Rising for a fourth day, highest level since 2015. The upswings we are seeing, the synchronous upswing is continuing in global equities. German Investor Confidence today setting optimistic tone for europes biggest economy. To 20. 4. G germanys economy enjoying a strong run supported by domestic spending and solid global trading. The strongest expansion since 2011. That is the data highlighting germany today. Look at the difference between spain and germany going back to 2008, the financial crisis. Points, the lowest in eight years. It has narrowed for 13 of the last 14 days to 79 basis points. On friday, we had the big news from fitch, citing strong relatively broadbased economic recovery in spain. A great piece yesterday saying spain trading at a small premium to germany, reflecting prospects for strong growth and core status within the euro area. Those times are returning. Lets compare sterling to rbs. Currency traders might want to Pay Attention to the health of the u. K. Banking industry. They chart the path of sterling using shares of rbs, majorityowned by the government, as a proxy, could help traders divide where sterling is headed against the yen. ,n three instances since 2011 marked by the red circle, we could see similar moves in the poundyen rate. The price could signal gains ahead for sterling. One of the many wonderful chart on the bloomberg today. 90 minutes into the session. More record highs for the major averages after flipping between small gains and losses around the open, we now have solid gains for the s p 500 and the nasdaq. The nasdaq up nearly. 7 on pace for its best three days since the beginning of the year. These record highs continue to go forward as we progress in the earnings season, plus the boost from tax reform. Look at the philadelphia utility index, of 1. 3 . Up 1. 3 . This has something to do with yields. Look at the 10 year yield. The leading utility companies. The 10 year yield down three basis points. Haven bonds are rallying for a second day in a row. The first time weve seen bonds rallying for two days in a row in 2018. We might not have much of reaction out of stocks relative to these drama the drama in thd. C in thd. C. Forearnings season utilities Credit Suisse saying one concern could be credit risk. Theres reason to think that we could in fact see the utilities come off the lows. They recently entered a correction. Utilities really taking a beating as yields have gone higher. This is the wall to your chart. On bottom, we are looking at the 10 year yield. That weighed on the utility sector. The dividends look less attractive. Utilitiesnley saying yields may drop back down to their recent highs considering this is the city economics of price index. Economics of price index. Surprise index. It appears to be dropping back down. That may be a reason to think we will see yields drop back down. Finally, lets take a quick look at twitter. Shares lower on the day, down 1. 7 as the chief operating officer is leaving the company. Tweet had ain a kind tweet and thanks to the company. Choppy movement here. It appears the stock could trade higher. Mark thanks. Big voices from douglas warning about complacency in the market, including the citigroup chief executive. You think of where we are today, we went through a Government Shutdown over the weekend and the market is up. You go through these events and you have to ask the question and the challenge is from the Asset Management or the investing side is, along the way, you sold brexit and bought it back high, if you sold President Trumps election, you bought it back higher. There is a numbness out there and ambivalence out there that is concerning. When the next turn comes, it is likely to be more violent than otherwise might be. Guest says a good way to manage these risks is layering active and passive portfolio elements strategically. Joining us is dick weil, Janus Henderson group coceo. The ambivalence he was talking about, is it concerning . Are you worried . Are there excessive layers of complacency out there right now . Dick i dont think so. I think the markets probably have the story correct. Global coordinated growth is whats happening now and its a bit hard to the real that the thatthat hard to derail in a short period of time. The underpinnings of the economy globally are Strong Enough that there is probably a buying opportunity. I dont think his fear of it is right in a grand sense. In the shorter term sense, a crowded trade in the market has become selling vol. That will reverse. Higher rates will generate more dispersion of companies, more volatility. As you see the 10 year climb towards 3 , you will see more volatility in the market. Mark how does that play into the active versus passive . I know you want to move the conversation into active and passive versus and important distinction. Dick a lot of people think passive and active are substitutes for each other. They are complements. It doesnt make sense to have all passive. Passive is not a good capital allocator. It free rides on the relationship between the stock and the index. I dont think passive is going away. It is a good baseline choice, it is an expensive. Inexpensive. The best asset alligators will use active and passive in concert with each other. It is an effective way for them to invest. Vonnie how do you charge for that . What would be the correct fee for such an approach . Active shouldal, charge a reasonable percentage of the outperformance and generates after fees it generates after fees. And institutional markets, performance fees make more sense because you have a long relationship with the client. In a retail market, it may make less sense. Meanster Holding Period if a mutual fund is currently adjusting, new investors are paying for performance perceived by other investors and they for paying the fee for their own