London. Its jobs day. Eurodollar, the one thing we need to watch out for 1. 2051. That were expectations these equities would go higher. We are seeing a little bit of retrenchment out of u. S. Equities because valuations, a lot of people think, are more attractive. Kettneree if max scherze thinks the same. The u. S. Jobs number, 2. 46. We will ask him about brexit. Ask him about this rotation into bonds. In later on, we speak with will em buiter. I know he has a thing or tow to say about germany. Sebastian in the u. S. A bombshell book detailing the backstabbing in Donald Trumps administation is being published four days ahead of schedule. The white house has been defending Donald TrumpsMental Fitness for office, an i ssue raised in the book. If he was unfit, he would not have defeated the most qualified group of candidates the Republican Party has ever seen. This is an incredibly strong and good leader. Thats why we have had such a successful 2017. Sebastian north korea has agreed to hold talks with south korea ahead of the Winter Olympics next month. The talks will include overall korean relations and north koreas participation in the games. U. K. Independence leader nigel farage will meet with michel barnier. Farage has asked his twitter followers to cement questions for him to ask. The meeting will take place 11 00 a. M. In brussels on monday. U. S. Car sales suffer their biggest slide since the global recession. Theres lingering skepticism over the emissions scandal. 6 from thefell 5. Year earlier. Demand for diesel slumped 17 with petrol models showing the biggest increase since records began in 1997. Angela merkels plan to extend her alliance is met with increasing public skepticism as she begins talks with her rival party. Only 45 backed a grand coalition between her christian spd. Rats and the she increased by two Percentage Points, compared with early december. Global news 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries around the world. Im Sebastian Salek and this is bloomberg. Francine stocks have rallied around the world on signs that the Global Economic expansion have pushed bacenchmarks to higher levels. The s p 500 and nasdaq breched new highs. Next on the agenda is the u. S. Payroll numbers. Joining us now is max kettner, a nd Simon Kennedy, our executive editor for Bloomberg Economics. Max, when you look at the market movement, what exactly is priced in . I dont know if people go for valuations, or if equities will go up. Max the law of the momentum trades which have worked in 2017 are still sort of carrying over, right . The financials doing well on the expectation that the tax code will perform. The cyclicals are outperforming the bond proxies. What you see is a continuation of the expectation of very good growth, but disinflationary. People expect a jump in 2018. Francine i want to get into the economy ina second. But overall, is this the year, depending on inflation, where you see a rotation away from bonds . Max i dont think so. That should have happened already, actually, in 2017. In 2017, everyone said, high yields dont make sense. Ieldingelds are yo 2. 5 . Meantright rotation would a switch to really good growth, with better than expected inflation, and then you could see a rotation from bonds to equities. Thinkne yoit seems markets this time it is for real. How can you be so sure . Max one year ago, we probably said the same things. The economists and central bankers have kind of stufck with the things will resume as normal, inflation will kick in. And markets have been holding off, as max said, but we are looking at strong economic data. The actual economic forces are gathering speed into the new year and that, in theory, should lead to inflation. The pmi is very interesting. Details,u dig into the and a lot of companies are talking about supply constraints, running into limits, which implies c inflation. Francine how reliable are these figures reflecting the workforce participation . They are pretty reliable. People will still question them. In the u. S. , weve not seen those trends kick in, which we normally would have done so. So, people are looking beneath the headline data, and the earnings data, the one thing missing from this global expansionist, the wages. But then that will reinforce the feds push to three Interest Rate hikes this year. Francine let me bring this over to the bloomberg terminal. Trend, the hiring looking more like midcycle. We have seen a lot of anecdotes from employers, discussing how the labor pool is shrinking. You can also see that it kidn of nd of it is not uncommon for this to excel a ratacceleran this part of the cycle. How much do you focus on this . Do you look at this to make sure theres not a wrong bet . I think the market focus has shifted to the average hourly earnings, as simon was saying earlier. Ultimately, thats the one puzzling piece we dont understand yet. A lot of strategists say, look, it feels like every start of the year, the last two or three y ears, everyone said, we expect higher bond yields and inflation should kick in because of the usual phillips curve relationship. Oken off. Sort of br there has come some realization that the phillips curve has bro ken up. Therefore, the headline number does not play. Francine this could be the year the phillips curve comes back. It could have been last year. Theres a lot of discussion about unemployment. What was old is new again. A very good article on Bloomberg Businessweek, he went back in crunched since 1961. He suggested that the fed will want to see some sign of which growth, as will the economy, which has felt not caught up in this economic growth. If and when they do, that could accelerate consumer spending. Francine max kettner and simon french, both stay with us. Includinging up, waiting on inflation. Euro area cpi. Its out in less than an hour. A little bit later, we talk brexit. Can the pound shak eoe off Political Uncertainty . We bring you the outlook for this year. This is bloomberg. Francine economics, finance and politics. This is bloomberg surveillance and im Francine Lacqua in london. Heres Sebastian Salek. Sebastian ubers former ceo plans to sell 29 of his stake in the ride hailing company, and stands to make 1. 