Up 4. 5 despite concern for their future. Lets give into the market action. Abigail . Turkey on my mind. Turkish stocks up three days in a row, 7 . This as middle eastern tensions ease. Investors moving into turkish assets. Verall, we have been tracking good turkish etf. Declinesyou can see similar to the risk often the u. S. , but there was never a recovery in 2019. Climbing, climbing, climbing. The turkey etf close to resistance, if above those levels, so this could be an area investors continue to go to for outperformance and catch up potential to the rally in the u. S. And other global markets. Cocacola structural changes are paying off, at least that is the word from credit suisse, which raised the stock to outperform in the price target to 64 a share. It sent cocacola shares soaring today. Itscola seeing growth in historically slow or no growth areas, developed economies and darkling beverages. Credit suisse believes Margin Expansion will prepar propel eas and cash flow. , 481 aooking at tesla share. I want to look at their market old competitors, gm and ford. Take a look at this chart. A 175 percent run up since lows over the summer. Of 86. 5 a market cap billion, almost as much as ford and gm combined. They have an it combined market value of 86. 7 million. Billion dollars. Gm postbankruptcy, a hit back in october of 2017. Joe thank you taylor in the markets team. Our cross at reporter is still with us process at reporter is to with the center cheap investment strategist. Us and our chief investment strategist. How important is the data . It is somewhat important. It doesnt have to be superstrong. I dont think the economy will grow at a fast pace any longer because we are at full employment. What we are really looking for is persistence. If there is more evidence this recovery is persistent and will continue without a recession, that is all it will take to get the stoxx going. Stocks going. If it is flat or trailing earnings, we need to see evidence of earnings picking up come in to get that picking up, and to get that you need healthy economic reports, jobs. Surprised about your comment about persistence. Badne is expecting anything in this jobs report. We will basically endoftheyear well above what most people thought we would do with regards to job creation, but a slower pace. Are we fine with that overall pace, historical levels trending you, as long as it stays, know, at a somewhat elevated level . I think we are better. , we have thet it ability to grow labor force around 100,000 or so. Slowect job creation to down to one or 2000 per month, but that is down to 100,000 per month, but that is good. We have 1. 5 productivity growth. That is betterthanaverage for this recovery. A fully employed economy where you dont want to aggravate inflation, that is nirvana, goldilocks. I dont think we are rooting for 200,000. I think 100,000 to 150,000 in that range on a consistent basis. I think this bearishefore you get to will need some pressure. Need somerish will pressure. None of the policy officials are backing away. The fed is not tightening in fiscal authorities are not tightening. There is not real pressure on Profit Margins at the moment. You need something. Would do it, but outside of that, i dont see anything except going higher until we get pressure on the market. , have been talking to people about this jobs report. Talking toave been people about this jobs report. Already, but then it is a Pressure Point for an hour or so, then a relentless. Arch higher in the s p maybe we will get that in earnings next week, but until you see a trend in these job market reports, im not sure that will be a point of pressure. Guest earlierd a who talked about this idea about low rate, low inflation, and low growth environment. You put that together, and you get a goldilocks scenario. That has to be good enough. Its going to be good enough. There is nothing else there. Exactly. A note this week said there outlook is we are in a lowgrade environment and that will be our way for lowgreat environment and we will be that way for some time. You will always have a bid until you see bond markets change. When we do get these ugly reports, there is this inherent bid for u. S. Treasuries. Joe one solid piece of conventional wisdom is that drop in says ra a economic says barring a drop in Economic Growth or surgeon inflation, the fed will be more or less on vacation through 2020 through the election. Do you see that and when might the fed become part of the story again . That is a good question. The biggest risk of this year for the market overall, for the economy, overheat risk. Every recovery in postwar history has ended with overheat risks. We have not killed it. I think Global Growth accelerating, not only globally that is what every Financial Market is telling you with stocks and bonds going up in Commodity Prices rising if it gets going too fast, we will see wages go to new highs, cpi may be to new highs. Joe,ld not be surprised, if you have the discussion about the fed having to raise the funds rate back in play before the end of this year. I think it might be they lift rates. If that 10 year yield gets above 2. 