the trading triggered a valuey. 13 central banks meet. e.c.b. and b.o.e., a highlight. they tell you next year to brace for the steepest rate hike since 2006. a miracle, president trump said tax reform is special and will press congress to get it done. >> welcome this monday, december 11, i'm david along with alix steele. bitcoin day. alix: here's where we are 2 1/2 hours before the cash open here in the u.s. bitcoin futures are high but stable as we end the trading year over the next few weeks. the euro darr is firmer. who will win out, the fed or e.c.b.? where will the currency cross get traction from? and the spread a little lighter at 57 basis points between the two's and 107s as it continues to flatten and crude up by .

04%. the trade the stock of the day the morning, the week is bitcoin. bitcoin futures trading there. what are we at? $17,000. friday we were at $10,000. david: that was huge. now time for the morning brief. a big week is ahead of us. today nafta talks begin in washington and later this week we have three key central bank decisions, the fed and e.c.b. and bank of england. russian president vladimir putin will hold an annual presser and an e.u. summit following the brexit breakthrough. there was a brexit breakthrough when you were away. alix: we're hearing the rollbacks, is the deal binding, is it not? is it legal? we have opinions on that. and bidding overed the weekend we're worried about a labor party and snap election. dave: the labor party is taking over, jeremy corbyn. he said if they do take over they'll move the bank of

england to birmingham. alix: that makes accepts. david: that will be different, for sure. alix: to bloomberg first news word, here's emma chandra. emma: russian president vladimir putin made a surprise visit to syria and ordered most russian troops to begin withdrawing. putin met with syria's prt, bashar al-assad and the first time he's been to syria to back assad in the civil war. france's president macron called president trump's decision to call jerusalem the capital is a call at peace. he disagreed saying mr. trump's action would help the middle east peace process. and alabama senior republican senator has urged voters in the state to reject federal republican roy moore's in tomorrow's special election. shelby said alabama deserves better.

moore has been accused of inappropriate behavior with teenage girl ps when he was in his 30's. global news 24 hours a day in more than 120 countries. i'm emma chandra. alix: time for the daybreak first take where we discuss the top three stories of the mork. bitcoin finally lands on wall street with futures surging 26% in the debut session. then central bankers, big week ahead, in focus will be the federal reserve and their outlook for 2020. finally, tax reform. can the house and senate actually get it done in five days? i don't know. we'll be joined by michael mckey, and peggy collins who leads the u.s. investing team for bloomberg. come inside bloomberg, it's the chart of the day. it's bitcoin and the circuit breakers that were triggered. this when you had a 10% and here a 20% rise and futures were halted for five minutes.

any maferte -- my favorite stat of the day, bitcoin is $350 billion overall with crypto currency and not even facebook market cap and here it is all we're talking about. >> it's a big step to open the exchanges and gives some legitimacy to bitcoin and now you'll see what some investors decided to not only go long on the currency with their face in it as a legitimate currency or whatever you want to call it but also hedge funds who will say hey, now is our opportunity to short the currency. so we've had stories about whether or not bitcoin is the next big short. >> the problem with bitcoin is nobody knows its value. i had a fascinating conversation with robert schiller, the nobel laureate from yale whether we're the problem and he said maybe, the fact we make such a big deal out of this. and one thing you can point to, you look at the number of contracts being traded. right now since futures trading began, 2,882 contracts, 2,882.

gold in the same time period, 67,000 contracts. so is this really a broadly interesting financial instrument or is this a narrowly focused speculative bet by a few people that gets an awful lot of publicity? david: i'm curious about legitimacy. everybody talking about it's more legitimate. why is that, the very fact we have a market makes it legitimate? it doesn't change the underlying value of a bitcoin. michael: it may be the market itself gives it some legitimacy. you separate out what a currency is or what something like this is. it's historic value but a median of exchange. the exchange part has gone away and nobody is using bitcoin to buy things anymore. it's too volatile and why would you pay for something in bitcoin and have the value go way up in the meantime. it's really just sort of all about the price and the fact the price keeps going un. david: they are using it to get

value in the form of initial coin offerings and getting cash o finance movies and startups. alix: if you go to france you buy bitcoin in the a.t.m. peggy: it will be interesting to see if main street america will start to move towards it. what we've been reporting is when people call their financial advisors and say hey, this thing sounds great, people are making 100% in value, their advisors are saying you know what, we think it's a bubble and do you really want to try and step in now when the bubble could burst any time? there are a lot of financial professionals who are still saying we think it's a money laundrying trade than a currency trade. alix: what are big banks waking up this morning thinking about? they want to help and get into it but they're in it and will they take all the share here? michael: probably wouldn't be if the big danks -- banks started to clear this and the customers would work with them. the fact the big banks don't

want to at this point because it don't think the regulatory structure is in place and think it's very risky still right now. if they continue to trade without problems they'll get into is it. i don't think the small brokers wimbledon the only ones in the long run. alix: we're not taking as position but if you're a special client we may help you trade. we won't be special the end of the day. the other big event will be the official banks. we have the fed on thursday -- wednesday and e.c.b. on thursday and b.o.e. and it will be a big day and i'll make mike sit on set with me all morning. the highlight? michael: janet yellen's swan song. her last press conference. we are expecting the fed to raise rates one more time. we'll get a little bit of a look at what the fed is thinking about in terms of 2018. through the eyes of janet

yellen who is leaving but also the new economic and rate projections, the dot plot we ll love to hate. alix: i like that. mike: we'll see if they adjust bahama of the tax will. david: will we get new projections? michael: does the tax bill lead them to boost their forecast for g.d.p. and inflation and therefore change the number of interest rate moves we see next year? alix: if rates go up and jp morgan said we'd see the steepest rate hikes next year out of 2006 and people come out of bitcoin. that bitcoin is a ball of money and if we wind up seeing substantial hikes and fightening somewhere, is that the disruptor? peggy: people have been searching for yield for years because rates have been so low. so if you start to see more asset classes including fixed income get more money or interest rate rise and coupons, you might see people move. what i think is one of the most

interesting things this week is the juxtaposition of bitcoin and its volatility and janet yellen essentially saying goodbye because she's been a steady hand in the markets in terms of when the different central bankers speak. oftentimes people say she's almost boring but in some ways it's been very steady for the market. it will be interesting to see if we see more volatility as the new fed chair takes over. david: i'll be interested, will the fed say yes we need to take into account tax overhaul and they've been reluctant saying it's not going to happen. they're getting close. don't they at some point say yes, we have to take it into account? michael: they do and the reason being they might not want to do it yet is because they don't have a good handle on the bill. some have incorporated some boost to growth in the forecast. we spoke with loretta a few weeks ago and she's done that. those who are doing it are doing it very small. he thinks maybe .10% ad to

g.d.p. but nothing spectacular. david: there are discrepancies between the house and senate but there's a lot of common ground there. peggy: it will be special. david: president trump tweeted that over the weekend. peggy: all along the goal of any tax reform which people have been working for for decade has been to make the tax code simpler but honestly for people in the metro area and california, people are confused to whether or not their taxes will go up or down and in certain states where you have salt, the state and local taxes potentially going away but maybe your income tax will go down or corporate tax go down. people can't figure out whether it's good or bad out of the gate. michael: interesting story out of bloomberg. 2009 as part of the stimulus bill then, people got a tax cut that amounted to $12 a week and polls showed nobody noticed. 25% of the people thought their

taxes had gone up. if you won't get a tax cut it on't lead you to spend more. david: the tax cut is the same we're looking for this time. alix: i had to pay for bills and i bought an air conditioner back in the day. david: thanks for peggy collins and michael mckee our colleague. coming up we'll continue our conversation with bitcoin with scott bauer of trading advantage. live in new york, this is bloomberg. ♪

alix: bitcoin lands on wall street up 26%. it shows the price versus the volume.

