triggering article 50. the trunk travel ban desktop travel ban faces -- trump travel ban faces tough questions. welcome from new york city from our viewers worldwide, i am jonathan ferro alongside alix steel and david westin. futures dead flat. yesterday a record high on the dow and s&p, and six days of dollar strength. i continue to look for where the safe haven trade is. if you look at the euro and swissie, the euro down 2/10 of 1%. ,his continues to go nowhere confounding me as they continue to talk about the political uncertainty. crudep a bit, and nymex rolling over by 3/10 of 1%. jonathan: alice tesh she is

asking -- she is asking where the volatility is, it is here where in the house of parliament they will be concluding debates to trigger article 50. we will bring you updates throughout the hour. we will bring you outside the house of parliament with nejra cehic. give us an idea of what is coming up. mentioned, prime questions kicking off now and the house of commons and in about 45 minutes, the debate will recommence, the third debate -- third day of debate on the possible amendment to the brexit bill. there were more than 250 amendments tabled and a 146 page document. accepted but the house of commons will have its final vote around 7:00 p.m. u.k.

which it will pass to the house of lords. an important concession on the part of theresa may's government. they will allow parliament to vote on the final draft agreement before it goes to the e.u. for ratification. one key thing is that parliament will not actually be able to ask for there to be any renegotiation. they are basically going to have ,o expect what is on the table or reject it -- except what is on the table or reject it. jonathan: can you give me an idea whether those concessions are enough to satisfy some of those? nejra: that is a great question, because that was part of the reason this was given, to calm these revelatory lawmakers. after that concession -- whether that concession will be enough,

probably not. what you have got on the table is not good enough for us, go back to the e.u. and negotiate, but they were told that is not going to happen. strategists this morning saying potentially this could lead the u.k. on a cliff edge. for that reason, even though we have seen a rebound in sterling over the past month, strategists are getting increasingly negative. the median estimate is for sterling to drop to 1.20. jonathan: we trade at 1.2498 on the cable rate. much more on the headlines as they come. alix: time warner is out with earnings, earnings and revenue beating estimates. earnings coming in at $7.9 billion. the stock is not yet trading in free markets. the revenue increased by 4% and operating income grew by about 10%.

some solid numbers out of time warner, but all eyes on a time warner-at&t deal. david: with us is sir martin sorrell. thank you for being here. i take it you do not want an introduction. we will leave it alone. are the ceout you and cofounder -- and for your clients, is it better to have a hard brexit fast or a softer brexit later? sir martin: i would say soft fast would be my answer. david: i did not say that. sir martin: that is the option i'm taking. just ungreased desk increased uncertainty. triggert they will

article 50 and then we will have years of tough negotiations. talking about the difference between mark carney's attitude and mario draghi's attitude, that is emblematic of the uncertainty that we have. basically, if we look at the environment, very little growth. 4%.th is around 3.5%, very little inflation, although nomicsl get more if trumpo succeeds. maybe some inflation in the u.k., but very little inflation worldwide, very little pricing .ower, and a focus on cost most corporate earnings are not hitting the top line but are hitting the bottom line, which indicates that people are putting in short-term cost programs. i saw jeffrey sachs was on moaning about the lack of investment. when you look at capital

investment figures and long-term investment figures, they are just not there, so this focus on the short-term is what they are doing. open your bullets in the morning about the long oration of what might happen the next couple of years, and we do not know. we do not know if the deal gets done and if it gets approved. you have to do two things, as far as we can see. , france,e.u. markets germany, -- they have to do more of that. the u.k. is trying to do bilateral trade agreements, not just for the u.s. but with china. it is not going to go into china because it has suggested the chinese are worrying about as cozying up to the americans. we want to do stuff with brazil,

so all these agreements will be important. jonathan: what have you told him so far? sir martin: i have not told him anything. jonathan: have they reached out? sir martin: they have, actually, and the view i get is pretty much what i have given you. business wants reduced uncertainty, limited uncertainty. run a business when there is always stuff on bloomberg like this? alix: the wages are getting higher. sir martin: a little bit. alix: are you seeing that start to feed in? sir martin: no, for the last 10 years really, people have become used the fixed compensation remaining pretty stable, increasing a little bit. information lights -- rates are low desk inflation rates are low. -- inflation rates are low. in our planning or 2017, salary

and budget around the 3% increase level worldwide, and that includes latin america at high inflation rate, countries like brazil and argentina. we have not seen increases in wage inflation to significant degrees, and labor shortages to significant degrees. there are labor issues, whether it be travel bans in the u.s. or concern about lack of free movement in the e.u., we have 17,000 people in the u.k. out of 200,000 worldwide. 17% of those 17,000 are e.u. citizens so they were are worried about whether they will continue to have u.k. citizenship, and vice versa. alix: i feel like the playbook over the past couple of years, you have to read everything the fed chair says in terms of raising rates and stimulus. are you not doing that anymore? you check your twitter account for what is happening in the

u.s.? sir martin: the playbook is since lehman, since 2009. there was a snap back in 2010. 2011 through 2016 have been moderate growth and very little inflation, and focused on cost. as you look at the results of lastackages for the quarter of 2016 thousand 16, it is really emblematic of that. if you read through all of them, there is a little bit of pricing power taking place in latin america but beyond that, very limited. they are grinding it out and i think listening to what you are saying and others are saying, there will continue to be that situation in 2017 and 2018. our budget for the u.k. is better than i anticipated on june the 23rd, or whatever it was that i was with the

secretary-general and five other holding company heads talking about the development goals and banks. decisions.brexit i was a little bit gloomy about that, but i have to say that so far so good. having said that, the next two years will be uncertain. david: you have brexit uncertainty and trump uncertainty. trumponomics is good for the u.s. in the short-term. looking at the next two to three years, i would anticipate stronger u.s. growth. what you gain on the u.s. wings, you lose on the international roundabouts because it is all bets are off into a nationally. what is going to happen with the relationships with china and mexico? , the president's visit to the u.k. will be an interesting occasion and i'm

sure it will stimulate emotions. david: are companies and markets overestimating trump at this point, whether they can get done what they said they will get done? sir martin: in relation to what is going on in congress, the democrats are certainly, by their actions they are signaling they are frustrated that they have a lack of a power base that gives them the opportunity to stop things that republicans want. i would say maybe it is not misplaced. we have to see what comes through because there is a considerable amount of disagreement as to what those measures will be. for example you repatriate all of those earnings overseas, will there be more dividends and buyback were true long-term investment? long-term capital investment. david: that is sir martin sarao. -- sarao. -- sorrell. jonathan: a $500 million

buyback, its first profit since 2013. with thestian jacques world's second-largest money company. coming up. this is bloomberg. ♪

jonathan: from new york city for viewers worldwide, this is bloomberg. i am jonathan ferro. blasted dividend estimates and says it will -- with us from our london office

and our european headquarters is jean-sebastian jacques, the rio tinto ceo. great to see you. jean: good to see you. jonathan: your predecessor referred to the company as a cash machine. has it been repaired? jean: i would call it more return machine. we disclosed our 2016 results this morning. it is clear that we have delivered on all the promises. wherever last time we talked was in november -- remember last time we talked was in november, and today we are very proud to say we have delivered everything we said we would deliver in terms of cash earnings, in terms of strengthening our portfolio, and in terms of cash returns. we see $6 billion of cash rate turns -- returns, which is above expectations.

at the same time we were able to invest for long-term, and mentioning the strength of the balance sheet. jonathan: you have talked a lot about the strategy of value over volume, a story i have heard from competitors like glencore. who i have not heard it from very much is bhp. whilst you cannot comment on their strategy, there's impacts yours to a certain extent. and you maintain value over volume if your biggest competitor, bhp, does not do the same? jean: i cannot make any comments about my competitors that i think what we showed today is a good example of volume. either we sell more in the same call space or we sell the same thing with a lower call space. the decision of value over volume be made in each community and asset.

this can be done without any intervention of our computers. jonathan: rio has a strong balance sheet, and a lot of people have said here is the balance sheet, what are you going to do on the m&a side? you are only a handful of mining companies to pay off the debt with less than a year's worth of ebita. you mentioned yourself you would like to see more diamond assets in the portfolio so beyond this one, if debeers became available is that something you would be interested in? jean: let's step back. integration into m&a has not changed. it is all about build and smart buys. m&aus to consider activities, the threshold is very high and the alignment of the stars has to be the right one to make sure we will be able to get value. it is fair to say -- look at the example of copper -- as recent

chilections, as i look at , evaluation is very good for the seller. at this point in time, everybody knows i would love to have on my portfolio and is on my christmas list. but the truth is unless the alignment of stars is the right one we are not going to pursue it. let's talk about it, because you said everyone knows what is on your christmas list and i do not. tier one assets in the copper space, for example. that should give you a pretty good hint. diamonds.ds, we love it is a very attractive industry and the reason why is because it is very difficult to find those new mines. to give you an example, when you look at the rock and see potentially we have copper and we have cash flows, it is 25

years on average. in the context of diamond, if you have cash flows, 30 years. it is a difficult to find one and when you have one you make lots of money. jonathan: let's talk about what you are selling, not buying. you are selling a coal asset, about a $2.5 billion deal. how confident are you that they have the financing in place to close that deal? , they aredeal supported by china inc., and that is one of the key considerations when we decided to go with them. we had this very clear conversation with them. today at this point in time we do not have much. it will be a long process but you have to go through regulatory law in australia, in china, in a few other geographies but so far so good. jonathan: the completion risk

for this deal, a lot of people would point out is what happens to the call markets from here. i guess the question i want to ask is why with the breakups be so small, and are you worried this company can walk away with pretty much nothing if they do not like the deal? the fees will be somewhat of a negotiation as always, but they are a very serious company. they already have assets in australia and are keen to acquire those assets. everything we are doing, every indication the are making is in the right direction. when they signed the deal in london a few weeks ago, we had dinner with the chairman and clearly they want to transact as clearly as we can. the two teams are working very hard to make it happen. jonathan: you are coming to d.c.

