Manus warm welcome to the show, the first of 2018. What does they year hold for you . Do you want to have a haven . It is the year of the dog in japan. What does it mean for markets . Will we see more Financial Market tremors . Last year posted the best performance since 2009. The japanese are on holiday. You have the msci excluding japan. It beat the estimates. Ofve got a question mark from china. Umbers philippines remained in expansion or a territory. Expansionary territory. It is a big week for markets. Hint this translates into bitcoin. This is where bitcoin started a year ago. 998. We are starting the year with a decline. It is the first year we are seeing a get in bitcoin since 2015. Estimate is around 15,000. You have competition from ethereum and rebel. And ripple. Deal,ficit with the tax along with the balance of payment numbers in the u. S. This might give you Something Else to hold onto. The dollar positioning turned long for the first time in six months. If you are looking for a haven,. E are talking about gold bitcoin might have started the year on a down, but this is your gold market. We had the best run since 2011. We are banging it out. What is driving it . A drop in the dollar, a search for haven status, or more of stored value . We have not seen a run like this since 2011. The market can stay irrational longer then it can stay solvent. It appears to be well and alive in the gold market at the moment. We will discuss if that is where you want to put your money as we go into 2018. Do you believe in that story of a softer center of banks, andhronized mobile growth the tax plan that drives america to growth along with china . Are there risks out there . In the meantime, Juliette Saly is back in the driving seat in singapore with the first world news. Juliet, happy new year. Juliette the death toll and protests that continued across iran has climbed. 13 people may have died in the demonstrations. Rallying in a rare show of displeasure with the islamic leaders. Tries to rouhani defuse the situation. U. S. Vice president mike pence will visit israel and egypt this month. The confirmation came after a foreign spokesman from israel field speculation that pants had that pence the visit was postponed until this month. Wantsks Prime Minister to include tax reform this year, targeting income tax for workers is and medium wages. The tax cuts will make it more feasible to work, which will bring more people to the job market and easy his countries countrys shortage. Malcolm turnbull hinted at a survey to gauge Public Opinion saying the nation needs an open and honest discussion on the issue. We will be joined by former australian Prime Minister at 11 30 a. M. U. K. Time. Biggestal areas so the house price increases in the u. K. This year. According to the bank of scotland, southwest england saw a 13 jump in prices in 2017. Englands south coast saw the next highest gains, raising more than 11 . Global news powered by 2700 journalists and analysts in more than 120 countries. You can find more stories on the bloomberg at top. Japan is closed. They are out of action until thursday. We have seen the regional index at record highs. It is led by what you are seeing in hong kong, i huge surge in property stocks. Start of the year flat. Have a look at what you are seeing in malaysia. A sellout of some of those stocks that were overboard on the friday session. Stocks in detail today, we heard from North Korean Kim jongun talking about how he hopes the Winter Olympics are a success. You have seen tourist related stocks rise in the seoul session today. Lifting the hang seng index. We may not see the introduction of property tax until 2020. Disappointing numbers on macaus numbers. Thank you, very much. 2018 in celebrity or a mode. The msci came in ahead of expectations. The highest since august. We have brought in the big guns. Wood. Udmore and rob welcome, good to see you. Happy new year. The chinese have delivered. We have the unofficial numbers. A nice set of data. There are a couple things that hurt me. They are setting the table nicely for us. In china isowth strong and solid. It will be above 6 . 6. 3 , or whatever it will be. It is strong global growth. They are managing the economy well. There is going to be financial asset dislocation during the year because they are starting the deleveraging process. The rest of the world can relax. China is going to be harder to play. Manus it is also fascinating to say we can relax at 6. 5 growth. Sincel be the slowest 1990. Weve written a lovely piece this morning. Take a look at this. We got the debt to gdp is set to be 620 by 2022. This is process the perennial issue. They have big potential which could dislocate markets in 2018 if they do not manage it smoothly. Mark they have a massive corporate debt level. You cant deny that. The banks are well capitalized. The central bank is the most reserved in the world. It is a oneparty system, so they do not need to go through congress to pass this. They can do things relatively easily. , they seem to be handling the growth process well. Manus rob, welcome to the show. How important is what mark just outlined . I know you are by trade a u. K. Economist. We in the u. K. Need a strong and robust china. How important is china in your assessment of 2018 . Rob very. Through much of 2017, the strength of manufacturing emis in thearea, pmis area. Continued strong growth in china ,s very important for that u. K. The u. S. , and the globe. We think chinese growth will be 6 , but will slow a bit through the year as the Chinese Government tries to rebalance a little bit. Manus that is quite low. Our forecast is 6. 