a narrow margin, what does it mean for spain and for europe? congress goes home on the heels of tax overhaul, the government going for another 30 days. they will take the holiday break to think of issues that have not solved. bitcoin moves down. the cryptocurrency down 25% and goldman sachs will open a trading desk with jpmorgan analyzing the situation. welcome to "bloomberg daybreak." i'm here with abigail doolittle. welcome. alix steel is off. almost the holiday. abigail: happy friday. getting ready for the long weekend. and not a lot of action for u.s. futures. let's start in europe. the stoxx 600 the same thing, down fractionally. and take a look at the -- x,flecting -- the ibe

reflecting the snap election in spain. the two-day- see chart, down 2/10 of a percent. look at that wild ride, big drop after the separatists won the snap election. maybe a surprise to investors. david: down less than 2/10 of a percent. abigail: a roller coaster in those two days. david:. now i look other headlines emma chandra has first word news. emma: congress managed to give the u.s. government from shutting down but will face a messy start to the new year. lawmakers approved a spending measure that will keep the government opened their january 19, but put off action on military spending, raising the debt ceiling and dealing with undocumented immigrants who came to the uss children. the british economy grew at the -- sinceace in 2013 were well below where they

before the vote to leave the european union. prices are rising faster than wages. in japan, the cabinet has approved a record $46 billion fund, wanting to improve military capabilities at a time when north korea is becoming more of a threat. on the shopping list, a third layer of ballistic missile defense and their first long-range missile. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm emma tonja. -- i'm emma chandra. this is bloomberg. david: thank you so much. time for our daybreak first take, where we discuss the top three stories of the morning. first up, catalonia. the voters elected a new government. the second topic on congress goes home for the holidays. they have put off a host of difficult issues. finally, bitcoin taking a licking, but goldman sachs wants to be in on the game's report

with a trading desk on the cryptocurrency. joining us is pimm fox and christine harper. great to have you. let's start with catalonia. the euro selloff of 2/10 of a percent, but you are taking a look beyond that. >> it is fascinating. take a look at this great chart. what we're looking at is a longer-term chart of in the blue, the spanish three year yield, and why to the catalonia three year yield. the spanish is in negative territory, below zero. catalonia, 1.7%, down from the time when we first had action and volatility in october. so investors, bond investors not very concerned. the other point, look at the white out here when we had the crisis. you would think that this would spark volatility, but bond

investors do not think so. david: is this quebec? pimm: it is barcelona. [laughter] and i mean, i understand all the ramifications and all about the central government in madrid, but christine you know this -- i mean, catalonia has a third to a quarter of the industrial production of spain. makes h -- the nissan their van that they export all over the world. so i mean, this is a big industrial zone. >> i think the question is, the independence movement, when it took office awesome banks talking about potentially moving banksk off we saw some talking about potentially moving. look at the u.k. numbers we just saw in what happened to them

because of brexit. pimm: they are not leaving the european union. this is not about the european union, this is a domestic fight. i mean, i was talking to a producer earlier, john was telling me when barcelona won the world cup you have the same level of demonstrations in the street. this is politics. abigail: the ecb has all of their backs. pimm: when you look at the chart, why does the chart go down, because the ecb is buying all the paper anyway. so the numbers are not -- david: it when i get resolved right away and if it is not resolved all the way, how will they find a government? come january 19 may need to address long-term funding, the looming deportation of immigrants known as streamers, and -- as dreamers, and the border wall. they've all these things to resolve and a lot cost money and they have spent a fair amount on tax overhaul.

>> there is concern about deficit spending and it has evaporated from the government, although you hear rand paul making noises about wanting to crack down. at this point, even though he voted for the tax bill, which is a deficit bill. means is theit economy is in a lot of places. in spain, we have seen the spanish housing market go on again, despite the fact the government seems completely incapable of sort of reaching agreement on things. all this like tax bill is a big win for the republicans. there are so many unresolved problems, so much conflict, yet economies and markets are taking it in stride. david: they are doing so well because governments are willing to spend money. it is through central banks. throwing a lot of public money to it. pimm: yes. listen, the buzz word is synchronized global economic growth right now and you hav an

e inexpensive money. banks will be able to loan more money, it will go to dividends and share buybacks, and all you have to do is look at the equity market. abigail: this is the third time we have seen this this year -- at some point, don't may need to act in a way that is not last-minute, you know, to the brink. >> they do -- [indiscernible] [laughter] >> they should but they won't. >> buyer christmas tree on the 26thth. -- 26th. maybe that is a good till for them. maybe they will start acting in a better way in 2018. there is a a real,

lot of people who want more fiscal austerity and a lot of people who want more stimulus. in catalonia, some want independence and is somewhat to be part of spain, the government is reflecting the differences in the population. >> good point. abigail: bitcoin at one point down 21% on the day, just in one day. amazing. the lows down 31%, the worst since 2013. let's hop into the bloomberg. another good chart. this is the five-day chart and what we're looking at is the bitcoin spot along with the cbo futures and we see the trend is down. we also see the volume has a spike. what do you make of this, because we have heard that goldman wants in on the action. a trading desk yesterday, long island iced tea, now long bitcoin. is it the best in the world? >> you cannot apply the typical

metrics to bitcoin because it is so volatile that in 20% move is not particularly a bear market for them. it is just a day. so there is obvious excitement, part of it is driven by the distrust of government, so these people believe that we need a new decentralized currency. the irony is you have wall street, the ultimate central party within the financial markets, trying to get in and play the middleman role that they play in regular finance in this new form of finance that is supposed to be decentralized and cut out the record david: is -- cut out the government. david: there is volatility here. >> exactly. goldman sachs is not historically known for being the first mover in anything, so it is interesting that they are first out of the gate in this case and being obviously really building up this.

abigail: what do you make of that? >> you cannot rule out that somebody else would get in their first. there have been other movers. i think that they are trading on this. david: many things, christine and pimm, great to have you. catalan separatists regain power dealing a blow to the prime minister, mariano rajoy. we are live in barcelona, next. from new york, this is bloomberg. ♪

pimm: this is bloomberg daybreak: europe emma: emma: a took over today will cleat and -- create gambling giant.