in the next month or so. what kind of clarity do you want from the trump administration and what would it mean for your asset? jean: in regard to the administration, as i said in the past, we do not do politics. we have lots of conversations on an ongoing basis with the obama administration and we have the same as we speak with the trump administration. we want to understand better their infrastructure because infrastructure is good for the copper business. there are lots of questions we have. i will go to the u.s. two to three times a year. we have ongoing dialogue with the administration, whatever the is.nistration jonathan: i look forward to catching up with you, hopefully when you come to the united states. jean-sebastian jacques, thank you. is.

happy with the world's second-largest mining company, a return machine. alix: coming up, andrew witty of an -- of glaxosmithkline will be here. the trumpabout administration negotiating drug prices. ♪

jonathan: from new york city for our viewers from new york city r our viewers worldwide, this is bloomberg daybreak. let's get a check of the markets. treasuries yesterday, we do have a bid in today's session as well. today we get $24 billion for the 10-year note. six straightket, days of dollar strength. you see it on the screen, against the euro at least.

the dollar index on its longest winning streak in 2017. alix: dollar-yen, we will be talking about that later. individual movers, we have got to start with disney. it was down about 1% after earnings. cable profit falling 11% and they are blaming that on espn. overall revenue falling about 3%. upever, the stock is back from its lows after bob iger says he continues to leave the door open for his term. gilead, ag a look at troubling warning from the company. it's hepatitis c franchise is fading. almost $12stimating billion and that was disappointing. they are going to need acquisitions to grow revenues. wrapping up with mont elise, missing earnings by 2% --

mondelez, missing earnings by 2%. three quarters of its revenue comes from outside the u.s. jonathan: people do those bar charts and monitor all the calls and see how many things get mentioned. the fx, it is right up here but you never hear it when it is for them, only against them. alix: backing out energy. david: they do not have to explain, that is because they are just good. coming up, steve case. he is here to discuss the effects of the trump administration's immigration policy on business. this is bloomberg ♪.

[ alarm clock beeping ] weather. ♪ [ laughter ] cartoons. wait for it. [ cat screech ] [ laughter ] ♪ [ screaming ] [ laughter ] make everyday awesome with the power of xfinity x1... hi grandma! and the fastest internet. [ girl screaming ] [ laughter ] jonathan: from new york city, this is bloomberg daybreak. i am jonathan ferro. we are about two hours and 23 seconds away from the cash open in new york. an interesting session

yesterday. futures pretty much dead flat, that is where we finished yesterday. if you look at the dow, we go nowhere. the situation cross asset is a little more interesting. that is your longest winning streak of strength since november 18. euro weakness for the third day. a decent bid on treasuries, yields coming in at 2.38 on the u.s. 10 year. david: state and government lawyers yesterday made their arguments by telephone to three judges. at stake is whether the administration can enforce the ban on immigration from seven countries. the government's lead lawyer said the government does not seem to agree with him. >> i am not sure i'm convincing the court so i want to make one key point with regard to the injunction, and that is that it

is overbroad and should be immediately stayed to the event that it is overbroad, even if the court thinks some applications of the law are problematic. david: joining us now is bloomberg businessweek writer paul barrett. sign, why wasod the government having so much trouble? i think think -- paul: among the reasons the three-judge panel seem to be skeptical was the government was unable to put forward any specific evidence that backed up president trump's contention that this action was necessary to protect national security. the court also was very skeptical of the government argument that this whole matter is not within the court's purview to review, that the court and other words should defer to the president when he is dealing with matters of national security. david: they pressed him hard

about why is it so urgent and he did not seem to have much of an answer. paul: overall, i was struck by the fact that the governor's lawyer seemed less well-prepared down the lawyer for the state of washington. there were some skeptical cell,ions for pur particularly from judge richard clifton, but overall he seemed to have a better time of it in terms of the theatrics of the oral argument. david: specifically on the issue of the skepticism of the state's case, how can this be muslim directed when such a small portion of muslims are included? what is the answer? paul: in order to be judged unconstitutional, does not have to affect every single member of the class of people who are affected. instead, it has to be shown to intended to be

affect some members of that the constitutional provision you would point to would be the establishment clause of the first amendment and/or equal protection clause of the fifth amendment. tweetedresident trump "if the u.s. does not win this case as it obviously should we can never have the security and safety to which we are entitled. politics!" how political is this case? if it gets to the supreme court it will seem quite politicized because they will be very likely to split between republican appointees and democratic appointees, and then would have a political cast. if that happens, whenever the lower court did with then hold split causes the case to revert to the lower court.

david: thank you so much, paul barrett reporting from washington. of the an open critic trump administration, steve case , has expressed his disapproval of the travel ban. we could get really mired in the legal and political issues, but let's start with the political -- the business issues. business isately about talent and we want to make sure we are a magnet for the best and brightest around the world. who do we keep out, and that is a legitimate discussion. we also have a discussion of how we bring people here. we are going to remain the most innovative nation we have to win a battle for global talent. they're going to be very important to make sure we build bipartisan support for those things so people come here to get great education and are able to stay.

one example i mentioned, somebody who graduated from wharton started a company and wanted to stay because he could not extend his visa. he got kicked out and went to india. now the company has 5000 employees in india. it is a problem to solve and also an opportunity, not only who do we keep out that who do we bring in? david: you are joined with some other distinguished leaders making the argument. at the same time we look at this case. this is seven countries. is it more about the next case than this one? steve: i think the issue on the executive order has less to do with the immigration but it is the first battle around immigration. i listened to some of the debate last night with the judges and i thought they had tough questions on both sides. it is a reminder we have a great

judicial system and although i get frustrated about some of the things that happen in terms of the politics, it is great to see them asking tough questions. i do not know how they will rule but i think they asked tough questions on both sides. part of what they were pressing the justice department on was, what is the urgency? by answer is statements made president trump and his advisers were sort of alarmist and were suggesting there is something. we do not know what information the president has. in general he should have control over the national security. they have intelligence we do not have. the perception that i was hearing from some of the justices is it was not clear that president trump had information to create the urgency. no matter what the court rules it will go to the supreme court likely so i want to look at what tech does for the longer-term.

do they hire internally and pay more for u.s. workers, or move businesses overseas to retain those workers? what does that wind up doing to profits? steve: that is a little bit of a false choice. the nature of your question suggested that high skilled people coming into the country are getting paid less. true in some fields but in the tech field that is not the case. we need to attract people from all over the country, particularly on the engineering side. , a techvery company now company, walmart is a big user of technology, donald is a big user. the other thing i think that needs to happen, i think silicon valley has been a little bit tone deaf, one of the reasons president trump one is because a lot of people feel left behind. they are not feeling the benefits of job creation, and there is a reason. last year, 85% of the venture

capital went to the states that clinton one and only 15% went to the states that trump one. california alone got 50% of venture capital, so what is happening is they are funding disruptive companies in places like silicon valley who are creating new technologies that disrupt and destroy jobs in the middle of the country, but we are not offsetting that by preventing the entrepreneurs in the middle of the country. that has to change, what we call the rise of the rest. a need more entrepreneurs and level playing field so that everybody everywhere has a shot at the american dream. big tech company like apple supposed to do? steve: i think they can invest more in countries in the middle invest more.y --

one of the interesting byproducts of the automation and manufacturing, which does destroy jobs is it also allows you to do many factoring in places that were not possible 10 years ago. some of the things that got outsourced are becoming in source again because the factories are more automated. there are fewer manufacturing jobs than 10 years ago, but some of the things that moved offshore, some of the companies are reconsidering that. jonathan: i want to try to put the talent story together with the investment story. you send this immigration story from the tech companies is the first battle that might come down the line and i assume they are worried about what may happen with visas and that kind of thing. the recent arguments that those visas have been abused to get cheaper talent from abroad, you are a man who gets -- in the tech industry. steve: i am sure there is some abuses and it is not bad to take

a look at it, but h-1b is not the focus of high skilled immigrations. it is more likely startup visa. people have talked about it on both sides for two decades and it still has not happened. people come for education and are kicked out and forced to go somewhere else to start their company. there was something else put in place recently. ,n international entrepreneur that will attract and keep more people here. companiesbigger tech that care more about that and i think we need to focus more on the startup side, the entrepreneur side. things like the start up these that are way more important than the h-1b. jonathan: which one moves the dial more for this administration? steve: i think the startup visa would be critical as at the end of the day, the reason he is president trump is because he appealed to the people in the

middle of the country who felt left behind by globalization and digitization. any defined ways to offset what has happened to them with new kinds of jobs and you can only do that by backing startups. these young, high growth companies. most of the jobs come from these. if we are not backing those startups across the country and helping the rest rise, if you will, we will not create jobs across the country and a lot of people will be left behind because all the focus is on the coast and not in the middle of the country. that has to be a key focus of the administration, it is not just around immigration. incentives tot create empowerment zones to invest in the middle of the country that to these entrepreneurs and help create jobs. i think we need an all in focus on how to remain the most

entrepreneurial country and how to level the playing field so we have an inclusive form of entrepreneurship, and it does not matter so much who you are or where you are. everyone has a shot at the american dream. alix: steve case, aol cofounder. eric schneiderman joins a list of 18 attorney generals who have filed a federal lawsuit to put a stay on president trump's travel ban. we will speak with him exclusively at 9:00. ♪