4 billion. Apple has said all Mac Computers and ios devices are affected by chip security. The company added that recent Software Updates mitigate the meltdown. The tech giant says the apple watch, which runs a derivative of the Apple Software system, is not affected. Streaming premier League Matches in the upcoming auction in the u. K. The move is part of a broader strategy to bring more sports content to the global customers. They are trying to get more people to subscribe to the prime membership, and convert occasional customers into loyal customers. Francine thank you, sebastian. Here is our inflation data, released at 10 00 a. M. This morning. It is expected to have slowed year on year to 3. 3 . Activity has accelerated to the fastest pace in almost seven years. What does this mean for mario draghi . Still with us, max kettner and Simon Kennedy. Thank you both for joining us. Executive editor, actually covering economics. Max, when you look at the big winners of 2017, you could argue it was opec because of what they did with oil, and the european economy because investors could not get enough of european assets. What about 2018 . Onall depends on you how you look at it. You get the euro appreciation in there. Its also a question of not whether eurozone equities will rally further, but a question of they will not continue to rally further, but should that shoot higher . When we look at positioning, positioning is that multi year highs. Of see one and a half years surprising positive activity in the eurozone. Go back 12 months ago and everyone was below that. Now, everybody is on the completely opposite camp. Euroine when you look at strength, is that the main concern that the euro region economy could have . I dont know if it is the main concern, but it is a concern. A lot of banks are raising it as a flag for global Central Banks, if the dollar keeps falling and their currency gives falling, that could put on ice their hedging plants. On ice their tightening plans. Some messages over the christmas holidays, perhaps suggesting they will be done in september. There will not be a long tapering. It will be interesting to hear from the dovish members of the ecb. Francine when you look at the Central Banks around the world, does mario draghi have the easiest job because of the mende, but he is not really given a mandate into the bond buying cultures . More facility. Pretty much, though, the easiest job has got to be jerome powells. Theme powell will have yellen fed for quite a while. Shes put in place strategy and guidance that would suggest powell would need to change quite a few minds on that board to change tract. , though, yeah. Hes bought some time, eys. He has bought some time, yes. The next big question for the ecb in the wider Investment Community is what happens after september. Hes got a couple of months, but at some point pressure will grow. Francine how much reporting and editing are you doing on the changes in the central bank over the next two years . You have jay powell coming in. You still have the Vice President of the fed. There is a huge amount. We have seen powell. A lot of board members, a lot of rumors going around as to who that might be. The pboc, potential change there for the first time in 15 years. Chile, south korea a lot of Central Banks are changing at the top. The new york fed is a big one. The ecb, five of the seven top positions in frank for will be changing by the end of next year, commenting in mario draghi. That allows the chance to influence monetary policy, to promonitoring. An ecig is there class is there an acid find . Lass you can we are modeling after 10 year bund yields. You can find the residual that has bueen building up since the restoration of qe. So, it yes, yeah, probably one of the most distorted i dont know, because we have got some parts of nonfinancial credit last year we had tech spreads around six basis points. That does not sound attractive either. That has recovered a little bit. Bunds, but part of credit also in ecb policies. Francine thank you so much, Simon Kennedy and max kettner. Kalanick next, travis is planning to sell 29 of his the company. This is bloomberg. Francine this is bloomberg surveillance and im Francine Lacqua in london. Uber cofounder Travis Kalanick is planning to offload some of his shares, about 29 . He previously stated he would never sell his stake. Joining me from commerzbank, next get i gesturing me from commerzbank, max kettner. This feels like a big deal. That is a pretty huge amount. Valuation atthe 48 billion. hisafter kalanick has sold shares, he will have the shares technically valued at 70 billion. So, thats quite a bit. But a big player, symbolically it shows he is cutting his ties from uber. He needed a successful company, but trashed a lot of reputations on the way. Francine is that good for the company, as they are trying to get away from the allegations and the court cases we have seen . Bloomberg markets asia ive i think it is great. Travis might try to sell more than his 29 . He got to a point where he realized he needed to step back and work out what hes going to do next. Mo4 billion is a lot of ney. The new management in place is hoping this is the tipping point, moving uber away from the ipo, whichcing the is the next big thing for the company. Francine do we have timing on that . In 2019. This is the last big window that employees and investors have to sell out from uber. The ipo is the next one, in over a years time, in theory. You cannot just offload your stake, even if you are a high stakeholder like travis. So, hes