in a deal valued at $5.4 billion. ladbrokes is known for shops and online operations. jvc has online brands including party casino credit the stage is being set -- party casino. the stage is being set for going to consider a deal into the highly competitive market for smaller passenger planes. and the parent of google no longer needs the adult supervision of one of the tech world's biggest names. eric schmidt stepping down as the chief officer of alphabet. he will remain on their board. that is your bloomberg business flash. david: thank you. majority reclaimed, the elections in spain saw separatists take back control of the regional assembly. we welcome back our colleague reporting from barcelona. give us a rundown of what exactly we know since the polls. >> it was a very messy election

in catalonia. the winner of the ballot was a pro spain party, clearly in favor of staying in spain. they had a very good result. but it is not good enough to form a government. we talked about this, we said they might win the election but they may not get enough. that is what happened. the pro-independence party clinging onto the majority and we look at a messy situation in the catalan parliament, and at the same time the winner of the night --carles puigdemont, remember he is still in brussels, he is asking to meet mariano rajoy. the question is when he will come back to spain. he is facing a legal investigation that could see him in prison. david: far from over. we will have to keep you there. thank you, maria. the catalan vote sent spanish stocks struggling to gain,

traction suffering its biggest drop in three months and futures indicating more losses ahead. the euro took a hit with its biggest decline in a month as investors assess the future of the spanish economy. david, welcome back. good to have you. let's start with spain. what does this mean in your judgment for spain, is this a temporary blip? a little bit like quebec in canada? >> at the end of the day they have the majority in terms of the seats in the house, but they do not have the democratic majority, they did not win 50% of the vote, it was shy of 48%. situation where we will look at the data really closely to see whether spain slows, you know from the growth that we have been used to over the last few quarters, to something like 2% analyzed. moreover, we would highlight as

of january the bond buying was down to about 6 billion euros a month to over 2.2 billion euros a month. the market will get less support going forward as well. as the spanish economy slows, it will affect spain. they could outperform italy going ford. abigail: it is interesting what you mentioned about the ecb coming back in pulling away support, because if we look at the three year yield we are going to see superlow levels. bond investors right now really not caring about this on that much. investors think that the ecb does have spain's back in this case, but you think they will step away. why don't market participants care more? why aren't they reacting? >> mario draghi managed to pull off a very dovish take, but

let's be clear, there stepping back simply in terms of the bond buying, particularly government bonds. we do not know exactly how this will work. something between government bonds going forward and agency paper in particular, but also the private sector that the ecb does as part of its program. we do expect to see a sizable set down in the government bonds and it will form more on the german bunds. now, we are also in an environment where the eurozone is outperforming expectations. we had upgrades to french gdp for the third quarter announced today and in this environment investors are generally bullish. but spain will underperform is the economy saw slowing over the next year or so. david: that is the question, because europe is on a nice track in terms of growth after struggling. what is the likelihood that this

problem with catalonia could slow down europe over all, or is it not big enough? >> it is not big enough. it is an issue for spain. catalonia separating from the rest of spain, or indeed leaving the eu, that probability is low. it is more of an issue if they lose economic momentum going forward. is -- one thing we will look at closely over the next year, but the backdrop at the moment is the eurozone economy clearly outperforming. it is set to grow at 3% next year, which is certainly above where the market currently thinks it will grow, but also very different from where we work even two years ago. abigail: knowing that you are an economist, the smartest investors are going to be looking for dislocation and opportunities, are there any you see right now? >> not really.

i mean, the market reaction has been fairly muted in the currency market and bond market. it is a market where maybe it is more about risk, and even that if you have a strong eurozone economies spain will still be growing. at the moment we are not seeing anything being thrown up, which looks odd particularly. david: david: from jeffries. you will stay with us. we will talk about brexit and what is going on in the economy in london. this is bloomberg. ♪

david: this is bloomberg.

i'm david westin. that is london. that is bloomberg headquarters in london. st. paul to the right, that is a gorgeous shot. abigail: stunning. david: david owens is with us. we want to talk about brexit. we will put up a chart, the brexit barometer. you do not need to know what the numbers are, but the numbers have gone down, come back up, now in the middle. is that reflecting where we are in terms of the economy in where negotiations are going? where are we with brexit? david owen: i think the recession was -- after the vote itself, we are now living in a world where the longer-term growth expectations for the u.k. -- the u.k. has slowed. most people are thinking that the u.k. will grow summer between 1% and 1.5% on average in 2018 and it compared with the

eurozone growing at almost 3%. the u.k. clearly is o underperforming. in terms of negotiations we have only agreed to move to the next stage. we have to agree in the first quarter in particular, the transitional arrangements, and it will be more difficult than people think. could have more discussion about whether actually post-brexit, will would be so aligned with the eu? or will we move away from it? this is brexit in name only. it will be incredibly, i think it will be used a lot in 2018. abigail: relative to the second part of the brexit negotiations, trade negotiations, what are the biggest sticking points and why do you think it will be so challenging and perhaps more challenging than some think? david owen: firstly, the u.k. is linked to the eu supply chain. it has been in the european

union for a long time, so manufacturing has deep supply chains. and they have many service sector industries, including financial services industries, but it goes beyond that. how do we continue to have access to the eu market in these key areas and at the same time able to strike new trade deals with other countries? this will be a completely new thing altogether. and with the u.k. wants is not aligned with the eu itself. i think it will be very fraught. the next stage of the process is a transitional deal and it is unclear whether we will be able to get anything there. the easiest thing could be to extend article 50 beyond march 2019, but it would mean this u.k. hasn't left the eu at that point and it could prove politically challenging for theresa may and her government. it will be a long process.

we have conceded certain things and we can move on to the next stage, but the game is only just starting really. abigail: what is the optimal settlement in your view, that would be the least disruptive to the u.k.'s economy, the european economy, and the world economy? what would be additive? david owen: i think the u.k. will have less access into the european markets in general, but as much access as possible. you could argue the u.k. would pay for access. as much access as possible. it is difficult, because that might not be conceded by eu partners. they could say you are either in or out. you cannot have access in areas like financial and business services more generally into themes problematic for complicated supply chains. at the moment, it is clear that

the eu does not want the u.k. to have its cake and eat it. i think discussions will be difficult in 2018. abigail: good point. they sound like they want to their cake and eat it too. difficult to do that. david: does not make mark carney's job easier. david owens. me? of me? -- prardon david owen: cannot really control the process. david: thank you so much. david allen coming from london. -- to us from london. ask whattocks, we will is in store for the new year in 2018? from new york, this is bloomberg. ♪

abigail: this is "bloomberg daybreak." i'm abigail doolittle. happy friday ahead of the long weekend. and not a lot happening for the u.s. market, but in europe a little bit more. take a look at the european vix,

up. the ibex down 1.3% after the separatists voted in a snap election. the s&p 500 and many futures -- ni futures are down, reflecting -- of only 1.7%. and bitcoin, down 21%, a bear market it one day if you can believe it. so much volatility. david: with the bitcoin, i can believe anything. let's look at what is going on outside the business world. emma: thank you. a split in the white house keeping president trump from carrying out a campaign pledge, including a loophole that benefits investment fund managers. white house economic adviser gary cohn wanted to close the loophole in the tax bill, but the treasury secretary steve mnuchin urged keeping the carried interest with new limits.