♪ this is bloomberg -- emma: this is bloomberg daybreak. coming up, andrew witty of glaxosmithkline on the president's comments on drug pricing.

time now for other stories making headlines this hour. i am emma chandra. dupont offering concessions to try to get the european union to agree to it every $4 billion combination with dow chemical. they are willing to sell part of the past business and the rmb that goes along with it. carlyle group posted fourth-quarter estimates that missed estimates. company founded by david rubenstein took a $175 million charge related to losses in its dwindling hedge fund business. they are stepping back from hedge funds and will focus more on global opportunities. stunt growth prospects to the danish brewer. they generated almost half of their operating prospect in 2009 but the prophets have plunged

because of problems in russia. that is your bloomberg business flash. i am emma chandra. alix: minneapolis fed kari made the unusual step of not voting for a rate hike. he delved pretty deep into his inflation and employment metric. the standout was the market reaction on potential fiscal policy. "financial markets are good at some things but notoriously bad for forecasting political outcomes. i don't have much confidence in their ability to forecast fiscal policy given how little we know today, so i am not yet incorporating the markets' guesses about fight just fiscal policy changes into my outlook." looking for the rise in consumer expectation, was that your take? after you talk to fed

presidents after the election, there seems to be question about fiscalincorporate stimulus and he appears to be toward the end of the spectrum until we start to see what sort of policies actually come out, which could be months down the road. what i found interesting is he in any case for how accommodative he thinks policy is. saying, we are pretty accommodative now matt:. they say actually we are accommodative but not that accommodative. we are only about four rate hikes below where we should be if we do not want to be providing the economy with any stimulus, but if you look at the unemployment and inflation rate, they have improved but they're both kind of in this range bound unemploymentre the rate has not gone down and the inflation rate has not gone up.

they kind of feel like, are they really -- are we really that accommodative? david: how much our markets paying attention to fed speak? definitely they are paying just as much attention as they ever were, but there is a difficulty in having to discount a little more heavily as even the fed is not know what is coming next. it is important what they say, that with the realization they are kind of feeling in the dark. jonathan: like they used to know. alix: we have had met on every day. -- matt on every day. david: is this a mine with what we are hearing out of the trump administration? donald trumpthat and navarro want a weaker dollar, and kush kari is saying do not go up on the rate so fast. the big question because janet yellen's term is

up in 2018, so the big question is who does he appoint as her replacement? will it be one of these more typical conservative hard money types or someone more in line with some comments trump has made about not being too concerned about stimulating the economy and running things a little hot? that is the big question and it is hard to know which way that breaks. jonathan: we talk about fed speak a lot and it is very rare for neil catch kari to weigh in on monetary policy. for him to weigh in on monetary policy is quite rare and i wonder what the story is with the dynamic, why he felt like he needed to come out this week and come out quite dovish on monetary policy, which is something he usually does not address. matt: over the past year or so the fed has taken a lot of flak for saying, we will raise rates four times and they only raised once.

that is exactly when he was coming in as fed president and he saw that and said, there is probably not a lot of all -- value from a to say where i think rates -- value from me to say where i think rates are, so i will step back and not do that. normally we get a speech from a fed president on why they voted one way or another, but he is just going to put out an essay on the internet. alix: i love the way he started the blog post. i know you do not want to hear from me but transparency is pretty good. i know you might hate me. jonathan: he talked about why he does not want to weigh in on monetary policy. matt boesler of bloomberg, great to have you with us. in the markets, this is how we set up. futures dead flat, almost exactly how we finished yesterday. that is the global equity market

picture. yields down by two basis points. option, $24re billion for the 10-year note including tomorrow, the sequence of supply that comes from the treasury with $15 billion. dollar strength, the dxy climbing for the third straight session. from new york, this is bloomberg. ♪

alix: this is bloomberg daybreak. i am alix steel. one thing i'm watching is crude, down by 8/10 of 1%. this is going to be a big mover today. supply, supply, supply, the young a saying we could hit record production in 2018. u.s.,arrels of oil in the the most since 1970. watch this for risk appetite

into the open. jonathan: it will be exciting for crude. market, pimco sang the fed and bank of england are warping into a new currency . let's bring in richard jones who joins us from london. a global economic advisor at pimco, we are in the fascinating piece of some of these decisions that have been made. maybe some people did not pick up on. what did you make of it? richard: certainly the view of currency manipulation and using the currency as a lever is something that has intensified given the remarks from president trump and some of his advisers. in this day and age where we are looking toward reflation, having a strong currency is not compatible with that. you do not want to be the

strongest currency on the block if you are trying to reflate your currency. they have asmb, massive problem with a currency that they see is way too strong. .his is a problem everywhere i think it has only intensified given the rhetoric out of washington. jonathan: what is really interesting is they are calling and covert cold war feel, probably a signal you maybe would not pay attention to because it is not targeted at the fx rate. the bank of england, when they cut their estimate by 50 basis saying that ise not the bank of england making a point about the labor market. they are trying to influence the fx market. be to picklt will it up on those kinds of signals if they are indeed the signals the central bank wants the markets to pick up on? richard: it is a bit take a race to the bottom for the central banks. with rates so low everywhere,

these new covert measures are the way that central banks will sort of, in a very less obvious way, try to weaken their currencies. kashkari was even talking about it yesterday, that is a massive input into central bank thinking. sixth straight day of dollar strength on the dxy. richard jones joining us out of london. coming up, ruchir sharma. .hat is next on this program from new york, this is bloomberg. ♪

♪ where is the detail?

drama at thegal trump administration faces hard-hitting questions in the appeals court. after the president put the fx market on notice, pimco waiting by saying it is a covert monetary war. welcome back to the second hour of "bloomberg daybreak." i am jonathan ferro with alix steel and david westin. it is a dollar strength story for the sixth-ranked day. the euro is retreating by 2/10 of 1%. david: -- alix: in terms of u.s. equities, the vix is up 1.5%. there is still no fear reflected in u.s. stock. the crude is up 8/10 of 1%. jonathan: here is some

volatility on the screen at the moment. in london, the house of parliament is arguing the article 50 bill to argue on that later to trigger the requisite process. process.- the brexit theresa may answered some questions in the morning session. she also asked some questions about it they can determine the outcome of the brexit outcome. have a veto under article 50. the bill goes to the house obviously. it is giving power to the government to trigger article 50. i would also remind him of this point, because he constantly refers to the interest of scotland inside the european union. an independent scotland would not be in the european union. ruchir, it is great to

have you on the program. thank you for joining us. policy is one thing. the data is something else. it paints a different picture. uchir: it is not all that different. let me tell you why. first, it is the first sign since the global financial crisis that the european economy is growing faster than the united states economy. we have european grows back up about 2% or so. that is pretty good. that is one. on the politics side, there is a lot of fear as far as europe is concerned. at the center of that fear factor which is france, look at what is happening in the polls. in the second round, if you look at the polls, when you do a candidate x is up

25% in the polls against the other candidate. they could be completely wrong. the margin of error here would have to be huge for this to work out. for her to make it all the way. i am not all that worried about european politics this year. even if on a big macro trend --is, the rise of population populism and nationalism is you stay, but if it is going to take power right now i am skeptical of that. jonathan: in the small print, it says, "i know what you are thinking." that must make you nervous to some extent. yes, but the margin of error who would have to be huge at about 25% to 30%. there is the other sort of and whenof brexit

those events happen how the markets will take things differently than how other people expect. like thatget a vote in france, it would be quite a shock. i think if you look at france and germany or the netherlands, the chance of a populist government coming into power in these countries remained very low to me. the european constitutions have been made after the second world war in order to prevent this type of outcome. about relatively bullish europe and european equities this year. david: talk about that bullishness. you make a case that the worst of the worst will not happen. that is not a case that says the best of the best will. what is the upside risk? the big benefit in europe? areir: european equities

trading at multi-decade lows compared to u.s. equities. we have seen massive performance in european equities that we have never seen before. second, the euro now appears to be quite cheap. the dollar run is quite extended, and the euro is cheap. in terms of the fundamental changes happening in europe, if you look at european debt as a share of gdp, it has come off. european growth has picked up. twoave already suffered recessions in the past seven or eight years. the author that lightning will strike twice in the same spot, to me, are relatively low. david: what about demographics and productivity lows? ruchir: i think they are challenging for europe, but the

demographics are a problem across the world. the working age population is now following. europeanhat the demographics are not great. however, the thing about europe is that we kind of overlook -- because of the prices and the environment they have been in, there have been some reforms in the past few years. that includes the most critical one that cuts back on it government spending -- cuts back on government spending. government spending and welfare spending in europe has peaked. that has been out of control, in the crisis has had an effect to curve that. jonathan: if you look at france? have thendeed, they high spending after north korea. they are out of control. jonathan: the situation with the french government is not.