5 , the slowest since 1990. Are you at the lower end . Below. Are a little bit slightly slowing growth. About 20t slowing basis points in china, which could turn out to be important for euro area exports which are geared to that high chinese growth. Have decenty, we area growth in 2018, slowing into 2019, as that slow down comes through. Biggestne of the debates of 2017 was, where has inflation gone . Will we ever when will we, let me be the optimist, when will we return to 2 . , thelook under the hood Employment Index remains below 50. The chinese have got the problem that the rest of the world has, their growing nicely, strongly, but they are not employing as many. That is the consequence of the inflation story. Of thes the soliloquy worlds challenges. The not only do they have problems everyone is facing of technology, and demographics, but also in china what is important to chinese inflation is food prices. The bloomberg agricultural index, the lowest on record going back to 1991. Food prices are generally cheap. Overall, Energy Prices are low as well. That means the distribution of cheap Agricultural Commodities means cheaper food prices. Inflationt sustained with runaway food prices. Even though they have higher growth that we have in the west, they will get inflation as well. Manus lets finish this section on global synchronized level of growth. Have 45 of the largest economies growing, according to the oecd. We are coming off of those cyclical highs. Indexes are on an upswing. This is a good backdrop for the start of 2018 for markets. Mark for sure. It is the first single nice global upturn we have had since the financial crisis. For sure, this is a good we arep for the forecast doing for the u. S. , the euro, the u. K. And for sure for the Financial Markets. How long to the drivers of that continue . A cycle kick in and take us to another level . Not the real big upside risk in 2018, whether globally you get. Aking off that is a big problem across the world, trend growth seems weak historically. One reason seems low investment. If that finally kicks in we may bes seeing better global growth. Manus great start to the conversation. Cudmore, we will see him throughout the programming this morning and this week. Rob wood stays with us. Sees aup, trump fantastic 2018 ahead. How long can the bull run into in you . Later, president rouhani calls riseslm as the death toll in toronto. Ran. Is bloomberg in teh manus london, waking up to 2018. We were lit up like a crackerjack with fireworks. U. K. Has the meager list of gays gains. We get the minutes from decembers fed meeting. Friday, is building up to the payroll numbers in terms of the wages. We will be focused on the wages numbers and participation rate. Those are the linchpins of what drives the market. In the u. S. , President Trump is. Redicting a fantastic 2018 at trumps club in maralago, trump said he got the stock market would continue to rise, that more companies would move to the United States in the year ahead. Jodi schneider joins us from hong kong. Trump always likes to grab onto the stock market as his responsibility. How important is it for him that the run continues . It has his fingerprints over it in terms of what happens next. Jodi yes, he likes to take as long as the market is buoyant, he will continue to take credit. The tax deal has been helping the market, and companies are happy. How foreignout Companies May be coming to the u. S. , im not quite so sure about that. While the deal does lower the corporate rate, and it is good for many u. S. Companies, particularly those who will benefit from International Tax implications, it is unclear if Foreign Companies will be advantaged as well, especially if they are advantaged in their own country. Obviously, there are other reasons. There has not been a lot of indications that nonus companies are rushing to the shores, but we will see. Companies are happy about the tax bill. It has been very important for them, and for him to get that win, and for the republicans in congress. Until this, they did not have a big legislative win. It is the Midterm Election year. Companies and the markets in general have been anticipating this. Now they have it, and we will see what continues to happen. Manus from a Foreign Policy perspective, where are we in tradeof south korea and in regards to the olympics . Set the stage for us in terms of the global theater of geopolitics at 2018 for the u. S. . Jodi it is very interesting what happened in