Transcripts For BLOOMBERG Whatd You Miss 20180118

Gop is showing incompetence with what he calls, quote, mixed signals. He compared mcconnell and President Trump to abbott and costello. Despite the restoration of a military hotline and at north talks inirst formal about two years, north Korea Remains north korea a great threat. John allens comments to reporters came before you and Security Council meeting on north korea. The council will maintain its unity in ensuring the consequences of defying International Law will be felt by the North Koreans. Because the North Koreans have an opportunity to change course. Added thatsador alan by changing course, north korea could pave the way for greater economic benefits and inclusion for its people. Scientists believe manmade Global Warming caused 2017 to be one of the hottest years on record. Nasa and researchers from berkeley rank last year second only to 2016, even in the absence of el nino which boosts temperatures naturally. The global average temperature in 2017 was about one. 5 degrees fahrenheit above the 20th century average. The five hottest years have been from 2010 on it. Global news, 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. Im Mark Crumpton. This is bloomberg. Julia live from bloombergs World Headquarters in new york on julia chatterley. Scarlet im scarlet fu. Joe im Joe Weisenthal. Julia stocks are mixed, taking a step back from yesterdays alltime highs. Joe the question is, whatd you miss . Scarlet the clock is ticking clock isnment the ticking for lawmakers to avoid a Government Shutdown. Week, bbtngs this expects to invest its windfall back into the business. Kelly king joined us in the next half hour to tell us where the savings will go. And investors of bitcoin are strapped in for a wild ride. Out whether bitcoin Needs Technology more than Technology Needs bitcoin. 2013 islashbacks to lawmakers each closer to a federal Government Shutdown. Ofall comes down to a matter votes. Speaker paul ryan is close, according to his team, but the chairman of the House Freedom caucus mark meadows disagrees, saying he does not have the votes, at least not yet. We are joined by National Political reporters ideal couple were on capitol hill with the latest. Take us through how many votes we think weve got here, and how many, are we talking about a fiveday push back . Ahil double conversation is about this roughly one month resolution to keep the government funded through roughly february 16. A couple of measures passed through, most notably secure extension of the Childrens Health Insurance Program. The house with count seems very, very close. Speaker ryan has roughly the amount of votes he needs or a few short. Expect some House Democrats to hop across the island support this measure. So that prospects look better in the house, but the senates were the real problems are at this point. It is very difficult for me, having conversations with a number of democratic aides in the senate and some democratic 60ators today, to count votes in the senate to keep the government funded past midnight tomorrow. I think democrats have reached their breaking point. They face a lot of pressure from the based on hold firm and include some sort of daca resolution as part of this and the Republican Leadership says there is no chance of that happening before friday at midnight. Scarlet it seems like the two sides are pretty hard on their positions, and a headline just crossed that said Senate Democrats have the votes to block a stopgap spending bill. The president did not make any mention of this when he spoke in pennsylvania and the last hour. He is campaigning for the republican congressman in western pennsylvania to make sure the republicans hold on to that seat. Going forward, how involved is the white house in all of this . Or have a washed their hands of all this, because the president s tweets this morning seemed to add to the confusion . Il they have not washed their hands of this. They have done the just opposite. They added an element of chaos today with this tweet. Republicans want to put it on the floor and put it in a sixyear extension of the Childrens Health Insurance Program, which seems like thats what the president is objecting to. They president said no, lets Childrens Health Insurance Program a shortterm attachment, indicating he wants it attached to a longerterm bill. But the white house is doing a little bit of cleanup on aisle trump today. We are looking at the house voting between 7 00 and 8 00 p. M. Tonight. The senate will try to pick up something very quickly after but there are a number of Senate Democrats who carry this over the finish line last month when they had to do another shortterm funding measure, who are now voting no. Again, the whole game is 60 votes in the senate right now and its difficult to see how they get that. Joe help me understand a little bit further the tactical approach the democrats are taking. To try to understand it, so they want to get obviously Childrens Health care, chip, funded. So the current stopgap bill would also funded for six years even though the bill only keeps the government open for a month. They also want to include something on immigration and get that soft. What is the reasoning for not taking the ship win, if you will, now, getting that taken care of now and then fighting exclusively on immigration a month from now . I think the calculus for the democrats is that they already supported three short term funding bills in this fiscal year, since last summer. And the return they do it gets harder and harder to explain to their base why they keep finding the government without using this, which is essentially their only leverage point, to force republicans to come to the table and have some sort of solution for the dreamers, these about 700,000 young people who would be at risk of deportation if there is no solution for them by the march 5 deadline that President Trump has set for ending the program. The short answer is democrats dont believe there will be any daca extension unless they use this which is the only extension which is the only leverage they have. The question has been for a will, democrats saying we do another shortterm measure in the time we will take care