Authorizing Prime Minister may. We trade, to where a half hours until the open. Robert shiller Robert Shiller coming out and saying stocks are way overpriced. S p futures off by three points. Over 2. 6 r yield around the highest level since 2014. The dollar is a touch stronger as well as crude. I want to focus on what is happening in the u. K. You have the ftse 500 moving higher despite the fact the pound is getting hit or because the pound is getting hit. Up. 5 and dollar pound can dollar at an eight week low. He have to look at that weather you have to look at that to see i would be remiss if i didnt touch on valiant. This is a twoday chart all what happened yesterday when we heard they were selling out. That stock down 15 in nearing the record lows. How low can it really go . We will dissect to that later. David he doubled down and now it does it did not work out. Alix so much drama for so long and now he does it. David this morning in england, we had surprising news out of the bank of england as the Deputy Governor resigned in the wake of news she failed to disclose her family ties to barclays. Here to explain how this could affect boe decisionmaking, we are joined by our colleague in london, scott hamilton. Before we get to the ramifications, take us through what happened with charlotte hogg. Scott she was appointed when mark carney joined the bank of england and it was only this year that she was also she also had expanded to become Deputy Governor for markets and bankings. She only had that job for two weeks. During the application process that it turned out she failed to disclose her family connections. Her brother was at barclays and she never told the bank her brother was there. During the scrutiny process that came about, they looked further into it and came out with a report saying they didnt think she met the high standards of the position of Deputy Governor and she sips of she subsequently resigned. David this was handpicked by mark, someone he specifically chose. Do we know anything about how she would have voted as part of the Monetary Policy . Very little about her economic stance. She doesnt have a strong. Conomic background her main experiences in the private sector, Consumer Financial firms, institutions. She was seen by economists very speculatively that she would join the mark carney consensus which inhabits the census of the committee and would probably vote in line with mark carney. Depending on who replaces her, that could upset that balance. At the moment, the bank isnt facing a situation where it needs to maybe change its stance quickly, so maybe the bank of england has time to find somebody before anything else comes up. David thanks so much. Thank you for joining us from london. Youoining us now is made it in thomas cole, we will this feels black eye. R lack i think they bank of england will take a backseat in the coming weeks. We are watching the data and we see challenges ahead for the u. K. Economy because brexit will be triggered in a few days and weeks and in our view, that will hurt the economy. We think there will probably be more bad news for the u. K. Economy going forward. We will stay alert to these new fax. Alix it seems like the market is catching up to that. We heard yesterday we could see another Scottish Referendum on independence and the pound is up. Today, 120 one on sterling. What prevents us from getting 120 and breaking below . Adam nothing and the longstanding target is 115 and i am comfortable with that. I think the uncertainty of the bank of england is clearly on helpful, but there are bigger uncertainties facing the u. K. Bc. N the composition of the n think there is some danger we have become complacent on the outlook for the economy. Is startingof risk to shift in the other direction. We were worried for sterling ahead of yesterdays developments and we feel no easier today. Alix what will be the trigger maybe it below 120 or 118. Will it be theresa may officially triggering article 50 . What is the timeline for you . Adam i think that is one of the potential catalysts, when article 50 is potentially triggered, which looks like later on than sooner. And the process of negotiation becomes much more open. It turns out to be a lot more antagonistic and difficult than markets currently anticipate. I can certainly see politics as one risk. The other is the potential of the data surprise which has been almost on interrupted lee positive on interruptedly positive since the referendum. I think they could both serve as catalysts to get a break lower in sterling. David there doesnt seem to be a definitive move one way or the other. There is uncertainty on both sides of the channel. Is that because markets are waiting to see how it plays out or have they already builtin all the risk . Thomas i think europe is between a rock at a hard place. Elections in the netherlands and france and germany later on, not to mention brexit. On the other side, you have Strong Economy data and i would highlight credit data. Credit data is picking up and in the u. S. , it is trending down. You have cyclical momentum in europe and that helps European Assets like the euro. David is supporting the euro a practical matter . Compared to where it was, the growth is not that robust. Adam if we look at how the euro has traded, through data releases, it is not taking a lot of direction currently from cyclical economic indicators, but rather, it is being driven , inerceived Political Risk particular if we look at the risk of le pen victory in the French Election and the euro is trading very closely with that and carrying a risk premium for political events. The Economic Cycle has moved