Transcripts For BLOOMBERG Bloomberg Daybreak Americas 201711

has made it at the top of my board. 10,000. jonathan: i'm not an idiot and i am not trying to call the top. alix: it will be a topic of conversation. david: there are some things going on inside the business emma chandra is here with first word news. emma: it is the biggest online shopping day of the year in the u.s. e-commerce is expected to rise almost 17% from the year ago to $6.6 billion. online spending across the holiday season is projected to rise 11%, the most ever. germany is edging closer to getting a new government. chancellor angela merkel has began negotiating with the social democrats over a potential partnership. she says any coalition partner would have to support a balanced budget and pro-business policies. and there will be royal wedding bells in the u.k. next spring. prince harry is engaged to american actress meghan markle. the announcement came when his father, prince charles, puts him fifth in line for the british throne. global news, 24 hours a day, powered by over 2700 journalists and analysts in more than 120 countries. i'm emma chandra. this is bloomberg. david: thanks. clearly that news about royalty is the lede. congress has returned to washington today and it is getting ready for a long weekend of tax reform, with the president having meetings with senate leaders today and tomorrow. the senate is scheduled for a marathon round of amendments on wednesday and a full senate vote coming maybe as early as thursday. joining us from washington, our bloomberg white house correspondent. that timeline is pretty aggressive. what does the reporting tell you about the likelihood the senate will vote on this by thursday? >> they will not vote if they do not have to vote. it will really depend what happens over the next 48 hours. the president will be meeting with a number of senators, the senate leadership will try to convince the number of holdouts that have not voiced their support, try to address their concerns, twist some arms, tried to get the votes to become hard yeses. some people are withholding their support in the senate right now. over the next 48 hours, there is going to be a full-court press to try to firm up those votes, and if they do, they will vote on thursday. if not, they can push it to next week, making it much harder to get something to the president's desk. david: what do we know about the issue or issues that might sway those votes one way or the other? >> there are a couple different issues. the biggest is concerning the most numbers of senators is the issue of the debt and deficit. there are a number of budget hawks, including a couple senators who are retiring, bob corker and jeff flake said they don't want to blow up the debt, and right now the numbers show that at least $1.4 trillion would be added to the deficit by this tax reform. they are going to try to convince those senators that there will be enough economic growth to cover all of that spending and all the tax cuts that will be heavily weighted toward corporate america and corporations. .4%idea is that if you have additional growth, you can pay for that $1.5 trillion in tax cuts. david: before we let you go, what about the cfpb? there is a big drama about who runs it, and there are two people showing up with think they run it? >> yes. you have president trump's interim director, chosen last week, mick mulvaney, and the outgoing cfpb director's deputy, that was also selected last week. they have both been selected. there is a debate over which statute will prevail as to who has the power to install the interim director before a permanent director is installed. this is something that could be decided by the courts. right now there is a lot of uncertainty about who was at the top, and it is important that the white house wants to have its way and have its person in there while the outgoing director wants to have someone who more aligns with his vision and his thinking on what kind of agency the cfpb should be. jonathan: appreciate your time. a busy week for you. bloomberg d.c. reporter. joining me, the absolute strategy research chief investment strategist. the fiscal hawks have gone quite quiet over the last few weeks. will they reassert themselves? >> i think we will see that coming through this final weekend. clearly the president wants to get that deal done, but there is a question about the bipartisan support, which is why the consumer protection board is so important. it's critical to get this through, and that question mark about will it bus the debt ceiling, how much growth can you generate to get this through the cbo? those are the key questions, and we are still very dubious about whether we will be able to drive this. jonathan: do you think bipartisan support is crucial? think you have got to say something that works for both sides, and there is a question mark about favoring the corporate sector, the rich over the broader community? it is still an issue. i think that is limiting how far you can push these tax cuts. reforms, andtax that is the thing that limits how much growth you are going to get next year. our sense is this isn't going to be a massive game changer for you was growth in 2018. it is only about a quarter percent, half percent and most. t encourages the fed to raise rates more aggressively and you will nullify the effect. the president will want to get something through, but the impact for the market in the economy will be limited. francine: you mentioned the economy more, but what will it mean to the market is the big question mark. i want to point out what our correspondent said, traders and investors they have brought economic growth forward, and they are betting the comprehensive progrowth policy response will eventually validate what otherwise could be quite fragile markets. i know you are a cell rally kind of guy, but what do you think? >> that is the rate story. the question we have been asking clients is have you changed your long-term forecast? most of them say no. if you haven't, then we have a 20% gain in equity markets. how many years of return have you bought, exactly on that assumption that the shift from loose money, tight fiscal two loose fiscal, tight money will really change the dynamic. my view is one is loose and one is tight. you still go nowhere. you still have this muted growth environment. we are not going toward 3% or 4% growth. the muted cycle makes it very difficult to break out to the other side and change the dynamics from growth to value. francine: you do get a corporate tax rate of 20%. that has to create some winners. how do you play that will still keeping this pessimistic view of the market? >> you have to take the viewers to where does that 20% play out? it certainly helps smaller cap stocks. i think the worry we have is that, if that is offset by these tighter interest rates, then the ability to take advantage of that from the market, and how long can those earning gains be sustained? equity markets drive off that long-run earnings growth. all it will do is bring equity market multiples down, from 20 times to 16 or 17 times. but the truth will be is global growth is slowing, if u.s. growth is slowing, it will be hard to sustain this market. david: the fed has said time and again that they are going in the direction of tighter interest rates, irrespective of what goes on with taxes. aren't we better off having the fiscal stimulus, and can extend the business cycle? >> that is the key point, david, which means what can you do with this business cycle? if we drive down the fiscal expansion toward 3%, we are starting to see wage pressures coming through, we are starting to see breakevens not coming down when the bond market comes down. we are starting to see signs of inflation. the thing that has boosted the equity market this last year is this very benign trade-off between gdp growth and inflation. it has been better these last three years, but it works around the tech bubble. you have to go back to the 1960's before you had it as good as this last time. this fiscalthat stimulus will change that dynamic between growth and inflation, and that is the thing that tends to undermine profit shares, so you need the tax cuts to offset that, and it undermines valuations, which is why this market will find it hard to really break through in 2018. jonathan: as we go from capital returns to capital spending next year, is that a positive point of view for the market? >> capital spending would normally be very positive, but you need to have strong earnings growth to support that. you need higher oil prices, and you need pricing power for the corporate sector to drive capital spending. everybody is expecting it's already priced into equities, but you haven't got the underlying drivers. jonathan: ian will be sticking with us. still ahead, president trump's pick for chair will have a hearing tomorrow. he will be grilled on monetary policy. what should we be watching from his remarks? that is next. this is bloomberg. ♪ emma: president trump's kick for the fed will be in the hot seat tomorrow when he faces his confirmation hearing. this will see our real first chance to find out what he thinks about regulation, monetary policy, and for a preview we are joined by our policy correspondent, michael mckee. still with us, ian harnett. mike, whether or not he gets confirmed is not the question, it is what will we hear? >> i don't think you will get a very strong group. we already know what he feels. he is a centrist on the fed. he has voted for the last five years so we know what he thinks, unless he has been hiding some disagreements that he couldn't bring up, he thinks the fed is on target, trying to raise rates toward a neutral level, and inflation is likely to rise to the fed's target, although it will take longer than we thought. there are reasons to be concerned about financial stability. markets may be getting ahead of themselves. the fed may have been too low for too long and it is time to keep raising rates. alix: but the inflation question, where will he said? dovish or hawkish? it feels like we saw a dovish tone than the minutes last week. >> he is probably going to come down somewhere in the middle. he has not spoken in depth the way janet yellen has about inflation and why they think it has been so low. she has brought up the idea that maybe our ways of calculating or forecasting inflation don't work anymore, but we don't think that is the case. i would think he would be in a similar situation. he's not an economist by training, he is a lawyer. no offense, david. [laughter] >> so whatever he says about that is probably going to be informed by the fed's staff, which has made its views clear, that the models they use still work. ian, i want to come back to the inflation question. it's going to be very hard in this hearing without raising the question of what happens if the tax cuts go through? how will he react? we don't know the answer. >> i think we come back to the question about the phillips curve. if you think these tax cuts are supposed to boost growth, drive unemployment lower, the belief is still there in the federal reserve that the phillips curve works, and if that is the case, you can add to those inflationary pressures. i agree with the idea that, as a lawyer, he is likely to be more rules-based, which means he will be looking at these models that suggest interest rates go up higher and faster. yes, they will be concerned about inflation going higher in a fiscal stimulus environment, which is why they will be prepared potentially to raise rates faster than they should. know, do wewhat you have any indications about whether it is right to the rules-based and inclined to raise rates, or whether he might be more patient with president trump and his tax plan? >> that is two different questions. the tax plan, the argument is simple. we don't know what it is going to be, we don't know what effect it will have. that it is and say not only the stimulus to consumer spending that might boost inflation, it is also the idea that they will push stock prices higher, which seems to be donald trump's whole goal. if you are worried about financial stability now, you would only be more worried in that case. powell has not suggested in the mode oft he is of the alan greenspan, but i think at this point, since he is not presented with a decision tree, he probably doesn't have a strong you. jonathan: how does what he says this week differ from what chair yellen