats come together on a big infrastructure deal. I cant imagine this Republican Congress agreeing to spend additional money to the tune of 200 billion a year on infrastructure. There is what people want to do versus what can be done. Mitch mcconnell has made it clear that he doesnt think any kind of welfare reform is doable in the senate or they have a very thin margin. There is no appetite for anyone kind of legislation. Whats doable in this environment . Very little. For a normal president. Trump is not a traditional president. He could rebuild the governing coalition on this by pulling democrats together. Obviously statements over doesnt help the situation. You could imagine a new york republican coming together with democrats on infrastructure. Anybody that has flown into new york or out of new york or taken the train surely knows the u. S. Needs more infrastructure. Julia we have seen them achieve things. Tax overhaul. Deregulation. Scarlet dont forget the Supreme Court justice. Than are you more worried you were in 2017 . Theres the twitter public show that we all see and theres a very functioning policy apparatus that is deregulating. It is think about how to deal with foreign policy. It is about what to do in terms of entitlement or spending cuts. You do see that side of it. I would say an Election Year its very hard to get things going. A lot of members are congress of Congress Democrats smell blood in the water and they think they have a very good chance of winning back the house. Julia important that we cut through the noise. Scarlet thank you so much. Coming up, januarys cryptocurrency selloff. The 20 tumbling as much as 20 . Why crackdown seers are weighing fears are weighing on all digital coins. This is bloomberg. Julia this is bloomberg markets. Im julia chatterley. Scarlet im scarlet fu. It has been a rough day for bitcoin. The cryptocurrency falling as much as 20 amid fears of crypto crackdown. Thats a bear market inside of one day. It echoes a broader selloff for the month of january. The Digital Asset is down more the sma this month and chairman warns investors it could go lower. Butt is called a currency very important characteristics of currencies arent all there. It is an extremely volatile value which undermines its use as a currency and it is also not broadly accepted and people that are investing in it say they should be prepared to lose all of their money. More. T joining us with it is hard to pinpoint a specific reason but is there anything triggering this kind of retrenchment in bitcoin . Arounds now trading 11,000 which is a pretty far cry from where it was just a month ago. It has lost almost half its value in the month alone. Thee is a lot going on in regulatory front especially in asia. Specifically in south korea and china which are the biggest markets for cryptocurrency trading. Over the weekend the south korean finance minister said the country is still looking at shutting down Cryptocurrency Exchanges there. There has been a lot of confusion around that and theres still some uncertainty around what is actually going to happen so they havent made an official call on whether they are going to do that or not. In china we had a story yesterday saying they are looking at shutting down some of the mobile apps and services that offer exchange trading. Those could be driving more fears for new cryptocurrency investors. We have seen selloffs before and they rebound a few days later. Is there anything we can pinpoint that is materially different from all of the headlines we have had over the past several months that have dented what has been quite a frenzied rally . You are right. In the past we have definitely it goes back up again. The same with china. The price of bitcoin tanked for like a day in then it shot back up. Julia we talked about the kimchi premium and the fact that it was trading at higher levels than bitcoin prices here in the United States. Have an impact the difference now is theres more and more regulatory concerns piling on top of one another both in the u. S. And in asia. The latest on cryptocurrencies. Coming up, why is cadillac doing so well in china . We will hear from the automakers president. From new york, this is bloomberg. Scarlet this is bloomberg markets. Im scarlet fu. Julia im julia chatterley. Why is cadillac crushing it in china . David westin sat down with x president at the north American International auto show in detroit to find out. We embarked on a very audacious plan for china to set it up as a second volume up for the brand and i17 17 we have already celebrated success. Fastestgrowing luxury brand in china. A buoy inttle bit by chinese luxury markets. David at some point you said it was going to take 10 years. At this point you are selling more x in china than in the United States . Yes. We have surpassed u. S. Performance but the chinese luxury market is significantly larger than the u. S. This is a phenomenon encountered by all luxury brands. David how big could this get for cadillac in china . We will probably do over 200,000 this year. I think when we roll out our new Product Portfolio which is going to drive growth domestically in the u. S. We should continue to see an acceleration in sales. We performed well in other markets besides china as well. In conjunction with a robust was performance 2017 really year for cadillac. It sets