5 , you will see discussion about pressure on the fed. Joe you think the election all . Es that at of course they would say we never worry about the political cycle, but in the real world is that a factor . I dont think they worry too much about a single rate change or altering what they are doing with quantitative easing in the face of that election. Particularly if the markets are in need of it or the economy, i think they would respond to that despite it being a political year. Romaine so great to have you, jim. Jim paulson and our thanks to katie, our process at reporter at bloomberg news. That does it for the closing bell. Whatd you miss . Is next. We will be looking at the jobs report coming up tomorrow. Stay tuned. This is bloomberg. Romaine live from bloombergs World Headquarters in new york. Here is a snapshot of u. S. Stocks today. Pushing the indices to record highs. Joe whatd you miss . Questionsis next as remain about the u. S. Approach to iran. The chinese vice premier and a delegation headed to the u. S. To sign the phase one trade deal. Gsas of the hedge funds, attempt to poach a trader from citadel may have gotten more than they bargained for. Joe jobless claims falling to a fiveweek low in the u. S. , the latest indication the labor market remain solid ahead of that december jobs report tomorrow morning. Our is more is, guest. Initial claims had been picking up, but now that scare seems to have gone away. The fourweek drop is good news for the jobs market. Area youlaims is one would start to see those first inklings of concern about the labor market, and we are not seeing that yet. The december jobs report, although expected to be slightly at 160than last month november, it still shows the job market is resilient, robusta, and has room to go. , it wills report determine the question on whether the strength in october and november is the beginning of a sustainable trend or more of an outlier. Wrote this great story about persistent longterm unemployment. It is at the highest level. What does that mean for the health of the jobs market . We saw a pop in continuing claims. They are for men and women who are unemployed and have already filed for Unemployment Insurance initially, and this is him staying on Unemployment Insurance. We saw that jump to the highest level since april 2018. Although one week does not determine anything necessarily about the labor market, it points to an overall trend we have seen throughout this expansion, and that is the people unemployed for over six months, they have remained unemployed for a long time and at a higher level we have seen across expansions in data going back to the 1940s. Romaine when you look back at where we were in 2019, the number of jobs created definitely higher than what economists expected, but were seeing that trajectory come down from where we were in 2018. What are people saying we will see in 2020 . 2019, it is important to remember it is a good newsbad news story. Ton oflion jobs is a jobs to add in 2019, assuming we get 160,000 tomorrow, but at the same time over the past couple of years, that would be the lowest number since 2011. 2020, economists expect job gains to continue to moderate as you see constraints on the supply and demand sides. For the supply side, there is the smallest labor pool there has been in decades, so finding qualified workers is hard. From a demandside, you see some of the same things we saw in 2019, uncertainty over the trade war, slowing Global Growth, and compare that to escalating tensions with iran and election uncertainty and it is possible you will see those job gains moderate further. Joe something very important meant chairman powell is watching is wage growth. He was asked whether he would characterize the labor market as hot. Despite 3. 5 percent unemployment wage growth is just soso. Growth at see wage 3. 1 yearoveryear. Will there be a rethinking in terms of how low the unimportant rate can go . We are 3. 5 . That was unimaginable a few years ago. Are you going to hear a, say, why not . We could still get into the two s . I dont know. We have seen the fed lower their expectations and as they grapple with the fact that despite three rate cuts and a 3. 5 unemployment rate, we have still not seen inflation pick up. For where we are in the expansion come at 3. 