bitcoin futures grinding higher and volume is superhot when it started trading. now volume is like two contracts are traded right now. joining us from chicago is scott bauer. what was it like to trade bitcoin over the last 12 hours? scott: it's been orderly. the futures market here has been orderly like you just said. , just a couple contracts being traded now. we're just under 3,000 total contracts. when you look at a total value you're around $50 million or so compared to the market cap of bitcoin being $300 billion. but this is really good. the market has been very orderly. most of the contracts that traded, the futures contracts have been in the january expiration cycle and a few going to february or march. but what we've seen since this was launched is the spread

between months has really come in. started out about a $2,000 widespread to go from january all the way out to march. and that has really come in. so you know, listen, it's a growing market here. this is just in its infancy in terms of futures here and the market is kind of getting a feel. overall very orderly. alix: i want to see what you're looking at, scott. the other chart is bitcoin futures versus the underlined bitcoin price which is trading lower and traders trade that called the basis. you also can wind up trading that versus another exchange. what's your popular trade right now? scott: i looked right now and the spread between february and march futures is only about $100 right now. it started off much wider than that. the january to march started out billion $2,000 wide. so to me that's a spread worth looking at is buying yourself a month's time from the feb

rather expiration to march with the $100 edge. that could wind up being a $2,000 spread or inverted spread. we don't know. the market will figure that out, fly and demand will make that come into line. to me it seems to perhaps be the favored edge if there was one out there. david: thanks to scott bauer. for more we welcome aaron brown, the former head of financial market research, a.q.r. capital management and writes for "bloomberg profits." and he's written a fascinating column. in your column you say there is underlying value to bitcoin. x-chain. aaron: we put in tens of millions of developer hours and billions of dollars and created this thing i sort of compare to

internet startups back in the early 1990's before there had been any i.p.o.'s. tremendous value there. hard to estimate what it is or who is going to capture it but it's there and i think bitcoin is the first major main stream financial instrument that gives you exposure to the pace. taved: back in the dot-com days with the stock options issued and they raised money and started new companies, underlying the option was a right down the road to have a stream of income from the underlying asset. that's not true here. when you buy a bitcoin and give money to somebody to start something up, you don't get a ride to participate in the revenue or profits from the company. michael: you're thinking moderate terms. in 1990's it wasn't clear the companies would make money and didn't have intellectual property and didn't have plans to get revenues or earnings. it was fate, the internet would

be big and if you gauged your -- gave your money to mark anderson or some of these early developers that somehow or another you'd get rewarded and you did. it doesn't mean you'll get rewarded this tile. zls agent work that day. there is a tremendous debate. trustwood will be a value and i don't know who makes it. it the users may like it and it's like we get the protocols. it all remains to be seen but it's a exciting area. lix: are you long bitcoin? >> yes, yes. i put 2% of my portfolio in crypto, and is my feeling what sensible allocation is. alix: we don't understand how

to value bit down and the latest from chief cramer over at unicredit. he said in the g-7 countries, is the sum of central bank money equals turnover $5 billion and contrast to with $21 million bitcoin. one bitcoin is worth $257,000 and if you do just m-1 supply, it's one million. what do you think? >> that's very 2012-2013 and i wrote similar things back then. bitcoin never will be a major transaction. there are better crypto currencies. alix: and it's not a good indicator. >> and existing companies are getting in and going to compete strongly with it. bitcoin is a transaction courtesy than store value. it's just not in the card. where i do think, it's a financial currency, a way to get exposure to the crypto space and people use it to put money into it and hopefully

somebody uses it to take money out though you're correct there may not be money coming out out and that's its value. i have to disagree with scott about the opening on this cboe. i'm talking to developers, talking to crypto. and half of these people are teenagers. none of them are over 30. they're very suspicious of finance. they went into crypto space because they didn't believe in traditional finance. so the cboe opens and immediately the republican site crashes. didn't have anything to do with the trading but for technically sophisticated people that looks bad. and then the hit limit twice. this does not look like a good opening. i think this is a battle for the hearts and mind of these developers. sol far we're losing. david: the good sneeze is we're off and running. alix: at least the limits work. >> to a financial person nobody went broke and the contracts went through. to a technical person it looks

-- alix: it looks bad. david: author of "the poker face." thanks for being with us. there will be more with ed tilly, and he'll be here at 4:30 london time. ok. now coming up, the republican party on a final sprint to merge their two tax bills by friday. we'll tell you where that stands live from new york, this is bloomberg.

>> republicans have one week to get to an agreement on a common approach to taxes if they're going to get a bill to president trump for signature before the holidays. our chief washington correspondent kevinner isily and andrew brenner are both here to take us through what need to get done. kevin, down there in washington, what do they need to do to get this to the president? kevin: down to the wire. in a couple days president trump will be expected to

deliver his closing pitch to lawmakers on capitol hill as the first major policy win of his presidency is just around the corner. everyone i'm talking to signals this definitely will get done within the next week, week and a half. and this is something the administration really need. mind you there will be other political distractions and december 27 you have the looming thutdown threat and tomorrow the nesh election in alabama, sure to drown out headlines around the country. much, hanks so long -- kevin. alix: deep on the jobs report, flatter today as you come inside the bloomberg. is steeper the way to go if you're going to factor in tax reform as well, infrastructure spending. andrew brenner is here. what's your call? andrew: my call is i think because of the tax plan and what it's going to do for pension funds, i think the

curve will continue to flatten. when that changes and the incentive for corporations to fund their pensions minimizes a bet as they conduct 35% this year and 25% next year the curve will steepen out a bit. alix: we're seeing calls for first quarter and third quarter and we'll get to totally flat on the yield curve. what's going to be the distinguishing factor that will flip it for you? andrew: there's no way the currency will get that flat. i'll go on record saying that. what you have is an economy that's rocking and rolling right now. the new york fed last week said the fourth quarter is 3.9% and that's the latest and the tax plan that will be stimulative. and the president now is talking about on his state of the union coming up with an san francisco plan and that's stimulative and the other thing going in your favor is the fact the fed will continue to raise rates. they'll raise raise it this week and probably three more times next year. i don't think the curve inverts still and don't think it gets that much flatter.