of it, next time we will take care of it and it is just gotten. Arder and harder to do it last week the president s remarks in a private meeting, the inflammatory language use, as made it worse for democrats in terms of crossing the isle to support something the republicans are doing without a daca solution. So it is a tough political place at the moment. Can only imagine that twitter handle, if we do go into a Shutdown Scenario here. Here forhe bigger risk the democrats, not using the leverage as youve described in pushing for a solution for the toamers versus what appears be on the service there forcing surface,n on the their forcing a shutdown. the party that controls the white house, white house, and senate, that has not shutdown a government has not happened. The shutdowns we saw under barack obama and Ronald Reagan were all under divided government. So republicans would be in a difficult situation. Having said that, if the reason for the shutdown is that republicans in the Senate United but couldnt get a super majority for keeping the government open, then yes, democrats would have some explaining to do and could be blamed. There are trumps state democrats, about 11 of them now with doug jones facing reelection in november. They dont necessarily want to go home to their constituents and say we shut down the government over democrats, about 11 of making se young, undocumented people get legal status. I dont think that plays well in certain parts of the country so for democrats its it tricky balance your scarlet a tough political position, as you said, sahil kapur, our National Political correspondent on capitol hill. Coming up we will speak from senator mike rounds of south , and thats coming up at 4 30 p. M. New york time. President trumps tax cuts help alleviate what has been a rough quarter of trading. The details coming next. This is bloomberg. Scarlet whatd you miss . The big banks wrapped up their Quarterly Results this morning, stubborn banks face problems in 2018 rising problems rising profits would be among them. Hoin us now is leigh estimize. Continuing gloom in trading, low volatility, this is a story with been talking about for quite some time. At say when we look cryptocurrencies and icos, thats where the excitement will really be. Markets i right now and its a good time to raise money. Big companies are raising money, but if you look at tech companies, there havent been too many big ipos. Telegram, 2 billion this afternoon. Scarlet ive never heard of telegram, by the way. Leigh its a good messaging app. The question is for a lot of these icos, what is the value of these tokens right now. While there isnt really a fundamental thing happening inside of the business, that the tokens are being used for, they are raising a ton of money on the backend. With banks, before we move on from them, trading revenues kind of mediocre. Not mediocre. It was terrible. A couple of different things, and we see this these are the contributors on our platform. People are not trading as much. Longterm hedge funds are closing shop at the fastest rate that they have in decades. A lot of money has gone to quant. That money has made value not a strategy anymore. Momentum and growth has crushed value over the last nine years. Scarlet and its all done passively. Leigh and its all done passively. All these things are contributing as well as the financial technology. Especially on the fixed income side now, degrading the ability for goldman and others to really drive margins on those debts. So they are firing a lot of traders and they are highly they are hiring programmers and installing technology. Do they put a brave face on it and say, these things will come back . Is the feeling you have looking at both sides of this . Leigh this is a personal view. This is how i think it going it is going to shape out. You will have bouts of volatility that are sharp and quake and then we will return to normalcy. At the underlying fundamentals, the way it market is structured now, is not too many value estors there now to catch there is no 10 billion manager in fidelity that is going to buy stock xyz at some level that that supplies some kind of support to the market when things go out of whack. Joe you mentioned there arent. Ig tech ideas tech stocks did phenomenally well. But in terms of the community you see and the people you talk to on their platform, do they feel like 2018 is going to be a repeat of 2017, a handful of companies gobbling up a greater share of all the prophets in the country . Are going toigger get bigger. There is a monopolistic affect the goes on among these companies right now, more than any time in history. I feel like a broken record little bit because i have been here a couple of quarters now and basically said, its kind of hilarious the tech stocks have been up so much yet the multiples have gone down. And we sit there and say wow, they are up so much but when you ups andfacebooks revenue numbers, they crush estimates. Ours are almost always higher by the street higher than the street by a significant amount of the still beat them. I would expect again, given the way we are seeing the trends in global in google revenue expectations, facebook revenue expectations, netflix revenue expectations, they are all up and the reports often bp expectations. Scarlet something we have seen over and over again. Among the big tech names though we havent seen that many instances of spending, and that is still to come. Its interesting, given where we are in this Economic Cycle a lot of people say 2018 will be peak gdp for everybody around the world. I believe we are at the top of an Economic Cycle and you are going to see rates rise. And this would all coincide. I think when we let at the big tech stocks, revenue per employee continues to increase. And we are going, when are they going to hire all these people . The dont need to. Its not a classic industry where you have to add that person to generate a piece of revenue. I think when we look at more midand small cap tech, names like tub spot and then dekes ubspot, and enterprise marketing tool. I think these names are really going to benefit. We have seen them beat consensus numbers over and over again with rising expectations. Those