1 yearoveryear wage growth is pretty tepid, but i will point out something i will be looking at tomorrow, the wage growth for the average american. For nonsupervisory and production workers, 2019 has been a great year. There wages are accelerating at a pace we have not seen in a decade. Romaine so great to have you to give us this update. Joe is on the edge of his seat for those numbers tomorrow. Before tomorrow, today, we talk about Citadel Securities suing a british hedge fund over its attempts for what it says our attempts to steal its trading model. We will have that next. This is bloomberg. Securities isel suing gsa capital, accusing him of accessing confidential information on an automated trading model that cost more than 100 million to develop. They also claim gsa was trying to hire one of citadel senior traders. Our guest is here to break it down. The 100t stake here, million, the trader himself . The 100 million is a big investment, but it is also that secret sauce citadel is putting into its algorithms. This strategy apparently made 50 million a year, so it is not invested inh they it, but how much profit it generated. What are the traitors freaking out about . Does it Say Something broader . Youf you are a traitor and work with these Algorithmic Trading models, who owns the ip . It still belongs to the firm. Who may want to test the value on the market, what issues does this raise for their careers . Securities said they started to investigate this was the trader model scented to his email. That is a warning sign, if people are starting to transmit the information. That is a way it gets discovered and investigated, then there is the question of whether or not someone who works on something has any ownership over it. Citadel would argue this is proprietary. How can you poach anybody anymore . Should traders be more careful about how they are communicating . Definitely gsa said to the trader in question, lets communicate by text and whatsapp, and clearly that wasnt enough. It was discovered anyway. Romaine what will happen now . Citadel has filed the lawsuit in london. Gsa said they would defend themselves. We have to see with their defense is by these claims. We are hearing two different stories. The initial filing said he was suspended from citadel, and the other said he is no longer at the firm, so that is an open question. Ultimately, the key question is what happens to that information. The point thatke gsa should not be able to use that information. Joe it reminds me of the lawsuit between google and uber over the selfdriving car technology. As finance because more techfocused, it will be the same thing. Definitely. ,his is the next battleground these proprietary algorithms, the secret sauce of these firms. Joe thank you for breaking down this lawsuit. Sticking to the u. K. , Meghan Markle and prince harry are stepping back from senior roles in working towards Financial Independence from the crown, but what does that mean for the duke and duchess of sussex. Joe is this controversial . Is thisne controversial . Joe it is apparently something in the u. K. It reminds me of downton abbey. There was a story on the bloomberg terminal saying he would get 100,000 per pop to speak. Million,eady worth 30 even if he severs himself from the crown. Joe apparently his brother is angry and resentful, because harry will have more fun in los angeles or wherever they go. Romaine they are going to canada i heard. Joe they will have more fun. They can do a spotify podcast. Romaine lets check the business flash headlines. Not a Big Christmas at the mall. Multiple retailers report declining holiday sales. That reinforces concerns the Department Stores and clothing chains are losing ground. , andnds cut its forecast kohls said its forecast would be at the low end of its previously announced range. Airbus will increase production in alabama, minimizing exposure to u. S. Tariffs put on aircraft. Raise the number of 320s it builds from five to seven a month. Torosoft looking for a way cut into amazons lead in cloud computing, unveiling new tools for retail customers. Microsoft will add a feature that his arrival to slack. Turn theirt people mobile phones into walkietalkies. Workers shifted 70,000 to this. That is your business flash update. Joe coming up come the latest on iran, facing increased sanctions from the u. S. And increased speculation in Iranian Missile led to the crash of ukrainian jet. The former white house aide for iran joins us next. From new york, this is bloomberg. Beyond the routine checkups. Beyond the notsoroutine cases. Comcast business is helping doctors provide care in whole new ways. All working with a new generation of technologies powered by our gigspeed network. Because beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected. To do the extraordinary. Take your business beyond. I am mark Justin TrudeauMark Crumpton with first word news. Justin trudeau once answers about ukrainian jet that crashed, killing 176 on board, including 60 canadians. Have intelligence from multiple sources, including our allies and own intelligence, the evidence indicates the plane was shot down by an iranian surfacetoair missile. This may well have been unintentional. Has learned u. S. Intelligence officials also increasing the belief that ukrainian jet was shot down by a missile. Witnesses say the jetline was on fire as it plunged. The house is about to vote on a measure limiting President Trumps ability to take military action against iran, this is democratic criticism of the killing of an iranian general intensifies. View, theek, in our administration conducted a provocative, disproportionate airstrike against iran, which endangered americans, and did so without consulting congress. The voter pelosi said was a statement of the congress and addedted states we are taking this path because it does