maybe another 10 basis points. david: what about the tightening. andrew: regulation kicks in and what you see is more restrictive, i think the deregulation and the way the trump administration is going about it will make things easier. so i really think it's going to be easier to get money. -- in question about the fact a lot is going on and the fed will tighten and we may see stuff out of the e.c.b. alix: andrew brenner, head of international fksed income. fed coming up next. this is bloomberg. ♪

alix: this is bloomberg daybreak. two hours before markets open. dow jones futures up by 54 points, a the bit of futures climbing higher in the u.s. european stocks flat on the

day. you wind up having a pound rolling over a touch on some potentially bad breaking news. causing a lot of performance with yields down. in the u.s. you have a curve steepening with a 10-year yield down by one basis point. crude is softer and bitcoin on the board officially trading up by 7%, around 17,000 is where we traded a bit ago. david: can you imagine we'd have a market check with bitcoin on it? alix: surprised copper or sterling didn't make it in there and had to put bitcoin in there. david: there are headlines with emma. emma: the largest of the wildfires in southern california is moving north. hundreds of people have fled their homes in santa barbara county. so far the fires have burned

more than 270 square miles and forced the evacuation of 30,000 people. just 15% of the fires have been contained. q.e. said the global cuts could end early if the market rebalances by june next year. kuwait's oil minister tells bloomberg russia wants to end the output capping deal as soon as possible. opec and allies agreed to extend the curb until next year to prop up prices. crown prince is trying to institute social reform. global news, 24 hours a day powered by 2,700 analysts in more than 120 countries. i'm emma chandra. alix: what movies will they show at the saudi cinema. i'm curious, what movies will we see and who will be allowed to go to the movies?

will they separate the male and female or go together? more questions. also a question, what are central banks doing this week? a big week coming out. fed is the first to go on wednesday. the latest survey by bloomberg economists say the fed will increase by 25 basis points in december and say revised 2018 growth forecast to 2.3%. 63% see upside risks and 45% say financial shock is the greatest risk to 2018 stability. whatever that means. joined by seth carpenter and with us is andrew benefiter -- ndrew brenner. what is your best case? >> we think they'll take onboard a tax cut package.

they did the summary and half were onboard with a big stimulus package. at that point no legislation was winding its way through college and now we're at a point the house and senate passed versions so i think they'll take that on as part of their base case and as a result will write in a couple more hikes than in september. alix: by a couple, 2019 moveup? seth: another hike in 2018 and another hike in 2019 relative to september. david: this is poor scoring by the fed on what growth we'll get. a lot of disagreement between the republicans and economists on how much growth there will be. will the fed come out? andrew: the fed has to increase their outlook to what the economy will do. david: by how much? andrew: as far as number of fed rate increases, the market is building in between 1.5% and 2. the fed is on record at this point as being three.

you have some of your big shops like goldman, j.p., deutschea saying four for next year and is on top of what you'll get wednesday. the only thing i can see happening is the middle of the ar, you haven't had a equity correction forever as fars that that goes. if there's an equity correction it will slow them down or there will be three, possibly four next year. david: does the core of c.p.i., inflation, justify that rate increase at this point? seth: one of the key things to keep in mind about the fed at this point is they're not hiking on where inflation is or has been, they're hiking on where they think inflation is going. what have we seen since the september meeting when they wrote down three hikes for 2018? we see some stabilizing in c.p.i., the last report that came out was over .2 and we'll get another print on wednesday and the committee will have that information in time to adjust their statement to adjust their s.e.p. and their

dots so as long as that comes in the way we think it will which will be another .2, it will be enough to give them confidence where inflation is going. alix: what about the markets? you know what i'll say what the fed is predicting what the market is pricing in, the green line is the fed and the median dots projection and the white line is what the market is valuing it as. seth, you work at the fed as an economist and worked at treasury. if you were still working at the fed and looked at this, what would you say or do? seth: i would remind the committee of what i think they already realize and why i don't think they're worried about the difference between their dots and the market pricing. the dots represent their forecast, what they think of as the single most likely outcome. that's a very, very different thing than what the market participant has to price when they're trying to figure out what position to take. they're trying to figure out the mean, the expected value on a mathematical sense. so if your headline before said people thought maybe there will be external shock, if something

happens to the economy you can't rule it out and causes the fed not to hike. we think inflation will be softer than the fed does. you have to add that probability in. the market is doing this probability weighting whereas the fed is looking at one outcome. david: the fed is not operating in a vacuum, we have the e.c.b. and b.o.j. and increasing at least speculation that they may be heading towards tightening as well, even b.o.j. might be buying a few less bonds than e.c.b. to what extent does the fed have to take that into account? andrew: even though the fed has raised four times, i think financial conditions continue to be easier and not tighter. i think what's really hurt the fed is the fact the e.c.b., they're only going to change from buying 60 billion a month, this will be the last month of that, starting next month through september they're going to drop it in half to 30. it's still going to be additive. the bank of japan is cut back the bucket from 25 to 40 years they're going to buy. and there is talk on the bloomberg today about them

cutting back some of their equities which we think is huge. so yeah, we can see a real problem. i'm not so sure it's a 2018 problem but it's going to be over the next few years you'll have the whole central bank experiment reverse and you know what, you have 11 trillion debt with negative yields. how dumb is that? you really want to lend european countries and companies money at negative interest rates? i don't. alix: many see 2019 as the issue and jp morgan had a note talking about the rate height tightening cycle for the whole world next year and they see that forecast rising to 2%. they see the biggest interest rate jump since 2006 next year. seth, when does that bite? seth: when it bites is hard to say. one thing i'll point out is it you look at the chart you have open which i think is great, the path at which it's going up for the projection is just much flatter than you saw in the last hiking cycle and i think

that's a very key point for everyone to keep in mind. the fed has consistently used the word gradual and think that's a very true statement and that chart shows it. alix: are other central banks gradual? seth: we have to wait and see, we talked about the e.c.b. making adjustments but it's not they're making adjustments, adding accommodation to withdrawing it but reducing the pace at which they're adding accommodation. david: in 2019 we'll see the global tightening to some extent. does it make it the right time to do tax cuts or the wrong time? the right time because you want fiscal stimulus but wrong time in the sense that for the fed to go in and issue a lot of new debt is a little awkward. andrew: the one thing i'll say, not answering your question directly but you've got to wonder why treasury secretary mnuchin doesn't issue long term debt and lock stuff in. this idea of funding it in bills in the short end when you know you're going to have

higher rates, plus you look how flat the yield curve is, you and i talked about it a minute ago. he should be issuing 30 years, 40 years, 50 years. there's tremendous demand. but to answer your question, look, the president wants a tax cut. he wants to go down as the jobs president. he's going to do everything in his power for that and if interest rates go higher, hat's the way it goes. alix: if you have a lower increase than the fed what do you see between tax reform and inflation? seth: tax cuts are a stimulus on demand. the question is how big will it be and then given the amount of increased demand, what's it going to do to inflation? to be clear we think inflation is going to rise. we think it's going to rise over the near term by the end of next year. but we think it will be just a bit slower than the fed does. if you look at goods inflation, it's been negative for a while. that's not going to change and part of an ongoing landscape of

