heavy hitters in health care and technology. We need more room for experimentation. We need to make sure we have a strong lineup in our Motion Picture releases. Abigail it is all straight ahead on bloomberg best. Abigail hello and welcome. Im abigail doolittle. This is bloomberg best, your weekly review of the most important Business News, analysis and interviews from Bloomberg Television around the world. The week began with a strategic signal from you came Prime Minister from u. K. Prime minister theresa may, who promised to inject new blood into her cabinet at the start of a critical year for her government. The reboot went underway monday. New year, new cabinet. Yes after losing three ministers , last year, Prime Minister theresa may kicking off 2018 with a Cabinet Reshuffle. The main thrust is about bringing in new blood, more dynamic, more him youthful slate more youthful slate of new mps. This is all part of theresa may trying to grab turf in the party from Jeremy Corbyn saying , we can do diversity, reach out to the youth, recapture some of those votes. Theresa mays Cabinet Reshuffle reshuffle didnt go quite as planned. The Prime Ministers office flagged yesterdays events as a refresh of her top team but , things went off script. Jeremy hunt, then Justine Greening reluctant discussions with her. A couple of ministers she wanted to move, in one case, he stood his ground and ended up keeping the same job. The other case, she ended up quitting. She is someone Justine Greening. She potentially could become a rebel voice and a thorn in mays side. That is one of the consequences of this reshuffle. The other is that the narrative coming out of this reshuffle is one of weakness, that may has a been able to out step her authority on the cabinet. Brexit is going to be incredibly tricky this year. Some big concessions are probably going to have to be made by the u. K. To get the brexit deal they want. To keep the negotiations going, strong leadership and the ability to unite the cabinet is going to be crucial. Where are those bond bulls . Pricing for five days, highest levels since march 2017, and the bond bears out in force. Bill gross tweeting yesterday the bond market confirms today 25yearlong trendlines confirmed. Jeffrey gun lock as well. If the 10year goes above 2. 63 , it will accelerate higher and equity markets will be spooked. Maybe that is the cocktail that is coming our way. I think calling this a bear market and thinking 10 year yields will go to 4 or 5 is probably a bit premature. We dont have the economic fundamentals to drive us there. That being said certainly, yields could hit 3 before finding a new level and stabilizing. Lets take it back to the bond market share. Today, it is china sparking the concerns. Officials from the worlds biggest foreign holder of u. S. Treasuries has recommended slowing or halting purchases of treasuries as the u. S. Prepares to boost its supply of debt. Present evidence suggests they have been liquidating recent evidence suggests they have been liquidating treasuries. There is supposedly an effort to diversify their portfolio. Perhaps. In any case, the liquidation in treasuries as opposed the regulation of treasuries by china is certainly an negative. A negative. We have a worldwide situation in which Central Banks in total , add in the fed that is actually reducing their portfolio. The world of Central Banks in total are not adding to their portfolio as they have in the past. There is 14 trillion bonds bought by Central Banks. That appears to be close to an end. Beijing rebuffs. China is claiming the bloomberg report saying officials recommended slowing or halting purchases of u. S. Treasuries might have quoted a wrong source or maybe fake news. The bloomberg report cited people familiar with the matter and noted it wasnt clear whether the recommendations had actually been adopted. This is a huge deal in how traders look if china wants u. S. Treasuries or not. How do we get to the bottom of it . What happened . Today the state administration of foreign exchange, they are a norm of the central bank in china they put , out a carefully worded statement where they fell short of the denial of our story, a full and complete denial. They went on to say they pursue a policy of diversification when it comes to investing, foreign reserves, and that they always look to Market Conditions when it comes to u. S. Treasuries. The account for the ecb meeting has particular importance this month. There was growing speculation central bank may want to and qe end qe altogether in the fall. Here is what they said. The view was widely shared among members that the governing councils communication would need to about gradually without a change in sequencing. If the economy continued to expand and inflation converged further towards the governing councils pain, the language could be revisited early in 2018. Is this a hawkish tint . I think it is further baby steps on the way to policy normalization. I think it is interesting that the ecb has said the messaging may change in 2018, because we have already seen some of that happening. They have come a and sounding more hawkish than i have in the past. It seems that this is concerted, something the ecb is preparing the market for. It is a slow, steady process, but they are moving towards their goal of policy normalization. A rate hike in 2018 is too much to expect, but 2019 is in play. German chancellor Angela Merkel has spent months trying to put a governing coalition together. It appears she may be making progress with an announcement that negotiations will go past the first round. There is a not a lot of details in the agreement. It is just a preliminary