i'm jonathan ferro. back together in the markets, futures pretty stable across the board. u.s. small business optimism surging to a 12 year high. if you switch up the board, sterling weakness and it ftse rall continues. yields up. alix: good to see you. here is what you need to know. inflation ahead. factory prices rising at the fastest pace in five years, adding to the global deflation seen in the market. and a post-brexit pound is the gift that keeps on giving, a double record for the ftse 100 as it haeadeads for his ninth all-time high. up senator jeff sessions is -- how many democrats will vote against him, and what potential changes could he make? that is what you need to know. david: they want to go to that big move up in china producer price numbers.

it was the most in five years. we are joined by our bloomberg executive editor. welcome to new york. i guess the first question is why? we saw such deflation in pti for so many months in a row, and now it has turned around rather genetically. -- rather dramatically. >> there has been a lot of government stimulus. we'll get annual gdp later this month, and that all to show that the government has been pretty transparent about hitting its target of 6.7%. the other data we had today was car sales. that was the biggest increase in three years, and that was off a tax cut. you can see the government doing a lot, and that is coming through in inflation and ppi. it's an interesting argument for the rest of us here about what else they can do is they need to in terms of monetary policy. david: but we are seeing a resurgence in ppi.

through the chinese economy and global economy? china's going through this dramatic amount of capacity cuts, over the last year and a half, two years. ppi was positive for the first time four months ago, and i think what we have come to is they have come to the end of the cycle of cutting capacity of supply and demand, which are more aligned, and i think that is what that is saying. for the rest of the world, i think it means china will stop being a deflationary drag. david: does this give president goes into the next congress? does this given power to make reform? >> i don't know about that. i think what he gives in the stability, having to worry about the economy at a time when they have other things off the plate. leadership change being front of that. david: thank you so much. our greater china executive editor.

jonathan: i want to bring in the global head of rates and fx strategies. vincent, great to have you, joining us on the phone. >> hello. jonathan: the rate hike is back on the table in china. >> it's a bit early to talk about that rate hike in china, but i think in terms of the balance between fiscal and military policy, there's a switch toward fiscal, and military policy is already easy, which is part of the strategy to stem capital control. more generally, i think we are seeing around the world signals in terms of economic data, in terms of inflation, quite b earish, but we aren't seeing a reaction in the market right now. jonathan: the reflation globally, let's pick out china more specifically. ppi is still stubbornly below

the target. food inflation was the big story at the beginning of last year. china specifically, we are getting a little too excited, maybe, too early about the prospects of inflation to increase. yeah,i thinkah, it is -- i think it's too early to talk about a tightening of military policy. yes, the economy is doing much better after most people expected the worst, but it's still not an easy situation. we're seeing a slow down in and definitely we are seeing what continues early this ayear. but i also think it is abouture, talking tightening of military policy. alix: consent, goldman sachs -- vincent, goldman sachs talks

about the fixing for the u.n. they will let it rise against the dollar. what does that actually mean? what does that do for china? what is your call? >> we're not looking for a sustained recovery in the yuan. the moves we saw earlier this year reflect differently a desire for the policymakers to decline and to stop capital outflows, and to probably try to hit speculators who have those positions. that being said, we don't think the economy can't afford much of we're stilling of-- looking for a weaker tny, but it will not be an easy try. in many markets it is the same, positions are very crowded, and it's not going to be easy to

trade the underlying view. jonathan: let's talk about those credit positions. coming into this year, short positions for futures are at an all-time high. does that squeeze continue? yeah.l, i'm afraid that, the market is going to trade in the near-term -- anytime the market rallies, the reaction is going to be fairly muted. i can't exclude that short covering, but eventually, i still believe that you want to sell the bones in treasury prices. eventually, the economy data, the inflation data, the policy rotation that we are seeing, all that is going to push it higher. that i would expect it is going to be hard to trade. we'll see short covering as we see now, and eventually when we

have something shocking, yields will go sharply higher. it's not going to be easy, but i still think the trend is higher. alix: in the meantime, you end up having 10 year yields. are they continuing to grind lower? what does that do for any kind of dollar rally in the short-term? >> well, definitely, we believe that real rates, 10 year real rates for example, has been a key driver of currencies, and the pullback in u.s. yields we have seen this year, which is quite significant, has definitely continue to be a pullback on the u.s. dollar. if anything, the reaction of the u.s. dollar has been fairly soft. low rates have moved faster. again, near term, that could frustrate the bullish trade. but again, i'm looking for a short-term correction, not new trends. jonathan: great to have you. think you.

societe generale. let's say good morning to emma chandra. emma: good morning. the u.s. senate begins confirmation hearings today for president-elect donald trump's nominees. he predict that all will be confirmed. among those to be confirmed, rex tillerson for secretary of state. he will face questions about his ties to russia and his extensive investments. u.s. prosecutors are preparing to file criminal charges against currency traders at the heart of the market rigging investigation. members of the so-called cartel chat group used instant messages to coordinate the rigging of financial currency benchmarks. five banks pleaded guilty. the soccer world cup is getting bigger, fifa agreeing to increase the field for the world cup from 32 to 48. that will begin in 2026. fifa estimates that with 80

matches it can bring in another $1 billion. global news, 24 hours a day, powered by over 2600 journalists and analysts in more than 120 countries. i'm emma chandra. this is bloomberg. alix? alix: thank you. here are equity futures, flat, but well off the lows of the session. premarket, selling over $3 billion worth of assets trying to pay down the debt load. to put it in perspective, the market cap soul from $89 billion now to about $5 billion, and this asset sale will try to help them . in europe, leading stocks higher, metal prices, particularly those out of china. rebar futures up 3%, iron ore up 5%, helping the stocks in the ftse 100, like anglo american, rio tinto. if you strip out commodity names

within the ftse, the rally looks a lot less impressive than it would otherwise. interesting factoid if we talk about rally records. and wrapping up with yahoo!, we got some news after the closing bell yesterday, the stock not yet moving. this is a look at what happened to yahoo! under marissa mayer, who is stepping down from the board of the new yahoo! company. it will be called altalba. five other members are also stepping down. this is what the stock has done since her tenure, but isn't that all alibaba? and what does this say about its sale to verizon? will be examining that. david: thanks. coming up, the ftse is on pace for its 11th day of game, the longest streak since 2009, and it could have its ninth straight record close, the most in history. does the rally have room left to run? that is next. this is bloomberg. ♪

jonathan: good morning from new york. i'm jonathan ferro. let's get a check of the markets. this is ahead of the open in two hours, 15 minutes. futures are really stable, going nowhere. the winning streak continues on the ftse 100. if you switch of the board, the scene is like this. treasuries,r pound, three weeks of gains and then again again. 2.37.asis point to we want to get back to the record moves on the ftse 100. the index closed at a record every day since the u.k. markets reopened after christmas, that is eight trading days. i think it has achieved only once before, in 1997. joining us now is richard jones and cynthia o-- the double

record. walk me through it. >> exactly. if it closes higher today, which you just showed, the that c is already up, that would be a ninth straight record. that beats the record streak we had in 1997. that is pretty phenomenal. a reminder that the dax did something similar in 2015, where it actually hit records by april. it all depends on the pound, which i am sure richard will guide me through. jonathan: that's one side and commodities are another. you strip out commodities, as guy johnson did, i can bring up the chart quickly. the blue line is the ftse 100, strip out the commodities, we go nowhere. talked to me about the ftse 100 and how it is flattered by what's happening with the commodities. >> that's very important, jon,

and everything that is happening in china is important, with the dollar. the ftse is extremely heavily weighted to commodities, to oil. obviously that huge rebound we had last year, if it does continue, is the big push. another side of the story -- and this is why some people are saying sell, sell, sell -- because the ftse 100 is actually quite a defensive market, when you compared to the rest of europe, because it does have this huge health care company and staples. it's interesting to see which side of the coin will win. alix: i told you it's all about commodity. commodity is one story, affects the other. i have the other portion of the chart. richard, this is for you. take a look at the bloomberg. this is the ftse 100 priced in euros and dollars. the ftse is the white line, purple is euros, and t dollarshen.

is this just all about the weaker pound? >> well, i think it's a very important driver. i think the important thing about the pound is that we have been on a very volatile ride since the brexit referendum last june, and i think that's not going to change anytime soon. there's a big focus on the prospects for a hard brexit. we have had this talk before christmas and were concerned, but now with that deadline for triggering article 50 at the end of march, it looms over the market, and the talk of hard brexit has not gone away, it has spooked investors. if the ftse was driven by the pound, we could probably continue to see it going forward, because the pound looks like there will be no respite. jonathan: rich, why is that the case? you look at the data that comes out and it is totally fine, it is solid. compared to the politics it is

point dot at what sterling traders look at the cyclical data points coming out, the pmi, the gdp, the confidence, etc., and say it won't be so bad? >> well, i think at a certain point, jon, sterling traders have come to the conclusion that we have not seen the actual reality of brexit start to bite. we had the central bank cut rates, we had the pound fall quite sharply, so it's actually a perfect storm for the u.k. economy in a positive way. nobody should be surprised that the u.k. economy is doing well because the conditions are perfect for it to do well. going forward, there's a little bit of caution, because as inflation rises, as the purchasing power of u.k. consumers gets bitten into, that will provide headwinds for the economy, and this big data bump will probably turn tail quickly. david: we have been hearing that since last june, since the vote,

and they predicted by right about now we would be feeling it. what are traders saying about trying to anticipate inflation and raise rates? >> well, i think the general opinion is that the next move in the u.k. will definitely be a rate rise. there is not a lot priced into 2017, and that becomes a less reliable predictor if you go out too far. but realistically, people expect the bank of england to be on hold, to look through the inflation generated by the weakness of the pound initially. there will be a point where they can't ignore it, but i think the big concern that people think the bank of england will be looking at is the fact that purchasing power will be diminished in the united kingdom and it will provide a big headwind. consumers are important in the u.s. as the u.k., and they are facing challenges. jonathan: the squeeze of real incomes. great to have you with us. richard jones out of london.