competition and technological change. david: what is been reported is the treasury is moving towards shorter debt than long term and fed and treasury, does it make sense and what are they doing? andrew: they're looking at the yield curve and asking themselves pricing on as many models as you can, where is it cheaper for them to issue? right now looking at pricing it looks like it's cheaper at the front end of the curve. the question about should they term things out now because interest rates are going to rise later is hard because once this is a slow moving ship and if they issue more long term debt now and there's less demand than maybe otherwise think and longer term interest rates rise they lock themselves into paying up at the long end. alix: a trader guy said about models, they're useful tools but only as good as their dine is in inputs and if you don't know the flaws you have a financial equivalent of a sucker at the poker table. if you're short the front end are you a sucker at the table

and should you be buying? andrew: should you be buying the short end of the marketplace? we said you'll have four rate hikes next year, i wouldn't buy the short end just yet. on the other hand i think the pension reforms and other things going on are going to keep the curve flatter for longer and i really think it's a mistake by the treasury not to take advantage of that today. david: seth, you agree? seth: i think the logic of the treasury is using is pretty sound. david: it's a bargain essentially? seth: they're always going to be issuing so the question is not is the short end longer than the long end but what do you expect the cost to be if you issue two years and roll it several times versus issuing 10 years from now and that you only can do in the context of a model and all the shortcomings and models under stoot. david: thank you for andrew brenner of natalliance. and seth. coming up, is wall street beat, there are reports disney is

buying a good part of tax and what it might mean for bob iger and if he has to stay on as disney c.e.o. so make sure the last big deal of his is a success. this is bloomberg. ♪

emma: this is bloomberg daybreak and this is the hewlett-packard enterprise greenroom. this is bloomberg. now to your bloomberg business flash. e struggling global retailer

stenhoff is in talks with banks for a margin loan. according with people with knowledge, they want banks to agree not to sell stocks that banks financings until next year. stenhoff saw 80% after they said they couldn't publish results. if disney reach as deal with fox to buy assets, the fox movie studio could be scaled back according to "the wall street journal" which sites people with knowledge of the deal. a agreement with bring to the end a decade long dominance of six major studios in hollywood. and in the u.k., the labor party is debating whether to move some of the bank of england's operations to birmingham, birmingham is the u.k.'s second largest city. labor would have to win the next general election before instituting any moves. the party's plans are aimed at spreading investment across the country. that's your bloomberg business flash. david? alix: why birmingham? david: blue-collar and the core

f labor, an industrial town. alix: president trump with coal and labor. david: like donald trump saying let's move the fed to dayton or birmingham, alabama. alix: wall street is buzz building some stories. emma highlighted a few of them. one is steinhoff on death's door with value investing and futures joining the index crowd and disney and fox hiring bankers and bob iger may extend his tenure to oversee the deal. my favorite over the weekend, bill agoman cannot get out from drama. here to take us through the wall street buzz is ed hammond who covers m & a and much more. stein hoff, four of the top red. headlines on the bloomberg terminal. the stocks fell 80% last week.

ed: it's savage. stein hoff had ongoing problems where they've been accounting properly and there have been i go regularities. it's one of these companies that's grown through acquisitions, it's unclear what's in there and what pieces are doing well and what's doing badly and they fear there's constam nation across the portfolio. they obviously came out and said there was accounting irregularities and delayed their results and the market hates that uncertainty and is absolutely mullered this stock and it's down 80% and if you look at it down last summer is 94% and saddled with this enormous debt burden with $21 billion debt on the market cap of $2.6 million. where do you go? alix: invesco comes ought and say we are exposed to debt and derivatives and they are hiring others to deal with the debt and it's like hey, maybe we'll e taking it seriously now.

and sell the same way. ed: they've hired guys to help them in negotiations with the banks. the banks are at the moment seems like they're agreeing to hold off from the share sales so steinhoff put up their stock as collateral with loans to buy the u.s. company mattress firm a store in the u.k. alix: like a dollar star's ed: pound land. you can buy anything you want there for a pound. when i was a student i'd go in and buy all my household cleaning products. it's kind of a hellish place. they've had a horrible time and the fascinating thing, crystal weiss was a chairman and worth $4 billion last week and $1.8 billion today.

alix: it hurts. we have breaking news concerning a situation developing here in new york at port authority. according to the nypd, the a, c, and e line being evacuated because the nypd is responding to reports of explosions at 42nd street and eighth avenue. that's what we know so far. we'll keep you updated as any kind of news wind up breaking. david: you may think of terrorism but there's all sorts of reasons we could have an explosion. you could have a transformer low up or something. the second story, this is from value investing. a series we're having. greenblat, value investor. and he's saying maybe we need to change our plan a little

bit. maybe we should have value plus a little bit of indexing. ed: a benjamin graham, warren buffett school of investing. the traditional strategy, people don't like it anymore because it's just not delivering the output it once did. you look at the s&p and how well that's done. people say why would i pay a hedge under fuge fees and why not hold the market? what he said, what greenberg said which is interesting and this piece is great, one of the fascinating things he's doing is he created this package where you can have a index. so it's sort of a hedge against hedge fund within his fund and you have half which is active and half which essentially tracks the index. you have a little bit less risk exposure. and cheaper as well. the fees are 1% versus the traditional 2%.

david: like smart beta, let's put some of the money in indexing and make decisions who is overpriced or underpriced. ed jirgese it's hedged out or whatever you want to call it. having your cake and eating it but seems to be making a success. david: up your alley in acquisitions, reports of disney buying a good piece of 21st century fox. over the weekend i saw according to bloomberg both companies retain bankers to get serious about had. is this going to happen and when? ed: this is probably the best entertainment story of the year and better than anything i've seen at cinema this year. it's fascinating, disney seemed to be the natural buyer and we heard of other people being around it and others. disney has been there the longest and they would fit very nicely with the film studio. there's a lot of franchises they could bring together and even actually some characters, some of the marvel characters sit at disney and some at fox. alix: my husband who could not care less about finance said my

god, do you know disney might buy fox and have all their arvel comics under one roof. david: it's not just all those characters but perhaps james murdoch under the same roof as bob iger. now reports are the board is saying to bob, you do this that's great but you have to stick around past your 2019 deadline. ed: iger is lying this never seems to end. he was going to go in 2017 and then said 2018 and now extended it to 2019. now they decided he'll have to be the one to integrate these two businesses should this deal go ahead and stick around longer. whether or not james murdoch comes across is an interesting question. if he ask you potentially have a world two of the murdoches running the fox and james murdoch running or being senior at disney. i don't know. it seems weird. too much murdoch control in one industry. but these guys are very savvy. they're very sort of inventive in the way they do deals so that could be part of the ticket. alix: how will well he do with

the fantastic four movies. ok. i'm done. david: thanks to ed from the bloomberg zone. alix: earlier today the a, c and e line are being evacuated after an explosion on 42nd and eighth. you're looking at live footage. you see traffic coming to a stand still as well. we don't have more information to why this has happened and what could have caused the explosion but nonetheless there was one on 42nd and eighth avenue and port authority is now also being contained and a, c, and e lines are no longer running and we'll bring you updates as we have them. this is bloomberg.

david: it's a december which is christmas and means we'll have a tax bill but also it means it's the end of president trump's first year in office and we're starting to see people leave the white house. dina powell well known to our audience from goldman sachs,

close to gary cone has said she's going to step down in early 2018 and over the weekend we had a second person say he's going to step down and he is paul winfrey, the director of budget policy at the white house and said he's leaving as well. this isn't entirely unusual the end of the first year and people are saying it's time to move on to something else. alix: is this normal for an administration? david: dina powell was involved in the middle eastern and after jerusalem and could be a coincidence or related but the main thing is we'll welcome her to new york. alix: developing news at times square, 42nd and eighth saw an explosion, acc and e lines being evacuated. traffic at a stand till.