that according to people familiar with the matter. china signaling it is ready to back another round of you and sections on north korea. the secret council votes today on whether to cut deliveries of petroleum products by 19%. that would be in response to north korea's missile tests last month. a palestinian leader says many countries can replace the u.s. in the peace process. he says the u.s. disqualified itself in the process by recognizing jerusalem as the capital of israel. they are working on "innovative solutions." global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm emma chandra. this is bloomberg. david: thank you. media and telecom stocks showing strength going into the end of the year after underperforming in the s&p 500 for much of 2017, as you can see from the chart. analysts say the move up could continue into the new year,

because of tax reform. joining us is craig moffett of moffettnathanson and a veteran analyst covering u.s. telecom. he has been named the number one analyst nine different times. impressive. craig: the advantage of gray hair. david: tell me about it. start with taxes, because president trump is going to sign this bill any day now and we are going through sector by sector and saying, how do we unpack this? what does it mean for your area? craig: the playbook is starting to become clearer. the obvious stuff is the ones that are big taxpayers, they will benefit more. i think that is starting, it is clear enough to everybody at this. point i think the nuances that are starting to show up now are trying to figure out which sectors are likely to compete away the tax advantage and which

ones are likely to have some measure of pricing power so they get to keep some of it. i think right now you are looking at them in the telecom space, at least some moderation in competitive intensity in the wireless sector, and therefore more optimism that these companies will get to keep the tax benefits. on the cable side that has historically been the appeal of those stocks, that those companies have a fair amount of pricing power, so i think you'll see the rally in the large cap cable stocks continue. abigail: when you say keep the tax cuts, are you talking about using that toward capital spending or buybacks or returning it to shareholders? at&t came out right away talking about the $1000 bonus, you have to wonder whether they are trying to get favor with the white house. craig: you are talking about a few million dollars, it is not entirely trivial but that is not really spending the tax cut. i have been fairly negative on at&t until about six months ago,

five months ago, and i had a sell rating on it and i upgraded it in int anticipation of tax reform. they could be the biggest winner in the telecom and cable universe, not on paper -- they don't get the largest mathematical benefit, but they could be the biggest winner as a stock because the case has become they started dictator on the brink of a serious discussion about when and if they would have to cut dividends, but that takes this off the table. and so that their case for air t at&t will befor off the table now for some years. at&t come although i am not a fan of their strategy, i like the stock. it is an interesting time to own the large cap companies like at&t, verizon is a big beneficiary, on the cable side comcast. david: if you look at stock

isking, how much of this because of treatment of capital investment because a lot of these companies are capital intensive and if they can use this is that a big advantage? craig: it helps, but it is not the big driver. we have had bonus depreciation for a long time ever since the crisis, so you will get some benefit from that. historically, these companies have not invested more because of bonus depreciation, we saw that after the financial crisis where they had bonus depreciation and they accelerated the expensing. not sure it up old for capital investment, but these companies have to invest a lot. the issue is, especially for at&t and verizon, how much more comfortable it makes dividend coverage. it does allow them to do a lot more. abigail: interesting to hear the difference between at&t as the stock that you like and dividend coverage that you said is a

safe, and now the potential merger with time warner which is complete caught up. how does that play into everything? craig: let's talk about taxes, the price they paid for time warner was a very steep price, unless tax reform happened. tax reform happened, and they were not anticipating it because when they made the transaction it was before the election and i think it is not likely that they went in with the expectation that donald trump was going to win the election, but the price that they paid for time warner is much more moderate in light of the fact that time warner will get to keep a substantially larger portion of their earnings. the strategy, it is a double-edged sword, whether they win or lose with the doj. you have seen that with the stock, it is not clear that it goes up when on to the deal go up or goes down when the on the video goes down.

the market is ambivalent about it. here is $110 billion transaction that when it was announced the at&t stock moved 1%, because the market had a hard time figuring out what to do about it. you can boil it down to if the deal closes it is good for the income statement and bad for the balance sheet. it is a question of which of those two things turns out to be more important. it is on the margin, it is not obvious. david: i am curious about pricing power, because the history is cable does not compete with one another. on the mobile side, there has been a lot of promotional competition trying to get more customers. do you think that that is going away? why is that? will there be more mergers? craig: the opposite. i think the consensus view going into 2017 was that once the republicans had won the election that a merger between sprint and t-mobile was highly likely, and

consolidation was going to help pricing power in the industry. i think the fact that the deal did not happen and it looks like it is off the table for some time at least, is probably good news for pricing in the industry because sprint now has a real challenge. sprint is not a beneficiary of tax reform. sprint now faces a lot of extra capital spending to catch up from spending deficiencies in the past. on a starting basis of almost no free cash flow and about $5 billion a year of debt maturity for the next three years, so they are going to have to be more moderate as they tried to balance these competing priorities. that is good news for everybody else. for now at least, the fact you did not get consolidation helps pricing. abigail: bigger picture, i know that your specialty is telecom, but if we bring in the media space it could be possible to say that 2017 is a pivotal

moment between the deals with telecom and on the media side we rupert murdoch willing to part with assets, finally. will we say 2017 was a game changer? craig: not compared to what people thought going into the year. abigail: interesting. craig: if you go back to the beginning of the year, sprint and t-mobile was almost certain to happen, verizon was going to buy dish network or possibly --rter, or possibly readily vertically integrated by a media company, charter might have to vertically integrate with a media company. there was an expectation of a flurry of deals, none of which happened. at&t and time warner dated back to 2016, so the only big deal that we saw announced was fox and disney. that is not the kind of the vertical consolidation that

people expected. depending on what happens with at&t and time warner, you could but-- this is nuanced, depending on the regulatory outcome, whether it is approved, but also the rules and regulations that will apply afterwards, you can imagine that it may make some vertical integration deals more likely, but i doubt it. i suspect that most people are looking at these kinds of strategies and wiping their brow and saying, thing goodness i did not do something stupid, because a lot of these deals did not make sense anyways. one of the broad lessons is m&a is not a substitute for strategy, it must be in service of strategy and a lot of these transactions were m&a in the guise of strategy and of those deals almost never work. david: so true. ok, thank you so much for being

here. coming up, tax overhaul puts college football on the defense. that is next. this is bloomberg. ♪

emma: this is "bloomberg daybreak." and this is the hewlett packard greenroom. of deutschehe ceo