would be where i would focus if you want to rotate into the right parts of the tech sector. And they are the names you like this earnings season. The ones to watch. Drogan, leigh. F estimize thank you. We are focusing on the worstperforming stock in the s p 500. This is the Worlds Largest producer of lithium and it is being punished as its rival wins along winning reduction dispute. Julie alb is the worst performer. It is a Chemical Company but has gotten more into lithium through acquisitions over the past couple of years. The company is part all of this is from chile, sq am is what it is referred to. It is in chile which is where a lot of the lithium production comes from and there has been a yearslong dispute that has been going on here. Qm operates one of the Worlds Largest deposits of lithium and now it as a result this dispute with chilean authorities and that should in qm, and thatd for s means more lithium supply coming to markets. Shares are trading a little lower and anything else that produces lithium is the client today. Joe at the bottom there we see the etf down 7 . Lithium, and battery tech. Let the them is one of these new, not new, a bunch of tech newly in demand for hightech and electric cars and all that. Ulie electric car batteries its not that there would be anofmarket demand, but its just a matter of how much supply is going to be out there. Qm will boost s its annual capacity from 66,000 tons of lithium carbonate. All in then is timing, as well. How quickly is a going to be able to get this online . How quickly is it going to be but to get to market . There is dispute among analysts how significant is is going to be for albemarle are some of its competitors to get to market. Albemarle has done well over the past several years as lithium prices climbed as demand, to your point, joe, has climbed as well. Julia julie, thank you for that. Vanguard talks about passive investing in asia. From new york, this is bloomberg. Julia whatd you miss . Passive investing isnt a major force in east asia but that hasnt stopped vanguard from exploiting opportunities there. Aboutuards chair spoke the companys asian plans. Vanguards chair spoke about the companys asian plans. How things get interpreted and so forth, and we are staying very close to that. I think being here is very important. There is a lot going on in this space. Do you see the likes of alibaba or tencent as competitors to the vanguard model . They could be potentially but they could be potential opportunities force as well. We have paid a lot of attention to the alibaba phenomenon and what they have been able to do. It is kind of a Playing Field for the team right now. Theyre up there talking to everybody. Asia as a reason, they are liking when it comes to passive fund investing. Is that a challenge for vanguard s growth for the region argue focus more in the active funds . William im not sure yet but i think what it means to us is, there is a lot of opportunity for what i would call lowcost investing. There is still a lot of very high cost product in the asian market. But whether it is lowcost or passive, i think you can make a case for both and you will see us doing both overtime. The likes of fidelity are starting to push back and lower their fees and become more competitive, what changes are you seeing in the Fund Management industry . William i think for the first time there is widespread belief that price actually matters. And there is a couple of things driving that. One is a certainly our success people arent just coming to us because we are lower cost. We are coming because the net return to the investor is better and that is really double driver of the cost argument. Actuallyk people have weakened to this. Some of the data are overwhelming and you just cant charge, if you are elected fund and you charge 100 basis points, you have very low probability about performing over a long run. Money management has been a very lucrative profession for active managers and its going to get less lucrative. People have got to reinvent themselves and get smarter about how they actually run money. Out therere skeptics who say this huge embrace of passive investing poses a significant risk to the markets. How do you defend against that . William the data just dont support it. Passive investing has provided with yday investor when you think about it is a zerosum game at the end of the day. The only represent returns is cost. Vanguardsat was chairman William Mcnabb speaking in beijing. Change are not rising to record highs. They were yesterday but we have come back a little bit with the dow off 95 points, the s p 500 losing 2 10 of 1 . From new york, this is bloomberg. [applause] [cheering] whatd you miss . Highs. Day record multiday averages are in the red and the tenured yield is about 2. 6 for the First Time Since march. [bellringing] scarlet im scarlet fu. Joe im Joe Weisenthal and if in live oning twitter we want to welcome you. Ourlet lets begin with market minutes. As julia said, not a day for record highs in u. S. Stocks. We actually declined and by recent standards, quite a bit you could argue. The dow come off by 94 points. Losing four points and the nasdaq down to. Joe not big by normal standards but by 20 standards it counts as a selloff. Scarlet we need some perspective there. Lets get perspective on recent earnings as well. Morgan stanleys reporting results and it broke from years for not reporting any losses, of 1 . Ck gaining 9 10 the Wealth Management part of the business is a big story this quarter with pretax management setting a record for the fourth straight quarter. So it looks like the pit it to what Wealth Management is really pivot tof the Wealth Management is really paying off for the firm. The bank of new york is saying it will spend money saved from the tax cut passed in washington on employees and its businesses. The bank will boost minimum wage to 15 an hour and meaningful in and meaningfully increase spending on technology. Albemarle corporation, this is our stock of the hour, at least julie told us about it earlier. There was a call hereby rbc saying this is a buy on potential weakness of supplies. But the bigger story here is over all about lithium and how things are going with the supply picture there, its biggest commodity. Joe lets look at the Government Bond market. 