us up well for 2018 and the years beyond. David that pace of growth for china is really quite remarkable. Where is that coming from . Buick ist least a being your main brand in china going back to the last emperor. Certainlyneral motors is one of the largest brands in the market overall. Distribution networks and obviously pricing. Its a different customer and our growth is coming from a degree of buoyancy from the markets. Markets shaped growth and we are taking it from other competitors. Markets shaped growth and we are taking it from other competitors. Julia that was the president of cadillac speaking with bloomberg. David westin in detroit. Time for a look at the biggest business stories in the news right now. The new telemaker will acquire the butterfinger and baby ruth brands through the deal. The sale marks nestles first step away from the candy industry to focus more on healthier and faster growing areas such as coffee, pet food and water. Light capitals David Einhorn calls last quarters return frustrating for both sides. According to a Quarterly Investor letter funds declined 1. 6 in the fourth quarter. The letter also said the firm took a small stake in twitter and a long position in bright house financials. Mark cuban says the Dallas Mavericks will accept cryptocurrencies next season. To aeeted his response user asking when fans would be able to buy tickets with bitcoin. He invested in the cryptocurrency later in the year. And that is your business flash update. That coin is trading lower today. It fell as much as 20 at one point. When you look at major equity markets or the major indexes inadequate markets the dow had been clinging to a gain. It has turned negative. The three major indexes are at their lows of the session. It is rare in 2018 to see a decline in the s p 500. Two declines this year out of 10 trading days. Julia we had the surge this morning. Investors obviously digesting earnings. We had oil under pressure as well. The dollar down some. 7 . Scarlet metals were under pressure as well. Julia Asset Classes rallying. Just giving back some. From new york, this is bloomberg. Worldt from bloomberg headquarters in midtown manhattan, this is bloomberg markets. Im scarlet fu. Natural gas dropping to a twomonth high, it has come back a little bit now off by 2 and according to the commodity whether group, temperatures will be above normal or seasonal across most of the northeast and midatlantic in the coming weeks. Finally. Hedge funds boosted their bullish bets to record levels last week. Concern thating prices may spark a regression or tray spent. Sugar slipping about 4. 2 today. Surplus ishe supply getting bigger. Sugar is down one and 30 in the past year due to that global surplus. Things, slipping today but still a record high of only 1. 5 . 30 for the month for the second half of the year, it looks a it over done, but there is still tremendous demand coming from asia. Julia thank you. Lets look at the headlines with mark crumpton. Mark President Trump today welcomed kaz of stans president to the white house. The leaders discussed ways to strengthen economic ties between the u. S. And the Central Region nations and enhanced security measures for dealing with north korea. Kaz extent it is a value partner and together, we are determined to prevent the north ean regime bannon Robert Mueller according to the new york times, then and will testify before a grand jury, possible extra in russia and President Trumps associates. He testified behind closed doors in front of a house committee. Republican president ial nominee mitt romney is not saying whether he will run for the Utah Senate Seat being vacated by retiring republican orrin hatch. He declined to answer when asked about a 2018 campaign while speaking about economic and policy issues in salt lake city. The former Massachusetts Governor moved to utah after losing the 2012 president ial election and became a frequent critic of donald trump. Going on spending spree after years of austerity according to people familiar with the matter. Transport and roads by about 30 over three years. Spending on health care and education would rise about 20 . Of theis coming out longest recession since Vladimir Putin came to power almost two decades ago. Global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. Im mark crumpton. This is bloomberg. Julia thank you. The world is going greener, spending on green energy last year was up from 2016 but it did not manage to top the 2016 peak according to a new report from the Energy Finance team. To discuss the report is even, who heads our new Energy Finance operations in the americas. Great to have you. Just talk about how much spending actually rose and what were the key drivers. About 333 billion dollars, one third of the bunny in new capital went into clean energy in 2017. Really the biggest driver and headline over the course of the year is china, where we saw on , 50 threele volume gigawatts of new solar capacity added on roots and all kind of places. China is far and away the world leader in terms of the most month capital deployed in the most amount of equipment deployed as well in support of clean energy. It was again a year where china led the pack and everybody else came in a distant second, including the United States with 67 billion dollars of investment compared to about 130 billion in