not require the signature of the president of the United States. President trump says he does not plan to block john bolton from testifying at a Senate Impeachment trial. Mr. Trump says he would consult with lawyers about whether boltons testimony would present a problem and when we start allowing National Security advisers to just go up and say whatever they want to say, we cant do that. The House AdministrationCommittee Heard from the ceos of the three biggest u. S. Voting equipment manufacturing, who all say Voting Machines are not 100 secure. In the first Election Security hearing at the start of a president ial election year, top from the three counties testified before congress. The election industry is better informed, supported, and more agile when it comes to Cyber Security threats as a designation ishs critical infrastructure. Was asked by a Ranking Member of the committee if Voting Machines were 100 secure, the executives unanimously stated no. According to a report put out by the university of pennsylvania, the executives represent companies believed to control more than 90 of the voting Equipment Market in the United States. Global news 24 hours a day on air and on quick take on twitter powered by more than 2700 journalists and analysts in over than 120 countries. I am Mark Crumpton. This is bloomberg. Iran. E breaking news on the u. K. Foreign secretary saying he agrees that the ukraine jet was shot down by an Iranian Missile. This tracks with other comments we heard earlier today, including from the canadian Prime MinisterJustin Trudeau. Our that gets us back to top story, which is the situation in iran. More is a now with distinguished fellow at the. Uincy institute he served on the National Security staff under president s ford, carter, and reagan, and was the Principal White House aide for iran through the iranian revolution. So great to have you here. Lets talk about the immediate situation. Areou buy that what people calling this offramp or deescalation can hold for a while and we are not likely to see more active attacks . There is an effort. I think the iranians tried hard to avoid getting themselves into a new round of escalation. Trump appears to have accepted that gesture from the iranians. He also made some positive comments about the fact we have worked together on certain things in the past. He has never said a word about that previously. We are may be seeing a breakthrough. Diplomacy, room for this is the only good thing one can see coming out of this situation. Regardless of the deescalation, what are the longerterm impacts of the moves made by the Trump Administration . Series of seen a shortterm actions by the administration responding to a particular issue, a particular problem, which then leads to longterm consequences. Just about everything we have done has produced the opposite effect you would like to see. We wanted to be more secure in the region, we are much less secure in the region. We wanted iran to come apart and they are getting stronger because the raveling around the flag. We wanted to keep iran from having control in iraq but they now have more influence in iraq than before. You can go on and on and on. You know, all of this, and the important thing we have to say, this is a selfmade crisis. A year ago, three or four years ago, none of this was happening, and none of it was going to happen. It is really because the United States has pulled out of the Iranian Nuclear deal and are closer to a Nuclear Weapon now than they were four years ago. There is nothing good that has come out of our relationship with iran. Romaine a lot of dominoes have fallen to get us to this place. Some say you have to go back to the u. S. Invasion of iraq. Policy andof trumps something he campaigned on was the u. S. Needs to extricate itself from these middle east situations, allowing more stability and security within our u. S. Borders. Do you buy that argument . I do. It is a very good thing. We are way over manned inabilities. Putting in another 14,000 troops. There were 50,000 to 70,000 there before. This is an enormous number. They have been there since 2003 when we invaded iraq. Having some of those troops move out i saw in one of the comments trump made in his speech the other day was saying have nato come in and take over. I can imagine wanting to put nato as a cover for the u. S. , to let us stay there but without attracting so much attention when the iraqis want to get rid of us. Joe before he was elected president , President Trump seemed inclined to make a break with established orthodoxy about the level of troops we need in the region. Extremelyit is critical and retrospective the way the iraq war was handled and so on. Do you think he represents a break and republican Foreign Policy . He was quite critical of george bush and the invasion of iraq. He has been critical. He has not put anything else in place. If you say it was all bad, everybody made mistakes, then you come along and make mistakes that make the situation worse, it is a break, a break that has pushed us to the edge of war. That is what has gotten peoples