says? >> that is interesting, and that is probably what the parlor game will be. they will be dissecting both testimonies, because she talked to the joint economic committee on wednesday and tried to see if there is any daylight between them. your baseline is what janet ifllen has said and done, and powell suggest any change, that would be news for wall street. there's a pollard game about have -- a parlor game about how many times they can raise rates. that is what they are going to be trying to do. jonathan: if they say to chair yellen, do we need a tax cut? is her answer different than governor powell's? >> i don't think they will be different. the one thing we know about governor powell is that he is a consensus builder. our expectation would be there busy we get a very similar answer. the key question is, who are the other appointees going to be? how was the rest of the shape of that board of governors going to shape up, as to how you build a consensus with what kind of person,? that will be the defining factor, i think, in this new era of the federal reserve, and our guess is that president trump is going to launch a have that growth coming through. about calls to deregulation, how does that fit with financial security? something has got to give. alix: the time is ticking. thanks very much, ian harnett. you will be sticking with us. a programming note. bloomberg will have big coverage of jay powell's confirmation hearing at 10:00 a.m. new york time. we will bring you fed chair janet yellen's testimony before the joint economic committee. coming up, bitcoin approaches $10,000. the cryptocurrency is up more than 45% over the last two weeks. what if anything can slow it down? this is bloomberg. ♪ alix: this is "bloomberg daybreak." meredith hasisher agreed to buy the struggling for $2.8corporated, billion, including debt. the koch brothers are supporting the deal with an equity injection. this was thanks ceo since 2009 boris colletti is leading to join a private group, replaced by a deputy ceo. has said the region will account for a third of the bank's. business. it was less than a year ago that bitcoin hit $8,000 and now the cryptocurrency has blown past $9,000 and is showing no signs of slowing. it has attracted more mainstream attention despite warnings of a bubble. it has gained more than 800% this year. that is your bloomberg business flash. jonathan: thank you. i'm struggling to keep up, genuinely. how many bubble conversations can we have about a cryptocurrency that keeps going up? jonathan: every year we have had that conversation. david: it was just last year we had that 10,000 call, which we thought was bold. i think we end the year at 10,000 in bitcoin. he said that maybe end of the week is where things will go. >> it's clearly driven by global liquidity. i think the interesting question is could the ecb defined what happens to that coin? the big driver of global liquidity, $1.5 trillion of global liquidity, $1.3 billion of that has been from the ecb. if we start to see ecb tapering, is that going to be the thing that undermines the bitcoin dynamic in 2018? jonathan: it depends on what you think is driving it. i done think retailers are looking at the ecb right now. >> absolutely not. jonathan: and the stat that went around, the amount of accounts that have been opened, 13 million. this is a retail phenomenon. retail investor gets involved, it becomes more tricky. the interesting point, as you suggested, is that the retail is ahead of the investor. we are hearing more institutional investors getting involved. you can't ignore 850% return. but the question is, what is the liquidity in this asset, and how much is it global liquidity driven? my view is that anytime you get an exponential trend, it is a bubble. how much do you lose with bubbles burst? 80% of value. that will be the question. will we suddenly find no liquidity and get real money? alix: to me, the quote of the day comes from david cycling. he said "the behavior seems deeply irrational, but those inclined to dismiss it and bet on an inevitable decline must remember that humans are deeply irrational." >> but at the end of the day, you need liquidity. you need someone to have liquidity to buy this. gives said by the amount of liquidity in the global economy, and what we know as the central banks are playing a crucial role. the other thing we know is that next year, the fed is going to be on qt, taking money out of the market, and the ecb will be reducing the amount they inject. with the fed also starting to raise rates as well, that liquidity environment has to get harder. longer-term, we are going to see a move toward cryptocurrencies. what we are seeing a central banks looking at cryptocurrencies. it is a rule that this is a speculative bubble and a dangerous place. jonathan: ian harnett, i feel a great to talk about this for a while but we haven't got time. coming up, a look at the results from black friday. an exclusive interview with the first president, coming up in just a moment. just over two hours away from the market open, futures at the moment a little bit softer but pretty much flat. in the bond market, here's the story. lower by one basis point. muted price action in g10. this is bloomberg. ♪ ♪ jonathan: about two hours away from the opening bell in new york city, the beginning of a new trading week. there's not much. week for the last first time at an all-time high and posting one of the best weekly gains in a couple months. a little bit flatter this morning. yields coming in about a basis point on the 10 year down almost two basis points 2 versus 10 about 50 sexson -- 57 on the day. -- the-year yield flatter yield curve. the fx market, really needed price of u.s.-g10. cable is going nowhere. you know why people are going to bitcoin, this is why. nothing in g10. alix: all you need is the move index and the vix on that chart. let's get an update on what is making headlines from outside the business world. we have emma chandra here. emma: a new study shows -- underscores how much the senate tax bill would increase the budget deficit. -- would add $1.4 trillion to the deficit by 2027. the goal is to get the measure to president trump's desk by the end of the year. a federal judge must decide who is temporarily running the u.s. financial protection bureau. english asked the blood -- asked the judge to block -- in indonesia, a volcano on the island of bali has erupted. authorities worry a bigger imminent.s global news 24 hours a day, powered by more 2700 journalists and analysts in more than 120 countries. i am emma chandra. this is bloomberg. david: we are not going to talk about retail. we are past black friday into cyber monday and everybody wants a scorecard on how retailers are doing. that's for brick-and-mortar and e-commerce. is here now. his company sees 40% of all data card purchases in the country and he is here to give us the interim report. how are retailers doing? guy: i will tell you about what leads up today test -- to today and then upcoming. what we did was look at the last 10 days before the holiday. that would be -- let's call it thanksgiving and brick -- black friday and we saw a surge of activity that didn't take away from the holiday. we saw spending growing about 9% in the nine to 10 days previous to thanksgiving over the weekend, thursday, friday, and into the weekend. very robust sales. increase in e-commerce transactions and about 12% increase in overall spending. 9% in retail and 18% in electronics and appliances. david: i want to put an underline on that because we have a full screen summarizing your data and the second bullet, retail spending up 9% although it is not better than it was last year. the big story is the lead up. that's where the difference was. guy: that's correct. awayd seen lead up taken in previous years and this year it was not the case. it was robust from the start through the weekend and we saw a steady increase in what we call current, not present, or e-commerce digital transactions. alix: there were 50% discounts. what kind of discounting did we see in the lead up and on black friday? i was seeing like 80%, 75% off. guy: in the retail section and the current data, we saw an increase of several percent year over year. in e-commerce we saw it down 5.6%. we attribute that to people buying more every day or standard goods this year versus previous years in e-commerce. just a much more comfortable process for them and that's probably why we saw to get dollar volumes down, but we saw transaction volume up 18% three alix: does that mean a better consumer or they are looking for the better deals than buying what they would anyway? guy: i think it is a little of everything. our jump to cyber monday, the first three hours were unbelievably robust. 40% more e-commerce traffic than yesterday. if you look at that trend around -- in e-commerce we refer to anything where you are not using a physical card. the comfort level is there. security and fraud also carry a higher percentage of activity on those fronts, but for the most part, people feeling much more comfortable. jonathan: if i buy online and pick up in-store, how do you book that? guy: we look at that as an online transaction. jonathan: typically we look at the difference between e-commerce and brick and mortar, but is there a hybrid model we need to track guy: there is. if you look at the grocery trend or food, there's a stronger preponderance of people buying online and picking up in-store or in a line in a drive-through. in retail, it's just starting to emerge so we don't see it as much. jonathan: do you think bricks and mortar are going to become more or less important with that in mind? guy: what it shows is everything is strong. the weather looked pretty good across the u.s., so foot traffic was strong. in previous years we saw imbalance. i think consumer confidence is very high and we are seeing across the board whether foot traffic in stores or e-commerce or mobile, it's the consumer is rate a have a positive season. go below the surface. what other sectors in retail that did particularly well and not so well? , veryhat i saw doing very well is electronics, appliances, and specialty retail. we saw positive trends on that front. electronics and appliances look yeardouble-digit growth over year. not so good where the lower end part of the retail sector. more the discounters or the everyday retail purchases seemed to not do as well, but everything looked in the positive. it was hard to find something that didn't do better than 2016. david: guy chiarello, thank you so much for being here. still with us is ian harnett. having listened to all that, should we be investing in retail? ian: i think we should, one because we are seeing retailers coming through as we just heard, the enthusiasm you are getting as unemployment comes down and people feel more confident about their jobs. this is an environment consumer spending does ok. retail outperforms when the markets come off. if we see liquidity squeezing the markets and disappointment relative to the expectations buildup in these pricing of value agents, the fact that started outperforming industrials is a key signal markets are starting to roll over and it fits in with things like copper being weaker than gold today. these are the signs you start to worry about about the overall direction of the market to absolutely, retail has some interesting dynamics of the current climate. of that is window dressing into the end of the year and how much is sustainable rotation? guy: the rotation will come as the market comes off. retail holds off when everything slows down and that's where what happens in the rest of the world relative to the u.s. becomes important. the u.s. consumer will continue driving through, but if global growth weakens because china's growth weakens, that's when industrial stocks start to falter and perhaps the tech stocks falter leaving traditional areas like retail saying these are the things i might want to own. alix: what part of retail? it seems like a nailbiting call right now? ian: i think it's the broad retailers in the general retailers. i think there are challenges in these areas. we were talking about inventory management being important, but i think what you have got to say is these are areas that are less behind and relatively attractive on a valuation basis and that will be relative stability. jonathan: let's take the experience of a company like tesco that went through a change years ago. if you want to play the recovery