Before one of the major holidays. We are heading for the end of the year. That is the attitude today. All three averages at simultaneous highs. Tied to optimism over the tax bill and the effect andould have on corporate stock prices. All three averages are reaching highs. The nasdaq has been lagging. We have a graphical look at this. The white lines are the times that the major averages closed at highs. The dow 69 closing high, now counting today. The s p is 61, and the nasdaq is 71. That is the number of times those major averages closed at records. The dow is close to breaking its record in recordsetting closes for the year. The last time it was this high was in 1995. Some of the out that we have seen include elliott management. In thend a half stake company and it seems numerous strategic opportunities. Shares are soaring nearly 50 . Jp morgan calls it one of his top midcap ideas for next year. Products are improving. Maker wasipment upgraded at keybank. An analyst says the stock is underappreciated and has potential to break out. Amd being upgraded to neutral. Though shares up 5 . There is a lot of deal activity today. The at the targets of various deals. Amplify is going to be bought by hershey four 6 billion. Consolidationnued in the snacking industry. We are also seeing snyder acquired by campbell soup. 4. 9 billion and 50 a share. In the gaming industry, Pinnacle Entertainment agreeing to be tenant national. Big m a monday in the United States. We are at the highest level since july 12, showing where we are and where we have come. U. K. , germany, france, all key cores fall for the second day. Stocks areacap having a tough year, lagging behind Global Equities by the biggest margin since 14 years. It is climbing less than 5 . Surging 20 . Index the difference is the red line you can see. Some pessimism over brexit shows no sign of letting up. Sterlings recovery threatened. Relative lin weakness will continue. That is the u. K. Stock market. Lets talk about currency. According to bloomberg strategists, if the trade doesnt start working out, it could be a very messy run. The speculative position of the euro is the largest since july 2007, according to the latest data. The euro today is testing an a onemonth low. There could be a very painful followthrough. Getting into the m a monday, this is a big scene. Look at shares rising. The French Aerospace specialists knocking off an unsolicited attempt to buy the dutch cybersecurity. They outbid the rival. It rallied at 4. 7 6 billion euros heard it won backing from a target company. This comes less than a week after the 46 bid which was rejected. It is significantly undervaluing the company. It protects against data tax in an increase only connected world. We are speaking later to the chief executive. Vonnie we are looking forward to that. On to u. S. Politics. Congress expected to vote on the tax cut bill by midweek, making it ready for President Trumps signature before the holidays. To are the potential winners and losers, and how will it affect the markets . Anding us is the chairman Investment Officer at cumberland. There are many winners and losers potentially, but do you want to name some industries that you are looking to get in if this happens this week . Year, caphappy new the hanukkah, merry christmas. Where in a celebration on the tax bill. If i were any more bullish right now, i would be arrested. That is how good this is. Small caps, big rebound. A have underperformed the tech sector by a big gap. A are closing it. They have been doing so for a few they are closing it. They have been doing so for a few weeks. Nextwill continue into week. We like the banks and financials, particularly the banks. They are hugely benefiting from an accelerated activity and we believe we will see that. This is a frontloaded, fiscal , and itprou. S. Company comes to Monetary Policy, and it is gradually extracting. It is a confluence that is very powerful for economics and markets. Lead to a this permanent shift of the s p earnings . What sort of shift are we talking about . Think the range of s p 500 earnings, permanent shift, is between 10 and 14, a anent shift, not growth permanent threshold. How you price that is a rare occurrence. We would had 300 to 400 points to the s p 500 the threshold shift. Then you have to say what happens, and you get an accelerator of Earnings Growth because of it. That combination is very powerful. Yes, it is a permanent shift and it is large. Mark that is the Earnings Growth. Can we talk about the economic growth. . President trump is asserting the 3 to 4 . Ll grow you buy into that . The surprise will be growth on the upside, and the second part is, we have deferred recession for at least a couple of years. We have a pathway which is clear. We look at corporate rates and big rates. Take the Little Company that is about to get a tax cut on 315,000 dollars in income. There are millions of them. They are in the half of economy that doesnt trade on the stock exchange. They are the growth entities of the new jobs, entrepreneurial spirit. My firm is one of those. There are many. That is a piece that is hard to estimate. What do we know . We know it has an accelerator and a tax cut and we know it has Capital Spending advantage it did not have 30 days ago. Mark how does the fed respond, david . David there you go. If you get a growth of capex and you have low inflation, the fed has room for gradualism. I believe they will continue. Why should they cut off an acceleration of growth when the inflation rate is below their target and they have been having trouble getting it up to their target . We think the fed is gradual for the next couple of years. Vonnie david, and at some point was made in the last few days and he said stocks arent higher because of President Trump or tax reform or any of those, it is