2. 61 . That is kind of the number of the day right there, 10 year onlys backing up, its the rise level since march of last year. Nonetheless, one of the big stories right now is that long and selloff. Its interesting because we got the selloff in equities, again not dramatic. No place id today. The twoyear unchanged. Moving on to currencies, lets look at what is going on in the dollar index. Three your lows were three your lows were touched in the prior session. But i think the and investors investorsthink the focus is on washington, with a lot of noise and confusion from and pushinguse, this forward for a few days if not a month so they could negotiate over a threeweek p eriod. Earlier in the u. S. Trading session, we bounced from ecb nd we did have the and talking earlier he made no mention of the euro strange rates. Other officials this weeks lacking the currency as an area of concern. Aboutldnt be talking currencies if we didnt talk about bitcoin. The january roller coaster as eased slightly. Monthl show you the six price to give you a sense of some of the volatility we have seen, rolling back from that plunge from the 10,000 level its best today performance of 2018. A lot of concerns about what is going on in that south korea report in terms of regulatory action. The regulatory crunch is coming. I one i saw one quote today and lets give you a dive into the bloomberg, showing you 30 day volatility on the south african rand which is the straight blue line. And that is versus bitcoins 30 day volatility. And we actually saw today the Russian Deputy Bank Governor comparing bitcoin to viagra, saying they wouldnt do anything to support the promotion of these pyramids. That is what he said. Joe that is a new one. Now, finally on the commodities front, not a huge move today anywhere. I want to look at oil. Earlier in thet day and dumping their estimate for u. S. Supply. Wild card, big whether we will see a bigger u. S. Industrial supply. On the other hand there was a big drawdown so the inventory story continue, or inventories are lighter than people expect. So the back and forth continues. Nonetheless, modest declines in oil, with gold down about 1 . Continuing with the theme that there was really know where to hide today, commodities, bonds, equities, all kind of selling off today. Scarlet whatd you miss . , david adader as chief of intelligence. One bond manager is talked about the bond bear market beginning. Do you agree . David i think it could be a bond bear market but i think its going to be more of a teddy bear market than a grizzly bear market. Because the same things that have supported yelp supported low bond yields here and around the world, which is essentially monetary policies, have also supported the equity market. When you saw yields get up to 285, perhaps they will get to 3 in the 10year area. I dont think so but they might. But i think the equity market is going to pick up and take some notice and i think it is going to be to the benefit of the bond market. In other words the causation could go, bond market yields go up. That leads to equity market volatility and amidst that equity volatility people go, ive got the vice of bonds. David exactly. When you think about the weighting and how and equity know about this portfolio a year ago, now is overweighted relatively speaking. So if you get bond yields a bit higher than suddenly they are attractive. Julia talk to us about the level of supply because there has been a lot of talk about the fact that we are going to see double supply and 2018 that we saw in 2017. Just the optics of that seem to be in line with greater spending from the federal government and the United States as a result of what weve got as far as tax taxrm is can earned reform is concerned. It feels like a convolution of factors that could mean higher yields. What are we missing . David i dont think were missing anything but yields are higher because weve known that this was coming for a long time. The tax reform has added to it but thats been talked about since the start of the trump administration. And if you look at the nature of the deficit excluding the tech stuff, economists and others have been forecasting this for years. News. S not really new its on us now and i think thats enough to justify somewhat higher yields. But you know, when you have that much issuance out there, it is taking capital away from other areas, from other investments. And so there is going to be some force you have to remember if you are in a bond index and you are looking at an accurate index an aggregate index, if europe bond manager or a passive investor, as more treasuries come into the marketplace your benchmark is going to have more treasuries and you are sort of forced to do some buying to sort of maintain pace with the issuance and what is going to be happening there. So there is a bit of a forced buying. I dont want to make this out to be it is a bullish case but i think it is a backstop. Thea so youre saying demand for passive in particular is under appreciative is underappreciated. You can see. You can see it in the way mutual funds and etf funds flow. But in terms of etfs and those passive funds, they have an absolutely surging and so you do have more passive investors out there that are going to be tracking an index. And even active bond managers have been following in index as well. They have their benchmarks out there. Once again, if you look at the weighting of treasuries in the Broader Market aggregates, they are going up. And i also believe come as a tangent, that the iteration of that is going up. I know its high right now and treasury doesnt want to extend it but i dont think there going to have much choice in the coming year or two. Ade thank you for that. R, scarlet breaking news were talking about ibm. Fourthquarter operating earningspershare of 5. 18, beating consensus estimates by a penny. 22. 5 billion dollars. Analysts were looking for just over 22 billion, and gross margin is a little shy of what 49. 