even if you do not get a nationalist government in power, what could you get instead? while it is favorable in europe, what do you buy? you buy the index? chir: france is a problem area, but outside of france you have germany, spain, portugal who have had reforms over the years. spain is growing up. germany has been as solid as ever. as far as france is concerned, there is a lot of bad news with respect to pricing of equities. it is all about changes in the margins. four france, the absolute picture still looks tenable. however, on the markets, we will see who the winner is in may. will france change for the better or worse? i am willing to say it will change for the better. to bring up the

portuguese debt very quickly. reforms.they made this is what the market thinks of their reforms. four percentage points on the 10 year. do you buy that? i feel that, in general, the situation has improved across europe including or to go. -- includings portugal. local politics are one thing, to see allossible good in a country from the bottom? pessimism inch 2010 and 2011. look at where we are today. there is so much optimism today. we are having to decade highs in fact. so where are the margins happening for the better? it is quite possible that because of a political shock -- europe has the habit of shooting

itself in the foot when things are going to get bigger, but i believe the margin of change for europe is for the better. european economic growth is finally doing well. you are growing at 2% despite terrible demographics. it is not a bad outcome. alix: he sort of broke the question down as far as countries. but what about sectors when it comes to opportunity? we are seeing for we close on the blue bars and four week highs on the yellow bar. this is for european stocks. when you see the blue bars, that is where we see the opportunities. which sectors have the margins to get better? ruchir: i think the stocks are more oriented towards the domestic economy. one of the big things we could talk about now are later would be globalization. global trade, global capital flows, global migrant flows, all

of them are impacting. if i were to buy stocks, it would be stocks that are much more oriented to the domestic countries.those that is an important distinction, because part of the problem for european equities is that they tend to have more cyclical stocks. more extended than the u.s. stock market. -- for data here is this all the historical data we have going back 60 or 70 years, european equities are trading at a relative basis at the lower they have ever traded against u.s. equities. that tells you something. alix: if you say you are looking , thisestic exposure there is a question of financials. they seem to have the most exposure. and howple with brexit it will work with the financial services. ruchir: i think there is some risk there. but if you are on a three or

five-year basis, i think it is ok. -- itlly risk and reward is really risk and reward. you are kind of going into the eye of the storm. i think it could work out possibly. it is very risky. look at what is happening with the italian bank after what happened in december. they are upwards about 15% from those levels. that is the opportunity we have out there in europe. it never looks all clear. you always have some murky signs. you saw it in the united states economy in 2010 and 2011. just look at the fact that the data is picking up. had twomind we have recessions in seven or eight years. there is increasing demand for those products across europe according to me. jonathan: you mentioned a

deglobalization theme which will talk about coming up. also, the prospect for trade wars. the chief executive of uk's largest drugmaker faces a certain message from president trump. that is coming up. this is bloomberg. ♪

emma: time for a look making best time for a look at the headlines at this hour. i can emma chandra with your louvered business flash. they're also buying at $500 million of shares. iron ore prices boosted profits by 12%. opec in other oil producers -- and other oil producers may have

to cut costs at the start of this year. production to cut about -- for about six months. say that some are saying it is too early to make a judgment, and they may not do -- follow the cuts. saudi arabia wants to sell less than 5% of the oil company. about $500stimate at billion. alix: president donald trump will meet with the japanese prime minister on friday to talk trade, energy, and getting u.s. investors into japan. the prime minister's advisers noted in a interview with bloomberg on monday, that it will talk about how they can tpp with theue of west.

i do not think an fta will be discussed. a potentials about currency manipulation as well. sharma of ruchir morgan stanley. he is to get u.s. investors to commit. forhis an offensive play someone with a trade surplus in the u.s.? ruchir: epic it is very interesting with the currency manipulation -- i think it is very interesting including the currency minute galatian as well. the japanese yen is now extremely cheap. that's currency manipulation as well -- currency manipulation as well. japanese yen is now extremely cheap. the japanese economy best in

japan, the news for the margins in the past six months has been better than what people have been expecting. the problem in japan is the demographics. the growth rate in japan is probably 0.5% or something like that. u.s., this is part of the strategy that the trump administration has. they had the japanese a bit off balance and wondering how to react to this. way, this is a type of strategy that is working. they are thinking about what more they can do with the u.s.. alix: so, if you are in that room with them, and you have had president trump, out to make a statement about japan and be more aggressive -- you could also point to the fact that the yen is the most undervalued currency in the developed market. what you do about that?

ruchir: i would say the yen is already rather cheap. there is a trend possibility for it to go up here. overlooking the fact that the japanese economy is doing at her. -- better. maybe there is something to it. a change in japanese corporate .ehavior for one a focus on profitability has increased. jonathan: they did come around in the past 24 hours with a note that stated there was this sort of covert currency war. it used the word "let." that japan should "let" the currency go back again. how does that work? ruchir: i think with japanese inflation and nominal gdp, surely that is a sign of it increasing.

moreeed for doing a lot monetary easing basically reduces. that is the natural rule in making again rise a little bit more. i'm try to make a monetary argument here. jonathan: let's go back to talking about the prospects of a unilateral agreement on currency. agreement,of g-20 but what is the prospect of something real in the next five years? ruchir: i am not sure we need that. look at the dollar today. this is the trend the dollar has been in, but the magnitude is increasing. that appreciation in the dollar over the past five years. it is very similar to what we

saw in 1990. i believe the dollar is getting to the point where mariani -- many currencies are all appreciating against the dollar. i think as the dollar keeps marching on, there are some currency's out there which are showing signs of exhaustion. in the developed world, that includes the yen, the euro is looking cheap, and so is the sterling. the emerging market world, there is the mexican peso. we are getting close to the --els of the tequila price tequila crisis in 1994. dollar's main correction here has to be against the chinese currency. that is the one area where we think the dollar still has room to run against the chinese currency. against many other currencies in

the world, we think the dollars will run could be coming to an end. david: coming up later in the program, we will have new york attorney general eric schneider who has joined in the opposition to the president's travel them. he will be here to talk about what he believes the ban is illegal. the likelihood of seeing more of those trump policies. this is bloomberg. ♪

david: this is bloomberg. i am david westin. cap president trump reach the target he has said -- can president trump reach the target he has set for the united states of 4%? ruchir: there are two drivers. one is the number of people entering the labor force. two is an increase in productivity. that's what has changed

a have to do with people. -- here is what has changed. it has to do with people. there is a population slowdown in the united states. cuts thatke the tax help get productivity back up, the problem is that you still may not get to 4% because of demographics slowing so significantly. in the 1980's and 1990's when the u.s. economy was growing about 4%, you had a sharp increase in the population growth rate of the country. labor was growing at about 1.5% a year. now, the labor growth rate is down to about .5%. that is the missing 1% that is not coming back anytime soon. even if you have the tax cuts similar to the 1980's, you still have the issue of labor growth. is just a law of economics. david: to get the 4%, what do

you need out of productivity? it would have to be immigration? uchir: out of the reagan years, we got about 1.7% average productivity growth a year. now, the labor force is likely to grow at about 0.5% or so for the next five years. 1%, you have to get massive integration which is not happening or unique significant changes to get people to come back -- or unique significant changes to get people to come back to work. i think that is very difficult to engineer. i think the best you can get for the growth in the economy is about 2.5%.

the 4% number i think is very ambitious. however, the demographics have changed to significantly. -- too significantly. chir sharma of morgan stanley, thank you. he will be staying with us. jonathan: coming up, we will be speaking with andrew witty. we are in new york city. we are a short while away from the market open. of dollar is seeing six days strength. we are off session highs. this is bloomberg. ♪

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softer.st a little bit basis point of 236. it is in the face of a lot of supply. the tenure debt coming in little bit later. withollar strengthening the exception of the dollar-yen. december 7 is the day you would have to go back to find it 1% move on the s&p. what does that mean for the future of 2017? sharma of morgan stanley is still with us. you say 2.5% growth is more feasible than one -- 4%? ruchir: in the market currently, there is the prospect of a corporate backing. that is what has got people to revise their earnings estimate.

if you look at the consensus forecast, people are not expecting much more than 2.5% growth for this year into next year. thatnk the big thing of affecting the market is expectation of getting a big corporate backstop. companies, to energy they are pricing a lower corporate tax with the pro-energy policy of a trump administration. the reality of earning is that it is based on an oil price. you have seen the big oil stocks get hit, and then you have the hope. where should investors be positioned between those two? r: typically, when you end up getting a crash in oil prices, it tends to stay in a wide range for a long period of time. the price of oil is stuck in a range of 30 to 60 for the foreseeable future.

upset of theo the range, i would be wary of investing in energy stock, because i feeling that is not the time to do it. $30 is a better time. the pricease is that of oil today is trading in line with its long-term historical average. i think this is perspective lost on many people. it is such an abnormal high. if you look at the hundred year history of oil prices, in adjusted terms today, the price of oil is not much higher than where it has been over the past 100 years or since they were the regulated back in 1973. i think a range of $30 to $60. but once we get to the upset of the range, that is how -- upside of the range, that is not the best time to invest in energy stocks. david: how important is it that they structure the corporate tax credit to enhance investment rather than just distribute

cash? ruchir: nobody really knows what to do in the market. it has to do with a broader stability tax. i think that is where the attention will turn to eventually. it equals expectations that it is completely unknown, 50-50. onhas a major sort of impact some corners of the market. that is what i keeping an eye out on. we do not seem to get much clarity on that until later this year. david: clarity on whether it happens or its nature? ruchir: i think both. it is a 50-50 think. it is such a complicated tax they are trying to put out there. it has a major impact on the internals of the market which is just not being priced yet. harper tax cuts i would say is 80%. 7% 80% -- 70% to

sharma of morgan stanley, thank you for being with us. it was great to have you. jonathan: it is one of the top selling drugs of theirs in the united states. present. -- president donald trump sent stocks plummeting after his targeting of pharmaceuticals. >> "they are getting away with murder -- president trump: they are getting away with murder. we are the largest buyer of drugs in the world, and yet we do not bid properly. we are going to start bidding, and we are going to save billions of dollars over time. the industry getting away with "murder." to join us now in the discussion is andrew witty. i will not ask you to respond to , but isident directly

would ask you to respond how does the engine get into gear when you hear comments like that from the president? what is the reaction like internally? ndrew" first of all, we started putting our engine into gear about five years ago. we have been very, very upfront about the need to reform pricing approach. we need to be very clear as we bring new products to market that we are demonstrating affordability. if you look at the medicines we have brought to america come up they had been brought to market at or below the price of existing technologies. in thelook at our prices u.s. over the past several years, over five years we have had a net price growth of about 1.5%. in the last two, it has been negative. last year in particular it was down 1% net price. our prices have all been at the net level.