attention, after we were so close, everybody said to wait a minute. Lets stop and back off a minute. How will this issue play into the u. S. Elections and how with the Democrats Use the issue . , nancy pelosisee is putting in a nonbinding resolution, which wont change anything. Over the years, we have given power progressively to the president to be able to make snap decisions with very little control, and trying to claw back some of that is very, very hard, and i think its not going to be before the election. It will be after the election, and depending on what happens. Nato,e you brought up the relationship hasnt been the strongest over the last couple of years. If the u. S. Does pull back and there is a significant pullback out of the region, is nato going to fill that void . I think the short answer is no. Our relations with nato have probably never been worse than they are now. Basically asking them to come along and take risks on our behalf after we left them out to dry, its hard to believe they would jump to that opportunity. Thank you. This is bloomberg. The bond market is looking historically expensive, and corporate debt investors have never received this little yield for taking on duration. Here with more is our Bloomberg Opinion colonists, telling us something about the sherman ratio. You gotrman ratio it right away. It is the yield divided by duration, which toes you how much of a backup in yields would be needed to cause the entire yield you get on your bond to be wiped out. Because it is at a record low, it would take 35 or 40 basis points higher in yields to wipe out the entire income return on the broad corporate funds. Are plowing in a. 2 billion dollars this week, it is something they should be cognizant of. This starts to impact investors when Interest Rates rise, so why does this matter now . That is the big question. If Interest Rates dont rise, you are perfectly fine taking duration risks. You have had relentless tightening in credit spreads. If credit spreads wont widen, maybe Interest Rates will. It is a risk youre taking on, but you expect the spread to cover you for any move higher in treasury yields, but that is not the case anymore. Romaine when you dig deeper into the sherman ratio, do you see a demarcation between the highyield side in the junk side . Right, no, that is an interesting point. You look at the spread in the yield and say, wow, you are basically getting no pickup for bb versus bbbs. Hasduration on triple bs skyrocketed. , it has skyrocketed to. Bu have short data in double bonds. Joe that last chart showed the sherman ratio declining for as long as there has been a bond market rally, which there has been for all of our memory. Through that time people are saying you cant by duration, rates are too low, rates can go below 3 , rates cant go below 2 . It is part of the broader picture, underlying treasure rates have gone lower than anyone expected. Yeah, the one thing that could change this is a pickup and inflation. Your hearing this chatter under the surface, blackrock, jeffrey sayingh, they are inflation protection specifically because nobody is expecting inflation. With this cause people to flood into riskier credit . Possibly. You see a big rally and triple cs. One of the interesting things about the Corporate Bond index is that it has become more exposed to triple b bonds, so you seen the sherman ratio decline in the index get riskier. Romaine our thanks there for all on the sherman ratio. Lets turn to washington. President trump announcing plans to overhaul the environment to policy back. It requires federal agencies to consider the Environmental Impact of projects such as roads, bridges, and pipelines for approval. The purpose is to speed up permitting. Kevin cirilli spoke with David Bernhardt to talk about the changes. Builder. Esident is a what we have done is come out with a proposal that will go out for Public Comment that improves on the national environmental. Olicy act it is a wonderful statute that has a noble mission. That mission is to ensure for government decisions that are likely to affect the environment that the government before making a decision and taking an action, goes and thinks about the environmental consequences of its proposed action, looks at alternatives to the proposed action, and solicits public input. The those things are done, goal is to make a more informed decision based on that information. Nekeep that core tenant of pa in place and fulfill that mission. We come up with protocols that allows to make decisions more quickly, minimize needless and ints about things, think it will really allow us to move forward, not only construction projects, pipelines. It will also affect the building of Indian Schools on federal lands. The ability of us to move quickly and come up with new wildfires. It is a consequential and farreaching decision. And for folks that are dependent on the timing of our permits, it will, i believe, create much better predictability. I find that point interesting. In terms of the timing, so many sites, theyuction are reliant upon that approval. This will streamline