kims north korean new years day speech. He did talk about nuclear ambitions. He made clear he had the button at the ready at his desk, and they are not going to shrink from their nuclear ambitions. However, he did offer an olive wasch to south korea, which a tactical change. It is something we have not seen in his rhetoric as of late. South korea took him up on it. Talks,t a date for january 9,. Lead to a this could larger range of discussion between the two countries. They have not had talks since 2015, more than two years. It will be interesting. It was the u. S. In an interesting position. President trump has not commented on this. He said, we will see what we will see. The fact he has not responded yet is interesting. It puts the u. S. Nn interesting position, potentially an awkward position. It puts some pressure on the u. S. It was a smart move by kim. We will see what comes out of them. There could be very little accomplished. The fact these two countries will talk to each other for the first time in two years is significant. Lets see how the rhetoric turns into reality. Jodi schneider in hong kong. Rob wood is still with us. Rob, trump taking credit for the run up in the stock market, but to a certain extent, america has a good mixing bowl. It has generous financing conditions. It has a fed that will hike three times next year. The basic layers are solid for the United States. Are you a 3 man for growth . Rob low 2 . Going into the new year, we have not factored in a very much for the tax plan yet, so we want to see the data going into the new year and how that reacts to it. For now, we are low 2 for us. That is well above u. S. Potential growth, which is below 2 for us. Absolutely still favorable financial conditions, good cyclical momentum, helps the u. S. Expand. We expect unemployment to keep falling. The fed is now approaching its interestof shortterm rates. As we go into next year, if were moving stimulus to hiking, that is one interesting aspect of this. Does the phillips curve, is it really sleeping . Manus you think it is going to come back to life . Rob i think yes has to be the right answer to this, especially planetput push on a down far enough. How low do you have go on the Unemployment Rate . How much does it determine factors . Weructural will learn more about that in 2018. We think inflation will accelerate. The Unemployment Rate fell 60 basis points. It was snoozing last year. Manus it was snoozing last year. The other debate in the markets will be what happens in the bond markets. Bonds underperformed. We got the Bloomberg Barclays global bond market index. The 10 year, do you see a significant shift . Weve done our estimate here. If i take the unemployment level you were talking about, if i take the growth level you were talking about, i am wondering are you part of that 50 basis point moving higher . Target, ind of your is the fed going to continue hiking . If we look at financial conditions, the longer conditions stay loose, the more likely the fed is to hike. Gos is the feds goal as we through 2018. The question is, how smoothly does that go . Manus when i started the conversation i talked about the dollar hitting a onemonth low. It had a fairly tough year last year. There are two issues in the United States. The twin evils of the deficit and balance levels. Im seeing the market taking a longer view of the dollar. How important is a low dollar to the american story . Rob it helps on the inflation side. The other thing to remember about the u. S. , it is not as highly geared, growth is not as highly geared to move the currency as in europe. Manus rob, we have to cut it a little short. Weve got a new report on Global Business confidence up next. Manus you are looking at a live shot of tokyo. That is the emperors palace. The dollar has a little bit of pressure this morning. It is going to be a big week in the markets. Japan is on holiday at the moment until thursday. Global stocks are starting the year quite well. They year of the dog in japan. Lets talk about Global Business optimism. Stocks are riding high. Sentiment among u. K. Companies has fallen last year. Optimism among firms around the world is at its highest levels since it started 25 years ago. Optimism for u. K. Companies was at 12 in q4. That is 60 lower than the same. In 2015. Is u. K. Economist at merrill lynch. We are on shaky ground. This is double confidence and u. K. Confidence, slipping away. That divergence, there is no shock there. What does it take to shift it down a little more aggressively to a more optimistic stance . Agreed transition period in q1 . Does that shift confidence down for you . Rob not up. I dont think anyone can be certain what would you shifted up. Agreed,nsition deal was what actually needs to happen for businesses to feel they have enough certainty, and enough ability to invest. Is still an open question. Michel barnier will say nothing is agreed until everything is agreed, but we can talk about transition but we will not sign it. The one way i think about transition is it stops investment