i think what we have been very clear on, and it has not always beenpopular -- we have very clear as a manufacturer to call for improvement in the price market. we call for more transparency on how we improve accent -- access to medications. jonathan: we had this discussion on this front. the president of this country supports medicare price negotiation. how does that impact you directly? how will it possibly shape the industry as a whole? ndrew: it depends exactly on what will happen. one thing i think everybody realizes is that the u.s. health-care care system is unbelievably complicated. there is an opportunity to streamline it, i suspect that would help. market solutions are the right

way to go. from a gs k perspective, if you look at medicare part b we have almost no exposure there. an immaterialave affect on gsk. whether we get generics later this year or if there are some reform in pricing on that space, you cannot lose it twice. the impact for gsk is not significant. this is not massive exposure for us. if you think about the guidance we have given this year, where we have said if there is a generic we have shown what the impact is, we can hold our own against that. i think that can give you a strong reassurance of the robustness of the country -- company. jonathan: let's talk a little bit about risk management then. get a drug ing to

against one of your best-selling medications. what are the odds of it getting through? ndrew: we had absolutely no idea on what the probability is. have no idea when it would be launched or the volume available for the pricing strategy. those are some key limits in the equation we have no idea on. so, we made an estimate. if it is no generic, we will grow earnings a show this year by 5% or 7%. if itre is a generic, arrives in the middle of the year and it is a pretty full on , it would take about -- we will be about flat to slightly down. so, we try to get our shareholders a bracket on the upper and lower side. we will then see as we go through the year.

this is literally trying to pin the tail on a donkey with a blindfold on. what we have done is given our shareholders are range. that lower end of the range is very consistent within a point or two of the consensus for the industry before we revealed our results today. we are all going to learn as even play out. looking at the lake of the land, there is a character in a stick. the stick is to get your prices down, and the care is that you want to see some of these drugs get through quicker. if that is the lay of the land, some of theme that drug approvals will be easier and quicker? andrew: first of all, i think we all encourage safe and efficient regulation. safe is most important. we need to protect patients.

we should accelerate, as long as we do not sacrifice patient safety. in the past seven years, no one has had more fda approvals then -- than gsk. 20 to going to have about 30 new drugs come through phase two and go forward. we would be a significant beneficiary of acceleration, but critically that has to be done while maintaining a strong focus on patient safety. jonathan: you have overseen many of those approvals. when you hand over the baton, what is the biggest challenge your successor will face? andrew: i think anna will have a will have a- emma full plate as anyone would do in such a big business. those 20 to 30 new that seems

role in, she will be the one who has to first open the envelope and get all the good and bad news before determining allocation of resources to move forward. that is what i thought this was the right time to move forward. i believe that whoever opens those envelopes is also the one who launches the product. she will embark on choices in the next 12 or 18 months that determine the future of our business in the next five or 10 years. that is going to be the number one priority for her. , think where we stand today is we have demonstrated strong and clear momentum over the past couple of years. we have about 10 billion pounds of sale in america. 7.5 in europe. seven in consumer. 4.5 in vaccines. all three businesses are growing and so are their profit margins. she will look how she can

accelerate and further decrease future risk. andrew, what is next for you? for me, it isew: another six weeks of being ceo of gsk. from april the first onward, i will give some consideration to what is next for me. we will see. this has been a phenomenal experience to lead this company -- company. i am very excited about emma taking over. i think she will be a terrific leader. witty, think so much for joining us. have two, we will experts weigh in on the fx

market that was put on notice by the president of the united states. this is bloomberg. ♪

♪ emma: this is "bloomberg daybreak." coming up in the next half hour, we will talk with eric schneiderman about the president's executive order on immigration. alix: welcome to "bloomberg daybreak." i am alix steel. we are losing some steam, but look at what we have seen in the past 15 minutes. the again is now up higher against the dollar. it is the strongest of the g 10 currencies. it is a perfect time for our next guest. this is our morning meeting now

we hear from two different banks. we are joined by steven kotok.er and david he is joining us from sarasota, florida which is a bit warmer than it is here i imagine. starting with you, stephen -- steven, he has been writing about what he calls "cold currency war." in which covert currency actions are being taken. has the trump talk about a weaker dollar stopped the slow war -- cold war or escalated it? steven: i think it really is a question of water macro policy. if they manage to push through the built in the house or something that looks -- the bill in the house, or something that looks like it, i do not think it

matters how much they talk down the dollar. they can do all the talking in the world, and it will not be effective. i think with the market is afraid of is if that bill gets the rails. derailed. then, the default policy will be to walk around and talk down the dollar while confronting different countries and industries about unfair trade practices. that would be dollar negative, because the market is looking to see some kind of physical stress here. talked about it being off somewhat today, but is it like a lot of other markets waiting to see what will happen? i think a lot of the dollar negative factors we saw in january have abated. through most of january, we were getting good news from the rest

of the world. steven: now that news is beginning to slow down. the other side is that we really do not know how much emphasis and priorities will be put on this goal. until we do know that, -- on fis cal. until we know that, we will continue to be in the doldrums. the market is waiting to hear from the president to say if that will be a major priority. david: what is going on on the bond side? k.: i think there is an issue that defines this currency adjustment outlook. it is this issue of numerous and see -- of numbers. we like numbers. from at had a leader worldwide company who cited all these statistics. do.racy, we know what to

we know how to price markets and make estimates whether it is gdp or the federal reserve. the currency strength rate narrative, we do not know what it means. when it is tweeted, we doubly do not know. the volatility is in the currencies. if you look at the yen-dollar, it has had a 15% swing in less than a year. that is the era we live in today. alix: it does not seem like it will end any time soon, so if you do not know what the policy is going to be then how do you make an investment? is the challenge for every portfolio manager including our firm. we are measuring spreads and all sorts of ways every single day. .hat is the clue in my view, you had a chart a

couple of days ago were you talked about the vix compared to the uncertainty index. the problem with the vix is that it is ubiquitous. it has lost its forecast power. weedsve to look in the for relationships that can reveal credit spreads or other types of spreads in these highly volatile times. that is the challenge for portfolio management in 2017. alix: i do have the chart. if you reference it, you know i'm going to do that. the white line is the vix. the policy uncertainty is the blue line. when you areder, looking at the currency market and you have this policy uncertainty not really being affected in fx volatility, what do you look to? nominal yields or real yields? steven: when we study economics, it is all about real yields. if you look at it. -- if you look at in

pure gold analysis, it seems -- analysis, it seems kind of all of the above. the expectation of rates for short bonds are going to keep going up. that is along with inflation. if we continue to move sideways, and it sounds like the fed will move in march -- the rest of the world is going to extend the january performance. we could see those yields come off which would be good for emerging markets. talking about the short bond trade, we have a lot of supply coming on. kotok, let's go back to you on bonds. we have seen some tightening their. -- there. have you seen a similar phenomenon? k.: remember, in our

portfolios we are looking at spreads of treasuries. there are sectors in the bond market that are still very cheap. if you can buy high grade, tax-free bond at 4% when the 30 year treasury is at 3% and is taxable, the tax-free bond becomes the gift. people are afraid of them. they think the tax code is going to change. well, it is going to change. areas in the bond market where you can be opportunistic, and there are areas where you have to be hedging or more careful. sovereign debt and u.s. treasury debt is one of those were you have to be more careful. i do agree with stephen -- steven that we might see lower rates in the treasury curve depending on how the economic unfolds. david: thank you both very much. jonathan: coming up, an important conversation with bruce richards.

that is coming up. from new york, this is bloomberg. ♪

jonathan: from new york city, this is "bloomberg daybreak." about 35 minutes away from the open in new york. futures on offer. doubt that negative on the s&p. negative on the s&p. six days straight of dollar strength. the dollar just beginning to roll over against the euro. the euro is now down 0.1%. it was down about 0.3%. treasuries are still busy could yield down by two basis points. the currency continues to flatten. in the commodity market, crude is one thing to look at. buy, buy.

he is winning big now after betting on gold during the election. at the end of the day, you have to contend with headlines out of the capital. out of d.c.. that is what we are seeing with the currency. ties is the 13 handle here -- here? david: where are any of the handles? coming up, he is one of the attorney general's that opposed donald trump immigration executive order. he is eric schneiderman, and he is here with us. this is bloomberg. ♪ . . .