5 ts were looking for, there. American express is also reporting as well. It sees for your Revenue Growth of 7 to a percent, that is the outlook for 2018. Its fullyear adjusted earningspershare outlook misses analysts estimates and that might be why the stock is down by 2 in afterhours trading. Because when you look at fourthquarter numbers that was a beat on the bottom line. Fourthquarter adjusted eps, 1. 58. Was 1. 54sus estimate but that outlook is causing some concern there for investors. Up, bbt regional post bank posts its financials. Bb ts ceo from kelly king coming up. Whatd you miss . Im Mark Crumpton with first word news. House Minority Leader Nancy Pelosi is criticizing the proposed continuing resolution to avoid a Government Shutdown. Gop lawmakers are said to be considering an even shorter duration for a stopgap spending bill. The losey indicated it may be too little, too late. Indicated that may be too little, too late. Amateurlooking like hour. We couldve come to a place where he would have a budget agreement as well as protecting our dreamers which is part of the agreement. Meantime im a bloomberg has learned even if the house passes a stopgap measure with a vote tonight, the want to advance it to the senate. At least three of 51 republicans say they want back the bill, meaning at least 12 democrats would need to support it. The u. S. , canada and mexico have agreed to extend the upcoming round of nafta talks in montreal by one day to january 29, according to for people with knowledge of the matter. Meanwhile, on a visit to pennsylvania today, President Trump continued to criticize nafta. Saysos finance minister negotiations are making progress. British Prime Minister theresa with the president of france outside london at the bilateral summit to strengthen security and intelligence ties between the two nations and to build goodwill amid brexit negotiations. French agreed help Fund Military and humanitarian missions in africa and strengthen their joint patrols a common destination for migrants looking to reach britain. The Associated Press reports dozens of u. S. Ambassadors to african countries have written to President Trump expressing socalled deep concerned over his comments about the continent and warning that respectful engagement is crucial to meeting and protecting american interests. The ap says the letter dated tuesday was signed by 78 former envoys. Global news, 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. Im Mark Crumpton. This is bloomberg. Whatd you miss . The Regional Bank bb t reports as fourthquarter results this morning, fueled by the federal tax cut. The bank says it plans to invest a substantial portion of tax savings back into the business. We are now joined by kelly king, chairman and ceo of bb t. Great to have you with us, lets just expand on what you will to do with these savings you achieved as a result of the tax cut. Kelly we see a broadbased benefit for all of our constituencies as a result of the tax cut. The first is that our clients will benefit as we continue to invest more and more in digital technological changes that will improve the quality, the the pace of delivery of Digital Products and services to our clients. Clearly the clients will benefit as we invest more in technology to make their interfacing with the bank more convenient. Our associates will clearly benefit. As you may have seen, we along with others did award a 1200 28,000 of our 37,000 associates. In addition to that, we raised our minimum salary from 12 dollars an hour to 15 an hour, which is a direct and immediate benefit to our associates. Our communities will do better immediately have set aside 100 million into our foundation to be up to support the communities more. And ultimately the shareholders when because i will likely recommend soon to our board a higher level of increase in our dividends than it wouldve been able to otherwise, because of the increased income. So Everybody Wins and its a good thing. The economy wins and we are excited about it. Scarlet kelly, i want to ask you about corporate loan demand because some of your peers worry corporate loan demand might taper off. And consumers will have more money in their pockets as well, saving from their paychecks. You have projected at 2 to 4 average of loan growth in 2018. Talk about what you see there. Whos going to be driving that loan growth in 2018 . What specific part of your client base and what specific part of their Consumer Base . Kelly i think the primary driver of the commercial side will be will be call main street. That is primarily were bbt person to space bbt participates. Small manufacturers struggled over the past two years as the economy has been driven more by International Trade by the largest businesses. Now that is kind of reversing and we are going to see main street come alive. They have substantial reasons to is moreas there consumption for their products, they have more money from taxes to invest, updating their equipment. So small and mediumsized businesses on main street will substantially benefit. It is true some of the largest corporations may at subdued borrowing in the short run because, you know, bringing some cash back, i dont know how long that will last. But that will be a temporary subdued effect in terms of the very large corporate market. Its not working be and two plays the most but it will have some effect. On the consumer side, you know im happy for the consumers, getting these bonuses. But to be honest, based on feedback i have gotten, i think most of the consumers that have gotten bonuses we use those bonuses to retire debt and buy essentials that they need. I dont think an impact all of their ongoing consumption, and their ongoing need for credit. It improves their Financial Condition a bit but i dont think itll change their need, and propensity tomorrow. So i think we will have increased r. O. E. Demand on small and mediumsized businesses in the Consumer Sector as well. Onia interesting point that. It would be remiss of me, given that you are one of the more credited banks on the street, not to talk about m a and purchase opportunities. You have already announced significant investments in syntax companies but where else have you cap dry of you cast your eye . Kelly we are at the end of a substantial twoyear period of major upgrades in our systems and processes. So we would be open to