We are 30 minutes away from the end of the monday session. There is a lot of green today. Stocks rising. Currencies canning against the dollar. Stocks up for the third consecutive day. A great chart. The pound and u. K. Government bonds appear to be taking opposite sides. Sterling reaching its highest level since the brexit vote. U. K. Ing blue line, the u. S. 10 year yield spread is the white line. Suggest thate does the gilt market is far from skeptical about brexit progress. Africa. Lk about south there is optimism that jacob zuma may be forced to step down. It was decided friday that the 75 gerald president must 75yearold president must leave office. Allow his replacement to take over the presidency. The rand up to a threeyear high against the dollar today. Ubs shares were down earlier falling the biggest amount since unit missede key earnings expectations. Down bylows of the day, about one third of 1 . The worldss 12 manager will repurchase as much as 2. 1 billion of stock in three years. Bank also combining its two Wealth Management businesses into one. Abigail, how is it looking over there . Record we have more highs for the averages. The nasdaq is higher, the dow is slightly lower, but considering the shutdown, it is pretty amazing. The s p 500 fell 5 . Perhaps a sense of complacency or that the vote in the senate will result in a nearterm spending short gap. The Philadelphia Stock Exchange utility index. Reasons first energy absolutely spiking, this is a today shark. This is their best day in almost a decade on the news that the company has received a 2. 5 billion equity investment. They will be performing a restructuring group. Is ant management activist investor. Maturities may be doing well on the day, but over the year it is a different story. Utilities are down by about 5 on the year. Utilities in an official correction from the alltime high last year. In white we are looking at yields, utilities down more than 10 since that. Dividends look less attractive in the Utility Company against the yield. It will be interesting to see whether or not this dynamic continues and whether it leads into more of a macro pullback. Fewlets take a look at a stocks trading higher. We are looking at halliburton up nearly 3. 8 . Beat earnings by 13. 6 . Margins from fracking nearly quadrupled. 1. 62 on an upgrade to outperform and finally a u. S. Deal at 1. 6 . Not exactly a ringing. Ndorsement the firm is saying that the u. S. Equities will continue to rally. Mark ubs kicking off the earnings season with a mixed bag of results. The bank announced a Share Buyback of fresh financial targets. Muffy spoke with manus cranny in zurich. We are able to continue and refine and retool our capital policy. By 8 . Hat we are we announced a Share Buyback that is the highlight. Why are investors underwhelmed by what ubs had to say today . Are a few stories for today. Buybackounced a share which is tiny compared to ubss market cap. What was most underwhelming is the operating performance. Margins are falling. This is a selection of low to negative Interest Rates in switzerland and the eurozone. Obviously there are compliance costs. I think that was one of the main reasons for the stock drop. The Share Buyback and the announcement of this was probably surprising earlier than anticipated by most people. It was a relatively small buyback like what ubs could be able to do. That was the main reason for the dropped today. They have updated that strategy, lets call it an upgrade. Takeaway here . I think that the profitability targets couldnt belabor it as an upgrade. Ar lowering some of the targets. Is themple assetmanagement business. They previously had a target of one billion in pretax profit over the cycle. I would say that the targets we were seen by some people as not very ambitious. I dont think we see a big shift in strategy. They stick to Wealth Management. I think the combination underpins their strategy. We want to do Wealth Management and we want to be the biggest wealth manager in the world. That is what we are good at. Vonnie should analysts be changing their view . It is one thing to be a lower forecast, but to deliver, at least you are delivering. It is also one of the only european banks returning cash to shareholders. My initial reaction was why is after thedropping buyback. I think that is really the positive takeaway. Ubs is one of the first banks that came out giving clear guidance on capital returns. They increased the dividends. These are the positive things we can take away today. A Share Buyback, increased dividends, and going forward, dividends may increase further. Mark think you for joining us. Reporting from zurich. Vonnie lets check in on the first word news. Hill, mitchl mcconnell is calling for a vote in less than an hour to end the partial government shutdown. They have been talking about a temporary spending bill. So far democrats have them have opposed any measure for young on donald undocumented immigrants immigrants facing deportation. Says the cuts are for businesses to invest. It is a Pivotal Moment in negotiations on the north American Free trade agreement. The next round of nafta talks gets underway today in montreal. The u. S. Has been ramping up the pressure to radically alter the trade deal in favor of american interests. Forwarderkel is moving in her attempt to form a government for the fourth time. The Coalition Party has agreed to put aside its misgivings and enter talks. Germany has been in a political stalemate since last