falling sharply. If we do not have a Transition Movement towards one in q1, firms will pare back their investment in the u. K. And increase it overseas. If we get Movement Towards a transition, we can continue along the tepid profile the u. K. Has had. We avoid a downturn, rather than creating conditions for an upturn. Ultimately, even with a twoyear transition, what do you tell businesses . You say, at best i will give you two years visibility here . For business, how willing will they be to make investments in the u. K. With that sort of visibility . Transitionnything, creates a floor from an economic perspective. , which inflation mystery we dont suffer from in this economy, weve got inflation, the wrong kind of inflation many people will say. You say wage growth is not going to accelerate in 2018. Is that because we dont have a strong and robust economy to give the employee that ability to command higher wages . Ailment from a global which is a lack of wages . Rob a bit of both. If you look across the u. S. , the euro, the u. K. , you see wage rose not responding as you would expect with falling employment. Falling unemployment. I think you can argue that in wherek. , it is well below unemployment is. If it was above unemployment you would expect wage growth to be improving. One thing we have done is launch a Consumer Confidence survey. We are asking questions to consumers, where do you expect wage growth to go . Manus what does that tell you . Rob that tells us it will not we have a relatively large sample size. Through december, we see relatively little reaction overall to the eu developments. Confidence did not change through the month. It fell when the negotiations appeared to break down. It rose after they seem to make a breakthrough, and ended roughly where it started. Manus we have established that. Sterling has not helped manufacturing. Be part of your base case. That would be part of your base case. Some people are going to say, new year, new date the pound should get a bit of a kicker. But if i look at that, it is not a breakout momentum for the pound, is it . The question for sterling markets is where do we go with transition . How important is that . Economy,of the absolutely. I do not think sterling is given a big kick to the economy. We have seen manufacturing growth pick up. It is still not growing faster than in that euro area, even though we have the pound of falling a lot. U. K. Has some coupling to global momentum a little bit. Find theam trying to yin for the yan. It is nowhere as strong as in the eurozone, and that is your point. Rob it has the longest stretch of growth in 25 years, but but the growth is still weaker than in the euro area. It should be highlys and can ice with the global economy, and getting a kick from sterling. We should be growing faster than everywhere else, not slower. Is somels you there shock hitting the u. K. It is not as catastrophic as i thought it would be. But clearly, u. K. Is suffering from uncertainty, from continued very weak structural fromctivity growth, declining migration flows. I cannot see how that changes this year. It is not a catastrophe, but the u. K. Will be the underperformer in the developed world this year. Manus thank you so much, rob wood. A reminder, if you are a bloomberg customer, you can watch the show using tv , as well as video. You can use all of the functions that we run. Ask theclick on, guest the question at the bottom of your screen. Mifid wilk come into force ii will come into force tomorrow. Managed. Tors money is banks and Asset Managers spent twond tube elements dollars billion. In terms of the biggest regulatory change in 10 years, it is a complex issue. Is everybody ready, or where do we think things, if they will go wrong, where might that be . The answer is no. Not everybody is going to be ready. Some people are not aware how much they are covered by the new rules. The regulator in the recent weeks backed off and said there allowe six months to firms to get across the line. As long as you show you are making an effort, you will be ok. If you have not made an effort, the regulator will not be happy with you. Manager and iet give you 100 million, and you decide you dont have the expertise in emerging markets, million, to give 10 that asset manager in hong kong is covered by mifid. A lot of overseas managers in asia, we dont think they are fully aware they are covered by these rules. They may get caught up in a way did not expect. Is there a sense regulators need to communicate more at a global level . That is happening, but hasnt been done robustly and the . Is that one of the system, which i think there is blame on both sides. The regular is giving a next her to get ready for the rules. To releaseular needs queue and days on how it is going to work. s. Q a if you are trying to set up i. D. Systems to deal with these rules, you are giving the people who have to implement them little time to make sure the system will work robustly. When the rules go into effect, will be systems be able to talk to each other . Will it crash under