alix. alix: carney in the hot seat tomorrow, talking to lawmakers with answers for tough questions. trump's transition test. senate confirmation hearings kicking off a capitol hill today, beginning with attorney general. what potential changes could he make? and will democrats actually vote against him? that's next. this is bloomberg. ♪

david: this is bloomberg. it's a big day for the incoming trump administration as the senate begins confirmation hearings on the president-elect's proposed cabinet members, starting with senator jeff sessions for attorney general. to set the stage, we are joined by our political reporter, reporting today from washington. kevin, we have the prepared remarks from the proposed attorney general.

i think a lot of our viewers will be saying, what is he going to do with things like the merger with at&t and time warner? what is he going to do with these lawsuits against, for example, barclays bank? does he address any of that? >> we are not seeing much of that, in terms of the financial aspect. i do expect him to get questioned on those topics in particular, and the lawmakers and aides of those lawmakers indicate that he will answer to that. but more broadly speaking, david, he is going to try to be someone and come across as someone who is going to unite the policing community. this is a general theme we saw from trunk on the campaign trail. he is going to say that he will be someone who will look to unite the country. that being said, he also has some controversial remarks he will have to answer for.

david: on that subject, it did strike me that we don't have a national police force in this country. that is done at state and local levels. how much influence does the attorney general have over our nationwide policing? >> he's going to be able to set the tone for the parameters of those debates. candidly, it has been a particularly charged time in the united states with regards to some of the issues that we have seen over the past several years, such as ferguson. but look, he is going to get a lot of questions from democrats about racially charged statements he made several years ago. and we have the quote here, we can pull it up. he's actually going to say, "i deeply understand the history of civil rights and the horrendous impact that relentless and systematic discrimination and the denial of voting rights has had on our african-american brothers and sisters." clearly, trump aides, trump

advisors, view this as a potential weak point for senator sessions and are going to try to come back at that with these statements, but i've got to be honest, if you are watching this hearing today, this is the point that the democrats and his critics are going to drive home as they tried to characterize him and also, if they have a chance, block his nomination. david: he's a senator, after all. when was the last time the senate rejected one of its own? he's going to get through, isn't it? >> is absolutely going to get through. the other point i would make is that he has also been someone who has been in the senate for decades. he has relationships with key members of the club, if you will, in the senate, who quite frankly have worked out with him, who see him in the gym. he has those relationships. but look for senator cory booker, a rising democratic star

and a member of the new class, if you will, of lawmakers in washington to really go after him. cory booker, unlike some of the more senior members, doesn't have that relationship that he needs to keep, and he can really go after him. alix: kevin, the senate jim? [laughter] alix: what i will be looking for is tonight at 9:00 p.m., when president obama addresses the nation for the last time. what can we expect today versus what we might have seen from other exiting u.s. presidents? >> unity. i think he is going to surprise a lot of people. i think this is a president who ran on the themes of hope and change eight years ago, and he is leaving office at a time of political divisiveness, and yes, no one would have expected that donald trump would be his heir to the presidency, but he is. i think one of the themes that we are going to see, in addition to him trying to stay key parts of the affordable care act and

clear his legacy on things like economic regulation, he is going to have to unify the country. while he is going to try to make the case to keep key parts of his legacy intact, i also think he is going to call for unity, and that will surprise a lot of people. alix: indeed, after the contentious debate on twitter. thank you very much. like i was mentioning, coming up at 8:30 eastern time, we will speak to a key member of donald trump's economic team, anthony scare emoji. . do not miss it coming up, the future of yahoo!. the company plans to change its name and trinkets board. what's next? this is bloomberg. ♪

get a check oflet's the market. yesterday kicked off the trading week with losses; today, a little bit of stabilization. we go nowhere on the dow, nowhere on the s&p 500.

a winning streak on the ftse continues. switch up the board and here it is, the cable rate weaker, 121. 52. treasuries up one basis point. alix? alix: inflation ahead. china's factory prices rising at the fastest in five years, adding to the reflation theme in the market.a and post-brexit is the gift that keeps on giving. trump's test. senate confirmation hearings kickoff with the attorney general, jeff sessions. the big question is how many democrats will vote against him, and what changes could you make? that is what you need to know. david: a morning must watch comes from the north american international auto show. every year the leadership of the global auto industry shows off their shiny new cars and talk about the developments in the business. this year is no exception, but another topic is taking center

stage, and that is what the trump administration will need for car companies, especially in the wake of what's coming out of trump tower. we asked a range of auto ceos what they expect or hope to see at the inauguration next week. >> there is a lot of opportunity. we have more in common with the administration and the president-elect then we have at odds, and we are looking to strengthen the country, strengthen business performance. we are a big provider of jobs, over 100,000 good paying jobs, and we are looking for some reform, regulatory streamlining, and he has already made statements -- those are all things that will improve our business and allow us to reinvest. >> i think we all agree with the president that we want to make america strong. we want to have good paying jobs, a good economy, because eventually that helps my business if i am selling cars in the strong economy. it allows me to sustain lines to

the future. >> everything being done in collaboration with the industry is much easier. to matter what the administration wants, they can things, as long as it's collaborative, as long as we have some kind of visibility about what's going to happen, we can do a lot of things. things, as long as it'sthe only thing we don't liks the price. >> it's a global company. we would like to have open trade. i think we cannot build everything in the local markets, importe of it we will and export after the u.s. i think it's an understanding for such an open, fair trade environment. i think it's something we would expect. very good working relationships with every administration and policy makers through the years. what we would like to see is free and fair trade agreements. we want to see regulation and

regulatory policies that are more reflective of reality. and we want to see corporate tax reform. here in the u.s. and amongst developed nations, we have the highest corporate tax, and we think it would be good for the economy. david: the thing that struck me as i talked to everyone of those ceos -- we agree with the president. the president of toyota, this is a company that trump just tweeted about the deal they made in mexico. think hisesting -- i tweets have had an effect. they are reluctant to take on the president. they want to make nice. jonathan: you and i talked about the pr for some of these companies in overdrive over the last couple weeks. the message, anyone of these guys knows, you will get this response. we have more in common with him then we don't. me, i don't see how it's a

fine line between can i trade in the u.s. market and penetrating the chinese market. the chinese market right now is surging, like the u.s. car market. we know it affects their abilities to produce a manufacturer autos outside the country, to export them into the country. the story right now is mexico-u.s. i just wonder if it becomes the u.s. versus china. david: and you noticed that mark feels from ford, he said fair trade. not just free trade but fair trade. he also sent currency manipulation. he has a substantial mexican operation and real deals with china, but they are making that move. alix: you have to wonder what concessions they are getting now and what they will ask for once they give it. ok, we did this for you, now you need to do this for us. david: mark feels mentioned tax reform, but another issue is fuel efficiency standards. there's a midterm review coming up, and that can help them when

it comes to manufacturing cars, because those are smaller and cheaper. they don't have to make as many to get there iir fuel economy down. alix: and there you go. ok. great stuff. changing of the guard over at yahoo!. marissa mayer says she plans to leave the board of the investment company after yahoo! sells its properties to verizon. the company also announced it will change its name to altaba. on the phone with us is david kirkpatrick. with us on set, paul sweeney. david, this is no surprise. she's not going to sit on the board of the investment company. >> right. i think she is somebody who has been excited about the product, that consumers see. she was a product developer at google, tremendously successful, and i think this is not at all surprising. she used the assets yahoo! owed

from alibaba and yahoo! japan as a transformation of yahoo!, which we have to agree didn't go as well as she would have hoped. in any case, it kept the company alive, it kept a valuable, and now she is going to move with verizon, at least briefly, and do something else. been talking all morning about what the trajectory of yahoo! shares has been. take a look at the bloomberg. this is a normalized matchup. white is yahoo!, blue line is the 100. this is where she took the helm. at the end of the day, this is all about alibaba investment and investment in japan. can we expect that kind of performance? >> you are right. the performance has been completely due to the surge in alibaba. it has been a tremendous global story since its ipo. the expectation for alibaba

remains positive. i think investors remain very positive about yahoo!, on the growth of the consumer and e-commerce in china. alibaba has had two very good quarters. in the consumer remains strong in china, and that continues to fuel the surge in that business, which will be reflected in altaba. real challenge for the remaining board members, to try to figure out a way to monetize the investments in such a way that they haven't figured out yet. there has been a lot of speculation after the hacking scandal. with the board of yahoo! has made these moves if they weren't really confident that the deal would go forward, with the part of yahoo! that is not alibaba? have,l, i think it might simply because they have got to

be prepared in case the deal does happen. i do think the deal is probably going to happen. i think it will probably happen at a lower price. if i were verizon i would be arguing for it. but i think generally they expect some kind of deal to happen, but even if they were uncertain, i think they would've had to do this. i wanted to chime in on the prospects for alibaba. yesterday, jack ma was with donald trump. this company is lead by an extraordinarily savvy leader who continues to do smart things. i think that is indicative of what the general public, and particularly the incoming president, thinks about alibaba, that he thinks it's important enough to get together with this leader. yes, alibaba is going to continue to thrive. alix: the rest is what happens to the marissa mayer. where my cheek of next? david, you brought it up earlier -- what you think? commentss made cryptic

about staying with the company to its next phase, in other words suggesting she will go into verizon at least briefly. i don't think anyone expects that's going to last very long. i have seen the figure $57 million for her expected payout in the event of the transformation. although she has got a lot of money already. i don't think she -- she doesn't really care that much, because she is very wealthy, but i suspect she will leave, she will probably seek another major executive position in the not-too-distant future, although given that she has a couple kids and she has been burned out by this, it wouldn't surprise me if she took some time off. alix: in terms of pr, i feel like on wall street only did is hide behind marissa mayer couldn't get it done. give me the case for why another tech company would want to hire her. >> the story of marissa mayer at yahoo!, she wasn't able to turn it around, but i would argue

that this was a mission impossible, that the company was really not fixable, it had really fallen so far behind the googles of the world, the facebooks, i that it was impossible. we saw that with aol. gets sold itself to verizon after it fell behind. yahoo! is now following a similar script. i think ursa minor did a lot of things. i think she's still retains very strong credibility in silicon valley, and i wouldn't be surprised if we see her again if you want to start up story where she could create a lot of well for herself and her shareholders. every board in america would probably like to have her on. i'm sure there's no shortage of opportunity. >> it doesn't hurt to have tech at the top of your resume. thanks.rkpatrick, coming up, the firm foundation

for growth. global trade. but where does it stand today in light of the trade talk? that's next. this is bloomberg.. ♪

alixemma: this is bloomberg daybreak. citi's chief u.s. equity strategist with his earnings. alix: analysts talk about trump and protectionism being the key risk of 2017, but deutsche bank says global trade was already rolling over, and had expressed

itself through things like brexit and donald trump. these three charts really paint that story. this is a number of free trade agreements that have been signed. a sharp decline ever since the global financial crisis. we are now down under 10. at one point in the late 90's we were up to over 40. that shows the deterioration in the global market. you can also see it reflected through tariffs. trade barriers are now 2.5%, antidumping measures around 2.5% of product. those are what we have against chinese steel being imported into the u.s. they are at some levels triple digits. you are also seeing countervailing products on the rise, up by almost .5%. of those are duties you want to counter export subsidies, for example. they are really climbing as well. those kind of taxes are climbing up products all across the board.