septembers election. Is bloomberg markets. Mark coming up, what started as a surprise alignment may be a longterm relationship. We will look at opec and russia. Vonnie live from new york, i am vonnie quinn. Mark live from the city of london, i am mark barton. Ecignd russia cooperation may extend beyond production cuts. We spoke with these two spokesman from each about their partnership. Think as weo reapproach the rebalancing, what do we know . My belief is that we need to extend the framework but not the production limits. It is the framework that we are formalizing, given the context between them and opec. We dont want to wait for a year of negotiations and deliberations. Youre on board with this continued cooperation . What mechanisms need to be in place for this . We would continue cooperating regardless of whether we need to extend the cuts or not because this could help the market, both consumers and producers. Mark has this put to get put mid2018y calls of a change to the production cuts or not . I dont think it does. I think what this says is the two big beasts in this deal will continue to Work Together if the market evolves in such a way there are clear signs that the group needs to produce more than i think they will discuss that. The forecast suggests that it might if u. S. Production grows rapidly and in fact the glass still isnt cleared by the end of 2018 these two have said they will continue to Work Together to ensure an orderly process. Openingnt be a sudden of the flood while coming back on. How can they manage it so well . This is one of the big things they have to deal with. Over whatuncertainty will happen in the u. S. And the uncertainty of demand growth this year. Inc is no stranger to acting an environment of uncertainty and doesnt always get it right, but the future of the oil market is never certain. U. S. Production and the sort of that increasing volumes of u. S. Production require makes this more difficult than normal. Uncertainty is the bedrock of the oil market. They are used to dealing with uncertainty. Dot they have attempted to is to say that yes, we recognize that there is uncertainty, but we will continue to Work Together to find a way through it. How much is the u. S. Reliant on what they come up with in terms of an agreement . Thent think producers in the u. S. Argue that they are profitable and able to operate. Pricef them at an oil well below what we see at the moment. Many it is opec and countries like russia that are more dependent on a High Oil Price than other producers in the united states. , the in their interest interest of the big producers to get together to restrict their output in order to keep the price at the sort of levels that they need. Mark 100 oil. Who is saying it and are they in the minority . Certainly the londonbased consulting as came out with a report a week ago that has a case with brent rising above 100 per barrel in the latter part of 2019. They base that on a forecast of continued Strong Demand growth growthby the continued in the Global Economic outlook and as they point out, the last of the preprice collapse oil project coming on stream this year. If you like the pipeline of new projects in 2019 outside of the u. S. Shale patch starts to dry up. They say that the temporary dislocation between supply and demand could be enough to push 100 per barrel briefly in 2019, but there are not yet a loud chorus of voices. Ahead, Angela Merkel moves ahead in the new bid to form a force government. It is a major boost from the social democratic party. A live report from berlin. This is bloomberg. Mark seven minutes away to the european close. Vonnie i am vonnie quinn. It is time for our stock of the hour. This company has agreed to buy judo therapeutics. They hope that this deal will help it expand into the Competitive Landscape of cancer treatment. It is that the only pharmaceutical today. It is all about cancer today. The spike in juneau is catching my eye. Premium the last a before these talks were announced. Fightings a new Cancer Technology that some say could be revolutionary. With this accident acquisition, celgene is trying to move into that space. And other strategy is to offset declining revenue from one of its biggest sales. Right now, sales from that drug are at 8 billion. It is expected to peak in 2022 a aboutn decline in 2025 to 9 billion. They are trying to offset revenue via another strategy. Vonnie we were talking about him him earlier. Seems to be quite a bit findter i think they their medicine with a 94 premium. Also not listed is another pharmaceutical. They have another strategy here. Other than kite, which has been purchased by juliette, gilead, juneau is another one that has not been purchased. Mark it is time for the Bloomberg Business flash. A look at some of the biggest business stories in the news now. Take news in the pharmaceutical industry. They agreed to buy this drug maker for 11. 6 billion. Sanofi is looking for new products to offset the kleins for its bestselling diabetes drug declines for its bestselling diabetes drug. There are reports that the coo ofset to become the next ceo sofi. Lets take a look at where you are up in markets are trending as we head to the close. Stocks are mixed. The ftse lower, the dax higher, cac 40 check out the currency boards as well. Arriving aheadu of that. Mark lime from Bloomberg Live from bloomberg headquarters in london, this is the european close. Stocks finishing up the day in m ago,n trading, w london lower. Most of the european boards hire. The stocks to 600 gaining for third day. Highest level since august 2015. 