because it is a Global Growth scenario and global recovery. How much of this is due to the presents dereg president s deregulation . David to pieces. Question addsno to profitability emilys burden on a company. The second part is there is very low inflation and low Interest Rate environment each has had 10 years, and is likely to persist for a while. We still have 9 trillion in debt trading at negative Interest Rates because of the central bank policy. Interest rates pressure down, even as we go out. And an why we have time accelerator in earnings and growth worldwide. Theu. S. Is now leading it, largest economy in the world getting stronger. Vonnie when does this cycle peak . When do we start to see it come to an end . David i can give you the time. It is 11 00, but i cant give you the day. We dont know. Prolonged cycle. If Monetary Policy is able to have gradualism, if inflation remains low and gradually improves, we have a very long cycle. It is a very positive environment. We could be shocked, of course. Anything can happen, a war, pestilence, we could have shock. Outside of shocks, we have a possibly long positive trajectory, very much a source of optimism. Mark on the subject of Central Banks, looking at what has been happening in south africa with the ecb holding the bonds of Steinhoff International and they are taking a loss. Question, to what beent have Central Banks distorting the credit markets . David there is no question they have been distorting the credit markets, absolutely. They maintain a zero Interest Rate, they expand the balance sheets, and they have done so in response to a financial crisis. Now they have to figure out a way to normalize things. Our Federal Reserve never went beyond federally guaranteed securities with the exception of a small piece in the midst of a firing of a financial crisis. Otherwise, we did not stray. European central bank went beyond it. The bank of japan has gone beyond it. They own stocks through etf. Normalizing out of those settings takes years, and it must be done in baby steps. That is why we have this very long cycle. Vonnie i have to ask you about the market given the tax changes and also the idea that january and february will see low issuance from bank of america this morning. David we think so. There have been changes in the area. We have advocated for the taxfree, highgrade u. S. Dollar bond. It has traded above its treasury yield comparison. It has been a gift. It still is a gift. We now know what the tax rates will be in if you are in a hightech state, your maximum rate is still going to be about 40 or higher, maybe into the mid40s. You can achieve a taxfree yield that makes that very advantageous. We advocate for taxfree bonds. We have been doing so and still do. . Onnie anyone to take care of any states or offerings that you would take care of . Differentt is a question. The issue of states and credit is paramount now. Likelesome states connecticut or illinois or new jersey have to be watched carefully as their credit situations deteriorate. We are dividing the United States into the weaker states and jurisdictions. They must be monitored closely. The stronger ones, which are very desirable, there is a huge gap. Theres a big get between utah with a triplea credit and new jersey which is 50 unfunded in its longterm liabilities. By utah over new jersey, you would never touch new jersey bonds, is that what you are saying . David no, you have to be careful which one and what the claims rp if youre in new jersey or the highest personal property tax states, you have to make a decision. Be careful about which ones you own. He is david kotok chairman and chief Investment Officer at cumberland advisors. Lets check in on first word news. Incident byificant the u. S. Air force. There are reports a car tried to ram the gates. The bbc says one person was arrested. The gate is on lockdown. President trump will declare china a strategic competitor in a speech today on national security. According to senior officials, the president s speech will be heavily influenced by his views on trade and economic relations. He is expected to outline actions that could target china. In chile, Sebastian Pinera has been elected president. He won almost 55 of the vote. He pledged to reverse four years of sluggish economic growth. He has occupied the president s office before between 2010 and 2014. In atlanta, flights are resumed at one of the worlds busiest airports after a blackout grounded more than 1000 flights. The effects are likely to be felt for days. Thousands of people are still stranded at the airport. 400 flights have been canceled today. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. Im emma chandra. This is bloomberg. Bitcoin future, started trading on the cme. The cryptocurrency continues. We are live on the Trading Floor in chicago next. This is bloomberg. Mark live from bloombergs new European Headquarters in the city of london, im mark barton. Vonnie and im vonnie quinn. This is bloomberg markets. Cmeoin began trading on the. The trend higher is unaffected, even though there was a drop at the opening. Joining us to talk is scott bauer of trading advantage. How much interest was there in the beginning of trading of these new contracts . We did see a major drop at the open. Scott it is not bad for the first day here. Some of the firms that will participate are feeling their way around the market. Right now, there is probably around 800 contracts or so that have traded. Remember, the cme contract is worth five bitcoins. It is really five times the notional value. That is a significant amount. The biggest thing we have seen so far is trading has gone off without a hitch. Things are going well here. Find coke we did see a drop in the price and a vonnie we did see a drop in the price and up a little. How much interest are