in can also see it reflected the u.s. when it comes to the following support of free trade. this is a percentage of those of the u.s. that have a free trade agreement now good. we are at the lowest level we have seen since 2010, right around 10%. we have overall free trade agreements falling, tariffs rising across the board, and sentiment that has been deteriorating as well. you could make the argument that it lead to things like trump and brexit. how will they play out is new rules come into place? david: we have one of our senior economists to talk about this -- this has been happening for some time now. there was a high water mark, and now it has come down since then. certainly the international trade negotiators are out of work. >> they're going to be out of work through this administration. david: is there any prospect of a turning around? >> probably not in the short run. trade policies need the support

of the people in the country they are in. the rest of the world is not as anti-trade as the united states is starting to the. european union is all about trade, and that is how germany powers ahead. of the fact that we are seeing fewer trade agreements is a necessarily a bad thing, it's that many bilateral trade agreements have been signed and we are seeing an effort to figure broader things, like the transpacific partnership, floundering on the rocks. jonathan: moving away from the politics, this is economics. train has been rolling over for a while now, and the relationship between trade and global gdp has also shifted. we are in a position where the global trade is less important than it otherwise was. >> it depends on the country. for emerging market countries, where a lot of the manufacturing is done, it is still very, very important. a lot of the countries that are reporting lower trade figures, a

lot of what they are doing is exporting parts and importing finished materials. it's not always captured in the data. the trade remains important, but less so than big, established countries with closed economies. david: this has real effect on investors. i was with some very serious investors -- i asked them and they said they will not invest right now in big companies dependent upon trade. >> they want to see what happens, whether or not we get into a trade war. that's the important thing. it's not so much that we are seeing a rise in nontariff barriers, but that we may get trade wars, that we may impose a tariff on somebody who then imposes one on us. that is the real threat. that's the idea,, that we have higher barriers as much as we could see tit-for-tat retaliation. david: but have you get there

without going through a war? >> exactly. david: thanks so much for joining us. gets time now for our other stories making headlines. here's emma chandra with your bloomberg business flash. emma: valeant pharmaceuticals agreed to sell more than $2 billion worth of assets. the embattled drugmaker is selling skincare brands to l'oreal. itss also selling pharmaceuticals unit to a privately owned chinese conglomerate for $820 billion. debtnt is $30 billion in after it was caught in scandals over high prices and accounting practices. the parent of the snapchat messaging app has made wonders at its headquarters. they say that they can get into the new overseas markets, which is a win for the u.k., attempting to lower businesses to the country in the wake of exit. -- optimism among americans it rose last month in the most since 1980.

expectations about the economy's profits rose dramatically. says that survey also more companies plan to invest and hire more. that's your bloomberg business flash. this is bloomberg. jonathan: thank you. coming up, barclays releases at least a dozen black swans that could hit the commodity sector. we dig into those potential problems with one of the authors, next. here's a check of the markets. an hour and 30 minutes away from the open futures stable,. yesterday we were down in the u.s. session. we go nowhere on the s&p 500. in the other asset class, in the bond market, yields up. the winning streak continues on the ftse, which is a losing streak for the pound, which is weaker against the dollar. from new york, this is bloomberg. ♪

alix: welcome to bloomberg daybreak. natural gas prices getting a break today, but overall it has been a rough start for the year. take a look at the bloomberg. is the difference between february natural gas prices and april natural gas prices. the weaker it gets, weaker current prices are. joining me now is nick potter, vice president of commodities at barclays, one of the authors of "the lax laws for commodities." what is the biggest thing in crisis today? >> we have seen a big selloff recently. in 2016, natural gas was the best-performing commodity out there. all of a sudden in 2017, a lot of long positions, going long, and the weather just didn't cooperate. that is why we have seen the selloff. if you have been watching, which everyone has been, you see the weather going very warm, very cold, very warm, very cold. meteorologist are having a nightmare figuring out what's

going on. traders our trading on this, and that is why we see the big whips. a big selloff after the new year, and now we should see some support. alix: support going forward, but you brought up some great black swans. we have a few we want to pull up, specifically u.s.-mexico trade wars. that could be a big black swan. also transit issues, like terrorism in turkey, drilling in the south china sea, anything against nuclear power. here, it's really the trade war front and center. how would that affect natural gas? 2016, itents we saw in was a year when you can expect the unexpected. given what we saw with brexit, trump, we wanted to put out scenarios of black swan events. some of them did focus on natural gas. when we look at the u.s. specifically, things are looking better in 2017. we should see more support going

forward, and we should see prices north of fat three dollar mark, which is different. even last year we were trading below that. one of the things that is supporting natural gas prices is further exports into mexico. there's a lot of rhetoric now with the incoming trump administration about a potential trade war with mexico. the word terrorist keeps coming up. what that means for future exports through the pipelines. if you had asked me last year, i was fairly bullish, and i still am, but if there is some broader, trade related dilemma that does happen, that could put some question marks. alix: not only that, you could make the argument that they would have to price even lower to make it to mexico, and that mean steeper prices here. >> exactly. it's a supply and demand fundamental analysis. if there is more gas, it means there will be lower-priced pressure. alix: does it also wind up

canceling infrastructure projects we have seen in pipelines, moving gas from the u.s. to mexico? >> that had been a big investment for a lot of private equity companies last year. a lot of people have been looking at building new infrastructure to feed the energy market in mexico. if you look at their energy supply and demand, they have declining domestic gas production and increasing demand. a lot of new gas-fired power plants. if you are a product developer, you saw a great opportunity to move u.s. gas into mexico. you saw a lot of pipeline proposals going forward. now there's a question mark. you have to ask yourself, what is longer-term trade policy going to look like? do we really want to put steel in the ground if we don't know what it's going to look like? alix: it doesn't seem totally out of left field, but what probability would he was signed to something like this happening? >> short-term, no real impact.

i think that should steadily increase, but i think it's a matter of building a new capacity that would allow levels to go higher. you really have to question it. these black swans, we don't think they will happen. but given the uncertainty that we have seen in the markets recently, i think these are important points that people have to keep an eye on, specifically in commodities. alix: and after that rough couple years. thanks very much. coming up, the earnings season outlook with the chief u.s. equity strategist at citigroup and his call on the bull run. this is bloomberg. ♪

jonathan: good morning, bloomberg daybreak on tuesday,

jenny were 10. -- january 10. gross, you from bill can't tweet your way to 3% growth. if you look at futures, we are down by 12 points. it closed at a record high on friday. here's the situation in the other asset classes. poundries up, and the doing its thing as the ftse keep some climbing. alix: here's what you need to know. inflation ahead. factory prices rising in china at the fastest pace in five years, adding to the global reflation team in the market. and the post-brexit town is the gift that keeps on giving, a record for the ftse 100 as it heads for his ninth all-time high. and senate confirmation hearings kick off today with the attorney general pick jeff sessions. the big questions is how many democrats will vote against him, and what potential changes could you make? jonathan: thank you. for more on the move up in china

producer price numbers, here is our bloomberg executive editor. great to have you. the numbers out this morning, the figures surging -- is that the rosen of spare get -- the erosion? >> i think it's probably a little bit of everything. but more than anything it's a capacity cut that came through. the government has done a lot of stimulus to get growth back on track and i think that's what we are seeing. it has only been four or five months where we have been positive, so it's not -- i think it's possible that it could change, there could be a trade war -- jonathan: after several year of negative reads. target, likeow the many developed central banks. how is it set to trend throughout the coming months? the eurozone, and others, they will be favorable. but china is a little different. >> i think it will depend on

growth still. i think the government -- for example, we had car sales at three-year highs off the tax cut. the government has already said we would do more tax cuts, fiscal rather than monetary. you might see that come through. jonathan: great to have you with us. this is what i like to see. david: that's the story this year about china. we all remember what was happening last year this time, a different picture. january and february last year, comparing the shanghai index with the s&p 500. it took a big step down, although it came back up some, and the shanghai led the s&p down. that was because of uncertainties in china that really grabbed the markets. now we are joined by the chief u.s. equity strategist to talk about the u.s. equity market. we start with china -- should we expect an echo of what's going

on in china? >> not really. if you go back prior to 2007, there is almost no correlation between u.s. markets and chinese markets. through 2010, there were strong correlations in the financial crisis that affected everybody. i think what happened last year, december 2015, february 2016, it was more of a recession in the u.s. it was a function of the energy sector as oil prices collapsed, high-yield markets became disassembled. that he had the fed rate hike, you started seeing capital spending plunging because of the energy sector, and everybody said we are getting into a recession. keep in mind, the energy sector employees wear less than 2% of u.s. workforce. people overshot on the energy stuff, but really, it wasn't related to china. david: so if it's not china,

energy looks a lot better, with a trumpet administration -- what is the danger of overshooting? >> an overshoot to the upside, the notion of the rally coming off the election, people were surprised that we had this rally simply because they were saying, there are trade wars, on this kind of stuff, as opposed to what i think has come out of it, which has been a perspective around pro-business, pro growth, real change in the investment landscape. and theff the crisis obama's response, you had this very significant government intervention. small business, the national federation of small business, asked business people, what worries you the most? what is the problem we face most? they were talking regulation and taxation, not business conditions. they have seen a huge shift in business optimism, and keep in