69. S at three weeks of gains through last week. Best run since october. Want to tell you about one of the big movers. A cargo shares up biggest lead since 2014. Grocery Delivery Technology to canadas sobeys. Effort to offer Services Building momentum. Generating annual sales of 19. 1 billion dollars. The deal follows a Licensing Agreement with in november bolstering prospects for technology. Cargo agreeing to buy ill relative, 11. 6 billion, about 105 per share, 64 premium to fridays close. Frances biggest drugmaker. What it wants to do is add treatments for rare Blood Disorders to its portfolio. Biggest acquisition announced by ofi in years. Sanofi is purchasing new products to offset declines for its best selling lantus which faces cheaper competition. Just want to show you whats happening to the euro today. As you can see, we are up against the dollar by a quarter the threeering around year high. 12264 is the close from last monday which was the threeyear high. Big event over the weekend in germany. Entering into negotiations with merkel led blocker. They got to vote on the vinyl packed. It was a close run thing. If the euro rises this week it will be the sixth consecutive weekly gain which would be the best run since 2014. I a lot could depend on the ecb on thursday. Theres going to be a possibility that mario draghi say a faster pace of your appreciation will risk weighing on inflation. We await the ecb on thursday. Vonnie a little volatile today. We are talking two or three Percentage Points when it comes. O the vicks movement that is not a bad thing. Right now it is perched at 11. Unclear if the shutdown is having an impact on market sentiment. There was a lot of all you can treasure each volume in treasury trading overnight. A lot of Central Banks meeting this week so that is impacting treasury trading. The 10 year yield moved up to that high and is just below that now at 2. 64 and staying there. Crude oil having a good day. Mexico, one of those crude oil currency markets. The peso is strengthening. One of the top performers this year in spite of fears over nafta breaking down three of mexican peso trading at 18. 71. Some of the other movers we are seeing, turkey has had a volatile day. The stock market there of 1. 8 . Strongerhas come back, than 8 10 of 1 . Mark . Weaker earlier lets turn to germany. Chancellor Angela Merkel is moving forward with her attempt to form a coalition government. Socialmes as the democrats agreed to enter negotiations on a common policy platform. In a politicaln stalemate since elections last september. Virgin yen and theres one more hurdle in the future isnt there . We have to knowledge this was probably the biggest hurdle. These were the activist. The ones we were the ones that were campaigning against Angela Merkel. A particular bitter pill to swallow. There is another hurdle to take. At the end of negotiations. These are the rank and file members. They are a different type of people. They are just like normal voters and they will not be swayed by the argument of new elections and the fear of new elections. Do they like a current correlation . Polls suggest the majority could be in favor of a grand coalition. Mark the spd calling for further concessions on health, labor, immigration. How palatable is that for merkels block . Demands are quite heavy if you look at it. They are going at the heart of the labor law and immigration which is contentious with merkels bavarian sister party. And also an issue which has been long debated in earlier talks of health insurance. If you look at the small print you will realize the spd has put the bar low and they have opened a lot of opportunities for a deal. They have not made this into a real hardline. Some people say if we only get one of these three issues, we will be happy. Mark thanks for joining us. The latest goingson in attempts to form a coalition. Vonnie attempts at governing here too. They are not working out at the moment. Pictures of House Minority leader nancy pelosi. She is holding a news conference. The senate is scheduled to take a procedural vote at noon eastern that could end the government shutdown. The senate went on recess for a while for members to talk amongst themselves. They were due to be back around 11 30. Anna e dgerton joins us for the latest. Anna right now we are waiting to see how Senate Democrat will receive promises made by Mitch Mcconnell. Promising to put immigration on the floor sometime around february 8. They are trying to figure out if they trust them on this promise, and is that enough for them to move their position and vote to reopen the government. Vonnie effectively the senate needs seven democrats to vote with republicans for this to pass. Why would democrats suddenly changed their mind and trust that immigration will be taken up it there is a continuing resolution . Anna i dont think they wanted this shutdown. Its one of the only tools they had. They are getting a lot of political blowback for them. It is not playing well for them in Public Opinion polls. This is not something they want to go on for two or three weeks. The longer the shutdown continues, the harder it is for two sides to get back and actually come to an agreement. That on immigration or government funding. As a goes on for longer the position hardens so they want to get it over with today. Vonnie it is blowback for everybody. If the democrats polled now there is no