performance. In the institutional context, performance fees are the right thought. You have to have a reasonable amount of base fee. Vonnie when a new client comes to you and says i like this idea of active and passive, how do you follow their money . Where do you send it . Dick we are optimistic about the future of risk assets right here in the global economy. You should be pretty close to your core base Asset Allocation measured against your liabilities. The difference between a professional investor and an amateur investor is typically staying within the framework. Ary fromno time to v your framework. Think about how good in my at selecting Asset Managers . If you are very good, you have a relatively lower share of active managers. If you think you are relatively be quite confident that a good active manager will deliver significant outperformance over the index and passive over the time peio d ds. Time periods. Mark some waiting for mario draghi to put a lid on the euro. Will he . If he does, will it make a difference . Dick probably what he says wont make a big difference. So much of european economy is trade related, its a challenge for companies trying to trade. We have seen germany survive strong currency and export their way out of it. I suspect it doesnt matter that much what hes going to say. Mark the other call is the boj will be the only bank still easing by the end of the year. The governor saying we will keep up with the easing. Many analysts saying later this year, they will start to communicate or take a bit of foot off the gas. Dick they may start communicating, not moving. I think the growing optimism around the japanese economy is a wonderful thing for the rest of the world. We believe that is a real trend. Our Partnership Means we have some insight into whats going on in japan. We are very optimistic. Vonnie we like Japan Equities. Death how much should we be invested in china china shares how much should we be invested in china . Dick you have to be a professional investor. You really need a professional asset manager. Its really true. The dynamics of that market place are challenging. The amount of information released about the economy in china and those companies is of a different quality than we are used to in the United States and the u. K. In europe. Therefore, you need to watch yourself. If you have a good professional investor, taking advantage of the fact that so much of the worlds growth is going to come out of china is a good strategy. Dick thank you for joining us mark thank you for joining us. Dick weil, Janus Henderson group coceo. Of next, bank of americas code next, bankan up vice german. Co covice chairman. This is bloomberg. Mark live from london, im barton with european close minutes away. Vonnie im vonnie quinn. Overhaulumps tax drawing praise and warnings from davos. Erik schatzker is back with one of the most powerful women in u. S. Banking. Erik she is indeed one of the most powerful women in u. S. Banking and shes Anne Finucane of bank of america, vicechairman. Anne thank you for having me. Vonnie made mention of the fact that weve had tax reform, the signature achievement on the economic front of President Trumps first year in office. Politics and policy are often important to a bank. Going into year two of the trump presidency, what are bank of americas policy priorities . Anne we want to actualize what just happened. Tax reform as opposed to some other things. The tax reform, we see huge opportunity there for our customers and companies. We want to see what we can do in that regard. Secondly, we are certainly looking at and hope for infrastructure, some change around infrastructure. That is certainly needed in the u. S. What about as far as regulation is concerned . How perceptive are members of the administration . Weve heard from secretary mnuchin. Rollback ulatory anne it might go a little differently. I dont know that i would see a rollback of doddfrank. I see an interpretation of doddfrank in a way that the original conveners would not object to most of it. Some of the rules were difficult to follow. If we could have an interpretation that was doable and simpler, volcker as an example, we would be enormously pleased. We see potential banking changes for smaller banks. I dont know if that would affect the larger corporations. Erik what you think the standing is of American Banking as an industry in particular large Banks Like Bank of america . Anne it is improved. We see that we have made great improvements, certainly from the low point in 2009, but just on its own. See somebodys to else trip and fall. Is a mistake people make that we are pleased by that we are not. Unfortunately, its a reflection on an entire industry. We are eager to demonstrate real value to people. Honestly, not to be pollyanna about it, but the last few years have been good because weve been transparent and tried to demonstrate value. Erik you are a leader among women in the American Banking industry. What needs to be done for there to be more people like you . Finally a woman running a large financial institution. Anne the more women in senior management, the more likely we will get somebody to be the ceo. You have to have a secession plan that includes women. A managementplace team 40 of our executive Management Team are women, 30 of the board are women. That makes a difference. If each one of us can mentor and sponsor somebody, we are bringing along a whole other group of women. Thats how you do it. Erik how do you equalize pay among men and women . Anne i think we have. Erik 100 . Women who do the same job as men getting paid the same amount of money. Anne we think we are at least at 99 . Pretty close to 100 . You can never stop. Are we looking at this . Yes. Are we looking at it for ourselves and for others and are we having other third parties look at us . Yes. Erik how much of a risk is the Metoo Movement to the Financial Services industry . Anne a risk . Erik what we have seen happen to entertainment might now happen to wall street. Anne i think wall street had its moments some years ago. You cant legislate individual behavior, but you can create a culture that is intolerant of behavior. We have done that. When we find Something Like that, we redevelop he quickly. Pretty quickly. When you have more women in senior management, it is less likely to happen. Think we as an industry had a lot of difficult years and we have learned from that. Erik its been cleaned up . Anne its been cleaned up. Erik we started off with tax reform. Bank of america was supportive of many of the aspects of the president s economic and business agenda. What about the things you dont support . Things for evaluate your Company First and for your employees and for your constituents and for your customers. I will use Climate Change as an example. Made athe top 21, we had 125 billion commitment to the environment. That is how much business we would do by 2025. We are not going to stop. It is a business opportunity. The government may step away from the paris agreement, but as a company, we are not going to step away. There is great opportunity there. The that is Anne Finucane, vicechairman in charge of strategy at bank of america. Mark another great interview. Well done. Erik schatzker in davos. Coming up, an interview with the head of petrobras. This is bloomberg. Mark live from london, i am mark barton with european close. Vonnie martin good friend is taking questions right now from the Senate Banking committee. He says the Federal Reserve is more or less on the right path. He says inflation could get to 2 within a year or so. He says the 30 year mortgage doesnt need a government guarantee. Good friend reiterating what he bestin the past that qe1 qe3 was not called for. Mark we are four minutes away from the and of the session today. France is down. New record for germany. Ftse up. 3 . Check out the currency board. The ecb meeting on thursday. Weve already heard from dick weil from janice henderson. 1. 2275, near the highs of december 2014. Lets see how the european yields are faring on this tuesday afternoon as we approach the close. Little change in the u. K. And germany. The 10 year yield in italy down by three basis points. This is bloomberg. European headquarters in london this is the european close. Fork it out, stocks rising the fourth day. Highs levels since august 2015. Carhe movers today shares up by 3. 4 today. They have invested 2. 8 billion in online over the next five years. Alexander trying to revise the stagnant retailer, the company is also going to sell stores and reduce the size of its sprawling french hypermarket. They are also looking at boosting their struggling chinese unit. Thirds ts for two an Online Specialty stores eroding sales and appliances and a price war erupting among french grocers. Big news in the media space. You can regulators saying 21st century fox is 11. 7 billion takeover of sky but not be in the public interest. It would threaten to give Rupert Murdoch and his family too much influence over the british media and should only proceed subject to concessions, which could include divesting sky news are the channel from fox newss influence. Dismisses and concerned about broadcasting standards. That is one concern. Of the big movers today big i5 percent since november of 2013. The collapse of rivals like monica airlines, spurring ticket prices in the runup for christmas. Fair game is continuing this year, the increase that europes airlines are beginning to regain control and supply following the capacity splurge triggered by the oil price. Vonnie. P by 5 today, vonnie the Japan Central Bank did nothing this morning and it sounded optimistic on japans growth. It has been a wild since we have been in the 110 range. The yield sitting back in the treasury. Higher than 1. 4 , it has been a boon for the oil market and related currencies such as the mexican peso, which is strong. This is in spite of nafta negotiations stalling. The economy investor in mexico saying that they might get something in march or later in the summertime, at which point we will have mexico elections interfering with things. Movers, to global macro Japan Equities reacting favorably. 1. 3 there at are some microstories that do not look so good. These only one simple rule, dont fight the trend. Currencies,odities, keep on fighting. Lets begin dani burger. Dont fight the trend. Mark how does this compare to other periods of history . Bonds, currencies if you bet on past winners in the past few months, the worstperforming asset every single class is going to get you a return this month. This is happened only three other times in the past decade. Things change in assets take a break, they are not always that in the same thing, but we are coming into a year where we are going to have central bank decisions, volatility coming back. If you change their position and follow the trends, then he did well this month. Mark it does affect the message, which is short dollar. They seem pretty bullish, tech starts did very well. Commodities, a bullish story over there. Curvee flattening yield the short dollar does not really fit the bullish picture, which may say there is some cracks forming in this trend. Mark what are the cracks trending in this thesis than . When you look at some of these indicators that historically say volatility will whip up again, the citigroup surprised economic index shows its data is beating expectations, it is at a peak right now. That will typically come down from a peak, meaning certainty is starting to see back into the market. Mark automated trend is standing like to blame automatic traders when there is a selloff. Jpmorgan for example really likes