Equities. We will comedo, back to this in a second while we fix this. Vonnie i will check u. S. Markets first because we are 90 minutes into the trading day. The dow is up. 25 . The s p up. 1 and the nasdaq tax reform helping the. S. Profit outlook david from mainstay capital think the trading weve been seeing this year is equivalent to euphoria. Perhaps this wont end well. Theyre interesting when we contrast this to a great chart we have in the bloomberg. We are looking at the number of death without a 5 pullback or greater. We are looking at the number of without a 5 pullback or greater. The s p 500 in blue. We are looking at the number of days without a 5 pullback. We are on day 295. Week,eek, it was last it was day 292. You have to go back to 1965. One of the bestperforming sectors on the day helping the record high, the financial sectors. Citigroup and bank of america higher. We have regional banks higher. Behind this trend, not surprisingly, yields. The 10 year yield is up five basis points. Up for a fourth day in a row. That is represented in red. Haven bonds are selling off as stocks climb. The rising yield is giving a bit of a boost the bloomberg dollar index, up for a second day in a row. Pretty interesting trading action that we have here in the u. S. More record highs, consistent with what weve seen in 2018. Mark we are up, five days of gains, best run since november 1. I want to try you this chart. This shows the synchronized nature of the upswing in equities. The 14 relative strength index for all these top indices above world index,g msci asia index, emerging markets index the stoxx 600 lingers below 70. Also at a record high today giving you a sense of the upswing in global equities, this is the boj today. Yields rising today. The 10year and 30 the boj cutting its longterm purchases. We are talking maturities between 10 and 25 years. The move doesnt have any policy implication. Investors are right to expect the central bank to head towards the normalization in the longer term. The boj has been buying fewer government bonds since adopting that yield curve control policy back in 2016 when it shifted its focus to controlling Interest Rates instead of asset purchases. Earlier,inc in london rising to a highest in a decade. Global inventories dwindle, zinc is the white line. And has risen every day since december 19, more than doubled since the start of 2016. Lets talk u. S. Politics. Vonnie lets do it. President trump very close to taking a nominee for fed vice chairman or vice chair, even. It has been vacant since Stanley Fischer retired in october. Potentials include former fed governor Lawrence Lindsey and mohamed elerian. Other names were touted as well. Whomever the president chooses will have to respond to criticism that the fed should reevaluate its 2 inflation target. Joining us now, robert eisenbeis. Lets start with something very basic. What does the fed number two actually do . Robert theres some misconceptions about what the fed vice chairman does. The fed tends to change and modify responsibilities depending upon what people bring to the table. In the past, the vice chairman has quite often been the chief operating office are of the Federal Reserve officer of the Federal Reserve. Clearly, that is not what stan fischer did. Stan fischer brought to the table this international anutation as far as outstanding economist. His position was much more related to policy than it was the operations of the fed. And will really depend upon what skills the person brings to the table what impact they will do. Its a bit overblown to think that it is a critical position in and of itself. Its another governor position. There arent specific responsibilities that go with the chair. Vonnie who would be a good companion or seatmate to Jerome Powell . Robert in this particular case, you would like to have an economist in that position. He doesnt have that particular background. In this particular case, if Larry Lindsey were to be selected, he obviously knows the fed, hes been involved in the past, he understands how it operates, he would be someone who would be very wellequipped to be a complement to chairman powell. Mark phil dudley will have to be replaced. Randy quarles is coming in. A couple moreair, dovish members wont be voting this year. What does that mean for policy in the year ahead . Robert this is the really interesting part about it. Right now, we will end up with a situation after chair yellen leaves, there will only be three governors. As far as the fomc is concerned, the reserve Bank President s will dominate the voting. I can remember thats ever happened before i cant remember thats ever happened before. It depends on who gets dudleys position. The president of the Federal Reserve bank of new york is a permanent member of the fomc. Interestingly enough, the people who are the incoming members include a list of very accomplished economists. John williams has experience from San Francisco, Loretta Mester from cleveland and now, Raphael Bostic from atlanta. These people are not only first rate economists, but their views have been pretty much aligned, at least according to their Public Statements, with what the policy has been all along. What i think they will stick to and probably be a tad more hawkish than the current makeup inpresident s who were voting voted in in 2017. Mark it could be more than likely that we see more than three rate hikes in 2018 . Robert im not sure about that. Right now, because of the vacancies and all the rest of it, i think you will see caution to begin with. They will be data dependent. I know there were some expressions in the last minutes of the fomc about people being not quite so sure about whether the number of hikes they had forecastsin the sep would infect the realized. In fact be realized. They will be data dependent. It depends on how the economy evolves. Vonnie there were lots of people chattering after the release of the 2012 minutes from all the 2012 fomc meetings when Jerome Powell came on board wondering if there was anything statements that he made that would indicate how he might be policy stance wise now, six years later. Robert im not sure statementst you would see in the minutes then tells you much about how he thinks now. Hes been in the process, hes been in the system for some time. Hes been exposed to how things operate. He seems to be a person whose views evolved and hes a considered individual. We should be looking more at what his current speeches are than anything else. He seems to be pretty well aligned, at least from a Public Statement perspective, with whats happened. I understand that hes expressed a bit of concern about the qe policies. We are not in a qe world right now. I think we will see more of the same for the short run. Vonnie we saw yields rise overnight and a bit of a bounce for the 10 years, 2. 