story, it wasn't through equity, it was through debt. is that going to be the story in retail? ian: i think the trouble with the debt situation is high yield become so expensive. expensive, equity is then high-yield is even more expensive. i think we would feel there is more scope for the retail high-yield rather than the communications or the energy space. that's the type of idiosyncratic risk we are starting to see come through. as the markets get higher, people look at more specific areas. you are absolutely right. david: where is the u.s. consumer getting the money from? is it because they are making more money or saving less? ian: it's a combination of the two. the income growth has come through very stable for the last four years and very stable indeed. that gives you a sense of the permanence of the income and you feel less worried you are going to be made redundant, so precautionary savings come down and you see the savings ratio come down and equity market is going up so you have the wealth effect. people feel more confident generally. that is where it's the fed takes the view they need to start stepping on the break rather than providing the accelerator, that's where you start to see the economy stabilizing the next 12 months. david: ian harnett will stay with us. a german compromise. chancellor angela merkel is being handed a lifeline by social democrats, reigniting hope for a coalition government. we will have the latest from berlin. if you can't watch television, you can tune into our colleague tom keene over on the radio. bloomberg surveillance can be heard in new york, boston, the bay area, washington, d.c., all across the united states. this is bloomberg. ♪ ♪ emma: this is "bloomberg daybreak/" coming up in the next hour, the former hudson bay ceo with his source on cyber monday. this is bloomberg. ♪ leaders of the german conservative party have agreed to pursue a grand coalition with social democrats. it comes after talks collapse that week ago. now the political party of the largest economy will be carefully negotiating terms for a revived alliance. bureau us is the berlin chief. talk to us about the conversations and the kind of concessions that need to be made on either side. >> good morning. we just had chancellor merkel speaking to reporters in berlin about 30 minutes ago and she struck a conciliatory tone and said she was ready for compromise. merkel, if he -- if she is anything, she is pragmatic and knows that reviving her coalition with social democrats is the best chance to avoid a fresh election. she said while she is going into talks with social democrats, this all kind of percolating over the weekend. she is going into the talks with her party's platform for the election that she had behind her that she is ready for compromise and to look at some of the things social democrats are asking for, such as higher pension and tax cuts for low-wage earners. jonathan: would this be a loser fiscal story then more european integration if they get their way? chad: i don't think so. germany -- whether you have social democrats or -- in government, they are still fiscally conservative. this would be a rerun of the coalition we have had for the past few years of this were to come to pass. certainly may be a bit more spending, your not going to see them blowing the budget by any means. it's very much ingrained in the society here that you would focus on having a balanced budget and germany would be one of the few countries with a budget surplus currently. jonathan: as a final question, if these two parties get together again, who is the biggest opposition party and how significant is that? chad: of course, the biggest opposition party would be the alternative for germany. this is this right-wing populist party. they would be the largest opposition party in the bundestag. you would still have the greens, the free democrats, and the radical left party in the opposition as well, so they would certainly -- while having to -- being the largest party, they would be in opposition with three other parties in one of the reason why the social democrats and merkel's party are looking at getting back together is because they do not want to have a rerun of the election. their concern being this would help the right-wing populist party gain even more seats if that were to come to pass. jonathan: we appreciate your time, sir. our berlin bureau chief still with us. i'm going to put up a chart and ask you to guess what it is and if you can tell me my chart very quickly. guess what that is? chad: i don't know, jonathan. -- ian: i don't know, jonathan, catalonia debt. jonathan: well, yeah. we talk about fragility in places like spain. at the end of the day, doesn't matter? ian: it matters if you change regulations or if you change institutions. personalities do not really change. ifalonia had a role to play it actually changed the structure of the eurozone. what we are seeing here -- we like spain versus italy because we see the catalonia deal seeing sorted out and getting more independence and i can see why that debt has had that rally. jonathan: the italian election around the corner and there is risk around it for a lot of people. is it rational to ignore that given the experience we had in europe so far that politics doesn't happen -- matter? providet will excitement as we were talking earlier. the lack of movement in some of these markets means you want to .lay these perturbations is it really going to change the direction of the european story? no. frau merkel being in power keeps more europe -- jonathan: i am guessing you are not telling people to have zero exposure to euro, so they have to have exposure to euro what do they do? ian: our view is tickets driven off the exchange -- is it gets driven off the exchange rate. if the euro comes down, it favors the core, large-cap stocks come and the growth stocks. if the euro goes up -- it comes down to currency story and you get the reverse of that. our expectation is the dollar will have a rally that will take the euro down perhaps down to 1.10 and that will favor the core. alix: 1.10, that's a great call. ian harnett, thank you very much. coming up, it's a clash between opec and america's oil industry reaching a day of reckoning. we will discuss key things to watch in this week's opec meeting. check out tv . you can watch us online and interact with us directly. this is bloomberg. ♪ ♪ this big oil event this week is opec's meeting that kicks off november 29 until the 30th -- the 30th. will they or will they not cut question mark mohammed barkindo said the path to oil market stability has had several bumps ,round the way -- along the way but our determination of hard work are paying off and he said oil investment is returning. traders tend to agree with that. brent net long divisions are around record highs. fallen off a little bit, but right around the records. we have seen brent almost up 20% since the last meeting in may. ofll with us is ian harnett afternoon research. is it a buy the rumor sell the news kind of event? ian: we think the oil price is going to come back. you got more downside risk here. as you were saying, there is investment starting to come on stream and that will keep the potential for any further price rises fairly limited. also, if we are right, the dollar tends to go up and that oppress oprah's -- the oil market. asthink slowing into 2018 chinese growth slows, that will take demand pressure out. the supply demand imbalance and the liquidity story all point to a weaker oil price rather than a push on towards $70 from here. alix: we know the statement don't bet against the fed. isn't it don't bet against opec? once theink opec stability. they want a clear division of what they are going to get. we know they are most afraid of from the end of 2015 and we saw the oil prices collapse and global markets collapsed. they cannot afford to see oil prices drop below $40, but they don't want to create instability seeing them push too high. year joining us is hobby -- javier. do we get a quota or an extension or both? >> i think we are going to get most likely on thursday will be an extension of the deal. the saudi's want to extend production for another nine months and i see the russians are more or less on board with that they are under agreement it's already there for an extension and both countries, saudi arabia and russia are ofcussing the fine details that agreement. it seems both countries are more or less in agreement to extend the deal for another nine months. alix: at what level? is the quota going to be the same or will we see fluctuations from now until the nine-month extension? javier: a little bit of the beginning i think we will have the same level, but that are the find -- those are the fine details they are discussing because we could see potentially new countries joining and that could affect the mathematics. i think opec may be creative with the finalist payments trying to present at a higher number. at the end of the day at least at the beginning, we will see 1.1 billion barrels a day. the russians would like to see that be reduced. it's kind of an exodus strategy. that may be postponed for another discussion in june when opec will have the next opec meeting. alix: fair point and thealix: question is what kind of oil pours -- oil price do they need? the fiscal breakevens are incredibly high. saudi arabia's breakeven is $73 and iran's at $54. gold up for example at $83. the backdrop is geopolitical tensions particularly between saudi's and the iranians. what backdrop does that play in these conversations? javier: it's making more complicated the conversations. if you think of the countries of the gulf, they used to drill together. that was saudi arabia, the uaee, and cutter -- qatar. obviously the situation between saudi arabia and iran makes it more competition. conversations have happened with opec even when countries were at war. iran and iraq sat together at the same table in the 1980's. the diplomatic tensions will be put aside for an agreement. certainly what price is needed is going to be in adjusting data point to work because it seems the saudi's need higher prices than russians. saudi arabia would like the price closer to $65, $70 when russia is at $55 a barrel. that will be potentially a point of tension. saudi arabia has the ipo of aramco. for that, it would like higher oil prices. ipo aramco,arabia are you interested? ian: it's certainly a subject of interest. the probability of that happening has dropped substantially. what is keith here is what -- key here is remember the oil price relative to gold is a great tool. if the oil price comes off relative to gold, that tells you global momentum is easing. if it goes the other way, you got a more positive environment. alix: we appreciate it, javier blas and ian harnett. jonathan: the head of political analysis and his thoughts on what we can expect in washington this week. ahead of the opening bell, one hour and 34 minutes away. futures are doing nothing. in the bond market, 2 versus 10 at session lows and the yen getting a bit. at a low for the day. in new york, this is bloomberg. ♪ ♪ jonathan: congress returns to work, another break our -- another make or break week for tax cuts. bitcoin rallies for another all-time high, answering a tenfold search sprinting for 10k. time to sell. koch brothers are back. city, goodrk morning. this is "bloomberg daybreak." i'm jonathan ferro along side alix steel and david westin. a little price action emerging. dollar weakness creeping in between the euro and the yen. in the bond market, treasury yields coming one basis point on the 10 year, but pushing up on the 2-year note. alix: 56 basis point is where we said down by three on the day. looking at dollar-yen. talking about dollar weakens happening. the south african ran, the best performers. bitcoin, check it out, 9600. vix and put innd bitcoin. jonathan: the requests are coming in. david: absolutely. let's get a update on what is making headlines outside of the business world with emma chandra. emma: it is the biggest online shopping day in the u.s. e-commerce on the cyber monday is expected to rise 17% from a year ago to $6.6 billion. thene spending during holiday season is projected to make up 11% of total retail sales. that would be the most ever. a federal judge must decide who is temporarily using the financial protection bureau. said sher director should be acting director. blocks asked a judge to trump' is an for mick mulvaney. there