the pressure of the volume of trades that have to go through . Problem with the ai not working, and what happens then . Manus lets see how prepared they are. You say there is a sixmonth. To get theirperiod socks up. Calmdent rouhani calls for after the death toll rises. Later, merkel and macron call for cooperation. Discuss. This is bloomberg. It is 1 43 a. M. In the city of new york. Futures is what every does what every manager wants them to do. We deliver the same in 2018 . One lady who is kicking the year off with a bang, Juliette Saly, how are you . Juliette very well. Happy new year. Site charter flight crashed in sydney. They killed all six people on board including the pilot. The ceo is set to step down in march. Formally the chief operating officer. And hister Associates Family were among 12 people who died in a light thing crash in costa rica. His wife and three sons died when a single engine plane crashed shortly after takeoff. Founder described him as a wonderful man. North korean hackers are hijacking computers to mind cryptocurrencies. According to the south korean government, it set a hacking hacked a south korean computer in 2017 and used it to mine coins around 25,000. That is your Bloomberg Business flash. Manus thank you, very much. The death toll in iran has climbed. 13 people have died. President rouhani is trying to defuse the situation i defending the arabian peoples right to demonstrate. Sad news in terms of these protests, and the consequences. What is the latest . Far, we know officially between 12 and as many as 16 people have been killed. That is since saturday. Saturday is when the first deaths were reported. There are other deaths unconfirmed. Have been in ran. Nto teh you cannot say things are concentrated in one area. People who have been healed and wounded in a province in the in the west of iran. That in the last few days, things are picking up in the afternoon again. Manus put this in perspective for us. The last visual we had at the scale of protesters was back in 2009. This started as an initial reaction in one core city, but has since spread. This thes, or has potential to be as big as 2009 . Where does this go from here . I think one of the important is that theseify protests, they are rare and unusual, and the clashes have been surprising. The strength and anger expressed in the slogans has been extremely strong. Seemingly,sters, they are chanting with little fear of any counterattacks from the Security Forces around them. So far, they are nowhere near on the same scale as they were in 2009 from the accounts that i have heard. Ive heard accounts from people who lived through that period, and remember it well. The scale and size is not the same. It also seems to be different demographics. The 2009 protests had a distinct , clear motivation, and an amediate reaction to president ial election at the time. These were proreformist middle class. This time, they started out as what many people think was a protest organized by political opponents of president rouhani. Against his economic record. Then they ended up spreading to people who oppose hardline elements themselves. Seemedew and spread, but to be carried by young workingclass iranians. Outsideook at tehran, Tehran University are middleclass students. Those are two key demographics driving much of the demonstrations at the moment. Manus thank you very much. Now from dubai. Geopolitics is probably the most. Urning issue on the agenda u. S. Relations, how saudis are reacting in the region, etc. What is the most in port and risk you are watching in 2018 . Important the most risk you are watching in 2018 . Everybody is looking at saudi arabia, qatar, iran. Nervous. Are oil has a rally, and is an important part of finances, the stocks in the region have broken with oil. That link is at the weakest level since 2014. We are all watching politics here. It is quite unpredictable. Manus that traditional relationship is breaking down, what interests me from a market perspective is that the Saudi Led Coalition on qatar, you makes ay qatar decline stunning opportunity. The reality is its it is the backdrop of what happens next that will drive sentiment in the region. Important a very point. Normally stock indexes in the region are correlated with saudi arabia. Atars relation is at the weakest level since 2005. That is a significant measure to look at. It creates an opportunity for qatari stocks. It has an expansionary budget for 2018. It took a big hit last year. It was the worst performing index in the world among major gauges. Opportunitiest of in qatar if you are willing to take the risk. Manus if you are willing to take the risk, it could be stellar returns. Happy new year. Lets talk about europe. It is the other big alpha story of markets from 2017. What does 2018 hold . The german chancellor used her message for the fourth term, Angela Merkel said she will work whileon to spread upholding values after years where we saw the far right enters since the 1950s. Merkel said the divide between winners and losers in the economic