advises. and nike is still struggling in north america, but the news is better elsewhere. the largest sports brand posted quarterly sales that missed estimates, but better than expected in china, the middle east and africa. roche has agreed to buy fire tech company igniter, the price $1.7 billion in cash credit it will give them experimental sash cash. it will give them experiment of drugs. top-selling medicines are about to lose protections. the controversial founder of public john's pizza chain is stepping down as ceo. he will be replaced by the chief operating officer. less than two months ago, he said the protests by professional football players were being mishandled by the nfl. he is one of the league sponsors and now shares are down. that is your bloomberg business flash. david: we now turn to the wall street beat, covering things that wall street will be buzzing

about today. number one, jeff's double line is set to produce mortgage-backed securities in-house. bankers is letting its do tax planning by deciding for themselves when they will take their bonuses. the third, how colleges are trying to get booster money in the door before losing it to tax breaks. joining us is jason kelly, the new york bureau chief. talk about double line, what are they doing differently and who will they be competing with? >> what is so interesting is jeff is a guy that everybody is always looking to see what he is doing. we talk about it in the newsroom, this is the big name that makes news. the other thing that gets people's attention is mortgages, especially not just from a personal perspective, but from the perspective if you go back to the financial crisis, we all know that mortgages were really interject -- -- intrinsic --

[laughter] david: there is some unpleasantness. >> but people really got out of the business. banks got out of that business, so seeing somebody like him go in, he is clearly seen opportunity -- seeing opportunity there. it is a relative small that relatively small beachhead that he has raised so far, but there seems to be a need. there is one thing that, i in -- hasory that said shrunk to $486 billion this year from $2.2 trillion at the end of 2006. david: is that a good thing or a bad thing? we heard from the fed saying we are looking at nonbanks going into these territories because they are outside of regulation. >> and we have a nonbank getting into the businesses here.the time is interesting abigail: -- and the time is in

interesting. what do you think this have to do with it that it could make for some volatility, maybe that is what he is looking for. >> we have talked about volatility all week. the idea that hedge funds and alternative investors have been looking for this volatility, that is where they make their money. it will be interesting to see. abigail: switching to the big topic of the day, the week, the year, tax overhaul. apparently it is influencing jeffries' decision to allow employees to receive their bonuses this year as opposed the next year. >> tax has been a big issue, bonuses are a big issue every --r on wall street, so this as you said, this is one of the ripple effects of tax -- of the tax plan, the tax law, jeffries is allowing people to take their bonuses in december if that is better for them from a tax

perspective. david: we were told by the president of the in ministration we will simplify things, we one have as many tax advisors, and all of our friends are now talking to people asking what should we do? should we bring afford the next year? it is consuming a lot of new york right now. >> and a lot of the rest of the country, because people are thinking about taxes in a different way than they had before, which brings us to our third story, college football. as i said through the imo last night, everybody loves college football and by everyone i mean me. david: although michigan is not in it. abigail: not so much me. >> i was looking at this and it is a tax story as well. i was checking my email last night and i had one from my alma playing in theot college football playoffs, but you know, they were making the same case of buy your season

tickets for basketball, and that is what people are saying, the deductibility is going away. this is a huge area of revenue for colleges. you know this. david: a huge area. i am stunned that there ever was a tax break for a buying the skyboxes in the big stadiums. hundreds of thousands of dollars and you get to take it as a charitable donation. i did not know it even existed. >> existed for just sort of regular season ticket holders. one thing that was in the story, as i was reading it, it struck me that this is based on the same credible as the seat licenses in professional sports, professional football and others. david: back to michigan. michiganiece, -- from says there could be benefits, because instead of contributing to the football program maybe people will contribute to the academics. abigail: i heard the endowments

for these colleges could be hurt because of tax reform and i heard about layoffs, so we have the good on the one hand and the bad on the other hand, so if it bounces out it could be interesting. that's imbalances out a could be interesting. >> harvard put out a letter saying that this will be hitting their budget. i believe to the tune of $11 and moren mit's case, than a million and harvard's case. david: but they do not have a strong football team. thank you so much. coming up, the loophole bringing in the tourists. why a little piece of u.s. territory in the middle of the pacific is under the spotlight because of the chinese going there to have babies. can watchtv , you as online and interact with us directly. go to tv on your terminal. from new york, this is bloomberg. ♪

abigail: welcome to "bloomberg daybreak." happy friday. and happy friday to you, david. taking a look at the markets, because of the holiday weekend not a lot of action for the dow futures which are basically flat, the nasdaq futures, all flat to slightly higher -- the traders already leaving for the holiday. not manning the desk. david: understandable, going away for the holidays.

i will tell you what caught my eye, i was looking at the wall street journal and there is a tiny island called saipan, the largest island in thenorthern mariana islands and a big naval battle was fought there during world war ii. it is an american territory. they said, we need more toryism. -- tourism. please waive the visa requirement for china, because it is so close to us. so they did, no problem. what happened? chinese women are going from china to saipan to have their babies so they can become american citizens. so chinese women are having babies in the northern mariana islands so they can be citizens. abigail: incredible. i think we saw something similar to that in los angeles and then the u.k. david: there was that issue where people were going to u.k. to have their babies. but there is an uptick.

-- and does not sound 448 does not sound like that many, but many people do not live there to begin with. at the same time, our friend, one of our producers said it is able to three hours worth of births on the mainland. abigail: one way to look at it. david: it is fascinating, the larger question about china and demography, they are moving away from the one child policy that they followed for years, and it is a question of as these people grow up increasing integration with the west. as china liberalize its and tries to control its currency. they have to manage the interaction, the globalization for china. even as we pull back. donald trump says, i do not want to go with too much globalization. abigail: protectionism, even. david: coming up, a conversation

with gerald storch, now the ceo of storage advisers and we will talk to him about retail. we are going into a big weekend for retail. abigail: i have some last-minute shopping. david: it is getting late. abigail: i have my work cut out for me. david: we will talk about how the tax bill has affected retail, who is up in who is down and who are the winners and losers. the battle between amazon and walmart. it is all coming up right here on "bloomberg daybreak." live from new york, this is bloomberg. ♪

♪ david: how much did you spend less month?we're 30 minutes away from

personal spending per november. the latest read on what inflation may be heading. catalonia collects the government favored from independence from spain. what does it mean for spain and europe? congress goes home on the heels of tax overhaul. legislators keep the government going for another 30 days and take a holiday break to think of the issues they had get to resolve. welcome to bloomberg daybreak on december 22. i am david westin with abigail doolittle. alix steel is off today. abigail: can you believe this is the second friday of 2017? david: and the days are getting longer. abigail: they are. this day is optimistic and positive. speaking of, let's look at the markets. in europe, not so much when we look at the ibex. it is down more than 1% as separatists did when the snap election in spain.