will be world wedding bells next bring. prince harry is engaged to american actress meghan markle. prince harry is fifth in line to the british throne. global news 24 hours a day powered by 2700 journalists and analysts in more than 127 countries. jonathan: thank you. notsh them luck, but i am interested in. [laughter] david: why am i not entirely surprised by that? jonathan: i feel like the united states are more interested in that been people in the u.k. david: maybe theresa may is interested. alix: what? actress? david: you don't know that series? [laughter] we will fill you in on the commercial break. [laughter] jonathan: let's move on to the serious stuff. in d.c., congress returns to capitol hill to continue tax reform bait dax tax reform debate --tax reform debate. washington ism terry haines. terry, i want to begin with you. we have not heard from -- do they make the difference this week or reassert themselves? happening --ns up what ins up happening is the senate passes a piece of legislation. everyone needs to remember that senator corker was the architect of the deal that allowed $1.8 trillion over 10 years in deficit space that allows aggressive tax reform to go forward. while he has been quiet in this debate overall, that was his major contribution. he andw, clearly, senator flake and others will be much more interested in trying to work within the senate and help out their colleagues instead of worrying about what feud they might be having with president trump. this thing is on the way to approval and the senate and we returned -- and we retained are 75% view that ultimately becomes law. jonathan: terry come as covers returns to work, what is the message they receive from their constituents and does it change anything at all? terry: i don't think it changes anything. i think the constituents, some of them anyway, well express skepticism. that is what the polls reflect. and the answer to that is best given by paul ryan, who says, you know, i think the results will speak for themselves. and what they think what they hope in congress is that increased prosperity, a jump started economy will provide its own answer to that, and ultimately, help them both in good policy. david: assuming there is approval in the senate with a version of the bill, are we off and running? theres the chance that may be serious disagreements between the house of representatives and the senate? terry: i think, david, the chance of that is very slim frankly. for all of the concern about differences between the house and the senate bills, what needs to be remembered is the fundamentals are the same. the corporate tax rate is the same. there are many other aspect that are the same. the fundamentals that were announced in late september. what you will end up with is something that looks very much like that. what are the disagreements over some pay forwards? surely. those will get resolved. terry, a 75% chance that it will pass, but jpmorgan says a 30% chance reflected in the market. is there risk to the upside? within -- keeping you i think jpmorgan's view, i am surprised by the number. maybe q1. there were some upside. i don't think there is a huge upside. i will consider it as a bonus if things get pass through. if it doesn't, there is some setback to get back to market, but not enough to trigger a correction. alix: there are two schools of thought. one is we need this boost for equity prices. the other is this is icing on the cake. we are doing well and corporate profits are up. what can't do you stand by? >> i am somewhere in between. i consider it a bonus. if it does not happen, it is not the end of the world. if it does happen, it is great. but with these valuations, you do need coming to keep extending it. if we don't have the tax reform, we need something else to come through. certainly, if interest rate hikes are coming through, we will get investors getting worried as a year progresses without some sort of tax boost. jonathan: what is happening with u.s. loan growth and demands for loans in this country? had you reconcile that with other issues elsewhere? >> demand for growth, demand for loans come at these rates, it is strong. we see that and the u.k. as well. a starting to pick up, despite the fears of brexit. same thing in europe. as rate go up -- as rates go up every time -- as rates go up over time, you would expect the demand for loans. it is also a risk. as you get risk going up and you have loan so high, that is a risk for the economy and the balance of where things are going in the future. terry haines, loan growth indicator showed loan growth weakening and the united states. does corporate america have a message for d.c. at the moment? don't expect more spending at this point, at least? julia: -- terry: that is entirely possible. tax revision to some extent is a leap in the dark because you are trying to predict behavior that is unpredictable. but what republican some of the president and the administration clearly hope is one thing that happens with tax reform is it on shackles lending to some extent. david: terry, it is not just the tax reform package. we also have the eighth of december coming up when they may have to shut down the government. tells -- tell us about the danger because the president is meeting with leaders in congress on thursday. what is the danger of a shutdown? that let mee had say, i have had the percentage of a shutdown a couple of months ago at 20%. i think it is much less than that today, frankly. the bottom line is we have a temporary spending package that was negotiated in early september that expires on december 8 as you said. that has to be extended somehow. the tea leaves that i see and hear and washington indicate to me that i think nobody is really interested in being a shutdown. there are a number of different trip wires of what to do about dreamers, long-term, short-term can be done with there. and a few other issues. but every indication has been that the republican democratic leaders have in working together on a spending package that would, like the budget and spending packages of two years ago, provide a slight bump up. and i mean slight bump up in federal spending for the next year or two. and this ought to be resolved either in december or possibly kick the can into january and finalize it there. jonathan: terry haines, great to catch up with you. you will be sticking with us, sir. coming up on the program, a busy week for the fed. theident trump's pick for fed chair j. powell. we will be listening to janet yellen. in the markets, one hour and 20 minutes away from the opening bell. equity markets doing absolutely nothing. creeping new curve lows for the year so far of 56, 57 basis points. this is bloomberg tv. ♪ ♪ ♪ >> this is bloomberg daybreak. i'm emma chandra. to sell ar has agreed group of publications. they will acquire time, sports illustrated and fortune. sabrina koch brothers are supporting the deal. than a week ago that bitcoin hip a thousand dollar mark. now the cryptocurrency has passed 9000. it has attracted more mainstream attention. more than 40% the last two weeks ending more than 800% this year. have a newnies strategy when it comes to streaming video services such as hulu. according to people familiar with the matter, capable operators comcast are in talks. -- paidompanies one to tv companies viewed streaming services as potential threats. david: fed chair janet on wednesday and we will hear from differentents from states, but altogether, those are not the main events. tuesday, the nominee for the next fed chair, jerome powell has his confirmation hearing in the senate. we welcome michael mckee to take us through it. mike, is this a supreme court nomination were j. powell's goal is not to say anything? mike: he wants to leave his options open and not the pen down and make some statement definitively on where he would take the economy, which is too bad because the one thing we do not know about him is what he would do in the case of some sort emergency. a beginning of a recession or a financial crisis or something like that. the previous fed chairs who have been economists at least for the last however many years, have a trail of academic writings. we knew been bernanke was an expert on the great depression, so people could in for ways he would attack that. with j. powell, it is a blank slate, so people are left to infer, and maybe they want him to fill in blanks he does not want to get high. david: they give them a powerful incentive to try to pay and down to get some direction from him about where we would head. but will they be looking for? mike: what powell things about the pace of raising interest rates. is he on board with the idea that we are going to do three or four more next year? where does he think inflation is going? he did say earlier this year in august the fact that inflation has not gone up as a mystery. asdid not expand on that janet yellen did at length in a couple of speeches recently. that might be an area where he will get some questioning because ultimately it is all about were rates go. jonathan: for there might be some inconsistencies, there will be a group who will want to things -- deregulation and tax cuts. at the same time, the federal reserve has been preaching about financial instabilities and enthusiasm on wall street. how is he going to manage that? he has got a talk about the fact that the fed is keeping an eye but they don't make policy based on markets. if the markets were to be seen as getting into a bubble, the fed may have to act. tying that the taxes is going to be a tough answer for him, and i am sure he is privacy it quite a bit today because we don't know what is going to be in the tax bill. out.han: maybe that is his maybe that is the perfect out, you can just say the bill has not gone through, so i don't know. alix: that is like the classicbp -- that is the classic pun. mike: he really does not have anything to say. if the tax bill results in higher inflation, they may have to respond to that. david: it is a lot harder to say that today than a month ago because we are closer to know what the tax bill will look like. alix: he is super psyched that it comes 24 hours before his confirmation. [laughter] david: thank you mike. alix: let's bring in terry haines and she must shock. -- let's bring in terry haines. 56 basis points. it has been a slow grind lower throughout the entire year. ? what are the consequences? think there has been too much fear about the tightening of the yield curve. i don't think we are looking at an eminent recession by any means. you see these concerns about wen inflation justified, but have globalization, technology. i don't think it is meant to be indicating that there is a full coming recession. recession will come at some point, but i don't think it will calm and 2018. maybe that's i don't think it will, towards the end of 2018. alix: morgan stanley talks about the recession in 2020. it will be sell the short by the long. seema: yeah. my view is rates are going up, so where do you look? 10 years? two years? the true concern is about inflation, and inflation will rising. there are signs of that coming through and we have seen from the data recently. it was surprising that last week minutes said that they were cautious about the recent data has suggested. but inflation will come through and the rates will go higher. jonathan: terry, and the beginning of 2017, there was concern about who would populate the fed in the give to come. do you think many people underestimate how focused the administration was on the fed and the kind of people they wanted on for their benefit? i think everybody underestimated this administration as far as that goes. the administration has had many successes in putting forward nominees and getting them through, and having them be big real players. underestimateid the administration's focus here. that was in part because it was hard to read the president's own tea leaves about what he wanted. -- but once office in office, they settled down into a pattern, and what they want in powell, somebody that continues broadly speaking the careful and broadly dovish policy that yellen put in place. and the big change may well be in financial regulation where the fed has some leeway in some ability to change it up. haines, thank you so much for being with us. and seema shah will be staying with us. meredith agrees to buy time think for $1.8 million by a deal backed by the koch brothers. we will have the details next. this