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alix: bitcoin features trading

debut triggered the 26% rally would move so big, certain breakers are triggered. 13 central banks meet this week to ecb, boe, and the fed a highlights. investors say to brace next year for the steepest rate hikes since 26. president trump says tax reform is special and will press congress to get it done. david: welcome on this monday, december 8. i am david westin with alix steel. now unchanged.es we were up earlier, but s&p futures took a leg lower as we got those headlines that there was an explosion at 42nd and 8th . we do not yet have any more details on what the explosion is, but there was a risk off move, slight risk off move, to those features. euro-dollar heading a little bit higher as the dollar is marginally weaker against the euro.

10-year yields overall coming in at 2.35%. buying pretty much everywhere in the bond market, and particular in the u.k. you're looking at that live shot of 42nd. david: there are a lot of emergency vehicles there. we do not know the cause or the damage, but there is a lot of response from the nypd. can see the vehicles and a lot of emergency vehicles, and the train lines ago through 8th avenue are halted. we do not have any more details on what that explosion is, but we will continue to update you. viewers not from manhattan, this is the center of manhattan, very close to times the portd close to authority, a central nervous system center for new york city. of course, police have had experience, sadly, with dealing with very some urgencies.

they are all over it with the fire department. alix: apparently, the a ,c, and e line are evacuated. david: time for the morning brief. we have a big week this week. toks in washington today later this week, three key central-bank decisions, the fed, ecb, and bank of england. vladimir putin will have his annual presser. an eu summit following the brexit breakthrough that happened last week. let's see what is making headlines outside the business world. emma: vladimir putin made a surprise visit to syria and ordered the withdrawal of russian troops there. he met with bashar assad, the first time putin has been to syria since he sent russian forces there in 2015. the french president says tosident trump's decision

recognize jerusalem as his real's capital is a threat to peace. he met with benjamin netanyahu in paris. netanyahu disagrees with macron . president trump will make closing arguments on republican tax cuts on monday. this these will take place in washington. house and senate negotiators are trying to work out the differences between the two versions of the tax bill. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am emma chandra. this is bloomberg. alix: we have breaking news concerning a commodity hedge fund. commodity hedge fund specializes in mostly coffee and cocoa trading. it will shut this month in return money to investors. both coffee and cocoa took a leg lower. cocoa is a little bit weaker on the news. they say the markets have been

overwhelmed by systems and algorithms, that the volume of overwhelming supply and demand for metals and does not leave room to trade. the risk reward is not attractive. if it were the old world of commodities, they seem to have a difficult time closing and returning money. david: robots strike again. alix: yeah, kind of. coffee, sugar, con, they really based on weather patterns. david: the world world. crazy asset we are watching his bitcoin. it cory future sister to trading -- bitcoin futures have started trading. julie hyman has been following this. if i can work fast enough, i can get you that chart. julie: i have a bunch of charts.

halt one? the alix: yes, walk us through appear julie: teachers began trading, and you had a couple of halts triggered by circuit breakers, when you have movements that happen too much into fast. this happens in the stock market, basically in the asset that trades. the volume we have seen thus far, about 2800 contracts have traded this far. we saw a surge of over 18,000 per bitcoin. ishas been volatile, which not a surprise, but it has also been relatively orderly. you had some turmoil on a website, as well, crushing briefly, but it is not a surprise. expectations with traders going into this were relatively low. they were sort of bracing for potentially volatility, potentially some kind of turmoil. given those low expectations, it has not materialized that it has

been that bad, at least not yet. it trades 24 hours a day, seven days a week. the cash settle everyday is at 3:30 new york time, 2:30 chicago time. that is something to keep in mind if you're looking for pricing. also, the pricing comes from one exchange, the gemini exchange, which is the one run by the winkle foss twins. when the contract launches on december 18, it will draw from a number of different exchanges to come up with its price. interesting to see this as a test case for what will happen in the wild west of bitcoin. david: a lot of arbitrage between exchanges? julie: potentially so, and we have that up, as well. we have a look at the futures versus the spot price. the question is who is in these

two markets, because what we have heard from various banks this far is they will not be trading bitcoin futures. some banks will allow some .lients to alix: selective client spirit julie: one brokerage is going for 50%d beyond, asking margin requirements, not allowing shorting. at least initially, there are some constraints being put on this. alix: breaking news from times square -- there was an explosion on 42nd and 8th. the a ,c, and e lines are stopped and are being evacuated. the mayor has been briefed on the incident and midtown, and that is according to his office. we do not yet know what caused the explosion, but we know the train lines have been stopped and evacuated. information is preliminary, but there was an explosion at 42nd and 8th. a standstill in traffic and a

lot of emergency vehicles. we will continue to watch out for any kind of headlines that cross on this news, david. we're getting reports trickling out about possible conflicts. we have to be careful not to report things unless we know it is true. i have learned the hard way that often the first information is wrong, particularly when there's that much sensitivity about things like this. we want to be careful about making sure we know what is right or just know that there was an explosion and that they are investigating. has been the mayor briefed in all of the trains they go through 42nd street have been rerouted. they are bypassing 42nd street. q, r,the 1, 2, 3, n, and 7 that are bypassing. looks like no trains are going to 42nd street at this time. david top cnn is reporting that

one person is in custody. it may he related or may not be related. one thing i will say is the nypd is better trained in dealing with these sorts of incidents, whether it is simply a transformer blowing up or something more sinister. the nypd is among the best in the world in doing this, with the fire department, in all fairness. update onnt to markets. look at the intraday chart of the us of the futures market. as the news broke. now we're back up into positive territory. futures pretty much flat on the day. at the margin, there was an initial shy away from risk. the dollar did not really move on the news, still trading around 93. trading at 2.36%. you did see some buying coming

into the market as that news had crossed. some sort of a buy the bond feel today, the outperform over in europe. nonetheless, a little bit of buying coming into the market as yields are down by about one basis point on the 10-year. you're looking at live footage of what looks like new york police officers, as well as traffic at a standstill. prettyop-out i am confident that is just outside the port authority on 8th avenue. i saw the "new york times" building, as well. alix: what we know at this time -- there was an explosion on 42nd and 8th avenue, trains a ,c, and e lines have been shut. other transit go through 42nd street, like 1, 2, 3, n, q, r, and 7 have been rerouted. the mayor has been briefed on the incident. we do not know why and what has

happened. we will be tracking all of this for you as we continue. we take a quick break. this is bloomberg. ♪

alix: breaking news -- there was an explosion at 42nd and 8th avenue. traffic coming to a standstill. it emergency vehicles, as well. is nowc, and e lines suspended at times square. all other subway lines have been rerouted to not pass times square. the mayor has been briefed on the issue. we do not have a clear read as to what caused the explosion. you can see there, 42nd and 8th. a looked on