mind that 85% of new jobs come from small business. if you try to reinflate the economy, you want small business people conspiring with animal spirits. jonathan: we know the small business number comes out at a 12 year high. what is the lag find that confidence and something coming for the bottom line? >> two responses. first, if i look at hiring one about athat year later we see unemployment rates coming down. that is down after having dipped. that is good news but it is probably a year from now in terms of the impact. at, what thing to look it shows is commercial and industrial loan activity. what are you saying about lending standards? they have been using for the past few quarters. there is a fear that there's a lull coming in the economy

before any actions are put in place. actually, because of the nine-month lag between changes in those lending standards and actual economic activity, it should be relatively strong. i appreciate the concerns people have, it's just that when we go back and look at the timing legs, it suggests that the economy reflate faster. alix: how do you factor in something like the potential trade war? >> from a trade war perspective -- i'm listening to what people are saying, i have no insight, he hasn't tweeted specifically to me, yet -- [laughter] >> but his comments a couple years ago, where he said the last thing they will do is

understand the trump process. canadian, so i have a little bit of sydney for this -- so far, if we terror up yeah, everyone has said, it's over 20 years since we negotiated it. they seem to be moving toward his direction, realizing that the u.s. economy is so important to the canadian economy that they can't get shutout. i think it's more about the moral suasion been going in, because that doesn't resolve job issues. on border tax, this will be an interesting thing to watch. there is going to be a lot of pushing and shoving, a lot of industries crying out. i think as you start talking about stores closing and various constituencies getting nervous -- it will be interesting to watch.

we are early in the political discourse, and we will see how it plays out. i think it is a risk. jonathan: let's just read where the prices are right now. down near 20,000, the 10 year around 2.4%. bill gross said this morning that 2.6% is a bigger mark. those kind of levels would mean we have gone into a bear bond market. what would that mean for your world,? for equities >> let's put that way out in the 19,999 versust is 20,000 -- totally irrelevant. round numbers are nice but it doesn't mean anything. with respect the 2.6%, i do think that's important to watch. 10 year yield has had enormous applications for how investors want to be position in the market, you hit a low in july

then you, and since want to be on the defensive. if that happens, it's important to how you want to be positioned. we think this kind of market for monitoring to fiscal stimulus shifts and puts more pressure on yields to go higher, which is for leadership group in the market. the question is where -- what level does it have to hit to generate concern? we look at the price of the yield and price-earnings. it's a simple chart to think about. five years ago, the lines went apart from each other. is the market overvalued question mark absolutely, it's unbelievably overvalued. it had nothing to do with the stock market. there are some normalization on the bond market that doesn't necessarily mean things have to collapse, because they never expanded.

if you don't get rewarded, why should he be punished on the other side? maybe i'm talking too much about my personal upbringing. [laughter] >> we can do that in the commercial break. david: will come back to canada shortly. you will be staying with us. let's get an update outside the business world with emma chandra. emma: thank you. let's begin in washington. on capitol hill, today is the start of confirmation hearings. the president-elect's cabinet nominees. he predicts all will be confirmed. among those in the spotlight, jeff sessions and former exxon mobil ceo rex tillerson. he'll face questions about his ties to russia and his extensive investment. meanwhile, president obama makes his farewell speech tonight. he won't be speaking from the white house. instead he will deliver his address from his adopted hometown, chicago.

he will likely deliver warnings about some policies being proposed by the president-elect, and you can watch his speech tonight here on bloomberg tv. coverage begins at 9:00 p.m. eastern time. and xi jingping will become the first chinese head of state to address the world economic forum in davos. he will speak next week at the opening session of the annual conference of billionaires and political leads. he will be a company by top chinese business executives, including jack ma. global news, 24 hours a day, powered by over 2600 journalists and analysts in more than 120 countries. i'm emma chandra. this is bloomberg. alix: thank you. u.s. equity futures go nowhere, but what is going somewhere if the ftse 100, now rising for an 11th straight day. we are looking at nine record highs, closing of another record today, up by over 3% in just the last few weeks. we have been talking about the pound, now at a 30 plus year

low. you also have the miners holding the top three spots since december 21. you have global reflation, commodities moving higher, helping the ftse. although oversold, it is over 70. up.vidual movers, alumina it will use ibm watson technology to cut dna sequencing times. what that means is it could revolutionize cancer care, so they can individualized drug therapies. that is expected to begin next year. it raised its price target to $170. his -- 55ng a look at t million shares at $29, a discount from the close. it also raised its dividend and will be using its money to increase holdings in one of its subsidiaries.

as for the individual movers. david: thanks. coming up, a big week of bank earnings ahead. to cap it all off, we will see retail numbers and consumer spending data on friday. we will learn about -- that's next. this is bloomberg. ♪

jonathan: from new york, this is bloomberg. willorld's biggest banks be releasing the latest quarterly results at the end of the week on friday. we will also get a read on retail and consumer spending over the holidays. -- we are still with the chief executive strategist. thank you for being here.

to talk about a rally that has just exploded from the bottom of the summer, when rates really bottomed, and then accelerated through the trump election results. the positioning now, over at ups -- go and get into some of these earnings reports. do you share that sentiment? wea week and a half ago, thought the markets were going at it too far and people got more bullish. you can sit there and say we will probably do some sort of a pullback. but i'm not surprised if we get some pullback. that's normal and markets. i'm not sure it's worth putting on a pedestal. i think it's more about don't buy this. you can wait and let the market come to you. take advantage of the pullback. in terms of why the banks do so was a widening of

the shape of the curve in terms of the spread, borrowing the fed window. the opportunity for margin improves. the potential for a later hand on regulation was probably a better way to say it -- truly shredding dodd-frank, which was one of the promises during the campaign -- just not as severe a clamping down. the proposed tax cuts -- a combination of all those makes the financial move seem reasonable. our sense -- potentially leadership in the market. jonathan: there are only now two on goldman. here's the bloomberg that you can bring up -- we're getting analyst ratings. the white line is priced, and below that we have had a tremendous run-up to some of these financials. the fed officials have come out

and said, you know what, i don't know what to do with my forecast because i don't know what's coming. as we go into earnings season, how can they say anything different? if you are looking for earnings guidance, validation of what you think will happen through 2017, why would this be any different to the fomc about their ability to say what is coming? >> you could say that forever. there's always uncertainty in the future. we put out another on the earnings outlook at the beginning of the release period -- we suspect that the company is that will be on those release calls will be a little bit uncomfortable, saying we don't know what we are going to be paying in the future because it will be up for discussion in congress. we don't know any of these things. so they are going to have a little more wider guidance but i still think they will be talking

about this idea of economic activity that seems to be picking up, there is this animal spirit developing. nothing is a slamdunk. i think they will put positive zen and the uncertainty factor -- it's not unique to the financials. when we look at the sell side, there are a percentage of readings that are by. we see health care is the most intensive buy, financials middle of the pack. there have been flows going into markets since the election, but not a whole lot has gone into financials. what you see is the shorts come off, the covering of the shorts. but i don't think there is massive over positioning. the flow of money doesn't suggest it is true. alix: my concern has to do with the 10 year yield. take a look at the bloomberg,

and it has been rolling to the lowest level since 1980. 10 year yields are higher but how do financials keep rallying? >> first of all, stocks are nominal, not real. if you look at any kind of history -- if you play the financials against that chart, you find there is almost no correlation whatsoever. i think there's a tendency -- i shouldn't say mixup fundamentals. what investors need to do is figure out what drives the stock price, not what drives the business. ultimately you are buying a ticker and you want to sell it at a higher price. i sometimes refer to it, policing the stock, not buying it. if you buy it you intend to own it forever. leasing would be with the intention of selling. in that sense, watch what drives stock prices. in that case, nominal yields are far more important. jonathan: we referenced that the other day. buying the dream and then sell

it down the road. great to have you with us. >> are you suggesting people should be suckers? [laughter] jonathan: the ftse on pace for his 11th day of gains, the longest since 2009. does the run have a little bit more space? plus, sky bridge capital's founder and the member of the trump transition team joins us from new york. this is bloomberg. ♪

jonathan: from new york, this is bloomberg daybreak. let's get a check the markets. here of the asset classes. features a little softer, down about .1%. not even that on the s&p 500. the record winning streak on the ftse continues. if you switch of the board, the fx market has a weaker pound, and we dropped to a low we haven't seen since october. it bounced back in the last

couple minutes to 121.68. offer afteremain on two basis points on the yield. alix: let's talk about that record move in the ftse, up for 11 straight days, closing at a record every day since u.k. markets reopened after christmas. the onlytrading days, time he did that was a 1987. -- was in 1987. you have to look at the ftse not just in pound turns the dollar and euro terms. this is the dynamic. the white line is the ftse 100, blue is dollar terms, purple in euro. can we trust that kind of rally? >> alix, as he said, it is all about the pound. the pound is a huge support for these stocks, because of huge proportion of earnings are actually from overseas. we can trust it in that if you are an investor, you are pretty happy and the story is not so

much the same. there are other supporters like mining stocks -- we saw a big rally since the christmas period, all to do with the data coming out of china and what's happening with the dollar. it's not just about the pound. whether we can trust it or not, we have to see. we have to see what happens with the pound and with brexit and what mark carney decides to do in the next year. jonathan: something you pointed out is the composition of the ftse, with the mining companies doing terrifically well off the back of commodities. you pointed out how the defensive the ftse can be. if you break it down -- it's about a quarter of the index. what do analysts say about that? >> exactly. that's the interest in part of the index. it has a factor between cyclical the defensive. that's about a quarter of an index defensive, and that tends to underperform the rest of europe.

when yields rise and the economy is looking better, when everyone wants to rush into cyclicals. that will be interesting to see what happens this year. jonathan: smart as always. we appreciate your time. coming up, trump's next test. senate confirmation hearings kicking off, beginning with attorney general, senator jeff sessions. what potential changes could he make, and will democrats vote against him? sky bridge cofounder and key member of the transition team joins us. that is next. from new york, this is bloomberg. ♪ with the xfinity tv app,