is bloomberg. ♪ [no audio] david: meredith will agree to buy time inc. it will bring the total value of the deal to $2.8 billion supported by a $650 million cash infusion by charles david koke. we bring in charles sweeney. let's talk about the deal. meredith, and magazine publisher by another magazine publisher. is it a rebirth for magazines, or are magazines burning out? >> the magazine industry continues to be under a lot of pressure. printing is declining. companies havene been trying to make up the decline with the digital businesses, which are growing. and meredith is going to digital business, but -- newspaper -- but it is it but is it enough to offset? david: these two brands are very different from one another. this sort of publications from meredith are very different from sports illustrated and time magazine. >> advertisers are looking to reach young women can come to meredith and get a broad solution. that is what meredith has built his magazine business on. they also own a lot of television stations and the cash flow from the tv business has supported their magazine business. company is a stronger because of that diversification and they hope that will help them buy time to develop the time property. david: the pressure -- the koch brothers went after some tribune newspapers including the los angeles times in the chicago tribune. they want to try to move the media right of center. do we believe them? >> we have to see. they do not have a board seat, which is interesting. that is very interesting. that suggest that at least in the beginning, they will not exert much influence, but the question becomes overtime, does that $650 million investment, part of the capital structure. david: if you look at the koke industry investments, i could not find any media properties. >> this is coming from their investment fund, the family office. koch not coming out of the industry. they haveof many across a number of industries. again, they initially are not going to have any control, but people will be monitoring that going for it. david: thank you so much. jonathan, we will be interesting who the next time person of the year is. jonathan: al qaeda are coming up, it is cyber monday. -- coming up, it is cyber monday. we will discuss that. the volatility of bitcoin has been remarkable. futures go absolutely nowhere. four minutes away from the opening bell. bidbond market, a bit of a on the 10 year treasury yields 233, but a weaker dollar is creeping in. this is bloomberg. ♪ ♪ a new tradingegin week at an all-time high after friday's close. the best week on the s&p 500. dead flat around much of the day so far. price action in the bond market, the flattening yield curve story continues. coming in at two basis points. the 10 year yield down to q2 33. dollar weakness starting to come in. euro-dollar at 119. the cable rate pulling back from 133. 17. let's pull you up to speed. here is emma chandra. emma: a new study underscores how much the senate tax bill would increase the budget deficit. the congressional budget office says the tax cuts would add $1.4 trillion to the deficit by 2020. republicans are trying to lock up the votes needed to pass the bill. the goal is to get the message to president trump desk by the end of the year. germany is edging closer to getting a new government. been talking have about a potential partnership. any coalition would have to support a balance budget and pro-business policy. and british prime minister theresa may has a week to find a compromise on the conflicting brexit demands. the irish prime minister assures the brexit won't return to checkpoints and towers. meanwhile, theresa may's political allies and northern ireland said the future of the border can only be decided along a newer trade deal. global news 24 hours a day, powered by 2600 journalists and analusts in more than 120 . countries. you. thank bitcoin topping $9,500 and showing no signs of slowing down at more than what he percent in the last two weeks. but do you use bitcoin to buy on black friday? we are joined by a correspondent. i did paypal. what about bitcoin? hype, i think people are trading bitcoin and speculating on it. they never really use it as a proper hamas any currency. people had tried for years to make it accepted, but ultimately, it was just too volatile. in transaction fees are rising as well. people are still trading it despite the wishes of some startups. alix: if i did want to buy something with bitcoin, how do i do that over the holiday season? so, there are companies that have tried to make a business of merchants. they are not willing to take the risk. more and more companies are coming up with ways, such as payment cars backed by bitcoin, but there is a lot of risk being -- concentrated on you taking on the risk of volatility. you may think that is ok. ultimately, this is a very complicated, risky venture that you are going to have to take responsibility for. jonathan: the risk lies the consumer because you ever -- because whatever you purchase would appreciate. [laughter] david: you talk about $9,700. that really gets your attention, but how broad are the transactions? we tend to focus on the transactions, but not the debt of the marketplace. how liquid is this really? >> that is a very good question. you can see why variations and spreads through the different exchanges trading bitcoin. curious invention of has a lot of rules hardwired into a to cap supply. those will be coming through on the transaction side. the spread getting of the currency come it is not happening. we are seeing a lot of speculation, a lot of trading. you know, unless you really want to crystallize those gains, it is not the money of today or tomorrow. david: tell me about that because i.s. heard that there are some places in the world to do except bitcoin. in japan, there are many more merchants who will accept bitcoin. is that wrong? >> it depends on the detail. have comennouncements out that these merchants except bitcoin in these countries except bitcoin, but if you dig deep, it is the intermediary taking on the inversion risk -- conversion risk. ultimately, this is one of our conversion risk not being taken on by the merchant. alix: and here i am thinking, i use paypal, i'm really cool. [laughter] the first --e to they have a read on what happening credit card transactions over the holiday season. here's what he had to say over the outcome. >> i think the consumer confidence is very high right now. we're seeing it is for traffic in stores, mobile, it is just the consumer ready to have a very positive season. alix: we are joined by the retail man himself. he is a huge resume, currently ceo of advisors. he also was chairman and ceo toys "r" us for seven years. he was vice-chairman at target and really helped develop their e-commerce platform. if you want to know of retail, you have to turn to jerry. did you buy in bitcoin over the weekend? >> i did not. but i did spend a lot of time visiting stores. black friday remains the marquee event and retail -- event in retail. we saw a huge increase in internet sales across retailers over the weekend. that was expected. what was an expected was a bigger story is that the brick and mortar were pretty resilient. there were a lot of people who came out. decrease at some brick and mortar retailers. via large, there were a lot of people in the stores. there was double digit growth online. you saw a huge increase in spending on black friday. alix: but is it enough? this is just for the s&p retail index looking at their debt outstanding. $222 billion. that red line is the average. we are well above that. comerstion is as the all picked up, -- as e-commerce picked up, can it offset the massive amount coming into the industry? >> black friday is holding up and has been holding out for a couple of years. people are shopping for the bargains. retail space is in a very transformational period right now. the underlining cause is the growth in the internet. brick stores are losing some of that business. they are getting some of it back with their own online businesses. like nordstrom.com and the others. but that comes in at a much lower profit rate. retain marketles share, the profitability declines because very few makes money online. jonathan: it has not been a good year with anyone being involved in toys "r" us recently. are there any lessons that some of these retailers and should not be applying -- these retailers should now be applying? >> it is a very leveraged situation. i think you have seen a privately -- that private equity is shunning retail as an investment because it looked like a place with cash flow. now it looks like it requires huge investment to women in the battle. -- two win the battle. to amazon, they had a big share of the toy market and now they have four times as much maybe 18% of the toy market. they had to take that share from somewhere and took some of it from target, some from toys "r" us, so it from elsewhere. jonathan: what happened with toys "r" us was an experience. the vendors shut down one by one. in your experience, how do these companies need to maintain the trust of vendors to make sure they have their life blood supply of the business? >> it is very important to communicate. retailers run into trouble when the vendors balk. you can pay them. they prefer to sell something and make money than not to sell something. david: you talk about margins online. what about margins and brick-and-mortar? how many for sale signs did you see? we saw 50% off. >> black friday is all about bargains. they were the same deals as last year and the year before. see the smirk when you stories come out about the bargains coming out. identical. almost look at the ads for various retailers year-over-year, and they are identical. you always have a tv or high-tech item. they are almost identical every year, year after year after year. alix: do you feel the world of ldl posture is done? >> now, it is important to be selective. when you have a go for the business proposition that is going to work in retail as a whole, there are way too many stores. shakeup,going to be a going to be consolidation, winners and losers. the trick is to find the winners. during this entire period, we have companies doing amazing. look at t.j. maxx, right? they are more thwarted the entire department store sector. over a $400 billion market cap for an off tail retailer. apparel sales have been declining for decades. alix: what about taking stores private? nordstrom is the latest in perhaps being taken private? >> we are going through a transition. i believe that these things like nordstrom have a wonderful future. they will adopt the internet. the internet is the technology for everybody just like the combustion engine. they will build it into their businesses. during this period, profit margins are stressed for the reasons given discussing. they have to get to the other side. a lot of companies will close. there will be restructuring. people will read do capital structures by going private or elsewhere. everyoneoing to see and makes money during transitional periods will look for opportunities whether it is hedge funds, activists, or private equity. for most investors, i say retail, it has been ugly in both debt and equity. when i say retail to you though, it is different. what are you getting excited about right now? jerry: off-price retailers, costco is a retailer that are freaking geniuses with what they do. it is a wonderful profit formula. you don't want to be one of the combatants. want to be one of the merchants. who was selling to these retailers. with providing the weapons they need to win this world were that is coming. jonathan: can we expect to see you back? jerry kill: no, it is really great to be an arms merchant. [laughter] jonathan: we appreciate your time. equities. u.s. from new york city. about 50 minutes away from the opening bell. the story -- futures have been dead flat after closing at an all-time high in friday session. we go nowhere on the dow and likewise on the s&p 500. this is bloomberg tv. ♪ >> i'm emma chandra. coming up in the next hour, oliver chen challenges we tell analyst with more on what to expect from on time -- what to expect from online retailers the cyber monday. in the european equity market, stock spreading as political concerns begin to diminish in germany as the spd comes closer to a grand coalition with chancellor angela merkel's conservative block. still with us, seema shah a principal global investors. -- global