boom. Concerned you are about solidarity in germany. There has not been so many different opinions about this for a long time. Some are talking about what goes through our society. We covered, but lets circle back to europe. If i look at macron and merkel setting the stage for 2018, it is not amazing, it is interesting to see how the french and germans ultimately will circle the wagons for themselves. This is fascinating. Merkel has been damaged. The economy is doing well. She wants to make sure the strength with the french leader is going to be there, and there is enough confidence. The euro zone economies have been picking up better than many had expected. Was to show proper leadership and say, lets take it to the next stage. Poland, czechoslovakia, hungary, one more powers back. They are the ones manus i dont know that anybody could replace britain. They are causing more asked angst. Saying, this is the way to go. Step in line. Manus a percent in equities return on the stock market was not barnstorming. 68 participants in our whisper about a 4 gain. And about 6. 5 in 2017. Given the political backdrop, do you think we will get more out of that . At all the major indices, they are doing really well. If you look at the ftse local, just though u. K. Stuff, you find all the domestic stocks have been flattened by that. Why . Were back to the brexit argument. You have to split it up to see with a good performance has been. You have to break it up into its constituent parts. Manus if we circle back to the this is the euro dollar over the past year. You can see this constant trajectory for the euro. Again, we look at where will we go in 2019. If you look at the political backdrop between macro and merkel, you got the strongest growth in the past 10 years. Does that add to the euro story . Help consistently weak the dollar has been, the bloomberg chart shows clearly. That is probably likely to continue for the time being. Those rates, and this will be crucial to what is happening in 2018, those rate rises, people will start to say, hang on, those rate rises will have more impact. Will not see positive elements on equity markets that we saw before. Manus we will talk more about that shortly. Up, china enters a new year in the celebratory mood. Pmiave the manufacturing ahead of expectations. Manus good morning from bloombergs European Headquarters in the city of london. This is bloomberg daybreak europe, and these are your top stories. Asian stocks had for another record close, as chinas manufacturing gase gauge hits the highest level. Protests see their most violent night. The death toll rises to 13. Yearurrency starts the new with a slide for the First Time Since 2015. A very happy new year. Ak, the firstybre show of 2018. Global stocks had their best performance since 2009. The numbers in china beat expectations. We have a global thinker nice recovery. The largest economies are in growth mode according to the oecd. Positions on brent are hitting record highs. There is a belief in growth. There is a belief in the opec nonopec story. Theyre just pausing on the u. K. Markets. It is hardly the dramatic drop in london. We have the macron merkel message, more europe to come. That will be critical in terms of what happens next on the political theater stage for europe. 13. S market up by you have this overall view of the markets. Encapsulated beautifully, when it said 2018 will have a powerful boom to the upside. Financial stability will be key. Lets talk about the risk radar. The japanese are on holiday until thursday. Taiwan has the best reading on the pmi since 2015. U. K. And the u. S. Will deliver their pmis later. The dollar is kicking off the year on a drop, extending decembers losses. Mind, something worth making a note of today, the positioning is that the market has underpinned this market with the data term long on in six months. Day one, back on the trading desk. Bitcoin can be day two. Sinces the worst start 2015. A year ago we traded at 998. What a spectacular day it has been. You got competition coming in for bitcoin. You have ethereum and ripple. The whisper number seems to be around 15,000. Lets have a look at the bond markets. A couple of interesting things going on there. It will be 160 billion on tbills in auctions. U. S. Treasuries, if you want your bang for your buck, you have to go to poland, you have to go to spain. But in the u. S. , this was the worst performing on market in , 2. 2 . If you are a euro investor or yen investor, the one thing the European Central banks wants to ensure they do not have a rerun in the thats what the markets have to deal with. The ecb wants to remove the accommodation. That is the progressive objective for the ecb this year. Juliette saly is standing by. She kicks off 2018 with the latest iran from with the latest from iran. Juliette the death toll in the protests over the past five days has climbed. 