35 . To what do you attribute this . Will it continue . Will yields continue to rise here . Robert that is an interesting question. One of the things i did was to go back and look at the pattern of rates on the 10 year for 2017. They were quite variable. Theres a lot of shortterm reaction to whats going on in the marketplace. Theres a bit of nervousness at this point about where policy will probably go in the short run. , when you get a market like an equity market like we have, theres a tendency to shift holdings from fixed income to equities. Some of that selloff is essentially just a desire to participate in what everybody expects to be a continuing rally. Whether that is realized or not is another matter. I think the earnings season will be very important in the next few days to figure out where things are as far as economies concerned. As far as the economy is concerned. The jobs numbers werent quite as strong as perhaps they were in the previous couple of months. It looks like the Fourth Quarter will still be pretty steady. Vonnie our thanks to robert eisenbeis, Cumberland Advisors vicechairman. Lets check in on the first word news. More progress in the first highlevel negotiations between the two koreas in more than two years. After 11 hours of discussions, north korea and south korea agreed to hold military talks in further dialogue. The kim jongun regime said it would send a delegation to south korea for next months Winter Olympics. President trump will discuss immigration today at the white house with a group of 20 lawmakers. Congress needs to pass a bill to prevent a partial Government Shutdown. Republicans have accused democrats of holding that measure hostage to ensure young undocumented immigrants wont be deported. U. S. Military satellite launched elon musk spotted in orbit doubts about whether the mission was a success. Spacexond stage of the failed. Spacex is the rocket did everything correctly. A wall street trader who became one of bitcoins biggest champions is starting a Merchant Bank dedicated to cryptocurrencies. He wants to lift his new company, Galaxy Digital lp, in canada. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. Im courtney donohoe. This is bloomberg. Mark coming up on the close, theresa mays Cabinet Reshuffle becomes chaotic with senior ministers refusing to follow orders. What does it mean for brexit . That is next. This is bloomberg. Vonnie live from new york, and vonnie quinn. Im vonnie quinn. Mark im mark barton. The closing roughly 13 minutes. Theresa may is facing chaos as he attempts to reshuffle her cabinet. It was all smiles for the cabinet today, the first meeting of the cap and after the reshuffle behind the scenes, some senior ministers have refused to follow her orders. Ning us with the latest Something Interesting did happen. At 3 26 local time. An appointment. What was announced . A campaigner for brexit who continues to campaign for a hard brexit clean break from the eu. Shes quite highprofile. She was a potential threat to may on the back benches if make came back from brussels with a deal that conceded too much to the eu. You can to this appointment is keeping her inside mark is this the no deal brexit minister many were talking about . Its not entirely clear whether theres an additional role. Steve baker is another persons been advocating a hard brexit. He was brought into the government. Its been a repeat of keeping the intent the government. Mark this is the question that has been vexing me. Yesterdayeening resigned or didnt want to move. How does one not move when the Prime Minister tells you or nudges you not to move . To me, that is external right. That is extra ordinary. There was one job she wanted to do. She voted remain. Her constituency is very strongly remaining. She is now released from her responsibility. She could well turn into a rebel when it comes to brexit. Inch out for her reemerging a different role in parliament. May, it speakso of her weakness. What that means for brexit is we will have a difficult two months concessions will have to be made by the u. K. They need to have a premise there was going to stamp or authority to say this is the way we are doing it. The concerned people have been cant, whatif she kind of authority is she going to have when it comes to ling down the law in the cabinet laying down the law in the cabinet . The government still has agreed on what its trying to extract from brussels. That is a debate that still needs to play out. The cabinet is very divided. It will be interesting to see how theresa may handles that. Vonnie what is three some may theresa maywhy does keep making gambles that make her look weak domestically and particularly in new york . There are two ways of answering that. In the case of the election, the polls were in her favor. She thought she had everything to win by calling the election and then it went horribly wrong. On this occasion, she had to appoint a couple of people because you luster deputy at the end of last year she lost her deputy at the end of last year. It speaks to her weakness that she cant boss her ministers around. , many times it has been