investments. great to catch up with you. feels like the politics doesn't really matter whether the politics is bad or improves, markets seem to be doing their own thing. is that your own take on the fema? --seema? seema: right now, there is a concern about the german election, exaggerating some of the concerns. in the beginning of next year when they announced the italian election date, there will be concerned growing about that because that is the potential earthquake in italy. i don't think -- i think the equity market will get a little sensitive to the various polls that come out. jonathan: does that shape your overall view on how you express your exposure in europe, or hedge yourself? european equities all of this year after the french election. .t looks like a fantastic buy a relative basis, if tax reform in the u.s. goes through, european equities don't look as attractive as the u.s. as they once did. but looking across the world, for me, it is emerging-market equities. you have most for potential banks to cut. looking across the basis, i prefer equities over credit. if i had to pick, it is emerging markets for me. david: sticking with europe, you said you like european equities. do you like financials? is it cyclicals? things you particularly works well given the european economy is growing? cima: i like financials -- seema: i like financials. i feel like there'll be a steepening yield curve. europe has made great inroads with regards to regulation and tighter policy on the banking side, so there is more confidence. i think financials do well, but growth momentum is on the way up in europe. that really supports cyclicals at this point. i do think though that will change as "the year because more and more people will be starting to think about what the ecb will do in 2019. but for the first part of the year, i think cyclicals will do as well as financials. david: maybe they will not wait until 2019. inflation may be starting to take off in europe. it may move faster than we thought. how can it affect equities? come to think we september of next year, and i am not convinced that they will extend another time. given the political pressures on the ecb against qe, there will be more speculation come 2019, they will start tightening. when it comes to interest rate hikes on the other hand, i have a very dovish view. the end of 2019 is the earliest for the interest rate hike. interest rate still supporting european equities to push back on european equities. but at that point in a year, i think equity start to look particularly expensive. it becomes a harder thing to sell. alix: seema shah of principal global investors. coming up on the cyber monday, amazon is set to open at a high -- is to set open at eight all new high. check out tv and watch us online. it is a great function. check us out. this is bloomberg. ♪ bloomberg. ♪ ♪ is bloomberg daybreak. oil is trading in the highest close in more than two years on the ease of the big opec meeting. crude is up 24% through september with speculation that the oil cartel, russia, and allies will extend production cuts. they have outlined an agreement to keep it in place through next year. the swiss bank ceo since 2009 is leaving to join the privately owned group. he will be replaced by the deputy ceo. has said the region will account for a third of the bank's business in the next five years. and pearson is selling off another one of its units. it struggling textbook publishing getting rid of its english-language business to get down debts. it is being buffeted $300 million. sold for $300 million. alix: thank you. here is one of the movers we are paying attention to. --zon, here is a shocker jeff bezos' personal wealth over $100 billion. he was big in cyber monday and big on black friday. he is doing a lot. jonathan: delightful stuff. alix: cyber monday sales expected to be the largest in u.s. history up 17% through adobe. and amazon is expected to get 15% of the increase in cyber monday gross sales. we cannot forget walmart because they may be the closest to amazon. at $1200 a share. western digital getting cut over morgan stanley. prices,eterioration in the chips used in flash memory. they see that pricing rolling over and had to cut samsung for the same reason. , retail, it all in bitcoin leading us to square. the stock had seen a pretty killer rally and now they are downgrading to sell from neutral despite the big bitcoin play. rally is waythe overdone. jonathan: if you wanted to get dorsey, through this and not through twitter. investor inre an square, you are happy with dorsey, but over at twitter, not so much. you wonder if he is expecting that he wonder if he is thinking about that company or the one that is drowning? hip bitcoin play. jonathan: let's check out bitcoin. seemingly headed towards 10,000. it has been a remarkable moving bitcoin throughout the last year so far. we are looking at a tenfold increase this year. there was a joke made that stuck with me. he said this is a religion. and that people would go home to thanksgiving indoctrinate their family members who within go out and bid up bitcoin in the preceding days. got openedcounts after the thanksgiving dinners last week? david: but it is all retail, noninstitutional. jonathan: but for the first time, david, for the first time ever, historically in terms of bubbles, wall street is the last one in. retail is the first one in an wall street is the last one in. alix: i want to get to that chart because it is an interesting piece from david fick going -- from david. it shows the amount of money in alternative classes and cryptocurrencies is the lowest of them all. 6 trillion in gold. even a smallthat amount of rotation and cryptocurrencies is enough to ignite a very solid stellar valley. david: which may help explain volatility because there are many transactions driving it up quite a bit. jonathan: you should see the amount of accounting are open now. his quite remarkable. -- it is quite remarkable. it is not apples to apples. but the number of accounts is quite significant for that one based. to keeput you have track of bitcoin if you are a manufacturer of chips. jonathan: in the gold rush, you sell the shovels. this monday, we close friday at an all-time high and coming to the new trading week doing absolutely nothing on futures. the price action is diluted. the yield curve is flattening earlier in the day by a couple of basis points. the 10 year yield coming at 233. in the fx market, the dollar starting to bleed in. weakness starting to come in. from new york, this is bloomberg. ♪ joanathan: congress returns to work, another make or break week for the efforts to put through cash -- tax cuts. bitcoin rallies to an all-time high, sprinting toward 10k. acquiringrothers are time ink. from new york city, good morning good morning. this is bloomberg daybreak. there counting you down to opening bell, 30 minutes away. let's look at the price action for you. morning, this elsewhere the dollar is racking up some dollar weakness over the last few weeks. it continues today against the euro. in the bond market, it is getting flatter and flatter. 57 basis points this morning, we cannot get a single basis point area let's get you some movers. deal of's the emanate the morning, meredith is buying time inc. that is what meredith shares should be worth after reporting to wells fargo. the conference call just ended. there is no interest in selling part of the portfolio. they already have broadcast tv deals in the works. time revenue has fallen 9% year on year and may have followed six quarters in war. they are providing some financing, there will be no editorial control. i have a big skepticism on that. buffalo wild wings is up .6%. aurora capital will raise its did another five dollars. billion.d bed is $2.4 they tried for. they own rvs and want to add buffalo wild wings to the list. a little under 3%. macy's is up 1% premarket as well. they experienced some snafus on black friday. the have some credit card processing glitches. the overall theme we are hearing is black friday if you think it matters did really well. inventories come out, we will delve into that later on in the show. joanathan: it is said to be a marathon week in washington during congress returns today and will again debate on tax reform. the tenant will -- senate will hold a vote on thursday. republicans do not have the votes yet you joining us with more is our white house correspondent. it's great to catch up with you. what is more significant, the fight in the senate or when the senate sits down with the house and tries to reconcile differences? >> that's a big question. republicans are taking this one step at a time. they need to get this through the senate if they get to the house and have that conference committee. this is a big hurdle for them to cross. if they are able to cross it this week, it will lead to some momentum. i would not expect this to get jammed up in the house. the house is so desperate to pass something, they have the votes to spare. if this gets through the senate, they will figure out a compromise. joanathan: with senators are we still nervous about? we heard about bob corker and he has gone quiet. will we hear more from them this week? >> we have a number of senators including bob corker, senator flake of arizona, senator mccain, senator langford of oklahoma who are worried about the impact of this bill on the debt. they are trying to work out a compromise senator langford said he wants a backstop that would allow them to rejigger things in a few years if they don't the growth they need. there are a number of holdouts who are worried about the debt and this bill would add 1.5 trillion to the deficit. in order to pass this, they will have to assuage those concerns. david: where are the politics? what are the senators hearing? >> they are hearing from their donors and members of their base. there has been no major legislation passed this year. they need to get something done in order to have something to take not to voters. the bill is not very popular with voters, only 25% support it. the idea that republicans of had the house and senate and white house and haven't been able to get any through -- anything through is a major factor on the tax bill and getting something done. that is driving the house and senate toward getting a bill to the president before christmas. joanathan: rtc correspondent in washington, thank you for watching -- joining us. it's great to have you with us on the program. it looks like they are creeping toward getting this done. street, noton wall many people are reacting to a positive step in terms of pushing this through. what are your thoughts on that? nick: you really have to get a sense of what the dynamic is in markets where it that is a segment that is exposed to tax cuts. the rallied 20% after election. with congress in session, they rallied 10%. that's where the action is, only small cap side. they are underperforming. if congress passes something, you could see it make up the gap. evaluation is pretty heavy, 24 times earnings. if you're looking for a clean play on the tax issue, it's clear it matters less than just getting something done. joanathan: typically, you think physical stimulus in a stronger dollar. stimulus equals a stronger dollar. stimulus, more rate rises and an improving economy. >> is getting people's attention. whether it is sending the traditional signal people take or not is up for debate. you have to look at the markets this year. we focus on these gains in the u.s., it's been a global rally. stocks around the world are setting records. it's not just a u.s. focused thing anymore. china is deleveraging. this is something that would normally spook the u.s. and world markets in previous years. the growth has been coming inconsistently across the world. you can have some deleveraging in china and still have this optimism on equities. weak, the tax cut is looking better by the day. note, thisraders of is what he had to say earlier on that. isbasically says the problem the discussions of the rest from excessive leverage takes place between bankers and traders. the average investor is told everything is jinxed. we have rewritten the term snafu. that is what we are talking about as well. nothing is going to go wrong. what do you think about that? : we have had this low volatility in moment for several years. it is not just been tax reform, it is been political change. nothing genders volatility. --y say there seems to be none of those really impact asset prices. i don't expect the tax moves to really affect the dynamic either. david: is that right in this sense? is there a difference between tax reform and tax cuts? would you really run of the deficit substantially? that will affect equities. make: -- nick: you can see that big graph going up in terms of debt outstanding to well over 100% of gdp. equity markets are still 18 times earnings. eventually, it should be enough to offset some of that increasing debt and bring it down. alix: what accounts for this? david: what about in the markets? there was a day when people were worried about the bond market. have we forgotten about that? michael: it feels slightly cycle, some of the best gains can happen toward the end of the cycle and how long that last few innings lasts is anyone's guess. we have had this pickup in growth toward the end of the cycle. or eighthbe the sixth or ninth. people don't want to miss out on that last lurch higher in the bull market. with 10% earnings growth forecast for next year, people are fixating on that and not worried about the other stuff. europe is a great example of that. david: what happens of the central banks pullback? joanathan: still in europe right now, in spain and italy they still trade like credits. because of the way europe has behaved in central banks have responded. to protect're going anything really bad happens. nick: that is the thing. we don't with the fed is going to look like next year except for the chair. joanathan: it's great to catch up with you. we have breaking news. alix: barracuda is going to be bought i probably. in software.ze the price tag is $1.6 billion. this of the the eighth deal in terms of being a buyer so are you this year. premium. 