down the agenda for the currency and that is likely to remain the case for at least until the other side of the French Election and potential he even that does not reserve the political overhang. David exactly. Does that mean that if you take away the Political Risk, which ,t some point it will go away that the cyclical forces would kick back in and the euro would rise . Other things being equal, i think that is the case. There is no doubt that cyclical indicators have improved and growth is running a little higher. I am not convinced Political Risk it operates that quickly. Once we get through france, we have german elections later in the year and italy constantly on the back burner and likely to come to the forefront. Alix and you have President Trump on the other side with Political Risk. There is a story out there that when you have Angela Merkel meeting with President Trump later this week that President Trump will push her so hard and the u. S. Is so important to german exports that if they lose that connection, she will need the u. K. Even more and that has the possibility of making a softer brexit. Do you see that narrative at all playing out . Thomas i think you now see the role of the European Union as a trade entity. Stronger as anis entity and fighting for all of its members, including the u. K. The thing with the germany is that they are more focused there is more focused shifting to the trade within germany, which has been growing strongly. I think that will definitely come on the table when it comes. O the meeting with trump however, i think germany will continue to say that the surplus is a result of competitiveness. Alix does it wind up needing the u. K. More and make the case for softer brexit because uncle or Angela Merkel will be pushed against a wall . Could help other countries to intensify incentivize them that is another issue. Alix thank you very much, we appreciate it Thomas Costerg staying with us and adam cole, good to see you. We want to welcome our twitter viewers. Bloomberg daybreak is streaming live 7 00 a. M. To 9 00 a. M. Eastern. Coming up, wednesday, matthew hornbeck, morgan stand Morgan Stanley will be here and jason furman, the former councilman economic advisers chairman joins an allstar lineup. This is bloomberg. Time for other stories making headlines at this hour. I am emma chandra. Raising the white flag on valeant pharmaceuticals. They put the entire stake in the embattled drugmaker. It is estimated that ackman may have lost 2. 8 billion and possibly more. Company ise struggling with construction delays in a multibilliondollar writedown in the business. Or she been made the announcement that it gained approval to delay the release of thirdquarter earnings until next week. The Company Estimates best has not gottenba their auditors to sign off on the plan. Vws improving profitability in the they missed the profit margin by 2. 2 build 2. 2 . They had to set aside money to pay for the scandal. This is bloomberg. David today, the fed begins the two days of meetings in a snowbound washington leading up to decisions tomorrow and we have janet yellins news conference. To take us through what investors should expect and what it could mean for markets, Thomas Costerg is still with us. There is a lot we still think we know. We are still at 100 for a march rate. Thomas i think the key focus will be on the dot plot. There is a risk of a move that up potentially if they believe the u. S. The data warrants a rate hike. David is that a timing issue or an ultimate where we end up two years or three years down the road . Thomas i think first you need to have rate hikes and then we can discuss where they end. The long rate will be in focus and it is true that the tiny yield has not moved that much since the beginning of this year. I do not think they will move the longterm rate. I think they still view the neutral rate as close to zero for the moment. Alix the question is what traders are pricing in. News,omes from bloomberg the blue is the spread between august and jayz august and futures. Ed fund the white line is april and august, about 18. That is a 75 chance of a rate hike in the summer. It seems like the market is starting to reach the fed. We could see three hikes. Thomas for the first time in a while i think the situation is good for them for the fed because the market and the fed is aligned. It lira is expected could stay low and that is what they want, judging by what the markets want. Alix if you are looking at the spread, it shows the market is anticipating three hikes. What is going to put four on the table . Thomas i think you need the stock market to continue doing well and u. S. A data to continue performing well. I think the key issue right now is for inflation, which i think is quite soft. Core p about oil prices that is as a vicious cycle. David people are worried that it could go lower. If they are going to be raising, we will need a flattening curve. What would drive the low end up, does that depend on President Trump and the fiscal stimulus . Thomas it is usually driven by the fed being behind the curve, you have inflation pressure rising quickly. It could come from trum and if trump and if congress orroves a inflation bill infrastructure or so on or if inflation shooting up out of the blue and then i think the market could actually worry that the fed being behind the curve. David what are the indicators telling us now . Thomas the fiveyear, fiveyear, it is actually quite stable around 2 . That is why i dont think the fed will be in a rush to have a to have four rate hikes. I do not think they will go above 2 in their rates because inflation seems to be stuck and i do not think inflation will break to the upside massively. Aix you can see that in 10year low rates, you can see them at 60 basis points. What has more upside, dollar or yield . Thomas it is complicated because they both upside in the nearterm. I think we see the 10year yield moving to 3 and we see Dollar Strength in the nearterm based on rate differentials. However, there are interesting weries that are we that are keeping on. I think the broad picture is Dollar Strength for the next few weeks and yields moving higher. David the you subscribe to the view that there is this and once you 2. 