you seeing . Is a good thing. One thing that is interesting is that even though we see a drop any spot price, some features havent moved. We have january through march, and there is right now at the last quote i saw was a little bit of inversion from january to february, where january future is trading higher than february. Not many contracts have traded yet in those contracts, but that is a little bit of an inversion. When the future came out, we saw 20,000. It settled in around 19,000. The market is kind of feeling forway around and looking price discovery. The main goal here for cme and for the big firms that are trading this is that this is technical logical a gone without technologically gone without a hitch. It is slow and steady. Michael lets talk about oil. We are seeing strategy vonnie lets talk about oil. Strategy is optimistic. What do you think for oil in 2018 . Scott in the short run, there is a push and pull. We know opec extended cuts all the way to the end of 2018, which remains to be seen whether that holds. On the flipside, we are seeing u. S. Ramp up production to the highest it has been. It is supposed to get to 10 Million Barrels a day. In the very short run, we are seeing reduced u. S. Drilling. Rig count last week was down four. That is putting pressure on the market, but we have titrating of 55 to 59, which i dont see changing in the interim. 2018, ierm going into think the pressure will be to the downside. Will be sub 55 and maybe even down towards 50 before we see 60. Bauer, that is todays futures in focus. Ahead, cybersecurity from is being bought. An exclusive interview. Coming up next hour. This is bloomberg. Vonnie this is bloomberg markets. Im vonnie quinn in new york. Mark im mark barton in london. Here is some of the Business News in the story. Campbell soup has agreed to buy snyders. Chips andkes potato snyders pretzels. Snacks have been selling. Her shes is buying amplify is buying amplify. Thatrcent premium at close include skinny pop popcorn. Hershey sees the deal adding to earnings in the first year. History, pinnacle is 10. Ng that combines two of the largest casinos outside of las vegas. That is the latest Bloomberg Business flash. Still ahead, Prime Minister theresa may is due to speak in parliament, laying out her vision for the next phase of brexit talks. This is bloomberg. Cannot live without it. So if you cant live without it. Why arent you using this guy . It makes your wifi awesomely fast. No. Still nope. Now were talking it gets you wifi here, here, and here. It even lets you take a time out. No no yes yes, indeed. Amazing speed, coverage and control. All with an xfi gateway. Find your awesome, and change the way you wifi. Monaco live from bloombergs World Headquarters in new york , im vonnie quinn. Mark im mark barton. This is bloomberg markets. Lets check on first word news. Tax bill, lawmakers trying to get the public and support for the measure. Estate companies to take advantage of a new tax break. , House Republicans are challenging the senate for the take it or leave it spending bill to keep the government running another month. The house is moving ahead with a the government at current levels through january 19. Senate democrats block it, and that means there will need to be a compromise to keep the government from shutting down after friday. The owner of the Carolina Panthers is caught up in an harassment allegations. He is now looking to sell the team to Jerry Richardson says it is time to turn the team over for new ownership. He is 81. According to sports illustrated, their accusations of races comments and sexual harassment. In austria, a new chancel is sworn in today. The Peoples Party struck a deal with the far right party. There is preempt concerns that austria could stray from the e. U. He is the youngest leader in europe. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. Im emma chandra. This is bloomberg. Mark while we wait for headlines for the theresa may speech, i want to bring in an author of bloombergs pessimist guide to 2028. Why 2028, john . Better wayut what a to make it more interesting. The look ahead is more interesting 10 years in the future we are looking at the potential shock of 2018 and looking at how they could shape the next decade. Beeness years have dominated by disruption across the board from politics to finance. We want to zone in on the key pressure points. It has been an entertaining venture. We are leaders to think outside the box. Corbyn make socialism great again. Lets start with that. What is the point you are trying to make with the rise of corbyn . John trying to shake up corbyn becoming Prime Minister would automatically be a disastrous thing. The scenario we are facing is that you get more chaos when he comes into power. He has pledged to spend more on health care and education. It proves to be a remarkably popular and he got reelected for a second term. He also ends up in this scenario spending too much money. There are rising concerns about a bailout 10 years down the line. Mark lets make you aware that Prime Minister theresa may is speaking. Heridea is to outline vision of what she wants the transition deal. Infighting is being done. What do we want the u. K. To brexit . Not much more assertive or enlightened about what brexit will look like than we were on the day after the conservative party is still split. Then again, you never know. There are reports that they are planning to tell theresa may that she could get some labor votes with her. Mark as to corbyn, he has been wise and ambiguous and letting the bad news m a and saying emanate and saying nothing. Government that is bounding around a little bit. In he has to do is not be government and keep your cards close to your chest. The labour party itself is divided. Mark lets listen in to Prime Minister theresa ma