22% it is now up 50% in premarket. joanathan: some hedge funds fear a bitcoin bubble. it is hitting another record today. we will catch up with oliver chen. he will tell us the winners and retail. from new york, futures are rather stable in the face of a selloff for the u.s. dollar and a bond market that gets a bit flat. this is bloomberg. ♪ alix: bitcoin is topping $9,500, showing no signs of slowing down. it gained 800% this year and attracted more mainstream attention despite the warnings of a double. this is what skeptics had to say. less how itare trades or who trades it did if you are stupid enough to buy it, you will pay the price one day. it can trade at $100,000 before it trades to zero. the only value is the other guy will pay for it. >> it's a scam for criminals around the world. it has no credibility and if you have no electricity you have no value. the chain technology is interesting, the cryptocurrency is an irrelevancy. >> it shows you how much demand for money laundering there is in the world. that's all it is. it's an index for money laundering. >> it's not a currency and its treated as an asset for tax purposes. you cannot force someone to accept them and they have no natural demand. you're not required to pay taxes. except thatt will going or cryptocurrency for taxes. alix: which side are you on? nick: i'm a fan. it makes a lot of sense. it is the next iteration of money. it's a way to store value and it is worked very well for that. it fits into a 21st century global economy because it leverages internet and smartphones and an interface and technology that replaces the faith you used to have an government. alix: is the buying rational or irrational? nick: totally irrational. it may very will -- well be a bubble. we have to look at the late 90's. i think there are some analogous things going on. people are buying at the don't understand it. it didn't mean we didn't end up with the internet. the tech bubble we see now, the the foundation was laid in the 90's. these things go through cycles. we see the first one for bitcoin. it will be around in 10 years and more useful. david: but at the point larry think made, it's an indicator of how much money needs to be laundered. the main advantage is no central government is involved. people who want that are people who are doing illicit things. doesn't that mean governments have to stop it? ofk: there is $1.1 trillion bills in the dollar. there are $2.2 trillion of u.s. sponsored money laundering facilities in the system right now. bitcoin is only $300 billion. maybe we should think about the $100 bill more than bitcoin. david: governments have talked about cutting back large bills because they can be used for illicit purposes. that may prove my point. nick: perhaps. let's say the issuance went down 15%. even though the europeans have cut back on 500 euros notes, they opt 100 and 200 to replace the gap. i don't know government wants to print dollar currencies. i think his point is right and there has been demand for getting assets offshore. look at saudi arabia. someone who is doing business might worry about political stability in the country. jamie dimon is off ace there. not every country has the legal protections we have in the u.s. and there is some legitimate purpose for people overseas. joanathan: does it makes sense that wall street would be against this given the following? someone says i really like this stock. that stock is part of his portfolio. does it make sense wall street would not like this to be a success? nick: wall street is looking for someplace to make money. joanathan: i'm not talking about the traders. heads ofng about the large financial institutions. does it make sense they would be against it? nick: in the same way barnes & noble was against amazon first came out. you're going to talk about your own book. not just been had about financial institution, but being american in that world and thinking the status quo is fine. joanathan: what does that mean for the future if they make it open to their clients after they are on record saying it's a fraud and some are saying it's stupid and anyone rise of is an idiot, then they offer exposure to clients. nick: it's interesting to see it. jamie dimon bad bounce it and says they will be involved in the futures market. they have to do was write for shareholders and that is to be in all legal markets where they can make a difference. joanathan: that's the trick. you will be sticking with us. jay powell has his confirmation hearing tomorrow. they are expected to grill him on monetary policy. we will discuss things to watch from his remarks. this is bloomberg. ♪ david: we hear from five fed presidents and janet yellen as well when she testifies before congress wednesday. that is the real news. real news is when the nominee to he the next chair has is confirmation hearing tuesday. joining us is our policy correspondent michael mckee. i want to get your title right. still with us is net. -- nick. a phd economists. he doesn't have a lot of background that he has written on. is he important on the fed? personifiedd gets by the chair. it's much less so from the greenspan days when he was seen as the fed. jerome powell be the one everyone looks to because there are so many empty seats on the board and that will continue into 2018. he will be the center of gravity. the bank presidents are all over the lot. we have hawks and doves and people in the middle. washington will pay close attention. david: what do we know about his performance so far? we heard about stanley fischer and mr. dudley. we never heard his name come up that much. was he a leader behind the scenes? man, he is the good gray the one who is followed along in done what is necessary and stayed out of the way. he gets good marks within the id for coming in and saying am an investment banker by vocation and my training was as a lawyer. teach me. he has learned a lot about all the very -- various aspects. workll be driven by stock when something untoward happens. he's got a good grasp of the general issues and he is the guy who took over from regulation when he left the board. he has some background in that now to work with the regulatory side of it as well. alix: 57 basis points. how does he look at that? it's caused by a confluence of factors that don't ignore a recession coming. you have very low neutral rates cause people to push down on the idea of how high the long end should be. you've got inflation expectations that are very low. you've got a lot of geopolitical money coming in from other places. the main reason we see a flattening and not the fact that there is any kind of problem in the economy. -- those: they would are be the questions wall street people would ask. when i think about the senate, i go back to that room the president was in with all the senators when he said would you like to be the fed chair? it was john taylor, not jay powell. when i think about the senate confirmation this week, i wonder if we will hear about if he is going to lead the john taylor way or the wall street way. will he be loose around monetary policy? mike: he said he does not believe in rules. he would not advocate that. that's on the record. we don't know who raised that meeting. -- their hands in that meeting. they want to know his reaction to the tax package and he will try to dodge that as much as possible. he said we are overregulated and the banking sector, but he has not been doctrinaire about it. they want to know what he thinks about regulation in general going home. joanathan: nick will be sticking with us. the opening bell is next. we are performance away from the cache. futures are going absolutely nowhere. the dollar is a lot weaker. this is bloomberg tv. ♪ retail. under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. or a little internet machine? [ phone rings ] it makes you wonder. shouldn't we get our phones and internet from the same company? that's why xfinity mobile comes with your internet. you get up to 5 lines of talk and text at no extra cost. so all you pay for is data. choose by the gig or unlimited. and ask how to get a $200 prepaid card when you buy any new samsung device with xfinity mobile. a new kind of network designed to save you money. click, call or visit today. joanathan: the opening bell is coming up. last week, another record high the open after we close through 2600 on friday for the first time ever. futures are stable going into the opening bell. we go nowhere on the dow. it is a little bit softer on futures. this is the story in the bond market. yields are 633. trade weatter, flatter are around 57 basis points or so. the fx market is the dollar which continues to bleed. that gives you a feel for the market open. let's get you to the cash open. alix: are those kids ringing the bell? we have a little bit of upside. the dow jones is barely up. the s&p is barely up. it is flat, not a lot of action within these. you have the s&p and the nasdaq closing of highs on friday. the s&p is over 2600. we will see how volume picks up throughout the day as people returned from vacation. it's all about retail as we look at the equities. jcpenney is up. gap is up over 1%. amazon is up over 1%. today is cyber monday. monday sales are expected to be up 17% thursday through friday -- 17%. $6.6 billion is expected to be spent today. wassingle day for alibaba $25 billion. jeff bezos, over $100 billion in value for himself. it's a good day for jeff bezos. an interesting art from retail, is this black friday and all the jews we talk about enough to overcome the structural issues and retail. index, the retail outstanding debt. these are just the stocks in the index. that debt is $122 billion. the trend line is this red line. we can celebrate all we want in terms of online spending being up, the heart of it, we still have a lot of retailers with advocate debt. how many more bankruptcies can we see? what does it mean for private equity buyouts? what about the companies trying to go private. joanathan: very much so. joining us is oliver chen. is still with us. it's a great point alec points out. toys "r" us is drowning in its own debt. are we going to see more of that? over: if you think about the evolution of retail, a lot of disruption and we will see that. there are some stand up names. walmart's offering strong value and investing billions in prices. we like walmart and we think value as a concept is long-term and appealing. there was a bright black friday. sales were up 5%. joanathan: walmart has had an incredible year. can anyone replicate what they have done? is that something you can replicate if you are another retailer? all over: half of walmart is grocery. consumers go five times a month for groceries. they have 4800 stores. it's hard to replicate. we