♪ jonathan: from new york city, onm our viewers worldwide,

this wednesday, for more aid, i am jonathan ferro alongside david westin and alix steel. we are counting down to the cash futures down .1% on the s&p. elsewhere on the fx market, yields lower at 20 basis points. the face of a lot of surprise, treasuries are holding up, as is the dollar 40 6th straight day -- for the 6th straight day. alix: gilead getting hard. hepatitis c drugs are losing steam to rivals like merck. isember, the hep c drug crucial for gilead. that stock is getting a lot of downgrade today. glaxosmithkline down .6%.

jonathan, you are just talking to the ceo. it does see a 5% to 7% growth this year is there is no at bar drug. the worry is what will the drug be if there is no generic? panera up by 2%. , sales actually rose by about -- comp sales rose by about 3%. a young china, this is the first time it has reported its own earnings as a standalone company, and buffalo wild wings up by almost 5%. lower thantlooks is estimated, and you get downgrade from analysts this morning as well. david? david: thanks, alix. it is the latest chapter in the immigration story. .rgument for made by telephone

at stake is whether the trump administration can o enforces ban again seven countries. court had not bought what he was selling, so you try to have a backup plan. august: i'm not sure and convincing the courts. some applications are problematic. david: joining us now is greg store, bloomberg supreme court reporter. give us the timeline. window we expect a decision on the court of appeals, and what happens next? greg: the court has said probably this week there will be a decision, and after that comes out, there is an excellent chance of losing side will go up to the supreme art. court there is a range of possibility, and some of them may take longer than others. david: take us through the

supreme court process at this moment. we had a split. what happened? greg: this will come up in the context of an emergency action where the admin's rachel is that the ninth circuit come ok, supreme court, you temporarily in state this popper -- policy, and they only need five votes for that. even with the four conservative justices, they will need summary from the liberal wing. you usually think of steve breyer. it will have to be across the court's ideological divide. david: even if the supreme court is not interfere to stay the suprem executive order, it goes down to the district court, right? sorts of things, called temporary restraining orders, usually cannot be appealed. this may be the exceptional case. the ninth circuit may not even get to the big constitutional questions. there are ways they can avoid doing a.

ultimately, one would expect the spring court to pick up these issues. it may not be right away. it may be a few months on the road. david: ok, thank you. that a supreme court reporter from bloomberg, greg stohr joining us from washington. exclusive now, the with eric schneiderman. during his six years as new york attorney general, he has brought many enforcement issues. most recently, he is spending on the one we were just talking about, stopping president trump's ban on immigration from seven countries associate with ban on immigration from seven countries associate with terrorism. let's start with the action which you have with 17 other attorneys general. 18 have joined. what do you see as the merits of the case. what is the likelihood of success in your judgment? i think therman: likelihood is very strong, and this is one of the cases brought by my office, others attorneys

general. it is not clear which will reach the supreme court, but the case is moving faster in the night stork it -- circuit than any others. i think the clauses very strong. the judge is most impressed by that, and it asks a very direct question -- can the president issue an order -- we know he has broad discretion for immigration order banningn all muslims from the united states? i think the answer, clearly under the establishment cause, is no. me, it is very clear from the language in the order itself and other things that have been said by trump and others in his administration that the intent and effect of this order is to discriminate against muslims and to favor christians or muslims, which filings the establishment. david: the order did not ban all muslims. it was seven specified countries. these countries have been named

by the obama administration being associated with terrorism. it was not randomly thought. mr. schneiderman: that was a false argument. the identify with the obama administration had to deal with visa waivers, some countries, like the united kingdom, said we are expanding the list of countries. you can have a u.k. passport passport from yemen, we want to make sure you have to get a visa. all that did was say you had to get a visa. it never banned anyone from coming here. david: you don't deny those seven countries have been associated with terroristic activity. mr. schneiderman: there is no rational connection between that .nd the senate -- sincere effort to protect the country the only thing this man does was destroyed against muslims. david: close to 23% of the population comes from other countries. state institutions, including out-of-state universities, hospitals, depend on people going back and forth from these countries and other countries. the tech sector come our finance

sector, and if you look at the statements of lloyd glenn fine and jamie is something that is the lifeblood of new york's economy. this affects every new yorker, every new york institution, and every new york business. david: certainly do not deny the constitution of the united states give special powers to the president in areas of national security, particularly immigration. you don't deny that. mr. schneiderman: oh no. and everyone concedes that. there is not one of my colleagues, and a cases have been brought in virginia, massachusetts, new york, have denied that. president cannot issue a order saying, "we are banning all dues, muslims, christians," and that was clearly in the argument before the ninth circuit yesterday. the defendant was on the edge of arguing that the president can make any thing he wants in regards to immigration, so this really is a test of the american rule of law and the role of the judiciary in the system. it is important for the courts to assert themselves.

this is about the balance of powers and the respect of the power of the judiciary to say what the law is, which was established a long time ago. turn, assertedo their the power of the courts to review executive decisions. go to sanctuary, which has been talked about, president trump stopped out -- spoke out about this, and we will put up a quote about what the president tsai, that he would cut off funds to states or cities that designate century cities. while i think it is ridiculous, you know, i am very much opposed to sanctuary cities. they breed crime, there is a lot of problems. if we have to, we will define your we will give terminus amounts of funding to california, obviously, the voters agree or they would not have voted for me. what is a thing sure a city? -- a sanctuary city.

david. mr. schneiderman: a lot of it is voluntary. and otherhe cities locals do not have to corporate with the federal government on a lot of their efforts to enforce immigration laws. there is no definition of "sanctuary." new york widened to refuse to dissipate was a there is no definition of ". sanctuary." this is about what the federal government has allowed to require states and cities to do, and what is overreach. some of my colleagues i am pleased to say in other states are now outlining what the trailers are, -- parameters are. sanctuary really is a misnomer. there is no victory definition of it. it is come again, the question of the reach of federal power. as far as mr. trump's assertion, there are severe leads on the ability of the federal government to course a local

government to complain with its request based on withdrawing funds. the funds cannot be used in a course of way, and they have to be directly tied to the program and issue, so mr. trump, i think, hyperbolically overstated the power of the federal government to punish a state like california if it chooses not to make its law enforcement officers agents of federal immigration. give --t actually did funds were cut off. are we looking at another lawsuit? mr. schneiderman: i don't think the federal government would even attempt to cut off general funds. the laws are so clear, and there is a second prohibition against the funds being cut off in a course of weight. i do not think -- course of weight. i do not -- coercive way. i do not think others, and even like another other policymakers under mr. trump, that will temper whatever actions he takes in many cases. the reason this executive order ande out so sloppily bizarrely was apparently it was hidden from the experts, the department, security, and sprung

on them as it was all of us in a surprise move on a friday night. david: there are other policies the trump administration has talked about adopting. are you looking at any of those as possible grounds for litigation? mr. schneiderman: absolutely. my job is to represent the people of the state of new york, and if there is a radical agenda that will hurt the state, i out to protect them. if there are families in new york who cannot get medical care they need -- people are suffering from there thousands by this travel ban. they cannot get back together with her family care we are out to protect new yorkers from whatever harm comes from federal overreach, whether they cut back environment allows, whether it is just relation for the lgbt community, our founders left a lot of power at the state level. that was a very wise decision in retrospect. i can speak for my colleagues -- i've never seen as strong a commitment by the democratic ag's to protect the people they represent and enforcing the law against any federal overreach by the trump administration. david: could a repeal of

obamacare trigger a lawsuit? on schneiderman: it depends what they do. absolutely. interference in the funding of health care, obviously, they're finding that more difficult to unravel them a thought in the first place. david: all right, eric schneiderman, new york attorney general, thank you for being here. jonathan? jonathan: coming up, stick dan lynch joins usll to we count you down to the market open about 18 minutes away. futures this morning, markets down .2% this morning. -16 points on the dow. from new york, this is bloomberg. ♪

alix: i am putting oil and as a future in focus today, a three-week low. 2018, we could see as much as 9.5 million barrels of oil a day coming out of the u.s. that would be the highest level since the 1970's. once the rhetoric with opec was going to destroy shale, but now shale is getting better, leaner, and faster, and will make a comeback. what does that mean for the oil price? joining us is the chief market strategist at ii trader. we have crude below a 60-day moving average good what kind of downside can you look at? guest: there is a big level at $51.59. there,tart closing below $50 is a psychological level, but there is a big part down and $45, insisting it remains bearish. this is more about the dollar than anyone is really talking about. the dow is leading this market in many ways.

last year at this time. the dollar began a dissent at 6.5% to its low in may, and crude oil bottomed at that time and was able to rally. a large people are stuck and cannot see the trees. you have to realize that the dollar may be 3% of its recent highs, but it is 10% off the flow last year. this is holding crude back. everybody looking for $60 in crude oil -- listen, you kind of already saw it. looking at where the dollar was in august or's of last year, puts crude oil kind of at $60 if you look at that perspective. alix: yes, but we've seen the inverse correlation breakdown, but the reality is stockpiles continue to build here in the u.s. you go through maintenance, there is an import line picking up. can you explain the downside in oil due to just her supply and demand, not necessarily a correlation? bill: i agree. they will be directional moves that come from supply and

demand, that come from u.s. shale or opec production cuts, and that will continue to move the market. now that we are in this consolidation area, that is why we have not seen a $60. we have seening is $60 achieved already. the dollar is in range here, and it could top out. i do think overall, a hiking cycle, depending what you see this year, seasonal economic weakness, could bring a lower dollar. but seasonal economic weakness could bring it here in the u.s. in crude oil. you have to look from a bigger charting perspective than where the dollar is. it is going to keep crude oil in check. what we are looking at right now, if crude oil gets down below $51.50, we will see another technical directional move, and that it will be because of shale coming back online, u.s. production really taking away from what opec has done, and then bringing the market down to $45 or so. really the reality is is the dollar does stay up here, that will be a quicker move. alix: $45, bill baruch of iitrader, thank you for a much

feared coming up, dan suzuki, equidl lynch senior y -- equity strategy, will join us. this is bloomberg. ♪

jonathan: from new york city on this wednesday, february 8, i am jonathan ferro. let's get you up to speed on the markets. futures a little softer on the margins, no real action here. yesterday, we had an intraday record on the s&p 500. we kissed that, rollover, and finished flat. we have seen that again and again. switch over the board your the other asset class provides a little more direction, and treasuries have done really well. down three basis points. at one point. those short, getting squeezed in a significant way. this morning, we were on for six

straight days of dollar strength , the dollar completely rolling over. the euro now positive on a session outlook. itx: stocks heavily crushed since the election of your it almost doubled since donald trump was elected. now we are getting some bears in the market. take a look at this. you can see traders are trading the most since 2014. since 2014,ensive this is when donald trump was elected. you have got small cap volatility still subdued. those concerns starting to filter in. joining us now is bank of america merrill lynch's dan suzuki, senior equity strategist. rising against a small cap volatility come agency the pay valuations that had a huge run, or is there some kind of real fear being percolated in the market? is a combination of several things. one you touched on is small cap is trading at 19 times. we have not really traded here

since the tech bubble. that has investors worried. you talked about how small cap has outperform since the election, but all of the outperformance in the first month. smart cap have underperformed since the election, november 8, so you have the rally, it the small caps have not gone anywhere on a relative basis. people are buying protection on an thought that there is inauguration tight mentality. alix: at some point, you might reform.buy the tax at what point do market say, i will not buy protection a more, i will just sellout? dan: i think that is way down the line. some i was on the show, we talked about how there was a trump put in the market, and that is one thing supporting the market shares and even what people have started to question that, the market has started to make new highs.