additional m a. Syntaxtion to the opportunities which we are very excited about it, we are looking at insurance opportunities for global of the wealth opportunities. Will continue to look at wholebank acquisitions but to be honest right now the economics around wholebank acquisitions have changed substantially of the past few years. And while we are very interested we are very, very selective and very conservative, and so i would say that right now our focus is primarily on insurance acquisitions, syntax acquisitions, some and Wealth Management but mostly focused on organic growth in our Community Bank and our national businesses. Julia thank you so much for joining us, kelly king, bb t chairman and ceo. Scarlet coming up, watching etfs on the rise. We dive into risks and rewards of investing in digital technology. This is bloomberg. G. Scarlet both block and bs en surged more than 20 in premarket trading today before opening little changed. What happened . Joining me from Denver Colorado , magoontian magoon capital founder. When trader says there was a lack of liquidity exacerbated by block and a lack of a long track record here because of their new security. What is your take on the dislocation we saw in trading this morning . Kristen we didnt see the dislocation when u. S. Markets open. Dislocation was in overnight trading were unfortunately there is often Retail Investors trying to buy securities that really just arent being traded, and doing so without using market limit orders, which is very important for buying etfs. And if youre buying any type of etf and just put a market order income especially after hours, bad things can happen. That today we spent time educating people and, at least the people we were talking to, assuring that they are placing market limit orders. So important, for any etf investor. Im looking at the terminal here and you have the first third of the screen that theree market and afterhours trade. Christian, talk about the distinction between your etf block and blcn. Passive, why do people like passive investing right now . The Technology Universe of companies is so dynamic and changing daily with announcements and initiatives that impact valuations significantly. We thought we could take up happened only buy and sell these names once every six months, like the other index etf does. We had to have a Portfolio Manager not only responding to those activities on a daily basis, but also avoiding some of these companies that are using blockchain in their name just to prop up the stock valuations. We think this is the responsible blockchain,t in actively managed, using the manager to be responsive on the upside and also to manage downside risk. Scarlet you talk about name change. Its interesting because the sec asked you and the other etf to change her name to no longer allow locked change in the name itself. They didnt have a problem with your ticker though because you still have be ok . You still have blk we were happy to change that and want to respect the secs concerns for investor protection. We know thats an Important Role they play in the u. S. Markets. Scarlet do think that because of your ticker compared to the other one, that that is making your etfs easier to find for investors . Blcn. Is double that of combination, i absolutely agree. We have a ticker that you can really kind of remember. The other one i think is quite hard. K i think is easy to remember. We have done other etfs like byebye, that were memorable and easier to go out and talk to people about. People remember them with a go back to the terminals and it ultimately else. But we think ultimately our Performance Advantage that we have shown today and the active approach, its showing merit in the markets. Amplify ceo and founder christian magoon, thank you. Coming up, we look at the state of the crack in the market in the wake of corporate debt explosions. That is dramatic, isnt it . This is bloomberg. Mark i am Mark Crumpton with first worldviews. House speaker ryan expects congress to come to terms a stopgap measure. He takes measures in the bill should prevent provide a bipartisan agreement. Whymembers understand on earth would we want to have a Government Shutdown, hurt the that is not in anyones interests. Mark the house will vote unable tonight, but bloomberg has learned that as of now there wont be enough votes to advance senate. That the ambassador so at northhotline koreas first lady talks with south korea north Korea Remains a great threat to International Peace and security. On then allens report Security Council meeting on north korea. Council will maintain its unity to ensure that political consequences that defy International Law and counter resolutions felt by the North Koreans because north korea has an opportunity to change course. Said that as there north korea could pave the way for greater economic benefits for its people. Scientists believe manmade Global Warming caused 2017 to be one of the hottest years on record. To 2016, evennd with the absence of el nino. The local average temperature in 2017 was about one and a half degrees fahrenheit above the 20thcentury average. The five hottest years have been from 2010 on. Pope francis check on a fell off ofer who his horse. He checked on the officer who was guarding the route while pope francis and his entourage passed by. Away, officer was taken the pontiff got back on the pope mobile to resume on his ride. Global news, 24 hours a day, powered by more than 2,700 journalists and analysts in more than 120 countries. Crumpton. This is bloomberg. Lets get a recap of todays market action. The dow falling 97 points. What is interesting is the move in bonds, because bonds fell on the yield on the 10 year. For the worst time since march we are at they start of a bond bear market. Julia were not counting that yet. Scarlet but a Government Shutdown is now looming. Have done rally pores, so investors are digesting earnings season and we have yields and a potential shutdown so something investors will be watching. What you miss . Tracy visiting from abu dhabi. Great to have you back on set. Weft to talk credit. Times. Like old credit spreads are a risk no real surprising record lows. Gettingies have been all the attention, but if