taking the opportunity to raise money. Francine we will be back with max kettner. Coming up on bloomberg tv, its the brexit show. We focus on theresa may and the pound. Francine good morning. Its time for our weekly brexit show, live from Bloomberg European headquarters in london. Im Francine Lacqua. Sebastian . Sebastian teresa may says she thinks hes bluffing. Two senior officials familiar are privately saying the e. U. Chief brexit negotiator is faking a hard line stance to make a deal that would allow banks to operate freely. This comes as the u. K. Comes to negotiate the ties with the union. The trade secretary is looking at all options amid reports britain is exploring membership as the t. T. P. To boost trade in brexit. The comment was made in a threeday trip to china. As brexit weighs on london house prices, a english spa town and two coastal areas saw the biggest increases last year according to halifax, southwest england, saw a 13 jump in 2017, almost five times the national increase. London south coast saw the next highest gain with prices rising more than 11 each. U. K. Car sales suffered their biggest slide since the global recession. It is based on lingering skepticism of the performance of diesel cars. Preliminary figures indicate 2017 sales fell 5. 6 to 2. 5 million vehicles and the steepest drop since tween. The demand for diesel dropped 17 and back to petro vehicles which prompted Carbon Emissions since records began in 1977. Gel ferrier is to meet barnard next week. He is the lead vote to lead the e. U. And is to submit questions to ask. The meeting scheduled between farage and barn yea on monday. Bloomberg powered by more than 2,700 journalists in 120 countries. Francine . Francine the pound will shake off the bronxity woos, according to a Foreign Exchange strategist at i. N. G. Sterling gained 10 against the dollar in the last year after a sharp drop following the brexit vote. I. N. G. Believes it will climb to 1. 53 by 2018 and is not the only one positive on the pound and tops the buy list of bank of Merrill Lynch and the International List as well. Still with us is max kettner from commerce bank. Dan, were getting headline figures for the unit labor cost and is a year on year Third Quarter for the u. K. , 1. 3 . What does it tell you . Dan pretty weak, unit labor costs just to clarify wages adjusted for productivity growth. Its a measure of inflationary pressure, domestic pressure in an economy and in the u. K. Youd expect unit labor costs, if inflation was running at target, 2 target, and i know its above that because the pound, but running at 2 youd expect union labor costs at 2. 2 . Youre close to a percent point below the level of the bank of england might like to see to see inflation back at the target. Its a weak reading. It doesnt make for good reading for those looking for, you know, hikes relatively soon. Francine at the same time we had encouraging figures from the u. K. The last couple days, Like Services werent bad and how do you make sense of all this . Dan they werent bad. We still think the economy is in the slow lane at the moment between growth this quarter it be. 4 which is what was in 3q and next year that pace is maintained and looking at 1. 4 gain. Youre right, the surveys were little bit relatively upbeat but the broad story is that its not poking inflationary pressure. Same sorry around the world and figures underline that. Francine max, your take on pound snn 150 . Max it looks a bit punchy, 153 and particularly not because of sterling appreciation but assumes a weak dollar and pretty much were in the opposite camp. For sterling as a whole, on a trade rated basis, probably broadly rangebound since the brexit vote and broadly truck chew waiting in this volatile range versus euro, particularly given we look for some euro weakness, actually, you cant unsee euro sterling tailing a little lower and see some complacency particularly in the first half of the year. Id rather say cable is within towards 130 but the 135 range but with regard to innation particularly the beginning of this year. 153 a bit too punchy and more if you want to play sterling strength, its probably more towards the euro leg versus dollar. Francine dan, you have a forecast . Dan we do. We have pound dollar at 136 at the end of the year so thats flat from where it is now. The reason why we would be different from the 1. 50 call is we dont think the bank of england will move this year and second of all we dont think brexit negotiations will go particularly well and that story will come back in a lot of these forecasts predicated on the transition deal coming through quickly and the trade deal we get i imagine being the forecast relatively optimistic about the trade deal and we a candidate type deal is what well head for. Francine lets bring you to my favorite chart, this is europe town and kind of a trajectory if you look into august of 2017 where a lot of bets were it would go to parity, euro pound at parity and weve leveled off. What happens if you see pound stronger, what happens to this chart . Max you probably can see a bit of sterling strength and interesting to see on one of your favorite charts that you do see some genuine sterling strength compared with eurodollar which is pretty much close to the highest where euro sterling is a bit below the highest there so you see some genuine sterling strength particularly versus euro and reckon particularly what weve seen the last year and a half there was a streak of positive surprises week over week and activity surprise in the euro zone and thats sort of leveling off particularly if you think about growth expectations for the euros economy has nearly doubled the last 12 months. For the potential for further upward price is rather small and with the euro appreciation, the potential for a few negative surprises in inflation is quite high the next couple months, euro is leveling