the process. It will on a whole host of things, when i came into the department of interior, the bureau of Land Management was taking five years to say yes or no to something. That is an eternity in construction. What happens is during that five years, things dramatically change, Little Things like the departure facility for a ferry to alcatraz island. It took five years what we were going to do there. The Manufacturing Industry praising this, the National Association of manufacturers calling for this a year ago. Talk to me about how this will impact the construction sector. That is huge. The president was speaking today and folks supporting that were in the building today. We have gotten to a point as a country where we have these wonderful ideas and need to do the things to consider environmental effects, we have gotten so wrapped up in the red tape that we are literally stopped. 6, 7, 16are taking 5, years. Suddenly we have an opportunity to get this right, lets improve it. These regulations have not been improved since the 1970s. Based on my reporting and talking to critics, this could end up in courts and environmentalists will raise concerns. They say this is good for big business and will hurt the environment. What is your response . I feel confident once we get comment and finetune this based andhat comment, i confident the proposal will survive scrutiny in the courts. I dont think that will be a question at all. The nationals environment to policy act is litigated a lot. People have a vested interest. They are lawyers and Environmental Consultants who get paid by the page. We will have readable, short documents. When will you enact this . We will be done in the Third Quarter of this year and moving forward. Romaine you were just listening to the u. S. Secretary of the interior, David Bernhardt. Coming up, heading back to washington. China gives its first phasemation of the one trade deal signings next week. That is coming up next. This is bloomberg. China announcing the vice premier will travel to washington to sign the first phase of the u. S. Trade deal. Joining us now with more is our trade reporter. The vice premier is coming back to washington. China indicated they will sign this deal. Is this pretty much done . Announced byas both sides in december, but the question has been when will they actually sign it. Both sides needed to do some translations. There is a chinese draft that needs to be done, but Robert Lighthizer was waving around an 86page draft of this back in december, claiming it was a done deal. Of course the president as far back as october was claiming this is a done deal. I guess we should all remain cautious until this gets signed from a the fact the chinese have come out and said the vice premier will be here on january 15 to sign this agreement is a real endorsement that this is happening. That is a big moment. Happents say it does january 15, phase one is over. Can you tell us right here, right now but at least between january 15 and may be the election that trade will not be a big story this year . Or phase three suddenly create problems for us again . I cant sit here today and tell you that, joe, because trade remains a big story. The two economies are having all sorts of problems. The immediate question after the signing on january 15 will be due the chinese live up to their end of the bargain. In the past, they have made a lot of promises. 2001hey joined the wto in that promises, when they join the wto in 2001, and havent lived up to those promises. The second question is what comes next . This is a small part of the package that donald trump promised when he came to china. Missing completely from this deal is anything to address industrial subsidies, cheap loans, cheap electricity that helps Chinese Companies outcompete American Companies internationally. Something the administration wants to address in phase two. We dont know when that will come. President trump saying i want to start phase two negotiations quickly, immediately, but also conceding those negotiations may not be concluded until after the november election. What do you think about this ability of donald trump to deliver on his promise to reduce the deficit between the u. S. And china . Things. A lot of tariffs remain in place, and those are having an impact on imports from china. The second thing is this deal includes a lot of purchases by china, 200 billion over two years. The u. S. Should be selling more stuff to china. Thank you. Daimler ceo speaks tomorrow. Joe im watching the world Agricultural Supply and demand report out tomorrow. Romaine dont miss this. I will be watching the december jobs report. 8 30 a. M. Eastern. Be here. That is all for whatd you miss . Joe have a great evening. This is bloomberg. Im taylor riggs in dzumhur cisco. This is bloomberg technology. Coming up in the next hour, apples shine. The Company Keeps hitting records. A new milestone in china. We will have details. The food Delivery Business is getting very crowded. Grubhub may be looking to consolidate. We will explain. Sales floor in the sky. It is no news that microsoft