china. Scarlet that is interesting especially given what we heard from the National Party passes congress in october where they put a lot of emphasis on clean energy. Talk a little more about what is specifically driving this year. It is not just not just solar. Economic and a number of cases when youre talking about putting solar on the ruse of individual houses or small businesses. In a lot of contexts, it can simply be cheaper for consumers and that can be a part of it. The biggest part of it is really the large scale project there. The Chinese Government made big promises about what will be offered to those projects. There is ambiguity about how that will get paid out. When the market receives a signal from the government that they want to support a certain type of development, the action happens and we see a great deal of it. Is the world passes largest co2 emitter, of course. Energiestalk about such a solar wind natural gas in terms of generating capacity added. We are still running the numbers are we think roughly 360 gigawatts of wind and solar, mostly with a tiny bit of geothermal and other technologies added in, built last year. Probably another 30 giga lots were built. Not have the exact numbers but there is little doubt that the majority of capacity added in 2017 will be zero carbon energy. Sibley not much cold is being westernrtainly in the hemisphere. Theres deftly gasping built but generally speaking the majority of what we see being built this past year is so most certainly zero carbon energy. Julia the top three countries going green, what about those cutting back and the drivers . Some actually surprised me. Classes interesting where you look at some of the countries where the numbers are going up and down, clean energy is proliferating quickly into a lot of Different Countries. Have seener countries up or down, chile had a good year last year but a less good one the year before. , less so like uruguay now. Is the way these projects can build, basically. There are auctions held in which renewable projects bid to build. In the years were otis need to get financed, those countries might see a lot of finance activity but you might see a decline a year after. It can be lumpy at times in Different Countries for sure but generally speaking, the overall trend has been up, driven largely by china. If we look at the Key Countries cutting back, the u. K. , germany, japan, germany has had its own challenges with the complications that has created. I guess her exit with policies, also a conundrum for the u. K. Here. Extent do you think the United States could suffer as we a result of 2018 as the president passes over the paris accord . President s in over the paris accord . Decision over the paris accord . The challenge for clean energy is to displace existing generations. In other words, we are not really growing the demand for electricity. If you want to add a solar plant, you have to replace a coal plant or something else. That is challenge number one. Trump effect, we are not seeing much of one so far i should note. The paris one in terms of the symbolism of the u. S. Pulling out, it is certainly a negative sign to the rest of the world about the u. S. Commitment to these issues, however, if you look at where the rubber meets the road in economics and other key supports in terms of tax credits and other things like that, the market was generally fine in the u. S. Where we haveless been in the last several years. Julia ethan, thank you so much. President trump is speaking at an event at the white house and were showing you live pictures. Talking about getting more women into the workforce. His daughter very much is at the forefront of it. He has been talking about the tax overhaul. The benefits kick in faster than expected. They are also looking at regulations under doddfrank. We will talk about that a little later in the show, particularly for the Smaller Community banks in the United States, the benefits of that was also talking about the Opioid Crisis and that the country the company nice to get up on the implications that has. The president speaking live as you can see. From new york, this is bloomberg. \ julia this is bloomberg markets. Scarlet it is timeout for the sector spied a report with Abigail Doolittle and turning negative, what sector are you focusing on . Applico earlier, we were going to look at health care pair now the material sector 1. 4 . The middle of august of last year. Take a look at the biggest are down sharply. 6 . Nearly 6 , more than 2018 and 2020, derrek lee to be missed as they are poised to outpace demand in the mediumterm. Big big drag here. The other factor and part of the reason we have the s p 500 lower, lets take a look along with oil. Lower. Emp and names, some of these could have to do with the idea investors dont think oil will stay above sticks 60. The chart may suggest when you bring in the production, it is a possibility. This is g btv 3081. Yellow is oil and in white, were looking at the production forecast. While stockpiles are on strong demand, it blew the commercial shorts rising to their records. Some weakness not just in the energy sector. Julia thank you. , shares aretric falling after it says it is taking a 6. 