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only xfinity gives you more to stream to any screen. download the xfinity tv app today. i've spent my life planting a size-six, non-slip shoe into that door. on this side, i want my customers to relax and enjoy themselves. but these days it's phones before forks. they want wifi out here. but behind that door, i need a private connection for my business. wifi pro from comcast business. public wifi for your customers. private wifi for your business. strong and secure. good for a door. and a network. comcast business. built for security. built for business. ♪ jonathan: from new york city, this is "bloomberg daybreak." i'm jonathan ferro. about one hour 23 seconds away from the opening. a pretty flat session so far this morning.

over in europe, the winning streak continues on the ftse. bond market, record shorts coming into this year. the squeeze continues for three weeks as we start 2017. 238 is your yield on the 10 year. around 12166. that has not been the story of the last couple days. alix: inflation ahead. china's factory prices rising in the fastest and five years, adding to the global reflation seem. cene. it's a double recce for the fetzer -- record for the ftse 100. trumps confirmation test kicks off today with attorney general jeff sessions. the big question is how many democrats vote against him and what changes they could make. following one of our top stories, for more on capitol hill, we are joined by kevin cirilli. any chance that jeff sessions

does not get confirmed? kevin: no, i don't think there is a chance the democrats can block them. they're going to try to characterize him and bring up some of the previous racially charged statements he made. sessions is going to drive home the point that he is going to be able to unify the country from the law and order perspective. we did see in his opening statements and i'm interested in what anthony has to say on this, anything about the potential mergers about trump has come out with. at&t and time warner being the big one about front. well behind the scenes as over in washington, and a meeting with paul ryan and his guys and the representatives from trumps team last night, who was there and what did they discuss? kevin: top advisers from trump world huddle together, including steven mnuchin and gary cohn and steve bannon. they huddled with folks like other topas well as

republican lawmakers to talk tax reform. i spoke with one of the sources directly in the room, who told me in addition to talking about corporate tax reform, lowering the corporate tax rate, they also talked about a way to move comprehensive tax reform that would get the personal income tax plan. this is something paul ryan has pushed for a very long time since he has been in congress. it is also something that i'm hearing that president-elect trump really wants to get through and take advantage of the republican-controlled congress. a lot happening this week with confirmation hearings and obamacare, but also behind the scenes, they are laying out the around work to pass tax reform and get started within the first 100 days. alix: what timeline does that give for real potential tax reform? kevin: i would expect corporate tax reform very early on. where this is going to get tricky, of course, as when you talk about rewriting the tax

code for personal income taxes and what have you. obviously we are right around tax season, too. this is something that donald trump campaigned heavily on. he said he was a dealmaker and he would be able to work with democrats on these particular issues. it is also something that democrats have criticized republicans for because of how they want to pay for it, and that's where things get a little bit more contentious politically speaking. either way, i huge sign last night that the top folks in the house as well as from trump's inner economic circle huddled last night in washington. alix: kevin cirilli, thank you very much. if i told you those guys would've been the room years ago, you would call me crazy. david: paul ryan is in seventh heaven and no he has a president who has a shot at doing it. this man has been at the front supporting donald trump and now is a key member of putting together the present elects transition to the presidency. anthony scare mucci is the

cofounder of scott bridge capital and an author of how he built an investment firm. he joins us now from trump tower. anthony, great to see you again. anthony: thank you. david: we have a lot to talk about. let's start with the jeff sessions confirmation hearing coming up just shortly now in washington. ,hat should we be looking for not with respect to the things he said toward violent crime and racial issues, but not necessary for our audience? what should we be expecting in terms of merger activity? we have this huge at&t and time warner merger coming up. what would be his attitude when running the justice department? anthony: let me give you more broad concepts and then we will talk about the merger activity. the key thing the attorney general designee wants to message people is that he will be building a very objective department of justice. at the end of the day, the standard of justice in the united states that all this

whole deal in terms of the impartiality of law and the objectivity of the justice department is something he really wants to send a message to the american people and the american congress that he is going to fortify. i know senator sessions personally. at call for his campaign and he is a brilliant guy. i have a lot of confidence in him and is very confident that he is going to be confirmed. mergers, theo the test for us is that it's a consumer driven test, it's a customer driven test, and it's a fairness test. you and i know enough about antitrust law but we have to be careful. when you create a monolithic structure, and you and i are old enough to remember the old at&t, the unregulated airline industry , and what tends to happen is that you lose the flexibility of pricing if you have things that are too monolithic. i think he is going to address that today. i think he is going to address

that in a pre-market and spirited sort of way. to me, i am very happy that he was present electron to pick. -- president-elect trumps pick. i think he will do a phenomenal job. david: it goes back to the reagan administration where they deregulated at&t. let's talk about the transition because you are in the middle of this and economics are so important in this new administration. tell us about the various players. there's a piece in "the wall street journal" that said you have several powerful players heading in different directions. wilbur ross and peter navarre on the one hand with the trade side with china and then you have gary cohn who is more of a free trader. how does that all come together into one cohesive whole? anthony: it's interesting because i read the article as you did. when you're inside, you know there is a little bit of an arbitrage spread between information in the paper and what's actually happening.

but i would say to you is that every one of those people is a free trader. you'll be very surprised that even peter navarro is a free trader. what he is looking for is fairness in the trade process. he is looking for an evenness in the playing field, where for 71 years, david, and by design the unevenedates o the playing field for goods and services flowing freely into the united states, and our services were embargoed to protect labor markets offshore the united states. what we want to do is flatten that out and make it free and fair and regulated in a way that will protect the american worker and the amerco middle-class. that is one piece of it. the second piece where you're talking about deficit hawks is that we all have to recognize that we have to contain the deficit. one of the things i love about the president-elect is that he is a revenue driven person. look for a simple vacation of the tax code.

look for an energy policy. if you think of the energy underground in the u.s., it could be a phenomenal revenue source for us. as a disruptive entrepreneur, which the president-elect is, you will find we will do very interesting things on energy, which is revenues frankly, taxation, which is simplification which will hopefully increase revenues and spur growth, and the last piece, because you are mentioning mulvaney, i will put in congressman price or the secretary designee price. you will see a simplify and make more affordable what is now currently called the affordable care act. my guess is that the american people are going to be very happy over the next 100-300 days. veryhan: that's a comprehensive response, but the idea that jumped out is that peter navarro is a free trade guy. he does not sound like one.

the point of making a fair something our audience would agree with. the auto sector is being one of them. i'm interested in how you flattening out. how do you think you're going to do it? book, hein peter's does list all those different protected industries in china. the rhetorical question is -- if they are allowed to protect their industries, why aren't we doing anything to protect our industries? an economist would say, no, don't do that because too much protectionism will slow down growth. what we need to do is arbitrate that with the chinese and other countries. we need to explain to them that their growth cannot come at the disadvantage to the american worker into the american middle class. in this was sitting chair with you, he would say to you guys, listen, we have got a fairness standard. understand asll economists that free trade is better for the world, but are other trading partners need to get onside with us to make sure

that happens. if you told me that the chinese are going to stop protecting those industries, that would be a lot better for the united states and better for the global economy. i think there are nuances here, but i want to assure you guys that the president-elect is a free fair trader and i think he is going to make that case to the amerco people and the rest of the world shortly. jonathan: if peter navarro was in the chair next to me, you and i would not get a word in. [laughter] we got some news from you on sky ridge and you would bring some more. have you had a bid yet for companies? anthony: we have got a couple of bids and we are parsing through that right now. as a mentioned to you guys last time, fleming is doing the work for us. i'm a good delegator and i know what a good at and not good at. i'm focused on making sure customers are happy. my partners and the people that

work at sky bridge are going to be happy. sky bridge model for once the stuff is announced is very exciting come and not only andour clients, employees, partners, but i think there is a really bright future in this industry, which people are not completely focused on. now we are talking about the fed starts thehe normalization of interest rates, you're going to see a renaissance in the hedge fund industry again because there will be an increase in volatility and dispersion, which means assets not being so tightly correlated. that will be great for the hedge fund industry. what is unfortunate for me is that if i do not stay at sky bridge and end up with an opportunity inside the administration, i will miss the opportunity, but it will be a big honor to serve the country as well. jonathan: david is going to ask you about how you can possibly serve the country. my question quickly is the background of the bits. other asset managers and other

firms, can you give us the background? anthony: absolutely. it's a blend of people. it would include other asset managers who are similar situated at sky bridge. it would include people more diversified than us and certainly some private equity buyers in the mix as well. we have 41,000 clients at sky bridge. it is a gem of a story because we are delivering hedge fund investment management to the mass affluence. i like to say that we are the hedge fund manager for every dentist in america. a million dollars in net worth and what hedge fund exposure to some of the most talented people in our industry, you can get that through our sky bridge vehicle at a $50,000 or $25,000 minimum on some of the platforms. this is an interesting birkin bag. people recognize that it's a great brand. our investment team is going to stay intact and they will do a phenomenal job for people.

my guess is that this will be a really nice story and hopefully eriod of time. hopefully you will invite me back and i can tell you the story. i know you want to help the ministration. david: have you made any progress finding a job inside to help this new administration? anthony: it's not really for me .o say that at this point what i would say to you guys is that over the last several weeks here and set the transition office, i'm trying to help the most amount of people with the least amount of drama. certainly you saw jared kushner's press release yesterday and a great happy birthday to him. he turns 36 today. he is a close personal friend and i been working closely with him and steve bannon. if something should come to pass, my guess is that it would be related to that component of what's going on in the white house. ultimately, it's up to the president-elect.