20 people may have died. Theesters clashed with Islamic Republic leaders. President rouhani has defended writes tong peoples demonstrate as he tries to defuse the situation. Vice president mike pence will visit israel and egypt. The confirmation came after an israeli spokesman said the visit is not included in the schedule of high dignitaries in january. Pence had planned to meet with egypts president and israels Prime Minister in december. It was postponed until this month. Prime minister wants to include the tax reform plan. Speech, heyears said tax cuts will make it more feasible to work, which will bring more people to the job market and ease the labor shortage. Global news powered by 2700 journalists and analysts in more you can findtries. More stories on the bloomberg at top. The first trading day of the year here in asia. The regional index is at its highest level on record. Japan is out of action until thursday. The 10 year high is led by hong kong stocks today. In australia we saw banks weigh on the index there. With comments from the north Korean Leader about the Winter Olympics. Having a look at stocks in detail, china is up by 12 on this rally you are seeing in Development Stocks in hong kong on reports that property tax will not come into effect until 2020. They are expecting 2018 sales to decline. Manus Juliette Saly in singapore. China is entering the new year in a celebratory mode. They came in at ahead of expectations. That is the highest reading since august. We have brought in mark cudmore. Good to see you, mark. Happy new year. The chinese are laying the table with a fairly good set of data. Is 6. 5 percent growth from china will be the weakest since 1990. None of that story to kick off the first day. Mark exactly. That comes on the tail of tax reform in the u. S. It will help Financial Markets. Youve got china on strong footing, and the u. S. On strong footing. We are still in a goldilocks. Cenario of low inflation and strong synchronized global growth. Manus strong synchronized returngrowth, we saw 22 2018 confident are you for in terms of the secret eyes growth story, and is that transfer into equities . With goldilocks, you have to finish the rest of the story. Three bears show up after that. Manus uplifting thought, go on. This year we will see more volatility. Inflationaryome pressures. Weve got good news priced in. We know the tax cuts have come through. It has been a nice global growth. It looks by design, the entire globe has grown. I think weve had a good story. This does not mean there will be disaster. Manus what does the enthusiastic moves look like . Mark i think we will continue grinding up. We will get more volatility. We will see a trend for growth going higher, but every so often we will get dislocated. Get because we did not volatility in the last 18 months, does not mean we will get that this year. As they get lower sustained volatility, we get higher risk from traders. It is more vulnerable. The overall bullish stories remain. There,ee pillars are growth, earnings, and liquidity. They remained supportive overall. As rates rise, and the qe is being withdrawn, you get this tapering affect, do asset prices get sustained . Mark the Second Derivative is important. We have seen the u. S. Curtailing their qe. We got the ecb, the fed has not been up marginal provider of liquidity for years. Equity markets have done well. The fed are going to continue to reinvest. It is not as though they are pulling the rug away from these markets. The chairman over at ubs says the argument that uncertainty is , and Economic Policy uncertainty pete at its highest level in january last year and remains worryingly high. Presents further cause for concern. Geopolitics, it is most felt, it is in your face. How prescient is geopolitical risk . Geopoliticsk doesnt matter until liquidity blows up. And north korea, if there is a military conflict on the peninsula that will hit markets badly. Until then, geopolitics doesnt matter. People are underinvested. A chance forare is people to buy in again. You are right, with the money sitting there, everybody is waiting. It is all about this price, give me a discount. Manus mark, good to see you. Have a good time in london. Justin stewart stays with us. Lets talk about oil because it will be the next discussion. Traders are paring for a busy 2018. Opec and its allies are heading into a second year of supply. Will it wiped out the oil glut . Former u. S. Treasury secretary joins us later. Manus it is it berlin at trading year. The dax up. Global stocks have their best performance since 2009. Does Angela Merkel form her government . Lets have a look at how markets are shaping up on the first fitting day of 2018. Day ofhe first trading 2018. 