2 billion aftertax charge because of problems in its Insurance Business. Thege breakup may be on cards. John were looking aggressively at the best structure for our portfolio to maximize the potential of our businesses. Cryptic. Now a Virtual Research partners, he has a whole Research Rating at 18 per share. Great to have you on. I do not know where to start with this really painful. Lets start with the breakup and work back through the numbers. If they think people over read the quote a bit. To some degree, he is trying to make necessity, and there are things he will have to look at. One of the predicaments they have is they have liabilities today and as you get smaller, managing the liabilities becomes trickier. The value is around 18 per share. I do not think it unlocks value in the classic sense. It only came in the hills of this review and it leads us to believe more review and more headaches. It is worrisome. This was reviewed every year and what theyre saying is they saw a problem and looked deeper but as of the year ago, we thought we had a problem. We got a 15 billion tech cash problem. It is possible he is doing a tough and hard job and was dealt a difficult hand. It makes it hard to be positive here. Im glad you mentioned the 15 billion. That is a contribution now over the next several years. In the shortterm, i look at the cash flow situation expected to raise 16 billion. They would exist even if you broke pieces off of this. Adjustmentck at the made in november and i am still concerned. Dividend is a most 5 billion. Once you pay it, there is not a whole lot left. That is where the selling assets get tricked week tricky. He should explore an ipo . That is one thing. Some people may have over read what he said a little bit. There is an obvious thing, the gdp business. They will do an Exchange Offer and split that off. That is made for separation. It is slightly cash at todays evaluation. There is no reason not to do it. The ipo of the leasing business is really an idea i have a look andhe situation in capital the capital they need for capital, it is a valuable asset where they can monetize and raise cash in the near term. What point do we look at this and say question is a to be asked about what is going on with management prior to this when you can do a yearly investigation on Insurance Business and find skeletons like this in the closet . Am i raising a question that is pertinent pertinent or am i being alarmist . At minimum what got us here was years and years of deployment. I am not ready to say it was more nefarious, but a lot of bad decisions. Keepecision was made to the tail on the Insurance Business because they thought it was the value enhancing thing to do. They did not understand which came in hit them hard. A lot of miscalculations here. Do you think the concept works or is it just that gd messed it up . It is a good question. You can look at what happened and say they do not deserve to be together as a company. There was certainly a lack of communication, a lack of perhaps oversight at the corporate level in understanding what is going on. Not maximize the value of the structure. Thank you. Coming up, walk the talk, citigroup has a big step in the pay gap. Helped to put the pressure on city and other Financial Service companies. This is bloomberg. Scarlet this is bloomberg markets. I am scarlet fu. Bridge pay gaps in the u. S. , the u. K. , and germany. To share u. S. Bank this about inequalities. Diversity in the workforce, we are joined by managing partner and talk natasha in boston. Putting pressure on the banks to address the gender pay gap. Great to speak with you again. This is part of a Broader Campaign focusing on nine Financial Services companies. You have been at this for a year. What prompted it to make a move . I think this is a Tipping Point for citigroup, wall street, as you said. We have been working on the edge sincee the end of 2016. A lot is happening. Apart from our pressure and investment pressure and what as aned in the tech center result of our previous campaign, there has been a helpful with shift in womens rights and a desire for fairness and equality. An important thing to point out is not simply a good thing to do, but there is a bitit as well to maintain as well. What is happening in terms of regulatory pressure brought, those are significant forces. You talk about regulatory pressures abroad. U. K. Will start to require all companies to report gender pay data in a broad public racist. Other firm like city and companies you are targeting, why would it not make disclosures in the u. S. If it is already doing this in other countries . I think it is a big question. All the big banks that have operations will have to disclose median gender pay gap in april. Citigroup is one of those firms. Look at jpmorgan and bank of america. The onus is on the companies to and bethe analysis transparent to shareholders. The analysis we have seen so far and the response it has gotten in terms of women and minorities getting a raise yesterday is it has been a positive reflection and that is why we would like what would like to see the other firms do as well. It found on average women mens pain 99 of and u. S. Minorities or and u. S. Minorities earned 99 of nonminority pain. It sounds like they are saying there is not a meaningful pay gap. Does that sound right to you . It is something they have been working on and on monday, in order adjustments to reach that number. Distinct that will be and the numbers we