to point to this. If you have things going well, trend following goes well and there is no volatility. Strategy called trend following that will lean into the trends, so right now of the buying cyclical stocks. Andly leaning into those, once the market has a turn, it will immediately start selling and have a shift of where the market is going. Because the trend has done so well, it has built a large position. The thinking goes that a reversal happens and it will exasperate any standing in the market. Mark becky for joining us. Thank you for joining us. Vonnie the World Economic forum and eric tasker is there. There is a theme in davos every have managed to sign away all of the economies in the world, even the ones that are breaking away from the world order as we have known it. This year creating a shared future in a fractured world. What are our leaders saying . What i am detecting most, is the 11 years distinct change in the mood. Last year went trump was elected there was some optimization for growth, but it was very tentative. This year i am not sure if growth is going to solve the fractured world, but it is amazing how much of a tonic it is for a subprime hangover, that they were suffering from for eight years. I can say conclusively it is gone, but im vast majority is gone. Optimisma real note of that this idea of Global Growth is synchronized and the Economic Cycle has several years left to run. That is an optimism that this idea of Global Growth is in almost any conversation i have had. The idea that President Trump going to be a davos even though he has sustained the as it were. S man, peoplehe basis of what say and the basis of what people do. Have interviewed today is getting out of dodge on thursday, nobody is sticking around for trump, they are all leaving because they think it is going to be chaotic. They think the Security Apparatus coming with the president is going to be impossible to navigate, and so that is a daunting prospect that they dont want to stick around to see what the president has to say in person. They prefer to watch it in the comfort of their own homes, or perhaps in the comfort of their private jets. Areae that is fascinating we want to hear from one of your important guests of today, and you have many important guests today. Were talking about Pedro Parente it is a pleasure to have you here. It is difficult enough navigating the volatility of oil markets of running a company like years, let alone the volatility of brazilian politics. Brazil is headed towards an election with unpredictable results. How is it affecting the way you run your company . Allou are right, you see Oil Prices Going up and staying at a level that was not predicted six months or nine months ago. There is less volatility, actually you see prices going up slightly and staying there. On this site, it is good for us, because we have to reduce our debt, and as you know we have a huge debt. Politicalout political volatility, we have a strategy on in place, and we really need to reduce our debt. We have a target for the end of the year and we are working costs,hard in safety, and improving the efficiency of capex, letsts in focus on what is going on outside of the company. Company isate owned a political animal, to what your Strategic Plan at risk in this election . That is a very important question. What i can tell you is that what there is no political interference whatsoever in what we are doing in the company, and i was an important discussion we had when i arrived. In order to really save the company, if i may, we need to have not any kind of political interference. The Controlling Shareholder will change, and if they change, they can decide to have another management and the company. You want to stay . Theres so many fs in this question there are so many ifs. There are discussions that we cannot anticipate. Who will be elected . Will i have alignment with the Political Group that will wind up election . That is an important issue to discuss. It sounds to me like you are expecting to leave. I am being very careful in setting expectations. I have no decisions in the work it is very important. Forgive me, i am not trying to interpret, but if the political interference were to return, that is something you will not tolerate . Of course not. I have the view that what was really bad for the company was the political indication of opposition inside the company. I have made it very clear that the management of the company has to be a professional indication, not any other type of consideration. What it help if it prioritized . I like to put this question a side if i discussed this issue, i would not be able to do anything else because it is a hot issue in brazil. I prefer not to give any indication of my view on this position. What i am saying is that for the brazilian society, i see there is a recent post showing that brazilians want are ining aside that you favor or not in favor of it, i understand why you dont want to comment. Is now the right time for that discussion to be held . Should be a discussion issue . I dont think it is the right time to discuss the issue. Will start an election. , so the discussions will be in a much more emotional ground, side of the get is a good idea. What about the uncertainty concerning asset sales that needs to reduce its debt . All of that is happening at the same time as this Political Uncertainty and the volatility that we have been discussing. You are right, for sure, in an Election Year it is tougher, but we have a strategic path we have to follow, and will do it. We have unannounced transactions that amount to 4. 