we have a great relationship and a great personal friendship. i certainly love the country as you guys know, and i want to serve the american people. we will see what happens over the next couple of weeks. you are pointing out something that i would like to point out. i could be in the ministration -- administration or outside the administration and certainly be helpful. jonathan: hopefully we will see you. great to see you, anthony scara mucci. the future of yahoo!. the company plans to change its name and strike at sport after the verizon deal. that's next. 45 minutes away and some change, futures marching negative. this is bloomberg. ♪

emma: this is "bloomberg

daybreak." i'm emma chandra and the hewlett-packard greenroom. i am here with the pimco global strategic advisor. he is on set next. ♪ from new york, this is bloomberg. a changing of the guard over at yahoo!. marissa mayer is leaving the board after leaving his web properties to verizon and it will change its name from yahoo!. joining us is paul sweeney. probably the worst kept secret on silicon valley is the idea that she would leave the company . where next for mercer mayer? -- marissa mayer? have a think she will lot of opportunities and most people on the silicon valley holder in high regard from her days at google. in terms of her tenure at

yahoo!, a lot of folks will look at it as a failure and not a success as she was unable to turn the company around. i think it was a job that was almost impossible to do. by the time she got to yahoo!, the company was so far behind andle in terms of search facebook in terms of social that there was not an opportunity to turn that business around. the best that you could do was much like a loaded -- sell it to a larger entity looking for a bigger audience. jonathan: we spent several years saying, when are you going to sell it? she would come on programs like this one and say i'm not going to sell it. $4.8 billion would put on the table and it's been sold. a couple of packs later, we're talking not about the transition and how this firm was integrated, but the price they're going to pay for it. are we revisiting the price anytime soon? atl: our litigation analysts bloomberg intelligence say it will be difficult to walk away from the deal, but they might

have the opportunity to come back to the table and determine whether there was any type of degradation of the value of yahoo! because of the hack. have they lost subscribers, have they lost revenue, and if so, will it impact valuations? they may have an opportunity to come back and get the deal done, but both sides are excited to do the deal could tim armstrong at verizon is really looking forward to get the assets. there is incentive to get the deal done, but there might be an opportunity to renegotiate some of the aspects of the deal. alix: no plan b? paul: no plan b at all for yahoo!. this is it. jonathan: great to have you. the idea that if they don't sell it and she runs it again? [laughter] time now for the other top stories this hour. let's go to emma chandra. are: u.s. prosecutors preparing to file criminal charges against currency traders in the heart of a market rigging investigation according to

people familiar with the matter. prosecutors say members of the so-called cartel chat group used instant messages to incarnate the rigging of current benchmarks. hasant pharmasse pharmaceuticas sold $2 billion worth of assets. it is selling three skincare brands to l'oreal and selling its pharmaceutical unit to a privately owned chinese conglomerate for $820 million. valeant is $30 billion in debt and is facing high prices and accounting practices. car sales in china rose in 2016 at the fastest pace in three years. consumers bought almost 24 million cars, suvs, and multipurpose vehicles. that is a 16% gain from the previous year. chinese shoppers take advantage of a tax cut. that is your bloomberg business flash. i'm emma chandra and this is goin bloomberg. david: there are a lot of

changes to washington. will one of them the greater oversight to the federal reserve? i have the new attempt at a legislative audit of the fed. this is goin bloomberg. ♪

alix: this is "bloomberg daybreak." rand paul, a key proponent of auditing the fed, is seeking a bill to keep from scrutiny under the office. he spoke to bloomer television yesterday. >> under the constitution, congress gave some power to the federal reserve, but they do not give away everything. we should be overseeing what they do there and the main problem that people arguing against oversight of the fed is the fed themselves. alix: for mark, michael mckee joins us now. this is like no surprise. of course senator rand paul will put this out there. time?his get through this

michael: in the past while republicans have supported it and the house passed a version, the senate never did because they felt barack obama would veto it. with donald trump coming to office, who has suggested he supports the idea, it is very possible we could see this happen. , "it is time for the fed to be solely focused on price stability and not recently announced qe2, which will monetize our debt and trigger inflation." dallas mike pence. he wanted to limit what the fed could do. mike pence directing a lot of what the ministration does. there's a better chance of this happening. alix: what happens when you have a bunch of government guys running the fed instead of economists? michael: they are already supervising the fed. all of its financial books are audited. knowpaul says we do not what they hold, but we do down

to the identification number on every security the fed holds. the feeling is what they really want and what rand paul really wants is a return to the gold standard. he and his father have argued this for years. if you look at the price of gold, you can see why a lot of people don't like that idea. the price of gold has been very volatile. alix: and there's not enough gold at all. michael: if they can criticize monetary policy decisions, congress can start pushing the fed to do things like that. jonathan: rand paul and his dad have a particular way of nikkei about the world. there is key distinction between auditing the fed and ending the federal reserve altogether. what is achievable? if you audit the fed, what comes next? michael: maybe congressional pressure on the fed to conduct monetary policy in a way that benefits the politicians. for acians will argue little more growth now and then we will worry about inflation down the road. central bankers hate that idea. jonathan: central bank

independence -- is that going to end anytime soon? michael: not anytime soon. we have to get people back to believing that government officials can do something right. jonathan: bloomberg's michael mckee. idaing up, richard clairr weighing in on the globalization trade. here's how the stage is set. futures stable throughout the morning. -23 on the dow. on the bond market, we switch at the board. yields up three basis points. the countdown to the open his next. this is bloomberg. ♪

♪ jonathan: to our viewers worldwide, a warm welcome to "bloomberg daybreak."

i'm jonathan ferro alongside david westin and alix steel. 30 mins away from the opening bell, this is how the stage is set. down 20 on the dow. weakness on the margins. we switch of the board quickly and the cable rate is casing and october 2016 low. bouncing back very quickly. seenetal story is to be though. david: here's what you need to know at this hour. a tale of two markets. the uk's ftse 100 had spurts nine straight record close while u.s. equities have stalled as showsump you fo euphoria signs of cracking. china factory prices rise at the fastest pace in five years, reflecting the deflation trend. trump test. senate confirmation hearings kickoff today with the attorney general jeff sessions. the big question is how may democrats will vote against him

and where he will take the department of justice. now over to alix steel for our movers. alix: u.s. equity futures go nowhere, but this is what jonathan was talking about. markets are higher particularly over in the u.k.. you have futures over in china over. copper in london over 2% and the zinc at a three-week high. city was coming out and saying that copper could hit over $6,000 with labor strikes coming on in chile. it leads to that global reflation trade we have been talking about. also helping is the ftse 100 because you are seeing natural resource stocks in the u.k. natural resources won th one of the worst performers last year -- that stock is up 3%. freeport-mcmoran up over 4%. the stock is up over 11% so far for 2017. that has been leading support

in u.s. rallies in indices. it will ship out commodities as of a different story when it comes to selloffs. jonathan: a big difference over there on the ftse and the composition of that particular index. for more on one of our big stories, the global reflation theme we are seeing in markets. we want to bring in richard cl arida. i keep hearing more and more about the idea that you are going to get flattening of the curve on the back of an aggressive timing from the federal reserve and it's a lot of the front end. will the fed be that aggressive? richard: it could be. the real lockhart could be how much analysts we get from trumponomics. the reflation picture looks a lot different than it did three or four months ago. for us, the issue is not so much where the fed ends up. it is more how fast it takes to get there. until two weeks ago, what we s the fed view of

the little path isn't different from the market. that is really the story now. could we get a bear flatter? sure. it depends on the fiscal stimulus we end up getting from washington. jonathan: and the pace of timing. that would mean the federal reserve committee and the whole will need to change its way of thinking of moving like a snail. are they going to do that? richard: it could happen in the sense that the fed is not going to go at every meeting like it did 10 years ago. could the fed go three or four times a year? sure. the fed now sees the economy at full employment. we had a big boost in average hourly earnings in the recent reports. i think there's a case to pick up the pace of hikes, which is more than one a year, which so far as the reality. jonathan: over $60 billion in the next three days. alix: you have the 10 year and a 30 year. what is the demand going to be? foreign buyers were not

materializing. richard: that's next on point because there is a huge precautionary demand for treasuries. when in doubt, by treasuries. as the reflation thing picks up and we get surprises globally, re may bergins, they're reducing treasury holdings. jonathan: the 30 year comes to market. how brave do you have to be to go long on this duration point? richard: we do not think duration is the way to make money in terms of over and under waiting fixed income. we had a repricing in duration. we are probably in a range now where at least we see more the details about trumponomics relative to where we were. have nohe bond markets doubt benefited from all the central banks buying a lot of bonds. they seem to be backing off some now. to that be replaced by the demographics? we have seen aging demographics around the world.

whether the increasing demand coming from the private sector that could support the bond market? richard: the great thing about the demographic trends is that you can forecast them well, but they move slowly. we're getting to a point where the slow-moving demographic trends come to the important forces in global bond markets. over the next several weeks and months, we will have lots of news. the fixed income will be there increasingly. alix: take us through what happens through the yields. bill gross saying it's way more important than doubt 20 k. ten is the cap on the year? "bloomberg daybreak." 10 year yields are around 40 basis points. richard: yields are expected through the forward curve to go up from here. it would be consistent with the funds rate of around 2.5%. to we overshoot? -- could we overshoot?

of course, we can. we do not think we will go back to the fed funds of four or five. we are in a new normal world. new normal because the fed is going slow or because you will still have buyers no matter what? richard: i think it's all the above. i think the global economy would look a lot different if we had precrisis rates right now. a lot of the reasons that the ftse is at an all-time high and we are close to 20,000 on the dow is precisely because rates are low. they will continue to be there, although they could rise from current levels. jonathan: is there a window here? alix steel wants to talk about issuance, but is there window? richard: potentially. i do not focus on the microstructure. isther factor in it depending on what's included in the tax reform bill. table the puzzles on the would no longer allow corporations to deduct interest. if that comes into play, that

will have a huge impact on issuance. that is a stretch and it will be interesting to see if that would survive any tax reform bill. that is one of the proposals now. alix: the other issue is that if you can repatriate money, you will not need to go to the debt market. issuing debt is no longer more attractive than issuing equity. we saw almost 52 or $60 billion of issuance last week. this week is supposed to be $25 billion. do you think it will go to the markets in the next few months or did everyone get it wrong and issuance is going to hold up? that's a good point andchardri: is the seasonal pattern in the issuance and we may get that again. we all have to acknowledge now between a potential change in fed policy and the tax policy that we really are in a new world here and we are going to have to look at it as the evidence comes in. jonathan: we have been in a new world at the turn of the year. by june and july, i asked the question because the world

changed very quickly in 2016. the base effects early this year will fuel the inflation story. we will see the optimism around the fiscal stimulus. if it doesn't come, what's the window for that delivery? let's assume we get to june and july and we do not have a firm gauge of what stimulus we will get. does the bond market rollover? richard: i think i discussed this on the show before christmas and issue is that bond markets look ahead. they may see a big package hitting ahead in 2018 and 2019. meanwhile in 2017, you don't really have any stimulus. you can get a tightening of financial conditions. by june or july, we may not have legislation. we will know the basic parameters of what will be in a likely package. it will take a long time to make the sausage as they say, but we will have a good sense by the summer what it's going to look like. david: the macro question -- we had 30 years of a bull market in bonds.