deal, but what we can glean is the new german government, if it does come together, is there is an intention they will respond to President Trumps America First agenda. I say that because in the agreement, they talk about strengthening the e. U. , spending more money on the e. U. The talk about the tax cuts in the u. S. And that they need to do something about the Corporate Tax rate within the e. U. As a whole. In terms of where we go, this is just a preliminary deal. Democrats next have to take it to their members. That will happen a week from now. They will have to vote on whether they agree with this preliminary deal, and only then do we get into formal talks where they hash out who controls ministries. A big step forward today but still a long ways to go. It is the unofficial start. Jp morgan reporting a larger than estimated decline in fixed income trading. The tax bill leading to a boost in its 2018 revenue. Wells fargo didnt have to wait to see the benefit. It already saw an earnings boost of 3 billion. Shares are falling after their profit and revenue came in short of estimates. Can we start with jp morgan and go through the taxrelated payments, taxrelated charges . The key question is what we learned about the future . Jp morgan did as good of a job as a kid in terms of giving us the forwardlooking impacts. The key negative is worse than expected trading revenues. That matters in terms of the run rate going into 2018. Fixed income equities coming in a little weaker. Wells fargo to me, the big number is the 3. 3 billion pretax charge, related to litigation, plus consumer issues. We did actually expect them to take a charge related to litigation. It is bigger than we thought. 19 over jp morgan this year. Is it what we expected . It is on the optimistic side of expectations. That is a good thing. Wells fargo also us guidance. That is good news for investors, but to some extent that has been expected. Still ahead as we review the week what is driving , Global Growth from Sergio Ermotti. Autonomous cars may be on the markets sooner than you think. I would say 2021, 2022. Abigail coming up more of the , weeks top business headlines. A bitcoin champion unveils a plan to build the Goldman Sachs of cryptocurrency. As far as his crypto net worth is concerned, he is all in. Abigail this is bloomberg. Abigail this is bloomberg best. Im abigail doolittle. Lets continue our global tour of the weeks top business stories in asia were north and south korea held their first formal talks in more than two years. North korea said it will send athletes and a highlevel delegation to the Winter Olympics in south korea next month and wants to resolve issues through dialogue and negotiations. Delegates said south korea wants both nations to march together at the games. The two sides are holding talk along the heavily fortified border. Overall, a positive mood, because both sides have a lot to gain, at least on the olympic issue. The South Koreans kick off the Winter Olympics in one month from today. They dont what the specter of war hanging over those olympics games that are supposed to foster brotherhood and unity around the world. And the North Koreans want to participate. They have two ice skaters that have qualified for the olympics. They got their concessions from the South Koreans. They will send a highlevel delegation to pyeongchang. They will send athletes and a cheering unit as well. For the south, they have peace and stability, at least for now. The south korean president has promised to never accept north Koreas Nuclear program a day after a rift emerged in talks between the two sides. When you talk about denuclearization, pretty frosty discussions. That is right. We have always known that president moon favored dialogue. He did not want to take the full on sanctions tactic like the United States and un security council. He wanted to engage as fellow koreans. Its interesting to hear president moon talk about the issues of the interkorean issues and also denuclearization. They are not separate issues. He is on the one hand saying to the south Korean People we need to have this dialogue, but we also must insist on denuclearization. That was the overriding theme in his comments today. They cannot accept north korea as a nuclear state, and they must ultimately push for denuclearization. Saudi arabian bankers have taken chosen to take saudi aramco public. Citigroup will take the lead in managing the ipo. Others serving as global coordinators. This is according to people familiar with the matter. Tell us this is about to happen this year . Next week, i will probably be talking about another five or six banks being added, but when you are talking about 1 trillion to 2 trillion even if the government gets what they have been looking at, that is a number that will need a lot of banks. Give me an idea of fees that could be paid. The biggest ipo ever, potentially. Typically the fees are really small when the government is involved. Maybe the banks can make commissions from the investors. The fees are like a fraction based on the other ipo stories we have been writing about. When the governments do these deals, and it is more a question of prestige. I worked in the biggest ipo in the galaxy. Saudi arabias market regulator has announced a series of new rules aimed at targeting qualified foreign investors. What impact on flows from abroad are you expecting from the tweaking of these rules . We have already started to see, because of the deregulation of many facets in the saudi Capital Markets an increasing , amounts of investor registration with the existing regime. One of the things we have seen is that more than 20 of qfii investors have been