45 of the largest economies are growing, according to the oecd. Unchanged,s authentic there. A tick there. According to President Trump, it will be another fast another fantastic year. Lets get across to Juliette Saly. Richard cousins and four members of his family were killed on sunday when their charter flight crash north of sydney. It plunged into the river near jerusalem bay, killing all six people on board including the pilot. Said the chief operating officer for europe will succeed. And hister steinberg family were among 12 people who died in a light plane crash in costa rica. Diedife and his three sons shortly after takeoff. Another american and two local crewmembers also died. Bridgewater founder described him as a wonderful man. North korean hijackers north , according to the south korean government, a in 2017 used a computer to mind coins worth around 25,000. South koreas biggest carmaking group has forecast a slowdown in. Ales as political risks cash after setting a record goal in 2017. Protectionism and dangers posed by geopolitics are threatening their performance in the worlds major markets. That is your Bloomberg Business flash. Juliette, thank you very much. Are heading allies into the second year of supply cuts to wipe out the global oil glut. Tensions and a wild into the market mix. Alex, let me bring it to you. The oil market is starting bullish. Is that the opec nonopec deal . Alex on the opec deals site of the equation, it has been the first thing to underpin the market. Opec s say whatever early last year there were noises about cutting for six months. Initially, some say it is a sign it is not working. I think it underpins the market. Manus there is also the proposition from the Fracking Community in the United States , willhey will pursue spend time with the commodity team. Do the fractures focus on value versus volume at these levels . That naturally draws in natural hedging momentum from the hackers. From the fractures. Alex there has been a lot of noise that they will have to limit volume, and hedge volume. Whether that happens remains to be seen. It shows another jump up in production. Those are hefty numbers. Last year, it wouldve been a concerning number for the market. The other concern is demand. Demand continues roaring ahead. Thing if such a Bad Production keeps ramping up. Manus i love a man who can sum it up succinctly. Justin stewart is my guest host. We are going to go help for leather. For leather. The positioning of the market has shifted. Are you a believer . Justin i think what youre going to see here, theyre clever reacting to price. At the price goes up, will they increase production and take advantage of it . Yes, they will. They went in on a big bet to make money on it. They are getting the game, they will be chasing it. As alex was saying, the agreement with opec has sustained. People are surprised by it. Opec member, an but they went along with it last year. They are in a better position now. Manus they have an election coming up. The assumption is putin will win. The question is if they will recommit to that. If i flip it over and have a value, thisrelative is bp, their 52week performance. Talking about the far righthand corner, you are looking at dividend yields. The average is 4. 52 . Shell is getting less, 5. 85 . These are quite appealing. Justin they are very appealing. People are more conservative, not sure what is happening. You want to buy into a yield like that. Thats not bad. Compounding dividends, it is very dull, but it is good for longterm returns. The total return was over 11. That is where you need that value. People should not ignore those yields. If you can get that, that is fine. Manus in the risk radar i was talking about bitcoin. We are trying to find our feet in this. Comparisons, bitcoin, a theory them, and ripple. There is competition for your investment now in terms of these investments. How do you look at bitcoin . We are writing stories about stop focusing on bitcoin, and started to understand where blockchain can deliver in the likes of banks. Blockchain. N and justin it is not just banks. I have spoken to retail operators handing larger items of clothing, food, things like that. Blockchain is like a spiders web. Once everything is connected, one bit will tell everybody else what is happening. In terms of security control, anybody delivering anything from money to widgets is a good control system. The blockchain mechanism is going to be more interesting. Good concept of banks coming out based on blockchain, i hope we will see those this year, i am going to have a look at some of them. Bitcoin is a pot, not a bitcoin is ua punt. When we set up the Confidence Index this morning, global competence is out of 25 year high. U. K. Confidence is under pressure. It has dropped considerably, aggressively. We have been wrong in our assessment in the u. K. Is beginning to look underpin briefly. Is 2018 going to be in the u. K. . Justin business was getting weaker. Justin, thank you for being with us on the First Edition of 2018. The rest of the european markets are set for the start of a treading day on day one of 2018. Guy johnson is up next with the european open. Welcome to bloomberg markets, the european open. Im guy johnson at our new london headquarters. Cash equity trade less than 30 minutes away. Guy china starting the year with a bang. Manufacturing pai pmi surging. The yuan and stocks strengthening. Ill show you the numbers. Will europe follow suit . Iran unrest, the death toll climbs
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