are seeing so far out of the u. K. And thereial Service Firms is reporting equal positions, it is seniority, geography, etc. They are making adjustments in salary where they see a deficit for women and minorities. Whichmbers coming out average about a 24 gap larger than the national average, in the u. K. , those are median numbers, not adjusted for job is aof what they reflect structural deficiency. The fact that in Financial Services, more than 50 of these firms are women but it is the man who holds the highpaying senior roles. Quickly, what kind of response have you gotten from other Financial Service companies you are targeting . Talking to quite a few of them and also heard from a few of them since the announcement. Be back withully more good news in the spring. Yes. Hopefully we will hear more from the other banks. Thank you so much, performing manager and partner who has been spearheading the push for gender pay equality. Julia julia speaking of banks, we will talk about the opportunities in the community bank. Julia welcome to bloomberg markets. We are live and bloomberg World Headquarters in new york over the next hour. We take a look at the u. S. Ending season. Look at to the rest of the week with a senior Portfolio Manager troy. It big investment from our interview with executive chairman will forward. Results of the commanderinchief, the first exams and sticking office. Julie hyman, julie. Julie from records early this morning and now all major 26,000s in the dow, earlier in the session up as much as 1. 1 . Is down. Q take a look throughout the session. Hitting the gain of 280 points. Finally went negative to just about a half hour ago. Of the catalyst for the downturn, you can find the same reason it was going up. Some sort of shift in sentiment. Typically, what this indicates is momentum. Since reached the highest 1971 which indicates we are at an extraordinarily overbought. Evel of u. S. Stocks it is not mean it cannot stay at that level. It has been above it, but finally, something sort of gave here and tomorrows session. Oil has had a more modest run admittedly. You today, 5. 7 . I was hoping for a chart so we could see a dip that it has had today. The various assets benefiting recently are now pulling back to some extent. Lets look at some movers on the up and the downside. We have been talking about general electric, the 6. 2 billion writedown related to the the Insurance Business. This has mostly to do with the results of a study, it makes a drug, and the help group coming out with an earnings forecast above estimates. That has talked parading down firms, and the fourth quarter, but benefiting from the tax cut Going Forward. Good stuff. Thank you for the wrapup. Lets check in the headlines with mark crumpton. The Trump Administration cutting 6,590 in funding from palestinian refugees. Slashing the first contribution of the year by more than half. More the u. S. Agencys largest donor, 30 of the budget. The palestinians of the west bank, jordan, syria, and lebanon. 30,000 Strong BorderSecurity Force in syria. Take a obligated to stand against those who harass and violate says the militia is a major threat to its security. An officer who sexually assaulted a gymnast. He has already pleaded guilty to musty females at his State University office and other locations. Daughter chelsea committed hecide in 2009, years after sexually abused her during a medical examination. You do not know what it is like to be at work and get a call to come home immediately of the mothers instinct tells you something is wrong any pulling your driveway and the medical examiner is there and your daughter is in a body bag they are loading her into the van. Bek he is expected to sentenced on friday. The office is speaking 42 145 thes in prison for 54yearold. Three churches in chile were fired but firebombed today. In total, nine to nine churches have been attacked in chile since friday. He paid for forgiveness from the chilean for irreparable damage done to children who have an sexually abused by priests. Dozens of protesters were arrested during the mass. Global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. I am mark crumpton. This is bloomberg. Scarlet thank you. Lets move back to businesses. Jpmorgan and wells fargo last week, wells fargo took a hit on litigation charges. Bank of america and Goldman Sachs will show their results tomorrow and Morgan Stanley announces thursday. Banking on banks but of a certain size, troy, skied Bridge Capital senior manager, regional banks have ample room to grow and he joins us now. Much that big banks are unattractive, but the prospects are better. Thearticularly because securities we are on our only backed by security banks. Ithink the senator said best, too big to fail had become too small to succeed. When you have a democrat in the andte articulating that writing nice letters about some bipartisan support coming, you know the loan growth is better, the Balance Sheets have cleaned up sonically and only get better, you have a massive tailwind of regulatory reform, administrative or warm, and now they get legislative i partisan reform on top of that. A lot of reform, but they all play to better quantity and the upside insecurities in particular. Garlic josh with saying the big Bank Loan Growth was strong. Doesnt that play into this as well here . Yes. There should