with that, the s&p 500 futures about flat. the bloomberg dollar index about flat, reflecting what will be a slow holiday trading day. , but no, near the low higher on the year. finally, bitcoin. date is the biggest story. at the low you see there, earlier in the session, down 21%. a bear market, down 31%. bitcoin has been on pace for its worst week since 2013 after touching $29,500. david: i bet it will go down some or. is david: what the pattern suggests. outside the business world, we turn to emma chandra. emma: congress managed to keep the u.s. government from shutting down. it faces a messy start to the new year. last night, lawmakers approved a

spending measure to keep the government open until january 19, but put off action on dealing with issues. signaling it is ready to back another round of u.n. sanctions on north korea. they voted today on whether to cut deliveries of petroleum products to the regime by 90%. tot would be a response north korea's long reach missile test last month. catalonia isead of demanding spain recognizes victory in elections. he says the government must guarantee he will not be arrested if he returns to spain.he fled to brussels to avoid jail after catalan separatists declared independence. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am emma chandra. this is bloomberg. david? david: thank you. it is time to discuss the top

three stories of the morning. catalonia, candidates favoring independence came out on top by a narrow margin. second, congress goes home for passingdays not before the resolution funding the government for another month, putting up a host of difficult issues. finally, personal income and spending data in half an hour. anding us now is mike mckee our chief content officer marty shanker. there was some market reaction to the catalonian reaction as the euro sold off around .2. also, reaction from the bond market. what is going on with the bonds in spain? abigail: almost a lack of reaction. when we look at the bond action, 2351. 230 51 -- the spanish yields in blue is negative. down from where we first started to have toxic separatism in

october, down to 1.7%. what stands out is in 2012 when we had the crisis of spreads and yields blowing out. at that point, the catalonian yield that 14%. to investors care? >> day care that they do not think anything will happen. there was so much special for the catalonian's to stay in spain from outside of spain. aboutropean union united an idea of a separatist movement. their feeling is the catalonian's cannot make it work if they withdraw. catalonia has a larger population in ireland and the could make it economically viable independently but it would take so long that the price it be so high and investors do not think it was happen. david: they did not decide much. mike's points, if there

was a separate is stayed there, they would move headquarters and businesses out of the region. this is more of an atmospheric thing than a real event of significance. david: is there a pattern? we still do not have a government in germany. the sense is this will go on for a long time and not much will get resolved. there seems to be a pattern. whether then netherlands have a governments or not. >> they do. there is no deadline. it could take months. ultimately, everybody thinks there will be some sort of coalition. abigail: does this have to do with the ecb? they have this bond buying program and they may be pulling in but they are still supporting financial markets in europe. they have the back of the country, so to speak. >> they have spain's back but not catalonia. they are buying spanish bonds. political polarization, it is a sign of it.

there is no middle ground, everybody is on the far right or left around the world. david: another thing that resolved is how we will spend our money for the government. congress temporarily converted a government shutdown. january 19, they will have to address a lot of issues. there's no resolution to long-term funding, dreamer status, defense spending, health insurance, boardwalk. they have a lot to do in 2019. >> you did not mention their surveillance program. david: a big, hot issue. >> are you going to fix tom keene? [laughter] >> there is>> union liberty on that issue. david: what makes them think they will be able to come back after this break and resolve these issues? taxes done, you get without democrats but not these things without the democrats. >> absolutely not an democrats are strident about the issue of matching any increase in military spending with domestic programs. the conservatives in the house when nothing to do it that. to do at thatg

and no one thinks they will resolve these in the next three weeks but they are girding for a fights on the 19th. the 19th will be a significant date unless they kick it down the road another three weeks and they could do that. abigail: that would be the pattern. >> interesting time for democrats because there are so many issues on which the republicans need them. there are keep things democrats want. they are playing not to win this fight only but in november 2018. they have got to take a stand on things they believe will be politically popular and not hurt them in the congressional elections. you wonder -- not hurt them in the congressional elections. you wonder if -- you wonder who gets blamed if there is a government shutdown. interesting strategy for them, as well. david: i'm getting an ib about the president tweeting -- at some point, i predict we start

working with the democrats for the good of the country. there you go. >> let's hold it atbay for cheers for that 1 -- at bat=y per cheers for that one -- at bay purchase for that one. >> that is interesting.the other day, donald trump asked paul ryan to start working on welfare reform, which is a divisive issue. now they're saying let's do infrastructure. >> what the president and democrats want to do is different. democrats want federal spending on infrastructure. trump once private spending. david: he goes on to say after having foolishly spent trillions of dollars in the middle east, so it is not his fault. >> but as people point out, there are donald trump twee ts same we need to be involved in the middle east. it is what it is. abigail: where does it stop? >> it is at the moment rather than a long-term strategic

philosophy. abigail: we will have a look at the economy when personal income and spending comes out for november. spending is expected to take up. where is inflation? i love this chart. 07 and the fed35 preferred measure of inflation is the key ce and we see it well below the fed's target in red of 2%, down here 1.45%. this is the conundrum that janet yellen says they do not understand. they do not understand why inflation is in picking up. >> they think it is a series of temporary fixes, but you can see how long temporary has been. [laughter] abigail: that goes back. >> to it raises the question of whether they should change their 2% target. either the 2% target or the measured the use because the cpi headline has been that 2% or above for some time. it is the pc number constructed differently. abigail: by do they like the

pce? >> they feel it better represents the current spending because the cpi has things like housing, the way they calculate housing, and you do not buy a house every month whereas you buy groceries every month. abigail: there may not be inflation on main street, but on wall street, we have had tremendous asset appreciation and inflation. people have criticized the fed for forcing that appreciation inflation and to illustrate assets but not main street. where is the difference? >> the fed is concern. they know they have played a role but they do not believe they are the sole-source of this. that is one reason they want to get interest rates higher. the cannot just raise them to stop it because you hit a wall, and you could cause a crash. abigail: got to be careful there. david: this jay powell want to get that? >> that is interesting. this is not just a u.s. phenomenon. this is a global phenomenon.

the unintended consequences of to 2008 areponse playing out in the market today. people still do not understand why prices and wages are not going up faster. that is a mystery. >> but jay powell does not get a chance until march. inflation numbers have a chance to move around. i brought a chart the other day with megan murphy and only way i got to the city and now i have marty. this is also out today. durable goods orders out and this is the long way of saying a proxy for business spending. after the recession, it went up and then down. in the last year, it has been going up again. the tax bill is supposed to make this rocket higher. here is your chart from february, for january and february data. watch and see if that continues. david: if is going up, then productivity should be behind it.