8th avenue where you see the emergency vehicles. it is right outside the port authority building. police evacuated the port authority. they are trying to sort through what happened, whether anybody is responsible, and they are worried about other injuries involved. alix: on twitter, there is a news stream from these agencies. cbs news says it appears that was a possible type bomb that went off inside a subway tunnel in times square. bloomberg has not confirm that. according to cbs news, it could have been a potential height from inside a tunnel -- bomb inside a tunnel. recipe futures took a leg lower as the news broke, now back to flat territory. when thelso saw a pop news broke. yields move down by about one basis point. the dollar pretty much went nowhere. on the margins, a little bit of safe haven.

david: my experience is the first information is often wrong, but i have syrian reports about a's -- but i have seen reports about a possible pipe bomb and reports of somebody was apprehended. the news is trickling out slowly but surely. over the course of the day, i am sure we will get a much better picture. dean curnutt is with us. what is your philosophy with things like this? reactmarkets are going to to the extent that there is something that truly changes risk appetite. risk appetite has been incredibly strong in equities in global markets. take a lot to kind of run this market off course. one of the metrics we look for in terms of capturing the geopolitical tone right now is

volatility on the korean yuan. in august when some of the rhetoric heated up between kim jong-un and donald trump, that has retreated, now at a three-year low in the korean yuan. this incident, i do not think it will be enough to push a market off track and effectively damage the risk appetite. alix: i should point out that we're learning from the white house of president trump has been briefed on the explosion in new york city. sarah sanders, press secretary, and formed us of that. he has been briefed on the situation, as has the mayor of new york. a reminder, 42nd and 8th, there has been an explosion. cbs news reporting it could have possibly been a pipe in one of the tunnels. no trains going to times square.

other lines, like the 1, 2, 3, n, q, r, and 7, have been rerouted. david: standard for the president to be briefed with things like this. the markets have shown such resilience to geopolitical risks isall sorts, whether it elections in europe or whether it is north korea or events at home. why are they so resilient? dean: it is a fundamental question right now. macro risk advisors, we look at volatility as part of the risk environment. we look at whether markets have been forced into risk, the central bank's grand plan, to lower the opportunity in sovereign markets, forcing people into equity markets. it is a little bit of a chase. it feels like there is a chase. the economic data is approving and there is kind of this wall of capital that needs to be put

to work in the markets. i think that is part of the low vol story. david: one thing that is being chased is bitcoin. one thing we know about bitcoin is it is volatile. in yes. futures trading should reduce some of the volatility. do you expect that to happen in the case of bitcoin with futures trading? dean: we have been asking all in s&p?o ate the vol bitcoin. this is not a bad start, actually. more volume that people anticipated. but you triggered the circuit breaker twice in the first day, firm charging 50% of collateral on a futures contract. that actually may not be enough. i would be concerned that the volatility in the asset is so high that even 50% of the margin, it may not be enough to

prevent people from getting too asset -- the word bubble is kind of a loaded term, but if you look back at the last atple of instances, you look the defining characteristic of an asset that may be in a speculative bubble, when volatility rises are medically as the spot prices rise dramatically, think housing bubble, thing crude oil bubble in 2008 -- all of these things were kind of a blowoff to the end, with volatility spiking even as the asset spikes. it is lack ofh of liquidity? there are not that many transactions. is a good point, there is a lack of transparency, like of liquidity, and an unbridled amount of enthusiasm for it. it will be interesting when you get to listing options and using liquidity in the options. you cannot imagine with the premiums will be. they will be very high.

alix: i want to update you on the breaking situation in times square. so 42nd and 8th, there was an explosion. multiple reports, one from cbs news, the kates there potentially was a pipe bomb that exploded in a subway tunnel. all trains have been stopped. seems that the port authority says the bus terminal is still open but betray my has been stopped. traffic to a standstill, ton of emergency vehicles. that should be 42nd and 8th right there. we will bring you more news as it winds up coming. nypd responding to the explosion manhattan.uare in also joining us is harm bandholz, unicredit chief u.s. economist. you look ofn, when something like this on the television screen, how do you factor that into the market? harm: first of all, i agree with dean -- i think the market has become numb to those types of

events. we have seen north korea shooting a rocket over japan and there was a bit of it to, then the next -- there was a bit of a dip, and then the next day was back to normal. not affect the underlying economic situation for the economy in the market. it is not changed by those there is some bigger plot behind it which requires geopolitical reaction. we do notnted out, want to talk about something like that. bottom line, no reaction. that ultimately a healthy thing that we do not react to these things? harm: we have to distinguish the impact on society, on the

well-being and the impact on the economic data. still seems there to be incentives for some people to do these dreadful things. had a report that there was someone in custody, and reuters is confirming that, saying one person is in custody. they are not confirming what type of device was used in the incident at port authority. the new york city mayor and president trump have been briefed on this. at 34th street, so that is what you could be looking at. reports indicate that it was a pipe bomb. the a ,c, and e lines have been evacuated and other train lines are rerouting around times square. david: i think we're looking at 8th avenue the other way. i believe that is penn station on the right, that round building.

alix: thank you. david: i think we're looking up and the bus terminal is on the left, port authority on the left. alix: in the market, a little bit of a risk off appetite with the s&p, now flipping into negative territory. not a big deal, down by about half a point. but we were higher and took a leg lower as the headlines broke. the dollar pretty much went nowhere, but you might of have the 10-yearg into market. yields to down by about one basis point, almost two at this point. the 10-year getting a tiny bid. a little bit of a safe haven on the news. s&p futures barely down, but you lower. the move we're waiting for any other official remarks that may come from president trump or the new york city mayor. that explosion about 45 minutes ago on 42nd and 8th.

reports indicate it was a type bomb exploding in a tunnel -- it mb exploding in a tunnel. we will keep you updated on the news. david: one additional piece of news is that the port authority is temporary -- temporarily closed. alix: it had been open. david: it is confirmed that they have closed the port authority. it is sort of up there on the left. you are just joining us, but 45 minutes ago, there was an explosion in times square on 42nd and 8th to review are looking at live shots there. also boys rerouted. a, c, and e not moving through times square. the port of is closed peer group boards they could have been a and they in a tunnel,

potentially have one suspect in custody at we will continue following it. toid: it is way too soon know what is going on, but i am encouraged that there are no reports of any injuries. it is somewhat encouraging at this point, because you typically circuiting some one was so perhaps no injured, which would be wonderful news. alix: yes, indeed. dean curnutt and harm bandholz are here with us. in general, all hedges have been paid off, so what do you do? closed below 10 more times in a single year than we have ever seen before, but the bigger story is the motionlessness of the s&p. even a 10 or 11 vix, it is way too high for people who want to be defensive and express a little skepticism around risk management.