predicted that she will leave she has held on against all predictions. There is an eigh clear a clear candidate waiting to replace her. People on both sides of the Brexit Debate fear it may go the other side will win. Most, thewins the . Rexiteers or remainers as it one way is it one way or the other or the same . In the cabinet, she has pretty much maintain the balance. For tobacco deputy was a strong campaigner for remain. One a lot of strong comments the referendum. R de facto deputy was a strong campaigner for remain. Remainer. O still be a the balance in the cabinet has been pretty much maintained. I dont think that changes it very much. Replacediners remainers, but some like jog thatosborne is quite interesting. Mark thanks for filling us in. Vonnie straight ahead, european stocks are higher. U. S. Markets are also higher. Heres a look at some of the sectors today in the s p 500. This is bloomberg. Vonnie live from new york city, im vonnie quinn. Mark im mark barton with the european close five minutes away. Uses giveaways like netflix and unlimited data plans to add 1. 1 million customers in the Fourth Quarter. It was better than expected. Less than a year ago. Andomer growth for tmobile the other three major carriers in the u. S. Is slowing. A second airplane delivery that was driven by andnd for boeing seve737 787 jets. Take a look at whats happening to european equities. We are three minutes away from the end of the tuesday session. Stocks are rising for the fifth consecutive day. This is bloomberg. Mark live from bloombergs european headquarters, this is the european close. Im mark barton with vonnie quinn in new york. Stocks rising for the fifth consecutive day. Best run since november the first. Real estate and utilities lower today. Great start from goldman sachs. The world index enjoying its longest streak in history. The msci emerging market indextd at its longest streak in history. We think equity correction risk this years high after a strong rally and high valuations. We also think and equity benchmark is unlikely given the supportive macro backdrop. The words of goldman sachs. Lets talk about data. Eurozone unemployment. Joblessness in the eurozone declining to the lowest level since 2009. The 19to the evidence nation economy has found its feet. The Unemployment Rate falling to 8. 7 in november. Matching the estimate below a point it percent the previous month. Economic growth last year probably the quickest in a decade and the pace of expansion is forecast to be almost as fast. All looking upwards in the eurozone. Lets not talk about inflation or the lack of it. Portugal versus germany we are talking the differences between the portugal 10 year and the german tenyear. Calling time on recent gains. Portugal still looks attractive versus other euro area peripheral debt to current valuations reflect its positive growth story. Portugal by the way had the Top Performing european bonds in 2017 if you strip out the less liquid great market greek market. One of the big woody movers. Oday, up by 10. 5 today business will be distributed to shareholders by the end of the second quarter. Ts al ticets ce usa the top 50 billion. Shares are surging today. Vonnie itthe has been pretty frequent to have picked out the same securities and have not had much to say about them. Today we have a little movement. Look at the 10 year yield. 2. 53 . We are still talking about five or six basis points and this may open the way to 2. 60 . The becauses the pboc changed the range for fixing its Exchange Rate and the currency is back up to 6. 53. These are little signals as to how Central Banks are going to work in the next several quarters. Also higherndex is for a second day thanks to the rising yield. Its also a testament to how important the asian Central Banks are going to be in the coming years. That may be want to point out bitcoin. Its down for another day. 14,850. Trimming some of those losses now. Lets stay on markets. Equity euphoria grips the world. Withburger is here sentiment stands and what may come next. This wordwing a lot euphoria. Over a year ago everyone was calling it the bull market. Do you want this chart first . I really like that chart because i think it just shows the breadth of this rally. I like this one because it is not just u. S. Stocks. This is emerging markets. This is asia, japan, world indexes. The only one if you are looking at developed nations that isnt at overbought territories this is relative strength index. This measures the momentum and speed that the equity indexes are rising. The only one that isnt there is europe. Europe is atbought like 65. Its really close around the world. Really hard to continue to call this the most hated rally when he keeps going and people keep buying and the sentiment is there for optimism. Mark so many equities indices are overbought. Who is actually buying right now . The better question is who isnt buying. You look at individual investors, institutional investors. The other chart is individual investors. Survey ofe aaii individual investors. Say that they expect that stocks are going to go up in the next six months. Thats the highest percentage since 2010. So a lot of optimism in individuals, institutions. Mark is that a contrarian indicator or not . It depends who you ask. Some people say this means the end of the bull market because theres so much optimism. Morgan stanley has a more sobering view. Thisbasically say increases the potential that we get a shortterm correction. At some level it is just simple math. Built upto have that i optimism. A lot of wires in the market in order to have a run on the bank and their is a potential for a shock which could really send people running towards the exit and it would be violent because there is so much of them as been so many people buying. Vonnie is that why people dread the bully ands so much . Because something apocalyptic was about to happen . Hard tois level its actually expressed that view. We are talking about i