guarantee that Mitch Mcconnell will actually take up legislation dealing with immigration after this as promised. Why should they fold now . What would it do for their pr to fold now . Anna i dont think there is a good way out of this or a should or shouldnt. It is not an enviable position for Chuck Schumer to be in. I think there is a lot of mistrust mistrust in Mitch Mcconnell and promises he might make. He promised one of his own senators, susan collins, that he would address Health Care Concerns before the end of last year and promised cente senator jeff flake that he would address immigration concerns. Hes making promises about immigration talks in february but i dont think they trust that is a hard and fast promise from him and they were trying to see if that is enough for them to step back from the brink and get the governmentbacked open. Fund essential and nonessential functions for federal workers then move on to immigration and tried to get an agreement. Is this just vonnie run with seven senators or do we have some bipartisan deal today . Anna it looks like at this point they are going to need at least nine of senators. Two Senate Republicans were Still Holding fast in their opposition to the continuing resolution. Senators mike lee and rand paul. Ranksf the republicans on in the senate are voting against this and you see frustration in the house that they are just sitting over here twiddling their thumbs. Theyre supposed to be on recess and they are waiting for the senate to act so they can vote on whatever the senate can get out. Vonnie what will democrats give . They cant just take it as it is now. They waited for three days if you like so at this point, what will they give in on . The entire immigration deal . Funding for the wall . Anna the immigration talks are going to be a more delicate process. Theres a lot more mistrust on both sides of this than there was two or three weeks ago. Its going to be a hard thing to resolve before march 5 which is the deadline the president said when he decided to end the obama era daca program that gave Legal Protections to some legal immigrants. They will have to find a way to do the horse trading of those different policies. I will give on chain migration if you can give on border security. Right now theres not a lot of good faith negotiation going on in washington. Vonnie an adjutant thanks for that. Heres courtney donohoe. Courtney the Commerce Department has given President Trump report that lead to terrorists on imported aluminum. Investigators began looking at whether it aluminum imports pose a threat to national security. The president has 90 days to decide on potential action. Vice president mike pence said the u. S. Will open its embassy in jerusalem next year. Pence is in that city where he was heckled by arab lawmakers in the israeli parliament. Authorities talked him out of the house. In saudi arabia, settlements from the crackdown on corruption could be more than 100 billion according to a senior saudi official. About 95 of the richest saudis are being held at the ritzcarlton. Cases have been settled by payments that are a combination of cash, real estate stocks and other assets. Greece is moving a step closer toward exiting its Financial Rescue program. Finance ministers are expected to sign off on the greek governments latest set of economic overhauls that will clear the way for another 8 billion in aid which will help greece pay its debt obligations. Bailout is set to end in august. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. Donohoe. Ney vonnie the shutdown into its third market. The first market day we are seeing. The dow is going nowhere. The nasdaq is up about half a percent because it is merger monday. A couple of massive harm a suitable deals along with others. The s p 500 up 3 10 of a percent and the 10 year yield just down around two basis points. Buying in treasuries. Really no impact upon the shutdown so far. Mark live from london, i mark barton. Vonnie in new york, im a vonnie quinn. This is the european close. Is it jail or on to the presidency . Brazils former leader da silva. Thatis just one equation latin american investors are weighing this year. The strategies em fixed income and macro. A, you must be looking your chops. Swith all of this volatility projected for this year, that is where you make your money, right. . for volatility with volatility brings them back. We always find opportunities but when there is chaos in the kets, that is vonnie will there be chaos and brazilvonnie . Our people used to Political Risk . Costas potentially. The judges will announce the ruling. I see three potential outcomes. Previous the last minute on and allows the appeal. The third outcome is the same as moreirst but only with severe language about not allowing another appeal and potential he coming up with harsher language and punishment. The first one is what is already discounted in the market. Therefore i see a further rally brazil isopped to having a number of other problems so i do not see a sustainable rally. A tealsecond case, where is an appeal is allowed, that would be negative for brazil. The third is what could potentially give sustainable rally and legs to rally for the upgrade. Politics in emerging markets is always noisy. These are powerful people with tight grip in the political and judicial system and they will do everything they possibly can until they get an outcome to their liking. The noise in the volatility will continue. Vonnie i want to go back to the first emerging markets taper tantrum if you like. The fed was about to raise rates and we had that crazy overnight session where emerging markets went ballistic. 