carrying the hedges its next on possible, so what do you do? we have advocated for using spreads. an example on a trade we have been active in is in the vix out to december 20, the 13, 14 call spread for 12 cents. it will not take that much for the vix two up to 14 or 15. we have seen it happen three or four times this year. it took about a 1.5% down live from the us a fee, so just a little bit of a pump in the road is enough to make the vix essentially go up 50%. curnutt, harm bandholz, they're both sticking with us as we follow the incident at port authority. this is bloomberg. ♪

alix: following that breaking news from earlier -- you are looking at a live shot of men town manhattan -- of midtown, manhattan, 42nd and 8th.

news alex indicate there was a pipe bomb and their is a suspect in custody. the a ,c, and e lines have been suspended and other trains through times square have been rerouted. lord authority has officially closed the bus station. s&p futures now unchanged on the day. we did see a leg lower as the heavens crossed about the incident in times square. you are seeing a touch, and i mean a touch, of safe haven and two other asset classes. the dollar, a tiny bid. yields moving lower by about two basis points. the dollar spot index no flat on the day. oil up by .3%. but gold getting a bit of a bid, like 26 cents. i am pointing of the reversal in the market, slight risk off safety seeking reversal on the sidelines. david: the president of the

united states has been informed of this incident. let's get more washington reaction from kevin cirilli. for us of reported the president was informed. house press secretary sarah huckabee sanders announcing the president trump has been briefed on the situation unfolding in new york city. new details in terms of what the motive is, at least from the administration. the situation very much unfolding. we should also note that some lawmaker reaction has started to trickle in, mostly from the new york delegation as they look to support the nypd and to alert and disseminate information authorities. we should note that this incident is coming just several weeks after the truck incident in new york city. and we should know president trump's reaction to that. right now, there is no motive for this particular incident that we are aware of, but following the isis-inspired

thatent on october 31, truck incident, the president did call for more extreme vetting just hours after that incident. alix: you can see that traffic is at a standstill with the emergency vehicles. hasfire department confirmed one non-life-threatening injury at the scene of the explosion, confirming one non-life-threatening injury at the scene of the bludgeon. explosion. the david: one more than what you want to happen. and deanarm bandholz curnutt with us. this is a week when some big things are happening, central-bank events, a tax overhaul bill they are trying to put together in congress, and now we have this incident in new york. and thenthe day-to-day a longer-term and then the longer-term an important -- how do you process those? harm: we have to digest it, and

that is what we are doing. we talked about trying to grasp the situation and the follow-up, but it is unlikely to have an impact on the market outlook beyond a couple of days. i think very soon the main focus will be back on central banks, tax overhaul, and the shutdown and all of that. economist, what do you think is more important to driving the economy in 2018? harm: i think it is the hope for the tax cut. we do not know how much is priced in, that there was a big risk-on move for several months now, and i think it started before president trump came into office. but there was more oil added to the fire. i think that has been the story. looks like central banks finally have found the rhythm. 2015 and the

forecast was three or four rate hikes but there was only one. ons year if they hike wednesday, it is the first time they are actually hitting the forecast. i think financial markets will take it as a bit of reassurance that the central bank knows what they are doing. i think fiscal policy is a bit more important than the central bank. alix: i love that you brought that up because we keep talking about how the markets do not meet up with the fed while the fed always comes to the market. you are a little pessimistic on the strength and her ability on the u.s. economy, more so than others. what do you see? or one .5%?t 1% or do they get that wrong? i got it wrong. ok, 2.5%? european banks look at annual averages.

what i am writing about right 3% growthhink the rate we have seen over the past to pluck quarters in may see again, it overstates what is going on in the economy. it has been bolstered by inventory buildup, strong exports. u.s. has a strong trade deficit, so i do not think that lasts. i think the underlying growth rate in the u.s. right now is something like 2.25%. it has not really changed for like two years. we may see strong headline numbers in the fourth quarter. more: so you think it is timing, rather than fundamentals? harm: shocks came together the same time. consecutivehad two corners with growth rates more than 4.5%. nobody was arguing that it is normal.

you have times when things go in the right direction and sometimes when things go in the wrong direction. overall, you must not look at the side effect and the underlying rate of growth is 2.25%. i think the potential is between 1.5% and 2%. i think the potential growth rate is a good deal smaller that has not changed. alix: nypd is reporting that no injuries other than a suspect are being reported. they do say that one male suspect is in custody. here is what would have learned of the past 45 minutes. there was an explosion at times square port authority, 42nd and 8th. a ,c, and e lines have been stopped. trains going to times square have been rerouted. the buster normal has -- the bus terminal has been stopped. it was reported that a pipe bomb was detonated in a tunnel, and one male suspect is in custody.

no other injuries besides the suspect at this time. there was a report of one person with nonlife threatening injuries from the scene, as well. david: sounds like that is the suspect. alix: if you are linking the dots. david: dean curnutt, how do you put together the urgent versus which we'reay, watching right now in new york, with the longer-term? dean: the urgency is about the severity. it is unfortunate, but in the grand scheme of the things we are seeing on the geopolitical and terrorist front, it is not in terms ofe infrastructure or loss of life, at least from what we know so far. it could be disruptive from the psychology, and then market psychology is incredibly strong and has been strong for a number of months now. david: harm was talking about the fundamentals of the economy.

about 2%, 2.1 if 2.25% for growth, rather than 3%. dean: markets have been prone to over extrapolation. we take what we see right now and get kind of giddy about it. forces of institutional money management require you to participate. there is the fear of missing out, fomo. are coming together. the global economy is in a secret eyes of suing -- synchronized upswing. it is not getting busters, but developed markets and emerging markets are moving together. markets are catching up to fundamentals a little bit. the concern is it is a little too far, too soon. when a look at options prices and risk premiums, i just see no margin for error. i look at correlation it we talk as a the korean yuan

geopolitical proxy, the vix itself. it is just a little buffer to protect folks from something -- and inevitably something will go wrong. it could be external or it could be that the business cycle runs into the headwinds that ultimately business cycles run into. i think we should step back and look at the nirvana that has been the growth in inflation experienced this year. you have got the dollar and a sweet spot, not rising too far. inflation is in a sweet spot to her the message. the is all happening at slow pace, market friendly pace. alix: jpmorgan said what will be an inflection point in rescue cashts and volatility is ready for inflation at 1%, and we are at -.5%.

do you agree, and how do you see that evolving? harm: i think they have a bit more of an aggressive call than we ahvhave. i am wary about certain inflection points. often morenge is gradual. along the tone of what we have said before, the risk on environment is still there. global growth is solid. we have liquidity. all central banks are still very accommodative, including the fed. so what do you do with your money? stocks have gone up quite a bit, but is still might be a good place -- we think europe is a better place than the u.s. because there is room to grow. alix: interesting. an update on the breaking news, our top story.