i think that sort of blissful ignorance goes on for several months before we get the details. there are three things driving this market here -- improving confidence, improving global growth, and the fiscal policy story. when you have all three of those stories, with all flat to improving, the markets have a lot of support. jonathan: is it a point is that small caps run about the same time the dollar did? dan: all of those postelection trades sort of went together that first month, and then they all sort of reverse course. in the asset class chart, the performance you had postelection through the first month has almost completely reversed in the months since. i think that is not specific to small-cap. i think it is all related. jonathan: beware think about it -- i asked a question, the dollar strength story was one of pse reasons the small cards ♪ knocked it out. who is in the driving seat, is that the ss market -- affects market?- fx?

dan: they are all dollar strength, border adjustment, dollar strengths. the more the border story happens, the more the dollar should go up. jonathan: for that reason, to capture that story, you are going to see a rich evaluation on small caps than you would on the s&p 500. when you make the comparison, small caps versus others, is it best to look at the russell historical on a basis? dan: i think you have to look at both, especially if you're comparing the two, but at the end of the day, i think there is disconnect between the near-term story and a long-term story. the long-term story, the evaluation is all that matters. i think the best bet is for longer-term investors, you want to sell those rallies. if you are a near-term investor, i think there is a lot of support and a lot of momentum,

and, and in a near-term, it will be driven more by the sentiment momentum, which means you can be buying in the near term if that is your sort. alix: these the interesting sectors here? dan: yeah. right now, you want to own the more domestic sectors. on that note, we like health care, we like discretionary, but it is more a technical call from a longer-term basis, i think you want to own health care stocks. alix: discretionary is interesting. we have had a lot of consumer confidence picking up, but the stock is not performed. is that the short-term, long-term peace you are talking about? dan: there are some concerns about the border. if you look at the sectors hitting the border adjustment, our numbers, 80% of the consumer sector. they are the most effected. if you look the fourth quarter, their consumers are not spending a lot. if you think you're going to get any kind of tax cuts for the consumer, that will be hugely positive for the discretionary spots. david: all right, dan suzuki of bankamerica merrill lynch will stay with us, i am happy to say. right now, president trump is

speaking in washington. you see him now, and he is talking about the immigration order and really is flustered with why the court is taking so long. he cannot believe how long it has taken. he cannot believe the courts are taking so long. he has tweeted out that it is politics. jonathan? jonathan: david, thank you. we're counting down to the opening bell on bloomberg. futures at the moment kind of trading more so, down on the margin by about 11% on the dow. -4 on the s&p 500. switching up the board, yield down three basis points. the stronger dollar story out of this market. we turn over. this is bloomberg. ♪

jonathan: from new york city for our viewers worldwide, this is "bloomberg daybreak." i am jonathan ferro caret moments away from the opening bell. futures that flat dropping

morning. 20,000 precisely on the dow. future as -19 at the moment. bell rings in new york city, yesterday, we had a new intraday high. pretty much going away. the fx market going nowhere, the euro pretty much dead flat. the intraday moves so far, we have six straight days of dollar moves. one thing that did hold is the strength in treasuries in the face of a ton of supply this week. 10-year yields comment by 4 basis points, adding a $24 billion pileup from the treasury a little bit later. 20 seconds into the market open, let's go to alix steel. alix: weakness running throughout the major indices. the dow hitting a record day intra-or they doubt now off by 51 points, s&p off 5. the only major index to not make

a record intraday high as of yesterday. the nasdaq actually will be able to close at a record high yesterday, but now the index off by .2% during we have breaking news for you -- canada booth is finally filing for its ipo. we do not know the size appeared when you the idea was coming, but now they have officially filed. watching i feel cozy and how many will actually go public is a good indication of how companies feel about market confidence. will want to ipo now versus later. very interesting headlines you we will bring you more details as they cross. individual movers is sort of an earnings but has appeared in gilead and getting hit hard, off by about 9%. c drug and lower pricing affecting. disney, you've got the good and the bad -- espn hurting as revenue is down for a third order. the positive, bob iger might stay past 2018. time warner up by .3%. it had a strong quarter over at

hbo and its film division. now the spotlight of course turning to its at&t tie up. monta lea's up by .6%, despite the fact that sales dropped again. it put a strain on the dollar. ez ceo warning of an immigration backlash. where is the volatility? if you peel back some of the layers, you can find some. this charge is the vix versus the v-vix, think of it as the volatility of the vix. you can see a big divergence, a real jump in the v=vix. also, traders are paying very high premiums for equity options. there is some concern come a little jitter in the markets, but not enough to move the next. jon, i keep on asking, "why?" tuned in,i've just

basically the last three mornings with alix asking a series of guests, "where is the volatility?" here is what they had to say. guest: if you were a trading, he would be looking at the next. -- vix. >> we have a set of growth numbers, and there is a sense of resynchronization. >> the reason it is so low is the fed has adopted an unofficial mandate over the last several years, which is targeting equity volatility. >> every time we get a correction, wanted is down a few percent, people fear it will be 10% to 15%, and people will start to do you risk. >> if you don't see concrete policy action coming from the fiscal side, then eventually things will catch up. >> what is so interesting as ever but he thought trump would in thecharts by his 2:00 morning tweets, and what we are seeing is the market is seeing this in a bizarre way as a very common backdrop. jonathan: still with us is dan

suzuki from bank of america merrill lynch. where is it? everyone says is not there, but it is coming. bank of america merrill lynch says what? dan: my esteemed colleague, been bolo, was talking about it. he is talking about the central bank as the third unofficial mandate or he is right. the other thing we were discussing earlier was the trump later that is a very powerful force in the market. if you think there will be a iset, that says stimulus coming, just get out of the way, it makes sense. you mentioned short the markets. there is a difference between price volatility and playing the inflection point. what is it saying to you right now? ton of downside support for the market heard there is a lot of money that has not gotten fully positioned into the markets here. i think there is for a much a buy and dip mentality that has worked out through the election. david: dan, why isn't it saving

at this point? if you look at the tweets, you get immediate drop in stock, but then it comes right back up again, so the marketsif you loou get immediate drop in stock, but then it comes right back up again, so the markets -- what is in the market look and say, "you know what, it is not have much effect over the long-term"? dan: the reality and the reason we do not believe in a trump put he is near term is bearish on the incremental tweaks. in the near term, we will not detail. down some of the volatility is coming, and you will get negative news about things getting watered down, things getting pushed back, but in the near term, you not get that. in the meantime, you also have other practices a mentioned earlier, which is improving global growth. david: which takes away from trump, which makes perfect sense to me. the one place we have not got the detail is on executive order with respect to immigration. where are we with that? dan: a bit of a kerfuffle. "kerfufurveball" at --

fle" at 9:35. dan: how was is going to impact corporate earnings? i think in the near term, you're not really going to see that earnings impact with immigration. alix: you are more focused on tax reform. larry fink is speaking at an investment conference, and he says we are living in a bipolar world right now. he sees a huge tension shaping a between the fed in president trump. so where do you hide versus where do you take advantage of when we see a selloff for the potential of the tax reform? n if you look: at the sectors we like, i think health care is a good place to hide. it has gotten beaten down so much -- alix: for good reason. if you have drug pricing efforts from the administration, there is a reason why -- dan: but if you look at the performance, health care has had a pretty good comeback in the

last couple of months, and i think that is on the idea, you bigthe meeting between the drug executive's and trump, and that has been away for some positive pace. the long-term story is health care is one of the best places for innovation in the u.s. market, and it is very cheap today, and it is not correlated with the markets. if you look at the pictures, beneficiaries, i think you want to own financials, and i thank you so much own discretionary in the near term. in the near term, there is a lot of of sites. jonathan: dan, we have spent the last year and a half talking about risk and uncertainty. if you let that take over your life, you would miss out on record highs of the equity market. you said here again, and we talk about risk, uncertainty, volatility is low, maybe it is shifting. dan: we touched on this one of the last times i was on the show, the market does not hate uncertainty come it is not hate risk, it hates downside risk. factor in the fact that there is upside risks to growth here. i think you also have to

recognize the bull market. of all,e with, first fundamentals, and valuations take a backseat to technical, and those returns are usually really strong. it yet.: so we have dan: there is further to go. if you look at the last few years, the minimal returns, going back to the 1920's, is 30%. that is the worst in the last few years. alix: what is your timeline for that? dan: we looked at a few indicators, and we felt that if the trends continue, the back half of 2017 was a nice case to factor in. as far as the reversal and growth trends that we see, and the idea that similar is coming down the line, i think it pushes the time i back 12 months to 18 months. alix: wow. dan: you are looking at the bull