be more upside to come but there is still a mystery as to why loan growth was as slow as it was a lot of it had to do with Capital Market activity instead. We think Smaller Banks had better loan growth because the cap theustomers cannot way larger Bank Customers can. You get back to fundamental securities, low dollar prices, a floating rate, so every time the fed hikes, you have more cash flow. Which is great news for them. The changes coming, you will have much more mergers in the space which should also benefit equity owners as well. Julia when do you expect the reginald regulation prospect of the regulation here particularly for Smaller Banks, what difference will it make . Seen so far ise the compounds of capital view of the fed. The Smaller Banks have less Regulatory Oversight than they did early last year and the year before. Soldreduces costs of goods. Furthermore, it takes the pressure off of banks, that every time they look to make a loan that might not fit in a box, they have to look over their shoulder and worry about ramifications for a lot of what is happening in the economy and service postelection have been related. The banks have much more freedom to lend. Going forward, once you codify that in doddfrank, that should have even more edifying effect on their willingness to land in and also consumer demand. If you dont have a strong commodity economy, then you dont have demand. Your call is for Hedge Fund Strategies using trust ceos way . O about it that first of all, predict ability. Think of the path since the runup to the election. They ripped after the election and everyone said, here we go. It is happening again. You didnt know what reforms you would get and how it is priced in because you never know that without reason realtime. Saw our low dollar Prices Higher now than then, for good reason. Low prices where you do not need it to make money because you already have decent cash flow improving but more than likely, mergers and acquisitions pick up and credit quality improves, or the securities are taken out. You get paid on the duration asset faster. The way we think they well, you will make a decent return, maybe not quite as say amazon if they are up this year, but a very competitive return. In order for the fundamental story to break, you need a lot of bad things to happen in a short time. You can have a 10 pullback in equities at some point in the next several months but it is hard to see how it happens given the strengths and fundamentals and the dollar price of security. Consistent returns and competitive upside. Risk of thehe economy Going Forward there is a significant drop and weve already seen the savings rate drop materially. Talk us through this. It is very critical. You look at various indicators we review. The only one flashing yellow is consumer savings. The consumer is critically important to the economy. It is the lowest since what, 2007 . Think about it. Most has been somewhere between 5 and 6 . Little high precrisis, but that is the shock that consumers had gone through and the financial crisis. It would go down eventually but the key was, whenever we have we wereth scares, always confident that the consumer was in a position that they continue to spend. As long as the consumer can continue to spend, capex could drop in exports could drop, china could have a hard landing and we would avoid a recession. At some point in the next several years, we would have another growth scale for whatever reason and our confidence in the ability to bail us out would be lower given how low consumer savings is. For mineral it happens with growth scares. Can jack up that savings rate. And not only do you have Consumer Spending growth, but you have a contraction. Next 12 to 18 months, the coast is clear. But at some point if we run Savings Rates this low, we could have a mild recession. What could speed it up or get us there faster . Tony it is hard to see. Is, sentiment, growth overseas, where the dollar is, financial conditions, all pointing up. You need them to start to go sideways and then turn over. We had to take a stab at something. It could be the increase at the back of the yield curve but even that to us with the confirmation of economic bulls and the inflation will actually come back in the reality the rally in equities is justified based on future growth. We do not see a moving from calamity, particularly the economy. With the overall pushes that horizon back quickly. There are a lot of things about the cycle. It keeps pushing it further and further out. Coming up, we will hear from fords executive chairman next. This is bloomberg. This is bloomberg markets. Julia ford is doubling down on electric vehicles. They plan to reduce spending to 11 billion by 2022. With bill ford, the north American International in detroit. They got along for electric cars and driverless technology. Is already happening for a lot of the technology is going into vehicles today. Otheres talking to vehicles, infrastructure, all of the Driver Assist technology you have been talking about, it is starting to happen. Pieces of the economy are going and even as they sit here. They are all about making vehicles safer and more pleasurable to be in. We will not just wake up one day and hit a switch. It will be very incremental. We think the payback on this will be tremendous when we get here. It will change