there was an explosion about an hour ago on 42nd and 8th avenue, port authority. the bus terminal is closed and train lines are being rerouted or suspended to times square. nypdis what we noted the is saying there is no injuries other than the suspect, and one male suspect is in custody. governor cuomo is at the scene. the new york mayor and president trump have been briefed. multiple reports indicated could have been a pipe bomb in a tunnel. we now know the suspect has been taken into custody. no injury except for the suspect. we will be updating a much more as we go, david. toid: it was first reported the fire department at 7:19 this morning eastern standard time. the explosion happened were two subway tunnels intersect, basically under the port authority. marketn terms of

reaction, it was a tiny, modest, risk off move. by about onep now point, so recovering from any kind of down move. a did see s&p futures take leg lower and saw a touch of buying into the bond market. dollar-yen basically flat on the day. a little bit of money coming into gold, but gold has given up a lot of its gains, now off by about one dollar and ounce. looking at the treasury market, as well, on the terminal. for the yields, off the lows of the session. we will be following this as a develops throughout the day. this is bloomberg. ♪

alix: the breaking news of the morning -- an explosion on 42nd new york city.in we have a reporter on the ground. where are you? erin: i am at 43rd street and 8th avenue right now, looking south, about a block north from the station. a pretty big crowd here right now. andce tape starts at 43rd there is aligned of armed officers keeping everyone away. that the neweems york police department is saying they have one suspect in custody and there are no other injuries other than the suspect. what else do you see on the ground? erin: a ton of rescue personnel, a few hospital vans, ambulances,

a stretcher out. i have not heard or seen anyone coming out, anything like that. and the carsens, really start at 46th street. pretty much everything on 8th avenue up to 45th is just, you know, like fire trucks and police cars and no other traffic coming down here. ared: give us a sense, there more emergency vehicle still coming to the scene or are there some leaving? is it the flow? same number.he i have not seen any coming or going. coming here, i saw sirens, but it has been about the same number for the past 10 minutes or so. outd: are people being kept of the area? what about people on the streets? erin: they are kind of just watching to see what is going

on. a lot of people taking cell phone video. i heard a few people frustrated they cannot get to the station. i do not think they realized what was going on at first. kind of just people stopping and looking right now. no one seems scared. it is pretty calm. david: how far is the perimeter away from the port authority? erin: excuse me? david: the perimeter, how far away from the port authority is it? erin: about one block. alix: not that big. in terms of the other news we know, there are no trains going through port authority, and a ,c, and e lines have stopped service. other train lines, 1, 2, 3, n, q, r, and 7, they go through times square have been rerouted. the bus terminal at port authority has been shut down, as well. governor cuomo is on the ground.

the mayor has been updated, and president trump has also been updated. thank you very much, erin, for joining us on the ground at 43rd and 8th avenue. david: dean, we have been talking about the effect this does not have on markets and we have not seen a lot of market reaction. how big does it have to be for the market to react? dean: either physically deceptive, so the terrorist attack from 9/11 was tremendously physically disruptive to exchanges. the exchanges had to close. of course, there was a large social and psychological impact. i think it is when something that, even if it is at a mass scale, stops the end looked at as an isolated incident and something starts together momentum on a rhetoric standpoint and the judo political front -- and the geopolitical front.

you follow the heated rhetoric, and i think that is where you start to get concerned that the brash talk can become something more an impact market psychology. "new york times" is now reporting that two people are in custody, there is a second. it was a fear1 -- that the terrorism would have to chilling effect on the economy and would interfere. has there been a negative effect on gdp growth in the u.s. are globally because of the influence of terrorism? harm: after 9/11, the u.s. moved closer together and there was a lot of stimulus coming into the economy to prevent the negative effects of the economy. it was the central bank and car

dealers offering incentives, all that stuff. many households were just happy to take the incentives, those who were not directly affected. broader, talking about potential growth and the long-term trend, we see that these numbers have deteriorated. i do not think it has anything to do with fear about terrorism. david: even beyond fear, what about security measures? more the airport today than we did before, and we have barriers up all around. even at the ports. has that affected growth or trade at all? harm: i mean, longer wait times and stuff, that is bad for productivity. is --oblem as economists we have had so many improvements with better security measures, so you can make the case that it

is in isolation, and without this, there would the -- even if it affects millions of people, the overall impact on productivity is really small. alix: let's wrap up the breaking news -- you are looking at 42nd and 8th avenue. there was an explosion about an hour and change ago. it was the intersection of two subway tunnels. david: where pedestrians go. alix: it looked like it was a pipe bomb explosion. that is coming from multiple news outlets. it is reported that there are now two suspects in custody. the new york police department saying only one individual has been injured. it appears that would be the suspect. no official word yet on any -- p staking claim or

david: taking credit. alix: claiming responsibility or the nationality or religious affiliation to the suspect. in the market, the middle of a risk off tone, but that seemed to reverse itself. the s&p now back in positive territory after moving lower on the headlines. there was a risk off move into the bond market, some buying at the margin, but that has dissipated somewhat. some money moving into gold, but that has also dissipated. so a modest risk off field. a similar story with the vix, well off the highs of the session. much more coming up. this is bloomberg. ♪

david: we returned to breaking news, a live shot down 8th avenue, just about at 42nd

street. about 7:19 this morning, the fire department was called because of an explosion at the intersection of two underground subway tunnels, just about where the port authority is. several subways go through there, and they have closed the a ,c, and e lines. new york police have reported they have at least one suspect in custody. apparently that suspect has non-life-threatening injuries. "the new york times" is reporting that there was a second suspect. nbc news reporting that this is being investigated as a terrorist activity potentially. it would not be surprising if there was a possible terrorist link. the mayor and president have been informed. governor cuomo is on the scene at 42nd and 8th avenue. alix: governor cuomo saying the fire department and first responders are still working to secure the area. here is the market reaction. back to normal is how we are in

the market. we saw some price action. the s&p did take a look lower as the news broke but has recovered, now in positive territory. there was more buying coming into the treasury market, modest buying into the dollar market but still negative on the day, and that seems to have stalled. some money coming into gold, but now gold is down about one dollar an ounce. 2.36% on the 10-year. the reaction in the market having some kind of laws as we try to digest the news of this attack in times square -- some kind of positive public briefing will happen shortly. this is bloomberg. ♪

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no! no! yes! yes, indeed. amazing speed, coverage and control. all with an xfi gateway. find your awesome, and change the way you wifi. city, i: from new york am jonathan ferro. this is the countdown to the open. ataking news -- an explosion new york's time square. let's get straight to emma

chandra. investigating and exposing in manhattan. according to the associated press, an explosive device was set off on a subway platform around 7:20 a.m. one person has been arrested and one person has been treated for injuries. morning thrown the commute into chaos. the white house says so -- and the president has been briefed. emma chandra, thank you. 30 minutes away from the opening bell. looks something like this -- no big moves off the back of that 1.1778.u euro-dollar at largely stable for the u.s. dollar and g10. as far as features are concerned, dead flat -- as far as futures are concerned, dead flat. 2.37 on the u.s. 10 year.