see amazon buying visible as well. david: i'm curious about the three-way boxing match. i'm not sure i would've picked target as being up at that level. they are reforming what they are doing, but they are behind the game. can they compete with walmart and amazon? oliver: they are famous for being rate merchants. about 20% of it is food. we are watching target. they are investing in price as well. we will see great value there today. they have an extra 15% off. target has a place here, they have over 1000 stores. it's very different from walmart. david: walmart made a very major acquisition online. does target have one of those major acquisitions in the online space? oliver: that is to be determined. they are so busy thinking about transformation and reinventing the organization. what we are looking for walmart is taking the jet technology into the walmart.com and giving you everyday low prices for new generation of millennial shoppers and giving people flexibility to get a lower price if you don't return items and thinking about the smart supply chain, which is transforming the supply chain and using stores as distribution points. alix: what you like and retail question mark -- retail? nick: retail is tough for me. the classic trade is you buy into the hype. this is going to be hard for all of these companies to deliver the 5% people are expecting. the only advantage is its longer than last season, one more day and that final weekend will be a big blowout. i am worried we can't meet the expectations because they are so high. alix: fair point. even t.j. maxx is off the lows of the year. which retail stocks are undervalued? oliver: it's either go deep value, which is walmart, anduper luxury like tiffany 70's. -- 70's. beauty is a very good sector. is asian of america, thinking that people wearing yoga pants and yoga pants been formalwear in some cases. alix: you guys see me every day when i walked into the office. oliver: it is awful mobile monday with the transformation of people shopping online with their phones and that has been happening. joanathan: that's the way i've been thinking about it here in -- about. amazon has had a great year. so has the set and paypal. they are up 40%. square is up exponentially. as you look at those companies, where is the big shift? oliver: mobile is over 50% of traffic. mobile is a sore -- store in your pocket area we see a lot more innovation with payments as well. the walmart shopper is very cash driven. walmart has a sensitive customer in terms of being a broad customer, lower and middle house and comes here it -- incomes. nick: i think you want the processor companies. they have places venture with bitcoin and crypto currencies. the one overriding factor is they are getting cheaper and cheaper. alix: what about the cybersecurity players? you are going to the invest in that tech knowledge he. the picks is selling and shovels to the minors. the security side is necessary. every day, there is a hack of some database that highlights the need for the service. david: we've talked a lot about volume and sales and margins. ceo for hudson bay, he said the margins are much lower. does this mean even if you win, you don't? oliver: they are under pressure. the average check size above $40 in novels you to advertise the shipping cost of $10 per package. you look for average check size. we will continue to see an online evolution were retailers have to invest in their online. what we need to see is more use of the store as the last distribution point where it that can get the shipping time in half area this cuts across categories from closing the luxury goods. it is market share we need to compete. it is so meaningful in terms of online growth rates at 20%, in-store traffic is flat. when you think about the consumer, retailers have to add convenient duration and culture and reinvent the store. data is a great topic for loyalty programs. data is the new oil. security will be a big deal as well, and artificial intelligence. alix: we talked about all the debt. having more bankruptcies do we need to see to get to the right kind of retail landscape? what does it mean for private equity? 20% mall we see about closures. a lot of the space needs to be rethought how do you spend your weekend? you think about food and health care. a lot of these malls, there are 20% too many. we will continue to see that. jcpenney they see some closings. they will be reinventing them all as an experience. black friday is an experience and people love physical shopping. you need to make retail relevant for the new generation. it's a much more creative culture and much more experiential. nick: how about neither? as you have heard, this is a revolution taking place. i am pretty sure the debt level you are quoting does not have operating leases. the situation is worse than that chart shows. alix: what retailers won't be around? oliver: you can get great genes for nine dollars or less. i do prefer the gap jeans. joanathan: you can get rate genes for nine dollars. product.t's a great it's a good deal. you can get very inexpensive close. think about h&m. apparel is a tough fragmented category. we like t.j. maxx because it 40% off. we are watching department stores. the mall is transforming. if you're not a retail superpower and you don't have the distribution center, you have to think about your strategy, lululemon is a good idea. the tory is secret owns their brand. level asn be on amazon well. joanathan: thank you very much. willg up, the company that have new owners. details on merits to buy time inc. that's coming up next. do we have another all-time high to speak of. ? this is bloomberg tv. ♪ emma: i am here in the enterprise green room. coming up, the former u.s. ambassador to germany will be discussing the latest on germany's coalition government efforts. this is bloomberg. alix: another day, another record for the s&p and nasdaq you have telecom, financials, and consumer propelling the s&p past 2600. it may be cyber monday on wall street helping the retailers, who is also merger monday. meredith is going to buy time. that is up 11% on the news. the total is $1.8 billion. offering 150 54 buffalo wild wings. i want to focus on time and meredith. how did this get done? and: is the third time meredith has come in for them. time is suffering from this decline in print media. meredith is in the similar game. they have tv channels. they've been much smarter in the way they have handled digital and they have fared better than time. this makes sense for them now. i think one really interesting , he is a nice goldman guy. he is been phenomenally successful. he is the guy who is advising meredith. he is also investing alongside the koch brothers before. he is named by them in their website that they share stock with. he's got a serious role in bringing the koch brothers as part of the finance. that is the thing that got it over the line. alix: what could wind up being? ed: they are getting a dividend. there is no call up on it for a few years. so far, it's passive investment. they will not have a board seat. it is basically". it's a very bold statement. they are not going to have any sway over editorial. there is no board seat, which is quite surprising when you consider the size of the investment. ist it does give over time it gives them enormous leverage should there be a situation where there is a change in control or whether something allows them to do more with what they have in the company. time, this will be interesting. , they are toitely the right of the right. it will be fascinating to see how this plays out. time has not been right wing. david: has this ever been done successfully with the magazine? time said this was their strategy and it didn't work. see the middle innings of this game. they are uncertain if it can happen. we see a lot of growth from his magazine companies coming from digital businesses. unfortunately, it's not offsetting the secular print advertising and circulation. when you put these companies together, do they have a bigger platform and can they compete against google and facebook? in seenn: am i right six years of revenue decline? secular decline in ad spending. if you look at five years, they forecast double-digit declines in magazine advertising. -- secular sexual or pressures. will the digital dollars ever offset the decline in print? joanathan: i'm thinking out loud, them not having an influence on the magazine, is an opportunity or the magazine to shift to the right given how aggressively some of gone to the left and have successfully. is there a serious conservative publication with solid journalism that could do well? >> there is a market there. but no further than fox news. it is a profit center area to the extent that rupert murdoch does move ahead, what business does he want to keep? that is a ratings winner on television. i'm struggling with the serious journalism and breitbart. what i said was it's the opportunity to have a conservative obligation with serious journalistic integrity. that's not what i said about right word -- right part. david: they lost -- invest a lot in their journalists. they are competing against people light breitbart who don't have to do that. quite meredith is saying to lose protection is they can get 400 million in the first two years. they are going to take a lot of cost out. does that mean they fire a lot of journalists? david: how many cost of already been taken out of time? it's been cost cuts after cost cap. i don't know once left to cut except the journalists. >> may be right way journalists are cheaper? alix: that's a great conversation. thank you. washington returns to work in president trump will be more involved in the final push. we will have the latest from capitol hill. if you have a terminal, check out tv . you can interact with us directly. just go to tv on your terminal. joanathan: futures were relatively stable and unchanged through the morning. we run by .1% on the s&p. from york, as is bloomberg. -- new york, this is bloomberg. ♪ david: it's going to be a busy week in washington with the senate wishing hard to get its version of tax overhaul passed as early as thursday. the president is out already with a tweet. bill is coming along very well, great support. the middle class and job producers can get even more an actual savings. very positiveis on this. what is he going to have to do to get this through the senate? >> it's going to be a heavy lift between now and thursday. they need 50 out of 52 senate votes to support the bill to get it through. i think they need to do what senator mcconnell said, to iron out the differences, the concerns between deficit hawks like jeff flake and bob corker who are retiring and don't have to worry about political collins,to susan especially the mandate repeal. ron johnson has said some terms known about the disadvantages. the president has talked to johnson. he said in the tweet i just read, what about collins and the affordable care act problem? she said she has big problems with the bill that's in it. >> it looks like they are leaving that in. they need that revenue. their entire math goes out of whack. it doesn't comply with senate rules. every year after the 10 year window, this needs to not raise the deficit by a single penny. says in the long-term they have to do that. lookingllins is not like something you can count on is a yes right now. the mandate is likely to stay in. joanathan: it's a busy week down in the ec as congress gets back to work. we have all-time highs on the s&p and on the dow. let me leave you with this that. close at an all-time high for 55 sessions this year. that is a new record, every four days on average. that's the most since 1928. from new york, this is bloomberg. ♪ ♪ vonnie it is 10:00 a.m. in new : york, 3:00 p.m. in london, and 11:00 p.m. in hong kong. from new york, i'm vonnie quinn. mark: live from bloomberg's new european headquarters in the city of london, i'm mark barton. welcome to "bloomberg markets." ♪ queen victoria street in barton wille mark be covering tax reform and lots more internet two hours, but we start with breaking economic data. abigail: we are looking at a nice beat year. the homes built would represent a decline, but instead, looking at 685,000 new homes built representing a 6.2% growth spurt. much better than what the survey had called for and this is important because when we look back at september, new homes had been up 19% on h

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