80, withoutat chart the emerging markets spread versus the fed rate. They are meeting each other. Have emerging markets decided the fed is no longer to worry about . Costas thats a very good question. There is a big debate going on about rising rates being a tailwind headwind for the asset class area to answer that question, one has to go back to the 2006 period of time. Rates are going higher for a good reason. There is growth. Synchronized, global growth. That is good. , rates are going higher. This is going to be the year of commodities. Commodities are good for emerging markets. I bet tailwinds will win at the end of the day. What happened in the last that cycle, increasing Interest Rate environment which was cycle in theike in early 2000s, the asset class continued tightening. Throughout the first two thirds potential probably a that cycle the tightening was active. Yields were going higher and emergingmarket yields were going lower. The spread compression was active and you had capital gains. The last third or so of the cycle was met i passive spread compression were spreads compressed because treasury yields were going higher but the asset class yields were not doing anything so the result spreads were compressed. Now we are back at the eighth or ninth inning of the cycle. Expect spreads to continue performing well. I expect the asset class to do well, potentially read its first pickup in march or so. From that point, the trade will be to buy the deep into the more volatile second half of the year. Mark how do we invest around those countries that have elections in the em universe this year . Costas very carefullycostas . Political calendar for the asset class with elections in brazil, mexico, colombia, among others. I think it is very difficult, a lections and politics in the asset class always are noisy. What we favor is relative value trade. Hard to have a conviction to be outright long or short but it will be volatile. It will be the flipside of last year with no volatility. Be a propitious time. Vonnie a chart here at one of the trade you are excited about. Take us through it. 106 in a bloomberg chart library. Costas that is a trade around argentina. A favorite topic of hours. I know its a consensus trade. What you see here is on the top chart, two argentine assets. One euro denominated, one dollar denominated assets. The differential between those assets, about 90 basis points now. It should gravitate toward zero. Be very positive. In cases where it is negative, we are buying mexican dollar assets. In the case of argentina we are buying euro denominated selling dollar assets. Thank you for your views today on emerging markets. Ostas hamakiotes this is bloomberg. Vonnie it is time for our global battle of the charts. What they might mean for investors. This is in addition to the charts we have featured in the last two hours to read access these on the bloomberg by running the function featured. King things off i wanted to start with a chart on paypal. Paypal is about to report earnings aftermarket, versus amex. Quite a divergence here. For the year, there it ps is below analyst estimates. It was amexs first quarterly loss since 1992. Paypal is expected to make 15 billion worth of revenue this year which is above analyst expectations. So we continue to see upward trajectory. Vonnie short and sweet and very informative. I love it. Mark, im sure you have all that and more. Dontif at first you succeed, try try again. Last week i was banging the em drum but you are giving me nothing. Im going to keep going until you give me something. In the wake of our last conversation, foreigners are buying sun african stocks, the fastest rates on record. Average daily inflows, strongest level since this data series began in 1997. It is down to optimism about the new anc later. We had this news of the anc saying president zuma has to leave office. The hope for sound economic management, leading to this big rise in florida inflows. 10 year yield down to a march low. All ofrk, you know those words flew over the top of my head. I judge based on merit always. However, all that said, you are the winner today. I love that chart very informative. I would urge everybody to look at both. We are waiting another type of vote. A vote in the u. S. Senate. A continuing resolution vote. We will bring you details. This is bloomberg. Mark Senate Majority leader Mitch Mcconnell is calling for a vote at this hour to end the partial government shutdown. Republicans have been discussing a temporary spending bill with a promise to deal with immigration later. So far, democrats have opposed any measure that does not include protection for young undocumented immigrants facing deportation. West virginia democrat joe manchin tells reporters he believes the shutdown could be resolved today. Secretary of state Rex Tillerson visited the u. S. Embassy in london. In that with ambassador Woody Johnson but was forced to cancel a planned meeting because of the u. S. Government shutdown. President trump rigorously canceled plans to formally open the facility because he was unhappy with the buildings cost and new location. In israel, as Vice President pence begins his speech, several lawmakers will cost were tossed out for heckling him. The main arab parties said it would boycott the president the Vice President cost speech. The