that is the theory as you invest in capital, it should come up. >> that is the theory but we are only getting back the levels we were at in 2010. abigail: one more piece of the mystery i have been thinking about, i have to think that it has to do something with the inflation conundrum c witha -- with cash at all-time lows. david:. thank you for being here coming up, majority reclaims. we are live in barcelona, next. live from new york, this is bloomberg. ♪

♪ emma: this is bloomberg daybreak. qualcomm and a

takeover bid. thechipmaker is opposing move of 11 new directors, saying they are biased in favor of the bid. this stage is set for a blockbuster deal in the jet business. boeing is considering a combination with brazil's company, expanding the fleet to a highly competitive market to smaller passenger planes. will createer today a gambling giant. deal valued at $5.4 billion. brands.online that is your bloomberg business flash. david: you are looking at live footage of spanish prime minister, giving a news conference following thursday's regional election. we heard from the leader -- the

previous later of ask, i haveo let me been told that impacts, they have both agreed to talk. if it is true, that is a major development.after the referendum , rajoy said i am not talking to you. >> right. joy giving a press conference. it is difficult to say what it will hold. to bedo talk, it has got outside of spain, says the previous catalonia leader. will accepting, i the new catalan government that dorges from the election and independence governments, but whatever they do has got to be held within the constitution and why the law in spain.

so no reference to independence or anything that looks like it. lori is saying we need to -- rajoy they say we need to do soul-searching to what happened. clearly, it was not good for us. it is unclear the talks they have, if they have them. ajoy a saying if there is a conversation, it has to be within the constitutional order and after this the referendum. abigail: you mentioned that the previous catalonian leader would like to have the talks for the reason of legal issues. i read in one spot that he could face jail time up to 30 years but it seems all of this good reverse it. what do you know about his legal issues with this breaking news? situationl, the legally is separate to what happened yesterday. it was a good night for perched among. catalonianfeels the people want him back. vote forlic seems to

him and want him back but now he says, i want the conversation. this has become a structural issue for spain, not about both of them. catalonian's want to have a say in conversation on what their place in spain should be. the question is whether rajoy will accept it. he is the prime minister of the nation. if anything, he should be the one setting conditions. david: thank you for the great reporting from russell on the, maria -- from barcelona. the ibex suffered its biggest drop in three months with more losses ahead. and the euro took a hit with its biggest decline in new amonth as they assessed the spanish economy's future -- decline in a month as they assess the spanish economy's future. tell us, is the euro down because of this catalan

election? euro's's slide has been because of the voting in catalonia. even if you look at the move in the euro, it has been tame. i do not think investors are looking at investments in spain as a massive game changer. it does complicate domestic local politics but it doesn't ask to take the existential questions of the euro area that some of the political upheaval in the past we have seen has. i think it is a limited reaction and seen as a local issue and not euro wide and something investors are taking in stride. abigail: that makes good sense in being a local issue. at, when we take it macro the european financial system, the ecb is there. they are supporting that system. do think that is one reason we are not seeing much of reaction with the euro or some of the peripheral yields, and even in

germany, as well? nothing in europe seems to be moving except for the ibex, the stock market. richard: i think that is the case. the ecb has been supportive, especially to the bond markets. if you were wind to win the referendum was held in catalonia, there was a knee-jerk reaction to take spanish yields higher to widen sovereign spreads but they settle down quickly. i think everybody realized the ecb is still there as a backstop and will continue to be in 2018, even if it is at a slower pace. i think the ecb has been a big support to this, especially sovereign bond markets. david: what about the u.s. tax changes? are they going to have an effect on the cross between the euro and dollar? 50 areas we will compete more capital back in the united states and it could come from europe. richard: there is a school of

thought that says it will be one of the eggs that will drive it -- the things that will drive it. also, what does this mean for economic growth in the united states? it has yet to be seen. there is no firm orthodox view on that. i think there is still a lot of digesting of the tax plan going on to come to terms to what longer-term applications are. politics and economic seven the big driver in fx this year. on the european side, those are looking better than this time last year. david: richard, thank you, bloomberg's richard jones from berlin today. coming up, boeing blockbuster. what a major deal could mean for the global aircraft market. that is next. this is bloomberg. ♪

♪ david: blowing could be landing a deal with embraer.

this is a canadian company. boeing shares have see it -- boeing shares have soared. give us a sense of what the deal is about and why is it important for boeing? >> this seems to be important because after airbus sort of was given the series earlier this year, they are teaming up to a-320.e c-series and the boeing thinks not having a smaller airplane in their portfolio is something that is hurting them. and for it could potentially hurt them, so they are trying to the gap with airbus and in barnier -- embraer.

they want an airplane that can offer between 75 and 130 seats and their 737 program. david: tell us why the focus is on smaller aircraft. for the longest time, we heard bigger and bigger. now everybody is fighting over small jets. what changed? george: we have not seen anything change it. in the air shares them at -- embraer shares the smaller aircraft at the largest amount in the world. they seldom to u.s. regional airlines. we do not see a big demand between 75 and 130 seats, which is why it is interesting to see boeing negotiate here to fill that portfolio. it might be they are starting to stretch the 737 a-300 20's so large that they feel airlines need something for smaller markets and want more of this to 140 seater.--

aboutl: the were talking the idea president trump was not willing to negotiate the way justin trudeau canada had wanted him to between the two companies. how is this plane into this now? george: this will be interesting.one, i think they will need brazilian government improvement . they will not want to see jobs go offshore. there is also big defense prime in brazil. i cannot see jobs coming from brazil to the u.s. or jobs are going there either. david: many thanks to george ferguson of bloomberg intelligence. in a few minutes, we will get the personal spending and income data for november and were inflation is heading on the heels of the third-quarter gdp number from yesterday. live from new york, this is bloomberg. ♪

abigail: this is bloomberg daybreak. happy friday before the holiday weekend. let's head over to the market. we look at the ibex in europe, down 1.2%. of the of a surprise but in the u.s., the s&p 500 futures and the bloomberg u.s. dollar about flat ahead of the holiday weekend. but bitcoin down 20% almost in a bear market once again on the day, affecting some bitcoin related companies. red. of long island iced tea, it was up yesterday on the news they would change their name. david: breaking economic data. personal income up .3 against a survey of .4. on the other hand, personal spending was .6 as opposed to .5, which was projected. pce year over year, what the fed looks like, right on the survey at 1.8%.