licensed in the last month to month and a half of all qfiis that have been licensed. We are looking for that pace of licensing to accelerate even further with the additional deregulation of the qfii regime. China is shaking up the currency market. The countrys central bank has made a change to the way it manages the currency. Analysts say the change shows chinas confident in the yuan current directory. It is heading for its biggest decline in two minute two months versus the dollar. There was an override. The government sometimes didnt agree with what the thought it should be priced at. This is an override to reduce volatility. Basically, they have been seeing the currency strengthen. It is at a level they feel comfortable with, maybe strengthening a bit too much. They say, time to get rid of this override. They probably havent used this override in several months. It doesnt change anything meaningfully. But it sends a signal that we are now willing to let the market again fully set or set as much as they wanted to the exchange rate. With that said if things turn , the other way and they dont like what they are seeing, this could quickly come back. One of bitcoins most outspoken champions plans to build a Goldman Sachs of crypto. He will start a Merchant Bank with bitcoin and blockchain ventures. Walk us through this. He is going institutional. That is one way of thinking about it. At the moment, you can buy Bitcoin Futures or the tokens themselves. Tz isno progress novogra creating a firm. He is going to take it public, that will give people another way of publicly investing in bitcoin. He is starting a Merchant Bank called Galaxy Digital lp. He is taking all of his crypto assets, 400 million of tokens and Startup Ventures and rolling it into this Merchant Bank. As far as his crypto net worth is concerned, he is all in. Chinas factory deflation eased to the lowest level since november 2016. Output slowed. Ppi rose 4. 9 in december while cpi rose 1. 8 . I think the dbi is one we looked at. It is obviously swelling for sure. The question is are we now heading into a more pronounced deceleration for ppi in china . Are we heading towards negative territory again . It is hard to say right now. For the moment, it remains positive. That is a good thing for company profits, a good thing for their Debt Services costs. It seems to be a slowing trend. It is a question of whether ppi in china is headed to negative territory. Lets not forget china was once , a big source of inflation. It seems to be a dimming part of that trait now. Trade now. The u. S. Industry data signaled to crude stockpiles dropped. Where does oil go from here . There is to offsetting dynamics. One is we look at the underlying economic background. It is one of the strongest synchronous growth backgrounds we have seen since 2004 when commodities went sharply to the upside. The offsetting force is this new oil order, meaning the shale revolution is very much underway. Putting downward pressure on oil prices. While we expect oil prices to remain flat and slightly down, the investment returns will be significant, really being driven by the shape of that forward curve. Investors buy at a discount, roll out on the front end. Prices could flatten down, but upside and returns driven by curve shape. This afternoon, we had dueling headlines on trades. Canadian officials said there is an increasing likelihood that President Trump will give his six months a notice to withdraw from nafta. Now white house officials saying , there is no change in the president s position. Irrespective of what the president and the u. S. Negotiating team feel, the canadians seem to be getting increasingly nervous. That is the bottom line. I think the question is what prompted this . We have seen an escalation of other trade disputes between canada and the u. S. Over aerospace, lumber, and we are heading into the sixth round of talks. The canadians have characterized the chance of saving nafta as heavily, if not entirely reliant on u. S. Nafta defenders speaking of the pressure donald trump not to abandon the pact altogether. It are hoping that will spur that kind of thing, youd of the u. S. Chamber or other senators or the Congress Looking at the canadians and saying we are worried and going to trump and , saying we need to take a step back off the ledge. Abigail welcome back to bloomberg best. Ubs held its Greater ChinaInvestment Conference in shanghai this week. Bloombergs Tom Mackenzie caught up with Sergio Ermotti for an exclusive interview and asked for his thoughts on the global macroeconomic climate. We continue to see a robust economic growth. The 3. 8 we saw in 2017 the mix , of this growth is going to be we will probably lose momentum in the u. S. , or not a strong as 2017. Some from the rebound of commodity prices, generally speaking. Some of it from the property in china. On the other end, we expect brazil and india to develop well. Of course we need to watch on , the other end. What is the repercussions of the normalization of Monetary Policy by Central Banks in the future. Are the u. S. And europe beginning to look frothy . Is that synchronized recovery underpinning valuations . I think we can say that starting the year we believe equities are still a good place to be. At least in terms compared other assets. At current levels we believe it is a good place to be. Valuation across all Asset Classes are high. Therefore we focus attention on quality and diversification. What are you seeing in terms of your trading clients from volatility . Are we starting to see a pickup now . Are they bullish about that . January is too early in the quarter, but in general, you expect january and the