market, potentially. david: that is is you get tax reform, if you get infrastructure spending. dan: if you break down the components of all the stimulus that is coming, i think it is hard to argue that you're going to get a huge fiscal stimulus given there are so many deficits in congress. corporate tax reform is likely to get water down, but you will get something there. in initial years, it will be positive for earnings, but it will start to fade. cutting household income taxes, i think that -- we do not see much push back there, for that is very likely to happen. that is actually a big boost given the economy is 70% consumer. david: do you factor in at all the deregulation move? dan: yeah, you have artie seen the start of that, and i think it is a big part of it. a quote from somewhere, "every business executive you talk to, they do not care about tax reform as much as they do about deregulation," so all of the stuff he has been saying and doing in the weeks since

inauguration are pointing toward that. alix: you mentioned of course financials, and a steeper yield curve, yet in the last two days, we have seen a lot of by incoming into the treasury market, flat across the curve. why you feel so confident about financials? there is some downside to that. soak it i't think think the valuations are very supportive. if you are a long-term investors, there is a long-term support for financials. they are the number one beneficiary of everything we have talked about today, in terms of the momentum, post rally, tax reform, deregulation -- and i do not think that is all priced into the market at these levels. so i think there is a lot of downside support. david: thanks so much to dan suzuki of bankamerica merrill lynch. coming up, disney out with earnings last night, missing revenues. the big news, however, was about bob iger, and he is going to stay on as ceo. we will focus on media next. this is bloomberg. ♪

emma: this is "bloomberg daybreak." i am emma chandra here in the hewlett-packard enterprise greenroom. coming up, algebras investor, founder, and ceo. we will get has outlook on global banking and more. ♪ david: this is bloomberg. i am david westin. disney came out with earnings last night trade on short mainly because of espn, but much of attention was given to ceo bob

iger, saying he would be open to a renewal of his contract. it is the first time he is said publicly, at least, that he might stay until retirement. with us now is paul sweeney, bloomberg intelligence u.s. director. this does not come as a huge shock. paul: no. they have not made much headway on the second round of succession here, slipping the expectation was, and less an internal candidate came out of nowhere, or they went out and interrupted in external candidate, the most likely scenario is bob would stay as long as he needs to stay until they can find a credible replacement. quite friendly, if you talk to most investors, they are happy with that. david: i was going to say, you need him to stay at least of the earnings call because immediately one earnings cannot, the stock took a dive, and then it came back after he said, "you know what, i would be open to stay in," and actually, it is up a little bit. paul: it is. the quarter last night, it was a bit of a mixed bag.

the all important espn story continues to be concern for investors. it continues to be a decline in subscribers. the question is -- is there a silver lining out there? some of the subscriber's back, either in a bundle or maybe going with a app app thatsumer would be more of a string service? bob iger said that is something they will launch into the marketplace sometime later in 2017. when you take all of those potential silver linings together, if you will, regarding espn2 scrubbers, much of that says we will give a wait and see, if you will, to the espn story. it is not what it was a couple of years ago when the initial shock came. david: bob, for whom i worked a couple of years, has been very clear, for three years now, that espn's growth would be slowing down. the question is -- how is he going to make up for that growth? one of the possibilities is, as you said, a sort of over the top of my direct to subscriber service from espn. what else? paul: the other businesses,

quite friendly, are performing extraordinarily well for disney. you talk about the themepark business and the parks and resorts business where they just invested $5 billion in shanghai, the parks and resorts business had aery solid corner -- very solid quarter again. of course, what has really been the surprise for this company over the last five years has been the film and entertainment business. there has been almost no volatility in that business. it has been nothing but up and to the right in terms of profiteer to take a look at the slated films for the next four years to five years. that will continue to be a good profit generator and will offset, to some degrees, some of the weakness that maybe occurring at espn. david: that was yesterday at the beltre. this morning, we had the time warner earnings out. paul: numbers were good, they beat on the revenue line, and the story for time warner, aside from being sold to at&t later in the year, is that their cable network, which is are you will play the most important revenue stream, is up about 14% in the

united states, which is by far the highest of any big media company. that is a reflection of the fact that time warner was able to renegotiate many their distribution agreements over the last couple of years on the back some very big programming investments, most notably the nba and the ncaa basketball. that allowed them to go to their district leaders and say, "we have much better content now," we want to get paid more, and they got the deal down. david: the crown jewel was hbo. there is a lot of concern that netlist is really going after them. paul: netflix is coming after them, so as amazon and hulu in terms of programming investment. all of those over the top players are making serious investment on par with or higher than actually hbo. hbo continues to be a very good business, had a very good quarter, and the future of hbo is again going direct to consumer with hbo now, hbo go, and as of those products are doing very well. they reported that they had over 2 million subscribers to hbo now, the over the top option for hbo. up, actually double,

year-over-year. david: word is clearing through washington. had language that they expect the transaction to be approved, so kind of confirmation of that. david: all right, paul sweeney of bloomberg intelligence. jonathan: coming up on bloomberg , "bloomberg markets" with vonnie quinn and mark barton. vonnie: we will be looking at opportunities in distress, high-yield spaces, and other places. we have seen interesting things when it comes to the trump administration. also, looking at health care as part of that, and continuing to see some opportunities in emp's. we will get details from the man who produced an 18% return last year. that is all coming up in the next half hour. jonathan: looking forward to that. in taea black belt

kwon do, dana friedman is coming up a little later on bloomberg television. will the trump administration lead to a boom in m&a? that is coming up very soon on bloomberg television. this is bloomberg. ♪

jonathan: from new york city, for our viewers worldwide, i am jonathan ferro.

biggest one-day drop so far this month, although a similar move in europe as well. switch of the board. in interesting session in the market, the dollar strength story. it has completely rolled over in the last hour or so. the cable rate now positive, up .2%. , so someback to $1.07 dollar weakness, but treasury holding steady. treasury really big, six basis the u.s. $2.34 on 10-year. billion 10-year coming today. the commodity market, alix steel, not crude making the headlines over the last few months -- it is gold. alix: it is the perfect recipe of having a weaker dollar and a lower yield. you can see a 5% rally in gold over the last month. you had the trifecta. swamped by larry fink and

the yahoo! conference, his headline justifies me why investors are going into gold. he says, "i see a lot of dark shadows in the market today. we're living in a bipolar world." he sees tension, he only sees one or two rate hikes. all of commentary goes for gold. also, remember, rates are falling here in the u.s. that is why you buy gold when rates are lower. david: so much for the trump bid. alix: as i margin, as i said before, everybody expects $1300. we did not get there. time for show takeaways. i was impressed with ruchir sharma of morgan stanley talking about equities. here's what he had to say. the chance of a populist government coming to power in this country to meet remains very, very low. the european constitutions have been made after the second world war, exactly for preventing this kind of an outcome. let's see if that works out. but i feel ok about europe, and

i feel relatively bullish about europe and european equities. alix: he feels ok about europe. banks, by andean european banks now, blackrock saying it is a goodbye as well, and he is not the only one. jonathan: for the politics, what we have learned of the last year or so is yes, the populists can win in the shape of a president trump, or it can get a low probability outcome in the shape of a brexit, but ultimately what it means for markets, we have learned that lesson in the last year. the other thing that ruchir sharma was touching on as well, when we look at the potential for a marine le pen win of the national front in france, yes, she went the first round, but she gets trounced in the second round. that is it for the politics. we've heard again and again, the data has been stronger in europe. whether you're long or short, you cannot refuse that data. the data has really held up. david: at the same time, the endorsement was, "it is not as bad as we thought," we will not

have marine le pen. right now, inway her attorney general of new york, was with us. we asked him about sanctuary, a device by which some cities will say we will get special treatment to immigrants. whether in fact donald trump, the president of the nine states, could follow through on his promise to cut federal funding for any city or state. here's what he said. mr. schneiderman: i don't think the federal government would even attempt to cut off general funds. it is so clear that the fines have to be directly related to the program an issue, and there is a second prohibition o against the funds being cut off. david: the bigger question is -- can the president do what he says he will do? the president has been very declared and saying "we will cut off funding," here we have the attorney general of new york state saying it will never happen. donald trump says he will do all these things -- is he going to be able to follow through? alix: the markets have reflected

that. the last few days, every where we were up at 9:30 a.m. was reversed by the afternoon. one headline can cause some kind of reversal because they are starved for the facts. jonathan: directional list markets. we have been "bloomberg daybreak ." thank you very much for joining us here to coming up, "bloomberg markets" with vonnie quinn and mark barton. we move south. by .3% on the dow, and .3% on the s&p 500, there and they're about. the tone in the treasury market, it is bullish in the face of a lot of shorts. yields coming in at $2.34, and that dollar strength story turns around. this is bloomberg. ♪

vonnie: it is 10:00 a.m. in new york and three clock p.m. in london and 11:00 in hong kong. this is "bloomberg markets." i am vonnie quinn. mark: i am mark barton in this

is -- and this is "bloomberg markets." ♪ vonnie: we are going to take you from new york to london in the next hour and also cover stories out of washington, paris, and greece. euro the top stories we're following on bloomberg and around the world. all giving rise to rising interest rates. what are the biggest opportunities and pitfalls? bruce richards with marathon asset management joins us. mark: with all of risk factors swirling around the markets, home equities managed to hit all-time highs. why supply is the key factor underpinning the games. and thepresident trump re