65 break that you will go to three on the 10 year . Thomas i think it is difficult to break through 3 . I think yield could likely go back down next year, touching 3 would be difficult to break and then we go back down. Alix great to get your perspective. Thank you very much for making it in on this snowy day. A quick programming note on wednesday, dont miss special coverage of the fed Rate Decision at 1 00 p. M. Eastern. I have been told there will be sand charts. You are looking at a snowy d. C. We are expecting 17 inches. This is bloomberg. David this is bloomberg. The Congressional Office came out with the scoring of the new Health Care Plan and right away there was a lot of controversy. As many as 14 million americans could lose their plan. Tom price, the secretary of health and Human Services came out right away and questioned the cbo. With disagree strenuously the report. We believe our plan would cover more individuals at a lower cost and give them the choices they want for the coverage they want for themselves and their family. Not that the Government Forces them to buy. David republican senator Lindsey Graham, the senator from South Carolina told the New York Times lets say the cbo is half fort, that should because concern. The prudent thing is to look at the report and see if we can address the concerns raised. This is high drama involving the cbo. Who wins in this battle . Kevin there is something in the report people will like and dislike on both sides. This says they will raise revenue at 337 billion offset. That is a win for the administration. When you look at that 14 million number of people who will lose insurance and democrats already onnds on that pounce that. That is where the fight is headed. With that number, you put a face on people who will lose insurance. That is not necessarily a number that folks headed into the Midterm Elections want to see. Honest, thee to be sources i am speaking with in the tea party and the more conservative numbers in the senate are still opposed to this. They have concerns that this plan does not go far enough. David that is on the senate side. On the house, they already made through two major committees. Will likely pass the house and when you get to the senate and talk to people like senator rand paul and Lindsey Graham, senator mike lee, they have concerns. They feel this institutionalized of they of of the Affordable Care act taxes. They feel this is not a full repeal. For a host of reasons, this could be something that is not that does not pass for republican support. Because of the cbo scoring and because of that metric, this could get through the senate. David there were some Interest Groups pretty much opposed. And questionsa from the aarp. One of the questions is on the elderly. The elderly with lower income at how badly they would be affected. What is the chance that could build backfire in the senate . Kevin look like look at states like michigan and indiana, all of these flyover states that the Republican Party was able to win during the last president ial cycle. These are also the states largely impacted by the Affordable Care act, that the Affordable Care act opened up coverage to and that would be directly impacted as a result of the 14 Million People losing coverage. From a political standpoint, that hits exactly the same states they want. David we will come back to this throughout the program. Alix Governor Cuomo just closed metronorth and a tractortrailer ban is in effect starting at 9 00 a. M. Here is a live look at times square. You can see potentially 17 inches. 5300 plus flights have been canceled so far. David that is the way i get home. Alix coming up, the former president of eli lilly gives his thoughts on the on obamacare. This is bloomberg. Alix this is bloomberg daybreak. Meats for two fed days, potentially to raise rates. You have schiller saying stocks are way overpriced and the 10yearyearold around a 14 year high. A little bit of buy on the margin on the yield. Up as well. We are looking at what is going up in the u. K. You have the pound continuing to get hammered. At one point you had a sterling at an eight week low. You had a sterlingdollar down. 7 and selling on the 10year. Lets get an update on what is making headlines outside the business world. Emma Chuck Schumer is threatening a shutdown on the proposed border wall. Schumer told republicans not to border the border fund parenthoodg planned into a senate bill. President eport the gave cia new authority to conduct drone strikes. Under president obama, the cia used drones to locate terrorists and the u. S. Military carried out the attacks. The northeastern u. S. Is being hit by a snow that could leave over a foot and a half of snow. There is a blizzard warning from pennsylvania to maine. The wind may gust over 50 miles per hour. Aboveground Subway Service in new york has shut down, so has bus service in new jersey and parts of connecticut. Global news 24 hours a day, powered by more 2600 journalists and analysts in more than 120 countries. I am emma chandra. This