you look at credit markets, it is more amazing to me. We saw credit spreads reaching the lowest since 2007. The also saw a forecast for credit spreads for the entire year 2018 blown past the actual move. For instance, and jpmorgan was looking at 20 basis points ofhtening in the first week 2018. If you contract that with what is happening with individual credit you mentioned carillion, steinhoff it is Pretty Amazing to me. Joe you look at situations like . His as being your socratic your secrecy. Herhe reason the spreads solo is because the ecb has been buying a bunch of Corporate Bonds and saying they are selling steinhoff wants bonds last week are you there was an accounting scandal, but the fact they are willing to sell a bond of that status should make investors think about what these things look like on a fundamental basis. Blowups cantic take away that appetite for credit risk . That is an excellent question, joe. Everyone is talking about the return of inflation. Does that mean economic recovery may be starts to eat itself in some way . The other interesting part is the technicals. There is very strong fundamental, the economy looks good for the most part, but the technicals are getting difficult. Everything looks overvalued, going back to that spread question. One of the technicals you might look at is what is going on with the u. S. Dollar. Weakening,. S. Dollar so you might see Foreign Investors and u. S. Credit markets begin to exit. We saw some of that lester, we saw a 35 drop from Foreign Investors. Wells fargo this week is raising the red flag that if the weakness continues, that will lead to inflows. Our Russian Companies looking at this and saying hey, we want to look at that. . This week is kind of special. It is Bank Earnings season, so we have banks coming into the market and sell once they release the results are you that is happening, but we are seeing interesting things in terms of the structure of some of the stuff that is being issued. We have a super pick in the market. Toggle that automatically turns into one equity. It is a hallmark of the pre2007 access of the credit market. You dont see it in the bear market . Leverage loans reaching a new alltime low according to the moody index. It is an indication of the balance of power. None of it is with the buyers because Everyone Wants credit, everyone still wants yield. Joe everyone still wants yield. If you are an investor in credit as you said, spreads have already gotten narrower and a islish forecast for 2018 there any signs of hedging activity or are they buying indiscriminately . They are doing these big macro overlays. This is getting interesting this year because it is the kind of best of times and the worst of times for credit investors. You have the economy going like gangbusters, but everything is overvalued. What are you supposed to do . Bank of america for instance under their recent note, they left that section bank. Nobody knows. Joe tracy, thank you so much for joining us. A shared future and a fractured world. To the world economy. We will discuss. From new york, this is bloomberg. Julia grading a shared future and a fractured world. That is the theme in the annual meeting and Economic Forum in davos. The kicks off next week. Joining us now to discuss his Bloomberg Businessweek editor peter coyle. The davos ist on i could amplify. Do i havent right . That is the argument, anyway. If you think about davos, you think about snow. Also think about sharing. Sharing in a fractured world. Is all about cooperation coordination. Those are the buzzwords that keep coming up year after year. That can be a good thing. You dont want people fighting each other but, as i found out talking to a professor from the university of denver there are times where you kind of what different people to do things different ways. Think about a forest. If you have want to of tree in it, and that there is a fungus, it would wipe out the forest all at once and you have dead trees. Whereas if we have diversity, then you have a healthier ecosystem. Scarlet cant you argue that Monetary Policy is the verse diverse . Fed is trying to increase Interest Rates and tighten Monetary Policy. But, if you look at Financial Conditions, they are looser now according to bloomberg Financial Conditions, then they were two years ago. In practice, Monetary Policy is fairly uniform across the developed world. Devils advocate, we had a financial crisis less than 10 years ago are you this say recencye bias. We forget what recessions are like . People Start Talking about the end of the world . I think it is fading away. There are people operating Financial Markets now who were not even in college or high school in the last financial crisis. Hear the echo of the great moderation talk from 2005 or 2006 . At quite alooking strong synchronized global recovery. If it is true that countries are becoming more locked together, and there is evidence in my story that equity markets in particular are more synchronized in the used to be think what happens when they are going up. It is great. But when it is going down, it is not so great. Take an economy that is on hard times. If other countries are doing a weak country can export from the stronger ones and pull itself up. If all countries are sinking, then you get into a dog eat dog world. And it becomes a huge mess. Joe brought up 2008 and 2009. China put everything together during the global recession. China was less integrated with the global economy, alleys with the financial system, then it is now. Julia what is the solution . Donald trump is going to davos. A my job, instead of sharing shared world, and fracturing a shared world. Scarlet lets see what he will accomplish there. Joe maybe they will solve all the problems. [laughter] peter, thank you so much. Great column. Have the say they votes to stop the stopgap spending bill even if it makes it to the house. The vote is scheduled for tonight. Well take a pulse at washington next. This is bloomberg. Scarlet it is time for business flash. Some of the biggest new stories right now. I just bc will pay a 100 million fine that problem is part of a larger investigation that led to convictions and charges against former bankers. According to people familiar