everyone predicted the end and it didn't end. what ended 30 years of a bull market? richard: i think several factors. one is the global economy is recovering apart from trump. we had some factors including the big decline in oil prices as well that probably made the global economy looks softer than it actually was now the oil has stabilized. certainly when you have big chunks of the global fixed icome market, negative rates, think we have seen the bottom on that and we are not going more negative on rates. as a result, i think you will see some modest rises in global yields. clarida islar staying with us. let's go to taylor riggs for first word news.

taylor: 22 people are killed and dozens are more wounded. the taliban is claiming the attacks saying many were killed. a suicide bomber targeted government offices and a car bomb went off moment later. confirmation hearing start today for president elect donald trump's cabinet nominees. trump critics all will be confirmed. among those in the spotlight are exxon ceo rex tillerson. he will face questions about his ties to russia and his extensive investments. president obama makes his farewell speech tonight. he will not be speaking from the white house. instead the president will deliver his address from his adopted hometown, chicago. he is likely to deliver some warnings on policies being proposed by president elect donald trump. you can watch president obama's speech tonight on bloomberg tv. coverage begins at 9:00 p.m. eastern. global news 24 hours a date howard by more than 2600 journalists and analysts in more

than 120 countries, i'm taylor riggs, this is bloomberg. alix: rally roadblock. the dow has opened within 20 points or less of 20,000. think stocks get their bite back. mark mahaney will join us with his outlook and more. this is bloomberg. ♪

this is bloomberg. i'm david westin. markets are waiting to see what a trump administration will bring them and nothing is more important there were trump heads on trade. earlier we spoke with anthony

ucci and whether they are headed in the same direction. anthony: every one of them is a free trader and not just gary cohn. peter navarro is a free trader. what peter navarro is looking for is fairness in the trade process and an even this in the playing field. design, and by evened thende playing field and our goods and services were embargoed to protect goods and services offshore of the united states. what we want to do is flat that out and make it free and fair and regulated in a way that will protect the american worker and the american middle class. ida is stillrd clar joining us. that always sounds good. who can be something -- again something that is free and fair? how realistic is that in a

practical matter? we sit down with presidency and xi and say we're going to change the rules, you have to persuade him up that. richard: the case for free trade is always dealing with caveats and qualifications that are oftentimes ignored. there are winners and losers. what we have realized is that there have been diminishing returns and there have been losers. you have had the shift in the income distribution. they key thing in all this as we look ahead on trade is will betroth administration operate within the existing rules of the game of the wto? if they do, i think there's a lot that they trump administration can do on trade within the wto that past presidents have not done. there are costs and benefits, but i don't think it leads to a major disruption globally if the u.s. operates within the wto system. some of the commentary by some of his economic team indicates

precisely that they want to operate more aggressively within the wto. they're absolutely right and are going to move away from ultimate lateral discussions to bilateral with some key countries like china and mexico. there are risks to that strategy, but i think ultimately it is something that can work as long as it operates within the existing rules of the game. jonathan: you listen any talks about the u.s. opening things up for other people. tom barrett came on the other week. the postwar international order and the infrastructure around it , things like the wto born out of all this, it's a bit of an an attack on those institutions and a reworking of that. i wonder what the consequences really are if we do go down that road. richard: sometimes talk is cheap and it's easy to bash an institution. to get back to the dub eto in particular, what's important within the wto is that there's a dispute settlement process, which means there's a set of rules where a country things in

other countries violating them and there is a body that adjudicated. u.s.n take years, but the benefits from that because it helps when other countries violate norms as well. it's important to operate within that existing framework. toppingards to subsidies and the unfair exclusion of u.s. goods, there are a lot of things that the u.s. and trump will be within that system. alix: there's also that potential border tax adjustment. wrap it all up. what kind of dollar do we see on these policies? richard: we see a stronger dollar whether or not you are looking at the fed's reaction. it's all going to be supportive of the dollar. the wildcard is do we get an overshooting of the dollar and tight financial conditions? historically you look at what happened during the reagan administration and you had a huge move in the dollar. the direction of the dollar is getting clearer and stronger,

but the magnitude is to be determined. jonathan: it will be very difficult to negotiate with china. i read the other week that it was the chinese commerce department fixed on the inside. you are going to go to them and say lower the tariffs? david: exactly right. they are on the ascendancy all over asia. they are feeling their power and they are not inclined right now to say, whatever you would like, mr. trump. jonathan: thinks so much have a nice day. ,lix: thank you for joining us pimco's global strategic advisor. they got hit after trumps when, but tech stocks are driving back. we will take a look at it next. this is bloomberg. ♪

alix: welcome back to "bloomberg daybreak." now for a look at what has led

the nasdaq in 2017 -- the thing stocks. -- fang stocks. the quartet has averaged a return of 6% this year, leading the nasdaq to three straight record closings. joining now is mark mahaney. is this anything other than they were oversold after the election and this is a nice little rebound? mark: i'm not sure. that's probably what it is. we will have earnings in a week and a half and we will see if they can support your today. one issue is the surging dollar. this is multinational stocks in this was a huge issue. theiries earn half of revenue and 80% of their profits overseas. a certain dollar will print growth this year. leaving aside that issue, underlying fundamentals are very much intact and we like these. alix: netflix hitting a record high friday in amazon the

highest since october. facebook hit a two-month high. netflix fundamental he at the top. mark: they will add more subscribers in the u.s. and anternational markets th they did in 2016 because they will be against the price increases last year. facebook may have the most interesting valuation. this is the lowest multiple you have had a chance to look at it since the ipo. we think numbers on the street could still go up. amazon -- what's new about amazon as i am fascinated by the system they are building. this is the biggest new development in tech. it three years ago was. the amazon cloud. the biggest new development is alexa and it's underappreciated by investors. jonathan: when will it start delivering money in a considerable wife? mark: cash flows have now moved through for amazon.

the stock is now trading around 20 times next year free cash flow. this is what he most attractive entry points in terms of cash flow and sometime. jonathan: it is easy for me to say that tax cuts are going to be good for xyz. you look at these companies and their effective tax rate in the tax cuts that could be coming. how does that stack up -- no difference? mark: there is not much of a difference. there are other companies that are going to benefit more from but two majoron, negative issues are out but twor negative issues are out there, black swan issues. i thought you were going to go with border adjusted taxes. that could negatively impact amazon could we do not think it will happen, but we will watch out for that. on netflix, there's the net neutrality issue could that could be a material negative for netflix. the trouble administration would be less likely to impose net neutrality.

in terms of audience growth overseas, that's particularly important to them. they do not have another strategy in terms of growing their audience. how confident are you that they can do it? mark: it's hard to know. we think there is this dramatic secular shift toward streaming video. there are 100 million streaming subscribers worldwide and we think the numbers could switch in the next five years. netflix is the leading pay subscriber worldwide and there are pay advantages. david: they have a would-be competitors and their cost of content acquisitions has been through the roof. they're spending billions of dollars to acquire this stuff. mark: there are a lot of competitors, but this is a very high table stakes business to get into. if you want to compete in streaming, you have to be able to pony up $5 billion a year at least. very few companies can do that consistently. we watch up for amazon. a bunchd it just won of golden globes. is it too late to buy?

mark: you can buy here, but you have to look out two or three years. this is not the back up the truck entry prices or something like that. below $100 is where you can get a double on it in three years . you cannot quite get there with netflix. in all fairness, with these stocks close to their all-time highs, this is not an aggressive entry point. there will be controversies and when there are, that is where you step in. jonathan: one of the accusations and potentially the argument is that tech in silicon valley is going to be the target of a lot of aggression because of what has happened with the labor market in the last 10 years. who is most vulnerable to that from a company perspective? mark: i'm going to give you a different point of view. amazon is going to become one of the 10 top largest employers in the country in the next year. they have over 300,000 employees

. these are not coders. a lot of them are distribution fulfillment center, blue-collar jobs. this is the workforce that the country is trying to build up. something that causes a break and amazon stock price and fundamentals is not good for the country. i don't want to overstate that, but put that in context. google has 60,000 employees. these are large employee-based companies. jonathan: thank you very much. counting down to the opening bell here in new york city on this tuesday morning, future stocks are down a 10th of 1%. the cash open is next. this is bloomberg. ♪ wow, x1 has netflix?