5 million beyond the transaction we and we have 2016, 21 billion to fulfill. Are you in a hurry . If you get a deal done, could get approval from the Current Energy minister before there is a change in government. We are in a hurry in the sense that we cannot lose time, but we are not going to fulfill all steps we need in order to do it. What type of talks have you begun with the oil majors that are interested in some of the assets that you are selling . Shell, exxon, and others . We see that having partnerships Strategic Partnerships with these major , you see, as you said very big and very Good Companies that are important for both knowledgeo assemble from both, in order to get good results. A very good producer of oil and the offshores of africa, and the geology of africa is the same of the atlantic because of the very old times of which they were late, so having this knowledge to reduce the risk to explore the atlantic. They have very good knowledge to increase the rate of take over so we always get good results from Strategic Partnerships. Leaking of the assets. Assets. Ng of the what else can you do to raise the assets . We have to have a dynamic pricing policy, which we are doing. As any other company in the world, it is not only patrol, adjusting we are prices based on the international markets, and as prices go up, this will be important for the company. Going to hedge production at the 70 price . We are. We only do this in small portions because of the volumes we are working with. That can beision taken without looking into the capacity of the market to take soe of much bigger volumes, there is something we cannot say at this moment. But again, pricing policy and reducing costs as we are doing, capex, just to give an example we are runningy, out of time. I want to thank pedro. Thank you very much. He is the ceo. Vonnie unfortunately the one thing we cannot stop is time. Dont forget, you can rewind some of these interviews and your bloomberg at tv. Coming up, trades is a major focus and apple, and canada represents the annual gathering a. Well talk with morneau in the next hour as talks enter a critical juncture. This is bloomberg. Vonnie live from new york, and vonnie quinn. Mark this is the european close on bloomberg television. Lets check on first world news. Jerusalem, Vice President mike spence says that the u. S. Needs to maintain its leader role in conflicts. Palestinian president says that there for several i recommended in as israels capital. Multiple casualties in a shooting at a high school in kentucky. Authorities say at least one person was killed and many others wounded. State police say a Deputy Sheriff has arrested the suspect. The state Department Says multiple americans were killed shooting at a hotel in afghanistan. To afghan authorities, 22 people were killed on the attack at the intercontinental hotel. In the philippines, the most active volcano spewed thousands of lava and ash today. More than 50,000 people had been evacuated. The volcanos 210 miles southeast of manila. Global news, 24 hours a day, powered by more than 2,700 journalists and analysts in more than 120 countries. This is bloomberg. Mark expert much, up next. Why the Worlds LargestOnline Tv Network keeps beating expectations. This is bloomberg. Vonnie time now for our stock of the hour. All of surging this on subscriber growth. Originalslate of content driving this. Beast. Look at the market cap, it is at a hundred and 90 billion, interesting enough we have a story out that they had a milestone yesterday microsoft hit their market cap of 700 billion. It is a rising tide with also other several fundamental issues going on with netflix that i want to dive into. The first is the Domestic Subscriber growth, the added almost 2 million in the last quarter, their biggest since the First Quarter of 2016. U. S. Was capthe doubt, but they keep pushing forward. A lot of this was because of Stranger Things and some of the original content. A millionorecasting and a half in the next quarter. They added 6 million net forecastingand are another 5 million in the next quarter, so all of this good news. Vonnie everybody is discovering Stranger Things. Mostly positive, goldman breaks into 315 from 250. The u. S. Domestic profit will be slowing down as they focus more on technology and marketing, they also said get ready for competition. This is a market that supports many players. Vonnie thank you for that stock of the hour. Mark checkout european stocks today. The day is over. Another record in germany, propelled by a fifth of 1 . A quick peak of the currency board, i will leave you with this. So minutes after the end of the european equities. This is bloomberg. We use our phones and computers the same way these days. So why do we pay to have a phone connected when were already paying for internet . Shouldnt it all just be one thing . Thats why Xfinity Mobile comes with your internet. You can get 5 lines of talk and text included at no extra cost. So all you pay for is data. Choose by the gig or unlimited. And ask how to get a 150 prepaid card when you buy a new lg x charge. Its a new kind of network designed to save you money. Call, visit, or go to xfinitymobile. Com mark i am Mark Crumpton with first world news. Says nobodyump knows whether democrats and republicans can reach a immigration deal by the new february 8 deadline. Today that democrats learned that shutting down the government is not the answer and everybody will be trying to reach a deal on daca. House Speaker Paul Ryan is leading a weeklong congressional delegation to the middle east. His office as the trip will focus on regional stability to campaign against islamic states, terrorism, and iranian aggression. There will with several other lawmakers including Services Committee chairman of texas. The state Department Says multiple americans were killed and wounded in the Taliban Attack at a hotel over the weekend in afghanistan. Officials are not think how Many Americans are casualties. Killedrt, 22 people were in the attack at the intercontinental hotel. U. K. Treasury chief