mixed numbers but might on the dot on pc deflator. we will bring in scott brown from st. petersburg, florida, and bloomberg's international economics correspondent michael mckee. michael, in the surprises? this is month of november. the numbers yesterday for third quarter more recent. michael: good news for the economy is we are spending more than we anticipated, up .4. the bad news for economy is we are making less. incomes are lower than expected and lower than last month. when you break it down, wages and salaries were up .4, double what it was in october, .2. your losses are somewhere else in the income spectrum. it is not as bad as it appears. we need to see the income levels continue to rise. you may see this with the tax bill in february when they change the withholding tables and use the money coming or staying in your paycheck and not

coming out. to go point,exico this is pretax overhaul. what do you make of the numbers? what do they tell us about inflation and growth, if anything? scott: i will start with growth. we saw pretty strong retail sales reported the last week but we also had upper provisions to previous numbers. consumer spending a bit stronger but this has been a seesaw year. we had bad weather in the first quarter, a rebound in the second, hurricane effects in the third quarter and we are seeing rebound from the effects in the fourth quarter. it makes it difficult to gauge the underlying trend. i think the concern for the consumer is wage growth has been relatively moderate but we have had higher gasoline prices. the purchasing price of the added income is relatively soft. it is a concern into the new year. in terms of inflation, we have been over this a number of times

where there has been a lot of factors pushing inflation down in the last few years. we have had a lot of slack in the labor market, a strong dollar, weak commodity prices. a lot of that is behind us now. you are poised for probably a pickup in inflation. i think the fed's expectation they will get to 2% in underlying inflation over the next years is a pretty good forecast. i think we will stick with that. abigail: david mentioned these numbers are before tax overhaul, this tax cuts once president trump signs the bill, as expected. $1.5 trillion perhaps could go into the economy. could that be a stimulus for inflation? scott: the one thing we -- the final bill, which was not in the house or senate versions was more frontloading of the fiscal stimulus. it may add a little to grow. a few years ago, during the

recovery, we had a payroll tax holiday for two years, where taxes were 2% lower than they previously.d been half of the consumers did not know that . i do not think we saw much of an spending.consumer it will help but i do not think it will be a game changer for the consumer in the first half of the year. 2019 whenter more in people start to get their tax refunds. that is a long way away. david: looking below the headline numbers, the durable goods numbers, those look disappointing. 1.3% in there up forecast was for 2% gain. they look at these spending -- they look at these numbers that come in weak. when you look at the numbers, you see that electronics and

computers and machinery were down on the month. those are things you would think companies would put money into if they were going to expand capacity. the one excuse- is it is before the tax bill. maybe company said let's wait because we will see what they do with the tax will. it looks like it will go through and we do the investment in the first part of the year, so right after january 1. let's watch durable goods orders for that spending and seep it materializes. david: one recently look at the numbers closely is we hope we can look into what the fed will do in response to this. what do these tell you about what the fed will do, if anything? we have the tax bill, a new year, and a new fed. what do you think will happen? scott: i think it would be a smooth transition with a new leadership at the fed. we know that the fed policy will remain data dependent, rate increases will become gradually,

but these are a lot of new people. beyond the middle of next year, it is cloudier. it is likely the policymakers will be more hawkish than they have been. inclined tohey were raise rates faster, but the risks of making a mistake increases both ways. the fed may raise rates too soon or they may raise rates too late. i think given the balance, they should be cautious in terms of raising rates, and there may be political pressure to get the tax bill some chance to have an effect on the economy. abigail: in terms of the composition of the fed, a lot of vacancies. there was a headline that larry lindsey could be nominated as the vice fed chair, and he had been the head of the national economic policy when george w. bush -- there was a tax overhaul their, small, but what connection could you make to the current headline and what his

chances are? scott: we do not know where the headline is on nominating someone else. mike: with the president in mar-a-lago now, it doesn't seem it will happen. after the first of the year, one would hope they would get a vice chair nominated. larry lindsey has been on the list for a long time. i was surprised by the story because people have talked about him. he does have that experience and he is a right-wing economist, so there is an appeal to the administration. he is the academic that some of the others haven't talked about our, but his chances in the administration is as good as anybody's. david: we had an expression in my law firm that is fun to argue about. let's talk about what the fed should be doing in terms of taking into account the tax changes. howou look at the numbers, do you think they will be

different once the tax bill goes into effect? >> i think we have seen some anticipation in terms of the growth forecast. we had this summer of economic rejections were the fed makes forecasts of growth on employment and inflation. we saw gdp numbers come up to 2018. some of that is baked into the outlook. isin, i think the question is this going to become a more political fed than we have had in the past? it is important monetary policy is dependent. we have this shift of focus away from monetary policy and more towards the regulatory environment. we are looking at the rules and regulations put in place since the great recession and now in the process of the mold back to some extent -- rolled back. that could be more of a focus for the markets as we look forward. the base case scenario is the fed may raise rates two times

but they could not raise them at all or raise them four times, it is a clouded outlook. abigail: it is interesting you say they could raise two times or three times because the fed says three times. markets think two times but it sounds like you are talking about the trajectory that we are in a tightening cycle. what do you think could shift that? or are we on cruise control? has janet yellen really done her job? and have market to spin spin well-trained? david: scott, that is for you. abigail: [laughter] exactly. scott: i think the last couple of years have been really the fed normalizing monetary policy. we are pretty close to what we would think would be a normal federal funds rate at this point given where we are. is, they have been taking the foot off the gas, are they ready to tap on the brakes?

we do know the population growth is slowing down and labor growth forceful slow down and that pace of job growth has been beyond the sustainable pace.we are still digging into the slack in the economy but we will run out at some point. the federal try to achieve a soft landing. that is a hard trick. david: scott brown of raymond james and bloomberg's mike mckee, thank you. let's get an update on headlines outside of the business world. emma chandra is here. emma: a split in the white house kept president trump from carrying out a loophole that investigates managers. to close theted loophole in the tax bill, but steve mnuchin successfully urged keeping carried interest with new limits, according to people the money with the matter. in the u.k., british economy grew at the slowest pace since 2013.

annual growth was 1.7%, well below the rate below -- before the vote to leave the european union. prices are rising faster than wages. and palestinian leader says many countries can replace the u.s. in the peace process. -- thewith the france french president and said the u.s. disqualified itself by recognizing jerusalem as israel's capital. the french president says he's working on "innovative solutions." global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am emma chandra. this is bloomberg. ceod: gerald storch, former of a number of retailers, now storch advisors ceo. we will talk about retail. if you cannot watch television, tune in to radio. john king and china ferro -- jonathan ferro -- tom keene and jonathan ferro are on. bloomberg surveillance can be

all across the united states of america on sirius xm radio. live from new york, this is bloomberg. ♪