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show me house of cards. finally, you can now find all of netflix in the same place as all your other entertainment. on xfinity x1. anything with a screen is a tv. stream 130 live channels. plus 40,000 on demand tv shows and movies, all on the go. you can even download from your x1 dvr and watch it offline. only xfinity gives you more to stream to any screen. download the xfinity tv app today. ♪ >> from new york city, this is bloomberg daybreak. but get you up to speed. the price action, not much of it. doubt futures a little soft. 500 futures going pretty

much nowhere. switching up the boards quickly, i will get you through other asset classes. treasuries through much of the morning, up about a basis point. the dollar index, weaker yesterday. stable today. let's get the market open. >> we have no more record highs on the s&p and the doubt. and as exiting right on its record closing from yesterday. dow is up by .1%. the s&p unchanged and the nasdaq is hitting a record closing high yet again. it is led by the bank stocks like we're talking about. a tech stocks helping to lead the way. by 5.5%.of we have been is in the market focusing on the good. 14.8%.rter, down the smallest quarterly sales

fall in five quarters there is december sales rose 15%. the stock is down and now up 5%. of 9% after earnings, this is all the theme of the cloud computing world is working. up of assist 15% getting upgraded over at goldman to buy from neutral. , it will be a major catalyst for this. market,ook at the stock it is still another global theme . a question i have had is how long will it last? you have 10 year yields just a little bit. a financial index, the blue line is the 10 years real year -- eels. them areee both of

rolling over while financials are able to stay that he. really have got to look at nominal yields about where financials are going. if they're trending lower, financials have to rollover as well. earnings coming out by the end of week. are we going to need a pullback in the meantime. mike,an: joining us now, great have you with us on the program. out gross janus capital this morning saying two things. to win six percent on the u.s. 10 year. >> confused and there is a lot of incoming search -- uncertainty. under trump, what will become tangible and what will not.

it is soothing to of the technical spirit i agree. he looked at basically the super long-term trend in treasuries. if you look back in 1987, treasury yields were above 10%. we had treasuries pushing yields down. he is looking at 2.6% on the treasury yield as the danger zone. that would be about the top here. he is saying bear market treasuries could be settled by that pier 1 i find fascinating is versus a friend made to be broken eventually. think anyone express treasury yields to keep going to zero and negative. that is what would have to have to continue indefinitely. it is bound to be broken at some point. areounds like they thinking, breaking it down it's too early. that will impact the level of stocks.

dow, and theree, have been a lot of technical to explain the treasury market. i think a lot of people are focused on this to see will test is take over and knocked over -- knocked out the reflation theme. jonathan: the aggressive central-bank targeting, then the structural forces squeezing the real your debt shields the days, will let change anytime soon? >> there is inflation pressure around the world. almost one percentage point more than estimated, them will bleed in prices. there is pressure coming in from around the world. there is a briefing that canvases all of the best fork testers out there and the consensus was basically they

expect inflation and economic growth. we will see. that is still a sense yields have rolled over since the middle december. there is still a sense the inflation will continue. >> the risk reward, emmanuel saying it is time to take you a heads of earnings on the financials himself. had a massive rally. what needs to happen to validate it? >> a good quarter, a lot of trading. we need to see the yield curves stay higher. there is a lot of deregulation built into financial stocks now. thank investors will look for some sort of looser regulations early in the trump administration to keep a rally like it's going. >> it is a concern now.

>> i have called the reflation negotiation. it took off out of the gate after the election. yields have rolled over a little bit. it is a question. a lot of people are wondering, what is the real trend going over? is it a stronger dollar at the same time. i do not know. allocate to be the one to have to make that call. jonathan: great to have you on the program. valeant selling $2.1 billion in assets, a big first step in the jug maker's >> to ease its debt burden. shares jumping the premarket about 9.8% in the first couple of minutes of trading. a reporter joins us now. the story with valeant, is it still all about the debt load? >> it is. sitting on about $30

billion worth of debt, which will be due over the next couple of years -- of years. i think investors are taking it as a good sign of things to come probably as opposed to problems of it here. it is in the right direction. is veryations, it positive. they are selling for more than they pay for. they are selling dermatology assets, core to the main business. they are selling those. i think all in all, pretty good news as they start toward what will be a long process. tells me you're talking about this on your terminal. this is the debt valeant carries. in c in 2018, they are coming under stress. 2020 is where they have serious money coming. how much more do they have to sell to make it? >> i have heard

numbers from 5-16,000,000,000 dollars in assets. it is a lot. it is not inconsequential amount of stuff. there was talk a month ago that they might sell some of their core business for $10 billion. that fell apart. there is more to do by multiples here. >> thank you for being with us today. coming up, the biotech downs. after suffering its worst year since 2001, the sector is roaring back and biogen has been among the leaders. we's be good the newly appointed ceo live in symphysis go. that is next in this is bloomberg. ♪

emma: this is bloomberg daybreak . coming up, pfizer policies newly appointed ceo live from jpmorgan plus's annual health care conference in san francisco. jonathan: this is bloomberg. we'll open up about 11 minutes into the session. , 1/10 of 1% on3% the s&p 500. let's cross over to abigail doolittle. ?: we have a lot of movers within the biotech index. performert percentage , having its best day in five

yesterday athe eeo the jpmorgan health care conference said the company will introduce a superfast dnase sequencer later this year. very bullish on this. upgrading shares to a buy. schreyerth noting that -- these shares trade -- it is something to keep in mind. also helping viropharma is the news yesterday -- pharmaceuticals $44.6. this put a bid under all of the oncology firms. or not m&a can save the biotech sector from the bear market. ,e hopped into the bloomberg and we see a beautiful uptrend over the last 23 years or so. in the tech bubble, a huge uptrend was broken down 75%. we see similar technicals more

recently with the uptrend broken. the question is whether or not m&a can it save the biotech from getting any worse or if the technicals will carry the biotech -- sector down. time will tell. >> staying in the sector is the second day of the annual health care, it's. it brings thousands of investors and helps executives -- come together from all over the world. there was a spy -- there with us live -- with the ceo of biogen, a man who has been in the job for a number of days. as -- >> thank you for having me. >> the best thing about being the new guy is you get to decide what is working and what is not and what needs changing. you have said biogen needs to

reinvigorate, in your terms, it's pipeline of neurology. let's get specifics. how? named toexciting to be the position. a great company with a great legacy. an exciting presence. news for theing future. >> let's talk about these specifics. how do you invigorate the company's pipeline? >> the core thing it innovation. why -- i have 25 years experience in the industry. it was basically the first time as the ceo of a company, we had such an array of neuroscience. this is where it is going.

good is never good enough. the objective is to go and bolster what we have so we can even that are meet the needs. >> to understand what you are saying, your preferences to bolster what you have as opposed to going out and getting something different. >> we have to do both. this is the name of the game. confident in the significant talent we have. but there is a lot outside also and we need to be had a position companies, acquire, in order to complement. neuroscience would be the focus. this is where public health is mandating to come and meet needs. >> there are many competitors of yours who also want to find this

partnership candidate. it is very expensive. you mentioned the possibility -- that is competitive. do you have parameters for what you are repaired to spend? >> the first thing is that the company is prepared. rigorous on how we allocate for the best return. >> is there a limit on how much money you are prepared to spend? >> no. we look into the financials. >> what about pricing. it is a thorny topic particularly here in the united dates. recently said biogen would

not rely on price increases to revenue and in the company raises the price of one of its leaders -- leaving -- by 2%. >> price remains one of the key things to manage, and i would say even more moving forward. it is value that commands will bring to the market. i will re-ask the question. how do you on the one hand say we will not rely on price increases and then raise prices? it is what we should do first in order to assess basically the results of the organization. in markets such as the u.s., we are able to take a reasonable price and this is what we have done. industry needs to change the way we gauge moving

forward. that price will prevail forever. i slept you mean by redefined that relationship with managers #>> i believe value creation toward the aim of health care reform and outcome should be something that currently the industry needs to look into. >> does that level and -- of engagement exists now? >> not really. >> it is years away? >> not necessarily. i am not sure this is always easydesigned -- it is not to put together because you have different actors to come along. >> before we run out of time, can you stand up to the managers? what can you do to fight back in the meantime? >> whatever we have done, including the price increase, withone working together

people around the country. this has an in-line with engagement together. we are careful on price. your question and push back is very fair. >> i wish you luck. the newly appointed ceo of biogen, from the jpmorgan health care conference here in san and cisco. i send it back to you for the time being in new york. bloombergcoming up, markets with mark barton and vonnie quinn. what is coming up? mark: you get straight back to san francisco speaking to the new ceo dave, a longtime are who recently took over as ceo. mark will speak to us. the company goes public today is part of a spinoff from hilton worldwide. achieving decorative and

chairman, the german one, not the u.s. based. we will chat with him and san francisco. peter, theff with best performance of all global airlines. it is just one of the issues i will chat with him about. a ceo festival. jonathan: mark used to run the morning show on europe. he studied longest winning streaks, longest losing streaks, and if he did not have the answer, he embarrassed you live on tv. mark: it is amazing. not only is the ftse daily run 11 days, the longest since 1997 or something, but the incredible run is the nine-day winning run, the longest winning streak ever who would have guessed

it, weak pound, miners, oil companies, john, it is something everyone. it.than: looking forward to coming up, confirmation hearings for donald trump today. he will testify before the senate judiciary committee. more on what to watch in these hearings. that is next. bloomberg. ♪

>> right now, jeff sessions confirmation hearing for attorney general in washington. we're looking at the ranking member from california. we go to kevin of bloomberg politics joining us from capitol hill. set the stage. what you looking for in this hearing? democrats try to reframe the debate surrounding

senator jeff sessions. they will have centered cory booker delivering what i'm told will be a blistering critique of senator jeff sessions, bringing up some of the racially charged statements from senator sessions. is republicans will try to use this to pivotion hearing toward what trump and his administration are only a return to law and order in american society. of course, we will be look for how he will on to mergers and acquisition russians, which i'm told he will get it some point during the hearing from people like that are mike lee, a republican of utah. obviously, the justice department -- sessions will have a large role in shaping the merger of a efficient deals whether or not at&t and time warner and go through. >> what in his record indicates where he might come out, a key

issue here? >> this is where things get interesting. you look at his long career and you look at the decades he has spent in the senate working as a member of the club if you will, across the aisle, the senate republicans who have dan in the upper chamber for decades, he has a somewhat mixed record. no one really knows not only where he stands physically on we also are, but pretty not sure of how president-elect trump will react or how much of a priority this will be for him. we're hoping to get clarity as an the next hour question portion of this hearing gets underway. >> very quickly, wise this the first one up?

hearingcould be a tough , one day before trump will try to change the press conference -- the subject at the press conference tomorrow. it's is one of the cover confirmation hearings because of the previous comments he has made on race. >> thank you. that wraps up this program. for the markets on record watch, the foot the high, that would be a record. mastec will be closed at a record today. the longest streak since 1999. this is bloomberg. ♪

>> it is 10:00 a.m. in new york, 3:00 p.m. in london. i am vonnie quinn. mark: i am mark barton. welcome to bloomberg markets. ♪

vonnie: we will take you from new york and washington and cover stories in london today. here's what we're looking at in the next hour. trump's over donald policies they. on both sides, little changed. mark: the worst three-day drop since october. ceo's is including the group should officials failed to implement an orderly transition out of the eu. forie: jeff sessions goes the senate sec's to the -- to become donald trump's attorney general. a look at what you might do, even legalizing pot.