with the matter, it just bc also entered into a deferred prosecution agreement and as promised to help in a criminal case against former traders and others. Pain pioneer has died. He founded in capital along with mitt romney. Bain was 80, and he died in his florida home on tuesday. General motors and a stock payout. They have to run out a settlement that was intended to resolve injury cases. It is over the faulty ignition switches and lost call value due to recalls in 2014. And that is your business flash update. Huge interest between payouts and buybacks. To avert amore day potential shutdown. Democrats say they could block the gop shortterm spending fix. Theyre offering their own solution and even shorter spending deal. Are talking about a handful of days. Alex is with us from washington. What are we expecting them to vote on . Looks like the house is going to vote on a temporary spending probably for a few weeks that would extend the Childrens Health Insurance Program for six years. That is on their strictly to draw democratic votes. But i dont think theyre going to get many. The macau to pots this are balking. It is looking dicey in the house and dicey in the senate. I remember a past shutdown. I remember drama and tension. I get this weird feeling that nobody cares this time. Am i wrong . , i think you are a little bit wrong. We are certainly excited about it here. I think both sides here are dreading this. Neither side wants to shut down. Neither side sees any political benefited anyway, but they are stuck in this trap. Democrats are facing pressure from their left flank to do something about the daca recipients. Republicans are facing pressure from the right flank to boost spending and not make a patchwork deal on immigration, and instead forced them across to the table on a bigger immigration bill. Scarlet conservatives in the house that like the continuing resolution and have issues with it. What is the obstacle here . Onemonth deal because it is too short. Will they be satisfied with four months . Year. Y want a full it is difficult to pin them down. Theres different constituencies with conservatives somewhat a big defense spending increase for domestic programs, health programs, welfare, those sorts of things. And there is a faction that is sick of doing shortterm spending bills. Theyre been doing this since october, and are putting their foot down and saying look, have to pass a Bill Belichick is to the end of the fiscal year. Care if thereey is a continuing resolution for three months, or four months . Think they care if National Parks are open, the smithsonian is open. That is when the shutdown comes to roost. The Smithsonian Museum is the first thing you see when the shutdown happens. The rest of the government will actually keep functioning during a shutdown, so it is a misnomer in the first place. I dont think the constituents care how long the spending bill is. Julia explain the white houses confusion in terms of childrens Insurance Program is concerned. No one is really sure where the president stands at this moment in order to facilitate sort of spending bill. Spelled it on to congress to get a deal done. It middle the president says he doesnt want the childrens insurance to be a part of a shortterm spending that best spending plan, that is an easy headline. Donald trump shuts down the government. He doesnt want those headlines out there. He will sign a bill if it gets through congress, but the white house right now is not winning votes in favor of any particular outcome. They have told congress to deal with it. Julia there is a blame game here. If we are talking about democrats pushing for a solution for dreamers, the president and thatlicans are saying democrats are scoffing it. Getting solution for the dreamers are being credited for a shutdown for the democrats . Think democrats are running a risk here. There are looking good for the november midterms. You have a good chance of taking the house. You may either hold on to the senate since they have or take the senate, possibly. Window that is harder area all the polls right now are favoring the democrats. And being blamed on a shutdown, that is going to hurt them. I am surprised they are willing to run that risk, even on an issue as important as the dreamers. Terms of the tactics over the next 24 hours or so, it appears that will get through the senate. Does that make it easier for conservatives in the house to hold out . Yes, it does. Thats probably what conservatives are counting on, that democrats in the senate are going to stand firm on their demands. Tois difficult right now gauge this thing out over the next 24 to 36 hours negotiations are fluid. Negotiators, including the president , are in question. Scarlet white house editor joining us from d. C. He received 29 and a half Million Dollars for his work in 2017 above the 5. 4 earlier. The pay package included 23 million of restricted stock height the performance. And 1. 5 Million Dollars in salary. All this coming from a regulatory filing. Up, what you need to know for to mars trading day. This is bloomberg. Scarlet u. S. Stocks are ticking up in the recordsetting without recordsetting rally. Kicking things off in a bitcoin company. Joe consumer sentiment. These surveys have been so good. Watching that. And dont miss this report coming out tomorrow. Scarlet that does it forward you miss. Joe have a great evening. This is bloomberg. Bloomberg watching technology. Lets start with a check of first world news. The house of representatives will vote on a temporary funding bill to avoid a Government Shutdown. House Speaker Paul Ryan said he is come to vote that the measure will pass while minority leader called the gop lastminute effort amateur hour. Sident trump make a stock stop to pennsylvania. Himalled apple ceo to thank for his promise to reinvest billions of dollars into the u. S. Economy. The president was on hand to support gop congressional nominee rex akoni. Mexico. , canada, and have agreed to extend nafta talks in montreal by one day, to generate 29. Two january 29. British Prime Minister theresa may met with french president outside of london. The meeting was intended to strengthen security and intelligence ties between the two nations