♪ emma: this is bloomberg daybreak and this is the hewlett enterprise pack -- hewlett packard enterprise greenroom. coming up, thomas lee of fun dstrat global advisors. this is bloomberg. ♪

emma: now to bloomberg business flash. buy ignyta.reed to the company is facing a critical transition because three of its top-selling medicines are about to lose patent protection. the parents of google no longer needs the little supervision of one of the biggest names, eric schmidt is stepping down the alphabet. he was brought in when google had 200 employees and its founders were in its 20's. he will remain on their board. the controversial founder of papa john's pizza chain is stepping down as ceo. he will be replaced by the chief operating officer. less than two months ago, schneider said the protest by professional foot all players were being mishandled the nfl. copper john's is one of the league sponsors. their shares were down 31% this year. david: thank you. we are in the final stretch of

the holiday shopping season. at least i hope i am. consumers appear to be opening their wallets more this year. the latest personal spending figures are up .6 for november. joining us is retail veteran jerry storch -- gerald storch. he is the former advisor of taylor and lord and served as taylor and ceo of toys "r" us and vice-chairman of target. good to have you. it is the perfect day. there are a lot of things to talk about but first, this at the battle between amazon and walmart. i think you have a chart to show some contrast between the companies. abigail: not only a chart, one of my favorites, but as we look at g #btv 8686, this tells the story. on top, we are looking at in white walmart's market cap, about $290 billion. up top, amazon at most $600 billion. on bottom is walmart's revenue,

dwarfing amazon. now, we have walmart getting into online with jet.com. every day, i see packages in my building. to some other companies have a chance against amazon? are investors getting this wrong? gerald: i do not think they have done anything wrong. amazon was a pioneer in internet. their stock prices forward-looking because they are not making money today. it is a belief that 20% growth rate will show compound indefinitely and they will gobble up more retail market. walmart was kind of late to the game and got a slow and poor start on the internet. more recently, they have said we will not lose to these guys. they are pouring tens of money and it has become their primary focus. they paid a billion dollars for jet.com. he is a smart guy and the internet. they are driving forward to fight back. they have substantial resources.

said, the first time they do something, they say it isn't impressive but by the time they get it right, it will scare the heck out of you. walmart is the only one, most people think, who has the money and wherewithal to stand toe to toe with amazon and everything that investment on the internet now. david: explain something to me. we never talk about margin. we talk about market cap, revenue, at some point do we have to worry about margin? gerald: i had a discussion on this point yesterday with the potential clients, who is a big company -- you had of the company. i was saying, i know. they're not making money. if you do it they do, you will not either. play have to do it anyway. i promise you are not doing enough. so when you look at walmart's results, most people applauded them and said they were good. you saw significant growth on internet and positive heat

versus expectations out of walmart. their margins were down year-over-year. their less profitable than they used to be. but that is what the internet will do. it will change the profiting loss for all retailers and squeeze margins. only the biggest and best who had the ability to innovate at the pace amazon does will succeed. walmart is the only one -- i will not tell you walmart is the only one, but they are lining up. every day, you see someone doing an alliance with one or the other or both. you realize these platforms not be as dominant as microsoft and apple. abigail: apple will be able to depreciate expenditure, so with that allow retailers to catch up with amazon? gerald: amazon invests billions of dollars a year in technology. how come you're not as good as amazon? do you know how much money they spend? we do not have that money. retailers as a whole are heavily

taxed. pay to make the money will close attention to the rate and this will be a great to boom and give them more time to make the investments to get through the transition period and be a survivor. david: specifies all retailers? there is also a reduction on the business reduction for tax purposes. a lot of them are highly leveraged and they pay a lot of interest. gerald: most pay high tax rates. i think the retailers not making any money for not get benefits. you look at jcpenney, great company historically, the way the tax bill will make a difference in terms of their profitability. what it will do for all retailers, whether you have a high or low tax rates, it will put more money in consumer pockets. this is a huge fiscal stimulus and it will drive more customer spending. you were talking about inflation.if this is not an inflationary tax bill, i do not know what is. anyone who took economics 10is

inflationary so it should drive inflation, which is fantastic for retailers. prices will rise immediately, but your factor for labor and renter sticky downwards. abigail: do you think this could ship the overall landscape? we were talking about how 2017 is so difficult, unusual. do you think we will go back to normal in 2018 and beyond? gerald: no way. it is a great fourth quarter based on the aggregate. there are winners and losers in retailers. anyone who thinks we can relax now, it is over, they will be out of business in two years. every retailer has to be on all channels. they will have to be close to her amazon is in terms of internet quality. even ask stores have to get better than they were because no one wants to go to a rundown start with you employees. david: are department stores coming back ever? gerald: good department stores are great.

there's no room for bad ones. people who love department stores, there are loyalty programs. every morning, i asked my wife, is this the right tie to wear? it would be great to stores did that. nordstrom is probably the gold standard and they perform better than others. i think they have a bright future. i think high-end guys do well. they have a margin structure to afford the salespeople and do that well. and people at the low end do it well because value is high, at places like tj maxx. people like t.j. maxx or costco. costco is incredible. retail probably one of the best. they have the lowest crisis and the customers are higher and than customers at walmart or target. they do an amazing job, overall. abigail: letter energy, great insight. sounds if you had to be a multitasker to be successful as a retailer. gerald: you have to drive on the

fact you get results every hour and adrenaline comes. abigail: so important to be an optimist in general. thank you, and coming up, google has a shakeup after 17 years in management. eric schmidt steps down as executive chairman. more on that, next. from new york, this is bloomberg. ♪

abigail: after 17 years of service, eric schmidt will step down as executive chairman at google. he will stay as a technical advisor and director of what. -- of alphabet. he says the reason to step down this to spend more time on philanthropy. that is a big theme for some of the world's wealthiest individuals. bezos,tingly, jeff around $100 million, surpassing warren buffett and bill gates, but he is not given money at. david: in fairness, a lot of

people question, when does it go to silicon valley?there has been speculation it will come. look at what happened to bill gates. he did not give away right away. abigail: it takes time. david: how long does it take? abigail: bill gates and warren buffett, based on a bloomberg news article i read one month ago, said both of those individuals would eat much wealthier than jeff bezos. that is how much money they have given away. what will jeff bezos do with his wealth? david: and they continue to give away. it is impressive. you have to give. you cannot rule out the possibility it will not get to silicon valley. it will get to jeff bezos. coming up, the open on bloomberg markets. a conversation with oppenheimer. live from new york, this is bloomberg. ♪

jonathan: from new york city, i

am jonathan ferro. this is the countdown to the open. ♪ the tax bill awaits the president's signature. equity, bowls ponder what is next -- equity, bulls ponder what is next. bitcoin plunges as wall street gets more comfortable with it. ending the year the way it started. europe worrying about politics. separatists in spain win regional elections. hunting down to the opening bell, it is officially the mission to get to the close this friday and get away for the holidays. futures unchanged. we grind towards a fifth straight week of gains on the s&p 500. in the fx market, politics in fact the euro --