our Business Model in a way we think will be amazing. The efficiency will limit the profit for vehicles, we think it could be really quite remarkable. The uptime will be higher. Perhaps casese quicker than current vehicles. We have our own projection and we will not know until we get there. What about the emotional connection . We all remember our first car. It will not all go away. A will have their place for sure. Around,as you and i are the fun of owning a vehicle will still be there. We may not want to drive it every day. If it were nerve and area, you probably will prefer to have a vehicle seamlessly take you to where you want to go. Vehicle, we are focused on, how do we personalize that. It is uniquely yours and you happen to experience it and you think that was really unexpected and cool. A child born today, with a have to learn to drive in 2034 . It is an interesting question. They may not have to but they may want to. There is a joy in driving. I will always love to drive for not everyone does. We have to talk about nafta. A big negotiation. You gotten a sense of where we are with nafta . It . Ou have a sense of i think to do something that drastic would not be something we would support. Nafta could be modernized and we certainly,urrencies but it has been a place for a while and has served the industry well. Our industry was built around nafta. Mean. Ends what you continuum, a complete blowout, and then a modernization that we would not be opposed to. The whole industry was built around the notion of nafta and we have to be really careful how much we tinker with it. Finally, you go back to electric vehicles for a moment. On on with the other effects on other industries . Far be it for me to speak another industry, but we have , 100 14 years or tremendous shifts over the 14 years. My greatest hope and my greatest ford is theing sure focus of that for another 800 years. Bill ford speaking with david westin at the International Auto show in detroit. Requested is time for a look at the biggest business stories now. Strategies,hare the that companies are responsible for telling shareholders about the impact of major legislative and regulatory changes. Weve heard that before. The real estate offered 5. 9 billion in stock properties. The letter was publicized today to encourage negotiations. They have so far not engaged in talks. Listof america topping one for the most blockchain patents. 43 patents based on public record. Bank of america has refrained contracts. Ng bitcoin and a quick reminder. You can catch all of the interviews on tv. There is troy from earlier this hour. You can tweet us as well. I am available at scarlet fu. From new york, this is bloomberg. Scarlet it is time now for options insight with julie hyman. You see theme, as midday reversal today, theyre obviously has not been volatility recently. Is an interesting trade you have seen unfolding amid the backdrop, the low volatility mostlyment and we see stocks have been rallying. There was this you unusual large tray today. Describe what you saw happening. What we have seen recently is people actually shift away from buying protection out right to buying actual downside put spreads. Earlier today, we had sp y or trade,der etf downside basically someone was buying the 274 january 31 a month in, while selling 273 downside to really just kind of cheap and it up. It is a very binary trade if you will. We have seen it depreciate us yesterday afternoon. The 274 straight was about 1. 6, 1. 7 below s p spot when that trait to list early today. We reversed about 60 basis points since the trade went up. If you things are going on between now and the 31st. This is a month and trade. We get about 37 of the s p reports earnings between now and the end of the month as well as the fomc Rate Decision january 1. Me about why someone would want to buy the spread versus outright . Is it just a cost issue . Yes. What people have done is they have been losing money as the market goes higher, just buying out right. This trait in particular, when they bought the 274 puts, they pay . 63 and i believe they sold . 42. 3 puts for it really only cost them . 11 to put the trade on instead of call it 50, 50 two cents outright. The 200,000 block, it is , a five point 5 billion notional trade. Pretty significant protection in the s p. We will keep watching these trends and see what happens. Thank you. We appreciated. Back to you. Julia still ahead, the state of trump off his health. We are moments away from a white house reefing with the president s edition. And averts that attempt to avert shutdowns. This is bloomberg. Is an ma isrk rk i am mark crumpton. A Senate Judiciary committee was told she did not catch President Trump using a specific vulgarity. The conversation was very impassioned. I do not dispute that the president was using tough language. Others in the room were also using tough language. If i could, the context in which this came up was the concept that the president would like to move to a meritbased system. Mark senator richard durbin, the only democrat at that january 11 meeting, says he stands by his account of allident trumps use of guaranty. He pressed her on africa, and she replied, i do not specifically remember a categorization of countries in africa. Be secretary says they will working with states on proper protocols for issuing emergency